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Ekspress Grupp: AS Ekspress Grupp: Consolidated Annual Report 2014

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Tallinn, Estonia, 2015-03-23 09:15 CET (GLOBE NEWSWIRE) --

The year 2014 was a successful year for Ekspress Group. In year-on-year comparison, the consolidated EBITDA of the Group increased by 22% to

almost EUR 9 million. Consolidated net profit was 30% higher and amounted to EUR 4.6 million. The EBITDA margin was 14.5%. The actual results were also higher compared to our cautiously budgeted EBITDA of EUR 8 million and net profit of EUR 3.8 million.

The above figures include all our joint ventures (AS SL Õhtuleht, AS Ajakirjade Kirjastus and AS Express Post) consolidated 50% line-by-line. Starting from 2014, in consolidated financial reports 50% joint ventures are recognised under the equity method, in compliance with new international financial reporting standards (IFRS). The change in this accounting policy does not affect the net profit, but decreases annual sales revenue approximately EUR 8.6 million and EBITDA approximately EUR 1.0 million. In its monthly reports, the management has continued to monitor 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% as previously and the other where joint ventures are recognised under the equity method and their net result is presented as financial income in one line. In Note 2 of the financial statements, the impact of every joint venture on the respective line of the income statement and balance sheet is described in more detail.

The income statement includes financial income in the amount of EUR 1.9 million resulting from the acquisition of shares of AS Ajakirjade Kirjastus and AS SL Õhtuleht from AS Eesti Meedia, their sale to OÜ Suits Meedia and subsequent restructuring. In essence, joint ventures with AS Eesti Meedia were sold and new joint ventures were acquired together with OÜ Suits Meedia. In addition, as a result of these transactions, trademarks, other intangible assets and goodwill in the acquired joint ventures are now recognised at their fair value in both the balance sheet of the joint ventures themselves and the Group (where joint ventures are 50% consolidated). In the income statement, the depreciation cost of these trademarks and other assets is recognised subsequently thus decreasing the net profit.

In addition to the above, the net profit was influenced by the impairment of goodwill related to Delfi Latvia in the amount of EUR 1.4 million. It is partly attributable to the decision made in the first half of 2014 to invest in the strengthening of the editorial office of Delfi Latvia which has had an impact on the entity's financial results and partly to the downturn of the economic climate, caused mainly by the events in Ukraine.

The Group's financial leverage improved notably during the year. The Group's total debt to EBITDA ratio (based on 50% proportional consolidation of joint ventures) decreased down to 2.57 by the end of the year and the debt service coverage ratio increased up to 1.90. Today our balance sheet allows us to look very aggressively towards new investment opportunities.

Media segment which includes 50% joint ventures achieved EBITDA growth of 44% compared to last year, totalling EUR 4.0 million. Starting from the third quarter when the Lithuanian magazine publisher UAB Ekspress Leidyba was merged with Delfi Lithuania, we no longer separate online media from periodicals, and talk about one media segment which represents both online and print media. The online revenue of Delfi Lithuania continues to be reported separately.

In the media segment, the biggest EBITDA growth was achieved by Delfi Estonia, exceeding last year's result by 98% and amounting to EUR 0.6 million. The strong result of Delfi Estonia is due to excellent work of the editorial office in increasing the readership of the portal that has enabled the advertising sales team to increase the revenue faster than the market in average. The rapid growth of new products, especially online topical portals and video solutions played an important role in increasing the revenue.

Although Delfi Latvia saw the EBITDA decrease 32% compared to year ago, it still earned a profit of EUR 0.1 million. In all three Baltic States, the competition in Latvia is the toughest. Acquisitions made by competitors to increase their market share have essentially equalled the readership of the three largest portals in Latvia, although Delfi remains the country's largest news portal and for a few months in the autumn was also Latvia's largest internet environment. In such a tough competitive situation we decided not to invest in acquisitions, but in the development of our own product, increasing editorial office and opening new topical portals. For this reason, costs in Delfi Latvia in 2014 were higher than we had planned at the start of the year.

EBITDA of Delfi Lithuania increased 23% in a year to EUR 1.3 million. The result of Delfi Lithuania was most affected by the merger with other group company Ekspress Leidyba, the Lithuanian magazine publisher, as a result of which we managed to optimise the organisational structure, while creating possibilities for selling online and print advertising packages.

It was also a good year for publishers. Although advertising income was largely in a downward trend, subscription income increased. AS Eesti Ajalehed that publishes newspapers Eesti Ekspress, Eesti Päevaleht and Maaleht improved its result by 46% and earned EUR 0.5 million in EBITDA. Contribution to the result during the year came from the series of Estonian children's films that were produced in cooperation with a group's book publisher Hea Lugu, and a series of detective novels, a cooperation project with third party book publisher Varrak. Our book publishing company Hea Lugu provided a positive surprise by earning an annual profit of EUR 0.1 million which is an increase of 71% from a year earlier. The strong annual result was attributable to the series of children's films in the first half and to several bestsellers published.

AS SL Õhtuleht increased its EBITDA result by 61% in a year to EUR 0.7 million. The result of AS Ajakirjade Kirjastus also improved this year, increasing by 49% and totalling EUR 0.5 million by the end of the year. The result of both AS SL Õhtuleht and AS Ajakirjade Kirjastus was influenced positively by smaller printing costs resulting from entering into new printing contracts with AS Kroonpress and AS Printall. Express Post, a home delivery service provider, grew 33% in a year, earning EUR 0.7 million in EBITDA.

