H1 2010 - Tom Tailor Reports... · number to 96. As a result of expanding our presence, Group revenue rose 9.9 percent year on year to EUR 147.3 million. Our constant growth in revenue

H1 »2010Casual fashion for a casual life

Key Figures

in € thousandQ2

2010Q2

2009Change

in %H1

2010H1

2009Change

in %

Revenue 70,893 62,422 13.6% 147,290 134,044 9.9%

Adjusted EBITDA 3,587 -550 752.2% 13,454 7,735 73.9%

Adjusted EBITDA margin (in %) 5.1 -0.9 – 9.1 5.8 –

One-time effects 244 337 – 7,259 -800 –

– due to IPO 36 0 – 6,384 0 –

EBITDA 3,343 -887 – 6,195 8,535 -27.4%

EBITDA margin (in %) 4.7 -1.4 – 4.2 6.4 –

Adjusted net income for the period -1,424 -8,610 83.5% -3,364 -11,383 70.4%

One-time effects including imputed tax effect 1,600 1,647 – 10,287 2,262 –

– due to IPO 43 0 – 6,852 0 –

Net result for the period -3,024 -10,257 70.5% -13,651 -13,645 –

Investments 4,284 2,970 44.2% 9,994 10,061 -0.7%

Number of employees as of June 30 (total) 901 769 17.2% 901 769 17.2%

in € thousand 30.06.10 31.12.09Change

in %

Total assets 269,750 250,108 7.9%

Equity 81,252 -68,181 219.2%

Equity-to-assets ratio (in %) 30.1 -27.3 –

Net financial liabilities 57,670 183,916 -68.6%

Points-of-Sale

30.06.10 31.12.09

Franchise-Stores 205 201

Shop-in-Shops 1,240 1,108

Retail- / Outlet-Stores 96 87

Controlled areas 1,541 1,396

Company Profile

Letter to Shareholders

TOM TAILOR Shares

Interim Management Report

Interim Consolidated Financial Statements

Other Disclosures

4

10

12

16 Overview of the Course of Business

17 Results of Operations

20 Financial Position and Net Assets

22 Employee Development

22 Events after the Balance Sheet Date

22 Risk and Opportunity Report

23 Outlook

28 Consolidated Statement of Comprehensive Income

29 Consolidated Statement of Cash Flows

30 Consolidated Balance Sheet

32 Consolidated Statement of Changes in

Shareholders’ Equity

33 Notes to the Financial Statements

45 Financial Calendar / Imprint

Company ProfileLetter to Shareholders

TOM TAILOR SharesInterim Management Report

Interim Consolidated Financial StatementsOther Disclosures

3

Contents

5Company ProfileLetter to Shareholders



TOM TAILOR KIDS

The TOM TAILOR KIDS Collection is casual streetwear for boys and girls. Easy and functional. Cool and lively. The styles are varied and can consistently be combined to new trendy outfits.

TOM TAILOR KIDS is designed for children and youngsters of 7 to 14 years of age, who know what counts – to be in TOM TAILOR’s style: Casual fashion for a casual life.

TOM TAILOR MINIS

The TOM TAILOR MINIS Collection is inspired by current trends and combines functionality with fashionable design. Lovingly-created and authentic looks are as important as the practical considerations of the parents. The MINIS Collection satifies both criteria and puts small children in the spotlight. TOM TAILOR MINIS is available for children of 18 months to 7 years of age.

TOM TAILOR BABy (Commercially available starting November)

The TOM TAILOR BABy Collection follows the latest fashion trends and focuses on the needs of the little ones and the requirements of the parents. Functionality, high-quality materi-als, optimum fit and an authentic, trendy design constitute the assortment of TOM TAILOR BABy. The ever-changing looks are lovingly and meticulously fabricated. The styles are avail-able in sizes 50 to 92. Small - but in terms of style – already very big.

Accessoires

TOM TAILOR is fashion and beyond, a distinct spirit of life. TOM TAILOR is casual fashion for a casual life, complete with a steadily growing accessories and home collection. In addition to gloves, caps, scarves, and fashion jewelry, TOM TAILOR grants licenses for shoes, leather goods, belts, bags, under-wear, perfumes, watches, jewelry, umbrellas, hosiery, bed sheets, towels, and tapestries.

The TOM TAILOR brand environment – Casual fashion for a casual life

TOM TAILOR is an international and vertically integrated life-style company. It offers stylish casual wear and accessories for men and women, teenagers, and children in a medium price range. Since the Company’s establishment in 1962, its authentic fashions have highlighted a positive and light-hearted attitude to life. Trends inspired by nature, seasonal colors, and trendy highlights are at the center of the Company’s unique fashion world. Each year, TOM TAILOR designs 12 collections complemented by 17 licensed product groups.

TOM TAILOR Casual and TOM TAILOR Denim

TOM TAILOR distributes its collections under the TOM TAILOR Casual and TOM TAILOR Denim lifestyle brands. TOM TAILOR Casual consists of the Men Casual, Women Casual, KIDS and MINIS collections. Baby will be introduced in November 2010. TOM TAILOR Denim consists of the Denim Male and Denim Female collections. TOM TAILOR Casual offers trendy and high quality fashion for men and women with an emphasis on the age group from 20 to 45 and collections for children aged 1.5 to 14 and babies. TOM TAILOR Denim aims at male and female teens and young adults aged 15 to 25. TOM TAILOR and TOM TAILOR Denim accessories round out the Group’s product range.

TOM TAILOR MEN Casual

TOM TAILOR MEN Casual collections for active men have always been at the heart of TOM TAILOR’s business. With MEN Casual, TOM TAILOR presents a comprehensive men’s collection of fashionable casual wear at prices in the medium market range. Casual describes a relaxed, active, and sporty look underscored with sophisticated details. The MEN Casual collection is designed for independent and fashion-conscious men who value good product quality.

TOM TAILOR WOMEN Casual

The WOMEN Casual collection takes a fashionable, femi-nine theme and implements it with relaxed and casual flair. Fashion able highlights, trendy details, and high product quality are transported into each of the monthly collections. Women Casual customers are cosmopolitan and lifestyle-oriented, always up-to-date, but never overdressed.

Company Profile




TOM TAILOR Denim Male and Denim Female“young fashion for young personalities”

The TOM TAILOR Denim collection is tailored to today’s young lifestyle generation: self-confident and authentic, with a taste for unconventional looks.

Designed for young adults aged 15 to 25, the TOM TAILOR Denim Male and TOM TAILOR Denim Female young fashion collections change every month and take their cue from the hottest trends in fashion capitals around the world. The newest color combinations, latest cuts, cool washings, and original details are everything the adventurous young fashion scene is looking for.

Stylish proportions and fabrics are complemented by contrast-ing colors and patterns to create a hip, cool denim look.

Every month, a new jeans highlight accentuates the fashion-conscious styles and becomes a must-have for trendsetters looking for unusual outfits. These highlights give our young customers a chance to make new fashion statements when-ever they want. The versatile denim product range with matching accessories always pays attention to the needs and price / performance expectations of young adults.

TOM TAILOR Denim Male and Denim Female are managed as an independent division under the TOM TAILOR umbrella brand. The young fashion collections are presented in a shop module system that is perfectly tailored to the target group and effectively transports the trendy denim design message.

TOM TAILOR Denim is the expression of an independent, relaxed, and individual style. It’s an authentic look that allows young customers to live their individuality to the fullest.




The basis for the Company’s expansion is its vertical integra-tion. Management began to adopt this structure in 2006 and after extensive efforts completed the process in preparation for the IPO this past spring. Today, the fashion company moni-tors and controls the entire value chain, from development to sales. The consistent vertical integration and the significantly improved equity structure as a consequence of taking the Company public have made it possible for TOM TAILOR to create the conditions for continued profitable growth.

TOM TAILOR – “Act Premium, Sell Volume”

TOM TAILOR’s business model consciously combines the emotional added value of its lifestyle brands with the strate-gic advantages of an intelligently vertical system provider. Our success derives from our ability to swiftly adapt the latest fash-ion trends with the target group in mind and our commitment to offer high quality at attractive prices. Development, design, and production of all TOM TAILOR collections are facilitated through systematic sales-floor planning tailored to the respec-tive customer needs. The Company designs and distributes its collections in the Wholesale and Retail segments and with this strategy achieves steady growth in a highly diversified market environment.

Growth strategy continues

TOM TAILOR is continuing its consistent growth strategy. At the end of the first half of 2010 the Company was represented in 96 own stores (up from 93 at the end of the first quarter), the TOM TAILOR e-shop, 205 franchise-stores (Q1 2010: 202), 1,240 shop-in-shops (Q1 2010: 1,206), and more than 4,500 multi-label sales areas, making for a total of about 6,000 points-of-sale in 35 countries. TOM TAILOR generated a total of EUR 147.3 million in revenue with 901 employees worldwide as of June 30, 2010.

