AS Silvano Fashion Group

Consolidated Annual Report 2023

(translation of Estonian original)

Beginning of the reporting period	1 January 2023
End of the reporting period	31 December 2023

Business name	AS Silvano Fashion Group
Registration number	10175491
Legal address	Tulika 17, 10613, Tallinn, Estonia
Telephone	+372 684 5000
Fax	+372 684 5300
E-mail	[email protected]
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.

Translation of the Group's consolidated financial statements in PDF-format without European Single Electronic Format (ESEF) markups. The original document is submitted in machine-readable .xhtml format to the Nasdaq Tallinn Stock Exchange and digitally signed (link: https://nasdaqbaltic.com/statistics/en/instrument/EE3100001751/reports).

MANAGEMENT REPORT 3
Corporate Governance Report 14
Corporate Social Responsibility 19
Remuneration report 22
Management Board´s confirmation to the Management Report 23
CONSOLIDATED FINANCIAL STATEMENTS 24
Management´s Board confirmation to the Consolidated Financial Statements 24
Consolidated Statement of Financial Position 25
Consolidated Income Statement 26
Consolidated Statement of Comprehensive Income 26
Consolidated Statement of Cash Flows 27
Consolidated Statement of Changes in Equity 28
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 29
Note 1 General information 29
Note 2 Material accounting policies 29
Note 3 Significant accounting estimates, judgments and uncertainties 37
Note 4 Fair value estimation 39
Note 5 Financial risk management 40
Note 6 Group entities 46
Note 7 Cash and cash equivalents 48
Note 8 Financial assets and financial liabilities 48
Note 9 Trade and other receivables 49
Note 10 Prepayments and tax receivables 49
Note 11 Inventories 49
Note 12 Investments in other shares 49
Note 13 Intangible assets 50
Note 14 Investment property 51
Note 15 Property, plant and equipment 52
Note 16 Trade and other payables 53
Note 17 Taxes 54
Note 18 Equity 56
Note 19 Earnings per share 57
Note 20 Revenue from contracts with customers 57
Note 21 Cost of goods sold 57
Note 22 Distribution expenses 58
Note 23 Administrative expenses 58
Note 24 Other operating expenses 59
Note 25 Net finance income/(expense) 59
Note 26 Leases 59
Note 27 Operating segments 61
Note 28 Transactions with related parties 63
Note 29 Events after the reporting date 64
Note 30 Separate financial information of the Parent company 65
DECLARATION OF THE MANAGEMENT BOARD 70
INDEPENDENT AUDITOR'S REPORT 71
PROFIT ALLOCATION PROPOSAL 77
DECLARATION OF THE SUPERVISORY BOARD 78

MANAGEMENT REPORT

General information about AS Silvano Fashion Group

AS Silvano Fashion Group (hereinafter "the Group") is a holding company that controls group of enterprises involved in the design, manufacturing, wholesale, franchise and retail sales of ladies' lingerie. The Group's income is generated by sales of Milavitsa, Alisee, Aveline, Lauma Lingerie, Laumelle and Hidalgo branded products through wholesales channel, franchised sales and own retail operated via Milavitsa and Lauma Lingerie retail stores. In 2023 and 2022 key sales markets for the Group were 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 AS Silvano Fashion Group are listed on the Nasdaq OMX Tallinn Stock Exchange and on the Warsaw Stock Exchange.

As of 31 December 2023 the Group employed 1 626 people (as of 31 December 2022: 1 616 people).

The Group comprises the following companies:

			Ownership	Ownership
	Location	Main activity	interest 31.12.2023	interest 31.12.2022
Parent company
AS Silvano Fashion Group	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%
SIA Silvano Fashion	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%
JSC Metropolitan Trade	Russia	Holding	100%	100%
Company Milavitsa ****
LLC Baltsped logistik	Belarus	Logistics	50%	50%

* CJSC Silvano Fashion is 100% owned by JSC Metropolitan Trade Company Milavitsa (same was effective as of 31.12.2022).

** JSC Sewing firm Yunona is owned by AS Silvano Fashion Group with the share of 49.27% and SIA Silvano Fashion with the share of 9.07%, the rest of the 41.66% shares belongs to the investors outside the consolidation group (same was effective as of 31.12.2022).

*** LLC Gimil is owned by AS Silvano Fashion Group with the share of 99.80% and SIA Silvano Fashion with the share of 0.20% (same was effective as of 31.12.2022).

**** JSC Metropolitan Trade Company Milavitsa is owned by AS Silvano Fashion Group and SIA Silvano Fashion, each holding 50% (same was effective as of 31.12.2022).

In addition, as of 31.12.2023 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 31.12.2022).

Group strategy is focused on the implementation of the proven business model of a vertically-integrated fashion group with brand management, strong retail operations, its own flexible production facilities and outsourcing expertise, differentiated independent sources of raw materials, and integral logistics. The Group aims to create value by offering a wide variety of lingerie in an attractive environment with good service, excellent quality and reasonable prices.

Selected financial and non-financial indicators

Summarized selected financial indicators of the Group for 12 months of 2023 compared to 12 months of 2022 and 31 December 2023 compared to 31 December 2022 were as follows:

in thousands of EUR	12m 2023	12m 2022	Change
Revenue	58 597	57 667	1.6%
Gross Profit	33 743	30 884	9.3%
Operating profit	17 973	14 665	22.6%
EBITDA	21 120	18 283	15.5%
Net profit for the period	11 107	12 544	-11.5%
Net profit attributable to equity holders of the Parent company	9 927	11 796	-15.8%
Earnings per share (EUR)	0,28	0,33	-15.2%
Operating cash flow for the period	11 703	14 062	-16.8%

in thousands of EUR	31.12.2023	31.12.2022	Change
Total assets	72 252	63 991	12.9%
Total current assets	59 395	50 309	18.1%
Total equity attributable to equity holders of the Parent company	54 120	44 786	20.8%
Cash and cash equivalents	32 878	25 909	26.9%

Margin analysis, %	12m 2023	12m 2022	Change
Gross profit	57.6	53.6	7.5%
Operating profit	30.7	25.4	20.9%
EBITDA	36.0	31.7	13.6%
Net profit	19.0	21.8	-12.8%
Net profit attributable to equity holders of the Parent company	16.9	20.5	-17.6%

Financial ratios, %	31.12.2023	31.12.2022	Change
ROA	14.5	19.0	-23.7%
ROE	20.2	28.1	-28.1%
Price to earnings ratio (P/E)	4.1	3.4	20.6%
Current ratio	5.8	5.1	13.7%
Quick ratio	3.4	2.8	21.4%

Underlying formulas:

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

Operating profit margin = operating 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 equity holders of the Parent company / average total assets

ROE (return on equity) = net profit attributable to equity holders of the Parent company / average equity attributable to equity holders of the Parent company

Earnings per share = net profit attributable to equity holders of the Parent company / weighted average number of ordinary shares Price to earnings ratio (P/E) = Share price at the end of reporting period / earnings per share, calculated based on the net profit attributable to equity holders of the Parent company

Current ratio = current assets / current liabilities

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

Own & franchise store locations, geography

Group-managed stores and franchised stores at the end of 2023:

	Own	Franchise	Total
Russia	58	334	392
Belarus	59	0	59
Baltics	5	20	25
Other regions	0	94	94
Total	122	448	570

At the end of the reporting period the Group and its franchising partners operated 540 Milavitsa and 30 Lauma Lingerie brand stores, including 122 stores operated directly by the Group. At the end of 2022 there was a total of 114 of Group-managed stores and 454 franchise stores.

Total selling area of Group-managed stores as of 31 December 2023 reached 11 322 (31 December 2022: 10 774) square meters with the following breakout by prime locations:

	31.12.2023	31.12.2022	Change
Russia	4 544	4 018	13.09%
Belarus	6 473	6 387	1.35%
Baltics	305	369	-17.34%
Total	11 322	10 774	5.09%

Business environment in 2023

Core operating markets for the AS Silvano Fashion Group in 2023 and 2022 were Russia, Belarus, other CIS countries and the Baltics. The Group's results for the 12 months of 2023 were determined by the situation in the economy of the main markets – Russia and Belarus. In addition, the whole Group's operations were impacted by situation in Ukraine. It had a significant impact not only on the money and capital markets, but also on the movement of goods, commercial trade, and supply chains, as well as on energy supplies.

In Belarus the economy appeared robust halfway through 2023: Cumulative GDP growth reached level of 3.9% in 2023. Easing growth in the mining and manufacturing sectors was offset by a quicker rise in construction activity and a smaller fall in agricultural output. Moreover, private spending was likely resilient in the year; retail sales growth strengthened despite an uptick in inflation and cooling wage growth. Meanwhile, goods exports rose by 4.7% comparing to 2022, reflecting an expected growth moderation in key partner Russia.

The annual inflation rate in 2023 in Belarus stopped at 5.8% in December of 2023 comparing the December 2022. Consumer prices rose the most for services (8.1%) and food (6.8%), offsetting muted growth for non-food goods (2.9%).

GDP growth in Russia accelerated to 3.6% in 2023, marking the strongest outturn since 2021. Growth in both household spending and fixed investment neared double-digit territory in Q3 and underpinned the overall upturn. Turning to Q4, growth seems to have decelerated. After cooling in October, economic activity growth slowed further to a seven-month low of 4.4% in November amid softer expansions in industrial output and retail sales. This was partly due to rising inflation and a weaker rouble, which prompted authorities to tighten financing conditions. In October, exports decreased at a faster pace year on year, while imports slid into contraction. That said, December PMI readings pointed to healthy operating conditions at the tail-end of 2023.

Monthly inflation rate in Russia was 0.73% in December 2023. That is 0.38 less than it was in November 2023 and 0.05 less than in December 2022. At the same time, 2023 year to date inflation rate is 7.42%.

2023 has been a turbulent year for the Baltic region. Negative economic sentiment was influenced by higher interest rates in the eurozone.

Notwithstanding the macroeconomic and geopolitical shocks, the Group's business continues to be strong and resilient as the Group was able to adapt to rapidly changing environment. The management of the Group monitored the situation closely during the reporting year and will continue to keep a close eye on the development of the geopolitical situation in Eastern Europe and the potential implications for the Group.

Business outlook

Group`s business is built on good quality, reasonably priced and known to our current target markets lingerie products. Our business is sustainable and is built on solid brands. Further to this, the Group has a strong distribution network with a total of 570 shops, of which 122 are managed by ourselves.

AS Silvano Fashion Group is well positioned given its strong brands, very good product range, reasonable price point, a focus on the functional segment of lingerie products. More specifically, AS Silvano Fashion Group will focus on the following:

The Group will continue building leaner organizational structure in order to make management of the Group more transparent and efficient;
Group`s distribution companies (Russia, Belarus, Latvia) will focus on the development of sales network, opening new stores and supporting of franchise businesses in order to increase sales and profitability;
Group`s manufacturing companies will continue with optimization of product portfolio in order to streamline purchasing and manufacturing activities and be in line with market trends;
The Group will continue with optimization of operational costs and personnel.
The Group is open to partnerships, which could widen range of Group`s activities or sales geography.

On the store openings, we try to shift the mind-set of our partners from quantity to quality that should ultimately increase the profitability of their business, and reduce the risk of failure. We advocate for store openings, since it allows us and our franchise partners to control revenue stream better.

Russia Economic Outlook

The Group's sales on the Russian market totalled 34 692 thousand EUR, decrease is 1.5% compared to 12 months of 2022. Local currency sales increased by 29.1% during 12 months of 2023 compared to the same 12 months of 2022. At the end of the reporting period, there were a total of 58 stores operated by the Group itself (as of 31 December 2022: 49 stores). The 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.

Belarus Economic Outlook

The Group's sales in Belarus in the 12 months of 2023 were 15 013 thousand EUR and increased by 2.7% compared to the 12 months of 2022. Sales in local currency increased by 17.8% 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 2022: 59 stores).

Ukraine Economic Outlook

The Group's sales in Ukraine in the 12 month of 2023 were 161 thousand EUR and decreased by 30.9% compared to the 12 month of 2022. Local currency sales decreased by 16.0% during 12 months of 2023 compared to the same 12 months of 2022.

Financial risks

The operations of the Group may be accompanied by a variety of financial risks, including the credit risk, liquidity risk, risk of changing interest rates and exchange rates having the most significant impact. Financial risk management falls within the sphere of competence of the Group's Management Board which seeks to minimize potential adverse effects of financial risks on the financial performance of the Group and includes the identification and measurement of the risks and checking the efficiency of the alleviation measures. The purposes of financial risk management are the alleviation of financial risks and the reduction of the volatility of the financial results. The financial risk management of the Group is guided by the risk management strategy established in the Group. The Supervisory Board of the Group is in charge for supervision of the measures taken by the Management Board to alleviate the risks. More information on the financial risks is disclosed in the Note 5 Financial Risk Management to the Consolidated Financial Statements.

Financial performance

Overall, Group sales grew by 1.6% compared to 12 months of 2022. The low growth in sales of underwear was affected by the situation caused by the weakening of the rouble in August 2023. Overall, Wholesale increased by 2.8%, measured in EUR.

The Group's gross profit during 12 months of 2023 amounted to 33 743 thousand EUR and increase by 9.3% compared to previous year. The gross margin during 12 months of 2023 increased by 7.5% compared to 12 months of 2022. The cost of sold goods decreased by 7.2%. Decrease in cost of goods sold is caused by the fact that material purchases are made in Belarusian roubles, which were weakening during 2023.

Consolidated operating profit for 12 months of 2023 amounted to 17 973 thousand EUR, compared to 14 665 thousand EUR for 12 months of 2022, increase by 22.6%. The consolidated operating profit margin was 30.7% for 12 months of 2023 (25.4% for 12 months of 2022). Consolidated EBITDA for 12 months of 2023 increased by 15.5% and amounted to 21 120 thousand EUR, which is 36.0% in margin terms (18 283 thousand EUR and 31.7% for 12 months of 2022).

Reported consolidated net profit attributable to equity holders of the Parent company for 12 months of 2023 amounted to 9 927 thousand EUR, compared to net profit of 11 796 thousand EUR for 12 months of 2022, net profit margin attributable to equity holders of the Parent company for 12 months of 2023 was 16.9% against net profit 20.5% for 12 months of 2022.

Financial position

As of 31 December 2023 consolidated assets amounted to 72 252 thousand EUR representing increase by 12.9% as compared to the position as of 31 December 2022. The main driver of this change is significant increase in highly liquid assets. The Group continued to accumulate additional liquidity in the form of cash throughout 2023 and as at 31 December 2023 has increased its cash reserves located in Estonia by EUR 7 434 thousands or 33.3%.

Inventory balance increased by 1 676 thousand EUR and amounted to 23 940 thousand EUR as of 31 December 2023. The growth is caused by overall inflation and quantitative increase in inventories. Trade and other receivables increased by 310 thousand EUR as compared to 31 December 2022 and amounted to 1 354 thousand EUR as of 31 December 2023.

Equity attributable to equity holders of the Parent company increased by 9 334 thousand EUR and amounted to 54 120 thousand EUR as of 31 December 2023. Current liabilities increased by 384 thousand EUR during 12 months of 2023.

Sales structure

Sales by markets

Group sales in its 2 major markets – Russia and Belarus – were 84.8% of its total sales in 2023.

	12m 2023	12m 2022	Change	Change, %
Russia, th RUB	3 163 150	2 451 014	712 136	29.1%
Belarus, th BYN	48 725	41 350	7 375	17.8%

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

	12m 2023	12m 2022	Change,	Change, %	12m 2023,	12m 2022,
in thousands of EUR			EUR		% of sales	% of sales
Russia	34 692	35 215	-523	-1.5%	59.2%	61.1%
Belarus	15 013	14 619	394	2.7%	25.6%	25.3%
Ukraine	161	233	-72	-30.9%	0.3%	0.4%
Baltics	1 443	1 490	-47	-3.2%	2.5%	2.6%
Kazakhstan	3 698	3 175	523	16.5%	6.3%	5.5%
Moldova	1 537	1 176	361	30.7%	2.6%	2.0%
Other markets	2 053	1 759	294	16.7%	3.5%	3.1%
Total	58 597	57 667	930	1.6%	100.0%	100.0%

Sales by business segments

	12m 2023	12m 2022	Change,	Change, %	12m 2023,	12m 2022,
in thousands of EUR			EUR		% of sales	% of sales
Wholesale	37 335	36 323	1 012	2.8%	63.7%	63.0%
Retail	21 203	21 304	-101	-0.5%	36.2%	36.9%
Other operations	59	40	19	47.5%	0.1%	0.1%
Total	58 597	57 667	930	1.6%	100.0%	100.0%

The main wholesale regions were Russia and Belarus.

Investments

During 12 months of 2023 the Group's investments into property, plant and equipment totalled 1 133 thousand EUR, in previous year same period 445 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. During 12 months of 2023 the Group has opened 14 new stores (12 stores in Russia and 2 stores in Belarus) and closed 4 stores (3 stores in Russia and 1 store in Belarus).

The Group is planning to invest during year 2024 around 1 160 thousand EUR to existing operations, of which about half is planned to open new stores and the renovation of existing retail stores, and the second half mainly for the updates of the software programs and renew production technology and equipment.

Research & development achievements

The Group carries out research, development and innovation activities in all areas of its business with the aim of improving the manufacturing and distribution processes and developing technologies that facilitate business management, either using its own resources or with the help of third parties.

In the reporting year, we continued to implement new parts of the 1C: ERP Enterprise Management 2 for Belarus software. The following were put into trial operation:

a subsystem for recording production processes of the sewing shop;
unit for recording cutting production labor costs;
subsystem for recording production processes of cooperation;
subsystem for accounting and quality control of the sewing workshop and logistics center;
interaction subsystem for information exchange with the logistics center;
subsystem for calculating the production cost of finished products;
reporting of the financial and economic block;
HR and payroll accounting subsystem.

The implementation made it possible to optimize part of the Group's business processes in Belarus, obtain advanced analytical data, and make the work of employees easier. Total amount of utilized investments in 2023 for the implementation of the software product amounted to 139 thousand euros. As of the end of 2023, the implementation of the project is 91% ready.

Seasonality of business

The operations of AS Silvano Fashion Group are not exposed to major seasonal fluctuations. As is common for clothing and fashion business, especially lingerie segment, the fourth quarter is lower than average sales (respectively -19% of the average quarterly revenue in 2023). The second and third quarters was slightly higher than quarterly average revenue (+ 18% and +5% in 2023).

Half year results are fairly equal, in recent years. A similar trend is also part of the operating profit.

Personnel

As of 31 December 2023, the Group employed 1 626 employees, including 500 people in retail operations. The rest were employed in production, wholesale, administration and support operations. As of 31 December 2022 there were 1 616 employees, including 499 people in retail operations.

Total gross salaries and related taxes during 12 months of 2023 amounted to 13 266 thousand EUR (12 757 thousand EUR in 12 months of 2022).

The teams of the AS Silvano Fashion Group companies comprise of highly-qualified and professional specialists who have long-term experience in the women's lingerie industry. To meet the growing demands of its business the Group pays careful attention to the development of all levels of management and to the training of own personnel and subcontractors, who need to meet common Group requirements and perform in line with the overall strategy of the Group.

AS Silvano Fashion Group continually works with its employees and business partners to ensure the sustained success of the Group. The objective of the human resources policy of Silvano Fashion Group is to value, develop and respect the Group's employees based on common principles, involving human resources management and planning, well thought out recruitment and selection processes, followed by purposeful and motivational development and the establishment of an environment that supports it. We are guided by the principle that success is based on loyal, committed, ethical and result-oriented employees.

Key events during 2023 until the release of Annual Report

On June 15th, 2023 AS Silvano Fashion Group held its regular Annual General Meeting of Shareholders. The Meeting adopted the following decisions.

• The Meeting approved the 2022 Consolidated Annual Report.

• The Meeting decided to leave the net profit undistributed and include the net profit of the financial year 2022 in retained earnings.

In the reporting year AS Silvano Fashion Group has continued broadening its on-site store network in Russia. In particular, in 2023, the Group opened 12 (including 4 stores in Saint Petersburg, 2 stores in Pskov, 1 store in Murmansk, 1 store in Petrozavodsk and 4 in Moscow) and closed 3 stores (including 2 stores in Moscow and 1 store in Sochi).

	Nasdaq OMX Tallinn Stock Exchange	Warsaw Stock Exchange
ISIN	EE3100001751	EE3100001751
Ticker	SFG1T	SFG
List/segment	BALTIC MAIN LIST	MAIN LIST
Issuer	Silvano Fashion Group (SFG)	Silvano Fashion Group (SFG)
Nominal value	0.10 EUR	0.10 EUR
Total number of securities	36,000,000	36,000,000
Number of listed securities	36,000,000	36,000,000
Listing date	20.05.1997	23.07.2007

Shares of AS Silvano Fashion Group

As of 31 December 2023, the 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 0.1 EUR each. The share register is electronic and maintained at the Estonian Central Register of Securities. The Group has been listed on Nasdaq OMX Tallinn Stock Exchange since 20 May 1997 I-list and since 21 November 2006 main list and on Warsaw Stock Exchange since 23 July 2007.

Ordinary shareholders are entitled to receive dividends when the company distributes them. Each ordinary share gives one vote at the general meeting of shareholders of AS Silvano Fashion Group. The shares are freely transferable, there are no restrictions imposed on them by the articles of association likewise there are no restrictions imposed on the transfer of securities concluded between the company and its shareholders. There are no known restrictions imposed on the transfer of securities laid down in the contracts between the shareholders.

Information on shares of AS Silvano Fashion Group

Key share details	2019	2020	2021	2022	2023
Number of shares outstanding at year end	36 000 000	36 000 000	36 000 000	36 000 000	36 000 000
Weighted average number of shares	36 000 000	36 000 000	36 000 000	36 000 000	36 000 000
Year-end share price, in EUR	2.17	1.56	1.965	1.12	1.13
Earnings per share, in EUR	0.3	0.04	0.25	0.33	0.28
Dividend per share, in EUR	n/a	n/a	n/a	n/a	n/a
Dividend / Net profit	n/a	n/a	n/a	n/a	n/a
Price to earnings ratio (P/E)	7.23	39.00	7.86	3.39	4.10

Share price performance and trading history

In 2023, AS Silvano Fashion Group share price increased by 0.9% and the Group's market capitalization increased by EUR 0.36 million.