Since only the net profit of our joint ventures is recognised in the Group's consolidated income statement prepared in accordance with new IFRS, the direct positive impact on consolidated results will be smaller due to amortisation of the trademarks and customer relations which now appear in the balance sheet of the joint ventures of AS SL Õhtuleht and AS Ajakirjade Kirjastus as a result of restructuring. However the positive impact is reflected in the EBITDA of the joint ventures themselves.

One of the most significant events in 2014 was the ending of the court dispute over the ownership of AS SL Õhtuleht and AS Ajakirjade Kirjastus. As a result of the dispute, AS Suits Meedia replaced AS Eesti Meedia as a shareholder in those two joint ventures. The immediate positive impact of the change in ownership was a significant decrease in the cost of printing services. In addition to a direct economic effect, this decision also has a long-term positive impact on the companies which have now more possibilities to compete in the market.

Very important event for the media segment was the growth in the number of paid digital subscriptions which exceeded 10,000 subscribers at the end of the year both for newspaper Eesti Ekspress and Eesti Päevaleht. It is also worth mentioning that weekly newspaper Eesti Ekspress celebrated its 25th birthday in autumn and at the same time Delfi celebrated its 15th birthday.

For online media companies, one of the most significant projects in 2014 was the development of the discount price portal Zave. By the end of the year, approximately 150 different merchants in the three Baltic States participated in this project.

The printing services segment increased its results ca 1% year-on-year and earned approximately EUR 6 million in EBITDA. In 2014, the key event in the printing services segment was the decision to acquire a new printing machine and its arrival in the last month of the year. The new sheet fed machine started production at the beginning of 2015.

At the end of the year we decided to launch a new business line - arrangement of entertainment events. The first project will be an exhibition in Riga about RMS Titanic that sank on her maiden voyage. The exhibition will open in the first half of 2015. After the Titanic exhibitions we will decide our further steps in terms of developing the business line of entertainment events.

In 2015 we expect the Group's business to gather pace and financial capability to increase. We expect to increase the consolidated revenue by 5% and the EBITDA by 8% at least. This includes 50% of the results of our joint ventures.

At the start of January we announced a merger between AS Eesti Ajalehed and AS Delfi into one entity. The objective of this step is to cut administrative bureaucracy in joint transactions between the two closely linked companies, to increase journalistic quality through the cooperation of editorial offices of both media entities and to provide paper and digital newspapers direct access to the marketing capacity of Estonian largest portal. For our advertising customers we wish to provide access to all our platforms from a single sales organisation.

We continue to develop the discount price portal Zave, a new innovative customer communication tool for retail merchants. We have also set a goal to increase the number of paid digital subscriptions up to 20 thousand by the end of the year.

We have also started the project in investing into Baltic startup companies with the objective of supporting young businesses that could develop their business with the help of the Group's marketing power in Baltic states and prepare expanding to larger international markets.

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.

Starting from 2014, in consolidated financial reports 50% joint ventures are recognised under the equity method, in compliance with new international financial reporting standards (IFRS). In its monthly reports, the management has continued to monitor 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% as previously and the other where joint ventures are recognised under the equity method and their net result is presented as financial income in one line.

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

20142013Change 20122011 style % ="font -size: 9pt;"> Perfor mance indic ators - joint ventu res conso lidate d 50% (EUR thous and) span> -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- ---------------------------------------------------------------- 61 38458 4275%59 70657 391> Sales reven uean> -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- ---------------------------------------------------------------- -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- ---------------------------------------------------------------- 8 8787 26422%7 8826 968> EBITDA 14.5%12.4%13.2%12.1%> EBITDA margi n (%) span> -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- ---------------------------------------------------------------- -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- ---------------------------------------------------------------- 5 6384 64721%4 5963 443> Operat ing profi t* n>9.2%8.0%7.7%6.0%> Operat ing margi n* (%) span> -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- ---------------------------------------------------------------- (732)(763)4%(1(2 style

549) 212) ="font -size: 9pt;"> Intere st expen sespan> -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- ---------------------------------------------------------------- -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- ---------------------------------------------------------------- 4 6203 54830%2 682893> Profit for the perio d*an>7.5%6.1%4.5%1.6%> Net margi n* (%) span> -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- ---------------------------------------------------------------- 5 1101 081373%2 5251 683> Net profi t for the perio d in the finan cial state ments n> (incl. impai rments and gain on chang e of owner ship inter est) span>8.3%1.9%4.2%2.9%> Net margi n (%) span> -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- ---------------------------------------------------------------- -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- ---------------------------------------------------------------- 6.6%1.4%3.2%2.0%> Return on asset s ROA (%) span>11.4%2.5%6.4%4.4%> Return on equit y ROE (%) span> -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- ---------------------------------------------------------------- 0.170.040.080.06> Earnin gs per share (EPS) -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- ----------------------------------------------------------------

* The results exclude allowances on impairments and one-off gains in relation to the acquisition in Eesti Päevalehe AS in 2011 and the change in ownership structure in joint ventures AS Ajakirjade Kirjastus and AS SL Õhtuleht in 2014. More information is disclosed in the Note 14 and Note 26 to the financial statements.

