Market announcement

Title

AS Ekspress Grupp: Consolidated Interim Report for the Second Quarter and Half Year of 2013

Message

Tallinn, Estonia, 2013-08-01 14:54 CEST (GLOBE NEWSWIRE) --


In the 2nd quarter of this year, Ekspress Grupp earned net profit of EUR 1.4
million as compared to EUR 972 thousand a year before which is 44% higher.
EBITDA was 6% lower than last year, i.e. EUR 2.4 million as compared to EUR 2.5
million last year. We are satisfied with both results as they exceeded our
forecasts published in the last quarter’s report. We expected net profit to
increase by 30% and EBITDA to decrease by 7%. The EBITDA margin for the quarter
fell by 0.2 percentage points as compared to the same period last year. 

In the first half of 2013, we earned net profit in the amount of EUR 2 million
which is 76% higher than in the same period last year and EBITDA was 6% lower
than last year, totalling EUR 3.9 million. The EBITDA margin in the first half
of the year fell by 0.4 percentage points as compared to last year. 

By the end of the 2nd quarter we have significantly lowered the company’s debt,
and attained a total debt/EBITDA ratio of 3.4. The debt service coverage ratio
has improved to 1.84 by the end of the quarter. 

The results in the quarter were marked by the decline of efficiency in the
online segment, primarily related to the cost of launching various new
projects, which hindered profit growth while sales were growing, as well as
deficit in the advertising revenue of print media. In the printing services
segment, our revenue has decreased but we have managed to maintain profit at
last year’s level and hence increased profitability. 

In the online segment Delfi Estonia and Delfi Lithuania have managed to
maintain their profits on last year’s level in the 2nd quarter. At the same
time EBITDA of Latvia failed to meet last year’s result, unlike in the 1st
quarter when Latvia was the only one to improve its result as compared to last
year. The reason for Delfi Latvia’s underperformance is the increase in costs
related to the hiring of additional editors in the autumn of last year. While
Delfi Lithuania managed to attain last year’s level, it failed to cover the
shortfall of the 1st quarter in the result for the half year. In the first
months of the quarter, the position of overdue accounts receivable improved
considerably, but we were forced to increase discounts again in June.
Cooperation projects which moved from the 1st quarter to the 2nd quarter in
Lithuania have been partially launched. 

In the online segment, we have laid great emphasis on the creation of new
online verticals and growth of video production. New projects included the
launch and further development of three online verticals in Lithuania in the
first half of the year, using primarily our own magazine trademarks as the
basis. In Estonia, we launched a travel portal Reisijuht.ee at the end of the
quarter which we also plan to introduce in Latvian and Lithuanian markets. The
travel portal cooperates with the publisher Telegraph Media Group of Great
Britain. In all the countries we have continued with video live-streaming both
in the fields of culture as well as sports. 

In May, we concluded an agreement for the acquisition of the company that
operates the portal Calis.lv in Latvia. The transaction was completed in July
this year. The portal is targeted at women, primarily at young mothers. We plan
to strengthen the portal through different thematic content and for this reason
we have acquired the Baltic content rights from the German publisher Grüne und
Jahr. 

In summary, it can be said about the online segment that the launch of new
projects and video production has temporarily lowered the efficiency of the
segment but it should improve once the projects are launched. 

As expected, the periodicals segment is under great pressure. The advertising
sales of the segment declined by almost 5% and retail sales by almost 9% as
compared to last year. We are happy that the sales generated by subscribers
stayed at the same level as last year and the growth of digital subscribers was
50% as compared to the same period last year. As compared to the last quarter,
we have increased the number of digital subscribers by approximately 10%. The
decline in advertising sales is primarily attributable to the decline in the
number of employment ads, as well as migration of retail ads to TV.  At the
same time we are witnessing positive trends in the magazine advertising sales,
where the year started off very slowly, but the 2nd quarter was at the same
level as last year. 

In the printing services segment, we have compensated the sales decline which
started in the middle of the 1st quarter by increasing efficiency in production
process, due to which our profitability has not suffered. The reasons for the
sales decline are related to the weakness in export markets and the situation
at the printing works where the high utilisation of machines hindered sales
growth. Compensation of lower customer orders which unexpectedly started at the
beginning of the year by new clients has been delayed. However, due to our low
market share in different export markets we are confident that we will also be
able to compensate for the sales decline in the second half of the year. 

