DGAP-News: Powerland AG: EBIT increase of 41% exceeds sales growth of 30% in Q1-2011

DGAP-News: Powerland AG / Key word(s): Interim Report
Powerland AG: EBIT increase of 41% exceeds sales growth of 30% in
Q1-2011

24.05.2011 / 07:17

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– Sales grew by 30.0% to EUR 34.1 million

– Gross profit up 45.8% to EUR 15.1 million and gross profit margin
improved to 44.5%

– EBIT increased by 41.1% to EUR 10.0 million and EBIT margin raised to
29.4%

– Contract with Studio Turchi successfully extended until 30 June 2016

– Opening of the Marketing and Brand Operation Center in Guangzhou

– Successful IPO at the Frankfurt Stock Exchange on 11 April 2011

Frankfurt, May 24, 2011. Today Powerland AG, the Chinese manufacturer of
exclusive luxury handbags and leather goods listed on the Frankfurt Stock
Exchange since 11 April 2011 (Prime Standard, ISIN: DE000PLD5558), presents
its Quarterly Financial Report for the first quarter from 1 January to 31
March 2011.

The Companies revenues are generated from the sale of handbags for women,
trolley cases, wallets, bags for men, belts and accessories made of mainly
genuine leather in the Luxury Segment and backpacks, trolley bags, travel
bags, laptop bags, ice bags, tool bags and other products made of textile
and bags made of synthetic leather in the Casual Segment.

Group sales increased from EUR 26.1 million in Q1/2010 by EUR 7.9 million,
or 30.4%, to EUR 34.1 million in Q1/2011.

In the Luxury Segment sales increased from EUR 12.3 million by EUR 5.3
million, or 43.4%, to EUR 17.6 million in Q1/2011. This increase was mainly
driven by an expansion of Powerland–s retail network. The number of
Powerland stores increased from 89 as at 31 March 2010 to 112 as at 31
March 2011. Powerland–s gross profit margin in the Luxury Segment improved
to 48.4% in Q1/2011 after 43.9% in Q1/2010. The increase mainly resulted
from a higher unit selling price. EBIT of the Luxury Segment climbed by
57.6% to EUR 4.7 million (prior years– period: EUR 3.0 million and EBIT
margin improved to 26.8% (prior years– period: 24.3%).

In the Casual Segment sales increased from EUR 13.8 million in Q1/2010 by
EUR 2.6 million, or 18.8%, to EUR 16.4 million in Q1/2011. This increase
was mainly due to the recovery of the global export market for synthetic
leather products and the shifting to higher margin fabric based products.
In the Casual Segment Powerland–s gross profit margin increased to 40.3%,
after 36.1% in Q1/2010. The increase resulted mainly from a better product
mix and enhanced cost control. EBIT of the Casual Segment with EUR 5.3
million was 29.0% higher than in the same period of last year. EBIT margin
advanced to 32.2% (prior year– period: 29.6%).

As the increase of cost of sales of the Group, which comprise costs of
materials consumed, direct labor costs for personnel employed in
production, production overheads and costs of contract manufacturing, was
lower than sales growth, gross profit increased from EUR 10.4 million in
Q1/2010 by EUR 4.8 million, or 45.8%, to EUR 15.2 million in Q1/2011. As a
result gross profit margin improved from 39.8% in the prior years– period
to 44.5% in the first quarter 2011. EBIT rose from EUR 7.1 million by EUR
2.9 million, or 41.1%, to EUR 10,0 million and EBIT margin improved to
29.4% in the first three months of 2011, after 27.1% in prior years–
period.

