Tallinna Kaubamaja            FINANCIAL RESULTS                 03/01/2004



AUDITED FINANCIAL RESULTS FOR 2003



The Group



The consolidated net sales for the year 2003 were 1.76  billion kroons;

112.5 million euros (including the parent company 579.4 million kroons; 37

million euros). The increase in net sales was 15% during the year and the

increase in sales area was 15 %. The market share of Tallinna Kaubamaja

Group in the retail market was 6.5%, and by the end of 2003 an increase of

4% was made from year 2002 with 6.2% share.



The audited net profit of Tallinna Kaubamaja Group for 2003 was 66.1 million

kroons; 4.2 million euros with an increase of 21 million kroons; 1.3 million

euros or 47% over the net profit for 2002. The net profit margin was 3.8%

and the respective indicator of the previous year was 2.9%. Net profit per

share was 9.7 kroons; 0.6 euros in 2003 and 6.6 kroons; 0.4 euros in 2002.



The total assets of Tallinna Kaubamaja Group were 808.8 million kroons; 51.7

million euros as at 31 December 2003, showing an increase of 32.3 million

kroons;  2.1 million euros.



During the year 2003, the investments in tangible fixed assets were 38

million kroons; 2.4 million euros. Major investments include the expansion

of Merimetsa and Torupilli Selvers in the amount of 9.5 million  kroons; 0.6

million euros, the new cashier system in Tallinna Kaubamaja in the amount of

4.7 million  kroons; 0.3 million euros and the furniture and fittings for

Rocca al Mare Fashion Store in the amount of 6.3 million kroons, 0.4 million

euros.



The liabilities of the Group have been decreased by 27 million kroons; 1.7

million euros. The short-term liabilities decreased by 25.5 million kroons;

1.6 million euros and long-term liabilities by 24.6 million kroons; 1.6

million euros. As a positive effect to the cash flows the commercial credit

increased by 15.4 million kroons; 1 million euros.



The owners’ equity for the group was 435.3 million kroons; 27.8 million

euros as at 31 December 2003, i.e. 53.8% of assets.



The average number of employees was 1289 in 2003, showing an increase by 74

people or 6%.



The efficiency of the Group improved considerably in 2003: the net sales per

employee increased by 8% and the sales area per employees increased by 8.6%

over the previous year. The stock turnover improved by 14% in 2003.



The number of loyal customers holding the Partner card has increased by 25%

during 2003, reaching 116 000 private persons by the end of the year.



Outlook of the retail market in 2004



Similarly to 2003, there would be a considerable increase in retail space in

2004. The time-weighted increase in retail space in Tallinn in 2003 was 20%

(a year before the indicator was 13%).

During the same period the increase in the retail sales (excluding motor

cars and gasoline) was 9.6% according to preliminary statistics (16% a year

before). As a result, the increase in supply (of retail sales area) was 10%

bigger than the increase in demand (i.e growth in retail sales).



The time-weighted increase of sales area in 2004 will be ca 16%. In the

spring of 2004 two major shopping centres will be opened: Viru Centre and

Ülemiste Centre.



According to the estimates of Tallinna Kaubamaja, the growth in retail sales

in 2004 will be between 8,5 - 9% in comparison to year 2003. Thus, the

growth in supply similarly to the previous year exceeds the demand. This

tendency may in certain areas, especially in Tallinn, reduce somewhat the

rental rates for retail space.



The growth of hypermarkets will somewhat slow and at the same time the

number of supermarkets and local stores will increase because the customer

is expecting more personal shopping environment.  Retail sellers are

becoming more interested in county towns due to their development potential.



If food and convenience retail has experienced sales volumes concentration

in larger chains for years, then in 2004 the same tendency will intensify in

fashion trade; the opening of Viru and Ülemiste centre will raise the

average standard of fashion trade.



The pressure on the margin will continue. There will be an increasing need

to invest or to reinvest in sales area. The key factor will be service: the

potential among retail chains to compete by the argument of price is coming

to an end, the new criterion for differentiation will be the quality of

service.



Under the conditions of a limited market and falling margins, management of

the supply chain as well as coordination and cooperation among those

involved will gain more importance.  Because of this, as well as due to the

increasing popularity of local products among consumers, cooperation with

Estonian manufactures will increase. Current successful projects between

Estonian retailers and Estonian manufacturers and processors will be

extended.



