Tallinna Kaubamaja            NEWS RELEASE                      02/28/2003



AUDITED FINANCIAL RESULTS 2002



The Group



The consolidated results of Tallinna Kaubamaja Group include 100%

subsidiaries AS A-Selver, AS Tartu Kaubamaja, Tallinna Kaubamaja Kinnisvara

AS and associated company Rävala Parkla AS (50%).



The consolidated net sales for the year 2002 were1,53  billion kroons; 97,9

million euros (including parent company 584,6 million kroons; 37,4 million

euros). The increase in net sales was 5,7% during the year and the increase

in selling area was 7,4 % The market share of Tallinna Kaubamaja Group in the

retail market was 6,2% by the end of 2002.



The audited net profit of Tallinna Kaubamaja Group was 45 million kroons; 2,9

million euros with an increase of 9,3 million kroons; 0,6 million euros or

26% over the net profit for 2001. The net profit margin was 2,9% and the

respective indicator of the previous year was 2,5%. Net profit per share was

6,6 kroons; 0,4 euros in 2002 and 5,3 kroons; 0,3 euros in 2001.



The total assets of Tallinna Kaubamaja Group were 776,4 million kroons; 49,6

million  euros  as at 31 December 2002, showing an increase of  77,7  million

kroons;  5 million euros.



During the year 2002 the investments in tangible fixed  assets  were 185,3

million kroons; 11,8 million euros   Major investments included the buildings

of Merimetsa Selver in the amount of 35 million  kroons; 2,2 million euros

and Torupilli Selver in the amount of 32,9 million  kroons; 2,1 million

euros. The lease agreement of Mai Selver in Pärnu has been capitalized in the

amount of 42,8 million  kroons; 2,7 million euros. Investments in furniture

and fixtures of new Selvers were made in the amount of 21,5 million  kroons;

1,4 million euros and investments of equipment of Selvers amounted to 26,7

million kroons; 1,7 million euros.



The liabilities of the Group have been increased by 100,6 million kroons; 6,4

million euros. The main sources of the increase in liabilities were an

increase of debt by 55,8 million  kroons; 3,6 million euros and an increase

of commercial credit by 39,6 million kroons; 2,5 million euros. The increase

in debt is attributable to the payout of higher than regular dividends in the

amount of 67,9 million kroons; 4,3 million euros. The size of dividends was

caused by the necessity to redesign the capital structure of the Group and

pave the way to an improved return on equity in the future.



The owners’ equity was 376 million kroons; 24 million euros as at 31 December

2002, i.e. 48% of assets.



The average number of employees was 1215 in 2002.



The efficiency of the Group considerably improved in 2002: the net sales per

employee increased by 17% and the sales area per employees increased by 19%

over the previous year. The average number of employees decreased by 9,7%.

The stock turnover improved by 9,8% in 2002.



The number of loyal customers has increased by 35% during 2002, reaching 93

000 private persons by the end of the year.



In May 2002 new loyal customer card was launched - Partner Card. In

connection with that the programs of loyal customers in Kaubamaja and Selver

were separated from each other. The department stores maintained the existing

conception of the program (5% discount on every purchase, 10% discount during

the birthday of the customer, special offers). The new conception of the

program of loyal customers in Selver was driven by the mismatch of the

existing program launched in 1995 in Kaubamaja and extended to Selver with

the needs of the expanded Selver chain and the current market situation in

the supermarket sector. Under the new program customers receive bonus points

on every purchase and take part in lotteries with good chances to win and

also get special offers. A great number of retail and services companies have

joined the program offering special terms to customers in 100 different

outlets.



Outlook of the retail market in 2003



In 2003 a big increase in the shopping space will have a strong effect on

retail market, started in 2002 already. In 2002 major shopping centres opened

ca 70 thousand sq m of new shopping space. Most of the new space (with the

exception of the expansion of Kristiine Centre) took place in 4th quarter of

2002, so its influence was within a short period. The time-weighted increase

in shopping space in 2002 was ca 13%. At the same time the increase in the

retail sales (excluding motor cars and gasoline) was ca 15,8% according to

preliminary statistics - the biggest increase since 1997.



Although 2003 will not see an increase in shopping space of comparable size,

the time-weighted increase will be ca 20%. That is mainly due to the full

effect of the space opened in the 4th quarter of 2002. Most important centres

to be opened in 2003 are the Mustakivi Centre in Lasnamäe and the development

in Sõpruse pst. in Mustamäe. The anchor tenant of both of them will

presumably be Citymarket (Kesko).



