Market announcement

Title

AS Ekspress Grupp Consolidated Interim Report for the Fourth Quarter and Twelve Months of 2011

Message

Tallinn, Estonia, 2012-02-29 14:59 CET (GLOBE NEWSWIRE) --


The following report presents the consolidated financial information of AS
Ekspress Grupp, the related market developments and management decisions. The
financial indicators and ratios show the outcome of the Group’s continuing
operations, i.e. they express the consolidated operating results of online
media, periodicals and printing services segments. 



Key financial indicators and financial ratios

Financial indicators                          Q4 2011  Q4 2010  Change%
(EUR thousand)                                                         
-----------------------------------------------------------------------
For the reporting period                                               
Sales                                          16 313   14 885      10%
Gross profit                                    3 660    3 466       6%
EBITDA                                          1 236    1 854     -33%
EBITDA (excl. change in  goodwill)              1 986    1 854       7%
Operating profit                                  287    1 016     -72%
Operating profit (excl. change in goodwill)     1 037    1 016       2%
Net profit/(loss) from continuing operations    (215)      210    -202%
Net profit/(loss) for the period                (215)      210    -202%
-----------------------------------------------------------------------



Financial indicators                     12 months 2011  12 months 2010  Change%
(EUR thousand)                                                                  
--------------------------------------------------------------------------------
For the reporting period                                                        
Sales                                            57 391          51 814      11%
Gross profit                                     12 544          11 294      11%
EBITDA                                            7 757           6 041      28%
EBITDA (excl. change in  goodwill)                6 967           6 041      15%
Operating profit                                  4 233           2 760      53%
Operating profit (excl. change in                 3 443           2 760      25%
 goodwill)                                                                      
Net profit/(loss) from continuing                 1 683           (509)     431%
 operations                                                                     
Net profit/(loss) for the period                  1 683           (146)    1250%
--------------------------------------------------------------------------------



Profitability ratios (%)                          Q4  2011  Q4 2010
-------------------------------------------------------------------
                                                 ------------------
Sales growth (%)                                     10%      10%  
Gross margin (%)                                     22%      23%  
EBITDA margin (%) (excl. change in  goodwill)        12%      12%  
Operating margin (%) (excl. change in  goodwill)     6%        7%  
Net margin (%)                                       -1%       1%  
ROA (%)                                              0%        0%  
ROE (%)                                              -1%       1%  
-------------------------------------------------------------------
Earnings per share  EUR                            (0.01)    0.01  
-------------------------------------------------------------------



Profitability ratios (%)                          12 months 2011  12 months 2010
--------------------------------------------------------------------------------
                                                 -------------------------------
Sales growth (%)                                       11%              0%      
Gross margin (%)                                       22%             22%      
EBITDA margin (%) (excl. change in  goodwill)          12%             12%      
Operating margin (%) (excl. change in  goodwill)        6%              5%      
Net margin (%)                                          3%              0%      
ROA (%)                                                 2%              0%      
ROE (%)                                                 4%              0%      
--------------------------------------------------------------------------------
Earnings per share  EUR                                0.06           (0.01)    
--------------------------------------------------------------------------------



Formulas used to calculate the financial ratios:

Sales growth (%)      (sales 2011 – sales 2010)/ sales 2010*100             
Gross margin (%)      gross profit/sales*100                                
Net margin (%)        net profit/sales*100                                  
EBITDA margin (%)     EBITDA (excl. change in  goodwill)/sales*100          
Operating margin (%)  Operating profit (excl. change in  goodwill)/sales*100
Earnings per share    net profit/average number of shares                   
ROA (%)                             net profit/average assets *100          
ROE (%)                             net profit/average equity *100          
                                                                            



Financial indicators         31.12.2011  31.12.2010  Change %
(EUR thousand)                                               
-------------------------------------------------------------
As of the end of the period                                  
Current assets                   12 523      12 729       -2%
Non-current assets               68 986      73 253       -6%
Total assets                     81 509      85 982       -5%
-------------------------------------------------------------
-------------------------------------------------------------
Current liabilities              16 547      16 018        3%
Non-current liabilities          26 574      33 665      -21%
Total liabilities                43 121      49 683      -13%
-------------------------------------------------------------
Equity                           38 388      36 299        6%
-------------------------------------------------------------





Financial position ratios (%)  31.12.2011  31.12.2010
-----------------------------------------------------
Equity ratio (%)                      47%         42%
Liquidity ratio                       0.8         0.8
Debt to equity ratio (%)              83%        107%
Debt to capital ratio (%)             43%         48%
-----------------------------------------------------

Formulas used to calculate the financial ratios:

Equity ratio (%)        equity / (liabilities + equity)* 100                    
Liquidity ratio         current assets/current liabilities                      
Debt to equity ratio    interest bearing liabilities /equity*100                
 (%)                                                                            
Debt to capital ratio   interest bearing liabilities –cash and cash equivalents 
 (%)                     (net debt)/                                            
                        (net debt+ equity)*100                                  



The year 2011 was a year of restored growth for Ekspress Group. The improved
economic environment helped the company to earn a net profit for the first time
since the beginning of the economic crisis. Our net profit totalled EUR 1.7
million as compared to the loss of EUR 0.1 million in 2010. Our EBITDA growth
was 28% as compared to last year, totalling EUR 7.8 million as compared to EUR
6.0 million in 2010. The company’s sales increased by 11%, totalling EUR 57.4
million as compared to EUR 51.8 last year. In 2011, sales exceeded the budget
by 2%. 

