THE PERFECT FIT - ir.tom-tailor-group.comir.tom-tailor-group.com/tomtailor/pdf/2013/TOM... · Interim Report Q1–Q3/2013 5 Highlights in Q3/2013 SEPTEMBER 2013 ... organised by Burda

Interim Report 1 January to 30 September 2013

T H E P E R F E C T F I T

Key FiguresEUR million Q3/2013 Q3/2012

ChangeQ1–Q3/

2013Q1–Q3/

2012

Change

absolute relative absolute relative

Revenue 249.0 190.7 58.3 30.6% 656.0 398.5 257.5 64.6%

TOM TAILOR Retail 67.1 50.6 16.5 32.6% 174.9 136.2 38.7 28.4%

TOM TAILOR Wholesale 90.2 82.8 7.4 8.9% 226.9 205.0 21.9 10.7%

BONITA 91.7 57.3 34.4 60.0% 254.2 57.3 196.9 343.6%

Share of revenue (in %)

TOM TAILOR Retail 26.9 26.5 26.7 34.2

TOM TAILOR Wholesale 36.2 43.4 34.6 51.4

BONITA 36.8 30.0 38.8 14.4

Cost of materials 119.2 93.6 25.6 27.4% 297.3 196.5 100.8 51.3%

Gross profit 129.8 97.1 32.7 33.7% 358.7 202.0 156.7 77.6%

Gross margin (in %) 52.1 50.9 54.7 50.7

Recurring EBITDA 21.4 19.1 2.3 12.0% 47.2 30.9 16.3 52.8%

Recurring EBITDA margin (in %) 8.6 10.0 7.2 7.8

One-off items 2.2 2.7 – 0.5 –18.5% 10.7 6.2 4.5 72.6%

EBITDA 19.2 16.4 2.8 17.1% 36.5 24.7 11.8 47.8%

EBITDA margin (in %) 7.7 8.6 5.6 6.2

Recurring EBIT 9.4 9.7 – 0.3 – 3.1% 12.0 10.5 1.5 14.3%

Recurring EBIT margin (in %) 3.8 5.1 1.8 2.6

One-off items (net of imputed tax effect) 4.4 4.5 – 0.1 –2.2% 17.3 10.4 6.9 66.3%

thereof amortisation of TOM TAILOR/BONITA 2.2 1.9 0.3 6.6 4.2 2.4

thereof financing costs/BONITA acquisition – 11.9 – 14.8

thereof cost of BONITA integration 2.1 –11.1 9.2 –11.1

thereof borrower’s note loans and refinancing 0.1 0.4 0.9 0.4

EBIT 5.0 5.2 – 0.2 –3.8% – 5.3 0.1 – 5.4 – 5,400.0%

EBIT margin (in %) 2.0 2.7 – 0.8 0.0

Recurring net income for the period 3.6 7.4 – 3.8 – 51.4% 0.2 5.5 – 5.3 – 96.4%

Recurring earnings per share (in EUR) 0.15 0.24 – 0.09 – 37.5% 0.01 0.21 – 0.20 – 95.2%

One-off items (including imputed tax effect) 3.5 3.7 – 0.2 – 5.4% 14.1 9.0 5.1 56.7%

thereof TOM TAILOR/BONITA PPA 1.5 1.3 0.2 4.6 2.9 1.7

Net income for the period 0.0 3.7 – 3.7 –100.0% –13.9 – 3.5 –10.4 –297.1%

Earnings per share (in EUR) 0.0 0.17 – 0.17 – 0.57 – 0.19 – 0.38

Cash generated from/used in operations 5.9 –25.9 31.8 122.8% 10.4 – 34.7 45.1 130.0%

Net cash used in investing activities 4.7 8.0 – 3.3 – 41.3% 19.0 18.5 0.5 2.7%

Employees as at 30 September (absolute) 6,406 6,089 317 5.2% 6,406 6,089 317 5.2%

thereof TOM TAILOR Wholesale 529 532 – 3 – 0.6% 529 532 – 3 – 0.6%

thereof TOM TAILOR Retail 1,666 1,264 402 31.8% 1,666 1,264 402 31.8%

thereof BONITA 4,211 4,293 – 82 –1.9% 4,211 4,293 – 82 –1.9%

31/12/2012 30/9/2013 30/9/2012

Change

absolute relative

Total assets 771.2 768.7 756.8 11.9 1.6%

Equity 218.9 200.8 215.3 –14.5 – 6.7%

Equity ratio (in %) 28.4 26.1 28.4

Return on equity (in %) 1.4 – 6.9 –1.6

Cash and cash equivalents 53.4 33.4 20.6 12.8 62.1%

Financial liabilities 301.2 309.5 300.0 9.5 3.2%

Net debt 247.8 276.1 279.4 – 3.3 –1.2%

Gearing (in %) 113.2 137.5 129.8

Contents 4 Highlights in Q3/2013 6 Letter to Shareholders 8 TOM TAILOR GROUP Brand World 10 Shares and Investor Relations

Interim Management Report 12 Business Model and Corporate Strategy 13 Economic Environment 14 Note on Net Assets, Financial Position and Results of Operations 14 Results of Operations 22 Financial Position 24 Net Assets 26 Personnel and Management 26 Report on Opportunities and Risks 27 Report on Post-Balance-Sheet Date Events 27 Report on Expected Developments

Consolidated Interim Financial Statements 30 Consolidated Income Statement 30 Consolidated Statement of Comprehensive Income 31 Consolidated Statement of Cash Flows 32 Consolidated Balance Sheet 34 Consolidated Statement of Changes in Equity 36 Notes to the Consolidated Interim Financial Statements

Financial Calendar and Contacts 46 Financial Calendar 46 Contacts 47 Publication Details 47 Future-Oriented Statements

4

Highlights in Q3/2013

JULY 2013

Renew yourself! TOM TAILOR launches new TV commercial

This is the slogan with which the TOM TAILOR GROUP is kicking off the upcoming autumn/winter season. As in TOM TAILOR’s previous TV spots, the spotlight is on the desire for the latest fashion must-haves. From now on, the slogan will be the underlying theme of TOM TAILOR’s commercials, which will change each month. The actors will also constantly reinvent them-selves in the spots running until December, shedding their old outfits and re-emerging in brand new TOM TAILOR looks. All of the stories are set against well-known backdrops in New York City. The commercials are broad-cast on ProSiebenSat.1 Media AG channels.

SEPTEMBER 2013

TOM TAILOR expands into South Africa

The TOM TAILOR GROUP is extending its international reach by entering the South African market. The South African expansion strategy focuses on building up the wholesale business under the TOM TAILOR umbrella brand. TOM TAILOR has already opened 12 shop- in-shops and a franchise store in the leading South African economic hubs since July 2013. To tap this new sales market, the TOM TAILOR GROUP is cooperating with a local partner, Edcon. By the end of the year, an additional 40 shop-in-shops selling exclusively the young fashion brand TOM TAILOR Denim are to be opened. Franchise stores are also planned for Cape Town and Durban. TOM TAILOR intends to continue its expansion in South Africa in 2014 as well.

5Interim Report Q1–Q3/2013 Highlights in Q3/2013

SEPTEMBER 2013

Revitalisation of the BONITA brand

The TOM TAILOR GROUP is aiming to increase its leverage of its BONITA umbrella brand’s potential and, at the same time, to offer its customers a modern shopping experience. To achieve these goals, all 1,000 BONITA stores will be revitalised in the coming months. The focus is on attractive and clear presentation of merchandise, both in the store and in the display windows, and on emotionalising the BONITA brand. Going forward, the use of decorative elements will provide a vibrant backdrop for the BONITA brand world. A central element of this is the BONITA campaign motifs. The “closing-down sale” for the first 250 stores began on 7 August under the slogan “We’re making your BONITA more beautiful”. The other stores will follow in groups of 250. Since the middle of September, the first stores have displayed the new BONITA look and feel.

OCTOBER 2013

TRIBUTE TO BAMBI charity jeans by TOM TAILOR

TOM TAILOR is the official fashion partner of TRIBUTE TO BAMBI 2013, a charity action organised by Burda Verlag. It is the fifth time that the fashion and lifestyle company has designed the successful TOM TAILOR charity jeans, which are sold to benefit TRIBUTE TO BAMBI – Help for Children in Need. As in previous years, TOM TAILOR is donating the entire net proceeds to charitable institutions. The limited edition TOM TAILOR charity jeans with the BAMBI motive have been available in-store and online at www.tom-tailor.de since 11 October 2013.

Letter to ShareholdersHamburg, November 2013

Dear Shareholders and Friends of TOM TAILOR,

After a busy nine months, the Company has very pleasing news to report for the third quarter. The inte-gration of BONITA and TOM TAILOR is going to plan, and we are now seeing the f irst positive effects on revenue and earnings. This progress is also being rewarded by the markets, as was seen once again at the end of October: we placed around 1.8 million new shares within a short space of time in the course of our capital increase, generating gross issue proceeds of EUR 29.5 million. We will use the funds to reduce our debt and increase our equity ratio, which in the future should again be between 30% and 35%. The interest shown by institutional investors in our capital increase strengthens our resolve to continue to systematically expand the TOM TAILOR GROUP and to further increase the presence of our two umbrella brands.

The benefits of integrating TOM TAILOR and BONITA, and the other results of our work, are becoming more and more visible with every quarter. In the third quarter, BONITA recorded like-for-like revenue growth (+5.3%) for the first time since its acquisition by TOM TAILOR – a good sign for the umbrella brand. This positive trend is mainly due to the modified collection development process and the shortened production times. This means that the turnaround is starting to take effect – and the TOM TAILOR GROUP has two popular and clearly defined umbrella brands on the market. TOM TAILOR retail recorded like-for-like revenue growth of 7.8%, rising for the 19th consecutive quarter. Both umbrella brands thus clearly outperformed the sector, which closed the third quarter with revenue down 1%.

Together with the TOM TAILOR wholesale business, which rose by almost 11%, the Company generated revenue of EUR 656.0 million in the first nine months of 2013, up 65% year-on-year. Recurring EBITDA rose by around 53% to over EUR 47 million. This was positively impacted by the inclusion of BONITA and the higher share of revenue from the retail business, as well as by the investments in our procurement organisation in Asia. The gross margin rose by four percentage points to 54.7%.

Buoyed by these tailwinds from the third quarter, we are now devoting ourselves wholeheartedly to the remaining weeks of the year. We will make the most of the upcoming Christmas business to further increase the TOM TAILOR GROUP’s revenue and earnings. We will do this by leveraging the advantages offered by our strong, broad-based position in the retail segment, our long-standing partnerships with our wholesale partners and the growing world of e-commerce. We have also been investing in the modern-isation of our BONITA branches since the middle of the year in order to further raise this umbrella brand’s profile.

We are confirming our revised outlook for the 2013 financial year that we announced in August at the time our H1 results were published; we are aiming to generate consolidated revenue of between EUR 890 million and EUR 910 million and recurring EBITDA of between EUR 85 million and EUR 95 million.

The TOM TAILOR GROUP is well positioned in every respect: alongside our powerful operating plat- form, we also enjoy a stronger capital base as a result of the capital increase. Going forward, we will actively continue our growth path with a particular focus on prof itability. Our sights are set f irmly on our goal – to further expand our position as one of Europe’s leading fashion and lifestyle companies.

Yours sincerely,

Dieter Holzer

8

TOM TAILOR GROUP Brand World

The TOM TAILOR umbrella brand offers high quality, fashionable casual wear and accessories for children, women and men up to the age of 40 in the mid-range price segment under the slogan “Casual fashion for a casual life”. TOM TAILOR releases 12 collections a year, and six for TOM TAILOR POLO TEAM. The brand’s fashion world is complemented by a large number of licensed products.

