Kalev                         FINANCIAL RESULTS                 05/31/2004



INTERIM REPORT 9 MONTHS 2003/2004



COMMENTS ON FINANCIAL RESULTS



The consolidated net sales of Kalev Ltd in the

first 9 months of the financial year 2003/2004

totalled 332.2 million kroons (21.2 million euros),

which exceeds the net sales of the last financial

year by 24%. The consolidated net profit of the

company in the given financial year amounted to 22

million kroons (1.4 million euros), which

constitutes an increase of 22%, compared to the

first 9 months of the financial year 2002/2003.



Increase in consolidated net sales was facilitated

by the incorporation of the new subsidiary - AS

Kalev Jõhvi Tootmine (formerly known as AS Järle) -

in the Kalev Group at the beginning of 2004, as

well as the sales growth of two subsidiaries - AS

Kalev Paide Tootmine and AS Kalev Real Estate

Company (AS Kalev REC) - in the given period.



The increase in the consolidated net profit of

Kalev Ltd in the first 9 months of the financial

year 2003/2004, compared to the same period last

year, was conditioned by the revenue earned from

other operating activities. The company’s main

activities - i.e. production and sales of

confectionery products - have stabilised after the

relocation of the company to the new plant building

in the 1st quarter of the financial year, and after

the initial difficulties upon launch of production

were overcome. The company focuses on and continues

to strive towards increasing profitability of the

main activities.



At the same time, the price of Kalev Ltd’s main raw

material - sugar - is bound to increase by

approximately 9 kroons per kilogram after Estonia’s

accession to the European Union. As a result, the

company will incur annual additional expenses in

the estimated amount of 37 million kroons.



Kalev Ltd’s relocation to the new plant building

also had an effect on the company’s administrative

and general expenses in the given period. General

and administrative expenses include single costs on

relocation and (dis)assembly of production

equipment as well as launch of production in the

total amount of 15.2 million kroons (0.97 million

euros).



Other revenue of the company in the given period

includes the fee for waiver from the right of

repurchase agreed in the contract of purchase and

sale under the law of obligations on the legal

share (18070/52410) of the real estate located at

Pärnu mnt 139 in Tallinn in the amount of 30

million kroons (1.9 million euros).



The total sales of Kalev Ltd’s confectionery

products amounted to nearly 6,000 tonnes in the

first 9 months of the financial year 2003/2004 - an

increase of 9%, compared to the same period last

year. The increase in total sales was mostly

conditioned by the addition of cookies and baked

goods to the company's product portfolio at the

beginning of 2004.



The domestic market constituted 76% of the total

sales of confectionery products, and 24% of the

sales was exported. In the given period, Latvia and



Ukraine remained the company’s main export

countries. In addition to the above countries,

Kalev Ltd also exported its products to Russia, the

Scandinavian countries and the US.



In the first 6 months of the financial year

2003/2004, the main emphasis of Kalev Ltd’s

marketing and sales activities lay in the

preparation and successful launch of Christmas

sales.



In October, Kalev Ltd launched the biggest

Christmas collection in the company’s history,

which contained over 50 items. The company also

expanded its product selection by introducing new

products - gingerbread and alcohol-free mulled

wine. The company’s Christmas sales were supported

by a thematic advertising campaign in various media

channels. Kalev Ltd sold a total of 520 tonnes of

Christmas products, compared to the 450 tonnes sold

in the previous year.



In the first 6 months of the financial year, the

company also launched a new product at the market -

a mixture of toffee and puffed corn called Mõnus

Maius, which was declared Estonia's Best

Confectionery Product 2003 at the competition held

by the Association of Estonian Food Industry. In

addition, the company launched, for export

purposes, Bitter chocolate with new additives, as

well as The Sealords and Mermaid chocolates for

sales through the tax-free system.



In the 3rd quarter of the financial year 2003/2004,

the company focused on the launch and sales of the

Valentine’s Day and Easter product portfolio. New

products included the boxed chocolate Coco,

hazelnut candy Maiuspala, Magus Mäng, Kuldne Kalev

and vanilla-flavoured Souffle. In addition, the

company launched, as an extension of the Oops!

candy family, the banana and peppermint-flavoured

Oops! candies.



According to the retail trade survey of the market

research supplier AC Nielsen, Kalev Ltd’s share at

market was 43.1% in February/March of 2004 as

regards chocolate and sugar confectionery products.

The company’s position was strongest in the

chocolate candy and candy bar sector, with market

shares of 61.5% and 52.2%, respectively.



Kalev Ltd’s market share in the cookie sector was

19.1% in February/March of the given period.