In the third quarter of the year we expect revenue to remain at last year’s
level, EBITDA to increase by 5-10% and net profit to double. First and
foremost, we expect better results in the online segment as compared to the
same quarter last year, as well as higher profitability of magazine publishing
as compared to last year which should compensate for the weakness of weekly and
daily newspapers in the periodicals segment. With regard to the printing
services segment, we expect to maintain last year’s level. Net profit growth
will primarily be achieved through lower interest expenses as compared to last
year. 

KEY FINANCIAL INDICATORS AND RATIOS

(EUR thousand)                    Q2 2013  Q2 2012  Change%  Q2 2011  Q2 2010
-----------------------------------------------------------------------------
For the period                                                               
Sales                              15 115   15 762      -4%   14 963   13 454
Gross profit                        3 782    3 795       0%    3 388    3 368
EBITDA                              2 385    2 526      -6%    2 024    2 179
Operating profit                    1 741    1 670       4%    1 134    1 349
Interest expenses                     178      553      68%      576      694
Net profit/(loss) for the period    1 397      972      44%      394      669
-----------------------------------------------------------------------------
-----------------------------------------------------------------------------
EBITDA margin (%)                   15.8%    16.0%             13.5%    16.2%
Operating margin (%)                11.5%    10.6%              7.6%    10.0%
Net margin (%)                       9.2%     6.2%              2.6%     5.0%
-----------------------------------------------------------------------------
-----------------------------------------------------------------------------
ROA (%)                              1.8%     1.2%              0.5%     0.8%
ROE (%)                              3.3%     2.5%              1.0%     2.0%
-----------------------------------------------------------------------------
Earnings per share (EPS)             0.05     0.03              0.01     0.03
-----------------------------------------------------------------------------



(EUR thousand)                           Half     Half  Change     Half     Half
                                         year     year     %       year     year
                                         2013     2012             2011     2010
--------------------------------------------------------------------------------
For the period                                                                  
Sales                                  28 925   29 982     -4%   28 109   25 112
Gross profit                            6 596    6 595      0%    6 005    5 433
EBITDA*                                 3 888    4 141     -6%    3 418    2 912
Operating profit*                       2 582    2 427      6%    1 690    1 249
Interest expenses                         374    1 041     64%    1 135    1 318
Net profit / (loss) from continuing     2 032    1 154     76%      240    (460)
 operations*                                                                    
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
EBITDA margin* (%)                      13.4%    13.8%            12.2%    11.6%
Operating margin* (%)                    8.9%     8.1%             6.0%     5.0%
Net margin* (%)                          7.0%     3.8%             0.9%    -1.8%
--------------------------------------------------------------------------------
Extraordinary gain related to               0        0            1 540        0
 acquisition of Eesti Päevalehe AS**                                            
--------------------------------------------------------------------------------
Net profit / (loss) from continuing     2 032    1 154     76%    1 780    (460)
 operations for the period in the                                               
 financial statements                                                           
--------------------------------------------------------------------------------
Net profit / (loss) for the period      2 032    1 154     76%    1 780     (97)
 in the financial statements                                                    
--------------------------------------------------------------------------------
Net margin (%)                           7.0%     3.8%             6.3%    -0.4%
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
ROA (%)                                  2.6%     1.4%             2.1%    -0.1%
ROE (%)                                  4.8%     3.0%             4.7%    -0.3%
--------------------------------------------------------------------------------
Earnings per share (EPS)                 0.07     0.04             0.06   (0.00)
--------------------------------------------------------------------------------

*The results exclude impairment of goodwill and trademarks, and the net
extraordinary gain in relation to the acquisition of an additional ownership
interest in Eesti Päevalehe AS (see below). 

**In the 1st quarter of 2011, an additional 50% ownership interest was acquired
in Eesti Päevalehe AS. The transaction was accounted for in two parts: firstly,
as the sale of the current 50% ownership interest on which the net
extraordinary gain totalled EUR 1 540 thousand and secondly, as the acquisition
of the wholly-owned subsidiary. 