Nasdaq OMX Tallinn Stock Exchange trading history	2019	2020	2021	2022	2023
High, in EUR	2.76	2.34	2.195	2.078	1.204
Low, in EUR	2.08	1.37	1.55	0.6601	0.99
Last, in EUR	2.17	1.56	1.965	1.12	1.13
Traded volume	3 443 297	5 504 119	6 319 071	5 992 900	3 170 330
Turnover, in EUR million	7.96	9.35	10.95	6.55	3.52
Market capitalization, in EUR million	78.12	56.16	70.74	40.32	40.68

Share price development and turnover on the Nasdaq OMX Tallinn Stock Exchange during 12 months of 2023 (EUR)

During 12 months of 2023 the highest and lowest prices of the AS Silvano Fashion Group` share on the Nasdaq OMX Tallinn Stock Exchange were 1.204 EUR and 0.99 EUR, respectively.

Warsaw Stock Exchange trading history	2019	2020	2021	2022	2023
High, in PLN	11.60	10.80	9.88	9.10	7.60
Low, in PLN	8.96	6.00	6.66	3.29	4.00
Last, in PLN	9.48	6.50	8.52	5.72	5.58
Traded volume	268 377	68 573	115 488	261 426	485 817
Turnover, in PLN million	2.89	0.52	0.93	1.20	2.52

Share price development on the Warsaw Stock Exchange during 12 months of 2023 (PLN)

During 12 months of 2023, the highest and lowest prices of the AS Silvano Fashion Group` share on the Warsaw Stock Exchange were 7.60 PLN and 4.00 PLN respectively.

The members of the Management Board of AS Silvano Fashion Group have no right to issue or buy back shares of AS Silvano Fashion Group without permission and terms given by the shareholders meeting. In addition, there are no commitments between the Group and its employees providing for compensation in case of mergers and acquisitions under chapter 19 of Securities Market Act.

Shareholder structure

As of 31 December 2023 AS Silvano Fashion Group had 3 336 shareholders (as of 31 December 2022: 3 585 shareholders).

All shares issued by AS Silvano Fashion Group are registered ordinary shares. Each ordinary share grants the holder one vote at the general meeting of shareholders. The Group does not issue share certificates to shareholders. The Group's share register is electronic and maintained at the Estonian Central Register of Securities.

Each ordinary share grants the holder the right to participate in profit distributions in proportion to the number of shares held.

	31.12.2023			31.12.2022
Shareholdings	Number of shareholders	% of votes	Number of shares	Number of shareholders	% of votes	Number of shares
>10%	2	47.54	17 115 798	2	47.54	17 115 798
1.0–10.0%	13	28.78	10 739 478	10	25.53	9 189 587
0.1–1.0%	38	10.34	3 758 065	45	13.88	4 997 800
<0.1%	3 283	13.34	4 386 659	3 528	13.05	4 696 815
Total	3 336	100,00%	36 000 000	3 585	100.0%	36 000 000

The distribution of shares as of 31 December 2023 and 31 December 2022:

Largest shareholders of AS Silvano Fashion Group (% of votes):

The main shareholders of the Group as at 31 December 2023 compared to 31 December 2022 are presented in the table below:

	31.12.2023	31.12.2022
BALTPLAST AS	25,31%	25,31%
AS SEB Pank Clients	22,22%	22,22%
UNICREDIT BANK AUSTRIA AG	5,96%	5,98%
Clearstream Banking AG	3,92%	3,00%
SWEDBANK AS CLIENTS	3,17%	2,93%
NORDEA BANK ABP/NON TREATY CLIENTS	2,64%	2,63%
CITIBANK ( NEW YORK) / GOVERNMENT OF NORWAY	2,43%	2,43%
Olegs Radcenko	1,98%	1,98%
SWEDBANK AB CLIENTS	1,91%	1,80%
Krajowy Depozyt Papierow Wartošciowych S.A.	1,63%	2,22%
VSG Invest OÜ	1,43%	0,98%
FIREBIRD REPUBLICS FUND LTD	1,28%	1,28%
IN INVEST OÜ	1,22%	0,28%
INTERACTIVE BROKERS LLC Client Omnibus Account	1,22%	1,28%
AB SEB BANKAS	1,05%	0,94%

Because the allocation of voting rights does not necessarily coincide with legal ownership, the shareholders' register of the Group may not include full details of persons who hold over 5% of voting rights represented by its shares.

Shares held by the members of the Management board and the Supervisory Board

The members of the Management board and the Supervisory Board did not have direct shareholding in Silvano Fashion Group AS as of 31 December 2023 (and 31 December 2022). During 2023 (and 2022) financial year there was no buy-back of shares of AS Silvano Fashion Group.

Dividends

AS Silvano Fashion Group is under no permanent or fixed obligation of paying dividends to its shareholders. Recommendations of the Management Board and the Supervisory Board for profit allocation are based on financial performance, requirements for current capital management, investment needs and strategic considerations. The decision on distribution of profit is made by the general meeting of shareholders on the basis of approved annual report.

Corporate Governance Report

The shares of AS Silvano Fashion Group have been admitted to trading on the Nasdaq OMX Tallinn Stock Exchange and the Warsaw Stock Exchange. Two corporate governance codes apply to the Group:

1) the Corporate Governance Recommendations adopted by the NASDAQ OMX Tallinn Stock Exchange and the Estonian Financial Supervision Authority (hereinafter CGR);

2) Corporate Governance Principles for WSE Listed Companies titled "Best Practice for GPW Listed Companies 2021" (hereinafter GPW CGP).

In accordance with the CGR and GPW CGP the Group shall describe its management practices in corporate governance recommendations report and confirm its compliance or not with CGR and GPW CGP. If the Group does not comply with CGR and/or GPW CGP, the Group shall explain in the report the reasons for its non-compliance. The Code of Best Practice for WSE Listed Companies provides the same obligation which is applicable to the Group due to its listing on the Warsaw Stock Exchange. The GPW CGP of the Warsaw Stock Exchange is similar to the CGR of the Nasdaq OMX Tallinn Stock Exchange.

The Management Board and the Supervisory Board of the Parent company confirm, to the best of their knowledge that they did everything possible to ensure that the management practices were in compliance with CGR and GPW CGP in all substantial matters during the reporting year. If the management practices deviated, in the Management Board's and/or the Supervisory Board's opinion, from particular provisions of CGR and/or and GPW CGP during 2023 such a deviation is explained below.

AS Silvano Fashion Group has not implemented a diversity policy as required by principle 2.1 of GPW CGP, which applies to all group companies yet, as we operate in many different legislative and cultural zone countries, most of them non-EU countries. But we follow diversity principles in our company culture and everyday activities to ensure that there is sufficient diversity in the governing bodies among the Group entities to have different opinions and views in the management positions and freedom to introduce new ideas. This approach will support effective management's decisions, the leadership and supervision of the exercise by the board and management teams and, therefore, the results of the companies. Diversity increased transparency will contribute significantly to the promotion of equal treatment and the fight against discrimination in the relevant decision-making bodies of other companies. Religion or belief, disability, age or sexual orientation discrimination as well as discrimination based on sex, racial and ethnic origin in the employment and occupation is not acceptable in the company culture of AS Silvano Fashion Group.

General Meeting of Shareholders

The highest governing body of the Group is the General Meeting of Shareholders. The competence of the General Meeting, the procedure for calling a meeting and passing of decisions is set forth in the Articles of Association of the Parent company. The annual general meeting is held once a year and extraordinary general meetings may be convened by the Management Board in the events prescribed by law. The general meeting is competent to change the articles of association, elect members of the Supervisory Board and decide on their remuneration, appoint an auditor, approve the annual report and allocate profit, as well as decide on other matters stipulated by the articles of association and laws. The articles of association do not provide for any rights to shares of a different class which would bring about unequal treatment of shareholders in voting. The General Meeting shall decide on amendment of the Articles of Association of the Company according to the procedure laid down in law and an amendment to the Articles of Association shall take effect upon making a relevant entry in the Commercial Register

A general meeting can adopt resolutions if over one-half of the votes represented by shares are present. A resolution of general meeting is adopted if over one-half of the votes represented at the meeting are in favour unless a larger majority is required by law. A resolution on amendment of the articles of association shall be adopted if at least twothirds of the votes represented at a general meeting are in favour.

The resolutions of the general meeting were published on Nasdaq OMX Tallinn and Warsaw stock exchanges and on Parent company's website in Estonian and English language.

On the 24 May 2023, the AS Silvano Fashion Group proposed to the shareholders to adopt the resolutions of the annual general meeting of shareholders without convening the meeting. The notice of the general meeting was published on 24 May 2023, in the information system NASDAQ OMX Tallinn https://view.news.eu.nasdaq.com/view?id=bc3e622810054b7a49a4f706f81ac5063&lang=en&src=listed and Warsaw Stock Exchange, on the website of SFG https://www.silvanofashion.com/investors/company announcements/ and in the daily newspaper Eesti Päevaleht..

On 15 June 2023 AS Silvano Fashion Group held its regular Annual General Meeting of Shareholders. The Meeting adopted the following decisions:

• Approved the 2022 Annual Report;

• Left the net profit undistributed and included the net profit of the financial year 2022 in retained earnings.

The Management Board of AS Silvano Fashion Group proposed to the shareholders to adopt resolutions of the shareholders without convening a meeting pursuant to § 299¹ of the Commercial Code. All questions from shareholders regarding the proposed resolutions were sent in advance to the e-mail address [email protected] until 1 June 2023. The list of shareholders entitled to vote on the resolutions of the shareholders was fixed on 7 June 2023, at the end of the business day of the NASDAQ CSD settlement system. Resolutions of the shareholders were voted on from 24 May to 14 June 2023 (inclusive). If a shareholder did not cast his or her votes, he or she shall be deemed to have voted against the resolutions. A shareholder had two options to cast his vote:

1) By sending a digitally signed or paper-signed and scanned ballot paper filled in by the voting shareholder or his or her authorized representative to the e-mail address [email protected] during the voting period;

2) By submitting or sending a completed ballot paper, which had been signed manually by the voting shareholder or his or her authorized representative, to the head office of AS Silvano Fashion Group at Tulika 17, 10613 Tallinn from 9:00-12:00 (EET), so that it would arrive no later than 14 June 2023 at 16:00 (EET).

When sending paper-signed and scanned ballot papers by e-mail or when sending paper-signed ballot papers by post, a copy of the personal data page of the shareholder's or his / her representative's identity document (e.g., passport or ID card) had to be sent together with the ballot paper. The shareholder's representative had also to submit a valid power of attorney for written reproduction in Estonian or English. A shareholder might use a power of attorney form, which was available on the website of AS Silvano Fashion Group www.silvanofashion.com. If the shareholder was a legal entity registered abroad, he had to send a copy of the extract from the relevant foreign commercial register showing the right of the representative to represent the shareholder (legal right of representation). The statement had to be in English or translated into Estonian by a sworn translator or an official translator equivalent to a sworn translator.

The resolutions of the general meeting were published on Nasdaq OMX Tallinn and Warsaw stock exchanges and on Parent company's website in Estonian and English language. Considering the aforementioned descriptions of general meeting held in 2023, the Group has largely complied with the CGR and GPW CGP in informing the shareholders, convening and holding the general meeting.

Company has not complied the section 1.3.3 of the CGR issued by Financial Supervision Authority in Estonia: the Issuers shall make participation in the General Meeting possible by means of communication equipment (Internet) if the technical equipment is available and where doing so is not too cost prohibitive for the Issuer. Since AS Silvano Fashion Group does not have the required technical equipment, that would allow secure identification of shareholders, currently attendance and participation in general meetings is not possible by means of communication equipment. Conducting a general meeting using electronic communication means (real-life broadcast of the general meeting, real-time bilateral communication, exercise of the right to vote during a general meeting either in person or by proxy) is also recommendation of GPW CGP. Due to the reasons described above, the Group does not apply the said recommendation of GPW CGP. In addition, the abovementioned recommendation is not applied by the Group as its implementation would involve technical risks. Giving to the shareholders an option to communicate in the course of the general meeting without being present at the meeting, using electronic communication means, involves both technical and legal hazards for the proper and efficient conduct of the general meeting. In particular, the above brings about a real risk of technical interference preventing continuous bilateral communication with shareholders present in venues other that the meeting room. Therefore, the Group is unable to guarantee the reliability of technical infrastructure. At the same time, in the Group's opinion, the currently applicable rules for participation in general meetings facilitate the proper and effective exercise of rights attached to shares and sufficiently secure the interests of all shareholders. Furthermore, the Group has not been informed of any shareholders' expectations in respect of conducting the General Meeting of Shareholders using electronic communication means.

The Group does not display on a corporate website an audio or video recording of a general meeting. Also, the Group does not provide real-time broadcasts of general meetings. In the Group's opinion, the manner in which general meetings have been documented so far ensures transparency of the Group's operations and safeguards the rights of all shareholders. In particular, the Group makes available the wording of resolutions adopted, in the form of current reports and website publications. Additionally, detailed data on voting results and objections, if any, raised against adopted resolutions are made available in the same form. Consequently, investors may obtain the knowledge of the material parts of, and matters discussed at, a general meeting.

Management Board

The Management Board is a governing body of AS Silvano Fashion Group that represents and directs the parent company on a daily basis. In accordance with the articles of association, the Management Board may have one to three members. In accordance with the Commercial Code, members of the Management Board of AS Silvano Fashion Group are elected by the Supervisory Board. In order to elect a member of the Management Board, his or her consent is required. According to the articles of association of the Group, a member of the Management Board shall be elected for a specified term of up to three years. A member of the Management Board shall be removed from the Management Board by the Supervisory Board. The Supervisory Board may remove a member of the Management Board regardless of the reason.

The member of the management board may resign from the management board regardless of the reason by giving the notice thereof to the Supervisory Board.

As of 31 December 2023 the Management Board had 1 member: Mr. Jarek Särgava, although according to the clause 2.2.1 of the CGR, the Management Board shall have more than one member and a Chairman shall be elected by its members. All resolutions are adopted by the Management Board in collaboration with the parent's company Supervisory Board. Under the direction of the parent company, close cooperation is carried out with the management of subsidiaries and the people responsible for respective areas. The Group believes that such a division protects the best the interests of all shareholders and ensures sustainability of the Group. In opinion of the supervisory board, the management of the Group is clearer and more transparent with one board member and so far the Supervisory Board has not considered election of additional board member to the Management Board to be necessary.

Upon assuming the office, member of the Management Board has executed a board member contract with the Group or service contract with a company belonging to the Group governing the service assignments of that member. Those contracts specify the rights, obligations and liability of the member of the management board, and lay down the provisions governing payment of principal remuneration. The amount of the remuneration was agreed upon in line with the service assignments and activities entrusted to the relevant member of the management board, the current state of the business, and the future trends. A more detailed overview of the remuneration paid to the member of the Management Board is available in the Remuneration Report. Members of the Management Board have informed the Parent company of their participation in other business entities, which are not members of the Group or management bodies thereof. No members of the Management Board are in direct competition with the Group. There is no conflict of the interest between the members of the Management Board and the Group and certain interest held by the members of Management Board, and their participation in managing bodies do not constitute a breach of the prohibition from competition. Moreover, the members of the Management Board have assumed the obligation to refrain from any breach of the non-competition obligation under their respective agreements.

Furthermore, the internal work procedure rules of the Group stipulate that no member of the Management Board or any employee shall demand or accept in their own personal interest any money or other benefits from any third persons in connection with their job, nor grant any third persons unlawful or unreasonable favours.

Supervisory Board

The task of the Supervisory Board is to plan the operations of the Parent company, organize the business and carry out supervision over the activities of the Management Board. The General Meeting of Shareholders elects the members of the Supervisory Board of the Parent company.

The Supervisory Board has three to five members according to the resolution of the general meeting and the member is elected for up to five years. The work of the Supervisory Board is organised by the Chairman of the Supervisory Board. The meetings of the Supervisory Board are held as necessary, but not less frequently than once every three months.

As of 31 December 2023 the Supervisory Board of the Parent company consists of five members: Mr. Toomas Tool (Chairman), Mr. Stephan Balkin, Ms. Mari Tool, Mr. Risto Mägi and Ms. Triin Nellis. The current composition of the Supervisory Board is available on the Parent company's website.

In accordance with Section 3.2.2. CGR more than one-half of the members of the supervisory board were independent. The Group is currently complying with the requirement of having at least half members of the Supervisory Board as independent members as set out in Section 3.2.2 of CGR. GPW CGP point 2.3. also requires that at least two members of the supervisory board meet the criteria of being independent and AS Silvano Fashion Group is in compliance with this requirement.

The members of the Supervisory Board elect and appoint the chairman of the supervisory board. Mr. Toomas Tool serves as the chairman of the supervisory board from 15 November 2012.

Based on CGR Section 3.2.5: "The amount of remuneration of a member of the Supervisory Board shall be published in the Corporate Governance Recommendations Report, indicating separately basic and additional payment (incl. compensation for termination of contract and other payable benefits)." The remuneration of the members of the Supervisory Board of AS Silvano Fashion Group has been approved by the resolution of the General Meeting of Shareholders dated 3 May 2019. This constitutes of EUR 2 000 as gross monthly remuneration for each supervisory board member and EUR 5 000 as gross monthly remuneration for the Chairman of the Supervisory Board. No severance pay is paid to resigning members of the supervisory board.

Based on CGR Section.3.3.2: "All conflicts of interests that have arisen in preceding year shall be indicated in the Corporate Governance Recommendations Report along with their resolutions." The Management Board of the Parent company is not aware of any conflicts of interests between the Supervisory Board members and the Group.

Altogether 5 meetings of the Supervisory Board were held in the reporting year. Most members of the Supervisory Board of the Group participated in more than one-half of the meetings of the Supervisory Board held during their term of office.

Cooperation of Management Board and Supervisory Board

The Management Board and the Supervisory Board work in close co-operation. The Management Board and the Supervisory Board hold joint meetings when matters concerning the Group's strategy are discussed, and the parties continuously exchange information pertaining to the strategic development of the Group. At such meetings the Management Board informs the Supervisory Board of any deviations from the Group's plans and targets and the reasons thereof. Meetings of the Chairman of the Supervisory Board and Management Board members are held to exchange information when needed. With respect to exchange of information, the internal rules governing the keeping, disclosure of internal information, as well as transactions with the shares of the Parent company are applied.

The Management Board regularly informs the Supervisory board of the key circumstances regarding the activity plans and business activities of AS Silvano Fashion Group, the risks involved and management of such risks.

No conflicts of interests occurred on financial year of 2023.

Disclosure of Information

Since listing of the shares of the Parent company on the Nasdaq OMX Tallinn Stock Exchange and the Warsaw Stock Exchange the Parent company has been adhering to the information disclosure requirements stipulated in the stock exchange to procure an equal treatment to the Parent company's shareholders.

The website of the Parent company can be found at the address www.silvanofashion.com. The information targeted at shareholders is available at the easily found section http://www.silvanofashion.com/investors/ where the materials related to the General Meetings, including notices, agendas, resolutions, annual reports, information on the membership of the Supervisory Board and auditors and other materials related to the agenda items have been published. The materials are available in Estonian and English languages.

The Parent company has disclosed on its website all the facts and assessment pertaining to the Group, which have been disclosed to financial analysts or other persons.

The Parent company publishes all its announcements in Estonian and English languages on the parent company's webpage and the webpage of the Nasdaq OMX Tallinn Stock Exchange and in English language on Warsaw stock exchange.

Based on CGR Section 5.6: "The Issuer shall disclose the dates and places of meetings with analysts and presentations and press conferences organized for analysts, investors or institutional investors on its website." In accordance with the rules of the Nasdaq OMX Tallinn Stock Exchange, AS Silvano Fashion Group first discloses all material and price sensitive information through the stock exchange system. The information disseminated at meetings with analysts is limited to previously disclosed data. All information which has been made public, including presentations made at meetings, is available on the Group's website (www.silvanofashion.com), which lists the contacts of persons who can provide further information. Presenting a schedule of meetings on the corporate website is not currently relevant. As a rule, the issuer cannot enable other shareholders to attend the meetings held with institutional investors and analysts. To ensure the objectivity and unbiased nature of the meetings, institutional investors observe internal rules which do not allow third parties to attend such meetings.

Audit committee

AS Silvano Fashion Group has an audit committee, with rules of procedure approved by Supervisory Board. The audit committee is responsible for monitoring and analyzing the processing of financial information, the effectiveness of risk management and internal controls, and the external audit of the consolidated financial statements. The committee is also responsible for making recommendations in relation to the above issues to prevent or eliminate problems and inefficiencies. The audit committee reports to the Supervisory Board and its members are appointed and removed by the Supervisory Board. The committee has two to five members whose term of office is timeless. The members of the audit committee are not remunerated for serving on the committee. Members of the committee are Mr. Otto Tamme and Mr. Risto Mägi.

Financial Reporting and Auditing

It is the duty of the Management Board of AS Silvano Fashion Group to organise the internal control and risk management of the Group in a manner that ensures the accuracy of the published financial reports. The purpose of the internal control and risk management systems connected with the financial reporting process is to ensure harmonised and trustworthy reporting of the Group's financial performance in conformity with the applicable laws, regulations, adopted accounting policies and the reporting principles approved by the Group. The principles of risk management have been defined in the Group's risk management framework, which describes the activities for risk management relating to identification, assessment, prioritisation and mitigation of risks and the definitions, roles and areas of responsibility related to the field. In addition, the risk management and internal control activities are organised with the work organisation rules of the Group and its subsidiaries, which describe the functioning of various processes.

The Group's financial area together with accounting and management reporting is the area of responsibility of the Group's chief financial officer (CFO) being responsible for the identification and assessment of risks in financial reporting, arranging the principles in relation to financial reporting of the Group. The financial reporting processes and systems are developed on a continuous basis. Risk analysis is conducted annually. This risk analysis serves as a basis for the further development of supervision and control measures and checkpoints in reporting to prevent the realisation of risks.

