Market announcement

Title

Baltika’s unaudited financial results, fourth quarter and 12 months 2022

Message

The  Group's fourth  quarter sales  revenue across  all channels totalled 2,803
thousand  euros,  increasing  by  7% compared  to  the same period last year (Q4
2021: 2,614 thousand  euros). Sales revenue for 12 months reached 9,613 thousand
euros,  decreasing by 18% compared  to the previous  year (2021: 11,770 thousand
euros). In 2022, the sales revenue of the e-store accounted for 10% (2021: 17%)
of the Group's total revenue.

The  year 2022 brought with it  strong growth in sales  of Ivo Nikkolo products.
The  sales revenue  of Ivo  Nikkolo products  increased by 38% to 9,482 thousand
euros  in 2022. In 2022, sales of Ivo  Nikkolo products accounted for 98% of the
Group's  total sales revenue.  From the second  half of 2021, the Group operated
with  only  one  brand  -  Ivo  Nikkolo.  In  2021, the  sales  revenue  of  the
discontinued  brands  Monton,  Mosaic,  Baltman  and  Bastion  made  up 42%, the
remaining  58% of  the  sales  revenue  was  made  up by the sale of Ivo Nikkolo
products.

In  the fourth  quarter, the  Group showed  strong sales  revenue growth in both
retail and e-store sales. Fourth quarter retail sales were 2,530 thousand euros,
increasing  by 6% compared to the same period last year (Q4 2021: 2,395 thousand
euros).  The sales revenue of the e-store in the fourth quarter was 235 thousand
euros,  which is 13% higher compared to the same period last year (Q4 2021: 209
thousand euros).

In  the last quarter of  the year, we continued  to update our store network. At
the  end  of  November,  we  opened  the  first new Ivo Nikkolo concept store in
Lithuania  -  we  replaced  the  old  Ivo  Nikkolo store in the Vilnius Panorama
shopping  centre with a new Ivo  Nikkolo concept store. Panorama shopping centre
is  located in  Zhverynas, one  of the  oldest and  most prestigious business and
residential  districts in  the centre  of Vilnius.  Panorama shopping  centre is
highly  valued  among  visitors  for  its  bright  interior  design, comfortable
shopping  environment  and  high-quality  service.  In  the  fourth quarter, Ivo
Nikkolo's  main focus  was on  marketing activities.  In October,  we started an
extensive  brand awareness  campaign in  Latvia and  Lithuania, which lasted for
three  months. In addition to the above, Ivo Nikkolo presented a modern feminine
clothing  and  accessory  collection  at  the  two biggest fashion events in the
Baltics,  which were  Riga Fashion  Week (11.10.2022)  and Tallinn  Fashion Week
(20.10.2022).

The  gross profit of the fourth  quarter was 1,579 thousand euros, decreasing by
5% compared  to the same period last year (Q4 2021: 1,671 thousand euros). Gross
profit for 12 months was 4,938 thousand euros, decreasing by 19% compared to the
same  period last year  (12 months 2021: 6,120 thousand  euros). The decrease in
gross profit is due to the fact that the Group operates with only one brand (Ivo
Nikkolo)  in  2022, but  in  the  comparable  period,  a significant part of the
Group's  sales revenue was the sales  results of the discontinued brands Monton,
Mosaic,  Baltman and  Bastion. The  Group's gross  profit margin  was 56% in the
fourth  quarter, while the comparable period's  gross profit margin was 64%. The
decrease  in  the  gross  profit  margin  by  8 percentage  points is due to the
increase  in raw material and transportation prices  in the second half of 2022
and  the strengthening of the US dollar,  which led to a significant increase in
costs  in the purchase price and delivery of goods. The Group has only partially
passed  on the price increase  to customers, which explains  the decrease in the
gross  profit margin  compared to  the comparison  period. The  Group's 12-month
gross  profit margin was 51%, remaining at a  similar level compared to the same
period last year (12M 2021: 52%).

The  net loss for the  fourth quarter was 561 thousand  euros, the result of the
comparable period was a net loss of 890 thousand euros. The Group's 12-month net
profit  was 3,493 thousand euros. The  12-month result is significantly affected
by the conclusion of the contract for the sale of the Ivo Nikkolo trademarks and
the  contract for the exclusive use of the Ivo Nikkolo trademarks in August. The
result  for 12 months  without considering  the sale  transaction of Ivo Nikkolo
trademarks  was a  net loss  of 3,943 thousand  euros. In the comparable period,
there was a net loss of 2,900 thousand euros.

The  Group's distribution and administrative  expenses were 2,084 thousand euros
in  the fourth quarter, decreasing  by 9% compared to the  same period last year
(Q4  2021: 2,289 thousand euros). Despite high  inflation and the energy crisis,
the  Group  has  been  able  to  reduce distribution and administrative expenses
through   consistent   cost  reduction,  increased  efficiency  and  closure  of
unprofitable stores.

The Management Board of the Group assesses the results of 12 months as positive.
The  Group  was  able  to  strongly  increase  the  sales revenue of Ivo Nikkolo
products  and maintain good  gross profitability despite  the uncertain economic
environment,  increased raw material and transport  prices and the volatility of
the  US  dollar.  Consistently  increasing  efficiency  and closing unprofitable
stores  has  gradually  improved  the  Group's  financial indicators. Increasing
efficiency will continue to be the Group's focus. The Group remains committed to
its chosen strategy and continues to implement it:

 1. By developing modern, high-quality products in our women's fashion brand Ivo
    Nikkolo, which is available in Estonia, Latvia and Lithuania and in other
    European countries through our e-store.
 2. By continuing the development of our omnichannel strategy and e-store
    functionalities.
 3. By continuing to open new Ivo Nikkolo concept stores in the Baltics.

