Annual Report • Feb 28, 2019
Annual Report
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AHLERS AG
Annual Report 2017/18 December 1, 2017 - November 30, 2018
• Europe as well as selected international markets, e.g. Canada and China
• Innovative and fashionable high-quality menswear
Brand strategy
| 2013/14 | 2014/15 | 2015/16 | 2016/17 | 2017/18 | Change | ||
|---|---|---|---|---|---|---|---|
| Consolidated financial statements | |||||||
| Sales | EUR million | 257.1 | 241.9 | 237.8 | 235.9 | 223.1 | -5.4% |
| thereof abroad | % | 45.2 | 44.9 | 45.3 | 46.2 | 45.9 | -0.3 PP |
| Gross profit | EUR million | 128.3 | 119.0 | 116.9 | 117.1 | 109.2 | -6.7% |
| as a percentage of sales | % | 49.9 | 49.2 | 49.2 | 49.6 | 48.9 | -0.7 PP |
| EBITDA | EUR million | 14.6 | 8.7 | 9.2 | 8.3 | 1.3 | -84.3% |
| EBIT | EUR million | 9.2 | 2.4 | 4.0 | 3.0 | -6.4 | n.a. |
| Net income | EUR million | 6.0 | 1.4 | 2.5 | 1.9 | -7.0 | n.a. |
| Depreciation, amortisation | |||||||
| and impairment losses | EUR million | 5.4 | 6.3 | 5.2 | 5.3 | 7.7 | -45.3% |
| Cash flow from operating activities | EUR million | 10.9 | 13.4 | 4.9 | 10.2 | 9.6 | -5.9% |
| Balance sheet total | EUR million | 190.4 | 180.6 | 181.6 | 181.2 | 172.2 | -5.0% |
| Non-current assets | EUR million | 60.7 | 62.1 | 62.0 | 63.5 | 62.5 | -1.6% |
| Equity | EUR million | 110.3 | 105.3 | 103.9 | 102.1 | 93.1 | -8.8% |
| Equity ratio | % | 57.9 | 58.3 | 57.2 | 56.4 | 54.1 | -2.3 PP |
| Number of employees | |||||||
| (annual average) | 2,226 | 2,093 | 2,042 | 2,062 | 2,122 | 2.9% | |
| The share | |||||||
| Market capitalisation | EUR million | 153.4 | 109.0 | 95.9 | 82.2 | 46.5 | -43.4% |
| Earnings per share | EUR | 0.42 | 0.08 | 0.17 | 0.13 | -0.51 | n.a. |
| 1. TO OUR SHAREHOLDERS | 4 |
|---|---|
| Letter of the CEO | 4 |
| Report of the Supervisory Board | 6 |
| Corporate Bodies | 10 |
| The Share | 12 |
| Corporate Governance Report | 16 |
| 2. COMBINED MANAGEMENT REPORT | 24 |
| General Information about the Group - Business Model |
24 24 |
| - Objectives and Strategy | 34 |
| - Research and Development | 37 |
| - Controlling System | 37 |
| 5. RISK AND OPPORTUNITY REPORT INCLUDING FINANCIAL INSTRUMENTS | 77 |
|---|---|
| Internal Control and Risk Management System | 81 |
| Other Disclosures | 82 |
| - Compensation Report | 82 |
| - Takeover-related Information | 84 |
| - Corporate Governance Statement | 87 |
| - Forward-looking Statements | 87 |
| - Related Party Disclosures | 87 |
| 6. CONSOLIDATED FINANCIAL STATEMENTS OF AHLERS AG | 88 |
|---|---|
| Consolidated Balance Sheet | 88 |
| Consolidated Income Statement | 90 |
| Consolidated Statement of Comprehensive Income | 90 |
| Consolidated Cash Flow Statement | 91 |
| Consolidated Statement of Changes in Equity | 92 |
| Notes to the Consolidated Financial Statements | 93 |
| Proposal for the Appropriation of Profits | 130 |
| Responsibility Statement | 130 |
| Audit Opinion | 131 |
This year will see our company celebrate its 100th anniversary. In 1919, my grandfather Adolf established the company, which was subsequently run by my father Jan and is now run by me. There have been difficult times such as wars and sincere crises, all of which we mastered successfully. At present, it is more of a "silent" crisis that is affecting the clothing industry. The world economy has been growing continuously for almost ten years and at the same time our relevant markets have been shrinking equally steadily. The growing casualisation is one of the reasons for this; it means that formal clothes are becoming less important and are worn less frequently. Instead, consumers increasingly choose sporty and casual garments. This noticeably reduces the spending on clothes. What is more, favourably priced clothing is available from food discounters and from low-price stores on the periphery and in the city centres. The Internet is also becoming increasingly established as a fully-fledged distribution channel. Physical retailers, who have traditionally presented the products in a professional manner and communicated and supported the latest trends, are increasingly losing revenues. Innovation, digitisation and efficiency is our response to these trends.
In times where there is no lack of purchasing power, innovation is key to success. Innovation is expressed in the design and the choice of fabric, in self-explanatory trends and in modern technology. Take our Futureflex jeans and suits, for instance, which immediately show customers the increased wearer comfort as soon as they try them on. Our new eJacket can be heated with a spare mobile phone battery, which makes it a true feel-good jacket in winter. Pierre Cardin's Voyage collection comprises contemporary, light and modern travelwear. Over the past months, we have implemented organisational changes at Pierre Cardin and Baldessarini that will make our collections even more innovative. With our large jeans- and trousers-business by all brands, we are well positioned at the core of the casualwear segment.
Needless to say, digitisation is first of all important for the e-commerce channel. Similar to the physical store segment, we focus on the "specialist retailers" of the Internet, i.e. multi-brand suppliers who are either e-commerce specialists or the online shops of physical retailers. They provide the right framework for our collections and place our products in the right environment. Digitisation has an efficiency-increasing and accelerating effect also in the internal product development and distribution processes. Ahlers has therefore launched projects for the electronic encryption of prototypes and series parts as well as for an image-based B2B order system, which accelerates the time-to-market process and reduces the costs of the production of the collections. By installing a system for the automatic generation of post-orders, we additionally can supply physical retailers with the right product at the right time.
Efficiency. A comprehensive programme of measures aimed at increasing earnings and efficiency was launched in September 2018. We focus on menswear with the brands Baldessarini, Pierre Cardin, Otto Kern and Pioneer. The Pionier Workwear brand continues to offer workwear. The efficiency programme comprises many simplifying and cost-saving changes such as the increasing shift towards full-package service arrangements and the relocation of logistic processes to Poland. For detailed information on the efficiency programme, please refer to page 37 of the present Annual Report.
While the year 2017/18 was disappointing and was the first in the company's history to end with a net loss, the measures initiated as part of the efficiency programme further weighed on the bottom line as they included provisions for severance payments. The current year will also be a year of transition. Although we again expect an operating loss, the result for 2018/19 will be much better, as we will probably incur hardly any more extraordinary expenses. Moreover, we will further deleverage the company with the help of specific measures that have already been initiated and thus make it even more stable. It is our declared objective to return to profit in 2020 when all measures initiated take effect.
In this anniversary year, my special thanks go to our employees, who dedicate a lot of energy to making our company successful and are showing great flexibility in embracing the significant changes. I thank our customers for their continued confidence in these challenging times. I would like to ask our suppliers to support us on our way towards increased efficiency and speed. Last but not least, I thank you, our shareholders, for your loyalty and hope that you will continue to support our company in the future.
Yours,
Dr. Stella A. Ahlers Chief Executive Officer
In the fiscal year 2017/18, the Supervisory Board performed all tasks incumbent on it under applicable laws, the company statutes, the rules of procedure and standards of good corporate governance. The ongoing crisis of the clothing industry, which accelerated even further in 2018, had the biggest influence on our work. We monitored the economic and financial performance of the company and critically reviewed its strategic orientation. The Supervisory Board continuously advised the Management Board and closely monitored and supported the development of the set of measures aimed at increasing the company's earnings and efficiency. We supervised the Management Board in managing the company and satisfied ourselves that all its actions were legal and proper and served their intended purpose. The Management Board fulfilled its information duties and regularly provided the Supervisory Board with timely and comprehensive written and verbal information on the situation of the Group. The Management Board reported in detail on the company strategy and its plans and budgets, the current business trend, the earnings and financial position, the human resources situation, the risk situation and compliance-related matters. The reports also contained information on deviations from previously reported targets and objectives as well as deviations in the business trend from the company's plans and projections. The strategic orientation of the company was discussed and agreed with us. The Supervisory Board was directly and immediately involved in all decisions of fundamental importance. Where required by law, the statutes or the rules of procedure of the Management Board, the Supervisory Board granted its approval for individual business transactions. The Supervisory Board actively monitored the situation of the company and liaised regularly with the Management Board, also outside the meetings. At the same time, there was a lively exchange of information and ideas between the CEO and the Chairman of the Supervisory Board.
The Supervisory Board held five meetings in the fiscal year 2017/18, all of which were attended by all members. One of the meetings was held as a telephone conference.
The main item on the agenda of the Supervisory Board meeting on December 7, 2017 were the plans and budgets for the fiscal year 2017/18 as well as the Group's medium-term planning. Detailed plans for our brands, the Group's staff, investments, marketing and cash flows were discussed. The Supervisory Board adopted the declaration of conformity and the supplement to the objectives regarding its composition. The report by the Compliance Officer is another regular item on the agenda of the December meeting. In addition, the chairpersons of the Audit Committee and the Marketing Committee informed the Supervisory Board members about the matters discussed at the latest meetings of their respective committees.
On February 7, 2018, the Supervisory Board held a telephone conference to discuss the consolidation of the share types and the conversion to registered shares. The Supervisory Board members then unanimously agreed to submit the corresponding proposals to the Annual Shareholders' Meeting on April 24, 2018 (for more information, see chapter "The share" on page 17).
At its meeting on February 14, 2018, the Supervisory Board primarily addressed the 2016/17 financial statements. The Management Board presented the financial statements and the situation of the Group and the company. The auditor reported on the audit of the consolidated and the separate financial statements and their results and answered the Supervisory Board's questions. After the discussion, the Supervisory Board approved the 2016/17 financial statements as well as the dividend proposal. The invitation to the Annual Shareholders' Meeting and to the separate meeting of the preferred shareholders were discussed and approved. The participants in the meeting discussed the risk situation of Q4 2016/17, which was largely unchanged compared to the previous year, whereupon the Supervisory Board approved the risk report for the period ended November 30, 2017. The Management Board then presented initial developments of the fiscal year that had just started.
In the context of the re-election of five of its six members at its constituent meeting after the Annual Shareholders' Meeting on April 24, 2018, the Supervisory Board elected the Chairman and the Vice Chairman of the full Supervisory Board as well as the chairmen and members of the Supervisory Board committees. The Supervisory Board then discussed the current business situation as presented by the Management Board, the order situation for autumn/winter 2018 and the forecast for the fiscal year 2017/18.
At the meeting on September 13, 2018, the Management Board initially presented the current business situation, the outlook on the next fiscal year and the order situation for the 2019 spring/summer season. The Management Board and the Supervisory Board extensively discussed the fact that the company's performance fell short of their expectations. They then passed the general resolutions for a comprehensive set of measures aimed at achieving a sustainable improvement in earnings and efficiency in the medium term. This includes the concentration on the core brands of Ahlers AG, measures for a leaner organisation and reduced complexity. The committees moreover reported on topics such as the introduction of factoring, the selection procedure for the change of the auditor, the status of the internal audit projects and the completed consolidation of the share types. The Supervisory Board approved the focal points for the 2017/18 audit proposed by the Audit Committee.
On November 21, 2018, the Supervisory Board held a written vote to approve the sale of trade receivables (factoring), a project which had roughly been presented at the previous meeting.
The Supervisory Board prepares its decisions in four committees, i.e. the Audit Committee, the Human Resources Committee, the Marketing Committee and the Nomination Committee. The committees discuss all important topics within their sphere of responsibility in detail and prepare the plenary Supervisory Board meetings. The Audit Committee held four regular meetings and one telephone conference in the past fiscal year. One of the regular meetings was extended to two days for an in-depth discussion of strategic issues. In addition, the Audit Committee briefly met after the Annual Shareholders' Meeting in April 2018 to prepare the strategy meeting. At the strategy meeting, the participants addressed the medium and long-term development goals developed by the Managing Directors of the individual brands and the measures to be taken to reach these goals. The Audit Committee continuously monitored the approach taken to reduce the net working capital as well as the changes in the latter. It also addressed the changes in the manufacturing structures and the procurement strategy. The Audit Committee also prepared the resolutions to be passed by the Supervisory Board such as the declaration of conformity, the consolidation of the share types, the factoring agreement, personnel decisions at the managing director level, the audit programme of the new fiscal year and the invitations to the Annual Shareholders' Meeting of the year 2018. A great part of the meeting was dedicated to the execution of a procedure for the selection of an auditor; this was initiated because the Audit Committee had decided, in view of the length of the mandate of the existing auditor, to initiate a tender in accordance with Article 16 of Regulation (EU) No. 537/2014 of the European Parliament and the Council of April 16, 2014 on specific requirements regarding the statutory audit of public-interest entities and repealing Commission Decision 2005/909/EC (Auditor Regulation). After completion of a transparent and non-discriminatory procedure and careful examination of the applicants, the Audit Committee, on December 11, 2018, resolved to submit a recommendation including reasons for two proposals, namely PricewaterhouseCoopers GmbH Wirtschaftsprüfungsgesellschaft and Baker Tilly GmbH & Co. KG Wirtschaftsprüfungsgesellschaft, with preference given to the latter, to the Supervisory Board. The Audit Committee also addressed the new legal provisions for companies' non-financial reporting. In the run-up to the elections to the Supervisory Board by the 2018 Annual Shareholders' Meeting, the Nomination Committee made its recommendations to the Supervisory Board regarding the persons to be elected as shareholder representatives. The Human Resources Committee and the Marketing Committee each held one meeting in the past fiscal year. All committee meetings were attended by all members.
At the plenary Supervisory Board meetings, the chairpersons provided detailed reports on the work of their respective committees.
There were no changes on the Management Board between December 1, 2017 and November 30, 2018. After the reporting date, the Supervisory Board held an ordinary meeting on December 12, 2018 at which it decided to reduce the Management Board to two members. The Supervisory Board wants to implement lean structures to respond to the challenges of the market with high flexibility. This is why Mr Götz Borchert resigned from the Management Board of Ahlers AG with effect from that date. His responsibilities have been assumed by the two remaining Board members. Management Board Chairwoman Dr. Stella A. Ahlers is in charge of Strategy, Brands, Distribution, Compliance, Auditing and Procurement. Dr. Karsten Kölsch is responsible for Finance, IT, Human Resources as well as Logistics and International Operations. The Supervisory Board would like to thank Mr Borchert for his dedicated and constructive work on the management board.
Prof. Dr. von Ah and the undersigned were re-elected to the Supervisory Board by the Annual Shareholders' Meeting on April 24, 2018. Mr Bernd Rauch, who had previously been designated to the Supervisory Board, also ran for election and was elected to the Supervisory Board by the Annual Shareholders' Meeting. There was one change among the employee representatives. Mr Hans-Joachim Knauf was elected by the workforce as a new Supervisory Board member to replace Ms Roswitha Galle. Ms Heidrun Baumgart was re-elected as employee representative. At this point Ms Galle deserves our thanks for the good cooperation.
After the reporting date, I informed Ahlers AG on February 6, 2019 that I intend to resign from office upon reaching the age of 65 with effect from the end of the 2019 Annual Shareholders' Meeting after having served on the Supervisory Board for 18 years, of which almost 16 years as Chairman. This step is intended to rejuvenate the controlling body. The Management Board was downsized already in December 2018. I therefore suggest, with the consent of the main shareholder, WTW Beteiligungsgesellschaft mbH, to also reduce the Supervisory Board from six to three members. This will pave the way towards implementing leaner structures in a challenging market environment. The corresponding amendment of the statutes is to be proposed to the Annual Shareholders' Meeting on April 17, 2019. Prof. Dr. Julia von Ah (Vice Chair), Mr Jörg-Viggo Müller and Mr Hans-Joachim Knauf (employee representative) have proposed to the company to also resign from the Supervisory Board with effect from the end of the Annual Shareholders' Meeting on April 17, 2019, provided that the proposals are accepted by the Annual Shareholders' Meeting. Mr Bernd Rauch resigned from office already with effect from January 31, 2019. We thank Mr Rauch for his long-standing, constructive cooperation.
The Supervisory Board will propose to the Annual Shareholders' Meeting to fill the vacant Supervisory Board positions with Mr Alexander Gedat (54), CEO of Marc O´Polo AG until August 2017, and Armin Fichtel (61), CEO of s.Oliver Group until the end of 2017. Both candidates have long-standing experience in the clothing industry and an in-depth knowledge of e-commerce. Once elected, Mr Gedat would also assume the role of Supervisory Board Chairman. Heidrun Baumgart will stay on the Supervisory Board as employee representative.
In the past fiscal year, the Supervisory Board again addressed the application and the further development of the corporate governance rules. For detailed information, please refer to the Corporate Governance Report on page 21et seq. The Supervisory Board discussed the company's practice against the background of the German Corporate Governance Code as amended on February 7, 2017. The declaration of conformity was discussed and adopted at the meeting on December 12, 2018. No conflicts of interest on the part of individual members of the Supervisory Board occurred. Prof. Dr. von Ah abstained from voting in the decisions taken by the Supervisory Board with regard to the company's service contracts with a member of the Supervisory Board pursuant to section 114 para. 1 of the German Stock Corporation Act (AktG), as she was affected by these decisions.
In 2018, the Annual Shareholders' Meeting appointed BDO AG Wirtschaftsprüfungsgesellschaft headquartered in Hamburg (Hanover Branch) as the auditors for the fiscal year 2017/18. The auditors had issued a written statement that no relationships or circumstances exist which could raise doubts about their independence. This statement gave no cause for objections. Following their audit, the auditors issued an unqualified audit opinion for the separate and the consolidated financial statements including the combined management report.
The separate financial statements of Ahlers AG prepared by the Management Board in accordance with the German Commercial Code (HGB) and the consolidated financial statements prepared according to International Financial Reporting Standards (IFRS) as well as BDO's audit reports were made available to all members of the Supervisory Board in good time prior to the meeting of the Audit Committee's and the Supervisory Board's annual accounts meeting on February 13, 2019. The audit report and the main points of the audit were explained in detail by the auditors. Following thorough discussion, the Supervisory Board approved the audit result of BDO and endorsed it following a detailed review of the separate and the consolidated financial statements and the combined management report. The separate and the consolidated financial statements prepared by the Management Board were endorsed by the Supervisory Board. The financial statements have thus been approved. The Supervisory Board agreed with the Management Board's proposal to pay out no dividend and to carry the profit forward to new account. The auditors also reviewed the Management Board's report on related party transactions and issued the following opinion:
"Based on our audit in accordance with our professional duties and judgement, we confirm that
The report on related party transactions and the audit report were immediately submitted to the Supervisory Board, which concurred with the result of the audit following a thorough review for completeness and accuracy. No objections were raised against the Management Board's related party disclosures.
Finally, at its meeting on February 13, 2019, the Supervisory Board adopted the proposal to be made to the Annual Shareholders' Meeting regarding the election of the auditor taking the recommendation and the preference of the Audit Committee into account. The Supervisory Board's proposal concurs with the Audit Committee's preference for Baker Tilly GmbH & Co. KG Wirtschaftsprüfungsgesellschaft.
The Supervisory Board thanks the Management Board and all employees for their work and their great personal commitment in the past fiscal year.
Herford, February 13, 2019 The Supervisory Board
Prof. Dr. Carl-Heinz Heuer Chairman of the Supervisory Board
Dr. Stella A. Ahlers Feusisberg (Switzerland) Chairwoman
Dr. Karsten Kölsch Herford
Götz Borchert (until December 12, 2018) Herford
Prof. Dr. Carl-Heinz Heuer Chairman Attorney, Königstein
Prof. Dr. Julia von Ah Deputy Chairwoman Tax advisor, Feusisberg (Switzerland)
Heidrun Baumgart Employee representative Administrative assistant, Bielefeld
Roswitha Galle (until April 24, 2018) Employee representative Administrative assistant, Spenge
Hans Joachim Knauf (since April 24, 2018) Employee representative Administrative assistant, Herford
Jörg-Viggo Müller Former member of the Management board of the Ravensburger AG, Reutlingen
Bernd A. Rauch (until January 31, 2019) Advertising expert, Oberursel (Taunus)
Prof. Dr. Carl-Heinz Heuer Chairman of the Supervisory board
| AUDIT COMMITTEE | PERSONNEL COMMITTEE |
|---|---|
| Prof. Dr. Julia von Ah Chairwoman |
Prof. Dr. Carl-Heinz Heuer Chairman |
| Prof. Dr. Carl-Heinz Heuer | Prof. Dr. Julia von Ah |
| Jörg-Viggo Müller | Jörg-Viggo Müller |
| MARKETING COMMITTEE | NOMINATION COMMITTEE |
| Bernd A. Rauch (until January 31, 2019) Chairman |
Jörg-Viggo Müller Chairman |
| Prof. Dr. Julia von Ah | Prof. Dr. Carl-Heinz Heuer |
| Prof. Dr. Carl-Heinz Heuer | Bernd A. Rauch (until January 31, 2019) |
After a strong start to the year, the German stock markets declined surprisingly strongly as of mid-2018. During Ahlers' fiscal year from December 2017 to November 2018, the prices of the German stock indices, DAX, MDAX and SDAX, declined by double-digit percentages. At the end of January, the DAX still marked an all-time high of just under 13,600 points but then lost over 2,300 points as the year progressed to close at 11,257 points on November 30, 2018 (down 14 percent on the previous year's 13,024 points). In December 2018, the DAX again dropped sharply. This was the first negative performance of Germany's leading index since 2011. The volatile and ultimately negative performance was primarily due to the growing awareness of the consequences of the already known political risks. Concerns that the US-Chinese customs dispute could slow down the world economy and the uncertainty about the UK's exit from the European Union influenced the stock markets in 2018.
Most German fashion companies were affected by the negative stock market performance and saw their share prices decline in 2018. It is safe to assume, however, that the continued decline in sales revenues generated by Germany's physical fashion stores affected the share prices even more strongly than the declining stock market. In spite of the favourable economic environment, sales revenues of Germany's fashion retailers declined again in the past year and even more strongly so than before. Among the reasons cited are the declining footfall in the city centres, the fact that more and more purchases are made on the Internet, the growing casualisation and last year's long and hot summer. It is safe to assume that clothing sales in most European markets also remained clearly below the economic growth rates in the respective countries. The challenging conditions of the textiles market are reflected in the share prices of many German fashion companies.
On June 29, 2018, Ahlers changed its bearer shares to registered shares and converted the preferred shares to common shares. On this day, the common share for the last time closed at EUR 4.24 and the preferred share at EUR 4.10 (prices on November 30, 2017: EUR 6.05 and EUR 5.98, respectively). The new registered common share started trading on July 2, 2018 and closed at EUR 3.72 on that day. Until mid-September, the price of the registered common share remained slightly above the price of the first day of trading and then dropped to EUR 3.40 by the reporting date (-8.6 percent). Between the balance sheet dates, the company's market capitalisation declined from EUR 82 million to EUR 47 million (-43 percent).
IMA = unweighted index of the following German and Austrian fashion shares: Adler Modemärkte, Gerry Weber, Hugo Boss, Ludwig Beck, Tom Tailor, Wolford
The ordinary Annual Shareholders' Meeting and the subsequent separate meeting of preferred shareholders of Ahlers AG held on April 24, 2018 resolved - each with a large majority - to change the bearer shares to registered shares and to convert the preferred shares to common shares.
The resolution adopted by the Annual Shareholders' Meeting and the corresponding amendments to the statutes were entered in the Commercial Register of the Bad Oeynhausen local court on Friday, June 29, 2018 and became effective as of the same date. The conversion from preferred shares to common shares in the securities accounts and at the stock exchange was executed on the same date after the end of trading. The personal data contained in the share register are processed in accordance with the EU General Data Protection Regulation (GDPR), the Federal Data Protection Act (BDSG), the German Stock Corporation Act (AktG) as well as all other relevant legal regulations. Ahlers AG uses these data only for the purposes laid down in the German Stock Corporation Act as well as in other potentially relevant legal regulations.
The relative share in Ahlers AG represented by one share has remained unchanged. The same applies to the amount of the equity capital. The number of common shares has been increased by the number of the former preferred shares (common shares after conversion: 13,681,520). Shareholders' right to sell their shares has not been restricted or otherwise been adversely affected. Most importantly, the company's consent is not required to sell shares.
Since Monday, July 2, 2018, the 13,681,520 new registered common shares have been listed and traded in the Regulated Market of the Frankfurt Stock Exchange (Prime Standard) and the Regulated Market of the Düsseldorf Stock Exchange. The new ISIN DE0005009740 (formerly DE0005009708 for the common shares and DE0005009732 for the preferred shares), the new WKN 500974 (formerly 500970 for the common shares, 500973 for the preferred shares) and the stock exchange symbol "AAH" became effective as of that date.
| 2017/18 | 2016/17 | |
|---|---|---|
| Share price in EUR (Nov. 30) | ||
| Registered common shares | 3.40 | 6.01* |
| Common shares | 5.98 | |
| Preferred shares | 6.05 | |
| Equity per share in EUR (Nov. 30) | 6.81 | 7.36 |
| Share price in EUR | ||
| Registered common shares | ||
| High | 4.20 | |
| Low | 2.66 | |
| Common shares | ||
| High | 7.20 | |
| Low | 5.75 | |
| Preferred shares | ||
| High | 7.24 | |
| Low | 5.40 | |
| Market capitalisation in EUR (Nov. 30) | 46.5 | 82.2 |
| Earnings per share in EUR | ||
| Registered common shares | -0.51 | |
| Common shares | 0.11 | |
| Preferred shares | 0.16 | |
| Price/earnings ratio (Nov. 30) | ||
| Registered common shares | - | |
| Common shares | 54 | |
| Preferred shares | 38 | |
| Price/carrying amount ratio (Nov. 30) | ||
| Registered common shares | 0.50 | |
| Common shares | 0.81 | |
| Preferred shares | 0.82 | |
| Dividend in EUR million | ||
| Nominal** | - | 2.36 |
| Dividend per share** | ||
| Registered common shares | - | |
| Common shares | 0.15 | |
| Preferred shares | 0.20 | |
| Dividend yield in % (Nov. 30) | ||
| Registered common shares | - | |
| Common shares | 2.5 | |
| Preferred shares | 3.3 |
* weighted mean price
** 2017/18: dividend proposal
In the context of various investor relations activities Ahlers regularly provides both the shareholders and all other parties interested in the company with comprehensive and up-to-date corporate information that goes beyond legal requirements.
Our Internet site at www.ahlers-ag.com contains numerous reports on the company, its product lines, its earnings and financial position as well as capital market-related topics surrounding the Ahlers share. The Annual Report, the half-year report and the quarterly statements, legally required ad-hoc releases and directors' dealings notifications, information on the Annual Shareholders' Meeting as well as current press reports and company presentations are published timely in German and English on this site.
Our Annual Shareholders' Meeting on April 24, 2018 was again attended by numerous shareholders. We regularly hold detailed talks with institutional investors and analysts to inform them of the current business situation as well as our expectations, strategies and news. Every year, we hold two analysts' conferences to present the Group's figures and outline the company's performance.
On November 30, 2018, the share capital of Ahlers AG in an amount of EUR 43.2 million comprised 13,681,520 no-par registered common shares and had not changed compared to the previous year.
| Registered | |||
|---|---|---|---|
| Total number of shares | common shares | ||
| as of Nov. 30, 2018 | 13,681,520 | 13,681,520 | |
| Security code number | 500974 | ||
| International Securities Identification | |||
| Number (ISIN) | DE0005009740 | ||
| Common shares | Preferred shares | ||
| as of Nov. 30, 2017 | 13,681,520 | 7,600,314 | 6,081,206 |
| Security code number | 500970 | 500973 | |
| International Securities Identification | |||
| Number (ISIN) | DE0005009708 | DE0005009732 |
The shareholder structure changed moderately in the course of the year. Prior to the consolidation of the share types, CEO Dr. Stella A. Ahlers reported the purchase of a total of 5,300 preferred shares and 4,100 common shares through WTW-Beteiligungsgesellschaft mbH. After the conversion of preferred shares to common shares, Dr. Ahlers reported the purchase of another 23,500 registered common shares. No other member of the Management Board or Supervisory Board traded in shares of Ahlers AG during the past fiscal year. As of the balance sheet date, WTW-Beteiligungsgesellschaft mbH held 52.5 percent of the shares of Ahlers AG (previous year: 52.3 percent, of which 76.7 percent were common shares and 21.8 percent were preferred shares). Between them, Dr. Ahlers and Westfälisches Textilwerk Adolf Ahlers Stiftung & Co. KG directly held 0.2 percent of the shares (previous year: 0.2 percent, of which 0.3 percent were common shares and 0.1 percent were preferred shares). Adolf Ahlers Familienstiftung in Speicher (CH) is the general partner of Westfälisches Textilwerk Adolf Ahlers Stiftung & Co. KG. Dr. Stella A. Ahlers is the authorised representative of Adolf Ahlers Familienstiftung. Apart from Dr. Ahlers, no other Board member owned shares in the company on the reporting date.
As of November 30, 2018, Ahlers AG held no own shares. 47.3 percent of the shares were free-float shares (previous year: 47.5 percent, of which 23.0 percent were common shares and 78.1 percent were preferred shares).
The German Corporate Governance Code defines important legal provisions for the management and supervision of German listed companies and contains nationally and internationally accepted standards of good and responsible corporate governance. The Management Board and the Supervisory Board of Ahlers AG base their work on these principles in order to establish and maintain shareholders', employees' and customers' trust in the sustainable development of the company through transparent and understandable activities as well as proper accounting.
On the following pages, the Management Board reports – also in the name of the Supervisory Board – on corporate governance at Ahlers AG. This report includes, as part of the management report, the corporate governance statement pursuant to sections 298f and 315d of the German Commercial Code (HGB) and the compensation report pursuant to clause 4.2.5 of the German Corporate Governance Code on the compensation of the Management Board and the Supervisory Board.
Ahlers AG largely complies with the recommendations of the "Government Commission on the German Corporate Governance Code" published by the Federal Ministry of Justice and Consumer Protection in the official section of the electronic Federal Gazette as amended on February 7, 2017. Due to specific features, Ahlers AG did not comply with all of the recommendations. The Management Board and the Supervisory Board jointly issued the declaration of conformity pursuant to section 161, para. 1, sentence 1 of the German Stock Corporation Act (AktG) on December 12, 2018. This declaration is permanently available to all interested parties on the company's website at www.ahlers-ag.com. The declaration of conformity reads as follows:
"Since its last declaration of conformity dated December 7, 2017 and with the exceptions noted therein, Ahlers AG has complied with the recommendations of the German Corporate Governance Code (Code) as amended on February 7, 2017. In the future Ahlers AG will comply with the recommendations of the German Corporate Governance Code as last amended on February 7, 2017, with the exception of the following recommendations:
Ahlers AG has taken out adequate insurance for its directors and officers to cover the D&O risk. The Management Board and Supervisory Board members of Ahlers AG perform their functions in a responsible manner and in the interest of the company. A significant deductible, which would have to be the same for all Supervisory Board members to comply with the principle of equality, would have very different impacts on the individual members depending on their private income and wealth situation. In case of an emergency, a less wealthy member could get into serious financial difficulties, which would not be fair in view of the fact that all members have the same duties.
Ahlers AG has not defined age limits for the members of the Management Board and the Supervisory Board, as the membership of these two bodies is based on qualifications and performance, which cannot be assessed using standardised age limits. Nor has a limit for the length of membership been fixed for the members of the Supervisory Board. According to the opinion of the Management Board and the Supervisory Board, the quality of the work of a member of the Supervisory Board tends to grow with increasing length of membership. Therefore we are of the opinion that a resignation from the Supervisory Board after a fixed maximum period does not make sense.
According to the statutes of Ahlers AG compensation is paid only to the chairs of Supervisory Board committees but not to simple members of such committees. The company is of the opinion that this function is covered by the general compensation of the Supervisory Board members.
Ahlers AG does not report the compensation of the Supervisory Board members individually. The compensation of the Supervisory Board comprises fixed and variable components, which are published. The Management Board and the Supervisory Board of Ahlers AG are of the opinion that this information is sufficient to assess whether the compensation of the Supervisory Board as a whole, as well as its individual components, are appropriate. In addition, the compensation paid by the company to the members of the Supervisory Board for personal achievements that are not related to their work on the Supervisory Board is shown separately and individually.
Ahlers AG Herford, December 12, 2018
The Management Board The Supervisory Board"
Ahlers AG attaches great importance to good corporate governance, which is an integral element of the corporate philosophy. In this context the regulations of the German Stock Corporation Act and the German Corporate Governance Code constitute an important basis. The Supervisory Board and the Management Board manage and control the company in a responsible manner with the aim of creating sustainable value. This includes the forward-looking management of risks (also see information on risk management in the Group management report). The Management Board and the Supervisory Board have committed themselves to complying with legal provisions and observing the recommendations of the German Corporate Governance Code in accordance with the annual declaration of conformity. Internal controlling, reporting and compliance structures are reviewed, refined and adjusted to changing conditions on an ongoing basis. The company's Declaration of Basic Values, which is binding for all members of the company, ensures that the compliance and corporate governance policies are firmly anchored throughout the Group. The Declaration of Basic Values is publicly available on the company's website at www.ahlers-ag.com.
According to section 76 para. 4 s. 1 AktG, the Management Board of companies that are listed on the stock exchange or subject to co-determination, should define targets for the share of women at the two management levels below the Management Board. On September 18, 2015, the Management Board for the first defined a target for the share of women of at least 30 percent for the two management levels below the Management Board. On May 3, 2017, the Management Board stated that the target had been reached within the deadline of June 30, 2017 and decided to leave the target at the respective management levels unchanged at 30 percent. As of the 2017/18 reporting date, 138 people worked at the two management levels below the Management Board (previous year: 147). The share of women stood at 41 percent, compared to 36 percent on the prior year reporting date. The effective date for achieving and reviewing the new targets is June 30, 2022.
