Offering Memorandum Adler Modema¨rkte AG Cre´dit Agricole CIB

Offering Memorandum
for the public offering of
2,650,000 no-par value ordinary bearer shares
originating from a capital increase against cash contributions still to be resolved by the Company’s
Annual General Meeting
and of
7,463,000 no-par value ordinary bearer shares
from the holdings of the Selling Shareholder
and of
1,516,950 no-par value ordinary bearer shares
from the holdings of the Selling Shareholder for purposes of a potential Over-allotment
and
for admission to the regulated market (regulierter Markt) and the regulated market subsegment
with additional post-admission listing obligations (Prime Standard)
of the Frankfurt Stock Exchange of
18,510,000 no-par value ordinary bearer shares
– each such share representing a notional interest in the share capital of c1.00
and carrying full dividend rights from 1 January 2011 –
of
Adler Modemärkte AG
Haibach
International Securities Identification Number (ISIN): DE000A1H8MU2
German Securities Identification Number (WKN): A1H8MU
Common Code: 061180117
Global Co-ordinator and Bookrunner
Crédit Agricole CIB
27 May 2011

ABOUT THIS OFFERING MEMORANDUM
The up to 11,629,950 offered shares (the ‘‘Offered Shares’’) of Adler Modemärkte AG, a stock
corporation organized under the laws of the Federal Republic of Germany, will only be publicly
offered in Germany based on the German language Wertpapierprospekt as approved by the
German Federal Financial Supervisory Authority (Bundesanstalt für Finanzdienstleistungsaufsicht –
BaFin) on 27 May 2011 (the ‘‘German Prospectus’’). This Offering Memorandum has not been
filed with, approved by or notified to any authority. It is a free translation of the German
Prospectus and is provided solely for the convenience of English speaking readers. All possible
care has been taken to ensure that this translation is an accurate presentation of the German
Prospectus.
However, in the event of any inconsistency between the German Prospectus and this translation
thereof, the German Prospectus shall take precedence and is solely legally binding.
This Offering Memorandum does not constitute or form part of an offer to sell, or a solicitation of
an offer to buy these securities, in the United States, Canada, Japan, Australia or any other
jurisdiction where such offer, sale or solicitation is not permitted. The securities referred to herein
have not been and will not be registered under the U.S. Securities Act of 1933, as amended (the
‘‘Securities Act’’), and may not be offered or sold in the United States absent registration under
the Securities Act or an available exemption from registration. The Offered Shares have not been
and will not be registered under the U.S. Securities Act.
No public offering of the securities referred to herein will be made in the United States, nor in any
country other than the Federal Republic of Germany. Neither this Offering Memorandum nor any
copy of it may be taken or transmitted into the United States, Canada, Japan or Australia or
distributed or redistributed, directly or indirectly, in the United States, Canada, Japan or Australia.

TABLE OF CONTENTS
TABLE OF CONTENTS ........................................................................................................... ii
SUMMARY OF THE OFFERING MEMORANDUM.................................................................. 1
General information about Adler and its business .................................................................... 1
Summary of the Offering........................................................................................................... 3
Summary of material financial information ................................................................................ 8
Background to the financial information contained in the Offering Memorandum and factors
affecting its comparability .......................................................................................................... 12
Summary of Risk Factors.......................................................................................................... 14
RISK FACTORS ....................................................................................................................... 16
Risks associated with the business – market and industry-related risks .................................. 16
Risks associated with the business – Company-related risks................................................... 17
Legal and tax risks .................................................................................................................... 23
Risks in connection with the Offering........................................................................................ 26
GENERAL INFORMATION ...................................................................................................... 28
Responsibility for the content of the Offering Memorandum ..................................................... 28
Documents on display............................................................................................................... 28
Statutory auditor........................................................................................................................ 28
Forward-looking statements ...................................................................................................... 28
Industry, market and customer data and information from third parties.................................... 29
Note regarding currency and financial information.................................................................... 31
THE OFFERING ....................................................................................................................... 32
Subject matter of the Offering Memorandum ............................................................................ 32
Price range, Offering Period, Offer Price and number of allotted shares ................................. 32
Premature termination of the Offering....................................................................................... 33
Projected timetable for the Offering .......................................................................................... 34
Information concerning the shares ............................................................................................ 34
Underwriting .............................................................................................................................. 35
Allotment ................................................................................................................................... 38
Stabilisation measures, Over-allotment and Greenshoe Option ............................................... 38
Stock exchange admission and commencement of trading ...................................................... 39
Designated Sponsor.................................................................................................................. 39
Selling agent.............................................................................................................................. 39
Selling Shareholder ................................................................................................................... 39
Lock-up...................................................................................................................................... 39
Paying and registration agent.................................................................................................... 40
REASONS FOR THE OFFERING, USE OF PROCEEDS, ISSUE COSTS AND INTERESTED
THIRD PARTIES....................................................................................................................... 41
Issue proceeds and costs ......................................................................................................... 41
Reasons for the Offering and use of proceeds ......................................................................... 41
Interested parties....................................................................................................................... 42
EARNINGS AND DIVIDENDS PER SHARE; DIVIDEND POLICY .......................................... 43
DILUTION ................................................................................................................................. 45
CAPITALISATION, INDEBTEDNESS AND BORROWING REQUIREMENTS........................ 46
Capitalisation and indebtedness................................................................................................ 46
Borrowing requirements ............................................................................................................ 48
Working capital statement ......................................................................................................... 48
SELECTED FINANCIAL INFORMATION................................................................................. 49
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS................................................................................................... 53
Overview of business ................................................................................................................ 53
Group of consolidated companies............................................................................................. 54
A
c
1
0
4
7
0
8
p
u
0
1
0
P
r
o
o
f
7
:
2
7
.
5
.
1
1
B
/
L
R
e
v
i
s
i
o
n
:
0
O
p
e
r
a
t
o
r
D
a
d
ii

Background to the financial information contained in the Offering Memorandum and factors
affecting its comparability .......................................................................................................... 55
Significant factors affecting the financial condition and results of operations ........................... 56
Significant accounting policies................................................................................................... 60
Adler’s results of operations in financial years 2008, 2009 and 2010, and in the first quarter of
financial year 2010 and 2011 (IFRS) ........................................................................................ 63
Adler’s net assets as at 31 December 2008, 31 December 2009, 31 December 2010 and 31
March 2011 (IFRS).................................................................................................................... 84
Adler’s financial position in financial years 2008, 2009 and 2010, and in the first quarter of
financial year 2010 and 2011 (IFRS) ........................................................................................ 92
Development of the Company’s net assets, financial position and results of operations in
financial years 2008, 2009 and 2010 (HGB)............................................................................. 95
MARKET AND INDUSTRY OVERVIEW .................................................................................. 96
Introduction and overview ......................................................................................................... 96
The clothing market................................................................................................................... 97
Market trends ............................................................................................................................ 98
REGULATORY ENVIRONMENT.............................................................................................. 101
Customs law.............................................................................................................................. 101
Legal requirements for bringing products on to the market ...................................................... 101
Consumer protection ................................................................................................................. 101
BUSINESS ................................................................................................................................ 103
Introduction and overview ......................................................................................................... 103
History of Adler.......................................................................................................................... 103
Competitive strengths................................................................................................................ 104
Strategy..................................................................................................................................... 107
Products .................................................................................................................................... 111
Competitors and competitive position ....................................................................................... 114
Trademarks, utility patents and domains, and licences to proprietary rights ............................ 114
Sales ......................................................................................................................................... 116
Marketing................................................................................................................................... 117
Property holdings, operating facilities, property, plant and equipment...................................... 118
Material agreements.................................................................................................................. 118
Insurance................................................................................................................................... 119
Investments ............................................................................................................................... 119
Sustainability and the environment ........................................................................................... 120
Litigation .................................................................................................................................... 120
GENERAL INFORMATION ABOUT THE COMPANY ............................................................. 122
Formation, commercial register entry, company name and registered office............................ 122
Company object ........................................................................................................................ 122
Financial year and term of the Company .................................................................................. 122
Group structure and affiliates .................................................................................................... 122
Notices ...................................................................................................................................... 125
INFORMATION ON THE CAPITAL OF THE COMPANY AND OTHER IMPORTANT
PROVISIONS OF THE ARTICLES OF ASSOCIATION........................................................... 126
Share capital and shares .......................................................................................................... 126
Development of the share capital.............................................................................................. 126
General provisions on capital increases.................................................................................... 127
Authorised capital...................................................................................................................... 127
Contingent capital and authorisation to issue warrant-linked and/or convertible bonds............ 128
Authorisation to acquire treasury shares................................................................................... 130
Shareholding notification requirements, takeover offers and exclusion of minority shareholders
(squeeze-out) ............................................................................................................................ 131
CORPORATE BODIES OF THE COMPANY AND EMPLOYEES........................................... 134
Overview ................................................................................................................................... 134
Executive Board ........................................................................................................................ 135
Supervisory Board..................................................................................................................... 139
A
c
1
0
4
7
0
8
p
u
0
1
0
P
r
o
o
f
7
:
2
7
.
5
.
1
1
B
/
L
R
e
v
i
s
i
o
n
:
0
O
p
e
r
a
t
o
r
D
a
d
iii

Annual General Meeting............................................................................................................ 148
Corporate Governance .............................................................................................................. 150
Management participation ......................................................................................................... 151
Employees................................................................................................................................. 151
SHAREHOLDER STRUCTURE (BEFORE AND AFTER THE OFFERING)............................ 153
Overview ................................................................................................................................... 153
Information on the shareholders................................................................................................ 153
RELATED PARTY TRANSACTIONS....................................................................................... 154
TAXATION IN THE FEDERAL REPUBLIC OF GERMANY .................................................... 158
Taxation of the Company .......................................................................................................... 158
Taxation of the shareholders..................................................................................................... 159
FINANCIAL SECTION .............................................................................................................. F-1
Unaudited consolidated interim financial statements of Adler Modemärkte AG as at 31 March
2011 (IFRS)............................................................................................................................... F-2
Audited consolidated financial statements of Adler Modemärkte GmbH as at 31 December
2010 (IFRS)............................................................................................................................... F-14
Audited consolidated financial statements of Adler Modemärkte GmbH as at 31 December
2009 (IFRS)............................................................................................................................... F-69
Audited annual financial statements of Adler Modemärkte GmbH as at 31 December 2010
(HGB) ........................................................................................................................................ F-119
Audited annual financial statements of Adler Modermärkte GmbH as at 31 December 2008
(HGB) ........................................................................................................................................ F-132
GLOSSARY .............................................................................................................................. G-1
RECENT DEVELOPMENTS AND OUTLOOK ......................................................................... A-1
SIGNATURES........................................................................................................................... U-1
This Offering Memorandum contains cross-references to other sections. In each case, the crossreferences
refer to the respective headings listed in the above Table of Contents in which the
relevant information can be found.
A
c
1
0
4
7
0
8
p
u
0
1
0
P
r
o
o
f
7
:
2
7
.
5
.
1
1
B
/
L
R
e
v
i
s
i
o
n
:
0
O
p
e
r
a
t
o
r
D
a
d
iv

SUMMARY OF THE OFFERING MEMORANDUM
The following summary is intended only as an introduction to this securities prospectus (the
‘‘Offering Memorandum’’). As the information is significantly more detailed in other sections of this
Offering Memorandum, investors should base their investment decision on an examination of the
Offering Memorandum in its entirety.
Adler Modemärkte AG, Haibach (the ‘‘Company’’ or ‘‘Adler Modemärkte AG’’ and together with its
consolidated subsidiaries collectively referred to as ‘‘Adler’’ or the ‘‘Adler Group’’) as well as
CREDIT AGRICOLE CORPORATE AND INVESTMENT BANK, Paris (‘‘Crédit Agricole CIB’’ also
referred to as the ‘‘Global Co-ordinator’’ or ‘‘Bookrunner’’), assume responsibility for this
summary pursuant to § 5 (2) sentence 3 No. 4 German Securities Prospectus Act
(Wertpapierprospektgesetz, ‘‘WpPG’’) and may be held liable for it, however only if the summary
proves to be misleading, inaccurate or contradictory when read in conjunction with other parts of
the Offering Memorandum.
In the event claims are asserted before a court of law based on information contained in this
Offering Memorandum, the investor appearing as plaintiff may be required to bear the costs of
translating the Offering Memorandum prior to the commencement of legal proceedings in
compliance with the national laws of the individual Member States of the European Economic Area.
General information about Adler and its business
Introduction and overview
As one of the leading textile retailers in Germany, Austria and Luxembourg, and with more than 60
years of tradition and a high level of customer loyalty, Adler is, in its own estimation, the market
leader among textile retailers for customers over 45 in Germany in the value price segment. Adler
offers a both broad and extensive range of womenswear, menswear and lingerie. With a
supplementary range consisting of accessories, footwear, kidswear and babywear, traditional dress,
sportswear and hardware products, Adler aims to round off its product portfolio and to exploit
existing cross-selling potential in its stores. Adler is currently focusing on large-space retail
concepts, i.e., the space occupied by the stores it operates is usually more than 1000 m 2 . Adler’s
product portfolio consists mainly of own brands, the collections for which are designed and
compiled to a large extent by Adler itself, and then produced by external manufacturers. This is
supplemented by a selected range of external brands. The products are distributed via a broad
network of currently 139 stores in Germany, Austria and Luxembourg, as well as an online store.
Competitive strengths
In terms of fit, fashion grade, functionality and quality, Adler’s product range is primarily tailored to
the generation of over 45s, whose share of the population will continue to grow. Adler has also
successfully positioned itself as a value-for-money supplier, offering high-quality products at an
attractive price-performance ratio. In addition, Adler has a vertically integrated business model with
full information control over all elements of the value chain, and can therefore respond efficiently to
changes in demand. Adler has also implemented a variable, modular retail space concept and can
therefore react flexibly to the offering of store spaces and occupy location-specific market niches.
Adler has been awarded several prizes for customer satisfaction and has an established customer
loyalty card programme that has been rated in tests as particularly good. It also enjoys
disproportionate awareness of its brand name and a very high level of customer loyalty.
Strategy
Adler intends to continue with its assortment policy and to continue to gear its communication
strategy and the layout of its stores to customers over 45. It will also increasingly focus on winning
as new customers those that are moving into the ever-growing age group of customers over 45. In
this way, Adler aims to further expand what it sees as its leading position in the primary segment it
serves. Adler has already successfully implemented this strategy in some stores and has attracted
an increasing number of new customers through the offering of selected external brands such as
s.Oliver, Tom Tailor, Street One, Cecil, OneTouch and Mexx, as well as more stringent visual
merchandising, i.e. via visual measures as part of merchandising, and extensive modernisation of
the shop fronts and interior design of its stores. Adler plans to continuously expand this concept to
further stores. In addition, Adler intends to expand its store network both organically and
inorganically, in order to exploit economies of scale and broaden its market position. As part of its
organic growth, Adler aims to open 20-35 new stores each year between 2011 and 2013 in
A
c
1
0
4
7
0
8
p
u
0
2
0
P
r
o
o
f
7
:
2
7
.
5
.
1
1
B
/
L
R
e
v
i
s
i
o
n
:
0
O
p
e
r
a
t
o
r
D
a
d
1

Germany and Austria depending on the market situation and the market environment, although it
would also like to selectively use opportunities that arise due to the withdrawal of department store
chains and small- and medium-sized retailers. In the medium term, Adler is also considering
international expansion into bordering countries of Germany and Austria with a similar age structure
and physiognomy of the population. In future, Adler would also like to achieve cost benefits, on the
one hand, and further optimise internal processes, on the other, through the use of innovative
technologies. For example, Adler is presently in the testing stage of the Group-wide introduction of
RFID (radio-frequency identification), an electronic goods tracking and tagging system. By setting
up an online shop in 2010, Adler also implemented a multi-channel sales strategy that aims to
attract in particular new customers entering the over 45 age group, as well as older, less mobile
customers.
A
c
1
0
4
7
0
8
p
u
0
2
0
P
r
o
o
f
7
:
2
7
.
5
.
1
1
B
/
L
R
e
v
i
s
i
o
n
:
0
O
p
e
r
a
t
o
r
D
a
d
2

Summary of the Offering
Offering......................................... The Offering consists of a public offering in the Federal Republic
of Germany and private placements in certain other European
jurisdictions outside the Federal Republic of Germany and
outside the United States of America.
Outside the United States of America, the Offered Shares will be
offered in the context of a placement under Regulation S of the
US Securities Act of 1933, as amended (the ‘‘Securities Act’’).
Offered Shares............................. The subject matter of this Offering Memorandum, including any
potential over-allotment, (the ‘‘Offering’’) relates to 11,629,950
no-par value ordinary bearer shares of the Company, each
representing a notional interest in the share capital of c1.00 and
carrying full dividend rights from 1 January 2011, consisting of
* 2,650,000 shares originating from a capital increase against
cash contributions of c2,650,000.00 still to be resolved by
the Company’s Annual General Meeting and excluding the
Selling Shareholder’s pre-emptive subscription rights (the
‘‘New Shares’’);
* 7,463,000 shares from the holdings of the Selling
Shareholder (the ‘‘Existing Shares’’); and
* 1,516,950 shares from the holdings of the Selling
Offering Period ............................
Shareholder for purposes of any potential over-allotment
(the ‘‘Greenshoe Shares’’, and together with the Existing
Shares and the New Shares collectively referred to as the
‘‘Offered Shares’’).
The Company and the Selling Shareholder, in consultation with
the Global Co-ordinator, reserve the right to reduce the number of
Offered Shares or to allot investors fewer than the total number of
Offered Shares.
The Offering, during which investors will be given the opportunity
to submit orders for the shares, is expected to begin on 30 May
2011 and end on 14 June 2011. On the final day of the Offering
Period, retail investors should be able to submit orders until 12.00
noon (CEST) and institutional investors until 5.00 p.m. (CEST).
The Company and the Selling Shareholder, in consultation with
the Global Co-ordinator, reserve the right to extend or shorten the
Offering Period.
Subscription terms...................... Orders must be submitted for a minimum of one share and may
stipulate a price limit within the price range, which is denominated
in round euro amounts or round euro cent figures of 25, 50 or 75
cents. Up to two orders may be submitted per securities account
of any retail investor.
Selling Shareholder..................... Before the Offering, the Company’s sole shareholder is Cheverny
Investments Limited, Malta (the ‘‘Selling Shareholder’’). The
Selling Shareholder will hold all the shares of the Company until
such time as this Offering is implemented and the capital increase
against cash contributions still to be resolved by the Company’s
Annual General Meeting has been entered into the commercial
register.
Global Co-ordinator and
Bookrunner ..................................
A
c
1
0
4
7
0
8
p
u
0
2
0
P
r
o
o
f
7
:
2
7
.
5
.
1
1
B
/
L
R
e
v
i
s
i
o
n
:
0
O
p
e
r
a
t
o
r
D
a
d
Crédit Agricole CIB is the Global Co-ordinator and the
Bookrunner.
Designated Sponsors.................. Designated Sponsors are Crédit Agricole Cheuvreux S.A., 9, quai
du Président Paul Doumer, 92400 Courbevoie, France (‘‘CA
Cheuvreux’’), and, from the fourth day of trading after publication
of the termination of any stabilisation measures, or at the latest
after the expiration of the Offering Period of 30 days, DZ BANK
3

AG, Deutsche Zentral-Genossenschaftsbank, Platz der Republik,
60265 Frankfurt am Main (‘‘DZ BANK’’ and together with
CA Cheuvreux, the ‘‘Designated Sponsors’’).
Selling Agent ............................... Selling Agent is Viscardi AG, Brienner Strasse 1, 80333 Munich
(‘‘Viscardi’’ oder ‘‘Selling Agent’’).
Price range................................... The price range within which orders may be placed is
e10.00 to e12.50
per share.
The Company and the Selling Shareholder, in consultation with
the Global Co-ordinator, reserve the right to increase or reduce
the upper and/or lower limit of the price range.
Offer Price.................................... After the Offering Period expires, the Company, the Selling
Shareholder and the Global Co-ordinator will use the order book
created in the book-building process to jointly set the Offer Price
per Offered Share (the ‘‘Offer Price’’). The Offer Price is
scheduled to be published in an ad hoc disclosure on an
electronic information system and on the Company’s website
(www.adlermode.com) and on the third business day following
expiry of the Offering Period in a notice published in the Börsen-
Zeitung.
Particularly in the event that the placement volume proves
insufficient to satisfy all the orders submitted at the Offer Price,
the Global Co-ordinator, in consultation with the Company,
reserves the right not to accept orders, either in whole or in part.
Changes to the Offer Terms ...... If the option to reduce the number of Offered Shares or modify the
price range and/or the Offering Period (collectively referred to as
the ‘‘Offer Terms’’) is exercised and to the extent required under
the German Securities Prospectus Act
(Wertpapierprospektgesetz, ‘‘WpPG’’), a supplement to this
Offering Memorandum will be filed with the German Federal
Financial Supervisory Authority (Bundesanstalt für
Finanzdienstleistungsaufsicht, ‘‘BaFin’’) and published following
approval thereof. The change will also be published on an
electronic information system and, to the extent required by the
German Securities Trading Act (Wertpapierhandelsgesetz,
‘‘WpHG’’), in an ad hoc disclosure. Investors will not be notified
individually.
The allotment of fewer than the total number of Offered Shares to
investors shall not constitute a change to the Offer Terms and as
such shall not trigger any duty to publish a supplement to this
Offering Memorandum.
Changes to the Offer Terms will not operate to invalidate orders
that have already been submitted. Investors who have already
submitted orders prior to the publication of any supplement are
entitled under the German Securities Prospectus Act to revoke
their orders within two business days of the supplement’s
publication.
Delivery and settlement.............. Delivery of the Offered Shares against payment of the Offer Price
and the customary securities commissions is expected to take
place on the second banking day after listing commences.
Stabilisation, Over-allotment
and Greenshoe Option ...............
A
c
1
0
4
7
0
8
p
u
0
2
0
P
r
o
o
f
7
:
2
7
.
5
.
1
1
B
/
L
R
e
v
i
s
i
o
n
:
0
O
p
e
r
a
t
o
r
D
a
d
In connection with the placement of the Company’s shares and to
the extent permitted by law (§ 20a (3) WpHG in conjunction with
EU Commission Regulation 2273/2003 dated 22 December
2003), Crédit Agricole CIB, as Stabilisation Manager, may make
over-allotments and execute measures aimed at supporting the
4

stock exchange or market price of the Company’s shares.
Stabilisation measures may be taken from the date the
General allotment criteria...........
Company’s shares list for trading and must be completed no
later than 30 calendar days after such date.
With regard to potential stabilisation measures and to the extent
permitted by law, in addition to orders for a total of 10,113,000
New and Existing Shares of the Company being offered, orders
may be executed with investors for up to 1,516,950 additional
shares of the Company (a maximum of 15% of the total New
Shares and Existing Shares being offered) (‘‘Over-allotment’’). In
order to cover these Over-allotments, the Selling Shareholder will
provide Crédit Agricole CIB prior to allotment up to 1,516,950
shares (up to 15% of the maximum total of New Shares and
Existing Shares being offered) by way of a securities loan without
charge.
In this context, the Selling Shareholder will grant Crédit Agricole
CIB an option to purchase up to 1,516,950 shares of the
Company (up to 15% of the maximum total of New Shares and
Existing Shares being offered) from the Selling Shareholder at the
Offer Price less agreed commission (‘‘Greenshoe Option’’), thus
satisfying the retransfer obligation under the securities loan. This
Greenshoe Option expires 30 calendar days after trading in the
Company’s shares commences and may only be exercised to the
extent that the Company’s shares have been placed by way of
Over-allotment.
The Company, the Selling Shareholder and the Global Coordinator
will comply with the ‘‘Principles for the allotment of share
issues to private investors’’ (Grundsätze für die Zuteilung von
Aktienemissionen an Privatanleger) issued on 7 June 2000 by the
Exchange Expert Commission (Börsensachverständigenkommission)
at the German Federal Ministry of Finance
Preferential allotment..................
(Bundesministerium der Finanzen).
Members of the Executive Board will be offered 75,000 of the total
of 11,629,950 Offered Shares. The Offered Shares subscribed by
those persons eligible under this plan will be allotted to them on a
preferential basis. Otherwise, there are no provisions for any
preferential allotment of the Offered Shares to any other specific
class of persons.
Stock exchange admission/
listing ............................................
All the Company’s shares, including the New Shares originating
from the capital increase against cash contributions still to be
resolved by the Company’s Annual General Meeting are
expected to be admitted to trading on the regulated market
(regulierter Markt) and the regulated market sub-segment with
additional post-admission listing obligations (Prime Standard) of
the Frankfurt Stock Exchange on the first business day following
expiry of the Offering Period, at the earliest. All the Company’s
shares are scheduled to commence listing on the second
exchange trading day following expiry of the Offering Period.
Lock-up/Selling restrictions ....... In the Underwriting Agreement entered into with the Selling
Shareholder and the Global Co-ordinator on 27 May 2011 (the
‘‘Underwriting Agreement’’), the Company has, inter alia,
undertaken that, for a period of twelve months from
commencement of trading in the Company’s shares, it will not,
without the prior written consent of the Global Co-ordinator:
* directly or indirectly issue, sell or offer shares of the
Company originating from any capital increase or held in
Treasury, nor enter into any obligation to sell or otherwise
dispose of same or announce any offer in relation thereto.
A
c
1
0
4
7
0
8
p
u
0
2
0
P
r
o
o
f
7
:
2
7
.
5
.
1
1
B
/
L
R
e
v
i
s
i
o
n
:
0
O
p
e
r
a
t
o
r
D
a
d
5

Excepted herefrom are those shares issued under
*
employee or management stock option plans described in
this Offering Memorandum;
directly or indirectly issue, sell or offer any securities or
uncertificated rights convertible into shares of the Company
or representing a right to acquire shares of the Company,
nor enter into any obligation to sell or otherwise dispose of
same or announce any offer in relation thereto;
* announce or implement any capital increase from
*
authorised capital;
propose any capital increase to its Annual General Meeting
for resolution; or
* enter into any transactions (including transactions in
Use of proceeds ..........................
derivatives) which constitute the economic equivalent of
the aforementioned measures.
In the Underwriting Agreement, the Selling Shareholder has
undertaken vis-à-vis the Global Co-ordinator that it will not (a)
initiate or consent to the aforementioned measures of the
Company, nor (b) for a period of twelve months following
commencement of trading in the Company’s shares (i) directly
or indirectly sell, offer or market any shares or other securities or
uncertificated rights convertible into or exchangeable for shares
of the Company or representing a right to acquire shares of the
Company, nor enter into any obligation to sell or otherwise
dispose of same or announce any offer in relation thereto; (ii)
propose any capital increase to the Annual General Meeting nor
consent to or support any such proposal; or (iii) enter into any
transactions (including transactions in derivatives) constituting
the economic equivalent of the transactions set out in (i) and (ii)
above, without the prior written consent of the Global Coordinator.
The Company plans to use the net issue proceeds accruing to it
primarily for the following projects presented here in the order of
their priority.
1. To a large extent, financing further growth:
a) internal growth through the opening of new stores
b) external growth through the purchase of competitors
and existing store chains;
2. as well as expanding the ‘‘shop-in-shop’’ concept to include
external brands; and
3. to a lesser extent, financing the programme for modernising
existing Adler stores.
Premature termination of the
Offering.........................................
International Securities
Identification Number (ISIN)....... DE000A1H8MU2
German Securities
Identification Number (WKN) .....
A1H8MU
Common Code............................. 061180117
Ticker symbol .............................. ADD
A
c
1
0
4
7
0
8
p
u
0
2
0
P
r
o
o
f
7
:
2
7
.
5
.
1
1
B
/
L
R
e
v
i
s
i
o
n
:
0
O
p
e
r
a
t
o
r
D
a
d
In the Underwriting Agreement with the Company (the
‘‘Underwriting Agreement‘‘), the Global Co-ordinator has
reserved the right to terminate the Underwriting Agreement and
discontinue the Offering.
6

Further information about the Company and Adler
Executive Board .......................... Lothar Schäfer (CEO)
Jochen Strack
Thomas Wanke
Supervisory Board ...................... Holger Kowarsch (Chairman)
Angelika Zinner (Deputy Chairman)*
Mona Abu-Nusseira
Majed Abu-Zarur*
Ingrid Düsmann-Schulz*
Corinna Groß*
Georg Linder*
Eduard Regele
Erika Ritter*
Markus Roschel
Markus Stillger
Jörg Ulmschneider
* Employee representative
Share capital and shares
(before the Offering) ..................
The Company’s share capital is currently c15,860,000 and is
divided into 15,860,000 no-par value ordinary bearer shares
representing a notional interest in the share capital of c1.00 per
no-par share. Each share carries one vote at the Annual General
Meeting.
Statutory auditor ......................... PricewaterhouseCoopers Aktiengesellschaft
Wirtschaftsprüfungsgesellschaft, Stuttgart.
Employees.................................... Adler had a total of 4,174 employees on average (trainees
included) in the 2010 financial year.
Other ............................................. Parties related to the Company have and have had various
business and legal relationships with companies in the Adler
Group.
A
c
1
0
4
7
0
8
p
u
0
2
0
P
r
o
o
f
7
:
2
7
.
5
.
1
1
B
/
L
R
e
v
i
s
i
o
n
:
0
O
p
e
r
a
t
o
r
D
a
d
7

Summary of material financial information
The consolidated financial statements were prepared in accordance with the accounting
requirements of the International Accounting Standards Board (IASB) – International Financial
Reporting Standards (‘‘IFRS’’), as adopted by the EU – using the nature of expense method and
contain the audited financial information in accordance with IFRS for the respective financial year
and corresponding comparative figures for the previous financial year. The Adler Group’s
consolidated financial statements and consolidated interim financial statements will continue to be
prepared in accordance with IFRS in the future.
Unless otherwise indicated, the financial information in this Offering Memorandum has been
extracted or derived from the audited consolidated financial statements of the Company in
accordance with IFRS as at 31 December 2010 (the ‘‘2010 IFRS Consolidated Financial
Statements’’), the audited consolidated financial statements of the Company in accordance with
IFRS as at 31 December 2009 (the ‘‘2009 IFRS Consolidated Financial Statements’’ and
together with the 2010 IFRS Consolidated Financial Statements the ‘‘IFRS Consolidated Financial
Statements’’) or the unaudited consolidated interim financial statements of the Company in
accordance with IFRS as at 31 March 2011 (the ‘‘2011 IFRS Consolidated Interim Financial
Statements’’). The financial information presented in the tables below represents a selection of the
financial information for the Adler Group contained in the financial statements and is quoted in
thousands of euros (‘‘e thousands’’) and rounded to whole numbers in accordance with normal
commercial practice in order to improve readability. Figures quoted as a percentage have been
rounded to one decimal place in accordance with normal commercial practice. Due to the rounding,
the figures presented in the tables do not always add up exactly to the particular total amount
given.
Financial information that has been designated in this Offering Memorandum as unaudited has not
been audited or reviewed by an auditor (prüferische Durchsicht) within the meaning of § 20.6 of
Appendix I to Commission Regulation (EC) No. 809/2004.
The consolidated financial information and business information presented represent a summary of
the financial information contained in this Offering Memorandum. Investors should base their
investment decisions on an examination of the Offering Memorandum as a whole.
A
c
1
0
4
7
0
8
p
u
0
2
0
P
r
o
o
f
7
:
2
7
.
5
.
1
1
B
/
L
R
e
v
i
s
i
o
n
:
0
O
p
e
r
a
t
o
r
D
a
d
8

Selected information relating to the consolidated income statement
c’000
(audited)
Financial year 3 months as at 31 March
2008* 2009* 2010* 2010 2011
in % of
revenue
(unaudited)
c’000
(audited)
in % of
revenue
(unaudited)
c’000
(audited)
in % of
revenue
(unaudited)
c’000
(unaudited)
in % of
revenue
(unaudited)
c’000
(unaudited)
in % of
revenue
(unaudited)
Revenue ............................................... 474,603 405,846 444,809 84,249 91,906
Other operating income......................... 23,404 4.9 17,709 4.4 8,172 1.8 2,240 2.7 2,601 2.8
Cost of materials .................................. -239,602 -50.5 -205,277 -50.6 -210,360 -47.3 -43,790 -52.0 -47,321 -51.5
Personnel expenses ............................. -128,173 -27.0 -80,553 -19.8 -74,996 -16.9 -17,778 -21.1 -19,286 -21.0
Other operating expenses..................... -157,412 -33.2 -125,251 -30.9 -129,776 -29.2 -32,321 -38.4 -34,502 -37.5
EBITDA** ............................................. -27,180 -5.7 12,474 3.1 37,849 8.5 -7,400 -8.8 -6,602 -7.2
Depreciation and amortisation............... -20,379 -4.3 -15,521 -3.8 -13,565 -3.0 -3,596 -4.3 -3,360 -3.7
Impairment ............................................ -7,852 -1.7 -2,322 -0.6 — — — — — —
EBIT** ................................................... -55,411 -11.7 -5,369 -1.3 24,284 5.5 -10,996 -13.1 -9,962 -10.8
Other interest and similar income 786 1,919 3,538 773 20
Interest and similar expenses ............... -6,977 -5,022 -4,121 -1,099 -914
Net finance costs ................................ -6,191 -3,103 -583 -326 -894
Profit/loss from operations ............... -61,602 -8,472 23,701 -11,322 -10,856
Income taxes......................................... 2,357 -149 4,778 67 2,006
Profit/loss from continuing
operations ........................................ n.a. -8,621 28,479 -11,255 -8,850
Profit/loss from discontinued operations n.a. 1,343 -1,057 -1,059 —
Consolidated net profit (+)/
loss (-) for the year.......................... -59,245 -7,278 27,422 -12,314 -8,850
of which attributable to non-controlling
interests ............................................. — — — — —
of which attributable to equity holders of
Adler Modemärkte GmbH.................. -59,245 -7,278 27,422 -12,314 -8,850
Consolidated total comprehensive
income .............................................. -59,245 -7,278 27,422 -12,314 -8,850
* Unless marked as unaudited, the financial information for financial years 2009 and 2010 has been extracted from the 2010
IFRS Consolidated Financial Statements. Unless marked as unaudited, the financial information for financial year 2008 has
been extracted from the 2009 IFRS Consolidated Financial Statements. The comparability of the financial information
presented in this table for financial years 2008 and 2009 is limited. For further details, please see ‘‘Management’s Discussion
and Analysis of Financial Condition and Results of Operations – Background to the financial information contained in the
Offering Memorandum and factors affecting its comparability’’.
** The Company uses EBITDA and EBIT as performance indicators in its business operations and is of the opinion that these key
figures could be used as performance indicators by investors. The Company defines EBITDA (earnings before interest, taxes,
depreciation and amortisation) as EBIT before depreciation and amortisation and impairment charges. The Company defines
EBIT (earnings before interest and taxes) in this context as the profit or loss from operations before net finance costs and
taxes. The figures for EBITDA and EBIT presented in this Offering Memorandum may not be comparable with the figures for
EBITDA and EBIT reported by other companies since, in the absence of a generally accepted definition of these key figures,
they may be calculated on the basis of different underlying variables.
A
c
1
0
4
7
0
8
p
u
0
2
0
P
r
o
o
f
7
:
2
7
.
5
.
1
1
B
/
L
R
e
v
i
s
i
o
n
:
0
O
p
e
r
a
t
o
r
D
a
d
9

The table below shows the development of EBITDA, EBIT and EBITDA adjusted for non-recurring
items in financial years 2008, 2009 and 2010 as well as in the first three months of financial years
2010 and 2011:
Financial year
3 months as at
31 March
2008* 2009* 2010* 2010 2011
c’000
(audited)
c’000
(audited)
c’000
(audited)
c’000
(unaudited)
c’000
(unaudited)
EBITDA** ............................................ -27,180 12,474 37,849 -7,400 -6,602
EBITDA margin (in % of revenue)
(unaudited) ...................................... -5.7 3.1 8.5 -8.8 -7.2
EBIT** .................................................. -55,411 -5,369 24,284 -10,996 -9,962
EBIT margin (in % of revenue)
(unaudited) ...................................... -11.7 -1.3 5.5 -13.1 -10.8
Adjusted EBITDA (unaudited)***....... -1,392 13,348 — — —
Adjusted EBITDA margin (in % of
revenue) (unaudited) ....................... -0.3 3.3 — — —
* Unless marked as unaudited, the financial information for financial years 2009 and 2010 has been extracted from the 2010
IFRS Consolidated Financial Statements. Unless marked as unaudited, the financial information for financial year 2008 has
been extracted from the 2009 IFRS Consolidated Financial Statements. The comparability of the financial information
presented in this table for financial years 2008 and 2009 is limited. For further details, please see ‘‘Management’s Discussion
and Analysis of Financial Condition and Results of Operations – Background to the financial information contained in the
Offering Memorandum and factors affecting its comparability’’.
** The Company uses EBITDA and EBIT as performance indicators in its business operations and is of the opinion that these key
figures could be used as performance indicators by investors. The Company defines EBITDA (earnings before interest, taxes,
depreciation and amortisation) as EBIT before depreciation and amortisation and impairment charges. The Company defines
EBIT (earnings before interest and taxes) in this context as the profit or loss from operations before net finance costs and
taxes. The figures for EBITDA and EBIT presented in this Offering Memorandum may not be comparable with the figures for
EBITDA and EBIT reported by other companies since, in the absence of a generally accepted definition of these key figures,
they may be calculated on the basis of different underlying variables.
*** Adjusted for non-recurring items: In financial year 2008 in particular non-recurring items relating to the restructuring
programme were incurred which had a material effect on the results of the Company for that financial year. The non-recurring
items consisted of the costs of contract terminations resulting from the early termination of rental agreements for unprofitable
Adler stores, personnel expenses for social compensation plans and termination benefits, and consultancy expenses for
restructuring advisers. The expenses were offset by income from the reversal of restructuring provisions recognised in the prior
year. Non-recurring items relating to the restructuring programme were also incurred in financial year 2009. They were much
lower than in the previous year, however. For example, only personnel-related restructuring expenses were incurred. The
expenses were offset by income from the reversal of restructuring provisions recognised in the previous year. There were no
material non-recurring items in financial year 2010. An adjusted EBITDA has therefore not been presented for financial year
2010. The detailed reconciliation of EBITDA for financial years 2008 and 2009 to the adjusted EBITDA for those financial years
was as follows:
A
c
1
0
4
7
0
8
p
u
0
2
0
P
r
o
o
f
7
:
2
7
.
5
.
1
1
B
/
L
R
e
v
i
s
i
o
n
:
0
O
p
e
r
a
t
o
r
D
a
d
Financial year
EBITDA and adjusted EBITDA 2008* 2009*
(all figures are unaudited unless otherwise indicated) c’000 c’000
EBITDA reported in the income statement (audited)........................................................ -27,180 12,474
Costs of contract terminations.............................................................................................. +12,915 —
Expenses for staff reductions............................................................................................... +11,132 +4,355
Expenses for restructuring advice........................................................................................ +1,854 —
Income from the reversal of restructuring provisions ........................................................... -113 -3,481
Adjusted EBITDA................................................................................................................. -1,392 13,348
10

The table below shows the analysis of revenue (net) by geographical region for financial years
2008, 2009 and 2010 and for the first three months of financial years 2010 and 2011:
Financial year 3 months as at 31 March
Revenue 2008* 2009* 2010* 2010 2011
c’000
(audited)
in % of
revenue
(unaudited)
c’000
(audited)
in % of
revenue
(unaudited)
c’000
(audited)
in % of
revenue
(unaudited)
c’000
(unaudited)
in % of
revenue
(unaudited)
c’000
(unaudited)
in % of
revenue
(unaudited)
Germany.............................. 394,824 83.2 332,014 81.8 356,195 80.1 67,854 80.5 73,213 79.7
Austria ................................. 65,880 13.9 60,873 15.0 74,599 16.8 13,416 15.9 15,468 16.8
Luxembourg ........................ 13,899 2.9 12,959 3.2 14,015 3.1 2,979 3.5 3,224 3.5
Revenue ............................. 474,603 100.0 405,846 100.0 444,809 100.0 84,249 100.0 91,906 100.0
* Unless marked as unaudited, the financial information for financial years 2009 and 2010 has been extracted from the 2010
IFRS Consolidated Financial Statements. Unless marked as unaudited, the financial information for financial year 2008 has
been extracted from the 2009 IFRS Consolidated Financial Statements. The comparability of the financial information
presented in this table for financial years 2008 and 2009 is limited. For further details, please see ‘‘Management’s Discussion
and Analysis of Financial Condition and Results of Operations – Background to the financial information contained in the
Offering Memorandum and factors affecting its comparability’’.
The table below shows the analysis of the figures for gross sales, which have been generated by
or derived from Adler’s stock management system and are unaudited, by product group for
financial years 2008, 2009 and 2010:
Financial year 3 months as at 31 March
Sales 2008* 2009* 2010* 2010 2011
c’000
(unaudited)
in % of
gross sales
(unaudited)
c’000
(unaudited)
in % of
gross sales
(unaudited)
c’000
(unaudited)
in % of
gross sales
(unaudited)
c’000
(unaudited)
in % of
gross sales
(unaudited)
c’000
(unaudited)
in % of
gross sales
(unaudited)
Womenswear (unaudited) ... 290,909 51.7 246,432 50.6 260,805 48.8 54,546 52.0 57,567 50.3
Menswear (unaudited)......... 166,756 29.6 146,297 30.1 150,019 28.1 28,860 27.5 29,595 25.8
Lingerie (unaudited) ........... 55,536 9.9 48,846 10.0 54,118 10.1 10,422 9.9 11,539 10.1
Supplementary assortment
(unaudited).......... .......... 49,828 8.9 45,052 9.3 69,792 13.1 11,073 10.6 15,813 13.8
Gross sales (unaudited) ... 563,030 486,627 534,734 104,901 114,514
Reconciliation to net
revenue (unaudited)** .... -88,427 -80,781 -85,378 -20,652 -22,608
(Net) revenue.......... .......... 474,603*** 405,846*** 444,809*** 84,249 91,906
* Unless marked as unaudited, the audited financial information for financial years 2009 and 2010 has been extracted from the
2010 IFRS Consolidated Financial Statements. Unless marked as unaudited, the audited financial information for financial year
2008 has been extracted from the 2009 IFRS Consolidated Financial Statements. The comparability of the financial
information presented in this table for financial years 2008 and 2009 is limited. For further details, please see ‘‘Management’s
Discussion and Analysis of Financial Condition and Results of Operations – Background to the financial information contained
in the Offering Memorandum and factors affecting its comparability’’.
** The reconciliation to net revenue is unaudited and principally comprises VAT and discounts incurred on the sale of products
and sales deferred as a result of discount entitlements relating to the Adler customer card that were acquired or not utilised.
*** These figures have been extracted from the 2009 and 2010 IFRS Consolidated Financial Statements and verified.
A
c
1
0
4
7
0
8
p
u
0
2
0
P
r
o
o
f
7
:
2
7
.
5
.
1
1
B
/
L
R
e
v
i
s
i
o
n
:
0
O
p
e
r
a
t
o
r
D
a
d
11

Selected information relating to the consolidated balance sheet
31 December 31 March
2008* 2009* 2010* 2011
c’000
(audited)
c’000
(audited)
c’000
(audited)
c’000
(unaudited)
ASSETS
Non-current assets.............................................. 88,891 72,644 67,501 67,989
Current assets..................................................... 101,033 132,325 95,214 101,252
Total equity and liabilities.................................... 189,924 204,969 162,715 169,241
EQUITY AND LIABILITIES
Equity .................................................................. 25,546 69,274 41,167 32,316
Non-current liabilities........................................... 63,886 54,520 47,165 44,200
Current liabilities.................................................. 100,492 81,175 74,383 92,725
Total equity and liabilities................................ 189,924 204,969 162,715 169,241
* The comparability of the financial information presented in this table for financial years 2009 and 2010 is to some extent limited.
For further details, please see ‘‘Management’s Discussion and Analysis of Financial Condition and Results of Operations –
Background to the financial information contained in the Offering Memorandum and factors affecting its comparability’’.
Selected information relating to the consolidated statement of cash flows
Financial year 3 months as at 31 March
2008* 2009* 2010* 2010 2011
c’000
(audited)
c’000
(audited)
c’000
(audited)
c’000
(unaudited)
c’000
(unaudited)
Net cash from (+)/used in (-)
operating activities..................... -22,523 7,192 25,800 -11,845 -13,640
Net cash from (+)/used in (-)
investing activities...................... 4,033 -37,842 -16,759 -255 -1,987
Net cash from (+)/used in (-)
financing activities ..................... 18,210 42,424 -13,076 -3,295 -3,427
Cash and cash equivalents at
end of period ........................... 25,217 36,991 32,956 21,308 13,902
* The comparability of the financial information presented in this table for financial years 2009 and 2010 is to some extent limited.
For further details, please see ‘‘Management’s Discussion and Analysis of Financial Condition and Results of Operations –
Background to the financial information contained in the Offering Memorandum and factors affecting its comparability’’.
Additional selected information
The table below gives an overview of the number of Adler stores as at 31 December 2008,
31 December 2009 and 31 December 2010 and 31 March 2011:
31 December 31 March
2008 2009 2010 2011
Adler stores (unaudited)...................................... 120 123 135 137
Background to the financial information contained in the Offering Memorandum and factors
affecting its comparability
The Company sold its shareholding in MOTEX, which provides transport and logistics services for
the Adler Group, with effect as at 30 September 2010. In consequence, a distinction is made
between continuing operations and discontinued operations in the consolidated income statement in
the 2010 IFRS Consolidated Financial Statements and the 2011 IFRS Consolidated Interim
Financial Statements (including the comparative figures presented for financial year 2009 and the
first quarter of financial year 2010). The profit or loss after tax of MOTEX for the first 9 and 3
months of financial year 2010 and the net profit or loss of MOTEX for financial year 2009 and the
net profit or loss of MOTEX in the first quarter of 2010 are reported in each case as a separate
item in the consolidated income statement in the 2010 IFRS Consolidated Financial Statements
and the 2011 IFRS Consolidated Interim Financial Statements (including the comparative figures
presented for financial year 2009 and the first quarter of financial year 2010). The other items in
A
c
1
0
4
7
0
8
p
u
0
2
0
P
r
o
o
f
7
:
2
7
.
5
.
1
1
B
/
L
R
e
v
i
s
i
o
n
:
0
O
p
e
r
a
t
o
r
D
a
d
12

the consolidated income statement for financial year 2010 (including the comparative figures
presented for financial year 2009 and the first quarter of financial year 2010), on the other hand,
reflect only the continuing operations.
In contrast, no distinction was made between continuing operations and discontinued operations in
the 2009 IFRS Consolidated Financial Statements (including the comparative figures presented for
financial year 2008) as the decision to sell MOTEX had not yet been taken at the balance sheet
date 31 December 2009.
In order to improve the comparability of the development of Adler’s business in financial years
2009 and 2010, the following discussion and analysis of the results of operations of Adler for
financial years 2009 and 2010 is therefore based on the financial information contained in the
consolidated income statement in the 2010 IFRS Consolidated Financial Statements (including the
comparative figures presented for financial year 2009). Those financial statements distinguish
between continuing operations and discontinued operations for both financial years.
In contrast, the financial information relating to Adler’s results of operations in financial year 2008,
which is taken from the comparative figures for the prior year in the consolidated income statement
in the 2009 IFRS Consolidated Financial Statements, does not distinguish between continuing
operations and discontinued operations.
The assets and liabilities of MOTEX are no longer included in the consolidated balance sheet as at
31 December 2010 in the 2010 IFRS Consolidated Financial Statements as a result of its sale with
effect as at 30 September 2010. The cash flows of MOTEX up to the date of sale, including the
proceeds of the sale of MOTEX and after deducting the cash funds disposed of in that connection,
are included in the consolidated statement of cash flows in the 2010 IFRS Consolidated Financial
Statements. In contrast, the assets and liabilities and the cash flows of MOTEX are included in full
in the comparative figures for financial year 2009 presented in the consolidated balance sheet and
the consolidated statement of cash flows in the 2010 IFRS Consolidated Financial Statements, and
also in the consolidated balance sheet and the consolidated statement of cash flows in the 2009
IFRS Consolidated Financial Statements (including the comparative figures presented for financial
year 2008).
The assets and liabilities of Adler Asset GmbH, Ansfelden / Austria (formerly: F.W. Woolworth Co.
Gesellschaft m.b.H.), acquired on 31 December 2010, are included for the first time in the
consolidated balance sheet as at 31 December 2010 in the 2010 IFRS Consolidated Financial
Statements.
In the light of these considerations
* the comparability of the financial information in the following discussion and analysis of Adler’s
results for operations for financial years 2008 and 2009,
* the comparability of the financial information in the following discussion and analysis of Adler’s
net assets for financial years 2009 and 2010 and
* the comparability of the financial information in the following discussion and analysis of Adler’s
financial position for financial years 2009 and 2010
are to some extent limited. The revenues of the Adler Group for financial year 2009 including the
activities of MOTEX reported in the consolidated income statement in the 2009 IFRS Consolidated
Financial Statements therefore amount to c410,824 thousand, while the revenues of the Adler
Group for financial year 2009 excluding the activities of MOTEX reported in the consolidated
income statement in the 2010 IFRS Consolidated Financial Statements amount to c405,846
thousand. The EBITDA of the Adler Group for financial year 2009 including the activities of
MOTEX reported in the consolidated income statement in the 2009 IFRS Consolidated Financial
Statements amounts to c14,652 thousand, while the EBITDA for financial year 2009 excluding the
activities of MOTEX reported in the consolidated income statement in the 2010 IFRS Consolidated
Financial Statements amounts to c12,474 thousand. The consolidated profit or loss after tax, on
the other hand, remains unchanged.
A
c
1
0
4
7
0
8
p
u
0
2
0
P
r
o
o
f
7
:
2
7
.
5
.
1
1
B
/
L
R
e
v
i
s
i
o
n
:
0
O
p
e
r
a
t
o
r
D
a
d
13

Summary of Risk Factors
Before deciding to purchase shares of Adler Modemärkte AG, investors should carefully read and
consider the risks factors summarised below. The occurrence of one or more of these risks, either
on their own or in conjunction with other circumstances, could materially prejudice the business of
the Adler Group and/or have a material adverse effect on its financial condition and results of
operations and the Company’s continued existence. The quoted stock market price of the
Company’s shares could fall if any of these risks occurs, and investors could lose a portion, or
even all, of their investment.
Risks associated with the business – market and industry-related risks
* A weak or deteriorating economy, particularly in Germany, or a reduction in the amount of
income available to Adler’s target group to spend on clothing for some other reason, could
negatively affect demand for the Adler Group’s products and result in a corresponding decline
in sales
* The Adler Group faces strong competition. If competition becomes more intense or new
competitors enter the market, the Adler Group could lose market share, pricing pressure could
increase significantly, and margins would be accordingly reduced.
* The Adler Group faces economic, political and other risks in overseas markets because it
procures a significant share of its stock from abroad.
Risks associated with the business – Company-related risks
* The Adler Group is dependent on the development of fashion trends each year and on the
market being receptive to its lines of clothing. The Adler Group may not be able to predict
and seasonably respond to trends in the future.
* The Adler Group’s future growth will depend on its ability to maintain and successfully expand
its market position and customer base.
* The Adler Group faces risks as a result of its ties to third-party service providers in
connection with stock procurement
* The Adler Group faces risks associated with disruptions to its stock management systems or
to logistics services outsourced to an external logistics services provider.
* The Adler Group’s operations may be disrupted or interrupted.
* The Adler Group’s growth strategy could be unsuccessful or progress more slowly than
planned. In particular, the Adler Group may be unable to continue to grow organically or take
over and successfully integrate other companies.
* The development of retail space is associated with considerable financial expense and
uncertainty with regard to future profitability.
* Defective stock could adversely affect the market’s acceptance of the Adler Group’s products
and trigger damages claims against the Adler Group.
* The Adler Group’s liquidity could suffer significantly if a substantial portion or even all
outstanding discount entitlements are redeemed within a very short timeframe.
* The Adler Group’s business is subject to seasonal fluctuations and weather conditions.
* The public’s perception and the reputation of the Adler Group could be adversely affected or
damaged if the manufacturers of the products sold by the Adler Group fail to comply with
employment, social and recognised ethical or other standards.
* Unexpectedly high increases in the wages payable to employees covered by collective
bargaining agreements in the retail sector could have a material adverse effect on Adler’s
wage and salary structure.
* The Adler Group’s future success depends on executives and other qualified employees.
* The Adler Group may be unable to adequately upgrade its in-house organisational and
reporting structures, risk monitoring and risk management systems and its financial accounting
or adapt them to keep up with its rate of growth.
* The Adler Group’s existing insurance protection may be inadequate.
* The Adler Group faces risks from changes in interest rates, which could adversely affect the
Adler Group’s results.
A
c
1
0
4
7
0
8
p
u
0
2
0
P
r
o
o
f
7
:
2
7
.
5
.
1
1
B
/
L
R
e
v
i
s
i
o
n
:
0
O
p
e
r
a
t
o
r
D
a
d
14

* The Adler Group faces risks associated with using external brands, which could adversely
affect the Adler Group’s results.
Legal and tax risks
* The Adler Group faces risks in connection with Adler store leases.
* Stock procurement could become more difficult by virtue of existing or future import
*
restrictions on goods from the Adler Group’s supply markets.
The legal relationship between the Adler Group and its customers is based on pro forma
terms designed for incorporation in a large number of contracts. Individual errors in the
drafting of such terms could therefore affect numerous legal relationships.
* The Adler Group’s compliance system and monitoring capabilities may not be sufficient in
order to prevent legal infringements or to expose past infringements or to prevent damage
from economic crime.
* The Adler Group may not be able to adequately protect its intellectual property.
* The Adler Group could infringe third-party intellectual property rights.
* The Adler Group faces competition law risks.
* The Adler Group could, for past periods, be required to make additional tax payments or
additional social security contributions, or face liabilities from commitments made under its
company pension scheme, or be required to repay government grants.
Risks in connection with the Offering
* Future sales of shares of the Company or comparable transactions by the Selling Shareholder
could adversely affect the share price.
* The Selling Shareholder may continue to exercise significant influence over Adler Modemärkte
AG and the interests of the Selling Shareholder could conflict with those of the rest of the
shareholders.
* Future capital measures could lead to substantial dilution of the interests held by the
shareholders in the Company.
* The Company’s Offer Price is expected to significantly exceed the proportional book value of
the equity per share.
* No guarantee can be given that active or liquid trading in the Company’s shares will develop
and the share price could be volatile.
* The Offering may not take place.
A
c
1
0
4
7
0
8
p
u
0
2
0
P
r
o
o
f
7
:
2
7
.
5
.
1
1
B
/
L
R
e
v
i
s
i
o
n
:
0
O
p
e
r
a
t
o
r
D
a
d
15

RISK FACTORS
Potential investors should carefully read and consider the risk factors described below and the
other information contained in this Offering Memorandum before making a decision on whether to
buy shares in Adler Modemärkte AG (the ‘‘Company’’ or ‘‘Adler Modemärkte AG’’, and together
with its subsidiaries ‘‘Adler’’ or the ‘‘Adler Group’’). The occurrence of one or more of these risks,
either on their own or in conjunction with other circumstances, could materially prejudice the
business of the Adler Group and/or have a material adverse effect on its financial condition and
results of operations and the Company’s continued existence. The selected order in which the risks
are listed is neither an indication of the likelihood of their occurrence, nor an indication of the
severity or significance of the individual risks. At the same time, the risk factors below are based
on assumptions which may subsequently prove to be incorrect. In addition, other risks and aspects
which are presently unknown to the Company may be significant. The quoted market price of the
shares could fall if any one of these risks occurs, and investors could lose a portion, or even all, of
their investment.
Risks associated with the business – market and industry-related risks
A weak or deteriorating economy, particularly in Germany, or a reduction in the amount of
income available to Adler’s target group to spend on clothing for some other reason, could
negatively affect demand for the Adler Group’s products and result in a corresponding
decline in sales. The Adler Group’s performance and future growth are largely dependent on the
general demand trends demonstrated by its target group in the retail clothing trade. Demand trends
are of particular significance in the Adler Group’s home market Germany, where approximately
80.1% of the Company’s sales were generated in the 2010 financial year, and also in its other
sales markets Austria and Luxembourg. Demand is, in turn, largely dependent on the general
economic climate and associated consumer buying behaviour. Any phase of weak economic
performance in the Adler Group’s sales markets, or a reduction in the amount of income available
to Adler’s target group to spend on clothing for some other reason, therefore considerably
increases the risk of a negative sales trend. This could result in greater pricing pressure on the
stock sold by the Adler Group and, accordingly, reduce margins. Even though there was an
economic upturn in 2010 after the financial and economic crisis of 2008 and 2009, particularly in
Germany, the economic situation could deteriorate again, for example if the current political and
military unrest, particularly in Northern Africa, worsens, if the after-effects of the natural disaster in
Japan become more severe, or if other political or economic crises or disasters, domestically or
abroad, intensify, and consumers could cut their consumption accordingly, or keep their
consumption low. The financial and economic crisis has created risks for global economic
development and thus also for economic development in Germany, which, as an export nation, is
particularly dependent on global economic growth, but also for economic development in the Adler
Group’s other sales markets. Any deterioration of the global economy again would affect the
European Union’s economic position and thus also the situation in Adler’s sales markets. The
occurrence of one or more of the aforementioned risks could have a material adverse effect on the
Adler Group’s financial condition and results of operations.
The Adler Group faces strong competition. If competition becomes more intense or new
competitors enter the market, the Adler Group could lose market share, pricing pressure
could increase significantly, and margins would be accordingly reduced. In general there is
considerable competition and associated pricing pressure in the clothing market. The existing
competition is further intensified by virtue of continuing globalisation and could therefore have a
negative impact on prices for the Adler Group’s products and thus on its sales and margins.
Competition could also trigger a reallocation of market share. It is possible that the Adler Group
will not be able to compete in this environment and will lose market share to its competitors. In the
textile market, customers are not necessarily loyal to a certain brand. However, customers
demonstrate stronger loyalty to certain clothing stores (source: GfK TextilNews Autumn 2008, p. 4).
Pricing often plays a key role when customers choose which clothing stores to frequent regularly
(source: GfK TextilNews Winter 2009, p. 4). The Adler Group’s competitors as retailers of, in
particular, classic and modern fashion for men and women over 45 years of age include C&A,
Charles Vögele, K&L Ruppert and AWG in the value price segment, Karstadt, Kaufhof and Gerry
Weber in the upper mid-price range, and, in particular, Otto Versand and Klingel in the mail order
business. There has been a noticeable expansion in budget clothing chains over the past few
years. The extensive range of budget clothing on offer in the budget price range has resulted in
fierce price competition. Due to increased consumer awareness of social and ecological issues
A
c
1
0
4
7
0
8
p
u
0
2
0
P
r
o
o
f
7
:
2
7
.
5
.
1
1
B
/
L
R
e
v
i
s
i
o
n
:
0
O
p
e
r
a
t
o
r
D
a
d
16

(see also ‘‘The public’s perception and reputation of the Adler Group could be adversely affected or
damaged if the manufacturers of the products sold by the Adler Group fail to comply with
employment, social and recognised ethical or other standards’’) large discounters could also be
compelled to relinquish, to a certain degree, their aggressive low-price policies in favour of
introducing social and ecological standards. If the orientation of the discounter market changes, it
is possible that some discounters will become direct competitors of Adler in the lower mid-price
segment. In addition, large clothing and warehouse chains are often well known and have a strong
presence in the market, and therefore also have a large customer base and extensive financial
resources. These companies can use these advantages to finance extensive marketing campaigns
for their products, and can pursue aggressive pricing policies because of their large sales volumes.
In addition, large retailers of brand name clothing could become direct competitors in the Adler
Group’s market and price segment by pursuing an aggressive pricing policy. This could
substantially increase pricing pressure, which may result in a loss of market share and lower
margins for the Adler Group. The clothing market in the Group’s home market Germany is growing
only very slowly, which means that in this environment of predatory competition, the main potential
for expansion is to gain market share. The other markets in which the Adler Group does or could
do business reveal similar trends, not least because of the expansion of the types of competitors
described. If the Adler Group is unable to procure and market its products in this competitive
environment in accordance with the wishes of consumers, and at the same time remain highly cost
effective, existing customers may go elsewhere. Price competition has also intensified because of
the continually growing pricing pressure caused by imports from low-income countries, which has
fundamentally changed the structure of the German clothing market. This price competition could
have a negative effect on the Adler Group’s margins and profitability. The Adler Group may not be
in a position to withstand this competition. Even clothing chains which, having positioned
themselves differently in the market, do not currently compete directly with Adler, could be
restructured in the future and become competitors of Adler by offering a new product range. In
addition, new competitors could enter the market and gain market share at the Adler Group’s
expense. Adler is currently focussing on large-space retail concepts, i.e., the space occupied by its
stores is usually more than 1,000 m 2 . Other retailers could, in the future, increasingly look towards
realising large-space retail concepts and therefore start to compete with Adler for retail space. This
may mean that Adler is unable to expand its store network, or only at increased cost, and that
Adler’s growth will be slowed. Increased competition for large-space retail concepts could also
mean that Adler is unable to extend existing leases, or is only able to do so on less favourable
conditions. The occurrence of one or more of the aforementioned risks could have a material
adverse effect on the Adler Group’s financial condition and results of operations.
The Adler Group faces economic, political and other risks in overseas markets because it
procures a significant share of its stock from abroad. The Adler Group procures a significant
share of its stock from Asia and also operates clothing stores outside Germany, albeit to a limited
extent. The Company’s growth strategy includes expanding its foreign operations. This also
includes potential expansion to countries outside the euro zone, particularly Switzerland.
Adler’s suppliers predominantly manufacture abroad, particularly in Asia. Adler co-operates with
Metro Group Buying Ltd., Hong Kong (‘‘MGB’’), a subsidiary of the METRO Group, in order to
procure stock. The Adler Group faces a range of risks over which it has no real control, primarily
because of the substantial volume of stock procured from abroad. Exchange controls and currency
fluctuations, for example if a country ceases to peg its currency to another currency, and other
rules governing foreign investment, could interfere with business dealings with foreign
manufacturing and trading partners and suppliers. Adler may not be able to successfully use
currency hedges to wholly or partially hedge against risks arising from currency fluctuations. The
risks in the Company’s supply markets, particularly Asia, also include uncertain political, social,
economic and legal situations. Trading restrictions, the enactment of import quotas for textiles and
clothing, or an increase in customs duties or a tightening of customs regulations could significantly
disrupt imports from these countries. Other conditions relevant to foreign transactions and
investments such as infrastructure, qualified employees and economic stability could deteriorate.
The occurrence of one or more of these risks could be materially detrimental to the Adler Group’s
financial condition and results of operations.
Risks associated with the business – Company-related risks
The Adler Group is dependent on the development of fashion trends each year and on the
market being receptive to its lines of clothing. The Adler Group may not be able to predict
A
c
1
0
4
7
0
8
p
u
0
2
0
P
r
o
o
f
7
:
2
7
.
5
.
1
1
B
/
L
R
e
v
i
s
i
o
n
:
0
O
p
e
r
a
t
o
r
D
a
d
17

and seasonably respond to trends in the future. The Adler Group’s clothing range is specifically
targeted at the over 45s. The Adler Group’s success depends on its ability to continually offer
attractive fashion collections or new products that accord with the tastes and fit of its target group.
This is a particular risk when expanding into new international markets. The specific risk associated
with the Adler Group’s focus on this particular target group is whether it will be able to transform
current fashion trends, which are generally tailored to a younger clientele, into products that meet
the specific fitting requirements of the Adler Group’s customers and also match their tastes. To this
end, the Adler Group offers various lines of clothing, which are distinguished by the varying
degrees to which they are geared towards current trends, a certain fit, or special wishes of the
target group. There is a risk that one or more of these lines of clothing will not meet the needs
and tastes of the target group and hence will not sell well. The financial and personal resources
required to procure the lines of clothing could therefore be wholly or partially wasted. Unsold stock
could necessitate write-downs. The Adler Group’s success also depends on its ability to
seasonably identify the changing wishes and demands of its customers and adapt its collections
and lines of clothing to these changing trends at short notice. There is no guarantee that the Adler
Group will always be able to do this, or do it to a sufficient extent. If it cannot, the Adler Group’s
ability to sell its stock may be limited and its product range may lose its appeal. Unsuccessful
collections or lines of clothing could lead to significantly lower sales figures and margins, and could
also have a negative impact on demand for subsequent collections. This could substantially impair
the Adler Group’s competitive position, growth opportunities and profitability. The occurrence of one
or more of the aforementioned risks could have a material adverse effect on the Adler Group’s
financial condition and results of operations.
The Adler Group’s future growth will depend on its ability to maintain and successfully
expand its market position and customer base. Awareness of the Adler Group name and
existing customer loyalty programmes, particularly the Adler customer card, but also its own
brands, are an important way of securing customer loyalty and attracting new customers. Customer
loyalty can be achieved not only by offering high quality, attractive products and a good priceperformance
ratio, but also through appealing customer loyalty programmes. Increasing the
awareness and acceptance of the Adler brand helps to acquire new customers and gives sales a
boost. Successful customer loyalty programmes also enable the Company to develop a profile and
distinguish itself from its competitors. There is a risk that the Adler Group will not be able to
maintain or successfully expand its customer base. The customer loyalty programmes require
considerable marketing and advertising expenditure. The Adler Group may not be in a position to
dedicate the necessary resources to marketing and advertising. In addition, the substantial
resources spent by the Adler Group on their advertising spokespeople to promote brand awareness
and appeal and customer loyalty may not have the desired effect. It is possible that the
spokespeople used by the Adler Group will lose their positive public image, and this could have a
negative effect on the stock it sells. If the Adler Group is unable to permanently secure the loyalty
of its existing customers and attract new customers, its competitiveness and sales figures could
suffer greatly. The occurrence of one or more of the aforementioned risks could have a material
adverse effect on the Adler Group’s financial condition and results of operations.
The Adler Group faces risks as a result of its ties to third-party service providers in
connection with stock procurement. The Adler Group procures its stock from numerous
suppliers both within Europe and, to a substantial extent, from Asia. Even though it does not
depend on individual suppliers in Europe, the Adler Group’s business would be prejudiced if a
large number of its European suppliers went out of business at the same time, for example
because of global economic or political developments. The Adler Group might not be able to keep
a sufficient volume of stock in hand in order to make up for stock shortages. This could lead to a
loss of customers and revenues. Stock from Asia is predominantly purchased through MGB, so the
Adler Group has no direct influence on the procurement of this stock. The Adler Group therefore
depends on the proper and timely purchase, storage and transportation of stock by MGB. If these
processes are disrupted or interrupted, the stock required by the Adler Group may not be available
on time or at all. One of the consequences of the retail clothing trade’s dependence on the season
and weather conditions (see ‘‘The Adler Group’s business is subject to seasonal fluctuations and
weather conditions’’) is that stock that arrives late may no longer be sellable. This could materially
prejudice the Adler Group’s business. In addition, the Adler Group may not be able to meet
contractually agreed minimum purchase volumes, which could trigger damages payouts or
premature termination of the agreement by MGB. The agreement with MGB was extended until
2013, however there is no guarantee that the existing procurement arrangement will continue
A
c
1
0
4
7
0
8
p
u
0
2
0
P
r
o
o
f
7
:
2
7
.
5
.
1
1
B
/
L
R
e
v
i
s
i
o
n
:
0
O
p
e
r
a
t
o
r
D
a
d
18

permanently on the favourable supply terms that currently apply. If MGB raises supply prices
sharply, the Adler Group’s sales and also its margins could be seriously affected. If MGB, as the
procurer of stock from Asia, goes out of business, the Adler Group might not be able to
compensate quickly for the loss of its partner, or not without substantial additional costs. It is by no
means certain that the Adler Group would be able to arrange procurement through other third-party
service providers, procurement agents or directly with the respective manufacturers – at least not
without incurring substantial expense – without facing supply interruptions, poor quality or cost
increases together with the associated plunge in sales and margins. Furthermore, it is possible that
Adler’s gross profits, particularly in its procurement markets, will fall in the future, for example as a
result of increasing cotton or commodities prices, energy costs and/or wage costs. Adler may be
unable to pass on some or all of these price rises to its customers. The occurrence of one or
more of the aforementioned risks could have a material adverse effect on the Adler Group’s
financial condition and results of operations.
The Adler Group faces risks associated with disruptions to its stock management systems
or to logistics services outsourced to an external logistics services provider. MOTEX Mode-
Textil-Service Logistik und Management GmbH (‘‘MOTEX’’) centrally handles, processes, tags,
finishes off semi-finished products, consigns, distributes and transports stock nationally and
internationally for the Adler Group with its own and third-party vehicles. MOTEX was formerly a
subsidiary of Adler Modemärkte AG. This gives rise to additional risks for the Adler Group over
and above the general logistics risks posed by, in particular, strikes and natural disasters, which
can hinder and delay the transportation of stock, particularly by sea or by air. After MOTEX was
spun-off, the Adler Group no longer had any direct influence on the logistics services and activities
of MOTEX. Therefore, the Adler Group is dependent on MOTEX meeting its contractual obligations
and processing and delivering the Adler Group’s stock on time. The MOTEX spin-off has increased
the risk that errors will occur when the Adler Group’s stock is processed, because MOTEX now
has a more diverse customer base. One of the consequences of the retail clothing trade’s
dependence on the season and weather conditions (see ‘‘The Adler Group’s business is subject to
seasonal fluctuations and weather conditions.’’) is that stock that arrives late may no longer be
sellable. Additional customs duties or tolls either in Germany or abroad or rising fuel prices could
also make logistics services more expensive. The cost of these services could also increase
because competitors of the Adler Group or other third parties may be prepared to pay higher
prices for MOTEX’s logistics services. Any disruption, interruption or substantial price rise in the
logistics chain could prejudice the Adler Group’s business and be materially detrimental to the
Adler Group’s financial condition and results of operations.
The Adler Group’s operations may be disrupted or interrupted. The Adler Group’s success
heavily depends on the efficient and uninterrupted operation of its IT systems. As IT systems are
particularly susceptible to damage, programming errors, power outages, fire, construction work and
similar physical interventions, it is impossible to completely rule out any disruption or interruption to
the system. It is also possible that the IT systems will be compromised by electronic or physical
attacks by third parties or computer viruses or similar attacks, despite existing electronic and
physical security systems. Any failure of the IT systems would be seriously detrimental to, in
particular, orders, warehousing, co-operation with external logistics services providers, online sales
and cashier services in the Adler stores. This could lead to stock shortages and to delays or
failures to deliver stock purchased online. As a result, the Adler Group may not be able to keep
the necessary product range in stock in the Adler stores or meet existing delivery obligations. This
could lead to a loss of customers and sales. The occurrence of one or more of the aforementioned
risks could have a material adverse effect on the Adler Group’s financial condition and results of
operations.
The Adler Group’s growth strategy could be unsuccessful or progress more slowly than
planned. In particular, the Adler Group may be unable to continue to grow organically or
take over and successfully integrate other companies. The Adler Group plans to expand its
business, primarily in Germany, but also abroad in the medium term. The Adler Group may be
unable to increase its market share through organic growth, or its expansion may be delayed. In
addition, the Adler Group may also be unable to expand through the acquisition of other
companies or by acquiring suitable retail space on reasonable conditions. The Adler Group sees
the acquisition of other companies as a potential opportunity to consolidate its market position. The
Adler Group is in competition with other companies when it comes to acquisitions, and its
competitors may prove to have greater financial resources or otherwise be able to assert a
A
c
1
0
4
7
0
8
p
u
0
2
0
P
r
o
o
f
7
:
2
7
.
5
.
1
1
B
/
L
R
e
v
i
s
i
o
n
:
0
O
p
e
r
a
t
o
r
D
a
d
19

stronger bargaining position than the Adler Group. The Adler Group may be unable to identify
companies that could be potential takeover targets or negotiate reasonable terms of acquisition.
The Adler Group may not be able to successfully run the companies it takes over. The Adler
Group’s products may not match fashion trends in foreign countries. This could jeopardise the
financing of acquired companies, as well as Adler’s future growth. The Adler Group may also be
unable to successfully integrate the acquired companies in the Adler Group or take advantage of
the expected synergies. The integration of companies is associated with a range of risks such as
the integration of production and distribution processes and staff, unforeseeable expenses and
prejudice to the existing business. Adler primarily focuses on large-space retail concepts, i.e. the
space occupied by its stores is usually more than 1,000 m 2 . Adler stores are generally located
outside the city centre, but nevertheless generally contain an assortment of stock targeted at inner
city customers. Adler may not be able to obtain the necessary approvals on a sufficient scale. Any
further expansion of the store network in inner city areas as a result may not be well received by
the Adler Group’s customers. This could impair the Adler Group’s growth. The occurrence of one
or more of the aforementioned risks could have a material adverse effect on the Adler Group’s
financial condition and results of operations.
The development of retail space is associated with considerable financial expense and
uncertainty with regard to future profitability. The Adler Group plans to expand its store
network both domestically and abroad. This also increases the sales risk. It is possible that
incorrect assumptions will be made in the planning process, in evaluating the appeal of particular
locations and customer potential and, on that basis, the actual sales potential of a new Adler store.
If sales fall short of expectations, there may be surplus stock, which would translate into a drop in
revenues. Furthermore, the opening of new stores requires greater capital expenditure and
increases running costs for rent and staff. It may only be possible to open new Adler stores if the
Company agrees to pay exorbitant rents. This could have an adverse effect on Adler’s results and
liquidity in particular. There is also no guarantee that the new Adler stores can be operated at a
profit. To this extent, the Adler Group’s expansion strategy is coupled with a heightened
entrepreneurial risk. The occurrence of one or more of the aforementioned risks could have a
material adverse effect on the Adler Group’s financial condition and results of operations.
Defective stock could adversely affect the market’s acceptance of the Adler Group’s
products and trigger damages claims against the Adler Group. Adler’s target group expects
high quality. The Adler Group’s products could be defective, which could lessen the market’s
acceptance of its products and thus also adversely affect sales. Where there are several instances
of product defects within a short space of time, the reputation of the Adler Group’s products could
be damaged, particularly given the quality standards of its customers, and this could lead to a
drastic decline in sales. The Company procures its products exclusively from third party
manufacturers. Because of its practice of outsourcing the entire logistics process, the Adler Group
may not always be able to identify and rectify defects in the quality of the products it procures
early enough (see ‘‘The Adler Group faces risks as a result of its ties to third-party service
providers in connection with stock procurement.’’ and ‘‘The Adler Group faces risks associated with
disruptions to its stock management systems or to logistics services outsourced to an external
logistics services provider.’’), and to this extent the Adler Group is also dependent on the quality
controls of its suppliers. The Company may have rights of recourse if products purchased from its
suppliers are defective. However, it is possible that, due to its contractual agreements with
suppliers, the Adler Group will not be able to seek redress to the full extent or be able to enforce
any or part of its rights of recourse against its suppliers or other third parties for legal, financial or
other reasons. In particular, defects in a particular line or ongoing quality defects may do
permanent damage to the reputation of the Adler Group’s products. It may not necessarily be
possible to fully make up for this damage. The Adler Group may not be able to implement other
measures to offset any damage to reputation and loss of sales associated with defective products.
As a result, new customer numbers could stagnate and existing customers may turn to other
competitors, which could lead to a loss of market share. The Adler Group may be faced with
product liability claims, warranty claims and damages claims if its products are defective. Where
such claims are not covered by existing third-party liability insurance, the Adler Group could be
burdened with substantial costs (see ‘‘The Adler Group’s existing insurance protection may be
inadequate.’’). If all items of a certain make are defective, a recall of previously sold stock may be
required, which would trigger substantial costs. The use of illegal chemicals, even if unintentional,
could also give rise to (criminal) legal sanctions, including onerous fines and/or product liability
damages claims against the Adler Group. There is no guarantee that provisions have been set
A
c
1
0
4
7
0
8
p
u
0
2
0
P
r
o
o
f
7
:
2
7
.
5
.
1
1
B
/
L
R
e
v
i
s
i
o
n
:
0
O
p
e
r
a
t
o
r
D
a
d
20

aside to a sufficient extent for this purpose or that provisions already set aside will be adequate to
cover such claims, particularly if customers sustain consequential loss or damage far in excess of
the value of the products sold by the Adler Group. The occurrence of one or more of the
aforementioned risks could have a material adverse effect on the Adler Group’s financial condition
and results of operations.
The Adler Group’s liquidity could suffer significantly if a substantial portion or even all
outstanding discount entitlements are redeemed within a very short timeframe. Holders of
the Adler customer card can obtain a 3% discount on the price when they purchase Adler
products, provided they present the card when they make their purchase. Customers may elect to
claim their discount entitlement as a discount on their next purchase or in cash. Discount
entitlements expire on 31 December of the calendar year following the year of purchase. Based on
past experience, the Company assumes that not all customers will redeem their discount
entitlement, and that the redemption of discount entitlements will occur across an extended period.
The Adler Group’s liquidity could therefore suffer significantly if a substantial portion or even all
outstanding discount entitlements are redeemed within a very short timeframe.
The Adler Group’s business is subject to seasonal fluctuations and weather conditions. The
Adler Group’s sales, profits, and also its financing requirements are subject to seasonal
fluctuations. For example, sales and profits in the second half of the year, particularly in the fourth
quarter, tend to be higher than in the other quarters because more winter clothing is sold, and
winter clothing generally has a higher average price per item. Moreover, the product range in the
spring and summer months includes a comparatively higher proportion of cheaper products such as
T-shirts. As a result of the seasonal nature of demand for clothing, the Adler Group’s peak periods
for purchases of goods and therefore higher financing requirements are in the months of February
and March, and August and September. Adler endeavours to reduce its peak financing
requirements and also to manage its liquidity by agreeing long-term target payment dates, with
payment due in some cases only after the products have been sold. Nevertheless, these
fluctuations may have a substantial adverse effect on interim results figures and it is possible that
results will be negative, particularly in the first quarter of the financial year. These fluctuations may
become more extreme in future. The retail clothing trade is also heavily dependent on weather
conditions. Previously, consumers would buy new clothes at the beginning of each season
regardless of weather conditions, whereas consumers today are showing a clear tendency towards
impulse buying. These days, consumers expect a range of clothing to suit the weather conditions.
This is why summer stock is still in demand if the autumn is warm, while if winter arrives late, the
demand for winter clothing can push into spring. This lessens the Company’s ability to plan which
items to keep in stock, and gives rise to the risk that its purchasing and warehousing policies will
be flawed because of the weather. The ability to compare the sales and results of each individual
quarter is therefore limited. These figures cannot be used to draw reliable conclusions with regard
to future results trends, and cannot be aggregated and extrapolated to predict net income for the
year. If actual quarterly results deviate from the forecast, the quoted market price of Adler
Modemärkte AG shares could become extremely volatile. This could have a negative impact on the
Adler Group’s liquidity situation and its refinancing capabilities, and thus a material adverse effect
on its financial condition and results of operations.
The public’s perception and the reputation of the Adler Group could be adversely affected
or damaged if the manufacturers of the products sold by the Adler Group fail to comply
with employment, social and recognised ethical or other standards. The Adler Group procures
a significant share of its stock from low-income countries in Asia, including from so-called free
export zones, which give locally domiciled companies privileges and preferential treatment, such as
exemptions from customs duties and tax breaks, as well as various subsidies. Production in these
countries is characterised by intense manual labour, large numbers of workers, and a great deal of
time and pricing pressure. The employment conditions and social standards experienced by
employees in these countries differ vastly from those by which European employers are bound
and, in some cases, are criticised by non-government organisations like the International Labour
Organisation (ILO). The introduction of acceptable uniform employment conditions and social
standards is complicated by the existence of differing legal systems and political and cultural
factors. The Adler Group has assurances from some of its suppliers that the textiles used comply
with ecological standards such as the ‘‘Oeko-Tex Standard 100’’, and that the goods supplied were
not manufactured using any type of labour that is exploitative, harmful to health, akin to slavery or
otherwise against human dignity, such as child labour, forced labour or bonded labour. However, it
A
c
1
0
4
7
0
8
p
u
0
2
0
P
r
o
o
f
7
:
2
7
.
5
.
1
1
B
/
L
R
e
v
i
s
i
o
n
:
0
O
p
e
r
a
t
o
r
D
a
d
21

is possible that, despite the standards imposed and the fact that MGB has been interposed in
order to uphold these standards, the goods sold by the Adler Group may still be produced using
child and forced labour and exploitative methods, or in violation of ecological standards and
regulations. It is also possible that service providers engaged by Adler, such as cleaning firms, do
not observe employment, ethical, social and ecological standards or the standards of the Business
Social Compliance Initiative (‘‘BSCI Standards’’) in connection with the employment of their
workers. Consumers are becoming increasingly aware of breaches of ethical, social and ecological
standards in the manufacture of consumer goods, and take such things into account when making
purchase decisions. Such matters could – regardless of whether the Adler Group is in a position to
identify and influence the relevant matter – be seriously detrimental to sales of the goods in
question and also have a negative impact on the public’s perception of the Adler Group, and have
a material adverse effect on the Adler Group’s financial condition and results of operations.
Unexpectedly high increases in the wages payable to employees covered by collective
bargaining agreements in the retail sector could have a material adverse effect on Adler’s
wage and salary structure. Adler has entered into a supplemental collective bargaining agreement
(company internal wage agreement) for all of its workers employed in Germany with the German
trade union for the services sector (vereinte Dienstleistungsgewerkschaft, ‘‘ver.di’’). This company
internal wage agreement provides that the wages to be paid by Adler to its employees in 2011 and
2012 must be increased by 50% in accordance with the wage rises set forth in the retail sector
collective bargaining agreement for Bavaria. From 2013 onwards, wage rises will be based on the
retail sector collective bargaining agreement for North Rhine-Westphalia. If the retail sector
collective bargaining agreements referred to above provide for wage increases in excess of the
Company’s expectations, this could have a material adverse effect on the Adler Group’s wage and
salary structure and thus also on its financial condition and results of operations.
The Adler Group’s future success depends on executives and other qualified employees.
The Adler Group’s success substantially depends on executives and other qualified employees, and
particularly on the members of the Company’s Executive Board. The Company’s proposed growth
and the successful operation of the Adler stores requires qualified executives and employees.
Companies compete for qualified staff. Executives and other qualified employees could switch to a
competitor or establish their own company or otherwise compete with the Adler Group. If the Adler
Group is unable to retain qualified staff, solicit additional qualified staff or provide existing staff with
further training, the Company may experience problems in achieving its strategic and commercial
objectives. The occurrence of one or more of the aforementioned risks could have a material
adverse effect on the Adler Group’s financial condition and results of operations.
The Adler Group may be unable to adequately upgrade its in-house organisational and
reporting structures, risk monitoring and risk management systems and its financial
accounting or adapt them to keep up with its rate of growth. The continual upgrade of internal
organisational structures and management processes so as to cope with the Adler Group’s
restructure and its existing and planned future growth will place high demands on the Company
and tie up management resources to a significant extent. The finance (including accounting,
controlling, legal and internal audit) and investor relations departments will be particularly affected.
It cannot be guaranteed that the Adler Group will be able to meet these increased demands to an
adequate extent or within a reasonable timeframe, particularly those relating to the risk control
system now mandatory under § 91 of the German Stock Corporation Act (Aktiengesetz, ‘‘AktG’’)
due to the Company’s change in legal form, and it is therefore possible that failings and
undesirable developments may occur within the aforementioned departments, which are not
identified in time and therefore have a material adverse effect on the Adler Group’s financial
condition and results of operations. The publicity and post-admission obligations stemming from the
proposed IPO will also place increased demands on the Adler Group’s financial accounting system.
Any breach of the Adler Group’s reporting and post-admission obligations could, as a result of
investors losing confidence in the Company, have a material adverse effect on the quoted market
price of Adler Modemärkte AG’s shares. If the Company is unable to seasonably identify omissions
or shortcomings in its risk monitoring or risk management system, or is unable to implement an
adequate system in time, then undesirable developments or bad decisions, either commercially or
administratively, may result. The occurrence of one or more of the aforementioned risks could have
a material adverse effect on the Adler Group’s financial condition and results of operations.
The Adler Group’s existing insurance protection may be inadequate. The Adler Group has
taken out insurance to cover various risks associated with its business, and such insurance is
A
c
1
0
4
7
0
8
p
u
0
2
0
P
r
o
o
f
7
:
2
7
.
5
.
1
1
B
/
L
R
e
v
i
s
i
o
n
:
0
O
p
e
r
a
t
o
r
D
a
d
22

subject to agreed maximum sums insured and contractually defined exclusions of liability, which the
Company believes are standard. The Adler Group decides on the type and scope of insurance
protection based on a commercial cost/benefit analysis in order to cover what it perceives to be
the significant risks. The Company cannot, however, guarantee that the Adler Group will not
sustain losses or be exposed to claims going beyond the type or scope of existing insurance
protection. The Adler Group could sustain damage for which it is not or only inadequately insured.
If several insured events occur or major damage is sustained, the Adler Group’s premiums may
increase. There is no guarantee that the Adler Group will be able to adequately insure the risks
associated with its business on commercially feasible terms in the future. The occurrence of one or
more of the aforementioned risks could have a material adverse effect on the Adler Group’s
financial condition and results of operations.
The Adler Group faces risks from changes in interest rates, which could adversely affect
the Adler Group’s results. Even though the Adler Group’s debt capital financing is minimal at the
moment, it is possible that it will seek financing to a greater extent in the future in the form of
credits or loans, some or all of which may be subject to variable interest rates. Interest rate swaps
can be used to hedge interest rate risks. However, to the extent that hedging transactions are not
entered into, changes in interest rates could have a negative impact on (i.e. increase) the amount
of interest payments for existing debt and the costs of refinancing those debts. Interest rate swaps
could also generate losses, which would have to be recognised in the accounts accordingly. The
occurrence of one or more of the aforementioned risks could affect the Adler Group’s results and
thus have a material adverse effect on the Adler Group’s financial condition and results of
operations.
The Adler Group faces risks associated with using external brands, which could adversely
affect the Adler Group’s results. Apart from its own brands, Adler has increasingly offered
external brands in certain Adler stores since 2010, including s.Oliver, Tom Tailor, Street One,
Cecil, Mexx and OneTouch. The ratio of external to own brands sold by Adler may not be
appropriate. If customers increasingly buy Adler’s own brands, the owners of the respective
external brands may refuse any further co-operation with Adler, which could diminish the appeal of
Adler stores. If customers increasingly prefer external brands, Adler’s margins may fall. The
occurrence of one or more of the aforementioned risks could affect the Adler Group’s results and
thus have a material adverse effect on the Adler Group’s financial condition and results of
operations.
Legal and tax risks
The Adler Group faces risks in connection with Adler store leases. The Adler Group has
leased the vast majority of its Adler stores. The respective lease agreements are generally entered
into for a long fixed term. This may make it impossible for the Adler Group to close or relocate
unprofitable stores quickly and at an acceptable cost. The Adler Group could therefore be tied to
unprofitable locations for long periods, or only be able to give them up by paying substantial
amounts in compensation. The rent for the leased retail space is usually linked to the consumer
price index. Any increase in the consumer price index leads to an amendment of the existing lease
agreements and an increase in the rent payable by Adler. In addition, an increase in general rent
levels for new leases could give rise to costs in excess of those budgeted. There is also the
possibility that the Company’s reorganisation as a stock corporation, or the change in Adler’s
ownership in the lead-up to or in the course of the IPO, will prompt lessors to require security for
their leases, a requirement which they have hitherto waived. This could have an adverse effect on
the Adler Group’s liquidity and/or results. Rent levels in certain locations in which the Adler Group
has stores could also experience a general decline, but depending on the store, the lessor and the
terms of the lease, the Adler Group may not be able to take advantage of falling rents through a
lease amendment or rent reduction. This could prevent the Adler Group from realising cost savings
and thus have a negative impact on the Adler Group’s competitiveness and results of operations.
The Adler Group has also assumed extensive property maintenance and repair obligations under
certain lease agreements. As a result, the Adler Group could face extensive costs for repair work,
which may be difficult to calculate. It is also possible that the lessor under some lease agreements
may have a right to terminate the lease before expiry of the intended term because of noncompliance
with the statutory written form requirement, or because of the change in Adler’s
ownership in the lead-up to or in the course of the IPO. Consequently, if leases are terminated, the
Adler Group may be compelled to give up a range of locations at short notice. This relates to one
location in particular, where the lessor has already terminated its existing lease with Adler effective
A
c
1
0
4
7
0
8
p
u
0
2
0
P
r
o
o
f
7
:
2
7
.
5
.
1
1
B
/
L
R
e
v
i
s
i
o
n
:
0
O
p
e
r
a
t
o
r
D
a
d
23

31 December 2011, and could bring about a drastic decline in sales and customer numbers.
Moreover, the Adler Group has undertaken modifications to many of the Adler stores it leases,
which it will be required to remove or reverse if the leases are terminated. The termination of
leases could thus give rise to substantial costs for the Adler Group. The occurrence of one or
more of the aforementioned risks could have an adverse effect on the Adler Group’s financial
condition and results of operations.
Stock procurement could become more difficult by virtue of existing or future import
restrictions on goods from the Adler Group’s supply markets. The Adler Group purchases a
significant share of its stock from Asia. In the past, the EU has introduced import quotas for certain
products from certain non-EU countries in order to strengthen certain industrial sectors within the
EU. The Company cannot rule out the possibility that existing or future import restrictions on goods
from the Adler Group’s supply markets will result in restrictions or increased costs when stock is
purchased outside the EU (because of customs duties, or the need for procurement from
alternative and more costly sources, for example). Such import restrictions could have a material
adverse effect on the Adler Group’s financial condition and results of operations.
The legal relationship between the Adler Group and its customers is based on standard
terms designed for incorporation in a large number of contracts. Individual errors in the
drafting of such terms could therefore affect numerous legal relationships. The Adler Group
has a contractual relationship with many customers. In the context of online sales and customer
loyalty programmes in particular, the contracts are often drafted on the basis of certain terms which
are intended to apply to a variety of cases. It is possible that individual provisions contain errors,
or that consents to the use of personal information in connection with customer loyalty programmes
are invalid. Given the sheer number of customer relationships, this could have serious adverse
legal consequences for the Adler Group. The occurrence of one or more of the aforementioned
risks could have a material adverse effect on the Adler Group’s financial condition and results of
operations.
The Adler Group’s compliance system and monitoring capabilities may not be sufficient in
order to prevent legal infringements or to expose past infringements, or to prevent damage
from economic crime. It is possible that employees or agents of the Adler Group grant or granted
benefits in the course of contract negotiations when initiating business dealings, or engage or
engaged in similar unfair trade practices. It is also possible that the customer information acquired
in connection with customer loyalty programmes may have been used or disclosed to third parties
in contravention of privacy laws. Adler may not have paid customs duties on time, or may fail to
do so in future. It is also possible that Adler has imported stock into the EU in contravention of the
Foreign Trade and Payments Act Implementing Regulation (Außenwirtschaftsverordnung, ‘‘AWV’’),
or will do so in the future. This could result in legal sanctions such as fines against the Adler
Group, the members of its corporate bodies and/or employees, and to third-party damages claims,
and also significantly damage the Adler Group’s reputation. The Adler Group’s compliance system
and monitoring capabilities may not be sufficient in order to prevent such legal infringements or to
expose past infringements. In addition, it is possible that employees of the Adler Group will cause
loss or damage to the Company through economic crime (fraud). The occurrence of one or more
of the aforementioned risks could have a material adverse effect on the Adler Group’s financial
condition and results of operations.
The Adler Group may not be able to adequately protect its intellectual property. The Adler
Group’s commercial success is reliant on its ability to protect its intellectual property, primarily its
trademarks. If the Adler Group is unable to defend the existence of its intellectual property rights,
its business model, which is founded on the distinctiveness of its brands, and thus also its
competitiveness and sales could be materially impaired, because customer loyalty and Adler’s
appeal to new customers also depend on customer awareness and acceptance of its brands. It is
also possible that third parties will infringe the Adler Group’s trademarks. The Adler Group has
licensed various companies to use its trademarks. The licence agreements generally provide that
the licensee must deliver the goods manufactured and labelled with the licensed trademark
exclusively to buyers arranged by the Adler Group or to the Adler Group itself. Trademark
infringement could arise, for example, if the licensee supplies the goods to non-prearranged buyers
or continues to use the trademark after termination of the licence agreement. Furthermore, the
Adler Group cannot guarantee that it will not fall prey to product piracy and be unable to effectively
defend itself against such piracy for legal, financial or other reasons. In particular, the Adler
Group’s commercial success could be prejudiced if it fails to detect infringements of its intellectual
A
c
1
0
4
7
0
8
p
u
0
2
0
P
r
o
o
f
7
:
2
7
.
5
.
1
1
B
/
L
R
e
v
i
s
i
o
n
:
0
O
p
e
r
a
t
o
r
D
a
d
24

property rights, or fails to do so early enough. Product piracy could have a negative impact on the
Adler Group’s sales figures in the relevant sales markets and also dilute and thus negatively affect
the prestige of its brands. The enforcement or defence of trademarks can also give rise to
considerable costs and tie up management resources to a substantial extent. The Adler Group has
engaged Thomson CompuMark to monitor its significant trademarks throughout Europe. As part of
its engagement, Thomson CompuMark informs the Adler Group of newly registered third-party
trademarks that could potentially infringe trademarks owned by the Adler Group. Nevertheless, the
action taken by the Adler Group may not be sufficient to prevent the infringement of its
trademarks. The occurrence of one or more of the aforementioned risks could have a material
adverse effect on the Adler Group’s financial condition and results of operations.
The Adler Group could infringe third-party intellectual property rights. The Adler Group itself
could infringe the intellectual property rights of third parties. The Adler Group has entered into
agreements governing trademark co-existence and prior rights with numerous companies, and
these agreements concern, among other things, the use of various Adler Group trademarks. It is
possible, for example, that the Adler Group may breach these trademark co-existence and prior
rights agreements and thus also third-party trademarks. The Adler Group registers current fashion
trends and incorporates them in its lines of clothing in a form that matches the expectations of its
target group. In so doing it is possible that stock sold by the Adler Group will infringe third-party
intellectual property rights, particularly registered designs or trademarks. Such infringements may
be met with claims for injunctive relief, information disclosure, damages or disposal and/or
destruction of the Adler Group’s products. This would mean that the Adler Group would have to
remove already acquired stock from the market or invest substantial amounts in order to obtain a
licence. This could, in turn, be prejudicial to its business and result in a steep fall in sales and a
reduction of margins. It is also possible that the planned upgrade and revival of products
necessary for Adler’s future commercial success will be hampered in the future by third-party
property rights. The occurrence of one or more of the aforementioned risks could be materially
detrimental to the Adler Group’s financial condition and results of operations.
The Adler Group faces competition law risks. It is possible that the Adler Group has already
contravened or will in the future contravene competition law provisions, particularly anti-trust and
public procurement laws, or that third parties will make allegations of this nature, whether founded
or not. In particular, it is possible that competitors or customers will accuse the Adler Group of
abusing a dominant market position, price fixing or other anti-competitive conduct. This could lead
to investigations by competition authorities or law enforcement agencies, the imposition of criminal
or regulatory sanctions such as fines, or orders for the Adler Group to pay damages. There is also
the risk that the Adler Group’s employees involved in the matter will be subject to criminal
prosecution. It is also possible that any investigations by competition authorities or law enforcement
agencies will have a negative impact on the Adler Group’s reputation. The occurrence of one or
more of the aforementioned risks could have a material adverse effect on the Adler Group’s
financial condition and results of operations.
The Adler Group could, for past periods, be required to make additional tax payments or
additional social security contributions, or face liabilities from commitments made under its
company pension scheme, or be required to repay government grants. The Adler Group is
subject to periodic audits by the tax office and social security institutions. Although the Company
believes that all companies in the Adler Group have always filed complete and correct tax returns
and have paid the correct amount of tax in each case and duly paid social security contributions, it
is possible that additional payments and interest on such additional payments will be imposed if the
tax authorities, particularly after a tax audit, or social security institutions take a different view of
the facts. The Adler Group’s structure has changed in recent years and, in particular, subsidiaries
have been sold to or acquired by parties related to the Adler Group. Moreover, a profit and loss
transfer agreement between the Company (the controlled entity) and its former shareholder,
AMODA GmbH (the controlling entity), was terminated effective 31 December 2010. Various legal
arrangements exist or existed between Adler Group companies and parties related to them. Since
the tax authorities have not yet fully reviewed these structural changes and arrangements between
companies within the Adler Group as well as between companies within the Adler Group and
parties related to them, it is possible that the Company will be required to make additional tax
payments, incidental tax payments (e.g. interest), and/or face greater tax liability in the future than
currently expected, if the tax authorities assess the restructuring measures and arrangements
differently. The Company is also unable to rule out the possibility that liabilities associated with
A
c
1
0
4
7
0
8
p
u
0
2
0
P
r
o
o
f
7
:
2
7
.
5
.
1
1
B
/
L
R
e
v
i
s
i
o
n
:
0
O
p
e
r
a
t
o
r
D
a
d
25

commitments under the company pension scheme will be higher than currently reported in the
Company’s financial statements, or that government grants awarded to Adler in the past will have
to be repaid for personnel reasons. The occurrence of one or more of the aforementioned risks
could have a material adverse effect on the Adler Group’s financial condition and results of
operations.
Risks in connection with the Offering
Future sales of shares of the Company or comparable transactions by the Selling
Shareholder could adversely affect the share price. After full placement of all the Offered
Shares (excluding exercise of the Greenshoe Option), the Selling Shareholder will continue to hold
approximately 45.4% (around 37.2% if the Greenshoe Option is exercised in full) of the Company’s
share capital. The sale of some or all of the shares held by the Selling Shareholder after the
Offering has been implemented could have a material adverse effect on the stock market price of
the Company’s shares. The Selling Shareholder has undertaken vis-à-vis the Global Co-ordinator
that, for a period of twelve months from the commencement of trading in the shares, it will not sell
any other existing shares of the Company or effect comparable transactions without the Global Coordinator’s
consent. If the Selling Shareholder should nonetheless take such measures, regardless
of the timing of such transactions and the consent of the Global Co-ordinator, or if the market
should become convinced that such measures could be taken, this could have a material adverse
effect on the stock market price of the Company’s shares and therefore make it more difficult for
the Company to raise further capital or only allow the Company to do so at unfavourable terms.
Such sales could also make it more difficult for the Company in the future to issue new shares at
a point in time and price it considers appropriate.
The Selling Shareholder may continue to exercise significant influence over Adler
Modemärkte AG and the interests of the Selling Shareholder could conflict with those of the
rest of the shareholders. After full placement of all the Offered Shares (excluding exercise of the
Greenshoe Option), the Selling Shareholder will continue to hold approximately 45.4% (around
37.2% if the Greenshoe Option is exercised in full) of the Company’s share capital. The interests
of the Selling Shareholder could conflict with those of the rest of the shareholders. Depending on
the attendance at the Company’s Annual General Meeting, the Selling Shareholder could still have
a significant influence on the approved resolutions and could push through the adoption of
resolutions requiring only a simple majority of the votes cast regardless of how the other
shareholders in attendance vote solely by virtue of the voting interest it holds. Such resolutions
include, for example, the composition of the Supervisory Board, the decision on the appropriation
of profits (and thus the decision as to the payment of dividends), the ratification of the acts of the
members of the Executive Board and Supervisory Board, as well as decisions on certain key
capital measures. The concentration of shareholdings could have an adverse effect on the stock
exchange price of the Company’s shares and thus make it more difficult for the Company to raise
further capital or only allow it to do so at unfavourable terms. The Selling Shareholder or its
affiliates could in the future acquire equity interests in competitors of the Adler Group. This could
intensify potential conflicts of interest between the Selling Shareholder and the rest of the
shareholders. The occurrence of one or more of the aforementioned risks could have a material
adverse effect on the Adler Group’s financial condition and results of operations.
Future capital measures could lead to substantial dilution of the interests held by the
shareholders in the Company. Future capital increases, particularly those excluding pre-emptive
subscription rights of shareholders, could lead to dilution of the shareholders’ interests in the
Company. If the Company were to take measures to raise additional equity, if applicable by the
issue of shares after the exercise of conversion rights or options from convertible bonds or
warrant-linked bonds possibly still to be issued or the acquisition of other companies or equity
interests in companies in exchange for shares of the Company, as well as the possible issue of
shares based on employee stock option plans, or were to propose such measures to the Annual
General Meeting, this could operate to dilute the interests held by shareholders or have a material
adverse effect on the stock market price of the Company’s shares. The Company has undertaken
that, for a period of 12 months from the commencement of trading in the Company’s shares, it will
not directly or indirectly offer or sell shares of the Company, announce any such offer or sale or
take any action deemed the economic equivalent of a sale without the Global Co-ordinator’s
consent. However, no assurance can be given that the Company will not take such action or
propose such measures to the Annual General Meeting within this 12-month period or at a later
A
c
1
0
4
7
0
8
p
u
0
2
0
P
r
o
o
f
7
:
2
7
.
5
.
1
1
B
/
L
R
e
v
i
s
i
o
n
:
0
O
p
e
r
a
t
o
r
D
a
d
26

point in time or that the market will not become convinced that this will occur. This could have a
material adverse effect on the stock market price of the Company’s shares.
The Company’s Offer Price is expected to significantly exceed the proportional book value
of the equity per share. The Offer Price to be paid by investors acquiring shares of the Company
under the Offering is expected to be well over the proportional net book value of Adler
Modemärkte AG’s consolidated tangible assets attributable to one share. The Offer Price therefore
implies a market capitalisation that significantly exceeds the book value of the equity. There is no
guarantee that the price at which Adler Modemärkte AG’s shares are traded on the Frankfurt Stock
Exchange after the Offering will reach the valuation level implied by the Offer Price. Nor is there
any guarantee that the share price can be maintained if it should reach the valuation level implied
by the Offer Price.
No guarantee can be given that active or liquid trading in the Company’s shares will
develop and the share price could be volatile. Before the Offering, there was no public market
for Adler Modemärkte AG’s shares. The Offer Price will be determined and set by the Global Coordinator
in consultation with the Company and the Selling Shareholder on the basis of the bookbuilding
procedure. The Offer Price determined in this way may not correspond to the price at
which the Adler Modemärkte AG shares are traded on the Frankfurt Stock Exchange after the
Offering; instead, the share price could fall significantly below the issue price. No guarantee can be
given that active trading in the shares will develop or continue after the Offering. After the Offering,
the share price of the Adler Modemärkte AG shares may be exposed to substantial fluctuations in
particular due to the interaction of supply of and demand for the Company’s shares or fluctuations
in the actual or forecast operating results, adjustments to any profit forecasts or failure to meet
analysts’ expectations, changes in general economic conditions or the general legal framework for
Adler Modemärkte AG as well as other factors, including the development of any of the risks
described in this Offering Memorandum. The number of shares in free float, fluctuation in the
Group’s results, economic volatility and the general performance on the financial markets
(regardless of the Adler Group’s results and financial condition) could lead to substantial fluctuation
in and have a material adverse effect on the share price. Similarly, general fluctuations in stock
prices, particularly of companies operating within the same industry as Adler Modemärkte AG, or
any deterioration in the general capital markets environment, for example due to political unrest in
Germany or abroad, or due to natural disasters, could lead to price pressure on the shares of
Adler Modemärkte AG without this necessarily being attributable to the business or the financial
condition and results of operations of Adler Modemärkte AG.
The Offering may not take place. The Underwriting Agreement stipulates that the Global Coordinator
may terminate the Underwriting Agreement under certain circumstances. If the
Underwriting Agreement were to be terminated, the Offering would not take place. Claims relating
to any securities commissions already paid and costs incurred by any investor in connection with
the subscription are controlled solely by the legal relationship between the investor and the
institution to which the investor submitted its order. Any allotments already made to investors will
be invalidated. Investors have no claim to delivery of the shares of Adler Modemärkte AG in this
event. Any investors who have made short sales would bear the risk of not being able to cover
their positions.
A
c
1
0
4
7
0
8
p
u
0
2
0
P
r
o
o
f
7
:
2
7
.
5
.
1
1
B
/
L
R
e
v
i
s
i
o
n
:
0
O
p
e
r
a
t
o
r
D
a
d
27

GENERAL INFORMATION
Responsibility for the content of the Offering Memorandum
Pursuant to § 5 (4) German Securities Prospectus Act (Wertpapierprospektgesetz, ‘‘WpPG’’), Adler
Modemärkte AG, Haibach (the ‘‘Company’’ or ‘‘Adler Modemärkte AG’’ and together with its
consolidated subsidiaries collectively referred to as ‘‘Adler’’ or the ‘‘Adler Group’’) as well as
CREDIT AGRICOLE CORPORATE & INVESTMENT BANK, Paris (‘‘Crédit Agricole CIB’’, also
referred to as the ‘‘Global Co-ordinator’’ or ‘‘Bookrunner’’), assume responsibility for the content
of this Offering Memorandum and state that, to their knowledge, the information contained in this
Offering Memorandum is true and correct and that no material facts have been omitted. They
further state that they have exercised due care to ensure that the information contained in this
Offering Memorandum is, to their knowledge, true and correct and that no facts have been omitted
that would be likely to alter the substance of this Offering Memorandum.
Notwithstanding § 16 WpPG, neither the Company nor the Global Co-ordinator are under any legal
obligation to update the Offering Memorandum.
In the event claims are asserted before a court of law based on information contained in this
Offering Memorandum, the investor appearing as plaintiff may be required to bear the costs of
translating the Offering Memorandum prior to the commencement of legal proceedings in
compliance with the national laws of the individual Member States of the European Economic Area.
Documents on display
For the period during which this Offering Memorandum is valid, copies of the following documents
cited in this Offering Memorandum may be inspected during regular business hours at the offices
of Adler Modemärkte AG, Industriestraße Ost 1-7, D-63808 Haibach, Germany:
* the Company’s Articles of Association;
* the Company’s audited HGB annual financial statements as at 31 December 2008 (the ‘‘2008
HGB Annual Financial Statements’’);
* the Company’s audited IFRS consolidated financial statements as at 31 December 2009 (the
‘‘2009 IFRS Consolidated Financial Statements’’);
* the Company’s audited IFRS consolidated financial statements as at 31 December 2010 (the
‘‘2010 IFRS Consolidated Financial Statements’’, together with the 2009 IFRS Consolidated
Financial Statements jointly referred to as the ‘‘IFRS Consolidated Financial Statements’’);
* the Company’s audited HGB annual financial statements as at 31 December 2010 (the ‘‘2010
HGB Annual Financial Statements’’ and together with the 2008 HGB Annual Financial
Statements jointly referred to as the ‘‘HGB Annual Financial Statements’’);
* the Company’s unaudited IFRS interim consolidated financial statements as at 31 March 2011
(the ‘‘2011 IFRS Consolidated Interim Financial Statements’’).
The Company’s future annual and interim financial reports will be available at the Company’s
offices and in the electronic companies register (www.unternehmensregister.de).
Statutory auditor
The Company’s auditor is PricewaterhouseCoopers Aktiengesellschaft
Wirtschaftsprüfungsgesellschaft, Friedrichstr. 14, 70174 Stuttgart (‘‘PwC’’). PwC is a member of the
German Chamber of Public Accountants (Wirtschaftsprüferkammer).
PwC audited the HGB Annual Financial Statements and IFRS Consolidated Financial Statements
and issued unqualified auditor’s reports thereon as reproduced in this Offering Memorandum.
Forward-looking statements
This Offering Memorandum contains certain forward-looking statements referring to the business,
the financial performance and earnings of Adler and the areas of business in which Adler operates.
Forward-looking statements are statements relating to future facts, events and other circumstances
not constituting historical facts. Expressions such as ‘‘expect’’, ‘‘intend’’, ‘‘plan’’, ‘‘assume’’ or
‘‘probably’’ are indicative of such statements. Such statements merely reflect the Company’s
opinion at the present time with respect to future events, and as such their realisation is subject to
risks and uncertainties.
A
c
1
0
4
7
0
8
p
u
0
3
0
P
r
o
o
f
7
:
2
7
.
5
.
1
1
B
/
L
R
e
v
i
s
i
o
n
:
0
O
p
e
r
a
t
o
r
D
a
d
28

The forward-looking statements in this Offering Memorandum relate, inter alia, to:
* the implementation of the Company’s strategic plans and the impact of these plans on Adler’s
financial condition and results of operations;
* the use of the issue proceeds;
* the development of the competitive situation and competitors;
* the Company’s expectations with respect to the impact of economic, operational, legal and
other risks relating to Adler’s business; and
* other statements regarding Adler’s future business development and general economic and
technological developments and other general conditions relevant to the business.
These forward-looking statements are based on current plans, assessments, forecasts and
expectations of the Company and on certain assumptions, which, although the Company believes
them to be reasonable at the present time, may prove to be incorrect. Numerous factors may
cause Adler’s actual development, performance or earnings generated to differ materially from the
development, performance or earnings expressly or implicitly assumed in the forward-looking
statements. Adler’s business is subject to a number of risks and uncertainties which could also
result in forward-looking statements, assessments or forecasts being incorrect. For a more detailed
discussion of the factors that could impact the future development of Adler’s business and the
markets on which it operates, the Company strongly recommends reading the sections entitled
‘‘Summary of the Offering Memorandum’’, ‘‘Risk Factors’’, ‘‘Management’s Discussion and Analysis
of Financial Condition and Results of Operations’’, ‘‘Business’’, and ‘‘Recent Developments and
Outlook’’ in this Offering Memorandum.
Should any one or more of these changes or uncertainties occur or should the Company’s
underlying assumptions prove incorrect, it cannot be ruled out that actual results will differ
materially from the assumptions, estimates or expectations described in this Offering Memorandum.
This could operate to prevent the Company from achieving its financial and strategic objectives.
The Company and the Global Co-ordinator do not intend to update the forward-looking statements
or the industry and customer information set forth in this Offering Memorandum beyond that which
is required by law.
Industry, market and customer data and information from third parties
This Offering Memorandum contains industry, market and customer data as well as calculations
taken from industry reports, market research reports, publicly available information and commercial
publications (‘‘External Information’’). External Information was, in particular, used for statements
regarding markets and market developments.
This Offering Memorandum also contains assessments of market data and information derived
therefrom, which is not ascertainable from publications of market research institutes or from any
other independent sources. Such information is based on the Company’s internal assessments
made based on many years of experience and expertise of its management and staff, evaluations
of industry information (from trade journals, trade fairs, meetings) or company-internal
assessments. As such, it may differ from the estimates of the Company’s competitors or
information gathered in the future by market research institutes or other independent sources.
Other Company estimates, by contrast, are based on published information or figures from
external, publicly available sources. The following sources, in particular, were relied on in preparing
the Offering Memorandum:
* Federal Ministry of Family Affairs, Senior Citizens, Women and Youth (Bundesministerium für
Familie, Senioren, Frauen und Jugend), Age: The driving force behind the economy, Final
Report (Wirtschaftsmotor Alter, Endbericht), July 2007;
* Institute of German Textile Retail Traders (Bundesverband des Deutschen Textilhandels,
‘‘BTE’’), 2010 Statistics Report (‘‘BTE Statistics Report 2010’’);
* Institute of German Textile Retail Traders (Bundesverband des Deutschen Textilhandels,
‘‘BTE’’), 2009 Statistics Report (‘‘BTE Statistics Report 2009’’);
* Institute of German Textile Retail Traders (Bundesverband des Deutschen Textilhandels,
‘‘BTE’’), Statement dated 18 January 2010;
* German E-Commerce and Distance Selling Trade Association (Bundesverband des Deutschen
Versandhandels e.V., ‘‘BVH’’), E-commerce trends in Germany 2010 (BtC);
A
c
1
0
4
7
0
8
p
u
0
3
0
P
r
o
o
f
7
:
2
7
.
5
.
1
1
B
/
L
R
e
v
i
s
i
o
n
:
0
O
p
e
r
a
t
o
r
D
a
d
29

* Business Technology Consulting AG (BTC), Distance selling and e-commerce in Germany
2009 (Versand- und Online-Handel in Deutschland 2009) (B2C);
* Datamonitor, Apparel Retail in Germany, Industry Profile;
* Datamonitor, Menswear in Germany, Industry Profile;
* Datamonitor, Womenswear in Germany, Industry Profile;
* Eurostat,
2010;
Statistics Austria, 2010-2012: Österreichische Nationalbank forecast, December
* Eurostat Press Office, Euro indicators press release, 34/2010, 4 March 2010 (‘‘Eurostat
Press Release 34/2010’’);
* Eurostat Press Office, Euro indicators press release, 148/2010, 6 October 2010 (‘‘Eurostat
Press Release 148/2010’’);
* Germany Trade and Invest, Economic trends compact (Wirtschafttrends kompakt),
*
Luxembourg, mid-year 2010;
Textile + Fashion Confederation (Gesamtverband textil + mode), Reports on the Economy 01/
2009-12/2010;
* Society for Consumer Research (Gesellschaft für Konsumforschung, ‘‘GfK‘‘) Market research,
press release dated 28 September 2010, Findings of the GfK Consumer Climate Study for
September 2010;
* GfK TextilNews, Autumn 2008;
* GfK TextilNews, Winter 2009;
* GfK TextilNews, Autumn 2010;
* GS1 Germany & WP7 Partners (Bridge Project), Supply Chain Management in the European
Textile Industry: Problem analysis and expected EPC/RFID benefits, July 2007).
* German Retail Federation (Handelsverband Deutschland, ‘‘HDE’’), E-commerce forecast 2010;
* Konzept & Markt GmbH/TextilWirtschaft, Top Shops 2009, November 2009;
* KPMG Deutsche Treuhand-Gesellschaft Aktiengesellschaft Wirtschaftsprüfungsgesellschaft,
Commerce Trends 2010;
* KPMG Deutsche Treuhand-Gesellschaft Aktiengesellschaft Wirtschaftsprüfungsgesellschaft,
*
Commerce Trends 2005 – Outlook for the food, fashion & footwear industries, 2003;
Mintel, Clothing Retailing Germany 2010 (‘‘Mintel Germany 2010’’);
* Mintel, Clothing Retailing Germany 2010 (‘‘Mintel Europe 2010’’);
* Otto Group 2009 Trend Study;
* German Federal Statistical Office (Statistisches Bundesamt), Population of Germany through
2050 (Bevölkerung Deutschlands bis 2050), per 2007;
* German Federal Statistical Office, Press release 061 dated 24 February 2010;
* Consumer Reports (Stiftung Warentest), Finanztest, 8/2010;
* TextilWirtschaft, BTE communication dated 5 February 2009 und 21 January 2010;
* TextilWirtschaft, Germany’s major clothing suppliers 2009 (Die größten Bekleidungslieferanten
in Deutschland 2009);
* TextilWirtschaft, Kundenmonitor, Socialwear, November 2008;
* TextilWirtschaft, TW study, Putting vertical partnerships to the test – Trade survey findings
(Vertikale Partnerschaften auf dem Prüfstand – Ergebnisse einer Handelsbefragung), May
2008 (‘‘TW Study’’);
* Verdict, Value Clothing in European Retail, September 2009 (‘‘Verdict Report 2009’’).
The majority of the market information contained in this Offering Memorandum is a condensation of
information derived by the Company on the basis of the above studies. Specific studies were cited
only in those cases where the relevant information may be taken directly from such study. The
remaining assessments of the company are based on internal sources, unless expressly indicated
otherwise in this Offering Memorandum.
A
c
1
0
4
7
0
8
p
u
0
3
0
P
r
o
o
f
7
:
2
7
.
5
.
1
1
B
/
L
R
e
v
i
s
i
o
n
:
0
O
p
e
r
a
t
o
r
D
a
d
30

Industry and market research reports, publicly available sources and commercial publications
generally indicate that, while the information contained therein stems from sources that may be
assumed to be reliable, the accuracy and completeness of such information is not guaranteed and
the calculations contained therein are based on a number of assumptions. Consequently, these
caveats also apply to the information included in this Offering Memorandum. Neither the Company
nor the Global Co-ordinator has verified the accuracy or completeness of External Information.
Any information taken from third parties has been accurately reproduced in this Offering
Memorandum. As far as the Company and the Global Co-ordinator are aware and able to
ascertain from the information taken from third parties, no facts have been omitted that would
make the information reproduced incorrect or misleading.
A glossary containing the technical terminology and abbreviations used herein is provided at the
end of this Offering Memorandum.
Note regarding currency and financial information
Financial information
Unless otherwise indicated, the financial information contained in this Offering Memorandum on the
Adler Group, which refers to reporting dates 31 December 2009 or 31 December 2010 or the
financial years ended 31 December 2009 or 31 December 2010, has been taken from the 2010
IFRS Consolidated Financial Statements.
Unless otherwise indicated, the financial information contained in this Offering Memorandum on the
Adler Group, which refers to the reporting date 31 December 2008 or the financial year ended
31 December 2008, has been taken from the 2009 IFRS Consolidated Financial Statements, which
include comparative figures for the financial year ended 31 December 2008.
Unless otherwise indicated, financial information contained in this Offering Memorandum on Adler
Modemärkte AG, which refers to reporting dates 31 December 2009 or 31 December 2010 or the
financial years ended 31 December 2009 or 31 December 2010, has been taken from the 2010
HGB Annual Financial statements.
Unless otherwise indicated, financial information contained in this Offering Memorandum on Adler
Modemärkte AG, which refers to the reporting date 31 December 2008 or the financial year ended
31 December 2008, has been taken from the 2008 HGB Annual Financial statements.
Unless otherwise indicated, financial information contained in this Offering Memorandum on Adler
Modemärkte AG, which refers to the reporting date 31 March 2011 or the three-month periods
ended 31 March 2010 or 31 March 2011, has been taken from the unaudited 2011 IFRS
Consolidated Interim Financial Statements and is unaudited.
Financial information that has been designated in this Offering Memorandum as unaudited has not
been audited or reviewed by an auditor (prüferische Durchsicht) within the meaning of § 20.6 of
Appendix I to Commission Regulation (EC) No. 809/2004.
Currency information
This Offering Memorandum contains currency information in euros, which refers to the official
currency of the Federal Republic of Germany and other Member States of the European Union.
Figures denominated in euros are indicated with ‘‘c’’ preceding the amount.
Rounding
Numerical figures contained in this Offering Memorandum in units of thousands, millions or billions
as well as percentages relating to numerical figures have been rounded off in accordance with
standard commercial practice. Therefore, totals or sub-totals contained in tables may differ
minimally from figures provided elsewhere in this Offering Memorandum, which have not been
rounded off. Due to rounding differences, individual numbers and percentages may not add up
exactly to the totals or sub-totals contained in the tables or mentioned elsewhere in this Offering
Memorandum.
A
c
1
0
4
7
0
8
p
u
0
3
0
P
r
o
o
f
7
:
2
7
.
5
.
1
1
B
/
L
R
e
v
i
s
i
o
n
:
0
O
p
e
r
a
t
o
r
D
a
d
31

THE OFFERING
Subject matter of the Offering Memorandum
The subject matter of this Offering Memorandum for purposes of the Offering, including any
potential over-allotment, (the ‘‘Offering’’) relates to a total of 11,629,950 no-par value ordinary
bearer shares of the Company, consisting of
* 2,650,000 shares originating from a capital increase against cash contributions of
c2,650,000.00 to be resolved by the Company’s Annual General Meeting and excluding the
Selling Shareholder’s pre-emptive subscription rights (the ‘‘New Shares’’);
* 7,463,000 shares from the holdings of the Selling Shareholder (the ‘‘Existing Shares’’); and
* 1,516,950 shares from the holdings of the Selling Shareholder for purposes of any potential
over-allotment (the ‘‘Greenshoe Shares’’, and together with the Existing Shares and the New
Shares collectively referred to as the ‘‘Offered Shares’’),
each representing a notional interest in the share capital of c1.00 and carrying full dividend rights
from 1 January 2011.
The Offering consists of a public offering in the Federal Republic of Germany and private
placements in certain other European jurisdictions outside the Federal Republic of Germany and
outside the United States of America. Outside the United States of America, the Offered Shares
will be offered in the context of a placement under Regulation S of the US Securities Act of 1933,
as amended (the ‘‘Securities Act’’). No shares will be offered within the United States of America,
Canada, Japan or Australia. The Offered Shares will be offered in one tranche both within the
Federal Republic of Germany as well as in certain other European jurisdictions outside the Federal
Republic of Germany and outside the United States of America. To this extent, no differences exist
in relation to the number and features of the Offered Shares or the nature of the transactions
connected therewith.
The Company and the Selling Shareholder, in consultation with the Global Co-ordinator, reserve
the right to reduce the number of Offered Shares or to allot investors fewer than the total number
of Offered Shares.
The New Shares will be created when the capital increase against cash contributions to be
resolved by the Company’s Annual General Meeting is implemented and entered in the commercial
register. Once the implementation of the capital increase has been recorded in the commercial
register, which is scheduled to take place on or before the first business day following expiry of the
Offering Period, the Company’s share capital will be c18,510,000.00.
The subject matter of this Offering Memorandum for purposes of admission of the Company’s
shares to trading on the regulated market (regulierter Markt) and the regulated market sub-segment
with additional post-admission listing obligations (Prime Standard) of the Frankfurt Stock Exchange
is a total of 18,510,000 no-par value ordinary bearer shares of the Company, consisting of
* 15,860,000 shares (current share capital); and
* 2,650,000 shares originating from the capital increase against cash contributions to be
resolved by the Company’s Annual General Meeting,
each representing a notional interest in the share capital of c1.00 and carrying full dividend rights
from 1 January 2011.
Price range, Offering Period, Offer Price and number of allotted shares
The price range within which orders may be placed is
e10.00 to e12.50
per share.
Orders must be submitted for a minimum of one share and may stipulate a price limit within the
price range, which is denominated in round euro amounts or round euro cent figures of 25, 50 or
75 cents. Up to two orders may be submitted per securities account of any retail investor.
The Offering, during which investors will be given the opportunity to submit orders for the shares,
is expected to begin on 30 May 2011 and end on 14 June 2011. On the final day of the Offering
Period, retail investors should be able to submit orders until 12.00 noon CEST and institutional
investors until 5.00 p.m. CEST. All orders are freely revocable until the respective Offering Period
expires.
A
c
1
0
4
7
0
8
p
u
0
3
0
P
r
o
o
f
7
:
2
7
.
5
.
1
1
B
/
L
R
e
v
i
s
i
o
n
:
0
O
p
e
r
a
t
o
r
D
a
d
32

