Market announcement

Title

AS Ekspress Grupp: Consolidated Interim Report for the Second Quarter and First Half-Year of 2017

Message

Tallinn, Estonia, 2017-07-31 15:20 CEST (GLOBE NEWSWIRE) --


The 2nd quarter of 2017 brought no major surprises for the Group. Competition
remains intense both in the media as well as printing services segment and the
Group is confronted with new trends and consumer preferences. It is necessary
to dare to experiment with new things. Such an approach will enable the Group
to increase its sales as well as EBITDA in the long term while leading to
higher costs and lower profitability in the short term. 



In the 2nd quarter, the Group’s consolidated revenue was slightly lower than in
the same period last year but over the first half-year we have managed to hold
on to last year’s level despite a significant decline in the sales of printing
services. In the 2nd quarter, the revenue totalled EUR 16.4 million and EBITDA
totalled EUR 1.2 million which is 6% lower than last year. Media segment and
especially online revenue increased considerably, but it still fails to offset
the declining revenue of the printing house. Such a decline in the revenue of
the printing services segment was to be expected and in a more optimistic
scenario we had hoped to offset it with the revenue growth of the media sector.
The Group’s net profit amounted to EUR 1.2 million which is nevertheless 8%
less than in the same period last year. In the first half-year, the net profit
remained at the same level as last year despite a decline in the revenue of
printing services and it totalled EUR 1.6 million. 



The online business of the media sector continues to demonstrate strong revenue
growth where revenue was 8% higher than a year earlier, totalling EUR 5.3
million and now accounting for 31% of the Group's total revenue. A special
mention should be given to Delfi Latvia and Delfi Lithuania which increased
their online revenue by 13% and 11%, respectively. We are also satisfied with
the stability of print media revenue in Estonia and interest of our paying
readers and their need for trustworthy news whether consumed on paper of
digitally. While the print advertising market is in a sharp downward trend
worldwide, the newspapers and magazines of Ekspress Group have greatly managed
to hold on to their level in Estonia. 



The above figures include the results of all our joint ventures (AS SL
Õhtuleht, AS Ajakirjade Kirjastus, AS Express Post and OÜ Linna Ekraanid)
consolidated 50% line-by-line. 



The printing services segment has been in a recession for several years,
accompanied by strong price competition, especially from printing houses in
Latvia and Lithuania that have reduced revenues and profitability. In the
printing services segment we are attracting new markets and clients in order to
overcome this recession. 



In the 2nd quarter, the revenue of the media segment increased by 2%, totalling
EUR 11.4 million.  EBITDA was EUR 1.4 million, which is the same as in the same
period last year. In the 2nd quarter, revenue growth was driven primarily by
Latvia and Lithuania. Competition is the strongest in Estonia, impacted in turn
by uncertainty of the advertising market. Despite this we continue with
innovation in developing various products and technical platforms as we
consider it to be driving force behind future success. In the online business,
traditional banner advertising continues to give way to more innovative
solutions, and more creative approaches also need to be found in paper. In the
online market, the consumers are using more mobile devices and our investments
into this business are continuous. 

We are glad to see strong growth in Delfi Latvia. In the 2nd quarter, the
revenue of Delfi Latvia increased by 13%, totalling EUR 1.0 million. EBITDA
increased by 39% and totalled over EUR 100 thousand. Delfi as the news portal
continues to be the market leader in Latvia in terms of internet users,
increasing its gap with its key competitor further, i.e. to 10.4%. 



The revenue of Ekspress Meedia decreased by 3% in the 2nd quarter and totalled
EUR 5.1 million, primarily attributable to the delayed launch of the new book
series “Eestile elatud elu“ (“Life lived to Estonia”) as compared to the series
launched last year. EBITDA decreased by 11% and was still in excess of EUR 400
thousand. The entire quarter is characterised by the instability of the
advertising market, evident both in the revenue of the online as well as print
advertising which remained at the same level as in the comparable period last
year. The number of digital subscribers increased by 6% as compared to the 1st
quarter and 42% as compared to the same period last year. New projects include
experience marketing events – a successful concert with Ott Lepland was held in
May and a reunion concert of Ruja to be held on the Song Festival Ground in
August. The latter business generates additional income and increases
profitability. 



