Revenue million % EBITDA million % EBITDA margin % 0.3 % 2.1 % -1.8 % %

Transcription

1 REPORT ON THE FIRST HALF OF 2012

2 KEYFIGURES 2 ZZ KEYFIGURES Income statement H H Change absolute Change relative Revenue million % EBITDA million % EBITDA margin % 0.3 % 2.1 % -1.8 % % EBIT million % EBIT margin % -2.9 % -1.0 % -1.9 % % Consolidated profi t for the year million % Earnings per share H H Change absolute Change relative Earnings per share % Net assets 06/30/ /31/2011 Change absolute Change relative Total assets million % Equity million % Equity ratio % 33.5 % 39.9 % Debt equity ratio Financial position H H Change absolute Change relative Net cash fl ows from operating activities million % Net cash fl ows from investing activities million % Free cash fl ow million % Employees 06/30/ /31/2011 Change absolute Change relative Number of employees as of June 30 number 4,289 4, % Stores 06/30/ /31/2011 Change absolute Change relative Total number of stores number %

3 INTERIM GROUP MANAGEMENT REPORT AS AT JUNE 30, ECONOMIC SITUATION AND BUSINESS DEVELOPMENT ZZ ZZ INTERIM GROUP MANAGEMENT REPORT AS AT JUNE 30, 2012 HIGHLIGHTS + Revenue amounted to million in H1 + New stores spur 7.5 percent growth + Unfavourable industry developments pressure earnings + New Executive Board member responsible for worldwide direct procurement + Considevable improvement free cashfl ow ECONOMIC SITUATION AND BUSINESS DEVELOPMENT Although the International Monetary Fund (IMF) recognises ever greater economic risks for the global economy and the euro crisis is continues to curb growth in Europe, the German economy has by and large bucked this trend thus far. Against this backdrop, the nearly one percent growth in gross domestic product (GDP) forecasted for 2012 can certainly be viewed as encouraging. This highly signifi cant to Adler Modemärkte AG, given that the Company generates more than three-fourths of its revenue in Germany. In addition, ADLER s existing stores in Austria and Luxembourg are not located in markets already gripped by the crisis in Europe. Exchange indexes, which gauge consumer spending and confi dence, also remained stable during the fi rst half of According to these indexes, the rampant government debt and euro crises did not curb German consumers private spending during this period, either. According to the GfK market research institute, the consumer climate is also expected to remain upbeat during the summer months. However, over-the-counter clothing and textile retail trade only benefi ted from this generally positive consumer sentiment to a limited extent during the fi rst half of The low customer frequency on sales fl oors already observed in the fi rst quarter continued during the remaining reporting period. According to the TextilWirtschaft industry benchmark test panel, of the thirteen weeks in the second quarter, revenue was up in only two weeks in May and two weeks in June. Despite relatively lower revenue during the same period of the previous year, each of the remaining nine weeks ended in the red, with the worst week down 15% year-on-year. Observers identifi ed extremely inclement weather as the root of this generally disappointing trend, as well as the fact that online clothing retail sales concepts continued to gain ground.

4 SALES PERFORMANCE AND ANALYSIS 4 ZZ SALES PERFORMANCE AND ANALYSIS Due to seasonal factors, ADLER s total sales and average price per article were lower during the fi rst half of the year than in the following fashion season, where fall and winter merchandise is higher priced. This was exacerbated by the unfavourable and disappointing industry performance during the second quarter described above. Nor were ADLER s stores completely immune to this trend. In particular, a very rainy April was extremely disappointing, generating considerably less sales year-on-year (-17%). However, ADLER recorded considerable revenue growth in both May (8%) and June (16%), thus still closing out the second quarter with slightly positive growth overall. In total, the Company s revenue under IFRS increased by 16.1 million to million (previous year: million) during the fi rst half of 2012, corresponding to a growth rate of 7.5%. With revenue increasing by 9.3% to million (previous year: million), growth in ADLER s core market, Germany, outpaced growth in Austria, where the 0.8% increase to 36.9 million in income only barely exceeded the previous year s fi gure ( 36.6 million). Revenue in Luxembourg ( 7.3 million) remained on par with the previous year ( 7.4 million). The recently opened new stores contributed exclusively to the growth during the reporting period. Including the acquired and subsequently rebranded Wehmeyer stores, the full-year 2011 saw the addition of 29 new stores; a further seven stores were added in the fi rst quarter of May saw the opening of another store in the city of Schwäbisch Gmünd. Sales volumes at the existing stores (like-for-like revenue) were not completely maintained and fell by 4.5%, primarily as a result of the disappointing month of April. The Wehmeyer stores acquired by ADLER during insolvency proceedings last fall had not yet contributed to revenue and earnings to the extent expected. The Company immediately sold two stores which did not fi t with the ADLER portfolio, and a third was sold as recently as early July. Despite lengthy discussions, ADLER did not succeed in fi nding suitable prospective buyers for four additional locations in Aachen, Düren, Mülheim-Kärlich and Siegburg. Consequently, these four stores have either since been closed or are currently being phased out. The remaining eleven core stores from the Wehmeyer purchase were the right fi t for the current portfolio.