Tallinn and Tartu Kaubamaja



In 2003, Kaubamaja abandoned its mission statement and vision, and came up

with a new purpose idea:



"Our objective is to add color and joy into people’s lives.  For that we are

creating inspiring city centers, meeting points, where we offer pleasant

experiences, goods and services that excite people’s senses and where they

become more beautiful, happier and wiser."



Based on the new purpose idea, the modernization of Kaubamaja is under way:

several large projects will be carried out, the portfolio of brands will

become wider and the visual merchandising as well as ways of selling will

change.



To give a clear signal of the changes through modern advertising patterns,

the logo and visual identity of Kaubamaja were replaced in August of 2003.



An important developmental milestone for Kaubamaja in 2003 was the opening

of a fashion store on the second floor of the Rocca al Mare Shopping Center.

The fashion store of Tallinna Kaubamaja offers medium-priced fashion and

personal items to the whole family that have gained popularity among our

loyal customers. The concept of the fashion store was created in order to

maintain and to grow the market share of the Group in Estonian retail

business.  Up to three more similar stores are planned to be opened in

upcoming years.



A very important part of the company’s activities was devoted to the project

"Kaubamaja 2004", according to which Tallinna Kaubamaja will expand its

sales area in the Viru Keskus (Viru Shopping Centre) which will open on

15April 2004.  The sales area of the Viru Keskus totals 23 000 m2, of which

Kaubamaja will lease about 7200 m2.  There will be over 70 stores in the

centre.  Together with the leased space in the Viru Keskus, the sales area

of Tallinna Kaubamaja will be about 14 5000 m2 (i.e. a 53% increase over the

previous year).



Kaubamaja will significantly expand the proportion of brands in total sales

of clothes: if until now the percentage of brand names has been around 40-50

(the rest were the sales of individual items, not brand collections), in the

new Tallinna Kaubamaja this will be close to 70%.  The following new brands

will be added: Calvin Klein, Mexx, Tom Tailor, GAS, Marc Aurel and More &

More for women, and S. Oliver, Mexx, Jeep, Stones, Calvin Klein and French

Connection for men.



Kaubamaja is becoming more recreational as well as family oriented.

Personal fashion advisors will be employed, and additional services will be

offered in the sales environment.  There will be four eating places and

children’s playground in Kaubamaja.



The implementation of the project "Kaubamaja2004" will provide a good base

for designing a new department store in Tartu.  The planning of the

selection of goods has started.  The new Tartu Kaubamaja will be the third

important developmental stage for Kaubamaja after the fashion store and the

project "Kaubamaja 2004".  The planned sales area in Tartu Kaubamaja is

about 7000 m2 (a three time increase over current space).



The main theme for Kaubamaja’s service in 2003 was service management and

renewal of service in light of the new purpose idea.  Differentiation in

service and its high quality need to become the source of Kaubamaja’s

successful competition.  The new ideas in service are pro-activity, positive

attitude, helpfulness and trust.



In the program of loyal customers, the policy to keep current loyal

customers by fulfilling their expectations better instead of focusing on

attracting new customers was taken.  The number of offers directed at

smaller client groups was increased.



To better keep track of stock, the system for the provision of inventories

was implemented and it was linked to the system of motivation.  This has

brought about an expected positive impact: in a year, the year-old

inventories have been reduced by 22%.



To more effectively use the retail space located in the town center, a

strategic partner LP-Logistika was hired to handle the store goods.  If the

cooperation is successful, the plan is to increase the volume of goods

handled and stored by LP-Logistika.



A-Selver



After following a period of rapid expansion in 2002, when the number of

Selver’s super and hyper markets doubled to 10 stores by the end of the

year, the year of 2003 was marked by stable development.  No new stores were

opened, but the Torupilli and Merimetsa Selvers expanded the sales area that

increased the sales area of the Selver chain by 1550 m2.



The key aspects for Selver in 2003 were repositioning in the market and

increasing the target customer base through winning over price sensitive

purchasers.  The above-mentioned events were of the main factors for Selver

to gain recognition and success in county centers located out of Tallinn.



In 2003, ten million purchases were made in the Selver chain, which was 53%

more than in 2002.



