Ahlers AG

Quarterly Report • Apr 14, 2008

INTERIM REPORT Q1 2007/08 (December 1, 2007 to February 29, 2008)

Business development in the first three months of fiscal 2007/08

1. Business and general conditions

Current economic data on unemployment, manufacturing output and gross national product (GNP) released in early 2008 reflect positive overall trends in Germany and the other western European countries. However, leading indicators such as consumer confidence, growth forecasts and stock market indices rather point to an economic weakening which could impact consumer spending.

Thus, German clothing sales during the first two months of the year 2008 were approximately at the previous year's level. The pre-Christmas 2007 business was rather disappointing and March 2008 sales came in weaker as well. This means that growth can only be driven by Eastern Europe and foreign markets further afield. The German clothing industry which booked its orders for the first half of 2008 already in the second half of 2007 reported 4.6 percent growth in its order volume, reflecting only slightly higher domestic figures as well as growing international volume, particularly in Eastern Europe, the Middle East and the Far East.

2. Earnings, financial and net worth position

Sales development: 14 percent sales growth reflecting improved order situation and earlier shipment of spring orders

This industry average was clearly exceeded by the Ahlers Group whose sales grew by 14 percent during the first quarter of 2007/08. For one thing, our incoming orders were higher than the industry average. For another, we were able to ship our spring orders considerably earlier. All told, sales came in at EUR 71.3 million compared to EUR 62.4 million in the prior year (EUR +8.9 million). Ahlers outperformed the industry average in particular with regard to the domestic growth rate of 12 percent and the expansion of the international business by 16 percent.

The most significant sales growth was achieved in the premium segment which grew by +29 percent or EUR +7.6 million, with pierre cardin, Baldessarini and Otto Kern all exhibiting substantial growth rates. A +12 percent expansion illustrates the highly positive development of the jeans and workwear segment. The strongest growth within this segment was recorded by Pionier Workwear which grew by +17 percent. The only slight decline was noted in the men's and sportswear area where sales were down 3 percent or EUR 0.6 million. While Gin Tonic posted slight growth, Jupiter sales declined.

A positive development is also evident in the gross margin which, at 47.1 percent of sales, improved by 0.5 percent on the previous year's 46.6 percent. An important driving factor in this context was the softness in the US dollar which resulted in lower purchasing costs. In addition, the improved margin reflects the effect of the earlier shipments which resulted in a higher share of pre-order merchandise in total sales compared to the end-ofseason sales in December.

While personnel expenses did not rise as fast as sales and profits, they still grew by a sizeable 8 percent. A part of the higher expenses was due to wage increases in the Polish factories and the currency appreciation of the Polish Zloty. Personnel expenses were additionally augmented by hiring in the retail area. Net other operating income and expenses, and depreciation and amortisation grew at a slower rate of + 4 percent. This rise reflects the higher commissions payable and licenses on the higher sales volume as well as the building up of Ahlers' own retail outlets. This was partly offset by positive exchange rate differentials from the consolidation which were negative in the previous year.

Earnings position: EBIT tripled, net income up 35 percent

The strong sales growth, the increased gross profit margin and the slower advance of the operating expenses combined to push EBIT from EUR 1.4 million to EUR 4.3 million, an improvement by more than 200 percent. The EBIT margin advanced from 2.3 percent to 6.0 percent.

Following the sale of eterna and before the special dividend payout in May 2007, the Ahlers Group held a high net liquidity and consequently reported a positive financial result of EUR 0.3 million. Following the dividend payout and due to the maintenance of a liquidity reserve for acquisitions, expenses will again be incurred in 2008. In addition, the staggered payment of the purchase price for Baldessarini led to a non-cash financial result of EUR -0.1 million, resulting in total financial expenses of EUR -0.4 million. Ahlers' pre-tax profit therefore came to EUR 3.9 million compared to EUR 1.8 million in the prior year (+117 percent).

