Eesti Post                    NEWS RELEASE                      08/27/2004



UNAUDITED FINANCIAL RESULTS, H 1 2004



In the first half of 2004, AS Eesti Post increased its

profits to EEK 20.1m, which is 60.2% more than in the

same period of the previous year.

The rapid increase of profits was due to a halt in

expenditure growth and a notable increase in operating

income, mainly attributable to logistics services and

universal postal service. The postal company made a

profit of EEK 12.4m for the first half of the previous

year.

"The financial results for the first half of this year

show that the saving policy devised by the supervisory

board, which assumed office in summer 2003, as well as

the changes in the management have given the desired

result," said Jüri Ehasalu, chairman of the supervisory

board of Eesti Post. "I am glad that Eesti Post has been

able to grow its sales at a relatively stable-sized

market in an increasingly tougher competition situation,

which also refers to a slight increase in our market

share," said Peeter Raudsepp, who assumed the post of

chairman of the management board of AS Eesti Post in the

autumn, when commenting on the first six months’ results.

"The increase in management costs that began last year

has been halted and the management board has decided to

follow the same principle in the second half-year."

The operating income of AS Eesti Post increased by 5.5%

compared to the first half of 2003, reaching EEK 333.4m.

The volume of postal services, which formerly tended to

decline, increased. The growth in this segment is all the

more significant since it is the largest service of the

company, accounting for more than one-third of the

operating income.

As the greatest change in the income structure, the

relative share of logistics services increased from the

former third to the second position, forming one-fifth of

the operating income. This was mainly due to the increase

in the total volume of ELS Ekspress courier services,

including the launch of a new service - the ELS

unregistered parcel. The increase in income from parcel

post is related to international parcels, where the

volume of service charges has increased by 20% when

compared to the same period of the previous year. Income

from domestic parcel delivery, however, has decreased by

9% during the same period. This could be due to the

increasing popularity of ELS, as its services are faster

and more convenient than ordinary postal delivery.

Due to a relatively sharp decrease in addressed

advertisement deliveries, income from direct marketing

has somewhat decreased compared to the same period of the

previous year and it forms 18% of operating income. The

main reasons for this are the lower press runs and the

competitive pressure on decreasing service charges.

The increase in the operating expenses of AS Eesti Post

has fallen from 8% in the first half of the previous year

to 3%, mainly in connection with a substantial curbing of

maintenance costs (administration, consultations, etc.).

Since human labour still plays a great role in postal

services, labour accounts for 60% of the total operating

expenses of EEK 307.7m. Labour costs have increased by

3.3% compared to the same period of the previous year and

amount to EEK 184.4m. The average labour expense per

employee has increased somewhat faster (6.8%), because

while the total labour expenses increased, the number of

employees decreased from 4100 to 4000 persons.

The company aims at increasing the income of its

employees without a major increase in the total salary

expenses, i.e. increased income should largely be based

on greater efficiency. The increases in the car fuel

price and postal delivery mileage have played a major

role in increasing operating expenses.

AS Eesti Post is a state-owned company whose main

activity is the provision of postal and communication

services.

The Eesti Post group includes the parent company AS Eesti

Post and the subsidiary AS Eesti Elektronpost, in which

AS Eesti Post has a holding of 50.86%.

The bonds of AS Eesti Post have been listed on the bonds

list of the Tallinn Stock Exchange since 11 July 2003.



Balance sheet

                                                          

                                                          

                               thousand kroons  thousand euros

                          Note30.06.20 31.12.20 30.06.20 31.12.20

                                    04      03      04      03

ASSETS                                                        

Current assets                                                

Cash and bank                  181 612 206 749  11 607  13 214

Shares                     1         0   1 600       0     102

Trade and other                 80 080  85 929   5 118   5 492

receivables

Inventories                     15 674  15 660   1 002   1 001

TOTAL CURRENT ASSETS           277 366 309 938  17 727  19 809

                                                          

Non-current assets                                             

Long-term receivables            1 096   1 158      70      74

Investment property        2    14 107  11 240     902     718

Property, plant and        2   324 180 339 867  20 719  21 721

equipment

Intangible assets          2     4 593   6 252     294     400

TOTAL NON-CURRENT ASSETS       343 976 358 517  21 984  22 913

                                                          

TOTAL ASSETS                   621 341 668 455  39 711  42 722

                                                          

LIABILITIES AND EQUITY                                          

Current liabilities                                             

Borrowings                 3    20 253  22 071   1 294   1 411

Funds received for social      122 764 143 939   7 846   9 199

welfare payments

Trade and other payables        75 428  99 622   4 821   6 367

Total current liabilities      218 445 265 632  13 961  16 977

Non-current liabilities                                         

Borrowings                 3   113 288 120 284   7 240   7 688

Other long-term                    623   1 595      40     102

liabilities

Total non-current              113 911 121 880   7 280   7 789

liabilities

TOTAL LIABILITIES              332 356 387 512  21 241  24 766

                                                          

MINORITY INTEREST                2 332   2 447     149     156

                                                                

Shareholders' equity                                            

Share capital                  245 873 245 873  15 714  15 714

Reserves                        10 002   8 811     639     563

Retained earnings               10 722       3     685       0

Net profit                      20 057  23 809   1 282   1 522

TOTAL SHAREHOLDERS'        4   286 653 278 496  18 320  17 799

EQUITY

                                                          

TOTAL LIABILITIES AND          621 341 668 455  39 711  42 722

EQUITY















Income statement



                                                           

                                                           

                                thousand kroons thousand euros

                           Note       6       6       6      6

                                 months  months  months months

                                  ended   ended   ended  ended

                                30 June 30 June 30 June 30 June

                                   2004    2003    2004   2003

Income                                                   

Net sales                    6  320 198 303 599  20 464 19 403

Government grants            5    6 961   7 500     445    479

Other operating income            6 274   5 039     401    322

Total income                    333 433 316 138  21 310 20 205

                                      0                  

Operating expenses                    0                  

Raw materials and                56 928  50 070   3 638  3 200

consumables used

Other operating expenses         43 036  46 824   2 751  2 993

Staff costs                     184 389 178 426  11 785 11 403

Depreciation and             2   22 378  22 018   1 430  1 407

amortisation

Other expenses                      971   1 271      62     81

Total operating expenses        307 702 298 608  19 666 19 084

                                                         

Profit from operations           25 732  17 530   1 645  1 120

                                                         

Financial income and                                     

expenses

Interest income                     866     831      55     53

Interest expense                 -2 620  -2 652    -167   -169

Foreign exchange gains and          241      61      15      4

losses

Other financial income and          -96     -57      -6     -4

expenses

Total financial income and       -1 609  -1 816    -103   -116

expenses

                                                         

Profit on ordinary               24 123  15 714   1 542  1 004

activities

Income tax expense           4    4 181   3 900     267    249

Profit before minority           19 942  11 814   1 274    755

interest

Minority interest                   115     576       7     37

Net profit                       20 057  12 390   1 282    792

                                                           

Basic earnings per share     8     8,16   11,56    0,52   0,74

(expressed in EEK/EUR per

share)

Diluted earnings per share   8     8,16   11,56    0,52   0,74

(expressed in EEK/EUR per

share)





Inge Rumessen

Director of Communication

50 70944