Finance costs increased from EUR 0.1 million in Q1/2010 to EUR0.3 million
in Q1/2011 to finance increased working capital requirements and the
acquisition of properties in Guangzhou. Group income tax increased from EUR
0.9 million in Q1/2010 to EUR 2.5 million in Q1/2011 as the tax rebate of
50% Powerland Fujian was enjoying ended in the financial year 2010. Net
profit for the period increased by 18.3% to EUR 7.2 million resulting in a
net profit margin of 21.0%, after EUR 6.1 million in the prior years–
period. Earnings per share rose from 0.61 EUR in the first quarter 2010 to
0.72 EUR in the first quarter 2011 calculated on 10 million ordinary shares
outstanding as at 31 March 2011. The EPS figures for Q1/2010 and Q1/2011
would be EUR 0.40 and EUR 0.48 calculated on the basis of the 15 million
ordinary shares as at 11 April 2011, the day of the IPO.

Net working capital went up EUR 2.0 million to EUR 21.4 million in the
first quarter 2011 compared to previous years– quarter as a result of the
business expansion. The ratio of net working capital to revenue however
could be lowered from 74.3% in Q1/2010 to 62.9% by strict cost management
and despite some raw material price increases.

Equity increased from EUR 27.2 million as at 31 December 2010 by EUR 5.5
million, or 20.2%, to EUR 32.7 million as at 31 March 2011 due to an
increase in retained earnings of EUR 7.2 million thousand, partially offset
by exchange differences on translating foreign operations of EUR 1.7
million.

The successful IPO of Powerland AG at the Frankfurt Stock Exchange took
place on 11 April 2011. The first quotation reached EUR 16.50. The Company
received gross proceeds from the IPO of EUR 75.0 million for the new 5
million new shares issued. The total number of shares outstanding since
then amounts to 15 million. With the new capital raised, Powerland will
continue to build its– brand, expand in distribution network and vertical
integration.

As the overall sales and margin development is on track in the first
quarter of 2011, Powerland feels confident to meet the targets of the
financial projection for 2011 and achieve organic sales growth of more than
30% (in RMB) compared to 2010, although the growth rate of Chinese national
economy is expected to slow down, as a result from the macro economical
consolidation. With regard to EBIT Powerland expects to achieve a margin
that is comparable to the one of 2010, given that no substantial raw
material price increases occur in the Casual Segment.

Powerland will consistently pursue the initiatives launched to improve the
results, based on improving pricing power, more efficient working capital
and cash flow management, better cost control, an upgrade of product mix in
the Casual Segment and innovative products in the Luxury Segment.

Group key figures                   Q1           Q1   Change     Change

Overview (EUR--000)                2010         2011   absolute     in %

Revenue                         26,123       34,053      7,930    30.4%

thereof Luxury Segment          12,289       17,617      5,328    43.4%

thereof Casual Segment          13,834       16,436      2,602    18.8%

Gross profit                    10,384       15,144      4,760    45.8%

EBIT                             7,091       10,005      2,914    41.1%

Net profit for the period        6,054        7,161      1,107    18.3%

EPS in EUR                        0.61         0.72       0.11    18.0%

                            31/12/2010   31/03/2011

Total equity                    27,205       32,712      5,507    20.2%

Equity ratio                     37.5%        43.5%

For additional information, please contact:

Powerland AG
Investor Relations Phone: +49 (0)172 – 674 97 92
J̦rg Peters Fax: +49 (0)6196 Р777 99 66
Hauptstrasse 129 E-Mail: ir@powerland.ag
65760 Eschborn Internet: http://www.powerland.ag

Public Relations Phone: +49 (0)6196 – 776 41 10
Dr Torsten Tragl Fax: +49 (0)6196 – 776 41 22
Hauptstrasse 129 E-Mail: pr@powerland.ag
65760 Eschborn Internet: http://www.powerland.ag

End of Corporate News

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24.05.2011 Dissemination of a Corporate News, transmitted by DGAP – a
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Language: English
Company: Powerland AG
Westhafentower
60327 Frankfurt am Main
Deutschland
Phone: +49 172 – 67 49 792
Fax: +49 6196 – 777 99 66
E-mail: info@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 News DGAP News-Service
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125865 24.05.2011