The Company and Cheverny Investments Limited, Malta (the ‘‘Selling Shareholder’’), in
consultation with the Global Co-ordinator, reserve the right to reduce the number of Offered
Shares, to reduce or raise the lower and/or upper limit of the price range and/or to extend or
shorten the Offering Period. If the option to reduce the number of Offered Shares and/or modify
the price range and/or the Offering Period (collectively referred to as the ‘‘Offer Terms’’) is
exercised and to the extent required under the German Securities Prospectus Act
(Wertpapierprospektgesetz, ‘‘WpPG’’), a supplement to this Offering Memorandum will be filed with
the German Federal Financial Supervisory Authority (Bundesanstalt für
Finanzdienstleistungsaufsicht, ‘‘BaFin’’) and published following approval thereof on the Company’s
website (www.adlermode.com). The change will also be published on an electronic information
system and, to the extent required by the German Securities Trading Act
(Wertpapierhandelsgesetz, ‘‘WpHG’’), in an ad hoc disclosure. Print copies of the supplement will
also be available free of charge during regular business hours at the offices of the Company and
the Global Co-ordinator. Investors will not be notified individually.
Changes to the Offer Terms will not operate to invalidate orders that have already been submitted.
Investors who have already submitted orders prior to the publication of any supplement are entitled
under the German Securities Prospectus Act to revoke their orders within two business days of the
supplement’s publication. The revocation need not stipulate any grounds and must be declared in
writing to the parties specified in the supplement as the recipient of such revocation; revocations
shall be deemed timely if dispatched before the notice period expires. Instead of revoking their
orders, investors may within two days of the supplement’s publication opt to modify orders
submitted prior thereto or to submit new limit or market orders. The allotment of fewer than the
total number of Offered Shares to investors shall not constitute a change to the Offer Terms and
as such shall not trigger any duty to publish a supplement to this Offering Memorandum.
After the Offering Period expires, the Company, the Selling Shareholder and the Global Coordinator
will use the order book created in the book-building process to jointly set the Offer Price
and the final placement volume. Pricing and the final placement volume will be set based on the
orders submitted by investors during the Offering Period and collected in the order book.
Once the Offer Price has been fixed, the Offered Shares will then be allotted to investors based on
the orders submitted. The Offer Price and the results of the Offering are scheduled to be published
on the final day of the Offering Period in an ad hoc disclosure on an electronic information system
and on the Company’s website (www.adlermode.com) and on the third business day following
expiry of the Offering Period in a notice published in the Börsen-Zeitung. Investors who have
submitted their orders through the Global Co-ordinator should be able to enquire at the office of
the Global Co-ordinator as to the Offer Price and the number of shares they have been allotted
starting at the earliest on the banking day immediately following pricing. The allotted shares are
expected to be delivered in book-entry form against payment of the Offer Price and the customary
securities commission two banking days after listing commences. Trading may commence even
before investors are notified of the number of shares they have been allotted. Particularly in the
event that the placement volume proves insufficient to satisfy all the orders submitted at the Offer
Price, the Global Co-ordinator, in consultation with the Company, reserves the right not to accept
investors’ orders, either in whole or in part.
Premature termination of the Offering
In the Underwriting Agreement with the Company (the ‘‘Underwriting Agreement’’), the Global Coordinator
has reserved the right to terminate the Underwriting Agreement and discontinue the
Offering. The Offering may be terminated even after trading has commenced and until the shares
have been delivered in book-entry form in exchange for payment of the Offer Price and the
customary securities commissions.
A
c
1
0
4
7
0
8
p
u
0
3
0
P
r
o
o
f
7
:
2
7
.
5
.
1
1
B
/
L
R
e
v
i
s
i
o
n
:
0
O
p
e
r
a
t
o
r
D
a
d
33

Projected timetable for the Offering
The projected timetable for the Offering is as follows:
27 May 2011.................................. Approval of the Offering Memorandum by BaFin
27 May 2011.................................. Publication of the Offering Memorandum on the Company’s
website (www.adlermode.com)
28 May 2011.................................. Publication of the Offering in the Börsen-Zeitung
30 May 2011.................................. Commencement of the Offering Period
No later than 3 June 2011............. Capital increase resolution by the Annual General Meeting
14 June 2011................................. Expiry of the Offering Period at 12.00 noon (CEST) for retail
investors (natural persons) and at 5.00 p.m. (CEST) for
14 June 2011.................................
institutional investors
Pricing and allotment
14 June 2011................................. Publication of the Offer Price and the final number of shares
placed in an ad hoc disclosure on an electronic information
system and on the Company’s website (www.adlermode.com)
15 June 2011................................. Registration of the implementation of the capital increase in the
commercial register
15 June 2011................................. Listing order issued by the Frankfurt Stock Exchange
15 June 2011................................. Publication of the listing order of the Frankfurt Stock Exchange on
the Frankfurt Stock Exchange’s website (www.boerse-
16 June 2011.................................
frankfurt.com)
Listing commences; first day of trading
17 June 2011................................. Publication of the Offer Price and the final placement volume in
the Börsen-Zeitung
20 June 2011................................. Book-entry delivery of the shares against payment of the Offer
Price and customary securities commissions
This Offering Memorandum and any supplements thereto are scheduled to be published following
approval thereof by the German Federal Financial Supervisory Authority (Bundesanstalt für
Finanzdienstleistungsaufsicht, ‘‘BaFin’’) on the Company’s website (www.adlermode.com). Print
copies of the Offering Memorandum and any supplements thereto will also be available free of
charge during regular business hours at the Company’s registered office.
Information concerning the shares
Voting rights
Each share carries one voting right at the Company’s Annual General Meeting. There are no
restrictions on voting rights with the exception of those stipulated by law in specific cases. All
shares carry the same voting rights.
Dividend rights, right to share in the liquidation proceeds, pre-emptive rights and voting rights
The Offered Shares carry full dividend rights from 1 January 2011. The Annual General Meeting,
which is held once annually within the first eight months of the financial year, decides on the
appropriation of any net retained profit and thus on the full or partial disbursement thereof to
shareholders. The Executive Board and Supervisory Board are required to submit a
recommendation on the appropriation of profit, but the Annual General Meeting is not bound by
such recommendation. Individual shareholders have no claim to the disbursement of dividends
unless the Annual General Meeting has passed a resolution to that effect (for details see the
section entitled ‘‘Earnings and Dividends per Share; Dividend Policy’’). The Annual General Meeting
may decide to make an in-kind distribution in addition to or instead of a cash distribution.
By law, claims to the payment of dividends generally become time-barred after three years, after
which time the Company may refuse to make any disbursement. Once the global certificates
representing the Company’s shares are deposited with Clearstream Banking AG, Mergenthalerallee
61, 65760 Eschborn, Germany (‘‘Clearstream’’), Clearstream will automatically credit any dividends
accruing on the shares in the future to the securities accounts held at the respective custodian
banks. Domestic custodian banks are under a corresponding obligation to their customers.
A
c
1
0
4
7
0
8
p
u
0
3
0
P
r
o
o
f
7
:
2
7
.
5
.
1
1
B
/
L
R
e
v
i
s
i
o
n
:
0
O
p
e
r
a
t
o
r
D
a
d
34

Shareholders whose shares are held in custodial accounts at foreign institutions should inform
themselves about the procedure applicable at such institutions. Forefeited dividend claims shall
accrue to the Company.
In the event the Company is dissolved, the assets remaining after discharging the Company’s
liabilities will accrue to the shareholders pursuant to § 271 German Stock Corporation Act
(Aktiengesetz, ‘‘AktG’’) in proportion to the respective interest they hold in the Company’s share
capital.
Shareholders have the right to subscribe for new shares issued pursuant to any future capital
increases in a ratio proportionate to the respective interest they hold in the Company’s current
share capital (pre-emptive right). No pre-emptive rights exist in the case of contingent capital
increases; otherwise, pre-emptive rights may be excluded by resolution of the Annual General
Meeting or, if the Annual General Meeting so authorises, by resolution of the Executive Board with
the consent of the Supervisory Board (for further details see the section entitled ‘‘Information on
the Capital of the Company and Other Important Provisions of the Articles of Association – General
provisions on capital increases’’).
Form and representation of the shares
All of the Company’s shares are no-par value ordinary bearer shares, each representing a notional
interest in the share capital of c1.00, and have been or will be issued based on the provisions of
the German Stock Corporation Act (Aktiengesetz). The current share capital is represented by a
global certificate without a dividend coupon, which has been deposited with Clearstream. The
shares originating from the capital increase against cash contributions still to be resolved by the
Company’s Annual General Meeting will likewise be represented by a global certificate without a
dividend coupon and deposited with Clearstream once the implementation of the capital increase
has been recorded in the commercial register. Pursuant to the Company’s Articles of Association,
shareholders are not entitled to receive definitive share certificates for their respective
shareholdings.
Delivery and settlement
The shares will be provided to the shareholders as co-ownership interests in the respective global
certificate. Delivery of the Offered Shares against payment of the purchase price and the
customary securities commissions is expected to take place on the second banking day after listing
commences. Shares purchased under the Offering may at the shareholder’s option be credited to
the securities account of a credit institution with Clearstream for the account of such investor or to
the securities account of a member in Euroclear Bank S.A./N.V., 1 Boulevard du Roi Albert II, B-
1210 Brussels, as the operator of the Euroclear System, or to Clearstream Banking S.A.,
42 Avenue JF Kennedy, L-1855 Luxembourg.
Transferability, lock-up
The shares are freely transferable in accordance with the legal provisions applicable to bearer
shares. With the exception of the restrictions set out in the sections entitled ‘‘The Offering – Lockup’’
and ‘‘The Offering – Underwriting – Selling restrictions’’, there are no lock-up requirements or
restrictions on the transferability of the Company’s shares.
ISIN/ WKN/ Common Code/ Ticker symbol
ISIN ........................................................................................................................ DE000A1H8MU2
WKN....................................................................................................................... A1H8MU
Common Code ....................................................................................................... 061180117
Ticker symbol......................................................................................................... ADD
Underwriting
Introduction
The Company, the Selling Shareholder and the Global Co-ordinator entered into an Underwriting
Agreement for the offer and sale of the shares under the Offering on 27 May 2011.
The Offering consists of a public offering in the Federal Republic of Germany and international
private placements to institutional investors in certain other European jurisdictions outside the
Federal Republic of Germany and outside the United States of America. The Offer Price will be set
A
c
1
0
4
7
0
8
p
u
0
3
0
P
r
o
o
f
7
:
2
7
.
5
.
1
1
B
/
L
R
e
v
i
s
i
o
n
:
0
O
p
e
r
a
t
o
r
D
a
d
35

pursuant to a bookbuilding procedure. There are no minimum or maximum limits for the number of
shares that may be offered or sold in any specific country or region.
In the Underwriting Agreement, the Global Co-ordinator has undertaken subject to the satisfaction
of certain conditions precedent such as the submission of legal opinions and the verification of the
substantive accuracy of certain information contained in the Offering Memorandum and the
representations and warranties made by the Company and the Selling Shareholder, to subscribe
for the New Shares at the lowest issue price within the meaning of § 9 (1) AktG, and to underwrite
these subject to the stipulation that the New Shares be offered to investors under the Offering. The
Global Co-ordinator will pay to the Company the difference between the Offer Price for the New
Shares and the issue price (less agreed commissions and costs) on the date the New Shares are
delivered. The Global Co-ordinator has further undertaken, subject to the satisfaction of certain
conditions precedent, to purchase up to 7,463,000 Existing Shares from the Selling Shareholder
and sell these under the Offering. The Selling Shareholder has also undertaken to provide the
Global Co-ordinator up to 1,516,950 Greenshoe Shares by way of a securities loan for the partial
coverage of over-allotments and, to the extent the Greenshoe Option is exercised, sell these to the
Global Co-ordinator. The Global Co-ordinator will pay to the Selling Shareholder the Offer Price for
the Existing Shares sold (less agreed commissions) on the date the Existing Shares are delivered
to the investors and will pay the Offer Price for the Greenshoe Shares (less agreed commissions)
within two banking days following the exercise of the Greenshoe Option, if and to the extent it is
exercised.
Selling restrictions
In the Underwriting Agreement, the Global Co-ordinator has further undertaken to publicly offer the
shares being offered by it exclusively in the Federal Republic of Germany, and to refrain from
offering or selling the shares, either directly or indirectly, within the United States of America or to
any U.S. person (‘‘U.S. Person’’) within the meaning of the U.S. Securities Act or for the account
of any such U.S. Person, except pursuant to an exemption from the registration and disclosure
requirements under U.S. securities laws and unless all other applicable U.S. laws have been
observed. The shares have not been and will not be registered under the Securities Act and may
only be offered or sold within the United States of America or to any U.S. Person pursuant to
Regulation S or another exemption from the registration requirements under the Securities Act.
The sale of the shares in the United Kingdom of Great Britain and Northern Ireland (the ‘‘United
Kingdom’’) is also subject to restrictions. In the Underwriting Agreement, the Global Co-ordinator
has undertaken that it has only communicated or caused to be communicated and will only
communicate or cause to be communicated any invitation or inducement to engage in investment
activity (within the meaning of § 21 of the Financial Services and Markets Act 2000 (‘‘FSMA’’))
received by it in connection with the issue or sale of the Offered Shares in circumstances in which
§ 21 (1) of the FSMA does not apply to the Company, and that it has complied and will comply
with all applicable provisions of the FSMA with respect to all actions taken by the Global Coordinator
in relation to the Offered Shares in, from or otherwise in connection with the United
Kingdom. In addition, the Global Co-ordinator has undertaken, that during the Offering and prior to
the expiry of six months from the date on which the Offering is settled, it will not offer or sell any
shares of the Company nor take any other action that might constitute a public offering in the
United Kingdom, except to persons whose ordinary activities involve them in acquiring, holding,
managing and disposing of investments for the purpose of their businesses or otherwise in
circumstances that would not result in an offer of transferable securities to the public within the
United Kingdom within the meaning of § 102B of the Financial Services and Markets Act 2000.
The Global Co-ordinator has furthermore represented and warranted that it will not offer or sell,
either directly or indirectly, the shares in Japan, Canada or Australia. The Global Co-ordinator has
also undertaken to comply with the relevant laws of any and all countries in which it conducts
selling activities in connection with the placement of the shares.
Global Co-ordinator and Bookrunner
The Global Co-ordinator and Bookrunner is CREDIT AGRICOLE CORPORATE AND INVESTMENT
BANK, 9, quai du Président Paul Doumer, 92920 Paris La Défense Cedex, Paris, France.
The Global Co-ordinator has maintained customary banking relations with the Company over the
past three financial years and may also continue to regularly perform services for the Company
and entertain normal business relations with it as a credit institution.
A
c
1
0
4
7
0
8
p
u
0
3
0
P
r
o
o
f
7
:
2
7
.
5
.
1
1
B
/
L
R
e
v
i
s
i
o
n
:
0
O
p
e
r
a
t
o
r
D
a
d
36

Global Co-ordinator’s underwriting obligations
Subject to the satisfaction of certain conditions precedent, the Global Co-ordinator has undertaken
in the Underwriting Agreement to underwrite an as yet unstipulated number of the Company’s
shares being offered under this Offering and to sell them thereunder. At the present time, the
Global Co-ordinator plans to underwrite all the shares being offered under this Offering.
The Company and the Selling Shareholder will pay the Global Co-ordinator commissions which are
customary in the industry. The Company and the Selling Shareholder may also at their discretion
pay the Global Coordinator a performance-based incentive fee.
Termination
The Underwriting Agreement provides that the Global Co-ordinator may terminate the Underwriting
Agreement under certain circumstances. Specifically, these include circumstances where
* following the execution of the Underwriting Agreement, a material deterioration occurs in the
economic or legal situation of the Company or any of its affiliates which is relevant to the
Offer Price or an event occurs which, in the Global Co-ordinator’s view, will have a material
adverse affect on the financial markets on which the Offered Shares are to be offered or
sold;
* due to the publication of additional information or a supplement to the Offering documents, a
substantial number of investors revoke their orders;
* a material adverse change occurs which, in the view of the Global Co-ordinator, is so farreaching
or serious that the Global Co-ordinator believes it would be not recommendable or
reasonable (particularly where the market price of the Company’s shares could be materially
affected as a result) to continue with the Offering or to allot the shares to investors or trade
shares on the primary or secondary markets; or
* a material adverse change occurs which, in the reasonable view of the Global Co-ordinator, is
so far-reaching or serious that the Global-Co-ordinator believes it would be not
recommendable or reasonable to continue with the Offering or to allot the shares to investors
or trade shares on the primary or secondary markets. According to the Underwriting
Agreement, such a material adverse change will exist where:
A
c
1
0
4
7
0
8
p
u
0
3
0
P
r
o
o
f
7
:
2
7
.
5
.
1
1
B
/
L
R
e
v
i
s
i
o
n
:
0
O
p
e
r
a
t
o
r
D
a
d
* since the reporting dates controlling for the information contained in the Offering
documents, a material impairment or expected material impairment (such as the
Company’s business being damaged or impaired, irrespective of whether it does or does
not have insurance coverage) has occurred which is not specified in the Offering
documents;
* since the reporting dates controlling for the information contained in the Offering
documents, there has been a change relating to the business, outlook, financial condition
and results of operations or assets of the Company or any of its affiliates or any
development that may bring about a change which, in the sole assessment of the Global
Co-ordinator, could be so material and adverse that it would not be recommendable,
reasonable or practicable to implement the Offering or deliver the Offered Shares as
provided in the Offering documents;
* in the sole assessment of the Global Co-ordinator, there has been a material change in
the Company’s Executive Board;
* trading on any one of the Frankfurt, London or New York stock exchanges is
suspended, either in whole or in part, a general moratorium on commercial banking
activities is imposed in Frankfurt, London or New York, or securities settlement, payment
and/or booking services in Europe are substantially interrupted; or
* a material adverse change in general national or international financial, political,
industrial, economic or legal conditions or in the conditions on the financial markets or in
foreign exchange rates or any substantial outbreak or escalation of acts of war or
terrorism occurs.
37

If the Underwriting Agreement is terminated, the Offering will not take place. Any allotments
already made to investors will be invalidated. In such case, no claim to delivery exists. Claims
relating to any subscription fees already paid and costs incurred by any investor in connection with
the subscription are controlled solely by the legal relationship between the investor and the
institution to which the investor submitted its order. Any investors who have made short sales
would bear the risk of not being able to cover their positions.
Indemnification
The Company and the Selling Shareholder have undertaken in the Underwriting Agreement to
indemnify the Global Co-ordinator against certain liabilities arising in connection with the Offering.
For further information on the Underwriting Agreement, specifically with respect to agreements
relating to measures taken by the Global Co-ordinator in the context of the Offering in order to
stabilise the market price of the Company’s shares (stabilisation measures) and undertakings by
the Company and the Selling Shareholder to refrain from taking any action that could affect the
market in the Company’s shares (lock-up agreements), see the sections entitled ‘‘The Offering –
Stabilisation measures, Over-allotment and Greenshoe Option’’ and ‘‘The Offering – Lock-up’’.
Allotment
Allotment to retail investors
No agreements exist between the Company, the Selling Shareholder and the Global Co-ordinator
as to the allotment procedure. The Company, the Selling Shareholder and the Global Co-ordinator
will comply with the ‘‘Principles for the allotment of share issues to private investors’’ (Grundsätze
für die Zuteilung von Aktienemissionen an Privatanleger) issued on 7 June 2000 by the Exchange
Expert Commission (Börsensachverständigenkommission) at the German Federal Ministry of
Finance (Bundesministerium der Finanzen). In this regard, investors registered as qualified
investors within the meaning of § 2 no. 6 d) and e) WpPG will be treated as institutional investors.
The Company, the Selling Shareholder and the Global Co-ordinator will determine the specific
details of the allotment procedure and publish these in accordance with the aforementioned
allotment principles. The allotment to retail investors under the Offering will be performed in
accordance with uniform criteria, which apply to the Global Co-ordinator and all its affiliated
institutions.
Preferential allotment
Members of the Executive Board as well will be offered up to 75,000 (0.6%) of the total of
11,629,950 Offered Shares. The Offered Shares subscribed by those persons eligible under this
plan will be allotted to them on a preferential basis. Otherwise, there are no provisions for any
preferential allotment of the Offered Shares to any specific class of persons.
Minimum allotment
Any minimum allotment will be determined once the order book has been closed and will be
published in accordance with the allotment principles. This is not associated with any general
allotment.
Stabilisation measures, Over-allotment and Greenshoe Option
In connection with the placement of the Company’s shares and to the extent permitted by law
(§ 20a (3) WpHG in conjunction with EU Commission Regulation 2273/2003 dated 22 December
2003), Crédit Agricole CIB, as stabilisation manager (the ‘‘Stabilisation Manager’’), may make
over-allotments and execute measures aimed at supporting the stock exchange or market price of
the Company’s shares in order to off-set any sales pressure that may exist. The Stabilisation
Manager is under no obligation to take stabilisation measures. Therefore, there is no guarantee
that any stabilisation measures will indeed be implemented. If stabilisation measures are taken,
these may be terminated at any time without prior notice. Such measures may be taken from the
date the Company’s shares list for trading in order to support the initial exchange price, if
necessary, and must be completed no later than 30 calendar days after such date (‘‘Stabilisation
Period’’). Stabilisation measures may cause the stock exchange or market price of the Company’s
shares to be higher than would have been the case absent such measures. In addition, such
measures may temporarily result in a stock exchange or market price at a level that is not
sustainable over the long term.
A
c
1
0
4
7
0
8
p
u
0
3
0
P
r
o
o
f
7
:
2
7
.
5
.
1
1
B
/
L
R
e
v
i
s
i
o
n
:
0
O
p
e
r
a
t
o
r
D
a
d
38

With regard to potential stabilisation measures and to the extent permitted by law, in addition to
orders for a total of 10,113,000 New and Existing Shares of the Company being offered, orders
may be executed with investors for up to 1,516,950 additional shares of the Company (a maximum
of 15% of the total New Shares and Existing Shares being offered) (‘‘Over-allotment’’). In order to
cover these Over-allotments, the Selling Shareholder will provide Crédit Agricole CIB prior to
allotment up to 1,516,950 shares (up to 15% of the maximum total of New Shares and Existing
Shares being offered) by way of a securities loan without charge.
In this context, the Selling Shareholder will grant Crédit Agricole CIB COMMERZBANK an option to
purchase up to 1,516,950 shares of the Company (up to 15% of the maximum total of New Shares
and Existing Shares being offered) from the Selling Shareholder at the Offer Price less agreed
commission (‘‘Greenshoe Option’’), thus satisfying the retransfer obligation under the securities
loan. This Greenshoe Option expires 30 calendar days after trading in the Company’s shares
commences and may only be exercised to the extent that the Company’s shares have been placed
by way of Over-allotment.
Within one week following the end of the Stabilisation Period, an announcement will be published
in the Börsen-Zeitung as to whether or not any stabilisation measures were taken, the date on
which the last stabilisation measure was taken, and the price range within which stabilisation
measures were taken (for each date on which a stabilisation measure was taken). The
implementation of the Over-allotment and the exercise of the Greenshoe Option and the date
thereof, as well as the number and class of the relevant shares will also be promptly published in
the Börsen-Zeitung.
Stock exchange admission and commencement of trading
All the Company’s shares (entire share capital) are expected to be admitted to trading on the
regulated market (regulierter Markt) and the regulated market sub-segment with additional postadmission
listing obligations (Prime Standard) of the Frankfurt Stock Exchange on the first
business day following expiry of the Offering Period, at the earliest. The decision on admission of
the shares is the sole purview of the Frankfurt Stock Exchange. Trading in the shares on the
Frankfurt Stock Exchange is planned to commence on the second exchange trading day following
expiry of the Offering Period.
Designated Sponsors
Crédit Agricole Cheuvreux S.A., 9, quai du Président Paul Doumer, 92400 Courbevoie, France
(‘‘CA Cheuvreux’’), and, from the fourth day of trading after publication of the termination of any
stabilisation measures, as at the latest after the expiration of the Offering Period of 30 days, DZ
BANK AG, Deutsche Zentral-Genossenschaftsbank, Platz der Republik, 60265 Frankfurt am Main
(‘‘DZ BANK’’), will be assuming the function of Designated Sponsors for the Company’s shares
trading on the Frankfurt Stock Exchange, although each is entitled to delegate this duty to an
authorised third party. The Designated Sponsors set binding prices for the purchase and sale of
the shares, which is designed in particular to achieve higher liquidity in the trading of the shares.
Selling Agent
Viscardi AG, Brienner Strasse 1, 80333 Munich, will assume the function of selling agent.
Selling Shareholder
The Company’s Selling Shareholder is Cheverny Investments Limited, Malta (the ‘‘Selling
Shareholder’’). The Selling Shareholder will hold all the shares of the Company until such time as
this Offering is implemented and the capital increase against cash contributions still to be resolved
by the Company’s Annual General Meeting has been entered into the commercial register. The
majority shareholder of Cheverny Investments Limited is blu Finance Limited, Malta. blu Finance
Limited’s majority shareholder is bluO Malta Holding Limited, Malta. The majority shareholder of
bluO Malta Holding Limited is bluO SICAV-SIF, Luxembourg.
Lock-up
In the Underwriting Agreement, the Company has undertaken that, for a period of 12 months from
commencement of trading in the Company’s shares, it will not, without the prior written consent of
the Global Co-ordinator
A
c
1
0
4
7
0
8
p
u
0
3
0
P
r
o
o
f
7
:
2
7
.
5
.
1
1
B
/
L
R
e
v
i
s
i
o
n
:
0
O
p
e
r
a
t
o
r
D
a
d
39

* directly or indirectly issue, sell or offer shares of the Company originating from any capital
increase or held in Treasury, nor enter into any obligation to sell or otherwise dispose of
same or announce any offer in relation thereto. Excepted herefrom are those shares issued
under employee or management stock option plans described in this Offering Memorandum;
* directly or indirectly issue, sell or offer any securities or uncertificated rights convertible into
shares of the Company or representing a right to acquire shares of the Company, nor enter
into any obligation to sell or otherwise dispose of same or announce any offer in relation
thereto;
* announce or implement any capital increase from authorised capital;
* propose any capital increase to its Annual General Meeting for resolution; or
* enter into any transactions (including transactions in derivatives) which constitute the
economic equivalent of the aforementioned measures.
In the Underwriting Agreement, the Selling Shareholder has undertaken that it will not (a) initiate or
consent to the aforementioned measures of the Company, nor (b) for a period of twelve months
following commencement of trading in the Company’s shares (i) directly or indirectly sell, offer or
market any shares or other securities or uncertificated rights convertible into or exchangeable for
shares of the Company or representing a right to acquire shares of the Company, nor enter into
any obligation to sell or otherwise dispose of same or announce any offer in relation thereto; (ii)
propose any capital increase to the Annual General Meeting nor consent to or support any such
proposal; or (iii) enter into any transactions (including transactions in derivatives) constituting the
economic equivalent of the transactions set out in (i) and (ii) above, without the prior written
consent of the Global Co-ordinator.
Paying and registration agent
CACEIS Bank Deutschland GmbH, Lilienthalallee 34-36, 80939 Munich, has been appointed as
paying and registration agent at which any and all measures required with respect to the shares
may be effected free of charge.
A
c
1
0
4
7
0
8
p
u
0
3
0
P
r
o
o
f
7
:
2
7
.
5
.
1
1
B
/
L
R
e
v
i
s
i
o
n
:
0
O
p
e
r
a
t
o
r
D
a
d
40

REASONS FOR THE OFFERING, USE OF PROCEEDS, ISSUE COSTS AND
INTERESTED THIRD PARTIES
Issue proceeds and costs
The amount of the gross issue proceeds from the sale of the shares under the Offering depends
on the number of shares actually placed and the final Offer Price.
Given this, the Company believes that based on an Offer Price of c11.25, which is the mid-point of
the price range of c10.00-c12.50 it is possible to generate a total of approximately c113.8 million
(excluding Greenshoe) in gross placement proceeds from the sale of the New Shares originating
from the capital increase and the Existing Shares. Assuming that all the Offered Shares (including
Greenshoe Shares) are placed and based on an Offer Price of c11.25 per share as the mid-point
of the price range within which orders per share may be placed, gross issue proceeds totalling
c130.8 million will accrue to the Company and the Selling Shareholder. Given this, the Company
will generate gross issue proceeds of c29.8 million assuming full placement of the New Shares. If
all of the shares offered are not sold, solely the number of Existing Shares held by the Selling
Shareholder may be reduced. The Selling Shareholder decides on the final number in co-ordination
with the Global Co-ordinator and the Company.
Under the Offering, the net issue proceeds from the capital increase (gross issue proceeds from
the sale of New Shares originating from the capital increase less the issue costs to be borne by
the Company) accrue to the Company. Up to 35% of certain costs related to the IPO which arise
for the Company shall be borne by the Selling Shareholder, but in no case more than c1.3 million
(see ‘‘Related Party Transactions – On-charge of IPO costs to the Selling Shareholder’’). Based on
an Offer Price of c11.25 per share, which reflects the mid-point of the price range within which
offers per share may be placed, the Company will generate approximately c29.8 million in gross
issue proceeds if the capital increase is implemented in full. Due to the fact that the costs are
contingent on the total number of shares placed and the Offer Price, which determine the amount
of commissions, and considering the fact that part of the costs have to be borne by the Selling
Shareholder, it is not possible at present to reliably predict the amount of the costs which have to
be borne by the Company. The Company believes that the total costs it will incur will amount to
approximately c2.2 million based on an Offer Price of c11.25 per share as the mid-point of the
price range with which oders per share may be placed and an assumption of costs which arise for
the Company in the amount of c1.3 by the Selling Shareholder. This also includes the Global Coordinator’s
placement and underwriting fee for the New Shares, which could be up to c0.8 million
based on an Offer Price of c11.25 per share, which is the mid-point of the price range (not
including any performance-based incentive fee paid at the Selling Shareholder’s discretion). Subject
to the aforementioned uncertainties, the Company believes that, based on an Offer Price of
c11.25, which is the mid-point of the price range and given these assumptions, it is possible to
generate approximately c27.6 million in net issue proceeds.
The net proceeds from the sale of the Existing Shares as well as any proceeds from the sale of
the Greenshoe Shares accrue to the Selling Shareholder. Assuming the Greenshoe Option is
exercised in full, and assuming an Offer Price of c11.25 per share as the mid-point of the price
range, the net issue proceeds will total approximately c97.2 million. This takes into account
payment of a placement and underwriting fee to the Global Co-ordinator for the Existing Shares
and the Greenshoe Shares totalling c2.5 million (not including any performance-based incentive fee
paid at the Selling Shareholder’s discretion) as well as the assumption of costs which arise for the
Company in the amount of c1.3 million by the Selling Shareholder.
Reasons for the Offering and use of proceeds
The net issue proceeds accruing to the Company will be used to strengthen its equity capitalisation
and to support the intended expansion of its business activities. Furthermore, the sale of the
Existing Shares and, if the Greenshoe Option is exercised, the sale of its Greenshoe Shares will
enable the Selling Shareholder to realise part of its investment.
The Company plans to use the net issue proceeds accruing to it from the placement of the New
Shares to finance further internal and external growth, to implement and finance its strategic
objectives and for general business purposes. Specifically, the Company plans to use the net issue
proceeds for the following projects presented here in the order of their priority:
1. To a large extent, financing further growth:
a. internal growth through the opening of new stores;
A
c
1
0
4
7
0
8
p
u
0
3
0
P
r
o
o
f
7
:
2
7
.
5
.
1
1
B
/
L
R
e
v
i
s
i
o
n
:
0
O
p
e
r
a
t
o
r
D
a
d
41

. external growth through the purchase of competitors and existing store chains;
2. as well as expanding the ‘‘shop-in-shop’’ concept to include external brands; and
3. to a lesser extent, financing the programme for modernising existing Adler stores.
To the extent and as long as the net issue proceeds have not been put toward any of the
aforementioned uses, the Company intends to invest in bank deposits or other liquid investments
with high asset quality.
The Selling Shareholder will receive the net proceeds from the sale of the Existing Shares and, if
the Greenshoe Option is exercised, the net proceeds from the sale of the Greenshoe Shares, and
will use these for its own purposes.
Interested parties
In connection with the Offering and the listing of the Company’s shares (the ‘‘Transaction’’), Crédit
Agricole CIB is in a contractual relationship with Adler Modemärkte AG and the Selling
Shareholder. Crédit Agricole CIB has been appointed by the Company and the Selling Shareholder
as the Global Co-ordinator and the Bookrunner. It advises the Company on the Transaction and
co-ordinates the structuring and execution thereof. Upon successful completion of the Transaction,
the Global Co-ordinator will receive standard commissions. The Global Co-ordinator or its affiliates
may also enter into business relations with the Company or render services to it in the ordinary
course of business. The Global Co-ordinator has a personal financial interest in the success of the
Offering as a result of these contractual relationships.
The Selling Shareholder as well as its shareholders have a personal interest in the Offering due to
the proceeds accruing directly or indirectly to them from the sale of their shares in the Company.
A
c
1
0
4
7
0
8
p
u
0
3
0
P
r
o
o
f
7
:
2
7
.
5
.
1
1
B
/
L
R
e
v
i
s
i
o
n
:
0
O
p
e
r
a
t
o
r
D
a
d
42

EARNINGS AND DIVIDENDS PER SHARE; DIVIDEND POLICY
The share in the Company’s profit to be distributed to shareholders depends on the respective
proportionate interest they hold in the share capital. When new shares are issued, a profit share
other than that set out in § 60 (2) sentence 3 AktG may be stipulated for such new shares.
The resolution on the distribution of any dividends for a given financial year and, if applicable, the
amount and date of such distribution must be adopted at the Annual General Meeting in the
following financial year. The Annual General Meeting adopts its resolutions on the basis of
proposals made by the Executive Board and the Supervisory Board. Under German law, dividends
may be distributed from the Company’s net retained profits only. Net retained profits are calculated
on the basis of the Company’s (non-consolidated) annual financial statements, which are prepared
in accordance with the accounting rules of the German Commercial Code (Handelsgesetzbuch,
‘‘HGB’’). German commercial law on preparing financial statements deviates in material respects
from IFRS. When determining the amount available for distribution, the Company’s (nonconsolidated)
net profit for the period must be adjusted for profits/losses carried forward from the
previous financial year as well as withdrawals from or transfers to reserves. The law requires that
certain reserves must be created and that such reserves must be eliminated from the calculation of
the net retained profits available for distribution.
The Company’s Executive Board prepares the annual financial statements and, as a rule, they are
approved jointly by the Executive Board and the Supervisory Board. When allocating the net profit,
they are authorised to transfer, in whole or in part, the net profit for the period to other reserves,
less the amounts transferred to the statutory reserve and any loss carry-forward. It is not
permissible to transfer more than one-half of the net profit for the year if other reserves exceed
one-half of the share capital or would exceed one-half as a result of the transfer. If the Executive
Board and the Supervisory Board are unable to reach agreement on the adoption of the annual
financial statements, or if the Executive Board and Supervisory Board resolve to defer the decision
on adopting the annual financial statements to the Annual General Meeting, then the Annual
General Meeting will adopt the annual financial statements.
Due to the remaining interest it will hold in the Company after the Offering is implemented, the
Selling Shareholder could be in a position to influence the Company’s dividend policy (see ‘‘Risk
Factors – The Selling Shareholder may continue to exercise significant influence over Adler
Modemärkte AG and the interests of the Selling Shareholder could conflict with those of the rest of
the shareholders’’).
The Company’s ability to distribute dividends in the future will depend on the future profits of the
Company, its economic and financial situation and other factors. Such factors specifically include
the liquidity requirements of the Company, its future prospects, market development and the tax
and legislative environment and other general conditions. Since the business activities of Adler are
performed by consolidated subsidiaries of the Company, the Company’s ability to pay dividends will
also depend on whether its consolidated subsidiaries generate profits, the amount of profits
generated, and whether they distribute them to the Company. There are no dividend restrictions or
special procedures for dividend payments to shareholders resident outside of Germany. For further
details on the taxation of dividend payments to shareholders resident outside of Germany, please
see ‘‘Taxation in the Federal Republic of Germany – Taxation of the Shareholders – Taxation of
dividends’’ and ‘‘– Shareholders resident outside of Germany’’.
To the extent the Company has net retained profits in the future it plans, subject to the decision of
its Annual General Meeting, to distribute its shareholders a reasonable and customary dividend
over the medium term. The Company will pursue a dividend policy whereby dividends will increase
in line with the increase in earnings per share, with a payout ratio at the level of listed reference
companies. Some of the Company’s net retained profits and/or financial resources are intended to
be used for financing Adler’s expansion, in particular by expanding the national and over the
medium term international network of stores and for financing acquisitions when the opportunity
presents itself.
Pursuant to a profit and loss transfer agreement with AMODA GmbH in force from 18 November
2004 until 31 December 2010, the Company was obligated to transfer its entire profit, i.e., its entire
annual net profit as determined in accordance with the provisions of the German Commercial Code
(Handelsgesetzbuch, ‘‘HGB’’) less any loss carry-forward from the prior year, to AMODA GmbH. In
financial year 2008, the Company had no net retained profit available for distribution due to its net
annual loss of c2,780 thousand, which was absorbed by the shareholder at that time pursuant to
A
c
1
0
4
7
0
8
p
u
0
3
0
P
r
o
o
f
7
:
2
7
.
5
.
1
1
B
/
L
R
e
v
i
s
i
o
n
:
0
O
p
e
r
a
t
o
r
D
a
d
43

an existing profit and loss transfer agreement. Likewise, no net retained profit was available for
distribution in the financial years 2009 and 2010 due to the Company’s contractual obligation to
transfer its annual net profit. In the financial years 2009 and 2010, the Company transferred c2,094
thousand and c18,372 thousand, respectively, to its shareholder at that time.
The following overview summarises consolidated net profit in accordance with IFRS and the
notional consolidated net loss for the period per share of the Company as well as the annual net
profit/loss for the financial year (before the loss offset/profit transfer) in accordance with HGB and
the dividends paid for the financial year 2008, 2009 and 2010. In each case it was assumed for
purposes of comparison that the Company’s share capital was divided into 15,860,000 equal
shares, each representing c1.00, such that the number of units on which the calculation was based
corresponded to the number of shares into which the Company’s share capital was divided prior to
the implementation of the Capital Increase for the IPO.
Financial year
2008 2009 2010
Consolidated net profit/loss for the period in accordance with
IFRS (in c thousand) (audited) ............................................ -59,245 -7,278 27,422
Consolidated net profit/loss for the period per share in the
Company (in c) (unaudited) ................................................. -3.74 -0.46 1.73
Net annual profit/loss for the financial year (before the loss
offset/profit transfer) for the Company in accordance with
HGB (in c thousand) (audited)............................................. -2,780 2,094 18,372
Dividend per share in c (unaudited) ......................................... — — —
A
c
1
0
4
7
0
8
p
u
0
3
0
P
r
o
o
f
7
:
2
7
.
5
.
1
1
B
/
L
R
e
v
i
s
i
o
n
:
0
O
p
e
r
a
t
o
r
D
a
d
44

DILUTION
The net carrying amount of Adler Modemärkte AG’s consolidated tangible assets (total assets less
all intangible assets and non-current and current liabilities) amounted to c29,193 thousand as at
31 March 2011 based on the unaudited 2011 Consolidated Interim Financial Statements. This
represents approximately c1.84 per share (calculated on the basis of 15,860,000 outstanding
shares of the Company in issue as of the date of this Offering Memorandum; all data unaudited).
On the assumption that the net issue proceeds accruing to the Company amount to approximately
c27.6 million (see also ‘‘Reasons for the Offering, Use of Proceeds, Issue Costs and Interested
Third Parties – Issue proceeds and costs’’) and on the assumption that the Offering which is the
subject of this Offering Memorandum is fully implemented by 31 December 2010, the restated net
carrying amount of Adler Modemärkte AG’s consolidated tangible assets as at 31 March 2011,
based on the unaudited 2011 Consolidated Interim Financial Statements would have amounted to
approximately c56.8 million or approximately c3.07 per share (unaudited; calculated on the basis of
c18,510,000 shares of the Company in issue following full implementation of the capital increase
against cash contributions still to be resolved by the Company’s Annual General Meeting. This
represents an increase in the net carrying amount of Adler Modemärkte AG’s consolidated tangible
assets of approximately c1.23 (or approximately 66.8%) per share for the Selling Shareholder. By
contrast, the Offer Price paid by an investor under these circumstances would exceed the net
carrying amount of Adler Modemärkte AG’s consolidated tangible assets by approximately c8.18 (or
approximately 266.5%) per share. An investor will therefore be diluted by 72.7% (all data
unaudited).
A
c
1
0
4
7
0
8
p
u
0
3
0
P
r
o
o
f
7
:
2
7
.
5
.
1
1
B
/
L
R
e
v
i
s
i
o
n
:
0
O
p
e
r
a
t
o
r
D
a
d
45

CAPITALISATION, INDEBTEDNESS AND BORROWING REQUIREMENTS
Capitalisation and indebtedness
The following table shows the actual capitalisation and indebtedness of Adler under IFRS as at
31 March 2011, as well as that adjusted for the proceeds from the Offering of the New Shares.
The capitalisation of the Company will change following the Offering due to the net issue proceeds
accruing to the Company depending on the extent to which the capital increase still to be resolved
by the Company’s Annual General Meeting is implemented. The adjusted figures in the right
column of the following table are based on the assumption that net issue proceeds accruing to the
Company from this Offering amount to c27.6 million (see also the section entitled ‘‘Reasons for the
Offering, Use of Proceeds, Issue Costs and Interested Third Parties – Issue proceeds and costs’’).
As at 31 March 2011
Before the
Offering
(unaudited)
After the
Offering 1)
(unaudited)
e’000 e’000
Current liabilities................................................................................. 92,725 92,725
of which guaranteed .......................................................................... — —
of which secured ............................................................................... 251 251
of which unsecured / non-guaranteed ............................................... 92,474 92,474
Non-current liabilities ......................................................................... 44,200 44,200
of which guaranteed .......................................................................... — —
of which secured ............................................................................... 4,295 4,295
of which unsecured / non-guaranteed ............................................... 39,905 39,905
Total liabilities ..................................................................................... 136,925 136,925
Equity ................................................................................................... 32,316 59,916
of which subscribed capital................................................................ 15,860 18,510
of which capital reserve..................................................................... 101,001 125,951
of which other reserves ..................................................................... — —
of which net retained profits .............................................................. -84,545 -84,545
of which noncontrolling interests....................................................... — —
Total liabilities and equity.................................................................. 169,241 196,841
1) Adjustment under the assumption that based on an Offer Price of c11.25 per share, which reflects the mid-point of the price
range within which orders per share may be placed, the Company receives net issue proceeds from the Offering of the New
Shares amounting to c27.6 million (see also ‘‘Reasons for the Offering, Use of Proceeds, Issue Costs and Interested Third
Parties – Issue proceeds and costs‘‘), and that rather than the proceeds being used to pay down liabilities, they are held as
sight or term deposits with banks or are invested in other current assets until they are used to make the planned investments.
A
c
1
0
4
7
0
8
p
u
0
3
0
P
r
o
o
f
7
:
2
7
.
5
.
1
1
B
/
L
R
e
v
i
s
i
o
n
:
0
O
p
e
r
a
t
o
r
D
a
d
46

The following table shows Adler’s current net financial liabilities (i.e. current financial liabilities less
cash and cash equivalents and current financial receivables) and net indebtedness (current net
financial liabilities and non-current financial liabilities) as at 31 March 2011:
Net financial debt
As at
31 March
2011
(unaudited)
c’000
Liquidity ........................................................................................................................ 13,902
of which cash-in-hand ............................................................................................... 3,719
of which balances with banks ................................................................................... 10,183
of which cash equivalents......................................................................................... —
of which securities .................................................................................................... —
Current financial receivables* ....................................................................................... 3,559
Current financial liabilities*............................................................................................ 78,134
of which liabilities to banks ....................................................................................... —
share of non-current liabilities due within one year................................................... 10,072
of which other current financial liabilities .................................................................. 68,062
Current net financial liabilities .................................................................................. 60,673
Non-current financial liabilities*..................................................................................... 38,119
of which non-current liabilities to banks .................................................................... —
of which securitised liabilities .................................................................................... —
of which other non-current liabilities.......................................................................... 38,119
Net financial debt ....................................................................................................... 98,792
* Financial receivables include all the items reported as current financial assets in the Company’s IFRS Interim Consolidated
Financial Statements as at 31 March 2011. Financial liabilities include all the items reported as financial liabilities in the
Company’s IFRS Interim Consolidated Financial Statements as at 31 March 2011 (including liabilities from finance leases).
As at 31 March 2011, Adler had the following contingent liabilities, commitments and other financial
obligations:
As at
31 March
2011
c’000
(unaudited)
Utilised guarantee lines*............................................................................................... 560
Rental payment guarantee*.......................................................................................... 613
Other financial obligations from rental and lease obligations ....................................... 172,736
Other financial obligations ............................................................................................ 13,946
* contingent liabilities
A
c
1
0
4
7
0
8
p
u
0
3
0
P
r
o
o
f
7
:
2
7
.
5
.
1
1
B
/
L
R
e
v
i
s
i
o
n
:
0
O
p
e
r
a
t
o
r
D
a
d
47

The table below provides an overview of Adler’s assets as at 31 March 2011:
As at 31 March 2011
Total amount
(unaudited)
Of which
transfer or
assignment as
security or
secured by land
charge
(unaudited)
c’000 c’000
Non-current assets..................................................................... 67,989 3,987
of which intangible assets ......................................................... 3,123 0
of which deferred taxes............................................................. 50,708 613
of which investment property .................................................... 10,142 0
of which income tax receivables ............................................... 3,374 3,374
of which other receivables and other assets............................. — 0
642 0
Current assets ............................................................................ 101,252 0
of which inventories .................................................................. 78,281 0
of which trade receivables ........................................................ 1,935 0
of which other receivables and other assets............................. 6,871 0
of which financial assets available for sale ............................... 263 0
of which cash and cash equivalents............................................. 13,902 0
Total............................................................................................. 169,241 3,987
Borrowing requirements
In order to finance the intended growth of Adler (see the section entitled ‘‘Business – Strategy’’),
borrowing may become necessary, especially to the extent that key investments, such as those
relating to organic and inorganic growth, require financial resources in excess of the net issue
proceeds received by the Company from the Offering of the New Shares.
Although the Company believes that it will have sufficient equity and if applicable debt resources
following implementation of the Offering to fund its current and planned investments, it can give no
guarantee that Adler will be in a position to conclude any necessary financing arrangements on
favourable terms, or at all. If Adler were not in a position to secure the necessary financing, the
Company could be forced to change its investment plans or to incur higher than expected financing
costs.
Working capital statement
In the Company’s opinion, Adler has sufficient working capital for a minimum of twelve months
following the date of this Offering Memorandum to meet payment obligations falling due.
A
c
1
0
4
7
0
8
p
u
0
3
0
P
r
o
o
f
7
:
2
7
.
5
.
1
1
B
/
L
R
e
v
i
s
i
o
n
:
0
O
p
e
r
a
t
o
r
D
a
d
48

SELECTED FINANCIAL INFORMATION
The consolidated financial statements were prepared in accordance with the accounting
requirements of the International Accounting Standards Board (IASB) – International Financial
Reporting Standards (‘‘IFRS’’), as adopted by the EU – using the nature of expense method and
contain the audited financial information in accordance with IFRS for the respective financial year
and corresponding comparative figures for the previous financial year. The Adler Group’s
consolidated financial statements and consolidated interim financial statements will continue to be
prepared in accordance with IFRS in the future.
Unless otherwise indicated, the financial information in this Offering Memorandum has been
extracted or derived from the audited consolidated financial statements of the Company in
accordance with IFRS as at 31 December 2010 (the ‘‘2010 IFRS Consolidated Financial
Statements’’), the audited consolidated financial statements of the Company in accordance with
IFRS as at 31 December 2009 (the ‘‘2009 IFRS Consolidated Financial Statements’’ and
together with the 2010 IFRS Consolidated Financial Statements the ‘‘IFRS Consolidated Financial
Statements’’) or the unaudited consolidated interim financial statements of the Company in
accordance with IFRS, as at 31 March 2011 (the ‘‘2011 IFRS Consolidated Interim Financial
Statements’’). The financial information presented in the tables below represents a selection of the
financial information for the Adler Group contained in the financial statements and is quoted in
thousands of euros (‘‘e thousands’’) and rounded to whole numbers in accordance with normal
commercial practice in order to improve readability. Figures quoted as a percentage have been
rounded to one decimal place in accordance with normal commercial practice. Due to the rounding,
the figures presented in the tables do not always add up exactly to the particular total amount
given.
The consolidated financial information and business information presented represent a summary of
the financial information contained in this Offering Memorandum. Investors should base their
investment decisions on an examination of the Offering Memorandum as a whole.
A
c
1
0
4
7
0
8
p
u
0
3
0
P
r
o
o
f
7
:
2
7
.
5
.
1
1
B
/
L
R
e
v
i
s
i
o
n
:
0
O
p
e
r
a
t
o
r
D
a
d
49

Selected information relating to the consolidated income statement
Financial year 3 months as at 31 March
2008* 2009* 2010* 2010 2011
in % of
in % of
in % of
in % of
in % of
c’000 revenue c’000 revenue c’000 revenue c’000 revenue c’000 revenue
(audited) (unaudited) (audited) (unaudited) (audited) (unaudited) (unaudited) (unaudited) (unaudited) (unaudited)
Revenue ................................ 474,603 405,846 444,809 84,249 91,906
Other operating income .......... 23,404 4.9 17,709 4.4 8,172 1.8 2,240 2.7 2,601 2.8
Cost of materials .................... -239,602 -50.5 -205,277 -50.6 -210,360 -47.3 -43,790 -52.0 -47,321 -51.5
Personnel expenses .............. -128,173 -27.0 -80,553 -19.8 -74,996 -16.9 -17,778 -21.1 -19,286 -21.0
Other operating expenses....... -157,412 -33.2 -125,251 -30.9 -129,776 -29.2 -32,321 -38.4 -34,502 -37.5
EBITDA** ............................... -27,180 -5.7 12,474 3.1 37,849 8.5 -7,400 -8.8 -6,602 -7.2
Depreciation and amortisation -20,379 -4.3 -15,521 -3.8 -13,565 -3.0 -3,596 -4.3 -3,360 -3.7
Impairment .............................. -7,852 -1.7 -2,322 -0.6 — — — — — —
EBIT** ..................................... -55,411 -11.7 -5,369 -1.3 24,284 5.5 -10,996 -13.1 -9,962 -10.8
Other interest and similar
income 786 1,919 3,538 773 20
Interest and similar expenses . -6,977 -5,022 -4,121 -1,099 -914
Net finance costs ................. -6,191 -3,103 -583 -326 -894
Profit/loss from operations . -61,602 -8,472 23,701 -11,322 -10,856
Income taxes........................... 2,357 -149 4,778 67 2,006
Profit/loss from continuing
operations .......................... n.a. -8,621 28,479 -11,255 -8,850
Profit/loss from discontinued
operations............................ n.a. 1,343 -1,057 -1,059 —
Consolidated net profit (+)/
loss (-) for the year............ -59,245 -7,278 27,422 -12,314 -8,850
of which attributable to noncontrolling
interests.............. — — — — —
of which attributable to equity
holders of Adler
Modemärkte GmbH ............. -59,245 -7,278 27,422 -12,314 -8,850
Consolidated total
comprehensive income..... -59,245 -7,278 27,422 -12,314 -8,850
* Unless marked as unaudited, the financial information for financial years 2009 and 2010 has been extracted from the 2010
IFRS Consolidated Financial Statements. Unless marked as unaudited, the financial information for financial year 2008 has
been extracted from the 2009 IFRS Consolidated Financial Statements. The comparability of the financial information
presented in this table for financial years 2008 and 2009 is limited. For further details, please see ‘‘Management’s Discussion
and Analysis of Financial Condition and Results of Operations – Background to the financial information contained in the
Offering Memorandum and factors affecting its comparability’’.
** The Company uses EBITDA and EBIT as performance indicators in its business operations and is of the opinion that these key
figures could be used as performance indicators by investors. The Company defines EBITDA (earnings before interest, taxes,
depreciation and amortisation) as EBIT before depreciation and amortisation and impairment charges. The Company defines
EBIT (earnings before interest and taxes) in this context as the profit or loss from operations before net finance costs and
taxes. The figures for EBITDA and EBIT presented in this Offering Memorandum may not be comparable with the figures for
EBITDA and EBIT reported by other companies since, in the absence of a generally accepted definition of these key figures,
they may be calculated on the basis of different underlying variables.
The table below shows the development of EBITDA, EBIT and EBITDA adjusted for non-recurring
items in financial years 2008, 2009 and 2010 as well as in the first three months of financial years
2010 and 2011:
Financial year
3 months as at
31 March
2008* 2009* 2010* 2010 2011
c’000
(audited)
c’000
(audited)
c’000
(audited)
c’000
(unaudited)
c’000
(unaudited)
EBITDA** ............................ -27,180 12,474 37,849 -7,400 -6,602
EBITDA margin (in % of
revenue) (unaudited)....... -5.7 3.1 8.5 -8.8 -7.2
EBIT** ................................. -55,411 -5,369 24,284 -10,996 -9,962
EBIT margin (in % of
revenue) (unaudited)....... -11.7 -1.3 5.5 -13.1 -10.8
Adjusted EBITDA
(unaudited)*** ................ -1,392 13,348 — — —
Adjusted EBITDA margin (in
% of revenue)
(unaudited)...................... -0.3 3.3 — — —
* Unless marked as unaudited, the financial information for financial years 2009 and 2010 has been extracted from the 2010
IFRS Consolidated Financial Statements. Unless marked as unaudited, the financial information for financial year 2008 has
been extracted from the 2009 IFRS Consolidated Financial Statements. The comparability of the financial information
presented in this table for financial years 2008 and 2009 is limited. For further details, please see ‘‘Management’s Discussion
and Analysis of Financial Condition and Results of Operations – Background to the financial information contained in the
Offering Memorandum and factors affecting its comparability’’.
A
c
1
0
4
7
0
8
p
u
0
3
0
P
r
o
o
f
7
:
2
7
.
5
.
1
1
B
/
L
R
e
v
i
s
i
o
n
:
0
O
p
e
r
a
t
o
r
D
a
d
50

** The Company uses EBITDA and EBIT as performance indicators in its business operations and is of the opinion that these key
figures could be used as performance indicators by investors. The Company defines EBITDA (earnings before interest, taxes,
depreciation and amortisation) as EBIT before depreciation and amortisation and impairment charges. The Company defines
EBIT (earnings before interest and taxes) in this context as the profit or loss from operations before net finance costs and
taxes. The figures for EBITDA and EBIT presented in this Offering Memorandum may not be comparable with the figures for
EBITDA and EBIT reported by other companies since, in the absence of a generally accepted definition of these key figures,
they may be calculated on the basis of different underlying variables.
*** Adjusted for non-recurring items: In financial year 2008 in particular non-recurring items relating to the restructuring
programme were incurred which had a material effect on the results of the Company for that financial year. The non-recurring
items consisted of the costs of contract terminations resulting from the early termination of rental agreements for unprofitable
Adler stores, personnel expenses for social compensation plans and termination benefits, and consultancy expenses for
restructuring advisers. The expenses were offset by income from the reversal of restructuring provisions recognised in the prior
year. Non-recurring items relating to the restructuring programme were also incurred in financial year 2009. They were much
lower than in the previous year, however. For example, only personnel-related restructuring expenses were incurred. The
expenses were offset by income from the reversal of restructuring provisions recognised in the previous year. There were no
material non-recurring items in financial year 2010. An adjusted EBITDA has therefore not been presented for financial year
2010. The detailed reconciliation of EBITDA for financial years 2008 and 2009 to the adjusted EBITDA for those financial years
was as follows:
Financial year
EBITDA and adjusted EBITDA 2008 2009
(all figures are unaudited unless otherwise indicated) c’000 c’000
EBITDA reported in the income statement (audited)........................................................ -27,180 12,474
Costs of contract terminations ........................................................................................... +12,915 —
Expenses for staff reductions ............................................................................................ +11,132 +4,355
Expenses for restructuring advice ..................................................................................... +1,854 —
Income from the reversal of restructuring provisions......................................................... -113 -3,481
Adjusted EBITDA................................................................................................................. -1,392 13,348
The table below shows the analysis of revenue (net) by geographical region for financial years
2008, 2009 and 2010, as well as for the first three months of financial years 2010 and 2011:
Financial year 3 months as at 31 March
Revenue 2008* 2009* 2010* 2010 2011
c’000
(audited)
in % of
revenue
(unaudited)
c’000
(audited)
in % of
revenue
(unaudited)
c’000
(audited)
in % of
revenue
(unaudited)
c’000
(unaudited)
in % of
revenue
(unaudited)
c’000
(unaudited)
in % of
revenue
(unaudited)
Germany ................................. 394,824 83.2 332,014 81.8 356,195 80.1 67,854 80.5 73,213 79.7
Austria..................................... 65,880 13.9 60,873 15.0 74,599 16.8 13,416 15.9 15,468 16.8
Luxembourg ............................ 13,899 2.9 12,959 3.2 14,015 3.1 2,979 3.5 3,224 3.5
Revenue ................................. 474,603 100.0 405,846 100.0 444,809 100.0 84,249 100.0 91,906 100.0
* Information for financial years 2009 and 2010 has been extracted from the 2010 IFRS Consolidated Financial Statements.
Unless marked as unaudited, the financial information for financial year 2008 has been extracted from the 2009 IFRS
Consolidated Financial Statements. The comparability of the financial information presented in this table for financial years
2008 and 2009 is limited. For further details, please see ‘‘Management’s Discussion and Analysis of Financial Condition and
Results of Operations – Background to the financial information contained in the Offering Memorandum and factors affecting
its comparability’’.
The table below shows the analysis of the figures for gross sales, which have been generated by
or derived from Adler’s stock management system and unless otherwise stated are unaudited, by
product group for financial years 2008, 2009 and 2010, as well as for the first three months of
financial years 2010 and 2011:
Financial year 3 months as at 31 March
Sales 2008* 2009* 2010* 2010 2011
c’000
(unaudited)
in % of
gross sales
(unaudited)
c’000
(unaudited)
in % of
gross sales
(unaudited)
c’000
(unaudited)
in % of
gross sales
(unaudited)
c’000
(unaudited)
in % of
gross sales
(unaudited)
c’000
(unaudited)
in % of
gross sales
(unaudited)
Womenswear (unaudited) ....... 290,909 51.7 246,432 50.6 260,805 48.8 54,546 52.0 57,567 50.3
Menswear (unaudited) ............ 166,756 29.6 146,297 30.1 150,019 28.1 28,860 27.5 29,595 25.8
Lingerie (unaudited) ................
Supplementary assortment
55,536 9.9 48,846 10.0 54,118 10.1 10,422 9.9 11,539 10.1
(unaudited) .......................... 49,828 8.9 45,052 9.3 69,792 13.1 11,073 10.6 15,813 13.8
Gross sales (unaudited).......
Reconciliation to net revenue
563,030 486,627 534,734 104,901 114,514
(unaudited)**........................ -88,427 -80,781 -85,378 -20,652 -22,608
(Net) revenue ......................... 474,603*** 405,846*** 444,809*** 84,249 91,906
* Unless marked as unaudited, the audited financial information for financial years 2009 and 2010 has been extracted from the
2010 IFRS Consolidated Financial Statements. Unless marked as unaudited, the audited financial information for financial year
2008 has been extracted from the 2009 IFRS Consolidated Financial Statements. The comparability of the financial
information presented in this table for financial years 2008 and 2009 is limited. For further details, please see ‘‘Management’s
Discussion and Analysis of Financial Condition and Results of Operations – Background to the financial information contained
in the Offering Memorandum and factors affecting its comparability’’.
A
c
1
0
4
7
0
8
p
u
0
3
0
P
r
o
o
f
7
:
2
7
.
5
.
1
1
B
/
L
R
e
v
i
s
i
o
n
:
0
O
p
e
r
a
t
o
r
D
a
d
51

** The reconciliation to net revenue is unaudited and principally comprises VAT and discounts incurred on the sale of products
and sales deferred as a result of discount entitlements relating to the Adler customer card that were acquired or not utilised.
*** These figures have been extracted from the 2009 and 2010 IFRS consolidated financial statements and verified.
Selected information relating to the consolidated balance sheet
31 December 31 March
2008* 2009* 2010* 2011
c’000
(unaudited)
c’000
(unaudited)
c’000
(unaudited)
c’000
(unaudited)
ASSETS
Non-current assets ..................................... 88,891 72,644 67,501 67,989
Current assets ............................................ 101,033 132,325 95,214 101,252
Total equity and liabilities ....................... 189,924 204,969 162,715 169,241
EQUITY AND LIABILITIES
Equity.......................................................... 25,546 69,274 41,167 32,316
Non-current liabilities .................................. 63,886 54,520 47,165 44,200
Current liabilities ......................................... 100,492 81,175 74,383 92,725
Total equity and liabilities ....................... 189,924 204,969 162,715 169,241
* The comparability of the financial information presented in this table for financial years 2009 and 2010 is to some extent limited.
For further details, please see ‘‘Management’s Discussion and Analysis of Financial Condition and Results of Operations –
Background to the financial information contained in the Offering Memorandum and factors affecting its comparability’’.
Selected information relating to the consolidated statement of cash flows
Financial year 3 months to 31 March
2008* 2009* 2010* 2011 2010
c’000
(audited)
c’000
(audited)
c’000
(audited)
c’000
(unaudited)
c’000
(unaudited)
Net cash from (+)/used in (-) operating
activities............................................ -22,523 7,192 25,800 -11,845 -13,640
Net cash from (+)/used in (-) investing
activities............................................ 4,033 -37,842 -16,759 -255 -1,987
Net cash from (+)/used in (-) financing
activities............................................ 18,210 42,424 -13,076 -3,295 -3,427
Cash and cash equivalents at end of
period .............................................. 25,217 36,991 32,956 21,308 13,902
* The comparability of the financial information presented in this table for financial years 2009 and 2010 is to some extent limited.
For further details, please see ‘‘Management’s Discussion and Analysis of Financial Condition and Results of Operations –
Background to the financial information contained in the Offering Memorandum and factors affecting its comparability’’.
Additional selected information
The table below gives an overview of the number of Adler stores as at 31 December 2008,
31 December 2009, 31 December 2010 and 31 March 2011:
A
c
1
0
4
7
0
8
p
u
0
3
0
P
r
o
o
f
7
:
2
7
.
5
.
1
1
B
/
L
R
e
v
i
s
i
o
n
:
0
O
p
e
r
a
t
o
r
D
a
d
As at 31 December 31 March
2008 2009 2010 2011
Adler stores (unaudited)...................................... 120 123 135 137
52

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
The following discussion and analysis of the assets, liabilities, financial position, and profit or loss
(financial condition and results of operations) of the Adler Group and of the Company refers,
except where expressly indicated otherwise, to the audited IFRS consolidated financial statements
of the Company for financial years 2009 and 2010, both of which were certified with an unqualified
auditors’ report and are reproduced elsewhere in this Offering Memorandum.
Financial information about the Adler Group in this section relating to the reporting date
31 December 2010 or the financial year ended 31 December 2010 is taken from the 2010 IFRS
Consolidated Financial Statements.
Financial information about the Adler Group in this section relating to the reporting date
31 December 2009 or the financial year ended 31 December 2009 is also taken from the 2010
IFRS Consolidated Financial Statements. The latter contain comparative figures for financial year
2009 which reflect the sale of MOTEX Mode-Textil-Service Logistik und Management GmbH,
Hörselgau (‘‘MOTEX’’) with effect as at 30 September 2010 and the classification of its activities as
discontinued operations from 1 January 2009 in the consolidated income statement as a result of
the decision to sell MOTEX taken in financial year 2010.
Financial information about the Adler Group in this section relating to the reporting date
31 December 2008 or the financial year ended 31 December 2008 is taken from the 2009 IFRS
Consolidated Financial Statements, which contain comparative figures as at 31 December 2008
and for the financial year ended 31 December 2008. In contrast to the 2010 IFRS Consolidated
Financial Statements and the comparative figures included for financial year 2009, no distinction
was made between continuing operations and discontinued operations in preparing the consolidated
income statement in the 2009 IFRS Consolidated Financial Statements and the comparative figures
included for financial year 2008, as the decision to sell MOTEX had not yet been taken at that
point in time.
Financial information about the Adler Group in this section relating to the reporting date 31 March
2011 or the three-month periods ended 31 March 2010 and 31 March 2011 is taken from the
unaudited 2011 IFRS Consolidated Interim Financial Statements and is unaudited.
The comparability of the financial information contained in the following discussion is therefore
limited. For further details, please see ‘‘Management’s Discussion and Analysis of Financial
Condition and Results of Operations – Background to the financial information contained in the
Offering Memorandum and factors affecting its comparability‘‘.
The financial information contained in the Financial Section of this Offering Memorandum cannot
serve as the basis for conclusions about the future financial condition and results of operations of
the Adler Group or of the Company or for a period other than the respective period covered by
that financial information.
The following discussion should be read together with the sections entitled ‘‘Risk Factors’’,
‘‘Capitalisation, Indebtedness and Borrowing Requirements’’ and ‘‘Business’’, the financial
information contained in the Financial Section of this Offering Memorandum, the explanations to
that financial information and the financial information contained elsewhere in this Offering
Memorandum.
Overview of business
As one of the leading textile retailers in Germany, Austria and Luxembourg, and with more than 60
years of tradition and a high level of customer loyalty, Adler is, in its own estimation, the market
leader among textile retailers for customers over 45 in Germany in the value price segment. Adler
offers a both broad and extensive range of womenswear, menswear and lingerie. With a
supplementary range consisting of accessories, footwear, kidswear and babywear, traditional dress,
sportswear and hardware products, Adler aims to round off its product portfolio and to exploit
existing cross-selling potential in its stores. Adler is currently focusing on large-space retail
concepts, i.e., the space occupied by the stores it operates is usually more than 1,000 m 2 . Adler’s
product portfolio consists mainly of own brands, the collections for which are designed and
compiled to a large extent by Adler itself, and then produced by external manufacturers. This is
supplemented by a selected range of external brands. The products are distributed via a broad
network of currently 139 stores in Germany, Austria and Luxembourg, as well as an online store.
A
c
1
0
4
7
0
8
p
u
0
4
0
P
r
o
o
f
7
:
2
7
.
5
.
1
1
B
/
L
R
e
v
i
s
i
o
n
:
0
O
p
e
r
a
t
o
r
D
a
d
53

In terms of fit, fashion grade, functionality and quality, Adler’s product range is primarily tailored to
the generation of over 45s, whose share of the population will continue to grow. Adler has also
successfully positioned itself as a value-for-money supplier, offering high-quality products at an
attractive price-performance ratio. In addition, Adler has a vertically integrated business model with
full information control over all elements of the value chain, and can therefore respond efficiently to
changes in demand. Adler has also implemented a variable, modular retail space concept and can
therefore react flexibly to the offering of store spaces and occupy location-specific market niches.
Adler has been awarded several prizes for customer satisfaction and has an established customer
loyalty card programme that has been rated in tests as particularly good. It also enjoys
disproportionate awareness of its brand name and a very high level of customer loyalty.
Adler intends to continue with its assortment policy and to continue to gear its communication
strategy and the layout of its stores to customers over 45. It will also increasingly focus on winning
as new customers those that are moving into the ever-growing age group of the over 45s. In this
way, Adler aims to further expand its position as market leader, according to its own estimates, in
the primary segment it serves. Adler has already successfully implemented this strategy in some
stores and has attracted an increasing number of new customers through the offering of selected
external brands such as s.Oliver, Tom Tailor, Street One, Cecil, OneTouch and Mexx, as well as
more stringent visual merchandising and extensive modernisation of the shop fronts and interior
design of its stores. Adler plans to continuously expand this concept to further stores. In addition,
Adler intends to expand its store network both organically and inorganically, in order to exploit
economies of scale and broaden its market position. As part of its organic growth, Adler plans to
open around 20 to 35 new stores each year in Germany and Austria between the years 2011 and
2013, depending on the market situation and market environment. It would also like to selectively
use opportunities that arise due to the withdrawal of department store chains and small- and
medium-sized retailers. In the medium term, Adler is also considering international expansion into
bordering countries of Germany and Austria with a similar age structure and physiognomy of the
population. In future, Adler would also like to achieve cost benefits, on the one hand, and further
optimise internal processes, on the other, through the use of innovative technologies. For example,
Adler is presently in the testing stage for the Group-wide introduction of RFID (radio-frequency
identification), an electronic goods tracking and tagging system. By setting up an online shop in
2010, Adler also implemented a multi-channel sales strategy that aims to attract in particular new
customers entering the over 45 age group as well as older, less mobile customers.
For more detailed information relating to Adler’s business activities, please see the section headed
‘‘Business’’.
Group of consolidated companies
Group of companies consolidated in the 2009 IFRS Consolidated Financial Statements
In addition to the Company as the parent company of the Group, the following companies were
fully consolidated as subsidiaries in the 2009 IFRS Consolidated Financial Statements:
Adler Group
Shareholding
in %
ADLER Atelier Moden GmbH, Haibach........................................................................ 100.0
ADVERS Versicherungsmakler GmbH, Haibach.......................................................... 100.0
MOTEX Mode-Textil-Service Logistik und Management GmbH, Hörselgau ................ 100.0
Adler Modemärkte Gesellschaft m.b.H., Vösendorf/Austria ......................................... 100.0
Adler Mode S.A., Foetz/Luxembourg ........................................................................... 100.0
ALASKA GmbH & Co. KG, Munich, in which the Group has no shareholding, was also included in
the consolidated financial statements as a special purpose entity on the basis of a rental
agreement with Adler Modemärkte GmbH (relating to an administration building in Haibach).
Group of companies consolidated in the 2010 IFRS Consolidated Financial Statements
The Company sold its shareholding in MOTEX with effect as at 30 September 2010.
Adler Atelier Moden GmbH was merged with ADVERS Versicherungsmakler GmbH with effect as
at 30 June 2010, on the basis of a merger agreement dated 29 December 2010 entered in the
commercial register of the absorbing company on 17 January 2011.
A
c
1
0
4
7
0
8
p
u
0
4
0
P
r
o
o
f
7
:
2
7
.
5
.
1
1
B
/
L
R
e
v
i
s
i
o
n
:
0
O
p
e
r
a
t
o
r
D
a
d
54

By a purchase agreement dated 17 December 2010, Adler Modemärkte Gesellschaft m.b.H.,
Ansfelden (formerly: Vösendorf)/Austria (also referred in the following as ‘‘Adler Modemärkte
Austria’’), acquired all of the shares in F.W. Woolworth Co. Gesellschaft m.b.H., Ansfelden/Austria
with effect as at 31 December 2010.
ADVERS Versicherungsmakler GmbH, Haibach, was renamed ADVERS GmbH by means of a
change to its Articles of Association entered in the relevant commercial register on 19 May 2010.
The group of companies consolidated by the Adler Group as at 31 December 2010, in addition to
the Company as the parent company of the Group, therefore comprised the following companies
fully consolidated as subsidiaries:
Adler Group
Shareholding
in %
ADVERS GmbH, Haibach ............................................................................................ 100.0
Adler Modemärkte Gesellschaft m.b.H., Ansfelden/Austria.......................................... 100.0
Adler Mode S.A., Foetz / Luxembourg ......................................................................... 100.0
F.W. Woolworth Co. Gesellschaft m.b.H., Ansfelden (formerly: Vösendorf)/Austria
(following change of name and registered office now:
Adler Asset GmbH, Ansfelden/Austria)*................................................................... (100.0)
* Sub-subsidiary of Adler Modemärkte AG; the percentage shareholding in brackets relates to the shares held by Adler
Modemärkte Gesellschaft m.b.H., Ansfelden/Austria, in the capital of this company.
In addition, ALASKA GmbH & Co. KG, Munich, in which the Group has no shareholding, was
included in the consolidated financial statements as a special purpose entity in accordance with
SIC 12 on the basis of a rental agreement with Adler Modemärkte GmbH (relating to an
administration building in Haibach).
There had been no change in the group of companies consolidated by the Adler Group as at
31 March 2011.
Background to the financial information contained in the Offering Memorandum and factors
affecting its comparability
The Company sold its shareholding in MOTEX, which provides transport and logistics services for
the Adler Group, with effect as at 30 September 2010. In consequence, a distinction is made
between continuing operations and discontinued operations in the consolidated income statement in
the 2010 IFRS Consolidated Financial Statements and the 2011 IFRS Consolidated Interim
Financial Statements (including the comparative figures presented for financial year 2009 and the
first quarter of financial year 2010). The profit or loss after tax of MOTEX for the first nine and
three months of financial year 2010 and the net profit or loss of MOTEX for financial year 2009
and the net profit or loss of MOTEX in the first quarter of 2010 are reported in each case as a
separate item in the consolidated income statement in the 2010 IFRS Consolidated Financial
Statements and the 2011 IFRS Consolidated Interim Financial Statements (including the
comparative figures presented for financial year 2009 and the first quarter of financial year 2010).
The other items in the consolidated income statement for financial year 2010 (including the
comparative figures presented for financial year 2009 and the first quarter of financial year 2010),
on the other hand, reflect only the continuing operations.
In contrast, no distinction was made between continuing operations and discontinued operations in
the 2009 IFRS Consolidated Financial Statements (including the comparative figures presented for
financial year 2008) as the decision to sell MOTEX had not yet been taken at the balance sheet
date 31 December 2009.
In order to improve the comparability of the development of Adler’s business in financial years
2009 and 2010, the following discussion and analysis of the results of operations of Adler for
financial years 2009 and 2010 is therefore based on the financial information contained in the
consolidated income statement in the 2010 IFRS Consolidated Financial Statements (including the
comparative figures presented for financial year 2009). Those financial statements distinguish
between continuing operations and discontinued operations for both financial years.
In contrast, the financial information relating to Adler’s results of operations in financial year 2008,
which is taken from the comparative figures for the prior year in the consolidated income statement
A
c
1
0
4
7
0
8
p
u
0
4
0
P
r
o
o
f
7
:
2
7
.
5
.
1
1
B
/
L
R
e
v
i
s
i
o
n
:
0
O
p
e
r
a
t
o
r
D
a
d
55

in the 2009 IFRS Consolidated Financial Statements, does not distinguish between continuing
operations and discontinued operations.
The assets and liabilities of MOTEX are no longer included in the consolidated balance sheet as at
31 December 2010 in the 2010 IFRS Consolidated Financial Statements as a result of its sale with
effect as at 30 September 2010. The cash flows of MOTEX up to the date of sale, including the
proceeds of the sale of MOTEX and after deducting the cash funds disposed of in that connection,
are included in the consolidated statement of cash flows in the 2010 IFRS Consolidated Financial
Statements. In contrast, the assets and liabilities and the cash flows of MOTEX are included in full
in the comparative figures for financial year 2009 presented in the consolidated balance sheet and
the consolidated statement of cash flows in the 2010 IFRS Consolidated Financial Statements, and
also in the consolidated balance sheet and the consolidated statement of cash flows in the 2009
IFRS Consolidated Financial Statements (including the comparative figures presented for financial
year 2008).
The assets and liabilities of Adler Asset GmbH, Ansfelden/Austria (formerly: F.W. Woolworth Co.
Gesellschaft m.b.H.), acquired on 31 December 2010, are included for the first time in the
consolidated balance sheet as at 31 December 2010 in the 2010 IFRS Consolidated Financial
Statements.
In the light of these considerations
* the comparability of the financial information in the following discussion and analysis of Adler’s
results for operations for financial years 2008 and 2009,
* the comparability of the financial information in the following discussion and analysis of Adler’s
net assets for financial years 2009 and 2010 and
* the comparability of the financial information in the following discussion and analysis of Adler’s
financial position for financial years 2009 and 2010
are to some extent limited. The revenues of the Adler Group for financial year 2009 including the
activities of MOTEX reported in the consolidated income statement in the 2009 IFRS Consolidated
Financial Statements therefore amount to c410,824 thousand, while the revenues of the Adler
Group for financial year 2009 excluding the activities of MOTEX reported in the consolidated
income statement in the 2010 IFRS Consolidated Financial Statements amount to c405,846
thousand. The EBITDA of the Adler Group for financial year 2009 including the activities of
MOTEX reported in the consolidated income statement in the 2009 IFRS Consolidated Financial
Statements amounts to c14,652 thousand, while the EBITDA for financial year 2009 excluding the
activities of MOTEX reported in the consolidated income statement in the 2010 IFRS Consolidated
Financial Statements amounts to c12,474 thousand. The consolidated profit or loss after tax, on
the other hand, remains unchanged.
Significant factors affecting the financial condition and results of operations
In the opinion of the Company, the following factors have contributed significantly to the
development of the business and the results of operations of the Adler Group in the period since
1 January 2008 and are expected to continue to have a significant influence on the results of
operations.
Market and sector-related factors
Demographic change
The deep-rooted process of demographic change, observable for many years in most industrial
nations including the markets in Germany, Austria and Luxembourg served by the Adler Group,
has continued over the whole period covered by the historical financial information of the Adler
Group reproduced in the Financial Section of this Offering Memorandum. In the Company’s
opinion, the number of people over 45 years of age will increase further in the coming years as a
result of this process of demographic change. This is confirmed by the estimates of the German
Federal Statistical Office (Statistisches Bundesamt Deutschland), according to which the proportion
of people in Germany aged 60 and over will rise steadily from 26.2% in 2010 to 38.9% in 2050
(source: German Federal Statistical Office, Population of Germany through 2050, per 2007). People
over 45 years of age represent an age group with particularly high purchasing power. This is
shown by the fact that for many types of goods, including clothing, customers over 50 years of age
account for almost 50 percent of consumer expenditure (source: Federal Ministry of Family Affairs,
Senior Citizens, Women and Youth (Bundesministerium für Familie, Senioren, Frauen und Jugend),
A
c
1
0
4
7
0
8
p
u
0
4
0
P
r
o
o
f
7
:
2
7
.
5
.
1
1
B
/
L
R
e
v
i
s
i
o
n
:
0
O
p
e
r
a
t
o
r
D
a
d
56

Age: The driving force behind the economy, Final Report, July 2007, p. 2). These customers attach
greater importance to high quality and the comfortable fit of their clothing. In the light of the
reorientation of its business strategy to meet the needs and expectations of customers aged 45
and over, Adler has once again benefited strongly since the middle of 2009 from this demographic
development and anticipates that this trend will continue in the future.
Effects of the general financial and economic crisis
Consumer expenditure on clothing and shoes rose steadily from 2005 to 2008 in the markets in
Germany, Austria and Luxembourg served by Adler. From the second half of 2008 onward,
however, the business environment in the clothing sector deteriorated due to the effects of the
general financial and economic crisis. Expenditure by private households on clothing declined again
in 2009 to a small extent. At the same time, as a result of the general financial and economic
crisis and the associated rise in unemployment and reluctance to spend money on consumer
items, consumers initially turned in particular to products in the lower price range in 2009. In
contrast, 2010 was characterised by a slow but steady recovery in the economy. Given a
continuing recovery in the markets and an increase in consumers’ average income, market
commentators expect to see a movement by customers back to higher quality goods (Mintel
Germany 2010, p. 17).
Division of the clothing market with growth of providers in the value price segment
The clothing market has shown an increasing tendency in the recent past to divide into clothing for
young, fashion-conscious customers on the one hand and clothing for older customers on the
other. Companies in the clothing market therefore face the challenge of winning over the growing
number of younger customers with an ever increasing interest in fashion, and also continuing to
retain an older customer group which is more conservative in its choice of clothing. This diverging
development in the fashion market is being intensified further by demographic change in Germany.
It is true, for example, that a greater willingness to invest in clothing has become apparent on the
part of younger customers. But with falling birth rates and increasing life expectancy, the proportion
of older customers with greater purchasing power has risen constantly. In addition, the market has
witnessed an increasing polarisation between high-price fashion and luxury items on the one hand
and budget fashion on the other. In contrast to the discount segment itself, the growth in the value
price segment is mainly the result of attracting customers from the mid-price range, given that
consumers are increasingly looking for high-quality products with an attractive trade-off between
price and performance. In the Company’s opinion, this trend will continue to dictate the structure of
the market in the next few years as well. It is true that in 2009, due to the economic crisis and the
resulting rise in unemployment and reluctance of consumers to spend, European consumers initially
turned in particular to products in the lower price range. However, 2010 was characterised by a
slow but steady recovery in the economy. This was accompanied by customers turning back to
higher-value products. In the Company’s opinion, this benefited market participants in the value
price segment in particular. The Company expects that this trend will continue in the medium term.
Cost structure determined by cost of materials
The cost structure of companies in the clothing trade is mainly determined by the cost of materials.
The cost of materials ratio of the Adler Group in all three financial years under consideration
amounted to around 50%. The amount of the cost of materials is mainly determined by the
purchase price for the textiles in Adler’s product range. The latter depends in turn to a great extent
on the cost of producing the textiles, in particular the costs incurred in production for wages and
raw materials, especially cotton. Since the beginning of 2009, the price of cotton has risen
constantly and at an increasing rate. Even if the substantial rise in the price of cotton has not yet
had a significant effect on the purchasing costs of companies in the clothing trade, the Company
believes that that will be the case to a much greater extent in the future than during the period
covered by the historical financial information reproduced in the Financial Section of this Offering
Memorandum. At the same time, Adler anticipates that it will be able to pass the higher purchasing
costs on to its customers.
Seasonal fluctuations
The sales, profits and financing requirements of retailers in the apparel sector are affected by
seasonal fluctuations. For example, sales and profits in the second half of the year, especially in
the fourth quarter of the calendar year, which corresponds to the financial year for Adler in contrast
to certain other exchange-listed companies in the textile industry due to sales of winter goods with
A
c
1
0
4
7
0
8
p
u
0
4
0
P
r
o
o
f
7
:
2
7
.
5
.
1
1
B
/
L
R
e
v
i
s
i
o
n
:
0
O
p
e
r
a
t
o
r
D
a
d
57

a higher average selling price per product, are generally better than in the first half of the financial
year, especially in the first quarter. Moreover, the product range in the spring and summer months
includes a comparatively higher proportion of cheaper products such as T-shirts. As a result of the
seasonal nature of demand for clothing, Adler’s peak periods for purchases of goods and therefore
higher financing requirements are in the months of February and March, and August and
September. Adler endeavours to reduce its peak financing requirements and also to manage its
liquidity by agreeing long-term target payment dates, with payment due in some cases only after
the products have been sold.
For the Adler Group, these seasonal factors that are typical of the sector resulted in the Adler
Group generating a consolidated net loss in both the first quarter of financial year 2010 and the
first quarter of financial year 2011. At the same time, inventories rose from c56,749 thousand as at
31 December 2010 to c78,281 thousand as at 31 March 2011. Current liabilities also increased
from c74,383 thousand as at 31 December 2010 to c92,725 thousand as at 31 March 2011 which
mainly reflected higher trade payables due to the growth in inventories. The Company anticipates
that over the remainder of financial year 2011 the Adler Group will be able to make up for these
negative seasonal effects typical of the sector at least as well as in previous years, especially as
both the revenue and earnings of the Adler Group in the first quarter of financial year 2011 were
significantly better than in the first quarter of financial year 2010, despite the fact that exceptionally
the Easter business in this financial year fell into the second quarter.
Increasing importance of Internet trading
The Internet has fundamentally changed consumers’ buying patterns over the past few years. Both
the in-store trade and the mail order business have therefore felt it necessary to implement multichannel
sales strategies. With this aim, many providers use the Internet to sell their products in
addition to their traditional sales channels. At the same time, e-commerce is not only an ever more
important sales channel but also a fundamental means of obtaining new customers. Against this
background, Adler launched the Adler Online-Shop in 2010 as an additional sales channel
alongside the stores. Adler anticipates that Adler’s positive image will carry over to the Online-Shop
and, conversely, that customers who have become aware of Adler on the Internet will also visit the
Adler stores in greater numbers.
Company-related factors
Focus on specific customer groups
From 2007 onward, Adler initiated a rejuvenation strategy under the management at that time and
refocused its portfolio towards products with a significantly higher fashion grade and a fit that
emphasised the figure. At the same time, the marketing strategy was tailored to appeal to younger,
fashion-oriented customers, involving significant expenditure. After this strategy had proven to be
unsuccessful and had resulted in substantial losses in financial year 2008, the newly appointed
management of Adler corrected this rejuvenation strategy by orienting the fit and fashion grade of
Adler’s product portfolio back towards the needs and expectations of the growing 45+ age group
and adding selected external brands. In this context, the Adler Group is able to benefit from the
fact that its target customer group consists predominantly of ‘‘fashion followers’’ who only react to
fashion trends once they are established and recognisable on the street and in the media. Since
this customer group is not particularly concerned with the latest clothing trends, Adler is not
affected by price markdowns until a later stage than many other businesses in the apparel sector
and to a lesser extent. Thanks to the high degree of visibility of customer data available via the
Adler customer card, Adler was able to communicate the revised strategy to its customers within a
short time by means of targeted mailing and sales initiatives. Adler is therefore well informed about
its customer group’s needs with respect to the fit of their clothing and their purchasing behaviour
and considers itself to be in a position to manage its purchases and sales in the best possible
manner as a result. A multi-channel strategy was also implemented with the launch of the Adler
Online Shop. As a result of these strategic measures, the current Adler management was able to
restore the Adler Group to operating profitability as early as the fourth quarter of 2009.
Expansion strategy
As part of the reorientation of Adler’s business activities carried out from 2007 onward by the
management at that time, a restructuring plan was introduced, in addition to the rejuvenation
strategy subsequently corrected by the current management, which provided for the closure and in
some cases drastic redesign of stores, among other things. The number of Adler stores fell
A
c
1
0
4
7
0
8
p
u
0
4
0
P
r
o
o
f
7
:
2
7
.
5
.
1
1
B
/
L
R
e
v
i
s
i
o
n
:
0
O
p
e
r
a
t
o
r
D
a
d
58

accordingly from 130 at 1 January 2008 to 120 at 31 December 2008. This strategy also turned
out to be unsuccessful and was therefore corrected by the current Adler management from the
second half of 2009 onward. Consequently, the number of Adler stores rose to 123 as at
31 December 2009 and to a total of 135 at 31 December 2010 as a result of re-opened and newly
opened stores. At the same time, the sales density, i.e. gross sales per square metre of net sales
area, improved from around c2,500 in financial year 2009 to around c2,600 in financial year 2010
while the gross profit generated per square metre of net sales area increased from around c1,000
in financial year 2009 to around c1,100 in financial year 2010. The Company’s intention is to
steadily expand its existing store network in the core markets of Germany and Austria, as a
method of consolidating its market position and achieving economies of scale in purchasing, sales
and marketing. Four new stores were opened during the period from 31 December 2010 up to the
date of this Offering Memorandum. Rental agreements have also already been signed for several
stores in additional locations. Negotiations are currently underway with respect to further rental
agreements for additional stores.
Restructuring
The current Adler management launched a comprehensive restructuring programme immediately
following its appointment in 2009. As part of this restructuring programme, it was possible to
achieve significant reductions in marketing expenses, by focusing the marketing activities on the
45+ age group, and in personnel expenses, by negotiating a company agreement and removing
levels of the hierarchy while at the same time freeing up the sales staff from administrative duties.
These reductions were achieved without harming the business activities of Adler as a result of the
cost savings made.
Sale of MOTEX
The Company sold its shareholding in MOTEX, which provides transport and logistics services for
the Adler Group, with effect as at 30 September 2010. The main effects of the disposal of MOTEX
were a significant reduction in personnel expenses and a small decline in the revenue of the Adler
Group. In addition, the Adler Group no longer has to bear the costs of operating and maintaining
MOTEX’s high-rack warehouse which has therefore also led to a modest reduction in its other
operating expenses. On the other hand, the Adler Group’s reported cost of materials has risen as
a result of the sale of MOTEX. Moreover, the Adler Group now also has to report the shipping and
transport costs it is charged by MOTEX within other operating expenses. Prior to the disposal of
MOTEX, these were eliminated on consolidation as intra-Group expenses. For more detailed
information on the effects of the sale of MOTEX on the financial condition and results of operations
of the Adler Group, please see ‘‘Background to the financial information contained in the Offering
Memorandum and factors affecting its comparability’’.
Profit and loss transfer agreement between the Company and AMODA GmbH
A profit and loss transfer agreement and tax grouping for income tax purposes were in place
between the Company and AMODA GmbH in all three financial years under review. As a result,
the Company as a member of the tax group had no liability to income tax over the whole period
under consideration. The profit and loss transfer agreement was terminated on 30 September 2010
with effect as at 31 December 2010. Accordingly, there has been no grouping of companies for tax
purposes since 1 January 2011. Since no liability to pay tax arose in the hands of the Company
until the cessation of the grouping for tax purposes on 31 December 2010, no tax expense was
recorded up to that date. Following the termination of the grouping for tax purposes as at
31 December 2010, the effects of actual taxes have been included in the financial statements for
the first time from 1 January 2011 with the result that the Company is expected to incur a
significantly higher tax expense in future periods than in the three financial years under review.
Non-recurring items in financial year 2008
Financial year 2008 was impacted in particular by non-recurring items relating to the restructuring
programme which had a material effect on the results of the Adler Group for that financial year.
The non-recurring items consisted of the costs of contract terminations resulting from the early
termination of rental agreements for unprofitable Adler stores, personnel expenses for social
compensation plans and termination payments, and consultancy expenses for restructuring
advisers. The expenses were offset by income from the reversal of restructuring provisions
recognised in the prior year. The non-recurring items led to a material reduction in the EBITDA of
A
c
1
0
4
7
0
8
p
u
0
4
0
P
r
o
o
f
7
:
2
7
.
5
.
1
1
B
/
L
R
e
v
i
s
i
o
n
:
0
O
p
e
r
a
t
o
r
D
a
d
59

the Adler Group in financial year 2008. In addition, impairment losses were recorded in financial
year 2008 that had a negative effect on the EBIT of the Adler Group in that financial year.
Non-recurring items in financial year 2009
Non-recurring effects resulting from the restructuring programme were also incurred in financial
year 2009 but were significantly lower than in the previous year. For example, personnel-related
restructuring expenses were incurred again in financial year 2009. But these expenses were
balanced by the reversal of restructuring provisions recognised in the prior year, with the result that
the impact of the non-recurring items on the EBITDA of the Adler Group in financial year 2009 was
not as severe as in financial year 2008. Moreover, impairment losses incurred in financial year
2009 were also lower than in the previous year, so that EBIT for financial year 2009 did not suffer
from the effects of non-recurring items as much as in the prior year.
Costs of preparation for the IPO
The preparation for the Company’s IPO, in particular the associated development of an IFRS
accounting system and corresponding IT facilities as well as a satisfactory risk monitoring and
management system, resulted in particular in higher personnel expenses and other operating
expenses. These costs affected earnings for financial year 2010 and will also affect earnings for
financial year 2011 to the extent that they cannot be offset directly against equity.
Significant accounting policies
The Company prepared its consolidated financial statements for financial year 2009 in accordance
with the requirements of the International Accounting Standards Board (IASB), London, in
conformity with International Financial Reporting Standards (IFRS), as adopted by the EU. In order
to ensure equivalence with consolidated financial statements prepared in accordance with the
German Commercial Code (Handelsgesetzbuch, ‘‘HGB’’), the consolidated financial statements for
financial year 2010 were additionally prepared in accordance with the provisions of § 315a HGB.
The interpretations issued by the IFRS Interpretations Committee (formerly the International
Financial Reporting Interpretations Committee and the Standing Interpretations Committee) were
also applied. The Company’s management based the preparation of the financial statements on the
assumption that the Adler Group will continue as a going concern. The requirements of IFRS were
applied for the first time in the preparation of the 2009 IFRS Consolidated Financial Statements.
The consolidated financial statements are prepared in euros at the balance sheet date of Adler
Modemärkte AG, i.e., 31 December of each calendar year. The companies included in the
consolidated financial statements also have 31 December as their balance sheet dates. The
accounting policies that were applied for the purpose of preparing the 2009 and 2010 IFRS
Consolidated Financial Statements and that, in the opinion of the Company, were significant are
described in the following paragraphs:
* Current income taxes: The applicable rate of income tax is calculated on the basis of the
tax laws in force on the balance sheet date for the countries in which the Company’s
subsidiaries operate. Adequate and appropriate provisions are recognised for expected tax
payments on the basis of these tax laws. Until 31 December 2010, a profit and loss transfer
agreement and tax grouping for income tax purposes were in place between the Company
and its shareholder AMODA GmbH with the result that the Company as a member of the tax
group had no liability to income tax. Since 1 January 2011, the tax grouping has no longer
been in place. Since no liability to pay tax arose in the hands of the Company up to
31 December 2010, no tax expense was recorded until the cessation of the grouping for tax
purposes. Following the termination of the grouping for tax purposes as at 31 December
2010, the effects of actual taxes have been included in the financial statements for the first
time from 1 January 2011.
* Deferred taxes: Deferred taxes are recognised for all temporary differences between the tax
bases of the assets and liabilities and their carrying amounts in the IFRS Consolidated
Financial Statements. No deferred taxes were recognised in respect of differences between
the tax bases and the amounts currently included in the financial statements within the
Company during the period of the grouping of companies for income tax purposes, since the
reversal of these differences would not have resulted in a tax effect. As a consequence of the
termination of the tax grouping between the Company and AMODA GmbH as at 31 December
A
c
1
0
4
7
0
8
p
u
0
4
0
P
r
o
o
f
7
:
2
7
.
5
.
1
1
B
/
L
R
e
v
i
s
i
o
n
:
0
O
p
e
r
a
t
o
r
D
a
d
60

2010, deferred taxes were required to be recognised for the first time as at 31 December
2010 in respect of differences in measurement between the IFRS carrying amounts and the
tax bases of assets and liabilities.
* Inventories: Merchandise accounted for as inventories is generally carried at the lower of
cost and net realisable value. Net realisable value is the amount of the estimated sale
proceeds achievable in the normal course of business less the necessary variable costs of
sale. The cost of production includes all directly attributable costs and appropriate portions of
necessary overheads and depreciation in addition to direct materials and production costs.
Cost is determined using the weighted average method. Borrowing costs have not been
included in the cost of inventories.
* Pension obligations: The Adler Group has a number of different benefit plans. They include
both defined benefit and defined contribution plans. Defined contribution plans are postemployment
plans under which an enterprise pays fixed contributions into a separate entity
(such as a fund or insurance arrangement) and has no legal or constructive obligation to pay
further contributions, even if the fund or the entitlements from the insurance agreement
entered into do not have sufficient assets to pay all employee benefits relating to employee
service in the current reporting period and prior periods. A defined benefit plan is a postemployment
plan other than a defined contribution plan. The agreements underlying the
defined benefit plans provide for different benefits within the Group depending on the
particular subsidiary. These mainly consist of pension entitlements once the relevant
pensionable age is reached and one-off payments on cessation of employment.
* Termination benefits: Termination benefits are paid when an employee is dismissed prior to
the normal retirement date or when an employee leaves employment voluntarily in return for a
termination payment. The Group recognises termination benefits immediately when it is
demonstrably and irrevocably committed to terminate the employment of current employees
on the basis of a detailed formal plan which cannot be withdrawn, or when it is demonstrably
required to pay termination benefits on the voluntary termination of employment by
employees. Payments falling due more than twelve months after the balance sheet date are
discounted to their present value. The entitlements to termination benefits are reported under
provisions for personnel expenses. This item also includes portions of the entitlements arising
from the German provisions relating to partial retirement arrangements.
* Financial liabilities: Discount entitlements not yet utilised by customers are also reported in
current financial liabilities. Customers are awarded these entitlements whenever they make a
purchase using the Adler customer card. Within a specifically defined period, customers can
offset these discount entitlements against a subsequent purchase or have the amount paid
out in cash. The amount included in financial liabilities represents customers’ discount
entitlements not yet utilised at the balance sheet date.
* Leases: Leases are classified as finance leases if substantially all of the risks and rewards of
ownership are transferred to the lessee under the terms of the lease. All other leases are
classified as operating leases. Non-current assets that are rented or leased and where the
relevant Group company has economic ownership (finance leases) are recognised at the
present value of the minimum lease payments or the lower fair value and depreciated over
their useful lives in accordance with the requirements of IAS 17 (Leases). The corresponding
liability to the lessor is reported in the balance sheet as a finance lease obligation under
liabilities from finance leases. The lease payments are apportioned between the finance
charge and the reduction of the lease obligation so as to produce a constant periodic rate of
interest on the remaining balance of the liability.
* Recognition of income and expenses: Revenue represents the fair value of the
consideration received or receivable for the sale of goods and services in the ordinary course
of business. Revenue is reported net of VAT and after deducting rebates and discounts.
Customers’ entitlements to refunds relating to goods delivered are recorded in the income
statement once the relevant invoices have been examined. Sales which give the customer the
right to acquire loyalty points are accounted for initially as a liability in the amount of the fair
value of the loyalty points using the deferred revenue method in accordance with IFRIC 13
and are recognised as revenue only when the points are utilised or expire. The corresponding
obligation from loyalty points not yet utilised is reported under deferred income. Within the
Adler Group, a loyalty points programme required to be accounted for in accordance with the
A
c
1
0
4
7
0
8
p
u
0
4
0
P
r
o
o
f
7
:
2
7
.
5
.
1
1
B
/
L
R
e
v
i
s
i
o
n
:
0
O
p
e
r
a
t
o
r
D
a
d
61

*
provisions of IFRIC 13 was offered only for a short time during the period under review up to
the end of April 2009. The related liability in respect of the deferral of revenue is included in
deferred income as at 31 December 2008. The programme expired at the end of April 2009
and loyalty points not utilised by that time were therefore recognised as revenue. No further
programmes were offered during the period under review.
Where customers making purchases with the Adler customer card acquire an entitlement to a
particular discount, the discount is recorded as a reduction in revenue. The liability is reported
within financial liabilities. The liability is reversed when the discount is utilised. If customers
allow their discount entitlements to expire, the amount not utilised is reported as revenue.
Revenue and other operating income is generally recognised only when the services have
been performed or the goods or products have been delivered and the risks of ownership
have transferred to the customer. Retail sales are settled in cash or using an EC or credit
card. The card company’s charges are recorded in other operating expenses. The Group’s
business policy is that the end user acquires its products with a right of return. This right of
return is quantified on the basis of historical amounts and deducted from revenue.
Expenses are recognised when the goods or services are utilised or when the expense is
incurred. This also applies to the recognition of advertising expenses. The latter are recorded
in accordance with the provisions of IAS 38 when the service – in this case the provision of
advertising services – has been performed for the Adler Group and not at the later date when
the Adler Group is conducting the relevant advertising campaigns.
Impairment: Assets with indefinite useful lives are not depreciated or amortised; they are
tested for impairment annually or whenever there are indications that an asset may be
impaired. Assets subject to depreciation or amortisation are reviewed for impairment if
*
relevant events or changes in circumstances indicate that the carrying amount may no longer
be recoverable. Any impairment loss recognised is equal to the excess of the carrying amount
over the recoverable amount. The recoverable amount is the higher of the fair value of the
asset less costs to sell and the value in use. For the purposes of the impairment test, assets
are combined at the lowest level for which cash flows can be separately identified (cashgenerating
units). If an impairment charge is subsequently reversed, the carrying amount of
the asset (of the cash-generating unit) is increased to the newly estimated recoverable
amount. For this purpose, the higher carrying amount resulting from the increase may not
exceed the amount that would have been determined, net of depreciation or amortisation, if
no impairment charge had been recognised in respect of the asset (the cash-generating unit)
in prior years. A reversal of an impairment charge is recognised immediately in profit or loss.
Impairment charges recognised in respect of goodwill may not be reversed.
Stock appreciation rights: Stock appreciation rights (SARs – cash-settled share-based
payment) are measured at their fair value at the date of grant. The fair value is recorded as
personnel expenses over the vesting period. The obligations arising from SARs are
recognised as provisions and measured at their fair value at the interim reporting date. The
expenses are recognised over the vesting period. The fair value of the SARs is determined
on the basis of mathematical calculations. Management is required to make assumptions for
this purpose with respect to the probability that particular events affecting the value will occur.
Significant factors affecting the value are the achievement of the target share prices on which
the value is based and the date of the IPO.
Please refer to the annual financial statements reproduced in the Financial Section for information
relating to the standards and interpretations required to be applied for the first time to the
Company’s 2008 consolidated financial statements in the context of the initial adoption of IFRS,
and for details of the additional accounting policies applied in the preparation of the IFRS
Consolidated Financial Statements of the Adler Group.
A
c
1
0
4
7
0
8
p
u
0
4
0
P
r
o
o
f
7
:
2
7
.
5
.
1
1
B
/
L
R
e
v
i
s
i
o
n
:
0
O
p
e
r
a
t
o
r
D
a
d
62

Adler’s results of operations in financial years 2008, 2009 and 2010, and in the first quarter of
financial years 2010 and 2011 (IFRS)
The Company’s income statement was prepared using the nature of expense method. The table
below shows the items in the Company’s consolidated income statement in accordance with IFRS
in financial years 2008, 2009 and 2010 and in the first three months of financial years 2010 and
2011:
c’000
(audited)
Financial year 3 months as at 31 March
2008* 2009* 2010* 2010 2011
in % of
revenue
(unaudited)
c’000
(audited)
in % of
revenue
(unaudited)
c’000
(audited)
in % of
revenue
(unaudited)
c’000
(unaudited)
in % of
revenue
(unaudited)
c’000
(unaudited)
in % of
revenue
(unaudited)
Revenue.......................................... 474,603 405,846 444,809 84,249 91,906
Other operating income................... 23,404 4.9 17,709 4.4 8,172 1.8 2,240 2.7 2,601 2.8
Cost of materials ............................. -239,602 -50.5 -205,277 -50.6 -210,360 -47.3 -43,790 -52.0 -47,321 -51.5
Personnel expenses........................ -128,173 -27.0 -80,553 -19.8 -74,996 -16.9 -17,778 -21.1 -19,286 -21.0
Other operating expenses............... -157,412 -33.2 -125,251 -30.9 -129,776 -29.2 -32,321 -38.4 -34,502 -37.5
EBITDA** ........................................ -27,180 -5.7 12,474 3.1 37,849 8.5 -7,400 -8.8 -6,602 -7.2
Depreciation and amortisation......... -20,379 -4.3 -15,521 -3.8 -13,565 -3.0 -3,596 -4.3 -3,360 -3.7
Impairment ...................................... -7,852 -1.7 -2,322 -0.6 — — — — — —
EBIT** ............................................. -55,411 -11.7 -5,369 -1.3 24,284 5.5 -10,996 -13.1 -9,962 -10.8
Other interest and similar income 786 1,919 3,538 773 20
Interest and similar expenses ......... -6,977 -5,022 -4,121 -1,099 -914
Net finance costs .......................... -6,191 -3,103 -583 -326 -894
Profit/loss from operations .......... -61,602 -8,472 23,701 -11,322 -10,856
Income taxes................................... 2,357 -149 4,778 67 2,006
Profit/loss from continuing
operations............................... n.a. -8,621 28,479 -11,255 -8,850
Profit/loss from discontinued
operations ................................ n.a. 1,343 -1,057 -1,059 —
Consolidated net profit (+)/
loss (-) for the year ................ -59,245 -7,278 27,422 -12,314 -8,850
of which attributable to noncontrolling
interests .................. — — — — —
of which attributable to equity
holders of Adler Modemärkte
GmbH....................................... -59,245 -7,278 27,422 -12,314 -8,850
Consolidated total
comprehensive income ......... -59,245 -7,278 27,422 -12,314 -8,850
* Unless marked as unaudited, the financial information for financial years 2009 and 2010 has been extracted from the 2010
IFRS Consolidated Financial Statements. Unless marked as unaudited, the financial information for financial year 2008 has
been extracted from the 2009 IFRS Consolidated Financial Statements. The comparability of the financial information
presented in this table for financial years 2008 and 2009 is limited. For further details please see ‘‘Background to the financial
information contained in the Offering Memorandum and factors affecting its comparability’’.
** The Company uses EBITDA and EBIT as performance indicators in its business operations and is of the opinion that these key
figures could be used as performance indicators by investors. The Company defines EBITDA (earnings before interest, taxes,
depreciation and amortisation) as EBIT before depreciation and amortisation and impairment charges. The Company defines
EBIT (earnings before interest and taxes) in this context as the profit or loss from operations before net finance costs and
taxes. The figures for EBITDA and EBIT presented in this Offering Memorandum may not be comparable with the figures for
EBITDA and EBIT reported by other companies since, in the absence of a generally accepted definition of these key figures,
they may be calculated on the basis of different underlying variables.
A
c
1
0
4
7
0
8
p
u
0
4
0
P
r
o
o
f
7
:
2
7
.
5
.
1
1
B
/
L
R
e
v
i
s
i
o
n
:
0
O
p
e
r
a
t
o
r
D
a
d
63

Information relating to the individual items in the consolidated income statement is provided in the
following sections:
Revenue
The table below shows the geographical distribution of revenue (net) in financial years 2008, 2009
and 2010 and in the first three months of financial years 2010 and 2011:
Financial year 3 months as at 31 March
Revenue 2008* 2009* 2010* 2010 2011
in % of
c’000 revenue
(audited) (unaudited)
c’000
(audited)
in % of
revenue
(unaudited)
in % of
in % of
in % of
c’000 revenue c’000 revenue c’000 revenue
(audited) (unaudited) (unaudited) (unaudited) (unaudited) (unaudited)
Germany .................. 394,824 83.2 332,014 81.8 356,195 80.1 67,854 80.5 73,213 79.7
Austria...................... 65,880 13.9 60,873 15.0 74,599 16.8 13,416 15.9 15,468 16.8
Luxembourg ............. 13,899 2.9 12,959 3.2 14,015 3.1 2,979 3.5 3,224 3.5
Revenue.................. 474,603 100.0 405,846 100.0 444,809 100.0 84,249 100.0 91,906 100.0
* Unless marked as unaudited, the financial information for financial years 2009 and 2010 has been extracted from the 2010
IFRS Consolidated Financial Statements. Unless marked as unaudited, the financial information for financial year 2008 has
been extracted from the 2009 IFRS Consolidated Financial Statements. The comparability of the financial information
presented in this table for financial years 2008 and 2009 is limited. For further details please see ‘‘Background to the financial
information contained in the Offering Memorandum and factors affecting its comparability’’.
The revenue of the Adler Group declined by 14.5% from c474,603 thousand in financial year 2008
to c405,846 thousand in financial year 2009 and rose by 9.6% to c444,809 thousand in financial
year 2010. In the first quarter of financial year 2011, revenue increased by a further 9.1 % from
c84,249 thousand in the first quarter of financial year 2010 to c91,906 thousand in the first quarter
of financial year 2011. Revenue in all three financial years was generated almost entirely from
sales of goods. The main focus of the Adler Group’s business activities during the whole of the
period under review was the domestic German market. Adler generated more than 80% of its
revenue in that market in all three financial years under consideration. However, there was a rising
trend in the proportion of revenue generated outside Germany which rose from 16.8% in financial
year 2008 to 18.2% in financial year 2009 to 19.9% in financial year 2010. This reflected the
increasing internationalisation of Adler’s business operations, notably as a result of the acquisition
and redesigning of existing stores in Austria in 2009 and 2010.
As a consequence of this, the proportion of the total revenue of the Adler Group represented by
revenue generated outside Germany rose to 20.3% in the first quarter of financial year 2011. This
was reflected in a decline in the proportion of the total revenue of the Adler Group accounted for
by revenue generated in Germany to 79.7% in the first quarter of financial year 2011.
A
c
1
0
4
7
0
8
p
u
0
4
0
P
r
o
o
f
7
:
2
7
.
5
.
1
1
B
/
L
R
e
v
i
s
i
o
n
:
0
O
p
e
r
a
t
o
r
D
a
d
64

Gross sales in financial years 2008, 2009 and 2010, the figures for which were generated by or
derived from Adler’s stock management system and are unaudited, were distributed as follows
between the womenswear, menswear and lingerie product groups and the supplementary
assortment mainly comprising accessories, shoes, kidswear and babywear, traditional dress and
hardware products:
Financial year 3 months as at 31 March
Sales 2008* 2009* 2010* 2010 2011
c’000
(unaudited)
in % of
gross sales
(unaudited)
c’000
(unaudited)
in % of
gross sales
(unaudited)
c’000
(unaudited)
in % of
gross sales
(unaudited)
c’000
(unaudited)
in % of
gross sales
(unaudited)
c’000
(unaudited)
in % of
gross sales
(unaudited)
Womenswear
(unaudited)......... 290,909 51.7 246,432 50.6 260,805 48.8 54,546 52.0 57,567 50.3
Menswear
(unaudited)......... 166,756 29.6 146,297 30.1 150,019 28.1 28,860 27.5 29,595 25.8
Lingerie (unaudited) . 55,536 9.9 48,846 10.0 54,118 10.1 10,422 9.9 11,539 10.1
Supplementary
assortment
(unaudited)......... 49,828 8.9 45,052 9.3 69,792 13.1 11,073 10.6 15,813 13.8
Gross sales
(unaudited) ....... 563,030 486,627 534,734 104,901 114,514
Reconciliation to net
revenue
(unaudited)**...... -88,427 -80,781 -85,378 -20,652 -22,608
(Net) revenue.......... 474,603*** 405,846*** 444,809*** 84,249 91,906
* Unless marked as unaudited, the audited financial information for financial years 2009 and 2010 has been extracted from the
2010 IFRS Consolidated Financial Statements. Unless marked as unaudited, the audited financial information for financial year
2008 has been extracted from the 2009 IFRS Consolidated Financial Statements. The comparability of the financial
information presented in this table for financial years 2008 and 2009 is limited. For further details please see ‘‘Background to
the financial information contained in the Offering Memorandum and factors affecting its comparability’’.
** The reconciliation to net revenue is unaudited and principally comprises VAT and discounts incurred on the sale of products
and sales deferred as a result of discount entitlements relating to the Adler customer card that were acquired or not utilised.
*** These figures have been extracted from the 2009 and 2010 IFRS Consolidated Financial Statements and verified.
Comparison of financial years 2008 and 2009
The decline of 14.5% in revenue from c474,603 thousand in financial year 2008 to c405,846
thousand in financial year 2009 was largely a consequence of the unsuccessful strategy of the
management at that time of focusing Adler’s activities on younger customer groups and of the
closure of stores or reductions in their selling area. As a result, the fall in revenue in financial year
2009 affected all regions in which the Adler Group has operations and was also reflected at
product level. The revenue figure for financial year 2009 also included a reduction of c4,978
thousand due to the fact that external revenue generated by MOTEX was no longer reported within
the continuing operations of the Adler Group from financial year 2009 onward.
Against this background, revenue generated in Germany fell by 15.9% from c394,824 thousand in
financial year 2008 to c332,014 thousand in financial year 2009, revenue generated in Austria by
7.6% from c65,880 thousand in financial year 2008 to c60,873 thousand in financial year 2009 and
revenue generated in Luxembourg by 6.8% from c13,899 thousand in financial year 2008 to
c12,959 thousand in financial year 2009. The above-average decline in revenue generated in
Germany was also due, as well as to the exclusion for the first time of the external revenue
generated by MOTEX, to the reduction of the number of Adler stores operated in Germany which
fell from 112 on 1 January 2008 to 104 as at 31 December 2009, while the number of Adler stores
operated in Austria and Luxembourg rose from 18 to 19 in the same period and was therefore
almost unchanged.
A product-based analysis of the reduction in revenue showed that each of the product groups was
also affected by the overall decline in Adler’s revenue in financial year 2009, although to differing
extents. Accordingly, gross sales generated in the Womenswear division fell by 15.3% from
c290,909 thousand in financial year 2008 to c246,432 thousand in financial year 2009, gross sales
generated in the Menswear division by 12.3% from c166,756 thousand in financial year 2008 to
c146,297 thousand in financial year 2009, gross sales generated in the Lingerie division by 12.1%
from c55,536 thousand in financial year 2008 to c48,846 thousand in financial year 2009 and gross
sales generated from the supplementary assortment by 9.6% from c49,828 thousand in financial
A
c
1
0
4
7
0
8
p
u
0
4
0
P
r
o
o
f
7
:
2
7
.
5
.
1
1
B
/
L
R
e
v
i
s
i
o
n
:
0
O
p
e
r
a
t
o
r
D
a
d
65

year 2008 to c45,052 thousand in financial year 2009 (all of the figures quoted in this paragraph
were generated by or derived from Adler’s stock management system and are unaudited).
Comparison of financial years 2009 and 2010
The increase in revenue of 9.6% from c405,846 thousand in financial year 2009 to c444,809
thousand in financial year 2010 was mainly attributable to the successful repositioning of Adler’s
business by reorienting the product portfolio to meet the needs and expectations of the 45+ agegroup,
on the one hand, and by reopening closed stores and opening new Adler stores, on the
other hand, which resulted in the number of stores growing from 123 as at 31 December 2009 to
135 as at 31 December 2010.
All three national markets served by Adler contributed to this increase in revenue. Revenue
generated in Germany rose by 7.3% from c332,014 thousand in financial year 2009 to c356,195
thousand in financial year 2010, revenue generated in Austria by 22.5% from c60,873 thousand in
financial year 2009 to c74,599 thousand in financial year 2010 and revenue generated in
Luxembourg by 8.1% from c12,959 thousand in financial year 2009 to c14,015 thousand in
financial year 2010. The above-average increase in revenue generated in Austria, as a result of
which the proportion of the Adler Group’s revenue generated outside Germany increased from
18.2% in financial year 2009 to 19.9% in financial year 2010, was mostly due to the opening of a
total of 9 new Adler stores in Austria in financial year 2010.
An analysis by product group shows that all product groups contributed to the increase in revenue
in financial year 2010, although the gross sales achieved by the supplementary assortment made
the biggest contribution, in both relative and absolute terms, improving by 54.9% from c24,740
thousand in financial year 2009 to c69,792 thousand in financial year 2010. This increase in sales
was due almost entirely to the reorganisation of the business activities relating to sales of shoes,
which had previously involved external providers who paid commissions and rent to the Company
(please see also ‘‘Other operating income – Comparison of financial years 2009 and 2010’’). In
addition, gross sales achieved in the Womenswear division were 5.8% higher at c260,805
thousand in financial year 2010 compared with c246,432 thousand in financial year 2009 while
gross sales in the Lingerie division rose 10.8% from c48,846 thousand in financial year 2009 to
c54,118 thousand in financial year 2010, more or less in line with the increase in total gross sales.
In contrast, the Menswear division reported comparatively modest growth in gross sales of 2.5%
from c146,297 thousand in financial year 2009 to c150,019 thousand in financial year 2010 (all of
the figures quoted in this paragraph were generated by or derived from Adler’s stock management
system and are therefore unaudited).
Comparison of the first quarter of 2010 and the first quarter of 2011
Revenue rose by 9.1% from c84,249 thousand in the first quarter of 2010 to c91,906 thousand in
the first quarter of 2011. All three regional markets contributed to the growth in sales although the
greatest percentage increase was achieved in Austria. Revenue in Austria rose by 15.3% from
c13,416 thousand in the first quarter of 2010 to c15,468 thousand in the first quarter of 2011. In
Germany the Adler Group achieved an increase of 7.9% in its revenue from c67,854 thousand in
the first quarter of financial year 2010 to c73,213 thousand in the first quarter of financial year
2011, while in Luxembourg revenue grew by 8.2% from c2,979 thousand in the first quarter of
financial year 2010 to c3,224 thousand in the first quarter of financial year 2011. The increase in
revenue in Austria is mainly explained by the acquisition of the former Woolworths stores. In
contrast to the first quarter of financial year 2010, a total of eight former Woolworths stores, which
have now been converted to Adler stores, were able to contribute fully to the growth in sales for
the first time in the first quarter of financial year 2011. The improvement in sales in Germany is
mostly due to the opening of new stores. This was reflected in an increase in the number of stores
in Germany from 104 as at 31 March 2010 to 109 as at 31 March 2011. The growth in sales in
Luxembourg was achieved entirely on the basis of the existing sales area. An analysis by product
group shows that all product groups contributed to the rise in revenue in the first quarter of
financial year 2011 compared with the first quarter of financial year 2010, although the percentage
contribution of the supplementary assortment to total gross sales increased from 10.6% in the first
quarter of financial year 2010 to 13.8% in the first quarter of financial year 2011.
Other operating income
The Adler Group’s other operating income mainly comprises rental income from sublet space in the
stores, income from the reversal of provisions and other liabilities, income from commissions and
A
c
1
0
4
7
0
8
p
u
0
4
0
P
r
o
o
f
7
:
2
7
.
5
.
1
1
B
/
L
R
e
v
i
s
i
o
n
:
0
O
p
e
r
a
t
o
r
D
a
d
66

licence agreements together with costs recharged and reimbursements of costs. Adler also
generated substantial other operating income from disposals of non-current assets in financial year
2008 in particular. The table below shows the breakdown of other operating income in financial
years 2008, 2009 and 2010 as well as in the first three months of financial years 2010 and 2011:
Financial year
3 months as at
31 March
Other operating income 2008* 2009* 2010* 2010 2011
c’000
(audited)
c’000
(audited)
c’000
(audited)
c’000
(unaudited)
c’000
(unaudited)
Rent ............................................... 4,813 4,344 3,387 1,054 656
Income from the reversal of
provisions .................................. 2,969 4,003 412 111 115
Commissions ................................. 3,397 2,721 185 158 13
Licence agreements....................... 831 2,466 859 208 185
Income from the reversal of other
liabilities ..................................... 422 2,081 789 133 345
Costs recharged/cost
reimbursements......................... 1,047 616 667 110 92
Income from damages................... 185 289 431 32 21
Income from disposals of noncurrent
assets............................ 8,261 133 22 3 4
Government subsidies for
personnel expenses .................. 227 129 252 90 36
Prior-period income........................ — — 484 300 2
Reimbursement of IPO costs......... — — — — 905
Miscellaneous ................................ 1,252 927 684 42 227
23,404 17,709 8,172 2,240 2,601
* The financial information for financial years 2009 and 2010 has been extracted from the 2010 IFRS Consolidated Financial
Statements. The financial information for financial year 2008 has been extracted from the 2009 IFRS Consolidated Financial
Statements. The comparability of the financial information presented in this table for financial years 2008 and 2009 is limited.
For further details please see ‘‘Background to the financial information contained in the Offering Memorandum and factors
affecting its comparability’’.
The Adler Group’s other operating income fell by 24.3% from c23,404 thousand in financial year
2008 to c17,709 thousand in financial year 2009 and by a further 53.9% to c8,172 thousand in
financial year 2010. Other operating income rose by 16.1% from c2,240 thousand in the first
quarter of financial year 2010 to c2,601 thousand in the first quarter of financial year 2011.
Comparison of financial years 2008 and 2009
The decline of 24.3% in other operating income from c23,404 thousand to c17,709 thousand in
financial year 2009 was mainly due to lower income from disposals of non-current assets. The
latter recorded a reduction of 98.4% from c8,261 thousand in financial year 2008 to c133 thousand
in financial year 2009. Income from disposals of non-current assets in financial year 2008
amounting to c6,501 thousand reflected the fact that a building complex leased under the terms of
a finance lease (the administration building and warehouses of MOTEX) was disposed of in the
course of the negotiations for a new lease agreement and continued to be used under the terms of
an operating lease. The lease agreements for a further four Adler stores that had been classified
to date as finance leases were also terminated prematurely. This disposal generated additional
income from disposals of non-current assets amounting to c1,467 thousand in financial year 2008.
The rental income arose from sublettings to store concessionaires. Licence income in financial year
2009 amounting to c1,800 thousand reflected the grant of a trademark licence to a nonconsolidated
affiliated company. In addition, the exclusion of other operating income generated by
MOTEX for the first time in financial year 2009 was responsible for c540 thousand of the decline.
The main factor offsetting the fall in other operating income was an increase of 34.8% in income
from the reversal of provisions from c2,969 thousand in financial year 2008 to c4,003 thousand in
financial year 2009. This was mainly due to the reversal of provisions for the early termination of
rental agreements, since the decision by the former management to close a number of stores was
A
c
1
0
4
7
0
8
p
u
0
4
0
P
r
o
o
f
7
:
2
7
.
5
.
1
1
B
/
L
R
e
v
i
s
i
o
n
:
0
O
p
e
r
a
t
o
r
D
a
d
67

eversed by the new Adler management team installed in financial year 2009. The jump of 196.8%
in income from licence agreements from c831 thousand in financial year 2008 to c2,466 thousand
in financial year 2009 was primarily due to the grant of a trademark licence to a non-consolidated
affiliated company in Austria.
Comparison of financial years 2009 and 2010
The continuing decline of 53.9% in other operating income from c17,709 thousand in financial year
2009 to c8,172 thousand in financial year 2010 was due firstly to lower income from the reversal
of provisions of c412 thousand in financial year 2010 compared with c4,003 thousand in financial
year 2009. This reflected the fact that there was no further income in financial year 2010 from the
reversal of provisions in connection with the revision of the decision to close certain Adler stores.
The second factor was the fall in licence income which included one-time income of c1,800
thousand in financial year 2009 resulting from the grant of a trademark licence to an affiliated
company in Austria. In addition, income from provisions also fell by 93.2% from c2,721 thousand in
financial year 2009 to c185 thousand in financial year 2010. This was attributable to the
reorganisation of the business activities with existing external providers in the Adler stores, mainly
relating to sales of shoes, who had paid commissions to the Company in the past. Following the
reorganisation of the activities with these business partners, the Company now generates revenue
from the sale of the goods but no longer receives commissions. Income from the reversal of
liabilities declined by 62.1% from c2,081 thousand in financial year 2009 to c789 thousand in
financial year 2010 while rental income was 22.0% lower at c3,387 thousand in financial year 2010
compared with c4,344 thousand in financial year 2009 as a consequence of Adler itself taking over
sales of shoes from the existing concessionaire. The reduction in other operating income in
financial year 2010 was offset to some extent by prior-period income amounting to c484 thousand
as a result of suppliers’ credits relating to deliveries of goods in previous years and the 95.3%
increase in government subsidies for personnel expenses from c129 thousand in financial year
2009 to c252 thousand in financial year 2010.
Comparison of the first quarter of 2010 and the first quarter of 2011
Other operating income improved by 16.1% from c2,240 thousand in the first quarter of financial
year 2010 to c2,601 thousand in the first quarter of financial year 2011.
The main reason for the increase in other operating income was other operating income amounting
to c905 thousand representing a proportionate share of the costs of the IPO incurred to date
assumed by the parent company. Miscellaneous other operating income for the first quarter of
financial year 2011 also included advertising costs subsidies amounting to c144 thousand
compared with the figure of only c4 thousand generated in the first quarter of financial year 2010.
These effects were offset by the reduction of 37.8% in rental income from c1,054 thousand in the
first quarter of financial year 2010 to c656 thousand in the first quarter of financial year 2011 and
lower commission income which fell by 91.8% from c158 thousand in the first quarter of financial
year 2010 to c13 thousand in the first quarter of financial year 2011. Both items resulted from the
reorganisation from the end of March 2010 of the business activities with existing external
providers in the Adler stores, especially relating to sales of shoes. Since that date, Adler has sold
external providers’ products as its own products and reports these sales as part of its revenue. On
the other hand, Adler receives no commission on the sales and the external providers no longer
pay rent to Adler for space rented in the stores. In addition, Adler generated prior-period income
amounting to c300 thousand in the first quarter of financial year 2010 as a result of suppliers’
credits in connection with deliveries of merchandise relating to earlier years, which did not apply in
the first quarter of financial year 2011.
A
c
1
0
4
7
0
8
p
u
0
4
0
P
r
o
o
f
7
:
2
7
.
5
.
1
1
B
/
L
R
e
v
i
s
i
o
n
:
0
O
p
e
r
a
t
o
r
D
a
d
68

