Ahlers AG

Quarterly Report • Apr 15, 2013

Ahlers AG, Herford Interim Report Q1 2012/13 Ahlers Ag

Ahlers AG

Interim Report Q1 2012/13

(December 1, 2012 to February 28, 2013)

Business performance in the first three months of fiscal 2012/13

Q1 2012/13 - Highlights

• Premium segment continues to grow, with sales revenues up by 5.3 percent
• Premium segment now accounts for 68 percent of total sales revenues (previous year: 61 percent)
• Sales revenues down by 5.2 percent due to discontinuation of Gin Tonic Woman and seasonal shifts
• Consolidated net income after taxes slightly below previous year at EUR 4.6 million (previous year: EUR 4.8 million)
• Equity ratio climbs to 63 percent (previous year: 61 percent)

1. Business and general conditions

Having declined in the fourth quarter of 2012, Germany's gross domestic product (GDP) has returned to moderate growth, with economists projecting a growth rate of less than one percent for the full year 2013. Between them, the economies of the other eurozone countries are on the decline again; the situation in Southern Europe remains especially difficult. Although some Eastern European countries are in a recession, the region as a whole should again post solid GDP growth this year.

On balance, this means that the economic situation in Europe is largely unchanged from the previous year. This also applies to unemployment, which is below the long-term average in Germany. By contrast, unemployment is a big problem in other European countries, where it is having a strong influence on private consumption. This means that the German economy is performing well both in absolute figures and in comparison with other countries, and consumer confidence has returned to a high level. Sales of textiles in the retail sector nevertheless declined by 9 percent in the important month of December 2012 and by 2 percent in January/February 2013 (source: Textilwirtschaft). The figures for March 2013 are also weak.

The sales situation for clothing retailers in other European countries is even more difficult, with most countries likely to post declining sales figures. Even retailers in Poland, whose economy has proved to be robust so far, reported declines in the past months, due to growing unemployment.

2. Earnings, financial and net worth position

Sales revenues in Premium segment up by 5.3 percent

The Baldessarini and Pierre Cardin Premium brands increased their sales revenues by 5.3 percent to EUR 45.3 million (previous: EUR 43.0 million) in the first three months of the fiscal year 2012/13. As a result, the Premium segment's contribution to total sales revenues increased from 61 percent in the prior year period to 68 percent in Q1 2012/13.

Decline in sales revenues due to discontinuation of Gin Tonic Woman and seasonal effects

In the previous year, the Management Board decided to reorganise Gin Tonic from scratch and to discontinue the ladieswear operations. In addition, some Gin Tonic stores were closed and the December delivery programme was cancelled. The articles for spring/ summer were delivered later this year due to the cold weather prevailing throughout Europe. Moreover, intra-seasonal orders were down on the previous year due to the belated start of the season in the retail sector. The 5.2 percent decline in Group's consolidated sales revenues was therefore due in almost equal parts to seasonal influences (-2.6 percent) and the discontinuation of Gin Tonic Woman (-2.6 percent). Total sales amounted to EUR 66.8 million (previous year: EUR 70.5 million).

in EUR million	Q1 2012/13	Q1 2011/12	Change in %
Premium Brands*	45.3	43.0	5.3
Jeans & Workwear	14.6	17.2	-15.1
Men's & Sportswear - continued activities	6.8	8.4	-19.0
- Gin Tonic Woman	0.1	1.9	-94.7
Total - continued activities	66.7	68.6	-2.8
- incl. Gin Tonic Woman	66.8	70.5	-5.2

Sales by segments

* incl. "miscellaneous" EUR 0.1 million (previous year: EUR 0.1 million)

EBIT before special effects

in EUR million	Q1 2012/13	Q1 2011/12	Change in %
Premium Brands	5.7	5.3	7.5
Jeans & Workwear	1.0	2.4	-58.3
Men's & Sportswear	-0.9	-0.5	-80.0
Total	5.8	7.2	-19.4

Sales revenues in the company's own Retail segment increased by 2 percent in spite of the unfavourable market situation in the first quarter and the closure of some Gin Tonic stores. As a result, the Retail segment's contribution to total sales revenues climbed from 8.7 percent to 9.3 percent.

earnings position

Group result only slightly below prior year at EUR 4.6 million

In the period under review, the gross profit margin rose moderately from 51.2 percent to 52.2 percent. Gross profit nevertheless declined by EUR 1.2 million to EUR 34.9 million (previous year: EUR 36.1 million) due to lower sales. With expenses more or less stable, EBIT before special effects declined at more or less the same rate from EUR 7.2 million to EUR 5.8 million (-19.4 percent).