Pursuant to section 111 para. 5 s. 1 and 5 AktG, the Supervisory Board of companies that are listed on the stock exchange or subject to co-determination should define targets for the share of women on the Management Board and the Supervisory Board. At the Supervisory Board meeting on September 18, 2015, targets of 30 percent each were defined. On the date they were defined, the targets were exceeded, as the share of women stood at 50 percent each. At its meeting on May 3, 2017, the Supervisory Board stated that the target had been reached within the deadline of June 30, 2017 and decided to leave the targets for both bodies unchanged at 30 percent. As of the 2017/18 reporting date, the share of women on the Management Board and the Supervisory Board stood at 33 percent each (previous year: 33 percent and 50 percent, respectively). Since December 2018, the share of women on the Management Board again amounted to 50 percent. The deadline for achieving and reviewing these targets is also June 30, 2022.
As a listed joint stock company under German stock corporation law, Ahlers AG has a dual board structure which consists of a Management Board and a Supervisory Board. The Management Board is responsible for managing the company and the Group. The Supervisory Board is tasked with supervising and advising the Management Board.
The Management Board of Ahlers AG is solely responsible for managing the company and controlling the Group entities. The management task, which comprises, in particular, the definition of the company's objectives, the strategic positioning of the Group and its management and supervision as well as corporate planning and financing, is performed by the Management Board as a collective body. The members of the Management Board therefore have joint responsibility for the complete management process. Irrespective of this overall responsibility, the members of the Management Board have specific responsibility for the departments assigned to them in the rules of procedure of the Management Board. Cooperation within the Management Board is also governed by these rules of procedure.
The Supervisory Board appoints, supervises and advises the Management Board and defines the disclosure and reporting duties. The approval of the Supervisory Board is required for defined measures of fundamental importance for the company or the Group such as material investments and legal transactions. The Supervisory Board has adopted its own rules of procedure. The Chairman of the Supervisory Board coordinates the work on the Supervisory Board, leads its meetings and represents the body's interests externally. A summary of the type and scope of the Supervisory Board activity in the fiscal year 2017/18 is included in the report of the Supervisory Board.
The Annual Shareholders' Meeting is the main instrument for shareholders to exercise their rights. It allows the shareholders to participate in important corporate decisions such as amendments to the statutes, the appropriation of profits and material structural changes affecting the foundations of the company. At the Annual Shareholders' Meeting, the shareholders elect the members of the Supervisory Board, unless these are elected by the workforce, and decide on the approval of the acts of the Management Board and the Supervisory Board as well as the compensation of the Supervisory Board. Every shareholder is entitled to attend the Annual Shareholders' Meeting and to ask the Management Board and the Supervisory Board questions. Since the bearer shares were changed to registered shares and the preferred shares converted to common shares on July 2, 2018, Ahlers AG has issued only a single share type. Each registered common share grants one vote at the Annual Shareholders' Meeting. Regular information is provided on the company's website at www.ahlers-ag.com, giving shareholders an idea of the current situation of the company. Prior to the Annual Shareholders' Meeting, the agenda and all other requisite documents are sent to the shareholders in good time and/or published on the company's website. Shareholders may have their voting right exercised by a proxy of their own choice. To facilitate the voting process for shareholders, Ahlers AG also provides representatives who are bound by instructions and exercise the voting right at the Annual Shareholders' Meeting. After the Annual Shareholders' Meeting, shareholders can find the voting results as well as the speech of the CEO on the company's website.
The past fiscal year again saw the Management Board and the Supervisory Board cooperate very closely. The Management Board provides the Supervisory Board with timely and comprehensive information about all relevant aspects relating to corporate planning and budgeting, the current business performance, the risk situation, risk management and compliance. Potential deviations of the business trend from the original plans are explained by the Management Board. The strategic positioning of the company is agreed between the Management Board and the Supervisory Board. Transactions of fundamental importance require the consent of the Supervisory Board. Besides the regular information provided, the Management Board and the Supervisory Board constantly exchange information on the situation of the company. Their relationship is characterised by openness and trust. The Supervisory Board assists the Management Board with advice and recommendations on the basis of sound information. All five Supervisory Board meetings in the fiscal year 2017/18 were attended by the Management Board. Meetings of the Human Resources Committee addressing amendments to the Management Board contracts, the calculation of bonuses or the appointment and/or dismissal of Management Board members were not attended by members of the Management Board.
At its meeting on December 12, 2018, the Supervisory Board defined the following diversity policy for the composition of the Management Board (section 289f para 2 No. 6 of the German Commercial Code (HGB)):
With regard to the composition of the Management Board as a whole, the Supervisory Board considers not only company-specific requirements and the personal and professional skills of the candidates but also the aspect of diversity. By this, the Supervisory Board primarily understands different and complementary professional profiles, professional and life experiences and an adequate representation of both sexes. In this context, the Supervisory Board also considers the following aspects:
In the fiscal year, the Management Board of Ahlers AG was composed of three and since December 12, 2018 of two members. Dr. Stella A. Ahlers (CEO) is in charge of Strategy, Brands, Distribution, Compliance, Auditing and Procurement. Dr. Karsten Kölsch (CFO) is in charge of Finance, IT, Human Resources as well as Logistics and International Operations. Götz Borchert was responsible for Marketing, Retail/E-commerce, Design/Product and Corporate Communications until he left the company. The members of the Management Board manage the company under their own responsibility and are exclusively committed to the interests of the company. Potential conflicts of interest must immediately be disclosed to the Supervisory Board, which was not necessary in the past fiscal year. The Supervisory Board's consent is to be obtained where a member of the Management Board intends to serve on the Supervisory Board of another company.
Pursuant to the statutes, the Supervisory Board of Ahlers AG is composed of six members, two of whom are elected by the workforce. Three members are elected by the Annual Shareholders' Meeting. On December 1, 2012, the holder of the registered shares as defined in section 5 para. 1 of the statutes of Ahlers AG, Westfälisches Textilwerk Adolf Ahlers Stiftung & Co. KG, appointed Bernd A. Rauch sixth member of the Supervisory Board in accordance with section 6 para. 2 of the statutes. The regular term of office of Supervisory Board members Prof. Dr. Carl-Heinz Heuer and Prof. Dr. Julia von Ah, who had been elected by the Annual Shareholders' Meeting, ended at the end of the Annual Shareholders' Meeting on April 24, 2018. Mr Jörg-Viggo Müller was elected by the 2015 Annual Shareholders' Meeting for a term of office ending on the day of the 2020 Annual Shareholders' Meeting. Prior to the necessary re-election, Westfälisches Textilwerk Adolf Ahlers Stiftung & Co. KG additionally declared that they give up the right to designate Supervisory Board members by way of which Mr Rauch had been nominated. Prof. Dr. Heuer, Prof. Dr. von Ah and Mr Bernd Rauch were re-elected to the Supervisory Board by the Annual Shareholders' Meeting on April 24, 2018. There was one change among the employee representatives. Mr Hans-Joachim Knauf was elected as a new Supervisory Board member by the employees. He succeeds Ms Roswitha Galle, who resigned from the Supervisory Board. Ms Heidrun Baumgart was re-elected as employee representative.
Depending on the specific circumstances of the company, the Supervisory Board shall form committees of members with relevant specialist expertise. One of these committees shall be an Audit Committee, which shall not be chaired by the Chairman of the Supervisory Board. For details of the committees formed by the Supervisory Board of Ahlers AG and their composition, refer to page XY in the chapter entitled "Corporate Bodies". Prof. Dr. Julia von Ah acts as an independent financial expert as defined in section 100 para. 5 of the German Stock Corporation Act (AktG) and also chairs the Audit Committee. Moreover, Mr Jörg-Viggo Müller is independent within the meaning of clause 5.4.2 sentence 2 of the German Corporate Governance Code.
In December 2017, the Supervisory Board modified its objectives for its composition and adopted a profile of skills and expertise for the entire Supervisory Board in accordance with clause 5.4.1 of the German Corporate Governance Code as amended on February 7, 2017. Pursuant to the resolution of December 12, 2018, the composition objectives and the profile of skills and expertise also define the policy with which the company aims to achieve diversity pursuant to section 289f para. 2 No. 6 of the German Commercial Code. The full wording of the objectives that have since been in place is shown below:
"Objectives for the composition of the Supervisory Board of Ahlers AG
Against the background of
the Supervisory Board of Ahlers AG decided, on December 7, 2017, to work towards the following objectives regarding its composition:
The specific spheres of knowledge, skills and professional experience of the individual members of the Supervisory Board should complement each other in such a way that sufficient professional expertise is available at all times for the Supervisory Board's work as such and for each material division of the company to ensure that the Management Board is permanently supervised and advised in a professional and efficient manner.
The Supervisory Board currently considers the objectives defined under (1) to (8) to be fulfilled. The objectives defined under (9) and (10) are taken into consideration as required on the respective occasions.
No material conflicts of interest requiring disclosure to the Annual Shareholders' Meeting occurred in the past fiscal year. Please refer to the details in the Supervisory Board and compensation report. In accordance with the principles of the DSW, the Supervisory Board reviews its efficiency once a year. As in the previous year, a survey was conducted for this purpose and discussed by the Supervisory Board members. Any insights gained form an integral element of the work of the Supervisory Board.
Pursuant to Art. 19 of Regulation (EU) No. 596/2014 of the European Parliament and of the Council dated April 16, 2014 (Market Abuse Regulation - MAR), directors of the company or their related parties must disclose the acquisition or sale of shares in Ahlers AG or related financial instruments if they amount to at least EUR 5,000 in a calendar year (Directors' Dealings). These directors' dealings of the past fiscal year as well as the changes in the shareholdings of Dr. Stella A. Ahlers are described in detail on page 15 in the chapter entitled "The share". Ahlers AG has met its legal obligation to publish the directors' dealings and has also posted the corresponding information on the company's website. For details on the information to be provided pursuant to section 160 para. 1 No. 8 AktG , please refer to page 123.
Ahlers AG aims to provide all shareholders and investors with timely information on an equal treatment basis. All relevant information is therefore announced concurrently in German and English. All relevant publications such as annual and quarterly reports and statements, ad-hoc and press releases as well as company presentations are published on the company's website at www.ahlers-ag.com. The financial calendar, which is also posted on this website, shows the regular publication dates as well as upcoming capital market events. Directors' dealings, which must be announced in a timely manner pursuant to Art. 19 of the Market Abuse Regulation (MAR), are also reported on the company's website.
The consolidated financial statements and the interim reports of Ahlers AG are based on International Financial Reporting Standards (IFRS). The separate financial statements of Ahlers AG are prepared in accordance with the German Commercial Code (HGB) and the German Stock Corporation Act (AktG). The annual financial statements, just like the interim report and the quarterly statements for the first and third quarter, are prepared by the Management Board and audited by the Supervisory Board. The Supervisory Board proposes the auditor, who is elected by the Annual Shareholders' Meeting. BDO AG Wirtschaftsprüfungsgesellschaft were again appointed auditors for the fiscal year 2017/18 by the Annual Shareholders' Meeting. The auditors had previously declared their impartiality to the Supervisory Board. BDO AG has audited the company's financial statements since the fiscal year 2008/09. The Audit Committee of the Supervisory Board commissioned the auditors and defined the main aspects of the audit as well as the auditor's fee.
The compensation report is contained in the combined management report for Ahlers AG and is shown on page 82 et seq. under "Compensation report".
for Ahlers AG and the Group for the fiscal year 2017/18
Headquartered in Herford, Germany, Ahlers AG is the parent company of the Ahlers Group, which currently comprises 32 (previous year: 31) independent companies. Each of the Group's brands is organised in a specific company. In addition, the Group maintains distribution companies in the most important foreign markets, most of which are wholly owned by the Group. At present, we have own distribution companies in 16 countries. Ahlers AG holds 49.0 percent in Jupiter Shirt GmbH, which was spun off from the Group in 2010 and develops and sells Jupiter branded shirts throughout Europe. Ahlers operates two production facilities in Poland and Sri Lanka. A list of the subsidiaries of the Ahlers Group can be found on page 96 "Shareholdings".
In the past fiscal year, OOO Ahlers RUS was established with effect from March 1, 2018 with a long-standing Russian partner and included in the basis of consolidation. Ahlers AG holds 60 percent in the company, while the Russian partner holds 40 percent. In December 2018, Ahlers signed a purchase agreement with its partner for another 30 percent of the shares and will thus increase its interest to 90 percent once the formalities have been completed. The Russian authorities have already granted their approval. The purpose of the company is to strengthen the activities of Pierre Cardin and Pioneer Authentic Jeans in Russia. The company operates eleven Pierre Cardin stores, one outlet store as well as the wholesale business with retailers. In Lithuania and Latvia, Ahlers operates one distribution company eachwhich mainly operate retail stores. On September 3, 2018 we acquired the shares of a local businessman and now hold 99.3 percent (previously 65.5 percent).
On April 24, 2018, the Annual Shareholders' Meeting approved the signing of a controlling and profit-and-losstransfer agreement between Ahlers AG and Otto Kern GmbH with effect from December 1, 2017. All other profit-and-loss transfer agreements between Ahlers AG and its subsidiaries remain unchanged (see table "Shareholdings" on page 96).
Ahlers is organised in the form of a function matrix. Each Managing Director of a brand is responsible for the product development and distribution activities of his/her brand. Central tasks such as IT, accounting, production, logistics, marketing and controlling/legal are based in the holding company and in Ahlers Zentralverwaltung GmbH. The central departments support the individual companies with their comprehensive knowledge and help to leverage synergies within the Group by bundling similar kinds of activities and common sourcing. The retail and outlet management activities including the German multi-label stores were merged into a single entity, Ahlers Retail GmbH. Branded outlets and stores are managed by the respective brand companies.
The Ahlers Group's five fashion brands offer customised collections for different target groups and price segments. Very high demands are made on quality and fashion appeal. Reflecting their fashion statements and price positioning, the brands have been divided into two segments – "Premium Brands" and "Jeans, Casual & Workwear".
MASCULINE, SELF-CONFIDENT AND STYLISH PASSION FOR QUALITY LOVE FOR DETAIL WWW.BALDESSARINI.COM
FUTUREFLEX, LE BLEU, DENIM ACADEMY, VOYAGE HIGH QUALITY WEARABLE TRENDS WWW.PIERRE-CARDIN.DE
CASUAL | MODERN | ROUGH
Solid, sustainable and profitable growth is the objective for the medium-term development of our company. The following strategic measures are designed to help achieve this goal:
• Europe as well as selected international markets, e.g. Canada and China
• Innovative and fashionable high-quality menswear
Ahlers generates over two thirds of its revenues in the attractive premium segment of the fashion market. We intend to drive domestic and international growth through our Baldessarini and Pierre Cardin brands. To achieve this objective, a focus will be placed on sharpening the brand profiles, expanding the collections and intensifying our operations in the international markets. For Pierre Cardin, we want to optimise revenues per square metre in Germany and launch target-oriented product innovations. With the start-up of the Russian subsidiary, we have installed a sales organisation for Pierre Cardin to intensify existing customer relations, e.g. through the introduction of NOS services, to win new customers and to optimise the existing eleven stores in Russia. We want to push ahead with the expansion of the Western European markets such as France and Spain as well as the Europe-wide expansion of points of sale. For Baldessarini, the focus will be placed on intensifying the jeans business and revising the market positioning with regard to products and prices. We also aim to internationalise the brand in Europe. In addition to the premium brands, the Pioneer Authentic brand will be turned from a jeans specialist into an integrated lifestyle brand offering not only jeans but also tops. We want to grow primarily at the specialist retail level and will therefore continue to refine our partnership schemes and POS concepts. Moreover, the distribution activities of the Pioneer/Pionier jeans family are to be pooled and strengthened.
We want to expand our own Retail operations selectively and optimise existing store concepts. Being a fast growing distribution channel, the e-commerce segment is of great strategic importance and will therefore be strengthened further organisationally, with priority attached to wholesale e-commerce distribution. In this context, a focus is placed on both e-commerce specialists and the e-commerce activities of the physical retailers. Licenses are to expand the product ranges of our brands and strengthen their respective brand identities.
Stationary specialist retailers will remain the most important sales channel for menswear. Revenue growth is to be generated through sales in branded shop-in-shop spaces which also have special significance in terms of gaining optimum brand exposure. Moreover, we pay special attention to improving sales revenues per square metre. At the same time, we continue to develop and improve our internal restocking and visual merchandising processes for the branded retail spaces. The partnership programmes, cooperation schemes and the service quality are analysed and optimised on an ongoing basis. Besides the physical retail stores, the focus is placed on the e-commerce activities of our customers.
With international sales revenues already accounting for as much as 46 percent of total sales revenues, Ahlers is a successful European player. By systematically expanding the local sales organisations, we aim to further increase our sales revenues in Europe. In doing so, we will grow our business with selected retailers but also our own stores and partner stores. Outside Europe we aim to grow our Baldessarini brand in the medium term. Distribution in Asia started in the fiscal year 2017/18.
For all our brands, a focus is being placed on winning online dealers in Europe and on internationalising the marketplace business. Ahlers therefore concentrates its e-commerce distribution activities in the online wholesale business. Ahlers moreover operates three online shops of the Pierre Cardin, Baldessarini and Pionier Workwear brands. We intend to grow our operations in this increasingly important distribution channel for the clothing sector with our three e-shops of Baldessarini, Pierre Cardin and Pionier Workwear and by selling our products on marketplaces.
Strategically, Ahlers relies on mono-brand stores of the Pierre Cardin and Baldessarini premium brands, which are optimised and refined constantly and which are operated by our company or by our partners, primarily in Eastern Europe. The further expansion is supported by ongoing analyses of locations in Germany and abroad. In individual case, we take over partner stores.
Breakdown of production by regions (previous year):
The optimisation of procurement and logistics is an ongoing challenge to the clothing sector. Ahlers constantly aims to choose the best suppliers and the most favourable logistic processes with the objective of optimising our quality, reliability, speed and procurement costs. We constantly review existing and new locations and suppliers with a view to ensuring a reliable, costefficient manufacturing organisation that meets our quality and social standards. In the medium term, we aim to change our procurement activities for jeans and suits to full-package services. We will continue to expand our procurement activities to the southern Mediterranean and reduce production in Poland. At the same time, the Group's unfinished goods logistics were relocated from Germany to Poland in February 2019. Further logistic activities will be handled out of Poland as of mid-2019. Compliance with social standards remains a precondition for signing up suppliers and service partners.
| Sri Lanka | 27.9% (25.8%) | |
|---|---|---|
| Poland | 9.6% (10.7%) | |
| China/ HKG | 8.6% (11.0%) | |
| Other Far East | 19.0% (16.5%) | |
| Other | 34.9% (36.0%) |
2017/18 2016/17
Research and development work in fashion is performed by the Product Management and Model Departments as well as by the sample-making workshops. For every season, these departments develop new collections which are matched to their target groups. The focus is on the design task, with the functionality of the garments representing an important secondary condition. The individual product groups of the individual brands usually have their own product management teams. While the Model Departments and the sample-making workshops are usually organised by classes of goods and work for several brands, they have dedicated specialists for the respective brand within the organisation.
As of November 30, 2018, the Product Management and Model Departments as well as the sample-making workshops had 98 employees (previous year: 99). These departments incurred largely stable expenses before one-time effects of EUR 6,780 thousand in the fiscal year 2017/18 (previous year: EUR 6,762 thousand). Besides this, the efficiency increase programme resulted in one-time effects for severance payments to employees of EUR 408 thousand (previous year EUR - thousand). Most of the expenses are personnel expenses. Operating expenses primarily comprise consulting costs. Research and development expenses represented 3.0 percent of sales revenues (previous year: 2.9 percent). Development expenses were not capitalised, as the requirements defined in IAS 38 were not fully met.
The Management Board of Ahlers AG controls the distribution and service companies of the Group. The Management Board defines the strategy, makes important decisions together with the management teams and monitors the accomplishment of objectives by the subsidiaries.
Medium-term budgets are established for the Group for a period of three fiscal years on a rolling basis every year. The annual individual budgets are planned bottom-up on the basis of the budgets per Group entity prepared by the individual Managing Directors together with the Management Board. Detailed targets regarding defined key performance and financial indicators are set for the individual distribution and service companies. Estimates of the macroeconomic trend in the budget year are incorporated into these individual budgets. At the beginning of each fiscal year, the Management Board submits a detailed annual Group budget for the new fiscal year to the Supervisory Board.
The budget figures are controlled for performance in the context of central monthly reporting. The Managing Directors of the subsidiaries use a prestructured monthly financial report to report quantitative and qualitative developments in the reporting month directly to the Group management. The Management Board regularly meets with the Managing Directors to seek information on the market situation and to take strategic decisions. Central reporting databases facilitate the target/actual control and provide daily, weekly and monthly IT reports. The annual budgets are reviewed and revised twice a year.
| 2017/18 | 2016/17 | ||
|---|---|---|---|
| Sales | EUR million | 223.1 | 235.9 |
| Gross margin | in % | 48.9 | 49.6 |
| EBITDA* | EUR million | 3.7 | 8.7 |
| EBITDA-Margin* | in % | 1.7 | 3.7 |
| EBIT* | EUR million | -1.4 | 3.5 |
| EBIT-Margin* | in % | -0.6 | 1.5 |
| Net income | EUR million | -7.0 | 1.9 |
| Profit margin before taxes | in % | -3.2 | 1.0 |
| Profit margin after taxes | in % | -3.1 | 0.8 |
| Earnings per share | |||
| Registered common shares | |||
| (previous year Common shares) | EUR | -0.51 | 0.11 |
| Preferred shares | EUR | - | 0.16 |
| Net Working Capital ** | EUR million | 77.5 | 86.3 |
| Return On Investment | in % | -4.0 | 1.0 |
* before special effects
** Inventories, trade receivables and trade payables
Key performance indicators include sales revenues, EBIT, consolidated earnings, operating cash flow, net working capital and capital expenditures. In addition, the targeted pricing margin and the actual margin, sales growth, the cost ratios, the EBIT margin as well as the average receivables in months have been identified as performance indicators. The forward stock cover plays a special role for the production decisions of the sales managers as it is the main factor influencing the amount of net working capital. All segments are controlled using the same performance indicators. Control of the units did not change materially in the fiscal year, as the Managing Directors report to the Management Board and the key performance indicators were calculated in the same way as before.
Nov. 30, 2018 Nov. 30, 2017
| Total | 2,145 (2,020) | |
|---|---|---|
| Austria | 41 | (45) |
| Eastern Europe/ Other 258 | (141) | |
| Sri Lanka | 750 | (683) |
| Poland | 507 | (543) |
| Germany | 589 | (608) |
General information about the group
| 2017/18 | 2016/17 | Change | ||
|---|---|---|---|---|
| Average number of employees | 2,122 | 2,062 | 2.9% | |
| Adjusted personnel expenses* | EUR million | 50.7 | 51.0 | -0.6% |
| Adjusted personnel expenses/employee* | KEUR | 23.9 | 24.7 | -3.2% |
| Number of apprentices | 21 | 23 | -8.7% | |
| Share of women in leading positions | in % | 41 | 36 | 13.9% |
* adjusted for special effects
Ahlers employed 2,122 people on average in the fiscal year 2017/18, 60 more than in the previous year. On November 30, 2018, the headcount was up by 125 people on the previous year. The increase was attributable to the start of Ahlers RUS, which hired 86 new employees, mostly in the retail segment. The deployment of our own employees in stores in Spain instead of commissioning a HR service provider led to the employment of 23 people. Ahlers reduced the production capacity of our plant in Poland (-38 people) and expanded the capacity in Sri Lanka (+67 people). In Germany, the job cuts implemented in the context of the strategic set of measures reduced the headcount by 19 compared to the previous year to 589 people.
Non-financial statement pursuant to sections 289b and 289c of the German Commercial Code (HGB) as well as non-financial Group statement pursuant to sections 315b and 315c HGB
Ahlers wants to offer men attractive, innovative and modern fashion and to generate solid and profitable growth in the process. Sustainability is an integral element of our corporate DNA. For Ahlers, acting responsibly towards people, the environment and society is an important benchmark. In a global industry, we are well aware of our responsibility towards our stakeholders. We understand sustainability as an ongoing process, to which we gear our corporate activity and which we review on an ongoing basis.
Since the fiscal year 2014/15, Ahlers AG has dedicated a separate chapter of its Annual Report to its sustainability strategy. With the publication of the present 2017/18 sustainability chapter, the company for the first time also complies with the statutory requirement to issue a non-financial statement. We report on the key sustainability issues and how we shape them positively through our compliance management activities. We have defined four strategic fields of action – Employees, Product, Environment and Society – along which we want to inform you about the steps we take to achieve sustainable value creation:
Employees: Well-trained and motivated employees play a key role in reaching our ambitious operational and strategic objectives. We want to become an even more attractive employer and promote equal opportunities within the company.
Product: We want to produce our products efficiently. In doing so, we live up to our responsibility in the supply chain and monitor compliance with social standards in the procurement process. Our quality management activities ensure the safety and long life of our products as well as high customer satisfaction.
Environment: Our day-to-day work focuses on the effective further development of our products to organic standards in strict compliance with statutory limits. We review the environmental compatibility of the production process and work to improve our energy and resource footprint.
Society: The focus of our social commitment lies in the field of visual arts. For decades, we have been providing loans from the ahlers collection to support exhibitions at renowned museums in Germany and abroad. At the regional level, we cooperate with the Herford-based Stiftung Ahlers Pro Arte gGmbH.
Dr. Stella A. Ahlers Chief Executive Officer
The present 2017/18 sustainability chapter was prepared on the basis of the GRI Standards: Core Option, refers to the fiscal year December 1, 2017 to November 30, 2018 and meets the requirements for the preparation of a non-financial statement within the meaning of sections 289b and 289c as well as sections 315b and 315c of the German Commercial Code (HGB). The Supervisory Board has reviewed the non-financial statement for legality, regularity and expediency. To the extent possible, this first report of its kind includes prior year figures for comparison.
The non-financial Group statement is published annually as part of the Annual Report. It is published in the Federal Gazette and is made available on the website of Ahlers AG under Investor Relations/Financial Reports as part of the Annual Report. To avoid redundancies, the chapter includes references to other contents of the present Annual Report.
GRI 102-14
GRI 102-1 GRI 102-49 GRI 102-50 GRI 102-51 GRI 102-52
Prime responsibility for sustainable action rests with the Management Board. The latter defines the strategic orientation of the company. A cross-divisional work group regularly addresses aspects of non-financial reporting and corporate social responsibility. The work group comprises employees working in HR, Compliance, Procurement and Investor Relations and reports directly to the Management Board. GRI 102-3 GRI 102-4 GRI 102-5 GRI 102-6
Information on our business model, our strategy, our brands and products as well as our organisation is provided in the combined management report on page 24 et seq. and the cross-references contained therein. For an overview of the company's executive and controlling bodies, please refer to page 10 et seq. The shareholder structure of Ahlers AG is outlined in the chapter entitled "The share" on page 12 et seq. GRI 102-7 GRI 102-10 GRI 102-18 GRI 102-45
GRI 102-40 GRI 102-42
GRI 102-43
Ahlers maintains regular contacts with different stakeholder groups. These include our employees, business partners, capital market participants as well as the government and society. This exchange promotes the understanding of the needs and requirements of all stakeholder groups. The intensity and frequency of the communication depends on the stakeholder's influence on the company and its performance and on the influence of the company's decisions on the stakeholder. Ahlers addresses the stakeholder groups offering different communication and dialogue services:
| Stakeholders | Communication and dialogue services | |
|---|---|---|
| Employees | ||
| Employees and management | Regular information via the Intranet, cooperative leadership philosophy and individual talks between employees and management, staff council members, training on occupational health and safety |
|
| Business partners | ||
| Customers and suppliers | Customer visits and customer service, collection handover and workshops, partnership schemes, participation in trade fairs and exhibitions, daily interaction |
|
| Capital market participants | ||
| Shareholders, investors and analysts | Annual Shareholders' Meeting, financial reporting, analyst and investor conferences, one-on-one meetings |
|
| Society and government | ||
| Neighbours, politicians, journalists, auditors, supervisory authorities and associations |
Annual accounts press conference, regular reports on company-related topics, whistleblowing and reporting, one-on-one meetings |
Being a member of various associations and organisations, Ahlers is well networked and maintains regular contacts with different stakeholder groups. We are members of associations and organisations such as Verband der Nordwestdeutschen Textil- und Bekleidungsindustrie, GermanFashion Modeverband Deutschland e.V., Industrie-Club e.V., Düsseldorf, Industrieund Handelsclub Ostwestfalen-Lippe e.V., the German-Polish Chamber of Industry and Commerce, the German Business Council and the Joint Apparel Association Forum, Sri Lanka as well as the Association WRAP – Worldwide Responsible Accredited Production.
Within the four sustainability-related fields of action, a materiality analysis carried out in 2017 identified five non-financial topics that are of particular relevance to the company and its stakeholders. The non-financial topics have been assessed with a view to the assumed expectations of the stakeholder groups on the one hand and to management's assessment of their importance for the company's success on the other hand. The five key topics are sustainable human resources management, compliance with social standards within the supply chain, ecological safety of our products and resource-efficient production. Compliance was identified as a topic of overriding importance for all strategic fields of action.
GRI 102-46 GRI 102-47
| Strategic field of action | Material topics | Selected aspects * |
|---|---|---|
| Compliance (overarching) | Declaration of Basic Values, anonymous whistleblowing, fight against corruption |
|
| Employees | Sustainable human resources | Training, |
| management | qualification, | |
| diversity, | ||
| equal treatment | ||
| Product | Compliance with social standards | Monitoring and avoidance of human |
| in our supply chain | rights violations and child labour, | |
| checking suppliers for compliance | ||
| with social standards | ||
| Safety of our products | Quality assurance, | |
| labelling duty | ||
| Environment | Resource-efficient production | Energy consumption, |
| carbon emissions | ||
| Society | corporate citizenship, | |
| cooperations |
* The non-financial Group statement additionally includes information on further aspects within the strategic fields of action.
The precautionary approach pursued by the company is outlined in the risk report on page 77 et seq. In the context of risk controlling, no material risks were identified which result from our business activity, our business relations, our products and services and which are very likely to have an adverse impact on the non-financial aspects that Ahlers considers to be material.
Compliance GRI 102-16 GRI 205-2 GRI 205-3
At Ahlers, compliance with laws and regulations covers all business activities and processes. The Management Board and the Supervisory Board of Ahlers AG align their work with the German Corporate Governance Code. Our Declaration of Basic Values, which is endorsed by all our employees, constitutes an important basis for the Group-wide compliance culture. The current version is publicly accessible in four languages on the intranet and in two languages on the Internet. This Code of Conduct applies to all employees of the Ahlers Group companies and governs their behaviour in the execution and running of day-to-day business in Germany and abroad. Ahlers AG stipulates legal business practices which observe fair competition, commercial trademark rights of third parties as well as cartel and competition regulations. All forms of corruption and bribery are prohibited. Contracts must be fulfilled and general ethical values and principles must be respected. There were no cases of confirmed corruption within the Group neither the past fiscal year nor in the previous year.
The companies of Ahlers AG comply with the legal requirements of all countries in which they operate. They also instruct their contractual partners accordingly. They respect and accept the different legal, social and cultural backgrounds of the countries along the value chain and acknowledge their structures, habits and traditions. Where these are inconsistent with the principles laid down in the Declaration of Basic Values, joint solutions shall be developed in a dialogue with the contractual partners. All employees are encouraged to immediately report violations of the Code of Conduct. For this purpose, an anonymised reporting form has been drawn up which is electronically sent to a lawyer. Potential violations are addressed and eliminated in cooperation with our Compliance Officer. In addition, measures are taken to avoid future violations. The Compliance Officer informs the Supervisory Board of his activities and the company's adherence to its Compliance Guidelines in an annual report. For more information on compliance, our declaration of conformity with the German Corporate Governance Code, information on our corporate governance policy and a description of the work of the Management Board and the Supervisory Board, refer to the Corporate Governance Report on page 16.
Ahlers is a family-run company with a long tradition at the Group headquarters in Herford. The company operates its own production facilities in Poland and Sri Lanka. The distribution and logistic activities for part of Eastern Europe are controlled out of Opole (Poland). The Group also has employees in retail stores and sales offices across Europe.
In a dynamic and increasingly digital world, companies must develop the skill to adapt to constant changes. This skill is first developed in the minds of a company's people. Our executives must spearhead this movement. Ahlers fosters a culture of encouragement and experimenting. This comprises active cooperation, a strong feeling of solidarity throughout the company, a constructive approach to errors as well as the possibility to push ahead and implement own ideas within a team.
Women play an important role at all hierarchical levels of Ahlers AG. As of the reporting date, 74 percent of our Group's 2,145 employees were women and 26 percent were men. In Germany, 372 of 589 employees are women (63 percent; previous year: 62 percent).
