ESTONIAN POST            FINANCIAL RESULTS        02.03.2005



AS Eesti Post audited financial results for 2004



The profit of AS Eesti Post exceeded budgetary expectations by

one-third. Owing a halt in the increase of costs and greater

income from logistics services and universal postal services, the

group’s profits grew by 23.1% to MEEK 29.3 compared to the year

2003.



According to Jüri Ehasalu, Chairman of the Supervisory Board of

AS Eesti Post, the company’s financial results for the previous

year are the expected result of the changes made in the company’s

management. “I am glad that progress was made both in terms of

service volumes and quality,” said Ehasalu.



Peeter Raudsepp, Chairman of the Management Board of AS Eesti

Post added that the company’s financial results were very good in

a situation where the prices of fuel, electricity and other

resources necessary for postal services have gone up

substantially and the company only expected a profit of MEEK 22.

“A targeted reduction of management costs and continuing greater

sales of express services also play important roles in generating

a greater profit.”



Compared to the year 2003, the operating income of AS Eesti Post

increased by 5.4% to MEEK 691.7. The increase in the postal

services volume, which showed a slight downward trend so far, is

all the more important since this is the largest service of the

company, accounting for more than one-third of the operating

income. The largest change in the income structure was the leap

of logistics services from the third to the second place; it

accounted for slightly over one-fourth of operating income.

Income from logistics services grew by 28.8% after 2003, mainly

owing to the ELS Ekspress courier services and parcel deliveries.



Income from direct marketing decreased by 1.8% compared to 2003.

Within this income segment, income from unaddressed advertising

grew by 11.8% and income from addressed advertising decreased by

19.8%. The latter is mainly due to smaller press runs and

competitive pressure to reduce service charges.



Income from financial services decreased by 12%; among these, the

decrease was the greatest (15.7%) in income from pension and

allowance payments.



Since AS Eesti Post is the only provider of universal postal

services and hence has to maintain an extensive and costly

service network, the loss from universal postal service was

covered by income from other postal services and non-postal

services, as demonstrated by the operations-based cost accounting

model of AS Eesti Post which was approved by the Communications

Board in 2004.



The growth of operating income of AS Eesti Post decreased from

5.9% in 2003 to 4.7% in 2004, mainly owing to curbed operating

expenses.



Since human labour still plays a great role in postal services,

labour costs account for 59.9% of the total operating expenses of

MEEK 655.1. The relative share of labour costs has remained

basically the same as in 2003 and it amounted to MEEK 392.6. The

average labour cost per employee increased by 6.5%, as the staff

decreased from 4082 to 3997 persons while the total labour costs

increased. The company aims at increasing the employees’ income

without substantially increasing the total salary expenses, i.e.

growth of income should mainly come from increased efficiency and

performance. Increases in car fuel prices and the postal delivery

mileage have also played a major role in the increase of

operating expenses.



AS Eesti Post is a state-owned company whose main business is the

provision of postal and communication services. The Eesti Post

group includes AS Eesti Post as the parent company and the

subsidiary AS Eesti Elektronpost, in which AS Eesti Post holds

50.86%. The bonds of AS Eesti Post have been listed in bond list

of the Tallinn Stock Exchange since 11 July 2003.



Balance sheet

in thousand kroons



                            Note 31.12.2004  31.12.2003

ASSETS                                                 

Current assets                                         

Cash and bank                1      222 858     206 749

Shares                       2            0       1 600

Trade and other              3       79 035      85 929

receivables

Inventories                  4       14 037      15 660

TOTAL CURRENT ASSETS                315 930     309 938

                                             

Non-current assets                                     

Long-term receivables        5        1 189       1 158

Investment property          6       10 879      11 240

Property, plant and          7      321 293     339 867

equipment

Intangible assets            7        4 646       6 252

TOTAL NON-CURRENT ASSETS            338 008     358 517

                                             

TOTAL ASSETS                        653 938     668 455

                                             

LIABILITIES AND EQUITY                       

Current liabilities                          

Borrowings                   10      21 368      22 071

Funds received for social    11     121 497     143 939

welfare payments

Trade and other payables     12     102 478      99 622

Total current liabilities           245 343     265 632

                                             

Non-current liabilities                      

Borrowings                   10     109 564     120 284

Other long-term              12         911       1 595

liabilities

Total non-current                   110 475     121 880

liabilities

TOTAL LIABILITIES                   355 818     387 512

                                             

MINORITY INTEREST                     2 217       2 447

                                             