Two cases that had been pending for quite some time were settled in the reporting period. This led to positive extraordinary income, which offset the decline in sales and lifted consolidated net income after taxes almost to the prior year level. At EUR 4.6 million, Ahlers' earnings after taxes were thus almost on a par with the previous year's EUR 4.8 million.

The changes in earnings in the individual segments were primarily influenced by the changes in sales revenues. As the sales trends, especially in the Jeans & Workwear and Men's Sportswear segments, were largely influenced by seasonal factors, the deviations should improve as the year progresses.

Earnings Position

in EUR million	Q1 2012/13	Q1 2011/12	Change in %
Sales	66.8	70.5	-5.2
Gross profit	34.9	36.1	-3.3
in % of sales	52.2	51.2
Personnel expenses*	-13.1	-13.2	0.8
Balance of other expenses/income*	-14.7	-14.3	-2.8
EBITDA*	7.1	8.6	-17.4
Depreciation and amortisation	-1.3	-1.4	7.1
EBIT*	5.8	7.2	-19.4
Special effects	0.4	-0.2
Financial result	-0.1	-0.2	50.0
Pre-tax profit	6.1	6.8	-10.3
Income taxes	-1.5	-2.0	25.0
Net income	4.6	4.8	-4.2

* before special effects

Financial and net worth position

Equity ratio climbs to 63 percent

As of February 28, 2013 Ahlers' equity ratio had improved by another 2 percent to 63 percent (previous year: 61 percent). The increase was mainly due to lower total assets, which, in turn were the result of reduced inventories (EUR -2.5 million) and receivables (EUR -3.5 million). Operating cash flow was up by 15 percent on the previous year thanks to the positive change in net working capital. Free cash flow (= changes in cash and cash equivalents) was up by as much as 31 percent on the prior year period, as the payment of the final purchase price instalment for Baldessarini GmbH had resulted in higher capital expenditures in the previous year.

Key management and financial indicators

			Q1 2012/13	Q1 2011/12
Sales	- continued activities	in EUR million	66.7	68.6
	- incl. Gin Tonic Woman	in EUR million	66.8	70.5
Gross margin		in %	52.2	51.2
EBITDA*		in EUR million	7.1	8.6
EBIT*		in EUR million	5.8	7.2
EBIT margin*		in %	8.7	10.2
Net income		in EUR million	4.6	4.8
	Profit margin before taxes	in %	9.2	9.7
	Profit margin after taxes	in %	6.9	6.9
Earnings per share
	common shares	in EUR	0.31	0.33
	preferred shares	in EUR	0.36	0.38
	Net Working Capital**	in EUR million	97.6	102.8
Equity ratio		in %	63.2	61.0

* before special effects

** inventories, trade receivables and trade payables

3. Post balance sheet events

No events of special significance for the Ahlers Group occurred between the end of the first three months and the publication of the interim report.

4. Risk report

No changes with respect to risks related to future developments have occurred since the start of the new fiscal year. The statements made in the risk report of the 2011/12 consolidated financial statements remain valid.

5. Employees

As of February 28, 2013, Ahlers employed 2,232 people, 27 less than one year ago. The decline is attributable to the redundancy programmes implemented at Gin Tonic in Sindelfingen and at Pionier Jeans & Casuals in Austria in the second half of 2012, which reduced the headcount by 46 people this year. By contrast, new jobs were created in our own Retail segment and as a result of the takeover of Danish workwear manufacturer HBI.

6. Performance of the Ahlers shares

On February 28, 2013, Ahlers shares traded at EUR 10.99 (common share) and EUR 11.29 (preferred share), which was up by 8 percent and by 7 percent, respectively, on the share price quoted on February 29, 2012. Including the dividend paid out in May 2012, the share prices were up by 15 percent and 14 percent, respectively, on the previous year.

Prices have also picked up since the end of the last fiscal year. The prices of the ordinary shares and the preferred shares were up by 8 percent and 4 percent, respectively, on the prices quoted on November 30, 2012.

7. Forecast report

Retail sales in Germany expected to stagnate on balance

The Management Board expects sales in the German fashion retail sector to remain more or less stable in the full year 2013. The belated start of the spring season, which is attributable to the cold weather, could be offset, all the more so as the prior year basis is not very high. On the whole, the European markets outside Germany will continue to contract moderately.

