Wolford AG — Earnings Release 2009

Dec 18, 2009

Report on the first half of the 2009/10 fiscal year

Key Figures for the Wolford Group (May 1 to October 31, 2009)

	First quarter ended	Second quarter ended		Six months ended	Change (absolute/
Amounts in thousands of EUR	July 31, 2009	Oct. 31, 2009	Oct. 31, 2009	Oct. 31, 2008	% points)
Sales	27,319	41,152	68,471	76,656	(8,185)
EBITDA	(1,377)	7,311	5,934	7,154	(1,220)
EBITDA margin	-5.04%	17.76%	8.67%	9.33%	(0.66)
Operating profit (EBIT)	(3,307)	5,364	2,057	3,668	(1,611)
Currency-adjusted EBIT (operating profit)*	(3,298)	5,507	2,209	2,623	(414)
Financial result	(339)	(431)	(770)	(2,655)	1,885
Result from continuing operations (before taxes)	(3,646)	4,933	1,287	1,013	274
Net result for the period	(3,295)	4,050	755	716	39
Earnings per share in EUR	(0.67)	0.82	0.15	0.15	0.00
Result from continuing operations before taxes,
plus depreciation, amortization and impairment	(1,716)	6,879	5,163	4,499	664
Net cash from operating activities	(6,063)	6,496	433	(6,468)	6,901
Capital investments excluding financial assets	1,191	3,392	4,583	9,294	(4,711)

Shareholders' equity	77,437	78,958	(1,521)
Equity ratio based on total assets	48.20%	45.71%	2.49
Net debt	37,659	40,559	(2,900)
Debt/equity ratio	48.63%	51.37%	(2.74)
Number of full-time equivalents at period end	1,496	1,689	(193)

*) Operating profit before realized currency translation differences = EBIT +/- currency translation differences

Stock Data

	2009/10	2008/09
ISIN-Code		AT0000834007
Number of shares	5,000,000	5,000,000
of which dividend-bearing	4,900,000	4,900,000
Earnings per share for the period	0.15 EUR	0.15 EUR
Stock price on April 30	8.34 EUR	22.89 EUR
Stock price high for first half of fiscal year	12.35 EUR	24.25 EUR
Stock price low for first half of fiscal year	7.80 EUR	13.50 EUR
Stock price on Oct. 31	12.05 EUR	15.33 EUR
Market capitalization on Oct. 31	60,250,000 EUR	76,650,000 EUR
Trading volume (average daily number of shares)	24,824	11,711

Macroeconomic development

The first six months of the 2009/10 fiscal year (May 1, 2009 – October 31, 2009) were characterized by an extremely tense market environment, in which most markets were confronted with an economic downturn compared to the first half of the previous fiscal year. In particular, the downswing negatively affected Europe and the USA, whereas various countries led by China continued to post growth rates, though dampened and thus served as a stabilizing economic force. The economic situation on international markets eased somewhat towards the end of the calendar year 2009, and initial signs of a recovery were perceptible in individual countries.

Sales development

Sales improvement in the second quarter

On balance, total sales of the Wolford Group were down 10.7 percent in the first half of the 2009/10 fiscal year (May 1, 2009 – October 31, 2009), to EUR 68.5 million. This year-on-year decline has to be seen in light of the record sales of EUR 76.7 million achieved in the first half of the 2008/09 fiscal year, which in turn was partly related to a much more favorable market environment. Whereas sales fell by 14.4 percent during the first three months of the current fiscal year, the situation improved slightly in the second quarter, with sales down 8.0 percent compared to the previous year.

Sales development

(in EUR million)

Consistent increase in sales at proprietary stores

Wolford's proprietary stores (own boutiques, shopin-shops and factory outlets) achieved a further increase in sales of 4.0 percent in the period under review, which is related to the strategic expansion of Wolford's distribution network. However, sales fell by 7.7 percent on a like-for-like basis. The retail segment increased its share of total Group sales to 44.3 percent, which in turn resulted in a rise of the share attributable to controlled distribution (via Wolford-owned and partner-operated boutiques, factory outlets and concession shopin-shops) to 56.7 percent.