Cost of materials
The cost of materials mainly comprises expenses for goods purchased as well as, to a very small
extent, expenses for services purchased. The table below shows the breakdown of the cost of
materials in financial years 2008, 2009 and 2010 as well as in the first three months of financial
years 2010 and 2011:
Financial year
3 months as at
31 March
Cost of materials 2008* 2009* 2010* 2010 2011
c’000
(audited)
c’000
(audited)
c’000
(audited)
c’000
(unaudited)
c’000
(unaudited)
Purchases of goods....................... 239,596 205,277 210,360 43,790 47,321
Purchases of services.................... 6 — — — —
239,602 205,277 210,360 43,790 47,321
Cost of materials ratio in %
(unaudited) ................................ 50.5 50.6 47.3 52.0 51.5
* Unless marked as unaudited, the financial information for financial years 2009 and 2010 has been extracted from the 2010
IFRS Consolidated Financial Statements. Unless marked as unaudited, the financial information for financial year 2008 has
been extracted from the 2009 IFRS Consolidated Financial Statements. The comparability of the financial information
presented in this table for financial years 2008 and 2009 is limited. For further details please see ‘‘Background to the financial
information contained in the Offering Memorandum and factors affecting its comparability’’.
The cost of materials fell by 14.3% from c239,602 thousand in financial year 2008 to c205,277
thousand in financial year 2009 and rose again by 2.5% to c210,360 thousand in financial year
2010. The cost of materials rose by a further 8.1% from c43,790 thousand in the first quarter of
financial year 2010 to c47,321 thousand in the first quarter of financial year 2011.
Comparison of financial years 2008 and 2009
The decline of 14.3% in the cost of materials from c239,602 thousand in financial year 2008 to
c205,277 thousand in financial year 2009 was mainly due to the reduced volume of business which
was reflected in lower amounts of goods purchased and used, but also to lower markdowns of
merchandise than in the previous year. The reduction in the cost of materials was slightly lower
than the fall in revenues of 14.5% over the same period. This was entirely due to the fact that the
exclusion of MOTEX for the first time in financial year 2009 resulted in an increase of c1,023
thousand in the reported cost of materials representing services purchased from MOTEX no longer
eliminated on consolidation. The cost of materials ratio therefore rose slightly from 50.5% in
financial year 2008 to 50.6% in financial year 2009. If the activities of MOTEX had continued to be
included in financial year 2009, the cost of materials ratio for financial year 2009 would have
dropped to 49.7%.
Comparison of financial years 2009 and 2010
The increase of 2.5% in the cost of materials from c205,277 thousand in financial year 2009 to
c210,360 thousand in financial year 2010 mainly reflected the fact that the volume of business
rose again, as reflected in growth in revenue of 9.6% from c405,846 thousand in financial year
2009 to c444,809 thousand in financial year 2010. This resulted in higher figures for goods
purchased and used. The cost of materials ratio improved from 50.6% in financial year 2009 to
47.3% in financial year 2010 as a result of the slower rate of increase in the cost of materials
compared with revenue. The reasons for this were improvements in the price reductions and
economies of scale together with improved buying terms.
Comparison of the first quarter of 2010 and the first quarter of 2011
The increase in revenue compared with the first quarter of financial year 2010 also resulted in a
higher cost of materials. The latter increased by 8.1% from c43,790 thousand in the first quarter of
financial year 2010 to c47,321 thousand in the first quarter of financial year 2011. It was thus
possible to restrict the rise in the cost of materials over the comparable period in the previous year
to less than the growth of 9.1% in revenue achieved in the same period. The cost of materials
ratio consequently improved from 52.0% in the first quarter of 2010 to 51.5% in the first quarter of
financial year 2011. The first quarter of each financial year is generally characterised by price
markdowns on merchandise in anticipation of the changeover from the winter collection to the
A
c
1
0
4
7
0
8
p
u
0
4
0
P
r
o
o
f
7
:
2
7
.
5
.
1
1
B
/
L
R
e
v
i
s
i
o
n
:
0
O
p
e
r
a
t
o
r
D
a
d
69

summer collection. The cost of materials ratio therefore also tends to be higher in the first quarter
of a financial year than in the financial year as a whole. In the first quarter of financial year 2011,
however, Adler was able to achieve lower markdowns of goods than in the same period of the
previous year. This was the most significant reason for the improvement in the cost of materials
ratio compared with the prior-year quarter.
Personnel expenses
In addition to wages and salaries, personnel expenses include employers’ contributions to the
statutory pension scheme, expenses for old-age pensions as well as for partial retirement
schemes/death benefits and anniversaries, and other social security contributions. Other social
security contributions mainly comprise statutory social security contributions such as health and
unemployment insurance as well as accident insurance for employees. The table below shows the
breakdown of personnel expenses in financial years 2008, 2009 and 2010:
Financial year
3 months as at
31 March
Personnel expenses 2008* 2009* 2010* 2010 2011
c’000
(audited)
c’000
(audited)
c’000
(audited)
c’000
(unaudited)
c’000
(unaudited)
Wages and salaries ....................... 106,945 66,073 62,062 14,621 15,710
Other social security contributions. 10,395 6,694 6,191 1,628 1,874
Employers’ contributions to
statutory pension scheme.......... 9,911 6,778 5,926 1,361 1,498
Expenses for old-age pensions ..... 712 689 774 154 183
Expenses for partial retirement/
death benefits/anniversaries...... 210 319 43 14 21
128,173 80,553 74,996 17,778 19,286
Personnel expenses ratio in %
(unaudited) ................................ 27.0 19.8 16.9 21.1 21.0
* Unless marked as unaudited, the financial information for financial years 2009 and 2010 has been extracted from the 2010
IFRS Consolidated Financial Statements. Unless marked as unaudited, the financial information for financial year 2008 has
been extracted from the 2009 IFRS Consolidated Financial Statements. The comparability of the financial information
presented in this table for financial years 2008 and 2009 is limited. For further details please see ‘‘Background to the financial
information contained in the Offering Memorandum and factors affecting its comparability’’.
Personnel expenses declined by 37.2% from c128,173 thousand in financial year 2008 to c80,553
thousand in financial year 2009 and by a further 6.9% to c74,996 thousand in financial year 2010.
Personnel expenses increased by 8.5% from c17,778 thousand in the first quarter of financial year
2010 to c19,286 thousand in the first quarter of financial year 2011. The development of the
average number of people employed by the Adler Group in financial years 2008, 2009 and 2010
as well as in the first three months of financial years 2010 and 2011 was as follows:
Number of employees (average)
2008*
(audited)
Financial year
2009*
(audited)
2010*
(audited)
3 months as at
31 March
2010
(unaudited)
2011
(unaudited)
Managers....................................... 157 150 161 151 175
Salaried employees ....................... 1,249 778 706 678 701
Part-time workers........................... 4,857 3,584 3,098 3,131 2,959
Trainees......................................... 228 190 209 197 240
6,491 4,702 4,174 4,157 4,075
* The financial information for financial years 2009 and 2010 has been extracted from the 2010 IFRS Consolidated Financial
Statements. The financial information for financial year 2008 has been extracted from the 2009 IFRS Consolidated Financial
Statements. The comparability of the financial information for financial years 2008 and 2009 is limited. For further details
please see ‘‘Background to the financial information contained in the Offering Memorandum and factors affecting its
comparability’’.
A
c
1
0
4
7
0
8
p
u
0
4
0
P
r
o
o
f
7
:
2
7
.
5
.
1
1
B
/
L
R
e
v
i
s
i
o
n
:
0
O
p
e
r
a
t
o
r
D
a
d
70

Comparison of financial years 2008 and 2009
The reduction of 37.2% in personnel expenses from c128,173 thousand in financial year 2008 to
c80,553 thousand in financial year 2009 was mainly due to restructuring-related personnel
expenses included in financial year 2008 and a lower number of employees in financial year 2009.
Another reason for the fall in personnel expenses for financial year 2009 was the exclusion for the
first time of personnel expenses amounting to c11,206 thousand incurred by MOTEX, which had
421 employees on average during 2009 (average in 2008: 535 employees).
In the light of these factors, wages and salaries fell by 38.2% from c106,945 thousand in financial
year 2008 to c66,073 thousand in financial year 2009. In line with this, employers’ contributions to
the statutory pension scheme declined by 31.6% from c9,911 thousand in financial year 2008 to
c6,778 thousand in financial year 2009 while other social security contributions were 35.6% lower,
falling from c10,395 thousand in financial year 2008 to c6,694 thousand in financial year 2009. The
percentage reduction in personnel costs was therefore higher than the percentage reduction in the
average number of employees, which fell by only 27.6%. As a result, the personnel expenses ratio
declined from 27.0% in financial year 2008 to 19.8% in financial year 2009, despite the lower figure
for revenue in financial year 2009.
Comparison of financial years 2009 and 2010
The continued decline of 6.9% in personnel expenses from c80,553 thousand in financial year
2009 to c74,996 thousand in financial year 2010 was mainly due to the lower number of
employees in financial year 2010 as a result of the restructuring programme which was not
completed until this financial year. The fall in the number of employees was primarily due to a
reduction in part-time workers from 3,584 on average during financial year 2009 to 3,098 on
average during financial year 2010. This was reflected in particular in a 6.1% decline in expenses
for wages and salaries from c66,073 thousand in financial year 2009 to c62,062 thousand in
financial year 2010.
The personnel expenses ratio again improved from 19.8% in financial year 2009 to 16.9% in
financial year 2010, reflecting the further reduction in personnel expenses along with the increase
in revenue.
Comparison of the first quarter of 2010 and the first quarter of 2011
Personnel expenses rose by 8.5% from c17,778 thousand in the first quarter of financial year 2010
to c19,286 thousand in the first quarter of financial year 2011. However, the number of people
employed by the Adler Group fell from an average of 4,157 in the first quarter of financial year
2010 to an average of 4,075 in the first quarter of financial year 2010. This included the 107
people employed on average by Adler Asset GmbH, which was acquired as at 31 December 2010,
who were taken into account for the first time in the first quarter of financial year 2011. The first
reason for the rise in personnel expenses over the prior-year quarter was the higher number of
full-time employees in the first quarter of financial year 2011 compared with the first quarter of
financial year 2010 and the increase in the hours worked by part-time employees which was
greater overall than the savings achieved through the reduction in numbers of part-time employees.
It should be noted in this connection that, because of the higher salary level, an increase in the
number of full-time employees has a significantly greater effect on personnel expenses than a
reduction of part-time employees considered in absolute terms. This effect was increased due to
the payment of employers’ contributions to employees’ capital-building accounts which was
restarted in April 2010 and therefore did not affect the first quarter of financial year 2010. In
addition, new contracts of employment for the members of the Executive Board have been in force
since 1 January 2011 which provide, among other things, for a variable component of remuneration
in the event of a successful IPO. In accordance with IFRS, an addition to personnel expenses was
therefore recorded in the first quarter of financial year 2011. The Company nevertheless managed
to keep the personnel expenses ratio more or less unchanged compared with the prior-year period
and in fact the ratio fell marginally from 21.1% in the first quarter of financial year 2010 to 21.0%
in the first quarter of financial year 2011 due to the slightly faster growth in revenue.
A
c
1
0
4
7
0
8
p
u
0
4
0
P
r
o
o
f
7
:
2
7
.
5
.
1
1
B
/
L
R
e
v
i
s
i
o
n
:
0
O
p
e
r
a
t
o
r
D
a
d
71

Other operating expenses
The table below shows the breakdown of other operating expenses in financial years 2008, 2009
and 2010 as well as in the first three montths of the 2010 and 2011 financial years:
Financial year
3 months as at
31 March
Other operating expenses 2008* 2009* 2010* 2010 2011
c’000
(audited)
c’000
(audited)
c’000
(audited)
c’000
(unaudited)
c’000
(unaudited)
Lease payments and building
expenses ................................... 58,152 53,171 54,176 12,981 13,976
Advertising costs............................ 47,232 32,028 37,960 10,076 10,568
Shipping and transport costs ......... — 12,881 12,295 3,457 2,936
Technical facilities.......................... 12,498 8,315 8,371 1,758 2,416
Consultancy expenses................... 4,460 4,412 2,383 455 1,015
Administrative expenses ................ 5,797 3,511 2,919 976 868
External cleaning costs.................. 3,439 3,109 2,744 647 704
Consumables ................................. 2,999 2,396 2,489 712 638
Office expenses ............................. 2,115 1,287 1,398 360 381
Incidental costs of monetary
transactions ............................... 1,119 1,010 1,122 186 225
Losses from disposals of noncurrent
assets............................ 1,151 410 645 245 10
Costs of terminating contracts ....... 12,915 — — — —
Miscellaneous ................................ 5,535 2,721 3,274 467 766
157,412 125,251 129,776 32,321 34,502
* The financial information for financial years 2009 and 2010 has been extracted from the 2010 IFRS Consolidated Financial
Statements. The financial information for financial year 2008 has been extracted from the 2009 IFRS Consolidated Financial
Statements. The comparability of the financial information presented in this table for financial years 2008 and 2009 is limited.
For further details please see ‘‘Background to the financial information contained in the Offering Memorandum and factors
affecting its comparability’’.
Other operating expenses recorded a decline of 20.4% from c157,412 thousand in financial year
2008 to c125,251 thousand in financial year 2009 and rose by 3.6% to c129,776 thousand in
financial year 2010. Other operating expenses rose by 6.7% from c32,321 thousand in the first
quarter of financial year 2010 to c34,502 thousand in the first quarter of financial year 2011.
Comparison of financial years 2008 and 2009
The decline of 20.4% in other operating expenses from c157,412 thousand in financial year 2008
to c125,251 thousand in financial year 2009 was mainly due firstly to the costs of contract
terminations amounting to c12,915 thousand included in financial year 2008 in connection with
rental agreements for insufficiently profitable stores terminated prematurely that were no longer
incurred in financial year 2009. An additional factor was a significant reduction of 32.2% in
advertising costs from c47,232 thousand in financial year 2008 to c32,028 thousand in financial
year 2009 which reflected the unsuccessful attempt in financial year 2008 by the management of
Adler at that time to implement a rejuvenation strategy with the help of substantial marketing
expenditure. As part of the successful repositioning of the Adler brand carried out in financial year
2009 to meet the needs and expectations of the growing 45+ age-group, the current management
was able to return marketing costs to a significantly lower level. Lease payments and building
expenses also fell by 8.6% from c58,152 thousand in financial year 2008 to c53,171 thousand in
financial year 2009 mainly as a result of the reductions in selling area initiated in financial year
2008. In addition, reductions were achieved of 33.5% in expenses for technical facilities from
c12,498 thousand in financial year 2008 to c8,315 thousand in financial year 2009 and of 39.4% in
administrative expenses from c5,797 thousand in financial year 2008 to c3,511 thousand in
financial year 2009. The decline in other operating expenses in financial year 2009 was offset by
shipping and transport costs amounting to c12,881 thousand that were no longer eliminated on
consolidation in this financial year but reported as expenses as a result of the exclusion for the
first time of the activities of MOTEX.
A
c
1
0
4
7
0
8
p
u
0
4
0
P
r
o
o
f
7
:
2
7
.
5
.
1
1
B
/
L
R
e
v
i
s
i
o
n
:
0
O
p
e
r
a
t
o
r
D
a
d
72

Comparison of financial years 2009 and 2010
The increase of 3.6% in other operating expenses from c125,251 thousand in financial year 2009
to c129,776 thousand in financial year 2010 was mainly due to the rise in advertising costs which
rose by 18.5% from c32,028 thousand in financial year 2009 to c37,960 thousand in financial year
2010 primarily as a result of renewed TV and radio advertising. The increase in other operating
expenses was held back firstly by the continuing reduction in administrative expenses, which fell by
16.9% from c3,511 thousand in financial year 2009 to c2,919 thousand in financial year 2010, and
in particular by the 46.0% decline in consultancy expenses from c4,412 thousand in financial year
2009 to c2,383 thousand in financial year 2010. The latter was mainly due to the fact that
consultancy services utilised in connection with the restructuring programme in financial year 2009
were no longer incurred in financial year 2010. A further factor was the 11.7% decline in external
cleaning costs from c3,109 thousand in financial year 2009 to c2,744 thousand in financial year
2010 which reflected contract renegotiations and the reduction in the range of services.
Comparison of the first quarter of 2010 and the first quarter of 2011
Other operating expenses increased by 6.7% from c32,321 thousand in the first quarter of financial
year 2010 to c34,502 thousand in the first quarter of financial year 2011. The main reason for the
increase was the 7.7% rise in lease payments from c12,981 thousand in the first quarter of
financial year 2010 to c13,976 thousand in the first quarter of financial year 2011 and the
associated higher expenses for technical facilities which grew by 37.4% from c1,758 thousand in
the first quarter of financial year 2010 to c2,416 thousand in the first quarter of financial year 2011.
A significant contribution to the increase in other operating expenses was also made by
consultancy expenses which rose by 123.1% from c455 thousand in the first quarter of financial
year 2010 to c1,015 thousand in the first quarter of financial year 2011, mainly due to consultancy
services in connection with the IPO arising in the first quarter of the current financial year. In
addition, advertising costs increased by 4.9% from c10,076 thousand in the first quarter of financial
year 2010 to c10,568 thousand in the first quarter of financial year 2011. This was caused by a
higher level of marketing activities in the first quarter of financial year 2011, especially in relation to
radio advertising. The rise in other operating expenses was slowed by lower shipping and transport
costs in the first quarter of financial year 2011. The latter fell by 15.1% from c3,457 thousand in
the first quarter of financial year 2010 to c2,936 thousand in the first quarter of financial year 2011
because, following the sale of MOTEX as at 30 September 2010, Adler entered into a new
agreement with MOTEX for logistics services on more favourable terms and was thus able to
reduce the costs of transporting merchandise.
Depreciation and amortisation
Depreciation and amortisation comprises depreciation charged on property, plant and equipment
and amortisation charged on intangible assets. Depreciation charged on property, plant and
equipment mostly consists of depreciation in respect of lessee’s fixtures in buildings owned by third
parties, buildings held under finance leases and other operating and office equipment. The table
below shows the breakdown of depreciation and amortisation in financial years 2008, 2009 and
2010 as well as in the first three months of the 2010 and 2011 financial years:
Financial year
3 months as at
31 March
Depreciation and amortisation 2008* 2009* 2010* 2010 2011
c’000
(audited)
c’000
(audited)
c’000
(audited)
c’000
(unaudited)
c’000
(unaudited)
Amortisation of intangible assets ..................... 1,586 1,654 817 211 184
Depreciation of property, plant and equipment 18,793 13,868 12,749 3,385 3,176
20,379 15,521 13,565 3,596 3,360
* The financial information for financial years 2009 and 2010 has been extracted from the 2010 IFRS Consolidated Financial
Statements. The financial information for financial year 2008 has been extracted from the 2009 IFRS Consolidated Financial
Statements. The comparability of the financial information presented in this table for financial years 2008 and 2009 is limited.
For further details please see ‘‘Background to the financial information contained in the Offering Memorandum and factors
affecting its comparability’’.
Depreciation and amortisation fell by 23.8% from c20,379 thousand in financial year 2008 to
c15,521 thousand in financial year 2009 and by a further 12.6% to c13,565 thousand in financial
A
c
1
0
4
7
0
8
p
u
0
4
0
P
r
o
o
f
7
:
2
7
.
5
.
1
1
B
/
L
R
e
v
i
s
i
o
n
:
0
O
p
e
r
a
t
o
r
D
a
d
73

year 2010. Depreciation and amortisation fell by 6.6% from c3,596 thousand in the first quarter of
2010 to c3,360 thousand in the first quarter of 2011.
Comparison of financial years 2008 and 2009
Depreciation and amortisation in financial year 2008 amounting to c20,379 thousand consisted
principally of depreciation charged in respect of lessee’s fixtures in buildings owned by third parties,
buildings held under finance leases and other operating and office equipment. The decline of
23.8% to c15,521 thousand in depreciation and amortisation in financial year 2009 was mainly due
to the fact that depreciation and amortisation charged on non-current assets within MOTEX in
financial year 2009 were no longer reported, since its activities were no longer included in
continuing operations in the 2010 IFRS Consolidated Financial Statements. Depreciation and
amortisation in financial year 2008 still included depreciation and amortisation of c3,520 thousand
relating to the assets of MOTEX. In addition, a total of four buildings held under finance leases,
which had contributed c668 thousand to depreciation and amortisation for financial year 2008, were
disposed of at the end of that year.
Comparison of financial years 2009 and 2010
The main reason for the further decline of 12.6% in depreciation and amortisation from c15,521
thousand in financial year 2009 to c13,565 thousand in financial year 2010 was the reduction in
investments in non-current assets in financial years 2009 and 2010 as a result of the restructuring
programme. The lower amount of investments resulted in correspondingly lower depreciation and
amortisation. An additional factor was that only a single new finance lease agreement for a store
was added in financial year 2010, which was also insufficient to outweigh the annual depreciation
on the existing buildings held under finance leases.
Comparison of the first quarter of 2010 and the first quarter of 2011
Depreciation and amortisation charged on non-current assets declined by 6.6% from c3,596
thousand in the first quarter of financial year 2010 to c3,360 thousand in the first quarter of
financial year 2011. The main reason for the further decline in depreciation and amortisation was
once again the reduction in investments in financial years 2009 and 2010 as a result of the
restructuring programme.
Impairment
Impairment comprises impairment losses recognised on intangible assets and property, plant and
equipment. The table below shows the breakdown of impairment charges in financial years 2008,
2009 and 2010 as well as in the first three months of financial years 2010 and 2011:
Financial year
3 months as at
31 March
Impairment charges and
reversals 2008* 2009* 2010* 2010 2011
c’000
(audited)
c’000
(audited)
c’000
(audited)
c’000
(unaudited)
c’000
(unaudited)
of which charged on intangible
assets ........................................ 250 1,814 — — —
of which charged on property, plant
and equipment (net reversals in
2009) ......................................... 7,603 -393 — — —
of which charged on investment
property ..................................... — 900 — — —
7,852 2,322 — — —
* The financial information for financial years 2009 and 2010 has been extracted from the 2010 IFRS Consolidated Financial
Statements. The financial information for financial year 2008 has been extracted from the 2009 IFRS Consolidated Financial
Statements. The comparability of the financial information presented in this table for financial years 2008 and 2009 is limited.
For further details please see ‘‘Background to the financial information contained in the Offering Memorandum and factors
affecting its comparability’’.
A
c
1
0
4
7
0
8
p
u
0
4
0
P
r
o
o
f
7
:
2
7
.
5
.
1
1
B
/
L
R
e
v
i
s
i
o
n
:
0
O
p
e
r
a
t
o
r
D
a
d
74

Impairment fell by 70.4% from c7,852 thousand in financial year 2008 to c2,322 thousand in
financial year 2009. No impairment charges were incurred in financial year 2010, or in the first
quarter of 2011.
Comparison of financial years 2008 and 2009
The decline in impairment in financial year 2009 was mainly due to the fact that in financial year
2008 impairment charges amounting to c6,547 thousand were recognised in respect of intangible
assets and property, plant and equipment of MOTEX, and impairment charges amounting to c759
thousand were incurred for the closure of stores. In this connection, an impairment charge of c546
thousand was also recognised in respect of property, plant and equipment capitalised under the
terms of a finance lease. Because of the development of the economy in financial year 2008, the
assets of MOTEX were tested for impairment as at 31 December 2008. In the light of the
recoverable amounts determined, an impairment charge of c6,547 thousand was recognised. Of
the total charge, an amount of c250 thousand was allocated to intangible assets, c112 thousand to
buildings, c4,602 thousand to technical equipment and machinery and c1,583 thousand to other
items of property, plant and equipment. In financial year 2009, reversals of impairment charges
amounting to c565 thousand were recognised in profit or loss due to the fact that only some of the
projected closures of stores actually took place. The impairment charges previously recognised in
respect of the property, plant and equipment of those stores which continued to be operated were
reversed up to the assets’ original depreciated cost.
Comparison of financial years 2009 and 2010
In financial year 2009, impairment losses amounting to c448 thousand were recognised in respect
of the rights to the ‘‘VIVENTY by Bernd Berger’’ brand acquired under the terms of a finance
lease. As a result of negative gross income relating to the ‘‘VIVENTY by Bernd Berger’’ line, the
intangible asset was written off in full. Further impairment losses totalling c1,367 thousand were
recorded in financial year 2009 in respect of internally generated logistics software since the use of
individual components of the software was discontinued in financial year 2009. Also in financial
year 2009, impairment losses amounting in total to c900 thousand were charged in connection with
the reclassification of one property into investment property. The portion of the property no longer
utilised by the Company itself was reclassified out of property, plant and equipment. The property
was written down to its fair value including land. This amount to c4,020 thousand as at
31 December 2009.
In financial year 2010, no impairment losses were required to be recognised within continuing
operations. The assets and liabilities of the discontinued operations were written down in financial
year 2010 to their fair value less costs to sell. This resulted in an impairment loss of c2,665
thousand, the full amount of which was reported within discontinued operations (please see also
the section headed ‘‘Consolidated net profit or loss for the year’’).
A
c
1
0
4
7
0
8
p
u
0
4
0
P
r
o
o
f
7
:
2
7
.
5
.
1
1
B
/
L
R
e
v
i
s
i
o
n
:
0
O
p
e
r
a
t
o
r
D
a
d
75

EBITDA and EBIT
The table below shows the development of EBITDA, EBIT, the most significant indicators of
operating performance in the view of the Company, in financial years 2008, 2009 and 2010 as well
as in the first three months of 2010 and 2011, and the EBITDA adjusted for restructuring-related
special items in financial years 2008 and 2009:
Financial year
3 months as at
31 March
EBITDA and EBIT 2008* 2009* 2010* 2010 2011
c’000
(audited)
c’000
(audited)
c’000
(audited)
c’000
(unaudited)
c’000
(unaudited)
EBITDA ........................................ -27,180 12,474 37,849 -7,400 -6,602
EBITDA margin (in % of revenue)
(unaudited) ............................... -5.7 3.1 8.5 -8.8 -7.2
EBIT ............................................. -55,411 -5,369 24,284 -10,996 -9,962
EBIT margin (in % of revenue)
(unaudited) ................................ -11.7 -1.3 5.5 -13.1 -10.8
Adjusted EBITDA (unaudited)**.. -1,392 13,348 — — —
Adjusted EBITDA margin (in % of
revenue) (unaudited) ................. -0.3 3.3 — — —
* Unless marked as unaudited, the financial information for financial years 2009 and 2010 has been extracted from the 2010
IFRS Consolidated Financial Statements. Unless marked as unaudited, the financial information for financial year 2008 has
been extracted from the 2009 IFRS Consolidated Financial Statements. The comparability of the financial information
presented in this table for financial years 2008 and 2009 is limited. For further details please see ‘‘Background to the financial
information contained in the Offering Memorandum and factors affecting its comparability’’.
** Adjusted for non-recurring items arising from the restructuring programme (for further details of the derivation of adjusted
EBITDA, please see ‘‘Adjusted EBITDA’’).
The Company uses EBITDA and EBIT as performance indicators in its business operations and is
of the opinion that these key figures could be used as performance indicators by investors. The
Company defines EBITDA (earnings before interest, taxes, depreciation and amortisation) as EBIT
before depreciation and amortisation and impairment charges. The Company defines EBIT
(earnings before interest and taxes) in this context as the profit or loss from operations before net
finance costs and taxes. The figures for EBITDA and EBIT presented in this Offering Memorandum
may not be comparable with the figures for EBITDA and EBIT reported by other companies since,
in the absence of a generally accepted definition of these key figures, they may be calculated on
the basis of different underlying variables.
EBITDA
EBITDA improved from c-27,180 thousand in financial year 2008 to c12,474 thousand in financial
year 2009 and by a further 203.3% to c37,849 thousand in financial year 2010. The negative figure
for EBITDA in the first quarter caused by seasonal factors (see ‘‘Significant factors affecting the
financial condition and results of operations – Market and sector-related factors – Seasonal
fluctuations’’) improved from c-7,400 thousand in the first quarter of financial year 2010 to c-6,602
thousand in the first quarter of financial year 2011.
Comparison of financial years 2008 and 2009
The improvement in EBITDA in financial year 2009 was mainly attributable to the faster rate of
decline in personnel expenses (-37.2%) and other operating expenses (-20.4%) in financial year
2009 compared with the fall in revenue (-14.5%). The main reasons for the above-average
reduction in personnel expenses were non-recurring personnel expenses incurred in financial year
2008 as a result of the restructuring programme and the lower number of people employed by the
Adler Group. The decline in other operating expenses was mainly due to costs of contract
terminations included in financial year 2008 in connection with rental agreements for insufficiently
profitable stores terminated prematurely that were no longer incurred in financial year 2009, and to
a significant reduction in advertising costs as a result of the successful repositioning of the Adler
brand to meet the needs and expectations of the expanding 45+ age-group (for more details,
please see ‘‘Personnel expenses’’ and ‘‘Other operating expenses’’).
A
c
1
0
4
7
0
8
p
u
0
4
0
P
r
o
o
f
7
:
2
7
.
5
.
1
1
B
/
L
R
e
v
i
s
i
o
n
:
0
O
p
e
r
a
t
o
r
D
a
d
76

Comparison of financial years 2009 and 2010
The renewed improvement in EBITDA in financial year 2010 was mainly due to the faster rate of
increase in revenue (+9.6%) compared with the rise in the cost of materials (+2.5%) and in other
operating expenses (+3.6%), while at the same time personnel expenses declined (-6.9%) (for
further details, please see ‘‘Cost of materials’’, ‘‘Personnel expenses’’ and ‘‘Other operating
expenses’’).
Comparison of the first quarter of 2010 and the first quarter of 2011
It is characteristic of the apparel sector that the sales and earnings of retailers such as Adler are
weaker in the first quarter of each calendar year than in the subsequent quarters. Since Adler’s
financial year corresponds to the calendar year, the first quarter of Adler’s financial year generally
reports negative EBITDA. This is due to a generally low level of consumer expenditure in the first
quarter and also by lower selling prices as a result of markdowns. The changeover from the winter
collection to the summer collection takes place towards the end of the first quarter. This
changeover is accompanied by lower selling prices on the sales side in order to make the sales
areas available for the new collection. The consequence of this is a higher cost of materials ratio
which, however, generally improves during the course of the financial year (for further information,
see also ‘‘Significant factors affecting the financial condition and results of operations – Market and
sector-related factors – Seasonal fluctuations’’). The Adler Group was nevertheless able to improve
its EBITDA figure compared with the prior-year period from c-7,400 thousand in the first quarter of
financial year 2010 to c-6,602 thousand in the first quarter of financial year 2011. This
improvement was mainly due to the 9.1% growth in revenue compared with the same quarter in
the previous year and the rise of 16.1% in other operating income, which outweighed the increases
of 8.1% in the cost of materials, 8.5% in personnel expenses and 6.7% in other operating
expenses. It was also possible to keep the price reductions in the first quarter of financial year
2011 lower than in the first quarter of financial year 2010, which had a positive effect on revenue
and the cost of materials ratio.
EBIT
EBIT rose by 90.3% from c-55,411 thousand in financial year 2008 to c-5,369 thousand in financial
year 2009 and improved further to c24,284 thousand in financial year 2010. The EBIT of the Adler
Group as a retailer in the apparel sector is also generally negative in the first quarter of the
financial year due to seasonal factors (see ‘‘Significant factors affecting the financial condition and
results of operations – Market and sector-related factors – Seasonal fluctuations’’). Against this
background, EBIT improved from c-10,996 thousand in the first quarter of financial year 2010 to
c-9,962 thousand in the first quarter of financial year 2011.
Comparison of financial years 2008 and 2009
The more significant improvement increase in EBIT compared with the improvement in EBITDA in
financial year 2009 reflected the significant reductions in both depreciation and amortisation (-
23.8%) and impairment charges (-70.4%) in financial year 2009. The lower figure for depreciation
and amortisation in financial year 2009 was primarily due to the fact that depreciation and
amortisation on the non-current assets of MOTEX were no longer included in financial year 2009.
The decline in impairment charges in financial year 2009 mainly reflected the inclusion in financial
year 2008 of impairment losses amounting to c6,547 thousand in respect of the intangible assets
and property, plant and equipment of MOTEX and impairment charges amounting to c759
thousand incurred in connection with the closure of stores (for further details, please see
‘‘Depreciation and amortisation’’ and ‘‘Impairment’’).
Comparison of financial years 2009 and 2010
The stronger improvement in EBIT compared with the rise in EBITDA again in financial year 2010
reflected both the continuing decline in depreciation and amortisation (-12.6%) and the fact that no
impairment losses at all were charged within continuing operations (for further details, please see
‘‘Depreciation and amortisation’’ and ‘‘Impairment’’).
Comparison of the first quarter of 2010 and the first quarter of 2011
The improvement in EBIT from c-10,996 thousand in the first quarter of financial year 2010 to
c-9,962 thousand in the first quarter of financial year 2011 was due, as well as to the improvement
in EBITDA from c-7,400 thousand in the first quarter of financial year 2010 to c-6,602 thousand in
A
c
1
0
4
7
0
8
p
u
0
4
0
P
r
o
o
f
7
:
2
7
.
5
.
1
1
B
/
L
R
e
v
i
s
i
o
n
:
0
O
p
e
r
a
t
o
r
D
a
d
77

the first quarter of financial year 2011, to a reduction in depreciation and amortisation from c3,596
thousand in the first quarter of financial year 2010 to c3,360 thousand in the first quarter of
financial year 2011.
Adjusted EBITDA
Financial years 2008 and 2009 were significantly affected by non-recurring items relating to the
restructuring programme.
Adjusted 2008 EBITDA
In financial year 2008 in particular non-recurring items relating to the restructuring programme were
incurred which had a material effect on the results of the Adler Group for that financial year. The
non-recurring items consisted of the costs of contract terminations resulting from the early
termination of rental agreements for unprofitable Adler stores, personnel expenses for social
compensation plans and termination benefits, and consultancy expenses for restructuring advisers.
The expenses were offset by income from the reversal of restructuring provisions recognised in the
prior year. These non-recurring items had a significant adverse effect on the EBITDA of the Adler
Group in financial year 2008.
Adjusted 2009 EBITDA
Non-recurring items relating to the restructuring programme were also incurred in financial year
2009. They were much lower than in the previous year, however. For example, personnel-related
restructuring expenses were incurred again in financial year 2009. These expenses were balanced
by the reversal of restructuring provisions recognised in the prior year, with the result that the
impact of non-recurring items on the EBITDA of the Adler Group in financial year 2009 was not as
severe as in financial year 2008.
Adjusted 2010 and Q1 2011 EBITDA
There were no significant non-recurring items relating to the restructuring programme in financial
year 2010 or for the first quarter of 2011. An adjusted EBITDA has therefore not been prepared for
financial year 2010 or for the first quarter of 2011.
The detailed reconciliation of EBITDA for financial years 2008 and 2009 to adjusted EBITDA for
those financial years was as follows:
Financial year
EBITDA and adjusted EBITDA 2008 2009
(all figures are unaudited unless otherwise indicated) c’000 c’000
EBITDA reported in the income statement (audited) ................................ -27,180 12,474
Costs of contract terminations .................................................................. +12,915 —
Expenses for staff reductions ................................................................... +11,132 +4,355
Expenses for restructuring advice ............................................................. +1,854 —
Income from the reversal of restructuring provisions ................................. -113 -3,481
Adjusted EBITDA......................................................................................... -1,392 13,348
EBITDA adjusted as shown above developed from c-1,392 thousand in financial year 2008 to
c13,348 thousand in financial year 2009. EBITDA for financial year 2010, which was not adjusted
in the absence of significant non-recurring items due to the restructuring programme, amounted to
c37,849 thousand. The adjusted EBITDA margin therefore improved from -0.3% in financial year
2008 to 3.3% in financial year 2009. In financial year 2010 Adler achieved an unadjusted EBITDA
margin of 8.5%.
A
c
1
0
4
7
0
8
p
u
0
4
0
P
r
o
o
f
7
:
2
7
.
5
.
1
1
B
/
L
R
e
v
i
s
i
o
n
:
0
O
p
e
r
a
t
o
r
D
a
d
78

Net finance costs
The table below shows net finance costs for financial years 2008, 2009 and 2010 and for the first
three months of 2010 and 2011:
Financial year
3 months as at
31 March
Net finance costs 2008* 2009* 2010* 2010 2011
c’000
(audited)
c’000
(audited)
c’000
(audited)
c’000
(unaudited)
c’000
(unaudited)
Interest income ............................ 786 1,919 3,538 773 20
from receivables from affiliated
companies ................................. 160 1,622 3,402 730 —
from receivables from banks...... 169 210 136 12 19
from tax repayments .................. 451 — — — —
from other items ......................... 6 87 0 31 0
Interest expense .......................... -6,977 -5,022 -4,121 -1,099 -914
for finance leases....................... -6,290 -4,639 -3,865 -1,030 -866
for liabilities to affiliated
companies ................................. -261 -363 -88 — 0
for liabilities to banks.................. -409 -15 -167 -40 -48
for payments of additional tax .... -12 0 — — —
for other items ............................ -5 -5 -1 -29 —
Net finance costs......................... -6,191 -3,103 -583 -326 -894
* The financial information for financial years 2009 and 2010 has been extracted from the 2010 IFRS Consolidated Financial
Statements. The financial information for financial year 2008 has been extracted from the 2009 IFRS Consolidated Financial
Statements. The comparability of the financial information presented in this table for financial years 2008 and 2009 is limited.
For further details please see ‘‘Background to the financial information contained in the Offering Memorandum and factors
affecting its comparability’’.
Net finance costs improved by 49.9% from c6,191 thousand in financial year 2008 to c3,103
thousand in financial year 2009 and by a further 81.2% to c583 thousand in financial year 2010.
Net finance costs changed from c326 thousand in the first quarter of financial year 2010 to c894
thousand in the first quarter of financial year 2011.
Comparison of financial years 2008 and 2009
The improvement in net finance costs in financial year 2009 was mainly due to a reduction in the
interest expense relating to finance leases from c6,290 thousand in financial year 2008 to c4,639
thousand in financial year 2009. The decline in the finance charge portion of the lease payments
for finance lease agreements mainly reflected the fact that a building complex leased under the
terms of a finance lease (the administration building and warehouses of MOTEX GmbH) was
reclassified in the course of the negotiations for a new lease agreement and continued to be used
under the terms of an operating lease. In addition, four lease agreements classified as finance
leases were terminated early in financial year 2008.
The increase in interest income arising from receivables from affiliated companies is mainly
attributable to the loan granted to Adler Treasury GmbH in financial year 2009.
Comparison of financial years 2009 and 2010
The renewed improvement in net finance costs in financial year 2010 mainly reflected the increase
of 109.7% in interest income from receivables from affiliated companies from c1,622 thousand in
financial year 2009 to c3,402 thousand in financial year 2010 resulting from the grant of an
additional loan to the affiliated company Adler Treasury GmbH. In addition, the interest expense for
finance leases declined again from c4,639 thousand in financial year 2009 to c3,865 thousand in
financial year 2010 as a result of the planned reduction in liabilities from finance leases.
Comparison of the first quarter of 2010 and the first quarter of 2011
Net finance costs increased by 174.2% from c326 thousand in the first quarter of financial year
2010 to c894 thousand in the first quarter of financial year 2011. The principal reason for this was
the decline in interest income from receivables due from affiliated companies. In the first quarter of
A
c
1
0
4
7
0
8
p
u
0
4
0
P
r
o
o
f
7
:
2
7
.
5
.
1
1
B
/
L
R
e
v
i
s
i
o
n
:
0
O
p
e
r
a
t
o
r
D
a
d
79

financial year 2010, interest income still included c730 thousand of interest income due from the
affiliated company Adler Treasury GmbH as a result of the grant of short-term loans. These loans
were settled at the end of financial year 2010 by offsetting through intercompany accounts. No
further interest income from loan receivables due from affiliated companies was therefore reported
in the first quarter of financial year 2011. The resulting increase in net finance costs was offset to
some extent by a reduction of c185 thousand achieved in the interest expense compared with the
prior-year period. This was mainly attributable to further scheduled repayments of finance lease
liabilities which resulted in a 15.9% reduction in the interest expense for finance leases from
c1,030 thousand in the first quarter of financial year 2010 to c866 thousand in the first quarter of
financial year 2011.
Income taxes
The table below shows the breakdown of income taxes in financial years 2008, 2009 and 2010 and
in the first three months of financial years 2010 and 2011:
Financial year
3 months as at
31 March
Income taxes 2008* 2009* 2010* 2010 2011
c’000
(audited)
c’000
(audited)
c’000
(audited)
c’000
(unaudited)
c’000
(unaudited)
Current tax expense (-)/ benefit (+) 4,252 -86 -301 -56 -60
Deferred taxes ............................... -1,895 -63 5,079 123 2,065
2,357 -149 4,778 67 2,006
* The financial information for financial years 2009 and 2010 has been extracted from the 2010 IFRS Consolidated Financial
Statements. The financial information for financial year 2008 has been extracted from the 2009 IFRS Consolidated Financial
Statements. The comparability of the financial information presented in this table for financial years 2008 and 2009 is limited.
For further details please see ‘‘Background to the financial information contained in the Offering Memorandum and factors
affecting its comparability’’.
Income taxes paid and payable in the individual countries together with deferred tax expenses and
benefits are reported under income taxes.
A profit and loss transfer agreement and tax grouping for income tax purposes were in place
between the Company and AMODA GmbH in all three financial years under review. As a result,
the Company as a member of the tax group had no liability to income tax. The profit and loss
transfer agreement was terminated on 30 September 2010 with effect as at 31 December 2010.
Accordingly, there has been no grouping of companies for tax purposes since 1 January 2011.
Since no liability to pay tax arose in the hands of the Company until the cessation of the grouping
for tax purposes on 31 December 2010, no current tax expense was recorded up to that date.
Following the termination of the grouping for tax purposes as at 31 December 2010, the effects of
current taxes have been included in the financial statements for the first time from 1 January 2011
with the result that, beginning in financial year 2011, the Company is expected to incur a
significantly higher tax expense than in previous financial years. Against this background, income
taxes reported by the Adler Group amounted to a tax benefit of c2,357 thousand in financial year
2008, a tax expense of c149 thousand in financial year 2009 and a further tax benefit amounting
to c4,778 thousand in financial year 2010. A tax benefit of c67 thousand was reported for the first
quarter of financial year 2010. In the first quarter of financial year 2011, i.e. the first period under
review since the termination of the profit and loss transfer agreement, a tax benefit amounting to
c2,006 thousand was recorded.
Comparison of financial years 2008 and 2009
The current tax benefit in financial year 2008 was mainly the result of repayments of corporation
tax relating to financial years before the tax grouping was in place. The reduction of 96.7% in the
deferred tax expense from c1,895 thousand in financial year 2008 to c63 thousand in financial year
2009 was mainly due to the termination of a total of five finance leases for which the amount of
the related deferred tax assets reversed was greater than the amount of the corresponding
deferred tax liabilities reversed.
A
c
1
0
4
7
0
8
p
u
0
4
0
P
r
o
o
f
7
:
2
7
.
5
.
1
1
B
/
L
R
e
v
i
s
i
o
n
:
0
O
p
e
r
a
t
o
r
D
a
d
80

Comparison of financial years 2009 and 2010
The change in income taxes from a tax expense of c149 thousand in financial year 2009 to a tax
benefit amounting to c4,778 thousand in financial year 2010 was mainly due to the first-time
recognition of deferred taxes within the Company. Deferred taxes were required to be included in
the Company’s financial statements for the first time as a result of the termination of the grouping
of companies for tax purposes as at 31 December 2010. Since the deferred tax assets required to
be recognised for the first time were higher than the deferred tax liabilities also required to be
recognised for the first time, the net effect was the recognition in financial year 2010 of a deferred
tax benefit amounting to c5,079 thousand, in contrast to the deferred tax expense of c63 thousand
recorded in financial year 2009.
Comparison of the first quarter of 2010 and the first quarter of 2011
The first quarters of financial years 2010 and 2011 both generated a tax benefit for the Adler
Group as a whole. The amount of the tax benefit rose from c67 thousand in the first quarter of
financial year 2010 to c2,006 thousand in the first quarter of financial year 2011. The increase was
mainly due to higher income from deferred taxes of c2,065 thousand compared with c123
thousand. Both quarters recorded an expense for current taxes which increased only slightly from
c56 thousand in the first quarter of financial year 2010 to c60 thousand in the first quarter of
financial year 2011. The reason for the substantial rise in deferred tax income was the termination
of the profit and loss transfer agreement and therefore also the termination of the grouping for
income tax purposes between the Company and AMODA GmbH as at 31 December 2010. No
deferred taxes were recorded in the books of the Company in the first quarter of financial year
2010, because the profit and loss transfer agreement was still in place. In the first quarter of
financial year 2011, in contrast, deferred tax assets were required to be recognised in respect of
the taxable loss arising up to the end of that quarter. The amount of the deferred tax income was
calculated on the basis of an actual tax calculation for the first quarter of financial year 2011.
Consolidated net profit or loss for the period
The consolidated net loss for period 2008 is comprised of EBIT less net finance costs and income
taxes. In the 2010 IFRS Consolidated Financial Statements (including the comparative figures
presented for financial year 2009), on the other hand, EBIT less net finance costs and income
taxes represents the profit or loss from continuing operations. The reason for this is the Company’s
decision, made and implemented in financial year 2010, to sell its shareholding in MOTEX. In
consequence, a distinction is made between continuing operations and discontinued operations in
the consolidated income statement in the 2010 IFRS Consolidated Financial Statements (including
the comparative figures presented for financial year 2009). The profit or loss after tax of MOTEX
for the first 9 months of financial year 2010 and the net profit or loss of MOTEX for financial year
2009 are reported in each case as a separate item in the consolidated income statement in the
2010 IFRS Consolidated Financial Statements (including the comparative figures presented for
financial year 2009) (for further details, please see ‘‘Background to the financial information
contained in the Offering Memorandum and factors affecting its comparability’’).
A
c
1
0
4
7
0
8
p
u
0
4
0
P
r
o
o
f
7
:
2
7
.
5
.
1
1
B
/
L
R
e
v
i
s
i
o
n
:
0
O
p
e
r
a
t
o
r
D
a
d
81

The table below shows the consolidated net profit or loss for the period in financial years 2008,
2009 and 2010 and in the first three months of financial years 2010 and 2011 and the breakdown
between the profit or loss from continuing operations and the profit or loss from discontinued
operations in financial years 2009 and 2010 and in the first three months of financial years 2010
and 2011:
Financial year
3 months as at
31 March
2008* 2009* 2010* 2010 2011
c’000
(audited)
c’000
(audited)
c’000
(audited)
c’000
(unaudited)
c’000
(unaudited)
Profit/loss from continuing
operations.................................. n.a. -8,621 28,479 -11,255 -8,850
Profit/loss from discontinued
operations.................................. n.a. 1,343 -1,057 -1,059 —
Consolidated net profit (+)/ loss
(-) for the period ...................... -59,245 -7,278 27,422 -12,314 -8,850
* The financial information for financial years 2009 and 2010 has been extracted from the 2010 IFRS Consolidated Financial
Statements. The financial information for financial year 2008 has been extracted from the 2009 IFRS Consolidated Financial
Statements. The comparability of the financial information presented in this table for financial years 2008 and 2009 is limited.
For further details please see ‘‘Background to the financial information contained in the Offering Memorandum and factors
affecting its comparability’’.
The consolidated net profit or loss for the period developed from c-59,245 thousand in financial
year 2008 to c-7,278 thousand in financial year 2009 and c27,422 thousand in financial year 2010.
The consolidated net loss for the period improved compared with the same quarter of the previous
year from c12,314 thousand in the first quarter of financial year 2010 to c8,850 thousand in the
first quarter of financial year 2011.
Comparison of financial years 2008 and 2009
In financial year 2008, the consolidated net loss for the period comprised EBIT amounting to
c-55,411 thousand plus net finance costs of c-6,191 thousand plus income taxes of c2,357
thousand.
A
c
1
0
4
7
0
8
p
u
0
4
0
P
r
o
o
f
7
:
2
7
.
5
.
1
1
B
/
L
R
e
v
i
s
i
o
n
:
0
O
p
e
r
a
t
o
r
D
a
d
82

Comparison of financial years 2009 and 2010
In financial year 2009, the consolidated net loss for the period was made up of the loss from
continuing operations amounting to c-8,621 thousand and the profit from discontinued operations
amounting to c1,343 thousand. In financial year 2010, the consolidated net profit for the period
was made up of the profit from continuing operations amounting to c28,479 thousand and the loss
from discontinued operations amounting to c-1,057 thousand. The breakdown of the profit or loss
from discontinued operations in financial years 2009 and 2010 was as follows:
Financial year
3 months as at
31 March
2009 2010 2010 2011
c’000
(audited)
c’000
(audited)
c’000
(unaudited)
c’000
(unaudited)
Income*............................................................... 24,318 18,831 7,285 —
Expenses ............................................................ -22,947 -16,931 -5,947 —
Operating profit before tax .............................. 1,371 1,900 1,338 —
Income taxes on operating profit ........................ -28 -292 -282 —
Operating profit after tax.................................. 1,343 1,608 1,056 —
Gain/loss from remeasurement/disposal............. — -2,665 -2,115 —
Gain/loss from remeasurement/disposal after
tax................................................................... — -2,665 -2,115 —
Profit/loss from discontinued operations....... 1,343 -1,057 -1,059 —
* The income from discontinued activities, which relate entirely to MOTEX, consisted mainly of intra-Group income in both
financial year 2009 and financial year 2010. MOTEX’s revenue from business with external third parties amounted to only
c4,978 thousand in financial year 2009 and to c3,853 thousand in financial year 2010.
The main reason for the improvement in the consolidated net profit or loss for the period from
c-7,278 thousand in financial year 2009 to c27,422 thousand in financial year 2010 was the
improvement in the profit or loss from continuing operations from c-8,621 thousand in financial year
2009 to c28,479 thousand in financial year 2010. In contrast, the profit or loss from discontinued
operations fell from c1,343 thousand in financial year 2009 to c-1,057 thousand in financial year
2010. The decline in the profit or loss from discontinued operations was primarily attributable to an
impairment loss of c2,665 thousand recorded on the reclassification of the assets and liabilities of
the discontinued operations as a result of the sale of MOTEX.
Comparison of the first quarter of 2010 and the first quarter of 2011
In the first quarter of financial year 2010, MOTEX was reported under the profit or loss from
discontinued operations. Following the sale of MOTEX as at 30 September 2010, the consolidated
net loss for the first quarter of financial year 2011 no longer includes the profit or loss from
discontinued operations. The full amount of the consolidated net loss for the first quarter of
financial year 2011 was generated from continuing operations.
A
c
1
0
4
7
0
8
p
u
0
4
0
P
r
o
o
f
7
:
2
7
.
5
.
1
1
B
/
L
R
e
v
i
s
i
o
n
:
0
O
p
e
r
a
t
o
r
D
a
d
83

Adler’s net assets as at 31 December 2008, 31 December 2009 and 31 December 2010 and
31 March 2011 (IFRS)
The table below shows selected items in the consolidated balance sheet of the Company as at
31 December 2008, 31 December 2009 and 31 December 2010 and 31 March 2011:
31 December 31 March
2008* 2009* 2010* 2011
c’000
(audited)
c’000
(audited)
c’000
(audited)
c’000
(unaudited)
ASSETS
Non-current assets ........................................... 88,891 72,644 67,501 67,989
Intangible assets.............................................. 5,067 2,560 2,994 3,123
Property, plant and equipment ........................ 80,741 63,760 52,215 50,708
Investment property......................................... — 3,374 3,374 3,374
Other receivables and other assets................. 1,027 707 649 642
Deferred tax assets ......................................... 2,056 2,243 8,269 10,142
Current assets 101,033 132,325 95,214 101,252
Inventories ....................................................... 62,539 53,600 56,749 78,281
Trade receivables ............................................ 3,657 602 1,338 1,935
Other receivables and other assets................. 9,620 41,132 3,908 6,871
Cash and cash equivalents ............................. 25,217 36,991 32,956 13,902
Total ASSETS .................................................... 189,924 204,969 162,715 169,241
EQUITY and LIABILITIES
Capital and reserves
Subscribed capital ........................................... 15,860 15,860 15,860 15,860
Capital reserves............................................... 85,057 138,157 101,001 101,001
Net accumulated losses .................................. -75,371 -87,743 -75,694 -85,545
Non-controlling interests ................................. — — — —
Total equity........................................................ 25,546 69,274 41,167 32,316
LIABILITIES
Non-current liabilities ....................................... 63,886 54,520 47,165 44,200
Provisions for pensions and other employee
benefits ........................................................... 3,547 3,323 4,607 4,535
Other provisions .............................................. 1,059 904 1,044 1,110
Financial liabilities............................................ 4,995 4,802 4,360 4,295
Finance lease obligations ................................ 54,222 45,178 36,277 33,824
Other liabilities ................................................. — — 249 —
Deferred tax liabilities ...................................... 63 313 628 436
Current liabilities............................................... 100,492 81,175 74,383 92,725
Other provisions .............................................. 16,375 4,661 2,792 2,602
Financial liabilities............................................ 15,840 13,572 14,213 17,086
Finance lease obligations ................................ 8,578 9,008 9,762 9,821
Trade payables................................................ 34,721 33,135 27,829 45,338
Other liabilities ................................................. 23,856 19,553 19,502 17,533
Income tax liabilities ........................................ 1,122 1,246 285 345
Total liabilities ................................................... 164,378 135,695 121,548 136,925
Total EQUITY and LIABILITIES 189,924 204,969 162,715 169,241
* The comparability of the financial information presented in this table for financial years 2009 and 2010 is to some extent limited.
For further details please see ‘‘Background to the financial information contained in the Offering Memorandum and factors
affecting its comparability’’.
Adler’s balance sheet total rose by 7.9% from c189,924 thousand as at 31 December 2008 to
c204,969 thousand as at 31 December 2009 and fell by 20.6% to c162,715 thousand as at
31 December 2010. Adler’s balance sheet total rose to c169,241 thousand as at 31 March 2011.
A
c
1
0
4
7
0
8
p
u
0
4
0
P
r
o
o
f
7
:
2
7
.
5
.
1
1
B
/
L
R
e
v
i
s
i
o
n
:
0
O
p
e
r
a
t
o
r
D
a
d
84

Selected balance sheet items are explained in more detail in the following paragraphs:
Assets
Non-current assets comprise intangible assets, property, plant and equipment, investment property,
other receivables and other assets, and deferred tax assets. Current assets comprise inventories,
trade receivables, other receivables and other assets, and cash and cash equivalents.
Intangible assets
The intangible assets comprise internally generated software as well as purchased software, rights
and licences. The internally generated intangible assets represent capitalised development costs for
logistics software and for a computer-based incentive pay system. Intangible assets declined from
c5,067 thousand as at 31 December 2008 to c2,560 thousand as at 31 December 2009 and rose
again to c2,994 thousand as at 31 December 2010 and to c3,123 thousand as at 31 March 2011.
The main reason for the reduction in intangible assets as at 31 December 2009 was the
recognition of impairment losses amounting to c1,439 thousand on internally generated intangible
assets. An impairment charge of c448 thousand was also recorded in respect of the ‘‘VIVENTY by
Bernd Berger’’ brand. As a result of negative gross income relating to the ‘‘VIVENTY by Bernd
Berger’’ line, the intangible asset was written off in full.
The increase of c434 thousand in intangible assets as at 31 December 2010 was mainly due to
the recognition of goodwill on the first-time consolidation of F.W. Woolworth Co. Ges.m.b.H. This
addition was offset to a small extent by the disposal of intangible assets with a carrying amount of
c26 thousand as a result of the sale of MOTEX.
The further growth in intangible assets to c3,123 thousand as at 31 March 2011 was mainly due to
prepayments made for the introduction of RFID, currently at the test stage, which were higher
overall than the amortisation charged on intangible assets in the first quarter of financial year 2011.
Property, plant and equipment
Property, plant and equipment mostly comprises leased land and buildings attributable to the Group
as economic owner as a result of the structure of the underlying lease agreements. The remaining
items of property, plant and equipment consist mainly of the fixtures and fittings of the Adler
stores. Property, plant and equipment changed from c80,741 thousand as at 31 December 2008 to
c63,760 thousand as at 31 December 2009 and c52,215 thousand as at 31 December 2010 and
c50,708 thousand as at 31 March 2011 therefore declined over the period under review as a
whole.
The lower figure for property, plant and equipment as at 31 December 2009 mainly reflects a
decline from c21,242 thousand as at 31 December 2008 to c14,405 thousand as at 31 December
2009 in the net book value of land and buildings (including buildings on third-party land), primarily
due to the reclassification into investment property of an item of land and a building held by the
consolidated special purpose entity ALASKA GmbH & Co. KG. An additional factor was the
reduction in the net book value of buildings held under finance leases from c39,963 thousand as at
31 December 2008 to c33,397 thousand as at 31 December 2009 as a result of depreciation and
the disposal of a store. The net book value of other operating and office equipment fell from
c17,181 thousand as at 31 December 2008 to c13,833 thousand as at 31 December 2009 as a
result of depreciation, which exceeded additions.
The further decline in property, plant and equipment as at 31 December 2010 was mainly due to
depreciation charged on property, plant and equipment which exceeded investments, and to the
disposal of MOTEX. The sale of MOTEX had a particular impact on technical equipment and
machinery which declined from a net book value of c2,086 thousand as at 31 December 2009 to
c0 thousand as at 31 December 2010. In previous years, this item comprised the high-rack
warehouse and preparation facilities of MOTEX. The net book value of buildings held under finance
leases fell from c33,397 thousand as at 31 December 2009 to c27,977 thousand as at
31 December 2010 mainly due to depreciation charged, although this was offset to a small extent
by the addition of a further finance lease agreement amounting to c940 thousand. Other operating
and office equipment declined by c2,655 thousand to a net book value of c11,178 thousand as at
31 December 2010. The increase of c356 thousand in the carrying amount resulting from the
acquisition of F.W. Woolworth Co. Ges.m.b.H. was outweighed by the disposal of items with a net
book value of c637 thousand as a result of the sale of MOTEX, together with depreciation charged
of c1,911 thousand.
A
c
1
0
4
7
0
8
p
u
0
4
0
P
r
o
o
f
7
:
2
7
.
5
.
1
1
B
/
L
R
e
v
i
s
i
o
n
:
0
O
p
e
r
a
t
o
r
D
a
d
85

As at 31 March 2011, this trend continued. The carrying amount of property, plant and equipment
declined by c1,507 thousand to c50,708 thousand. Investments in property, plant and equipment
amounting to c1,687 thousand in the first quarter of financial year 2011 were outweighed by
significantly higher depreciation charged. The majority of the depreciation charged on property,
plant and equipment related to properties classified as finance leases which recorded no new
additions in the first quarter of 2011.
Property, plant and equipment amounting to c5,914 thousand as at 31 December 2008, c639
thousand as at 31 December 2009 and c618 thousand as at 31 December 2010 and c613
thousand as at 31 March 2011 served as security for financial liabilities.
Investment property
Investment property consists of an item of land and a building held by the consolidated special
purpose entity ALASKA GmbH & Co. KG, which was reclassified into investment property out of
property, plant and equipment during financial year 2009 as the building was no longer utilised in
its entirety by the Adler Group and was intended to be let for the most part. Accordingly,
investment property amounting to c3,374 thousand was reported in the consolidated balance sheet
for the first time as at 31 December 2009. At the date of reclassification in financial year 2009, this
resulted in the recognition of an impairment loss amounting to c900 thousand.
Since there was no change in the fair value of the property in financial year 2010 or in the first
quarter of 2010, the carrying amount as at 31 December 2010 and at 31 March 2011 remained at
c3,374 thousand.
The full amount of investment property as at 31 December 2009 and as at 31 December 2010 and
at 31 March 2011 served as security for financial liabilities.
Other receivables and other assets
In addition to payments into a money market fund for the purpose of covering partial retirement
commitments that are held in trust on a long-term basis, other receivables and other assets mainly
comprise receivables from related parties together with tax receivables and prepaid expenses. A
distinction is made between non-current and current other receivables and other assets. Noncurrent
other receivables and other assets declined from c1,027 thousand as at 31 December 2008
to c707 thousand as at 31 December 2009 and fell further to c649 thousand as at 31 December
2010 to c642 thousand as at 31 March 2011. Current other receivables and other assets grew
from c9,620 thousand as at 31 December 2008 to c41,132 thousand as at 31 December 2009 and
to c3,908 thousand as at 31 December 2010 and c6,871 thousand as at 31 March 2011.
The main reason for the increase in current other receivables and other assets as at 31 December
2009 was a short-term receivable for c36,407 thousand due from the affiliated company Adler
Treasury GmbH which was originated in financial year 2009 as a result of the grant of a loan. In
contrast, receivables from related parties as at 31 December 2008 amounted to only c5,051
thousand and consisted of short-term receivables due from the parent company at that time,
AMODA GmbH. Of the total amount, c2,780 thousand represented an amount due to the Company
in respect of losses assumed under the profit and loss transfer agreement. In addition, tax
receivables rose from c1,829 thousand as at 31 December 2008 to c2,156 thousand as at
31 December 2009. The entire amount of the latter comprised income tax receivables due to
foreign companies as a result of overpayments in the current and previous financial year.
The decline in current other receivables and other assets as at 31 December 2010 was mostly due
to the assignment to AMODA GmbH of the loan receivable due from the affiliated company Adler
Treasury GmbH, which amounted to c36,407 thousand as at 31 December 2009, offset by a
withdrawal from capital reserves in financial year 2010. Current prepaid expenses as at
31 December 2010 include an amount of c158 thousand representing expenditure deferred for the
first time in connection with the planned capital increase for the IPO which is the subject of this
Offering Memorandum.
The main reason for the growth in other receivables and other assets as at 31 March 2011 was
the increase in prepaid expenses. The majority of the annual insurance premiums and the annual
charges for the tills and computer maintenance contracts are paid at the beginning of each
financial year. The payments are recorded as prepaid expenses so that the expense is allocated to
the periods to which it relates. Furthermore, the costs of the IPO incurred to date are recorded as
prepaid expenses until they are able to be offset against the proceeds of the issue at the date of
the IPO. Since a substantial portion of the costs of the IPO was incurred in the first quarter of
A
c
1
0
4
7
0
8
p
u
0
4
0
P
r
o
o
f
7
:
2
7
.
5
.
1
1
B
/
L
R
e
v
i
s
i
o
n
:
0
O
p
e
r
a
t
o
r
D
a
d
86

financial year 2011, there was a significant increase in prepaid expenses. An additional factor was
that payments in advance for marketing activities such as TV advertising, which will not take effect
until later in the financial year, were recorded under other receivables.
Deferred tax assets
Current deferred tax assets changed from c2,056 thousand as at 31 December 2008 to c2,243
thousand as at 31 December 2009 and c8,269 thousand as at 31 December 2010 to c10,142
thousand as at 31 March 2011. The termination of the profit and loss transfer agreement between
the Company and AMODA GmbH as at 31 December 2010 resulted in the first-time recognition of
deferred taxes by the Company, reflected in a substantial increase in deferred tax assets
compared with prior years. For information relating to the effects of the profit and loss transfer
agreement between the Company and AMODA GmbH terminated as at 31 December 2010, please
see ‘‘Significant factors affecting the financial condition and results of operations – Companyrelated
factors – Profit and loss transfer agreement between the Company and AMODA GmbH’’.
As at 31 March 2011, deferred tax assets rose by a further c1,873 thousand to c10,142 thousand.
Deferred tax assets were required to be recognised in the first quarter of 2011 in respect of the
taxable loss arising by the end of the quarter. The amount of the deferred tax assets was
calculated on the basis of an actual tax calculation for the first quarter of 2011.
Inventories
Inventories mainly comprise merchandise. Inventories changed from c62,539 thousand as at 31
December 2008 to c53,600 thousand as at 31 December 2009, c56,749 thousand as at 31
December 2010 and c78,281 thousand as at 31 March 2011, mainly as a result of factors relating
to the reporting date. The significant increase in inventories as at 31 March 2011 was mainly due
to peak periods for purchases of goods which arise in particular in the months of February and
March as a result of the seasonal nature of demand for Adler’s clothing. For example, towards the
end of the first quarter of the financial year Adler receives most of the summer collection that will
be sold in the subsequent months. The consequence of this is a substantial rise in inventories as
at 31 March of each financial year. A similar peak period for purchases arises in the months of
August and September when Adler receives the majority of the winter collection that will be sold in
the subsequent months (for further information, see also ‘‘Significant factors affecting the financial
condition and results of operations – Market and sector-related factors – Seasonal fluctuations’’).
Trade receivables
Trade receivables declined from c3,657 thousand as at 31 December 2008 to c602 thousand as at
31 December 2009 and increased to c1,338 thousand as at 31 December 2010 to c1,935
thousand as at 31 March 2011. As at 31 December 2008, trade receivables were mostly due from
subsidiaries of METRO AG (affiliated companies). The reason for the decline in trade receivables
as at 31 December 2009 was mainly the reduction in trading with companies in the METRO group
after the Company and its subordinate affiliated companies left the METRO group. Of the total
trade receivables reported at 31 December 2010 amounting to c1,338 thousand, an amount of
c1,258 thousand represented trade receivables due from MOTEX, which is an affiliated company of
the Company following its sale with effect as at 30 September 2010. The further growth in trade
receivables as at 31 March 2011 mainly reflected the receivable due from the shareholder in
respect of its proportionate participation in the costs of the IPO.
Cash and cash equivalents
Cash and cash equivalents are comprised of cash-in-hand and balances with banks. Cash and
cash equivalents rose from c25,217 thousand as at 31 December 2008 to c36,991 thousand as at
31 December 2009 and declined to c32,956 thousand as at 31 December 2010 to c13,902
thousand as at 31 March 2011.
The increase in cash and cash equivalents as at 31 December 2009 was accounted for primarily
by higher balances with banks of c33,579 thousand as at 31 December 2009 compared with
c21,398 thousand as at 31 December 2008.
The lower figure of c32,956 thousand as at 31 December 2010 mainly reflected the reduction in
balances with banks from c33,579 thousand as at 31 December 2009 to c29,370 thousand as at
31 December 2010.
The seasonal decline of c19,054 thousand in cash and cash equivalents to c13,902 thousand as at
31 March 2011 was mainly due to the sharp increase in purchases of inventories in the first
A
c
1
0
4
7
0
8
p
u
0
4
0
P
r
o
o
f
7
:
2
7
.
5
.
1
1
B
/
L
R
e
v
i
s
i
o
n
:
0
O
p
e
r
a
t
o
r
D
a
d
87

quarter of each financial year, which is usually reflected in a greater outflow of liquidity in order to
settle liabilities to suppliers in the first quarter of each financial year.
Equity
Adler’s equity rose from c25,546 thousand as at 31 December 2008 to c69,274 thousand as at
31 December 2009 and declined to c41,167 thousand as at 31 December 2010 to c32,316
thousand as at 31 March 2011.
The principal reason for the increase in equity as at 31 December 2009 was the growth in capital
reserves from c85,057 thousand as at 31 December 2008 to c138,157 thousand as at
31 December 2009. The increase was made up of two contributions to capital reserves amounting
to c25,600 thousand and c13,000 thousand, together with an income subsidy amounting to
c14,500 thousand granted by the shareholder, which is not reported as income under the
requirements of IFRS but is added directly to capital reserves. A substantial portion of the additions
to capital reserves was used to offset losses.
The principal reason for the decline in equity to c41,167 thousand as at 31 December 2010 was
the reduction in capital reserves from c138,157 thousand as at 31 December 2009 to c101,001
thousand as at 31 December 2010. The latter reflected a withdrawal from capital reserves of
c39,228 thousand, offset by an increase in capital reserves amounting to c1,572 thousand and an
income subsidy of c500 thousand granted by the shareholder, which was not reported as income
under the requirements of IFRS but was added directly to capital reserves. The withdrawal from
capital reserves amounting to c39,228 thousand took the form of the assignment of a portion of a
receivable due from Adler Treasury GmbH to AMODA GmbH for the same amount. The increase
in capital reserves of c1,572 thousand was effected by offsetting a portion of the liability for the
profit and loss transfer for the previous year. The reduction in equity to c32,316 thousand as at 31
March 2011 was solely due to the consolidated net loss in the first quarter of financial year 2011
incurred as a result of seasonal factors. There were no other changes.
Liabilities
Non-current liabilities comprise provisions for pensions and other employee benefits, other
provisions, financial liabilities, finance lease obligations and deferred tax liabilities. Current liabilities
comprise other provisions, financial liabilities, finance lease obligations, trade payables, other
liabilities and income tax liabilities. Liabilities fell by 17.5% from c164,378 thousand as at
31 December 2008 to c135,695 thousand as at 31 December 2009 and by a further 10.4% to
c121,548 thousand as at 31 December 2010 and rose by 12.7% to c136,925 thousand as at 31
March 2011.
The main reasons for the decline in liabilities as at 31 December 2009 were the reduction in
finance lease obligations from c62,800 thousand as at 31 December 2008 to c54,186 thousand as
at 31 December 2009 and lower current other provisions of c4,661 thousand as at 31 December
2009 compared with c16,375 thousand as at 31 December 2008.
The continued fall in liabilities in financial year 2010 was primarily due to the further reduction in
finance lease obligations from c54,186 thousand as at 31 December 2009 to c46,039 thousand as
at 31 December 2010 and lower trade payables of c27,829 thousand as at 31 December 2010
compared with c33,135 thousand as at 31 December 2009.
The main reason for the higher liabilities as at 31 March 2011 was the rise in trade payables from
c27,829 thousand as at 31 December 2010 to c45,338 thousand as at 31 March 2011 due to
seasonal factors.
Further details of the principal changes in liabilities are given in the following paragraphs:
Provisions for pensions and other employee benefits
Provisions for pensions and other employee benefits comprise capital commitments to employees
who began their employment with the Company prior to 1980 and individual commitments to the
founders of the firm and certain former members of management. Provisions for pensions and
other employee benefits amounted to c3,547 thousand as at 31 December 2008 and c3,323
thousand as at 31 December 2009 and were therefore relatively unchanged. The increase of
c1,284 thousand to c4,607 thousand as at 31 December 2010 was mostly due to the acquisition of
F.W. Woolworth Co. Ges.m.b.H., as a result of which the Adler Group acquired pension provisions
amounting to c1,495 thousand. Provisions for pensions and other employee benefits fell slightly to
c4,535 thousand as at 31 March 2011.
A
c
1
0
4
7
0
8
p
u
0
4
0
P
r
o
o
f
7
:
2
7
.
5
.
1
1
B
/
L
R
e
v
i
s
i
o
n
:
0
O
p
e
r
a
t
o
r
D
a
d
88

Other provisions
Other provisions comprise provisions for restructuring costs/termination payments, rent and
incidental rental expenses, litigation risks, other provisions for personnel expenses and other
provisions.
Non-current other provisions remained at a consistently low level during the whole of the period
under review, amounting to c1,059 thousand as at 31 December 2008, c904 thousand as at
31 December 2009 and c1,044 thousand as at 31 December 2010 and c1,110 thousand as at 31
March 2011.
Current other provisions fell from c16,375 thousand as at 31 December 2008 to c4,661 thousand
as at 31 December 2009 and declined further to c2,792 thousand as at 31 December 2010.
Current other provisions remained relatively unchanged as at 31 March 2011 at c2,602 thousand.
The lower figure for current other provisions as at 31 December 2009 mainly reflected the
reduction in provisions for restructuring expenses from c13,763 thousand as at 31 December 2008
to c1,843 thousand as at 31 December 2009. The obligations arising from the restructuring
programme included expenses in connection with the closure of Adler stores in financial years
2008 and 2009, in addition to provisions for termination costs. The majority of the provisions was
utilised in financial year 2009.
The further decline in other current provisions to c2,792 thousand as at 31 December 2010 was
mainly attributable to the additional utilisation of restructuring provisions amounting to c1,533
thousand. On the other hand, the acquisition of F.W. Woolworth Co. Ges.m.b.H. gave rise to an
increase in other current provisions of c191 thousand. In contrast, the disposal of MOTEX resulted
in a reduction in other current provisions as at 31 December 2010 amounting to c117 thousand.
Financial liabilities
Non-current financial liabilities, which consisted over the whole period under review solely of
liabilities of the consolidated special purpose entity ALASKA GmbH & Co. KG to METRO Finance
B.V. with a maturity of more than one year, fell from c4,995 thousand as at 31 December 2008 to
c4,802 thousand as at 31 December 2009 and c4,360 thousand as at 31 December 2010 and
c4,295 thousand as at 31 March 2011. The non-current liability to METRO Finance B.V. represents
a loan maturing on 31 July 2024 which is being repaid in quarterly instalments. The changes in
financial years 2009 and 2010 and Q1 2011 reflected the scheduled repayments of the loan.
Current financial liabilities comprise the current portion of the loan from METRO Finance B.V.,
liabilities to banks with a maturity of less than one year and liabilities in connection with Adler’s
customer card whose maturity is also normally less than one year.
Current financial liabilities declined from c15,840 thousand as at 31 December 2008 to c13,572
thousand as at 31 December 2009 and rose to c14,213 thousand as at 31 December 2010 and
c17,086 thousand as at 31 March 2011.
The current liabilities in connection with Adler’s customer card, which developed from c15,765
thousand as at 31 December 2008 to c13,526 thousand as at 31 December 2009 and c13,858
thousand as at 31 December 2010 to c16,835 thousand as of 31 March 2011, arose from discount
entitlements not yet utilised by customers who had settled their purchases using the Adler
customer card. The customers can offset the discount entitlement obtained from making a
purchase against a subsequent purchase or can have the amount paid in cash. The rise in the
current liabilities from the Adler customer card reflected the fact that the liabilities increase during
the year without affecting cash. Customers’ discount entitlements do not expire until 31 December
of each financial year. As a result, in the first quarter of the financial year there was only an
increase in customers’ discount entitlements, which was higher than the customer discounts
actually redeemed. But there is no reversal of the liabilities as a result of the expiry of entitlements
in the first quarter of a financial year.
As at 31 December 2008, the financial liabilities were secured by property, plant and equipment
with a carrying amount of c5,194 thousand. As at 31 December 2009, the financial liabilities were
secured by items of property, plant and equipment with a carrying amount of c639 thousand and
by investment property with a carrying amount of c3,374 thousand. As at 31 December 2010, the
financial liabilities were secured by items of property, plant and equipment with a carrying amount
of c618 thousand and by investment property with a carrying amount of c3,374 thousand. As at
31 March 2011, the financial liabilities were secured by items of property, plant and equipment with
A
c
1
0
4
7
0
8
p
u
0
4
0
P
r
o
o
f
7
:
2
7
.
5
.
1
1
B
/
L
R
e
v
i
s
i
o
n
:
0
O
p
e
r
a
t
o
r
D
a
d
89

a carrying amount of c613 thousand and by investment property with a carrying amount of c3,374
thousand.
Finance lease obligations
Finance lease obligations relate to assets classified under licences and land and buildings that are
attributable to the Group as economic owner as a result of the structure of the underlying lease
agreements. The finance lease agreements relate principally to leased buildings for stores. Finance
lease obligations declined from c62,800 thousand as at 31 December 2008 to c54,186 thousand
as at 31 December 2009 and to c46,039 thousand as at 31 December 2010 and c43,645
thousand as at 31 March 2011. Of the total amount, current finance lease obligations with a term
of less than one year accounted for c8,578 thousand as at 31 December 2008, c9,008 thousand
as at 31 December 2009 and c9,762 thousand as at 31 December 2010 and c9,821 thousand as
at 31 March 2011. Non-current finance lease obligations with a term of one year or more
amounted to c54,222 thousand as at 31 December 2008, c45,178 thousand as at 31 December
2009 and c36,277 thousand as at 31 December 2010 and c33,824 thousand as at 31 March 2011.
The reduction in non-current finance lease obligations as at 31 December 2009 was mainly due to
scheduled repayments and the termination of a rental agreement.
The further decline as at 31 December 2010 was mainly due to the continuing scheduled
repayments of the liabilities, although this was offset by the addition of a finance lease agreement
for an Adler store amounting to c940 thousand.
As in previous years, the renewed fall in finance lease liabilities as at 31 March 2011 resulted from
the scheduled repayment of the liabilities. At the same time, no new finance lease agreements
were entered into in the first quarter of financial year 2011.
Trade payables
Trade payables, which mainly arose from deliveries of goods, fell from c34,721 thousand as at
31 December 2008 to c33,135 thousand as at 31 December 2009 and c27,829 thousand as at
31 December 2010 against the background of shorter target payment dates which Adler used to
obtain discounts in some cases. As at 31 March 2011 trade payables increased by c17,509
thousand to c45,338 thousand. The sharp rise reflected peak periods for purchases of goods as a
result of the seasonal procurement policy normal for the sector. The growth in inventories due to
purchases for the summer collection in the months of February and March generally also results in
higher trade payables. As a result of the seasonal nature of demand for clothing, Adler’s peak
periods for purchases of goods and therefore higher financing requirements are in the months of
February and March, and August and September. Adler endeavours to reduce its peak financing
requirements and also to manage its liquidity by agreeing longer-term target payment dates, with
payment due in some cases only after the products have been sold. All of the trade payables were
due within one year at the respective balance sheet date.
Other current liabilities
Other current liabilities mostly comprise liabilities for VAT, liabilities to AMODA GmbH, liabilities for
wages and salaries, liabilities to customers for gift vouchers sold, liabilities for customs duties and
wages tax, and accrued lease payments. Other current liabilities fell from c23,856 thousand as at
31 December 2008 to c19,553 thousand as at 31 December 2009 and to c19,502 thousand as at
31 December 2010 and c17,533 thousand as at 31 March 2011.
The main reasons for the lower amount of other current liabilities as at 31 December 2009 were
the decline in liabilities for wages and salaries from c5,351 thousand as at 31 December 2008 to
c3,422 thousand as at 31 December 2009 as a result of the restructuring programme, one-time
liabilities from contract terminations of c1,500 thousand incurred as at 31 December 2008 and the
fall in miscellaneous other current liabilities from c2,105 thousand as at 31 December 2008 to
c513 thousand as at 31 December 2009. These declines were offset in particular by a rise in the
liabilities to AMODA GmbH from c0 thousand as at 31 December 2008 to c4,216 thousand as at
31 December 2010, of which c2,094 thousand resulted from the Company’s obligation to transfer
profits and losses. As at 31 December 2010 the liability to AMODA GmbH consisted mainly of the
profit and loss transfer for financial year 2010 still outstanding. The original liability of c18,373
thousand was offset against receivables due to the Company from AMODA GmbH with result that
the amount of the liabilities declined to c3,968 thousand as at 31 December 2010.
A
c
1
0
4
7
0
8
p
u
0
4
0
P
r
o
o
f
7
:
2
7
.
5
.
1
1
B
/
L
R
e
v
i
s
i
o
n
:
0
O
p
e
r
a
t
o
r
D
a
d
90

A number of different factors contributed to the continued decline in other current liabilities which
fell by c1,969 thousand to c17,533 thousand as at 31 March 2011. For example, liabilities for
wages and salary payments rose by c746 thousand as a result of higher personnel expenses,
while liabilities from customs duties increased by c1,419 thousand due to a greater volume of
purchases of goods. In the other direction, the liabilities to AMODA GmbH or its legal successor
fell by c522 thousand, while VAT liabilities declined by c3,459 thousand because revenue in March
of financial year 2011 was lower than revenue in December of financial year 2010 and at the same
time in March of financial year 2011 there was a greater amount of purchases of goods for which
input tax was deductible.
Income tax liabilities
Income tax liabilities relate to liabilities arising from corporation tax and trade tax. Income tax
liabilities changed from c1,122 thousand as at 31 December 2008 to c1,246 thousand as at
31 December 2009 and c285 thousand as at 31 December 2010 and c345 thousand as at 31
March 2011 as a result of factors relating to the reporting date. As at 1 January 2008 there were
also provisions of c1,778 thousand for risks arising from a company tax audit for the period before
the grouping of companies for tax purposes, and other income tax liabilities amounting to c24
thousand. Thanks to an agreement with the tax authorities, the Company was able to reverse the
majority of these amounts to profit or loss in financial year 2008.
A
c
1
0
4
7
0
8
p
u
0
4
0
P
r
o
o
f
7
:
2
7
.
5
.
1
1
B
/
L
R
e
v
i
s
i
o
n
:
0
O
p
e
r
a
t
o
r
D
a
d
91

Adler’s financial position in financial years 2008, 2009 and 2010 and in the first quarter of
financial years 2010 and 2011 (IFRS)
The table below shows the Company’s consolidated statement of cash flows for financial years
2008, 2009 and 2010 and for the first three months of financial years 2010 and 2011:
Financial year
3 months as at
31 March
2008* 2009* 2010* 2010 2011
c’000
(audited)
c’000
(audited)
c’000
(audited)
c’000
(unaudited)
c’000
(unaudited)
I. Net cash flow from operating activities
Consolidated profit (+)/loss (-) for the year
before tax......................................................... -61,602 -7,101 22,935 -12,099 -10,856
(+) Depreciation and amortisation on property,
plant and equipment and intangible assets....... 20,379 16,218 14,124 3,772 3,360
(+) Impairment........................................................ 7,852 2,394 2,664 2,115 —
Decrease (-) in pension provisions......................... -304 -225 -197 -62 -72
Gains (-)/losses (+) from the sale of non-current
assets................................................................ -7,110 325 516 157 6
Other non-cash income (-) and expenses (+) ........ 20,962 14,230 10,311 4,620 6,224
Net finance costs ................................................... 6,191 3,141 581 329 894
Interest received..................................................... 783 264 139 13 20
Interest paid ........................................................... -686 -205 -168 -41 -48
Income taxes paid.................................................. -464 -82 -462 -116 -115
Increase (-)/decrease (+) in inventories ................. 2,136 7,617 -2,024 -14,231 -22,024
Increase (-)/decrease (+) in trade receivables and
other receivables............................................... 4,872 5,246 -179 1,660 -3,650
Increase (+)/decrease (-) in trade payables, other
liabilities and other provisions ........................... -17,262 -34,599 -22,310 5,581 12,566
Increase (+)/decrease (-) in other balance sheet
items.................................................................. 1,730 -31 -130 -223 55
= Net cash from (+)/used in (-) operating
activities
(net cash flow)................................................. -22,523 7,192 25,800 -11,845 -13,640
II. Cash flows from investing activities
Proceeds from disposals of non-current assets ..... 650 908 572 309 14
Payments for investments in non-current assets ... -11,831 -3,750 -4,418 -564 -2,001
Proceeds from the repayment of loans and shortterm
deposits..................................................... 15,214 — — — —
Cash outflow from sales of companies (net of cash
disposed of)....................................................... — — -376 — —
Payments for acquisitions of companies (net of
cash acquired)................................................... — — -237 — —
Payments for short-term deposits .......................... — -35,000 -12,300 — —
= Net cash from (+)/used in (-) investing
activities........................................................... 4,033 -37,842 -16,759 -255 -1,987
Free cash flow ...................................................... -18,490 -30,650 9,041 -12,100 -15,627
III. Cash flows from financing activities
Cash flows from the issue (+) /repayment (-) of
current financial liabilities .................................. -1 — 57 — -57
Losses assumed by shareholders.......................... — 2,780 — — —
Repayments of borrowings..................................... -5,184 -222 -240 -59 -111
Capital contributions by shareholders .................... 40,000 53,100 — — —
Payments in connection with finance lease
liabilities............................................................. -16,605 -13,234 -12,893 -3,236 -3,259
= Net cash from (+)/used in (-) financing
activities........................................................... 18,210 42,424 -13,076 -3,295 -3,427
IV. Net increase (+)/decrease (-) in cash and
cash equivalents ............................................. -280 11,774 -4,035 -15,395 -19,054
Cash and cash equivalents at beginning of period 25,497 25,217 36,991 36,991 32,956
Cash and cash equivalents reclassified into noncurrent
assets held for sale............................... — — — -288 —
Cash and cash equivalents at end of period.......... 25,217 36,991 32,956 21,308 13,902
Net increase (+)/decrease (-) in cash and cash
equivalents ...................................................... -280 11,774 -4,035 -15,395 -19,054
* The comparability of the financial information presented in this table for financial years 2009 and 2010 is to some extent limited.
For further details please see ‘‘Background to the financial information contained in the Offering Memorandum and factors
affecting its comparability’’.
A
c
1
0
4
7
0
8
p
u
0
4
0
P
r
o
o
f
7
:
2
7
.
5
.
1
1
B
/
L
R
e
v
i
s
i
o
n
:
0
O
p
e
r
a
t
o
r
D
a
d
92

The Company defines cash and cash equivalents as holdings of cash and cash equivalents less
cash subject to restrictions on disposal. Cash and cash equivalents developed from c25,497
thousand as at 1 January 2008 to c25,217 thousand as at 31 December 2008, c36,991 thousand
as at 31 December 2009 and c32,956 thousand as at 31 December 2010 and c13,902 thousand
as at 31 March 2011. At all balance sheet dates, cash and cash equivalents comprised balances
with banks, checks and cash-in-hand. There was no cash subject to restrictions on disposal during
the period under review.
In accordance with IAS 7, the cash flows are classified as cash from or used in operating activities
(net cash flow), investing activities and financing activities. The principal positive components of the
Adler Group’s cash flow in financial years 2008 and 2009 were capital contributions from
shareholders. The latter amounted to c40,000 thousand in financial year 2008 and c53,100
thousand in financial year 2009. They were offset in financial year 2008 in particular by cash used
in operating activities amounting to c22,523 thousand and in financial year 2009 by cash used in
investing activities of c37,842 thousand in total, mainly in the form of payments for short-term
deposits. In contrast, significant positive net cash from operating activities of c25,800 thousand was
generated in financial year 2010, but this was slightly outweighed by net cash used in investing
activities amounting to c16,759 thousand together with net cash used in financing activities
amounting to c13,076 thousand. A significant factor affecting operating cash flow in the first quarter
of financial years 2010 and 2011 was the purchase of the summer collection in the months of
February and March, which resulted in a higher outflow of cash for the purchase of inventories.
In addition, the following cash flows from discontinued operations are included in the consolidated
statement of cash flows for financial years 2009 and 2010 as well as for the first three months of
financial year 2010 and 2011:
Financial year
3 months as at
31 March
2009 2010 2010 2011
c’000
(audited)
c’000
(audited)
c’000
(unaudited)
c’000
(unaudited)
Net cash from (+)/used in (-) operating activities
(net cash flow) ................................................ 359 563 212 —
Net cash from (+)/used in (-) investing activities. -285 -131 -3 —
Free cash flow................................................... 74 432 209 —
Net cash from (+)/used in (-) financing activities — — — —
Net increase in cash and cash equivalents ... 74 432 209 —
In the first quarter of financial year 2010, MOTEX was reported under discontinued operations.
Following the sale of MOTEX as at 30 September 2010, a distinction was no longer made in the
first quarter of financial year 2011 between continuing operations and discontinued operations. The
whole of the change in cash and cash equivalents in the first quarter of 2011 was therefore
generated by the Adler Group’s continuing operations.
Adler’s financial position in financial years 2008, 2009 and 2010 developed in other respects as
follows:
Cash flows from operating activities (net cash flow)
Cash flows from operating activities (net cash flow) improved from c-22,523 thousand in financial
year 2008 to c7,192 thousand in financial year 2009 and c25,800 thousand in financial year 2010.
In comparison with the same quarter of the previous year, the net cash flow, which is on a regular
basis negative in the first quarter of a financial year due to seasonal factors, changed from c-
11,845 thousand in the first quarter of financial year 2010 to
c-13,640 thousand in the first quarter of financial year 2011.
Comparison of financial years 2008 and 2009
The principal reason for the positive net cash flow in financial year 2009 was the improvement in
the consolidated loss before tax from c61,602 thousand in financial year 2008 to c7,101 thousand
in financial year 2009.
A
c
1
0
4
7
0
8
p
u
0
4
0
P
r
o
o
f
7
:
2
7
.
5
.
1
1
B
/
L
R
e
v
i
s
i
o
n
:
0
O
p
e
r
a
t
o
r
D
a
d
93

Comparison of financial years 2009 and 2010
The continued improvement in cash flows from operating activities in financial year 2010 was
primarily due to the consolidated profit for the year before tax of c22,935 thousand achieved in
financial year 2010. The effect was amplified by a reduction of c12,289 thousand compared with
the prior year in cash used in settling trade payables, other liabilities and other provisions. This
was offset by a small increase in inventories due to factors relating to the reporting date.
Comparison of the first quarter of 2010 and the first quarter of 2011
For seasonal reasons, the first quarter of the financial year generally reports negative cash flows
from operating activities. This is due to the substantial outflow of liquidity for the purchase of the
summer collection which normally takes place in the months of February and March. In the first
quarter of financial year 2011, the improvement in the consolidated net loss for the period tended
to have a positive effect on the cash flows from operating activities compared with the first quarter
of financial year 2010. However, this effect was outweighed by the fact that Adler placed
significantly higher orders for inventories in the first quarter of financial year 2011 than in the same
period of financial year 2010 in anticipation of higher expected sales for the year and as a result of
newly opened stores. In the light of this, net cash flow changed from c-11,845 thousand in the first
quarter of financial year 2010 to c-13,640 thousand in the first quarter of financial year 2011.
Cash flows from investing activities
Cash flows from investing activities changed from c4,033 thousand in financial year 2008 to
c-37,842 thousand in financial year 2009 and c-16,759 thousand in financial year 2010. In
comparison with the prior year, cash flows from investing activities changed from c-255 thousand
in the first quarter of financial year 2010 to c-1,987 thousand in the first quarter of financial year
2011.
Comparison of financial years 2008 and 2009
The increase in net cash used in investing activities in financial year 2009 was mainly attributable
to an increase in payments for short-term deposits from c0 thousand in financial year 2008 to
c35,000 thousand in financial year 2009, which reflected the grant of a loan to the affiliated
company Adler Treasury GmbH. This was offset by a significant reduction in investments in
property, plant and equipment which were initially cut back in connection with the restructuring
programme.
Comparison of financial years 2009 and 2010
Net cash used in investing activities in financial year 2010 was mostly attributable, in addition to
payments for investments in non-current assets amounting to c4,418 thousand, to further payments
for short-term deposits amounting to c12,300 thousand as a result of the grant of an additional
loan to Adler Treasury GmbH. The loans extended to Adler Treasury GmbH were repaid in
financial year 2010 without affecting cash by means of an assignment offset against a withdrawal
from capital reserves and by means of further offsetting against receivables due from AMODA
GmbH.
Cash flows from investing activities for financial year 2010 include cash outflows as a result of the
sale of MOTEX amounting to c376 thousand. This amount is made up of the purchase price for
the company of c135 thousand received by Adler less cash and cash equivalents amounting to
c511 thousand disposed of as part of the sale. Cash flows from investing activities also include
cash inflows arising from the acquisition of F.W. Woolworth Co. Ges.m.b.H. amounting to c237
thousand. This amount is made up of the purchase price for the company of c1,761 thousand paid
by Adler less cash and cash equivalents amounting to c1,524 thousand received by the Adler
Group as part of the acquisition of the company.
Comparison of the first quarter of 2010 and the first quarter of 2011
The principal reason for the rise in cash used in investing activities from c255 thousand in the first
quarter of financial year 2010 to c1,987 thousand in the first quarter of financial year 2011 was
that Adler incurred greater expenditure on investments in the first quarter of financial year 2011
compared with the first quarter of financial year 2010. The investments mostly related to equipment
and fittings for new stores and the expansion of the brand shops.
A
c
1
0
4
7
0
8
p
u
0
4
0
P
r
o
o
f
7
:
2
7
.
5
.
1
1
B
/
L
R
e
v
i
s
i
o
n
:
0
O
p
e
r
a
t
o
r
D
a
d
94

Cash flows from financing activities
Cash flows from financing activities changed from c18,210 thousand in financial year 2008 to
c42,424 thousand in financial year 2009 and c-13,076 thousand in financial year 2010. In
comparison with the same quarter of the previous year, cash flows from financing activities
changed from c-3,295 thousand in the first quarter of financial year 2010 to c-3,427 thousand in
the first quarter of financial year 2011.
The positive cash flows from financing activities in financial years 2008 and 2009 were primarily
the result of capital contributions by the shareholder amounting to c40,000 thousand in financial
year 2008 and c53,100 thousand in financial year 2009. Net cash used in financing activities in
financial year 2010 was mainly caused by payments in connection with liabilities from finance
leases amounting to c12,893 thousand which reflected scheduled repayments of the liabilities.
The comparatively low figure for cash used in financing activities in the first quarter of financial
years 2010 and 2011 mainly represented scheduled repayments of finance lease liabilities in both
periods.
Development of the Company’s net assets, financial position and results of operations in
financial years 2008, 2009 and 2010 (HGB)
The following analysis of the Company’s net assets, financial position and results of operations in
financial years 2008, 2009 and 2010 is based with respect to the financial information for the
financial year ended on 31 December 2008 on the Company’s audited 2008 HGB Annual Financial
Statements, certified with an unqualified auditors’ report, and with respect to the financial
information for the financial years ended on 31 December 2009 and 31 December 2010 on the
Company’s audited 2010 HGB Annual Financial Statements, certified with an unqualified auditors’
report, reproduced elsewhere in this Offering Memorandum.
The sales of the Company in accordance with HGB declined from c424,594 thousand in financial
year 2008 to c364,164 thousand in financial year 2009 and rose to c390,899 thousand in financial
year 2010. The sales were generated mainly from the sale of textile goods in Germany.
The balance sheet total grew from c127,974 thousand as at 31 December 2008 to c150,214
thousand as at 31 December 2009 and declined to c108,467 thousand as at 31 December 2010.
On the asset side, this was mainly due to the changes in receivables from affiliated companies
which rose from c17,081 thousand as at 31 December 2008 to c47,430 thousand as at
31 December 2009 and declined to c9,560 thousand as at 31 December 2010. On the liabilities
side, the most significant changes were in capital reserves which rose from c33,468 thousand as
at 31 December 2008 to c72,068 thousand as at 31 December 2009 and fell back again to
c34,412 thousand as at 31 December 2010 as a result of a withdrawal in financial year 2010. In
addition, trade payables increased from c16,247 thousand as at 31 December 2008 to c29,021
thousand as at 31 December 2009 and fell to c24,144 thousand as at 31 December 2010.
A
c
1
0
4
7
0
8
p
u
0
4
0
P
r
o
o
f
7
:
2
7
.
5
.
1
1
B
/
L
R
e
v
i
s
i
o
n
:
0
O
p
e
r
a
t
o
r
D
a
d
95

MARKET AND INDUSTRY OVERVIEW
Introduction and overview
As one of the leading textile retailers in Germany, Austria and Luxembourg, and with more than 60
years of tradition and a high level of customer loyalty, Adler is, in its own estimation, the market
leader among textile retailers for customers over 45 in Germany in the value price segment. Adler
offers a both broad and extensive range of womenswear, menswear and lingerie. With a
supplementary range consisting of accessories, footwear, kidswear and babywear, traditional dress,
sportswear and hardware products, Adler aims to round off its product portfolio and to exploit
existing cross-selling potential in its stores. Adler is currently focusing on large-space retail
concepts, i.e., the space occupied by the stores it operates is usually more than 1000 m 2 . Adler’s
product portfolio consists mainly of own brands, the collections for which are designed and
compiled to a large extent by Adler itself, and then produced by external manufacturers. This is
supplemented by a selected range of external brands. The products are distributed via a broad
network of currently 139 stores in Germany, Austria and Luxembourg, as well as an online store.
Adler generates the majority of its revenues in Germany. In 2010, Adler generated 80.1% of its
revenues in Germany. Adler also operates through subsidiaries in Austria and Luxembourg. The
Adler Group plans to continue growing, both in Germany and, in the medium term, abroad, by
opening new Adler stores and, where opportunities arise, through acquisitions.
The business development and the further growth of Adler shall depend on the general
development of demand in clothing retail in its sales markets and, in particular, among the target
customer groups. Consumer demand shall be determined significantly by general economic
development and the resulting consumer mood.
The severe recession triggered by the financial crisis resulted in a significant shrinking of the global
economy up until the end of March 2009 and also had a material adverse effect on the gross
domestic product of Adler’s key sales markets. In the course of 2009, the economic trend initially
stabilised at a low level and then slowly recovered in the course of 2010 (source: Textile + Fashion
Confederation (Gesamtverband textil + mode), Reports on the Economy 01/2009-12/2010).
Economic performance in the EU, where Adler generates all of its revenues, thus declined by 4.2%
in 2009, measured in terms of gross domestic product (‘‘GDP’’) (source: Eurostat Press Office,
Euro indicators press release, 34/2010, 4 March 2010 (‘‘Eurostat Press Release 34/2010’’)).
Accordingly, consumer spending of private households in the fourth quarter of 2009 was initially
down compared with the same quarter of 2008, decreasing by 1.1%; however, the Society for
Consumer Research (Gesellschaft für Konsumforschung, ‘‘GfK’’) forecasts an increase of around
5% for 2010 (source: Eurostat Press Release 34/2010).
Economic growth, measured on the basis of GDP, was similar in Germany, Adler’s primary sales
market. In the course of 2009, economic growth declined by 4.9% year-on-year, whereas the
upturn in the German economy in 2010 led to an increase in GDP of 3.6% (source: German
Federal Statistical Office, Press release 061 dated 24 February 2010; German Federal Statistical
Office, Press release 074 dated 24 February 2011). In spite of an increase in private consumer
spending in the first half of 2009, the overall increase in spending in 2009 was initially small
(source: German Federal Statistical Office (Statistisches Bundesamt), Press release 061 dated 24
February 2010). This upswing resulted in an overall improvement in the consumer climate.
According to the GfK Consumer Climate Study, consumer confidence was at a three-year high in
2010. The propensity to buy measured by the GfK also increased in 2010. Based on these values,
and assuming that the positive economic trend will continue, the GfK forecasts a continued
increase in real private consumer spending in 2010 (source: GfK market research, press release
dated 28 September 2010, Findings of the GfK Consumer Climate Study for September 2010).
In Austria, Adler’s second-largest market, GDP decreased by 0.9% in the fourth quarter of 2009,
compared with the same quarter of the previous year (source: Eurostat Press Office, Euro
indicators press release, 148/2010, 6 October 2010 (‘‘Eurostat Press Release 148/2010’’)). In its
forecast from December 2010, Oesterreichische Nationalbank (OeNB) projected growth in Austria’s
economic performance of 1.9% in 2010 (source: Eurostat, Statistics Austria, 2010-2012:
Österreichische Nationalbank forecast, December 2010). In Luxembourg, where Adler also
generates a portion of its revenues, GDP increased by 2.1% in the fourth quarter of 2009
compared with the same quarter of the previous year (source: Eurostat Press Release 148/2010).
For 2010, Germany Trade and Invest, Gesellschaft für Außenwirtschaft und Standortmarketing
A
c
1
0
4
7
0
8
p
u
0
5
0
P
r
o
o
f
7
:
2
7
.
5
.
1
1
B
/
L
R
e
v
i
s
i
o
n
:
0
O
p
e
r
a
t
o
r
D
a
d
96

mbH, forecast growth of 3% (source: Germany Trade and Invest, Economic trends compact
(Wirtschafttrends kompakt), Luxembourg, mid-year 2010).
The clothing market
The textiles and clothing retail trade is one of the largest sectors of the retail industry. The market
volume in the European clothing market, which is characterised by accelerated vertical integration,
amounted to more than c301 billion in 2009 (source: Mintel Europe 2010). The German clothing
market, which is Adler’s domestic market, is the largest clothing market in Europe. In Germany
alone, the retail industry generated turnover of around c56.5 billion from textiles and clothing in
2009 (source: Institute of German Textile Retail Traders (Bundesverband des Deutschen
Textileinzelhandels e.V., ‘‘BTE’’), Statement dated 18 January 2010).
The market data for the clothing market in the regions of relevance for Adler – Germany, Austria
and Luxembourg – is presented in the following.
Germany
The spending of German consumers on clothing and footwear increased continuously between
2005 and 2008, from c65.93 billion in 2005 to c70.39 billion in 2008 (source: Mintel Europe 2010).
Although the business situation in the clothing industry in the second half of 2008 was significantly
worse, due to the effects of the banking crisis, than in the retail industry as a whole, consumer
spending of private households on clothing fell only slightly in 2009, to c69.86 billion (source:
Mintel Europe 2010; Institute of German Textile Retail Traders (BTE), 2009 Statistics Report (‘‘BTE
Statistics Report 2009’’)). Average spending on clothing items per capita amounted to c686 in
2008, and was thus above the EU average of c581 in 2008 (source: Verdict, Value Clothing in
European Retail, September 2009, (‘‘Verdict Report 2009’’), p. 17). Clothing prices increased by
0.4% in 2009 and by 0.9% in the first six months of 2010 (BTE, 2010 Statistics Report, p. 92).
The average gross revenue per square metre of retail space in the German clothing industry was
c3,500 in 2008, and was thus higher than the EU average of c2,980. Average store spaces in
Germany, at an average of 255 m 2 , were the largest in the EU-wide comparison, which showed an
average of around 161 m 2 (source: Verdict Report 2009).
The market shares of the segments womenswear, menswear and kidswear amounted to 55.4%,
30.8% and 13.8%, respectively, in 2008 (source: Datamonitor, Apparel Retail in Germany, Industry
Profile, p. 10). A significant portion of the revenue in the clothing retail industry in Germany is
generated in the womenswear segment. Almost twice as much revenue is generated in this
segment on average than in the menswear segment. The clothing industry thus benefited from a
steady growth in gross revenue in the womenswear segment, from c26.5 billion in 1998 to
c28.7 billion in 2008, whereas the revenue generated through the sale of menswear only increased
from c14.6 billion in 1998, to c15.3 billion in 2008. A share of 59.6% of the revenues in the
womenswear segment in 2008 was generated from the sale of clothing, footwear, sportswear and
accessories in specialist shops. A total of 29.7% of the revenue was generated by department
stores and 6.1% by supermarkets and discount stores; the rest was spread among a variety of
alternative sales channels (source: Datamonitor, Womenswear in Germany, Industry Profile, p. 10).
A 44.9% share of the revenue in the menswear segment was generated in 2008 in specialist
shops for clothing, footwear, accessories and luxury goods, while 36.8% was generated from sales
in department stores and 9.4% from supermarkets and discount stores. The remaining revenue
was distributed among alternative sales channels (source: Datamonitor, Menswear in Germany,
Industry Profile, p. 10). Revenue growth of 7.7% is forecast for the German clothing retail industry
in the coming years, from c27.03 billion in 2010 to c29.11 billion in 2015 (source: Mintel Germany
2010, p. 16).
The German clothing market is influenced by a large number of retailers. In spite of the market
consolidation that has been emerging recently, the German clothing market remains highly
fragmented. More than 50 German clothing suppliers generate revenue of over c50 million, with the
German market accounting for a significant share (source: TextilWirtschaft, Germany’s major
clothing suppliers 2009 (Die größten Bekleidungslieferanten in Deutschland 2009). The market
shares of the companies among the clothing suppliers or textile retailers that generate revenue of
c1 billion or more are limited to a few percent. Then there is a whole range of foreign companies
of different sizes that have established themselves on the German market. In Germany, the leading
companies in the clothing retail market in 2009 were C&A, with a market share of 9%, and H&M,
A
c
1
0
4
7
0
8
p
u
0
5
0
P
r
o
o
f
7
:
2
7
.
5
.
1
1
B
/
L
R
e
v
i
s
i
o
n
:
0
O
p
e
r
a
t
o
r
D
a
d
97

with a market share of 8.7%, followed by Esprit (4.9%), KiK (4.9%) and Peek & Cloppenburg
(4.6%) (source: Mintel Germany 2010, p. 20).
Austria
Consumer spending on clothing in Austria increased slightly between 2005 and 2009. In 2005,
spending amounted to around c6.84 billion and, in 2009, c7.29 billion (source: Mintel Clothing
Retailing Europe 2010, p. 9) This corresponds to a growth rate of 6.6%. Average spending on
clothing items per capita amounted to c890 in 2009 (source: Verdict Report 2009, p. 17). Revenue
in the Austrian clothing retail industry is expected to grow by 13.3% in the coming years, from
c4.5 billion in 2010 to c5.14 billion in 2015 (source: Mintel Europe 2010, p. 16, 22).
Market leaders in the clothing retail market in Austria in 2009 were H&M, with a market share of
9.7%, and C&A, with a market share of 9.1%, followed by KiK (3.6%), Charles Vögele (3.6%) and
New Yorker (3.4%) (source: Mintel Europe 2010, p. 23).
Luxembourg
The retail industry in Luxembourg grew by 6.3% in the second quarter of 2010, thus achieving the
highest revenue growth within the EU (Eurostat, Economic Statistics, November 2010). In 2008, a
market volume of around c4.3 billion was generated in the clothing sector in Luxembourg.
Compared with the previous year, this corresponded to growth of 1.9% (source: Verdict Report
2009). Average spending per capita on clothing amounted to c889 in 2009 (source: Verdict Report
2009, p. 17).
Market trends
In the Company’s opinion, the German, Austrian and Luxembourg clothing market for customers
over 45 are in particular characterised by the following trends and growth drivers:
Segmentation of the clothing market. The clothing market is increasingly divided into clothing for
young, fashion-conscious customers, on the one hand, and older customers, on the other (source:
Mintel Germany 2010, p. 15). Companies operating in the clothing industry are accordingly faced
with the challenge both of attracting the growing number of younger customers who have an ever
more pronounced interest in fashion, and maintaining the loyalty of older customers who are more
conservative in their choice of clothing (source: Mintel Germany 2010, p. 15, 17). This diverging
development in the fashion market is being intensified further by demographic change in Germany.
So, although younger customers are showing a greater willingness to invest in clothes, the decline
in birth rates and the increased life expectancy mean that the proportion of older customers is
growing. The over 50s are responsible for almost 50% of consumer spending in many goods
categories, including clothing (source: Federal Ministry of Family Affairs, Senior Citizens, Women
and Youth (Bundesministerium für Familie, Senioren, Frauen und Jugend), Age: The driving force
behind the economy, Final Report, July 2007, p. 2). In addition, the market is becoming
increasingly polarised into high-price fashion and luxury items, on the one side, and budget
fashion, on the other, which will shape market structures in coming years. Combined with the
further penetration of, mostly foreign, vertically integrated companies, which are breaking open
market structures with their monobrand concepts, this will mean – particularly for smaller, specialist
retailers – an even more accelerated selection process. As a result, many small- and mediumsized
specialist retailers operate their business as a franchisee of a successful vertically
integrated company (source: KPMG Deutsche Treuhand-Gesellschaft Aktiengesellschaft
Wirtschaftsprüfungsgesellschaft, Commerce Trends 2010).
Growth of retailers in lower price segments. In 2009, European consumers initially resorted to
buying in particular goods in the lower price segment, due to the economic crisis and the
associated rise in unemployment and consumer reluctance (Mintel Germany 2010, p. 17). However,
2010 was characterised by a slow, but steady economic recovery. Given a continuing recovery in
the markets and an increase in consumers’ average income, market commentators expect to see a
movement by customers back to higher quality goods (Mintel Germany 2010, p. 17). Overall, the
clothing market has become increasingly polarised in the past few years into high-price fashion and
luxury products, on the one side, and very cheap fashion, on the other. Contrary to the purely
discount segment, in particular the increase in the lower mid-price segment is attributable to the
migration of consumers from the mid-price segment, as consumers are increasingly attaching value
to high-quality goods at an attractive price-performance ratio. In the Company’s opinion, this trend
will continue to shape market structures in the coming years.
A
c
1
0
4
7
0
8
p
u
0
5
0
P
r
o
o
f
7
:
2
7
.
5
.
1
1
B
/
L
R
e
v
i
s
i
o
n
:
0
O
p
e
r
a
t
o
r
D
a
d
98

Revenue growth at vertically integrated companies and vertical partnerships. In addition to price,
market-defining criteria on the current clothing market are the flexibility and the speed of response
of the retail industry. To ensure this, numerous vertical co-operation alternatives between industry
and trade have emerged, which are being further developed and improved on an ongoing basis
(source: TextilWirtschaft, BTE communication dated 5 February 2009 und 21 January 2010).
Essentially, these consist of a joint, usually contractually fixed agreement concerning space leasing,
goods placement, delivery times, limit and sales planning and the associated bundled presentation
of the brand in a separate, defined area (source: TextilWirtschaft, TW study, Putting vertical
partnerships to the test – Trade survey findings (Vertikale Partnerschaften auf dem Prüfstand –
Ergebnisse einer Handelsbefragung), May 2008 (‘‘TW Study’’). The number of vertical partnerships
in Germany increased by 9.0%, from 51,000 in 2008 to 55,600 in 2009 (source: Konzept & Markt
GmbH/TextilWirtschaft, Top Shops 2009, p. 10). The number of vertical partnerships is expected to
increase further within the next two years (source: TW Study). In particular foreign vertically
integrated companies, for example H&M and Zara, have gained market share in Germany (source:
KPMG Deutsche Treuhand-Gesellschaft Aktiengesellschaft Wirtschaftsprüfungsgesellschaft,
Commerce Trends 2010). A business survey conducted by the industry association TextilWirtschaft
showed, however, that many suppliers are not meeting the demands of the retail market, due,
among other things, to a lack of professional support, a lack of professional space controlling,
deficiencies in inventory management, a lack of risk sharing or poor coverage of the collections.
Consequently, greater selection among vertical partnerships is expected in future, meaning that
competition between suppliers of vertical partnerships will also increase (source: TW Study).
Faster product and fashion cycles. A key trend in almost all sectors, but particularly in the fashion
industry, is the shortening of product life cycles and therefore the necessity to introduce new or
modified products onto the market at shorter and shorter intervals. Then there is the continuing
elimination of seasonal purchasing. Whereas consumers used to buy new clothes at the beginning
of each season, regardless of weather conditions, consumers now expect a product range that
corresponds to the weather. Key drivers of this trend include the improvement in process efficiency
and the more intensive interaction between customers and companies (source: GS1 Germany &
WP7 Partners (Bridge Project), Supply Chain Management in the European Textile Industry:
Problem analysis and expected EPC/RFID benefits, July 2007). In particular the factor of time
gives vertical systems significant competitive advantages. Acting upon trends and quickly
converting these into marketable collections is and shall remain a crucial competitive advantage,
according to KPMG (source: KPMG Deutsche Treuhand-Gesellschaft Aktiengesellschaft
Wirtschaftsprüfungsgesellschaft, Commerce Trends 2005 – Outlook for the food, fashion & footwear
industries, 2003).
Growing demand for socialwear. Besides price and quality, another factor that is increasingly
playing a role in consumers’ purchase decisions is whether products have been produced in
compliance with social and ecological standards. This also applies in particular to purchases of
clothing. The group of ethical consumers has grown significantly over the past few years.
Particularly women, the more educated, and 48 to 67-year-olds have driven this trend forward.
According to the Otto Group Trend Study 2009, this trend will continue in the coming years. A total
of 67% of those surveyed in this study said they occasionally or often purchased ethical products;
65% intend to do this more often in future. In a representative consumer survey conducted by the
market research institute GfK, 43% of those surveyed said they considered at least occasionally
whether clothes they were purchasing were socialwear; 40% said they would give this (even) more
consideration in future (source: TextilWirtschaft, Kundenmonitor, Socialwear, November 2008).
Expansion of shopping centres. The number of shopping centres in Germany has quadrupled since
1990. Until 2009, the number of shopping centres increased to 414. These shopping centres
occupied a total retail space of around 13 million square metres in 2009, corresponding to an
average of 31,000 square metres of space per shopping centre. Recently, successful and
established centres have increasingly been extending their retail space, while older shopping
centres are trying to make themselves more attractive by undertaking renovation measures
(source: Konzept & Markt GmbH/TextilWirtschaft, Top Shops 2009).
Internationalisation and globalisation. The difficult conditions in the domestic market, as well as the
enhanced attractiveness of in particular the geographically nearby Eastern European markets, have
enabled most companies to significantly increase their foreign expansion in the last few years. This
quest for international presence and enlarged sales markets shall continue to be seen in future,
too. Current trends show that companies are taking a more selective and more considered
A
c
1
0
4
7
0
8
p
u
0
5
0
P
r
o
o
f
7
:
2
7
.
5
.
1
1
B
/
L
R
e
v
i
s
i
o
n
:
0
O
p
e
r
a
t
o
r
D
a
d
99

approach than they did a few years ago. Particularly in the textile industry, above all foreign
vertically integrated companies successfully gained market share in Germany and maintained a
high rate of expansion (source: KPMG Deutsche Treuhand-Gesellschaft Aktiengesellschaft
Wirtschaftsprüfungsgesellschaft, Commerce Trends 2010).
Growing importance of e-comerce. The Internet has effected a key change in the mail order
business over the past few years and has contributed decisively to growth in the retail industry
(BTE Statistics Report 2009). The original mail order industry – in other words, the sale of goods
predominantly on the basis of catalogues, press advertisements, leaflets, etc. from companies with
no or just a small number of stationary retail outlets – which generated revenue of around
c15.0 billion in 2007 with just over 6,100 companies, has largely been replaced by multi-channel
suppliers (source: BTE Statistics Report 2009). These companies use both catalogues and press
advertising, and the Internet, to market their products, and, often, they also have their own
stationary stores (BTE Statistics Report 2009). Last year, more than 34 million people in Germany
purchased goods or services via the Internet. For 2010, the German E-Commerce and Distance
Selling Trade Association (Bundesverband des Deutschen Versandhandels, ‘‘BVH’’) forecast that
the online share of total German mail order revenue, estimated at c29.7 billion, would amount to
57%; in 2009, it had a share of 53% (source: BVH, E-commerce trends in Germany 2010 (BtC)).
From a total of c15.4 billion of online spending on goods in Germany in 2009 (2008: c13.4 billion),
the commodity group ‘‘Clothing, textiles and footwear’’ was the strongest generator of revenue, with
38% (source: Business Technology Consulting AG (BTC), Distance selling and e-commerce in
Germany (Versand- und Online-Handel in Deutschland) 2009 (B2C)). The market share attributable
to clothing purchased via mail order is larger in Germany than in the rest of Europe (Mintel
Germany 2010, p. 13). For German mail-order businesses, e-commerce is a sales channel that is
not only becoming more and more important, but it is also a primary means through which to
attract new customers. In a survey conducted among its member companies, the BVH discovered
23.1% of all new customers each year are now attracted via the Internet. The proportion of online
purchasers among the regular customers of mail-order companies has now reached 29.9% (source:
KPMG Deutsche Treuhand-Gesellschaft Aktiengesellschaft Wirtschaftsprüfungsgesellschaft,
Commerce Trends 2010). According to a forecast of the German Retail Federation
(Handelsverband Deutschland, ‘‘HDE’’), online trading revenue is expected to increase by around
10% in 2011 compared with 2010, to c26.1 billion (source: HDE, E-commerce Forecast 2010).
A
c
1
0
4
7
0
8
p
u
0
5
0
P
r
o
o
f
7
:
2
7
.
5
.
1
1
B
/
L
R
e
v
i
s
i
o
n
:
0
O
p
e
r
a
t
o
r
D
a
d
100

REGULATORY ENVIRONMENT
Adler’s business is heavily influenced by the legislative framework in its core market Germany, as
well as in Austria and Luxembourg. In many cases, the development of Community law has meant
that the applicable laws, rules and regulations are shaped by European law requirements. For
example, the EU has specified customs duties on imports of goods produced in non-EU countries,
and member states are required to impose these duties. In addition, minimum product safety and
textile labelling standards are often stipulated in EU Directives. The standard industry rules and
regulations applicable to Adler, particularly because it imports textile products from other countries
and engages in retail selling activities, are discussed below as they relate to Adler’s core market,
Germany.
Customs law
The vast majority of the products sold by Adler are manufactured overseas. Adler’s suppliers, and
not Adler itself, import these products into Germany. However, Adler bears the customs duty either
directly or indirectly. For example, for stock purchased by MGB in the Asia region, Adler has
agreed to assume all import duties. Customs duties do not have to be paid on all clothing imports
from Asia. The customs duty on clothing imported from China to Germany is 12%, whereas
clothing imported from Bangladesh is exempt from customs duty. Where the goods imported by
Adler are exported from a country at a price that is lower than the price for which the same goods
are sold in the export country, Adler may also be subject to EU anti-dumping measures, such as
anti-dumping customs duties.
Legal requirements for bringing products on to the market
The sale of clothing in Germany is subject to the provisions of the German Foodstuffs, Consumer
Goods and Animal Feed Code (Lebensmittel-, Bedarfsgegenstände- und Futtermittelgesetzbuch).
This Act prohibits activities such as selling textiles that have been manufactured using certain
chemicals. Criminal sanctions and substantial fines may be imposed if the legislative provisions are
contravened.
In addition, under the Textile Labelling Act (Textilkennzeichnungsgesetz), textile products may only
be sold in Germany if they carry a label stipulating the textile composition and the respective
percentage of each fibre. Documents verifying the facts on which the composition labels are based
must be kept for two years. Any breach of these requirements is punishable as an administrative
offence and may be subject to a fine of up to c5,000.
There is currently no obligation in Germany to specify the country of origin (‘‘made in …’’) for
textiles. However, attempts are being made at EU level to introduce labelling obligations of this
kind within the EU. In addition, most items of clothing carry a care label. In Germany, however,
care labels are not yet a requirement. By contrast, textile products sold in Austria are required to
carry a care label. The common symbols used on care labels are trademarks registered in favour
of GINETEX, an international association for textile care labelling. The care symbols may not be
used without a licence from GINETEX. Adler possesses the relevant licences.
Consumer protection
Adler is subject to a range of general consumer protection laws because it sells its products to
consumers. These laws particularly include provisions relating to the sale of consumer goods,
which guarantee greater protection of warranty rights under sales law, as well as rules limiting the
application of standard terms and conditions. In addition, customers who purchase products via
Adler’s online shop have a cooling-off period pursuant to distance selling laws. Also applicable are
European laws prohibiting unfair trade practices, and in Germany the Unfair Competition Act
(Gesetz gegen den unlauteren Wettbewerb). These laws prohibit, for example, certain particularly
aggressive or misleading trade practices. The contravention of consumer protection laws can give
rise to claims for damages, injunctive relief, forfeiture of profits and also criminal sanctions. The
Company is not aware of any claims or warnings against Adler based on the contravention of
consumer protection laws.
Legal requirements for establishing and using retail establishments offering an assortment of
products classified as appropriate for inner city areas (zentrenrelevant)
Adler is currently focussing on large-space retail concepts, i.e., the space occupied by its stores is
usually more than 1,000 m 2 . Adler stores are generally located outside the city centre. In Germany,
A
c
1
0
4
7
0
8
p
u
0
5
0
P
r
o
o
f
7
:
2
7
.
5
.
1
1
B
/
L
R
e
v
i
s
i
o
n
:
0
O
p
e
r
a
t
o
r
D
a
d
101

the Federal Building Code (Baugesetzbuch, ‘‘BauGB’’) and the Federal Land Utilisation Ordinance
(Baunutzungsverordnung, ‘‘BauNVO’’) essentially form the legal basis for retail planning controls
and retail site development. At state level (in the Bundesländer), state urban and regional planning
and development laws also apply as a means of controlling the use of land for retail operations.
Municipalities generally also develop retail trade policies which specify retail development targets.
Where the sales area of Adler stores exceeds 800 m 2 and the total floor space exceeds 1,200 m 2 ,
the stores are, as large retail establishments offering an assortment of products (textiles) classified
as appropriate for inner city areas, eligible for approval, provided the relevant site is zoned under
the land use plan as a special use or business district. Smaller Adler stores, in other words stores
with a sales area of 800 m 2 or less, are also generally eligible for planning approval where the
land concerned has commercial zoning under the land use plan. Municipalities do, however, have
the power to specify, in the land use plan, that land in such zones may not be used for retail
establishments that offer products classified as appropriate for inner city areas. Large Adler stores
are eligible for approval at sites within an integrated and coherent settlement (im Zusammenhang
bebautes Ortsteil) that do not fall under a land use plan (unzoned central district), provided there is
already another large retail establishment in the immediate vicinity. This does not apply if the
combination of retail establishments has the potential to harm central business and service districts
that serve the local community or other local communities. In these districts, the municipality may
prevent the establishment of retail businesses by drawing up a land use plan, the sole purpose of
which is to exclude the use of land for retail activities. In unzoned outer districts, plans to establish
retail stores are generally ineligible for approval in light of the numerous public interests potentially
involved.
A
c
1
0
4
7
0
8
p
u
0
5
0
P
r
o
o
f
7
:
2
7
.
5
.
1
1
B
/
L
R
e
v
i
s
i
o
n
:
0
O
p
e
r
a
t
o
r
D
a
d
102