5 FINANCIAL PERFORMANCE 5 QUARTERLY COMPARISON ZZ FINANCIAL PERFORMANCE The ADLER Group s material expenses for the reporting period were considerably higher than the previous year s fi gure ( million) due to increased sales performance ( million). Gross trading profi t (consolidated revenue less material expenses) of million also exceeded the previous year ( million). The gross profi t margin (50.1%) declined by one percentage point year-on-year (51.1%). Personnel expenses of 43.9 million during the fi rst half of 2012 (previous year: 38.8 million) were in line with ADLER s growth strategy. The personnel expenses ratio thus amounted to 18.9% during the fi rst half of the year (previous year: 17.9%). Other operating expenses rose slightly in comparison and increased by only 3.3 million to 75.6 million (previous year: 72.3 million), and thus amounted to less than one third of revenue (32.5%; previous year: 33.4%). ADLER s Executive Board considers earnings before interest, taxes, depreciation and amortisation (EBITDA) to be the most important performance indicator for income. Compared to the same quarter in the previous year ( 4.6 million), EBITDA decreased by 3.9 million to 0.7 million during the reporting period. The EBITDA ratio thus decreased from 2.1% to 0.3%. This decline resulted from the disappointing month of April, the somewhat low customer frequency during the fi rst half of the year overall, the customary weak profi ts generated during the start-up phase of those stores opened for the fi rst time in 2011 and 2012, and the associated increased personnel expenses and other operating expenses. Write-downs totalled 7.4 million and, due to the increased number of stores, were higher than the previous year s fi gure of 6.8 million. Earnings before interest and taxes (EBIT) amounted to -6.6 million (previous year: -2.2 million). The fi nancial result ( -1.9 million) was just under the previous year s total ( -1.7 million). Earnings before taxes (EBT) totalled -8.5 million (previous year: -3.9 million). The consolidated loss for the period after taxes amounted to 7.1 million (previous year: 2.9 million), which was equal to the net income attributable to the shareholders of Adler Modemärkte AG. Adjusted earnings per share amounted to (based on 18,115,663 non-par value shares) for H (H1 2011: -0.18). Calculated for the second quarter only, adjusted earnings per share totalled 0.14 (second quarter of the previous year: 0.37). No shares had yet been issued in the comparable period; rather there was just one share in existence. QUARTERLY COMPARISON The primary factor impacting Q was the disappointing month of April described above, which was disappointing for the entire industry. Nonetheless, at million, the Company s revenue slightly exceeded the previous year s fi gure of million by 1.5 million (+1.2%). This growth was also attributable to the new store openings. Accordingly, material costs ( 59.2 million) were on par with the previous year ( 58.5 million); this was refl ected by an unchanged gross profi t margin of (53.0%). Personnel expenses and other operating expenses represented the main differences in a quarterly comparison. Personnel expenses increased by 2.3 million to 21.8 million year-on-year, whereas other operating expenses rose by 1.1 million to currently 38.9 million in Q The personnel expenses ratio rose from 15.7% to 17.3% and other operating expenses increased from 30.3% to 30.9%. These increased expenses were due exclusively to the newly opened stores in fall 2011 and spring 2012 as well as the integration of the Wehmeyer stores starting in September This development caused EBITDA to fall from 11.2 million to 8.4 million, whereas depreciation and amortisation which had remained virtually unchanged reduced EBIT from 7.8 million to 4.6 million.

