Baltika                       FINANCIAL RESULTS                 10/31/2002



BALTIKA'S RESULTS FOR 3Q 2002



The unaudited consolidated net sales of Baltika in the

first nine months of 2002 were EEK 361.4m (EUR 23.1m) and

the net profit was EEK 5.72m (EUR 0.37m). Compared to the

same period of 2001, the net sales increased by 19.3%

(EEK 58.56m; EUR 3.74m) while the net profit was smaller

by 37.8% (EEK 3.47m; EUR 0.22m). The net sales within the

first nine months of 2001 were EEK 302.8m and the net

profit was EEK 9.19m. The sales of the third quarter of

2002 amounted to EEK 129.78m, i.e. by 9.36% higher than

in the third quarter of the previous year (EEK 11.11m).

The net loss for the third quarter was EEK 3.86m, however

the company managed a profit of EEK 0.36m in the third

quarter of 2001.



Sales

In September, Baltika launched a new international

clothes trademark, MONTON, which is marketed in 30 retail

outlets of the Baltika Group in a total of five

countries. The first month of marketing demonstrated the

excellent sales potential of the new trademark: in

September, Monton’s turnover was EEK 21.1m, accounting

for 77% of the retail sales of the Baltika Group.

However, in July and August the sales were less than

normally. The long warm summer in the whole of Europe

curbed customer flows in shops as well as the average

purchase level per buyer. The sales enlivened only in

September. The net sales for September were 45.22% (EEK

58.69m, EUR 3.57m) of the sales turnover of the entire

third quarter. The retail sales of Baltika’s own stores

were EEK 27.5m (EUR 1.76m) in September, representing a

43% growth compared to the same period last year.

The share of Baltika’s own shops (brand and factory

shops) in the nine months net sales of the Baltika Group

was 47%, totalling EEK 171.17m (EUR 10.94m). The

wholesales comprised EEK 145.19m (EUR 9.28m) and the

sales of subcontracted products were EEK 41.31m (EUR

2.64m). Compared to the same period of the previous year,

the sales of our own products and goods increased by

31.5% up to EEK 318.8m (EUR 20.37m), while the sales of

subcontracted products downsized by 29.6%. The total

export sales for the nine months were EEK 267.05m (EUR

17.07m), accounting for 74% of the total net sales.

As of the end of September, Baltika Group had operable

retail space in seven countries with a total area of

8361m2, of which the sales space of own shops accounted

for 6603m2 (a total of 48 shops).



The sales efficiency has also increased in line with the

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

per m2 have increased by 12% compared to the nine months

of the previous year.



Profit

The net profit of Baltika Group for the nine months was

EEK 5.72m (EUR 0.37m) while the loss for the 3rd quarter

constituted EEK 3.86m (EUR 0.25m). The operating profit

for the nine months was EEK 14.4m (EUR 0.92m), remaining

at the level of the previous year (EEK 14.6m, EUR 0.94).

In connection with the introduction of the new trademark,

all the costs of launching the trademark and

restructuring the stores were borne in the third quarter.

These costs totalled EEK 8.3m (EUR 0.53m) on all five

markets, however they were one-time costs which affected

the results of just one quarter. Another factor that had

a considerable impact on the profit was the longer-than-

usual discount period during the summer applied in the

retail chain in order to reduce the stock of goods at the

end of the season. The effect of the sales below margin

on the profit is estimated by the management to be about

EEK 2.5m (EUR 0.16m). The increased loan burden in 2002

for the purpose of financing the investments necessary

for the implementation of the Baltika Group Strategy is

also reflected in financial expenses where the interest

expenses have increased by EEK 2.68m (EUR 0.17m) compared

to the same period of the previous year totalling EEK

6.45m (EUR 0.41m).



