Notes to the consolidated balance sheet
and profit and loss account
in thousand €, unless otherwise stated
- 1. Tangible fixed assets
Land
Buildings
Other fixed operating assets
Total
Book value 1 January 2013
5,460
3,878
21,598
30,936
Investments
-
-
4,353
4,353
Currency adjustment
-
-
(12)
(12)
Disposals
-
-
(803)
(803)
Depreciation
-
(363)
(7,511)
(7,874)
Impairment
-
-
(1,009)
(1,009)
Book value 31 December 2013
5,460
3,515
16,616
25,591
Accumulated depreciation
-
5,599
70,111
75,710
Accumulated revaluation
(3,797)
-
-
(3,797)
Purchase price
1,663
9,114
86,727
97,504
Book value 1 January 2014
5,460
3,515
16,616
25,591
Investments
-
79
11,293
11,372
Currency adjustment
-
-
17
17
Disposals
-
-
(1,002)
(1,002)
Depreciation
-
(354)
(6,735)
(7,089)
Book value 31 December 2014
5,460
3,240
20,189
28,889
Accumulated depreciation
-
5,953
72,550
78,503
Accumulated revaluation
(3,797)
-
-
(3,797)
Purchase price
1,663
9,193
92,739
103,595
The revaluation relates to the company land at Uden and Hoogeveen and the land forming part of retail properties owned. These properties are located in the Dutch cities of Elst, Den Helder, ’s Hertogenbosch and Uden. This land was revalued on 11 December 2012 by an independent valuer.
In the company’s judgment, the fair value has not changed significantly since the last valuation.
The writedown included in the statement of movements for 2013 relates to the tangible fixed assets of the Dutch and Belgian Matrassen Concord stores and the Slaapgenoten stores. The recoverable value relating to the capitalised tangible fixed assets at these stores is estimated at zero, and the carrying amounts of the tangible fixed assets of the Dutch and Belgian Matrassen Concord stores and the Slaapgenoten stores were accordingly written down to zero.
The tangible fixed assets are intended for own use.
- 2. Intangible fixed assets
2014
2013
Book value 1 January
2,833
2,855
Investments
1,839
1,086
Disposals
(2)
(3)
Depreciation
(1,153)
(1,057)
Impairment
-
(48)
Book value 31 December
3,517
2,833
Accumulated depreciation
4,839
3,748
Purchase price
8,356
6,581
The intangible operating assets consist mainly of licenses and software.
The writedown included in the statement of movements for 2013 relates to the intangible fixed assets of the Dutch and Belgian Matrassen Concord stores and the Slaapgenoten stores.
- 3. Long-term accounts receivable
The deposits in connection with the rent of stores are presented as financial fixed assets given the long term nature of these receivables.
- 4. Stocks
This comprises stocks held in stores to the value of € 47,923 (2013: € 50,043) and stocks held in warehouses to the value of € 5,558 (2013: € 5,506). The write-down for possible obsolescence included in this item can be specified as follows:
2014
2013
Balance at 1 January
2,357
1,863
Additions
82
1,038
Withdrawals
(766)
(544)
Balance at 31 December
1,673
2,357
The provision is determined taking account of the quantity of goods withdrawn from the range or returned to suppliers.
Within the additions included in the statement of movements € 643 relates to the writedown of the stocks of the Slaapgenoten stores and the Dutch and Belgian Matrassen Concord stores set to be closed. The provision of € 772 recognised in 2013 for these stores was nil at year-end 2014.
- 5. Debtors
All the accounts receivable fall due within less than one year and are carried at amortised cost price which is equal to the nominal value. Sales in stores and deliveries are settled in cash. Receivables relate mainly to receivables due from wholesale customers and trade receivables arising from agreed bonuses. A provision of € 60 (2013: € 91) is recognised for wholesale accounts receivable. This is 44.9% (2013: 100%) of the overdue receivables.
- 6. Cash and cash equivalents
This item relates to the cash, cheques and bank balances. The amount is composed as follows: cash € 260 (2013: € 272), bank balances € 19,361 (2013: € 6,340) and cash in transit € 1,262 (2013: € 2,942).
- 7. Equity
The movements in the equity items are shown in the consolidated equity movement overview. The company’s authorised share capital amounts to € 2,000, divided into 100 million ordinary shares with a nominal value of € 0.02.
Movements in the number of issued and fully paid-up shares and movements in the number of shares in portfolio are shown below:
2014
2013
Issued and paid-up shares as at 1 January
21,805,117
21,805,117
Share issue on exercise of employee stock options
100,445
-
Issued and paid-up shares as at 31 December
21,905,562
21,805,117
Shares in portfolio as at 1 January
23,805
75,805
Repurchased during the year
-
-
(Re)issue on exercise of options
(21,082)
(2,000)
Sale of shares in portfolio
-
(50,000)
Shares in portfolio as at 31 December
2,723
23,805
A total of 121,527 shares were sold at a price of € 15.23 with a view to the exercise of employee stock options, resulting in an increase of equity by € 1,851.
