ELKO Group Convention Riga, September 2004

Agenda Regional Economic Overview CEE and EU effect Russian Market Elko Group Update Future developments

Regional Economic Overview

European Developing Market Overview Three groups of countries –New EU Entrants: Baltics, Poland, Czech, Slovakia, Slovenia, and Hungary –Prospective EU Entrants: Romania, Bulgaria, and Former Yugoslavia –EU Neighbours: Russia, Ukraine, and Turkey The Convergence Play –Political and Economic convergence to EU norms driven by economic power of one market and political pressure

Convergence – Implications Faster economic growth than US or Western Europe for 20 years plus –Implies faster market growth for all manufactured goods –Increasing share of European Market Harmonisation –Common EU law –Similar business rules and partnership Extending to neighboring countries –Standardized rules on VAT and Duty –Common Currency and Accounting Principles –Unfortunately, significant cultural and other differences will remain

CEE vs. EU: GDP Per Capita, 2002 The Enduring Wealth Gap Productivity gap = lower IT spend GDP Per Capita at Nominal Rates — 2002 Various Estimates — 50 to 80 Years — Based on 3% to 4% Annual GDP Growth Source: EIU, Eurostat U.S. $

EU Accession: Understanding the Impact US$M CAGR 10.7% Pre-Accession Indirect 1998–2000 CAGR 9.9% Pre-Accession Low Impact 2001–2006 CAGR 9.9–11.4% Post-Accession High Impact 2007–2013 Three Phased Market Development IT Spending for the EU 12 Accession States Source: IDC

CEE vs. EU: GDP Per Capita, 2002 The Enduring Wealth Gap IT Spending Ratios in CEE, 2002 Czech Rep. Slovenia Greece Hungary Romania EU 15 = 2.8% Bulgaria EU Accession 12 CEE is still playing catch-up EU 15 average: $635 per capita/ca. 2.8% of GDP (2002) Poland Spain Ukraine EU 15 Russia Estonia Latvia Lithuania Turkey Croatia Slovakia Cyprus Source: IDC IT/Capita US$ IT$/GDP

EU 12 — IT Market Development CAGR 2002–2007 IT Consulting 0% 10% 20% 30% 40% 50% 60% 70% PCs Services Operations Datacoms Implementation Volume Servers Software App. Tools. App. Solutions. Storage Overall Regional Market Growth of 10–11% Annually CAGR 02/07 4.5% 6.9% 11.8% 12.2% 9.8% 11.6% $16 Billion Market by 2007 Source: IDC Worldwide Black Book, December 2003

Conclusion Low IT spending ratios plus high growth = huge potential Local expertise will be needed to design and implement a regional strategy. Majority of countries will grow quickly for at least 10 to 15 years in order to reach parity with Western Europe. EU accession will make more funding options available and drive additional investment in IT (direct and indirect impact)

Russian Market: Stabilizing Political system moving toward democracy Growth of middle class supporting political and economic reforms Russian business is increasingly linked to the EU

Russian Market: High Economic Growth Oil Boom fueling all sectors Economic growth spreading throughout country Dormant manufacturing capacity being utilized More predictable regulatory, tax and legal environment More focus on quality and value  High usage of technology to meet international competition

Russian Growth and the PC Market Total Desktop PCs shipped in 2003: 3.6 Million Source: IDC Proximity resellers Supplier is local

Russian PC Market by End User, 2003 Source: IDC

Russian PC Market: Unsaturated Source: IDC

Russian IT Market Growth by Product key issue in 2003 has been availability more than marketing investment Source: IDC

Long term growth for Russian IT market $bn >70% increase Source: IDC

ELKO Group Update

Vilnius, LT Emerald lakes, SL president Vaira-Vīķe Freiberga, LV Tatry, SK Drakula’s castle, RO Crimea, UA Andrus Veerpalu, EE Olympics champion St.Petersburg, RU Kolsjun island, CR RIGA, the Headquarters of ELKO Group

ELKO Group countries, overview countries are different: size language culture political situation mentality ELKO Group offices have in common: ambition to grow and succeed be a member of the ELKO Group

Mission Statement Be the Number One IT supplier in Europe’s Emerging Markets Through excellent execution and professional services, offer customers and vendors the opportunity to participate in the rapid growth in CIS, Eastern European and the Baltic countries. Deliver value to customers through excellent service, value to shareholders through superior returns, and value to employees through a stimulating and challenging work environment.

Key Figures ‘00-’04 / SALES REVENUE ($M) +20% +38% +18%

Revenue HY 1’03 & HY 1’04 Q1 2003Q Sales$78 million$92 million + 18 % Q2 2003Q Sales$74 million$94,4 million + 28 %

Sales Growth by Office HY1’03-HY2’04

Operational & Strategic Overview

ELKO Group Territory Development

ELKO Group Corporate Strategy Centralise Strategic management Integration into local markets Maintain extensive components based product portfolio Leverage technology

Recent Developments Slovakia: –Acquired new company –Upgraded warehouse and office space Russia: –New logistic centre in Moscow and 11 other regional centers –Increasing sales team by 15 people –Implementing JD Edwards Ukraine –Opened 5 offices and regional warehouses Romania –New warehouse and office

Successes of the ELKO TEAM

Some numbers CPU: 1 Mio. HDD’s: 1,4 Mio. Mainboards: 400k Media: 20,X Mio. VGA cards:220k Storage devices: 850k Displays: 220k Floppy Disks: 740k Keyboards: 300k Mice: 620k And much more…

Revenue Development 2003 – 2007 ($M)

The ELKO Team Powerful selling machine in the NEW middle of Europe Hard working dedicated distribution team Access to fast growing markets One central contact and control point opens business to 9 countries, 26 offices, 28 warehouses, 120 sales people and 5000 customers Strong financial performance audited by PriceWaterhouseCoopers gives stability and security

thank you! for more information about ELKO Group please visit our website: for further questions please contact ELKO Group marketing department