LEADING FASHION RETAILER IN THE BALTICS AND EASTERN EUROPE

February 2013 Baltika Group today

• Baltika Group is strong fashion retailer in the Baltics and Eastern Europe • Baltika employs vertically integrated business model • Group owns five fashion brands: Monton, Mosaic, Baltman, Bastion, Ivo Nikkolo • Group operates five retail concepts and over 110 stores in five countries • Over 1200 employees • 2011 revenue 53.4 million euros • www.baltikagroup.com From production company to fashion retailer

2013 •5 brands •113 stores in 5 countries •Over 1200 employees History: company

1928 Gentleman established in as producer of raincoats 2007 European Business Awards 2007 finalist in 1959 Company is restructured and renamed Baltika, producing two categories formal menswear 2008 Baltika is recognised for having the best 1960 New production building opened at Veerenni 24, Tallinn investor relations on the Tallinn Stock Exchange 1988 Production of ladies wear begins 2011 Baltika is recognised: best investor relations on the Tallinn Stock Exchange 3rd place 1991 Baltika is privatised 2012 Nominent at Swedish Business Awards in 1997 Baltika listed on the Tallinn Stock Exchange that belongs the category of Corporate Social Responsibility to the NASDAQ OMX Group today Initiative of the Year History: brands

1991: Baltika launches its first menswear 2006: CHR and Evermen concepts rebranded collection Baltman as Mosaic 1993: Baltika launches its first ladies wear 2006: Baltika acquires Estonian well known collection Christine Collection (CHR) designer brand Ivo Nikkolo, established in 1994 1995: Evermen collection launched 2012: Baltika acquires Estonian well known 2002: Baltika launches its brand Monton in brand Bastion, established in 1987 five markets History: stores

1991: Baltika opens its first store in Baltika has today stores in five : Baltman store in Pärnu that is countries and 26 cities opened till today 2012 Baltika opens Monton e-store that 1993: first store in serves customers in Europe, Russia and 1994: first store in Russia 1996: first store in 2000: first store in Ukraine History: Baltika Quarter

2009: Baltika establishes Baltika Quarter to unite design and creative companies, company sells its real estate in 2012 to focus on its core business, fashion retail 2009: Baltika opens novel concept store Moetänav, representing all Baltika´s four brands 2010: Baltika renovated office is awarded with Estonian Cultural Endowment Annual Award for architecture and Estonian Society of Interior Architects Annual Award in the category of offices Baltika head office in Tallinn

• Baltika head office is located in Tallinn in Baltika Quarter • Former production building, built in 1960s, renovated into a modern office building in 2009 • Baltika Quarter creates synergy of design and creative companies • Awards for Baltika office: – Estonian Cultural Endowment Annual Award for architecture 2009 – Estonian Society of Interior Architects Annual Award in the category of offices 2009 – Tallinn Design Map History: awards

Fashion Award Golden Needle (Estonia) for Baltika´s designers: 2011 nomination, Aivar Antonio Lätt (Baltman) 2009 Eve Hanson (Ivo Nikkolo) 2005 Eve Hanson (Ivo Nikkolo) 2004 Evelin Lill (CHR) 2003 Merike Pääro (Bastion) 1999 Janika Sootna (CHR) 1998 Tarvo Jaansoo (Baltman) 1997 Ivo Nikkolo (Ivo Nikkolo) 1996 Marika Siska (Baltman) Vertically integrated business model

• A balanced portfolio of different brand store chains • Department stores in the Baltics, (Monton, Mosaic, Baltman, Ivo Nikkolo, Bastion) Finland, Russia and Europe • Strong local retail organisations in five markets • Monton e-store opened in 2012 • Brands franchise concepts Retail: Multichanneling: ca 90% of net sales ca 10% of net sales

• Own production base (two factories in Estonia): specialisation in men’s and women’s tailored suits, shirts, jackets, coats (ca 30% of sales) • Worldwide purchasing (ca 70% of sales)