6 FINANCIAL POSITION AND CASH FLOWS 6 CASH FLOW AND CASH FLOW MANAGEMENT ZZ FINANCIAL POSITION AND CASH FLOWS The ADLER Group s total assets amounted to million as at June 30, Co pared to the period ended December 31, 2011 ( million), this was an increase of 1.6 million. Inventories during the same period fell slightly from 73.5 million (December 31, 2011) to 72.7 million. Intangible assets rose by 1.1 million from 3.5 million to 4.6 million. As a result of renewed fi nance lease arrangements, property, plant and equipment grew by 9.3 million to 60.0 million (December 31, 2011: 50.7 million). Depreciation and amortisation in the amount 7.4 million was offset by investments of 5.3 million. Equity fell to 63.1 million (December 31, 2011: 74.6 million), and was thus down by 11.5 million; this was attributable to the consolidated loss for the period and the share buyback programme which has since been concluded. Accordingly, as at the reporting date, the equity ratio decreased from 39.9% (December 31, 2011) to 33.5%, which is still an extremely solid ratio. At the end of the fi rst half of the year, the debt ratio rose from 1.51 (December 31, 2011) to This increase is attributable primarily to the increased obligations from fi nance leases and newly opened storesas part of the Company s expansion. ADLER s working capital (inventories plus trade receivables less trade payables) is based on the pure retail business mainly from inventories less accounts payable to suppliers. As at June 30, 2012, working capital rose from 44.1 million (December 31, 2011) to 42.3 million. CASH FLOW AND CASH FLOW MANAGEMENT The capital increase as part of the IPO led to a one-off gross cash infl ow of 26.5 million in the previous year. There was no such item in 2012, which complicates the comparison of the fi gures. Net cash fl ows from operating activities were considerably higher year-on-year, due primarily to an increase in other non-cash expenses of 14.4 million (previous year: 10.3 million) and a slight decrease in inventories of 0.2 million (previous year: -6.4 million). During the reporting period, net cash fl ows from operating activities amounted to 5.2 million and were considerably higher than in the previous year (net outfl ow of 2.8 million). Net cash fl ows from investing activities amounted to -5.3 million (previous year: -4.0 million). Thus, free cash fl ow amounted to -0.1 million (previous year: -6.8 million). Net cash fl ows from fi nancing activities were impacted in the previous year primarily by the capital increase in the context of the IPO ( 26.5 million) and in the fi rst half of 2012 by the share buyback programme ( 4.3 million). This resulted in a net cash outfl ow from fi nancing activities of 10.6 million (previous year: net cash infl ow of 18.4 million). As a consequence, cash and cash equivalents in the reporting period decreased by a total of 10.7 million (previous year: increase of 11.6 million).

7 INVESTMENT 7 EMPLOYEES ZZ RISK REPORT JFK INVESTMENT The ADLER Group s investments during H totalled 5.3 million (previous year: 4.0 million). Of that amount, 3.7 million (previous year: 3.2 million) was attributable to property, plant and equipment (operating and offi ce equipment) and 1.6 million (previous year: 0.8 million) to intangible assets. Investments for the fi rst half of the year include new openings in Peine, Kerpen, Lünen, Rastatt, Kaufbeuren, Waghäusel, Gmunden (Austria) and Schwäbisch Gmünd as well as any investments in further developing ADLER s online shops. The Company was able to more effectively combine its e-commerce activities and brickand- mortar retail business through the relaunch of its improved online shop, thus laying a solid foundation for the continued growth of online sales. EMPLOYEES As at June 30, 2012, the ADLER Group had 4,289 employees. Compared to the same period in the previous year, this represents an increase of 233 employees, or 5.75%. Measured in full-time equivalents, ADLER had 2,708.4 employees as compared to the 2,500.7 employees in the previous year (+8.3%) Both fi gures refl ect the increase in the number of ADLER stores as part of the expansion project. The increase in the number of stores was the result of new openings as well as the acquisition and rebranding of the acquired Wehmeyer stores. As a company that takes on trainees, ADLER also assumes social responsibility for young people and employed a total of 256 trainees (all apprenticeship years) at the Group as at the end of the fi rst half of the year. RISK REPORT Opportunities and risks may impact business development positively or negatively. The Company employs a risk management and control system to identify in advance and effectively manage the relevant opportunities and risks. ADLER s risk management is an integral part of all of the Group s decisions and business processes and thus supports the long-term protection of our Company s future success. Against this background, the Group risks are fi nite and manageable. Currently, there are no material risks that jeopardise the Group s long-term fi nancial position, fi nancial performance or cash fl ows. We have detailed the specifi c risks and opportunities that could have material longterm effects on our fi nancial position, fi nancial performance or cash fl ows, as well as the structure of our risk management system in our report on the 2011 fi nancial year.

