Adolf Ahlers AG, Herford

Transcription

1 Adolf Ahlers AG, Herford Annual Report December 1, 1999 to November 30, 2000

2 fashionable success Five-Year-Summary (Figures in DM million) Financial Statements of the Parent Company 1995/ / / / /2000 Balance sheet total Fixed assets Current assets Shareholders equity Borrowed funds long-term short-term Sales Net profit for the year Taxes on income and net worth Total dividends distributed Financial Statements for the Group worldwide 1995/ / / / /2000 Balance sheet total Fixed assets Current Assets Shareholders equity Borrowed funds long-term short-term Sales Net profit prior to depreciation of goodwill and trademark rights Net profit for the year Taxes on income and net worth Investments (excluding acquisitions) Depreciation thereof goodwill/ trademark rights

3 fashionable success ERFOLG DER ANZIEHT Adolf Ahlers Aktiengesellschaft is an internationally operating company in the clothing industry quoted on the stock exchange. We produce and sell mainly outer garments for men, we have over 6,600 employees in Germany and abroad, and are represented worldwide by subsidiaries or agencies. Ahlers identifies international trends and converts them into wearable fashion, turning fashion trends into sales successes focusing on the profitable premium brand segment. Ahlers has been firmly established in the topselling market for leisure wear for decades. For more than 80 years we have been the reliable partner of the mediumsized specialized retail trade. Know-how, sound structure and financial strength of the company combined with made-to-measure collections for clearly defined target groups are our strong points. Adolf Ahlers Aktiengesellschaft Elverdisser Straße 313 D Herford Tel. +49 (5221) Fax +49 (5221)

4 fashionable success Adolf Ahlers Aktiengesellschaft Elverdisser Straße 313 D Herford Postfach 1155 D Herford Telephone +49 (5221) Telefax +49 (5221)

5 Page 2 / 3 Contents Corporate Bodies Report of the Supervisory Board Management Report of the Board of Directors Consolidated financial statements and individual financial statements of the Parent Company Business development Investments Employees Report on Risk Management Report concerning relations with affiliated companies Prospects Development of the Ahlers Shares Balance Sheet Structure Flow of Funds Analysis Consolidated Financial Statements of Adolf Ahlers AG Consolidated Balance Sheet Consolidated Profit and Loss Statement Development of Expenditures for the Start-up and Expansion of Operations and of Fixed Assets Financial Statements of Adolf Ahlers AG Balance Sheet Profit and Loss Statement Development of Fixed Assets Notes to the Consolidated Financial Statements and to the Financial Statements of Ahlers AG Auditors Opinion Table of Affiliated Companies This is a translation of the Annual Report 1999/2000. The German original has priority over this translation.

6 fashionable success Corporate Bodies Supervisory Board Board of Directors Dr. Ewald Hilger Lawyer Düsseldorf Chairman Ernst-August Theiling Businessman Hiddenhausen Deputy Chairman (until December 31, 2000) Heidrun Baumgart* Industrial clerk Bielefeld Member of the Works Council Ahlers Goldress Bekleidungs-G.m.b.H. Jan A. Ahlers Herford Chairman Karl A. Galling Herford Deputy Chairman Stephan R. Müller Hünfeld (Deputy until June 22, 2000) Thomas Theiling Hiddenhausen (Deputy until June 22, 2000/ retired on March 31, 2001) Dieter A. Beran Businessman Nürnberg Dr. Erich Coenen Former member of the Board of Directors Commerzbank AG Frankfurt am Main Management Committee Stella A. Ahlers Zürich Hermann Doerbecker Herford Dr. Carl-Heinz Heuer Lawyer Königstein Deputy Chairman (as of January 1, 2001) Oliver Galling Herford Fred Leciejewski Hiddenhausen Dieter Hoppe* Ironer Herford Member of the Works Council Ahlers-Verbund GmbH Wulf Nerbe Passau Klaus Schlaffke Borken *elected by the employees For additional information on the members of the Board of Directors and the Supervisory Board please refer to page 85.

7 Page 4 / 5 Report of the Supervisory Board During the business year from December 1, 1999 to November 30, 2000 the Supervisory Board has supervised the business management of the Board of Directors based on continuous verbal and written reports of the Board of Directors concerning essential matters in the business development, the profitability and the position of the company. In addition, the Chairman was kept informed about any material developments and current decisions on a continuous basis. The Supervisory Board has performed its duties according to law and by-laws, has consulted with the Board of Directors on all essential matters relating to company policy and dealt with and approved business transactions which, in accordance with the by-laws, required official approval and has, in several meetings, thoroughly discussed fundamental matters and important individual proceedings. In the business year 1999/2000, the Supervisory Board met on March 23, 2000, June 28, 2000, September 19, 2000 and November 7, The personnel committee discussed personnel matters of the Board of Directors in three meetings during the business year. The financial audit committee met on March 23, The financial statements and the management report of Adolf Ahlers Aktiengesellschaft and of the Ahlers Group for the period from December 1, 1999 to November 30, 2000, including the accounting records, were audited by and bear the unqualified opinion of Arthur Andersen Wirtschaftsprüfungsgesellschaft Steuerberatungsgesellschaft mbh, Hamburg. The engagement letter was signed by the Chairman of the Supervisory Board; the reports were submitted to him following the completion of the auditors work, handed over to the members of the financial audit committee, and given to the remaining Supervisory Board members for information. The Supervisory Board has taken note of and concurs with the result of the audit. The Board has examined the financial statements and the management report of Adolf Ahlers Aktiengesellschaft and the Ahlers Group, as well as the proposal of the Board of Directors regarding the appropriation of profits; there were no objections. The Supervisory Board has approved the financial statements following the final result of its examination; the financial statements are thereby adopted. The Supervisory Board concurs with the proposal of the Board of Directors concerning the appropriation of profits. In the meeting of the financial audit committee on March 22, 2001, the auditors reported on the audit and the main audit fields, and replied in detail to the questions of the Supervisory Board; the auditors were of the opinion that a Management Letter is not required. Furthermore, the Supervisory Board was extensively informed by