Considering the sales development of the individual distribution channels, sales with boutiques (Wolford-owned and partner-operated), which accounted for the largest share, or 45.0 percent of total sales in the first half of 2009/10, were down 6.5 percent. This development is due to the declining business generated with partneroperated boutiques. In contrast, sales at the 107 Wolford-owned boutiques could be maintained at a stable level due to the opening of new stores or the takeover of existing partner-operated outlets. Department stores and multi-brand retailers posted a drop in sales, whereas factory outlets generated a gratifying sales increase of 8.8 percent.

Wolford determinedly pushed ahead with the rollout of its store concept during the period under review. Accordingly, 11 points of sales were newly opened or redesigned to display the distinctive premium look in the first half of the 2009/10 fiscal year. As at October 31, 2009, a total of 210 outlets (93 proprietary and 117 partner-owned) embodied the modern and light look of the Wolford store concept.

Sales share of controlled distribution

Earnings

Improved result from continuing operations and net result for the period

The result from continuing operations amounted to EUR 1.3 million in the first six months of 2009/10, improving by 27.1 percent in a year-on-year comparison. The net result for the period totaled EUR 0.8 million, a rise of 5.5 percent from the first half of the 2008/09 fiscal year (H1 2008/09: EUR 0.7 million). This development demonstrates that the cost reduction and efficiency-enhancing measures which were initiated have had a sustainable impact and positively affect the earnings situation of the Wolford Group.

The financial result improved significantly in the first six months of the current fiscal year, rising EUR 1.9 million due to the lower net interest expenses and a more favorable mark-to-market valuation of foreign currency transactions.

Solid capital structure – further rise in the equity ratio

Inventories could be cut back by EUR 6.5 million compared to the previous year's level based on the implementation of inventory optimization measures. This represents a 13 percent inventory decrease, whereas delivery quality continues to remain high. The reduction in the financial resources tied up in working capital also had a very positive effect on the financial result. The Wolford Group will continue to determinedly pursue optimization measures in the second half of the fiscal year.

The persistent reduction of borrowings from banks and other financial liabilities combined with a lower level of capital expenditure resulted in a decline in net debt to EUR 37.7 million at the half-year balance sheet date of October 31, 2009, down from EUR 40.6 million as at October 31, 2008. Shareholders' equity of the Wolford Group totaled EUR 77.4 million on October 31, 2009, compared to the previous year's figure of EUR 79.0 million. The equity ratio climbed 2.5 percentage points in a year-on-year comparison to 48.2 percent as at the end of October 2009.

Shareholders' equity

(in EUR million)

Equity ratio as a percentage of total assets

Favorable development of the Wolford share in the first half-year

In the first six months of the 2009/10 fiscal year, the Wolford share profited from the perceptible recovery on global stock markets, with the share price rising to EUR 12.05 as at October 31, 2009. This compares to a share price of EUR 8.34 on April 30, 2009. The highest share price in the first half 2009/10 was reached on September 23, 2009, closing at EUR 12.35, with the lowest closing price of the first six months at EUR 7.80, posted on July 17, 2009.

Wolford in the future

Well prepared for future growth

Although there were initial signs of a recovery in several markets during the second quarter, the Executive Board of Wolford Aktiengesellschaft still expects a continuing difficult market environment to prevail in the second half of the 2009/10 fiscal year. Order volume for the spring/summer 2010 collection was rather restrained due to the ongoing uncertain economic situation. However, demand slightly picked up in November and the first days of the Christmas trade. Based on the strategic orientation of the company accompanied by the consistent implementation of efficiency-enhancing measures, the Wolford Group is well prepared for the future. From today's point of view, the Executive Board anticipates moderate growth once again in the 2010/11 fiscal year.

