HEMA
annual report 2013
HEMA B.V.
annual report 2013
This annual report is adopted by the general meeting of shareholders on April 25, 2014.
Registration number Chamber of Commerce (‘Kamer van Koophandel’) 34215639.
HEMA is expanding. In this annual report we take you briefly along our countries and stores in Europe.
contents
financial highlights 2006 – 2013
5
message to our stakeholders
9
report from the management board
11
financial results
17
outlook 2014
21
report from the supervisory board
23
corporate governance
27
financial statements
31
consolidated income statement
32
consolidated statement of comprehensive income
33
consolidated statement of financial position
34
consolidated statement of changes in equity
35
consolidated statement of cash flow
36
consolidated shareholder funding
38
notes to the consolidated financial statements
41
company financial statements
85
company income statement
86
company balance sheet 87
notes to the company financial statements
89
other information
101
events after reporting date
101
independent auditor’s report
103
statutory appropriation of the result
107
cautionary notice
109
contact information
110
the Netherlands
since 1926
528 stores
The Netherlands is our home market. From the head office,
located in Amsterdam, there are direct lines to the stores, the
distribution centre and the bakeries.
favourite products
smoked sausage, cotton pads, organic t-shirts
financial highlights
2006 – 2013
5
The graphs below show the financial highlights of HEMA B.V. (‘HEMA’ or the ‘Company’) for the year 2006 up
to and including 2013. The financial years 2007 and 2012 cover 53 weeks, the other years consist of 52 weeks.
Before July 6, 2007, HEMA was part of Maxeda and accordingly the financial information for 2006 and 2007
as set forth in this paragraph is pro-forma financial information and covers a full financial year of 52 and 53
weeks respectively.
€ mln
1750
1500
1250
1000
750
500
250
0
1,363
1,446
1,510
1,566
1,624
1,662
1,650
1,578
2006
2007
2008
2009
2010
2011
2012
2013
gross sales
Gross sales are total sales to customers through HEMA’s own stores and to its franchisees.
€ mln
1200
1000
800
600
400
200
954
1,009
1,049
1,082
1,114
1,150
1,153
1,091
2006
2007
2008
2009
2010
2011
2012
2013
0
Net sales are gross sales minus value added taxes and rebates.
6
net sales
€ mln
175
150
125
100
75
50
25
operating EBITDA
92 58
113 77
132 91
140 98
156 111
155 105
141 85
119 60
2006
2007
2008
2009
2010
2011
2012
2013
operating income
0
Operating EBITDA is defined as operating income plus depreciation, amortisation, impairments and the annual
oversight fee.
# stores
700
600
500
400
300
355
404
457
504
555
601
638
666
2006
2007
2008
2009
2010
2011
2012
2013
stores
7
HEMA
bijzonder
gewoon maakt
HEMA makes the ordinary extraordinary
message to our
stakeholders
This year has been another exceptionally challenging year for the Dutch non-food retail sector due to a
decreasing number of in-store visitors in inner cities, extremely low consumer confidence and limited signs of a
structural recovery in the housing market. In this environment, HEMA invested substantially in its core business,
through significant investment in in-store refurbishments, e-commerce and launching new formats including
the HEMA stand-alone beauty store concept.
However, these commercial activities could not fully offset the decrease in consumer spending. As a result,
sales in our Dutch stores are lower than last year and profitability is under pressure. Importantly, HEMA’s
international markets have performed as anticipated and better than last year. Anticipations are that
the Dutch non-food retail sector will recover, but it will remain challenging in the near term. Sales in our
international markets and our on-line sales are projected to grow further. This evolving retail environment has
led HEMA to review, adapt and align its cost level to enable continued investment in clear and proven growth
opportunities.
In this tough economic climate, we had to work hard to drive sales. In the face of this challenge, we
nevertheless managed to make progress in our growth strategy, to grow stronger on internet and in France.
The decline in consumer confidence did, however, have a negative effect on our top line growth - our
operating EBITDA, which decreased from 141 million to 119 million and our operating income, which decreased
from 85 million to 60 million.
The retail environment is incredibly dynamic, and customers’ needs are changing faster than ever. Their lives
are hectic and they want convenience. They also expect a personalised shopping experience. There is a
growing focus on sustainability, and people expect to find the right choices and information to support and
inspire them while shopping and they want all of these things at an affordable price. This new reality demands
distinctiveness and innovation rather than low prices alone.
In view of the above, we are proud of the fact that our customers have proclaimed HEMA the most essential
brand for the sixth year in a row. During the past year we achieved more milestones.We successfully launched
the HEMA health insurance and the notary service. We opened a total of 29 new stores. We also opened our
first HEMA BEAUTY outside the Netherlands (Paris) and we recently opened our 28th store in France. As well as
the announcement of stores in England and Spain in 2014, we continued to pursue our ambition for growth
within Europe and explore new markets.
There are signs that the financial crisis is slowly coming to an end. Consumer confidence is growing once
again. We remain cautious in our outlook but we’re committed to delivering on our growth strategy abroad
and in ‘new’ countries like England and Spain. In a responsible way of course, and with great consideration for
the world around us. I strongly believe that HEMA will be indispensable to both existing customers and to new
customers if we remain true to our origins.Despite challenging times, HEMA remains committed and confident
in investing and improving the experience for its customers every day.
On behalf of the Management Board,
Ronald van Zetten
Chief Executive Officer
Amsterdam, the Netherlands, March 28, 2014
9
Belgium
since 1984
96 stores
Belgium is now HEMA’s second home market. In 2014, HEMA
hopes to achieve its 100th store milestone
favourite products
Jip & Janneke candy, bijoux, photo albums
report from the
management board
our mission
Since 1926, HEMA has been making people’s daily lives easier and more fun at affordable prices. We believe
that a happier and easier life should be affordable for everyone, no matter where they live or work, how old
or young they are, whatever the time of the day. 24 hours a day, seven days a week, when and where they
want it, whatever wishes they have.
This is why our stores offer only the best products and services for daily living with exceptional designs at
surprisingly low prices - a combination not found anywhere else. This is what makes us what we are. That’s
HEMA.
since 1926
Many years ago, when only wealthy people could afford to shop in department stores, Arthur Isaac and Leo
Meyer had a dream. They wanted to make life a little easier for people that had to live with very little. They
dreamt of a department store where people with a small income would be able to buy good quality products
for their daily lives at low prices.
On November 4, 1926, they opened their first Hollandse Eenheidsprijzen Maatschappij Amsterdam (Dutch
Standard Prices Company Amsterdam) in Amsterdam. HEMA: a store where people could buy products for
daily life at fixed prices of 10, 25 or 50 cents. A store offering simplicity, quality and low prices. Arthur and Leo’s
dream had become reality.
our ambition: rapid growth
Every week almost six million people visit our stores in Belgium, Germany, France, Luxembourg and the
Netherlands. This is the proof that exceptional simplicity transcends borders and that HEMA’s optimistic
message appeals everywhere.
This is why we keep opening new stores. We are doing our utmost to increase the turnover of our existing
stores and expand HEMA online. Thanks to this growth we are able to buy products at better terms, enabling
us to offer our customers lower prices.
store formats
Our store formats are designed to help our customers at any time of the day, no matter where they are.
Coming years, HEMA aims to become even more attuned with the rhythm of customers’ lives and their wishes.
We will adjust our store formats to suit them, including HEMA online. The objective is to give our customers
exactly what they want, wherever they are, day and night, seven days a week.
low prices
Coming years, low prices will be crucial , also at HEMA. This is why we want our prices to correspond even
better with the prices our customers are willing to pay. This applies not just to customers who look for good
quality at a good price, as well as customers who only look for the lowest price.
product range
For 87 years, HEMA has made everyday items something special. We believe that little things can make life
more fun. To make things easy for our customers, we select only the best products, test them ourselves and
sell them as our own brand. We want to be sure that every product in our stores is a real HEMA product that
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stands out because of its 100% exceptional simplicity. The best choice is there in our stores: from our well-known
HEMA heroes to all our surprising new products and services.
Every day we look for ways to make our products and services even better, at an even more attractive price.
That’s HEMA as well. The same goes for our customer service. If you are not satisfied with a HEMA product, for
any reason whatsoever, you can get your money back without any discussion.
our supply chain
We are always looking for new and better suppliers. We look for suppliers all over the world. In parts of the
world that are further away, we concentrate on suppliers of products that we sell a lot of all year round.
Closer to home, we look for suppliers who are able to supply products quickly in varying quantities.
HEMA’s objective is to achieve 100% availability of our products in our stores for our customers. This is why we
are constantly looking for ways to improve our supply chain: to reduce costs, reduce stocks and accurately
forecast the products our customers will buy in the future.