The primary focus of future growth is on the expansion of TOM TAILOR-controlled sales areas such as own retail-stores, shop-in-shop systems, franchise-stores, and distribu-tion via the dynamic e-business. In addition to the advantage of expanding TOM TAILOR’s brand presence, the potential economies of scale make this strategy especially convincing. Closely interrelated planning and control processes enable the Company to adapt the entire flow of goods and especially product development flexibly to new trends, consequently expanding TOM TAILOR’s advantages over the competition.

Tom Tailor | Half Year report 201010

The first half of 2010 was an eventful period, and for TOM TAILOR it was also a time of success. In the midst of an exceptionally difficult corporate financing environment, we demonstrated tremendous courage by following through with our IPO in March. It was a wise decision. We managed to strengthen our equity base and consequently created the foundation for making TOM TAILOR one of the leading lifestyle fashion brands in Europe. Profitable growth will lead us to that goal.

The first half of 2010 was highly successful from an opera-tional perspective as well, confirming the appropriateness of our growth strategy. We were able to post gains in all areas and steadily continue our growth in controlled retail space. In the six months just ended, we increased the number of franchise-stores by 4 to 205 and the number of shop-in-shops from 1,108 to 1,240. In the Retail segment we increased the number of own stores by 9 in the reporting period, bringing the total number to 96. As a result of expanding our presence, Group revenue rose 9.9 percent year on year to EUR 147.3 million. Our constant growth in revenue confirms that the brand strategy of TOM TAILOR Casual and TOM TAILOR Denim, backed by our strength in systems and processes, is capable of sustainably setting the Company apart from the market trend.

The expansion of controlled sales areas will continue to be a priority in the coming months. In the Retail segment, the focus is on opening new stores; we will step up this effort in the third quarter of 2010 in particular. Thanks to our improved equity structure, vertically integrated business model, and strong brands TOM TAILOR Casual and TOM TAILOR Denim, we have outstanding prospects for developing unique dynamics of our own as economies recover in our core markets and consumer confidence rises in our home market Germany in particular.

We would like to thank all of our employees for their outstand-ing performance in the past months and our shareholders for their confidence in the management team of TOM TAILOR Holding AG. We are convinced that TOM TAILOR is in an excellent position to respond to the challenges and oppor-tunities of the coming months.

Hamburg, August 2010

Dieter Holzer Dr. Axel Rebien Christoph Rosa

letter to Shareholders

Dear Shareholders,

Company Profileletter to Shareholders



11

Dieter HolzerChief Executive officer (CEo)

Dr. axel rebien Chief Financial officer (CFo)

Christoph rosaChief Product Development and Procurement officer (CPo)


TOM TAILOR Holding AG’s shares have been quoted on the Frankfurt Stock Exchange in the Prime Standard segment and the regulated market of the Hamburg Stock Exchange since March 26, 2010. The successful initial public offering (IPO) of TOM TAILOR Holding AG was one of the first IPOs in Germany in over two years.

In connection with the IPO, the Company placed a total of 11 million shares from a capital increase. Another 470,356 were placed from the holdings of the existing shareholders through the partial exercise of the greenshoe option. All of these pre-vious shareholders still retain shares in TOM TAILOR Hol d-ing AG.

Shareholdings of executive officers as of June 30, 2010 Shares

Dieter Holzer, Chief Executive Officer 250,000

Dr. Axel Rebien, Member of the Board 11,000

Christoph Rosa, Member of the Board 11,000

Dr. Christoph Schug, Member of the Supervisory Board 14,800

About 95% of the shares offered for subscription were placed with institutional investors, while approximately 5% were placed with retail investors. 60% of the institutional investors are from Germany while about 40% are based in other Euro-pean countries.

The offer was significantly oversubscribed at an offer price of EUR 13.00 EUR per share in the middle of the price range of EUR 11.00 to 15.00. As a result, the Company recorded gross IPO proceeds of EUR 143.0 million in total. A large portion of these proceeds was used to reduce financial liabilities in the first quarter of 2010, thereby strengthening the Company’s capital structure and enhancing financial flexibility. A further part of the proceeds will in future be used to finance the ex-pansion of the controlled sales areas, with the Retail segment focusing on own stores and the Wholesale segment focus-ing on franchise-stores and shop-in-shops. The Company’s planned dynamic expansion over the coming years is intended to achieve profitable growth, further market penetration and increased recognition of the TOM TAILOR brand.

Share price performance

From the initial public offering on March 26, 2010, to the end of the reporting period (June 30, 2010), the share price * remained relatively stable. After a brief low at EUR 12.50 in June, the high to date, EUR 13.90, was recorded on May 17. The share closed at EUR 12.14 on June 30, 2010, giving a market capitalization of EUR 201 million.

Freefloat 69.26%Alpha Funds(total) 17.11%Morgan Finance S.A. 11.64%Dieter Holzer 1.51%Other donorshareholders 0.34%Dr. Axel Rebien 0.07%Christoph Rosa 0.07%

Shareholder structure as of June 30, 2010 in %

16,528,169

Tom Tailor Shares

* XETRA closing prices

Company ProfileLetter to ShareholdersTom Tailor Shares

Interim Management ReportInterim Consolidated Financial Statements

Other Disclosures

13

80

90

100

110

ISIN DE000A0STST2

WKN A0STST

Ticker symbol TTI

Type of shareNo-par value ordinary

registered shares

Stock exchanges Frankfurt and Hamburg

Stock exchange segment SDAX ® (Prime Standard)

First day of trading March 26, 2010

Issue price EUR 13.00

Number of outstanding shares 16,528,169

Active dialog with the capital market

During a two-week roadshow preceding the IPO, the Manage-ment Board engaged in dialogue with around 100 investors. TOM TAILOR places a high priority on an active dialog with the capital market. During the current fiscal year, the on going contact with the financial community will be stepped up and the Investor Relations activities expanded. In the second half of 2010, TOM TAILOR will be making concerted efforts to attract new investors at investor conferences in Germany and abroad. Also, at the German Equity Forum of Deutsche Börse AG at the

end of this November in Frankfurt am Main, we will be offe r-ing the international attendees another analyst meeting and a number of one-on-ones. For a detailed schedule, please refer to the financial calendar on page 45.

Three renowned research houses are currently covering TOM TAILOR Holding AG shares:

Research House DateTarget Price

Recommen-dation

HSBC Trinkaus & Burkhardt July 19, 2010 12,00 Neutral

JP Morgan May 7, 2010 15,80 Overweight

Commerzbank May 4, 2010 20,00 Buy

Share performance (indexed) in %

DAXSDAX ®

TOM TAILOR Share

110

105

100

95

90

85April May June


Overview of the Course of Business

Economic Conditions

The economic and consumer climate in the first half of 2010 indicates a clear recovery from the effects of the financial and economic crisis. According to the OECD, consumer confidence in Germany returned to its long-term average value in the second quarter. These assessments are also supported by the con-sumer climate index of the Gesellschaft für Konsumforschung (GfK – Society for Consumer Research) of June 23, 2010. Overall indicators for the consumer climate were at 3.5 points in June, after 2.7 points in June 2009. The forecast for July and August is 3.6 points and 3.9 points, respectively*. Along with the im-provement in the consumer climate, economic expectations and income prospects also picked up, while the propensity to buy declined slightly after a strong early summer with good weather and anticipatory consumption related to the FIFA World Cup. The favorable development of the German job market and strong German exports led to generally optimistic expectations for the coming months, which at this point in time have not been dampened by the economic risks of the government’s austerity package and the rising cost of health insurance. The German Bundesbank predicts that the gross domestic product will grow by 1.9% in 2010.

The OECD’s assessment of the other European core markets of TOM TAILOR is somewhat weaker, but still characterized by ris-ing tendencies of economic growth. Economic researchers with the OECD predict that the strongest growth rates in 2010 will be in Switzerland, at 1.8%, and in Austria and Belgium, at 1.4%. Despite the devalued euro and the related rise in export op-portunities, the economic recovery in Netherlands and France, each with economic growth of 1.2%, still lags noticeably behind Germany. On the whole, however, even though extraordinary circumstances such as the unusually hard winter and debt crises in several countries still had a dampening effect on demand, the euro zone, which is where TOM TAILOR generates the majority of its sales revenues, has benefited from the recovery of the world economy. In the coming months, too, the expansion strategy that TOM TAILOR has adopted, and particularly in the retail seg-ment, will be supported by improving economic conditions.

Industry development

The global economic crisis had a noticeable impact on the textile market over the past few years. Only companies with clear-cut strategies and positioning, such as TOM TAILOR, were able to successfully withstand this crisis. In fact, TOM TAILOR closed the year 2009 with record revenue of EUR 300.2 million.

