DGAP-News: Powerland AG / Key word(s): Final Results Powerland AG: Powerland reports revenue growth and publishes audited Annual Report for full year 2014 29.05.2015 / 11:35 --------------------------------------------------------------------- Powerland reports revenue growth and publishes audited Annual Report for full year 2014 - Full year 2014 revenue grew by 4.8% to EUR 175.1 million; EBIT down 13.4% to EUR 10.7 million - Product mix continues to improve: Luxury segment contributes 68.9% to Group revenue in full year 2014 (FY 2013: 62.4%) - Further optimization of distribution network - Increased equity ratio of 78.5% as at 31 December 2014 (68.2% as at 31 December 2013) - Conservative outlook for 2015 Frankfurt/Main, 29 May 2015 - Powerland AG (ISIN DE000PLD5558 / Prime Standard), Powerland AG (ISIN DE000PLD5558 / Prime Standard), the leading Chinese company of premium handbags, leather goods and accessories, today presents the Annual Report for the financial year 2014, with an unqualified audit opinion and adoption by the Supervisory Board. 2014 remained a challenging year for Powerland. Although China is gradually migrating to a consumption-driven economy, the general economic slow-down had an adverse impact on the consumer market. In particular, China's luxury goods market had unprecedentedly contracted by one per cent on a year-on-year basis. In this difficult environment, Powerland achieved revenues of EUR 175.1 million in full year 2014, up 4.8% from EUR 167.1 million in 2013. This plus was driven by an increase in sales of products from the Luxury segment of approximately 15.8%. Over the course of 2014, Powerland successfully continued its strategy to migrate towards its high-profit-margin segment: The Luxury segment now contributes 68.9% of revenues to the Company, in contrast to 62.4% for 2013. In addition, the Luxury segment proves to be highly profitable: During the fourth quarter 2014, segment EBIT significantly increased from EUR 0.3 million in Q4 2013 to EUR 3.4 million in Q4 2014.

in EUR million                     2013           2014           Change (%)
Revenue                            167.1          175.1          4.8%
Luxury                             104.2          120.7          15.8%
Casual                             62.9           54.4           -13.5%
Luxury %                           62%            69%
Casual %                           38%            31%
Gross profit                       60.8           60.6           -0.4%
EBIT1                              12.3           10.7           -13.4%
Net profit                         5.4            3.8            -30.3%
Earnings per share in EUR2         0.36           0.25           -30.6%

1 EBIT represents earnings before net finance cost and tax 2 The computation of earnings per share is based on net profit and 15 million shares. Continued focus on quality of Powerland's distribution network In 2014, Powerland continued the review of the sales and brand performance of its existing stores and as a consequence downsized the distribution network by underperforming stores. In the meantime, some store locations were adjusted from higher to lower floors to enhance the brand visibility and boost single-store performance in return. In addition, Powerland has implemented more stringent criteria for new store openings as the brand name is getting more recognized and customer appeal has increased. In line with this strategy, Powerland opened the first store outside mainland China at Hong Kong airport, as well as its first lifestyle store in Putian and the first three online stores at jingdong.com, tmall.com and vip.com. In total, the number of Powerland stores decreased from 214 as at 1 January 2014 to 200 as at 31 December 2014. 36 stores were newly opened in 2014 while 50 stores were closed during the same period. Out of the 200 existing stores, 163 are distributor-operated stores, 34 self-operated stores and 3 online stores. Earnings situation Despite the increased revenue, gross profit of the Company decreased slightly from EUR 60.8 million (FY 2013) to EUR 60.6 million (FY 2014) mainly due to the gross profit decrease of 29.1% in the Casual segment. Due to a more efficient management of distributors and a more efficient allocation of the marketing budget, full year SG&A expenses decreased from EUR 33.8 million by 13.2%, to EUR 29.3 million. Meanwhile, Powerland's administrative and other expenses increased from EUR 15.0 million in 2013 by 40.3%, to EUR 21.0 million in 2014 mainly due to increased provisions for trade receivables. As a result, full year operating earnings before interest and taxes (EBIT) decreased from EUR 12.3 million by 13.4%, to EUR 10.7 million and EBIT margin decreased from 7.4% in 2013 to 6.1% in 2014. Due to higher financial expenses, profit before tax fell from EUR 9.6 million in 2013 by 19.8% to EUR 7.7 million in 2014. Increased equity ratio Equity increased from EUR 151.3 million as at 31 December 2013 by 12.8% to EUR 170.6 million as at 31 December 2014 mainly resulting from the profit generated in 2014. The equity ratio increased from 68.2% as at 31 December 2013 to 78.5% as at 31 December 2014. Prior-year figures have been adjusted in accordance with IAS 8 (please refer to note 4 in the Annual Report). Conservative outlook for 2015 During China's annual parliamentary meeting in March 2015, an economic growth target at "around 7 per cent" was announced for 2015. This signifies the slowest expansion rate since 25 years. It was also admitted that China faced greater economic headwinds this year than in 2014. In this context, the Company holds a conservative outlook about 2015. Group revenue is expected to decline to approximately EUR 112 million in 2015 due to weakening demand from both the domestic and the overseas market. In response, Powerland plans to deepen the restructuring of its nationwide distribution network and contract self-operated stores to further reduce store maintenance cost. Furthermore, sales & distribution channels of the Luxury segment will be further diversified to offset the impact from the decelerating retail market, but the effect of the strategic transition is yet to be testified. In addition, the Company will continue to pursue austerity in the management of operating expenses. However, due to the adverse market conditions faced by our distribution partners, the trade receivable position is subject to higher provision adjustment. As a result, the Company predicts that Group EBIT of 2015 will decline to approximately EUR 6 million and Group net profit is exposed to risk of net loss. To improve liquidity, the Company has no major capital expenditure plan in 2015 and will have exhaustive efforts to reduce the level of working capital. For the annual report for full year 2014 and further information about the Company please refer to: www.powerland.ag For further information, please contact: Powerland AG c/o GFD - Gesellschaft für Finanzkommunikation mbH Fellnerstrasse 7-9 60322 Frankfurt am Main Germany Phone: +49 (0) 69 66 554 - 459 Fax: +49 (0) 69 66 554 - 276 E-mail: [email protected] Home: http://www.powerland.ag --------------------------------------------------------------------- 29.05.2015 Dissemination of a Corporate News, transmitted by DGAP - a service of EQS Group AG. The issuer is solely responsible for the content of this announcement. The DGAP 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 c/o GFD mbH, Fellnerstr. 7-9 60322 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: Regulated Market in Frankfurt (Prime Standard); Regulated Unofficial Market in Berlin, Dusseldorf, Hamburg, Munich, Stuttgart End of News DGAP News-Service --------------------------------------------------------------------- 363191 29.05.2015