FAKTO

COMMENTARY TO FINANCIAL RESULTS



COMMENTARY TO THE FINANCIAL RESULTS, Q1 2000



In Q1 2000 the companies of AS Fakto group sold a total of 313 new cars 

from Nissan, Fiat and Alfa Romeo, i.e. 65 cars more than in Q1 1999.



Sale of new cars by companies:

	        2000		 1999		 Change		    (%)

Nissan Balti	 285		  204		     81		  39.71%

incl. AS Fakto	 136		  120		     16		  13.33%

AS Itaalia Auto	  28		   44		    -16		 -36.36%

Total		 313		  248		     65		  26.21%



In Q3 2000 the company's net sales totaled EEK 90.9 million, providing 

EEK 17.5 million or 22.8% increase from Q1 1999.



Net sales by fields of activity:

		              2000            1999 	Change 	      %

Cars			74,598,743	56,840,723  17,758,020	 31.24%

Services		 2,958,744	 2,989,935     -31,191	 -1.04%

Spare parts		11,539,277	11,432,738     106,538	  0.93%

Garage equipment	 1,040,941	 1,439,147    -398,205  -27.67%

Car rental services	    60,615	   116,406     -55,790  -47.93%

Other sales		   782,853	   661,012     121,842	 18.43%

Total			90,981,173	73,479,960  17,501,213	 23.82%



Net sales (in thousand EEK) by companies in the group:

                         Fakto	N-Balti	It.Auto	        Nempe      Group

Cars			35,413	61,836	6,615		    0	  74,314

Services		 2,703	     0	  718		   75	   2,958

Spare parts		 5,598	 6,842	2,170		1,333	  11,539

Car rental		    30	     1	    0		  438	      61

services

Garage equipment	 1,040	     0	    0		    0	   1,041

Other sales		 1,317	   359	   38		   55	     783

Total			46,103	69,038	9,541		1,900	  90,981



Changes in net sales by companies:

                        Fakto		N-Balti	It.Auto	Nempe	  Group

Cars			4,734		19,998	-2,733	  0	 17,562

Services		  -45		     0	   136	 16	    -31

Spare parts		  104		  -253	   129	154	    106

Car rental		1,316		     0	     0	  0	    -56

services

Garage equipment	 -398		     0	     0	  0	   -398

Other sales		 -139		   197	    11	  9	    122

Total			4,256		19,941	-2,458	178	 17,501

Change (%)		10.17%	40.62%	-20.48%   10.34%	 18.43%



Data in the above table contains intra-group sales results.





Sale of vehicles.



Primary registration of cars in Q1 2000, data from ARK (vehicle 

registration center):

                                   2000  1999  Difference     %

Total cars registered at ARK	  3,985 7,791    -3,806  -48.9%

incl. new cars	                  2,016 1,689       327   19.4%



The above table shows that number of newly registered cars increased 

in Q1 2000 by 19.4& y-o-y; however, total number of registered cars 

has fallen by 48.9%. One of the reasons for that may be that people 

sell already registered used cars, to replace them with new cars.

 

Registration of new cars at ARK in Q1, by models:

Model        2000   Share  1999   Share  1998   Share  1997    Share

Toyota	      214  10.62%   158   9.35%   204  10.91%   167   12.43%

Volkswagen    179   8.88%   171  10.12%   224  11.99%    76    5.66%

Nissan        168   8.33%   110   6.51%   128   6.85%    95    7.07%

Peugeot       162   8.04%    88   5.21%    88   4.71%    46    3.43%

Honda         148   7.34%   171  10.12%   169   9.04%   134    9.98%

Mazda         138   6.85%   121   7.16%   106   5.67%    81    6.03%

Kia            85   4.22%    58   3.43%    67   3.58%    42    3.13%

Opel           83   4.12%    69   4.09%   111   5.94%    59    4.39%

Seat           77   3.82%    25   1.48%     2   0.11%     4    0.30%

Daewoo         71   3.52%    17   1.01%    23   1.23%     3    0.22%

Other 	      691  34.28%   701  41.50%   747  39.97%   636   47.36%

Total       2,016         1,689         1,869         1,343		 

Incl. group   189   9.38%   139   8.23%   176   9.42%   143   10.65%



Compared to Q1 1999, the market share of cars sold by companies of 

Fakto group has increased by 1.15%.



Services and sale of spare parts.



In Q1 2000 the consolidated sales of services amounted to EEK 2,959 

thousand, or EEK 31 thousand less than in Q1 1999.



