KLEMENTI

COMMENTARY TO FINANCIAL RESULTS



COMMENTARY TO FINANCIAL RESULTS, H1 2000



In H1 2000 the consolidated and unaudited net sales of AS Klementi 

amounted to EEK 49.9 million, which is EEK 1.6 million or 3.5% 

less than in H1 1999 (H1 99 consolidated net sales EEK 48.3 million). 

In H1 the exports amounted to EEK 25.3 million, or 50.6% of net 

sales.



Compared to the same period last year, the sale of goods produced 

increased by 7.7% (from EEK 30.2 million to EEK 32.5 million). The 

share of goods produced of net sales was 65.2%.

Sale of goods produced by markets (million EEK):



                      H1 2000           H1 1999       	Change

Estonia                  22.9              20.7              10.6%

Latvia, Lithuania         5.6               7.1             -21.1%

Finland, Sweden           3.8               1.9              96.9%

Other                     0.2               0.5             -48.5%



Improved sales of goods produced in Estonia are connected with good 

sales results of retail stores owned by Klementi. Decreased sales 

results in Latvia and Lithuania are due to people's lower purchasing 

power, resulting from overall slowdown of economy, and also due to 

introduction of competitive local products on the market. Increased 

sales in Scandinavian countries are due to successful launch of new 

agencies.



In H1 2000 the sales of goods produced amounted to EEK 15.6 million, 

which accounts for 31.2% of net sales (30.4% in H1 1999). Compared 

with the same period last year, the share of subcontracting works was 

lower by 2.8%.



In H1 2000 AS Klementi consolidated and unaudited loss stood at 

EEK 4.6 million (net loss during the same period last year EEK 

2.2 million).



Net loss was mainly due to delayed delivery of fabrics for spring 

collections and resulting under-fulfillment of sales schedule of 

goods produced in Q1, but also by setbacks on the Lithuanian market. 

Moreover, the company sold in H1 previous seasons' models in order to 

decrease inventories and secure liquidity. 



In Q2 Klementi's share capital was increased by EEK 11 million, 

through directed share issue to its parent company P.T.A. Group OY.

After the share issue P.T.A. Group OY owns 68.97% holding in 

Klementi. Proceeds from the share issue will be used to renew the 

company's technological equipment, to be completed by the end of year 

2000.



In Q2 AS Klementi also issued 10-year bonds to its parent company 

P.T.A. Group OY in total amount of EEK 2 million. The proceeds will 

be used to partially cover the costs of building the new storage 

complex. The new storage complex will be completed by October 2000, 

and it will be used for reception, complementing and distribution of 

all raw materials used by P.T.A. group in production processes 

(textiles and other materials). Thus AS Klementi will became a focal 

point of P.T.A. group's raw materials logistics.



AS Klementi continued to develop its retail sales activities. In Q2 

Klementi opened its stores in Tartu Riga. As of end-H1 Klementi had 5 

stores in Estonia, 1 store in Riga and 1 store in Vilnius. Klementi's 

Latvian and Lithuanian stores are operated by local companies, which 

are not owned by Klementi. In H1 2000 AS Klementi intends to open 2 

more Klementi stores in Estonia and 1 in Vilnius.



AS Klementi forecasts to earn zero-profit at EEK 117 million turnover 

in year 2000.





Madis Võõras

Management Board chairman

+372 67 10 700