The operating results of 2011 were impacted by several extraordinary activities.

-          The net extraordinary gain arising from the revaluation profit of
ownership in  Eesti Päevalehe AS and the impairment loss recognised for
goodwill of Eesti Päevaleht, Lithuanian magazine publisher Ekspress Leidyba and
Delfi Latvia in  amount  EUR 790 thousand; 

-          Information technology developments  made previously at Eesti
Päevalehe AS were written down in the amount of EUR 270 thousand; 

-          We incurred extraordinary one-off expenses in the amount of ca EUR
150 thousand related to the merger and relocation of the editorial offices of
Eesti Päevalehe AS and AS Eesti Ajalehed. 



Excluding the net result attributable to revaluation gain and change in
goodwill, we earned normalised  EBITDA in the amount of EUR 7.0 million which
is 15% higher than last year and net profit from continuing operations in the
amount of EUR 0.9 million, which is EUR 1.5 million higher than last year. The
EBITDA margin increased by 0.6% in 2011. 

In 2011, the company’s restructuring process which had already been launched
two years ago, continued. 



In the periodicals segment, the most significant event was the acquisition of
an ownership interest in Eesti Päevalehe AS at the beginning of the year.  This
acquisition was a cash-free transaction. The former co-shareholder Jaan
Manitski’s company OÜ Vivarone acquired the real estate property previously in
the ownership of Eesti Päevalehe AS (also current premises used by the
editorial office) and AS Ekspress Grupp acquired the shares of Eesti Päevalehe
AS from OÜ Vivarone previously held by the latter. As a consequence of the
merger of Eesti Päevalehe AS and AS Eesti Ajalehed in the second half of the
year, we managed to stabilise the economic activities of the newspaper Eesti
Päevaleht and considerably improve the organisational efficiency of these two
companies due to their merger. The estimated net gain from the acquisition of
Eesti Päevalehe AS and its merger with AS Eesti Ajalehed is almost EUR 0.4
million for the year, manifested primarily in the improvement of efficiency. In
addition to attainment of organisational efficiency, the merger enabled us to
launch joint marketing packages both in the sale of advertisements as well as
newspaper subscriptions, which had previously been independent of each other.
More specifically, this manifests itself in cross-marketing of the newspapers
published by AS Eesti Ajalehed as well as in preparation of joint product
packages, the best example of which is the joint subscription packages of
digital newspapers of Eesti Päevaleht and Eesti Ekspress. 

In 2011, the second most important focus in the operations of the periodicals
segment was development of digital newspapers. The digital products in our
product portfolio include pay-per-read articles, the access to which can be
bought through the newspapers’ online pages, digital newspapers of Eesti
Ekspress and Eesti Päevaleht which can be accessed through web browsers to be
read in personal computers and the applications of Eesti Ekspress, Eesti
Päevaleht and Ärileht for tablet computers. Based on the results of operations
for the year 2011, we can state that Ekspress Grupp is the pioneer of digital
publishing of periodicals. A significant acknowledgement of our digital product
development was the ninth place won by Eesti Ekspress iPad application in the
global digital publications contest WAN-IFRA XMA Cross Media Awards 2011, where
our competitors were large, globally well-known publications. We also consider
development of the time-based paywall for consumption of the digital content
which we have created and the marketing chain based thereon to be unique in the
world. However, the contribution of  digital publishing revenue to the total
periodicals segment is still insignificant. 

During the restructuring of the periodicals segment, we decided to combine the
separate book-publishing operations of newspapers into one entity, for the
purpose of which we set up a new private limited company Hea Lugu. For the
purpose of comparability, we shall treat this company as well as Eesti
Päevalehe AS together with AS Eesti Ajalehed. 



In the online segment, the key event was the recovery of EBITDA  growth of
Delfi Latvia. The sales of Delfi Latvia increased by 20% as compared last year,
but while Delfi Latvia still incurred a EBITDA loss of EUR 107 thousand in
2010, it ended the year 2011 with a EBITDA profit of EUR 230 thousand. We
consider the change in the concept of Delfi Ukraine as another important
development, which has created an opportunity for a stable increase in the
number of portal users, especially in the last months of the year. Advertising
sales are also slowly picking up. The launching of Delfi digital book store at
Delfi Estonia is also worth mentioning. During the first four months of its
operation, Delfi Digiraamat achieved the third place in the terms of the number
of books sold in the e-book market. In 2012, the plan calls for launching
digital book stores also in Latvia and Lithuania. The sales in the online
segment as a whole increased by 14% and EBITDA more than doubled. 

In the printing services segment, AS Printall’s success in the export markets
continued. Both the company’s sales as well as EBITDA increased by 15% as
compared to last year. The key to Printall’s successful results of operations
lies in its high-quality export products, which the efficiently managed company
is able to sell at competitive prices. Sales increased in all export markets.
The largest markets continued to be Scandinavia and Russia, while the
Netherlands and France have also become important markets. In the last quarter,
exports made up 72% of the company’s sales and the contribution made by group
companies was 15%. The sales and net profit of Printall contribute
significantly to the Group’s total results of operations. 

With regard to the cost structure of group companies, the greatest changes were
related to the amendment of the Lithuanian tax laws, which increased Delfi
Lithuania’s liabilities in the form of the social tax, as well as the addition
of the local news portal Eesti Elu acquired by Delfi Estonia to the cost base
and the addition of rental expenses to the expenses of AS Eesti Ajalehed (Eesti
Päevalehe AS used to be located on its own premises and did not incur any
rental expenses). The other changes occurred in the expenses were primarily
related to the growth of business; no major growth of in the number of
employees or their wages occurred in 2011. 