8 FORECAST 8 PERSONNEL MATTERS ZZ EVENTS AFTER THE BALANCE SHEET DATE ZZ JFK FORECAST Based on the development of revenue in the fi rst six months of 2012, the Company continues to consider growth in the high single-digit to low double-digit percentage range possible for fi nancial year Despite the fact that EBITDA declined yearon-year during the fi rst six months, the Company expects EBITDA to improve analogously to revenue by the end of the year. This forecast is based on theassumption that measures introduced to increase the gross profi t and reduce costs will take hold and that the closure and sale of the remaining Wehmeyer stores will contribute to earnings as anticipated during the second half of the year. Furthermore, the Company expects the economic environment in which the ADLER stores operate to continue to remain stable and that there will be no further declines in demand as in there were in April. PERSONNEL MATTERS The Group s Executive Board was expanded during the reporting period. In its meeting on May 9, 2012, the Supervisory Board appointed Manuela Kraft, a procurement specialist, as the new Executive Board member responsible for procurement, supply chain management and logistics with effect from May 21, By virtue of this appointment, her primary objective is to expand the Company s direct procurement of goods in Asia and thus increasing the gross profi t margin. The Executive Board of Adler Modemärkte AG now comprises four members. EVENTS AFTER THE BALANCE SHEET DATE There were no events of material signifi cance for the ADLER Group after June 30, 2012 and prior to the publication of this interim Group management report.

9 ADLER SHARE PRICE DEVELOPMENT 9 ZZ JFK ADLER SHARE PRICE DEVELOPMENT As at June 30, 2012, the price of ADLER Group shares was The moving average in the second quarter was Compared to the Q1 closing date ( 6.30), this therefore represents a decrease of 0.85, or approximately 13.5%. Although this ADLER share price is still far above the historical low of 3.88 as at the initial listing date, the Executive Board nonetheless believes that this sceptical investor sentiment neither refl ects the positive recommendations of many analysts nor the current consumer-friendly climate in Germany. This valuation was too low from the perspective of the Company, and the Executive Board consequently took advantage of this circumstance to continue the share buyback programme (which was started in the fi rst quarter) through to the end of the second quarter. In total, the Company acquired exactly 762,161 own shares on the open market as at June 30, 2012 under the buyback programme. This corresponds to a voting interest in share capital of 4.12%. The share buyback programme was ended as at June 30, No decisions about how to use the shares have yet been made. As a way to continue to improve the climate for potential investors, the Executive Board of Adler Modemärkte AG provided investors with detailed information about the Company and its strategies in the second quarter as well. The ongoing positive reports and recommendations to purchase ADLER shares show that these activities were well received. The Executive Board is of the opinion that the current ADLER share price adequately refl ects neither the value nor the potential of the Company.

10 CONSOLIDATED INCOME STATEMENT 10 CONSOLIDATED INCOME STATEMENT FOR THE PERIOD FROM JANUARY 1 TO JUNE 30, 2012 k Jan. 1, - Jun. 30, 2012 Jan. 1, - Jun. 30, 2011 Revenue 232, ,459 Other operating income 3,670 5,046 Material expenses -116, ,820 Personnel expenses -43,879-38,825 Other operating expenses -75,633-72,268 EBITDA 712 4,592 Depreciation and amortisation -7,361-6,766 EBIT -6,649-2,174 Other interest and similar income Interest and similar expenses -1,938-1,785 Financial result -1,881-1,741 Net income from operations -8,530-3,915 Income taxes 1,475 1,015 Consolidated loss for the period (-) -7,055-2,900 Earnings per share* Basic in Diluted in * Earnings per share were calculated on the basis of the weighted average of existing shares in the period from January 1 to June 30, 2012 in the amount of 18,115,663 shares. 16,087,143 shares were taken into account in the previous year (reorganisation period) from March 17 to June 30, 2011.

11 CONSOLIDATED INCOME STATEMENT 11 CONSOLIDATED INCOME STATEMENT FOR THE PERIOD FROM APRIL 1 TO JUNE 30, 2012 k Apr. 1, - Jun. 30, 2012 Apr. 1, - Jun. 30, 2011 Revenue 126, ,553 Other operating income 2,174 2,445 Material expenses -59,215-58,499 Personnel expenses -21,758-19,539 Other operating expenses -38,913-37,766 EBITDA 8,377 11,194 Depreciation and amortisation -3,750-3,406 EBIT 4,627 7,788 Other interest and similar income 9 24 Interest and similar expenses -1, Financial result -1, Net income from operations 3,574 6,941 Income taxes -1, Consolidated profit for the period (+) 2,495 5,950 Earnings per share* Basic in Diluted in * Earnings per share were calculated on the basis of the weighted average of existing shares in the period from April 1 to June 30, 2012 in the amount of 17,708,432 shares. 16,087,143 shares were taken into account in the previous year (reorganisation period) from March 17 to June 30, 2011.

