Market announcement

Title

Consolidated interim report for Q4 and 12 months 2010

Message

Tallinn, Estonia, 2011-02-15 18:43 CET (GLOBE NEWSWIRE) --

Management Report

Selected Financial Indicators

In summary, the selected financial indicators of AS Silvano Fashion Group for
Q4 2010 and 12 months 2010 were as follows: 



In thousands of EUR                                   Q4 2010  Q4 2009  % change
--------------------------------------------------------------------------------
Net sales                                              20,857   16,645     25.3%
--------------------------------------------------------------------------------
Earnings before interest, taxes and depreciation        3,579      308  1,062.0%
(EBITDA)                                                                        
--------------------------------------------------------------------------------
Net profit / (loss) for the period                      2,948      706    317.6%
--------------------------------------------------------------------------------
Net profit / (loss) attributable to owners of the       2,621      326    704.0%
Company                                                                         
--------------------------------------------------------------------------------
Earnings per share (EUR)                                 0.07     0.01    600.0%
--------------------------------------------------------------------------------


In thousands of EUR                                       2010    2009  % change
--------------------------------------------------------------------------------
Net sales                                               93,292  74,044     26.0%
--------------------------------------------------------------------------------
Earnings before interest, taxes and depreciation        19,415   6,052    220.8%
(EBITDA)                                                                        
--------------------------------------------------------------------------------
Net profit / (loss) for the period*                     15,064   1,391    983.0%
--------------------------------------------------------------------------------
Net profit / (loss) attributable to owners of the       12,240    -165          
Company*                                                                        
--------------------------------------------------------------------------------
Earnings per share (EUR)                                 0.310  -0.004          
--------------------------------------------------------------------------------
Operating cash flow for the period                      16,854  11,754     43.4%
--------------------------------------------------------------------------------
* Selected financial indicator includes only the result of continuing
operations in 2009 



In thousands of EUR                              31.12.2010  31.12.2009  %      
                                                                         change 
--------------------------------------------------------------------------------
Total assets                                         65,085      54,352    19.7%
--------------------------------------------------------------------------------
Total current assets                                 49,974      39,452    26.7%
--------------------------------------------------------------------------------
Total equity attributable to equity holders of       42,042      31,308    34.3%
the Company                                                                     
--------------------------------------------------------------------------------
Loans and borrowings                                     36       1,805   -98.0%
--------------------------------------------------------------------------------
Cash and cash equivalents                            21,468       9,838   118.2%
--------------------------------------------------------------------------------


Ratios*                                               Q4 2010  Q4 2009  % change
--------------------------------------------------------------------------------
Gross margin                                            38.7%    44.8%    -13.8%
--------------------------------------------------------------------------------
EBITDA margin                                           17.2%     1.9%    805.3%
--------------------------------------------------------------------------------
Net profit margin attributable to owners of the         12.6%     2.0%    541.3%
Company                                                                         
--------------------------------------------------------------------------------


Ratios*                                                   2010   2009  % change
-------------------------------------------------------------------------------
Gross margin                                             39.8%  43.5%     -8.5%
-------------------------------------------------------------------------------
EBITDA margin                                            20.8%   8.2%    153.7%
-------------------------------------------------------------------------------
Net profit margin attributable to owners of the Company  13.1%  -0,2%          
-------------------------------------------------------------------------------
ROA                                                      20.5%  -0,3%          
-------------------------------------------------------------------------------
ROE                                                      33.4%  -0,5%          
-------------------------------------------------------------------------------
Price to earnings ratio (P/E)                              8.8  n/a            
-------------------------------------------------------------------------------
Current ratio                                              4.1    2.8     46.4%
-------------------------------------------------------------------------------
Quick ratio                                                2.8    1.6     75.0%
-------------------------------------------------------------------------------
* Financial ratios cover only continuing operations



Underlying formulas:

Gross margin = gross profit / sales revenue
EBITDA margin = EBITDA / sales revenue
Net profit margin attributable to owners of the Company = net profit
attributable to owners of the Company / sales revenue 
ROA (return on assets) = net profit attributable to owners of the Company/
average total assets 
ROE (return on equity) = net profit attributable to owners of the Company/
average equity attributable to equity holders of the Company 
EPS (earnings per share) = net profit attributable to owners of the Company/
weighted average number of ordinary shares 
Price to earnings ratio = Share price at the end of reporting period/earnings
per share 
Current ratio = current assets / current liabilities
Quick ratio = (current assets - inventories) / current liabilities



Business results

On overall, according to the seasonality trends of the business Q4 is usually
slightly weaker with respect to sales as compared to other quarters; however,
December usually is one of the best performing months in a year. 