GRI 103-1/2/3 Sustainable human resources management
Since 2005, the company has been headed by CEO Dr. Stella A. Ahlers. The Management Board was composed of three members until December 12, 2018 and of two members after that date. At present, half of its members are male and the other half are female. Until April 24, 2018, men and women were equally represented on the Supervisory Board. Since the election of new Supervisory Board members by the Annual Shareholders' Meeting, it has been composed of four male and two female members: Prof. Dr. Julia von Ah as Deputy Chairwoman and Chairwoman of the Audit Committee as well as employee representative Heidrun Baumgart. The total management team of all Group companies comprises 138 people (previous year: 147). 57 people or 41 percent of them are women (previous year: 53; 36 percent). In Germany, the management team comprises 52 people (previous year: 61), of whom 11 are women (21 percent; previous year: 20 percent). The targets defined by Ahlers for the share of women on the executive bodies and at the two management levels below the Management Board are outlined in the Corporate Governance Report on page 16.
| Previous 2017/18 % year % 2017/18 % Total number of employees 2,145 100.0 2,020 100,0 589 100.0 (reporting date) thereof men 566 26.4 551 27.3 217 36.8 women 1,579 73.6 1,469 72.7 372 63.2 full-time 1,979 92.3 1,866 92.4 511 86.8 part-time 166 7.7 154 7.6 78 13.2 |
Previous | |
|---|---|---|
| year | % | |
| 608 | 100.0 | |
| 230 | 37.8 | |
| 378 | 62.2 | |
| 526 | 86.5 | |
| 82 | 13.5 | |
| covered by a collective | ||
| bargaining agreement 645 30.1 575 28.5 542 92.0 |
563 | 92.6 |
| Employees by | ||
| functional areas | ||
| Product management | ||
| and sales 392 18.3 382 18.9 277 47.0 |
266 | 43.8 |
| Administration 130 6.1 128 6.3 92 15.6 |
90 | 14.8 |
| Retail 426 19.9 326 16.1 133 22.6 |
145 | 23.8 |
| Production 1,197 55.8 1,184 58.6 87 14.8 |
107 | 17.6 |
| Employees in | ||
| management positions 138 6.4 147 7.3 52 8.8 |
61 | 10.0 |
| thereof men 81 58.7 94 63.9 41 78.8 |
49 | 80.3 |
| thereof women 57 41.3 53 36.1 11 21.2 |
12 | 19.7 |
| Average age of men in | ||
| management positions 50 51 53 |
52 | |
| Average age of women in | ||
| management positions 44 46 50 |
50 | |
| Average age of | ||
| total workforce 44 46 46 |
45 | |
| New hirings 970 899 38 |
82 | |
| thereof men 171 17.6 191 21.2 12 31.6 |
25 | 30.5 |
| thereof women 799 82.4 708 78.8 26 68.4 |
57 | 69.5 |
| 845 943 57 Departures |
87 | |
| thereof men 156 18.5 218 23.1 25 43.9 |
25 | 28.7 |
| thereof women 689 81.5 722 76.6 32 56.1 |
59 | 67.8 |
* Ahlers worldwide incl. manufacturing and sales locations
GRI 102-8 GRI 102-41 GRI 401-1 GRI 405-1
Many employees have been with the company for many years, and staff turnover in the company is low. In Germany, employees stay with Ahlers for an average of 13 years. The turnover amounted to 4.3 percent based on the Schröder formula*. Ahlers continuously advances its brands and its corporate structures. In the past years, for instance, the company expanded and adapted its e-commerce and retail departments. In this growth segment as well as in other areas of the company, e.g. distribution and marketing, Ahlers is constantly on the lookout for ambitious and talented people who would like to contribute their passion and their commitment to a leading fashion company. Another focus is on the search for apprentices and university graduates, primarily in the fields of distribution, marketing, retail, product management and accounting/controlling. A trainee programme is available for graduates starting their career at Ahlers.
* (voluntary departures / headcount at beginning of reporting period + new hirings) x 100
Training young people has a long tradition at Ahlers, with the company attaching special importance to high-quality induction and support. Ahlers relies on qualified young talents who stay with the company for a long time and actively contribute to the success of the Group. Trainees and apprentices are quickly involved in the departmental processes and, after a comprehensive induction programme, are given the chance to assume responsibility at an early stage of their career. At present, the company employs 21 (previous year: 23) apprentices. They are guided through our company based on carefully developed plans and are supported closely. As part of their vocational training, the commercial trainees spend time abroad to get to know our own international production facilities and suppliers. Vocational training in the following professions is available at our Herford branch:
We regularly offer dual studies, e.g. business administration and business informatics, for high school graduates. Traditionally Ahlers retains a large proportion of its apprentices and graduates in continuing employment.
Apprentices 2016-2019
Competent and motivated people are the most important asset of any company. Ahlers AG supports its employees by showing them career development opportunities and offering them different further training and qualification measures. Up-and-coming talents regularly have the possibility to enrol in dual study courses to enhance their qualifications as future managers. In 2018, the company again supported several employees enrolled in business management and IT study courses.
Throughout the company, at least 2,000 days were dedicated to further training. The topics covered here ranged from department-specific aspects to cross-divisional contents such as compliance, general corporate processes and IT security. In addition to these further training possibilities, the individual departments may carry out their individualised training measures. The latter are organised by the individual departments and not recorded centrally.
Cooperation with universities is an important success factor, which helps attract and win young talents for the Group at an early stage. A good example is our cooperation with Bielefeld University in the context of the BU2BU programme ("Best Undergraduates to Bielefeld University") with the aim of promoting academic excellence. Ahlers gives a number of interns the opportunity to gain an insight into everyday working life. Moreover, we recruit talented graduates to enrol in a dual study programme in International Business Administration. In this context, Ahlers cooperates with institutions such as LDT Nagold (Academy for Fashion Management), AMD (Akademie Mode & Design) as well as the Bielefeld University of Applied Sciences.
Ahlers complies with all legal requirements and standards to avoid safety risks at the workplace. Every employee at the Herford headquarters is trained in general accident prevention, fire protection and health regulations for VDU work once a year. In addition, fire protection assistants and first-aiders are trained and further educated and hazard assessments are prepared and reviewed for relevant departments. In the fiscal year, eight work accidents were reported in the Group, which resulted in 73 man-days lost. There were no work-related deaths.
Ahlers attaches great importance to the equal treatment of its employees and attempts to prevent discriminatory behaviour. We do not tolerate discrimination, harassment and offensive behaviour. The binding Declaration of Basic Values obliges all employees to treat each other with respect and trust. Nobody shall be disadvantaged because of their sex, age, disability, nationality, colour, religion, belief or sexual orientation. We expect all employees to respect the dignity, privacy and personal rights of each individual in their working environment. During the reporting period, there was one case of discrimination in the form of inappropriate behaviour towards female colleagues. The employee concerned has been warned.
GRI 403-2
Sustainability Report
GRI 404-1
For over eighty years, Ahlers has had a material influence on the region surrounding the headquarters in Herford/Elverdissen as well as on the people who work for the company and show their commitment, their passion and their loyalty. Ever since its foundation in 1919, the clothing manufacturer can rely on the loyalty of its staff. This reporting period saw Ahlers honour thirty-five employees who have successfully worked for the company for ten, twenty-five or even forty years. The Management Board and the Managing Directors would like to thank all employees for the great commitment shown in the past fiscal year.
In mid-2015, we established a central department named "Corporate Compliance Production and Procurement". The employees in this independent department monitor compliance with social and product standards and implement Ahlers' own supplier management policies within the Group. They are in charge of hazardous substances management and advise the individual product groups. In 2018, 101 employees (product managers, purchasers and dispatchers of all product groups; previous year: 68 employees) were trained in Ahlers policies on aspects such as purchasing, supplier management, social standards in the manufacturing plants, hazardous substances management and product safety. The department's staff ensure that Group-wide requirements are defined, coordinated and implemented consistently. Since early 2016, we have kept a detailed documentation of all our suppliers and production plants comprising certifications and social compliance documents in accordance with a defined acceptance procedure. The supplier portfolio is continuously checked for up-to-dateness and optimised. Ahlers already has a policy of pooling the purchasing activities for similar materials across its brands and aims to successively achieve a concentration of suppliers. This systematic, database-assisted supplier management policy approach makes it easier to ensure compliance with the Group's standards and increases the quality and transparency of the supervision.
Ahlers has its own Restricted Substances List (RSL) for chemical and hazardous substances, which the department has developed in cooperation with Verband der Nordwestdeutschen Textil- und Bekleidungsindustrie e.V. and is further developing in cooperation with GermanFashion Modeverband Deutschland e.V. The standards for the use of chemicals and compliance with legal requirements regarding hazardous substances are coordinated centrally for all companies of the Ahlers Group. Based on a specifically developed risk matrix, the operating unit constantly commissions external laboratories to take random samples of the raw materials and finished products of all brands; in some cases, the goods of individual product groups are tested on a permanent basis. We exclusively cooperate with accredited laboratories in Germany and abroad. In the event of positive tests, precautionary measures have been taken to ensure that product batches can be narrowed down and localised. In doing so, the company regularly prepares for potential production-related risks and outlines possible action scenarios.
The textile supply chain may schematically be divided into five steps. In this presentation, Ahlers and its business model form part of the manufacturing and the trading process:
49
Ahlers' procurement activities comprise the production in two company-owned manufacturing plants, cut-make trim (CMT) and full- package services (FPS). The products of Ahlers AG are primarily manufactured in Eastern Europe and Asia:
Procurement by country and type as at November 2018
Ahlers AG and its brands are fully aware of their social responsibility and attach the greatest importance to ethical behaviour. Our companies therefore comply with international social accountability standards, which are defined in a Code of Conduct. The principles and standards laid down in this Code of Conduct are based on the agreements and standards of the International Labour Organisation (ILO), the UN Universal Declaration on Human Rights and the UN Declaration on the Rights of the Child.
For several decades, the company has operated two production facilities in Poland and Sri Lanka. Most trousers are produced in Ahlers' own production facilities. This not only ensures maximum transparency for a major part of its output but also allows the company to constantly enhance its expertise and its high quality standards. The company's own plants meet all requirements of the social compliance standards. Since 2014, our Sri Lankan production facility has undergone a complex and detailed audit process conducted by the WRAP (= Worldwide Responsible Accredited Production) organisation and has been awarded the Gold Certificate. The next regular audit is scheduled for the first quarter of 2019. The WRAP audit revolves around a set of principles including legal and social compliance, environmental compatibility as well as health and safety. The standards defined by these principles have been complied with.
GRI 103-1/2/3 Social standards in the supply chain GRI 102-12 GRI 408-1 GRI 409-1 GRI 414-1
Ahlers also cooperates with independent suppliers, all of whom are selected carefully and based on strict criteria and who are continuously monitored. The company assesses the political situation in the country and also considers international transport links and available resources at the production site. When choosing suppliers, the company makes sure that they are certified to BSCI (Business Social Compliance Initiative) or SA 8000 (international standard aiming to improve workplace practices) and present good references. The company focuses on long-term relationships with all its suppliers. As the basis for cooperation, every supplier must undertake to comply with the company's Code of Conduct as well as with international social standards. As of the reporting date, 92 percent of the suppliers of finished and unfinished goods had confirmed the Ahlers policies in writing and undertaken to comply with them (Ahlers Code of Conduct, Restricted Substances List, CSR confirmation). Two years ago, full CSR documentation became mandatory for the inclusion of new suppliers in the pool of suppliers. As in the previous year, all new suppliers, without exception, therefore underwent a multi-stage onboarding process before being approved for the Purchasing Department. In addition, the procurement teams predominantly review sub-contracted production facilities of the upstream supply chain in the high-risk countries (classification to amfori BSCI). Any changes that may be required are discussed and implemented jointly with the factory management teams. Ahlers intends to expand its own reviews of the upstream textile supply chain. Our own business and production locations are not exposed to any risk of forced/child labour or hazardous working conditions for young workers. At our suppliers, this risk is also minimised to the extent possible because of the many measures taken to ensure compliance with social standards in the procurement process.
As a manufacturer of premium products Ahlers attaches special importance to excellent product quality. Selected materials must be processed carefully and in accordance with their high quality. This is why all production processes – from planning to production to delivery – are subjected to detailed quality controls in the context of the quality management system.
GRI 103-1/2/3 Safety of our products GRI 416-1 GRI 417-1
In keeping with the high quality standards and expectations of the company and its customers, all products of Ahlers AG are manufactured on the principle that they are ethically correct and non-hazardous. Ahlers jeans are treated exclusively with tested and non-hazardous agents and manufactured using permissible production techniques. Ahlers attaches great importance to avoiding health hazards in the production process. They meet statutory limits and, wherever possible, remain below them. All suppliers are obliged to refrain from using hazardous substances in the production of materials in accordance with applicable legislation. To ensure that this is done, Ahlers has defined clear standards for its business partners and obliged them to check for themselves that these are met. In addition, the company continuously commissions external, independent testing laboratories to check the products and verify that they are free from hazardous substances. With the help of our risk matrix, textile and non-textile findings are assessed for their chemical risk. Based on this risk assessment, Ahlers arranged 1,647 chemical hazardous substances tests in FY 2017/18; these tests focused on the following:
Due to the care taken along the procurement chain, irregularities in production are largely impossible. The continuous control and inspection of the product processes are ensured as our employees regularly visit the local production facilities. In some cases, facilities are visited without prior announcement, while other facilities are supported throughout the year. Should irregularities arise or checks result in findings nevertheless, they are contained and remedied immediately with the help of defined process plans. Ahlers meets all legal requirements regarding the labelling of its products. All products bear information on the material composition, care instructions, the product number and manufacturer's information. In the fiscal year, there were no complaints from customers or penalties due to faulty labels or markings.
Ahlers' Terms and Conditions of Purchase apply to active suppliers from which the company sources goods or services. The conditions include a separate paragraph with special guaranties by the supplier. All suppliers commit to complying with the Ahlers policies (Ahlers Code of Conduct, Restricted Substances List, CSR confirmation) as well as the applicable legal provisions of the European Union, in particular the REACH Regulation and the legal provisions of the Federal Republic of Germany. Compliance with these commitments is of great importance for the contractual relationship. Each violation constitutes a material breach of contract and may put the contractual partner under an obligation to pay damages.
In the context of a pilot project in cooperation with the Verband der Nordwestdeutschen Textil- und Bekleidungsindustrie e.V. and the GermanFashion Modeverband Deutschland e.V., Ahlers has communicated the Manufacturing Restricted Substances List (MRSL) of the Zero Discharge of Hazardous Chemicals Initiative (ZDHC) to its largest suppliers of unfinished goods who use wet processes. The MRSL restricts the use of hazardous chemicals in the textile value chain. Ahlers thus covers about 70 percent of its procurement volume (in euros) of unfinished goods that are subject to wet processes in their manufacture. According to supplier feedback, about 60 percent of the procurement volume was produced in accordance with the MRSL requirements in the fiscal year 2017/18 . The aim is to encourage all our suppliers to implement the ZDHC-MRSL standards. The Zero Discharge of Hazardous Chemicals Initiative (ZDHC) is to reduce the impact of hazardous chemicals on people and the environment. The Initiative supports the widespread use of harmless substances and the implementation of best practice guidelines in chemicals management to protect consumers, workers and nature.
We attach great importance to using scarce resources sparingly and reducing the burden on the environment. Unfinished goods manufacture, garment manufacture and logistics are the fields in which we can do the most to protect the environment. The company is fully committed to using energy sparingly, to ensuring the best possible utilisation of raw materials in the production process and to avoiding waste and the pollution of air and water. Ahlers uses environmentally compatible production techniques and ensures that natural resources, energy and water are used efficiently. Our own jeans laundry is equipped with sewage purification plants for the separation of dyes. This minimises the level of water pollution caused by the washes. A high degree of automation ensures the energy efficiency of the production processes. In the past fiscal year, we conducted a survey among the largest jeans laundries in order to identify potential for improvement with regard to the inventorisation of additives, good housekeeping, waste water and environmental management. Ahlers thus covers about 70 percent of the jeans that are subjected to washing treatments per year. The results of the survey will lead to further results and recommendations, which we will develop in cooperation with the specialist department of Modeverband GermanFashion Deutschland e.V. This stage of the production process primarily focuses on the sparing use of resources and chemicals, the pretreatment of waste water and on raising our business partners' awareness for environmentally friendly measures. The premium quality of the Ahlers products makes them particularly long lasting. The extended lifecycle of the fashion products helps protect resources and the environment. Since the 2017 autumn/winter season Ahlers has refrained from using genuine fur and will no longer use mohair wool as of the 2019 spring/summer season.
Social standards in the supply chain
Safety of our products
Sustainability Report
production GRI 307-1 GRI 308-1
Ahlers expects its business partners to also comply with applicable environmental protection regulations and to use natural resources responsibly and requires them to act in an environmentally compatible manner along the production chain. All new suppliers signed up in the fiscal year have endorsed our Code of Conduct and, in doing so, have undertaken to comply with the principles of the Rio Declaration. In the past fiscal year, the Group had to pay neither fines nor non-monetary penalties for non-compliance with environmental laws and regulations.
Ahlers currently determines the consumption figures for energy, carbon emissions, water and waste water at the Group's main administrative and manufacturing locations: Herford in Germany, Opole and Lubin in Poland, and Katunayake in Sri Lanka.
| MWh* | 2017/18 | 2016/17 |
|---|---|---|
| Electricity** | 5,344 | 5,479 |
| Fuel | 3,902 | 3,997 |
| Heating energy | 6,075 | 6,941 |
| Biomass*** | 13,651 | 12,148 |
| Total energy consumption | 28,972 | 28,565 |
* Unit conversion to MWh according to Energie.Agentur.NRW
** The share of electricity from renewable energy sources depends on the electricity mix of our energy suppliers for Germany, this
share was about 53 percent in 2016/17 The survey is based on the consumption data taken from the utility companies' bills.
*** Combustion of rapidly renewable resources for the generation of steam
Energy-related carbon emissions
The fiscal year 2017/18 was the first in which Ahlers determined the carbon emissions based on the organisation's energy consumption. The basic data of the logistic, manufacturing and administrative locations in Germany, Poland and Sri Lanka that are managed and controlled by Ahlers were taken into account. The calculation was made with support from independent experts of Energie.Agentur.NRW. The emission factors of the individual energy sources are taken from scientifically reliable sources such as the latest version of the GEMIS database of the International Institute for Sustainability Analysis and Strategy or the IEA, Paris.
| 2017/18 | ||||
|---|---|---|---|---|
| Germany | Poland | Sri Lanka | ||
| Carbon emission (t/a) * | 2,689 | 2,044 | 902 | |
| spec. carbon emission t/MWh /* | 0.34 | 0.45 | 0.05 |
* Consumption (kWh/a)*emission factor
** Carbon emission (t/a)/total energy consumption
*** The result shows an average value for Germany, a relatively high value for Poland, which is due to the high share of fossil fuels, and a low value for Sri Lanka, which is due to the high share of biomass
| m³ | 2017/18 | 2016/17 | GRI 303-1 |
|---|---|---|---|
| GRI 306-1 | |||
| Total water taken | 131,905 | 122,229 | |
| Waste water | 108,377 | 110,268 |
The survey is based on the consumption data taken from the utility companies' bills. The water is taken by municipal or other water utilities and partly from the ground water. Ahlers introduces most of its waste water into the public sewer system. In the past fiscal year, the production facilities in Poland and Sri Lanka used about 18 percent of the water taken for the generation of steam for ironing, the irrigation of green spaces, etc. (previous year: approx. 10 percent). Depending on the degree of contamination, the waste water produced at the Sri Lankan production facility is pretreated in an in-house processing plant (77 percent) and a biological treatment plant (23 percent) before being introduced into the public sewer system.
In the reporting period, Ahlers determined the share of renewable and non-renewable materials in its products. This was done on the basis of the raw materials sourced from suppliers, which are then extrapolated to the finished goods purchased. Only continued product groups were taken into consideration. In the past fiscal year, the share of renewable materials used for Ahlers products amounted to 78%.
| 2017/18 | ||
|---|---|---|
| Renewable | 3,738 t | 78% |
| Non-renewable | 1,037 t | 22% |
| Total | 4,775 t | 100% |
The head office of Ahlers AG in Herford, Elverdisser Straße 313,was subjected to an energy audit in 2017. In this context, the consumption of heating oil, natural gas and electricity was examined and assessed with the aim of identifying potential for energy savings and defining corresponding energy saving measures. To determine the energy flows, the individual consumers and current load profiles were analysed. In the area of thermal insulation and heat generation, the data were recorded and assessed.
The audit has resulted in seven energy saving measures, which Ahlers will implement successively in the context of its investment plans, and for which additional company locations will be reviewed:
As far as logistics are concerned, the centralisation of warehouses and the efficient use of cargo space help avoid unnecessary transports. Ahlers is constantly trying to concentrate its base of suppliers and manufacturing partners with a view to reducing carbon emissions through reduced transports. When signing up logistic partners, Ahlers makes sure that the latter can ensure transports that are as environmentally friendly as possible. Deliveries from the Far East are made by ship or rail wherever possible to avoid an adverse impact on our carbon footprint that would arise from air transport. As of spring 2018, we have significantly reduced the transports of unfinished goods through the consolidation of the unfinished goods warehouse in Poland, which additionally helps avoid emissions. Moreover, our carton packagings are used multiple times before they are eventually recycled.
GRI 301-1
The ahlers collection, which also comprises the works of art owned by Ahlers AG, today consists of more than 2,000 works of art from about 500 artists. The main focus is on expressionism and art of the second half of the 20th century.
The commitment to art has a long tradition at Ahlers. For many decades, parts of the collection have been made available for exhibitions to allow the public to engage with the pieces of art. Requests for loans from renowned national and international museums testify to the quality of the ahlers collection. In 2018, works from the collections were on display in museums such as Sprengel Museum Hannover, Museum Wiesbaden, Palazzo Strozzi in Florence, Ludwig Forum Aachen, Museen Böttcherstraße in Bremen, Prins Eugens Waldemarsudde in Stockholm and Paul Klee Zentrum in Bern.
For many years Ahlers AG has cooperated with the Stiftung Ahlers Pro Arte by loaning important works of art for the latter's exhibitions, which attract national media coverage. Among the highlights of the foundation's activities in 2018 were the exhibitions "Von Worpswede aus: Paula Modersohn-Becker und Otto Modersohn" (April to June) and "#DepictingWomen: Frauenbilder in der Kunst" (September to December).
Major parts of the ahlers collection are loaned permanently to renowned museums with which the company has cooperated for many years. The German expressionist works from the collection are on exhibition at the Franz Marc Museum in Kochel am See, while the extensive collection of works from the 2nd half of the 20th century – with a focus on Nouveau Réalisme and Dieter Roth – is on display at the Sprengel Museum in Hanover.
In 2019, the ahlers collection will again support many projects with loans, e.g. exhibitions such as "Zwischen Utopie und Anpassung - Das Bauhaus in Oldenburg" (Landesmuseum für Kunst und Kulturgeschichte, Oldenburg), "Paula Modersohn-Becker und die Künstlergemeinschaft Brücke" (Buchheim Museum, Bernried) and "Tanz! Max Pechstein: Bühne, Parkett, Manege" (Kunsthalle Tübingen).
Just like fashion, the visual arts reflect the culture and living environment of their time. Both crystallise changes in the zeitgeist, the political and social environment and technical potential. Based on the insight that art and fashion are equally rooted in creativity while at the same time stimulating it, the company's art collection is an important component of its corporate and brand communications and its effect manifests itself not only externally but also inside the organisation: by placing selected works in the business premises, Ahlers integrates art into the working environment, thus offering its employees and guests an inspiring atmosphere. A special project in 2018 was the exhibition "Gesicht und Maske: Rollenspiele in der Porträtkunst", which was the result of a cooperation between Pierre Cardin and Modehaus Hagemeyer in Minden. From mid-October, more than 30 high-calibre works from the ahlers collection were displayed on the 2nd floor of the Hagemeyer store, right next to the sales space of Pierre Cardin, for a period of three weeks. The aim of this exhibition, which was very well received by the customers and employees of Hagemeyer, was to present works of art right at the heart of our business partners' and customers' everyday life and thus to inspire and impress people, who normally visits museums only seldom.
A selection of exhibitions that were supported by loans from the ahlers collection in the 2017/18 financial year can be found on the following page.
Ahlers makes financial and in-kind donations to a variety of social projects, associations and cultural institutions. While we continue to sponsor a number of local initiatives linked to our traditional base in Herford, we also support projects elsewhere. Going forward, Ahlers will uphold its level of social engagement and develop it further.
NIKI DE SAINT PHALLE, YVES KLEIN, OTTO MÜLLER ETC. #DEPICTINGWOMEN: FRAUENBILDER IN DER KUNST STIFTUNG AHLERS PRO ARTE GGMBH, HERFORD: SEP 15, – DEC 09, 2018
CÉSAR CÉSAR CENTRE POMPIDOU, PARIS: DEC 13, 2017 – MAR 26, 2018
CHRISTO, MIMMO ROTELLA, DANIEL SPOERRI ETC. FLASHES OF THE FUTURE LUDWIG FORUM, AACHEN: APR 20 – AUG 19, 2018
At 3.8 percent, the gross domestic product (GDP) of the world economy grew somewhat more strongly in 2018 than projected by most economic institutes at the beginning of the year (forecast in January 2018 and previous year each 3.7 percent; Commerzbank Economic Research January 2018; all other figures in this chapter Commerzbank Economic Research January 2019). This was primarily attributable to the US economy, whose growth rate of 2.9 percent was much higher than in the previous year (2.2 percent) and than assumed at the beginning of the year (January 2018 forecast: 2.3 percent). China, the second large economy, also expanded more strongly than originally expected (forecast: 6.4 percent), although the growth rate of 6.6 percent was slightly below the 2017 rate of 6.8 percent. For the eurozone, the experts initially projected GDP growth of 2.5 percent, which would have been slightly above the previous year's 2.4 percent. In fact, however, the economy slowed down in the course of the year and remained below the forecasts of the beginning of the year. A growth rate of 1.9 percent nevertheless means that the eurozone economy again showed a positive trend. The slowdown in the eurozone economy is probably mainly attributable to the appreciation of the common currency in the first half of 2018. The stronger euro made European companies less competitive and led to lower global demand for products from the eurozone, especially in China. The opposite effect came from the expansionary monetary policy still pursued by the European centra bank, which keeps interest rates at a low level. The debt levels of companies and consumers remain manageable and private consumption and capital spending are on the increase. Similar to the eurozone economy, the Russian economy also remained below the growth forecast. At 1.6 percent (previous year: 1.9 percent), growth clearly fell short of the originally projected 2.9 percent because of the US sanctions.
In 2018, the GDP growth rates of all four large European economies – Germany (2018: 1.5 percent; 2017: 2.2 percent), France (2018: 1.5 percent; 2017; 1.9 percent), Spain (2018: 2.5 percent; 2017: 3.1 percent) and Italy (2018: 1.0 percent; 2017: 1.5 percent) – were lower than in the previous years. As in the previous years, the Spanish economy grew more strongly than the eurozone average. Germany and France were more or less on a par and slightly below average. This means that the German economy, which used to grow at rates clearly above the eurozone average in the past years, is slowing down. Italy's GDP is still not back at the level recorded prior to the 2007 financial crisis.
Besides the macroeconomic trend, the labour market situation has a strong influence on consumer sentiment and domestic demand. In the eurozone, the jobless rate dropped from 9.1 percent in the previous year to 8.2 percent in the past fiscal year, which means it is back at the pre-crisis level. In some European countries, the increasingly short supply of labour has led to rising collective wages. By contrast, the stronger pay rises have not yet resulted in a visible increase in inflation, which additionally supports disposable incomes for consumption as well as purchasing power. Consumer prices in the eurozone countries increased by 1.7 percent in 2018 (previous year: 1.5 percent). The good labour market situation and the resulting real income growth have led to good consumer sentiment, especially in Germany. Moreover, the low interest rates have increased people's readiness to take on debt. Consumer confidence thus stood at a robust high level in 2018, with real consumer spending growing by 1.5 percent in sync with the economic output. This shows that private consumption remained an important driver of the German economy (GfK Consumer Confidence, December 21, 2018). The labour market situation improved also in other European countries, where consumer sentiment is also assumed to be positive.
The downward trend in sales revenues generated by Germany's physical fashion stores continued in spite of the robust macroeconomic situation and the continued good consumer sentiment. Having declined by 1.3 percent in the previous year, sales revenues of the physical fashion stores dropped by at least 1.2 percent between December 2017 and November 2018 (Textilwirtschaft 49_2018). According to other market observers, the decline was even stronger, e.g. -2 to -3 percent according to Handelsverband Textil, BTE, and -3.4 percent according to management consultants Hachmeister & Partner (calendar year 2018 each). Among the reasons cited for the fact that retail sales have contracted continuously since 2011 are the declining footfall in the city centres and the increasing shift from physical to omni-channel shoppers (Textilwirtschaft 02_2019). But the growing online sales of apparel (+7.7 percent, www.textilwirtschaft.de, January 22, 2019) do not close the gap of the physical retail stores. In the past year, sales of apparel were additionally affected by the long spell of warm and dry weather. The fact that retailers organise more and more promotional and discount campaigns at increasingly early stages is additionally weighing on the sector's sales revenues.
It is safe to assume that clothing retail sales in most European markets that are relevant for Ahlers also remained clearly below the economic growth rates in the respective countries. Especially in Russia, liquidity remains low and fashion sales have likely declined due to the continued weakness of the rouble and the resulting low purchasing power of Russian consumers. The relevant European market as a whole has therefore probably declined as in the previous year.
| EUR million | 2017/18 | 2016/17 | Change in % |
|---|---|---|---|
| Premium Brands* | 153.6 | 162.7 | -5.6 |
| Jeans, Casual & Workwear | 69.5 | 73.2 | -5.1 |
| Total | 223.1 | 235.9 | -5.4 |
* incl. "miscellaneous" EUR 0.3 EUR (previous year: EUR 0.4 million)
| EUR million | 2017/18 | 2016/17 | Change in % |
|---|---|---|---|
| Germany | 120.8 | 126.9 | -4.8 |
| Western Europe | 58.8 | 60.5 | -2.8 |
| Middle-/ Eastern Europe/ Misc. | 43.5 | 48.5 | -10.3 |
| Total | 223.1 | 235.9 | -5.4 |
| EUR million | 2017/18 | 2016/17 | Change in % |
|---|---|---|---|
| 1. quarter | 60.7 | 63.1 | -3.8 |
| 2. quarter | 50.1 | 54.2 | -7.6 |
| 3. quarter | 57.2 | 62.4 | -8.3 |
| 4. quarter | 55.1 | 56.2 | -2.0 |
| Total | 223.1 | 235.9 | -5.4 |
The revenue trend in the fiscal year 2017/18 was primarily influenced by two factors. The growing casualisation and the unusually long spell of high temperatures from April to October 2018 led to a sharp drop in sales of suits and jackets (effect on revenues: EUR -9.7 million). The difficult market situation in Eastern also had an adverse effect on Group revenues. In Russia, new US sanctions weighed on the rouble exchange rate and, consequently, on consumers' purchasing power. As of October 2018, the declining oil price made the economic situation of Russia, which is dependent on raw material exports, even more critical. Sales in Russia and Ukraine dropped by a total of EUR 2.2 million. But business was difficult also in the rest of Eastern Europe, e.g. in Poland (EUR -1.2 million) and the Baltic states (EUR -0.6 million). Consequently, sales revenues in the Central/ Eastern Europe/Other region declined by a total of EUR 5.0 million or 10.3 percent. In Western Europe it was primarily the premium brands, Pierre Cardin and Baldessarini, which were able to grow in markets such as France, the Netherlands and Switzerland, thus mitigating the negative trend. In this region, the fashion company generated sales revenues of EUR 58.8 million (previous year: EUR 60.5 million; -2.8 percent). In Germany, Pioneer Authentic Jeans grew by a gratifying 1.8 percent in spite of the difficult market environment. Pionier Workwear's revenues in Germany were on a par with the previous year. As these developments were insufficient to fully offset the negative overall trend, however, Group sales revenues in the German home market fell by EUR 6.1 million or 4.8 percent to EUR 120.8 million. Total revenues in the fiscal year 2017/18 declined by EUR 12.8 million or 5.4 percent from EUR 235.9 million to EUR 223.1 million.
Sales revenues generated by our own Retail segment increased by 2.0 percent in the fiscal year 2017/18. The Retail segment's share in total revenues climbed from 13.0 percent to 14.0 percent due to Ahlers RUS. Like-for-like revenues decreased by 5.8 percent.
Of the total of 149 stores (previous year: 155), 35 (previous year: 28) were operated by Ahlers, thereof six in Germany and 29 outside Germany, mostly in Eastern Europe. Most of our company-operated stores are located in the Baltic States and Poland. With the foundation of Ahlers RUS, we took over eleven stores in March 2018 and additionally opened one outlet store. In February 2018, the Otto Kern store in Norderney was converted into an Elsbach Denim Library.
Our partners operated a total of 114 stores on November 30, 2018, 13 less than in the previous year (of which 11 due to the takeover of Ahlers RUS). In Poland, the number of partner-operated stores declined moderately from 43 to 42. Poland still has the largest number of stores. At 34, the number of partner stores in Ukraine was slightly below the previous year's 35 stores. In Russia, the number of partner stores dropped by 11 to 18 due to the takeover of Ahlers RUS. This again puts the two countries in second and third place behind Poland. Another 14 partner stores are located in other Eastern European countries such as Czechia and Belarus. There are two and three Baldessarini stores, respectively, in Egypt and the United Arab Emirates. Moreover, one partner operated a Pierre Cardin store in the Netherlands.
| 2017/18 | 2016/17 | Change | |
|---|---|---|---|
| EUR million | EUR million | in % | |
| Sales | 223.1 | 235.9 | -5.4 |
| Gross profit | 109.2 | 117.1 | -6.7 |
| in % of sales | 48.9 | 49.6 | |
| Personnel expenses * | -50.7 | -51.0 | 0.6 |
| Balance of other expenses/income * | -54.8 | -57.4 | 4.5 |
| EBITDA * | 3.7 | 8.7 | -57.5 |
| Depreciation and amortisation * | -5.1 | -5.2 | 1.9 |
| EBIT * | -1.4 | 3.5 | n.a. |
| Special effects | -5.0 | -0.5 | <-200.0 |
| Financial result | -0.7 | -0.6 | -16.7 |
| Earnings before taxes | -7.1 | 2.4 | n.a. |
| Income taxes | 0.1 | -0.5 | n.a. |
| Consolidated results for the year | -7.0 | 1.9 | n.a. |
* before one-time effects
The gross profit margin declined by a moderate 0.7 percentage points from 49.6 percent to 48.9 percent in the fiscal year due to the fact that the increased inventories required higher write-downs while lower discounts were granted. Gross profit declined by EUR 7.9 million to EUR 109.2 million (-6.7 percent) mainly as a result of the lower sales revenues. At EUR 50.7 million, personnel expenses were slightly below the previous year's EUR 51.0 million (EUR -0.3 million) due to the savings achieved in the administrative departments at the Herford headquarters and in Austria and in spite of the integration of Ahlers RUS (EUR +0.5 million). By contrast, the balance of other operating expenses and income declined more strongly by EUR 2.6 million or 4.5 percent to EUR 54.8 million (previous year: EUR 57.4 million). This was mainly due to lower variable selling expenses (e.g. commissions) but also to savings regarding rents, marketing, travelling expenses, etc. Moreover, the sale of a work of art at a price of EUR 0.6 million resulted in a rounded book profit in the same amount due to a very low carrying amount. No works of art were sold in the previous year. The integration of the Russian business had a cost-increasing effect of EUR 1.0 million. At EUR 5.1 million, write-downs were more or less on a par with the previous year's EUR 5.2 million. Total operating expenses before one-time effects, which comprise personnel expenses, the balance of other operating expenses and income as well as write-downs, declined by EUR 3.0 million or 2.6 percent in the fiscal year 2017/18.
