Börsiteade

Pealkiri

The fifth report of the reorganization advisor on the fulfillment of the reorganization plan

Teade

On 19 June 2020, Harju County Court approved the reorganization plan of AS
Baltika (Baltika). The restructuring advisor needs to submit a report to the
court and the impacted creditors every six months. The first report was
submitted in December 2020. The fifth report is hereby published to all
investors. The data and numbers in the report refer to Baltika on a stand-alone
basis, not as a Group i.e. the numbers are not consolidated.

Due to the reorganization proceedings, Baltika has been able to continue with
business reorganisations during 2022 - to close the vast majority of
unprofitable stores and launch a new store concept in four locations. We have
optimised business processes and significantly reduced operating expenses. Our
strategic decision to sell some of Ivo Nikkolo's trademarks brought Baltika a
one-time profit in the amount of 7,436 thousand euros, which successfully
fulfilled the equity recover plan. Baltika confirms that it will be able to
successfully fulfil the restructuring plan and the obligations assumed by the
plan.

Brigitta Kippak

Chairman of The Management Board, CEO

[email protected]
(https://www.globenewswire.com/Tracker?data=utZFBlByzaeC-
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THE REPORT OF THE REORGANISATION ADVISOR ON THE FULFILMENT OF THE REORGANISATION
PLAN

Harju County Court confirmed with 19.06.2020 ruling for civil case 2-20-4688 the
reorganisation plan of AS Baltika (hereafter Baltika).

In accordance with § 50 of the Reorganisation Act, the reorganisation advisor of
Baltika  hereby presents  to the  court and  creditors the  fifth written report
regarding the fulfilment of the reorganisation plan.

To  verify the fulfilment of the  reorganisation plan and evaluate the financial
situation,  the reorganisation advisor has used  the audited accounts of Baltika
as at 31.12.2021 and unaudited accounts as at 31.10.2022.

Fulfillment of the reorganization plan

The  claims  of  30 creditors  in  the  total amount of 12 206 649.74 euros were
transformed  based on  the reorganisation  plan. Claims  were transformed in two
groups.

Total  financial impact of reduction of  claims based on the reorganisation plan
is 5 045 198 euros, which is recorded under other operating revenue in Baltika's
2020 profit and loss statement.

Based  on the reorganisation plan  Baltika had to pay  interest on the claims in
Group  I and starting from  June of 2021 start payments  of principal amounts in
Group  I. Baltika has fulfilled this  obligation to Swedbank AS. Other creditors
in  Group I have  confirmed to reorganisation  advisor that they  do not require
Baltika  to pay in accordance with the  reorganisation plan and agree to be paid
later.

Based  on the  reorganisation plan,  payments of  principal amounts of claims in
Group  II had to  begin from the  end of 2021, and  the first payments were made
before  the deadline or 31 December 2021. As of  the date of this report Baltika
has  not yet  made payments  to Group  II creditors  that are  due at the end of
2022, but the company has informed reorganisation advisor about its intent to do
so before 31 December 2022.

Baltika's financial situation

Within  the  first  six  month  after  the  confirmation  of reorganisation plan
Baltika's   financial   situation   has   been  positively  influenced  by  both
transformation  of the creditors' claims and also several substantive changes in
Baltika´s  operations,  as  a  result  of  which  compared to the state prior to
reorganisation, the  gross profit of Baltika from the sale of goods has improved
and  various operating expenses have reduced (incl rent expenses that fall under
several operating expenses, payroll).

The  below  table  contains  the  prognosis  of  2021 profit  and loss statement
presented  in the  reorganisation plan  of Baltika,  actual profit  and loss for
2021, the   figures   for   10 months   from  the  prognosis  (01.01.2022  until
31.10.2022) and the actual profit and loss statement for ten months of 2022.

