Klementi                      FINANCIAL RESULTS                 11/17/2003



FINANCIAL RESULTS Q3 2003



The third quarter of 2003 is characterised by the following

indicators:

- turnover increase compared to last year 33%

- wholesale growth in the Nordic countries doubled

- net profit EEK 2.5 million

- inventories decreased by 38%, inventory turnover ratio 5.1 (last

year 3.0)

- the number of employees was reduced by 28% i.e. 179 employees

over the year

- 9 month turnover per employee increased by 28%

- changes in the group structure



The unaudited consolidated group net turnover of AS Klementi in

the third quarter of 2003 was EEK 50.9m (EUR 3.3m) and the net

profit amounted to EEK 2.5m (EUR 0.2m). In the same period of the

previous year the turnover amounted to EEK 38.2m (EUR 2.4m) and

the net profit was EEK 3.6m (EUR 0.2m).

Compared with the same period of the previous year the turnover

increased by 33%.



The unaudited consolidated group net turnover of the first 9

months of 2003 was EEK 105.6m (EUR 6.8m) and the net loss amounted

to EEK 16.5m (EUR 1.1m). During the same period of the previous

year the turnover was EEK 95.5m (EUR 6.1m) and the net loss was

EEK 15.2m (EUR 1.0m).



As of September 30, 2003 there were 456 employees in the group.

During the third quarter of 2003 the number of employees was

reduced by 14% i.e. 74 persons.





» CHANGES IN THE STRUCTURE OF THE GROUP



With a view to providing better service to the Swedish wholesale

clients an independent subsidiary in Sweden was founded. On July

31 2003 AS Klementi acquired non-active company Nybyggaren 10:1000

AB. The new business name of the company is Klementi Trading AB.

AS Klementi owns 100% of the company’s shares.



On October 9 2003 AS Klementi acquired 100% of the Latvian retail

company SIA Vision. The company has been retailing Klementi

apparel for a number of years already and is currently operating

two shops in Riga. Up to then AS Klementi did not have any

shareholding in the company.  SIA Vision has been consolidated

into the Klementi group as a subsidiary from August 1 2003.



In connection with the start of co-operation between AS Klementi

and the leading Lithuanian retail chain Apranga APB, AS Klementi

closed its own shops in Lithuania at the beginning of September

and began the liquidation process of its subsidiary UAB Klementi

Vilnius.





» SALES ANALYSIS



The net turnover breakdown by activity in the third quarter was as

follows:



NET TURNOVER                     2003   2002   2003   2002   03/02 

                                 EEKm   EEKm   EURm   EURm  change

Apparel sales                    45.5   33.3    2.9    2.1   36.6%

Subcontracting and other sales    5.4    4.9    0.4    0.3   10.2%

TOTAL                            50.9   38.2    3.3    2.4   33.0%



In the third quarter the sale of both the own trademarks and

subcontracting showed positive signs of growth. The sale of

apparel increased in the third quarter by 37%.



The largest increase was in the apparel wholesale in the Nordic

countries, the numbers almost doubled. The wholesale share in the

Nordic countries formed 64% of apparel sale.





The net turnover breakdown by activity in the first nine months

was as follows:



NET TURNOVER                     2003   2002   2003   2002    03/02

                                 EEKm   EEKm   EURm   EURm   change 

Apparel sales                    87.9   68.3   5.6    4.4     28.7%

Subcontracting and other sales   17.7   27.2   1.1    1.7    -34.9%

TOTAL                           105.6   95.5   6.8    6.1     10.6%



Currently Klementi retail chain consists of 10 shops, 8 of which

are in Estonia and 2 in Latvia. As of the end of September

Klementi had 2,377 square metres of retail area (last year at the

same time the total retail area was 2,547 square metres).

Despite a decrease in retail area the retail turnover increased in

the third quarter by 6%. The share of retail turnover in the total

sale of apparel in the first 9 months was 42%.





» COST ANALYSIS



The cost on goods, raw materials and services has increased due to

an enlarged share of purchased goods in Klementi collections.



The miscellaneous operating expenses in the third quarter are

incomparable with the figures of last year. In reality the

miscellaneous operating expenses have decreased in comparison with

last year by 8% i.e. EEK 0.7m (EUR 0.05m). In the first half of

2002 improbable receivables in the amount of EEK 10.0m (EUR 0.6m)

were incurred as costs in relation with the bankruptcy of P.T.A.

Group OY. In the third quarter the cost of improbable receivables

was reduced by EEK 5.7m (EUR 0.4m).