In 2012, we expect conservative sales growth in the periodicals and online
segments. Sales of periodicals are expected to increase due the recovery of
advertising sales in the second half of the year just ended, which should also
continue modestly this year. In the printing services segment, we do not expect
any major growth due to the printing companies operating nearly at full
capacity in peak periods. However, we expect the Group’s EBITDA margin to grow
by 1-2 percentage points this year, because we do not see any major sources of
expense growth. Our objective in 2012 is to increase the efficiency of the
online segment, continue the development of Delfi Ukraine and improve the
efficiency of its advertising sales, increase the number of subscribers of
digital publications and grow revenue in the periodicals segment, and take the
united  editorial offices to the next level on the basis of our media brands. 



Overview of the Group’s segments



Key financial data of the segments in Q4 2010/2011

                          --------------------------
     (EUR thousand)                  Sales          
--------------------------                          
                           Q4 2011  Q4 2010  Change%
----------------------------------------------------
online media                 2 586    2 302      12%
periodicals                  6 544    6 051       8%
printing services            8 143    7 230      13%
corporate functions             71       31     129%
intersegment eliminations  (1 031)    (729)     -41%
----------------------------------------------------
TOTAL                       16 313   14 885      10%
----------------------------------------------------



                          --------------------------
     (EUR thousand)                 EBITDA          
--------------------------                          
                           Q4 2011  Q4 2010  Change%
----------------------------------------------------
online media                   696      302     130%
periodicals                     62      253     -75%
printing services            1 495    1 529      -2%
corporate functions        (1 018)    (236)    -331%
intersegment eliminations        1        6     -83%
----------------------------------------------------
TOTAL                        1 236    1 854     -33%
----------------------------------------------------



Key financial data of the segments for the 12 months of 2010/2011

                          ----------------------------------------
     (EUR thousand)                         Sales                 
--------------------------                                        
                           12 months 2011  12 months 2010  Change%
------------------------------------------------------------------
online media                        8 977           7 884      14%
periodicals                        24 069          22 520       7%
printing services                  27 736          24 221      15%
corporate functions                   209             129      62%
intersegment eliminations         (3 600)         (2 940)     -22%
------------------------------------------------------------------
TOTAL                              57 391          51 814      11%
------------------------------------------------------------------



                          ----------------------------------------
     (EUR thousand)                         EBITDA                
--------------------------                                        
                           12 months 2011  12 months 2010  Change%
------------------------------------------------------------------
online media                        1 425             758      88%
periodicals                           552             914     -40%
printing services                   5 959           5 198      15%
corporate functions                 (191)           (833)      77%
intersegment eliminations              12               4     200%
------------------------------------------------------------------
TOTAL                               7 757           6 041      28%
------------------------------------------------------------------



                  -----------------
EBITDA margin      Q4 2011  Q4 2010
------------------                 
online media           27%      13%
periodicals             1%       4%
printing services      18%      21%
-----------------------------------



                  -------------------------------
EBITDA margin      12 months 2011  12 months 2010
------------------                               
online media                  16%             10%
periodicals                    2%              4%
printing services             21%             21%
-------------------------------------------------



The segments’ EBITDA does not include goodwill impairment. This is included
within the corporate function. The segment results do not include intragroup
management fees. Volume-based and other fees payable to advertising agencies
have not been deducted  from the advertising sales of segments. 



News portals owned by the Group

Owner            Portal        Owner              Portal         
-----------------------------------------------------------------
Delfi Estonia    www.delfi.ee  Eesti Ajalehed AS  www.ekspress.ee
-----------------------------------------------------------------
                 rus.delfi.ee                     www.maaleht.ee 
-----------------------------------------------------------------
Delfi Latvia     www.delfi.lv                     www.epl.ee     
-----------------------------------------------------------------
                 rus.delfi.lv  AS SL Õhtuleht     www.ohtuleht.ee
-----------------------------------------------------------------
Delfi Lithuania  www.delfi.lt                                    
-----------------------------------------------------------------
                 ru.delfi.lt                                     
-----------------------------------------------------------------
Delfi Ukraine    www.delfi.ua                                    
-----------------------------------------------------------------



Online media segment

The online media segment includes Delfi operations in Estonia, Latvia,
Lithuania and Ukraine. 



                          --------------------------
     (EUR thousand)                  Sales          
--------------------------                          
                           Q4 2011  Q4 2010  Change%
----------------------------------------------------
Delfi Estonia                  913      783      17%
Delfi Latvia                   591      513      15%
Delfi Lithuania              1 054    1 000       5%
Delfi Ukraine                   17       11      55%
other Delfi companies           11       22     -50%
intersegment eliminations        0     (27)     100%
----------------------------------------------------
TOTAL                        2 586    2 302      12%
----------------------------------------------------



                          --------------------------
     (EUR thousand)                 EBITDA          
--------------------------                          
                           Q4 2011  Q4 2010  Change%
----------------------------------------------------
Delfi Estonia                  117       20     485%
Delfi Latvia                   135       16     744%
Delfi Lithuania                285      252      13%
Delfi Ukraine                 (62)    (138)      55%
other Delfi companies          221      155      42%
intersegment eliminations        0      (3)        -
----------------------------------------------------
TOTAL                          696      302     130%
----------------------------------------------------



