KALEV

ANNOUNCEMENT



DEVELOPMENT COUNCIL'S FINAL REPORT



AS Kalev development council completed its work. Today AS Kalev 

Supervisory Board approved the development council's final report, 

as a result of which the company has achieved stable profitability.



The aim of the Kalev development council was to chart the company's 

current situation, to design a new, efficiency-based strategic 

development plan for years 2000 - 2002, and to bring the company to 

management-by-objectives based structure.



The major aim of AS Kalev strategic development plan is to bring the 

company to results-oriented management structure, operating under the 

principles of profit centers, also development of employee motivation 

system, and development of intellectual capital. Another important 

goal was trademark-based development and expansion of product line, 

based on Kalev's leading role in each product group on Estonian 

sweets market. Thirdly the company intends to further improve the 

efficiency of management of resources. Based on Kalev's strategic 

development plan, the company also designed development plans and 

budgets for its structural units: marketing, production, and 

resources.



AS Kalev general manager Mr. Oliver Kruuda said that Kalev's 

employees and development council have made a major contribution to 

bringing the company to profit, by finding ways to enhance the 

company's efficiency through results-based reallocation of resources 

and reduction of production, administrative and personnel costs. "The 

main result of the development strategy is constant improvement of 

the company's financial results and efficiency, which we initially 

planned to achieve by year 2002," said Kruuda, and added that Kalev 

will continue to further apply the development strategies.



AS Kalev development council was created by the company's Supervisory 

Board in February 2000; the council started its work after Kalev's 

top management changed in March. Today the development council has 

achieved its main goal to design a new, efficiency-based strategic 

development plan in accordance with the changed economic conditions. 

The development council consists of Kalev's employees and several 

outside experts.



In 1999 AS Kalev posted EEK 43 mln net loss; in H1 2000, however, 

Kalev's consolidated net profit figure stood at EEK 5.9 mln (EEK 5.8 

mln y-o-y growth). The H1 consolidated net sales were EEK 158 mln, 

having grown annually more than 5%.



AS Kalev is the leader on the Estonian sweets market with over 45% 

market share.





Kristina Seimann

PR manager

+372 62 83 858