+-------------------+-------------------+-----------+--------------+-----------+
|                   |Prognosis 12 months|           |              |           |
|                   |2021 in            |Actual  12 |Prognosis  10 |Actual  10 |
|Thousand euros     |reorganisation plan|months 2021|months 2022   |months 2022|
+-------------------+-------------------+-----------+--------------+-----------+
|Revenue            |             17 535|      6 113|        17 485|      4 638|
+-------------------+-------------------+-----------+--------------+-----------+
|Total revenue      |             17 535|      6 113|        17 485|      4 638|
+-------------------+-------------------+-----------+--------------+-----------+
|Cost of goods sold |             12 202|      5 402|        12 158|      3 649|
+-------------------+-------------------+-----------+--------------+-----------+
|Gross profit       |              5 333|        711|         5 327|        989|
+-------------------+-------------------+-----------+--------------+-----------+
|Gross profit margin|                30%|        12%|           30%|        21%|
+-------------------+-------------------+-----------+--------------+-----------+
|Various   operating|                   |           |              |           |
|expenses           |              2 432|      1 640|         1 963|        992|
+-------------------+-------------------+-----------+--------------+-----------+
|Payroll            |              2 267|      2 028|         1 931|      1 278|
+-------------------+-------------------+-----------+--------------+-----------+
|Depreciation,      |                   |           |              |           |
|amortisation    and|                   |           |              |           |
|impairment         |                162|         56|           158|        111|
+-------------------+-------------------+-----------+--------------+-----------+
|Other     operating|                   |           |              |           |
|expense (-) /income|                   |           |              |           |
|(+)                |               -119|        111|             0|      7 378|
+-------------------+-------------------+-----------+--------------+-----------+
|Operating income (-|                   |           |              |           |
|loss)              |                591|     -2 902|         1 275|      5 987|
+-------------------+-------------------+-----------+--------------+-----------+

Results  of 2021 were significantly affected by restrictions caused by Covid-19
pandemic  and closure of stores in  Lithuania, Latvia and Estonia. Sharp decline
in  revenue starting from December 2020 (stores were completely closed in Latvia
and  Lithuania  from  December  of  2020 and  in Estonia from March of 2021, and
reopened to visitors in May of 2021 in Lithuania and Estonia and June of 2021 in
Latvia),  which was partly compensated by an increase in revenue from e-channel,
meant  that  during  2021 Baltika's  actual  revenue, gross profit and operating
profit  were considerably  lower than  the respective  figures presented  in the
prognosis in the reorganisation plan.

Revenue, gross profit and operating profit for the first four months of 2022
were significantly affected by the following events:

  * Unpredictable state of war between Russia and Ukraine that had an impact of
    the sales of Baltika in the first weeks of March (decline in number of
    visitors to stores). The strongest impact was experienced in the Lithuanian
    market where visitor numbers began to decline from the second half of
    February (local media was covering the threat of potential war). By the end
    of March the situation in the Baltics had stabilised and visitor numbers
    started to recover gradually.
  * All Baltic countries experienced high rates of COVID-19 cases in the first
    quarter of 2022, which impacted negatively on the visits to stores and also
    presented challenges to everyday management of stores' operations, due to
    which quality of service also declined and impacted on sales negatively.
  * Decline in revenue resulted from planned closure of loss making stores.

Revenue  for 01.05.2022 - 31.10.2022 was  3 139 thousand Euro, which  is by 923
thousand  Euro  lower  than  for  the  same  period  previous  year (revenue for
comparable  period was 4 062 thousand  Euro).  Decline in  revenue was caused by
planned closure of loss making stores.

During 01.05.2022 - 31.10.2022 three loss making stores were closed:

      * In July of 2022 Veerenni store in Estonia
      * In August of 2022 Valmiera Galerija Valleta store in Latvia
      * In October of 2022 Jõhvi Pargikeskus store in Estonia.

Reduced revenue will in future be compensated by opening of a new store:

  *  In August of 2022 outlet store in Arsenali Keskus in Tallinn.

In  addition  to  aforementioned,  in  the  end  of November the old kind of Ivo
Nikkolo  store in Vilnius  Panorama Commercial Centre  was replaced with a store
with  new Ivo Nikkolo concept.  The new concept will  support growth of sales of
Ivo Nikkolo products going forward.

Gross  profit  for  01.05.2022 -  31.10.2022 was  700 th. Euro, and gross profit
margin  22%. Gross profit  for the  comparable period  of the  previous year was
764 th. Euro  and gross profit  margin 19%. Decline of  gross profit is directly
related  to  decline  in  revenue.  Gross  profit  margin  has improved by three
percentage   points.   Increase   in   prices  of  raw  materials  and  cost  of
transportation,   and   strengthening   of  US  dollar,  have  brought  about  a
considerable  increase in  the cost  of goods  and their procurement. Despite of
that Baltika has managed to improve its gross margin as a result of well managed
pricing  policy on  its markets  (discounting in  stores has  been strategically
thought  through and increase in  cost of goods has  been partially passed on to
consumers).