On 24 December 2003, Kalev Ltd acquired 99.1% of

the shares AS Järle. The purpose of acquiring the

shares of AS Järle was to aggressively enter the

Estonian cookie market, and to launch operations in

the bread and dark bread sector in accordance with

the long-term development strategy of Kalev Ltd.

The extraordinary General Meeting of the

Shareholders of AS Järle, which was held on 5

February 2004, decided to change the business name

of the subsidiary to AS Kalev Jõhvi Tootmine. The

company is located at Põrguvälja tee 6, Lehmja, Rae

Parish, Harju County.



On 20 February 2004, Kalev Ltd concluded a sales

agreement on the shares of 10 private individuals,

thus acquiring 59.4% of the shares of the private

limited company (OÜ) Maiasmokk. The company must

pay 51,700 kroons for the above share.



OÜ Maiasmokk has long-term experience in the

production and marketing of baked goods through

both its cafe and other retail companies. Kalev Ltd

plans to change the cafe, through the acquired

subsidiary, into an exclusive coffee shop, and

start offering high-quality candies in addition to

baked goods. The company also plans to open the

Estonian Candy Museum on the second floor of the

building.



The building, located at Pikk 16 and leased

indefinitely to OÜ Maiasmokk, is owned by the City

of Tallinn. The specific amount of the investments

required for renovating the facade of the building,

and the cafe and museum premises, as well as the

lease terms and conditions, are still being

negotiated.



In the first 9 months of the financial year

2003/2004, the average number of employees amounted

to 723 in Kalev Group—an increase of 22%, compared

to the same period last year. This increase was

mostly conditioned by the incorporation of the

staff of AS Kalev Jõhvi Tootmine in the group.







BALANCE SHEET (consolidated, unaudited)

(in kroons)



ASSETS                     31.03.04      31.03.03     30.06.03

                         Consolidated  Consolidated Consolidated

CURRENT ASSETS               EEK           EEK          EEK

CASH AND BANK               3 254 736     1 138 053    8 591 080

CUSTOMER RECEIVABLES      123 610 798   131 297 696   90 024 044

PREPAID EXPENSES           19 740 351    11 917 363    5 308 235

INVENTORIES                85 853 581    57 695 522   40 726 937

TOTAL CURRENT ASSETS      232 459 466   202 048 634  144 650 296

                                                               

NON-CURRENT ASSETS                                             

MISCELLANEOUS LONG-TERM       330 180       887 180      330 180

RECEIVABLES

TANGIBLE ASSETS           363 089 521   225 000 168  255 038 885

REAL ESTATE INVESTMENTS    61 665 519    18 063 950   75 573 095

INTANGIBLE ASSETS          -9 019 603       242 357      217 715

TOTAL NON-CURRENT         416 065 617   244 193 655  331 159 875

ASSETS

                                                               

TOTAL ASSETS              648 525 083   446 242 289  475 810 171

                                                               

LIABILITIES AND OWNER’                                         

EQUITY

                                                               

LIABILITIES                                                    

CURRENT LIABILITIES        65 235 634     3 059 521   27 346 235

PREPAYMENTS FROM           14 333 000        93 347      497 042

CUSTOMERS

SUPPLIER PAYABLES         127 466 816    72 211 471   76 162 122

TAXES PAYABLE               5 577 867    14 441 582    4 537 792

OTHER PAYABLES             16 595 672    11 030 543   10 275 440

TOTAL CURRENT             229 208 988   100 836 463  118 818 631

LIABILITIES

                                                               

NON-CURRENT LIABILITIES   156 549 867   123 938 734  116 381 525

                                                           

                                                               

TOTAL NON-CURRENT         156 549 867   123 938 734  116 381 525

LIABILITIES

                                                               

MINORITY INTEREST             189 300                          

OWNER’S EQUITY                                                 

SHARE CAPITAL              78 775 000    78 775 000   78 775 000

REVALUATION RESERVE        17 159 388   112 812 302   17 159 388

STATUTORY LEGAL RESERVE     1 537 837     1 537 837    1 537 837

RETAINED EARNINGS         143 137 790    10 392 119  110 675 117

NET PROFIT FOR THE         21 966 913    17 949 834   32 462 673

FINANCIAL YEAR

TOTAL OWNER’S EQUITY      262 576 928   221 467 092  240 610 015

                                                               

TOTAL LIABILITIES         648 525 083   446 242 289  475 810 171









BALANCE SHEET (consolidated, unaudited)

(in euros)



ASSETS                     31.13.04      31.13.03     30.06.03

                         Consolidated Consolidated  Consolidated

CURRENT ASSETS               EUR           EUR          EUR

CASH AND BANK                 208 015        72 735     549 069

CUSTOMER RECEIVABLES        7 900 150     8 391 431   5 753 570

PREPAID EXPENSES            1 261 635       761 656     339 257

INVENTORIES                 5 487 030     3 687 406   2 602 919

TOTAL CURRENT ASSETS       14 856 830    12 913 228   9 244 815

                                                               

