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AS Ekspress Grupp: Consolidated Interim Report for the first quarter of 2016

Teade

Tallinn, Estonia, 2016-04-29 15:05 CEST (GLOBE NEWSWIRE) --


The results of the 1st quarter 2016 were in line with the expectations of the
Company’s management. The Group’s consolidated revenue amounted to EUR 14.4
million, exceeding last year’s revenue by 2%. Year on year, EBITDA decreased
18% by EUR 0.3 million and amounted to EUR 1.2 million, but on par with the
Company’s forecast. The net profit was EUR 0.3 million that is 44% less than a
year ago, but 3% more than the forecast. The above figures include all our
joint ventures (AS SL Õhtuleht, AS Ajakirjade Kirjastus and AS Express Post)
consolidated 50% line-by-line. The decrease in EBITDA and net profit year on
year was mainly attributable to the decision to deliberately increase the cost
basis in the highly competitive media segment and the slow start of the
Lithuanian advertising market at the start of the year. In the first quarter of
2015 there were elections in Estonia and Lithuania, therefore our expectations
on revenue growth this quarter compared to previous period were smaller. 



Revenue of the media segment increased 3% as a whole as compared to the year
before, while revenue from digital and online channels was up by 8%. EBITDA
decreased as compared to last year, totalling EUR 34 thousand. The weaker
result of the media segment in the 1st quarter was mainly attributable to the
slow start of Delfi Lithuania at the beginning of the year, where the result of
first two months was below last year’s figure by about EUR 260 thousand. Since
March, the business has picked up and in the final month of the quarter Delfi
Lithuania exceeded last year’s result already by ca EUR 60 thousand. We believe
that Delfi Lithuania is able to earn back the 1st quarter’s shortfall during
the rest of the year. Because of last year’s growth in the cost basis, Delfi
Latvia’s 1st quarter result was lower as compared to a year ago, but exceeded
the Company’s own forecast. Nonetheless, we expect both companies to grow on a
yearly basis. Ekspress Meedia has again achieved a good result both in revenue
and profit growth, with online revenue increasing 7% even in comparison with
last year’s very strong growth of between 20-30%. We can also be proud of the
3% growth of print advertising and 6% growth in subscriptions and single-copy
sales. 



The priority of the media segment is the same - innovation in developing
different products and technical platforms. In all three countries, several new
topical portals have been launched, several new multimedia projects have been
carried out and e-commerce services have been developed. Of major developments,
one should mention the digital edition of Maaleht that had a very successful
initial offer. Starting from the new year, our advertising sales departments
are offering in addition to online advertising in our own portals also the
possibility to buy advertising in other local or international channels.
Customers of Levira and Starman in Estonia can watch Delfi TV broadcasts and
shows also from their TVs. In Lithuania, the functionality and
user-friendliness of classified portal Alio was improved, allowing it to
notably increase readership and ranking. 



In addition to technical development, we also strongly focus on content
production. We do it by producing longer and more analytical articles and
exclusive text or image content. Our project “98 nations” won a lot of praise
and was mentioned in the Anniversary Day speech of the President of Estonia.
Delfi’s daily investigative journalism programme Sensor as well as audio
broadcasts of Ekspress and Delfi have progressing well. We also surprised our
readers and viewers with broadcasts from the competitions of Estonia’s new
extreme sports superstar Kelly Sildaru in Aspen and Oslo. The high level of our
editorial departments is shown also by several prominent awards. Eesti
Päevaleht journalist Tuuli Jõesaar won the year’s top journalistic prize the
Bonnier Award with her articles on parents who cure their ill children with
toxic chlorine dioxide. Delfi Latvia’s project “#10 memories” won the award of
the Latvian Association of Journalists for the best multimedia project. After
the previous editor-in-chief of Eesti Ekspress left abroad, the weekly’s new
editor-in-chief is Erik Moora, a politologist with long experience in media. 



Strong content helped Delfi to become Latvia’s largest online site also by the
new method of the Gemius survey. The gap with the direct competitor, news
portal TVNet, increased. 