At EUR 5.0 million, extraordinary expenses in the fiscal year 2017/18 clearly exceeded the previous year's EUR 0.5 million (EUR +4.5 million). These one-time effects were primarily caused by the set of measures adopted in September. Most of the amount was attributable, however, to provisions for severance payments to employees. The discontinuation of activities also led to compensation payments to sales representatives. Moreover, external sales representatives will be replaced by employed salespeople (and receive the corresponding compensation payments) for the continued operations, resulting in greater efficiency in the medium term thanks to increased effectiveness and reduced costs. The premature termination of lease agreements of unprofitable stores led to additional costs. Extraordinary expenses of EUR 0.6 million were caused by the valuation of the outstanding receivables from three customers who are still active but in a difficult financial situation. As in the previous year, Ahlers also generated moderate extraordinary income in the reporting period. The company sold an unused piece of land outside the Sri Lankan premises at a price of EUR 0.2 million above the very low carrying amount (extraordinary income in previous year: EUR 0.3 million).
At EUR 0.7 million, the financial result was on a par with the previous year (EUR 0.6 million). If deferred taxes had been recognised in full, the Group's tax rate would have climbed moderately from 20.8 percent to 22.5 percent and tax income of EUR 1.6 million would have been generated. In view of moderate results planned for the next five years, however, the company recognised tax income of only EUR 0.1 million in the income statement (income tax expenses of EUR 0.5 million in the previous year). This means that there are off-balance deferred tax assets of EUR 1.5 million. This is equivalent to earnings before taxes of EUR 4.8 million. Together with the capitalised items, the Group has deferred tax assets of EUR 4.0 million, for which earnings of EUR 12.6 million may be generated in the future without having to pay taxes.
The reduction in personnel expenses and operating expenses and the other operating income mitigated the effect of lower revenues on earnings before one-time effects but were insufficient to offset them in full. EBITDA declined by EUR 5.0 million to EUR 3.7 Mio. million (-58 percent; previous year: EUR 8.7 million). Consolidated earnings after taxes dropped to EUR -7.0 million in the fiscal year 2017/18 (previous year: EUR 1.9 million) because of the lower revenues and much higher extraordinary expenses.
| Nov. 30, 2018 | Nov. 30, 2017 | |||
|---|---|---|---|---|
| Assets | EUR million | in % | EUR million | in % |
| Property, plant and equipment and intangible assets | 42.1 | 24.5 | 42.8 | 23.6 |
| Other non-current assets | 19.2 | 11.1 | 19.5 | 10.8 |
| Deferred tax assets | 1.2 | 0.7 | 1.2 | 0.7 |
| Non-current assets | 62.5 | 36.3 | 63.5 | 35.1 |
| Inventories | 80.9 | 47.0 | 75.3 | 41.6 |
| Trade receivables | 20.2 | 11.7 | 31.6 | 17.4 |
| Other current Assets | 4.4 | 2.6 | 4.4 | 2.4 |
| Cash and cash equivalents | 4.2 | 2.4 | 6.4 | 3.5 |
| Current assets | 109.7 | 63.7 | 117.7 | 64.9 |
| Total assets | 172.2 | 100.0 | 181.2 | 100.0 |
| Nov. 30, 2018 | Nov. 30, 2017 | |||
|---|---|---|---|---|
| Equity and liabilities | EUR million | in % | EUR million | in % |
| Equity | 93.1 | 54.1 | 102.1 | 56.4 |
| Pension provisions | 3.4 | 2.0 | 4.1 | 2.2 |
| Other non-current liabilities and provisions | 21.5 | 12.5 | 29.0 | 16.0 |
| Deferred tax liabilities | 1.1 | 0.6 | 1.6 | 0.9 |
| Non-current liabilities | 26.0 | 15.1 | 34.7 | 19.1 |
| Current income tax payables | 0.7 | 0.4 | 0.6 | 0.3 |
| Other current liabilities and provisions | 52.4 | 30.4 | 43.8 | 24.2 |
| Current liabilities | 53.1 | 30.8 | 44.4 | 24.5 |
| Liabilities | 79.1 | 45.9 | 79.1 | 43.6 |
| Total equity and liabilities | 172.2 | 100.0 | 181.2 | 100.0 |
Ahlers was able to maintain its solid balance sheet structure in the fiscal year 2017/18 in spite of the adverse environment. At EUR 172.2 million, total assets were down by EUR 9.0 million on the previous year's EUR 181.2 million on November 30, 2018. The decline in total assets is primarily attributable to the reduction in current assets (EUR -8.0 million). Due to the signing of a factoring agreement, receivables declined by EUR 10.4 million as of the balance sheet date. By contrast inventories increased by EUR 5.6 million to EUR 80.9 million (previous year: EUR 75.3 million). The foundation of Ahlers RUS, the weak summer season and the slow sales of autumn/winter merchandise sent inventories rising to EUR 61.4 million (EUR +8.0 million; previous year: EUR 53.4 million). Stocks of raw materials declined by EUR 2.4 million to EUR 19.0 million (previous year: EUR 21.4 million) as we took the first steps towards full-package services for the production of jeans and improved the accuracy of our procurement planning. Together with increased trade payables (EUR +3.0 million), net working capital (balance of inventories, trade receivables and trade payables) declined by EUR 8.8 million or 10.2 percent from EUR 86.3 million to EUR 77.5 million.
Total non-current assets decreased by a moderate EUR 1.0 million to EUR 62.5 million (previous year: EUR 63.5 million). The reduction was mainly attributable to property, plant and equipment as well as intangible assets, which declined by EUR 0.7 million from EUR 42.8 million to EUR 42.1 million due to write-downs. Other non-current assets dropped by a moderate EUR 0.3 million to EUR 19.2 million. By contrast, deferred tax assets remained unchanged, as the company decided not to capitalise EUR 1.5 million in losses carried forward based on conservative assumptions (see page 60).
In the fiscal year 2017/18, Ahlers reduced its net financial liabilities, which comprise the balance of non-current and current financial liabilities less cash and cash equivalents, by EUR 1.4 million. As of the balance sheet date, net financial liabilities totalled EUR 28.5 million (previous year: EUR 29.9 million), mainly as a result of the factoring agreement. The reduction in net working capital resulted in free cash, which was used to reduce non-current financial liabilities (EUR -7.5 million). As a result, non-current liabilities declined by EUR 8.7 million from EUR 34.7 million to EUR 26.0 million in the fiscal year 2017/18. By contrast, total current financial liabilities increased by EUR 3.9 million. Part of the fiscal year's high extraordinary expenses of EUR 5.0 million will result in payments in the following periods, which is why other provisions increased by a strong EUR 2.5 million to EUR 4.9 million.
Equity capital decreased by EUR 9.0 million to EUR 93.1 million (previous year: EUR 102.1 million) because of the decline in consolidated results (EUR -7.0 million) and the payment of the previous year's dividend in the fiscal year 2017/18. As total assets also declined noticeably, however, the equity ratio stayed at a high level of 54.1 percent as at November 30, 2018 (previous year: 56.4 percent).
| Financial figures | ||
|---|---|---|
| Equity ratio | in % | 54.1 | 56.4 |
|---|---|---|---|
| Dept ratio * | in % | 83.8 | 75.8 |
| Interest coverage ratio ** | in % | <1.0 | 400.2 |
| Return on equity | in % | -7.5 | 1.9 |
| Investment in property, plant and | |||
| equipment and intangible assets | EUR million | 5.9 | 6.9 |
| Total assets | EUR million | 172.2 | 181.2 |
| 2017/18 | 2016/17 |
|---|---|
* excl. deferred taxes
** before one-time effects
Basing on the much lower consolidated earnings, operating cash flow almost reached the previous year's level, primarily because of the EUR 8.8 million reduction in net working capital, which is attributable to the factoring agreement, as well as the changes in current provisions in the context of the optimisation measures initiated by the company. At EUR 9.6 million, operating cash flow was only slightly below the previous year's EUR 10.2 million (-5.9 percent or EUR -0.6 million). Net investments declined moderately due to the ending investments in the new enterprise resource planning (ERP) system and in spite of the investments in Ahlers RUS, sending free cash flow before financing activities and after dividend rising to EUR 1.4 million, which was more or less on a par with the previous year's EUR 1.5 million. The repayment of non-current financial liabilities led to a sharp drop in free cash flow, which stood at a negative EUR -7.5 million in the fiscal year 2017/18.
| EUR million | 2017/18 | 2016/17 | Change in % |
|---|---|---|---|
| Consolidated results for the year | -7.0 | 1.9 | n.a. |
| Depreciation, amortisation and impairment losses | 6.0 | 5.0 | 20.0 |
| Change in net working capital | 8.8 | 3.6 | >100.0 |
| Change in current provisions | 2.5 | -0.3 | n.a. |
| Other changes* | -0.7 | 0.0 | n.a. |
| Cash flow from operating activities | 9.6 | 10.2 | -5.9 |
| Net investments | -6.1 | -6.5 | 6.2 |
| Effects of changes in the scope of exchange rates | 0.3 | 0.2 | 50.0 |
| Dividend payments | -2.4 | -2.4 | 0.0 |
| Free cash flow before financing activity | 1.4 | 1.5 | -6.7 |
| Additions to (+), repayment of (-) non-current liabilities | -8.9 | 3.3 | n.a. |
| Free cash flow | -7.5 | 4.8 | n.a. |
| Liquid funds as of November 30 ** | -1.2 | 6.3 | n.a. |
* Other non-cash expenses and income EUR -0.5 million (previous year: EUR 0.3 million) Change in non-current provisions and other liabilities EUR -1.5 million (previous year EUR -1.4 million)
** Cash less overdrafts
The market conditions for European clothing retailers were again challenging in the fiscal year 2017/18. Pioneer Authentic Jeans and Pionier Workwear were our only brands that were able to defy the negative market trend. Pierre Cardin Jeans also grew in 2017/18. In spite of a few positive developments, revenues and earnings clearly fell short of the Management Board's expectations even considering the difficult conditions in the past fiscal year. The sale of trade receivables allowed us to significantly reduce the cash tied up in net working capital and to use it to reduce our net liabilities.
Our operating earnings targets were not reached. The Management Board and the Supervisory Board therefore initiated a comprehensive set of measures to increase earnings and efficiency in the medium term. The associated extraordinary expenses reduced consolidated earnings even further. At the end of the fiscal year, the financial position was sound and the balance sheet was backed with high equity capital as usual. The future revenue and earnings trend should be positive as of 2020 due to the measures initiated. 2018/19 will be another year of transformation, for which we project an operating loss but again positive cash flow and a further reduction in net liabilities. We are cautiously optimistic for the next fiscal years.
Sales revenues by segments
| 2017/18 EUR million |
2016/17 EUR million |
Change in % |
|
|---|---|---|---|
| Premium Brands* | 153,6 | 162,7 | -5,6 |
| Jeans, Casual & Workwear | 69,5 | 73,2 | -5,1 |
| Total | 223,1 | 235,9 | -5,4 |
* incl. other 0.3 EUR million (previous year 0.4 EUR million)
The difficult sales of suits and jackets and the tight market situation in Eastern Europe primarily affected the revenues of the premium brands, Baldessarini, Pierre Cardin and Otto Kern. Segment revenues declined by a total of EUR 9.1 million or 5.6 percent to EUR 153.6 million in the fiscal year 2017/18 (previous year: EUR 162.7 million). By contrast, the premium brands were able to record some successes in important Western European markets such as France (segment revenues +1.9 percent), the Netherlands (+8.7 percent) and Switzerland (+14.4 percent). These individual successes of the Premium segment were mainly attributable to Pierre Cardin jeans (+1.6 percent); moreover, Pierre Cardin increased its brand revenues in Scandinavia by an impressive 8.5 percent. Baldessarini was able to more than double its revenues in the UK and Sweden and also grew strongly in Poland (+ 30 percent), which is an important market for Ahlers. The brand also grew its revenues in Canada by roughly 30 percent, starting from a low base. The positive regional developments were insufficient to offset the downward overall trend, though. At 69 percent, the Premium segment's share in total revenues remained unchanged from the previous year.
In the Jeans, Casual & Workwear segment, sales revenues of Pioneer Authentic Jeans were more or less on a par with the previous year (+ 0.5 percent). The brand was successful in markets such as Germany (+ 1.8 percent) and Switzerland (+ 20.6 percent) as well as Poland (+ 3.0 percent) and Czechia (+ 16.1 percent). Sales of Pionier Workwear also showed a positive trend and picked up by 1.0 percent. The workwear specialist's domestic revenues were on a par with the previous year and picked up by an impressive 12 percent in France. The positive revenue trend of the two core brands of the Jeans, Casual & Workwear segment failed to fully offset the difficult sales of jackets. Jupiter saw its revenues decline by 23 percent in the fiscal year due to the long period of hot weather. Sales revenues of Pionier Jeans & Casuals also fell short of expectations and declined by 11 percent. The segment's total revenues dropped by EUR 3.7 million from EUR 73.2 million to EUR 69.5 million. As in the previous year, the Jeans, Casual & Workwear segment accounted for 31 percent of total revenues.
| EUR million | 2017/18 | 2016/17 | Change in % |
|---|---|---|---|
| Premium Brands * | -2.4 | 1.1 | n.a. |
| Jeans, Casual & Workwear | 1.0 | 2.4 | -58.3 |
| Total | -1.4 | 3.5 | n.a. |
* incl. other EUR 0,5 million (previous year EUR 0,0 million)
The gross profit margin of the three premium brands, Baldessarini, Pierre Cardin and Otto Kern, declined by 1.2 percentage points. The lower revenues were the main reason for the reduced gross profit (- EUR 6.5 million), however. The variable selling expenses and the revenue-related transport costs declined by 0.5 percentage points and mitigated the revenue effect. The Premium segment's operating expenses were more or less on a par with the previous year. Including 'other' earnings, the Premium segment's earnings declined by EUR 3.5 million from EUR 1.1 million to EUR -2.4 million due to the lower revenues.
Although the gross profit margin increased moderately (+ 0.6 percentage points), the declining revenues in the Jeans, Casual & Workwear segment led to a much lower gross profit in the fiscal year 2017/18. Compared to the previous year, variable selling expenses declined slightly, personnel expenses remained unchanged and other operating expenses increased moderately. Due to the effect of the reduced revenues, total earnings of the Jeans, Casual & Workwear segment declined by EUR 1.4 million from EUR 2.4 million to EUR 1.0 million.
Disclosures based on the German Commercial Code (Handelsgesetzbuch – HGB)
Ahlers AG is the parent company of the Ahlers Group. Its central function is the operational and strategic management of the Group by the Management Board. However, Ahlers AG is not merely a holding company but has signed management and service agreements with certain subsidiaries. Under these contracts, the contractual partners (the commission agents) are responsible for the procurement of all required face fabrics, findings and accessories as well as merchandise, have these materials processed on behalf of Ahlers AG and then market them in their own name but on the account of Ahlers AG; they also perform administrative and service tasks. Contracts of this kind have been signed with the following companies: Ahlers Zentralverwaltung GmbH, Baldessarini GmbH, Pionier Berufskleidung GmbH, Jupiter Bekleidung GmbH, Pioneer Jeans-Bekleidung GmbH, Pionier Jeans & Casuals Deutschland GmbH and Otto Kern GmbH. In return for the above activities, these companies receive a full refund of their expenses, interest on capital as well as appropriate compensation. Controlling and profit and loss transfer agreements were signed with all of the above companies. Ahlers AG also collects domestic and foreign income from investments as well as income and expenses from the controlling and profit and loss transfer agreements signed with other Group companies.
| 2017/18 | 2016/17 | Change | |
|---|---|---|---|
| EUR million | EUR million | in % | |
| Sales | 82.8 | 88.2 | -6.1 |
| Gross profit | 28.8 | 31.4 | -8.3 |
| in % of sales | 34.8 | 35.6 | |
| Personnel expenses* | -1.2 | -1.5 | 20.0 |
| Balance of other expenses/income* | -35.7 | -38.2 | 6.5 |
| Depreciation and amortisation* | -0.1 | -0.1 | 0.0 |
| Income from investments* | 6.0 | 9.6 | -37.5 |
| EBIT* | -2.2 | 1.2 | n.a. |
| Special effects | -3.9 | -0.3 | <-200.0 |
| Financial result | -0.2 | -0.2 | 0.0 |
| Earnings before taxes | -6.3 | 0.7 | n.a. |
| Income taxes | -0.1 | 0.9 | n.a. |
| Net loss/income | -6.4 | 1.6 | n.a. |
* before special effects
Sales revenues of Ahlers AG declined by EUR 5.4 million from EUR 88.2 million to EUR 82.8 million in the fiscal year 2017/18. Similar to the Group level, this was due to two factors. First, the growing casualisation and the unusually long spell of hot summer temperatures from April to October 2018 led to a sharp drop in commission agents' sales of suits and jackets. Second, the difficult market situation in Eastern Europe also had an adverse effect on commission agents' revenues. At 24.7 percent, the export share of revenues was therefore slightly lower than in the previous year (26.2 percent).
The lower gross profit of EUR 28.8 million posted for the fiscal year 2017/18 (EUR -2.6 million; previous year: EUR 31.4 million) is mainly attributable to the reduced revenues. To a minor extent, it was due to the 0.8 percentage point decline in the gross profit margin. Personnel expenses dropped by EUR 0.3 million from EUR 1.5 million to EUR 1.2 million, due to the fact that the Management Board compensation was reduced (see Compensation Report on page 82). The balance of other operating expenses and income declined from EUR 38.2 million to EUR 35.7 million, thus improving the result by EUR 2.5 million. This was mainly due to a reduction in variable selling expenses such as commissions. The sale of a work of art at a price of EUR 0.6 million, which resulted in a rounded book profit in the same amount due to a very low carrying amount, also had a positive influence. In addition, the write-up of the investment in Otto Kern GmbH generated income of EUR 1.7 million. The latter was offset, however, by the write-down of the investment in the Polish distribution and logistics company, Ahlers Poland, in the same amount (prior year write-down of EUR 0.1 million).
Income from investments in domestic and foreign companies declined by EUR 2.7 million from EUR 5.0 million to EUR 2.3 million in the past fiscal year. The balance of income from profit-and-loss-transfer agreements and expenses from losses taken over from German commission agents before one-time effects also declined noticeably by EUR 1.0 million (2017/18 balance: EUR 3.7 million; prior year balance: EUR 4.7 million). Ahlers AG's income from investments therefore declined by 38 percent or EUR 3.6 million from EUR 9.6 million to EUR 6.0 million. This was mainly due to the fact that commission agents' and foreign subsidiaries' earnings declined because of the lower revenues. EBIT before one-time effects dropped from EUR 1.2 million to EUR -2.2 million in the fiscal year 2017/18.
At EUR 3.9 million, one-time effects exceeded the prior year level considerably (EUR 0.3 million). They were primarily caused by the efficiency-enhancing measures adopted in September 2018. Severance payments played the most important role in this context. One-time effects also include compensation payments to sales representatives, which became necessary because of the discontinuation of activities, and the costs of store closures. At EUR 0.2 million, the financial result was on a par with the previous year.
The results before taxes declined by EUR 7.0 million to EUR -6.3 million in the fiscal year 2017/18, resulting in infinitely usable loss carryforwards. As moderate results are planned for the following years, no deferred tax assets were recognised in the fiscal year. At EUR -6.4 million, Ahlers AG's net loss was clearly below the previous year's net income of EUR 1.6 million.
| Nov. 30, 2018 | Nov. 30, 2017 | ||||
|---|---|---|---|---|---|
| Assets | EUR million | in % | EUR million | in % | |
| Property, plant and equipment and intangible assets | 0.2 | 0.1 | 0.3 | 0.2 | |
| Other non-current assets | 81.7 | 59.0 | 80.6 | 55.4 | |
| Non-current assets | 81.9 | 59.1 | 80.9 | 55.6 | |
| Inventories | 32.8 | 23.7 | 31.3 | 21.5 | |
| Trade receivables | 4.1 | 3.0 | 8.8 | 6.0 | |
| Other current assets | 16.7 | 12.0 | 20.1 | 13.8 | |
| Cash and cash equivalents | 0.4 | 0.3 | 2.7 | 1.9 | |
| Current assets | 54.0 | 39.0 | 62.9 | 43.2 | |
| Accrued items and deferred taxes | 1.8 | 1.3 | 1.8 | 1.2 | |
| Total Assets | 137.7 | 100.0 | 145.6 | 100.0 |
| Nov. 30, 2018 | Nov. 30, 2017 | ||||
|---|---|---|---|---|---|
| Equity and liabilities | EUR million | in % | EUR million | in % | |
| Equity | 85.6 | 62.2 | 94.3 | 64.8 | |
| Pension provisions | 0.2 | 0.2 | 0.4 | 0.3 | |
| Other non-current liabilities | 23.0 | 16.7 | 29.9 | 20.5 | |
| Other provisions | 2.3 | 1.8 | 2.8 | 1.9 | |
| Other liabilities and deferred income | 26.6 | 19.2 | 18.2 | 12.5 | |
| Liabilities | 52.1 | 37.8 | 51.3 | 35.2 | |
| Total equity and liabilities | 137.7 | 100.0 | 145.6 | 100.0 |
At EUR 137.7 million, total assets of Ahlers AG were down by EUR 7.9 million on the previous year's EUR 145.6 million on November 30, 2018. The decline in total assets is mainly attributable to the EUR 8.9 million reduction in current assets. Due to the signing of a factoring agreement, receivables declined by EUR 4.9 million as of the balance sheet date. The other changes more or less offset each other. Thanks to stricter cash management, cash and cash equivalents were down by EUR 2.3 million on the previous year. By contrast inventories increased by EUR 1.5 million to EUR 32.8 million (previous year: EUR 31.3 million). Together with slightly lower trade payables (EUR -0.4 million), net working capital (balance of inventories, trade receivables and trade payables) declined by EUR 2.8 million from EUR 33.6 million to EUR 30.8 million. The company's interest in Ahlers RUS increased fixed assets by a moderate EUR 1.0 million to EUR 81.9 million (previous year: EUR 80.9 million).
On the liabilities side, equity capital declined by EUR 8.7 million to EUR 85.6 million because of the reduced result and the dividend payment. At 62.2 percent, the equity ratio was almost on a par with the previous year (64.8 percent) on the balance sheet date due to the reduced total assets. Net financial liabilities decreased slightly by EUR 0.6 million to EUR 28.9 million (previous year: EUR 29.5 million). While the factoring agreement led to the repayment of non-current financial liabilities, it also increased the liabilities to affiliated companies. Between them, these factors increased the debt capital by a moderate EUR 0.8 million from EUR 51.3 million to EUR 52.1 million.
| Free cash flow | |||
|---|---|---|---|
| EUR million | 2017/18 | 2016/17 | Change in % |
| Net loss/income for the year | -6.4 | 1.6 | n.a. |
| Depreciation, amortisation and impairment losses | 0.1 | -0.2 | n.a. |
| Profit/loss from disposal of fixed assets | 0.5 | 0.0 | n.a. |
| Change in net working capital | 2.9 | 1.9 | 52.6 |
| Change in current provisions | -0.5 | 0.4 | n.a. |
| Other changes | 11.0 | -2.5 | n.a. |
| Cash flow from operating activities | 7.6 | 1.2 | >100.0 |
| Net investments | -0.4 | 0.2 | n.a. |
| Free cash flow before financing activity | 7.2 | 1.4 | >100.0 |
| Additions to (+), repayment of (-) non-current liabilities | -7.1 | 3.1 | n.a. |
| Dividend payments | -2.4 | -2.4 | 0.0 |
| Free cash flow | -2.3 | 2.1 | n.a. |
| Liquid funds as of November 30 * | 0.4 | 2.7 | -85.2 |
* Cash less overdrafts
At EUR 7.6 million, cash flow from operating activities was positive in the fiscal year 2017/18 and clearly exceeded the previous year's EUR 1.2 million in spite of the net loss for the year. This increase was mainly due to the reduction in net working capital and the increase in liabilities to affiliated companies resulting from the factoring activities handled by Ahlers AG for its subsidiaries. The repayment of non-current financial liabilities led to a sharp drop in free cash flow, which stood at a negative EUR -2.3 million in the fiscal year 2017/18. Free cash flow for both fiscal years, 2017/18 and 2016/17, was almost balanced at EUR -0.2 million.
Interested readers can access Ahlers AG's balance sheet, profit and loss account and notes on the Internet by going to the Investor Relations section of the company's homepage, www.ahlers-ag.com.
The Ahlers Group has installed a consistent risk management system covering all Group units. This risk management system also extends to the parent company, Ahlers AG. Reference is therefore made to the Group Risk and Opportunity Report as of page 77. The statements made in this report are also directly relevant for Ahlers AG in respect to most of the risks, given that Ahlers AG itself is an operating company as well. In addition, these risks are also indirectly relevant as they can potentially damage the position of individual subsidiaries, e.g. leading to lower dividends and potentially requiring the parent company to provide additional funding.
The earnings forecast for Ahlers AG hinges materially on the performance of its subsidiaries and the performance of the Group. Readers are therefore referred to the Group's Forecast Report and the Report on Post Balance Sheet Events provided on the following pages. As in the case of the Group, we are cautiously optimistic about the performance of Ahlers AG in the fiscal year 2018/19. We expect Ahlers AG to show a robust performance in a challenging business environment. In the context of the set of measures adopted in September 2018, important strategic decisions were taken to increase earnings in the medium term. The fiscal year 2018/19, which has just begun, will be a year of transformation for Ahlers AG. Sales revenues of Ahlers AG are expected to decline, mainly because of the discontinuation of the Jupiter sportswear brand and the discontinued ladieswear activities of Pioneer. The difficult market conditions should additionally weigh on commission agents' sales revenues. We expect Ahlers AG's total revenues to decline at a single-digit percentage rate. The set of measures adopted will lead to a noticeable reduction in expenses both directly at Ahlers AG and at its investments in the fiscal year 2018/19. Due to revenue effects on gross profit, EBIT before one-time effects should nevertheless remain negative and rather tend to deteriorate slightly compared to the previous year. Extraordinary expenses should decline sharply, however, and thus lead to a noticeable improvement in earnings. Net liabilities should decline further because of a reduction in inventories and the sale of assets. Ahlers AG is unlikely to employ its own staff also in 2018/19. For further developments, please refer to the Group forecast below.
In the report for the previous year, the Management Board of Ahlers AG had projected a moderate increase in total revenues and EBIT before one-time effects above the prior year level (EUR 1.2 million) in the fiscal year 2017/18. Both expectations did not come true. The Group's revenues were much lower than expected and were the main reason for the marked drop in EBIT before one-time effects.
No events requiring disclosure in this report occurred after the balance sheet date.
In 2018, the world economy grew by 3.8 percent, i.e. at a slightly higher rate than in the year before (2017: 3.7 percent; all figures in this chapter courtesy Commerzbank Economic Research January 2019). Most economic institutes assume that this solid growth trend will generally continue in the year 2019, albeit at a somewhat more moderate pace , with a growth forecast of 3.5 percent. A GDP growth rate of 2.5 percent slightly below the prior year level but still above the 2017 growth rate is projected for the US economy (previous year: 2.9 percent; 2017: 2.2 percent). China's GDP is also expected to grow at a slightly lower rate of 6.3 percent (previous year: 6.6 percent; 2017: 6.8 percent). By contrast, the GDP growth forecast of 1.4 percent for the eurozone is significantly more moderate (previous year: 1.9 percent) and, most importantly, clearly below the 2017 growth rate (2.4 percent). The growth expectations for the four large eurozone countries reflect this slightly downward trend. The German and French economies are expected to grow by 1.2 percent each in 2019 (2018: 1.5 percent each), while growth rates of 2.4 percent and 0.9 percent are projected for Spain and Italy, respectively (2018: 2.5 and 1.0 percent, respectively). A moderately positive economic trend is projected also for the Russian economy, which is expected to grow by 1.1 percent in 2019 (2018: 1.6 percent). Risks to this economic scenario come primarily from world politics. The further course of Great Britain's exit from the European Union and the trade dispute between the USA and China continue to cause political uncertainties, although their impact on the general economic trend has so far been only moderate. By contrast, the European Central Bank's expansionary monetary policy supports the economy by stimulating domestic demand in the eurozone. Further improvements in the labour market, rising wages and favourable financing conditions are likely to send both private consumption and capital spending rising. Private consumption is expected to remain an important pillar of the European economy. In view of fully utilised capacities and the relatively high growth rates of the previous years, the lower growth in the German economy is interpreted as a return to normal.
Germany's Gesellschaft für Konsumforschung projects per-capita purchasing power, i.e. nominal disposable income, to increase by 3.3 percent (GfK press release dated December 13, 2018). This positive purchasing power trend is supported by rising wages in many industries and the stable labour market. Pensions are also expected to increase in 2019. Depending on the individual economic growth rates, purchasing power is likely to increase also in other European countries. How much of the nominal increase in purchasing power will remain in real terms depends on consumer price inflation. An average annual inflation rate of 1.5 percent is projected for the eurozone, with consumer prices in Germany expected to increase by 1.7 percent on average. This suggests that real disposable income is likely to grow.
As in the previous year, the macroeconomic preconditions for a positive industry trend are in place. Thanks to the good economic and labour market trend and rising wages in many industries, European consumer sentiment is likely to stay at a high level in 2019. Real incomes in the more dynamically growing economies should pick up, as the inflation rates in these countries are likely to remain below the anticipated increase in purchasing power. What is more, the persistently low interest rates continue to make saving unattractive. Private consumption and retail sales are therefore likely to grow. The market environment for apparel is nevertheless likely to remain challenging in the fiscal year 2018/19. The past years have shown that declining footfall in city centres has a stronger influence than consumers' income growth. Retailers and local governments have launched various initiatives, e.g. allowing stores to open on certain Sundays, to halt and reverse this trend. Sales revenues of physical clothing stores are likely to decline moderately also in 2019. The low base of the previous year should have a mitigating effect, however. The anticipated increase in online sales of apparel are unlikely to offset the decline in physical retail sales. We not only expect the sales revenues of Germany's physical clothing stores to decline in 2019 but also project a similar trend for our relevant foreign markets in Europe.
In the dramatically changing market environment, the Management Board and the Supervisory Board initiated comprehensive measures in 2018, which are expected to lead to a sustainable increase in both revenues and earnings in the medium term. Most of these measures are expected to be implemented in the course of 2019, which means that they will take full effect in 2020. It will therefore be all the more important to seize market opportunities with great determination and to align the company with its target customers and distribution channels. The set of measures includes:
The fiscal year 2018/19, which has just begun, will be a year of transformation for Ahlers. The measures adopted in September 2018 to increase earnings and efficiency include the discontinuation of the Jupiter sportswear brand and of the ladieswear activities of Pierre Cardin and Pioneer in the course of the fiscal year. This is expected to reduce revenues in 2018/19 by about EUR 6 million. In view of the market situation, the Management Board projects declining revenues also for the continued operations. Altogether, this should reduce Group revenues by a medium single-digit percentage. The respective shares of both segments in total revenues should remain largely stable. We project growing revenues for our own Retail operations and our e-commerce activities. This growth will also be attributable to Ahlers RUS, which is expected to grow organically and will be consolidated for the first full year (nine months in the previous year).
The Management Board expects consolidated earnings to improve noticeably in the fiscal year 2018/19, mainly because of reduced one-time effects. While 2017/18 saw greatly increased extraordinary expenses of EUR 5.0 million weigh on the result, expenses in the new fiscal year should return to the normal level of the past fiscal years. Moreover, we expect moderate extraordinary income from the sale of a piece of land, which has been initiated in the previous years and should be realised in 2019. The operating result will be greatly influenced by revenue effects on gross profit. The gross profit margin should improve slightly due to more favourable procurement costs, reduced returns and, consequently, lower inventory write-downs, thus mitigating the effect somewhat. Operating expenses, which comprise personnel expenses, other expenses and write-downs, should drop sharply as a result of the cost-cutting measures. Write-downs are expected to be below the prior year level. Revenue and expense effects on the operating result should largely offset each other. From today's point of view, we expect EBIT before one-time effects to tend to remain below the previous year's EUR -1.4 million, as the cost-cutting measures will become effective only gradually over the course of the year. It is also planned to sell works of art. The cash flow from this sale should be within the medium single-digit euro million range, while the profit contribution is more difficult to quantify at this stage and has not been incorporated into the forecast. The financial result is expected to remain unchanged. Consolidated earnings after taxes are likely to grow at a high double-digit percentage rate but still be negative in 2018/19, which will be a year of transformation. It is our declared objective to return to profit in 2020 when all measures initiated take effect.
All projections are based on the assumption of a growing world economy, as outlined above, and the absence of any crises and major insolvencies in the retail sector in the main output markets. Developments in the retail sector remain difficult to assess. This year's spring/summer season is particularly difficult to predict because of the unfavourable prior year base. Therefore please note that the forecast is subject to great uncertainty.
The fiscal year 2018/19 is expected to see the Group's headcount decline by about 200 people from 2,145 on November 30, 2018 to about 1,950. This reduction will be the result of the planned job cuts resulting from the discontinuation of operations and the reduction of the production capacity in Poland. In Germany, the headcount is likely to decline across nearly all divisions as the efficiency-enhancing measures are implemented (November 30, 2018: 589 people).
Net capital expenditures planned for the fiscal year 2018/19 are noticeably lower than in the previous year (EUR 6.1 million) and should also be slightly below the declining write-downs before one-time effects (2017/18: EUR 5.1 million). After three years of relatively high investments, the ERP system was largely completed in the fiscal year 2017/18. Investments in intangible assets will therefore decline sharply in the current fiscal year 2018/19. Moreover, the foundation of Ahlers RUS led to higher investments in the previous year, which will not be repeated this year. The breakdown of the remaining budget will be more or less equivalent to that of the previous year.