TOM TAILOR The Company’s TOM TAILOR MEN and TOM TAILOR WOMEN lines offer fashionable clothing for the 25- to 40-year-old target group. The TOM TAILOR MEN collections bring together sporty and casual elements. TOM TAILOR WOMEN is targeted at young, modern women. The TOM TAILOR KIDS brand is broken down into several product lines for children aged 18 months to 14 years and is complemented by TOM TAILOR BABY.

TOM TAILOR DENIMTOM TAILOR Denim comprises the TOM TAILOR Denim Male and TOM TAILOR Denim Female lines. These collections are aimed at young adults between the ages of 15 and 25. They pick up on current trends from fashion capitals around the world, marrying the latest styles and colours with fashionable washes and selected details. TOM TAILOR Denim embodies a spirited, authentic lifestyle.

TOM TAILOR POLO TEAMTOM TAILOR’s third brand, TOM TAILOR POLO TEAM, was launched on the market in August 2012. The premium sportswear brand is targeted at men and women aged 25 to 40. Its six collections a year feature elaborate embroidered appliqués, classic emblems and coordinating prints for a sporty style.

TOM TAILOR ACCESSORIES/LICENCES TOM TAILOR issues licences for many different product groups, including bed linen, eyewear, bags, shoes, watches and bodywear. Licensing and close cooperation with the various partners involved have become a core component of TOM TAILOR’s strategy and success over the past few years. In 2012, licensing partners generated gross sales of around EUR 80 million at the point of sale with licensed TOM TAILOR products.

9Interim Report Q1–Q3/2013 TOM TAILOR GROUP Brand World

BONITA offers fashion separates for men and women aged 40 to 60. The basis for its collections are high-quality items of clothing that can be mixed and matched repeatedly to create new outfits. The items feature charming details, optimum fits and outstanding colour fidelity. The products are sold exclusively in BONITA’s own retail stores as part of a highly standardised system under the slogan “BONITA gibt es nur bei BONITA” (“You can only get BONITA at BONITA”). The demo- graphic trend and the increasing number of people over 40, plus the less pronounced competition in this market segment, offer BONITA substantial growth opportunities.

BONITABONITA creates fashion for women who want to highlight their individual style. BONITA’s looks are authentic and confident, and underline women’s natural beauty. High colour fidelity and perfectly coordinating looks provide options for various outfits. BONITA fashion stands for sophisticated, timeless style without sacrificing fashionable details.

BONITA MENBONITA men underlines men’s personalities with multi-faceted outfits. Featuring optimum fits, a large selection of different styles and high-quality materials, BONITA men offers casual fashion that can be mixed and matched, from sporty to relaxed. New looks can be created time and again thanks to seasonal colour themes.

BONITA ACCESSORIES BONITA’s offering is rounded off by a wide range of accessories, such as scarves, shawls, neck- laces, belts, watches and bags. Unlike TOM TAILOR, the entire accessory development process is managed internally rather than via partners, meaning that no licensing is involved. Products are only sold at BONITA stores. Colourful and stylish accessories play a key role at BONITA, to comple-ment the collection.

10

Shares and Investor RelationsTOM TAILOR’S ShARES

Overall, capital market sentiment was good, with the stock markets turning in an upbeat performance in the first three quarters of 2013. The European debt crisis became less acute, as the financial markets expected a positive resolution and uncertainty declined as a result. The economic environ-ment also improved considerably, partly as a result of the end of the eurozone recession after two years. This had a positive effect on share price performance in many countries. The benchmark indices, such as the German DAX, recorded new temporary highs in the second quarter. Following a brief bout of weakness, prices recovered again, reaching renewed highs in some cases at the end of the third quarter.

TOM TAILOR’s shares got off to a good start in the new year. In the first nine months of 2013, the share price fluctuated largely in the range between EUR 16 and EUR 18 and demonstrated a slightly positive trend as against the beginning of the year. Measured in terms of XETRA closing prices, the shares hit their all-time high on 16 May 2013, at EUR 18.39. The shares subsequently lost ground, due among other things to a difficult economic environment for the sector combined with extremely unfavourable weather conditions. They reached a low of EUR 14.78 on 16 August, only to recover again over the course of the third quarter. The shares closed at EUR 16.87 on 30 September, up 4.7% on their starting price at the end of 2012. The benchmark index, the SDAX, rose by 21.8% in the first nine months. The Company’s market capitalisation amounted to EUR 408.4 million on 30 September and an average of a good 52,800 shares were traded daily on all German stock exchanges.

INVESTOR RELATIONS

The TOM TAILOR GROUP’s investor relations activities aim to attract capital market participants as important partners in the Company’s continuing growth. This means that constant and timely communication is a particular priority for the Management Board, as is the transparent and reliable presentation of the Company’s strategic focus, news and developments. Our aim is to build and strengthen trust and to achieve a fair and realistic market valuation for TOM TAILOR’s shares. This is why we intend to further increase awareness of TOM TAILOR and to cement the perception of TOM TAILOR’s shares as a promising growth stock.

The Management Board and the investor relations team intensified their active dialogue with the capital markets in the first nine months, holding a large number of discussions with investors from Germany, other parts of Europe, the USA and Canada at roadshows and investors’ conferences. These discussions centred on the business development of the TOM TAILOR umbrella brand on the one hand and on the current status of the BONITA integration on the other. Key issues here were how the measures taken were working and when the economic turnaround could be expected. As at the end of the third quarter, a total of 13 investment houses regularly published reports on current developments at the TOM TAILOR GROUP. Ten analysts again recommended buying shares, while two issued a “hold” recommendation and one a “sell” recommendation. This research coverage is to be further expanded in the future.

11Interim Report Q1–Q3/2013 Shares and Investor Relations

Key Data on TOM TAILOR Shares

Share class No-par-value registered shares

ISIN DE000A0STST2

WKN (German securities ID number) A0STST

Ticker symbol TTI

Index SDAX® (Prime Standard)

Stock markets Frankfurt and Hamburg

Most important trading venue XETRA (electronic trading system)

Designated sponsor

Berenberg Bank AG Commerzbank AG Close Brothers Seydler Bank AG

Number of shares as of 30 September 2013 24,209,035

* SDAX indexed to the TOM TAILOR share price in EUR.

Entwickung der TOM TAILOR Aktie im Vergleich zum SDAX® im Zeitraum 1. Januar bis 30. September 2013

Development of the TOM TAILOR Share Compared to SDAX® for the Period from 1 January to 30 September 2013

in EUR

EUR

20

19

18

17

16

15

20

19

18

17

16

15

TOM TAILOR

SDAX®*

TOM TAILOR

SDAX®*

1. Januar

1 January

1. Februar

1 February

1. März

1 March

1. April

1 April

1. Mai

1 May

1. Juni

1 June

1. Juli

1 July

1. August

1 August

1. September

1 September

12

Interim Management Report– Revenue up 64.6% to EUR 656.0 million– TOM TAILOR retail segment grows 28.4% to EUR 174.9 million– Gross margin increases by 4.0 percentage points to 54.7% – Recurring EBITDA of EUR 47.2 million (+52.8%)– BONITA sees first positive revenue trend year-on-year on a like-for-like basis – Cash capital increase to strengthen capital base (after the end of the reporting period) – Forecast for 2013 confirmed

BUSINESS MODEL AND CORPORATE STRATEGY

GROUP STRUCTURE

There were no significant changes to TOM TAILOR Holding AG’s Group structure in the first nine months of 2013. Effective 1 May of the year under review, the Group acquired a 51% interest in S.C. TOM TAILOR RETAIL RO S.R.L., Romania, as part of its further expansion. The purpose of this company, which is operated with a partner, is to continue increasing market penetration in the South East Europe region. In addition, in the third quarter BONITA GmbH & Co. KG was merged with BONITA Deutschland Holding GmbH, which was then renamed BONITA GmbH, in order to streamline the legal structure of the BONITA subgroup. Overall, 42 directly and indirectly held subsidiaries now belong to the consolidated Group.

THE TOM TAILOR BUSINESS MODEL

The TOM TAILOR GROUP does business using two umbrella brands, TOM TAILOR and BONITA.

The TOM TAILOR umbrella brand offers high-quality, fashionable casual wear and accessories for children, women and men up to the age of 40 in the mid-range price segment under the slogan “Casual fashion for a casual life”. TOM TAILOR releases 12 collections a year for TOM TAILOR Casual and TOM TAILOR Denim and six collections a year for TOM TAILOR POLO TEAM. The brand’s fashion world is complemented by a large number of licensed products. The fashion group sells its collec-tions via the wholesale and retail segments.

BONITA comprises casual wear for men and women aged 40 to 60. The basis for its collections are high-quality items of clothing that can be mixed and matched repeatedly to create new outfits. The items feature charming details, optimum fits and outstanding colour fidelity. The Company’s products are sold exclusively in its own retail stores as part of a highly standardised system under the slogan “BONITA gibt es nur bei BONITA” (“You can only get BONITA at BONITA”). The demo-graphic trend and the increasing number of people over 40, plus the less pronounced competition in this market segment, offer the Company substantial growth opportunities.

13Interim Report Q1–Q3/2013 Interim Management Report

CORPORATE GOALS AND STRATEGY

The TOM TAILOR GROUP has a clear long-term vision – to become one of Continental Europe’s major textile companies. Based on this, the Group’s strategy is to outperform the industry as a whole in terms of revenue and earnings growth. Continually strengthening its earnings potential enables the TOM TAILOR GROUP to grow its enterprise value sustainably and for the long term. Key elements of the strategy include replicating the business model, expanding the number of controlled selling spaces, achieving economies of scale, vertical alignment and securing growth financing. The TOM TAILOR GROUP is known for its analytical design and product development process and its ability to react quickly and flexibly to market trends. The focus is on understanding and fulfilling customer requirements by rapidly managing fashion trends in an analytical manner. The Group controls the entire value chain and increasingly distributes its products via controlled spaces (retail, e-commerce, franchise stores and shop-in-shops).

ECONOMIC ENVIRONMENT

MACROECONOMIC ENVIRONMENT

According to figures from the Institut für Weltwirtschaft (IfW – Institute for the World Economy) in Kiel, the global economy has picked up speed slightly. The outlook for the advanced economies has brightened in particular. The US and Japanese economies grew and the recession in the eurozone ended after almost two years. By contrast, momentum in the emerging economies is clearly experiencing a longer-term slowdown. Although the economy in China picked up again, several of the other emerging economies came under pressure as a result of the US Federal Reserve’s announcement to reduce its bond purchases in the near future. The overall forecast for global GDP growth for full-year 2013 was cut slightly to 3.1% (June 2013 estimate: 3.2%).

The IfW reports that the German economy has experienced a clear upturn in the course of this year. This positive development was mainly driven by the domestic economy. After GDP growth of 0.7% in 2012, the Institute therefore continues to expect an increase of 0.5% for 2013 (June 2013 estimate: 0.5%). Consumer sentiment also remained stable at the beginning of autumn. Although economic expectations and consumer spending appetite increased, income expectations weakened slightly while still remaining at a high level. The GfK consumer confidence index stood at 7.0 points in September (previous year: 6.0 points), pointing to an upward trend. The strong showing by the advanced economies and the end of the recession in Europe probably also contributed to this.

14

SECTOR-SPECIFIC DEVELOPMENTS

Fashion retailers in Germany recorded a decline in revenue of 2% in the first nine months of 2013, although August and September closed in positive territory. Although summer 2013 was one of the warmest summers on record, it did not lead to the strongest revenue for fashion retailers, because autumn merchandise was already hitting the shops during the main period of hot weather. The summer collections sold well but at sharp discounts, which had a negative effect on overall revenue (source: TW Testclub).

