KALEV

ANNOUNCEMENT



SALE OF HOLDINGS IN SUBSIDIARIES



In accordance with AS Kalev development strategies for year 2000, the 

company sold its holdings in Russian and Ukrainian subsidiaries 

Tsharodeika and Logistical Center of Ukraine (LCU). The sales 

agreements were made on 17.08.2000 and 31.10.2000, respectively.



Tsharodeika and LCU were sold with an aim to clear the company's 

balance sheet. The provisions to cover the losses posted by 

subsidiaries were made to AS Kalev financial reports during the 

previous periods, and are also reflected in the company's 1999 

financial reports.



Currently the aforementioned subsidiaries' impact on AS Kalev 

financial statements is insubstantial. The subsidiaries' turnover and 

assets volume account for less than 5% of AS Kalev audited results. 

As at the end of 1999 Tsharodeika's and LCU's fixed assets accounted 

for 0.45% and 0.99% of the group's fixed assets, respectively.



AS Kalev had 56% holding in Kaliningrad's confectionery Tsharodeika, 

and 100% holding in Ukrainian foodstuff wholesaler LCU. Kalev 

currently seeks ways to sell its Russian subsidiary Bogatõr, whereas 

provisions to cover Bogatõr's losses have been made to AS Kalev 

financial reports during the previous periods, and are also reflected 

in the company's 1999 financial reports.



This year AS Kalev has also been interested in selling its holdings 

in Russian and Ukrainian subsidiaries, and to invest the proceeds in 

the successfully operating parent company. In year 2000 Kalev focused 

its activities on stable domestic market and exported mainly to the 

Baltic markets through the parent company. In the framework of the 

second marketing strategy, the company evaluates opportunities to 

enter in the future to sweets markets with higher purchasing power, 

as opposed to the current eastern-directed development strategies. 



In 1999 AS Kalev posted EEK 43 mln loss. However, after transition to 

management-by-objectives the company posted in H1 2000 EEK 5.9 mln 

net profit (EEK 5.8 mln y-o-y growth), and had EEK 158 mln net 

turnover (5% y-o-y growth). Currently Kalev is the leader on Estonian 

sweets market with over 45% market share.



Sale of subsidiaries cannot be treated as transaction with related 

parties.





Kristina Seimann

Public Relations Manager

+372 62 83 858