BUSINESS
Introduction and overview
As one of the leading textile retailers in Germany, Austria and Luxembourg, and with more than 60
years of tradition and a high level of customer loyalty, Adler is, in its own estimation, the market
leader among textile retailers for customers over 45 in Germany in the value price segment. Adler
offers both a broad and extensive range of womenswear, menswear and lingerie. With a
supplementary range consisting of accessories, footwear, kidswear and babywear, traditional dress,
sportswear and hardware products, Adler aims to round off its product portfolio and to exploit
existing cross-selling potential in its stores. Adler focuses on large-space retail concepts, i.e., the
space occupied by the stores it operates is usually more than 1,000 m 2 . Adler’s product portfolio
consists mainly of own brands, the collections for which are designed and compiled to a large
extent by Adler itself, and then produced by external manufacturers. This is supplemented by a
selected range of external brands. The products are distributed via a broad network of currently
139 stores in Germany, Austria and Luxembourg, as well as an online store.
In terms of fit, fashion grade, functionality and quality, Adler’s product range is primarily tailored to
the generation of over 45s, whose share of the population will continue to grow. Adler has also
successfully positioned itself as a value-for-money supplier, offering high-quality products at an
attractive price-performance ratio. In addition, Adler has a vertically integrated business model with
full information control over all elements of the value chain, and can therefore respond efficiently to
changes in demand. Adler has also implemented a variable, modular retail space concept and can
therefore react flexibly to the offering of store spaces and occupy location-specific market niches.
Adler has been awarded several prizes for customer satisfaction and has an established customer
loyalty card programme that has been rated in tests as particularly good. It also enjoys
disproportionate awareness of its brand name and a very high level of customer loyalty.
Adler intends to continue with its assortment policy and to continue to gear its communication
strategy and the layout of its stores to the over 45s. It will also increasingly focus on winning as
new customers those that are moving into the ever-growing age group of the over 45s. In this way,
Adler aims to further expand what it believes to be a leading position in the primary segment it
serves. Adler has already successfully implemented this strategy in some stores and has attracted
an increasing number of new customers through the offering of selected external brands such as
s.Oliver, Tom Tailor, Street One, Cecil, OneTouch and Mexx, as well as more stringent visual
merchandising and extensive modernisation of the shop fronts and interior design of its stores.
Adler plans to continuously expand this concept to further stores. In addition, Adler intends to
expand its store network both organically and inorganically, in order to exploit economies of scale
and broaden its market position. As part of its organic growth, Adler aims to open 20-35 new
stores each year between 2011-2013 in Germany and Austria depending on the market situtation
and the market environment, although it would also like to selectively use opportunities that arise
due to the withdrawal of department store chains and small- and medium-sized retailers. In the
medium term, Adler is also considering international expansion into bordering countries of Germany
and Austria with a similar age structure and physiognomy of the population. In future, Adler would
also like to achieve cost benefits, on the one hand, and further optimise internal processes, on the
other, through the use of innovative technologies. For example, Adler is presently in the testing
stage for the Group-wide introduction of RFID (radio-frequency identification), an electronic goods
tracking and tagging system. By setting up an online shop in 2010, Adler also implemented a
multi-channel sales strategy that aims to attract in particular new customers entering the over 45
age group, as well as older, less mobile customers.
In financial year 2010, Adler, with its average of 4,174 employees, generated revenue in the
amount of c444,809 thousand, thereof 80.1% in Germany, 16.8% in Austria and 3.1% in
Luxembourg, and EBITDA of c37,849 thousand.
In the first quarter of the 2011 financial year, Adler generated revenue of c91,906 thousand.
History of Adler
The Adler Group dates back to a family business founded in 1948, which was part of the METRO
Group from 1996 until 2009. Over the decades of its existence, Adler has built up a base of
regular customers, most of whom fall into the growing age group of over 45s. Starting in 2007,
Adler began a rejuvenation strategy under its previous management and re-orientated its product
portfolio to include a higher fashion grade and slim-fitting clothes. At the same time, the marketing
strategy was revised to target younger, fashion-conscious customers; marketing measures were
A
c
1
0
4
7
0
8
p
u
0
5
0
P
r
o
o
f
7
:
2
7
.
5
.
1
1
B
/
L
R
e
v
i
s
i
o
n
:
0
O
p
e
r
a
t
o
r
D
a
d
103

educed and a restructuring concept was introduced that provided, among other things, for the
closure and, in some cases, drastic reorganisation of stores. After this strategy proved to be
unsuccessful, resulting in losses in 2009, the Adler Group was sold in 2009 to investment company
bluO. The Adler management newly installed in 2009 corrected the rejuvenation strategy by
refocusing Adler’s product portfolio, in terms of fit and fashion grade, back on the needs and
expectations of the growing over 45 age group, and expanding it to include selected external
brands. At the same time, proven marketing and sales measures were reactivated; a multi-channel
strategy was implemented with the launch of the online shop, stores that had been closed down
were reopened, and new stores were opened. As a result of these strategic measures, the
officiating Adler management led the Company’s operations back into profitability as early as the
fourth quarter of 2009. The table below gives an overview of Adler’s history:
1948 Formation of the Company by Wolfgang Adler in Annaberg (Saxony)
1970 Opening of the first store at the new Company headquarters in Haibach (near Aschaffenburg)
1974 Launch of the Adler customer card
1981 Entry into Luxembourg market
1982 Sale of the Company to ASKO Deutsche Kaufhaus AG
1987 Entry into Austrian market
1990 Opening of 50th Adler store
1996 Sale of ASKO Deutsche Kaufhaus AG to the METRO Group
1998 Opening of 100th Adler store
2007 Start of rejuvenation strategy under previous management
2009 Sale of the Adler Group to investment company bluO, discontinuation of rejuvenation strategy
and reorientation of the Company to the customer group over 45 years
2009 Acquisition of former Woolworth stores in Austria
2010 Launch of Adler online shop
2010 Sale of MOTEX Group to investment company bluO
2011 Legal reorganisation of the Company into a German stock corporation (Aktiengesellschaft)
Competitive strengths
In Adler’s view, it is one of the leading textile retailers in Germany, Austria and Luxembourg. It has
tailored its product range, in terms of fit, fashion grade, functionality and quality, primarily to the
generation of over 45s, whose share of the population will continue to grow. Adler presumes that it
will be able to gain further market share in its market and competitive environment. In this respect,
Adler stands out because it combines the following competitive strengths:
Market leader in the growing market segment of customers over 45 according to its own
assessments. Based on its own assessments, Adler is the market leader among textile retailers
for customers over 45 in the value price segment. Adler is therefore successfully positioned in a
customer segment whose members, on average, have a higher level of purchasing power than the
rest of the German population. By focussing on this group, Adler consciously sets itself apart from
the majority of its competitors, whose strategy is tailored to younger customers. In the Company’s
opinion, the number of people aged over 45 will continue to increase in the years and decades to
come, due to the demographic trend. This assumption is corroborated by estimates of the German
Federal Statistical Office (Statistisches Bundesamt), which predicts that the proportion of people in
Germany aged 60 and above will increase continuously from 26.2% in 2010 to 38.9% in 2050
(source: German Federal Statistical Office, Population of Germany by 2050 (Bevölkerung
Deutschlands bis 2050), per 2007). Adler therefore regards the 45+ customer group as a growing
market segment in an overall market that is likely to stagnate over the next few years. For this
reason, Adler has tailored its business model to the needs and expectations of customers over 45.
Its product range meets the requirements and expectations of customers over 45 in terms of fit,
quality, durability and functionality. Adler’s communication and marketing strategy, and the layout of
its stores, are also geared to this customer group.
Attractive product range with fits tailored to men and women over 45, and established
range of plus sizes. Adler has an established product portfolio among customers over 45
featuring a wide range of sizes and brands. The own brands it markets as part of its multi-brand
A
c
1
0
4
7
0
8
p
u
0
5
0
P
r
o
o
f
7
:
2
7
.
5
.
1
1
B
/
L
R
e
v
i
s
i
o
n
:
0
O
p
e
r
a
t
o
r
D
a
d
104

strategy are primarily tailored to the needs of the over 45s. When building a range, Adler
considers, on the one hand, that today’s over 45s attach value to modern, fashionable clothing, but
also that they have different requirements in terms of fit and sizes. Most products are available not
only in standard sizes, but also in plus sizes and special sizes. This plays an important role for the
customers targeted by Adler, since body proportions change with age, yet the range of suitable,
attractive women’s and men’s fashion is considerably limited. Market research has shown, for
instance, that the range of trousers, blouses and dresses for women above size 46 is extremely
small and the fit of the few products that are available is often poor (source: GfK TextilNews,
Autumn 2010, p. 4). Adler’s product range, on the other hand, offers attractive, fashionable
clothing, including larger dress sizes, and the clothes are tailored to fit older customers. With the
brands ‘‘Thea 42 Plus’’ for women and ‘‘Big Fashion’’ for men, Adler has also established two
exclusively plus size brands and was ranked 4th among all German textile retailers in this category
of the Top Shops Study 2009 (source: Konzept & Markt GmbH/TextilWirtschaft, Top Shops 2009,
p. 225). In GfK’s opinion, the market for larger sizes holds substantial sales potential (source: GfK
TextilNews, Autumn 2010, p. 4). Adler considers itself well positioned with its offering in this market
segment compared with its competitors, and therefore feels able to exhaust this sales potential to a
significant extent.
Vertically integrated business model with full information control over all elements of the
value chain. In the Company’s opinion, providing the target group with an optimum supply of indemand
products and successfully implementing established trends is crucial to the success of a
highly customer-orientated fashion company that is positioned as a fashion follower. In addition to
an attractive price-performance ratio, brand awareness and brand acceptance, decisive factors
include in particular the ability to offer fashion trends that are already established on the market
that incite customers to purchase. Based on this consideration, Adler’s focus is on gearing its
product range to its target group. This requires consistent process management along the entire
value chain, which can be controlled centrally and on all levels. The Company believes that Adler
achieves this through vertical integration of all elements of the value chain (development,
production, logistics and distribution), accompanied by a high degree of process standardisation
within its organisational structure. This vertical integration means that Adler can respond more
efficiently to changes in demand. This ensures that the current, in-demand products are always on
the sales floor in sufficient quantities, thus allowing an increase in sales density to be achieved.
Very high level of customer loyalty and satisfaction as well as brand awareness. Adler has
been awarded several prizes for customer satisfaction and has an established customer loyalty
card programme that has been rated in tests as particularly good. It also enjoys disproportionate
awareness of its brand name and a very high level of customer loyalty. Adler enjoys broad
acceptance among its customers, as the results of the nationwide competition ‘‘Deutschlands
Kundenchampions’’ (Germany’s customer champions) show. This competition is organised by the
business magazine ‘‘Impulse’’, together with the German Society for Quality (Deutsche Gesellschaft
für Qualität, DGQ) in Frankfurt and the market research institute Forum in Mainz with the aim of
identifying companies from all industries that are achieving particularly high rates of customer
satisfaction. Among the top 50 companies, all of which were awarded the ‘‘Deutschlands
Kundenchampions’’ seal, Adler was ranked 3rd among the participating retailers in 2009, and 5th in
2010. Adler was even awarded 1st place among textile retailers in both 2009 and 2010.
When it comes to customer loyalty, Adler’s customer card is of major importance. Adler issued its
first customer cards back in 1974 and gathered appropriate experience using this marketing tool. In
financial year 2010, around 3.3 million customers used the Adler customer card and shopped at
least once in one of Adler’s stores. Overall, Adler generated around 90% of its revenue with the
Adler customer card in financial year 2010, which, in the Company’s opinion, can be taken as an
indication of the high proportion of regular customers in Adler’s customer base. According to a
study conducted by the magazine ‘‘Finanztest’’ from August 2010, Adler’s customer card is ‘‘almost
ideal’’ in comparison with 24 well-known card programmes (source: Consumer Reports (Stiftung
Warentest), Finanztest, 8/2010, p. 12). Assessment criteria for this review were the regular financial
benefit associated with the customer card, including outside of special promotional offers, the
general terms and conditions for collecting discounts and the way in which the companies handle
customers’ personal data. As an incentive to use the customer card, Adler uses discount credit
notes, loyalty discounts, low prices for the alteration service, as well as competitions, gifts, free
rewards, extended exchange rights and other benefits. Adler benefits from the multiple use of its
customer card, because this enables it to analyse more precisely the shopping behaviour of its
A
c
1
0
4
7
0
8
p
u
0
5
0
P
r
o
o
f
7
:
2
7
.
5
.
1
1
B
/
L
R
e
v
i
s
i
o
n
:
0
O
p
e
r
a
t
o
r
D
a
d
105

customers. Using this information, Adler can place target group-specific and thus efficient
advertising in the form of mailings, for example by addressing buyers of the ‘‘Big Fashion’’ own
brand with advertising for precisely this own brand.
Due to its over 60 years of history, Adler has a strong brand. In surveys, awareness of the ‘‘Adler’’
brand across all age groups was 70%; among women over 40, it was as high as 84% (source:
Konzept & Markt GmbH/TextilWirtschaft, Top Shops 2009, p. 29 et seq.). In relation to the number
of stores it operates, awareness of Adler is therefore disproportionately high and is almost on the
same level as other textile retailers with a much higher store density (source: Mintel Germany
2010, p. 18).
Attractive value-per-money perception. Adler regards itself as a value-for-money supplier,
offering high-quality products at an attractive price-performance ratio. The customers Adler targets,
particularly the group of over 45s, are needs-based customers. They tend to be conservative, longterm-orientated
and have high standards, particularly with regard to the quality and durability of the
garments. The typical customers targeted by Adler mostly only react to fashion trends after these
have perceptibly established themselves on the street and in the media. Adler attaches particular
importance to the use of good-quality materials and quality processing for all products. Adler
believes it has satisfied this quality demand in the last few years, which is reflected in particular in
the high level of customer satisfaction and the low return rate. In spite of this demand for quality,
Adler is able to offer its customers a price that is still attractive. Adler achieves cost benefits
through its modular, standardised shopfitting concept, which allows flexible shop remodelling
without changing the furnishings, dispenses with cost-intensive lifestyle elements and thus
simultaneously communicates the value-for-money concept to customers. In addition, the majority
of Adler’s stores are not in high-priced city centre locations, but, rather, in large-scale retail parks
or shopping centres on the periphery of cities or in rural areas. Adler can therefore achieve lower
lease prices and thus cost benefits, which it can pass on to its customers. At the same time, these
locations meet the needs of the customer group Adler is trying to attract, for whom parking
facilities, being able to shop close to home and spacious store layouts are of great importance.
Adler’s product prices are in the value price segment. This makes the products particularly
attractive to price-conscious customers. The demand for fashion at affordable prices has increased
significantly recently, which is reflected in the increased market share of textile discount retailers
and clothing companies in lower price segments (source: Mintel Germany 2010, p. 17). Adler
presumes that the demand for value clothing will grow further in the coming years. The attractive
price-performance ratio of Adler’s products is a significant distinguishing feature compared with
competitors. Adler sets itself apart both from the textile discount stores, whose products, although
cheaper, are of a poorer quality, and from other clothing retailers, whose products are more
expensive for the same or poorer quality, and who have less of a selection on offer. Adler intends
to further optimise the price-performance ratio of its products and thereby attract new customers.
Flexible, standardised retail space concept and location-specific tailoring of the product
range. Adler can adapt the product range of its stores at any time to cater to each location and
local market conditions. It has designed five standard modules for all departments, each with
different space requirements. For instance, Adler can fit out a store in a location with a poor local
offering of lingerie with a large lingerie department. Conversely, at another location, Adler may
choose to have a very small lingerie department and, instead, have particularly large core
departments (e.g. womenswear, trousers and knitwear), because the competition offers only a
small range locally for the needs-orientated, conservative customer. When laying out its stores,
Adler is guided by the parameters of practicality, functionality, cost efficiency, brightness,
cleanliness, clarity of arrangement and clear customer guidance, in order to highlight to the
customer Adler’s image as a value-for-money supplier. Adler generally uses standard furnishings
and standard rear walls in its stores. Adler stores can therefore very quickly be re-modularised at
very little expense. If the local competitive environment changes, the store management can
increase or reduce the size of departments, as required, in a short time and without any major
expense. Adler focuses on large-space retail concepts, i.e., the space occupied by the stores is
usually more than 1,000 m 2 . Large-scale retail concepts distinguish themselves by acting as a
customer magnet, in other words, they generate customer frequency themselves. Small-space
concepts, on the other hand, merely skim off the customer frequency in their surrounding area, but
are generally dependent on expensive prime locations as a result. Operators of large-scale retail
concepts like Adler, on the other hand, tend to be able to obtain lower lease prices per square
metre, also because they are important customer magnets for operators of shopping centres and
A
c
1
0
4
7
0
8
p
u
0
5
0
P
r
o
o
f
7
:
2
7
.
5
.
1
1
B
/
L
R
e
v
i
s
i
o
n
:
0
O
p
e
r
a
t
o
r
D
a
d
106

etail parks. The offering of spaces for retailers who can implement large-scale concepts has grown
continuously over the past few years, since large department store chains like Hertie and Karstadt,
as well as a number of small retailers, have withdrawn from the market or are continuing to
withdraw to some extent. Adler intends to exploit any expansion opportunities that arise from this.
Due to its modular system, Adler is able to fit out spaces measuring between 700 m* and 4,000
m* with a both sufficiently extensive and suitably broad product range. As part of its expansion,
Adler is therefore able to exploit opportunities that arise due to the withdrawal of individual
competitors better than competitors whose store concept is geared to a particular size of retail
space. Adler’s retail space concept also helps to reduce costs, because Adler is not tied to specific
store sizes and can therefore, at any time, utilise advantages that arise on less expensive retail
spaces that are unsuitable for some competitors.
Experienced and qualified management and employees. Adler’s experienced management team
has only been managing the Company since mid-2009, but has succeeded, within the space of a
few months, in leading the Company out of the red and successfully repositioning it in the market.
To do this, management focused on sustainable strategic measures with long-term cost-cutting
potential, as well as on expansion through new store openings or the reopening of stores that had
just previously been shut down. The officiating management team recognised very early on the
potential of the experienced Adler staff and ensured, in the spirit of ‘‘lean management’’ – by
reducing the levels of hierarchy and discharging administrative functions – that in particular the
sales staff in the stores can devote more time to advising customers. Adler’s management team
has also taken personnel and organisational decisions to ensure that the individual stores are run
by a team of middle management that is present on the sales floors and has plenty of scope for
independent decision-making. This contributes significantly to the flexibility of and customer loyalty
to the Adler organisation, and has also helped Adler to recruit a large number of qualified and
experienced employees from current or former competitors. Customer loyalty at Adler is also
ensured by the fact that fluctuation of the sales staff in Adler’s stores is low, in the Company’s
opinion, compared with other (textile) retailers. The comparatively low level of fluctuation is also
furthered by the fact that Adler prioritises compliance with social standards. Adler has a codetermined
Supervisory Board and a Works Council, and has concluded a company wage
agreement with trade union ver.di. Adler therefore consciously distinguishes itself from discount
retailers, which have hit the headlines in recent years for paying low wages or infringing employee
rights. A majority of Adler’s employees, i.e., more than 80% have already been with the Company
for more than two years. More than 70% of Adler’s employees have even worked for the Company
for more than 5 years. At an average age of 46, many of the Adler Group’s employees are the
same age as the primary target group of over 45s. The experienced staff of Adler were ranked
among the top 15 in both the ‘‘Staff’’ and ‘‘Service’’ categories in the 2009 Top Shops Study. As
they have worked for the Company for many years, Adler’s employees have built up long-term
relationships with Adler customers, which has also contributed to the high proportion of regular
customers in Adler’s customer base. Adler promotes customer orientation and service motivation
through regular training of its sales staff by the responsible middle management team. In addition,
in financial year 2010, Adler significantly increased the number of trainee positions. Due to a closemeshed
monitoring system that is based, among other things, on the monthly deployment of test
shoppers, the Adler management team is able to specifically target its training or other measures
to improve customer orientation and service quality.
Strategy
Adler considers itself to be a long-term-orientated supplier of high-quality, value-for-money, yet
fashionable clothing, which meets in particular the needs and expectations of the over 45s with this
focus. In 2007 and 2008, a radical rejuvenation strategy under Adler’s former management (which
included increasing the fashion grade of its products, marketing geared to younger customers and
slim-fitting styles, as well as store closures) was unsuccessful. The new management team
installed in 2009 therefore corrected this strategy and, by refocusing on older customers, i.e., by
adjusting in particular the product portfolio in terms of fit and fashion grade to the group of over
45s, expanding the product range to include selected external brands, reactivating tried-and-tested
marketing and sales measures, (re-)opening stores and launching an online shop, succeeded in
bringing the Company’s operations back into the black in the fourth quarter of 2009. Going forward,
Adler is aiming to further extend what it considers to be its leading position in Germany, Austria
and Luxembourg in the market for men’s and women’s fashion for the over 45s in the value price
segment, and to continue growing organically and inorganically, as appropriate, in the medium term
A
c
1
0
4
7
0
8
p
u
0
5
0
P
r
o
o
f
7
:
2
7
.
5
.
1
1
B
/
L
R
e
v
i
s
i
o
n
:
0
O
p
e
r
a
t
o
r
D
a
d
107

in this growing market segment, both in the markets it has already penetrated and in new markets.
In order to implement this overall strategy, Adler has set itself the following individual strategic
objectives:
Expansion of what the Company believes to be market leadership in the market segment of
customers over 45. Adler is aiming to further expand what it believes to be an already excellent
position in the fashion market for men and women over 45 in the value price segment, and
become the market leader. The product and brand policy shall therefore continue to be tailored
primarily to this target group, particularly with regard to fit, quality and the offering of fashionable,
value-for-money clothing. The course taken by the previous management in 2007 and 2008, which
called, among other things, for drastic reorganisation of the stores by integrating cost-intensive
lifestyle elements, and tailoring of the collections and marketing strategy to younger target groups,
including modifications to the fits of the garments, was corrected by Adler’s current management
team in 2009. Since 2009, therefore, Adler has instead consciously re-committed itself to the target
group of the over 45s and is focusing on, at most, cautious modernisation geared to attracting new
customers who are entering the over 45 age group, without losing regular customers. In this spirit,
Adler has already begun fitting out all its stores with wider aisles, larger fitting rooms, rest areas
and alteration services, to better conform to the trend towards convenience shopping and even
better meet the needs of older customers. The marketing strategy continues to focus on
addressing its target customer groups in the appropriate manner, through mailings and flyers. Adler
has been generating customer frequency in its stores through mailings and flyers for more than 20
years, and plans to further optimise usage of these based on the over 15 million usable addresses
in its customer database. In order to reactivate older regular customers, in the second half of 2009,
Adler began focusing more on the use of bus trips to its stores again, accompanied by an
appropriate programme of supporting events. Adler also intends to continue the collaboration with
testimonials by spokespersons Birgit Schrowange and Reiner Calmund as figures of integration for
Adler’s relevant target groups. In addition, Adler is aiming to attract new customers who will enter
the over 45 age group in future. It has already laid the foundations for this with its increased
offering of selected external brands, such as s.Oliver, Tom Tailor, Street One, Cecil and
OneTouch, and the launch of its online shop, and has increased the number of new customers it
has attracted by almost 40%, from around 250,000 in 2009 to around 350,000 in 2010. In the first
quarter of 2011, it has already attracted an additional 71,000 new customers. In 2011, Adler
intends to pick up on the social trend across all age groups towards a greater interest in sport and
fitness. To this end, Adler has been offering since the first quarter of 2011 a wider range of
sportswear and functional clothing, as well as a ski collection, under its new own brand, ‘‘Eibsee’’.
It has engaged former alpine ski racers Rosi Mittermaier and Christian Neureuther as advertising
partners, who embody perfectly the trend towards more sport and fitness activities across all age
groups.
Increasing the attractiveness of the stores to win new customers. Adler intends, through more
stringent visual merchandising, modernisation of its shop fronts and interior design of its stores, as
well as the offering of selected external brands, to further increase the attractiveness and sales of
its stores. In 2009, Adler set up its own Visual Merchandising department, which devises systemic
standards for the Adler stores. The dominant parameters of these standards are practicality,
functionality, cost efficiency, brightness, cleanliness, clarity of arrangement and clear customer
guidance. Nevertheless, Adler consciously does without a resource- and cost-intensive design with
lifestyle elements in its stores, since the target group addressed by Adler does not desire such
layouts. The implementation of the uniform visual merchandising standards is to be further
improved by the increased use of the Tex-Store software already tested at competitors. In financial
year 2010, Adler also modernised the shop fronts and interior design of some of its stores, which
involved putting up the new logo, a discrete reorganisation of the interior and a re-design of the
entrance and shop front. Adler plans to continuously expand this concept to further stores. In this
respect, Adler will adhere to its proprietary space concept with wide aisles and spacious fitting
rooms. Adler anticipates an increase in sales and sales density per store as a result of the
modernisation efforts. Adler also intends to expand its range of selected external brands. Over the
past few years, Adler has integrated external brands such as ‘‘Steilmann’’, ‘‘Gin Tonic’’, ‘‘Wrangler’’,
‘‘Paddock’s’’, ‘‘Pioneer’’, ‘‘Triumph’’ and ‘‘Schiesser’’ into a number of its stores. These external
brands are presented within concession concepts. In 2010, Adler significantly expanded this range
of external brands and set up ‘‘shop-in-shops’’ within a number of its stores, in which it sells
products from well-known brand manufacturers like ‘‘s.Oliver’’, ‘‘Tom Tailor’’, ‘‘Street One’’, ‘‘Cecil’’
and ‘‘OneTouch’’. These ‘‘shop-in-shops’’ are made to stand out both spatially and visually, and are
A
c
1
0
4
7
0
8
p
u
0
5
0
P
r
o
o
f
7
:
2
7
.
5
.
1
1
B
/
L
R
e
v
i
s
i
o
n
:
0
O
p
e
r
a
t
o
r
D
a
d
108

fitted out with original furnishings of the respective brand manufacturer. The aim is for Adler stores
to attract in particular new customers entering the over 45 age group, who will thus be introduced
to Adler as a place to shop. In the stores in which Adler has already implemented its ‘‘shop-inshop’’
concept, the number of new customers has increased disproportionately compared with
stores with no external brands, and the average age of the customers has also decreased. Adler
therefore plans to expand its ‘‘shop-in-shop’’ concept beginning in the second half of the 2011
financial year to numerous additional stores, and has also won the Mexx brand for this.
Ongoing expansion of the store network in core markets. The Company plans to continuously
further expand its existing store network in the core markets of Germany and Austria, in order to
expand its market position and exploit economies of scale in purchasing, sales and marketing.
Among other things, this includes improving the efficiency of TV and radio advertising. In
expanding its store network in Germany, Adler will primarily concentrate on towns and the outskirts
of cities with a catchment area of more than 50,000 inhabitants. At the moment, Adler is
predominantly assessing future locations for large-space concepts, i.e., stores with more than
1,000 m 2 of sales floor in retail parks, shopping centres and city centre locations. Retail parks are
particularly suitable as locations for Adler stores, firstly because they offer a high basic frequency
that Adler stores can participate in, and, secondly, because general conditions outside the stores,
e.g. adequate parking facilities and accessibility, meet the needs of Adler customers. Shopping
centre locations are interesting for Adler if the needs of the over 45s are not yet being adequately
met there and lease prices are reasonable. As some large department store chains, such as Hertie
and Karstadt, as well as a number of small retailers, have withdrawn from the market or are
continuing to withdraw to some extent, Adler also sees good opportunities for opening stores in city
centre locations. Due to its modular system, Adler is able to adequately stock retail spaces sized
between 700 m 2 and 4,000 m 2 with a both extensive and broad product range, and can therefore
flexibly exploit any opportunities that arise within the scope of its planned expansion. It has already
done this successfully In Austria, where Adler expanded its store network in 2010 by acquiring
former Woolworth stores. By standardising processes and retail space concepts, creating capacities
in the Construction department and in lower management, Adler has laid the foundations for rapid
expansion. As part of its organic growth, Adler aims to open 20-35 new stores each year between
2011-2013 in Germany and Austria depending on the market situation and the market environment.
In the long term, Adler sees potential in Germany to triple the number of its stores.
International expansion and acquisition of competitors. In the medium term, Adler also plans
to expand into other European markets. Adler’s focus here will presumably be on the regions
bordering on those markets already covered. Initial market analyses are to be carried out in
several European countries, in particular in Switzerland from 2011, to determine whether Adler will
be able to successfully hold its own in the respective market with its business model. If the results
of these tests are positive, Adler shall look into initial market entries from 2012 or 2013. Adler’s
international expansion will be guided by the extent of similarity between the population of these
markets with customers in Germany in terms of age structure and physiognomy and their demands
with regard to fit and fashion grade. The international expansion is to focus primarily on border
regions, where the population already frequents Adler’s stores to some extent. The clothing market
is characterised by increasing consolidation. In addition to growing organically, Adler intends, where
opportunities present themselves, to exhaust growth potential in Germany, but also in other
European countries, through acquisitions of companies with insufficient capital, and thus strengthen
its own market position. Adler assumes that by making acquisitions and implementing the Adler
concept it will be able to achieve a sustainable increase in its overall profitability.
Increase in the use of innovative technologies. Adler plans to achieve both cost benefits and
sales growth by employing innovative technologies. Through the increased use of the Tex-Store
software from 2011, Adler hopes to achieve even greater vertical integration and interaction
between, in particular, purchasing and visual merchandising in the stores. This programme enables
the development of concepts for presenting goods, even before product procurement. The RFID
(radio-frequency identification) system is already being used in the sale of textiles by well known
companies in the United States, and is currently being tested by Adler. If this trial is successful,
Adler plans to launch RFID across all stores from spring/summer 2012. RFID requires small
microchips – known as tags – to be sewn into the products at Adler’s suppliers. These tags can be
read using scanners and could therefore potentially increase efficiency and optimise processes in
logistics, loss prevention, stock-taking and purchasing. Adler also expects RFID to bring increases
in sales, as the technology will speed up assortment management, especially the re-ordering of
A
c
1
0
4
7
0
8
p
u
0
5
0
P
r
o
o
f
7
:
2
7
.
5
.
1
1
B
/
L
R
e
v
i
s
i
o
n
:
0
O
p
e
r
a
t
o
r
D
a
d
109

items that are selling well. Adler expects the comprehensive use of a merchandise planning system
that it is currently testing to result in more efficient monitoring of merchandise flows and, thus, cost
benefits. An optimisation of the online shop launched in 2010 is expected to contribute to further
increases in sales.
Increase in sales through multi-channel distribution strategy. Adler pursues a multi-channel
distribution strategy. In terms of its most important distribution channel, its stores, it focuses on
large-space retail concepts. These are distinctive in that they act as a customer magnet, in other
words, they generate customer frequency themselves. Small-space concepts, on the other hand,
merely skim off the customer frequency in their surrounding area, and are therefore typically
dependent on expensive prime locations. Operators of large-space retail concepts like Adler,
however, tend to be able to obtain lower lease prices per square metre, since, on the one hand,
they are able to generate good sales even in secondary retail locations, and on the other hand,
due to their effect as a customer magnet and lessee of large retail spaces, they are also generally
in a better negotiating position vis-à-vis operators of retail parks or shopping centres. In 2010,
Adler launched another distribution channel, in addition to its stores – the Adler online shop. Adler
expects the online shop to exude Adler’s positive image and, in turn, for customers who have
become aware of Adler online to frequent Adler’s stores more often. Adler also benefits from side
effects of the online business. Based on the localisation of online customers, inferences can be
made with regard to the potential for additional Adler stores in certain regions, and customer
addresses can be collected for use in mailings and other marketing campaigns. Over the next few
years, the online shop is to be expanded and its user-friendliness optimised, particularly with
regard to the needs of older people. One key instrument that supports sales is the Adler customer
card, which was used by around 3.3 million customers in financial year 2010, and which Finanztest
magazine rated as ‘‘almost ideal’’. In the medium term, Adler is considering selling its products
through TV shops, since ordering via this sales channel is just as convenient as ordering through
Adler’s online shop, but requires less technical ability on the part of the customer and therefore
seems particularly suitable for Adler’s older customers. The first formats are currently being tested.
Increase in sales through multi-format marketing strategy. Adler operates its stores as largespace
retail concepts and therefore follows an intensive multi-format marketing strategy that aims
to enhance the effect of the stores as a customer magnet. In order to strengthen the marketing
measures at the point of sale, i.e., in its stores, Adler set up its own Visual Merchandising
department in 2009, which devises systemic standards for the Adler stores. The dominant
parameters of these systemic standards are practicality, functionality, cost efficiency, brightness,
cleanliness, clarity of arrangement and clear customer guidance. Other key marketing measures
traditionally include mailings, supplements and flyers, which are primarily geared to Adler’s core
customer base and which, based on the data generated from the online shop and Adler customer
card, are specifically geared to the respective target groups and continuously optimised. Adler also
focuses on placing target group-specific and thus efficient advertising in the form of mailings, for
example by addressing buyers of the ‘‘Big Fashion’’ own brand with advertising for precisely this
own brand. Adler also runs brand and product advertising in the form of TV and radio
advertisements, which have to date been based on, among other things, testimonials by
spokespersons Birgit Schrowange and Reiner Calmund, but will in future also be tailored to the
new advertising partners, Rosi Mittermaier and Christian Neureuther. Since launching its online
shop, Adler has also reinforced its online marketing: for example, Internet users can now view
numerous adverts on Adler’s website. In addition, Adler is considering setting up a TV shop in the
medium term, via which its products would be simultaneously sold and advertised.
Economic, social and ecological sustainability. Adler has positioned itself in such a way
strategically that the measures it takes contribute to the long-term success of the Company and
permanently ensure that the interests of all stakeholders are not compromised. For instance,
Adler’s assortment policy focuses on long durability and quality, which not only satisfies the needs
of Adler’s customers, but also reduces the need for raw materials, thus benefiting the environment.
Another way in which Adler contributes to the conservation of natural resources is through its
participation in the ‘‘I:CO’’ project, as part of which used clothes and shoes are collected and
reused or recycled. Adler ensures the motivation, competence and customer orientation of its
employees by means of a wage and personnel policy that is based on a co-determined
Supervisory Board, a company internal wage agreement with trade union ver.di, and the cooperation
with Adler’s works councils. By selling products certified as Fair Trade products and
contractually agreeing to safeguarding social standards as far as possible in relation to its
A
c
1
0
4
7
0
8
p
u
0
5
0
P
r
o
o
f
7
:
2
7
.
5
.
1
1
B
/
L
R
e
v
i
s
i
o
n
:
0
O
p
e
r
a
t
o
r
D
a
d
110

suppliers, Adler makes it clear that it also attaches importance to compliance with humane
standards in the production of the products it sells. Adler therefore preserves its positive brand
image long term, which could otherwise be damaged by negative reporting. Adler intends to
continue its involvement in activities outside of its area of business and, in the interest of building a
stable society in the long term, support in particular children’s and youth projects.
Products
Overview
Based on its own assessments, Adler is the market leader among textile retailers in the value price
segment for customers over 45 in Germany. Adler is currently focussing on large-space retail
concepts, i.e., the space occupied by its stores is usually more than 1,000 m 2 . Due to the size of
its stores, Adler is able to offer a both broad and extensive range of womenswear, menswear and
lingerie. With a supplementary range consisting of accessories, footwear, kidswear and babywear,
traditional dress, sportswear and hardware products, Adler aims to round off its product portfolio
and to exploit existing cross-selling potential in its stores. Due to the breadth of its product range,
Adler is able to offer its customers a one-stop-shopping experience, i.e., customers can satisfy a
number of complementary needs in the stores.
Adler’s product range is primarily tailored to the needs of customers over 45, whose share in the
overall population will continue to grow in future. Adler’s target group values attributes such as fit,
functionality and quality with perceptibly longer durability, all at an attractive price. Adler therefore
pays particular attention to ensuring that its products offer an attractive price-performance ratio and
fits that suit the changed body proportions of the over 45s. It also offers a large section of its
collections in plus sizes. The fashion grade of the assortment marketed by Adler is tailored to the
needs of the customer group it targets, whose members do not usually follow fashion trends until
after these have already perceptibly established themselves on the street and in the media.
Adler pursues a multi-brand strategy, addressing a number of different groups within its target
customer group of the over 45s. With its own brands ‘‘Malva’’ (women) and ‘‘Senator’’ (men), for
example, it serves a core customer base of older, conservative customers, which has grown over a
number of decades. However, it also caters for the trend among the over 45s towards fashionable,
sporty clothing with its additional own brands that have a modern classic fashion grade. In addition,
since 2009, Adler has increasingly been offering well-known external brands in certain stores, such
as s.Oliver, Tom Tailor, Street One, Cecil, OneTouch and Mexx, to thus expand its offering and
win new customers who are just entering the over 45 age group and are thereby being introduced
to Adler as a place to shop.
In financial year 2010, Adler generated around 49% of its gross revenue from womenswear, 28%
of its gross revenue from menswear, 10% of its gross revenue from lingerie and around 13% of its
gross revenue from its supplementary assortment. Around 96% of Adler’s total gross revenue was
generated from own brands and around 4% from external brands. The main womenswear own
brands in financial year 2010 were ‘‘Bexleys Woman’’, which accounted for 54% of the gross
revenue generated with own brands in the Womenswear segment, followed by ‘‘Malva’’, with 26%,
‘‘Thea 42 plus’’, with 9%, ‘‘MyOwn’’, with 7%, ‘‘Via Cortesa’’, with 3%. In the Menswear segment,
‘‘Bexleys Man’’ was the most significant own brand in financial year 2010, accounting for 59% of
the gross revenue generated with men’s own brands, followed by ‘‘Senator’’, with 13%, ‘‘Eagle No.
7’’, with 12%, ‘‘Big Fashion’’, with 10%, and ‘‘Via Cortesa’’, with 6%. Revenue in the Lingerie
segment was generated with Adler’s ‘‘Bexleys’’ own brand and the external brands ‘‘Triumph’’,
‘‘Schiesser’’, ‘‘Götzburg’’ and ‘‘Pierre Cardin’’. The top-selling sub-segments of the supplementary
assortment in financial year 2010 were Accessories, with 29% of gross revenue, Footwear, with
27%, Kidswear and Babywear, with 13%, Traditional Dress, with 9%, Sportswear, with 8%, and
hardware products, with 5%. Adler generated additional revenue from the operations of restaurants
and alteration services, which it operates itself in some of its stores as a supplementary marketing
measure. Adler’s principal areas of business presented here are those that operated during the
entire period covered by the historical financial information.
Womenswear
Adler focuses on a both broad and extensive range of womenswear, offering, among other things,
trousers, skirts, jumpers, blouses, shirts, tops, blazers and jackets. Adler therefore provides its
female customers with a one-stop-shopping experience that enables them to kit themselves out
with new clothes from head to toe. As part of its multi-brand strategy, Adler sells a number of
A
c
1
0
4
7
0
8
p
u
0
5
0
P
r
o
o
f
7
:
2
7
.
5
.
1
1
B
/
L
R
e
v
i
s
i
o
n
:
0
O
p
e
r
a
t
o
r
D
a
d
111

different own brands and external brands in its stores that aim to cater for various customer groups
within the principal target group of the customers over 45, but also younger female customers.
With the ‘‘Malva’’ brand, Adler is targeting more mature female customers. This brand’s style is
very classic. In addition, when developing the collections, priority is given to the parameters of
wearing comfort and functionality. The ‘‘Malva’’ brand is available up to size 54. As far as possible,
easy-iron, washable and easy-care materials are used. With this brand, Adler meets the
expectations of a needs-based, more conservative core customer base that has been loyal to Adler
for decades, and presents these brands in a traditional way in its core and coordinates
departments.
The target group of the ‘‘Bexleys Woman’’ brand is women over 45, who are frequent shoppers, as
well as quality-conscious, and looking for clothing in the size and fit they require. Adler presents
this brand in its core and combination departments. The brand is designed as a modern classic
brand with fashionable and sporty elements. The use of high-quality materials is a main priority.
The ‘‘Thea 42 plus’’ own brand is geared to women over 35 sized between 42 and 56. The aim of
Adler’s ‘‘Thea 42 plus’’ brand is to offer clothes that are highly comfortable to wear, fit well and still
have a high fashion grade at the same time. For the younger target group, who is not purely
needs-orientated, the collections of the ‘‘Thea 42 plus’’ own brand are presented within ‘‘shop-inshop’’
concepts. In terms of price, the products of the ‘‘Thea 42 plus’’ brand are in the mid-range
of the own brands offered by Adler.
Adler’s own brands ‘‘Viventy by Bernd Berger’’, ‘‘Via Cortesa’’ and ‘‘MyOwn’’ are aimed at women
over 35 or 40. ‘‘Viventy by Bernd Berger’’ is designed as an independent designer collection within
the Adler product range. The collections of the ‘‘Via Cortesa’’ own brand are in a modern, sporty
style, while those of the ‘‘MyOwn’’ brand are in a fashionable to trendy style. Due to these focuses,
the brands ‘‘Viventy by Bernd Berger’’, ‘‘Via Cortesa’’ and ‘‘MyOwn’’ are each marketed as part of
‘‘shop-in-shop’’ concepts within the stores. Since impulse buys play a greater role among the target
group of these three own brands, complete outfits are increasingly being presented in the stores.
In terms of price, ‘‘MyOwn’’ is in the lower price range, ‘‘Via Cortesa’’ is in the mid-range and
‘‘Viventy by Bernd Berger’’ is in the upper price range of the products offered by Adler.
In order to attract more and more new customers, Adler has increasingly been selling selected
external brands since 2009. These are presented within visually distinctive ‘‘shop-in-shops’’ fitted
out with original furnishings of the manufacturer, with the aim of cautiously modernising the overall
image of Adler stores. The external brands sold by Adler in the Womenswear segment are
‘‘Steilmann’’, ‘‘Gin Tonic’’, ‘‘Gin Fizz’’, ‘‘s.Oliver’’, ‘‘Tom Tailor’’, ‘‘cecil’’, ‘‘Street One’’, ‘‘OneTouch’’
and, since 2011, ‘‘Mexx’’. In a continuously growing number of stores, Adler has, since financial
year 2009, increasingly been displaying the well-known external brands alongside the respective
counterpart of its younger own brands, i.e., in particular ‘‘MyOwn’’ and ‘‘Via Cortesa’’, and has to
date succeeded in the relevant stores in increasing both total sales and sales of own brands by
following this strategy.
Menswear
Adler’s Menswear segment also focuses on a both broad and extensive product range that
provides its customers with a one-stop-shopping experience. Once again, Adler employs a multibrand
strategy for its male customers with the aim of addressing various customer groups within its
principal target group of men over 45, as well as younger customers, by offering various own
brands and external brands.
Adler’s ‘‘Senator’’ brand is aimed at more mature customers from their late 50s. The style of the
clothing under this brand is respectable and low-key. In addition, when developing the collections,
priority is given to the parameters of wearing comfort and quality. The ‘‘Senator’’ brand is available
up to size 59. As far as possible, easy-iron, washable and easy-care materials are used. With this
brand, Adler meets the expectations of a needs-orientated, more conservative core customer base
that has been loyal to Adler for decades, and presents these brands in a traditional way in its core
and combination departments.
The target group of the ‘‘Bexleys Man’’ brand is men over 45. Adler presents the ‘‘Bexleys Man’’
brand in its core and coordinates departments. The brand is designed as a modern classic brand.
The use of high-quality materials is a main priority.
The ‘‘Big Fashion’’ own brand is geared to customers over 40 wearing between size 60 and 70.
Adler’s ‘‘Big Fashion’’ brand aims to offer fashionable clothing that is highly comfortable to wear.
A
c
1
0
4
7
0
8
p
u
0
5
0
P
r
o
o
f
7
:
2
7
.
5
.
1
1
B
/
L
R
e
v
i
s
i
o
n
:
0
O
p
e
r
a
t
o
r
D
a
d
112

For the younger target group, who is not purely needs-orientated, the collections of the ‘‘Big
Fashion’’ own brand are presented within ‘‘shop-in-shop’’ concepts. In terms of price, the products
of the ‘‘Big Fashion’’ brand are in the upper mid-range of the own brands offered by Adler.
Under its ‘‘Via Cortesa’’ own brand, Adler also offers men a complete range of clothing that picks
up on the trend towards smart, sporty clothing; this is also presented in Adler stores as part of a
‘‘shop-in-shop’’ concept. ‘‘Via Cortesa’’ is aimed at customers in their late 30s and upwards. Adler’s
Menswear segment also includes the long-established, strong jeans own brand, ‘‘Eagle No. 7’’,
under which Adler now successfully markets not only jeans, but also other fashionable trousers,
jackets, long-sleeved shirts, t-shirts, sweatshirts and knitwear. The ‘‘Eagle No. 7’’ own brand is
aimed at men in their mid-30s and upwards, who value a higher fashion grade.
Adler presents these own brands within the scope of ‘‘shop-in-shop’’ concepts and combines them
to a certain extent with selected external brands. Adler has been incorporating external brands into
its product range for men for a long time. The brands ‘‘Wrangler’’, ‘‘Paddock’s’’ and ‘‘Pioneer’’, for
example, have been offered alongside the own brand ‘‘Eagle No. 7’’ for a number of years now.
Recently, Adler introduced the additional external brands ‘‘Gin Tonic’’, ‘‘Tom Tailor’’ and ‘‘Cecil
Men’’ into its menswear range. In this way, the Adler Group is also aiming to increase the
frequency in its stores of the customer groups relevant for the younger own brands ‘‘Via Cortesa’’
and ‘‘Eagle No. 7’’, so that both the external brands and the own brands benefit.
Lingerie
The Adler Group has integrated lingerie departments, including swimwear, in all its stores. The size
of the respective lingerie departments in the stores varies from location to location, in order to
make optimum use of the particular competitive situation locally. As with all its departments, Adler
has organised the lingerie department into five different-sized modules, which it can integrate in the
stores as it chooses. Where there are gaps in local supplies – such as those that have arisen
recently, for example, due to the withdrawal of large department store chains like Hertie and
Karstadt, or the pullout of small retailers – Adler is therefore able to quickly exploit such
opportunities by expanding its lingerie department.
Adler has a both broad and extensive assortment of lingerie for every customer group within the
market segment of the over 45s. Drawing from the reputation of the strong own brands ‘‘Malva’’,
‘‘Senator’’, ‘‘Big Fashion’’, ‘‘Bexleys Woman’’, ‘‘Bexleys Man’’ and ‘‘MyOwn’’, Adler places lingerie
collections of its own under these labels. In addition, Adler collaborates with external brand
suppliers and also offers lingerie from the ‘‘Triumph’’ and ‘‘Schiesser’’ brands, and, since 2010, has
been collaborating with ‘‘Götzburg’’ and ‘‘Pierre Cardin’’.
Supplementary assortment
In order to round off the product range of its stores, on the one hand, and leverage cross-selling
potential, on the other, Adler also markets a supplementary range of products, in addition to
womenswear, menswear and lingerie. This supplementary assortment mainly includes accessories,
footwear, kidswear and babywear, traditional dress, sportswear and hardware items.
The collective term ‘‘accessories’’ primarily includes handbags, scarves, belts and jewellery. Adler
mainly offers accessories under the own brands of its Womenswear and Menswear segments. In
its jewellery segment, Adler also sells the external brands ‘‘Irina’’ and ‘‘beeline’’.
The Adler Group also sells footwear in many of its stores, the offering of which varies from
location to location, depending on the competitive situation locally. Adler has been co-operating in
this area for more than ten years with a company of the Hamm-Reno Group. This supplier
originally leased spaces in some of the Adler Group’s stores, on which it sold footwear. Since July
2010, however, Adler has been operating the footwear departments integrated in some of its stores
itself, with its own staff or, in some cases, staff acquired from this supplier. Adler’s footwear range
consists entirely of external brands, such as ‘‘Bama’’, ‘‘Dockers’’, ‘‘Dr. Jürgens’’, ‘‘Mercedes’’,
‘‘Rieker’’ and ‘‘Tamaris’’.
Adler maintains kidswear and babywear departments in many of its stores, selling both own brands
and external brands. In future, Adler’s Kidswear and Babywear segments will consist entirely of
external brands like Tom Tailor.
Adler has traditionally been well positioned in the market for traditional dress with its own brand,
‘‘Alphorn’’. The range of traditional dress is styled to suit local tastes, however, i.e., it focuses
A
c
1
0
4
7
0
8
p
u
0
5
0
P
r
o
o
f
7
:
2
7
.
5
.
1
1
B
/
L
R
e
v
i
s
i
o
n
:
0
O
p
e
r
a
t
o
r
D
a
d
113

mainly on Southern Germany. In addition, Adler varies its range of traditional dress seasonally,
increasing it, for example, during the Munich Oktoberfest.
Under its own brand ‘‘fit & more’’, Adler currently sells predominantly tracksuits and leisure suits.
Since the end of the first quarter of 2011, Adler also offers a wider range of sportswear and
functional clothing, as well as an annual ski collection, under its new own brand, ‘‘Eibsee’’, to
exploit growth opportunities in this area.
Under the collective name ‘‘hardware’’, Adler sells products that fall into the specific area of
interest of its customers. Adler manages this range of hardware products in the short term based
on the respective margin and sales contribution of the relevant items. Hardware products include,
for example, household goods, alarm clocks, popular fiction and calculators. Hardware products are
primarily sold under the own brand ‘‘Adler Club’’.
Competitors and competitive position
In the highly fragmented textile retail market, Adler focuses on the market segment of the over
45s, and primarily offers fashion in the value price segment. In these markets, Adler considers
itself to be in competition with a large number of, in particular, local textile retailers.
Other, nationwide suppliers of classic and modern fashion for women and men over 45, which
Adler regards as major competitors, are C&A, Charles Vögele, K&L Ruppert and AWG, in the
value price segment, and Karstadt, Kaufhof and Gerry Weber in the upper mid-price range. In
terms of its mail order business, Adler considers Otto Versand and Klingel to be its main
competitors.
Contrary to most of its competitors, Adler distinguishes itself through its clear positioning in the
clothing market. It is the only major supplier in the fashion industry that consistently focuses on the
demands and fashion needs of the over 45s. This focus is clearly distinguishable for customers,
thus giving Adler a unique selling point in the clothing retail market that sets it apart from its
competitors.
Trademarks, utility patents and domains, and licences to proprietary rights
Trademarks and trademark licenses
Trademark rights are of considerable importance for the Adler Group. The Adler Group owns
around 80 German trademarks and around 70 international registrations, each of which are
generally protected in several countries, particularly Austria, the Benelux countries, Poland and
Switzerland. The Adler Group also owns around 40 Community trade marks, which are protected in
all member states of the European Union, as well as more than 50 national trademarks outside of
Germany, which are protected in particular in Austria, China, Poland and Turkey. The Adler
Group’s most important brand family is the family of ‘‘Adler’’ brands. The Adler Group also owns a
large number of other brands, some of which hold substantial economic relevance for the Adler
Group, such as, for example, the brand families ‘‘Malva’’, ‘‘Bexleys’’, ‘‘Thea 42 Plus’’, ‘‘Via
Cortesa’’, ‘‘MyOwn’’, ‘‘Senator’’, ‘‘Big Fashion’’, ‘‘Eagle’’, ‘‘Alphorn’’ and ‘‘Eibsee’’. A large majority of
these brands are protected not only as national trademarks in Germany, but also as Community
trade marks throughout Europe, and as international registrations in a number of other countries.
Adler Modemärkte AG is in some cases owner and in some cases merely the exclusive licence
holder of various brand names in the ‘‘Viventy by Bernd Berger’’ brand family.
Domains
The Adler Group owns more than 100 domains. These domains are predominantly registered as
.de domains, .com domains, .eu domains, .at domains and .lu domains. Adler’s main domain is
adlermode.com. Adler also uses a number of other domains, e.g. adler.de, adlermode.de, adlermodemaerkte.de,
adlermode.at, adlerfashion.at, adler.lu, adlerfashion.com, adlerfashion.eu,
adlermodemaerkte.eu, bexleys.com, bexleys.de, bexleys.eu, malva-adler.com, malva-adler.de,
thea42plus.com, thea42plus.de, viacortesa.com, viacortesa.de and viacortesa.eu. These domains
redirect the Internet user to the main domain, adlermode.com.
Assortment planning, procurement, warehousing and logistics
When planning its assortment and developing its collections, Adler focuses primarily on the
generation of customers over 45, in terms of fit, fashion grade, functionality and quality. In doing
this, the Adler Group considers that the customers Adler targets are predominantly fashion
A
c
1
0
4
7
0
8
p
u
0
5
0
P
r
o
o
f
7
:
2
7
.
5
.
1
1
B
/
L
R
e
v
i
s
i
o
n
:
0
O
p
e
r
a
t
o
r
D
a
d
114

followers, in other words, they only react to fashion trends after these have perceptibly established
themselves on the street and in the media. The fashion risk, i.e., the risk of not recognising
emerging trends in good time, is therefore smaller for Adler, due to its target group, than for
competitors, for whose customers keeping up with the latest fashion trends is particularly important.
Accordingly, lead times, in other words, the time between the design of a collection and its delivery
to the customers, are also less important for Adler than for competitors whose customers desire a
particularly high fashion grade. Nevertheless, the Company has vertically integrated its entire
planning, development, procurement and distribution process, from the design of the products until
they are marketed. This vertical integration means that Adler can respond more efficiently to
changes in demand. The aim is to ensure that the current, in-demand products are always on the
sales floor in sufficient quantities and that an increase in sales density can therefore be achieved.
Assortment planning
Adler employs its own team of designers for its own brands, and has an independent department
that is responsible for technical product development. These two teams compile the collections
marketed under the own brands and therefore work closely together with the various responsible
control purchasers. Adler takes care to ensure that each brand has its own distinctive image, is
coherent within itself and, at the same time, sets itself apart from the other own brands. The
collections are developed jointly for Germany, Austria and Luxembourg, as the taste and
preferences of the customers in all three countries are largely the same.
Adler continuously performs market and customer analyses. In particular the vertical integration and
Adler’s customer card permit a specific analysis of the needs of Adler’s customers. Adler is
therefore able to recognise changes in its industry environment in good time and can proactively
and quickly adapt its product assortment to the changed requirements of its customers. Due to its
production cycles, new collections are already being designed during the procurement phase.
Procurement
Adler undertakes the procurement of its products to a significant extent via Metro Group Buying
Ltd., Hong Kong (‘‘MGB’’). MGB bundles the procurement activities of the METRO Group in Asia
and accordingly has a great deal of market power there, from which Adler also benefits. At the
same time, Adler is one of MGB’s biggest customers for textiles. In financial year 2010, Adler
procured around 40% of its purchasing volume through MGB. Significantly more than 90% of this
volume was produced in East Asia, Southeast Asia and on the Indian subcontinent, predominantly
in low-wage countries, and delivered to Europe by sea freight.
Adler has also concluded a large number of contracts with importers, each of which accounted for
less than 5% of the total volume delivered to Adler in financial year 2010. Some importers ensure
quick responses to changes in demand, since their production facilities are close to Europe. Some
of the contracts with importers pertain to never-out-of-stock items (‘‘NOS items’’), which are
automatically replenished when they sell out. The suppliers of NOS items stock a portion of the
products in their own warehouse for short-term call-off by Adler. Adler maintains additional supplier
relationships with the manufacturers of the external brands it offers in its stores.
Warehousing and logistics
The logistics requirements in the textiles trade are high, which is attributable, on the one hand, to
the faster and faster seasonal turnarounds in the past few years and to a growing change in
consumer behaviour, on the other. Adler therefore has an integrated and efficient material
management system, which, together with Adler’s other IT systems, records, plans and controls all
goods flows from the source to the point of sale.
Adler’s logistics services are primarily rendered by MOTEX Mode-Textil-Service Logistik und
Management GmbH (‘‘MOTEX’’). This company assumes responsibility, among other things, for
goods receiving, order picking, reprocessing and pricing, as well as the completion of semi-finished
products. MOTEX, a former subsidiary, was sold to investment company bluO with effect from
1 October 2010 (for more details see ‘‘Related Party Transactions’’). The aim of this measure is to
focus on the core business of sales and increase flexibility in logistics. Adler continues to be
MOTEX’s main customer.
The goods purchased via MGB are shipped centrally to MOTEX’s textiles logistics centre in
Hörselgau, near Gotha, which, in the Company’s opinion, is one of the most cutting-edge goods
distribution centres in Europe. The logistics centre has a state-of-the-art overhead conveyor
A
c
1
0
4
7
0
8
p
u
0
5
0
P
r
o
o
f
7
:
2
7
.
5
.
1
1
B
/
L
R
e
v
i
s
i
o
n
:
0
O
p
e
r
a
t
o
r
D
a
d
115

system, specialist software and logistics technologies, and has capacity for up to 100 million items
per year. In addition to the quality controls to be carried out on site at the manufacturer by MGB,
as per a service level agreement, additional quality spot checks of the products and packaging are
carried out after the delivery is received at the logistics centre. Some of the goods Adler purchases
directly from importers are also delivered centrally to the Hörselgau logistics centre. A small
number of the importers and the majority of the manufacturers of the external brands offered in
Adler stores, on the other hand, deliver their goods directly to the Adler stores.
MOTEX also transports the goods to the individual Adler stores. At this point, a portion of the
delivered goods is transferred directly from the logistics centre to the individual Adler stores (push
strategy). The remaining goods are stored temporarily for delivery at a later date. The Adler stores
receive supplies from this replenishment warehouse within a few days, as necessary, based on
their sales figures (pull strategy). This concept of a combined push and pull strategy enables
efficient logistics planning and control.
Adler is currently in the testing stage for the Group-wide introduction of the electronic goods
tracking and tagging system RFID (radio-frequency identification). This system is already being
used in the sale of textiles by well known companies in the United States, and is currently being
tested by Adler. If this trial is successful, Adler plans to launch RFID across all stores from spring/
summer 2012. RFID requires small microchips to be sewn into the products at Adler’s suppliers.
These microchips can be read using scanners and could therefore have the potential to increase
efficiency and optimise processes in logistics, loss prevention, stock-taking and purchasing. Adler
also expects RFID to bring increases in sales, as the technology will speed up assortment
management, especially the re-ordering of items that are selling well.
Sales
Adler pursues a multi-channel sales strategy with its two distribution channels – its stores and its
online shop – and is considering expanding this strategy to selling its products via TV shops. The
Adler Group operates the majority of its currently 139 stores as large-space retail concepts. These
are distinctive in that they act as a customer magnet, in other words, they generate customer
frequency themselves, whereas small-space retail concepts merely skim off the customer frequency
in their surrounding area.
In financial year 2010, Adler updated the shop front and interior presentation of some of its stores.
This included putting up the new logo launched in 2009, a discreet re-organisation of the interior
and a re-design of the entrance and shop front. Adler plans to continuously expand this concept to
further stores. In this respect, Adler will adhere to its proprietary space concept with wide aisles,
an adequate number of large fitting rooms and rest areas. Adler anticipates an increase in sales
and sales density as a result of the modernisation efforts. In 2009, Adler reactivated organised bus
trips as a measure to increase customer frequency in its stores. In collaboration with bus
operators, Adler customers are offered trips to selected stores, which are combined with fashion
shows and, often, excursion programmes or concerts. Adler is particularly targeting its older regular
customer base with these bus trips.
A key instrument for promoting sales is Adler’s customer card. Adler issued its first customer cards
back in 1974 and gathered appropriate experience using this marketing tool. In financial year 2010,
around 3.3 million customers used the Adler customer card and shopped at least once in one of
Adler’s stores. Overall, Adler generated around 90% of its revenue with the Adler customer card in
financial year 2010. According to a study conducted by the magazine ‘‘Finanztest’’ from August
2010, Adler’s customer card is ‘‘almost ideal’’ in comparison with 24 well-known card programmes
(source: Consumer Reports (Stiftung Warentest), Finanztest, 8/2010, p. 12). Assessment criteria for
this review were the regular financial benefit associated with the customer card, including outside
of special promotional offers, the general terms and conditions for collecting discounts and the way
in which the companies handle customers’ personal data. As an incentive to use the customer
card, Adler uses discount credit notes, loyalty discounts, low prices for the alteration service, as
well as competitions, gifts, free rewards, extended exchange rights and other benefits. Adler
benefits from the multiple use of its customer card, because this enables it to analyse more
precisely the shopping behaviour of its customers. Using this information, Adler can place target
group-specific and thus efficient advertising in the form of mailings, for example by addressing
buyers of the own brand ‘‘Big Fashion’’ with advertising for precisely this own brand.
Adler has recognised that the generation entering the over 45 age group is significantly more
technophilic and enjoys a more modern lifestyle. In 2010, therefore, Adler launched another sales
A
c
1
0
4
7
0
8
p
u
0
5
0
P
r
o
o
f
7
:
2
7
.
5
.
1
1
B
/
L
R
e
v
i
s
i
o
n
:
0
O
p
e
r
a
t
o
r
D
a
d
116

channel, its online shop, via which it generated sales of more than c1.3 million in 2010. Over the
next few years, the online shop is to be expanded and its user-friendliness optimised, particularly
with regard to the needs of older people. Adler expects its online offering to have a multi-channel
effect, i.e., it anticipates that the online shop will benefit from business in the stores, and that the
online business will have positive effects on customer frequency in the stores. This assumption is
based, on the one hand, on the thinking that customers whose interest was aroused through the
online shop will come to the stores to try on and purchase clothes. The online shop, in turn, will
benefit from the stores, since these make the offering seem more reliable for Internet customers
than that of an anonymous online shop. Adler also benefits from side effects of the online
business. Based on the localisation of online customers, inferences can be made with regard to
the potential for additional Adler stores in certain regions, and customer addresses can be
collected for use in mailings and other marketing campaigns.
In the medium term, Adler is considering selling its products through TV shops, since ordering via
this sales channel is just as convenient as ordering through Adler’s online shop, but requires less
technical ability on the part of the customer and therefore seems particularly suitable for Adler’s
older customers. The first formats are currently being tested.
Marketing
Adler pursues a multi-format marketing strategy and uses a number of different media to promote
its image and products. As an operator of large-space retail concepts, Adler’s focus is to generate
customer frequency in its stores through the intensive use of marketing measures.
In order to optimise its marketing at the point of sale, i.e., in its stores, Adler set up its own Visual
Merchandising department in 2009, which has devised systemic standards for Adler’s stores. The
dominant parameters of these systemic standards are practicality, functionality, cost efficiency,
brightness, cleanliness, clarity of arrangement and clear customer guidance, with the aim of
highlighting Adler’s image as a value-for-money supplier. In 2011, Adler plans to increase its use of
the Tex-Store software, which enables closer integration of design, purchasing and visual
merchandising, and which should therefore bring an improvement in visual merchandising as a
marketing tool in the stores.
To increase customer frequency in the stores, Adler continues to rely on traditional marketing
measures, such as mailings, supplements and flyers, which are primarily aimed at Adler’s regular
customer base. The use and efficiency of mailings, supplements and flyers is reviewed on an
ongoing basis and optimised based on customer responses. Adler has a broad database to help it
with this, which was generated in particular through the Adler customer card, with which Adler
generated around 90% of its revenue in financial year 2010, and the online shop. Based on this
information on the shopping behaviour of its customers, Adler places target group-specific and thus
efficient advertising, for example by addressing buyers of the ‘‘Big Fashion’’ own brand with
advertising for precisely this own brand. In financial year 2010, Adler issued numerous mailings
with a total circulation of approximately 45 million and printed flyers with a total circulation of
approximately 200 million.
Adler also airs TV and radio advertisements during programmes that are popular among the over
45 customer group. Adler’s TV and radio advertising is both product and event-driven, or for image
promotion. Many of Adler’s advertising spots can also be viewed online by Internet users, on
Adler’s website. Since setting up its online shop, Adler has also intensified its online marketing
activities. In addition, Adler is involved in initiatives that, although they serve to improve Adler’s
image, are primarily an expression of Adler’s sustainable corporate strategy. These initiatives
include the sale of products certified as Fair Trade products, supporting the charity campaign ‘‘Fit
am Ball’’ (‘‘Fit on the ball’’ campaign to promote physical education in schools), and the used
clothing recycling initiative ‘‘I:CO’’.
Adler’s marketing activities rely heavily on the prominence of its advertising partners and
spokespeople. In March 2010, well known TV presenter Birgit Schrowange returned as a crossbrand
advertising spokesperson for Adler, having previously acted as an advertising spokesperson
for Adler until the end of 2008. Schrowange enjoys a great deal of affection among Adler’s
customers and contributes significantly to the level of awareness and recognisability of Adler’s
brands. For Adler’s target customer group, she represents a credible and authentic figure with
whom they can identify. Adler uses Schrowange as an advertising spokesperson both in TV
advertisements and in mailings, supplements, flyers and in its merchandising. Since March 2010,
Reiner Calmund, former general manager of the football club Bayer 04 Leverkusen, has been
A
c
1
0
4
7
0
8
p
u
0
5
0
P
r
o
o
f
7
:
2
7
.
5
.
1
1
B
/
L
R
e
v
i
s
i
o
n
:
0
O
p
e
r
a
t
o
r
D
a
d
117

acting as advertising spokesperson for the ‘‘Big Fashion’’ own brand. Calmund’s strong media
presence, particularly his many TV appearances, mean he is recognised by a large section of
Adler’s target customer base. Due to his physique, Calmund is an authentic advertising
spokesperson for the ‘‘Big Fashion’’ plus size collection. Adler has also engaged former alpine ski
racers Rosi Mittermaier and Christian Neureuther as additional, credible advertising partners, with
whom Adler customers can identify. They are primarily expected to represent the trend towards
more sport and fitness activities across all age groups and help establish the new sports own
brand, ‘‘Eibsee’’. Adler also expects the collaboration with Rosi Mittermaier and Christian
Neureuther to give the Adler brand a sportier image overall.
Property holdings, operating facilities, property, plant and equipment
Property holdings and operating facilities
Adler has leased two administration buildings at its headquarters in Haibach, near Aschaffenburg,
and also has an option from the owner to acquire one of the properties. The stores Adler operates
are leased. At some locations, it has sub-leased or rented out all or part of the spaces it has
leased. With the exception of one property in St. Pölten, Austria, Adler does not own any
properties at the present time.
The table below shows significant property holdings owned or leased by the Adler Group as of the
date of this Offering Memorandum:
Location Description
Leased/
owned Area
Industriestraße Ost 1-5, Haibach
Administration/
(Bavaria, Germany)
retail space Leased appr. 22,000 m 2
Industriestraße Ost 7, Haibach
(Bavaria, Germany) Administration Leased appr. 5,800 m 2
Mariazeller Straße 254, St. Pölten
(Lower Austria, Austria) Retail space Owned appr. 13,000 m 2
Significant property, plant and equipment
Adler’s property, plant and equipment mainly consists of operating and office equipment, leasehold
improvements and buildings leased by Adler, which for accounting purposes are attributed to Adler
as the beneficial owner due to the structure of the underlying lease agreements. These buildings
are predominantly used to operate Adler’s stores. Adler operated 137 stores as at 31 March 2011
and operates 139 stores as of the date of this Offering Memorandum. The remaining items of
property, plant and equipment consist mainly of the fixtures and fittings of the Adler stores. The
value of property, plant and equipment fell from c80,741 thousand as at 31 December 2008 to
c63,760 thousand as at 31 December 2009, and then to c52,215 thousand as at 31 December
2010. The value of property, plant and equipment was c50,708 thousand as of 31 March 2011.
There have been no material changes to Adler’s property, plant and equipment as of the date of
this Offering Memorandum.
The property, plant and equipment is predominantly located in Germany and, to a much smaller
extent, in Austria and Luxembourg, and was financed from cash flows from operating activities and
cash flows from financing activities. For information on current and future investments in property,
plant and equipment, see the section entitled ‘‘Business – Investment’’.
Material agreements
Outlined below are all material agreements concluded outside the ordinary course of business in
the two years prior to the date of this Offering Memorandum to which either the Company or
another member of the Adler Group is a party, as well as all other agreements in force as of the
date of this Offering Memorandum that were concluded outside the ordinary course of business
and which contain a term conferring a right or obligation on a member of the Adler Group, such
right or obligation being of material importance to the Adler Group:
Purchasing commission agency agreement with MGB Metro Group Buying Ltd.
Adler has engaged MGB Metro Group Buying Ltd., Hong Kong (‘‘MGB’’) to act as its purchasing
commission agent. MGB concludes purchase agreements with suppliers worldwide in its own
name, but for the account and at the risk of Adler, and renders additional services in this context,
A
c
1
0
4
7
0
8
p
u
0
5
0
P
r
o
o
f
7
:
2
7
.
5
.
1
1
B
/
L
R
e
v
i
s
i
o
n
:
0
O
p
e
r
a
t
o
r
D
a
d
118

in particular logistics services in Asia for Adler. MGB works exclusively for Adler in the territories
covered by the agreement, which does not include 30 European countries or (as regards
exclusivity) Turkey. This agreement was concluded for a minimum term until 31 December 2013,
and may be terminated thereafter with notice of twelve months to the end of the year.
Textile and transport logistics agreement with MOTEX Mode-Textil-Service Logistik und
Management GmbH
MOTEX Mode-Textil-Service Logistik und Management GmbH (‘‘MOTEX’’) is responsible for Adler’s
goods and transport logistics. This includes, among other things, goods receiving, inventory
management, order picking, preparation for dispatch, supplying all stores in Germany, Luxembourg
and Austria from MOTEX’s logistics centre, transporting returns from the stores to MOTEX’s
logistics centre, and cartage between the stores. Adler and MOTEX renewed the master
agreements pertaining to textiles and transport logistics for Germany, Austria and Luxembourg on
15 December 2010 and on 10 March 2011. These agreements have a minimum term until
31 December 2013; thereafter, they may be terminated with notice of twelve months to the end of
the respective year.
Loans extended by Adler to Adler Treasury GmbH
The Company entered into a master agreement with Adler Treasury GmbH on 9 March 2009
governing the reciprocal granting of loans. In 2009 and 2010, the Company extended three loans
totalling approximately c40,000 thousand to Adler Treasury GmbH under this master agreement.
The Company and Adler Treasury GmbH also entered into a further loan agreement in November
2010 concerning the Company’s grant of a loan of c7,300 thousand to Adler Treasury GmbH.
Effective 31 December 2010, the Company assigned its claims for the repayment of principal and
interest under the aforementioned loans to AMODA GmbH as part of the arrangement to offset
AMODA GmbH’s claims against the Company (for further details see ‘‘Related Party Transactions
– Financial dealings with AMODA GmbH and Adler Treasury GmbH’’).
Insurance
Adler has comprehensive insurance protection for its buildings, production facilities and inventories.
Adler has taken out employer’s liability and product liability insurance, as well as environmental
liability insurance. It also has group accident insurance for certain employees. All goods shipments
are insured. Adler also has D&O insurance to cover financial losses due to negligent breaches of
duty on the part of members of the Adler Group’s corporate bodies as well as IPO insurance to
cover potential prospectus liability risks. The insurance protection is regularly restricted by riskdependent
or legally prescribed maximum limits of cover.
Adler reviews its insurance coverage on a regular basis and adjusts it, if necessary. The Company
is nevertheless unable to rule out the possibility of the Adler Group or the companies of the Adler
Group incurring damages for which no insurance protection, or no sufficient coverage, exists,
based on existing insurance contracts. Furthermore, there is no guarantee that Adler or its
subsidiaries will be able to obtain sufficient insurance cover at appropriate premiums in future.
Investments
In the 2008 financial year, Adler made investments of c11,831 thousand, of which c1,409 thousand
was invested in intangible assets and c10,422 thousand was invested in property, plant and
equipment. Investments in intangible assets included an investment of c727 thousand for software,
rights and licences, c360 thousand for internally generated intangible assets, and c322 thousand
for payments on account of intangible assets. Investments in property, plant and equipment
included c2,325 thousand for fixtures and fittings in buildings, c122 thousand for technical plant
and equipment, and c7,975 thousand for other operating and office equipment.
In the 2009 financial year, Adler made investments of c3,750 thousand, of which c1,074 thousand
was invested in intangible assets and c2,676 thousand was invested in property, plant and
equipment. All investments in intangible assets were for software, rights and licences. Investments
in property, plant and equipment included c953 thousand for fixtures and fittings in buildings,
c171 thousand for technical plant and equipment, c1,513 thousand for other operating and office
equipment, and c39 thousand for payments on account of property, plant and equipment.
In the 2010 financial year, Adler made investments of c4,418 thousand, of which c420 thousand
was invested in intangible assets and c3,998 thousand was invested in property, plant and
A
c
1
0
4
7
0
8
p
u
0
5
0
P
r
o
o
f
7
:
2
7
.
5
.
1
1
B
/
L
R
e
v
i
s
i
o
n
:
0
O
p
e
r
a
t
o
r
D
a
d
119

equipment. All investments in intangible assets were for software, rights and licences. Investments
in property, plant and equipment included c1,687 thousand for fixtures and fittings in buildings,
c2,238 thousand for other operating and office equipment, and c73 thousand for payments on
account of property, plant and equipment.
All investments in all three financial years were primarily made in Germany and, to a much smaller
extent, in Austria and Luxembourg, and they were predominantly financed from cash flows from
operating activities.
In the current financial year, Adler has invested c4,257 thousand up to the date of this Offering
Memorandum, particularly for the purpose of opening new stores, the procurement of replacements
and upgrade measures, particularly in Germany. The Company’s Executive Board has also
approved additional investments totalling up to c18,649 thousand for the remainder of the 2011
financial year, contingent in part on the successful implementation of the IPO. Some of these
investments are also to be financed from cash flows from operating activities, and otherwise from
cash flows from financing activities. There are no other current investments.
Sustainability and the environment
As a long-term-oriented company, Adler attaches importance to ensuring that the products it sells
are manufactured in compliance with social and ecological standards. Adler therefore consciously
markets products that have been certified as Fair Trade products, both in its stores and via its
online shop. In addition, Adler has obligated its principal supplier, MGB Metro Group Buying HK
Limited, to comply with social standards, and in particular to observe the standards of the Business
Social Compliance Initiative (‘‘BSCI’’), of which it is also a member. Adler obtains contractual
assurance from a majority of its other individual suppliers stating that the textiles they supply
conform to the ‘‘Oeko-Tex-100’’ standard and that they were not manufactured using any type of
labour that is exploitative, harmful to health, akin to slavery or otherwise against human dignity,
such as child labour, forced labour or bonded labour.
The Adler Group is committed, as a long-term-oriented company, to its social responsibility. It
supports the ‘‘I:CO’’ project of the Swiss I:Collect AG, as part of which Adler customers can donate
used clothing and footwear at any of Adler’s stores. I:Collect AG then reprocesses these items
professionally or recycles items that can still be worn as second-hand clothing. Participating
customers receive discount vouchers from Adler for each bag of unwanted clothing donated, which
they can redeem when shopping in an Adler store. Adler also engages in charitable projects,
particularly children’s projects.
The Company is not aware of any soil pollution on any of the properties used by Adler. Adler has
sublet two service stations on properties it leases, but does not itself maintain any operating
facilities with plant that, in the Company’s opinion, present a significant risk of environmental
pollution.
Litigation
With the exception of the proceedings presented below, Adler is not and was not the subject of
any government interventions, nor is it or was it involved in any judicial or arbitration proceedings
that are ongoing or that existed or were concluded in the past twelve months, or that are pending,
to the Company’s knowledge, and that could have or have recently had a material adverse effect
on the financial condition or results of operations or the profitability of Adler:
* Claim for outstanding fees by former advertising partner
A former advertising partner has sued Adler for payment of a fee of around c450,000. The
claim was preceded by disputes concerning the termination of an advertising contract and the
fee owed to the former advertising partner. The proceedings concluded with a court
settlement resolved on 17 March 2010, which provides for Adler to pay an amount of
c400,000 to the former advertising partner.
* Claim for the return of a fee against communications agency
Adler is currently suing a communications agency that it commissioned, as well as the
managing director of this agency. In Adler’s opinion, the communications agency charged
Adler excessive fees of around c535,000 by submitting falsified documents. In the first
instance, the relevant claim asserted by Adler for repayment of the excessive fees paid to the
communications agency was allowed to the full extent, while an identical claim against the
A
c
1
0
4
7
0
8
p
u
0
5
0
P
r
o
o
f
7
:
2
7
.
5
.
1
1
B
/
L
R
e
v
i
s
i
o
n
:
0
O
p
e
r
a
t
o
r
D
a
d
120

*
managing director of the communications agency was only partly allowed. All parties have
lodged an appeal against the first instance verdict. The appellate proceedings before the
Higher Regional Court (Oberlandesgericht) in Cologne are still ongoing.
Claim for damages against brand research agency
Adler has sued a brand research agency for damages of almost c600,000. In Adler’s opinion,
the brand research agency did not adequately complete the brand research it was engaged to
carry out. The dispute between the parties has since been resolved by an out-of-court
settlement, which provides for the brand research agency to pay Adler a concluding payment
of c250,000.
* Commission claim of recruitment agency
A recruitment agency is claiming commission from Adler in connection with the employment of
Thomas Wanke. The amount claimed is 33% of his gross annual remuneration. The
recruitment agency lodged a preliminary claim for the commissions in the amount of
c150,000. To determine the actual amount of the alleged commissions claimed, the
recruitment agency also brought an action to obtain information as to Thomas Wanke’s gross
remuneration. Both actions were dismissed at first instances, however the recruitment agency
has lodged an appeal against the decisions of the first instance.
A
c
1
0
4
7
0
8
p
u
0
5
0
P
r
o
o
f
7
:
2
7
.
5
.
1
1
B
/
L
R
e
v
i
s
i
o
n
:
0
O
p
e
r
a
t
o
r
D
a
d
121

GENERAL INFORMATION ABOUT THE COMPANY
Formation, commercial register entry, company name and registered office
Adler Modemärkte AG, Haibach, is a stock corporation (Aktiengesellschaft) formed in Germany and
organised under the laws of the Federal Republic of Germany. It was formed pursuant to the
reorganisation of Adler Modemärkte GmbH and recorded in the commercial register of the Local
Court (Amtsgericht) of Aschaffenburg under HRB 11581 on 17 March 2011. The Company does
business under its own name.
The Company’s business address is Industriestraße Ost 1-7, 63808 Haibach, Germany. The
Company’s telephone number is +49 (0) 6021/6331217.
Company object
In accordance with § 2 of the Company’s Articles of Association, the object of the Company is the
production, distribution and wholesale and retail selling of textiles and articles in the clothing
industry, such as menswear, women’s wear and kidswear, as well as the import and export of
such, and the provision of all related services. The Company may also operate restaurants. It is
entitled to engage in all transactions and to take all measures which it deems appropriate to serve
the object of the Company. It is entitled to establish branches in Germany and abroad and may
form, acquire, sell and take up equity interests in enterprises of all types. The Company may
manage enterprises and enter into corporate agreements with them or may limit its involvement to
administrative functions. It may spin off its operations in full or in part into affiliates. These rights
are not limited to Germany.
Financial year and term of the Company
The Company’s financial year begins on 1 January and ends on 31 December. The Company has
been formed for an indefinite term.
Group structure and affiliates
Adler Modemärkte AG is the parent of the Adler Group. The following chart provides an overview
of the structure of the Adler Group as at the date of this Offering Memorandum:
A
c
1
0
4
7
0
8
p
u
0
5
0
P
r
o
o
f
7
:
2
7
.
5
.
1
1
B
/
L
R
e
v
i
s
i
o
n
:
0
O
p
e
r
a
t
o
r
D
a
d
122

No control and profit and loss transfer agreements exist within the Adler Group.
The following table provides an overview of Adler Modemärkte AG’s significant subsidiaries as at
the date of this Offering Memorandum. The financial information provided below relates to the 2010
financial year and unless otherwise indicated was taken from the audited annual financial
statements of the respective subsidiary as at 31 December 2010, which were prepared in
accordance with accounting requirements applicable in each respective country.
Company name .............................................................. Adler Modemärkte Gesellschaft m.b.H.
Shareholder ..................................................................... Adler Modemärkte AG
Registered office/country ................................................. Ansfelden, Austria
Commercial register entry................................................ Local Court of Linz, FN 134649p
Balance sheet date .......................................................... 31 December
Key business ................................................................... Wholesale and retail trading in merchandise
of all types, and the import, export and
transit of merchandise of all types,
particularly menswear, women’s wear and
kidswear under the ‘‘Adler’’ brand, as well
as the creation of menswear, women’s
wear and kidswear under the ‘‘Adler’’ brand
as well as investments in these and similar
enterprises; men’s and women’s tailoring;
hospitality services in restaurants, cafés,
buffets, espresso bars, snack bars, ice
cream parlours and milk bars, limited to
serving all types of meals and selling warm
and cold prepared food, alcoholic
beverages in sealed containers, nonalcoholic
beverages and the sale of such
beverages in open containers; investments
in these and similar enterprises.
Subscribed capital (in c thousand) (unaudited) ............... 37
of which paid in (in c thousand) (unaudited)................ 37
Reserves (in c thousand) (unaudited) ............................. 8,435
Net profit/loss for the year (in c thousand) (unaudited) ... 9
Investment book value according to the Company’s 2010
HGB Annual Financial Statements (based on the
shares held (directly or indirectly) by the Company) (in
c thousand) (audited) .................................................. 6,979
Investment income according to the Company’s 2010
HGB Annual Financial Statements (in c thousand) —
(audited) ......................................................................
Amounts owed by the Company (in c thousand) —
(unaudited)...................................................................
Amounts due to the Company (in c thousand) (unaudited) 3,005
A
c
1
0
4
7
0
8
p
u
0
5
0
P
r
o
o
f
7
:
2
7
.
5
.
1
1
B
/
L
R
e
v
i
s
i
o
n
:
0
O
p
e
r
a
t
o
r
D
a
d
123

Company name .............................................................. Adler Mode S. A.
Shareholder ..................................................................... Adler Modemärkte AG
Registered office/country ................................................. Foetz, Luxemburg
Commercial register entry................................................ Registre de Commerce et des Sociétés
Luxembourg, B27167
Balance sheet date .......................................................... 31 December
Key business ................................................................... The administration and operation of one or
more businesses specialising in trade; the
purchase and sale of textiles, articles of
clothing, haberdashery and knitted goods,
fashion accessories and jewellery and trade
in similar articles which will be sold in the
future as the result of new technical
developments and the operation of an
establishment for serving alcoholic and
non-alcoholic beverages and the operation
of restaurants, as well as all types of
financial and civil-law transactions and
transactions in movable assets and real
estate which are related to this object or
could be expedient for the realisation
thereof. The company may also acquire
equity interests of all types in Luxembourgbased
or foreign enterprises, provided
these have an analogous or related object
or such equity interests serve the
development and extension of its own
object.
Subscribed capital (in c thousand) (unaudited) ............... 31
of which paid in (in c thousand) (unaudited)................ 31
Reserves (in c thousand) (unaudited) ............................. 539
Net profit/loss for the year (in c thousand) (unaudited) ... 652
Investment book value according to the Company’s 2010
HGB Annual Financial Statements (based on the
shares held (directly or indirectly) by the Company) (in
c thousand) (audited) .................................................. 31
Investment income according to the Company’s 2010
HGB Annual Financial Statements (in c thousand) —
(audited) ......................................................................
Amounts owed by the Company (in c thousand) 2,445
(unaudited)...................................................................
Amounts due to the Company (in c thousand) (unaudited) —
A
c
1
0
4
7
0
8
p
u
0
5
0
P
r
o
o
f
7
:
2
7
.
5
.
1
1
B
/
L
R
e
v
i
s
i
o
n
:
0
O
p
e
r
a
t
o
r
D
a
d
124

Notices
Pursuant to the Articles of Association, Company notices are published in the electronic Federal
Gazette (Bundesanzeiger). Information to shareholders may also be transmitted via remote data
transfer, subject to their consent. Transmission of notifications pursuant to § 125 (2) German Stock
Corporation Act (Aktiengesetz, ‘‘AktG’’) is limited to electronic communication. The Executive Board
is authorised but not obligated to transmit such notifications by other means as well.
In compliance with the provisions of the German Securities Prospectus Act, notices in connection
with the approval of this Offering Memorandum or supplements thereto must be published in the
manner stipulated for this Offering Memorandum.
A
c
1
0
4
7
0
8
p
u
0
5
0
P
r
o
o
f
7
:
2
7
.
5
.
1
1
B
/
L
R
e
v
i
s
i
o
n
:
0
O
p
e
r
a
t
o
r
D
a
d
125

INFORMATION ON THE CAPITAL OF THE COMPANY AND OTHER IMPORTANT PROVISIONS OF
THE ARTICLES OF ASSOCIATION
The following overview contains information on the Company’s share capital, which is divided into
shares, and its development since the Company was founded. It also contains information on
certain provisions of the Company’s Articles of Association and German law, which governs both
the Company and its shares.
Share capital and shares
The share capital of the Company prior to the implementation of the Offering is c15,860,000. It is
divided into 15,860,000 no-par value ordinary bearer shares. All of the shares are fully paid in.
Each no-par value share represents a notional interest in the share capital of c1.00. Should the
capital increase of c2,650,000 still to be resolved by the Company’s Annual General Meeting for
purposes of the initial public offering (IPO) (the ‘‘Capital Increase for the IPO’’) be fully
implemented, the Company’s share capital will be c18,510,000.00. The share capital will then be
divided into 18,510,000 no-par value ordinary bearer shares, each representing a notional interest
in the share capital of c1.00.
The implementation of the Capital Increase for the IPO will be entered in the commercial register
of the Local Court of Aschaffenburg prior to admission of the shares to trading on the regulated
market (regulierter Markt) of the Frankfurt Stock Exchange (Prime Standard).
The shares into which the Company’s current share capital is divided are represented in a global
certificate without a dividend coupon, which will be deposited with Clearstream prior to listing. An
additional global certificate without a dividend coupon will be issued for the New Shares stemming
from the Capital Increase for the IPO and will likewise be deposited with Clearstream.
The holders of the Company’s no-par value shares hold co-ownership interests in the respective
global certificates. The Executive Board stipulates the form and content of the share certificates as
well as any dividend and renewal coupons. The Company may consolidate individual shares into
share certificates representing multiple shares (global shares, global certificates). Shareholders are
not entitled to receive definitive share certificates representing their shareholdings unless so
required by the rules of any stock exchanges to which the shares are admitted. Nor are
shareholders entitled to the issue of dividend and renewal coupons.
The Company’s shares are freely transferable in accordance with the provisions applicable to
bearer shares. With the exception of the contractual restrictions on the Company and the Selling
Shareholder described in the section entitled ‘‘The Offering – Lock-up’’, there are no lock-up
requirements or restrictions on the transferability of the Company’s shares.
Development of the share capital
The Corporation was formed on 20 April 1993 when Adler Bekleidungswerk AG & Co. KG,
Haibach, was reorganised as a German limited liability company (GmbH). It was recorded in the
commercial register of the Local Court (Amtsgericht) of Aschaffenburg (HRB 5202) under the name
Adler Modemärkte GmbH, with its registered seat in Haibach and share capital of DEM 6,000,000.
The Company’s share capital was subsequently increased on several occasions and converted into
euros; as at 6 October 2004, its share capital was c15,860,000.
By virtue of the resolution by the shareholders’ meeting on 1 March 2011, recorded in the
commercial register on 17 March 2011, the Company was reorganised as a stock corporation
(Aktiengesellschaft) under German law. The Company’s share capital of c15,860,000 was divided
during the reorganisation into 15,860,000 no-par value ordinary bearer shares, each representing a
notional interest in the share capital of c1.00.
It is expected that on or before 3 June 2011, the Company’s Annual General Meeting will resolve
to increase the share capital by issuing 2,650,000 new no-par value ordinary bearer shares against
cash contributions, subject to the exclusion of the Selling Shareholder’s pre-emptive rights, each
such share representing a notional interest in the share capital of c1.00. The Global Co-ordinator is
to be authorised to underwrite the New Shares subject to the stipulation that the shares be offered
to investors as part of an initial public offering of the Company and the proceeds generated in
excess of the issue amount (less costs and commissions) be paid to the Company in accordance
with the agreement concluded with the Company. The Executive Board will be authorised to
stipulate the individual details of the capital increase and the implementation thereof. The
implementation of the capital increase will be entered in the commercial register entry of the
A
c
1
0
4
7
0
8
p
u
0
6
0
P
r
o
o
f
7
:
2
7
.
5
.
1
1
B
/
L
R
e
v
i
s
i
o
n
:
0
O
p
e
r
a
t
o
r
D
a
d
126

Company prior to the admission of the Company’s shares to trading on the regulated market of the
Frankfurt Stock Exchange.
For more details on the Company’s shareholder structure, see the section entitled ‘‘Shareholder
Structure (Before and After the Offering)’’.
General provisions on capital increases
Even after the initial public offering, the Company may increase its share capital by resolution of
the Annual General Meeting. Pursuant to the currently applicable Articles of Association, a
resolution generally requires a simple majority of the voting share capital represented at the
adoption of the resolution and concurrently the simple majority of votes cast. However, if nonvoting
preferred shares are to be issued (§ 182 (1) sentence 2 German Stock Corporation Act
(Aktiengesetz, ‘‘AktG’’)), or if the resolution on the share capital increase provides for the exclusion
of the shareholders’ pre-emptive rights (§ 186 (3) AktG) then, instead of a simple majority of the
voting share capital represented at the adoption of the resolution, a 75% majority of the share
capital represented at the vote will be required. Pursuant to the German Stock Corporation Act,
each shareholder is generally entitled to a pre-emptive right to subscribe for new shares to be
issued pursuant to a capital increase (including convertible bonds, warrant-linked bonds, profit
participation rights or participating bonds). Pre-emptive rights are freely transferable; trading in preemptive
rights may be set up on the German stock exchanges during a prescribed period prior to
the expiration of the subscription period. The Annual General’ Meeting may exclude the
Shareholders’ pre-emptive rights with a minimum 75% majority of the share capital represented at
adoption of the resolution. The Executive Board is required to submit to the Annual General’
Meeting a written report setting out the grounds for the partial or complete exclusion of pre-emptive
rights and justifying the proposed issue price. Pre-emptive rights may generally be excluded only in
cases where the Company’s interest in excluding them objectively outweighs the shareholders’
interest in being granted such pre-emptive rights. Failing such a justification, pursuant to § 186 (3)
sentence 4 AktG pre-emptive rights may be excluded when new shares are issued if the Company
increases the capital against cash contributions, the amount of the capital increase does not
exceed 10% of the existing share capital and at the same time the issue price of the new shares
is not substantially lower than the stock exchange price. Where the resolution on the capital
increase specifies that the new shares are to be acquired by a credit institution or an enterprise
within the meaning of § 53 (1) sentence 1 or § 53b (1) sentence 1 or (7) German Banking Act
(Kreditwesengesetz, ‘‘KWG’’) subject to the obligation to offer such new shares to shareholders,
this shall not constitute an exclusion of pre-emptive rights.
When new shares are issued, the dividend rights attaching thereto may differ from the stipulations
of § 60 (2) sentence 3 AktG.
Authorised capital
In accordance with the Articles of Association currently in force, the Executive Board is authorised,
subject to the consent of the Supervisory Board, to increase the Company’s share capital against
cash or in-kind contributions, on one or several occasions in the period until 10 February 2016, by
a total of up to c7,930,000 by issuing new no-par value bearer shares (authorised capital). The
shareholders shall generally be granted a pre-emptive right. The statutory pre-emptive right may
also be granted in a manner whereby the New Shares are underwritten by a bank or banking
syndicate subject to the obligation to offer such New Shares to the Company’s shareholders for
subscription.
However, the Executive Board shall be authorised, subject to the consent of the Supervisory
Board, to exclude the shareholders’ statutory pre-emptive right (a) in the case of capital increases
against in-kind contributions that are performed specifically for the purpose of acquiring companies,
parts of companies or equity investments in companies; (b) in the case of capital increases against
cash contributions where the issue price of the new shares to be issued subject to the exclusion of
pre-emptive rights pursuant to § 186 (3) sentence 4 AktG is not substantially lower than the stock
exchange price of the Company’s shares of the same class and with the same features, and
where the proportion of share capital attributable to the new shares to be issued subject to the
exclusion of pre-emptive rights pursuant to § 186 (3) sentence 4 AktG does not in the aggregate
exceed 10% of the share capital existing at the time the authorisation enters into effect or is
exercised, provided that shares which were issued during the term of the authorisation until the
A
c
1
0
4
7
0
8
p
u
0
6
0
P
r
o
o
f
7
:
2
7
.
5
.
1
1
B
/
L
R
e
v
i
s
i
o
n
:
0
O
p
e
r
a
t
o
r
D
a
d
127

date on which it is exercised by direct or analogous application of § 186 (3) sentence 4 AktG are
to be counted toward this threshold of 10% of share capital; or (c) to avoid fractional amounts.
The Supervisory Board is authorised to duly amend the Articles of Association of the Company
subsequent to the full or partial exercise of authorised capital, particularly with respect to the
amount of share capital and the number of existing no-par value shares.
Contingent capital and authorisation to issue warrant-linked and/or convertible bonds
Following the entry in the commercial register of an amendment to the Articles of Association still
to be resolved by the Annual General Meeting, which is expected to take place on or before the
final day of the Offering Period, the Executive Board will foreseeably be authorised, subject to the
Supervisory Board’s consent, to increase the Company’s share capital on a contingent basis by
c7,930,000 through the issue of up to 7,930,000 no-par value ordinary bearer shares. The
contingent capital increase will serve the sole purpose of granting shares to holders of warrantlinked
and/or convertible bonds issued by the Company until 30 April 2016 on the basis of the
authorisation granted by the Annual General Meeting. Pursuant to the terms and conditions of the
convertible bonds, the contingent capital increase will also serve the purpose of issuing shares to
holders of convertible bonds carrying conversion obligations. The contingent capital increase will be
implemented only to the extent that the holders of the warrant-linked and/or convertible bonds
exercise their conversion or option rights, or the holders of the convertible bonds under a
conversion obligation satisfy such obligation, and to the extent that no cash compensation is made
or already existing shares are used to satisfy these rights. The New Shares will be issued at the
respective option or conversion price to be determined in accordance with the authorisation
resolution of the Company’s Annual General Meeting. The New Shares will carry dividend rights as
from the commencement of the financial year in which they are created as a result of the exercise
of option or conversion rights or the satisfaction of conversion obligations. Subject to the
Supervisory Board’s consent, the Executive Board will be authorised to determine the further
details of the implementation of the contingent capital increase.
Following a corresponding resolution by the Company’s Annual General Meeting, which is expected
to be adopted on or before the final day of the Offering Period, the Executive Board will be
authorised, subject to the Supervisory Board’s consent, to issue, on one more occasions on or
before 30 April 2016, warrant-linked and/or convertible bonds with a total nominal amount of up to
c250,000,000 with a maximum term to maturity of 20 years and, subject to the specific stipulations
of the respective terms and conditions of the warrant-linked and/or convertible bonds, to grant
option rights to the holders of warrant-linked bonds and conversion rights to the holders of
convertible bonds in respect of up to c7,930,000 no-par value ordinary bearer shares of the
Company.
The bonds may be issued both in euro and the national currency of an OECD country, provided
the corresponding euro equivalent limits are adhered to. They may also be issued by a domestic
or foreign company in which the Company directly or indirectly holds the majority of votes and
capital (hereinafter ‘‘Majority-held Affiliated Company’’). In this case the Executive Board will be
authorised to assume the guarantee on behalf of the issuing company regarding the redemption of
the bonds and to grant shares of the Company to the holders of such bonds to satisfy the option
or conversion rights attached to such bonds.
Subject to the specific stipulations of the bond terms and conditions, the holders or creditors of
convertible bonds will be entitled to exchange their convertible bonds for New Shares of the
Company. The terms and conditions may also provide for a conversion obligation at the end of the
term or an earlier date. In this case the terms and conditions may provide that the Company shall
be entitled to compensate fully or partially in cash any difference between the nominal amount of
the bond and a stock market price of the shares at the time of the conversion obligation to be
specified in the bond terms and conditions (the ‘‘Market Price at the Time of Conversion’’),
multiplied by the conversion ratio. However, the Market Price at the Time of Conversion must
amount to at least 80% of the market price of the Company’s shares (calculated on the basis set
forth below) at the time the bonds are issued.
In the case where warrant-linked bonds are issued, one or more warrants will be attached to each
bond which entitle the bearer to subscribe for New Shares of the Company in accordance with the
warrant terms and conditions to be stipulated by the Executive Board. The term of the option right
may not exceed twenty years. The proportionate amount of the share capital attributable to the no-
A
c
1
0
4
7
0
8
p
u
0
6
0
P
r
o
o
f
7
:
2
7
.
5
.
1
1
B
/
L
R
e
v
i
s
i
o
n
:
0
O
p
e
r
a
t
o
r
D
a
d
128

par value shares to be subscribed for per warrant-linked bond may not exceed the nominal amount
of the warrant-linked bond.
For convertible bonds, the conversion ratio is determined by dividing the nominal amount of one
bond by the fixed conversion price for one New Share of the Company. The conversion ratio may
also be determined by dividing the issue price of one bond that is less than the nominal amount by
the fixed conversion price for obtaining one New Share of the Company. The terms and conditions
may also provide that the conversion ratio shall be variable and may be rounded up or down to an
even figure; in addition, a supplementary cash payment may be stipulated. Furthermore, the terms
and conditions may provide for fractional amounts to be combined or compensated for in cash The
proportionate amount of the share capital represented by the shares to be issued upon conversion,
or to be subscribed for upon exercise of the option, may on no account exceed the nominal
amount and issue price of the convertible or warrant-linked bonds
The warrant-linked and convertible bonds (bonds) may also be issued against in-kind contributions
if the value of the in-kind contributions reflects the issue price, which may not be substantially
lower than the theoretical market value of the bonds as established in accordance with recognised
principles of financial mathematics.
Shareholders will generally be entitled to the statutory pre-emptive rights upon issue of the bonds.
The bonds may also be offered to shareholders by way of an indirect subscription right; in this
case, they will be underwritten by a bank or banking syndicate with the obligation of offering the
bonds to the shareholders for subscription. However, the Executive Board will be authorised,
subject to the consent of the Supervisory Board, to exclude shareholders’ pre-emptive rights with
respect to the bonds in the following cases:
* in order to exclude fractional amounts resulting from the subscription ratio from the
shareholders’ pre-emptive right,
* if (i) they are issued against cash contributions and (ii) the issue price is not significantly
lower than the theoretical market value of the bonds as calculated in accordance with
generally accepted actuarial methods; this shall apply, however, only to the extent that the
shares to be issued in order to satisfy the option and/or conversion rights thereby created do
not in the aggregate exceed 10% of the registered share capital, neither at the time this
authorisation becomes effective nor at the time it is exercised. This figure shall take into
account the proportionate amount of the share capital attributable to the shares issued from
authorised capital during the period from the date of the Annual General Meeting resolving on
the authorisation to the end of the term of this authorisation by way of a cash capital increase
under exclusion of the pre-emptive rights in accordance with § 186 (3) sentence 4 AktG.
Furthermore, this figure shall take into account the proportionate amount of the share capital
attributable to own shares (treasury shares) sold during the term of this authorisation with the
exclusion of pre-emptive rights by analogous application of § 186 (3) sentence 4 AktG,
* where bonds are issued against in-kind contributions and the exclusion of pre-emptive rights
is in the interests of the Company,
* where necessary in order to grant holders of convertible bonds, warrants or convertible profit
participation rights issued by the Company or its subordinate group companies a pre-emptive
right to the extent that such right would be available to them after exercising the rights or
after satisfying the conversion obligations.
The option or conversion price will be calculated on the basis of the following principles: Even
when the following anti-dilution rules are applied, the option or conversion price must amount to at
least 80% of the volume-weighted average market price of the Company’s shares in the XETRA
trading system of the Frankfurt Stock Exchange (or a comparable successor system) during the
period between commencement of the book-building procedure and the final setting of the bond
price by the banks accompanying the issue or, if shareholders are eligible to subscribe for the
bonds, during the subscription period, with the exception of the last four exchange trading days
prior to such period’s expiry, or over the ten trading days prior to the date of the Executive Board’s
resolution on the issue of the bonds. The terms and conditions may also provide that, depending
on the share price performance or based on the anti-dilution provisions, the option or conversion
price may be amended during the bond’s period of validity provided such amendments fall within
the fluctuation margin to be set by the Executive Board.
A
c
1
0
4
7
0
8
p
u
0
6
0
P
r
o
o
f
7
:
2
7
.
5
.
1
1
B
/
L
R
e
v
i
s
i
o
n
:
0
O
p
e
r
a
t
o
r
D
a
d
129

Notwithstanding § 9 (1) AktG, the option or conversion price may be reduced under an anti-dilution
clause in accordance with the terms and conditions by payment of a corresponding amount in cash
upon exercise of the conversion right or by reduction of the supplementary payment if, during the
option or conversion period, the Company increases the share capital while granting its
shareholders pre-emptive rights, or if the Company and/or its Majority-held Affiliated Company
issue additional warrant-linked or convertible bonds or grant any other option rights and do not
grant the holders of (existing) option or conversion rights pre-emptive rights to the extent to which
they would have been entitled after exercising the option or conversion rights. Instead of a cash
payment or a reduction of the supplementary payment the conversion ratio may also – to the
extent possible – be adjusted by dividing it with the reduced conversion price. In addition, the
terms and conditions may provide for an adjustment of the option and conversion rights in the case
of a capital reduction or measures resulting in a dilution of the value of the issued shares of the
Company.
The terms and conditions may provide or permit that the Company shall not grant the holders of
option or conversion rights shares of the Company but instead pays an equivalent amount in cash
in accordance with the terms and conditions. The terms and conditions may also provide that the
bonds may, at the Company’s option, be converted into already existing shares of the Company
instead of into new shares out of contingent capital, or that the option right or the option obligation
may be satisfied by delivery of such shares.
The Executive Board will be authorised, subject to the consent of the Supervisory Board, to
stipulate the terms and conditions of the bonds as well as the further details of the issuance and
features of the warrant-linked and/or convertible bonds, particularly with respect to interest rate,
issue price, term to maturity and denomination, and to stipulate the option or conversion period.
As at the date of this Offering Memorandum, no option or conversion rights regarding shares of the
Company have been issued. At present, there are no definite plans for any such issue.
Authorisation to acquire treasury shares
The Company currently holds no treasury shares. However, following a corresponding resolution by
the Company’s Annual General Meeting, which is expected to be adopted during the first week of
the Offering Period, the Company will foreseeably be authorised, subject to the Supervisory
Board’s consent, to acquire treasury shares representing a total of up to 10% of the share capital
existing at the time of the adoption of the resolution. Such authorisation will be valid until 30 April
2016. Any acquisition for the purpose of trading in treasury shares will be precluded. The shares
acquired under this authorisation together with other shares of the Company which the Company
has acquired, but does not yet own at the time of acquisition may not represent more than 10% of
the share capital. The authorisation may be exercised in whole or in partial amounts once on one
or more occasions by the Company or by dependent companies or entities in which the Company
has a majority shareholding, or by third parties acting for the account of the Company or
dependent companies or entities in which the Company has a majority shareholding. Treasury
shares may be acquired over the stock exchange or by way of a public purchase offer directed to
all shareholders. If the shares are acquired over the stock exchange, the consideration paid per
share (excluding ancillary acquisition costs) will not be permitted to be more than 10% above or
below the price determined for the share on the relevant stock exchange trading day in the
opening auction of the XETRA trading system (or a comparable successor system). If the shares
are acquired by way of a public purchase offer, the purchase price offered or the minimum and
maximum amounts of the purchase price range per share (excluding ancillary acquisition costs) will
not be permitted to be more than 10% above or below the closing price in the XETRA trading
system (or a comparable successor system) on the third stock exchange trading day preceding the
day of the public announcement of the purchase offer. If, following publication of a public purchase
offer, there are significant deviations from the relevant price, the purchase offer may be adjusted.
In this case, the price on the third stock exchange trading day preceding the public announcement
of any such adjustment will be relevant. The volume of the offer may be restricted. If the offer is
over-subscribed, acceptance of the offer must take place on a pro rata basis. A preferential
acceptance of smaller units of up to 100 tendered shares per shareholder may be stipulated. The
Executive Board will be authorised, subject to the consent of the Supervisory Board, to use
treasury shares of the Company that are acquired pursuant to this authorisation for the following
purposes: (i) the shares may be cancelled without the need for a separate resolution herefor by
the Annual General Meeting. The authorisation for cancellation may be exercised in whole or in
A
c
1
0
4
7
0
8
p
u
0
6
0
P
r
o
o
f
7
:
2
7
.
5
.
1
1
B
/
L
R
e
v
i
s
i
o
n
:
0
O
p
e
r
a
t
o
r
D
a
d
130

partial amounts and will result in a reduction of the share capital. Alternatively, the Executive Board
may determine that the share capital will not be reduced and that the cancellation will instead
result in the proportionate interest in the share capital held by the other shareholders being
increased pursuant to § 8 (3) AktG, in which case, the Executive Board will be authorised to adjust
the Articles of Association with respect to the number of shares set forth therein, (ii) the shares
may be offered and transferred to third parties in connection with company mergers or the
acquisition of companies or equity investments in companies, (iii) the shares may be offered for
purchase and transferred to Executive Board members, employees of the Company or its Group
companies, (iv) the shares may be offered for purchase and transferred to third parties who, as
strategic partners of the Company or its Group companies, play a significant role in assisting the
Company to achieve its corporate goals, (v) the shares may be used to satisfy the obligations of
the Company arising out of convertible bonds issued or guaranteed by it.
Shareholding notification requirements, takeover offers and exclusion of minority shareholders
(squeeze-out)
Disclosure of shareholdings in listed companies
The German Securities Trading Act (Wertpapierhandelsgesetz, ‘‘WpHG’’) stipulates that any
shareholder whose voting interest in a listed company reaches, exceeds or falls below 3%, 5%,
10%, 15%, 20%, 25%, 30%, 50% or 75% through acquisition, sale or by other means, must
promptly notify the relevant company and the German Federal Financial Supervisory Authority
(Bundesanstalt für Finanzdienstleistungsaufsicht, ‘‘BaFin’’) in writing or by fax and no later than
within four trading days of the fact that (i) any of the aforementioned thresholds have been
reached, exceeded or are no longer met, and report (ii) the total voting interest now held. The
notice period begins on the date upon which the party subject to the notification requirement knows
in fact, or, based on circumstances, should have known that its voting interest reached, exceeded
or fell below any of the aforementioned thresholds. In calculating the voting thresholds under the
German Securities Trading Act, the voting rights of certain parties affiliated or acting in concert with
the shareholder are to be counted toward this threshold. Acting in concert is assumed if
shareholders co-ordinate the exercise of their voting rights at the annual general meetings of the
company or co-ordinate their conduct outside the annual general meeting with the aim of
permanently and materially changing the company’s corporate strategy. An agreement in a specific
case, on the other hand, will not be deemed acting in concert. Also to be counted are those voting
rights attaching to shares which are held by a third party for the account of the notifying
shareholder, which were transferred to a third party as security and with respect to which a
usufructory right has been created in favour of the notifying shareholder, which may be acquired by
the notifying shareholder by way of a binding declaration of intent and which are entrusted to the
notifying shareholder or under which it may exercise voting rights as proxy.
Similar obligations to notify the Company and BaFin apply in the case of other financial
instruments which allow the holder to unilaterally acquire, pursuant to a legally binding agreement,
Company shares that have already been issued and which carry voting rights. In such case,
disclosure is required when the respective interest reaches, exceeds or falls below any of the
above thresholds, with the exception of the 3% threshold. In determining the relevant thresholds for
notification, shareholdings in the form of the foregoing financial instruments are combined with
shareholdings in the form of voting shares.
Pursuant to Art. 1 no. 3 in conjunction with Art. 9 (3) of the German Investor Protection and
Capital Markets Improvement Act (Anlegerschutz- und Funktionsverbesserungsgesetzes, ‘‘AnsFuG’’;
Federal Law Gazette (BGBl.) 2011 I, p.538), which entered into force on 8 April 2011, beginning
on 1 February 2012, a new § 25a of the German Securities Trading Act (WpHG) will enter into
force, which expands the notification requirements of § 25 WpHG to include other financial
instruments not covered by § 25 WpHG.
Failure of a shareholder to give the required notification will operate to preclude such shareholder
from exercising the rights attaching to its shares (including its voting rights and the right to receive
dividends) for the term of default. Furthermore, failure to comply with notification requirements may
be penalised by the imposition of a statutory fine. If due to wilful or grossly negligent conduct, a
shareholder fails to file notification that the reportable voting threshold had been reached, exceeded
or was not met or files an incorrect notification as to the amount of the voting interest held, the
shareholder’s voting rights may be suspended for a period of up to six months after the receipt of
the improper notification. This shall not apply where the voting interest specified in the previous
A
c
1
0
4
7
0
8
p
u
0
6
0
P
r
o
o
f
7
:
2
7
.
5
.
1
1
B
/
L
R
e
v
i
s
i
o
n
:
0
O
p
e
r
a
t
o
r
D
a
d
131

incorrect notification deviates from the actual voting interest by less than 10% and there was no
failure to file notification that any voting threshold specified had been reached, exceeded or was
not met.
Where the shareholder or person held attributable by law is an investment services firm, those
shares or other financial instruments which are held in the trading portfolio and with respect to
which it has been ensured that the voting rights attaching thereto will not be exercised and do not
represent more than 5% of the voting shares nor convey the right to acquire more than 5% of the
voting shares, shall not be counted.
The Company must publish the notifications received by it without undue delay, and no later,
however, than three trading days following receipt thereof and advise BaFin of such publication. At
the end of a given month in which voting rights have increased or decreased, the Company must
also publish a notification of the total number of voting rights and notify BaFin of the publication.
The notifications and the information on the total number of voting rights must also be transmitted
to the company register for recording without undue delay, but not prior to publication thereof.
Any shareholder whose voting interest from shares reaches or exceeds the 10% threshold must
disclose to the issuer within 20 trading days the objectives pursued with the acquisition of the
voting rights as well as the origin of the funds used for the acquisition, unless the Articles of
Association provide otherwise. Similarly, any changes to targets must be notified within 20 trading
days. In calculating the thresholds, the voting rights of specific persons must be counted in
accordance with the foregoing rules.
Mandatory takeover offers and squeeze-out of minority shareholders
Under the provisions of the German Securities Acquisition and Takeover Act (Wertpapiererwerbsund
Übernahmegesetz), shareholders who acquire 30% or more of the voting rights in a listed
stock corporation (‘‘Offeror’’) are required to publish this fact along with the percentage of their
voting interest and thereafter (provided no exemption from this obligation has been granted) make
a mandatory offer to all shareholders in the target company. In calculating this 30% threshold, the
voting rights of certain parties affiliated or acting in concert with the shareholder are to be counted
toward this threshold. The relevant provisions of the German Securities Acquisition and Takeover
Act correspond to those of the German Securities Trading Act described in ‘‘Disclosure of
shareholdings in listed companies’’ except for the provisions on financial instruments, which grant
the holder a unilateral right of acquisition.
If a shareholder fails to disclose that the 30% threshold was reached or exceeded or fails to
submit a mandatory public offer, it will be precluded from exercising the rights attached to these
shares (including the voting right and the right to received dividends) while such default subsists. In
addition, an administrative fine may be imposed in the event of failure to comply with duties of
notification.
If, after the takeover offer, the Offeror holds at least 95% of the voting capital of the target
company it may petition for the remaining voting shares to be transferred to it by way of a court
order against the grant of reasonable settlement (‘‘Squeeze-out under Takeover Law’’). If the
foregoing takeover offer achieves an acceptance rate of at least 90% of the share capital under
the offer, the offer price shall be deemed a reasonable settlement. Otherwise, the settlement shall
be set by the court.
In addition, the annual general meeting of a German stock corporation may, at the request of a
shareholder holding at least 95% of the share capital (‘‘Principal Shareholder’’), resolve to
transfer the shares from the remaining shareholders (‘‘Minority Shareholders’’) to the Principal
Shareholder in return for a reasonable cash settlement equivalent to the proportionate economic
value of the company (‘‘Squeeze-out under Stock Corporation Law’’). The annual general
meeting of a stock corporation may also resolve the integration (Eingliederung) into another
domestic stock corporation (‘‘Principal Entity’’) provided that at least 95% of the shares of the
company to be integrated are held by the Principal Entity. The departing shareholders in the
company being integrated are entitled to a reasonable settlement, which is generally to be granted
in the form of shares in the Principal Entity and is determined based on the ratio between the
enterprise value of the Principal Entity and that of the company being integrated.
Disclosure of transactions by persons exercising executive responsibilities at a listed company
Under the German Securities Trading Act, persons exercising executive responsibilities at a listed
company (‘‘Executives’’) are under an obligation to notify the Company and BaFin within five
A
c
1
0
4
7
0
8
p
u
0
6
0
P
r
o
o
f
7
:
2
7
.
5
.
1
1
B
/
L
R
e
v
i
s
i
o
n
:
0
O
p
e
r
a
t
o
r
D
a
d
132

usiness days of their transactions involving shares of the Company or related financial
instruments, in particular, derivatives. The foregoing also applies to persons closely related to such
Executives. The Company is required to publish such notice promptly following receipt and send a
copy thereof to BaFin and to the companies’ register following publication. The reporting obligation
shall not apply provided the total aggregate value of the transactions with an Executive and closely
related parties of such person is less than c5,000 within a single calendar year.
Executives are members of a management, administrative or supervisory body of the stock
corporation as well as other persons having regular access to insider information within the
meaning of the German Securities Trading Act and who are authorised to make material business
decisions.
The following constitute persons closely related to an Executive: spouses, registered partners,
dependent children and other relatives who have been living in the same household as the
Executive for at least one year as of the date of the transaction to be notified. Legal entities at
which the aforementioned person exercises executive responsibilities are also subject to the
reporting obligation. The aforementioned provision also applies to those legal entities, companies
and institutions which are directly or indirectly controlled by an Executive or any party closely
related to an Executive, were formed for the benefit of any such person, or whose economic
interest largely reflects those of any such person.
Parties at fault for failure to comply with a reporting obligation may be penalised by the imposition
of a fine.
A
c
1
0
4
7
0
8
p
u
0
6
0
P
r
o
o
f
7
:
2
7
.
5
.
1
1
B
/
L
R
e
v
i
s
i
o
n
:
0
O
p
e
r
a
t
o
r
D
a
d
133

CORPORATE BODIES OF THE COMPANY AND EMPLOYEES
Overview
The corporate bodies of the Company are the Executive Board (Vorstand), the Supervisory Board
(Aufsichtsrat) and the Annual General Meeting. The powers of these corporate bodies are
governed, inter alia, by the German Stock Corporation Act (Aktiengesetz, ‘‘AktG’’), the German
Reorganisation Act (Umwandlungsgesetz), the German Securities Acquisition and Takeover Act
(Wertpapiererwerbs- und Übernahmegesetz), the Articles of Association and the respective rules of
procedure of the Company’s Executive Board and Supervisory Board.
The Executive Board manages the Company at its own responsibility in accordance with the laws
of the Federal Republic of Germany, the provisions of the Articles of Association and of the rules
of procedure of the Executive Board and in compliance with the resolutions of the Annual General
Meeting and the Supervisory Board. The Executive Board represents the Company in its dealings
with third parties. The Executive Board must ensure that an appropriate risk management and
internal monitoring system is set up and operated within the Company in order to facilitate the
early identification of developments that might jeopardise the continued existence of the Company.
The members of the Executive Board are appointed and dismissed by the Supervisory Board. The
Executive Board has a duty to report to the Supervisory Board. It must report to the Supervisory
Board regularly, promptly and comprehensively on all issues of relevance to the Company with
respect to planning, business development, the risk situation, risk management, strategic measures
and other relevant circumstances affecting the Company. Moreover, reports must be presented to
the chairman of the Supervisory Board on other important occasions. Furthermore, the Supervisory
Board may request a report on Company matters at any time.
The Supervisory Board is responsible for monitoring and advising the Executive Board in the
execution of its management duties. Generally speaking, a member of the Company’s Supervisory
Board may not at the same time be a member of the Company’s Executive Board. Under German
stock corporation law, measures relating to management may not be transferred to the Supervisory
Board. However, the Articles of Association or the Supervisory Board must stipulate that certain
types of transactions may be undertaken only subject to its consent.
The members of the Executive Board and the Supervisory Board have fiduciary duties and duties
of care toward the Company. In discharging these duties, a broad range of interests, in particular
those of the Company, its shareholders, its employees, its creditors and the general public, must
be taken into account. In particular, the Executive Board must also take into account the
shareholders’ rights to equal treatment and equal information.
According to German stock corporation law, individual shareholders – like any other person – are
prohibited from using their influence on the Company to cause a member of the Executive Board
or Supervisory Board to act in a manner that would damage the Company. Any person who uses
his or her influence to cause a member of the Executive Board or the Supervisory Board, a
commercial attorney-in-fact (Prokurist) or an authorised agent to act in a manner that damages the
Company or its shareholders is required to compensate the Company for the damage suffered by
it as a result. In addition, the members of the Executive Board and Supervisory Board are jointly
and severally liable if they have acted in breach of their duties and the Company has suffered
damage as a result.
Generally, a shareholder has no standing to bring a court action against members of the Executive
Board or the Supervisory Board if such shareholder believes that the relevant members have
breached their duties toward the Company and that the Company has suffered damage as a
result. As a rule, compensatory damages claims on the part of the Company against members of
the Executive Board or the Supervisory Board may be enforced only by the Company itself, in
which respect the Company is represented by the Executive Board in the event of claims against
Supervisory Board members, and by the Supervisory Board in the event of claims against
Executive Board members. According to a decision by the German Federal Supreme Court
(Bundesgerichtshof, ‘‘BGH’’), the Supervisory Board is required to assert against the Executive
Board any compensatory damages claims that are foreseeably enforceable, unless there are
significant reasons involving the Company’s welfare that argue against the assertion of such claims
and such arguments outweigh or are at least equal to the arguments in favour of asserting them.
Should the respective corporate body authorised to represent the Company decide not to prosecute
a claim, compensatory damages claims of the Company against members of the Executive Board
or the Supervisory Board must be asserted if the Annual General Meeting resolves to do so by a
A
c
1
0
4
7
0
8
p
u
0
6
0
P
r
o
o
f
7
:
2
7
.
5
.
1
1
B
/
L
R
e
v
i
s
i
o
n
:
0
O
p
e
r
a
t
o
r
D
a
d
134

simple majority, although the Annual General Meeting may appoint a special representative to
assert the claims. Shareholders whose shares collectively represent 10% of the share capital or a
pro rata amount of c1,000,000 may also apply for judicial appointment of a special representative
to assert the compensatory damages claims, who, if appointed, becomes responsible for this in
place of the Company’s corporate bodies. If there are facts in evidence that justify a strong
suspicion that the Company has suffered damage as a result of impropriety or a gross breach of
the law or the Articles of Association, shareholders whose shares collectively represent 1% of the
share capital or a pro rata amount of c100,000 also have the option, subject to certain
requirements, to be granted leave by the competent court to assert compensatory damages claims
of the Company against members of the relevant corporate bodies in their own name on behalf of
the Company. Such an action will become inadmissible if the Company itself brings an action for
damages.
The Company may not waive or settle compensatory damages claims against members of the
corporate bodies until three years after a given claim has vested, and then only if the shareholders
resolve to do so by a simple majority of votes cast at the Annual General Meeting and provided
that no minority of shareholders whose shares collectively represent at least 10% of the share
capital place an objection on the record.
Executive Board
Introduction
Pursuant to the Company’s Articles of Association, the Executive Board is composed of at least
two members. The Supervisory Board stipulates the number of Executive Board members and
appoints them. The Company’s Executive Board currently has three members. The Supervisory
Board may appoint one member of the Executive Board as Chief Executive Officer (CEO). The
Supervisory Board dismisses members of the Executive Board. Executive Board members are
appointed for a maximum term of five years. Reappointment or an extension of the term of office
for up to an additional five years is permissible. The Supervisory Board may revoke the
appointment of an Executive Board member for good cause prior to expiry of his or her term of
office, such as in cases of a gross breach of duty, an inability to duly manage the Company’s
business or a vote of no confidence in the Executive Board member by the Annual General
Meeting, unless the vote of no confidence was clearly on subjective grounds. The formal legal
relationship created by virtue of appointment of an Executive Board member is to be distinguished
from the contract of service between the Executive Board member and the Company. The contract
of service also has a maximum term of five years, although it is permissible to provide for an
automatic renewal of the contract of service in the event of reappointment. Otherwise, the
provisions of the German Civil Code (Bürgerliches Gesetzbuch, ‘‘BGB’’) on service relationships
apply to the employment relationship and termination thereof.
Management and representation
The members of the Executive Board conduct the business of the Company jointly and with
collective responsibility (Kollegialprinzip). Therefore they are obliged to inform each other regularly
on all material transactions and the course of business within their respective areas of
responsibility. To the extent measures and transactions within one Executive Board member’s area
of responsibility affect that or those of another, those involved shall endeavour to co-ordinate with
one another. If consensus cannot be reached, the Executive Board members involved shall have
the Executive Board adopt a resolution thereon. Any Executive Board member who has serious
concerns about any matter involving another Executive Board member shall seek to obtain a board
resolution unless his/her concern can be allayed by discussing the matter with the other Executive
Board member. Notwithstanding the collective responsibility of the Executive Board, the Supervisory
Board shall issue rules of procedure for the Executive Board. Pursuant to the Company’s Articles
of Association, resolutions of the Executive Board are adopted by a simple majority of the
Executive Board members participating in the adoption of the resolution unless the law or the rules
of procedure stipulate a different majority. In the event of a tie, the Chairman shall have the
casting vote.
The applicable rules of procedure stipulate that the Executive Board requires the consent of the
Supervisory Board for various transactions. The Executive Board is also required to obtain the
Supervisory Board’s consent in those cases where it is involved in transactions or measures at a
controlled entity of the Company which require Supervisory Board’s consent under the rules of
A
c
1
0
4
7
0
8
p
u
0
6
0
P
r
o
o
f
7
:
2
7
.
5
.
1
1
B
/
L
R
e
v
i
s
i
o
n
:
0
O
p
e
r
a
t
o
r
D
a
d
135

procedure and the relevant transactions or measures would require consent if the controlled entity
were not an independent part of the Company’s business. The Supervisory Board may make
additional transactions contingent upon its consent or restrict the group of transactions requiring its
consent. Consent must be obtained before the relevant transaction or measure is effected. Prior
consent shall not be required in those cases where the matter is evidently urgent, the transaction
or measure has been co-ordinated and agreed with the chairman of the Supervisory Board and
where the Executive Board can in its due discretion assume that the Supervisory Board will
approve the transaction or measure. In such cases, the Executive Board shall inform the
Supervisory Board of the transaction or measure without undue delay.
The Company is legally represented by two members of the Executive Board or by one member of
the Executive Board acting jointly with a commercial attorney-in-fact (Prokurist). The Supervisory
Board may grant one or several members of the Executive Board the right to represent the
Company alone. The Supervisory Board may exempt all or individual members of the Executive
Board generally or in individual cases from the prohibition on self-dealing under § 181 limb 2 BGB.
Currently, Lothar Schäfer is the only person authorised to represent the Company alone and who
is exempt from the prohibition against self-dealing pursuant to § 181 limb 2 BGB.
Members of the Executive Board
The members of the Company’s Executive Board and their respective areas or responsibility are
set forth in the following overview.
Name Appointed to
the Executive
Board on
Appointed for
a term of
Competencies
Lothar Schäfer (CEO) ........... 4 March 2011 3 years Strategy, Purchasing, Logistics,
Supply Chain Management,
Quality Control, PR and IR
Jochen Strack ....................... 4 March 2011 3 years Accounting and Controlling,
Human Resources, Internal
Audit, Legal and IT
Thomas Wanke ..................... 4 March 2011 3 years Sales, Marketing, Visual
Merchandising, Expansion
Lothar Schäfer
Lothar Schäfer (born 1965) studied mechanical engineering at the Cologne University of Applied
Sciences (Fachhochschule Köln) from 1985 to 1989, earning a degree in Engineering (Diplom-
Ingenieur). Thereafter, he worked until 1990 as a test engineer in the R&D department of Jean
Walterscheid GmbH. From 1990 to 1995, Lothar Schäfer was employed at Harmonic Drive
Antriebstechnik GmbH, initially as a design engineer, then as Product Manager and later as Area
Sales Manager, Export. In 1995, he relocated to the Swiss firm, Roulement Miniature SA RMB AG,
where he worked until 2001 first as Product Manager and later as Head of Marketing; he was
Managing Director of RMB Ltd. in the UK. From 1998 to 2000 he was enrolled in the WHU – Otto
Bensheim School of Management’s (WHU-Koblenz-Vallendar) part-time executive MBA programme
with Northwestern University, Evanston, USA (Kellogg), and was awarded a Master of Business
Administration (Kellogg-WHU). From 2001 to 2003, Lothar Schäfer worked as Business
Development Manager for Yole Développement SA on a freelance basis and was a member of
management of Land- und Gartentechnik Schäfer GmbH Landmaschine-Gartengeräte-Automobile.
In 2003 and 2004 he also worked as Managing Director at EXMAR Armaturen GmbH. From 2004
to 2008, Lothar Schäfer was Chief Operating Officer of two affiliates of Arques Industries AG,
E.Missel GmbH & Co KG and Jahnel-Kestermann GmbH & Co. KG, and from 2009 to 2011 he
was Managing Director of MOTEX and Amoda GmbH. From 2009 to 2010, Lothar Schäfer was
also Managing Director of Adler Atelier Moden GmbH, Haibach, which was merged into ADVERS
GmbH on 28 December 2010. Since 2009, Lothar Schäfer has been Managing Director of Adler
Modemärkte Gesellschaft m.b.H, Austria, and ADVERS GmbH (prior to 19 May 2010, ‘‘Advers
Versicherungsmakler GmbH’’). Lothar Schäfer has also held a position on the board of directors of
Adler Mode S.A., Foetz/Luxembourg since 2009, and as Managing Director of Adler Asset GmbH
(prior to 31 December 2010, ‘‘F.W. Woolworth Co. Ges.m.b.H.’’). In March 2009, Lothar Schäfer
was appointed Managing Director (CEO) of Adler Modemärkte GmbH. Following the adoption of
the resolution on the reorganisation into a German stock corporation, he was appointed to the
A
c
1
0
4
7
0
8
p
u
0
6
0
P
r
o
o
f
7
:
2
7
.
5
.
1
1
B
/
L
R
e
v
i
s
i
o
n
:
0
O
p
e
r
a
t
o
r
D
a
d
136

Company’s Executive Board where he is responsible for Strategy, Purchasing, Logistics, Supply
Chain Management, Quality Control, PR and IR.
Beyond the aforementioned, Lothar Schäfer has not held any other positions as a member of a
management, administrative or supervisory body or a partner in companies or enterprises outside
of Adler during the past five years.
Jochen Strack
Jochen Strack (born 1960) completed his education as a tax officer (Finanzwirt) at the Hesse
Revenue Authority (Hessische Finanzveraltung) from 1977 to 1979. From 1979 to 1991 he worked
as a tax officer at the Hesse Revenue Authority in Frankfurt and Gießen. From 1991 to 1997,
Jochen Strack was Head of Tax Consulting (Leiter der Abteilung Steuerberatung) at Hohlweck,
Arnold, Schulte & Mayer in Linden. From 1995 to 1997, he also held the position of Managing
Director of FAHOMA Vermietungs- u. Verpachtungsgesell. mbH in Friedrichroda. Jochen Strack
was also President of HOST Consulting Inc. in Cape Coral, USA from 1996 to 2000. In 1998, he
also worked as Head of Audit (Prüfungsleiter) of Hessische Treuhand
Wirtschaftsprüfungsgesellschaft GmbH in Gießen. From 1999 to 2002, Jochen Strack worked as
Controller, and from 2000 as a commercial attorney-in-fact (Prokurist) at COS Distribution AG in
Linden. From 1999 to 2002 he was also a commercial attorney-in-fact at TOPEDO GmbH. From
2002 to 2009, Jochen Strack was Chief Financial Officer (CFO) of COS Distribution AG. From
2007 to 2009, he was appointed Managing Director (CFO) of COS Distribution GmbH in Linden
and its subsidiaries, Avitos GmbH, E-Logistics GmbH, TOPEDO-IT Handels GmbH and tiscon
Handelsgesellschaft GmbH. In September 2009, Jochen Strack was appointed Managing Director
(CFO) of Adler Modemärkte GmbH and following the adoption of the resolution on reorganising the
Company into a German stock corporation, he was appointed to the Executive Board, where he is
responsible for Accounting and Controlling, Human Resources, Internal Audit, Legal and IT. In
March 2011, Jochen Strack was also appointed the Company’s Labour Relations Officer
(Arbeitsdirektor). Since 2009, Jochen Strack has also functioned as Managing Director of Adler
Modemärkte Gesellschaft m.b.H. and since 2010 as Managing Director of Adler Asset GmbH (prior
to 31 December 2010, ‘‘F.W. Woolworth Co. Ges. m.b.H.’’).
Beyond the aforementioned, Jochen Strack has not held any other positions as a member of a
management, administrative or supervisory body or a partner in companies or enterprises outside
of Adler during the past five years.
Thomas Wanke
Thomas Wanke (born 1961) completed training as retail salesman (Einzelhandelskaufmann) at
Peek & Cloppenburg in Düsseldorf in 1982 and as assistant manager (Substitut) in 1985. He then
went on to complete his Chamber of Commerce and Industry (IHK) certification as a sales
specialist (Handelsfachwirt) at the Essen Business Training Centre (Bildungswerk der Essener
Wirtschaft) in 1986. From 1979 to 1986 he worked as Department Manager at Peek &
Cloppenburg in Düsseldorf. From 1986 to 1990, Thomas Wanke was Branch Manager at Takko
Fashion and from 1990 to 1995 Managing Director at the textiles store (Textilhaus) Cramer &
Meermann. In 1995, he attended the Essen Academy of Business and Administration (Verwaltungsund
Wirtschaftsakademie Essen), earning a degree in business administration (Diplom Betriebswirt
(VWA)). From 1996 to 1999 he worked as National Sales Manager at Ernsting’s family. From 1999
to 2000, Thomas Wanke was Divisional Managing Director/Regional Managing Director at
SinnLeffers AG, from 2000 to 2006 Managing Director, Germany, at Charles Vögele AG, and from
2006 to 2008 Managing Director, Germany, at Obi Bau und Heimwerkermärkte. From 2008 to
2009, he was Managing Director of TAKKO Holding GmbH. Since 2009, Thomas Wanke has been
Managing Director of Adler Modemärkte Gesellschaft m.b.H. in Austria. In 2009, he became
Managing Director of Adler Modemärkte GmbH. Following the adoption of the resolution on
reorganising the Company into a German stock corporation, Thomas Wanke was appointed to the
Company’s Executive Board, where he is responsible for Sales, Marketing, Visual Merchandising
and Expansion.
Beyond the aforementioned, Thomas Wanke has not held any other positions as a member of a
management, administrative or supervisory body or a partner in companies or enterprises outside
of Adler during the past five years
The members of the Executive Board may be contacted at the Company’s business address.
A
c
1
0
4
7
0
8
p
u
0
6
0
P
r
o
o
f
7
:
2
7
.
5
.
1
1
B
/
L
R
e
v
i
s
i
o
n
:
0
O
p
e
r
a
t
o
r
D
a
d
137