12 CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME 12 CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME FOR THE PERIOD FROM JANUARY 1 TO JUNE 30, 2012 k Jan. 1, - Jun. 30, 2012 Jan. 1, - Jun. 30, 2011 Consolidated loss for the period (-) -7,055-2,900 Other comprehensive income 8-2 Change in fair value of available-for-sale fi nancial instruments 0 0 Other comprehensive income 8-2 Consolidated total comprehensive income -7,047-2,902 FOR THE PERIOD FROM APRIL 1 TO JUNE 30, 2012 k Apr. 1, - Jun. 30, 2012 Apr. 1, - Jun. 30, 2011 Consolidated profit for the period (+) 2,495 5,950 Other comprehensive income 8-2 Change in fair value of available-for-sale fi nancial instruments 0 0 Other comprehensive income 8-2 Consolidated total comprehensive income 2,503 5,948

13 CONSOLIDATED STATEMENT OF FINANCIAL POSITION 13 CONSOLIDATED STATEMENT OF FINANCIAL POSITION AS AT JUNE 30, 2012 ASSETS in k Jun. 30, 2012 Dec. 31, 2011 Non-current assets Intangible assets 4,617 3,503 Property, plant and equipment 59,990 50,654 Investment property 2,002 3,374 Other non-current receivables and assets Deferred tax assets 10,279 7,932 Total non-current assets 77,405 66,397 Current assets Inventories 72,661 73,528 Trade receivables 50 1,153 Other current receivables and assets 8,976 5,786 Available-for -sale fi nancial assets Cash and cash equivalents 29,340 40,024 Total current assets 111, ,737 Total ASSETS 188, ,134

14 CONSOLIDATED STATEMENT OF FINANCIAL POSITION 14 CONSOLIDATED STATEMENT OF FINANCIAL POSITION AS AT JUNE 30, 2012 EQUITY and LIABILITIES in k Jun. 30, 2012 Dec. 31, 2011 EQUITY Capital and reserves Subscribed capital 17,748 18,510 Capital reserves 119, ,521 Accumulated other comprehensive income Net accumulated losses -74,491-67,436 Total equity 63,121 74,580 LIABILITIES Non-current liabilities Provisions for pensions and similar obligations 4,191 4,276 Other non-current provisions 1,164 1,115 Non-current fi nancial liabilities 3,957 4,103 Non-current fi nancial lease obligations 36,163 27,687 Other non-current liabilities 1, Deferred tax liabilities Total non-current liabilities 46,745 38,152 Current liabilities Other current provisions 2,190 2,421 Current fi nancial liabilities 22,468 15,011 Current fi nance lease obligations 8,149 9,413 Trade payables 30,366 30,613 Other current liabilities 15,642 16,944 Current income tax liabilities 5 0 Total current liabilities 78,820 74,402 Total liabilities 125, ,554 Total EQUITY and LIABILITIES 188, ,134

15 CONSOLIDATED STATEMENT OF CHANGES IN EQUITY 15 CONSOLIDATED STATEMENT OF CHANGES IN EQUITY CONSOLIDATED STATEMENT OF CHANGES IN EQUITY FOR THE PERIOD FROM JANUARY 1 TO JUNE 30, 2012 k Subscribed capital Capital reserves Accumulated other comprehensive income Net accumulated losses Total equity As at Jan. 1, , , ,436 74,580 Share buyback , ,412 Total transactions with shareholders , ,412 Consolidated loss for the period ,055-7,055 Other comprehensive income Consolidated total comprehensive income ,055-7,047 As at Jun. 30, , , ,491 63,121 CONSOLIDATED STATEMENT OF CHANGES IN EQUITY FOR THE PERIOD FROM JANUARY 1 TO JUNE 30, 2011 k Subscribed capital Capital reserves Accumulated other comprehensive income Net accumulated losses Total equity As at Jan. 1, , , ,694 41,167 Income subsidies from shareholders Contribution to capital reserves Capital increase (net of transaction costs and tax) 2,650 22, ,139 Total transactions with shareholders 2,650 22, ,139 Consolidated loss for the period ,900-2,900 Other comprehensive income Consolidated total comprehensive income ,900-2,902 As at Jun. 30, , , ,594 63,404