                          ----------------------------------------
     (EUR thousand)                         Sales                 
--------------------------                                        
                           12 months 2011  12 months 2010  Change%
------------------------------------------------------------------
Delfi Estonia                       3 177           2 643      20%
Delfi Latvia                        2 014           1 681      20%
Delfi Lithuania                     3 703           3 463       7%
Delfi Ukraine                          56              35      60%
other Delfi companies                  26             151     -83%
intersegment eliminations               1            (89)     101%
------------------------------------------------------------------
TOTAL                               8 977           7 884      14%
------------------------------------------------------------------



                          ----------------------------------------
     (EUR thousand)                         EBITDA                
--------------------------                                        
                           12 months 2011  12 months 2010  Change%
------------------------------------------------------------------
Delfi Estonia                         154              56     175%
Delfi Latvia                          230           (106)     317%
Delfi Lithuania                       653             737     -11%
Delfi Ukraine                       (259)           (522)      50%
other Delfi companies                 647             594       9%
intersegment eliminations               0             (1)        -
------------------------------------------------------------------
TOTAL                               1 425             758      88%
------------------------------------------------------------------



Throughout the year, the main drivers behind the sales and EBITDA growth of the
online segment were Delfi Estonia and Latvia. In Lithuania, the sales growth
has been modest and the margin has been impacted by  the increase in staff
costs arising from the changes in taxation of employee compensations. Ukraine
reduced its loss by almost half due to the layoffs in  the editorial staff at
the beginning of the year. In summary, it can be said about the online media
segment that Delfi Estonia and Latvia have started to demonstrate better
results due to the improvement of the economic environment and the market has
started to recover slightly in Lithuania. Delfi Ukraine continues to increase
the number of its users; however, it will take a while before advertising
revenue catches up. The ongoing focus of the editorial staff of Delfi is to
improve the quality of their products and news. 

The key highlights during the year worth mentioning separately include:

·         Advertising sales were launched in Delfi’s mobile environments. The
sales of video advertisements were also launched, creating better opportunities
for the online segment to participate in the television advertising market. The
growth of mobile advertisements has been aggressive, yet modest in absolute
numbers. 

·         An important product development upgrade included the environment for
collecting and displaying pictures, videos and anecdotes sent by users (in the
portal vimka.ee in Estonia). 

·         Special vouchers were introduced under the trademark of Delfi Diil in
all three Baltic States and in addition, the environment for aggregation of
discount  vouchers was launched where advertisements are sold to other
companies offering discount  vouchers. 

·         A new system of user comments was created, allowing users with a
registered user identity to comment on the articles. The users can authorise
themselves and make comments using the user names of the most popular social
networks, such as Facebook, Twitter, draugiem.lv and odnoklasniki.ru. 

·         Integration with Facebook’s environment where since June it is
possible to read the news produced by the company as well as the news posted by
the user’s Facebook friends without exiting Delfi website. 

·         Additional fee-based services in the classified ads portals Müü!;
Pardod!; Parduok! and Prodai! were introduced in all countries. 



Delfi Estonia

·         Delfi Estonia has become the website with the largest number of
visitors, surpassing neti.ee in terms of the number of weekly users. 

·         During the organisational reform, the editorial office of Delfi was
relocated to the joint premises with Eesti Ekspress, Eesti Päevaleht and
Maaleht. Due to the relocation of the editorial offices to the same premises,
the exchange of information and cooperation among various publications in
covering major events has significantly improved. 

·         For the purpose of creating IT synergies, the web environments of
Eesti Ekspress, Eesti Päevaleht and Maaleht have been moved to Delfi’s portal
platform and the articles published in newspapers are also published in Delfi’s
news feed. 

·         The e-business department of Delfi Estonia was launched with the goal
of collaborating with the best online businesses and earning from e-commerce in
addition to earning regular advertising revenue. In 2011, the most successful
project was the development of the sales environment of e-books, Delfi
Digiraamat. Delfi Digiraamat represents a cooperation project of the Estonian
Digital Book Centre and Delfi, where Delfi sells all e-books digitalised or
purchased for resale by the EDBC. At Delfi Digiraamat, it is possible to buy
the majority of e-books published in Estonia 

·         A new advertising and content section "Reisileidja" (Trip Finder) was
introduced which has received good feedback from tourist companies and
generated new advertising revenue for Delfi. 

·         In the 1st quarter, Delfi Estonia acquired the portal Eesti Elu,
which was used as the basis for developing a hyperlocal news portal, and which
is becoming more and more popular. 

·         From October, Delfi news is displayed on the screens  of city buses.

·         In cooperation with SEB Charity Fund, Delfi Estonia successfully
implemented a cooperation project “Christmas Wish Tree”, with the objective to
provide Christmas presents to 1000 children and young people without parental
care. Delfi readers donated more than EUR 30 thousand in support of the
project. 

At the end of 2011, Delfi Estonia became the most visited website, surpassing
neti.ee with its weekly number of users. During 2011, the number of users of
Delfi.ee has on average increased by 100 000 users a week. Two media
publications - Delfi and Postimees – dominate the market. The most important
developments in the Internet market have been related to the development of
mobile environments, because the growth of smart phones as well as tablet
computers continues at a fast pace. In 2012, the share of media consumption on
mobile phones is expected to grow the fastest. 



Delfi Latvia

·         Delfi Latvia was awarded the special prize at the annual awards of
the Latvian Journalist Association “Best Economic Publication of the Year”. 

