Market announcement

Title

AS Ekspress Grupp: Consolidated Annual Report 2016

Message

Tallinn, Estonia, 2017-03-27 07:57 CEST (GLOBE NEWSWIRE) --


The year 2016 was a year of new challenges for the Group, both within and
outside the Group. The end of the year was also influenced by the rotation in
the management of our parent company, subsidiaries and joint ventures that
provided new challenges for several managing directors. 

Consolidated revenue increased 2% as compared to the year before and EBITDA
increased 8%, amounting to EUR 62.8 million and EUR 8.5 million, respectively
In revenue terms, it was an especially successful year for the online business
of our media segment, with online revenue growing 12% in a year, totalling EUR
18.6 million and reaching almost 30% of the Group’s total revenues. It was also
positive that in spite of predictions, the print media in Estonia is showing
continued viability and increased revenue from last year. The latter is
attributable to new products in our portfolio and additional products targeted
at subscribers and retail consumer such as books or special magazine issues.
The growth in the print media is mainly being driven by subscription and
single-copy sales although average circulations are decreasing. The printing
services segment continues to stagnate, with strong price pressure decreasing
revenue by 1% and lowering profitability. We were more optimistic when
preparing the budget which is why the yearly consolidated revenue and EBITDA of
the Group as compared to the budget were 5% below expectations. The above
figures include all our joint ventures (AS SL Õhtuleht, AS Ajakirjade
Kirjastus, AS Express Post and OÜ Linna Ekraanid) consolidated 50%
line-by-line. 

The management proposes to pay dividends for 2016 six euro cents per share in
total amount EUR 1.8 million. 

The revenue of the media segment reached EUR 42.2 million, having increased 6%
in a year, whereas revenue from digital and online channels was up 12%. EBITDA
amounted to EUR 4.8 million which was 3% lower than the year before, but
exceeded the budget by 7%. The priorities of the media segment continue to be
innovation in developing various products and technical platforms. In all three
countries, we launched new topical portals, carried out several new multimedia
projects, developed e-commerce services and different advertising sales
channels and implemented new solutions for target groups. We remain active also
in the social media. A major emphasis is on web-based TV production and
broadcasting. Since 2016, the apps of our international brand Delfi TV are
available for Android TV and Apple TV. In addition, web TV can be watched also
traditionally, for instance as a client of Starman or Levira Hybrid TV. One
should also mention active development for mobile telephones that have almost
become the main channel for consuming news. Delfi and our classical newspaper
brands are here clearly market leaders in innovation. 

A major surprise was the strong performance of Delfi Latvia that has built
momentum in recent years, increasing revenue 10% to EUR 3.4 million and EBITDA
by 37% to EUR 413 thousand. This was achieved in spite of the exit of a
long-term sales manager and part of the sales team in September and tough
competition between online portals. In a year, Delfi Latvia has launched and
tested several new products and has been kind of a start-up incubator. In July
we acquired www.atverskapi.lv, the leading classified portal in its niche in
Latvia. The editorial office continues to focus on publishing more long-read
analytical articles and carrying out media projects, as reflected in our
readership and recognised by press awards. 

In a year, the revenue of Ekspress Meedia increased 5% and amounted to more
than EUR 19.1 million. This includes 13% growth in Delfi online and newspaper
digital revenue, totalling EUR 7.3 million. Print advertising grew 3%. This was
achieved mainly as a result of focusing on the efficiency of the sales team,
the increasingly versatile portfolio and innovative approach. Press
subscriptions and single copy sales revenue increased 1% from the previous
year, and the number of digital subscriptions is up by about 30% thanks to
different cooperation projects. We constantly invest in new products and IT
solutions. We also invest in our staff to enable them to increase the quality
of journalism. This explains why the company’s EBITDA was 24% lower than a year
earlier. The annual result was also affected by the growth in print and
delivery costs, resulting from the increase in advertising sales volumes. 

Delfi Lithuania is growing more modestly, but consistently. The company’s
revenue increased 4% to EUR 8.6 million. The growth of online advertising
revenue was 9%. EBITDA increased 9% totalling EUR 1.7 million. This result can
be considered positive in all aspects, especially in the light of the very
disappointing first quarter. Thanks to persistent work, Lithuania has become a
clear market leader in mobile platforms where we were losing out to competition
in earlier years. Online continues to grow, but magazine circulations, print
advertising and distribution costs decrease at a stable rate. 

The revenue and profit growth of Ajakirjade Kirjastus, respectively 10% and
39%, is mainly attributable to the expansion in our product portfolio in April
when we acquired Estonia’s largest women’s weekly Naisteleht as well as
magazines Nipiraamat and Müstiline Ajalugu. As a result of the transaction, we
merged the newly acquired weekly Naisteleht with the existing magazine Naised
and reached significant synergies, giving a boost to both revenue and profit.
In addition, we continue to organise events and courses by using our brands in
order to build brands, offer additional value to subscribers and help to
increase revenue. The revenue of Ajakirjade Kirjastus for the year totalled EUR
9.5 million and EBITDA was EUR 1.1 million, of which half is recognized in the
consolidated figures of the Ekspress Group. 

