CONSOLIDATED FINANCIAL RESULTS Q1 2011

Q1 11 Consolidated Financial Results

Turnover

The consolidated turnover of continuing operations remained close to the Q1 ’10 sales level, marginally lower by 0.41% and in Q1 2011 amounted to € 49.61 million, from € 49.81 mil in Q1 2010.

Greece exhibited a marginal increase in sales, while the Group’s foreign markets showed a marginal decline in sales.

Gross Profit

The Gross profit of continuing operations, during Q1 2011, has decreased by 8.51%, to €23.33 mil., from €25.50 mil. The gross profit margin of continuing operations settled at 47.02% vs 51.18%, largely affected by the rapid price increase in raw materials.

EBITDA

The EBITDA of continuing operations posted a reduction of 36.49% to €3.02 mil. in Q1 2011, from €4.75 mil., in Q1 2010, mainly influenced  by the increased production cost.

EBIT

The earnings before interest and taxes of continuing operations reached €2.06 mil., from €3.81 mil., down by 46.02% and EBIT margin settled from 7.65% in Q1 2010, at 4.15% in Q1 2011.

EBT

During the first quarter, the group recorded financial income from continuing operations, which amounted to € 0.28 million and attributed to strong cash flows.

Consequently, profit before tax of continuing operations amounted to € 2.34 million, from € 3.85 million decreasing by 39.28%.

EATAM

The earnings after taxes and minorities of continuing operations reached €1.96 mil., reduced by 35.50% compared to Q1 2010. Including the windfall tax of €0.44 mil. recorded during the first quarter of 2010, EATAM from continuing operations declined by 30.67% compared to the corresponding period last year, while EATAM margin stood at 3.95% from 5.67 %.

Q1 ’11 Consolidated Balance Sheet / Cash Flow

Highlights

During the first quarter of 2011 the group continued to generate strong cash flows, due to the containment of operating expenses and the effective management of working capital.

The Group’s working capital settled at €66.25 mil. in Q1 2011 from €63.30 mil. in FY 2010, and €64.10 mil. in FY 2009 while working capital requirements over sales of continuing operations, settled at 30.14% vs 28.77% in 2010 and 29.68% in 2009 respectively.

At the same time the Group benefits from a healthy capital structure and low leverage. In Q1 2011, the Group’s net debt settled at €-4.69 mil., from €5.80 mil. in Q1 2010 (net cash position).

1. CONSOLIDATED SBU ANALYSIS

Q1’11 Turnover Breakdown

During Q1 2011, sales from continuing operations stood at the previous year’s level.

Cosmetics recorded a sales growth of 8.05% amounting to €23.62 mil., from €21.86 mil., in Q1 2010. In this SBU, the own brands demonstrate an increase of 12.55%, thus their contribution to total turnover was increased from 67.36% to 70.17%.

Sales of Household Products fell by 5.84% reaching € 20.98 million from € 22.28 million in the corresponding period last year. Sales of own brands in this category decreased by 6% while their contribution to group sales amounted to 99.67%.

The category of Other Sales showed an overall decrease of 11.64% during Q1 2011, mainly driven by the subcategory of Health & Care products.

Own versus Distributed Activity Turnover Breakdown

During Q1 2011, consolidated revenues from continuing activities of own brands (cosmetics and household products) amounted to €37.49 millions from €36.99 million in Q1 2010, increased by 1.36%. Furthermore, their contribution to the total group turnover stood at 75.56%, considerably increased in comparison to the previous year's level.

Consolidated revenues from continuing activities of distributed brands during Q1 2011 reached €12.12 million, from €12.83 million in Q1 2010, decreasing by 5.49%. Their participation to the total group sales of continuing activities settled at 24.44%.

1.2. Q1 ’11 EBIT SBU Breakdown

Operating earnings were partly affected by the sales drop in the category of household products as well as the increased production costs and the loss presented by the affiliated company Estee Lauder JV.

Cosmetics EBIT increased in Q1 2011 by 50.04% reaching € 1.76 million from €1.17 million. The Cosmetics EBIT margin during Q1 2011 settled at 7.43% vs 5.35% in Q1 2010. This category’s contribution to total EBIT rose to 85.34% from 30.70% same period last year.