In the meantime, the textile sector also seems to have bot-tomed out after two years of struggle. In the first two months of the first quarter, the entire industry suffered from the unusu-ally hard winter and the related consumer reticence. But when the weather started to improve in March, the trend reversed again. On the whole, the Confederation of the German Textile and Fashion Industry (Gesamtverband textil+mode) confirms an across-the-board recovery of key economic indicators for the sector in the first half of 2010 and hence a robust upward trend. TOM TAILOR was able to exceed the average market growth of 2% in Germany (Source: TW Testclub 27/2010). In the first six months of 2010, the Company reported like-for-like growth in the retail segment of 5.8% excluding the successful e-shop and 14.1% including it.

Important events in the reporting period

On March 26, 2010, the TOM TAILOR Group reached one of the most important milestones in the Company’s history when it launched its IPO. Since then, the Company’s shares have been listed in the Prime Standard segment of the Frankfurt Stock Exchange and on the regulated market of the Hamburg Stock Exchange. Effective June 21, 2010, barely two months after the IPO, the share managed to enter the Small-Cap- Index (SDAX ®) comprising the 50 largest public companies below the MDAX ®. We were one of the first companies in Germany to launch an IPO in over two years – a move that demonstrates TOM TAILOR’s courage and decisiveness backed by our consistent growth stra-tegy. The success of this IPO is clear: the Company received EUR 143.0 million in gross offering proceeds, which has strengthened our capital base and allowed us to accelerate the expansion of our profitable business model in controlled shop-floor sales.

interim management report

* Source: GfK Group, Notice of July 27, 2010


TOM TAILOR Sharesinterim management report


17

Organization

The following changes to TOM TAILOR Holding AG’s Manage-ment Board occurred during the reporting period: COO Dietmar Axt resigned from the Management Board at the end February 2010 with effect as of December 31, 2010, in accor dance with the terms of the contract. He was thereupon released from his duties until the end of the year. The COO’s du-ties were assumed by the Chairman of the Management Board; there is currently no plan to fill this position. The Management Board now consists of three members, Dieter Holzer, CEO, Dr. Axel Rebien, CFO, and Christoph Rosa, CPO.

Results of operations

Revenue

By actively pursuing our corporate philosophy – “Act Premium, Sell Volume” – TOM TAILOR was able to break from the mar-ket trend in the first half of 2010 and continue on its growth course. Group revenue rose by 9.9% in the first half of 2010, climbing to EUR 147.3 million (H1 2009: EUR 134.0 million). The growth in revenue was particularly strong in the second quarter of 2010, when Group revenue increased by 13.6% from EUR 62.4 million to EUR 70.9 million. This positive performance highlights the effectiveness of our strategy: offering attractive, high-quality casual wear and excellent value with systematic, monthly changes.

Development in sales in € thousand

0

30000

60000

90000

120000

150000150,000

120,000

90,000

60,000

30,000

0

70,893

147,290

62,422

134,044

Q 2 2009 H 1 2009Q 2 2010 H 1 2010

Revenue by region

TOM TAILOR was able to raise revenue by 9.1% to EUR 103.2 million (H1 2009: EUR 94.6 million) in its key home market of Germany. Revenue outside Germany grew by 11.8% to EUR 44.1 million (H1 2009: EUR 39.4 million). In our core foreign markets of Austria, Switzerland, the Benelux countries, and France, revenue growth exceeded the market, rising by 21.5% to EUR 31.4 million (H1 2009: EUR 25.8 million). Revenue generated outside Germany is now 29.9% of total revenue (H1 2009: 29.4%) All in all, TOM TAILOR’s core markets repre-sented 91.4% of total revenue (H1 2009: 89.9%).

Expenses

TOM TAILOR was able to reduce its cost of materials ratio by 2.8 percentage points to 52.7% in the first half of 2010. Thanks to continued process optimization in product development and procurement as well as economies of scale in purchasing in line with our growth strategy, the Retail segment contributed a larger share of total revenue and played a significant role in this development.

Personnel costs were adversely affected by special payments to the Management Board (EUR 2.3 million) and other execu-tives as part of the successful IPO, as well as the departure of Dietmar Axt from the Management Board (EUR 0.7 mil-lion), in the total amount of approximately EUR 3.0 million. Adjusted for these special effects, personnel costs have risen by EUR 23.8 million (unadjusted: EUR 26.8 million) or 13.3% compared with the same period in the previous year

0

20000

40000

60000

80000

100000

120000 120,000

80,000

40,000

0

103,205

51,51044,08545,387

94,584

19,383

39,460

17,035

Sales according to region in € thousand

GermanyOther Countries

Q 2 2009 H 1 2009Q 2 2010 H 1 2010


ness by the holding company in 2005.

Earnings

Despite special charges related to debt restructuring of approxi-mately EUR 3.4 million, financial earnings at the end of the quarter were EUR -8.7 million, or EUR 1.8 million higher than in the prior-year period (H1 2009: EUR -10.5 million). A net loss for the period of EUR -13.7 million (H1 2009: EUR -13.6 million) resulted from one-time charges (including imputed tax effect) of EUR 10.3 million. Earnings per share were EUR -1.19, and EUR -0.29 when adjusted for the total special effects.

The net loss reported in the first half of 2010 includes the costs of the IPO and the effects of the pre-IPO financing struc-ture from the first quarter. In the traditionally weaker second quarter, the net loss for the period improved significantly by EUR 7.3 million to EUR -3.0 million year on year (Q2 2009: EUR -10.3 million). Lower future interest charges and the elimi-nation of one-time effects, together with an increase in opera t-ing earnings, will lead to an additional sustained improvement in period earnings.

(H1 2009: EUR 21.0 million). This reflects the rise in the number of employees within the TOM TAILOR Group, which was up by 17.2% from June 30, 2009. We primarily increased our sales staff in our retail segment.

other operating expenses were up EUR 7.4 million to EUR 43.8 million (H1 2009: EUR 36.4 million). This was mainly due to expenses associated with the IPO of approximately EUR 4.0 million, which under IFRS are not reported as equity capital generating expenses and offset against capital reserves. These expenses involve the restructuring of the syndicated bank loan agreement. The remaining EUR 3.4 million of the increase is attributable chiefly to the expansion of our retail segment and associated rental expenses as well as variable revenue-related costs.

Earnings before interest, taxes, depreciation, and amortization (EBiTDa) were adversely impacted by a one-time charge incurred as a result of the IPO. Adjusted for the total one-time EBITDA-effects of EUR 7.3 million, EBITDA* rose significantly by 73.9% to EUR 13.5 million (H1 2009: EUR 7.7 million). As a result, the adjusted EBITDA margin continued to increase and amounted to 9.1% (H1 2009: 5.8%). EBITDA before one-time effects of EUR 6.2 million was EUR 2.4 million below the first half of 2009 (EUR 8.6 million).

In the second quarter of 2010, EBITDA improved significantly by EUR 4.2 million from a loss of EUR 0.9 million in the prior year to positive EBITDA of EUR 3.3 million.

Depreciation, amortization, and impairments amounted to EUR 10.5 million in the first half of 2010 and were in line with the previous year’s level (EUR 10.4 million). This included write-downs of EUR 4.0 million (H1 2009: EUR 4.0 million) on disclosed hidden reserves related to the purchase price allo-cation of the acquisition of the operational TOM TAILOR busi-

* Adjusted EBITDA refers to EBITDA corrected for special effects that have occurred beyond the scope of ordinary business activities.




19

are sold at established department stores and clo thing retail chains as well as through domestic and international mail order companies. In the Retail segment, the TOM TAILOR Group sells its products directly at our network of retail-stores and outlet stores as well as online. E-business activities include our e-shop as well as e-commerce partnerships with mail order companies Neckermann and OTTO Versand.

