Baltika                       FINANCIAL RESULTS                 07/24/2002



BALTIKA'S RESULTS FOR 6M 2002



NOTES ON CONSOLIDATED ECONOMIC RESULTS OF AS BALTIKA FOR THE

FIRST SIX MONTHS OF 2002





The unaudited consolidated net sales of Baltika in the first

six  months of 2002 were EEK 232.6m (EUR 14.8m) and the  net

profit was EEK 9.6m (EUR 0.61m). Compared to the same period

of  2001,  the net sales increased by 25.8% (EEK 47.5m;  EUR

3.4m) and the net profit by 8.5% (EEK 0.8m; EUR 0.05m).  The

net  sales  within  the first six months of  2001  were  EEK

184.1m and the net profit was EEK 8.8m. The net sales of the

2nd  quarter  were EEK 107.3m - an increase  of  43.4%  (EEK

32.5m)  compared with the 2nd quarter of the previous  year.

The net profit of the 2nd quarter was EEK 1.6m, which was by

19.8% less (EEK 0.4m) than in the previous year.



The  share of Baltika's own shops (brand and factory  shops)

in  the retail sales of the Baltika Group increased to  49%,

constituting   EEK  112.5m  (EUR  7.19m).   The   wholesales

comprised   EEK  90.25m  (EUR  5.77m)  and  the   sales   of

subcontracted products were EEK 26.13m (EUR 1.67m). Compared

to  the  same period of the previous year, the sales of  our

own  products  and goods increased by 48% up to  EEK  204.5m

(EUR  13.07m),  while  the sales of  subcontracted  products

downsized  by 42%. The changes are related to the activities

arising from the strategy of the company. As of the  end  of

June,  Baltika  Group  had operable retail  space  in  seven

countries  with a total area of 7714m2, of which  the  sales

space  of  own  shops accounted for 5484m2 (a  total  of  40

shops).  Simultaneously  with  the  opening  of  new  shops,

preparations were underway to implement a new retail concept

of BG and to introduce a new retail brand.



The  sales  efficiency has also increased in line  with  the

increment  of  new retail outlets (sales/m2). Average  sales

per  m2 have increased by 29% compared to the six months  of

the previous year.



Significant  changes have occurred in the cost structure  of

Baltika  Group, attributable to the increment of new stores;

lease  and  labour costs have increased the most.  Also,  in

2002  higher  than  usual  costs can  be  explained  by  the

development  and implementation of a new retail  concept  by

September this year. The operating costs and labour costs of

the  company increased, compared to the same period  of  the

previous  year, by 43% and 23%, respectively.  The  increase

in  the  sales of Baltika's own products has also  increased

the  percentage of goods and material related costs  in  the

structure of costs.



The  consolidated  balance sheet total of  Baltika  was  EEK

351.3m  (EUR  22.5m)  as  of the end  of  June;  the  growth

compared  to  the beginning of the year was EEK  53.9m  (EUR

3.4m),  i.e.  +18%. The inventories of goods,  semi-finished

goods  and  basic  materials  increased,  compared  to   the

beginning  of the year, by EEK 35.3m (EUR 2.3m)  up  to  EEK

166.4m (EUR 10.6m). Such an  increase is mainly attributable

to  the  increment  of retail premises and  to  the  ongoing

preparations for the autumn season.



During  the six months, investments into noncurrent physical

assets amounted to EEK 29m (EUR 1.9m).

Towards  the  end  of  May,  a 75% subsidiary,  SIA  Baltika

Latvija, was founded in Latvia. Its share capital is 131,200

LVL  and  it  will  start operations with  three  stores  in

August.



The following methods of financing have been used: overdraft

facilities,  proceeds from the issue of bonds,  a  new  bank

loan for the completion of the Ahtme sewing factory and  the

sale and lease-back of equipment.



The main ratios of AS Baltika Group as of 30.06.2002 were:



                                 30.06.2002     30.06.2001

- operating profitability          6.13%          6.24%

 (operating profit / net sales)

- net profitability                4.14%          4.79%

(operating profit / net sales)

return on owners' equity ROE      11.18%         14.1%

(operating profit / net sales)

the average of 12 months)

- return on total assets            5.4%          8.0%

(operating profit / net sales)

average cost  -

the average of 12 months)

- solvency ratio

(current assets - stocks/          0.69           0.71

short-term obligations)



Income statement                                      

consolidated,                                         

unaudited

                                                       

th EEK                Q2  2002        Q2        6m      6m

                                    2001      2002    2001

Revenue                                               

Net sales              107 296    74 809   231 602 184 132

Other revenue              872       333     5 902   1 863

Total revenue          108 168    75 142   237 504 185 995

Expenses                                              

Materials              -43 232   -36 473  -101 942 -79 008

Change in               10 338    13 566    15 653   9 312

inventories

Other operating        -27 338   -17 965   -53 363 -37 351

expenses

Personnel expenses     -37 947   -27 050   -73 157 -59 284

Depreciation            -4 803    -3 588    -9 139  -6 900

Other expenses          -1 057      -252    -1 370  -1 268

Total expenses        -104 039   -71 762  -223 318 -174 499

                                                      

Operating profit         4 129     3 380    14 186  11 496

                                                      