The revenue of Delfi Lithuania increased in a more modest speed this quarter
than in the last one, but growth was still 7% and revenue totalled EUR 4.4
million. Online revenue increased by 11% and 20% in the first half-year. We are
especially pleased to see that most of the revenue growth has led to a profit,
as a result of which EBITDA totalled EUR 0.6 million which is 28% better than
in the same period last year. In the 2nd quarter, we managed to halt the
decline in the print media advertising revenue, however, the declining trend
has continued in subscription and retail sales. 

The revenue of Ajakirjade Kirjastus declined by 5% and totalled EUR 2.3
million. EBITDA reached over EUR 100 thousand. One half of it is reflected in
the consolidated figures of Ekspress Group, primarily attributable to the
complicated advertising market which also impacted other Estonian companies.
The result also includes investments into increasing the web team in order to
enter more aggressively to the Internet with its products and brands, similarly
to the movement of readers. The volume of books to be published has also
reduced which in turn has led to a decrease in revenue. 



SL Õhtuleht continued to successfully swim against the tide and it increased
its revenue in the 2nd quarter by 4% and EBITDA by 8%. The revenue in the 2nd
quarter totalled EUR 2.4 million and EBITDA totalled EUR 320 thousand. One half
of it is reflected in the consolidated figures of Ekspress Group. For the ninth
consecutive month, Õhtuleht is the daily newspaper with the largest circulation
in Estonia. The number of digital subscribers has increased by 34% since the
end of last year. 

A complicated situation continues in the printing services segment. The revenue
of Printall decreased by 7% as compared to the year before and totalled EUR 6.2
million. EBITDA was 11% lower than a year earlier and totalled EUR 1.0 million.
Over the last half-year we have actively looked for new clients in Central
Europe, where the first positive signs are already visible. 

The financial position of the Group has notably strengthened during the year.
The ratio of total debt and EBITDA has been below 2.0 since last year. This has
led to the next round of syndicated loan agreement negotiations as a result of
which the interest margin decreased and monthly repayments ceased. 



In the first half-year, we launched a loyalty programme for the key managers at
the Group, which motivates them to contribute more to the entity. The share
option programme was approved at the General Meeting of Shareholders held in
June. A special education fund was launched within the Group, helping to
increase our employees’ qualification and motivation. 

A new development programme was adopted at the technology company Ekspress
Digital in order to contribute to the company’s growth and capability and to be
able to provide development services outside the Group. 

The activities mentioned above demonstrate that we continue to contribute more
to expanding our activities and increasing our employees’ motivation. 

The quarter ended has made as cautious when forecasting our financial results.
In light of the last forecasts we believe that we will be able to maintain our
revenue at the last year’s level but necessary investments accompanied by the
complicated market situation increase our costs and lower EBITDA. 

Our mission 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. 

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



In the 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. 



Performance indicators – joint       Q2      Q2   Change      Q2      Q2      Q2
 ventures 50%                      2017    2016        %    2015    2014    2013
consolidated (EUR thousand)                                                     
For the period                                                                  
Sales                            16 382  16 545      -1%  15 998  16 007  15 115
EBITDA                            2 184   2 332      -6%   1 488   2 935   2 384
EBITDA margin (%)                 13.3%   14.1%             9.3%   18.3%   15.8%
Operating profit                  1 403   1 546      -9%     745   2 180   1 742
Operating margin (%)               8.6%    9.3%             4.7%   13.6%   11.5%
Interest expenses                 (106)   (134)      21%   (146)   (181)   (178)
Net profit/(loss) for the         1 221   1 324      -8%     481   1 858   1 398
 period                                                                         
Net margin (%)                     7.5%    8.0%             3.0%   11.6%    9.3%
Return on assets ROA (%)           1.6%    1.7%             0.6%    2.4%    1.8%
Return on equity ROE (%)           2.4%    2.7%             1.0%    4.2%    3.3%
Earnings per share (EPS)           0.04    0.05             0.02    0.06    0.05