This year SL Õhtuleht has been in the winds of change. There have been changes
in the team, organizational and management structure. We have invested in
increasing the efficiency of advertising sales, modernization of the company
and development of new products. All this has helped to make Õhtuleht the
newspaper with the largest circulation in weekdays, keep the level of
subscribers and single-copy sales high and increase advertising revenue. The
number of digital subscribers has more than tripled as compared to the start of
the year. The revenue of SL Õhtuleht increased 4% in a year and amounted to EUR
8.7 million. EBITDA amounted to EUR 0.8 million and was 23% lower than in the
previous year. Half of this is reflected in the consolidated figures of the
Ekspress Group. 

It was another difficult year in the printing services segment. The revenue of
Printall decreased 1% from the year before and amounted to EUR 25.6 million.
EBITDA remained 6% below last year’s level and amounted to EUR 4.6 million. The
number of orders and work volume keeps increasing, but price pressure is
dampening revenue growth and increased volume is pushing up labour costs.
Despite the tough market situation, persistent and aggressive marketing has
helped us to attract new products and customers in Scandinavia, improved our
price level in the second half of the year and attracted recognition also in
printing sectors outside periodicals. This enables to expand the B2B segment
that produces for own use product catalogues and other specific products that
are suitable for our sheet-fed printing machines. In the last year, Printall
has been transforming from a large and elite plant to wide-based tool for
promoting communication. The situation on the printing services market in 2017
is not expected to improve. 

In July we signed a contract to acquire a 50% holding in OÜ Linna Ekraanid,
which is engaged in the sale of digital outdoor advertising in Estonia. In
September we acquired 49% holding in Babahh Media OÜ which is engaged in the
video production, media solutions and streaming related infrastructure sales in
Estonia. In the second quarter of 2019 we will acquire the remaining 50% of OÜ
Linna Ekraanid, and thereby will become the company’s sole shareholder. The
purpose of the acquisition is to create preconditions for the Group to set off
a new business line and thereby expand the Group’s portfolio of business areas.
The objective of AS Ekspress Grupp is to develop the business line of digital
outdoor advertising in all three Baltic countries and take the leading role in
this business segment. With regard to Babahh Media OÜ, the Group has an option
to acquire an additional ownership in Babahh Media OÜ in 2021, thereby AS
Ekspress Grupp would increase its ownership in Babahh Media OÜ to 70% in total.
The purpose of the acquisition is to expand the business of AS Ekspress Grupp
in the fast-growing market of online video production and video streaming. The
acquisition of Babahh Media OÜ also helps to supplement the video production
portfolio of our Delfis in all our markets through wide-based knowledge. 

The financial position of the Group has strengthened notably during the year.
As at the end of the year, the ratio of total debt to EBITDA was below 2.0,
which according to the syndicate loan contract means a lower interest margin
and enables even more aggressively to invest with the help of loan capital. The
debt service coverage ratio is almost 2.8. 

For the first time the Group has prepared a corporate social responsibility
report, the results and summaries have been added to the respective subsections
of the management report. 

Despite the challenging situation in the media landscape, we are looking
forward to the next year with excitement, especially because of several
personnel changes in the Group at the start of the year. On January 1,
Mari-Liis Rüütsalu who has earlier management experience from Delfi Estonia and
Ekspress Meedia took office as the new Group CEO. New managers, all of whom
were promoted from within the Group, started also in Ekspress Meedia,
Ajakirjade Kirjastus and SL Õhtuleht. 

In financial terms we expect the revenue of the media segment to increase 4-5%
and EBITDA to grow, assisted by acquisitions made in 2016. In the printing
services segment we will try to maintain this year’s revenue level in spite of
price pressure. In a more optimistic outlook we hope that the profit growth of
the media segment will cover the decrease in EBITDA in the printing services
segment. This means that the share of media and online activities in the Group
revenue and profit will grow. However, a significantly more negative background
of the external environment may lower EBITDA of the printing services segment
by 10-15%, which in turn would mean that in consolidated terms, the revenue
would grow by about 4%, but EBITDA would decrease by about the same percentage. 

Our ambition remains to offer new and interesting experiences both on paper and
in digital media, without ever compromising on news quality, choice of topics
and journalistic objectivity. 

The Group’s goal is to be a truly modern media group with a strong foothold in
all markets where actively present, with a leading position in online media. 

In consolidated financial reports 50% joint ventures are recognised under the
equity method, in compliance with international financial reporting standards
(IFRS). In its monthly reports, the management monitors the Group’s performance
on a basis of proportional consolidation of joint ventures and the syndicated
loan contract also determines the calculation of some loan covenants by
proportional consolidation. For the purpose of clarity, the management report
shows two sets of indicators: one where joint ventures are consolidated
line-by-line 50% and the other where joint ventures are recognised under the
equity method and their net result is presented as financial income in one
line. 