·         The Latvian Journalist Association recognised Delfi as the best
publication to report on EU topics. 

·         Upgrades in the product design with enhancement of content quality
have helped the company to reach the highest number of views per page among
Latvian news portals. 

·         Collaboration projects in different fields:

o   With the help of the EU subsidy, the portal Morning.lv was launched with
the goal of communicating information related to the European Parliament. 

o   Delfi Latvia was selected as the media partner for the Latvian Olympic
Committee in arranging the ceremony “Athlete of the Year”. 

o   Collaboration project “Road  reporter” with  TV3+ on national journalism.



The most popular website among the Latvian Internet users continues to be the
e-mail environment Inbox.lv  despite the fact that it lost ca 50 thousand users
during the year. In terms of the number of users, the social network
draugiem.lv still holds the second place but due to the growth of use of
international social networks, the number of users of Draugiem is expected to
fall – by ca 100 thousand as compared to last year. Delfi.lv continues to be
the most popular news portal with its number of users remaining almost at the
same level as last year. However, important changes occurred in the       
Latvian media market in 2011. Schibsted Media Group acquired the Latvian news
portal tvnet.lv in March 2011 and the Russian language news portal novonews.lv
in October, increasing its number of users by ca 50 thousand users with these
acquisitions. The second acquisition in the field of online media occurred in
September 2011, when Sanoma News acquired the second most-popular news portal
apollo.lv. 



Delfi Lithuania

·           In the first quarter, Delfi Lithuania launched the women’s news
portal www.5braskes.lt with the goal of increasing its market share primarily
targeted at women. 

·         In December, Delfi Lithuania was selected as the partner for MAMA
2011, the largest Lithuanian music awards gala which took place in Vilnius. 

·         From November, the new CEO of Delfi Lithuania is Aleksandras
?esnavi?ius. 

·         From October, the news of Delfi Lithuania has been integrated into
the popular IP TV “Gala” in Lithuania, where the readers can read Delfi news
while watching TV. 

·         From October, the company started active cooperation with the
Lithuanian national television. 



Delfi continues to be the uncontested market leader among Lithuanian Internet
users with more than one million unique users. The key event in the Lithuanian
market was the arrangement of the European Basketball Championship; however,
the activity of Internet users did not increase significantly. This can be
attributed to the very good coverage of the games on home soil. 



Delfi Ukraine

·         In the 1st quarter, an important conceptual change was implemented,
and a product and organisational reform was launched. The former conservative
information portal strategy was abandoned and a more entertaining news portal
with tabloid-like news with a social content was launched. The product was made
more tabloid-like than it is normally customary in the Baltic States. The
market reception of the new product has been good, manifested in the steady
growth of unique users. In December, Delfi Ukraine had the highest number of
visitors ever during its history. 

·         In November, cooperation with Tochka was launched.



The Ukrainian Internet market operates in a significantly different manner than
that of the Baltic States. Considerably less attention is paid to local media
publications than the so-called “aggregators” which aggregate the news of media
publication on their pages. During the year, several changes have occurred in
the staffs and strategies of the market participants. The formerly popular
concept of “buying readers” has become less widespread and therefore, the
readership of media publications is beginning to resemble the actual real
readership. In this light, it is good to acknowledge that Delfi’s long-term
strategy to attract loyal users has started to show positive results and the
steady growth of readers is turning Delfi into a serious market contender in
Ukraine. 



Periodicals segment

The periodicals segment includes the publishers of newspapers, magazines and
books. This segment also includes AS Express Post, engaged in home delivery of
periodicals. 

In September, the Estonian Competition Authority granted its permission for the
concentration of  Eesti Päevalehe AS and Eesti Ajalehed AS. As of 1 October,
these two companies were merged. As of 1 October, the book publishing
department of the merged company was spun off as a separate legal entity. The
new book publisher under the name of OÜ Hea Lugu will remain as the subsidiary
of Eesti Ajalehed AS. The merger of the joint ventures AS SL Õhtuleht and AS
Linnaleht occurred on 1 November 2011 and that of OÜ Uniservice and AS
Ajakirjade Kirjastus occurred on 1 January 2012. 

At the beginning of the year, a preliminary contract to sell Express Post AS
was concluded with AS Eesti Post, which however was prohibited by the
Competition Authority in autumn. Both shareholders of Express Post are
currently considering various alternative scenarios to determine the future
activities  of the company. 



-----------------------------                          
       (EUR thousand)                   Sales          
                             --------------------------
                              Q4 2011  Q4 2010  Change%
-------------------------------------------------------
Eesti Ajalehed AS**             3 330    3 733     -11%
SL Õhtuleht AS*                   915      887       3%
AS Ajakirjade Kirjastus*        1 206    1 243      -3%
UAB Ekspress Leidyba              742      691       7%
AS Express Post*                  628      644      -2%
OÜ Uniservice*                      0        4    -100%
intersegment eliminations***    (277)  (1 151)      76%
TOTAL                           6 544    6 051       8%
-------------------------------------------------------



                             --------------------------
       (EUR thousand)                  EBITDA          
-----------------------------                          
                              Q4 2011  Q4 2010  Change%
-------------------------------------------------------
Eesti Ajalehed AS**             (192)        3   -6510%
SL Õhtuleht AS*                    62       57       9%
AS Ajakirjade Kirjastus*          102       77      32%
UAB Ekspress Leidyba               12     (18)     167%
AS Express Post*                   82       79       4%
OÜ Uniservice*                      0      (1)     100%
intersegment eliminations***      (4)       56        -
TOTAL                              62      253     -75%
-------------------------------------------------------



