On
The reorganization process has allowed Baltika to continue with business restructuring. We have closed the majority of unprofitable stores and launched a new store concept in four locations. We have optimized business processes and significantly reduced operating costs. The processes related to cost optimization, efficiency improvement, and profitability enhancement will continue throughout 2023. The decisions and changes made during the reorganization process are already having a positive impact on Baltika's financial results. Baltika confirms its ability to successfully fulfill the reorganization plan and the commitments made in the plan.
Brigitta Kippak
Chairman of The Management Board, CEO
brigitta.kippak@baltikagroup.com
THE REPORT OF THE REORGANISATION ADVISOR ON THE FULFILMENT OF THE REORGANISATION PLAN
In accordance with § 50 of the Reorganisation Act, the reorganisation advisor of Baltika hereby presents to the court and creditors the sixth written report regarding the fulfilment of the reorganisation plan.
To verify the fulfilment of the reorganisation plan and evaluate the financial situation, the reorganisation advisor has used the audited accounts of Baltika as at
Fulfilment of the reorganisation plan
The claims of 30 creditors in the total amount of 12 206 649.74 euros were transformed based on the reorganisation plan. Claims were transformed in two groups.
Total financial impact of reduction of claims based on the reorganisation plan is 5 045 198 euros, which is recorded under other operating revenue in Baltika’s 2020 profit and loss statement.
Based on the reorganisation 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. Baltika has fulfilled this obligation to
Based on the reorganisation plan, payments of principal amounts of claims in Group II had to begin from the end of 2021. The first payments were made before the deadline or
Baltika’s financial situation
Within the first six month 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).
The below table contains the prognosis of 2022 profit and loss statement presented in the reorganisation plan of Baltika, actual profit and loss for 2022, the figures for 4 months from the prognosis (
Thousand euros | Prognosis 12 months 2022 in reorganisation plan | Actual 12 months 2022 | Prognosis 4 months 2023 | Actual 4 months 2023 |
Revenue | 19 014 | 2 887 | 9 618 | 1 971 |
Total revenue | 19 014 | 2 887 | 9 618 | 1 971 |
Cost of goods sold | 13 451 | 4 060 | 5 359 | 1 423 |
Gross profit | 5 564 | -1 173 | 4 259 | 548 |
Gross profit margin | 29% | -41% | 44% | 28% |
Various operating expenses | 2 353 | 1 150 | 905 | 319 |
Payroll | 2 312 | 1 562 | 830 | 534 |
Depreciation, amortisation and impairment | 187 | 140 | 73 | 39 |
Other operating expense (-) /income (+) | 0 | 7 379 | 0 | 4 |
Operating income (-loss) | 711 | 3 354 | 2 450 | -339 |
Revenue for 2022 was 2 887 th. Euro and has declined 53% in comparison to 2021 (2021: 6 113 th. Euro). Revenue was significantly affected by the following events:
- Unpredictable state of war between
Russia andUkraine that had an impact of the sales of Baltika from the first weeks of March. - All Baltic countries experienced high rates of COVID-19 cases in the first quarter of 2022, which impacted negatively on the visits to stores and also presented challenges to everyday management of stores’ operations, due to which quality of service also declined and impacted on sales negatively.
- During 2022 a total of 12 stores were closed resulting is significant decline in revenue compared to 2021. Decline in revenue was compensated by opening of four new concept stores and one outlet store.
- Adjustment of intra-group transfer pricing that resulted in decreasing of AS Baltika’s revenue by 2 330 th Euro.
Operating profit for 2022 was materially impacted by Baltika’s strategic decision to sell part of Ivo Nikkolo trademarks and continue using them under an exclusive licence agreement. As a result of this transaction, Baltika recorded a one-off gain of 7 436 th Euro and as a result operating profit for the year was 3 354 th Euro.
Revenue for
- Demand for Ivo Nikkolo products has increased in comparison to previous year. Revenue of retail segment of Baltika grew 7% during the first four months of 2023 as compared to the same period previous year.
- Group’s retail segment has been growing organically. As of end of April last year Baltika was operating 30 stores, whereas at the end of April this year the number of stores was 25. Hence Baltika was able to grow revenue despite of decreasing number of stores.
Gross profit for
Operating loss for
The prognosis vs actual cumulative profit and loss for 40 months from
Thousand euros | Prognosis in reorganisation plan for 40 months till | Actual for 40 months till |
Revenue | 48 849 | 20 861 |
Total revenue | 48 849 | 20 861 |
Cost of goods sold | 36 955 | 19 463 |
Gross profit | 11 894 | 1 398 |
Gross profit margin | 24% | 7% |
Various operating expenses | 7 629 | 5 248 |
Payroll | 8 112 | 6 700 |
Depreciation, amortisation and impairment | 487 | 317 |
Other operating expense (-) /income (+) | 3 776 | 11 241 |
Operating income (-loss) | -558 | 374 |
While observing the actual profit and loss for 40 months (
Baltika’s shareholders’ equity as of
For the fulfilment of the reorganisation plan it is important that Baltika’s future financial results, considering the worsening of results in 2021 and the first half of 2022, 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 and presented to reorganisation advisor, Baltika’s projected 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
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.
Reorganisation advisor of Aktsiaselts Baltika
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