BALTIKA

COMMENTARY TO FINANCIAL RESULTS



COMMENTARY TO FINANCIAL RESULTS, Q4 2000



The consolidated reports for year 2000 include the results of 

the following subsidiaries and associated companies:



                              31.12.2000            31.12.1999

                                holding %             holding %

AS Baltika (parent)

AS Virulane (Estonia)            60.88%                 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%                     -

Baltika Ukraina (Ukraine)          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%. In October Baltika established a subsidiary in 

Ukraine with USD 40 thousand share capital. As at 31.12.00 Baltman’s 

subsidiary SIA Baltman was in the process of liquidation.



Baltika’s consolidated and unaudited net sales in 2000 amounted to 

EEK 340.8 mln, providing EEK 51.8 mln (18%) annual growth. Sales of 

manufactured output amounted to EEK 257.9 mln (EEK 48.3 mln or 23% 

more than in 1999) and turnover of subcontracting works EEK 73.7 

mln (EEK 6.8 mln or 9% more than in 1999).



Exports accounted for 66% (EEK 224.4 mln) of net sales, providing EEK 

38.0 mln annual growth; manufactured output accounted for 66% of net 

sales.



Sales by markets (EEK Mio):

                Q4 2000         2000     Q4 1999      1999

Estonia            28.4        114.0        35.7      99.8

Latvia, Lithuania  17.6         71.3        15.6      61.8

Scandinavia        19.0         89.2        14.8      88.0

Russia, Ukraine     6.7         27.8         1.4       8.5

Great Britain       5.5         26.2         7.3      22.3

Germany               0          3.7         0.4       2.1

Poland              1.6          4.2         0.5       0.8

USA                 0.3          1.8           0        0



General improvement in the economic environment have boosted the 

sales in most of the markets. 23% increase in sales of manufactured 

output is mostly due to opening of new stores and expansion of sales 

premises. In 2000 the company opened altogether 8 of its own 

stores (2 in Poland, 1 in Sweden, 2 in Lithuania, 1 in Ukraine, 

2 in Estonia), and 4 "shop-in-shop" type stores in Poland and 5 

franchises (2 in Latvia, 3 in Russia).



In 2000 AS Baltika consolidated and unaudited net profit was EEK 

16.5 mln (EEK 14.7 mln y-o-y growth), incl. group's profit EEK 14.3

mln (EEK 13.1 mln y-o-y growth). In Q4 the parent company and group 

posted EEK 3.3 mln and EEK 3.6 mln net profit, respectively. 



Compared with 1999 the operating expenses grew by EEK 15.0 mln or 

30.8%. The major factor behind the increased expenses is development 

of sales and management during the whole period, due to which the 

rental expenses (opening of new stores), advertising and marketing 

expenses, expenses related with entrance to new markets, and also 

transportation costs (due to tightened schedule of delivery of goods) 

grew substantially.



Compared with the last year, the company’s financial expenses 

decreased 24.7% or EEK 1.7 mln, incl. EEK 1.3 mln decrease in 

interest expenses. Consolidated total assets amounted to 

EEK 233.4 mln, having increased annually by EEK 15.2 mln 

(incl. current assets by EEK 11.2 mln). Supply of raw materials 

and goods inventories that the company acquired to support the 

sales of manufactured output, and investments made into opening 

of new sales premises decreased the cash account by EEK 1.3 mln, 

increased inventories by EEK 9.7 mln. Compared with the beginning 

of the year, the loans account decreased by EEK 4.8 mln.



AS Baltika financial ratios as of 31.12.2000:

 	 		               		2000     1999

- gross margin (gross profit/net sales) 	4.73%    2.58%

- profit margin (net profit/net sales) 		4.84%	 0.6%

- ROE (net profit/owners equity) 	       11.16%	 1.04%

- ROA(net profit/average cost of assets) 	 6.3%    0.2%

- Quick ratio					0.75     0.85

((current assets - inventories)/current liabilities)



The accounting principles used for compilation of Q4 2000 financial 

reports are in accordance with the accounting principles used for 

compilation of financial reports for the same period last year. 

The accounting principles are in accordance with the International 

Accounting Standards and accounting practices. All data is presented 

in millions of Estonian kroons, unless stated otherwise. The interim 

report is not audited.





Ülle Järv

Management Board member

+372 63 02 741