8 fashionable success Report of the Supervisory Board the auditors on the adoption of the Law for Control and Transparency in Businesses (KonTraG), and on the status of risk management. The Supervisory Board was presented with the report of Arthur Andersen Wirtschaftsprüfungsgesellschaft Steuerberatungsgesellschaft mbh of December 5, 2000, regarding the audit of the early detection system of risks in accordance with paragraph 317 (4) HGB as of November 30, The auditors made the following declaration: Our audit showed that the Board of Directors has taken adequate measures, as required according to paragraph 91 (2) Law on Stock Companies, in particular regarding the establishment of a monitoring system, and that the monitoring system is capable of detecting certain developments, which might endanger the continuation of the company, at an early stage. The Board of Directors has prepared a report regarding the company s relations with affiliated companies and presented it to the Supervisory Board together with the audit report prepared by the auditors. The auditors have given the following audit opinion: Based on an audit in accordance with our professional duties and judgement we confirm that 1. the actual statements in the report are correct, 2. the company s performance under the legal transactions listed in the report was not unduly high. The examination of this report by the Supervisory Board did not give cause for any objections; the Supervisory Board therefore concurs with the audit result of the auditors. Following the conclusive result of its examination, the Supervisory Board raises no objection to the declaration of the Board of Directors concerning the company s relations with affiliated companies. The Supervisory Board expresses its thanks and recognition to the Board of Directors and the employees for their work and active performance during the past business year. Particular thanks, also on behalf of the Board of Directors, goes to Mr. Ernst-August Theiling, who retired from the Supervisory Board as of December 31, 2000 after more than 50 years of performance for Ahlers. Previously, he had decisively influenced the development of Adolf Ahlers Aktiengesellschaft as member of the Board of Directors for over 13 years, and then as delegated Supervisory Board member.

9 Page 6 / 7 Dr. Carl-Heinz Heuer, lawyer in Königstein, was appointed new member of the Supervisory Board as of January 1, 2001, and was elected Deputy Chairman in the board meeting on January 25, Herford, March 22, 2001 The Supervisory Board Dr. Ewald Hilger Chairman

10 fashionable success Management Report of The Board of Directors Consolidated Financial Statements and Financial Statements of the Parent Company Course of Business The expectations of the German clothiers in 2000 to reach the turnover level of the preceding year have not been fulfilled. Instead, the domestic clothiers recorded a 2.1 percent decline in total sales to DM 21.0 billion. The producer price index was at +0.1 percent during this period. The orders position also reflects the overall negative economy. Total incoming orders show a decrease of 1.8 percent. Domestic demand of minus 3.6 percent is persistently weak. Foreign demand is stabilizing with a plus of 3.1 percent. The shrinkage process also continued in The number of manufacturing outlets decreased by 10.8 percent, the number of employees by 9.8 percent. From January to November clothing exports dropped 1.9 percent to DM 9.0 billion, while imports were up 3.4 percent to DM 22.2 billion; this led to a 7.4 percent rise of import surplus to DM 13.2 billion. On the other hand, the Ahlers group was, once again, better than the industry s average in the completed business year, and thus went a large step towards its target of achieving the billionmark in turnover. The group s sales revenues of DM million surpassed year-previous value by 24.3 percent; more than half the rise is accounted for by consolidation effects. The foreign share therein was DM million or 30.5 percent. The result from ordinary business activities of DM 54.5 million was at last year s level. EBIT was up 12 percent to DM 62.0 million, and the EBITDA of DM 83.9 million surpassed previous year s by 17 percent. The lower rise, when compared to turnover, is in part due to market conditions and to the higher marketing costs incurred by the new brands, including the internet subsidiary a-fashion.com. Moreover, depreciation of goodwill and brand rights went up around 70 percent to DM 7.9 million. These factors prevented us from reaching our projected targets. When comparing this year s with last year s figures, it should be noted that the latter Turnover according to regions in the group (year earlier) Western Europe 24.4% (24.9%) Central/Eastern Europe 6.1% (6.7%) Germany 69.5% (68.4%)

