Klementi                      FINANCIAL RESULTS                 06/02/2003



FINANCIAL RESULTS, Q1 2003



The unaudited consolidated group net sales of AS Klementi 

in the first quarter of  2003  were  EEK 31.8m (EUR 2.0m) 

and net loss amounted to  EEK  9.1m  (EUR 0.6m).  

In the same period of the previous year, the net sales were 

EEK  32.4m (EUR  2.1m) and net loss EEK 4.6m (EUR 0.3m). 

As of 31 March 2003,  the  group employed 564 people. 

During the year, the number of the employees decreased by

11.5%, i.e. by 73 persons.



» SALES ANALYSIS

Net sales of the first quarter of 2003 met the expectations.

The sales breakdown according to the activities in the first 

quarter was as follows:



NET SALES           2003    2002   2003   2002      y-o-y

                                                   growth

                    EEKm    EEKm   EURm   EURm      03/02

Apparel sales       25.9    21.1    1.7    1.4      22.5%

Subcontracting       5.9    11.3    0.3    0.7     -47.3%

and other sale

TOTAL               31.8    32.4    2.0    2.1      -1.8%



Compared  to the same period of the previous year, the structure 

of the  sales underwent significant changes. The share of apparel 

sales increased  to  81.3% (65.2% in 2002). The greatest increase, 

by 2.2 times, i.e. EEK 5.6m (EUR 0.4m) occurred in the wholesale 

of apparel in the Nordic countries.



The  retail share in the apparel sales was 50% in the first 

quarter  of  2003.

Compared  to the same period of the previous year, the sales 

per square  metre increased by 4%.

This year, the company plans to acquire 100% of the retail 

company SIA Vision.

SIA  Vision rents two sales premises in Riga and has a long 

history of selling Klementi products. Currently, AS Klementi 

has no participating interest in the company  and  the  sales

of these stores are not therefore  reflected  in  the

retail sale results.



The  decrease  in  the  share of subcontracting was caused  

by  the  company’s increased  need  to put an additional 



load on manufacturing by  producing  new collections  under  

its  own trademarks. Thus, the decrease  in  the  work  in

progress  and finished goods reserves of the company remained 

less significant in  the first quarter of 2003 than in the 

previous year, and revenue increased by 11.5%.



The  subcontracting  and  other sales in the first quarter  

of  2002  included revenue from P.T.A. Group OY in amount EEK 6.0 m.





» PROFIT ANALYSIS

Net loss in the first quarter of 2003 amounted to EEK 9.1m 

(EUR 0.6m). The net result  involved one-off expenditures 

in the amount of EEK 2.5m  (EUR  0.16m).

Loss from ordinary business activities was caused by a 

lower profitability  in retail.  In  January and February 

retail sales dominated the collections  from the  previous 

periods with a lower mark-ups. During the first quarter of 2003,

two  inefficient  shops  were  closed down  and  work  

was  continued  on  the development  of the new retail 

concept. In May this year, two  new  stores  in 



accordance  to the new concept were opened in Tallinn 

(Kristiine  Centre)  and Riga (Origo Centre).



The one-off factors affecting the activities included 

the following.

Since  the  beginning of this year, the principle employed 

for the calculation of the cost price (warehouse price) 

of the company’s own production has become more  conservative.  

The cost price of products no longer includes  production

development  costs.  The  negative impact of the changes  

in  the  calculation principle  on the results of the first 

quarter of 2003 amounted  to  EEK  1.0m (EUR  0.07m). 

The increase in the share of the products manufactured this year

will  reduce  the  impact of the changes in the calculation 

principle  on  the financial results. 



The  optimisation  of  the  demand for workforce,  

commenced  past  year,  was continued in the first 

quarter of 2003. The redundancy costs amounted  to  

EEK 0.4m (EUR 0.03m) in the period.



Additional loss of EEK 1.1m was accounted from last 

year’s wholesale in Latvia and Lithuania.



» BALANCE SHEET ANALYSIS AND RATIOS



The  consolidated balance sheet total of AS Klementi 

was EEK 115.0m (EUR 7.4m) as  of 31.03.2003. 

In the assets of the balance sheet, the stocks decreased by

EEK 4.8m (EUR 0.3m).

