AS KALEV

ANNOUNCEMENT

03.09.99

 

COMMENTARY TO THE FINANCIAL RESULTS 06/99

 

The H1 1999 financial statements of AS Kalev consolidate the 

results of subsidiary Tšarodeika (located in Kaliningrad), 

Ukrainian Logistics Center and subsidiary Kim Amsterdam Team Ltd., 

which holds 50% shareholding in confectionery Bogatõr in Moscow. 

 

 

BALANCE SHEET

ASSETS

The company's balance sheet size decreased annually by 96 million 

EEK (from 312.2 million EEK to 216.2 million EEK, or 30.7%). The 

volume of current assets dropped from 173.3 million EEK to 132.3 

million EEK, i.e. 23%; 

lower volume of current assets is mainly due to declined net sales 

(-33.9% compared to H1 1998).

Marketable securities account has declined by 5.8 million EEK due 

to decreased value of securities' portfolio.

Accounts receivable dropped from 65.3 million to EEK 36.2 million 

EEK, mainly due to write-off of the Russian market-related accounts 

receivable at the end of 1998 and lower sales volumes.

Other receivables increased due to 11 million EEK receivable from 

sale of raw materials at the end of last year, which has not yet 

been paid for.

Prepaid expenses increased by 4 million EEK due to income tax paid 

on 1998 dividend payments. The size of fixed assets dropped annually 

by 55 million EEK, incl. 24.5 million EEK of long-term financial 

investments in subsidiaries. Major part of it (16.5 million EEK) 

proceeds from disposal of shareholding in Vilniaus Pergale in 

January this year. The rest of changes in the structure of 

fixed assets took place in 1998.

 

LIABILITIES AND OWNERS' EQUITY

The size of owners' equity account declined annually by 77.4 million EEK, 

mainly due to 73.4 million EEK loss posted in 1998. Compared to H1 1998, 

the company's owners' equity declined by 57.3%. The volume of liabilities 

dropped by 16.6 million EEK or 9.5%. The account of other liabilities 

decreased by 10.7 million EEK, incl. 9.8 million EEK of dividends paid 

in 1997 (paid out in Q3 1998).

 

 

H1 INCOME STATEMENT

The consolidated H1 1999 net sales of AS Kalev amounted to 150.1 million 

EEK and net profit 0.1 million EEK (0.3 million EEK planned).

In H1 the company sold 4299 tons of confectioneries, which is comparable 

to the results of H1 1996. Compared to H1 1998, the sales dropped in all 

markets, except Latvia, where the y-o-y increase in sales volume was 135 

tons. The sales dropped the most on the Russian and Ukrainian markets, where 

y-o-y decrease was 1786 and 366 tons of confectioneries, respectively.

Compared to H1 1998, the domestic sales dropped by 304 tons, mainly due to 

extraordinarily hot summer when the customers preferred ice-cream to chocolate 

and candies. Due to lower sales, the net sales account declined by 33.9% or 77 

million EEK from H1 1998 level.

Compared to H1 1998, the cost of goods sold declined by 37.4% or 67.7 million 

EEK, and gross profit by 20.1% or 9.3 million EEK. Profit margin increased by 

4.3%, suggesting increased production efficiency.

The company's operating profit increased from H1 1998 by 7.7% or 0.9 million 

EEK; operating profit margin increased by 3.5%. Compared to H1 1998, the 

administrative expenses increased by 11.9% or 2.3 million EEK; the unconsolidated 

administrative expenses dropped by 8.1% or 1.5 million EEK. Total volume of 

administrative expenses in H1 1999 amounted to 21.5 million EEK, of which 

LCU-related administrative expenses totaled 4.2 million EEK. Compared to 

H1 1998, the marketing expenses dropped by 36.7% or 5.1 million EEK. Revenues 

increased by 7.6 million EEK. The company also earned 2.3 million EEK of 

extraordinary income from disposal of shareholding in affiliated company 

AS Vilniaus Pergale. Foreign exchange gain totaled 7.2 million EEK.

AS Kalev earned no income from equity holding. Financial expenses increased 

mainly due to financial losses posted by subsidiaries and affiliated companies 

(foreign exchange loss) and increased interest expenses (due to incr. borrowings), 

incl. 5.1 million EEK financial loss posted by Tsarodeika and 3.9 million EEK 

by LCU, and 6.2 million EEK of interest expenses on syndicate loan.

 

 

 

Andrus Koha

Financial Director

+372 65 08 804

 

Eva Jaanson

Chief Accountant

+372 65 08 731