The reduction in net working capital remains an important objective in the fiscal year that has just begun. The consistent sale of old merchandise, the reduction in inventories resulting from the discontinuation of activities and the change towards fullpackage services should lead to a further decline in net working capital. Together with the noticeably improved consolidated earnings, operating cash flow should be more or less on a par with the previous year. Reduced investments that are lower than write-downs should increase the free cash flow. The Management Board proposes not to pay out a dividend for the fiscal year 2017/18. The sale of works of art and of the unused piece of land should improve the financial position. Altogether, free cash flow before financing activities should therefore be positive and net liabilities should be further reduced. As a result, the balance sheet structure should tend to improve.
In the Annual Report for 2016/17, the Management Board had projected a low single-digit percentage increase in Group revenues and a medium double-digit percentage rise in consolidated earnings after taxes for the following year. The revenue forecast for the fiscal year 2017/18 was not reached, mainly because of the difficult market situation. Group sales revenues declined by EUR 12.8 million or 5.4 percent from EUR 235.9 million to EUR 223.1 million. The earnings forecast was clearly missed because of declining revenues and high extraordinary expenses for the measures aimed at increasing the company´s earnings and efficiency adopted in September 2018. Consolidated earnings after taxes decreased by EUR 8.9 million from EUR 1.9 million to EUR -7.0 million. Due to the start-up of Ahlers RUS, capital expenditures were only slightly lower than in the previous year and higher than originally expected. As had been projected, the reduction in net working capital released cash and thus greatly helped to strengthen the operating cash flow. Free cash flow before financing activities was positive as planned. As announced in the 2016/17 Annual Report, the solid balance sheet structure was maintained.
| Trend | Actual | ||
|---|---|---|---|
| 2018/19 | 2017/18 | ||
| Sales | Premium Brands | - | 153.6 |
| Jeans, Casual & Workwear | - | 69.5 | |
| Total | - | 223.1 | |
| Earnings | EBIT after one-time effects | ++ | -6.4 |
| Consolidated net income | ++ | -7.0 | |
| Capital expenditure | -- | 6.1 |
positive change by single-digit percentage
negative change by single-digit percentage
-/+ stable outlook
including Financial instruments
Good corporate management means, on the one hand, securing the company's future through the forward-looking exploitation of market opportunities. On the other hand, active risk management is required to protect the company against hazards arising at short notice. The aim is to identify and, wherever possible, to quantify risks at an early stage, so that an appropriate response can be taken to avoid or at least reduce damages.
The Management Board has installed a risk management system which meets the requirements of a multi-brand company with a decentralised, regionally distributed organisation. The revolving, mostly monthly reporting system therefore supplies not only the data which are required for operational management but also the data which are relevant for the quantification of risks. The Supervisory Board's Audit Committee receives a quarterly risk report which supports its own work. This report classifies all risks as high, medium or low depending on the probability of occurrence and the size of the risk. The direction of change and the size of the risk are then determined. The regular risk reports are regularly reviewed by the Management Board and the Risk Manager for appropriateness, effectiveness and their contents. The Internal Audit Department is involved in risk management through ongoing monitoring and review of the Group's policies and processes. Ahlers AG and the Group distinguish between risks that are monitored and controlled centrally and risks that are recorded in the operating units and reported to the headquarters.
Centrally monitored operational/strategic risks
To mitigate the important operational risk of a decline in the profitability of the divisions, Ahlers constantly monitors all relevant key figures of the individual brands such as the pricing margin and the gross profit margin as well as the compliance with cost budgets. As soon as the first signs of a deviation from the plan and, as a result, of declining profitability are identified, management starts to look for and analyse the causes and to develop countermeasures together with the units affected.
Strategic risks may result from the termination of license agreements or the transfer of trademark rights to third parties. To minimise these risks, Ahlers renews such agreements for long terms and constantly monitors the national and international registration of its trademarks as well as compliance with license agreements with third parties.
Comprehensive insurance has been taken out to cover, among other things, the risks from business disruptions, loss of goods and claims for damages. The insurance situation is reviewed annually together with the company's independent insurance broker and the policies are adjusted if required. In this context, possibilities for improved cover and for reducing insurance premiums are reviewed and seized where this makes sense.
Procurement risks are a constant challenge because of the qualitative and quantitative demands made on fashion companies. Fashion companies are forced to reconcile the conflicting demands of cost management and reliability; both stagnation and hasty changes of suppliers may put the company at risk. Ahlers reduces these risks through a careful and early selection of competent suppliers as well as thorough quality checks. Manufacturers are selected under risk and opportunity aspects; the latter may relate to more favourable regional production costs or currency changes.
Ahlers' business activity as a clothing manufacturer entails relevant risks relating to environmental social and labour matters as well as human rights and the fight against corruption only with regard to procurement. This relates to non-compliance with environmental, social and corporate governance within the supply chain. To avoid these non-financial risks, Ahlers pursues a preventive approach and prevents these risks with the help of clearly defined Group-wide agreements and measures (see non-financial Group statement on page 41 et seq.).
Policies are in place requiring all material legal cases to be reported to the Group headquarters where they are managed by the responsible legal experts, legal counsel and the Management Board. Adequate provisions for current legal disputes have been established in the financial statements. Wherever this is possible and makes sense, insurance is taken out against liability risks. There are currently no legal disputes that might have a material impact on the financial situation of the Group.
IT risks result from the growing trend towards the networking of information systems and the need for their constant availability. Computer systems and networks may break down, which would lead to a massive disruption of the business operations. Moreover, unauthorised data access or the misuse of data represents a growing threat. We mitigate these risks through the use of modern hardware and software meeting the latest security standards. Competent internal and external experts ensure that Ahlers' IT systems are permanently protected and optimised. These measures are supported by regular investments in hardware and software, virus scanners, firewall systems and access controls. The security of the IT infrastructure of Ahlers AG is confirmed by the "Trusted Site Infrastructure" seal awarded by the German TÜV. In the fiscal year 2017/18, the implementation of the General Data Protection Regulation played an important role. The IT Officers and the Data Protection Officer cooperated closely to implement the GDPR. A special software was purchased in the fiscal year to support data protection management and meet the company's documentation duties.
No material risks arise from the capital structure. The Ahlers Group is characterised by a high equity ratio and a high net asset value and, in relation to this, low net liabilities. Positions that are affected by external factors and difficult to calculate such as pension provisions represent a low percentage of total assets.
The liquidity risk and the risk of cash flow fluctuations are monitored constantly. Liquidity is guaranteed by sufficient credit lines which cover seasonal and unexpected cash needs. The credit lines are made available by several banks; drawings against these lines stood at less than 50 percent at the end of the fiscal year. At the end of the fiscal year 2017/18, Ahlers additionally signed factoring agreements on regular revolving sales of trade receivables to further strengthen its credit lines. Seasonal fluctuations in the financial area arise primarily with regard to receivables and should largely be mitigated by the factoring agreements going forward. It has therefore been possible to reduce the credit lines as of January 1, 2019 in agreement with the banks. Liquidity, which is important to any company, is ensured by regular and close communication with the lending institutions as well as sufficient medium-term credit lines covering the basic requirements. Cash flows from the actual business activity are well predictable over a season. Cash flow is primarily influenced by profitability and fluctuations in net working capital. To further reduce its liabilities, the company plans to sell a piece of land it does not need for its operations as well as several works of art in the fiscal year 2018/19.
Currency risks play a very important role for international corporations, especially when purchasing is handled in another currency than sales, which is the case for most fashion companies. This is why the US dollar amounts required for procurement in Asia are hedged on the basis of a guideline agreed with the Supervisory Board for each season, according to which the foreign currency amounts required for the seasonal cycle are hedged at minimum and maximum rates. The necessity of these seasonal hedges is regularly reviewed against actual requirements. Ahlers and its competitors are obviously exposed to the risk of an extended weakness in the euro which would make imports from Asia more expensive beyond the hedged period. In such a case, management would consider protecting the gross profit margin through moderate price rises and through the relocation of manufacturing contracts to Eastern Europe. As the strong US dollar has made purchases in Asia more expensive, we have increasingly sourced goods in Europe and thus reduced our exposure to the US dollar especially in the past years.
Interest rate risks arise in the event of changes in market rates on debt capital. The risk of rising borrowing costs relates to floating-rate loans and follow-up financing that may be required. Although the company's debt capital is relatively low, Ahlers closely monitors the changes in market interest rates. Loans are mostly raised at fixed interest rates or interest rate swaps are used to hedge the interest rate risks arising from large debt financings if this is justified by market expectations.
Risks and opportunities arising from the works of art owned by Ahlers AG arise from long-term value changes in the art market. Management regularly reviews the carrying amounts of the company's works of art. Sustainable declines in the market value would result in write-downs. In the context of the preparation of the financial statements, the value of selected works of art has been reviewed on the basis of auction results and market research; no need for impairment write-downs was identified in this context. In the past, no material write-downs on the works of art were required, either. Instead, we believe that there are hidden reserves in our works of art, which are difficult to quantify.
A strict examination of creditworthiness and insurance against bad debts mitigate the bad debt risks of Ahlers AG, which are generally of great importance. The company refrains from hedging receivables only following critical examination and, if available, an analysis of the customer relationship to date. Bad debt risks that cannot be insured must be approved by the Management Board. Such decisions are reviewed regularly after no more than six months.
Every season, fashion manufacturers are exposed to the risk of their collections not being accepted by the market and sales revenues declining as a result. This is therefore a material risk for the company. The collections are produced with the help of framework plans, which define the size and the price situation in advance. Timely reports on pre-sales and monthly reports from the divisions about the market situation keep the Management Board informed about the market strength of our products. The integration of sell-through information from retailers and our own stores clearly facilitates the creation of products that sell successfully and allows to expand production of fast selling items at short notice.
Managing the inventory risk is an important task in the fashion industry. On the one hand, high product availability is key to successful cooperation with retailers; on the other hand, however, inventories must be sold by the end of the season to ease the liquidity position of the company. Ahlers minimises this risk by means of systematic planning and selling principles and through regular inventory checks, all of which helps to keep inventories at the right level.
The risk of dependence on individual customers is increased by the fact that traditional specialist retailers are increasingly being driven out of the market by large chains; as a result, large customers account for a growing percentage of sales. Large suppliers providing retailers with professional services and high-quality products benefit from this trend. Ahlers communicates with customers at all levels to identify market requirements and problems at an early stage. This increasingly also includes e-commerce customers, as the Internet is gaining importance as a distribution channel for clothing. In addition, the company has implemented a reporting system which ensures that delivery ratios, punctuality of deliveries, orders on hand and sales revenues are monitored constantly to provide all customers with excellent services and intensify customer relationships. The Ahlers Group's multi-brand strategy mitigates the risk of customer dependence insofar as the brands are positioned differently and are therefore targeted at different customers and retail formats.
As a company operating in the international consumer goods sector, Ahlers is exposed to risks that arise from both the global economic trend and the economic developments in the individual countries. Economic, political and socio-cultural conditions influence consumers' purchasing behaviour and, consequently, also the company's revenues and earnings. Moreover, our output markets are characterised by a shift towards e-commerce and by fierce competition for market share, brand presence and people. These external developments and the related risks are monitored by the Management Board and continuously discussed with the Audit Committee and the Supervisory Board. Ahlers addresses these risks through its internationalisation strategy as well as by sharpening the profiles of its brands in order to tap new markets and potential customers.
The risks outlined above also entail opportunities. In particular, the constant monitoring of the profitability of the business units presents opportunities to identify new developments. In particular, the reports on divisional risks provide important findings regarding market opportunities. If, for instance, the reports describe changes in customer demand in certain markets, the early response to these changes may entail opportunities. The situation on the procurement side is similar. The fact that all key markets are monitored simultaneously allows the company to quickly shift to those countries where prices are competitive and reliable quality is offered.
As in the previous year, the risk report covers the full basis of consolidation. There were no material changes in the risk management system compared to the previous year.
While the overall risk position of Ahlers AG and the Group deteriorated slightly because of the developments in 2017/18, it is still classified as low as the financial situation remains solid. From today's point of view, we can identify no risks that could jeopardise the company's ability to continue as a going concern either on their own or in combination with other risks.
Ahlers sources most of its goods in Asia, where the US dollar is the standard currency. To prevent losses arising from shortterm exchange rate fluctuations, the procurement processes are hedged seasonally on the basis of a quantitative procurement plan with a horizon of up to twelve months. The company primarily uses forward exchange contracts for this purpose. Options may also be used to a limited extent. Distribution activities in foreign currencies, e.g. the Swiss franc, are hedged to a much lower extent.
The company is currently financed by bilateral loan agreements with banks. The basic requirements are usually covered by medium-term loans with an initial maturity of usually five years from several banks. Most of these medium-term loans are secured by fixed interest rates or interest rate hedges for the term of the respective tranche. As the interest rate hedges always relate to credit agreements, they are combined with the hedged items for hedge accounting. Short-term credit lines are used to cover seasonal peaks.
pursuant to sections 289 para. 4, 315 para. 4 HGB with regard to the accounting process
Two major components ensure that risks in the company are avoided or mitigated, namely a system of instructions and rules of procedure, on the one hand, and controlling and informing reports, on the other hand.
Rules of procedure for the Supervisory Board, the Management Board and the Managing Directors of all Group companies define the rooms for manoeuvre and the involvement of different hierarchy levels in the decision-making process. Individual instructions that are valid for all employees are posted on the intranet of the Ahlers Group together with the Group's Declaration of Basic Values. The Declaration of Basic Values was distributed to all employees in 2015. New employees always receive the Declaration when they join the company.
Controlling reports with different degrees of detail on the risk situation are sent to all officers at defined suitable intervals, usually monthly. The Audit Committee of the Supervisory Board is informed about the central risks and the segment risks in a quarterly risk report.
The internal control system of the accounting and consolidation process aims to minimise sources of error and identify errors quickly. For this purpose, the accounting departments of the Group are organised centrally per country, in some cases they have a cross-border organisation. The participation of external service providers in the accounting process is usually confined to individual services such as the calculation of pension provisions. In minor exceptional cases, financial statements are prepared externally.
The SAP system forms the technical backbone of the accounting system. The regions have active access to the SAP system, while the central organisation has controlling access. The maintenance and updating of SAP master data and the system support are handled centrally.
The Group accounting manual ensures that all recurrent incidents are treated consistently. New incidents are agreed with the Group headquarters. Changes in Group accounting are immediately communicated to all employees involved as well as to external service providers concerned. The subsidiaries use standardised questionnaires for reporting, which are completed by the respective accounting departments for each monthly, quarterly and annual financial statements. These include the local and the IFRS statements as well as the reconciliation of receivables and liabilities between the Group companies. All data are pooled in the central consolidation department, which manages all internal reconciliations, consolidations, the monitoring of reporting deadlines and the quality control of the data reported. The department uses a consolidation software programme to process all separate financial statements into the consolidated financial statements. The consolidation process is geared to stringent control as well. Reconciliation differences in the consolidation are communicated to the subsidiaries involved and corrected.
The Group generally applies the four-eye principle. Important accounting decisions such as the measurement of inventories and receivables are reviewed and approved by the Management Board. Flat hierarchies, direct reporting lines and the preparation of monthly interim statements allow risks to be identified and errors to be detected at an early stage.
The Internal Audit Department regularly addresses aspects that are relevant for the financial statements and performs a controlling function in the annual accounting process. In this context, a focus is on the management and the measurement of inventories, which are especially challenging in the clothing sector and important for the result. The effectiveness of the internal control and risk management system in the accounting-relevant processes is also regularly reviewed by the Internal Audit Department.
The processes, systems and controls implemented sufficiently ensure that the Group's accounting process complies with International Financial Reporting Standards (IFRS), the German Commercial Code (HGB) as well as other accountingrelevant rules and laws and is thus permissible.
The compensation of the Management Board members is decided and regularly reviewed for appropriateness by the Supervisory Board. The criteria taken into account in this review are the size, activity and economic situation of Ahlers AG, on the one hand, and the tasks of the respective Management Board member and his/ her personal contribution to the company's performance, on the other hand. In the opinion of the Supervisory Board, the total compensation and its individual components are appropriate given the tasks and performance of the respective Management Board members and the financial situation of Ahlers AG. The Human Resources Committee prepares the Supervisory Board's appointment decisions. It submits proposals to the Supervisory Board regarding the compensation, the compensation scheme and its regular review as well as the conclusion, amendment and termination of the employment contracts of the Management Board members. The employment contracts of all Management Board members are structurally identical.
The compensation is always performance-oriented and consists of the following components:
The Management Board contracts do not include an explicit severance pay commitment in case a contract is terminated prematurely. Nor do they include any change-of-control clauses in case of a takeover. No pension commitments were made to the incumbent members of the Management Board.
The total compensation of the Management Board broken down by components is shown below:
| Total | 990 | 1,421 |
|---|---|---|
| Miscellaneous | 33 | 32 |
| Annual bonus/* | -87 | 379 |
| Salary | 1,044 | 1,010 |
| KEUR | 2017/18 | 2016/17 |
* composed of a profit-related, target-related and long-term bonus.
The long-term bonus is included at an amount of EUR 0 thousand (previous year: EUR 10 thousand).
** The total amount of the one-year variable compensation of EUR -87 thousand is composed of the bonus for the fiscal year 2017/18 in the amount of EUR 7 thousand and reduced bonus payments for the fiscal year 2016/17 in the amount of EUR -94 thousand, which were recognised as income in the reporting period. The latter had been recognised as an expense in the amount of EUR 320 thousand in the fiscal year 2016/17. Due to the reduced payment, this provision was released in the above amount.
(Expense level)
| CEO | Dr. Stella A. Ahlers Götz Borchert Chairman Marketing/Retail Entry 06/2005 Entry 02/2017 |
Dr. Karsten Kölsch CFO Entry 08/2007 |
|||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| KEUR | 2017/18 | Min. | Max. 2016/17 | 2017/18 | Min. | Max. 2016/17 | 2017/18 | Min. | Max. 2016/17 | ||||
| Fixed compensation | 480 | 480 | 480 | 480 | 204 | 204 | 204 | 170 | 360 | 360 | 360 | 360 | |
| Additional benefits | 19 | 19 | 19 | 19 | 0 | 0 | 0 | 0 | 14 | 14 | 14 | 13 | |
| Total | 499 | 499 | 499 | 499 | 204 | 204 | 204 | 170 | 374 | 374 | 374 | 373 | |
| Annual bonus | -74 | 0 | 1,350 | 210 | -20 | 0 | 370 | 54 | 7 | 0 | 600 | 105 | |
| Long-term variable Bonus: | |||||||||||||
| Dec. 14 - Nov. 17 | 0 | 0 | 120 | 5 | 0 | 0 | 120 | - | 0 | 0 | 120 | 5 | |
| Dec. 17 - Nov. 20 | 0 | 0 | 120 | 0 | 0 | 0 | 120 | 0 | 0 | 0 | 120 | 0 | |
| Total | 425 | 499 | 1,969 | 709 | 184 | 204 | 694 | 224 | 381 | 374 | 1,094 | 478 | |
| Pension expenses | - | - | - | - | - | - | - | - | - | - | - | - | |
| Total compensation | 425 | 499 | 1,969 | 709 | 184 | 204 | 694 | 224 | 381 | 374 | 1,094 | 478 |
(Payment level)
| Dr. Stella A. Ahlers | Götz Borchert Chairman Marketing/Retail |
Dr. Karsten Kölsch | ||||
|---|---|---|---|---|---|---|
| CEO Entry 06/2005 |
Entry 02/2017 | CFO Entry 08/2007 |
||||
| KEUR | 2017/18 | 2016/17 | 2017/18 | 2016/17 | 2017/18 | 2016/17 |
| Fixed compensation | 480 | 480 | 204 | 170 | 360 | 360 |
| Additional benefits | 19 | 19 | 0 | 0 | 14 | 13 |
| Total | 499 | 499 | 204 | 170 | 374 | 373 |
| Annual variable bonus | 146 | 216 | 34 | 0 | 67 | 90 |
| Long-term variable Bonus: | ||||||
| Dec. 14 - Nov. 17 | ||||||
| with payment Apr. 18 | 5 | - | - | - | 5 | - |
| Total | 650 | 715 | 238 | 170 | 446 | 463 |
| Pension expenses | 0 | 0 | 0 | 0 | 0 | 0 |
| Total compensation | 650 | 715 | 238 | 170 | 446 | 463 |
Former members of the Management Board and the management of Adolf Ahlers GmbH and their survivors received total compensation of EUR 51 thousand (previous year: EUR 68 thousand) during the fiscal year 2017/18.
The Supervisory Board compensation is governed by section 18 of the statutes. Similar to the Management Board compensation, the compensation for the Supervisory Board is also geared to the size and the economic situation of Ahlers AG as well as to the tasks of each individual member of the Supervisory Board. The compensation consists of a fixed and a variable component. The variable component is oriented towards the sustainable growth of the company. It is calculated as a fixed per-thousand fraction of the average consolidated net income of the past three years taking a defined threshold value into account, and is capped. Additional compensation is paid to the Chairperson and the Deputy Chairperson of the Supervisory Board as well as the Committee Chairpersons.
| KEUR | 2017/18 | 2016/17 |
|---|---|---|
| Fixed compensation | 105 | 105 |
| Variable compensation | 0 | 0 |
| Total | 105 | 105 |
All expenses incurred by the Supervisory Board members in conjunction with their mandates as well as the value-added tax charged on their compensation are refunded. No loans are granted to members of the Supervisory Board. Von Ah & Partner AG, Zurich (Switzerland), in which Supervisory Board member and Audit Committee Chairwoman Prof. Dr. von Ah is a partner, provided tax consulting services to the Ahlers Group in the fiscal year 2017/18, for which an amount of EUR 6 thousand was invoiced. In accordance with section 114 of the German Stock Corporation Act (AktG), all benefits had previously been approved by the Supervisory Board.
As of November 30, 2018, Ahlers AG's share capital amounted to EUR 43,200,000.00. It is divided into 13,681,520 registered shares. Each share represents approx. EUR 3.16 of the share capital. Pursuant to section 22 of the statutes, each common share represents one vote at the Annual Shareholders' Meeting. There are no voting right controls in case that employees hold a share in the capital of Ahlers AG.
On November 30, 2018, chairwoman Dr. Stella A. Ahlers held 52.7 percent of the share capital of Ahlers AG both directly and indirectly through Westfälisches Textilwerk Adolf Ahlers Stiftung & Co. KG as well as WTW-Beteiligungsgesellschaft mbH.
Pursuant to section 8 of the statutes, the Management Board of Ahlers AG consists of at least one member. The Supervisory Board determines the number of Management Board members and may appoint a Chairperson or Spokesperson of the Management Board as well as a Deputy Chairperson or Deputy Spokesperson of the Management Board. Vice members of the Management Board may also be appointed.
According to section 179 et seq. of the German Stock Corporation Act (AktG), amendments to the statutes may be decided by at least three quarters of the share capital represented at the Annual Shareholders' Meeting. The Supervisory Board is authorised to autonomously make amendments to the statutes to the extent that such amendments merely relate to the wording (section 27 of the statutes).
Based on a resolution by the Annual Shareholders' Meeting of May 3, 2017 in conjunction with the resolution adopted by the Annual Shareholders' Meeting on April 24, 2018 on the conversion of bearer shares into registered shares and the abolition of the preferred shares as well as the transfer restrictions of the former registered shares and their right to designate members to the Supervisory Board, the statutes were amended as follows: The Management Board shall be authorised, with the consent of the Supervisory Board, to increase the share capital by up to EUR 21,600,000 once or several times through the issue of new, registered common shares against cash and/or non-cash contributions by May 2, 2022 (Authorised Capital, section 4 para. 2 of the statutes).
The Management Board may exclude shareholders' subscription rights with the consent of the Supervisory Board in the following cases:
and only to the extent that the ex-rights shares issued against cash and/or non-cash contributions on the basis of this authorisation or as part of another ex-rights authorised capital measure do not exceed 20 percent of the share capital neither at the time this authorisation becomes effective nor at the time this authorisation is exercised. The following shares are counted towards the above 20 percent limit:
Based on a resolution by the Annual Shareholders' Meeting of May 3, 2017 in conjunction with the resolution adopted by the Annual Shareholders' Meeting on April 24, 2018, the Management Board is authorised, until May 2, 2022 and subject to the consent of the Supervisory Board, to acquire shares in the company representing up to 10 percent of the share capital of EUR 43,200,000.00 that existed on the day the resolution was adopted.
The authorisation may be exercised once or multiple times in full or partial amounts for one or several purposes by the company or by companies dependent on it or majority-owned by it or by third parties acting for the latter's account or for the account of the company. The acquisition may be effected via the stock exchange or via a public invitation to submit sales bids. The purchase price may not be more than 10 percent higher or lower than the current market price.
The public offering and/or the public invitation to submit offers for sale may be subject to additional conditions according to the resolution of the Annual Shareholders' Meeting.
The Management Board is authorised, with the consent of the Supervisory Board, to use the own shares acquired on the basis of this authorisation or of one or several previous authorisations for all legally permissible purposes, especially for the following purposes:
Shareholders' subscription rights to own shares acquired on the basis of this authorisation or of previous authorisations will be excluded if they are used in another way than a sale via the stock exchange or an offer to all shareholders in accordance with the authorisations under (2), (3), (4) and (5) above. In addition, shareholders' subscription rights may be excluded for fractional amounts if own shares are sold via an offer to all shareholders.
No change of control clauses exist. Nor has the company signed compensation agreements with the members of the Management Board or other employees that would apply in case of a takeover bid.
The corporate governance statement to be issued pursuant to sections 289f, 315d HGB is contained in the Corporate Governance Report on page 16 et seq. It is also posted on the Internet at www.ahlers-ag.com.
This report contains forward-looking statements, which are subject to a number of uncertainties that could cause actual results to differ materially from expectations of future developments should one or more of these uncertainties, whether specified or not, materialise or if any assumptions underlying the statements above prove to be incorrect.
Pursuant to section 312 para. 3 of the German Stock Corporation Act (AktG), the Management Board declares: "Each of the transactions mentioned in the related party disclosures was made on terms equivalent to those that prevail in arm's length transactions, based on the circumstances known to us at the time when such transactions were made. No measures were taken or omitted at the instigation or in the interest of the controlling company or one of its affiliated companies."
Ahlers AG Herford, February 12, 2019
Dr. Stella A. Ahlers Dr. Karsten Kölsch
| KEUR | Notes | Nov. 30, 2018 | Nov. 30, 2017 |
|---|---|---|---|
| A. Non-current assets | |||
| I. Property, plant and equipment | (11) | ||
| 1. Land, land rights and buildings | 14,005 | 14,298 | |
| 2. Technical equipment and machines | 1,684 | 1,581 | |
| 3. Other equipment, plant and office equipment | 8,077 | 9,822 | |
| 4. Payments on account and plant under construction | 5 | 28 | |
| 23,771 | 25,729 | ||
| II. Intangible assets | (12) | ||
| 1. Industrial property rights and similar rights and assets | 14,236 | 14,437 | |
| 2. Payments on account | 4,110 | 2,583 | |
| 18,346 | 17,020 | ||
| III. At-equity investments | (13) | 571 | 541 |
| IV. Other non-current assets | (14) | ||
| 1. Other financial assets | 904 | 1,185 | |
| 2. Other assets | 17,698 | 17,790 | |
| 18,602 | 18,975 | ||
| V. Deferred tax assets | (8) | 1,176 | 1,245 |
| Total non-current assets | 62,466 | 63,510 | |
| B. Current assets | |||
| I. Inventories | (15) | ||
| 1. Raw materials and consumables | 18,964 | 21,361 | |
| 2. Work in progress | 458 | 537 | |
| 3. Finished goods and merchandise | 61,445 | 53,422 | |
| 80,867 | 75,320 | ||
| II. Trade receivables | (16) | 20,211 | 31,538 |
| III. Other current assets | (17) | ||
| 1. Other financial assets | 447 | 7 | |
| 2. Receivables from affiliates | 102 | 0 | |
| 3. Current income tax claims | 725 | 1,391 | |
| 4. Other assets | 3,142 | 3,018 | |
| 4,416 | 4,416 | ||
| IV. Cash and cash equivalents | (18) | 4,219 | 6,403 |
| Total current assets | 109,713 | 117,677 | |
| Total assets | 172,179 | 181,187 |
| KEUR | Notes | Nov. 30, 2018 | Nov. 30, 2017 |
|---|---|---|---|
| A. Equity | (19) | ||
| I. Subscribed capital | (20) | 43,200 | 43,200 |
| II. Capital reserve | (23) | 15,024 | 15,024 |
| III. Retained earnings | (24) | 34,864 | 44,221 |
| IV. Equity difference from currency translation | (25) | -1,354 | -1,786 |
| Equity attributable to shareholders of Ahlers AG | 91,734 | 100,659 | |
| V. Non-controlling interests | 1,407 | 1,466 | |
| Total equity | 93,141 | 102,125 | |
| B. Non-current liabilities | |||
| I. Pension provisions | (26) | 3,445 | 4,074 |
| II. Other provisions | (27) | 549 | 504 |
| III. Financial liabilities | (28) | ||
| 1. Other financial liabilities | 19,707 | 27,225 | |
| 2. Non-controlling interests in partnerships | 1,253 | 1,247 | |
| 20,960 | 28,472 | ||
| IV. Other liabilities | 19 | 20 | |
| V. Deferred tax liabilities | (8) | 1,021 | 1,622 |
| Total non-current liabilities | 25,994 | 34,692 | |
| C. Current liabilities | |||
| I. Current income tax liabilities | 699 | 554 | |
| II. Other provisions | (29) | 4,861 | 2,320 |
| III. Financial liabilities | (28) | 12,961 | 9,049 |
| IV. Trade payables | 23,577 | 20,559 | |
| V. Other liabilities | (30) | ||
| 1. Liabilities to affiliates | 2,564 | 2,518 | |
| 2. Other liabilities | 8,382 | 9,370 | |
| 10,946 | 11,888 | ||
| Total current liabilities | 53,044 | 44,370 | |
| Total liabilities | 79,038 | 79,062 | |
| Total equity and liabilities | 172,179 | 181,187 |
Consolidated balance sheet
| KEUR | Notes | 2017/18 | 2016/17 |
|---|---|---|---|
| 1. Sales | (1) | 223,067 | 235,931 |
| 2. Change in inventories of finished goods and work in progress | 5,779 | 1,237 | |
| 3. Other operating income | (2) | 5,500 | 3,838 |
| 4. Cost of materials | (3) | -119,610 | -120,099 |
| 5. Personnel expenses | (4) | -53,304 | -51,403 |
| 6. Other operating expenses | (5) | -60,102 | -61,248 |
| 7. Depreciation, amortisation and impairment losses on property, plant | |||
| and equipment, intangible assets and other non-current assets | (6) | -7,735 | -5,262 |
| 8. Profit shares from At-Equity-investments | (7) | 30 | 100 |
| 9. Interest and similar income | (7) | 92 | 156 |
| 10. Interest and similar expenses | (7) | -841 | -869 |
| 11. Pre-tax profit | -7,124 | 2,381 | |
| 12. Income taxes | (8) | 123 | -492 |
| 13. Consolidated net results | -7,001 | 1,889 | |
| 14. of which attributable to: | |||
| - Shareholders of Ahlers AG | -7,006 | 1,836 | |
| - Non-controlling interests | (9) | 5 | 53 |
| Earnings per share (EUR) undiluted/diluted | (10) | ||
| - Registered common shares (previous year: Common shares) | -0.51 | 0.11 | |
| - Preferred shares | - | 0.16 | |
| KEUR | Notes | 2017/18 | 2016/17 |
|---|---|---|---|
| 13. Consolidated net results | -7,001 | 1,889 | |
| Not to be reclassified to profit or loss | |||
| 15. Actual gains and losses on defined benefit plans | (24) | 140 | -77 |
| To be reclassified to profit or loss | |||
| 16. Net result from cash flow hedges | (25) | 838 | -1,313 |
| 17. Currency translation differences | -405 | 198 | |
| 18. Other changes | -140 | -149 | |
| 19. Others comprehensive income after taxes | (8) | 433 | -1,341 |
| 20. Comprehensive result | -6,568 | 548 | |
| 21. of which attributable to: | |||
| - Shareholders of Ahlers AG | -6,434 | 643 | |
| - Non-controlling interests | -134 | -95 | |
| KEUR | 2017/18 | 2016/17 |
|---|---|---|
| Consolidated net results | -7,001 | 1,889 |
| Income taxes | -123 | 492 |
| Interest income / Interest expenses | 719 | 613 |
| Depreciation and amortisation / appreciation (net) | 6,035 | 4,962 |
| Losses / gains from the disposals of non-current assets (net) | -600 | 133 |
| Change in inventories and other current and non-current assets | 6,363 | 3,299 |
| Change in non-current provisions | -379 | -446 |
| Change in non-controlling interests in partnerships and other non-current liabilities | 5 | -1 |
| Change in current provisions | 2,541 | -261 |
| Change in other current current liabilities | 1,900 | 344 |
| Income taxes paid | -698 | -2,020 |
| Income taxes received | 837 | 1,173 |
| Cash flow from operating activities | 9,599 | 10,177 |
| Cash receipts from disposals of items of property, plant and equipment | 282 | 190 |
| Cash receipts from disposals of intangible assets | 5 | 0 |
| Cash receipts from disposals of other non-current assets | 640 | - |
| Payments for investment in property, plant and equipment | -2,840 | -4,286 |
| Payments for investment in intangible assets | -3,045 | -2,619 |
| Payments for the acquisition of other non-current assets | -2 | 0 |
| Payments for the acquisition of consolidated companies | -1,090 | - |
| Payments for the acquisition of minority interests | -130 | - |
| Interest received | 100 | 157 |
| Cash flow from investing activities | -6,080 | -6,558 |
| Dividend payments | -2,356 | -2,356 |
| Additions / repayment of non-current financial liabilities | -8,118 | 4,165 |
| Interest paid | -842 | -862 |
| Cash flow from financing activities | -11,316 | 947 |
| Net change in liquid funds | -7,797 | 4,566 |
| Effects of changes in the scope of exchange rates | 279 | 227 |
| Liquid funds as of December 1 | 6,291 | 1,498 |
| Liquid funds as of November 30 | -1,227 | 6,291 |
We refer to details under No. 18 of the Notes to the Consolidated Financial Statements for further information on the composition of liquid funds.
for fiscal 2017/18
Subscribed capital
| Equity- | Accumulated | Total | |||||||
|---|---|---|---|---|---|---|---|---|---|
| diff. from | Total | other com | non-con | ||||||
| Common | Preferred | Capital | Retained | currency | Group | prehensive | trolling | ||
| KEUR | shares | shares | reserve | earnings | translation | holdings | Capital | income | interest |
| Notes | (20) | (20) | (23) | (24) | (25) | (9) | |||
| Balance as of | |||||||||
| Nov. 30, 2016 / | |||||||||
| Dec. 1, 2016 | 24,000 | 19,200 | 15,024 | 44,008 | -672 | 101,560 | 1,454 | 919 | 2,373 |
| Total net income | |||||||||
| for the period | 1,757 | -1,114 | 643 | -95 | -95 | ||||
| Dividends paid | -2,356 | -2,356 | 0 | ||||||
| Acquisition of | |||||||||
| minority interests | 812 | 812 | -812 | -812 | |||||
| Balance as of | |||||||||
| Nov. 30, 2017 / | |||||||||
| Dec. 1, 2017 | 24,000 | 19,200 | 15,024 | 44,221 | -1,786 | 100,659 | 642 | 824 | 1,466 |
| consolidation of | |||||||||
| the shares | 19,200 | -19,200 | 0 | ||||||
| Total net income | |||||||||
| for the period | -6,866 | 432 | -6,434 | -134 | -134 | ||||
| Dividends paid | -2,356 | -2,356 | 0 | ||||||
| Acquisition of | |||||||||
| minority interests | -135 | -135 | 75 | 75 | |||||
| Balance as of | |||||||||
| Nov. 30, 2018 | 43,200 | 0 | 15,024 | 34,864 | -1,354 | 91,734 | 717 | 690 | 1,407 |
for the fiscal year from December 1, 2017 to November 30, 2018
Ahlers AG is one of the largest listed European fashion manufacturers with a focus on menswear. The company originated as a textile business founded in 1919 by Adolf Ahlers in the Frisian town of Jever. In 1932, the company moved its headquarters from Oldenburg to Herford; it went public in 1987.