Performance           1st Half   1st Half  Change  1st Half  1st Half   1st Half
 indicators – joint       year  year 2016       %      year      year  year 2013
 ventures 50%             2017                         2015      2014           
consolidated (EUR                                                               
 thousand)                                                                      
For the period                                                                  
Sales                   31 079     30 947      0%    30 178    30 773     28 925
EBITDA                   3 427      3 574     -4%     3 005     4 389      3 888
EBITDA margin (%)        11.0%      11.5%             10.0%     14.3%      13.4%
Operating profit         1 891      2 022     -6%     1 507     2 871      2 582
Operating margin (%)      6.1%       6.5%              5.0%      9.3%       8.9%
Interest expenses        (222)      (269)     18%     (320)     (357)      (374)
Net profit/(loss)        1 631      1 636      0%     1 037     2 361      2 036
 for the period                                                                 
Net margin (%)            5.2%       5.3%              3.4%      7.7%       7.0%
Return on assets ROA      2.1%       2.1%              1.3%      3.1%       2.6%
 (%)                                                                            
Return on equity ROE      3.2%       3.4%              2.2%      5.5%       4.9%
 (%)                                                                            
Earnings per share        0.05       0.06              0.03      0.08       0.07
 (EPS)                                                                          



Balance sheet – joint ventures 50%              30.06.2017  31.12.2016  Change %
 consolidated (thousand EUR)                                                    
As of the end of the period                                                     
Current assets                                      17 066      16 251        5%
Non-current assets                                  60 874      61 506       -1%
Total assets                                        77 940      77 757        0%
incl. cash and bank                                  4 430       4 572       -3%
incl. goodwill                                      38 904      38 904        0%
Current liabilities                                 11 074      12 222       -9%
Non-current liabilities                             15 949      14 462       10%
Total liabilities                                   27 023      26 684        1%
incl. borrowings                                    15 860      16 603       -4%
                      Equity                        50 917      51 073        0%
                                                                                



Financial ratios (%) – joint ventures consolidated 50%  30.06.2017  31.12.2016
Equity ratio (%)                                           65%         66%    
Debt to equity ratio (%)                                   31%         33%    
Debt to capital ratio (%)                                  18%         19%    
Total debt/EBITDA ratio                                    1.90        1.96   
Liquidity ratio                                            1.54        1.33   



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

Performance indicators – joint        Q2      Q2  Change      Q2      Q2      Q2
 ventures under equity method       2017    2016       %    2015    2014    2013
 (thousand EUR)                                                                 
For the period                                                                  
Sales (only subsidiaries)         13 923  14 120     -1%  13 765  13 764  12 998
EBITDA (only subsidiaries)         1 944   1 962     -1%   1 113   2 664   2 196
EBITDA margin (%)                  14.0%   13.9%            8.1%   19.4%   16.9%
Operating profit (only             1 253   1 249      0%     429   1 936   1 576
 subsidiaries)                                                                  
Operating margin (%)                9.0%    8.8%            3.1%   14.1%   12.1%
Interest expenses (only             (99)   (121)     18%   (130)   (181)   (178)
 subsidiaries)                                                                  
Profit of joint ventures by          141     224    -37%     225     190      82
 equity method                                                                  
Net profit for the period          1 221   1 324     -8%     481   1 858   1 398
Net margin (%)                      8.8%    9.4%            3.5%   13.5%   10.8%
Return on assets ROA (%)            1.6%    1.8%            0.6%    2.5%    1.8%
Return on equity ROE (%)            2.4%    2.7%            1.0%    4.2%    3.3%
Earnings per share (EPS)            0.04    0.05            0.02    0.06    0.05