A perfect supply chain is essential for achieving rapid growth in Europe.
the HEMA spirit
Everything begins with our staff. Our people do ordinary tasks exceptionally well, every day. Their
involvement, pride, love and sense of responsibility give HEMA its human face. This applies to everyone: from
the Distribution Centre to the bakery, the stores and the head office. This is the HEMA spirit.
centre of society
HEMA is close to ordinary people and at the centre of society. We want to be good to our colleagues within
HEMA and we want to be good to the world around us. Therefore we fulfil our responsibilities towards people,
the environment and society. It’s all about making the world a little bit better and showing real responsibility.
a store for everyone
Our customers make HEMA what it is. A store where everyone feels at home. Something new every day, yet
very familiar. This is why people keep coming back to our stores. Society in miniature. Because HEMA will
always be HEMA, no matter where it is located.
milestones of 2013
■ HEMA app
June 2013, HEMA introduced the HEMA app for the smartphone. With this app customers can order products
directly, see the availibility on stock in the stores and online, and are able to scan the price.
■ health insurance
Besides car insurances, house insurances and travel insurances, HEMA now also offers healthcare insurances.
Anyone in the Netherlands can sign up to a clear, easy-to-understand and affordable insurance policy to
cover healthcare costs. In addition, anyone who switches to HEMA healthcare insurance gets a 10% discount
on almost everything at HEMA for a year.
■ notary service
On October 29, 2013, HEMA introduced the HEMA notary service. This new, online service can be used to draw
up a simple and affordable cohabitation contract or will in simple, understandable language.
■ customer centric DNA award
On April 18, 2013, we were presented with the “Customer Centric DNA Award” in the Retail category. According
to consumers, HEMA is constantly up to date and is known for its top quality products, all-inclusive design and
highly affordable prices. Apple and Ikea were also nominated in this category.
12
■ VROUW award
On June 11, 2013, HEMA was presented with two “Vrouw awards” by “De Telegraaf” in the categories website
and living. The nominees were initially selected by a panel of experts according to the following criteria:
accessibility, setting the tone, positive, recognisable and pure Dutch. 17,500 “Vrouw” readers then voted for
their favourite store.
The “Vrouw award” was set up by “De Telegraaf” for products and retail chains that improve the lives of women.
■ business award
The presentation of the “Business Awards Franse KvK” was held on Thursday evening June 13, 2013.
The French Ambassador, Pierre Ménat, presented HEMA a prestigious prize in the category Business
Development NL-FR.
■ Esprix award
On June 13, 2013, we were also presented with a bronze “Esprix Award”. In order to be eligible for an Esprix,
a campaign must demonstrably influence the behaviour of a target group. The jury looked at the intelligent
combination of strategy and creation. According to the jury, our online competition “make your own HEMA
roll” fulfilled these requirements.
■ European Business Award
In the context of the European Business Awards 2013/14, HEMA was nominated as “National Champion” in
the category “The Award for Customer Focus”. HEMA represented the Netherlands in this competition, along
with fifteen other nominees. If you consider that over 17,000 companies registered with the EBA admissions
committee, you will understand that this is a huge achievement. Winning an award remains a challenge. There
are 526 nominated National Champions, representing 31 countries from across Europe.
■ most indispensable brand
For the sixth year in a row, HEMA has been chosen by both men and women as the most indispensable brand.
EURIB (European Institute for Brand Management) asked thousands of consumers which particular brand in the
market place they would miss most.
■ ethnical female manager 2013
In November during the election of the “Businessclub Etnical Business Women” (EZVN), Iman Eddini, Head of HR
HEMA, was chosen as the “Ethnical Female manager 2013.”
■ Beauty Astir award 2013
HEMA won the “Beauty Astir Award” (the most prestigious beautyprice of cosmetic journalists in the
Netherlands) in the category “Best Fragrance Women” for the collection of fragrances “Today I feel…”
Following the report the jury was convinced that HEMA is developping the successformula for beauty (first
stand alone beautyshops, shop-in-shops) very well with the new collection of fragrences. Nice names selected,
nice bottles, and nice prices!
■ HEMA BEAUTY France
On September 4, 2013, HEMA opened the doors of the first HEMA Beauty in France. The store is located in the
Belle Epine shopping centre. With a surface area of 60 m2, customers can visit this store for make-up, skincare
products, inspiration and advice.
■ 28th store in France
On January 22, 2014, HEMA opened its 28th store in France at Arcueil la Vache Noire. Following the success
of HEMA stores in Northern France and the Paris region, this new store is a further step in fulfilling HEMA’s
ambitions for expansion in Europe.
■ lean and green STAR
The “Lean & Green Award and Star” presentation was held in Scherpenzeel on May 16. Intelligent route
planning, loading and improved warehouse heating meant that HEMA was able to fulfil the targets of the Lean
& Green programme: reducing CO2-emissions by at least 20% while simultaneously lowering costs in five years.
■ collaboration with stichting Fotoweek (Photo Week)
Under the title of “Fotoweek”, photographers, photography clubs, museums, photography stores, libraries,
13
book stores and all other people working with images, organised numerous activities for the Dutch public in
September. Through “Fotoweek”, HEMA reached a wide audience to publicise its photography products in an
exclusive and appealing manner.
■ royal visit
On October 1, 2013, Her Majesty Queen Máxima officially opened the third edition of the “Pensioen3daagse”
(3-day Pension Event) in the HEMA distribution centre. The “Pensioen3daagse” took place on 1, 2 and 3 October
2013 and its theme was: “Have you got your pension sorted out?” During this 3-day event, activities to give
people an insight into their pensions are organised throughout the country. The Pensioen3daagse is an
initiative of the national platvorm “Wijzer in geldzaken” (Wiser in Money Matters).
■ best chain store for Baby and Children’s fashion
During the ABN AMRO Best Chain store Event 2013, HEMA was hailed as the best in the category Baby and
Children’s fashion. 269 other retail chains competed in the survey.
■ 200,000 Facebook Fans
On Friday November 1, 2013, we were delighted to welcome our 200,000th “like” on Facebook. This means that
200,000 people have indicated they are fans of HEMA.
■ library and HEMA
Free online courses with your library card. From December 12, 2013, all library members in The Netherlands are
offered the opportunity to develop themselves for a year, thanks to three online course packages provided
by HEMA.
14
15
we geloven
in het plezier
van kleine
dingen
we believe in the small things in life
financial results
(all amounts in million euros)
In 2013 net sales were under pressure and decreased with 5.3% to 1,091.3. On a comparable basis, 2012 had an
additional 53rd week, net sales decreased with 3.6%. In total 29 new stores were opened, of which 13 in France.
Operating EBITDA (i.e. earnings before interest, taxes, depreciation and amortisation) was 21.7 lower versus
2012. 2013 depreciation and amortisation was 3.9 higher than last year, resulting in an operating income of
59.7 (2012: 85.1). As a result of an amend and extend of the borrowings, interest rates were higher, leading to
5.6 higher cash interest (refer to note 16 for more information). The net result for 2013 was 22.2 lower than 2012,
resulting in a net loss of 16.4 (2012: 5.8 profit).
The net cash position increased with 13.6 in 2013. The lower EBITDA was offset by lower capital expenditures
versus last year and a positive movement of working capital. The positive cash flow of 13.6 is including a
repayment of borrowings of 18.3 (2012: 7.8).
Net sales, operating EBITDA and operating income are as follows:
(in million euros)
net sales
operating EBITDA
operating margin (operating EBITDA /net sales)
operating income
2013
2012
% change
(restated)*
1,091.3
1,152.9
(5.3%)
119.0
140.7
(15.4%)
10.9%
59.7
12.3%
85.1
(29.9%)
*) The restatement has an impact of 0.8 on operating income. Refer to note 2.1.1, IAS 19, for more information.
Finance costs and net profit are as follows:
(in million euros)
2013
2012
€ change
(restated)*
operating income
59.7
85.1
(25.4)
net cash interest
(39.7)
(34.1)
(5.6)
deferred interest and amortisation of financing costs
(36.7)
(37.5)
0.8
total finance costs
(76.4)
(71.6)
(4.8)
0.3
(7.7)
8.0
(16.4)
5.8
(22.2)
Income taxes
net (loss) / profit
*) The restatement has an impact of 0.6 on net profit. Refer to note 2.1.1, IAS 19, for more information.
In 2013, 39.7 in net cash interest was paid on bank loans (compared to 34.1 in 2012). In addition, 36.7 was
accrued for deferred financing costs (compared to 37.5 in 2012). These deferred financing costs primarily
comprise interest on the shareholder loan, which is added to the principal amount. As a result, total financing
costs (both cash and deferred) amounted to 76.4.
17
The net cash flow can be summarised as follows:
(in million euros)
2013
2012
(restated)*
€ change
operating cash flow before changes in working
capital
117.2
138.7
(21.5)
change in working capital
23.5
24.3
(0.8)
investments in capital expenditure
(59.6)
(80.7)
21.1
financing
(66.3)
(43.0)
(23.3)
(1.2)
(11.4)
10.2
13.6
27.9
income taxes
net cash flow
(14.3)
*) The restatement has an impact of 0.6 on operating cashflow and 0.6 on working capital. Refer to note 2.1.1, IAS19, for more information.
Investments, excluding investments in financial lease, in 2013 totalled 59.6 (2012: 80.7). HEMA substantially
invested in 25 new own operated stores, improvement and maintenance of existing stores, e-commerce and IT.