Ahlers AG's headquarters are located in Elverdisser Strasse 313 in Herford, Germany, and the company is registered in the commercial register of the district court of Bad Oeynhausen (HRB 6541).
Ahlers AG shares are traded on the stock exchanges in Frankfurt/Main and Düsseldorf, as well as over the counter at other German exchanges.
The fiscal year begins on December 1 and ends on November 30 of the following year. The consolidated financial statements are prepared in accordance with IFRS, as applicable in the EU, as well as applicable supplementary regulations from the German Commercial Code (HGB) as stipulated in section 315e (1) of the HGB.
The consolidated financial statements are prepared in euros and most figures are given in thousands of EUR (KEUR). Due to the fact that the consolidated financial statements are prepared in thousands of EUR, rounding differences can arise, since computations of individual items are based on figures in euros. For the sake of clarity in the presentation, individual items from the income statement and balance sheet have been summarised. These items are detailed and explained in the notes to the consolidated financial statements.
The consolidated financial statements were prepared by the Management Board of Ahlers AG on February 12, 2019 and submitted to the Supervisory Board for approval. The latter has the possibility to amend the consolidated financial statements after their release by the Management Board. The consolidated financial statements are deemed to be approved upon their endorsement by the Supervisory Board unless the Management Board and the Supervisory Board decide to have them approved by the Annual Shareholders' Meeting.
The consolidated financial statements of Ahlers AG were prepared in accordance with the International Financial Reporting Standards (IFRS) of the International Accounting Standards Board (IASB), taking into consideration the interpretations of the International Financial Reporting Interpretations Committee on the IFRS (IFRIC), as well as applicable supplementary regulations from the German Commercial Code (HGB) as stipulated in section 315e (1) of the HGB. All IFRS and IFRIC were observed that had been endorsed and mandated by the EU Commission prior to November 30, 2018. Standards and interpretations that have been issued, but are not yet mandatory, have not been applied prematurely.
The financial statements were prepared according to the going concern principle. Corresponding figures for comparison with the previous year are provided for all items of the financial statements.
The consolidated financial statements are prepared based on historical cost. The sole exception is in the case of derivative financial instruments, which are measured at market value, provided that market values can be reliably determined.
The income statement is structured according to the nature of expense method.
Preparation of the consolidated financial statements taking into consideration the pronouncements of the IASB requires that assumptions and estimates are utilised in the case of some items that have an effect on the level and reporting of assets and liabilities, income and expenses, as well as contingent liabilities. Assumptions and estimates relate in particular to establishing terms of economic life, determining net realisable value when measuring inventory, accounting for and measuring provisions, the realisability of future tax relief, as well as in determining cash flows, growth rates and discount factors in connection with impairment tests and the measurement of brands. Actual values may deviate from the assumptions and estimates made. Any required changes are recognised in profit or loss at the time that additional knowledge is obtained.
The accounting and valuation principles are generally consistent with the methods applied in the previous year. In addition, the Group has applied the following new and/or revised pronouncements that are relevant for the business activity of the Group and became mandatory for the fiscal year 2017/18:
With the exception of the presentation and additional notes, the application of the pronouncements had no impact on the consolidated financial statements.
The following pronouncements that are relevant for the business activity of the Group had been published as of November 30, 2018 but were not mandatory as of this date (effective for annual periods beginning on or after the dates stated):
The standards are applied as of the annual periods for which they are effective. The option to apply these standards and interpretations prematurely was not exercised. With the exception of additional and/or modified disclosures in the notes as well as the new standard relating to revenue from contracts with customers, first-time adoption is not expected to have material effects on the consolidated financial statements. The application of the new standard on revenue from contracts with customers will increase total assets by approx. EUR 3 million. While the effects of the new leasing standard are still being reviewed, we generally expect it to increase total assets by a low double-digit million euro amount.
All 12 domestic and 20 foreign subsidiaries that are directly or indirectly controlled by Ahlers AG are fully consolidated in the 2017/18 consolidated financial statements in addition to the parent company, Ahlers AG. In the past fiscal year, OOO Ahlers RUS was established with effect from March 1, 2018 with a long-standing Russian partner and included in the basis of consolidation. The purchase price of the acquired net assets amounted to EUR 1,090 thousand and was paid from cash flow. The acquired net assets comprise fixed assets (EUR 85 thousand), inventories (EUR 549 thousand) and the carrying amount of the minority interest (EUR -257 thousand). The resulting positive difference of TEUR 704 was capitalized as goodwill. The purpose of the company is to strengthen the activities in Russia. Moreover, the share in the two Baltic distribution companies was increased from 65.5 percent to 99.33 percent. With effect from December 1, 2017, Ahlers AG signed a controlling and profit-and-loss-transfer agreement with Otto Kern GmbH.
A list of subsidiaries and investments can be found on page 96.
The financial statements of all of the consolidated companies within the Ahlers Group are prepared according to uniform accounting and measuring principles.
Business combinations are accounted for using the purchase method. When recognised for the first time, goodwill is measured at the cost of acquisition, which is the amount by which the acquisition cost of the business combination exceeds the Group's share in the fair values of the identifiable assets, liabilities and contingent liabilities of the acquired company. Companies are included in the consolidated financial statements only as long as the parent company is in control.
Intra-group balances, transactions, income, expenses and gains and losses from intra-group transactions contained in the carrying amount of assets are eliminated in full.
The consolidated financial statements of Ahlers AG are included in the consolidated financial statements of Westfälisches Textilwerk Adolf Ahlers Stiftung & Co. KG, Herford, the highest-level controlling parent company. The consolidated financial statements of Westfälisches Textilwerk Adolf Ahlers Stiftung & Co. KG are published in the Federal Gazette.
| SHAREHOLDINGS OF AHLERS AG | thereof | Net | |||
|---|---|---|---|---|---|
| (including direct and indirect investments) | indirectly held | income/ | |||
| Equity | loss 2) | ||||
| share | Equity 1) | 2017/18 | |||
| Company | (in %) | % | via | KEUR | KEUR |
| 1. Ahlers P.C. GmbH, Herford | 100.00 | 21,032 | 3) | ||
| 2. Ahlers Textilhandel GmbH & Co. KG, Herford | 80.00 | 5,512 | 578 | ||
| 3. Ahlers Vertrieb GmbH, Herford | 100.00 | 36 | 3) | ||
| 4. Ahlers Zentralverwaltung GmbH, Herford | 100.00 | 3,895 | 3) | ||
| 5. Baldessarini GmbH, Herford | 100.00 | 1,673 | 3) | ||
| 6. Ahlers Retail GmbH, Herford | 100.00 | 61 | 3) | ||
| 7. HEMINA Grundstücks-Vermietungsgesellschaft mbH & Co. | |||||
| Objekt Herford KG, Pullach im Isartal | 94.00 | 94.00 | 2. | 3,724 | 150 |
| 8. Jupiter Bekleidung GmbH, Herford | 100.00 | 129 | 3) | ||
| 9. Otto Kern GmbH, Herford | 100.00 | 7,987 | 3) | ||
| 10. PIONEER Jeans-Bekleidung GmbH, Herford | 100.00 | 54 | 3) | ||
| 11. Pionier Berufskleidung GmbH, Herford | 100.00 | 30 | 3) | ||
| 12. Pionier Jeans & Casuals Germany GmbH, Herford | 100.00 | 26 | 3) | ||
| 13. Adolf Ahlers AG, CH-Zug | 100.00 | 4,314 | 30 | ||
| 14. Ahlers Austria GmbH, A-Mariasdorf | 100.00 | 4,519 | 167 | ||
| 15. Ahlers Europe Ltd., USA-New York | 100.00 | -358 | -22 | ||
| 16. Ahlers Herford (España) S.L., E-Madrid | 100.00 | 350 | -7 | ||
| 17. Ahlers Herford (Italia) S.R.L., I-Torino | 100.00 | 404 | -5 | ||
| 18. Ahlers Premium France S.A.S., F-Horbourg-Wihr | 100.00 | 2,474 | 272 | ||
| 19. "Ahlers-Poland" Spolka z o.o., PL-Opole | 100.00 | 11,221 | -293 | ||
| 20. OOO Ahlers RUS, RUS-Moskwa | 60.00 | 660 | 50 | ||
| 21. SIA Clasic, LV-Riga | 99.33 | 99.33 | 26. | -167 | -131 |
| 22. Dial Textile Industries Ltd., CL-Katunayake | 100.00 | 2,280 | 772 | ||
| 23. Ahlers Danmark A/S, DK-Haderslev | 100.00 | 1,088 | 76 | ||
| 24. "LUBINEX"-Spolka z o.o., PL-Lubin | 62.85 | 62.85 | 19. | 2,703 | -174 |
| 25. Otto Kern Austria GmbH, A-Mariasdorf | 100.00 | 100.00 | 9. | 846 | 65 |
| 26. UAB Stesa Clasic, LT-Vilnius | 99.33 | 99.33 | 1. | 464 | -316 |
| 27. TEXART Bratislava, s r.o., SK-Bratislava | 100.00 | 100.00 | 14. | 122 | 4 |
| 28. TEXART d.o.o., HR-Strmec Samoborski | 100.00 | 100.00 | 14. | 259 | 60 |
| 29. TEXART d.o.o., SLO-Ljubljana | 100.00 | 100.00 | 14. | 90 | 28 |
| 30. TEXART Magyarorszag Kft., H-Budapest | 100.00 | 100.00 | 14. | 505 | 29 |
| 31. TEXART spol. s r.o., CZ-Prag | 100.00 | 100.00 | 14. | 191 | 29 |
| 32. Texart UK Ltd., GB-London | 100.00 | 111 | 4 |
1) Amounts in foreign currencies are stated at the mid-rate on the balance sheet date.
2) Net income/loss stated in foreign currency is presented at the average rate for the fiscal year.
3) Control and profit and loss transfer agreement.
No audit under local legislation was performed for Texart UK Ltd., London, UK, for reasons of materiality. Ahlers AG guarantees the latter's liabilities pursuant to section 479A of the UK Companies Act 2006.
The balance sheet date of the companies included in the consolidation coincides with that of the parent company. The only exception is HEMINA Grundstücks-Vermietungsgesellschaft mbH & Co. Objekt Herford KG, Pullach im Isartal, whose balance sheet date is December 31. An interim statement was therefore prepared as of November 30, 2018.
The consolidated financial statements are prepared in euros, the functional and reporting currency of the Group. Each company within the Group defines its functional currency. The items in the respective company's financial statements are measured using this functional currency. Foreign currency transactions are first translated into the functional currency at the spot rate on the day of the transaction. Monetary assets and liabilities in foreign currencies are translated into the functional currency on every closing date using the closing rate. Exchange differences from monetary items as part of a net investment in a foreign operation are recognised in equity. All other currency translation differences are recognised in profit or loss. Non-monetary items measured at historical cost in a foreign currency are translated using the exchange rate on the date of the transaction. The assets and liabilities of the foreign companies are translated into euros at the closing rate. Income and expenses are translated at the mean rate. The resulting exchange differences are recognised as a separate equity component. The cumulative amount recorded in equity for a foreign operation is recognised in profit or loss when this foreign operation is sold.
In the consolidated fixed assets and provisions schedule, opening and closing balances were translated at historical rates, while movements within the fiscal year were translated at average annual rates. Resulting adjustments are shown as currency translation differences in a separate column.
The table below shows the changes in the exchange rates of important currencies:
| Currency | Average rate | Closing rate | |||
|---|---|---|---|---|---|
| Country | 1 EUR = | 2017/18 | 2016/17 | 2018 | 2017 |
| Poland | PLN | 4.25 | 4.28 | 4.29 | 4.21 |
| Switzerland | CHF | 1.16 | 1.10 | 1.13 | 1.17 |
| Sri Lanka | LKR | 189.90 | 170.60 | 203.31 | 181.81 |
| USA | USD | 1.19 | 1.12 | 1.14 | 1.18 |
Property, plant and equipment are recorded at cost minus accumulated scheduled depreciation and, where applicable, impairment losses. The terms of useful life on which depreciation is based reflect the anticipated economic term of use for the Group. The following terms of useful life are used for scheduled depreciation of key assets:
| - | Buildings | 15 to 50 years |
|---|---|---|
| - | Machinery | 5 to 15 years |
| - | Furniture and fixtures and office equipment | 3 to 30 years |
Terms of useful life, residual carrying amounts and depreciation methods for property, plant and equipment are reviewed on a regular basis in order to ensure that the depreciation method and period coincide with the anticipated useful economic life of the asset items.
Acquired intangible assets with terms of useful life that can or cannot be determined are capitalised at cost if it is probable that future economic benefits are associated with the asset and if the cost of the asset can be reliably established. Acquired intangible assets with a determinable useful life are amortised over three to eight years using the straight-line method. Acquired intangible assets with an indeterminable useful life are not subject to scheduled amortisation; rather they are reviewed for recoverability on an annual basis and in the event that there is an indication of impairment and written down to the recoverable amount to the extent necessary. In the case of intangible assets with an indeterminable useful life, a review occurs in every reporting period to ascertain whether events and circumstances continue to justify the estimate of an indeterminable useful life for these assets. In the event that reasons for previous impairment losses no longer apply, these impairment losses are reversed and the carrying amount of the asset is increased to its recoverable amount. Terms of useful life, residual values and amortisation and depreciation methods are reviewed at least annually at the end of the fiscal year. If expectations differ from previous estimates, the appropriate changes are accounted for as changes to estimates.
Shares in associated companies are recognised at cost. Subsequent measurement – starting after the end of the first full fiscal year – reflects the percentage changes in equity caused by net income/loss for the year and capital increases/reductions less dividends received. Where a company's fiscal year differs from that of the Ahlers Group, interim financial statements are prepared for the investment as at November 30.
Works of art are measured in accordance with IAS 16, Property, plant and equipment. Under this standard, assets are recognised at amortised cost. Works of art with acquisition values in excess of EUR 1,500 are not subject to depreciation. Given that these works of art are believed to be of lasting value, no scheduled depreciation is applied; they are consequently valued at cost. Works of art with an acquisition value lower than EUR 1,500 are subject to scheduled depreciation. No standard exists under IFRS that explicitly addresses works of art, since these represent neither inventories, nor property, plant and equipment, nor intangible assets, nor financial assets. IAS 8 stipulates that in these cases such accounting policies should be used that are relevant to the economic decision-making needs of the reader and that result in reliable information. The requirements and guidance in Standards and Interpretations dealing with similar and related issues are to be used in these cases. In the present case, IAS 16, Property, plant and equipment, is the appropriate basis.
Financial instruments are reported in accordance with IAS 39. Financial assets are thus classified in the following categories to the extent relevant to the Ahlers Group:
In the case of regular way purchases and sales of financial assets, trade day accounting is used. First-time recording of a financial asset occurs on the day on which the Ahlers Group has become the contractual partner. Financial assets are measured at the fair value of the consideration; in the case of receivables and loans, transaction costs are included.
Changes in fair value of financial assets held for trading are reported in the consolidated income statement.
In the case of receivables and loans, subsequent measurement occurs at amortised cost using the effective interest method less potential value impairments.
Financial assets are derecognised when their sale is contractually agreed; loans and receivables are derecognised upon repayment.
The derivative financial instruments are recorded at fair value. Derivatives are reported in the balance sheet under other financial assets or other financial liabilities.
Changes in fair value of the derivatives are reported depending on whether these instruments are used for hedging purposes and the conditions for accounting for a hedging relationship according to IAS 39 are met. If these conditions are not met, despite the fact that an economic hedging relationship applies, the changes in fair value of the derivative financial instruments are recognised immediately in profit or loss; otherwise, they are directly recognised in equity.
The Ahlers Group uses forward exchange contracts only as derivatives to manage current and future currency risks. In addition, interest rate swaps are used on a case-by-case basis to hedge interest rates.
Borrowing costs are recognised as an expense in the period in which they are incurred.
Terms of useful life, residual values and depreciation and amortisation methods for property, plant and equipment, works of art and intangible assets with determinable terms of useful life are reviewed at least once a year in order to ensure that the depreciation methods, the useful lives and residual values are in accordance with the economic useful life.
Intangible assets with indeterminable terms of useful life are reviewed for impairment at least once a year. Measurement of intangible assets is based on the cash-generating unit to which the respective asset belongs. The Ahlers Group's cash-generating units are individual corporate divisions to which cash flows can be directly attributed.
If there are indications of impairment or if the annual review of impairment of an asset is required, the Ahlers Group estimates the recoverable amount of the respective asset. The recoverable amount is the higher of the net selling price and the value in use. The net selling price is the amount that can be recovered from the sale of an asset in an arm's length transaction, less selling costs. The value is determined on the basis of a discounted cash flow model. The value in use is calculated on the basis of estimated future cash flows from the use and disposal of the asset using the discounted cash flow method. Cash flows are projected on the basis of financial plans with a five-year planning horizon approved by the management; current developments are taken into account. Material assumptions on which the cash flow projections are based include asset-specific licensing income and the related cost trends. More recent findings are incorporated in the preparation of projections on a rolling basis and may lead to adjustments of existing plans. Cash flows are discounted at the time of the impairment review using risk-equivalent capitalisation interest rates. If the carrying amount of an asset exceeds the recoverable amount, the asset is regarded as impaired and written down to its recoverable amount.
If the review leads to the conclusion that an earlier impairment loss is no longer applicable or is applicable only to a lesser degree, the Ahlers Group estimates the recoverable amount. In the event that the reasons for a previous impairment loss no longer apply, the carrying amount of the asset is increased to its recoverable amount. This amount may not, however, exceed the carrying amount that would pertain after taking into account amortisation, if no impairment loss had been recorded against the asset in previous years. A reversal of an impairment loss is recognised immediately in net income or loss in the period in which it is recorded. Once recognised, goodwill impairments are not reversed.
Financial assets are tested for impairment at each balance sheet date. If the recoverable amount of an asset is lower than its carrying amount, the asset is written down to the recoverable amount. This write-down is expensed as an impairment loss. An impairment loss recorded previously as an expense is adjusted against profit or loss if matters have arisen that would require such an adjustment; however, the adjustment may result in an amount no greater than the amortised cost.
Inventories are measured at the lower of cost or net realisable value. Costs incurred in bringing inventories to their present location in their present condition are accounted for as follows:
Raw materials
• First-in first-out method (Fifo)
Finished goods and services and work in progress
• Direct material and labour costs, direct production costs, material overheads and the appropriate share of production overheads based on actual production during the fiscal year, not taking into account borrowing costs.
Net realisable value is the estimated selling price in the ordinary course of business less the estimated costs of completion and the estimated costs necessary to make the sale.
Trade receivables are recorded at the original invoice amount minus allowances, if necessary. An allowance is created if there is objective evidence that the company will not be in a position to collect the receivable. Receivables are written off as soon as they are deemed uncollectible.
The majority of receivables are covered by trade credit insurance. The deductible agreed in the trade credit insurance amounts to 10 percent. Allowances for receivables that have been insured via trade credit insurance are created, if necessary, only in the amount of the contractually agreed deductible.
Cash and cash equivalents in the balance sheet include cash on hand and bank balances.
For purposes of the consolidated cash flow statement, cash and cash equivalents include the items defined above as well as liquid investments such as other securities that can be converted into certain cash at any point in time and are subject only to negligible risks of value fluctuation. Overdrafts are deducted for the purpose of the consolidated cash flow statement.
When loans are initially recorded, they are measured at the fair value of the consideration. Subsequently, interest-bearing loans are measured using the effective interest method at amortised cost.
Retirement plan obligations and retirement plan expenses of defined benefit plans are measured using the projected unit credit method. The measurement is undertaken according to country-specific conditions. The Ahlers Group only has closed pension plans in which existing pensioners and vested benefits are required to be measured. Actuarial reviews are conducted annually. These reviews take into account both the pensions known and benefits acquired at the balance sheet date and future anticipated pension increases.
The effects arising from the revaluation of the net debt, in this case essentially actuarial gains and losses from adjustments or changes to actuarial assumptions, are recognised in other comprehensive income in accordance with IAS 19. The amount recognised as a debt under the pension plans is thus equivalent to the present value of the defined benefit obligation.
Pre-retirement part-time agreements are based on the so-called block model. Two types of obligations arise in this connection – the repayment amount and the replenishment amount – both of which are recorded at their net present value in accordance with actuarial principles.
As part of the long-term bonus, the members of the Management Board were granted stock appreciation rights, which can only be settled in cash.
Where the company receives services in return that cannot be identified individually or as a whole, these nonidentifiable services are measured at the difference between the fair value of the stock-based compensation and the fair value of the non-identifiable services received at the time of the granting. This is then capitalised or charged as an expense.
The fair value is spread over the period up to the day the right may first be exercised and is then recognised in profit or loss in respect of a corresponding liability. The liability is remeasured at every balance sheet date and on the settlement date. Changes in the fair value are recognised in profit or loss.
Provisions are created if a current legal or constructive obligation towards a third party exists in connection with a past event, which will probably result in an outflow of funds and for which a reliable estimate of the amount of the obligation can be made. Provisions for restructuring measures are established when a detailed, formal restructuring plan exists and when the parties concerned rightfully expect the restructuring measures to be implemented. If the interest rate impact is material, provisions are measured at net present value. If discounting takes place the increase in provisions occasioned by the passage of time is recorded as interest expense.
When measured for the first time, financial liabilities are recognised at the fair value of the counter-performance received. Following the first-time recognition, financial liabilities are measured at amortised cost using the effective interest method. Trade payables and other liabilities are recorded at the nominal value or the repayment amount.
If the Ahlers Group bears all material opportunities and risks under lease agreements and is therefore considered the economic owner (finance leases), the leased object is capitalised at the lower of market value or the present value of future lease payments at the time that the contract is entered into. The payment obligations arising under the finance lease are recorded under financial liabilities in the equivalent amount. The interest portion of the lease liabilities is reported in the consolidated income statement over the term of the lease. If the future transfer of ownership of the leased asset is sufficiently certain, depreciation is undertaken over the useful economic life. Otherwise the depreciation period is based on the term of the lease.
In addition to finance lease agreements, the Ahlers Group has entered into lease agreements that qualify as operating leases. As a result, the leased objects – from an economic perspective – are attributable to the lessor and the operating lease instalments represent period expenses. The total of future lease payments for the basic period when the lease is uncancellable is reported under financial obligations.
Income is recognised when it is probable that economic benefit will flow to the company and the amount can be reliably measured. Income is measured at the fair value of the consideration received. Income is stated net of discounts, rebates, VAT or other charges. Moreover, the following accounting criteria must be fulfilled in order to recognise income:
Actual tax refund claims and tax obligations for the current fiscal year and for earlier fiscal years are measured at the anticipated amount of the refund from, or payment to, the tax authorities.
Deferred tax assets and liabilities are created for all temporary differences between the values recorded for tax purposes by the individual companies and the values recorded in the consolidated financial statements according to IFRS as well as in connection with specific consolidation processes. Deferred tax assets also include tax reduction claims arising from the expected use of existing tax loss carryforwards in subsequent years and the realisation of which can be assumed with a sufficient degree of probability. Deferred tax assets and liabilities are measured using the tax rates that are expected to apply during the period in which an asset is realised or a liability is met. The tax rates (and tax laws) applicable on the balance sheet date are taken as the basis. Future changes in tax rates must be taken into account on the balance sheet date provided that their eventual enactment in the course of the legislative process is accepted as a given fact.
Income taxes related to items that are recognised directly in equity are recognised in equity and not in profit or loss. Deferred tax assets and liabilities are netted in the consolidated balance sheet, provided that an enforceable right
exists to offset the actual tax debt and the deferred taxes relate to the same tax subject and the same tax authority.
| 2017/18 | 2016/17 | |||
|---|---|---|---|---|
| KEUR | % | KEUR | % | |
| Domestic | 120,784 | 54.1 | 126,942 | 53.8 |
| Foreign | 102,283 | 45.9 | 108,989 | 46.2 |
| 223,067 | 100.0 | 235,931 | 100.0 |
Sales revenues were generated almost without exception by the sale of clothing; licensing revenues from Otto Kern GmbH, Herford, in the amount of EUR 855 thousand (previous year: EUR 787 thousand), Baldessarini GmbH, Herford, in the amount of EUR 232 thousand (previous year: EUR 169 thousand) and Pioneer Jeans-Bekleidung GmbH, Herford, in the amount of EUR 24 thousand (previous year: EUR 22 thousand) are included in this figure. Foreign sales were generated primarily in Europe.
| KEUR | 2017/18 | 2016/17 |
|---|---|---|
| Reversal of an impairment loss | 1,700 | 300 |
| Income from the disposal of fixed assets | 819 | 117 |
| Income from personal use of company cars | 545 | 538 |
| Exchange gains | 462 | 651 |
| Income from the release of provisions/other liabilities | 428 | 274 |
| Income from re-invoicing | 359 | 415 |
| Rental income | 316 | 327 |
| Income from the reversal of valuation allowances on trade receivables | 281 | 314 |
| Income from damages | 100 | 73 |
| Income from insurance payments | 16 | 213 |
| Income unrelated to the reporting period | 6 | 58 |
| Income from area assignments sales agents | 0 | 210 |
| Others | 467 | 348 |
| 5,499 | 3,838 |
In the fiscal year 2017/18, other operating income remained almost stable compared to the previous year. The increase is attributable to another write-up of the Otto Kern trademark right (EUR 1,700; previous year: EUR 300 thousand).
| KEUR | 2017/18 | 2016/17 |
|---|---|---|
| Cost of raw materials and supplies and purchased goods | 93,550 | 90,681 |
| Cost of purchased services | 26,060 | 29,418 |
| 119,610 | 120,099 |
The cost of materials adjusted for changes in finished goods and work in progress in an amount of EUR -5,779 thousand (previous year: EUR -1,237 thousand) decreased at a lower rate than sales revenues due to higher inventory write-downs.
| KEUR | 2017/18 | 2016/17 |
|---|---|---|
| Wages and salaries | 45,290 | 43,583 |
| Social security contributions | 7,897 | 7,725 |
| Retirement benefit and similar expenses | 117 | 95 |
| 53,304 | 51,403 |
Social security contributions include employer contributions to contribution-based pension plans in an amount of EUR 3,465 thousand (previous year: EUR 3,455 thousand).
The increase in personnel expenses is attributable to severance payments that became necessary because of the discontinuation of Jupiter Sportswear and the ladieswear activities as well as to the first-time consolidation of Ahlers RUS.
| KEUR | 2017/18 | 2016/17 |
|---|---|---|
| Distribution expenses | 31,456 | 32,990 |
| General and administrative expenses | 12,046 | 11,319 |
| Advertising expenses | 4,860 | 5,522 |
| Maintenance expenses | 2,405 | 2,378 |
| Valuation allowances | 1,021 | 321 |
| Insurance expenses | 1,000 | 1,041 |
| Banking fees | 629 | 538 |
| Other taxes | 396 | 416 |
| Other fees | 343 | 310 |
| Exchange differences | 273 | 767 |
| Miscellaneous | 5,673 | 5,646 |
| 60,102 | 61,248 |
Distribution expenses are comprised chiefly of costs that vary with sales levels (commissions, travel costs, licenses, freight and removals from storage). Administrative expenses include legal, consultancy and EDP costs as well as general administrative costs. The cost of trade fairs and marketing, including trade marketing, constitutes advertising expenses.
The non-current liabilities with indefinite terms towards Adolf Ahlers AG, CH-Zug, represent monetary items as part of a net investment in a foreign operation as defined in IAS 21.15. Pursuant to IAS 21.32f, the resulting exchange differences are initially not shown under operating expenses but recognised in equity. They are recognised in profit or loss only on disposal of the net investment.
| KEUR | 2017/18 | 2016/17 |
|---|---|---|
| Property, plant and equipment | ||
| Land and buildings | 489 | 510 |
| Technical equipment and machines | 339 | 304 |
| Other equipment, plant and office equipment | 3,487 | 3,519 |
| Intagible Assets | ||
| Trademark rights and similar rights | 3,420 | 929 |
| Goodwill | - | - |
| Other non-current assets | ||
| Other assets | - | - |
| 7,735 | 5,262 | |
| thereof impairment losses | ||
| Goodwill | 1,700 | - |
Impairment losses relate to the Baldessarini brand.
| KEUR | 2017/18 | 2016/17 |
|---|---|---|
| Write-up of the at-equity investment | 30 | 100 |
| Other interest and similar income | 92 | 156 |
| Interest expenses | -841 | -869 |
| -719 | -613 |
The write-up of the at-equity investment was made in accordance with the increase in the pro-rated equity capital. For further information, refer to No. 13 of the notes.
| KEUR | 2017/18 | 2016/17 |
|---|---|---|
| Current taxes | ||
| Germany | 155 | 469 |
| Foreign | 663 | 677 |
| 818 | 1,146 | |
| Deferred taxes | ||
| Germany | -785 | -667 |
| Foreign | -156 | 13 |
| -941 | -654 | |
| -123 | 492 |
Of the deferred taxes, EUR 195 thousand in income relate to the recognition and reversal of temporary differences (previous year: expense of EUR 355 thousand).
Ahlers AG had a domestic income tax rate of 30.88 percent (previous year: 30.88 percent) for deferred taxes, consisting of corporate tax at a rate of 15.00 percent and the solidarity surcharge imposed on corporate tax at a rate of 5.50 percent as well as German municipal trade tax of 15.05 percent with an average multiplying factor of 430 percent. Foreign tax rates are between 14.00 and 33.33 percent (previous year between 12.00 and 33.33 percent).
The table below shows a reconciliation statement between the anticipated income tax expense that would theoretically have resulted if using an income tax rate of 30.88 percent (previous year: 30.88 percent) at the Group level and the income tax actually reported for the Group.
| KEUR | 2017/18 | 2016/17 |
|---|---|---|
| Consolidated net results before income taxes | -7,124 | 2,381 |
| Expected tax expense at a rate | ||
| of 30.88% (2016/17: 30.88%) | -2,200 | 735 |
| Tax rate differences at local tax rate | -77 | -462 |
| Effects from changes in tax rates | 1 | 2 |
| Non-deductible business expenses | 228 | 276 |
| Taxes for previous fiscal years | 344 | 60 |
| Adjustments to recognition of deferred tax assets and other permanent differences | 1,563 | -74 |
| Tax-free income | -4 | -56 |
| Other differences | 22 | 11 |
| Total adjustments | 2,077 | -243 |
| Tax expense reported | -123 | 492 |
As of November 30, 2018, no deferred taxes were recorded for tax loss carryforwards of EUR 8,233 thousand (previous year: EUR 2,939 thousand) that exist in the Group, as the Group believes it is rather unlikely that they will be utilised in the next five years. This amount includes EUR 3,281 thousand that will lapse successively over the next 20 years. In addition, deferred tax assets in the amount of EUR 298 thousand (previous year: EUR 352 thousand) have been recognised, whose utilisation depends on future taxable events which exceed the bottom line effects from the release of existing taxable temporary differences. Their use is guaranteed as sufficient taxable profits are expected. These expectations are based on the plans and budgets of the respective Group companies. The planned sales increases, cost savings and the further penetration of the market are the core elements of the Group strategy justifying this recognition.
Tax deferrals are to be allocated to the following balance sheet accounts:
| Nov. 30, 2018 | Nov. 30, 2017 | ||||
|---|---|---|---|---|---|
| deferred | deferred | deferred | deferred | ||
| tax | tax | tax | tax | ||
| KEUR | assets | liabilities | assets | liabilities | |
| Property, plant and equipment | 18 | 1,336 | 46 | 1,374 | |
| Intangible assets | 35 | 2,530 | 46 | 2,559 | |
| Non-current financial Assets | - | 57 | - | 57 | |
| Inventories | 794 | - | 683 | - | |
| Trade receivables and other | |||||
| current financial assets | 87 | - | 85 | 5 | |
| Pension provisions | 392 | - | 443 | - | |
| Other provisions | 269 | 102 | 158 | 118 | |
| Financial liabilities | 52 | 138 | 358 | - | |
| Other liabilities | 142 | - | 154 | 19 | |
| 1,789 | 4,163 | 1,973 | 4,132 | ||
| Losses carried forward | 2,529 | - | 1,782 | - | |
| 4,318 | 4,163 | 3,755 | 4,132 | ||
| Balance | -3,142 | -3,142 | -2,510 | -2,510 | |
| 1,176 | 1,021 | 1,245 | 1,622 |
As of the balance sheet date, there were taxable temporary differences relating to subsidiaries in the amount of EUR 390 thousand (previous year: EUR 382 thousand), for which no deferred tax liabilities were recognised as no sales or profit distributions are planned.
