Ahlers AG, Herford Annual Report

Transcription

1 Ahlers AG, Herford Annual Report December 1, 2000 to November 30, 2001

2 Five-Year-Summary (Figures in million Euros) Financial Statements of the Parent Company 1996/ / / / /01 Balance sheet total Fixed assets Current assets Shareholders equity Borrowed funds long-term short-term Sales Net income for the year Taxes on income and net worth Total dividends distributed Financial Statements for the Group worldwide 1996/ / / / /01 Balance sheet total Fixed assets Current assets Shareholders equity Borrowed funds long-term short-term Sales Net income prior to depreciation of goodwill and trademark rights Net income for the year Taxes on income and net worth Investments (excluding acquisitions) Depreciation thereof goodwill/ trademark rights

3 fashionable success ERFOLG DER ANZIEHT Ahlers AG 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 approx. 5,800 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 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. Ahlers AG Elverdisser Str. 313 D Herford Tel. +49 (05221) 979-o Fax +49 (05221)

4 Ahlers AG Elverdisser Straße 313 D Herford Postfach 1155 D Herford Telephone +49 (5221) Telefax +49 (5221)

5 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 Consolidated Financial Statements of Ahlers AG Consolidated balance sheet Consolidated profit and loss Statement Development of expenditures for the start-up and continuation of operations and of fixed assets Financial Statements of Ahlers AG Balance sheet Profit and loss Statement Development of fixed assets Notes to the Consolidated Financial Statements and the Financial Statements of Ahlers AG Auditors Opinion Affiliated Companies of Ahlers AG This is a translation of the Annual Report 2000/01. The German original has priority over this translation.

6 Corporate Bodies Supervisory Board Board of Directors Dr. Ewald Hilger Lawyer Düsseldorf Chairman Ernst-August Theiling Businessman Hiddenhausen Deputy Chairman (until December 31, 2000) Jan A. Ahlers Herford Chairman Karl A. Galling Herford Deputy Chairman Stephan R. Müller Hünfeld Dr. Carl-Heinz Heuer Lawyer Königstein Deputy Chairman (as of January 1, 2001) Thomas Theiling Hiddenhausen (until March 31, 2001) Heidrun Baumgart Industrial clerk Bielefeld Member of the Works Council Management Committee Stella A. Ahlers Zürich Dieter A. Beran Businessman Nürnberg Dr. Erich Coenen former member of the Board of Directors Commerzbank AG Frankfurt am Main (until June 27, 2001) Wolfgang Hartmann Member of the Board of Directors Commerzbank AG Frankfurt am Main (as of June 27, 2001) Hermann Doerbecker Herford Oliver Galling Herford Fred Leciejewski Hiddenhausen Wulf Nerbe Passau Klaus Schlaffke Borken Dieter Hoppe Ironer Herford Member of the Works Council For complete information on the members of the Supervisory Board and the Board of Directors please refer to pages 89 to 91.

7 Report of the Supervisory Board During the business year from December 1, 2000 to November 30, 2001 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 thoroughly discussed fundamental matters and important individual proceedings. In the calendar year 2001, the Supervisory Board met on January 25, 2001, March 22, 2001, June 27, 2001, October 17, 2001 and on December 12, The personnel committee discussed personnel matters of the Board of Directors in two meetings during the business year 2000/01. The financial audit committee met on March 22, The financial statements and the management report of Ahlers AG and of the Group for the period from December 1, 2000 to November 30, 2001, including the accounting records, were audited by and bear the unqualified opinions 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 Ahlers AG and of the 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 13, 2002, 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

8 Report of the Supervisory Board Supervisory Board was extensively informed by the auditors on the adoption of the Law for Control and Transparency in Businesses (Kon- TraG), and on the status of risk management. Within the scope of their audit, Arthur Andersen Wirtschaftsprüfungsgesellschaft Steuerberatungsgesellschaft mbh also prepared a report on their audit of the early detection system of risks in accordance with paragraph 317 (4) HGB as of November 30, 2001; this report was presented to the Supervisory Board. 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) 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. 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 our 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 goes to Dr. Erich Coenen, who retired from the Supervisory Board on his own accord with the end of the ordinary shareholders meeting on June 27, Mr. Wolfgang Hartmann, Dipl.- Volkswirt, member of the Board of Directors of

9 Commerzbank AG, Frankfurt am Main, was appointed new member of the Supervisory Board as of June 27, 2001, as representative of the shareholders up to the end of the ordinary shareholders meeting Herford, March 13, 2002 The Supervisory Board Dr. Ewald Hilger Chairman

