SAKU ÕLLETEHASE AS       NEWS RELEASE           28.02.2005



Review of operations for Saku Brewery audited financial

results 2004



Highlights of 2004



In the past financial year Saku Õlletehase AS:

-     succeeded  in  retaining a leading position  in  the

  Estonian beer market (41.6%) despite rapid growth in the

  importance  of cheaper beers and strong alcohol  in  the

  alcohol market in general;

-    began canning Carlsberg in 0.5 litre containers and

attained a leading position in the imported beers segment;

-    increased exports to Finland four-fold. Since 1 May

Saku Originaal is distributed in Finland by the largest

Finnish brewery Sinebrychoff OY. The export containers of

Saku Originaal were included in the Finnish packaging

deposit system.

-    achieved a two-fold increase in the sales of cider

and long drink and increased related market share

considerably.



Market and consumption



Beer



According to the Estonian Breweries Association,  in  2004

the  Estonian  beer market grew 13.6%, largely  thanks  to

cheaper  beers,  including products in PET packaging,  and

purchases  by  Finnish tourists. Saku  Brewery’s  domestic

beer sales grew 11.6%.



Based   on   the   information   of   Estonian   Breweries

Association, in the past financial year Saku Õlletehase AS

retained  its  leading position with 41.6% of  the  market

(2003:  42.4%). By the year-end, the share of products  in

glass  bottles had declined to 51.7% (2003: 76.6%) whereas

the one of PET packaged products had grown to 34.1% (2003:

12.4%).  Increased purchases by Finnish tourists increased

the  share  of canned beer to 14.2% (2003: 10.9%)  of  the

total.



In  the  canned  segment, our market share  was  one  half

notwithstanding Finnish producers’ robust  penetration  to

the  Estonian market following Estonia’s accession to  the

EU.  We  entered the PET packaged beer market  in  October

2003  and  according to AC Nielsen in 2004  increased  our

share  in the segment four-fold (2004: 33.8%; 2003: 8.1%).

The  main  growth  driver was Presidendi line  in  2-litre

containers.

         

In  the  premium  segment our market share increased  from

49.8%  to  52.5%. Growth resulted largely from  successful

sales  of Carlsberg whose canning was launched in Saku  in

February  2004.  According to  AC  Nielsen,  in  the  past

financial  year  the  share of Carlsberg  in  the  premium

segment  of the Estonian retail beer market grew from  20%

to  28%. According to AC Nielsen, growth in Saku Brewery’s

share of the premium segment was also facilitated by  Saku

Valge,  which  at the year-end accounted  for  7%  of  the

segment.

         

In  the mainstream segment (which includes Saku Originaal,

A  Le  Coq Premium and Rock), Saku Originaal was the  only

major  brand which was able to maintain its market  share.

It also remained the most popular and best-sold beer brand

in Estonia.

         

In  the strong beers segment, we increased our share  from

38%  to 41%, largely thanks to successful sales of 2-litre

Presidendi 8.



Cider and long drink



In the past two years Saku Õlletehase AS has increased its

cider  and  long drink sales substantially, succeeding  in

diversifying its revenue base.



According to producers’ associations, in 2004 the domestic

cider  market grew 36.8% to 6.4 million litres (2003:  4.7

million litres). The share of our Kiss line increased from

24.4%  to  32.3%, mostly thanks to successful product  and

packaging  development. In terms of  litres,  cider  sales

doubled thanks to market growth and effective competition.

In September Kiss became market leader with a 36.6% share.

The  market  share of our draught cider grew from  34%  to

41%.



The  Estonian gin long drink market grew from 7.0  million

to  9.8  million litres (39.5%). According  to  producers’

associations,  the  market share of Saku  Gin  Long  Drink

leaped  from 13.1% in 2003 to 22.4% largely on account  of

successful  product and packaging development. Sales  more

than  doubled  thanks  to market growth  and  increase  in

market share.



Mineral water



According to our estimates, the mineral water market  grew

7.8%  to  37.4  million litres. The packaged water  market

grows  at  the expense of soft drinks thanks to consumers’

increasing awareness of a healthy lifestyle and a  decline

in the use of tap water. In 2004 the market grew first and

foremost thanks to cheaper lines (in 2004 the share of the

so-called  economy segment grew from 23.3% to  31.8%)  and

the  popularity of flavoured waters (during the  year  the

market  share  of  flavoured waters  grew  from  34.8%  to

37.1%).