In 2010 the Group's major markets have continued to recover. Economic situation
in Russia, the Group's key market, was steadily improving. The consumers'
purchasing power has increased and unemployment rate has lowered. Russian Ruble
strengthened by 3.8% against multi-currency basket in 2010 (from January till
December). To compare, in 2009 it weakened by 3.9%. Real effective exchange
rate of the Russian Ruble went up by 4.2% against USD and by 15.0% against
Euro. Based on the forecasts of the Ministry of Economics of Russian Federation
effective exchange rate of Russian Ruble will go up by 5.7% in 2011. Oil and
gas prices continue to support Russian economy. As a result, retail sales in
the end customer market have been growing since the beginning of 2010. The
Group's sales in Russia in 12 months 2010 were 24.1% above of the respective
period in 2009. 

The Belarusian market has been stable during 2009 and did not weaken in 12
months 2010. According to preliminary information the estimated Belarusian
economy's GDP growth was 7.6% in 2010. In Q4 2010 retail operations in Belarus
demonstrated an increase of 56.6% in local currency terms and 56.3% in EUR
terms as compared to Q4 2009. 

Unfortunately signs of the recovery of Ukrainian economy are still not as
strong as in Russia. 

Despite the difficult situation that remains in the Baltics, where economy
suffered the most in 2009, Lauma Lingerie's Q4 2010 sales in the Baltic
countries increased by 76.5% as compared to Q4 2009. 

In general, 2010 sales level and market situation confirmed management forecast
of business recovery. Q4 sales demonstrated an increase of 25.3% as compared to
Q4 2009. 

The opinion of the management of the Group is that the markets have entered
into the stabilization phase and that consumers have adjusted their purchasing
patterns to the new market conditions. 

On overall, apparel and lingerie markets are currently undersupplied,
especially in Russia, because of limited orders placed for finished garments by
major retailers in 2009 while the demand has grown significantly. The situation
is favourable for the companies operating their own production units and those
capable of fast restock of their retail outlets due to effective sourcing and
logistics solutions. At the same time this has brought severe rivalry for local
production capacities and the price per labour minute in the market has on
average increased by 30-50%. 

At the end of the reporting period the Group and its franchising partners
operated 412 Milavitsa and Lauma Lingerie outlets, including 50 stores operated
directly by the Group and the rest by franchising partners. The Group's retail
focus has been shifted towards the promotion and support of franchising in
cooperation with existing and new partners. 



Financial performance

The Group's sales from continuing operations amounted to EUR 93,292 thousand in
2010, representing a 26.0% increase as compared to the previous year. In Q4
2010 sales amounted to EUR 20,857 thousand, representing a 25.3% increase as
compared to respective period in the previous year. 

Overall wholesale sales from continuing operations increased by 37.7%, while
retail sales from continuing operations presented a decrease of 5.4%, mainly
due to closures of underperforming stores and the restructuring of the Group's
distribution model that was carried out by the management in 2009. Decrease in
retail sales is thus in line with management expectations and follows the
restructuring decisions taken in 2009 when loss-making own retail operations in
Russia were gradually discontinued. As the result, the proportion of own retail
sales in total sales decreased by 5.8% and came at 17.5% of total sales in
2010. 

The Group's gross margin from continuing operations in 2010 decreased and was
39.8%, as compared to 43.5% in the previous year. Q4 2010 gross margin
decreased as well as compared to Q4 2009 and amounted to 38.7%. Decrease in
gross margin is mainly explained by higher customs duties on materials imported
by the Group from the EU after Belarus joining the Customs Union with Russia
and by the decline of the proportion of retail sales in total sales. 

The consolidated operating profit from continuing operations in 2010 amounted
to EUR 17,658 thousand, compared to EUR 3,863 thousand in 2009. The
consolidated operating margin from continuing operations was 18.9% (5.2% in
2009). The operating profit and the operating margin in 2009 were adversely
influenced by one-off expenses. 