Operating  profit for 01.05.2022 - 31.10.2022 was 6 761 th. Euro. Operating loss
for  the comparable period  the previous year  was 898 th Euro. Operating profit
for  01.05.2022 -  31.10.2022 was  materially  impacted  by  Baltika's strategic
decision to sell part of Ivo Nikkolo trademarks and continue using them under an
exclusive licence agreement. As a result of this transaction, Baltika recorded a
one-off  gain of 7 436 th Euro, which  explains the increase in operating profit
as  compared with the  same period last  year. Operating profit  for the current
period (01.05.2022 - 31.10.2022,) without taking into account the gain from sale
of  Ivo Nikkolo  trademarks, would  have been  (668) thousand  Euros. Still this
result  would have been 230 thousand  Euro better that for  the same period last
year.

The prognosis vs actual cumulative profit and loss for 34 months from 1 January
2020 to 31 October 2022 is presented in the table below.

+--------------------------+---------------------------+-----------------------+
|                          |Prognosis in reorganisation|                       |
|                          |                   plan for|   Actual for 34 months|
|Thousand euros            |  34 months till 31.10.2022|        till 31.10.2022|
+--------------------------+---------------------------+-----------------------+
|Revenue                   |                     47 321|                 20 642|
+--------------------------+---------------------------+-----------------------+
|Total revenue             |                     47 321|                 20 642|
+--------------------------+---------------------------+-----------------------+
|Cost of goods sold        |                     35 663|                 17 630|
+--------------------------+---------------------------+-----------------------+
|Gross profit              |                     11 658|                  3 013|
+--------------------------+---------------------------+-----------------------+
|Gross profit margin       |                        25%|                    15%|
+--------------------------+---------------------------+-----------------------+
|Various operating expenses|                      7 239|                  4 771|
+--------------------------+---------------------------+-----------------------+
|Payroll                   |                      7 731|                  5 883|
+--------------------------+---------------------------+-----------------------+
|Depreciation, amortisation|                           |                       |
|and impairment            |                        457|                    249|
+--------------------------+---------------------------+-----------------------+
|Other operating expense (-|                           |                       |
|) /income (+)             |                      3 776|                 11 236|
+--------------------------+---------------------------+-----------------------+
|Operating income (-loss)  |                          7|                  3 346|
+--------------------------+---------------------------+-----------------------+

While  observing  the  actual  profit  and  loss  for  34 months  (01.01.2020 to
31.10.2022), into  which period fall the impact of reorganisation of claims, the
impact  of closure of  stores due to  Covid-19, lower number of  visitors due to
high  number of  Covid cases  within population,  and the   impact of the war in
Ukraine,  one can see that cumulatively both actual revenue and gross profit are
lower  than in prognosis  made while compiling  reorganisation plan. At the same
time  actual various operating  expenses and payroll  expenses are lower than in
prognosis. Due to the one-off gain of 7 436 th Euro from the sale of trademarks,
cumulative  operating profit  of Baltika  is 3 346 th  Euro, and  this result is
significantly  better that in the  prognosis made while compiling reorganisation
plan.

As  a result of operating profit for ten months of 2022, Baltika's shareholders'
equity has become positive and is 5 930 thousand Euro as at 31.10.2022.

For  the fulfilment  of the  reorganisation plan  it is important that Baltika's
future  financial results, considering the worsening  of results in 2021 and the
first  half of 2022, are such that they  allow repayment of creditors' claims in
accordance  with the terms of the reorganisation plan. According to the forecast
made  by Baltika's management and presented to reorganisation advisor, Baltika's
projected financial results and cash flows would be sufficient for that purpose.

The  number of Baltika's employees reduced from 112 as at the end of March 2020
to 58 as at 31.10.2020 and 36 as at 31.10.2022.

Based  on the  above, the  reorganisation advisor  is of  the opinion  that as a
result   of   confirming  of  the  reorganisation  plan,  and  implementing  the
reorganisation measures, Baltika´s financial situation has improved. Baltika has
followed  in its operations the reorganisation plan, due to which fulfilling the
reorganisation  plan, including paying  the creditors' claims  in the period set
out in reorganisation plan, is still realistic.

The  reorganisation  advisor  confirms,  that  he  has  forwarded this report in
addition  to  the  court  also  to  all  the  creditors  that  are  impacted  by
reorganisation.

Tallinn, 16.12.2022.a.

Artur Suits
Reorganisation advisor of Aktsiaselts Baltika