KLEMENTI

REPORT

 

MANAGEMENT REPORT 1999

 

1. Significant Events

 

- In January 1999 a Finnish apparel producer P.T.A. Grupp OY 

acquired 43% stake in AS Klementi. In 1999 P.T.A. Group OY became 

the parent company of AS Klementi; as of 01.01.2000 P.T.A. Group 

holds 54.26% stake in Klementi share capital;

- on 12.02.1999 the extraordinary general meeting of Klementi 

shareholders was held, to elect the company's new Supervisory 

Board. On the same day the Supervisory Board appointed a new 

Management Board to the company.

- in 1999 Klementi developed in Tallinn a chain of retailers for 

Klementi's production (5 stores).

 

 

2. Products

 

In 1999 the business activities of Klementi and its subsidiaries 

were based on three independent business areas, targeted to 

different markets:

- development, production and sales of women's apparel (trademarks 

KLEMENTI and REGINA)

- development, production and sales of professional apparel 

(trademark PROFLINE)

- subcontracting

 

The output of two first business areas are financed by AS Klementi 

(trademarks Klementi and Regina) and Klementi's subsidiary AS 

Profline (trademark Profline). Raw materials for subcontracting 

works are generally supplied and delivered by customer. 

In 1999 the company developed a new overcoat-line under trademark 

PIRETTA, to be launched in 2000.

 

The consolidated net sales of Klementi and its subsidiaries in 1999 

totaled EEK 106,155 thousand, or EEK 18,424 thousand (14.8%) less 

than in 1998.

Sales by business areas and other activities:

- women's apparel: EEK 57,894 thousand (54.5% of net sales); 

decline 22.4%;

- professional apparel: EEK 12,608 thousand (11.9%); decline 30.3%;

- subcontracting (with sale of services) EEK 33,313 thousand 

(31.4%); increase 13.7%;

- other (sale of materials, rent of premises, diner, etc.) EEK 

2,340 thousand (2.2%); increase 8.5%.

 

In 1999 the company sold its products (excluding subcontracting) 

for total of EEK 70,502 thousand (66.4% of total turnover),  incl. 

sale of women's apparel 82.1% and professional apparel 17.9%.

Overview of sales by markets is provided in the notes of the 

financial statements.

The expenses for development of new apparel lines in 1999 amounted 

to EEK 5,185 thousand, or EEK 1,689 thousand (48.3%) more than in 

1998.

 

 

3. Production

 

In 1999 the production activities of Klementi took place mainly in 

the company's production premises in Mustamäe, Tallinn (346 

workplaces for sewers).

The company's output volume in standard minutes (SM) was 22,908 

thousand SM, incl. 1,726 thousand SM bought from other apparel 

production companies.

In 1999 the Tallinn production unit of Klementi produced 22,752 

thousand SM, or 65.7 thousand SM per employee (in 1998 the 

respective numbers 61.6 thousand SM per employee, or 6.5% growth).

 

 

4. Suppliers

 

AS Klementi and its subsidiaries buy the necessary raw materials 

mainly from European companies, thus benefiting from tax-free 

import of products to European Union countries, and Latvia and 

Lithuania. Approximately 60 companies supply raw materials. 

Expenses on raw materials totaled EEK 37,028 thousand (34.9% of net 

sales), providing EEK 26,861 thousand or 42.0% y-o-y decline.

 

 

5. Personnel and Salaries

 

In 1999 Klementi and its subsidiaries employed an average of 675 

workers (17 persons less than in 1998, or 2.5% decline), including 

477 workers on production facilities (28 persons less than in 

1998). In 1999 personnel expenses with social security and health 

insurance taxes amounted to EEK 46,832 thousand, providing EEK 

1,389 thousand or 2.9% decline on annual basis. Personnel expenses 

accounted for 44.1% of net sales. Employee absence stood at 6.4% of 

annual standard worktime, whereas the respective figure among 

sewers was 8.4% (8.7% in 1998).

 

 

6. Investments

 

Investments made in 1999:

- tangible assets				EEK 5,886 thousand

- intangible assets			EEK 261 thousand

- real estate betterment		EEK 570 thousand

                   TOTAL:		EEK 6,717 thousand

 

The company bought technological equipment for total of EEK 2,302 

thousand. 

Investment to tangible and intangible assets include both lease and 

rent contract payments made before 01.01.1999 and during the year 

1999.

In 1999 Klementi acquired under new lease agreements mainly 

technological equipment for production facilities, for instance:

- accessories for cutting complex Lectra E 95 

- steamer with economizer Clayton SE 6-50

 

 

7. Real Estate Development

 

In 1999 the company continued to renovate and rent out its office 

premises at Akadeemia St. 33, Tallinn; a parking house next to the 

office building was completed. The company conducted real estate 

renovation and improvement works in 1999 for total of EEK 570 

thousand. Total volume of rent income in 1999 was EEK 914 thousand, 

or EEK 103 thousand (10.1%) less than in 1998.

 

 

8. Subsidiaries

 

AS Klementi has holdings in the following subsidiaries:

- OÜ Klementi Kinnisvara, share capital EEK 500 thousand, 100% 

owned by AS Klementi (administration of AS Klementi real estate 

objects);

- AS Profline, share capital EEK 2,500 thousand, 100% owned by AS 

Klementi (production of professional apparel);

- Klementi Trading OY (registered in Finland), share capital EEK 

131.6 thousand, 100% owned by AS Klementi (sale of AS Klementi 

production in Finland; activities were terminated in Q3 1999);

- AS Brendman, share capital EEK 100 thousand, 100% owned by AS 

Klementi (retail sales of women's apparel; did not operate in 1998 

and 1999).

 

 

9. Management and Supervisory Board

 

AS Klementi Management Board, as of 01.01.1999

- Madis Võõras - Management Board chairman

- Mare-Ann Perkmann

- Lilia Peets

 

As of 02.03.1999 AS Klementi Management Board consists of three 

members, including:

- Madis Võõras - Management Board chairman (managing director)

- Mare - Ann Perkmann (product development director)

- Ardo Kamratov - (director economic and administrative affairs) 

The Management Board held in 1999 altogether 40 meetings.

 

AS Klementi Management Board members are also the executive 

managers of the company. In 1999 the aforementioned persons 

received a total of EEK 1,116 thousand in salaries and additional 

payments, incl. EEK 144 thousand for participation in the work of 

Management Board.

 

As of 01.01.1999 the Supervisory Board of AS Klementi included: 

Ardo Kamratov, Tambet Mägi and Elmu Puidet.

 

As of 02.03.1999 the Supervisory Board of AS Klementi included: 

Kari Mattsson (P.T.A. Group OY), Risto Wartiovaara (Captum Group 

OY), Heikki Mäntynen (Captum Group OY), Andres Toome (AS Optiva 

Pank), Peeter Kross (Mainor MPS AS).

 

In 1999 the Supervisory Board held altogether 11 meetings. The 

Supervisory Board members were not remunerated in 1999.

 

 

Tiina Saarepuu

+372 67 10 718