Consolidated net profit from foreign exchange rate fluctuations amounted to EUR
805 thousand in 2010 and was mainly accrued in Q1 2010 and mainly related to
the intra-group borrowings in EUR and USD. 

Effective tax rate for the year 2010 amounted to 22.2% and was lower than
expected due to relatively low effective tax rates in Q2 2010 (19.2%) and Q4
2010 (18.7%). Effective tax rates in 2010 and Q4 2010 improved significantly as
compared to the respective periods in the previous year. While statutory tax
rates in Belarus and Russia remained unchanged, the improvement of the
effective tax rate is caused by the terminated loss making operations, lowering
profitability of the Group's largest subsidiary SP ZAO Milavitsa and use of tax
loss of prior years in Russia. 

Consolidated net profit from continuing operations attributable to equity
holders amounted to EUR 12,240 thousand in 2010, compared to net loss of EUR
165 thousand in 2009; net margin from continuing operations attributable to
equity holders was 13.1% (up from a negative margin of 0.2% in 2009). 

In 2010, the Group's return on equity amounted to 33.4% (-6.8% in 2009) and
return on assets was 20.5% (-3.8% in 2009). 



Financial position

As of 31 December 2010 consolidated assets amounted to EUR 65,085 thousand
representing an increase of 19.7% as compared to the position as of 31 December
2009. 

Property, plant and intangibles balances increased by EUR 657 thousand as
compared to 31 December 2009. Acquisitions of property, plant and intangible
assets amounted to EUR 2,419 thousand in 2010. 

Inventory balance amounted to EUR 15,792 thousand as of 31 December 2010 as
compared to EUR 17,019 thousand as of 31 December 2009. Decrease in inventories
is mainly explained by optimization of stock levels in the distribution and
retail companies of the Group. 

Trade receivables increased by EUR 1,230 thousand as compared to 31 December
2009 and amounted to EUR 9,642 thousand as of 31 December 2010. The balance of
trade receivables as of 31 December 2010 is in line with seasonality trends and
overall increase is mainly driven by increase in sales. 

Foreign exchange fluctuations had a positive impact on the Group's equity, in
the form of a positive change in the currency translation reserve in the amount
of EUR 335 thousand for 2010. On 21 September 2010 the Group paid out a
dividend in the amount of EUR 1,980 thousand. Equity attributable to equity
holders increased by EUR 10,734 thousand and amounted to EUR 42,042 thousand as
of 31 December 2010. 

Current liabilities decreased by EUR 1,922 thousand in 2010, in line with
management expectations. 

The liquidity position of the Group improved in 2010 with respect to the total
balance of borrowings and related maturities. Current and non-current loans and
borrowings decreased by EUR 1,769 thousand to EUR 36 thousand as of 31 December
2010. Loans received and loans repaid in 2010 amounted to EUR 765 thousand and
EUR 2,542 thousand respectively, including finance lease liabilities repaid in
the amount of EUR 53 thousand. In Q2 2010 the Group settled an overdraft
facility of AS Lauma Lingerie that amounted to EUR 925 thousand as of 31 March
2010. 

In 2009 the Group divested its loss making apparel business line through the
sale of shares in its former 100% subsidiary PTA Grupp AS. At the date of
disposal the Group had outstanding guarantees issued to Danske Bank A/S
Estonian branch securing certain borrowings and guarantee limits of PTA Grupp
AS. As of 31 December 2010 PTA Grupp AS's balance of borrowings and guarantees
from Danske Bank A/S Estonian branch that were secured by a surety provided by
SFG amounted respectively to EUR 178 thousand and EUR 228 thousand. 

Tax liabilities and other payables, including payables to employees, amounted
to EUR 4,216 thousand. Provisions amounted to EUR 136 thousand as of 31
December 2010. 



Sales

Sales by business segments



                        2010          2009        Change        2010        2009
                EUR thousand  EUR thousand  EUR thousand  percentage  percentage
                                                          from sales  from sales
--------------------------------------------------------------------------------
Wholesale             76,536        55,583        20,953       82.0%       75.1%
--------------------------------------------------------------------------------
Retail                16,345        17,275          -930       17.5%       23.3%
--------------------------------------------------------------------------------
Other                    411         1,186          -775        0.5%        1.6%
operations                                                                      
--------------------------------------------------------------------------------
Total                 93,292        74,044        19,248      100.0%      100.0%
--------------------------------------------------------------------------------


Sales by markets

In 2010, the Group focused mainly on the Baltic, Russian, Belarusian and
Ukrainian markets. 