At year-end 2013, HEMA had cash and cash equivalents of 175.9 and 70 in unused working capital facility,
resulting in total available cash of 245.9, compared to 232.3 at year-end 2012. HEMA is able to finance all
investments from the net cash flow generated by the company. As a result of the amend and extend, from July
2014 the working capital facility will decrease from 70 to 55.
Financial position is as follows:
(in million euros)
capital employed (fixed assets plus net working
capital)
shareholder funding (at year-end)
shareholder funding as a % of capital employed
2013
2012
1,416.4
1,415.4
1.0
530.6
515.9
14.7
37.5%
€ change
36.4%
Including intangible assets, HEMA’s capital employed totalled 1,416.4 at year-end 2013, 37.5% of which was
funded by the shareholder. At year-end 2013, shareholder funding consist of 337.5 in equity and 193.1 as a loan
from the shareholder. Interest on the shareholder loan is deferred (i.e. is added to the principal amount). In
addition, the shareholder loan is subordinated to all current and future obligations of HEMA.
18
19
Germany
since 2002
10 stores
Germans get particular pleasure from the colourful designs
of HEMA’s products. Customers become fans once they
discover that HEMA products are not only reasonably priced
and well designed, but also of good quality.
favourite products
candle lights, coffee pads, baby bodies
outlook 2014
Fortunately there are signs that the financial crisis is slowly coming to an end. Consumer confidence is growing
again, however consumers will remain reserved in retail spending. Therefore we remain cautious in our
outlook, but we are committed to delivering on our strategy, with the opening of at least 25 stores in 2014, of
which a significant number in France and in ‘our new countries’ Spain and England.
Besides opening stores abroad, we are convinced that e-commerce continues to grow in both products and
services. Consumers are becoming more accustomed in switching between shopping on- and offline. The
customer of the future requires an eminent shopping experience and expects service to be a top priority, both
in stores as on the internet. Despite challenging times, HEMA remains committed and confident in investing and
improving the experience for its customers every day!
Amsterdam, the Netherlands, March 28, 2014
21
besonderes Design
und niedrige
Preise
excellent quality, exceptional design and low prices
hohe Qualität,
report from the
supervisory board
HEMA’s Supervisory Board is a corporate body responsible for supervising and advising the Board of
Managing Directors in performing its management tasks. In carrying out its duties, the Supervisory Board is
guided by the interests of the Company and its business.
The Supervisory Board has adopted rules of procedure, including a profile as to its size and composition. The
Supervisory Board is responsible for monitoring and assessing its own performance.
composition of the supervisory board
In accordance with its rules of procedure, the Supervisory Board aims for an appropriate combination of
knowledge, experience and expertise among its members in relation to HEMA’s business. The independence
of its members best enables the Supervisory Board to carry out its responsibilities.
The Supervisory Board of HEMA consists of four members. There were no changes during the year 2013. In April
2013, the Annual Meeting of Shareholders approved the decision of the Supervisory Board to reappoint Mr.
Moberg for another four year term.
The Supervisory Board does not consist of at least 30% women. The current members have been appointed
based on their qualities, and they were the best possible candidates for the function of Supervisory Board
member at the time of appointment. In the future, as in the past, the Supervisory Board will continue to
consider female candidates for the position of Supervisory Board member of HEMA, as well as male
candidates, in case a new member needs to be appointed.
reappointment schedule
name
date of birth
date of initial
appointment
date of possible
reappointment
gender
Robert Darwent
October 12, 1972
July 6, 2007
April 2016
male
Mary Minnick
November 27, 1959
July 6, 2007
April 2016
female
Dolf Collee
October 24, 1952
April 1, 2008
April 2016
male
Anders Moberg
March 21, 1950
April 8, 2009
April 2017
male
23
meetings of the supervisory board
In 2013 the Supervisory Board held six meetings either in person or via conference call. None of its members
were absent from these meetings. During three meetings the independent external auditor attended to discuss
internal and external control as well as the endorsement of the financial statements and the audit thereof.
The members of the Supervisory Board have regular contact with the CEO, CFO and other members of the
Management Board of HEMA outside the scheduled meetings of the Supervisory Board.
activities of the supervisory board
The Supervisory Board devotes considerable time to discuss HEMA’s strategy with the Management Board of
HEMA, including objectives, associated risks and mechanisms for controlling financial risks. Furthermore, the
Supervisory Board reviews and approves quarterly and annual financial statements and annual budgets.
Other topics of discussion included the performance and the remuneration of the Board of Managing
Directors, risk management, international expansion, supply chain and the financing of HEMA. Regular agenda
items included the financial and operational performance, price development and the general course of
business.
members of the supervisory board
Robert Darwent (1972)
Mr. Robert Darwent was first appointed as member and chairman of the Supervisory Board on July 6, 2007,
and has remained in this position since then. The decision made by the Supervisory Board to reappoint Mr.
Darwent was approved by the Annual Meeting of Shareholders in April 2012.
Mr. Darwent is a founding partner of Lion Capital. In the past Mr. Darwent was employed by private equity firm
Hicks, Muse, Tate & Furst and by the private equity group of Morgan Stanley. Mr. Darwent currently serves as
Board member for Weetabix, AS Adventures, and All Saints being other investments held by Lion Capital. Mr.
Darwent is a British citizen residing in the United Kingdom.
Mary Minnick (1959)
Ms. Mary Minnick was first appointed as member and vice-chairman of the Supervisory Board on July 6, 2007,
and has remained in this position since then. The decision made by the Supervisory Board to reappoint Ms.
Minnick was approved by the Annual Meeting of Shareholders in April 2012.
Ms. Minnick is a partner of Lion Capital. In the past Ms. Minnick held various management and marketing
positions with the Coca-Cola Company. Ms. Minnick currently serves as Board member for Target Corporation
(a US based retailer), Heineken, WhiteWave Foods and Ad van Geloven, the latter being another investment
held by Lion Capital. Ms. Minnick is a US citizen residing in the United Kingdom.
Dolf Collee (1952)
Mr. Dolf Collee was first appointed as member of the Supervisory Board on April 1, 2008, and has remained
in this position since then. The first appointment of Mr. Collee was made in accordance with the enhanced
right of recommendation of the works counsel. The decision made by the Supervisory Board to reappoint Mr.
Collee was approved by the Annual Meeting of Shareholders in April 2012.
Mr. Collee is Chairman of HEMA’s Audit Committee. Mr. Collee is currently a consultant. In the past Mr. Collee
was amongst others a member of the Managing Board of ABN AMRO Bank and a member of the Board of
VNO-NCW. Mr. Collee currently serves as a Supervisory Board member for Ewals Cargo B.V., Ajax N.V., Arena
N.V., Central Industrial Group N.V., Abis Shipping B.V., Conhold B.V. and Wealth Management Partners N.V.
Furthermore Mr. Collee is member of the Investment Committee of Project Holland Fonds and adviser of ITDS
B.V. Mr. Collee is a Dutch citizen residing in the Netherlands.
Anders Moberg (1950)
Mr. Anders Moberg was first appointed as member of the Supervisory Board on September 1, 2009, and has
remained in this position since then. The decision made by the Supervisory Board to reappoint Mr. Moberg was
24
approved by the Annual Meeting of Shareholders in April 2013.
Mr. Moberg is currently a consultant. In the past Mr. Moberg was amongst others CEO of Majid Al Futtaim (MAF)
Group LLC (one of the biggest retailers in the Middle East), CEO of Royal Ahold (the world’s fourth largest food
retailer), President International of Home Depot and CEO of IKEA. Mr. Moberg currently serves as a board
member for Husqvarna AB, Ahlstrom corporation, ZetaDisplay AB, ITAB AB, Amor Gmbh, Clas Ohlson AB, OBH
Nordica AB, Rezidor AB, Byggmax AB and Bergendahl & Son AB. Mr. Moberg is a Swedish citizen residing in
Dubai.
audit committee
In 2011 the Supervisory Board has founded an Audit Committee as a sub-committee of the Supervisory Board.
The Audit Committee has adopted rules of procedures, including an overview of tasks and powers and in
relation towards independent external auditors.
The Audit Committee assists the Supervisory Board in its responsibilities to oversee the financing, financial
statements, financial reporting process, system of internal controls and risk management of HEMA. The Chief
Financial Officer is invited to the Audit Committee meetings, as well as other members of senior management
and the independent external auditor when the Audit Committee deems it necessary or appropriate.
Mr. Collee acts as Chairman of the Audit Committee. During 2013 the Audit Committee held four meetings. Main
topics discussed during the meetings include quarterly and annual financial statements, the quality of the
internal control environment, tax, financing and internal and external audits.
Robert Darwent, chairman
Mary Minnick, vice-chairman
Dolf Collee
Anders Moberg
Amsterdam, the Netherlands, March 28, 2014
25
Luxembourg
since 2006
4 stores
In a country with a population of just over half a million
people, HEMA is well represented with four stores.
favourite products
cosmetics, tissues, lollypops
corporate
governance
HEMA has adopted the structure regime (governance rules applicable to large companies in the Netherlands).
