- English Translation – Report for the first half year ... - Design Hotels

Report for the first half year 2008
- English Translation –
August 4, 2008
Design Hotels AG Reports Results for the 1 st Half Year 2008
Increase in Revenue by 17 Percent; Slow Down in Operating Profits Due to Increase in
Staff Capacity
Berlin – Design Hotels AG (Regulated Market, Munich: LBA; ISIN: DE0005141006), integrated
provider of marketing and positioning services for individually managed hotels and small hotel
groups in the New Luxury Segment, today reports its results for the 1 st half year 2008 under
IFRS.
Financial Highlights for the Design Hotels Group:
Revenues for the 1 st half year 2008 increased by approx. 17 percent to 4.14m Euro
(previous year: 3.53m Euro). Again all activities have contributed to the increase. In the second
quarter, however, the economic climate and the weak British Pound and US-Dollar showed a
negative impact. Commissions accounted for more than half of the total revenues with
2.17m Euro (+9 percent). Membership Fees came in at 1.03m Euro (+20 percent); Marketing
Products & Consulting achieved revenues of 0.94m Euro (+40 percent).
The Gross Profit Margin was 74 percent and thus at a comparative level to last year
(75 percent).
The EBITDA for the 1 st half year 2008 came in at approx. 382,000 Euro compared to 620,000
Euro achieved during the comparative period last year. In the 1 st half year 2008 extraordinary
income in the amount of 130,000 Euro was generated. In the same period last year extraordinary
income of 271,000 Euro was generated. The adjusted operating results decreased by
99,000 Euro or 28 percent to 252,000 Euro (previous year: 351,000 Euro). The adjusted EBITDA
margin was 6.1 percent (previous year: 9.9 percent).
The EBIT for the 1 st half year came in at 304,000 Euro, the adjusted EBIT at 174,000 Euro. This
shows a 38 percent decrease compared to 281,000 Euro achieved in the previous year.
Net Profits amounted to 309,000 Euro; the adjusted net profits amounted to 179,000 Euro.
Adjusted net profits decreased by 46 percent compared to the previous year’s figures
(331,000 Euro). Earnings per share amounted to 0.03 Euro (previous year: 0.07 Euro).
As per June 30, 2008, the Company had Cash and Cash Equivalents in the amount of
2.39m Euro, as compared to 2.20m Euro on December 31, 2007. In the first six months
Shareholder’s Equity increased from 4.3m Euro to 5.04m Euro.
Additional Notes:
CEO Claus Sendlinger commented: „For several months now the travel industry has been facing
a slow down as a result of the economic climate. In particular the number of travels from the US
has been decreasing. Despite this trend the Company shows continuous growth in the existing
business model with business generated from Europe and Asia. Expansion of the service
portfolio for hotel development and consulting assists to increase total revenues. Our specific
marketing expertise in the niche market of individually managed hotels and small hotel groups
helps to set us apart from our competitors and supports growth. Generic products such as