Remuneration, shareholdings, loans, other legal relationships and conflicts of interest
Remuneration
The remuneration of the members of the Executive Board comprises a fixed annual salary and a
variable component consisting of a short-term incentive (‘‘STI’’) and a long-term incentive payment
(‘‘LTI’’) as well as a one-off special bonus, however Lothar Schäfer’s variable component overall
and the long-term incentive payments of Jochen Strack and Thomas Wanke are dependent on the
IPO being successful, with trading commencing on the regulated market in the Prime Standard
segment of the Frankfurt Stock Exchange.
Lothar Schäfer receives an annual fixed salary of c220,000, Thomas Wanke receives an annual
fixed salary of c200,000 and Jochen Strack receives an annual fixed salary of c175,000.
Lothar Schäfer and Thomas Wanke each receive an STI of 1%, and Jochen Strack an STI of
0.6% of earnings from ordinary operations (EBT) in accordance with the certified IFRS income
statement in the Company’s annual financial statements in excess of c10,000,000 plus provisions
for Executive Board bonuses, not to exceed c500,000 per annum for Lothar Schäfer and Thomas
Wanke and not to exceed c250,000 per annum for Jochen Strack. The Supervisory Board may
reasonably reduce the STI if it is based on circumstances not reasonably related to the Executive
Board members’ performance or on extraordinary developments. The STI for the past financial year
is due and payable two months after the close of the Annual General Meeting. If a member‘s
appointment to the Company’s Executive Board was only for part of the financial year, the STI
shall be paid on a pro rata temporis basis.
The LTI is calculated as follows: The members of the Executive Board undertake to subscribe for
shares of the Company on the date of listing and to hold these for at least one year from the date
of purchase. Lothar Schäfer will undertake to acquire shares at the issue price in an amount
equivalent to c500,000; Jochen Strack will undertake to acquire shares at the issue price in an
amount equivalent to c50,000 and Thomas Wanke will undertake to acquire shares at the issue
price in an amount of c200,000. For each share of the Company subscribed, the Executive Board
members receive five stock appreciation rights (‘‘SAR’’). One SAR grants a claim to payment
contingent upon the performance of the stock exchange price of the shares; it does not however
grant an option to acquire a share in the Company. The waiting period for the exercise of SAR is
three years from the issue date. SAR may only be exercised if the closing price of the Company’s
stock at the end of the waiting period is at least 30% higher than the issue price. SAR may be
exercised after the waiting period expires either in whole or in part within a two-year period
(‘‘Exercise Period’’). Upon expiry of the Exercise Period, those SAR which have not been
exercised shall expire. For Lothar Schäfer, the LTI is a maximum of c2,000,000, for Thomas
Wanke a maximum of c1,600,000 and for Jochen Strack a maximum of c800,000.
In the event of a successful initial public offering, the Executive Board members shall each receive
a one-off special bonus of c50,000.
In the 2010 financial year, the current members of the Company’s Executive Board received
remuneration totalling c576 thousand from the Company and/or its subsidiaries and affiliates.
Neither the Company nor any of its subsidiaries has recognised reserves or provisions for pension,
retirement or similar benefits paid to Executive Board members currently in office.
The Company has taken out D&O insurance (‘‘D&O’’) for the members of the Executive Board with
a deductible in accordance with § 93 (2) sentence 3 AktG (10% of the loss or damage up to 1.5
times the fixed annual remuneration) to cover risks arising out of the Executive Board members’
professional activities on behalf of the Company (see the section entitled ‘‘Business – Insurance’’).
The Company bears all legal defence costs if an insured event occurs. The Company reimburses
the Executive Board members 50% of their proven expenses for health and long-term care
insurance, albeit not more than the total of the Company’s share of the health and long-term care
insurance premiums owed in the event an employment relationship is deemed to exist under social
security insurance law. The members of the Executive Board are furthermore provided with
company cars, which may also be used privately.
In satisfaction of the requirements for an exemption from the statutory disclosure duty and contrary
to the provisions of the German Corporate Governance Code, the Company’s Annual General
Meeting is expected on or before the final day of the Offering Period to resolve not to disclose the
remuneration of individual members of the Executive Board paid by the Company in the
Company’s annual and consolidated financial statements in accordance with §§ 285 sentence 1 no.
A
c
1
0
4
7
0
8
p
u
0
6
0
P
r
o
o
f
7
:
2
7
.
5
.
1
1
B
/
L
R
e
v
i
s
i
o
n
:
0
O
p
e
r
a
t
o
r
D
a
d
138

9 a sentences 5 to 8, 314 (1) no. 6 a sentences 5 to 8 German Commercial Code
(Handelsgesetzbuch, ‘‘HGB’’) for the financial year beginning 1 January 2011 as well as the four
financial years thereafter and instead to disclose only the total remuneration of the Executive Board
members.
Shareholdings of Executive Board members
The members of the Executive Board currently hold no shares in the Company. The members of
the Executive Board will undertake to subscribe shares of the Company on the date of listing and
hold these for at least one year. The members of the Executive Board do not hold any options to
subscribe for shares of the Company either.
Loans, other legal relationships and conflicts of interest
The Company has not extended the members of the Company’s Executive Board any loans or
drawn on any loans from these.
The service agreements of the members of the Executive Board provide for non-compete
covenants for the term of said agreements. In the event Executive Board members’ positions are
terminated prematurely, payments to the respective Executive Board member, including ancillary
payments, may not exceed the equivalent of two annual salaries (‘‘Severance Cap’’) and may not
remunerate more than the remaining term of office. The Severance Cap is calculated based on the
total remuneration for the past financial year and the expected total remuneration for the current
financial year.
Other than their position as members of a corporate body and the relationships described in the
section entitled ‘‘Related Party Transactions’’, the Executive Board members do not have any legal
relationships with the Company. The Executive Board members have no potential conflicts of
interest in relation to their obligations toward the Company on the one hand and their personal
interests or obligations on the other. No familial relationships exist between the members of the
corporate bodies.
Jochen Strack was Managing Director of COS Distribution GmbH, Linden, and Managing Director
of its wholly owned subsidiaries, Avitos GmbH, Linden, TOPEDO IT-Handels GmbH, Linden, E
Logistics GmbH, Linden, and tiscon Handelsgesellschaft m.b.H., Wiener Neudorf, Austria. In 2009,
insolvency proceedings were instituted against the assets of these companies. The insolvency
proceedings in Austria against the assets of Tiscon Handelsgesellschaft m.b.H. have been closed,
the remaining insolvency proceedings are still pending. Jochen Strack was fined in his capacity as
Managing Director of COS Distribution GmbH approximately c200 by the Federal Employment
Agency in Gießen (Bundesagentur für Arbeit Gießen) for breach of COS Distribution GmbH’s
reporting duties as the recipient of benefits from the Federal Employment Agency in connection
with the premature termination of a COS Distribution GmbH employee’s trainee relationship.
Otherwise, no member of the Company’s Executive Board has in the last five years been a
member of an administrative, management or supervisory body or a member of senior
management of any company whose assets were subject to insolvency receivership or liquidation
proceedings, or been subject to any public accusations or sanctions by statutory authorities or
regulatory authorities (including professional associations). No member of the Executive Board has
ever been deemed unfit by a court of law for membership in an administrative, management or
supervisory body of any issuing company or for serving in management or for managing the
business of an issuer. Nor has any member of the Company’s Executive Board been convicted in
the last five years of any criminal acts of fraud.
Supervisory Board
Introduction
Pursuant to the Company’s Articles of Association, the Supervisory Board is composed of 12
members. Six of these members are elected by the Annual General Meeting and six are elected
by the employees in accordance with the provisions of the German Co-determination Act of 1976
(Mitbestimmungsgesetz 1976, ‘‘MitbestG’’). Members are elected for the period until the conclusion
of the Annual General Meeting that resolves to ratify the actions of the Supervisory Board
members for the fourth financial year following commencement of their term of office. The financial
year in which the term of office commences is not included in calculating such period. The Annual
General Meeting may stipulate a shorter term of office for those Supervisory Board members
elected by the shareholders. Re-appointments are permissible.
A
c
1
0
4
7
0
8
p
u
0
6
0
P
r
o
o
f
7
:
2
7
.
5
.
1
1
B
/
L
R
e
v
i
s
i
o
n
:
0
O
p
e
r
a
t
o
r
D
a
d
139

Substitutes may also be elected for one or several specific shareholder representatives on the
Supervisory Board. They shall become members of the Supervisory Board in an order to be
stipulated at the time of election when the shareholder representatives for whom they were elected
as substitutes leave the Supervisory Board before their term of office expires and where no
successor has been appointed. If a substitute steps in to replace a departing member of the
Supervisory Board, the term of office of such substitute shall expire as soon as a successor has
been appointed for such departing member or at the latest when the departing member’s remaining
term of office expires. Any subsequent election as a consequence of which the term of office of
the substitute replacing the departing member expires shall require a majority of 75% of the votes
cast. If the substitute being replaced by a subsequent election had been appointed for several
specific Supervisory Board members, his or her position as a substitute member shall be reinstated
and, where several substitute members have been appointed, he or she shall be first in order of
priority. Supervisory Board members and substitute members may resign their office subject to four
weeks’ notice without showing good cause. The letter of resignation shall be sent to the Executive
Board and the chairman of the Supervisory Board shall be notified thereof.
Following the Annual General Meeting at which all the Supervisory Board members to be elected
by the Annual General Meeting have been so elected, a meeting of the Supervisory Board shall be
held which shall not require any special invitation. At such meeting, which shall be chaired by the
oldest Supervisory Board member in terms of age, the Supervisory Board shall elect from among
its ranks as specified under § 27 MitbestG the chairman and the deputy chairman of the
Supervisory Board for the duration of its term or for a shorter period to be stipulated by it. At such
meeting, the Supervisory Board may also elect a second deputy chairman by a majority of the
votes cast.
Supervisory Board meetings and adoption of resolutions
As a rule, the Supervisory Board shall meet once every calendar quarter and must hold two
meetings in any given calendar half year. Supervisory Board meetings are convened by the
chairman of the Supervisory Board subject to a two-week notice period in writing, by fax or by email.
In calculating the notice period, the date of dispatch of the invitation and the date of the
meeting shall not be included. In urgent cases, the chairman may reasonably shorten this notice
period and convene the meeting orally, by telephone, fax, e-mail or by other customary means of
telecommunication.
Supervisory Board resolutions are generally adopted in the context of meetings. At the direction of
the Supervisory Board chairman, resolutions may also be adopted orally, by telephone, in writing,
by fax, by e-mail or by other customary means of telecommunication, in particular by video
conferencing. The Supervisory Board has quorum if the members have been sent an invitation at
the last known address in writing, by fax or by e-mail and at least half the total of required
members participate in the adoption of the resolution personally, by written proxy voting or by
voting per fax, e-mail or by telephone. Members are also deemed to be participating in the
adoption of resolutions when they abstain from voting.
Resolutions of the Supervisory Board shall be adopted by the majority of the votes cast to the
extent not otherwise required by law, specifically §§ 27, 29 (2), 31 and 32 MitbestG. The foregoing
shall also apply with respect to elections. If a vote results in a tie, and should at least two
members of the Supervisory Board present at the meeting so request, the item up for resolution
shall be re-submitted for discussion. If a second vote on the item up for resolution ends in a tie,
the chairman of the Supervisory Board shall have a second vote in accordance with § 29 (2)
MitbestG and § 31 (4) MitbestG. The second vote is governed by the same provisions as those
applicable to the chairman’s first vote.
Prior to the end of the 2010 financial year, the Supervisory Board had met four times. In the
current financial year, the Supervisory Board has thus far met two times.
Legal position of the Supervisory Board
The Supervisory Board acts in accordance with the relevant statutory provisions, the provisions of
the Articles of Association and the Supervisory Board’s rules of procedure. In performing its duties,
the Supervisory Board must work together with other corporate bodies of the Company on a basis
of trust. The Supervisory Board members are not subject to orders or instructions. The Supervisory
Board members are under a duty to keep confidential and not to disclose to third parties any and
all facts, namely business and trade secrets and confidential information of which they become
A
c
1
0
4
7
0
8
p
u
0
6
0
P
r
o
o
f
7
:
2
7
.
5
.
1
1
B
/
L
R
e
v
i
s
i
o
n
:
0
O
p
e
r
a
t
o
r
D
a
d
140

aware in the course of their Supervisory Board activities; this obligation shall survive the
termination of their office as Supervisory Board members. The duty of confidentiality applies in
particular to any confidential reports and information received, and particularly the course of
deliberations, the opinions of individual members of the Supervisory Board as well as other
personal statements or comments. Upon expiry of their term of office, Supervisory Board members
shall return any and all confidential documents in their possession to the Company. The foregoing
requirement does not affect any rights of retention.
The Supervisory Board appoints the Executive Board, advises it and supervises its management. It
decides on management issues where the Executive Board’s rules of procedure or the Articles of
Association require the Supervisory Board’s consent or where the Executive Board submits
transactions to the Supervisory Board for its consent. In this respect as well, the Supervisory Board
has no right to initiate decisions or issue instructions. The Executive Board must report to the
Supervisory Board on an ongoing basis on the business policy pursued and any and all Executive
Board measures taken or omitted which may be of material importance to the Company’s
profitability or liquidity, or with respect to which the Supervisory Board or individual members
thereof request an accounting. The Supervisory Board’s duty of supervision also extends to
measures by the Company’s Executive Board that relate to the management of Adler.
Pursuant to the German Stock Corporation Act, the Supervisory Board represents the Company
vis-à-vis the Executive Board members. It appoints the auditor for the audit of the annual financial
statements and the consolidated financial statements pursuant to §§ 290 et seq. HGB. The
Supervisory Board issues itself rules of procedure.
Binding declarations of intent of the Supervisory Board are issued by the chairman or, in the event
he is unable to do so, by the deputy chairman.
The Supervisory Board’s authority to amend the Articles of Association extends to editorial changes
only.
Members of the Supervisory Board
The current members of the Company’s Supervisory Board are listed in the following table:
Name Member since
Holger Kowarsch (Chairman) March 2009
Angelika Zinner (Deputy Chairman)* March 2008
Mona Abu-Nusseira February 2010
Majed Abu-Zarur* June 2009
Ingrid Düsmann-Schulz* March 2008
Corinna Groß* March 2008
Georg Linder* March 2008
Eduard Regele February 2011
Erika Ritter* March 2008
Markus Roschel September 2009
Markus Stillger March 2011
Jörg Ulmschneider February 2010
* Employee representatives
The term of office of all current members of the Supervisory Board ends upon the conclusion of
the Annual General Meeting resolving on the ratification of the acts of the members of the
Supervisory Board for financial year 2012, i.e., at the conclusion of the 2013 Annual General
Meeting.
Holger Kowarsch (Chairman)
Holger Kowarsch (born 1969) studied business administration from 1988 to 1994 at Justus-Liebig-
Universität zu Gießen, where he earned a degree in business (Diplom-Kaufmann). From 1995 to
1997, he worked at Bakelite AG in central Finance and Controlling, before going on to take a
position as Deputy Sales Manager (stellvertretende Vertriebsleitung) in the Phenolic Resins
division. From 1997 to 2003, Holger Kowarsch acted as commercial attorney-in-fact for Zeitler
Sitzmöbel GmbH & Co. KG, Lichtenau. From 2000 to 2004, he also worked as commercial and
technical manager with signing authority for Arnstädter Büromöbelwerk GmbH & Co. KG. In 2004,
Holger Kowarsch worked at Lanzet Bad GmbH and advised DDP Deutsche Depeschendienst
A
c
1
0
4
7
0
8
p
u
0
6
0
P
r
o
o
f
7
:
2
7
.
5
.
1
1
B
/
L
R
e
v
i
s
i
o
n
:
0
O
p
e
r
a
t
o
r
D
a
d
141

GmbH in Berlin as well as Missel GmbH. From 2004 to 2005 he was Managing Director at
Colordruck Pforzheim GmbH & Co. KG. Since 2005, Holger Kowarsch has been Managing Director
of AHS Unternehmensberatung GmbH in Chur, Switzerland. From 2005 to 2008, Holger Kowarsch
sat on the executive board of Evotape S.p.A. Novara, Italy. From 2006 to 2008, he was Vice
President of Operations at ARQUES Industries AG and from 2006 to 2007 Managing Director of
Wolfsheck Betriebs GmbH. From 2006 to 2007, he was Managing Director of BEA Elektrotechnik
und Anlagenbau Technische Dienste Lausitz GmbH. From 2007 to 2008, Holger Kowarsch was
chairman of the supervisory board of Richard Schöps & Co. AG in Vienna. From 2007 to 2008,
Holger Kowarsch was Managing Director of Camping Outlet GmbH in Bielefeld. From 2007 to
2008, Holger Kowarsch was a member of the executive board of ARQUES Austria Invest AG in
Vienna. Since 2008, he has worked in consulting at bluO International Affiliates Ltd. in Munich.
From 2009 to 2010, Holger Kowarsch acted as Managing Director at Evotape Packaging SRL in
Novara and at Evotape Masking SRL in Novara. From 2009 to 2010, Holger Kowarsch also sat on
the executive board of Evotape SPA in Novara and on the supervisory board of Zugspitze AG in
Munich. Since 2009, Holger Kowarsch has been a member of the supervisory board of Alzchem
Trostberg GmbH in Trostberg and since 2010 deputy chairman of the supervisory board of ZIP
Warenhandels AG.
Beyond the aforementioned positions and his office as a member of the Company’s Supervisory
Board, Holger Kowarsch has not held any other positions as a member of a management,
administrative or supervisory body or a partner in companies or enterprises outside of Adler during
the past five years.
Angelika Zinner
Angelika Zinner (born 1949) completed training as a retail saleswoman (Einzelhandelskauffrau) at
Appelrath/Küpper in Aachen from 1964 to 1967. From 1967 to 1970, she worked as a saleswoman
at Bambino-Moden in Aachen and from 1970 to 1972 as a saleswoman at Kaufhof AG in Aachen.
After taking time out to raise a family, Angelika Zinner returned to the workforce and has been
working at the Company as a saleswoman/consultant and department manager since 1987. She
has been chairman of the Company’s central works council since 1999. From 2006 to 2010,
Angelika Zinner was chairman of the Company’s Group works council. She is currently the deputy
chairman of the Economic Committee and a member of the Bargaining Committee
(Tarifkommission).
In addition to her office as deputy chairman of the Company’s Supervisory Board, Angelika Zinner
was also a member of the supervisory board of Metro AG from 2008 to 2009. Beyond the
aforementioned, Angelika Zinner has not held any other positions as a member of a management,
administrative or supervisory body or a partner in companies or enterprises outside of Adler during
the past five years.
Mona Abu-Nusseira
Mona Abu-Nusseira (born 1978), holds a degree in business law (Diplom-Wirtschaftsjuristin). From
2004 to 2005, she worked as a women’s rights development aid worker for combating female
genital mutilation (FGM) at the Mutawinat Organisation in the Sudan. From 2005 to 2008, Mona
Abu-Nusseira worked in Corporate Project Management/M&A at Scout 24 Holding GmbH. Since
2008, she has worked as Principal at bluO International Affiliates in M&A.
In addition to her office as a member of the Company’s Supervisory Board, Mona Abu-Nusseira
has also been a member of the supervisory board of AlzChem Trostberg GmbH since February
2010. Beyond the aforementioned, Mona Abu-Nusseira has not held any other positions as a
member of a management, administrative or supervisory body or a partner in companies or
enterprises outside of Adler during the past five years.
Majed Abu-Zarur
Majed Abu-Zarur (born 1957) earned a Masters degree (Magister) in Russian studies from
Simferopol State University in the former Soviet Union in 1981. From 1986 to 1988, he was a
freelance employee at Intersprachschule in Mannheim. From 1989 to 1992, Majed Abu-Zarur was
an administrative assistant (kaufmännischer Angestellte) at Geber & Marder in Mannheim. Since
1992, Majed Abu-Zarur has worked as an Information/Cashier/Sales Consultant (Fachberater Info,
Kasse und Verkauf) at Adler Modemarkt in Mannheim. He is a member of the Company’s central
works council, the Trade Union Works Committee (Gewerkschaftlicher Betriebsausschuss (GBA)),
A
c
1
0
4
7
0
8
p
u
0
6
0
P
r
o
o
f
7
:
2
7
.
5
.
1
1
B
/
L
R
e
v
i
s
i
o
n
:
0
O
p
e
r
a
t
o
r
D
a
d
142

the Economic Committee and the Bargaining Committee. Majed Abu-Zarur is also chairman of the
works council at the Adler store in Mannheim.
Beyond his office as member of the Company’s Supervisory Board, Majed Abu-Zarur has not held
any other positions as a member of a management, administrative or supervisory body or a partner
in companies or enterprises outside of Adler during the past five years.
Ingrid Düsmann-Schulz
Ingrid Düsmann-Schulz (born 1956) studied social sciences, German and Education at the
University of Münster, completing her degree in education by passing the 1st state exam
(secondary levels I and II) in 1982 and the 2nd state exam (secondary levels I and II) in 1985.
From 1985 to 1988 she worked as an advisor and instructor at the Educational Centre for Retail
Trade (Bildungszentrum des Einzelhandels). Since 1988, she has worked as Head of Training
(Ausbildungsleiterin) and Trainer for Human Resources Development (Trainerin für
Personalentwicklung) at the Company.
Beyond her office as a member of the Company’s Supervisory Board, Ingrid Düsmann-Schulz has
not held any other positions as a member of a management, administrative or supervisory body or
a partner in companies or enterprises outside of Adler during the past five years.
Corinna Groß
Corinna Groß (born 1968) completed her training as a Window Dresser (Schauwerbegestalterin) at
Horten in Braunschweig from 1986 to 1989 where she then worked as a Window Dresser from
1989 to 1993. From 1996 to 2006, Corinna Groß was trade union secretary for ver.di, the German
trade union for the services sector (vereinte Dienstleistungsgewerkschaft, ‘‘ver.di’’). From 1993 to
1996, she worked as an administrative assistant (Verwaltungsangestellte) at the German Trade,
Banks and Insurances Union (Gewerkschaft Handel, Banken und Versicherungen, ‘‘HBV’’). Since
2007 she has been District Managing Director at ver.di.
Beyond her office as a member of the Company’s Supervisory Board, Corinna Groß has not held
any other positions as a member of a management, administrative or supervisory body or a partner
in companies or enterprises outside of Adler during the past five years.
Georg Linder
Georg Linder (born 1954) completed his studies in Würzburg in 1980 with a degree in business
administration (Diplom-Betriebswirt) and has been working for the Company since then. From 1980
to 1988, Georg Linder worked as Deputy Manager of Controlling, after which he was promoted to
Department Manager; since 2000 he has been Divisional Manager of Purchasing, Goods Tracking
and Customs.
In addition to his office as member of the Supervisory Board of the Company, which he has held
since 1994, and his activity as executive staff representative since 2003, Georg Linder has been a
member of the Representatives Assembly (Vertreterversammlung) of Raiffeisenbank Aschaffenburg
eG since 1999 and since 2005 company representative of the Aschaffenburg Chamber of Industry
and Commerce (IHK) on the Foreign Trade Committee (Außenwirtschaftsausschuss) of the German
Association of German Chambers of Industry and Commerce (Deutscher Industrie- und
Handelskammertag, ‘‘DIHK’’) in Berlin. Beyond the aforementioned, Georg Linder has not held any
other positions as a member of a management, administrative or supervisory body or a partner in
companies or enterprises outside of Adler during the past five years.
Eduard Regele
Eduard Regele (born 1968) completed his training as Assistant Tax Specialist (Steuerfachgehilfe)
from 1986 to 1989 to become a Specialist in Tax and Business Consulting Professions
(Fachgehilfe in steuer- und wirtschaftsberatenden Berufen). Thereafter, he worked initially as an
Assistant Tax Specialist until 1997 and later also as an accountant (Bilanzbuchhalter (IHK)) with
tax consultants in Donauwörth, Dillingen and Augsburg. During this time, he completed his training
at the German Chamber of Industry and Commerce to become a certified accountant. He then
went on to study business administration (Betriebswirt (VWA)) at the Academy of Business and
Management in Schwaben (Verwaltungs- und Wirtschaftsakademie Schwaben). From 1997 to 2001,
he worked as an accountant at Alterum Treuhand- und Steuerberatungsgesellschaft mbH (BTV
Unternehmensgruppe) in Munich. In 2001, he was Head of Finance and Controlling at Webmotion
AG in Pullach. From 2001 to 2002, he was Director of Controlling at TUXIA GmbH in Augsburg.
From 2002 to 2003, Eduard Regele was Director of the Group Finance Department of ARQUES
A
c
1
0
4
7
0
8
p
u
0
6
0
P
r
o
o
f
7
:
2
7
.
5
.
1
1
B
/
L
R
e
v
i
s
i
o
n
:
0
O
p
e
r
a
t
o
r
D
a
d
143

Industries AG. From 2004 to 2006, he worked as CFO of the Schierholz Translift Group in Kriens,
Switzerland. In pursuit of further training in IAS/IFRS and US-GAAP, he earned a Certificate in
International Accounting (CINA) in 2004. In 2006, Eduard Regele was Director for Special Tasks
(Director für Sonderaufgaben) at ARQUES Industries AG. From 2006 to 2010, he was also Director
of the M&A-Department at ARQUES Industries AG. Since 2010, Eduard Regele has been the
Head of Capital Markets & Corporate Acquisitions (Leiter Kapitalmarkt & Unternehmensverkäufe) at
bluO International Affiliates.
In addition to his office as member of the Company’s Supervisory Board, Eduard Regele has held
in the last five years and to the extent not otherwise indicated continues to hold the following
positions as a member of a management, administrative or supervisory body or a partner in
companies and enterprises outside Adler:
* Member of the board of directors of Schierholz Translift Schweiz AG in Kriens, Switzerland
(2005 to 2006);
* member of the board of directors of Schierholz Translift Global Manufacturing and Finance
AG in Zug, Switzerland (since 2005);
* Managing Director of Schierholz Translift Holding GmbH in Starnberg, Germany (2005 to
2006);
* Managing Director of AMODA SPV GmbH in Haibach (since 2011);
* Managing Director of AMODA Schuhmoden GmbH in Haibach (since 2011);
* Managing Director of AMODA Verwaltungs GmbH in Haibach (since 2011);
* Managing Director of AMODA Treasury Verwaltungs GmbH in Haibach (since 2011);
* Managing Director of AMODA SPV Verwaltungs GmbH in Haibach (since 2011).
Erika Ritter
Erika Ritter (born 1955) studied at the Halle/Saale Pedagogical University (Pädagogische
Hochschule in Halle/Saale) from 1974 to 1978, earning a teaching degree in chemistry and
mathematics in 1978 (Diplom-Lehrerin für Chemie und Mathematik). From 1978 to 1982, she
taught chemistry and mathematics at Lessing-Oberschule in Halle/Saale. From 1984 to 1987, Erika
Ritter was a full-time trade unionist at the Free German Trade Union Federation (Freier Deutscher
Gewerkschaftsbund (FDGB)) in Berlin-Marzahn and from 1987 to 1990 studied social sciences
(Diplom-Gesellschaftswissenschaftlerin) at the FDBG Academy (Gewerkschaftshochschule) in
Bernau. Since 1990, Erika Ritter has worked as a full-time trade unionist at HBV, or ver.di (since
HBV merged with various other unions into ver.di in 2001). Since 2006 she has held the position
of Regional Section Head, Commerce, ver.di Berlin-Brandenburg.
In addition to her office as member of the Supervisory Board of the Company, Erika Ritter has
held in the last five years and to the extent not otherwise indicated continues to hold the following
positions as a member of a management, administrative or supervisory body or a partner in
companies and enterprises outside Adler:
* Member of the supervisory board and works council of extra Verbrauchermärkte GmbH (2004
– 2008);
* Member of the supervisory board of Otto Reichelt GmbH (since 2008).
Markus Roschel
Markus Roschel (born 1968) studied business administration (Diplom-Betriebswirt FH), specialising
in marketing, at the Saarland University of Applied Sciences (Fachhochschule des Saarlandes)
from 1987 to 1990. From 1990 to 1992, Markus Roschel worked as District Manager (Bezirksleiter)
for ALDI GmbH & Co. KG at the Mörfelden-Walldorf and Bingen locations. From 1992 to 1993, he
was Sales Manager (Verkaufsleiter) at Norma SARL in Avignon, France. From 1993 to 1997, he
was Sales Manager at ALDI Marché SARL Paris Nord, France. From 1997 to 2007, Markus
Roschel worked at PMD Modenhandels GmbH, first as Sales Director for Germany, Austria and
Poland, and then as Managing Director at Pimkie and XANAKA for Germany, Austria and Poland,
and from 2004 to 2007, as Managing Director at Pimkie Europe North East. From 2006 to 2007,
he also functioned as CEO of Pimkie Invest AG. From 2007 to 2008, he was Managing Director of
Bonita Holding GmbH. From 2008 to 2009, Markus Roschel was self-employed as a corporate
consultant. From 2009 until 30 December 2010, he was also Managing Director of Adler Asset
GmbH (formerly ‘‘F.W. Woolworth Co. Ges. m.b.H’’), which has been part of the Adler Group since
A
c
1
0
4
7
0
8
p
u
0
6
0
P
r
o
o
f
7
:
2
7
.
5
.
1
1
B
/
L
R
e
v
i
s
i
o
n
:
0
O
p
e
r
a
t
o
r
D
a
d
144

31 December 2010. Since 2009, Markus Roschel has worked as Investment Manager at bluO
International Affiliates Ltd. He has also been a member of the executive board of ZiP
Warenhandels AG since 2010.
In addition to his office as member of the Supervisory Board of the Company, Markus Roschel has
held in the last five years and to the extent not otherwise indicated continues to hold the following
positions as a member of a management, administrative or supervisory body or a partner in
companies and enterprises outside Adler:
* President at MODE DIFFUSION SYSTEM – M.D.S. S.A. in Switzerland (2006 to 2007);
* Member of the executive board of PIMINVEST AG in Germany (2005 to 2007);
* Managing Director of PIMKIE MODE CZECH S.R.O. in the Czech Republic (2006 to 2007);
* Member of the executive board of PIMKIE MODE POLSKA Sp. z.o.o. in Poland (2006 to
2007);
* Managing Director of PIMKIE MODE SLOVAKIA S.R.O. in Slovakia (2006 to 2007);
* Managing Director of PMD MODEN HANDELS GmbH in Germany (2005 to 2007).
Markus Stillger
Markus Stillger (born 1962) studied economics from 1983 to 1986 at Justus-Liebig University in
Gießen. He has worked in the financial services sector since 1986. Markus Stillger has also been
the managing partner of Stillger & Stahl Vermögensverwaltung GbR since 1996, and commercial
attorney-in-fact (Prokurist) (CFO) of ABID Senioren Immobilien GmbH since 1999. Since 2003 he
has also been the managing director (CEO) of MB Fund Advisory GmbH, and since 2010 the
managing director (CEO) of STIKMA GmbH.
In addition to his office as member of the Supervisory Board of the Company and the
aforementioned offices, Markus Stillger has held in the last five years and to the extent not
otherwise indicated continues to hold the following positions as a member of a management,
administrative or supervisory body or a partner in companies and enterprises outside Adler:
* Member of the supervisory board of Ex-Oriente Lux AG in Reutlingen, Germany (since 2008);
* Chairman of the supervisory board of Keyreus AG in Munich, Germany (since 2009);
* Member of the supervisory board of Agrarius AG in Bad Homburg, Germany (since 2009).
Jörg Ulmschneider
Jörg Ulmschneider (born 1944) completed training in textiles wholesale and foreign trade from 1959
to 1962. From 1969 to 1972, he studied business administration (Diplom-Betriebswirt) at
Saarbrücken University for Business and Applied Sciences (Fachhochschule für Wirtschaft in
Saarbrücken). From 1959 to 1963, he worked at the textiles wholesaler Arnold Becker. From 1963
to 1966, Jörg Ulmschneider completed his military training with the German air force. From 1966 to
1972, he was Managing Director for textiles wholesale at Arnold Becker Forbach in France. From
1972 to 1983, Jörg Ulmschneider was Managing Director at Mode & Textilgroßhandel Dany in
Paderborn. From 1977 to 1983, he was Managing Director at Modekaufhaus Dany. From 1983 to
1998, Jörg Ulmschneider worked as Head of Purchasing for Textiles/Fashion & Hardware at
Globus in St. Wendel. From 1998 to 2000, he was CEO at Globus Lebensmittel & Nonfood Textil
in Prague, Czech Republic, and from 2000 to 2005 CEO at DWW Deutsche Woolworth Holding
GmbH in Frankfurt. Since 2005, Jörg Ulmschneider has worked as a self-employed corporate
consultant for large retail establishment issues. In 2009, he worked for bluO International Affiliates
Limited on the restructuring of the Company’s textiles purchasing.
In addition to his office as member of the Company’s Supervisory Board, Jörg Ulmschneider has
also been Managing Director at New Connections corporate consultants since 2006. Beyond the
aforementioned, Jörg Ulmschneider has not held any other positions as a member of a
management, administrative or supervisory body or a partner in companies or enterprises outside
of the Adler Group during the past five years.
Other than the aforementioned cases, the members of the Company’s Supervisory Board are not
currently and have not in the last five years been members of administrative, management or
supervisory bodies or partners in companies and enterprises outside Adler.
The members of the Supervisory Board may be contacted at the Company’s business address.
A
c
1
0
4
7
0
8
p
u
0
6
0
P
r
o
o
f
7
:
2
7
.
5
.
1
1
B
/
L
R
e
v
i
s
i
o
n
:
0
O
p
e
r
a
t
o
r
D
a
d
145

Supervisory Board committees
The Supervisory Board has created from among its ranks a Personnel Committee, an Audit
Committee and a Nomination Committee as well as a Committee in accordance with § 27 (3)
MitbestG.
The Personnel Committee consists of four members. The chairman of the Supervisory Board and
the first deputy chairman are members of the Personnel Committee by virtue of their respective
functions. The Supervisory Board elects two additional members, one shareholder representative
and one employee representative. The chairman of the Supervisory Board also functions as the
chairman of the Personnel Committee. The Personnel Committee is responsible for preparing the
Supervisory Board’s decisions regarding personnel issues. In the Supervisory Board’s stead, the
Personnel Committee resolves on (i) other legal transactions vis-à-vis and with Executive Board
members (§ 112 AktG), as well as the consent to transactions valued at more than c50,000
between the Company or one of its affiliates on the one hand and an Executive Board member or
party related to the Executive Board member on the other; (ii) permission with respect to other
activities of any Executive Board member in accordance with § 88 AktG (non-compete covenant)
as well as consent to other ancillary activities, in particular positions on supervisory boards and
positions on comparable supervisory bodies at companies outside the Group; (iii) the granting of
loans to those persons specified in §§ 89, 115 AktG, e.g. commercial attorneys-in-fact and
members of the Supervisory Board; (iv) consent to agreements with members of the Supervisory
Board under § 114 AktG; (v) consent to Executive Board decisions on the scope of share rights
and the terms and conditions of share issues in the context of capital increases from authorised
capital or based on a resolution by the Annual General Meeting; (vi) consent to Executive Board
decisions on the scope of rights arising out of shares, convertible or warrant-linked bonds as well
as the terms and conditions of their issue in the context of capital increases from authorised
capital; (vii) consent to Executive Board decisions on the sale or redemption of treasury shares as
well as the terms and conditions of the issue or redemption of treasury shares. The Personnel
Committee also regularly discusses and advises on issues of long-term succession planning for the
Executive Board, taking into account corporate plans for executive staffing and also with a view to
maintaining diversity. Any conflicts of interest on the part of members of the Executive Board or
the Supervisory Board are disclosed to the Personnel Committee rather than the Supervisory
Board. The chairman of the committee is responsible taking receipt of statements and declarations.
The Audit Committee consists of four members who are elected by the Supervisory Board from
among its ranks. The Audit Committee prepares the decisions of the Supervisory Board with
respect to the adoption of the annual financial statements and the approval of the consolidated
financial statements. To this end, the Audit Committee is charged with conducting a preliminary
audit of the annual financial statements, the consolidated financial statements, the condensed
management report and the proposal for the appropriation of profits. The Audit Committee decides
on the agreement with the auditor (in particular issuing the audit engagement, establishing the
areas of focus for the audit and the fee agreement). It takes appropriate action in order to
determine and monitor the auditor’s independence. The Audit Committee also assists the
Supervisory Board in monitoring management and in this regard deals in particular with risk
management and compliance issues.
In the event of a stock exchange listing, a Nomination Committee will be created consisting of
three members. The chairman of the Supervisory Board is a member of the Nomination Committee
by virtue of his function. The shareholder representatives of the Supervisory Board elect from
among their ranks two additional members. The chairman of the Supervisory Board also functions
as the chairman of the Nomination Committee. The Nomination Committee is charged with
recommending suitable candidates to the Supervisory Board for proposals to elect shareholder
representatives on the Supervisory Board by the Annual General Meeting. In so doing, the
Nomination Committee shall take into account the requirements defined in § 2 (1), (3) and (4) with
respect to the composition of the Supervisory Board and the objectives defined by the Supervisory
Board under § 2 (2).
The Supervisory Board also appointed a Committee in accordance with § 27 (3) MitbestG which
performs the duties assigned to it by law.
A
c
1
0
4
7
0
8
p
u
0
6
0
P
r
o
o
f
7
:
2
7
.
5
.
1
1
B
/
L
R
e
v
i
s
i
o
n
:
0
O
p
e
r
a
t
o
r
D
a
d
146

Remuneration, shareholdings, loans, other legal relationships and conflicts of interest
Remuneration
The members of the Supervisory Board receive remuneration in the amount of c10,000 for their
activities, payable following the conclusion of a given financial year. The chairman of the
Supervisory Board receives double this amount and the deputy chairman of the Supervisory Board
receives 1.5 times this amount. For each Supervisory Board committee of which they are a
member, they receive an additional 10%, provided that the respective committee has met at least
twice in the respective financial year. Excepted from this provision on remuneration is the
membership in the Mediation Committee pursuant to § 27 (3) MitbestG. Supervisory Board
members who have not been a member or chairman of the Supervisory Board or a committee for
an entire financial year shall be remunerated on a pro rata temporis basis; this shall apply with
respect to the LTI remuneration in accordance with the assessment period. Remuneration shall be
due and payable at the end of the Annual General Meeting resolving on the ratification of the acts
of the Supervisory Board. Supervisory Board members shall also receive c300 for each
Supervisory Board meeting attended. The chairman shall receive double this amount and the
deputy chairman shall receive 1.5 times this amount. Members of the Supervisory Board shall also
be reimbursed for all expenses as well as VAT payable on their remuneration and out-of-pocket
expenses. The Annual General Meeting shall decide by resolution on other methods of
remuneration for the members of the Supervisory Board and benefits of a remunerative nature.
As a result of the shareholder representatives waiving their remuneration, the total remuneration of
the members of the Supervisory Board for meetings attended was c40 thousand in financial year
2010.
The Company has taken out D&O insurance for the members of the Supervisory Board at its own
cost, which provides for a deductible that is equivalent to the deductible required by law for
Supervisory Board members. The Company bears all legal defence costs if an insured event
occurs.
Neither the Company nor any of its subsidiaries has recognised reserves or provisions for pension,
retirement or similar benefits paid to Supervisory Board members currently in office.
Shareholdings of Supervisory Board members
The members of the Supervisory Board do not hold any shares of the Company. The members of
the Supervisory Board do not hold any options to subscribe for shares of the Company.
Loans, other legal relationships and conflicts of interest
Companies of Adler have not granted the members of the Company’s Supervisory Board any loans
or drawn on loans from these members.
Other than their positions as members of a corporate body and the relationships described above
and in the section entitled ‘‘Related Party Transactions’’, the Supervisory Board members do not
have any other legal relationships with the Company. Supervisory Board members Holger
Kowarsch, Mona Abu-Nusseira, Eduard Regele, Markus Roschel and Jörg Ulmschneider have
professional or contractual ties with companies that are affiliates of the Selling Shareholder. They
are therefore also committed to the interests of these companies. The interests of these companies
may not be identical to those of the Company, which could give rise to conflicts of interest.
Apart from the foregoing, the members of the Supervisory Board do not have any potential
conflicts of interest in relation to their obligations toward the Company on the one hand and their
personal interests or obligations on the other. No familial relationships exist between the respective
members of the corporate bodies.
There are no services agreements between the Company or its subsidiaries on the one hand and
one or several Supervisory Board members on the other that provide for concessions in the event
of the termination of the services agreement.
Eduard Regele was a member of the board of directors of Schierholz Translift Schweiz AG, Kriens/
Switzerland and of Schierholz Translift Global Manufacturing and Finance AG, Zug/Switzerland. On
6 June 2008, insolvency proceedings were commenced against Schierholz Translift Schweiz AG
and this entity was deleted from the commercial register. Schierholz Translift Global Manufacturing
and Finance AG was dissolved by shareholder resolution dated 3 July 2009. The dissolution of this
company has not yet been entered in the commercial register of the Canton of Zug. With the
exception of Eduard Regele, no member of the Company’s Supervisory Board has in the last five
A
c
1
0
4
7
0
8
p
u
0
6
0
P
r
o
o
f
7
:
2
7
.
5
.
1
1
B
/
L
R
e
v
i
s
i
o
n
:
0
O
p
e
r
a
t
o
r
D
a
d
147

years been a member of an administrative, management or supervisory body or a member of
senior management of any company whose assets were subject to insolvency receivership or
liquidation proceedings. No member of the Company’s Supervisory Board has been subject to any
public accusations or sanctions by statutory authorities or regulatory authorities (including
professional associations). No member of the Supervisory Board has ever been deemed unfit by
court of law for membership on an administrative, management or supervisory body of any issuing
company or for serving in management or for managing the business of an issuer, or convicted of
fraud offences in the last five years.
Annual General Meeting
Introduction
The Annual General Meeting is the corporate body in which the shareholders are able to exercise
their rights within the Company. Pursuant to the Company’s Articles of Association, the Annual
General Meeting is held at the Company’s registered office, or at a location within 100 km of the
Company’s registered office, or in a city in Germany with a population of at least 50,000 residents,
or at the domicile of a German stock exchange to which the shares of the Company are admitted
to official trading. The Annual General Meeting is held within the first eight months of a given
financial year. Moreover, apart from those cases stipulated by law and in the Articles of
Association, an Annual General Meeting must be convened if the interests of the Company so
require. Annual general meetings may be convened by the Executive Board or by the Supervisory
Board in those cases prescribed by law. Furthermore, shareholders whose shares collectively
represent at least 5% of the Company’s share capital may request that an Annual General Meeting
be convened or, subject to certain requirements, may be authorised by a court of competent
jurisdiction to independently convene an Annual General Meeting. Unless a shorter period is
permitted by law, notice of the Annual General Meeting must be given at least 30 days prior to the
date of the meeting and must be published in the electronic Federal Gazette (Bundesanzeiger).
The date of publication and the date upon which the registration period expires shall not be
included in calculating such period.
Those shareholders who register in a timely manner prior to the Annual General Meeting are
entitled to attend the Annual General Meeting and exercise their voting rights. The Company must
receive the registration at the address specified in the notice of meeting in text form (§ 126b BGB)
in German or in English at least six days prior to the date of the Annual General Meeting (final
registration date). The date of the Annual General Meeting and the date of receipt are not counted
in calculating this deadline. Shareholders are further required to provide proof of their entitlement to
attend the Annual General Meeting and exercise their voting rights. This requires the submission of
proof of shareholding issued in text form (§ 126b BGB) in German or in English by the
shareholder’s account bank or financial services institution. Such proof of shareholding must relate
to the date stipulated by law (§ 123 (3) sentence 3 AktG) prior to the meeting (record date) and
must be received at the address stated in the notice of meeting at least six days prior to the
Annual General Meeting (final date for proof of entitlement). If such proof is not provided or not
provided in the proper form, the Company may deny the shareholder admission. If share
certificates have not been issued, the notice of the Annual General Meeting must specify the
manner in which shareholders are required to prove their entitlement to attend the Annual General
Meeting and exercise their voting rights.
The Annual General Meeting shall be chaired by the chairman of the Supervisory Board. If the
chairman is absent or otherwise unable to act, a member of the Supervisory Board elected by the
majority of shareholder representatives on the Supervisory Board shall chair the meeting. If no
member of the Supervisory Board agrees to chair the meeting, the notary appointed to notarise the
proceedings shall open the meeting and have it elect a chairman. The chairman shall lead the
discussion and determine the sequence in which the items on the agenda are discussed as well as
the form and manner of voting.
Shareholders may arrange to be represented by proxy at the Annual General Meeting. The proxy
must be granted in text form, unless the Articles of Association or the notice of the Annual General
Meeting stipulates a less stringent form.
Adoption of resolutions
The resolutions of the Annual General Meeting are adopted by a simple majority of votes cast and
to the extent a capital majority is required, by a simple majority of the share capital represented at
A
c
1
0
4
7
0
8
p
u
0
6
0
P
r
o
o
f
7
:
2
7
.
5
.
1
1
B
/
L
R
e
v
i
s
i
o
n
:
0
O
p
e
r
a
t
o
r
D
a
d
148

the adoption of the relevant resolution, unless a greater majority is mandated by law or the Articles
of Association. Pursuant to mandatory statutory provisions, capital increases excluding
shareholders’ pre-emptive subscription rights, capital reductions, the dissolution, re-organisation or
merger of the Company, the transfer of the Company’s entire assets and consent to inter-company
agreements within the meaning of § 291 et seq. AktG, in particular, require a majority of no less
than 75% of the share capital represented at the adoption of the relevant resolution. If a simple
majority is not achieved during the first round of voting, a second vote will be held between the
two or more candidates receiving the highest numbers of votes. If only one person receives the
highest number of votes the second round of voting will be between this person and the person(s)
receiving the second highest number of votes. In the second round of voting, the highest number
of votes will be deciding. In the event of a tie, the chairman shall decide by drawing lots. The
Executive Board is authorised to stipulate that shareholders may cast their votes without having to
attend the meeting by written or electronic ballot.
Each no-par value share carries one vote at the Annual General Meeting. Voting rights may be
exercised by proxies. The grant of proxy, its revocation and the proof of proxy vis-à-vis the
Company must be provided in text form. The notice of meeting may stipulate a less stringent form.
The foregoing shall not affect § 135 AktG. If a shareholder appoints more than one person as
proxy, the Company may reject one or more of these. The Company may appoint one or more
proxies to exercise the shareholders’ rights in accordance with their instructions. The details,
specifically with regard to the form and deadlines for the grant and revocation of proxies shall be
published together with the notice of the respective Annual General Meeting.
Every shareholder has the right to speak and ask questions at the Annual General Meeting. This
right may be subject to various restrictions, particularly with regard to the Company’s interest in
confidentiality and proper and expeditious conduct of the Annual General Meeting. The chairman
stipulates the sequence of speakers and the agenda items addressed and to the extent permitted
by law, decides on whether to consolidate related items up for resolution under a single item for
voting and may reasonably restrict the time a shareholder has to exercise his or her right to speak
and ask questions for the entire course of the meeting, for individual items on the agenda and for
individual speakers and may do so either at the start or during the course of the Annual General
Meeting and to the extent necessary for due and proper conduct of the Annual General Meeting
and may order the debate to be closed. Subject to certain requirements governed by the German
Stock Corporation Act, shareholders and members of the Executive Board and the Supervisory
Board may appeal resolutions of the Annual General Meeting before the regional court of
competent jurisdiction on various legal aspects or seek a declaratory judgment invalidating the
relevant resolution.
Competencies
The Annual General Meeting resolves upon the appropriation of the Company’s net retained profit
and the ratification of the actions of the Executive Board and Supervisory Board for the respective
financial year ended prior to the Annual General Meeting. In addition, the Annual General Meeting
appoints the Company’s auditor for the financial statements for the respective current financial
year.
The Annual General Meeting adopts the Company’s annual financial statements in the event the
Executive Board and Supervisory Board have not already done so. It elects the Supervisory Board
and makes decisions, in particular on the following issues:
* measures involving the raising of capital and capital decreases;
* amendments to the Articles of Association;
* measures involving legal re-structurings such as mergers, spin-offs and legal re-organisations;
* transfer of the Company’s entire assets;
* integration of a Company; and
* execution or amendment of inter-company agreements (in particular control and profit and
loss transfer agreements).
Post-formation acquisition (Nachgründung)
Pursuant to German stock corporation law, agreements by a stock corporation with founders or
shareholders holding more than 10% of the relevant corporation’s share capital pursuant to which
the stock corporation is to acquire current assets, assets to be created or other assets in
A
c
1
0
4
7
0
8
p
u
0
6
0
P
r
o
o
f
7
:
2
7
.
5
.
1
1
B
/
L
R
e
v
i
s
i
o
n
:
0
O
p
e
r
a
t
o
r
D
a
d
149

consideration for an amount exceeding 10% of the share capital and which are entered into during
the first two years following recording of the company in the commercial register, enter into effect
only with the consent of the annual general meeting and upon recording in the commercial register
(§ 52 AktG). In the absence of the annual general meeting’s consent or recording in the
commercial register, legal acts in performance of such agreements are also invalid. However this
does not apply if the assets are acquired in the ordinary course of business at the relevant stock
corporation, in the context of compulsory levy of execution or on the stock exchange.
An agreement subject to the foregoing rules must be executed in writing unless another form is
prescribed. The agreement must be reviewed by the Supervisory Board, which must submit a
written report on the review to the annual general meeting prior to adoption of any resolution by it.
In addition, before the annual general meeting adopts any resolution, a review must be conducted
by one or more company formation auditors.
The resolution by the annual general meeting requires a majority of at least 75% of the share
capital represented upon adoption of the resolution. If the Agreement is concluded in the first year
following recording of the stock corporation in the commercial register, the shares of the approving
majority must represent no less than 25% of the total share capital of the stock corporation.
The Company was formed by re-organisation of Adler Modemärkte GmbH and was entered in the
commercial register of the Local Court of Aschaffenburg on 17 March 2011 in the legal form of a
German stock corporation (Aktiengesellschaft). Agreements entered into by the Company prior to
17 March 2013 with the Selling Shareholder or with shareholders whose interest in the share
capital exceeds 10% and pursuant to which the Company has acquired or is to acquire current
assets, assets to be created or other assets for compensation exceeding 10% of the share capital
may therefore be subject to post-formation acquisition rules.
Corporate Governance
The ‘‘Government Commission of the German Corporate Governance Code’’
(Regierungskommission Deutscher Corporate Governance Kodex) appointed by the German
Federal Minister of Justice in September 2001 approved on 26 February 2002 the German
Corporate Governance Code (‘‘Code’’) and last adopted various amendments to the Code on 26
May 2010. The Code makes recommendations and suggestions for the management and
supervision of German listed companies based on internationally and nationally accepted standards
for good and responsible corporate management. The Code is intended to make the German
corporate governance system transparent and comprehensible. The Code includes
recommendations (‘‘Shall Provisions’’) and suggestions in (‘‘Should/Can Provisions’’) on
corporate governance in relation to shareholders and the annual general meeting, the executive
board and supervisory board, transparency, accounting and auditing. The Code may be accessed
at www.corporate-governance-code.de.
There is no duty to comply with the recommendations or suggestions in the Code. Stock
corporation law merely requires that the executive board and the supervisory board of a listed
company submit an annual declaration stating either that the recommendations of the Code have
been and are being complied with, or stating which of those recommendations have not been and
are not being applied. The declaration is to be made accessible to shareholders on a permanent
basis. It is permissible to deviate from the suggestions contained in the Code without disclosure.
The Company’s Executive Board and Supervisory Board have supported the Code’s principle of
good and responsible corporate management. As, until now, the Company was not a publicly listed
company and the Code was therefore not applicable to it, the Company has in the past refrained
and up until the date of this Offering Memorandum will refrain from publishing a declaration of
compliance. Nor did it or does it comply with the Code’s recommendations and suggestions, since
this did not seem expedient in light of the Company’s size and legal structure.
After the initial public offering, the Company intends to comply with the recommendations of the
German Corporate Governance Code, as amended, subject to the following exceptions:
* No disclosure of individual Executive Board members’ remuneration (4.2.4): The
Company’s Annual General Meeting is expected to resolve on or before the final day of the
Offering Period that it will refrain from disclosing individual Executive Board members’
remuneration. The Company believes that disclosing the individual remuneration could result
in it being forced to adjust Executive Board remuneration levels.
A
c
1
0
4
7
0
8
p
u
0
6
0
P
r
o
o
f
7
:
2
7
.
5
.
1
1
B
/
L
R
e
v
i
s
i
o
n
:
0
O
p
e
r
a
t
o
r
D
a
d
150

* Composition of the Supervisory Board (5.4.1(2)): The Company’s Supervisory Board has
not published any concrete objectives with respect to the Supervisory Board’s composition.
The Supervisory Board endeavours to ensure that its members have a variety of
complementary professional experience and abilities. It is also intended to continue to have
women, who currently make up 40% of the members, fairly represented on the Supervisory
Board. In the Supervisory Board’s view, establishing concrete objectives would, however,
severely limit the board’s flexibility when it comes to finding candidates with the necessary
experience and competency. For the same reason, the Company has decided not to establish
any age limit for members of the Supervisory Board.
* Supervisory Board remuneration (5.4.6(2)): The members of the Supervisory Board do not
receive performance-based remuneration. The Company believes that remunerating members
of the Supervisory Board based on performance could create the wrong incentives that would
run counter to the Supervisory Board’s supervisory and advisory function.
* Period for publishing the consolidated financial statements and interim reports (7.1.2):
The Company will have its consolidated and interim financial statements published within the
time periods stipulated by law. The Company aims to comply with the time periods stipulated
by the German Corporate Governance Code, however, it will not be able to achieve this goal
during the first year following the initial listing due to organisational restructuring.
The Company intends to submit a corresponding declaration of compliance in accordance with §
161 AktG for the current financial year and ensure that this is made accessible on a permanent
basis.
Management participation
The members of the Executive Board undertake to subscribe for shares of the Company on the
date of listing and to hold these for at least one year from the date of purchase. Lothar Schäfer
will undertake to acquire shares at the issue price in an amount equivalent to c500,000; Jochen
Strack will undertake to acquire shares at the issue price in an amount equivalent to c50,000 and
Thomas Wanke will undertake to acquire shares at the issue price in an amount of c200,000. For
each share of the Company subscribed, the Executive Board members will receive five stock
appreciation rights (‘‘SAR’’). One SAR grants a claim to payment contingent upon the performance
of the stock exchange price of the shares; it does not however grant an option to acquire a share
in the Company. The waiting period for the exercise of SAR is three years from the issue date.
SAR may only be exercised if the closing price of the Company’s stock at the end of the waiting
period is at least 30% higher than the issue price. SAR may be exercised after the waiting period
expires either in whole or in part within a two-year period (‘‘Exercise Period’’). Upon expiry of the
Exercise Period, those SAR which have not been exercised shall expire. For Lothar Schäfer, the
LTI is a maximum of c2,000,000, for Thomas Wanke a maximum of c1,600,000 and for Jochen
Strack a maximum of c800,000.
Employees
Overview
The following table provides an overview of the average total number of employees at Adler in the
2008, 2009 and 2010 financial years as well as at 31 March 2011:
Number of employees
(period average)
Financial year
2008
Financial year
2009 incl.
continued
activities
Financial year
2009
continued
activities only
Financial year
2010
3 months as
at 31 March
2011
(audited) (audited) (audited) (audited) (unaudited)
Managers ..................... 157 155 150 161 175
Salaried employees...... 1,249 1,001 778 706 701
Part-time workers ......... 4,857 3,767 3,584 3,098 2,959
Trainees ....................... 228 200 190 209 240
A
c
1
0
4
7
0
8
p
u
0
6
0
P
r
o
o
f
7
:
2
7
.
5
.
1
1
B
/
L
R
e
v
i
s
i
o
n
:
0
O
p
e
r
a
t
o
r
D
a
d
6,491 5,123 4,702 4,174 4,075
151

The overwhelming majority of the workforce is based in Germany. Only minimal staff is employed
in Austria and Luxembourg. The number of Adler employees as of 31 March 2011 was 4,075 and
has not changed significantly since then up until the date of this Offering Memorandum.
Until 31 December 2010, Adler Modemärkte AG was a member of the AHD Employers’ Association
for Working Conditions in the Trade and Services Industry (Arbeitgeberverband AHD
Unternehmervereinigung für Arbeitsbedingungen im Handel- und Dienstleistungsgewerbe e.V.).
Adler Modemärkte AG has not been a member of any employers’ association since 1 January
2011. A supplemental collective bargaining agreement (company internal wage agreement) entered
into with the German trade union for the services sector (vereinte Dienstleistungsgewerkschaft,
‘‘ver.di’’) is in force at Adler Modemärkte AG. This agreement proscribes general layoffs based on
operating reasons and site closures until 31 December 2012.
Many of Adler Modemärkte AG’s stores have works councils. Adler Modemärkte AG also has a
central works council. Adler Mode Luxembourg also has a representative council for salaried and
hourly employees that is responsible for both its stores. One of Adler Modemärkte Austria’s stores
and three branches of Adler Asset GmbH (formerly F.W. Woolworth Co. Ges.m.b.H.) also have a
works council. From the beginning of the period covering the Company’s historical financial
information reproduced in the Financial Section until the date of this Offering Memorandum, there
have not been any strikes or stoppages or other disputes with employee representatives that
materially impacted the Company’s business.
Remuneration system
The remuneration of Adler’s employees subject to collective bargaining agreements is governed by
the applicable collective bargaining agreements. Apart from the existing company internal wage
agreements (e.g. industry-wide collective bargaining agreement, company pension scheme
agreement, collective wage agreement), a supplemental collective bargaining agreement entered
into with the ver.di union is in force at Adler Modemärkte AG (company internal wage agreement).
Some employees of Adler Modemärkte AG and Adler Modemärkte Austria, particularly those in
management positions, also receive variable remuneration in addition to their fixed remuneration.
Subject to individual contractual provisions, employees in management positions and, for workrelated
reasons, other employees (e.g. some employees in Construction and Visual Merchandising)
may be provided company cars which they may also use for private purposes.
In addition, with the exception of Advers GmbH, the Adler Group companies grant their staff
discounts ranging from 17% to 25%, depending on the company, as well as other voluntary social
benefits (such as birthday gift vouchers and payments on defined anniversaries of service – in
Austria’s case to the extent not already governed in principle in collective bargaining agreements).
Company pension scheme
Adler Modemärkte AG granted several earlier members of management and one employee in a
management position individual commitments with respect to pension benefits. In addition to this,
an employer-financed pension fund is in place at Adler Modemärkte AG, which has been closed to
new hires since 1 January 1980. According to the applicable collective bargaining agreement, Adler
Modemärkte AG also pays those employees subject to collective bargaining agreements an annual
pension benefit. Managerial employees of Adler Modemärkte AG have the option of joining the
company pension fund, ‘‘Versorgungsfond der Adler Modemärkte e.V.’’. Adler Modemärkte AG pays
a monthly contribution to this pension fund on behalf of fund members. Adler Modemärkte AG
intends to enable its employees to obtain direct insurance. Adler Asset GmbH (formerly F.W.
Woolworth Co. Ges.m.b.H) grants a small number of its employees company pension benefits from
an employer-funded pension fund which was closed effective 30 November 1969, or a one-off
pension allowance to employees who joined the company prior to 1 January 1983. Otherwise Adler
does not pay any company pension benefits, with the exception of purely employee-financed
company pension benefits (deferred compensation).
A
c
1
0
4
7
0
8
p
u
0
6
0
P
r
o
o
f
7
:
2
7
.
5
.
1
1
B
/
L
R
e
v
i
s
i
o
n
:
0
O
p
e
r
a
t
o
r
D
a
d
152

SHAREHOLDER STRUCTURE (BEFORE AND AFTER THE OFFERING)
Overview
The following table presents an overview of the Company’s shareholder structure before and after
implementation of the Offering based on the information provided to the Company from the Selling
Shareholder:
Shareholder
Before the Offering
No-par
shares %
Shareholdings
After the Offering with full
implementation of the
capital increase and
excluding exercise of the
Greenshoe Option
No-par
shares %
After the Offering with full
implementation of the
capital increase and full
exercise of the Greenshoe
Option
No-par
shares %
Cheverny Investments Limited,
Malta, Gzira ................................... 15,860,000 100.0 8,397,000 45.4 6,880,050 37.2
Free float .......................................... 0 0.0 10,113,000 54.6 11,629,950 62.8
Total ................................................. 15,860,000 100.0 18,510,000 100.0 18,510,000 100.00
Information on the shareholders
Prior to the Offering, the Company’s sole shareholder is Cheverny Investments Limited. blu
Finance Limited, Malta holds a 99.99% interest in Cheverny Investments Limited. bluO Malta
Holding Limited, Malta holds a 99.98% interest in blu Finance Limited. bluO SICAV-SIF,
Luxembourg holds a 99.98% interest in bluO Malta Holding Limited. The Principal Shareholders do
not have any varying voting rights.
A
c
1
0
4
7
0
8
p
u
0
6
0
P
r
o
o
f
7
:
2
7
.
5
.
1
1
B
/
L
R
e
v
i
s
i
o
n
:
0
O
p
e
r
a
t
o
r
D
a
d
153

RELATED PARTY TRANSACTIONS
Related parties of the Company include members of the Executive Board and of the Supervisory
Board as well as their immediate family members and companies over which the Executive Board
or Supervisory Board members of the Company or their immediate family members can exert a
controlling influence, or in which they hold a material voting interest, either directly or indirectly.
Related parties also include the Company’s principal shareholders, currently the Selling
Shareholder and previously AMODA GmbH, including their affiliates. Related parties also include
the Adler Group’s subsidiaries, associated companies and joint ventures.
In March 2009, all shares in the Company’s sole shareholder at the time, AMODA GmbH, were
sold and transferred by the METRO Group to bluO beta equity Limited. Until such time therefore,
METRO AG and its affiliates also qualified as related parties of the Company. Since then, bluO
beta equity Limited, which is affiliated with the Selling Shareholder and which transferred its equity
interest in the Company to the Selling Shareholder in 2011, and its other affiliates qualify as
related persons of the Company. After the sale of MOTEX effective 30 September 2010, MOTEX
also became a related party of the Company (as an affiliate). MOTEX is the legal successor of
MOTEX Mode-Textil-Service GmbH & Co. KG (‘‘MOTEX GmbH & Co. KG’’), which was dissolved
without liquidation by virtue of MOTEX absorbing all of its shares, so its assets and liabilities were
transferred to MOTEX by way of universal succession. Adler Asset GmbH (formerly F.W.
Woolworth Co. Ges.m.b.H.) also qualified as a related party of the Company until it was sold by a
subsidiary of AMODA GmbH to Adler Modemärkte Austria effective 31 December 2010.
Apart from the business dealings with fully consolidated subsidiaries as set forth in the IFRS
consolidated financial statements, which particularly include all business dealings with MOTEX up
until its sale effective 30 September 2010, the Company and its subsidiaries are or were party to
the following agreements with related parties in the period from 1 January 2008 up until the date of
this Offering Memorandum:
Exchange of services with METRO Group companies
In 2008 and 2009, companies within the Adler Group purchased services from the METRO Group,
including procurement, energy, transport, facility management, construction tender, advertising and
IT services. The Adler Group also entered into leases with METRO Group companies in respect of
some of the movable and immovable property used by the Adler Group. Some of these
agreements are structured as finance leases and some as operating leases. Companies within the
METRO Group received c29,318 thousand in 2008 for these services and pursuant to the leases.
In 2009 (in the period before the Adler Group left the METRO Group), Adler Group companies
paid c3,242 thousand for services provided by the METRO Group, and c1,909 thousand on the
basis of the leases. The Adler Group also made payments of c5,668 thousand to the METRO
Group in 2008, primarily as a contribution to head office expenses. The METRO Group paid
c1,036 thousand in 2008 and c26 thousand in 2009 (in the period before the Adler Group left the
METRO Group) for services provided by the Adler Group.
Loans and guarantees provided by the METRO Group
METRO Finance B.V. extended a loan to ALASKA GmbH & Co. KG, Munich, for the purpose of
financing the acquisition and incidental transaction costs of an administration building leased to the
Company. The Group has no shareholding in ALASKA GmbH & Co. KG, but it is included in the
Adler Group’s consolidated financial statements as a special purpose entity because of its lease
agreement with Adler Modemärkte GmbH (relating to the aforementioned administration building).
The loan has a maturity date of 31 July 2024 and is repaid in quarterly instalments. The loan
amount was c4,608 thousand as of 31 December 2010. METRO AG also undertook to a credit
institution on 30 September 2008 to act as guarantor for up to c5,000 thousand of the Company’s
liabilities. There were also other loans amounting to c213 thousand as at 1 January 2008 relating
to an undated loan to METRO Group Asset Management Service GmbH with a fixed rate of
interest of 5%, which was paid back in full in 2008.
Purchasing commission agency agreement with MGB Metro Group Buying Ltd.
Adler engaged MGB, a company belonging to the METRO Group, to act as purchasing
commission agent on its behalf (see ‘‘Material agreements – Purchasing commission agency
agreement with MGB Metro Group Buying Ltd.’’). The Adler Group purchased stock valued at
c89,155 thousand in 2008 and stock valued at c23,550 thousand in 2009 (before the Adler Group
left the Metro Group) from MGB.
A
c
1
0
4
7
0
8
p
u
0
6
0
P
r
o
o
f
7
:
2
7
.
5
.
1
1
B
/
L
R
e
v
i
s
i
o
n
:
0
O
p
e
r
a
t
o
r
D
a
d
154

Financial dealings with AMODA GmbH and Adler Treasury GmbH
On 18 November 2004, the Company entered into a profit transfer agreement with its former
parent, AMODA GmbH. In 2008, AMODA GmbH made payments to the Company of c48,809
thousand and offset losses of the Company amounting to c2,780 thousand, which led to a c51,589
thousand increase in capital reserves according to IFRS. AMODA GmbH made two further
payments of c25,600 thousand and c13,000 thousand respectively into capital reserves in 2009.
AMODA GmbH also settled receivables of c17,000 thousand owed to the Company, which boosted
capital reserves according to IFRS by c14,500 thousand. These receivables stemmed from an
agreement to sell and assign receivables between the Company and Adler Treasury GmbH,
pursuant to which the latter assigned receivables owed by AMODA GmbH with a nominal value of
c17,500 thousand to the Company in return for payment of c2,500 thousand.
The Company terminated the profit transfer agreement with AMODA GmbH on 27 September
2010, and termination took effect on 31 December 2010. On 23 December 2010, AMODA GmbH
and the Company offset AMODA GmbH’s future claim against the Company for the transfer of
profits in 2010 (valued at c14,327 thousand) against receivables owed to the Company by AMODA
GmbH. The offset receivables owed by AMODA GmbH to the Company related to additional trade
tax payments of c1,535 thousand, which the Company put up for AMODA GmbH, and purchase
price claims of c12,792 thousand under an agreement to sell and assign receivables, under which
the Company sold and assigned claims for repayment and interest against its affiliate, Adler
Treasury GmbH, to AMODA GmbH. The Company’s claims for repayment and interest stemmed
from loans with a total nominal value of c47,300 thousand extended by the Company to Adler
Treasury GmbH in 2009 and 2010. Other claims for repayment against Adler Treasury GmbH
under the aforementioned loans (valued at c39,228 thousand) were also assigned to the Company
in order to offset a withdrawal by AMODA GmbH from the Company’s capital reserves. In 2010,
AMODA GmbH also settled a residual claim of c500 thousand owed to the Company, which
resulted from Adler Treasury GmbH’s receivable against AMODA GmbH with a nominal value of
c17,500 thousand, which was assigned in 2009. The increase in capital reserves according to
IFRS totalled c2,072 thousand as a result of this, and also as a result of a partial offset involving a
liability under the profit transfer agreement from the previous year amounting to c1,572 thousand.
In the years 2008, 2009 and 2010, the Company also continually paid public charges, fees and
taxes and other expenses of AMODA GmbH, which AMODA GmbH later reimbursed. The
Company was also covered under AMODA GmbH’s fidelity and D&O insurance policies.
Service level agreements between the Company and bluO International Affiliates Limited
bluO International Affiliates Limited, an affiliate of the Company, provided services to the Company
in 2009, 2010 and 2011 pursuant to two service level agreements. The agreements particularly
related to the provision of assistance with budget preparation and liquidity and financial planning,
assistance with developing corporate strategy and organisational structure, organisation of the sales
structure, cost reduction measures and human resources issues, and also assistance with
monitoring the financial situation on an ongoing basis. The original agreement was terminated
effective 31 May 2010 and superseded by a new agreement, which was terminated on 31 March
2011. bluO International Affiliates Limited received c1,271 thousand for its services in 2009, and
c1,071 thousand in 2010.
Share purchase and assignment agreement between the Company and bluO beta equity Limited
concerning the MOTEX share
On 28 September 2010, the Company (as seller) and bluO beta equity Limited (as purchaser)
entered into an agreement to sell the single share in MOTEX. The Company assigned its share
valued at c26 thousand to bluO beta equity Limited effective 30 September 2010. The purchase
price, which was calculated on the basis of two independent valuations, was c135 thousand.
Inclusion of MOTEX in the intra-Group liquidity balancing scheme
By virtue of agreements dated 10 May 2000, 23 April 2003 and 22 August 2003, MOTEX and its
legal predecessor were included in the intra-Group liquidity balancing scheme between the
Company and its subsidiaries. Under this scheme, positive or negative balances in Adler
Modemärkte Austria’s account were automatically balanced out on a daily basis through one of
MOTEX’s accounts. Positive or negative balances in the accounts of MOTEX, Adler Mode
Luxemburg and Advers GmbH were, in turn, automatically balanced out on a daily basis through
one of Adler Modemärkte AG’s accounts in accordance with a further account linking agreement
A
c
1
0
4
7
0
8
p
u
0
6
0
P
r
o
o
f
7
:
2
7
.
5
.
1
1
B
/
L
R
e
v
i
s
i
o
n
:
0
O
p
e
r
a
t
o
r
D
a
d
155

with the banks involved. In the lead-up to the sale of MOTEX, the latter was removed from the
intra-Group liquidity balancing scheme and the underlying agreements with MOTEX were
terminated. The Company’s claims against MOTEX as a result of the intra-Group liquidity balancing
scheme (c8,722 thousand) were sold and assigned to Adler Modemärkte Austria effective
30 September 2010. MOTEX then offset, against these claims, claims totalling c8,583 thousand,
which were owed to it by Adler Modemärkte Austria under the intra-Group liquidity scheme.
MOTEX settled the remaining difference with Adler Modemärkte Austria in November 2010. The
Company had also undertaken on 20 January 2010 to offset any losses incurred by MOTEX in the
2010 financial year. This agreement was revoked on 10/28 February 2011.
Inclusion of MOTEX in Adler Group loans under which the borrowers are jointly and severally liable
Before MOTEX was sold, the Company and MOTEX (the borrowers) also entered into several loan
agreements with Commerzbank Aktiengesellschaft, Saarbrücken, under which the Company was
jointly and severally liable for MOTEX’s liabilities. Some of these loan agreements were already
terminated by agreement dated 10/13 October 2008. MOTEX’s liabilities under loan agreements
still in force and under which joint and several liability exists are valued at no more than
c50 thousand.
Inclusion of MOTEX in the Company’s insurance protection
As a former subsidiary of the Company, MOTEX was covered by the Company’s insurance. The
Company’s insurance contracts were amended effective 1 January 2011 such that MOTEX is no
longer co-insured.
Master agreements governing textile and transport logistics between Adler Group companies and
MOTEX
MOTEX provides transport and textile logistics services in Germany, Austria and Luxembourg, and
to this end has entered into agreements with the Company and Adler Modemärkte Austria. The
agreements between MOTEX and the Company or Adler Modemärkte Austria were renewed on
15 December 2010 and 10 March 2011 and may be terminated on 12 months’ notice, however not
before 31 December 2013. MOTEX receives a fee for its services, which is calculated based on
the number of units transported (transport logistics) or the number of services performed per unit
(textile logistics) and fixed service charges, which apply until 31 December 2013. These amounted
to c3,846 thousand in the fourth quarter of 2010.
Stock purchase agreement between the Company and MOTEX
On 13 December 2010, the Company entered into an agreement with MOTEX to purchase stock
sold by MOTEX through a factory outlet. The purchase price was c1,000 thousand and fell due on
7 January 2011.
Master agreements for IT services between the Company and MOTEX
Under master agreements governing the provision of services, the Company provides data centre
and network services, project services in the form of advisory and development services, and
procurement and strategy services for MOTEX. The master agreements were entered into for an
indefinite term and may be terminated in writing by either party on 12 months’ notice to the end of
any calendar year. The Company provided IT services valued at c89 thousand to MOTEX in the
fourth quarter of 2010.
Offsetting arrangement between the Company, Ahlers AG and MOTEX
Ahlers AG is the parent company of several of the Company’s suppliers (collectively referred to as
the ‘‘Ahlers Group’’). These suppliers are owed receivables by Adler as a result of the supply
arrangements. MOTEX has receivables against companies in the Ahlers Group on the basis of its
warehousing and freight forwarding activities. In 2010, Ahlers AG, the Company and MOTEX
agreed to settle payments by offsetting receivables owed to one another, subject to a waiver of the
requirement of reciprocity. The Company terminated the agreement effective 31 March 2011.
Sub-licensing of the ‘‘Adler’’ trademark to Adler Asset GmbH (formerly F.W. Woolworth Co. Ges.m.b.H.)
In 2009, the Adler Group generated royalties of c1,800 thousand from the grant of a sub-licence in
respect of the ‘‘Adler’’ trademark by Adler Modemärkte Austria to its former affiliate, Adler Asset
GmbH (formerly F.W. Woolworth Co. Ges.m.b.H.).
A
c
1
0
4
7
0
8
p
u
0
6
0
P
r
o
o
f
7
:
2
7
.
5
.
1
1
B
/
L
R
e
v
i
s
i
o
n
:
0
O
p
e
r
a
t
o
r
D
a
d
156

Acquisition of Adler Asset GmbH (formerly F.W. Woolworth Co. Ges.m.b.H.) by Adler Treasury GmbH
By agreement dated 17 December 2010, Adler Modemärkte Austria acquired 100% of the shares
in Adler Asset GmbH (formerly F.W. Woolworth Co. Gesellschaft m.b.H.) from a subsidiary of
AMODA GmbH, Adler Treasury GmbH, effective 31 December 2010. The purchase price was
c1,761 thousand.
Exchange of services between the Adler Group and Adler Asset GmbH (formerly F.W. Woolworth Co.
Ges.m.b.H.)
Adler Asset GmbH (formerly F.W. Woolworth Co. Ges.m.b.H.), which has formed part of the Adler
Group since 31 December 2010, has provided retail space, staff and other services to eight of
Adler Modemärkte Austria’s stores since February 2010 and receives cost price for its services.
Adler Asset GmbH (formerly F.W. Woolworth Co. Ges.m.b.H.) has also leased areas in four stores
directly to Adler Modemärkte Austria. In addition, the Company provides IT services to Adler Asset
GmbH (formerly F.W. Woolworth Co. Ges.m.b.H.) pursuant to a master agreement for IT services
concluded in 2009.
Loan agreement between Adler Treasury GmbH and Adler Asset GmbH (formerly F.W. Woolworth Co.
Ges.m.b.H.)
Adler Treasury GmbH and Adler Asset GmbH (formerly F.W. Woolworth Co. Ges.m.b.H.) entered
into a loan agreement on 28 September 2010. Under the agreement, Adler Treasury GmbH
extended a loan of c50 thousand to Adler Asset GmbH. The loan was repayable on 31 December
2010 and bore interest at 1.1% p.a. from 1 October 2010 until repayment. Adler Asset GmbH
repaid the loan in February 2011.
Consulting agreement between the Company and Susanne Schäfer
Since 1 July 2009, the wife of the Company’s Chief Executive Officer has provided advisory
services relating to the marketing of the Company’s products pursuant to a consulting agreement
concluded on 1 May 2009. She receives a daily rate of c350 for her services. Mrs Schäfer has
undertaken not to work directly or indirectly for competitors of the Company for the term of the
agreement and for six months thereafter. The agreement was initially entered into for a limited term
and was automatically extended by a further month at the end of each term, unless terminated by
either party on 30 days’ notice to the end of the current term. Susanne Schäfer received a total
fee of c40 thousand in the 2010 financial year.
Sale of the Company’s used vehicles to Schäfer GmbH
In 2009 and 2010, Land- und Gartentechnik Schäfer GmbH Landmaschinen-Gartengeräte-
Automobile, Limburg an der Lahn, the managing director of which is the brother of the Company’s
Chief Executive Officer, purchased used passenger vehicles from the Company with a total value
of c500 thousand.
Consulting and bonus agreement between the Company and AHS Unternehmensberatung GmbH
Pursuant to an agreement dated 13 March 2009, AHS Unternehmensberatung GmbH, Chur,
Switzerland, the managing director of which is Holger Kowarsch, a current member of the
Company’s Supervisory Board, charged the Company a total of c40 thousand in the 2009 financial
year for advisory services relating to the restructure of the Adler Group. The agreement was
terminated in accordance with the relevant notice requirements effective 1 March 2010. No further
fees were paid to AHS Unternehmensberatung GmbH in 2010.
On-charge of IPO costs to the Selling Shareholder
By an agreement dated 23 May 2011 the Selling Shareholder accepted to bear up to 35% of
certain costs related to the IPO. The Selling Shareholder’s costs will be due and payable on 31
July 2011 and are limited as follows: If the Company’s shares are admitted to the stock exchange
and the listing commences until 30 June 2011, the Selling Shareholder’s costs shall not exceed an
amount equal to c1,300,000, otherwise the Selling Shareholder’s costs shall not exceed an amount
equal to c1,000,000. Background is that the Selling Shareholder as the parent company will benefit
from the IPO.
The Company believes that all transactions with its related parties are based on standard market
conditions.
A
c
1
0
4
7
0
8
p
u
0
6
0
P
r
o
o
f
7
:
2
7
.
5
.
1
1
B
/
L
R
e
v
i
s
i
o
n
:
0
O
p
e
r
a
t
o
r
D
a
d
157

TAXATION IN THE FEDERAL REPUBLIC OF GERMANY
This section contains a summary of certain important German tax principles that may be relevant
with respect to the acquisition, holding, and transfer of shares. This discussion does not purport to
be a complete or exhaustive description of all potential tax aspects that may become of relevance
to the shareholders. This summary is based on domestic German tax law applicable as of the date
of this Offering Memorandum, including the provisions of double taxation treaties entered into
between Germany and other countries. Please note that the status of such laws and treaties may
change and that such changes may, in certain circumstances, have retroactive effect.
This section is no substitute for the individual tax advice provided to each particular shareholder.
Persons interested in acquiring shares are therefore urged to consult their tax advisors regarding
the tax consequences of the acquisition, holding, sale or transfer by gift or inheritance of shares
and a possible refund of withholding tax (Kapitalertragsteuer). Only such individual tax advice can
adequately take into account the special tax situation of the individual shareholder.
Taxation of the Company
In Germany, the profits earned by the Company are generally subject to corporate income tax at a
rate of 15%, plus a solidarity surcharge of 5.5% thereon (resulting in a total tax liability of
15.825%).
Dividends or other profit shares, which the Company receives from domestic or foreign
corporations, are generally exempt from corporate income tax; however, a flat 5% of such income
is deemed to be a non-deductible business expense and is therefore subject to corporate income
tax (plus solidarity surcharge). In effect, this limits the tax exemption to 95%. The same applies to
the Company’s gains on the disposal of shares in another domestic or foreign corporation. Capital
losses and disposal costs are not tax deductible. Actual business expenses incurred in connection
with domestic or foreign equity investments in corporations may, however, be deducted in full
unless they are disposal costs.
In addition, corporations are subject to trade tax (Gewerbesteuer) on trade earnings
(Gewerbeertrag) generated at their permanent establishments (Betriebsstätten) in Germany. The
effective trade tax rate depends upon the local municipalities in which the Company maintains
permanent establishments. The average municipal trade tax charge is about 14% of the trade
earnings. This average tax rate is based on an (national) average multiplier (Hebesatz) of 400%
and the 3.5% uniform basic tax rate.
Profit shares received by domestic and foreign corporations and capital gains on the disposal of
shares in another corporation are generally treated in the same manner for trade tax purposes as
for corporate income tax purposes. However, up to 95% of the profit shares received will in effect
be tax-exempt only if the Company held at least a 15% equity interest in the other corporation at
the beginning of the tax assessment period in question (so-called trade tax participation exemption
(gewerbesteuerliches Schachtelprivileg)). For corporations domiciled in another EU member state,
the trade tax participation exemption will apply if the minimum equity interest is a mere 10%. By
contrast, additional restrictions regarding the grant of the trade tax participation exemption will
apply for profit shares from corporations domiciled outside the EU.
In determining the Company’s taxable profit, interest expenses may be deducted only in the
amount of the interest income, and for the additional interest balance the deduction will generally
be limited to 30% of modified EBITDA (earnings before interest expenses and interest income,
taxes, depreciation and amortisation) for tax purposes, if the interest balance is c3 million or more
and no exceptional circumstances come into play. Interest expenses that may not be deducted are
carried forward without restriction into the Company’s subsequent financial years (so-called interest
carry-forward). The available EBITDA carry-forward that exceeds the interest balance is carried
forward into the following five financial years.
Tax loss carry-forwards may be used to fully offset any positive net income, which is subject to
corporate income tax, or trade earnings of up to c1 million only. Where the net income or the trade
earnings are in excess of this amount, only 60% of such excess may be offset against the tax
losses carried forward. The remaining 40% is subject to tax (so-called minimum taxation
(Mindestbesteuerung)). As a general rule, tax loss carry-forwards that are not utilised may,
however, be carried forward indefinitely and, in the context of the minimum taxation, may be used
to offset future taxable income or trade earnings.
A
c
1
0
4
7
0
8
p
u
0
6
0
P
r
o
o
f
7
:
2
7
.
5
.
1
1
B
/
L
R
e
v
i
s
i
o
n
:
0
O
p
e
r
a
t
o
r
D
a
d
158

Interest carry-forwards and unused losses of the Company will expire in full if more than 50% of
the subscribed capital, membership rights, participation rights, or voting rights are transferred,
directly or indirectly, to an acquirer or related parties of such acquirer within a period of five years
or there is a comparable situation (tainted acquisition of an equity investment). In addition, losses
of the current financial year incurred up to the tainted acquisition of the equity investment may no
longer be offset against profits. For transfers of more than 25% and up to 50%, interest carryforwards
or unused losses may no longer be used in the ratio of the transferred shares. If unused
losses and interest carry-forwards are covered by the hidden reserves of the domestic business
assets of the company incurring the loss, the losses will not expire. Hidden reserves from foreign
business assets will not be taken into account in this respect. The set-off of hidden reserves from
domestic business assets against interest carry-forwards ranks subordinate to the set-off against
unused losses.
Taxation of the shareholders
When discussing taxation of the shareholder, a differentiation must be made between taxation in
connection with the holding of the shares (taxation of dividends), the disposal of shares for
consideration (taxation of capital gains), and the gratuitous transfer of shares (inheritance and gift
tax).
Taxation of dividends
Withholding tax
Upon the payment of dividends, the Company must generally withhold a withholding tax in the
amount of 25% plus a solidarity surcharge of 5.5% thereon (i.e. a total of 26.375%), as well as
church tax, if any, and deliver such tax to the tax authorities. The Company is not responsible for
withholding taxes at the source. The tax base for the dividend withholding tax is the dividend
resolved by the Annual General Meeting of the Company.
The withholding and remittance of withholding tax are independent of whether and to what extent
the dividends are taxable at the level of the shareholder and regardless of whether the shareholder
is resident in or outside of Germany. Exceptions may apply with respect to certain shareholders,
for example corporations domiciled outside of Germany in another Member State of the European
Union if the Parent-Subsidiary Directive of the EU (Council Directive 90/435/EEC dated 23 July
1990, as amended) is applicable to such shareholders. In this case, the withholding of the dividend
withholding tax may be waived upon application, provided that an equity interest of at least 10% is
held and additional requirements are met. The same applies with respect to dividends that are
distributed to a permanent establishment situated in another Member State of the EU or of a
parent company which is subject to unlimited tax liability in Germany, provided that the equity
interest in the company does, in fact, form part of the business assets of this permanent
establishment.
Dividend payments to other non-resident shareholders are subject to withholding tax at a reduced
rate (generally 15%) where Germany and such shareholder’s home country have entered into a
double taxation treaty, the shareholder is entitled to protection under the respective treaty, the
shareholder is entitled to take advantage of the treaty benefits under German national tax law, and
the shareholder does not hold the shares through a permanent establishment or fixed base in
Germany, or as business assets for which a permanent representative has been appointed in
Germany. As a rule, the reduction in withholding tax is granted by refunding the difference between
amounts withheld pursuant to the application of statutorily prescribed rates (including the solidarity
surcharge) and the shareholder’s liability for withholding tax based on the application of the
relevant double taxation treaty (generally 15%). The shareholder must apply for a refund by
submitting the appropriate form to the German Federal Office for Taxes (Bundeszentralamt für
Steuern). Where a corporation resident in the other treaty country holds a direct equity interest of
at least 10%, the withholding of the difference in amounts may, upon application, be dispensed
with provided certain requirements are met. The appropriate application forms are available from
the Bundeszentralamt für Steuern, Hauptdienstsitz Bonn-Beuel, An der Küppe 1, D-53225 Bonn
(www.bzst.bund.de), as well as at German embassies and consulates. If the shareholder is a
foreign corporation, reduction in the withholding tax rate is tied to the fulfilment of further
requirements under German law.
A
c
1
0
4
7
0
8
p
u
0
6
0
P
r
o
o
f
7
:
2
7
.
5
.
1
1
B
/
L
R
e
v
i
s
i
o
n
:
0
O
p
e
r
a
t
o
r
D
a
d
159

Taxation of shareholders resident in Germany
Private assets
Dividends paid to shareholders holding the shares as private (non-business) assets are subject to
a uniform tax rate of 25% plus the solidarity surcharge (overall rate of 26.375%) as well as church
tax, if any (so-called final flat-rate tax (Abgeltungssteuer)). This tax rate corresponds to the
withholding tax rate for dividends. The private investor’s liability for income tax (plus solidarity
surcharge and church tax, if any) will invariably be satisfied through the withholding of the
investment income tax (withholding tax) at the corporation level, i.e., the tax withheld is definitive
regardless of the shareholder’s individual tax rate. Shareholders may apply for the tax on their
investment income to be assessed at the normal income tax rate if this would serve to lower their
respective tax burden. In both cases, however, the deduction of income-related expenses from
investment income will no longer be permitted, with the exception of the flat ‘‘saver’s’’ allowance
(Sparerpauschbetrag) totalling c801 (or c1,602 for married couples filing a joint income tax return).
Business assets
If the shares are held as business assets, taxation depends upon whether the shareholder is a
corporation (Kapitalgesellschaft), a sole proprietor (Einzelunternehmer), or a partnership
(Personengesellschaft):
Dividend payments received by corporations are generally exempt from corporate income tax.
However, 5% of the tax-free dividend income is deemed to be non-deductible business expense.
Therefore, 5% of the dividends are in effect subject to taxation. In return, the business expenses
actually incurred in relation to the shares may generally be deducted without limitation.
Tax-exempt dividend income is to be taken into account for purposes of determining the trade tax
assessment basis, unless the corporation held at least 15% of the Company’s registered share
capital as of the beginning of the relevant tax assessment period. In the latter instance, however,
5% of the dividends that are considered non-deductible business expenses are subject to trade tax.
In the case of sole proprietors holding the shares as business assets, 60% of dividend payments is
subject to tax (plus solidarity surcharge and church tax, if any) at the respective progressive
income tax rate. Correspondingly, only 60% of business expenses having an economic nexus to
such dividend income is deductible (subject to other limitations on deductibility) for tax purposes
(under the so-called partial-income method (Teileinkünfteverfahren)). In addition, the dividend
payments are subject to trade tax in the full amount to the extent the shareholder is liable for trade
tax and the shareholder did not hold at least 15% of the Company’s share capital at the beginning
of the relevant tax assessment period. However, depending on the local municipality’s trade tax
rate and the sole proprietor’s individual tax circumstances, trade tax will be credited in full or in
part against the shareholder’s income tax liability.
Where the shares are held by a partnership, personal or corporate income tax is levied only at the
level of its partners. If the partners are subject to corporate income tax, 95% of the dividend
payments are tax-exempt. By contrast, if a partner is subject to personal income tax, 60% of the
dividends will be subject to income tax plus solidarity surcharge and church tax, if any. With
respect to the deductibility of business expenses, see the discussion above regarding partners
subject to corporate income tax and partners subject to personal income tax.
Dividend payments are subject to trade tax in the full amount at the level of the partnership to the
extent the partnership is liable for trade tax and did not hold at least 15% of the Company’s
registered share capital as of the beginning of the relevant tax assessment period. To the extent
an individual has an ownership interest in a partnership, trade tax imposed at the level of the
partnership will – depending on the local municipality’s trade tax rate and such individual partner’s
tax circumstances – be credited in full or in part against such individual partner’s income tax
liability. To the extent corporations have an ownership interest in the partnership, trade tax is levied
on 5% of the dividends that are considered non-deductible business expenses, even if the
partnership holds at least 15% of the Company’s registered share capital.
Under certain conditions, special rules apply for credit institutions, financial services institutions,
finance companies, life insurance companies, health insurance companies, and pension funds.
Shareholders resident outside of Germany
For non-resident shareholders who do not hold their shares through a permanent establishment or
fixed base in Germany, or as business assets for which a permanent representative has been
A
c
1
0
4
7
0
8
p
u
0
6
0
P
r
o
o
f
7
:
2
7
.
5
.
1
1
B
/
L
R
e
v
i
s
i
o
n
:
0
O
p
e
r
a
t
o
r
D
a
d
160

appointed in Germany, the tax liability is generally discharged through the withholding of the
26.375% withholding tax plus solidarity surcharge; where appropriate, a reduction (generally to
15%) and a partial refund of or exemption from withholding tax may be obtained on the basis of an
applicable double taxation treaty (see the section entitled ‘‘Withholding tax’’ above). Where
shareholders hold their shares (either directly or via a partnership) as assets of a permanent
establishment or fixed base in Germany, or as business assets for which a permanent
representative has been appointed in Germany, the above-described partial-income method shall
apply.
Taxation of capital gains
Shareholders resident in Germany
Private assets
Capital gains realised on a disposal of shares are subject to the final flat tax rate of 25% (plus
solidarity surcharge and church tax, if any), if the equity interest amounts to less than 1% of the
Company’s share capital and was acquired after 31 December 2008. If the capital gain is paid or
credited by a domestic paying agent (e.g. custodian bank), the flat-rate final tax will be withheld by
way of a deduction from the investment income for the account of the shareholder. Shareholders
may apply for the tax on their investment income to be assessed at the normal income tax rate if
this would lower their respective tax burden. In both cases, however, the deduction of incomerelated
expenses from the capital gains realised will no longer be permitted, with the exception of
the flat ‘‘saver’s’’ allowance (Sparerpauschbetrag) totalling c801 (or c1,602 for married couples
filing a joint income tax return). Gains from the disposal of equity interests representing less than
1% of the Company’s share capital are non-taxable if the interest was acquired prior to 1 January
2009.
If the shareholder or – in the event of a gratuitous transfer – such shareholder’s legal predecessor,
or one of the shareholder’s legal predecessors if the shares were transferred gratuitously several
times in succession has, at any point during the five years immediately preceding the disposal,
held an interest in the Company’s share capital of at least 1%, then the taxpayer generates income
from business operations (Gewerbebetrieb) upon the disposal of the shares. This income is not
subject to the final flat-rate tax, but rather the individual income tax rate is applied. Here, too, the
partial-income method is used, i.e., only 60% of the income is subject to taxation and only 60% of
expenses is considered in the determination of income.
The above discussion applies mutatis mutandis to gains realised on the disposal of subscription
rights. The exercise of a subscription right will likewise be deemed a disposal of same. The capital
gain to be considered for tax purposes corresponds to the stock market price of the subscription
right at the time of acceptance of the rights offering. Such gain forms part of the new shares’
acquisition cost.
Business assets
If the shares are held as business assets, taxation of the capital gain on the disposal of shares
depends upon whether the shareholder is a corporation, a sole proprietor, or a partnership:
If the shareholder is a corporation, the capital gains realised are generally exempt from corporate
income tax and trade tax, irrespective of the amount of the equity investment and the shares’
holding period. However, 5% of the capital gains are considered non-deductible business expenses
and are therefore subject to taxation. In effect, this limits the tax exemption to 95%. In return, the
business expenses actually incurred in relation to the shares may generally be deducted without
limitation. Capital losses as well as losses resulting from the write-down of shares to going concern
value are not deductible for tax purposes.
Where the shares are held by sole proprietors, 60% of capital gains are subject to income tax plus
solidarity surcharge and church tax, if any. Correspondingly, only 60% of business expenses
having an economic nexus to such capital gains, and 60% of any capital losses or losses resulting
from the write-down of shares to going concern value are deductible for tax purposes. If the sole
proprietor is liable for trade tax, 60% of the capital gains are subject to trade tax. However,
depending on the local municipality’s trade tax rate and the sole proprietor’s individual tax
circumstances, trade tax will be credited in full or in part against the shareholder’s income tax
liability.
If the shareholder is a partnership, tax treatment depends upon whether the partners are subject to
personal or corporate income tax: In effect, if a partner is a corporation, 95% of the capital gains
A
c
1
0
4
7
0
8
p
u
0
6
0
P
r
o
o
f
7
:
2
7
.
5
.
1
1
B
/
L
R
e
v
i
s
i
o
n
:
0
O
p
e
r
a
t
o
r
D
a
d
161

are generally tax exempt. For partners subject to personal income tax, 60% of the capital gains are
taxable. Similar rules apply for purposes of the trade tax depending upon the composition of the
partnership’s partners if the partnership is liable for trade tax. To the extent an individual has an
ownership interest in a partnership, trade tax imposed at the level of the partnership will –
depending on the local municipality’s trade tax rate and such individual partner’s tax circumstances
– be credited in full or in part against such individual partner’s income tax liability. With respect to
the deductibility of business expenses having an economic nexus to the capital gains and the
deductibility of capital losses, see the discussion above regarding partners subject to corporate
income tax and partners subject to personal income tax.
At present, the tax treatment regarding the disposal of subscription rights held as business assets
has not been conclusively settled. According to the fiscal administration and the most recent
decisions by the German Federal Fiscal Court (Bundesfinanzhof), any such capital gains realised
by corporations are taxable in full. It is possible that this also applies to corresponding gains
realised by sole proprietors and partnerships.
Under certain conditions, special rules apply for credit institutions, financial services institutions,
finance companies, life insurance companies, health insurance companies, and pension funds.
Shareholders resident outside of Germany
Capital gains realised by non-resident shareholders who do not hold their shares though a
permanent establishment or fixed base in Germany, or as business assets for which a permanent
representative has been appointed in Germany, are only subject to tax in Germany where the
disposing shareholder, or – in the case of a gratuitous acquisition – the shareholder’s legal
predecessor, or one of the shareholder’s legal predecessors if the shares were transferred
gratuitously several times in succession, held a direct or indirect equity interest of at least 1% of
the Company’s share capital at any point during the five years preceding the disposal. If the
shareholder is a corporation, only 5% of the capital gains is subject to corporate income tax and
the solidarity surcharge. If the shareholder is a natural person, 60% of the capital gains is taxable
(under the partial-income method).
Normally, however, German double taxation treaties provide for a complete exemption from
German taxation and cede the right of taxation to the shareholder’s country of residence.
The rules described above regarding shareholders who are resident in Germany apply mutatis
mutandis with respect to capital gains arising on the disposal of shares that were held though a
permanent establishment or fixed base in Germany, or as business assets for which a permanent
representative has been appointed in Germany. As a rule, the existing double taxation treaties also
cede the right of taxation to Germany.
Special rules for credit institutions, financial services institutions, finance companies, life
insurance companies, health insurance companies and pension funds
If credit institutions and financial services institutions hold shares which are allocable to their
trading book (Handelsbuch) pursuant to § 1a German Banking Act (Kreditwesengesetz, ‘‘KWG’’),
then neither the applicable exemption from corporate income tax (95%) nor the partial-income
method will apply to dividends or capital gains and capital losses arising on the disposal of shares,
i.e., dividend income and capital gains are fully subject to corporate income tax and trade tax. 95%
of dividends may be exempt from trade tax if an equity interest of at least 15% was held in the
Company’s share capital at the beginning of the relevant tax assessment period. The foregoing
also applies with respect to shares acquired by finance companies within the meaning of the
German Banking Act for the purpose of deriving gains from short-term proprietary trading. This also
applies to credit institutions, financial services institutions and finance companies that have their
registered office in another Member State of the European Union or in another signatory to the
Agreement on the European Economic Area. However, liability for trade taxation arises only if the
shares are held through a permanent establishment. Similarly, the 95% exemption valid for
corporate income tax does not apply to dividends paid with respect to, or capital gains and losses
arising on the disposal of, shares held by life insurance and health insurance companies and
pension funds which are allocable to capital investments. For these shareholders, however, a trade
tax exemption is not possible as a result of the size of the investment. However, there is an
exception to the taxation of dividend income and capital gains which fall within the scope of the
Parent-Subsidiary Directive of the EU. 95% of such amounts are exempt from taxation.
A
c
1
0
4
7
0
8
p
u
0
6
0
P
r
o
o
f
7
:
2
7
.
5
.
1
1
B
/
L
R
e
v
i
s
i
o
n
:
0
O
p
e
r
a
t
o
r
D
a
d
162

Inheritance and gift tax
The transfer of shares to another person by gift or causa mortis is only subject to gift or
inheritance tax under the following circumstances:
(i) The decedent, donor, heir, beneficiary, or any other transferee maintained, as of the date of
the transfer, a residence, habitual abode, place of management or registered office, in
Germany or, as a German citizen, has not spent more than five consecutive years outside of
Germany without maintaining a residence in Germany;
(ii) independent of these individual circumstances, the shares were held by the decedent or
donor as business assets for which a permanent establishment was maintained in Germany
or for which a permanent representative in Germany had been appointed; or
(iii) the decedent, at the time of accrual of the inheritance, or the donor, at the time of the gift,
either individually or collectively with related parties, held, directly or indirectly, at least 10% of
the Company’s share capital. In exceptional cases, a lower equity interest may also suffice.
The few estate and gift tax double taxation treaties which Germany has entered into with other
countries generally provide that German inheritance or gift tax is levied only in case (i) and –
subject to certain restrictions – in case (ii).
Other Taxes
No other taxes are assessed on the acquisition, disposal, or other forms of transfer of shares
(value added tax, transfer tax, etc.). However, business owners may opt for the payment of value
added tax on transactions that are otherwise tax exempt where the transaction is carried out on
behalf of another business owner for its business. At present, Germany does not levy a wealth tax
(Vermögensteuer).
A
c
1
0
4
7
0
8
p
u
0
6
0
P
r
o
o
f
7
:
2
7
.
5
.
1
1
B
/
L
R
e
v
i
s
i
o
n
:
0
O
p
e
r
a
t
o
r
D
a
d
163

[This page intentionallay left blank]

Financial Section
CONTENT
Unaudited consolidated interim financial statements of Adler Modemärkte AG as at
31 March 2011 (IFRS).............................................................................................................. F-2
– Consolidated income statement for the period from 1 January 2011 to 31 March
2011.................................................................................................................................. F-3
– Consolidated balance sheet as at 31 March 2011.......................................................... F-4
– Consolidated statement of changes in equity for the period from 1 January 2011 to
31 March 2011 ................................................................................................................. F-5
– Consolidated statement of cash flows for the period from 1 January 2011 to
31 March 2011 ................................................................................................................. F-6
– Notes to the consolidated financial statements as at 31 March 2011............................ F-7
Audited consolidated financial statements of Adler Modemärkte GmbH as at
31 December 2010 (IFRS) ....................................................................................................... F-14
– Consolidated income statement for the financial year from 1 January 2010 to
31 December 2010........................................................................................................... F-15
– Consolidated balance sheet as at 31 December 2010 ................................................... F-16
– Consolidated statement of changes in equity for the financial year from 1 January
2010 to 31 December 2010 ............................................................................................. F-17
– Consolidated statement of cash flows for the financial year from 1 January 2010 to
31 December 2010........................................................................................................... F-18
– Notes to the consolidated financial statements as at 31 December 2010 ..................... F-19
– Auditors’ Report................................................................................................................ F-68
Audited consolidated financial statements of Adler Modemärkte GmbH as at
31 December 2009 (IFRS) ....................................................................................................... F-69
– Consolidated income statement for the financial year from 1 January 2009 to
31 December 2009........................................................................................................... F-70
– Consolidated balance sheet as at 31 December 2009 ................................................... F-71
– Consolidated statement of changes in equity for the financial year from 1 January
2009 to 31 December 2009 ............................................................................................. F-73
– Consolidated statement of cash flows for the financial year from 1 January 2009 to
31 December 2009........................................................................................................... F-74
– Notes to the consolidated financial statements as at 31 December 2009 ..................... F-75
– Auditors’ Report................................................................................................................ F-118
Audited annual financial statements of Adler Modemärkte GmbH as at 31 December
2010 (HGB)............................................................................................................................... F-119
– Income statement for the financial year from 1 January 2010 to 31 December 2010 .. F-120
– Balance sheet as at 31 December 2010......................................................................... F-121
– Notes to the annual financial statements as at 31 December 2010............................... F-123
– Auditors’ Report................................................................................................................ F-131
Audited annual financial statements of Adler Modemärkte GmbH as at 31 December
2008 (HGB)............................................................................................................................... F-132
– Income statement for the financial year from 1 January 2008 to 31 December 2008 .. F-133
– Balance sheet as at 31 December 2008......................................................................... F-134
– Notes to the annual financial statements as at 31 December 2008............................... F-136
– Auditors’ Report................................................................................................................ F-142
– Statement of cash flows for the financial year from 1 January 2008 to 31 December
2008.................................................................................................................................. F-143
– Statement of changes in equity for the financial year from 1 January 2008 to 31
December 2008 ................................................................................................................ F-144
– Auditors’ Report................................................................................................................ F-145
A
c
1
0
4
7
0
8
p
u
0
7
0
P
r
o
o
f
7
:
2
7
.
5
.
1
1
B
/
L
R
e
v
i
s
i
o
n
:
0
O
p
e
r
a
t
o
r
D
a
d
F-1

A
c
1
0
4
7
0
8
p
u
0
7
0
P
r
o
o
f
7
:
2
7
.
5
.
1
1
B
/
L
R
e
v
i
s
i
o
n
:
0
O
p
e
r
a
t
o
r
D
a
d
Unaudited consolidated interim financial statements
of Adler Modemärkte AG
as at 31 March 2011 (IFRS)
F-2

Consolidated income statement
for the period from 1 January 2011 to 31 March 2011
1 Jan.-
31 Mar.
2011*
1 Jan.-
31 Mar.
2010*
c’000 c’000
Revenue ........................................................................................................ 91,906 84,249
Other operating income ................................................................................. 2,601 2,240
Cost of materials ........................................................................................... -47,321 -43,790
Personnel expenses ...................................................................................... -19,286 -17,778
Other operating expenses ............................................................................. -34,502 -32,321
EBITDA ......................................................................................................... -6,602 -7,400
Depreciation and amortisation ....................................................................... -3,360 -3,596
EBIT .............................................................................................................. -9,962 -10,996
Other interest and similar income.................................................................. 20 773
Interest and similar expenses........................................................................ -914 -1,099
Net finance costs......................................................................................... -894 -326
Profit/loss from operations......................................................................... -10,856 -11,322
Income taxes ................................................................................................. 2,006 67
Profit/loss from continuing operations ..................................................... -8,850 -11,255
Profit/loss from discontinued operations ................................................. 0 -1,059
Consolidated net loss for the period (-).................................................... -8,850 -12,314
of which attributable to shareholders of Adler Modemärkte AG ................ -8,850 -12,314
Earnings per share (continuing operations)
Undiluted in c............................................................................................. -0.56 -0.71*
Diluted in c................................................................................................. -0.56 -0.71*
Earnings per share (discontinued operations)
Undiluted in c............................................................................................. 0 -0.07*
Diluted in c................................................................................................. 0 -0.07*
Consolidated statement of comprehensive income
for the period from 1 January 2011 to 31 March 2011
1 Jan.-
31 Mar.
2011
1 Jan.-
31 Mar.
2010
c’000 c’000
Consolidated net loss for the period (-).................................................... -8,850 -12,314
Other comprehensive income........................................................................ 0 0
Consolidated total comprehensive income .............................................. -8,850 -12,314
of which attributable to shareholders of Adler Modemärkte AG ................ -8,850 -12,314
* In order to present comparison figures, earnings per share have been calculated on the basis of the 15,860,000 shares currently
in issue. For the period from 1 January to 31 March 2010, and as reported in the consolidated financial statements as at
31 December 2010, however, only one share existed.
A
c
1
0
4
7
0
8
p
u
0
7
0
P
r
o
o
f
7
:
2
7
.
5
.
1
1
B
/
L
R
e
v
i
s
i
o
n
:
0
O
p
e
r
a
t
o
r
D
a
d
F-3

Consolidated balance sheet
as at 31 March 2011
ASSETS 31 Mar. 2011 31 Dec. 2010
c’000 c’000
Non-current assets
Intangible assets ......................................................................................... 3,123 2,994
Property, plant and equipment .................................................................... 50,708 52,215
Investment property .................................................................................... 3,374 3,374
Other receivables and other assets ............................................................ 642 649
Deferred tax assets..................................................................................... 10,142 8,269
Total non-current assets .......................................................................... 67,989 67,501
Current assets
Inventories................................................................................................... 78,281 56,749
Trade receivables........................................................................................ 1,935 1,338
Other receivables and other assets ............................................................ 6,871 3,908
Available-for-sale financial assets ............................................................... 263 263
Cash and cash equivalents ......................................................................... 13,902 32,956
Total current assets.................................................................................. 101,252 95,214
Total ASSETS ............................................................................................ 169,241 162,715
EQUITY and LIABILITIES 31 Mar. 2011 31 Dec. 2010
c’000 c’000
EQUITY
Capital and reserves
Subscribed capital ....................................................................................... 15,860 15,860
Capital reserves .......................................................................................... 101,001 101,001
Accumulated other comprehensive income................................................. 0 0
Net accumulated losses .............................................................................. -84,545 -75,694
Total equity................................................................................................ 32,316 41,167
LIABILITIES
Non-current liabilities
Provisions for pensions and other employee benefits................................. 4,535 4,607
Other provisions .......................................................................................... 1,110 1,044
Financial liabilities ....................................................................................... 4,295 4,360
Finance lease obligations............................................................................ 33,824 36,277
Other liabilities............................................................................................. 0 249
Deferred tax liabilities.................................................................................. 436 628
Total non-current liabilities...................................................................... 44,200 47,165
Current liabilities
Other provisions .......................................................................................... 2,602 2,792
Financial liabilities ....................................................................................... 17,086 14,213
Finance lease obligations............................................................................ 9,821 9,762
Trade payables ........................................................................................... 45,338 27,829
Other liabilities............................................................................................. 17,533 19,502
Income tax liabilities .................................................................................... 345 285
Total current liabilities.............................................................................. 92,725 74,383
Total liabilities ........................................................................................... 136,925 121,548
Total EQUITY and LIABILITIES ................................................................ 169,241 162,715
A
c
1
0
4
7
0
8
p
u
0
7
0
P
r
o
o
f
7
:
2
7
.
5
.
1
1
B
/
L
R
e
v
i
s
i
o
n
:
0
O
p
e
r
a
t
o
r
D
a
d
F-4

Consolidated statement of changes in equity
for the period from 1 January 2011 to 31 March 2011
Subscribed
capital
Capital
reserves
Accumulated
other
comprehensive
income
Net
accumulated
losses Total equity
c’000 c’000 c’000 c’000 c’000
As at 1 Jan. 2011.............. 15,860 101,001 0 -75,694 41,167
Income subsidies from
shareholders....................... 0 0 0 0 0
Additions to capital
reserves ............................. 0 0 0 0 0
Total transactions with
shareholders..................... 0 0 0 0 0
Consolidated net loss for
the period ........................... 0 0 0 -8,851 -8,851
Other comprehensive
income................................ 0 0 0 0 0
Consolidated total
comprehensive income ... 0 0 0 -8,851 -8,851
As at 31 Mar. 2011............ 15,860 101,001 0 -84,545 32,316
Consolidated statement of changes in equity
for the period from 1 January 2010 to 31 March 2010
Subscribed
capital
Capital
reserves
Accumulated
other
comprehensive
income
Net
accumulated
losses Total equity
c’000 c’000 c’000 c’000 c’000
As at 1 Jan. 2010.............. 15,860 138,157 0 -84,743 69,274
Income subsidies from
shareholders....................... 0 500 0 0 500
Contribution to capital
reserves ............................. 0 1,572 0 0 1,572
Total transactions with
shareholders..................... 0 2,072 0 0 2,072
Consolidated net loss for
the period ........................... 0 0 0 -12,314 -12,314
Other comprehensive
income................................ 0 0 0 0 0
Consolidated total
comprehensive income ... 0 0 0 -12,314 -12,314
As at 31 Mar. 2010............ 15,860 140,229 0 -97,057 59,032
A
c
1
0
4
7
0
8
p
u
0
7
0
P
r
o
o
f
7
:
2
7
.
5
.
1
1
B
/
L
R
e
v
i
s
i
o
n
:
0
O
p
e
r
a
t
o
r
D
a
d
F-5

Consolidated statement of cash flows
for the period from 1 January 2011 to 31 March 2011
1 Jan.-
31 Mar. 2011
1 Jan.-
31 Mar. 2010
c’000 c’000
Consolidated net loss (-) before tax.................................................. -10,856 -12,099
(+) Depreciation and amortisation on property, plant and equipment
and intangible assets ........................................................................ 3,360 3,772
(+) Impairment....................................................................................... 0 2,115
Decrease (-) in pension provisions ....................................................... -72 -62
Losses (+) from the sale of non-current assets .................................... 6 157
Other non-cash expenses (+) ............................................................... 6,224 4,620
Net finance costs .................................................................................. 894 329
Interest received.................................................................................... 20 13
Interest paid .......................................................................................... -48 -41
Income taxes paid................................................................................. -115 -116
Increase (-) in inventories ..................................................................... -22,024 -14,231
Increase (-) in trade receivables and other receivables ........................ -3,650 -1,660
Increase (+) in trade payables, other liabilities and other provisions .... 12,566 5,581
Increase (+)/decrease (-) in other balance sheet items ........................ 55 -223
Net cash used in (-) operating activities
(Net cashflow) ..................................................................................... -13,640 -11,845
Proceeds from disposals of non-current assets.................................... 14 309
Payments for investments in non-current assets .................................. -2,001 -564
Net cash used in (-) investing activities ........................................... -1,987 -255
Free cashflow ...................................................................................... -15,627 -12,100
Cash flows from the repayment (-) of current financial liabilities .......... -57 0
Repayments of borrowings ................................................................... -111 -59
Payments in connection with finance lease liabilities............................ -3,259 -3,236
Net cash used in (-) financing activities ........................................... -3,427 -3,295
Net decrease (-) in cash and cash equivalents................................ -19,054 -15,395
Cash and cash equivalents at beginning of period ............................... 32,956 36,991
Cash and cash equivalents reclassified into ‘‘non-current assets held
for sale’’ ............................................................................................ 0 -288
Cash and cash equivalents at end of period......................................... 13,902 21,308
Net decrease (-) in cash and cash equivalents................................ -19,054 -15,395
A
c
1
0
4
7
0
8
p
u
0
7
0
P
r
o
o
f
7
:
2
7
.
5
.
1
1
B
/
L
R
e
v
i
s
i
o
n
:
0
O
p
e
r
a
t
o
r
D
a
d
F-6

Notes to the consolidated financial statements as at 31 March 2011
I. Preliminary remarks
Adler Modemärkte AG is a corporation (Kapitalgesellschaft) in accordance with German law and its
registered office is at Industriestrasse 1-5, Haibach, Federal Republic of Germany. The relevant
registration court is located in Aschaffenburg (registered under number HRB 11581).
The Adler Group (Adler Modemärkte AG and its subsidiaries) is engaged in apparel retailing and
operates specialist clothing stores in Germany, Luxembourg and Austria. Under the trade name
‘‘ADLER’’, the Group operates specialist clothing stores either on a stand-alone basis or as part of
specialist stores or shopping centres. It also operates specialist clothing stores together with other
retailers at locations operated jointly. The range of goods offered by the ADLER stores includes
womenswear, menswear and kids’ wear.
The euro (c) is both the presentation currency and the functional currency of the Adler Group. The
figures in the notes to the consolidated financial statements are quoted in thousands of euros
(c’000).
Until 28 February 2011, the sole shareholder in Adler Modemärkte AG was AMODA GmbH,
Haibach. The ultimate controlling company is BluO beta equity Limited, Birmingham, United
Kingdom, whose place of management is Vienna, Austria. On 28 February 2011, the existing
shareholder passed to Cheverny Investments Ltd., St. Julians/Malta.
By a resolution of Cheverny Investments Ltd., St. Julians/Malta, the sole shareholder, to reorganise
the Company dated 1 March 2011, the Company was converted by means of a change of legal
form pursuant to §§ 190 et seq., 238 et seq. of the German Reorganisation of Companies Act
(Umwandlungsgesetz, ‘‘UmwG’’) into a public corporation (Aktiengesellschaft) with a share capital
amounting to c15,860,000 divided into 15.86 million no-par value bearer shares with a notional
value of c1. The relevant entry was recorded in the commercial register on 17 March 2011.
The Adler Group also provided logistics services, including to third parties, through MOTEX Mode-
Textil-Service Logistik und Management GmbH. The services comprised distribution, processing,
handling, consignment, labelling, the finishing of semi-finished products and the transportation of
textile industry goods in Germany and abroad using its own and third-party vehicles. MOTEX
Mode-Textil-Service Logistik und Management GmbH was sold as at 30 September 2010 and is
therefore no longer a member of the group of consolidated companies. The activities sold
represent discontinued operations within the meaning of IFRS 5. In accordance with the provisions
of IFRS 5, continuing operations and discontinued operations are presented separately up to the
date of sale for the comparable period from 1 January 2010 to 31 March 2010. The individual
items reported in the income statement contain only the income and expenses attributable to
continuing operations. The profit or loss from discontinued operations is presented in the income
statement as a separate item. In the period from 1 January 2010 to 31 March 2011, MOTEX
Mode-Textil-Service Logistik und Management GmbH no longer forms part of the consolidated
group of companies and accordingly no discontinued operations are now presented.
II. Notes on the principles and methods employed in the consolidated financial statements
Accounting policies
The consolidated interim financial statements of Adler Modemärkte AG were prepared in
accordance with the requirements of the International Accounting Standards Board (IASB), London,
in conformity with International Financial Reporting Standards (IFRS), as adopted by the EU. The
interpretations issued by the IFRS Interpretations Committee (formerly the International Financial
Reporting Interpretations Committee and the Standing Interpretations Committee) were also
applied. Accordingly, these consolidated interim financial statements as at 31 March 2011 were
prepared in conformity with IAS 34. Income and expenses in connection with taxes on income
were determined on the basis of actual tax calculations.
Those provisions of International Financial Reporting Standards (IFRS) were applied that had
become mandatory by the balance sheet date of 31 March 2011. There was no early adoption of
standards whose application had not yet become mandatory as at 31 March 2011.
The notes to the 2010 consolidated financial statements apply accordingly in particular with respect
to the significant accounting policies adopted.
In addition, deferred tax assets in respect of tax losses incurred by Adler Modemärkte AG in the
period from 1 January to 31 March 2011 were recognised and reported for the first time as at
A
c
1
0
4
7
0
8
p
u
0
7
0
P
r
o
o
f
7
:
2
7
.
5
.
1
1
B
/
L
R
e
v
i
s
i
o
n
:
0
O
p
e
r
a
t
o
r
D
a
d
F-7

31 March 2011. In the prior-year period, a profit and loss transfer agreement and tax grouping for
income tax purposes was in place between Adler Modemärkte AG and its then sole shareholder
AMODA GmbH with the result that Adler Modemärkte AG as a member of the tax group had no
income tax liability. This arrangement was terminated as at 31 December 2010.
The following items are reflected in the interim financial statements in addition to the accounting
policies as at 31 December 2010:
Stock appreciation rights (SARs – cash-settled share-based payment) are measured at their fair
value at the date of grant. The fair value is recorded as personnel expenses over the vesting
period. The obligations arising from SARs are recognised as provisions and measured at their fair
value at the interim reporting date. The expenses are recognised over the vesting period. The fair
value of the SARs is determined on the basis of mathematical calculations and in conformity with
the business plans. Management is required to make assumptions for this purpose with respect to
the probability that particular events affecting the value will occur.
The amount of the Long Term Incentive (LTI) bonus granted in the event of a successful IPO is
based on the performance of the shares from the date of initial listing. The members of the
Executive Board have entered into a commitment to purchase shares of the Company for a
predetermined amount (own investment of c750 thousand) in the event of an IPO. The Company
will grant the Executive Board five SARs, which grant the holder the right to a cash payment
depending on the share price, for each share subscribed for. After a waiting period of three years
from the date of the IPO, the SARs may be exercised in full or in part within two years provided
that the own investment can be shown to have been held for one year and the final price of the
shares at the end of the waiting period is at least 30% above the issue price (= share price on
initial listing). SARs that remain unexercised expire without compensation at the end of the twoyear
exercise period. The payment for each SAR is derived from the difference between the
average closing price of the shares during the last five trading days prior to the exercise date and
the issue price. The amount of the bonus is limited. The provision reported as at 31 March 2011
amounted to c63 thousand and was added to personnel expenses.
Standards and interpretations applicable for the first time
The application of the following standards and interpretations revised or newly issued by the IASB
was mandatory for the first time from 1 January 2011:
Standards
IFRS 1 Limited exemption from comparative IFRS 7 disclosures for first-time adopters
IAS 24 Related party disclosures
IAS 32 Classification of rights issues
various Annual Improvements Project (2010)
Interpretations
IFRIC 14 Prepaid contributions with existing minimum funding requirements
IFRIC 19 Extinguishing financial liabilities with equity instruments
For more detailed information on the respective changes to the standards and interpretations,
please refer to the consolidated financial statements as at 31 December 2010. The first-time
application of the revised standards has not resulted in any effects on the net assets, financial
position and results of operations of the Adler Group since there are no relevant items within the
Adler Group.
Standards, interpretations and amendments to published standards that are not yet mandatory
The following standards, amendments to standards and interpretations have already been issued
but are mandatory only for reporting periods beginning after 1 January 2011. These will be applied
by the Adler Group from the prescribed date and the Group has estimated the expected effects of
the individual standards, amendments to standards and interpretations on its net assets, financial
position and results of operations, to the extent that it was possible to make such an estimate at
this stage.
A
c
1
0
4
7
0
8
p
u
0
7
0
P
r
o
o
f
7
:
2
7
.
5
.
1
1
B
/
L
R
e
v
i
s
i
o
n
:
0
O
p
e
r
a
t
o
r
D
a
d
F-8

