AS Baltika's unaudited financial results, fourth quarter and 12 months of 2017

Baltika Group ended the fourth quarter with a net profit of 920 thousand euros,
which exceeds the result of same period last year by 300 thousand euros. The
result of fourth quarter in last year was a net profit of 620 thousand euros. 

In the fourth quarter Group's revenue increased 2% compared to same period last
year and was 12,969 thousand euros. Retail revenue in the fourth quarter was
11,626 thousand euros, increasing 2% and strong sales growth was continually
shown by e-store. Wholesale and franchise sales decreased 7% compared to the
fourth quarter last year. 

Baltic region retail business recovered after the three quarter long period of
decrease and resulted in 2% sales growth in the fourth quarter compared to the
fourth quarter of last year. In November and December the offer of
autumn-winter season collection brought visitors back to shopping centres,
sales growth was supported by increase both in sales transactions and in
average spend. Sales were recovering faster in Estonia and Latvia, showing
increase 4% and 2% respectively in the fourth quarter. In year total retail
sales amounted to 39,476 thousand euros, decreasing 1% compared to last year. 

Wholesale and franchise revenue decreased 7% in the fourth quarter and was 857
thousand euros. Wholesale and franchise revenue growth was supported by
recently added market Serbia and Peek & Cloppenburg department stores chain in
Germany and Austria. The fourth quarter sales revenue decreased mainly due to
complicated economic situation of Eastern-European franchise partners and
smaller demand for new orders. While franchise sales decreased in the fourth
quarter, then the wholesale increased and one of the growth reason was
successful sale of PyeongChang Olympic collection to the partners. The biggest
brand in wholesale and franchise was Monton with 60% share of sales. At the end
of the fourth quarter there were 33 franchise stores representing Baltika's
brands, forming 26% of the total stores portfolio. In year total the wholesale
and franchise revenue increased 5% and was 6,300 thousand euros. 

Baltika Group's e-store Andmorefashion.com revenue increased 38% in the fourth
quarter and was 427 thousand euros. The most-selling brand in e-store was
Monton, comprising of 37% from revenue. By country, most of the sales were in
Estonia with share of 53%, followed by Latvia 17% and Lithuania 16%. Compared
to same period last year, the largest growth was in Latvia (+54%). Total of
7,300 orders from 31 counties were received in the fourth quarter. In November,
Click&Collect service that so far had been available in Estonia and Latvia, was
also launched in Lithuania. E-store processes of assembling orders and
merchandising were simplified through new developments. In year total, the
e-store Andmorefashion.com revenue increased 38% and was 1,468 thousand euros. 

Implementing the more conservative cost policy and efficient inventory
management process together with more favourable input conditions in the second
half-year, recovered the gross profit growth at the end of year and led to the
highest gross profit margin earned in a quarter in last five years. The
company's gross profit margin in the fourth quarter was 54.9% increasing by 3.1
percentage points in the year. The gross profit for the quarter was 7,122
thousand euros, increasing by 547 thousand euros compared to last year's
comparable result. The year total gross profit amounted to 23,670 thousand
euros (2016: 23,497 thousand euros). 

Group's distribution and general expense increased 2% in the fourth quarter and
1% in a year. The distribution and general expense to revenue ratio in the
fourth quarter was 46.2% remaining at the same level in comparable period. In
year total, the ratio was 48.5% improving by 0.1 percentage points. 

In year total, Baltika's revenue increased 1%. The e-store and wholesale and
franchise revenue showed growth; with that one of the company's objectives for
2017 - revenue growth in all of the sales channels - was partly met. In spite
of the weak result of nine months, which was caused by poor sales and decreased
gross profit related to deeper discounts in retail sector, with the
contribution of strong fourth quarter company managed to end the year in
profit. Company ended the 2017 in a profit of 58 thousand euros, last year
profit was 177 thousand euros. 