11 Page 8 / 9 include an extraordinary book profit amounting to DM 7.5 million from the sale of a real property and a work of art. Classical and leisure time clothes (men s & sportswear) with the most significant brands Jupiter, B.S.M. and GIN TONIC went up 40.4 percent to a turnover of DM million. This growth was primarily the result of the initial consolidation of GIN TONIC, Stuttgart, whereas the brands Jupiter and B.S.M. showed declining sales. The result from ordinary business activities in this sector went down from DM 6.6 million to DM 0.9 million. The decline is, among other reasons, accounted for by DM 2.3 million increased depreciation of goodwill and by DM 2.9 million interest incurred by higher loan liabilities in connection with the acquisition of GIN TONIC and Brandt. The two companies, acquired in 1999, Brandt Sportive Mode GmbH and GIN TONIC SPECIAL Mode GmbH and their subsidiaries, did not perform as positively as expected during the past year. The targeted net profit for the year was underrun by around 25 percent. Whereas GIN TONIC came up to year-earlier turnover, Brandt with the brand B.S.M. had to suffer losses in sales of 30 percent in the highly competitive sportswear market. The relaunch at GIN TONIC initiated half a year ago, started off quite well; this fact is already reflected by turnover and particularly by the advance sales spring/summer The presently existing shop system of around 100 shops is persistently being expanded and modernized. Regarding the sportswear brands Jupiter and B.S.M. we were, in particular, not satisfied by the performance. Drastic measures will have to be taken in the current year in order to show encouraging figures in the future. Turnover in the jeans & workwear sector with the brands Pioneer, Pionier and Pionier Sportive rose 4.6 percent from DM million to DM million. Following the elimination of the non-profitable jeans sector Bronco in financial year 1998/99, and since the other sectors have shown a positive performance, the result from ordinary business activities went up above proportion by 34.5 percent from DM 14.3 million to DM 19.3 million.

12 fashionable success Management Report of The Board of Directors The premium brands sector performed as expected. Total turnover rose by 22.3 percent from DM million to DM million. In order to continue to expand this sector both in turnover and earnings, an agreement concluded on April 26, 2000 secures us the world-wide rights to the premium brand OTTO KERN. The result from ordinary business activities also rose above proportion as in the jeans & workwear sector, by 23.2 percent from DM 29.3 million to DM 36.1 million, despite the fact that profits were burdened by DM 4.8 million for goodwill depreciation and DM 1.7 million interest. Adolf Ahlers Aktiengesellschaft to DM million. The group s equity ratio was at 43.7 percent and at Adolf Ahlers Aktiengesellschaft 44.8 percent. The return on equity prior to income taxes was 23.7 percent in the group and 28.2 percent at Adolf Ahlers Aktiengesellschaft. Balance sheet structure of the Group Fixed Assets 36.8% Equity 42.0% Fixed Assets 41.2% Equity 43.7% Turnover according to groups of customers in the group (year earlier) Specialized retailers 70.3% (68.3%) Miscellaneous 1.0% (0.0%) Specialized discount stores 3.2% (3.5%) Mail order houses 3.2% (2.9%) Current Assets 63.2% Borrowed Capital 58.0% Current Assets 59.8% Borrowed Capital 56.3% 1998/ / / /2000 Department stores 6.6% (5.5%) Consumer markets 5.6% (6.8%) Large chain stores 10.1% (13.0%) The good balance sheet structure in the group and at Adolf Ahlers Aktiengesellschaft remains unchanged at November 30, Compared to last year, the group s total assets rose 0.3 percent to DM million, and 6.7 percent at Earnings per share according to the formula of the DVFA/SG (Deutsche Vereinigung für Finanzanalyse und Anlageberatung/ Schmalenbach-Gesellschaft) was determined at DM 2.00 for the year under review (comparable last year DM 1.95). In comparison to the preceding year the group s cash flow increased by DM 4.9 million to DM 51.0 million, and that of Adolf Ahlers Aktiengesellschaft by DM 8.8 million to DM 43.5 million.

13 Page 10 / 11 The Board of Directors and the Supervisory Board propose to the shareholders meeting the distribution of a DM 1.60 (0.82 EUR) dividend for ordinary shares and of DM 1.70 (0.87 EUR) for preferred stock. Including the tax credit of DM 0.69 for ordinary shares and DM 0.73 for preferred stock, the total yield per ordinary share amounts to DM 2.29 and to DM 2.43 for the preferred stock. Based on the respective yearend closing rates, the holder of ordinary shares earns an 8.4 percent return, and the holder of preferred stock 8.8 percent. Furthermore, an allocation to revenue reserves of DM 13.0 million was made from profits to further strengthen the equity base. In accordance with the resolution passed by the shareholders meeting on June 28, 2000, the conversion of the equity capital to euros and its increase from corporate funds without issuing new shares by 6,386, EUR to 43,200, EUR was registered in the Trade Register of the Local Court Herford on July 28, In the past financial year, eterna Mode GmbH, Passau, again reported higher earnings and turnover, as expected, and thus contributed to the excellent performance of the premium brand sector. On July 1, 2000, eterna installed an internet platform eterna online-shop and was successful in establishing the virtual distribution channel on the market. Out of 250 actually interested retailers in Germany, 80 specialized retailers had already installed the eterna onlineshop on their homepage in February 2001, and are now selling eterna shirts over the world wide web. The next 150 retailers, who firmly applied for the eterna online-shop, will be provided with the premium brand s virtual sales area by yearend. Contrary to the general negative trend for e-commerce in the clothing industry, the success of the eterna online-shop is unusually high. A multi-lingual shop-version for online sales to, for instance, England and France is under preparation. Eterna Mode GmbH also utilizes the internet as the information medium of the future for strategic purposes, i.e. to directly communicate important product innovations. Thus, the world-wide unique certification of the eterna products with the ecological label Öko-Tex Standard 100 plus was deliberately presented by the eterna online-shop. The retailers who already participate in the eterna online-shop, also confirmed the achieved increase in customer servicing. The Pionier Freizeitkleidung Ges.m.b.H., Mariasdorf/Austria, continues to be on the road to success. With a rise in turnover of 11 percent, the result recorded a double-digit percentage.