16 CONSOLIDATED CASH FLOW STATEMENT 16 CONSOLIDATED CASH FLOW STATEMENT CONSOLIDATED CASH FLOW STATEMENT FOR THE PERIOD FROM JANUARY 1 TO JUNE 30, 2012 k Jan. 1, - Jun. 30, 2012 Jan. 1, - Jun. 30, 2011 Consolidated loss for the period (-) before tax -8,530-3,915 (+) Depreciation of property, plant and equipment and amortisation of intangible assets 7,361 6,766 Decrease (-) of provisions for pensions Loss (+) resulting from sale of non-current assets Other non-cash expenses (+) 14,441 10,298 Net interest income 1,881 1,741 Interest income Interest expense Income taxes paid -1,123-1,717 Decrease (+) of inventories 209-6,416 Increase (-) of trade receivables and other receivables ,551 Decrease (-) in trade payables, other liabilities and other provisions -6,967-9,264 Decrease (-) of other items contained in the statement of fi nancial position -1,763 1,487 Net cash flows (+) from operating activities 5,185-2,831 Proceeds from disposal of non-current assets 3 26 Payments for investments in non-current assets -5,283-3,981 Net cash flows from (-) investing activities -5,280-3,955 Free cash flow -95-6,786 Repayment (-) of current fi nancial liabilities Capital increase 0 26,500 Capital increase-related expense 0-1,401 Payments for share buyback programme -4,315 0 Payments in connection with the repayment of loan liabilities Payments in connection with fi nance lease liabilities -6,144-6,518 Net cash flows from (-) financing activities -10,589 18,351 Net decrease (-) in cash and cash equivalents -10,684 11,565 Cash and cash equivalents at beginning of period 40,024 32,956 Cash and cash equivalents at end of period 29,340 44,521 Net decrease (-) in cash and cash equivalents -10,684 11,565

17 CONDENSED NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 17 CONDENSED NOTES TO THE CON- SOLIDATED FINANCIAL STATEMENTS FOR THE PERIOD ENDED JUNE 30, 2012 I. PRELIMINARY REMARKS Adler Modemärkte AG, having its registered offi ce in Haibach near Aschaffenburg, is the strategic and operating holding company of the ADLER Group. It operates the stores in Germany. The Group operates its Austrian stores through the wholly-owned subsidiaries Adler Modemärkte Gesellschaft m.b.h. and Adler Asset GmbH, both in Ansfelden, Austria. Its stores in Luxembourg are operated by the wholly-owned subsidiary ADLER MODE S.A., Luxembourg. In its role as the ADLER Group s holding company, Adler Modemärkte AG assumes Group-wide responsibilities for all of its subsidiaries. In particular, these include procuring goods, marketing, providing IT infrastructure, fi nancial accounting, audits, controlling and legal. ADLER is engaged almost exclusively in the textile retail industry and operating specialist clothing stores as part of specialist stores or shopping centres. It also operates specialist clothing stores as retail stores or together with other retailers at locations operated jointly. The ADLER stores offer a wide range of product lines, including all major clothing categories as well as lingerie and accessories. II. NOTES ON THE BASES AND METHODS EMPLOYED IN THE CONSOLIDATED FINANCIAL STATEMENTS ACCOUNTING POLICIES The consolidated fi nancial statements of Adler Modemärkte AG were prepared in accordance with the requirements of the International Accounting Standards Board (IASB), London, in conformity with International Financial Reporting Standards (IFRSs), as adopted by the EU. The interpretations issued by the IFRS Interpretations Committee (formerly the International Financial Reporting Interpretations Committee and the Standing Interpretations Committee) were also applied. Accordingly, these consolidated interim fi nancial statements as at June 30, 2012 were prepared in conformity with IAS 34. Depreciation and amortisation, additions to provisions for pensions and interest payments are recognised as an expense in the period to which they relate during the year. Income and expenses in connection with taxes on income were determined on the basis of actual tax calculations. Only those provisions of International Financial Reporting Standards (IFRSs) were applied that had become mandatory by the end of the reporting period as at June 30, There was no early adoption of standards whose application had not yet become mandatory. The notes to the 2011 consolidated fi nancial statements apply accordingly in particular with respect to the signifi cant accounting policies adopted. This interim report was subject to a review (prüferische Durchsicht) by PricewaterhouseCoopers AG Wirtschaftsprüfungsgesellschaft, Stuttgart. GROUP OF CONSOLIDATED COMPANIES/SHAREHOLDINGS As at the end of June 30, 2012, there was no year-on-year change in the group of consolidated companies.