Balance sheet                 30.06.2013  31.12.2012  Change %
(EUR thousand)                                                
--------------------------------------------------------------
As of the end of the period                                   
Current assets                    12 788      13 545       -6%
Non-current assets                66 002      66 754       -1%
Total assets                      78 790      80 299       -2%
--------------------------------------------------------------
--------------------------------------------------------------
incl. cash and bank accounts       3 372       3 280        3%
incl. goodwill                    41 093      41 093        0%
--------------------------------------------------------------
--------------------------------------------------------------
Current liabilities               13 417      14 967      -10%
Non-current liabilities           22 555      24 233       -7%
Total liabilities                 35 972      39 200       -8%
--------------------------------------------------------------
--------------------------------------------------------------
incl. borrowings                  26 170      28 580       -8%
Equity                            42 822      41 099        4%
--------------------------------------------------------------



Financial ratios (%)         30.06.2013  31.12.2012
---------------------------------------------------
Equity ratio (%)                54%         51%    
Debt to equity ratio (%)        61%         70%    
Debt to capital ratio (%)       35%         38%    
Total debt/EBITDA ratio         3.4         3.6    
Debt service coverage ratio     1.84        1.52   
Liquidity ratio                 0.95        0.90   
---------------------------------------------------



Formulas used to calculate the financial ratios                                 
--------------------------------------------------------------------------------
- 
EBITDA margin* (%)               EBITDA* /sales x 100                           
--------------------------------------------------------------------------------
Operating margin* (%)            Operating profit* /sales x 100                 
--------------------------------------------------------------------------------
Net margin* (%)                  Net profit* /sales x 100                       
--------------------------------------------------------------------------------
Net margin (%)                   Net profit/sales x 100                         
--------------------------------------------------------------------------------
Earnings per share               Net profit/average number of shares            
--------------------------------------------------------------------------------
Equity ratio (%)                 Equity /(liabilities + equity) x 100           
--------------------------------------------------------------------------------
Debt to equity ratio (%)         Interest bearing liabilities /equity x 100     
--------------------------------------------------------------------------------
Debt to capital ratio (%)        Interest bearing liabilities –cash and bank    
                                  accounts                                      
                                 (net debt)/(net debt+ equity) x 100            
--------------------------------------------------------------------------------
Total debt/EBITDA                Interest bearing borrowings/EBITDA             
--------------------------------------------------------------------------------
Debt service coverage ratio      EBITDA/loan and interest payments for the      
 (DSCR)                           period                                        
--------------------------------------------------------------------------------
Liquidity ratio                  Current assets/current liabilities             
--------------------------------------------------------------------------------
ROA (%)                          Net profit/average assets  x 100               
--------------------------------------------------------------------------------
ROE (%)                          Net profit/average equity x 100                
--------------------------------------------------------------------------------

OVERVIEW OF THE SEGMENTS

The Group operates in the following operating segments:

-        online media

-        periodicals (newspapers, magazines and books)

-        printing services.

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 revenues can be adversely affected by an
economic slowdown or recession. It can appear in lower advertising costs in
retail and housing sectors, preference of other advertising channels and
changes in consumption habits of retail consumers. 

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 the
higher consumer spending during the Christmas season, with the attendant peaks
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. 

Key financial data of the segments Q2 2013/2012

                          --------------------------
     (EUR thousand)                  Sales          
--------------------------                          
                                Q2       Q2  Change%
                              2013     2012         
----------------------------------------------------
online media                 3 224    2 912      11%
periodicals                  5 947    6 606     -10%
printing services            7 131    7 482      -5%
corporate functions            385      279      38%
intersegment eliminations  (1 572)  (1 517)      -4%
----------------------------------------------------
TOTAL GROUP                 15 115   15 762      -4%
----------------------------------------------------



                          ------------------------
     (EUR thousand)                 EBITDA        
--------------------------                        
                           Q2 2013     Q2  Change%
                                     2012         
--------------------------------------------------
online media                   730    743      -2%
periodicals                    259    392     -34%
printing services            1 599  1 563       2%
corporate functions          (204)  (173)     -18%
intersegment eliminations        1      1       0%
--------------------------------------------------
TOTAL GROUP                  2 385  2 526      -6%
--------------------------------------------------