14 fashionable success Management Report of The Board of Directors Due to the good backlog of orders, all production capacities were utitilized continuously as in the preceding years. The total volume of internal production and farmed-out production (crossborder commission processing and fully purchased) is spread over 10 countries. The share of internal production is 43.0 percent. Since the production capacities of the Polish manufacturing plants ROMEO Spolka z o.o. and NOVOMEX Spolka z o.o. and of eterna GmbH, Schärding/Austria, will be reduced, the share of internal production will drop even further. Our producing subsidiary, Dial Textile Industries Ltd., Sri Lanka, with its production facilities in Katunayake and Kuliyapitiya, reported good earnings again and thus links to the preceding years. The financial year at the Polish production and distribution facilities was not satisfying, although turnover was up 8 percent and the low level of earnings rose by 75 percent. Adolf Ahlers Aktiengesellschaft has a branch office in Mariasdorf/Austria with an average of 17 employees. A minor net profit was reported. Production structure in the Group (year earlier) Internal production 43.0% (45.6%) Fully purchased goods 22.3% (10.8%) Farmed-out production 34.7% (43.6%) In co-operation with significant fashion stores we continued the exhibition Expressionist Pictures in 2000 as well; it took place in Dessau and in Dresden. The conversion procedure of our communication and data systems to the year 2000 was troublefree. The performance of the plant in Banovce/ Slovakia with around 600 employees, which has been producing exclusively for eterna, is decidedly positive.

15 Page 12 / 13 Investments In the year under review, investments noticeably exceeded depreciation. The additions to fixed assets of the group came up to DM 39.5 million, DM 39.0 million less than year-earlier. In the domestic group investments totalled DM 36.0 million, abroad DM 3.5 million. DM 26.4 million were invested in intangible fixed assets, DM 1.6 million in land and buildings, DM 2.7 million in technical plant and machinery, DM 6.9 million in factory and office equipment, DM 0.5 million for payments on account and plant under construction, and DM 1.4 million in financial assets. The additions to intangible fixed assets represent the brand rights OTTO KERN as well as the compensation for the premature termination of the licence agreement OTTO KERN men s shirts including T-shirts amounting to DM 22.3 million, as well as postcapitalization of the goodwill GIN TONIC, Brandt Sportive Mode and jac totaling DM 2.6 million. The remaining additions are exclusively accounted for by EDP software. The additions in land and buildings primarily include the modernization of the administrative building in Herford-Elverdissen as well as the buildings in Lubin/Poland and Banovce/Slovakia. As in the preceding years, the investments in technical plant and machinery largely served modernization, rationalization, as well as replacement investments in all sectors. The additions to factory and office equipment predominantly concern EDP-hardware, the purchase of exhibition booths as well as the equipment for the showrooms OTTO KERN in the Gehry building in Düsseldorf. Payments on account and plant under construction concern machines for the production in Sri Lanka and Poland. The additions to financial assets relate to works of art. Other loans include an interest-bearing loan to Otto Kern, Monaco, which serves to finance the capital increase at the subsidiary Otto Kern GmbH. The disposals of assets of DM 3.9 million are largely accounted for by the sale of the building of B-Beteiligungs- und Verwaltungsges.m.b.H in Pinkafeld/Austria, and the building of the shutdown processing plant of Brandt Sportive Mode GmbH in Seesen. The gain on disposals totalled DM 0.9 million.

16 fashionable success Management Report of The Board of Directors Employees The number of employees in the group decreased from 6,850 to 6,639, representing a cutback of 211 employees or 3.1 percent. The number of trainees all in the commercial sector rose by 6 to a total of 52 young men and women; the number is expected to increase further in the next couple of years. In Germany, staff declined by 79 to 1,129 employees, and in the production sites in Poland, Sri Lanka and in the remaining countries abroad, the number of employed persons dropped by 132 to 5,510. Structure of employees in the Group (year earlier) Poland 2,435 (2,628) Sportive Mode GmbH, GIN TONIC SPECIAL Mode GmbH and its subsidiaries. In Germany, an average of DM 83,419 (last year DM 80,964) was spent for each employee of the company. Pension payments of DM 1,123,455 (last year 1,129,071) were made to 762 former employees or their descendants; these payments were made exclusively on the grounds of pension commitments entered into before The average age of the domestic staff was 40.8 years; the average number of years of service was 10.2 years. In the year under review, 10 employees were able to look back on 25 or 40 years of service; one employee celebrated her 45th anniversary. At the occasion of a celebration for their jubilees management expressed its gratitude for their loyalty to our company. Germany 1,129 (1,208) Looking back on the past financial year we Austria 307 (318) Slovakia 588 (504) would like to thank all our employees for their performance. Others 22 (19) Sri Lanka 2,158 (2,173) In the year under review the personnel expenses in the Ahlers group rose 16.6 percent to DM million; included therein are DM 14.3 million as a result of the consolidation of Brandt Report on Risk Management Our risk management system, which was further developed following the adoption of the Law for Control and Transparency in Businesses