The Management Board of AS Silvano Fashion Group publishes the annual report once each year and interim reports during the financial year. The annual report, which is signed by the members of the Management Board and Supervisory Board, is submitted to shareholders for examination. Consolidated Annual Report of the Group has been prepared in accordance with the International Financial Reporting Standards as adopted by the European Union. The auditor (Ernst & Young Baltic AS) is auditing this Consolidated Annual Report of the Group for the sixth consecutive year.

During 2023, the auditor of the Group didn't provide to the Group any other services.

Based on CGR Section 6.2.1: "Also the remuneration the Issuer has paid or shall pay to the auditor shall be published." The fee for the audit of Consolidated financial statements of the Group for the year ended 31 December 2023 is two hundred seventy thousand euros.

Based on CGR Section 6.2.4: "Pursuant to the contract the auditor obliges to disclose to the Supervisory Board and at the General Meeting the facts, which become evident to them during the course of exercising of a regular audit, indicating noncompliance with the Corporate Governance Recommendations by the Management Board or the Supervisory Board. The Auditor shall prepare a memorandum to the Issuer regarding these facts along with the auditor's report. The auditor shall not reflect in the memorandum the facts that the Management Board has explained in the Corporate Governance Recommendations Report." The agreement entered into by an audit firm is governed by International Standards on Auditing, the Estonian Auditing Rules and the risk management policies of the audit firm that do not require the auditor to submit a memorandum on the issuer's non-compliance with the Corporate Governance Code. Accordingly, the agreement signed between AS Silvano Fashion Group and its audit firm does not include a corresponding article and the auditor does not submit such a memorandum.

In our opinion, the financial audit conducted in 2023 has been in conformity with the regulatory provisions, international standards and the set expectations. Ernst & Young Baltic AS has introduced the results of the work during the interim audit and for the final audit before issuing the auditor's report. The independent auditor's report is presented on pages 71-76.

Corporate Social Responsibility

AS Silvano Fashion Group has special responsibility towards society and the environment. Accordingly, in addition to economic growth, its corporate strategy and business operations are also oriented to ecological and social values. For the Group, this responsibility translates into numerous areas of involvement designed to promote the health and professional development of employees as well as activities to protect the environment and the ecosystem.

Sustainable business

AS Silvano Fashion Group continually works with its employees and business partners to ensure the sustained success of the Group. For this purpose, the business strategy focuses on the long-term enhancement of brand value, without neglecting the short-term requirements of the consumer and capital markets.

Environmental responsibility and product sustainability

AS Silvano Fashion Group acknowledges its responsibility for preserving environment for future generations, aims at improving living standards of both its employees and people living in the area of the Group's operations, seeks to enhance the quality of goods produced and thus commits to the following:

Observe both national and international legislation on environment protection.
Produce goods with maximum ecological efficiency, consume materials and energy resources efficiently.
Reduce the level of environmental impact and waste products by improving current and adopting new resource saving, low waste or non-waste technologies.
Constantly improve employees' knowledge on environment and ecology.
Improve current environmental management system through its ongoing development and performance evaluation.
Regularly inform the public and partners on the measures taken by management and employees to protect environment and increase ecological efficiency of production process.

AS Silvano Fashion Group considers as an obligation to be able to provide products that not only satisfy the needs of its customers but also protect the environment. With this in mind, AS Silvano Fashion Group companies comply with internationally recognized production standards of Oeko-Tex, REACH, ISO, EAC and GOST R. This approach is valid both for raw materials and final products.

The STANDARD 100 by OEKO-TEX® is a globally recognized certification system for raw, semi-finished, and finished textile products at all processing levels. It stands for customer confidence and high product safety. If a textile product has the STANDARD 100 label, the customer can be certain that every component of this product, i.e., every thread, button and other accessories, has been tested for harmful substances and that the article results to be harmless for human health. Oeko-Tex implies also a regular audit that is conducted once per three years. Oeko-Tex certified products automatically comply with REACH (Registration, Evaluation and Authorization of Chemicals) Regulation requirements. The Regulation has been adopted to improve the protection of human health and the environment from the risks that can be posed by chemicals, while enhancing the competitiveness of the EU chemicals industry.

ISO standard is a universally accepted quality standard. ISO creates documents that provide requirements, specifications, guidelines or characteristics that can be used consistently to ensure that materials, products, processes and services are fit for their purpose. AS Silvano Fashion Group has following ISO standards in place:

1. Quality management standards to help work more efficiently and reduce product failures;
1. Environmental management standards to help reduce environmental impacts, reduce waste and be more sustainable;
1. Health and safety standards to help reduce accidents in the workplace.

CJSC Milavitsa certified the system of environmental management according to ISO 14000 already in 2003. Afterwards, in 2009 there was made certification according to ISO 14001 (version of 2005). In CJSC Milavitsa BS OHSAS 18001:2007 certification was made in 2006 - standard for occupational health and safety management systems. BS OHSAS 18001:2007 certification according to version of 2007, was made in 2009. In 2018, the labor protection and environmental management system was recertified for compliance with the requirements of BS OHSAS 18001 and ISO 14001 versions of the 2015 version. On June 6, 2018 TIC 15 104 151343 and TIC 15 116 12364 certificate were obtained for the compliance of the integrated system with the ISO 14001: 2015 and BS OHSAS 18001: 2007 standards. On July 13, 2021, CJSC Milavitsa received the ISO 14001 environmental management system certificate. Another subsidiary of AS Silvano Fashion Group - Lauma Lingerie obtained the ISO 14001:1996 environmental standard certificate and the ISO 9001:2000 quality management certificate already in 2003.

EAC certificate is a conformity document required for import and sales of products in the countries of the Eurasian Customs Union. The EAC certifications are issued by independent certification bodies and their laboratories accredited by the relevant agencies of the members of the EAC Economic Union: Russia, Belarus, Kazakhstan, Armenia and Kyrgyzstan.

GOST certificates are a National Standard, in other words a document attesting that a product conforms to Russian Federation quality and safety requirements (GOST R, GOST EN, GOST R IEC, GOST R ISO, etc.). For AS Silvano Fashion Group these certificates are obligatory as they are required in order to import and sell products in the Russian Federation.

In the specific markets the Group companies also have particular certificate requirements to comply with.

Social responsibility and social initiatives

AS Silvano Fashion Group acknowledges its responsibility for life and health of its employees as well as business partners, aims at improving safety and quality of working conditions and thus commits to the following:

Observe both national and international legislation on labour rights protection.
Guarantee safe working conditions to its employees: detect and analyse related risks on a regular basis; take all possible actions and allocate necessary funds to minimize negative impact of dangerous and harmful factors in the workplace.
Constantly improve quality of working conditions and guarantee social support to the employees through the Program of Health Promotion.
Take care of employees' health by preventing work-related diseases, providing medical support within the framework of the Program of Health Promotion.
Use modern equipment and new technologies to ensure safe working conditions and high level of labour productivity.
Ensure employees' satisfaction, motivation and dedication by investing in professional training and education.
Carry out standardized employee performance reviews in all business areas in order to identify and promote personal development and career opportunities for each employee.

Besides that, AS Silvano Fashion Group and its largest subsidiary CJSC Milavitsa are conscious of a certain responsibility for the general development of the region and well-being of the local community in Belarus, focusing mainly on children, youth and sportsmen by supporting their educational efforts, spending their leisure time in good surroundings and professional sport development.

AS Silvano Fashion Group is convinced that support of local communities, promotion of healthy lifestyle are longterm positive contributions to healthy, economically active and environmentally conscious society. During 2023 AS Silvano Fashion Group has supported schools, centers for disabled people, nursing homes, charity organizations, colleges, youth sport clubs, trade union of industrial workers, etc.

AS Silvano Fashion Group is also focused on employee wellbeing. This is why it organizes recreation and health improvement activities for employees' children in health camps, organizes cultural events for employees and their children, provides sponsorship and other social benefits.

Complying with human rights

AS Silvano Fashion Group confirms its continuing commitment to honour the UN Convention for the Protection of Human Rights and Fundamental Freedoms and contributes to ensuring the objectives of the declaration through complying with human rights and fundamental freedoms in all of its activities.

Fighting corruption

AS Silvano Fashion Group considers as corruption the abuse of power resulting from the official position for personal gain and admits that corruption jeopardises democracy and human rights, undermines good governance, social justice, damages the competitiveness and economic development of states, and endangers democratic institutions and the moral foundations of the society. Our main goal is to prevent corruption, however, we also pay considerable attention to the control of our activities. Major methods include avoiding conflict of interests, ensuring

transparency, and increasing awareness within the Group. Main forms of corruption, the prevention of which is also in the focus of the Group, are:

granting and accepting gratuities or bribes;
abuse of official position or power;
conflict of interests;
nepotism;
embezzlement;
trading with know-how and inside information or using it for personal interests.

In combating corruption, we proceed from the following principles:

When communicating with the employees, the heads of the Group's companies draw their attention to the fact that no form of corruption is accepted in the Group and is in conflict with the ethical beliefs of the Group.
We proceed from ethical, fair and transparent business and implement measures that contribute to it (such as rules, instructions, contracts, declarations, etc.).
In our relationships with partners, we follow mutually and in every way the principles of preventing corruption.
Upon the emergence of incidents of corruption, we forward the respective information to the police or prosecuting authority.

Quality management

A high quality business and management model is one of the assets of AS Silvano Fashion Group. The objective is to develop business processes, practices and systems based on the principles of continuous improvement and in accordance with the customers' needs and expectations. Quality development is a continuous process where every employee has a central role to play. The Group particularly emphasizes the handling of customer feedback so that the necessary information reaches the relevant employees with minimum delay and that corrective and preventive action can be effectively implemented.

AS Silvano Fashion Group largest subsidiary - CJSC Milavitsa was the first Belarusian company who made the certification of its management systems already in 1996. SO 9000 certification was made in 2003 according to the requirements of International quality standards. As requirements changed in 2009, CJSC Milavitsa made recertification according to ISO 9001. CJSC Milavitsa has been following the standard through the years. In 2018, the company successfully passed a certification audit for compliance with the requirements of STB ISO 9001-2015. On June 11, 2021 CJSC Milavitsa received the quality management system certificate ISO 9001, the date of initial certification was June 11, 2003.

Remuneration report

This remuneration report has been prepared in accordance with the Estonian Securities Market Act and provides an overview of the remuneration paid to the management board member of AS Silvano Fashion Group (hereinafter 'the Group'). In the context of the Estonian Securities Market Act, the manager of the Group is Member of the Management Board Mr. Jarek Särgava.

The purpose of this remuneration report is to provide a comprehensive and clear overview of the remuneration paid to the manager.

Remuneration of the member of the management board

In 2023 (and 2022), the Management Board of the Group had one member.

Under the terms of the contract of the Member of the Management, Jarek Särgava has been paid monthly basic remuneration of EUR 3 thousand (2022: EUR 3 thousand) and annual remuneration of EUR 36 thousand (2022: EUR 36 thousand) in total in 2023. In addition, Jarek Särgava serves as Chief Executive Officer in JSC Metropolitan Trade Company Milavitsa, subsidiary of AS Silvano Fashion Group, which is located in Russian Federation. The duties and remuneration of Jarek Särgava as Chief Executive Officer, are specified in the employment agreement concluded with him, in which Chairman of the Board of Directors, Toomas Tool, represented the JSC Metropolitan Trade Company Milavitsa. Under the terms of the contract, the basic remuneration of Jarek Särgava is denominated in Russian roubles and is RUB 212 thousand for 0,25 FTE monthly (2022: RUB 189 thousand). Additionally, Jarek Särgava may get performance pay based on the results of the work for the year and according to the decision of the board of directors.

Remuneration of Jarek Särgava, Member of the Management Board

in thousands of EUR	2020	2021	2022	2023
Total remuneration	36,40	35,20	63,40	63,50
Incl. basic remuneration1	36,40	35,20	63,40	63,50
Incl. performance pay	0,00	0,00	0,00	0,00

¹ Basic remuneration is calculated as gross remuneration.

Remuneration for 2019 year does not materially differ from the remuneration amounts in years 2020-2021.

Set out below is the annual change in the remuneration of Jarek Särgava, Member of the Management Board, performance of the Group, and average remuneration of full-time employees of the Group:

	2019	2020	2021	2022	2023
Operating profit change	-28%	-17%	23%	13%	23%
Increase in manager remuneration1	2%	-9%	-3%	86%	-3%
Incl. increase in basic remuneration	2%	-9%	-3%	86%	-3%
Incl. increase in performance remuneration	0%	0%	0%	0%	0%
Increase in the average remuneration of full-time employees2	15%	-18%	1%	44%	2%

¹The change in the remuneration is affected by the fluctuations of EUR/RUB currency exchange rates as part of the remuneration of the Member of the management board is denominated in Russian roubles.

² The average remuneration of full-time employees is calculated by dividing the remuneration costs specified in Note 23 "Administrative expenses", from which the remuneration of the Member of the Management Board is deducted, by the average number of full-time employees during the reporting period, excluding the member of the Executive Board.

The authority to decide the remuneration principles and remuneration of the Management Board is vested in the Supervisory Board.

The Member of the Management, Jarek Särgava does not have any additional bonuses, discounts, shares or shares options granted or offered.

Management Board´s confirmation to the Management Report

The Management Board acknowledges its responsibility and confirms, to the best of its knowledge, that the management report which consists of "Management Report", "Corporate Governance Report", "Corporate Social Responsibility" and "Remuneration report" as set out on pages 3 to 22 is an integral part of the Consolidated Annual Report of AS Silvano Fashion Group for 2023 and gives a true and fair view of the trends and results of operations, main risks and uncertainties of AS Silvano Fashion Group and its subsidiaries as a group during the reporting period.

___________________________

Jarek Särgava Member of the Management Board 16 April 2024

CONSOLIDATED FINANCIAL STATEMENTS

Management´s Board confirmation to the Consolidated Financial Statements

The Management Board acknowledges its responsibility and confirms, to the best of its knowledge, that

1) the Consolidated Financial Statements as set out on pages 25 to 69 is an integral part of the Consolidated Annual Report of AS Silvano Fashion Group for 2023 and the accounting policies used in preparing the consolidated financial statements are in compliance with International Financial Reporting Standards adopted by the European Union;

2) the consolidated financial statements give true and fair view of the financial position, the results of the operations and the cash flows of the Group;

3) AS Silvano Fashion Group is going concern.

___________________________

Jarek Särgava Member of the Management Board 16 April 2024

Consolidated Statement of Financial Position

in thousands of EUR	Note	31.12.2023	31.12.2022

ASSETS
Current assets
Cash and cash equivalents	5,7,8	32 878	25 909
Trade and other receivables	5,8,9	1 354	1 044
Prepayments and tax receivables	10,17	1 115	971
Current loans granted	5,8	29	10
Other assets		79	111
Inventories	11	23 940	22 264
Total current assets		59 395	50 309
Non-current assets
Non-current receivables	5,8	292	301
Investments in associates	6	85	82
Investments in other shares	8,12	213	259
Deferred tax asset	17	2 155	2 166
Intangible assets	13	579	585
Investment property	14	899	1 041
Property, plant and equipment	15	8 634	9 248
Total non-current assets		12 857	13 682
TOTAL ASSETS		72 252	63 991

LIABILITIES AND EQUITY
Current liabilities
Current lease liabilities	5,26	2 162	2 373
Trade and other payables	5,8,16	7 377	5 837
Tax liabilities	17	747	1 692
Total current liabilities		10 286	9 902
Non-current liabilities
Deferred tax liability	17	736	1 039
Non-current lease liabilities	5,26	4 321	4 041
Non-current provisions		46	41
Total non-current liabilities		5 103	5 121
Total liabilities		15 389	15 023
Equity
Share capital	18	3 600	3 600

Share premium		4 967	4 967
Statutory reserve capital	18	1 306	1 306
Unrealised exchange rate differences		-20 002	-19 409
Retained earnings		64 249	54 322
Total equity attributable to equity holders
of the Parent company		54 120	44 786
Non-controlling interest	6	2 743	4 182
Total equity		56 863	48 968
TOTAL EQUITY AND LIABILITIES		72 252	63 991

Notes on pages 29 to 69 are integral part of these Consolidated Financial Statements.

Consolidated Income Statement

in thousands of EUR	Note	12m 2023	12m 2022

Revenue from contracts with customers	20,27	58 597	57 667
Cost of goods sold	21	-24 854	-26 783
Gross Profit		33 743	30 884
Distribution expenses	22	-10 572	-11 143

Administrative expenses	23	-4 501	-4 391
Other operating income		286	525
Other operating expenses	24	-983	-1 210
Operating profit		17 973	14 665
Currency exchange income/(expense)	25	-3 345	1 117
Other finance income/(expenses)	25	-93	-453
Net finance income/(expense)		-3 438	664

Profit from an associate using the equity method		24	1
Profit before tax		14 559	15 330
Income tax expense	17	-3 452	-2 786

Profit for the period		11 107	12 544
Attributable to :
Equity holders of the Parent company		9 927	11 796
Non-controlling interest		1 180	748

Earnings per share from profit attributable to equity
holders of the Parent company, both basic and diluted (EUR)	16	0,28	0,33

Consolidated Statement of Comprehensive Income

in thousands of EUR	12m 2023	12m 2022
Profit for the period	11 107	12 544
Other comprehensive income (loss) that will be reclassified to profit or loss in subsequent periods :
Exchange differences on translation of foreign operations	-2 520	-877
Total other comprehensive income (loss) for the period	-2 520	-877
Total comprehensive income (loss) for the period Attributable to :	8 587	11 667

Equity holders of the Parent company	9 334	10 638
Non-controlling interest	-747	1 029

Notes on pages 29 to 69 are integral part of these Consolidated Financial Statements.

Consolidated Statement of Cash Flows

in thousands of EUR	Note	12m 2023	12m 2022
Cash flow from operating activities
Profit for the period		11 107	12 544
Adjustments for:
Depreciation and amortization of non-current assets	13,14,15	3 147	3 618
Share of profit of equity accounted investees		-24	-1
Gains/Losses on the sale of property, plant and equipment	24	1	8
Net finance income / costs	25	3 438	-664
Provision for impairment losses on trade receivables	22,24	54	2
Provision for inventories	11	1 198	683
Income tax expense	17	3 452	2 786
Change in inventories	11	-7 845	-1 358
Change in trade and other receivables	9,10	-839	199
Change in trade and other payables	16	2 530	-667
Income tax paid		-4 516	-3 088
Net cash flow from operating activities		11 703	14 062
Cash flow from investing activities
Interest received	25	601	38
Dividends received	25	11	3
Proceeds from disposal of property, plant and equipment		39	58
Loans granted		-19	-8
Acquisition of property, plant and equipment	15	-1 133	-445
Acquisition of intangible assets	13	-144	-113
Net cash flow from investing activities		-645	-467
Cash flow from financing activities
Payment of principal portion of lease liabilities	26	-2 307	-2 634
Interest paid on lease liabilities	26	-688	-546
Dividends paid to non-controlling interests		-692	-560
Net cash flow from financing activities		-3 687	-3 740
Net increase in cash and cash equivalents		7 371	9 855
Cash and cash equivalents at the beginning of period	7	25 909	17 098
Effect of translation to presentation currency		-845	-509
Effect of exchange rate fluctuations on cash held		443	-535
Cash and cash equivalents at the end of period	7	32 878	25 909

Notes on pages 29 to 69 are integral part of these Consolidated Financial Statements.

Consolidated Statement of Changes in Equity

in thousands of EUR	Share Capital	Share Premium	Statutory reserve capital	Unrealised exchange rate differences	Retained earnings	Total equity attributable to equity holders of the Parent company	Non controlling interest	Total equity
Balance as at 1 January 2022	3 600	4 967	1 306	-18 251	42 526	34 148	3 713	37 861
Profit for the period	0	0	0	0	11 796	11 796	748	12 544
Other comprehensive income (loss) for the period	0	0	0	-1 158	0	-1 158	281	-877
Total comprehensive income for the period	0	0	0	-1 158	11 796	10 638	1 029	11 667
Transactions with owners, recognised directly in equity
Dividends declared	0	0	0	0	0	0	-560	-560
Total transactions with owners, recognised directly in equity	0	0	0	0	0	0	-560	-560
Balance as at 31 December 2022	3 600	4 967	1 306	-19 409	54 322	44 786	4 182	48 968
Balance as at 1 January 2023	3 600	4 967	1 306	-19 409	54 322	44 786	4 182	48 968
Profit for the period	0	0	0	0	9 927	9 927	1 180	11 107
Other comprehensive income (loss) for the period	0	0	0	-593	0	-593	-1 927	-2 520
Total comprehensive income (loss) for the period	0	0	0	-593	9 927	9 334	-747	8 587
Transactions with owners, recognised directly in equity
Dividends declared	0	0	0	0	0	0	-692	-692
Total transactions with owners, recognised directly in equity	0	0	0	0	0	0	-692	-692
Balance as at 31 December 2023	3 600	4 967	1 306	-20 002	64 249	54 120	2 743	56 863

Notes on pages 29 to 69 are integral part of these Consolidated Financial Statements.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

Note 1 General information

AS Silvano Fashion Group (hereinafter "the Parent company" or "the Company") is a holding company that controls a group of enterprises (hereinafter collectively referred to as "the Group") involved in the design, manufacturing, wholesale, franchise and retail sales of ladies lingerie. The Group's income is generated by sales of Milavitsa, Alisee, Aveline, Lauma Lingerie, Laumelle and Hidalgo branded products through wholesales channel, franchised sales and own retail operated via Milavitsa and Lauma Lingerie retail stores. In 2023 and 2022 key sales markets for the Group have been Russia, Belarus, other CIS countries and the Baltics.

The Parent company is a public limited company, which is listed on NASDAQ OMX Tallinn Stock Exchange and on Warsaw Stock Exchange. The Parent company is incorporated and domiciled in Estonia. The address of its registered office is Tulika 17, 10613 Tallinn, registration number is 10175491. There is no controlling shareholder. These financial statements were authorized for issue by the Management Board of AS Silvano Fashion Group on 16 April 2024.