NON-CURRENT ASSETS                                             

MISCELLANEOUS LONG-TERM        21 102        56 701      21 102

RECEIVABLES

TANGIBLE ASSETS            23 205 591    14 380 095  16 299 914

REAL ESTATE INVESTMENTS     3 941 135     1 154 494   4 829 989

INTANGIBLE ASSETS            -576 546        15 489      13 914

TOTAL NON-CURRENT          26 591 371    15 606 779  21 164 919

ASSETS

                                                               

TOTAL ASSETS               41 448 201    28 520 007  30 409 734

                                                               

LIABILITIES AND OWNER’                                         

EQUITY

                                                               

LIABILITIES                                                    

CURRENT LIABILITIES         4 169 306       195 538   1 747 738

PREPAYMENTS FROM              916 043         5 699      31 767

CUSTOMERS

SUPPLIER PAYABLES           8 146 593     4 615 142   4 867 634

TAXES PAYABLE                 356 490       922 983     290 017

OTHER PAYABLES              1 060 654       704 978     656 719

TOTAL CURRENT              14 649 087     6 444 608   7 593 875

LIABILITIES

                                                               

NON-CURRENT LIABILITIES    10 005 335     7 921 109   7 438 116

                                                               

TOTAL NON-CURRENT          10 005 335     7 921 109   7 438 116

LIABILITIES

                                                               

MINORITY INTEREST              12 098                          

OWNER’S EQUITY                                                 

SHARE CAPITAL               5 034 627     5 034 627   5 034 627

REVALUATION RESERVE         1 096 682     7 210 002   1 096 682

STATUTORY LEGAL RESERVE        98 285        98 285      98 285

RETAINED EARNINGS           9 148 149       664 176   7 073 411

NET PROFIT FOR THE          1 403 938     1 147 201   2 074 738

FINANCIAL YEAR

TOTAL OWNER’S EQUITY       16 781 681    14 154 291  15 377 743

                                                               

TOTAL LIABILITIES          41 448 201    28 520 007  30 409 734









INCOME STATEMENT (consolidated, unaudited)

(in kroons)             

                              01.07.03 -   01.07.02 -

                               31.03.04     31.03.03

                             Consolidated Consolidated

                                  EEK         EEK

NET SALES                     332 208 026 265 907 722

                                                     

COST OF GOODS SOLD            211 390 576 180 403 200

                                                     

GROSS PROFIT                  120 817 450  85 504 522

                                                     

MARKETING EXPENSES             42 640 707  44 978 076

ADMINISTRATIVE AND GENERAL     65 431 832  24 708 830

EXPENSES

OTHER OPERATING INCOME         32 685 123  22 070 888

OTHER OPERATING EXPENSES       15 335 657  12 326 698

                                                     

OPERATING PROFIT               30 094 377  25 561 806

                                                     

FINANCIAL INCOME                  989 904     576 992

FINANCIAL EXPENSES              9 141 791   8 188 963

                                                     

PROFIT BEFORE INCOME TAX       21 942 490  17 949 835

                                                     

MINORITY INTEREST                  24 423            

                                                     

NET PROFIT                     21 966 913  17 949 834

                                                     

EARNINGS PER SHARE                   2,79        2,28







INCOME STATEMENT (consolidated, unaudited)

(in euros)              

                              01.07.03 -   01.07.02 -

                               31.03.04     31.03.03

                             Consolidated Consolidated

                                  EUR         EUR

NET SALES                      21 231 908  16 994 557

                                                     

COST OF GOODS SOLD             13 510 286  11 529 836

                                                     

GROSS PROFIT                    7 721 623   5 464 721

                                                     

MARKETING EXPENSES              2 725 231   2 874 616

ADMINISTRATIVE AND GENERAL      4 181 846   1 579 178

EXPENSES

OTHER OPERATING INCOME          2 088 955   1 410 583

OTHER OPERATING EXPENSES          980 125     787 818

                                                     

OPERATING PROFIT                1 923 376   1 633 693

                                                     

FINANCIAL INCOME                   63 266      36 876

FINANCIAL EXPENSES                584 265     523 369

                                                     

PROFIT BEFORE INCOME TAX        1 402 377   1 147 201

                                                     

MINORITY INTEREST                   1 561            

                                                     

NET PROFIT                      1 403 938   1 147 201

                                                     

EARNINGS PER SHARE                   0,18        0,15





Ruth Roht

PR manager

6 077 858