The company’s articles of association are available at the trade register of the chamber of commerce and
industry of Amsterdam.
management board
HEMA’s formal board is the Board of Managing Directors, consisting of the CEO and the CFO. Operationally the
company is managed by its Management Board. In addition to the CEO and the CFO, the Management Board
consists of five other members: the Director Buying and Merchandising Food and Buying Desk, the Director
Buying and Merchandising Fashion and Hardware, the Director Marketing, the Director Supply Chain and the
Director Operations.
supervisory board
The Supervisory Board supervises the policies pursued by the Board of Managing Directors and the company’s
general affairs and the business connected with it. The Supervisory Board also assists the Board of Managing
Directors by providing advice. In carrying out its duties, the Supervisory Board is guided by the interests of the
company and its business. The Supervisory Board is supported in its work by the Audit Committee on specific
matters including financial reporting, risk management, internal controls and advising the Supervisory Board
on the appointment of the independent external auditors of HEMA.
general meeting of shareholders
HEMA’s shares are ultimately 100% held by Dutch Lion Coöperatief U.A., an investment company which is
owned by several investment funds, advised by Lion Capital as its members. In addition, certain members of
HEMA’s management have an indirect economic interest in Dutch Lion Coöperatief U.A.
risk factors
HEMA aims to increase the transparency of risk management to its stakeholders by describing its risk
management and control systems and procedures, and has identified key risks specific for HEMA.
risk management and control systems and procedures
HEMA has implemented the following risk management and control systems to create an appropriate control
environment and to monitor performance closely:
■an annual sign off for compliance to HEMA’s Code of Conduct by management and a selection of
personnel;
■an internal certification procedure related to the fair presentation of HEMA’s financial condition and
operations in the quarterly and annual financial statements;
■a bill of authority with clear procurement authorizations;
■a whistle blower policy to enable Dutch employees to anonymously report any misconduct within the
company;
■a formal planning and control cycle, which includes the preparation and approval of a long-term business
plan, annual budget, quarterly forecast, monthly management reporting and weekly KPI reports;
■procedural manuals and an integrated, detailed description of the accounting policies applied;
■an information security policy;
27
■control self assessments for certain key parts of the business;
■an internal Audit & Risk department, which conducts and assists with risk assessments within the company
and performs audits on all key areas in the business;
■an annual monitoring report to the Management Board on the follow up of recommendations from
internal and external audits.
The Management Board reports on and accounts for the internal control environment and the risk
management and control systems and procedures within the company to the Audit Committee. The content
and progress on the follow up of recommendations from internal and external audits is annually reported
to and discussed with the Audit Committee. The Audit & Risk department plays an important role in providing
an objective view and ongoing affirmation of the effectiveness of the overall internal risk management and
control systems and procedures.
risk profile
We take strategic and operational risks as a part of doing business. We want to promote entrepreneurship
and enter into new businesses but monitor results closely. We seek to minimise compliance and financial
reporting risks. A summary of principal risk factors which we currently consider material for HEMA is provided
below.
strategic risk
The implementation of our strategy is subject to external risks such as a general economic and financial
downturn in the countries we operate, new and stronger competitors in specific product groups, price and
promotion management by our competitors, rapidly changing consumer preferences, and fluctuation of
foreign exchange rates, prices of raw materials, such as cotton, and oil prices.
operational risk
Operations may be affected by disruptions in our IT systems, as a result of strikes or calamities at our facilities.
Unseasonal or severe weather conditions are known to impact sales. A significant dependency on suppliers
outside the European Union exposes us to a variety of related risks. In 2014 we will continue our efforts to
improve operational execution, shorten lead times and achieve more flexibility in vendor agreements to
meet sudden changes in customer demand. Our results of operations can be impacted by amongst others
shoplifting, fraud, higher labour costs, pension fund contributions and a rise in rental costs for new and
expiring lease agreements. Other identified principal operational risk factors include the recruitment and
retention of key personnel and the risks associated with our franchise structure.
compliance risk
HEMA and its contract parties are subject to laws and regulations related amongst others to product safety,
health safety, quality, employee protection, consumer protection and the environment. Non compliance
could lead to liability claims, fines, closure of stores or facilities, delays, an increase in compliance costs and
reputational damage. We continuously strive to comply with laws and regulations, to avoid legal action and,
when necessary, resolve disputes. Specifically, HEMA has actively followed up on the asbestos assessments in
the Netherlands and finalised the remediation. In Belgium and Luxembourg HEMA has finalised the asbestos
assessments and is in the process of asbestos remediation. France and Germany are next on the agenda.
financial risk
For a detailed description of financial risks we kindly refer you to note 24 of the financial statements.
financial reporting risk
Our financial statements are prepared in accordance with International Financial Reporting Standards (‘IFRS’),
as adopted by the European Union. Changes in these standards or interpretations thereof, issued by standardsetting bodies for IFRS, may adversely impact our reported financial results or position. At this moment, HEMA is
not subject to specific financial reporting risks due to changes in these standards or interpretations thereof.
The Management Board and management are responsible for developing and testing internal risk
management and monitoring systems designed to identify significant risks, monitor the achievement of targets
and ensure compliance with relevant legislation and regulations. The Management Board bears ultimate
responsibility for determining the maximum acceptable level of risk. HEMA has adopted the structure regime
28
(governance rules applicable to large companies in the Netherlands). The company’s articles of association
are available at the trade register of the chamber of commerce and industry of Amsterdam.
29
nos produits
se distinguent
par leur style
vraiment HEMA
our products are recognizable by the real HEMA design
financial statements
31
consolidated income statement
from February 4, 2013 up to and including February 2, 2014
(in million euros)
net sales
note
2013
2012
(restated) *
4
1,091.3
1,152.9
cost of sales
(589.6)
(631.9)
gross profit
501.7
521.0
(442.0)
(435.9)
operating expenses
5
operating income
59.7
85.1
(76.4)
(71.6)
(16.7)
13.5
0.3
(7.7)
(16.4)
5.8
shareholder
(16.4)
5.8
net (loss) / profit
(16.4)
5.8
finance costs
6
income before income taxes
income taxes
net (loss) / profit
7
attributable to
*) The restatement is a result of a change in accounting standards and has an impact of 0.6 on net result (5.8 restated versus 6.4
reported). Refer to note 2.1.1, IAS19, for more information.
The accompanying notes on pages 41 to 82 are an integral part of these consolidated financial statements.
32
consolidated statement of comprehensive income
from February 4, 2013 up to and including February 2, 2014
(in million euros)
note
2013
2012
(restated) *
net (loss) / profit
(16.4)
5.8
■remeasurements on post employment benefit
obligations
-
0.8
■tax effect on remeasurements on post employment
benefit obligations
-
(0.2)
6.7
5.0
6.7
5.6
(9.7)
11.4
shareholder
(9.7)
11.4
total comprehensive income for the year
(9.7)
11.4
other comprehensive income / (loss)
items that will not be reclassified to profit and loss:
items that may subsequently be reclassified to profit and loss
■ cash-flow hedges, net of tax
other comprehensive income / (loss) for the year, net of tax
total comprehensive income for the year
15
attributable to
*) The restatement is a result of a change in accounting standards and has an impact of 0.6 on net result and other comprehensive
income. On total OCI, the restatement has no impact. Refer to note 2.1.1, IAS19, for more information.
The accompanying notes on pages 41 to 82 are an integral part of these consolidated financial statements.
33
consolidated statement of financial position
as at February 2, 2014
(in million euros, after appropriation of current
year result)
note
February 2
2014
February 3
2013
(restated)*
January 30
2012
(restated)*
assets
property, plant and equipment
8
209.7
201.2
174.2
intangible assets
9
1,168.7
1,174.4
1,172.9
deferred tax assets
7
-
-
0.1
other non-current assets
10
2.0
1.6
1.0
1,380.4
1,377.2
1,348.2
total non-current assets
inventories
11
147.6
147.8
150.8
trade and other receivables
12
63.5
69.0
64.5
other current financial assets
13
0.3
-
3.2
current tax assets
7
3.0
-
-
cash and cash equivalents
14
175.9
162.3
134.4
390.3
379.1
352.9
1,770.7
1,756.3
1,701.1
total current assets
total assets
share capital
15
share premium
15
408.2
408.2
other reserves
15
(0.4)
(7.1)
(12.1)
retained earnings
15
(70.4)
(54.0)
(60.3)
337.5
347.2
335.8
total equity
-
-
408.2
liabilities
borrowings
16
755.0
761.0
767.9
shareholder loan
17
193.1
168.7
146.9
other financial liabilities
18
24.9
30.8
36.2
employee benefits
19
7.1
7.9
8.8
deferred tax liabilities
7
98.7
99.7
101.7
provisions
20
0.1
0.1
0.2
1,078.9
1,068.2
1,061.7
total non-current liabilities
trade and other payables
21
336.4
315.6
284.2
borrowings
16
10.8
18.3
7.8
other financial liabilities
22
5.7
6.5
3.8
current tax liabilities
7
1.4
0.5
7.8
354.3
340.9
303.6
1,770.7
1,756.3
1,701.1
total current liabilities
total equity and liabilities
*) The February 3, 2013 and January 30, 2012 figures are restated on other reserves and retained earnings. For 2011, 0.2 has moved from
retained earnings to other reserves. For 2012, 0.6 have moved from retained earnings to other reserves.All other balance sheet lines
are unadjusted. Refer to note 2.1.1, IAS 19, for more information.