FINANCIAL INDICATORS AND RATIOS – joint ventures consolidated 50% line-by-line

Performance indicators – joint      2016    2015  Change    2014    2013    2012
 ventures consolidated 50% (EUR                      %                          
 thousand)                                                                      
Sales revenue                     62 793  61 528      2%  61 384  58 427  59 706
EBITDA                             8 487   7 869      8%   8 878   7 264   7 882
EBITDA margin (%)                  13.5%   12.8%           14.5%   12.4%   13.2%
Operating profit*                  5 221   4 866      7%   5 638   4 647   4 596
Operating margin* (%)               8.3%    7.9%            9.2%    8.0%    7.7%
Interest expenses                  (518)   (618)     16%   (732)   (763)      (1
                                                                            549)
Profit for the period*             4 406   3 907     13%   4 620   3 548   2 682
Net margin* (%)                     7.0%    6.4%            7.5%    6.1%    4.5%
Net profit for the period in the   4 406   2 707     63%   5 110   1 081   2 525
 financial statements                                                           
(incl. impairments and gain on                                                  
 change of ownership interest)                                                  
Net margin (%)                      7.0%    4.4%            8.3%    1.9%    4.2%
Return on assets ROA (%)            5.8%    3.5%            6.6%    1.4%    3.2%
Return on equity ROE (%)            8.9%    5.6%           11.4%    2.5%    6.4%
Earnings per share (EPS)            0.15    0.09            0.17    0.04    0.08



* The results reflect the outcome of regular business activities and do not
include impairment losses on goodwill, profit arised from the changes in
ownership interests in our joint ventures etc. 





Balance       31.12.2016  31.12.2015  Change  31.12.2014  31.12.2013  31.12.2012
 sheet –                                   %                                    
 joint                                                                          
 ventures                                                                       
 consolidate                                                                    
d 50% (EUR                                                                      
 thousand)                                                                      
At the end                                                                      
 of the                                                                         
 period                                                                         
Current           16 251      15 553      4%      15 189      14 447      13 545
 assets                                                                         
Non-current       61 506      61 588      0%      65 665      63 019      66 754
 assets                                                                         
Total assets      77 757      77 141      1%      80 854      77 466      80 299
incl. cash         4 572       4 666     -2%       6 788       4 501       3 280
 and bank                                                                       
incl.             38 904      38 232      2%      39 432      40 052      41 093
 goodwill                                                                       
Current           12 222      12 539     -3%      14 110      14 468      14 967
 liabilities                                                                    
Non-current       14 462      15 928     -9%      19 569      20 673      24 233
 liabilities                                                                    
Total             26 684      28 467     -6%      33 679      35 141      39 200
 liabilities                                                                    
incl.             16 603      18 787    -12%      24 592      24 432      28 580
 borrowings                                                                     
Equity            51 073      48 674      5%      47 175      42 325      41 099







Financial ratios (%)        31.12.201  31.12.201  31.12.201  31.12.20  31.12.201
– joint ventures                6          5          4         13         2    
 consolidated 50%                                                               
--------------------------------------------------------------------------------
Equity ratio (%)               66%        63%        58%        55%       51%   
---------------------------                                           ----------
Debt to equity ratio (%)       33%        39%        52%        58%       70%   
---------------------------                                           ----------
Debt to capital ratio (%)      19%        22%        27%        32%       38%   
---------------------------                                           ----------
Total debt/EBITDA ratio        1.96       2.39       2.61      3.36       3.63  
---------------------------                                           ----------
Debt service coverage          2.75       1.79       1.90      1.66       1.52  
 ratio                                                                          
---------------------------                                           ----------
Liquidity ratio                1.33       1.24       1.08      1.00       0.90  
--------------------------------------------------------------------------------





FINANCIAL INDICATORS AND RATIOS – joint ventures recognised under the equity
method 

Performance indicators – joint      2016    2015  Change    2014    2013    2012
 ventures by the equity method                       %                          
 (EUR thousand)                                                                 
Sales revenue (only               53 324  52 773      1%  52 793  50 086  51 290
 subsidiaries)                                                                  
EBITDA (only subsidiaries)         7 280   6 680      9%   7 894   6 591   7 345
EBITDA margin (%)                  13.7%   12.7%           15.0%   13.2%   14.3%
Operating profit* (only            4 328   3 920     10%   4 973   4 071   4 173
 subsidiaries)                                                                  
Operating margin* (%)               8.1%    7.4%            9.4%    8.1%    8.1%
Interest expenses (only            (471)   (550)     14%   (689)   (763)      (1
 subsidiaries)                                                              550)
Profit of joint ventures by          772     785     -2%     557     494     339
 equity method                                                                  
Profit for the period*             4 406   3 907     13%   4 621   3 548   2 682
Net margin* (%)                     8.3%    7.4%            8.8%    7.1%    5.2%
Net profit for the period in the   4 406   2 707     63%   5 110   1 081   2 525
 financial statements                                                           
(incl. impairments and gain on                                                  
 change of ownership interest)                                                  
Net margin (%)                      8.3%    5.1%            9.7%    2.2%    4.9%
Return on assets ROA (%)            6.1%    3.7%            6.8%    1.4%    3.2%
Return on equity ROE (%)            8.9%    5.6%           11.4%    2.5%    6.4%
Earnings per share (EPS)            0.15    0.09            0.17    0.04    0.08



* The results reflect the outcome of regular business activities and do not
include impairment losses on goodwill, profit arised from the changes in
ownership interests in our joint ventures etc. 