Financial income           113       114       231     573

Financial expenses      -2 407    -1 353    -4 575  -2 892

Profit before taxes      1 835     2 141     9 842   9 177

Declared income tax       -265         0      -265       0

Net profit for the       1 570     2 141     9 577   9 177

financial year

Minority interest         -182       -43        -3     351

Net profit for the       1 752     2 184     9 580   8 826

Group

Basic earnings per        0,37      0,46       2,0     1,84

share  (kr)

Diluted earnings per      0,36      0,45      1,97    1,82

share (kr)







                                                              

Income statement                                              

consolidated, unaudited                                       

                                                              

th EUR                                Q2     Q2       6m      6m 

                                    2002     2001     2002    2001

Revenue                                                       

Net sales                           6 857   4 781   14 802  11 768

Other revenue                          56      21      377     119

Total revenue                       6 913   4 802   15 179  11 887

                                                                  

Expenses                                                          

Materials                          -2 763  -2 331   -6 515  -5 050

Change in inventories                 661     867    1 000     595

Other operating expenses           -1 747  -1 148   -3 411  -2 387

Personnel expenses                 -2 425  -1 729   -4 676  -3 789

Depreciation                         -307    -229     -584    -441

Other expenses                        -68     -16      -88     -81

Total expenses                     -6 649  -4 586  -14 273 -11 152

                                                                  

Operating profit                      264     216      907     735

                                                                  

Financial income                        7       7       15      37

Financial expenses                   -154     -86     -292    -185

Profit before taxes                   117     137      629     587

Declared income tax                   -17       0      -17       0

Net profit for the financial year     100     137      612     587

Minority interest                     -12      -3        0      22

Net profit for the Group              112     140      612     564

                                                              

Basic earnings per share              0,02    0,03     0,13   0,12

                                                                  

Diluted earnings per share           0,02    0,03     0,13    0,12







Balance sheet                                   

consolidated,unaudited                          

th EEK                  30.06.2002   30.06.2001  31.12.2001

ASSETS                                           

Current assets                                  

Cash and bank               11 280       4 682     12 626

Marketable securities          476         512        574

Customer receivables        57 415      43 624     56 115

Other receivables           14 328       9 720     10 802

Inventory                  166 391     113 632    131 145

Total current assets       249 890     172 170    211 262

Non-current assets                              

Long-term fin.               2 454       1 951      2 600

investments

Tangible fixed assets       94 302      61 531     78 390

Intangible fixed assets      4 643       2 462      5 180

Total non-current          101 399      65 944     86 170

assets

TOTAL ASSETS               351 289     238 114    297 432

                                                

LIABILITIES AND OWNERS’                         

EQUITY

Current liabilities                             

Debt obligations            59 120      48 133     34 721

Customer prepayments           141         109        154

Supplier payables           45 654      25 153     40 544

Other tax liabilities        7 811       4 702      5 081

Accrued expenses             8 220       4 281      6 641

Short-term provisions          -           120        -

Total current              120 946      82 498     87 141

liabilities

Long-term liabilities                           

Long-term debt              74 199      16 532     63 723

obligations

Total long-term             74 199      16 532     63 723

liabilities

TOTAL LIABILITIES          195 145      99 030    150 864

Minority interest            6 629       6 033      6 632

OWNERS’ EQUITY             149 515     133 051    139 936

Share capital at            48 000      48 000     48 000

nominal value

Share premium               24 910      24 910     24 910

Reserves                    22 885      22 885     22 885

Retained earnings           44 141      28 430     28 430

Net profit for the           9 580       8 826     15 711

fin.year

TOTAL LIABILITIES AND      351 289     238 114    297 432

OWNERS’ EQUITY





Balance sheet                                  

consolidated,unaudited                         

th EUR                  30.06.2002  30.06.2001  31.12.2001

ASSETS                                         

Current assets                                 

Cash and bank                  721       299         807

Marketable securities           30        33          37

Customer receivables         3 669     2 788       3 586

Other receivables              916       621         690

Inventory                   10 634     7 262       8 382

Total current assets        15 971    11 004      13 502

Non-current assets                             

Long-term fin.                 157       125         166

investments

Tangible fixed assets        6 027     3 933       5 010

Intangible fixed assets        297       157         331

Total non-current            6 481     4 215       5 507

assets

TOTAL ASSETS                22 451    15 218      19 009

                                               

LIABILITIES AND OWNERS’                        

EQUITY

Current liabilities                            

Debt obligations             3 778     3 076       2 219

Customer prepayments             9         7          10

Supplier payables            2 918     1 608       2 591

Other tax liabilities          499       301         325

Accrued expenses               525       274         424

Short-term provisions          -           8         -

Total current                7 730     5 273       5 569

liabilities

Long-term liabilities                          

Long-term debt               4 742     1 057       4 073

obligations

Total long-term              4 742     1 057       4 073

liabilities

TOTAL LIABILITIES           12 472     6 329       9 642

Minority interest              424       386         424

OWNERS’ EQUITY               9 556     8 503       8 944

Share capital at             3 068     3 068       3 068

nominal value

Share premium                1 592     1 592       1 592

Reserves                     1 463     1 463       1 463

Retained earnings            2 821     1 817       1 817

Net profit for the             612       564       1 004

fin.year

TOTAL LIABILITIES AND       22 451    15 218      19 009

OWNERS’ EQUITY





Ülle Järv

Member of the Management Board

+372 6302 741