10 Management Report of the Board of Directors Consolidated financial statements and individual financial statements of the Parent Company Business development The development of the German clothiers and the domestic retail trade for textiles and clothing has been marked by stagnation and market saturation for several years now. On an overall basis, private consumption did increase, however, sales in the clothing sector fell short of expectations the share of private consumption dropped from year to year and was down to 5.5 percent in 2000, as the significance of other sectors, particularly leisure time and living, rose more strongly. Thus, the expectations of the German clothiers in 2001, to reach the year-earlier turnover level, have once again not been fulfilled. Instead, the domestic clothiers recorded an almost two percent decline, on total sales of 9.95 billion Euros, during the period January to November The producer price index was at +0.2 percent during this period. The orders position also reflects the overall negative national economy, as last year, incoming orders show a loss of 3.6 percent. The stabilizing trend in foreign demand is continuing, at a gain of 21.7 percent. The German clothiers meanwhile have an approximate 45 percent share in exports. Around two-thirds of this share is accounted for by the EC countries. The shrinkage process of the German clothiers also persisted in 2001; from January to November 2001 the number of manufacturing outlets decreased by 11.7 percent, the average number of employees by 7.9 percent. From January to October clothing exports rose 1.5 percent to 4.6 billion Euros, while imports remained flat at last year s level, at 10.7 billion Euros; this led to a 0.9 percent decline of import surplus to 6.1 billion Euros. In the completed business year, the Ahlers group was, once again, better than the industry s average. The group s sales revenues of million Euros were just slightly up on year-earlier level, however, in this environment marked by ruinous competition and a negative economy, they can be deemed a success, although the group s targeted turnover growth was not achieved. Foreign share, at million Euros, is now 32.4 percent.

11 first-time inclusion of the OTTO KERN division for a full business year. These factors prevented Turnover according to regions in the group (year earlier) Germany 67.6% (69.5%) Central-/Eastern Europe 7.9% (6.1%) Western Europe 24.5% (24.4%) us from reaching our projected targets. When comparing this year s with year-earlier figures, it should also be noted that the 2000/2001 figures include an extraordinary book profit from the sale of works of art, at 2.7 million Euros, and that the net profit was negatively affected by the tax audit for the period 1995 to 1998, and its aftermaths influencing the years 1999 to 2001, at 0.6 million Euros. The premium brands sector surpassed targets time and again. Apart from quality, brand The results on ordinary activities, at 23.5 million Euros, was more than 4.4 million Euros short of last year s level. Compared to last year, EBIT declined by just 2.8 million Euros and EBITDA even by only 1.9 million Euros. The results did not quite live up to our expectations. The lower net profit, by around 2.0 million Euros, was primarily burdened by the social plans concluded in the current business year, with around 3.3 million Euros, as well as by the non-hedgable currency exchange losses of the Rupie (LKR), amounting to 1.2 million Euros. Moreover, depreciation on goodwill and brand rights have meanwhile gone up to around 4.5 million Euros; compared to last year, the rise is driven by the awareness and sympathy play an increasingly prominent role when purchasing clothing. This is why we see the strength of the brand as the decisive success factor. Overall, turnover rose 15.6 percent from million Euros to million Euros and thus represents the largest share in the Ahlers group, at 42.5 percent. Particularly our licenced brand Pierre Cardin shows an above-average performance in turnover and earnings. In addition, the eterna sector achieved excellent growth rates in both turnover and earnings, as in the past years, and thus contributed to the first-rate performance of the premium brands sector. The OTTO KERN sector is still below targets, owing to the fact that both

12 Management Report of the Board of Directors the products of the licencees as well as those produced by the Ahlers group have to be repositioned on the market and stand their ground. Nevertheless, this sector continues to bear a great potential. The encouraging performance of the premium brands will persist in future as well. Even though sales through the traditional core departments of the retail trade continue to account for the largest part of total sales, retail floor space management is gaining significance. Here too, we have developed corresponding concepts and solutions and are going to meet the demands in cooperation with our trade partners. Results from ordinary activities slipped at a very high level, to 16.3 million Euros. This decline was driven by the losses in the OTTO KERN sector, as initial turnovers could not be achieved before the second half-year 2000/2001, i.e. with the supply of the advance sales fall/winter Moreover, write-downs on immaterial assets linked to the acquisition of eterna and the trademark rights OTTO KERN, totalling 2.9 million Euros, as well as costs incurred by social plans, at 1.8 million Euros, have burdened profits. Turnover in the jeans & workwear sector, with the brands Pioneer, Pionier and Pionier Sportive, remained roughly at the high year-earlier level, at 81.7 million Euros. It becomes evident in this sector as well, that by the increasing extension of retail floor space management with the wellknown brandname PIONEER, intensified competition can be successfully met. Additionally, Pionier Sportive, the specialist for extra large sizes, was able to act successfully in a difficult environment. The market for workwear is in a difficult phase, the industry s total turnover in Germany continues to slip. The workwear sector in the Ahlers group was able to raise profits once again, with almost flat turnovers. Results from ordinary activities remained at a high level, at 9.8 million Euros and a return on sales of over 12 percent. Turnover in men s & sportswear, with the main brands Jupiter, B.S.M. and GIN TONIC, slipped by 20.5 million Euros to million Euros, particularly, the turnovers of Jupiter and B.S.M. were negatively affected.