-----------------------------                                        
       (EUR thousand)                          Sales                 
                             ----------------------------------------
                              12 months 2011  12 months 2010  Change%
---------------------------------------------------------------------
Eesti Ajalehed AS**                   12 761          14 001      -9%
SL Õhtuleht AS*                        3 432           3 441       0%
AS Ajakirjade Kirjastus*               4 190           4 370      -4%
UAB Ekspress Leidyba                   2 816           2 725       3%
AS Express Post*                       2 396           2 417      -1%
OÜ Uniservice*                             9              12     -25%
intersegment eliminations***         (1 535)         (4 446)      65%
TOTAL                                 24 069          22 520       7%
---------------------------------------------------------------------



                             ----------------------------------------
       (EUR thousand)                          EBITDA                
-----------------------------                                        
                              12 months 2011  12 months 2010  Change%
---------------------------------------------------------------------
Eesti Ajalehed AS**                    (211)              42    -603%
SL Õhtuleht AS*                          203             269     -25%
AS Ajakirjade Kirjastus*                 164             168      -2%
UAB Ekspress Leidyba                      14           (317)     104%
AS Express Post*                         290             297      -2%
OÜ Uniservice*                             1             (6)     117%
intersegment eliminations***              91             461        -
TOTAL                                    552             914     -40%
---------------------------------------------------------------------



*Proportionate share of joint ventures

** For the purpose of comparability, Eesti Ajalehed AS combines the data for
Eesti Ajalehed AS, Eesti Päevalehe AS (100% in both years) with that of Hea
Lugu OÜ. 

***Intra-segment eliminations in EBITDA include the elimination of the 50%
negative EBITDA of  Eesti Päevalehe AS and the sales loss of the trademark of
Ekspress Leidyba UAB in 2010, and the 50% negative EBITDA of  Eesti Päevalehe
AS and restatement of the goodwill which arose on acquisition of an ownership
interest in Eesti Päevalehe AS in 2011. 



In 2011, the periodicals segment grew and this primarily due to the acquisition
of an additional 50% ownership interest of Eesti Päevalehe AS. Without this
change, the segment’s results would have remained below last year’s results.
While the advertising sales recovered in 2011, the decline in book publishing
as well as in circulation and revenue of printed newspapers and magazines
continued.  In the 4th quarter, EBITDA was negatively affected by the
impairment loss recognised for the client relationship management  software of
Eesti Päevaleht, and the redundancy and relocation expenses due to the merger
of Eesti Päevalehe AS and AS Eesti Ajalehed in the amount of ca EUR 120
thousand. 

The Lithuanian publishing company Express Leidyba was the only company in this
segment to grow its sales 2011, primarily due to the addition of the magazine
Cosmopolitan. Sales declined the most at  AS Ajakirjade Kirjastus and Eesti
Ajalehed AS combined entity due to the aforementioned decline in the number of
published books. Newspapers Maaleht and Eesti Ekspress surprised positively,
with the advertising sales up by 14.1% and 9.6%, respectively. At the same
time, advertising sales decreased by 3.0% at Õhtuleht and by 6.5% at Eesti
Päevaleht. The revenue of single copy sales and subscriptions increased by 3.1%
at Maaleht, remained at the same level as in 2010 at Eesti Ekspress and
decreased by 2.6% at Õhtuleht and 9.2% at Eesti Päevaleht. 

In the 2nd quarter, an important product upgrade was implemented at the
newspaper Eesti Päevaleht. Under the guidance of the new editor-in-chief Vallo
Toomet who had previously been in charge of economic news, the upgraded Eesti
Päevaleht with a more magazine-like format and design was developed and
launched. The product upgrade of Eesti Päevaleht was received well in the
market, which is evidenced by the fact that Eesti Päevaleht was the only
national daily newspaper whose readership increased in the 3rd quarter. 

In 2011, Janek Luts who had formerly worked as the editor-in-chief of Kuku
Raadio became the editor-in-chief of Eesti Ekspress. 

A joint digital newspaper campaign of Eesti Päevaleht and Eesti Ekspress was
launched, where subscribers can buy the tablet PC Apple iPad at a special
price. A software solution was also developed, enabling to use the product
published on iPad from regular desktop or laptop computers. 

The creation of the multi-media news space across the media units based in
Estonia was also successfully launched. The editorial offices of various
publications were relocated to common premises at the end of the 2nd quarter,
followed by content integration and cooperation between different editorial
offices and their people. 

Estonian newspaper circulation 2010-2011

The year 2011 was a year of relative stabilisation in the Estonian newspaper
market. The circulation of major publications declined slightly, but not
significantly. Postimees continues to be the newspaper with the highest
circulation. In terms of comparison of the annual average circulation,  Eesti
Päevaleht was the biggest loser  as compared to 2010. This decline was to be
expected because the acquisition of the 100% ownership interest of the
newspaper by Ekspress Grupp,  the replacement of the editor-in-chief as well as
the review of the concept of the newspaper always translates into losses in
circulation. 

Circulation is also affected by the continued decline of point of sales all
over Estonia. 