Balance       31.12.2016  31.12.2015  Change  31.12.2014  31.12.2013  31.12.2012
 sheet–                                  %                                      
 joint                                                                          
 ventures by                                                                    
 equity                                                                         
 method (EUR                                                                    
 thousand)                                                                      
As at the                                                                       
 end of the                                                                     
 period                                                                         
Current           13 094      12 386      6%      12 303      11 357      10 747
 assets                                                                         
Non-current       61 074      60 794      0%      64 292      63 899      67 470
 assets                                                                         
Total assets      74 168      73 180      1%      76 595      75 256      78 217
incl. cash         2 856       2 927     -2%       5 275       2 209       1 291
 and bank                                                                       
incl.             36 953      36 953      0%      38 153      39 596      40 637
 goodwill                                                                       
Current            9 591       9 033      6%      11 481      12 259      12 885
 liabilities                                                                    
Non-current       13 504      15 473    -13%      17 939      20 672      24 233
 liabilities                                                                    
Total             23 095      24 506     -6%      29 420      32 931      37 118
 liabilities                                                                    
incl.             15 784      17 687    -11%      23 152      24 432      28 580
 borrowings                                                                     
Equity            51 073      48 674      5%      47 175      42 325      41 099







Financial ratios (%)        31.12.201  31.12.201  31.12.201  31.12.20  31.12.201
– joint ventures by the         6          5          4         13         2    
 equity method                                                                  
Equity ratio (%)               69%        67%        62%        56%       53%   
Debt to equity ratio (%)       31%        36%        49%        58%       70%   
Debt to capital ratio (%)      20%        23%        27%        34%       40%   
Total debt / EBITDA ratio      2.17       2.65       2.93      3.71       3.89  
Debt service coverage          2.67       1.67       1.77      1.50       1.36  
 ratio                                                                          
Liquidity ratio                1.37       1.37       1.07      0.93       0.83  







Formulas used to calculate the financial ratios                                 
EBITDA       Earnings before interest, tax, depreciation and amortization.      
              EBITDA does not include any impairment  losses recognized during  
              the period or result from restructuring.                          
EBITDA       EBITDA/sales x 100                                                 
 margin (%)                                                                     
Operating    Operating profit*/sales x100                                       
 margin*                                                                        
 (%)                                                                            
Net margin*  Net profit*/sales x100                                             
 (%)                                                                            
Net margin   Net profit /sales x100                                             
 (%)                                                                            
Earnings     Net profit / average number of shares                              
 per share                                                                      
Equity       Equity/ (liabilities + equity) x100                                
 ratio (%)                                                                      
Debt to      Interest bearing liabilities /equity x 100                         
 equity                                                                         
 ratio (%)                                                                      
Debt to      Interest bearing liabilities – cash and cash equivalents (net debt)
 capital      /(net debt +equity) x 100                                         
 ratio (%)                                                                      
Total        Interest bearing borrowings /EBITDA                                
 debt/EBITD                                                                     
A ratio                                                                         
Debt         EBITDA/loan and interest payments for the period                   
 service                                                                        
 coverage                                                                       
 ratio                                                                          
Liquidity    Current assets / current liabilities                               
 ratio                                                                          
Return on    Net profit /average assets x 100                                   
 assets ROA                                                                     
 (%)                                                                            
Return on    Net profit /average equity x 100                                   
 equity ROE                                                                     
 (%)                                                                            



* The results reflect the outcome of regular business activities and do not
include impairment losses on goodwill, profit arised from the changes in
ownership interests in our joint ventures etc. 

Cyclicality

All operating areas of the Group are characterised by cyclicality and
fluctuation, related to the changes in the overall economic conditions and
consumer confidence. The Group’s revenue can be adversely affected by an
economic slowdown or recession in home and export markets. It can appear in
lower advertising costs in retail, preference of other advertising channels
like preference of internet rather than print media and changes in consumption
habits of retail consumers e.g. following current news in news portals versus
reading printed newspapers, preference of the younger generation to use mobile
devices and other communication channels, etc. 

Seasonality

The revenue from the Group’s advertising sales as well as in the printing
services segment is impacted by major seasonal fluctuations. The level of both
types of revenue is the highest in the 2nd and 4th quarter of each year and the
lowest in the 3rd quarter. Revenue is higher in the 4th quarter because of
higher consumer spending during the Christmas season, accompanied by the
increase in advertising expenditure. Advertising expenditure is usually the
lowest during the summer months, as well as during the first months of the year
following Christmas and New Year’s celebrations. Book sales are the strongest
in the last quarter of the year. Subscriptions and retail sales of periodicals
do not fluctuate as much as advertising revenue. However the summer period is
always more quiet and at the beginning of the school year in September there is
an increase in subscriptions and retail sale which usually continues until next
summer holiday period. 