The procurement markets for the textile and clothing industry remained stable in the first nine months of 2013. The price of cotton increased slightly as against the year-end, from 75 US cents to approximately 86 US cents per pound, remaining within the forecast range of 82 to 90 US cents (source: cotton forward curve, NYB-ICE Futures US Softs).

NOTE ON NET ASSETS, FINANCIAL POSITION AND RESULTS OF OPERATIONS

The net assets, financial position and results of operations of the TOM TAILOR GROUP as at 30 September 2013 reflect the consolidation of the BONITA Group. The comparability of the figures reported below with the corresponding prior-year data is therefore limited. BONITA was consolidated on 1 August 2012. As a result, the prior-year figures only include BONITA’s revenue and earnings for the months of August and September, whereas the assets and liabilities are included in full as at the reporting date of 30 September 2013.

RESULTS OF OPERATIONS

REVENUE

The TOM TAILOR GROUP’s revenue rose by a total of 64.6% in the first nine months to EUR 656.0 million of 2013 (2012: EUR 398.5 million). Of this increase, 49.4 percentage points were attributable to the initial inclusion of BONITA. BONITA generated revenue of EUR 254.2 million (2012: EUR 57.3 million), accounting for 38.8% of Group revenue. The TOM TAILOR umbrella brand continued its growth path, again bucking the overall trend in the sector. Revenue increased by 17.8% to EUR 401.8 million in the first nine months (2012: EUR 341.2 million). In the third quarter of 2013, Group revenue rose by 30.6% to EUR 249.0 million (Q3/2012: EUR 190.7 million). Of this figure, EUR 91.7 million (2012: EUR 57.3 million) was attributable to the acquisition of BONITA. Excluding BONITA, the TOM TAILOR umbrella brand’s revenue rose by 17.9% in the third quarter to EUR 157.3 million (Q3/2012: EUR 133.4 million).


In Germany, the TOM TAILOR GROUP lifted its revenue by 63.9% in the first nine months to EUR 431.7 million (2012: EUR 263.4 million). BONITA accounted for EUR 181.6 million of this increase and accounted for 42.1% of consolidated revenue in Germany. Revenue growth was also strong outside Germany. At EUR 224.3 million (2012: EUR 135.1 million), the TOM TAILOR GROUP recorded a 66.0% increase in international revenue. This was primarily driven by increased business activities in South East Europe and its expansion in its core international markets – Austria, Switzerland, the Benelux countries and France. BONITA contributed EUR 72.6 million to international revenue.

The TOM TAILOR GROUP lifted revenue in its core international markets by 72.0% to EUR 158.6 million (2012: EUR 92.2 million). This confirms its strategy of also investing strategically in core international markets outside its domestic market, Germany.

OTHER OPERATING INCOME

Other operating income declined from EUR 22.8 million to EUR 16.6 million in the first nine months of 2013. The main driver for this was the negative goodwill associated with the acquisition of BONITA that was recognised in the previous year (EUR 11.1 million). After adjustment for this special factor, other operating income increased by EUR 4.9 million. This increase is primarily attributable to the inclusion in full for the first time of other operating income at BONITA compared with the previous year. It largely related to income from letting/subletting properties owned by BONITA (EUR 2.4 million).

Umsatzentwicklung

Revenue

Umsatzentwicklung nach Regionen

Revenue Growth by Region

in Mio. EUR

EUR million

in Mio. EUR

EUR million

Q32012

Q32012

Q32012

Q32012

Q1–Q32012

Q1–Q32012

Q1–Q32012

Q1–Q32012

Q32013

Q32013

Q32013

Q32013

Q1–Q32013

Q1–Q32013

Q1–Q32013

Q1–Q32013

750

600

450

300

150

750

600

450

300

150

750

600

450

300

150

750

600

450

300

150

Deutschland

TOM TAILOR

BONITA

Germany

TOM TAILOR

BONITA

Ausland

TOM TAILOR

BONITA

Foreign markets

TOM TAILOR

BONITA

190,7249,0 27,8

72,6

398,5

656,0

59,7

151,7

63,9

181,6

97,6

250,115,2

15,2

46,3

119,9

42,1

42,1

87,1

221,3

190.7249.0 27.8

72.6

398.5

656.0

59.7

151.7

63.9

181.6

97.6

250.115.2

15.2

46.3

119.9

42.1

42.1

87.1

221.3

16

COST OF MATERIALS

The cost of materials amounted to EUR 297.3 million in the first nine months of 2013 (2012: EUR 196.5 million), up 51.3% year-on-year. This was mainly due to the consolidation of BONITA and the ongoing growth of the TOM TAILOR umbrella brand. The gross margin improved by 4.0 percentage points to 54.7% in the period under review (2012: 50.7%). This positive margin development was attributable primarily to the increase in retail revenue at TOM TAILOR as well as the initial inclusion in full of BONITA, which sells its products exclusively via its own retail stores. The continued expansion of the Group’s own procurement organisation in Asia also had a positive impact.

PERSONNEL EXPENSES

Personnel expenses rose by 91.1% in the first nine months of 2013 to EUR 144.5 million (2012: EUR 75.6 million). This mainly reflects the 141.7% increase in the average number of staff at the TOM TAILOR GROUP, which is primarily attributable to the acquisition of BONITA and to ongoing expansion. The TOM TAILOR GROUP employed 6,406 people as at 30 September 2013 (previous year: 6,089), of whom 4,211 worked at BONITA. The higher personnel expense to revenue ratio was also attributable to upfront personnel expenses for ongoing retail store expansion and to non-recurring additional costs related to the integration of BONITA.

OTHER OPERATING EXPENSES

Other operating expenses were up 56.1% on the prior-year period at EUR 194.3 million (2012: EUR 124.5 million). The EUR 69.8 million increase was mainly attributable to rental expenses of EUR 42.2 million at BONITA, which were recognised in full for the first time. In total, BONITA accounted for other operating expenses of EUR 78.6 million (2012: EUR 15.8 million). Other operating expenses increased at a slower pace than revenue due to the fact that fixed costs did not increase at the same rate, as well as to slower growth in logistics costs for order picking and unchanged marketing costs.

Other operating expenses mainly comprise rental expenses (EUR 88.9 million; 2012: EUR 40.2 million), logistics costs for order picking (EUR 15.9 million; 2012: EUR 13.6 million) and marketing expenses (EUR 18.7 million; 2012: EUR 18.6 million). The number of retail stores rose by 48 as against 31 Decem-ber 2012 to 1,346 as at the 30 September 2013 reporting date. Of these, 1,004 stores were attribut-able to BONITA and 342 to TOM TAILOR.


EARNINGS BEFORE INTEREST, TAXES, DEPRECIATION AND AMORTISATION (EBITDA)

Recurring EBITDA rose by 52.8% in the first nine months of 2013 to EUR 47.2 million (2012: EUR 30.9 million). Apart from revenue growth, this year-on-year improvement was the result of an increase in the gross margin and a slower rise in other operating expenses. In the third quarter of 2013, recurring EBITDA rose by 12.0% overall to EUR 21.4 million (2012: EUR 19.1 million). Reported EBITDA amounted to EUR 36.5 million in the first nine months of 2013, up EUR 11.8 million or 47.8% on the prior-year period (2012: EUR 24.7 million).

DEPRECIATION, AMORTISATION AND IMPAIRMENT LOSSES

Depreciation/amortisation amounted to EUR 41.8 million in the first nine months of 2013, up EUR 17.2 million year-on-year (2012: EUR 24.6 million). This figure contrasted with capital expenditure totalling EUR 19.0 million in the reporting period (2012: EUR 18.5 million). EUR 15.7 million of the increase in depreciation/amortisation reflects the initial inclusion in full of the depreciation/amortisation attributable to BONITA, as well as the further expansion of TOM TAILOR’s retail business and of the number of its controlled selling spaces (shop-in-shops and franchise stores) over the past few years.

Entwicklung bereinigtes EBITDA

Development Recurring EBITDA

in Mio. EUR

EUR million

50

40

30

20

10

50

40

30

20

10

19,1

19.1

21,4

21.4

30,9

30.9

47,2

47.2

Q32012

Q32012

Q1–Q32012

Q1–Q32012

Q32013

Q32013

Q1–Q32013

Q1–Q32013

18

FINANCIAL RESULT

At EUR –12.5 million, the financial result for the first nine months of 2013 was down EUR 3.0 million as against the previous year (EUR –9.5 million). This is primarily attributable to higher interest expenses as a result of the increase in debt following the acquisition of BONITA, as well as the increased utilisation of operating bank lines of credit due to seasonal factors. In addition, the first nine months of 2013 include expenses in the amount of EUR 2.8 million (2012: EUR 2.4 million) relating to the refinancing measures implemented in 2012, which are being amortised in the financial result over the term of the financing.

INCOME TAXES

The income taxes item reported a positive figure of EUR 3.9 million in the first nine months of 2013, (2012: EUR 5.8 million). This reflects the higher negative result before income taxes, which was due in particular to integration factors. The notional tax rate was 21.8%. The tax rate of 62% reported in the previous year was due to the non-tax-deductible, non-recurring effect of the negative goodwill from the purchase price allocation of BONITA (EUR 11.1 million) and therefore cannot be used for comparison.

NET INCOME FOR THE PERIOD AND EARNINGS PER SHARE

Recurring net income for the first nine months of 2013 was EUR 0.2 million, approximately EUR 5.3 million less than in the previous year (2012: EUR 5.5 million). Recurring earnings per share (EPS) therefore amounted to EUR 0.01 (2012: EUR 0.21). The decrease is primarily attributable to the higher negative financial result and the loss of EUR 12.4 million made by the BONITA umbrella brand in the first nine months of 2013. Unlike the TOM TAILOR umbrella brand, BONITA was unable to escape the difficult market environment caused by the weather.

The net income reported for the period was also negative, at EUR –13.9 million (2012: EUR –3.5 mil - lion) and led to earnings per share of EUR – 0.57 (2012: EUR – 0.19). This was mainly due to integration costs of approximately EUR 9 million in addition to weather-related factors.


Reconciliation to Recurring Net Income for the Period

EUR thousand Q3/2013 Q3/2012 Q1–Q3/2013 Q1–Q3/2012

Net income for the period 34 3,710 –13,876 – 3,502

Income tax expense 476 – 3,025 – 3,879 – 5,835

Net income before income tax 510 685 –17,755 – 9,337

Financial result 4,502 4,478 12,455 9,479

One-off items

of which in depreciation, amortisation and impairment losses: – Amortisation from TOM TAILOR (PPA) from 2005 1,174 1,174 3,522 3,522

– Amortisation from BONITA (PPA) from 2012 1,018 679 3,054 679

of which in financial result: – Financing costs/BONITA acquisition 683 751 2,840 2,438

of which in EBITDA: – Financing costs/BONITA acquisition 0 11,872 0 14,787

– Negative goodwill from BONITA acquisition 0 –11,099 0 –11,099

– Cost of BONITA integration 2,076 380 9,159 380

– Total cost of BONITA acquisition in EBITDA 2,076 1,153 9,159 4,068

– Cost of Bread & Butter for new TOM TAILOR POLO TEAM division 0 1,204 0 1,204

– Borrower’s note loans and refinancing costs 110 0 873 0

– Other one-off items 0 331 655 931

2,186 2,688 10,687 6,203

Aggregate one-off items, net of tax effect 5,061 5,292 20,103 12,842

Recurring EBIT 9,390 9,704 11,963 10,546

as % of revenue 3.8 5.1 1.8 2.6

Depreciation, amortisation and impairment losses (net of amortisation from PPA) 12,022 9,395 35,212 20,390

Recurring EBITDA 21,412 19,099 47,175 30,936

as % of revenue 8.6 10.0 7.2 7.8

Depreciation, amortisation and impairment losses (net of amortisation from PPA) –12,022 – 9,395 – 35,212 –20,390

Financial result (net of one-off items) – 3,819 – 3,727 – 9,615 –7,041

Recurring net income before income tax 5,571 5,977 2,348 3,505

Income tax expense – 476 3,025 3,879 5,835

Imputed tax effect (30 %) on aggregate one-off items –1,518 –1,588 – 6,031 – 3,853

Recurring net income for the period 3,577 7,414 196 5,487

SEGMENT REPORTING

Segment reporting in the TOM TAILOR GROUP is divided into the retail and wholesale segments. The retail segment was expanded to include BONITA following its acquisition, so a distinction is now made within it between the TOM TAILOR and BONITA umbrella brands. The retail segment comprises retail and outlet stores operated by the Company and e-commerce activities. The latter include the TOM TAILOR e-shop and e-commerce partnerships with a number of mail-order companies. In the wholesale segment, the Company distributes TOM TAILOR products to business customers, who sell

20

these to end customers via different sales channels. These include franchise stores, shop-in-shops and multi-label sales outlets. There are now a total of three reportable segments (TOM TAILOR retail, TOM TAILOR wholesale and BONITA retail).