Estonian newspaper readership 2010-2011

In the 4th quarter, the total reach of publications included in the reader
surveys of TNS Emor was 62% of the population. In a year-over-year comparison,
this translates into ca 20 thousand people abandoning printed newspapers. This
confirms the international trend of a declining number of readers of printed
newspapers in developed countries. Although the trend of readers is still
downward,  printed newspapers are still competitive in the advertising market
in many respects, meaning that fast disappearance of printed newspapers is not
yet to be expected. The readership figures for 2011 vary from quarter to
quarter, showing that the consumption of printed newspapers is becoming more
cyclical in nature than we have previously witnessed. However, these figures
concern just the readers of printed newspapers. As Ekspress Grupp is developing
the digital versions of its newspapers for the second consecutive year already,
we are more optimistic about the future than the current readership figures
indicate. 

Ekspress Group Lithuanian magazine readership  2010-2011

The readership figures in the last quarter of 2011 have increased significantly
– as compared to the previous quarters, the readership of  all magazines of
Ekspress Leidyba has increased by 21% which is a very good result. However, as
compared to the last year, the readership figures have stayed at the same
level. Of the monthly magazines, Panele and Moteris are Lithuanian most popular
publications. 

Printing services segment

All printing services of AS Ekspress Grupp 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). 



---------------                          
(EUR thousand)            Sales          
               --------------------------
                Q4 2011  Q4 2010  Change%
-----------------------------------------
AS Printall       8 143    7 230      13%
-----------------------------------------



               --------------------------
(EUR thousand)           EBITDA          
---------------                          
                Q4 2011  Q4 2010  Change%
-----------------------------------------
AS Printall       1 495    1 529      -2%
-----------------------------------------





---------------                                        
(EUR thousand)                   Sales                 
               ----------------------------------------
                12 months 2011  12 months 2010  Change%
-------------------------------------------------------
AS Printall             27 736          24 221      15%
-------------------------------------------------------



               ----------------------------------------
(EUR thousand)                   EBITDA                
---------------                                        
                12 months 2011  12 months 2010  Change%
-------------------------------------------------------
AS Printall              5 959           5 198      15%
-------------------------------------------------------



The printing company Printall continues to exceed previous year’s results. Both
sales as well as EBITDA increased by 15%. The share of group companies in sales
decreases and the share of exports increases. Most of the volume growth is
generated by printing on heatset machines, but a positive trend in 2011 was the
modest capacity growth of coldset machines as compared to the decline in
previous years. 

Geographical break-down of printing services

                       Q4 2011  Q4 2010  Change%
------------------------------------------------
                      --------------------------
Exports                  5 630    4 779      18%
Finland                    688      424      62%
Sweden                   1 504    1 363      10%
Norway                     802      850      -6%
Russia                   1 117      983      14%
Denmark                    182      301     -40%
Lithuania                  219      177      24%
Other exports            1 118      681      64%
Estonia                  2 513    2 451       3%
Total sales              8 143    7 230      13%
------------------------------------------------
------------------------------------------------
Incl. group sales        1 034    1 040      -1%
Incl. non-group sales    7 109    6 190      15%
------------------------------------------------



                       12 months 2011  12 months 2010  Change%
--------------------------------------------------------------
                      ----------------------------------------
Exports                        18 691          15 571      20%
Finland                         2 248           1 816      24%
Sweden                          5 069           4 388      16%
Norway                          2 969           3 041      -2%
Russia                          4 194           3 100      35%
Denmark                           742             991     -25%
Lithuania                         771             638      21%
Other exports                   2 698           1 597      69%
Estonia                         9 045           8 650       5%
Total sales                    27 736          24 221      15%
--------------------------------------------------------------
--------------------------------------------------------------
Incl. group sales               3 993           4 010       0%
Incl. non-group sales          23 743          20 211      17%
--------------------------------------------------------------



Consolidated balance sheet (unaudited)

(EUR thousand)                          31.12.2011  31.12.2010
--------------------------------------------------------------
--------------------------------------------------------------
ASSETS                                                        
Current assets                                                
Cash and cash equivalents                    2 729       2 767
Trade and other receivables                  6 921       6 941
Inventories                                  2 833       2 961
Total                                       12 483      12 669
Non-current assets held for sale                40          60
Total current assets                        12 523      12 729
--------------------------------------------------------------
--------------------------------------------------------------
Non-current assets                                            
Term deposit (Note 7)                           98       3 009
Trade and other receivables                    167         162
Investments in associates                        0           8
Property, plant and equipment (Note 6)      16 751      19 138
Intangible assets (Note 6)                  51 970      50 936
Total non-current assets                    68 986      73 253
--------------------------------------------------------------
TOTAL ASSETS                                81 509      85 982
--------------------------------------------------------------
                                       -----------------------
LIABILITIES                                                   
Current liabilities                                           
Borrowings (Note 7)                          5 436       5 233
Trade and other payables                    11 111      10 785
Total current liabilities                   16 547      16 018
--------------------------------------------------------------
--------------------------------------------------------------
Non-current liabilities                                       
Long-term borrowings (Note 7)               26 397      33 053
Other long-term liabilities                      1           2
Derivate instruments                           176         610
Total non-current liabilities               26 574      33 665
--------------------------------------------------------------
Total liabilities                           43 121      49 683
--------------------------------------------------------------
--------------------------------------------------------------
EQUITY                                                        
Share capital (Note 10)                     17 878      19 044
Share premium                               14 277      14 277
Reserves (Note 10)                             480          46
Retained earnings                            5 749       2 900
Currency translation reserve                     4          32
Total equity                                38 388      36 299
--------------------------------------------------------------
TOTAL LIABILITIES AND EQUITY                81 509      85 982
--------------------------------------------------------------



