AS EKSPRESS GRUPP CONSOLIDATED INTERIM REPORT FOR THE FOURTH QUARTER AND TWELVE MONTHS OF 2012 AS Ekspress Grupp Consolidated Interim Report for the Fourth Quarter and Twelve Months of 2012 TABLE OF CONTENTS GENERAL INFORMATION ............................................................................................................................. 3 ManaGement Board’s confirmation of the Group’s consolidated interim report ......................................... 4 MANAGEMENT REPORT ................................................................................................................................ 5 OVERVIEW OF THE SEGMENTS ........................................................................................................... 10 GROUP STRUCTURE ................................................................................................................................... 19 SHARES AND SHAREHOLDERS OF AS EKSPRESS GRUPP ........................................................ 20 INTERIM CONSOLIDATED FINANCIAL STATEMENTS ................................................................. 23 Consolidated balance sheet (unaudited) ........................................................................................................ 23 Consolidated statement of comprehensive income (unaudited)................................................................ 24 Consolidated statement of chanGes in equitY (unaudited) .......................................................................... 25 Consolidated cash flow statement (unaudited) ............................................................................................. 26 NOTES TO THE CONSOLIDATED INTERIM FINANCIAL STATEMENTS ........................... 27 Note 1. General information ........................................................................................................................... 27 Note 2. Bases of preparation ........................................................................................................................... 28 Note 3. Financial risk manaGement ................................................................................................................ 28 Note 4. Business combinations ....................................................................................................................... 33 Note 5. Investments in joint ventures............................................................................................................ 34 Note 6. PropertY, plant and equipment and intangible assets .................................................................... 35 Note 7. Bank loans and borrowings ............................................................................................................... 38 Note 8. SeGment reporting............................................................................................................................... 40 Note 9. Earnings per share .............................................................................................................................. 4 2 Note 10. EquitY ................................................................................................................................................. 42 Note 11. Contingent liabilities ......................................................................................................................... 4 2 Note 12. Related partY transactions ............................................................................................................... 43 Note 13. Events after the balance sheet date................................................................................................ 44 Note 14. SustainabilitY of operations ............................................................................................................. 