TALLINNA KAUBAMAJA

COMMENTARY TO FINANCIAL RESULTS



COMMENTARY TO FINANCIAL RESULTS, H1 2000



In Q2 Tallinna Kaubamaja AS made changes to the accounting 

principles, according to which the company's land and buildings will 

be carried at market value on the balance sheet. Fixed assets' 

revaluation reserves will be shown on the balance sheet owners equity 

account. No changes have occurred in the group's holdings in its 

subsidiaries or the group's structure. The financial reports of 

subsidiaries are consolidated row-by-row, by eliminating reciprocal 

receivables, liabilities and transactions. Results of affiliated 

company (Rävala Parkla AS) are consolidated under equity method, i.e. 

only Kaubamaja's share of subsidiary's financial result is reflected 

in the group reports. The half-year financial statements are 

unaudited.



H1 2000 was a successful one for Tallinna Kaubamaja. The concern's 

net sales during the reporting period amounted to EEK 494.5 mln, 

providing 14% or EEK 61 mln growth y-o-y (H1 1999: EEK 433.6 mln). 

Growth in sales was supported by opening of youth department of 

Tallinna Kaubamaja in February this year, and opening of Pirita 

Selver in May this year, also by significant growth in reputation of 

Kadaka Selver among the consumers. AS A-Selver H1 net sales grew by 

34% or EEK 42.5 million on annual basis (ca 25% of which was 

contributed by Pirita Selver). In H1 the group earned EEK 16.6 

million of net profit, which is EEK 10.2 million more than in H1 1999 

(EEK 6.4 million). Substantial increase in profit figure was mainly 

from increased sales and active marketing. The client base of most of 

the companies in the group has grown.



In H1 the group balance sheet size grew by EEK 244.2 million, 

amounting to EEK 621.4 million on 30.06.2000. Growth in balance sheet 

size was mainly due to application of new principles of reflection of 

value of real estate. Owners' equity account now also includes the 

revaluation reserves account in amount of EEK 168.9 mln. As at 

30.06.2000 the company's owners' equity account volume was EEK 332.8 

mln. Due to revaluation of real estate, also the fixed assets were 

discounted in the amount of EEK 5 mln (reflected on income 

statement's depreciation of fixed assets account).



Earnings per share stood at EEK 2.45 as at 30.06.2000.



In April the shareholders annual general meeting made the following 

decisions:

 - to increase the number of Supervisory Board members;

 - elect new Supervisory Board members;

 - to appoint PriceWaterhouseCoopers to audit the company's financial 

reports in year 2000;

 - to pay dividends EEK 1 per share (total EEK 6,778,200).



On May 23 Pirita Selver was opened. Unfortunately the new Selver was 

opened during the time period when number of bomb threats made to 

service companies grew substantially. During the first month of 

operating Pirita Selver received altogether seven bomb threats, which 

had a significantly negative effect on the store's reputation among 

the customers. For the same reason the company also had to postpone 

the launch of Drive-In (ordering of foodstuff via internet) service. 

As of today, however, the Drive-In service has been launched.



On July 7 Tallinna Kaubamaja issued discount bonds in total value of 

EEK 14.3 mln; the maturity date is 07/12/2001. Proceeds from bond 

issue will be used for opening of Järve Selver. Construction of the 

building of Järve Selver is in the final stages and on schedule. 

Major part of the furniture and equipment for the store has been 

ordered; selection of personnel is currently in progress.





Urmo Vallner

Management Board member

+372 64 00 200