18 CONDENSED NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 18 III. OTHER NOTES 1. SEASONAL EFFECTS The Group s revenue is subject to seasonal fl uctuations. For example, revenue and earnings in the second half of the year, particularly in the fourth quarter, are higher than in the other quarters due to the sale of winter merchandise with a higher average selling price for each product. 2. EQUITY On January 12, 2012, the Executive Board of Adler Modemärkte AG (with the prior approval of the Supervisory Board) resolved to partially exercise the authorisation granted by the extraordinary shareholders meeting on May 30, 2011 to acquire own shares and resolved to acquire over the stock exchange up to 1,000,000 own shares by June 30, 2012 at a maximum price of per share (excluding ancillary acquisition costs). The acquired 762,161 own shares were offset with the corresponding items in equity. Accordingly, 762 thousand in subscribed capital and 3,650 thousand in capital reserves were deducted directly. 3. EARNINGS PER SHARE Shares bought back during a period are taken into account on a pro-rated basis for the period in which they are in circulation. There are no dilutive effects at the present time. The weighted average of existing shares in the reporting period amounted to 18,115,663 shares (Jan. 1, 2011 Jun. 30, 2011: 16,087,143 shares). Earnings per share amounted to (previous year: -0.18). 4. LEASES Various leases for store space were extended during the course of the current fi nancial year. If these leases were classifi ed as fi nance leases in the statement of fi nancial position, total liabilities were increased by the present value of the future lease payments and total assets were increased by the corresponding capitalisation of the leased asset. The amortisation period for leased objects was adjusted accordingly. 5. INVESTMENT PROPERTY An increase in the Group s own use of investment property led to a reclassifi cation under property, plant and equipment.

19 CONDENSED NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 19 IV. SEGMENT REPORTING Jun. 30, 2012 in k Stores Segment Reconciliation to IFRS ADLER Group External revenue (net) 239,283-6, ,638 Revenue from trading 114, ,930 Total cost -116, ,276 EBITDA 1,739-1, Reconciliation of revenue from ordinary activities EBITDA 712 Depreciation and amortisation -7,361 EBIT -6,649 Financial result -1,881 Revenue from ordinary activities -8,530 Jun. 30, 2011 in k Stores Segment Reconciliation to IFRS ADLER Group External revenue (net) 221,187-4, ,459 Revenue from trading 108, ,515 Total cost -113, ,245 EBITDA 272 4,320 4,592 Reconciliation of revenue from ordinary activities EBITDA 4,592 Depreciation and amortisation -6,766 Impairment 0 EBIT -2,174 Financial result -1,741 Revenue from ordinary activities -3,915 Non-current assets, defi ned as intangible assets, property, plant and equipment and investment property, are broken down by region as follows: Jun. 30, 2012 Dec. 31, 2011 k Germany International Group Germany International Group Non-current assets 51,273 15,336 66,609 40,891 16,640 57,531 There has been no change in the breakdown of the segment compared with the previous year.

20 CONDENSED NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 20 V. RELATED PARTY DISCLOSURES The related parties include the key management personnel of Adler Modemärkte AG. These persons are listed in the consolidated fi nancial statements as at December 31, In the reporting period, only companies controlled by the principal shareholder bluo SICAV-SIF and its shareholders or legal representatives qualify as related parties. In the year under review, Adler Modemärkte AG was an associated company of bluo SICAV-SIF, Luxembourg. Transactions with related parties are contractually agreed and carried out at prices that have also been agreed with third parties. The following transactions were entered into with related parties: k Jan. 1, - Jun. 30, 2012 Jan. 1, - Jun. 30, 2011 Services purchased from affi liated companies 8,097 9,222 Total 8,097 9,222 Reimbursement of IPO costs by former sole shareholder 0 1,300 Sale of services to affi liated companies 8 24 Total 8 1,324 MOTEX Mode-Textil-Service Logistik und Management GmbH, listed as a related party based on its relationship with bluo SICAV-SIF, lost its status as an affi liated company at the end of the fi rst six months of the year. Therefore, outstanding balances related to it (shown below) will no longer be taken into account: k Jun. 30, 2012 Dec. 31, 2011 Accounts receivable from affi liated companies 3 1 Total 3 1 Accounts payable to affi liated companies 0 1,521 Total 0 1,521 Family members of individuals in key positions provided services to the ADLER Group in the amount of 21 thousand (Jan. 1, 2011 Jun. 30, 2011: 24 thousand). The services were remunerated at arm s length conditions. In the period under review, no property, plant or equipment was sold to or acquired by family members or by individuals in key positions of controlled companies (Jan. 1, 2011 Jun. 30, 2011: 10 thousand). Remuneration for members of the Supervisory Board in their function as employees amounted to 145 thousand (Jan. 1, 2011 Jun. 30, 2011: 143 thousand) during the year under review. Due to the expansion of the Executive Board, 432,500 stock appreciation rights (SARs) had now been issued during the reporting period. The current expense for the period amounts to 21 thousand (Jan. 1, 2011 Jun. 30, 2011: 0). The valuation parameters have not changed. As at the end of June 30, 2012, non-current provisions amounted to 39 thousand (December 31, 2011: 18 thousand). For information relating to the remuneration of the Executive Board, please refer to the details given in the consolidated fi nancial statements as at December 31, 2011.