                  -----------------
EBITDA margin      Q2 2013  Q2 2012
------------------                 
online media           23%      26%
periodicals             4%       6%
printing services      22%      21%
-----------------------------------
TOTAL                  16%      16%
-----------------------------------

Key financial data of the segments 1st half year 2013/2012

                          ------------------------------
     (EUR thousand)                    Sales            
--------------------------                              
                           Half year  Half year  Change%
                                2013       2012         
--------------------------------------------------------
online media                   5 660      5 099      11%
periodicals                   11 690     12 387      -6%
printing services             13 749     14 858      -7%
corporate functions              740        420      76%
intersegment eliminations    (2 914)    (2 782)      -5%
--------------------------------------------------------
TOTAL GROUP                   28 925     29 982      -4%
--------------------------------------------------------



                          -----------------------------------
     (EUR thousand)                      EBITDA              
--------------------------                                   
                           Half year 2013  Half year  Change%
                                                2012         
-------------------------------------------------------------
online media                          814        981     -17%
periodicals                           469        413      14%
printing services                   3 013      3 093      -3%
corporate functions                 (410)      (347)     -18%
intersegment eliminations               2          1     100%
-------------------------------------------------------------
TOTAL GROUP                         3 888      4 141      -6%
-------------------------------------------------------------



                  -------------------------------
EBITDA margin      Half year 2013  Half year 2012
------------------                               
online media                  14%             19%
periodicals                    4%              3%
printing services             22%             21%
-------------------------------------------------
TOTAL                         13%             14%
-------------------------------------------------

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. 

News portals owned by the Group

Owner            Portal        Owner              Portal         
-----------------------------------------------------------------
Delfi Estonia    www.delfi.ee  AS Eesti Ajalehed  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                                    
-----------------------------------------------------------------



Classified portals owned by the Group

Owner            Portal       Owner              Portal             
--------------------------------------------------------------------
Delfi Lithuania  www.alio.lt  AS Eesti Ajalehed  www.ekspressjob.ee 
--------------------------------------------------------------------
                                                 www.ekspressauto.ee
--------------------------------------------------------------------
                                                 www.hyppelaud.ee   
--------------------------------------------------------------------

Online media segment

The online media segment includes Delfi operations in Estonia, Latvia,
Lithuania and Ukraine as well as the Parent Company Delfi Holding. 



                          ----------------------
     (EUR thousand)                Sales        
--------------------------                      
                              Q2     Q2  Change%
                            2013   2012         
------------------------------------------------
Delfi Estonia              1 154  1 009      14%
Delfi Latvia                 678    613      11%
Delfi Lithuania            1 377  1 269       9%
Delfi Ukraine                 15     21     -29%
other Delfi companies          0      0        -
intersegment eliminations      0      0        -
------------------------------------------------
TOTAL                      3 224  2 912      11%
------------------------------------------------



                          --------------------
     (EUR thousand)               EBITDA      
--------------------------                    
                             Q2    Q2  Change%
                           2013  2012         
----------------------------------------------
Delfi Estonia               178   176       1%
Delfi Latvia                 30    73     -59%
Delfi Lithuania             452   459      -2%
Delfi Ukraine              (49)  (68)      28%
other Delfi companies       120   105      15%
intersegment eliminations   (1)   (2)        -
----------------------------------------------
TOTAL                       730   743      -2%
----------------------------------------------



                          ------------------------------
     (EUR thousand)                    Sales            
--------------------------                              
                           Half year  Half year  Change%
                                2013       2012         
--------------------------------------------------------
Delfi Estonia                  2 005      1 808      11%
Delfi Latvia                   1 198      1 092      10%
Delfi Lithuania                2 432      2 158      13%
Delfi Ukraine                     25         35     -29%
other Delfi companies              0          6    -100%
intersegment eliminations          0          0        -
--------------------------------------------------------
TOTAL                          5 660      5 099      11%
--------------------------------------------------------



