Rakvere Lihakombinaat         NEWS RELEASE                05/03/2004 10:30



FINANCIAL RESULTS, 3 MONTHS 2004



RAKVERE MEAT PROCESSING PLANT LTD



FINANCIAL YEAR 2004, 1st QUARTER



AS Rakvere Lihakombinaat is the largest meat processing company in the 

Baltics. As of 31 March 2004 Rakvere Lihakombinaat Group had 1,248 

employees (1,324 employees as of 31 March 2003).

The parent company is located and registered in Estonia, County of 

Lääne-Virumaa, Sõmeru , Roodevälja Village.



The Group companies as at 31 March 2004:

                            Country      Participation  Participation 

                         of location        31.03.04       31.12.03

AS Rakvere Lihakombinaat 

(the parent company)            Estonia	

AS Ekseko                       Estonia        98,4%          98.4%

     AS Ekseko’s subsidiaries:

     OÜ Kurika Seafarm          Estonia         100%           100%

     OÜ Põlva Peekon            Estonia         100%           100%

     OÜ Viiratsi Söödatehas     Estonia         100%           100%

     OÜ Viiratsi Peekon         Estonia         100%           100%

     OÜ Lutsu Seafarm           Estonia         100%           100%

AS Linnulihatooted              Estonia          76%            76%

AS Rigas Miesnieks               Latvia       93.82%         93,82%

OÜ Klaipedos Maisto Produktai Lithuania         100%           100%

     OÜ Klaipedos Maisto Produktai subsidiaries:

     OÜ Pentinuotis           Lithuania         100%           100%

     OÜ Klaipedos Maisto 

          Prekyba             Lithuania         100%           100%





2. General economic environment and its effect on the company



No major changes occurred in the economic environment at the beginning 

of 2004. All Baltic states showed continued positive economic growth, 

which facilitated an increase in private consumption. This, in turn, 

had a favourable effect on the company’s operations.



In the 1st quarter, the price of pork - the company’s main raw material 

- was very low throughout Europe. This was bound to have an effect on 

the economic results of the subsidiary Ekseko. Protective customs 

duties imposed on pork by Latvia continued to impede Rakvere Group’s 

business activities.



Increased retail competition incited by the opening of new commercial 

premises and the standardisation of the activities of major retail 

chains all over the Baltics resulted in particularly strict 

requirements for suppliers.



Preparations for EU accession on May 1 had the biggest effect on the 

operations of Rigas Miesnieks in the 1st quarter. Export to the EU had 

no material effect on the economic activities of the parent company 

Rakvere Meat Processing Plant, which had already been acknowledged as 

compliant with the EU requirements.



Sales and profit



The net sales of Rakvere Lihakombinaat Group in the first 3 months of 

2004 totalled 273 million kroons or 17,428 th. euros (266,5 million 

kroons or 17,034 th. euros in 2003). The net sales increase 2,3% by 

6,2 million kroons (394 th. euros) as compared to last year. 

The sales volume was 10,0 th. tons including by products in the 

Baltic States. This constitutes a 540 tons or 5,7 % increase compared 

to last year. The company’s production volumes continued to grow at 

a relatively greater speed than that of sales. This indicates a drop 

in average product price.





The net profit of Rakvere Lihakombinaat Group was 14,1 million kroons 

or 902 th. euros (in 2003 3,4 million kroons or 902 th. euros). 



Main financial indicators of Rakvere Lihakombinaat Group, millions 

of kroons (th. euros)



                      3months 2004   3months 2003   12months 2003



Net sales          272,7 (17 428)   266,5 (17 034)  1 166,3 (74 543)

Operating expenses 256,8 (16 411)   260,9 (16 676)  1 115,9 (71 321)

Operating profit    15,9  (1 017)     5,6    (358)     50,4  (3 222)

Net profit          14,1    (902)     3,4    (215)     39,8  (2 546)



Investments         38,5  (2 459)    17.2  (1 099)     89,7  (5 734)



Forecast



Although the Group companies have made preparations for accession to EU, 

it could prove difficult to forecast all aspects related to the 

accession. In addition to the opening of new markets in Europe, the 

company will be most affected by the termination of the Baltic free 

trade agreement, and, above all, the opening of the Latvian and 

Lithuanian markets to competitors from Europe.