SEGMENT OVERVIEW

Key financial data of the segments 2012-2016

The Group’s activities are divided into two large segments - media segment and
printing services segment. Last year, there was also an entertainment segment. 

The segments’ EBITDA does not include intragroup management fees, impairment of
goodwill and trademarks. Volume-based and other fees payable to advertising
agencies have not been deducted from the advertising sales of segments, because
the management monitors gross advertising sales. Discounts and rebates are
reduced from the Group’s sales and are included in the combined line of
eliminations. 





(EUR thousand)                        Sales                      Sales          
                                2016     2015  Change     2014     2013     2012
                                                  %                             
media segment (by equity      31 579   30 063      5%   27 459   25 842   25 562
 method)                                                                        
incl. revenue from all        17 269   15 555     11%   13 449   11 595   10 561
 digital and online                                                             
 channels                                                                       
printing services             25 585   25 842     -1%   28 951   27 462   29 167
entertainment segment              0      517   -100%        0        0        0
corporate functions            2 233    1 937     15%    1 731    1 530      996
intersegment eliminations    (6 073)  (5 586)     -9%  (5 347)  (4 748)  (4 435)
TOTAL GROUP by equity         53 324   52 773      1%   52 793   50 086   51 290
 method                                                                         
media segment by              42 229   39 943      6%   36 930   34 955   34 773
 proportional consolidation                                                     
incl. revenue from all        18 574   16 619     12%   14 306   12 226   11 147
 digital and online                                                             
 channels                                                                       
printing services             25 585   25 842     -1%   28 951   27 462   29 167
entertainment segment              0      517   -100%        0        0        0
corporate functions            2 233    1 937     15%    1 731    1 530      996
intersegment eliminations    (7 254)  (6 711)          (6 228)  (5 520)  (5 230)
TOTAL GROUP by proportional   62 793   61 528      2%   61 384   58 427   59 706
 consolidation                                                                  







(EUR thousand)                           EBITDA                   EBITDA        
                                  2016     2015  Change     2014     2013   2012
                                                    %                           
media segment by equity method   3 572    3 724     -4%    3 025    2 123  2 089
media segment by proportional    4 779    4 913     -3%    4 013    2 792  2 624
 consolidation                                                                  
printing services                4 645    4 966     -6%    5 944    5 862  6 052
entertainment segment              (2)  (1 110)    100%        0        0      0
corporate functions              (936)    (899)     -4%  (1 076)  (1 356)  (797)
intersegment eliminations            0        0    -65%        0     (38)      1
TOTAL GROUP by equity method     7 280    6 680      9%    7 894    6 591  7 345
TOTAL GROUP by proportional      8 487    7 869      8%    8 878    7 264  7 882
 consolidation                                                                  







EBITDA margin                                2016  2015  2014  2013  2012
media segment by equity method                11%   12%   11%    8%    8%
media segment by proportional consolidation   11%   12%   11%    8%    8%
printing services                             18%   19%   21%   21%   21%
TOTAL GROUP by equity method                  14%   13%   15%   13%   14%
TOTAL GROUP by proportional consolidation     14%   13%   15%   12%   13%



MEDIA SEGMENT

The media segment includes Delfi operations in wholly-owned subsidiaries in
Estonia, Latvia and Lithuania, publishing of Estonian newspapers Maaleht, Eesti
Ekspress and Eesti Päevaleht, book publishing in Estonia, magazine publishing
in Lithuania, activities of the retail offer portal Zave and holding company
Delfi Holding. This segment also includes 50% joint ventures AS SL Õhtuleht
(publisher of Õhtuleht and Linnaleht), magazine publisher AS Ajakirjade
Kirjastus, home delivery company AS Express Post and, since the summer 2016, OÜ
Linna Ekraanid, engaged in sale of digital outdoor advertising. 

In July 2015 AS Delfi and newspaper publisher AS Eesti Ajalehed were merged in
Estonia. New company continued to operate under name of AS Ekspress Meedia. A
year earlier Delfi UAB and magazine publisher Ekspress Leidyba UAB were merged
in Lithuania. In Lithuania mergered entity continued under name of Delfi. 