Standards
Mandatory
from*
Adopted by EU
Commission
IFRS 1 Hyperinflation and fixed transition dates ............. 1 Jul. 2011 No
IFRS 7 Disclosures – transfers of financial assets .......... 1 Jul. 2011 No
IFRS 9 Financial instruments: classification and
No
impairment of financial assets............................. 1 Jan. 2013
IAS 12 Income taxes....................................................... 1 Jan. 2012 No
Interpretations
—
* Date of first-time mandatory application stipulated by the IASB. Where the standard, interpretation or amendment has already
been adopted by the EU Commission, the date is the date for mandatory application stipulated by the EU.
For more detailed information on the respective changes to the standards and interpretations,
please refer to the consolidated financial statements as at 31 December 2010.
First-time application will either have no effect on the net assets, financial position and results
operations of the Adler Group or it is not possible to estimate the effects of these changes at the
present time.
Group of consolidated companies/shareholdings
In addition to Adler Modemärkte AG, one German subsidiary and three foreign subsidiaries in
which Adler Modemärkte AG directly or indirectly holds the majority of the voting rights have been
included in the interim report as at 31 March 2011:
Name, registered office
Shareholding
in %
ADLER Modemärkte Gesellschaft m.b.H., Ansfelden / Austria .................................... 100
ADLER Mode S.A., Foetz / Luxembourg ..................................................................... 100
ADVERS GmbH, Haibach ............................................................................................ 100
Adler Asset GmbH, Ansfelden / Austria (formerly F. W. Woolworth Co. Ges.m.b.H.,
Ansfelden / Austria).................................................................................................. 100
In addition, ALASKA GmbH & Co. KG, Munich, in which the Group has no shareholding, was
included in the consolidated financial statements as a special purpose entity in accordance with
SIC 12 on the basis of a rental agreement with Adler Modemärkte GmbH (relating to an
administration building in Haibach).
By a purchase agreement dated 17 December 2010, Adler Modemärkte Gesellschaft m.b.H.,
Ansfelden / Austria, acquired all of the shares in F.W. Woolworth Co. Ges.m.b.H., Ansfelden /
Austria with effect as at 31 December 2010. The name of this company was changed to Adler
Asset GmbH.
III. Other notes
1. Seasonal effects
The sales, profits and financing requirements of the Adler Group are affected by seasonal
fluctuations. For example, sales and profits in the second half of the year, especially in the fourth
quarter, are generally higher than in the other quarters due to the sale of winter merchandise with
a higher average selling price for each product. Moreover, the product range in the spring and
summer months includes a comparatively higher proportion of cheaper products such as T-shirts.
As a result of the seasonal nature of demand for clothing, Adler has peak periods for purchases of
goods and therefore higher financing requirements in the months of February and March, and
August and September, which is linked to increases in inventories, other receivables and other
assets, and in liabilities. Adler endeavours to reduce its peak financing requirements and also to
A
c
1
0
4
7
0
8
p
u
0
7
0
P
r
o
o
f
7
:
2
7
.
5
.
1
1
B
/
L
R
e
v
i
s
i
o
n
:
0
O
p
e
r
a
t
o
r
D
a
d
F-9

manage its liquidity by agreeing long-term target payment dates, with payment due in some cases
only after the products have been sold. Nevertheless, these fluctuations can have substantial
negative effects on profits during the year, which resulted in a negative result in the first quarter.
This is expected to be outweighed by positive earnings in each of the second and fourth quarters.
The increase in the financial liabilities reflects additions during the year to customers’ entitlements
to discounts. Customer discounts are acquired by customers during the financial year and can be
redeemed by customers at any time. The full amount of the customer discount entitlements is
reflected in higher financial liabilities during the year. At the end of the financial year, unutilised
customer discount entitlements from the respective previous year expire. This results in a reversal
of this item at the end of the financial year, since the proportion of customer discounts redeemed
is expected to be lower than the accumulated entitlements.
2. Profit/loss from discontinued operations
Discontinued operations
1 Jan.-
31 Mar. 2011
1 Jan.-
31 Mar. 2010
c’000 c’000
Income .................................................................................................. 0 7,285
Expenses .............................................................................................. 0 -5,947
Operating profit before tax................................................................. 0 1,338
Income taxes on operating profit........................................................... 0 -282
Operating profit after tax.................................................................... 0 1,056
Gain/loss from remeasurement/disposal............................................... 0 -2,115
Gain/loss from remeasurement/disposal after tax........................... 0 -2,115
Profit/loss from discontinued operations......................................... 0 -1,059
3. Equity
Following the resolution to reorganise the Company as a public corporation dated 1 March 2011,
the subscribed capital (share capital) comprises 15,860,000 shares with a notional share of c1.00
in the share capital. The subscribed capital (share capital) previously reported consisted of one
share with a notional value of c15.86 million. Please refer also to the preliminary remarks in this
connection.
A
c
1
0
4
7
0
8
p
u
0
7
0
P
r
o
o
f
7
:
2
7
.
5
.
1
1
B
/
L
R
e
v
i
s
i
o
n
:
0
O
p
e
r
a
t
o
r
D
a
d
F-10

IV. Segment reporting
31 March 2011
Stores
segment
Discontinued
operations Total segments
Reconciliation
to IFRS Adler Group
c’000 c’000 c’000
External revenue (net).. 94,809 0 94,809 -2,904 91,906
Revenue with other
segments (net)......... 0 0 0 0 0
Total revenue (net)....... 94,809 0 94,809 -2,904 91,906
Profit or loss on goods
sold.......................... 43,194 0 43,194
Total costs.................... -52,777 0 -52,777
EBITDA ........................ -5,911 0 -5,911 -691 -6,602
(Reconciliation to profit or loss from operations)
EBITDA ........................ -6,602
Depreciation and
amortisation ............. -3,360
Impairment ................... 0
EBIT ............................. -9,962
Net finance costs.......... -894
Profit or loss from
operations................ -10,856
31 March 2010
Stores
segment
Discontinued
operations Total segments
Reconciliation
to IFRS Adler Group
c’000 c’000 c’000 c’000 c’000
External revenue (net).. 86,825 1,645 88,470 -4,221 84,249
Revenue with other
segments (net)......... 0 5,135 5,136 -5,135 0
Total revenue (net)....... 86,825 6,780 93,606 -9,356 84,249
Profit or loss on goods
sold.......................... 41,234 5,483 46,718
Total costs.................... -47,543 -4,515 -52,058
EBITDA ........................ -3,881 1,411 -2,470 -4,929 -7,400
(Reconciliation to profit or loss from operations)
EBITDA ........................ -7,400
Depreciation and
amortisation ............. -3,596
Impairment ................... 0
EBIT ............................. -10,996
Net finance costs.......... -326
Profit or loss from
operations................ -11,322
There has been no change in the breakdown of the Adler Group’s individual segments compared
with 31 December 2010. The discontinued operations were sold as at 30 September 2010 and are
therefore no longer included in the interim financial statements as at 31 March 2011.
A
c
1
0
4
7
0
8
p
u
0
7
0
P
r
o
o
f
7
:
2
7
.
5
.
1
1
B
/
L
R
e
v
i
s
i
o
n
:
0
O
p
e
r
a
t
o
r
D
a
d
F-11

The breakdown of the non-current assets, defined as intangible assets, property, plant and
equipment and investment property, by region is as follows:
31 March 2011 31 March 2010
Germany International Group Germany International Group
c’000 c’000 c’000 c’000 c’000 c’000
Non-current assets 38,273 18,932 57,205 43,912 19,336 63,248
V. Related party disclosures
Companies controlled by the shareholder Cheverny Investments Ltd., St. Julians/Malta, and its
shareholders or legal representatives qualify as related parties. The parent companies are
Cheverny Investments Ltd., St. Julians/Malta, bluO Finance Ltd., St. Julians/Malta, bluO Malta
Holding Ltd., St. Julians/Malta and bluO SICAV-SIF, Luxembourg.
MOTEX Mode-Textil-Service Logistik and Management GmbH was deconsolidated as at
30 September 2010. Since that date, this company has been an affiliated company.
Transactions with related parties are contractually agreed and carried out at prices that have also
been agreed with third parties.
The term ‘‘affiliated companies’’ refers to all companies controlled by the ultimate parent company
of the Adler Group.
The following transactions were entered into with related parties:
1 Jan.-
31 Mar. 2011
1 Jan.-
31 Mar. 2010
c’000 c’000
Purchases of services from affiliated companies.................................. 4,737 294
4,737 294
IPO costs recharged to parent company .............................................. 905 0
Sales of services to affiliated companies .............................................. 17 0
Interest income from affiliated companies............................................. 0 730
The following balances with related parties were outstanding at the balance sheet dates:
922 730
31 Mar. 2011 31 Dec. 2010
c’000 c’000
Trade receivables due from affiliated company .................................... 1,192 1,258
Receivables due from parent company................................................. 905 0
2,097 1,258
Liabilities to parent company................................................................. 3,446 3,968
Liabilities to affiliated company ............................................................. 2,450 0
Loan liabilities to affiliated company...................................................... 0 50
5,896 4,018
Family members of key management personnel provided services to the Adler Group in an amount
of c11 thousand (1 Jan. 2010 – 31 Mar. 2010: c5 thousand). Payment for the services was made
on normal market terms. In addition, items of property, plant and equipment amounting to c10
thousand (1 Jan. 2010 – 31 Mar. 2010: c133 thousand) were sold to companies controlled by
family members of key management personnel. The sale was made on normal market terms.
The loan liability to an affiliated company as at 31 December 2010 was a loan with a short-term
maturity bearing interest at 1.1%. The loan was repaid in February 2011.
A
c
1
0
4
7
0
8
p
u
0
7
0
P
r
o
o
f
7
:
2
7
.
5
.
1
1
B
/
L
R
e
v
i
s
i
o
n
:
0
O
p
e
r
a
t
o
r
D
a
d
F-12

Interest income of c730 thousand arose during the period 1 January 2010 – 31 March 2010 in
respect of loans extended to an affiliated company. Please refer to the consolidated financial
statements as at 31 December 2010.
For information relating to the remuneration of the Executive Board, please refer to the details
given under ‘‘Accounting policies’’.
Haibach, 3 May 2011
Lothar Schäfer Jochen Strack Thomas Wanke
Member of the Executive Board Member of the Executive Board Member of the Executive Board
A
c
1
0
4
7
0
8
p
u
0
7
0
P
r
o
o
f
7
:
2
7
.
5
.
1
1
B
/
L
R
e
v
i
s
i
o
n
:
0
O
p
e
r
a
t
o
r
D
a
d
F-13

A
c
1
0
4
7
0
8
p
u
0
7
0
P
r
o
o
f
7
:
2
7
.
5
.
1
1
B
/
L
R
e
v
i
s
i
o
n
:
0
O
p
e
r
a
t
o
r
D
a
d
Audited consolidated financial statements
of Adler Modemärkte GmbH
as at 31 December 2010 (IFRS)
F-14

Consolidated income statement for the financial year from
1 January 2010 to 31 December 2010
Notes
No. 2010 2009*
c’000 c’000
Revenue ....................................................................................... 1 444,809 405,846
Other operating income ................................................................ 2 8,172 17,709
Cost of materials .......................................................................... 3 -210,360 -205,277
Personnel expenses ..................................................................... 4 -74,996 -80,553
Other operating expenses ............................................................ 5 -129,776 -125,251
EBITDA ........................................................................................ 37,849 12,474
Depreciation and amortisation ...................................................... 6 -13,565 -15,521
Impairment.................................................................................... 6 0 -2,322
EBIT ............................................................................................. 24,284 -5,369
Other interest and similar income................................................. 3,538 1,919
Interest and similar expenses....................................................... -4,121 -5,022
Net finance costs........................................................................ 7 -583 -3,103
Profit/loss from operations........................................................ 23,701 -8,472
Income taxes ................................................................................ 8 4,778 -149
Profit/loss from continuing operations .................................... 28,479 -8,621
Profit/loss from discontinued operations ................................ 9 -1,057 1,343
Consolidated net profit (+)/loss (-) for the year....................... 27,422 -7,278
of which attributable to shareholders of Adler Modemärkte GmbH 27,422 -7,278
Earnings per share (continuing operations)............................ 35
Undiluted in c’000 ..................................................................... 28,479 -8,621
Diluted in c’000 ......................................................................... 28,479 -8,621
Earnings per share (discontinued operations)........................ 35
Undiluted in c’000 ..................................................................... -1,057 1,343
Diluted in c’000 ......................................................................... -1,057 1,343
Consolidated statement of comprehensive income
for the financial year from 1 January to 31 December 2010
Notes
No. 2010 2009*
c’000 c’000
Consolidated net profit (+)/loss (-) for the year .................. 27,422 -7,278
Other comprehensive income................................................... 0 0
Consolidated total comprehensive income ......................... 27,422 -7,278
of which attributable to shareholders of Adler Modemärkte
GmbH ................................................................................... 27,422 -7,278
* adjusted prior-year figures
A
c
1
0
4
7
0
8
p
u
0
7
0
P
r
o
o
f
7
:
2
7
.
5
.
1
1
B
/
L
R
e
v
i
s
i
o
n
:
0
O
p
e
r
a
t
o
r
D
a
d
F-15

ASSETS
Consolidated balance sheet
as at 31 December 2010
Notes
No.
31 Dec.
2010
31 Dec.
2009
c’000 c’000
Non-current assets
Intangible assets .............................................................................. 10 2,994 2,560
Property, plant and equipment......................................................... 11 52,215 63,760
Investment property ......................................................................... 12 3,374 3,374
Other receivables and other assets ................................................. 13 649 707
Deferred tax assets.......................................................................... 15 8,269 2,243
Total non-current assets ............................................................... 67,501 72,644
Current assets
Inventories ....................................................................................... 16 56,749 53,600
Trade receivables ............................................................................ 17 1,338 602
Other receivables and other assets ................................................. 13 3,908 41,132
Available-for-sale financial assets.................................................... 14 263 0
Cash and cash equivalents.............................................................. 18 32,956 36,991
Total current assets....................................................................... 95,214 132,325
Total ASSETS................................................................................. 162,715 204,969
Notes
No.
31 Dec.
2010
31 Dec.
2009
EQUITY and LIABILITIES
c’000 c’000
EQUITY
Capital and reserves
Subscribed capital............................................................................ 15,860 15,860
Capital reserves ............................................................................... 101,001 138,157
Net accumulated losses................................................................... -75,694 -84,743
Total equity..................................................................................... 19 41,167 69,274
LIABILITIES
Non-current liabilities
Provisions for pensions and other employee benefits ..................... 20 4,607 3,323
Other provisions............................................................................... 21 1,044 904
Financial liabilities ............................................................................ 22 4,360 4,802
Finance lease obligations................................................................. 23 36,277 45,178
Other liabilities ................................................................................. 25 249 0
Deferred tax liabilities....................................................................... 15 628 313
Total non-current liabilities........................................................... 47,165 54,520
Current liabilities
Other provisions............................................................................... 21 2,792 4,661
Financial liabilities ............................................................................ 22 14,213 13,572
Finance lease obligations................................................................. 23 9,762 9,008
Trade payables ................................................................................ 24 27,829 33,135
Other liabilities ................................................................................. 25 19,502 19,553
Income tax liabilities......................................................................... 26 285 1,246
A
c
1
0
4
7
0
8
p
u
0
7
0
P
r
o
o
f
7
:
2
7
.
5
.
1
1
B
/
L
R
e
v
i
s
i
o
n
:
0
O
p
e
r
a
t
o
r
D
a
d
Total current liabilities .................................................................. 74,383 81,175
Total liabilities................................................................................ 121,548 135,695
Total EQUITY and LIABILITIES..................................................... 162,715 204,969
F-16

Consolidated statement of changes in equity
for the financial year from 1 January 2010 to 31 December 2010
Notes
No.
Subscribed
capital
Capital
reserves
Net
accumulated
losses
Total
equity
c’000 c’000 c’000 c’000
As at 01 Jan. 2009 ................................... 15,860 85,057 -75,371 25,546
Income subsidies from shareholders ......... 0 14,500 0 14,500
Contribution to capital reserves ................. 0 38,600 0 38,600
Transfer to shareholders............................ 0 0 -2,094 -2,094
Total transactions with shareholders .... 0 53,100 -2,094 51,006
Consolidated net loss for the year 1 ............ 0 0 -7,278 -7,278
Consolidated total comprehensive
income 1 ..................................................... 0 0 -7,278 -7,278
As at 31 Dec. 2009 ................................... 15,860 138,157 -84,743 69,274
As at 01 Jan. 2010 ................................... 15,860 138,157 -84,743 69,274
Withdrawals from capital reserves ............. 0 -39,228 0 -39,228
Income subsidies from shareholders ......... 0 500 0 500
Additions to capital reserves...................... 0 1,572 0 1,572
Transfer to shareholders............................ 0 0 -18,373 -18,373
Total transactions with shareholders .... 0 -37,156 -18,373 -55,529
Consolidated net profit for the year 1 .......... 0 0 27,422 27,422
Consolidated total comprehensive
income 1 ..................................................... 0 0 27,422 27,422
As at 31 Dec. 2010 ................................... 19 15,860 101,001 -75,694 41,167
1 Since there are no items of other comprehensive income, the consolidated net profit or loss for the year is the same as
consolidated total comprehensive income.
A
c
1
0
4
7
0
8
p
u
0
7
0
P
r
o
o
f
7
:
2
7
.
5
.
1
1
B
/
L
R
e
v
i
s
i
o
n
:
0
O
p
e
r
a
t
o
r
D
a
d
F-17

Consolidated statement of cash flows for the financial year from
1 January 2010 to 31 December 2010
Notes
No. 2010 2009
c’000 c’000
Consolidated profit (+)/loss (-) for the year before tax ............... 22,935 -7,101
(+) Depreciation and amortisation on property, plant and equipment
and intangible assets ........................................................................ 14,124 16,218
(+) Impairment losses ....................................................................... 2,664 2,394
Decrease (-) in pension provisions ................................................... -197 -225
Losses (+) from the sale of non-current assets................................ 516 325
Other non-cash income (-) and expenses (+)................................... 10,311 14,230
Net finance costs .............................................................................. 581 3,141
Interest received ............................................................................... 139 264
Interest paid ...................................................................................... -168 -205
Income taxes paid............................................................................. -462 -82
Decrease (+)/increase (-) in inventories............................................ -2,024 7,617
Decrease (+)/increase (-) in trade receivables and other receivables -179 5,246
Decrease (-) in trade payables, other liabilities and other provisions -22,310 -34,599
Decrease (-) in other balance sheet items........................................ -130 -31
Net cash from (+)/used in (-) operating activities (Net cashflow) 27 25,800 7,192
Proceeds from disposals of non-current assets................................ 572 908
Payments for investments in non-current assets.............................. -4,418 -3,750
Cash outflow from sales of companies (net of cash disposed of) .... -376 0
Payments for acquisitions of companies (net of cash acquired) -237 0
Payments for short-term deposits..................................................... -12,300 -35,000
Net cash from (+)/used in (-) investing activities ........................ 27 -16,759 -37,842
Free cashflow.................................................................................. 27 9,041 -30,650
Cash flows from the issue (+) of current financial liabilities.............. 57 0
Losses assumed by shareholders .................................................... 0 2,780
Repayments of borrowings ............................................................... -240 -222
Capital contributions by shareholders............................................... 0 53,100
Payments in connection with finance lease liabilities ....................... -12,893 -13,234
Net cash from (+) / used in (-) financing activities...................... 27 -13,076 42,424
Net decrease (-) / increase (+) in cash and cash equivalents .... 27 -4,035 11,774
Cash and cash equivalents at beginning of the period..................... 36,991 25,217
Cash and cash equivalents at end of the period .............................. 32,956 36,991
Net decrease (-) / increase (+) in cash and cash equivalents .... 27 -4,035 11,774
A
c
1
0
4
7
0
8
p
u
0
7
0
P
r
o
o
f
7
:
2
7
.
5
.
1
1
B
/
L
R
e
v
i
s
i
o
n
:
0
O
p
e
r
a
t
o
r
D
a
d
F-18

Notes to the consolidated financial statements
as at 31 December 2010
I. Preliminary remarks
Adler Modemärkte GmbH is a corporation (Kapitalgesellschaft) in accordance with German law and
its registered office is at Industriestrasse 1-5, Haibach, Federal Republic of Germany. The relevant
registration court is located in Aschaffenburg.
Its financial year is the calendar year. The financial years of all the companies included in the
consolidated financial statements also end on 31 December of the calendar year.
The consolidated financial statements were prepared by the management on 28 February 2011
and authorised for publication.
The Adler Group (Adler Modemärkte GmbH and its subsidiaries) is engaged in apparel retailing
and operates specialist clothing stores in Germany, Luxembourg and Austria. Under the trade
name ‘‘ADLER’’, the Group operates specialist clothing stores either on a stand-alone basis or as
part of specialist store or shopping centres. It also operates specialist clothing stores together with
other retailers at locations operated jointly. The range of goods offered by the ADLER stores
includes womenswear, menswear and kidswear.
The euro (c) is both the presentation currency and the functional currency of the Adler Group. The
figures in the notes to the consolidated financial statements are quoted in thousands of euros
(c’000).
As at 31 December 2010, the sole shareholder in Adler Modemärkte GmbH is AMODA GmbH,
Haibach. The ultimate controlling company is BluO beta equity Limited, Birmingham, United
Kingdom, whose place of management is Vienna, Austria.
The Adler Group also provided logistics services, including to third parties, through MOTEX Mode-
Textil-Service Logistik und Management GmbH. The services comprised distribution, processing,
handling, consignment, labelling, the finishing of semi-finished products and the transportation of
textile industry goods in Germany and abroad using its own and third-party vehicles. MOTEX
Mode-Textil-Service Logistik und Management GmbH was sold as at 30 September 2010 and is
therefore no longer a member of the group of consolidated companies. The activities sold
represent discontinued operations within the meaning of IFRS 5. In accordance with the provisions
of IFRS 5, continuing operations and discontinued operations are presented separately. The
individual items reported in the income statement contain only the income and expenses
attributable to continuing operations. The profit or loss from discontinued operations is presented in
the income statement as a separate item. The prior-year figures in the income statement and all of
the detailed information presented in the notes have been adjusted accordingly and now also
distinguish between continuing operations and discontinued operations. No other adjustments have
been made to the prior-year figures.
II. Notes on the principles and methods employed in the consolidated financial statements
Accounting policies
The consolidated financial statements of Adler Modemärkte GmbH were prepared in accordance
with the requirements of the International Accounting Standards Board (IASB), London, in
conformity with International Financial Reporting Standards (IFRS), as adopted by the EU. The
interpretations issued by the IFRS Interpretations Committee (formerly the International Financial
Reporting Interpretations Committee and the Standing Interpretations Committee) were also
applied. The consolidated financial statements conform to the directives relating to consolidated
accounts issued by the European Union (Directive 83/349/EEC). In order to ensure equivalence
with consolidated financial statements prepared in accordance with the German Commercial Code
(Handelsgesetzbuch, ‘‘HGB’’), all of the disclosures and explanations required by § 315a HGB over
and above the requirements of the IASB have also been provided. The consolidated financial
statements in the form in which they are presented here comply with the provisions of § 315a
HGB; those provisions constitute the legal basis for the preparation of consolidated accounts in
accordance with international accounting standards in Germany in conjunction with Regulation (EC)
No. 1606/2002 of the European Parliament and of the Council of 19 July 2002 on the application
of international accounting standards.
A
c
1
0
4
7
0
8
p
u
0
7
0
P
r
o
o
f
7
:
2
7
.
5
.
1
1
B
/
L
R
e
v
i
s
i
o
n
:
0
O
p
e
r
a
t
o
r
D
a
d
F-19

Those International Financial Reporting Standards (IFRS) were applied that had become mandatory
by the balance sheet date 31 December 2010. There was no early adoption of standards whose
application had not yet become mandatory as at 31 December 2010.
Standards and interpretations applicable for the first time
The application of the following standards and interpretations revised or newly issued by the IASB
was mandatory for the first time from the start of financial year 2010:
Standards
IFRS 1 Additional exemptions for first-time adopters
IFRS 2/IFRIC 11 Group cash-settled share-based payment transactions
IFRS 3 Business combinations
IAS 27 Consolidated and separate financial statements
IAS 39 Financial instruments: recognition and measurement: eligible hedged items
IAS 39/IFRS 7 Reclassification of financial assets – effective date and transitional provisions
various Annual improvements project (2009)
Interpretations
IFRIC 12
Service concession arrangements
IFRIC 15 Agreements for the construction of real estate
IFRIC 16 Hedges of a net investment in a foreign operation
IFRIC 17 Distributions of non-cash assets to owners
IFRIC 18 Transfers of assets from customers
* The amendments to IFRS 1 included additional exemptions for first-time adopters of IFRS.
The amendments relate to the retrospective application of IFRS in particular circumstances
and are intended to ensure that entities do not incur disproportionately high costs in
converting to IFRS. Specifically, the amendments exempt
* entities in the oil and gas industry that have recorded exploration and development costs
for sites in the development or production phases in a geographical region on a
combined basis in cost centres in line with national accounting requirements from the
obligation to apply IFRS retrospectively in full to the relevant oil and gas assets, and
* entities with existing leasing contracts from the need to reassess these contracts with
respect to their classification in accordance with IFRIC 4 ‘‘Determining whether an
Arrangement Contains a Lease’’, if a determination in accordance with national
*
accounting requirements that are similar to the provisions of IFRIC 4 has already been
made at an earlier balance sheet date.
The Adler Group is not a first-time adopter of IFRS in these present consolidated financial
statements. The amendments to IFRS 1 are therefore not relevant for the Adler Group.
The amendments to IFRS 2/IFRIC 11 ‘‘Share-based Payment’’ are intended to clarify the
accounting treatment of cash-settled share-based payments within a group. The amendments
made clear that:
* An entity that receives goods or services in a share-based payment arrangement must
account for those goods or services irrespective of which entity in the group settles the
related obligation and whether the obligation is settled in shares or cash.
* In IFRS 2 a ‘group’ has the same meaning as in IAS 27 ‘‘Consolidated and Separate
Financial Statements’’, that is, it includes only the parent company and its subsidiaries.
The amendments clarify the scope of IFRS 2 and the interaction of IFRS 2 with other
standards. No items of this nature are currently present within the Adler Group. The first-time
application of IFRS 2 therefore had no effects on the net assets, financial position and results
of operations of the Adler Group.
* The new IFRS 3 (R) includes provisions relating to the scope of the standard, the
components of the purchase price, the treatment of non-controlling interests and goodwill, and
also to the extent of the assets, liabilities and contingent liabilities required to be recognised.
The standard also contains requirements for the accounting treatment of losses brought
forward and for the classification of contracts to which the acquiree is party. The revised
A
c
1
0
4
7
0
8
p
u
0
7
0
P
r
o
o
f
7
:
2
7
.
5
.
1
1
B
/
L
R
e
v
i
s
i
o
n
:
0
O
p
e
r
a
t
o
r
D
a
d
F-20

standard retains the use of the acquisition method for business combinations but introduces
material changes to the determination of the cost of acquisition. The first-time application of
IFRS 3 (R) to the business disposal that took place in the current financial year had no
effects on the net assets, financial position and results of operations of the Adler Group.
* The revised standard IAS 27 (R) ‘‘Consolidated and Separate Financial Statements’’
prescribes the mandatory application of the economic entity approach for the accounting
treatment of purchases and sales of shares that take place after control is obtained and that
do not result in a loss of control. Under this approach, minority transactions of this type are
regarded as transactions with owners and recorded within equity. In the case of share sales
resulting in a loss of control, any gain or loss on disposal is recorded in the income
statement. If shares continue to be held following the loss of control, the shares retained are
recognised at their fair value. The difference between the previous carrying amount of the
shares retained and their fair value is reported in profit or loss as part of the gain or loss on
disposal and must be disclosed separately in the notes together with the corresponding
remeasured amount of the shares retained. In the case of step acquisitions or partial
disposals of shares, the standard requires the shares already held or the shares retained,
respectively, to be remeasured at fair value through profit or loss. In addition, losses
attributable to noncontrolling interests which result in the noncontrolling interests having a
deficit balance must be presented in future as negative carrying amounts within consolidated
equity. The new provisions of IAS 27 were not applicable to the business disposal that took
place in financial year 2010. The first-time application of IAS 27 (R) therefore had no effects
on the net assets, financial position and results of operations of the Adler Group.
* The amendments to IAS 39 ‘‘Financial Instruments: Recognition and Measurement’’ – eligible
hedged items set out:
* the conditions under which inflation risks can be designated as a hedged item for
hedging purposes, and
* the possibility of using options as a hedging instrument for hedging one-sided risks.
The first-time application of the amendments was not relevant to the Adler Group and
therefore had no effect on its net assets, financial position or results of operations.
* IFRIC 12 deals with the accounting treatment of certain service concession arrangements
where a public-sector body contracts with a private operator. This interpretation does not
apply to the Adler Group since there are no items of the relevant kind.
* IFRIC 15 makes clear in what circumstances agreements for the construction of real estate
are subject to the provisions of IAS 11 or of IAS 18. IFRIC 15 also contains guidance on
when revenue should be recognised in the case of agreements for the construction of real
estate that fall within the scope of IAS 18. This interpretation does not apply to the Adler
Group since there are no items of the relevant kind.
* IFRIC 16 clarifies what should be regarded as the risk in the hedge of a net investment in a
foreign operation and which entity within a group can hold the hedging instrument used to
reduce this risk. This interpretation does not apply to the Adler Group since there are no
items of the relevant kind.
* IFRIC 17 clarifies and explains the accounting treatment of non-cash dividends to owners of
an entity. This interpretation does not apply to the Adler Group since there are no items of
the relevant kind.
* IFRIC 18 clarifies and explains the accounting treatment for the transfer from a customer of
items of property, plant and equipment or of cash for the construction or purchase of an item
of property, plant and equipment. This interpretation does not apply to the Adler Group since
there are no items of the relevant kind.
* The IASB publishes annual improvements to existing standards. These consist of minor
changes in the majority of cases. The changes resulting from the 2009 Annual Improvements
Project, which mainly apply as at 1 January 2010, are not presented here on the grounds that
they are not material. First-time application of the revised standards had no effects on the net
assets, financial position or results of operations of the Adler Group.
A
c
1
0
4
7
0
8
p
u
0
7
0
P
r
o
o
f
7
:
2
7
.
5
.
1
1
B
/
L
R
e
v
i
s
i
o
n
:
0
O
p
e
r
a
t
o
r
D
a
d
F-21

Standards, interpretations and amendments to published standards that are not yet mandatory
The following standards, amendments to standards and interpretations have already been issued
but are mandatory only for reporting periods beginning after 1 January 2010. These will be applied
by the Adler Group from the prescribed date and the Group has estimated the expected effects of
the individual standards, amendments to standards and interpretations on its net assets, financial
position and results of operations, to the extent that it was possible to make such an estimate at
this stage.
Mandatory Adopted by EU
from* Commission
Standards
IFRS 1 Limited exemption from comparative IFRS 7
disclosures for first-time adopters ....................... 1 Jul. 2010 Yes
IFRS 1 Hyperinflation and fixed transition dates ............. 1 Jul. 2010 No
IFRS 7 Disclosures – transfers of financial assets .......... 1 Jul. 2011 No
IFRS 9 Financial instruments: classification and
impairment of financial assets............................. 1 Jan. 2013 No
IAS 12 Income taxes....................................................... 1 Jan. 2012 No
IAS 24 Related party disclosures .................................... 1 Jan. 2011 Yes
IAS 32 Classification of rights issues .............................. 1. Feb. 2010 Yes
various Annual Improvements Project (2010).................. mostly
Yes
1. Jan. 2011
Interpretations
IFRIC 14 Prepaid contributions with existing minimum
funding requirements........................................... 1. Jan. 2011 Yes
IFRIC 19 Extinguishing financial liabilities with equity
instruments.......................................................... 1 Jul. 2010 Yes
* Date of first-time mandatory application stipulated by the IASB. Where the standard, interpretation or amendment has already
been adopted by the EU Commission, the date is the date for mandatory application stipulated by the EU.
* The amendment to IFRS 1 in the course of the amendments to IFRS 7 exempts first-time
adopters of IFRS from certain disclosures in the notes introduced in IFRS 7. The amendment
to IFRS 1 now also grants entities applying IFRS for the first time an optional exemption from
the requirement to present comparative information for measurements at fair value and for
liquidity risk. IFRS 7 permits these exemptions in cases where the comparable periods end
prior to 31 December 2009. This ensures that first-time adopters of IFRS also benefit from
the transitional provisions for the application of the revised IFRS 7. The amendments to IFRS
1 and IFRS 7 must be applied at the latest from the start of the first financial year beginning
after 30 June 2010.
* The amendments to IFRS 7 published in October 2010 result in a broad alignment of the
corresponding disclosure requirements under International Financial Reporting Standards
*
(IFRS) and US Generally Accepted Accounting Principles (US GAAP). The amendments to
IFRS 7 relate to expanded disclosure requirements for the transfer of financial assets and are
intended to allow users of financial statements to improve their understanding of the effects of
the risks remaining with the transferring entity. Application of the amendments is mandatory
for financial years beginning on or after 1 July 2011. Earlier application is permitted. The
presentation of comparative information is optional in the first year of application. The Adler
Group is not in a position to estimate the effects of these amendments at the present time.
IFRS 9 ‘‘Financial Instruments: Classification and Measurement’’ was published in November
2009 (IFRS 9 2009). This standard forms part of the project to replace IAS 39, intended to be
completed in 2010. The standard deals with the classification and measurement of financial
assets. As a result of IFRS 9, the existing measurement categories loans and receivables,
held-to-maturity investments, available-for-sale financial assets and financial assets at fair
value through profit or loss are replaced by two categories: assets measured at amortised
cost and those measured at fair value. The determination whether a financial instrument can
be classified as measured at amortised cost depends both on the entity’s business model, i.e.
how the entity manages its financial instruments, and on the product characteristics of the
particular instrument. Financial instruments that do not meet the criteria for inclusion in the
amortised cost category must be measured at fair value through profit or loss. Measurement
at fair value directly in equity is permitted for selected equity instruments. The characteristics
A
c
1
0
4
7
0
8
p
u
0
7
0
P
r
o
o
f
7
:
2
7
.
5
.
1
1
B
/
L
R
e
v
i
s
i
o
n
:
0
O
p
e
r
a
t
o
r
D
a
d
F-22

of this new category are not the same as those of the existing category ‘‘available-for-sale
financial assets’’. IFRS 9 (2009) contains no provisions relating to the measurement of
financial liabilities. IFRS 9 (2010) was published as a supplement to IFRS 9 (2009) in October
2010. IFRS 9 (2010) contains additional provisions to those of IFRS 9 (2009) relating to the
classification and measurement of financial liabilities and to the derecognition of financial
assets and liabilities. IFRS 9 (2010) contains no significant changes for financial liabilities,
with the exception of the fair value option. Under the fair value option, changes in fair value
as a result of the entity’s own credit risk are recorded in other comprehensive income, while
all other changes in fair value are reported in profit or loss (one-step approach). With respect
to derecognition, IFRS 9 (2010) incorporates the provisions of IAS 39 currently in force. IFRS
9 is effective for financial years beginning on or after 1 January 2013. Earlier application
starting in 2009 is permitted. The application of these amendments within the EU still requires
endorsement by the prescribed EU process. The Adler Group is not a position to estimate the
effects of the new standard at the present time.
* In December 2010 the International Accounting Standards Board (IASB) published
amendments to IAS 12 Income Taxes. These amendments also entail changes to the scope
of SIC-21 Income Taxes – Recovery of Revalued Non-Depreciable Assets. The amendment
partially clarifies the treatment of temporary taxable differences in connection with the use of
the fair value model prescribed by IAS 40. The amendment provides that it will normally be
assumed that taxable differences will reverse as a result of a sale of the underlying asset.
The amendment is applicable retrospectively for financial years beginning on or after 1
January 2012. First-time application of the amendment will not have any effects on the net
assets, financial position or results of operations of the Adler Group.
* The amendments to IAS 24 were published in November 2009. The changes affecting
government-related entities will not have any effects on the presentation of the financial
information. The amendments to IAS 24 also clarified the definition of a related party. The
revised standard is effective for reporting periods beginning or after 1 January 2011. Earlier
application is permitted. The Adler Group is not a state-controlled entity and does not
anticipate any effects on the presentation of its financial information resulting from the
amendments to IAS 24.
* Amendments to IAS 32 ‘‘Financial Instruments: Presentation’’. The amendments prescribe the
accounting treatment in the financial statements of the issuer for subscription rights, options
and warrants for the purchase of a fixed number of equity instruments that are denominated
in a currency other than the functional currency of the issuer. Previously, such cases were
accounted for as derivative liabilities. Subscription rights that are issued pro rata to the
existing shareholders of an entity for a fixed amount of currency must be classified as equity.
The currency in which the exercise price is denominated is irrelevant for this purpose. The
Adler Group does not anticipate that the first-time application of the revised standard will have
any effects on its net assets, financial position and results of operations and expects that the
matters addressed will not apply to the Adler Group since there are no items of the relevant
kind.
* The IASB publishes annual improvements to existing standards. These consist of minor
changes in the majority of cases. The changes resulting from the 2010 Annual Improvements
Project are not presented here on the grounds that they are not material. The Adler Group
will apply the changes as at 1 January 2011 (2010 Annual Improvements Project). It is not
possible to make an estimate of the effects on the net assets, financial position or results of
operations of the Group and the presentation of its financial information at the present time.
The changes will be applied once they have been endorsed.
* Amendment to IFRIC 14 ‘‘The Limit on a Defined Benefit Asset, Minimum Funding
Requirements and their Interaction’’. The amendment to IFRIC 14 applies in the rare cases in
which an entity is subject to minimum funding requirements and makes prepaid contributions
in order to meet those requirements. The amendment allows the entities in these cases to
record the benefit of such prepayments as an asset. This interpretation does not apply to the
Adler Group since there are no items of the relevant kind.
* IFRIC 19: ‘‘Extinguishing Financial Liabilities with Equity Instruments’’. IFRIC 19 explains the
requirements of IFRS where an entity extinguishes all or part of a financial liability by means
of the issue of shares or other equity instruments. The interpretation makes clear that the
A
c
1
0
4
7
0
8
p
u
0
7
0
P
r
o
o
f
7
:
2
7
.
5
.
1
1
B
/
L
R
e
v
i
s
i
o
n
:
0
O
p
e
r
a
t
o
r
D
a
d
F-23

equity instruments issued to a creditor for the purpose of extinguishing a financial liability
represent ‘‘consideration paid’’ in accordance with IAS 39.41 and that the relevant equity
instruments must be measured in principle at fair value. If the fair value cannot be reliably
determined, the equity instruments must be measured at the fair value of the liability
extinguished and the difference between the carrying amount of the financial liability
derecognised and the amount at which the equity instruments issued were initially recognised
must be reported in the income statement. This interpretation does not apply to the Adler
Group since there are no items of the relevant kind.
These consolidated financial statements are based on the historical cost principle. Available-for-sale
financial assets and investment property are accounted for at fair value. The income statement was
prepared using the nature of expense method. Items in the consolidated balance sheet are
classified according to their maturities. Assets and liabilities falling due within one year are reported
as current. Assets and liabilities are classified as non-current if they remain within the Group for
longer than one year. Trade receivables and payables and also inventories are of an exclusively
short-term nature and are therefore reported under the current items.
The accounting policies set out below were applied for the purpose of preparing the consolidated
financial statements.
Group of consolidated companies/shareholdings
In addition to Adler Modemärkte GmbH, one German subsidiary and three foreign subsidiaries in
which Adler Modemärkte GmbH directly or indirectly holds the majority of the voting rights have
been included in the consolidated financial statements:
Name, registered office
Shareholding
in % Currency
Subscribed
capital in
local
currency in
thousands
ADLER Modemärkte Gesellschaft m.b.H., Ansfelden /
Austria ........................................................................ 100 EUR 37
ADLER Mode S.A., Foetz / Luxembourg........................ 100 EUR 31
ADVERS GmbH, Haibach .............................................. 100 EUR 25
F. W. Woolworth Co. Ges.m.b.H., Ansfelden / Austria... 100 EUR 5,087
ALASKA GmbH & Co. KG, Munich, in which the Group has no shareholding, has also been
included in the consolidated financial statements as a special purpose entity in accordance with
SIC-12 on the basis of a rental agreement with ADLER Modemärkte GmbH (relating to an
administration building in Haibach).
Adler Ateliermoden GmbH, which was included in the group of consolidated companies in the
previous year, was merged with ADVERS GmbH with effect as at 30 June 2010, on the basis of a
merger agreement dated 29 December 2010 entered in the commercial register of the absorbing
company on 17 January 2011. The merger did not give rise to any effects on the net assets,
financial position or results of operations of the Adler Group. ADVERS Versicherungsmakler GmbH
provided insurance broking services for the Adler Group until it ceased its operating business
activities at the end of 2008. Since the beginning of 2009, the company has been used to process
the Adler Group’s cash pooling transactions. ADVERS Versicherungsmakler GmbH was renamed
ADVERS GmbH by means of a change to its Articles of Association, entered in the relevant
commercial register on 19 May 2010 and published on 26 May 2010.
Adler Modemärkte GmbH sold its shareholding in MOTEX Mode-Textil-Service Logistik und
Management GmbH, Hörselgau as at 30 September 2010. The date of deconsolidation was the
same as the date of sale.
Adler Modemärkte Gesellschaft m.b.H., Ansfelden / Austria, acquired all of the shares in F.W.
Woolworth Co. Ges.m.b.H., Ansfelden / Austria with effect as at 31 December 2010 on the basis
of a purchase agreement dated 17 December 2010. The company was renamed Adler Asset
GmbH at the time of preparation of the financial statements.
A
c
1
0
4
7
0
8
p
u
0
7
0
P
r
o
o
f
7
:
2
7
.
5
.
1
1
B
/
L
R
e
v
i
s
i
o
n
:
0
O
p
e
r
a
t
o
r
D
a
d
F-24

Consolidation principles
Subsidiaries are all companies (including special purpose entities) in which the Group has the
power to govern the financial and operating policies and generally holds more than 50% of the
voting rights. In assessing whether control exists, the existence and effect of potential voting rights
that are currently exercisable or convertible are taken into account where relevant. Subsidiaries are
included in the consolidated financial statements from the date on which control is obtained by the
Group (full consolidation). They are no longer consolidated from the date on which control is lost.
The financial statements of the German and foreign subsidiaries included in the consolidated
financial statements are prepared using uniform accounting policies in accordance with IAS 27.
Intra-Group profits and losses, revenues and income and expenses are eliminated, together with
receivables and liabilities existing between subsidiaries consolidated. Receivables and liabilities to
the same third-party company are offset where the relevant conditions are met. Intercompany
profits are eliminated. Deferred tax assets and liabilities are recognised in respect of temporary
differences arising from consolidation adjustments in accordance with IAS 12 (Income Taxes).
Special purpose entities are set up to achieve a particular purpose and must be consolidated if the
Group is able to exercise control over the special purpose entity. This is assessed on the basis of
the following criteria:
* Are the activities of the special purpose entity being conducted according to the Group’s
specific needs so that the Group obtains benefits from the activities of the special
purpose entity
* Does the Group have the decision-making powers to obtain the majority of the benefits
of the special purpose entity’s activities
* Does the Group have the right to obtain the majority of the benefits of the special
purpose entity’s activities and is it therefore potentially exposed to risks incident to the
special purpose entity’s activities
* Does the Group retain the majority of the residual or ownership risks related to the
special purpose entity or its assets in order to obtain benefits from its activities.
If the existence of control is established in this way, the special purpose entity is included in the
consolidated financial statements.
Consolidation of subsidiaries
Subsidiaries acquired are accounted for using the acquisition method. The cost of the acquisition is
the fair value of the assets given, the equity instruments issued and the liabilities incurred or
assumed at the date of the transaction plus costs directly attributable to the acquisition. The
acquiree’s identifiable assets, liabilities and contingent liabilities in a business combination are
measured on initial consolidation at their fair values at the date of the transaction, irrespective of
the extent of any minority interests.
Any excess of the cost of acquisition over the Group’s share of the net assets measured at fair
value is recognised as goodwill; if the cost of the acquisition is lower than the net assets of the
subsidiary acquired measured at fair value, the difference is recognised immediately in profit or
loss.
Company acquisitions
Adler Modemärkte Gesellschaft m.b.H., Ansfelden / Austria acquired all of the shares in F.W.
Woolworth Co. Ges.m.b.H., Ansfelden / Austria as at 31 December 2010. The transaction
represents a business combination under common control. Such transactions are accounted for
within the Adler Group in accordance with the provisions of IFRS 3 Business combinations. The
Adler Group uses the purchase method for the purpose of accounting for business combinations.
The consideration paid is equal to the fair value at the date of the acquisition of the assets given,
the liabilities assumed and the equity instruments issued. Incidental costs of the acquisition are
expensed. The acquiree’s identifiable assets, liabilities and contingent liabilities in a business
combination are measured on initial consolidation at their fair values at the date of the transaction.
The excess of the consideration paid, the amount of all non-controlling interests and the fair value
of the share of the acquiree’s equity held prior to the acquisition over the fair value of the net
assets at the date of acquisition is recognised as goodwill. If the consideration paid is less than the
fair value of the net assets of the subsidiary acquired, the difference is recognised directly in profit
A
c
1
0
4
7
0
8
p
u
0
7
0
P
r
o
o
f
7
:
2
7
.
5
.
1
1
B
/
L
R
e
v
i
s
i
o
n
:
0
O
p
e
r
a
t
o
r
D
a
d
F-25

or loss as income, once the identification and measurement of the net assets and the
measurement of the cost of the acquisition have been reassessed. For further details, please see
Note 30 Company acquisitions.
Currency translation
Business transactions in foreign currencies in the separate financial statements of subsidiaries
prepared in euros are measured at the rate of exchange at the date when the transaction is
initially recorded. Exchange rate gains and losses arising up to the balance sheet date from the
translation of receivables and liabilities are reflected in the financial statements; gains and losses
resulting from movements in exchange rates are reported in profit or loss.
III. Accounting policies
The accounting policies are applied in principle on a consistent basis.
Non-current assets and depreciation and amortisation
* Goodwill
Goodwill arising on consolidation represents the excess of the cost of a company acquisition over
the Group’s interest in the fair value of the identifiable assets, liabilities and contingent liabilities of
a subsidiary. In accordance with IFRS 3 Business combinations, goodwill is not amortised. Instead,
in accordance with IAS 36 Impairment of assets, it is tested for impairment annually and whenever
there are indications of possible impairment and, where necessary, written down to the recoverable
amount. The impairment charge is recognised immediately in profit or loss. Impairment losses
recognised in respect of goodwill may not be reversed in subsequent periods. For the purpose of
impairment testing, goodwill is allocated to cash-generating units. The allocation is made to those
cash-generating units or groups of cash-generating units which are expected to benefit from the
synergies of the underlying business combination.
* Other intangible assets
Purchased intangible assets are recognised at cost.
All purchased intangible assets with finite useful lives are amortised on a straight-line basis.
Amortisation is based on the following economic useful lives applied consistently across the Group:
* concessions, rights, licences: 3 to 7 years or the shorter contractual term where relevant
* software: 3 to 5 years
Internally generated intangible assets mostly comprise software. Costs associated with the
operation or maintenance of software are expensed when incurred. Costs incurred directly in
connection with the production of identifiable individual software products over which the Group has
control are recognised as an intangible asset if it is regarded as probable that the intangible asset
will generate future economic benefits, is technically feasible and if the costs can be reliably
determined. The directly attributable costs include personnel costs for the employees involved in
development and other costs directly attributable to the development of software. Capitalised
development costs for computer software with a finite useful life are amortised on a straight-line
basis over the period of its expected use but subject to a maximum of five years.
If impairment in excess of the amortisation charged is identified, the asset is written down to the
recoverable amount.
There were no other intangible assets with indefinite useful lives during the period under review.
* Property, plant and equipment
Items of property, plant and equipment used in the operation of the business for more than one
year are measured at cost less depreciation. Significant components of an item of property, plant
and equipment are recognised and depreciated separately. Subsequent costs are recognised as a
component of the cost of the asset only if it is probable that future economic benefits will flow to
the Group as a result and if the costs can be reliably determined. All other repair and maintenance
expenses are recognised as expenses in the income statement in the financial year in which they
are incurred.
A
c
1
0
4
7
0
8
p
u
0
7
0
P
r
o
o
f
7
:
2
7
.
5
.
1
1
B
/
L
R
e
v
i
s
i
o
n
:
0
O
p
e
r
a
t
o
r
D
a
d
F-26

Depreciation is not charged on land. For all other assets depreciation is charged on a straight-line
basis over the following expected useful lives of the assets:
– buildings including investment property: 33 years
– operating facilities: 3 to 10 years
– operating and office equipment: 3 to 10 years
– vehicles: 4 to 6 years
– lessee’s fixtures: 10 years.
The carrying amounts and useful economic lives are reviewed at each balance sheet date and
adjusted where necessary. If the carrying amount of an asset is higher than its estimated
recoverable amount, it is immediately written down to the latter. Gains and losses from disposals of
items of property, plant and equipment are calculated as the difference between the proceeds of
sale and the carrying amount, and are recorded in profit or loss.
Investment property
Investment property comprises land and buildings held in order to generate rental income and/or
for the purposes of capital appreciation and that are not used in the ordinary course of business. It
is measured at fair value. The fair value was determined by a property expert.
Leasing
Leases are classified as finance leases if substantially all of the risks and rewards of ownership
are transferred to the lessee under the terms of the lease. All other leases are classified as
operating leases.
Non-current assets that are rented or leased and where the relevant Group company has
economic ownership (finance leases) are recognised at the present value of the minimum lease
payments or the lower fair value and depreciated over their useful lives in accordance with the
requirements of IAS 17 (Leases). If it is not sufficiently certain at the start of the lease that
ownership will transfer to the lessee, the asset must be depreciated over the shorter of the term of
the lease and the useful life.
The corresponding liability to the lessor is reported in the balance sheet as a finance lease
obligation under liabilities from finance leases. The lease payments are apportioned between the
finance charge and the reduction of the lease obligation so as to produce a constant periodic rate
of interest on the remaining balance of the liability.
Lease payments made under the terms of an operating lease are reported as an expense in the
income statement on a straight-line basis over the term of the lease.
Impairment of non-financial assets
Assets with indefinite useful lives are not depreciated or amortised; they are tested for impairment
annually or whenever there are indications that an asset may be impaired. Assets subject to
depreciation or amortisation are reviewed for impairment if relevant events or changes in
circumstances indicate that the carrying amount may no longer be recoverable. Any impairment
loss recognised is equal to the excess of the carrying amount over the recoverable amount. The
recoverable amount is the higher of the fair value of the asset less selling costs and the value in
use. For the purposes of the impairment test, assets are combined at the lowest level for which
cash flows can be separately identified (cash-generating units).
If an impairment charge is subsequently reversed, the carrying amount of the asset (of the cashgenerating
unit) is increased to the newly estimated recoverable amount. For this purpose, the
higher carrying amount resulting from the increase may not exceed the amount that would have
been determined, net of depreciation or amortisation, if no impairment charge had been recognised
in respect of the asset (the cash-generating unit) in prior years. A reversal of an impairment charge
is recognised immediately in profit or loss. Impairment charges recognised in respect of goodwill
may not be reversed.
Government grants
Government grants are recorded at their fair value if it is reasonably certain that the grant will be
made and that the Group will comply with the conditions necessary for receipt of the grant.
A
c
1
0
4
7
0
8
p
u
0
7
0
P
r
o
o
f
7
:
2
7
.
5
.
1
1
B
/
L
R
e
v
i
s
i
o
n
:
0
O
p
e
r
a
t
o
r
D
a
d
F-27

Government grants in respect of costs are recorded over the period during which the related costs,
for which the grant is intended to compensate, are incurred.
The Group receives government grants, that are recorded as income, as compensation for costs
arising in connection with partial retirement agreements. As a result of the conditions attached to
these government grants, the Group is under an obligation to keep open the positions occupied by
partially retired employees and to recruit new employees to fill them.
Building cost subsidies
Building cost subsidies are either paid to the lessor by the Group company for the purpose of
upgrading the property or granted by the lessor for independent building work for the construction
of the store. Building cost subsidies paid are accounted for as other assets and are expensed over
the remaining minimum term of the contract. Building cost subsidies received are reported as other
liabilities and reversed to income over the minimum term of the contract.
Current income taxes
The applicable rate of income tax is calculated on the basis of the tax laws in force on the balance
sheet date for the countries in which the Company’s subsidiaries operate. The applicable rates of
income tax for the particular countries are between 17.2% and 30.0%, as in the previous year.
Adequate and appropriate provisions are recognised for expected tax payments on the basis of
these tax laws.
A profit and loss transfer agreement and tax grouping for income tax purposes was in place
between Adler Modemärkte GmbH and its shareholder AMODA GmbH with the result that Adler
Modemärkte GmbH as a member of the tax group had no income tax liability. The profit and loss
transfer agreement was terminated on 30 September 2010 with effect as at 31 December 2010.
Since 1 January 2011, the tax grouping has no longer been in place. Since no liability to make tax
payments was incurred by Adler Modemärkte GmbH, no tax expense was recorded until the
cessation of the grouping for tax purposes. Following the termination of the grouping for tax
purposes as at 31 December 2010, the effects of actual taxes have been included in the financial
statements for the first time from 1 January 2011. Future income tax liabilities or benefits are
included in the financial statements of companies not forming part of the grouping for tax purposes.
Deferred taxes
In accordance with IAS 12, deferred taxes are recognised for all temporary differences between the
tax bases of the assets and liabilities and their carrying amounts in the IFRS consolidated financial
statements (liability method). Deferred taxes are measured on the basis of the tax rates and tax
laws in force or substantively enacted at the balance sheet date and which are expected to apply
at the date of realisation of the deferred tax asset or settlement of the deferred tax liability.
Deferred tax assets are recognised to the extent that it is probable that taxable profit will be
available against which the temporary difference can be utilised. If it is sufficiently certain that it will
be possible to utilise the future tax benefit resulting from loss carryforwards in future periods, a
deferred tax asset is recognised.
IAS 12.39 provides that deferred taxes on temporary differences in connection with investments in
subsidiaries (‘‘outside basis differences’’) should be recognised in the consolidated financial
statements only when the following criteria are not met:
– the parent company, shareholder or joint venture partner is in a position to control the
timing of the reversal of the temporary difference; and
– it is probable that the temporary difference will not reverse in the foreseeable future.
This is not the case within the Adler Group. The temporary difference generally reverses only when
the company is sold. At the present time the Adler Group is not planning to dispose of any
subsidiaries but, on the other hand, it would be in a position to control the timing of any disposal.
No deferred taxes are recognised in the consolidated financial statements of the Adler Group in
respect of temporary differences relating to investments in subsidiaries.
No deferred taxes were recognised in respect of differences between the tax bases and the
amounts currently included in the financial statements within Adler Modemärkte GmbH during the
period of the grouping of companies for tax purposes, since the reversal of these differences would
not have resulted in a tax effect. As a consequence of the termination of the tax grouping between
Adler Modemärkte GmbH and AMODA GmbH as at 31 December 2010, deferred taxes were
A
c
1
0
4
7
0
8
p
u
0
7
0
P
r
o
o
f
7
:
2
7
.
5
.
1
1
B
/
L
R
e
v
i
s
i
o
n
:
0
O
p
e
r
a
t
o
r
D
a
d
F-28

equired to be recognised for the first time as at 31 December 2010 in respect of differences in
measurement between the IFRS carrying amounts and the tax bases of assets and liabilities.
Deferred taxes were recognised for all companies not forming part of the tax grouping in
accordance with the requirements of IAS 12.
Deferred tax assets and liabilities are netted if there is a legally enforceable right to offset current
tax assets against current tax liabilities and if the deferred taxes relate to the same tax authority.
Inventories
Merchandise accounted for as inventories is generally carried at the lower of cost and net
realisable value. Net realisable value is the amount of the estimated sale proceeds achievable in
the normal course of business less the necessary variable costs of sale. The cost of production
includes all directly attributable costs and appropriate portions of necessary overheads and
depreciation in addition to direct materials and production costs. Cost is determined using the
weighted average method.
Receivables and other assets
* Trade receivables
Trade receivables are recorded initially at fair value and measured in subsequent periods at
amortised cost less any impairment losses. An impairment charge is recorded in respect of trade
receivables if there are objective indications that the amounts of receivables due are not collectible
in full. The amount of the impairment charge is measured as the difference between the carrying
amount of the receivable and the present value of the estimated future cash flows from that
receivable, determined using the effective interest rate method. The impairment charge is reported
in profit or loss. Trade receivables are classified under the loans and receivables category.
* Available-for-sale financial assets
Available-for-sale financial assets are non-derivative financial assets that have either been allocated
to this category or have not been allocated to any of the other measurement categories set out in
IAS 39. They are measured at fair value. Unrealised gains and losses resulting from changes in
fair value are recorded in other comprehensive income. When securities within the available-forsale
financial assets category are disposed of or become impaired, the adjustments to fair value
accumulated directly in equity are recorded in the income statement as gains or losses from
financial assets.
* Derivative financial instruments
The Adler Group did not make use of any derivative financial instruments in the period under
review.
* Other receivables and other assets and loans
Other receivables and other assets and loans are recorded initially at fair value and measured in
subsequent periods at amortised cost using the effective interest method – in the case of noncurrent
loans – less any impairment losses. Appropriate valuation allowances are recognised in
respect of any risks existing. At each balance sheet date the carrying amounts of financial assets
not measured at fair value through profit or loss are reviewed for objective indications of
impairment (such as significant financial difficulties on the part of the debtor, a high probability of
insolvency proceedings against the debtor, a significant change in the technological, economic or
legal environment, or in the market environment of the issuer or a permanent decline in the fair
value of the financial asset to below amortised cost). Any impairment charge, based on a lower fair
value in comparison with the carrying amount, is reported in the income statement. If it becomes
clear at subsequent measurement dates that the fair value has risen objectively as a result of
events that occurred after the date when the impairment charge was recognised, the impairment
charge is reversed through profit or loss in the relevant amount. The fair value determined for the
purpose of reviewing possible impairment losses in respect of loans and receivables measured at
amortised cost is equal to the present value of the estimated future cash flows, discounted at the
original effective rate of interest.
Other receivables and other assets and loans are allocated to the loans and receivables category.
Financial assets are generally recorded at the trade date.
A
c
1
0
4
7
0
8
p
u
0
7
0
P
r
o
o
f
7
:
2
7
.
5
.
1
1
B
/
L
R
e
v
i
s
i
o
n
:
0
O
p
e
r
a
t
o
r
D
a
d
F-29

Cash and cash equivalents
Cash and cash equivalents include cash, demand deposits and other short-term highly liquid
financial assets with an original term of no more than three months. Overdrafts utilised are
reported as liabilities to banks under current financial liabilities.
Equity
Equity consists of subscribed capital, capital reserves and retained earnings (net accumulated
losses). The subscribed capital represents the nominal capital of the parent company. Capital
reserves comprise all capital amounts contributed to the Company from external sources that are
not subscribed capital.
Provisions
Provisions are recognised when the Group has a present legal or constructive obligation arising as
a result of a past event, it is probable that an outflow of resources embodying economic benefits
will be required to settle the obligation and the amount of the provision can be reliably estimated.
Where there is a number of similar obligations, the likelihood that an outflow of resources will be
required is determined by considering that class of obligations as a whole. Provisions are stated at
the expected settlement amount after taking into account all identifiable associated risks and are
not offset against rights of recourse.
Where the effect of the time value of money is material, non-current provisions are carried at the
settlement amount discounted to the balance sheet date. The discount rate used for this purpose is
a pre-tax rate of interest reflecting the current market assessment of the economic situation and
the risks specific to the obligation.
Employee benefits
* Pension obligations
The Adler Group has a number of different benefit plans. They include both defined benefit and
defined contribution plans. Defined contribution plans are post-employment plans under which an
enterprise pays fixed contributions into a separate entity (such as a fund or insurance
arrangement) and has no legal or constructive obligation to pay further contributions, even if the
fund or the entitlements from the insurance agreement entered into do not have sufficient assets to
pay all employee benefits relating to employee service in the current reporting period and prior
periods. A defined benefit plan is a post-employment plan other than a defined contribution plan.
The agreements underlying the defined benefit plans provide for different benefits within the Group
depending on the particular subsidiary. The latter mainly comprise
* pension entitlements once the relevant pensionable age is reached,
* one-off payments on cessation of employment.
The provision relating to defined benefit plans carried in the consolidated balance sheet is
calculated as the present value of the pension obligation at the balance sheet date less the fair
value of any plan assets available, after taking into account unrecognised actuarial gains and
losses and any past service cost not yet recognised.
The actuarial calculation of the pension provisions for the Company’s old-age part time is based on
the projected unit credit method prescribed by IAS 19 (Employee Benefits). An actuarial valuation
is carried out by independent actuarial experts for this purpose at each balance sheet date. The
projected unit credit method takes account of the known pensions and vested benefits at the
balance sheet date and includes increases in salaries and pensions expected in the future. The
valuations are based on the legal, economic and tax environment of the individual country. The
obligations, which exist solely in the European economic area, were measured using an actuarial
rate of interest of 4.75% (prior year 5.25%), projected annual wage and salary increases of 2.5%
(prior year 2.0%) and projected annual pension increases of 2.0% (prior year 1.5%). Employee
turnover is determined for each specific company and taken into account on the basis of age and
length of service. The actuarial valuations are mostly based on specific mortality tables for each
country. The provision is made up of the present value of the expected benefits less the fair value
of the plan assets plus or minus any actuarial gains and losses not yet recognised. The expected
return on the plan assets was assumed to be 3.5% (prior year 4.0%).
A
c
1
0
4
7
0
8
p
u
0
7
0
P
r
o
o
f
7
:
2
7
.
5
.
1
1
B
/
L
R
e
v
i
s
i
o
n
:
0
O
p
e
r
a
t
o
r
D
a
d
F-30

The accumulated actuarial gains and losses resulting from the differences arising over the years
between the projected pension obligations and plan assets and the actual amounts at the year-end
are only recognised if they lie outside a range of 10% of the higher of the pension obligations and
the plan assets. In this event, the excess is divided by the average remaining working lives of the
active employees participating in the plan and recorded as an additional expense or item of
income. Past service cost for benefits that have not yet vested is allocated over the remaining
working life until the entitlement vests. The cost relating to benefits that have already vested is
recognised as an expense immediately. The interest component of the addition to provisions
included in the pension expenses (interest cost for pension obligations and expected income from
plan assets) is reported as interest expense within personnel expenses.
Payments out of a defined contribution benefits plan are included in profit or loss and reported
within personnel expenses.
* Obligations for severance payments
Employees who began their service in Austria on or after 1 January 2003 participate in a defined
contribution benefits plan. Obligations arising from severance payments for employees whose
service began prior to 1 January 2003 are covered by defined benefit plans. When service is
ended by the company or pensionable age is reached, or in the case of invalidity or death,
participating employees receive a severance payment which amounts to a multiple of their basic
monthly salary – depending on their length of service – subject to a maximum of twelve months’
salary. A maximum of three months’ salary is paid immediately on cessation of service, while the
payment of any further amounts is distributed over a period of several months. In the event of
death, the heirs of participating employees are entitled to 50% of the severance payment.
* Termination benefits
Termination benefits are paid when an employee is dismissed prior to the normal retirement date
or when an employee leaves employment voluntarily in return for a termination payment. The
Group recognises termination benefits immediately when it is demonstrably and irrevocably
committed to terminate the employment of current employees on the basis of a detailed formal
plan which cannot be withdrawn, or when it is demonstrably required to pay termination benefits on
the voluntary termination of employment by employees. Payments falling due more than twelve
months after the balance sheet date are discounted to their present value. The entitlements to
termination benefits are reported under provisions for personnel expenses. This item also includes
portions of the entitlements arising from the German provisions relating to partial retirement
arrangements.
Liabilities
* Financial liabilities
Financial liabilities are recorded at fair value on initial recognition and measured at amortised cost
in subsequent periods. Differences between the historical cost and the repayment amount of noncurrent
liabilities are reflected in the financial statements using the effective interest method.
Financial liabilities measured at amortised cost are recognised initially at fair value, taking into
account transaction costs.
Loan liabilities are classified as current if repayment is due within the following twelve months.
Discount entitlements not yet utilised by customers are also reported in current financial liabilities.
Customers are awarded these entitlements whenever they make a purchase using the Adler
customer card. Within a specifically defined period, customers can offset these discount
entitlements against a subsequent purchase or have the amount paid out in cash. The amount
included in financial liabilities represents customers’ discount entitlements not yet utilised at the
balance sheet date.
* Liabilities from finance leases
Lease liabilities are recognised if economic ownership of the leased or rented leased assets is
attributable to companies of the Adler Group and the assets are capitalised under property, plant
and equipment (finance leases). On initial recognition, the lease obligations are recorded at the fair
value of the leased asset or, if lower, the present value of the lease payments.
A
c
1
0
4
7
0
8
p
u
0
7
0
P
r
o
o
f
7
:
2
7
.
5
.
1
1
B
/
L
R
e
v
i
s
i
o
n
:
0
O
p
e
r
a
t
o
r
D
a
d
F-31

For this purpose, the finance charge is apportioned over the term of the lease in such a way that
a constant periodic rate of interest over time is produced on the outstanding balance of the finance
lease liability.
* Trade payables and other liabilities
Trade payables and other liabilities are carried at amortised cost. Trade payables and other current
liabilities are reported under other liabilities.
Contingent liabilities
Contingent liabilities are possible or present obligations resulting from past events but for which an
outflow of resources is estimated to be not probable. Under IAS 37, obligations of this nature are
not recorded in the balance sheet but are disclosed in the notes to the financial statements.
Recognition of income and expenses
Revenue represents the fair value of the consideration received or receivable for the sale of goods
and services in the ordinary course of business. Revenue is reported net of VAT and after
deducting rebates and discounts. Customers’ entitlements to refunds relating to goods delivered are
recorded in the income statement once the relevant invoices have been examined. No programmes
entitling customers to acquire loyalty points were offered during the period under review.
Where customers making purchases with the Adler customer card acquire an entitlement to a
particular discount, the discount is recorded as a reduction in revenue. The liability is reported
within financial liabilities. The liability is reversed when the discount is utilised. If customers allow
their discount entitlements to expire, the amount not utilised is reported within revenue.
Revenue and other operating income is generally recognised only when the services have been
performed or the goods or products have been delivered and the risks of ownership have
transferred to the customer. Retail sales are settled in cash or using an EC or credit card. The
card company’s charges are recorded in other operating expenses. The Group’s business policy is
that the end user acquires its products with a right of return. This right of return is quantified on
the basis of historical amounts and deducted from revenue.
Expenses are recognised when the goods or services are utilised or when the expense is incurred.
This also applies to the recognition of advertising expenses. The latter are recorded in accordance
with the provisions of IAS 38 when the service – in this case the provision of advertising services
– has been performed for the Adler Group and not at the later date when the Adler Group is
conducting the relevant advertising campaigns.
Rental income and expenses are recorded as revenue or expenditure on an accruals basis in the
period to which they relate.
Net finance costs
Interest income and interest expenses are recorded on an accruals basis in the period to which
they relate using the effective interest method, based on the outstanding balance of the loan and
the applicable interest rate. The applicable interest rate is the rate of interest that discounts the
estimated future cash flows over the term of the financial asset to its net carrying amount.
In the case of a finance lease agreement, payments received are apportioned between the finance
charge and the reduction of the outstanding liability using mathematical methods.
Borrowing costs are reported in the income statement in the period in which they are incurred,
except for borrowing costs required to be capitalised in respect of qualifying assets.
Costs of equity issuance
The Company is currently preparing to carry out a capital increase. In accordance with IAS 32,
costs directly attributable to the issue of equity instruments are accounted for as a deduction from
equity at the date of the issue. Since the capital increase had not been carried out by the balance
sheet date, the costs of the transaction already incurred were recorded as prepaid expenses. The
amount will be reclassified into equity at the date of the capital increase. If the transaction is not
carried out, the prepaid expenses will be reversed to profit or loss.
A
c
1
0
4
7
0
8
p
u
0
7
0
P
r
o
o
f
7
:
2
7
.
5
.
1
1
B
/
L
R
e
v
i
s
i
o
n
:
0
O
p
e
r
a
t
o
r
D
a
d
F-32

Segment reporting
Under the provisions of IFRS 8, operating segments are identified on the basis of the internal
organisation and reporting structure. An operating segment is defined as a component of an entity
which generates revenues and incurs expenses from its business activities, whose operating results
are regularly reviewed by the entity’s chief operating decision maker to make decisions about
resources to be allocated to the segment and assess its performance and for which discrete
financial information is available. The chief operating decision maker is the company’s
management.
Segments are structured for the purpose of segment reporting according to the entity’s principal
activities.
The reportable segments within the Adler Group are
* stores
* textile logistics (discontinued in financial year 2010).
Earnings per share
IAS 33 Earnings per share requires earnings per share to be disclosed even if the shares of an
entity are not publicly traded but the company nevertheless files its IFRS consolidated financial
statements with a securities commission or other regulatory organisation for the purpose of issuing
ordinary shares in a public market. At the date of preparation of these consolidated financial
statements, the Company’s equity capital consists of a single share. The earnings per share are
therefore the same as the consolidated net profit or loss. There are no potential dilutive effects at
the present time. The earnings per share figure is calculated by dividing the consolidated net profit
or loss by the share.
Accounting treatment of non-current assets and liabilities held for sale and discontinued
operations
A non-current asset is classified as held for sale in accordance with IFRS 5 if its carrying amount
is intended to be recovered principally through a sale transaction rather than through continuing
use. In principle, there must be a plan to sell the asset within the next 12 months and it must be
possible to complete the sale within that period. The asset is measured at the lower of its carrying
amount and the fair value less costs to sell and is presented separately in the balance sheet.
Under IFRS 5, a component of an entity is accounted for as a discontinued operation if it is held
for sale or has already been disposed of. The discontinued operation is measured at the lower of
its carrying amount and the fair value less costs to sell.
Litigation and claims for damages
The companies in the Adler Group are involved in a range of legal and administrative proceedings
in the course of their general business operations or similar proceedings could be initiated or
claims asserted in the future. Although the outcome of individual proceedings cannot be predicted
with certainty given the imponderable factors involved in legal disputes, it is currently estimated
that they will have no material adverse effect on the results of operations of the Group over and
above the risks reflected in the financial statements in the form of liabilities or provisions.
Use of estimates and assumptions
The preparation of the consolidated financial statements has involved the making of assumptions
and use of estimates that have affected the reporting and the amount of the assets, liabilities,
income and expenses recognised and of the contingent liabilities. These estimates and
assumptions relate principally to the establishment of uniform economic useful lives used across
the Group, the assessment of whether impairment charges are required for inventories, the
measurement of provisions, pensions and risks specific to individual locations, together with the
recoverability of future tax benefits, in particular those arising from loss carryforwards. The actual
amounts may differ in particular cases from the estimates and assumptions made. Revised
amounts are reflected at the date when improved knowledge becomes available.
Our estimates are based on historical amounts and other assumptions considered to be accurate
in the particular circumstances. The actual amounts may differ from the estimates made. The
estimates and assumptions are reviewed on an ongoing basis. The true and fair view principle is
also applied to the use of estimates.
A
c
1
0
4
7
0
8
p
u
0
7
0
P
r
o
o
f
7
:
2
7
.
5
.
1
1
B
/
L
R
e
v
i
s
i
o
n
:
0
O
p
e
r
a
t
o
r
D
a
d
F-33

Useful lives of non-current assets
The determination and standardisation of economic useful lives applied across the Group is based
on historical data relating to the actual expected useful lives of non-current assets. It is assumed
that the assets are subjected to normal use.
Valuation allowances on inventories
Valuation allowances on inventories are determined in the light of conditions in the sales market
and are based to some extent on historical amounts.
Income taxes
The Group has a liability to pay income taxes in various countries in accordance with different
particular bases of assessment. The global provision for taxes is recognised on the basis of the
profit determined in accordance with local tax regulations and the applicable local rates of tax.
The amount of the tax provisions and liabilities is based on estimates of whether and in what
amount income taxes will become payable. Risks arising from the possibility of a different
treatment for tax purposes are reflected, where necessary, in provisions for the appropriate
amount.
In addition, it is necessary to make estimates in order to assess the recoverability of deferred tax
assets. The key factor in assessing the recoverability of deferred tax assets is the estimation of the
likelihood that future profits for tax purposes (taxable income) will be available.
Uncertainties relating to the interpretation of complex tax regulations and the amount and timing of
future taxable income must also be taken into account. Especially in view of the international
structure of the Group, differences between actual events and our assumptions, or future changes
in those assumptions, may result in revised amounts for the tax charge or benefit in future periods.
Provisions
Assumptions about the likelihood of an outflow of resources occurring have to be made for the
purpose of determining whether to recognise provisions. These assumptions represent the best
possible assessment of the circumstances underlying the particular provision but are subject to an
element of uncertainty given the inevitable use of assumptions. Assumptions also have to be made
about the amount of any outflow of resources for the purpose of measuring the provisions. A
change in the assumptions can therefore result in a revised amount for the provision. Accordingly,
the use of assumptions can also give rise here to an element of uncertainty.
The determination of the present value of pension obligations depends primarily on the choice of
the discount rate of interest and the other actuarial assumptions which must be formulated afresh
at the end of each financial year. For this purpose, the underlying discount rate is the rate of
interest on corporate bonds with high credit ratings, denominated in the currency in which the
payments are made and with the same maturity structure as the pension obligations. Changes in
these interest rates may result in material revisions to the amount of the pension obligations.
Impairment
Goodwill is tested annually for impairment in accordance with IAS 36 Impairment of assets and IAS
38 Intangible assets. If events or changes in circumstances give rise to indications of possible
impairment, impairment testing must also be carried out more frequently. The amortisation of
goodwill is not permitted. For the purpose of testing goodwill for impairment, the carrying amount of
the individual cash-generating unit to which the goodwill has been allocated is compared with the
respective recoverable amount, i.e. the higher of the fair value less costs to sell and the value in
use. In those cases where the carrying amount of the cash-generating unit is higher than its
recoverable amount, the difference represents an impairment loss. Impairment losses calculated in
this manner are deducted initially from the carrying amount of the goodwill allocated to the
strategic business unit in question. Any remaining amount is allocated to the other assets in the
respective strategic business unit pro rata on the basis of their carrying amounts, to the extent that
IAS 36 applies. The calculation of the recoverable amount is based on the future cash flows
expected to be derived from the continuing use of the cash-generating unit. The cash flow
projections were based on the Company’s current business plans. The cost of capital is calculated
as the weighted average of the cost of equity and the cost of debt, taking into account the
proportions of total capital represented by equity and debt respectively. The cost of equity
represents the expected return from the cash-generating unit and is derived from a suitable peer
A
c
1
0
4
7
0
8
p
u
0
7
0
P
r
o
o
f
7
:
2
7
.
5
.
1
1
B
/
L
R
e
v
i
s
i
o
n
:
0
O
p
e
r
a
t
o
r
D
a
d
F-34

group. The cost of debt is based on the average cost of debt derived from bonds with an average
remaining maturity of 20 years.
For the purpose of reflecting risks specific to individual locations in the financial statements (mainly
the estimation of anticipated losses from operating lease agreements and the impairment of finance
lease agreements relating to store rents), an adjusted EBIT for a particular planning horizon is
estimated for locations with ongoing losses. This is then compared with objectively determined
rents in order to calculate the extent of any failure to cover future rents and/or to adjust the
carrying amounts to a recoverable amount determined under the assumption either that the location
will continue in its present use or that it will be used for a different purpose.
The fair value of land and buildings being tested for impairment is normally based on a valuation
by an independent expert. Expert opinions on the market values of property, plant and equipment
are subject to an element of uncertainty as a result of the unavoidable use of assumptions.
All identifiable risks at the date of preparation of the consolidated financial statements were
included in the context of the underlying estimates and assumptions.
IV. Notes to the income statement
1. Revenue
Revenue (net) is generated almost entirely from sales of goods and is distributed geographically as
follows:
2010 2009
c’000 c’000
Germany........................................................................................................ 356,195 332,014
Austria ........................................................................................................... 74,599 60,873
Luxembourg................................................................................................... 14,015 12,959
2. Other operating income
444,809 405,846
2010 2009
c’000 c’000
Rental income................................................................................................ 3,387 4,344
Licence income.............................................................................................. 859 2,466
Income from the reversal of other liabilities................................................... 789 2,081
Recharged costs / cost reimbursements ....................................................... 667 616
Prior-period income ....................................................................................... 484 0
Income from damages................................................................................... 431 289
Income from the reversal of provisions ......................................................... 412 4,003
Government subsidies for personnel expenses............................................. 252 129
Commissions ................................................................................................. 185 2,721
Income from disposals of non-current assets................................................ 22 133
Miscellaneous ................................................................................................ 684 927
8,172 17,709
The rental income was generated from subletting to store concessionaires.
The prior-period income consists of credits from suppliers in respect of deliveries of goods relating
to prior years.
Licence income amounting to c1,800 thousand was generated from the grant of a trademark
licence to a subsidiary of AMODA GmbH.
3. Cost of materials
The cost of materials amounting to c210,360 thousand (prior year: c205,277 thousand) consists
entirely of purchased merchandise.
A
c
1
0
4
7
0
8
p
u
0
7
0
P
r
o
o
f
7
:
2
7
.
5
.
1
1
B
/
L
R
e
v
i
s
i
o
n
:
0
O
p
e
r
a
t
o
r
D
a
d
F-35

4. Personnel expenses
2010 2009
c’000 c’000
Wages and salaries ....................................................................................... 62,062 66,073
Other social security contributions................................................................. 6,191 6,694
Employers’ contributions to statutory pension scheme.................................. 5,926 6,778
Expenses for old-age part time ..................................................................... 774 689
Expenses for partial retirement/death benefits/anniversaries ........................ 43 319
74,996 80,553
The significant reduction in personnel expenses reflects the lower number of employees in 2010.
The average number of people employed by the Group during the reporting period was:
2010 2009
c’000 c’000
Managers....................................................................................................... 161 150
Salaried employees ....................................................................................... 706 778
Part-time workers .......................................................................................... 3,098 3,584
Trainees......................................................................................................... 209 190
4,174 4,702
The fall in the number of employees is the result of the restructuring programme completed in
financial year 2010.
The numbers of employees shown relate solely to the continuing operations. An average of 383
employees (prior year 421 employees) were engaged in the discontinued operations during the
year under review.
5. Other operating expenses
2010 2009
c’000 c’000
Lease payments and building expenses........................................................ 54,176 53,171
Advertising costs ........................................................................................... 37,960 32,028
Shipping and transport costs ......................................................................... 12,295 12,881
Technical facilities.......................................................................................... 8,371 8,315
Administrative expenses................................................................................ 2,919 3,511
External cleaning costs.................................................................................. 2,744 3,109
Consumables................................................................................................. 2,489 2,396
Consultancy expenses................................................................................... 2,383 4,412
Office expenses............................................................................................. 1,398 1,287
Incidental costs of monetary transactions ..................................................... 1,122 1,010
Losses from disposals of non-current assets ................................................ 645 410
Miscellaneous ................................................................................................ 3,274 2,721
129,776 125,251
The reduction in consultancy expenses mainly reflected the consultancy services utilised in the
previous year in connection with the restructuring programme.
The lower figure for external cleaning costs is the result of contract renegotiations and the
reduction in the range of services.
The rise in advertising costs is mainly due to the costs of renewed TV and radio advertising which
were not incurred in the previous year.
A
c
1
0
4
7
0
8
p
u
0
7
0
P
r
o
o
f
7
:
2
7
.
5
.
1
1
B
/
L
R
e
v
i
s
i
o
n
:
0
O
p
e
r
a
t
o
r
D
a
d
F-36

6. Depreciation, amortisation and impairment
The amounts of depreciation and amortisation are presented in the consolidated statement of
changes in non-current assets.
No impairment losses were recognised within the continuing operations in financial year 2010. In
accordance with the provisions of IFRS 5, the assets and liabilities attributable to the discontinued
operations were written down to their fair value less costs to sell. This resulted in an impairment
loss of c2,665 thousand recorded in its entirety within discontinued operations. For further details,
please see Note 9.
In financial year 2009, impairment losses amounting to c448 thousand were recognised in respect
of the rights to the ‘‘VIVENTY by Bernd Berger’’ trademark acquired under the terms of a finance
lease. The recoverable amount is equal to the value in use. As a result of continuous negative
gross income relating to the ‘‘VIVENTY by Bernd Berger’’ line, the intangible asset was written off
in full.
Impairment losses totalling c1,439 thousand were also recorded in financial year 2009 in respect of
internally generated intangible assets. Of this amount, c1,367 thousand related to internally
generated logistics software and c72 thousand to a computer-based incentive pay system.
Also in financial year 2009, impairment losses amounting in total to c1,072 thousand were
recorded in connection with the reclassification of one property into investment property. The
portion of the property no longer utilised by the Company itself was reclassified out of property,
plant and equipment. Of the total impairment charge, c900 thousand related to the investment
property, c53 thousand to land and c119 thousand to buildings. The property was written down to
its fair value including land. This amounted to c4,020 thousand as at 31 December 2009.
In financial year 2009, reversals of impairment losses amounting to c565 thousand were recorded
under impairment since only some of the closures of stores planned in financial year 2008 actually
took place. The impairment charges previously recognised in respect of the property, plant and
equipment of those stores which continued to be operated were reversed up to the assets’ original
depreciated cost.
The impairment losses of c2,394 thousand in the financial year 2009 were reported in the income
statement as follows:
2009
c’000
Impairment .......................................................................................................................... 2,322
Profit/loss from discontinued operations ............................................................................. 72
7. Net finance costs
Net finance costs comprise the items below analysed by the items giving rise to them as follows:
2010 2009
c’000 c’000
Interest income
Receivables from affiliated companies....................................................... 3,402 1,622
Receivables from banks............................................................................. 136 210
Other .......................................................................................................... 0 87
3,538 1,919
Interest expense
Interest expense from finance leases ........................................................ -3,865 -4,639
Liabilities to banks...................................................................................... -167 -15
Liabilities to affiliated companies................................................................ -88 -363
Other .......................................................................................................... -1 -5
-4,121 -5,022
Net finance costs......................................................................................... -583 -3,103
A
c
1
0
4
7
0
8
p
u
0
7
0
P
r
o
o
f
7
:
2
7
.
5
.
1
1
B
/
L
R
e
v
i
s
i
o
n
:
0
O
p
e
r
a
t
o
r
D
a
d
F-37

The interest income arising from receivables from affiliated companies is attributable to loans
granted to Adler Treasury GmbH. In addition, interest income was received from MOTEX (affiliated
company since 1 October 2010) in an amount of c89 thousand. The interest income from banks
relates to current account balances. Interest expenses amounting to c88 thousand were also
incurred with respect to MOTEX (affiliated company since 1 October 2010). The related items were
allocated to the loans and receivables category.
All interest income and interest expenses arising from financial assets and financial liabilities were
calculated using the effective interest method.
The interest included in net finance costs represents the total amount of interest income and
expenses calculated using the effective interest method.
8. Income taxes
The income tax expense was made up as follows:
2010 2009
c’000 c’000
Current tax expense (-) / benefit (+).............................................................. -301 -86
Deferred taxes ............................................................................................... 5,079 -63
4,778 -149
Income taxes paid and payable in the individual countries together with deferred tax expenses and
benefits are reported under income taxes.
A profit and loss transfer agreement and tax grouping for income tax purposes was in place
between Adler Modemärkte GmbH and AMODA GmbH until 31 December 2010 with the result that
Adler Modemärkte GmbH as a member of the tax group had no income tax liability until the
termination of the profit and loss transfer agreement.
The tax rate of 27.000% applied for the German company is made up of corporation tax amounting
to 15.825% (including the solidarity surcharge of 5.500%) and the trade tax rate of 11.150%.
Foreign income taxes are calculated on the basis of the laws and regulations in force in the
particular countries. The overall tax rate applicable for the Adler Group amounts to 27.000%. The
tax rates are unchanged from the previous year.
The calculation of deferred taxes is based on the tax rates expected to apply in the individual
countries when the deferred tax asset is realised or the liability is settled; these generally reflect
the tax laws in force or enacted at the balance sheet date. Deferred taxes were recognised for the
first time within Adler Modemärkte GmbH in the financial year 2010 as the tax grouping for income
tax purposes was terminated as at 31 December 2010. The first-time recognition of deferred taxes
resulted in a deferred tax benefit in the financial year 2010.
The differences between the income tax expense actually recorded and the expected income tax
expense are shown in the following reconciliation. The expected income tax expense is calculated
from the profit or loss before taxes multiplied by the applicable income tax rate.
A
c
1
0
4
7
0
8
p
u
0
7
0
P
r
o
o
f
7
:
2
7
.
5
.
1
1
B
/
L
R
e
v
i
s
i
o
n
:
0
O
p
e
r
a
t
o
r
D
a
d
F-38

2010 2009
c’000 c’000
Consolidated net profit/loss before taxes ...................................................... 23,701 -8,472
Applicable rate of income tax ........................................................................ 27.00% 27.00%
Expected income tax expense ................................................................... 6,399 -2,287
Effects of differing foreign tax rates ......................................................... 39 120
Effects of differing German tax rates ........................................................ -13 0
Tax effects
Deferred and current taxes not recognised due to grouping of companies for
tax purposes* ............................................................................................ -4,960 2,009
Prior-period tax benefits ................................................................................ 35 2
Current taxable losses not recognised .......................................................... 181 403
Tax-exempt income ....................................................................................... 0 -98
Effects from first-time recognition of deferred taxes...................................... -6,495 0
Other differences ........................................................................................... 36 0
Total tax effects ........................................................................................... -11,203 2,316
Actual tax expense ...................................................................................... -4,778 149
Effective rate of tax ....................................................................................... -20.16% -1.75%
* In 2010 this item only contains effects from current taxes.
9. The profit/loss from discontinued operations
In financial year 2010 the Company took the decision to dispose of MOTEX Mode-Textil-Service
Logistik und Management GmbH. The company was sold to BluO beta equity. As a result of the
decision to sell the company, the assets and liabilities of MOTEX Mode-Textil-Service Logistik und
Management GmbH held for sale were accounted for as a discontinued operation in accordance
with the requirements of IFRS 5. By a purchase agreement dated 28 September 2010, MOTEX
Mode-Textil-Service Logistik und Management GmbH was sold with effect as at 30 September
2010. The operating profit of MOTEX Mode-Textil-Service Logistik und Management GmbH up to
30 September 2010 was reported in the consolidated income statement as part of the profit or loss
from discontinued operations. The prior-year figures for the discontinued operation within the
consolidated income statement were adjusted accordingly in order to present discontinued
operations separately for that year as well. In the course of reclassifying the assets and liabilities
of the discontinued operations as a disposal group in the financial statements for financial year
2010, an impairment loss of c2,665 thousand was recognised which was reported in its entirety
within discontinued operations. The whole of the disposal group (including inventories) was taken
into account for the purpose of determining the impairment losses.
A
c
1
0
4
7
0
8
p
u
0
7
0
P
r
o
o
f
7
:
2
7
.
5
.
1
1
B
/
L
R
e
v
i
s
i
o
n
:
0
O
p
e
r
a
t
o
r
D
a
d
F-39

The purchase price for MOTEX Mode-Textil-Service Logistik und Management GmbH amounted to
c135 thousand and was paid in cash. At the date of sale, the carrying amount of the non-current
assets held for sale amounted to c12,397 thousand while the carrying amount of the liabilities held
for sale was c12,262 thousand. The breakdown of the profit or loss from discontinued operations is
as follows:
Discontinued operations 2010 2009
c’000 c’000
Income........................................................................................................... 18,831 24,318
Expenses....................................................................................................... -16,931 -22,947
Operating profit before tax ......................................................................... 1,900 1,371
Income taxes on operating profit ................................................................... -292 -28
Operating profit after tax ............................................................................ 1,608 1,343
Gain/loss from remeasurement / disposal ..................................................... -2,665 0
Gain/loss from remeasurement / disposal after tax................................. -2,665 0
Profit/loss from discontinued operations ................................................. -1,057 1,343
At the date of sale, the assets held for sale comprised intangible assets of c4 thousand, property,
plant and equipment of c219 thousand, inventories of c40 thousand, receivables and other assets
of c11,612 thousand, cash and cash equivalents of c511 thousand and deferred tax assets
amounting to c11 thousand. The liabilities held for sale comprised provisions of c132 thousand,
liabilities of c12,119 thousand and deferred tax liabilities of c11 thousand.
V. Notes to the balance sheet
10. Intangible assets
The intangible assets comprise internally generated software as well as purchased software, rights
and licences and goodwill. The internally generated intangible assets represent capitalised
development costs for logistics software and for a computer-based incentive pay system.
A
c
1
0
4
7
0
8
p
u
0
7
0
P
r
o
o
f
7
:
2
7
.
5
.
1
1
B
/
L
R
e
v
i
s
i
o
n
:
0
O
p
e
r
a
t
o
r
D
a
d
F-40

The development of intangible assets in financial year 2010 was as follows:
Software,
rights and
licences Goodwill
Licences under
finance leases
Internally
generated
assets Pre-payments Total
c’000 c’000 c’000 c’000 c’000 c’000
Cost 1 Jan. 2010......................... 24,692 0 828 2,913 0 28,433
Additions....................................... 420 0 0 0 0 420
Disposals...................................... -78 0 0 0 0 -78
Transfers ...................................... 0 0 0 0 0 0
Reclassification discontinued
operations................................. -1,106 0 0 -656 0 -1,762
Change in group of consol.
companies ................................ 1 868 0 0 0 869
As at 31 Dec. 2010 ..................... 23,929 868 828 2,257 0 27,882
Amortisation 1 Jan. 2010........... -22,256 0 -380 -1,100 0 -23,736
Additions....................................... -776 0 0 -52 0 -828
Disposals...................................... 78 0 0 0 0 78
Transfers ...................................... 0 0 0 0 0 0
Reclassification discontinued
operations................................. 1,028 0 0 385 0 1,413
As at 31 Dec. 2010 ..................... -21,926 0 -380 -767 0 -23,073
Impairment 1 Jan. 2010.............. -52 0 -448 -1,637 0 -2,137
Additions....................................... 0 0 0 0 0 0
Disposals...................................... 0 0 0 0 0 0
Reversals ..................................... 0 0 0 0 0 0
Reclassification discontinued
operations................................. 52 0 0 270 0 322
As at 31 Dec. 2010 ..................... 0 0 -448 -1,367 0 -1,815
Net book value 31 Dec. 2009..... 2,384 0 0 176 0 2,560
Net book value 31 Dec. 2010..... 2,003 868 0 123 0 2,994
The additions to amortisation amounting to c828 thousand were reported in the income statement
as follows:
2010
c’000
Depreciation and amortisation ............................................................................................ 817
Profit/loss from discontinued operations ............................................................................. 11
The development of intangible assets in financial year 2009 was as follows:
Software,
rights and
licences
Licences under
finance leases
Internally
generated
assets Pre-payments Total
c’000 c’000 c’000 c’000 c’000
Cost 1 Jan. 2009............................................. 22,612 828 2,913 1,009 27,362
Additions .......................................................... 1,074 0 0 0 1,074
Disposals.......................................................... -3 0 0 0 -3
Transfers .......................................................... 1,009 0 0 -1,009 0
As at 31 Dec. 2009 ......................................... 24,692 828 2,913 0 28,433
Amortisation 1 Jan. 2009............................... -21,252 -173 -620 0 -22,045
Additions .......................................................... -1,004 -207 -480 0 -1,691
Disposals.......................................................... 0 0 0 0 0
Transfers .......................................................... 0 0 0 0 0
As at 31 Dec. 2009 ......................................... -22,256 -380 -1,100 0 -23,736
Impairment 1 Jan. 2009 ................................. -52 0 -198 0 -250
Additions .......................................................... 0 -448 -1,439 0 -1,887
Disposals.......................................................... 0 0 0 0 0
Reversals ......................................................... 0 0 0 0 0
As at 31 Dec. 2009 ......................................... -52 -448 -1,637 0 -2,137
Net book value 31 Dec. 2008......................... 1,308 655 2,095 1,009 5,067
Net book value 31 Dec. 2009......................... 2,384 0 176 0 2,560
The additions to amortisation amounting to c1,691 thousand were reported in the income statement
as follows:
2009
c’000
Depreciation and amortisation ............................................................................................ 1,654
Profit/loss from discontinued activities ................................................................................ 37
A
c
1
0
4
7
0
8
p
u
0
7
0
P
r
o
o
f
7
:
2
7
.
5
.
1
1
B
/
L
R
e
v
i
s
i
o
n
:
0
O
p
e
r
a
t
o
r
D
a
d
F-41

Goodwill of c868 thousand arose from the first-time consolidation of F.W. Woolworth Co.
Ges.m.b.H. as at 31 December 2010. The figures included in the financial statements in respect of
this business combination are still provisional. The transaction did not take place until the end of
the reporting period with the result that the determination of the fair values of the assets and
liabilities acquired has not yet been completed in all respects. Adjustments may therefore still be
made to the amounts included in the consolidated financial statements within the period of one
year prescribed by IFRS 3.45 for the measurement of the assets and liabilities. In consequence,
the determination of the goodwill is also still provisional. Furthermore, it has not yet been possible
to allocate the goodwill arising on the first-time consolidation of the acquiree to the cash-generating
units in accordance with the internal reporting system on a definitive basis. In order to comply with
the requirements of IAS 36 and to ensure that goodwill does not become impaired, an impairment
test was approximated on the basis of the results available to date. The recoverable amount was
determined using the fair value less costs to sell on the approximated basis of 3-year cash flow
projections. A post-tax discount rate of 6.46 percent was applied. On the basis of the detailed
projections used, the growth discount was fixed at 1 percent. The approximated calculation gave
no indication of any need for a write-down of goodwill as reported, since the fair value less costs
to sell was higher than the carrying amount.
The finance lease agreements consist of a licence for the ‘‘VIVENTY by Bernd Berger’’ trademark.
The lease agreement provides for components of rent that are dependent on the level of sales.
The lease has a term of 4 years with a subsequent obligation to buy.
Contingent rental expenses of c34 thousand (prior year c0 thousand) were recognised in the
income statement in respect of the licences acquired by means of a finance lease.
No impairment losses were identified in financial year 2010 in respect of assets from finance
leases (prior year c448 thousand) or internally generated assets (prior year c1,439 thousand). For
further information, please refer to Note 6 Depreciation, amortisation and impairment.
11. Property, plant and equipment
Property, plant and equipment include leased land and buildings attributable to the Group as
economic owner as a result of the structure of the underlying lease agreements. In order to ensure
that these lease agreements, capitalised as finance leases, are measured at the appropriate
amount, they were reviewed with the aim of identifying any impairment write-downs that might be
necessary. The reviews of the individual stores do not result in any indications of impairment.
The remaining items of property, plant and equipment consist mainly of the fixtures and fittings of
the stores.
A
c
1
0
4
7
0
8
p
u
0
7
0
P
r
o
o
f
7
:
2
7
.
5
.
1
1
B
/
L
R
e
v
i
s
i
o
n
:
0
O
p
e
r
a
t
o
r
D
a
d
F-42

The development of property, plant and equipment in financial year 2010 was as follows:
Land and land
rights
Buildings
(incl.
buildings on
third-party
land)
Buildings
under finance
leases
Technical
equipment
and
machinery
Other
operating and
office
equipment
Pre-payments
/ assets under
construction Total
c’000 c’000 c’000 c’000 c’000 c’000 c’000
Cost 1 Jan. 2010 ......................... 228 55,417 129,285 10,967 69,552 39 265,488
Additions....................................... 0 1,687 940 0 2,238 73 4,938
Disposals ...................................... 0 -1,293 -60 -116 -2,737 0 -4,206
Reclassifications ........................... 0 32 0 0 7 -39 0
Reclassification discontinued
operations ................................. 0 -200 0 -10,851 -6,352 0 -17,403
Change in group of consol.
companies ................................ 0 59 0 0 356 0 415
As at 31 Dec. 2010...................... 228 55,702 130,165 0 63,064 73 249,232
Depreciation 1 Jan. 2010 ........... 0 -40,956 -95,341 -4,279 -53,942 0 -194,518
Additions....................................... 0 -2,865 -6,300 -338 -3,793 0 -13,296
Disposals ...................................... 0 1,012 0 119 1,911 0 3,042
Reclassifications ........................... 0 0 -547 0 0 0 -547
Reclassification discontinued
operations ................................. 0 39 0 4,498 4,132 0 8,669
As at 31 Dec. 2010...................... 0 -42,770 -102,188 0 -51,692 0 -196,650
Impairment 1 Jan. 2010.............. -53 -231 -547 -4,602 -1,777 0 -7,210
Additions....................................... 0 0 0 0 0 0 0
Disposals ...................................... 0 0 0 0 0 0 0
Reversals...................................... 0 0 0 0 0 0 0
Reclassifications ........................... 0 0 547 0 0 0 547
Reclassification discontinued
operations ................................. 0 111 0 4,602 1,583 0 6,296
As at 31 Dec. 2010...................... -53 -120 0 0 -194 0 -367
Net book value 31 Dec. 2009..... 175 14,230 33,397 2,086 13,833 39 63,760
Net book value 31 Dec. 2010..... 175 12,812 27,977 0 11,178 73 52,215
The additions to depreciation amounting to c13,296 thousand were reported in the income
statement as follows:
2010
c’000
Depreciation and amortisation ............................................................................................ 12,749
Profit/loss from discontinued operations ............................................................................. 547
The development of property, plant and equipment in financial year 2009 was as follows:
Land and land
rights
Buildings
(incl.
buildings on
third-party
land)
Buildings
under finance
leases
Technical
equipment
and
machinery
Other
operating and
office
equipment
Pre-payments
/ assets under
construction Total
c’000 c’000 c’000 c’000 c’000 c’000 c’000
Cost 1 Jan. 2009 ......................... 873 59,139 131,774 10,804 72,340 0 274,930
Additions....................................... 0 953 0 171 1,513 39 2,676
Disposals ...................................... 0 -393 -2,489 -8 -4,301 0 -7,191
Reclassification of investment
property..................................... -645 -4,282 0 0 0 0 -4,927
As at 31 Dec. 2009...................... 228 55,417 129,285 10,967 69,552 39 265,488
Depreciation 1 Jan. 2009 ........... 0 -38,658 -91,264 -3,847 -52,817 0 -186,586
Additions....................................... 0 -3,243 -6,547 -432 -4,305 0 -14,527
Disposals ...................................... 0 292 2,470 0 3,180 0 5,942
Reclassification of investment
property..................................... 0 653 0 0 0 0 653
As at 31 Dec. 2009...................... 0 -40,956 -95,341 -4,279 -53,942 0 -194,518
Impairment 1 Jan. 2009.............. 0 -112 -547 -4,602 -2,342 0 -7,603
Additions....................................... -53 -119 0 0 0 0 -172
Disposals ...................................... 0 0 0 0 0 0 0
Reversals...................................... 0 0 0 0 565 0 565
As at 31 Dec. 2009...................... -53 -231 -547 -4,602 -1,777 0 -7,210
Net book value 31 Dec. 2008..... 873 20,369 39,963 2,355 17,181 0 80,741
Net book value 31 Dec. 2009..... 175 14,230 33,397 2,086 13,833 39 63,760
A
c
1
0
4
7
0
8
p
u
0
7
0
P
r
o
o
f
7
:
2
7
.
5
.
1
1
B
/
L
R
e
v
i
s
i
o
n
:
0
O
p
e
r
a
t
o
r
D
a
d
F-43

The additions to depreciation amounting to c14,527 thousand were reported in the income
statement as follows:
2009
c’000
Depreciation and amortisation ............................................................................................ 13,868
Profit/loss from discontinued operations ............................................................................. 659
For information relating to the impairment losses and reversals recognised, please refer to Note 6
Depreciation, amortisation and impairment.
The finance and operating lease agreements relate principally to leased buildings for stores. The
lease agreements generally include renewal clauses as well as price adjustment clauses based on
changes in the rental price index. In addition, variable components of rent are contingent
depending on the sales achieved in the individual stores. In financial year 2010, the contingent
rental payments under finance lease agreements amounted to c1,254 thousand (prior year
c812 thousand), while those under operating lease agreements were c1,170 thousand (prior year
c3,433 thousand).
As in the previous year, no impairment losses were recognised in respect of assets from finance
leases in financial year 2010.
The terms of the leases generally amount to between 5 and 20 years with renewal options. The
renewal options must be exercised by the Company, depending on the particular lease agreement,
at a specified time prior to expiry of the lease agreement. This period ranges between three and
twelve months prior to expiry of the lease agreement. The renewal terms amount to between one
year and five years.
The expenses for operating lease agreements in the financial year amounted to c49,413 thousand
(prior year c48,360 thousand). Expenses for operating lease agreements in the discontinued
operations in the prior year amounted to c1,990 thousand. The operating lease agreements contain
similar renewal options.
The obligations from operating leases are due in subsequent periods as follows:
2010 2009
c’000 c’000
Operating leases
Future minimum lease payments
up to 1 year................................................................................................ 33,656 32,304
1 to 5 years................................................................................................ 91,889 103,053
more than 5 years...................................................................................... 47,356 61,021
172,901 196,378
In the previous year, there were also obligations from operating leases relating to discontinued
operations in the amounts of c2,060 thousand (up to 1 year), c8,183 thousand (1 to 5 years) and
c15,300 thousand (more than 5 years).
Property, plant and equipment amounting to c618 thousand (prior year c639 thousand) serves as
collateral for financial liabilities.
12. Investment property
The investment property reported in the financial statements consists of land and a building held
by the special purpose entity ALASKA GmbH & Co. KG included in the consolidation that was
reclassified out of property, plant and equipment during financial year 2009. The building is no
longer used in its entirety by the Adler Group and is intended for the most part to be let. The
portion which is now available to be let was reclassified as investment property. It is carried at fair
value. The fair value at both balance sheet dates was determined by an expert valuer on the basis
of market data. At the date of the reclassification in 2009, this resulted in the recognition of an
impairment charge amounting to c900 thousand. Rental income of c3 thousand (prior year
c0 thousand) was generated in financial year 2010.
A
c
1
0
4
7
0
8
p
u
0
7
0
P
r
o
o
f
7
:
2
7
.
5
.
1
1
B
/
L
R
e
v
i
s
i
o
n
:
0
O
p
e
r
a
t
o
r
D
a
d
F-44

2010 2009
c’000 c’000
Cost 1 Jan. ................................................................................................... 3,374 0
Reclassification from property, plant and equipment..................................... 0 4,274
Impairment..................................................................................................... 0 -900
As at 31 Dec................................................................................................. 3,374 3,374
As in the previous year, the full amount of investment property serves as collateral for financial
liabilities.
Expenses for maintenance and repairs amounting to c26 thousand (prior year c17 thousand) were
incurred during the financial year.
13. Other receivables and other assets
31 Dec.
2010
31 Dec.
2009
c’000 c’000
Non-current receivables and other assets
Payments into a money market fund to cover partial retirement commitments
(held in trust) ............................................................................................. 381 414
Security deposits and sureties....................................................................... 158 158
Prepaid expenses .......................................................................................... 110 135
649 707
Current receivables and other assets
Receivables from related parties
Adler Treasury GmbH (affiliated company)................................................ 0 36,407
0 36,407
Tax receivables ............................................................................................. 466 2,156
Prepaid expenses .......................................................................................... 686 638
Credit card receivables.................................................................................. 1,284 784
Other.............................................................................................................. 1,472 1,147
3,908 41,132
Other receivables and other assets include financial assets amounting to c1,823 thousand (prior
year c37,763 thousand).
Current prepaid expenses include an amount of c158 thousand (prior year c0 thousand)
representing deferred expenditure in connection with the planned capital increase.
The tax receivables consist entirely of income tax receivables by foreign companies. They are the
result of overpayments of tax for the current and previous financial years.
The prepaid expenses relate to advance payments of rent, building cost subsidies and
maintenance contracts.
The loan to Adler Treasury GmbH in an amount of c36,407 thousand included in the previous year
was offset against a withdrawal from capital reserves during the financial year. For this purpose,
Adler Modemärkte GmbH assigned the whole of the loan amounting to c39,228 thousand (see
Note 34) including interest accrued to date to AMODA GmbH.
14. Available-for-sale financial assets
Available-for-sale financial assets amounting to c263 thousand (prior year c0 thousand) include
securities that it was not possible to allocate to any of the other measurement categories set out in
IAS 39. The item consists entirely of fund units. The fund units were acquired by the Adler Group
A
c
1
0
4
7
0
8
p
u
0
7
0
P
r
o
o
f
7
:
2
7
.
5
.
1
1
B
/
L
R
e
v
i
s
i
o
n
:
0
O
p
e
r
a
t
o
r
D
a
d
F-45

as at 31 December 2010 in the course of the acquisition of F.W. Woolworth Co. Ges.m.b.H. They
were initially recognised at fair value. As a result, no changes in the fair value have yet been
required to be recognised in other comprehensive income.
15. Deferred tax assets
Deferred tax assets and liabilities are netted if there is a legally enforceable right to offset current
tax assets against current tax liabilities and if the deferred taxes relate to the same tax authority.
The deferred tax liabilities and deferred tax assets relate to the following items:
31 Dec.
2010
31 Dec.
2009
c’000 c’000
Deferred tax assets
Intangible assets............................................................................................ 538 249
Property, plant and equipment ...................................................................... 19 22
Investment property....................................................................................... 878 880
Inventories ..................................................................................................... 334 0
Receivables and other current assets ........................................................... 689 511
Provisions ...................................................................................................... 723 118
Liabilities ........................................................................................................ 16,236 4,343
Tax loss carryforwards .................................................................................. 19 19
Total deferred tax assets ............................................................................ 19,436 6,142
of which current.......................................................................................... 3,099 5,431
of which non-current .................................................................................. 16,337 711
Deferred tax liabilities
Intangible assets............................................................................................ 34 0
Property, plant and equipment ...................................................................... 7,529 2,889
Investment property....................................................................................... 726 727
Inventories ..................................................................................................... 0 0
Provisions ...................................................................................................... 3,375 595
Liabilities ........................................................................................................ 131 1
Total deferred tax liabilities........................................................................ 11,795 4,212
of which current.......................................................................................... 2,025 4,210
of which non-current .................................................................................. 9,770 2
Netting of deferred tax assets and liabilities.................................................. -11,167 -3,899
Balance sheet amount of deferred tax assets .......................................... 8,269 2,243
Balance sheet amount of deferred tax liabilities...................................... 628 313
The changes in deferred tax assets compared with the previous year were recorded in profit or
loss unless they resulted from the change in the group of consolidated companies.
The loss carryforwards for corporation tax and trade tax purposes shown here relate entirely to
German companies. No deferred tax assets were recognised in respect of portions of existing
foreign loss carryforwards for corporation tax purposes amounting to c24,739 thousand (prior year
c7,690 thousand).
The calculation of deferred taxes resulted in a surplus of deferred tax assets. Where there was
doubt about the recoverability of the deferred tax assets due to insufficient projected earnings in
the local tax budgets, the deferred tax assets in such cases were recognised only up to the
amount of the deferred tax liabilities.
No deferred tax liabilities were recognised in respect of temporary differences in connection with
investments in subsidiaries amounting to c1,604 thousand (prior year c1,706 thousand).
Please refer also to the information under accounting policies and the details provided in Note 8.
A
c
1
0
4
7
0
8
p
u
0
7
0
P
r
o
o
f
7
:
2
7
.
5
.
1
1
B
/
L
R
e
v
i
s
i
o
n
:
0
O
p
e
r
a
t
o
r
D
a
d
F-46

16. Inventories
31 Dec.
2010
31 Dec.
2009
c’000 c’000
Germany........................................................................................................ 46,274 46,394
International ................................................................................................... 10,475 7,206
56,749 53,600
Inventories are measured respectively at the lower of cost or the net realisable selling price on the
balance sheet date less costs still to be incurred. In financial year 2010, impairment allowances on
inventories were c1,567 thousand lower (prior year c1,322 thousand higher) compared with the
previous year. Impairment allowances of c1,744 thousand (prior year c1,322 thousand) were
recognised mainly as a result of excessive inventory days and lack of marketability.
Inventories consist solely of merchandise.
17. Trade receivables
All trade receivables have a remaining maturity of up to one year. Valuation allowances in respect
of trade receivables were not necessary. None of the trade receivables are overdue. All of the
receivables are denominated in euros.
The Adler Group did not receive any collateral or other credit enhancements as security for trade
receivables in financial years 2010 and 2009, nor as security for outstanding invoices.
For those receivables that were neither impaired nor overdue, there were no indications at the
balance sheet date that the associated payments will not be made when they fall due.
As at 31 December 2010, trade receivables amounting in total to c1,258 thousand (prior year
c0 thousand) due from a subsidiary of BluO beta equity Limited (affiliated company) were reported.
18. Cash and cash equivalents
Cash and cash equivalents were made up as follows:
31 Dec.
2010
31 Dec.
2009
c’000 c’000
Balances with banks...................................................................................... 29,370 33,579
Cash-in-hand ................................................................................................. 3,586 3,412
None of the cash was subject to restrictions on disposal at the balance sheet dates.
19. Equity
32,956 36,991
Subscribed capital
The subscribed capital of Adler Modemärkte GmbH, Haibach, was unchanged at c15,860 thousand
in the period under review. The equity interests of the shareholders are fully paid-up.
Capital reserves
The Company’s capital reserves amounted to c101,001 thousand at the balance sheet date. The
capital reserves fell by c37,156 thousand in financial year 2010 from c138,157 thousand. The
decline was the result of a withdrawal from capital reserves amounting to c39,228 thousand, an
increase in capital reserves amounting to c1,572 thousand and an income subsidy amounting to
c500 thousand granted by the shareholder, which is not reported as income under the
requirements of IFRS but is added directly to capital reserves.
A
c
1
0
4
7
0
8
p
u
0
7
0
P
r
o
o
f
7
:
2
7
.
5
.
1
1
B
/
L
R
e
v
i
s
i
o
n
:
0
O
p
e
r
a
t
o
r
D
a
d
F-47

The withdrawal from capital reserves amounting to c39,228 thousand took the form of the
assignment to AMODA GmbH of a portion of a receivable due from Adler Treasury GmbH for the
same amount. For more information, please also see Note 34. The increase in capital reserves of
c1,572 thousand was effected by offsetting a portion of the liability for the profit and loss transfer
for the previous year.
In financial year 2009, the capital reserves rose by c53,100 thousand from c85,057 thousand. The
increase was made up of two contributions to capital reserves amounting to c25,600 thousand and
c13,000 thousand, together with an income subsidy amounting to c14,500 thousand granted by the
shareholder, which is not reported as income under the requirements of IFRS but is added directly
to capital reserves.
By a receivables purchase and assignment agreement dated 13 October 2009, Adler Treasury had
assigned a portion of the receivables due to it from AMODA GmbH amounting to c17,500
thousand to Adler Modemärkte GmbH. The purchase price amounted to c2,500 thousand. By
31 December 2009, the end of the financial year, AMODA GmbH had settled receivables due to
Adler Modemärkte GmbH amounting to c17,000 thousand. This resulted in the recognition of an
income subsidy amounting to c14,500 thousand. AMODA paid the remaining amount in financial
year 2010, which resulted in the recognition of an income subsidy amounting to c500 thousand.
Net accumulated losses
For details relating to the changes in net retained profits/net accumulated losses, please refer to
the information presented in the consolidated statement of changes in equity.
Dividend restrictions
The articles of association of Adler Modemärkte GmbH contain no provisions for dividend
restrictions over and above the statutory minimum.
Capital management
The Adler Group’s objectives with respect to capital management are firstly to ensure that the
business is able to continue operations on a long-term basis and to generate adequate returns for
the shareholders, and secondly to maintain an optimal capital structure in order to reduce the cost
of capital.
The capital structure is managed in such a way as to take account of changes in the general
economic environment and the risks attaching to the underlying assets. As a result of its healthy
operating cash flow, the Company is in a position to deploy its own financial resources in the best
possible way. For example, investments are regularly reviewed to see whether the Company’s own
available financial resources can be replaced by external (lease) financing in order to take
advantage of improved purchasing prices for goods (e.g. discounts) or to exploit advantageous
opportunities for sales arising at short notice. The Adler Group is normally in constant contact with
banks for the purpose of considering the use of bank loans to optimise the return on equity.
In this context, the raising of new debt is managed on the basis of a target debt structure. The
choice of financial instruments is mainly influenced by the objective of matching the maturities of
assets and liabilities which is achieved by managing the maturities of the instruments issued.
Capital is monitored on the basis of the indebtedness ratio, calculated as the relationship of net
debt to equity.
31 Dec.
2010
31 Dec.
2009
c’000 c’000
Equity............................................................................................................. 41,167 69,274
Debt ............................................................................................................... 121,548 135,695
Indebtedness ratio....................................................................................... 2.95 1.96
20. Provisions for pensions and other employee benefits
The provisions for pensions comprise firstly capital commitments to employees who began their
employment with Adler Modemärkte GmbH prior to 1980 and also individual commitments to the
A
c
1
0
4
7
0
8
p
u
0
7
0
P
r
o
o
f
7
:
2
7
.
5
.
1
1
B
/
L
R
e
v
i
s
i
o
n
:
0
O
p
e
r
a
t
o
r
D
a
d
F-48

founders of the firm and certain former members of management. The amount of the provision
recognised in the balance sheet is made up as follows:
31 Dec.
2010
31 Dec.
2009
c’000 c’000
Provisions for pensions (direct commitments) ............................................... 3,990 3,048
Provisions for severance payments............................................................... 617 275
Provisions for company pension schemes .............................................. 4,607 3,323
The development of the pension obligations representing the present value of commitments granted
under defined benefit plans in the Adler Group companies was as follows:
31 Dec.
2010
31 Dec.
2009
c’000 c’000
As at 1 Jan. .................................................................................................. 4,821 4,826
Current service cost....................................................................................... 107 110
Interest cost................................................................................................... 241 268
Pensions paid ................................................................................................ -403 -555
Actuarial losses ............................................................................................. 537 172
Change in group of consolidated companies ................................................ 1,495 0
Reclassification liabilities held for sale........................................................... -11 0
As at 31 Dec. of ........................................................................................... 6,787 4,821
The associated plan assets developed as follows:
31 Dec.
2010
31 Dec.
2009
c’000 c’000
As at 1 Jan. .................................................................................................. 1,490 1,397
Contributions (employer)................................................................................ 165 188
Expected interest income .............................................................................. 61 64
Pension payments (severance payments) -95 -223
Actuarial gains (+)/losses (-) for the year ...................................................... -43 64
Fair value of plan assets as at 31 Dec. ..................................................... 1,578 1,490
The plan assets consist of a direct insurance policy taken out to cover the obligations arising from
severance payments. In accordance with IAS 19, the resulting claim against the insurance
company is offset as plan assets against the provision for severance payments required to be
recognised. The premiums are paid in the respective calendar year.
The expected return on plan assets is determined on a uniform basis, taking into account longterm
historical yields, the allocation of assets and estimates of the long-term yield on investments
in the future. The actual return on plan assets in the financial year amounted to c18 thousand
(prior year: c128 thousand).
A
c
1
0
4
7
0
8
p
u
0
7
0
P
r
o
o
f
7
:
2
7
.
5
.
1
1
B
/
L
R
e
v
i
s
i
o
n
:
0
O
p
e
r
a
t
o
r
D
a
d
F-49

The reconciliation of the obligations with the amount of the provision is as follows:
31 Dec.
2010
31 Dec.
2009
c’000 c’000
Unfunded defined benefit obligation .............................................................. 5,062 3,300
Wholly or partly funded defined benefit obligation......................................... 1,725 1,521
Subtotal ......................................................................................................... 6,787 4,821
less fair value of plan assets ......................................................................... -1,578 -1,490
Funded status 31 Dec. ................................................................................ 5,209 3,331
Actuarial gains (+)/losses (-) not yet recognised ........................................... -606 -8
Reclassification liabilities held for sale........................................................... 4 0
Provision for company pension schemes as at 31 Dec. ......................... 4,607 3,323
The experience adjustments to the amounts recognised in the balance sheet were as follows:
2010 2009 2008
c’000 c’000 c’000
Experience adjustments to liabilities......................................... 537 40 125
Experience adjustments to plan assets.................................... 43 -63 -39
The amounts recognised in the income statement in the period under review were made up as
follows:
2010 2009
c’000 c’000
Interest cost of defined benefit obligation...................................................... 240 268
Expected interest income from plan assets................................................... -61 -64
Service cost ................................................................................................... 107 110
Realised actuarial gains................................................................................. -10 -17
276 297
The expected funding for post-employment benefits plans for the financial year ending 31 December
2011 amounts to c165 thousand (prior year c188 thousand).
The current employers’ contributions to the statutory pension scheme are included as an expense
in the operating profit or loss for the relevant year and amounted to c5,926 thousand (prior year
c6,778 thousand) for the Group as a whole in the financial year.
The funded status of the pension provisions in prior years developed as follows:
31 Dec.
2008
1 Jan.
2008
c’000 c’000
Unfunded defined benefit obligation .............................................................. 3,344 3,420
Wholly or partly funded defined benefit obligation......................................... 1,482 1,596
Subtotal ......................................................................................................... 4,826 5,016
less fair value of plan assets ......................................................................... -1,397 -1,364
A
c
1
0
4
7
0
8
p
u
0
7
0
P
r
o
o
f
7
:
2
7
.
5
.
1
1
B
/
L
R
e
v
i
s
i
o
n
:
0
O
p
e
r
a
t
o
r
D
a
d
Funded status 31 Dec. ................................................................................ 3,429 3,652
F-50

21. Other provisions (non-current and current)
Restructuring
/ termination
payments
Rent and
incidental
rental
expenses
Other
provisions for
personnel
expenses
Other
provisions Total
As at 1 Jan. 2009....................... 13,763 1,542 1,154 975 17,434
Utilisations................................... -10,282 -578 -685 -467 -12,012
Additions ..................................... 1,843 1,494 553 167 4,057
Reversals .................................... -3,481 -398 0 -146 -4,025
Interest accrual ........................... 0 0 111 0 111
As at 31 Dec. 2009 .................... 1,843 2,060 1,133 529 5,565
Non-current ................................. 0 0 632 272 904
Current ........................................ 1,843 2,060 501 257 4,661
As at 31 Dec. 2009 .................... 1,843 2,060 1,133 529 5,565
Utilisations................................... -1,533 -1,919 -691 -260 -4,403
Additions ..................................... 508 1,640 451 250 2,849
Reversals .................................... -264 -141 0 -5 -410
Interest accrual ........................... 0 0 56 0 56
Addition to group of consol.
companies ............................... 136 0 107 54 297
Reclassification of discontinued
operations................................ -47 0 -71 0 -118
As at 31 Dec. 2010 .................... 643 1,640 985 568 3,836
Non-current ................................. 0 0 889 155 1,044
Current ........................................ 643 1,640 96 413 2,792
As at 31 Dec. 2010 .................... 643 1,640 985 568 3,836
The obligations from restructuring activities comprise expenses associated with the closing of
stores in 2009 and 2010 in addition to provisions for termination costs.
The provision for rent and incidental rental expenses relates to additional rent payable due to rent
indexation provisions and possible additional payments arising from operating income and
expenses statements.
The other provisions for personnel expenses relate to partial retirement commitments and
provisions for anniversaries and death benefits, based on actuarial assumptions and discounted to
reflect the expected maturities.
Other provisions include provisions for the costs of retaining documents and also, in the prior year,
provisions for onerous contracts with a non-current portion amounting to c155 thousand (prior year
c272 thousand).
A
c
1
0
4
7
0
8
p
u
0
7
0
P
r
o
o
f
7
:
2
7
.
5
.
1
1
B
/
L
R
e
v
i
s
i
o
n
:
0
O
p
e
r
a
t
o
r
D
a
d
F-51

22. Financial liabilities
31 Dec.
2010
31 Dec.
2009
c’000 c’000
Liabilities to METRO Finance B.V. 5 1 year............... 248 46
Liabilities to METRO Finance B.V. 4 1 year............... 4,360 4,802
4,608 4,848
Liabilities to Adler Treasury GmbH
(affiliated company) 5 1 year............... 50 0
50 0
Liabilities to banks 5 1 year............... 57 0
57 0
Liabilities from Adler customer card 5 1 year............... 13,858 13,526
13,858 13,526
18,573 18,374
The liability to METRO Finance B.V. (affiliated company until 6 March 2009) comprises a loan at a
current fixed rate of interest of 3.26% p.a. (interest rate fixed from 1 April 2009 to 31 March 2011).
The loan paid a fixed rate of interest of 5.04% p.a. until 31 March 2009. The loan has a maturity
date of 31 July 2024 and is repaid in quarterly instalments.
The liabilities from the Adler customer card represent discount entitlements not yet utilised due to
customers who have settled their purchases using the Adler customer card. The customers can
offset the discount entitlement obtained from making a purchase against a subsequent purchase or
can have the amount paid in cash. The amount not yet utilised at the balance sheet date is
reported in full as a financial liability in accordance with the requirements of IAS 39. Since the
entitlements expire at the latest on 31 December of the following year, the item is included in
current financial liabilities. The amounts credited to customers do not bear interest.
Based on the normal payment agreements with banks and other business partners, the maturities
of the current financial liabilities and therefore the associated cash outflows are as follows:
31 Dec.
2010
31 Dec.
2009
c’000 c’000
14,358 13,813
of which due in the following time bands:
5 30 days ..................................................................................................... 13,913 13,526
30 – 90 days.................................................................................................. 149 107
90 – 180 days................................................................................................ 99 61
180 days – 1 year.......................................................................................... 197 120
The liabilities from the Adler customer card are presented within the ‘‘under 30 days’’ time band
since the customers are entitled to redeem their credit at any time within twelve months. In
accordance with IFRS 7 liabilities of this nature that are payable at any time are allocated to the
earliest time band.
As at 31 December 2010, the financial liabilities were secured by items of property, plant and
equipment with a carrying amount of c618 thousand and by investment property with a carrying
amount of c3,374 thousand. As at 31 December 2009, the financial liabilities were secured by
items of property, plant and equipment with a carrying amount of c639 thousand and by
investment property with a carrying amount of c3,374 thousand.
A
c
1
0
4
7
0
8
p
u
0
7
0
P
r
o
o
f
7
:
2
7
.
5
.
1
1
B
/
L
R
e
v
i
s
i
o
n
:
0
O
p
e
r
a
t
o
r
D
a
d
All of the financial liabilities are repayable in euros.
F-52

23. Finance lease obligations
The Group’s property, plant and equipment include assets classified under licences and land and
buildings that are attributable to the Group as economic owner as a result of the structure of the
underlying lease agreements. The Group’s obligations arising from finance lease agreements of this
nature can be seen from the following table:
31 Dec.
2010
31 Dec.
2009
c’000 c’000
Finance lease agreements
Future minimum lease payments
up to 1 year................................................................................................ 12,941 12,912
1 to 5 years................................................................................................ 36,532 42,521
more than 5 years...................................................................................... 6,135 12,221
55,608 67,654
Discounting
up to 1 year................................................................................................ -3,179 -3,904
1 to 5 years................................................................................................ -5,913 -8,452
more than 5 years...................................................................................... -477 -1,112
-9,569 -13,468
Present value
up to 1 year................................................................................................ 9,762 9,008
1 to 5 years................................................................................................ 30,619 34,069
more than 5 years...................................................................................... 5,658 11,109
46,039 54,186
The finance lease agreements relate principally to leased buildings for stores. The decline in the
liabilities reflects the lower amount of the obligations for rental payments.
The terms of the leases generally amount to between 5 and 20 years with renewal options. All of
the liabilities from finance leases are repayable in euros.
24. Trade payables
Trade payables at the balance sheet date are due in their entirety, as in the previous year, to third
parties unrelated to the Group. Also as in the previous year, all trade payables are due within one
year.
Based on the normal payment agreements with suppliers and other business partners, the
maturities of the current trade payables and therefore the associated cash outflows are as follows:
31 Dec.
2010
31 Dec.
2009
c’000 c’000
Carrying amount.......................................................................................... 27,829 33,135
of which due in the following time bands:
5 30 days ..................................................................................................... 19,426 15,109
30 – 90 days.................................................................................................. 8,403 18,026
90 – 180 days................................................................................................ 0 0
180 days – 1 year.......................................................................................... 0 0
All of the trade payables are due in euros, as in previous years.
No collateral has been provided by the Adler Group for the trade payables reported. Goods are
delivered by suppliers subject to the retention of title provisions applying in the specific country.
A
c
1
0
4
7
0
8
p
u
0
7
0
P
r
o
o
f
7
:
2
7
.
5
.
1
1
B
/
L
R
e
v
i
s
i
o
n
:
0
O
p
e
r
a
t
o
r
D
a
d
F-53