The expected increase in personal savings and other costs outside the retail

sector (household and mortgage costs, etc) do not allow forecast the increase

in retail sales in 2003 to be as optimistic as in 2002. The formerly

important increase component of gradually legalized open market sales will

have a much lesser effect in 2003. Our expectation of the increase in retail

sales in 2003 is ca 7-10%.



Tallinna Kaubamaja and Tartu Kaubamaja



There have been some significant changes in the activities of Tallinna and

Tartu Kaubamaja.



As of January 2002 the sales staff in both department stores works in 8-9

hour shifts. The planning of workforce by week and day has thereby been

synchronized with customer flows, resulting in considerable improvement in

labour efficiency.



The most important change in Kaubamaja's main process was the start of

category management in October. It means that the sales area and assortment

are managed by dividing the whole sales environment into specific parts,

characterized by fixed sales area and location in the department, stylistic

consistency in visual merchandising and fixed assortment. Sales planning

relies on category-based goals. In connection with the change, the roles of

sales and service staff have been partially redefined.



The number of suppliers has been significally reduced and better contract

terms agreed upon. Some additional new suppliers and brands have been added

to the brand portfolio. A great emphasis has been laid on the completeness of

fashion collections. New visual merchandising standard has been implemented,

helping the client make easier purchase decisions.



An important issue of 2002 has been inventory management. Purchasing volumes

have been planned more accurately than before and the supply cycle has been

improved. The new more flexible pricing strategy enables to consider more

precisely the expectations of target customers, competitive situation in the

market and existing inventory.



2002 has brought along specific attention to creating an entertaining retail

environment. Several new ideas and events were carried out, climaxing in the

Christmas campaign and its opening extravaganza.



In relations with our loyal customers, we have taken a firm course towards

personalizing the relationship. 2002 was the first year of Kaubamaja's new

loyal customer magazine Hooaeg (The Season) that has received very positive

feedback from the customers and with its circulation of 60 000 is on its way

to being an integral part of the Estonian media landscape also from the

advertisers' point of view.



An important task of 2003 is the revamping of the supply chain with an aim of

cutting costs and being able to plan the supply cycle better. The plan is to

outsource handling and storage-related activities to a strategic partner.

Inventory management will continuously be improved. A new inventory provision

system is being introduced as part of the plan, helping us to deal with the

structure of the inventory on arrival-time basis.



The most important development project of Tallinna Kaubamaja in 2003 is

connected with the planned opening of a new wing in the Viru Keskus shopping

centre which is currently under construction and will be open for business in

the spring of 2004. Tallinna Kaubamaja will rent ca 7150 sq.m sales area in

the new centre. Part of the existing 9 500 sq m sales area will be rented out

and the total sales area of the department store after opening in the

shopping centre will be ca 13 500 sq m.



The priority of Tartu Kaubamaja is to maintain its leading position on the

retail market of Tartu and continue development activities for opening in the

new Hansakvartal center that will be open in the autumn of 2004. According to

preliminary plans, the sales area of the new Tartu Kaubamaja will be ca 7 500

sq m.



A-Selver



The number of Selver stores was doubled in 2003, reaching 10 by the end of

the year. On May 10 Mai Selver was opened in Pärnu, on May 30 Merimetsa

Selver in Tallinn, on October 5 Krooni Selver in Rakvere, on October 17

Männimäe Selver in Viljandi and on December 12 Torupilli Selver in Tallinn.

With the opening of five new Selvers the selling space increased by 6 914 sq

m.



As the majority of retail sales has been concentrated in big chains and the

expected increase in sales will be below the rates of previous years, the

competition among big chains will be even tougher. Selver already began its

adaptation to the changes in the market situation in the spring of 2002 by

reducing the prices.



In 2003 the policy to offer good prices in Selver stores will be continued.

More attention will be paid to price-sensitive sector of potential customers,

widening so the amount of target customers. In addition to improving the

assortment and offering better prices Selver will also focus on the further

improvement of customer service, sales environment and the Selver Cousine

with the aim of maintaining the values of Selver: quick service, convenience,

good prices and good assortment.



The main target of 2003 is to increase the sales of the Selver chain. This is

supported by the five new Selvers opened in 2002 and also the increase of

opening time by two hours, changes in market communication and widening of

the target customer segment. In 2003 it is planned to open new Selver stores.

The concentration of retail space is varied in different regions of Estonia.

In Tallinn and other cities there is still room for new stores.