News portals owned by the Group



Owner            Portal        Owner            Portal         
Ekspress Meedia  www.delfi.ee  Ekspress Meedia  www.ekspress.ee
                 rus.delfi.ee                   www.maaleht.ee 
Delfi Latvia     www.delfi.lv                   www.epl.ee     
                 rus.delfi.lv                                  
Delfi Lithuania  www.delfi.lt  AS SL Õhtuleht   www.ohtuleht.ee
                 ru.delfi.lt                    www.vecherka.ee







(EUR thousand)                                                  Sales           
                                                        2016     2015  Change  %
Ekspress Meedia AS (Delfi Estonia + Eesti Ajalehed)   19 116   18 248         5%
incl. Delfi Estonia online revenue                     6 728    5 931        13%
Delfi Latvia                                           3 375    3 066        10%
Delfi Lithuania (incl. magazine publishing)            8 563    8 230         4%
incl Delfi Lithuania online revenue                    6 602    6 051         9%
Hea Lugu OÜ                                              538      651       -17%
Zave Media OÜ                                              1        5       -77%
Other companies (Delfi Holding)                            -        -          -
Intersegment eliminations                               (14)    (136)        89%
TOTAL subsidiaries                                    31 579   30 063         5%
SL Õhtuleht AS*                                        4 329    4 154         4%
Ajakirjade Kirjastus AS*                               4 765    4 347        10%
Express Post AS*                                       2 609    2 477         5%
Linna Ekraanid OÜ*                                       166        -          -
Intersegment eliminations                            (1 219)  (1 099)       -11%
TOTAL joint ventures                                  10 651    9 879         8%
TOTAL segment by proportional consolidation           42 229   39 943         6%







(EUR thousand)                                               EBITDA        
                                                      2016   2015  Change %
Ekspress Meedia AS (Delfi Estonia + Eesti Ajalehed)  1 448  1 899      -24%
Delfi Latvia                                           413    301       37%
Delfi Lithuania (incl. magazine publishing)          1 741  1 590        9%
Hea Lugu OÜ                                             33     91      -64%
Zave Media OÜ                                         (61)  (147)       59%
Other companies (Delfi Holding)                        (2)    (9)       78%
Intersegment eliminations                              (0)    (1)         -
TOTAL subsidiaries                                   3 572  3 724       -4%
SL Õhtuleht AS*                                        394    508      -23%
Ajakirjade Kirjastus AS*                               544    392       39%
Express Post AS*                                       247    289      -14%
Linna Ekraanid OÜ*                                      22      -         -
Intersegment eliminations                                0      0      118%
TOTAL joint ventures                                 1 207  1 189        2%
TOTAL segment by proportional consolidation          4 779  4 913       -3%



* Proportional share of joint ventures



ONLINE MEDIA and DELFI

As a market leader Delfi continues to invest into new technologies and IT
solutions to improve user experience of its readers and advertisers. This year
Delfi mobile application for IOS and Android devices and m.delfi environment
were renewed together with more functionality. New feature zlick was introduced
enabling to purchase paid content with 0-click. Ad-free Delfi solution for
mobile phones where users can remove all ads from the Delfi environment for a
monthly fee was introduced. Since 2016 Delfi app is available for Apple TV and
Sony Android TV users. The clients of Levira and Starman in Estonia are able to
watch Delfi TV broadcasts and programmes traditionally on television screens. 

In Lithuania, Delfi was the first publisher that introduced Facebook messenger
bots. Delfi was also the first in Lithuania to use Facebook Live streaming. Of
pan-Baltic developments, the solution to use Facebook Instant Article was
completed. 

Starting from 2016, our advertising sales departments offer in addition to
online advertising in our own portals also the possibility to buy advertising
in other local or international channels. We also offer to our customers a full
advertising service from the idea to execution including booking media space
and provide programmatic advertising solutions. 

The range of vertical products continues to expand. This year, Delfi Estonia
launched www.kinoveeb.ee dedicated to the film art and www.homme.ee that is
targeted at men and refers to a supplement of newspaper Eesti Ekpress. Delfi
Latvia launched an esoterics portal www.orakuls.lv and two video sub-verticals
www.retvplay.lv and www.360play.lv. In Lithuania, in cooperation with the
Lithuanian Marketing Association (LiMA), a new unique website for marketing
professionals was launched that aims to promote communication between them.
Delfi FIT, a Delfi subsite that is promoting healthy lifestyle, was launched 
in cooperation with the Lithuanian Basketball Federation. Also portal
www.busiumama.lt, a portal targeted at expecting mothers, and a new Delfi
subsite Delfi Style, were launched. The National Basketball Association (NBA)
and DELFI Lithuania announced a new multiyear partnership that includes plans
to launch www.nba.com/Lithuania, the NBA’s new official online destination in
Lithuania. 

Delfi Lithuania continues developing the classified portal www.alio.lt. In
July, Delfi Latvia acquired a specialized classified portal www.atverskapi.lv.
As a new e-commerce service, www.tobook.lv  was launched in Latvia that gathers
different beauty saloons and possibility of making reservations on-line. 

In all three Baltic countries the focus is on writing more long-read analytical
articles in order to increase the value of Delfi to users. In Estonia this is
being provided in co-operation with editorial teams of our daily and weekly
newspapers Eesti Päevaleht, Eesti Ekspress and Maaleht. 

A lot of attention is being paid on socially responsible behaviour and to
supporting various charity projects, cultural, sport, social and business
events in all Baltic countries. 

Estonian online readership 2015-2016

In the first quarter of 2016, Postimees merged two classified portals www.kv.ee
and www.osta.ee owned by Eesti Meedia into its postimees.ee domain. This
increased the number of users of Postimees.ee by 17%. 