Circulation revenue of Ekspress Meedia has been growing mainly because of
subscriptions of print products. Although the book series has ended, Maaleht
continues to surprise with its high subscription and single-copy sales. In
March we launched our new book series “Timeless love stories” which this time
is published together with LP, the weekend issue of Eesti Päevaleht. Although
there has been a small decrease in the number of digital subscriptions because
of the price increase, the successful launch of the digital version of Maaleht
adds confidence that we are on the right track. 



Similarly to newspapers, the print advertising market of magazines is also
presenting new challenges, especially in satisfying the need for smarter
solutions. Despite everything, Ajakirjade Kirjastus increased the advertising
revenue 4%. The increase in the cover price is offsetting the fall in
circulation and enables also to raise circulation revenue. At the start of
April, Ajakirjade Kirjastus signed a contract with OÜ Presshouse under which it
acquired Naisteleht, Estonia’s largest weekly magazine targeted at women, as
well as publishing rights for magazines Nipiraamat and Müstiline Ajalugu. As a
result of the transaction, we hope to achieve significant synergy and increase
the Company’s profit. As compared to the same period last year, the result of
Ajakirjade Kirjastus was weaker, but in line with expectations. 



Also SL Õhtuleht increased its revenue, mainly thanks to the growth in online
advertising and circulation revenue. We launched new topical portals Lifestyle
(Elustiil) and Special (Eriline), started video series of a fitness school and
a money school, added two sports podcasts to the travel podcast, expanded the
list of cooperation partners of the advertising network and upgraded the mobile
version of Õhtuleht. As a result, also the time that the users stay on the
mobile site has increased notably. In the 1st quarter, we set records in both
monthly and weekly online readership. Product innovation and team building have
increased costs which is why EBITDA fell in the 1st quarter in spite of revenue
growth. 



The printing segment has managed to stop last year’s decrease in revenue and
profit, and its revenue and profit from the 1st quarter were comparable to the
same period a year earlier. The segment continues to suffer under the negative
impact of economic sanctions imposed on Russia which has reduced printing
prices in Scandinavia. However, payment problems of several Scandinavian
competitors and a related decrease in their production capacity are creating
better recovery possibilities for others. Although Printall’s production volume
is growing, the price pressure remains strong. The revenue from last year can
be successfully maintained, but not yet increased. On the other hand, Printall
has won several long-term contracts to offer printing service on customer’s
paper that will have a positive impact on the growth of printing revenue and
profit, but less on the total revenue. 



The financial position of the Group is strong, the ratio of total debt and
EBITDA is below 2.5 and the debt service coverage ratio is about 2.0. A strong
financial position enables us to continue analyse new opportunities related to
new media with the objective of finding new areas of activity and enterprises
in the Group portfolio. 



Our position for the next quarter and the full year is modest. We still hope
for stable growth of the online and print media and faster recovery of the
printing services segment. We expect better 2nd quarter compared to the start
of the year with the revenue growth of our main business around 10% and EBITDA
growth 1-2%. 



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 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       Q1      Q1  Change      Q1      Q1      Q1
 ventures consolidated  50% (EUR    2016    2015       %    2014    2013    2012
 thousand)                                                                      
For the period                                                                  
Sales                             14 402  14 180      2%  14 766  13 809  14 219
EBITDA                             1 242   1 517    -18%   1 454   1 503   1 615
EBITDA margin (%)                   8.6%   10.7%            9.8%   10.9%   11.4%
Operating profit                     477     762    -37%     691     840     756
Operating margin (%)                3.3%    5.4%            4.7%    6.1%    5.3%
Interest expenses                  (135)   (174)     23%   (176)   (197)   (488)
Net profit /(loss) for the           312     556    -44%     503     638     179
 period                                                                         
Net margin (%)                      2.2%    3.9%            3.4%    4.6%    1.3%
Return on assets ROA (%)            0.4%    0.7%            0.6%    0.8%    0.2%
Return on equity ROE (%)            0.6%    1.2%            1.1%    1.5%    0.5%
Earnings per share (EPS)            0.01    0.02            0.02    0.02    0.01