The personnel expenses of the third quarter include the redundancy

payments to the amount of EEK 1.1m (EUR 0.07m). In addition to the

company’s own funds the redundancy payments were also covered by

the Unemployment Fund to the amount of EEK 0.5m (EUR 0.03m). By 

eliminating the redundancy payments it is clear that the personnel 

expenses have decreased in the year by 16%.





» PROFIT ANALYSIS



The loss of the first 9 months of 2003 includes one-off costs to

the amount of EEK 4.9m (EUR 0.31m), including:



- EEK 1.9m (EUR 0.12m) costs from the previous periods, of which

EEK 1.1m (EUR 0.07m) was due to the additional wholesale loss of

the previous year in Latvia and Lithuania.



- EEK 0.8m (EUR 0.04m) for developing the new retail concept and

the new Klementi logo and reorganising the outlets.



- In the third quarter of 2003 the optimisation of the demand for

workforce was successfully completed. In 9 months the number of

employees was reduced by 25% i.e. 152 people.

The redundancy payments in the given period amounted to EEK 2.2m

(EUR 0.14m).





» BALANCE SHEET ANALYSIS AND RATIOS



The consolidated balance sheet of AS Klementi as of September 30

2003 was EEK 131.4m (EUR 8.4m). The stocks have decreased over the

year by 37.6% i.e. EEK 15.8m (EUR 1.0m) and the inventory turnover

ratio has improved by 2.1 points.



The wholesale increase in the third quarter in the Nordic

countries by EEK 14.3m (EUR 0.9m) has led to an increase in the

accounts receivable by EEK 5.6m (EUR 0.4m).



The investment volume of the first half-year was EEK 0.9m, most of

which went into the opening of the new shop in the Kristiine

shopping centre.



With the purchase of SIA Vision additional goodwill was accumulated 

in the amount of EEK 2.1m (EUR 0.13m), which is reflected in the 

balance sheet under intangible assets.

Simultaneously, as a result of this transaction the long-term

financial investments and the accounts receivable decreased and

the inventories increased.



In June of the current year the public issue of the company’s

shares took place, as a result of which the share premium

increased to EEK 40.9m (EUR 2.6m). In the third quarter the share

premium was reduced by the amount of the direct management costs

of the issue by EEK 0.6m (EUR 0.04m).





The key financial ratios of AS Klementi group as of 30.09.2003:



                                                 2003       2002 

				9 months   9 months



- year-over-year turnover growth (third quarter) 33.0%     12.9%



- year-over-year turnover growth (9 months)      10.6%     21.5%



- apparel sale share in total turnover           83.2%     71.5%



- inventory turnover ratio (adjusted to year)     5.1        3.0

  [net turnover/average inventory]



- current ratio                                  0.94       1.27

  [current assets/current liabilities]



- liquidity ratio                                0.53       0.51

  [current assets-inventory / current liabilities]



- EBIT margin                                  -12.0%     -11.6%

  [operating profit / net turnover]



- net margin                                   -15.6%     -15.9%

  [net profit / net turnover]