21 CONDENSED NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 21 VI. RESPONSIBILITY STATEMENT To the best of our knowledge, and in accordance with the applicable reporting principles for interim fi nancial reporting, the consolidated interim fi nancial statements give a true and fair view of the fi nancial position, fi nancial performance and cash fl ows of the Group, and the group interim management report provides a true and fair view of the development of the business, including the results of operations and the position of the Group as well as a description of the signifi cant opportunities and risks associated with the expected development of the Group for the remaining months of the fi nancial year. Haibach, July 27, 2012 Lothar Schäfer Manuela Kraft Karsten Odemann Thomas Wanke Chairman of the Member of the Member of the Member of the Executive Board Executive Board Executive Board Executive Board

22 CONDENSED NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 22 VII. REVIEW REPORT To Adler Modemärkte AG, Haibach We have reviewed the condensed consolidated interim fi nancial statements - comprising the state-ment of fi nancial position, statement of comprehensive income, statement of changes in equity, statement of cash fl ows and selected explanatory notes - and the interim group management report of Adler Modemärkte AG for the period from January 1 to June 30, 2012 which are part of the half-year fi nancial report pursuant to (Article) 37w WpHG ( Wertpapierhandelsgesetz : German Secu-rities Trading Act). The preparation of the condensed consolidated interim fi nancial statements in accordance with the IFRS applicable to interim fi nancial reporting as adopted by the EU and of the interim group management report in accordance with the provisions of the German Securities Trad-ing Act applicable to interim group management reports is the responsibility of the parent Com-pany s Board of Managing Directors. Our responsibility is to issue a review report on the condensed consolidated interim fi nancial statements and on the interim group management report based on our review. We conducted our review of the condensed consolidated interim fi nancial statements and the in-terim group management report in accordance with German generally accepted standards for the review of fi nancial statements promulgated by the Institut der Wirtschaftsprüfer (Institute of Public Auditors in Germany) (IDW). Those standards require that we plan and perform the review so that we can preclude through critical evaluation, with moderate assurance, that the condensed consoli-dated interim fi nancial statements have not been prepared, in all material respects, in accordance with the IFRS applicable to interim fi nancial reporting as adopted by the EU and that the interim group management report has not been prepared, in all material respects, in accordance with the provisions of the German Securities Trading Act applicable to interim group management reports. A review is limited primarily to inquiries of company personnel and analytical procedures and there-fore does not provide the assurance attainable in a fi nancial statement audit. Since, in accordance with our engagement, we have not performed a fi nancial statement audit, we cannot express an audit opinion. Based on our review, no matters have come to our attention that cause us to presume that the con-densed consolidated interim fi nancial statements have not been prepared, in all material respects, in accordance with the IFRS applicable to interim fi nancial reporting as adopted by the EU nor that the interim group management report has not been prepared, in all material respects, in accordance with the provisions of the German Securities Trading Act applicable to interim group management reports. Stuttgart, August 9, 2012 PricewaterhouseCoopers Aktiengesellschaft Wirtschaftsprüfungsgesellschaft Jürgen Schwehr Wirtschaftsprüfer (German Public Auditor) ppa. Axel Ost Wirtschaftsprüfer (German Public Auditor)

23 CONTACT & FINANCIAL CALENDAR 23 VIII. CONTACT & FINANCIAL CALENDAR Contact Investor Relations Adler Modemärkte AG Industriestrasse Ost 1-7 D Haibach Telephone: FAX: InvestorRelations@adler.de Financial calendar November 12, 2012 Publication of the Q interim report Please visit us online at

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