Balance sheet– joint ventures consolidated      31.03.2016  31.12.2015  Change %
 50%                                                                            
(EUR thousand)                                                                  
As of the end of the period                                                     
Current assets                                      15 502      15 553        0%
Non-current assets                                  61 045      61 588       -1%
Total assets                                        76 547      77 141       -1%
incl. cash and bank                                  4 714       4 666        1%
incl. goodwill                                      38 232      38 232        0%
Current liabilities                                 12 176      12 539       -3%
Non-current liabilities                             15 380      15 928       -3%
Total liabilities                                   27 556      28 467       -3%
incl. borrowings                                    18 160      18 787       -3%
                      Equity                        48 991      48 674        1%
                                                                                







Financial ratios (%) – joint ventures consolidated  50%  31.03.2016  31.12.2015
Equity ratio (%)                                            64%         63%    
Debt to equity ratio (%)                                    37%         39%    
Debt to capital ratio (%)                                   22%         22%    
Total debt /EBITDA ratio                                    2.39        2.39   
Debt service coverage ratio                                 1.91        1.79   
Liquidity ratio                                             1.27        1.24   





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

Performance indicators – joint        Q1      Q1  Change      Q1      Q1      Q1
 ventures under the equity          2016    2015       %    2014    2013    2012
 method (EUR thousand)                                                          
For the period                                                                  
Sales (only subsidiaries)         12 255  12 093      1%  12 734  11 812  12 177
EBITDA (only subsidiaries)         1 025   1 238    -17%   1 330   1 417   1 548
EBITDA margin (%)                   8.4%   10.2%           10.4%   12.0%   12.7%
Operating profit (only               324     543    -40%     593     777     720
 subsidiaries)                                                                  
Operating margin (%)                2.6%    4.5%            4.7%    6.6%    5.9%
Interest expenses (only            (120)   (155)     22%   (176)   (197)   (489)
 subsidiaries)                                                                  
Profit of joint ventures by          132     194    -32%      98      63      40
 equity method                                                                  
Net profit for the period            312     556    -44%     503     638     179
Net margin (%)                      2.5%    4.6%            3.9%    5.4%    1.5%
Return on assets ROA (%)            0.4%    0.7%            0.7%    0.8%    0.2%
Return on equity ROE (%)            0.6%    1.2%            1.2%    1.5%    0.5%
Earnings per share (EPS)            0.01    0.02            0.02    0.02    0.01







Balance sheet– joint ventures under equity        31.03.2016  31.12.2015  Change
 method (EUR thousand)                                                       %  
As of the end of the period                                                     
Current assets                                        12 591      12 386      2%
Non-current assets                                    60 420      60 794     -1%
Total assets                                          73 011      73 180      0%
incl. cash and bank                                    3 075       2 927      5%
incl. goodwill                                        36 953      36 953      0%
Current liabilities                                    9 093       9 033      1%
Non-current liabilities                               14 927      15 473     -4%
Total liabilities                                     24 020      24 506     -2%
incl. borrowings                                      17 135      17 687     -3%
Equity                                                48 991      48 674      1%







Financial ratios (%) – joint ventures by equity method  31.03.2016  31.12.2015
Equity ratio (%)                                           67%         67%    
Debt to equity ratio (%)                                   35%         36%    
Debt to capital ratio (%)                                  22%         23%    
Total debt /EBITDA ratio                                   2.65        2.65   
Debt service coverage ratio                                1.81        1.67   
Liquidity ratio                                            1.38        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
(e.g. preference of internet rather than print media) and changes in
consumption habits of retail consumers (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                                                                         
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                                                                     
 (%)                                                                            