Tallinna Kaubamaja Kinnisvara



The buildings of Tallinna Kaubamaja Kinnisvara are leased to other members of

the Tallinna Kaubamaja Group (Tallinna Kaubamaja  and A-Selver).



The most important event in 2002 was the construction of the buildings of

Merimetsa and Torupilli Selver. The parking lot of Pirita Selver was

extended. Improvements were made to the buildings leased by Tallinna

Kaubamaja and Pirita Selver. With the aim of building new Selver stores land

was purchased in Narva, in Vesivärava Street in Tallinn and in Saaremaa.



Preparations for the construction of the new building for Tartu Kaubamaja

were continued: additional archaeological excavations were carried out and

competition for architectural design organised.



The main objective of 2003 is the construction of the Tartu Kaubamaja

building and finding new sites for the expansion of the Selver chain. The

building of Tartu Kaubamaja will have ca 20 000 sq m of selling, service and

office space.



The company shall continue preparations for the extension of the building

leased by Pirita Selver and the redesign of some of the space presently

leased by Tallinna Kaubamaja after its expansion to the Viru Keskus Shopping

Centre.



TALLINNA KAUBAMAJA AS

Consolidated audited balance sheet

The Group                          in thousands of EEK/EUR

                                   31.12.2002          31.12.2001

                                   The Group           The Group

 ASSETS                               EEK       EUR       EEK       EUR

Current assets

Cash and bank                          34 258     2 189    76 199     4 870

Trade receivables                      10 250       655     5 100       326

Other receivables                       3 454       221     3 063       196

Accrued income                             98         6        83         5

Prepaid expenses                        7 611       486     2 496       160

Inventories                           163 442    10 446   170 693    10 909

Total current assets                  219 112    14 004   257 633    16 466

Non-current assets

Long-term financial assets

Shares of assoc. companies              3 943       252     2 844       182

Long-t receivables from ass. Co.s      12 028       769    12 028       769

Other long-term receivables                 0         0         0         0

Total long-term fin. assets            15 971     1 021    14 872       951

Tangible fixed assets

Land and buildings                    478 758    30 598   360 567    23 044

Plant and equipment                    96 400     6 161    70 469     4 504

Other equipment and fixtures          160 724    10 272   141 514     9 044

Accumulated depreciation             -197 662   -12 633  -151 123    -9 659

Construction in progress                2 936       188     4 062       260

Prep. to suppl. for tang. FA            1 588       101     2 459       157

Total tangible fixed assets           542 744    34 688   427 949    27 351

Intangible assets                      -1 384       -88    -1 713      -110

Total non-current assets              557 331    35 620   441 108    28 192

TOTAL ASSETS                          776 443    49 624   698 741    44 658



LIABILITIES AND OWNERS’ EQUITY

Debt liabilities                       76 192     4 870   131 053     8 376

Cust. advances for goods and serv.      3 648       233     3 161       202

Supplier payables                     148 158     9 469   108 552     6 938

Other payables                         28 739     1 837    24 031     1 536

Total current liabilities             256 737    16 408   266 796    17 051

Long-term debt liabilities            143 663     9 182

Total non-current liabilities         143 663     9 182    33 032     2 111

Total liabilities                     400 400    25 590   299 828    19 162

Owners’ equity

Share capital                          67 882     4 338    67 882     4 338

Statutory legal reserve                 7 269       465     7 269       465

Reval. reserve of fixed assets        156 490    10 002   160 964    10 287

Retained earnings                      99 390     6 352   127 040     8 119

Net profit for the financial year      45 012     2 877    35 758     2 285

Total owners’ equity                  376 044    24 034   398 913    25 495

TOTAL LIAB. AND OWNERS’ EQUITY        776 443    49 624   698 741    44 658





Parent Company

                                   in thousands of EEK/EUR

                                   31.12.2002          31.12.2001

                                   Parent Co           Parent Co

 ASSETS                               EEK       EUR       EEK       EUR

Current assets

Cash and bank                          26 267     1 679    57 270     3 660

Trade receivables                       2 336       149     1 720       110

Other receivables                      52 710     3 369    22 892     1 463

Accrued income                             98         6        83         5

Prepaid expenses                          848        54     1 334        85

Inventories                            68 500     4 378    81 437     5 205

Total current assets                  150 759     9 635   164 735    10 529

Non-current assets

Long-term financial assets

Shares of subsidisries                349 802    22 356   341 101    21 800

Shares of assoc. companies              3 943       252     2 844       182