In the third quarter of 2016, Gemius changed the methodology of the online
readership survey in Estonia, Latvia and Lithuania, as a result of which the
readership of mobile devices and tablet PCs was added to the above readership
of computer users. As a result of the change of methodology that was made in
September, the total number of computer users in Estonia fell by 11%. The
number of computer users of Postimees.ee decreased less than that of computers
users of Delfi. Competition between Delfi and Postimees remains active. In
spite of changes in methodology, the readership of Õhtuleht has been very
stable. Starting from the summer of 2016, the Gemius survey also shows separate
readership in mobile devices and tablet PCs. 



Latvian online readership 2015-2016

At the beginning of 2016, the research company Gemius changed its method of
online surveys, and, as a result, the online readership figure decreased in
February. This figure shows only the online readership of PC users. Inbox.lv
remains Latvia’s largest portal among PC users. Contrary to expectations, Inbox
increased its readership at the end of the year, especially in mobile devices.
The readership of Delfi.lv as compared to tvnet.lv is practically unchanged.
The number of mobile users continues to grow. The local social network
draugiem.lv steadily continues to lose users to Facebook. As in other Baltic
countries, the main competition in Latvia is for attracting new mobile users. 

Lithuanian online readership 2015-2016

Delfi.lt remains Lithuania’s largest online portal. In the third quarter 2016,
15min.lt added several portals that do not belong to this media group, which is
why the readership of the 15min.lt domain increased in the fourth quarter of
2016. This growth does not mean growth in readership of media services and
therefore does not mean that the market situation of 15min.lt has improved. TV3
and Lrytas.lt are competing for the third place. As in other markets,
development and marketing activities in Lithuania are focused on increasing the
number of mobile users. In this segment, Delfi has notably increased its
readership. 



PRINT MEDIA



Estonian newspaper circulation 2015-2016



Circulations of newspapers in Estonia have been falling moderately in the long
run. In the fourth quarter 2016 there was a significant change in the
circulations of paper versions of newspapers in Estonia. For three months,
Õhtuleht has been the newspaper with the largest circulation in Estonia and
Postimees has fallen to the second place. In December, Postimees fell to the
third place because, traditionally, Maaleht gained considerably in December.
The circulation of Päevaleht has somewhat decreased in 2016, but the growth in
the number of digital subscribers of Päevaleht has been much quicker than the
decrease in the circulation of the paper version of the newspaper. 



Estonian newspaper readership 2015-2016

Similarly to the circulation of newspapers, the readership of publications also
remained relatively stable in 2016. As compared to the fourth quarter 2015, the
readership of Eesti Ekspress and Eesti Päevaleht increased, while that of
Postimees and Õhtuleht decreased. As this survey does not cover the readership
of digital newspapers, it does not represent the total readership. The number
of digital subscriptions of periodicals of Ekspress Group amounts to ca 50
thousand. Increasing the readership of digital newspapers remains the main task
for the Group’s publications. 



MEDIA AWARDS in 2016

Professionalism, ambition and dedication of journalists of Ekspress Group is
outstanding and their work has won many awards. In ensuring the sustainability
of free and strong press, the organisation and the employees consider real and
positive social impact of their work more important than the prize. 

Press awards of the Estonian Newspaper Association

  -- Winner of investigative journalism aka the Bonnier Award: Tuuli Jõesaar
     (Eesti Päevaleht) with her stories on parents who feed toxic chlorine
     dioxide to their children (so-called MMS scandal).

  -- Winner of Lifetime Achievement Award (first issued in 2016): senior
     journalist and journalism lecturer Priit Hõbemägi.

  -- Winner of Young Journalist Award: Urmas Jaagant (Eesti Päevaleht).

  -- Winners of Video Award: Tiit Blaat and Kairi Prints with a video story of a
     man who lives in a tree in Lasnamäe.

  -- Winner of Web Design Award: Eesti Ekspress.

Awards of the Latvian Press Association

  -- Delfi Latvia won the Latvian Press Association's Excellence Award 2015 for
     the multimedia project "#10memories".
  -- In 2016 Delfi Latvia won The Most Influential Brand in Social Media Award.

Awards in Lithuania

  -- Delfi Sports was awarded a special prize for the best media outlet in
     Lithuania during "Lithuanian Sports Management Awards 2016".

PRINTING SERVICES SEGMENT



All printing services of the Group are provided by AS Printall which is one of
the largest printing companies in Estonia. We are able to print high-quality
magazines, newspapers, advertising materials, product and service catalogues,
paperback books and other publications in our printing plant. The new printing
machine installed in 2015 has enabled us to further expand the range of printed
products. 





(EUR thousand)           Sales          
                  2016    2015  Change %
AS Printall     25 585  25 842       -1%







(EUR thousand)          EBITDA        
                 2016   2015  Change %
AS Printall     4 645  4 966       -6%





The printing services segment continues to be impacted by the economic
sanctions imposed towards Russia, the negative impact of which on the
Scandinavian printing industry also impacts us. The production volume of
Printall continues to increase, but the price pressure is still strong due to
the production capacity which has become available in Scandinavia. The sales
keep increasing, however the profit margin continues to fall due to lower
prices. 

