PRO KAPITAL

COMMENTARY TO FINANCIAL RESULTS



COMMENTARY TO GROUP FINANCIAL RESULTS, 9M 2000



The 9m 2000 unaudited balance sheet, income statement and commentary 

to the financial results of AS Pro Kapital Grupp, published via the 

information system of the Tallinn Stock Exchange on 17.11.2000, 

include the consolidated and unaudited results of the group. Since the 

detailed financial results of Domina subsidiary concern are yet to come 

in, the appendices to the interim report will be published at the end 

of the current month.



The group's consolidated financial reports are compiled in line with 

the principles of International Accounting Standards (IAS).  

Consolidated financial reports include the results of subsidiary 

concerns where AS Pro Kapital Grupp holds at least 20% of shares or 

votes represented with shares. Consolidated financial reports of the 

subsidiary concerns include the results of companies, where the 

respective parent companies hold at least 20% of shares or votes 

represented with shares.



Consolidated financial reports include the results of subsidiary 

concerns Pro Kapital Eesti, Pro Kapital Latvia and Pro Kapital 

Vilnius. The group reports also reflect the assets and liabilities of 

Italian subsidiary concern Domina Hotel e Comproprieta Alberghiere (new 

business name: Domina Vacanze). The group income statement includes 

Domina subsidiary concern's Q3 income report, since according to applied 

accounting principles, AS Pro Kapital Grupp gained control over its 

subsidiary concern's revenues and expenses only in Q3.



AS Pro Kapital Grupp 9m 2000 consolidated and unaudited net sales 

were EEK 218.7 million, where Pro Kapital Eesti consolidated net 

sales stood at EEK 108.8 mln and Pro Kapital Latvia consolidated sales 

at EEK 46.6 mln; in Q3 the consolidated net sales of Domina Vacanze were 

EEK 63.3 mln.



The group's consolidated net sales figure reflects the sales prices 

of real estate objects for which notarial sales agreements and preliminary 

sales agreements have been made, sale of vacation units, income from 

operating of hotels based on client invoices, real estate rental 

services, real estate related consultations and management and administration 

services. The turnover figure also reflects the sales prices of real estate 

objects sold under finance lease agreements.



AS Pro Kapital Grupp 9m 2000 consolidated and unaudited net profit 

was EEK 5.6 million, where Pro Kapital Eesti consolidated net loss 

stood at EEK 6.8 mln, Pro Kapital Latvia consolidated net profit at 

EEK 7.7 mln, Pro Kapital Vilnius consolidated net profit at EEK 

0.2 mln, and Domina Vacanze Q3 consolidated net profit at EEK 4.5 mln.



The result of Pro Kapital Eesti is lower by amortization of goodwill 

in the amount of EEK 7.4 million, shown on the income statement 

account of general administrative expenses, in accordance with the

principles of IAS.



The preliminary sales agreements that are not calculated into 9m 

turnover figure (not in line with the criteria for accounting of 

turnover) had a negative impact on the consolidated results of the 

subsidiary concerns. Also the companies that own real estate objects, 

which are conserved or in development stages and thus lack sales 

income to cover the administrative expenses, impacted negatively the 

daughter concerns' consolidated results.



Major changes in 9m consolidated income statements compared with the reports 

from the same period last year, are due to addition of Domina subsidiary 

concern's Q3 consolidated income statement to the group's consolidated income 

reports. Changes are also due to intensified operations in Estonia and 

Latvia. The net sales of subsidiary concern's in the Estonia and Latvia

grew annually from EEK 73 mln to EEK 159 mln. The turnover was most impacted 

by the results of Ilmarise dwelling quarter, Kristiine Kaubanduskeskus 

(Kristiine Shopping Center) and PK Latvia, which develops an historical 

building in Riga Old Town (address Stabu 19). 



The financial expenses grew on annual basis by EEK 18.5 mln. On the 

group's financial expenses account (EEK 31.5 mln), the calculated interest 

from convertible bonds amounts to EEK 10.1 million, accounting loss from EVP 

(privatization vouchers) fixed liabilities amounts to EEK 3.5 mln, and Domina 

subsidiary concern's financial expenses are EEK 1.3 mln. The remaining EEK 

16.6 mln are interest paid to banks and privatization liabilities paid to 

privatization agencies of different countries for loans on Kristiine 

Kaubanduskeskus, Ilmarise dwelling quarter and building located Stabu 19, 

Riga.



The income tax account includes subsidiary concern's calculated income tax 

from 9m results, taking into account the provisions of legal acts valid in

the domicile countries.



AS Pro Kapital Grupp consolidated balance sheet volume grew to 

EEK 2,187.9 mln by the end of Q3 2000, up from EEK 1,041.2 mln as at 

31.12.1999. Substantial changes took place on the group's assets, 

liabilities and equity accounts due to acquisition of Domina 

subsidiary concern in H1 2000. 



In addition to this commentary Pro Kapital Group will also publish the Domina 

Vacanze's consolidated balance sheet and income statement as at 31.08.2000, 

with an aim to facilitate the analysis on impact of consolidation of Domina 

subsidiary concern to Pro Kapital Group. The subsidiary concern's financial 

year began on 01.12.1999, thus there's a one-month difference between the 

financial years of Domina and the parent concern. 



Domina Vacanze financial year currently lasts from December 1 until November 

30. Considering that the accounting principles pertaining to the procedures 

necessary for compilation of annual financial reports are audited by the 

international auditing company PriceWaterhouseCoopers, the 9m results of 

Domina subsidiary concern are comparable with the parent group's results. Pro 

Kapital Grupp has set a goal to adjust the accounting principles of Domina 

subsidiary concern upon compilation of consolidated annual report for year 

2000, and to integrate Domina's reporting and financial accounting systems 

with the parent company by the by end of Q1 2001.





Ilona Saari

PK Group, Board member

+372 614 4924