Consolidated balance sheet at October 31, 2009 (IFRS)

In thousands of EUR	Oct. 31, 2009	Oct. 31, 2008	Apr. 30, 2009
ASSETS
Non-current assets
Property, plant and equipment	65,336	65,965	65,022
Goodwill	1,133	1,207	1,180
Intangible assets excluding goodwill	10,692	8,589	10,672
Non-current available-for-sale financial assets	4,956	7,593	4,780
Non-current receivables and other assets	1,194	1,342	1,327
	83,311	84,696	82,981
Deferred tax assets	4,973	4,964	5,220
Current assets
Inventories	43,365	49,856	44,747
Current receivables and other assets	21,013	25,521	16,137
Prepaid expenses	3,337	3,512	2,102
Current available-for-sale financial assets	38	37	38
Cash and cash equivalents	4,609	4,168	3,752
	72,362	83,094	66,776
Total assets	160,646	172,754	154,977

In thousands of EUR	Oct. 31, 2009	Oct. 31, 2008	Apr. 30, 2009
Kon zern -Passiva SHAREHOLDERS' EQUITY AND LIABILITIES
Shareholders' equity
Share capital and capital reserves	38,168	38,168	38,168
Other reserves	32,726	32,243	32,551
Currency translation differences	(3,408)	(2,239)	(3,102)
Retained earnings	14,615	15,450	13,865
Treasury stock	(4,664)	(4,664)	(4,664)
	77,437	78,958	76,818
Deferred tax liabilities	329	334	349
Non-current liabilities
Long-term debt	7,459	4,739	18,614
Provisions for employee benefits	13,763	16,144	13,756
Other non-current liabilities	163	150	158
	21,385	21,033	32,528
Current liabilities
Current portion of long-term debt	2,313	3,382	2,903
Bank loans and overdrafts	36,200	42,996	19,729
Current provisions	5,196	6,443	4,741
Trade payables	4,362	4,881	4,051
Advance payments received	953	906	1,024
Other current liabilities	12,471	13,821	12,834
	61,495	72,429	45,282
Total shareholders' equity and liabilities	160,646	172,754	154,977

Consolidated income statement (IFRS)

		Second quarter ended		Six months ended
In thousands of EUR	Oct. 31, 2009	Oct. 31, 2008	Oct. 31, 2009	Oct. 31, 2008
Sales	41,152	44,743	68,471	76,656
Other operating income	861	1,649	1,766	2,292
Change in inventories of finished goods
and work-in-process	(4,714)	(3,862)	(1,061)	1,013
Own work capitalised	37	52	59	76
Operating output	37,336	42,582	69,235	80,037
Cost of materials and purchased services	(4,544)	(7,425)	(12,538)	(18,410)
Staff costs	(15,747)	(17,723)	(32,620)	(37,082)
Depreciation, amortization and impairment losses
on property, plant and equipment and intangible assets	(1,946)	(1,798)	(3,876)	(3,486)
Other operating expenses	(9,735)	(9,351)	(18,144)	(17,391)
Operating profit (EBIT)	5,364	6,285	2,057	3,668
Net interest cost	(246)	(1,823)	(399)	(2,333)
Net investment securities income	2	76	3	105
Interest cost of employee benefit liabilities	(187)	(214)	(374)	(427)
Financial result	(431)	(1,961)	(770)	(2,655)
Profit from continuing operations (before taxes)	4,933	4,324	1,287	1,013
Income taxes	(883)	(708)	(532)	(297)
Net profit for the period	4,050	3,616	755	716

Condensed consolidated cash flow statement (IFRS)

		Six months ended
In thousands of EUR	Oct. 31, 2009	Oct. 31, 2008
Net cash from operating activities	433	(6,468)
Net cash used in investing activities	(4,258)	(8,619)
Net cash from financing activities	4,727	16,154
Net increase in cash and cash equivalents	902	1,067
Cash and cash equivalents at beginning of period	3,752	2,957
Effect of exchange rate fluctuations on cash and cash equivalents
at beginning of period	(45)	144
Cash and cash equivalents at end of period	4,609	4,168

Consolidated statement of changes in equity (IFRS)

	Six months ended
In thousands of EUR	Oct. 31, 2009	Oct. 31, 2008
Shareholders' equity at beginning of period	76,818	79,018
Net profit for the period	755	716
Dividends	0	(2,107)
Increase in share capital	0	0
Sale of treasury stock	0	0
Currency translation	(306)	1,765
Other changes	170	(434)
Shareholders' equity at end of period	77,437	78,958

Stock data	Oct. 31, 2009	Oct. 31, 2008
Earnings per share in EUR (diluted = undiluted)	0.15	0.15
Weighted average number of shares outstanding in '000	4,900	4,900

Notes on the interim financial report at October 31, 2009

General information

The consolidated interim financial statements of the Wolford Group for the first half of the 2009/10 fiscal year were prepared under the responsibility of the Executive Board in compliance with the International Financial Reporting Standards (IFRS) on the basis of IAS 34 (Interim Financial Reporting).

