Herlitz business development steady and within expectations.

The measures implemented in the previous year have laid the foundations for a steady financial year 2010. The first quarter of 2010 developed according to expectations.
 
Sales revenues of Herlitz Group for the period between 1 January and 30 March of the current financial year were below those of the previous year. This was as intended and the result of focusing on the brand business as part of the Group’s strategy. The sale of the soft plastic business and the further reduction of discounts and bulk orders were particularly important in this context. The share of brand products in sales revenues therefore rose further, improving the gross profit margin in turn. In addition, there is a current slump in demand from the international commercial office supplies business.

Compared to the same period in the previous year, the Group achieved considerable savings, particularly in personnel expenses by implementing the structural changes described above and additional measures. The cost structure’s increased flexibility has a positive effect if the sales level is varying.

Other operating income fell significantly year on year due to the sale of the Czech subsidiary proOFFICE s.r.o. at the beginning of the year 2009.

Between January and March 2010, Herlitz Group generated operating losses (EBIT). Savings did not entirely compensate for the income received from the company sale in the previous year, which was missing in the current period. The operating result of the first quarter of 2010 is therefore lower than in the same quarter in 2009.

Due to the seasonal nature of the stationery and office supplies business, Herlitz Group usually does not achieve a positive EBIT at the beginning of a year.

Even after deducting interest and taxes, and despite the slightly better financial result due to lower debt, the result for the period was negative.

The sales revenues and earnings developments for the first three months of the year continued in April and the first half of May.

The national and international stationery and office supplies industry has not yet recovered from the economic and financial crisis, which will prove to be an incalculable risk to business developments in the coming months. Herlitz Group is facing these challenges by focusing its business and increasing the flexibility of its cost structure on a stable financing base.

It is still uncertain to which degree opportunities can already be derived from the merger with the Pelikan Group in the current financial year.

The assets and financial position of Herlitz Group has not changed significantly compared to the explanations in the 2009 Group Management Report. The statements on the future development of the assets, financial and earnings position, especially those contained in the risk and prognosis report, remain valid.

Berlin, 14 May 2010

Herlitz Aktiengesellschaft, Berlin
The Management Board