The shares in portfolio have not yet been cancelled and therefore not been deducted from the number of issued and paid-up shares. These repurchased shares are no longer included in the earnings per share calculation.
The revaluation reserve relates to company land.
A proposal will be submitted to the Annual General Meeting of Shareholders to distribute a final dividend in cash of € 0,37 per share. The total dividend for 2014 will therefore amount to € 0.65 per share (2013: € 0.27).
- 8. Provisions
The formula portfolio in the Benelux was streamlined in 2014. The strategic focus is on the Beter Bed and Beddenreus formulas. The operations of the Matrassen Concord the Netherlands and Belgium and Slaapgenoten formulas were therefore discontinued in the course of 2014.
A provision for onerous contracts has been formed for the long-term leases relating to the stores of these two formulas.
This can be broken down as follows:
2014
2013
Balance at 1 January
4,542
-
Additions
-
4,542
Withdrawals
(1,885)
-
Releases
(602)
-
Balance at 31 December
2,055
4,542
Of which short-term (in other liabilities)
804
1,864
Total provision for onerous rental contracts
1,251
2,678
The provision for onerous rental contracts is based on the rent and the remaining term, taking account of a subletting probability and a mark-up for service costs.
- 9. Long-term obligations
The deferred tax liabilities relate to the differences between the valuation of stocks and fixed assets, including company land, in the Netherlands, Germany and Switzerland for tax and financial reporting purposes. This difference is long-term in nature.
The movements in this item in 2014 and 2013 are as follows:
2014
2013
Balance at 1 January
2,424
2,400
Over profit and loss account
(206)
24
From equity
-
-
Balance at 31 December
2,218
2,424
Within deferred tax liabilities at the end of the financial year € 949 (2013: € 949) relates to the revaluation of company land and € 614 (2013: € 731) to the difference between the valuation of stock for tax purposes and for financial reporting purposes; € 655 relates to the difference between the valuation of the tangible fixed assets for tax purposes and for financial reporting purposes (2013: € 744).
A loan of € 10.0 million at a fixed rate of interest of 4.75% was entered into in mid-June 2009. The loan has a term of five years and will be repaid in monthly instalments. The annual repayment obligation of € 2.0 million is paid from current cash flows. This loan was repaid in full in June of this year.
- 10. Current obligations
To fund the group the company has current account facilities totalling € 42.8 million at its disposal. Furthermore, facilities totalling € 7.2 million are available for providing guarantees.
For the purpose of the current account facilities, the company and its subsidiaries have undertaken not to encumber their assets with any security rights without the prior consent of the credit providers.
The above-mentioned current account facilities include a committed facility in the amount of € 20.0 million, which will expire on 31 July 2015. As security for the committed facility, mortgages have been provided for the Uden and Hoogeveen distribution centres and for the Den Helder store premises. The main conditions of the account overdraft facilities are a minimum solvency rate of 25% and a maximum net interest-bearing debt/EBITDA ratio of 2.5.
At the end of the year under review, the current account facilities were only used for providing bank guarantees, mainly for the purpose of rent payments in the amount of € 0.7 million (2013: € 0.8 million). Of the facilities available specifically to provide guarantees, a total of € 6.1 million was in use at year-end 2014 (2013: € 5.5 million).
The other liabilities include a pension liability for a former employee of € 1.4 million (2013: € 1.3 million), calculated on an actuarial basis.
- 11. Financial obligations
The financial obligations can be specified as follows:
up to 3 months
3 to 12 months
1 to 5 years
2014
Accounts payable
17,517
-
-
Credit institutions
-
-
-
Total
17,517
-
-
2013
Accounts payable
8,746
-
-
Credit institutions
4,475
500
-
Total
13,221
500
-
The market value of the financial obligations is roughly equal to amortised cost.
- 12. Information by geographic area
Revenue by country
2014
%
2013
%
Germany
213,159
58
201,114
56
The Netherlands
109,203
30
114,984
32
Other countries
42,660
12
41,852
12
Intercompany adjustment
(1,069)
-
(587)
-
Total
363,953
100
357,363
100
(In)tangible fixed assets by country
2014
2013
The Netherlands
19,361
13,774
Germany
10,194
12,312
Other countries
2,851
2,338
Total
32,406
28,424
- 13. Wage and salary costs
The following wage and salary components are included in the operating expenses:
2014
2013
Wages and salaries
74,637
71,739
Social security costs
13,371
13,141
Pension costs
2,289
2,590
Employee stock options
(439)
(101)
Total
89,858
87,369
The pension contributions relate virtually exclusively to defined contribution schemes or schemes designated as such. Free fall for employee stock options, € 116 relate to the current and former members of the company’s Management Board (2013: € 83).