31.12.201431.12.201331.12.2012 style>Change% ="font -size: 9pt;"> Balanc e sheet - joint ventu res conso lidate d 50% n> (EUR thous and) span> -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- ------------------------------- At the end of the perio dn>15 18914 4475%13 545> Curren t asset sn>65 66563 0194%66 754> Non-cu rrent asset sn>80 85477 4664%80 299> Total asset sn> -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- ------------------------------- -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- ------------------------------- 6 7884 50151%3 280> incl. cash and bank39 43240 052-2%41 093> incl. goodw illpan> -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- ------------------------------- -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- ------------------------------- 14 11014 468-2%14 967> Curren t liabi lities 19 56920 673-5%24 233> Non-cu rrent liabi lities n>33 67935 141-4%39 200> Total liabi lities -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- ------------------------------- -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- ------------------------------- 24 59224 4321%28 580> incl. borro wings47 17542 32511%41 099> Equity -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- -------------------------------

31.12.2 e:9pt;">31.12.2 e:9pt;">31.12.2 50% 014 013 012 -------------------------------------------------------------------------------- Equitfont-siz>58%e:9pt;">55%e:9pt;">51%an> an> an>Debtfont-siz>52%e:9pt;">58%e:9pt;">70%an> an> an>Debtfont-siz>27%e:9pt;">32%e:9pt;">38%an> an> an>Totalfont-siz>2.61e:9pt;">3.36e:9pt;">3.63pan> pan> pan>Debtfont-siz>1.90e:9pt;">1.66e:9pt;">1.52 pan> pan> pan>Liquifont-siz>1.08e:9pt;">1.00e:9pt;">0.90pan> pan> pan> --------------------------------------------------------------------------------

FINANCIAL INDICATORS AND RATIOS - joint ventures recognisedunder the equity method

20142013Change 20122011 style % ="font -size: 9pt;"> Perfor mance indic ators - joint ventu res by the equit y metho d (EUR thous and) span> -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- ---------------------------------------------------------------- 52 79350 0865%51 29049 027> Sales reven ue (only subsi diarie s)an> -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- ---------------------------------------------------------------- -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- ---------------------------------------------------------------- 7 8946 59120%7 3456 311> EBITDA (only subsi diarie s)an>15.0%13.2%14.3%12.9%> EBITDA margi n (%) span> -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- ---------------------------------------------------------------- -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- ---------------------------------------------------------------- 4 9734 07122%4 1732 930> Operat ing profi t* (only subsi diarie s)an>9.4%8.1%8.1%6.0%> Operat ing margi n* (%) span> -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- ---------------------------------------------------------------- -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- ---------------------------------------------------------------- (689)(763)10%(1(2 style

550) 219) ="font -size: 9pt;"> Intere st expen ses (only subsi diarie s)an>55749413%339421> Profit of joint ventu res by equit y metho dn> -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- ---------------------------------------------------------------- -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- ---------------------------------------------------------------- 4 6213 54830%2 682893> Profit for the perio d*an>8.8%7.1%5.2%1.8%> Net margi n* (%) span> -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- ---------------------------------------------------------------- 5 1101 081373%2 5251 683> Net profi t for the perio d in the finan cial state ments n> (incl. impai rments and gain on chang e of owner ship inter est) span>9.7%2.2%4.9%3.4%> Net margi n (%) span> -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- ---------------------------------------------------------------- -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- ---------------------------------------------------------------- 6.8%1.4%3.2%2.0%> Return on asset s ROA (%) span>11.4%2.5%6.4%4.4%> Return on equit y ROE (%) span> -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- ---------------------------------------------------------------- 0.170.040.080.06> Earnin gs per share (EPS) -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- ----------------------------------------------------------------

* The results exclude allowances on impairments and one-off gains in relation to the acquisition in Eesti Päevalehe AS in 2011 and the change in ownership structure in joint ventures AS Ajakirjade Kirjastus and AS SL Õhtuleht in 2014. More information is disclosed in the Note 14 and Note 26 to the financial statements.

31.12.201431.12.2013Change31.12.2012 style % ="font -size: 9pt;"> Balanc e sheet - joint ventu res by equit y metho d (EUR thous and) span> -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- -------------------------------- As at the end of the perio dn>12 30311 3578%10 747> Curren t asset sn>64 29263 8991%67 470> Non-cu rrent asset sn>76 59575 2562%78 217> Total asset sn> -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- -------------------------------- -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- -------------------------------- 5 2752 209139%1 291> incl. cash and bank38 15339 596-4%40 637> incl. goodw illpan> -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- -------------------------------- -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- -------------------------------- 11 48112 259-6%12 885> Curren t liabi lities 17 93920 672-13%24 233> Non-cu rrent liabi lities 29 42032 931-11%37 118> Total liabi lities -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- -------------------------------- -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- -------------------------------- 23 15224 432-5%28 580> incl. borro wings47 17542 32511%41 099> Equity -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- --------------------------------

31.12.2 e:9pt;">31.12.2 ze:9pt;">31.12 method 014 013 .2012 -------------------------------------------------------------------------------- Equityfont-siz>62%e:9pt;">56%ze:9pt;">53% an> an> span>Debtfont-siz>49%e:9pt;">58%ze:9pt;">70% an> an> span>Debtfont-siz>27%e:9pt;">34%ze:9pt;">40% an> an> span>Totalfont-siz>2.93e:9pt;">3.71ze:9pt;">3.89 pan> /span>Debtfont-siz>1.77e:9pt;">1.50ze:9pt;">1.36 pan> pan> /span>Liquidfont-siz>1.07e:9pt;">0.93ze:9pt;">0.83 pan> /span> --------------------------------------------------------------------------------

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. 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 increase in subscriptions and retail sale which usually continues until next summer holiday period.