Ongoing quarter

The  Group's  sales  revenue  in  the  period 01.01.2023 - 26.02.2023 was 1,365
thousand  euros, decreasing  by 6% compared  to the  same period  last year. The
decrease  in  sales  revenue  compared  to  the  previous  period  is due to the
following circumstances:

 1. In the first quarter of 2022, deeply discounted products were sold, which
    led to a very high demand for products. The impact of the discount can be
    seen in the Group's gross profit margins: the gross profit margin for the
    period 01.01.2023 - 26.02.2023 was 56%, the gross-profit margin for the
    comparable period was 43%. Well-managed discount campaigns in the current
    quarter have significantly improved the Group's gross profitability compared
    to the comparable period; and
 2. Closure of unprofitable stores has decreased sales revenue. In January
    2022, the Group had 8 stores more than this year, and in February 2022, 5
    stores more than this year.

Retail  sales efficiency during the period 01.01.2023 - 26.02.2023 (sales per m2
per  month, EUR) was 119 EUR, increasing by 27% compared to the same period last
year.

At  the beginning  of January,  we joined  the Tango  e-shop packaging recycling
system.  The goal of  joining the system  is to reduce  the amount of disposable
packaging  waste  generated  when  shopping  in  our  e-store.  From now on, our
customers  have  the  opportunity  to  order  their goods in Low imPACK reusable
packaging  and get the  deposit money back  after returning the packaging. Among
the  clothing trade companies, Baltika is the  first to have joined the e-shop's
packaging circulation system with its Ivo Nikkolo brand e-shop.

At  the  beginning  of  January,  we  closed  our  Ivo  Nikkolo store in Vilnius
Akropolis  shopping centre in Lithuania due to  the expiration of the lease. The
new  Ivo  Nikkolo  concept  store  opened  in  Lithuania in November 2022 in the
Vilnius  Panorama shopping centre  has been well  received by our former Vilnius
Akropolis centre customers.

At  the beginning of February, we reopened  the brand store at Ivo Nikkolo Suur-
Karja 14. The store was closed in November 2020, when during the COVID pandemic,
the  legendary  location  of  the  Suur-Karja  street  store became commercially
problematic  due to the lack of tourists. In today's market situation, the Group
again believes in the potential of this region. In addition to the above, in the
current  quarter we will finish  the renovation of the  Ivo Nikkolo store in the
Galleria Riga shopping centre in Latvia, as a result of which we will open a new
Ivo Nikkolo concept store in Latvia at the begging of March.

Consolidated statement of financial position

                                  31 Dec 2022   31 Dec 2021
------------------------------------------------------------
  ASSETS

  Current assets

  Cash and cash equivalents               222           614

  Trade and other receivables           3,285           696

  Inventories                           2,056         2,491

  Total current assets                  5,562         3,801

  Non-current assets

  Deferred income tax asset                91            80

  Trade and other receivables           2,756             0

  Other non-current assets                107           172

  Property, plant and equipment         1,269           855

  Right-of-use assets                   4,602         6,210

  Intangible assets                       586           631

  Total non-current assets              9,411         7,948

  TOTAL ASSETS                         14,973        11,749



  LIABILITIES AND EQUITY

  Current liabilities

  Borrowings                            3,096           364

  Lease liabilities                     1,714         2,050

  Trade and other payables              1,950         2,438

  Total current liabilities             6,760         4,852

  Non-current liabilities

  Borrowings                            1,070         2,425

  Lease liabilities                     3,364         4,333

  Trade and other payables                147             0

  Total non-current liabilities         4,582         6,758

  TOTAL LIABILITIES                    11,342        11,611



  EQUITY

  Share capital at par value            5,408         5,408

  Reserves                              4,431         4,431

  Retained earnings (-losses)          -6,208        -9,701

  TOTAL EQUITY                          3,631           138

  TOTAL LIABILITIES AND EQUITY         14,973        11,749

Consolidated statement of profit or loss and other comprehensive income

                                              4Q 2022 4Q 2021 12m 2022 12m 2021
-------------------------------------------------------------------------------




 Revenue                                        2,803   2,614    9,613   11,770

 Cost of goods sold                            -1,223    -943   -4,675   -5,650

 Gross profit                                   1,579   1,671    4,938    6,120



 Distribution costs                            -1,779  -1,960   -7,111   -8,084

 Administrative and general expenses             -305    -329   -1,448   -1,467

 Other operating income (-expense)                -12    -128    7,408      926

 Operating profit (loss)                         -518    -746    3,787   -2,505



 Finance costs                                    -53     -79     -304     -330

 Profit (loss) before income tax                 -571    -825    3,483   -2,835



 Income tax expense                                11     -65       11      -65



 Net profit (loss) for the period                -561    -890    3,493   -2,900



 Total comprehensive income (loss)
 for the period                                  -561    -890    3,493   -2,900





 Basic earnings per share from net profit
 (loss)
  for the period, EUR                           -0,01   -0,02     0,06    -0,05



 Diluted earnings per share from net profit
 (loss)

  for the period, EUR                           -0,01   -0,02     0,06    -0,05


Brigitta Kippak
Chairman of The Management Board, CEO
[email protected]
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