DGAP-Adhoc: Powerland AG: Uncertainties burden Powerland's business in Q2 2013

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.

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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: ir@powerland.ag

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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: ir@powerland.ag
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

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