Segment reporting

For purposes of segment reporting the TOM TAILOR Group distinguishes between the Wholesale and Retail business units. In the Wholesale segment, TOM TAILOR supplies commercial customers who sell high-value TOM TAILOR products (“Act Pre-mium”) to end customers through a variety of distribution chan-nels. This includes franchise-stores, shop-in-shops, and multi-label sales centers. In this way, high volumes (“Sell Volume”)

in € thousandQ2

2010H1

2010Q2

2009H1

2009

Net income for the period -3,024 -13,651 -10,257 -13,645

Income taxes -168 653 -153 1,441

Earnings before tax -3,192 -12,998 -10,410 -12,204

Financial result 1,279 5,327 4,346 10,529

ONE-TIME EFFECTS

Interest cost of restructuring debt capital due to IPO 26 3,405 0 0

Amortization of purchase price allocation (PPA) from 2005 2,016 4,032 2,016 4,032

IPO costs

– Personnel costs 0 2,355 0 0

– Restructuring of debt capital 36 4,029 0 0

36 6,384 0 0

Severance costs (former member of the management board) 0 667 0 0

Other one-time effects 208 208 337 -800

Total one-time effects excluding tax effect 2,286 14,696 2,353 3,232

Adjusted EBIT 373 7,025 -3,711 1,557

in % of sales revenue 0.5% 4.8% -5.8% 1.2%

Depreciation and amortization (excluding PPA) 3,214 6,429 3,161 6,178

Adjusted EBITDA 3,587 13,454 -550 7,735

in % of sales revenue 5.1% 9.1% -0.9% 5.8%

Depreciation and amortization (excluding PPA) -3,214 -6,429 -3,161 -6,178

Financial result -1,279 -5,327 -4,346 -10,529

Adjusted earnings before tax -906 1,698 -8,057 -8,972

Income taxes 168 -653 153 -1,441

Imputed tax effect (30%) for total one-time effects -686 -4,409 -706 -970

Adjusted net income for the period -1,424 -3,364 -8,610 -11,383

Reconciliation to adjusted net income for the period


decline in the first quarter. Traditionally, the second quarter is the weakest in the year for the Wholesale segment. This year, it was possible to achieve a turnaround in earnings. In the second quarter of 2010, the Wholesale segment generated EBITDA of EUR 0.8 million after a loss of EUR 2.6 million in the prior year period. The impact of the cost of the IPO on half-year earnings amounted to EUR 3.2 million in the first six months of 2010 (H1 2009: EUR 6.7 million) and hence represents a solid basis for the continued improvement of earnings in the traditionally stronger second half of the year.

Financial Position and Net Assets

Cash flow

The high one-time effects related to the IPO and the expen-ses arising from the reorganization of the financing structure resulted in a negative half-year result of EUR 13.7 million. The cash outflow from operating activities of EUR 17.4 million (H1 2009: outflow of EUR 2.5 million) was largely a consequence of the expansion of inventory in the amount of EUR 11.5 million and the EUR 7.4 million rise in receivables and other assets resulting from the expansion of controlled sales areas and the rise in revenue in the first half of 2010. The seasonality of the fashion industry, however, generally results in low cash flow from operating activities during the first half of the year.

0

20000

40000

60000

80000

100000

120000

42,347

22,091

104,943

48,803

30,301

16,495

103,743

45,926

Sales according to segment in € thousand

RetailWholesale

Q 2 2009 H 1 2009Q 2 2010 H 1 2010

120,000

80,000

40,000

0

One of our key growth drivers is the expansion of our business in retail, a segment that contributed considerably to higher rev-enues in the first six months of 2010. Revenue in the Retail seg-ment, for instance, rose by 39.8% to EUR 42.3 million, up from EUR 30.3 million in the previous year. The number of retail-stores we operate has grown by 9 stores since December 31, 2009. We currently operate 96 stores: 61 in Germany, 18 in Austria, and 17 in other countries.

The Retail segment contributed a total of EUR 22.1 million to total revenue in the second quarter of 2010 (Q2 2009: EUR 16.5 million).

We saw particularly dynamic growth in our e-business. The e-shop continued to perform very well, recording growth rates of more than 40.0% year on year. The Retail segment repre-sented a 28.8% share of total revenue in the reporting period.

EBITDA generated by the Retail segment in the first half of 2010 amounted to EUR 2.9 million (H1 2009: EUR 1.7 million) and largely reflected second quarter earnings of EUR 2.4 million (Q2 2009: EUR 1.6 million). Due to the seasonal nature of the business, the rising earnings trend in the Retail segment will continue in the second half of the year.

Group revenue in the Wholesale segment was EUR 104.9 mil-lion in the first half of 2010 and hence slightly higher than the previous year’s level (H1 2009: EUR 103.7 million). The Whole-sale segment contributed 71.2% of total revenue in the first half of 2010 (H1 2009: 77.4%). In our home market of Germany and in our core foreign markets, we saw an encouraging 3.3% increase in revenue. In the markets of Russia, the Ukraine, Georgia, Belarus, and Ireland, domestic economic situations remained troubled. We restricted our order volumes in these markets in response to the risks, which resulted in revenue declines in the first half of the year. On the whole, however, the markets referred to above are now beginning to stabilize. Here, too, we expect revenue to perform better in the future. We increased the number of shop-in-shops by 132 to 1,240 since December 31, 2009. The number of franchise-stores has increased to a total of 205 due to the takeover of four franchise-stores by our Retail segment and the opening of six new franchise-stores.

The volume of orders recorded in the Wholesale segment through the end of June 2010, which includes the November 2010 collection, grew by 4.0% from the same period in 2009.

In the second quarter of 2010, revenue in the Wholesale segment rose 6.3% to a total of EUR 48.8 million (Q2 2009: EUR 45.9 million) and compensated for the slight year-on-year




21

The significant rise in equity resulted from the IPO in March 2010. The gross offering proceeds of EUR 143.0 million and the con-version of shareholder loans in the amount of EUR 25.0 million resulted in a considerable rise in equity by EUR 149.4 million to EUR 81.2 million after deducting first-half earnings. In turn, the equitytoassets ratio rose to 30.1% (December 31, 2009: minus 27.3%). Now that the IPO has been completed, this rise is creating the conditions for the Company’s dynamic and profitable growth to continue.

The reduction of debt led to a EUR 126.4 million decline in total financial liabilities. As of June 30, 2010, non-current financial liabilities amounted to EUR 66.8 million, down from EUR 187.7 million at the end of 2009.

0

50000

100000

150000

200000 200

150

100

50

0

57.7

183.9

Net financial debt in € million

31.12.0930.06.10

The net cash outflow from investments amounted to EUR 10.0 million in the reporting period (H1 2009: outflow of EUR 9.9 million). In the first six months of the fiscal year, the focus of investment was primarily on expanding our controlled sales areas in both segments. This growth strategy led to an outflow of EUR 4.6 million in the Retail segment. In the Whole-sale segment, more than EUR 5.4 million was used in particular to continue the expansion of controlled sales areas.

The net cash flows from financing activities amounted to EUR 31.9 million. The gross offering proceeds of EUR 143.0 mil-lion received in connection with the IPO, minus the costs gen-e rated in the first half of 2010 of EUR 6.6 million in connection with the increase in subscribed capital, were used to repay all shareholder loans in the amount of EUR 32.6 million (exclud-ing interest payments) after the capital increase (conversion of shareholder loans in the amount of EUR 25.0 million). Fur-thermore, non-current financial liabilities in the amount of EUR 66.4 million were repaid. All current bank credit lines uti-lized previously, in the amount of EUR 6.0 million, were repaid. Accordingly, at the end of June 2010 we had cash and cash equivalents of EUR 13.9 million. The reduction in cash and cash equivalents between the end of the first and second quarter resulted primarily from the seasonal reduction in cash and cash equivalents in the second quarter and the payment of costs related to the IPO.

Capital expenditure

Our “Act Premium, Sell Volume” philosophy focuses particu-larly on store construction in addition to product performance. It is important that TOM TAILOR customers feel good in our sales areas so that they are more likely to buy. We are therefore investing primarily in the expansion of our premium stores to build a base for further revenue growth.

In the coming months TOM TAILOR will continue to invest in the expansion of controlled sales areas.

Balance sheet structure

The seasonal rise in inventories to EUR 42.9 million (Decem-ber 31, 2009: EUR 31.4 million) as well as the expansion of controlled sales areas and the positive orders situation result-ed in higher trade receivables of EUR 41.4 million (Decem-ber 31, 2009: EUR 33.4 million) and increased Group assets of TOM TAILOR to EUR 269.7 million at the end of June 2010. This was EUR 19.6 million or 7.8% higher than on December 31, 2009 (EUR 250.1 million).


Risk management

TOM TAILOR employs a risk management system that is an integral component of our business processes and a key ele-ment in our business decisions. Group-wide risk management is coordinated and controlled centrally from our headquarters in Hamburg. Potential risks that arise in connection with busi-ness activities are identified early on, monitored, and limited by means of suitable control measures. Key components include the planning system, internal reporting, and comprehensive risk reporting. In our subsidiaries, a decentralized risk management system is in place to implement the requirements received from headquarters. Our subsidiaries also undertake additional ope-rational risk management activities locally. At the same time, the risk management system makes it possible to take the best possible advantage of arising opportunities in keeping with the corporate strategy. An important component of risk and opportunity management is the transfer of operational risks to insurers. The financial consequences of insurable risks, such as property risks, service interruptions, or payment default, are neutralized to the extent possible. Other risks, in turn, are assumed by suppliers and purchasing agencies.

