SANITAS

MATERIAL EVENT



INFORMATION RELEASE



On 10 August 2001 a meeting of the Supervisory board of AB Sanitas took place.

During the meeting the report of the Management Board and “Arthur Andersen”

auditors’ opinion for the first half of 2001 were analyzed. Upon the

recommendations of the audit company, AB Sanitas made technical provisions of

LTL 2.5m in its balance (long-term assets, i.e. recreation house in Palanga and

LAIB securities in Turto Bankas, were revalued at a valuation price. Provisions

for old debts for sold production in 1998-1999 as well as for remainder of

stock were made). Due to those provisions, AB Sanitas encountered a loss of

LTL 2m.

During last years, the company referred to debt recovering companies and has

been actively working in this field. Therefore, debts of the company are

decreasing and incoming cash flows are higher than the production realisation

amounts. In order to ensure a better management of financial risk, the company

reduced the number of its partners and uses commodity loan insurance.

The company successfully implements Development programme for 2001-2004,

reorganising its manufacture according to Good Manufacturing Practice (GMP)

equirements. This year the company concentrated its activities towards

acquiring license, technological process validation and modernising of

laboratories. In June of this year, the company started to build a boiler-room

for production of its own technological steam. This will allow the company to

save about LTL 25thou every month. In September of this year, AB Sanitas will

start to build modern warehouse and laboratory.

In 2004, when the requirements of the GMP will come into force in Lithuania,

AB Sanitas will fully implement the GMP requirements. In 2000, the company was

the first from the Baltic countries to receive ISO 9002 certificate.

Shareholders approved the decision to renovate the company and allocated

necessary financial means for that purpose. During 7 months of 2001, sales of

AB Sanitas comprised LTL 13.7m, total profit amounted to LTL 4.1m. During the

second quarter of the year, the company’s sales in Lithuania rose by 47%. Its

indirect export to Russia augmented as well.





Genovaitė Aliulienė

Head of Auth. Capital Service

8 (27) 223170