Retail SegmentsTotal revenue in the two retail segments rose by approximately 121.8% to EUR 429.1 million in the first nine months of 2013 (2012: EUR 193.5 million). The share of Group revenue attributable to the retail segment increased in line with this, to 65.4% (2012: 48.5%). This was mainly attributable to the full consolidation of BONITA for the first time, as well as to growth in the TOM TAILOR retail segment. The retail share will continue to increase going forward due to the ongoing trend toward controlled selling spaces.

TOM TAILOR Retail Segment The accelerated expansion of business in the TOM TAILOR retail segment remains the key growth driver for the TOM TAILOR GROUP. In line with this, revenue in this segment increased by an above-average 28.4% in the first nine months of 2013, to EUR 174.9 million (2012: EUR 136.2 million). Consequently, the share of revenue attributable to the TOM TAILOR umbrella brand accounted for by retail sales recorded another increase, to 43.5% (2012: 39.9%). On a like-for-like basis (i.e. excluding expansion), revenue growth in the TOM TAILOR retail segment amounted to 7.8% for both the first nine months of 2013 and the third quarter, again outperforming the sector as a whole. At 342, the number of retail stores rose by 59 since 30 September 2012 and by 27 since 31 December 2012. Of these, 141 retail stores are in Germany, 66 are in Austria and 135 are in other countries.

Revenue generated by e-commerce activities rose by 19.1% to EUR 28.0 million in the first nine months of 2013 (2012: EUR 23.5 million). In the third quarter, boosted by the new TV campaign, it rose by an impressive 27.2% to EUR 10.2 million (2012: EUR 7.9 million).

Recurring EBITDA in the TOM TAILOR retail segment improved by EUR 1.9 million to EUR 9.9 million in the first nine months of 2013 (2012: EUR 8.0 million). The gross margin remained stable at 58.5% (2012: 58.5%) despite the difficult market environment caused by the weather. Especially higher marketing expenses of EUR 1.7 million at the EBITDA level had a negative impact.

BONITA Retail Segment The BONITA umbrella brand previously comprised own retail stores only. These are now joined by the BONITA e-shop, which went online on 6 June 2013 and which will boost BONITA’s growth going forward.

BONITA recorded revenue of EUR 254.2 million in the first nine months of 2013. This corresponds to 38.8% of the Group’s revenue and 59.2% of retail revenue for both umbrella brands. Revenue in the first half of 2013 in particular somewhat underperformed the market – which deteriorated overall – due to the persistent rain and winter weather, and to the fact that the potential of the BONITA brand, which is highly regarded among end customers, is not being fully exploited at present. By contrast, the year-on-year decline in revenue was reversed for the first time in the third quarter of 2013, recording a 3.1% increase. On a like-for-like basis, BONITA generated a 5.3% increase in the third quarter. However, revenue declined by 3.1% year-on-year in the first nine months of 2013 as a whole and by 4.8% on a like-for-like basis. The positive trend at BONITA in the third quarter was primarily based on the change in the collection development process and the optimised production


times. The first products from the autumn/winter collection, which were manufactured using TOM TAILOR’s proven design and development process, have been available in BONITA stores since August. Dedicated marketing campaigns and seasonal sales measures were employed in connection with the changeover at the stores and the delivery of the new collections, resulting in the previous collections being sold to a large extent. This had a positive effect on the revenue trend.

BONITA’s prior-year revenue is only included from August 2012 onwards as the BONITA Group was only consolidated on 1 August 2012. The number of BONITA retail stores rose by 21 as against 31 December 2012 to 1,004. Of these, 714 stores are in Germany, 121 are in Austria and 169 are in other countries.

Recurring EBITDA rose to EUR 12.7 million in the first nine months of 2013 (2012: EUR 5.9 million). Integration expenses of EUR 7.7 million were incurred in this period (2012: EUR 0.4 million), resulting in reported EBITDA of EUR 4.9 million (2012: EUR 17.0 million). After adjustment for the seven months of 2012 that are not included due to the initial consolidation, recurring EBITDA declined by EUR 15 million. This year-on-year deterioration was mainly due to the difficult market environment caused by the weather, which led to lower revenue and higher discounts, and to the fact that the potential from the integration of BONITA could not yet be fully exploited. At 62.1%, the gross margin declined by 2.6 percentage points compared with the prior-year months, which were not yet reflected in the consolidated figure. The gross margin for the third quarter of 2013 of 60% was impacted in particular by the discounts offered as part of the dedicated marketing campaigns and seasonal sales measures adopted for the previous months’ collections.

Since the first new products to be developed using the TOM TAILOR design and development process hit the shelves in BONITA stores in August, the Management Board of TOM TAILOR Holding AG is expecting the signs of stabilisation seen at the end of the third quarter of 2013 and the initial positive trend at BONITA to continue in the period up to the end of the year.

Umsatzentwicklung nach Segmenten

Revenue Growth by Segment

Retail-Store-Entwicklung

Retail Stores

in Mio. EUR

EUR million

Anzahl Stores

Number of stores

30.9.2012

30/9/2012

31.12.2012

31/12/2012

30.9.2013

30/9/2013

750

600

450

300

150

750

600

450

300

150

2.000

1.600

1.200

800

400

2,000

1,600

1,200

800

400

982

982

974

974

1.004

1,004

67,1

67.1

50,6

50.6

136,2

136.2

174,9

174.9

315

315

283

283

342

342

TOM TAILOR Retail

TOM TAILOR Wholesale

BONITA

TOM TAILOR Retail


BONITA

TOM TAILOR

BONITA

TOM TAILOR

BONITA

90,2

90.2

82,8

82.8

205,0

205.0

226,9

226.9

91,7

91.7

57,3

57.3

57,3

57.3

254,2

254.2

Q32012

Q32012

Q1–Q32012

Q1–Q32012

Q32013

Q32013

Q1–Q32013

Q1–Q32013

22

TOM TAILOR Wholesale SegmentRevenue in the TOM TAILOR wholesale segment rose by 10.7% in the first nine months of 2013 to EUR 226.9 million (2012: EUR 205.0 million). The segment thus accounted for 56.5% of the TOM TAILOR umbrella brand’s revenue (2012: 60.1%). The Company increased its wholesale revenue in Germany by 6.7% to EUR 147.9 million (2012: EUR 138.6 million) and lifted international revenue by 18.9% to EUR 78.9 million (2012: EUR 66.4 million). The number of shop-in-shops rose by 198 as against 31 December 2012 to 2,229. The number of franchise stores rose by 11 to 186. Order intake in the wholesale segment for the period up to December 2013 was up 8.1% as against the previous year.

Recurring EBITDA rose by EUR 7.6 million in the first nine months of 2013 to EUR 24.6 million (2012: EUR 17.0 million). This increase was mainly due to the optimisation of the procurement process thanks to the purchasing company in Asia, which has been operational since August 2012, as well as to a decline in marketing costs.

FINANCIAL POSITION

CASH FLOW

The TOM TAILOR GROUP recorded cash generated from operations of EUR 10.4 million in the first nine months of 2013, EUR 45.1 million more than in the prior-year period (2012: EUR –34.7 million). One key reason for this is the positive net income for the period after adjustment for non-cash depreciation/amortisation. Although the net income reported for the period declined year-on-year, adjusted net income including depreciation/amortisation in the amount of EUR 41.8 million improved by EUR 7.0 million compared with the previous year to EUR 28.0 million (2012: EUR 21.0 million). In addition, inventories rose just EUR 14.4 million year-on-year despite the expansion (2012: EUR 33.0 million). In this context, the reduction in inventories at BONITA due to the sell-off of the previous months’ collections is also having a positive effect; these had led to disproportionately high inventory levels in the first half of the year. Inventories have seen a sector-wide seasonal increase in the third quarter of 2013 due to the addition of more expensive winter articles. This situation will right itself up to the end of the year provided that the winter months and the Christmas trade progress normally and will lead to positive cash inflows. In general, BONITA stores are now being supplied with higher levels of merchandise to mitigate the shortages that occurred in the past.

The remaining liquidity effects are not due to special factors but rather reflect the seasonal nature of the business. Non-cash changes in the amount of EUR –2.2 million (2012: EUR –16.9 million) mainly comprise changes in the fair value of currency forwards entered into to hedge purchasing volumes denominated in US dollars.

The seasonal nature of the fashion industry over the year means that cash flow from operations is usually lower in the first nine months, due in particular to the changeover from less expensive summer collections to more expensive winter collections. The trend in the reporting period is therefore not unusual.


Including interest paid, net cash from operating activities was positive, at EUR 2.6 million. This represents a year-on-year improvement of EUR 44.5 million (2012: EUR – 41.9 million).

Net cash used in investing activities was EUR 18.6 million (2012: EUR –134.6 million), significantly lower than the previous year. This was mainly due to the acquisition of the BONITA Group, which took place in the third quarter of the previous year and led to cash outflows of EUR 116.0 million. Excluding this non-recurring item, the investment volume was slightly higher than in the previous year. Investing activities remained focused on expanding controlled selling spaces in all three segments.

Net cash used in financing activities amounted to EUR – 4.0 million, down sharply on the previous year (EUR 187.7 million). This amount was due to seasonal drawdowns of existing bank lines of credit in connection with the Group’s operating activities and the scheduled repayment of long-term loans to banks in the amount of EUR 10 million. A total of EUR 80 million in financial liabilities was raised in connection with the issuance of the borrower’s note loan, and the entire amount was used to directly repay other financial liabilities.

Liquidity increased by EUR 12.8 million year-on-year to EUR 33.4 million.

CAPITAL EXPENDITURE

“Act Premium. Sell Volume” – this philosophy is particularly relevant to product quality and store design. Customers should feel comfortable in TOM TAILOR and BONITA selling spaces, and this in turn should positively influence purchase decisions because shoppers are spending more time in-store. EUR 19.0 million (2012: EUR 18.5 million) was invested Group-wide to further expand controlled selling spaces in all three segments. EUR 6.1 million of this was invested in the TOM TAILOR retail segment (2012: EUR 10.4 million) and EUR 5.9 million in the TOM TAILOR wholesale segment (2012: EUR 6.1 million). Capital expenditure in the retail segment largely related to shop fittings and fixtures for the 27 new stores. Approximately EUR 4.4 million was spent on new selling spaces in the wholesale segment. The remaining EUR 1.5 million primarily related to the IT/software infrastruc-ture. BONITA invested a total of EUR 7.0 million in the first nine months of 2013 (2012: EUR 2.0 million), primarily in shop fittings for new and existing stores.