One risk factor is the potential loss of product quality. In order to guarantee stable supplier relations with consistently high product quality and attractive prices while collections are constantly changing, TOM TAILOR works, in the area of sourcing, with an international network of purchasing agents and manufacturers that are committed to the TOM TAILOR Code of Conduct. Currently, some 120 manufacturers in twelve countries are actively operating on behalf of TOM TAILOR. The Code of Conduct encompasses all core labor standards of the International Labor Organization (ILO) and is mandatory for all partners. The code is meant to ensure that all TOM TAILOR products at all production facilities are manufactured under humane working conditions. We conduct regular inspections of our production sites in order to guarantee compliance with our high quality standards in addition to labor law require-ments and internationally accepted standards with regard to working conditions. In this respect, quality control is first and foremost the responsibility of the manufacturer in each case, who produces and checks the merchandise in accordance with precise quality benchmarks.

Independent, accredited auditors carry out these working con-dition inspections. TOM TAILOR is an active member of the Business Social Compliance Initiative (BSCI), a European ini-tiative of trading companies that have joined together in order to implement a uniform monitoring system for their suppliers. Further quality checks also take place in the central warehouse and in our corporate laboratory in Hamburg.

Employee Development

As of June 30, 2010, TOM TAILOR had 901 employees (exclud-ing members of the Management Board, trainees, and tem-porary personnel), 132 more than on June 30, 2009. This rise is based above all on the recruitment of new employees for TOM TAILOR owned and operated retail-stores. Of these 901 employees (H1 2009: 769), 478 were engaged in the Whole-sale segment (H1 2009: 434) and 423 in the Retail segment (H1 2009: 335). Regionally, TOM TAILOR had 677 employees in Germany (H1 2009: 604) and 224 abroad (H1 2009: 165).

Events after the Balance Sheet Date

After the end of the period under review, no significant events occurred at TOM TAILOR Holding AG.

Risk and Opportunity Report

The growth strategy of TOM TAILOR Holding AG, which was successfully implemented in the first half of the year, can sus-tainably increase corporate value only if entrepreneurial risks and opportunities are responsibly managed. A central element of the Company’s risk policy is to enter into risks only when the associated business activities are highly likely to lead to an increase in TOM TAILOR’s corporate value. Our number one priority is always to keep risks manageable and controllable.

Employees according to segments

Retail 423Wholesale 478

30.06.09

769

30.06.10

901

Retail 335Wholesale 434




23

Industry- and market-related risks

In the first six months of 2010, TOM TAILOR grew at a faster rate than the overall trend in the clothing market. Persistently weak economic performance or a deterioration in the economy, especially in our home market of Germany, could have an adverse impact on overall consumer demand and thus on demand for TOM TAILOR products, which could lead to a slump in sales and increase pressure on margins. Our core clothing markets are characterized by intense competition, which could become even more acute in future. We counter these risks with our growth-oriented corporate strategy, which entails further expansion both domestically and abroad, as well as with the pursuit of a consis-tent orientation as a vertical system provider.

TOM TAILOR deals with possible economic, political, and other entrepreneurial risks abroad by selling products primarily in countries with a stable economic and political environment.

Company-related risks

TOM TAILOR has been growing successfully in the market, in part because we identify current trends quickly, adapt accord-ingly, and promptly distribute them to our points-of-sale. In the event that TOM TAILOR should fail at some point to identify current trends quickly and to appeal to the taste of our target groups in its target markets, to price correctly, or to develop and launch new products, our competitive position, opportuni-ties for growth, and profitability may suffer. We counter these risks by outsourc ing risk areas to third parties as described above. At the same time, the close proximity of customers in our retail-stores offers opportunities for TOM TAILOR because feedback from custo mers can be used for the quick identifica-tion and implementation of new trends.

Despite a careful brand strategy, the continued establishment and strengthening of the TOM TAILOR Casual and TOM TAILOR Denim brands could fail, which in turn could adversely affect growth prospects. We therefore place a high degree of im-portance on the protection and preservation of our brand im-age. In the Wholesale segment TOM TAILOR maintains trade relationships with major customers, who may cease to buy from TOM TAILOR. This could then involve significant losses in revenue. Bankruptcies among major customers also present a unique risk for revenue losses in the Wholesale segment. We manage the risk of default through measures such as trans-ferring the risk to commercial credit insurers. Furthermore, by increasing our expansion in the Retail segment, we are reduc-ing our dependence on major customers.

TOM TAILOR is a successful medium-sized company and culti-vates a corporate culture that thrives on and profits from good relations with all employees. However, TOM TAILOR is also especially dependent on the Management Board and other exe cutives. Loss of an executive could have a negative impact on business performance. We counter this risk by establishing a positive working environment and offering attractive salary packages that are aligned with our long-term goals. Other, less significant company-related risks include IT risks, quality risks, manufacturer risks, and procurement and purchasing risks as well as interest rate, currency, and financial risks. These risks will be detailed in full in the upcoming annual report.

TOM TAILOR can exploit opportunities that arise in the course of expanding controlled sales areas. The difficult market condi-tions of the recent past and the retreat of some competitors offer expansion possibilities that did not previously exist. For instance, optimum sites are now easily available on the mar-ket, in particular for our retail-stores. TOM TAILOR can take advantage of the increased public interest resulting from the successful IPO and our listing on the Prime Standard (SDAX ®) to increase brand recognition and sharpen the brand profile. The dynamic growth also contributes to higher brand recog-nition. This gives TOM TAILOR an opportunity to attract the attention of the target groups even more effectively.

Assessment of the overall risk position

At this time there are no individual or aggregate risks that could jeopardize the ability of TOM TAILOR Holding AG to continue as a going concern in the foreseeable future.

Overall there have been no significant changes to the risk situ-ation of TOM TAILOR Holding AG compared with the end of fiscal year 2009. The IFRS consolidated financial statements for 2009 form an integral part of the offering prospectus and are available for download at www.tom-tailor.com.

Outlook

Economy

The current studies and projections of economic research institutions indicate a significant revival of the business and consumer climate, in particular for the German market. The German Bundesbank, for instance, predicts growth of 1.9% for the Federal Republic of Germany in 2010. Ifo Institut reported a business climate index of 106.2 in July, and the forecast is slightly less at 105.5. According to the GfK consumer climate index of July 27, 2010, the German consumer climate is stably recovering and all indicators suggest that the positive trend


will continue. Internationally, too, the world economy will begin to grow again in 2010. At this time, however, there are still several factors that make the European economic situation un-predictable on the whole. For instance, there is still uncertainty regard ing the development of the euro. Nonetheless, the weak-ness of the euro, for instance in relation to the U. S. dollar, could also have positive effects for the export economy and hence for domestic consumption in the respective euro countries, and this would have favorable repercussions for TOM TAILOR. Conversely, a revival of the economy and a resulting decline in government economic stimulus plans could have a dampening effect on the economy in TOM TAILOR’s key markets. *

Future corporate development

Against the backdrop of stable private consumption and a slight rise in the economy, TOM TAILOR Holding AG expects its profitable growth course to continue in its core European markets. Financial resources obtained from the March 2010 IPO will support our strategic corporate goals, which include the extension and replication of the current successful business model by expanding controlled sales areas in the core markets. Based on the existing infrastructure of the entire value creation chain, the Company will consequently be able to gain market share and raise sales and profitability.

Our expansion will focus primarily on the Retail segment and on opening company-operated stores. Because our owned and operated stores have not yet sufficiently penetrated our core markets, there is still sufficient potential for future growth. In the Wholesale segment sales space productivity is to be increased across all product lines and controlled shop-in-shop sales areas and franchise-stores further expanded.

We plan to accelerate expansion in our key foreign markets of Austria, Switzerland, the Benelux countries, and France, in addition to our home market in Germany. As a result, we will reduce country-related dependencies. We see further potential for growth by continuing to optimize our cost management and process flows. In line with our corporate philosophy “Act Premium, Sell Volume” TOM TAILOR anticipates sales growth of between 8 and 12% for 2010 compared with the previous year, along with a slight increase in profitability based primarily on positive economies of scale.

The liquid resources made available by the IPO, as well as higher future cash flow from operating will be used to achieve this accelerated growth. The goal is to earn an appropriate dividend yield for shareholders in the medium term on a con-tinuous basis.

The lifestyle company TOM TAILOR is represented in the fashion market with the brands TOM TAILOR Casual and TOM TAILOR Denim. The MEN Casual, WOMEN Casual, KIDS, MINIS, BABy, Denim Male, and Denim Female collections, as well as the re-lated accessory collections, are marketed under the umbrella brand TOM TAILOR. Our two brands and the related collections are aimed at different target groups that each have their own brand profile. Tom Tailor Casual and Tom Tailor Denim are already successfully presented as independent entities in the market. We will continue to pursue this clear diversification in the future as well.