Performance indicators –          1st      1st  Change      1st     1st      1st
 joint ventures under equity     Half     Half       %     Half    Half     Half
 method (thousand EUR)           year     year             year    year     year
                                 2017     2016             2015    2014     2013
For the period                                                                  
Sales (only subsidiaries)      26 332   26 375      0%   25 858  26 498   24 811
EBITDA (only subsidiaries)      3 018    2 987      1%    2 351   3 993    3 612
EBITDA margin (%)               11.5%    11.3%             9.1%   15.1%    14.6%
Operating profit (only          1 661    1 573      6%      972   2 529    2 354
 subsidiaries)                                                                  
Operating margin (%)             6.3%     6.0%             3.8%    9.5%     9.5%
Interest expenses (only         (208)    (241)     14%    (285)   (357)    (374)
 subsidiaries)                                                                  
Profit of joint ventures by       210      356    -41%      419     288      146
 equity method                                                                  
Net profit for the period       1 631    1 636      0%    1 037   2 361    2 036
Net margin (%)                   6.2%     6.2%             4.0%    8.9%     8.2%
Return on assets ROA (%)         2.2%     2.2%             1.4%    3.2%     2.7%
Return on equity ROE (%)         3.2%     3.4%             2.2%    5.5%     4.9%
Earnings per share (EPS)         0.05     0.06             0.03    0.08     0.07



Balance sheet – joint ventures under equity     30.06.2017  31.12.2016  Change %
 method                                                                         
(thousand EUR)                                                                  
As of the end of the period                                                     
Current assets                                      14 080      13 094        8%
Non-current assets                                  60 673      61 074       -1%
Total assets                                        74 753      74 168        1%
incl. cash and bank                                  2 842       2 856        0%
incl. goodwill                                      36 953      36 953        0%
Current liabilities                                  8 677       9 591      -10%
Non-current liabilities                             15 159      13 504       12%
Total liabilities                                   23 836      23 095        3%
incl. borrowings                                    15 197      15 784       -4%
Equity                                              50 917      51 073        0%



Financial ratios  (%) – joint venture consolidated under  30.06.2017  31.12.2016
 equity                                                                         
Equity ratio (%)                                             68%         69%    
Debt to equity ratio (%)                                     30%         31%    
Debt to capital ratio (%)                                    20%         20%    
Total debt/EBITDA ratio                                      2.08        2.17   
Liquidity ratio                                              1.62        1.37   

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. 



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                                              
 (%)                                                                            
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                                                                         
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                                                                     
 (%)                                                                            

SEGMENT OVERVIEW

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. 

Key financial data of the segments Q2 2013-2017

(thousand EUR)                        Sales                      Sales          
                                  Q2       Q2  Change       Q2       Q2       Q2
                                2017     2016       %     2015     2014     2013
media segment (by equity       8 621    8 511      1%    7 984    7 492    6 751
 method)                                                                        
incl. revenue from all         5 127    4 740      8%    4 116    3 730    3 257
 digital and online                                                             
 channels                                                                       
printing services segment      6 199    6 663     -7%    6 386    7 210    7 131
entertainment segment              0        0       -      392        0        0
corporate functions              592      593      0%      488      423      385
intersegment eliminations    (1 490)  (1 648)     10%  (1 485)  (1 361)  (1 270)
TOTAL GROUP under equity      13 923   14 120     -1%   13 765   13 764   12 998
 method                                                                         
media segment by              11 409   11 231      2%   10 507    9 950    9 082
 proportional consolidation                                                     
incl. revenue from all         5 344    4 903      9%    4 258    3 848    3 342
 digital and online                                                             
 channels                                                                       
printing services segment      6 199    6 663     -7%    6 386    7 210    7 131
entertainment segment              0        0       -      392        0        0
corporate functions              592      593      0%      488      423      385
intersegment eliminations    (1 818)  (1 942)          (1 775)  (1 576)  (1 483)
TOTAL GROUP by proportional   16 382   16 545     -1%   15 998   16 007   15 115
 consolidation                                                                  



(thousand EUR)                                 EBITDA                 EBITDA    
                                        Q2     Q2   Change      Q2     Q2     Q2
                                      2017   2016        %    2015   2014   2013
media segment by equity method       1 189  1 059      12%   1 256  1 261    800
media segment by proportional        1 430  1 430       0%   1 631  1 532    989
 consolidation                                                                  
printing services segment            1 024  1 148     -11%   1 271  1 537  1 599
entertainment segment                    0      0        -      (1      0      0
                                                              129)              
corporate functions                  (270)  (246)     -10%   (285)  (134)  (204)
intersegment eliminations                0      0                0      0      1
TOTAL GROUP under equity method      1 944  1 962      -1%   1 113  2 664  2 196
TOTAL GROUP by proportional          2 184  2 332      -6%   1 488  2 935  2 384
 consolidation                                                                  
                                                                                