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 Q1 2012-2016



(EUR thousand)                         Sales                     Sales          
                                   Q1       Q1  Change       Q1       Q1      Q1
                                 2016     2015       %     2014     2013    2012
media segment  (by equity       6 771    6 581      3%    6 414    5 923   5 633
 method)                                                                        
incl. revenue from all          3 558    3 350      6%    2 787    2 470   2 232
 digital and online channels                                                    
printing services segment       6 341    6 318      0%    7 062    6 617   7 376
entertainment segment               -       61       -        -        -       -
corporate functions               539      471     14%      421      355     139
intersegment eliminations     (1 395)  (1 338)     -4%  (1 163)  (1 084)   (971)
TOTAL GROUP by equity method   12 255   12 093      1%   12 734   11 812  12 177
media segment by                9 197    8 963      3%    8 637    8 106   7 869
 proportional consolidation                                                     
incl. revenue from all          3 839    3 566      8%    2 987    2 599   2 370
 digital and online channels                                                    
printing services segment       6 341    6 318      0%    7 062    6 617   7 376
entertainment segment               -       61       -        -        -       -
corporate functions               539      471     14%      421      355     139
intersegment eliminations     (1 675)  (1 633)          (1 354)  (1 269)      (1
                                                                            165)
TOTAL GROUP by proportional    14 402   14 180      2%   14 766   13 809  14 219
 consolidation                                                                  







(EUR thousand)                               EBITDA                 EBITDA      
                                         Q1     Q1   Change     Q1     Q1     Q1
                                       2016   2015        %   2014   2013   2012
media segment by equity method           34    279     -88%    338    207    192
media segment by proportional           251    558     -55%    466    294    259
 consolidation                                                                  
printing services segment             1 182  1 161       2%  1 459  1 414  1 529
entertainment segment                   (2)     24    -106%      -      -      -
corporate functions                   (189)  (226)      16%  (467)  (206)  (174)
intersegment eliminations               (0)    (0)     100%      0      1      0
TOTAL GROUP by equity method          1 025  1 238     -17%  1 330  1 417  1 548
TOTAL GROUP by proportional           1 242  1 517     -18%  1 454  1 503  1 615
 consolidation                                                                  







EBITDA margin                                   Q1    Q1    Q1    Q1    Q1
                                              2016  2015  2014  2013  2012
--------------------------------------------------------------------------
media segment  by equity method                 1%    4%    5%    3%    3%
---------------------------------------------                        -----
media segment  by proportional consolidation    3%    6%    5%    4%    3%
---------------------------------------------                        -----
printing services segment                      19%   18%   21%   21%   21%
--------------------------------------------------------------------------
TOTAL GROUP by equity method                    8%   10%   10%   12%   13%
--------------------------------------------------------------------------
TOTAL GROUP by proportional consolidation       9%   11%   10%   11%   11%
--------------------------------------------------------------------------

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 and home delivery company AS Express Post. 

The entities’ EBITDA is presented before the trademark royalty fees that were
paid to the direct parent company Delfi Holding until April 2015. In May 2015,
Delfi group was restructured in order to reflect the actual management
structure changed over the years and as a consequence of which Delfi’s local
companies are now directly owned by AS Ekspress Grupp. 

In July 2015 AS Delfi and newspaper publisher AS Eesti Ajalehed were merged in
Estonia. New company continues to operate under name AS Ekspress Meedia. In
2014, Delfi UAB and magazine publisher Ekspress Leidyba UAB were merged in
Lithuania. 

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           
                                                 Q1 2016  Q1 2015  Change  %
Ekspress Meedia AS (Delfi Est + Eesti Ajalehed)    4 212    4 110         2%
incl. Delfi Estonia online revenue                 1 436    1 345         7%
Delfi Latvia                                         734      676         9%
Delfi Lithuania (incl. former Ekspress Leidyba)    1 720    1 739        -1%
incl. Delfi Lithuania online revenue               1 242    1 208         3%
OÜ Hea Lugu                                          104      117       -11%
OÜ Zave Media                                          1        0          -
Intersegment eliminations                              0     (61)       100%
TOTAL subsidiaries                                 6 771    6 581         3%
AS SL Õhtuleht*                                    1 027    1 014         1%
AS Ajakirjade Kirjastus*                           1 041    1 018         2%
AS Express Post*                                     641      638         0%
Intersegment eliminations                          (284)    (289)         2%
TOTAL joint ventures                               2 426    2 381         2%
TOTAL segment by proportional consolidation        9 197    8 963         3%