Besides the tax expenses shown in the income statement, deferred taxes of EUR -407 thousand (previous year: EUR 487 thousand) from the recognition of the forward exchange contracts in equity, the translation differences pursuant to IAS 21.32f and the treatment of the effects from the remeasurement of the net liability of the pension obligations were directly recognised in equity. The table below shows the individual tax effects in the consolidated statement of comprehensive income:
| 2017/18 | 2016/17 | |||
|---|---|---|---|---|
| before | deferred | before | deferred | |
| KEUR | taxes | taxes | taxes | taxes |
| Not to be reclassified to profit or loss | ||||
| Actual gains and losses on defined benefit plans | 206 | -66 | -101 | 23 |
| To be reclassified to profit or loss | ||||
| Net result from cash flow hedges | 1,213 | -375 | -1,902 | 589 |
| Currency translation differences as per IAS 21.32f | -109 | 34 | 404 | -125 |
| Other currency translation differences in the equity | -331 | - | -80 | - |
| Other changes | -139 | - | -149 | - |
| 840 | -407 | -1,828 | 487 | |
| Others income after taxes | 433 | -1,341 |
Companies in which Ahlers AG holds less than 100 percent are included in the consolidated financial statements. The shares relating to non-controlling interests are shown separately from equity attributable to equity holders of Ahlers AG under equity in the consolidated balance sheet. Non-controlling interests in the consolidated net income and comprehensive income are also shown separately in the consolidated income statement and the consolidated statement of comprehensive income.
Earnings per share are defined as the net income for the period attributable to the shareholders of Ahlers AG divided by the weighted average number of shares outstanding during the fiscal year. An average of 13,681,520 no-par shares (previous year: 13,681,520) were outstanding in the year under review. No shares existed either as of November 30, 2018, or November 30, 2017, that would have a diluting effect on earnings per share. Consolidated net results attributable to the shareholders of Ahlers AG amounts to EUR -7,006 thousand (previous year: EUR 1,836 thousand). This amount is distributed evenly over all shares. In the fiscal year 2017/18, this resulted in earnings per share of EUR -0.51 (previous year: EUR 0.11 per common share and EUR 0.16 per preferred share).
Changes to the individual items of non-current assets during fiscal 2016/17 and 2017/18 are shown in the consolidated fixed and intangible assets schedule attached to the notes to the consolidated financial statements.
Due to further payments for the ERP project and the change in the basis of consolidation resulting from the addition of Ahlers RUS, investments in property, plant and equipment and intangible assets exceeded the systematic depreciation in the fiscal year 2017/18. The additions to factory and office equipment in the amount of EUR 2,049 thousand primarily include shop systems as well as replacement investments.
Exclusive use of the company-owned Baldessarini and Otto Kern brands is assured by means of long-term, renewable industrial property rights. Consequently an indeterminable term of useful life can be deemed to exist in each case.
The carrying amount of intangible assets with indeterminable useful lives is comprised of the carrying amount of Otto Kern trademark rights of EUR 5,600 thousand (previous year: EUR 3,900 thousand) and Baldessarini trademark rights of EUR 4,270 thousand (previous year: EUR 5,970 thousand). Each forms a cash generating unit which serves to review the value.
Goodwill was recognised in the amount of EUR 328 thousand (previous year: EUR 328 thousand) in the context of the takeover of the Stesa Group in Lithuania in prior years. The foundation of Ahlers RUS resulted in the capitalisation of goodwill in the amount of EUR 704 thousand.
Development expenses were not capitalised, as the requirements defined in IAS 38 were not fully met. R&D costs of EUR 7,188 thousand (previous year: EUR 6,762 thousand) were recognised as an expense in the fiscal year.
As of the balance sheet date, the recoverable amounts were reviewed and the Group's property, plant and equipment, intangible assets with determinable and indeterminable lives and goodwill were tested for impairment. The cash-generating units to which the intangible assets with indeterminable lives belong are the Otto Kern and Baldessarini divisions, i.e. the Premium segment. The recoverable amounts were determined on the basis of the net selling prices. The cash flow projections are based on growth rates in the mid single-digit range for the planning periods, which reflect the trend of the past years in this segment. The discount rate used for the cash flow projections averages 7.92 percent for each cash-generating unit. The Otto Kern trademark rights were written up by EUR 1,700 thousand and the Baldessarini trademark rights were written down by EUR 1,700 thousand in the fiscal year.
Goodwill relates to the cash-generating unit of the Stesa Group, Lithuania, i.e. to the Premium Brands segment. The recoverable amount for the Stesa Group was also determined on the basis of the net selling price by means of discounted cash flow projections. The growth rates for the planning periods are in the mid single-digit range, which reflects the trend of the past years in the respective segments. The discount rate used for the cash flow projections averages 7.92 percent for this cash-generating unit.
Management is of the opinion that the assumptions and estimates for the cash-generating units are adequate. Future changes in the framework conditions may nevertheless have an impact on the parameters for the calculation of the recoverable amount. This may result in the recoverable amount deviating from the corresponding carrying amount in the future.
Ahlers AG holds a 49 percent share in Jupiter Shirt GmbH, Tirschenreuth, which was established in 2010. The reporting date of the company is December 31. Therefore interim financial statements were prepared as at November 30, 2018. Given that the company continues to show a positive performance and the capital was neither increased nor reduced, the investment was recognised at a value which exceeds the prior year level by EUR 30 thousand. The income is shown under profit shares from at-equity investments. Jupiter Shirt paid out no dividend in the fiscal year.
In the fiscal year 2017, the company, which is accounted for using the equity method, generated sales revenues of EUR 7,820 thousand and earnings before taxes of EUR 19 thousand. Total assets amounted to EUR 6,036 thousand as of December 31, 2017.
Other financial assets include a loan granted by Ahlers AG to a foreign key account in the amount of EUR 38 thousand (previous year: EUR 498 thousand). These were original receivables from goods supplied that were converted into an interest-bearing three-year payment plan. The loan is secured by a personal guaranty.
The item also comprises other interest-bearing and non-interest-bearing long-term loans, surrender values pertaining to life insurance policies as well as rent deposits.
Other assets mainly include works of art. These consist primarily of works by well-known contemporary and Classic Modernist artists. The carrying amounts declined by EUR 91 thousand in the fiscal year as a result of sales and systematic depreciation at a low level. The sales generated proceeds of EUR 640 thousand, resulting in net income of EUR 547 thousand. As in the previous year, no works of art were bought in the fiscal year 2017/18.
Other non-current assets are comprised as follows:
| KEUR | Nov. 30, 2018 | Nov. 30, 2017 |
|---|---|---|
| Contemporary Art | 11,178 | 11,254 |
| Classic Modernism | 5,754 | 5,767 |
| Other works of art | 766 | 768 |
| 17,698 | 17,789 |
Classic Modernism comprises art from the first half of the 20th century, while contemporary art was created after World War II. Ahlers AG's collection of Classic Modernist art includes works by Alexej von Jawlensky, Emil Nolde and August Macke, while most of its pieces of contemporary art are by Yves Klein.
| KEUR | Nov. 30, 2018 | Nov. 30, 2017 |
|---|---|---|
| Raw materials and consumables | 18,964 | 21,362 |
| Work in progress | 458 | 537 |
| Finished goods and merchandise | 61,444 | 53,421 |
| 80,866 | 75,320 |
The amount of impairment taken into consideration in measuring inventories is EUR 10,294 thousand (previous year: EUR 8,529 thousand). The carrying amount of inventories recorded at net realisable value is EUR 22,690 thousand (previous year: EUR 17,720 thousand).
Inventories of finished goods and merchandise increased primarily because of the revenue-related increase in old merchandise and NOS inventories as well as the first-time consolidation of Ahlers RUS. Stocks of raw materials were reduced due to more precisely timed fitting of the production plants and shorter procurement channels.
Trade receivables are usually not interest-bearing and the average number of days outstanding is 51 (previous year: 51). The changes in impairments included in trade receivables are shown below:
| KEUR | 2017/18 | 2016/17 |
|---|---|---|
| As at Dec. 1 | 1,413 | 1,615 |
| Utilisation | -334 | -235 |
| Reversal | -282 | -297 |
| Additions | 825 | 300 |
| Currency translation differences | -9 | 30 |
| As at Nov. 30 | 1,613 | 1,413 |
All expenses and income from the measurement of trade receivables are recognised in other operating expenses/income and reflected in the income statement.
The table below shows the age structure of the trade receivables as of November 30, 2018:
| KEUR | Nov. 30, 2018 | Nov. 30, 2017 |
|---|---|---|
| Carrying amount on November 30 | 20,211 | 31,538 |
| thereof neither overdue nor impaired | 12,930 | 25,234 |
| thereof overdue but not impaired | 5,712 | 4,992 |
| < 90 days | 3,598 | 3,162 |
| > 90 to 180 days | 531 | 1,651 |
| > 180 to 270 days | 284 | 40 |
| > 270 to 360 days | 873 | 28 |
| > 360 days | 426 | 111 |
This includes receivables from a major foreign customer in the amount of EUR 2,047 thousand (previous year: EUR 2,977 thousand). Together with the loan reported under other non-current assets (section 14 of the notes), the outstanding receivables to this customer amounted to EUR 2,085 thousand at the balance sheet date (previous year: EUR 3,475 thousand). Of these receivables, EUR 2,085 thousand (previous year: EUR 2,150 thousand) are secured by guarantees.
With regard to the trade receivables that are overdue but not impaired, there are no indications that suggest that the debtors will fail to meet their obligations.
The decline in trade receivables is attributable to the factoring agreement signed with effect from November 30, 2018. The resulting effect amounts to EUR 10,377 thousand. For further information, please refer to note (33) - Financial risk management.
Other financial assets essentially include the positive value from the fair value measurement of the forward exchange contracts. These amounted to EUR 448 thousand as of the balance sheet date (previous year: EUR - thousand). They also comprise financial assets held for trading in Germany at carrying amounts of EUR - thousand (previous year: EUR 7 thousand).
Receivables from affiliates in the amount of EUR 102 thousand (previous year: EUR 0.3 thousand) relate to the exchange of goods and services with these companies.
Other assets in the amount of EUR 3,142 thousand (previous year: EUR 3,017 thousand) primarily include value added tax, deferred license payments, bonus claims as well as receivables from suppliers and insurance companies.
| KEUR | Nov. 30, 2018 | Nov. 30, 2017 |
|---|---|---|
| Cash on hand | 187 | 174 |
| Bank balances | 4,032 | 6,229 |
| 4,219 | 6,403 |
Bank balances include readily available cash and cash equivalents and invested overnight funds which bear interest at market rates. The fair value of cash and cash equivalents is EUR 4,219 thousand (previous year: EUR 6,403 thousand).
Cash and cash equivalents can be broken down as follows for cash flow statement purposes:
| KEUR | Nov. 30, 2018 | Nov. 30, 2017 |
|---|---|---|
| Cash on hand | 187 | 174 |
| Bank balances | 4,032 | 6,229 |
| Overdraft facilities | -5,446 | -112 |
| -1,227 | 6,291 |
Equity and its individual components are shown separately in the consolidated statement of changes in equity.
Subscribed capital consists of a total of 13,681,520 no par shares. These are registered common shares (previous year: 7,600,314 common shares and 6,081,206 non-voting preferred shares. The 7,600,314 common shares included 500 registered shares with transfer restrictions).
The total number of shares outstanding remained unchanged from the previous year and stood at 13,681,520 shares as of November 30, 2018.
Based on a resolution by the ordinary Annual Shareholders' Meeting of May 3, 2017 in conjunction with the resolution adopted by the Annual Shareholders' Meeting on April 24, 2018 on the conversion of bearer shares into registered shares and the abolition of the preferred shares as well as the transfer restrictions of the former registered shares and their right to designate members of the Supervisory Board, the statutes were amended as follows: The Management Board shall be authorised, with the consent of the Supervisory Board, to increase the share capital by a total of no more than EUR 21,600 thousand once or several times through the issue of new, registered common shares against cash and/or non-cash contributions by May 2, 2022. The Management Board shall, however, be authorised to exclude the shareholders' subscription rights under certain conditions with the consent of the Supervisory Board (see chapter 'Takeover-related information and explanatory report', p. 84 or www.ahlers-ag.com, 'Investor Relations' section).
As of November 30, 2018, the company held no own shares.
The capital reserve totals EUR 15,024 thousand; EUR 12,782 thousand of this amount is due to the premium on the capital increase against cash contributions that occurred at the time of the IPO, and EUR 1,610 thousand from the issue of preferred shares. The capital reserve in the consolidated IFRS financial statements was reduced by the costs of raising equity that were incurred during the IPO.
The revenue reserves in an amount of EUR 34,864 thousand are made up of profit carryforwards (EUR 32,256 thousand), the net loss for the year attributable to the shareholders of Ahlers AG (EUR -7,006 thousand), the revenue reserves from the firsttime adoption of IFRS (EUR 7,293 thousand) and other revenue reserves (EUR 2,321 thousand). The latter include the effects from the revaluation of the net debt of the pension obligations in the amount of EUR -773 thousand before taxes and EUR -564 thousand after taxes, which are directly recognised in equity.
Of Ahlers AG's HGB profit for the year including the HGB profit reserves totalling EUR 26,823 thousand, the amount representing deferred tax assets under HGB in the amount of EUR 1,651 thousand as well as the difference from the calculation of the pension provisions at different discount rates pursuant to section 253 (6) HGB in the amount of EUR 142 thousand may not be distributed.
The equity difference for currency translations comprises the exchange differences arising from translation of the individual financial statements of foreign subsidiaries into euros, exchange differences from monetary items as part of a net investment in a foreign operation after tax pursuant to IAS 21.32f as well as from the recognition of currency forward transactions hedged in accordance with IAS 39 in equity after taxes. Deferred taxes accounted for in equity represented a total of EUR 241 thousand (previous year: EUR 582 thousand).
| Statement of provisions 2017/18 | |||||||
|---|---|---|---|---|---|---|---|
| Addition of | Currency | ||||||
| Dec. 1, | unaccrued | translation | Nov. 30, | ||||
| KEUR | 2017 | Utilisation | Release | Additions | interest | differences | 2018 |
| Non-current | |||||||
| provisions | |||||||
| Retirement benefit and | |||||||
| similar obligations | 4,074 | 564 | 35 | 5 | 2 | -37 | 3,445 |
| Other anniversaries | 465 | 52 | 0 | 49 | 9 | -9 | 462 |
| Part-time retirement | 39 | 0 | 0 | 47 | 0 | - | 86 |
| Sub-total | 504 | 52 | 0 | 96 | 9 | -9 | 548 |
| Current | |||||||
| provisions | |||||||
| Goods returned/discounts | 1,408 | 1,406 | 0 | 1,364 | - | -3 | 1,363 |
| Severance payments | 365 | 294 | 56 | 2,963 | - | -3 | 2,975 |
| Other | 547 | 277 | 19 | 298 | - | -26 | 523 |
| Sub-total | 2,320 | 1,977 | 75 | 4,625 | - | -32 | 4,861 |
| 6,898 | 2,593 | 110 | 4,726 | 11 | -78 | 8,854 |
Pension obligations of the Ahlers Group are calculated using the projected unit credit method. In this approach, future obligations are computed taking into consideration dynamic developments using actuarial methods.
The following assumptions were used as the basis for calculation of pension obligations:
| Parameter | 2017/18 | 2016/17 |
|---|---|---|
| Projected interest rate (discount rate) | 1.76% | 1.74% |
| Projected pension trend | 2.00% | 2.00% |
Actuarial gains and losses are recognised in other comprehensive income in accordance with IAS 19.120 et seq. Pension expenses are composed of personnel expenses and interest expenses.
Salary trends are omitted, since pension provisions relate exclusively to employees who have already left and no new pension commitments are being entered into for the future. The present values of the defined benefit obligations are recognised in the balance sheet.
The table below shows the changes in the gross present values of defined benefit obligations:
| KEUR | 2017/18 | 2016/17 |
|---|---|---|
| Present value of the defined benefit obligation as of December 1 | 3,441 | 3,654 |
| + Current service cost |
42 | 41 |
| + Interest cost (effect of discounting) |
86 | 84 |
| - Benefits paid |
-391 | -400 |
| +/- Actuarial gains/losses | -206 | 101 |
| - Curtailments/settlements |
0 | 0 |
| Present value of the defined benefit obligation as of November 30 | 2,972 | 3,480 |
| Currency translation | -37 | -39 |
| 2,935 | 3,441 |
The present value of the defined benefit obligations amounted to EUR 3,654 thousand as of November 30, 2016, EUR 3,917 thousand as of November 30, 2015 and EUR 4,154 thousand as of November 30, 2014.
For information regarding the amounts stated in the income statement and in other comprehensive income, please refer to (4) Personnel expenses and (8) Income taxes.
Pension provisions almost entirely are associated with former employees in Germany. The provision also includes legally stipulated termination indemnity claims (benefits upon retirement) relating to employees employed abroad in the amount of EUR 510 thousand (previous year: EUR 633 thousand).
As the number of active future beneficiaries is very low and continues to decline, the defined benefit plans entail no risk to future cash flows.
The anniversary bonus provisions included in this item are based on expert actuarial opinions, whose calculations are based on current assumptions and trends that apply at the balance sheet date.
Pre-retirement part-time employment provisions of EUR 110 thousand (previous year: EUR 56 thousand) have also been recorded. These pre-retirement part-time employment provisions are secured by securities for insolvency insurance with a fair market value of EUR 24 thousand (previous year: EUR 17 thousand). The securities are offset against the pre-retirement part-time employment provisions as they qualify as plan assets. Proceeds from the securities in the amount of EUR 0.3 thousand (previous year: EUR - thousand) were recognised in the income statement.
Non-current financial liabilities are interest-bearing and generally have terms of between two and eight years. Liabilities to banks include the "associated liability" from the factoring agreement of EUR 522 thousand, which is recognised for the first time. For more information on factoring, please refer to note (33).
Other financial liabilities include leasing liabilities in an amount of EUR 174 thousand (previous year: EUR 407 thousand) as well as negative market values from the measurement of forward exchange contracts in the amount of EUR - thousand (previous year: EUR 765 thousand). Due to the floating interest rates of the financial liabilities, the fair value is identical with the respective carrying amount.
The table below shows the remaining terms and the average interest rates of the financial liabilities on the respective balance sheet dates:
| Remaining terms | |||||||
|---|---|---|---|---|---|---|---|
| up to | 1 to | > 5 | Total non | ||||
| KEUR | Year | 1 year | 5 years | years | current | Total | |
| 2018 | Carrying amount | 12,788 | 18,296 | 1,410 | 19,706 | 32,494 | |
| Liabilities | Interest rate | 1.37% | 1.68% | 1.35% | |||
| to banks | 2017 | Carrying amount | 8,054 | 24,050 | 2,998 | 27,048 | 35,102 |
| Interest rate | 1.46% | 1.75% | 1.33% | ||||
| 2018 | Carrying amount | 23,577 | - | - | - | 23,577 | |
| Trade | Interest rate | - | - | - | |||
| payables | 2017 | Carrying amount | 20,559 | - | - | - | 20,559 |
| Interest rate | - | - | - | ||||
| 2018 | Carrying amount | 174 | - | - | - | 174 | |
| Other | Interest rate | 1.52% | - | - | |||
| payables | 2017 | Carrying amount | 995 | 177 | - | 177 | 1,172 |
| Interest rate | 1.52% | 1.52% | - | ||||
| Total | 2018 | 36,539 | 18,296 | 1,410 | 19,706 | 56,245 | |
| amounts | 2017 | 29,608 | 24,227 | 2,998 | 27,225 | 56,833 |
All liabilities to affiliated companies are due within one year. This item also includes trade payables.
Factory and office equipment items are leased under finance lease arrangements. Future minimum lease payments under finance leases can be reconciled to their present values as follows:
| Nov. 30, 2018 | Nov. 30, 2017 | |||
|---|---|---|---|---|
| Present | Present | |||
| Minimum | value of | Minimum | value of | |
| lease | minimum | lease | minimum | |
| KEUR | payments | lease | payments | lease |
| Maturity | ||||
| within a year | 175 | 174 | 234 | 230 |
| 1 to 5 years | - | - | 178 | 177 |
| > 5 years | - | - | - | - |
| Total minimum lease payments | 175 | 174 | 412 | 407 |
| minus the interest portion | -1 | -5 | ||
| Present value of minimum lease payments | 174 | 407 |
Liabilities under finance leases are offset by assets in an amount of EUR 174 thousand (previous year: EUR 407 thousand) shown under property, plant and equipment.
Lease payments in the fiscal year 2017/18 totalled EUR 234 thousand (previous year: EUR 235 thousand).
Other current provisions primarily contain provisions for severance payments to employees and representatives. Additions in the fiscal year were made in the context of the discontinuation of Jupiter Sportswear and the ladieswear activities. This item also includes provisions for returns and discounts. The net margins are shown here. The latter are determined on the basis of the prior year figures and the current sales trend.
| KEUR | Nov. 30, 2018 | Nov. 30, 2017 |
|---|---|---|
| Liabilities to affiliated companies | 2,564 | 2,518 |
| Other liabilities | 8,382 | 9,370 |
| thereof | ||
| Wages and salaries | 3,482 | 4,156 |
| Taxes | 1,462 | 1,487 |
| Social security | 701 | 841 |
| Miscellaneous | 2,737 | 2,886 |
| 10,946 | 11,888 |
Miscellaneous other liabilities include liabilities for bonuses and customs payments.
The table below shows the carrying amounts and fair values of the financial assets and liabilities as at the balance sheet date:
| Measurement | Nov. 30, 2018 | Nov. 30, 2017 | |||
|---|---|---|---|---|---|
| category as | |||||
| defined in | Carrying | Fair | Carrying | Fair | |
| KEUR | IAS 39 | amount | value | amount | value |
| Assets | |||||
| Cash and cash equivalents | LaR | 4,219 | 4,219 | 6,403 | 6,403 |
| Trade receivables | LaR | 20,211 | 20,211 | 31,538 | 31,538 |
| Other financial assets | 1,352 | 1,352 | 1,192 | 1,192 | |
| thereof: | |||||
| - Other non-current financial assets | LaR | 904 | 904 | 1,185 | 1,185 |
| - Hedge-related derivatives | n.a. | 448 | 448 | - | - |
| - Other current financial assets | FAHfT | - | - | 7 | 7 |
| Liabilities | |||||
| Liabilities to banks | FLAC | 32,494 | 32,494 | 35,102 | 35,102 |
| Trade payables | FLAC | 23,577 | 23,577 | 20,559 | 20,559 |
| Other financial liabilities | 174 | 174 | 1,172 | 1,172 | |
| thereof: | |||||
| - Liabilities from lease agreements | n.a. | 174 | 174 | 407 | 407 |
| - Hedge-related derivatives | n.a. | - | - | 765 | 765 |
| Total per measurement category as defined in IAS 39: | |||||
| Loans and Receivables | LaR | 25,334 | 25,334 | 39,126 | 39,126 |
| Financial Assets Held for Trading | FAHfT | - | - | 7 | 7 |
| Financial Liabilities Measured at Amortised Cost | FLAC | 56,071 | 56,071 | 55,661 | 55,661 |
The fair value is the amount at which the respective items could be exchanged between contractual parties at the present time. The above figures are based on the following assumptions:
Due to the short-term nature, there are no differences between amortised cost and the fair values of cash and cash equivalents, trade receivables, current liabilities to banks and current trade payables.
The fair values of other current financial assets are based on a price determined in an active market.
Non-current financial instruments and non-current liabilities to banks carry floating interest rates, which means that the discounted future cash flows are equivalent to the carrying amounts.
Derivative instruments eligible for hedge accounting are based on forward exchange contracts, which are measured using forward exchange rates. All relevant valuation parameters are observable in the market (Level 2 of the fair value hierarchy defined in IFRS 7).
Risks from financial instruments as defined in IFRS 7.31 also relate to financial covenants (written conditions attached to financial instruments, especially loan agreements, providing for legal consequences in the event of non-compliance with agreed financial ratios). The Ahlers Group has agreed to comply with financial covenants in credit agreements with various financial institutions. These relate to certain equity ratios and leverage ratios of the Ahlers Group. The financial covenants are monitored in the context of the risk management system. Regular reports are submitted to the banks. There is no indication that compliance with the financial covenants is not possible.
The changes in liabilities resulting from financing activities are fully cash-effective.
The table below shows the net results by measurement categories:
| Subsequent measurement | Net result | |||||||
|---|---|---|---|---|---|---|---|---|
| from | at fair |
Currency trans |
Impair | from | ||||
| KEUR | interest | value | lation | ment | disposal | 2017/18 | 2016/17 | |
| Loan and Receivables | LaR | 93 | - | 53 | -736 | -83 | -673 | 127 |
| Financial Assets Held | ||||||||
| for Trading | FAHfT | - | 0 | - | - | - | 0 | 0 |
| Financial Liabilities | ||||||||
| Measured at Amortised Cost | FLAC | -819 | - | -38 | - | - | -857 | -770 |
All interest is shown in net interest income. Gains and losses from the measurement of forward exchange contracts not eligible for hedge accounting are recognised in the cost of materials. The effects from subsequent measurement and from the disposal of the other items are shown under other operating income/expenses.
Contingent liabilities exist in the form of guaranties in the amount of EUR 951 thousand as of the balance sheet date (previous year: EUR 984 thousand). No guaranties were underwritten for affiliated companies.
In addition, there were contractual obligations for the acquisition of property, plant and equipment in the amount of EUR 47 thousand as of November 30, 2018 (previous year: EUR 55 thousand). This amount results from the purchase obligation for the exchange of technical equipment in a production facility. The outflow of cash for this purchase will occur in the first months of the following fiscal year. There is no possibility for the reimbursement of any (partial) amounts.
The following future minimum lease payments under uncancellable operating leases for factory and office equipment exist as of the balance sheet date:
| KEUR | Nov. 30, 2018 | Nov. 30, 2017 |
|---|---|---|
| Maturity | ||
| within a year | 6,909 | 6,504 |
| 1 to 5 years | 12,007 | 12,854 |
| > 5 years | 1,085 | 2,312 |
| 20,001 | 21,670 |
The lease agreements do not contain renewal options. No limitations have been imposed on the Group in connection with the lease agreements. Conditional lease payments of EUR 887 thousand (previous year: EUR 292 thousand) have been recorded under lease expense. These conditional lease payments concern payments that vary according to sales levels. In the fiscal year 2017/18, payments under operating leases totalled EUR 7,821 thousand (previous year: EUR 7,589 thousand).
To finance its business activity, the Ahlers Group mainly uses financial liabilities in the form of interest-bearing loans and trade payables and the transfer of financial assets. These are offset by cash and cash equivalents as well as short-term deposits and trade receivables. In addition, the Ahlers Group uses financial derivatives.
The Ahlers Group operates internationally and is, therefore, exposed to exchange rate, default and interest rate risks. The Ahlers Group enters into forward exchange contracts to cover the risk of exchange rate fluctuations. The transactions are executed exclusively with marketable instruments. These serve to hedge future exchange rate fluctuations of the USD and the CHF against the EUR. Exchange rate fluctuations of the USD affect the Ahlers Group in the procurement of raw materials, manufactured products and manufacturing services in international markets, while fluctuations in the exchange rate of the CHF affect the Ahlers Group in the sale of goods in Switzerland (cash flow hedge).
The table below shows the volumes and fair values of the forward exchange contracts as of the respective balance sheet dates:
| Nov. 30, 2018 | Nov. 30, 2017 | ||||||
|---|---|---|---|---|---|---|---|
| Nominal value | Fair value | Nominal value | Fair value | ||||
| in thsd. | in thsd. | ||||||
| currency | currency | ||||||
| Type | Currency | units | KEUR | KEUR | units | KEUR | KEUR |
| Purchases | USD | 11,500 | 9,483 | 442 | 27,094 | 23,467 | -765 |
| Sales | CHF | 1,500 | 1,328 | 5 | - | - | - |
As of November 30, 2018, there were forward exchange deals with a positive market value of EUR 447 thousand (previous year: EUR - thousand) and forward exchange deals with a negative market value of EUR - thousand (previous year: EUR -765 thousand). Forward exchange deals with a positive market value are reported under other current financial assets and those with a negative market value under other current financial liabilities. All operating forward exchange contracts in the Ahlers Group have a remaining term of between four days and nine months and are realised in batches of between EUR 0.4 million and EUR 0.9 million over this period, with a focus on certain seasons. All contractual parameters of all the above forward exchange deals are fixed, which means that there are no bandwidth agreements and the contracts cannot be cancelled prematurely. The contractually fixed USD/EUR exchange rates range from 1.1746 to 1.2708. No collateral was furnished. The cash flow hedges for future purchases were expected to be highly effective, which means that the requirements for hedge accounting pursuant to IAS 39 were met. Accordingly, positive effects in an amount of EUR 309 thousand after deferred taxes (previous year: EUR 529 thousand negative effects) from the measurement of forward exchange contracts were recognised in equity at the fair value.
The table below shows the sensitivity of the consolidated net income before tax (due to changes in realised exchange differences) and the equity capital (due to changes in the fair value of the forward exchange contracts and the after-tax results of the above pre-tax effects) towards possible and realistic changes in the exchange rates of the US dollar, the Swiss franc and the Polish zloty before debt consolidation:
| Changes in exchange rates |
Impact on net income before tax |
Impact on equity | ||||
|---|---|---|---|---|---|---|
| 2018 | 2017 | 2018 KEUR |
2017 KEUR |
2018 KEUR |
2017 KEUR |
|
| +3% | +4% | 114 | 241 | 79 | 167 | |
| USD | -3% | -2% | -114 | -121 | -79 | -84 |
| +2% | +3% | -107 | -151 | -74 | -104 | |
| CHF | -2% | -2% | 107 | 101 | 74 | 70 |
| +1% | +2% | 20 | 67 | 14 | 46 | |
| PLN | -1% | -1% | -20 | -33 | -14 | -23 |
Credit limits are defined to minimise the risk concentration and reduce losses from the default of a business partner to a minimum. The maximum default risk is apparent from the carrying amount of each financial asset reported in the balance sheet. These risks are in part covered by appropriate insurance in the case of trade receivables (cf. note (16) Trade receivables). The maximum default risk in this area thus comprises the unsecured receivables and the deductible of the trade credit insurance and amounted to EUR 7.4 million as of the balance sheet date (previous year: EUR 8.6 million).
The Ahlers Group uses interest rate swaps to hedge future cash flows from floating-rate loans. The interest rate swaps are based on hedged items with comparable, opposite risks (micro hedges). The hedged items and the hedges form hedging relationships; the credit volume secured with these hedging relationships amounted to EUR 600 thousand and had a market value of EUR -2 thousand as of the balance sheet date.
The table below shows the sensitivity of the consolidated net income before tax and of equity towards possible and realistic changes in floating interest rates for floating rate non-current liabilities based on the assumption that the interest margin remains unchanged:
| in basis points | Increase / decrease | Impact on net income before tax (KEUR) |
Impact on equity (KEUR) |
||
|---|---|---|---|---|---|
| 2018 | 2017 | 2018 | 2017 | 2018 | 2017 |
| +15 | +15 | -42 | -45 | -29 | -31 |
| -5 | -5 | 14 | 15 | 10 | 10 |
With effect from November 30, 2018, Ahlers signed a factoring agreement with a buyer of receivables. Under this agreement, the receivables buyer is obliged to purchase trade receivables that are due in the short term. The purchases are made on a monthly revolving basis with weekly reconciliations and cover a contractually agreed volume of between EUR 9 million and EUR 28 million. Ahlers has the right to determine the utilisation of this volume. All risks and opportunities are essentially transferred. The relevant risks in this context are the credit risk and the risk of delayed incoming payments. The credit risk is additionally mitigated by a trade credit insurance policy to cover peaks. The remaining risk of payment defaults borne by Ahlers AG amounts to 3.06 percent. The resulting expected loss has been recognised as an expense and is included in financial liabilities. This expected loss represents the continuing involvement and amounted to EUR 0.5 million on the balance sheet date. The volume of receivables sold amounted to EUR 10.9 million in the fiscal year (only November 30, 2018). Ahlers bears the risk of payment delays.
As of the balance sheet date, the receivables sold and not yet settled under the factoring agreement amounted to EUR 10.9 million.
Ahlers remains in charge of servicing the receivables sold, which means that the company retains the right to dispose of the receivables sold. Ahlers may, however, dispose of the receivables sold only in the context of the servicing function. These receivables are recognised in the amount of the "continuing involvement", i.e. in the amount of the maximum amount of the liability for the risk of payment defaults relating to the trade receivables sold. A corresponding liability to banks is recognised. If this risk – and, hence, the "continuing involvement" – is reduced by an incoming payment, these receivables and liabilities are unrecognised accordingly.
Ahlers recognises the purchase price payments received from the buyer of the receivables in operating cash flow.
With regard to cash management, the Ahlers Group aims to maintain its flexibility through the use of overdrafts, bank loans, the transfer of financial assets and operating leases. In the context of the budgeting process, a cash flow projection is performed in conjunction with a seasonal peak calculation and checked against the available funds including the existing credit lines. The risk of a cash shortage is thus monitored constantly.
The Ahlers Group's capital management activities are geared to supporting the business activity, maintaining a good equity ratio as well as creating financial security and flexibility.
In managing its capital structure, the company primarily takes changes in the economic environment into account. Capital can be managed through the adjustment of dividend payments, the issue of new shares or the repurchase or redemption of own shares. Portfolio decisions made in this context are outlined under "Takeover-related information" in the combined management report. As of November 30, 2018, no modifications of the targets, principles or processes occurred.
The business activity of the Ahlers Group is mostly of a short-term nature, which means that net working capital is the adequate variable for monitoring the capital. The net working capital comprises inventories, current trade receivables as well as current trade payables.
| KEUR | Nov. 30, 2018 | Nov. 30, 2017 |
|---|---|---|
| Inventories | 80,868 | 75,320 |
| Trade receivables | 20,211 | 31,538 |
| Current trade payables | -23,576 | -20,559 |
| Net working capital | 77,503 | 86,299 |
The Ahlers Group defines its reporting segments by the type of products. This primarily reflects the internal reporting system as well as the internal decision-making processes.