On  the  basis  of  surveys by AC Nielsen,  in  2004  Saku

Brewery’s share in the water market remained stable (2003:

11.9%; 2004: 11.7%).



Soft drinks



According to our estimates, in 2004 the soft drinks market

grew 3.4%. Growth resulted mainly from an increase in  the

sales  of  cheaper local brands. The most  notable  growth

occurred  in local clear lemonades segment, which includes

classical  and local fruit flavoured brands. We  succeeded

in  increasing our market share from 4.7% to 7.6%, largely

thanks  to  strong sales of the Päikese  line,  which  was

launched  in 2003. In 2004 the share of Päikese  limps  in

the  clear  lemonades segment was 10.3% and the  share  of

Päikese kali in the kvass segment was 11.9%.



Performance and operating results



Saku  Õlletehase AS ended 2004 with revenues of EEK  531.6

million  (€34.0),  an EEK 67.5 million (€4.3  million)  or

14.5% improvement on 2003. Sales results improved both  in

the  domestic and export markets, especially in  the  beer

and   other   alcoholic  beverages  (cider,  long   drink)

segments.



In   quantitative  terms,  beverage  sales  totalled  68.1

million  litres, 20% up on 2003, domestic sales accounting

for  58.0  million  litres and exports  for  10.1  million

litres of the total. With sales of 46.0 million litres and

a 41.6% market share Saku Õlletehase AS remained leader of

the   Estonian  beer  market.  Other  alcoholic  beverages

accounted for 4.3 million litres of beverages sold in  the

domestic market, approximately 106% up on 2003.



Expenses grew by EEK 66.8 million (€4.3 million) or  16.7%

to  EEK  467.5 million (€29.9 million). The largest growth

occurred  in  the  cost  of  materials,  consumables   and

services,  mostly  because of an increase  in  output  and

sales.  In  the past financial year the share of  products

sold  in  one-way packaging (pet packaging, cans)  roughly

doubled.   Therefore,   related   packaging   costs   rose

substantially.  Increasing operating capacities  triggered

growth in transport and personnel expenses.



Operating  profit  for  the period amounted  to  EEK  64.1

million (€4.1 million), EEK 0.7 million (€0.04 million) or

1.1%  up  on 2003. Net profit amounted to EEK 50.0 million

(€3.2  million),  EEK 4.7 million (€0.3 million)  or  8.6%

down  from  2003.  Net  profit  formation  was  materially

affected  by  dividend tax, which due to the depletion  of

the   reserve   acquired   in  the   tax   reform   proved

approximately  twice  as large as in  2003.  Earnings  per

share amounted to EEK 6.25 (€0.40).



Our  direct  tax  burden  was  EEK  279.7  million  (€17.9

million),  including alcohol excise duties  of  EEK  174.3

million (€11.1 million).



Investment



In  2004  we  invested EEK 38.9 million (€2.5 million)  in

property, plant and equipment and intangibles. Investments

in production and lab facilities totalled EEK 28.4 million

(€1.8  million), the largest projects including completion

of  the  PET  line and technological upgrade of  the  brew

house.  Sales-related investments totalled EEK 9.0 million

(€0.6  million)  and  investments in  computer  hard-  and

software amounted to EEK 0.5 million (€34,000).



Perspective



Similarly to previous years, in 2005 our primary objective

is  to  remain leader of the Estonian beer market  and  to

continue  aggressive expansion in other beverage segments.

In  addition,  we  intend  to  sustain  sales  growth  and

innovative product and packaging development.



As  market leader, we are prepared to change the structure

of  the beer market and to improve the competitiveness  of

the  mainstream  and  premium segments through  innovative

product development and packaging solutions. We will focus

on  the  mainstream  and premium segments  but  expect  to

achieve  and  maintain  a strong position  also  in  other

segments.  Furthermore, we intend  to  sustain  aggressive

growth  in  other markets, especially those of  cider  and

long drink.



In  the  near  future  a  major development  will  be  the

packaging  deposit  system which will  apply  to  beverage

containers as of 1 May 2005. Under the Packaging  Act,  in

every  stage  of  use, returnable beverage containers  are

added  a  returnable container charge (a  deposit),  which

adds    value    to   the   containers.   On    successful

implementation,  the  system  will  improve  recovery   of

containers and consumers’ environmental awareness. In  the

foundation  of the packaging recovery organisation,  which

is  required for the system, Saku Õlletehase AS cooperates

with  AS  A.  Le Coq Tartu Õlletehas and AS Coca-Cola  HBC

Eesti   through   relevant  professional  and   industrial

associations.



