United Labels AG

Earnings Release • Aug 15, 2008

letter to shareholders

Peter Boder CEO

Dear UNITEDLABELS Shareholders,

Following a successful start to the year, our performance after the first six months of 2008 remains up on the first half of 2007. Alongside revenue growth, we have also recorded an improvement in profit.

Consolidated revenue increased by 2.5% to €19.2 million in the first half of 2008. At the same time, UNITEDLABELS AG succeeded in lifting earnings before interest and taxes to €0.3 million.

The Group's encouraging earnings performance was driven to a large extent by our Key Account segment. In this segment sales revenue increased by 5.8% to €13.1 million, while earnings rose by 4.7% to €2.0 million. Within this area business with German-based key accounts provided fresh impetus, as did revenue growth generated by our foreign subsidiaries in Belgium and the UK. In the UK sales revenue grew by 23.9% to €0.7 million, while Belgium recorded an increase of 18.0%, taking its sales revenue to €1.8 million.

The Special Retail segment generated sales revenue of €6.1 million in the first six months of 2008, whereas the segment result was slightly down on last year's figure for the same period. In Italy sales revenue within the Special Retail segment increased by 30.3% to €0.8 million. By contrast, the German specialist retail sector as a whole was faced with sluggish consumer spending.

We remain committed to maintaining an attractive and topical range of licences. In the period under review, three new highly promising licences were added to our portfolio: "The Clone Wars" by Lucasfilm, "Sino" by Steinbeck and a French manga by the name of "Naruto". In addition, as from the next quarter we will be supplying "Angel Cat Sugar" merchandise for the first time. The response within the retail industry is already very encouraging indeed.

These newly integrated licences will allow us to target a wide audience, and we are confident that we can achieve good sales from merchandise designed around these themes.

In July we acquired a 35% interest in the French-based Groupe Montesquieu, with the option of a majority takeover. The acquisition of the aforementioned ownership interest is subject to the usual conditions precedent. Groupe Montesquieu generated sales of approx. €16 million in the last financial year and is well established in the large-account segment of the French textiles market. In acquiring an interest in this entity, we have considerably strengthened our market position in France.

In the UK, we plan to relocate our office from Nottingham to London. Benefiting from improved structures, we will be able to operate more efficiently from our new business premises. At the same time, we will be located in closer proximity to our customers.

Overall, we have taken another step forward and hope that our share price will be buoyed by the favourable prospects for our future business, despite the current climate within the stock market. Our current share price provides the perfect opportunity to invest in our company and participate directly in our success.

Thank you for placing your trust in our company.

Key Figures	6M 2008 (€ '000)	6M 2007 (€ '000)	Delta %
Revenue	19.189	18.728	+2,5 %
EBITDA	637*	554*	+15,0 %
EBIT	315	197	+59,9 %
EBT	74	33	+124,2 %
Net profit for the year	52	(144)
Net cash from operating activities	3,786	3,403	+11,3 %
Earnings/(loss) per share (€)	0,01	(0,03)
Headcount	139	125

* incl. amortisation of usufructuary rights

Revenue and Earnings

Revenue increased by 2.5% in the first six months, up from €18.7 million in 2007 to €19.2 million in 2008. The year-on-year gains were attributable mainly to the German location as well as operations in Belgium and Italy. Sales generated by House of Trends europe GmbH, a new subsidiary established in August 2007, contributed a total of €0.8 million to revenues. EBIT rose from €0.2 million to €0.3 million in the same period, while the posttax result for the period improved from a loss of €0.1 million to a profit of €0.1 million. The gross profit margin also showed continuing signs of improvement, expanding by 0.9 percentage points compared with the same period a year ago.

Segments

The business model embraced by UNITEDLABELS is centred around key account business as a focal point of the company's activities. In total, 68% of revenue is generated within this area. In the first six months of the financial year sales revenue within this area rose by 5.8% year on year to €13,128 thousand (prev. year: €12,414 thousand). In particular, business generated by the German parent company improved by a significant 7.0%. Overall, segment expenses amounted to €9,869 thousand (prev. year: €9,274 thousand). Profit for the Key Account segment as a whole stood at €1,981 thousand (prev. year: €1,892 thousand), up 4.7% on last year's figure for the same period.