Consolidated statement of comprehensive income (unaudited)

(EUR thousand)                                Q4      Q4   12 months   12 months
                                            2011    2010        2011        2010
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Sales                                     16 313  14 885      57 391      51 814
Cost of sales                                (12     (11    (44 847)    (40 520)
                                            653)    419)                        
Gross profit                               3 660   3 466      12 544      11 294
Marketing expenses                         (649)   (640)     (2 098)     (2 242)
Administrative expenses                       (1      (1     (7 081)     (6 435)
                                            929)    782)                        
Other expenses                             (343)   (147)       (542)       (270)
Other income                                 298     119         620         413
--------------------------------------------------------------------------------
Gain from sale of ownership in joint           0       0       1 540           0
 venture (Note 3)                                                               
Impairment loss for goodwill (Note 6)      (750)       0       (750)           0
Operating profit                             287   1 016       4 233       2 760
--------------------------------------------------------------------------------
                                         ---------------------------------------
Interest income                               12      31          45          52
Interest income                            (523)   (639)     (2 212)     (2 596)
Foreign exchange gains (losses)               73      16          45          16
Other finance costs                         (47)    (39)       (154)       (175)
Net finance cost                           (485)   (631)     (2 276)     (2 702)
Profit/(loss) from investments in            (8)    (11)        (52)        (33)
 associates                                                                     
Profit (loss) before income tax            (206)     374       1 905          25
Income tax expense                           (9)   (164)       (222)       (534)
--------------------------------------------------------------------------------
Profit (loss) from continuing operations   (215)     210       1 683       (509)
--------------------------------------------------------------------------------
Profit (loss) from discontinued                0       0           0         363
 operations                                                                     
--------------------------------------------------------------------------------
Profit (loss) for the reporting period     (215)     210       1 683       (146)
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Net profit (loss) for the reporting                                             
 period attributable to:                                                        
equity holders of the parent company       (215)     228       1 683       (128)
non-controlling interest                       0    (18)           0        (18)
Other comprehensive income (expense)                                            
Currency translation differences            (63)    (14)        (28)        (73)
Hedging reserve change                        63     284         434         284
Total other comprehensive income               0     270         406         211
 (expense) for the period                                                       
Comprehensive income for the reporting     (215)     480       2 089          64
 period attributable to:                                                        
equity holders of the parent company       (215)     498       2 089          82
non-controlling interest                       0    (18)           0        (18)
--------------------------------------------------------------------------------
Basic and diluted earnings per share      (0,01)    0,01        0,06      (0,01)
 (Note 9)                                                                       
--------------------------------------------------------------------------------



Consolidated cash flow statement (unaudited)

(EUR thousand)                                            12 months    12 months
                                                               2011         2010
--------------------------------------------------------------------------------
Cash flows from operating activities from continuing                            
 operations                                                                     
--------------------------------------------------------------------------------
Operating profit (loss) for the period                        4 233        2 760
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Adjustments for:                                                                
Depreciation, amortisation and impairment (Note 6)            3 524        3 282
Gain from sale of ownership in joint venture and              (790)            0
 change in goodwill (Note 6)                                                    
Profit (loss) on sale and write-downs of property,              249           20
 plant and equipment                                                            
Changes in working capital:                                                     
Trade and other receivables                                   (121)        1 191
Inventories                                                     249        (265)
Trade and other payables                                      (690)      (1 917)
Cash generated from operations                                6 654        5 071
Income tax paid                                                (98)        (365)
Interest paid                                               (2 318)      (2 596)
                                                       -------------------------
Net cash generated from operating activities from             4 238        2 109
 continuing operations                                                          
--------------------------------------------------------------------------------
Net cash used in operating activities from                        0        (160)
 discontinued operations                                                        
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Cash flows from investing activities                                            
Investments in subsidiaries and joint ventures (Notes          (26)            0
 3,4)                                                                           
Term deposit release/placement) (Note 7)                      1 500      (3 000)
Proceeds from sale of shares in subsidiaries (Note 5)             0        3 980
Interest received                                                51           62
Purchase of property, plant and equipment (Note 6)            (914)        (581)
Proceeds from sale of property, plant and equipment              92          542
Loans granted                                                  (30)         (39)
Loan repayments received                                        126          648
                                                       -------------------------
Net cash used in investing activities from continuing           799        1 611
 operations                                                                     
--------------------------------------------------------------------------------
Net cash generated from investing activities from                 0            0
 discontinued operations                                                        
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Cash flows from financing activities from continuing                            
 operations                                                                     
Issue of shares                                                   0        5 248
Finance lease repayments made                               (1 245)      (1 279)
Change in overdraft used                                      (712)      (1 879)
Proceeds from borrowings                                         90        (245)
Repayments of borrowings                                    (3 208)      (5 188)
                                                       -------------------------
Net cash used in financing activities from continuing       (5 075)      (3 342)
 operations                                                                     
--------------------------------------------------------------------------------
Net cash used in financing activities from                        0          (5)
 discontinued operations                                                        
--------------------------------------------------------------------------------
NET (DECREASE)/INCREASE IN CASH AND CASH EQUIVALENTS           (38)          214
--------------------------------------------------------------------------------
                                                       -------------------------
Cash and cash equivalents at the beginning of the             2 767        2 553
 period                                                                         
Cash and cash equivalents at the end of the period            2 729        2 767
--------------------------------------------------------------------------------




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