Shareholders' equity                         

Share capital                       245 873     245 873

Reserves                             10 002       8 811

Retained earnings                    10 722           3

Net profit                           29 307      23 809

TOTAL SHAREHOLDERS' EQUITY   13     295 903     278 496

                                             

TOTAL LIABILITIES AND               653 938     668 455

EQUITY











Income statement

in thousand kroons



                               Note       2004       2003

Income                                                   

Net sales                       14     660 009    621 558

Government grants               15      15 273     17 122

Other operating income          16      16 381     17 411

Total income                           691 662    656 090

                                                         

Operating expenses                                       

Raw materials and consumables   17     120 602    104 742

used

Other operating expenses        18      94 408     98 245

Staff costs                     19     392 613    376 709

Depreciation and amortisation   6,7     44 998     43 775

Other expenses                  16       2 516      2 224

Total operating expenses               655 138    625 695

                                                         

Profit from operations                  36 525     30 396

                                                         

Financial income and expenses                            

Interest income                          1 919      1 944

Interest expenses                       -5 133     -5 331

Foreign exchange gains and                  91       -133

losses

Other financial income and                -145       -188

expenses

Financial income and expenses                0        225

from financial investments

Total financial income and      20      -3 267     -3 483

expenses

                                                         

Profit on ordinary activities           33 258     26 913

Income tax expense              13      4  181      3 900

Group profit before minority            29 077     23 013

interest

Minority interest                          230        797

Net profit                              29 307     23 809

                                                

Basic earnings per share        21       11,92      13.44

(expressed in EEK per share)

Diluted earnings per share      21       11,92      13.44

(expressed in EEK per share)



Balance sheet

in thousand euros



                            Note 31.12.2004  31.12.2003

ASSETS                                                 

Current assets                                         

Cash and bank                1       14 243      13 214

Shares                       2            0         102

Trade and other              3        5 051       5 492

receivables

Inventories                  4          897       1 001

TOTAL CURRENT ASSETS                 20 192      19 809

                                             

Non-current assets                                     

Long-term receivables        5           76          74

Investment property          6          695         718

Property, plant and          7       20 534      21 721

equipment

Intangible assets            7          297         400

TOTAL NON-CURRENT ASSETS             21 603      22 913

                                             

TOTAL ASSETS                         41 794      42 722

                                             

LIABILITIES AND EQUITY                       

Current liabilities                          

Borrowings                   10       1 366       1 411

Funds received for social    11       7 765       9 199

welfare payments

Trade and other payables     12       6 550       6 367

Total current liabilities            15 680      16 977

                                             

Non-current liabilities                      

Borrowings                   10       7 002       7 688

Other long-term              12          58         102

liabilities

Total non-current                     7 061       7 789

liabilities

TOTAL LIABILITIES                    22 741      24 766

                                             

MINORITY INTEREST                       142         156

                                             

Shareholders' equity                         

Share capital                        15 714      15 714

Reserves                                639         563

Retained earnings                       685           0

Net profit                            1 873       1 522

TOTAL SHAREHOLDERS' EQUITY   13      18 912      17 799

                                             

TOTAL LIABILITIES AND                41 794      42 722

EQUITY

                                                       

                                                       











Income statement

in thousand euros



                                Note        2004        2003

Income                                                      

Net sales                        14       42 182      39 725

Government grants                15          976       1 094

Other operating income           16        1 047       1 113

Total income                              44 205      41 932

                                                  

Operating expenses                                

Raw materials and consumables    17        7 708       6 694

used

Other operating expenses         18        6 034       6 279

Staff costs                      19       25 093      24 076

Depreciation and amortisation   6,7        2 876       2 798

Other expenses                   16          161         142

Total operating expenses                  41 871      39 989

                                                  

Profit from operations                     2 334       1 943

                                                  

Financial income and expenses                     

Interest income                                0         124

Interest expenses                            123        -341

Foreign exchange gains and                  -328          -8

losses

Other financial income and                     6         -12

expenses

Financial income and expenses                 -9          14

from financial investments

Total financial income and       20         -209        -223

expenses

                                                  

Profit on ordinary activities              2 126       1 720

Income tax expense               13          267         249

Group profit before minority               1 858       1 471

interest

Minority interest                             15          51

Net profit                                 1 873       1 522

                                                  

Basic earnings per share         21         0.76        1.42

(expressed in EUR per share)

Diluted earnings per share       21         0.76        1.42

(expressed in EUR per share)







Inge Rumessen

Estonian Post

Communication manager

Ph. 50 70 944