Formulas used to calculate the financial ratios -------------------------------------------------------------------------------- - EBITDA margin>(%) -------------------------------------------------------------------------------- Operating Operating margin>* (%) -------------------------------------------------------------------------------- Net Net margin* (%) profit*/sales x100 -------------------------------------------------------------------------------- Net margin Net (%) profit /sales x100 -------------------------------------------------------------------------------- Earnings Net per share profit / average number of shares -------------------------------------------------------------------------------- EquityEquity/ ratio (%) (liabilities + equity) x100 -------------------------------------------------------------------------------- Debt toInterest equity ratio (%) bearing liabilities /equity x 100 -------------------------------------------------------------------------------- Debt toInterest capital ratio (%) bearing liabilities - cash and cash equivalents (net debt) /(net debt +equity) x 100 -------------------------------------------------------------------------------- TotalInterest debt/EBITDA ratio bearing borrowings /EBITDA -------------------------------------------------------------------------------- Debt>EBITDA/loan and interest payments for the period -------------------------------------------------------------------------------- LiquidityCurrent ratio assets / current liabilities -------------------------------------------------------------------------------- Return onNet profit assets ROA (%) /average assets x 100 -------------------------------------------------------------------------------- Return onNet profit equity ROE (%) /average equity x 100 --------------------------------------------------------------------------------

* The results exclude allowances on impairments and one-off gains in relation to the acquisition in Eesti Päevalehe AS in 2011 and the change in ownership structure in joint ventures AS Ajakirjade Kirjastus and AS SL Õhtuleht in 2014. More information is disclosed in the Note 14 and Note 26 to the financial statements.

SEGMENT OVERVIEW

Key financial data of the segments 2011-2014

From the 3rd quarter of the current year when the Group's Lithuanian subsidiaries were merged, the Group's activities are divided into the media segment and the printing services segment. Previously, the entities of the media segment were divided into online media and periodicals segments.

The segments' EBITDA does not include intragroup management fees, and 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.

-------------------------------------------------------------------------------- -------------------------------------------------------------------------------- ------------------------------------------------------------ SalesSales> (EUR thous and) span> -------20142013Change 20122011

% -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- ------------------------------------------------------------------- -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- ------------------------------------------------------------------- 27 45925 8426%25 56223 789> media segme nt (by equit y metho d)an>13 44911 59516%10 5619 111> incl. reven ue from all digit al and onlin e chann elspan>28 95127 4625%29 16727 736> printi ng servi cespan>1 7311 53013%996209> corpor ate funct ions span>(5 347)(4 748)13%(4 435)(2 707)> inters egment elimi nation sn> -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- ------------------------------------------------------------------- 52 79350 0865%51 29049 027 >TOTAL GROUP by equit y metho dn> -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- ------------------------------------------------------------------- -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- ------------------------------------------------------------------- 36 93034 9556%34 77332 771> media segme nt by propo rtiona l conso lidati onan>14 30612 22617%11 1479 673> incl. reven ue from all digit al and onlin e chann elspan>28 95127 4625%29 16727 736> printi ng servi cespan>1 7311 53013%996209> corpor ate funct ions span>(6 228)(5 520)13%(5 230)(3 325)> inters egment elimi nation sn> -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- ------------------------------------------------------------------- 61 38458 4275%59 70657 391 >TOTAL GROUP by propo rtiona l conso lidati onan> -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- -------------------------------------------------------------------

-------------------------------------------------------------------------------- -------------------------------------------------------------------------------- ----------------------------------------------------------- EBITDAEBITDA> (EUR thous and) span> -------20142013Change 20122011

% -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- ------------------------------------------------------------------ 3 0252 12342%2 0891 325> media segme nt by equit y metho dn>4 013 2 79244%2 6241 977> media segme nt by propo rtiona l conso lidati onan>5 9445 8621%6 0525 959> printi ng servi cespan>(1 076)(1 356)21%(797)(980)> corpor ate funct ions span>0(38)101%17> inters egment elimi nation sn> -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- ------------------------------------------------------------------ 7 8946 59120%7 3456 311 >TOTAL GROUP by equit y metho dn> -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- ------------------------------------------------------------------ 8 8787 26422%7 8826 968 >TOTAL GROUP by propo rtiona l conso lidati onan> -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- ------------------------------------------------------------------

-------------------------------------------------------------------------------- -------------------------------------------------------------------------------- ------- 2014201320122011> EBITDA margi nn> ------- 11%8%8%6%> media segme nt by equit y metho dn>11%8%8%6%> media segme nt by propo rtiona l conso lidati onan>21%21%21%21%> printi ng servi cespan> -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- -------------- 15%13%14%13% >TOTAL GROUP by equit y metho dn> -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- -------------- 15%12%13%12% >TOTAL GROUP by propo rtiona l conso lidati onan> -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- --------------

MEDIA SEGMENT

The media segment includes Delfi operations in Estonia, Latvia and Lithuania as well as the parent company Delfi Holding. Starting from 1 March 2014, the operations of Delfi in Ukraine have been terminated. EBITDA of Delfi Ukraine also includes expenses related to the termination of operations. The media segment also includes AS Eesti Ajalehed (publisher of Maaleht, Eesti Ekspress and Eesti Päevaleht), book publisher OÜ Hea Lugu as well as magazine publisher UAB Ekspress Leidyba in Lithuania, the latter having been merged into Delfi Lithuania on 1 July 2014.