13 On the one hand, this decline is driven by a weakening in the whole medium price segment, on the other hand, the sportswear business reported a strong declining trend. Again, we are going to waive unprofitable turnovers in the current financial year, thus accepting further losses in turnover. In the completed business year, respective measures were introduced to adapt costs to the lower turnovers, i.e. by cuts in staff, streamlining of the product range and by merging procurement, marketing and administration for the products of the brands Jupiter and B.S.M. In reaction to the intensive competition, the cooperation with the retailers was strengthened by expanding the floorspace concept. This development is especially met in the GIN TONIC sector; additional shop-in-shop systems have been successfully implemented in cooperation with the retailers. Nineteen new shops were opened in the past business year, meanwhile, there is a total of 113 shops. Results from ordinary activities in this sector continued to decline. This is due mainly to the weak jacket business; goodwill depreciation totalling 1.6 million Euros and restructuring measures have additionally burdened operating results. The business year of the Brandt Sportive Mode GmbH and GIN TONIC SPECIAL Mode GmbH including their subsidiaries, all purchased in 1999, did not take the expected positive course of business. The targeted net profit was again underrun. Whereas GIN TONIC was able to slightly raise last year s turnover, by 1.2 million Euros, B.S.M. reported a decline of 8.1 million Euros. Large chain stores 11.7% (10.1%) Consumer markets 4.7% (5.6%) Department stores 5.9% (6.6%) Mail order houses 3.3% (3.2%) Specialized discount stores 2.2% (3.2%) Miscellaneous 1.8% (1.0%) Beginning 2002 the new B2B platform ahlers24.com of the Ahlers group started with the brand Pioneer, other brands are to follow. This portal is primarily oriented to specialized retailers, who do not have the opportunity to exchange data via EDI. Apart from ordering NOS-merchandise (never-out-of-stock) and placing reorders, registered customers can exchange business documents by , request the actual status of their deliveries and orders Turnover according to groups of customers in the group (year earlier) Specialized retailers 70.4% (70.3%)

14 Management Report of the Board of Directors and look into tracking information of the shipping companies. In the future, advance ordering will also be included in this extranet. The eterna online-shop system has been running since July 1, 2000; here, importance was attached to a cooperation with the specialized retailers. At the turn of the business year already, 116 retailers linked their own homepage to our shop and another 180 have announced their interest in doing so. As at November 30, 2001, the balance sheet structure of the group and at Ahlers AG remains good. Compared to last year the balance sheet total in the group, at million Euros (last year million Euros), and at Ahlers AG, at million Euros (last year million Euros) were nearly flat. The group s share of equity capital in the balance sheet total was 44.6 percent and 48.4 percent at Ahlers AG. The return on equity before income taxes was at 19.9 percent in the group and 24.3 percent at Ahlers AG. Earnings per share according to the formula DVFA/SG (Deutsche Vereinigung für Finanzanalyse und Anlageberatung/Schmalenbach- Gesellschaft) were determined at 0.91 Euro for the year under review (compared to 1.02 Euros last year). Cash flow in the group slipped by 2.3 million Euros to 23.8 million Euros as compared to last year, and by 1.7 million Euros to 20.6 million Euros at Ahlers AG. The Board of Directors and the Supervisory Board propose to the shareholders meeting the distribution of an unchanged dividend of 0.82 Euro for ordinary shares and of 0.87 Euro for preferred stock. Including the tax credit of 0.35 Euro for ordinary shares and 0.37 Euro for preferred stock, the total yield for ordinary shares amounts to 1.17 Euros and to 1.24 Euros for preferred stock. Based on the respective yearend closing rates, the holder of ordinary shares earns a 9.4 percent return, and the holder of preferred stock 12.8 percent. Furthermore, an allocation to revenue reserves of 6.5 million Euros was made from profits to strengthen the equity base. Balance sheet structure of the Group 250,0 200, Fixed Assets 40.3% Equity 43.7% 97.0 Fixed Assets 37.4% Equity 44.6% In the completed business year, a subordination and profit and loss transfer agreement was signed between Ahlers AG and its subsidiary 150,0 100,0 50, Current Assets 59.7% Borrowed Capital 56.3% Current Assets 62.6% Borrowed Capital 55.4% 0,0 1999/ / / /2001

