PRO KAPITAL

COMMENTARY TO FINANCIAL RESULTS



COMMENTARY TO GROUP FINANCIAL RESULTS, H1 2000



The H1 2000 unaudited balance sheet, income statement and commentary 

to the financial results of AS Pro Kapital Group, published via the 

information system of the Tallinn Stock Exchange on 29.09.2000, 

include the consolidated and unaudited results of the group.



The group's consolidated financial reports are compiled in line with 

the principles of International Accounting Standards (IAS).  

Consolidated financial reports include the results of subsidiary 

concerns where AS Pro Kapital holds at least 20% of shares or votes 

represented with shares. Consolidated financial reports of the 

subsidiary concerns include the results of companies, where the 

respective parent companies hold at least 20% of shares or votes 

represented with shares.



Consolidated financial reports include the results of subsidiary 

concerns Pro Kapital Eesti, Pro Kapital Latvia and Pro Kapital 

Vilnius. The group reports also reflect the assets and liabilities of 

Italian subsidiary concern Domina Hotel e Comproprieta Alberghiere. 



The group income statement does not include the income statement of 

Domina subsidiary concern since based on the accounting principles 

applied upon consolidation, AS Pro Kapital Grupp gained control over 

its subsidiary concern's revenues and expenses only at the end of H1.



AS Pro Kapital Grupp H1 2000 consolidated and unaudited net sales 

were EEK 118.6 million, where Pro Kapital Eesti consolidated net 

sales stood at EEK 84.4 mln and Pro Kapital Latvia consolidated sales 

at EEK 34.2 mln. 



The group's consolidated net sales figure reflects the sales prices 

of real estate objects for which notarial sales agreements have been 

made, real estate rental services, real estate related consultations 

and management and administration services. The turnover figure also 

reflects the sales prices of real estate objects sold under finance 

lease agreements.



AS Pro Kapital Grupp H1 2000 consolidated and unaudited net profit 

was EEK 0.8 million, where Pro Kapital Eesti consolidated net loss 

stood at EEK 3.1 mln, Pro Kapital Latvia consolidated net profit at 

EEK 5.0 mln, and Pro Kapital Vilnius consolidated net profit at EEK 

1.1 mln. 



The result of Pro Kapital Eesti is lower by amortization of goodwill 

in the amount of EEK 4.9 million, shown on the income statement 

account of general administrative expenses, in accordance with 

principles of IAS.



The preliminary sales agreements that are not calculated into H1 

turnover figure (not in line with the criteria for accounting of 

turnover) had a negative impact on the consolidated results of the 

subsidiary concerns. Also the companies that own real estate objects, 

which are conserved or in development stages and thus lack sales 

income to cover the administrative expenses, impacted negatively the 

daughter concerns' consolidated results.



The financial expenses grew on annual basis by EEK 10.4 mln. On the 

group's financial expenses account (EEK 17.5 mln), the interest 

expenses account for EEK 16.7 million. Growth in interest expenses 

was mainly due to EEK 6.8 million calculated interest from bonds 

issued by AS Pro Kapital Grupp, and higher interest payments due to 

additional loans taken by the companies in the group.



AS Pro Kapital Grupp consolidated balance sheet volume grew to 

EEK 2,124.9 mln by the end of H1 2000, up from EEK 1,041.2 mln as at 

31.12.1999. Substantial changes took place on the group's assets, 

liabilities and equity accounts due to acquisition of Domina 

subsidiary concern in H1 2000. More detailed review of changes in the 

group's financial statements from the aforementioned transaction are 

provided in Pro Kapital Group H1 intermediary report.





Ilona Saari

Management Board member

+372 614 4924