The Group's reporting segments break down into a Premium Brands segment and a Jeans, Casual & Workwear segment. Expenses for central functions are charged to the segments with due consideration to the arm's length principle and based on actual usage. Due to the different positioning of the segments, no inter-segment revenues are generated. Where a clear allocation of assets and liabilities is not possible, these are allocated using appropriate distribution ratios. The segment result is the result before taxes, as income taxes are not segmented due to the central management. For the same reason, assets and liabilities do not include deferred or current tax assets and liabilities.
This means that the total assets stated in the balance sheet (EUR 172,179 thousand) result from the assets as derived from the segment information (EUR 170,278 thousand) plus deferred tax assets and current income tax assets (EUR 1,901 thousand). Accordingly, the liabilities stated in the balance sheet (EUR 79,038 thousand) result from the liabilities as derived from the segment information (EUR 77,144 thousand) plus deferred tax liabilities and current income tax liabilities (EUR 1,720 thousand) as well as leasing liabilities (EUR 174 thousand).
The Group segment information by geographic regions reflects the main output markets of the Ahlers Group.
The accounting and valuation principles for the Group segment information are the same as for the consolidated financial statements.
The following divisions constitute the reporting segments:
This segment consists of the manufacture and sale of the premium brands of the Ahlers Group. Pierre Cardin, Otto Kern and Baldessarini belong to this group.
This segment consists of the manufacture and sale of non-premium brand jeans, sportswear, casual clothing as well as working clothes. This segment includes the brands Jupiter, Pionier Workwear, Pionier Jeans & Casuals and Pioneer Authentic Jeans.
Individual products that cannot be appropriately allocated to the various business segments are listed in this section, which primarily includes the works of art.
'Western Europe' encompasses the following countries: Austria, Belgium, Denmark, Finland, France, Great Britain, Greece, Iceland, Ireland, Italy, Luxembourg, the Netherlands, Norway, Portugal, Spain, Sweden and Switzerland. 'Central/Eastern Europe/Other' covers all the remaining countries.
The figures for the Group segment information are based on consolidated figures without adjusting for inter-segment results, which are insignificant.
'Segment result' is defined as pre-tax income. 'Assets' are total assets minus deferred tax assets and current tax claims. 'Liabilities' include the total of current and non-current liabilities minus deferred tax liabilities, current income tax obligations and liabilities under leases. The item 'Other non-cash items' includes net additions to provisions.
The compensation of the Management Board members is decided and regularly reviewed for appropriateness by the Supervisory Board. The criteria taken into account in this review are the size, activity and economic situation of Ahlers AG, on the one hand, and the tasks of the respective Management Board member and his/her personal contribution to the company's performance, on the other hand. In the opinion of the Supervisory Board, the total compensation and its individual components are appropriate given the tasks and performance of the respective Management Board members and the financial situation of Ahlers AG. The Human Resources Committee prepares the Supervisory Board's appointment decisions. It submits proposals to the Supervisory Board regarding the compensation, the compensation scheme and its regular review as well as the conclusion, amendment and termination of the employment contracts of the Management Board members. The employment contracts of all Management Board members are structurally identical.
The compensation is always performance-oriented and consists of the following components:
The Management Board contracts do not include an explicit severance pay commitment in case a contract is terminated prematurely. Nor do they include any change-of-control clauses in case of a takeover. No pension commitments were made to the incumbent members of the Management Board.
The total compensation of the Management Board broken down by components is shown below:
| KEUR | 2017/18 | 2016/17 |
|---|---|---|
| Salary | 1,044 | 1,010 |
| Annual bonus* | -87 | 379 |
| Miscellaneous | 33 | 32 |
| Total | 990 | 1,421 |
* composed of a profit-related, target-related and long-term oriented bonus.
The long-term bonus is included at an amount of 0 KEUR (previous year: 10 KEUR).
Former members of the Management Board and the management of Adolf Ahlers GmbH and their survivors received total compensation of EUR 51 thousand (previous year: EUR 68 thousand) during fiscal 2017/18.
The Supervisory Board compensation is governed by section 18 of the statutes. Similar to the Management Board compensation, the compensation for the Supervisory Board is also geared to the size and the economic situation of Ahlers AG as well as to the tasks of each individual member of the Supervisory Board. The compensation consists of a fixed and a variable component. The variable component is oriented towards the sustainable growth of the company. It is calculated as a fixed perthousand fraction of the average consolidated net income of the past three years taking a defined threshold value into account, and is capped. Additional compensation is paid to the Chairperson and the Deputy Chairperson of the Supervisory Board as well as the Committee Chairpersons.
| KEUR | 2017/18 | 2016/17 |
|---|---|---|
| Fixed compensation | 105 | 105 |
| Variable compensation | 0 | 0 |
| Total | 105 | 105 |
All expenses incurred by the Supervisory Board members in conjunction with their mandates as well as the value-added tax charged on their compensation are refunded. No loans are granted to members of the Supervisory Board. Von Ah & Partner AG, Zurich (Switzerland), in which Supervisory Board member and Audit Committee Chairwoman Prof. Dr. von Ah is a partner, provided tax consulting services to the Ahlers Group in the fiscal year 2017/18, for which an amount of EUR 6 thousand was invoiced. In accordance with section 114 of the German Stock Corporation Act (AktG), all benefits had previously been approved by the Supervisory Board.
Westfälisches Textilwerk Adolf Ahlers Stiftung & Co. KG, Herford, holds a majority interest in the voting share capital of Ahlers AG, mainly via its fully-owned subsidiary, WTW-Beteiligungsgesellschaft mbH, Herford. The Ahlers AG financial statements are included in the consolidated financial statements of Westfälisches Textilwerk Adolf Ahlers Stiftung & Co. KG, Herford.
On June 29, 2018, Dr. Stella A. Ahlers notified in accordance with section 21 (1) of the German Securities Trading Act (WpHG) that her voting interest in Ahlers AG, Herford, exceeded the thresholds of 3%, 5%, 10%, 15%, 20%, 25%, 30% and 50% on June 29, 2018 and amounted to 52.54% (which corresponds to 7,188,512 voting rights) on that date. Pursuant to section 22 (1) sentence 1 no. 1 of the German Securities Trading Act (WpHG), 52.34% (which corresponds to 7,161,244 voting rights) are attributable to Dr. Stella A. Ahlers.
Attributable voting rights are held through the following companies which are controlled by Dr. Stella A. Ahlers and whose voting interest in Ahlers AG amounts to 3% or more:
Apart from Dr. Ahlers, no other Board member owned shares in the company on the reporting date.
Transactions with related parties were executed under conditions that pertain to arm's length transactions. The open positions at the end of the fiscal year – with the exception of goods deliveries that are supplied under retention of title as is customary in the industry – are not collateralised and will be paid in cash or by offset. There are no guarantees relating to claims or debts of related parties. As in the previous year, the Ahlers Group did not record allowances against receivables from related parties in the year under review. The need to create an allowance is examined on an annual basis by reviewing the financial position of the related party. Key business relationships are explained below:
During fiscal 2017/18 there were
As of November 30, 2018, net liabilities in the amount of EUR 2.5 million (previous year: EUR 2.5 million) resulted from business relations between Ahlers AG and its subsidiaries on the one hand and related parties on the other.
| 2017/18 | 2016/17 | |
|---|---|---|
| Blue collar | 1,263 | 1,226 |
| White collar | 859 | 836 |
| Total | 2,122 | 2,062 |
The Management Board and the Supervisory Board of Ahlers AG have submitted the declaration of conformity in compliance with the German Corporate Governance Code for 2018 pursuant to section 161 of the German Stock Corporation Act (AktG) and made the declaration permanently accessible to shareholders on the Ahlers AG website (www.ahlers-ag.com).
As of November 30, 2018, the exemption rule provided for in section 264 (3) and section 264b of the HGB was applied by the following subsidiaries:
Baldessarini GmbH, Herford, Otto Kern GmbH, Herford, Ahlers Retail GmbH, Herford, Pionier Jeans & Casuals Deutschland GmbH, Herford, Ahlers Zentralverwaltung GmbH, Herford, Ahlers Vertrieb GmbH, Herford, Jupiter Bekleidung GmbH, Herford, Pionier Berufskleidung GmbH, Herford, Pioneer Jeans-Bekleidung GmbH, Herford, and Ahlers P.C. GmbH, Herford, as well as Ahlers Textilhandel GmbH & Co. KG, Herford. In addition, Hemina Grundstücks-Vermietungsgesellschaft mbH & Co. Objekt Herford KG, Pullach im Isartal, will exercise the exemption option provided for in section 264b HGB for the financial statements for the period ended December 31, 2018.
There were no incidents after the balance sheet date that had a material impact on the Group's earnings, financial and net worth position as of November 30, 2018.
The audit fee expensed in the fiscal year 2017/18 and the previous year covered the following services:
| KEUR | 2017/18 | 2016/17 |
|---|---|---|
| Audit of the financial statements | 245 | 236 |
| Other attestation services | - | - |
| Tax consulting services | - | - |
| Other services | - | - |
| 245 | 236 |
In the fiscal year 2017/18, Ahlers AG distributed a dividend of EUR 0.15 per common share and of EUR 0.20 per preferred share. The total dividend payments amounted to EUR 2,356,288.30.
In view of the business performance in the fiscal year 2017/18, the Management Board proposes to pay out no dividend for the fiscal year 2017/18.
Attorney, Königstein (Chairman), Sozietät Heuer Busch & Partner
Tax consultant, Feusisberg, Switzerland (Deputy Chairwoman), von Ah & Partner AG
Administrative assistant, Bielefeld (Employee representative), Ahlers Zentralverwaltung GmbH
Roswitha Galle (until April 24, 2018) Administrative assistant, Spenge (Employee representative), Ahlers Zentralverwaltung GmbH
Hans-Joachim Knauf (since April 24, 2018) Commercial clerk, Herford (Employee representative), Ahlers Vertrieb GmbH
Former member of the Management Board of Ravensburger AG, Reutlingen
Bernd A. Rauch (until January 31, 2019) Advertising expert, Oberursel (Taunus)
Dr. Stella A. Ahlers Feusisberg, Switzerland, Chairwoman of the Management Board
Dr. Karsten Kölsch Herford, Board member in charge of Finance, IT, Human Resources, Logistics and International Operations
Götz Borchert (until December 12, 2018) Herford, Board member in charge of Marketing, Retail/E-commerce, Design/Product and Corporate Communications
On November 30, 2018 members of the Supervisory/Management Board of the company are represented on the following boards of other companies:
Supervisory/Management Board members not mentioned above are not represented on other companies' boards.
| Dec. 1, 2017 | Additions | Disposals | Reclassi fication |
Currency differences |
Nov. 30, 2018 |
|---|---|---|---|---|---|
| 33,940 | 266 | 52 | 1 | -166 | 33,989 |
| 9,783 | 526 | 24 | 201 | -648 | 9,838 |
| 45,211 | 2,048 | 2,024 | -192 | -114 | 44,929 |
| 28 | 5 | -18 | 5 | ||
| 88,962 | 2,840 | 2,105 | -8 | -928 | 88,761 |
| 31,395 | 1,330 | 27 | 196 | -6 | 32,888 |
| 429 | -2 | 427 | |||
| 2,583 | 1,715 | -188 | 4,110 | ||
| 34,407 | 3,045 | 27 | 8 | -8 | 37,425 |
| 123,369 | 5,885 | 2,132 | 0 | -936 | 126,186 |
| Accumulated costs |
| Accumulated costs | ||||||
|---|---|---|---|---|---|---|
| KEUR | Dec. 1, 2016 | Additions | Disposals | Reclassi fication |
Currency differences |
Nov. 30, 2017 |
| Property, plant and equipment | ||||||
| Land, land rights and buildings | 33,635 | 284 | 43 | 64 | 33,940 | |
| Machinery | 9,920 | 731 | 315 | 70 | -623 | 9,783 |
| Plant and office equipment | 43,082 | 3,255 | 1,130 | 4 | 45,211 | |
| Payments on account and plant under construction | 87 | 16 | -70 | -5 | 28 | |
| 86,724 | 4,286 | 1,488 | 0 | -560 | 88,962 | |
| Intangible assets | ||||||
| Industrial property rights and similar rights and assets | 29,367 | 2,620 | 62 | -538 | 8 | 31,395 |
| Goodwill | 424 | 5 | 429 | |||
| Payments on account | 2,046 | 0 | 538 | -1 | 2,583 | |
| 31,837 | 2,620 | 62 | 0 | 12 | 34,407 | |
| 118,561 | 6,906 | 1,550 | 0 | -548 | 123,369 |
| Accumulated depreciation/amortisation | Carrying amounts | ||||||||
|---|---|---|---|---|---|---|---|---|---|
| Currency differences Nov. 30, 2018 |
Dec. 1, 2017 | Additions | Disposals | Appreciations | Currency differences |
Nov. 30, 2018 | Nov. 30, 2018 Nov. 30, 2017 | ||
| -166 33,989 -648 |
19,642 | 489 | 50 | -97 | 19,984 | 14,005 | 14,298 | ||
| 9,838 44,929 |
8,202 | 339 | -114 | -501 | 8,154 | 1,684 | 1,581 | ||
| 5 | 35,389 | 3,487 | 1,939 | -85 | 36,852 | 8,077 | 9,822 | ||
| - | - | 5 | 25,729 | ||||||
| 88,761 | 63,233 | 4,315 | 1,875 | -683 | 64,990 | 23,771 | |||
| 32,888 | 17,286 | 3,420 | 22 | 1,700 | -4 | 18,980 | 13,908 | 14,109 | |
| 427 | 101 | -2 | 99 | 328 | |||||
| 4,110 | - | - | 4,110 | ||||||
| 37,425 | 17,387 | 3,420 | 22 | 1,700 | -6 | 19,079 | 18,346 | 17,020 | |
| 126,186 | 80,620 | 7,735 | 1,897 | 1,700 | -689 | 84,069 | 42,117 | 42,749 | |
| Accumulated depreciation/amortisation | Carrying amounts | ||||||||
| Nov. 30, 2017 | Dec. 1, 2016 | Additions | Disposals | Currency differences |
Nov. 30, 2017 | Nov. 30, 2017 Nov. 30, 2016 | |||
| 33,940 | 19,135 | 510 | 10 | 7 | 19,642 | 14,298 | 14,500 1,198 |
||
| 9,783 | 8,722 | 304 | 314 | -510 | 8,202 | 1,581 | |||
| 45,211 | 32,713 | 3,519 | 841 | -2 | 35,389 | 9,822 | 10,369 | ||
| 28 88,962 |
- 60,570 |
4,333 | 1,165 | -505 | - 63,233 |
28 25,729 |
26,154 | ||
| 16,711 | 929 | 63 | 300 | 9 | 17,286 | 14,109 | 12,656 | ||
| 96 | 5 | 101 | 328 | ||||||
| 2,583 | - | - | 2,583 | ||||||
| 34,407 | 16,807 | 929 | 63 | 300 | 14 | 17,387 | 17,020 | 15,030 | |
| 77,377 | 5,262 | 1,228 | 300 | -491 | 80,620 | 42,749 |
for fiscal 2017/18
by
| business | ||||||||||
|---|---|---|---|---|---|---|---|---|---|---|
| segment | Premium Brands | Jeans, Casual & Workwear | Others | Total | ||||||
| KEUR | 2017/18 | 2016/17 | 2017/18 | 2016/17 | 2017/18 | 2016/17 | 2017/18 | 2016/17 | ||
| Sales | 153,239 | 162,357 | 69,507 | 73,217 | 321 | 357 | 223,067 | 235,931 | ||
| Intersegment sales | - | - | - | - | - | - | - | - | ||
| Segment results | -6,556 | 254 | -1,110 | 2,136 | 542 | -9 | -7,124 | 2,381 | ||
| thereof | ||||||||||
| Depreciation and | ||||||||||
| amortisation | 5,926 | 3,724 | 1,792 | 1,519 | 17 | 19 | 7,735 | 5,262 | ||
| Impairment losses | ||||||||||
| (IAS 36) | - | - | - | - | - | - | - | - | ||
| other | ||||||||||
| non-cash items | 1,660 | 217 | 1,314 | 69 | 0 | 1 | 2,974 | 287 | ||
| Interest income | 71 | 115 | 51 | 141 | 0 | - | 122 | 256 | ||
| Interest expense | 561 | 577 | 278 | 290 | 2 | 2 | 841 | 869 | ||
| Net assets | 120,672 | 124,255 | 31,428 | 36,010 | 18,178 | 18,286 | 170,278 | 178,551 | ||
| Capital | ||||||||||
| expenditure | 3,941 | 5,266 | 1,944 | 1,640 | 0 | 0 | 5,885 | 6,906 | ||
| Liabilities | 56,311 | 54,994 | 20,789 | 21,450 | 44 | 35 | 77,144 | 76,479 |
| by | ||||||||
|---|---|---|---|---|---|---|---|---|
| geographic region |
Premium Brands | Jeans, Casual & Workwear | Others | Total | ||||
| KEUR | 2017/18 | 2016/17 | 2017/18 | 2016/17 | 2017/18 | 2016/17 | 2017/18 | 2016/17 |
| Germany | ||||||||
| Sales | 72,093 | 77,018 | 48,369 | 49,566 | 321 | 358 | 120,783 | 126,942 |
| Net assets | 87,595 | 93,405 | 22,727 | 23,536 | 18,161 | 18,271 | 128,483 | 135,212 |
| Western Europe | ||||||||
| Sales | 44,406 | 44,782 | 14,414 | 15,687 | - | - | 58,820 | 60,469 |
| Net assets | 8,790 | 10,151 | 4,093 | 7,693 | - | - | 12,883 | 17,844 |
| Central-/ Eastern | ||||||||
| Europe/ Others | ||||||||
| Sales | 36,740 | 40,557 | 6,724 | 7,963 | - | - | 43,464 | 48,520 |
Net assets 24,288 20,699 4,609 4,781 15 15 28,912 25,495
The Management Board and the Supervisory Board propose not to pay out a dividend to the shareholders from the profit of EUR 541,106.33 posted for the fiscal year 2017/18 and to carry the full profit forward to new account.
Herford, February 12, 2019
Dr. Stella A. Ahlers Dr. Karsten Kölsch
To the best of our knowledge, and in accordance with the applicable reporting principles, the consolidated financial statements give a true and fair view of the earnings, financial and net worth position of the Group, and the management report and Combined Management Report include a fair review of the development and performance of the business and the position of the Group, together with a description of the principal opportunities and risks associated with the expected development of the Group.
Herford, February 12, 2019
Dr. Stella A. Ahlers Dr. Karsten Kölsch
To Ahlers AG, Herford:
We have audited the consolidated financial statements of Ahlers AG, Herford and its subsidiaries (the Group), which comprise the consolidated statement of financial position as at 30 November 2018, and consolidated profit and loss account, comprehensive income, consolidated statement of changes in equity and consolidated statement of cash flows for the financial year from 1 December 2017 to 30 November 2018, and notes to the consolidated financial statements, including a summary of significant accounting policies. In addition, we have audited the combined management report of Ahlers AG, Herford for the financial year from 1 December 2017 to 30 November 2018. In accordance with the German legal requirements, we have not audited the content of those parts of the combined management report listed in the chapter "other information".
In our opinion, on the basis of the knowledge obtained in the audit,
Pursuant to § 322 Abs. 3 Satz [sentence] 1 HGB, we declare that our audit has not led to any reservations relating to the legal compliance of the consolidated financial statements and of the combined management report.
We conducted our audit of the consolidated financial statements and of the combined management report in accordance with § 317 HGB and the EU Audit Regulation (No. 537/2014, referred to subsequently as "EU Audit Regulation") and in compliance with German Generally Accepted Standards for Financial Statement Audits promulgated by the Institut der Wirtschaftsprüfer [Institute of Public Auditors in Germany] (IDW). Our responsibilities under those requirements and principles are further described in the "Auditor's Responsibilities for the Audit of the Consolidated Financial Statements and of the Combined Management Report" section of our auditor's report. We are independent of the group entities in accordance with the requirements of European law and German commercial and professional law, and we have fulfilled our other German professional responsibilities in accordance with these requirements.
In addition, in accordance with Article 10 (2) point (f) of the EU Audit Regulation, we declare that we have not provided non-audit services prohibited under Article 5 (1) of the EU Audit Regulation. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinions on the consolidated financial statements and on the combined management report.
Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the consolidated financial statements for the financial year from 1 December 2017 to 30 November 2018. These matters were addressed in the context of our audit of the consolidated financial statements as a whole, and in forming our opinion thereon, we do not provide a separate opinion on these matters.
We identified the following matters as key audit matters:
Taking into account impairment losses of EUR 10.3 million, inventories are recognized at EUR 80.9 million in the consolidated financial statements of Ahlers AG. Inventories are measured at the lower of cost or net realizable value. The determination of the net realizable value greatly requires estimations and assumptions by the legal representatives regarding future sales quantities and prices. There is a risk that the collections might not be sufficiently accepted by the market and goods already produced will not be sold.
Due to the discretionary decisions required in connection with determining the net realizable value and the recognized amount of the balance sheet item, valuation of inventories was considered a particularly important issue of the audit.
The disclosures of Ahlers AG on realized proceeds are included on page 100 and 110 of the notes to the consolidated statements.
Our own IT specialists audited the appropriateness of IT-based processes in the scope of inventory valuation. When auditing the impairment of inventories, we also retraced the days-of-inventory-analyses of the legal representatives and compared the impairment losses used for inventory risks in the reporting year with those of prior years and checked them for plausibility. In the process, we critically examined the expectations of the legal representatives with respect to future sales quantities and prices and retraced the impairment losses as determined by the company. All in all, we are convinced that the estimations and assumptions regarding the valuation of inventories made by the legal representatives are appropriate.
In the reporting year, Ahlers AG Group recognized revenue from clothing sales in an amount of EUR 222.0 million. Due to the different distribution channels and the use of different IT systems therewith connected as well as the returns options, there is a risk regarding the applicable recognition and cut-off of revenue. In our opinion, this issue was of particular importance because the extent of revenue is a key measure in the scope of capital market communications and performance indicators (gross profit margin, EBITDA margin, EBIT margin, return on sales).
The disclosures of Ahlers AG on realized proceeds are included on page 102 and 103 of the notes to the consolidated statements. Distribution channels are outlined on pages 24 ff. of the combined management report.
Amongst other things, we audited the accurate recognition of sales by way of reconciliation with contractual bases and had customers of Ahlers AG confirm transactions of the reporting year we previously selected. We retraced estimations made by the legal representatives as regards the extent of returns and verified them – amongst others – by means of empirical values from the past. We also evaluated IT-based sales processes with respect to accurate recognition of sales on an accrual basis. We called in our IT specialists for this purpose. All in all, we assured ourselves of the appropriateness of proceeds realization in the reporting year.
Due to the economic development, the Supervisory Board and the Management Board adopted comprehensive set of measures in the fourth quarter of the reporting year. It comprises the concentration on Ahlers AG's core brands, the streamlining of the organisation and a reduction in complexity. The full set of measures will lead to job cuts of about 130, including presumably 100 in Germany. During our audit we have determined this fact as a key audit matter because there is a risk that the restructuring provision is incomplete and that the recognition criteria are not met. In addition, the valuation of the restructuring provision largely depends on the assessments and assumptions of the legal representatives and is therefore discretionary.
The disclosures of Ahlers AG on the restructuring provision are included on page 101 of the notes to the consolidated statements and on page 59 of the combined management report.
As part of our audit we assessed the recognition criteria for the recognized restructuring provision. Based on our review of the Executive Board and Supervisory Board minutes and our interviews we comprehended the estimates and assumptions of management. We are confident that a formal restructuring plan was in place before the balance sheet date and essential components had been communicated to the affected employees or that the implementations of the measures had already begun. In addition, for a deliberate selection of the employees affected by the workforce reduction we have reconciled the underlying assumptions with the restructuring plan as well as with planned redundancies or termination agreements during the period of preparation. Overall, we were confident of the appropriateness of the restructuring provision.
In fiscal year 2017/2018 Ahlers AG and several of its subsidiaries joined a factoring program. Pursuant to this agreement the buyer of the receivables is required to purchase short-term trade account receivables up to a certain volume. Receivables in the amount of EUR 10.9 million were sold as of 30 November 2018 and a receivable transfer was recognized. There are purchase price deductions and since neither all chances and risks are transferred or retained the Group recognizes a remaining continuing involvement. In our audit we determined this issue as a key audit matter due to the complex contract design and the first-time accounting.
The disclosures of Ahlers AG on the factoring agreement are included on page 111, 114 and 119f. of the notes to the consolidated statements.
During our audit we consulted our internal specialists for the assessment of the factoring agreement and the determination and balance sheet presentation of the continuing involvement. For the evaluation of the accounting of the factoring agreement we have reviewed, reconfirmed and comprehended the contractual agreements. Thereby we examined the criteria of IAS 39 for the disposal of assets. In particular we determined wether the requirements for the derecognition of receivables and the accounting for a continuing involvement have been met. Overall, we were confident of the appropriateness of the accounting for the factoring agreement.
The executive directors are responsible for the other information. The other information comprises:
Our opinions on the consolidated financial statements and on the combined management report do not cover the other information, and consequently we do not express an opinion or any other form of assurance conclusion thereon.
In connection with our audit, our responsibility is to read the other information and, in so doing, to consider whether the other information
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.
The executive directors are responsible for the preparation of the consolidated financial statements that comply, in all material respects, with IFRSs as adopted by the EU and the additional requirements of German commercial law pursuant to § 315e Abs. 1 HGB and that the consolidated financial statements, in compliance with these requirements, give a true and fair view of the assets, liabilities, financial position, and financial performance of the Group. In addition the executive directors are responsible for such internal controls as they have determined 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, the executive directors are responsible for assessing the Group's ability to continue as a going concern. They also have the responsibility for disclosing, as applicable, matters related to going concern. In addition, they are responsible for financial reporting based on the going concern basis of accounting unless there is an intention to liquidate the Group or to cease operations, or there is no realistic alternative but to do so.
Furthermore, the executive directors are responsible for the preparation of the combined management report that, as a whole, provides an appropriate view of the Group's position and is, in all material respects, consistent with the consolidated financial statements, complies with German legal requirements, and appropriately presents the opportunities and risks of future development. In addition, the executive directors are responsible for such arrangements and measures (systems) as they have considered necessary to enable the preparation of a combined management report that is in accordance with the applicable German legal requirements, and to be able to provide sufficient appropriate evidence for the assertions in the combined management report.
The supervisory board is responsible for overseeing the Group's financial reporting process for the preparation of the consolidated financial statements and of the combined management report.
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 whether the combined management report as a whole provides an appropriate view of the Group's position and, in all material respects, is consistent with the consolidated financial statements and the knowledge obtained in the audit, complies with the German legal requirements and appropriately presents the opportunities and risks of future development, as well as to issue an auditor's report that includes our opinions on the consolidated financial statements and on the combined management report.
Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with § 317 HGB and the EU Audit Regulation and in compliance with German Generally Accepted Standards for Financial Statement Audits promulgated by the Institut der Wirtschaftsprüfer (IDW) will always detect a material misstatement. 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 and this group management report.
We exercise professional judgment and maintain professional skepticism throughout the audit. We also:
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 controls that we identify during our audit.
We also provide those charged with governance with a statement that we have complied with the relevant independence requirements, and communicate with them all relationships and other matters that may reasonably be thought to bear on our independence, and where applicable, the related safeguards.
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.
We were elected as group auditor by the annual general meeting on 24 April 2018. We were engaged by the supervisory board on 8 November 2018. We have been the group auditor of the Ahlers AG without interruption since the financial year 2009.
We declare that the opinions expressed in this auditor's report are consistent with the additional report to the audit committee pursuant to Article 11 of the EU Audit Regulation (long-form audit report).
The German Public Auditor responsible for the engagement is Birte Fleischer.
Hannover, February 13, 2019
BDO AG Wirtschaftsprüfungsgesellschaft
Heesch Fleischer Auditor Auditor
| Number | Disclosures | Page |
|---|---|---|
| Universal Standards | ||
| 102-1 | Name of the organisation | 41 |
| 102-2 | Activities, brands, products, and services | 42 |
| 102-3 | Location of headquarters | 42 |
| 102-4 | Location of operations | 42 |
| 102-5 | Ownership and legal form | 42 |
| 102-6 | Markets served | 42 |
| 102-7 | Scale of the organisation | 42 |
| 102-8 | Information on employees and other workers | 45 |
| 102-9 | Supply chain | 48 |
| 102-10 | Significant changes to the organisation and its supply chain | 42 |
| 102-11 | Precautionary principle or approach | 44 |
| 102-12 | External initiatives | 49, 51 |
| 102-13 | Membership of associations | 43 |
| 102-14 | Statement from senior decision-maker | 41 |
| 102-16 | Values, principles, standards, and norms of behaviour | 44 |
| 102-18 | Governance structure | 42 |
| 102-40 | List of stakeholder groups | 42 |
| 102-41 | Percentage of employees under collective bargaining agreements | 45 |
| 102-42 | Identifying and selecting stakeholders | 42 |
| 102-43 | Approach to stakeholder engagement | 42 |
| 102-45 | Entities included in the consolidated financial statements | 42 |
| 102-46 | Defining report content and topic Boundaries | 43 |
| 102-47 | List of material topics | 43 |
| 102-49 | Changes in reporting | 41 |
| 102-50 | Reporting period | 41 |
| 102-51 | Date of most recent report | 41 |
| 102-52 | Reporting cycle | 41 |
| 102-53 | Contact point for questions regarding the report | Back cover |
| 102-55 | GRI content index | 138 |
| Number | Disclosures | Page |
|---|---|---|
| Topic-specific Standards | ||
| 103-1, 2, 3 | Disclosures on management approaches | 44, 49, 50, 51 |
| Economic | ||
| own indicator |
Social standards in the supply chain | 49, 51 |
| own indicator |
Safety of our products | 50 |
| 205-2 | Communication and training about anti-corruption policies and procedures | 44 |
| 205-3 | Confirmed incidents of corruption and actions taken | 44 |
| Environmental | ||
| 301-1 | Materials used by weight or volume | 53 |
| 302-1 | Energy consumption within the organisation | 52 |
| own indicator |
Energy-related carbon emissions | 52 |
| 303-1 | Total water withdrawal by source | 53 |
| 306-1 | Water discharge by quality and destination | 53 |
| 307-1 | Non-compliance with environmental laws and regulations | 51 |
| 308-1 | New suppliers that were screened using environmental criteria | 51 |
| Social | ||
| 401-1 | New employee hires and employee turnover | 45, 46 |
| 403-2 | Number and type of injuries, occupational diseases, days lost, absence | 47 |
| 404-1 | Average hours of training per year per employee | 47 |
| 405-1 | Diversity of governance bodies and employees | 44, 45 |
| 406-1 | Incidents of discrimination and corrective actions taken | 47 |
| 408-1 | Operations and suppliers at significant risk for incidents of child labour | 49 |
| 409-1 | Operations and suppliers at significant risk for incidents of forced or compulsory labour |
49 |
| 414-1 | New suppliers that were screened using social criteria | 49 |
| 416-1 | Assessment of the health and safety impacts of product and service categories | 48, 50 |
| 417-1 | Requirements for product and service information and labelling | 50 |
100th anniversary of the company
| 2018 | Consolidation of share types and conversion into registered shares Foundation of Ahlers RUS, in which Ahlers holds 60 percent; signing of an agreement to acquire another 30 percent Announcement of comprehensive programme of measures aimed at increasing earnings and efficiency |
|---|---|
| 2017 | Opening of the Elsbach Denim Library in Westerland on Sylt Relocation of Baldessarini to the Herford headquarters |
| 2016 | Launch of the Pierre Cardin online shop |
| 2014 | Opening of the "Elsbach Denim Library" multi-brand store in Hamburg Acquisition of additional Pierre Cardin licenses in Belgium, France and Spain |
| 2013 | Takeover of the license for Pierre Cardin leg wear Opening of an international showroom in Rue Royale in Paris Launch of the Pionier Workwear online shop |
| 2012 | Launch of the Baldessarini online shop |
| 2011 | Takeover of the remaining interests in Otto Kern GmbH |
| 2010 | Spin-off of the Jupiter shirts business and foundation of a joint venture under the name of Jupiter Shirt GmbH (Ahlers share: 49 percent) |
| 2006 | Sale of the Eterna Group Acquisition of Baldessarini GmbH, Munich |
| 2005 | Dr. Stella A. Ahlers, granddaughter of company founder Adolf Ahlers, is appointed to head the Management Board |
| 2004 | Inclusion in the Prime Standard segment of the German Stock Exchange |
| 2000 | Acquisition of the rights to the Otto Kern Brand |
| 1998 | Ahlers shares are traded in the Official Market segment of the German Stock Exchange |
| 1996 | Acquisition of Eterna Beteiligungs-AG, Passau |
| 1992 | Licensing partnership with Pierre Cardin, Paris, begins |
| 1987 | Initial public offering |
| 1979 | Foundation of a production plant in Sri Lanka |
| 1977 | Launch of the Pioneer brand for denim fashion |
| 1971 | Foundation of the Pionier Workwear brand |
| 1970 | Launch of the Pionier brand for jeans and trousers of all sizes |
| 1932 | Company moves to Herford/Westphalia |
| 1919 | Establishment as a textile wholesale business in the Frisian town of Jever |
| Annual accounts press conference in Düsseldorf | February 28, 2019 |
|---|---|
| Quarterly statement Q1 2018/19 | April 10, 2019 |
| Analysts' conference in Frankfurt am Main | April 11, 2019 |
| Annual Shareholders' Meeting in Düsseldorf | April 17, 2019 |
| Half-year report 2018/19 | July 10, 2019 |
| Quarterly statement Q3 2018/19 | October 14, 2019 |
| Analysts' conference in Frankfurt am Main | October 15, 2019 |
Ahlers AG Herford
TEXART Gesellschaft für Werbung und Public Relations mbH Herford
Drake Media GmbH Bad Oeynhausen
Investor Relations Elverdisser Str. 313 32052 Herford Germany
[email protected] www.ahlers-ag.com
phone +49 (0) 5221 979-211 fax +49 (0) 5221 979-215
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