» BALANCE SHEET consolidated, unaudited

                                      30.09.2003  30.09.2002 31.12.2002

                                        EEK ‘000   EEK ‘000    EEK ‘000



Cash and bank                              3 402      2 725       4 485

Customer receivables                      28 571     22 992      12 537

Misc. receivables and accrued income          500       479         868

Prepaid expenses                            1 591     1 765       2 896

Inventories                                26 331    42 172      29 002

CURRENT ASSETS                             60 395    70 133      49 788



Long-term financial investments             1 471     3 182       2 578

Tangible fixed assets                      61 955    51 468      64 649

Intangible assts                            7 553       764       5 771

NON-CURRENT ASSETS                         70 979    55 414      72 998

ASSETS                                    131 374   125 547     122 786



Debt obligations                           52 072    36 573      34 792

Customer prepayment                            17         0         952

Accounts payable                            5 717    10 027      10 867

Miscellaneous payables                          0         0           0

Tax liabilities                             3 369     4 999       3 875

Accrued expenses                            3 193     3 623       3 905

Other unearned revenue                          0        12          12

Short-term provisions                           3         3          12

SHORT-TERM LIABILITIES                     64 371    55 237      54 415



Long-term liabilities                      27 494    32 395      27 467

Other long-term liabilities                 4 928         0       4 928

Long-term provisions                           68        68          68

LONG-TERM LIABILITIES                      32 490    32 463      32 463

TOTAL LIABILITIES                          96 861    87 700      86 878



Share capital                              18 969    13 219      13 219

Share premium                              40 294    30 863      30 863

Revaluation reserve                        15 578       816      15 578

Other reserves                              1 046     1 046       1 046

Retained profit                           -24 798     7 083       7 083

Profit for the financial year             -16 496   -15 180     -31 881

EQUITY                                     34 513    37 847      35 908

LIABILITIES AND EQUITY                    131 374   125 547     122 786





» BALANCE SHEET consolidated, unaudited

                                     30.09.2003  30.09.2002  31.12.2002

                                       EUR ‘000    EUR ‘000    EUR ‘000

Cash and bank                               217         174         287

Customer receivables                      1 826       1 469         801

Misc. receivables and accrued income         32          31          55

Prepaid expenses                            102         113         185

Inventories                               1 683       2 695       1 854

CURRENT ASSETS                            3 860       4 482       3 182



Long-term financial investments              94         203         165

Tangible fixed assets                     3 960       3 290       4 132

Intangible assets                           483          49         368

NON-CURRENT ASSETS                        4 536       3 542       4 665

ASSETS                                    8 396       8 024       7 847



Debt obligations                          3 328       2 337       2 223

Customer prepayments                          1           0          61

Accounts payable                            365         641         694

Miscellaneous payables                        0         247           0

Tax liabilities                             215         319         247

Accrued expenses                            204         232         250

Other unearned revenue                        0           1           1

Short-term provisions                         0           0           1

SHORT-TERM LIABILITIES                    4 114       3 530       3 477



Long-term liabilities                       1 757     2 070       1 755

Other long-term liabilities                   315         0         315

Long-term provisions                            4         4           4

LONG-TERM LIABILITIES                       2 076     2 074       2 074

TOTAL LIABILITIES                           6 191     5 604       5 551



Share capital                               1 212       845         845

Share premium                               2 575     1 973       1 973

Revaluation reserve                           996        52         996

Other reserves                                 67        67          67

Retained profit                            -1 585       453         453

Profit for the financial year              -1 054      -970      -2 038

EQUITY                                      2 206     2 420       2 296

LIABILITIES AND EQUITY                      8 396     8 024       7 847





» III QUARTER INCOME STATEMENT consolidated, unaudited

                                          2003     2002    2003     2002

                                            Q3       Q3      Q3       Q3

                                       EEK’000  EEK’000 EUR’000  EUR’000



Net sales                               50 864   38 236   3 251    2 444

Change in inventories                   -3 514    2 276    -225      145

Other revenue                              543      577      35       37

TOTAL REVENUE                           47 893   41 089   3 061    2 626



Goods, raw material and services        19 540   14 709   1 249      940

Miscellaneous operating expenses         8 616    3 609     551      231

Personnel expenses                      13 600   14 822     869      947

Depreciation                             1 918    1 749     123      112

Other expenses                             370      811      24       51

TOTAL EXPENSES                          44 044   35 700   2 815    2 281



OPERATING PROFIT                         3 849    5 389     246      345



Interest expenses                       -1 481   -1 857     -95     -119

Foreign exchange profit (loss)             104      -45       7       -3

Other financial income / expense            35       66       2        4

NET FINANCIAL ITEMS                     -1 342   -1 836     -86     -118



NET PROFIT                               2 507    3 553     160      227

Basic earnings per share (EEK / EUR)      1.32     1.60    0.08    -0.26

Diluted earnings per share (EEK / EUR)    1.30     1.52    0.08    -0.24





» 9 MONTH INCOME STATEMENT consolidated, unaudited

                                        2003      2002      2003     2002

                                    9 months  9 months  9 months 9 months

                                     EEK’000   EEK’000   EUR’000  EUR’000



Net sales                            105 643    95 522     6 752    6 105

Change in inventories                 -5 504       759      -352       48

Other revenue                          1 158     1 346        74       86

TOTAL REVENUE                        101 297    97 627     6 474    6 239



Goods, raw material and services      42 392    34 051     2 709    2 176

Miscellaneous operating expenses      23 328    24 905     1 491    1 592

Personnel expenses                    40 945    42 903     2 617    2 742

Depreciation                           5 611     5 086       359      325

Other expenses                         1 660     1 793       106      114

TOTAL EXPENSES                       113 936   108 738     7 282    6 949



OPERATING PROFIT                     -12 639   -11 111      -808     -710



Interest expenses                     -4 017    -4 255      -257     -272

Foreign exchange profit (loss)            24       -11         2        1

Other financial income / expense         136       197         9       11

NET FINANCIAL ITEMS                   -3 857    -4 069      -247     -260



NET PROFIT                           -16 496   -15 180    -1 054     -970

Basic earnings per share (EEK/ EUR)   -10.63     -4.92     -0.68    -0.31

Diluted earnings per share (EEK/ EUR) -10.28     -4.64     -0.66    -0.30





Toomas Leis

Chairman

+372 6 710 700