This segment also includes joint ventures AS SL Õhtuleht (publisher of Õhtuleht and Linnaleht), magazine publisher AS Ajakirjade Kirjastus and home delivery company AS Express Post.

News portals owned by the Group

Owner 9pt;">Portalpt;">Owner 9pt;">Portal > -------------------------------------------------------------------------------- Delfi 9pt;">www.delfi.ee pt;">AS Eesti 9pt;">www.ekspress Estonia Ajalehed .ee --------------------------------------------------------------------------------rus.delfi.ee 9pt;">www.maaleht. ee -------------------------------------------------------------------------------- Delfi 9pt;">www.delfi.lv 9pt;">www.epl.ee Latvia span> --------------------------------------------------------------------------------rus.delfi.lv -------------------------------------------------------------------------------- Delfi 9pt;">www.delfi.lt pt;">AS SL 9pt;">www.ohtuleht Lithuania Õhtuleht .ee --------------------------------------------------------------------------------ru.delfi.lt --------------------------------------------------------------------------------

Classified portals owned by the Group

Owner 9pt;">Portalpt;">Owner pt;">Portal > -------------------------------------------------------------------------------- Delfi 9pt;">www.alio.lt pt;">AS Eesti pt;">www.ej.eeLithuania Ajalehed n> --------------------------------------------------------------------------------www.ekspressau to.ee --------------------------------------------------------------------------------

------- Sales> (EUR thous and) span>

-------------------------------------------------------------------------------- ---------------------------------------------------20142013Change

% -------------------------------------------------------------------------------- ---------------------------------------------------------- 5 0204 10122%> Delfi Eston iaan>2 5622 3788%> Delfi Latvi an>8 0477 4398%> Delfi Lithu ania (incl . Ekspr ess Leidy ba)pan>5 5574 80616%> incl. onlin e reven ues n>253-96%> Delfi Ukrai nean>11 33011 2351%> AS Eesti Ajale hedpan>792987-20%> OÜ Hea Lugu n>0 0-> other compa nies (Delf i Holdi ng)pan>(294)(351)16%> inters egment elimi nation sn>27 45925 8426% >TOTAL (subs idiari es)pan> -------------------------------------------------------------------------------- ---------------------------------------------------------- -------------------------------------------------------------------------------- ---------------------------------------------------------- 3 9093 7345%> AS SL Õhtul eht* span>4 2244 0365%> AS Ajaki rjade Kirja stus*2 4152 3513%> AS Expre ss Post* (1 077)(1 008)-7%> additi onal elimi nation sn> -------------------------------------------------------------------------------- ---------------------------------------------------------- 9 4719 1124%> TOTAL (join t ventu res) span> -------------------------------------------------------------------------------- ---------------------------------------------------------- 36 93034 9556% >TOTAL segme nt by propo rtiona l conso lidati on n> -------------------------------------------------------------------------------- ----------------------------------------------------------

-------------------------------------------------------------------------------- -------------------------------------------------------- EBITDA> (EUR thous and) span>20142013Change

% -------------------------------------------------------------------------------- -------------------------------------------------------- 57529198%> Delfi Eston iaan>90133-32%> Delfi Latvi an>1 2951 05623%> Delfi Lithu ania (incl . Ekspr ess Leidy ba)pan> incl. onlin e reven ues n>(51)(195)74%> Delfi Ukrai nean>53936946%> AS Eesti Ajale hedpan>945571%> OÜ Hea Lugu n>47942114%> other compa nies (Delf i Holdi ng)pan>3(7)-> inters egment elimi nation sn>3 0252 12342% >TOTAL (subs idiari es)pan> -------------------------------------------------------------------------------- -------------------------------------------------------- -------------------------------------------------------------------------------- -------------------------------------------------------- 35622161%> AS SL Õhtul eht* span>25717249%> AS Ajaki rjade Kirja stus*37227933%> AS Expre ss Post* 2(3)168%> additi onal elimi nation sn> -------------------------------------------------------------------------------- -------------------------------------------------------- 98767047%> TOTAL (join t ventu res) span> -------------------------------------------------------------------------------- -------------------------------------------------------- 4 0132 79244% >TOTAL segme nt by propo rtiona l conso lidati on n> -------------------------------------------------------------------------------- --------------------------------------------------------

* Proportional share of joint ventures

Delfi Estonia

  • Further development of Delfi TV on a standalone new platform and the increasing number of live webcasts under the Delfi TV brand. Major projects included, already for the second year events dedicated to the anniversary of the Republic of Estonia, reports from Olympic Games, FIBA World Cup, Song and Dance Festival, visit of US President Barack Obama in Estonia, streams from basketball matches abroad and webcasts from games of 5 different Estonian leagues etc.
  • Websites for weather and jokes were renewed. The latter was re-named www.igav.ee.
  • A new verticals were launched: www.kasulik.ee aimed at regular consumers, www.elutark.ee directed to elderly people, www.catwalk.ee intended for people with interest on fashion.
  • Cooperation with the New Age portal www.alkeemia.ee.
  • Cross Baltic development of portal www.zave.ee, intented for information about discount offers in the city.
  • Launching of a new comments' section which has increased the number of comments posted by registered users.
  • Delfi's mobile application was renewed.
  • Delfi celebrated it's 15th birthday in November. "A day with Delfi" was presented for showing to the users how Delfi everyday work is being done and news produced.
Estonian online readership 2013-2014

