Kalev                         FINANCIAL RESULTS                 05/28/2003



FINANCIAL RESULTS 9 MONTHS 2002/2003



COMMENTS ON FINANCIAL RESULTS



The consolidated net sales of Kalev Ltd in the first 9 months 

of the financial year totalled 265.9 million kroons (nearly 

17 million euros), which exceeds the net sales of the same 

period last financial year* by 27.3 million kroons or 11.5% 

(in 2001/2002 - 238,6 million kroons or 15.2 million euros).



The consolidated net profit of the company in the first 

9 months amounted to 17.9 million kroons (1.1 million euros), 

which constitutes a decrease of nearly 7 million kroons (or 

nearly 27%), compared to the same period last financial year. 

Decrease in net profit was conditioned by the employment of 

additional sales staff in August as well as the sudden 

increase of raw material costs. Increase of raw material 

costs resulted from the price increase of an important raw 

material - cocoa beans - at the world market. In the first 

9 months of the financial year, the costs of Kalev Ltd on 

cocoa beans increased by approximately 13 million kroons, 

compared to the same period last financial year.



The sales of Kalev Ltd on the home market were rejuvenated by 

active marketing activities, employment of additional sales 

staff, as well as growth in the number of customers in 

connection with the application of the direct distribution 

system.



In the given period, the company launched several new products 

to the market (including the Valik handmade chocolates in 

metal boxes, which are mainly targeted to the tourist segment, 

and the Vana Tallinn gift box). In October, Kalev Ltd launched 

the 2002 Christmas collection, which converged traditional 

Christmas products (different chocolates and boxed chocolate), 

the "Päkapikutajad" collection targeted to children, and new 

products launched in Christmas (e.g. Zürii candies). In 

co-operation with the Estonian Puppet Theatre, the children’s 

Christmas play "Päkapikutajad" was performed in December on 

the premises of Kalev Ltd. Nearly 23,000 people came to see 

the show. According to the research conducted by AS Emor, 

seven out of ten Estonians bought a Christmas product of 

Kalev Ltd at Christmas 2002 or at the turn of the year. 

Chocolates of different sizes proved to be the most popular 

product.



In the beginning of 2003, Kalev Ltd introduced three new 

candies: Banaani, Moonike and Marja. In February, the company 

launched a selection of Valentine’s Day products, which 

included, among other products, the Flirt boxed chocolate, 

which was very well received by the customers. The sales of 

Valentine’s Day products of Kalev Ltd increased by 84% in 2003, 

compared to the Valentine’s Day sales in 2002.



According to the Retail Sales Inventory Survey conducted by 

the market research company AC Nielsen, Kalev Ltd’s share in 

the Estonian retail trade was 54.5% as at the end of January 

2003. This constitutes an increase of 6.2%, compared to last 

financial year, Kalev’s share in the chocolate confectionery

group increased by 2.8% to 58.4%.



Sales of confectionery products of Kalev Ltd totalled 5,471 

tons in the first 9 months of the financial year, and increase 

by approximately 5%, compared to the same period last financial 

year. Home market constituted 80% of the total sales; 20% of 

the sales were exported. In the given period, Latvia and the 

Ukraine remained the main export countries of the company. In 

addition to the above countries, Kalev Ltd also exported its 

products to Russia, Scandinavian countries and the United 

States.



Chocolate confectionery products (chocolate candies, chocolate 

bars and boxed chocolate) constituted 68% of the total sales of 

confectionery products of Kalev Ltd in the first 9 months of 

the financial year.



In the given period, the company actively continued the 

construction of the new plant building in Põrguvälja, Rae Parish, 

Harjumaa. The warehouse for finished goods was completed in the 

new plant building of Kalev Ltd in February 2003. The company 

plans to move its operations to the new location between May 

and July and put the new plant into operation sometime between

July and September 2003.



The company’s marketing expenses increased by 13 million kroons 

(nearly 40%), compared to the same period last financial year. 

This was caused, first and foremost, by the increase in the 

number of employees of the Sales Department.