(EUR thousand)                                             EBITDA          
                                                 Q1 2016  Q1 2015  Change %
Ekspress Meedia AS (Delfi Est + Eesti Ajalehed)      199      116       72%
Delfi Latvia                                         (4)       43     -109%
Delfi Lithuania (incl. former Ekspress Leidyba)    (103)      116     -189%
OÜ Hea Lugu                                          (8)        5     -260%
OÜ Zave Media                                       (50)        0         -
Delfi Holding                                          0      (1)      100%
Intersegment eliminations                            (0)      (0)         -
TOTAL subsidiaries                                    34      279      -88%
AS SL Õhtuleht*                                       97      118      -18%
AS Ajakirjade Kirjastus*                              47       73      -36%
AS Express Post*                                      73       88      -17%
Intersegment eliminations                              0      (0)      222%
TOTAL joint ventures                                 217      279      -22%
TOTAL segment by proportional consolidation          251      558      -55%



*Proportional share of joint ventures

DELFI and related products

As a market leader Delfi continues to invest into new technologies and IT
solutions to improve user experience of its readers and advertisers. Last year,
new Delfi mobile applications for both IOS and Android devices were launched,
enabling to use more creative solutions in the mobile environment. Programmatic
advertising sales will be further developed in all three countries. In addition
to online advertising, from this year our advertising sales departments will
provide an opportunity to buy advertising space in other local or international
channels. Delfi TV platforms will continue to be developed. The clients of
Levira and Starman in Estonia are now able to watch Delfi TV broadcasts and
programmes on their television screens. The launch of digital newspaper of
Maaleht was one of the main developments in Estonia. Within the first week
there were extraordinary six thousand downloads. 

We continue to expand the range of vertical products. In the 1st quarter Delfi
Estonia launched www.filmiveeb.ee that is dedicated to the film art. Delfi
Latvia launched the esoterics portal www.orakuls.lv. Lithuania launched
www.busiumama.lt, a portal targeted at expecting mothers, and in cooperation
with the Lithuanian basketball federation, Delfi FIT, a sub-section that
supports healthy lifestyle. 

Delfi Lithuania continues to develop further the classified portal www.alio.lt
which has become 12th among all portals in Lithuania. 

In all countries there is a focus on writing more long-read analytical articles
in order to increase Delfi’s position in all qualitative indexes like “trust”,
“usability”, “originality” and etc. In Estonia this has been provided in
co-operation with editorial teams of our daily and weekly newspapers Eesti
Päevaleht, Eesti Ekspress and Maaleht. 

We continue to focus on socially responsible behaviour, supporting different
charitable projects, culture, sports, social and business events. In the 1st
quarter in Latvia we supported several concerts and conferences and hold our
own presentations. Delfi Lithuania organised pan-Baltic tennis tournament with
more than 250 participants. 

Estonian online readership 2015-2016

In the 1st quarter 2016, Postimees added Eesti Meedia owned classifieds portals
kv.ee and osta.ee under the postimees.ee domain. As a result the usership
number for postimees.ee grew by 17%. The growth in readership is increasing
mainly among mobile users which is why larger online portals have been
investing in this particular segment, including both marketing and product
development. 

During 2016, the methodology of the online readership survey in Estonia, Latvia
and Lithuania will change, as a result of which the readership of mobile
devices and tablet PCs will be added to the above readership of computer users. 

Delfi Latvia



Latvian online readership 2015-2016

Starting from the beginning of 2016, the method of the Gemius online survey has
changed. Because of that, the online readership figure decreased. This figure
shows only the online readership of PC users. Inbox.lv remains Latvia’s largest
portal among PC users. Delfi.lv has increased its lead over tvnet.lv. The local
social network draugiem.lv continues to lose users to Facebook. As in other
Baltic countries, the main competition in Latvia is for mobile users. 

