AS Silvano Fashion : Quarterly Earnings

AS Silvano Fashion Group

Consolidated Interim Financial Report

for Q1 of 2024 (unaudited)

(translation of the Estonian original) *

Beginning of the reporting period	1 January 2024
End of the reporting period	31 March 2024
Business name	AS Silvano Fashion Group
Registration number	10175491
Legal address	Tulika 17, 10613 Tallinn
Telephone	[phone]
Fax	[phone]
E-mail	[e-mail]
Website	www.silvanofashion.com
Core activities	Design, manufacturing and distribution of women's
	lingerie
Auditor	Ernst & Young Baltic AS

• This version of our report is a translation from the original, which was prepared in Estonian. All possible care has been taken to ensure that the translation is an accurate representation of the original. However, in all matters of interpretation of information, views or opinions, the original language version of our report takes precedence over this translation.

AS Silvano Fashion Group Consolidated Interim Financial Report for Q1 of 2024
Contents
Management Report	3
Declaration of the Management Board	10
Consolidated Statement of Financial Position	11
Consolidated Income Statement	12
Consolidated Statement of Comprehensive Income	12
Consolidated Statement of Cash Flows	13
Consolidated Statement of Changes in Equity	14
Notes to the Interim Report	15
Note 1 Summary of significant accounting policies	15
Note 2 Cash and cash equivalents	15
Note 3 Trade and other receivables	16
Note 4 Inventories	16
Note 5 Property, plant and equipment	17
Note 6 Trade and other payables	18
Note 7 Equity	18
Note 8 Earnings per share	18
Note 9 Revenue from contracts with customers	18
Note 10 Transactions with related parties	19
Note 11 Operating segments	19

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AS Silvano Fashion Group Consolidated Interim Financial Report for Q1 of 2024

Management Report

General information about AS Silvano Fashion Group

AS Silvano Fashion Group (hereinafter "the Group") is a holding company that controls group of entities involved in the design, manufacturing, wholesale, franchise and retail sales of Ladies lingerie. The Group's revenue is generated by sales of Milavitsa, Alisee, Aveline, Lauma Lingerie, Laumelle and Hidalgo brand products through wholesale channels, franchised sales and own retail operated via Milavitsa and Lauma Lingerie retail stores. Key sales markets for the Group are Russia, Belarus, other CIS countries and the Baltics.

The parent company of the Group is AS Silvano Fashion Group (hereinafter "the Parent company"), which is domiciled in Estonia. AS Silvano Fashion Group registered address is Tulika 17, Tallinn, Estonia.

The shares of the Group are listed on the Nasdaq OMX Tallinn Stock Exchange and on the Warsaw Stock Exchange. As of 31 March 2024 the Group employed 1 650 people (as of 31 December 2023: 1 626 people).

The Group comprises of the following entities:

			Ownership	Ownership
			interest	interest
	Location	Main activity	31.03.2024	31.12.2023
Parent company
Silvano Fashion Group AS	Estonia	Holding
Entities belonging to the
Silvano Fashion Group:
CJSC Silvano Fashion*	Russia	Retail and wholesale	100%	100%
LLC Silvano Fashion	Belarus	Retail and wholesale	100%	100%
LLC Silvano Fashion	Ukraine	Wholesale	100%	100%
Silvano Fashion SIA	Latvia	Retail	100%	100%
CJSC Milavitsa	Belarus	Manufacturing and wholesale	85.02%	85.02%
JSC Sewing firm Yunona	Belarus	Manufacturing and wholesale	58.33%	58.33%
LLC Gimil	Belarus	Manufacturing and wholesale	100%	100%
JSC Lauma Lingerie	Latvia	Manufacturing and wholesale	100%	100%
Alisee SARL	Monaco	Holding	99%	99%
JCS Metropolitan Trade	Russia	Holding	100%	100%
Company Milavitsa **
LLC Baltsped logistik	Belarus	Logistics	50%	50%

• Silvano Fashion CJSC is 100% owned by Metropolitan Trade Company Milavitsa CJSC (same was effective as of 31.12.2023).
• Metropolitan Trade Company Milavitsa LLC is owned by AS Silvano Fashion Group and SIA Silvano Fashion, each holding 50% (same was effective as of 31.12.2023).

In addition, as of 31.03.2024 the subsidiary of AS Silvano Fashion Group, CJSC Milavitsa, had investment in associate LLC Trade house "Milavitsa "Novosibirsk with a 25% ownership interest (same was effective as of 31.12.2023).

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AS Silvano Fashion Group Consolidated Interim Financial Report for Q1 of 2024

Business environment and results

The Group's sales amounted to 13 904 thousand EUR during the Q1 of 2024, representing a 1.7% decrease as compared to the same period for the previous year. The Group's gross profit during the Q1 of 2024 amounted to 7 789 thousand EUR and decreased by 4.1% compared to Q1 of 2023. The Gross margin during the Q1 of 2024 decreased to 56.0% from 57.4% as compared to Q1 of 2023.