17 Page 14 / 15 (KonTraG), was audited by and bears the opinion of our auditors. The report according to paragraph 317 (4) HGB (IDW PS 340) closes with the following statements on the early risk detection system: Our audit showed that the Board of Directors has taken adequate measures, as required according to paragraph 91 (2) AktG, in particular regarding the establishment of a monitoring system, and that the monitoring system is capable of detecting certain developments, which might endanger the continuation of the company, at an early stage. Basis for our risk management are clearly defined targets and the monitoring of their achievement. A multiple reporting system guarantees that, in particular, the Board of Directors, but also the Supervisory Board are informed about abortive developments on time, thus enabling them to take retaliatory action. According to the principles of clarity and materiality only those risks are subject to reporting, which either endanger the continuation of the company, or which could materially impair the assets, liabilities, financial position and profit or loss. Furthermore, these risks must be anticipated with a considerable, but not necessarily prevailing, probability. In the Ahlers group, there are no reportable individual risks, nor individually insignificant risks, which when taken as a whole - could lead to materially negative consequences. In principle, however, also the Ahlers group bears risks; in particular, these are product risks, e.g. quality risks, risks entailed by warranty, and economic risks, but also exchange rate and interest rate risks. We meet quality and warranty risks already in the forefront with severe technical controls, with the aim of further reducing our returns ratio and the production of so-called second choice merchandise. A possible declining propensity to consume and, therefore, a lower demand for our products, is a calculable risk. On the one hand, we spread our risks by the diversity of our product assortment, which embraces all price levels, on the other hand, the awareness level particularly of our brands eterna and Pierre Cardin as well as in future also OTTO KERN reduces our risks. Slackening paying habits of our customers and, thus, write-downs on liabilities, could also be the effect of declining propensity to consume. We minimize this risk by a consequent credit check and an insurance against loss of receivables. Particulary in the past years we have been extremely successful in applying this policy. Currency risks have practically disappeared since the introduction of the euro. We meet the exchange rate fluctuations

18 fashionable success Management Report of The Board of Directors between the Euro and the US Dollar with conservative rate-hedging transactions. We constantly keep a vigilant eye on the global interest rate development, ready to take appropriate action. companies according to paragraph 312 AktG. Similarly, the company did not take or refrain from measures which were upon request or in the interest of these companies during the year under review. We have guaranteed, on the one hand, that risks are detected and evaluated at an early stage, on the other hand, that in the event of a risk corresponding measures can be taken. Report concerning relations with affiliated companies The limited partnership Westfälisches Textilwerk Adolf Ahlers, Herford, holds the majority in Adolf Ahlers Aktiengesellschaft. The report to be issued in accordance with paragraph 312 AktG concerning the relations with affiliated companies was presented to the Supervisory Board on time. The report closes with the following statement of the Board of Directors: Our company has, in the circumstances known to us at the time of the undertaking of all legal transactions quoted, received an appropriate counter-performance for each legal transaction. During the business year 1999/2000 our company has not carried out any legal transactions upon request of or in the interest of affiliated Prospects At year-end 2000 we renewed the licensing agreements for the very successful products Pierre Cardin Jeans and Pierre Cardin Sportswear up to the end of In financial year 2000/01 we expect a 25 percent rise in turnover with Pierre Cardin products, which will be doubled with an above-average performance of earnings in the next four years. As of May 1, 2000 we acquired the world-wide rights to the premium brand OTTO KERN from Hucke AG. Mr. Otto Kern holds a 20 percent share in Otto Kern GmbH, Herford. We intend to utilize and expand the very high degree of popularity of the brand together with our licence partners. The products men s sportswear, men s shirts, knitwear for men as well as jeans for ladies and men are not subject to licensing. They will be marketed by Otto Kern GmbH. First turnover figures are targeted as soon as the fall/winter collection is available on the market in the second half of We anticipate sales

19 Page 16 / 17 revenues of around DM 20 million. In the first full financial year ( to ) we expect turnover at around DM 50 million and a profit. With the help of additional licence partners we will further develop the brand OTTO KERN to secure a good earnings position. The backlog of orders of DM million is at a high level and thus secures, as in the past, the full utilization of our production capacities. Significant increases were again noted in the premium brands sector. On account of the strongly declining market in the medium-priced segment during the past years, and the overall increased pressure on margins, it will not be possible to put through any price increases in 2001 either. On the procurement market we expect price increases due to the higher dollar rate. Production or job processing costs, respectively, will hardly change as against the preceding year. Persistently rising costs in Poland impel us to reduce the production capacities in the plants Romeo Spolka z o.o. and Novomex Spolka z o.o. by 50 percent, so as to pass on production orders further eastwards. Total investments of DM 15.0 million excluding acquisitions are planned for the current business year. Thus, total investments, which primarily concern rationalization, replacements and modernization, will be lower than depreciation. 25 of the 139 works of art owned by Adolf Ahlers Aktiengesellschaft were sold in January 2001 with a sales profit of DM 5.3 million. According to the resolution passed by the general meeting of June 28, 2000, Adolf Ahlers Aktiengesellschaft is entitled to purchase its own shares. On December 14, 2000 the Board of Directors resolved to make use of this authorization and purchased both kinds of shares. It is intended to employ these shares to finance the acquistion of a company or shareholdings. We have prepared ourselves conscientiously for the Euro as group currency. As of December 1, 2000 we have introduced the Euro in the financial accounting throughout the group without any problems. The conversion of inventory management will be made under consideration of our customer profile, the demands of the market, and our selling cycles as of June 1, On account of the careful preparation we do not expect any failures or breakdowns. The levelling-off of the decline in turnover in the German clothing industry from minus 5.5 percent in 1999 to minus 2.1 percent in the past year generates hope that a slight profit for the year can be regarded as realistic in the current business year.

20 fashionable success Management Report of The Board of Directors We have ambitious aims for the business year 2000/2001, even though we do not expect an easing of the overall fierce competitive situation. Nevertheless, some companies will again do much better than the industry on the average. We are confident that we will be among those companies, and that we will reach our target of DM 800 million turnover as well as a net profit of over DM 30 million despite expenditures incurred by restructuring measures and portfolio adjustments. A dividend at last year s level is thus secured.