Highlights of the period until the date of release of this quarterly report

  -- In September the biggest brand in Baltika's portfolio Monton celebrated its
     15th birthday. For the occasion, Monton designers created a special
     collection named "Freedom" as a tribute to all free spirits, to freedom of
     creation and expression and to free Estonia. Swallow campaign, created for
     the communication of Monton's anniversary and special collection, won the
     prize of Digital Deed 2017 in branded content category.
  -- To Celebrate Estonia's 100th and Canada's 150th birthday, a premiere under
     the concept called Northern Spirit EstoSyle was held in Toronto in Canada
     in September. During this event, eight internationally most recognized
     Estonian fashion and design brands were showcased, including three
     Baltika's brands: Monton, Baltman and Ivo Nikkolo.
  -- On 11 November 2017, Supervisory Board decided to recall the head of
     purchasing and supply chain Ingrid Uibukant from the Management Board
     starting from 18th of December 2017. Management Board of Baltika AS will
     continue with two members: Chief Executive Officer Meelis Milder and Chief
     Financial Officer Maigi Pärnik-Pernik.
  -- In November Monton and the Estonian Olympic Committee revealed the new
     Olympic collection dedicated to Estonia's 100th birthday. Monton's
     collection for the PyeongChang Winter Olympics is called 1918 after the
     year of birth of Estonian Republic. Many of the world media publications
     have named the outfit of Estonian Olympic Delegation as one of the best in
     PyeongChang.
  -- In December, Baltika started the new pilot project to support the e-store
     growth in Finland, within this project new pop-up store was opened in Iso
     Omena Shoppingcenter in Espoo. Initial duration for the Finnish project is
     planned for six months with the purpose to support the integration of
     e-store Andmorefashion.com and physical store to offer unified and better
     shopping experience to the customer.
  -- In the fourth quarter, Baltika opened Monton Andmore store in Estonia in
     Nautica shopping center and pop-up store with new concept was opened in
     Finland in Iso Omena shopping center. Franchise partner in Ukraine opened
     Monton store in Kiev in Gorodok shopping center
  -- In relation to unite marketing and communication areas in Baltika Group and
     bring their management under one unit, starting from December Mari-Liis
     Küppar works in Baltika as new Marketing and Communication Manager. She has
     previous working experience in Swedbank AS, Saku Õlletehase AS and AS
     Värska Vesi. The role of the marketing and communication department is to
     represent stronger customer view in the organisation to bring Group's
     business strategy into life. Thereby, there is intention to make the
     brands' marketing communication stronger in different channels.
  -- Starting from January 2018, Raivo Videvik is working in Baltika as new
     Export Director, for the purpose to put effort into the growth of export
     and to accelerate the increase of sales in franchise and wholesale.
     Previously, Raivo has been responsible for managing sales department and
     export area in Timbeco Woodhouse OÜ, being active in developing business
     and retail processes in Elektrum Eesti OÜ and also in Eesti Gaas AS.

Consolidated statement of financial position

Thousand euros                 31 Dec 2017  31 Dec 2016
-------------------------------------------------------
ASSETS                                                 
Current assets                                         
Cash and cash equivalents              704          419
Trade and other receivables          2,055        1,956
Inventories                         10,499       11,096
Total current assets                13,258       13,471
Non-current assets                                     
Deferred income tax asset              189          228
Other non-current assets               487          522
Property, plant and equipment        2,395        3,022
Intangible assets                    1,513        1,676
Total non-current assets             4,584        5,448
TOTAL ASSETS                        17,842       18,919
                                                       
EQUITY AND LIABILITIES                                 
Current liabilities                                    
Borrowings                           1,309        5,835
Trade and other payables             5,984        6,923
Total current liabilities            7,293       12,758
Non-current liabilities                                
Borrowings                           5,363        1,196
Total non-current liabilities        5,363        1,196
TOTAL LIABILITIES                   12,656       13,954
                                                       
EQUITY                                                 
Share capital at par value           8,159        8,159
Share premium                          496          496
Reserves                             1,345        1,182
Retained earnings                   -4,872       -5,049
Net profit for the period               58          177
TOTAL EQUITY                         5,186        4,965
TOTAL LIABILITIES AND EQUITY        17,842       18,919

Consolidated statement of profit and loss

Thousand euros                                     4 Q     4 Q     2017     2016
                                                  2017    2016                  
--------------------------------------------------------------------------------
                                                                                
Revenue                                         12,969  12,704   47,459   46,993
Client bonus provision                              16      23       16       23
Revenue after client bonus provision            12,985  12,727   47,475   47,016
Cost of goods sold                              -5,863  -6,152  -23,805  -23,519
Gross profit                                     7,122   6,575   23,670   23,497
                                                                                
Distribution costs                              -5,425  -5,242  -20,630  -20,336
Administrative and general expenses               -567    -630   -2,387   -2,504
Other operating income (-expense)                  -12      95      -35       44
Operating profit                                 1,118     798      618      701
                                                                                
Finance costs                                     -159    -173     -521     -519
Profit before income tax                           959     625       97      182
                                                                                
Income tax expense                                 -39      -5      -39       -5
                                                                                
Net profit for the period                          920     620       58      177
                                                                                
                                                                                
Basic earnings per share from net profit for      0.02    0.02     0.00     0.00
 the period, EUR                                                                
                                                                                
Diluted earnings per share from net profit for    0.02    0.02     0.00     0.00
 the period, EUR                                                                
                                                                                

Maigi Pärnik-Pernik

Member of the Management Board

[e-mail]

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