In the third quarter 2014, TNS Emor changed the methodology of its TNS Metric survey, which explains the sharp increase in the number of users. The main essence of the change is more accurate measurement and separate reporting of the number of mobile users. As a result of this change, Delfi remains the largest news portal in Estonia. This applies both to the number of PC and mobile users who visit the news portals. The increase of the usres in Estonian internet market can be also explained by the increasing number of mobile users using smartphones. This will remain the key priority for news organisations to serve mobile users.

Delfi Latvia

  • In July and August, Delfi was the largest online portal in Latvia succeding also the local e-mail provider inbox.lv.
  • Delfi TV streams based on a new platform from such events as matches of the Latvian basketball league and ice hockey league, an exclusive cabaret show from Concert Hall Palladium, opening of the National Library, etc.
  • During the year many new verticals have been launched: travel site www.turismagids.lv both in Latvian and Russian, humour website www.loli.lv, new weather portal www.laika-zinas.lv, home and garden portal www.majadarzs.lv, new portal for women www.vina.lv, Russian portals covering politics www.spektr.lv, easy reading portals aimed at younger generation in Latvian www.skats.lv and Russian www.tchk.lv, health portal www.rutks.lv.
  • Cross Baltic development of portal www.zave.lv, intented for getting overview about discount offers in the city.
  • Media partner for several cooperation projects and teams:
    • Latvian Music Awards "The Great Music Award"
    • Positivus Festival and several Latvian music bands
    • Baltic Pearl Film and International Film Festival
    • Marketing Festival "Password" and international advertising festival "Golden Hammer 2014"
    • Riga Fashion Week
    • Riga Marathon
    • Latvian national ice-hockey team
    • Award of the year in Sports etc.
Latvian online readership 2013-2014

In July and August 2014, Delfi.lv became Latvia's largest online portal for the first time, exceeding the readership of inbox.lv. In September, however, Inbox.lv had again more users than Delfi.lv. In spite of the merger of tvnet.lv and apollo.lv in the 2nd quarter, their readership has not exceeded that of Delfi. In addition, the first available data on the number of users of mobile equipment are very favourable for Delfi.lv. Delfi is exceeding Latvian competitors in terms of mobile equipment by more than 20%.

During the 4th quarter competitive situation remained stable with inbox.lv holding the first position in readership numbers. Delfi has been holding the second position and has been the most read newsportal in Latvia.

Starting from January 2014, the method of the Gemius online survey has changed. The readership in 2014 includes only results for computer users (PC) and excludes all mobile equipment. Separate statistics on mobile equipment will be created in the beginning of 2015.

Delfi Lithuania

  • In November and December DELFI news portal achieved its all time high readership records.
  • Delfi TV was launched on a new platform and has produced live webcast and streams from such events as Login, the largest tech conference in the Baltic states, ideas conference Tedx Vilnius, Davis Cup tennis match between Lithuania and Norway, various fashion and theatre events, Geneva Automotive Show, etc. DELFI signed long lasting contracts with National Basketball League and Lithuanian Basketball Federation and got an exclusive internet streaming rights to broadcast more than 700 sport streams in 2015.
  • Delfi TV launched a daily TV programme with news in brief that in 2 minutes wraps up the most important and interesting news and produced several documentary series.
  • New TV channels "Moteris TV" ("Lithuanian Woman") and "Mano namai TV" ("My Home") were launched.
  • Several new verticals were launched and existing sub-sites were renewed. New jokes site www.Galjuokauji.lt, a special co-site kablys.delfi.lt dedicated to fisherman audience, a new Delfi English Channel.
  • Co-operation projects such as: special co-site dedicated to auto fans in a partnership with Top Gear magazine, two major on-line automotive projects with the partners "Top Gear Awards" and "Car of the Year" to attract more male audience, special project with www.Kur.lt Lithuanian entertainment guide aimed at young city audience, a food order platform lekste.lt was integrated into Delfi recipes vertical www.1000receptu.lt.
  • The layout of the mobile application was renewed and information was added, making Delfi the most popular newsportal in mobile phones and tablet PCs.
  • DELFI changed social media strategy and dedicated additional resources within organization. Due to those activities significatly increased effectiviness in working with social media.
  • Delfi and the Lithuanian magazine publisher Ekspress Leidyba were merged into one media house enabling further synergies between those two companies.
Lithuanian online readership 2013-2014

Delfi continues to be the largest online portal in Lithuania. In the 4th quarter, there were no major changes in preferences of Internet users in Lithuania. The initial data about the users of mobile equipment shows that the competition in this segment in Lithuania is very tough and other portals are closer to Delfi in readership than in computer users (PC). Delfi ended year with a new record of monthly real users - 1.198.737 and reached the highest gap between Delfi and 15min.lt - 19,45%. Starting from January 2014, the method of the Gemius online survey has changed. The readership in 2014 includes only results for computer users (PC) and excludes all mobile equipment. Separate statistics on mobile equipment will be created in the beginning of 2015.

