Saku Õlletehas                FINANCIAL RESULTS                 02/26/2004



AUDITED FINANCIAL RESULTS OF 2003



Performance and results



Saku  Brewery Ltd ended 2003 with revenues of EEK 464.1m,

(€29.7m), an EEK 21.5m (€1.4m), i.e. 4.8% improvement  on

2002.  Sales  results improved both in the  domestic  and

export  markets,  especially  in  the  segment  of  other

alcoholic beverages (cider and long drink).



Since  2003 the net result of the sales and purchases  of

returnable  containers is recognised as other revenue  or

other  expense  depending  on  whether  the  transactions

result  in  a  gain  or a loss. As a  result,  comparable

revenues for 2002 have been reduced to the extent of  EEK

328.2m (€21m).



In  quantitative terms, our beverage sales  totalled  57m

litres,  1%  up on 2002, the domestic market contributing

49.8m  and export markets 7.2m of the total. With  annual

sales  of  41.2m  litres  and a  42.5%  market  share  we

remained  the  leader of the Estonian beer market.  Other

alcoholic   beverages  accounted  for  2.1m   litres   of

beverages  sold  in the domestic market, 140%  growth  on

2002.



Expenses remained more or less stable, decreasing by  EEK

1.7m (€109,000), i.e. 0.4% compared to 2002. Spending  on

materials,  consumables and supplies grew  by  EEK  20.7m

(€1.3m), largely on account of an increase in the  output

of  canned  products  (up 4.3m litres).  Other  operating

expenses,  on  the  other hand, decreased  by  EEK  20.6m

(€1.3m). The largest savings were attained in advertising

where improved efficiency allowed to cut costs without  a

reduction in marketing operations but we cut back also in

other areas.



Operating  profit for the period amounted  to  EEK  63.4m

(€4.1m),  EEK 23.2m (€1.5m), i.e. 57.6% up on  2002.  Net

profit  equalled  EEK 54.8m (€3.5m), reflecting  a  59.1%

improvement on the adjusted figure for 2002. Earnings per

share amounted to EEK 6.85 (€0.44).



Our  direct tax burden was EEK 205.7m (€13.1m), including

alcohol excise duties of EEK 136.9m (€8.7m).



At  the  year-end we employed 245 people under  contracts

with an unspecified term. The average number of employees

was 247.



Market and consumption



Beer

According to the Estonian Breweries Association, in  2003

the volume of the Estonian beer market levelled off at 97

million litres. Per-capita consumption amounted to  70.7

litres. In the first half of the year, the market  shrank

due to cold weather 7% on the same period in 2002. At the

end  of  nine  months,  however,  thanks  to  a  recovery

triggered by better weather conditions in the second half

of  the  summer  the  domestic beer market  was  only  3%

smaller  than  a year ago. In the fourth quarter,  growth

continued  on  account of an increase in the distribution

of  cheaper  beers and price campaigns. In terms  of  the

whole year, market volume the same as in 2002.



Based  on  the  information  of  the  Estonian  Breweries

Association, in 2003 the Estonian beer market was divided

as follows: the leader was Saku Brewery Ltd with 42.5% of

the market, followed by Tartu Õlletehas (35.4%), Viru Õlu

(10.2%),  imported beers (8.3%), Pärnu Õlletehas  (2.4%),

Nigula Õlu (0.8%), Saaremaa Õlletehas (0.4%) and Sillamäe

Õlletehas (0.1%).



Increasing demand for cheaper beers allowed both  cheaper

import  and cheaper and stronger domestic beers to expand

their  market share. The rise of cheaper beers  increased

use  of one-way, especially plastic containers on account

of  bottles mostly. In 2003, 64% of the beer supplied  to

the  Estonian  market was bottled,  15%  canned,  14%  in

plastic containers and 7% was draught.



In  2003  we continued putting a lot of effort in product

development. In response to the increasing popularity  of

plastic containers and the rise of extra strong beers, we

launched  in October Presidendi Pilsner and Presidendi  8

in  plastic containers and in March Presidendi 10,  which

improved  our  position in the extra strong  segment.  In

summer we brought out an innovative seasonal product Saku

on Ice Tequila.



Other beverages

Saku  Brewery has expanded on other beverages markets  in

2003. According to the Estonian Breweries Association, in

2003 the domestic cider market grew to 4.7 million litres

(37%).  Sales of our Kiss line improved by an outstanding

80%  thanks to new canned products. The line attained 25%

of  the  accumulated market volume, 5.6 percentage points

up on 2002.

The  Estonian long drink market grew to 7 million litres.

The  share  of  our Gin Long Drink line  improved  by  10

percentage points to 13% of the market.

The  Estonian  mineral water market grew  to  35  million

litres (12%). We compete in the premium segment with  the

Saku  Vichy  Classique line and in the  mainstream  cheap

segment  with  the Montavit line. In 2003 sales  of  Saku

mineral  waters grew 22.5%. Our market share is  12%  and

Saku  Vichy  Classique is among the five most  recognised

mineral waters in Estonia.



In  2003  the  Estonian soft drink market  shrank  to  47

million  litres  (4.1%).  Sales of  Saku  Brewery’s  soft

drinks,  however, grew 6.4%, largely on  account  of  the

launch of Päikese kvass and Päikese clear lemonade in the

second half of the year.