15 Brandt Sportive Mode GmbH, Kassel. This agreement generated an inflow of 0.4 million Euros. Also in the business year 2000/2001 a subordination and profit and loss transfer agreement was signed between Ahlers AG and the subsidiary Otto Kern GmbH, Herford; losses of 3.9 million Euros were taken over. Both agreements were concluded with retroactive effect of December 1, 2000 and are subject to the approval of the general meeting of Ahlers AG on June 14, The main reason for these agreements is the fact that, on account of the regulations of the tax reduction law, the funds used to finance the respective acquisitions are not tax-deductible anymore. For the same reason eterna Beteiligungs-Aktiengesellschaft, Passau, concluded a subordination and profit and loss transfer agreement with GIN TONIC SPECIAL Mode GmbH, Stuttgart. Ahlers AG concluded such an agreement with eterna Beteiligungs-Aktiengesellschaft, Passau, on October 16, 2001, subject to the approval of the General meeting of Ahlers AG, which is to come into effect for the first time with the business year beginning on December 1, In addition, the losses of the completed business year were tax-deductible on account of the agreement between Ahlers AG and Otto Kern GmbH. Our Austrian subsidiaries continue to be on the road to success. With a rise in turnover of just under five percent, EBIT recorded a double-digit percentage. The Polish production and marketing companies reported a satisfactory performance. Turnover rose 15.5 percent, the results on ordinary activities increased by 0.6 million Euros, thus generating a return on sales of 7.4 percent. As in prior years, all own production capacities were continuously utilized in the year under review due to the order situation. The total volume of internal production and farmed-out work (cross-border commission processing and fully purchased) is mainly spread over nine countries. The share of internal production is 41.6 percent. Production structure in the Group (year earlier) Farmed-out production 28.9% (34.7%) Fully purchased goods 29.5% (22.3%) Internal production 41.6% (43.0%)

16 Management Report of the Board of Directors The performance of the plant in Banovce/Slovakia with 635 employees, which has been producing exclusively for eterna, is decidedly positive. Our producing subsidiary, Dial Textile Industries Ltd., in Sri Lanka, with production facilities in Katunayake and Kuliyapitiya, reported good earnings again and thus links to the preceding years. Unfortunately, this result was clauded by non-hedgable currency exchange losses in the Rupie (LKR) of 1.2 million Euros (last year 0.3 million Euros exchange gains). Ahlers AG has a branch office in Mariasdorf/Austria. The average number of employees was 16. A minor net profit was reported. The branch will be liquidated in the current business year. The conversion procedure of our data systems to the Euro was trouble-free. Investments Investments noticeably underran depreciation in the year under review. The additions to fixed assets in the group came up to 6.6 million Euros, 13.6 million Euros less than the year before. In the domestic group investments totalled 4.2 million Euros, abroad 2.4 million Euros. Disposals of fixed assets totalled 7.9 million Euros. Investments in intangible fixed assets were at 0.4 million Euros, 0.3 million Euros were invested in land and buildings, 1.6 million Euros in technical plant and machinery, 2.3 million Euros for payments on account, 1.7 million Euros in plant under construction, and 0.3 million Euros in financial assets. The additions to intangible fixed assets are exclusively accounted for by EDP software. The additions in land and buildings primarily concern the buildings in Herford-Elverdissen, in Mariasdorf/Austria and in Lubin/Poland.