Hamburg, August 10, 2010

TOM TAILOR Holding AG

The Management Board

* Source: Poll by GermanFashion Modeverband e. V., January 2010

28 Tom Tailor | Half Year report 2010

€ thousand Note no. Q2 2010 Q2 2009 H1 2010 H1 2009

Sales 70,893 62,422 147,290 134,044

Other operating income 3,103 1,799 7,235 6,374

Cost of materials -37,158 -34,694 -77,671 -74,444

Personnel costs (4) -12,391 -11,045 -26,835 -21,032

Depreciation, amortization and impairments -5,230 -5,177 -10,461 -10,210

Other operating expenses (4) -21,104 -19,369 -43,824 -36,407

Profit from operating activities -1,887 -6,064 -4,266 -1,675

Financial result (4) -1,305 -4,346 -8,732 -10,529

Result before income tax -3,192 -10,410 -12,998 -12,204

Income tax 168 153 -653 -1,441

Net result for the period -3,024 -10,257 -13,651 -13,645

Other comprehensive result

Currency effects from foreign operations -266 112 -413 209

Comprehensive income after tax -3,290 -10,145 -14,064 -13,436

EARNINGS PER SHARE IN EUR (5)

Basic earnings per share (in EUR) -0.26 -2.05 -1.19 -2.73

Diluted earnings per share (in EUR) -0.26 -2.05 -1.19 -2.73

Consolidated Statement of Comprehensive Income

interim Consolidated FinancialStatementsas of June 30, 2010



interim Consolidated Financial StatementsOther Disclosures

29

€ thousand H1 2010 H1 2009

Net result for the period 13,651 13,645

Depreciation of property, plant and equipment and amortization of intangible assets 10,461 10,210

Income tax expense / income 643 1,441

Interest income and expenses 8,732 10,529

Change in non-current provisions 50 47

Change in current provisions -956 -4,910

Loss / gain on the disposal of intangible assets and property, plant and equipment -2 -157

Change in inventory -11,510 -1,653

Change in receivables and other assets -7,394 -1,436

Change in liabilities and other assets -783 -2,807

Income taxes paid / received -318 866

Other non-cash changes -2,654 -999

Net cash flow from (used in) operating activities -17,382 -2,514

Interest paid -4,738 -4,346

Interest received 10 10

Net cash flow from (used in) current activities -22,110 -6,850

Capital expenditures on intangible assets and property, plant and equipment -9,994 -10,061

Proceeds from disposal of intangible assets and property, plant and equipment 2 157

Net cash flow from (used in) investing activities -9,992 -9,904

IPO proceeds 143,000 0

Transaction costs (IPO) -6,637 0

Repayment of shareholder loans -32,612 0

Change in current financing liabilities -5,987 10,331

Long-term financing liabilities 503 2,172

Repayment of long-term financing liabilities -66,402 -2,500

Net cash flow from financing activities 31,865 10,003

Effect of exchange rate changes 75 -13

Change in cash and cash equivalents -162 -6,764

Cash and cash equivalents at beginning of period 14,091 11,448

Cash and cash equivalents at end of period 13,929 4,684

COMPOSITION OF CASH AND CASH EQUIVALENTS

Cash balances at banks and cash in hand 13,929 4,684

Consolidated Statement of Cash Flows


Consolidated Balance Sheet

€ thousand Note no. June 30, 2010 December 31, 2009

NON-CURRENT ASSETS

Intangible assets 136,517 139,872

Property, plant and equipment 23,328 19,938

Deferred income tax 833 254

Other assets 1,370 2,011

Prepaid expenses and deferred charges 3,994 4,445

166,042 166,520

CURRENT ASSETS

Inventories 42,922 31,412

Trade receivables 41,430 33,363

Income tax receivables 722 436

Cash and cash equivalents 13,929 14,091

Other assets 2,545 3,083

Prepaid expenses and deferred charges 2,160 1,203

103,708 83,588

269,750 250,108

Assets




31

€ thousand Note no. June 30, 2010 December 31, 2009

SHAREHOLDERS’ EQUITy

Subscribed capital (7) 16,528 5,000

Capital reserve (7) 204,349 52,380

Accumulated deficit -139,019 -125,368

Accumulated other comprehensive result -606 -193

81,252 -68,181

NON-CURRENT LIABILITIES

Pension provisions 226 176

Other provisions 135 135

Deferred income tax 33,486 34,285

Financial liabilities (8) 66,808 187,732

Other liabilities 4,246 4,797

Unearned income 3,376 3,961

108,277 231,086

CURRENT LIABILITIES

Other provisions 13,683 13,365

Current income tax liabilities 5,710 5,712

Financial liabilities (8) 4,791 10,275

Trade payables 52,731 50,920

Other liabilities 2,163 5,840

Unearned income 1,143 1,091

80,221 87,203

269,750 250,108

Liabilities and Shareholders’ Equity


€ thousandSubscribed

capitalCapital reserve

Accumulated deficit

Accumulatedother com-prehensive

result Total

January 1, 2010 5,000 52,380 -125,368 -193 -68,181

Comprehensive income after tax 0 0 -13,651 -413 -14,064

Equity contributions in kind 528 24,472 0 0 25,000

Capital increase (IPO proceeds) 11,000 132,000 0 0 143,000

Transaction costs (IPO) 0 -4,646 0 0 -4,646

Personnel costs due to share-based remuneration 0 143 0 0 143

June 30, 2010 16,528 204,349 -139,019 -606 81,252

€ thousandSubscribed

capitalCapital reserve

Accumulated deficit

Accumulatedother com-prehensive

result Total

January 1, 2009 5,000 52,380 -119,722 -200 -62,542

Comprehensive income after tax 0 0 -13,645 209 -13,436

June 30, 2009 5,000 52,380 -133,367 9 -75,978

Consolidated Statement of Changes in Shareholders’ Equity for the period from January 1 to June 30, 2010

Consolidated Statement of Changes in Shareholders’ Equity for the period from January 1 to June 30, 2009




33

1. Basis of preparation

The consolidated interim financial statements of TOM TAILOR Holding AG for the first six months ended June 30, 2010, were prepared in accordance with applicable International Financial Reporting Standards (IFRS), as applied in the EU, including the binding interpretations of the International Financial Reporting Interpretations Committee (IFRIC).

TOM TAILOR Holding AG has compiled condensed consolidated interim financial statements for the first six months of 2010, taking into account the regulations of IAS 34 on “Interim financial reporting.” Consequently, the present financial statements should be read in the context of the consolidated financial statements for fiscal 2009. The condensed financial statements and the interim management report were subjected neither to an audit nor to a review by auditors.

On March 26, 2010, TOM TAILOR Holding AG successfully concluded its IPO with a listing on the official market of the German stock exchange in Frankfurt (Prime Standard). In this offering, 11 million shares at a par value of EUR 1.00 each were placed under a capital increase resolved on March 24, 2010, and registered on March 25, 2010. The Company achieved gross offer proceeds of EUR 143.0 million at an offer price of EUR 13.00 per share.

In addition to the issue of new shares, 470,356 additional shares from existing shareholders were placed under the greenshoe option.

The accounting, consolidation and valuation methods essentially reflect those on which the consolidated financial statements as at December 31, 2009, are based. A detailed description of these methods is available in the Notes to the consolidated financial statements as of December 31, 2009, published on the Company’s website.

The following matters in the interim financial statements, which differ from the accounting, consolidation and valuation methods as at December 31, 2009, should be taken into consideration:

Share-based payment system

In fiscal year 2010, a share-based payment system (“Matching Stock Program” or “MSP”) was intro-duced for members of the Management Board. The MSP has been classified and valued as share-based payment to be settled by equity instruments in accordance with the regulations of IFRS 2. Please refer to Note 9. “Related party disclosures” for a more detailed description of the share-based payment system.

Costs of raising equity

Directly allocatable costs related to the raising of equity in the first half of 2010, incurred upon issue of new ordinary shares as part of the IPO, were offset against capital reserves in accordance with IAS 32 with no impact on profit or loss once the associated income tax benefits had been deducted.

2. Seasonal influences

The Group’s business activities are subject to seasonal influences, which lead to fluctuations in sales and earnings during the year. Due to seasonal conditions, sales are generally lower in the first two quarters, the spring and summer collections, than in the last two quarters, the fall and winter collec-tions and Christmas buying activities.