The accounting and valuation policies applied to the consolidated financial statements of the Wolford Group for the 2008/09 fiscal year remained unchanged.

The consolidated interim financial statements do not include all information and explanatory notes which are required in relation to the consolidated financial statements for the fiscal year as a whole. For this reason, this interim report should be read together with the Annual Report 2008/09 of the Wolford Group applying to the balance sheet date of April 30, 2009.

In all financial reporting of the Wolford Group, amounts are reported in thousands of euros (TEUR). Rounding differences may occur due to the use of automated calculation aids.

2009/10	Austria	Rest of	North	Asia	Consolidations/	Group
In thousands of EUR		Europe	America		Eliminations
Sales	45,047	43,095	9,312	772	(29,755)	68,471
thereof inter-segment	29,755	0	0	0	(29,755)	0
External sales	15,292	43,095	9,312	772	0	68,471
Operating result (earnings before interest and taxes)	2,139	688	(238)	(75)	(457)	2,057
Net interest cost	(346)	(47)	(6)	0	0	(399)
Net income from securities	(3)	0	0	0	6	3
Interest cost from employee benefit liabilities	(374)	0	0	0	0	(374)
Result from continuing operations (before taxes)	1,416	641	(244)	(75)	(451)	1,287
Segment assets	159,573	50,289	13,217	1,147	(63,580)	160,646
thereof non-current	90,345	19,487	3,808	394	(30,723)	83,311
Segment liabilities	71,582	35,111	6,240	779	(30,503)	83,209
Investments	1,232	2,941	407	3	0	4,583
Depreciation and amortization	2,442	1,056	343	35	0	3,876
Total number of employees	1,071	524	110	19		1,724

Operating segment report (by region; IFRS)

The basis for segment reporting and the valuation of the segment profit have remained unchanged since the consolidated financial statements for the 2008/09 fiscal year.

Notes on the interim financial report at October 31, 2009 Changes in the scope of consolidation

The number of companies included in the scope of consolidation has not changed since the last reporting date.

Seasonality of business operations

Compared with the first quarter, the second quarter of the fiscal year is traditionally a stronger period, as reflected by figures for total sales as well as earnings indicators. The Wolford Group traditionally generates the most sales in the third quarter of the fiscal year, due to the Christmas shopping season.

Non-current assets

The Wolford Group invested a total of TEUR 4,583 during the first six months of the 2009/10 fiscal year, which represents a decrease of TEUR 4,711 from the comparable period of the previous year. The reduced investment volume had a positive effect on the company's liquidity situation.

Inventories

The launch of a new production planning system has enabled more precise production planning which was accompanied by a reduction in production throughput time. In addition, retail inventories

North Asia Consolidations/ America Eliminations	Rest of Europe	Austria	2008/09
10,129 524	48,110	53,148	Sales
0 0	0	35,255	thereof inter-segment
10,129 524	48,110	17,893	External sales
122 (65)	816	3,562	Operating result (earnings before interest and taxes)
4 0	(7)	(2,330)	Net interest cost
0 0	105 0		Net income from securities
0 0	(427) 0		Interest cost from employee benefit liabilities
126 (65)	910 809		Result from continuing operations (before taxes)
13,952 1,155	46,969	177,039	Segment assets
3,441 431	13,481	95,814	thereof non-current
5,281 633	36,059	86,482	Segment liabilities
432 204	4,355	4,303	Investments
258 14	904	2,310	Depreciation and amortization
118 20	458	1,313	Total number of employees

are coordinated by means of an automatic replen ishment system. Due to the implementation of these inventory optimization measures, Wolford has successfully cut back on inventories by 13 percent, or TEUR 6,491, compared to the level at October 31, 2008. In addition, delivery qual ity was once again improved, and the reduction in financial resources tied up in working capital had an extremely positive impact on the financial result.