Average number of employees
All the companies included in the consolidation had an average of 2,388 employees (FTE) in 2014 (2013: 2,458):
2014
2013
Germany
1,558
1,561
The Netherlands
576
629
Spain
49
62
Austria
117
116
Switzerland
79
78
Belgium
9
12
Total
2,388
2,458
- 14. Option program
The options are long-term in nature and can be exercised providing that the profit target has been met. The costs of the option program are calculated using the Black & Scholes model. With effect from 2013, the costs of the options program are calculated using a combined model of Black & Scholes and Monte Carlo simulations. An overview of the details of the options granted and still outstanding, as well as the values employed in the Black & Scholes model, is provided hereafter.
The conditions have been changed with effect from the options series 2013. In the first three years after the award of the options granted, 33.3% of the options will vest annually if the ‘Total Shareholder Return’ (TSR = share price gains plus dividend distributed) of Beter Bed Holding N.V. exceeds the ‘Total Shareholder Return of the AScX, based on the year of the award. In addition, the employee is required to continue to be employed by the company for three years. Options can only be exercised if these conditions are met after three years. The previous options policy/options contract will continue to apply up to 2012 for options already granted.
From the 2013 series, this means that the calculation will be based on three different Black & Scholes values, risk-free interest rates and volatility percentages. The ranges of those percentages are set out in the table below.
2014
2013
2011
2010
2009
Number granted
166,700
166,500
218,000
218,000
218,000
Number outstanding
166,700
111,000
180,750
176,750
174,250
Value according to Black & Scholes
€ 1.78 - € 1.93
€ 1.26 - € 1.76
€ 1.58
€ 3.54
€ 3.20
Exercise from
19-5-2017
25-4-2016
28-10-2013
29-10-2012
28-10-2011
Exercise through
19-5-2019
25-4-2018
28-4-2017
29-4-2016
28-4-2015
Profit target (in millions)
-
-
€ 32.0
€ 32.0
€ 25.0
Profit target achieved in year
-
-
-
-
2010
TSR > AScX
No
No
-
-
-
Share price on the allotment date
€ 17.37
€ 14.09
€ 14.67
€ 19.07
€ 15.23
Exercise price
€ 17.37
€ 14.09
€ 14.67
€ 19.07
€ 15.23
Expected life
5 years
5 years
3.8 years
5.5 years
3.8 years
Risk-free rate of interest (%)
0.78 - 0.46
0.75 - 0.48
1.71
2.25
2.40
Volatility (%)1
27.50 - 21.94
31.93 - 30.19
32.15
40.40
48.00
Dividend yield (%)
5.20
5.90
9.00
7.35
5.00
- 1 Expected volatility is based on end-of-month closing prices for the most recent period with a length equalling the expected term with a maximum of five years.
A total of 121,527 options were exercised in 2014 at a price of € 15.23. This related to 121,527 options from the 2009 series. In 2014, another 39,575 options expired, as a number of employees holding options left the company before the expiration dates. No options expired in 2014 due to the expiry of their term. However, a portion of the options expired because the vesting conditions were not satisfied. The series concerned is the series 2013 part I. Lastly, 166,700 new options were granted in 2014. See the summary of option series outstanding.
- 15. Depreciation
2014
2013
Depreciation and impairment on tangible fixed assets
7,089
8,883
Depreciation and impairment on intangible fixed assets
1,153
1,105
Total of depreciation and impairment
8,242
9,988
The depreciation rates, which are based on the expected economic life, are as follows:
Company land
0%
Buildings
3.33%
Other fixed operating assets
10% - 33%
Software, licenses and other
10% - 33%
- 16. Other operating expenses
The other operating expenses comprise € 45.6 million in rental and lease costs (2013: € 53.0 million), with the remainder relating mainly to selling and distribution costs.
The Dutch and Belgian Matrassen Concord stores and the Slaapgenoten stores were closed in 2014. A provision for the costs to be incurred for this was recognised in 2013. In addition, a number of the stores of El Gigante del Colchón were closed in 2013 and a reorganisation of the Benelux head office was carried out. The costs incurred for these reorganisations and restructuring in 2013 totalled € 7.4 million.
- 17. Income tax expense
A tax asset is recognised at year-end 2014 under financial fixed assets of € 31 (2013: € 83) relating to future tax loss carryforwards.