EBITDA margin                                  Q2    Q2    Q2    Q2    Q2
                                             2017  2016  2015  2014  2013
media segment by equity method                14%   12%   16%   17%   12%
media segment by proportional consolidation   13%   13%   16%   15%   11%
printing services segment                     17%   17%   20%   21%   22%
TOTAL GROUP under equity method               14%   14%    8%   19%   17%
TOTAL GROUP by proportional consolidation     13%   14%    9%   18%   16%



Key financial data of the segments in the first half-year 2013-2017

(thousand EUR)                          Sales                      Sales        
                           1st Half  1st Half  Change     1st      1st  1st Half
                               year      year       %    Half     Half      year
                               2017      2016            year     year      2013
                                                         2015     2014          
media segment (by equity     16 049    15 282      5%  14 565   13 906    12 674
 method)                                                                        
incl. revenue from all        9 345     8 298     13%   7 466    6 517     5 727
 digital and online                                                             
 channels                                                                       
printing services segment    11 966    13 004     -8%  12 704   14 272    13 749
entertainment segment             0         0       -     453        0         0
corporate functions           1 167     1 132      3%     960      844       740
intersegment eliminations   (2 849)   (3 043)      6%      (2  (2 524)   (2 353)
                                                         823)                   
TOTAL GROUP under equity     26 332    26 375      0%  25 858   26 498    24 811
 method                                                                         
media segment by             21 436    20 428      5%  19 469   18 588    17 188
 proportional                                                                   
 consolidation                                                                  
incl. revenue from all        9 746     8 602     13%   7 716    6 735     5 876
 digital and online                                                             
 channels                                                                       
printing services segment    11 966    13 004     -8%  12 704   14 272    13 749
entertainment segment             0         0       -     453        0         0
corporate functions           1 167     1 132      3%     960      844       740
intersegment eliminations   (3 489)   (3 617)              (3  (2 929)   (2 752)
                                                         408)                   
TOTAL GROUP by               31 079    30 947      0%  30 178   30 773    28 925
 proportional                                                                   
 consolidation                                                                  
                                                                                



(thousand EUR)                     EBITDA                       EBITDA          
                         1st Half  1st Half  Change  1st Half      1st  1st Half
                             year      year       %      year     Half      year
                             2017      2016              2015     year      2013
                                                                  2014          
media segment (by           1 543     1 094     41%     1 535    1 599     1 007
 equity method)                                                                 
media segment by            1 951     1 681     16%     2 189    1 997     1 283
 proportional                                                                   
 consolidation                                                                  
printing services           1 922     2 330    -18%     2 432    2 995     3 013
 segment                                                                        
entertainment segment           0       (1)       -   (1 105)        0         0
corporate functions         (446)     (436)     -2%     (511)    (601)     (410)
intersegment                    0         0                 0        0         2
 eliminations                                                                   
TOTAL GROUP under           3 018     2 987      1%     2 351    3 993     3 612
 equity method                                                                  
TOTAL GROUP by              3 427     3 574     -4%     3 005    4 389     3 888
 proportional                                                                   
 consolidation                                                                  



EBITDA margin                1st Half   1st Half   1st Half  1st Half   1st Half
                                 year       year       year      year       year
                                 2017       2016       2015      2014       2013
media segment (by equity          10%         7%        11%       12%         8%
 method)                                                                        
media segment by                   9%         8%        11%       11%         8%
 proportional                                                                   
 consolidation                                                                  
printing services segment         16%        18%        19%       21%        22%
TOTAL GROUP under equity          11%        11%         9%       15%        15%
 method                                                                         
TOTAL GROUP by                    11%        12%        10%       14%        13%
 proportional                                                                   
 consolidation                                                                  



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. 