25. Other current liabilities
31 Dec.
2010
31 Dec.
2009
c’000 c’000
Liabilities from VAT........................................................................................ 5,093 5,234
Liabilities for wages and salaries................................................................... 4,861 3,422
Liabilities to Amoda GmbH (parent company)............................................... 3,968 4,216
Liabilities to customers for gift vouchers sold................................................ 2,600 2,250
Liabilities for customs duties.......................................................................... 842 1,020
Liabilities from wages tax .............................................................................. 622 949
Social security contributions .......................................................................... 380 318
Accrued lease payments ............................................................................... 363 893
Employers’ liability insurance......................................................................... 331 387
Deferred building cost subsidies.................................................................... 217 351
Miscellaneous ................................................................................................ 225 513
19,502 19,553
Other current liabilities include financial liabilities amounting to c6,925 thousand (prior year c6,879
thousand).
The liabilities to AMODA GmbH mainly reflect (in the prior year in an amount of c2,094 thousand)
the remaining liability from the profit and loss transfer of Adler Modemärkte GmbH for the
respective financial year. As at the end of financial year 2010, Adler Modemärkte GmbH had
granted Adler Treasury GmbH a loan for c7,300 thousand. The loan paid interest at a rate of
0.8% p.a. By a receivables purchase and assignment agreement dated 23 December 2010, Adler
Modemärkte GmbH assigned this loan, the outstanding amount of the other loans of c772
thousand and accrued interest amounting to c4,720 thousand to AMODA GmbH as at 31 December
2010. The interest of c4,720 thousand resulted from the grant of a loan to Adler Treasury GmbH
for a total nominal amount of c47,300 thousand with disbursements in 2009 and 2010. By a netting
agreement dated 23 December 2010, Adler Modemärkte GmbH and AMODA GmbH agreed to
offset, as at 31 December 2010, the receivables amounting to c12,792 thousand due to Adler
Modemärkte GmbH arising from the receivables purchase and assignment agreement dated
23 December 2010 and the trade tax payments of c1,535 thousand paid by Adler Modemärkte
GmbH on behalf of AMODA GmbH against the receivable due to AMODA GmbH in respect of the
profit and loss transfer for financial year 2010 amounting to c18,373 thousand.
The miscellaneous current liabilities include an amount of c26 thousand (prior year c26 thousand)
in respect of the compensation entitlement of the limited partners in Alaska GmbH & Co. KG which
is limited to this amount.
26. Income tax liabilities
The income tax liabilities at the balance sheet date relate in their entirety to foreign income tax
liabilities. In the previous year, this item included corporation tax liabilities amounting to c907
thousand and trade tax liabilities of c339 thousand.
27. Statement of cash flows
The statement of cash flows shows the development of the Adler Group’s cash and cash
equivalents in the year under review and the prior year. Cash and cash equivalents are defined for
this purpose as holdings of cash and cash equivalents less cash subject to restrictions on disposal.
In accordance with IAS 7, the cash flows are classified as cash from/used in operating activities,
investing activities and financing activities.
A
c
1
0
4
7
0
8
p
u
0
7
0
P
r
o
o
f
7
:
2
7
.
5
.
1
1
B
/
L
R
e
v
i
s
i
o
n
:
0
O
p
e
r
a
t
o
r
D
a
d
F-54

2010 2009
c’000 c’000
Cash from (+)/ used in (-) operating activities (net cash flow) ...................... 25,800 7,192
Cash from (+)/ used in (-) investing activities................................................ -16,759 -37,842
Free cash flow ............................................................................................. 9,041 -30,650
Cash from (+)/ used in (-) financing activities................................................ -13,076 42,424
Net decrease (-) / increase (+) in cash and cash equivalents ................. -4,035 11,774
The statement of cash flows was prepared according to the indirect method. Impairment losses are
presented on a separate line within operating cash flow.
Cash and cash equivalents as at 31 December 2010 amounted to c32,956 thousand (prior year
c36,991 thousand) and include demand deposits with banks, cheques and cash-in-hand. There
was no cash subject to restrictions on disposal during the reporting period.
Other non-cash income and expenses amounting to c10,311 thousand (prior year c14,230
thousand) include valuation allowances in respect of inventories, additions to other provisions and
additions to current financial liabilities from the Adler customer card.
The following material non-cash transactions took place in financial year 2010:
A portion amounting to c1,572 thousand of the liability of c2,094 thousand due to AMODA GmbH
in respect of the profit and loss transfer agreement for the previous year was contributed to capital
reserves, while a further portion amounting to c500 thousand was granted to the Company as an
income subsidy, which is also accounted for as a contribution to capital reserves under the
requirements of IFRS.
An amount of c39,228 thousand was withdrawn from capital reserves by the shareholder, but this
amount was offset against receivables due to the Company from the shareholder and the full
amount therefore had no effect on cash. The recognition of the liability from the profit and loss
transfer for financial year 2010 amounting to c18,373 thousand had no effect on cash. A portion
amounting to c14,327 thousand of the total amount was offset against receivables due from
AMODA GmbH. The remaining amount of c4,046 thousand had not yet been paid by the end of
financial year 2010. Please see Notes 25 and 34 for details of the amounts offset and the
outstanding liability.
Non-current assets and liabilities from finance leases both rose by c940 thousand with no effect on
cash as a result of an additional finance lease agreement.
Cash flow from investing activities include cash outflows of c376 thousand resulting from the sale
of MOTEX Mode-Textil-Service Logistik und Management GmbH. The purchase price for the
company amounted to c135 thousand. As a result of the sale, cash and cash equivalents of c511
thousand were disposed of.
Cash flow from investing activities also include cash outflows of c237 thousand relating to the
purchase of F.W.Woolworth Co. Ges.m.b.H. The purchase price for the company amounted to
c1,761 thousand. As a result of the purchase of the company, the Group acquired cash and cash
equivalents of c1,524 thousand.
The breakdown of interest paid in the financial years under review was as follows:
2010 2009
c’000 c’000
Interest paid from finance leases .................................................................. 3,865 4,639
Interest paid from operating activities............................................................ 168 205
Total .............................................................................................................. 4,033 4,844
A
c
1
0
4
7
0
8
p
u
0
7
0
P
r
o
o
f
7
:
2
7
.
5
.
1
1
B
/
L
R
e
v
i
s
i
o
n
:
0
O
p
e
r
a
t
o
r
D
a
d
F-55

The following cash flows attributable to the discontinued operations are included in the consolidated
statement of cash flows:
2010 2009
c’000 c’000
Cash from (+)/ used in (-) operating activities (net cash flow) ...................... 563 359
Cash from (+)/ used in (-) investing activities................................................ -131 -285
Free cash flow ............................................................................................. 432 74
Cash from (+)/ used in (-) financing activities................................................ 0 0
Net increase in cash and cash equivalents .............................................. 432 74
28. Segment reporting
2010
Stores
segment
Discontinued
operations
Total
segments
Reconciliation
to IFRS Adler Group
c’000 c’000 c’000 c’000 c’000
External revenue (net)........................... 441,943 3,776 445,719 -910 444,809
Revenue with other segments (net) ...... 0 13,833 13,833 -13,833 0
Total revenue (net)................................ 441,943 17,609 459,552 -14,743 444,809
Profit or loss on goods sold .................. 217,871 13,967 231,838
Total costs............................................. -203,833 -12,557 -216,390
EBITDA 22,703 2,356 25,059 12,790 37,849
Reconciliation to profit or loss from operations
EBITDA ................................................. 37,849
Depreciation and amortisation............... -13,565
Impairment ............................................ 0
EBIT ...................................................... 24,284
Net finance costs .................................. -583
Profit from operations............................ 23,701
2009
Stores
segment
Discontinued
operations
Total
segments
Reconciliation
to IFRS Adler Group
c’000 c’000 c’000 c’000 c’000
External revenue (net)........................... 406,092 4,868 410,960 -5,114 405,846
Revenue with other segments (net) ...... 0 18,232 18,232 -18,232 0
Total revenue (net)................................ 406,092 23,100 429,192 -23,346 405,846
Profit or loss on goods sold .................. 183,835 18,486 202,321
Total costs............................................. -204,278 -17,370 -221,648
EBITDA -6,284 2,027 -4,257 16,731 12,474
Reconciliation to profit or loss from operations
EBITDA ................................................. 12,474
Depreciation and amortisation............... -15,521
Impairment ............................................ -2,322
EBIT ...................................................... -5,369
Net finance costs .................................. -3,103
Loss from operations............................. -8,472
A
c
1
0
4
7
0
8
p
u
0
7
0
P
r
o
o
f
7
:
2
7
.
5
.
1
1
B
/
L
R
e
v
i
s
i
o
n
:
0
O
p
e
r
a
t
o
r
D
a
d
F-56

The profit or loss on goods sold generated by the internal reporting system comprises the gross
profit on goods sold and reimbursements from suppliers.
The segment report was prepared in accordance with IFRS 8 (Operating segments). The segments
were defined in accordance with the Group’s internal management and reporting procedures and
comprise the following reportable segments:
* stores
* textile logistics (discontinued in financial year 2010).
The stores segment comprises the Company’s entire activities relating to the stores operated by
the Adler Group.
The textile logistics segment comprises the Adler Group’s activities relating to the preparation and
distribution of textile goods. The entire textile logistics segment was sold during the financial year
as at 30 September and is therefore reported only under the profit or loss from discontinued
operations in the financial years presented in the consolidated income statement in these
consolidated financial statements. The reconciliation of the information presented in the segment
report therefore relates only to the continuing operations as presented in the consolidated income
statement. The information relating to the discontinued textile logistics segment is presented
separately. No reconciliation has been provided to the profit or loss from discontinued operations
since that item does not appear in the internal reporting system.
Since the internal reporting system is based on the accounting requirements of the HGB, the
information contained in the segment report has been prepared on the basis of the HGB. In
accordance with the provisions of IFRS 8.28, a reconciliation has been provided to the accounting
principles applied in the consolidated financial statements and therefore to the amounts presented
in the consolidated income statement.
The principal performance indicator used by the Adler Group’s decision makers for management
purposes is the figure reported internally for EBITDA, which is defined as the profit or loss from
operations before interest, taxes, depreciation and amortisation on property, plant and equipment
and intangible assets, and impairment.
The breakdown of the non-current assets, defined as intangible assets, property, plant and
equipment and investment property, by region is as follows:
31 Dec. 2010 31 Dec. 2009
Germany International Group Germany International Group
c’000 c’000 c’000 c’000 c’000 c’000
Non-current assets............ 39,944 18,639 58,583 49,656 20,038 69,694
29. Risk management and the use of derivative financial instruments
The finance department of Adler Modemärkte GmbH monitors and manages the financial risks of
the entire Adler Group. Specifically, those risks are
* Liquidity risks
* Market risks (interest rate and currency risks)
* credit risks
The Adler Group is exposed to a large number of financial risks as a result of its business
activities. We understand risk to mean unexpected events and possible developments that have a
negative effect on achieving the objectives we have set ourselves and our expectations. The risks
that are relevant are those with a material effect on the net assets, financial position and results of
operations of the Company. The Group’s risk management system analyses a range of risks and
attempts to minimise negative effects on the financial position of the Company. The risk
management activities are carried out in the finance department on the basis of established
guidelines.
For the purpose of measuring and managing material individual risks, the Group distinguishes
between liquidity, credit and market risks.
A
c
1
0
4
7
0
8
p
u
0
7
0
P
r
o
o
f
7
:
2
7
.
5
.
1
1
B
/
L
R
e
v
i
s
i
o
n
:
0
O
p
e
r
a
t
o
r
D
a
d
F-57

Liquidity risks
We understand liquidity risk in the narrow sense to mean the risk of being able to meet present or
future payment obligations either not at all or only on unfavourable terms. The Company mainly
generates financial resources through its operating activities.
Adler Modemärkte GmbH functions as the financial coordinator for the companies in the Adler
Group in order to ensure that the financial requirements for the operating business and for
investments are covered on the most favourable terms possible in terms of cost and in amounts
that are always sufficient. The necessary information is provided via a Group financial planning
process with additional 14-day liquidity projections on a rolling weekly basis, and is analysed
constantly.
The long-term corporate financing requirements of the Adler Group are secured by the ongoing
cash flows from operating activities and from leases entered into on a long-term basis.
The intra-Group cash management system enables short-term liquidity surpluses in individual
Group companies to be used as internal financing to meet the cash requirements of other Group
companies. This contributes to a reduction in the volume of external debt financing and to the best
possible use of cash deposits and capital investments, and therefore has a positive effect on the
net interest income and expenses of the Group.
At Group level, a consolidated and integrated liquidity plan is prepared using the latest business
planning and financial projections together with additional special items that are identified at short
notice.
The Adler Group is mainly financed by its own liquid resources generated from its operating
activities. It has only one loan outstanding, to a company within the METRO AG group, which was
used for a property financing transaction. At the balance sheet date, the outstanding amount of the
loan was c4,608 thousand (prior year c4,848 thousand). Current loan liabilities at the balance
sheet date amounted to c248 thousand (prior year c46 thousand). The remaining current financial
liabilities at the balance sheet date amounted to c13,965 thousand (prior year c13,526 thousand).
In financial year 2010 the shareholder granted an income subsidy amounting to c500 thousand
(prior year c14,500 thousand). In addition, a capital increase was carried out in an amount of
c1,572 thousand. On the other hand, an amount of c39,228 thousand was withdrawn from capital
reserves. Neither this withdrawal nor the capital increase had any effect on cash. At the beginning
of financial year 2009 an amount of c38,600 thousand was contributed to capital reserves by the
former shareholder.
Maturity analysis of financial liabilities
The table below shows the maturity structure of the contractual undiscounted cash flows from
financial liabilities:
31 Dec. 2010
up to 1
year
over 1
year
c’000 c’000
Trade payables.............................................................................................. 27,829 0
Financial liabilities.......................................................................................... 14,358 5,384
Liabilities from finance leases........................................................................ 12,941 42,666
Other financial liabilities................................................................................. 6,925 0
31 Dec. 2009
up to 1
year
over 1
year
c’000 c’000
Trade payables.............................................................................................. 33,135 0
Financial liabilities.......................................................................................... 13,813 6,791
Liabilities from finance leases........................................................................ 12,912 54,742
Other financial liabilities................................................................................. 6,879 0
The undiscounted cash outflows are subject to the condition that the liabilities are repaid on the
earliest due date.
A
c
1
0
4
7
0
8
p
u
0
7
0
P
r
o
o
f
7
:
2
7
.
5
.
1
1
B
/
L
R
e
v
i
s
i
o
n
:
0
O
p
e
r
a
t
o
r
D
a
d
F-58

A detailed analysis of the maturity band ‘‘up to 1 year’’ is provided in Note 24 ‘‘Trade payables’’ for
the trade payables and in Note 22 ‘‘Financial liabilities’’ for the financial liabilities.
The maturities of the liabilities from finance leases ‘‘up to 1 year’’ and therefore the associated
cash outflows are as follows:
31 Dec.
2010
31 Dec.
2009
c’000 c’000
Total due within one year ........................................................................... 12,941 12,912
of which due in the following time bands:
5 30 days ..................................................................................................... 864 864
30 – 90 days.................................................................................................. 2,371 2,380
90 – 180 days................................................................................................ 3,235 3,223
180 days – 1 year.......................................................................................... 6,471 6,445
The maturities of the other current liabilities ‘‘up to 1 year’’ and therefore the associated cash
outflows are as follows:
31 Dec.
2010
31 Dec.
2009
c’000 c’000
Total due within one year ........................................................................... 6,925 6,879
of which due in the following time bands:
5 30 days ..................................................................................................... 2,626 2,276
30 - 90 days .................................................................................................. 3,968 2,094
90 - 180 days ................................................................................................ 331 387
180 days - 1 year .......................................................................................... 0 2,122
Credit risks
Credit risks arise from the complete or partial default of a counterparty, for example through
insolvency, and in connection with deposits. The maximum risk of default is equal to the carrying
amounts of all the financial assets. Valuation allowances are recognised in respect of trade
receivables and other receivables and assets in accordance with rules applied consistently across
the Group and cover all identifiable credit risks.
As part of the risk management system, minimum requirements for the credit rating and also
specific upper limits for the exposure are laid down for all business partners of the Adler Group.
The level of the upper credit limit reflects the creditworthiness of a contractual counterparty and the
typical size of the volume of transactions with that party. This is based on a systematic procedure
for approving limits set down in the Treasury guidelines, which relies firstly on the classifications
awarded by international ratings agencies and on internal credit assessments, and secondly on
historical values experienced by the Group with the respective contractual parties. The Adler Group
therefore has a very low exposure to credit risks.
The loans and receivables reported in the consolidated financial statements amounting to c3,161
thousand (prior year c38,365 thousand) are not secured. The maximum risk of default is therefore
equal to the carrying amount of the loans and receivables reported.
Valuation allowances in appropriate amounts are generally recognised in order to take account of
identifiable risks of default in respect of receivables.
None of the loans and receivables reported at the balance sheet date were impaired or overdue.
Market risks (interest rate and currency risks)
We understand market risk to mean the risk of loss that can arise due to a change in market
parameters used for measurement (currency, interest rates, price).
Interest rate and currency risks are significantly reduced and limited by the principles laid down in
the internal Treasury guidelines. These establish mandatory rules applied uniformly across the
Group that all hedging transactions must be subject to predetermined limits and must never result
in an increase in the risk position. At the same time, the Adler Group is fully aware that the
A
c
1
0
4
7
0
8
p
u
0
7
0
P
r
o
o
f
7
:
2
7
.
5
.
1
1
B
/
L
R
e
v
i
s
i
o
n
:
0
O
p
e
r
a
t
o
r
D
a
d
F-59

opportunities for increasing earnings by taking advantage of current or expected changes in interest
rates or exchange rates are very limited.
The Adler Group is not exposed to currency risks since 100% of the consolidated revenue is
generated in euros and all purchases of goods are also made in euros. All receivables, loans and
financial liabilities are denominated in euros.
Risks due to changes in interest rates can arise mainly as a result of potential changes in the
value of a financial instrument which is sensitive to interest rates, in response to changes in
market rates of interest which lead to changes in the expected cash flows. In order to minimise the
risk of changes in interest rates within the Adler Group, where necessary, loans are taken out only
on a long-term basis and leases are entered into at fixed rates of interest. With the exception of
the liability to METRO Finance B.V. (see Note 22), the Adler Group is not a party to any financial
instruments bearing a variable rate of interest. If the level of interest rates had been 100 basis
points higher at the date when the new rate of interest was determined for this liability in financial
year 2009, the interest expense for financial year 2009 would have been c5 thousand higher. If the
level of interest rates had been 100 basis points lower at the date when the new rate of interest
was determined for this liability in financial year 2009, the interest expense for financial year 2009
would have been c5 thousand lower. Since the period for which the interest rate was fixed
included the whole of financial year 2010, there was no sensitivity to interest rates in this period.
The Adler Group is not exposed to any other material risks affecting the prices of financial
instruments. At the balance sheet date, the Group held no shares in quoted companies.
The sensitivity analysis of the available-for-sale financial assets resulted in the following potential
changes as at 31 December 2010: In the event of an increase of 5% in the market price, equity
would have risen by c10 thousand. In the event of a decrease of 5% in the market price, equity
would have fallen by c10 thousand.
Carrying amounts and fair values of financial instruments
The table below shows the carrying amounts and fair values of the financial assets and liabilities
for each measurement category in accordance with IAS 39. The fair value of a financial instrument
is the amount for which an asset could be exchanged or a liability settled between knowledgeable,
willing parties in an arm’ s length transaction.
31 Dec. 2010
Balance sheet item
Other liabilities
Carrying
amount
At amortised cost
Loans and
receivables
Carrying
amount
At fair value
(in equity) Total amount
Available-forsale
financial
assets
Carrying
amount
Carrying amount
under
IAS 17
Carrying
amount
Carrying
amount Fair Value
c’000 c’000 c’000 c’000 c’000 c’000
Available-for-sale financial assets ............. — — 263 — 263 263
Cash and cash equivalents ....................... — 32,956 — — 32,956 32,956
Trade receivables...................................... — 1,338 — — 1,338 1,338
Other financial assets................................ — 1,823 — — 1,823 1,823
Total financial assets.............................. 0 36,117 263 0 36,380 36,380
Trade payables ......................................... 27,829 — — — 27,829 27,829
Financial liabilities ..................................... 18,573 — — — 18,573 18,817
Liabilities from finance leases ................... — — — 46,039 46,039 47,188
Other financial liabilities............................. 6,925 — — — 6,925 6,925
Total financial liabilities ......................... 53,327 0 46,039 99,366 100,759
A
c
1
0
4
7
0
8
p
u
0
7
0
P
r
o
o
f
7
:
2
7
.
5
.
1
1
B
/
L
R
e
v
i
s
i
o
n
:
0
O
p
e
r
a
t
o
r
D
a
d
F-60

31 Dec. 2009
Balance sheet item
Other liabilities
Carrying
amount
At amortised cost
Loans and
receivables
Carrying
amount
At fair value
(in equity) Total amount
Available-forsale
financial
assets
Carrying
amount
Carrying amount
under
IAS 17
Carrying
amount
Carrying
amount Fair Value
c’000 c’000 c’000 c’000 c’000 c’000
Cash and cash equivalents ....................... — 36,991 — — 36,991 36,991
Trade receivables...................................... — 602 — — 602 602
Other financial assets................................ — 37,763 — — 37,763 37,763
Total financial assets.............................. 0 75,356 0 0 75,356 75,356
Trade payables ......................................... 33,135 — — — 33,135 33,135
Financial liabilities ..................................... 18,374 — — — 18,374 18,544
Liabilities from finance leases ................... — — — 54,186 54,186 56,010
Other financial liabilities............................. 6,879 — — — 6,879 6,879
Total financial liabilities ......................... 58,388 0 0 54,186 112,574 114,568
The fair values of the available-for-sale financial assets are determined on the basis of the market
price available in an active market. The determination of the fair value falls under Level 1 for the
inputs used in the determination of fair values in accordance with IFRS 7.
The fair values of the other financial instruments were determined on the basis of the market
information available at the balance sheet date using the methods and assumptions described
below.
In view of the short maturities of trade receivables and cash, it is assumed that the fair values are
approximately equal to the carrying amounts.
In principle, the liabilities included in the balance sheet under trade payables generally have short
remaining maturities, so that the fair values are approximately equal to the carrying amounts
reported, in line with the assumption made.
Other financial assets, financial liabilities, liabilities from finance leases and other financial liabilities
reported in the balance sheet comprise current and non-current financial assets and liabilities. The
fair values of assets and liabilities with remaining maturities of more than 1 year are calculated by
discounting the cash flows associated with those assets and liabilities using current interest rate
parameters. For this purpose, the individual credit ratings used by the Group are reflected in the
form of normal market credit and liquidity spreads for the purpose of determining the present
values.
Net gains and losses from financial instruments by measurement category
The table below shows the net gains and losses from financial instruments reported in the income
statement by measurement category. Interest income and expenses were the only relevant items
for the determination of the net gains and losses.
2010
A
c
1
0
4
7
0
8
p
u
0
7
0
P
r
o
o
f
7
:
2
7
.
5
.
1
1
B
/
L
R
e
v
i
s
i
o
n
:
0
O
p
e
r
a
t
o
r
D
a
d
Loans and
receivables
Other
liabilities Total
c’000 c’000 c’000
from interest ................................................................ 3,538 -256 3,282
Total............................................................................ 3,538 -256 3,282
F-61

2009
Loans and
receivables
Other
liabilities Total
c’000 c’000 c’000
from interest ................................................................ 1,919 -383 1,536
Total............................................................................ 1,919 -383 1,536
No interest income was received from impaired trade receivables during the period under review.
For information relating to the net gain or loss from available-for-sale financial assets, please see
Note 14.
Other disclosures
At the balance sheet date there were no financial assets or financial liabilities designated as at fair
value through profit or loss. The Group had no holdings of derivative financial instruments.
30. Company acquisitions
By a purchase agreement dated 17 December 2010, Adler Modemärkte Ges.m.b.H., Ansfelden /
Austria acquired all of the shares in F.W. Woolworth Co. Ges.m.b.H., Ansfelden / Austria from
Adler Treasury GmbH. The Adler Group obtained control over F.W. Woolworth Co. Ges.m.b.H on
31 December 2010.
The acquired company operates a total of eight own stores in Austria which will be used from now
on to sell the Adler Group’s products. Following its acquisition by the Adler Group, F.W. Woolworth
Co. Ges.m.b.H. will no longer sell its own products.
The purchase price for the company amounted to c1,761 thousand which was paid entirely in
cash. Goodwill amounting to c868 thousand was recognised on initial consolidation. The amounts
at which this business combination is reflected in the financial statements are still preliminary. The
transaction did not take place until the end of the reporting period with the result that the
determination of the fair values of the assets and liabilities acquired has not yet been completed in
all respects. Adjustments may therefore still be made to the amounts included in the consolidated
financial statements within the period of one year prescribed by IFRS 3.45 for the measurement of
the assets and liabilities. In consequence, the determination of the goodwill is also still provisional.
The assets and liabilities acquired were as follows:
Carrying Fair value
amount in in
c’000 c’000
Non-current assets
Intangible assets ........................................................................................ 1 1
Property, plant and equipment................................................................... 415 415
Deferred tax assets....................................................................................
Current assets
629 719
Inventories.................................................................................................. 6 6
Trade receivables....................................................................................... 821 821
Other assets............................................................................................... 887 887
Cash and cash equivalents........................................................................
Liabilities
1,524 1,524
Provisions................................................................................................... 1,457 1,793
Trade payables .......................................................................................... 650 650
Other liabilities............................................................................................ 950 950
Deferred tax liabilities................................................................................. 87 87
A
c
1
0
4
7
0
8
p
u
0
7
0
P
r
o
o
f
7
:
2
7
.
5
.
1
1
B
/
L
R
e
v
i
s
i
o
n
:
0
O
p
e
r
a
t
o
r
D
a
d
Net assets..................................................................................................... 893
Purchase price for 100% of the shares ..................................................... 1,761
Goodwill ....................................................................................................... 868
F-62

Cash acquired amounted to c1,524 thousand, resulting in an overall net cash outflow of c237
thousand.
The goodwill arising as a result of the transaction is mainly due to the expansion of the sales
network.
The fair values of the assets and liabilities were determined on the basis of observable market
prices. Where it was not possible to determine market prices, income-based approaches or costbased
methods were used to measure the assets and liabilities acquired.
No business operations were discontinued or disposed of in the course of the acquisition.
Consolidated revenue and the current profit or loss for the period did not increase as a result of
the acquisition of the company in 2010, since the company was not consolidated for the first time
until control was obtained as at 31 December 2010.
The Adler Group has revised the acquiree’s business strategy since the acquisition. From the date
of acquisition, the company has no longer reported revenues from sales of merchandise. Revenues
are generated solely from rental income and the provision of staff. The revenues and profit or loss
for the period of the acquired company amounted to c9,028 thousand and c-539 thousand
respectively in the period from 1 January 2010 to 31 December 2010.
VI. Other notes
31. Other financial obligations
As at the balance sheet date 31 December 2010, there were other financial obligations arising from
rental, lease and service agreements entered into by the Group in the ordinary course of business
that cannot be terminated prior to maturity. The maturity analysis of the future payments arising
from those agreements attributable to continuing operations is as follows:
2010
up to 1
year 1-5 years
over 5
years Total
c’000 c’000 c’000 c’000
Rental and lease obligations............................... 33,656 91,889 47,356 172,901
Other obligations................................................. 27,417 0 0 27,417
Total ................................................................... 61,073 91,889 47,356 200,318
2009
up to 1
year 1-5 years
over 5
years Total
c’000 c’000 c’000 c’000
Rental and lease obligations............................... 32,304 103,053 61,021 196,378
Other obligations................................................. 23,943 0 0 23,943
Total ................................................................... 56,247 103,053 61,021 220,321
The total rental and lease obligations amounting to c172,901 thousand (prior year c196,378
thousand) relate to rental and lease agreements for land and buildings in an amount of c170,010
thousand (prior year c193,219 thousand) and to operating lease agreements for other facilities and
operating and office equipment in an amount of c2,891 thousand (prior year c3,159 thousand). In
the previous year, there were also rental and lease obligations within the discontinued operations
amounting to c25,500 thousand for land and buildings and amounting to c43 thousand for other
facilities and operating and office equipment.
In addition, there were other financial obligations of c286 thousand in the prior year attributable to
discontinued operations. These related to maintenance and service agreements for machinery and
equipment, software and other operating and office equipment.
Furthermore, there were capital expenditure commitments of c27,417 thousand (prior year c23,657
thousand) at the balance sheet date 31 December 2010.
A
c
1
0
4
7
0
8
p
u
0
7
0
P
r
o
o
f
7
:
2
7
.
5
.
1
1
B
/
L
R
e
v
i
s
i
o
n
:
0
O
p
e
r
a
t
o
r
D
a
d
F-63

The total future minimum lease payments arising from subleases amounted to c2,471 thousand
(prior year c6,738 thousand) at 31 December 2010.
2010
up to 1
year 1-5 years
over 5
years Total
c’000 c’000 c’000 c’000
Minimum lease payments from subleases .......... 948 1,493 30 2,471
Total ................................................................... 948 1,493 30 2,471
2009
up to 1
year 1-5 years
over 5
years Total
c’000 c’000 c’000 c’000
Minimum lease payments from subleases .......... 1,039 5,699 0 6,738
Total ................................................................... 1,039 5,699 0 6,738
32. Contingent liabilities
The Group has a guarantee facility in an amount of c2,000 thousand (prior year c5,000 thousand)
with Commerzbank in Saarbrücken. As at 31 December 2010 the guarantee facility was being
utilised in an amount of c1,177 thousand (prior year c586 thousand). The full amount of the facility
utilised was secured by a pledge on current accounts in favour of Commerzbank in Saarbrücken. A
rental guarantee for c86 thousand (prior year c0 thousand) and a customs guarantee in an amount
of c1,000 thousand (prior year c0 thousand) were also outstanding.
In the previous year there was a customs guarantee of c27 thousand attributable to the
discontinued operations.
33. Executive bodies of the Company
The following persons exercised a management function in financial year 2010 and up to the date
of preparation of the financial statements:
* Lothar Schäfer (spokesman of the managing board), Villmar, managing director for
buying,
* Dr. Martin Vorderwülbecke, Munich, managing director without portfolio (resigned as at
31 December 2010),
* Thomas Wanke, Brunswick, managing director for sales, marketing and visual
*
merchandising,
Jochen Strack, Linden, managing director for administration.
The managing directors are the key management personnel of the Adler Group in accordance with
IAS 24. Management’s compensation in financial year 2010 amounted in total to c576 thousand
(prior year: c958 thousand). The compensation can be broken down as follows:
2010 2009
c’000 c’000
Fixed payments ............................................................................................. 494 437
Payments in kind ........................................................................................... 9 11
Bonuses......................................................................................................... 73 0
Short-term employee benefits .................................................................... 576 448
Termination payments ................................................................................... 0 510
Termination benefits ................................................................................... 0 510
576 958
The balances outstanding as at 31 December 2010 amounted to c73 thousand (prior year
c0 thousand) and were reported under other liabilities.
Family members of key management personnel provide services to the Company.
A
c
1
0
4
7
0
8
p
u
0
7
0
P
r
o
o
f
7
:
2
7
.
5
.
1
1
B
/
L
R
e
v
i
s
i
o
n
:
0
O
p
e
r
a
t
o
r
D
a
d
F-64

The total payments to former managing directors and their surviving dependants amounted to c156
thousand (prior year c156 thousand). Pension provisions of c1,663 thousand (prior year c1,718
thousand) have been recognised for former members of management and their surviving
dependants.
The members of the supervisory board of Adler Modemärkte GmbH in financial year 2010 were as
follows:
* Markus Zöllner, Bichl, industrial engineer, chairman of the supervisory board
* Oliver Apelt, Düsseldorf, managing director
* Mona Abu-Nusseira, Munich, business law graduate (from 1 March 2010)
* Dr. Hans-Michael Deml, Munich, attorney (until 28 February 2010)
* Mortimer Glinz, Munich, graduate engineer (until 31 October 2010)
* Holger Kowarsch, Hochstadt, businessman
* Frank Müller, Munich, business consultant (until 28 February 2010)
* Markus Roschel, Sasbachwalden, business administration graduate (from 1 November
2010)
* Jörg Ulmschneider, Schmelz, business administration graduate (from 1 March 2010)
* Angelika Zinner, Kettenis/Belgium, chairwoman of the general works council, Adler
*
Modemarkt Aachen (vice-chairwoman of the supervisory board, employee representative)
Majed Abu-Zarar, Viernheim, employee at Adler Modemarket Neu-Edingen (employee
representative)
* Ingrid Düsmann-Schulz, Haibach, member of the works council, Adler Modemarket
Haibach (employee representative)
* Corinna Gross, Neuss, secretary of the Essen district of the ver.di united services union
(employee representative)
* Georg Linder, Hösbach, section head of procurement planning, Adler Modemarkt
*
Haibach (employee representative)
Erika Ritter, secretary of the national executive board of the ver.di union, national retail
section Berlin (employee representative).
The members of the supervisory board are also key management personnel of the Adler Group in
accordance with IAS 24. The total compensation of the members of the supervisory board for
attending meetings during the financial year amounted to c40 thousand (prior year c40 thousand).
A member of the supervisory board is the managing director of a company which charged the
Company a total of c40 thousand in financial year 2009 for consultancy services in connection with
the restructuring programme.
34. Related party disclosures
In March 2009 Adler Modemärkte GmbH was acquired by BluO beta equity Limited, United
Kingdom, whose place of management is Vienna, Austria. Until the date of sale in 2009, the
Company was owned by METRO AG. Accordingly, a change in the related parties took place in
financial year 2009. The related parties include the key management personnel of Adler
Modemärkte GmbH. The latter are listed by name together with their compensation in Note 33
Executive bodies of the Company.
All companies controlled by METRO AG or its principal owners were regarded as related parties
until the sale of the Company to BluO beta equity Limited in financial year 2009. The parent
companies were AMODA GmbH (immediate parent company) and METRO AG. Since the
transaction, only companies controlled by the new owner BluO beta equity Limited and its
shareholders or legal representatives qualify as related parties. The parent companies are AMODA
GmbH and BluO beta equity Limited.
MOTEX Mode-Textil-Service Logistik und Management GmbH was deconsolidated as at
30 September 2010. Since that date, this company has been an affiliated company.
Transactions with related parties are contractually agreed and carried out at prices that have also
been agreed with third parties.
A
c
1
0
4
7
0
8
p
u
0
7
0
P
r
o
o
f
7
:
2
7
.
5
.
1
1
B
/
L
R
e
v
i
s
i
o
n
:
0
O
p
e
r
a
t
o
r
D
a
d
F-65

The term ‘‘affiliated companies’’ refers to all companies controlled by the ultimate parent company
of the Adler Group.
The following transactions were entered into with related parties:
2010 2009
c’000 c’000
Profit and loss transfer to parent company ................................................... 18,373 2,094
Purchases of services from affiliated companies .......................................... 4,917 4,513
Interest payable to affiliated companies ........................................................ 88 363
Purchases of goods from affiliated companies.............................................. 0 23,550
Payments to affiliated companies under property leases .............................. 0 1,909
23,378 32,429
Interest receivable from affiliated companies ................................................ 3,402 1,622
Sales of goods to affiliated companies.......................................................... 1,000 0
Sales of services to affiliated companies ...................................................... 89 26
Grant of a trademark licence to an affiliated company.................................. 0 1,800
The following balances with related parties were outstanding at the balance sheet dates:
4,491 3,448
31 Dec.
2010
31 Dec.
2009
c’000 c’000
Trade receivables due from affiliated company............................................. 1,258 0
Loan receivables due from affiliated company .............................................. 0 36,407
1,258 36,407
Liabilities to parent company ......................................................................... 3,968 4,216
Loan liabilities to affiliated company .............................................................. 50 0
4,018 4,216
The loan receivables of c36,407 thousand as at 31 December 2009 due from an affiliated company
represented several short-term loans amounting in total to c35,000 thousand which paid interest at
a rate of 8.0% and were disbursed in 2009. No fixed maturity was agreed for the loans which were
repayable at any time. The loan receivables of c36,407 thousand include interest amounting to
c1,407 thousand. Except for an amount of c772 thousand, the loan was assigned to the parent
company and offset against a withdrawal from capital reserves in financial year 2010 (see Note
19). The amount due in respect of interest did not form part of the assignment. In financial year
2010, two further short-term loans with a total amount of c12,300 thousand were extended to the
affiliated company. Interest was payable on the loans at 8% in respect of a loan with a nominal
amount of c5,000 thousand and at 0.8% in respect of a loan with a nominal amount of c7,300
thousand. The outstanding amounts were offset in full against liabilities due to the parent company
prior to the balance sheet date. The remaining loan of c772 thousand and accrued interest
amounting to c4,720 thousand were also assigned to AMODA GmbH as at 31 December 2010.
The loan liability to an affiliated company is a loan with a short-term maturity which bears interest
at 1.1%.
Family members of key management personnel provided services to the Adler Group in an amount
of c40 thousand (prior year c18 thousand). Payment for the services was made on normal market
terms. In addition, items of property, plant and equipment amounting to c255 thousand (prior year
c245 thousand) were sold to companies controlled by family members of key management
personnel. The sale was made on normal market terms. A member of the supervisory board is the
managing director of a company which charged the Company a total of c40 thousand in financial
A
c
1
0
4
7
0
8
p
u
0
7
0
P
r
o
o
f
7
:
2
7
.
5
.
1
1
B
/
L
R
e
v
i
s
i
o
n
:
0
O
p
e
r
a
t
o
r
D
a
d
F-66

year 2009 for consultancy services in connection with the restructuring programme. The amount
outstanding in respect of these transactions is c0 thousand (prior year c26 thousand).
There are no obligations from finance or operating leases due to related parties.
During financial year 2010, F.W. Woolworth Co. Ges.m.b.H. was acquired from Adler Treasury
GmbH (see Note 30), while MOTEX Mode-Textil-Service Logistik und Management GmbH was
sold to BluO beta equity Limited (see Note 9).
The financial relationships with related parties set out in the tables are explained in further detail in
the following sections:
* Other operating income (see Note 2)
* Other current liabilities (see Note 25)
* Loans (see Note 22, Financial liabilities)
* Subsidies (see Liquidity risks under Note 29, and Note 19 Equity)
* Profit and loss transfer agreement (see Note 19 Equity and Note 27 Statement of cash flows)
* Other receivables (see Note 13 Other receivables and other assets)
* Trade receivables (see Note 17)
35. Earnings per share
At the date of preparation of these consolidated financial statements, the Company’s equity capital
consists of a single share. The earnings per share are therefore the same as the consolidated net
profit or loss. There are no potential dilutive effects at the present time. The earnings per share
figure is calculated by dividing the consolidated net profit or loss, subdivided into continuing
operations and discontinued operations, by the share.
36. Litigation and claims for damages
The Adler Group is not involved in any legal or arbitration proceedings with a significant effect on
the position of the Group. The existing proceedings have not yet been concluded and/or the
amount of the obligation or of the claims cannot be reliably determined as a result of the high
degree of uncertainty.
37. Auditors’ fees
Fees amounting in total to c322 thousand (prior year c195 thousand) were incurred in financial
year 2010 for services provided by the auditor within the meaning of § 318 HGB:
2010 2009
c’000 c’000
Audit of the financial statements ................................................................... 285 145
Other audit work ............................................................................................ 0 2
Tax advice ..................................................................................................... 37 48
Other services ............................................................................................... 0 0
Total .............................................................................................................. 322 195
38. Events after the balance sheet date
There were no matters arising after the end of the financial year up to the date of preparation of
the annual financial statements that have a material effect on the net assets, financial position and
results of operations of financial year 2011.
Haibach, 28 February 2011
Lothar Schäfer Jochen Strack Thomas Wanke
Managing Director Managing Director Managing Director
A
c
1
0
4
7
0
8
p
u
0
7
0
P
r
o
o
f
7
:
2
7
.
5
.
1
1
B
/
L
R
e
v
i
s
i
o
n
:
0
O
p
e
r
a
t
o
r
D
a
d
F-67

The following auditor’s report (Bestätigungsvermerk) has been issued in accordance with § 322
German Commercial Code (Handelsgesetzbuch) in German language on the German version of
the consolidated financial statements and the management report of Adler Modemärkte GmbH as
of and for the year ended December 31, 2010. The management report is neither included nor
incorporated by reference in this offering circular.
Auditors’ Report
We have audited the consolidated financial statements prepared by the Adler Modemärkte GmbH,
Haibach, comprising the statement of financial position, the statement of comprehensive income,
statement of changes in equity, cash flow statement and the notes to the consolidated financial
statements, together with the group management report for the business year from January 1 to
December 31, 2010. The preparation of the consolidated financial statements and the group
management report in accordance with the IFRS, as adopted by the EU, and the additional
requirements of German commercial law pursuant to § (Article) 315a Abs. (paragraph) 1 HGB
(‘‘Handelsgesetzbuch’’: German Commercial Code) is the responsibility of the parent Company’s
Managing Directors. Our responsibility is to express an opinion on the consolidated financial
statements and on the group management report based on our audit.
We conducted our audit of the consolidated financial statements in accordance with § 317 HGB
and German generally accepted standards for the audit of financial statements promulgated by the
Institut der Wirtschaftsprüfer (Institute of Public Auditors in Germany) (IDW). Those standards
require that we plan and perform the audit such that misstatements materially affecting the
presentation of the net assets, financial position and results of operations in the consolidated
financial statements in accordance with the applicable financial reporting framework and in the
group management report are detected with reasonable assurance. Knowledge of the business
activities and the economic and legal environment of the Group and expectations as to possible
misstatements are taken into account in the determination of audit procedures. The effectiveness of
the accounting-related internal control system and the evidence supporting the disclosures in the
consolidated financial statements and the group management report are examined primarily on a
test basis within the framework of the audit. The audit includes assessing the annual financial
statements of those entities included in consolidation, the determination of the entities to be
included in consolidation, the accounting and consolidation principles used and significant estimates
made by the Company´s Managing Directors, as well as evaluating the overall presentation of the
consolidated financial statements and the group management report. We believe that our audit
provides a reasonable basis for our opinion.
Our audit has not led to any reservations.
In our opinion based on the findings of our audit the consolidated financial statements comply with
the IFRS as adopted by the EU, and the additional requirements of German commercial law
pursuant to § 315a Abs. 1 HGB and give a true and fair view of the net assets, financial position
and results of operations of the Group in accordance with these requirements. The group
management report is consistent with the consolidated financial statements and as a whole
provides a suitable view of the Group’s position and suitably presents the opportunities and risks of
future development.
Stuttgart, February 28, 2011
PricewaterhouseCoopers
Aktiengesellschaft
Wirtschaftsprüfungsgesellschaft
Rüdiger Dresel
Wirtschaftsprüfer
(German Public Auditor)
A
c
1
0
4
7
0
8
p
u
0
7
0
P
r
o
o
f
7
:
2
7
.
5
.
1
1
B
/
L
R
e
v
i
s
i
o
n
:
0
O
p
e
r
a
t
o
r
D
a
d
F-68
ppa. Axel Ost
Wirtschaftsprüfer
(German Public Auditor)

A
c
1
0
4
7
0
8
p
u
0
8
0
P
r
o
o
f
7
:
2
7
.
5
.
1
1
B
/
L
R
e
v
i
s
i
o
n
:
0
O
p
e
r
a
t
o
r
D
a
d
Audited consolidated financial statements
of Adler Modemärkte GmbH
as at 31 December 2009 (IFRS)
F-69

Consolidated income statement for the financial year from
1 January 2009 to 31 December 2009
Notes
No. 2009 2008
c ‘000 c ‘000
Revenue ................................................................................... 1 410,824 474,603
Other operating income............................................................ 2 18,249 23,404
Cost of materials ...................................................................... 3 -204,254 -239,602
Personnel expenses................................................................. 4 -91,757 -128,173
Other operating expenses ........................................................ 5 -118,410 -157,412
EBITDA .................................................................................... 14,652 -27,180
Depreciation and amortisation.................................................. 6 -16,218 -20,379
Impairment ............................................................................... 6 -2,394 -7,852
EBIT ......................................................................................... -3,960 -55,411
Other interest and similar income ............................................ 1,704 786
Interest and similar expenses................................................... -4,845 -6,977
Net finance costs ................................................................... 7 -3,141 -6,191
Loss from operations ............................................................ -7,101 -61,602
Income taxes............................................................................ 8 -177 2,357
Consolidated net loss for the year ....................................... -7,278 -59,245
of which attributable to non-controlling interests ...................... 9 0 0
of which attributable to shareholders of Adler Modemärkte
GmbH -7,278 -59,245
Consolidated statement of comprehensive income
for the financial year from 1 January to 31 December 2009
Notes
No. 2009 2008
c ‘000 c ‘000
Consolidated net loss for the year ....................................... -7,278 -59,245
Other comprehensive income................................................... 0 0
Consolidated total comprehensive income ......................... -7,278 -59,245
of which attributable to non-controlling interests ...................... 0 0
of which attributable to shareholders of Adler Modemärkte
GmbH................................................................................... -7,278 -59,245
A
c
1
0
4
7
0
8
p
u
0
8
0
P
r
o
o
f
7
:
2
7
.
5
.
1
1
B
/
L
R
e
v
i
s
i
o
n
:
0
O
p
e
r
a
t
o
r
D
a
d
F-70

ASSETS
Consolidated balance sheet as at
31 December 2009
Notes
No.
31 Dec.
2009
31 Dec.
2008
1 Jan.
2008
c ‘000 c ‘000 c ‘000
Non-current assets
Intangible assets ................................................. 10 2,560 5,067 4,799
Property, plant and equipment............................ 11 63,760 80,741 114,934
Investment property ............................................ 12 3,374 0 0
Loans to related parties ...................................... 13 0 0 213
Other receivables and other assets .................... 14 707 1,027 1,333
Deferred tax assets............................................. 15 2,243 2,056 4,148
Total non-current assets .................................. 72,644 88,891 125,427
Current assets
Inventories........................................................... 16 53,600 62,539 66,267
Trade receivables................................................ 17 602 3,657 5,282
Other receivables and other assets .................... 14 41,132 9,620 24,978
Cash and cash equivalents................................. 18 36,991 25,217 25,497
Total current assets.......................................... 132,325 101,033 122,024
Total ASSETS .................................................... 204,969 189,924 247,451
A
c
1
0
4
7
0
8
p
u
0
8
0
P
r
o
o
f
7
:
2
7
.
5
.
1
1
B
/
L
R
e
v
i
s
i
o
n
:
0
O
p
e
r
a
t
o
r
D
a
d
F-71

EQUITY and LIABILITIES
Notes
No.
31 Dec.
2009
31 Dec.
2008
1 Jan.
2008
c ‘000 c ‘000 c ‘000
EQUITY
Capital and reserves
Subscribed capital............................................... 15,860 15,860 15,860
Capital reserves .................................................. 138,157 85,057 33,468
Net accumulated losses...................................... -84,743 -75,371 -16,126
69,274 25,546 33,202
Non-controlling interests...................................... 0 0 0
Total equity........................................................ 19 69,274 25,546 33,202
LIABILITIES
Non-current liabilities
Provisions for pensions and other employee
benefits ........................................................... 20 3,323 3,547 3,851
Other provisions.................................................. 21 904 1,059 916
Financial liabilities ............................................... 22 4,802 4,995 4,995
Finance lease obligations.................................... 23 45,178 54,222 87,227
Deferred tax liabilities.......................................... 15 313 63 259
Total non-current liabilities.............................. 54,520 63,886 97,248
Current liabilities
Other provisions.................................................. 21 4,661 16,375 6,152
Financial liabilities ............................................... 22 13,572 15,840 22,874
Finance lease obligations.................................... 23 9,008 8,578 9,869
Trade payables ................................................... 24 33,135 34,721 42,516
Other liabilities .................................................... 25 19,553 23,856 29,703
Income tax liabilities............................................ 26 1,246 1,122 5,887
Total current liabilities...................................... 81,175 100,492 117,001
Total liabilities ................................................... 135,695 164,378 214,249
Total EQUITY and LIABILITIES........................ 204,969 189,924 247,451
A
c
1
0
4
7
0
8
p
u
0
8
0
P
r
o
o
f
7
:
2
7
.
5
.
1
1
B
/
L
R
e
v
i
s
i
o
n
:
0
O
p
e
r
a
t
o
r
D
a
d
F-72

Consolidated statement of changes in equity
for the financial year from January 2009 to 31 December 2009
Notes
No.
Subscribed
capital
Capital
reserves
Net
accumulated
losses
Attrib. to
shareholders
of
Adler
Modemärkte
GmbH
Attrib. to
noncontrolling
interests
Total
equity
c ‘000 c ‘000 c ‘000 c ‘000 c ‘000 c ‘000
As at 1 Jan. 2008 ...................... 15,860 33,468 -16,126 33,202 0 33,202
Income subsidies from
shareholders.......................... 0 48,809 0 48,809 0 48,809
Losses assumed by
shareholders.......................... 0 2,780 0 2,780 0 2,780
Total transactions with
shareholders........................ 0 51,589 0 51,589 0 51,589
Consolidated net loss for the
year 1 ...................................... 0 0 -59,245 -59,245 0 -59,245
Consolidated total
comprehensive income 1
0 0 -59,245 -59,245 0 -59,245
As at 31 Dec. 2008.................... 15,860 85,057 -75,371 25,546 0 25,546
As at 1 Jan. 2009 ...................... 15,860 85,057 -75,371 25,546 0 25,546
Income subsidies from
shareholders.......................... 0 14,500 0 14,500 0 14,500
Contribution to capital reserves.. 0 38,600 0 38,600 0 38,600
Transfer to shareholders ............ 0 0 -2,094 -2,094 0 -2,094
A
c
1
0
4
7
0
8
p
u
0
8
0
P
r
o
o
f
7
:
2
7
.
5
.
1
1
B
/
L
R
e
v
i
s
i
o
n
:
0
O
p
e
r
a
t
o
r
D
a
d
Total transactions with
shareholders........................ 0 53,100 -2,094 51,006 0 51,006
Consolidated net loss for the
year 1 ...................................... 0 0 -7,278 -7,278 0 -7,278
Consolidated total
comprehensive income 1 ..... 0 0 -7,278 -7,278 0 -7,278
As at 31 Dec. 2009.................... 19 15,860 138,157 -84,743 69,274 0 69,274
1 Since there are no items of other comprehensive income, the consolidated net loss for the year is the same as the consolidated
total comprehensive income
F-73

Consolidated statement of cash flows for the financial year from
1 January 2009 to 31 December 2009
Notes
No. 2009 2008
c ‘000 c ‘000
Consolidated net loss before tax ......................................... -7,101 -61,602
(+) Depreciation and amortisation on property, plant and
equipment and intangible assets.......................................... 16,218 20,379
(+) Impairment losses............................................................... 2,394 7,852
Decrease (-) in pension provisions........................................... -225 -304
Gains (-)/losses (+) from the sale of non-current assets.......... 325 -7,110
Other non-cash income (-) and expenses (+) .......................... 14,230 20,962
Net finance costs...................................................................... 3,141 6,191
Interest received....................................................................... 264 783
Interest paid ............................................................................. -205 -686
Income taxes paid .................................................................... -82 -464
Decrease (+) in inventories ...................................................... 7,617 2,136
Decrease (+) in trade receivables and other receivables......... 5,246 4,872
Decrease (-) in trade payables, other liabilities and other
provisions ............................................................................. -34,599 -17,262
Increase (+)/decrease (-) in other balance sheet items ........... -31 1,730
Net cash from (+)/used in (-) operating activities
(Net cashflow)......................................................................... 27 7,192 -22,523
Proceeds from disposals of non-current assets ....................... 908 650
Payments for investments in non-current assets ..................... -3,750 -11,831
Proceeds from the repayment of loans and short-term deposits 0 15,214
Payments for short-term deposits ............................................ -35,000 0
Net cash from (+)/used in (-) investing activities ................ 27 -37,842 4,033
Free cashflow ......................................................................... 27 -30,650 -18,490
Cash flows from the issue (+) / repayment (-) of current
financial liabilities ................................................................. 0 -1
Losses assumed by shareholders............................................ 2,780 0
Repayments of borrowings....................................................... -222 -5,184
Capital contributions by shareholders ...................................... 53,100 40,000
Payments in connection with finance lease liabilities ............... -13,234 -16,605
Net cash from financing activities........................................ 27 42,424 18,210
Net increase (+) / decrease (-) in cash and cash
equivalents ......................................................................... 27 11,774 -280
Cash and cash equivalents at beginning of the period ............ 25,217 25,497
Cash and cash equivalents at end of the period...................... 36,991 25,217
Net increase (+) / decrease (-) in cash and cash
equivalents ......................................................................... 27 11,774 -280
A
c
1
0
4
7
0
8
p
u
0
8
0
P
r
o
o
f
7
:
2
7
.
5
.
1
1
B
/
L
R
e
v
i
s
i
o
n
:
0
O
p
e
r
a
t
o
r
D
a
d
F-74

Notes to the consolidated financial statements
as at 31 December 2009
I. Preliminary remarks
Adler Modemärkte GmbH is a corporation (Kapitalgesellschaft) in accordance with German law and
its registered office is at Industriestrasse 1-5, Haibach, Federal Republic of Germany. The relevant
registration court is located in Aschaffenburg.
Its financial year is the calendar year. The financial years of all the companies included in the
consolidated financial statements also end on 31 December of the calendar year.
The consolidated financial statements were prepared by the management on 11 February 2011
and authorised for publication.
The Adler Group (Adler Modemärkte GmbH and its subsidiaries) is engaged in apparel retailing
and operates specialist clothing stores in Germany, Luxembourg and Austria. Under the trade
name ‘‘ADLER’’, the Group operates specialist clothing stores either on a stand-alone basis or as
part of specialist store or shopping centres. It also operates specialist clothing stores together with
other retailers at locations operated jointly. The range of goods offered by the ADLER stores
includes womenswear, menswear and kids’ wear.
The Adler Group also provides logistics services, including to third parties, through MOTEX Mode-
Textil-Service Logistik und Management GmbH. The services comprise distribution, processing,
handling, consignment, labelling, the finishing of semi-finished products and the transportation of
textile industry goods in Germany and abroad using its own and third-party vehicles.
Until the end of 2008, the Group company ADLER Atelier Moden GmbH produced clothing for sale
in the ADLER stores; a very small proportion was sold to third parties. The Company has not
carried out any operating activities since that time. ADVERS Versicherungsmakler GmbH provided
insurance broking services for the Adler Group until it ceased its operating business activities at
the end of 2008. Since the beginning of 2009, the company has been used to process the Adler
Group’s cash pooling transactions.
The euro (c) is both the presentation currency and the functional currency of the Adler Group. The
figures in the notes to the consolidated financial statements are quoted in thousands of euros
(c ‘000).
The sole shareholder in Adler Modemärkte GmbH is AMODA GmbH, Haibach. The ultimate
controlling company is BluO beta equity Limited, Birmingham, United Kingdom, whose place of
management is Vienna, Austria.
II. Notes on the principles and methods employed in the consolidated financial statements
Accounting policies
These financial statements represent the first IFRS consolidated financial statements of Adler
Modemärkte GmbH in accordance with the provisions of IFRS 1. Until financial year 2007, the
Company prepared voluntary consolidated financial statements in accordance with IFRS, but did
not do so as at 31 December 2008. The Company therefore qualifies once again as a first-time
adopter of IFRS as at 31 December 2009 in accordance with IFRS 1. No consolidated financial
statements in accordance with any other accounting standards were published in earlier years. The
reconciliations required by IFRS 1 have not been presented, since at the date of the opening
balance sheet only IFRS consolidated financial statements are available and no consolidated
financial statements in accordance with any other accounting requirements.
The Adler Group did not make use of any of the exemptions permitted by IFRS 1 for the purpose
of the first-time preparation of the IFRS consolidated financial statements as at 31 December 2009.
The consolidated financial statements of Adler Modemärkte GmbH were prepared in accordance
with the requirements of the International Accounting Standards Board (IASB), London, in
conformity with International Financial Reporting Standards (IFRS), as adopted by the EU. The
interpretations issued by the IFRS Interpretations Committee (formerly the International Financial
Reporting Interpretations Committee and the Standing Interpretations Committee) were also
applied.
A
c
1
0
4
7
0
8
p
u
0
8
0
P
r
o
o
f
7
:
2
7
.
5
.
1
1
B
/
L
R
e
v
i
s
i
o
n
:
0
O
p
e
r
a
t
o
r
D
a
d
F-75

Those International Financial Reporting Standards (IFRS) were applied that had become mandatory
by the balance sheet date 31 December 2009. There was no early adoption of standards whose
application had not yet become mandatory as at 31 December 2009.
Standards, interpretations and amendments to published standards that are not yet mandatory
The following standards, amendments to standards and interpretations have already been issued
but are mandatory only for reporting periods beginning on or after 1 January 2010. These will be
applied by the Adler Group from 1 January 2010, or a date that may be prescribed later, and the
Group has estimated the expected effects of the individual standards, amendments to standards
and interpretations on its net assets, financial position and results of operations, to the extent that
it was possible to make such an estimate at this stage.
Standards
IFRS 1 +
IFRS 7
Mandatory
from*
Adopted
by EU
Commission
Exemption from certain disclosures in the notes................. 1 Jul. 2010 Yes
IFRS 1 Additional exemptions for first-time adopters ...................... 1 Jan. 2010 Yes
IFRS 2 Group cash-settled share-based payment transactions ...... 1 Jan. 2010 Yes
IFRS 3 Purchase price components for business combinations ..... 1 Jul. 2009 Yes
IFRS 7 Transfers of financial assets ............................................... 1 Jul. 2011 No
IFRS 9 Financial instruments: classification and measurement of 1 Jan. 2013 No
financial assets....................................................................
IAS 12 Income taxes....................................................................... 1 Jan. 2012 No
IAS 24 Related party disclosures .................................................... 1 Jan. 2011 Yes
IAS 27 Consolidated and separate financial statements................. 1 Jul. 2009 Yes
IAS 32 Classification of rights issues .............................................. 1. Feb. 2010 Yes
IAS 39 Financial instruments: recognition and measurement:
eligible hedged items...........................................................
1 Jul. 2009 Yes
various Annual improvements project (2009) .................................. mostly 1 Jan.
2010
Yes
various Annual improvements project (2010) .................................. mostly 1 Jan.
2011
No
Interpretations
IFRIC 12 Service concession arrangements ...................................... 31 Mar. 2009 Yes
IFRIC 14 Prepaid contributions with existing minimum funding 1 Jan. 2011 Yes
requirements .......................................................................
IFRIC 15 Agreements for the construction of real estate ................... 1 Jan. 2010 Yes
IFRIC 16 Hedges of a net investment in a foreign operation ............. 1 Jul. 2009 Yes
IFRIC 17 Distributions of non-cash assets to owners......................... 1 Nov. 2009 Yes
IFRIC 18 Transfers of assets from customers.................................... 1 Nov. 2009 Yes
IFRIC 19 Extinguishing financial liabilities with equity instruments..... 1 Jul. 2010 Yes
* Date of first-time mandatory application stipulated by the IASB. Where the standard, interpretation or amendment has already
been adopted by the EU Commission, the date is the date for mandatory application stipulated by the EU.
* The amendment to IFRS 1 in the course of the amendments to IFRS 7 exempts first-time
adopters of IFRS from certain disclosures in the notes introduced in IFRS 7. The amendment
to IFRS 1 now also grants entities applying IFRS for the first time an optional exemption from
the requirement to present comparative information for measurements at fair value and for
liquidity risk. IFRS 7 permits these exemptions in cases where the comparable periods end
prior to 31 December 2009. This ensures that first-time adopters of IFRS also benefit from
the transitional provisions for the application of the revised IFRS 7. The amendments to IFRS
1 and IFRS 7 must be applied at the latest from the start of the first financial year beginning
after 30 June 2010.
The amendments to IFRS 1 include additional exemptions for first-time adopters of IFRS. The
amendments relate to the retrospective application of IFRS in particular circumstances and are
intended to ensure that entities do not incur disproportionately high costs in converting to IFRS.
Specifically, the amendments exempt
A
c
1
0
4
7
0
8
p
u
0
8
0
P
r
o
o
f
7
:
2
7
.
5
.
1
1
B
/
L
R
e
v
i
s
i
o
n
:
0
O
p
e
r
a
t
o
r
D
a
d
F-76

* entities in the oil and gas industry that have recorded exploration and development costs for
sites in the development or production phases in a geographical region on a combined basis
in cost centres in line with national accounting requirements from the obligation to apply IFRS
retrospectively in full to the relevant oil and gas assets, and
* entities with existing leasing contracts from the need to reassess these contracts with respect
to their classification in accordance with IFRIC 4 ‘‘Determining whether an Arrangement
Contains a Lease’’, if a determination in accordance with national accounting requirements
that are similar to the provisions of IFRIC 4 has already been made at an earlier balance
sheet date.
Application of the amendments to IFRS 1 is mandatory at the latest from the start of the first
financial year beginning after 31 December 2009. Earlier application is permitted. The Adler Group
is already a first-time adopter of IFRS in these present consolidated financial statements. The
amendments to IFRS 1 will therefore not be relevant for the Adler Group in the future.
* The IASB has issued amendments to IFRS 2 ‘‘Share-based Payment’’ which clarify the
accounting treatment of cash-settled share-based payments within a group. The amendments
make clear that:
* An entity that receives goods or services in a share-based payment arrangement must
account for those goods or services irrespective of which entity in the group settles the
related obligation and whether the obligation is settled in shares or cash.
* In IFRS 2 a ‘group’ has the same meaning as in IAS 27 ‘‘Consolidated and Separate
Financial Statements’’, that is, it includes only the parent company and its subsidiaries.
The amendments published clarify the scope of IFRS 2 and the interaction of IFRS 2 with
other standards. The amendments to IFRS 2 also incorporate into the standard guidance
previously included in IFRIC 8 ‘‘Scope of IFRS 2’’ and IFRIC 11 ‘‘IFRS 2: Group and
Treasury Share Transactions’’. The IASB has therefore withdrawn IFRIC 8 and IFRIC 11. The
amendments are effective for reporting periods beginning on or after 1 January 2010. They
are applicable retrospectively. Earlier application is permitted. No items of this nature are
currently present within the Adler Group. The amendments to IFRS 2 therefore have no effect
on the net assets, financial position and results of operations of the Adler Group.
* IFRS 3 (Revised) ‘‘Business Combinations’’ (effective from 1 July 2009). The new IFRS 3
includes provisions relating to the scope of the standard, the components of the purchase
price, the treatment of non-controlling interests and goodwill, and also to the extent of the
assets, liabilities and contingent liabilities required to be recognised. The standard also
contains requirements for the accounting treatment of losses brought forward and for the
classification of contracts to which the acquiree is party. The revised standard retains the use
of the acquisition method for business combinations but introduces material changes to the
determination of the cost of acquisition. For example, the adjustment of the cost of acquisition
in the event that the purchase price agreement is dependent on future events must be
included in the determination of the purchase price at the fair value at the date of acquisition
irrespective of the probability that those events will occur. Subsequent changes to the fair
value of contingent purchase price components classified as liabilities must generally be
recognised prospectively in profit or loss. The Adler Group will apply IFRS 3 (Revised) for its
financial years beginning on 1 January 2010.
* The amendments to IFRS 7 published in October 2010 result in a broad alignment of the
corresponding disclosure requirements under International Financial Reporting Standards
(IFRS) and US Generally Accepted Accounting Principles (US GAAP). The amendments to
IFRS 7 relate to expanded disclosure requirements for the transfer of financial assets and are
intended to allow users of financial statements to improve their understanding of the effects of
the risks remaining with the transferring entity. Application of the amendments is mandatory
for financial years beginning on or after 1 July 2011. Earlier application is permitted. The
presentation of comparative information is optional in the first year of application. The Adler
Group is not in a position to estimate the effects of these amendments at the present time.
* IFRS 9 ‘‘Financial Instruments: Classification and Measurement’’ was published in November
2009 (IFRS 9 2009). This standard forms part of the project to replace IAS 39, intended to be
completed in 2010. The standard deals with the classification and measurement of financial
assets. As a result of IFRS 9, the existing measurement categories loans and receivables,
A
c
1
0
4
7
0
8
p
u
0
8
0
P
r
o
o
f
7
:
2
7
.
5
.
1
1
B
/
L
R
e
v
i
s
i
o
n
:
0
O
p
e
r
a
t
o
r
D
a
d
F-77

held-to-maturity investments, available-for-sale financial assets and financial assets at fair
value through profit or loss are replaced by two categories: assets measured at amortised
cost and those measured at fair value. The determination whether a financial instrument can
be classified as measured at amortised cost depends both on the entity’s business model, i.e.
how the entity manages its financial instruments, and on the product characteristics of the
particular instrument. Financial instruments that do not meet the criteria for inclusion in the
amortised cost category must be measured at fair value through profit or loss. Measurement
at fair value directly in equity is permitted for selected equity instruments. The characteristics
of this new category are not the same as those of the existing category ‘‘available-for-sale
financial assets’’. IFRS 9 (2009) contains no provisions relating to the measurement of
financial liabilities. IFRS 9 (2010) was published as a supplement to IFRS 9 (2009) in October
2010. IFRS 9 (2010) contains additional provisions to those of IFRS 9 (2009) relating to the
classification and measurement of financial liabilities and to the derecognition of financial
assets and liabilities. IFRS 9 (2010) contains no significant changes for financial liabilities,
with the exception of the fair value option. Under the fair value option, changes in fair value
as a result of the entity’s own credit risk are recorded in other comprehensive income, while
all other changes in fair value are reported in profit or loss (one-step approach). With respect
to derecognition, IFRS 9 (2010) incorporates the provisions of IAS 39 currently in force. IFRS
9 is effective for financial years beginning on or after 1 January 2013. Earlier application
starting in 2009 is permitted. The application of these amendments within the EU still requires
endorsement by the prescribed EU process. The Adler Group is not a position to estimate the
effects of the new standard at the present time.
* In December 2010 the International Accounting Standards Board (IASB) published
amendments to IAS 12 Income Taxes. These amendments also entail changes to the scope
of SIC-21 Income Taxes – Recovery of Revalued Non-Depreciable Assets. The amendment
partially clarifies the treatment of temporary taxable differences in connection with the use of
the fair value model prescribed by IAS 40. The amendment provides that it will normally be
assumed that taxable differences will reverse as a result of a sale of the underlying asset.
The amendment is applicable retrospectively for financial years beginning on or after 1
January 2012. First-time application of the amendment will not have any effects on the net
assets, financial position or results of operations of the Adler Group.
* The amendments to IAS 24 were published in November 2009. The changes affecting
government-related entities will not have any effects on the presentation of the financial
information. The amendments to IAS 24 also clarified the definition of a related party. The
revised standard is effective for reporting periods beginning or after 1 January 2011. Earlier
application is permitted. The Adler Group is not a state-controlled entity and does not
anticipate any effects on the presentation of its financial information resulting from the
amendments to IAS 24.
* IAS 27 (Revised), ‘‘Consolidated and Separate Financial Statements under IFRS’’ (effective
from 1 July 2009). The revised standard prescribes the mandatory application of the
economic entity approach for the accounting treatment of purchases and sales of shares that
take place after control is obtained and that do not result in a loss of control. Under this
approach, minority transactions of this type are regarded as transactions with owners and
recorded within equity. In the case of share sales resulting in a loss of control, any gain or
loss on disposal is recorded in the income statement. If shares continue to be held following
the loss of control, the shares retained are recognised at their fair value. The difference
between the previous carrying amount of the shares retained and their fair value is reported
in profit or loss as part of the gain or loss on disposal and must be disclosed separately in
the notes together with the corresponding remeasured amount of the shares retained. In the
case of step acquisitions or partial disposals of shares, the standard requires the shares
already held or the shares retained, respectively, to be remeasured at fair value through profit
or loss. In addition, losses attributable to noncontrolling interests which result in the
noncontrolling interests having a deficit balance must be presented in future as negative
carrying amounts within consolidated equity. The Adler Group does not anticipate that the
first-time application of the revised standard will have any material effects on its net assets,
financial position and results of operations.
A
c
1
0
4
7
0
8
p
u
0
8
0
P
r
o
o
f
7
:
2
7
.
5
.
1
1
B
/
L
R
e
v
i
s
i
o
n
:
0
O
p
e
r
a
t
o
r
D
a
d
F-78

* Amendments to IAS 32 ‘‘Financial Instruments: Presentation’’. The amendments prescribed
the accounting treatment in the financial statements of the issuer for subscription rights,
options and warrants for the purchase of a fixed number of equity instruments that are
denominated in a currency other than the functional currency of the issuer. Previously, such
cases were accounted for as derivative liabilities. Subscription rights that are issued pro rata
to the existing shareholders of an entity for a fixed amount of currency must be classified as
equity. The currency in which the exercise price is denominated is irrelevant for this purpose.
The Adler Group does not anticipate that the first-time application of the revised standard will
have any effects on its net assets, financial position and results of operations and expects
that the matters addressed will not apply to the Adler Group.
* Amendments to IAS 39 ‘‘Financial Instruments: Recognition and Measurement’’ – eligible
hedged items (effective from 1 July 2009). In these amendments, the IASB sets out:
– the conditions under which inflation risks can be designated as a hedged item for
hedging purposes, and
– the possibility of using options as a hedging instrument for hedging one-sided risks.
* The IASB publishes annual improvements to existing standards. These consist of minor
changes in the majority of cases. The changes resulting from the annual improvements
projects for 2009 and 2010 are not presented here on the grounds that they are not material.
The Adler Group will apply the changes as at 1 January 2010 (2009 improvements project)
and as at 1 January 2011 (2010 improvements project). It is not possible to make an
estimate of the effects on the net assets, financial position or results of operations of the
Group and the presentation of its financial information at the present time.
* IFRIC 12 is effective for financial years beginning on or after 31 March 2009. IFRIC 12 deals
with the accounting treatment of certain service concession arrangements where a publicsector
body contracts with a private operator. This interpretation has no application within the
Adler Group.
* Amendment to IFRIC 14 The Limit on a Defined Benefit Asset, Minimum Funding
*
Requirements and their Interaction. The amendment to IFRIC 14 applies in the rare cases in
which an entity is subject to minimum funding requirements and makes prepaid contributions
in order to meet those requirements. The amendment allows the entities in these cases to
record the benefit of such prepayments as an asset. This interpretation has no application
within the Adler Group.
IFRIC 15 Agreements for the Construction of Real Estate. IFRIC 15 makes clear in what
circumstances agreements for the construction of real estate are subject to the provisions of
IAS 11 or of IAS 18. IFRIC 15 also contains guidance on when revenue should be
*
recognised in the case of agreements for the construction of real estate that fall within the
scope of IAS 18. This interpretation has no application within the Adler Group.
IFRIC 16 Hedges of a Net Investment in a Foreign Operation. IFRIC 16 clarifies what should
be regarded as the risk in the hedge of a net investment in a foreign operation and which
entity within a group can hold the hedging instrument used to reduce this risk. This
*
interpretation has no application within the Adler Group.
IFRIC 17 Distributions of Non-cash Assets to Owners. IFRIC 17 clarifies and explains the
accounting treatment of non-cash dividends to owners of an entity. This interpretation has no
application within the Adler Group.
* IFRIC 18 Transfers of Assets from Customers. IFRIC 18 clarifies and explains the accounting
treatment for the transfer from a customer of items of property, plant and equipment or of
cash for the construction or purchase of an item of property, plant and equipment. This
interpretation has no application within the Adler Group.
* IFRIC 19: Extinguishing Financial Liabilities with Equity Instruments. IFRIC 19 explains the
requirements of IFRS where an entity extinguishes all or part of a financial liability by means
of the issue of shares or other equity instruments. The interpretation makes clear that the
equity instruments issued to a creditor for the purpose of extinguishing a financial liability
represent ‘‘consideration paid’’ in accordance with IAS 39.41 and that the relevant equity
instruments must be measured in principle at fair value. If the fair value cannot be reliably
determined, the equity instruments must be measured at the fair value of the liability
extinguished and the difference between the carrying amount of the financial liability
A
c
1
0
4
7
0
8
p
u
0
8
0
P
r
o
o
f
7
:
2
7
.
5
.
1
1
B
/
L
R
e
v
i
s
i
o
n
:
0
O
p
e
r
a
t
o
r
D
a
d
F-79

derecognised and the amount at which the equity instruments issued were initially recognised
must be reported in the income statement. This interpretation has no application within the
Adler Group.
These consolidated financial statements are based on the historical cost principle. The income
statement was prepared using the nature of expense method. Items in the consolidated balance
sheet are classified according to their maturities. Assets and liabilities falling due within one year
are reported as current. Assets and liabilities are classified as non-current if they remain within the
Group for longer than one year. Trade receivables and payables and also inventories are of an
exclusively short-term nature and are therefore reported under the current items.
The accounting policies set out below were applied for the purpose of preparing the consolidated
financial statements.
Group of consolidated companies/shareholdings
In addition to Adler Modemärkte GmbH, the following three German and two foreign subsidiaries in
which Adler Modemärkte GmbH directly or indirectly holds the majority of the voting rights have
been included in the consolidated financial statements:
Name, registered office
Shareholding
in % Currency
Subscribed
capital in
local
currency in
thousands
ADLER Atelier Moden GmbH, Haibach .......................... 100 EUR 67
ADVERS Versicherungsmakler GmbH, Haibach ............ 100 EUR 25
MOTEX Mode-Textil-Service Logistik und Management
GmbH, Hörselgau....................................................... 100 EUR 26
ADLER Modemärkte Gesellschaft m.b.H., Vösendorf /
Austria ........................................................................ 100 EUR 37
ADLER Mode S.A., Foetz / Luxembourg........................ 100 EUR 31
ALASKA GmbH & Co. KG, Munich, in which the Group has no shareholding, has also been
included in the consolidated financial statements as a special purpose entity in accordance with
SIC 12 on the basis of a rental agreement with ADLER Modemärkte GmbH (relating to an
administration building in Haibach).
Consolidation principles
Subsidiaries are all companies in which the Group has the power to govern the financial and
operating policies and generally holds more than 50% of the voting rights. In assessing whether
control exists, the existence and effect of potential voting rights that are currently exercisable or
convertible are taken into account where relevant. Subsidiaries are included in the consolidated
financial statements from the date on which control is obtained by the Group (full consolidation).
They are no longer consolidated from the date on which control is lost.
The financial statements of the German and foreign subsidiaries included in the consolidated
financial statements are prepared using uniform accounting policies in accordance with IAS 27.
Intra-Group profits and losses, revenues and income and expenses are eliminated, together with
receivables and liabilities existing between subsidiaries consolidated. Receivables and liabilities to
the same third-party company are offset where the relevant conditions are met. Intercompany
profits are eliminated. Deferred tax assets and liabilities are recognised in respect of temporary
differences arising from consolidation adjustments in accordance with IAS 12 (Income Taxes).
Consolidation of subsidiaries
Subsidiaries acquired are accounted for using the acquisition method. The cost of the acquisition is
the fair value of the assets given, the equity instruments issued and the liabilities incurred or
assumed at the date of the transaction plus costs directly attributable to the acquisition. The
acquiree’s identifiable assets, liabilities and contingent liabilities in a business combination are
measured on initial consolidation at their fair values at the date of the transaction, irrespective of
the extent of any minority interests.
A
c
1
0
4
7
0
8
p
u
0
8
0
P
r
o
o
f
7
:
2
7
.
5
.
1
1
B
/
L
R
e
v
i
s
i
o
n
:
0
O
p
e
r
a
t
o
r
D
a
d
F-80

Any excess of the cost of acquisition over the Group’s share of the net assets measured at fair
value is recognised as goodwill; if the cost of the acquisition is lower than the net assets of the
subsidiary acquired measured at fair value, the difference is recognised immediately in profit or
loss.
Currency translation
Business transactions in foreign currencies in the separate financial statements of subsidiaries
prepared in euros are measured at the rate of exchange at the date when the transaction is
initially recorded. Exchange rate gains and losses arising up to the balance sheet date from the
translation of receivables and liabilities are reflected in the financial statements; gains and losses
resulting from movements in exchange rates are reported in profit or loss.
III. Accounting policies
The accounting policies are applied in principle on a consistent basis.
Non-current assets and depreciation and amortisation
* Intangible assets
Purchased intangible assets are recognised at cost.
All purchased intangible assets with finite useful lives are amortised on a straight-line basis.
Amortisation is based on the following economic useful lives applied consistently across the Group:
* concessions, rights, licences: 3 to 7 years or the shorter contractual term where relevant
* software: 3 to 5 years
Internally generated intangible assets mostly comprise software. Costs associated with the
operation or maintenance of software are expensed when incurred. Costs incurred directly in
connection with the production of identifiable individual software products over which the Group has
control are recognised as an intangible asset if it is regarded as probable that the intangible asset
will generate future economic benefits, is technically feasible and if the costs can be reliably
determined. The directly attributable costs include personnel costs for the employees involved in
development and other costs directly attributable to the development of software. Finance costs are
not capitalised as a component of cost. Capitalised development costs for computer software with
a finite useful life are amortised on a straight-line basis over the period of its expected use but
subject to a maximum of five years.
If impairment in excess of the amortisation charged is identified, the asset is written down to the
recoverable amount.
There were no intangible assets with indefinite useful lives during the period under review.
* Property, plant and equipment
Items of property, plant and equipment used in the operation of the business for more than one
year are measured at cost less depreciation. Significant components of an item of property, plant
and equipment are recognised and depreciated separately. Subsequent costs are recognised as a
component of the cost of the asset only if it is probable that future economic benefits will flow to
the Group as a result and if the costs can be reliably determined. All other repair and maintenance
expenses are recognised as expenses in the income statement in the financial year in which they
are incurred.
Depreciation is not charged on land. For all other assets depreciation is charged on a straight-line
basis over the following expected useful lives of the assets:
– buildings including investment property: 33 years
– operating facilities: 3 to 10 years
– operating and office equipment: 3 to 10 years
– vehicles: 4 to 6 years
– lessee’s fixtures: 10 years.
The carrying amounts and useful economic lives are reviewed at each balance sheet date and
adjusted where necessary. If the carrying amount of an asset is higher than its estimated
recoverable amount, it is immediately written down to the latter. Gains and losses from disposals of
A
c
1
0
4
7
0
8
p
u
0
8
0
P
r
o
o
f
7
:
2
7
.
5
.
1
1
B
/
L
R
e
v
i
s
i
o
n
:
0
O
p
e
r
a
t
o
r
D
a
d
F-81

items of property, plant and equipment are calculated as the difference between the proceeds of
sale and the carrying amount, and are recorded in profit or loss.
Investment property
Investment property comprises land and buildings held in order to generate rental income and/or
for the purposes of capital appreciation and that are not used in the ordinary course of business. It
is measured at fair value. The fair value was determined by a property expert.
Leasing
Leases are classified as finance leases if substantially all of the risks and rewards of ownership
are transferred to the lessee under the terms of the lease. All other leases are classified as
operating leases.
Non-current assets that are rented or leased and where the relevant Group company has
economic ownership (finance leases) are recognised at the present value of the minimum lease
payments or the lower fair value and depreciated over their useful lives in accordance with the
requirements of IAS 17 (Leases). If it is not sufficiently certain at the start of the lease that
ownership will transfer to the lessee, the asset must be depreciated over the shorter of the term of
the lease and the useful life.
The corresponding liability to the lessor is reported in the balance sheet as a finance lease
obligation under liabilities from finance leases. The lease payments are apportioned between the
finance charge and the reduction of the lease obligation so as to produce a constant periodic rate
of interest on the remaining balance of the liability.
Lease payments made under the terms of an operating lease are reported as an expense in the
income statement on a straight-line basis over the term of the lease.
Special purpose entities
Special purpose entities are set up to achieve a particular purpose and must be consolidated if the
Group is able to exercise control over the special purpose entity. This is assessed on the basis of
the following criteria:
* Are the activities of the special purpose entity being conducted according to the Group’s
specific needs so that the Group obtains benefits from the activities of the special purpose
entity
* Does the Group have the decision-making powers to obtain the majority of the benefits of the
special purpose entity’s activities
* Does the Group have the right to obtain the majority of the benefits of the special purpose
entity’s activities and is it therefore potentially exposed to risks incident to the special purpose
entity’s activities
* Does the Group retain the majority of the residual or ownership risks related to the special
purpose entity or its assets in order to obtain benefits from its activities.
If the existence of control is established in this way, the special purpose entity is included in the
consolidated financial statements.
Impairment of non-monetary assets
Assets with indefinite useful lives are not depreciated or amortised; they are tested for impairment
annually or whenever there are indications that an asset may be impaired. Assets subject to
depreciation or amortisation are reviewed for impairment if relevant events or changes in
circumstances indicate that the carrying amount may no longer be recoverable. Any impairment
loss recognised is equal to the excess of the carrying amount over the recoverable amount. The
recoverable amount is the higher of the fair value of the asset less selling costs and the value in
use. For the purposes of the impairment test, assets are combined at the lowest level for which
cash flows can be separately identified (cash-generating units).
If an impairment charge is subsequently reversed, the carrying amount of the asset (of the cashgenerating
unit) is increased to the newly estimated recoverable amount. For this purpose, the
higher carrying amount resulting from the increase may not exceed the amount that would have
been determined, net of depreciation or amortisation, if no impairment charge had been recognised
in respect of the asset (the cash-generating unit) in prior years. A reversal of an impairment charge
A
c
1
0
4
7
0
8
p
u
0
8
0
P
r
o
o
f
7
:
2
7
.
5
.
1
1
B
/
L
R
e
v
i
s
i
o
n
:
0
O
p
e
r
a
t
o
r
D
a
d
F-82

is recognised immediately in profit or loss. Impairment charges recognised in respect of goodwill
may not be reversed.
Government grants
Government grants are recorded at their fair value if it is reasonably certain that the grant will be
made and that the Group will comply with the conditions necessary for receipt of the grant.
Government grants in respect of costs are recorded over the period during which the related costs,
for which the grant is intended to compensate, are incurred.
The Group receives government grants, that are recorded as income, as compensation for costs
arising in connection with partial retirement agreements. As a result of the conditions attached to
these government grants, the Group is under an obligation to keep open the positions occupied by
partially retired employees and to recruit new employees to fill them.
Building cost subsidies
Building cost subsidies are either paid to the lessor by the Group company for the purpose of
upgrading the property or granted by the lessor for independent building work for the construction
of the store. Building cost subsidies paid are accounted for as other assets and are expensed over
the remaining minimum term of the contract. Building cost subsidies received are reported as other
liabilities and reversed to income over the minimum term of the contract.
Current income taxes
The applicable rate of income tax is calculated on the basis of the tax laws in force on the balance
sheet date for the countries in which the Company’s subsidiaries operate. The applicable rates of
income tax for the particular countries are between 17.2% and 30.0% (prior year: 17.2% and
31.0%). Adequate and appropriate provisions are recognised for expected tax payments on the
basis of these tax laws.
A profit and loss transfer agreement and tax grouping for income tax purposes was in place
between Adler Modemärkte GmbH and its shareholder AMODA GmbH with the result that Adler
Modemärkte GmbH as a member of the tax group had no income tax liability. The profit and loss
transfer agreement was terminated on 30 September 2010 with effect as at 31 December 2010.
Since 1 January 2011, the tax grouping has no longer been in place. Since no liability to make tax
payments was incurred by Adler Modemärkte GmbH, no tax expense was recorded until the
cessation of the grouping for tax purposes. Following the termination of the grouping for tax
purposes as at 31 December 2010, the effects of actual taxes have been included in the financial
statements for the first time from 1 January 2011. Future income tax liabilities or benefits are
included in the financial statements of companies not forming part of the grouping for tax purposes.
Deferred taxes
In accordance with IAS 12, deferred taxes are recognised for all temporary differences between the
tax bases of the assets and liabilities and their carrying amounts in the IFRS consolidated financial
statements (liability method). Deferred taxes are measured on the basis of the tax rates and tax
laws in force or substantively enacted at the balance sheet date and which are expected to apply
at the date of realisation of the deferred tax asset or settlement of the deferred tax liability.
Deferred tax assets are recognised to the extent that it is probable that taxable profit will be
available against which the temporary difference can be utilised. If it is sufficiently certain that it will
be possible to utilise the future tax benefit resulting from loss carryforwards in future periods, a
deferred tax asset is recognised.
IAS 12.39 provides that deferred taxes on temporary differences in connection with investments in
subsidiaries should be recognised in the consolidated financial statements only when the following
criteria are not met:
– the parent company, shareholder or joint venture partner is in a position to control the timing
of the reversal of the temporary difference; and
– it is probable that the temporary difference will not reverse in the foreseeable future.
This is not the case within the Adler Group. The temporary difference generally reverses only when
the company is sold. At the present time the Adler Group is not planning to dispose of any
subsidiaries but, on the other hand, it would be in a position to control the timing of any disposal.
A
c
1
0
4
7
0
8
p
u
0
8
0
P
r
o
o
f
7
:
2
7
.
5
.
1
1
B
/
L
R
e
v
i
s
i
o
n
:
0
O
p
e
r
a
t
o
r
D
a
d
F-83

No deferred taxes are recognised in the consolidated financial statements of the Adler Group in
respect of temporary differences relating to investments in subsidiaries.
No deferred taxes were recognised in respect of differences between the tax bases and the
amounts currently included in the financial statements within Adler Modemärkte GmbH during the
period of the grouping of companies for tax purposes, since the reversal of these differences would
not have resulted in a tax effect. As a consequence of the termination of the tax grouping between
Adler Modemärkte GmbH and AMODA GmbH as at 31 December 2010, deferred taxes were
required to be recognised for the first time as at 31 December 2010 in respect of differences in
measurement between the IFRS carrying amounts and the tax bases of assets and liabilities.
Deferred taxes were recognised for all companies not forming part of the tax grouping in
accordance with the requirements of IAS 12.
Deferred tax assets and liabilities are netted if there is a legally enforceable right to offset current
tax assets against current tax liabilities and if the deferred taxes relate to the same tax authority.
Inventories
Merchandise accounted for as inventories is generally carried at the lower of cost and net
realisable value. Net realisable value is the amount of the estimated sale proceeds achievable in
the normal course of business less the necessary variable costs of sale. The cost of production
includes all directly attributable costs and appropriate portions of necessary overheads and
depreciation in addition to direct materials and production costs. Cost is determined using the
weighted average method. Borrowing costs have not been included in the cost of inventories.
Receivables and other assets
* Trade receivables
Trade receivables are recorded initially at fair value and measured in subsequent periods at
amortised cost less any impairment losses. An impairment charge is recorded in respect of trade
receivables if there are objective indications that the amounts of receivables due are not collectible
in full. The amount of the impairment charge is measured as the difference between the carrying
amount of the receivable and the present value of the estimated future cash flows from that
receivable, determined using the effective interest rate method. The impairment charge is reported
in profit or loss. Trade receivables are classified under the loans and receivables category.
* Derivative financial instruments
The Adler Group did not make use of any derivative financial instruments in the period under
review.
* Other receivables and other assets and loans
Other receivables and other assets and loans are recorded initially at fair value and measured in
subsequent periods at amortised cost using the effective interest method – in the case of noncurrent
loans – less any impairment losses. Appropriate valuation allowances are recognised in
respect of any risks existing. At each balance sheet date the carrying amounts of financial assets
not measured at fair value through profit or loss are reviewed for objective indications of
impairment (such as significant financial difficulties on the part of the debtor, a high probability of
insolvency proceedings against the debtor, a significant change in the technological, economic or
legal environment, or in the market environment of the Issuer or a permanent decline in the fair
value of the financial asset to below amortised cost). Any impairment charge, based on a lower fair
value in comparison with the carrying amount, is reported in the income statement. If it becomes
clear at subsequent measurement dates that the fair value has risen objectively as a result of
events that occurred after the date when the impairment charge was recognised, the impairment
charge is reversed through profit or loss in the relevant amount. The fair value determined for the
purpose of reviewing possible impairment losses in respect of loans and receivables measured at
amortised cost is equal to the present value of the estimated future cash flows, discounted at the
original effective rate of interest.
A
c
1
0
4
7
0
8
p
u
0
8
0
P
r
o
o
f
7
:
2
7
.
5
.
1
1
B
/
L
R
e
v
i
s
i
o
n
:
0
O
p
e
r
a
t
o
r
D
a
d
Other receivables and other assets and loans are allocated to the loans and receivables category.
Financial assets are generally recorded at the trade date.
F-84

Cash and cash equivalents
Cash and cash equivalents include cash, demand deposits and other short-term highly liquid
financial assets with an original term of no more than three months. Overdrafts utilised are
reported as liabilities to banks under current financial liabilities.
Equity
Equity consists of subscribed capital, capital reserves and retained earnings. The subscribed capital
represents the nominal capital of the parent company. Capital reserves comprise all capital
amounts contributed to the Company from external sources that are not subscribed capital. The
interests of other shareholders in the equity of the Company are reported as non-controlling
interests.
Provisions
Provisions are recognised when the Group has a present legal or constructive obligation arising as
a result of a past event, it is probable that an outflow of resources embodying economic benefits
will be required to settle the obligation and the amount of the provision can be reliably estimated.
Where there is a number of similar obligations, the likelihood that an outflow of resources will be
required is determined by considering that class of obligations as a whole. Provisions are stated at
the expected settlement amount after taking into account all identifiable associated risks and are
not offset against rights of recourse.
Where the effect of the time value of money is material, non-current provisions are carried at the
settlement amount discounted to the balance sheet date. The discount rate used for this purpose is
a pre-tax rate of interest reflecting the current market assessment of the economic situation and
the risks specific to the obligation.
Employee benefits
* Pension obligations
The Adler Group has a number of different benefit plans. They include both defined benefit and
defined contribution plans. Defined contribution plans are post-employment plans under which an
enterprise pays fixed contributions into a separate entity (such as a fund or insurance
arrangement) and has no legal or constructive obligation to pay further contributions, even if the
fund or the entitlements from the insurance agreement entered into do not have sufficient assets to
pay all employee benefits relating to employee service in the current reporting period and prior
periods. A defined benefit plan is a post-employment plan other than a defined contribution plan.
The agreements underlying the defined benefit plans provide for different benefits within the Group
depending on the particular subsidiary. The latter mainly comprise
* pension entitlements once the relevant pensionable age is reached,
* one-off payments on cessation of employment.
The provision relating to defined benefit plans carried in the consolidated balance sheet is
calculated as the present value of the pension obligation at the balance sheet date less the fair
value of any plan assets available, after taking into account unrecognised actuarial gains and
losses and any past service cost not yet recognised.
The actuarial calculation of the pension provisions for the Company’s old age pensions is based on
the projected unit credit method prescribed by IAS 19 (Employee Benefits). An actuarial valuation
is carried out by independent actuarial experts for this purpose at each balance sheet date. The
projected unit credit method takes account of the known pensions and vested benefits at the
balance sheet date and includes increases in salaries and pensions expected in the future. The
valuations are based on the legal, economic and tax environment of the individual country. The
obligations, which exist solely in the European economic area, were measured using an actuarial
rate of interest of 5.25% (prior year 5.85%), projected annual wage and salary increases of 2.0%
(prior year 2.5%) and projected annual pension increases of 1.5% (prior year 2.0%). Employee
turnover is determined for each specific company and taken into account on the basis of age and
length of service. The actuarial valuations are mostly based on specific mortality tables for each
country. The provision is made up of the present value of the expected benefits less the fair value
of the plan assets plus or minus any actuarial gains and losses not yet recognised. The expected
return on the plan assets was assumed to be 4.0% (prior year 4.5%).
A
c
1
0
4
7
0
8
p
u
0
8
0
P
r
o
o
f
7
:
2
7
.
5
.
1
1
B
/
L
R
e
v
i
s
i
o
n
:
0
O
p
e
r
a
t
o
r
D
a
d
F-85

The accumulated actuarial gains and losses resulting from the differences arising over the years
between the projected pension obligations and plan assets and the actual amounts at the year-end
are only recognised if they lie outside a range of 10% of the higher of the pension obligations and
the plan assets. In this event, the excess is divided by the average remaining working lives of the
active employees participating in the plan and recorded as an additional expense or item of
income. Past service cost for benefits that have not yet vested is allocated over the remaining
working life until the entitlement vests. The cost relating to benefits that have already vested is
recognised as an expense immediately. The interest component of the addition to provisions
included in the pension expenses (interest cost for pension obligations and expected income from
plan assets) is reported as interest expense within personnel expenses.
Payments out of a defined contribution benefits plan are included in profit or loss and reported
within personnel expenses.
* Obligations for severance payments
Employees who began their service in Austria on or after 1 January 2003 participate in a defined
contribution benefits plan. Obligations arising from severance payments for employees whose
service began prior to 1 January 2003 are covered by defined benefit plans. When service is
ended by the company or pensionable age is reached, or in the case of invalidity or death,
participating employees receive a severance payment which amounts to a multiple of their basic
monthly salary – depending on their length of service – subject to a maximum of twelve months’
salary. A maximum of three months’ salary is paid immediately on cessation of service, while the
payment of any further amounts is distributed over a period of several months. In the event of
death, the heirs of participating employees are entitled to 50% of the severance payment.
* Termination benefits
Termination benefits are paid when an employee is dismissed prior to the normal retirement date
or when an employee leaves employment voluntarily in return for a termination payment. The
Group recognises termination benefits immediately when it is demonstrably and irrevocably
committed to terminate the employment of current employees on the basis of a detailed formal
plan which cannot be withdrawn, or when it is demonstrably required to pay termination benefits on
the voluntary termination of employment by employees. Payments falling due more than twelve
months after the balance sheet date are discounted to their present value. The entitlements to
termination benefits are reported under provisions for personnel expenses. This item also includes
portions of the entitlements arising from the German provisions relating to partial retirement
arrangements.
Liabilities
* Financial liabilities
Financial liabilities are recorded at fair value on initial recognition and measured at amortised cost
in subsequent periods. Differences between the historical cost and the repayment amount of noncurrent
liabilities are reflected in the financial statements using the effective interest method.
Financial liabilities measured at amortised cost are recognised initially at fair value, taking into
account transaction costs.
Loan liabilities are classified as current if repayment is due within the following twelve months.
Discount entitlements not yet utilised by customers are also reported in current financial liabilities.
Customers are awarded these entitlements whenever they make a purchase using the Adler
customer card. Within a specifically defined period, customers can offset these discount
entitlements against a subsequent purchase or have the amount paid out in cash. The amount
included in financial liabilities represents customers’ discount entitlements not yet utilised at the
balance sheet date.
* Liabilities from finance leases
Lease liabilities are recognised if economic ownership of the leased or rented leased assets is
attributable to companies of the Adler Group and the assets are capitalised under property, plant
and equipment (finance leases). On initial recognition, the lease obligations are recorded at the fair
value of the leased asset or, if lower, the present value of the lease payments.
A
c
1
0
4
7
0
8
p
u
0
8
0
P
r
o
o
f
7
:
2
7
.
5
.
1
1
B
/
L
R
e
v
i
s
i
o
n
:
0
O
p
e
r
a
t
o
r
D
a
d
F-86

For this purpose, the finance charge is apportioned over the term of the lease in such a way that
a constant periodic rate of interest over time is produced on the outstanding balance of the finance
lease liability.
* Trade payables and other liabilities
Trade payables and other liabilities are carried at amortised cost. Trade payables and other current
liabilities are reported under other liabilities.
Contingent liabilities
Contingent liabilities are possible or present obligations resulting from past events but for which an
outflow of resources is estimated to be not probable. Under IAS 37, obligations of this nature are
not recorded in the balance sheet but are disclosed in the notes to the financial statements.
Recognition of income and expenses
Revenue represents the fair value of the consideration received or receivable for the sale of goods
and services in the ordinary course of business. Revenue is reported net of VAT and after
deducting rebates and discounts. Customers’ entitlements to refunds relating to goods delivered are
recorded in the income statement once the relevant invoices have been examined. Sales which
give the customer the right to acquire loyalty points are accounted for initially as a liability in the
amount of the fair value of the loyalty points using the deferred revenue method in accordance
with IFRIC 13 and are recognised as revenue only when the points are utilised or expire. The
corresponding obligation from loyalty points not yet utilised is reported under deferred income.
Within the Adler Group, a loyalty points programme required to be accounted for in accordance
with the provisions of IFRIC 13 was offered only for a short time during the reporting period. The
related liability in respect of the deferral of revenue is included in deferred income as at 31
December 2008. The programme expired at the end of April 2009 and loyalty points not utilised by
that time were therefore recognised as revenue. No further programmes were offered during the
reporting period.
Where customers making purchases with the Adler customer card acquire an entitlement to a
particular discount, the discount is recorded as a reduction in revenue. The liability is reported
within financial liabilities. The liability is reversed when the discount is utilised. If customers allow
their discount entitlements to expire, the amount not utilised is reported within revenue.
Revenue and other operating income is generally recognised only when the services have been
performed or the goods or products have been delivered and the risks of ownership have
transferred to the customer. Retail sales are settled in cash or using an EC or credit card. The
card company’s charges are recorded in other operating expenses. The Group’s business policy is
that the end user acquires its products with a right of return. This right of return is quantified on
the basis of historical amounts and deducted from revenue.
Expenses are recognised when the goods or services are utilised or when the expense is incurred.
This also applies to the recognition of advertising expenses. The latter are recorded in accordance
with the provisions of IAS 38 when the service – in this case the provision of advertising services
– has been performed for the Adler Group and not at the later date when the Adler Group is
conducting the relevant advertising campaigns.
Rental income and expenses are recorded as revenue or expenditure on an accruals basis in the
period to which they relate.
Net finance costs
Interest income and interest expenses are recorded on an accruals basis in the period to which
they relate using the effective interest method, based on the outstanding balance of the loan and
the applicable interest rate. The applicable interest rate is the rate of interest that discounts the
estimated future cash flows over the term of the financial asset to its net carrying amount.
In the case of a finance lease agreement, payments received are apportioned between the finance
charge and the reduction of the outstanding liability using mathematical methods.
Borrowing costs are reported in the income statement in the period in which they are incurred,
except for borrowing costs required to be capitalised in respect of qualifying assets.
A
c
1
0
4
7
0
8
p
u
0
8
0
P
r
o
o
f
7
:
2
7
.
5
.
1
1
B
/
L
R
e
v
i
s
i
o
n
:
0
O
p
e
r
a
t
o
r
D
a
d
F-87

Litigation and claims for damages
The companies in the Adler Group are involved in a range of legal and administrative proceedings
in the course of their general business operations or similar proceedings could be initiated or
claims asserted in the future. Although the outcome of individual proceedings cannot be predicted
with certainty given the imponderable factors involved in legal disputes, it is currently estimated
that they will have no material adverse effect on the results of operations of the Group over and
above the risks reflected in the financial statements in the form of liabilities or provisions.
Use of estimates and assumptions
The preparation of the consolidated financial statements has involved the making of assumptions
and use of estimates that have affected the reporting and the amount of the assets, liabilities,
income and expenses recognised and of the contingent liabilities. These estimates and
assumptions relate principally to the establishment of uniform economic useful lives used across
the Group, the assessment of whether impairment charges are required for inventories, the
measurement of provisions, pensions and risks specific to individual locations, together with the
recoverability of future tax benefits in particular those arising from loss carryforwards. The actual
amounts may differ in particular cases from the estimates and assumptions made. Revised
amounts are reflected at the date when improved knowledge becomes available.
Our estimates are based on historical amounts and other assumptions considered to be accurate
in the particular circumstances. The actual amounts may differ from the estimates made. The
estimates and assumptions are reviewed on an ongoing basis. The true and fair view principle is
also applied to the use of estimates.
Income taxes
The Group has a liability to pay income taxes in various countries in accordance with different
particular bases of assessment. The global provision for taxes is recognised on the basis of the
profit determined in accordance with local tax regulations and the applicable local rates of tax.
The amount of the tax provisions and liabilities is based on estimates of whether and in what
amount income taxes will become payable. Risks arising from the possibility of a different
treatment for tax purposes are reflected, where necessary, in provisions for the appropriate
amount.
In addition, it is necessary to make estimates in order to assess the recoverability of deferred tax
assets. The key factor in assessing the recoverability of deferred tax assets is the estimation of the
likelihood that future profits for tax purposes (taxable income) will be available.
Uncertainties relating to the interpretation of complex tax regulations and the amount and timing of
future taxable income must also be taken into account. Especially in view of the international
structure of the Group, differences between actual events and our assumptions, or future changes
in those assumptions, may result in revised amounts for the tax charge or benefit in future periods.
Provisions
Assumptions about the likelihood of an outflow of resources occurring have to be made for the
purpose of determining whether to recognise provisions. These assumptions represent the best
possible assessment of the circumstances underlying the particular provision but are subject to an
element of uncertainty given the inevitable use of assumptions. Assumptions also have to be made
about the amount of any outflow of resources for the purpose of measuring the provisions. A
change in the assumptions can therefore result in a revised amount for the provision. Accordingly,
the use of assumptions can also give rise here to an element of uncertainty.
The determination of the present value of pension obligations depends primarily on the choice of
the discount rate of interest and the other actuarial assumptions which must be formulated afresh
at the end of each financial year. For this purpose, the underlying discount rate is the rate of
interest on corporate bonds with high credit ratings, denominated in the currency in which the
payments are made and with the same maturity structure as the pension obligations. Changes in
these interest rates may result in material revisions to the amount of the pension obligations.
Impairment
For the purpose of reflecting risks specific to individual locations in the financial statements (mainly
the estimation of anticipated losses from operating lease agreements and the impairment of finance
lease agreements relating to store rents), an adjusted EBIT for a particular planning horizon is
estimated for locations with ongoing losses. This is then compared with objectively determined
A
c
1
0
4
7
0
8
p
u
0
8
0
P
r
o
o
f
7
:
2
7
.
5
.
1
1
B
/
L
R
e
v
i
s
i
o
n
:
0
O
p
e
r
a
t
o
r
D
a
d
F-88

ents in order to calculate the extent of any failure to cover future rents and/or to adjust the
carrying amounts to a recoverable amount determined under the assumption either that the location
will continue in its present use or that it will be used for a different purpose.
The fair value of land and buildings being tested for impairment is normally based on a valuation
by an independent expert. Expert opinions on the market values of property, plant and equipment
are subject to an element of uncertainty as a result of the unavoidable use of assumptions.
All identifiable risks at the date of preparation of the consolidated financial statements were
included in the context of the underlying estimates and assumptions.
IV. Notes to the income statement
1. Revenue
Revenue (net) is generated almost entirely from sales of goods and is distributed geographically as
follows:
2009 2008
c’000 c’000
Germany........................................................................................................ 336,992 394,824
Austria ........................................................................................................... 60,873 65,880
Luxembourg................................................................................................... 12,959 13,899
2. Other operating income
410,824 474,603
2009 2008
c’000 c’000
Rental income................................................................................................ 4,344 4,813
Income from the reversal of provisions ......................................................... 4,025 2,969
Commissions ................................................................................................. 2,898 3,397
Licence income.............................................................................................. 2,466 831
Income from the reversal of other liabilities................................................... 2,152 422
Recharged costs / cost reimbursements ....................................................... 779 1,047
Income from damages................................................................................... 289 185
Income from disposals of non-current assets................................................ 134 8,261
Government subsidies for personnel expenses............................................. 133 227
Miscellaneous ................................................................................................ 1,029 1,252
18,249 23,404
The rental income was generated from subletting to store concessionaires.
An amount of c6,501 thousand of the income from disposals of non-current assets in the prior year
resulted from the fact that a building complex leased under the terms of a finance lease (the
administration building and warehouses of MOTEX Mode-Textil-Service Logistik und Management
GmbH) was disposed of in the course of the negotiations for a new lease agreement and
continued to be used under the terms of an operating lease. The lease agreements for a further
four stores that had been classified to date as finance leases were also terminated prematurely.
The disposal resulted in income amounting to c1,467 thousand.
Licence income amounting to c1,800 thousand was generated from the grant of a trademark
licence to an affiliated company.
A
c
1
0
4
7
0
8
p
u
0
8
0
P
r
o
o
f
7
:
2
7
.
5
.
1
1
B
/
L
R
e
v
i
s
i
o
n
:
0
O
p
e
r
a
t
o
r
D
a
d
F-89

3. Cost of materials
2009 2008
c’000 c’000
Purchased goods........................................................................................... 204,254 239,596
Purchased services ....................................................................................... 0 6
4. Personnel expenses
204,254 239,602
2009 2008
c’000 c’000
Wages and salaries ....................................................................................... 75,392 106,945
Other social security contributions................................................................. 7,600 10,395
Employers’ contributions to statutory pension scheme.................................. 7,639 9,911
Expenses for old-age part time ..................................................................... 808 712
Expenses for partial retirement/death benefits/anniversaries ........................ 318 210
91,757 128,173
The sharp reduction in personnel expenses mostly reflects the personnel costs caused by
restructuring activities included in the prior year and the lower number of employees in 2009.
The average number of people employed by the Group during the reporting period was:
2009 2008
Managers....................................................................................................... 155 157
Salaried employees ....................................................................................... 1,001 1,249
Part-time workers .......................................................................................... 3,767 4,857
Trainees......................................................................................................... 200 228
5,123 6,491
The fall in the number of employees is the result of the restructuring activities in financial year
2009.
5. Other operating expenses
2009 2008
c’000 c’000
Lease payments and building expenses........................................................ 56,549 58,152
Advertising costs ........................................................................................... 32,212 47,232
Technical facilities.......................................................................................... 8,883 12,498
Consultancy expenses................................................................................... 4,814 4,460
Administrative expenses................................................................................ 3,681 5,797
External cleaning costs.................................................................................. 3,250 3,439
Consumables................................................................................................. 2,398 2,999
Office expenses............................................................................................. 1,389 2,115
Incidental costs of monetary transactions ..................................................... 1,012 1,119
Losses from disposals of non-current assets ................................................ 460 1,151
Costs of terminating contracts ....................................................................... 0 12,915
Miscellaneous ................................................................................................ 3,762 5,535
118,410 157,412
The costs of terminating contracts in financial year 2008 were incurred as a result of the
restructuring activities undertaken (including the termination of rental agreements).
A
c
1
0
4
7
0
8
p
u
0
8
0
P
r
o
o
f
7
:
2
7
.
5
.
1
1
B
/
L
R
e
v
i
s
i
o
n
:
0
O
p
e
r
a
t
o
r
D
a
d
F-90

6. Depreciation, amortisation and impairment
The amounts of depreciation and amortisation are presented in the consolidated statement of
changes in non-current assets.
In financial year 2009, impairment losses amounting to c448 thousand were recognised in respect
of the rights to the ‘‘VIVENTY by Bernd Berger’’ trademark acquired under the terms of a finance
lease. The recoverable amount is equal to the value in use. As a result of continuous negative
gross income relating to the ‘‘VIVENTY by Bernd Berger’’ line, the intangible asset was written off
in full. The fair value less costs to sell is equal to the value in use.
Impairment losses totalling c1,439 thousand were also recorded in financial year 2009 in respect of
internally generated intangible assets. Of this amount, c1,367 thousand related to internally
generated logistics software and c72 thousand to a computer-based incentive pay system. The
recoverable amounts of the assets are equal in each case to their values in use. In view of the
adjusted remaining useful lives, the assets and/or components were therefore written down in full.
Also in financial year 2009, impairment losses amounting in total to c1,072 thousand were
recorded in connection with the reclassification of one property into investment property. The
portion of the property no longer utilised by the Company itself was reclassified out of property,
plant and equipment. Of the total impairment charge, c900 thousand related to the investment
property, c53 thousand to land and c119 thousand to buildings. The property was written down to
its fair value including land. This amounted to c4,020 thousand as at 31 December 2009.
Impairment losses amounting to c759 thousand were incurred in the prior year for stores marked
for closure. In this connection, an impairment charge of c546 thousand was also recognised in
respect of property, plant and equipment capitalised under the terms of a finance lease. The
recoverable amounts of the assets are equal in each case to their values in use. The assets were
written off in full. Because of the development of the economy in financial year 2008, the assets of
MOTEX Mode-Textil-Service Logistik und Management GmbH were tested for impairment as at
31 December 2008. The impairment test was carried out at the level of the MOTEX Mode-Textil-
Service Logistik und Management GmbH cash-generating unit. In the light of the recoverable
amounts determined, an impairment charge of c6,547 thousand was recognised. Of the total
impairment charge, an amount of c250 thousand was allocated to intangible assets, c112 thousand
to buildings, c4,602 thousand to technical equipment and machinery and c1,583 thousand to other
items of property, plant and equipment. The recoverable amount was determined using a
discounted cash flow model. The calculation was based on cash flow projections over a 6-year
period. A post-tax discount rate of 8.84% p.a. was applied. On the basis of the detailed projections
used, no deduction was made from the discount rate in respect of anticipated growth in the cash
flows.
In the current financial year, reversals of impairment losses amounting to c565 thousand were
recorded under impairment since only some of the intended closures of stores actually took place.
The impairment charges previously recognised in respect of the property, plant and equipment of
those stores which continued to be operated were reversed up to the assets’ original depreciated
cost.
A
c
1
0
4
7
0
8
p
u
0
8
0
P
r
o
o
f
7
:
2
7
.
5
.
1
1
B
/
L
R
e
v
i
s
i
o
n
:
0
O
p
e
r
a
t
o
r
D
a
d
F-91

7. Net finance costs
Net finance costs comprise the items below analysed by the items giving rise to them as follows:
2009 2008
c’000 c’000
Interest income
Receivables from affiliated companies .......................................................... 1,407 160
Receivables from banks ................................................................................ 210 169
Repayment of tax .......................................................................................... 0 451
Other.............................................................................................................. 87 6
1,704 786
Interest expense
Interest expense from finance leases............................................................ -4,639 -6,290
Liabilities to affiliated companies ................................................................... -185 -261
Liabilities to banks ......................................................................................... -15 -409
Payment of additional tax .............................................................................. 0 -12
Other.............................................................................................................. -6 -5
-4,845 -6,977
Net finance costs......................................................................................... -3,141 -6,191
The increase in interest income arising from receivables from affiliated companies is mainly
attributable to the loan granted to Adler Treasury GmbH in financial year 2009. The interest income
from banks relates to ongoing current account balances. Both items were classified under the
loans and receivables category. In financial year 2008, interest income was recorded for
repayments of tax related to company tax audits in respect of the period 1999 – 2004.
The reduction in the interest portion of the lease payments arising from finance lease agreements
mainly resulted from the fact that a building complex leased under the terms of a finance lease
(the administration building and warehouses of MOTEX Mode-Textil-Service Logistik und
Management GmbH) was reclassified in the course of the negotiations for a new lease agreement
and continued to be used under the terms of an operating lease. In addition, four lease
agreements classified as finance leases were terminated early in financial year 2008.
All interest income and interest expenses arising from financial assets and financial liabilities were
calculated using the effective interest method.
The interest included in net finance costs represents the total amount of interest income and
expenses calculated using the effective interest method.
8. Income taxes
The income tax expense was made up as follows:
2009 2008
c’000 c’000
Current tax expense (-) / benefit (+).............................................................. -113 4,252
Deferred taxes ............................................................................................... -64 -1,895
-177 2,357
Income taxes paid and payable in the individual countries together with deferred tax expenses and
benefits are reported under income taxes.
A profit and loss transfer agreement and tax grouping for income tax purposes is in place between
Adler Modemärkte GmbH and AMODA GmbH with the result that Adler Modemärkte GmbH as a
member of the tax group has no income tax liability.
The current tax benefit in financial year 2008 was mainly the result of repayments of corporation
tax relating to financial years before the tax grouping was in place.
A
c
1
0
4
7
0
8
p
u
0
8
0
P
r
o
o
f
7
:
2
7
.
5
.
1
1
B
/
L
R
e
v
i
s
i
o
n
:
0
O
p
e
r
a
t
o
r
D
a
d
F-92

The tax rate of 27.000% applied for the German company is made up of corporation tax amounting
to 15.825% (including the solidarity surcharge of 5.500%) and the trade tax rate of 11.150%.
Foreign income taxes are calculated on the basis of the laws and regulations in force in the
particular countries. The overall tax rate applicable for the Adler Group amounts to 27.000%. The
tax rates are unchanged from the previous year.
The calculation of deferred taxes is based on the tax rates expected to apply in the individual
countries when the deferred tax asset is realised or the liability is settled; these generally reflect
the tax laws in force or enacted at the balance sheet date.
The differences between the income tax expense actually recorded and the expected income tax
expense are shown in the following reconciliation. The expected income tax expense is calculated
from the profit or loss before taxes multiplied by the applicable income tax rate.
2009 2008
c’000 c’000
Consolidated net loss before taxes ............................................................... -7,101 -61,602
Applicable rate of income tax ........................................................................ 27.00% 27.00%
Expected income tax expense ................................................................... -1,917 -16,633
Effects of differing foreign tax rates ......................................................... 120 170
Effects of differing German tax rates ........................................................ 14 12
Tax effects
Deferred and current taxes not recognised due to grouping of companies for
tax purposes.............................................................................................. 2,009 15,670
Items added back for tax purposes ............................................................... 44 52
Tax-exempt income ....................................................................................... -98 -45
Prior-period tax benefits ................................................................................ -11 -5,280
Current taxable losses not recognised .......................................................... 403 1,519
Effects of deferred tax assets not recognised ............................................... -383 2,195
Other differences ........................................................................................... -4 -17
Total tax effects ........................................................................................... 1,960 14,094
Actual tax expense ...................................................................................... 177 -2,357
Effective rate of tax ....................................................................................... -2.49% 3.83%
9. Non-controlling interests in the consolidated net loss for the year
There were no non-controlling interests in the consolidated net loss for the year. The consolidated
net loss for the year is attributable in its entirety to the owners of Adler Modemärkte GmbH.
A
c
1
0
4
7
0
8
p
u
0
8
0
P
r
o
o
f
7
:
2
7
.
5
.
1
1
B
/
L
R
e
v
i
s
i
o
n
:
0
O
p
e
r
a
t
o
r
D
a
d
F-93

V. Notes to the balance sheet
10. Intangible assets
The intangible assets comprise internally generated software as well as purchased software, rights
and licences. The internally generated intangible assets represent capitalised development costs for
logistics software and for a computer-based incentive pay system.
The development of intangible assets in financial year 2009 was as follows:
Software,
rights and
licences
Licences under
finance leases
Internally
generated assets Pre-payments Total
c’000 c’000 c’000 c’000 c’000
Cost 1 Jan. 2009 ......................... 22,612 828 2,913 1,009 27,362
Additions ....................................... 1,074 0 0 0 1,074
Disposals ...................................... -3 0 0 0 -3
Transfers....................................... 1,009 0 0 -1,009 0
As at 31 Dec. 2009 ...................... 24,692 828 2,913 0 28,433
Amortisation 1 Jan. 2009 ........... -21,252 -173 -620 0 -22,045
Additions ....................................... -1,004 -207 -480 0 -1,691
Disposals ...................................... 0 0 0 0 0
Transfers....................................... 0 0 0 0 0
As at 31 Dec. 2009 ...................... -22,256 -380 -1,100 0 -23,736
Impairment 1 Jan. 2009 .............. -52 0 -198 0 -250
Additions ....................................... 0 -448 -1,439 0 -1,887
Disposals ...................................... 0 0 0 0 0
Reversals ...................................... 0 0 0 0 0
As at 31 Dec. 2009 ...................... -52 -448 -1,637 0 -2,137
Net book value 31 Dec. 2008 ..... 1,308 655 2,095 1,009 5,067
Net book value 31 Dec. 2009 ..... 2,384 0 176 0 2,560
The development of intangible assets in financial year 2008 was as follows:
Software,
rights and
licences
Licences under
finance leases
Internally
generated assets Pre-payments Total
c’000 c’000 c’000 c’000 c’000
Cost 1 Jan. 2008 ......................... 22,765 0 2,553 687 26,005
Additions ....................................... 727 828 360 322 2,237
Disposals ...................................... -880 0 0 0 -880
Transfers....................................... 0 0 0 0 0
As at 31 Dec. 2008 ...................... 22,612 828 2,913 1,009 27,362
Amortisation 1 Jan. 2008 ........... -20,952 0 -254 0 -21,206
Additions ....................................... -1,047 -173 -366 0 -1,586
Disposals ...................................... 747 0 0 0 747
Transfers....................................... 0 0 0 0 0
As at 31 Dec. 2008 ...................... -21,252 -173 -620 0 -22,045
Impairment 1 Jan. 2008 .............. 0 0 0 0 0
Additions ....................................... -52 0 -198 0 -250
Disposals ...................................... 0 0 0 0 0
Reversals ...................................... 0 0 0 0 0
As at 31 Dec. 2008 ...................... -52 0 -198 0 -250
Net book value 1 Jan. 2008........ 1,813 0 2,299 687 4,799
Net book value 31 Dec. 2008 ..... 1,308 655 2,095 1,009 5,067
The finance lease agreements consist of a licence for the ‘‘VIVENTY by Bernd Berger’’ trademark.
The lease agreement provides for components of rent that are dependent on the level of sales.
The lease has a term of 4 years with a subsequent obligation to buy.
Contingent rental expenses of c0 thousand (prior year c79 thousand) were recognised in the
income statement in respect of the licences acquired by means of a finance lease.
A
c
1
0
4
7
0
8
p
u
0
8
0
P
r
o
o
f
7
:
2
7
.
5
.
1
1
B
/
L
R
e
v
i
s
i
o
n
:
0
O
p
e
r
a
t
o
r
D
a
d
F-94

Impairment losses of c448 thousand (prior year c0 thousand) in respect of assets from finance
leases and of c1,439 thousand in respect of internally generated assets were identified in financial
year 2009. In addition, impairment losses of c52 thousand for licences and c198 thousand for
internally generated software were recognised in the prior year. For further information, please refer
to Note 6. Depreciation, amortisation and impairment.
11. Property, plant and equipment
Property, plant and equipment include leased land and buildings attributable to the Group as
economic owner as a result of the structure of the underlying lease agreements. In order to ensure
that these lease agreements, capitalised as finance leases, are measured at the appropriate
amount, they were reviewed with the aim of identifying any impairment write-downs that might be
necessary. The reviews of the individual stores did not result in the identification of any potential
losses required to be recognised.
The remaining items of property, plant and equipment consist mainly of the fixtures and fittings of
the stores.
The development of property, plant and equipment in financial year 2009 was as follows:
Land and land
rights
Buildings (incl.
buildings on
third-party
land)
Buildings
under finance
leases
Technical
equipment and
machinery
Other operating
and office
equipment
Pre-payments /
assets under
construction Total
c’000 c’000 c’000 c’000 c’000 c’000 c’000
Cost 1 Jan. 2009............... 873 59,139 131,774 10,804 72,340 0 274,930
Additions............................. 0 953 0 171 1,513 39 2,676
Disposals............................ 0 -393 -2,489 -8 -4,301 0 -7,191
Reclassification of
investment property....... -645 -4,282 0 0 0 -4,927
As at 31 Dec. 2009............ 228 55,417 129,285 10,967 69,552 39 265,488
Depreciation 1 Jan. 2009 . 0 -38,658 -91,264 -3,847 -52,817 0 -186,586
Additions............................. 0 -3,243 -6,547 -432 -4,305 0 -14,527
Disposals............................ 0 292 2,470 0 3,180 0 5,942
Reclassification of
investment property....... 0 653 0 0 0 0 653
As at 31 Dec. 2009............ 0 -40,956 -95,341 -4,279 -53,942 0 -194,518
Impairment 1 Jan. 2009.... 0 -112 -547 -4,602 -2,342 0 -7,603
Additions............................. -53 -119 0 0 0 0 -172
Disposals............................ 0 0 0 0 0 0 0
Reversals............................ 0 0 0 0 565 0 565
As at 31 Dec. 2009 -53 -231 -547 -4,602 -1,777 0 -7,210
A
c
1
0
4
7
0
8
p
u
0
8
0
P
r
o
o
f
7
:
2
7
.
5
.
1
1
B
/
L
R
e
v
i
s
i
o
n
:
0
O
p
e
r
a
t
o
r
D
a
d
Net book value 31 Dec.
2008 .............................. 873 20,369 39,963 2,355 17,181 0 80,741
Net book value 31 Dec.
2009 .............................. 175 14,230 33,397 2,086 13,833 39 63,760
F-95

The development of property, plant and equipment in financial year 2008 was as follows:
Land and land
rights
Buildings (incl.
buildings on
third-party
land)
Buildings
under finance
leases
Technical
equipment and
machinery
Other operating
and office
equipment
Pre-payments /
assets under
construction Total
c’000 c’000 c’000 c’000 c’000 c’000 c’000
Cost 1 Jan. 2008............... 873 59,513 167,442 10,758 70,555 0 309,141
Additions............................. 0 2,325 0 122 7,975 0 10,422
Disposals............................ 0 -2,699 -35,668 -76 -6,190 0 -44,633
Reclassification of
investment property....... 0 0 0 0 0 0
As at 31 Dec. 2008............ 873 59,139 131,774 10,804 72,340 0 274,930
Depreciation 1 Jan. 2008 0 -37,213 -101,622 -2,633 -52,738 0 -194,206
Additions............................. 0 -3,525 -8,467 -1,282 -5,519 0 -18,793
Disposals............................ 0 2,080 18,825 68 5,440 0 26,413
Reclassification of
investment property....... 0 0 0 0 0 0 0
As at 31 Dec. 2008 0 -38,658 -91,264 -3,847 -52,817 0 -186,586
Impairment 1 Jan. 2008 0 0 0 0 0 0 0
Additions............................. 0 -112 -547 -4,602 -2,342 0 -7,603
Disposals............................ 0 0 0 0 0 0 0
Reversals............................ 0 0 0 0 0 0 0
As at 31 Dec. 2008 0 -112 -547 -4,602 -2,342 0 -7,603
Net book value 1 Jan.
2008 873 22,299 65,820 8,125 17,817 0 114,934
Net book value 31 Dec.
2008 873 20,369 39,963 2,355 17,181 0 80,741
For information relating to the impairment losses and reversals recognised, please refer to Note 6.
Depreciation, amortisation and impairment.
The finance and operating lease agreements relate principally to leased buildings for stores. The
lease agreements generally include renewal clauses as well as price adjustment clauses based on
changes in the rental price index. In addition, variable components of rent are contingent
depending on the sales achieved in the individual stores. In financial year 2009, the contingent
rental payments under finance lease agreements amounted to c812 thousand (prior year c803
thousand), while those under operating lease agreements were c3,433 thousand (prior year c2,592
thousand).
Impairment losses of c0 thousand (prior year c547 thousand) were identified in financial year 2009
in respect of assets from finance leases. For further information, please refer to Note 6.
Depreciation, amortisation and impairment.
The terms of the leases generally amount to between 5 and 20 years with renewal options. The
renewal options must be exercised by the Company, depending on the particular lease agreement,
at a specified time prior to expiry of the lease agreement. This period ranges between three and
twelve months prior to expiry of the lease agreement. The renewal terms amount to between one
year and five years.
The expenses for operating leases during the financial year amounted to c50,350 thousand (prior
year c52,744 thousand). The operating lease agreements contain similar renewal options.
The obligations from operating leases are due in subsequent periods as follows:
2009 2008
c’000 c’000
Operating leases
Future minimum lease payments
up to 1 year................................................................................................ 34,364 36,802
1 to 5 years................................................................................................ 111,236 111,270
more than 5 years...................................................................................... 76,321 92,515
A
c
1
0
4
7
0
8
p
u
0
8
0
P
r
o
o
f
7
:
2
7
.
5
.
1
1
B
/
L
R
e
v
i
s
i
o
n
:
0
O
p
e
r
a
t
o
r
D
a
d
F-96
221,921 240,587

Property, plant and equipment amounting to c639 thousand (prior year c5,914 thousand) serves as
collateral for financial liabilities.
12. Investment property
The investment property reported in the financial statements consists of land and a building held
by the special purpose entity ALASKA GmbH & Co. KG included in the consolidation, that was
reclassified out of property, plant and equipment during financial year 2009. The building is no
longer used in its entirety by the Adler Group and is intended for the most part to be let. The
portion which is now available to be let was reclassified as investment property. It is carried at fair
value. The fair value as at 31 December 2009 was determined by an expert valuer. At the date of
the reclassification in 2009, this resulted in the recognition of an impairment charge amounting to
c900 thousand. It was not possible to generate any rental income in financial year 2009, as the
building only became available to be let towards the end of the financial year.
2009 2008
c’000 c’000
Cost 1 Jan. ................................................................................................... 0 0
Reclassification from property, plant and equipment..................................... 4,274 0
Impairment..................................................................................................... -900 0
As at 31 Dec................................................................................................. 3,374 0
The full amount of investment property serves as collateral for financial liabilities as at 31 December
2009 (prior year c0 thousand).
Expenses for maintenance and repairs amounting to c17 thousand (prior year c32 thousand) were
incurred during the financial year.
13. Loans to related parties
The other loans amounting to c213 thousand as at 1 January 2008 related to an undated loan to
METRO Group Asset Management Service GmbH (affiliated company) with a fixed rate of interest
of 5%, that was paid back in full in 2008.
14. Other receivables and other assets
31 Dec.
2009
31 Dec.
2008
1 Jan.
2008
c’000 c’000 c’000
Non-current receivables and other assets
Payments into a money market fund to cover partial
retirement commitments (held in trust)....................... 414 776 912
Security deposits and sureties........................................ 158 90 235
Prepaid expenses ........................................................... 135 161 186
707 1,027 1,333
Current receivables and other assets
Receivables from related parties
Adler Treasury GmbH (affiliated company) .................... 36,407 0 0
AMODA GmbH (parent company) .................................. 0 5,051 0
METRO AG (parent company) ....................................... 0 0 15,000
36,407 5,051 15,000
Tax receivables............................................................... 2,156 1,829 5,081
Prepaid expenses ........................................................... 638 707 841
Credit card receivables ................................................... 784 1,223 3,038
Other............................................................................... 1,147 810 1,018
A
c
1
0
4
7
0
8
p
u
0
8
0
P
r
o
o
f
7
:
2
7
.
5
.
1
1
B
/
L
R
e
v
i
s
i
o
n
:
0
O
p
e
r
a
t
o
r
D
a
d
F-97
41,132 9,620 24,978