Sale of services by companies in Q1:

                     2000       1999   Change       %

AS Fakto        2,703,380  2,748,396  -45,016  -1.64%

AS Itaalia Auto   718,248    582,328  135,921  23.34%

OÜ Nempe           74,998     59,009   15,989  27.09%

Group           2,958,744  2,989,935  -31,191  -1.04%



Compared to last year, the group's income from sale of services and 

spare parts has increased by EEK 75 thousand, incl. growth in sale 

of spare parts by EEK 106.5 thousand:



  	              2000       1999   Change       %

AS Fakto         5,598,486  5,494,979   103,507   1.88%

AS Nissan Balti  6,841,908  7,095,151  -253,244  -3.57%

AS Itaalia Auto  2,169,695  2,040,744   128,952   6.32%

OÜ Nempe         1,332,678  1,178,971   153,707  13.04%

Group 	        11,539,277 11,432,738   106,538   0.93%





Other activities 



Other activities include income from sales of car rental services, 

garage equipment, income from rent of premises and income from other 

sales that are not related with the company's main activity fields. 

In Q1 the income from sales of other services totaled EEK 1.9 

million, i.e. EEK 420 thousand less that in Q1 1999.

Income from sales of garage equipment has dropped by EEK 398 

thousand, and income from car rental services by EEK 56 thousand. 

Other sales increased to EEK 303 thousand in Q1, i.e. EEK 168 

thousand EEK more than in Q1 1999. Other sales account includes 

mainly resale of different expenses (i.e. sale of advertising related 

expenses etc.)





Operating expenses

 

Compared to Q1 1999 the operation expenses have increased by EEK 

1,519,802. 

Changes by expense accounts:

                                      2000	      1999	   Change

Personnel expenses		 7,126,051	 6,566,686	  559,365

Other operating expenses	 4,649,098	 3,449,187	1,199,911

Depreciation of fixed assets	 1,482,405	 1,721,879	 -239,475

Total operating expenses	13,257,554	11,737,752	1,519,802



On the operating expenses account, the volume of other operating 

expenses has increased the most, mainly due to increased advertising 

expenses. The advertising expenses have mainly increased on the 

account of this spring's car fair "Motorex 2000", where all companies 

of the group participated this year.





Commentary to income statements



Profit earned by companies in AS Fakto group in Q1:

                    AS Fakto AS N-Balti It. Auto OÜ Nempe	Group

Net sales 	    46,103	69,038    9,541	   1,900	90,981

Cost of goods sold  39,008	65,130    7,791	   1,011	78,071

Gross profit	     7,095	 3,908    1,749	     889	12,911

		 		 		 		 		 

Operating and 	     6,402	 3,942    2,811	     848	13,258

personnel expenses, depreciation

Other income	       559	   674       56      43		   855

Other expenses	       396	 1,280      195       1		 1,396

Financial income	10           1        0     257            244

Financial expenses     537	    22      471	    270		 1,293

Minority interest                                                 -231

Profit		       329        -662   -1,673  69,497   	-1,705



In above table Fakto's profit is shown without income and expenses with 

financial investments.



AS Fakto expects growth in sales of new cars as of Q2, mainly due 

to launch of new models. The new models include Nissan Almera, Nissan 

Maxima and Fiat Punto, first presented at Motorex fair. In addition 

to these models, Nissan Patrol with new type of engine and automatic 

shift will be introduced. 



Sale of services and spare parts has remained unchanged compared to 

last year's results; the company does not expect substantial growth 

in income from these areas. These areas of activities are closely 

connected with sales of new cars, thus substantial growth in income 

from sale of services can proceed only from similar addition of new 

cars to the market.



Commentary to balance sheet.



As of 31.03.2000 the group's balance sheet size stood at EEK 130,069 

thousand, providing quarterly decrease of EEK 2.9 million; no 

substantial changes have taken place compared with standings at 

31.12.99. Compared with balance sheet as at 31.03.99, the balance 

sheet volume has decreased by EEK 20.8 million. Current assets have 

declined by EEK 13.5 million and non-current assets by EEK 7.4 

million (incl. increased depreciation of fixed assets by EEK 4.6 

million and decreased financial investments by EEK 4.4 million).



On the current assets account the balance of inventories has dropped 

by EEK 8.9 million. Also the accounts receivable are lower by EEK 2.3 

million and balance of cash has dropped by EEK 2.6 million.



On the liabilities and owners equity account the balance of current 

liabilities has dropped by EEK 11.1 On the current assets account the 

balance of, long-term liabilities by EEK 6.1 million, minority 

interest by EEK 550 thousand and owners equity by EEK 3.1 million.



On the current liabilities account the balance of supplier payables 

has decreased by EEK 11.4 million. Also the amount due in tax 

liabilities has decreased by EEK 2.3 million and short-term payables 

by EEK 759 thousand. 



On the non-current liabilities account the balance of debt 

obligations is lower by EEK 3.9 million and deferred income tax

liability by EEK 2.3 million. EEK 3.1 million change in owners equity

includes EEK 2.3 million of dividends paid in 1999, dividends

calculated for year 2000 in the amount EEK 165,006, and the last 12

months' financial result of EEK -622 thousand.

 

In Q1 earnings per share stood at EEK -1.03.





Toivo Urva

Management Board Chairman

+372 6 389 200