24

NET ASSETS

ASSETS

Non-current assets changed only insignificantly compared with 31 December 2012. Depreciation/ amortisation on intangible assets and property, plant and equipment rose to EUR 41.8 million (2012: EUR 24.6 million) as a result of the consolidation of BONITA. This figure contrasted with capital expenditure of EUR 19.0 million (2012: EUR 18.5 million), which mainly related to ongoing expansion. Non-current assets declined slightly overall, from EUR 524.6 million as at 31 December 2012 to EUR 513.9 million.

Current assets amounted to EUR 254.8 million, exceeding the figure as at 31 December 2012 (EUR 246.5 million) by EUR 8.3 million. This was due in particular to the EUR 14.9 million expansion in inventory levels to EUR 138.6 million (31 December 2012: EUR 123.7 million). This increase in inventory levels is attributable to ongoing expansion and the addition of 48 retail stores, the continued increase in the number of controlled selling spaces and the procurement of winter articles, which are comparatively more expensive. Inventories at BONITA stores had been higher in the first half of 2013 due to lower revenue caused by the weather. However, they were sold off in the third quarter, returning inventories to normal levels.

At EUR 768.8 million, total assets remained virtually unchanged as against 31 December 2012 (EUR 771.2 million).

Vermögensstruktur

Asset Structure

Kapitalstruktur

Capital Structure

31.12.2012

31/12/2012

31.12.2012

31/12/2012

30.9.2013

30/9/2013

30.9.2013

30/9/2013

100%

80%

60%

40%

20%

100%

80%

60%

40%

20%

100%

80%

60%

40%

20%

100%

80%

60%

40%

20%

32,0

32.0

32,633,2

33.2

24,9

24.9

68,0

68.0

39,066,8

66.8

49,0

49.0

Langfristige

Vermögenswerte

Kurzfristige

Vermögenswerte

Non-current assets

Current assets

Eigenkapital

Langfristige Schulden

Kurzfristige Schulden

Equity

Non-current liabilities

Current liabilities

28,4 26,1

26.1

32.6

39.0

28.4


EQUITY

Equity declined to EUR 200.8 million in the first nine of 2013 (31 December 2012: EUR 218.9 million) primarily as a result of the negative net income for the period of EUR –13.9 million. The equity ratio declined slightly in line with this to 26.1% (31 December 2012: 28.4%), since total assets remained relatively constant.

LIABILITIES

Under the non-current liabilities item, non-current financial liabilities rose by approximately EUR 83.6 million to EUR 288.2 million (31 December 2012: EUR 204.6 million). The increase is attributable to the successful issuance of a borrower’s note loan, as well as higher drawdowns of long-term bank lines of credit as a result of seasonal factors. The borrower’s note loan had a total volume of EUR 80 million and was primarily placed with institutional investors in Germany and Europe. The entire amount was used to refinance current liabilities incurred during the acquisition of BONITA ahead of time. The borrower’s note loan has three tranches with maturities of 2.6, 3.6 and 5 years, and bears both fixed and variable rates of interest. The coupons reflect the present favourable level of interest rates and lie within the range of previously payable interest rates.

Under the current liabilities item, current financial liabilities in particular declined to EUR 21.3 million (31 December 2012: EUR 96.6 million) due to repayments following the issuance of the long-term borrower’s note loan.

OFF-BALANCE-SHEET FINANCING INSTRUMENTS

The Company does not use any off-balance-sheet financing instruments such as factoring, asset-backed securities, sale and leaseback transactions, or contingent liabilities involving special purpose entities not included in the consolidated financial statements. The TOM TAILOR GROUP has entered into a small number of other operating leases, for example for IT equipment and Company vehicles. Off-balance-sheet financing instruments therefore do not have any material effect on the Group’s net asset position.

26

PERSONNEL AND MANAGEMENT

The TOM TAILOR GROUP employed 6,406 people as at 30 September 2013 (excluding the Manage-ment Board, vocational trainees and casual workers; 30 September 2012: 6,089 employees). BONITA is the segment in the TOM TAILOR GROUP with the most employees (4,211; 30 September 2012: 4,293). A total of 1,666 people worked in the TOM TAILOR retail segment (30 September 2012: 1,264) and 529 in the TOM TAILOR wholesale segment (30 September 2012: 532). This significant increase in staff in the TOM TAILOR retail segment is due in particular to recruitment for the new retail stores.

In regional terms, the TOM TAILOR GROUP (including BONITA) has 4,148 employees in Germany (30 September 2012: 4,098) and 2,258 employees outside Germany (30 September 2012: 1,991).

REPORT ON OPPORTUNITIES AND RISKS

In the course of its business activities, the TOM TAILOR GROUP is exposed to a large number of risks and opportunities associated with operating any business. Risks refer to events that, if they occur, result in negative deviations from planned targets. If they materialise, these risks can hamper business development for the long term, dampen earnings growth and endanger the Company’s net assets and financial position. In contrast, opportunities refer to circumstances that may positively affect the TOM TAILOR GROUP’s future development. Detailed information about opportunities and risks, as well as a description of TOM TAILOR’s risk management system, can be found on pages 83 ff of the 2012 Annual Report. The statements made there continue to apply without modification.

There are currently no risks that, individually or in the aggregate, could endanger the continued existence of TOM TAILOR Holding AG.

Mitarbeiter nach Segmenten

Employees by Segment

7.500

6.000

4.500

3.000

1.500

7,500

6,000

4,500

3,000

1,500


TOM TAILOR Retail

BONITA


TOM TAILOR Retail

BONITA

529

529

532

532

1.666

1,666

1.264

1,264

4.211

4,211

4.293

4,293

30.9.2012

30/9/2012

30.9.2013

30/9/2013


REPORT ON POST-BALANCE-SHEET DATE EVENTS

TOM TAILOR Holding AG issued 1,818,098 new, no-par-value registered shares on 24 October 2013 as part of a cash capital increase. The new shares were issued at a price of EUR 16.25 per share under the terms of a private placement for institutional investors using an accelerated bookbuilding procedure. This generated gross issue proceeds of approximately EUR 29.5 million for the Company.

The 1,818,098 new registered shares were issued by way of a capital increase from authorised capital. The implementation of the capital increase was entered in the commercial register on 24 October 2013. As a result of the capital increase, the Company’s share capital has risen from EUR 24,209,035.00 to EUR 26,027,133.00. Shareholders’ pre-emptive rights were disapplied. The new shares bear dividend rights as from 1 January 2013.

There were no other events with a material effect on the net assets, financial position and results of operations of the Group between the end of the reporting period and the publication of this interim report.

REPORT ON EXPECTED DEVELOPMENTS

OUTLOOK – ECONOMIC ENVIRONMENT AND SECTOR DEVELOPMENTS

In its September economic forecast, the Institut für Weltwirtschaft (IfW – Institute for the World Economy) in Kiel is predicting an increase of 3.1% in global output for the current year. This figure is slightly lower than the June 2013 forecast of 3.2% and is primarily attributable to the muted growth in the emerging economies. The forecast for 2014 remained unchanged, at 3.8%.

In the industrialised nations, the economic outlook for the current year has hardly changed. The eurozone countries overcame the recession in spring 2013 and the IfW now expects gross domestic product (GDP) for full-year 2013 to decline by 0.4% (June 2013 outlook: – 0.6%). This prediction assumes that uncertainty about the progress of the European sovereign debt crisis will not flare up again significantly. The recovery is expected to continue in 2014, with the result that the IfW is predicting an increase of 1.1%. The GDP growth forecast for the USA was reduced slightly to 1.5% (June 2013 outlook: 1.8%), while the prediction for Japan increased to 2.0% (June 2013 outlook: 1.5%). The picture for the emerging economies is mixed: China is still expected to see growth of 7.5%, whereas the figure for India is only 3.5%, after a forecast of 5.5% in June 2013. Moderate growth is still expected for 2013 in Central and Eastern Europe and Russia, an important region for the TOM TAILOR GROUP.

Consumer spending appetite in Germany, plus the general economic environment (including low unemployment), are decisive factors for the TOM TAILOR GROUP’s revenue and earnings growth, as the Group generates around 66% of its total revenue in Germany. Following a soft period in the winter, the German economy has clearly picked up in the course of this year. The IfW has left its June 2013 forecasts of a 0.5% GDP increase in 2013 and a 1.8% increase in 2014 unchanged.

28

Consumer sentiment began the autumn stable. The GfK consumer confidence index in Germany increased to 7.0 points in the first nine months of the year (previous year: 6.0 points). Both income expectations (33.7 points, previous year: 23.9 points) and consumers’ willingness to buy (45.0 points, previous year: 33.0 points) rose significantly year-on-year. Economic expectations also increased to 10.7 points, clearly exceeding the prior-year figure of –17.2 points. It would seem that, like the experts, consumers are expecting a recovery in Germany.

The price of raw cotton (approximately 86 US cents per pound at the beginning of October 2013) should see little movement up to the end of the year (source: Commerzbank), thus remaining within the forecast range of 82 to 90 US cents. Labour costs in the Asian manufacturing countries are expected to continue rising.

OUTLOOK FOR 2013

In the first three quarters of 2013, German clothing retailers recorded a year-on-year decline in revenue of 2% overall due to unfavourable weather conditions. The extremely cold weather – par-ticularly in March – led to a significant drop in footfall in the TOM TAILOR GROUP’s core markets. In the second quarter, the summer started off wet and cold, with major flooding also affecting many parts of Germany. The delayed onset of summer temperatures led to unusually early seasonal sales, which meant the sector recorded slight revenue growth of 1% only in June. The third quarter also closed with a decline in revenue of 1%, as the hot weather in July and August depressed demand for autumn merchandise.

Alongside the expansion of the retail segment, the TOM TAILOR GROUP’s primary focus in the current financial year is on integrating BONITA, and particularly on consolidating and harmonising systems and processes. After incurring integration costs of around EUR 9 million in 2013, the Company expects to see significant cost advantages from economies of scale as of financial year 2014. These will result in particular from the joint, direct procurement of merchandise by the entire Group via TOM TAILOR’s own purchasing company in Asia. BONITA will realise potential savings of approximately EUR 6 million in 2014 from this.

In March 2013, the TOM TAILOR GROUP introduced its proven product development cycle at BONITA, cutting the standard lead time from design to sale in the branches by 16 weeks, to between 24 and 28 weeks. As a result, BONITA is now more in line with the timing of the market and can quickly integrate new trends into the design process. Shortened lead times also mean more demand- driven production volumes, permitting cost savings. The first collections manufactured using this new approach reached BONITA branches this autumn. At the same time, the first 250 BONITA stores were modernised in September to further raise the brand’s profile at the point of sale. The remodel-ling will continue in the fourth quarter of 2013 and into next year.

The BONITA FASHION Card customer loyalty programme, which was launched at the beginning of the year, had over 350,000 registered customers at the end of September 2013. In addition, BONITA has been online – and therefore available around the clock – since 6 June 2013. The new BONITA e-shop enables the company to also tap into the growing world of e-commerce, which is increasingly being used by mature consumers.


The Management Board of TOM TAILOR Holding AG expects that the optimised procurement processes and shorter lead times at BONITA will have a positive effect on business performance. The initial effects of this could already be seen in the third quarter, with the brand recording encouraging demand and like-for-like revenue growth. The Management Board believes this positive trend will basically continue in the fourth quarter. Another focus area is the expansion of the retail segment and the opening of additional branches for the TOM TAILOR and BONITA umbrella brands. The TOM TAILOR GROUP opened a total of 69 branches and closed 21 in its retail segment in the first nine months. Around 24 additional branches are set to open during the remainder of the year and around six are to be closed.

