Kalev                         FINANCIAL RESULTS                         01.12.2004



COMMENTS ON FINANCIAL RESULTS, 3 MONTHS 2004/2005



Characteristic indicators for the 1st quarter of  the  financial  year  2004/2005,

compared to the 1st quarter of the financial year 2003/2004:



    . Increase in revenue: 2.5 times (104.5 million  kroons  -  i.e.  6.7  million

      euros);

    . Increase in confectionery product revenue: 1.2 times (12.6 million kroons  -

      i.e. 0.8 million euros);

    . Increase in export revenue: 7.1  times  (68.3  million  kroons  -  i.e.  4.4

      million euros);

    . Increase in revenue per employee: 1.9 times (0.12 million kroons - i.e.  7.7

      thousand euros);

    . Increase in confectionery products sold: 1.7 times (1,048 tons);

    . Dairy products sold: 3,900 tons (79 million kroons - i.e. 5 million euros);

    . Increase in net profit: 15.9 million kroons - i.e. 1 million euros;

    . Changes in the group structure



Group structure



In this 3-month interim report, the financial indicators  of  Kalev  Ltd  and  its

subsidiaries have been consolidated line by line.



The Kalev Group incorporates the parent company Kalev Ltd and six subsidiaries.



 Name of subsidiary                      Location    Share as of    

                                                     30.09.2004     

 AS Kalev Paide Tootmine                 Estonia     100%           

 AS Kalev Jõhvi Tootmine                 Estonia     99.1%          

 AS Vilma                                Estonia     60.7%          

 AS Kalev Real Estate Company (AS Kalev  Estonia     59.3%          

 REC)                                                               

 OÜ Maiasmokk                            Estonia     81.3%          

 Kalev Merchant Services Ltd             USA         100%           



On 1 July 2004, Kalev Ltd acquired 60.6746% of the shares  (i.e.  436,857  shares)

of Viljandi  bakery  AS  Vilma,  which  currently  manufactures  baked  goods  and

confectionery products as well  as  semi-manufactured  flour  products  under  the

Vilma trademark. The objective of the purchase of the shares of AS  Vilma  was  to

expand  the  activities  of  Kalev  Ltd  in  the  flour  confectionery  sector  in

accordance  with  the  company's  long-term  development  strategy.  The  majority

interest acquired in AS Kalev Jõhvi Tootmine (formerly known as AS Järle)  at  the

end of 2003 was Kalev Ltd's first step towards this objective.



Product sales



In the first three months of the financial year 2004/2005, the main focus  of  the

marketing and sales activities of KALEV Ltd lay in the  preparation  of  Christmas

sales.



New products launched by Kalev Ltd in the given  period  include  chocolate-coated

cocoa-flavoured pralines, boxed chocolate Athena  and  biscuits  Tähekesed.  Kalev

Ltd also brought the biscuit series manufactured by AS Kalev Jõhvi Tootmine  under

the Kalev trademark, and modernised several dark bread and  white  bread  packages

of AS Kalev Jõhvi Tootmine. In co-operation with AS EMT, the  company  launched  a

new product - POP-biscuits - for young sweet tooths.



According to the retail survey conducted by AC Nielsen Eesti, Kalev  Ltd's  market

share was 44.7% in August and September 2004, as regards  chocolate  confectionery

and sugar confectionery products. In the  biscuit  sector,  the  company's  market

share was 20.1% in the same period.



Kalev Ltd sold a total of nearly 2,650  tons  of  confectionery  products  in  the

first three months of the financial year 2004/2005-an increase  of  66%,  compared

to the same period last year. This increase was due to the  deficit  of  goods  at

the end of the summer of 2003, conditioned by the company's  relocation,  as  well

as  the  addition  of  flour  confectionery  products  in  the  company's  product

portfolio.



The home market constituted 86% of the total sales of chocolate confectionery  and

sugar confectionery products; 14%  of  the  sales  were  exported.  In  the  given

period, the Baltic States remained the company's main export targets. In  addition

to the above countries, Kalev Ltd also exported its products to  the  Scandinavian

countries,  Russia  and  the  United  States.  Virtually  no  flour  confectionery

products were exported in the given period.