Other receivables and other assets include financial assets amounting to c37,763 thousand
(31 Dec. 2008: c7,140 thousand; 1 Jan. 2008: c19,185 thousand).
The tax receivables consist entirely of income tax receivable by foreign companies. They are the
result of overpayments of tax for the current and previous financial years.
The prepaid expenses relate to advance payments of rent, building cost subsidies and
maintenance contracts.
The receivables from AMODA GmbH as at 31 December 2008 include an amount of c2,780
thousand representing losses for the financial year assumed under the profit and loss transfer
agreement with Adler Modemärkte GmbH.
15. Deferred tax assets
Deferred tax assets and liabilities are netted if there is a legally enforceable right to offset current
tax assets against current tax liabilities and if the deferred taxes relate to the same tax authority.
The deferred tax liabilities and deferred tax assets relate to the following items:
31 Dec.
2009
31 Dec.
2008
1 Jan.
2008
c’000 c’000 c’000
Deferred tax assets
Intangible assets............................................................. 249 415 596
Property, plant and equipment........................................ 22 21 66
Investment property ........................................................ 880 0 0
Inventories ...................................................................... 0 161 27
Receivables and other current assets ............................ 511 462 391
Provisions ....................................................................... 118 149 350
Liabilities ......................................................................... 4,343 4,546 10,863
Tax loss carryforwards.................................................... 19 37 65
Total deferred tax assets ............................................. 6,142 5,791 12,358
of which current .............................................................. 5,431 5,074 11,590
of which non-current ....................................................... 711 717 768
Deferred tax liabilities
Intangible assets............................................................. 0 30 118
Property, plant and equipment........................................ 2,889 3,252 7,907
Investment property ........................................................ 727 0 0
Inventories ...................................................................... 0 0 26
Provisions ....................................................................... 595 514 380
Liabilities ......................................................................... 1 2 38
Total deferred tax liabilities ......................................... 4,212 3,798 8,469
of which current .............................................................. 4,210 3,793 8,469
of which non-current ....................................................... 2 5 0
Netting of deferred tax assets and liabilities................... -3,899 -3,735 -8,210
Balance sheet amount of deferred tax assets ........... 2,243 2,056 4,148
Balance sheet amount of deferred tax liabilities....... 313 63 259
The changes in deferred taxes compared with the prior year were recorded in the income
statement.
The loss carryforwards for corporation tax and trade tax purposes shown here relate entirely to
German companies. No deferred tax assets were recognised in respect of portions of existing
foreign loss carryforwards for corporation tax purposes amounting to c7,690 thousand (31 Dec.
2008: c6,077 thousand; 1 Jan. 2008: c0 thousand).
The calculation of deferred taxes resulted in a surplus of deferred tax assets. Where there was
doubt about the recoverability of the deferred tax assets due to insufficient projected earnings in
A
c
1
0
4
7
0
8
p
u
0
8
0
P
r
o
o
f
7
:
2
7
.
5
.
1
1
B
/
L
R
e
v
i
s
i
o
n
:
0
O
p
e
r
a
t
o
r
D
a
d
F-98

the local tax budgets, the deferred tax assets in such cases were recognised only up to the
amount of the deferred tax liabilities.
No deferred tax liabilities were recognised in respect of temporary differences in connection with
investments in subsidiaries amounting to c1,706 thousand (31 Dec. 2008: c3,082 thousand; 1 Jan.
2008: c1,769 thousand).
Please refer also to the information under accounting policies and the details provided in Note 8.
16. Inventories
31 Dec.
2009
31 Dec.
2008
1 Jan.
2008
c’000 c’000 c’000
Germany ......................................................................... 46,394 55,334 58,929
International .................................................................... 7,206 7,205 7,338
53,600 62,539 66,267
Inventories are measured respectively at the lower of cost and the net realisable selling price on
the balance sheet date less costs still to be incurred. Impairment charges of c1,322 thousand (prior
year c1,592 thousand) in respect of inventories were recorded in the cost of materials in financial
year 2009. The impairment losses were recognised mainly as a result of excessive inventory days
and lack of marketability. There was no recognition of valuation allowances for inventories to a
lower net selling price less costs still to be incurred.
Inventories as at 31 December 2009 and 31 December 2008 consisted solely of merchandise. Raw
materials, consumables and supplies amounting to c1,016 thousand and finished products of
c1,097 thousand were also included in inventories as at 1 January 2008.
17. Trade receivables
All trade receivables have a remaining maturity of up to one year. Valuation allowances in respect
of trade receivables were not necessary. None of the trade receivables are overdue. All of the
receivables are denominated in euros.
Receivables amounting in total to c3,389 thousand (1 Jan. 2008 c4,854 thousand) due from
subsidiaries of METRO AG (affiliated companies) were reported as at 31 December 2008.
The Adler Group did not receive any collateral or other credit enhancements as security for trade
receivables in financial years 2009 and 2008, nor as security for outstanding invoices.
For those receivables that were neither impaired nor overdue, there were no indications at the
balance sheet date that the associated payments will not be made when they fall due.
18. Cash and cash equivalents
Cash and cash equivalents were made up as follows:
31 Dec.
2009
31 Dec.
2008
1 Jan.
2008
c’000 c’000 c’000
Balances with banks ....................................................... 33,579 21,398 21,234
Cash-in-hand .................................................................. 3,412 3,819 4,263
36,991 25,217 25,497
None of the cash was subject to restrictions on disposal at the balance sheet dates.
19. Equity
Subscribed capital
The subscribed capital of Adler Modemärkte GmbH, Haibach, was unchanged at c15,860 thousand
in the period under review. The equity interests of the shareholders are fully paid-up.
A
c
1
0
4
7
0
8
p
u
0
8
0
P
r
o
o
f
7
:
2
7
.
5
.
1
1
B
/
L
R
e
v
i
s
i
o
n
:
0
O
p
e
r
a
t
o
r
D
a
d
F-99

Capital reserves
The Company’s capital reserves amounted to c138,157 thousand at the balance sheet date. The
capital reserves rose by c53,100 thousand in financial year 2009 from c85,057 thousand. The
increase was made up of two contributions to capital reserves amounting to c25,600 thousand and
c13,000 thousand, together with an income subsidy amounting to c14,500 thousand granted by the
shareholder, which is not reported as income under the requirements of IFRS but is added directly
to capital reserves.
In financial year 2008, the capital reserves rose by c51,589 thousand from c33,468 thousand. The
increase was attributable to income subsidies granted by the shareholder amounting to c48,809
thousand. In accordance with the requirements of IFRS, the amount was not recorded as income
but added directly to capital reserves. In addition, the assumption by AMODA GmbH of losses
generated by Adler Modemärkte Deutschland GmbH amounting to c2,780 thousand was also
reported in capital reserves.
Net accumulated losses
For details relating to the changes in net retained profits/net accumulated losses, please refer to
the information presented in the consolidated statement of changes in equity.
Non-controlling interests
There were no non-controlling interests in the consolidated net loss for the year. The consolidated
net loss for the year is attributable in its entirety to the owners of Adler Modemärkte GmbH.
Dividend restrictions
The articles of association of Adler Modemärkte GmbH contain no provisions for dividend
restrictions over and above the statutory minimum.
Capital management
The Adler Group’s objectives with respect to capital management are firstly to ensure that the
business is able to continue operations on a long-term basis and to generate adequate returns for
the shareholders, and secondly to maintain an optimal capital structure in order to reduce the cost
of capital.
The capital structure is managed in such a way as to take account of changes in the general
economic environment and the risks attaching to the underlying assets. As a result of its healthy
operating cash flow, the Company is in a position to deploy its own financial resources in the best
possible way. For example, investments are regularly reviewed to see whether the Company’s own
available financial resources can be replaced by external (lease) financing in order to take
advantage of improved purchasing prices for goods (e.g. discounts) or to exploit advantageous
opportunities for sales arising at short notice. The Adler Group is normally in constant contact with
banks for the purpose of considering the use of bank loans to optimise the return on equity.
In this context, the raising of new debt is managed on the basis of a target debt structure. The
choice of financial instruments is mainly influenced by the objective of matching the maturities of
assets and liabilities which is achieved by managing the maturities of the instruments issued.
Capital is monitored on the basis of the indebtedness ratio, calculated as the relationship of net
debt to total equity.
31 Dec.
2009
31 Dec.
2008
1 Jan.
2008
c’000 c’000 c’000
Equity.............................................................................. 69,274 25,546 33,202
Debt ................................................................................ 135,695 164,378 214,249
Indebtedness ratio........................................................ 1.96 6.43 6.45
20. Provisions for pensions and other employee benefits
The provisions for pensions comprise firstly capital commitments to employees who began their
employment with Adler Modemärkte GmbH prior to 1980 and also individual commitments to the
A
c
1
0
4
7
0
8
p
u
0
8
0
P
r
o
o
f
7
:
2
7
.
5
.
1
1
B
/
L
R
e
v
i
s
i
o
n
:
0
O
p
e
r
a
t
o
r
D
a
d
F-100

founders of the firm and certain former members of management. The amount of the provision
recognised in the balance sheet is made up as follows:
31 Dec. 31 Dec. 1 Jan.
2009 2008 2008
c’000 c’000 c’000
Provisions for pensions (direct commitments) ................ 3,048 3,119 3,212
Provisions for severance payments................................ 275 428 639
Provisions for company pension schemes................ 3,323 3,547 3,851
The development of the pension obligations representing the present value of commitments granted
under defined benefit plans in the Adler Group companies was as follows:
31 Dec.
2009
31 Dec.
2008
c’000 c’000
As at 1 Jan. 4,826 5,016
Current service cost....................................................................................... 110 132
Interest cost................................................................................................... 268 265
Pensions paid ................................................................................................ -555 -691
Actuarial losses ............................................................................................. 172 104
As at 31 Dec................................................................................................. 4,821 4,826
The associated plan assets developed as follows:
31 Dec.
2009
31 Dec.
2008
c’000 c’000
As at 1 Jan. 1,397 1,364
Contributions (employer)................................................................................ 188 222
Expected interest income .............................................................................. 64 61
Pension payments (severance payments)..................................................... -223 -289
Actuarial gains for the year............................................................................ 64 39
Fair value of plan assets as at 31 Dec. ..................................................... 1,490 1,397
The plan assets consist of a direct insurance policy taken out to cover the obligations arising from
severance payments. In accordance with IAS 19, the resulting claim against the insurance
company is offset as plan assets against the provision for severance payments required to be
recognised. Since 2008 the premiums have been paid in the respective calendar year.
The expected return on plan assets is determined on a uniform basis, taking into account longterm
historical yields, the allocation of assets and estimates of the long-term yield on investments
in the future. The actual return on plan assets in the financial year amounted to c128 thousand
(prior year: c100 thousand).
A
c
1
0
4
7
0
8
p
u
0
8
0
P
r
o
o
f
7
:
2
7
.
5
.
1
1
B
/
L
R
e
v
i
s
i
o
n
:
0
O
p
e
r
a
t
o
r
D
a
d
F-101

The reconciliation of the obligations with the amount of the provision is as follows:
31 Dec.
2009
31 Dec.
2008
1 Jan.
2008
c’000 c’000 c’000
Unfunded defined benefit obligation ............................... 3,300 3,344 3,420
Wholly or partly funded defined benefit obligation.......... 1,521 1,482 1,596
Subtotal........................................................................... 4,821 4,826 5,016
less fair value of plan assets .......................................... -1,490 -1,397 -1,364
Funded status 31 Dec. 3,331 3,429 3,652
Actuarial gains (+)/losses (-) not yet recognised ............ -8 118 199
Provision for company pension schemes as at
31 Dec........................................................................ 3,323 3,547 3,851
The experience adjustments to the amounts recognised in the balance sheet were as follows:
2009 2008
c’000 c’000
Experience adjustments to liabilities.............................................................. 40 125
Experience adjustments to plan assets ......................................................... -63 -39
The amounts recognised in the income statement in the period under review were made up as
follows:
2009 2008
c’000 c’000
Interest cost of defined benefit obligation...................................................... 268 265
Expected interest income from plan assets................................................... -64 -61
Service cost ................................................................................................... 110 132
Realised actuarial losses ............................................................................... -17 -16
297 320
The expected funding for post-employment benefits plans for the financial year ending 31 December
2010 amounts to c188 thousand.
The current employers’ contributions to the statutory pension scheme are included as an expense
in the operating profit or loss for the relevant year and amounted to c7,639 thousand (prior year
c9,911 thousand) for the Group as a whole in the financial year.
A
c
1
0
4
7
0
8
p
u
0
8
0
P
r
o
o
f
7
:
2
7
.
5
.
1
1
B
/
L
R
e
v
i
s
i
o
n
:
0
O
p
e
r
a
t
o
r
D
a
d
F-102

21. Other provisions (non-current and current)
Restructuring
/
termination
payments
Rent and
incidental
rental
expenses
Litigation
risks
Other
provisions
for
personnel
expenses
Other
provisions Total
c’000 c’000 c’000 c’000 c’000 c’000
As at 1 Jan. 2008................. 510 1,374 3,000 1,865 319 7,068
Utilisations ............................. 0 -446 -942 -833 -157 -2,378
Additions................................ 13,366 996 0 478 839 15,679
Reversals .............................. -113 -382 -2,058 -419 -26 -2,998
Interest accrual...................... 0 0 0 63 0 63
As at 31 Dec. 2008 .............. 13,763 1,542 0 1,154 975 17,434
Non-current ........................... 0 0 0 631 428 1,059
Current .................................. 13,763 1,542 0 523 547 16,375
As at 31 Dec. 2008 .............. 13,763 1,542 0 1,154 975 17,434
Utilisations ............................. -10,282 -578 0 -685 -467 -12,012
Additions................................ 1,843 1,494 0 553 167 4,057
Reversals .............................. -3,481 -398 0 0 -146 -4,025
Interest accrual...................... 0 0 0 111 0 111
As at 31 Dec. 2009 .............. 1,843 2,060 0 1,133 529 5,565
Non-current ........................... 0 0 0 632 272 904
Current .................................. 1,843 2,060 0 501 257 4,661
As at 31 Dec. 2009 .............. 1,843 2,060 0 1,133 529 5,565
The obligations from restructuring activities comprise expenses associated with the closing of
stores in 2008 and 2009 in addition to provisions for termination costs.
The provision for rent and incidental rental expenses relates to additional rent payable due to rent
indexation provisions and possible additional payments arising from operating income and
expenses statements.
The provision for litigation risks mostly relates to legal disputes with the former lessor of the
operating location in Großostheim. In financial year 2008, the Company was able to reach
agreement with the respective parties and most of the provision was reversed to profit or loss.
The other provisions for personnel expenses relate to partial retirement commitments and
provisions for anniversaries and death benefits, based on actuarial assumptions and discounted to
reflect the expected maturities.
Other provisions include, among other items, provisions for the costs of retaining documents and
provisions for onerous contracts with a non-current portion amounting to c272 thousand (31 Dec.
2008: c428 thousand; 1 Jan. 2008: c155 thousand).
A
c
1
0
4
7
0
8
p
u
0
8
0
P
r
o
o
f
7
:
2
7
.
5
.
1
1
B
/
L
R
e
v
i
s
i
o
n
:
0
O
p
e
r
a
t
o
r
D
a
d
F-103

22. Financial liabilities
31 Dec.
2009
31 Dec.
2008
1 Jan.
2008
c’000 c’000 c’000
Liabilities to METRO Finance B.V.......... 5 1 year 46 75 259
Liabilities to METRO Finance B.V.......... 4 1 year 4,802 4,995 4,995
4,848 5,070 5,254
Liabilities to banks.................................. 5 1 year 0 0 5,001
0 0 5,001
Liabilities from Adler silver card ............. 5 1 year 13,526 15,765 17,614
13,526 15,765 17,614
18,374 20,835 27,869
The liability to METRO Finance B.V. (affiliated company) comprises a loan at a current fixed rate
of interest of 3.26% p.a. (interest rate fixed from 1 April 2009 to 31 March 2011). The loan paid a
fixed rate of interest of 5.04% p.a. until 31 March 2009. The loan has a maturity date of 31 July
2024 and is repaid in quarterly instalments.
The liability to banks amounting to c5,000 thousand as at 1 January 2008 paid a fixed rate of
interest of 4.62% p.a. and was repaid in full in financial year 2008.
The liabilities from the Adler customer card represent discount entitlements not yet utilised due to
customers who have settled their purchases using the Adler customer card. The customers can
offset the discount entitlement obtained from making a purchase against a subsequent purchase or
can have the amount paid in cash. The amount not yet utilised at the balance sheet date is
reported in full as a financial liability in accordance with the requirements of IAS 39. Since the
entitlements expire at the latest on 31 December of the following year, the item is included in
current financial liabilities. The amounts credited to customers do not bear interest.
Based on the normal payment agreements with banks and other business partners, the maturities
of the current financial liabilities and therefore the associated cash outflows are as follows:
31 Dec.
2009
31 Dec.
2008
1 Jan.
2008
c’000 c’000 c’000
Carrying amount ........................................................... 13,813 16,091 23,134
of which due in the following time bands:
5 30 days ...................................................................... 13,526 15,765 17,614
30 – 90 days................................................................... 107 138 116
90 – 180 days................................................................. 61 63 116
180 days – 1 year........................................................... 120 125 5,288
The liabilities from the Adler customer card are presented within the ‘‘under 30 days’’ time band
since the customers are entitled to redeem their credit at any time within twelve months. In
accordance with IFRS 7 liabilities of this nature that are payable at any time are allocated to the
earliest time band.
As at 31 December 2009, the financial liabilities were secured by items of property, plant and
equipment with a carrying amount of c639 thousand and by investment property with a carrying
amount of c3,374 thousand. As at 31 December 2008, the financial liabilities were secured by
property, plant and equipment with a carrying amount of c5,194 thousand.
All of the financial liabilities are repayable in euros.
A
c
1
0
4
7
0
8
p
u
0
8
0
P
r
o
o
f
7
:
2
7
.
5
.
1
1
B
/
L
R
e
v
i
s
i
o
n
:
0
O
p
e
r
a
t
o
r
D
a
d
F-104

23. Finance lease obligations
The Group’s property, plant and equipment include assets classified under licences and land and
buildings that are attributable to the Group as economic owner as a result of the structure of the
underlying lease agreements. The Group’s obligations arising from finance lease agreements of this
nature can be seen from the following table:
31 Dec. 31 Dec. 1 Jan.
2009 2008 2008
c’000 c’000 c’000
Finance lease agreements
Future minimum lease payments
up to 1 year................................................................. 12,912 13,258 16,549
1 to 5 years ................................................................. 42,520 47,473 63,608
more than 5 years....................................................... 12,222 20,376 48,439
67,654 81,107 128,596
Discounting
up to 1 year................................................................. -3,904 -4,680 -6,680
1 to 5 years ................................................................. -8,452 -11,383 -18,433
more than 5 years....................................................... -1,112 -2,244 -6,387
-13,468 -18,307 -31,500
Present value
up to 1 year................................................................. 9,008 8,578 9,869
1 to 5 years ................................................................. 34,069 36,090 45,175
more than 5 years....................................................... 11,109 18,132 42,052
54,186 62,800 97,096
The finance lease agreements relate primarily to leased buildings for stores, the amount of which
declined in financial year 2008 due to the reclassification of a leased building complex (the
administration building and warehouses of MOTEX Mode-Textil-Service Logistik und Management
GmbH) in the course of the negotiations for a new lease agreement. The decline in the liabilities
was also attributable to early closures of stores and the associated termination of leases, as well
as to scheduled repayments.
The terms of the leases generally amount to between 5 and 20 years with renewal options. All of
the liabilities from finance leases are repayable in euros.
24. Trade payables
31 Dec.
2009
31 Dec.
2008
1 Jan.
2008
c’000 c’000 c’000
Liabilities to third parties ................................................. 33,135 20,268 29,177
Liabilities to affiliated companies .................................... 0 14,453 13,339
As in previous years, all trade payables are due within one year.
A
c
1
0
4
7
0
8
p
u
0
8
0
P
r
o
o
f
7
:
2
7
.
5
.
1
1
B
/
L
R
e
v
i
s
i
o
n
:
0
O
p
e
r
a
t
o
r
D
a
d
F-105
33,135 34,721 42,516

Based on the normal payment agreements with suppliers and other business partners, the
maturities of the current trade payables and therefore the associated cash outflows are as follows:
31 Dec.
2009
31 Dec.
2008
1 Jan.
2008
c’000 c’000 c’000
Carrying amount ........................................................... 33,135 34,721 42,516
of which due in the following time bands:
4 30 days ...................................................................... 15,109 20,259 31,085
30 – 90 days................................................................... 18,026 14,450 11,254
90 – 180 days................................................................. 0 0 0
180 days – 1 year........................................................... 0 12 177
All of the trade payables are due in euros, as in previous years.
No collateral has been provided by the Adler Group for the trade payables reported. Goods are
delivered by suppliers subject to the retention of title provisions applying in the specific country.
25. Other current liabilities
31 Dec.
2009
31 Dec.
2008
1 Jan.
2008
c’000 c’000 c’000
Liabilities from VAT......................................................... 5,234 7,499 7,713
Liabilities to Amoda GmbH (parent company)................ 4,216 0 7,538
Liabilities for wages and salaries.................................... 3,422 5,351 6,370
Liabilities to customers for gift vouchers sold................. 2,250 2,370 2,525
Liabilities for customs duties........................................... 1,020 620 300
Liabilities from wages tax ............................................... 949 1,522 1,060
Accrued lease payments ................................................ 893 964 0
Employers’ liability insurance.......................................... 387 534 582
Deferred building cost subsidies..................................... 351 493 326
Social security contributions ........................................... 318 468 436
Liabilities from contract terminations .............................. 0 1,500 0
Deferred income from customer loyalty programme....... 0 430 0
Liabilities to Metro AG (parent company) ....................... 0 0 1,198
Miscellaneous ................................................................. 513 2,105 1,655
19,553 23,856 29,703
Other current liabilities include financial liabilities amounting to c6,879 thousand (31 Dec. 2008:
c4,430 thousand; 1 Jan. 2008: c11,870 thousand).
The liabilities to AMODA GmbH include liabilities amounting to c2,094 thousand (31 Dec. 2008:
c0 thousand; 1 Jan. 2008: c7,538 thousand) in respect of the profit and loss transfer from Adler
Modemärkte GmbH for each financial year.
The miscellaneous current liabilities include an amount of c26 thousand in respect of the
compensation entitlement of the limited partners in Alaska GmbH & Co. KG which is limited to this
amount.
26. Income tax liabilities
The income tax liabilities include liabilities relating to corporation tax amounting to c907 thousand
(31 Dec. 2008: c845 thousand; 1 Jan. 2008: c2,861 thousand) and liabilities relating to trade tax
amounting to c339 thousand (31 Dec. 2008: c277 thousand; 1 Jan. 2008: c1,224 thousand). As at
1 January 2008 there were also provisions of c1,778 thousand for risks arising from a company
tax audit for the period before the grouping of companies for tax purposes, and other income tax
liabilities amounting to c24 thousand. Thanks to an agreement with the tax authorities, the
Company was able to reverse the majority of these amounts to profit or loss in 2008.
A
c
1
0
4
7
0
8
p
u
0
8
0
P
r
o
o
f
7
:
2
7
.
5
.
1
1
B
/
L
R
e
v
i
s
i
o
n
:
0
O
p
e
r
a
t
o
r
D
a
d
F-106

27. Statement of cash flows
The statement of cash flows shows the development of the Adler Group’s cash and cash
equivalents in the year under review and the prior year. Cash and cash equivalents are defined for
this purpose as holdings of cash and cash equivalents less cash subject to restrictions on disposal.
In accordance with IAS 7, the cash flows are classified as cash from/used in operating activities,
investing activities and financing activities.
2009 2008
c’000 c’000
Cash from (+)/ used in (-) operating activities (net cash flow) ...................... 7,192 -22,523
Cash from (+)/ used in (-) investing activities................................................ -37,842 4,033
Free cash flow ............................................................................................. -30,650 -18,490
Cash from (+)/ used in (-) financing activities................................................ 42,424 18,210
Net increase (+)/ decrease (-) in cash and cash equivalents .................. 11,774 -280
The statement of cash flows was prepared according to the indirect method. Impairment losses are
presented on a separate line within operating cash flow.
Cash and cash equivalents as at 31 December 2009 amount to c36,991 thousand (31 Dec. 2008:
c25,217 thousand; 1 Jan. 2008: c25,497 thousand) and include demand deposits with banks,
cheques and cash-in-hand. There was no cash subject to restrictions on disposal during the
reporting period.
Other non-cash income and expenses amounting to c14,230 thousand (prior year: c20,962
thousand) include valuation allowances in respect of inventories, additions to other provisions and
additions to current financial liabilities from the Adler customer card.
The following non-cash transactions took place in financial year 2008:
The ‘‘VIVENTY by Bernd Berger’’ trademark was acquired partly by means of a finance lease. The
addition amounting to c828 thousand had no effect on cash.
Liabilities to the shareholder amounting to c8,809 thousand were converted into equity with no
effect on cash.
28. Risk management and the use of derivative financial instruments
The finance department of Adler Modemärkte GmbH monitors and manages the financial risks of
the entire Adler Group. Specifically, those risks are
* liquidity risks
* market risks (interest rate and currency risks)
* credit risks
The Adler Group is exposed to a large number of financial risks as a result of its business
activities. We understand risk to mean unexpected events and possible developments that have a
negative effect on achieving the objectives we have set ourselves and our expectations. The risks
that are relevant are those with a material effect on the net assets, financial position and results of
operations of the Company. The Group’s risk management system analyses a range of risks and
attempts to minimise negative effects on the financial position of the Company. The risk
management activities are carried out in the finance department on the basis of established
guidelines.
For the purpose of measuring and managing material individual risks, the Group distinguishes
between liquidity, credit and market risks.
Liquidity risks
We understand liquidity risk in the narrow sense to mean the risk of being able to meet present or
future payment obligations either not at all or only on unfavourable terms. The Company mainly
generates financial resources through its operating activities.
Adler Modemärkte GmbH functions as the financial coordinator for the companies in the Adler
Group in order to ensure that the financial requirements for the operating business and for
investments are covered on the most favourable terms possible in terms of cost and in amounts
A
c
1
0
4
7
0
8
p
u
0
8
0
P
r
o
o
f
7
:
2
7
.
5
.
1
1
B
/
L
R
e
v
i
s
i
o
n
:
0
O
p
e
r
a
t
o
r
D
a
d
F-107

that are always sufficient. The necessary information is provided via a Group financial planning
process with additional 14-day liquidity projections on a rolling weekly basis, and is analysed
constantly.
The long-term corporate financing requirements of the Adler Group are secured by the ongoing
cash flows from operating activities and from leases entered into on a long-term basis.
The intra-Group cash management system enables short-term liquidity surpluses in individual
Group companies to be used as internal financing to meet the cash requirements of other Group
companies. This contributes to a reduction in the volume of external debt financing and to the best
possible use of cash deposits and capital investments, and therefore has a positive effect on the
net interest income and expenses of the Group.
At Group level, a consolidated and integrated liquidity plan is prepared using the latest business
planning and financial projections together with additional special items that are identified at short
notice.
The Adler Group is mainly financed by its own liquid resources generated from its operating
activities. It has only one loan outstanding, to a company within the METRO AG group, which was
used for a property financing transaction. The outstanding balance of the loan as at the balance
sheet date amounted to c4,848 thousand (31 Dec. 2008: c5,070 thousand; 1 Jan. 2008: c10,254
thousand). The balance as at 1 January 2008 includes a further loan for c5,000 thousand.
However, this loan was replaced by the loan from the METRO AG group company. Current loan
liabilities at the balance sheet date amounted to c46 thousand (31 Dec. 2008: c75 thousand; 1 Jan.
2008: c5,260 thousand). The remaining current financial liabilities at the balance sheet date
amounted to c13,526 thousand (31 Dec. 2008: c15,765 thousand; 1 Jan. 2008: c17,614 thousand).
In 2008 an income subsidy amounting to c40,000 thousand granted by the shareholder at that time
was contributed to capital reserves. The shareholder granted two further income subsidies
amounting to c8,809 thousand in the form of the waiver of a receivable.
In financial year 2009 the new shareholder also granted an income subsidy amounting to c14,500
thousand. In addition, a further c38,600 thousand was contributed to capital reserves by the former
shareholder at the beginning of the financial year.
Maturity analysis of financial liabilities
The table below shows the maturity structure of the contractual undiscounted cash flows from
financial liabilities:
up to over
31 Dec. 2009
1 year 1 year
c’000 c’000
Trade payables.............................................................................................. 33,135 0
Financial liabilities.......................................................................................... 13,813 6,791
Liabilities from finance leases........................................................................ 12,912 54,742
Other financial liabilities................................................................................. 6,879 0
up to
1 year
over
1 year
31 Dec. 2008
c’000 c’000
Trade payables.............................................................................................. 34,721 0
Financial liabilities.......................................................................................... 16,091 7,226
Liabilities from finance leases........................................................................ 13,258 67,849
Other financial liabilities................................................................................. 4,430 0
up to
1 year
over
1 year
1 Jan. 2008
c’000 c’000
Trade payables.............................................................................................. 42,516 0
Financial liabilities.......................................................................................... 23,134 7,478
Liabilities from finance leases........................................................................ 16,549 112,046
Other financial liabilities................................................................................. 11,870 0
A
c
1
0
4
7
0
8
p
u
0
8
0
P
r
o
o
f
7
:
2
7
.
5
.
1
1
B
/
L
R
e
v
i
s
i
o
n
:
0
O
p
e
r
a
t
o
r
D
a
d
F-108

The undiscounted cash outflows are subject to the condition that the liabilities are repaid on the
earliest due date.
A detailed analysis of the maturity band ‘‘up to 1 year’’ is provided in Note 24 ‘‘Trade payables’’ for
the trade payables and in Note 22 ‘‘Financial liabilities’’ for the financial liabilities.
The maturities of the finance lease obligations ‘‘up to 1 year’’ and therefore the associated cash
outflows are as follows:
31 Dec.
2009
31 Dec.
2008
1 Jan.
2008
c’000 c’000 c’000
Total due within one year ............................................ 12,912 13,258 16,549
of which due in the following time bands:
5 30 days ...................................................................... 864 888 1,164
30 – 90 days................................................................... 2,380 2,427 2,924
90 – 180 days................................................................. 3,223 3,315 4,088
180 days – 1 year........................................................... 6,445 6,628 8,373
The maturities of the other current liabilities ‘‘up to 1 year’’ and therefore the associated cash
outflows are as follows:
31 Dec.
2009
31 Dec.
2008
1 Jan.
2008
c’000 c’000 c’000
Total due within one year ............................................ 6,879 4,430 11,870
of which due in the following time bands:
5 30 days ...................................................................... 2,276 2,396 2,551
30 – 90 days................................................................... 2,094 0 0
90 – 180 days................................................................. 387 2,034 582
180 days – 1 year........................................................... 2,122 0 8,737
Credit risks
Credit risks arise from the complete or partial default of a counterparty, for example through
insolvency, and in connection with deposits. The maximum risk of default is equal to the carrying
amounts of all the financial assets. Valuation allowances are recognised in respect of trade
receivables and other receivables and assets in accordance with rules applied consistently across
the Group and cover all identifiable credit risks.
As part of the risk management system, minimum requirements for the credit rating and also
specific upper limits for the exposure are laid down for all business partners of the Adler Group.
The level of the upper credit limit reflects the creditworthiness of a contractual counterparty and the
typical size of the volume of transactions with that party. This is based on a systematic procedure
for approving limits set down in the Treasury guidelines, which relies firstly on the classifications
awarded by international ratings agencies and on internal credit assessments, and secondly on
historical values experienced by the Group with the respective contractual parties. The Adler Group
therefore has a very low exposure to credit risks.
The loans and receivables reported in the consolidated financial statements amounting to c38,365
thousand (31 Dec. 2008: c10,797 thousand; 1 Jan. 2008: c24,680 thousand) are not secured. The
maximum risk of default is therefore equal to the carrying amount of the loans and receivables
reported.
Valuation allowances in appropriate amounts are generally recognised in order to take account of
identifiable risks of default in respect of receivables.
None of the loans and receivables reported at the balance sheet date were impaired or overdue.
Market risks (interest rate and currency risks)
We understand market risk to mean the risk of loss that can arise due to a change in market
parameters used for measurement (currency, interest rates, price).
A
c
1
0
4
7
0
8
p
u
0
8
0
P
r
o
o
f
7
:
2
7
.
5
.
1
1
B
/
L
R
e
v
i
s
i
o
n
:
0
O
p
e
r
a
t
o
r
D
a
d
F-109

Interest rate and currency risks are significantly reduced and limited by the principles laid down in
the internal Treasury guidelines. These establish mandatory rules applied uniformly across the
Group that all hedging transactions must be subject to predetermined limits and must never result
in an increase in the risk position. At the same time, the Adler Group is fully aware that the
opportunities for increasing earnings by taking advantage of current or expected changes in interest
rates or exchange rates are very limited.
The Adler Group is not exposed to currency risks since 100% of the consolidated revenue is
generated in euros and all purchases of goods are also made in euros. All receivables, loans and
financial liabilities are denominated in euros.
Interest rate risks are liable to arise mainly as a result of movements in market rates of interest
which result in changes in expected cash flows. In order to minimise the risk of changes in interest
rates within the Adler Group, where necessary, loans are taken out only on a long-term basis and
leases are entered into at fixed rates of interest. With the exception of the liability to METRO
Finance B.V. (see Note 22), the Adler Group is not a party to any financial instruments bearing a
variable rate of interest. If the level of interest rates had been 100 basis points higher at the date
when the new rate of interest was determined for this liability, the interest expense for 2009 would
have been c5 thousand higher. If the level of interest rates had been 100 basis points lower at the
date when the new rate of interest was determined for this liability, the interest expense for 2009
would have been c5 thousand lower. Since the interest rate was fixed for the whole of 2008, there
was no sensitivity to interest rates in that period.
The Adler Group is not exposed to any other material risks affecting the prices of financial
instruments. At the balance sheet date, the Group held no shares in quoted companies.
Carrying amounts and fair values of financial instruments
The table below shows the carrying amounts and fair values of the financial assets and liabilities
for each measurement category in accordance with IAS 39. The fair value of a financial instrument
is the amount for which an asset could be exchanged or a liability settled between knowledgeable,
willing parties in an arm’ s length transaction.
31 Dec. 2009
Balance sheet item
Other
liabilities
Carrying
amount
At amortised cost At fair value Total amount
Loans
and
receivables
Carrying
amount
Derivatives
held for
trading
Carrying
amount
Carrying amount
under IAS 17
Carrying
amount
Carrying
amount
c’000 c’000 c’000 c’000 c’000 c’000
Loans ........................................................ — 0 — — 0 0
Cash and cash equivalents ....................... — 36,991 — — 36,991 36,991
Trade receivables...................................... — 602 — — 602 602
Other financial assets................................ — 37,763 — — 37,763 37,763
Total financial assets.............................. 0 75,356 0 0 75,356 75,356
Trade payables ......................................... 33,135 — — — 33,135 33,135
Financial liabilities ..................................... 18,374 — — — 18,374 18,544
Liabilities from finance leases ................... — — — 54,186 54,186 56,010
Other financial liabilities............................. 6,879 — — — 6,879 6,879
Total financial liabilities ......................... 58,388 0 0 54,186 112,574 114,568
A
c
1
0
4
7
0
8
p
u
0
8
0
P
r
o
o
f
7
:
2
7
.
5
.
1
1
B
/
L
R
e
v
i
s
i
o
n
:
0
O
p
e
r
a
t
o
r
D
a
d
F-110
Fair
Value

31 Dec. 2008
Balance sheet item
Other
liabilities
Carrying
amount
At amortised cost At fair value Total amount
Loans
and
receivables
Carrying
amount
Derivatives
held for
trading
Carrying
amount
Carrying amount
under IAS 17
Carrying
amount
Carrying
amount
Fair
Value
c’000 c’000 c’000 c’000 c’000 c’000
Loans ........................................................ — 0 — — 0 0
Cash and cash equivalents ....................... — 25,217 — — 25,217 25,217
Trade receivables...................................... — 3,657 — — 3,657 3,657
Other financial assets................................ — 7,140 — — 7,140 7,140
Total financial assets.............................. 0 36,014 0 0 36,014 36,014
Trade payables ......................................... 34,721 — — — 34,721 34,721
Financial liabilities ..................................... 20,835 — — — 20,835 20,961
Liabilities from finance leases ................... — — — 62,800 62,800 67,647
Other financial liabilities............................. 4,430 — — — 4,430 4,430
Total financial liabilities ......................... 59,986 0 0 62,800 122,786 127,759
1 Jan. 2008
Balance sheet item
Other
liabilities
Carrying
amount
At amortised cost At fair value Total amount
Loans
and
receivables
Carrying
amount
Derivatives
held for
trading
Carrying
amount
Carrying amount
under IAS 17
Carrying
amount
Carrying
amount
Fair
Value
c’000 c’000 c’000 c’000 c’000 c’000
Loans ........................................................ — 213 — — 213 213
Cash and cash equivalents ....................... — 25,497 — — 25,497 25,497
Trade receivables...................................... — 5,282 — — 5,282 5,282
Other financial assets................................ — 19,185 — — 19,185 19,185
Total financial assets.............................. 0 50,177 0 0 50,177 50,177
Trade payables ......................................... 42,516 — — — 42,516 42,516
Financial liabilities ..................................... 27,869 — — — 27,869 27,973
Liabilities from finance leases ................... — — — 97,096 97,096 102,381
Other financial liabilities............................. 11,870 — — — 11,870 11,870
Total financial liabilities ......................... 82,255 0 0 97,096 179,351 184,740
The fair values of the financial instruments are determined on the basis of the market information
available at the balance sheet date using the methods and assumptions described below.
In view of the short maturities of trade receivables and cash, it is assumed that the fair values are
approximately equal to the carrying amounts.
In principle, the liabilities included in the balance sheet under trade payables generally have short
remaining maturities, so that the fair values are approximately equal to the carrying amounts
reported, in line with the assumption made.
As at 1 January 2008, loans reported in the balance sheet consisted solely of one item. This was
a loan that was repaid in 2008. Given the short maturity of the loan, the fair value was
approximately equal to the carrying amount reported, in line with the assumption made.
Other financial assets, financial liabilities, liabilities from finance leases and other financial liabilities
reported in the balance sheet comprise current and non-current financial assets and liabilities. The
fair values of assets and liabilities with remaining maturities of more than 1 year are calculated by
discounting the cash flows associated with those assets and liabilities using current interest rate
parameters. For this purpose, the individual credit ratings used by the Group are reflected in the
A
c
1
0
4
7
0
8
p
u
0
8
0
P
r
o
o
f
7
:
2
7
.
5
.
1
1
B
/
L
R
e
v
i
s
i
o
n
:
0
O
p
e
r
a
t
o
r
D
a
d
F-111

form of normal market credit and liquidity spreads for the purpose of determining the present
values.
Net gains and losses from financial instruments by measurement category
The table below shows the net gains and losses from financial instruments reported in the income
statement by measurement category. Interest income and expenses were the only relevant items
for the determination of the net gains and losses.
2009
Loans and
receivables
Other
liabilities Total
c’000 c’000 c’000
from Interest ................................................................... 1,703 -205 1,498
Total ............................................................................... 1,703 -205 1,498
2008
Loans and
receivables
Other
liabilities Total
c’000 c’000 c’000
from interest.................................................................... 335 -674 -339
Total ............................................................................... 335 -674 -339
No interest income was received from impaired trade receivables during the period under review.
Other disclosures
At the balance sheet date there were no financial assets or financial liabilities designated as at fair
value through profit or loss. The Group had no holdings of derivative financial instruments.
VI. Other notes
29. Other financial obligations
As at the balance sheet date 31 December 2009, there were other financial obligations arising from
rental, lease and service agreements entered into by the Group in the ordinary course of business
that cannot be terminated prior to maturity. The analysis of the total future payments arising from
those agreements by maturities is as follows:
2009 up to
1 year 1-5 years
over
5 years Total
Rental and lease obligations............................... 34,364 111,236 76,321 221,921
Other obligations................................................. 23,943 0 0 23,943
Total ................................................................... 58,307 111,236 76,321 245,864
2008 up to
1 year 1-5 years
over
5 years Total
Rental and lease obligations............................... 36,802 111,270 92,515 240,587
Other obligations................................................. 21,325 0 0 21,325
Total ................................................................... 58,127 111,270 92,515 261,912
The total rental and lease obligations amounting to c221,921 thousand (prior year c240,587
thousand) relate to rental and lease agreements for land and buildings in an amount of c218,719
A
c
1
0
4
7
0
8
p
u
0
8
0
P
r
o
o
f
7
:
2
7
.
5
.
1
1
B
/
L
R
e
v
i
s
i
o
n
:
0
O
p
e
r
a
t
o
r
D
a
d
F-112

thousand (prior year c238,678 thousand) and to operating lease agreements for other facilities and
operating and office equipment in an amount of c3,202 thousand (prior year c1,909 thousand).
The other financial obligations include c286 thousand (prior year c298 thousand) in respect of
maintenance and service agreements for machinery and equipment, software and other operating
and office equipment.
In addition, there were capital expenditure commitments of c23,657 thousand (prior year c21,027
thousand) at the balance sheet date 31 December 2009.
The total future minimum lease payments arising from subleases amounted to c6,738 thousand
(prior year: c9,735 thousand) at 31 December 2009.
2009 up to
1 year 1-5 years
over
5 years Total
c’000 c’000 c’000 c’000
Minimum lease payments from subleases .......... 1,039 5,699 0 6,738
Total ................................................................... 1,039 5,699 0 6,738
2008 up to
1 year 1-5 years
over
5 years Total
c’000 c’000 c’000 c’000
Minimum lease payments from subleases .......... 1,061 8,674 0 9,735
Total ................................................................... 1,061 8,674 0 9,735
30. Contingent liabilities
The Group has a guarantee facility in an amount of c5,000 thousand with Commerzbank in
Saarbrücken. As at 31 December 2009 the guarantee facility was being utilised in an amount of
c586 thousand. The full amount of the facility utilised was secured by a pledge on current
accounts in favour of Commerzbank in Saarbrücken. A customs guarantee for an amount of c27
thousand was also outstanding.
In the previous year there were also rental and customs guarantees amounting to c539 thousand
and c2,152 thousand.
31. Executive bodies of the Company
The following persons exercised a management function in financial year 2009 and up to the date
of preparation of the financial statements:
* Wolfgang Krogmann (chairman), Hamburg, managing director for coordination and sales
(until 10 March 2009),
* Reinhard Müller, Düsseldorf, commercial managing director (until 6 March 2009),
* Andreas Oerter, Haibach, managing director for buying/marketing (until 10 March 2009),
* Lothar Schäfer (spokesman of the managing board), Villmar, managing director for buying
(from 11 March 2009),
* Dr. Martin Vorderwülbecke, Munich, managing director without portfolio
(from 11 March 2009; resigned as at 31 December 2010),
* Thomas Wanke, Brunswick, managing director for sales, marketing and visual merchandising
(from 1 July 2009),
* Jochen Strack, Linden, managing director for administration (from 1 September 2009).
A
c
1
0
4
7
0
8
p
u
0
8
0
P
r
o
o
f
7
:
2
7
.
5
.
1
1
B
/
L
R
e
v
i
s
i
o
n
:
0
O
p
e
r
a
t
o
r
D
a
d
F-113

The managing directors are the key management personnel of the Adler Group in accordance with
IAS 24. Management’s compensation in financial year 2009 amounted in total to c958 thousand
(prior year: c1,386 thousand). The compensation can be broken down as follows:
2009 2008
c’000 c’000
Fixed payments ............................................................................................. 437 1,094
Payments in kind ........................................................................................... 11 25
Bonuses......................................................................................................... 0 265
Short-term employee benefits .................................................................... 448 1,384
Termination payments ................................................................................... 510 0
Termination benefits ................................................................................... 510 0
Pension payments ......................................................................................... 0 2
Post-employment benefits.......................................................................... 0 2
958 1,386
The balances outstanding as at 31 December 2009 amounted to c0 thousand (31 Dec. 2008: c265
thousand) and were reported under other liabilities.
Family members of key management personnel provide services to the Company.
The members of the supervisory board of Adler Modemärkte GmbH in financial year 2009 were as
follows:
* Zygmunt Mierdorf, Düsseldorf, member of the management board of METRO AG, chairman of
the supervisory board (until 6 March 2009, 12:30 hours)
* Werner Arndt, Düsseldorf, department head of legal & projects at METRO AG (until 6 March
2009, 12:30 hours)
* Dr. Hans-Jörg Gidlewitz, Duisburg, section head of planning & controlling at METRO AG (until
6 March 2009, 12:30 hours)
* Georg W. Mehring-Schlegel, Düsseldorf, section head of group strategy at METRO AG (until
6 March 2009, 12:30 hours)
* Dr. Stephan Körkemeyer, Düsseldorf, compensation & benefits at METRO AG (until 6 March
2009, 12:30 hours)
* Dr. Jürgen Pfister, personnel & social matters at METRO AG (until 6 March 2009, 12:30
hours)
* Markus Zöllner, Bichl, industrial engineer, chairman of the supervisory board (from 6 March
2009, 14:00 hours)
* Oliver Apelt, Düsseldorf, managing director (from 6 March 2009, 14:00 hours)
* Dr. Hans-Michael Deml, Munich, attorney (from 6 March 2009, 14:00 hours)
* Mortimer Glinz, Munich, graduate engineer (from 6 March 2009, 14:00 hours)
* Holger Kowarsch, Hochstadt, businessman (from 6 March 2009, 14:00 hours)
* Frank Müller, Munich, business consultant (from 6 March 2009, 14:00 hours)
* Angelika Zinner, Kettenis/Belgium, chairwoman of the general works council, Adler Modemarkt
Aachen (vice-chairwoman of the supervisory board, employee representative)
* Majed Abu-Zarar, Viernheim, employee at Adler Modemarkt Neu-Edingen (from 1 July 2009,
employee representative)
* Ingrid Düsmann-Schulz, Haibach, member of the works council, Adler Modemarkt Haibach
(employee representative)
* Corinna Gross, Neuss, secretary of the Essen district of the ver.di united services union
(employee representative)
A
c
1
0
4
7
0
8
p
u
0
8
0
P
r
o
o
f
7
:
2
7
.
5
.
1
1
B
/
L
R
e
v
i
s
i
o
n
:
0
O
p
e
r
a
t
o
r
D
a
d
F-114

* Sabine Heckel, Großfriesen, specialist sales adviser, Adler Modemarkt Plauen-Kauschwitz
(until 30 June 2009, employee representative)
* Georg Linder, Hösbach, section head of procurement planning, Adler Modemarkt Haibach
(employee representative)
* Erika Ritter, secretary of the national executive board of the ver.di union, national retail
section Berlin (employee representative).
The members of the supervisory board are also key management personnel of the Adler Group in
accordance with IAS 24. The total compensation of the members of the supervisory board for
attending meetings amounted to c40 thousand (prior year c39 thousand). A member of the
supervisory board is the managing director of a company which charged the Company a total of
c40 thousand (prior year c0 thousand) in financial year 2009 for consultancy services in connection
with the restructuring programme.
32. Related party disclosures
In March 2009 Adler Modemärkte GmbH was acquired by BluO beta equity Limited, United
Kingdom. The Company was owned by METRO AG during the reporting period until the date of
sale. Accordingly, a change in the related parties took place in financial year 2009. The related
parties include the key management personnel of Adler Modemärkte GmbH. The latter are listed
by name together with their compensation in Note 31. Executive bodies of the Company.
All companies controlled by METRO AG or its principal owners were regarded as related parties
until the sale of the Company to BluO beta equity Limited. The parent companies were AMODA
GmbH and METRO AG. Since the transaction, only companies controlled by the new owner BluO
beta equity Limited and its shareholders or legal representatives qualify as related parties. The
parent companies are AMODA GmbH (immediate parent company) and BluO beta equity Limited.
Transactions with related parties are contractually agreed and carried out at prices that have also
been agreed with third parties.
The following transactions were entered into with related parties:
Purchases of goods:
2009 2008
c’000 c’000
Affiliated companies....................................................................................... 23,550 89,155
Purchases of services:
23,550 89,155
2009 2008
c’000 c’000
Affiliated companies....................................................................................... 4,513 29,318
Parent companies.......................................................................................... 0 5,668
4,513 34,986
Services received from and performed for related parties are normally purchased on the basis of
actual costs plus a profit margin of 5%. Goods are purchased at the same prices that would be
received by an unrelated third party.
A
c
1
0
4
7
0
8
p
u
0
8
0
P
r
o
o
f
7
:
2
7
.
5
.
1
1
B
/
L
R
e
v
i
s
i
o
n
:
0
O
p
e
r
a
t
o
r
D
a
d
F-115

Sales of services:
2009 2008
c’000 c’000
Affiliated companies....................................................................................... 26 893
Parent companies.......................................................................................... 0 143
26 1,036
Family members of key management personnel provided services to the Adler Group in an amount
of c18 thousand (prior year c0 thousand). Payment for the services was made on normal market
terms. In addition, items of property, plant and equipment amounting to c245 thousand (prior year
c0 thousand) were sold to companies controlled by family members of key management personnel.
The items were sold on normal market terms. A member of the supervisory board is the managing
director of a company which charged the Company a total of c40 thousand (prior year c0
thousand) in financial year 2009 for consultancy services in connection with the restructuring
programme. The outstanding balances amounted to c26 thousand (prior year c0 thousand).
Financial transactions with related parties:
* Other operating income (see Note 2)
* Trade payables and other liabilities (see Notes 24 and 25)
* Loans (see Note 22, Financial liabilities)
* Subsidies (see Liquidity risks under Note 28, and Note 19, Equity)
* Profit and loss transfer agreement (see Note 19, Equity)
* Loans (see Note 13)
* Other receivables (see Note 14)
* Trade receivables (see Note 17).
The obligations from finance and operating lease agreements with related parties, which mostly
comprise rental agreements for buildings leased from companies within the METRO AG group
(affiliated companies), are due as follows in subsequent periods:
up to
1 year 1-5 years
over
5 years Total
c’000 c’000 c’000 c’000
Finance lease agreements
Future lease payments ....................................... 2,057 6,965 1,606 10,628
Discounting ......................................................... -612 -1,563 -136 -2,311
Present value ...................................................... 1,445 5,402 1,470 8,317
Operating lease agreements
Future lease payments ....................................... 8,452 27,901 18,969 55,322
Details of interest income and interest expenses arising in connection with related parties are given
under Note 7, Net finance costs.
33. Litigation and claims for damages
The Adler Group is not involved in any legal or arbitration proceedings with a significant effect on
the position of the Group. The existing proceedings have not yet been concluded and/or the
amount of the obligation or of the claims cannot be reliably determined as a result of the high
degree of uncertainty.
A
c
1
0
4
7
0
8
p
u
0
8
0
P
r
o
o
f
7
:
2
7
.
5
.
1
1
B
/
L
R
e
v
i
s
i
o
n
:
0
O
p
e
r
a
t
o
r
D
a
d
F-116

34. Auditors’ fees
Fees amounting in total to c195 thousand (prior year c482 thousand) were incurred in financial
year 2009 for services provided by the auditor within the meaning of § 318 German Commercial
Code (Handelsgesetzbuch, ‘‘HGB’’):
2009 2008
c’000 c’000
Audit of the financial statements ................................................................... 145 327
Other audit work ............................................................................................ 2 47
Tax advice ..................................................................................................... 48 38
Other services ............................................................................................... 0 70
Total .............................................................................................................. 195 482
35. Events after the balance sheet date
There were no matters arising after the end of the financial year up to the date of preparation of
the annual financial statements that have a material effect on the net assets, financial position and
results of operations of financial year 2010.
Haibach, 11 February 2011
Lothar Schäfer Jochen Strack Thomas Wanke
Geschäftsführer Geschäftsführer Geschäftsführer
A
c
1
0
4
7
0
8
p
u
0
8
0
P
r
o
o
f
7
:
2
7
.
5
.
1
1
B
/
L
R
e
v
i
s
i
o
n
:
0
O
p
e
r
a
t
o
r
D
a
d
F-117

Auditors’ Report
To Adler Modemärkte GmbH, Haibach:
We have audited the consolidated financial statements prepared by the Adler Modemärkte GmbH,
Haibach, comprising the statement of financial position, the statement of comprehensive income,
statement of changes in equity, cash flow statement and the notes to the consolidated financial
statements, for the business year from January 1 to December 31, 2009. The preparation of the
consolidated financial statements in accordance with the IFRS, as adopted by the EU, is the
responsibility of the Company’s Managing Directors. Our responsibility is to express an opinion on
the consolidated financial statements based on our audit.
We conducted our audit of the consolidated financial statements in accordance with § (Article) 317
HGB (‘‘Handelsgesetzbuch’’: ‘‘German Commercial Code’’) and German generally accepted
standards for the audit of financial statements promulgated by the Institut der Wirtschaftsprüfer
(Institute of Public Auditors in Germany) (IDW). Those standards require that we plan and perform
the audit such that misstatements materially affecting the presentation of the net assets, financial
position and results of operations in the consolidated financial statements in accordance with the
applicable financial reporting framework are detected with reasonable assurance. Knowledge of the
business activities and the economic and legal environment of the Group and expectations as to
possible misstatements are taken into account in the determination of audit procedures. The
effectiveness of the accounting-related internal control system and the evidence supporting the
disclosures in the consolidated financial statements are examined primarily on a test basis within
the framework of the audit. The audit includes assessing the annual financial statements of the
companies included in consolidation, the determination of the companies to be included in
consolidation, the accounting and consolidation principles used and significant estimates made by
the Company’s Managing Directors, as well as evaluating the overall presentation of the
consolidated financial statements. We believe that our audit provides a reasonable basis for our
opinion.
Our audit has not led to any reservations.
In our opinion based on the findings of our audit the consolidated financial statements comply with
the IFRS, as adopted by the EU, and give a true and fair view of the net assets, financial position
and results of operations of the Group in accordance with these requirements.
Stuttgart, February 11, 2011
PricewaterhouseCoopers
Aktiengesellschaft
Wirtschaftsprüfungsgesellschaft
Rüdiger Dresel
Wirtschaftsprüfer
(German Public Auditor)
A
c
1
0
4
7
0
8
p
u
0
8
0
P
r
o
o
f
7
:
2
7
.
5
.
1
1
B
/
L
R
e
v
i
s
i
o
n
:
0
O
p
e
r
a
t
o
r
D
a
d
F-118
ppa. Axel Ost
Wirtschaftsprüfer
(German Public Auditor)

A
c
1
0
4
7
0
8
p
u
0
8
0
P
r
o
o
f
7
:
2
7
.
5
.
1
1
B
/
L
R
e
v
i
s
i
o
n
:
0
O
p
e
r
a
t
o
r
D
a
d
Audited annual financial statements
of Adler Modemärkte GmbH
as at 31 December 2010 (HGB)
F-119

Income statement for the financial year from
1 January 2010 to 31 December 2010
2010 2009
c c c
1. Sales ........................................................................ 390,899,085.93 364,163,928.32
2. Other operating income ........................................... 12,519,585.88 19,574,529.01
403,418,671.81 383,738,457.33
3. Cost of materials
Cost of purchased goods ........................................ -204,942,937.89 -201,873,172.55
198,475,733.92 181,865,284.78
4. Personnel expenses
a) Wages and salaries........................................ -49,923,370.87 -56,833,208.94
b) Social security contributions and expenses
for old-age part time.......................................
(of which for old-age part time c384,151.41;
-10,917,390.22
prior year c211 thousand).............................. -9,897,951.79
-59,821,322.66
5. Amortisation of intangible assets,
depreciation of tangible assets and write-downs .... -5,287,931.92 -6,934,466.09
6. Other operating expenses ....................................... -118,811,726.06 -121,431,269.55
14,554,753.28 -14,251,050.02
7. Income from investments in affiliated companies ... 0.00 104,441.77
(of which from affiliated companies c0.00;
prior year c104 thousand)
8. Other interest and similar income ........................... 3,586,616.37 1,917,581.67
(of which from affiliated companies c3,458,886.97;
prior year c1,658 thousand)
9. Interest and similar expenses.................................. -262,710.53 -28,881.04
(of which to affiliated companies c8,298.24;
prior year c11 thousand)
(of which from expenses from periodic interest
accrual c242,637.00;
prior year c0 thousand)
10. Income from profit and loss transfer agreements
(prior year expenses from losses assumed)
(of which from affiliated companies c536.65;
prior year c-33 thousand) ........................................ 536.65 -32,654.00
3,324,442.49
11. Profit/loss from operations................................... 17,879,195.77 -12,290,561.62
12. Extraordinary income ............................................... 590,023.00 14,500,000.00
13. Extraordinary expenses ........................................... -58,043.00 0.00
14. Extraordinary profit ............................................... 531,980.00 14,500,000.00
15. Other taxes .............................................................. -39,085.95 -115,401.82
18,372,089.82 2,094,036.56
16. Profit transferred due to profit and loss transfer
agreement ................................................................ -18,372,089.82 -2,094,036.56
17. Net profit for the year ........................................... 0.00 0.00
A
c
1
0
4
7
0
8
p
u
0
8
0
P
r
o
o
f
7
:
2
7
.
5
.
1
1
B
/
L
R
e
v
i
s
i
o
n
:
0
O
p
e
r
a
t
o
r
D
a
d
F-120

ASSETS
Balance sheet
as at 31 December 2010
31 Dec. 2010 31 Dec. 2009
e e
A. Fixed assets
I. Intangible assets
Licences and computer software .............................................. 1,955,351.00 2,287,766.00
II. Tangible assets
1. Constructions on third-party land..................................... 6,644,901.00 8,077,533.00
2. Operating and office equipment....................................... 7,856,653.00 9,843,671.00
3. Payments on account ...................................................... 66,588.54 39,350.82
14,568,142.54 17,960,554.82
III. Financial assets
1. Shares in affiliated companies......................................... 7,101,535.48 405,412.24
2. Long-term investments..................................................... 380,749.47 380,749.47
3. Other loans....................................................................... 280,312.98 193,696.25
7,762,597.93 979,857.96
24,286,091.47 21,228,178.78
B. Current assets
I. Inventories
1. Consumables and supplies .............................................. 553,141.19 536,098.57
2. Merchandise ..................................................................... 45,713,938.87 45,315,626.36
3. Payments on account ...................................................... 0.00 125,000.00
46,267,080.06 45,976,724.93
II. Receivables and other assets
1. Trade receivables............................................................. 33,803.31 9,656.06
2. Receivables from affiliated companies ............................ 9,560,300.10 47,429,576.56
3. Other assets..................................................................... 1,719,186.84 1,413,166.18
11,313,290.25 48,852,398.80
III. Cash-on-hand and bank balances ............................................ 26,021,564.17 33,583,992.65
83,601,934.48 128,413,116.38
C. Prepaid expenses.............................................................................. 578,721.86 572,967.00
A
c
1
0
4
7
0
8
p
u
0
8
0
P
r
o
o
f
7
:
2
7
.
5
.
1
1
B
/
L
R
e
v
i
s
i
o
n
:
0
O
p
e
r
a
t
o
r
D
a
d
F-121
108,466,747.81 150,214,262.16

EQUITY AND LIABILITIES
31 Dec. 2010 31 Dec. 2009
c c
A. Equity
I. Subscribed capital ..................................................................... 15,860,000.00 15,860,000.00
II. Capital reserves......................................................................... 34,412,000.00 72,067,694.13
50,272,000.00 87,927,694.13
B. Provisions
1. Provisions for pensions and other employee benefits.......... 2,848,947.00 2,678,193.00
2. Other provisions ............................................................... 18,419,664.50 16,298,396.71
21,268,611.50 18,976,589.71
C. Liabilities
1. Trade payables ................................................................ 24,144,227.70 29,021,127.21
2. Liabilities to affiliated companies ....................................... 6,413,160.38 6,700,445.16
(of which to the sole shareholder c3,968,069.81; prior
year c4,216 thousand)
3. Other liabilities.................................................................. 6,281,648.23 7,427,705.95
(of which from taxes c3,132,939.73; prior year c3,689
thousand) of which relating to social security
c1,331.32; prior year c1 thousand)
36,839,036.31 43,149,278.32
D. Deferred income 87,100.00 160,700.00
A
c
1
0
4
7
0
8
p
u
0
8
0
P
r
o
o
f
7
:
2
7
.
5
.
1
1
B
/
L
R
e
v
i
s
i
o
n
:
0
O
p
e
r
a
t
o
r
D
a
d
F-122
108,466,747.81 150,214,262.16

Notes to the annual financial statements as at 31 December 2010
I. General information
The Company prepared its annual financial statements in accordance with the requirements
applying to large corporations (§ 264 German Commercial Code (Handelsgesetzbuch, ‘‘HGB’’)) in
conjunction with § 267 (3) and (4) HGB) and of the German Limited Liability Companies Act
(GmbH-Gesetz, ‘‘GmbHG’’).
The income statement was prepared using the classifications in accordance with the nature of
expense method pursuant to § 275 (2) HGB.
The recognition and measurement requirements of the German Act for the Modernisation of
Accounting Law (Bilanzrechtsmodernisierungsgesetz, ‘‘BilMoG’’), which came into force on 29 May
2009, are applicable for the first time to the annual financial statements of the Company for
financial year 2010 (Article 66 (3) sentence 1 Introductory Act to the German Commercial Code
(Einführungsgesetz zum Handelsgesetzbuch, ‘‘EGHGB’’)). The Company did not make use of the
option of applying the requirements early (Article 66 (3) sentence 6 EGHGB).
The application of the provisions of the BilMoG may result in changes in the measurement and
reporting of items in the balance sheet for the previous year in the BilMoG opening balance sheet
as at 1 January 2010. The prior-year figures have not been restated on first-time application in
accordance with Article 67 (8) sentence 2 EGHGB.
In accordance with the new HGB rules, expenses arising from the periodic interest accrual on
provisions have been reported in the income statement for the first time under interest and similar
expenses.
AMODA GmbH, Haibach, holds 100% of the shares in Adler Modemärkte GmbH, Haibach.
II. Accounting policies and notes to the balance sheet
As a result of the sale of the Company’s subsidiary MOTEX Mode-Textil-Service Logistik und
Management GmbH (MOTEX) as at 30 September 2010, all costs of goods handling invoiced by
MOTEX were required to be capitalised from 1 October 2010 as incidental costs of acquisition, and
they were recognised as part of the measurement of inventories.
Provisions for pensions and other employee benefits are measured on the basis of actuarial
calculations in accordance with the projected unit credit method using the 2005 G mortality tables
published by Dr. Klaus Heubeck. The provisions for pensions and other employee benefits were
discounted at the average market rate of interest for the past seven years published by the
Bundesbank for an assumed remaining maturity of 15 years (§ 253 (2) sentence 2 HGB). At the
balance sheet date, that rate of interest was 5.15%. For the purposes of the calculation of the
provisions for pensions and other employee benefits, it was assumed that pensions would increase
by 2.0% per annum and that the annual rate of employee turnover would be 1.8%. The revised
accounting treatment of the pension provisions resulting from the transition to BilMoG as at
1 January 2010 (BilMoG opening balance sheet) resulted in additions to the provisions of c599
thousand compared with the amount previously recognised as at 31 December 2009. The
Company is making use of the option granted by Article 67 (1) sentence 1 EGHGB and is
spreading the cost of the revised treatment (c599 thousand) over a period of 15 years. An amount
of c40 thousand was recognised as an extraordinary expense in financial year 2010. At the
reporting date for the financial statements, therefore, the amount of the Company’s pension
liabilities not covered by the pension provisions was c559 thousand.
Provisions for obligations from partial retirement programmes are recognised in accordance
with actuarial principles using both the block model and the part-time working model, and on the
basis of the 2005 G mortality tables published by Dr. Klaus Heubeck. The rate of interest
appropriate to the maturity of the obligations is 4.07% per annum. The provisions for partial
retirement programmes were recognised in respect of partial retirement agreements already
concluded at the balance sheet date. They include additional step-up payments and the Company’s
obligations accrued up to the balance sheet date in respect of hours worked in excess of those
contractually agreed. The addition to the provisions resulting from the application of the BilMoG
amounted to c6 thousand in accordance with Article 67 (1) EGHGB.
Provisions for the obligations from anniversary bonuses are recognised on the basis of the
company-wide works agreement dated 10 June 2010 and the basic framework agreement dated
1 June 2005. The amount of the provisions for anniversary obligations is calculated in accordance
A
c
1
0
4
7
0
8
p
u
0
8
0
P
r
o
o
f
7
:
2
7
.
5
.
1
1
B
/
L
R
e
v
i
s
i
o
n
:
0
O
p
e
r
a
t
o
r
D
a
d
F-123

with actuarial principles using an interest rate of 5.15% per annum and on the basis of the 2005 G
mortality tables published by Dr. Klaus Heubeck. The determination of the provisions for
anniversary bonuses was based on an assumed annual increase in wages and salaries of 2.0%
and an annual employee turnover rate of 1.8%. The revised accounting treatment of the provisions
for anniversaries due to the transition to BilMoG as at 1 January 2010 (BilMoG opening balance
sheet) resulted in a provision that was c90 thousand lower than the amount recognised as at
31 December 2009. The excess amount was recognised as extraordinary income since it was
probable that the amount of the reversal would not need to be added back to the provision before
31 December 2024.
Provisions for the obligations from continued salary payments in the event of death were
recognised in accordance with the basic framework agreement dated 1 June 2005. The amount of
the provisions for continued salary payments in the event of death is calculated in accordance with
actuarial principles using an interest rate of 5.15% per annum and on the basis of the 2005 G
mortality tables published by Dr. Klaus Heubeck. The determination of the provisions for continued
salary payments in the event of death was based on an assumed annual increase in wages and
salaries of 2.0% and an annual employee turnover rate of 1.8%. An amount of c12 thousand was
added to the provisions as a result of the transition to BilMoG in accordance with Article 67 (1)
EGHGB.
The accounting policies were otherwise unchanged compared with the previous year.
Fixed assets
* Intangible assets are carried at cost less straight-line amortisation in accordance with the
normal useful lives for the business; they mainly comprise computer software which is
amortised over five years.
* Tangible assets are recorded at cost less straight-line depreciation in accordance with the
normal useful lives for the business. No write-downs or reversals of write-downs were
necessary.
Since 2008, low-value fixed assets between c150 and c1,000 have been pooled in a
collective account for the particular financial year in accordance with the tax regulations (§ 6
(2a) German Income Tax Act (Einkommensteuergesetz, ‘‘EStG’’)) and one fifth has been
charged as depreciation. All low-value fixed assets under c150 were expensed immediately
during the year under review in accordance with the tax regulations (§ 4 (2) EStG).
* Shares in affiliated companies under financial assets are measured at cost less valuation
allowances in the event of impairment which is expected to be permanent. The shareholding
in Adler Atelier Moden GmbH, Haibach, was extinguished as at 1 July 2010 as a result of the
company’s merger with ADVERS GmbH, Haibach. The carrying amount of the shareholding in
Adler Modemärkte Gesellschaft m.b.H., Ansfelden/Austria increased by c6,722 thousand in
financial year 2010 as a result of a contribution to capital reserves by Adler Modemärkte
GmbH. Long-term investments and other loans are recorded at the nominal value or the fair
value, if lower; they contain securities amounting to c381 thousand (prior year c381 thousand)
held for the purpose of covering partial retirement commitments.
The breakdown and development of fixed assets can be seen from the following statement of
changes in fixed assets:
A
c
1
0
4
7
0
8
p
u
0
8
0
P
r
o
o
f
7
:
2
7
.
5
.
1
1
B
/
L
R
e
v
i
s
i
o
n
:
0
O
p
e
r
a
t
o
r
D
a
d
F-124

Development of fixed assets
A
c
1
0
4
7
0
8
p
u
0
8
0
P
r
o
o
f
7
:
2
7
.
5
.
1
1
B
/
L
R
e
v
i
s
i
o
n
:
0
O
p
e
r
a
t
o
r
D
a
d
Cost Accum. depreciation and amortisation Net book values
31 Dec.
2009
31 Dec.
2010
31 Dec.
2010
01 Jan.
2010 Additions Disposals
31 Dec.
2010
01 Jan.
2010 Additions Transfers Disposals
e’000 e’000 e’000 e’000 e’000 e’000 e’000 e’000 e’000 e’000 e’000
I. Intangible assets
Licences and computer software ...................... 23,994 418 0 0 24,412 21,706 751 0 22,457 1,955 2,288
II. Tangible assets
1. Constructions on third-party land ........... 40,956 594 32 1,285 40,297 32,879 1,780 1,007 33,652 6,645 8,077
2. Operating and office equipment............. 52,020 1,602 7 1,916 51,713 42,176 2,757 1,077 43,856 7,857 9,844
3. Payments on account............................. 39 66 -39 0 66 0 0 0 0 66 39
93,015 2,262 0 3,201 92,076 75,055 4,537 2,084 77,508 14,568 17,960
III. Financial assets
1 Shares in affiliated companies ............... 405 6,723 0 26 7,102 0 0 0 0 7,102 405
2. Long-term investments ........................... 381 0 0 0 381 0 0 0 0 381 381
3. Other loans............................................. 194 86 0 0 280 0 0 0 0 280 194
980 6,809 0 26 7,763 0 0 0 0 7,763 980
F-125
117,989 9,489 0 3,227 124,251 96,761 5,288 2,084 99,965 24,286 21,228

The shares held directly and indirectly in affiliated companies relate to the following companies:
Nominal/
fixed capital
31 Dec.
2010 Shareholding
Equity
31 Dec.
2010
Net profit/
loss (-)
for 2010
c’000 % c’000 e
Adler Modemärkte Gesellschaft m.b.H,
Ansfelden/Austria ............................... 37 100.0 8,367 9
ADLER MODE S.A., Foetz/Luxembourg 31 100.0 3,230 652
Adler Asset GmbH (formerly
F.W. Woolworth Co. Ges.m.b.H.),
Ansfelden/Austria ............................... 5,087 100.0 1,752 -539
ADVERS GmbH, Haibach...................... 25 100.0 211 -6
Current assets
* Inventories are measured at the lower of cost or market value; appropriate valuation
allowances are recognised in respect of seasonal merchandise. The weighted average
*
method is used as a simplified method of valuation. Directly attributable costs of goods
handling are capitalised.
Receivables, other assets, cash-in-hand and bank balances are carried at the nominal
amount. All identifiable risks are reflected in appropriate valuation allowances. The receivables
and other assets are due within one year.
Prepaid expenses
* This item comprises expenditure prior to the balance sheet date representing expenses
attributable to a particular period after the reporting date.
Provisions
The provisions take account of identifiable risks and other uncertain liabilities; they are measured at
the amount necessary according to prudent business judgment.
* The other provisions principally comprise provisions for rebates c10,107 thousand (prior
year c6,618 thousand), performance bonuses c2,260 thousand (prior year c838 thousand),
rent and incidental rental costs c1,840 thousand (prior year c2,061 thousand), obligations for
holidays and time off in lieu c851 thousand (prior year c704 thousand) as well as for energy/
electricity/gas/water c845 thousand (prior year c831 thousand).
Liabilities
* Liabilities are carried at their repayment amount. As in the prior year, all liabilities have a
remaining maturity of up to one year. Liabilities are secured using the methods normal for the
sector. No assets have been pledged.
Deferred income
* Deferred income comprises amounts received prior to the balance sheet date representing
income attributable to a particular period after that date. Deferred income amounted to c87
thousand (prior year c161 thousand).
Foreign currency translation
* Receivables and liabilities in foreign currencies are measured at the rate prevailing on the
date of the transaction or the date on which the transaction is recorded. Exchange rate gains
(in the case of foreign currency receivables with a remaining maturity of one year or less) and
exchange rate losses at the balance sheet date are included in the financial statements.
Deferred taxes
Deferred taxes are recognised in respect of the differences between the carrying amounts of
assets and liabilities in the financial statements in accordance with commercial law and their tax
A
c
1
0
4
7
0
8
p
u
0
8
0
P
r
o
o
f
7
:
2
7
.
5
.
1
1
B
/
L
R
e
v
i
s
i
o
n
:
0
O
p
e
r
a
t
o
r
D
a
d
F-126

ases, provided that they are expected to reverse in subsequent financial years. Deferred tax
assets and deferred tax liabilities are reported after netting.
The Company does not make use of the option of recognising a deferred tax asset granted by
§ 274 (1) sentence 2 HGB in the event that there is a surplus of deferred tax assets at the
balance sheet date.
Since the profit and loss transfer agreement with AMODA GmbH, Haibach, was terminated with
effect as at 31 December 2010 and by entry in the commercial register dated 1 February 2011, the
Company has been liable to tax in its own right since 1 January in 2011. A calculation of the
amount of deferred taxes was therefore carried out.
The calculation of the deferred taxes was based on an effective tax rate of 27.00% (15.825% for
corporation tax including the solidarity surcharge and 11.175% for trade tax), which is expected to
apply at the date when the differences reverse. The rate of trade tax is derived from the trade tax
multiplier of 320%.
As at the balance sheet date, a surplus of deferred tax assets amounting to c938 thousand
resulted after netting deferred tax assets and liabilities (total differences approach). The Company
does not make use of the option of recognising a deferred tax asset granted by § 274 (1)
sentence 2 HGB with the result that no deferred taxes were recognised in the balance sheet. The
deferred tax assets and liabilities calculated resulted from the following temporary differences
between the carrying amounts in the financial statements and the tax bases:
31 Dec. 2010
Difference
between f/s
and tax base
e’000 Tax rate
31 Dec. 2010
Deferred tax
assets
e’000
Balance sheet item
Constructions on third-party land ....................................... 205 27.00% 55
Inventories ......................................................................... 1,235 27.00% 334
Provisions for pensions and other employee benefits ....... 238 27.00% 64
Other provisions................................................................. 1,952 27.00% 527
31 Dec. 2010
Difference
between f/s
and tax base
e’000 Tax rate
31 Dec. 2010
Deferred tax
assets
e’000
Balance sheet item
Other liabilities ................................................................... 157 27.00% 42
The differences between the financial statements in accordance with commercial law and the tax
bases, which give rise to deferred taxes, are largely the result of
* differences in measurement as a result of the findings of the company tax audit for the
assessment
inventories),
periods up to and including 2004 (constructions on third-party land and
* differences between the requirements of commercial law and the tax regulations in the
measurement of provisions (in particular long-term provisions for personnel expenses).
III. Notes to the income statement
Sales were generated mainly in Germany and almost entirely from textile products. Sales
amounting to c38,083 thousand (prior year c32,395 thousand) related to the procurement of
clothing products for the affiliated companies Adler Modemärkte Gesellschaft m.b.H., Ansfelden/
Austria, and ADLER MODE S.A., Foetz/Luxembourg.
Other operating income mainly comprises rental income, income from administration costs and
other costs allocated to affiliated companies and income from purchasing discounts. The item
included prior-period income of c1,702 thousand (prior year c5,577 thousand) resulting mainly from
reversals of provisions and from suppliers’ bonuses for earlier years.
A
c
1
0
4
7
0
8
p
u
0
8
0
P
r
o
o
f
7
:
2
7
.
5
.
1
1
B
/
L
R
e
v
i
s
i
o
n
:
0
O
p
e
r
a
t
o
r
D
a
d
F-127

Other operating expenses mainly comprise rental, advertising, energy and maintenance expenses
and inventory management costs. Other operating expenses include prior-period expenses of c149
thousand (prior year c105 thousand)
Financial income mainly consists of interest income from loans to and receivables due from
affiliated companies amounting to c3,459 thousand (prior year c1,658 thousand).
The extraordinary income comprises income not attributable to operating activities from the
settlement of a receivable due from AMODA GmbH, Haibach, which was acquired at less than its
nominal amount (c500 thousand), and the effects recognised in profit or loss of the transition to
BilMoG as at 1 January 2010. The effects of the transition relate to the provisions for pensions
and the provisions for anniversary payments and death benefits.
As a result of the tax grouping with AMODA GmbH, Haibach, no income tax liability is incurred
by Adler Modemärkte GmbH. The tax grouping with AMODA GmbH was terminated as at
31 December 2010.
IV. Other disclosures
Other financial obligations
The Company has obligations arising from long-term rental and lease agreements – these
amounted to c40,263 thousand (prior year c40,208 thousand) for the next twelve months. Similar
amounts are expected to apply in future years.
The Company has obligations from lease agreements with Miller Leasing (mainframe computer and
magnetic disks). These amounted to an annual obligation of c644 thousand over the contractually
agreed remaining term (30 May 2012). Vehicle lease agreements give rise to annual expenses of
c524 thousand.
The Company has obligations from rental agreements for copying machines (stores and head
office) amounting to c78 thousand in calendar year 2011.
At the reporting date, open orders to suppliers for purchases of goods amounting to c27,417
thousand were outstanding.
The Company has entered into a long-term lease for a building with Alaska GmbH & Co KG,
Munich, with a contractually agreed remaining term until 31 July 2024. The resulting expenses for
the remaining term amount to c3,283 thousand (rent) and c2,078 thousand in respect of a lessee
loan. The building was sold to Alaska GmbH & Co KG in 2004 and has been leased back since
then. The Company has an option to buy the property at the end of the lease term. The advantage
of this agreement is that less capital is tied up than in the case of a purchase. Risks could arise
from the fact that the agreement cannot be terminated prior to the end of its term.
A
c
1
0
4
7
0
8
p
u
0
8
0
P
r
o
o
f
7
:
2
7
.
5
.
1
1
B
/
L
R
e
v
i
s
i
o
n
:
0
O
p
e
r
a
t
o
r
D
a
d
F-128

Contingent liabilities
Adler Modemärkte GmbH has issued a collateral promise (Schuldenbeitrittserklärung) in connection
with a rental agreement entered into by ADLER MODE S.A., Foetz/Luxembourg; the rental
obligations amount to c3,193 thousand (prior year c3,739 thousand) over the remaining term of the
agreement.
Adler Modemärkte GmbH has issued a letter of comfort in connection with rental agreements
entered into by Adler Modemärkte Gesellschaft m.b.H., Ansfelden/Austria; the associated
obligations amount to c41,936 thousand (prior year c43,158 thousand) over the remaining term of
the agreements.
Adler Modemärkte GmbH has issued a letter of comfort in connection with safeguarding the
business operations of Adler Modemärkte Gesellschaft m.b.H., Ansfelden/Austria. In the letter,
Adler Modemärkte GmbH gives a commitment to provide the subsidiary with sufficient financial
resources that it is in a position at all times to meet its current and future obligations, including any
default interest, when they are due.
The Company has a guarantee facility (Avalrahmen) in an amount of c2,000 thousand with
Commerzbank in Saarbrücken. As at 31 December 2010 the guarantee facility was being utilised in
an amount of c1,177 thousand. The full amount of the facility utilised was secured by a pledge on
current accounts in favour of Commerzbank in Saarbrücken. In addition, pledges over bank
balances have been granted to the main customs office (c1,000 thousand) and in connection with
supplier credit insurance (c1,500 thousand) in line with standard industry practice.
No liability was required to be reflected in the financial statements in respect of the above
obligations entered into since it is not expected that the obligations will crystallise or that any
expense will be incurred by the Company.
Apart from the other financial obligations and contingent liabilities described, there are no offbalance
sheet transactions than would be significant for the financial position of the Company.
Employees
In financial year 2010 the Company had an average of 3,226 salaried employees and 166 trainees.
Supervisory board
* Markus Zöllner, Bichl, industrial engineer, chairman of the supervisory board
* Mona Abu-Nusseira, Munich, business law graduate (from 1 March 2010)
* Oliver Apelt, Düsseldorf, managing director
* Dr. Hans Michael Deml, Munich, attorney (until 28 February 2010)
* Mortimer Glinz, Munich, graduate engineer (until 31 October 2010)
* Holger Kowarsch, Hochstadt, businessman
* Frank Müller, Munich, business consultant (until 28 February 2010)
* Markus Roschel, Sasbachwalden, business administration graduate (from 1 November 2010)
* Jörg Ulmschneider, Schmelz, business administration graduate (from 1 March 2010)
* Angelika Zinner 1 , Kettenis/Belgium, chairwoman of the general works council, Adler
*
Modemarkt Aachen (vice-chairwoman of the supervisory board)
Majed Abu-Zarur 1 , Viernheim, employee at Adler Modemarkt Neu-Edingen
* Ingrid Düsmann-Schulz 1 , Haibach, member of the works council, Adler Modemarkt Haibach
* Corinna Gross 1 , Neuss, secretary of the Essen district of the ver.di united services union
* Georg Linder 1 ,Hösbach, section head of procurement planning, Adler Modemarkt Haibach
* Erika Ritter 1 , secretary of the national executive board of the ver.di union, national retail
section Berlin
The total compensation of the members of the supervisory board during the financial year
amounted to c40 thousand (prior year c40 thousand).
1 Employee representatives.
A
c
1
0
4
7
0
8
p
u
0
8
0
P
r
o
o
f
7
:
2
7
.
5
.
1
1
B
/
L
R
e
v
i
s
i
o
n
:
0
O
p
e
r
a
t
o
r
D
a
d
F-129

Management
* Lothar Schäfer, Villmar, spokesman of the managing board and managing director for buying
* Thomas Wanke, Brunswick, managing director for sales, marketing and visual merchandising
* Jochen Strack, Linden, managing director for administration
* Dr. Martin Vorderwülbecke, Munich, managing director without portfolio (until 31 December
2010)
The total compensation of the members of management in financial year 2010 amounted to c576
thousand (prior year c958 thousand). The total amount paid to former members of management
and their surviving dependants was c156 thousand (prior year c156 thousand). Pension provisions
of c1,715 thousand (prior year c1,526 thousand) have been recognised for former members of
management and their surviving dependants. At the reporting date for the financial statements, the
liability not covered by these pension provisions following the transition to BilMoG amounts to c281
thousand.
Group structure
Adler Modemärkte GmbH is the company which prepares consolidated financial statements for the
largest group of companies. The consolidated financial statements and group management report
of Adler Modemärkte GmbH including the auditors’ report are required to be published in
accordance with § 325 HGB. The consolidated financial statements are available from the
registered office of Adler Modemärkte GmbH in Haibach.
All companies in which BluO beta equity Ltd., Birmingham/United Kingdom, holds a majority of the
shares directly or indirectly are regarded as affiliated companies.
Total auditors’ fees
The disclosure relating to auditors’ fees within the meaning of § 285 No. 17 HGB is not made here
since the information is contained in the consolidated financial statements of Adler Modemärkte
GmbH.
Profit and loss transfer
In accordance with the profit and loss transfer agreement, the full amount of the net profit for the
financial year is transferred to the sole shareholder AMODA GmbH, Haibach.
A
c
1
0
4
7
0
8
p
u
0
8
0
P
r
o
o
f
7
:
2
7
.
5
.
1
1
B
/
L
R
e
v
i
s
i
o
n
:
0
O
p
e
r
a
t
o
r
D
a
d
Haibach, 14 February 2011
Schäfer Strack Wanke
F-130

The following auditor’s report (Bestätigungsvermerk) has been issued in accordance with § 322
German Commercial Code (Handelsgesetzbuch) in German language on the German version of
the financial statements and the management report of Adler Modemärkte GmbH as of and for the
year ended December 31, 2010. The management report is neither included nor incorporated by
reference in this offering circular.
Auditors’ Report
We have audited the annual financial statements, comprising the balance sheet, the income
statement and the notes to the financial statements, together with the bookkeeping system, and the
management report of the Adler Modemärkte GmbH, Haibach, for the business year from January
1 to December 31, 2010. The maintenance of the books and records and the preparation of the
annual financial statements and management report in accordance with German commercial law
are the responsibility of the Company’s Managing Directors. Our responsibility is to express an
opinion on the annual financial statements, together with the bookkeeping system, and the
management report based on our audit.
We conducted our audit of the annual financial statements in accordance with § (Article) 317 HGB
(‘‘Handelsgesetzbuch’’: ‘‘German Commercial Code’’) and German generally accepted standards for
the audit of financial statements promulgated by the Institut der Wirtschaftsprüfer (Institute of Public
Auditors in Germany) (IDW). Those standards require that we plan and perform the audit such that
misstatements materially affecting the presentation of the net assets, financial position and results
of operations in the annual financial statements in accordance with (German) principles of proper
accounting and in the management report are detected with reasonable assurance. Knowledge of
the business activities and the economic and legal environment of the Company and expectations
as to possible misstatements are taken into account in the determination of audit procedures. The
effectiveness of the accounting-related internal control system and the evidence supporting the
disclosures in the books and records, the annual financial statements and the management report
are examined primarily on a test basis within the framework of the audit. The audit includes
assessing the accounting principles used and significant estimates made by the Company’s
Managing Directors, as well as evaluating the overall presentation of the annual financial
statements and management report. We believe that our audit provides a reasonable basis for our
opinion.
Our audit has not led to any reservations.
In our opinion based on the findings of our audit, the annual financial statements comply with the
legal requirements and give a true and fair view of the net assets, financial position and results of
operations of the Company in accordance with (German) principles of proper accounting. The
management report is consistent with the annual financial statements and as a whole provides a
suitable view of the Company’s position and suitably presents the opportunities and risks of future
development.
Stuttgart, February 14, 2011
PricewaterhouseCoopers
Aktiengesellschaft
Wirtschaftsprüfungsgesellschaft
Rüdiger Dresel
Wirtschaftsprüfer
(German Public Auditor)
A
c
1
0
4
7
0
8
p
u
0
8
0
P
r
o
o
f
7
:
2
7
.
5
.
1
1
B
/
L
R
e
v
i
s
i
o
n
:
0
O
p
e
r
a
t
o
r
D
a
d
F-131
ppa. Axel Ost
Wirtschaftsprüfer
(German Public Auditor)

A
c
1
0
4
7
0
8
p
u
0
9
0
P
r
o
o
f
7
:
2
7
.
5
.
1
1
B
/
L
R
e
v
i
s
i
o
n
:
0
O
p
e
r
a
t
o
r
D
a
d
Audited annual financial statements
of Adler Modemärkte GmbH
as at 31 December 2008 (HGB)
F-132

Income statement for the financial year from
1 January 2008 to 31 December 2008
2008 2007
c c c’000
1. Sales ......................................................... 424,593,906.23 473,202
2. Other operating income ............................ 15,431,782.58 15,590
440,025,688.81 488,792
3. Cost of materials
Cost of purchased goods.......................... -248,621,046.89 -253,092
191,404,641.92 235,700
4. Personnel expenses
a) Wages and salaries.......................... -80,776,331.60 -72,442
b) Social security contributions
and expenses for old-age part
time ...................................................
(of which for old-age part time
-14,726,639.10 -15,124
c454,776.78;
thousand)
prior year c464
-95,502,970.70
5. Amortisation of intangible assets,
depreciation of tangible assets and
write-downs ...............................................
(of which write-downs c524,108.00;
prior year c0 thousand)
-7,216,798.21 -6,221
6. Other operating expenses......................... -144,420,227.92 -145,958
-55,735,354.91 -4,045
7. Expenses (prior year: income) from
profit and loss transfer agreements.......... -2,536,018.54 939
8. Income from investments in affiliated
companies ................................................. 5,000,000.00 8,000
9. Other interest and similar income.............
(of which from affiliated companies
618,519.34 1,466
c463,070.51;
thousand)
(prior year c1,162
10. Interest and similar expenses ...................
(of which to affiliated companies
c198,180.19; prior year c652 thousand)
-604,452.37 -900
2,478,048.43
11. Profit/loss from operations .................... -53,257,306.48 5,460
12. Extraordinary income ................................ 48,809,173.47 0
13. Income taxes (benefit) .............................. 1,723,930.92 2,201
14. Other taxes................................................ -55,732.00 -74
1,668,198.92
-2,779,934.09 7,587
15. Income from losses assumed
(prior year: expense from profits
transferred) ................................................ 2,779,934.09 -7,587
16. Net profit for the year ............................ 0.00 0
A
c
1
0
4
7
0
8
p
u
0
9
0
P
r
o
o
f
7
:
2
7
.
5
.
1
1
B
/
L
R
e
v
i
s
i
o
n
:
0
O
p
e
r
a
t
o
r
D
a
d
F-133

ASSETS
Balance sheet
as at 31 December 2008
31 Dec. 2008 31 Dec. 2007
c c’000
A. Fixed assets
I. Intangible assets
Licences and computer software .................................... 2,993,753.47 2,081
II. Tangible assets
1. Fixtures on third-party land..................................... 9,996,033.00 11,348
2. Operating and office equipment ............................. 12,499,830.00 10,974
22,495,863.00 22,322
III. Financial assets
1. Shares in affiliated companies................................ 405,412.24 405
2. Long-term investments............................................ 650,000.00 650
3. Other loans ............................................................. 124,491.61 94
1,179,903.85 1,149
26,669,520.32 25,552
B. Current assets
I. Inventories
1. Consumables and supplies..................................... 691,012.35 816
2. Merchandise............................................................ 57,386,506.04 54,929
58,077,518.39 55,745
II. Receivables and other assets
1. Trade receivables.................................................... 6,584.79 128
2. Receivables from affiliated companies ................... 17,080,949.90 35,802
(of which from the sole shareholder
c5,050,770.34; prior year c0 thousand)
3. Other assets............................................................ 1,109,410.98 3,092
18,196,945.67 39,022
III. Cash-in-hand and balances with banks .......................... 23,547,935.02 23,380
99,822,399.08 118,147
C. Prepaid expenses................................................................... 1,481,936.40 1,716
A
c
1
0
4
7
0
8
p
u
0
9
0
P
r
o
o
f
7
:
2
7
.
5
.
1
1
B
/
L
R
e
v
i
s
i
o
n
:
0
O
p
e
r
a
t
o
r
D
a
d
F-134
127,973,855.80 145,415

EQUITY and LIABILITIES
31 Dec. 2008 31 Dec. 2007
c c’000
A. Equity
I. Subscribed capital ........................................................... 15,860,000.00 15,860
II. Capital reserves............................................................... 33,467,694.13 33,468
49,327,694.13 49,328
B. Provisions
1. Provisions for pensions........................................... 3,089,589.00 3,184
2. Provisions for taxes ................................................ 0.00 1,778
3. Other provisions ...................................................... 32,066,540.60 17,598
35,156,129.60 22,560
C. Liabilities
1. Liabilities to banks .................................................. 0.00 5,000
2. Trade payables ....................................................... 16,247,421.84 25,835
3. Liabilities to affiliated companies ............................ 16,349,468.02 31,454
(of which to the sole shareholder c0.00;
prior year c7,538 thousand)
4. Other liabilities ........................................................ 10,650,509.21 10,912
(of which from taxes c6,459,546.33; prior year
c7,161 thousand) (of which relating to social
security c51,449.81; prior year c27 thousand)
43,247,399.07 73,201
D. Deferred income..................................................................... 242,633.00 326
A
c
1
0
4
7
0
8
p
u
0
9
0
P
r
o
o
f
7
:
2
7
.
5
.
1
1
B
/
L
R
e
v
i
s
i
o
n
:
0
O
p
e
r
a
t
o
r
D
a
d
F-135
127,973,855.80 145,415

Notes to the annual financial statements as at 31 December 2008
I. General information
The Company prepared its annual financial statements in accordance with the requirements
applying to large corporations (§ 264 German Commercial Code (Handelsgesetzbuch, ‘‘HGB’’)) in
conjunction with § 267 (3) and (4) HGB) and of the German Limited Liability Companies Act
(GmbH-Gesetz, ‘‘GmbHG’’).
The income statement was prepared using the classifications in accordance with the nature of
expense method pursuant to § 275 (2) HGB.
AMODA GmbH, Düsseldorf, holds 100% of the shares in Adler Modemärkte GmbH, Haibach.
II. Accounting policies and notes to the balance sheet
In financial year 2008 the directly attributable costs of merchandise processing recharged to Adler
Modemärkte GmbH by MOTEX Mode-Textil-Service Logistik und Management GmbH were
capitalised for the first time as incidental costs of acquisition of the merchandise. This change
reflected the full-cost approach and therefore improved the view presented of the net assets and
results of operations. The incidental costs of purchase of merchandise amounted to c16,409
thousand and increased the amount of inventories as at 31 December 2008 by c4,128 thousand;
the remaining costs of c12,281 thousand were charged to the cost of materials, while other
operating expenses were reduced in total by c16,409 thousand.
The accounting policies were otherwise unchanged compared with the previous year.
Fixed assets
* Intangible assets are carried at cost less straight-line amortisation in accordance with the
normal useful lives for the business; they mainly comprise computer software which is
amortised over five years.
* Tangible assets are recorded at cost less straight-line depreciation in accordance with the
normal useful lives for the business. In financial year 2008 write-downs amounting to c524
thousand were recognised in respect of tangible fixed assets as a result of store closures.
Low-value fixed assets with individual values up to c150 are written off immediately and
treated as disposals.
* Shares in affiliated companies under financial assets are measured at cost less valuation
allowances in the event of impairment which is expected to be permanent. Long-term
investments and other loans are recorded at the nominal amount or the fair value, if lower;
these include securities amounting to c650 thousand purchased for the purpose of covering
partial retirement commitments that have been transferred into the administration of a trustee
in order to protect against the risk of insolvency.
The breakdown and development of fixed assets can be seen from the following statement of
changes in fixed assets:
A
c
1
0
4
7
0
8
p
u
0
9
0
P
r
o
o
f
7
:
2
7
.
5
.
1
1
B
/
L
R
e
v
i
s
i
o
n
:
0
O
p
e
r
a
t
o
r
D
a
d
F-136

Development of fixed assets
A
c
1
0
4
7
0
8
p
u
0
9
0
P
r
o
o
f
7
:
2
7
.
5
.
1
1
B
/
L
R
e
v
i
s
i
o
n
:
0
O
p
e
r
a
t
o
r
D
a
d
Cost Accumulated depreciation and amortisation Net book values
31 Dec.
2007
31 Dec.
2008
31 Dec.
2008
01 Jan.
2008 Additions Disposals
31 Dec.
2008
01 Jan.
2008 Additions Disposals
c’000 c’000 c’000 c’000 c’000 c’000 c’000 c’000 c’000 c’000
I. Intangible assets
Licences and computer software .............................. 21,160 1,778 0 22,938 19,079 865 0 19,944 2,994 2,081
II. Tangible assets
1. Fixtures on third-party land ............................ 42,130 1,344 2,329 41,145 30,782 2,219 1,852 31,149 9,996 11,348
2. Operating and office equipment..................... 52,944 6,107 4,777 54,274 41,970 4,133 4,329 41,774 12,500 10,974
95,074 7,451 7,106 95,419 72,752 6,352 6,181 72,923 22,496 22,322
III. Financial assets
1. Shares in affiliated companies ....................... 405 0 0 405 0 0 0 0 405 405
2. Long-term investments ................................... 650 0 0 650 0 0 0 0 650 650
3. Other loans..................................................... 94 31 0 125 0 0 0 0 125 94
1,149 31 0 1,180 0 0 0 0 1,180 1,149
F-137
117,383 9,260 7,106 119,537 91,831 7,217 6,181 92,867 26,670 25,552

The shares held directly and indirectly in affiliated companies relate to the following companies:
Nominal/
fixed capital
31 Dec. 2008
Shareholding
Equity
31 Dec. 2008
Net profit/
loss (-)
for the year
c’000 % c’000 c’000
Adler Modemärkte Gesellschaft m.b.H,
Vösendorf/Austria ................................... 37 100.0 1,612 -2,133
ADLER MODE S.A., Foetz/Luxembourg .... 31 100.0 2,379 1,181
Adler Atelier Moden GmbH ........................ 67 100.0 67 -2,536 1
MOTEX Mode-Textil-Service Logistik und
Management GmbH ............................... 26 100.0 7,066 1,620
ADVERS Versicherungsmakler GmbH....... 25 100.0 188 104
1 Before losses assumed.
Current assets
* Inventories are measured at the lower of cost or market value; appropriate valuation
allowances are recognised in respect of seasonal merchandise. The weighted average
method is used as a simplified method of valuation. Directly attributable costs of merchandise
processing are capitalised. For details of the change of measurement policy, please see the
note on page 7.
* Receivables, other assets, cash-on-hand and bank balances are carried at the nominal
amount. All identifiable risks are reflected in appropriate valuation allowances. The receivables
and other assets are due within one year.
* Receivables from affiliated companies amounting to c6,450 thousand (prior year c8,771
thousand) relate to short-term loans and amounting to c5,580 thousand (prior year c6,002
thousand) relate to the Company’s deliveries of goods and services and are all due within
one year.
Prepaid expenses
* This item comprises expenditure prior to the balance sheet date representing expenses
attributable to a particular period after the reporting date.
Provisions
The provisions take account of identifiable risks and other uncertain liabilities; they are measured at
the amount necessary according to prudent business judgment.
* Pension provisions were calculated using the projected unit credit method. The following
measurement parameters were applied: Heubeck 2005 mortality tables, interest rate 5.85%
(prior year 5.6%), increase in pensions 2.0% (prior year 1.7%), rate of inflation 2.25% (prior
year 2.0%).
* Other provisions mainly comprise provisions for restructuring costs of which c7,597
thousand related to personnel expenses and c7,026 thousand to non-staff costs and
provisions for discounts (c8,774 thousand; prior year c9,112 thousand) and other personnelrelated
obligations (c4,443 thousand; prior year c5,802 thousand).
Liabilities
* Liabilities are carried at their repayment amount. All liabilities have a remaining maturity of up
to one year. In the prior year, all liabilities also had a remaining maturity of up to one year.
Liabilities are secured using the methods normal for the sector. No assets have been
pledged.
* Liabilities to affiliated companies amounting to c13,689 thousand (prior year c13,232
thousand) relate to deliveries of goods and services and amounting to c2,660 thousand (prior
year c10,684 thousand) relate to short-term loans and are all due within one year.
A
c
1
0
4
7
0
8
p
u
0
9
0
P
r
o
o
f
7
:
2
7
.
5
.
1
1
B
/
L
R
e
v
i
s
i
o
n
:
0
O
p
e
r
a
t
o
r
D
a
d
F-138

Deferred income
* Deferred income comprises amounts received prior to the balance sheet date representing
income attributable to a particular period after that date.
Foreign currency translation
* Receivables and liabilities in foreign currencies are measured at the rate prevailing on the
date of the transaction or the date on which the transaction is recorded. Exchange rate losses
as at the balance sheet date are included in the financial statements.
III. Notes to the income statement
Sales are generated almost wholly in Germany and only from textile goods. Sales amounting to
c36,381 thousand (prior year c40,510 thousand) related to the procurement of clothing products for
the affiliated companies Adler Modemärkte Gesellschaft m.b.H., Vösendorf/Austria and ADLER
MODE S.A., Foetz/Luxembourg.
Other operating income mainly comprises, as in the previous year, rental income, income from
administration costs and other costs allocated to affiliated companies and income from purchasing
discounts. The item includes prior-period income of c1,122 thousand (prior year c1,312 thousand).
Other operating expenses mainly comprise, as in the previous year, rental, advertising, energy
and maintenance expenses.
Extraordinary income includes the income subsidies from the shareholder amounting to c40,000
thousand not allocated to operating activities, a waiver of the receivable relating to the profit and
loss transfer for 2008 amounting to c7,587 thousand and the waiver by METRO AG of a claim for
repayment of VAT of c1,221 thousand.
As a result of the grouping for tax purposes with AMODA GmbH, Düsseldorf, no tax effects are
reflected in the Company’s financial statements.
Income taxes mainly comprise prior-period income amounting to c1,646 thousand plus accrued
interest from the reversal of a provision in the light of the results of the company tax audit for the
period from 1999 to 2004.
IV. Other disclosures
Other financial obligations
The Company has obligations arising from long-term rental and lease agreements – these
amounted to c43,279 thousand (prior year c45,345 thousand) for the next twelve months, of which
c11,570 thousand (prior year c11,990 thousand) was due to affiliated companies included in the
consolidated financial statements. Similar amounts are expected to apply in future years, after
taking into account store closures.
The Company has obligations from lease agreements with IBM (mainframe computer and magnetic
disks), amounting to c2,873 thousand in each of the next three years.
The Company has obligations from rental agreements (stores and head office) for copying
machines, amounting to c105 thousand in calendar year 2009.
We have leased nine Mini Coopers for advertising purposes until 31 August 2009, for which the
Company has an obligation amounting to c72 thousand.
As at the balance sheet date, we had open orders of c359 thousand in connection with
administration and sales activities and c20,667 thousand in respect of the purchase of goods from
suppliers, of which c8,887 thousand related to affiliated companies.
Contingent liabilities
Adler Modemärkte GmbH has issued a collateral promise (Schuldenbeitrittserklärung) in connection
with a rental agreement entered into by ADLER MODE S.A., Foetz/Luxembourg – the rental
obligations amount to c4,273 thousand (prior year c4,807 thousand) over the remaining term of the
agreement.
Adler Modemärkte GmbH has issued a letter of comfort in connection with rental agreements
entered into by Adler Modemärkte Gesellschaft m.b.H., Vösendorf/Austria; the associated
A
c
1
0
4
7
0
8
p
u
0
9
0
P
r
o
o
f
7
:
2
7
.
5
.
1
1
B
/
L
R
e
v
i
s
i
o
n
:
0
O
p
e
r
a
t
o
r
D
a
d
F-139

obligations amount to c20,507 thousand (prior year c22,968 thousand) over the remaining term of
the agreements.
Adler Modemärkte GmbH has issued a letter of comfort in connection with the imminent
overindebtedness of Adler Modemärkte Gesellschaft m.b.H., Vösendorf/Austria. In the letter, Adler
Modemärkte GmbH gives a commitment to provide the subsidiary with sufficient financial resources
that it is in a position at all times to meet its current and future obligations, including any default
interest, when they are due.
Employees
In financial year 2008 the Company had an average of 2,451 (prior year 2,627) salaried employees
and 178 (prior year 193) trainees.
Supervisory board
Zygmunt Mierdorf, Düsseldorf, member of the management board of METRO AG (chairman)
Werner Arndt, Düsseldorf, department head of legal & projects at METRO AG
Dr. Hans-Jörg Gidlewitz, Duisburg, section head of planning & controlling at METRO AG
Georg W. Mehring-Schlegel, Düsseldorf, section head of group strategy at METRO AG (from
19 June 2008)
Dr. Stephan Körkemeyer, Düsseldorf, compensation & benefits at METRO AG (from 19 June 2008)
Dr. Jürgen Pfister, Düsseldorf, personnel & social matters at METRO AG (from 19 June 2008)
Sibylle Gottschalk, Kelkheim, businesswoman (until 18 June 2008)
Wolfgang Kraus, Meerbusch, former member of the management board of Kaufhof Warenhaus AG
(until 18 June 2008)
Günter Schmittdiel, former managing director of Adler Modemärkte GmbH, Birkenfeld (until 18 June
2008)
Angelika Zinner, 1 Kettenis/Belgium, chairwoman of the general works council, Adler Modemarkt
Aachen (vice-chairwoman of the supervisory board)
Ingrid Düsmann-Schulz 1 , Haibach, member of the works council, Adler Modemarkt Haibach
Corinna Gross 1 , Neuss, secretary of the Essen district of the ver.di united services union
Sabine Heckel 1 , Großfriesen, specialist sales adviser Adler Modemarkt Plauen-Kauschwitz
Georg Linder 1 ,Hösbach, section head of procurement planning, Adler Modemarkt Haibach
Erika Ritter 1 , secretary of the national executive board of the ver.di union, national retail
Malene Volkers 1 , Berlin, secretary of the national executive board of the ver.di union, national retail
section Berlin (until 18 June 2008)
The total compensation of the members of the supervisory board during the financial year
amounted to c39 thousand (prior year c53 thousand).
1 Employee representatives.
Management
Wolfgang Krogmann (chairman), Hamburg, managing director for coordination and sales
Tono Volmary, Düsseldorf, commercial managing director (until 29 August 2008)
Reinhard Müller, Düsseldorf, commercial managing director (from 19 September 2008)
Andreas Oerter, Haibach, managing director for buying/marketing
Hans-Otto Ulbrich, Bessenbach, managing director for sales/marketing (until 30 June 2008)
The total compensation of the members of management in financial year 2008 amounted to c1,407
thousand (prior year c1,445 thousand). The total amount paid to former members of management
and their surviving dependants was c156 thousand (prior year c155 thousand). Pension provisions
of c1,775 thousand (prior year c1,553 thousand) have been recognised to date for former
members of management and their surviving dependants.
A
c
1
0
4
7
0
8
p
u
0
9
0
P
r
o
o
f
7
:
2
7
.
5
.
1
1
B
/
L
R
e
v
i
s
i
o
n
:
0
O
p
e
r
a
t
o
r
D
a
d
F-140

Group structure
The Company is a subsidiary of AMODA GmbH, Düsseldorf. The latter company in turn is a
member of the METRO group.
The Company’s ultimate parent company, which prepares consolidated financial statements for the
largest group of companies, is METRO AG, Düsseldorf. Adler Modemärkte GmbH and its
subsidiaries are included in the consolidated financial statements of METRO AG via AMODA
GmbH, Düsseldorf. The consolidated financial statements and group management report of
METRO AG including the auditors’ report are required to be published in accordance with § 325
HGB. The consolidated financial statements are available from the registered office of METRO AG
in Düsseldorf.
All investee companies in which a majority of the shares are held directly or indirectly by the above
parent company are regarded as affiliated companies.
Profit and loss transfer
In accordance with the profit and loss transfer agreement, the full amount of the loss for the
financial year is assumed by the parent company.
A
c
1
0
4
7
0
8
p
u
0
9
0
P
r
o
o
f
7
:
2
7
.
5
.
1
1
B
/
L
R
e
v
i
s
i
o
n
:
0
O
p
e
r
a
t
o
r
D
a
d
Haibach, 13 February 2009
Krogmann Müller Oerter
F-141

Auditors’ Report
We have audited the annual financial statements, comprising the balance sheet, the income
statement and the notes to the financial statements, together with the bookkeeping system, and the
management report of the Adler Modemärkte GmbH, Haibach, for the business year from January
1 to December 31, 2008. The maintenance of the books and records and the preparation of the
annual financial statements and management report in accordance with German commercial law
are the responsibility of the Company’s Managing Directors. Our responsibility is to express an
opinion on the annual financial statements, together with the bookkeeping system, and the
management report based on our audit.
We conducted our audit of the annual financial statements in accordance with § (Article) 317 HGB
(‘‘Handelsgesetzbuch’’: ‘‘German Commercial Code’’) and German generally accepted standards for
the audit of financial statements promulgated by the Institut der Wirtschaftsprüfer (Institute of Public
Auditors in Germany) (IDW). Those standards require that we plan and perform the audit such that
misstatements materially affecting the presentation of the net assets, financial position and results
of operations in the annual financial statements in accordance with (German) principles of proper
accounting and in the management report are detected with reasonable assurance. Knowledge of
the business activities and the economic and legal environment of the Company and expectations
as to possible misstatements are taken into account in the determination of audit procedures. The
effectiveness of the accounting-related internal control system and the evidence supporting the
disclosures in the books and records, the annual financial statements and the management report
are examined primarily on a test basis within the framework of the audit. The audit includes
assessing the accounting principles used and significant estimates made by the Company’s
Managing Directors, as well as evaluating the overall presentation of the annual financial
statements and management report. We believe that our audit provides a reasonable basis for our
opinion.
Our audit has not led to any reservations.
In our opinion based on the findings of our audit, the annual financial statements comply with the
legal requirements and give a true and fair view of the net assets, financial position and results of
operations of the Company in accordance with (German) principles of proper accounting. The
management report is consistent with the annual financial statements and as a whole provides a
suitable view of the Company’s position and suitably presents the opportunities and risks of future
development.
Stuttgart, February 13, 2009
PricewaterhouseCoopers
Aktiengesellschaft
Wirtschaftsprüfungsgesellschaft
Peter Neugebauer ppa. Stefan Sigmann
Wirtschaftsprüfer Wirtschaftsprüfer
(German Public Auditor) (German Public Auditor)
A
c
1
0
4
7
0
8
p
u
0
9
0
P
r
o
o
f
7
:
2
7
.
5
.
1
1
B
/
L
R
e
v
i
s
i
o
n
:
0
O
p
e
r
a
t
o
r
D
a
d
F-142

Statement of cash flows for the financial year from
1 January 2008 to 31 December 2008
2008
c’000
Loss for the period before extraordinary items and profit and loss transfer ....................... -42,780
Depreciation, amortisation and write-downs on fixed assets .............................................. 7,217
Increase in provisions ......................................................................................................... 12,596
Losses on disposals of fixed assets ................................................................................... 518
Write-downs of other assets ............................................................................................... 252
Decrease in inventories, trade receivables and other assets not related to investing or
financing activities........................................................................................................... 16,712
Decrease in trade payables and other liabilities not related to investing or financing
activities.......................................................................................................................... -16,950
Cash flows from operating activities .............................................................................. -22,435
Proceeds from disposals of fixed assets ............................................................................ 407
Payments for investments in tangible and intangible fixed assets...................................... -9,229
Payments for investments in financial assets ..................................................................... -31
Cash flows from investing activities............................................................................... -8,853
Proceeds of income subsidy from shareholder................................................................... 40,000
Contributions to capital reserves......................................................................................... 0
Repayments of loans .......................................................................................................... -5,000
Payment from change in intra-Group financing arrangements with ADLER subsidiaries ... -3,545
Cash flows from financing activities .............................................................................. 31,455
Change in cash and cash equivalents ................................................................................ 167
Cash and cash equivalents at beginning of period ............................................................. 23,381
Cash and cash equivalents at end of period ................................................................. 23,548
Cash and cash equivalents as at 31 December 2008 consisted solely of cash-in-hand and
balances with banks.
A
c
1
0
4
7
0
8
p
u
0
9
0
P
r
o
o
f
7
:
2
7
.
5
.
1
1
B
/
L
R
e
v
i
s
i
o
n
:
0
O
p
e
r
a
t
o
r
D
a
d
F-143

Statement of changes in equity
for the financial year from 1 January 2008 to 31 December 2008
2008 statement of changes in equity
Subscribed
capital
Capital
reserves
Revenue
reserves
Net retained
profits/
accumulated
losses Total equity
c c c c c
As at 01 Jan. 2008 ...... 15,860,000 33,467,693 0 0 49,327,693
Net loss for the year ..... 0 0 0 0 0
Contribution to capital
reserves.................... 0 1 0 0 1
As at 31 Dec. 2008...... 15,860,000 33,467,694 0 0 49,327,694
A
c
1
0
4
7
0
8
p
u
0
9
0
P
r
o
o
f
7
:
2
7
.
5
.
1
1
B
/
L
R
e
v
i
s
i
o
n
:
0
O
p
e
r
a
t
o
r
D
a
d
F-144

Auditors’ Report
To Adler Modemärkte GmbH, Haibach:
We have audited the statement of changes in equity and the cash flow statement for financial year
2008 derived by the company from the annual financial statements for the financial year 2008 as
well as from the underlying bookkeeping system. The statement of changes in equity and cash
flow statement supplements the annual financial statements of Adler Modemärkte GmbH, Haibach,
for the financial year 2008 prepared on the basis of German commercial law provisions.
The preparation of the statement of changes in equity and the cash flow statement for the financial
year 2008 in accordance with German commercial law provisions is the responsibility of the
company’s legal representatives.
Our responsibility is to express, based on the audit performed by us, an opinion as to whether the
statement of changes in equity and the cash flow statement for financial 2008 has been properly
derived from the annual financial statements for the financial year 2008 as well as from the
underlying bookkeeping system in accordance with German commercial law provisions. The subject
matter of this engagement did not include the audit of the underlying annual financial statements
as well as the underlying bookkeeping system.
We have planned and performed our audit in compliance with the IDW Auditing Practice
Statement: Audit of Additional Elements of Financial Statements (IDW AuPS 9,960.2) such that any
material errors in the derivation of the statement of changes in equity and the cash flow statement
from the annual financial statements as well as the underlying bookkeeping system are detected
with reasonable assurance.
In our opinion, which is based on the findings obtained during the audit, the statement of changes
in equity and the cash flow statement for financial year 2008 has been properly derived from the
annual financial statements for financial year 2008 as well as the underlying bookkeeping system in
accordance with German commercial law provisions.
Stuttgart, February 7, 2011
PricewaterhouseCoopers
Aktiengesellschaft
Wirtschaftsprüfungsgesellschaft
Rüdiger Dresel ppa. Axel Ost
Wirtschaftsprüfer Wirtschaftsprüfer
(German Public Auditor) (German Public Auditor)
A
c
1
0
4
7
0
8
p
u
0
9
0
P
r
o
o
f
7
:
2
7
.
5
.
1
1
B
/
L
R
e
v
i
s
i
o
n
:
0
O
p
e
r
a
t
o
r
D
a
d
F-145

GLOSSARY
AktG .............................................. Aktiengesetz (German Stock Corporation Act).
BaFin............................................. Bundesanstalt für Finanzdienstleistungsaufsicht (Federal
Financial Supervisory Authority).
BauGB .......................................... Baugesetzbuch (German Federal Building Code).
BauNVO ........................................ Baunutzungsverordnung (German Federal Land Utilisation
Ordinance).
Best Ager ..................................... Term to describe ladies and gentleman who are older than 45
years
BGB............................................... Bürgerliches Gesetzbuch (German Civil Code).
bluO .............................................. bluO beta equity Limited, Kärntner Ring 5-7, A-1010 Vienna,
registered at Companies House Cardiff under 6697201.
Cross-selling ................................ Full utilisation of established customer relationships to achieve
additional product sales.
Convenience shopping............... Term to describe a form of shopping where consumers attach
particular importance to convenience when shopping.
Concession concept ................... Form of merchandising in textile retail where products of a fashion
company or a brand are displayed separately, both visually and
spatially, from products of other fashion companies or brands,
and the manufacturer specifies which furnishings but not which
rear walls and flooring are to be used.
Discount store ............................. Retailers whose overriding strategic objectives are to achieve
price leadership and cost benefits.
EBIT .............................................. Earnings before Interest and Taxes. The Company understands
this key company ratio to be its operating result.
EBITDA ......................................... Earnings before Interest, Taxes, Depreciation and Amortisation.
The Company understands this key company ratio to be its EBIT
before amortisation of intangible assets and depreciation of
property, plant and equipment.
E-commerce ................................. Purchase and sale of goods and services over the Internet.
EU.................................................. European Union.
Fashion follower.......................... A concept where the fashion company does not generally attempt
to create new trends with its new collections, but rather promptly
adapts promising new trends in its collections. Also describes
persons who do not react to fashion trends until they have been
accepted and are commonly seen in public and in the media.
Sales density ............................... Sales revenue per square metre of ‘‘net sales area’’ (sales floor
according to the rental agreement less fitting rooms, cash
registers, lounges, shop windows).
Frequency..................................... In retail, this refers to the number of customers in a certain period.
Frequency can be measured for the location as well as for the
individual departments of the store.
Large-space retail concept......... In textile retail, stores with a sales area of more than 800 m 2 .
HGB............................................... Handelsgesetzbuch (German Commercial Code).
IDW................................................ Institut der Wirtschaftsprüfer in Deutschland e.V. (Institute of
Public Auditors in Germany), Düsseldorf.
Coordinates department ............. Form of merchandising used in textile retail where various
compatible products (e.g. trousers, jumpers and jackets) are
offered within one department.
International Financial
Reporting Standards (IFRS) .......
A
c
1
0
4
7
0
8
p
u
1
0
0
P
r
o
o
f
7
:
2
7
.
5
.
1
1
B
/
L
R
e
v
i
s
i
o
n
:
0
O
p
e
r
a
t
o
r
D
a
d
Firstly, the generic term for all accounting provisions promulgated
by the International Accounting Standards Committee. Secondly,
accounting provisions newly adopted by the International
G-1

Lean management.......................
Accounting Standards Board (IASB) since 2003. The provisions
adopted until 2002 continue to be published as International
Accounting Standards (IAS). The IASs shall only be renamed as
IFRS in the case of fundamental changes to the provisions of
already existing standards.
Management approach characterised in particular by the basic
principles of decentralisation and parallel processing, with the aim
of bringing about a stronger customer orientation while
Store .............................................
consistently lowering costs for management as a whole.
An individual branch of Adler.
Multi-channel strategy ................ Selling of products via a number of different distribution channels.
Multi-format strategy................... Image and product promotion using various media.
NOS items .................................... Abbreviation for Never-Out-of-Stock items. These are items that
are always in stock and which are automatically replenished when
they sell out.
One-stop-shopping...................... Expression used to describe the possibility for customers to
satisfy a number of complementary needs, due to a retailer’s
broad and extensive product range.
Online shop ................................. A company’s trading platform on the Internet that enables
customers to view, order and pay for products online.
Point of sale ................................ Place of sale, at which customers have direct contact with the
merchandise and can be targeted with sales promotion measures
to encourage impulse buys.
Retail park .................................... Areas in locations on the outskirts of towns and cities, where
branches of different retail chains are situated, with adjacent
parking facilities.
RFID .............................................. Abbreviation of radio-frequency identification. This is an
Shop-in-shop................................
electronic goods tracking and tagging system.
Form of merchandising in textile retail where products of a fashion
company or a brand are displayed separately, both visually and
spatially, from products of other fashion companies or brands,
and the manufacturer specifies which furnishings and which rear
walls and flooring are to be used.
Socialwear .................................... Clothing that has been manufactured in compliance with certain
social and ecological standards.
Core department.......................... Form of merchandising in textile retail where different versions of
the same product (e.g. trousers, jacket) are offered in greater
depth, frequently sorted by size, colour or fabric.
Testimonial................................... The term testimonial is an advertising term that refers to the
specific recommendation – to increase the credibility of the
advertising message – of a product, a service, an idea or an
institution by a person who is usually known to the target group.
Tex-Store ...................................... Software that enables closer integration of design, purchasing
and visual merchandising.
Value-for-money supplier ........... Supplier of high-quality products with an attractive price-
Visual merchandising .................
performance ratio.
Collective term used to describe visual measures taken to
promote sales at the final point of sale. Visual merchandising
includes, for example, the store construction, the presentation of
goods, the design of the sales area and the arrangement of goods
or advertising materials.
WpHG............................................ Wertpapierhandelsgesetz (German Securities Trading Act).
WpPG............................................ Wertpapierprospektgesetz (German Securities Prospectus Act).
A
c
1
0
4
7
0
8
p
u
1
0
0
P
r
o
o
f
7
:
2
7
.
5
.
1
1
B
/
L
R
e
v
i
s
i
o
n
:
0
O
p
e
r
a
t
o
r
D
a
d
G-2

RECENT DEVELOPMENTS AND OUTLOOK
In the first few months of the 2011 financial year, Adler was able to follow on from the positive
developments in the 2010 financial year. It should be noted here that sales, profits and financing
requirements in the textile industry are subject to seasonal fluctuations. For example, sales and
profits in the first six months of the calendar year, especially in the first quarter, are generally lower
than in the third and fourth quarters of the calendar year. In addition, there is an increased need
for financing due to annual peak periods for purchases of goods in February and March (and again
in August and September). Given that Adler’s financial year corresponds to the calendar year and
therefore begins on 1 January 2011 - in contrast to the financial year of certain other companies in
the textile industry - these effects have a negative impact on the first quarter of Adler’s financial
year, which is completely compensated for particluarly by the second and fourth quarter. Therefore
Adler realised a consolidated net loss for the first quarter of past financial years and the current
financial year. However, this loss decreased again significantly from c12,314 thousand in the first
quarter of financial year 2010 to a loss of c8,850 thousand in the first quarter of financial year
2011. At the same time, Adler’s net indebtedness increased from c63,525 thousand as at 31
December 2010 to c98,793 thousand as at 31 March 2011 due to seasonal factors. This increase
in net indebtedness was offset by an increase in inventories from c56,749 thousand as at 31
December 2010 to c78,281 thousand as at 31 March 2011.
As Adler’s gross profit margin on merchandise improved, it increased its revenues by 9.1% from
c84,249 thousand in the first quarter of financial year 2010 to c91,906 thousand in the first quarter
of financial year 2011. This development is particularly noteworthy given the fact that revenues
generated in the week preceding Easter are usually higher; in financial year 2010, these pre-Easter
revenues were generated in the first quarter while in financial year 2011 they were not recorded
until the second quarter, and thus will be reported for the first time in the semi-annual report.
Revenue and profit increased year-on-year, a development which persisted into the first quarter of
the 2011 financial year. Adler expects to generate a significantly positive result as compared to the
first quarter of 2010, with a revenue increase in at least the high single-digit percentage range.
To date in financial year 2011, Adler has expanded its store network by an additional four stores.
In addition, leases have already been signed for several stores in additional locations. The
Company is currently negotiating leases for additional stores. Adler plans to continue to expand its
store network throughout financial year 2011, as well as to upgrade a large number of stores and
to expand its offering of selected external brands into additional stores under the shop-in-shop
model. Adler expects further sales growth in 2011 as a result of these measures, its own
sportswear brand, ‘‘Eibsee’’, which was successfully launched towards the end of the first quarter,
and the growing acceptance of its online shop.
With regard to costs, prices are rising, particularly as a result of high global prices for cotton. To
date, Adler has successfully compensated for this price increase by raising its sales prices and is
of the opinion that it will be able to continue to do so in the future in case of further price increase,
although the global prices for cotton has been falling since March 2011. As far as personnel
expenses are concerned, Adler benefited from a company internal wage agreement concluded at
the end of 2010, however this has to be seen in light of an increase in staff numbers as a result
of the Company’s expansion. The costs of the IPO could constitute an additional burden on profit,
with the share of costs attributable to the New Shares intended to be sold pursuant to the Offering,
less the associated income tax benefits, being recognised directly in equity.
Provided that there are no notable negative effects on Adler’s procurement and sales and provided
any further increases in the price of cotton can continue to be offset by higher sales prices, and
assuming that the newly opened stores make their budgeted contribution to profits in the 2011
financial year already, the Company believes that Adler can increase its sales in the remainder of
the 2011 financial year compared to the previous year and thus also improve its profits.
On 1 March 2011, the shareholders’ meeting resolved to reorganise the Company as a stock
corporation under German law. This reorganisation took effect when it was registered in the
commercial register on 17 March 2011.
There have been no material changes to Adler’s financial condition and results of operations since
the end of the last reporting period for which financial information is published in this Offering
Memorandum, i.e. since the end of 31 March 2011, to the date of this Offering Memorandum.
A
c
1
0
4
7
0
8
p
u
1
1
0
P
r
o
o
f
7
:
2
7
.
5
.
1
1
B
/
L
R
e
v
i
s
i
o
n
:
0
O
p
e
r
a
t
o
r
D
a
d
A-1

Haibach, Paris, 27 May 2011
A
c
1
0
4
7
0
8
p
u
1
2
0
P
r
o
o
f
7
:
2
7
.
5
.
1
1
B
/
L
R
e
v
i
s
i
o
n
:
0
O
p
e
r
a
t
o
r
D
a
d
Adler Modemärkte AG
signed Lothar Schäfer signed Jochen Strack signed Thomas Wanke
CREDIT AGRICOLE
CORPORATE AND INVESTMENT
BANK
signed Sylvia M. Seignette signed Peter Thomas
U-1

[This page intentionallay left blank]

[This page intentionallay left blank]

[This page intentionallay left blank]