The accompanying notes on pages 41 to 82 are an integral part of these consolidated financial statements.
34
consolidated statement of changes in equity
from February 4, 2013 up to and
including February 2, 2014
(in thousand euros)
attributable to the shareholders
note
share
capital
balance as of January 29, 2012
(as previously reported)
18
effect of changes in accounting
standards (ias19r)
-
balance as of january 29, 2012
(restated)
18
share
premium
other
reserves
retained
earnings
total
equity
408,224
(12,368)
(60,074)
335,800
408,224
225
-
(225)
(12,143)
(60,299)
335,800
comprehensive income
profit for the year
5,806
5,806
-
-
-
cash flow hedges, net of tax
-
-
4,952
change in other reserves
-
-
122
478
4,952
total comprehensive income
-
-
5,074
6,284
600
other comprehensive income
-
-
11,358
transactions with owners
share premium contribution
-
-
-
-
-
change in other reserves
-
-
-
-
-
total transactions with owners
-
-
-
-
-
balance February 3, 2013 (restated)
18
408,224
(7,069)
(54,015)
347,158
(16,420)
(16,420)
comprehensive income
profit for the year
-
-
-
-
other comprehensive income
cash flow hedges, net of tax
-
-
6,664
-
6,664
change in other reserves
-
-
50
-
50
total comprehensive income
-
-
6,714
share premium contribution
-
-
-
-
-
change in other reserves
-
-
-
-
-
total transactions with owners
-
-
-
-
-
balance as of February 2, 2014
18
408,224
(355)
(70,435)
337,452
(16,420)
(9,706)
transactions with owners
The accompanying notes on pages 41 to 82 are an integral part of these consolidated financial statements.
35
consolidated statement of cash flow
from February 4, 2013 up to and including February 2, 2014
(in million euros)
note
2013
2012
(restated)
cash flow from operating activities
net profit
income tax recognised in the income statement
(16.4)
5.8
(0.3)
7.7
finance costs recognised in the income statement
6
76.4
71.6
depreciation and amortization of non-current assets
5
57.5
53.6
117.2
138.7
operating cash before changes in working capital
movements in working capital
■ decrease / (increase) in trade and other receivables
12
5.5
(4.5)
■ decrease in inventories
11
0.2
3.0
■ increase in trade and other payables
21
20.8
31.4
19/20
(0.8)
(1.0)
(2.2)
(4.6)
140.7
163.0
■ decrease in provisions
■ change in other assets / liabilities
cash generated from operations
income taxes paid
(1.2)
net cash generated by operating activities
(11.4)
139.5
151.6
cash flow from investing activities
payments for property, plant & equipment
8
(51.0)
(66.2)
payments for intangible assets
9
(8.6)
(14.5)
(59.6)
(80.7)
net cash used in investing activities
36
(in million euros)
note
2013
2012
(restated)
cash flow from financing activities
interest paid
6
(39.8)
(34.6)
interest received
6
0.1
0.5
repayments of borrowings
16
(18.3)
(7.8)
payments for financial leases
18
(1.3)
(1.1)
(7.0)
-
finance fees paid
net cash generated by financing activities
net cash from operating, investing and financing activities
(66.3)
(43.0)
13.6
27.9
cash and cash equivalents at the beginning of the year
14
162.3
134.4
cash and cash equivalents at the end of the year
14
175.9
162.3
The accompanying notes on pages 41 to 82 are an integral part of these consolidated financial statements.
37
consolidated shareholder funding
as at February 2, 2014
(in million euros, after appropriation of current year result)
February 2
2014
February 3
2013
shareholder loan
193.1
168.7
group equity
337.5
347.2
530.6
515.9
total shareholder funding
The accompanying notes on pages 41 to 82 are an integral part of these consolidated financial statements.
38
39
France
since 2009
28 stores
Since the opening of the first store in Créteil, Paris, HEMA
has become highly popular among the French. HEMA aims
to open a HEMA store in every major French city.
favourite products
cake decoration sprinkles, tights, bubble solution
notes to the
consolidated
financial statements
(all amounts in million euros, unless otherwise stated)
1
the company and its operations
HEMA B.V. (‘HEMA’ or the ‘Company’) is a limited liability company with its registered seat and head office in
Amsterdam, the Netherlands.
The principal activities of the Company are retail operations in the Netherlands, Belgium, Luxembourg,
Germany and France. The activities of HEMA are subject to seasonal influences. HEMA’s business generally
experiences an increase in net sales in the fourth quarter of each year.
HEMA’s shares are ultimately held 100% by Dutch Lion Coöperatief U.A. (‘Dutch Lion Coop’), an investment
company which is owned by several investment funds advised by Lion Capital.
Before September 11 2007 the name of HEMA was HEMA Holding B.V. (‘HEMA Holding’). The name was changed
following a legal merger between HEMA Holding and HEMA B.V. (‘HEMA (old)’), with HEMA Holding as the
surviving entity. On July 6, 2007 HEMA (old) was acquired by HEMA Holding from its then owner Maxeda B.V.
(‘Maxeda’). HEMA Holding accounted for the assets and liabilities of HEMA (old) based on the fair value of these
assets and liabilities in accordance with IFRS 3 Business Combinations.
2
significant accounting policies
2.1
basis of preparation
The consolidated financial statements have been prepared in accordance with International Financial
Reporting Standards (‘IFRS’) as endorsed by the European Union.
The financial information relating to HEMA is presented in the consolidated financial statements. Accordingly,
in accordance with section 402, part 9, book 2 of the Dutch Civil Code (‘B2 DCC’), the company financial
statements only contain an abridged income statement.
The consolidated financial statements have been prepared on the historical cost convention, except for the
revaluation of financial instruments. The principal accounting policies are set out below.
The preparation of financial statements in conformity with IFRS requires the use of certain critical accounting
estimates. It also requires management to exercise its judgement in the process of applying the group’s
accounting policies. The areas involving a higher degree of judgement or complexity, or areas where
assumptions and estimates are significant to the consolidated financial statements are disclosed in note 3.
HEMA’s reporting calendar is based on 12 periods of four weeks or five weeks. The financial year is a 52- or 53week year ending on the Sunday nearest to January 31. Financial year 2013 consists of 52 weeks and ended on
February 2, 2014. The comparable financial year 2012 consisted of 53 weeks and ended on February 3, 2013.
41
2.1.1
changes in accounting policies and disclosures
(a) standards and interpretations effective in the current year
In the current year the Company has adopted the following new and amended International Financial
Reporting Standards:
■amendments to IAS 1 ‘Financial statement presentation’, regarding other comprehensive income. The
main change resulting from these amendments is a requirement for entities to group items presented in
‘other comprehensive income’ (OCI) on the basis of whether they are potentially reclassifiable to profit
or loss subsequently (reclassification adjustments). The amendments do not address which items are
presented in OCI. The Company has applied the amendment to IAS 1 from February 4, 2013. This standard
does not have a material impact on the financial statements of HEMA.
■amendment to IAS 19 ‘Employee Benefits’. These amendments eliminate the corridor approach and
calculate finance costs on a net funding basis. Remeasurements of employee benefits (actuarial gains and
losses) will be recorded in equity in stead of profit and loss. The Company has applied the amendment to
IAS 19 from February 4, 2013. This standard does not have a material impact on the financial statements of
HEMA. For comparison reasons, HEMA retrospectively adjusted the figures of 2011 and 2012.For 2011, 0.2 has
moved from retained earnings to other reserves. For 2012, 0.6 have moved from retained earnings to other
reserves. On total net result for 2012 changes from 6.4 (profit) reported to 5.8 (profit) restated.
■amendment to IFRS 7 ‘Financial instruments: Disclosures’, on asset and liability offsetting. This amendment
includes new disclosures to facilitate comparison between those entities that prepare IFRS financial
statements to those that prepare financial statements in accordance with US GAAP. The Company has
applied this amendment from February 4, 2013. The company added additional disclosures in note 24.
■annual improvements 2011: IFRS 1, ‘First time adoption’: IAS 1, ‘Financial statement presentation’, IAS 16,
‘Property plant and equipment’, IAS 32, ‘Financial instruments; Presentation’, IAS 34, ‘Interim financial
reporting’. The Company has applied the improvements from February 4, 2013. These changes do not have
a material impact on the financial statements of HEMA.
■IFRS 10, ‘Consolidated Financial Statements’: The objective of IFRS 10 is to establish principles for the
presentation and preparation of consolidated financial statements when an entity controls one or more
other entity (an entity that controls one or more other entities) to present consolidated financial statements.
It defines the principle of control, and establishes controls as the basis for consolidation. It sets out how
to apply the principle of control to identify whether an investor controls an investee and therefore must
consolidate the investee. It also sets out the accounting requirements for the preparation of consolidated
financial statements. The Company has applied the new standard from February 4, 2013. These changes do
not have a material impact on the financial statements of HEMA.