Print-media in Estonia

Estonian newspaper circulation 2013-2014

Circulations of Estonian newspapers have remained stable or are falling moderately. The circulation of daily newspapers is falling faster than that of weekly newspapers. As of the 4th quarter 2014, there has also been a significant development in the market - Õhtuleht has been the newspaper with the largest circulation in Estonia for three consecutive months. Other Group publications also performed well during the second half of the year, with all Eesti Päevaleht, Maaleht and Eesti Ekspress increasing circulation. One also needs to add to these figures the number of subscribers of digital newspapers which totalled more than 10 thousand for both Eesti Ekspress and Eesti Päevaleht, as of the end of the 2014.

Estonian newspaper readership 2013-2014

Over the recent two years, newspaper readership has been fairly stable. Õhtuleht has been one of the most successful newspaper brand, that has been growing it's readership. Other two daily newspapers, Postimees and Eesti Päevaleht, has been losing readers. Weekly newpapers are also in a stable readership trend. The number of readers of digital newspapers of the Group is not included in the above figures and the number of readers of all publications of the Group is higher than shown in the graph above.

PRINTING SERVICES SEGMENT

All printing services of the Group are provided by AS Printall which is one of the largest printing companies in Estonia. Printall is able to print both newspapers (coldset) and magazines (heatset).

------- Sales> (EUR thous and) span>

-------------------------------------------------------------------------------- -----------------------------------------------20142013Change

% -------------------------------------------------------------------------------- ------------------------------------------------------ 28 95127 4625%> AS Print allpan> -------------------------------------------------------------------------------- ------------------------------------------------------

-------------------------------------------------------------------------------- ---------------------------------------------------- EBITDA> (EUR thous and) span>20142013Change

% -------------------------------------------------------------------------------- ---------------------------------------------------- 5 9445 8621%> AS Print allpan> -------------------------------------------------------------------------------- ----------------------------------------------------

In 2014 AS Printall managed to increase its revenues 5%, out of which 5.7% is allocated to increase of services provided and 5.2% sales of paper. Due to changes in political landscape there have been changes in the structure of export markets where the share of Russia continues to decrease.

In June, AS Printall signed a contract for the acquisition of a new sheetfed printing machine. The machine will be used for printing magazine covers, small-circulation magazines and advertising products. The production will start at the beginning of 2015. Approximately 2/3 of the acquisition cost is financed with a long-term loan.

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 FINANCIAL STATEMENTS

Consolidated balance sheet

31.12.201431.12.201301.01.2013> (EUR span> thous andpan> )n> -------------------------------------------------------------------------------- ----------------------------------------------------------------------

-------------------------------------------------------------------------------- --------------------------------------------------------------- ASSETS Curren t asset sn>3 6562 1111 193> Cash and cash equiv alents 19980> Term depos itspan>6 5196 7746 912> Trade and other recei vables 374514> Corpor ate incom e tax recei vable2 0722 3292 531> Invent ories0097> Assets held for sale -------------------------------------------------------------------------------- ---------------------------------------------------------------------- 12 30311 35710 747> Total curre nt asset sn> -------------------------------------------------------------------------------- ---------------------------------------------------------------------- -------------------------------------------------------------------------------- ---------------------------------------------------------------------- Non-cu rrent asset sn>1 600098> Term depos itan>1 170269228> Trade and other recei vables 65130137> Deferr ed tax asset 5001 5431 362> Invest ments in joint ventu respan>16400> Invest ments in assoc iates14 50613 59514 775> Proper ty, plant and equip ment n>46 28748 36250 870> Intang ible asset sn>64 29263 89967 470> Total non-c urrent asset sn> -------------------------------------------------------------------------------- ---------------------------------------------------------------------- 76 59575 25678 217> TOTAL ASSET Sn> -------------------------------------------------------------------------------- ---------------------------------------------------------------------- -------------------------------------------------------------------------------- ---------------------------------------------------------------------- LIABIL ITIES n> Curren t liabi lities 5 2133 7604 347> Borrow ings span>6 2498 4368 418> Trade and other payab lespan>1963120> Corpor ate incom e tax payab lean>11 48112 25912 885> Total curre nt liabi lities n> Non-cu rrent liabi lities n>17 93920 67224 233> Long-t erm borro wings n>17 93920 67224 233> Total non-c urrent liabi lities -------------------------------------------------------------------------------- ---------------------------------------------------------------------- 29 42032 93137 118> TOTAL LIABI LITIES -------------------------------------------------------------------------------- ---------------------------------------------------------------------- -------------------------------------------------------------------------------- ---------------------------------------------------------------------- EQUITY 17 87817 87817 878> Share capit al n>14 27714 27714 277> Share premi uman>(64)00> Treasu ry share sn>1 4401 250740> Reserv esan>13 6448 8488 190> Retain ed earni ngspan>07214> Curren cy trans lation reser vean>47 17542 32541 099> TOTAL EQUIT Y n> -------------------------------------------------------------------------------- ---------------------------------------------------------------------- 76 59575 25678 217> TOTAL LIABI LITIES AND EQUIT Yn> -------------------------------------------------------------------------------- ----------------------------------------------------------------------