The consolidated financial statements are part of the annual report that has to be approved by the shareholders, and they serve as a basis for adopting a resolution for distributing the profit. Shareholders may decide not to approve the annual report, which has been prepared by the management board and approved by the supervisory board, and may demand that a new annual report to be prepared.

Note 2 Material accounting policies

Principal accounting policies applied in the preparation of these consolidated financial statements are set out below. These policies have been consistently applied to all years presented, unless otherwise stated.

2.1 Basis of preparation

The consolidated financial statements of AS Silvano Fashion Group have been prepared in accordance with International Financial Reporting Standards as adopted by the European Union ("IFRS EU"). The consolidated financial statements have been prepared on the historical cost basis, except for investments in equity instruments that are measured at fair value through profit or loss, as presented in the accounting policies below.

The preparation of financial statements in conformity with IFRS EU requires the use of certain critical accounting estimates. It also requires management to exercise its judgment in the process of applying the Group`s accounting policies. The areas involving a higher degree of judgment or complexity, or areas where assumptions and estimates are significant to the consolidated financial statements are disclosed in Note 3.

2.1.1 Changes in accounting policies and disclosures

The standards/amendments that are effective and have been endorsed by the European Union

The accounting policies adopted are consistent with those of the previous financial year except for the following IFRS and amendments to IFRS which have been adopted by the Group as of 1 January 2023:

IFRS 17 Insurance contracts,
IAS 1 Presentation of Financial Statements and IFRS Practice Statement 2: Disclosure of Accounting policies (Amendments),
IAS 8 Accounting policies, Changes in Accounting Estimates and Errors: Definition of Accounting Estimates (Amendments),
IAS 12 Income taxes: Deferred Tax related to Assets and Liabilities arising from a Single Transaction (Amendments),
IAS 12 Income taxes: International Tax Reform - Pillar Two Model Rules (Amendments)

The newly adopted IFRS and amendments to IFRS did not have a material impact on the Group's accounting policies. For further information, please refer to the below.

• IAS 1 Presentation of Financial Statements and IFRS Practice Statement 2: Disclosure of Accounting policies (Amendments)

The Amendments are effective for annual periods beginning on or after January 1, 2023. The amendments provide guidance on the application of materiality judgements to accounting policy disclosures. In particular, the amendments to IAS 1 replace the requirement to disclose 'significant' accounting policies with a requirement to disclose 'material' accounting policies. Also, guidance and illustrative examples are added in the Practice Statement to assist in the application of the materiality concept when making judgements about accounting policy disclosures. The Group assessed its accounting policies disclosure and made updates to the information disclosed in this section of "Material accounting policies". The amendments did not result in any changes to the accounting policies themselves.

2.1.2 Standards issued but not yet effective and not early adopted by the Group

2.1.2.1) The standards/amendments that are not yet effective, but they have been endorsed by the European Union

IAS 1 Presentation of Financial Statements: Classification of Liabilities as Current or Noncurrent (Amendments). The amendments are effective for annual reporting periods beginning on or after January 1, 2024, with earlier application permitted, and will need to be applied retrospectively in accordance with IAS 8. Management has assessed that the application of amendments will not have material impact on the Group's financial statements.
IFRS 16 Leases: Lease Liability in a Sale and Leaseback (amendments). The amendments are effective for annual reporting periods beginning on or after January 1, 2024, with earlier application permitted. Management has assessed that the application of amendments will not have material impact on the Group's financial statements.

2.12.2) The standards/amendments that are not yet effective and they have not yet been endorsed by the European Union

IAS 7 Statement of Cash Flows and IFRS 7 Financial Instruments Disclosure - Supplier Finance Arrangements (Amendments). The amendments are effective for annual reporting periods beginning on or after January 1, 2024, with earlier application permitted. Management has assessed that the application of amendments will not have material impact on the Group's financial statements.
IAS 21 The Effects of Changes in Foreign Exchange Rates: Lack of Exchangeability (Amendments). The amendments are effective for annual reporting periods beginning on or after January 1, 2025, with earlier application permitted. Management has assessed that the application of amendments will not have material impact on the Group's financial statements.
Amendment in IFRS 10 Consolidated Financial Statements and IAS 28 Investments in Associates and Joint Ventures: Sale or Contribution of Assets between an Investor and its Associate or Joint Venture. In December 2015 the IASB postponed the effective date of this amendment indefinitely pending the outcome of its research project on the equity method of accounting. Management has assessed that the application of amendments will not have material impact on the Group's financial statements.
IAS 21 The Effects of Changes in Foreign Exchange Rates: Lack of Exchangeability (Amendments) The amendments are effective for annual reporting periods beginning on or after January 1, 2025, with earlier application permitted. The amendments specify how an entity should assess whether a currency is exchangeable and how it should determine a spot exchange rate when exchangeability is lacking. A currency is considered to be exchangeable into another currency when an entity is able to obtain the other currency within a time frame that allows for a normal administrative delay and through a market or exchange mechanism in which an exchange transaction would create enforceable rights and obligations. If a currency is not exchangeable into another currency, an entity is required to estimate the spot exchange rate at the measurement date. An entity's objective in estimating the spot exchange rate is to reflect the rate at which an orderly exchange transaction would take place at the measurement date between market participants under prevailing economic conditions. The amendments note that an entity can use an observable exchange rate without adjustment or another estimation technique. The amendments have not yet been endorsed by the EU. Management has assessed that the application of amendments will not have material impact on the Group's financial statements.

2.2 Consolidation

The consolidated financial statements comprise the financial statements of the Company and its directly and indirectly controlled subsidiaries. The Group generally has control by holding more than one half of the voting rights. In one case control has been assessed for the investment with 50% ownership (further information in Note 6). The Group considers all facts and circumstances when assessing whether it controls an investee and reassesses whether it controls an investee if facts and circumstances indicate that there are changes to one or more of the three elements of control.

Subsidiaries are fully consolidated from the date on which control is transferred to the Group. They are deconsolidated from the date when the control ceases. Inter-company transactions, balances and unrealised gains on transactions between Group companies are eliminated. Unrealised losses are also eliminated. When necessary, amounts reported by the subsidiaries have been adjusted to conform to the Group's accounting policies. Reporting periods of subsidiaries reconcile with that of the Group and thus no adjustments are necessary for the purpose of consolidation.

The Group has investments in subsidiaries with non-controlling interest. For the accumulated non-controlling interests of the subsidiaries at the end of the reporting period for the material non-controlling interests, please refer to Note 6.

2.3 Foreign currency transactions

Functional and presentation currency

Items included in the financial statements of each of the Group's entities are measured using the currency of the primary economic environment in which the entity operates ('the functional currency'). The consolidated financial statements are presented in euro, which is the Group's presentation currency and also the Parent company's functional currency.

Transactions and balances

Foreign currency transactions are translated into the functional currency using the exchange rates prevailing at the dates of the transactions or valuation where items are re-measured. Foreign exchange gains and losses resulting from the settlement of such transactions and from the translation at year-end exchange rates of monetary assets and liabilities denominated in foreign currencies are recognised in the consolidated income statement within "Other operating income" or "Other operating expenses" lines. Foreign exchange gains and losses related to foreign exchange transactions under cash accounts and operations with Group's borrowings are presented in the consolidated income statement within line "Currency exchange income/(expense)".

Monetary assets and liabilities denominated in foreign currencies are translated at the functional currency spot rates of exchange at the reporting date.

Non-monetary items that are measured at historical cost in a foreign currency are translated using the exchange rates at the dates of the initial transactions.

Group companies

The results and financial position of all the Group entities that have a functional currency different from the presentation currency are translated into the presentation currency as follows:

assets and liabilities of foreign operations are translated into presentation currency at the exchange rate prevailing at the reporting date;
income and expenses for each income statement are translated at average monthly exchange rates.

The exchange differences arising on translation are recognised directly in equity as "Unrealised exchange rate differences" reserve via the "Exchange differences on translation of foreign operations" within the consolidated statement of comprehensive income.

2.4 Property, plant and equipment

Property, plant and equipment are carried at cost less accumulated depreciation and accumulated impairment, if any.

The initial cost of property, plant and equipment comprises its purchase price, including non-refundable purchase taxes and any directly attributable costs of bringing the asset to its working condition and location for its intended use. Expenditures incurred after the property, plant and equipment is ready for its intended use, such as repair and maintenance costs, are normally charged to the consolidated statement of comprehensive income in the period the costs are incurred.

When significant parts of plant and equipment are required to be replaced at intervals, the Group depreciates them separately based on their specific useful lives.

Depreciation on assets is calculated using the straight-line method over their estimated useful lives, as follows:

Buildings:
Production buildings	30-75 years
Other buildings	20-50 years
Plant and equipment:
Sewing equipment	7-10 years
Vehicles	5-7 years
Other equipment	5-10 years
Other equipment and fixtures:
Computers, tools and other items of equipment	3-5 years
Store furnishings	3-5 years

The assets' residual values and useful lives are reviewed, and adjusted if appropriate, at the end of each reporting period.

An item of property, plant and equipment is derecognised upon disposal or when no future economic benefits are expected from its use or disposal. Gains and losses on disposals are recognised within "Other operating income" or "Other operating expenses" in the consolidated income statement.

2.5 Intangible assets

Intangible assets are initially measured at cost. Subsequently they are measured at cost less accumulated amortization and accumulated impairment. Trademarks and licences acquired in a business combination are recognised at fair value at the acquisition date. Trademarks and licences have a finite useful life and are measured at cost less accumulated amortisation and accumulated impairment, if any. Amortisation is calculated using the straight-line method to allocate the cost of trademarks and licences over their estimated useful lives of 5 to 10 years. The amortisation of intangible assets is based on the specific asset function and is included in cost of goods sold, distribution and/or administrative expenses of the consolidated income statement. Detailed information is disclosed in Note 13.

2.6 Investment property

The property (buildings) held by the Group for earning non-current rental yields or for capital appreciation, rather than for its own operations, is recorded as investment property. Investment property is initially recognized in the consolidated statement of financial position at cost, including any directly attributable expenditure (e.g. notary fees, property transfer taxes, professional fees for legal services, and other transaction costs without which the transaction would have not taken place). Investment property is subsequently measured at cost less any accumulated depreciation and any accumulated impairment losses. Depreciation is calculated based on straight-line method. The useful lives of the Investment property (buildings) are within the range between 20 and 50 years.

Investment property is derecognized on disposal or when the asset is withdrawn from use and no future economic benefits are expected. Gains or losses from de-recognition of investment property are included within other operating income or other operating expenses in the consolidated income statement in the period in which de-recognition occurs. When the purpose of use of an investment property changes, the asset is reclassified in the consolidated statement of financial position. From the date of the change, the accounting policies of the group into which the asset has been transferred are applied to the asset.

2.7 Impairment of non-financial assets

The Group assesses, at each reporting date, whether there is an indication that an asset may be impaired. If any indication exists, the Group estimates the asset's recoverable amount. An assessment is also made at each reporting date to determine whether there is an indication that previously recognised impairment losses no longer exist or have decreased. A previously recognised impairment loss is reversed only if there has been a change in the assumptions used to determine the asset's recoverable amount since the last impairment loss was recognised.

Impairment losses are recognised in the consolidated income statement in expense categories consistent with the function of the impaired asset. Reversals of impairment losses are recognised in the consolidated income statement consistent by reducing the expense category where the impairment loss has previously been recorded. As at 31.12.2023 and 31.12.2022 no indications exist that suggest that assets might be impaired and thus no impairment test were carried out.

2.8 Financial instruments

2.8.1 Financial assets

The Group has financial assets measured subsequently at amortised cost and at fair value through profit or loss (FVPL).

Financial assets at amortised cost

The Group's financial assets at amortised cost include trade and other receivables, cash and cash equivalents and loans granted by the Group. Loans granted are immaterial.

Trade receivables are recognised at the trade date i.e., the date on which the Company becomes a party to the contractual provisions of the instrument and are initially measured at the transaction price. Financial assets at amortised cost are subsequently measured using the effective interest (EIR) method and are subject to impairment. Gains and losses are recognised in consolidated income statement as distribution expenses when the asset is derecognised, modified or impaired. Foreign exchange gains and losses are presented as separate line items in the consolidated income statement.

Impairment of financial assets

Expected credit loss (ECL) model is used for financial assets measured at amortised cost.

Expected credit losses are a probability-weighted estimate of credit losses. A credit loss is the difference between the cash flows that are due to the Group in accordance with the contract and the cash flows that the Group expects to receive discounted at the original effective interest rate.

The Group measures loss allowances as follows:

for trade receivables (including lease receivables) at an amount equal to lifetime ECLs;
for cash and cash equivalents that are determined to have low credit risk at the reporting date (the management considers 'low credit risk' to be an investment grade credit rating with at least one major rating agency) at an amount equal to 12-month ECLs;
for all other financial assets at an amount of 12-month ECLs, if the credit risk (i.e. the risk of default occurring over the expected life of the financial asset) has not increased significantly since initial recognition; if the risk has increased significantly, the loss allowance is measured at an amount equal to lifetime ECLs.

2.8.2 Financial liabilities

The Group has financial liabilities which are classified, at initial recognition, as loans and borrowings (lease liabilities) and trade and other payables.

Trade payables are recognised initially at fair value, net of directly attributable transaction costs and measured subsequently at amortised cost using the effective interest method.

For the recognition and measurement of lease liabilities, please refer to section 2.15 below.

2.9 Cash and cash equivalents

In the consolidated statement of financial position and in the consolidated statement of cash flows cash and cash equivalents include cash on hand, cash at banks and current highly liquid deposits with a maturity of three months or less, that are readily convertible to a known amount of cash and subject to an insignificant risk of changes in value.

Statement of cash flows has been prepared using the indirect method.

2.10 Inventories

Inventories are stated at the lower of cost and net realisable value. Cost is determined using the weighted average method. The cost of finished goods and work in progress comprises raw materials, direct labour, other direct costs and related production overheads. Net realisable value is the estimated selling price in the ordinary course of business, less applicable variable selling expenses.

Inventories, whose net realisable value is lower than cost are considered as obsolete. Obsolete inventories include: raw materials not intended for further use, standard finished goods not intended for further sale, finished goods that will be definitely included in seasonal sales and promo-events (30% average discount) and non-standard finished goods, e.g. rejects and defected finished goods (85% of closing balance in average).

2.11 Share capital

Ordinary shares are classified as share capital within the equity.

The Group forms statutory reserve capital in accordance with the Commercial Code of the Republic of Estonia. Statutory reserve capital has reached and exceeds the required minimum balance of at least 1/10 of share capital. Reserve capital may be used to cover a loss, or to increase share capital. Payments shall not be made to shareholders from reserve capital. For further information refer to Note 18.

2.12 Current and deferred income tax

The tax expense for the period comprises current and deferred tax. Tax is recognized in the consolidated income statement, except to the extent that it relates to items recognised in the consolidated comprehensive income or directly in equity. In this case, the tax is also recognised in consolidated comprehensive income or directly in equity, respectively.

The current income tax charge is calculated on the basis of the tax laws enacted or substantively enacted at the reporting date in the countries where the Parent company and its subsidiaries operate and generate taxable income. Management periodically evaluates positions taken in tax returns with respect to situations in which applicable tax regulation is subject to interpretation. It establishes provisions where appropriate on the basis of amounts expected to be paid to the tax authorities.

Deferred income tax is recognised, using the liability method, on temporary differences arising between the tax bases of assets and liabilities and their carrying amounts in the consolidated financial statements. However, deferred tax liabilities are not recognised if they arise from the initial recognition of goodwill; deferred income tax is not accounted for if it arises from initial recognition of an asset or liability in a transaction other than a business combination that at the time of the transaction affects neither accounting nor taxable profit or loss. Deferred income tax is determined using tax rates (and laws) that have been enacted or substantively enacted by the reporting date and are expected to apply when the related deferred income tax asset is realised or the deferred income tax liability is settled.

Deferred income tax assets are recognised only to the extent that it is probable that future taxable profit will be available against which the temporary differences can be utilised.

Deferred income tax is provided on temporary differences arising on investments in subsidiaries and associates, except for deferred income tax liability where the timing of the reversal of the temporary difference is controlled by the Group and it is probable that the temporary difference will not reverse in the foreseeable future.

The Group has not offset deferred tax assets and liabilities as there isn't a legally enforceable right to offset current tax assets against current tax liabilities and the deferred income tax assets and liabilities do not relate to income taxes levied by the same taxation authority on either the same taxable entity or different taxable entities where there is an intention to settle the balances on a net basis.

Estonia

In accordance with applicable laws of the Republic of Estonia, the Estonian entities do not pay income tax on profits. Instead of the income tax payable on profits, the Estonian entities pay corporate income tax on dividends, fringe benefits, gifts, donations, costs of entertaining guests, non-business related disbursements and adjustments of the transfer price. The current tax rate is 20/80 on the amount paid out as net dividends.

Corporate income tax paid on dividends is recognized in the consolidated statement of comprehensive income as an income tax expense and in the consolidated statement of financial position as a deferred income tax liability to the extent of the planned dividend payment. An income tax liability is due on the 10th day of the month following the payment of dividends.

Deferred income tax is provided on post-acquisition retained earnings and other post acquisition movements in reserves of subsidiaries, except where the Group controls the subsidiary's dividend policy and it is probable that the difference will not reverse through dividends or otherwise in the foreseeable future.

The Group controls the reversal of temporary differences relating to taxes chargeable on dividends from subsidiaries or on gains upon their disposal. The Group does not recognise deferred tax liabilities on such temporary differences except to the extent that management expects the temporary differences to reverse in the foreseeable future.

Latvia

In accordance with the Latvian Income Tax Act, income tax is not levied on companies' profits but on dividends distributed. The tax rate in 2023 was 20/80 of the amount distributed as the net dividend (20/80 in 2022). As the object of taxation is dividends, not profit, there are no differences between the carrying amounts and tax bases of assets and liabilities which could give rise to deferred tax assets or liabilities. The income tax payable on dividends is recognised as the income tax expense of the period in which the dividends are declared.

Deferred income tax is provided on retained earnings and other movements in reserves of subsidiaries in Latvia, except where the Group controls the subsidiary's dividend policy and it is probable that the difference will not reverse through dividends or otherwise in the foreseeable future.

The Group controls the reversal of temporary differences relating to taxes chargeable on dividends from subsidiaries in Latvia or on gains upon their disposal. The Group does not recognise deferred tax liabilities on such temporary differences except to the extent that management expects the temporary differences to reverse in the foreseeable future.

Other countries

The Group's foreign entities pay tax on corporate profits in accordance with the laws of their domicile. In Monaco the tax rate is 33.33%, in Russia 20% and in Ukraine 18%.

In Belarus income tax rate for the legal entities has been calculated applying 18% tax rate for the reporting periods ended 31 December 2023 and 31 December 2022. Starting from January 1st, 2023 tax rate on corporate profits was changed in Belarus from 18% to 20% for all legal entities. Based on the provisions of IAS 10.22 (h) management of the Group does not consider such subsequent changes in the tax rate as an adjusting event, thus, all tax assets and liabilities within 2022 were calculated by reference to tax rates enacted or substantively enacted as at 31 December 2022, which as at 31 December 2022 was 18%. For the purpose of the respective deferred tax assets and liabilities calculations, those should be measured at the tax rates that are expected to apply in the year when the asset is realised or the liability is settled, based on tax rates (and tax laws) that have been enacted or substantively enacted at the reporting date. Thus, the management has applied 20% tax rate for the respective calculations (Note 17).

For the subsidiaries in the abovementioned countries, the deferred income tax assets and liabilities are determined for all temporary differences between the tax bases of assets and liabilities and their carrying amounts on the reporting date. Deferred corporate income tax is calculated on the basis of tax rates applicable on the reporting date and current legislation, expected to prevail when the deferred tax assets are settled (Note 3).

2.14 Revenue from contracts with customers

Revenue from contracts with customers arises from the retail and wholesale sales of lingerie. The Group recognises revenue when it transfers control of goods to a customer at an amount of consideration to which the Group expects to be entitled in exchange for those goods. The Group has generally concluded that it is the principal in its revenue arrangements.

Sale of goods – retail

Revenue from the sale of goods is recognised at the time when a sales transaction is completed for the client in a retail store. The client generally pays in cash or by card.

Sale of goods – wholesale

Wholesale revenues are recognised when control of the products has transferred, being when the products are delivered to the wholesalers. The wholesaler has full discretion over the channel and price to sell the products, and there is no unfulfilled obligation that could affect acceptance of the products by the wholesaler. Delivery occurs when the products have been sent out of the warehouses of the Group, as this is when the risks of obsolescence and loss have been transferred to the wholesaler, and the wholesaler has accepted the products in accordance with the sales contract, the acceptance provisions have lapsed, or the Group has objective evidence that all criteria for acceptance have been satisfied.

A receivable is recognised when the goods are shipped and not when the invoice has been issued, as this is the point in time that the consideration is unconditional because only the passage of time is required before the payment is due. The Group uses its accumulated historical experience to estimate the number of returns by using the expected value method. The validity of this assumption and the estimated amount of returns are reassessed at each reporting date. Because the number of products returned has been steadily low for years, it is not highly probable that a significant reversal in the cumulative revenue recognised will occur.

Financing component

The Group does not have any contracts where the period between the transfer of the promised goods or services to the customer and payment by the customer exceeds one year. Consequently, the Group does not adjust any of the transaction prices for the time value of money.

2.15 Leases

2.15.1 The Group as the Lessee

The Group assesses at contract inception whether a contract is, or contains, a lease. That is, if the contract conveys the right to control the use of an identified asset for a period of time in exchange for consideration. The Group recognises right-of-use assets and lease liabilities for all leases, except for current leases and leases of low-value assets.

Right-of-use assets

The Group recognises right-of-use assets at the commencement date of the lease (i.e., the date the underlying asset is available for use) and measures right-of-use assets at cost, less any accumulated depreciation and impairment losses, and adjusted for any remeasurement of lease liabilities. The cost of right-of-use assets includes the amount of lease liabilities recognized, initial direct costs incurred, and lease payments made at or before the commencement date.