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  SL Õhtuleht      www.ohtuleht.ee
                 ru.delfi.lt                    www.vecherka.ee



(thousand EUR)                               Sales                 EBITDA       
                                        Q2      Q2  Change     Q2     Q2  Change
                                      2017    2016       %   2017   2016       %
Ekspress Meedia                      5 065   5 218     -3%    424    479    -11%
incl. Delfi Estonia online revenue   1 903   1 906      0%                      
Delfi Latvia                         1 007     893     13%    131     95     38%
Delfi Lithuania                      2 461   2 305      7%    645    505     28%
incl. Delfi Lithuania online         2 026   1 819     11%                      
 revenue                                                                        
Hea Lugu                                90      97     -7%   (10)    (9)    -11%
Zave Media                               0       0       -      0   (10)    100%
Other companies                          0       0       -    (1)    (1)      0%
Intersegment eliminations              (2)     (2)      1%      0    (0)       -
TOTAL subsidiaries                   8 621   8 511      1%  1 189  1 059     12%
SL Õhtuleht*                         1 181   1 134      4%    161    150      8%
Ajakirjade Kirjastus*                1 161   1 218     -5%     53    157    -66%
Express Post*                          601     680    -12%    (0)     64   -101%
Linna Ekraanid*                        101       -       -     27      -       -
Intersegment eliminations            (256)   (312)     18%    (0)      0   -100%
TOTAL subsidiaries                   2 788   2 720      3%    241    371    -35%
TOTAL segment by proportional       11 409  11 231      2%  1 430  1 430      0%
 consolidation                                                                  

* Proportional share of joint ventures

(thousand EUR)                        Sales                     EBITDA          
                           1st Half  1st Half  Change      1st  1st Half  Change
                               year      year       %     Half      year       %
                               2017      2016             year      2016        
                                                          2017                  
Ekspress Meedia               9 560     9 430      1%      645       677     -5%
incl. Delfi Estonia           3 439     3 342      3%                           
 online revenue                                                                 
Delfi Latvia                  1 862     1 627     14%      218        92    137%
Delfi Lithuania               4 444     4 026     10%      696       402     73%
incl. Delfi Lithuania         3 658     3 061     20%                           
 online revenue                                                                 
Hea Lugu                        186       201     -7%     (15)      (17)     12%
Zave Media                        0         1   -100%      (0)      (60)    100%
Other companies                   0         0       -      (1)       (1)      0%
Intersegment eliminations       (3)       (3)     -6%        0         1       -
TOTAL subsidiaries           16 049    15 282      5%    1 543     1 094     41%
SL Õhtuleht*                  2 278     2 162      5%      258       247      4%
Ajakirjade Kirjastus*         2 292     2 259      1%      137       203    -33%
Express Post*                 1 187     1 321    -10%     (25)       137   -119%
Linna Ekraanid*                 174         -       -       39         -       -
Intersegment eliminations     (544)     (596)      9%      (0)       (0)      0%
TOTAL subsidiaries            5 387     5 146      5%      408       587    -30%
TOTAL segment by             21 436    20 428      5%    1 951     1 681     16%
 proportional                                                                   
 consolidation                                                                  

* 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 the zlick innovation has been developed further that now enables to
buy paid content with zero click in all our channels. Ad-free Delfi has been
launched enabling to read ad-free Delfi portal for a monthly fee. Delfi Sport
launched a separate mobile application. In digital newspapers the Android
application of Eesti Ekspress now also includes an offline option. The family
package that includes all Estonian digital newspapers and magazines of our
Group enables access from a separate Android application. Delfi Latvia has
transferred all its verticals to the so-called responsive design and has
renewed its classified portal atverskapi.lv. Delfi Lithuania was the first
local portal in Lithuania to launch an innovative voiceover solution that
enables to listen to the news. 

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

The range and content of vertical products continues to expand. Delfi Estonia
launched a new Russian language portal – Polesnoje. An agreement has been
concluded to broadcast WTA tennis tournaments in order to show the matches of
Estonian tennis star Anett Kontaveit. Exclusive blog and content cooperation is
conducted with Estonian rally driver Ott Tänak. Delfi Latvia has been actively
broadcasting Latvia’s local elections through various multi-media and video
projects. Delfi Lithuania launched a new sub-site “Delfi Food“ and “Delfi
Travel”. The National Basketball Association (NBA) and Delfi Lithuania started
a multi-year cooperation project and launched NBA’s first official Lithuanian
online portal in the Delfi environment at www.delfi.lt/nba. To fight fake news,
a separate disclose portal was set up at www.demaskuok.lt consisting of
information that is distributed, but is not true. 