In the wholesale segment (TOM TAILOR only), the TOM TAILOR GROUP is also aiming for further growth and to increase the number of franchise stores and shop-in-shop selling spaces. The expansion is focusing primarily on the Group’s domestic market, Germany, and its core international markets of Austria and Switzerland. Experts are forecasting positive, or at least stable, economic growth in these markets, which should have a positive impact on consumer spending in the rest of 2013. In light of the current economic and industry environment, the Management Board of TOM TAILOR Holding AG considers the Group to be in a strong economic situation. It expects its net assets, financial position and results of operations to develop positively in the current financial year. The successful capital increase in October 2013, which generated gross issue proceeds of around EUR 29.5 million, had a positive effect here, and will increase the equity ratio and reduce gearing. The Management Board of TOM TAILOR Holding AG is confirming its revised August 2013 forecast of Group revenue of EUR 890 to 910 million for financial year 2013, despite the challenging economic environment and difficult weather in the first nine months. The Company is assuming that the TOM TAILOR umbrella brand will continue to grow its revenue as forecast, while the BONITA umbrella brand will not yet meet revenue expectations this year in view of its current systems. The share of total revenue from the retail business will continue to increase in 2013 thanks to the first full-year consolidation of BONITA and the expansion of the number of selling spaces in the retail segment.

The Management Board of TOM TAILOR Holding AG is also confirming its revised August forecast for recurring consolidated EBITDA of EUR 85 to 95 million in the year under review. While the TOM TAILOR umbrella brand is expected to report positive development, BONITA is not yet expected to meet its EBITDA targets. At an overall level, revenue growth, the higher retail share thanks to BONITA’s branch network and the improved gross margin will boost the TOM TAILOR GROUP’s profitability going forward. The seasonal sales, which began very early this year, outstanding integration costs for BONITA and operating expenses associated with the continued expansion of the Group’s own selling spaces will have an offsetting effect.

30

Consolidated Interim Financial StatementsIncome Statement

consolidated Income Statement for the Period from 1 January to 30 September 2013


Revenue 249,033 190,681 656,015 398,521

Other operating income 6,412 16,231 16,611 22,801

Cost of materials –119,203 – 93,594 –297,305 –196,513

Personnel expenses – 48,436 – 40,597 –144,509 –75,621

Depreciation, amortisation and impairment losses –14,214 –11,248 – 41,788 –24,591

Other operating expenses – 68,580 – 56,310 –194,324 –124,455

Profit from operating activities 5,012 5,163 – 5,300 142

Financial result – 4,502 – 4,478 –12,455 – 9,479

Result before income tax 510 685 –17,755 – 9,337

Income tax expense – 476 3,025 3,879 5,835

net income for the period 34 3,710 –13,876 – 3,502

of which attributable to:

Shareholders of TOM TAILOR Holding AG –2,230 1,516 –18,860 – 5,242

Non-controlling interests 2,264 2,194 4,984 1,740

earnings per share

Basic earnings per share (in EUR) – 0.09 0.07 – 0.78 – 0.28

Diluted earnings per share (in EUR) – 0.09 0.07 – 0.78 – 0.28

Statement oF comPRehenSIve Income

consolidated Statement of comprehensive Income for the Period from 1 January to 30 September 2013


net income for the period 34 3,710 –13,876 – 3,502

Exchange differences on translating foreign operations 196 – 670 6 –781

Change in fair value of cash flow hedges – 6,563 4,697 –2,563 – 5,486

Deferred taxes on change in fair value of cash flow hedges 2,004 –1,409 809 1,646

Items that may be reclassified subsequently to profit or loss – 4,363 2,618 –1,748 – 4,621

other comprehensive income – 4,363 2,618 –1,748 – 4,621

total comprehensive income, net of tax – 4,329 6,328 –15,624 – 8,123

of which attributable to:

Shareholders of TOM TAILOR Holding AG – 6,455 4,134 –20,527 – 9,863

Non-controlling interests 2,126 2,194 4,903 1,740

31Interim Report Q1–Q3/2013 Consolidated Interim Financial Statements

Statement oF caSh FlowS

consolidated Statement of cash Flows for the Period from 1 January to 30 September 2013

EUR thousand Q1–Q3/2013 Q1–Q3/2012

net income for the period –13,876 – 3,502

Depreciation, amortisation and impairment losses 41,788 24,591

Income tax expense – 3,960 – 5,834

Interest income/expense 12,455 9,479

Change in non-current provisions –2,061 813

Change in current provisions 2,060 6,708

Proceeds from disposal of intangible assets and items of property, plant and equipment 228 363

Change in inventories –14,364 – 33,031

Change in receivables and other assets –12,506 –22,439

Change in liabilities 3,508 15,276

Income taxes paid/refunded – 602 –10,207

Other non-cash changes –2,260 –16,944

cash generated from/used in operations 10,410 – 34,727

Interest paid –7,849 –7,219

Interest received 66 19

net cash provided by/used in operating activities 2,627 – 41,927

Payments to acquire intangible assets and items of property, plant and equipment –19,039 –18,555

Additions due to change in basis of consolidation – 61 –116,049

Proceeds from disposal of intangible assets and items of property, plant and equipment 510 25

net cash provided by/used in investing activities –18,590 –134,579

Cash capital increase by issuing new shares – 20,660

Costs of raising equity capital – – 816

Dividend payment – –2,810

Dividend payment to non-controlling interest shareholders –1,917 –

Proceeds from issue of financial liabilities 93,245 237,500

Repayments of financial liabilities – 95,334 – 66,805

net cash provided by/used in financing activities – 4,006 187,729

Effect of exchange rate changes on cash and cash equivalents – 41 9

Net change in cash and cash equivalents –20,010 11,232

Cash and cash equivalents at beginning of period 53,382 9,376

cash and cash equivalents at end of period 33,372 20,608

composition of cash and cash equivalents

Cash funds 33,372 20,608

32

Balance Sheet

consolidated Balance Sheet as at 30 September 2013

aSSetS

EUR thousand 30/9/2013 31/12/2012

non-current assets

Intangible assets 345,029 352,765

Property, plant and equipment 158,988 163,500

Other non-current assets 9,902 8,369

513,919 524,634

current assets

Inventories 138,653 123,737

Trade receivables 69,448 51,917

Income tax receivables 3,882 2,242

Other current assets 9,502 15,276

Cash and cash equivalents 33,372 53,382

254,857 246,554

total assets 768,776 771,188


eQUItY anD lIaBIlItIeS

EUR thousand 30/9/2013 31/12/2012

equity

Subscribed capital 24,209 24,209

Capital reserves 274,621 274,486

Consolidated net accumulated losses – 99,205 – 80,345

Accumulated other comprehensive income – 6,731 – 5,064

Equity attributable to shareholders of TOM TAILOR Holding AG 192,894 213,286

Non-controlling interests 7,940 5,680

200,834 218,966

non-current provisions and liabilities

Provisions for pensions 511 511

Other provisions 9,784 11,845

Deferred tax liabilities 73,631 78,635

Non-current financial liabilities 288,221 204,579

Other non-current liabilities 4,496 5,000

376,643 300,570

current provisions and liabilities

Other current provisions 34,436 29,616

Income tax payables 6,995 5,641

Current financial liabilities 21,327 96,615

Trade payables 103,903 93,302

Other current liabilities 24,638 26,478

191,299 251,652

total equity and liabilities 768,776 771,188

34

Statement oF changeS In eQUItY

consolidated Statement of changes in equity for the Period from 1 January to 30 September 2013

number of shares

(thousand)Subscribed capital

(EUR thousand)capital reserves

(EUR thousand)

consolidated net accumulated losses

(EUR thousand)

accumulated other comprehensive incomeattributable to

shareholders of tom taIloR

holding ag (EUR thousand)

non-controlling interests

(EUR thousand)total

(EUR thousand)

currency translation differences

(EUR thousand)

cash flow hedge reserve

(IaS 39) (EUR thousand)

Deferred taxes on fair value measurement

of hedges (EUR thousand)

Balance at 1 January 2013 24,209 24,209 274,486 – 80,345 –1,556 – 4,895 1,387 213,286 5,680 218,966

Comprehensive income, net of tax – – – –18,860 87 –2,563 809 –20,527 4,903 –15,624

Dividends paid – – – – – – – – –2,643 –2,643

Other changes – – 135 – – – – 135 – 135

Balance at 30 September 2013 24,209 24,209 274,621 – 99,205 –1,469 –7,458 2,196 192,894 7,940 200,834


number of shares



(EUR thousand)


(EUR thousand)





(EUR thousand)total

(EUR thousand)


(EUR thousand)





Balance at 1 January 2012 16,528 16,528 187,856 – 95,793 – 816 4,354 – 1,388 110,741 3,001 113,742

Change in basis of consolidation – – – – – – – – 24 24

Comprehensive income, net of tax – – – – 5,242 – 781 – 5,486 1,646 – 9,863 1,740 – 8,123

Cash capital increase 1,653 1,653 19,007 – – – – 20,660 – 20,660

Non-cash capital increase 6,028 6,028 86,201 – – – – 92,229 – 92,229

Costs of raising equity capital – – – 571 – – – – – 571 – – 571

Dividends paid – – – – 2,810 – – – – 2,810 – – 2,810

Personnel expenses share-based payment – – 193 – – – – 193 – 193

Balance at 30 September 2012 24,209 24,209 292,686 – 103,845 – 1,597 – 1,132 258 210,579 4,765 215,344


Statement oF changeS In eQUItY


number of shares



(EUR thousand)


(EUR thousand)





(EUR thousand)total

(EUR thousand)


(EUR thousand)





Balance at 1 January 2013 24,209 24,209 274,486 – 80,345 –1,556 – 4,895 1,387 213,286 5,680 218,966

Comprehensive income, net of tax – – – –18,860 87 –2,563 809 –20,527 4,903 –15,624

Dividends paid – – – – – – – – –2,643 –2,643

Other changes – – 135 – – – – 135 – 135

Balance at 30 September 2013 24,209 24,209 274,621 – 99,205 –1,469 –7,458 2,196 192,894 7,940 200,834


number of shares



(EUR thousand)


(EUR thousand)





(EUR thousand)total

(EUR thousand)


(EUR thousand)





Balance at 1 January 2012 16,528 16,528 187,856 – 95,793 – 816 4,354 – 1,388 110,741 3,001 113,742

Change in basis of consolidation – – – – – – – – 24 24

Comprehensive income, net of tax – – – – 5,242 – 781 – 5,486 1,646 – 9,863 1,740 – 8,123

Cash capital increase 1,653 1,653 19,007 – – – – 20,660 – 20,660

Non-cash capital increase 6,028 6,028 86,201 – – – – 92,229 – 92,229

Costs of raising equity capital – – – 571 – – – – – 571 – – 571

Dividends paid – – – – 2,810 – – – – 2,810 – – 2,810

Personnel expenses share-based payment – – 193 – – – – 193 – 193

Balance at 30 September 2012 24,209 24,209 292,686 – 103,845 – 1,597 – 1,132 258 210,579 4,765 215,344

36

Notes to the Consolidated Interim Financial Statements1. BaSIS oF PRePaRatIon

The consolidated interim financial statements of TOM TAILOR Holding AG for the first nine months ended 30 September 2013 were prepared in accordance with the effective International Financial Reporting Standards (IFRSs), as adopted by the EU, including the applic- able interpretations issued by the International Financial Reporting Interpretations Committee (IFRIC).