17 The additions in technical plant and machinery as well as factory and office equipment concern, in all group companies, exclusively replacement investments. Payments in advance and plant under construction concern the expansion of the administrative building of eterna Mode GmbH, Passau. Additions to financial assets primarily relate to works of art. The 25 works of art from the collection sold under contract of January 26, 2001 account for the major part of the disposal of fixed assets, at 5.1 million Euros. The remaining 2.6 million Euros are generated by the closing-down of production facilities and the cut-down of staff. In total, a gain on disposals of 3.0 million Euros was achieved, 2.7 million Euros thereof relate to the sale of the works of art. Employees The number of employees in the group decreased from 6,639 to 5,856, representing a cutback of 783 employees or 11.8 percent. In Germany, staff declined by 67 to 1,062 employees, abroad the number of employed persons dropped by 716 to 4,794. The decline is primarily accounted for by the restructuring measures implemented in business year 2000/2001. In the production plants in Austria and Poland, staff was cut by 430 people. The production capacities were shifted to lowercost countries. Furthermore, production in Passau was shut-down, the number of redundancies was 40. The remaining staff reductions were made on the administrative level. The social plans negotiated with the Works Councils and the Trade Unions burden results, at around 3.3 million Euros. During the current business year, the number of domestic employees will be reduced by 70, abroad by 120 persons. Corre- Structure of employees in the Group (year earlier) Poland 2,112 (2,435) Slovakia 635 (588) Austria 200 (307) Others 23 (22) Germany 1,062 (1,129) Sri Lanka 1,824 (2,158)

18 Management Report of the Board of Directors sponding measures have been initiated, the costs for the social plans are already included in reserves. In the year under review, a total of 49 young men and women were apprentices all in the commercial sector. The personnel expenses of the Ahlers group remained nearly on year-earlier level, at 78.5 million Euros (78.1 million Euros); accounting for the expenses incurred by the social plans, at 3.3 million Euros, personnel expenses are already declining as forecast in the current business year, by 2.9 million Euros. In the current year we expect further declining personnel expenses of at least another 4.6 million Euros, driven by the layoffs, and will thus be able to achieve the cost savings in the personnel sector, targeted at 7.5 million Euros. An average of 44,666 Euros (last year 42,201 Euros) was spent for each employee of the domestic companies. Pension payments of 596,960 Euros (previously 574,413 Euros) were made to 789 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 40.2 years, the average number of years of service was 10.8 years. Within the scope of the new collectively agreed pre-pension part-time regulation, we have concluded eight such agreements. In doing so, the so-called block model is applied; i.e. the whole term of the pre-pension part-time work is classified into an active and a passive phase, at equal parts. Target of this regulation is to enable more young people to enter the working environment. In the year under review, 18 employees were able to look back on 25 or 40 years of service, respectively; two employees celebrated their 45th anniversary. At the occasion of a celebration for their jubilees, management expressed its gratitude for their loyalty and good cooperation. We would like to take this opportunity to thank all our employees for their performance.

19 Report on Risk Management Our risk management system, which was developed following the adoption of the Law for Control and Transparency in Businesses (Kon- TraG), 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. Within the scope of the budget planning for the business year 2000/2001 both targets and observable risks have been determined. Furthermore, the person responsible for risk management has defined detailed risk fields, which take into account all operating processes and functions of the Ahlers group. These fields are updated twice a year and documented in a check list. The check list allows the variable evaluation of the individual sectors. 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. Corresponding communication on the part of the Board of Directors and the person responsible for the risk management has increased the risk awareness of the respective employees accordingly. The system-dependent monitoring of the early risk detection system has been guaranteed by designating a person responsible for risk management; the system-independent supervision is the responsibility of the internal auditing department. The regulations in connection with the risk management system have been documented in the Risk Management Manual of Ahlers AG, and are valid for the whole group. According to the principles of clarity and materiality only those risks are subject to reporting, which either endanger the continuation of the

20 Management Report of the Board of Directors 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 risk which cannot easily be calculated. 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 OTTO KERN, reduces our risks. Slackening paying habits of our customers and, thus, writedowns 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. Particularly 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 between the Euro and the US dollar with conservative rate-hedging transactions. Inasmuch as such risks are not hedgable they do not, however, present a risk subject to reporting. We constantly keep a vigilant eye on the global interest rate development, ready to take appropriate action. 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 Ahlers AG. 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:

21 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 2000/2001 our company has not carried out any legal transactions upon request of or in the interest of affiliated 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. Prospects Following the renewal of a large part of the agreements, up to 2006, of the very successful products Pierre Cardin Jeans and Pierre Cardin Sportswear, manufactured under licence, additional long-term licensing agreements were concluded for the countries of Russia, White Russia and the Ukraine, for the first time on an exclusive basis in the completed business year; we anticipate large turnover potentials in these countries. In addition, an also long-term licensing agreement for ladies jeans was signed for the areas of Germany, Austria, Switzerland and the Benelux countries. Owing to our experience and our know-how in the jeans sector we are confident that we will not only earn good turnovers, but also record good profits. Due to the present economic situation in the retail trade, we did not reach the targeted figures with the products of the premium brand OTTO KERN. However, we are confident that turnover will rise more strongly from season to season, and that the earnings position will improve considerably. In the completed business year we separated from some of our licensees, as our standards were not met. We were able to win an experienced licensee for the significant market of ladies knitwear; we expect first successes to show in the current business year already. With the aid of additional licensees, which we will select carefully, we will further develop the brand OTTO KERN and also ensure a good earnings position. Driven by the orders backlog and the anticipated incoming orders fall/winter 2002, own production capacities will be fully utilized also in the current business year.