The differences between the valuation of tangible fixed assets for tax purposes and for financial reporting purposes give rise to the recognition of a tax asset of € 323 (2013: € 321). The other differences between the tax and accounting bases of valuation totalled € 143 (2013: € 145).
An amount of € 7,623 (2013: € 6,390) in tax loss carry forwards is not recognised in the balance sheet, as their utilisation is currently assessed as being unlikely. These tax-offsettable losses are subject to the following terms:
Term
1 year
-
2 - 5 years
-
6 - 10 years
384
11 - 18 years
4,358
Infinite
2,881
The reconciliation between the tax liability and the results of the calculation of the profit before taxes, multiplied by the local tax rate in the Netherlands, was as follows on 31 December 2014 and 31 December 2013:
2014
2013
Profit before taxes
22,743
11,568
At the applicable legal rate of 25.0% in the Netherlands (2013: 25.0%)
5,686
2,892
Adjustment profits tax previous years
109
100
Permanent differences
(1,613)
(1,259)
Future loss set-off not included
407
939
Recognition of previously unrecognized deferred tax assets
-
(72)
Effect of the tax rates outside the Netherlands
1,294
770
At an effective tax rate of 25.9% (2013: 29.1%)
5,883
3,370
Profit tax in the consolidated profit and loss account
5,883
3,370
The item tax in the profit and loss account comprises the following:2014
2013
Tax for current year
5,929
3,344
Adjustment of profit tax for prior years
109
100
Temporary differences
(208)
(114)
Future tax loss carryforwards
53
40
Profit tax in the consolidated profit and loss account
5,883
3,370
- 18. Remuneration of the Management and Supervisory Board
In 2014 and 2013 the remuneration for the members of the Management Board is as follows:
A.H. Anbeek
B.F. Koops
D. van Hoeve
Total
2014
2013
2014
2013
2014
2013
2014
2013
Salary
323
323
200
166
-
49
523
538
Variable remuneration
169
97
85
45
-
-
254
142
Pension
97
97
50
38
-
-
147
135
Employee stock options
(125)
36
9
-
-
(119)
(116)
(83)
Social security charges
9
9
9
7
-
2
18
18
Lease car
13
13
16
12
-
4
29
29
Total
486
575
369
268
-
(64)
855
779
In 2014 and 2013 the remuneration for the members of the Supervisory Board is as follows:2014
2013
D.R. Goeminne
37
37
A.J.L. Slippens
23
23
E.A. de Groot
27
27
W.T.C. van der Vis
27
18
C.A.S.M. Renders
-
9
Total
114
114
The variable remunerations relate to the year in which they are classified and are included in the expenses of that year. For a detailed explanation, please refer to the remuneration report.
The costs listed under ‘Employee stock options’ represent the amount accounted for in the profit and loss account for that year.
The members of the Management Board and the Supervisory Board hold no shares or exercisable options on shares in Beter Bed Holding N.V.
- 19. Earnings per share
The net profit of € 16.9 million divided by the average number of outstanding shares totalling 21,854,740 equals to an earnings per share of € 0.77. Due to the option series outstanding, the number of shares used for the calculation of the diluted earnings per share is equal to 21,900,404. This results in diluted earnings per share of € 0.77.
- 20. Commitments not included in the balance sheet
The company has entered into long-term rental and lease obligations concerning buildings and other operating assets. The minimum obligation on the balance sheet date can be shown as follows:
Duration
2015
2016
2017
2018
2019
after 2019
Rental agreements
38,635
26,131
16,168
9,418
6,061
1,756
Lease agreements
2,012
1,348
737
355
127
150
Total
40,647
27,479
16,905
9,773
6,188
1,906
The majority of the rental agreements for the company premises required for the Beter Bed formula are long-term agreements (between five and ten years), with options for renewal. The majority of the rental agreements for the Matratzen Concord formula have been concluded for a period between five to ten years, whereby a clause has been included stipulating that the agreements can be terminated without charge within the first two years.
In the year under review amounts of € 43.1 million (2013: € 50.5 million) arising from rental agreements for real estate and € 2.5 million (2013: € 2.5 million) arising from lease agreements have been recorded in the profit and loss account.At year-end 2014, the Wonen Industrial Pension Fund for the Home Furnishings Industry had a funding ratio of 111.2% (year-end 2013: 101.1%). As at 31 December 2014, the company had no additional obligation.
- 21. Related parties
The companies listed in principles of consolidation are included in the consolidation of Beter Bed Holding N.V. and its participating interests.
The financial relationships between Beter Bed Holding N.V. and its participating interests consist almost fully in receiving dividends and receiving interest on loans provided.
- 22. Post-balance sheet events
No events that are required to be disclosed occurred in the period between the end of the year under review and the preparation of these financial statements.