TOM TAILOR Holding AG has prepared condensed consolidated interim financial statements for the first nine months of 2013 in accordance with IAS 34, Interim Financial Reporting. The accompanying financial statements should therefore be read in conjunction with the consolidated financial statements for financial year 2012. The condensed financial statements and the interim management report have not been audited or reviewed by an auditor.

With the exception of the changes resulting from the accounting pronouncements described in “2. INTERPRETA-TIONS AND STANDARDS REQUIRED TO BE APPLIED FOR THE FIRST TIME IN THE REPORTING PERIOD”, the accounting policies and consolidation methods applied are generally identical to those adopted for the consolidated financial statements for the year ended 31 December 2012. A detailed description of these policies and methods is contained in the notes to the consolidated financial statements in the annual report for the year ended 31 December 2012 published on the Company’s website.

With the exception of the new stock option programme described in “6. BALANCE SHEET DISCLOSURES”, there have been no material changes in the exercise of man-agement judgement and the assumptions and estimates applied in the interim consolidated financial statements for the first nine months of 2013 compared with the audited consolidated financial statements for financial year 2012.

2. InteRPRetatIonS anD StanDaRDS ReQUIReD to Be aPPlIeD FoR the FIRSt tIme In the RePoRtIng PeRIoD

IFRS 13 Fair value measurementThe IASB published the new standard IFRS 13 Fair Value Measurement in May 2011. IFRS 13 defines fair value and provides guidance on how to determine fair value when fair value measurement is required by another IFRS. The standard itself does not specify in which cases fair value measurement must be applied. With the exception of the explicit scope exclusions in IFRS 13, it sets out standard disclosures for all assets and liabilities that are measured at fair value, as well as for all assets and liabilities whose fair value must be disclosed; in particular, this enhances the disclosure requirements relating to non-financial assets. The application of IFRS 13 has resulted in additional disclosures in TOM TAILOR Holding AG’s consolidated financial statements.

amendment to IaS 1 Presentation of Financial State-ments – Presentation of Items of other comprehensive Income In June 2011, the IASB published amendments to IAS 1 Presentation of Financial Statements under the title Presentation of Items of Other Comprehensive Income. The amendments require that items of other compre-hensive income (OCI) be grouped into those that will subsequently be reclassified to profit or loss (“recycled”) and those that will not.


amendment to IaS 19 employee BenefitsIn June 2011, the IASB published amendments to IAS 19 Employee Benefits. The amendments mainly concern eliminating the deferral of actuarial gains and losses (the “corridor” approach) in favour of immediate recogni-tion in other comprehensive income within equity, immediate recognition of past service cost, the presen-tation of changes in net liabilities/assets under defined benefit pension plans, and the recognition of the net interest expenses or income from a pension plan’s net liabilities or net assets. In addition, supplementary disclosures on the characteristics of the pension plans and the associated risks for the entity are required.

In the past, all actuarial gains and losses were recognised in the income statement. Following the amendment to IAS 19, actuarial gains and losses have been recognised in other comprehensive income from the beginning of financial year 2013. Pension obligations were not remeas-ured in the reporting period because of their insignificance, so there is no need for any specific disclosure of actuarial gains and losses to be recognised in other comprehensive income for the reporting period. Actuarial gains and losses amounting to EUR 194 thousand were recognised in financial year 2012. It is not possible to allocate the amount to the comparative nine-month period ended 30 September 2012. Due to the insignificance of pension obligations in the consolidated financial statements, the initial application of the amendments to IAS 19 do not result in any material changes.

annual Improvements (aIP) 2009–2011In June 2011, the IASB published its fourth round of annual improvements as an exposure draft of proposed amend-ments to five IFRSs. The amendments are intended to eliminate ambiguities in existing IFRSs. The following areas have been clarified: requirements regarding voluntary comparative information (IAS 1), classification of servicing equipment as inventory or as property, plant and equip-ment (IAS 16), income tax implications of distributions to holders of an equity instrument and transaction costs of an equity transaction (IAS 32 and IAS 12), disclosure of segment information in an interim report (IAS 34). These do not result in any material changes in the consolidated financial statements of TOM TAILOR Holding AG.

3. BaSIS oF conSolIDatIon/ BUSIneSS comBInatIonS

The basis of consolidation of the TOM TAILOR GROUP comprises TOM TAILOR Holding AG as the ultimate parent and the subsidiaries listed in the notes to the consolidated financial statements for the year ended 31 Decem-ber 2012.

changes in the Basis of consolidationTo streamline the previous structure of the BONITA subgroup at a company law level, BONITA GmbH & Co. Kommanditgesellschaft, Hamminkeln, was merged with BONITA Deutschland Holding GmbH, Hamminkeln, which was then renamed BONITA GmbH.

BONITA (Schweiz) Retail AG, Baar/Switzerland, and BONITA SAS, Paris/France, were formed to develop and expand the BONITA brand’s retail business in Switzer- land and France. BONITA GmbH, Hamminkeln, holds all shares of both subsidiaries.

38

In addition, BONITA ITALIA S.R.L. UNIPERSONALE, Italy, was formed. The company’s goal is to drive the BONITA brand’s future retail expansion in Italy. BONITA GmbH, Hamminkeln, holds all of the share capital amounting to EUR 100 thousand.

On 10 July 2013, BONITA GmbH, Hamminkeln, acquired all of the shares of BONITA Österreich Handels GmbH, Salzburg, Austria, for a purchase price of EUR 1.8 million. The purchase was not classified as an acquisition in accordance with IFRS 3.

The new subsidiaries TOM TAILOR Veleprodaja d.o.o., domiciled in Belgrade/Serbia, and TOM TAILOR ITALY SRL, domiciled in Bolzano/Italy, were formed to expand wholesale activities in South East Europe and Italy. TOM TAILOR GmbH, Hamburg, holds all shares of both subsidiaries, amounting to EUR 10 thousand each.

Effective 1 May 2013, the TOM TAILOR GROUP acquired a 51% interest in S.C. TOM TAILOR RETAIL RO S.R.L., Bucharest, Romania. This acquisition is designed to accelerate the strategic expansion of the controlled selling spaces and the TOM TAILOR brand in Romania. As a result of the agreement, the TOM TAILOR GROUP has acquired five stores that are being operated as its own retail stores.

The purchase price for the 51% interest acquired, which has been recognised as a cash expenditure, initially amounts to EUR 0.5 million of the entire share capital of EUR 0.5 million. The acquired company was consolidated effective 1 May 2013 in the TOM TAILOR GROUP, and no non-controlling interests have been reported, because it is controlled and because the existing put/call options and the other contractual arrangements mean it is certain that the remaining 49% interest will be acquired by 2018. The purchase price for the acquisition of the remaining interest is largely variable and is contingent on the earnings performance of the acquired company. Based on the agreements that have been entered into and the planning assumptions for the period up to 2016, the provisional cost of the acquisition has been estimated at approximately EUR 2.5 million. Only EUR 500 thousand of the purchase price has been recognised as a cash expenditure to date.

The provisional liability recognised for the purchase price is reported at its fair value as a non-current liability.

Purchase price allocation (PPA) for the acquisition is still preliminary. The following table shows the purchase price of the shares acquired and the fair value of the assets acquired and liabilities assumed:

Preliminary Fair values as at the acquisition Date

EUR thousandPreliminary fair values

Property, plant and equipment 623

Inventories 552

Cash funds 27

Other assets 122

total assets 1,324

Trade payables 979

Other liabilities 530

total liabilities 1,509

Net assets acquired –185

Cost of acquisition 3,079

goodwill 3,264

In accordance with the requirements of IFRS 3, Business Combinations, all assets acquired and liabilities and contingent liabilities assumed are recognised at their fair value. Purchase price allocation resulted in the recognition of goodwill amounting to EUR 3.3 million. This goodwill is justified economically by the fact that the acquirer will benefit from the expected positive business development of the acquiree in the future.

Since the acquisition date, the acquired stores of S.C. TOM TAILOR RETAIL RO S.R.L. have contributed EUR 0.3 million to consolidated revenue and EUR – 0.1 million to consoli-dated net income for the period. Because of the existing customer relationships in the wholesale segment and the lack of comparable delivery and payment conditions, it is not possible to estimate the effects of the business combination as if it had occurred at the beginning of financial year 2013.


4. SeaSonal FactoRS

The Group’s business activities are exposed to seasonal factors resulting in fluctuations in revenue and profit or loss in the course of the year. Seasonal factors mean that revenue from the spring/summer collection in the first half of the year is customarily lower than revenue in the second half of the year, which is dominated by the autumn/winter collection and the Christmas business.

5. Segment RePoRtIng

operating Segments Q3/2013 (2012)

EUR thousand

Wholesale RetailConsoli-

dation groupTOM TAILOR TOM TAILOR BONITA Total

Third-party revenue 90,211 (82,787)

67,098 (50,630)

91,724 (57,263)

158,821 (107,893)

249,033 (190,681)

Intersegment revenue 29,147 (22,828)

0 (0)

–29,147 (–22,828)

0 (0)

Revenue 119,358 (105,615)

67,098 (50,630)

91,724 (57,263)

158,821 (107,893)

–29,147 (–22,828)

249,033 (190,681)

earnings before interest, taxes, depreciation and amortisation (eBItDa)

9,549 (– 3,916)

4,939 (4,003)

4,343 (16,988)

9,282 (20,991)

394 (– 663)

19,226 (16,411)

material non-cash expenses 4,270 (10,407)

35 (528)

246 (– 9,556)

281 (– 9,028)

4,551 (1,379)

Information about Regions Q3/2013 (2012)

EUR thousand GermanyInternational

markets group

Revenue 160,945 (129,099)

88,088 (61,582)

249,033 (190,681)

Non-current assets 447,600 (456,956)

56,417 (57,505)

504,017 (514,461)

40

operating Segments Q1–Q3 2013 (2012)

EUR thousand

Wholesale RetailConsoli-

dation groupTOM TAILOR TOM TAILOR BONITA Total

Third-party revenue 226,890 (205,048)

174,879 (136,210)

254,246 (57,263)

429,125 (193,473)

656,015 (398,521)

Intersegment revenue 69,722 (57,805)

0 (0)

– 69,722 (– 57,805)

0 (0)

Revenue 296,612 (262,853)

174,879 (136,210)

254,246 (57,263)

429,125 (193,473)

– 69,722 (– 57,805)

656,015 (398,521)

earnings before interest, taxes, depreciation and amortisation (eBItDa)

20,818 (215)

9,943 (8,014)

4,978 (16,988)

14,921 (25,002)

749 (– 484)

36,488 (24,733)

material non-cash expenses 11,913 (17,077)

423 (832)

5,438 (– 9,556)

5,861 (– 8,724)

17,774 (8,353)

Information about Regions Q1–Q3 2013 (2012)

EUR thousand GermanyInternational

markets group

Revenue 430,045 (263,287)

225,970 (135,234)

656,015 (398,521)

Non-current assets 447,600 (456,956)

56,417 (57,505)

504,017 (514,461)

The information on revenue by regions shown above is classified by customer location. Non-current assets by regional segment are composed of intangible assets and items of property, plant and equipment.


6. Balance Sheet DIScloSUReS

Share-based PaymentsOn 3 June 2013, the Annual General Meeting of TOM TAILOR Holding AG resolved a Company stock option programme in order to be able to grant stock option rights to members of the Company’s Management Board, members of the management of affiliated companies and selected employees below Management Board level of the Company and below management level of affiliated companies (hereinafter referred to as the Long-term Stock Option Programme). The associated performance targets are measured on the basis of a multi-year assessment and comply with the legal requirements of the Aktiengesetz (AktG – German Stock Corporation Act) and the German Corporate Governance Code.