■IAS 27 (revised 2011),‘Separate financial statements’: IAS 27 (revised 2011) includes the provisions on
separate financial statements that are left after the control provisions of IAS 27 have been included in the
new IFRS 10. The Company has applied the amended standard from February 4, 2013. These changes do not
have a material impact on the financial statements of HEMA.
■IFRS 13, ‘Fair value measurement’: IFRS 13 aims to improve consistency and reduce complexity by
providing a precise definition of fair value and a single source of fair value measurement and disclosure
requirements for use across IFRSs. The requirements, which are largely aligned between IFRS and US GAAP,
do not extend the use of fair value accounting but provide guidance on how it should be applied where
its use is already required or permitted by other standards within IFRS or US GAAP. The Company has
applied IFRS 13 from February 4, 2013.
(b) Standards, amendments and interpretations to existing standards that are not yet effective, have not
been early adopted by the Company and are endorsed by the European Union
The following standards and amendments to existing standards have been published and are mandatory
for the Company’s accounting years beginning on or after February 3, 2014, and the Company has not early
adopted them:
■amendment to IAS 32, ‘Financial instruments: Presentation’, on asset and liability offsetting: These
amendments are to the application guidance in IAS 32, ‘Financial instruments: Presentation’, and clarify
some of the requirements for offsetting financial assets and financial liabilities on the balance sheet. The
Company will apply the amendment from February 3, 2014. These changes are not expected to have a
42
material impact on the financial statements of HEMA.
■amendment to IAS 36, ‘Impairment of assets’ on recoverable amount disclosures: This amendment
addresses the disclosure of information about the recoverable amount of impaired assets if that amount is
based on fair value less costs of disposal. The Company will apply the amendment from February 3, 2014.
These changes are not expected to have a material impact on the financial statements of HEMA.
■amendment to IAS 39 ‘Novation of derivatives’: This amendment provides relief from discontinuing hedge
accounting when novation of a hedging instrument to a central counterparty meets specified criteria. The
Company will apply the amendment from February 3, 2014. These changes are not expected to have a
material impact on the financial statements of HEMA.
2.2
basis of consolidation
The consolidated financial statements include the financial statements of the Company and entities over which
the Company has control. Control is achieved when the Company has the power to govern the financial and
operating policies of an entity so as to obtain benefits from its activities.
The results of the subsidiaries acquired or disposed during the year are included in the consolidated income
statement from the effective date of acquisition or up to the effective date of disposal as appropriate.
Where necessary, adjustments are made to the financial statements of the subsidiaries to bring their
accounting policies in line with those used by HEMA.
All intra-group transactions balances income and expenses are eliminated in full on consolidation.
The consolidated statement of cash flow has been prepared using the indirect method. Cash flows in foreign
currencies are restated into euros at the date of the cash flow.
HEMA’s significant subsidiaries are listed in note 30.
2.3
foreign currency translation
functional and presentation currency
Items included in the financial statements of each of the Company’s entities are measured using the currency
of the primary economic environment in which the entity operates (‘the functional currency’). The consolidated
financial statements are presented in Euro, which is the company’s functional and presentation currency.
transactions and balances
Foreign currency transactions are translated into the functional currency using an average rate that
approximates the actual rate at the date of the transaction. Whenever exchange rates fluctuate significantly,
the exchange rates prevailing at the dates of the transactions are used. Foreign exchange gains and losses
resulting from the settlement of such transactions and from the translation at year-end exchange rates of
monetary assets and liabilities denominated in foreign currencies are recognised in the income statement,
except when deferred in the hedge reserve in equity as qualifying cash flow hedges.
group companies
Some subsidiaries have a functional currency that is different from the presentation currency. None of these
entities has a currency of a hyperinflationary economy. The results and financial position of all these entities
that have a functional currency different from the presentation currency are translated into the presentation
currency as follows:
■assets and liabilities for each balance sheet presented are translated at the closing rate at the date of that
balance sheet;
■income and expenses for each income statement are translated at average exchange rates (unless
this average is not a reasonable approximation of the cumulative effect of the rates prevailing on the
transaction dates, in which case income and expenses are translated at the rate on the dates of the
transactions); and
■all resulting exchange differences are recognised in equity.
43
2.4
net sales
HEMA generates and recognises net sales to retail customers at the point of sale in its stores and upon
delivery of products to internet customers. HEMA also generates revenues from the sale of products to retail
franchisees, which are recognised upon delivery. HEMA recognises franchise fees as revenue when all
material services relating to the contract have been substantially performed. Discounts earned by customers
are recognised as a reduction of sales at the time of the sale. Generally, net sales and cost of sales are
recorded based on the gross amount received from the customer for products sold and the amount paid to
the vendor for products purchased. However, for certain products or services, such as the sale of insurance
contracts and customised photo books, HEMA acts as an agent and consequently records the amount of
commission income in its net sales. Net sales exclude value-added taxes.
2.5
cost of sales
Cost of sales includes the purchase price of the products sold and other costs incurred in bringing the
inventories to their present location and condition. These costs include costs of purchasing, styling, quality
control, storing, rent, salaries and transporting products to the extent it relates to bringing the inventories to
their present location and condition. The depreciation costs are allocated to the inventory, however when the
inventory is sold the depreciation costs (of the costs mentioned above) are recorded under depreciation and
not under the cost of sales.
2.6
finance cost
Finance cost covers all interest income and expense attributable to the reporting year on a timeproportionate basis, by reference to the principal outstanding and at the effective interest rate applicable.
This item also includes gains and losses on hedging activities and amortisation of capitalised financing costs.
2.7
income taxes
Income tax expense represents the sum of the tax currently payable and deferred tax.
current tax
The tax currently payable is based on taxable profit for the year. Taxable profit differs from profit as reported
in the consolidated income statement because it excludes items of income or expense that are taxable or
deductible in other years and it further excludes items that are never taxable or deductible. The Company’s
liability for current tax is calculated using tax rates that are applicable for the year.
deferred tax
Deferred tax is recognised on differences between the carrying amounts of assets and liabilities in the
consolidated financial statements and the corresponding tax bases used in the computation of taxable
profit, and is accounted for using the balance sheet liability method. Deferred tax liabilities are generally
recognised for all taxable temporary differences, and deferred tax assets are generally recognised for all
deductible temporary differences to the extent that it is probable that taxable profits will be available against
which those deductible temporary differences can be utilised. Such assets and liabilities are not recognised
if the temporary difference arises from goodwill or from the initial recognition (other than in a business
combination) of other assets and liabilities in a transaction that affects neither the taxable profit nor the
accounting profit.
The carrying amount of deferred tax assets is reviewed at each balance sheet date and reduced to the extent
that it is no longer probable that sufficient taxable profits will be available to allow all or part of the asset to
be recovered.
Deferred tax assets and liabilities are measured at the tax rates that are expected to apply in the year in
which the liability is settled or the asset realised, based on tax rates (and tax laws) that have been enacted
or substantively enacted by the balance sheet date. The measurement of deferred tax liabilities and assets
reflects the tax consequences that would follow from the manner in which the Company expects, at the
reporting date, to recover or settle the carrying amount of its assets and liabilities.
44
Deferred tax assets and liabilities are offset when there is a legally enforceable right to set off current tax
assets against current tax liabilities and when they relate to income taxes levied by the same taxation
authority and the Company intends to settle its current tax assets and liabilities on a net basis.
current and deferred tax for the year
Current and deferred tax are recognised as an expense or income in the income statement, except when
they arise from the initial accounting for a business combination. In the case of a business combination, the
tax effect is taken into account in calculating goodwill or in determining the excess of the acquirer’s interest
in the net fair value of the acquiree’s identifiable assets, liabilities and contingent liabilities over the cost of the
business combination.
2.8
property, plant and equipment
Items of property, plant and equipment are stated at cost less accumulated depreciation and impairment
losses. Cost includes expenditures that are directly attributable to the acquisition or construction of an asset.
Subsequent expenditures are capitalised only when it is probable that future economic benefits associated
with the item will flow to the Company and the costs can be measured reliably. All other subsequent
expenditures represent repairs and maintenance and are expensed as incurred.
Depreciation is computed using the straight-line method based on the estimated useful lives of the items of
property, plant and equipment, taking into account the estimated residual value. Where an item of property,
plant and equipment comprises major components having different useful lives, each such part is depreciated
separately. The assets’ useful lives are reviewed, and adjusted if appropriate, at each balance sheet date.
The estimated useful lives of property, plant and equipment are:
leasehold improvements
10 years
technical installations
10 years
hardware
3 – 5 years
furniture & fixtures
7 years
trucks & cars
7 years
Assets that are expected to have a shorter useful life are depreciated in this shorter period.
Depreciation of assets subject to finance leases and leasehold improvements is calculated on a straight-line
basis over either the lease or the estimated useful life of the asset, whichever is shorter.
2.9
leasing
Leases are classified as finance leases whenever the terms of the lease transfer substantially all the risks and
rewards of ownership to the lessee. All other leases are classified as operating leases.
Assets held under finance leases are initially recognised as assets of HEMA at their fair value at the inception
of the lease or, if lower, at the present value of the minimum lease payments. The corresponding liability to the
lessor is included in the balance sheet as a finance lease obligation.