                          ------------------------------
     (EUR thousand)                   EBITDA            
--------------------------                              
                           Half year  Half year  Change%
                                2013       2012         
--------------------------------------------------------
Delfi Estonia                    149        221     -33%
Delfi Latvia                      69         66       5%
Delfi Lithuania                  495        628     -21%
Delfi Ukraine                  (108)      (135)      20%
other Delfi companies            210        204       3%
intersegment eliminations        (1)        (3)        -
--------------------------------------------------------
TOTAL                            814        981     -17%
--------------------------------------------------------



In the 2nd quarter, sales growth in the online segment continued at the same
pace as at the beginning of the year; however, June was slower than expected.
Sales growth is driven by several new products, such as video streaming etc,
which require significant expenditure and due to which profitability suffers.
However, these represent new trends in online media with good prospects.
Additional editorial staff has helped to improve the quality of our content and
attracted new unique users, although it has negatively impacted EBITDA. In all
the countries, Delfi has reached new record highs both in terms of the number
of users as well as pageviews. At the same time continuous optimisation of
processes and costs is taking place. 



Delfi Estonia

·       Delfi Estonia continued its live broadcasts of sports events
(broadcasts of basketball matches, etc.), followed by broadcasts of various
cultural events, such as  Tallinn Music Week, Jazzkaar, etc. 

·       A new business website Ärileht www.arileht.ee was launched in
cooperation with Eesti Päevaleht. 

·       New travel portal www.reisijuht.ee.

·       New baby-blog in cooperation with the clinic Fertilitas.

·       The subportals of Eesti Elu and Naisteka got a facelift.

Delfi continues to be the largest online environment in Estonia. In the 2nd
quarter of 2013, the gap between Delfi and Postimees widened considerably on a
weekly basis, reaching 176 thousand users in favour of Delfi in week 20. In the
same week, delfi.ee reached the highest ever number of users, with 1 109 305
users on a weekly basis. Delfi outperformed Postimees also in terms of the
number of mobile users, reaching 190 thousand mobile users in week 23. The use
of other internet environments has been stable and without any major changes in
Estonia. 



Delfi Latvia

·       A new home and garden portal was launched.

·       A new travel portal was launched with Delfi Estonia and Delfi Lithuania.

·       All Delfi channels and verticals received a facelift.

·       Other cooperation projects in various fields:

-        Media partner for Nordea Riga Marathon,

-        Official news portal for Rally of Champions,

-        Official cooperation partner of the advertising festival “Golden
Hammer”. 

·       Based on the survey by DDB, Delfi remains the most popular and
influential brand in Latvian social media. 

In the 2nd quarter of 2013, there were no major changes in Latvian internet
environments. Delfi.lv has widened the gap with the key competitor Tvnet.lv,
which after the acquisition of spoki.lv in the 1st quarter of 2013 increased
the number of its users by 50 thousand on average. In the 2nd quarter, Delfi
Latvia acquired the portal calis.lv, primarily targeted at young mothers. The
integration of its users with Delfi.lv will take place in the second half of
2013. Delfi.lv continues to be the news portal with the highest number of users
in Latvia. The most popular webpages among Latvian Internet users continue to
be the e-mail environment Inbox and the social network Draugiem. 



Delfi Lithuania

·       Two new verticals were launched in the market  – one of which
home-related and the other one with family and parenting. 

·       May of this year turned out to be the best month ever for Delfi
Lithuania. 

Among Lithuanian internet users, Delfi Lithuania remains a clear market leader
and continues to have more than one million unique users a month. From the
second quarter of 2012, Delfi has increased the gap with other portals and
Delfi has more than 200 thousand users more than its closest competitor. As
compared to the 2nd quarter of last year, Delfi has increased the number of
regular users by ca. 6%. The use of smaller internet portals shows a modest
downward trend, which refers to the fact that users prefer to receive all
necessary information and entertainment from one source. 



Delfi Ukraine

·       The company continues with the strategy launched last year to offer
easier and more tabloid-like news and has increased its content production of
news targeted at women due to the profile of users of Delfi.ua. 

·       Marketing activities in social media and cooperation projects with
radio and TV channels to improve Delfi’s visibility in the market. 