In the first three months of the financial year 2004/2005, Kalev Ltd's  subsidiary

AS Kalev Paide Tootmine sold a total of  nearly  3,900  tons  of  dairy  products,

including skim milk and milk powder, highly pasteurised milk and  butter.  40%  of

the above products were sold at the home market, and 60% were exported.  The  main

export targets for dairy products mostly included EU member states.



Economic activities and financial results



The consolidated net sales of Kalev Ltd for the financial year 2004/2005  amounted

to 174.9 million kroons (i.e. 11.2 million euros)-a  2.5-time  increase,  compared

to the same period last year. In the given period, the company earned 52  thousand

kroons (3.3 thousand euros) in consolidated net  profit,  compared  to  the  15.9-

million-kroon (i.e. 1.0-million-euro) net loss in the first three  months  of  the

financial year 2003/2004.



Increase in the consolidated net  sales  of  Kalev  Ltd  was  facilitated  by  the

incorporation of two new subsidiaries - AS Kalev Jõhvi  Tootmine  (formerly  known

as AS Järle) and AS Vilma - in the Kalev Group at the beginning  of  2004  and  in

July 2004, respectively, as well as the turnover increase of the  subsidiaries  AS

Kalev Paide Tootmine and AS Kalev Real Estate Company (AS Kalev REC) in the  given

period.



The turnover increase in the first three months of the financial  year  2004/2005,

compared to the same period last year can also be  explained  by  the  deficit  of

chocolate confectionery goods at the end of the summer  of  2003,  conditioned  by

the company's relocation to a new production complex.



The consolidated net profit of  Kalev  Ltd  in  the  first  three  months  of  the

financial year 2004/2005 corresponded to the estimations. This period is the  most

modest period of the year, businesswise. The net loss for the first  three  months

of the previous financial year was generated by single  expenses  related  to  the

relocation and assembly of the company's production equipment, as well  as  launch

of production.



The 71% increase  in  the  company's  marketing  expenses  in  the  given  period,

compared  to  the  same  period  last  year,  was  due  to  incorporation  of  new

subsidiaries in the Kalev Group. The 24% decrease in  general  and  administrative

expenses is conditioned by the company's relocation to a  new  production  complex

this year-the administrative and general expenses in the  first  three  months  of

the financial year 2003/2004 included single relocation expenses.



In the first three months of the financial year 2004/2005, Kalev Group employed

an average of 827 people-a 66% increase, compared to the same period last year.

This increase was mainly due to incorporation of the employees of the

subsidiaries AS Kalev Jõhvi Tootmine, AS Vilma and OÜ Maiasmokk among the group

staff.





BALANCE SHEET (consolidated, unaudited)





 ASSETS                   30.09.2004    30.06.2004    30.09.2004  30.06.2004  

                          Consolid.     Consolid.     Consolid.   Consolid. 

                                             

 CURRENT ASSETS             EEK            EEK          EUR         EUR         

 CASH AND BANK              6 157 229      2 780 382    393 519      177 699     

 CUSTOMER RECEIVABLES      96 691 501    206 221 734  6 179 713   13 179 971  

 PREPAID EXPENSES           8 115 598      3 024 730    518 681      193 315     

 INVENTORIES              130 563 662     85 073 277  8 344 539    5 437 173   

 TOTAL CURRENT ASSETS     241 527 990    297 100 123 15 436 452   18 988 159  

                                                                            

 NON-CURRENT ASSETS                                                         

 LONG-TERM FINANCIAL          330 180        330 180     21 102       21 102      

 INVESTMENTS                                                                 

 MISCELLANEOUS LONG-TERM      330 180        330 180     21 102       21 102      

 RECEIVABLES                                                                

 TANGIBLE ASSETS          379 842 193    351 168 558 24 276 341   22 443 761  

 REAL ESTATE INVESTMENTS   62 214 132     58 054 766  3 976 208    3 710 376  

 INTANGIBLE ASSETS          6 485 441     -9 017 055    414 495     -576 295    

 TOTAL NON-CURRENT ASSETS 448 871 946    400 536 449 28 688 146   25 598 945  

                                                                            