21 Page 18 / 19 Development of the Ahlers Shares In 2000 the investors on the stock exchange had to learn it the hard way. The spreading enthusiasm in spring was followed by a cold shower. Profit expectations without any relation to reality, caused by a practically unstoppable interneteuphoria, led to exorbitant expectations. The largest profit were promised by the risk-carrying securities on the New Market. However, not only the media and internet shares were hit badly, even some of the standard shares from the Old Economy have more than disappointed the investors with losses of between 40 and 50 percent. Structure of shareholders Ordinary share (year earlier) 26.42% (26.76%) widely spread 73.58% (73.24%) Kommanditgesellschaft Westfälisches Textilwerk Adolf Ahlers (Ahlers family) Structure of shareholders Preference share (year earlier) The ordinary share of Adolf Ahlers AG was valued at EUR at year-end, the preferred stock at EUR. This largely corresponds to last year s values. The price performance of our shares was quite diversified. In the first quarter our shares hit a low at 11 EUR, only to recover during the following months. After this, the price slipped again step by step to under 12 EUR without any fundamental reasons; it stabilized at around 14 EUR again in the last weeks of the year. Both the German stock index (DAX) as well as the C-DAX, which closed at -7.5 percent and/or -9.9 percent, respectively, at year-end, suffered quite some losses. The DAX even lost just under 21 percent from its peak in March of 8, points to 6, at year-end % (61.44%) widely spread 0.62% (0.00%) own shares 41.14% (38.56%) Kommanditgesellschaft Westfälisches Textilwerk Adolf Ahlers (Ahlers family) In their search for more promising securities with which they do not risk their necks, more and more investors are looking for shares in the SDAX. Here, they expect to find the ideal conservative type of investment. Thus, the SDAX along with the M-DAX showed positive performances with rises of 7.2 percent and/or 17.6 percent, respectively. Ahlers AG is also represented in this quality sector and ranks 24 th

22 fashionable success Development of the Ahlers Shares among 119 enterprises according to market capitalisation, and 58 th according to turnover in the stock market at the end of We anticipate that the Ahlers share is going to benefit from this trend in future, and show a positive performance again. Including the tax credit, a shareholder earns a 8.9 percent (last year 7.8 percent) return on the proposed dividend of DM 1.60 (0.82 EUR) for ordinary shares, and 9.6 percent (previously 8.0 percent) on the proposed dividend of DM 1.70 (0.87 EUR) for preferred stock, based on the price effective November 30, The priceearnings-ratio of the ordinary share is 13.6 and that of the preferred stock 13.9 on the basis of the DVFA/SG global earnings. The regular, all inclusive and just-in-time information policy is the aim of our investor relations activities, which is to promote the trust of all operators in the capital market. In addition to the general meeting in June, we attach a lot of importance to the financial statements and our quarterly interim reports. In order to supply shareholders and potential shareholders with the best possible information, we have completely reviewed our internet homepage under emphasizing the financial information sector.

23 Page 20 / 21 Data of the Ahlers Shares Per share in DM Nov.30,1995 Nov.30,1996 Nov.30,1997 1) Nov.30,1998 2) Nov.30,1999 3) Nov.30, 2000 Ordinary share Dividend Dividend after tax credit Preference share Dividend Dividend after tax credit issued shares (in numbers) Ordinary shares 800, , ,000 8,000,000 8,000,000 8,000,000 Preference shares 200, , ,000 4,000,000 6,400,000 6,400,000 Result after taxes ) 2.03 DVFA/SG earnings )+7) 2.00 Cash-flow 4) ) ) ) )+5) ) Ordinary Share Year-end price (14.00 E) (13.95 E) Highest price (18.40 E) (15.00 E) Lowest price (13.00 E) (11.25 E) Preference share Year-end price (14.25 E) (14.19 E) Highest price (21.50 E) (16.75 E) Lowest price (13.66 E) (11.00 E) 1) Following the issue of bonus shares in the ratio of 1 for 5 at a subscription price of DM ) Following share split-up 10 for 1 3) Following the issue of preference shares in the ratio of 1 for 5 at a subscription price of E 2.80 = DM ) Cash-flow: Net surplus + Depreciation +/ Changes in long-term reserves 5) Frankfurt am Main as of December 30, 1999 Xetra 6) Earnings determined following the recommendations of DVFA/SG in ) Pro rata temporis 12,600,000 shares due to capital increase September 8, 1999

24 fashionable success Balance Sheet Structure Group AG Nov. 30, 2000 Nov. 30, 1999 Nov. 30, 2000 Nov. 30, 1999 thousand thousand thousand thousand DM % DM % DM % DM % Assets Expenditures for the start-up and expansion of operations 2, Intangible and tangible fixed assets 190, , , , Financial assets 15, , , , Fixed assets 205, , , , Inventories 140, , , , Trade receivables 97, , , , Other receivables and other assets 28, , , , Liquid assets and securities 41, , , , Current assets 307, , , , Prepaid expenses 1, , Total Assets 518, , , , Liabilities Equity 226, , , , Special untaxed reserves , , , , Pension provisions 12, , , , Long-term liabilities 171, , , , Other accruals 31, , , , Other liabilities and deferred income 75, , , , Borrowed capital 291, , , , Total Liabilities 518, , , ,