In the 2007/08 reporting period, the Ahlers Group's tax ratio was back to a more "normal" level of 30.5 percent compared to the previous year when the capitalisation of a tax refund claim under the German SEStEG Act resulted in tax credits despite the positive pre-tax result.

Following these effects Ahlers generated a net income of EUR 2.7 million in the first quarter of 2007/08 compared to EUR 2.0 million in the same period of the prior year (+35 percent).

Key management and financial indicators

in EUR million	Q1 2007/08	Q1 2006/07	Change in %
Sales	71.3	62.4	14.3
Germany	37.3	33.2	12.3
Abroad	34.0	29.2	16.4
Gross profit	33.6	29.1	15.5
as a percentage of sales	47.1	46.6
EBITDA	5.5	2.6	111.5
EBIT	4.3	1.4 2	07.1
Net income for the period	2.7	2.0	35.0
Earnings per share (in EUR)	0.19	0.14
Working Capital	100.8	86.4	16.7
Equity ratio (in %)	51.8	66.9

Financial and net worth position: Solid equity ratio of 52 percent remains unchanged

Even after the high special dividend paid out in May 2007 the Ahlers Group remains solidly financed with an equity ratio of 52 percent and net liquidity of EUR 7.4 million (previous year: 67 percent; EUR 62.8 million).

In mid-2007 the company started to lift inventory levels with a view to improving product availability; first-quarter sales reflect the success of this measure. As a result inventories grew faster than sales during the reporting period, expanding by 20 percent. In contrast, trade receivables grew at a rate of 11 percent, which was slower than sales (+14 percent). Aggregate working capital increased by 17 percent from EUR 86.4 million to EUR 100.8 million.

3. Post balance sheet events

No events of special significance occurred between the close of the first quarter and preparation of the interim report of Ahlers AG.

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 2006/07 consolidated financial statements remain valid.

5. Employees

60 jobs created in Germany

On February 29, 2008, the Ahlers Group's headcount comprised 2,974 employees, up by 85 compared to the same point in time one year earlier (+3 percent). In Germany, 60 new jobs were created mainly in the retail and sales areas. Due to the high wage rises in Poland local production was scaled back and the headcount was reduced by 94 people. These capacities were added to our own factory in Sri Lanka (+106 employees).

6. Development of Ahlers shares

On February 29, 2008, Ahlers shares were trading at EUR 10.30 (common share) and EUR 10.18 (preferred share). At the end of February 2008, the share prices were down 36 percent and 38 percent, respectively, on the prices recorded one year earlier (EUR 16.05 and EUR 16.48). Factoring in the special dividend of EUR 2.95 and EUR 3.00, respectively, the share price declined by 21 percent and 24 percent, respectively.

7. Forecast report

Future economic conditions

As already pointed out above, the economic environment in Western Europe is becoming slightly clouded and private consumption is expected to weaken compared to the prior year. Having expanded by 1 percent in the previous year, German retail sales in the current year are expected to remain flat at best. In our estimation, the rest of Western Europe is bound to see another slight contraction as in the previous year. Strong growth is anticipated in the Eastern European markets where ongoing industrialisation continues to generate incremental GNP and purchasing power growth.

Profitability outlook: Sales and EBIT to grow

Our Annual Report (from page 44) published recently contained an in-depth discussion of the company's profitability outlook for the financial year 2007 and beyond. For the full year 2007/08 we expect a similar sales growth as in the previous year (2006/07 +5.7 percent, EUR 259.9 million), an increase in EBIT in excess of sales growth (2006/07 EUR 12.0 million) and net income at approximately the previous year's level (2006/07 EUR 9.7 million). The Managing Board maintains this guidance also after the first quarter of 2007/08. The half-year figures will show slower sales growth, given that part of the firstquarter growth was due to earlier product shipments.

In view of the challenging economic situation retailers are placing their spring orders a little later this year. This still makes it difficult to offer accurate forecasts for the second half of 2007/08. However, we anticipate to report single-digit growth figures also for the second half of the year.