 TOTAL  ASSETS            690 399 936    697 636 572 44 124 598   44 587 103  

                                                                            

 LIABILITIES AND OWNER'                                                     

 EQUITY                                                                     

                                                                            

 LIABILITIES                                                                

 CURRENT LIABILITIES       64 083 647    109 628 402 4 095 692   7 006 532   

 PREPAYMENTS FROM           6 980 784      3 416 983   446 153     218 385     

 CUSTOMERS                                                                  

 SUPPLIER PAYABLES        169 357 272   165 615 804 10 823 902  10 584 779  

 TAXES PAYABLE            0                 527 594     0           33 719      

 OTHER PAYABLES            34 896 887    37 145 927  2 230 318   2 374 057   

 TOTAL CURRENT            275 318 590   316 334 710 17 596 065  20 217 473  

 LIABILITIES                                                                

                                                                            

 NON-CURRENT LIABILITIES  143 286 653   123 323 114  9 157 686   7 881 784   

 TOTAL NON-CURRENT        143 286 653   123 323 114  9 157 686   7 881 784   

 LIABILITIES                                                                

 TOTAL LIABILITIES        418 605 243   439 657 824 26 753 751  28 099 256  

                                                                            

 OWNER'S EQUITY                                                             

 SHARE CAPITAL             78 775 000    78 775 000  5 034 640   5 034 640   

 REVALUATION RESERVE       17 159 388    17 159 388  1 096 685   1 096 685   

 STATUTORY LEGAL RESERVE    3 160 971     3 160 971    202 023     202 023     

 RETAINED EARNINGS        168 640 869   141 514 656 10 778 116   9 044 435   

 NET PROFIT FOR THE            52 006    17 184 663      3 324   1 098 300   

 FINANCIAL YEAR                                                             

 MINORITY INTEREST        4 006 459     184 070     256 059     11 764      

 TOTAL OWNER'S EQUITY     267 788 234   257 794 678 17 114 787  16 476 083  

 TOTAL LIABILITIES AND    690 399 936   697 636 572 44 124 598  44 587 103  

 EQUITY                                                                     





INCOME STATEMENT (consolidated, unaudited)





                    01.07.2004      01.07.2003 -   01.07.2004-    01.07.2003- 

                    30.09.2004      30.09.2003     30.09.2004     30.09.2003  

                                                     

                    Consolid.       Consolid.      Consolid.      Consolid.                   

                                  

                    EEK             EEK            EUR            EUR         

                                                  

 NET SALES          174 907 870     70 319 933     11 178 650      4 494 263   

                                                                             

 COST OF GOODS SOLD 133 267 510     49 483 080      8 517 346      3 162 545   

                                                                             

 GROSS PROFIT        41 640 360     20 836 853      2 661 304      1 331 718   

                                                                             

 MARKETING EXPENSES  18 515 689     10 831 890      1 183 368        692 284     

 ADMINISTRATIVE AND  18 311 201     24 101 438      1 170 299      1 540 363   

 GENERAL EXPENSES                                                            

 OTHER OPERATING      1 538 850      1 128 826         98 350         72 145      

 INCOME                                                                      

 OTHER OPERATING      2 618 328      1 074 764        167 342         68 690      

 EXPENSES                                                                    

                                                                             

 OPERATING PROFIT     3 733 992    -14 042 413        238 646       -897 474    

                                                                             

 FINANCIAL INCOME       176 261        274 905         11 265         17 570      

 FINANCIAL EXPENSES   3 540 856      2 112 414        226 302        135 008     

                                                                             

 PROFIT BEFORE          369 396    -15 879 922         23 609     -1 014 912  

 INCOME TAX                                                                  

                                                                             

 MINORITY INTEREST     -317 390       0               -20 285        0           

                                                                             

 NET PROFIT              52 006    -15 879 922          3 324     -1 014 912  

                                                                             

 EARNINGS PER SHARE        0,01          -2,02          0,00           -0,13       







Ruth Roht

PR manager



+372 6 077 858