Revenues generated within the Special Retail segment totalled €6,061 thousand in the first six months (prev. year: €6,313 thousand). While Italy managed to generate growth in what is generally seen as a particularly successful market for specialist retailers, business in Germany was unable to match last year's performance, which had been buoyed by "Die wilden Kerle" ("The Wild Soccer Bunch"). Expenses within the Special Retail segment amounted to €5,092 thousand (prev. year: €5,136 thousand), while depreciation/ amortisation and write-downs totalled €680 thousand (prev. year: €709 thousand). Thus, segment profit stood at €289 thousand (prev. year: €468 thousand).

Administrative expenses declined from €2,038 thousand in the first six months of 2007 to €1,895 thousand in the first half of 2008.

On this basis, primary segment reporting is as follows:

Primary reporting format – Customer segments

2008
in € '000	Special Retail	Key Account		Group
Sales revenues	6.061	13.128		19.189
Segment expenses	(5,092)	(9,896)		(14,988)
Depreciation/amortisation and write-downs	(680)	(1,251)		(1,931)
Segment result	289	1,981		2,270
Administrative expenses				(1,895)
Depreciation administration				(60)
Finance cost				(241)
Result from ordinary activities				74
Taxes
				(22)
Consolidated net profit/(loss)				52
	Special Retail	Key Account	Administration	Group
Segment assets (in € '000)	13,927	19,104	16,173	49,204

Segment liabilities (in € '000) 5,242 7,531 4,478 17,251

2007

in € '000	Special Retail	Key Account	Group
Sales revenues	6.313	12.414	18.728
Segment expenses	(5,136)	(9,274)	(7,044)
Depreciation/amortisation and write-downs	(709)	(1,248)	(1,957)
Segment result	468	1,892	2,360
Administrative expenses			(2,038)
Depreciation administration			(124)
Finance cost			(164)
Result from ordinary activities			33
Taxes			(176)
Consolidated net profit/(loss)			(144)

	Special Retail	Key Account	Administration	Group
Segment assets (in € '000)	14,081	20,013	15,067	49,161
Segment liabilities (in € '000)	4,837	8,485	3,381	16,702

6-Months' report

Secondary reporting format – Geographical segments (in € '000)

Sales revenues	1-6/2008	1-6/2007
Germany, Austria, Switzerland	9,377	8,431
Iberian Peninsula	4,814	5,068
France	2,294	2,365
Rest of the World	2,705	2,863
Group	19,189	18,728

Total assets	1-6/2008	1-6/2007
Germany, Austria, Switzerland	34,256	32,673
Iberian Peninsula	8,231	8,810
France	1,230	1,804
Rest of the World	5,487	5,874
Group	49,204	49,161

Net cash from operating activities improved from €3.4 million to €3.8 million in the first six months of 2008, prompted mainly by a significant inflow of cash on the back of buoyant trading in the fourth quarter of the previous financial year. As a result, cash and cash equivalents rose from €4.8 million at the end of the 2007 financial year to €5.3 million at the end of the reporting period, while financial liabilities declined from €10.2 million to €6.3 million. At the reporting date, net debt stood at €1.0 million.

As at June 30, 2008, the equity ratio stood at 64.9%. The company continues to hold 46,199 treasury shares. Following the Annual General Meeting in May, a dividend of €0.8 million was distributed to shareholders and recognised in equity.

Compared with the end of the 2007 financial year, the balance sheet total contracted by €4.2 million to €49.2 million due to the decline in receivables and liabilities.

Basis of preparation (IFRS/IAS) and statement of compliance

The financial statements for the quarter have been prepared in accordance with internationally accepted accounting standards, on the basis of the International Financial Reporting Standards (IFRS) and International Accounting Standards (IAS) promulgated by the International Accounting Standards Board (IASB).