Consolidated statement of comprehensive income

20142013> (EUR span> thous andpan> )n> -------------------------------------------------------------------------------- --------------- -------------------------------------------------------------------------------- --------------- 52 79350 086> Sales reven uean>(40(39 style 688) 195) ="font -size: 9pt;"> Cost of sales 12 10510 891> Gross profi tn>470542> Other incom en>(2 011)(1 style 864) ="font -size: 9pt;"> Market ing expen sespan>(5 438)(5 style 396) ="font -size: 9pt;"> Admini strati ve expen sespan>(153)(102)> Other expen sespan>1 9330> Gain from chang e in owner ship inter est in joint ventu res n> -------------------------------------------------------------------------------- --------------- (1 443)(2 style 467) ="font -size: 9pt;"> Impair ment of goodw ill and trade marks -------------------------------------------------------------------------------- --------------- 5 4631 604> Operat ing profi tn> -------------------------------------------------------------------------------- ---------------

-------------------------------------------------------------------------------- -------- 275> Intere st incom en>(689)(763)> Intere st expen sean>33 (71)> Foreig n excha nge gains (loss es)pan>(90)(58)> Other finan ce costs (719) (887)> Net finan ce cost557494> Profit (loss ) on share s of joint ventu respan> 2320> Profit (loss ) from inves tments in assoc iates5 3241 231> Profit befor e incom e tax span>(214)(150)> Income tax expen sean> -------------------------------------------------------------------------------- --------------- 5 1101 081> Profit for the repor ting perio dn> -------------------------------------------------------------------------------- --------------- -------------------------------------------------------------------------------- --------------- Net profi t for the repor ting perio d attri butabl e topan> :n>5 1101 081> Equity holde rs of the paren t compa nyan> Other compr ehensi ve incom e that may be subse quentl y recla ssifie d to profi t or loss(34)58> Curren cy trans lation diffe rences 5 0761 139> Total other compr ehensi ve incom e for the perio dn> Compre hensiv e incom e for the repor ting perio d attri butabl e to: span>5 0761 139> Equity holde rs of the paren t compa nyan>0.170.04> Basic and dilut ed earni ngs per share n> -------------------------------------------------------------------------------- ---------------

Consolidated cash flow statement

20142013> (EUR span> thous andpan> )n> -------------------------------------------------------------------------------- ------------ Cash flows from opera ting activ ities -------------------------------------------------------------------------------- ------------ 5 4631 604> Operat ing profi t for the repor ting year -------------------------------------------------------------------------------- ------------ -------------------------------------------------------------------------------- ------------ Adjust ments for:2 9212 521> Deprec iation , amort isatio n and impai rment n>1 4432 467> Loss on trade mark and goodw ill impai rment(10 style 933) ="font -size: 9pt;"> Gain from chang e in owner ship inter est in joint ventu res n>6(30)> (Gain) /loss on sale and write -down of prope rty, plant and equip ment span>136384> Change in value of share optio nn> Cash flows from opera ting activ ities: 33472> Trade and other recei vables 251242> Invent ories(216 style 250) ="font -size: 9pt;"> Trade and other payab lespan>6 3717 276> Cash gener ated from opera tions(185)(240)> Income tax paid(692)(794)> Intere st paid

-------------------------------------------------------------------------------- ----- 5 4946 242> Net cash gener ated from opera ting activ ities n> -------------------------------------------------------------------------------- ------------ -------------------------------------------------------------------------------- ------------ Cash flows from inves ting activ ities n>(10 style 600) ="font -size: 9pt;"> Term depos it (plac ement) /relea sean>2 3540> Receiv ed on restr ucturi ng of joint ventu respan>(3)0> Invest ments in joint ventu respan>(135)0> Acquis ition of assoc iate span>0(327)> Acquis ition of subsi diary0(15)> Purcha se of other inves tments 634> Intere st recei vedpan>(3(769) style 101) ="font -size: 9pt;"> Purcha se of prope rty, plant and equip ment span>13107> Procee ds from sale of prope rty, plant and equip ment span>(24)(3)> Loans grant edan>76> Loan repay ments recei vedpan>

-------------------------------------------------------------------------------- ----- (2(967) style 483) ="font -size: 9pt;"> Net cash used in inves ting activ ities n> -------------------------------------------------------------------------------- ------------ -------------------------------------------------------------------------------- ------------ Cash flows from finan cing activ ities(298)(298)> Divide nds paid203312> Divide nd recei ved from joint ventu respan>(75)(25)> Financ e lease repay ments1 117(745)> Change in use of overd raft span>1 3460> Loan recei ved n>(3(3 style 695) 600) ="font -size: 9pt;"> Repaym ents of bank loans (64)0> Purcha se of treas ury share sn> -------------------------------------------------------------------------------- ------------ (1(4 style 466) 357) ="font -size: 9pt;"> Net cash used in finan cing activ ities n> -------------------------------------------------------------------------------- ------------ 1 545918> NET (DECR EASE)/ INCREA SE IN CASH AND CASH EQUIV ALENTS -------------------------------------------------------------------------------- ------------

-------------------------------------------------------------------------------- ----- 2 1111 193> Cash and cash equiv alents at the begin ning of the year3 6562 111> Cash and cash equiv alents at the end of the year -------------------------------------------------------------------------------- ------------

Additional information: Gunnar Kobin Chairman of the Management Board GSM: +372 5188111 e-mail: This email address is being protected from spambots. You need JavaScript enabled to view it.

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