The Wolford Group will continue to determinedly pursue optimization measures in the second half of the fiscal year.

Financing activities and financial result

Financial liabilities declined by TEUR 5,144 during the reporting period compared to the first half of 2008/09, which can be attributed to the reduction in capital employed and the lower level of invest ments. Lower interest rates and the positive markto-market valuation of foreign exchange forward contracts resulted in an improvement of the finan cial result, which increased by TEUR 1,885.

Contingent liabilities

There have been no material changes in contin gent liabilities since the last reporting date.

Related party transactions

There are immaterial business relationships with related companies and individuals. All transactions are conducted at normal market prices, terms and conditions.

Significant events after the reporting date

There were no significant events requiring disclosure between the balance sheet date of October 31, 2009 and the publication of this interim financial report.

Report on the auditor's review

These consolidated interim financial statements were neither subject to a comprehensive audit nor to an auditor's review by chartered accountants.

Statement by the Executive Board pursuant to § 87 (1) Austrian Stock Exchange Act

The Executive Board of Wolford Aktiengesellschaft certifies, to the best of its knowledge, that the consolidated interim financial statements have been prepared in accordance with the Interna tional Financial Reporting Standards, in particular IAS 34 (Interim Financial Reporting), and present a fair and accurate picture of the profit, asset and financial position of the Wolford Group.

Bregenz, December 2009

The Executive Board signed: Holger Dahmen Peter Simma

More information is available at www.wolford.com / Investor Relations / Investor Information / Financial Reports / Interim Reports.

Definitions of financial indicators are contained in the latest annual report for the 2008/09 fiscal year.

Contacts

Holger Dahmen, Chairman of the Executive Board Peter Simma, Dep. Chairman of the Executive Board

WOLFORD AKTIENGESELLSCHAFT Wolfordstraße 1 6901 Bregenz on Lake Constance, Austria Phone: +43 (0) 5574/690-1268 Fax: +43 (0) 5574/690-1219 E-mail: Investor@wolford.com Website: www.wolford.com

Financial calendar	Friday	March 19, 2010	Results Q3 2009/10
	Friday	July 23, 2010	Press conference on results for 2009/10 fiscal year,
			9:30 a.m., Vienna
	Tuesday	September 14, 2010	Annual shareholder's meeting, 2:00 p.m., Bregenz
	Friday	September 17, 2010	Results Q1 2010/11
	Thursday	September 23, 2010	Ex-dividend date
	Thursday	September 30, 2010	Dividend payment date
	Friday	December 17, 2010	Results H1 2010/11

About this report

WOLFORD AKTIENGESELLSCHAFT

Wolfordstraße 1 6901 Bregenz on Lake Constance, Austria

For further information:

WOLFORD AKTIENGESELLSCHAFT

Almira Pusch Phone: +43 (0) 5574 690-1268 Fax: +43 (0) 5574 690-1219 E-mail: Investor@wolford.com Website: www.wolford.com

The report on the first half of 2009/10 in German or English can be ordered by calling +43 (0) 5574 690-1268. It is also available on the Internet at www.wolford.com.

Consulting:	Pleon Publico
	Public Relations & Lobbying
Layout:	www.gruenberg4.at
	Photography: Wolford Aktiengesellschaft
	Translation: Clifford Stevens
Printing:	Buchdruckerei Lustenau
	Millennium Park 10
Paper:	Hello Silk

© WOLFORD AKTIENGESELLSCHAFT

Disclaimer

The consolidated interim financial statements of the Wolford Group have been put together with the greatest possible diligence. All data has been carefully checked. Nevertheless, rounding off, compositor's or printing errors cannot be excluded.

This interim financial report has also been prepared in English. However, the definitive version is the German one. This interim financial report contains forward-looking statements which reflect the opinions and expectations of the Executive Board, and involve risks and uncertainties which could have a significant impact on actual circumstances and thus actual results. For this reason, readers are cautioned not to place undue reliance upon any forward-looking statements. Wolford Aktiengesellschaft does not undertake any obligation to publish any update or revision of the forward-looking statements contained in this report, unless otherwise required by law.