Stable sales in spite of the discontinuation of Gin Tonic Woman and sharp rise in earnings projected for the fiscal year 2012/13

After the first three months, the Ahlers Management Board has confirmed its guidance for the full year 2012/13. The discontinuation of Gin Tonic Woman will shave off about EUR 10 million of the total sales revenues in the still young fiscal year 2012/13. This is equivalent to about 4 percent of total sales revenues. The Management Board nevertheless expects the company's total sales revenues to remain more or less stable, as the Premium segment, in particular, should grow strongly. This forecast is based on good pre-sales for the autumn/ winter season 2013.

The fact that the restructuring of Gin Tonic was completed last year will lead to much better earnings in 2012/13. The other brands are also expected to make growing profit contributions. On balance, the Management Board therefore expects consolidated net income to come in between the previous year's EUR 7.3 million and the EUR 10.1 million posted in 2010/11, with a tendency towards the upper end of this range.

Fixed asset investments in the current fiscal year should be higher than in the previous year but are unlikely to exceed depreciation and amortisation of approx. EUR 6.0 million. Management will work hard to further reduce net working capital in order to generate good cash flow and to further expand the solid financial structure.

Consolidated balance sheet

as of February 28, 2013

A S S E T S

KEUR	Feb. 28, 2013	Feb. 29, 2012	Nov. 30, 2012
A. Non-current assets
I. Property, plant and equipment
1. Land, land rights and buildings	16,577	16,984	16,690
2. Technical equipment and machines	1,141	1,488	1,176
3. Other equipment, plant and office equipment	10,431	11,551	10,619
4. Payments on account and plant under construction	111	20	103
	28,260	30,043	28,588
II. Intangible assets
1. Industrial property rights and similar rights and assets	11,901	12,250	11,987
III. At-equity investments	211	211	211
IV. Other non-current assets
1. Other financial assets	1,529	1,711	1,562
2. Other assets	19,767	18,472	19,224
	21,296	20,183	20,786
V. Deferred tax assets	1,077	1,600	1,215
Total non-current assets	62,745	64,287	62,787
B. Current assets
I. Inventories
1. Raw materials and consumables	18,474	17,425	22,840
2. Work in progress	367	263	336
3. Finished goods and merchandise	43,676	47,353	42,741
	62,517	65,041	65,917
II. Trade receivables	43,737	47,176	32,717
III. Other current assets
1. Other financial assets	806	934	615
2. Receivables from affiliates	4,184	4,339	0
3. Current income tax claims	2,116	1,969	2,944
4. Other assets	3,764	3,644	3,914
	10,870	10,886	7,473
IV. Cash and cash equivalents	6,355	9,790	11,855
Total current assets	123,479	132,893	117,962
Total assets	186,224	197,180	180,749

E Q U I T Y A N D L I A B I L I T I E S

KEUR	Feb. 28, 2013	Feb. 29, 2012	Nov. 30, 2012
A. Equity
I. Subscribed capital	43,200	43,200	43,200
II. Capital reserve	15,024	15,024	15,024
III. Retained earnings	58,254	61,131	53,724
IV. Currency translation adjustments	-883	-959	-1,140
Equity attributable to shareholders of Ahlers AG	115,595	118,396	110,808
V. Non-controlling interest	2,116	1,885	2,089
Total equity	117,711	120,281	112,897
B. Non-current liabilities
I. Pension provisions	5,047	4,893	5,140
II. Other provisions	329	337	372
III. Financial liabilities
1. Other financial liabilities	22,154	20,742	22,290
2. Non-controlling interests in partnerships	1,243	1,252	1,226
	23,397	21,994	23,516
IV. Other liabilities	26	27	26
V. Deferred tax liabilities	2,285	2,324	2,190
Total non-current liabilities	31,084	29,575	31,244
C. Current liabilities
I. Current income tax liabilities	1,179	3,322	683
II. Other provisions	3,656	3,588	3,369
III. Financial liabilities	8,566	13,445	4,465
IV. Trade payables	8,659	9,465	14,911
V. Other liabilites
1. Liabilities to affiliates	144	954	2,187
2. Other liabilities	15,225	16,550	10,993
	15,369	17,504	13,180
Total current liabilities	37,429	47,324	36,608
Total liabilities	68,513	76,899	67,852
Total equity and liabilities	186,224	197,180	180,749