Delfi Lithuania

Lithuanian online readership 2015-2016

Delfi.lt remains Lithuania’s largest online portal. In the 1st quarter 2016,
there were no major changes in the preferences of online users in Lithuania. As
in other markets, development and marketing activities in Lithuania were
focused on increasing the number of mobile users. In this segment Delfi has
notably increased its readership. 



Print media in Estonia

Estonian newspaper circulation 2015-2016



Circulations of newspapers in Estonia have been falling moderately in the long
run. In this respect, 2015 was a pleasant exception since newspaper
circulations stabilized. Circulations of some periodicals have also been
growing slightly for the first time in several years. In 2016 we expect to see
similar trends – the year’s first quarter has been encouraging and it forecasts
a stable year in the newspaper segment. 



One also needs to add to the above readership the number of subscribers of
digital newspapers. At the end of the 1st quarter 2016, our Group’s publication
Eesti Päevaleht had ca 12 thousand subscribers, Eesti Ekspress ca 10 thousand
and  Maaleht ca 7 thousand. 

Estonian newspaper readership 2015-2016

                                        

Similarly with the circulation of newspapers, the readership of publications
also remained relatively stable at the beginning of 2016. As compared to the
1st quarter 2015, readership of Maaleht, Eesti Ekspress and Eesti Päevaleht
increased. As this survey does not cover the readership of digital newspapers,
it does not represent the complete readership. The number of digital
subscriptions of periodicals of the Ekspress Group amounts ca 30 thousand.
Increasing the readership of digital newspapers remains the main task for the
Group’s publications. 

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 sheet-fed
machine installed in 2015 has enabled us to further expand the range of printed
products. 





(EUR thousand)         Sales        
                   Q1     Q1  Change
                 2016   2015     %  
AS Printall     6 341  6 318      0%







(EUR thousand)          EBITDA        
                   Q1     Q1  Change %
                 2016   2015          
AS Printall     1 182  1 161        2%





The printing services segment continues to be negatively impacted by to the
economic sanctions imposed on Russia. Although the production volume of
Printall increased, the price pressure is still strong due to the more intense
competition in Scandinavia and continuously appreciating paper prices. Despite
that, the sales of printing services increased by 3% in the 1st quarter. 



Printing services and the environment

In addition to its very strong financial position, Printall also focuses on
environmentally conscious production.  Printall has been granted ISO 9001
management and ISO 14001 environmental certificates. 

The Minister of the Environment of the Republic of Estonia and the waste
managing company AS Ragn-Sells awarded Printall with the title of the Top
Recycler of the Year, because the company recycles 95% of its waste. 

The Nordic Council of Ministers has awarded Printall with the environmental
label “The Nordic Ecolabel”, used to acknowledge the companies in the Nordic
countries that use environmentally efficient production. Printall also has FSC
and PEFC Chain of Custody (COC) certificates, which the company uses to promote
a green way of thinking in the printing industry. Both of those certificates
indicate compliance with monitoring and product production process requirements
which are issued to businesses that comply with the requirements established by
the FSC (Forest Stewardship Council) and the PEFC (Programme for the
Endorsement of Forest Certification). A business that is issued these
certificates helps to support the environmentally friendly, socially fair and
economically viable management of the world’s forests. 

Printall cares about the environment and uses green energy. The POWERED BY
GREEN certificate is a proof that the company buys electricity, 70% of which
has been generated by renewable sources of energy. 