Right-of-use assets are depreciated on a straight-line basis over the lease term as follows:

Retail premises up to 3 years;
Warehouse and office premises up to 5 years;
Other equipment up to 3 years.

The Group's obligations under its leases are secured by the lessor's title to the leased assets.

The right-of-use assets are also subject to impairment. Refer to the accounting policies in section 2.7 Impairment of non-financial assets. Right-of-use assets are presented in the consolidated statement of financial position on the line "Property, plant and equipment".

Lease liabilities

At the commencement date of the lease, the Group recognises lease liabilities measured at the present value of lease payments to be made over the lease term. The lease payments include fixed payments (including in substance fixed payments) Variable lease payments that do not depend on an index or a rate are recognized as expenses (unless they are incurred to produce inventories) in the period in which the event or condition that triggers the payment occurs.

In calculating the present value of lease payments, the Group uses its incremental borrowing rate at the lease commencement date because the interest rate implicit in the lease is not readily determinable. After the commencement date, the amount of lease liabilities is increased to reflect the accretion of interest and reduced for the lease payments made. In addition, the carrying amount of lease liabilities is remeasured if there is a modification, a change in the lease term or a change in the lease payments (e.g., changes to future payments resulting a change in an index or rate used to determine such lease payments).

Current leases and leases of low-value assets

The Group applies the short-term leases exemption to the leases of machinery and equipment which have a lease term of 12 months or less from the commencement date and do not contain a purchase option. It also applies leases of low value recognition exemption to leases of office equipment that are considered to be low value. Lease payments on current leases and leases of low-value assets are recognised as expense on a straight-line basis over the lease term within cost of goods sold, distribution expenses and administrative expenses.

2.15.2 The Group as the Lessor

The Group has leases in which it does not transfer substantially all the risks and rewards incidental to ownership of an asset are thus classified as operating leases. Lease income arising is accounted for on a straight-line basis over the lease terms and is included in line "Other operating income" in the consolidated income statement.

Note 3 Significant accounting estimates, judgments and uncertainties

The preparation of the consolidated financial statements in accordance with IFRS as adopted by the EU requires management to make judgments, estimates and assumptions that affect the application of accounting policies and the reported amounts of the assets, liabilities, income and expenses, and the accompanying disclosures. Actual results may differ from these estimates.

Estimates and judgments are continually evaluated and are based on historical experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances.

Russia-Ukraine conflict and going concern

Since the onset of the military conflict between Russia and Ukraine on 24 February 2022, and the subsequent imposition of severe sanctions by Western countries against Russia and Belarus, the economic landscape has continued to evolve. The sanctions regime, alongside restrictions on capital flows and the economic isolation of Russia and Belarus, remains a significant factor influencing the global enterprises. The fluid situation undoubtedly has had impact on and continues to affect the Group's business operations as significant operations of the Group are located in countries targeted by the aforementioned sanctions – major sales market in Russia and production facilities Belarus. Despite these challenges, the Group's strategic adaptations in 2022, including diversifying suppliers portfolio and adjusting supply chains, have proven effective in maintaining business continuity and operational stability. The consequences of the Russia-Ukraine conflict and adjustments to new realities were an important topic for the management of the Group in 2022 and continued to be on the agenda also in 2023. The situation was monitored closely and promptly. As of 2023, the Group's proactive management and operational resilience have allowed us to navigate the complexities of the ongoing geopolitical situation without significant disruption to our going concern status. The adaptations initiated in the previous year—such as engaging with new suppliers and optimizing our supply chain—have been consolidated, ensuring the sustained availability of raw materials and the continuity of our production facilities in Belarus. Our financial performance remains stable, with profitability levels maintained through careful liquidity and risk management. The Group's independence from external financing and robust liquidity position further underpin our operational resilience.

The management of the Group has assessed that current sanctions and restrictive measures in response to the conflict in Ukraine do not have significant impact on the Group's ability to continue as a going concern at the present moment since the sanctions currently imposed do not have an adverse effect on the Group and Group's operations continue in a routine mode. Despite the challenges, the Group ended the year with positive results, and was even able to improve operating profitability compared to 2022 year. The production sites continue to work under normal conditions, the Group has sufficient number of raw materials and production of the coming months is secured, allowing for meeting the increased demand of buyers during the high season. The Group does not rely on external financing and current liquidity position of the Group allows it to continue its operations in the foreseeable future. The Group management remains cautious about the impacts of the conflict in the coming months (impacts of sanctions, supply, currency exchange rates, etc.). The outlook to date does not call into question the financial position of the Group in a context of high uncertainty as regards the extent, outcome and consequences of the ongoing conflict.

According to the assessment of the management of the Group the restrictive measures in response to the Russia-Ukraine conflict are not expected to have significant impact on the Group's ability to continue as a going concern provided the situation does not get worse substantially. The management continues to monitor the geopolitical situation closely, regularly assessing risks related to sanctions, supply chain dynamics, currency fluctuations, and broader strategic considerations. Through comprehensive scenario planning and stress testing, we remain prepared for a range of potential future developments. Although the geopolitical environment presents inherent uncertainties, because of our thorough risk management processes and the effectiveness of our adaptive strategies the management of the Group concluded that going concern assumption is appropriate and these consolidated financial statements are prepared on a going concern basis.

Nevertheless, the unpredictable nature of the Russia-Ukraine conflict and potential for further escalation or additional sanctions pose a continuous risk. The management acknowledges that such developments could impact our operational and financial performance going forward. We are committed to remaining vigilant, with ongoing assessments of the situation to mitigate potential adverse effects on the Group. Despite these challenges, the current assessment indicates that the Group is well-positioned to continue as a going concern, supported by our strategic adaptations and the resilience of our operations. The Group's Management continues to track the ongoing conflict and its potential repercussions closely. The Group's Management, having considered all available information about the future which was obtained during and after the reporting period up to the date when these consolidated financial statements are authorised for issue, believes that the Group continues as a going concern. However, given the

unpredictability of the situation and possible reactions of the government bodies involved, including future potential sanctions and countersanctions, as well as the fact that these circumstances are beyond the control of the Group's Management, there is a risk that further escalation of Russia-Ukraine conflict could result in adverse effect on the results of operations, financial position and net assets of the AS Silvano Fashion Group. As a result, there is a material uncertainty that may cast significant doubt on the Group's ability to continue as a going concern.

Control event

The significant changes in the economic and political environment due to the military conflict in Ukraine may indicate changes in the ability of an investor to control subsidiaries according to IFRS 10 in the affected areas. For AS Silvano Fashion Group Russia, Belarus and Ukraine can be counted among the affected areas.

When examining the facts and circumstances the Group carefully considered whether there have been changes that may significantly limit its ability to exercise the rights or governance provisions with respect to subsidiaries in affected areas due to the military conflict in the region as well as sanctions and other restrictive measures imposed by both EU countries as well as Russia and Belarus. The Group has concluded that despite changing environment in which the Group operates, there have been no changes to any elements of control and that control over the subsidiaries in the affected areas was not lost. Further information on the consolidation principles can be found in Section 2.2 Consolidation of the Note 2.

Allowance for obsolete inventories

The need for and extent of writing down of inventories is determined as follows: 100% write-down of raw materials not intended for further use, 100% write-down of standard finished goods not intended for further sale, finished goods that will be definitely included in seasonal sales and promo-events (30% average discount), non-standard finished goods (rejects, defected finished goods) (85% of closing balance in average).

The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognized in the period in which the estimate is revised if the revision affects only that period. The amounts of write-downs are disclosed in Notes 11 and 21.

Determination of the lease term for lease contracts with renewal and termination options (Group as a Lessee)

The lease term as the non-cancellable term of the lease is determined with taking into account all periods covered by an option to extend the lease if it is reasonably certain to be exercised, or any periods covered by an option to terminate the lease, if it is reasonably certain not to be exercised. The Group has several lease contracts that include extension and termination options.

The Group applies judgement in evaluating whether it is reasonably certain whether or not to exercise the option to renew or terminate the lease. That is, it considers all relevant factors that create an economic incentive for it to exercise either the renewal or termination. After the commencement date, the Group reassesses the lease term if there is a significant event or change in circumstances that is within its control that affects its ability to exercise or not to exercise the option to renew or to terminate (e.g. significant leasehold improvements or significant customization of the leased asset).

In September 2022, due to enforcement of the law 197-3 in Belarus lessees are no longer able to conclude lease agreements nominated in foreign currencies. Lease payments in the agreements should be specified only in the amounts nominated in Belarusian roubles (BYN). Due to majority of the lease agreements of the Group in Belarus were nominated in USD, in 2022 the Group renegotiated all respective agreements stipulating the new lease payments nominated in BYN. The management considered the change in the lease payments currency as leases modifications. Thus, the management accounted for modification in its right-of-use assets and lease liabilities arising from lease portfolio in USD and modified respective right-of-use assets and liabilities in the amount of the changed future cash-flows discounted under the new IBR rates (Note 15, 27). In 2023, the term of the aforementioned law was prolonged till 1 January, 2025. This led to significant number of modifications in 2023 year.

Deferred tax assets and uncertain tax positions

a) Deferred tax assets are recognized for deductible temporary differences to the extent that it is probable that taxable profit will be available in the period when deductible temporary differences realize against which those differences can be utilized. The amount of deferred tax assets of the Group equals to EUR 2 155 thousand as of 31 December 2023 (EUR 2 166 thousand as of 31 December 2022). The management believes that full amount of deferred tax assets will be utilized. The management has concluded that the deferred tax asset will be recoverable using the estimated future taxable income based on the approved business plans and budgets for subsidiaries the deferred tax asset arises from.

b) Based on the tax legislation changes introduced in 2020 in one of the countries of the Group's operations that became effective for the periods starting from January 1, 2021 the management decided to recognize provision for potential tax uncertainties in total amount of EUR 400 thousand. In 2022 the management recognised additional provision for potential tax uncertainties in amount of EUR 598 thousand as respective tax uncertainties were still in place. During 2023, as a result of communications with tax authorities, the Group decided to release provision for potential tax uncertainties in amount of EUR 872 thousand. Management estimation for the created tax provision is based on the management interpretation of the respective legislation changes and the likelihood of the future liabilities' exposure. The aforementioned effects are recorded in line "Income tax expense".

Deferred Tax related to Investments in Subsidiaries

Undistributed profits of the subsidiary give rise to 'outside' temporary differences, i.e., differences between the tax bases of the investments or interests (their original cost) and the carrying amounts of net assets of the relevant investments or interests. Although the parent company has control over the operations of subsidiaries consolidated into the Group and might control the timing of the reversal of the temporary differences, that is highly probable that the temporary differences related to undistributed profits of subsidiaries will be reversed in the foreseeable future at least for several of subsidiaries. Therefore, when the parent has determined that such distribution is probable in the Group's consolidated financial statements deferred tax liability is recognized.

The management has the historical practice to reinvest the earnings of the foreign subsidiaries in Russia and in Latvia in its operations, thus, it has been determined that no distributions will be made in the foreseeable future and no deferred tax liability has been recognized from the 'outside' temporary differences with respect to these subsidiaries historically. In addition to that in 2022 as the result of the outbreak of the military conflict and as the response of Russian Federation to the sanctions imposed by the EU against Russia, a decree of the President of the Russian Federation from 5 March 2022 "On temporary actions with respect to the fulfilment of the obligations in front of foreign creditors" was adopted in order to limit the number of payments made to the shareholders in the EU and in foreign currencies. Based on that the Group will continue to reinvest the profits received in Russia for the further operational and business development needs and has no plans for dividend distributions from Russia in the foreseeable future.

With respect to Ukraine, being the most affected region by the outbreak of the military conflict, the certain restrictions have been introduced to the dividend's distributions. According to resolution No 18 of the Board of the National Bank of Ukraine dated 24 February 2022 the National Bank of Ukraine decided to suspend the operation of the FX market of Ukraine, except for operations of selling foreign currency to its customers. That resolution provides that within the martial period it is not possible to purchase currency and pay dividends to non-residents in foreign currency. The only option is to pay dividends in hryvnias. However, this requires non-residents to open bank accounts in hryvnia in bank of Ukraine. Based on that the management of the Group considers that in the foreseeable future it is impracticable to distribute any of the dividends from the subsidiary situated in Ukraine and thus no respective deferred tax liabilities have been accrued as of 31 December 2023 (and 31 December 2022).

The Group has the historical practice to distribute profits from its subsidiaries operating in Belarus. Tax legislation in Belarus presumes that in case the dividend is distributed to the non-resident parent company, such distribution is subject to additional taxation. The expected amount of the future distribution is determined based on the average distributed dividends for several prior years and amounts of the profits earned by the subsidiary for the reporting period. The deferred tax liabilities related to such distribution are recognized in the consolidated financial statements by using 10% rate applicable to profits distributed from Belarus (Note 17).

Note 4 Fair value estimation

All assets and liabilities for which fair value is measured or disclosed in the financial statements are categorised within the fair value hierarchy, described as follows, based on the lowest level input that is significant to the fair value measurement as a whole:

Level 1 — Quoted (unadjusted) market prices in active markets for identical assets or liabilities; Level 2 — Valuation techniques for which the lowest level input that is significant to the fair value measurement is directly or indirectly observable;

Level 3 — Valuation techniques for which the lowest level input that is significant to the fair value measurement is unobservable.

For assets and liabilities that are recognized in the financial statements on a recurring basis, the Group determines whether transfers have occurred between Levels in the hierarchy by re-assessing categorization (based on the lowest level input that is significant to the fair value measurement as a whole) at the end of each reporting period.

The management estimates that the carrying amount of the Group's financial assets and liabilities does not significantly differ from their fair value. Trade receivables and payables are current and therefore the management estimates that their carrying amount is close to their fair value. The fair values of trade receivables and payables are determined at third level inputs. Fair value of lease liabilities is determined at second level of fair value hierarchy. Management estimates that the Group's interest rates on lease liabilities correspond to market conditions therefore their carrying amount is close to their fair value. Fair value of investments in other shares is determined at third level. Fair value of such equity instruments is valued using models with both observable and unobservable data. The unobservable inputs to the models include assumptions regarding the future financial performance of the investee, its risk profile, and economic assumptions regarding the industry and country in which the investee operates. Fair value of the investment property is determined at third level inputs. The Group has involved independent real estate valuators to perform the valuation of the investment property. The independent real estate valuator has applied the market approach, still the final value has been identified applying judgmental adjustments allowing for the characteristics of the real estate under assessment.

Note 5 Financial risk management

The Group's activities expose it to a variety of financial risks: credit risk, liquidity risk and market risk (including currency risk and interest rate risk). The Group's overall risk management program focuses on the unpredictability of financial markets and seeks to minimise potential adverse effects on the Group's financial performance.

The Management Board has an overall responsibility for establishment and oversight of the Group's risk management framework. The achievement of risk management goals in the Group is organized in such a way that risk management is part of normal business operations and management. Risk management is a process of identifying, assessing and managing business risks that can prevent or jeopardize the achievement of business goals.

Credit risk

Credit risk is the risk of financial loss to the Group if a customer or counterparty to a financial instrument fails to meet its contractual obligations.

Credit risk is managed on the Group basis, except for credit risk relating to accounts receivable balances. Each local entity is responsible for managing and analysing the credit risk for each of their new clients before standard payment and delivery terms and conditions are offered. Credit risk arises from cash and cash equivalents and deposits with banks and financial institutions, as well as credit exposures to wholesale customers, including outstanding receivables and committed transactions. For banks and financial institutions, mostly independently rated parties with a quality rating are accepted. Banks established in Belarus and Russia are not rated since the military conflict between Russia and Ukraine started. If wholesale customers are independently rated, these ratings are used. If there is no independent rating, management assesses the credit quality of the customer, taking into account its financial position, past experience and other factors. Individual risk limits are set based on internal or external ratings in accordance with limits set by the board of each local entity. The utilisation of credit limits is regularly monitored. Sales to retail customers are settled in cash or using credit cards. No credit limits were exceeded during the reporting period, and management does not expect any losses from non-performance by these counterparties.

The carrying amount of financial assets (except for financial assets measured at fair value through profit or loss) represents the maximum credit exposure. The maximum exposure to credit risk at the reporting date was:

in thousands of EUR	Note	2023	2022
As of 31 December
Cash and cash equivalents	7	32 878	25 909
Trade receivables	8, 9	1 188	880
Rent receivables	8, 9	33	30
Other receivables	8, 9	133	134
Current loans granted	8	29	10
Non-current receivables	8	292	301
Total		34 553	27 264

Maximum exposure to credit risk for cash and cash equivalents was as follows:

in thousands of EUR	31 December 2023	31 December 2022
Fitch rating A-AAA	35	198
Fitch rating B-BBB	29 780	22 244
Fitch rating C-CCC	7	23
Not rated	3 056	3 444
Total cash and cash equivalents (Note 7)	32 878	25 909

The ageing profile of trade and other receivables was:

	Gross	Expected credit loss	Gross	Expected credit loss
in thousands of EUR	31 December 2023	2023	31 December 2022	2022
Not past due	1 050	0	513	0
Overdue 1-30 days	83	-1	248	0
Overdue 31-90 days	116	-26	59	0
Overdue 91-180 days	103	0	25	0
Overdue more than 180 days	115	-85	258	-59
Total	1 467	-113	1 103	-59
Total net (Note 9)	1 354		1 044

Not past due trade receivables represented by the receivables towards wholesale customers. There is no substantial risk concentration in trade receivables. All not past due receivables have been settled by the date on which these consolidated financial statements are authorized for issue.

An impairment analysis of trade receivables is performed at each reporting date using a provision matrix to measure expected credit losses. Movements in the allowance for the expected credit losses in respect of trade receivables during the year were as follows:

in thousands of EUR	2023	2022
Balance at the beginning of the period	-59	-57
Accrued during the period	-84	-2
Reversed during the period	19	0
Effect of the exchange rate differences upon
translation to presentation currency	11	0
Balance at the end of the period	-113	-59

Liquidity risk

Liquidity risk is the risk that the Group will not be able to meet its financial obligations as they fall due. Cash flow forecasting is performed in the operating entities of the group and aggregated by group finance function. Group finance function monitors rolling forecasts of the Group's liquidity requirements to ensure it has sufficient cash to meet operational needs. Such forecasting takes into consideration the Group's financing plans, compliance with internal balance sheet ratio targets and, if applicable, external regulatory or legal requirements – for example, currency restriction.

As of 31 December 2023 and 31 December 2022, the Group's current assets exceeded its current liabilities.

The table below analyses Group's financial liabilities into relevant maturity groupings based on the remaining period at the reporting date to the contractual maturity date. The amounts disclosed in the table are the contractual undiscounted cash flows.

in thousands of EUR

As of 31 December 2023	Note	Carrying amount	Contractual cash flows	6 months or less	6-12 months	1-2 years	2-5 years	Over 5 years
Financial liabilities at amortized cost
Trade payables	8, 16	5 349	5 349	5 349	0	0	0	0
Lease liabilities	26	6 483	7 941	1 407	1 418	2 215	2 827	74
Other payables	8, 16	370	370	370	0	0	0	0
Total		12 202	13 660	7 126	1 418	2 215	2 827	74
in thousands of EUR
As of 31 December	Note	Carrying	Contractual	6 months	6-12	1-2	2-5	Over 5
2022		amount	cash flows	or less	months	years	years	years
Financial liabilities at amortized cost
Trade payables	8, 16	4 055	4 055	4 055	0	0	0	0
Lease liabilities	26	6 414	7 870	1 469	1 531	2 032	2 553	285
Other payables	8, 16	151	151	151	0	0	0	0
Total		10 620	12 076	5 675	1 531	2 032	2 553	285

Market risks

Market risks are risks that changes in market prices, such as foreign currency exchange rates, interest rates and equity prices will affect the Group's income or the value of its holdings of financial instruments. The objective of market risk management is to manage and control market risk exposures within acceptable parameters, while optimizing the return. Management has assessed that interest rate risk is not applicable because as at 31 December 2023 and 31 December 2022 the Group has no financial instruments with the floating rates.

Currency risk

The Group is exposed to currency risk on sales, purchases and cash that are denominated in a currency other than respective functional currencies of the Group entities. In the Group's markets, sale and purchase prices are fixed in the following currencies: EUR (Euro), RUB (Russian roubles), BYN (Belarusian roubles), USD (US dollar), UAH (Ukrainian hryvnia). Other purchase and sales transactions are mainly in Euro and in US dollars. Intra-group transactions are primarily in Euros, Russian roubles and Belarusian roubles.

Most materials required for the manufacturing of women's lingerie are imported from Asian countries, EU member states or from the local suppliers for the contracts with which could be fixed in euros. Those purchases are mainly in Euros and US dollars.

Most of the Group's wholesale sales to third parties are in roubles (RUB). The Group's retail sales prices are fixed in the currency of the retail market. Fluctuations in the exchange rates of local currencies affect both the Group's revenue and expenses. Rapid changes in the market's economic environment and increases or decreases in the value of its currency may have a significant impact on the Group's operations and the customers' purchasing power.

In respect of other monetary assets and liabilities denominated in foreign currencies, the Group ensures that its net exposure is kept on an acceptable level (a reasonable level in prevailing circumstances) by buying or selling foreign currencies at spot rates when necessary to address current imbalances.

The Group is the most exposed to currency risks arising from fluctuations in the exchange rates of BYN and RUB. The Group has addressed this risk by keeping money in more stable currencies such as EUR. Currency risk management includes maintaining an appropriate balance in BYN and RUB which corresponds to the amount required to fulfil liabilities to respective suppliers. The Group does not use hedging to reduce currency risks.

During the reporting year, the exchange rates of currencies affecting the Group's operating results changed as follows against EUR (based on closing figures): Ukrainian hryvnia -6.8% (2022: -26.8%), US dollar -4.4% (2022: - 5.8%), Belarusian rouble -21.3% (2022: -1.3%) and Russian rouble -31.2% (2022: -+8.2%).