In 2001, the management of the company deemed it necessary to 

increase, during the year, the provisions for write-off of 

inventories as well as provisions for doubtful debts in the 

total amount of 16.8 million kroons (11.8 million kroons in 

the 1st half-year and 5 million kroons in the second half-year).

General administrative expenses increased by the establishment 

of the above reserves. In the end of the financial year (in 

December 2001), the management decided to account for the 

reserves as operating expenses in the income statement. 

Therefore, the general administrative expenses in 2001/2002 

and 2002/2003 cannot be compared.



The consolidated gross profitability of Kalev Ltd in the first 

9 months of the financial year was 32.2%, which constitutes a 

decrease of 4.7%, compared to the same period last financial year. 

The main reason for the decrease of gross profitability was the 

43% price increase of an important raw material (cocoa beans), 

compared to the same period last financial year.



In the first 9 months of the financial year, the average number 

of employees of Kalev Ltd amounted to 592, which constitutes an 

increase of nearly 10%, compared to the same period last 

financial year. In October 2002, employer’s obligations arising 

from employment contracts concluded with the employees of AS Paide 

Piimakombinaat were transferred to Kalev Ltd. At the same time, 

the number of Kalev Ltd’s employees was also influenced by the 

increase in the staff of the Sales Department by 49 employees.

_______________________________

* From 1 July 2001 to 31 March 2002







BALANCE SHEET (consolidated, unaudited)

In kroons



ASSETS                         31.03.2003   30.06.2002

                                       

CURRENT ASSETS                          

CASH AND BANK ACCOUNTS          1 138 053    3 476 327

CUSTOMER RECEIVABLES           39 630 988   32 244 225

                                      

OTHER RECEIVABLES              91 666 709    9 692 416

                                       

PREPAID EXPENSES               11 917 363    3 333 224

                                       

INVENTORIES                    57 695 522   48 968 656

                                       

TOTAL CURRENT ASSETS          202 048 634   97 714 848

                                       

                                                    

NON-CURRENT ASSETS                                  

OTHER LONG-TERM RECEIVABLES        887 180     887 180

LONG-TERM FINANCIAL                      0   2 764 416

INVESTMENTS

TANGIBLE ASSETS                225 000 168 166 533 651

                                      

REAL ESTATE INVESTMENTS         18 063 950  69 266 253

                                       

INTANGIBLE ASSETS                  242 357     290 378

TOTAL NON-CURRENT ASSETS       244 193 654 239 741 878



                                                    

TOTAL ASSETS                   446 242 289 337 456 726

                                       

                                                    

LIABILITIES AND EQUITY                              

                                                    

LIABILITIES                                         

PAYABLES                        3 059 520   33 891 332

                                                

CUSTOMER PREPAYMENTS               93 347       53 274

PAYABLES TO SUPPLIERS          72 211 471   35 565 238

                                      

TAX LIABILITIES                14 441 582    3 997 352

                                      

OTHER LIABILITIES              11 030 542   33 826 371

                                      

TOTAL CURRENT LIABILITIES     100 836 463  107 333 567

                                       

                                                    

LONG-TERM LIABILITIES          98 132 951   21 000 000

                                   

OTHER LONG-TERM PAYABLES       25 805 783    5 120 672

                                     

TOTAL LONG-TERM LIABILITIES   123 938 734   26 120 672

                                    

                                                    

EQUITY                                            

SHARE CAPITAL                   78 775 000  78 775 000

                                     

REVALUATION RESERVE            112 812 302 112 812 302

                                      

RETAINED EARNINGS                          -18 341 560

                                                

LEGAL RESERVE                    1 537 837          

PROFIT FOR THE YEAR-ENDED       10 392 119         

                                      

PROFIT FOR THE FINANCIAL        17 949 834  30 756 745

YEAR                                   

TOTAL EQUITY                   221 467 092 204 002 487

                                  

                                                    

TOTAL LIABILITIES AND EQUITY   446 242 289 337 456 726

                                       







BALANCE SHEET (consolidated, unaudited)

In euros



ASSETS                          31.03.2003  30.06.2002

                                           

CURRENT ASSETS                   

CASH AND BANK ACCOUNTS              72 735    222 177

CUSTOMER RECEIVABLES             2 532 875  2 060 776

                                               