Sourcing

• Centralised management: product design, brand management, supply chain, logistics, store concepts, merchandising, marketing, etc. • Efficient inventory control and sales information systems: info available on a daily basis Centralised management Advantages of vertically integrated business model • Retail partner is participating in collection making process: – Based on customer demand; – Replenishment according to sales results; – Quick response – repeating bestsellers during season; • Price making policy according to customer’s purchasing power and demand: – First price; – Sales prices policy; • Competitiveness increases; • Flexibility when managing crisis; • Producer isn't so dependent from cooperation partners like in wholesale and producer can timely forecast production capacity and strategy. Sourcing from 19 countries

Sales to 27 countries

Central warehouse in Estonia COLLECTION DEVELOPMENT PROCESSES Collection Development Cycle

sales monitoring&analysis, Range Review; stock management; initial sales and buying plan; replenishment; of products; building up OTB for next promotions, other activities period

transportation to Baltika fashion trends analysis Warehouse (styling, colour palettes, From Baltika Warehouse to fabrics); Markets creative trips; fabric fairs

COLLECTION DEVELOPMENT PROCESS orders to suppliers; decision of colours, fabrics; order conformation; first styling ideas; production new fabrics testing

designing in Corel Designer; salesman samples ; proto sample orders; block orders for supplier if preparation of samples needed; first cost prices based on final cost prices proto Product development sequence Sales and Marketing sequence BRANDS AND RETAIL CONCEPTS Brands • Launched in 2002 • Monton is exciting, quality fashion brand reflecting global trends in its own unique way • Target customer: – 25+ fashion concious and independent men and women earning average income – individual, fully formed taste, make their own fashion choices • New brand visual identity and store concept in 2011 in co-operation with international agency Dan Pearlman • Store format: 200-350 sqm in shopping centre • Monton collection sold in 51 Baltika Group stores in Estonia, Latvia, Lithuania , Ukraine and Russia • Monton e-store Monton new concept store in SC Galerija Centrs (1): Monton new concept store in SC Galerija Centrs (2): Monton new concept store in SC Galerija Centrs (3): Monton new concept store in SC Galerija Centrs (4): • Launched in 2006 • Mosaic is for women and men, who are practical, responsible and well-organized and have a need for uncomplicated and reliable fashion • Target customer: – 35+ family-oriented and practical women and men earning average income – value traditions and are socially active, want to look elegant and stylish, prefer clothes making them look younger • New brand visual identity and store concept in 2011 in co-operation with international agency Dan Pearlman • Store format: 150-200 sqm in shopping centre • Mosaic collection sold in 51 Baltika Group stores in Estonia, Latvia, Lithuania, Ukraine and Russia • Main wholesale customers are Peek & Cloppenburg, Tallinna Kaubamaja and Stockmann • Launched in 1991 • Prestigious business wear brand for men, offering stylish, classic and high-quality clothing and personal service • 20-year-old innovative brand (multi-layered, wind- and waterproof fabrics like used in sportswear) • Target customer: – 35+ practical men earning higher income and working in management position, needing sophisticated look for everyday work, business trips and evening events – value quality and personal service, practicality and innovation • Store format: 60-100 sqm in shopping centre • Baltman collection sold in 16 Baltika Group stores in Estonia, Latvia and Lithuania • Main wholesale customer is Tallinna Kaubamaja • Designer fashion brand for ladies offering premium business outfit and occasion wear to express own individuality • Brand established by Estonian fashion designer Ivo Nikkolo in 1994, Baltika acquired the brand in September 2006 • Target customer: – 30+ mindset professional, self confident and intelligent women with higher income needing quality outfit for work, business trips and events – value high quality of life and expect very high level of service and high product quality • Store format: 60-100 sqm in shopping centre • Ivo Nikkolo collection sold in 17 Baltika Group stores in Estonia, Latvia, Lithuania , Russia and Ukraine • Main wholesale customers are Stockmann, Tallinna Kaubamaja. Through wholesale partner sold also in Russia and Finland • Launched in 1987 • Oriented to a woman who values quality, classical style and Estonian production • Target customer: – 35+ feminine woman with classic taste and wish for formal and festive style quality clothing – values timeless fashion, quality and brand handwriting • Collection is sold in 7 stores in Estonia and Latvia HEAD OFFICE AS Baltika Veerenni 24 EE-10135 Tallinn, Estonia Tel. +372 630 2731 Fax +372 630 2814 [email protected] www.baltikagroup.com