Notes to the Financial Statements


3. Segment reporting

Segment results (Q2 2010)

€ thousand Wholesale Retail Consolidation Group

Third-party sales 48,803(45,926)

22,091(16,495)

0(0)

70,893(62,422)

Sales from other segments 8,764(6,535)

0(0)

-8,764(-6,535)

0(0)

Total Sales 57,567(52,461)

22,091(16,495)

-8,764(-6,535)

70,893(62,422)

Earnings before interest, tax, depreciation and amortization (EBITDA) 843

(-2,580)2,428(1,613)

71(80)

3,343(-887)

Material non-cash expenses 5,166(9,098)

316(478)

0(0)

5,482(9,576)

Information by region (Q2 2010)

€ thousand GermanyOther

countries Consolidation Group

Sales 51,510(45,387)

19,383(17,035)

0(0)

70,893 (62,422)

Non-current assets 151,518(162,097)

8,327(6,634)

0(0)

159,845(168,731)

Segment results (H1 2010)

€ thousand Wholesale Retail Consolidation Group

Third-party sales 104,943(103,743)

42,347(30,301)

0(0)

147,290(134,044)

Sales from other segments 16,203(12,468)

0(0)

-16,203(-12,468)

0(0)

Total Sales 121,146(116,211)

42,347(30,301)

-16,203(-12,468)

147,290(134,044)

Earnings before interest, tax, depreciation and amortization (EBITDA) 3,221

(6,734)2,903(1,721)

71(80)

6,195(8,535)

Material non-cash expenses 3,964(7,132)

316(478)

0(0)

4,280(7,610)




35

Information by region (H1 2010)

€ thousand GermanyOther

countries Consolidation Group

Sales 103,205(94,584)

44,085(39,460)

0(0)

147,290(134,044)

Non-current assets 151,518(162,097)

8,327(6,634)

0(0)

159,845(168,731)

(previous year in brackets)

The information above on revenues according to region is classified according to the custo mer’s registered office. Non-current assets according to region are composed of intangible assets and prop-erty, plant and equipment.

4. Notes to the consolidated income statement

Personnel costs

€ thousand

Q2 H1

2010 2009 2010 2009

Wages and salaries 10,661 9,464 20,270 18,043

Special IPO remuneration / resignation Management Board 0 0 3,022 0

Share-based payments 94 0 143 0

Social security and retirement and similar 1,636 1,581 3,400 2,989

12,391 11,045 26,835 21,032

Special remuneration was agreed for members of the Management Board and management as a con-sequence of the successful IPO. Furthermore, special expenses were incurred at the end of February 2010 due to the resignation of one of the members of the Management Board and his immediate release from duty from that point until the expiration of his contract at the end of 2010.


Other operating expenses

€ thousand

Q2 H1

2010 2009 2010 2009

Operating and similar expenses 12,437 11,764 23,538 20,640

Selling expenses 5,792 4,436 10,577 9,484

General and administrative expenses 2,839 3,169 5,680 6,283

Special effects related to the IPO 36 0 4,029 0

Other operating expenses 21,104 19,369 43,824 36,407

Compared to the first six months of the previous year, other operating expense in the first six months of 2010 primarily contains costs incurred in conjunction with the reorganization of the TOM TAILOR Holding AG’s financing structure.

The rise in operating and other expenses in both the first half and the second quarter is the result largely of rental expense as part of the expansion, as well as costs that vary with sales volume.

Net interest expense

€ thousand

Q2 H1

2010 2009 2010 2009

Interest income 9 5 10 10

INTEREST EXPENSE

Interest paid to lenders -1,542 -4,151 -5,053 -8,080

Release of former transaction costs -26 -168 -3,405 -334

Market valuation of interest rate hedges 608 652 537 -816

Other items -354 -684 -821 -1,309

-1,314 -4,351 -8,742 -10,539

-1,305 -4,346 -8,732 -10,529

In connection with replacing the previous financing structure, structuring costs distributed over the term of the loans and paid in previous years of approximately EUR 3.4 million were charged to expense for the last time in the first six months of 2010.

Interest payments to lenders contain interest paid to mezzanine financiers of EUR 912 thousand (H1 2009: EUR 2,076 thousand) and to shareholders of EUR 801 thousand (H1 2009: EUR 1,412 thou-sand) from the time preceding the IPO.




37

5. Earnings per share

In accordance with IAS 33, earnings per share are calculated as Group net income attributable to share-holders of TOM TAILOR Holding AG divided by the weighted average number of shares outstanding during the year under review.

€ thousand 30.06.10 30.06.09

Number of shares as at reporting date 16,528,169 5,000,000

Q2 H1

2010 2009 2010 2009

Net income attributable to shareholders of the parent company (in € thousand) -3,024 -10,257 -13,651 -13,645

Weighted average number of ordinary shares (in thousand) 11,492 5,000 11,492 5,000

Basic earnings per share (in €) -0.26 -2.05 -1.19 -2.73

Diluted earnings per share (in €) -0.26 -2.05 -1.19 -2.73

Due to the capital increase from contributions in kind on March 4, 2010, (number of new shares: 528,169) and the capital increase from the issue of 11 million new shares as part of the IPO on March 25, 2010, the weighted average number of ordinary shares has increased significantly vis-à-vis the same period in the previous year.

6. Notes to the cash flow statement

The cash outflow from operating activities of EUR 17.4 million worsened in the prior-year period by EUR 14.9 million. The cause for this was the net loss for the period of EUR 13.7 million which was characte rized by the one-time effects related to the IPO and the additional expenses incurred for the change of the financing structure. In addition, seasonal factors and the further expansion led to an increase of inventories and cash outflows as of the balance sheet date.

The cash flow from financing activities in the first six months was related to the successful IPO. An amount of EUR 143.0 million accrued to the Company as gross offer proceeds. With due regard to the cash outflows in connection with the liabilities to shareholders in the amount of EUR 32.6 million and the repayment of non-current financial liabilities in the amount of EUR 66.4 million, the total cash flow from financing activities amounted to EUR 31.9 million.

Cash and cash equivalents came to EUR 13.9 million at the end of the first six months of 2010, exceed-ing the previous year’s figure by EUR 9.2 million.


7. Subscribed capital and capital reserve

In March of 2010, shareholder loans totaling EUR 25,000 thousand were converted to equity in order to strengthen the equity base. As a result of the capital increase from contributions in kind, subscribed capi-tal rose by EUR 528 thousand, corresponding to 528,169 registered shares at a par value of EUR 1.00, to EUR 5,528 thousand. The amount earned in excess of the par value of EUR 24,472 thousand was transferred to the capital reserve.

A total of 11 million new shares at a par value of EUR 1.00 each were issued at the time of the IPO. Subscribed capital amounts to a total of EUR 16,528,169 and consists of 16,528,169 shares of no par value after the IPO.

The capital reserve contains additional payments by shareholders, as well as the amounts earned over and above par value at the time the shares were issued. Taking into account issue costs (adjusted for income tax benefits) of EUR 4.6 million incurred by TOM TAILOR Holding AG and recognized directly in equity, the capital reserve rose by a total of EUR 127.5 million to EUR 204.3 million.

Furthermore, in the extraordinary General Shareholders’ Meeting on March 24, 2010, the Management Board was authorized to increase the share capital of the Company until March 24, 2015, with the consent of the Supervisory Board. This can be achieved by issuing new, registered shares for cash and / or contributions in kind in one amount or in partial amounts on one or more occasions by up to a maximum of EUR 8,264,084 (authorized capital I).

8. Financial liabilities

€ thousand 30.06.10 31.12.09

Liabilities to banks 60,556 128,118

Liabilities to shareholders 0 57,612

Liabilities under lease agreements 7,183 8,511

Liabilities to third parties 3,860 3,766

71,599 198,007

thereof non-current 66,808 187,732

thereof current 4,791 10,275

Offer proceeds were used to significantly strengthen cash resources for future growth and to signifi-cantly reduce bank liabilities by means of special repayments. Contractual conditions vis-à-vis banks were adjusted as part of the restructuring. In accordance with IAS 39, new loans, which replace the previous loans, are now involved. The loans are due at the end of January of 2014, taking into account the repayment of EUR 53.7 million.

The effective interest rate of the long-term loans is variable and is geared to the 3-month EURIBOR rate plus a margin of between 2.5% p.a. and 4.25% p.a. (H1 2009: between 1.75% and 3.5%), the level of which ultimately depends on the ratio of net debt and EBITDA adjusted for special effects.




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9. Related party disclosures

Related parties with respect to the TOM TAILOR Group in principle refer to members of the Management and Supervisory Boards, as well as such companies as are controlled by members of corporate bodies or may exercise influence on members of corporate bodies. In addition, relations with joint ventures and associates are of importance in this respect.