44 2 AS Ekspress Grupp Consolidated Interim Report for the Fourth Quarter and Twelve Months of 2012 GENERAL INFORMATION BeGinninG of reportinG period 1 JanuarY 2012 End of reportinG period 31 December 2012 CompanY name AS Ekspress Grupp ReGistration number 10004677 Address Narva mnt 11 E. 10151 Tallinn Phone 669 8381 Fax 669 8081 E-mail [email protected] Internet homepaGe www.egrupp.ee Main field of activitY PublishinG and related services (5814) ManaGement Board Gunnar Kobin (chairman) Andre Veskimeister Pirje Raidma Madis Tapupere SupervisorY Board Viktor Mahhov (chairman) Hans H. Luik Aavo Kokk Antti Mikael Partanen (until 04.05.2012) Kari Sakari Salonen (since 04.05.2012) Harri Helmer Roschier Ville Jehe Auditor AS PricewaterhouseCoopers 3 AS Ekspress Grupp Consolidated Interim Report for the Fourth Quarter and Twelve Months of 2012 Management Board’s confirmation of the Group’s consolidated interim report The ManaGement Board confirms that the manaGement report and interim consolidated financial statements of AS Ekspress Grupp disclosed on paGes 5 to 44 present a true and fair view of the keY events which have occurred durinG the reportinG period and their effect on the Group’s financial position, results and cash flows, and theY include a description of major risks and related partY transactions of Great siGnificance. Gunnar Kobin Chairman of the ManaGement Board signed digitally 28.02.2013 Pirje Raidma Member of the ManaGement Board signed digitally 28.02.2013 Andre Veskimeister Member of the Management Board signed digitally 28.02.2013 Madis Tapupere Member of the ManaGement Board signed digitally 28.02.2013 4 AS Ekspress Grupp Consolidated Interim Report for the Fourth Quarter and Twelve Months of 2012 MANAGEMENT REPORT 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 and corporate functions. Key financiaL indicators and financiaL ratios Change FinanciaL indicators Q4 2012 Q4 2011 Q4 2010 Q4 2009 (EUR thousand) % For the reporting period Sales 16 447 16 313 1% 14 885 13 514 Gross profit 3 914 3 660 7% 3 466 2 598 EBITDA* 2 246 1 986 13% 1 854 896 Operating profit* 1 496 1 037 44% 1 016 37 Profit /(Loss) from continuing operations for the period * 1 269 535 137% 210 (780) EBITDA margin* (%) 13,7% 12,2% 12,5% 6,6% Operating margin* (%) 9,1% 6,4% 6,8% 0,3% Net margin* (%) 7,7% 3,3% 1,4% -5,8% Impairment of Goodwill (157) (750) -79% 0 (5 844) Net profit / (loss) from continuinG operations for the period 1 112 (215) 617% 210 (6 624) Net profit for the period in the financial statements 1 112 (215) 617% 210 (6 986) Net marGin (%) 6.8% -1.3% 1.4% -51.7% *The results exclude impairment of Goodwill and trademarks. mEUR SaLes, EBITDA and EBITDA margin in Q4 18 16,3 16,4 24,0% 16 14,9 13,5 14 19,0% 12 10 Sales 8 14,0% EBITDA 6 4 1,85 1,99 2,25 9,0% 0,90 6,6% 12,5% 12,2% 13,7% 2 0 4,0% 2009 Q4 2010 Q4 2011 Q4 2012 Q4 5 AS Ekspress Grupp Consolidated Interim Report for the Fourth Quarter and Twelve Months of 2012 FinanciaL indicators 12 months 12 months Change 12 months 12 months (EUR thousand) 2012 2011 % 2010 2009 For the period Sales 59 706 57 391 4% 51 814 51 974 Gross marGin 13 187 12 544 5% 11 294 9 292 EBITDA* 7 882 6 968 13% 6 041 3 014 Operating profit* 4 596 3 443 33% 2 760 (445) Profit /(Loss) from continuing operations for the period * 2 682 893 200% (509) (3 613) EBITDA margin* (%) 13,2% 12,1% 11,7% 5,8% Operating margin* (%) 7,7% 6,0% 5,3% -0,9% Net margin* (%) 4,5% 1,6% -1,0% -7,0% ExtraordinarY Gain related to acquisition of Eesti Päevalehe AS** 0 1 540 -100% 0 0 Impairment of Goodwill and trademarks (157) (750) -79% 0 (5 844) Net profit / (loss) from continuinG operations for the period in the financial 2 525 1 683 50% (509) (9 457) statements Net profit / (loss) for the period in the financial statements 2 525 1 683 50% (146) (12 144) Net marGin (%) 4,2% 2,9% -0,3% -23,4% Earnings per share (EPS) 0.08 0.06 (0.01) (0.58) *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 in Eesti Päevalehe AS was acquired. 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 (see Note 4 to the financial statements). mEUR SaLes, EBITDA and EBITDA margin 70 24,0% 57,4 59,7 60 52,0 51,8 50 19,0% 40 Sales 14,0% 30 EBITDA 20 3,01 6,04 6,97 7,88 9,0% 10 5,8% 11,7% 12,1% 13,2% 0 4,0% 2009 2010 2011 2012 6 AS Ekspress Grupp Consolidated Interim Report for the Fourth Quarter and Twelve Months of 2012 Revenue by activity 100% 5% 5% 4% 4% 90% Sale of other Goods and services 80% 37% 41% 42% 43% 70% Sale of paper and printinG services 60% Book publishinG 5% 50% 4% 3% 4% Subscriptions' revenue 15% 14% 14% 14% 40% SinGle-copY sales 9% 7% 6% 6% 30% AdvertisinG revenue 20% 28% 29% 30% 29% 10% 0% 2009 2010 2011 2012 BaLance sheet 31.12.2012 31.12.2011 Change % (EUR thousand) As of the end of the period Current assets 13 545 12 523 8% Non-current assets 66 754 68 986 -3% TotaL assets 80 299 81 509 -1% Current liabilities 14 967 16 547 -10% Non-current liabilities 24 233 26 574 -9% TotaL LiabiLities 39 200 43 121 -9% EquitY 41 099 38 388 7% FinanciaL