eservation services will face even stronger competition. In order to strengthen our market
position as service provider we accept the temporary weakening of the results. The expansion of
our service portfolio and the entry into a new business model required investment in manpower.
As expected this expansion of staff capacities will have a negative impact on the operating
results. For the business year 2008 we expect a single-digit growth in revenues and a positive
operating result just under the results of the previous year.
In the second half of the year, we will continue to focus on the quality offensive started in 2007
and on the expansion of loyalty activities by launching a loyalty program for end consumers at the
end of the year. Our main goal remains to increase revenue per member hotel through targeted
consulting activities.”
Interim Group Management Report 1 st Half Year 2008
General Business Situation
Uncertain Economic Outlook Slows Down Growth
In the first six months, the travel industry has faced a negative impact from the uncertain global
economic outlook and the weak US-Dollar. As a result, the World Tourism Organisation
(UNWTO) lowered their forecast for the second half year. The UNWTO still expects an increase
for the year, however lower than 5%. Positive impulses still come from Asia-Pacific.
The world-wide crisis on the financial markets has a negative impact on hotel development due to
higher equity required for the financing of real estate projects.
Net Assets, Financial Position, and Results of Operations
Commission Revenue Looses Drive
Whereas in the past three years commission revenue had been the major growth factor, it has
lost drive in the first half year 2008. With 45 percent of bookings coming from the US the
Company’s revenues react to the development in the US. The weak British Pound and US-Dollar
against the Euro also have a negative impact on the commission revenue.
Furthermore, the number of rooms could not be increased as expected. At the end of the 2 nd
quarter 171 hotels (previous year: 164) with 12.604 rooms were members of Design Hotels.
The decrease compared to the 174 member hotels at the end of 2007 is due to strategic
decisions and the qualitative cleaning of the portfolio. Since the beginning of the year eleven new
hotels were accepted, including the first members in China and Australia - The Emperor in Peking
and the Limes hotel in Brisbane. The number of applications for membership remained on a high
level with 231 hotels.
In the first half year, the Number of Bookings increased by 17 percent compared to the previous
year. The value of bookings increased by 10 percent to 35m Euro.
Net Profit Margin Remains Stable
In the first half year, the Net Profit Margin remained stable at 74 percent (previous year: 75
percent). The margin is, however, subject to fluctuations due to the varied revenue structure in
the respective reporting periods.
Costs
Investment in Manpower Reflected in Operating Expenses
The total Operating Expenses (Staff, Marketing, Selling Expenses as well as Administrative
Costs) amounted to 2.83m Euro in the first half year, which shows an increase of 22 percent
compared to the 2.32m Euro in the previous year.

Staff expenses show the highest increase with 27 percent and are a result of the staff expansion.
The average Number of Employees increased to 56 compared to 45 employees in the first half
year of 2007. Despite the staff expansion by almost one quarter revenue per employee remained
stable with 74,000 Euro compared to 78,000 Euro in the pervious year.
Net Assets, Financial Position, and Results of Operations
Cash Flow Improved
In the second quarter Design Hotels AG signed a settlement agreement with the Ministry of
Tourism of the Dominican Republic. With a one-time payment of 200,000 US-Dollar existing
claims of the Company for consultancy services rendered in 2001 were finally compensated. As
these claims against the Dominican Republic had been fully written off in 2001 and 2002, approx.
130,000 Euro were added to the books as extraordinary income.
The EBITDA for the 1 st half year 2008 came in at approx. 382,000 Euro compared to
620,000 Euro achieved during the comparative period last year. In the 1 st half year 2008
extraordinary income in the amount of 130,000 Euro was achieved. In the same period last year
extraordinary income of 271,000 Euro was achieved. The adjusted operating results decreased
by 99,000 Euro or 28 percent to 252,000 Euro (previous year: 351,000 Euro). The adjusted
EBITDA margin amounted to 6.1 percent (previous year: 9.9 percent).
The EBIT for the 1 st half year came in at 304,000 Euro, the adjusted EBIT at 174,000 Euro. This
shows a 38 percent decrease compared to the 281,000 Euro achieved in the previous year.
Net Profits amounted to 309,000 Euro; the adjusted net profits amounted to 179,000 Euro.
Adjusted net profits decreased by 46 percent compared to the result of the previous year
(331,000 Euro). Earnings per share amounted to 0.03 Euro (previous year: 0.07 Euro).
As per June 30, 2008, the company had Cash and Cash Equivalents of 2.39m Euro, as
compared to 2.20m Euro on December 31, 2007. In the first six months Shareholder’s Equity
increased from 4.3m Euro to 5.04m Euro. The equity ratio is at 73 percent (31.12.2007: 72
percent). In the first six months a positive Cash-Flow in the amount of 186,000 Euro (previous
year: 49,000 Euro) was generated.
Outlook
The Company is currently taking short-term measures such as new sales programs to react to
the changing market situation and to secure the commission revenue. With a rather medium to
long-term perspective loyalty programs for end consumers, travel agents and journalists will be
launched in the second half of the year. Furthermore, a great focus will be put on revenue and
yield management consulting to the member hotels. Quality management will also remain in the
focus. Demand in the field of hotel development and consulting has reached the expected levels.
Management expects total revenue for the year of 500,000 Euros from brand development and
brand positioning projects as well as feasibility studies. For 2008, Management expects singledigit
growth in revenues and positive operating results just below last year’s figures.
Report on Risks and Opportunities
The circumstances described in the risk report for 2007 in terms of individual and market risks
remain valid for 2008. In the first half year 2008 the economic situation of the western industrial
nations has deteriorated as a result of the reduced growth expectations in North America and
Western Europe. As business and leisure travel is influenced by the economic trend,
Management expects a negative impact on commission revenue from the individual member
hotels. As a counter measure the number of member hotels will be increased. Furthermore, the
service portfolio of consulting services will be expanded. However, demand for consultancy
services may be influenced by cyclical fluctuations.
In the first half year no risks have materialised which jeopardise the continuation of the Company.