Related parties

(a) The Management Board» Mr. Dieter Holzer, Businessman, Ravensburg (Chairman of the Management Board) » Dr. Axel Rebien, Businessman, Quickborn» Mr. Christoph Rosa, Businessman, Schweinfurt» Mr. Dietmar Axt, Businessman, Hamburg (until February 28, 2010)

Mr. Dietmar Axt resigned effective February 28, 2010, and was released from his contract as member of the Management Board until its expiration at the end of 2010 at the same time.

During the year under review no member of the Management Board has been a member of other Super-visory Boards and control committees.

In January of 2010 the service contracts of members of the Management Board, Dr. Axel Rebien and Mr. Christoph Rosa, were extended by three years each and that of Mr. Dieter Holzer by five years.

Due to the successful IPO, expenses for special payments to members of the Management Board were recorded in the interim financial statements in the amount of EUR 2.1 million; they were paid in the second quarter.

Share-based payment systemOn January 20, 2010, the Supervisory Board passed a resolution implementing a share-based payment system (“Matching Stock Program” or “MSP”) for members of the Management Board. The term of the MSP is 14 years, beginning with the first day of listing of the Company’s shares. The MSP is designed to combine interests that the Management Board and shareholders have in common.

The MSP includes five tranches in all; the first is awarded on the day of the first listing and the remaining tranches each one year after the preceding tranche. Members of the Management Board are required to have an active service or employment contract with TOM TAILOR Holding AG and own shares in TOM TAILOR Holding AG (“MSP shares”) at the time of the award. Each “MSP share” entitles the holder to purchase 0.4 (Chairman of the Management Board) or 3 (other Management Board members) phan-tom stocks per tranche. There is a blocking period of four years from the date of issue of the relevant tranche before the phantom stocks awarded can be exercised. This occurs automatically in defined exercise windows once the exercise hurdle has been reached, an MSP gain can be established and a participant in the exercise has not objected in time. The exercise hurdle is reached if the perfor mance of the TOM TAILOR Holding AG share exceeds that of the SDAX ® since the relevant tranche was awarded. Upon exercise the members of the Management Board are paid the difference between the exercise price and the basic price of all phantom stocks exercised, minus payroll tax and other duties, in TOM TAILOR Holding AG shares. The amount calculated, prior to the deduction of payroll taxes and duties, is limited to 2.5% of earnings before interest, taxes, depreciation and amortization (EBITDA) of the last consolidated financial statements of TOM TAILOR Holding AG.


The MSP has been classified and valued as share-based payment to be settled by equity instru-ments. Cash settlements are not permitted. The fair value of the equity instruments was estimated for all tranches based on a Monte Carlo model and taking into consideration all conditions under which phantom stocks have been granted. This also includes the mapping of the exercise hurdle, as well as simulation of future exercise and basic prices. The calculation of fair value was based on the following parameters:

Dividend yield 2.50%

Remaining term (in years) 9 – 14

Expected volatility 31.65% – 32.90%

Risk-free interest rate 3.10% – 3.54%

Share price at time of valuation EUR 12.85

SDAX ® at time of valuation EUR 3,832.91

Anticipated SDAX ® volatility 19.23% – 19.56%

Based on these parameters, the weighted average of the fair value of the phantom stocks granted in the period under review is EUR 3.14.

In addition to the fixed and variable remuneration components, which have remained the same, under the MSP members of the Management Board have transferred a total of 209,500 MSP shares at a basic price of EUR 13.00 into the program. This entitles the holders to purchase 705,000 phantom stocks. In addition, the members of the Management Board have been granted the right to receive additional MSP shares under the second tranche. As at the balance sheet date, all phantom stocks are still outstanding and cannot be exercised at present. No phantom stocks have expired, been forfeited or been exercised.

Furthermore, Mr. Holzer extended two shareholder loans to the Company in 2006 and 2009 totaling EUR 1.1 million (including accumulated interest), which were repaid as part of the overall reduction of shareholder loans.

Members of the Management Board held the following number of shares on June 30, 2010:

Number of shares

Dieter Holzer 250,000

Dr. Axel Rebien 11,000

Christoph Rosa 11,000




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(b) Supervisory BoardDuring the extraordinary General Shareholders’ Meeting of March 4, 2010, the new version of TOM TAILOR Holding AG’s statutes was adopted. The change in the statutes entails expanding the Company’s Supervisory Board by three members to six members. It consists of the following members:

» Mr. Uwe Schröder, Businessman, Hamburg (Chairman)» Mr. Thomas Schlytter-Henrichsen, Businessman, Königstein,Taunus (Deputy Chairman)» Mr. Alain Blanc-Brude, Director, Monaco (from April 21, 2009, until March 8, 2010)» Mr. Andreas W. Bauer, Businessman, Munich (since March 8, 2010)» Mr. Andreas Karpenstein, Attorney, Düsseldorf (since March 8, 2010)» Dr. Christoph Schug, Businessman, Mönchengladbach (since March 8, 2010)» Mr. Gerhard Wöhrl, Businessman, Munich (since March 8, 2010)

According to the statutes, members of the Supervisory Board receive, in addition to reimbursement of their expenditures, a fixed annual remuneration of EUR 40 thousand, and in the case of the Chair-man EUR 150 thousand and the Deputy Chairman EUR 75 thousand (plus statutory value added tax, if applicable). The remuneration becomes due at the end of the General Shareholders’ Meeting that accepts the consolidated financial statements for the relevant fiscal year or decides on their endorsement.

Mr. Uwe Schröder (Chairman) and Mr. Thomas Schlytter-Henrichsen hold indirect shares in TOM TAILOR Holding AG.

As at June 30, 2010, the member of the Supervisory Board, Dr. Christoph Schug, held 14,800 shares directly.

Mr. Gerhard Wöhrl is a majority shareholder in Rudolf Wöhrl AG, for which he served as Chairman of the Management Board until March 31, 2010. In the first six months of 2010 the TOM TAILOR Group achieved sales revenues of EUR 1.6 million with Rudolf Wöhrl AG. Trade receivables as at June 30, 2010, amounted to EUR 169 thousand.

(c) ShareholdersShareholder loans, including accrued interest, recorded as at December 31, 2009, in the amount of EUR 57.6 million were transferred to the capital reserve in two tranches of EUR 10 million and EUR 15 million respectively as part of an increase in capital from contributions in kind and / or conver-sion in order to strengthen equity and in preparation for the IPO in March of 2010.

The remaining loans were repaid in full to shareholders.

10. Events after the end of the quarter / first six months

No events of material significance to the Group’s net assets, financial position and results of opera-tions have occurred since the end of the quarter / first six months and prior to publication of the interim report.


To the best of our knowledge, and in accordance with the applicable reporting principles for interim financial reporting, the interim consolidated financial statements give a true and fair view of the assets, liabilities, financial position and profit or loss of the group, and the interim management report of the group includes a fair review of the development and performance of the business and the position of the group, together with a description of the principal opportunities and risks associated with the expected development of the group for the remaining months of the financial year.

Hamburg, August 10, 2010TOM TAILOR Holding AG

The Management Board

responsibility Statement

Financial Calendar

Date Current events

REPORTING

August 10, 2010 Half Year Report 2010

November 09, 2010 9-Month Report 2010

March 31, 2011 Annual Report 2010

OTHER EVENTS

August 12, 2010 Roadshow, London

August 19, 2010 Bankhaus Lampe Consumer Goods Conference, Frankfurt

August 25, 2010 Commerzbank Sector Conference, Frankfurt

September 06, 2010 Roadshow, Milan

September 07, 2010 Roadshow, Paris

September 08, 2010 Roadshow, Paris

September 27, 2010 Merck Finck Investor Conference, Munich

November 22/23, 2010 German Equity Forum, Frankfurt

December 1 – 3, 2010 Berenberg European Conference, Pennyhill, UK

Contact

Investor RelationsViona BrandtTOM TAILOR Holding AG

Phone: +49 (0) 40 58956-429Fax: +49 (0) 40 58956-399Email: [email protected]

This Half year Report is also available in German.

Disclaimer

Important noteThis interim report contains statements on future developments that are based on currently available information and that involve risks and uncertainties that could lead to actual results deviating from these forward-looking statements. The statements on future developments are not to be understood as guarantees. The future developments and events are dependent on a number of factors. They include various risks and unanticipated circumstances, and are based on assumptions that may not be correct. These risks and uncertainties include, for example, unforeseeable changes in political, economic and business conditions, the competitive situation, interest rate and currency developments and other risks and unanticipated circumstances.

Imprint

PublisherTOM TAILOR Holding AG, Hamburg

Concept & DesignIR-One AG & Co., Hamburg

TOM TAILOR Holding AG Garstedter Weg 14 22453 Hamburg www.TOM-TAILOR.com

Documents

H1 2010 - Tom Tailor Reports... · number to 96. As a result of expanding our presence, Group revenue rose 9.9 percent year on year to EUR 147.3 million. Our constant growth in revenue