Financial and net worth position remain solid

From today's point of view nothing points to a material change in the Group's solid financial position. The Group should be able to finance its slightly increased investments in fixed assets from its cash flow. Current asset growth should slow down clearly and become further aligned with sales growth.

The company remains on the lookout for further acquisitions which fit in with the Ahlers brand portfolio and are suitable to support the Group's sales and profit growth particularly at the international level.

Consolidated balance sheet

as of February 29, 2008

Assets
in KEUR	Feb. 29, 2008 F	eb. 28, 2007	Nov. 30, 2007
A. Non-current assets
I. Property, plant and equipment
1. Land, land rights and buildings	21,200	22,054	21,554
2. Technical equipment and machines	1,897	1,420	1,819
3. Other equipment, plant and office management	11,953	9,508	11,255
4. Payments on account and plant under construction	138	261	209
	35,188	33,243	34,837
II. Intangible assets
1. Industrial property rights and similar rights and assets	12,048	11,904	11,762
2. Payments on account	10	100	10
	12,058	12,004	11,772
III. Payments on account
1. Other loans	768	456	588
2. Other financial assets	132	121	139
3. Other assets	18,163	16,210	17,611
	19,063	16,787	18,338
IV. Deferred tax assets	2,898	2,347	2,503
Total non-current assets	69,207	64,381	67,450
B. Current assets
I. Inventories
1. Raw materials and consumables	17,391	16,993	22,341
2. Work in progress	413	336	412
3. Finished goods and merchandise	40,753	31,298	37,959
	58,557	48,627	60,712
II. Trade receivables	53,656	48,523	44,850
III. Other current assets
1. Other securities	564	569	556
2. Receivables from affiliates	43	25	24
3. Current income tax claims	7,393	8,694	6,917
4. Other assets	7,622	5,465	6,896
	15,622	14,753	14,393
IV. Cash and cash equivalents	61,862	72,769	60,954
Total current assets	189,697	184,672	180,909
Total assets	258,904	249,053

Equity and liabilities
in KEUR	Feb. 29, 2008 F	eb. 28, 2007	Nov. 30, 2007
A. Equity
I. Subscribed capital	43.200 43	,200 43	,200
II. Capital reserve	15,024	15,024	15,024
III. Retained earnings	73,928	106,390	71,313
IV. Currency translation adjustments	-217	-359	-506
Equity attributable to shareholders of Ahlers AG	131,935	164,255	129,031
V . Minority interests	2,260	2,338 2	,192
Total equity	134,195	166,593	131,223
B. Non-current liabilities
I. Pension provisions	5,710	6,389 5	,699
II. Other provisions	6,078	6,307 5	,759
III. Financial liabilities
1. Other financial liabilities	16,928	19,261	17,119
2 . Minority interests in partnerships	3,737	3,553 3	,711
	20,665	22,814	20,830
IV. Trade payables	1,308	1,183	1,257
V . Other liabilities	50	57	50
VI. Deferred tax liabilities	2,233	2,730 2	,136
Total non-current liabilities	36,044	39,480	35,731
C. Current liabilities
I. Current income tax liabilities	1,233	2,073	861
II. Other provisions	3,100	3,031 2	,347
III. Financial liabilities	56,296	10,979 44	,173
IV. Trade payables	11,414	10,795	17,290
V . Other liabilities
1. Liabilities to affiliates	2,296	2,408 3	,847
2 . Other liabilities	14,326	13,694	12,887
	16,622	16,102	16,734
Total current liabilities	88,665	42,980	81,405
Total liabilities	124,709	82,460	117,136
Total equity and liabilities	258,904	249,053	248,359