In   2005   we  will  continue  investment  in  production

technologies   and   sales  support.  We   will   complete

investments in our water treatment plant, will  upgrade  a

part of the filling plant and will complete deposit-system

related adjustments to financial accounting software.

In an environment of sustained consolidation, we will

continue enhancing our internal competencies and will

further improve cooperation and knowledge sharing with the

Baltic and other companies of the BBH group.



BALANCE SHEET                                                 

(In thousands)                     EEK               €

                               31.12.   31.12.   31.12.   31.12.

                                2004     2003     2004     2003

                                                           

ASSETS                                                        

 Cash and bank balances       36,461   22,023    2,330    1,408

 Trade receivables (Note 2)   43,319   35,308    2,768    2,256

 Other receivables and         6,766    5,282      432      337

prepayments (Note 3)

 Inventories (Note 4)        109,674  113,652    7,009    7,264

TOTAL CURRENT ASSETS         196,220  176,265   12,539   11,265

                                                              

Non-current assets                                            

 Long-term financial          11,029   12,705      707      813

investments (Note 5)

 Property, plant and         239,295  245,843   15,293   15,712

equipment (Note 6)

 Intangible assets (Note 7)      596      719       38       46

TOTAL NON-CURRENT ASSETS     250,920  259,267   16,038   16,571

                                                              

TOTAL ASSETS                 447,140  435,532   28,577   27,836

                                                              

LIABILITIES AND EQUITY                                        

Current liabilities                                           

 Debt obligations (Note 8)      140      907        9       58

 Trade payables              16,266   12,226    1,039      782

 Other payables (Note 13)       471    4,600       30      294

 Tax liabilities (Note 9)    23,314   15,809    1,490    1,010

 Payables to employees        3,095    4,288      198      274

 Other accrued expenses       3,078    1,599      196      102

 Provisions (Note 10)        24,636   29,582    1,575    1,891

TOTAL CURRENT LIABILITIES    71,000   69,011    4,537    4,411

                                                              

Non-current liabilities                                       

 Finance lease liabilities               419                27

(Note 8)

TOTAL NON-CURRENT                        419                27

LIABILITIES

                                                              

Equity (Note 11)                                              

 Share capital               80,000   80,000    5,113    5,113

 Compulsory capital reserve   8,000    8,000      511      511

 Other reserves              44,070   44,070    2,817    2,817

 Retained earnings          194,032  179,262   12,401   11,457

 Profit for the period       50,038   54,770    3,198    3,500

TOTAL EQUITY                376,140  366,102   24,040   23,398

                                                              

TOTAL LIABILITIES AND EQUITY447,140  435,532   28,577   27,836

  

  



INCOME STATEMENT                                            

(In thousands)                       EEK                €

                                  2004     2003    2004     2003

                                                                

Revenue                                                         

 Sales revenue (Note 12)       530,865  463,362  33,928   29,614

 Other revenue (Note 14)           705      736      46       47

Total revenue                  531,570  464,098  33,974   29,661

                                                                

Expenses                                                        

 Change in work in progress     -6,105      453    -390       29

and finished goods

inventories

 Materials, consumables and    241,305  185,104  15,422   11,830

services (Note 15)

 Other operating expenses      125,292  112,158   8,008    7,168

(Note 15)

 Personnel expenses (Note 15)   58,081   52,091   3,712    3,329

 Depreciation and               45,025   46,216   2,878    2,954

amortisation charges (Notes

6, 7)

 Other expenses (Note 15)        3,915    4,688     250      300

Total expenses                 467,513  400,710  29,880   25,610

                                                                

OPERATING PROFIT                64,057   63,388   4,094    4,051

                                                                

 Financial income and               35     -936       2      -60

expenses (Note 16)

                                                                

PROFIT BEFORE TAX               64,092   62,452   4,096    3,991

                                                                

 Income tax expense (Note 18)   14,054    7,682     898      491

                                                                

PROFIT FOR THE PERIOD           50,038   54,770   3,198    3,500

                                                                

Basic earnings per share          6.25     6.85    0.40     0.44

(Note 17)

Diluted earnings per share        6.25     6.85    0.40     0.44

(Note 17)





Kristina Seimann

Communication Manager

+372 6 508 303





+372 6 508 303