Total sales by markets



                       2010          2009        Change        2010        2009
               EUR thousand  EUR thousand  EUR thousand  percentage  percentage
                                                         from sales  from sales
-------------------------------------------------------------------------------
Russia               53,721        43,295        10,426       57.6%       58.5%
-------------------------------------------------------------------------------
Belarus              25,531        19,558         5,973       27.4%       26.4%
-------------------------------------------------------------------------------
Baltics               4,814         3,946           868        5.2%        5.3%
-------------------------------------------------------------------------------
Ukraine               4,636         3,493          1143        4.9%        4.7%
-------------------------------------------------------------------------------
Other markets         4,590         3,752           838        4.9%        5.1%
-------------------------------------------------------------------------------
Total                93,292        74,044        19,248      100.0%      100.0%
-------------------------------------------------------------------------------


The majority of lingerie sales revenue in 2010 in the amount of EUR 53,721
thousand was generated in the Russian market, accounting for 57.6% of all
lingerie sales in 2010 as compared to EUR 43,295 thousand in 2009. Sales in
Russia comprise both retail sales and wholesale. The second largest region for
lingerie sales was Belarus, where sales reached EUR 25,531 thousand,
contributing 27.4% of lingerie sales (both retail and wholesale) as compared to
EUR 19,558 thousand in 2009. 

Although still affected by the economic situation, sales in the major markets
demonstrated a positive trend in terms of pieces sold in 2010 as compared to
the respective period in 2009. 

The most considerable sales growth took place on the Belorussian, Russian and
Ukrainian markets. Overall sales results in 2010 were slightly above management
expectations after a difficult 2009. 

Changes in the sales strategy introduced by Milavitsa in late 2009 and early
2010 were implemented in 2010 in Russia and Ukraine. The Group aims to increase
control over its distribution and its organizational structure has been
adjusted accordingly. 

To support the growth of sales, Milavitsa continued conducting additional
marketing activities in Belarus, Ukraine and Russia and implementing supportive
measures in the opening of new franchised stores. Joint programs with dealers
and distributors were continued in 2010 in the fields of marketing and
franchising. 

Milavitsa has been recognized as the most valuable Belarussian brand in the
report published by MPP Consulting, a Ukrainian brand rating agency. 

Intima, the largest and the most respected European lingerie magazine, produced
a substantial report on Milavitsa in its September issue which is available at
www.intima.fr. 

Lauma Lingerie experienced a sharp recovery in sales in their major markets
after being affected by the crisis. A new sales and marketing manager with
considerable experience in the industry has joined the company. 

In terms of lingerie brands, “Milavitsa” core brand accounted for 72.1% of
total lingerie sales revenue in 2010 (2009: 74.4%) and amounted to EUR 66,967
thousand. “Lauma Lingerie” core brand accounted for 8.2% of total lingerie
sales (2009: 5.3%) and amounted to EUR 7,616 thousand. Other brands such as
“Alisee”, “Aveline”, “Hidalgo” and “Laumelle” comprised 19.7% of total lingerie
sales in 2010 (2009: 20.3%), amounting to EUR 18,298 thousand. 



Wholesale

In 2010, wholesale revenue amounted to EUR 76,536 thousand, representing 82.0%
of the Group's total revenue (2009: 75.1%). The main wholesale regions were
Russia, Belarus, Ukraine and the Baltic States. Gradual improvements in sales
were observed already in Q1 and Q2 2010 despite the expectations of the
difficult start of the year. Wholesale results in Q3 and Q4 continued improving
compared to the same period of 2009 demonstrating a positive trend. Substantial
growth has been achieved in Kazakhstan. 

Additional activities were introduced in the non-core markets targeted at the
diversification of the Group's sales towards the western European countries.
Some markets will be approached through sales agents, while others will be
served by local dealers. The Group will also seek private label production
opportunities where practical. 



Retail operations

Total lingerie retail sales of the Group in 2010 amounted to EUR 16,345
thousand, representing a 5.4% decrease as compared to the previous year. 

