AS KALEV

ANNOUNCEMENT

 

COMMENTARY TO FINANCIAL RESULTS AS OF 30.09.1999

 

The economic situation of Kalev has improved during this year 

compared to the previous one. Although the figures in the 

consolidated income statement of AS Kalev reflect a loss of 14.4 

million EEK, it includes some 31.6 million EEK of provisions 

(including the provisions of subsidiaries and related companies in 

the amount of 17.6 million EEK) made mostly to cover the 

liabilities occurred during the Russian economic crisis in 

1997-1998. The consolidated profit of AS Kalev before provisions is 

17.2 million EEK for the financial year of 1999.

 

Income statement

The 9-month 1999 consolidated net turnover decreased by 74 million 

EEK compared to 1998 respectively, amounting to 237.2 million EEK 

at the end of the period. The net turnover of confectionery export 

decreased in nine months by 46.8% or 59.2 million EEK compared to 

the respective 1998 result. At the same time the Q3 1999 exports 

were in the same amount with Q3 1998, forming 35% of the total 

turnover (31% in Q3 1998). The domestic market turnover decreased 

by 8% or 13 million EEK compared to 1998 respectively, amounting to 

149.7 million EEK at the end of period. The decrease in domestic 

market turnover is explained by the decrease in market volume and 

unfavourably warm summer for the sales of confectionery. The 

company's market share in Estonia is at the same level with the 

share in 1998, that is 45%. The net turnover of subsidiaries and 

related companies formed 4.9% or 11.7 million EEK of the 9-month 

consolidated net turnover.

 

Regardless of the decrease in gross profit by 8.5 million EEK due 

to the decrease in market capacity, the profit margin increased by 

3.3% in comparison to 1998 respectively. The average price of goods 

increased by 8.3% compared to 1998 respectively due to a decrease 

in export share. The marketing costs decreased in nine months by 

7.5 million EEK compared to 1998 respectively. 

 

The trading income increased by 8.2 million EEK, including the 10.7 

million EEK profit earned from exchange rate changes. The business 

expenses totalled to 32.5 million EEK. The business expenses 

include the 10.4 million EEK loss from exchange rate change and 

17.8 million EEK from general provisions suggested by the auditors 

and 1.7 million of depreciation of wrapping material.

 

Financial costs decreased by 7.2 million EEK compared to the same 

period last year, as there have occurred no expenses in the 

amortisation of goodwill and recording of investments based on the 

equity method.

 

The financial results of subsidiaries and related companies are 

reflected in the income statement in total of -12.1 million EEK.

 

 

Balance sheet

Assets

Compared to nine months 1998, the balance volume decreased from 

330.8 million EEK to 261.5 million EEK. Working capital decreased 

from 206.4 million EEK to 118.5 million EEK. The decrease in 

working capital is partly due to the fall in net turnover and 

provision of liabilities. The decrease of stocks and other bonds as 

compared to 30.09.1999 is reflected in the 1998 financial year 

report in the amount of 5.7 million EEK due to the decrease in the 

value of securities portfolio. The change in 1999 has been -0.1 

million EEK.

 

Customer receivables have decreased from 67 million EEK to 37 

million EEK, which is partly due to the formation of the reserves: 

a general reserve of 1.6 million EEK from regular monthly 

provisions and a reserve of 4.9 million EEK of additional 

provision, as suggested by the auditors, were formed. The amount of 

various liabilities has decreased by 9.4 million EEK. The prepaid 

expenses for upcoming periods have decreased by 5.4 million EEK 

(including the income tax of the company returned by the tax 

office). The inventories  have decreased from 93.6 million EEK to 

51 million EEK (provision of 1.7 million EEK). The company's 

non-current assets have grown from 124.4 million EEK to 143 million 

EEK. That is due to the revaluation of non-current assets in 

accordance with the International Accounting Standards (land and 

buildings) by 62.2 million EEK, which has increased tangible assets 

to 135.3 million EEK.

 

Liabilities

The volume of the long-term liabilities has decreased by 32.9%, 

from 135 million EEK to 90.6 million EEK. The decrease has occurred 

on the basis of repayment schedule of long-term syndicated loan and 

on the expense of a 30 million EEK repayment made in May 1999.

 

The owner's equity has decreased by 17.5% from 127.6 million EEK to 

105.3 million EEK. That is due to a loss of 70 million EEK in Q4 

1998 and a loss of 14.4 million EEK during this year. At the same 

time the amount of owner's equity increased by a 62.2 million EEK 

due to revaluation of non-current assets reserve.

 

 

Andrus Koha

Financial Director

 

Eva Jaanson

Head Accountant

 

 

Tiina Altmets

Information Manager

+372 62 83 711