Consolidated operating profit for Q1 of 2024 decreased by 10.5% to 3 548 thousand EUR, compared to 3 963 thousand EUR for Q1 of 2023. Consolidated EBITDA for Q1 of 2024 decreased by 9.7% and was 4 298 thousand EUR, compared to 4 761 thousand EUR for Q1 of 2023.

Reported consolidated net profit for Q1 of 2024 amounted to 2 916 thousand EUR, as compared to net profit of 1 867 thousand EUR in the prior year's same period. Net profit attributable to equity holders of the Parent company for Q1 of 2024 amounted 2 554 thousand EUR.

Russia Economic Outlook

The Group's sales on the Russian market totalled 8 169 thousand EUR, decrease is 3.8% compared to Q1 of 2023. Local currency sales increased by 21.2% during Q1 of 2024 compared to the same Q1 of 2023. Group will focus on improving profitability of its retail business, we will also continue to expand our store chain there depending on the availability of reasonably priced sales areas. At the end of the reporting period, there were a total of 58 stores operated by the Group itself (as of 31 December 2023: 58 stores).

Belarus Economic Outlook

The Group's sales in Belarus in the Q1 of 2024 were 3 302 thousand EUR and decreased by 7.8% compared to the Q1 of 2023. Sales in local currency increased by 8.8% during the same period. At the end of the reporting period, there were a total of 59 stores operated by the Group itself (as of 31 December 2023: 59 stores).

Ukraine Economic Outlook

The Group's sales in Ukraine in the Q1 of 2024 were 18 thousand EUR and decreased by 61.7% compared to the Q1 of 2023.

Sales structure

Sales by markets

Group sales in its 2 major markets - Russia and Belarus- were 82.5% of its total sales. Measured in local currencies sales increase was accordingly - 21.2% in Russia, 8.8% in Belarus.

	Q1 2024	Q1 2023	Change	Change, %
Russia, th RUB	802 025	661 611	140 414	21.2%
Belarus, th BYN	11 508	10 580	928	8.8%

Group`s sales results by markets measured in EUR are presented below:

	Q1 2024	Q1 2023	Change,	Change, %	Q1 2024,	Q1 2023,
in thousands of EUR			EUR		% of sales	% of sales
Russia	8 169	8 495	-326	-3.8%	58.8%	60.1%
Belarus	3 302	3 582	-280	-7.8%	23.7%	25.3%
Ukraine	18	47	-29	-61.7%	0.1%	0.3%
Baltics	263	283	-20	-7.1%	1.9%	2.0%
Other markets	2 152	1 734	418	24.1%	15.5%	12.3%
Total	13 904	14 141	-237	-1.7%	100.0%	100.0%

The majority of lingerie sales revenue during Q1 of 2024 in the amount 8 169 thousand EUR was generated in Russia, accounting for 58.8% of total sales. The second largest market was Belarus, where sales were 3 302 thousand EUR, contributing 23.7% of lingerie sales (both retail and wholesale).

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AS Silvano Fashion Group Consolidated Interim Financial Report for Q1 of 2024
Sales by business segments
	Q1 2024	Q1 2023	Change,	Change, %	Q1 2024,	Q1 2023,
in thousands of EUR			EUR		% of sales	% of sales
Wholesale	9 123	9 112	11	0.1%	65.6%	64.4%
Retail	4 764	5 020	-256	-5.1%	34.3%	35.5%
Other operations	17	9	8	88.9%	0.1%	0.1%
Total	13 904	14 141	-237	-1.7%	100.0%	100,0%

During Q1 of 2024 wholesale revenue amounted to 9 123 thousand EUR, representing 65.6% of the Group's total revenue (Q1 of 2023: 64.4%). The main wholesale regions were Russia and Belarus.

Our retail revenue decreased by 5.1% and amounted 4 764 thousand EUR, this represents 34.3% of the Group`s total revenue.

Own & franchise store locations, geography
				Total
		Own	Franchise
	Russia	58	337	395
	Belarus	59	0	59
	Baltics	5	18	23
	Other regions	0	89	89
	Total	122	444	566

At the end of the reporting period the Group and its franchising partners operated 540 Milavitsa and 26 Lauma Lingerie brand stores, including 122 stores operated directly by the Group (as of 31 December 2023: 122 stores).

