Börsiteade

Pealkiri

The third 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 third 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 focus and follow
through with its business turnaround during the last year - switching to just
one brand (Ivo Nikkolo), optimizing, and also heavily reducing all operating
expenses even further than what was previously indicated in the reorganization
plan. The new in-store assortment and the new business strategy have also helped
Baltika survive the negative impact of the second wave of Covid-19. Baltika
confirms it will certainly be able to successfully complete the reorganization
plan and will manage the payment of all obligations according to the plan, if
not even earlier than expected if there will not be any additional or other
negative business scenarios in particular due to Covid-19 further spread all
over Baltics.

Flavio Perini
Member of Management Board, CEO

[email protected]  (mailto:[email protected] )


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
reorganization plan of AS Baltika (hereafter Baltika).

In accordance with § 50 of the Reorganisation Act, the reorganization advisor of
Baltika  hereby presents  to the  court and  creditors the  third written report
regarding the fulfillment of the reorganization plan.

To  verify the fulfillment of the reorganization plan and evaluate the financial
situation,  the reorganization advisor has used  the audited accounts of Baltika
as of 31.12.2020 and unaudited accounts as of 31.10.2021.

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 reorganization  plan. Claims  were transformed in two
groups.

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

Based  on the reorganization 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 the reorganization 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 must start from the end of 2021. As of the date of this report Baltika
has not made any payments to Group II creditors yet but the company has informed
reorganisation advisor about its intent to do so before 31 December 2021.

Baltika's financial situation

Within  the  first  six  months  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).

Results  of 2021 are being significantly affected  by restrictions caused by the
Covid-19 pandemic  and the closure  of stores in  Lithuania, Latvia and Estonia.
The 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.

The  below table  contains the  prognosis of  the 2020 profit and loss statement
presented  in the reorganisation plan of Baltika, the actual profit and loss for
2020, the   figures   for   10 months   from  the  prognosis  (01.01.2021  until
30.10.2021) and the actual profit and loss statement for ten months of 2021.

+-------------------+-------------------+-----------+--------------+-----------+
|                   |Prognosis 12 months|           |              |           |
|                   |2020 in            |Actual  12 |Prognosis  10 |Actual  10 |
|Thousand euros     |reorganization plan|months 2020|months 2021   |months 2021|
+-------------------+-------------------+-----------+--------------+-----------+
|Revenue            |12 300             |9 891      |16 125        |6 349      |
+-------------------+-------------------+-----------+--------------+-----------+
|Total revenue      |12 300             |9  891     |16 125        |6 349      |
+-------------------+-------------------+-----------+--------------+-----------+
|Cost of goods sold |11 302             |8 578      |11 030        |4 956      |
+-------------------+-------------------+-----------+--------------+-----------+
|Gross profit       |998                |1 313      |5 095         |1 393      |
+-------------------+-------------------+-----------+--------------+-----------+
|Gross profit margin|8.1%               |13,3%      |31,6%         |21,9%      |
+-------------------+-------------------+-----------+--------------+-----------+
|Various   operating|                   |           |              |           |
|expenses           |2 844              |2 140      |2 029         |1 304      |
+-------------------+-------------------+-----------+--------------+-----------+
|Payroll            |3 533              |2 576      |1 893         |1 734      |
+-------------------+-------------------+-----------+--------------+-----------+
|Depreciation,      |                   |           |              |           |
|amortisation    and|                   |           |              |           |
|impairment         |137                |82         |137           |95         |
+-------------------+-------------------+-----------+--------------+-----------+
|Other     operating|                   |           |              |           |
|expense (-) /income|                   |           |              |           |
|(+)                |3 895              |3 747      |-119          |116        |
+-------------------+-------------------+-----------+--------------+-----------+
|Operating income (-|                   |           |              |           |
|loss)              |-1 622             |262        |1 154         |-1 623     |
+-------------------+-------------------+-----------+--------------+-----------+

The  comparison shows that  the actual operating  profit of Baltika for 2020 was
far  better than the prognosis made  when compiling the reorganisation plan, but
the  actual operating  profit for  the ten  months of 2021 is considerably worse
than  the  prognosis  made  when  compiling  the reorganisation plan. The actual
operating  profit for the ten months of  2021 is EUR2 777 thousand lower than that
of  prognosis, whereas for the first four months of 2021 the profit was lower by
EUR  2 849 thousand, which shows  that during the  last six months the performance
has  somewhat improved. Looking at the combined profit and loss for 22 months or
the  period from 01.01.2020 to 31.10.2021, which reflects both the impact of the
measures  of reorganisation plan and the impact  of the closure of stores due to
Covid-19, one  can see that cumulatively both combined figures of actual revenue
and  operating profit are  lower than those  of prognosis in reorganisation plan
(see table below).

+--------------------------+---------------------------+-----------------------+
|                          |Prognosis in reorganization|                       |
|                          |                   plan for|   Actual for 22 months|
|Thousand euros            |  22 months till 31.10.2021|        till 31.10.2021|
+--------------------------+---------------------------+-----------------------+
|Revenue                   |                     28 425|                 16 240|
+--------------------------+---------------------------+-----------------------+
|Total revenue             |                     28 425|                 16 240|
+--------------------------+---------------------------+-----------------------+
|Cost of goods sold        |                     22 332|                 13 534|
+--------------------------+---------------------------+-----------------------+
|Gross profit              |                      6 093|                  2 706|
+--------------------------+---------------------------+-----------------------+
|Gross profit margin       |                      21,4%|                  16,7%|
+--------------------------+---------------------------+-----------------------+
|Various operating expenses|                      4 874|                  3 443|
+--------------------------+---------------------------+-----------------------+
|Payroll                   |                      5 427|                  4 310|
+--------------------------+---------------------------+-----------------------+
|Depreciation, amortisation|                           |                       |
|and impairment            |                        274|                    177|
+--------------------------+---------------------------+-----------------------+
|Other operating expense (-|                           |                       |
|) /income (+)             |                      4 014|                  3 863|
+--------------------------+---------------------------+-----------------------+
|Operating income (-loss)  |                       -468|                 -1 361|
+--------------------------+---------------------------+-----------------------+

The  comparison between actual profit and  loss for 22 months and prognosis made
while compiling reorganisation plan shows that actual various operating expenses
and  payroll expenses  are lower  than in  prognosis. Therefore,  the deficit of
operating  profit can be fully explained by lower gross profit, which in turn is
caused  by  the  circumstances  that  began  in  December  of 2020 and continued
throughout the first half of 2021 (closed stores).

For  the fulfillment of the reorganisation  plan, it is important that Baltika's
future  financial results, considering the temporary worsening in the first half
of  2021, 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   until  the  end  of  2021 and  for  2022 (presented  to
reorganisation   advisor  in  December  2021), and  assuming  normalised  retail
activities,  Baltika's 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 of 31.10.2020 and 42 as of 31.10.2021.

Baltika's shareholders' equity is EUR 948 thousand as of 31.10.2021.

As  of 31.10.2021, Baltika  had overdue  payables in  the amount of EUR16 thousand
that  have been paid as of the date of this report, which shows that Baltika has
been able to meet its current liabilities.

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, 16.12.2021.a.
Artur Suits
Reorganisation advisor of Aktsiaselts Baltika
Digitally signed