Retail operations were conducted in Belarus, Russia and Latvia. At the end of
2010 the Group operated 50 own retail outlets with a total area of 4,253 square
meters. As of 31 December 2010, there were 348 Milavitsa branded shops operated
by Milavitsa trading partners in Russia, Belarus, Ukraine, Moldavia,
Kazakhstan, Uzbekistan, Kyrgyzstan, Latvia, Azerbaijan, Armenia, Cyprus,
Germany, Georgia and Slovenia, of which 25 shops were opened in Q4 2010. Some
underperforming shops were closed or relocated. Additionally, as of 31 December
2010, there were 14 Lauma Lingerie retail outlets operated by Lauma Lingerie
trading partners in Lithuania, Latvia and Estonia, of which 2 were opened in Q4
2010. International retail expansion of Milavitsa resulted in opening of
Milavitsa branded stores in Germany, Georgia and Slovenia. The 200th Milavitsa
store was opened in Russia. Also a Milavitsa store was opened in Tverskaja
street, the major shopping street in Moscow. 

In 2010 9 new own lingerie stores were opened, including 5 under Milavitsa
brand name in Belarus and 4 stores under Lauma Lingerie brand name in Latvia.
One underperforming store was closed in Belarus, one - in Latvia, three
underperforming stores were closed in Russia and 18 stores were transferred to
Milavitsa's trading partners in the course of the strategy to shift focus from
own retail chain towards the development of Milavitsa franchise network, thus
terminating the loss making own retail operations in Russia. 

Number of own stores as of:

                        31.12.2010  31.12.2009
----------------------------------------------
Latvia                           8           5
----------------------------------------------
Belarus                         42          38
----------------------------------------------
Russia                           0          21
----------------------------------------------
Total stores                    50          64
----------------------------------------------
Total sales area, sq m       4,253       5,523
----------------------------------------------

A number of sales promotions were conducted in the Milavitsa retail chain in
Belarus. Own retail operations in Belarus remain one of the key priorities for
the Group's further sales development in the country. Overall retail operations
in the country demonstrated a 50.2% growth in local currency terms and a 47.7%
growth in EUR terms as compared to 2009 mainly due to the number of new shops
opened in the recent year. Sales per square meter in the like-for-like shops
have increased as well. 

In the Baltics, retail sales decreased by 38.2% as compared to the previous
year and amounted to EUR 759 thousand. Decrease in own retail sales in the
Baltics is explained by the divestment of Lithuanian retail operations in
November 2009. 

In respect of lingerie retail in Russia the strategic decision to shift focus
from own retail chain towards the development of Milavitsa franchise network
was made in H2 2009, that resulted in the termination of the loss making own
retail operations in Russia. As the result, the Group's own Oblicie stores were
rebranded to Milavitsa and a transfer of stores to Milavitsa's trading partners
commenced while non-performing stores were closed. During H1 2010 all 21
remaining stores were either transferred to trading partners or closed. As of
30 June 2010 the Group did not have any own retail stores in Russia. Certain
structural and management changes have been made in the Group's Russian
operations (including the establishment of a separate franchise department) to
implement the selected franchise development strategy. 

Own stores by concept

Market   Milavitsa  Lauma Lingerie  Total  Sales area,
            stores          stores                sq m
------------------------------------------------------
Belarus         42               0     42        3,824
------------------------------------------------------
Latvia           0               8      8          429
------------------------------------------------------
Total           42               8     50        4,253
------------------------------------------------------


Discontinued operations

Discontinued operations' reported results in 2009 include operations of PTA
(apparel business line) for H1 2009. Results of PTA operations are presented in
the consolidated income statement as a single line item under ‘Loss from
discontinued operations'. 



Production, sourcing, purchasing and logistics

Due to the high demand on the market, similarly to H1 2010, in H2 2010 the
Group's manufacturing companies increased their production and purchasing
volumes. 

The total volume of production in SP ZAO Milavitsa amounted to 4,688 thousand
pieces in Q4 2010, representing a 24.9% increase as compared to the respective
period in the previous year. The total production volume in Lauma Lingerie
amounted to 264 thousand pieces in Q4 2010, showing an increase of 81% as
compared to the respective period in the previous year. Production capacities
in SP ZAO Milavitsa in Q4 2010 increased in order to prepare for increased
production volumes in 2011. 