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AS Silvano Fashion Group Consolidated Interim Financial Report for Q1 of 2024

Selected Financial Indicators

Summarized selected financial indicators of the Group for Q1 of 2024 compared to Q1 of 2023 and 31.03.2024 compared to 31.12.2023 were as follows:

in thousands of EUR	Q1 2024	Q1 2023	Change
Revenue	13 904	14 141	-1.7%
Gross Profit	7 789	8 124	-4.1%
Operating profit	3 548	3 963	-10.5%
EBITDA	4 298	4 761	-9.7%
Net profit for the period	2 916	1 867	56.2%
Net profit attributable equity holders of the Parent company	2 554	1 616	58.0%
Earnings per share (EUR)	0.07	0.04	75.0%
Operating cash flow for the period	1 753	4 133	-57.6%

in thousands of EUR	31.03.2024	31.12.2023	Change
Total assets	78 038	72 252	8.0%
Total current assets	65 157	59 395	9.7%
Total equity attributable to equity holders of the Parent	56 384	54 120	4.2%
company
Cash and cash equivalents	37 505	32 878	14.1%

Margin analysis, %	Q1 2024	Q1 2023	Change
Gross profit	56.0	57.4	-2.4%
Operating profit	25.5	28.0	-8.9%
EBITDA	30.9	33.7	-8.3%
Net profit	21.0	13.2	59.1%
Net profit attributable to equity holders of the Parent company	18.4	11.4	61.4%

Financial ratios, %	31.03.2024	31.12.2023	Change
ROA	15.2	14.5	4.8%
ROE	20.9	20.2	3.5%
Price to earnings ratio (P/E)	3.7	4.1	-9.8%
Current ratio	4.7	5.8	-19.0%
Quick ratio	3.0	3.4	-11.8%

Underlying formulas:

EBITDA = net profit for the period + depreciation and amortisation + net finance income + income tax expense Gross profit margin = gross profit / revenue

EBITDA margin = EBITDA / revenue Net profit margin = net profit / revenue

Net profit margin attributable to equity holders of the Parent company = net profit attributable to equity holders of the Parent company / revenue

ROA (return on assets) = net profit attributable to owners of the Company for the last 4 quarters/ average total assets

ROE (return on equity) = net profit attributable to owners of the Company for the last 4 quarters/ 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, calculated based on the net profit attributable to owners of the Company for the last 4 quarters

Current ratio = current assets / current liabilities

Quick ratio = (current assets - inventories) / current liabilities

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AS Silvano Fashion Group Consolidated Interim Financial Report for Q1 of 2024

Financial performance

The Group`s sales amounted 13 904 thousand EUR during Q1 of 2024, representing a 1.7% decrease as compared to the same period of previous year. Overall, retail decreased by 5.1%, measured in EUR.

The Group's gross profit during Q1 of 2024 amounted to 7 789 thousand EUR and decrease by 4.1% compared to previous year. The gross margin during Q1 of 2024 decreased by 2.4% compared to Q1 of 2023. The cost of sold goods increased by 1.6%.

Consolidated operating profit for Q1 of 2024 amounted to 3 548 thousand EUR, compared to 3 963 thousand EUR for Q1 of 2023, decrease by 10.5%. The consolidated operating profit margin was 25.5% for Q1 of 2024 (28.0% for Q1 of 2023). Consolidated EBITDA for Q1 of 2024 decreased by 9.7% and amounted to 4 298 thousand EUR, which is 30.9% in margin terms (4 761 thousand EUR and 33.7% for Q1 of 2023).

Reported consolidated net profit attributable to equity holders of the Parent company for Q1 of 2024 amounted to 2 554 thousand EUR, compared to net profit of 1 616 thousand EUR for Q1 of 2023, net profit margin attributable to equity holders of the Parent company for Q1 of 2024 was 18.4% against net profit 11.4% for Q1 of 2023.

Financial position

As of 31 March 2024 consolidated assets amounted to 78 038 thousand EUR representing increase by 8.0% as compared to the position as of 31 December 2023.

Trade and other receivables increased by 925 thousand EUR as compared to 31 December 2023 and amounted to 2 279 thousand EUR as of 31 March 2024. Inventory balance increased by 91 thousand EUR and amounted to 24 031 thousand EUR as of 31 March 2024.

Equity attributable to equity holders of the Parent company increased by 2 264 thousand EUR and amounted to 56 384 thousand EUR as of 31 March 2024. Current liabilities increased by 3 473 thousand EUR during Q1 of 2024.

Investments

During Q1 of 2024 the Group's investments into property, plant and equipment totalled 278 thousand EUR, in previous year same period 314 thousand EUR. Investments were made mainly into opening and renovating own stores, as well into equipment and facilities to maintain effective production for future periods.

Personnel

As of 31 March 2024, the Group employed 1 650 employees, including 518 people in retail operations. The rest were employed in production, wholesale, administration and support operations. In 31.12.2023 there were 1 626 employees, including 500 people in retail operations.

Total salaries and related taxes during Q1 of 2024 amounted to 3 509 thousand EUR ( 3 492 thousand EUR in Q1 2023). The remuneration of key management of the Group, including the key executives of all subsidiaries, totalled 163 thousand EUR.