The production facility of Selver named Selveri Köök (Selver Couisine)

gained popularity in 2003.  The assortment was expanded, special preordering

system was introduced and the products sold under the name of Selveri Köök

were actively marketed, resulting in a 32% increase in the sales of Selveri

Köök over the prior year.



The advantage of A-Selver over the competing retail chains lies in the

combination of following factors:

  -   good prices

-   wide assortment

-   friendly and fast service

-   Estonian made goods and raw material

-   the assortment of Selveri Köök



In 2004, the Selver chain continues to expand in other towns of Estonia.  In

June, Saare Selver will open in Tallinna mnt. 67 in Kuressaare.  With the

opening of Saare Selver, 1221 m2 sales area will be added. At the beginning

of February 2004, the expansion of Tondi Selver, which started in 2003, was

completed totaling to additional 1548 m2 of sales area, resulting in a wider

assortment of foodstuffs and household goods . In place of two production

areas currently used, the company will open central kitchen in April 2004 in

the premises of Kadaka Selver. The purpose of the change is to make

production process more efficient and to increase the selection of products

offered by Selver Köök by 25%.



Short-term goal is to open Selvers in Tartu and Narva



TALLINNA KAUBAMAJA KINNISVARA



The fixed assets belonging to Tallinna Kaubamaja Kinnisvara have been rented

out under operating lease terms to the companies of Tallinna Kaubamaja Group

(Tallinna Kaubamaja and A-Selver).



In 2003, the development in Tartu Riia 1, Vanemuise 2 and Küüni 14

(Hansakvartal) was continued with a purpose to construct new Tartu

Kaubamaja. During the year, additional archeological excavations were

performed, existing constructions were demolished  and design work for new

building started. Other investments of the company were mainly directed

toward preparation of renovation work for the Gonsiori 2 building in Tallinn

and expansion of Pirita Selver.



In 2004, the design work for Tartu Kaubamaja will continue and the

construction of the building will start. The company is planning to find

tenants who will support and supplement the product selection of Tartu

Kaubamaja. In addition, the company is planning to expand Pirita Selver, to

find new projects to meet the needs of Selver chain, and to renovate the

Tallinna Kaubamaja’s B section.