Consolidated income statement

for Q1 2007/08

in KEUR	Q1 2007/08	Q1 2006/07
1. Sales	71,254	62,382
2. Change in inventories of finished goods and work in progress	2,497	1,955
3. Other operating income	508	385
4. Cost of materials	-40,184	-35,260
5. Personnel expenses	-14,474	-13,390
6. Other operating expenses	-14,071	-13,509
7. Depreciation, amortisation and impairment losses on property, plant and equipment,
intangible assets and other non-current assets	-1,262	-1,113
8. Interest and similar income	572	600
9. Interest and similar expenses	-951	-284
10. Pre-tax profit	3,889	1,766
11. Income taxes	-1,185	247
12. Net income for the period	2,704	2,013
13. of which attributable to:
- Shareholders of Ahlers AG	2,615	1,980
- Minority interests	89	33
Earnings per share (in EUR)	0.19	0.14

Consolidated cash flow statement

for Q1 2007/08

in KEUR	Q1 2007/08		Q1 2006/07
Net income for the period		2,704	2	,013
Depreciation, amortisation and impairment losses of
non-current assets	1,262		1,113
Change in deferred taxes	-299		-93
Change in non-current provisions	330		-153
Change in minority interests in partnerships
and other non-current liabilities	77		6
Change in other provisions	753		959
Gains/losses from the disposals of non-current assets (net)	-112		7
Increase in inventories and
other current and non-current liabilities	-8,596		-8,477
Decrease in other current liabilities	-5,962	-12,547	-5,129	-11,767
Cash flow from operating activities		-9,843		-9,754
Cash receipts from disposals of items of property,
plant, and equipment	631	22
Payments for investment in property, plant, and equipment	-1,923		-724
Payments for investment in intangible assets	-29		-76
Cash flow from investing activities		-1,321		-778
Repayment of non-current financial liabilities	-191		-36
Cash flow from financing activities		-191		-36
Net change in liquid funds		-11,355		-10,568
Effects of changes in exchange rates		-199		84
Liquid funds as of December 1		18,942		73,325
Liquid funds as of February 29 (previous year as of February 28)		7,388		62,841

Composition of liquid funds

	Balance as of	Balance as of
in KEUR	Feb. 29, 2008	Nov. 30, 2007 C	hanges
Cash and cash equivalents	61,862	60,954	908
Other securities	564	556	8
Current financial liabilities	55,038 42	,568	-12,470
	7,388	18,942	-11,554

Consolidated statement of changes in equity as of Feb. 29, 2008 (previous year as of Feb. 28, 2007)

	Equity attributable to shareholders of Ahlers AG
						Equity
						attributable
		Subscribed capital C			urrency	to share-
C	ommon	Preferred C	apital	Retained	translation	holders of	Minority	Total
in KEUR	shares	shares	reserve		earnings adjustments	Ahlers AG	interests	equity
Balance as of Dec. 1, 2006	24,000	19,200	15,024	104,410	-239	162,395	2,333	164,728
Exchange differences					-120	-120		-120
Net income				1,980		1,980 33		2,013
Other changes							-28	-28
Total net income for the period				1,980	-120	1,860	5	1,865
Dividends paid						-	-	-
Balance as of Feb. 28, 2007	24,000	19,200	15,024	106,390	-359	164,255	2,338	166,593
Balance as of Dec. 1, 2007	24,000	19,200	15,024	71,313	-506	129,031	2,192	131,223
Exchange differences					2 89 2	89		289
Net income				2,615	2	,615	89	2,704
Other changes							-21	-21
Total net income for the period				2,615	289	2,904	68	2,972
Dividends paid						-	-	-
Balance as of Feb. 29, 2008	24,000	19,200	15,024	73,928	-217	131,935	2,260	134,195