Decisions made by governing bodies during 04 months 2024

On the 19th of March 2024, the AS Silvano Fashion Group proposed to the shareholders to adopt the resolution of the extraordinary general meeting of shareholders stated below without convening the meeting.

The notice of the general meeting was published on March 19, 2024, in the information system NASDAQ OMX Tallinn https://view.news.eu.nasdaq.com/view?id=b77cafc430f1ac23a81813069a95a15cd&lang=enand Warsaw Stock Exchange, on the website of SFG https://www.silvanofashion.com/investors/company-announcements/and in the daily newspaper Eesti Päevaleht.

On April 9, 2024 Silvano Fashion Group Extraordinary Meeting of Shareholders adopted the following decisions:

1. To appoint the auditing company Ernst & Young Baltic AS (registry code 10877299, located at Rävala puiestee 4, 10143 Tallinn) as the auditor of AS Silvano Fashion Group;
2. To authorize the Management Board of AS Silvano Fashion Group to enter into an audit service agreement with the auditing company AS Ernst & Young Baltic for auditing the economic activities of AS Silvano Fashion Group 2023.

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AS Silvano Fashion Group Consolidated Interim Financial Report for Q1 of 2024

Shares of AS Silvano Fashion Group

As of 31 March 2024 registered share capital of AS Silvano Fashion Group amounted to 3 600 thousand EUR divided into 36 000 000 ordinary shares with a nominal value of 0.10 EUR each. The share register is electronic and maintained at the Estonian Central Register of Securities. The Company has been listed on Nasdaq OMX Tallinn Stock Exchange main list (since 21.11.2006) and on Warsaw Stock Exchange (since 23.07.2007).

As of 31 March 2024 AS Silvano Fashion Group had 3 235 shareholders (as of 31 December 2023: 3 336 shareholders).

As of 31 March 2024 shareholders, whose interest in AS Silvano Fashion Group exceeded 5% included:

Name	Number of shares	Shareholding
Major shareholders	19 262 985	53.50%
BALTPLAST AS	9 115 798	25.32%
AS SEB PANK CLIENTS	8 000 000	22.22%
UNICREDIT BANK AUSTRIA AG	2 147 187	5.96%
Other shareholders	16 737 015	46.50%
Total number of shares	36 000 000	100.00%

As of 31 December 2023 shareholders, whose interest in AS Silvano Fashion Group exceeded 5% included:

Name	Number of shares	Shareholding
Major shareholders	19 262 985	53.50%
BALTPLAST AS	9 115 798	25.32%
AS SEB PANK CLIENTS	8 000 000	22.22%
UNICREDIT BANK AUSTRIA AG	2 147 187	5.96%
Other shareholders	16 737 015	46.50%
Total number of shares	36 000 000	100.00%

Share price development and turnover on the Tallinn Stock Exchange during Q1 months of 2024 (EUR)

During Q1 months of 2024 the highest and lowest prices of the AS Silvano Fashion Group` share on the Tallinn Stock Exchange were 1.188 EUR and 1.062 EUR, respectively

1,25	50000
1,2	40000
1,15	30000
1,1	20000
1,05	10000
1	0

Volume

SFG1T share price

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AS Silvano Fashion Group Consolidated Interim Financial Report for Q1 of 2024

110,00%

100,00%

90,00%

SFG1T share price

OMXBBGI

Share price development on the Warsaw Stock Exchange during Q1 of 2024(PLN)

During Q1 of 2024, the highest and lowest prices of the AS Silvano Fashion Group` share on the Warsaw Stock Exchange were 6.33 PLN and 4.89 PLN respectively.

8000

7000

6000

5000

4000

3000

2000

1000

0

7

6,5

6

5,5

5

4,5

4

3,5

Volume

SFG share price (WSE)

120%

110%

100%

90%

80%

SFG share price (WSE)

WIG 20

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AS Silvano Fashion Group Consolidated Interim Financial Report for Q1 of 2024

Declaration of the Management Board

The Management Board of AS Silvano Fashion Group has reviewed and approved Consolidated Interim Financial Report for Q1 of 2024 (hereinafter "the Interim Report").

Member of the Management Board confirms that according to his best knowledge the Interim Report gives a true and fair view of financial position of the Group, its financial performance and its cash flows in accordance with International Financial Reporting Standards, as adopted by EU, and IAS 34 "Interim Financial Reporting".

Furthermore, Member of the Management Board confirms that in his opinion the Interim Report provides a fair review of significant developments in the Group's activities that occurred during the reporting period and their impact and describes significant risks and uncertainties that may affect the Group during future reporting periods.

The Interim Report has not been audited or otherwise reviewed by the auditors.

___________________________

Jarek Särgava

Member of the Management Board May 18, 2024

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