In preparing the consolidated financial statements, the Management Board is required to make estimates and assumptions that affect the reported amounts of assets and liabilities/ equity as well as the amounts disclosed in the income statement. It is possible that these assumptions and estimates may not coincide with actual occurrences. Actual results may differ from forecasts if consumer behaviour or the actions of licensors or trading partners (customers, suppliers) change.

Uniform accounting policies have been applied to the quarterly financial statements. The financial statements are presented in euros.

Employees

At the end of June 2008, the UNITEDLABELS Group employed 139 (prev. year: 125) members of staff. Of these, 72 were employed in Germany, 46 in Spain, 5 in France, 6 in Belgium, 7 in England and 3 in Italy. Additional staff members were recruited mainly for recently established House of Trends europe GmbH and the newly launched airport shops in Spain.

Licences

As at June 30, 2008, UNITEDLABELS AG held a portfolio of 60 licence agreements covering the most well-known and popular cartoon characters, the emphasis being on the merchandise categories of giftware, accessories, apparel and soft toys.

Newly incorporated licences such as Star Wars – The Clone Wars, Sino and Naruto are expected to generate additional momentum in sales.

New movies such as Clone Wars, Wall-E, High School Musical and also Kung Fu Panda will raise the awareness and appeal of the various characters and thus drive demand for products sold under licence.

Share Performance

For the global stock markets the first six months of 2008 proved to be the most volatile half-year period in 22 years. The majority of the world's stock exchanges lost more than 20 per cent in value. Germany's DAX also slipped by 20 per cent, thus failing to maintain its relatively solid performance in recent years. Mirroring the general market trend as well as the performance of Germany's other small caps, shares in UNITEDLABELS lost ground over the course of the period.

This, however, has opened up excellent opportunities for private and institutional investors. UNITEDLABELS has a highly topical portfolio of licences and a successful business model. Investors now have the chance to acquire shares at a particularly favourable price and thus participate directly in the company's success.

General Meeting of Shareholders and Dividend Payment

United Labels AG hosted its 8th Annual General Meeting at Halle Münsterland on May 20, 2008. In total, 530 visitors, shareholders and invited guests attended the meeting, as part of which owners in the company were given the opportunity to vote on items on the agenda. The investors voted in favour of management's proposal for a dividend payment of €0.20 per share, unchanged from last year's dividend.

Directors' Holdings

As at June 30, 2008, UNITEDLABELS AG had a total of 4.2 million shares, with 46,199 shares being held by the company itself as treasury stock. At June 30, 2008, the Management Board as well as the members of the Supervisory Board of UNITEDLABELS AG held the following shares and options:

Peter M. Boder held 2.63 million shares. The Chairman of the Supervisory Board Dr. Jens Hausmann held no shares; the members of the Supervisory Board Prof. Dr. Helmut Roland and Michael Dehler held 5,728 and 441 shares respectively. As at June 30, 2008, no options had been granted and no valid share option plan was in place.

Thus, there were no changes in directors' holdings compared with December 31, 2007.

Responsibility Statement in accordance with Section 37y WpHG in conjunction with Section 37w (2) No. 3 WpHG

To the best of our knowledge, and in accordance with the applicable reporting principles for interim financial reporting, the interim consolidated financial statements give a true and fair view of the assets, liabilities, financial position and profit or loss of the group, and the interim management report of the group includes 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 for the remaining months of the financial year.

Outlook

Sustained growth in both sales and operating profit is of tremendous importance to our Group's success within the business arena. With this in mind, we shall continue to pursue projects aimed at contributing to this success.

