Powerland AG / Key word(s): Half Year Results/Change in Forecast 10.09.2013 20:41 Dissemination of an Ad hoc announcement according to § 15 WpHG, transmitted by DGAP - a company of EQS Group AG. The issuer is solely responsible for the content of this announcement. --------------------------------------------------------------------------- Uncertainties burden Powerland's business in Q2 2013 - Group revenue decreased by 4.6% to EUR 90.3 million after six months1) - Luxury segment revenue increased by 7.2% compared to H1 2012 - EBIT down by more than 25% to EUR 12.1 million - Economic uncertainties and the high level of management involvement in connection with the delay of the Annual Financial Statements 2012 burden performance - Outlook for 2013 has to be lowered due to changed parameters and special effects, further long-term growth potential - Publication date for Annual Results 2012 still not confirmed; - Engagement of Ernst & Young for independent audit opinion Frankfurt/Main, 10 September 2013 - The slowed growth momentum in China, increased competition as well as a high level of management involvement in connection with the delayed publication of the Annual Financial Statements for the business year 2012 have put a strain on the operative performance of Powerland AG (ISIN DE000PLD5558 / Prime Standard), the leading Chinese manufacturer of handbags, leather goods and accessories, during the second quarter of 2013. Based on preliminary and unaudited figures, Group revenue decreased by 4.6% (in Renminbi 4.5%) to EUR 90.3 million (H1 2012: EUR 94.7 million) (please note the important notice (disclaimer) at the end of this press release). The intensified downward trend in the months April to June affected both business segments. Due to the successful expansion of the distribution network, the Luxury segment still showed a positive development in the first half of 2013, with revenue increasing by 7.2% to EUR 56.2 million (H1 2012: EUR 52.4 million). However, revenue in the second quarter declined by 6.2%. Revenue in the Casual segment decreased by 19.3% to EUR 34.1 million (H1 2012: EUR 42.3 million) in the first half of the year. Against the background of the changed parameters, Powerland was forced to accept lower unit selling prices in both business segments, especially in the second quarter. Accordingly and based on the additional expenditures in context with the delay of the Annual Financial Statements 2012, earnings before interest and taxes (EBIT) dropped significantly by 26.7% to EUR 12.1 million in the first half of the year (H1 2012: EUR 16.5 million). Net profit declined in a comparable dimension to EUR 8.6 million (H1 2012: EUR 11.5 million). Expansion of store capacities continues, though at a lower pace The exceptional effects for the management also resulted in delays of the expansion schedule of store capacities in the Luxury segment. In the first half of 2013, 12 shop openings were realized of which four took place in the second quarter, namely in the Chinese major cities Hefei, Ji'nan, Guiyang and Fuzhou. As in 2012, Powerland is focusing on profitable activities in high-quality locations. Accordingly three poor-performing stores have been shut down in the second quarter. As a result, the total number of stores increased from 180 at the year-end 2012 to 189 at 30 June 2013, of which 36 are self-operated. In the second half of the year, the Company intends to open additional shops to increase the total number of stores to approximately 200. Against the background of the changed parameters, the existing targets for the expansion of store capacities had to be reduced. Nevertheless, a significant further expansion of self-operated stores is still intended. Continued high growth potential - Outlook for 2013 has to be adjusted due to changed parameters and special effects The Chinese economy is expected to continue to develop well in the coming years, although less dynamically. The Company should benefit from the growing middle class in China and the current government policy designed to increase domestic consumption. New store openings and the continuing extensive brand-building measures will increasingly contribute positively to the growth of Powerland in the following years after the current difficult phase will have ended. The management has revised the outlook for 2013 according to the changed parameters and expects a revenue target which will be slightly below the previous year's level and earnings below last years' figure. Publication date for Annual Results 2012 still not confirmed As communicated in July, Powerland's statutory auditor BDO AG Wirtschaftsprüfungsgesellschaft denied the Audit Opinion for the unconsolidated and consolidated financial statements for 2012 based on certain factors hindering the audit (so-called 'Prüfungshemmnisse'). Management Board and Supervisory Board of Powerland AG have commented on this and have engaged Ernst & Young as an independent auditor to review the above-mentioned factors hindering the audit and carry out a detailed assessment in order to decide on measures to be taken. This audit has started and Powerland will inform the capital markets immediately after the audit is concluded and the results are analysed about the next steps. Powerland is currently in the process of considerably improving the internal structures in finance and controlling. In this context, the new chief financial officer (CFO) YaChen Jiang took over responsibility in mid-July. In addition, the Company has decided to initiate a Share Buyback Programme and buy back up to 1,500,000 Powerland AG shares through the stock exchange starting 25 July 2013 until the end of 2013. Important notice (disclaimer): All financial information for the first half of 2013 is preliminary and unaudited. Please refer to the ad-hoc notices published by Powerland AG on 26 March, 2 July and 15 July 2013 regarding the denial of an audit opinion for the business year 2012. The factors hindering our statutory auditor from issuing an audit opinion as set out in our ad-hoc notice dated 15 July 2013 could ultimately also make it necessary to revise the financial information set out herein. Investors are therefore advised to consider the financial information contained in this release with great caution. The full reports of the first half 2013 as well as for the first quarter 2013 will be published on the internet pages of the Company (www.powerland.ag) on 11 September 2013. ___________________________________ 1) All comparative figures in this press release are year-on-year comparisons with the same period in the previous year 2012. For more information, please contact: Powerland AG Jiangbin He Investor Relations Director Lyoner Strasse 14 60528 Frankfurt am Main Germany Phone: +49 (0) 69 66 554 - 459 Fax: +49 (0) 69 66 554 - 276 E-mail: [email protected] 10.09.2013 DGAP's Distribution Services include Regulatory Announcements, Financial/Corporate News and Press Releases. Media archive at www.dgap-medientreff.de and www.dgap.de --------------------------------------------------------------------------- Language: English Company: Powerland AG Lyoner Straße 14 60528 Frankfurt am Main Germany Phone: +49 69 - 66554-459 Fax: +49 69 - 66554-276 E-mail: [email protected] Internet: www.powerland.ag ISIN: DE000PLD5558 WKN: PLD555 Listed: Regulierter Markt in Frankfurt (Prime Standard); Freiverkehr in Berlin, Düsseldorf, Hamburg, München, Stuttgart End of Announcement DGAP News-Service ---------------------------------------------------------------------------