Rakvere Lihakombinaat         FINANCIAL RESULTS                 10/28/2003



FINANCIAL RESULTS, 9 MONTHS 2003



RAKVERE LIHAKOMBINAAT GROUP

COMMENT ON FINANCIAL RESULTS

28.10.2003



FINANCIAL RESULTS, 9 MONTHS 2003 (1.1 - 30.09. 2003)



Group companies as on 30 September 2003:



                             of location     30.09.03        31.12.02

AS Rakvere Lihakombinaat 

(the parent company)            Estonia	

AS Ekseko                       Estonia         98,4%          98.2%

        AS Ekseko’s subsidiaries:

        OÜ Kurika Seafarm       Estonia         100%            100%

        OÜ Põlva Peekon         Estonia         100%            100%

        OÜ Viiratsi Söödatehas  Estonia         100%            100%

        OÜ Viiratsi Peekon      Estonia         100%

        OÜ Lutsu Seafarm        Estonia         100%	

AS Linnulihatooted              Estonia          76%             76%

AS Rigas Miesnieks              Latvia        93,82%          92,47%

OÜ Klaipedos Maisto Produktai   Lithuania       100%            100%

        OÜ Klaipedos Maisto Produktai subsidiary:

        OÜ Pentinuotis          Lithuania       100%            100%	

        OÜ Klaipedos Maisto 

           Prekyba              Lithuania       100%



As of 30 September 2003 Rakvere Lihakombinaat Group had 1,303 employees 

(1,264 employees as of 30 September 2002).



In the third quarter economic growth in the Baltics exceeded that of the 

EU countries. Due to the anticipated EU membership Baltic states' 

economise are in a situation characterised by highest ever reliability 

and practically similar interest rates with the EU.



International meat markets have seen a period of low prices resulting 

from cyclical developments in production. In the last weeks of September 

there has been some increase in prices which may predict a new turn. 

Strong euro has squeezed the export margins of EU originating products.



In the Baltic region of HK Group of companies measures have been 

introduced to respond to changing market circumstances. Overall 

situation on the raw material market coupled with pre-EU political 

protectionaism in the Baltics have caused some tensions on the meat 

products' market and pushed pork prices down in Estonia.



In September Rakvere Lihakombinaat was the first Estonian meat sector 

enterprise to receive EU approval for raw meat.



In Estonia Rakvere Group invested into environmental protection systems 

at Ekseko pig farm. In Latvia Rakvere Group continued investing into 

upgrading Rigas Miesnieks to EU standards and into constructing a 

logistics center to the Rigas Miesnieks facility.





Sales and financial results



The net sales of Rakvere Lihakombinaat Group in the first 9 months 

of 2003 totalled 856 million kroons or 

54 685 th. euros (915 million kroons or 58 449 th. euros in 2002). 

The net sales fell 6% by 58.9 million kroons (3 764 th. euros) as 

compared to last year. The sales volume total was 29.9 th. tons in 

the Baltic States. This constitutes a 0.7 th. ton or 2.4 % increase 

compared to last year.



The net profit of Rakvere Lihakombinaat Group was 33.9 million kroons 

or 2 170 th. euros (in 2002, adjusted and comparable data amounted to 

61.5 million kroons (3 928 th. euros). 

Highlights of financial results of Rakvere Lihakombinaat Group, 

millions of kroons (th. euros)



                   9 months 2003   9 months 2002   12 months 2002

                                                       adjusted*

-------------------------

Net sales          855.6 (54 685)  914.5 (58 449)  1 226.5 (78 389)				

Operating expenses 815.1 (52 098)  843.1 (53 886)  1 137.3 (72 687)   	   

Operating profit    40.5 ( 2 587)   71.4 ( 4 563)     89.2 ( 5 702)     

Net profit          33.9 ( 2 170)   61.5 ( 3 928)     75.8 ( 4 847)



Investments         59.0  (3 770)   43.2  (2 760)    73.8   (4 714)		        	



* A new standard - IAS 41: Agriculture - entered into force on 1 

January 2003. Pursuant to the standard, biological assets shall be 

recorded on the balance sheet at their fair value less point-of-sale 

costs and the income statement lays down the change in the fair value 

of biological assets. The corresponding change has also been introduced 

to the comparative data of the first 9 months of 2002 (operating profit 

growth of 2,3 million kroons or 150 th. euros, and net profit growth 

of 2,3 million kroons or 147 th. euros).