Long-t receivables from ass. Co.s      12 028       769    12 028       769

Total long-term fin. assets           365 773    23 377   355 973    22 751

Tangible fixed assets

Land and buildings

Plant and equipment                    16 227     1 037    16 547     1 058

Other equipment and fixtures           81 189     5 189    80 414     5 139

Accumulated depreciation              -84 513    -5 401   -75 109    -4 800

Construction in progress

Prep. to suppl. for tang. FA               90         6        30         2

Total tangible fixed assets            12 994       830    21 882     1 398

Intangible assets

Total non-current assets              378 767    24 208   377 855    24 149

TOTAL ASSETS                          529 527    33 843   542 590    34 678



LIABILITIES AND OWNERS’ EQUITY

Debt liabilities                       55 109     3 522    88 036     5 627

Cust. advances for goods and serv.      1 710       109     1 519        97

Supplier payables                      45 299     2 895    41 746     2 668

Other payables                         16 364     1 046    12 376       791

Total current liabilities             118 483     7 572   143 677     9 183

Long-term debt liabilities             35 000     2 237

Total non-current liabilities          35 000     2 237

Total liabilities                     153 483     9 809   143 677     9 183

Owners’ equity

Share capital                          67 882     4 338    67 882     4 338

Statutory legal reserve                 7 269       465     7 269       465

Reval. reserve of fixed assets        156 490    10 002   165 632    10 586

Retained earnings                      99 390     6 352   122 372     7 821

Net profit for the financial year      45 012     2 877    35 758     2 285

Total owners’ equity                  376 044    24 034   398 913    25 495

TOTAL LIAB. AND OWNERS’ EQUITY        529 527    33 843   542 590    34 678



Consolidated audited profit and loss statement



The Group                          in thousands of EEK/EUR

                                   31.12.2002          31.12.2001

                                   The Group           The Group

                                      EEK       EUR       EEK       EUR

Operating income

Net sales                           1 532 325    97 933 1 449 973    92 670

Other operating income                 41 689     2 664    24 777     1 584

Total operating income              1 574 014   100 598 1 474 750    94 254

Operating expenses

Cost of goods sold                 -1 147 961   -73 368-1 084 086   -69 286

Other operating expenses             -177 111   -11 319  -154 732    -9 889

Personnel expenses                   -130 413    -8 335  -129 744    -8 292

Depreciation

Depr. and value adjustments of FA     -55 319    -3 536   -53 056    -3 391

Depreciation of  goodwill/badwill         329        21       212        13

Other expenses                         -8 168      -522    -5 589      -357

Total operating expenses           -1 518 643   -97 059-1 426 995   -91 202

Operating profit                       55 371     3 539    47 755     3 052

Financial income                            0         0         0         0

Fin. inc. on shares in subsidiaries     1 099        70       102         7

Interest income                         2 109       135       833        53

Other financial income                      0         0       871        56

Total financial expenses              -13 566      -867   -13 913      -889

Net profit                             45 012     2 877    35 758     2 285





Parent Company                     in thousands of EEK/EUR

                                   31.12.2002          31.12.2001

                                   Parent Co           Parent Co

                                      EEK       EUR       EEK       EUR

Operating income

Net sales                             584 597    37 363   577 070    36 882

Other operating income                 44 557     2 848    50 767     3 245

Total operating income                629 153    40 210   627 837    40 126

Operating expenses

Cost of goods sold                   -421 321   -26 927  -418 432   -26 743

Other operating expenses             -109 039    -6 969  -114 488    -7 317

Personnel expenses                    -57 705    -3 688   -61 468    -3 929

Depreciation

Depr. and value adjustments of FA     -12 622      -807   -16 637    -1 063

Depreciation of  goodwill/badwill           0         0         0         0

Other expenses                         -4 682      -299    -4 290      -274

Total operating expenses             -605 369   -38 690  -615 316   -39 326

Operating profit                       23 784     1 520    12 521       800

Financial income from subsidiaries     32 312     2 065    26 641     1 703

Fin. inc. from related companies        1 099        70       102         7

Interest income                         4 178       267     4 356       278

Other financial income                      0         0       871        56

Financial expenses from subsid.        -9 970      -637    -1 429       -91

Interest expense                       -6 269      -401    -7 154      -457

Muud finantskulud                        -122        -8      -150       -10

Net profit                             45 012     2 877    35 758     2 285





Katrin Mühls

CFO

+372 6 673 200