Last update: 15.01.2021 21:37 (GMT+2)

Baltika: Commentary to group's financial results 01.01.-31.03.2000

27.04.2000, Baltika, TLN
BALTIKA
COMMENTARY TO FINANCIAL RESULTS

COMMENTARY TO GROUP'S FINANCIAL RESULTS 01.01.-31.03.2000

The Q1 2000 consolidated reports reflect the results of the following
subsidiaries and associated companies:

31.03.2000 holding % 31.03.1999 holding %
AS Baltika (parent)
AS Virulane (Estonia) 55.15% 55.15%
AS Baltman (Estonia) 100% 100%
SIA Baltman (Latvia) 100% 100%
Baltmano Prekiba (Lithuania) 100% 90%
Baltika Sweden (Sweden) 100% 100%
AS Elina STC (Estonia) 37.5% 37.5%
Baltika Poland (Poland) 100% -
Baltinia OY (Finland) 100% 100%

AS Elina STC is treated as subsidiary since AS Baltika controls the
financial activities of AS Elina STC. On 01.03.2000 AS Baltika bought
an additional 10% holding in Baltmano Prekiba, thus increasing its
holding to 100%.

AS Baltika Q1 2000 consolidated and unaudited net sales amounted to
EEK 88.7 mln, providing EEK 8.1 mln (10%) annual growth. Sales of
manufactured output amounted to EEK 67.4 mln (EEK 7.9 mln or 13.2%
more than in Q1 1999) and turnover of subcontracting works EEK 20.6
mln (EEK 1.7 mln or 9.2% more than in Q1 1999).
Exports accounted for 70.2% (EEK 62.2 mln) of net sales; manufactured
output accounted for 76% of net sales (in Q1 1999 the manufactured
output accounted for 73.9% of net sales, and exports 69.8% of net
sales).
Sales by markets:

In EEK million
Q1 2000 Q1 1999 Change (%)
Estonia 26.4 24.4 8.5%
Latvia, Lithuania 21.4 21.4 0.2%
Finland, Sweden, Norway 26.0 27.0 -3.7%
Russia, Ukraine 6.7 2.1 217.5%
England, Germany 6.9 5.7 20.5%
Poland 1.2

Major changes took place on the Russian market, where last year's
conservative sales policies were replaced by more intensive sales
strategies in order to fully exploit improvement of the economic
climate. The clients on the Russian market include mainly the
company's long-term business partners who successfully survived the
economic crisis. Turnover of domestic market increased by EEK 2.1 mln
or 8.5% y-o-y.

AS Baltika Q1 2000 consolidated and unaudited net profit was EEK
5,328 thousand (EEK 2,338 thousand or 78% y-o-y growth), incl.
group's profit EEK 4,372 thousand (EEK 1,680 thousand or 62% y-o-y
growth).
The following factors had a substantial effect on the company's net earnings:
- bonus reserve connected with operating profit: EEK 1.9 mln (no
bonus reserves in Q1 1999);
- expenses related with opening of the Polish subsidiary's first
shop: EEK 1.2 mln;
- differences in Income Tax Law (EEK 1.2 mln income tax calculated in
Q1 1999).

In Q1 2000 also the liquidity of AS Baltika has improved:
Quick ratio ((current assets - inventories)/current liabilities)
increased from 0.85 (01.01.2000) to 0.99 (31.03.2000). the following
changes took place on the current assets account in Q1: volume of
marketable securities dropped by EEK 8 mln, accounts receivable
increased by EEK 14 mln, inventories decreased by EEK 5 mln
(inventories of raw materials and work-in-progress decreased by more
than EEK 9 mln, and inventories of finished goods and goods purchased
for resale grew by EEK 4.5 mln). All aforementioned changes are
mainly due to the seasonal nature of the company's activities.
Comparison of seasonably comparable balance sheet standings
(31.03.2000 and 31.03.1999) indicates that inventories for the whole
group decreased by EEK 12 mln (incl. inventories of finished goods
EEK 16 mln); also the customer receivable declined (EEK 6.6 mln) and
balance of cash and marketable securities increased (EEK 11 mln).

In Q1 the group's effectiveness ratios improved on y-o-y basis:
- inventory turnover (net sales/ average inventories during the
quarter) increased by 27.3%;
- total assets turnover (net sales/ average assets during the
quarter) increased by 13,6%
- days sales outstanding ((accounts receivable/ customer
prepayments)/average daily net sales) decreased by 15 days or 26%.

Debt ratio (liabilities/assets) dropped in Q1 from 43% (01.01.2000)
down to 41% (31.03.2000). Liabilities have dropped mainly on the
accounts of accounts payable (-5 mln EEK) and current period
repayment of long-term bank loans (-1.46 mln EEK).

Profitability ratios:
In Q1 gross margin (gross profit / net sales) stood at 6.9%
(excluding operating profit bonus reserves 9.1%); profit margin 6%
(excluding operating profit bonus reserves 8.2%); ROE (net profit /
average owners equity) grew 56.5% y-o-y.


Ülle Järv
Management Board member
+372 6 302 741

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