The Group's exposure to foreign currency risk is as follows based on notional amounts:

in thousands of EUR
as of 31 December 2023	Note	Total	EUR	BYN	RUB	USD	UAH
Cash and cash equivalents	7, 8	32 878	31 437	927	364	0	150
Trade receivables, net	8, 9	1 221	493	252	416	0	60
Other current receivables	8, 9	133	1	100	1	31	0
Current loans granted	8	29	0	20	9	0	0
Trade payables	8, 16	-5 349	-2 830	-790	-30	-1 699	0
Other payables	8, 16	-370	0	-352	-6	-12	0
Lease liabilities	26	-6 483	-2 112	- 1 446	-2 683	-242	0
Total statement of financial position exposure		22 059	26 989	-1 289	-1 929	-1 922	210
in thousands of EUR

as of 31 December 2022	Note	Total	EUR	BYN	RUB	USD	UAH
Cash and cash equivalents	7, 8	25 909	24 976	548	165	25	195
Trade receivables, net	8, 9	910	448	395	67	0	0
Other current receivables	8, 9	134	2	96	1	33	2
Current loans granted	8	10	0	10	0	0	0
Trade payables	8, 16	-4 055	-2 212	-737	-37	-1 069	0
Other payables	8, 16	-151	0	-134	-15	-2	0
Lease liabilities	26	-6 414	-2 214	- 1 370	-2 767	-63	0
Total statement of financial		16 343	21 000	-1 192	-2 586	-1 076	197

Based on the management's estimate as at the reporting date the fluctuation in EUR/BYN and EUR/RUB exchange rate shall not be more than 20% in average per annum and fluctuation in EUR/USD exchange rate shall not be more than 5% in average per annum.

A 20 percent weakening of BYN against EUR as of 31 December 2023 would affect profit or loss and equity by the amounts presented below. This analysis assumes that all other variables, in particular interest rates, remain constant. The analysis is performed on the same basis for 2022.

Effect on profit before tax in thousands of EUR

	2023	2022
EUR	258	238
Total	258	238
Effect on equity in thousands of EUR
	2023	2022
EUR	206	195
Total	206	195

A 20 percent strengthening of BYN against EUR would have had the equal but the opposite effect on the above currency to the amounts shown above on the basis that all other variables remain constant.

A 20 percent weakening of RUB against EUR as of 31 December 2023 would affect profit or loss and equity by the amounts presented below. This analysis assumes that all other variables, in particular interest rates, remain constant. The analysis is performed on the same basis for 2022.

Effect on profit before tax in thousands of EUR

	2023	2022
EUR	386	517
Total	386	517
Effect on equity in thousands of EUR
	2023	2022
EUR	309	414
Total	309	414

A 20 percent strengthening of RUB against EUR would have had the equal but the opposite effect on the above currency to the amounts shown above on the basis that all other variables remain constant.

A 5 percent weakening of USD against EUR as of 31 December 2023 would affect profit or loss and equity by the amounts presented below. This analysis assumes that all other variables, in particular interest rates, remain constant. The analysis is performed on the same basis for 2022.

Effect on profit before tax in thousands of EUR

	2023	2022
EUR	96	54
Total	96	54
Effect on equity in thousands of EUR
	2023	2022
EUR	77	44
Total	77	44

A 5 percent strengthening of USD against EUR would have had the equal but the opposite effect on the above currency to the amounts shown above on the basis that all other variables remain constant.

Capital management

The Group's objectives when managing capital are to safeguard the Group's ability to continue as a going concern in order to provide returns for shareholders and benefits for other stakeholders. The Group manages total equity including non-controlling interest as capital. The amount of capital managed by the Group is equal to 56 863 thousand EUR as of 31 December 2023 and 48 968 thousand EUR as of 31 December 2022. The externally imposed capital requirements arise from Estonian Commercial code, requiring a certain minimum level of owner's equity to be maintained. Those requirements are incorporated into the management of capital and have been met for all reporting periods. There were no changes in the Group's approach or in external requirements imposed on the Group's capital and capital management during the year. There are no plans to engage significant external capital.

Operating environment

Belarus

Since the onset of the military conflict between Russia and Ukraine on 24 February 2022, the escalation of geopolitical tensions and the military conflict between Russia and Ukraine have had a negative impact on the economic situation in the country. The Republic of Belarus functioned under the influence of negative external factors caused by the constantly growing sanctions pressure. The EU, the US and a number of other countries have imposed numerous sanctions on certain sectors of the economy, a number of Belarusian state and commercial organizations, including banks and individuals. Restrictions were also introduced on certain types of transactions, including blocking the funds of legal entities on accounts in foreign banks. Some international companies have announced the suspension of activities in the Republic of Belarus or the termination of the supply of products to the Republic of Belarus.

In 2023, Belarusian GDP increased by 3.9% compared to 2022 and amounted to BYN 216.1 billion at current prices. The balance of foreign trade for services in 2023 was positive in the amount of USD 0.49 billion against a positive balance in the amount of USD 4.141 billion in 2022.

In 2023, the Belarusian rouble weakened against the main foreign currencies. The official exchange rate of the US dollar has changed from 2.7364 Belarusian roubles for 1 US dollar as of 31 December 2022 to 3.1775, euro changed from 2.9156 Belarusian roubles to 3.5363.

In order to ensure macroeconomic steadiness and stabilize the situation in the domestic foreign exchange and deposit markets, the refinancing rate of the National Bank of the Republic of Belarus has been steadily decreasing from 12 to 9.5 percent per annum.

The 2023 year ended with an inflation at the level of 5.8% while forecasted level was in range of 7-8%.

Russia

The country's political situation is currently relatively unstable as the Russian economy faces adverse effects from sanctions imposed on Russia by a number of countries, the country's overall geopolitical situation, and fluctuations in crude oil prices. All these events negatively impact the Russian economy as a whole. In particular, this results in volatility of the Russian rouble and brings forth the necessity of economic, tax, political and other reforms.

The future stability of the Russian economy is largely dependent upon economic reforms, development of the legal, tax and regulatory frameworks, and the effectiveness of financial and monetary measures undertaken by the government of the Russian Federation.

While the Russian Government has introduced a range of stabilization measures to provide liquidity and support refinancing of foreign debt owed by Russian banks and companies, there continues to be uncertainty regarding the access to capital and its cost. Capital markets instability may result in a significant deterioration of liquidity in the banking sector, and tighter credit conditions within Russia.

In 2023, the Russian rouble weakened against the US dollar from 70.3375 Russian roubles for 1 US dollar as of 31 December 2022 to 89.6883, euro changed from 75.6553 Russian roubles to 99.1919.

Russian GDP increased by 3.6% and amounted to RUB 171 trillion at current prices. General inflation rate in 2023 was 7.4%, which is in line with the initial forecast of 7-7.5%.

Latvia

In 2023, Latvia navigated through continued global uncertainties with resilience, showing signs of economic recovery amidst geopolitical tensions. Real GDP is estimated to have contracted by 0.6% in 2023. Private consumption and exports slowed down markedly in 2023, whereas investment and public consumption expenditure showed strong growth. The labour market remained strong, with wage growth above inflation supporting real disposable incomes.

The challenges of the ongoing Ukrainian crisis were met with efforts to diversify trade and pivot towards alternative energy sources, mitigating some of the adverse impacts from the previous year. Inflation, a significant concern in 2022, showed signs of easing. Inflation in Latvia has returned to a low level and is lower than the EU average. Prices have decreased in the last months of 2023 mainly due to the sharp fall in global energy prices. In Latvia, this is reflected in lower heat energy and fuel prices, which also reduce the pressure on the prices of other goods and services. Annual inflation was declining every month from the very high levels observed in the first half of 2023 to stand at 0.9% in December 2023 (20.7% in December 2022). Headline inflation averaged a still elevated level of 9.1% in 2023.

Note 6 Group entities

	Location	Main activity	Effective Ownership interest 31.12.2023	Effective Ownership interest 31.12.2022
Parent company
AS Silvano Fashion Group	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%
SIA Silvano Fashion	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%
JSC Metropolitan Trade Company	Russia	Holding	100%	100%
Milavitsa****
LLC Baltsped logistik	Belarus	Logistics	50%	50%

* CJSC Silvano Fashion is 100% owned by JSC Metropolitan Trade Company Milavitsa (same was effective as of 31.12.2022).

*** LLC Gimil is owned by AS Silvano Fashion Group with the share of 99.80% and SIA Silvano Fashion with the share of 0.20% (same was effective as of 31.12.2022).

**** JSC Metropolitan Trade Company Milavitsa is owned by AS Silvano Fashion Group and SIA Silvano Fashion, each holding 50% (same was effective as of 31.12.2022).

Summary related to the entities associated with material NCI:

The total non-controlling interest is EUR 2 743 thousand (2022: EUR 4 182 thousand), of which EUR 2 599 thousand is for CJSC Milavitsa (2022: EUR 2 648 thousand). The non-controlling interest in respect of JSC Sewing firm Yunona, LLC Silvano Fashion (Belarus), LLC Baltsped logistik and Alisee SARL is not material.

There are no significant restrictions on group's ability to access or use assets, settle liabilities of all of its subsidiaries with non-controlling interest.

a) Summarised financial information on subsidiaries with material non-controlling interests:

Summarised statement of financial position of CJSC Milavitsa

in thousands of EUR	31 December 2023	31 December 2022
Current assets	18 559	17 466
Non-current assets	5 090	6 299
Total assets	23 649	23 765

Current liabilities	5 687	5 113
Non-current liabilities	610	973
Net assets	17 352	17 679
Total liabilities and equity	23 649	23 765

Summarised income statement of CJSC Milavitsa

in thousands of EUR	2023	2022
Revenue	32 560	31 095
Profit before income tax	9 261	4 675
Income tax expense	-1 261	-664
Profit for the period	8 000	4 011
Other comprehensive income (loss)	- 557	- 390
Total comprehensive income	7 443	3 621

Summarised statement of cash flows of CJSC Milavitsa

in thousands of EUR	2023	2022
Profit for the period	8 000	4 011
Net cash flow from operating activities	4 252	4 007
Net cash flow from investing activities	827	-944
Net cash flow from financing activities	-4 453	-3 396
Net increase/(decrease) in cash and cash	626	-333
equivalents
Cash and cash equivalents at the beginning of the	391	714
period
Effect of exchange rate fluctuations on cash	51	-610
Effect of translation to presentation currency	-171	621
Cash and cash equivalents at the end of the period	897	392

b) Basis for control over LLC Baltsped logistik:

The Group has control over LLC Baltsped logistik due to the ability to direct relevant activities of LLC Baltsped logistik through a combination of voting rights arising from the shareholding, and the existence of operational agreements whereby a significant portion of LLC Baltsped logistik activities involve the Group.

c) Investments in associates:

Investments in associates as at 31 December 2023 were represented by the investments of CJSC Milavitsa in LLC Trade house "Milavitsa", Novosibirsk. The Group has 25% ownership interest in the associate which is recorded in the statement of financial position at a carrying amount of 85 thousand EUR (31 December 2022: 25% interest at a carrying amount of 82 thousand EUR).

Note 7 Cash and cash equivalents

in thousands of EUR
As of 31 December	Note	2023	2022
Current deposits in EUR		29 500	22 000
Current deposits in currencies other than EUR		566	191
Current bank accounts in EUR		1 925	2 963
Current bank accounts in currencies other than EUR		466	300
Cash in transit		368	284
Cash on hand		53	171
Total	5,8	32 878	25 909

Cash and cash equivalents distributed by the geographical concentration are presented in the following table:

in thousands of EUR
As of 31 December	Note	2023	2022
Estonia		29 763	22 329
Belarus		1 536	1 266
Russia		943	1 785
Ukraine		150	195
Latvia		61	122
Monaco		425	212
Total	5,8	32 878	25 909

Note 8 Financial assets and financial liabilities

in thousands of EUR
Financial assets	Note	31 December 2023	31 December 2022
Financial assets at fair value through profit or loss
Investments in other shares	12	213	259

Debt instruments at amortised cost
Non-current receivables*	5	292	301
Trade receivables	5, 9	1 221	910
Other receivables	5, 9	133	134
Current loans granted	5	29	10

Other financial assets
Cash and cash equivalents	5, 7	32 878	25 909
Total financial assets		34 766	27 523

Total current		34 261	26 963
Total non-current		505	560

* Security deposits under lease agreements

in thousands of EUR
Financial liabilities	Note	31 December 2023	31 December 2022
Current lease liabilities	26	2 162	2 373
Trade payables	5, 16	5 349	4 055
Other payables	5, 16	370	151
Total current financial liabilities		7 881	6 579

Non-current lease liabilities	26	4 321	4 041
Total non-current financial liabilities		4 321	4 041

Note 9 Trade and other receivables

in thousands of EUR
As of 31 December	Note	2023	2022
Trade receivables		1 301	939
Rent receivables		33	30
Other receivables		133	134
		1 467	1 103
Allowance for expected credit losses		-113	-59
Total trade and other receivables	5,8	1 354	1 044

Note 10 Prepayments and tax receivables

in thousands of EUR
As of 31 December	2023	2022
Prepayments made to suppliers	409	450
VAT recoverable	704	520
Other tax prepayments	2	1
Total prepayments and tax receivables	1 115	971

Note 11 Inventories

in thousands of EUR
As of 31 December	2023	2022
Raw and other materials	6 501	6 042
Work in progress	1 321	1 079
Finished goods	14 220	14 143
Goods in transit	295	249
Prepayments for raw and other materials	144	284
Other inventories	1 459	467
Total	23 940	22 264

Other inventories as of 31 December 2023 include goods purchased for resale in amount of EUR 1 138 thousand (31 December 2022: EUR 138 thousand).

The Group monitors obsolete inventories on the ongoing basis. Management approach for the assessment of the potential allowance for the obsolete inventories is described in detail in Note 3. During 2023 the Group recognised the allowance for the obsolete inventories in the amount of EUR 1 198 thousand (2022: EUR 683 thousand). This is recognised in "Cost of goods sold" (note 21). Allowance was created as the usage of raw materials in the amount of EUR 421 thousand (2022: EUR 256 thousand) in further production is unlikely and the management considers the sale of the finished goods in the amount of EUR 777 thousand (2022: EUR 427 thousand) as remote.

Note 12 Investments in other shares

Details of the Group's investments in other shares are presented below:

			Ownership as of		Carrying value
in thousands of EUR	Domicile	Core activity	31.12.23	31.12.22	31.12.23	31.12.22
OJSC Svitanok	Belarus	Manufacturing	11,3730%	11,3730%	201	245
CJSC Minsk Transit Bank	Belarus	Financing	0,0262%	0,0262%	6	7
OJSC Belvnesheconombank	Belarus	Financing	0,0030%	0,0030%	6	7
OJSC Belinvestbank	Belarus	Financing	0,0000%	0,0000%	0	0
National Pension Fund of Belarus	Belarus	Financing	0,0005%	0,0005%	0	0
Total					213	259

The investments to other shares are classified as equity instruments and are stated at fair value third level, because the shares are not traded in an active market. As of 31 December 2023 (and 31 December 2022) the fair value of the abovementioned shares of unlisted companies was close to acquisition cost and determined by techniques based on the management's judgment.

Note 13 Intangible assets

in thousands of EUR	Software	Trademarks and licences	Unfinished projects and prepayments	Total
As of 31 December 2021
Cost	1 727	69	192	1 988
Accumulated amortization	-1 408	-45	0	-1 453
Net book amount	319	24	192	535

Movements during 2022
Acquisition	3	0	110	113
Transfers and reclassifications	16	0	-16	0
Amortization	-38	-11	0	-49
Unrealised exchange rate differences	-14	8	-8	-14
Closing net book amount	286	21	278	585
As of 31 December 2022
Cost	1 726	71	278	2 075
Accumulated amortization	-1 440	-50	0	-1 490
Net book amount	286	21	278	585
Movements during 2023
Acquisition	6	0	142	148
Amortization	-41	-3	0	-44
Unrealised exchange rate differences	-46	-3	-61	-110
Closing net book amount	205	15	359	579
As of 31 December 2023
Cost	1 464	60	359	1 883
Accumulated amortization	-1 259	-45	0	-1 304
Net book amount	205	15	359	579

As of 31 December 2023, the cost of fully amortized items of intangible assets still in use amounted to EUR 1 199 thousand (31 December 2022: 1 580 thousand).

Note 14 Investment property

in thousands of EUR	Warehouse
	and		Office and
	production	Retail	other
	premises	premises	premises	Total
As of 31 December 2021
Cost	429	936	32	1 397
Accumulated depreciation	-14	-285	-12	-311
Net book amount	415	651	20	1 086
Movements during 2022
Depreciation	-14	-19	-1	-34
Unrealised exchange rate differences	-4	-7	0	-11
Closing net book amount	397	625	19	1 041
As of 31 December 2022
Cost	425	925	31	1 381
Accumulated depreciation	-28	-300	-12	-340
Net book amount	397	625	19	1 041
Movements during 2023
Transfers from property, plant and equipment (note 15)	0	74	0	74
Depreciation	-12	-17	-1	-30
Unrealised exchange rate differences	-68	-114	-4	-186
Closing net book amount	317	568	14	899
As of 31 December 2023
Cost	350	830	26	1 206
Accumulated depreciation	-33	-262	-12	-307
Net book amount	317	568	14	899

The investment property is recognized at cost less accumulated depreciation and any impairment losses. Rental income generated by the investment property in 2023 and recognized in the consolidated income statement amounted to EUR 146 thousand (2022: EUR 208 thousand). Rental income is recognized within the other operating income.

The expenses related (including maintenance and repairs) to both premises earning rental income and those not earning any rental income were insignificant in both years.

Investment property of the Group is located in Minsk, Belarus. As of 31 December 2023 independent certified valuator IPM Consult performed valuation of the Group's investment property. Valuation was based on market approach. This approach is based on market transactions involving similar assets by type of property and with similar infrastructure. The value of the similar properties has been then adjusted to the characteristics of the real estate under assessment. Based on the third-party valuator assessment the fair value of the investment property of the Group as at 31 December 2023 amounted to 3 085 thousand EUR (31 December 2022: 3 261 thousand EUR).

Note 15 Property, plant and equipment

in thousands of EUR			Other
	Land		equipment	Right	Assets
	and	Plant and	and	of-use	under
	buildings	equipment	fixtures	asset	construction	Total
As of 31 December 2021
Cost	4 065	14 992	4 625	12 499	64	36 245
Accumulated depreciation	-2 209	-13 325	-4 118	-6 622	0	-26 274
Net book amount	1 856	1 667	507	5 877	64	9 971
Movements during 12m 2022
Additions	0	14	270	2 605	148	3 037
Modifications	0	0	0	-18	0	-18
Disposals	0	0	-43	-412	0	-455
Reclassifications	0	97	88	0	-185	0
Depreciation	-100	-498	-287	-2 542	0	-3 427
Unrealised exchange rate differences	-16	-2	26	126	6	140
Closing net book amount	1 740	1 278	561	5 636	33	9 248
As of 31 December 2022
Cost	4 020	14 838	4 688	14 350	33	37 929
Accumulated depreciation	-2 280	-13 560	-4 127	-8 714	0	-28 681
Net book amount	1 740	1 278	561	5 636	33	9 248
Movements during 12m 2023
Additions	0	21	529	3 524	583	4 657
Disposals	0	0	-40	-197	0	-237
Transfers to Investment property (note 14)	-74	0	0	0	0	-74
Reclassifications	0	408	197	0	-605	0
Depreciation	-72	-335	-339	-2 327	0	-3 073
Unrealised exchange rate differences	-293	-245	-141	-1 203	-5	-1 887
Closing net book amount	1 301	1 127	767	5 433	6	8 634
As of 31 December 2023
Cost	3 242	12 775	4 464	13 470	6	33 957
Accumulated depreciation	-1 941	-11 648	-3 697	-8 037	0	-25 323
Net book amount	1 301	1 127	767	5 433	6	8 634

As of 31 December 2023 the cost of fully depreciated items of property, plant and equipment still in use amounted to EUR 12 312 thousand (31 December 2022: EUR 11 712 thousand).

Set out below are the carrying amounts of right-of-use assets recognised and the movements during the period:

	Office	Warehouse	Retail	Other
in thousands of EUR	premises	premises	premises	equipment	Total
As of 31 December 2021
Cost	420	3 724	8 319	37	12 499
Accumulated depreciation	-185	-1 265	-5 162	-11	-6 622
Net book amount	235	2 459	3 157	26	5 877
Movements during 2022
Additions	66	0	2 537	2	2 605
Modification	0	0	-18	0	-18
Disposals	-9	-265	-120	-18	-412
Depreciation	-73	-425	-2 040	-4	-2 542
Unrealised exchange rate differencies	10	29	87	0	126
Closing net book amount	229	1 798	3 603	6	5 636
As of 31 December 2022
Cost	457	3 466	10 407	20	14 350
Accumulated depreciation	-228	-1 668	-6 804	-14	-8 714
Net book amount	229	1 798	3 603	6	5 636
Movements during 2023
Additions	37	158	3 299	30	3 524
Modifications	0	0	0	0	0
Disposals	0	0	-197	0	-197
Depreciation	-65	-343	-1 914	-5	-2 327
Unrealised exchange rate differencies	-36	-294	-870	-3	- 1 203
Closing net book amount	165	1 319	3 921	28	5 433
As of 31 December 2023
Cost	398	2 754	10 290	28	13 470
Accumulated depreciation	-233	-1 435	-6 369	0	-8 037
Net book amount	165	1 319	3 921	28	5 433

Note 16 Trade and other payables

As of 31 December	Note	2023	2022
Trade payables to third parties	5, 8	5 349	4 055
Prepayments received from customers*		669	690
Accrued expenses		552	505
Employee payables	5, 8	422	429
Payables to shareholders	5, 8	15	7
Other payables	5, 8	370	151
Total trade and other payables		7 377	5 837

*Prepayments received from customers for products and services include prepayments for goods which the Group is obliged to sell subsequently to the reporting date.

The Group has no contractual obligations to purchase assets, nor any contingent liabilities that are not reflected in the consolidated financial statements.