22 Management Report of the Board of Directors Contrary to last year, we do not expect any price increases on the procurement market on account of the persistently high dollar rate. Production or job processing costs, respectively, will hardly change. Persistently rising costs in Poland impelled us to reduce the Polish production capacities considerably, so as to pass on production orders to lower-cost countries. The shirt production in Schärding/Austria was reduced progressively and shut-down completely at the beginning of By shifting this production to our own plants in Slovakia and to Czech job processing businesses, higher savings potentials will be generated, which will affect earnings in the current year. Driven also by these measures, the Ahlers group will continue to achieve satisfactory profits in the future. Total investments of 12.0 million Euros are planned for the current business year. The largest part thereof, approx. 6.7 million Euros, will be accounted for by the expansion of the central warehouse of our subsidiary eterna Mode GmbH in Passau. Construction is to begin in May 2002, completion is envisaged for March This investment is necessary so as to meet the logistic tasks required for the planned growth in turnover in the coming years. The remaining total investments, which primarily concern rationalization, replacements and modernization, is notably lower than depreciation. The year 2001/2002 began as planned. We particularly expect double-digit growth rates in turnover for the premium brands, along with a good performance. In the sector jeans & workwear we anticipate a moderate rise in turnover; at least, turnover is to remain on the same level as before. For reasons of profitability, we are going to induce further declines in turnover in the men s and sportswear segment, because the margins are insufficient due to competitive pressure. Overall, we envisage higher growth potentials abroad than at home. We are confident that we will again do much better than the industry on the average, that the financial year 2001/2002 will be another satisfactory year for our enterprise, and that the distribution of a shareholder-friendly dividend will be possible.

23 Development of the Ahlers Shares Following the year that ended the New-Economy-dreams, 2001 was the year of disappointed hopes for a recovery of the stock markets. The widespread expectation that the worst was over after the crash of the TMT industry (technology, media, telecommunication), which began in March 2000, has been thoroughly disproved. The crash was undiminished in 2001 and presented the stock markets with the second consecutive year of losses. This has been a rarity so far. On September 11, the bad humour of the market players vanished and changed to pure horror. The respective price reactions did not fail to come. Indices plunged heavily to new all-time lows in Europe and also in the U.S.A., where trading halted for several days. The commonplace opinion that the collapse on the German stock market was actually caused by the terror attacks in the U.S.A. is not correct, however. It is a fact that the DAX dropped sharply between September 11 and September 21, when it reached the lowest level of the year, however, it had already slipped strongly in the period before. The attacks were rather a catalytic agent than the decisive reason for the crash. Up to this point the market did not want to admit how desastrous the economic situation and the prospects of the companies really were. Also the Ahlers share lost ground. The ordinary shares of Ahlers AG were valued at Euros at year-end, preference share at 9.71 Euros and were thus particularly evident when looking at the preferred stock under year-earlier levels. The price development of our shares was negative without any perceptible fundamental reasons. Both classes of shares recorded price losses throughout the entire year. Only the price of the ordinary share was able to stabilize somewhat near year-end at high turnovers and has again surpassed the significant 200-day-level. Structure of shareholders Ordinary share (year earlier) 24.69% (26.42%) widely spread 1.56% (0.00%) own shares 73.75% (73.58%) Kommanditgesellschaft Westfälisches Textilwerk Adolf Ahlers (including shares added according to WpHG) Structure of shareholders Preference share (year earlier) 56.57% (58.24%) widely spread 2.11% (0.62%) own shares 41.32% (41.14%) Kommanditgesellschaft Westfälisches Textilwerk Adolf Ahlers (including shares added according to WpHG)