Investment

In 2010, the Group's investments totalled EUR 2,419 thousand with investments
into retail amounting to EUR 355 thousand. Other investments were made in
equipment and facilities to maintain effective production and to add capacity
for 2011. 



Personnel

As of 31 December 2010, the Group employed 3,193 employees including 411 in
retail and 2,064 in production. The rest were employed in wholesale,
administration and support operations. 

Total salaries and wages in 2010 amounted to EUR 17,980 thousand. The
remuneration of the members of the Management Board and Supervisory Board
totalled EUR 357 thousand. The members of the Management Board also serve as
executives for the Group's subsidiaries. 



Key Events in 2010

Share buy-back program

On 9 November 2010 the Extraordinary General Meeting approved the Supervisory
Council's proposal to start a share buyback program under the following
conditions: 

-         SFG is entitled to buy back its own shares from the date of the
approval of the buyback until 30 June 2011; 

-         The total nominal value of own shares to be bought back by SFG may
not exceed 3,960,700 shares, i.e 10% of total share capital of SFG; 

-         The maximum price payable by SFG for one share to be 4.00 EUR;

-         The maximum amount payable by SFG for its own shares to be 15,842,800
EUR; 

-         Own shares to be paid for with assets exceeding the share capital,
compulsory reserves and share premium. 

The buyback period started on 15 November 2010. During the period from 15
November 2010 to 7 January 2011 number of shares bought back amounted to
133,629, average price per share amounted to 2.7757 EUR resulting in total cost
of 370,911 EUR. 

After the transactions listed above, AS Silvano Fashion Group owns 133,629 of
its own shares, which constitute 0.34% of the share capital. Under the buyback
program, shares up to the value of 15,308,284 million Euros remain to be bought
back. The maximum amount of shares that remains to be bought back is 3,827,071. 



Registration of share capital reduction

The decrease of the share capital of Aktsiaselts Silvano Fashion Group was
registered in Estonian commercial register on 15 October 2010. 

The reduction of the share capital was decided by the Annual General Meeting of
SFG on 28 June 2010, by which the share capital of SFG was decreased from EUR
25,564,659 (EEK 400,000,000) to EUR 25,313,487 (EEK 396,070,000) by cancelling
of 393,000 A-shares owned by SFG. 



Share buy-back program of the Group's subsidiary SP ZAO Milavitsa

On 21 May 2010 the parent company of the Group approved the share buy-back
program of the Group's largest subsidiary SP ZAO Milavitsa. The terms of the
program permit a buy-back of up to 1,967 shares of SP ZAO Milavitsa,
representing up to 20% of all shares in SP ZAO Milavitsa, in the period between
June 2010 and February 2011 with the objective of subsequent cancellation of
shares; the offered price per share of SP ZAO Milavitsa is 3,000,000 BYR. As of
27 January 2011, 256 shares have been acquired by SP ZAO Milavitsa constituting
2.60% of all shares in SP ZAO Milavitsa. The management of the Group does not
expect that the shareholding of SFG will increase significantly after the
completion of the buy-back program. Changes in AS SFG's shareholding as the
result of share buy-back will take place in H1 2011, provided the Annual
General Meeting of SP ZAO Milavitsa will resolve to cancel the shares that were
repurchased by SP ZAO Milavitsa. 



Establishment of a Subsidiary OOO Milavitsa Logistic

In the light of the increasing business volumes and potential business for the
services to be offered to all group companies, a joint-venture between the
Group's parent company AS Silvano Fashion Group and largest subsidiary SP ZAO
Milavitsa was created in December 2010. The newly founded company targets
rendering of the services for both in- and outbound logistics and distribution
of the Group's products. 



Changes in the Supervisory Board

The extraordinary general meeting of shareholders of AS Silvano Fashion Group
was held on 5 March 2010, in Tallinn. The meeting resolved to recall members of
the Supervisory Board of SFG Mr. Indrek Rahumaa and Mr. Priit Põldoja and to
elect Mr. Risto Mägi, Mr. Stephan Balkin, Mr. Otto Tamme and Mr. Sven Kunsing
to the Supervisory Board. 

On 24 March 2010 a member of the Supervisory Board Mr. Sven Kunsing presented
to SFG an application for his resignation from the position of a supervisory
board member, and requested that the application would be provided to the next
ordinary general meeting of SFG. The shareholders of the Company acknowledged
Sven Kunsing's resignation from the supervisory board on the Annual General
Meeting held on 28 June 2010. 