Testing of various e-commerce projects and development of classified portals in
Latvia and Lithuania continues. 

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 2016-2017

In the third quarter 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. Comparable data from Estonia are available from September
2016. 

In the measurement period, the readership of Delfi and Postimees has been
relatively stable. In the first quarter of 2016, Postimees merged classified
portals www.kv.ee and www.osta.ee owned by Eesti Meedia into its postimees.ee
domain. By adding the number of users of classified portals Postimees achieved
a higher number of users than Delfi. Õhtuleht has increased its readership to
330,000 unique users. 



Latvian online readership  2016-2017

At the beginning of 2016 research company Gemius changed its method of online
survey. These figures now show the number of users of Latvian Internet portals
in computers, mobile devices and tablet PCs. Delfi remains stable and is the
largest new portal in Latvia by online readership. Inbox that is slightly
bigger than Delfi by the number of users is an email environment and not a news
portal. The number of users of Latvian portals has been relatively stable and
is similar for all portals. Only Draugiem is losing users at a stable rate.
According to the survey commissioned by the Latvian government in the spring
2017, Latvia’s most trusted media channel is Delfi.lv that is trusted more than
even the state-owned TV station. 

Lithuanian online readership 2016-2017

At the beginning of 2016 research company Gemius changed its method of online
survey. These figures now show the number of users of Lithuanian Internet
portals in computers, mobile devices and tablet PCs. 

Delfi.lt remains Lithuania’s largest online portal. In the third quarter 2016,
15min.lt merged several portals that did not belong to this media group and
therefore, the number of users of 15min.lt domain increased in the fourth
quarter 2016.  This growth does not show the number of users of media services
and therefore cannot be regarded as the improvement of the market situation of
15min.lt. In March 2017 the readership of such third portals is no longer
considered part of 15min.lt and, as a result, the readership of 15min.lt has
decreased notably. Delfi increased its readership significantly thanks to new
products and active marketing activities. TV3 and Lrytas.lt are battling for
the third place. 

                                        

NEWSPAPERS IN ESTONIA

To get a fair picture of the newspaper market, one must look at the circulation
of newspapers together with the number of subscribers of digital newspaper. The
newspaper with the largest circulation in Estonia is Õhtuleht whose number of
users exceeded 50 thousand in June 2017. Päevaleht has about 45,200 and Eesti
Ekspress has 35,400 users. The number of users of digital newspapers has
notably increased in the recent year and exceeds the decrease in the readership
of paper newspapers. For Postimees, the data on users of digital newspapers are
not available and the graph shows the number of readers of paper newspapers. 

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. 



(thousand EUR)         Sales                  EBITDA        
                   Q2   Q2    Change   Q2     Q2    Change %
                 2017   2016     %     2017   2016          
Printall        6 199  6 663     -7%  1 024  1 148      -11%



(thousand                  Sales                             EBITDA             
 EUR)                                                                           
                1st Half    1st Half    Change   1st Half     1st Half    Change
               year 2017   year 2016       %     year 2017    year 2016      %  
Printall          11 966        13 004     -8%        1 922        2 330    -18%



The printing services segment continues to be impacted by the economic
recession which also has a negative impact on our printing plant.  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 as well as the activities of competitors in the Baltic States. A
sheet-fed machine acquired two years ago has helped to prevent a steeper
revenue decline, and has helped to expand the product range outside the normal
media sector. 

Consolidated balance sheet (unaudited)