                                        

Consolidated balance sheet (unaudited)

(EUR thousand)                   31.03.2016  31.12.2015
ASSETS                                                 
Current assets                                         
Cash and cash equivalents             3 061       2 927
Term deposit                             14           0
Trade and other receivables           6 709       6 741
Corporate income tax prepayment          35           0
Inventories                           2 772       2 718
Total current assets                 12 591      12 386
Non-current assets                                     
Trade and other receivables           1 153       1 149
Deferred tax asset                       42          42
Investments in joint ventures         1 139       1 007
Investments in associates               205         215
Property, plant and equipment        13 427      13 791
Intangible assets                    44 454      44 590
Total non-current assets             60 420      60 794
TOTAL ASSETS                         73 011      73 180
LIABILITIES                                            
Current liabilities                                    
Borrowings                            2 234       2 240
Trade and other payables              6 737       6 679
Corporate income tax payable            122         114
Total current liabilities             9 093       9 033
Non-current liabilities                                
Long-term borrowings                 14 901      15 447
Deferred tax liability                   26          26
Total non-current liabilities        14 927      15 473
TOTAL LIABILITIES                    24 020      24 506
EQUITY                                                 
Share capital                        17 878      17 878
Share premium                        14 277      14 277
Treasury shares                       (205)       (176)
Reserves                              1 821       1 787
Retained earnings                    15 220      14 908
TOTAL EQUITY                         48 991      48 674
TOTAL LIABILITIES AND EQUITY         73 011      73 180

Consolidated statement of comprehensive income (unaudited)

(EUR thousand)                                                        Q1      Q1
                                                                    2016    2015
Sales revenue                                                     12 255  12 093
Cost of sales                                                        (10      (9
                                                                    199)    795)
Gross profit                                                       2 056   2 298
Other income                                                         113     107
Marketing expenses                                                 (517)   (553)
Administrative expenses                                               (1      (1
                                                                    309)    288)
Other expenses                                                      (19)    (21)
Operating profit                                                     324     543
Interest income                                                       10      11
Interest expense                                                   (120)   (155)
Other finance costs                                                 (16)    (16)
Net finance cost                                                   (126)   (160)
Profit (loss) on shares of joint ventures                            132     194
Profit (loss) from shares of associates                             (18)    (15)
Profit before income tax                                             312     562
Income tax expense                                                     0     (6)
Net profit  for the reporting period                                 312     556
Net profit for the reporting period attributable to:                            
Equity holders of the parent company                                 312     556
Other comprehensive income (expense) that may be subsequently                   
 reclassified to profit or loss                                                 
Currency translation differences                                       0       0
Total other comprehensive income (expense)                             0       0
Comprehensive income (expense) for the reporting period              312     556
Attributable to equity holders of the parent company                 312     556
Basic and diluted earnings per share                                0.01    0.02

Consolidated cash flow statement (unaudited)

(EUR thousand)                                                  Q1 2016  Q1 2015
Cash flows from operating activities                                            
Operating profit for the reporting year                             324      543
Adjustments for:                                                                
Depreciation, amortisation and impairment                           700      695
(Gain)/loss on sale and write-down of property, plant and           (5)        0
 equipment                                                                      
Change in value of share option                                      34       30
Cash flows from operating activities:                                           
Trade and other receivables                                          20    (820)
Inventories                                                        (55)       22
Trade and other payables                                             45      661
Cash generated from operations                                    1 062    1 131
Income tax paid                                                    (28)     (39)
Interest paid                                                     (120)    (155)
Net cash generated from operating activities                        914      937
Cash flows from investing activities                                            
Term deposit (placement)/release                                      0    1 600
Interest received                                                    10       11
Purchase of  property, plant and equipment                        (205)    (220)
Proceeds from sale of property, plant and equipment                   9        1
Loans granted                                                         0        0
Loan repayments received                                              0        1
Net cash used in investing activities                             (186)    1 393
Cash flows from financing activities                                            
Finance lease repayments                                           (21)     (20)
Change in use of overdraft                                            0  (1 117)
Loan received                                                        11        0
Repayments of bank loans                                          (542)  (2 533)
Purchase of treasury shares                                        (29)     (31)
Net cash used in financing activities                             (581)  (3 702)
NET (DECREASE)/INCREASE IN CASH AND CASH EQUIVALENTS                148  (1 372)
Cash and cash equivalents at the beginning of the year            2 927    3 656
Cash and cash equivalents at the end of the year                  3 075    2 284




         Additional information:
         Gunnar Kobin
         Chairman of the Management Board
         GSM: +372 5188111
         e-mail: [email protected]