Klementi                      FINANCIAL RESULTS                 03/03/2004



2003 PRELIMINARY RESULTS



COMMENTS ON THE YEAR 2003 INTERIM RESULTS



The unaudited consolidated group net turnover of AS Klementi

in the fourth quarter of 2003 was EEK 28.0m (EUR 1.8m) and

the net loss amounted to EEK 5.7m (EUR 0.4m). In the same

period of the previous year the turnover amounted to EEK

37.7m (EUR 2.4m) and the net loss was EEK 16.7m (EUR 1.1m).



The unaudited consolidated group net turnover of 12 months

of 2003 was EEK 133.6m (EUR 8.5m) and the net loss amounted

to EEK 22.2m (EUR 1.4m).

During the same period of the previous year the turnover was

EEK 133.3m (EUR 8.5m) and the net loss was EEK 31.9m (EUR

2.0m).



As of December 31, 2003 there were 450 employees in the

group. As of December 31, 2002 the number of staff in the

group was 580. During a year the number of employees was

reduced by 22% i.e. 130 persons.



As of December 31, 2003 in addition to the parent company

four subsidiaries belonged to AS Klementi group:



Klementi Trading OY shareholding 100% - wholesale business

Klementi Trading AB shareholding 100% - wholesale business

SIA Vision shareholding 100% - retail business 

UAB Klementi Vilnius shareholding 100% - retail business





>> Sales analysis



The net turnover breakdown by activity over 12 months was as

follows:



NET TURNOVER                2003    2002    2003    2002    03/02

                            EEKm    EEKm    EURm    EURm   change

Apparel sales              109.9    98.7     7.0    6.3     11.3%

Subcontracting and other 

sales                       23.7    34.6     1.5    2.2   - 31.5%

TOTAL                      133.6   133.3     8.5    8.5      0.2%



Over the past two years the share of apparel sales in

turnover has increased from 64% to 82%. 55% of the apparel

sales came from wholesale and 45% from retail.



The net turnover breakdown by activity in the fourth quarter

was as follows:



NET TURNOVER               2003    2002    2003    2002    03/02

                           EEKm    EEKm    EURm    EURm   change

Apparel sales              22.0    30.4     1.4     1.9   -27.6%

Subcontracting and 

other sales                 6.0     7.3     0.4     0.5   -17.8%

TOTAL                      28.0    37.7     1.8     2.4   -25.7%



A decrease in turnover in the fourth quarter was mainly due

to retail. Compared to the fourth quarter of 2002 the retail

turnover had fallen by EEK 7.3m (EUR 0.5m). A smaller

turnover was caused by the following factors:



- The turnover of the fourth quarter of 2002 included

  extraordinary old collections’ inventory sale in the amount

  of EEK 3m.

- In September 2003 AS Klementi closed down its outlets in

  Lithuania.



Co-operation with Lithuania’s leading retail chain Apranga

APB started at the beginning of 2004.



Currently Klementi’s retail chain consists of 10 outlets, 8

of which are in Estonia and 2 in Latvia. As of the end of

the year Klementi had 2,377 square meters of retail area (at

the same time a year before the outlet areas totalled 2,910

square meters).



>> Profit analysis



The loss of 2003 includes one-off costs in the amount of EEK

4.9m (EUR 0.31m), including:



- EEK 1.9m (EUR 0.12m) costs from the previous periods, of

which EEK 1.1m (EUR 0.07m) was due to the additional

wholesale loss of the previous year in Latvia and Lithuania.



- EEK 0.8m (EUR 0.04m) for developing the new retail concept

and the new Klementi logo and reorganising the outlets.



- EEK 2.2m (EUR 0.14m) for redundancy payments in the given

period.





>> Balance sheet analysis and ratios



The consolidated balance sheet of AS Klementi as of December

31, 2003 was EEK 122.0m (EUR 7.8m).



The key financial ratios of AS Klementi group as of December

31, 2003 were as follows:



                                                     2003    2002

- year-over-year turnover growth                       0%     20%

- apparel sale share in total turnover                82%     74%

- inventory turnover ratio (adjusted to year)

  [net turnover / average inventory]                  4.3     3.7

- current ratio

  [current assets / currents liabilities]            0.79    0.91

- liquidity ratio  [current assets-inventory

 / current liabilities]                              0.29    0.38

- EBIT margin  [operating profit / net turnover]   -12.4%  -19.8%

- net margin [net profit / net turnover]           -16.6%  -23.9%





>> Plans for year 2004



For Klementi 2004 is the first full year that sees the trademark 

PTA represented in the Baltic States and the Nordic countries.



In 2004 the trademark PTA enters the Norwegian market. By now the 

contract of sale has been signed and the first sales have taken place.



At the beginning of 2004 sales cooperation with Lithuanian market 

leader Apranga was started.



The aim in retailing is to increase the items density in outlets 

and sales effectiveness. In 2004 two new retail

outlets will be opened in Tallinn (in Viru and Ülemiste Centre).



At the beginning of 2004 the wage structure of manufacturing

piecework labourers changed. The reason for changing the

wage structure in manufacturing was that the old system was

too complicated and non-transparent. The new system should

enable the valuation of individual’s contribution to the

work process more fairly and reduce personnel expenses that

are caused by ineffectiveness.