The Ukrainian internet market operates in a significantly different manner than
that of the Baltic States. As compared to the 1st quarter last year, the number
of users of Delfi.ua has increased by ca. 16 %. May was one of the best months
for Delfi.ua unlike the overall trend in the internet market, Delfi.ua
increased by 12% as compared to last month. The Ukrainian internet market is
generally characterised by a constant change in various media publications. The
market is not yet fully established, and providers and consumers alike are
still developing their preferences. In the 2nd quarter of 2013, one important
change occurred among market participants, when the media group UMH changed
ownership. 



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. 



--------------------------                          
     (EUR thousand)                  Sales          
                          --------------------------
                           Q2 2013  Q2 2012  Change%
----------------------------------------------------
AS Estonia Ajalehed          2 848    3 059      -7%
OÜ Hea Lugu                    122      454     -73%
AS SL Õhtuleht*                965      964       0%
AS Ajakirjade Kirjastus*     1 029    1 110      -7%
UAB Ekspress Leidyba           651      723     -10%
AS Express Post*               591      586       1%
intersegment eliminations    (259)    (290)      11%
TOTAL                        5 947    6 606     -10%
----------------------------------------------------



                          --------------------------
     (EUR thousand)                 EBITDA          
--------------------------                          
                           Q2 2013  Q2 2012  Change%
----------------------------------------------------
AS Estonia Ajalehed             77      191     -60%
OÜ Hea Lugu                   (10)       32    -131%
AS SL Õhtuleht*                 69      100     -31%
AS Ajakirjade Kirjastus*        45       10     350%
UAB Ekspress Leidyba             4     (10)     140%
AS Express Post*                74       72       3%
intersegment eliminations        0      (3)        -
TOTAL                          259      392     -34%
----------------------------------------------------



--------------------------                                        
     (EUR thousand)                         Sales                 
                          ----------------------------------------
                           Half year 2013  Half year 2012  Change%
------------------------------------------------------------------
AS Estonia Ajalehed                 5 464           5 831      -6%
OÜ Hea Lugu                           451             602     -25%
AS SL Õhtuleht*                     1 865           1 876      -1%
AS Ajakirjade Kirjastus*            1 947           2 095      -7%
UAB Ekspress Leidyba                1 279           1 355      -6%
AS Express Post*                    1 191           1 180       1%
intersegment eliminations           (507)           (552)       8%
TOTAL                              11 690          12 387      -6%
------------------------------------------------------------------



                          ----------------------------------------
     (EUR thousand)                         EBITDA                
--------------------------                                        
                           Half year 2013  Half year 2012  Change%
------------------------------------------------------------------
AS Estonia Ajalehed                   150             227     -34%
OÜ Hea Lugu                            45              12     275%
AS SL Õhtuleht*                       104             135     -23%
AS Ajakirjade Kirjastus*               23            (16)     244%
UAB Ekspress Leidyba                  (1)            (73)      99%
AS Express Post*                      148             129      15%
intersegment eliminations               0             (2)        -
TOTAL                                 469             413      14%
------------------------------------------------------------------

*Proportionate share of joint ventures

The 2nd quarter of 2013 is characterised by the continued recession and downturn
 in the advertising market of printed newspapers. The advertising volumes of    
 magazines in the 2nd quarter have remained at the same level as last year. In  
 the 2nd quarter, we have laid great emphasis on the continued advertising of   
 digital newspapers, and upgrading of the technical platform and enhancing of   
 customer convenience. In April, a new landing page for digital newspapers      
 http://www.digilehed.ee/misondigileht was launched. The digital subscribers of 
 Eesti Ekspress and Eesti Päevaleht can read digital editions as well as        
 fee-based articles. In addition, in cooperation with the Estonian Digital Book 
 Centre, there is an opportunity to receive a free e-book together with a       
 digital newspaper each month. In the second quarter was introduced addition to 
 read newspapers  with smartphone. Preparations for introduction of new series  
 together with printed newspapers in the autumn are underway.                   