OTHER RECEIVABLES                5 858 556    619 457

PREPAID EXPENSES                   761 656    213 031

INVENTORIES                      3 687 406  3 129 660

                                               

TOTAL CURRENT ASSETS             12 913 228 6 245 101

                                                

                                                   

NON-CURRENT ASSETS                                 

OTHER LONG-TERM RECEIVABLES         56 701     56 701

LONG-TERM FINANCIAL                      0    176 678

INVESTMENTS

TANGIBLE ASSETS                 14 380 095 10 643 413

                                              

REAL ESTATE INVESTMENTS          1 154 494  4 426 909

                                               

INTANGIBLE ASSETS                   15 489     18 558

TOTAL NON-CURRENT ASSETS        15 606 779 15 322 259

                                               

                                                   

TOTAL ASSETS                    28 520 007 21 567 361

                                               

                                                   

LIABILITIES AND EQUITY                             

                                                   

LIABILITIES                                        

PAYABLES                           195 538  2 166 045

                                                

CUSTOMER PREPAYMENTS                 5 966      3 405

PAYABLES TO SUPPLIERS            4 615 142  2 273 027

                                                

TAX LIABILITIES                    922 983    255 477

OTHER LIABILITIES                  704 978  2 161 894

                                               

TOTAL CURRENT LIABILITIES        6 444 608  6 859 848

                                              

                                                   

LONG-TERM LIABILITIES            6 271 823  1 342 141

                                                

OTHER LONG-TERM PAYABLES         1 649 286    327 270

TOTAL LONG-TERM LIABILITIES      7 921 109  1 669 411

                                                

                                                   

EQUITY                                           

SHARE CAPITAL                    5 034 627  5 034 627

                                                

REVALUATION RESERVE              7 210 002  7 210 002

                                               

RETAINED EARNINGS                        0 -1 172 236

                                               

LEGAL RESERVE                       98 285         

PROFIT FOR THE YEAR-ENDED          664 176         

PROFIT FOR THE FINANCIAL         1 147 201  1 965 709

YEAR                                           

TOTAL EQUITY                    14 154 291 13 038 102

                                             

                                                   

TOTAL LIABILITIES AND EQUITY    28 520 007 21 567 361

                                                







INCOME STATEMENT (consolidated, unaudited)

In kroons

                          01.07.2002-  01.07.2001-

                          31.03.2003   31.03.2002

                               

NET SALES                 265 907 721  238 566 086

                              

                                               

COST OF GOODS SOLD        180 403 200  150 709 071

                                 

                                               

GROSS PROFIT                85 504 522  87 857 015

                                               

MARKETING EXPENSES          44 978 076  32 024 734

ADMINISTRATION EXPENSES     24 708 830  14 889 109

OTHER INCOME                22 070 888     606 380

OTHER EXPENSES              12 326 698  12 851 088

                                               

OPERATING PROFIT            25 561 805  28 698 466

                                               

FINANCIAL INCOME               576 992     112 286

FINCANCIAL EXPENSES          8 188 963   4 067 314

                                               

NET PROFIT                  17 949 835  24 743 437

                                               

EARNINGS PER SHARE                2.28      3.14





INCOME STATEMENT (consolidated, unaudited)

In euros

                         01.07.2002-   01.07.2001-

                         31.03.2003    31.03.2002

                              

NET SALES                 16 994 557  15 247 113

                                               

COST OF GOODS SOLD        11 529 836   9 632 041

                                               

GROSS PROFIT               5 464 721   5 615 072

                                               

MARKETING EXPENSES         2 874 616   2 046 748

ADMINISTRATION EXPENSES    1 579 178     951 585

OTHER INCOME               1 410 583      38 755

OTHER EXPENSES               787 818     821 332

                                               

OPERATING PROFIT           1 633 693   1 834 162

                                               

FINANCIAL INCOME              36 876       7 176

FINANCIAL EXPENSES           523 369     259 948

                                               

NET PROFIT                 1 147 201   1 581 390

                                               

EARNINGS PER SHARE               0.15      0.20





Ruth Roht

PR manager

+372 6 28 38 58