In order to manage business activities in a more operational

manner the implementation of new integrated business

software Microsoft Axapta has been started.





The consolidated reports of AS Klementi (group) have been

prepared in accordance with the International Accounting

Standards.



>> BALANCE SHEET

consolidated, unaudited

                               31.12.03 31.12.02 31.12.03 31.12.02

                                EEK’000  EEK’000  EUR’000  EUR’000



Cash and bank                    2 916     4 485      186      287

Customer receivables            14 862    12 537      950      801

Misc. receivables and 

accrued income                   1 096       868       71       55

Prepaid expenses                   945     2 896       60      185

Inventories                     33 284    29 002    2 127    1 854

CURRENT ASSETS                  53 103    49 788    3 394    3 182



Long-term financial investments  1 174     2 578       75      165

Tangible fixed assets           60 403    64 649     3860    4 132

Intangible assets                7 306     5 771      467      368

NON-CURRENT ASSETS              68 883    72 998    4 402    4 665

ASSETS                         121 986   122 786    7 796    7 847



Debt obligations                47 603    34 792     3042    2 223

Customer prepayments               470       952       30       61

Accounts payable                 9 744    10 867      623      694

Miscellaneous payables             782         0       50        0

Tax liabilities                  3 242     3 875      207      247

Accrued expenses                 5 657     3 905      362      250

Other unearned revenue               2        12        0        1

Short-term provisions               12        12        1        1

SHORT-TERM LIABILITIES          67 512    54 415    4 315    3 477

Long-term liabilities           21 283    27 467    1 360    1 755

Other long-term 

liabilities                      4 203     4 928      269      315

Long-term provisions                68        68        4        4

LONG-TERM LIABILITIES           25 554    32 463    1 633    2 074

TOTAL LIABILITIES               93 066    86 878    5 948    5 551

Share capital                   18 969    13 219    1 212      845

Share premium                   40 294    30 863    2 575    1 973

Revaluation reserve             15 578    15 578      996      996

Other reserves                   1 046     1 046       67       67

Retained profit                -24 798     7 083   -1 585      453

Profit for the 

financial year                -22 234   -31 881     -1 421  -2 038

Unrealised exchange rate

differences                       65         0          4       0

EQUITY                         28 920    35 908      1 848   2 296

LIABILITIES AND EQUITY        121 986   122 786      7 796   7 847







>> INCOME STATEMENT

consolidated, unaudited

                                   2003     2002     2003     2002

                                     Q4       Q4       Q4       Q4

                                EEK’000  EEK’000  EUR’000  EUR’000

Net sales                        27 987   37 736    1 789    2 412

Other revenue                     4 596      252      294       16

TOTAL REVENUE                    32 583   37 988    2 082    2 428

Change in inventories            -2 285   13 885     -146      887

Goods, raw material               9 219   10 629      589      680

Miscellaneous operating expenses 15 292   10 232      977      654

Personnel expenses               11 775   15 785      753    1 009

Depreciation                      1 961    2 128      125      136

Other expenses                      492      613       31       40

TOTAL EXPENSES                   36 454   53 272    2 330    3 406 

OPERATING EXPENSES               -3 871  -15 284     -247     -978



Interest expenses                -1 738   -1 463     -111      -93

Foreign exchange profit (loss)     -182      -14      -12       -1

Other financial income/expense       53       60        3        4

NET FINANCIAL ITEMS              -1 867   -1 417     -119      -90

NET PROFIT                       -5 738  -16 701     -367   -1 068

Basic earnings per share (EEK/EUR)-3.02   -12.63    -0.19    -0.80

Diluted earnings 

per share (EEK/EUR)               -2.95   -12.17    -0.19    -0.78



____________________________________________________________



>> INCOME STATEMENT

consolidated, unaudited 

                                   2003     2002     2003     2002

                                EEK’000  EEK’000  EUR’000  EUR’000

Net sales                       133 630  133 258    8 540    8 517

Other revenue                     5 754    1 598      368      102

TOTAL REVENUE                   139 384  134 856    8 908    8 629

Change in inventories             3 219   13 126      206      839

Goods, raw material              51 611   44 680    3 299    2 856

Miscellaneous operating 

expenses                        38 620    35 137    2 468    2 246

Personnel expenses              52 720    58 688    3 369    3 751

Depreciation                     7 572     7 214      484      461

Other expenses                   2 152     2 406      138      154

TOTAL EXPENSES                 155 894   161 251    9 963   10 307



OPERATING PROFIT               -16 510   -26 395   -1 055   -1 678



Interest expenses               -5 755    -5 718    -368      -365

Foreign exchange profit (loss)    -158       -25     -10        -1

Other financial income/expense     189       257      12        16

NET FINANCIAL ITEMS             -5 724    -5 486    -366      -350



NET PROFIT                     -22 234   -31 881  -1 421    -2 038

Basic earnings per 

share (EEK/EUR)                 -13.56    -31.03   -0.87     -1.98

Diluted earnings per 

share (EEK/EUR)                 -13.16    -29.59   -0.84     -1.89





Toomas Leis

Chairman

+372 6 710 700