Following a previous announcement on 27.9.2002, the management of BALKAN EXPORT SA states that the company continues to apply a comprehensive cost reduction program, strengthening its competitiveness and improving its financial numbers.

The Company having as a principle to safeguard the interests of its shareholders, of all its employees and of the National and local economy had decided:

1. The adjustment of the operation of the Novopan unit to the conditions of intense competition in the wood products sector, aiming at the optimum expenses control, the stocks reduction and the restriction of the required working capital.
2. The continuation of the savings program in the operational and general expenses of the Company.
3. The strict control of the sale terms and of the credit terms of its customers.

Regarding the recent publications in the press the Company management announces that:

- Within the framework of adjustment of issues relevant to the working capital, the company cannot maintain high stocks of its products and therefore adopts measures for their decrease. One of the measures that have been proposed was the partial employment of the Novopan unit, a proposal that has not been accepted by the employees' union. Thus, in the new year, we have proceeded to the production reduction of the specific unit, while at the same time we continue the policy of cost reduction even though this entails the exercise of the Company legal right to dismiss the 2% of employees per month.

- The company management has respected in deed and constantly the fights of its employees' union, in particular, during the great common effort that has been made for the re-operation of BALKAN EXPORT SA. However it expresses its displeasure for the declarations that have been recently made by the union regarding the Company's future and the misleading information that they include.

In conclusion, the Company management declares emphatically that:

BALKAN EXPORT SA. is one of the healthiest businesses of the sector and that all necessary measures are taken in order to further reinforce its status in the market.
BALKAN EXPORT SA. has zero bank loan, sufficient liquidity and a ratio of foreign capitals to equity capital that it ranks it among the healthiest Greek businesses.
Despite the particular unfavorable conditions in the local as well as in the international timber product sector, the Company still expands its market share that is possesses as well as it improves its financial results.