25 Page 22 / 23 Flow of Funds Analysis Group AG 1999/ / / /99 thousand thousand thousand thousand thousand thousand thousand thousand DM DM DM DM DM DM DM DM Net income for the year 29,125 29,939 43,111 34,440 Disposals of/additions to fixed assets (net balance) 21,809 16, Changes in long-term reserves 42 21, , Cash-flow 50,976 46,115 43,475 34,685 Changes in other accurals -9,368 7, ,969 Change in item special untaxed reserves Profits/Losses from the disposal of fixed assets (net balance) ,262-8, ,777-7,749 40,714 45,194 43,395 26,936 Additions to/disposals of inventories, trade receivables and other assets -21,737-27,593-51,224-34,247 Additions to/disposals of trade accounts payable and other liabilities 5,661-16, ,080-6,669-57,893-4,818-39,065 Inflow of funds from ordinary business activities 24,638 17,114-14,498-12,129 Earnings from the disposal of fixed assets 4,702 6, ,561 Earnings from the disposal of intangible fixed assets 30 7 Earnings from the disposal of financial assets 85 7,716 31,848 6,007 Additions to fixed assets -11,726-30, Additions to intangible fixed assets -26,389-47,265-3 Additions to financial assets -1, ,296-44,869 Fund redemption from investments -34,653-64,063-6,814-35,956 Deposits from capital increase 13,143 13,143 Distribution of dividends for 1998/99-21,606-19,600-21,606-19,600 Payments from compensatory item of outside shareholders (profit shares) Borrowing/Redemption of long-term loans -1,612 76,817 6,160 80,923 Fund redemption/inflow of funds from financing -23,483 69,446-15,446 74,466 Effects of changes in the companies included in consolidation and of the exchange rates Change of balance of finance capital -33,237 22,629-36,758 26,381

26 fashionable success

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28 Ulrich Rückriem, born 1938 in Düsseldorf Sculpture Jupiter Column Dolomite from Anröchte Approx meters high Set-up in 1988 by Ulrich Rückriem in front of the Ahlers administrative building in Herford-Elverdissen

29 On the following pages we present a picture of the range of our activities. Our successful corporate strategy is made up of individual companies, brands, markets, our commitment to the stock market and our commitment to art. pierre cardin JUPITER eterna B.S.M. Since we are convinced that art is not just a luxury but a real need in today s society, we ll be showing you, in addition to our products, a part of the Ahlers Group s extensive art collection. It includes many renowned and unique expressionist and modern works of art and it is one of the best liked art collections as loan to exhibitions in cooperation with our customers. ANDY JLLIEN OTTO KERN GIN TONIC PIONEER Pionier Berufskleidung PIONIER SPORTIVE Art and fashion together are the supporting pillars of our corporate strategy: to introduce creative masterpieces of our culture to a wide range of consumers. Bringing joy and enthusiasm to people are what drive our actions, in art as in fashion. ahlers group

30 About the art of making fashion.

31 Adolf Ahlers Aktiengesellschaft goes back to a cloth wholesale company founded in 1919 by Adolf Ahlers in Jever, county of Friesland. Headquartered in Herford since 1932, we have for decades been one of the largest and most profitable enterprises of the German clothing industry. Since our IPO in 1987 the Ahlers stock has been a popular investment for the serious-minded. The company focuses on the production and distribution of men s outer garments and is present around the world with subsidiaries and agencies. We have made it our goal to turn fashion trends into selling successes. We identify international trends and convert them into wearable fashion, focusing on the profitable premium brand segment. Ahlers has been firmly established in the top-selling market for leisurewear for decades. Strategic action in managing our brands is just as important to us as practiceoriented competence, solidity and financial strenght. Our target groups are well defined and our collections well balanced. This makes us a reliable partner for the specialty clothing retail trade. Men s- & Sportswear JUPITER B.S.M. GIN TONIC Jeans & Workwear PIONEER Pionier Berufskleidung PIONIER SPORTIVE Premium Brands OTTO KERN pierre cardin ANDY JLLIEN eterna A BrandPhilosophy

32 Die Schlagwörter New Womanswear und Modern Woman sind in aller Munde. Das Marktsegment definiert sich zwischen Young Fashion und klassischer DOB.

33 pierre cardin is internationally among the Top Ten best known luxury brands. As the largest European licenceholder we possess the rights for jeanswear, sportswear, coats, knitwear and shirts and, in eastern Europe (with the exception of Hungary), men s suits as well. The Pierre Cardin brand was created for men who attach importance to a well-groomed and modern appearance both in their leisure and their work. Facts High quality and individuality Selective distribution by the specialized retail trade Clear brand management by targeted sales support The variety of collections are well established in the market today. The fashion stands out with its stylish interpretation of topical trends, its high-quality manufacturing and a love of detail. pierre cardin

34 Die Schlagwörter New Womans-wear und Modern Woman sind in aller Munde. Das Marktsegment defini.

35 JUPITER a brand with attractive prices and high value-for-money. Jupiter benefits from the wide synergies across the whole Ahlers Group. Deliberately positioned in the medium price segment, the individual products complement each other. The range of shirts, sportswear, coats, jackets and trousers is rounded out by separate completed programs with comfortable and functional lines for the on-the-move business generation. Facts Modern men s garments for leisure time and business Guaranteed quality standard at a convincing price-performance-ratio Targeted offers to complete the trade mix Jupiter is sold to specialty clothing retailers, to large chain stores and department stores and offers interesting yield aspects. JUPITER