24 Development of the Ahlers Shares The German stock index (DAX) lost around 20 percent during the course of the year and was quoted at 5, at year-end. The SDAX did not prove to be any better during the year. By year-end the index lost over 23 percent. The poor performance of this section of the stock market also induced Ahlers AG to retire voluntarily from the SMAX, with effect of September 24, Ahlers AG, one of the founder members of the SMAX, thus drew the conclusions from an unsatisfactory price performance that the shares recorded since its participation in the SMAX. The Ahlers share is now listed on the Official Market. After the decline of the share prices on a large scale, sound equities are regaining the interest of the investors, all the more so as these frequently offer an upward price potential. Also the Ahlers share is among the top dividend-bearing securities. Because the fiscal year deviates from the calendar year, the half-income method cannot be applied on the distribution of the year Including the tax credit, a shareholder earns a 8.7 percent (last year 8.9 percent) return on the proposed dividend of 0.82 Euro for ordinary shares, and 11.4 percent (previously 9.6 percent) on a proposed dividend of 0.87 Euro for preferred stock, based on the price effective November 30, The price-earnings-ratio (PER) of the ordinary share is 14.8 and that of the preference share 12.0 on the basis of the DVFA/SG global earnings. In spite of its retirement from the SMAX, Ahlers AG will continue to fulfill the transparency requirements of the SMAX. The aim of our investor relations activities will be a regular, all inclusive and just-in-time information policy, 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 the shareholders and potential shareholders with information as best as possible, we have presented the financial information sector in a clear and up-to-date manner under

25 Data of the Ahlers Share Per share in Euros Nov.30,1996 Nov.30,1997 1) Nov.30,1998 2) Nov.30,1999 3) Nov.30,2000 Nov.30,2001 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 8,000,000 Preference share 200, ,000 4,000,000 6,400,000 6,400,000 6,400,000 Earnings after taxes ) DVFA/SG earnings 5) ) Cash-flow 4) ) ) ) )+5) ) 2001 Ordinary share Year-end price Highest price Lowest price Preference share Year-end price Highest price Lowest price ) Following the issue of bonus shares in the ratio of 1 for 5 at a subscription price of E 2) 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

26 Balance sheet structure Group AG Nov. 30, 2001 Nov. 30, 2000 Nov. 30, 2001 Nov. 30, 2000 thousand thousand thousand thousand Euros % Euros % Euros % Euros % Assets Expenditures for the start-up and expansion of operations 2, , Intangible and tangible fixed assets 91, , Financial assets 2, , , , Fixed assets 94, , , , Inventories 72, , , , Trade receivables 50, , , , Other receivables and other assets 6, , , , Liquid assets and securities 31, , , , Current assets 161, , , , Prepaid expenses Total Assets 259, , , , Liabilities Shareholders equity 115, , , , Special untaxed reserves , , , , Pension provisions 6, , , Long-term liabilities 73, , , , Other accruals 19, , , , Other liabilities and deferred income 44, , , , Borrowed capital 143, , , , Total Liabilities 259, , , ,

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29 The following pages serve to give you an overview of the products and services of Ahlers AG. The individual companies, brands and markets as well as our commitment to art are the basis of our successful corporate strategy. Since we are convinced that art is not luxury but necessity for modern people, we will show you, together with our products, a section of our art collection. The works of art of our collection are popular lendings for exhibitions organized in cooperation with our customers. Art and fashion are thus a pillar of our corporate philosophy: To present creative masterpieces of our culture to a wide range of consumers. The joy and enthusiasm of the people are the attributes that determine our activities, in art as in fashion. pierre cardin JUPITER eterna B.S.M. ANDY JLLIEN OTTO KERN GIN TONIC PIONEER Pionier Berufskleidung PIONIER SPORTIVE Sisignora

30 About the art of making fashion.

31 Ahlers AG goes back to a cloth wholesale company founded in 1919 by Adolf Ahlers in Jever country 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 stock market flotation in 1987 the Ahlers stock has been a popular investment for the seriousminded. 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 to 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 practice-oriented competence, solidity and financial strength. Our target groups are well defined and our collections well balanced. This makes us a reliable partner for the speciality clothing retail trade. Premium Brands OTTO KERN pierre cardin ANDY JLLIEN eterna Men s- & Sportswear JUPITER B.S.M. GIN TONIC Jeans & Workwear PIONEER Pionier Berufskleidung PIONIER SPORTIVE A brand philosophy

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 posses 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. 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. Facts High quality and individuality Selective distribution by the specialized retail trade Clear brand management by targeted sales support Takeover of marketing responsibility (sales area concepts) pierre cardin

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35 a brand with attractive prices and high value-for-money. Jupiter benefits from the large 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 off by independent programmes with comfortable and functional lines for the onthe-move business generation. Jupiter is sold to speciality clothing retailers, to large chain stores and department stores and offers interesting yield aspects, with well-targeted offers to round off the retailers product mix. Facts Guaranteed quality standard for convincing price-performance-ratio JUPITER

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

37 hemden und blusen. bügelfrei. Marktführer im Bereich bügelfreier Hemden und Blusen.