TALLINNA KAUBAMAJA AS

Consolidated audited balance sheet: the Group

                     in thousands of EEK/EUR

                      31.12.03            31.12.02

                      The Group           The Group

 ASSETS                  EEK       EUR       EEK       EUR

Current assets

Cash and bank             73 311    4 685     34 258    2 189

Trade receivables          8 419      538     10 250      655

Other receivables          4 159      266      3 454      221

Accrued income                33        2         98        6

Prepaid expenses           2 136      137      7 611      486

Inventories              175 971   11 247    163 442   10 446

Total current assets     264 029   16 875    219 112   14 004

Non-current assets

L-T financial assets

Shares of assoc. co.       5 427      347      3 943      252

Long-t receivables fr     12 028      769     12 028      769

Total L-T fin. ass.       17 455    1 116     15 971    1 021

Tangible fixed ass.      528 234   33 760    542 744   34 688

Intangible assets           -938      -60     -1 384      -88

Total L-T assets         544 751   34 816    557 331   35 620

TOTAL ASSETS             808 779   51 690    776 443   49 624



LIABILITIES AND

OWNERS’ EQUITY

Debt liabilities          50 653    3 237     76 192    4 870

Customer prepaym.          4 820      308      3 648      233

Supplier payables        163 562   10 453    148 158    9 469

Other payables            35 384    2 261     28 739    1 837

Total current liab.      254 419   16 260    256 737   16 408

L-T debt liabilities     119 029    7 607    143 663    9 182

Total liabilities        373 449   23 868    400 400   25 590

OWNERS’ EQUITY

Share capital             67 882    4 338     67 882    4 338

Statutory reserve          7 269      465      7 269      465

Asset reval. reserve     152 016    9 716    156 490   10 002

Retained earnings        142 088    9 081     99 390    6 352

Profit for the per.       66 075    4 223     45 012    2 877

Total equity             435 331   27 823    376 044   24 034

TOTAL LIAB. AND

OWNERS’ EQUITY           808 779   51 690    776 443   49 624





TALLINNA KAUBAMAJA AS

Consolidated audited balance sheet: the Parent Company

                     in thousands of EEK/EUR

                      31.12.03            31.12.02

                       Parent              Parent

 ASSETS                  EEK       EUR       EEK       EUR

Current assets

Cash and bank             40 954    2 617     26 267    1 679

Trade receivables          1 769      113      2 336      149

Other receivables          4 919      314     52 710    3 369

Accrued income                32        2         98        6

Prepaid expenses           1 034       66        848       54

Inventories               67 614    4 321     68 500    4 378

Total current assets     116 322    7 434    150 759    9 635

Non-current assets

L-T financial assets     387 443   24 762    349 802   22 356

Shares of assoc. co.       5 427      347      3 943      252

Long-t receivables

from ass. Co.s            12 028      769     12 028      769

Total L-T fin. ass.      404 898   25 878    365 773   23 377

Tangible fixed ass.       19 409    1 240     12 994      830

Total L-T assets         424 307   27 118    378 767   24 208

TOTAL ASSETS             540 629   34 553    529 527   33 843



LIABILITIES AND

OWNERS’ EQUITY

Debt liabilities          35 000    2 237     55 109    3 522

Customer prepaym.          3 019      193      1 710      109

Supplier payables         49 613    3 171     45 299    2 895

Other payables            17 666    1 129     16 364    1 046

Total current liab.      105 298    6 730    118 483    7 572

L-T debt liabilities           0        0     35 000    2 237

Owners’ equity

Share capital             67 882    4 338     67 882    4 338

Statutory reserve          7 269      465      7 269      465

Asset reval. reserve     152 016    9 716    156 490   10 002

Retained earnings        142 088    9 081      99390     6352

Profit for the per.       66 075    4 223      45012     2877

Total equity             435 331   27 823     376044    24034

TOTAL LIAB. AND

OWNERS’ EQUITY           540 629   34 553     529527    33843



TALLINNA KAUBAMAJA AS

Consolidated audited profit and loss statement: the Group



                     in thousands of EEK/EUR

                        2003                2002

                      12 months           12 months

                     The Group           The Group

                         EEK       EUR       EEK       EUR

Operating income

Net sales              1 760 768  112 534  1 532 325   97 933

Other op. income          43 815    2 800     41 689    2 664

Total op. income       1 804 583  115 334  1 574 014  100 598

Operating expenses

Cost of goods sold    -1 330 289  -85 021 -1 147 961  -73 368

Other op. expenses      -193 087  -12 341   -177 111  -11 319

Personnel expenses      -148 049   -9 462   -130 413   -8 335

Depreciation             -52 376   -3 347    -55 319   -3 536

Depr. of  goodwill           446       28        329       21

Other expenses            -6 604     -422     -8 168     -522

Total op. expenses    -1 729 959 -110 565 -1 518 643  -97 059

Operating profit          74 624    4 769     55 371    3 539

Financial inc & exp

Fin. inc & exp. on

shares in associates       1 484       95      1 099       70

Interest inc & exp        -9 923     -634    -11 288     -721

Other fin. Inc&exp          -109       -7       -169      -11

Net profit                66 075    4 223     45 012    2 877



TALLINNA KAUBAMAJA AS

Consolidated audited profit and loss statement: the Parent



                     in thousands of EEK/EUR

                        2003                2002

                      12 months           12 months

                       Parent              Parent

                         EEK       EUR       EEK       EUR

Operating income

Net sales                579 386   37 030    584 597   37 363

Other op. income          41 344    2 642     44 557    2 848

Total op. income         620 730   39 672    629 153   40 210

Operating expenses

Cost of goods sold      -414 794  -26 510   -421 321  -26 927

Other op. expenses      -107 261   -6 855   -109 039   -6 969

Personnel expenses       -57 598   -3 681    -57 705   -3 688

Depreciation              -7 648     -489    -12 622     -807

Other expenses            -5 221     -334     -4 682     -299

Total op. expenses      -592 522  -37 869   -605 369  -38 690

Operating profit          28 208    1 803     23 784    1 520

Financial inc & exp

Fin. inc & exp. on

shares in subsid.         37 641    2 406     22 342    1 428

Fin. inc & exp. on

shares in assiciates       1 484       95      1 099       70

Interest inc & exp        -1 180      -75     -2 090     -134

Other fin. expenses          -78       -5       -122       -8

Net profit                66 075    4 223     45 012    2 877





Katrin Mühls

CFO

+372 6673 200