The  inventory  turnover  was 4.8 in the first quarter  

of  2003,  marking  an improvement by 1.5 points over the 

year (3.3 in 2002).



The key financial ratios of AS Klementi group were:



                                         1Q 2003    1Q 2002



year-over-year sales growth             -1.8%         25.3%



apparel sales share in total sales      81.3%         65.2%



inventory turnover (adjusted to year)    4.8           3.3

[net sales/average inventory]



liquidity ratio                          0.35          0.43

[(current assets - inventories)/current liabilities]



current ratio                            0.79          1.08

[current assets/current liabilities]



EBIT margin                            -24.8%        -10.6%



[operating profit/net turnover]



net margin                             -28.7%        -14.1%

[net profit/net turnover]





» BALANCE SHEET, consolidated, unaudited





                   31.03.03   31.12.02    31.03.03   31.12.02

                   EEK ‘000   EEK ‘000    EUR ‘000   EUR ‘000

Cash and bank          1,696     4,485       108        287

Customer              14,934    12,537       955        801

receivables

Other receivables        477       868        30         55

and accrued income

Prepaid expenses       2,477     2,896       158        185

Inventories           24,211    29,002     1,548      1,854

                                                         

CURRENT ASSETS        43,795    49,788     2,799      3,182

                                                        

Long-term              2,587     2,578       165        165

financial assets

Tangible assets       62,762    64,649     4,011      4,132

Intangible assets      5,880     5,771       376        368

FIXED ASSETS          71,229    72,998     4,552      4,665

ASSETS               115,024   122,786     7,351      7,847

Debt obligations      38,668    34,792     2,471      2,223

Customer                  53       952         3         61

prepayments

Accounts payable       9,120    10,867       583        694

Taxes payable          4,263     3,875       272        247

Accrued expenses       3,628     3,905       232        250

Other unearned             0        12         0          1

income

Short-term                 9        12         1          1

provisions

CURRENT               55,741    54,415     3,562      3,477

LIABILITIES

Long-term debt        27,494    27,467     1,757      1,755

Other long-term        4,928     4,928       315        315

payables

Provisions for            68        68         4          4

liabilities and

charges

LONG-TERM             32,490    32,463      2,076     2,074

LIABILITIES

TOTAL LIABILITIES     88,231    86,878     5,638      5,551

Share capital         13,219    13,219       845        845

Share premium         30,863    30,863     1,973      1,973

Revaluation           15,578    15,578       996        996

reserve

Other reserves         1,046     1,046        67         67

Retained earnings    -24,798     7,083    -1,585        453

Profit for the        -9,115   -31,881      -583     -2,038

financial year

OWNERS’ EQUITY        26,793    35,908     1,713      2,296

LIABILITIES AND      115,024   122,786     7,351      7,847

OWNERS’ EQUITY

                                                 





» INCOME STATEMENT, consolidated, unaudited



                   Q1 2003    Q1 2002    Q1 2003    Q1 2002

                  EEK ‘000   EEK ‘000   EUR ‘000   EUR ‘000

Net sales           31,811      32,388     2,033     2,070

Other revenue          326         429        21        27

Change in           -2,761      -6,464      -176      -413

inventories

TOTAL REVENUE       29,376      26,353     1,878     1,684

Goods, raw          12,870       5,877       823       376

material,

materials

Misc. operating      6,924       6,444       443       412

expenses

Personnel           14,718      14,892       940       952

expenses

Depreciation         1,835       1,641       117       105

Other expenses         904         931        58        59

TOTAL EXPENSES      37,251      29,785     2,381     1,904

OPERATING PROFIT   - 7,875      -3,432      -503      -220

                                                         

Interest            -1,253      -1,219       -80       -78

expenses

Foreign exchange       -39           8        -3         1

loss

Other financial         52          66         3         4

income and                                               

expenses

NET FINANCIAL       -1,240      -1,145       -80       -73

ITEMS

NET PROFIT          -9,115      -4,577      -583      -293

Basic earnings       -6.89       -1.30     -0.44     -0.08

per share

(EEK)

Diluted earnings     -6.63       -1.22     -0.42     -0.08

per share (EEK)





Toomas Leis

CEO

+372 6 710 700