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 speciality retail trade by employing the best quality. B.S.M. s high quality and highly functional sportswear is sold throughout Europe. The main brand is complemented by independent labels, orientated to topical outdoor trends with prominent sportswear details. Facts Specialist for functional sportswear jackets Widely recognized for wearing comfort Wide distribution in the speciality retail trade B.S.M.

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

41 Facts Frauen schauen Männer zuerst auf die Schuhe, dann in die Augen, auf die Hände und schließlich auf den Po. Und sagen: es sind die inneren Werte die zählen. Assortment for the Premium-Casuals segment Young, modern designer look ANDY JLLIEN lässt Männer Männer sein. 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 developes 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 and bags complete the world of OTTO KERN as lifestyle-supplier. As owner of the brand, Ahlers AG prizes a consistent branded-licence Facts Exemplary degree of popularity A complete brand in both presentation and philosophy All-round range Premium competence and diversification management. Licensees are selected partners who are market leaders in their segment. OTTO KERN

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45 GIN TONIC stands for not quite normal. GIN TONIC men is among the leading collections in the segment of young men s fashion, unconventional, stylish and individual. GIN TONIC women is the casual collection for the trendy young woman. Innovative collection with a high level of aspiration on fashion and stylish basics. Facts Stylish outfits for people with a will of their own and looking for something special new marketing concepts offer the retail trade a fair risk distribution and clear competitive advantages Constant up-dating of assortments by graduated programmes and delivery dates Advertising material and events at the point-of-sales support selling 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. 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 target group-oriented Young- Fashion-Girls-Collection are Facts Leading brand image with the legendary number Strong merchandising presence in the trade 24-hour-delivery service EDP internetworking with top customers further significant parts of the product range. PIONEER

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49 Pionier Berufskleidung 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 the traditional workwear, the Pionier programme also includes corporate wear that incorporates the latest trends and fashionable Facts accents. Supplies leading enterprises in trade, industry and the service sector. Modern logistics centre guarantees 24-hour-delivery Technical quality supervised by TÜV, a leading German technical agency. Certification under DIN EN ISO Consistently high quality standards, proven a million times. 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 programme of tops creates the Pionier Sportive Look. By using high and innovative qualities, cultivated standards and large inventories, 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

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53 SISIGNORA Those who love life enjoy it. Sisignora creates fashion for women who enjoy life in plenty. The brand has established itself as one of the leaders in the large size segment. The core competence lies in the experience to convert trendy themes into wearable fashion, particularly for the large sizes. Facts Outfits for women who are longing to know what it is like to wear a size 38. Constant up-dating of the assortments by 12 monthly deliveries Sales area concepts and shop-in-shop with communication measures and point-of-sale material Full-year promotion with fashionable events Sisignora

54 Bettina Rheims (geb. 1952) Jean Tinguely ( ) Autoportrait de Valeria Golino par moi-même x 114 cm Silver Gelantine Print Relief avec Spaghetti VonRoll x 56 cm Mixed media, collage, on board VG Bild-Kunst, Bonn 2002 für Werke von: Bernhard Luginbühl, Hermann Nitsch, Dieter Roth, Kurt Schwitters, Timmermahn, Jean Tinguely Friedrich Ahlers- Hestermann ( ) Selbstportrait x 60 cm Oil on canvas Dieter Roth ( ) Drillinge 1985/86 51,8 x 95,4 x 3,5 cm Mixed media, collage. Front and back Bettina Rheims (geb. 1952) Bettina Rheims (geb. 1952) Michael Douglas pour Basic Instinct avec un bas sur la tête x 50 cm Silver Gelantine Print Madonna lying on the floor of a red room x 120 cm Colour Negative Print Kurt Schwitters ( ) Mz 122 Tropfen rot ,4 x 6,8 cm Collage Timmermahn (geb. 1942) Menschen über Hollyfield x 162 cm Oil on canvas Hermann Nitsch (geb. 1938) Schüttbild mit Hemd x 300 cm Öl auf grundierter Jute Bernhard Luginbühl (geb. 1929) Ankerfigur mit Doppelpoller x 380 x 278 cm Iron sculptur On loan at the Altonaer Museum in Hamburg