Group Overview (unaudited)
According to IFRS
Consolidated Profit and Loss Statement (in Thousand Euro)
Total per June 30, 2008
2nd Quarter
Revenues 2008 2007 2008 2007
Annual Membership Fees TEuro 1.028 856 526 451
Commissions TEuro 2.168 2.000 1.151 1.081
Marketing Products/Consulting TEuro 940 669 406 379
Others TEuro 0 0 0 0
Total Revenues TEuro 4.136 3.525 2.083 1.911
Cost of Sales TEuro 1.081 866 484 450
Gross Profit TEuro 3.055 2.659 1.599 1.461
Staff Expenses TEuro 1.728 1.362 906 686
Selling Expenses TEuro 483 436 261 265
Administrative Expenses TEuro 621 517 351 287
Total Operating Expenses TEuro 2.832 2.315 1.518 1.238
Other Operating Income TEuro 183 305 151 298
Other Operating Expenses TEuro 24 27 6 21
EBITDA TEuro 382 622 226 500
EBIT TEuro 304 552 187 465
EBT TEuro 309 552 192 465
After-tax Profit TEuro 309 602 192 515
Average Number of Employees 56 45 58 46
Revenue Per Employee TEuro 74 78 36 42

Consolidated Statement of Cash Flow (in Thousand Euro)
Total per June 30, 2008 2nd Quarter
2008 2007 2008 2007
EBITDA from Profit and Loss Statement TEuro 382 352 225 230
Cash flow from Investing Activities TEuro -86 -29 -62 -12
Balance Trade Payables vs. Trade
Receivables TEuro -110 -273 69 -36
Change in Securities Portfolio TEuro 0 -1 0 -1
Change of Liquid Funds TEuro 186 49 232 181
Liquid Funds at the beginning of the
Period TEuro 2.202 1.392 2.156 1.260
Liquid Funds at the end of the Period TEuro 2.388 1.441 2.388 1.441
Bonds and Guarantees TEuro 155 128 155 128
Available Liquid Funds TEuro 2.233 1.313 2.233 1.313

Consolidated Balance Sheet
30.06.2008 31.12.2007
Assets EUR EUR EUR EUR
Long-term Assets
Fixed Assets 336,993.38 322,352.60
Deferred Taxes 2.365,000.00 2.701,993.38 2.365,000.00 2.687,352.60
Short-term Assets
Inventory 109,218.41 124,522.00
Accounts Receivable 1.502,447.20 1.391,545.03
Other Assets 202,214.18 194,241.51
Liquid Funds and Securities 2.387,919.75 4.201.799,54 2.201,859.91 3.912,168.45
Total Assets 6.903,792.92 6.599,521.05
Liabilities and Shareholder’s Equity
Shareholder’s Equity Capital
Share Capital 8.972,072.00 8.972,072.00
-
Cumulated Other Equity Capital -1.907,730.17
1.910,521.71
-
Net Loss -2.026,452.90 5.037,888.93 2.335,258.40 4.726,291.89
Long-term Liabilities
Deferred Taxes 0,00 0,00 2,840,00 2,840,00
Short-term Liabilities
Accruals 269,399.00 375,539.22
Down-Payments 389,832.03 281,162.20
Accounts Payable 560,142.38 624,001.10
Other Liabilities 646,530.58 1.865,903.99 589,686.64 1.870,389.16
Total Liabilities 6.903,792.92 6.599,521.05