Lease payments are apportioned between finance charges and reduction of the lease obligation so as to
achieve a constant rate of interest on the remaining balance of the liability. Finance charges are charged
directly to the income statement unless they are directly attributable to qualifying assets in which case they
are capitalised in accordance with HEMA’s policy on borrowing costs.
Operating lease payments are recognised as an expense on a straight line basis over the lease term, except
where another systematic basis is more representative of the time pattern in which economic benefits from the
leased asset are consumed. Contingent rentals arising under operating leases are recognised as an expense
in the year in which they are incurred.
45
2.10 intangible assets
goodwill and impairment of goodwill
Goodwill represents the excess of the cost of an acquisition over the Company’s interest in the net fair value
of the identifiable assets, liabilities and contingent liabilities at the date of acquisition, and is carried at cost
less accumulated impairment losses. For the purposes of impairment testing, goodwill is allocated to each of
the cash generating units (or groups of cash generating units) that is expected to benefit from the synergies
of a business combination. Each unit (or group of units) to which the goodwill is allocated, represents the
lowest level within the Company at which the goodwill is monitored for internal management purposes and
that is not larger than a segment. Cash-generating units to which goodwill has been allocated are tested
for impairment annually, or more frequently when there is an indication that the cash-generating unit may
be impaired. An impairment loss is recognised for the amount by which the cash-generating unit’s carrying
amount exceeds its recoverable amount. The recoverable amount is the higher of a cash generating unit’s
fair value less costs of disposal and its value in use. An impairment loss is allocated first to reduce the carrying
amount of the goodwill and then to the other assets of the cash generating unit pro rata on the basis of the
carrying amount of each asset in the cash-generating unit. An impairment loss recognised for goodwill is not
reversed in subsequent years.
other intangible assets
Intangible assets acquired in a business combination are identified and recognised separately from goodwill
where they satisfy the definition of an intangible asset and their fair values can be measured reliably. The cost
of such intangible assets is their fair value at the acquisition date.
brand
Brands with indefinite useful lives are tested for impairment on an annual basis. Brands are considered as
corporate assets and can be allocated on a reasonable and consistent basis to cash-generating units for
the purpose of impairment testing. The allocation is made to those cash-generating units or groups of cashgenerating units that are expected to benefit from the business combination in which the brand arose. The
Company allocates brands to operating segment in which it operates.
customer relationships
The customer relationships have a definite useful life and are carried at cost less accumulated amortisation
and impairment. Amortisation is calculated using the straight-line method to allocate the
cost of customer relationships over their estimated useful lives.
computer software and others
Acquired computer software licenses are capitalised on the basis of the costs incurred to acquire and
bring to use the specific software. These costs are amortised over their estimated useful lives. Costs
associated with developing or maintaining computer software programs are recognised as an expense
as incurred. Costs that are directly associated with the development of identifiable and unique software
products controlled by the Company, and that will probably generate economic benefits exceeding costs
beyond one year, are recognised as intangible assets.
Key Money has a definite useful life and is carried at cost less accumulated amortisation and impairment.
Amortisation is calculated using the straight-line method to allocate the key money over their estimated useful
lives
Amortisation is computed using the straight-line method based on the estimated useful lives, which are as
follows:
customer relationships
10 – 13 years
software
3 – 10 years
other
3 – 12 years
For software, lives in excess of six years are used only when management is satisfied that the lives of these
assets will clearly exceed that year. The useful lives are reviewed, and adjusted if appropriate, at each
46
balance sheet date. HEMA assesses on a yearly basis whether there is any indication that other intangible
assets may be impaired.
Impairment of non-current assets other than goodwill and brand
HEMA assesses on a yearly basis whether there is any indication that non-current assets may be impaired. If
indicators of impairment exist, HEMA estimates the recoverable amount of the asset. Where it is not possible
to estimate the recoverable amount of an individual asset, HEMA estimates the recoverable amount of the
cash-generating unit to which it belongs. Individual stores are considered separate cash-generating units
for impairment testing purposes. The recoverable amount is the higher of an asset’s fair value less costs
of disposal and its value in use. In assessing value in use, the estimated future cash flows are discounted
to their present value using a post-tax discount rate that reflects current market assessments of the time
value of money and the risks specific to the asset. An impairment loss is recognised in the consolidated
income statement for the amount by which the asset’s carrying amount exceeds its recoverable amount. In
subsequent years, HEMA assesses whether indications exist that impairment losses previously recognised for
non-current assets other than goodwill and the brand may no longer exist or may have decreased. If any such
indication exists, the recoverable amount of that asset is recalculated and its carrying amount is increased to
the revised recoverable amount, if required. The increase is recognised in operating income as an impairment
reversal. An impairment reversal is recognised only if it arises from a change in the assumptions that were
used to calculate the recoverable amount. The increase in an asset’s carrying amount due to an impairment
reversal is limited to the depreciated amount that would have been recognised had the original impairment
not occurred.
2.11
inventories
Inventories are stated at cost or net realisable value, whichever is lower. Cost consists of all costs of purchase,
cost of conversion and other costs incurred in bringing the inventories to their present location and condition,
net of vendor allowances attributable to inventories. The cost of the majority of inventories is determined
using a moving average price method. Net realisable value represents the estimated selling price for the
inventories less all estimated costs of completion and costs necessary to make the sale.
Inventories are recognised in the balance sheet when the significant risks and rewards of ownership of the
goods have been transferred to HEMA.
2.12 financial assets
Regular purchases and sales of financial assets are recognised on the trade-date – the date on which
the group commits to purchase or sell the asset. Financial assets are derecognised when the group has
transferred substantially all risks and rewards of ownership.
receivables
Trade receivables, loans, and other receivables that have fixed or determinable payments that are not
quoted in an active market are classified as loans and receivables. Loans and receivables are measured
at amortised cost using the effective interest method, less any impairment. Interest income is recognised by
applying the effective interest rate, except for short-term receivables when the recognition of interest would
be immaterial.
2.13 cash and cash equivalents
Cash and cash equivalents include cash on hand, deposits held at call with banks, other short-term
highly liquid investments with original maturities of three months or less, and bank overdrafts. Bank
overdrafts are shown within borrowings in current liabilities on the balance sheet.
47
2.14financial liabilities and equity instruments issued by the
company
classification as debt or equity
Debt and equity instruments are classified as either financial liabilities or as equity in accordance with the
substance of the contractual arrangement.
equity instruments
An equity instrument is any contract that evidences a residual interest in the assets of an entity after deducting
all of its liabilities. Equity instruments issued by HEMA are recorded at the proceeds received, net of direct issue
costs.
financial liabilities
Financial liabilities are classified as either financial liabilities ‘at fair value through profit and loss’ or ‘other
financial liabilities’. Effectively the Company only recognises other financial liabilities as it has no financial
liabilities at fair value through profit and loss.
The other financial liabilities including borrowings, are initially measured at fair value, net of transaction costs.
They are subsequently measured at amortised cost using the effective interest method, with interest expense
recognised on an effective yield basis.
Other financial liabilities relating to financial lease agreements are stated at the net present value of future
lease instalments. Gift cards (included in other liabilities) are carried at nominal value minus a non-redemption
percentage, which is based on historical redemption figures. Each year at balance sheet date, the nonredemption percentage will be reassessed and adjusted accordingly. All other liabilities are carried at the
nominal value. Repayment commitments on long term liabilities that are payable within one year are included
under short-term borrowings.
derecognition of financial liabilities
The Company derecognises financial liabilities when, and only when, the Company’s obligations are
discharged, cancelled or they expire.
2.15 derivative financial instruments
The Company enters into derivative financial instruments to manage its exposure to interest rate and foreign
exchange rate risk, including foreign exchange forward contracts and interest rate swaps. Further details of
derivative financial instruments are disclosed in note 24.
Derivatives are initially recognised at fair value at the date a derivative contract is entered into and
are subsequently remeasured to their fair value at each balance sheet date. The resulting gain or loss is
recognised in profit or loss immediately unless the derivative is designated and effective as a hedging
instrument, in which event the timing of the recognition in profit or loss depends on the nature of the hedge
relationship. A derivative is presented as a non-current asset or a non-current liability if the remaining maturity
of the instrument is more than 12 months and it is not expected to be realised or settled within 12 months. Other
derivatives are presented as current assets or current liabilities.
hedge accounting
HEMA designates certain cash flow hedging instruments. These hedges are accounted for as cash flow
hedges. The effective portion of changes in the fair value of derivates that are designated and qualify as cash
flow hedges are recognised in other comprehensive income and allocated to the other reserves within equity.
The gain or loss relating to the ineffective portion is recognised immediately in the income statement, and is
included in the ‘other financial gains and losses’ in the income statement. Hedge accounting is discontinued
when the Company revokes the hedging relationship, the hedging instrument expires or is sold, terminated, or
exercised, or no longer qualifies for hedge accounting.
48
Amounts deferred in equity are recycled in the income statement in the years when the hedged item is
recognised in the income statement, in the same line of the income statement as the hedged item.