Additional share issue

In order to provide additional financing to the strategic

growth plans of the group and to increase the personal

interest of the top executives in the company, the

special meeting of shareholders of AS Baltika, held on 17

September, decided to increase the share capital by EEK

6,444,500 (EUR 411.88m) and to issue for that purpose

additional 644,450 shares with a nominal value of EEK 10

each and priced EEK 36 each; the total issue amount was

EEK 23,200,200 (EUR 1.48m). The entire issue was

subscribed for and paid by the investment company OÜ BMIG

founded by the management board and chairman of the

supervisory board of AS Baltika. The post-issue share

capital of AS Baltika is EEK 54,444,500 (EUR 3.48m) and

its major shareholders are Baltic Republics Fund (BRF)

and OÜ BMIG with 35.68% and 20.26%, respectively. The

issue was organised by AS Hansapank.





Balance sheet



The consolidated balance sheet total of Baltika was EEK

390.4m (EUR 24.95m) as of 30.09.2002; the growth compared

to the beginning of the year was EEK 93.0m (EUR 5.94m),

i.e. +31.26%. The inventories of goods, semi-finished

goods and basic materials increased, compared to the

beginning of the year, by EEK 43.54m (EUR 2.78m) up to

EEK 174.69m (EUR 11.16m). The introduction of the new

trademark Monton necessitated preproduction and build-up

of stocks in order to guarantee  that in the beginning of

September the Monton outlets on five markets are filled

with goods. In addition, the increase of the stock of

goods can also be attributed to the growth of retail

sales premises (+19 new stores within nine months) and

the preparation for the autumn season.



During the six months, investments into noncurrent

physical assets amounted to EEK 33.7m (EUR 2.2m).



{0>Investeeringute ja jaepindade kasvuga seotud varude

sisseostu finantseerimine on suurendanud Baltika Grupi

laenukoormust aasta algusega võrreldes 42,0 mln krooni

võrra.<}79{>»The financing of the purchase of stocks

necessitated by investments and expansion of retail

premises has increased the loan burden of Baltika Group

by EEK 42m compared with the beginning of the year.



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.«<0}



The main ratios of AS Baltika Group as of 30.09.02 were:





                         30.09.2002           30.09.2001

- operating profitability     4,0%           4,8%

(operating profit / net sales)

- net profitability           1,6%           3,0%

(net profit for the group /net sales)

return on owners’ equity ROE  8,5%           9,8 %

(net profit/owners’ equity*)

- return on total assets      3,7%           5,3%

(operating profit / net sales)

average cost*)

- solvency ratio

(current assets - stocks/     0,69           1,2

short-term obligations)