Investment



In  2003 we invested EEK 33.5m (€2.1m) in property, plant

and  equipment  and  intangible  assets.  Investments  in

production and laboratory facilities totalled  EEK  21.3m

(€1.4m). The largest projects were installation of a  PET

line,  which began in 2003 and will be completed in 2004.

Sales-related investments totalled EEK 5.6m  (€0.4m)  and

investments  in  information systems  and  data  security

amounted to EEK 1.0m (€65,000).





BALANCE SHEET                                                 

(In thousands)                     EEK               EUR

                            31.12.20 31.12.20 31.12.2031.12.20

                               03       02       03      02

                                     Adjusted         Adjusted

                                         *                *

                                                           

ASSETS                                                        

 Cash and bank                22,023    3,296   1,408      211

 Trade receivables (Note 2)   35,308   29,051   2,256    1,857

 Other receivables and         3,882    2,645     248      169

prepayments (Note 3)

 Inventories (Note 4)        113,652  118,480   7,264    7,572

TOTAL CURRENT ASSETS         174,865  153,472  11,176    9,809

                                                              

Non-current assets                                            

 Long-term financial assets   14,060   16,000     899    1,023

(Notes 5, 10)

 Other long-term                  45       98       3        6

receivables (Note 6)

 Property, plant and         245,843  260,597  15,712   16,655

equipment (Note 7)

 Intangible assets (Note 8)      719    1,147      46       73

TOTAL NON-CURRENT ASSETS     260,667  277,842  16,660   17,757

TOTAL ASSETS                 435,532  431,314  27,836   27,566

                                                              

LIABILITIES AND EQUITY                                        

Current liabilities                                           

 Debt obligations (Notes         907    7,154      58      457

9,10)

 Trade payables               12,226   19,962     782    1,277

 Payables to group             4,600      282     294       18

companies (Note 15)

 Deposit liability (Notes     29,209   29,751   1,867    1,901

4, 7)

 Tax liabilities (Note 11)    15,809   12,376   1,010      791

 Payables to employees         4,288    4,607     274      294

 Other accrued expenses        1,599    3,463     102      222

 Provisions (Note 12)            373      676      24       43

TOTAL CURRENT LIABILITIES     69,011   78,271   4,411    5,003

                                                              

Non-current liabilities                                       

 Non-convertible debt            419    1,711      27      109

(Notes 9,10)

TOTAL NON-CURRENT                419    1,711      27      109

LIABILITIES

                                                              

Equity (Note 13)                                              

 Share capital                80,000   80,000   5,113    5,113

 Mandatory capital reserve     8,000    8,000     511      511

 Other reserves               44,070   44,070   2,817    2,817

 Accumulated profits         179,262  184,838  11,457   11,813

 Net profit for the period    54,770   34,424   3,500    2,200

TOTAL EQUITY                 366,102  351,332  23,398   22,454

TOTAL LIABILITIES AND        435,532  431,314  27,836   27,566

EQUITY

  

  

*  Comparable data on 2002 has been adjusted  because  in

2003  the principles of IAS 12 were implemented  for  the

recognition  of  dividend  tax (for  further  information

refer to Note 13).

In  addition, adjustments have been made for  changes  in

the  recognition  of returnable containers  (for  further

information refer to Note 4).





INCOME STATEMENT                                          

(In thousands)                     EEK               EUR

                              2003     2002     2003    2002

                                     Adjusted         Adjusted

                                         *                *

                                                              

Revenue                                                       

 Sales revenue (Note 14)     463,362  440,218  29,614   28,135

 Other revenue (Note 16)         736    2,416      47      154

Total revenue                464,098  442,634  29,661   28,289

                                                              

Expenses (Note 17)                                            

 Changes in inventories of       453      964      29       62

work in progress and

 finished goods

 Materials, consumables and  185,104  164,377  11,830   10,505

supplies used

 Other operating expenses    112,158  132,724   7,168    8,483

 Personnel expenses           52,091   53,872   3,329    3,443

 Depreciation and             46,216   43,410   2,954    2,774

amortisation expense

 Other expenses                4,688    7,075     300      452

Total expenses               400,710  402,422  25,610   25,719

                                                              

PROFIT FROM OPERATIONS        63,388   40,212   4,051    2,570

                                                              

 Financial income and           -936   -1,391     -60      -89

expenses (Note 18)

                                                              

PROFIT FOR THE PERIOD         62,452   38,821   3,991    2,481

BEFORE TAX

                                                              

 Income tax expense            7,682    4,397     491      281

                                                              

NET PROFIT FOR THE PERIOD     54,770   34,424   3,500    2,200

                                                              

Basic earnings per share        6.85     4.30    0.44     0.28

(Note 19)

Diluted earnings per share      6.85     4.30    0.44     0.28

(Note 19)





*  Comparable data on 2002 has been adjusted  because  in

2003  the principles of IAS 12 were implemented  for  the

recognition  of  dividend  tax (for  further  information

refer to Note 13).

In  addition, adjustments have been made for  changes  in

the  recognition  of returnable containers  (for  further

information refer to Note 14).





Kristina Seimann

Communication Manager

+ 372 6 508 303