Forecast 



In the third quarter prices of pork have started to increase again on 

the Baltic market which is a promising sign for the coming months of 

the year. 

 

Import tariffs imposed by the Latvian Government affected pork exports 

from Estonia to Latvia. The fourth quarter foresees increase of export 

quotas and reduction of tariff rates from the Latvian side.





Made in Rakvere on 28 October 2003



Olle Horm

Rakvere Lihakombinaat

Chairman of the Board







RAKVERE LIHAKOMBINAAT GROUP 				

BALANCE SHEET 				

                                Thousand Estonian 	Thousand Euros

                                kroons				

ASSETS                          30.09.03    31.12.02	30.09.03   31.12.02

                                            adjusted              adjusted



				

Current assets				

Cash and bank                  42 680      15 259       2 728       975

Trade receivables              75 261      89 260       4 810     5 704

Tax receivables                 4 086       5 548         261       355

Other short-term receivables    2 837       6 199         181       396

Inventories                    90 375     100 274       5 776     6 409

Biological assets              58 209      59 481       3 720     3 802

Total current assets          273 448     276 021      17 476    17 640

				

Non-current assets				

Long-term financial assets      1 621       4 535         104       290

Tangible fixed assets         423 431     415 726      27 062    26 570

Other intangible assets         6 060       2 029         387       130

Total non-current assets      431 112     422 290      27 553    26 990

				

T OT A L  A S S E T S:        704 560     698 311      45 029    44 630

				

LIABILITIES AND OWNERS’ EQUITY				

				

Current liabilities				

Loans and lease payables        1 817       2 768         116       177

Supplier payables              67 490      68 566       4 313     4 382

Tax payables                    8 615      11 827         551       756

Other current liabilities      15 477      16 039         989     1 025

Total current liabilities      93 399      99 200       5 969     6 340

				

Long-term loans and 

lease payable                 121 262     142 821       7 750     9 128

Total liabilities             214 661     242 021      13 719    15 468

				

Minority interest               4 027       3 541         257       226

				

Owners’ equity				

Share capital                 377 217     377 217      24 108    24 108

Mandatory legal reserve         9 734       5 942         622       380

Retained earnings              98 976      68 820       6 326     4 399

Unrealised translation 

differences                       -55         770          -4        49

Total owners’ equity          485 872     452 749      31 053    28 936

				

TOTAL LIABILITIES AND 

OWNERS’ EQUITY :              704 560     698 311      45 029    44 630







RAKVERE LIHAKOMBINAAT GROUP				

INCOME STATEMENT				

                                Thousand Estonian      Thousand Euros

                                         kroons

                                 9 m 2003   9 m 2002   9 m 2003  9 m 2002

                                            adjusted             adjusted*

Revenue	

Net sales                        855 635     914 526    54 685    58 449

Change in fair value of 

biological assets                 -1 272       2 348       -81       150

Other revenue                      6 336       3 098       405       198

Total revenue                    860 699     919 973    55 009    58 797

				

Change in work-in-progress 

and finished goods                -4 153        -616      -265       -39

Materials, consumables and 

supplies                        -542 534    -579 127   -34 674   -37 013

Other operating expenses        -119 224    -117 404    -7 620    -7 503

Personnel expenses              -113 457    -111 047    -7 251    -7 097

Depreciation and write-downs 

of non-current assets            -37 932     -34 922    -2 424    -2 232

Other expenses                    -2 918      -5 459      -186      -349

				

Operating profit                  40 482      71 397     2 587     4 563

				

Financial income/expenses				

Net foreign exchange gain/loss      -745      -1 285       -48       -82

Interest and other 

financial income                   1 974       1 893       126       121

Interest and other financial 

expenses                          -7 782     -10 071      -497      -644

Total financial 

income/expenses                   -6 553      -9 463      -419      -605

				

Profit before taxes               33 929      61 935     2 168     3 958

Minority interest                    -19         477        -1        30

				

Net profit                        33 948      61 458     2 170     3 928

				

Earnings per share                  0,90        1,63     0,058     0,104





Olle Horm

Chairman of the Board

032 29 221