Consolidated balance sheet

(EUR thousand)                 31.12.2016  31.12.2015
ASSETS                                               
Current assets                                       
Cash and cash equivalents           2 805       2 927
Term deposits                          51           0
Trade and other receivables         7 468       6 741
Inventories                         2 770       2 718
Total current assets               13 094      12 386
Non-current assets                                   
Trade and other receivables           982       1 149
Deferred tax asset                     34          42
Investments in joint ventures       2 435       1 007
Investments in associates             591         215
Property, plant and equipment      12 722      13 791
Intangible assets                  44 310      44 590
Total non-current assets           61 074      60 794
TOTAL ASSETS                       74 168      73 180
LIABILITIES                                          
Current liabilities                                  
Borrowings                          2 313       2 240
Trade and other payables            7 170       6 679
Corporate income tax payable          108         114
Total current liabilities           9 591       9 033
Non-current liabilities                              
Long-term borrowings               13 471      15 447
Deferred tax liability                 33          26
Total non-current liabilities      13 504      15 473
TOTAL LIABILITIES                  23 095      24 506
EQUITY                                               
Share capital                      17 878      17 878
Share premium                      14 277      14 277
Treasury shares                     (863)       (176)
Reserves                            2 058       1 787
Retained earnings                  17 723      14 908
TOTAL EQUITY                       51 073      48 674
TOTAL LIABILITIES AND EQUITY       74 168      73 180

Consolidated statement of comprehensive income

(EUR thousand)                                                    2016      2015
Sales revenue                                                   53 324    52 773
Cost of sales                                                 (42 122)  (41 781)
Gross profit                                                    11 202    10 992
Other income                                                     1 085       659
Marketing expenses                                             (2 488)   (2 377)
Administrative expenses                                        (5 357)   (5 236)
Other expenses                                                   (114)     (118)
Impairment of goodwill                                               0   (1 200)
Operating profit                                                 4 328     2 720
Interest income                                                     32        42
Interest expense                                                 (471)     (550)
Foreign exchange gains (losses)                                   (10)       (6)
Other finance costs                                               (56)      (71)
Net finance cost                                                 (505)     (585)
Profit (loss) on shares of joint ventures                          772       785
Profit (loss) from investments in associates                       113        86
Profit before income tax                                         4 708     3 006
Income tax expense                                               (302)     (299)
Profit for the reporting period                                  4 406     2 707
Net profit for the reporting period attributable to:                            
Equity holders of the parent company                             4 406     2 707
Other comprehensive income                                           0         0
Total other comprehensive income for the period                  4 406     2 707
Comprehensive income for the reporting period attributable                      
 to:                                                                            
Equity holders of the parent company                             4 406     2 707
Basic and diluted earnings per share                              0.15      0.09

Consolidated cash flow statement

(EUR thousand)                                                     2016     2015
Cash flows from operating activities                                            
Operating profit for the reporting year                           4 328    2 720
Adjustments for:                                                                
Depreciation, amortisation and impairment                         2 953    2 760
Loss on trademark and goodwill impairment                             0    1 200
(Gain)/loss on sale and write-down of property, plant and            37      (4)
 equipment                                                                      
Change in value of share option                                     136       91
Cash flows from operating activities:                                           
Trade and other receivables                                       (709)    (191)
Inventories                                                        (53)    (645)
Trade and other payables                                            484      361
Cash generated from operations                                    7 175    6 292
Income tax paid                                                   (293)    (118)
Interest paid                                                     (519)    (525)
Net cash generated from operating activities                      6 363    5 649
Cash flows from investing activities                                            
Term deposit (placement)/release                                      0    1 600
Acquisition of joint ventures                                     (868)        0
Acquisition of associate                                          (311)        0
Purchase and receipts of other investments                            5     (50)
Interest received                                                    32       33
Purchase of  property, plant and equipment                      (1 335)  (1 575)
Proceeds from sale of property, plant and equipment                  39       33
Loans granted                                                      (25)        0
Loan repayments received                                            175       74
Net cash used in investing activities                           (2 289)      115
Cash flows from financing activities                                            
Dividends paid                                                  (1 456)  (1 187)
Dividend received from joint ventures                               246      278
Finance lease repayments                                           (72)     (89)
Change in use of overdraft                                            0  (1 117)
Loan received                                                        11      687
Repayments of bank loans                                        (2 186)  (4 952)
Purchase of treasury shares                                       (687)    (112)
Net cash used in financing activities                           (4 144)  (6 492)
NET (DECREASE)/INCREASE IN CASH AND CASH EQUIVALENTS               (71)    (729)
Cash and cash equivalents at the beginning of the year            2 927    3 656
Cash and cash equivalents at the end of the year                  2 856    2 927




         Additional information:
         Mari-Liis Rüütsalu
         Chairman of the Management Board
         GSM: +372 512 2591
         e-mail: [email protected]