36 Die Schlagwörter New Womans-wear und Modern Woman sind in aller Munde. Das Marktsegment defini.

37 one of the leading manufacturers of high-quality all-cotton shirts and blouses. With its most successful product, eterna EXCELLENT non-iron shirts and blouses made of exclusive fine Swiss cotton, eterna is the market leader in Germany. This superior competitive position is the result of a clear commitment to quality, the ability to deliver quickly and a strong willingness to work with the special retail trade. Facts Market leader in the segment of non-iron shirts and blouses Exclusive Swiss cotton Guaranteed 24-hourdelivery service from an exemplary logistics center Perfect processing to the last detail, a quality characteristic for excellent high-class workmanship

38 Die Schlagwörter New Womans-wear und Modern Woman sind in aller Munde. Das Marktsegment defini.

39 B.S.M. The Sportswear-Company counts as one of the market leaders for men s leisure time jackets in Germany. Positioned in the mid-price segment, the brand distinguishes itself in the specialized retail trade by employing the best quality. B.S.M. s high quality and highly Facts Specialist for functional sportswear jackets Widely recognized for wearing comfort Wide distribution in the specialty retail trade functional sportswear is sold throughout Europe. The main brand is complemented by independent program labels, oriented to topical outdoor trends with prominent sportswear details. B.S.M.

40 Die Schlagwörter New Womans-wear und Modern Woman sind in aller Munde. Das Marktsegment defini.

41 Women first look at a man s shoes, then into his eyes, at his hands and finally at his behind. And they say: It s the human qualities that count. Facts Assortment for the New-Menswear segment Own designer brand of Adolf Ahlers Aktiengesellschaft Young, modern designer look ANDY JLLIEN lets men be men ANDY JLLIEN is the Ahlers Group s modern, young designer collection. The collection is targeted at the successful man between 25 and 45 with purchasing power, who prefers a young and modern designer look in his wardrobe. Together with the Swiss designer Andy Jllien, a young creative team from the Ahlers Group develops self-confident collections with high demands on quality and comfort. Following its successful introduction to the market with strong clothing specialists, the brand is on its way to becoming a Premium Label. ANDY JLLIEN

42 Die Schlagwörter New Womans-wear und Modern Woman sind in aller Munde. Das Marktsegment defini.

43 OTTO KERN OTTO KERN is one of the best known German designer labels. Positioned in the premium segment, the brand represents a modern and innovative collection. The product range includes fashion for women and men; accessories such as underwear and swimwear while glasses, bags and jewellery complete the world of OTTO KERN as lifestyle-supplier. As owner of the brand, Adolf Ahlers Aktiengesellschaft attaches great importance to an uncompromising brand management. Licencees are selected partners who are market leaders in their segment. Facts Exemplary degree of popularity A complete brand in both presentation and philosophy All-round range Premium competence and diversification OTTO KERN

44 Everybody is talking about New Womanswear and Modern Woman.

45 GIN TONIC The label for up-to-date, casual fashion for modern people. GIN TONIC divides its lines of business into three independent product lines. GIN TONIC Men is among the leading collections in the segment of young men s fashion. GIN TONIC Women presents fashion for the trendy young woman for all occasions. SISIGNORA and its mix-match collections is just made for strong women who want to dress in a modern and self-confident manner. Facts Fashionable outfits for younger target groups SISIGNORA young fashion for women with size 42 upwards Constant up-dating of assortments by graduated programs and delivery dates Sales area concepts and shop-in-shop GIN TONIC

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47 PIONEER is among the largest jeans brands in Germany. The jeans with the number is the terse brand figure, which has meanwhile become the legendary Pioneer image. Not least due to this fact, Pioneer enjoys an aboveaverage degree of popularity. Facts Leading brand image with the legendary number Strong merchandising presence in the trade 24-hour-delivery service EDP internetworking with top customers The collection develops its strength in the profitable segment of modern basics, an up-to-date form of jeans and slacks. The matching tops and a Young-Fashion-Girls-Collection are significant parts of the product range. PIONEER

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49 Pionier Workwear belongs to the most purchased brands for workwear in Germany. For more than 60 years the enterprise has been known for high-quality and functional workwear for the trade and for industry and service companies. In addition to traditional workwear, the Pionier program also includes corporate wear considering the latest trends and fashionable accents. Facts Supplies leading enterprises in trade, industry and the service sector. Modern logistics center guarantees 24-hour-delivery Technical quality supervised by TÜV, a leading German technical agency. Certification under DIN EN ISO 9001 Consistently high quality standards in development, materials and manufacturing Pionier Berufskleidung

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51 PIONIER SPORTIVE Holds a significant market share in the casual segment of men s fashion with comfortable leisure time slacks. A matching program of tops creates the Pionier Sportive look. By using high and innovative qualities and cultivated standards, Pionier Sportive has been gaining an increasing share of the men s leisure slacks market. Facts Specialist for leisure slacks Strong in extra-large sizes PIONIER SPORTIVE

52 Max Beckmann Selbstbildnis mit steifem Hut ,3 x 24,7 cm Etching Joseph Beuys Filzanzug 1978, für die Basler Fasnacht VG Bild-Kunst, Bonn 2001 für Werke von Horst Antes, Max Beckmann, Joseph Beuys, Sandro Chia, Alexej Jawlensky, Jasper Johns Notes on art... Ulrich Rückriem Jupiter-Column set up in 1988 Anröchter Dolomite approx. 670 cm high Sandro Chia Quel sonno speciale del cane x 102 cm Tempera August Macke Schaufenster x 22,5 cm Tempera and watercolour Jasper Johns Target x 69,5 cm Screenprint Alexej Jawlensky Oberau Fabrik ,5 x 40,5 cm Oil on board Horst Antes Zweifigurig II x 49 cm Oil on board