On 28 June 2010 Ants Susi was elected as the supervisory board member of the
Company 



Changes in the Management Board

On 5 June 2010 the term of office of Dmitry Ditchkovsky and Sergei Kusonski as
Management Board members of SFG expired. Mr. Ditchkovski and Mr. Kusonski
continues to work in the same positions in the management of SFG under
employment agreements. 

On 5 August 2010 the Supervisory Board of AS Silvano Fashion Group decided to
elected Märt Meerits as the new management board member of SFG. On 8 November
2010 the Supervisory Board of AS Silvano Fashion Group appointed Mr. Märt
Meerits as the Chairman of the Management Board. Mr. Norberto Rodriguez was
appointed as the Vice Chairman of the Management Board 

Establishment of an Audit Committee

On November 8, the Supervisory Board of Silvano Fashion Group approved the
formation of the Audit Committee on grounds of the Authorised Public
Accountants Act. The committee has three members: Ms. Jekaterina Stuge
(Chairperson), Ms. Maivi Ots and Mr. Otto Tamme. 



Consolidated statement of financial position

Unaudited


                                                        31.12.2010    31.12.2009
--------------------------------------------------------------------------------
                                                      EUR thousand  EUR thousand
--------------------------------------------------------------------------------
ASSETS                                                                          
--------------------------------------------------------------------------------
Non-current assets                                                              
--------------------------------------------------------------------------------
Property, plant and equipment                               11,446        10,753
--------------------------------------------------------------------------------
Intangible assets                                              534           570
--------------------------------------------------------------------------------
Investment property                                          1,299         1,284
--------------------------------------------------------------------------------
Investments in equity accounted investees                      106           139
--------------------------------------------------------------------------------
Available-for-sale financial assets                            370           362
--------------------------------------------------------------------------------
Deferred tax asset                                           1,324         1,158
--------------------------------------------------------------------------------
Other receivables                                               32           634
--------------------------------------------------------------------------------
Total non-current assets                                    15,111        14,900
--------------------------------------------------------------------------------
Current assets                                                                  
--------------------------------------------------------------------------------
Inventories                                                 15,792        17,019
--------------------------------------------------------------------------------
Corporate income tax asset                                      59           464
--------------------------------------------------------------------------------
Other tax receivables                                        1,517         1,462
--------------------------------------------------------------------------------
Trade receivables                                            9,642         8,412
--------------------------------------------------------------------------------
Other receivables                                            1,188         1,167
--------------------------------------------------------------------------------
Prepayments                                                    288           609
--------------------------------------------------------------------------------
Cash and cash equivalents                                   21,468         9,838
--------------------------------------------------------------------------------
Assets classified as held for sale                              20           481
--------------------------------------------------------------------------------
Total current assets                                        49,974        39,452
--------------------------------------------------------------------------------
TOTAL ASSETS                                                65,085        54,352
--------------------------------------------------------------------------------
                                                                                
--------------------------------------------------------------------------------
LIABILITIES AND EQUITY                                                          
--------------------------------------------------------------------------------
Equity                                                                          
--------------------------------------------------------------------------------
Share capital at per value                                  25,313        25,565
--------------------------------------------------------------------------------
Share premium                                               14,130        14,271
--------------------------------------------------------------------------------
Own shares                                                    -311          -450
--------------------------------------------------------------------------------
Statutory capital reserve                                       67            67
--------------------------------------------------------------------------------
Other reserves                                                 453             0
--------------------------------------------------------------------------------
Translation reserve                                        -11,587       -11,922
--------------------------------------------------------------------------------
Retained earnings                                           13,977         3,777
--------------------------------------------------------------------------------
Total equity attributable to equity holders of the          42,042        31,308
Company                                                                         
--------------------------------------------------------------------------------
Non-controlling interest                                    10,974         8,701
--------------------------------------------------------------------------------
Total equity                                                53,016        40,009
--------------------------------------------------------------------------------
Non-current liabilities                                                         
--------------------------------------------------------------------------------
Loans and borrowings                                             0           259
--------------------------------------------------------------------------------
Other liabilities                                                0            93
--------------------------------------------------------------------------------
Total non-current liabilities                                    0           352
--------------------------------------------------------------------------------
Current liabilities                                                             
--------------------------------------------------------------------------------
Loans and borrowings                                            36         1,546
--------------------------------------------------------------------------------
Trade payables                                               7,681         7,925
--------------------------------------------------------------------------------
Corporate income tax payable                                   608           227
--------------------------------------------------------------------------------
Other tax payable                                              712         1,587
--------------------------------------------------------------------------------
Other payables                                               1,131           912
--------------------------------------------------------------------------------
Provisions                                                     136           217
--------------------------------------------------------------------------------
Accrued expenses                                             1,757         1,536
--------------------------------------------------------------------------------
Deferred income                                                  8            41
--------------------------------------------------------------------------------
Total current liabilities                                   12,069        13,991
--------------------------------------------------------------------------------
Total liabilities                                           12,069        14,343
--------------------------------------------------------------------------------
TOTAL LIABILITIES AND EQUITY                                65,085        54,352
--------------------------------------------------------------------------------