Consolidated income statement

for Q1 of 2012/13

KEUR		Q1 2012/13	Q1 2011/12
	1. Sales	66,769	70,514
	2. Change in inventories of finished goods
	and work in progress	1,138	644
	3. Other operating income	1,151	898
	4. Cost of materials	-33,049	-35,057
	5. Personnel expenses	-13,051	-13,280
	6. Other operating expenses	-15,419	-15,253
	7. Depreciation, amortisation, and impairment losses on property, plant,
	and equipment, intangible assets and other non-current assets	-1,341	-1,404
	8. Interest and similar income	164	70
	9. Interest and similar expenses	-221	-273
	10. Pre-tax profit	6,141	6,859
	11. Income taxes	-1,555	-2,012
	12. Net income for the period	4,586	4,847
	13. of which attributable to:
	- Shareholders of Ahlers AG	4,530	4,768
	- Non-controlling interest	55	79
	Earnings per share (EUR)
	- common shares	0.31	0.33
	- preferred shares	0.36	0.38

Consolidated statement of comprehensive income

for Q1 of 2012/13

KEUR	Q1 2012/13	Q1 2011/12
12. Net income for the period	4,586	4,847
Not to be reclassified to profit and loss
14. Actuarial gains/losses on defined benefit pension plans	-	-
To be reclassified to profit and loss
15. Net result from cash flow hedges	272	-703
16. Currency translation differences	-15	825
17. Other changes	-29	-9
18. Other comprehensive income after taxes	228	113
19. Comprehensive income	4,814	4,960
20. of which attributable to:
- Shareholders of Ahlers AG	4,788	4,890
- Non-controlling interest	26	70

Consolidated cash flow statement

for Q1 of 2012/13

KEUR	Q1 2012/13	Q1 2011/12
Net income for the period	4,586	4,847
Income taxes	1,555	2,012
Interest income / Interest expenses	57	203
Depreciation and amortisation	1,341	1,404
Gains / losses from the disposals of non-current assets (net)	-3	10
Increase / decrease in inventories and
other current and non-current assets	-12,160	-12,101
Change in non-current provisions	-137	-33
Change in non-controlling interests in partnerships
and other non-current liabilities	18	35
Change in current provisions	287	2
Change in other current liabilities	-4,143	-3,371
Interest paid	-156	-144
Interest received	64	70
Income taxes paid	-1,408	-3,230
Income taxes received	1,389	0
Cash flow from operating activities	-8,710	-10,296
Cash receipts from disposals of items
of property, plant, and equipment	5	92
Cash receipts from disposals of intangible assets	0	2
Payments for investment in property, plant, and equipment	-923	-931
Payments for investment in intangible assets	-47	-2,278
Cash flow from investing activities	-965	-3,115
Repayment of non-current financial liabilities	-136	-1,330
Cash flow from financing activities	-136	-1,330
Net change in liquid funds	-9,811	-14,741
Effects of changes in the scope of exchange rates	10	764
Liquid funds as of December 1	11,783	13,619
Liquid funds as of February 28 (previous year February 29)	1,982	-358

Consolidated statement of changes in equity

as of February 28, 2013 (previous year as of February 29, 2012)

Equity attributable to shareholders of Ahlers AG

		Subscribed capital				Adjustment
KEUR	Common shares	Preferred shares	Own shares	Capital reserve	Retained earnings	item for currency translation	Total Group holdings	Non controlling interest	Total Equity
Balance as of Dec. 1, 2011	24,000	19,200	0	15,024	56,363	-1,081	113,506	1,815	115,321
Total net income for the period					4,768	122	4,890	70	4,960
Dividends paid							0		0
Others							0		0
Balance as of Feb. 29, 2012	24,000	19,200	0	15,024	61,131	-959	118,396	1,885	120,281
Balance as of Dec. 1, 2012	24,000	19,200	0	15,024	53,724	-1,140	110,807	2,090	112,897
Total net income for the period					4,530	258	4,788	26	4,814
Dividends paid					0		0		0
Others					0		0		0
Balance as of Feb. 28, 2013	24,000	19,200	0	15,024	58,254	-882	115,595	2,116	117,711