For example, UNITEDLABELS plans to acquire a 35% interest in Montesquieu Finances SAS, Roubaix, a Group operating within the French market for products sold under licence. In acquiring the ownership interest, UNITEDLABELS will further expand its position in the large-account segment of the French market. The Montesquieu Finances SAS Group includes Embassy SAS as well as Comics World SAS. With a track record spanning several years, both enterprises are well-established suppliers to retailers and mail-order companies in France. The product range encompasses men's, women's and children's apparel, featuring the most popular licensed cartoon characters. The French group generated consolidated sales revenue of approx. EUR 16 million in 2007.Given the complementary business model and opportunities for close collaboration within the areas of purchasing, product development and sales, the deal is expected to produce significant growth effects. Additionally, UNITEDLABELS holds options for a majority takeover. The acquisition is subject to the usual conditions precedent.

Several new licences have been added to our topical, high-impact portfolio: Star Wars – The Clone Wars by Lucasfilm, Sino, designed by Steinbeck, and Naruto, a manga series that has proved particularly popular in France. Our aim is to reach a wide target audience with the help of these licences.

In August we will be presenting our new winter catalogue for specialist retailers. Covering over 100 pages, it includes a host of innovative products featuring some of the most popular characters known from comics as well as the silver screen. The range includes new stars such as Hannah Montana, Kim Possible, Angel Cat Sugar, Power Rangers and Hot Wheels, alongside well-established characters such as Snoopy, The Simpsons, The Wild Soccer Bunch, High School Musical, Cars, Pucca and many more. Combining current trends and popular classics, we are able to offer a selection of almost 4,500 items ranging from giftware and accessories to apparel, soft toys and textiles.

And in the event that the merchandise of choice is not featured in the catalogue, retailers can find the very latest products and special offers in our revamped online shop – open around the clock.

In England, we plan to restructure our business by moving our premises from Nottingham to London. We will thus be located in closer proximity to our customers, which will allow us to coordinate operations faster and communicate with clients on a one-to-one basis.

Put your trust in us!

UNITEDLABELS Aktiengesellschaft, Münster Group Income Statement (IFRS)

for the period from 1 January to 30 June 2008 (unaudited)

	01/01/08 30/06/08		01/01/07 30/06/07		01/04/08 30/06/08		01/04/07 30/06/07
	€	%	€	%	€	%	€
Sales revenues	19,189,284.68	100.0 %	18,727,774.19	100.0 %	9,315,336.61	100.0 %	9,342,858.29
Cost of materials	(10,223,957.04)	(53,3 %)	(10,046,633.11)	(53.6 %)	(5,187,446.34)	(55.7 %)	(5,141,372.22)
Amortisation/write-downs of usufructuary rights	(1,668,934.53)	(8,7 %)	(1,724,378.83)	(9.2 %)	(577,401.01)	(6.2 %)	(727,531.25)
	7,296,393.12	38,0 %	6.956.762,25	37,1 %	3,550,489.27	38.1 %	3,473,954.82
Other operating income	111,848.50	0,6 %	49,564.11	0.3 %	52,668.77	0.6 %	26,412.79
Staff costs	(3,180,518.17)	(16,6 %)	(2,913,240.42)	(15.6 %)	(1,608,297.03)	(17.3 %)	(1,482,429.72)
Depreciation of property, plant and equip ment, and amortisation of intangible assets (excl. amortisation of usufructuary rights)	(322,165.86)	(1.7 %)	(356,918.96)	(1.9 %)	(161,186.32)	(1.7 %)	(199,405.84)
Other operating expenses	(3,590,575.17)	(18.7 %)	(3,538,673.88)	(18.9 %)	(1,771,634.32)	(19.0 %)	(1,820,565.77)
Profit from operations	314,982.42	1.6 %	197,493.09	1.1 %	62,040.37	0.7 %	(2,033.72)
Finance income	84,189.32	0.4 %	79,217.13	0.4 %	12,207.84	0.1 %	48,972.08
Finance cost	(324,802.52)	(1.7 %)	(243,945.31)	-1,3 %	(132,306.04)	(1.4 %)	(120,141.27)
Net finance cost	(240,613.20)	(1.3 %)	(164,728.18)	(0.9 %)	(120,098.20)	(1.3 %)	(71,169.19)
Profit before income taxes	74.369,22	0,4 %	32,764.91	0.2 %	(58,057.83)	(0.6 %)	(73,202.90)
Taxes on income	(21,890.25)	(0.1 %)	(176,471.12)	(0.9 %)	14,515.81	0.2 %	(82,521.67)
Consolidated net profit	52,478.97	0.3 %	(143,706.21)	(0.8 %)	(43,542.02)	(0.5 %)	(155,724.57)