Change in Share Capital
Share Capital Cumulated
Other Equity Capital Net Loss Total
in EUR in EUR in EUR in EUR
As per 1.1.2007 8.972,072.00 -1.924,712.63 -3.499,907.36 3.547,452.01
Regrouping 0,00
Variance from Currency
Conversions 0,00
Net Profit for the Year 602,116.22 602,116.22
As per 30.06.2007 8.972,072.00 -1.924,712.63 -2.897,791.14 4.149,568.23
Share Capital Cumulated
Other Equity Capital Net Loss Total
in EUR in EUR in EUR in EUR
As per 1.1.2008 8.972,072.00 -1.910,521.71 -2.335,258.40 4.726,291.89
Regrouping 0,00
Variance from currency
conversions 2,791.54 2,791.54
Net profit for the Year 308,805.50 308,805.50
As per 30.06.2008 8.972,072.00 -1.907,730.17 -2.026,452.90 5.037,888.93
Notes to the Report for the 1 st Half Year 2008
General Information
The report was prepared in accordance with the International Financial Reporting Standards
(IFRS), the International Accounting Standards (IAS) previously published by the International
Accounting Standards Committee (IASC). The standards and interpretations valid on January 1,
2008 have been applied. The interim financial report and the interim management report have
neither been audited in accordance with Section 317 of the German Commercial Code (HGB) nor
reviewed by an auditor.
Consolidation
The consolidation group of Design Hotels AG remained unchanged from that listed in the 2007
annual statement.
Accounting and Valuation Principles
The accounting and valuation principles used correspond as a rule to those applied in the last
consolidated statement at the end of the financial year. A detailed description of the methods was
published in the 2007 annual report.
Other Information
Events after closing of the reporting period: After conclusion of the reporting period, no events
have occurred which have an impact on the net assets, financial position, and results of
operations of Design Hotels AG.

Profit and Loss Statement: Design Hotels AG generates revenues in the segments commissions
and membership fees. Revenues from services are realised according to IAS 18 after rendering
of the service and in case the company can realise the profit. All discounts and allowances are
deducted from the revenues. The annual membership fees, which are paid in advance by the
member hotels, are deferred over the months of the reporting period as deferred income.
Earnings Per Share: Earnings per Share (EPS) were determined in accordance with IAS 33. EPS
must be determined for all companies whose equity shares are traded in a public marketplace.
Undiluted EPS is the ratio between the periodical result attributed to the equity shares of the
parent company (enumerator) and the weighted average of the equity shares which are in
circulation in the reporting period (denominator).
Business with closely associated persons: In the reporting period, no considerable business with
members of the Executive Board, members of the Supervisory Board or persons closely related
was conducted by the company.
Own Shares: Design Hotels AG currently holds no own shares.
Members of the Supervisory Board: Mr. Michael Struck resigned from his positions as member of
the supervisory board effective 31.07.2008. Mr. Holger Lösch has resigned effective 30.09.2008.
Confirmation by the Legal Representatives
To the best of my knowledge and accordance with the applicable reporting principles for interim
financial reporting, the interim consolidated financial statements give a true and fair view of the
assets, liabilities, financial position and profit of the group, and the interim management report of
the group includes a fair review of the development and performance of the business and the
position of the group, together with a description of the principal opportunities and risks
associated with the expected development of the group for the remaining months of the financial
year.
Claus Sendlinger, 4. August 2008
Contact:
Design Hotels AG Schwarz Financial Communication
Claus Sendlinger (CEO) Frank Schwarz
Stralauer Allee 2c
10245 Berlin
P +49 (0)30 88 484 00 01 P +49 (0)611 17453 9811
F +49 (0)30 25 933 01 7 F +49 (0)611 17453 9829
ir@designhotels.com schwarz@schwarzfinancial.com
Design Hotels AG (formerly: lebensart global networks AG) is an integrated provider of
communication and positioning services and acts as a consultant for individually managed hotels
and small hotel groups. The service range of design hotels begins with the concept for a hotel.
Clients of design hotels AG can choose from a modular service portfolio. With the brand Design
Hotels the company currently represents and markets a unique collection of over 170 individual
hotels in more than 40 countries. Through its marketing and communication activities Design
Hotels AG forms the connection between the member hotel and a global clientele looking for selfdetermination
and individuality.
www.designhotels.com, ISIN: DE0005141006, Munich Stock Exchange (Regulated Market)