Consolidated income statement for 12 months 2010

Unaudited


                                                  2010 12 months  2009 12 months
                                                  EUR thousand    EUR thousand  
--------------------------------------------------------------------------------
                                                                                
--------------------------------------------------------------------------------
Continuing operations                                                           
--------------------------------------------------------------------------------
Revenue                                                                         
--------------------------------------------------------------------------------
Sales revenue                                             93,292          74,044
--------------------------------------------------------------------------------
Costs of goods sold                                      -56,132         -41,862
--------------------------------------------------------------------------------
Gross Profit                                              37,160          32,182
--------------------------------------------------------------------------------
                                                                                
--------------------------------------------------------------------------------
Other operating income                                     1,176             987
--------------------------------------------------------------------------------
Distribution costs                                        -9,986         -11,552
--------------------------------------------------------------------------------
Administrative expenses                                   -8,146         -10,138
--------------------------------------------------------------------------------
Other operating expenses                                  -2,546          -7,616
--------------------------------------------------------------------------------
Operating profit / loss                                   17,658           3,863
--------------------------------------------------------------------------------
                                                                                
--------------------------------------------------------------------------------
Finance income and finance costs                                                
--------------------------------------------------------------------------------
Interest expenses                                            -75            -527
--------------------------------------------------------------------------------
Gains/losses on conversion of foreign currencies             805             972
--------------------------------------------------------------------------------
Other financial income / expenses                          1,004             611
--------------------------------------------------------------------------------
Net finance income/ (costs)                                1,734           1,056
--------------------------------------------------------------------------------
                                                                                
--------------------------------------------------------------------------------
Share of profit of equity accounted investees                -36             -20
--------------------------------------------------------------------------------
Profit before tax                                         19,356           4,899
--------------------------------------------------------------------------------
Income tax expense                                        -4,292          -3,508
--------------------------------------------------------------------------------
Profit / (loss) from continuing operations                15,064           1,391
--------------------------------------------------------------------------------
                                                                                
--------------------------------------------------------------------------------
Discontinued operations                                                         
--------------------------------------------------------------------------------
Loss from discontinued operations (net of income               0          -2,303
tax)                                                                            
--------------------------------------------------------------------------------
Profit / (loss) for the period                            15,064            -912
--------------------------------------------------------------------------------
                                                                                
--------------------------------------------------------------------------------
Attributable to                                                                 
--------------------------------------------------------------------------------
Owners of the Company                                     12,240          -2,468
--------------------------------------------------------------------------------
Non-controlling interest                                   2,824           1,556
--------------------------------------------------------------------------------
                                                                                
--------------------------------------------------------------------------------
                                                                                
--------------------------------------------------------------------------------
Earnings per share                                                              
--------------------------------------------------------------------------------
Basic earnings per share (EUR)                              0.31           -0.06
--------------------------------------------------------------------------------
Diluted earnings per share (EUR)                            0.31           -0.06
--------------------------------------------------------------------------------
                                                                                
--------------------------------------------------------------------------------
Continuing operations                                                           
--------------------------------------------------------------------------------
Basic earnings per share (EUR)                              0.31          -0.004
--------------------------------------------------------------------------------
Diluted earnings per share (EUR)                            0.31          -0.004
--------------------------------------------------------------------------------