Powerland AG: Significant increase in revenue and gross profit in first quarter 2012

Significant increase in revenue and gross profit of Powerland
in first quarter 2012

- Revenue increased during first quarter 2012 by 37.8 percent to approx.
EUR 47 Mio. compared to prior period

- Luxury segment drives Group gross profit to record high in Q1/2012 to around EUR 20 Mio., approx. one third above last period comparable figure

- 15 low performance / lower prospect distributor stores closed as part of continued store assessment activities

Frankfurt / Main, 5/24/2012 - Powerland AG (ISIN DE000PLD5558 / Prime Standard), the leading Chinese manufacturer of exclusive luxury handbags and leather goods, listed on the Frankfurt Stock Exchange since April 2011, presented today its first quarter results 2012.

Group revenue for Powerland AG increased from EUR 34.1 million in Q1 2011 by 37.8 percent to EUR 46.9 million in Q1 2012. Revenue growth was mainly driven by the expansion of Powerland's retail network and an increase in selling prices in the Luxury segment.

Gross profit increased by 33.1 percent over the same period to EUR 20.2 million, mainly due to higher unit selling prices and an improved product mix in the Luxury segment.

EBIT for the Powerland Group decreased by 14.3 percent in the first quarter 2012 to EUR 8.6 million. Earnings before taxes of EUR 7.7 million are slightly lower in first quarter 2012 compared to Q1 2011. This reduction mainly was mainly driven by higher selling and distribution costs for brand building in the Luxury segment, as well as the higher administrative expenses.

'Based on overall positive economic development, our growth strategy, the enhancement of brand awareness as well as our product quality we are confident that Powerland will strengthen its strong market position in China for luxury handbags in 2012 and beyond', explained Shunyuan Guo, CEO of Powerland AG when discussing the excellent development of the operating business during Q1 2012. 'Intensive brand building and continuation of a new marketing strategy through digital media at more than 30 key airports in China were primary drivers of revenue growth ', underlined Guo. The number of Powerland stores increased from 112 as at 31 March 2011 to 149 as at 31 March 2012. 'In line with our quality growth strategy, we decided to review our store network in detail and close down 15 distributor-operated stores in Q1 2012, which are strategically not well located and would not have had the potential to increase their sales substantially. Our target to have a total of 300 stores by the end of 2014 remains unchanged', stated Guo.

Sales in the Luxury segment grew strongly by 41.0 percent year-on-year during the first quarter 2012. The Luxury segment is the Company's core focus for further growth and is expected to account for approximately 70% of the Group's revenues in two to three years. Expansion of the sales network to a total of 300 stores by the end of 2014, of which approximately 70 stores will be opened and operated by Powerland itself, will support this target. These self-operated stores are mainly flagship stores. Expansion of own production facilities in the current factory premises are also planned.

Revenue in the Casual segment increased by 34.4 percent to EUR 22.1 million. EBIT for this segment amounted to EUR 5.1 million. This increase was mainly due to the higher sales of synthetic leather products to customers domiciled outside of China.

Gross profit of Powerland increased from EUR 15.1 million in Q1 2011 by 33.1 percent to EUR 20.2 million in Q1 2012. This strong growth was mainly due to the significant gross profit growth of 52.6% in the Luxury segment, which contributed more than 50 % of the Group's revenues. The increase in Q1 2012 was mainly due to higher unit selling prices, which out-paced cost increases for raw materials, labour and administration expenses and also to an improved product mix.

Profit before tax decreased by 20.2 percent to EUR 7.7 million in Q1 2012. This was mainly due to increases in S&D costs, administrative expenses and net financing costs.

Income tax for the Group decreased to EUR 2.0 million from EUR 2.5 million in Q1 2011. Earnings per share (EPS) were eur 0.38 in Q1 2012. Equity amounted to EUR 132 million as at 31 March 2012. The Equity ratio accounted for 69.8 percent at the same day compared to 73.4 percent as at 31 December 2011.

Overall sales development was in-line with management expectations for the first quarter of 2012. Based on current business trends, , management are confident of achieving the targeted organic sales growth of at least 20% (in RMB terms) compared to 2011.

'We believe, that China's macroeconomic situation will remain healthy in 2012, which should sustain market demand for our products. Powerland's results should improve due to our 'cost plus' pricing strategy and a series of existing initiatives, such as, more efficient usage of working capital, improved cash flow management, better cost control and supply chain supervision. Optimizing the Luxury segment product portfolio and launching new and innovative Casual products should further enhance results. The aim of Powerland is for its shareholders to participate proportionately in the Company's future success', Guo underlined when discussing the outlook of the Group.

^* the computation of earnings per share for Q1 2011 was based on net profit for the period
and the 10 million shares issued during the reorganisation exercise as if they were issued
on 1 January 2011
^** the computation of earnings per share for Q1 2012 is based on net profit of the period
and the 15 million shares

For further informationen please contact directly:

Powerland AG

Investor Relations           Tel: +49 (0)172 - 674 97 92
Jörg Peters                       Fax: +49 (0)6196 - 777 99 66
Hauptstrasse 129            E-Mail: ir@powerland.ag
65760 Eschborn              Home: http://www.powerland.ag
Germany

Public Relations              Tel: +49 (0)6196 - 776 41 10
Karl-Friedrich Brenner    Fax: +49 (0)6196 - 776 41 22
Hauptstrasse 129            E-Mail: pr@powerland.ag
65760 Eschborn              Home: http://www.powerland.ag
Germany