(thousand EUR)                   30.06.2017  31.12.2016
ASSETS                                                 
Current assets                                         
Cash and cash equivalents             2 804       2 805
Term deposits                            38          51
Trade and other receivables           8 412       7 468
Corporate income tax prepayment         134           0
Inventories                           2 692       2 770
Total current assets                 14 090      13 094
Non-current assets                                     
Trade and other receivables             993         982
Deferred tax asset                       34          34
Investments in joint ventures         2 645       2 435
Investments in associates               522         591
Property, plant and equipment        12 267      12 722
Intangible assets                    44 212      44 310
Total non-current assets             60 673      61 074
TOTAL ASSETS                         74 753      74 168
LIABILITIES                                            
Current liabilities                                    
Borrowings (Note 7)                      71       2 313
Trade and other payables              8 505       7 170
Corporate income tax payable            101         108
Total current liabilities             8 677       9 591
Non-current liabilities                                
Long-term borrowings                 15 126      13 471
Deferred tax liability                   33          33
Total non-current liabilities        15 159      13 504
TOTAL LIABILITIES                    23 836      23 095
EQUITY                                                 
Share capital                        17 878      17 878
Share premium                        14 277      14 277
Treasury shares                        (22)       (863)
Reserves                              1 531       2 058
Retained earnings                    17 253      17 723
TOTAL EQUITY                         50 917      51 073
TOTAL LIABILITIES AND EQUITY         74 753      74 168

Consolidated statement of comprehensive income (unaudited)

(thousand EUR)                          Q2      Q2  1st Half year  1st Half year
                                      2017    2016           2017           2016
Sales revenue                       13 923  14 120         26 332         26 375
Cost of sales                          (10     (10       (20 800)       (21 146)
                                      724)    947)                              
Gross profit                         3 199   3 173          5 532          5 229
Other income                           270     123            448            236
Marketing expenses                   (798)   (684)        (1 514)        (1 201)
Administrative expenses                 (1      (1        (2 762)        (2 649)
                                      400)    340)                              
Other expenses                        (18)    (23)           (43)           (42)
Operating profit                     1 253   1 249          1 661          1 573
Interest income                         55      10            114             19
Interest expense                      (99)   (121)          (208)          (241)
Other finance costs                   (19)    (18)           (33)           (33)
Net finance cost                      (63)   (129)          (127)          (255)
Profit on shares of joint ventures     141     224            210            356
Profit/(loss) from shares of          (21)    (34)           (23)           (16)
 associates                                                                     
Profit before income tax             1 310   1 378          1 721          1 690
Income tax expense                    (89)    (54)           (90)           (54)
Net profit  for the reporting        1 221   1 324          1 631          1 636
 period                                                                         
Net profit for the reporting                                                    
 period attributable to:                                                        
Equity holders of the parent         1 221   1 324          1 631          1 636
 company                                                                        
Other comprehensive income               0       0              0              0
Total comprehensive income           1 221   1 324          1 631          1 636
Attributable to equity holders of    1 221   1 324          1 631          1 636
 the parent company                                                             
Basic and diluted earnings per        0.04    0.05           0.05           0.06
 share                                                                          

Consolidated cash flow statement (unaudited)

(thousand EUR)                                     1st Half year   1st Half year
                                                            2017            2016
Cash flows from operating activities                                            
Operating profit for the reporting year                    1 661           1 573
Adjustments for:                                                                
Depreciation, amortisation and impairment                  1 357           1 413
(Gain)/loss on sale and write-down of property,              (3)            (11)
 plant and equipment                                                            
Change in value of share option                                0              68
Cash flows from operating activities:                                           
Trade and other receivables                                   80           (497)
Inventories                                                   78             282
Trade and other payables                                   (487)             262
Cash generated from operations                             2 686           3 090
Income tax paid                                            (231)           (184)
Interest paid                                              (208)           (241)
Net cash generated from operating activities               2 247           2 665
Cash flows from investing activities                                            
Interest received                                            102              19
Purchase of other investments                               (35)               0
Purchase of property, plant and equipment                  (814)           (407)
Proceeds from sale of property, plant and                     13              16
 equipment                                                                      
Loans granted                                            (2 025)             (9)
Loan repayments received                                   1 028               9
Net cash used in investing activities                    (1 732)           (372)
Cash flows from financing activities                                            
Dividends received                                            56             246
Finance lease payments made                                 (35)            (42)
Loan received                                                  0              11
Repayments of bank loans                                   (552)         (1 086)
Purchase of treasury shares                                    0           (687)
Net cash used in financing activities                      (531)         (1 557)
NET (DECREASE)/INCREASE IN CASH AND CASH                    (15)             736
 EQUIVALENTS                                                                    
Cash and cash equivalents at the beginning of              2 856           2 927
 the year                                                                       
Cash and cash equivalents at the end of the year           2 842           3 663








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