AS Silvano Fashion Group (“SFG”) has entered into a share purchase agreement for the sale of all its shares (90% of the share capital) in Splendo Polska Sp. z o.o. (“Splendo”), a Polish retail subsidiary operating 6 retail outlets. The closing of the transaction is expected to occur within four weeks, subject to the fulfillment of certain conditions precedent. Taking account of the SFG's total investment in Splendo, the transaction is estimated to generate a loss of approximately EUR 1.2 million (EEK 18.8 million). The sale of this loss-making subsidiary will end cash outflows to Polish operations and help decrease overall management costs. Splendo will be acquired by a local wholesale partner of SFG, and Splendo's retail outlets will continue their business after being rebranded as “Milavitsa” franchise stores. SFG intends to continue and develop cooperation with its Polish wholesale partners and distribute both “Milavitsa” and “Lauma Lingerie” branded products through wholesale and retail channels. The sale of Polish retail operations will improve the efficiency of the group, as SFG's business model adjusts to the global economic downturn. The management intends to focus its short- and mid-term efforts on SFG's primary target markets of Russia, Ukraine, Belarus and the Baltics. Further action may be expected in the coming quarters to ensure that SFG remains competitive in the changing market conditions. The sale of Splendo is not a material transaction within the meaning of the Tallinn Stock Exchange Rules. The members of the Management Board and the Supervisory Board of SFG do not have any personal interest in the transaction. Dmitry Ditchkovsky Chairman of the Management Board AS Silvano Fashion Group Tel +372 6 710 700