Estonian newspaper circulation 2012-2013

Circulations of Estonian newspapers remain stable or are slightly decreasing.
The circulation of daily newspapers has been falling more than that of weekly
newspapers. The Estonian market is inevitably following the global trends of
consumers migrating from printed newspapers to digital channels. As compared to
2012, only Maaleht has increased the average circulation in a quarter, by 100
copies. The circulation of other publications is slightly decreasing. 

Estonian newspaper readership 2012-2013

Stable growth of the readers of Maaleht can be highlighted as positive news. As
compared to the 2nd quarter of last year, the number of readers of Maaleht has
increased by 9 000 readers. The number of readers of other newspapers is
relatively stable. The number of printed newspapers excludes the readers of
digital newspapers, the development of which remains under the Group’s special
focus. 

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). 



---------------                          
(EUR thousand)            Sales          
               --------------------------
                Q2 2013  Q2 2012  Change%
-----------------------------------------
AS Printall       7 131    7 482      -5%
-----------------------------------------



               --------------------------
(EUR thousand)           EBITDA          
---------------                          
                Q2 2013  Q2 2012  Change%
-----------------------------------------
AS Printall       1 599    1 563       2%
-----------------------------------------



---------------                                        
(EUR thousand)                   Sales                 
               ----------------------------------------
                Half year 2013  Half year 2012  Change%
-------------------------------------------------------
AS Printall             13 749          14 858      -7%
-------------------------------------------------------



               ----------------------------------------
(EUR thousand)                   EBITDA                
---------------                                        
                Half year 2013  Half year 2012  Change%
-------------------------------------------------------
AS Printall              3 013           3 093      -3%
-------------------------------------------------------

Due to operation of heatset machines at maximum production capacity levels
during the peak season, sales growth is getting more difficult to attain.
Decrease of circulations also has a negative impact, as compensating the
decrease and obtaining new clients is due to specifics of printing industry a
long term process. Despite the decline of the segment’s total sales by up to 7%
in the first half of the year, the share of only printing services has
decreased considerable less, i.e.  2.2%. The share of group companies in sales
is decreasing. However, the sales in Estonia have increased as compared to the
same period last year. The focus continues to be laid on making processes more
efficient, as a consequence of which EBITDA has remained at the same level as
last year despite falling sales. 

Printing services and the environment

In addition to its very strong financial position, Printall also focuses on
environmentally conscious production. In 2012, Printall was granted ISO 9001
management and ISO 14001 environmental certificates. 

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

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

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



Consolidated balance sheet (unaudited)

(EUR thousand)                    30.06.2013  31.12.2012
--------------------------------------------------------
--------------------------------------------------------
ASSETS                                                  
Current assets                                          
Cash and cash equivalents           3 274          3 182
Trade and other receivables         6 879          7 344
Inventories                         2 538          2 922
Total                              12 691         13 448
Non-current assets held for sale       97             97
Total current assets               12 788         13 545
--------------------------------------------------------
--------------------------------------------------------
Non-current assets                                      
Term deposit                           98             98
Trade and other receivables           243            228
Deferred income tax assets            137            137
Property, plant and equipment      14 292         14 841
Intangible assets                  51 232         51 450
Total non-current assets           66 002         66 754
--------------------------------------------------------
TOTAL ASSETS                       78 790         80 299
--------------------------------------------------------
                                 -----------------------
LIABILITIES                                             
Current liabilities                                     
Borrowings                          3 682          4 347
Trade and other payables            9 619         10 498
Corporate income tax liability        112            122
--------------------------------------------------------
Total current liabilities          13 413         14 967
--------------------------------------------------------
--------------------------------------------------------
Non-current liabilities                                 
Long-term borrowings               22 488         24 233
Deferred income tax liability          67              0
--------------------------------------------------------
Total non-current liabilities      22 555         24 233
--------------------------------------------------------
Total liabilities                  35 968         39 200
--------------------------------------------------------
--------------------------------------------------------
EQUITY                                                  
Share capital                      17 878         17 878
Share premium                      14 277         14 277
Reserves                              866            740
Retained earnings                   9 798          8 190
Currency translation reserve            3             14
TOTAL EQUITY                       42 822         41 099
--------------------------------------------------------
TOTAL LIABILITIES AND EQUITY       78 790         80 299
--------------------------------------------------------
                                                        