Consolidated earnings per share
basic	0.01 €	(0,03 €)
diluted	0.01 €	(0,03 €)
Weighted average shares outstanding
basic	4.153.880 shares	4.193.252 shares
diluted	4.153.880 shares	4.193.252 shares

Group Statement of Changes in Equity

(unaudited)

	Subscribed capital € '000	Capital reserves € '000	Revenue reserves € '000	Translation reserve € '000	Consolidated unapp. profit € '000	Treasury shares € '000	Total € '000
Balance at 31/12/06	4,200	24,384	2,883	(20)	1,995	0	33,442
Avg.dividend distr.	0	0	0	0	(840)	0	(840)
Consolidated net profit Q II 2007	0	0	0	0	(144)	0	(144)
Balance at 30/06/07	4,200	24,384	2,883	(20)	1,011	0	32,458

Currency translation	0	0	0	(34)	0	0	(34)
Consolidated net profit 2007	0	0	0	0	397	0	397
Treasury shares	0	0	0	0	0	(223)	(223)
Total result of the period	0	0	0	(34)	(443)	(223)	(700)

Balance at 31/12/07	4,200	24,384	2,883	(54)	1,552	(223)	32,742
Currency translation	0	0	0	(11)	0	0	(11)
Dividend distribution	0	0	0	0	(830)	0	(830)
Consolidated net profit QII 2008	0	0	0	0	52	0	52
Balance at 30/06/08	4,200	24,384	2,883	(65)	774	(223)	31,953

UNITEDLABELS Aktiengesellschaft, Münster Group Balance Sheet (IFRS) as at 30 June 2008

ASSETS

Assets	30/06/08 €	31/12/07 €
Non-current assets
Property, plant and equipment	6,097,725.98	6,324,683.81
Intangible assets	11,776,370.09	10,773,443.69
Deferred tax assets	3,079,233.41	2,981,975.43
	20,953,329.47	20,080,102.93
Current assets
Inventories	8,977,643.29	9,002,441.07
Trade and other receivables	12,534,952.87	18,007,959.28
Other assets	1,431,768.13	1,487,706.58
Cash and cash equivalents	5,306,040.58	4,780,636.01
	28,250,404.87	33,278,742.95
Total assets	49.203.734,34	53.358.845,88

UNITEDLABELS Aktiengesellschaft, Münster Group Balance Sheet (IFRS) as at 30 June 2008

EQUITY AND LIABILITIES

	30/06/08 €	31/12/07 €
Shareholder`s equity
Capital and reserves attributable to the owners of the parent company
Subscribed capital	4,200,000.00	4,200,000.00
Capital reserves	24,384,570.63	24,384,570.63
Revenue reserves	2,883,209.63	2,883,209.63
Currency translation	(64,698.46)	(54,111.96)
Consolidated unappropriated surplus	774,119.76	1,552,400.98
Treasury shares	(223,892.91)	(223,413.73)
Total equity	31,953,308.65	32,742,655.55
Non-current liabilities
Provisions for pensions	774,985.01	718,405.00
Financial liabilities	5,141,378.54	5,810,422.04
	5,916,363.55	6,528,827.04
Current liabilities
Provisions	1,710,364.56	1,061,165.99
Tax liabilities	79,307.14	33,007.00
Financial liabilities	1,153,767.99	4,355,512.65
Trade and other payables	8,390,622.45	8,637,677.64
	11,334,062.13	14,087,363.28
Total equity and liabilities	49,203,734.34	53,358,845.88