Group segment reporting

as of Feb. 29, 2008 (previous year as of Feb. 28, 2007),

by business segment

	premium brands		jeans&workwear men's&sportswear Miscellaneaous					Total
in KEUR	2007/08 2	006/07	2007/08 2006/07		2007/08 2	006/07	2007/08 2	006/07	2007/08 2	006/07
Sales
from third parties	33,532 25	,945	18,578	16,631	19,077	19,711	67	95	71,254	62,382
of which Germany	14,923	12,240	12,656	11,651	9,616	9,248	67	95	37,262 33	,234
of which abroad	18,609	13,705	5,922 4	,980	9,461	10,463	-	-	33,992 2	9,148
Intersegment sales	-	-	-	-	-	-	-	-	-	-
Segment result	1,489	111	2,586	1,722	-179	- 47	-7	-20	3,889	1,766
thereof
depreciation and
amortisation	577 4	80	272 3	08	405 322		8 3		1,262	1,113
other non-cash items	792 4	67	207 334		232 2	73	-	-	1,231	1,074
Interest income	278 244		146 235		148	122	-	-	572	601
Interest expense	522	122	121 45		308	117	-	-	951 2	84
Net assets	127,405	106,582	48,059 5	7,689	54,182 5	7,098	18,966	16,642	248,612 23	8,011
Capital expenditure	963 2	68	355	176	634 35	6	552	855	2,504	1,655
Liabilities	61,009 35	,042	24,186	14,521	34,845 2	6,481	645	674	120,685	76,718

by geographic region

		premium brands					jeans&workwear men's&sportswear Miscellaneaous		Total
in KEUR	2007/08 2	006/07	2007/08 2	006/07	2007/08 2	006/07	2007/08 2	006/07	2007/08 2	006/07
Germany
Sales	14,923	12,240	12,656	11,651	9,616	9,248	67	95	37,262 33	,234
Net assets	85,961	80,435	33,509 3	8,009	37,761 4	1,821	18,853	16,514	176,084	176,779
Capital expenditure	625	133	237	95	410 22	0	552	855	1,824	1,303
Western Europe
Sales	10,699	8,238	4,419 3	,669	6,523	7,067	-	-	21,641	18,974
Net assets	9,638	8,461	10,339	8,654	6,053	6,457	-	-	26,030 23	,572
Capital expenditure	137 24		62 3	0	192	88	-	-	391	142
Central/Eastern Europe/
Other
Sales	7,910 5	,467	1,503	1,311	2,938 3	,396	-	-	12,351	10,174
Net assets	31,806	17,686	4,211	11,026	10,368	8,820	113	128	46,498 3	7,660
Capital expenditure	201	111	56 5	1	32 4	8	-	-	289 2	10

8. Notes to the financial statements

Accounting and valuation principles

The interim financial statements for the first three month of fiscal 2007/08 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). The interim statements for the first quarter of fiscal 2007/08 comply in particular with the provisions of IAS 34 Interim Financial Statements.

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, 2007. A detailed explanation of these principles has been published in the notes to the consolidated financial statements of the 2006/07 Annual Report.

This interim report for the first quarter ended February 29, 2008 has not been reviewed by an auditor.

The quarterly report is prepared in euros and all figures given in thousands of euros (KEUR). Due to the fact that the quarterly 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 is defined as net income for the period divided by the weighted average number of shares outstanding during the reporting period. No shares existed either as of February 29, 2008, or February 28, 2007, that would have a diluting effect on earnings per share.

Contingent liabilities

Contingent liabilities did not change materially since the last balance sheet date on November 30, 2007.

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 2007/08	April 14, 2008
DVFA analyst meeting in Frankfurt/Main	April 17, 2008
Annual Shareholders' Meeting in Düsseldorf	May 15, 2008
Interim report Q2 2007/08	July 15, 2008
Interim report Q3 2007/08	October 14, 2008

Herford, April 2008

The Management Board

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

Ahlers AG Investor Relations Elverdisser Str. 313 32052 Herford Germany

Tel: + 49 5221- 979 - 202 fax: + 49 5221- 71222

investor.relations@ahlers-ag.com www.ahlers-ag.com

AHLERS AG

• produces menswear under several brands, tailored to its respective target groups
• is one of the leading European menswear manufacturers
• 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 3,000 people
• generates 47 percent of its sales revenues in international markets
• produces approximately 12 million fashion items per year

The brands