Note 17 Taxes

Taxes prepaid and payable

in thousands of EUR	Notes	31 December 2023		31 December 2022
		Prepaid taxes	Taxes payable	Prepaid taxes	Taxes payable
Value added tax		704	351	520	494
Property tax		0	2	0	1
Corporate income tax		0	111	0	768
Personnel income tax		0	92	0	100
Social security		0	178	0	211
Other taxes		2	13	1	118
Total taxes	10	706	747	521	1 692

Income tax expense comprises the following:

in thousands of EUR	2023	2022
Current income tax	3 859	4 497
Deferred tax	-407	-1 711
Income tax expense	3 452	2 786

Reconciliation between the tax expense and profit or loss multiplied by applicable tax rate

Reconciliation between the expected and the actual taxation charge is provided below.

in thousands of EUR	2023	2022
Profit before tax	14 559	15 330
Theoretical income tax at the statutory tax rate*	0	0
Tax effect of expenses that are not deductible in determining	-407	-1 711
taxable profit
Effect of higher tax rates applied for dividends payments at	541	1 085
parent company**
Effect of higher tax rates of foreign subsidiaries**	3 318	3 412
Income tax expense for the year	3 452	2 786

* The theoretical income tax rate for the Group in 2023 and in 2022 was 0%, as in accordance with applicable laws of the Republic of Estonia, the Estonian entities do not pay income tax on profits. Instead of the income tax payable on profits, the Estonian entities pay corporate income tax on dividends, fringe benefits, gifts, donations, costs of entertaining guests, nonbusiness related disbursements and adjustments of the transfer price under the tax rate 20/80.

** The Group's foreign entities pay tax on corporate profits in accordance with the laws of their domicile. In Monaco the tax rate is 33.33%, in Russia 20%, in Belarus 20% and in Ukraine 18% (Note 2). When distributing dividends, additional corporate income tax is paid at the rate of 15% - in Russia, 10% - in Belarus, 5% - in Ukraine.

Deferred tax arises from temporary differences between the carrying amount of an asset or a liability in the statement of financial position and its tax base. The Group's deferred tax asset and liability are attributable to the following assets and liabilities:

in thousands of EUR	1 January 2022	Charged to profit or loss	FX impact	31 December 2022
Effect from deductible temporary differences:
Property, plant and equipment	301	885	-60	1 126
Inventories	828	92	-33	887
Other temporary differences	97	9	47	153
Deferred tax asset	1 226	986	-46	2 166
Set-off of deferred tax	0	0	0	0
Net deferred tax assets	1 226	986	-46	2 166
Effect from taxable temporary differences:
Theoretical tax on dividends distributions	-805	90	76	-639
Provision on tax uncertainties (Note 3)	-941	635	-94	-400
Deferred tax liability	-1 746	725	-18	-1 039
Set-off of deferred tax	0	0	0	0
Net deferred tax liability	- 1 746	725	-18	-1 039
Net deferred tax position	-520	1 711	-64	1 127

in thousands of EUR	1 January 2023	Charged to profit or loss	FX impact	31 December 2023
Effect from deductible temporary differences:
Property, plant and equipment	1 126	192	-213	1 105
Inventories	887	67	-2	952
Other temporary differences	153	9	-64	98
Deferred tax asset	2 166	268	-279	2 155
Set-off of deferred tax	0	0	0	0
Net deferred tax assets	2 166	268	-279	2 155
Effect from taxable temporary differences:
Theoretical tax on dividends distributions	-639	-224	127	-736
Provision on tax uncertainties (Note 3)	-400	363	37	0
Deferred tax liability	-1 039	139	164	-736
Set-off of deferred tax	0	0	0	0
Net deferred tax liability	- 1 039	139	164	-736
Net deferred tax position	1 127	407	-115	1 419

Potential income tax on dividends payable

The Group didn't recognize income tax in respect of undistributed profits of JSC Lauma Lingerie because the Group doesn't plan to distribute dividends from JSC Lauma Lingerie in the foreseeable future perspective (Note 3).

As of 31 December 2023 the Group recognized potential income tax on dividends payable by the following subsidiaries:

CJSC Milavitsa 564 thousand EUR (31 December 2022: 537 thousand EUR)
LLC Silvano Fashion (Belarus) 142 thousand EUR (31 December 2022: 71 thousand EUR)
LLC Gimil 30 thousand EUR (31 December 2022: 31 thousand EUR)

Management estimates and judgments with respect to the potential tax on dividends payable are disclosed in Note 3.

Note 18 Equity

As of 31 December 2023 registered share capital of AS Silvano Fashion Group amounted to 3 600 thousand EUR divided into 36 000 000 shares with a nominal value of 0.1 EUR each (as of 31 December 2022: 3 600 thousand EUR, 36 000 000 shares and 0.10 EUR nominal value, respectively). All shares as of 31 December 2023 (and 31 December 2022) are ordinary shares and fully paid.

As at 31 December 2023 the Group's retained earnings distributable to shareholders as dividends amounted to 39 244 thousand EUR (as at 31 December 2022: 30 786 thousand EUR). The related income tax payable on those dividends would be 5 003 thousand EUR (as at 31 December 2022: 4 127 thousand EUR) as part of the corporate income tax has already been paid on those profits by the Group. The related income tax is calculated assuming that Group's retained earnings are distributed in full amount.

The minimum share capital and maximum share capital in accordance with articles of association of AS Silvano Fashion Group amount to 3 600 EUR thousand and 14 400 EUR thousand respectively. All issued shares have been fully paid for.

As of 31 December	2023	2022
Share capital, in thousands of EUR	3 600	3 600
Number of shares	36 000 000	36 000 000
Par value of a share, in EUR	0.1	0.1

All shares issued by AS Silvano Fashion Group are registered ordinary shares. Each ordinary share grants the holder one vote at the general meeting of shareholders. The Company does not issue share certificates to shareholders. The Company's share register is electronic and maintained at the Estonian Central Register of Securities.

Each ordinary share grants the holder the right to participate in profit distributions in proportion to the number of shares held. General Meeting decides the amount that will be distributed as dividends on the basis of the approved consolidated financial statements of the Group.

As of 31 December 2023 AS Silvano Fashion Group had 3 336 shareholders (31 December 2022: 3 585 shareholders).

Statutory reserve

The Group has formed statutory reserve capital in accordance with the Commercial Code of the Republic of Estonia. During each financial year, at least 1/20 of the net profit shall be entered in reserve capital, until reserve capital is at least 1/10 of share capital. Reserve capital may be used to cover a loss, or to increase share capital. Payments shall not be made to shareholders from reserve capital.

Note 19 Earnings per share

The calculation of basic earnings per share for 2023 and for 2022 is based on profit attributable to owners and a weighted average number of ordinary shares.

in thousands of shares	2023	2022
Number of ordinary shares at the beginning of the period	36 000	36 000
Number of ordinary shares at the end of the period	36 000	36 000
Weighted average number of ordinary shares for the period	36 000	36 000

In thousands of EUR	2023	2022
Profit for the period attributable to equity holders of the Parent
company	9 927	11 796
Basic earnings per share (EUR)	0,28	0,33
Diluted earnings per share (EUR)		0,33

Diluted earnings per share do not differ from basic earnings per share as the Group has no financial instruments issued that could potentially dilute the earnings per share.

Note 20 Revenue from contracts with customers

in thousands of EUR	2023	2022
Revenue from wholesale	37 335	36 323
Revenue from retail sale	21 203	21 304
Subcontracting and services	35	25
Other sales	24	15
Total revenue from contracts with customers	58 597	57 667
Timing of revenue recognition
Goods and services transferred at a point in time	58 597	57 667
Total	58 597	57 667

In the reporting period and comparable period, the Group did not have any clients whose revenue would exceed 10% of the Group revenue.

Note 21 Cost of goods sold

in thousands of EUR	Note	2023	2022
Raw materials		8 946	12 619
Purchased goods		1 928	2 326
Purchased services		4 788	3 586
Payroll expenses	23	6 239	5 656
Depreciation and amortization	13,14,15	246	346
Rent	26	42	89
Utilities		281	319
Repairs and maintenance		65	126
Transport expenses		588	984
Auxiliary materials		371	337
Other production costs		162	139
Allowance for obsolete inventories	11	1 198	256
Total		24 854	26 783

Rent expenses include short-term leases and variable lease payments.

The Group total payroll expenses and average number of employees are disclosed in Note 23.

Note 22 Distribution expenses

in thousands of EUR	Note	2023	2022
Advertising and marketing expenses		458	545
Payroll expenses	23	5 107	5 207
Storage and packaging		17	20
Rent	26	511	491
Transportation services		164	130
Depreciation and amortization	13,14,15	2 601	2 945
Utilities		439	498
Materials usage		468	577
Business trips		44	12
Allowance for bad debts	5,9	7	2
Bank commissions		408	393
Other expenses		348	323
Total		10 572	11 143

Rent expenses include short-term leases and variable lease payments.

The Group total payroll expenses and average number of employees are disclosed in Note 23.

Note 23 Administrative expenses

in thousands of EUR	Note	2023	2022
Payroll expenses		1 920	1 894
Other expenses		225	197
Depreciation and amortization	13,14,15	198	222
IT costs		227	221
Office expenses		97	128
Communication expenses		57	59
Rent	26	203	236
Utilities		213	235
Services		478	271
Bank comissions		174	147
Business trips		110	65
Insurance		47	39
Supervisory and management board remuneration	28	552	677
Total		4 501	4 391

Rent expenses include short-term leases and variable lease payments.

Total payroll expenses
in thousands of EUR	2023	2022
Wages and salaries	10 232	9 820
Social security taxes	3 034	2 937
Total payroll expenses	13 266	12 757
Average number of employees in the
reporting period	1 644	1 606

Note 24 Other operating expenses

in thousands of EUR	Note	2023	2022
Social benefits to employees		258	189
Other taxes		272	232
Allowance for bad debts	5,9	77	0
Allowance for obsolete inventories	11	0	427
Loss on disposal of property, plant,
equipment and intangible assets		3	8
Expenses for donations		7	5
Depreciation and amortization	13,14,15	102	105
Other expenses		264	244
Total		983	1 210

Social benefits to employees include costs related to the social programs and additional benefits provided to the employees (mainly in Belarus) and expenses related to social infrastructure, maintenance expenses of employee dormitories, first aid station and canteen.

Note 25 Net finance income/(expense)

in thousands of EUR	Note	2023	2022
Interest income on bank deposits		599	38
Gain from derecognition of lease	26
liabilities		0	51
Other finance income		2	1
Dividends received		11	3
Interest expense of lease liabilities	26	-688	-546
Other finance expenses		-17	0
Total other finance income/
expenses		-93	-453
Gain/(loss) on conversion of foreign
currencies		-3 345	1 117
Net finance income/(expense)		-3 438	664

Cash at banks earns interest at fixed rates based on bank deposit rates. Short-term deposits are normally made for 3 months periods and earn interest at the respective short-term deposit rates. The increase in interest rates and the volume of cash being deposited in the reporting period caused increase of interest income.

The change of net finance income/(expense) compared to year 2022 is mainly caused by high fluctuations of FXrates in Belarus and Russia.

Note 26 Leases

The Group as a Lessee

Set out below are the carrying amounts of lease liabilities (included under lease liabilities) and the movements during the period:

in thousands of EUR	Note	2023	2022
Lease liabilities as of 1 January		6 414	6 920
Additions	15	3 524	2 615
Modifications	15	0	-18
Derecognition	15	-197	-425
Unrealised exchange rate differences		-951	-44
Finance costs	25	688	546
Repayments		-2 995	-3 180
Lease liabilities as of 31 December		6 483	6 414

The maturity analysis of carrying amounts of lease liabilities is disclosed below:

in thousands of EUR
as of 31 December	2023	2022
Payable in less than one year	2 162	2 373
Payable between one and five years	4 247	3 770
Payable in over five years	74	271
Total	6 483	6 414

The maturity profile of the Group's lease liabilities based on contractual undiscounted payments is disclosed in Note 5.

The following are the amounts recognized in profit or loss:

in thousands of EUR	Note	2023	2022
Depreciation expense of right-of-use assets	15	-2 327	-2 542
Interest expense on lease liabilities	25	-688	-546
Expenses relating to short-term leases (included in cost of
goods sold, distribution and administrative expenses)	21, 22, 23	-393	-425
Gain (loss) on derecognition of lease liabilities	25	0	51
Variable lease payments (included in cost of goods sold,
distribution and administrative expenses)	21, 22, 23	-363	-391
Total amount recognized in profit and loss		-3 771	-3 853

The Group had total cash outflows for leases of EUR 3 358 thousand in 2023 (2022: EUR 3 571 thousand). Movements in right-of-use asset balance in financial year 2023 and 2022 are disclosed in Note 15.

Variable vs Fixed Lease Payments

in thousands of EUR

2023	Fixed Payments	Variable Payments	Total Payments
Fixed rent	1 664	0	1 664
Variable rent with minimum payment	1 331	314	1 645
Variable rent only	0	49	49
Total rent	2 995	363	3 358

2022	Fixed Payments	Variable Payments	Total Payments
Fixed rent	1 808	0	1 808
Variable rent with minimum payment	1 372	246	1 618
Variable rent only	0	145	145
Total rent	3 180	391	3 571

The Group as a Lessor

The Group has entered into operating leases on its investment property portfolio consisting of certain manufacturing buildings (see Note 14). These leases have terms of between 4 and 14 years. Rental income recognised by the Group during the year is EUR 146 thousand (2022: EUR 208 thousand). The Group as a lessor does not have any noncancellable operating lease contracts.

Note 27 Operating segments

The Group`s operating segments have been determined based on regular reports being monitored and analysed by the Management and Supervisory Boards (chief operational decision maker) of the parent company on an ongoing basis.

The Supervisory Board considers the business primarily from the activity perspective, monitoring separately wholesale and retail activities.

The wholesale segment includes purchasing and production of women's lingerie, and distribution to external wholesale customers and the retail segment. The Group's manufacturing facilities are located in Latvia and Belarus.
The retail segment purchases women's lingerie from wholesale segment, and subsequently sells the lingerie through own retail network in Latvia, Russia and Belarus.
Operations, assets and liabilities of holding companies and the logistic center are disclosed separately under the heading "Unallocated".
Intersegment revenues include sales to both other segments as well as within the same segment.

There is a strong integration between wholesale and retail segments mainly through sales of goods from wholesale segment for subsequent resale in own retail network. The accounting policies of reportable segments are the same. Management estimates that intersegment transactions have been done on arm-length basis.

Primary measures monitored by the Supervisory Board are segment revenues, segment EBITDA (which is defined as profit before depreciation, amortisation, net finance income/expense, income tax expense) and segment net profit. These measures are included in the internal management reports that are reviewed by the Management Board and the Supervisory Board. Segment EBITDA is used to measure performance as management believes that such information is the most relevant in evaluating the results of certain segment relative to other entities that operate within the industry. Interest income and interest expenses are not core activities of operating segments and are not provided to management and are not evaluated by management as performance assessment criteria of segments' performance. Therefore, interest income and interest expenses are presented on net basis.

Unallocated revenues include revenues from services.

in thousands of EUR	Lingerie retail	Lingerie wholesale	Total segments	Unallocated	Eliminations	Total

Revenue from external customers	21 203	37 335	58 538	59		58 597
Intersegment revenues	0	32 482	32 482	3 083	-35 565	0
EBITDA	8 888	12 376	21 264	-144		21 120
Amortization and depreciation	-2 105	-596	-2 701	-446		-3 147
Operating income, EBIT	6 783	11 780	18 563	-590	0	17 973
Profit from associates using equity method	0	24	24	0		24
Net finance income	-704	-233	-937	-2 501		-3 438
Income tax	-819	-2 082	-2 901	-551		-3 452
Net profit	5 260	9 489	14 749	-3 642	0	11 107
Investments in associates	0	85	85	0		85
Other operating segments assets	16 331	23 641	39 972	32 195		72 167
Reportable segments liabilities	9 840	3 304	13 144	2 245		15 389
Capital expenditures	1 927	871	2 798	36		2 834
Number of employees as of reporting date	500	1 028	1 528	98		1 626

Operating segments 2023 12m 2023 and as of 31 December 2023

Operating segments 2022	12m 2022	and as of 31 December 2022

	Lingerie	Lingerie	Total
in thousands of EUR	retail	wholesale	segments	Unallocated	Eliminations	Total
Revenue from external customers	21 304	36 323	57 627	40		57 667
Intersegment revenues	0	31 519	31 519	3 032	-34 551	0
EBITDA	10 288	7 824	18 112	171		18 283
Amortization and depreciation	-1 936	-1 055	-2 991	-627		-3 618
Operating income, EBIT	8 352	6 769	15 121	-456	0	14 665
Profit from associates using equity method	0	1	1	0		1
Net finance income	-195	-1 075	-1 270	1 934		664
Income tax	-1 011	-1 322	-2 333	-453		-2 786
Net profit	7 146	4 373	11 519	1 025	0	12 544
Investments in associates	0	82	82	0		82
Other operating segments assets	5 108	32 936	38 044	25 865		63 909
Reportable segments liabilities	1 361	11 248	12 609	2 414		15 023
Capital expenditures	2 262	290	2 552	2		2 554
Number of employees as of reporting date	499	1 010	1 509	107		1 616

Information about geographical areas

Revenues in the table below are based on the geographical location of customers, segment assets are based on the geographical location of the assets.

Geographical segments

in thousands of EUR	Revenue 12m 2023	Revenue 12m 2022	Non-current assets 31.12.2023	Non-current assets 31.12.2022
Russia	34 692	35 215	3 638	3 316
Belarus	15 013	14 619	8 784	10 023
Ukraine	161	233	0	0
Baltics	1 443	1 490	410	318
Kazakhstan	3 698	3 175	0	0
Moldova	1 537	1 176	0	0
Other countries	2 053	1 759	25	25
Total	58 597	57 667	12 857	13 682

Note 28 Transactions with related parties

The following parties are considered to be related;

a) Shareholders owning, directly or indirectly, a voting power in the parent company or its significant subsidiaries that gives them significant influence over the parent company or its significant subsidiaries and companies under their control.
b) Associates enterprises in which parent company or its subsidiaries have significant influence;
c) Members of the Management Board and Supervisory Boards of parent company and its subsidiaries and their immediate family members and companies under their control or significant influence.

The Group's owners are legal and physical persons and no sole shareholder has control over the Group's activities. According to the management's assessment, the prices applied in transactions with related parties did not differ significantly from the market terms.

The Group didn't recognise any allowance for doubtful receivables from associates as of 31 December 2023 and as of 31 December 2022.

Sales of goods and services
in thousands of EUR	12m 2023	12m 2022
Associates	475	531
Total	475	531
Purchases of services
in thousands of EUR	12m 2023	12m 2022
Entities under control of Supervisory Board members	109	117
Total	109	117
Benefits to key management of the group*
in thousands of EUR	12m 2023	12m 2022
Remunerations and benefits (Note 23)	552	677
Total	552	677

*The Group considers the members of the Supervisory and Management Board in all companies included in the consolidation group as key management of the Group for the purposes of this disclosure.

There is no severance compensation for the Management Board and Supervisory Board members in case of termination or ending of the Board member contract.

Note 29 Events after the reporting date

On 3 January 2024, Russian Presidential Decree No. 8 was issued, which introduces a legal framework that could allow for the expropriation of foreign-owned assets in Russia, in retaliation to international sanctions. This measure targets assets from countries that have enacted sanctions against Russia. However, as none of the Group's assets in Russia have been frozen or are directly affected by sanctions, management believes there is no risk of expropriation for our operations under this decree. Group's management remains vigilant, ensuring full compliance with local laws and safeguarding our interests.

In response to ongoing geopolitical tensions, on 23 February 2024 the European Union announced a new set of economic sanctions targeting Russia. These sanctions are specifically designed to impact its strategic sectors, including advanced technology, machinery, and equipment for the energy sector, and critical materials for the defense industry. The Group's operations in the manufacturing, wholesale, and retail of ladies' lingerie are distinctly outside the scope of these sanctions, meaning Group's business activities remain unaffected. This underscores Group's resilience and adaptability, ensuring our operations continue seamlessly amidst the evolving geopolitical landscape.

On 7 March, 2024, the council of ministers of the Republic of Belarus, adopted a resolution no. 164. This resolution suspends the implementation of the international agreements on the avoidance of double taxation with 27 countries (including Estonia and other EU countries) starting from 1 June, 2024. Tax rate on dividends distribution towards foreign shareholders from mentioned countries will be increased to 25%. The management of the Group is planning to distribute dividends from subsidiaries in Belarus before 1 June, 2024, and thus, has concluded that these events are non-adjusting subsequent events and therefore their potential impact was not considered when making estimates and assumptions as at 31 December 2023.

Escalating geopolitical tensions, potentially leading to further sanctions by or against Russia and Belarus could directly impact the Group's operations. The Group is closely monitoring the developments in Russia and Belarus, evaluating their possible impact on our operations, financial position, and cash flows. The situation remains fluid, and we are committed to adapting our operations as necessary to navigate the evolving economic and political landscape.

Note 30 Separate financial information of the Parent company

In accordance with the Accounting Act of Estonia, unconsolidated primary financial statements of consolidating unit (parent company) have been disclosed in the notes of the consolidated annual report. These unconsolidated primary financial statements do not constitute the parent company`s separate financial statements as defined in IAS 27 (Separate Financial Statements). The parent company's primary reports are prepared using the same accounting principles and estimation basis used in the consolidated financial statements, excluding subsidiaries, which are accounted for in parent company's unconsolidated primary financial statements using cost method (less impairment, if any).