Group Segment Information

as of February 28, 2013 (previous year as of February 29, 2012)

by

Premium Brands			Jeans & Workwear		Men´s & Sportswear		Miscellaneous		Total
2012/13	2011/12	2012/13	2011/12	2012/13	2011/12	2012/13	2011/12	2012/13	2011/12
45,262	42,963	14,553	17,227	6,883	10,268	71	56	66,769	70,514
-	-	-	-	-	-	-	-	-	-
5,600	5,021	986	2,349	-443	-509	-2	-2	6,141	6,859
803	778	330	318	202	303	6	5	1,341	1,404
3,272	230	416	132	81	13	-	-	3,769	375
112	46	36	14	16	10	-	-	164	70
153	180	48	62	20	31	-	-	221	273
115,066	116,030	30,118	33,239	17,103	25,263	20,743	19,078	183,030	193,610
692	626	205	114	73	234	480	52	1,450	1,026
42,614	43,145	14,134	16,633	7,918	10,172	204	863	64,870	70,813

by

geographic

region	Premium Brands			Jeans & Workwear	Men´s & Sportswear		Miscellaneous		Total
KEUR	2012/13	2011/12	2012/13	2011/12	2012/13	2011/12	2012/13	2011/12	2012/13	2011/12
Germany
S ales	20,476	20,428	10,610	12,363	3,036	5,367	71	56	34,193	38,214
Net Assets	84,476	81,257	14,445	14,564	11,004	17,520	20,730	19,065	130,655	132,406
Western Europe
S ales	12,849	12,932	3,003	3,337	2,964	3,715	-	-	18,816	19,984
Net Assets	9,467	9,534	12,501	13,404	4,885	5,872	-	-	26,853	28,810
Central/ Eastern
Europe/ Other
S ales	11,937	9,603	940	1,527	883	1,186	-	-	13,760	12,316
Net Assets	21,123	25,239	3,172	5,271	1,214	1,871	13	13	25,522	32,394

8. Notes to the financial statements

Accounting and valuation principles

The interim financial statements for the first three months of fiscal 2012/13 have been prepared in accordance with the International Financial Reporting Standards (IFRS) of the International Accounting Standards Board (IASB) and the International Financial Reporting Interpretation Committee's interpretations of the IFRS (IFRIC). They comply in particular with the provisions of IAS 34 - Interim financial reporting.

The accounting and valuation principles and principles of consolidation are consistent with those applied in the preparation of the consolidated financial statements as of November 30, 2012. A detailed explanation of these principles has been published in the notes to the consolidated financial statements of the 2011/12 Annual Report.

The interim report is prepared in euros and all figures are given in thousands of euros (KEUR). Due to the fact that the report is prepared in EUR thousands, rounding differences can arise, since computations of individual items are based on figures in euros.

Earnings per share

Earnings per share are defined as net income (attributable to the shareholders of the Ahlers AG) divided by the weighted average number of shares outstanding during the reporting period. No shares existed either as of February 28, 2013, or February 29, 2012, that would have a diluting effect on earnings per share.

Contingent liabilities

Contingent liabilities have not changed materially since the last balance sheet date on November 30, 2012.

Segment reporting

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 are Premium Brands, Jeans & Workwear and Men's & Sportswear. 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 positionings 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 186,224 thousand) result from the assets as derived from the segment information (EUR 183,030 thousand) plus deferred tax assets and current income tax assets (EUR 3,194 thousand). Accordingly, the liabilities stated in the balance sheet (EUR 68,513 thousand) result from the liabilities as derived from the segment information (EUR 64,870 thousand) plus deferred tax liabilities and current income tax liabilities (EUR 3,464 thousand) as well as leasing liabilities (EUR 179 thousand).

The Group segment information by geographic regions reflects the main output markets of the Ahlers Group.

The valuation principles for the segment report are the same as for the consolidated financial statements.

Herford, April 2013

The Management Board

Forward-looking statements

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 the assumptions underlying the statements above prove to be incorrect.

Financial Calendar

DATES

Interim report Q1 2012/13	April 15, 2013
Analysts' conference in Frankfurt am Main	April 17, 2013
Annual Shareholders' Meeting in Düsseldorf	May 7, 2013
Half year report 2012/13	July 11, 2013
Interim report Q3 2012/13	October 14, 2013
Analysts' conference in Frankfurt am Main	October 16, 2013

If you have any questions regarding this interim report, please contact:

Ahlers AG Investor Relations Elverdisser Str. 313 D-32052 Herford

phone: +49 (0) 52 21/ 979-211 fax: +49 (0) 52 21/ 725 38 investor.relations@ahlers-ag.com WWW.AHLERS-AG.COM

ISIN DE0005009708 and DE0005009732

Ahlers AG

• is a fashion manufacturer specialising in menswear
• produces fashion under several brands, tailored to its respective target groups
• is one of the biggest listed European manufacturers of menswear
• is family-run in the third generation by Dr. Stella A. Ahlers
• was established by Adolf Ahlers in 1919 and listed as a joint stock corporation in 1987
• employs approximately 2,200 people
• generates more than 60 percent of its sales revenues from premium brands

The Brands