  *average of 12 months



AS BALTIKA

Income statement

consolidated, unaudited



th EEK                   Q3 2002  Q3 2001 9m 2002  9m 2001

Revenue

Net sales                 129 779  118 673 361 381  302 805

Other revenue                  50     -405   5 952    1 458

Total revenue             129 829  118 268 367 333  304 263



Expenses

Materials                 -34 510  -42 320-136 452 -121 328

Change in inventories     -16 386  -11 344    -733   -2 032

Other operating expenses  -35 332  -23 220 -88 695  -60 571

Personnel expenses        -37 237  -33 637-110 394  -92 921

Depreciation               -5 448   -3 587 -14 587  -10 487

Other expenses               -725   -1 012  -2 095   -2 280

Total expenses           -129 638 -115 120-352 956 -289 619



Operating profit              191    3 148  14 377   14 644



Financial income               54       76     285      649

Financial expenses         -2 535   -1 696  -7 110   -4 588

Profit before taxes        -2 290    1 528   7 552   10 705

Declared income tax            -3     -184    -268     -184

Net profit for the finan   -2 293    1 344   7 284   10 521

Minority interest           1 571      980   1 568    1 331

Net profit for the Group   -3 864      364   5 716    9 190



Basic earnings per share    -0,71     0,08    1,05     1,91



Diluted earnings per share  -0,79     0,08    1,04     1,89





BALTIKA

Income statement

consolidated, unaudited



th EUR                        Q3 2002  Q3 2001  9m 2002  9m 2001

Revenue

Net sales                       8 294    7 585   23 096   19 353

Other revenue                       3      -26      380       93

Total revenue                   8 298    7 559   23 477   19 446



Expenses

Materials                      -2 206   -2 705   -8 721   -7 754

Change in inventories          -1 047     -725      -47     -130

Other operating expenses       -2 258   -1 484   -5 669   -3 871

Personnel expenses             -2 380   -2 150   -7 055   -5 939

Depreciation                     -348     -229     -932     -670

Other expenses                    -46      -65     -134     -146

Total expenses                 -8 285   -7 357  -22 558  -18 510



Operating profit                   12      201      919      936



Financial income                    3        5       18       41

Financial expenses               -162     -108     -454     -293

Profit before taxes              -146       98      483      684

Declared income tax                 0      -12      -17      -12

Net profit for the financial     -147       86      466      672

Minority interest                 100       63      100       85

Net profit for the Group         -247       23      365      587



Basic earnings per share        -0,05     0,00     0,08     0,12



Diluted earnings per share      -0,05     0,01     0,07     0,12



Balance sheet

consolidated,unaudited

th EEK                      30.09.2002 30.09.2001  31.12.2001

ASSETS

Current assets

Cash and bank                  16 269      4 879     12 626

Marketable securities             476        477        574

Customer receivables           71 851     78 286     56 115

Other receivables              18 534     12 242     10 802

Inventory                     174 687    115 931    131 145

Total current assets          281 817    211 815    211 262

Non-current assets

Long-term fin. investments      2 566      2 205      2 600

Tangible fixed assets         101 784     70 995     78 390

Intangible fixed assets         4 258      2 205      5 180

Total non-current assets      108 608     75 405     86 170

TOTAL ASSETS                  390 425    287 220    297 432



LIABILITIES AND OWNERS’ EQUITY

Current liabilities

Debt obligations               68 435     24 358     34 721

Customer prepayments              126        142        154

Supplier payables              53 337     39 827     40 544

Other tax liabilities           4 966      5 604      5 081

Accrued expenses               11 809      9 732      6 641

Short-term provisions             -          120        -

Total current liabilities     138 673     79 783     87 141

Long-term liabilities

Long-term debt obligations     74 199     67 009     63 723

Total long-term liabilities    74 199     67 009     63 723

TOTAL LIABILITIES             212 872    146 792    150 864

Minority interest               8 701      7 013      6 632

OWNERS’ EQUITY                168 852    133 415    139 936

Share capital at nominal value 48 000     48 000     48 000

Unregistered share capital     23 200        -          -

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 fin.year     5 716      9 190     15 711

TOTAL LIABILITIES AND OWNERś  390 425    287 220    297 432

EQUITY



Balance sheet

consolidated,unaudited

th EUR                          30.09.2002  30.09.2001 31.12.2001

ASSETS

Current assets

Cash and bank                      1 040        312         807

Marketable securities                 30         30          37

Customer receivables               4 592      5 003       3 586

Other receivables                  1 185        782         690

Inventory                         11 165      7 409       8 382

Total current assets              18 011     13 537      13 502

Non-current assets

Long-term fin. investments           164        141         166

Tangible fixed assets              6 505      4 537       5 010

Intangible fixed assets              272        141         331

Total non-current assets           6 941      4 819       5 507

TOTAL ASSETS                      24 953     18 357      19 009



LIABILITIES AND OWNERS’ EQUITY

Current liabilities

Debt obligations                   4 374      1 557       2 219

Customer prepayments                   8          9          10

Supplier payables                  3 409      2 545       2 591

Other tax liabilities                317        358         325

Accrued expenses                     755        622         424

Short-term provisions                -            8         -

Total current liabilities          8 863      5 099       5 569

Long-term liabilities

Long-term debt obligations         4 742      4 283       4 073

Total long-term liabilities        4 742      4 283       4 073

TOTAL LIABILITIES                 13 605      9 382       9 642

Minority interest                    556        448         424

OWNERS’ EQUITY                    10 792      8 527       8 944

Share capital at nominal value     3 068      3 068       3 068

Unregistered share capital         1 483        -           -

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 fin.year          365        587       1 004

TOTAL LIABILITIES AND OWNERS’     24 953     18 357      19 009

EQUITY





Ülle Järv

Management  Board member

+372 6302 741