According to the company’s management, the parent company’s strong 

position on the Estonian market, Ekseko’s competitive edge and the 

programs implemented by the Latvian and Lithuanian subsidiaries for 

increasing efficiency and profitability will ensure continued positive 

growth of the company, and maintain its competitive edge.





Olle Horm

Chairman of the Management Board 

Rakvere Lihakombinaat AS





RAKVERE LIHAKOMBINAAT GROUP 

BALANCE SHEET 

                       in Thousands of kroons    in Thousands of euros

ASSETS                   31.3.2004 31.12.2003    31.3.2004 31.12.2003

				

Current assets				

Cash and bank               41 569    33 026       2 657     2 111

Trade receivables           75 864    86 733       4 849     5 543

Tax receivables              9 164     8 543         586       546

Other short-term 

receivables                  3 595     4 840         230       309

Inventories                 98 964    88 046       6 325     5 627

Biological assets           73 582    65 377       4 703     4 178

Total current assets       302 738   286 565      19 348    18 315

				

Non-current assets				

Long-term receivables        2 046       967         131        62

Tangible fixed assets      461 270   437 731      29 480    27 976

Other intangible assets      3 255     3 296         208       211

Goodwill                       781       826          50        53

Total non-current assets   467 352   442 820      29 869    28 301

				

TOTAL ASSETS:              770 090   729 385      49 217    46 616

				

LIABILITIES AND OWNERS’ EQUITY				

				

Current liabilities				

Loans and lease payables    30 050     4 355       1 921       278

Supplier payables           77 309    71 241       4 941     4 553

Tax payables                 7 950    10 116         508       647

Deferred tax                 1 747     1 698         112       109

Other current liabilities   30 581    21 833       1 954     1 395

Total current liabilities  147 637   109 243       9 436     6 982

				

Long-term loans and 

lease payable              112 036   124 339       7 160     7 947

Pension liabilities            759       738          48        47

Total liabilities          260 431   234 320      16 644    14 976

				

Minority interest            3 563     3 628         228       232

				

Owners’ equity				

Share capital              377 217   377 217      24 108    24 108

Mandatory legal reserve      9 734     9 734         622       622

Retained earnings          119 394   105 269       7 631     6 728

Unrealised translation 

differences                   -249      -783         -16       -50

Total owners’ equity       506 096   491 437      32 345    31 408



TOTAL LIABILITIES AND 

OWNERS’ EQUITY :           770 090   729 385      49 217    46 616





RAKVERE LIHAKOMBINAAT GROUP

INCOME STATEMENT

                       in Thousands of kroons    in Thousands of euros

Revenue                3 months 04 3 months 04  3 months 04 3 months 04

				

Net sales                  272 695    266 522      17 428   17 034

Other revenue                1 843      3 212         118      205

Total revenue              274 537    269 734      17 546   17 239

				

Change in work-in-progress 

and finished goods           6 943     -1 093         444      -71

Change in fair value of 

biological assets            8 205     -1 115         524      -70

Materials, consumables 

and supplies              -182 838   -171 806     -11 685  -10 980

Other operating expenses   -38 562    -38 893      -2 465   -2 486

Personnel expenses         -37 924    -37 798      -2 424   -2 416

Depreciation and write-downs 

of non-current assets      -13 644    -12 612        -872     -806

Other expenses                -799       -816         -51      -52

				

Operating profit            15 918      5 600       1 017      358

				

Financial income/expenses				

Net foreign exchange 

gain/loss                       31       -342           2      -22

Interest and other 

financial income               528        687          34       44

Interest and other financial 

expenses                    -2 429     -2 671        -155     -171

Total financial 

income/expenses             -1 869     -2 326        -119     -149

				

Profit before taxes         14 049      3 274         898      209

Minority interest               78         87           5        6

Net profit                  14 126      3 361         902      215

				

Earnings per share            0,37       0,09       0,024    0,006





Olle Horm

Chairman of the Board

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