For the purposes of granting shares to the holders of stock option rights under the Long-term Stock Option Programme, the Annual General Meeting also resolved to contin- gently increase share capital by up to EUR 2,400,000.00 by issuing up to 2,400,000 no-par value registered shares in the Company. Overall, 2,400,000 stock option rights can therefore be granted. A total of up to 1,200,000 stock option rights can be granted to members of the Company’s Management Board, up to 600,000 to members of the management of affiliated companies, and up to 600,000 to employees of the Company and of affiliated companies. The stock option rights may be issued in quarterly tranches of up to 600,000 stock option rights each.

In the four issuing periods, the option beneficiaries will receive stock option rights with two different strike prices. For 75% of the issued stock option rights (type A stock option rights), the strike price corresponds to the issue price; for the remaining 25%, the strike price of the stock option rights issued (type B stock option rights) corres-ponds to 120% of the issue price.

The stock option rights may be exercised no earlier than four years after the date of issue (vesting period). The stock option rights have a maximum term of seven years from the date of issue. The stock option rights may only be exercised if (1) the closing price of the shares on the last five trading days of the vesting period exceeds

the issue price by an average of at least 35%, whereby the issue price shall correspond to the average closing price of the shares on the last 30 trading days before the date of issue of the respective stock option right, and (2) diluted consolidated earnings per share (EPS) adjusted for special factors for the financial year ending prior to the end of the respective vesting period have increased by at least 50% compared with the EPS for the financial year ending prior to the issue of the respective stock option rights. The gain achieved by the option beneficiaries when exercising their options may not exceed three times the issue price (cap).

If the cap is exceeded, the strike price of the relevant option type will be adjusted in such a way that the differ- ence between the market price on exercise and the adjusted strike price does not exceed three times the issue price.

During the reporting period, a total of 485,000 of the available 600,000 stock options were issued on 26 August 2013. The remaining 115,000 stock options available for this first tranche were not issued. None of the stock options are exercisable yet due to the vesting period. The strike price of the 485,000 stock options granted in the reporting period is EUR 16.30 (type A) and EUR 19.56 (type B).

The fair value of the stock options was determined using the Black-Scholes method. The fair value per share for the type A and type B stock option rights is EUR 3.51 and EUR 2.89, respectively. The 250-day historical volatility was 30%, the expected dividend was 1.83% and the risk-free interest rate was 1.77%. The share price on the issue date was EUR 16.30 and the share price hurdle is therefore EUR 22.00 (+35%). The pay-out is capped at 400% for type A stock option rights and 420% for type B stock option rights. On average, it was assumed that the options would be exercised after a period of 5.5 years. A fluctuation of 0% p.a. was assumed.

During the reporting period, the expense for share-based payments to members of the Company’s Management Board, members of the management of affiliated companies and selected employees below Management Board level of the Company and below management level of affiliated companies amounted to EUR 39 thousand.

42

Financial liabilitiesAt the end of May 2013, TOM TAILOR Holding AG success-fully issued a borrower’s note loan of EUR 80 million to refinance short-term bank liabilities from the acquisition of the BONITA companies. The issue was placed mainly with institutional investors in Germany and other European countries. The borrower’s note loan has three tranches with maturities of 2.6, 3.6 and 5 years, and bears both fixed and variable rates of interest. It matures no later than the end of May 2018, depending on the maturity of the individual tranches.

The coupons reflect the present favourable level of interest rates and are within the range of previously payable interest rates.

As was the case with the previous financing structure, con- tinuation of the loan finance is dependent on compliance with certain financial covenants (EBITDA/net interest income, net debt/EBITDA and an equity ratio >27.5%); these are to be calculated on the basis of the consolidated financial statements prepared in accordance with International Financial Reporting Standards (IFRSs) as at each year-end.

Bank commission of EUR 0.5 million relating to the borrower’s note loan has been amortised over the term of the liabilities to banks using the effective interest method. The deferred commission will be recognised in the interest expense item in profit or loss over the term of the loans.

Financial Instruments DisclosuresThere were no changes as against 31 December 2012 in the policies and methods applied to measuring fair value. A detailed description of these policies and methods is contained in the notes to the consolidated financial statements in the annual report for the year ended 31 December 2012.

The purchase price liabilities arising from the acquisition of the 51% interest in TOM TAILOR Retail Joint Venture GmbH domiciled in Bregenz/Austria, S.C. TOM TAILOR RETAIL RO S.R.L., Bucharest/Romania, and the options on TOM TAILOR E-Commerce GmbH & Co. KG granted to the partner in a cooperation project related to online activities were classified as financial liabilities at fair value through profit or loss. These financial liabilities comprise contingent purchase price payments, the amount of which will be based on the current market value of the shares at the relevant date.

For financial instruments that are measured at fair value and for which there are no quoted prices in an active market, fair value is determined using valuation techniques, primarily the discounted cash flow method. This is based on management’s forecasts and assumptions about future revenue and earnings, investments, growth rates and discount rates.

The Group applies the following hierarchy to the valuation techniques used to measure and present the fair values of financial instruments:

− level 1 quoted prices (unadjusted) in active markets for identical assets or liabilities

− level 2 techniques where all inputs that have a signif-icant effect on the fair value recognised are observable either directly or indirectly

− level 3 techniques that use inputs that have a significant effect on the fair value recognised and are not based on observable market data


The following tables show the financial instruments as at 30 September 2013 and 31 December 2012 that are subsequently measured at fair value.

Fair value of Financial Instruments

EUR thousand 30/9/2013 Level 1 Level 2 Level 3

Financial liabilities at fair value through profit or loss

Derivatives used to hedge interest rate risk (interest rate swap) 2,737 – 2,737 –

Contingent consideration from business combinations 5,156 – – 5,156

Hedging instruments designated as cash flow hedges (currency forwards) 7,574 – 7,574 –

15,467 – 10,311 5,156

31/12/2012 Level 1 Level 2 Level 3

Financial liabilities at fair value through profit or loss

Derivatives used to hedge interest rate risk (interest rate swap) 3,340 – 3,340 –

Contingent consideration from business combinations 2,727 – – 2,727

Hedging instruments designated as cash flow hedges (currency forwards) 5,011 – 5,011 –

11,078 – 8,351 2,727

The financial liabilities based on a Level 3 fair value measurement are the contingent purchase price payments arising from the acquisition of the majority interests in TOM TAILOR Retail Joint Venture GmbH, Bregenz/Austria, and S.C. TOM TAILOR RETAIL RO S.R.L., Bucharest/Romania.

There were no reclassifications into or out of the three levels of the fair value hierarchy in the reporting period.

44

The following table shows the reconciliation of the Level 3 measurements to the fair value of financial liabilities.

Reconciliation of level 3 measurements to the Fair value of Financial liabilities

30 September 2013

EUR thousandopening balance Acquisitions Disposals

Total gains and losses

Reclassifi-cations

closing balance

Recognised in the income

statement

Recognised in other

comprehensive income

Purchase price liabilities 2,321 2,579 – -150 – – 5,156

31 December 2012

EUR thousandopening balance Acquisitions Disposals

Total gains and losses

Reclassifi-cations

closing balance

Recognised in the income

statement

Recognised in other

comprehensive income

Purchase price liabilities 2,321 – – – 125 – 531 2,727

7. caSh Flow DIScloSUReS

The statement of cash flows shows how the Group’s cash and cash equivalents change due to cash inflows and outflows over the course of the reporting period. IAS 7 Statements of Cash Flows distinguishes between cash flows from operating, investing and financing activities. Cash flows are derived using the indirect method, based on the Group’s net income for the period.

The net cash used in financing activities amounting to EUR 4.0 million resulted primarily from the utilisation due to seasonal factors of bank lines of credit that were drawn down to finance the negative cash flow from operating activities and from investing activities.

The entire EUR 80 million issued under the borrower’s note loan was used to refinance the short-term bank liabilities from the acquisition of the BONITA group of companies.


8. RelateD PaRtY DIScloSUReS

In principle, related parties of the TOM TAILOR GROUP may be members of the Management Board and the Supervisory Board, as well as those companies that are controlled or influenced by members of governing bodies. Joint ventures and associates may also be related parties.

a) management BoardMr Dieter Holzer became a member of the Advisory Board of JW Germany Holding GmbH, Idstein/Taunus on 1 July 2013.

Members of the Management Board directly held the following shares as at 30 September 2013: Dieter Holzer 266,610 shares, Dr Axel Rebien 20,000 shares and Udo Greiser 4,000 shares.

b) Supervisory BoardMembers of the Supervisory Board directly held the following shares as at 30 September 2013: Dr Christoph Schug 18,400 shares, Gerhard Wöhrl 16,700 shares and Andreas W. Bauer 5,400 shares.

9. eventS aFteR the enD oF the RePoRtIng PeRIoD

TOM TAILOR Holding AG issued 1,818,098 new, no-par value registered shares on 24 October 2013 as part of a cash capital increase. The new shares were issued at a price of EUR 16.25 per share under the terms of a private placement for institutional investors using an accelerated bookbuilding procedure. This generated gross issue proceeds of approximately EUR 29.5 million for the Company.

The 1,818,098 new registered shares were issued by way of a capital increase from authorised capital. The imple-mentation of the capital increase was entered in the commercial register on 24 October 2013. As a result of the capital increase, the Company’s share capital has risen from EUR 24,209,035.00 to EUR 26,027,133.00. Share-holders’ pre-emptive rights were disapplied. The new shares bear dividend rights as from 1 January 2013.

There were no other events with a material effect on the net assets, financial position and results of operations of the Group between the end of the reporting period and the publication of this interim report.

46

Financial Calendar and ContactsFInancIal calenDaR

Date current events 25 March 2014 Publication of Annual Report 2013 and Analyst Conference 8 May 2014 Interim Report Q1/201427 May 2014 Annual General Meeting, Hamburg6 August 2014 Interim Report H1/20146 November 2014 Interim Report Q3/2014

contactS

TOM TAILOR Holding AGGarstedter Weg 14 | 22453 Hamburg | GermanyPhone: + 49 (0)40 589 56 0Fax: + 49 (0)40 589 56 [email protected]

Investor Relations & corporate communicationsFelix ZanderHead of Investor Relations & Corporate [email protected]: + 49 (0)40 589 56 449

Erika KirstenSenior Specialist Investor Relations & Corporate [email protected]: + 49 (0)40 589 56 420

47

PUBlIcatIon DetaIlS

PublisherTOM TAILOR Holding AGGarstedter Weg 14 | 22453 Hamburg | Germany

This interim report is also available in German; in addition, it can be accessed in German and English on the Internet at http://ir.tom-tailor-group.com. The German version of this interim report is legally binding.

Date of Publication7 November 2013

editorial officeMC Services AG | Munich | Germanywww.mc-services.eu

concept, Design and ProductionKMS TEAM GmbH | Munich | Germanywww.kms-team.com

PhotographyThe rights to the campaign images belong to TOM TAILOR GmbH.

FUtURe-oRIenteD StatementS

This document contains forward-looking statements, which are based on the current estimates and assumptions by the management of TOM TAILOR Holding AG. Forward-looking statements are characterized by the use of words such as expect, intend, plan, predict, assume, believe, estimate, anticipate and similar formulations. Such statements are not to be understood as in any way guaranteeing that those expectations will turn out to be accurate. Future performance and the results actually achieved by TOM TAILOR Holding AG and its affiliated companies depend on a number of risks and uncertainties and may therefore dif fer materially from the forward-looking statements. Many of these factors are outside TOM TAILOR Holding AG’s control and cannot be accurately estimated in advance, such as the future economic environment and the actions of competitors and others involved in the marketplace. TOM TAILOR Holding AG neither plans nor undertakes to update any forward-looking statements.

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