Powerland continues to show significant improvements in its Luxury segment

Group revenue in the second quarter 2014 increased by 29.3% to EUR 55.2 million, recording an all-time quarterly high;

Luxury segment recorded best quarterly performance since inception: Luxury revenues increased by 37.1% to EUR 35.4 million;

Group EBIT and net profit with EUR 7.7 million and EUR 4.7 million more than tripled;

Store expansion program: Powerland opened its first store outside mainland China in Hong Kong International Airport;

Positive net cash flow from operating activities and free cash flow in H1 2014;

Share buyback program extended beyond 2014;

Outlook for 2014 confirmed

Frankfurt/Main, 29 August 2014 - Based on preliminary and unaudited figures, Group revenues of Powerland (ISIN DE000PLD5558 / Prime Standard), the leading Chinese manufacturer of handbags, leather goods and accessories, increased in the first half

2014 to EUR 94.5 million (H1 2013: EUR 90.4 million). This was mainly due to a very strong contribution of the Luxury segment particularly in the second quarter 2014 when the segment showed its best quarterly performance since inception with revenues up by
37.1% yoy to EUR 35.4 million. On a half year basis, revenue in the Luxury segment increased from EUR 56.2 million in H1 2013 by 16.9%, to EUR 65.7 million in H1 2014. The increases were mainly driven by an expansion of Powerland's retail network as well as improvements regarding the single-store performance. Revenues in the Casual segment increased by 17.4%, to EUR 19.8 million in Q2 2014. On a half year basis, revenue in the Casual segment decreased from EUR 34.1 million in H1 2013 by 15.7% to EUR 28.8 million in H1 2014. These decreases in H1 2014 were mainly due to the restructuring practice in the fabric production facilities. The restructuring is expected to be completed in the third quarter of 2014 and will lead to a heavier focus on the synthetic leather or genuine leather within the facilities. According to the communicated strategy, sales contributions from the Luxury segment continued to increase from 62% in H1 2013
to 70% in H1 2014.

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Group earnings before interest and taxes (EBIT) increased significantly from EUR 1.7 in Q2 2013 to EUR 7.7 million in Q2 2014. This strong increase was due to the extraordinary EBIT increase of the Luxury segment where EBIT increased from EUR 0.5 million in Q2 2013 to EUR 6.6 million in Q2 2014, achieving an EBIT margin of 18.7% (after 2.0% in Q2 2013). This upswing was achieved mainly due to the larger revenue basis. In addition, selling & distribution expenses were reduced. This development underlines Powerland's success in its strategic focus on the Luxury segment for future profitable growth.
On a half year basis, Group EBIT decreased from EUR 12.1 million in H1 2013 by 5.8%, to EUR 11.4 million in H1 2014. The decrease in H1 2014 mainly resulted from the decline in sales and gross profit from Casual segment whose fabric facilities were under restructuring.
Consequently, net profit increased from EUR 1.0 million in Q2 2013 to EUR 4.7 million in
Q2 2014. Net profit for the first half year of Powerland Group decreased from EUR 8.6 million in H1 2013 to EUR 8.1 million in H1 2014.

in EUR million

(unaudited)

Q2 2014

Q2 2013

Change

H1 2014

H1 2013

Change

Revenue

55.2

42.7

29.3%

94.5

90.4

4.6%

Luxury

35.4

25.9

37.1%

65.7

56.2

16.9%

Casual

19.8

16.8

17.4%

28.8

34.1

-15.7%

Luxury %

64.2

60.1

69.5

62.2

Casual %

35.8

39.9

30.5

37.3

Gross profit

18.6

14.2

30.5%

33.0

34.6

-4.5%

Luxury

15.5

11.1

40.4%

28.2

26.8

5.0%

Casual

3.1

3.2

-3.9%

4.8

7.8

-37.7%

EBIT

7.7

1.7

349.4%

11.4

12.1

-5.8%

Luxury

6.6

0.5

1,148%

10.2

8.3

23.7%

Casual

1.1

1.2

-10.4%

1.2

3.9

-68.8%

EBIT margin

13.9%

4.0%

12.1%

13.4%

Luxury

18.7%

2.0%

15.5%

14.7%

Casual

5.3%

7.0%

4.2%

11.3%

Net profit

4.7

1.0

377.4%

8.1

8.6

-5.3%

Net cash flow from operating activities has increased from EUR -38.5 million in the first
half 2013 to EUR 2.1 million in the first half 2014. This increase was mainly due to a

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more effective management over working capital in H1 2014. Net debt was slightly reduced from EUR 44.3 million to EUR 44.0 million. Cash and cash equivalents increased from EUR 15.4 million as at 31 December 2013 to EUR 16.5 million at the end of the reporting period.

Consequent optimization of store network

To remain competitive in the challenging retail market, Powerland is making constant efforts to optimize its distribution network. In the second quarter of 2014, Powerland closed down nine underperforming stores while six more stores were newly opened. Powerland maintains close monitoring procedures over the nationwide store performance and will coordinate a further store consolidation if any store fails to meet the requirements. Moreover, the product offering at the terminal stores has been enriched to stimulate the single-store performance. Meanwhile, Powerland continues to expand in a cautious manner in the face of a fast-changing environment. In July 2014, Powerland opened its first store outside mainland China in Hong Kong International Airport. The Hong Kong store is part of the plan to boost Powerland's international reputation and prepare Powerland further for a more extensive business expansion.
As at 30 June 2014, the Company's Luxury segment products were sold in a total of 221 stores, while 177 stores (153 as at 30 June 2013) run by external distributors and 44 stores (36 as at 30 June 2013) run by the Company, mainly in tier 1 and tier 2 cities in China.

Outlook for 2014 confirmed

The Management Board confirms its already communicated cautiously optimistic outlook for 2014. Powerland expects to outperform what has been achieved in 2013.
In the second half of 2014, Powerland will focus more on the management of its existing distribution network. With ongoing efforts in adjusting underperforming stores, Powerland will expand in a more prudent manner in the rest of the year. Meanwhile, Powerland intends to further improve its single-store performance by diversifying its product offering and moderate point-of-sales promotion. Financial wise, Powerland will continue its efforts in active working capital management as well as strict budget control.
The full report of the first quarter 2014 is published on the Company's website
(www.powerland.ag).

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For more 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: ir@powerland.ag
Home: http://www.powerland.ag

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