Consolidated statement of comprehensive income (unaudited)

(EUR thousand)                                Q2      Q2   Half year   Half year
                                            2013    2012        2013        2012
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Sales revenue                             15 115  15 762      28 925      29 982
Cost of sales                                (11     (11    (22 329)    (23 387)
                                            333)    967)                        
Gross profit                               3 782   3 795       6 596       6 595
Marketing expenses                         (621)   (582)     (1 119)     (1 051)
Administrative expenses                       (1      (1     (3 027)     (3 300)
                                            486)    598)                        
Other income                                (28)    (67)        (57)       (101)
Other expenses                                94     122         189         284
--------------------------------------------------------------------------------
Operating profit                           1 741   1 670       2 582       2 427
--------------------------------------------------------------------------------
                                         ---------------------------------------
Interest income                                3       2           3           5
Interest expense                           (178)   (553)       (374)     (1 041)
Other finance income/costs                  (26)      35        (26)        (30)
Net finance cost                           (201)   (516)       (397)     (1 066)
Profit (loss) on shares of associates          4     (3)         (3)        (30)
Profit (loss) before income tax            1 544   1 151       2 182       1 331
Income tax (expense)                       (147)   (179)       (150)       (177)
--------------------------------------------------------------------------------
Net profit (loss) for the reporting        1 397     972       2 032       1 154
 period                                                                         
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Net profit (loss) for the reporting                                             
 period attributable to:                                                        
Equity holders of the parent company       1 397     972       2 032       1 154
Other comprehensive income (expense)                                            
Currency translation differences               9    (52)        (11)        (13)
Profit (loss) on change in value of a          0      68           0         130
 hedging instrument                                                             
Total other comprehensive income for the       9      16        (11)         117
 period                                                                         
Comprehensive income (expense) for the     1 406     988       2 021       1 271
 reporting period                                                               
Attributable to equity holders of the      1 406     988       2 021       1 271
 parent company                                                                 
Basic and diluted earnings per share        0.05    0.03        0.07        0.04
--------------------------------------------------------------------------------

Consolidated cash flow statement (unaudited)

(EUR thousand)                                           Half year     Half year
                                                              2013          2012
--------------------------------------------------------------------------------
Cash flows from operating activities                                            
--------------------------------------------------------------------------------
Operating profit (loss) for the reporting period             2 582         2 427
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Adjustments for:                                                                
Depreciation, amortisation and impairment                    1 305         1 716
Gain (loss) on sale and write-downs of property,                 0            31
 plant and equipment                                                            
Cash flows from operating activities:                                           
Trade and other receivables                                    466         (609)
Inventories                                                    384           185
Trade and other payables                                   (1 061)         (879)
Cash generated from operations                               3 676         2 871
Income tax paid                                              (121)          (90)
Interest paid                                                (374)       (1 041)
                                                     ---------------------------
Net cash generated from operating activities                 3 181         1 740
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Cash flows from investing activities                                            
Purchase of other financial investments                       (15)             0
Acquisition of subsidiary                                      (4)             0
Interest received                                                3             5
Purchase of  property, plant and equipment                   (556)         (417)
Proceeds from sale of property, plant and equipment             17            15
Loans granted                                                  (3)           (1)
Loan repayments received                                         3           181
                                                     ---------------------------
Net cash generated from investing activities                 (555)         (217)
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Cash flows from financing activities                                            
Finance lease repayments made                                    0         (390)
Change in use of overdraft                                   (745)           151
Change in use of factoring                                       0           213
Repayments of borrowings                                   (1 789)       (1 984)
                                                     ---------------------------
Net cash used in financing activities                      (2 534)       (2 010)
--------------------------------------------------------------------------------
NET (DECREASE)/INCREASE IN CASH AND CASH EQUIVALENTS            92         (487)
--------------------------------------------------------------------------------
                                                     ---------------------------
Cash and cash equivalents at the beginning of the            3 182         2 729
 period                                                                         
Cash and cash equivalents at the end of the period           3 274         2 242
--------------------------------------------------------------------------------




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