Statement of Financial Position

in thousands of EUR	31.12.2023	31.12.2022
ASSETS
Current assets
Cash and cash equivalents	29 763	22 329
Trade and other receivables	864	818
Total current assets	30 627	23 147
Non-current assets
Non-current receivables	16 555	17 862
Investment in subsidiaries	24 124	24 124
Property, plant and equipment	62	63
Total non-current assets	40 741	42 049
TOTAL ASSETS	71 368	65 196
LIABILITIES AND EQUITY
Current liabilities
Current lease liabilities	13	12
Trade and other payables	53	30
Tax liabilities	25	22
Total current liabilities	91	64

Non-current liabilities Non-current lease liabilities	52	49
Total non-current liabilities	52	49
Total liabilities	143	113
Equity
Share capital	3 600	3 600
Share premium	4 967	4 967
Statutory reserve capital	1 306	1 306
Retained earnings	61 352	55 210
Total equity	71 225	65 083
TOTAL EQUITY AND LIABILITIES	71 368	65 196

Income Statement and Other Comprehensive Income

in thousands of EUR	2023	2022
Revenue from contracts with customers	1 280	952
Administrative expenses	-1 083	-800
Operating profit	197	152

Other finance expense	-3	-2
Currency exchange income/(expense)	87	27
Other finance income	6 402	7 036
Net finance income	6 486	7 061
Profit before tax	6 683	7 213
Income tax expense	-541	-1 086
Profit for the period	6 142	6 127
Other comprehensive income	0	0
Total comprehensive income for the period	6 142	6 127

Statement of Cash Flows

in thousands of EUR	2023	2022
Cash flow from operating activities
Profit for the period	6 142	6 127
Adjustments for:
Depreciation and amortization of non-current assets	15	13
Net finance income	-6 486	-7 061
Income tax expense	541	1 086
Change in trade and other receivables	32	-113
Change in trade and other payables	26	8
Net cash flow from operating activities	270	60
Cash flow from investing activities
Interest received	588	1 718
Dividends received	4 954	6 061
Loans granted	-30	-530
Proceeds from repayments of loans granted	1 667	3 292
Acquisition of property, plant and equipment	0	-2
Net cash flow from investing activities	7 179	10 539
Cash flow from financing activities
Payment of principal portion of lease liabilities	-12	-12
Interest paid on lease liabilities	-3	-1
Net cash flow from financing activities	-15	-13
Increase in cash and cash equivalents	7 434	10 586
Cash and cash equivalents at the beginning of period	22 329	11 743
Cash and cash equivalents at the end of period	29 763	22 329

Statement of Changes in Equity

in thousands of EUR	Share capital	Share premium	Statutory reserve capital	Retained earnings	Total
Balance as of 31 December 2021	3 600	4 967	1 306	49 083	58 956
Profit for the period	0	0	0	6 127	6 127
Other comprehensive income for the period	0	0	0	0	0
Total comprehensive income for the period	0	0	0	6 127	6 127
Balance as of 31 December 2022	3 600	4 967	1 306	55 210	65 083
Carrying amount of interests under control or significant influence					-24 124
Interests under control or significant influence under the equity method					10 092
Adjusted unconsolidated equity as of 31 December 2022					51 051
Profit for the period	0	0	0	6 142	6 142
Other comprehensive income for the period	0	0	0	0	0
Total comprehensive income for the period	0	0	0	6 142	6 142
Balance as of 31 December 2023	3 600	4 967	1 306	61 352	71 225
Carrying amount of interests under control or significant influence					-24 124
Interests under control or significant influence under the equity method					17 643
Adjusted unconsolidated equity as of 31 December 2023					64 744

The difference between adjusted unconsolidated equity and the consolidated equity attributable to equity holders of the Company as at 31 December 2023 is caused by the fact that parent company ceases to recognise its share of losses of particular subsidiaries once the investment has been reduced to zero when applying equity method while such losses are consolidated line by line in the consolidated financial statements of the Group. In addition, the consolidated equity attributable to equity holders of the Company is affected by several adjustments which arise upon consolidation only.

DECLARATION OF THE MANAGEMENT BOARD

The Management Board has prepared the Management Report, the Consolidated Financial Statements and the Profit Allocation Proposal of AS Silvano Fashion Group for the year ended on 31 December 2023 in accordance with the International Financial Reporting Standards as adopted by the EU and the financial statements present a true and fair view of the group's assets, liabilities, financial position and profit.

___________________________

Jarek Särgava Member of the Management Board 16 April 2024

Ernst & Young Baltic AS Rävala 4 10143 Tallinn Eesti Tel.: +372 611 4610 [email protected] www.ey.com/et_ee

Äriregistri kood 10877299 KMKR: EE 100770654

Ernst & Young Baltic AS Rävala 4 10143 Tallinn Estonia Phone.: +372 611 4610 [email protected] www.ey.com/en_ee

Code of legal entity 10877299 VAT payer code EE 100770654

Translation of the Estonian Original

INDEPENDENT AUDITOR'S REPORT

To the Shareholders of AS Silvano Fashion Group

Report on the audit of the consolidated financial statements

Opinion

We have audited the consolidated financial statements of AS Silvano Fashion Group and its subsidiaries (the Group), which comprise the consolidated statement of financial position as at 31 December 2023, and the consolidated income statement, consolidated statement of comprehensive income, consolidated statement of cash flows and consolidated statement of changes in equity for the year then ended, and notes to the consolidated financial statements, including material accounting policy information.

In our opinion, the accompanying consolidated financial statements present fairly, in all material respects, the financial position of the Group as at 31 December 2023, and its consolidated financial performance and its consolidated cash flows for the year then ended in accordance with International Financial Reporting Standards as adopted by the European Union.

Basis for Opinion

We conducted our audit in accordance with International Standards on Auditing (Estonia). Our responsibilities under those standards are further described in the "Auditor's responsibilities for the audit of the consolidated financial statements" section of our report. We are independent of the Group in accordance with the International Code of Ethics for Professional Accountants (including International Independence Standards) (IESBA Code) together with the ethical requirements that are relevant to our audit of the consolidated financial statements in Estonia, and we have fulfilled our other ethical responsibilities in accordance with these requirements and the IESBA code.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

Material uncertainty related to going concern

We draw attention to Note 3 in the consolidated financial statements, which indicates that further escalation of Russia-Ukraine conflict and future potential sanctions and restrictive measures, if any, could result in adverse effect on the results of operations, financial position and net assets of AS Silvano Fashion Group. As stated in Note 3, these events or conditions, along with other matters as set forth in Note 3, indicate that a material uncertainty exists that may cast significant doubt on the Group's ability to continue as a going concern. Our opinion is not modified in respect of this matter.

Key audit matters

Key audit matters are those matters that, in our professional judgment, were of most significance in the audit of the consolidated financial statements of the current period. In addition to the matter described in the "Material uncertainty related to going concern" section of our report, we have determined the matter described below to be the key audit matter to be communicated in our report. These matters were addressed in the context of the audit of the consolidated financial statements as a whole, and in forming the auditor's opinion thereon, and we do not provide a separate opinion on these matters. For each matter below, our description of how our audit addressed the matter is provided in that context.

We have fulfilled the responsibilities described in the "Auditor's responsibilities for the audit of the consolidated financial statements" section of our report, including in relation to these matters. Accordingly, our audit included the performance of procedures designed to respond to our assessment of the risks of material misstatement of the consolidated financial statements. The results of our audit procedures, including the procedures performed to address the matters below, provide the basis for our audit opinion on the accompanying consolidated financial statements.

Key Audit Matter	How our audit addressed the key audit matter
Inventory write down to net realizable value	During the audit procedures, we did, among other things, the following:
As at 31 December 2023 the Group's inventory balance in the consolidated statement of financial position of the Group amounted to EUR 23 940 thousand,	► We updated our understanding of the inventory valuation process, including assumptions and methods that management uses in their assessment of inventory write down to net realizable value.
accounted for at the lower of cost or net realizable value (Note 11).	► We performed inventory count observations using remote observation tools at selected locations and involved component auditors to attend physical inventory counts at
The Group sells ladies' lingerie that is subject to changing consumer demands and fashion trends. The fast-moving nature	selected locations to validate procedures related to inspection of existence of the inventory, including assessment of the condition of inventory.
of fashion requires assessing whether net realizable value of inventory is higher than the cost of inventory which involves significant management's judgment. Changes in judgments and assumptions made by the management may have a material effect on the consolidated financial statements and consequently inventory write down to net realizable value is considered a key audit matter.	► We assessed the production plans for the foreseeable future and considered whether raw materials could be used in production to identify obsolete raw materials that require a write down.
	► We assessed the management analysis of slow moving and obsolete inventories as at 31 December 2023 by reviewing inventory ageing as well as inventory movements during 2023 and subsequent to year-end in 2024 to identify slow moving items.
In addition, this matter is significant to our audit due to materiality of the amounts as inventories constitute 33.1% of the total assets of the Group in the consolidated statement of financial position as at 31	► We compared planned sales prices for finished goods according to approved price lists for 2024 to their cost as well as tested actual subsequent sales of finished goods in January 2024 to identify items sold below their cost comparing the actual results with the management's estimate.
December 2023.	► We independently calculated the estimate of the write-down loss for potentially discounted items, by applying the historical sales data to the inventory at the balance sheet date while taking into account its profile and age and comparing it to the calculations performed by the management.
	► We recalculated the inventory write downs to net realizable value for accuracy.
	► We considered adequacy of the disclosures in the consolidated financial statements in this area (Note 3 and 11).

Other information

Other information consists of the Management Report, including Corporate Governance Report, Corporate Social Responsibility Report, Remuneration Report and Management Board's confirmation to the Management Report, but does not consist of the consolidated financial statements and our auditor's report thereon. Management is responsible for the other information. Our opinion on the consolidated financial statements does not cover the other information and we do not express any form of assurance conclusion thereon, except as indicated below.

In connection with our audit of the consolidated financial statements, our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the consolidated financial statements or our knowledge obtained in the audit or otherwise appears to be materially misstated. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact. We have nothing to report in this regard.

With respect to the Management report, we also performed the procedures required by the Auditors Activities Act of the Republic of Estonia. Those procedures include considering whether the Management report is consistent, in all material respects, with the consolidated financial statements and is prepared in accordance with the requirements of the Accounting Act of the Republic of Estonia.

Furthermore, in accordance with Securities Market Act of the Republic of Estonia we are required to consider whether the Remuneration Report is prepared in compliance with the requirements of Article 135³ of the Securities Market Act of the Republic of Estonia.

Based on the work performed during our audit, in our opinion:

► the Management Report is consistent, in all material respects, with the consolidated financial statements;
► the Management Report has been prepared in accordance with the applicable requirements of the Accounting Act of the Republic of Estonia;
► the Remuneration Report is prepared in compliance with the requirements of Article 135³ of the Securities Market Act of the Republic of Estonia.

Responsibilities of management and those charged with governance for the consolidated financial statements

Management is responsible for the preparation and fair presentation of the consolidated financial statements in accordance with International Financial Reporting Standards as adopted by the European Union, and for such internal control as management determines is necessary to enable the preparation of consolidated financial statements that are free from material misstatement, whether due to fraud or error.

In preparing the consolidated financial statements, management is responsible for assessing the Group's ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless management either intends to liquidate the Group or to cease operations, or has no realistic alternative but to do so.

Those charged with governance are responsible for overseeing the Group's financial reporting process.

Auditor's responsibilities for the audit of the consolidated financial statements

Our objectives are to obtain reasonable assurance about whether the consolidated financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor's report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with International Standards on Auditing (Estonia) will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these consolidated financial statements.

As part of an audit in accordance with International Standards on Auditing (Estonia), we exercise professional judgment and maintain professional skepticism throughout the audit. We also:

► identify and assess the risks of material misstatement of the consolidated financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control;
► obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Group's internal control;
► evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by management;
► conclude on the appropriateness of management's use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Group's ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor's report to the related disclosures in the consolidated financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our

auditor's report. However, future events or conditions may cause the Group to cease to continue as a going concern;

► evaluate the overall presentation, structure and content of the consolidated financial statements, including the disclosures, and whether the consolidated financial statements represent the underlying transactions and events in a manner that achieves fair presentation;
► obtain sufficient appropriate audit evidence regarding the financial information of the entities or business activities within the Group to express an opinion on the consolidated financial statements. We are responsible for the direction, supervision and performance of the group audit. We remain solely responsible for our audit opinion.

We communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit.

We also provide those charged with governance with a statement that we have complied with relevant ethical requirements regarding independence, and to communicate with them all relationships and other matters that may reasonably be thought to bear on our independence, and where applicable, actions taken to eliminate threats or safeguards applied.

From the matters communicated with those charged with governance, we determine those matters that were of most significance in the audit of the consolidated financial statements of the current period and are therefore the key audit matters. We describe these matters in our auditor's report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should not be communicated in our report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication.

Report on Other Legal and Regulatory Requirements

1. Report on the compliance of format of the consolidated financial statements with the requirements for European Single Electronic Reporting Format ("ESEF")

Based on our agreement we have been engaged by the management of the Group to conduct a reasonable assurance engagement for the verification of compliance with the applicable requirements of the European Single Electronic Reporting Format of the consolidated financial statements of the Group for the year ended 31 December 2023 (the Single Electronic Reporting Format of the consolidated financial statements) contained in the file 529900JNG41RRJKJYB65-2023-12-31-en.zip (SHA-256-checksum: d856af9e6edaa207df7fb747f2dcab9dab0709ec0e3c88192b6b0bf9972bac04).

Description of a subject and applicable criteria

The Single Electronic Reporting Format of the consolidated financial statements has been applied by the management of the Group to comply with the requirements of art. 3 and 4 of the Commission Delegated Regulation (EU) 2019/815 of 17 December 2018 supplementing Directive 2004/109/EC of the European Parliament and of the Council with regard to regulatory technical standards on the specification of a single electronic reporting format (the "ESEF Regulation"). The applicable requirements regarding the Single Electronic Reporting Format of the consolidated financial statements are contained in the ESEF Regulation.

The requirements described in the preceding sentence determine the basis for application of the Single Electronic Reporting Format of the consolidated financial statements and, in our view, these requirements constitute appropriate criteria to form a reasonable assurance conclusion.

Responsibilities of management and those charged with governance

The management of the Group is responsible for the application of the Single Electronic Reporting Format of the consolidated financial statements that complies with the requirements of the ESEF Regulation.

This responsibility includes the selection and application of appropriate markups in iXBRL using ESEF taxonomy and designing, implementing and maintaining internal controls relevant for the preparation of the Single Electronic Reporting Format of the consolidated financial statements which is free from material non-compliance with the requirements of the ESEF Regulation.

Those charged with governance are responsible for overseeing the financial reporting process, which includes also the preparation of consolidated financial statements in the single electronic reporting format required by applicable requirements.

Auditor's responsibility

Our responsibility was to express a reasonable assurance conclusion whether the Single Electronic Reporting Format of the consolidated financial statements complies, in all material respects, with the ESEF Regulation.

We conducted our engagement in accordance with the International Standard on Assurance Engagements (Estonia) 3000 (Revised) "Assurance Engagements other than Audits and Reviews of Historical Financial Information" (ISAE (EE) 3000 (Revised)). This standard requires that we comply with ethical requirements, plan and perform procedures to obtain reasonable assurance whether the Single Electronic Reporting Format of the consolidated financial statements is prepared, in all material respects, in accordance with the applicable requirements.

Reasonable assurance is a high level of assurance, but it does not guarantee that the service performed in accordance ISAE 3000 (Revised) will always detect the existing material misstatement (significant noncompliance with the requirements).

Quality control requirements

We apply the provisions of the International Standard on Quality Management (Estonia) 1 (Revised) and accordingly maintain a comprehensive system of quality control including documented policies and procedures regarding compliance with ethical requirements, professional standards and applicable legal and regulatory requirements.

We comply with the independence and other ethical requirements of the International Code of Ethics for Professional Accountants (including International Independence Standards) issued by the International Ethics Standards Board for Accountants, which is founded on fundamental principles of integrity, objectivity, professional competence and due care, confidentiality and professional behaviour.

Summary of the work performed

Our planned and performed procedures were aimed at obtaining reasonable assurance that the Single Electronic Reporting Format of the consolidated financial statements was applied, in all material respects, in accordance with the applicable requirements and such application is free from material errors or omissions. Our procedures included in particular:

► obtaining an understanding of the internal control system and processes relevant to the application of the Single Electronic Reporting Format of the consolidated financial statements, including the preparation of the XHTML format and marking up the consolidated financial statements;
► verification whether the XHTML format was applied properly;
► evaluating the completeness of marking up the consolidated financial statements using the iXBRL markup language according to the requirements of the implementation of Single Electronic Reporting Format as described in the ESEF Regulation;
► evaluating the appropriateness of the Group's' use of iXBRL markups selected from the ESEF taxonomy and the creation of extension markups where no suitable element in the ESEF taxonomy has been identified;
► evaluating the appropriateness of anchoring of the extension elements to the ESEF taxonomy.

We believe that the evidence we have obtained is sufficient and appropriate to provide a basis for our conclusion.

Conclusion

In our opinion, the Single Electronic Reporting Format of the consolidated financial statements for the year ended 31 December 2023 complies, in all material respects, with the ESEF Regulation.

2. Other requirements of the auditor's report in accordance with Regulation (EU) No 537/2014 of the European Parliament and of the Council

Appointment and approval of the auditor

We were first appointed as auditors of AS Silvano Fashion Group, as public interest entity, for the financial year ended 31 December 2018 in accordance with the decision made by the General Meeting of Shareholders on 28 June 2018. In accordance with the decision made by the Extraordinary General Meeting of Shareholders on 9 April 2024 we were appointed to carry out the audit of the Group's consolidated financial statements for the year ended 31 December 2023. Our total uninterrupted period of engagement is 6 years, covering the periods ended 31 December 2018 to 31 December 2023.

Consistency with the additional report submitted to the audit committee

Our report on audit of the consolidated financial statements expressed herein is consistent with the additional report to the Audit Committee of the Group, which we issued in accordance with Article 11 of the Regulation (EU) No. 537/2014 on the same date as the date of this report.

Non-audit services

We confirm that in light of our knowledge and belief, services provided to the Group are consistent with the requirements of the law and regulations and do not comprise prohibited non-audit services referred to in Article 5(1) of the Regulation (EU) No 537/2014 of the European Parliament and of the Council.

Except for the statutory audit services and assurance engagement on the compliance of format of the consolidated financial statements with the requirements for the European Single Electronic Reporting Format, no other services were provided by us to the Group.

Tallinn, 16 April 2024

/signed digitally/ /signed digitally/

Olesia Abramova Olga Pliškina Authorised Auditor's number 561 Authorised Auditor's number 736 Ernst & Young Baltic AS Audit Company's Registration number 58

PROFIT ALLOCATION PROPOSAL

Retained earnings attributable to equity holders of AS Silvano Fashion Group as of 31 December 2023:

Accumulated retained earnings	54 322 000 EUR
Profit for the year ended 31 December 2023	9 927 000 EUR
Total retained earnings year ended 31 December 2023	64 249 000 EUR

The Management Board of AS Silvano Fashion Group makes the following proposal to the Annual General Meeting:

Payment of dividends to shareholders	0 EUR
Transfer of profit to retained earnings	9 927 000 EUR
Retained earnings after allocations	64 249 000 EUR

_________________________

Jarek Särgava Member of the Management Board 16 April 2024

DECLARATION OF THE SUPERVISORY BOARD

The Supervisory Board of AS Silvano Fashion Group has reviewed the Consolidated Annual Report, prepared by the Management Board, consisting of the Management Report, the Consolidated Financial Statements, the Management Board's Profit Allocation Proposal and the Independent Auditor's Report, and has approved the Consolidated Annual Report 2023 for presentation at the Annual General Meeting of Shareholders.

Toomas Tool	Chairman of the Supervisory Board	________	______2024
Triin Nellis	Member of the Supervisory Board	________	______2024
Mari Tool	Member of the Supervisory Board	________	______2024
Risto Mägi	Member of the Supervisory Board	________	______2024
Stephan David Balkin	Member of the Supervisory Board	________	______2024

AI Terminal

Silvano Fashion Group

2224_10-k_2024-05-02_49d8091c-5f9d-4307-acd8-f62cf2ff8c22.pdf

AS Silvano Fashion Group

Consolidated Annual Report 2023

MANAGEMENT REPORT

General information about AS Silvano Fashion Group

Selected financial and non-financial indicators

Underlying formulas:

Own & franchise store locations, geography

Business environment in 2023

Business outlook

Russia Economic Outlook

Belarus Economic Outlook

Ukraine Economic Outlook

Financial risks

Financial performance

Financial position

Sales structure

Sales by markets

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

Sales by business segments

Investments

Research & development achievements

Seasonality of business

Personnel

Key events during 2023 until the release of Annual Report

Shares of AS Silvano Fashion Group

Information on shares of AS Silvano Fashion Group

Share price performance and trading history

Share price development and turnover on the Nasdaq OMX Tallinn Stock Exchange during 12 months of 2023 (EUR)

Share price development on the Warsaw Stock Exchange during 12 months of 2023 (PLN)

Shareholder structure

The distribution of shares as of 31 December 2023 and 31 December 2022:

Largest shareholders of AS Silvano Fashion Group (% of votes):

Shares held by the members of the Management board and the Supervisory Board

Dividends

Corporate Governance Report

General Meeting of Shareholders

Management Board

Supervisory Board

Cooperation of Management Board and Supervisory Board

Disclosure of Information

Audit committee

Financial Reporting and Auditing

Corporate Social Responsibility

Sustainable business

Environmental responsibility and product sustainability

Social responsibility and social initiatives

Complying with human rights

Fighting corruption

Quality management

Remuneration report

Remuneration of the member of the management board

Management Board´s confirmation to the Management Report

CONSOLIDATED FINANCIAL STATEMENTS

Management´s Board confirmation to the Consolidated Financial Statements

Consolidated Statement of Financial Position

Consolidated Income Statement

Consolidated Statement of Comprehensive Income

Consolidated Statement of Cash Flows

Consolidated Statement of Changes in Equity

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

Note 1 General information

Note 2 Material accounting policies

2.1 Basis of preparation

2.1.1 Changes in accounting policies and disclosures

The standards/amendments that are effective and have been endorsed by the European Union

• IAS 1 Presentation of Financial Statements and IFRS Practice Statement 2: Disclosure of Accounting policies (Amendments)

2.1.2 Standards issued but not yet effective and not early adopted by the Group

2.2 Consolidation

2.3 Foreign currency transactions

Functional and presentation currency

Transactions and balances

Group companies

2.4 Property, plant and equipment

2.5 Intangible assets

2.6 Investment property

2.7 Impairment of non-financial assets

2.8 Financial instruments