The operating profits of own brands within this category increased by 59.53% during Q1 2011 standing at €1.70 million from €1.06 million in Q1 2010.

The EBIT of Household Products reduced by 78.95% to €0.35 million from €1.68 million in Q1 2010 affected by the significant increase of production cost, due to the price increase of the raw materials. The EBIT margin of the household products stood at 1.68% from 7.53%. The own brands of this category presented a declining EBIT of 79.04% reaching €0.36 million.

Own vs Distributed EBIT Breakdown

The Own brands portfolio, generated income of €2.05 million in Q1 2011 versus €2.77 million in Q1 2010, reduced by 25.79%. The contribution of own brands (cosmetics and household products) to the total EBIT of continuing operations during Q1 2011 stood at 99.86%.

EBIT of distributed brands, of continuing operations in the Q1 2011 amounted to €0.24 million, from € 0.15 million in the corresponding period last year, posting a 56.45% increase. Their contribution to total EBIT corresponded to 11.53% from 3.98%. In addition, Estee Lauder JV presented EBIT of € -0,23 million, compared to € 0,89 million in Q1 2010.

2. CONSOLIDATED REGIONAL ANALYSIS

2.1. Q1 ’11 Turnover Breakdown

The Group’s regional sales during the first quarter of 2011 were maintained at the previous year’s level.

The marginal increase presented by the Greek market is offset by the marginal reduction of the Group’s foreign markets.

It is also worth to note that the currency movements had a small negative impact in the Foreign Countries turnover during the current period. (drop by 0.29% in local currency and c. 0.44% currency devaluation).

Sales from Foreign Countries decreased to € 29,70 million in Q1‘11 from € 29,92 million in Q1 ‘10.

The Greek market’s turnover was positively influenced mainly by the subcategory of fragrances & cosmetics.

Greek and Eastern European Market Turnover breakdown Analysis

During Q1 2011, the foreign countries contribution to the Group’s sales stood at 59.86%, near the previous year’s level.

2.2. 12M’10 EBIT Breakdown

During Q1 2011 the Group’s operating profit was influenced by the significant increase in production costs, which is reflected both in Greece and Eastern Europe, and the negative performance of the Estee Lauder JV.

The Greek EBIT in Q1 2011 was reduced by 25.77% to €2.1 mil., from €2.83 mil, in Q1 2010.

Excluding the loss of the Estee Lauder JV, Greek EBIT during Q1 2011 amounted to €2.33 mil from €1.93 mil, increased by 20.56%.

Greek EBIT margin, excluding losses from Estee Lauder JV, stood at 11.71% from 9.72% in the respective period of 2010.

The foreign countries posted a decrease of EBIT, which is mainly due to Poland, Romania and Bulgaria. The main reason for this decrease is the rise in production costs that was due to the significant price increase of raw materials, which, in turn, affected negatively the gross profit margin.

As a result, EE countries had an overall EBIT € -0.04 million from € 0.99 million at the corresponding period of 2010.

3. Objectives and Prospects

The Group's financial results for the first quarter of 2011 are in accordance to the budget.

The increase in production costs due to increased prices of raw materials affected significantly the profitability of the group.

The first quarter results show a shift of the market towards “mass market” cosmetics due to their lower price. The management had been waiting this turn and has already invested in this segment with new quality products (new product series Bioten), that have recently been launched in the Greek market and their sales will affect the current year's figures.

As expected, the adverse conditions in the economic environment remained during the first quarter of 2011, while the situation is not expected to improve in the foreseeable future. Therefore, the management focuses on aligning the cost structure with the expected revenues, and adjusts the product portfolio with the consumer trends.

The management remains dedicated to its policy, for sound capital structure, low net debt, containment of operating cost and in general for efficient management of working capital, with the objective to further enhance the Group’s financial position.

At the same time, the management, as always, remains focused on its strategic objectives that support and secure a profitable outlook for Sarantis Group and specifically on the following:

• Organic growth of the core business activities and emphasis on Sarantis own brands portfolio.
• Increase of the existing market shares of own brands.
• Continuous examination of the situation in the economies of the Group’s countries and modification of the business where deemed necessary according to the new market conditions.
• Examine possible acquisition targets in the Group’s foreign countries, as long as market share, profitability and cost structure allow for synergies. The Group’s management considers that current conditions are in favor of exploring possible new acquisitions.