UNITEDLABELS Aktiengesellschaft, Münster Group Cash Flow Statement (unaudited)

	06/2008 € '000	06/2007 € '000
Consolidated net profit	52	(144)
Depreciation of property, plant and equipment, and amortisation of intangible assets	1,991	2,081
Change in provisions	706	(252)
Other non-cash expenses	97	-93
Loss on the disposal of non-current assets	0	34
Changes in inventories, trade receivables and other assets not attributable to investing or financing activities	5,554	2,663
Changes in trade payables and other liabilities not attributable to investing or financing activities	(4,614)	(887)
Cash flows from operating activities	3,786	3,403
Proceeds from the disposal of non-current assets	0	0
Payments for investments in non-current assets	(1,762)	(4,684)
Cash flows from investing activities	(1,762)	(4,684)
Proceeds from capital increase	0	0
Dividend distribution	(831)	(840)
Proceeds from financial loans	0	1.402
Repayment of financial loans	(669)	(125)
Cash flows from financing activities	(1,500)	437
Net cash change in cash and cash equivalents	524	(844)
Currency translation	0	0
Cash and cash equivalents at the beginning of the period	4,782	4,486
Cash and cash equivalents	5,306	3,642
Gross debt bank	6,295	5,507
Net debt bank	989	1,865
Composition of cash and cash equivalents:
Cash and cash equivalents	5,306	3,642

UNITEDLABELS AG

Gildenstraße 6 48157 Münster Deutschland Tel.: +49 (0) 251- 32 21- 0 Fax: +49 (0) 251- 32 21- 999 info@unitedlabels.com

UNITEDLABELS Ibérica S.A.

Av. de la Generalitat, 29E Pol. Ind. Fontsanta 08970 Sant Joan Despi Barcelona Spanien Tel.: +34 (0) 93 - 4 77 13 63 Fax: +34 (0) 93 - 4 77 32 60 info@unitedlabels.es

UNITEDLABELS France SAS ZAC du Moulin Rue de Marquette Batiment C n 10 59118 Wambrechies Frankreich Tel.: +33 (0) 328 - 33 44 01 Fax: +33 (0) 328 - 33 44 02 info@unitedlabels.fr

UNITEDLABELS Ltd.

Innovate Office Lake View Drive Sherwood Park/Nottingham NG15 0DA Großbritannien Tel.: +44 (0) 16 23 - 72 61 00 Fax: +44 (0) 16 23 - 72 93 60 unitedlabelsltd@unitedlabels.com

Pathoekeweg 48 8000 Brügge Belgien Tel.: +32 (0) 50- 45 69 60 Fax: +32 (0) 50- 31 28 22 info@unitedlabels.be

UNITEDLABELS Comicware Ltd. Unit 1501-2, Valley Centre, 80-82 Morrison Hill Road, Wanchai Hongkong Tel.: +85 (0) 225 - 44 29 59 Fax: +85 (0) 225 - 44 22 52 jkam@unitedlabels.com

UNITEDLABELS Italia Srl. Via Frà Paolo Sarpi, 5/D 50136 Florenz Italien Tel.: +39 (0) 55 - 61 20 35 0 Fax: +39 (0) 55 - 61 20 57 9 info@unitedlabels.com

House of Trends europe GmbH Alenconer Straße 30 49610 Quakenbrück Deutschland Tel.: +49 (0) 54 31 - 90 86 0 Fax: +49 (0) 54 31 - 90 86 22 info@houseoftrends.com

Financial calendar 2008

November 10-12 Participance at the German Equity Forum in Frankfurt

November 11 Publication of 9-Months' Report

UNITEDLABELS AG

Investor Relations-contact:

If you require further information on UNITEDLABELS or its financial results, please contact Mr. Timo Koch:

Tel.: +49 (0) 2 51 - 32 21 - 406 Fax: +49 (0) 2 51 - 32 21 - 960

tkoch@unitedlabels.com investorrelations@unitedlabels.com info@unitedlabels.com