Any cumulative gain or loss deferred in equity at that time remains in equity and is recognised when the
forecast transaction is ultimately recognised in the income statement. When a forecast transaction is no longer
expected to occur, the cumulative gain or loss that was deferred in equity is recognised immediately in the
income statement.
2.16pensions and other post- and longterm-employment
benefits
The net liabilities recognised in the consolidated balance sheet for defined benefit plans represent the present
value of the defined benefit obligations.
Contributions to defined contribution plans are recognised as an expense when they are due. Postemployment benefits provided through industry multi-employer plans, managed by third parties, are
generally accounted for under defined contribution criteria.
For other long-term employee benefits, such as long-service awards, provisions are recognised on the basis
of discount rates and other estimates that are consistent with the estimates used for the defined benefit
obligations. For these provisions all remeasurements are recognised in the consolidated income statement
immediately.
2.17 provisions
Provisions are recognised when the Company has a present (legal or constructive) obligation as a result of
past events, it is more likely than not that an outflow of resources will be required to settle the obligation and
the amount can be reliably estimated. The amount recognised is the best estimate of the expenditure required
to settle the obligation. Provisions are discounted whenever the effect of the time value of money is significant.
Restructuring provisions are recognised when the Company has approved a detailed formal restructuring
plan, and the restructuring either has commenced or has been announced to those affected by it.
The expected settlements within one year are included under short term provisions.
2.18 share-based payments
Key personnel of HEMA has been offered the opportunity to invest in Dutch Lion Coop. The investment consists
of a membership rights component that is recognised as a share-based payment transaction in accordance
with IFRS 2. In addition part of the investment consists of a loan component that is also disclosed by HEMA
in accordance with IAS 24 – Related party transactions for the loan components issued to management. In
accordance with IFRS 2 that provides guidance on whether share-based payment transactions should be
accounted for as equity-settled or cash-settled share based payment transactions, HEMA recognises the
membership right instruments purchased under the Management Equity Plan as an equity settled share-based
payment transaction (since the instrument is not settled by HEMA and the investment is not in equity instruments
of HEMA (Dutch Lion Coop the ultimate parent of the Company has the obligation to settle and the investment
is in equity instruments of Dutch Lion Coop)).
For equity settled share based payment arrangements, the fair value of membership right instruments is
measured at the grant date and, if applicable the fair value is recognised as an expense with a corresponding
increase recognised in equity. The fair value of the membership right instruments purchased under the
Management Equity Plan is equal to the difference between (i) the fair market value of the membership right
instruments at the date of grant; and (ii) the subscription price payable for the membership right instruments
acquired. Where vesting conditions are applicable the expense is recognised over the vesting period of the
instruments granted.
49
3
critical accounting estimates and judgements
The preparation of HEMA’s consolidated financial statements requires management to make a number of
estimates and assumptions. These estimates and assumptions affect the reported amounts of assets and
liabilities, of income and expenses and the disclosure of contingent assets and liabilities. Estimates and
assumptions may differ from future actual results. The estimates and assumptions that management considers
most critical and that have a significant inherent risk of causing a material adjustment are the following:
■ i mpairment of non-current assets (note 8 and 9). Determining whether non-current assets are impaired
requires an estimation of the recoverable amount of the asset (or cash generating unit). For this purpose
the Company is required to make estimations and assumptions in respect of future cash flows and the
appropriate discount rate. The carrying amount of non-current assets that are subject to an annual
impairment test is 732.7 (goodwill) and 394.4 (brand name).
■ i ncome taxes (note 7). HEMA has significant tax loss carry forward positions. Significant judgement is
required in determining the consolidated provision for income taxes and the recoverable amounts
of deferred tax assets related to tax loss carry forward positions. Currently no deferred tax asset is
recognised. The carrying amount of the deferred tax liability is 98.7.
■inventories (note 11). The obsolete stock provision amounts to 9.1 (2012: 9.9). Judgement is required to
determine the size of the provision.
■employee benefits (note 19). The employee benefit obligations consists of a jubilee plan (5.8) and early
retirement plans (1.3). The calculations for the jubilee plan are determined by independent actuaries. The
early retirement plans are calculated based on Company assumptions.
■ f inancial derivatives (note 24). The balance sheet includes financial derivatives mainly currency forward
contracts and interest rate swaps, with a net fair value of 6.6 (liability). The fair value of financial instruments
that are not traded in an active market (for example over-the-counter derivatives) is determined on the
basis of valuation techniques performed by an external party.
■ s
hare-based payment (note 26). HEMA calculates the fair value of the share based payment components
of the Management Equity Plan. Significant judgement is required to determine the equity component in
this Plan. For further details, please refer to note 26.
4
net sales
The net sales can be specified as follows:
from February 4, 2013 up to and including February 2, 2014
(in million euros)
2013
2012
sales to retail customers
786.9
820.4
sales to franchisees
289.3
314.7
15.1
17.8
other sales
net sales
50
1,091.3
1,152.9
5
operating expenses
The operating expenses can be specified by nature as follows:
from February 4, 2013 up to and including February 2, 2014
(in million euros)
salaries
2013
2012
(restated)
154.3
159.0
taxes and social securities
29.0
26.5
employee benefit expenses
12.7
11.7
other personnel expenses
6.9
7.5
202.9
204.7
total labour costs
housing and rents
118.1
111.7
other general expenses
67.4
68.3
(3.9)
(2.4)
57.5
53.6
442.0
435.9
other income and expense
depreciation, amortisation and impairments
total operating expenses
The employee benefit expenses relate to defined contribution and defined benefit plans. For the defined
benefit plans see note 19.
6
finance costs
from February 4, 2013 up to and including February 2, 2014
(in million euros)
2013
2012
interest income
(0.1)
(0.5)
■ cash interest expense
39.8
34.6
■ non cash interest expense
32.3
29.4
amortised finance costs
4.0
3.8
other financial expense
0.4
4.3
76.4
71.6
interest expense
total finance costs
Interest income is attributable to the interest on cash and cash equivalents. The cash interest expense is
attributable to the interest on borrowings (see note 16), financial liabilities and bank overdrafts. The non-cash
interest is attributable to the interest on the shareholder loan and mezzanine facility (see note 16). The non-cash
interest is added to the principal of the mezzanine facility and the shareholder loan.
51
7
income taxes
The fiscal unity of which HEMA is part, is headed by the Company’s ultimate shareholder Dutch Lion
Coöperatief U.A. The fiscal unity consists of Dutch Lion Coöperatief U.A., Dutch Lion B.V., HEMA B.V., HEMA
Bakkerijen B.V., HEMA Financiering B.V., and HEMA Financial Services B.V. All taxes for the fiscal unity are paid
by HEMA. The current tax paid in these consolidated financial statements mainly relate to the income taxes for
HEMA Belgium and the fiscal unity. As a result of losses in Dutch Lion B.V. and Dutch Lion Coop, HEMA records
the share in current taxes of Dutch Lion B.V. and Dutch Lion Coop as a payable to these entities (refer to note
25). The other tax positions in these consolidated financial statements, such as deferred taxes, only relate to the
taxes for HEMA and its subsidiaries.
current taxes
The current tax asset of 3.0 relates to the fiscal unity Dutch Lion Coöperatief U.A. The current tax liability of 1.4
mainly relates to HEMA Belgium B.V.
income tax recognised in profit or loss
The following table specifies the current and deferred tax components of income taxes as recognised in the
consolidated income statement.
from February 4, 2013 up to and including February 2, 2014
(in million euros)
2013
2012
(restated)
current income taxes
domestic taxes
0.8
(8.5)
■ Asia
(0.1)
-
■ Europe
(1.4)
(1.3)
(0.7)
(9.8)
1.0
2.1
-
-
1.0
2.1
0.3
(7.7)
foreign taxes
total current tax expense
deferred income taxes
domestic taxes
foreign taxes
■ Europe
total deferred tax expense
total income taxes
effective income tax rate
HEMA’s effective tax rate in the consolidated income statement differs from the statutory income tax rate of
the Netherlands, which is 25 percent in both 2013 and 2012. The following table reconciles the statutory income
tax rate of the Netherlands with the effective income tax rate as shown in the consolidated income statement.
52
from February 4, 2013 up to and including February 2,
2014, (in million euros)
income before income taxes
income tax expense at statutory rate
2013
2012
(restated)
(16.7)
13.5
4.2
(25.0%)
(3.4)
(25.0%)
■rate differential (local statutory rates versus the
statutory rate of the Netherlands) – effect of different
tax rates of subsidiaries operating in different
jurisdictions.
(0.5)
3.0%
(0.3)
(2.2%)
■ loss carry forward not recognised
(0.7)
4.2%
(0.1)
(0.7%)
adjustments to arrive at effective income tax rate:
■ additional loss carry forward recognised
■ non-deductible and other items
-
-
0.1
0.7%
(2.7)
16.0%
(4.0)
(29.8%)
0.3
(1.8%)
(7.7)
(57.0%)
total income taxes
deferred income tax
The significant components of deferred income tax assets and liabilities as of February 2, 2014 and February 3,
2013 are as follows:
(in million euros)
February 2
2014
February 3
2013
post-employment and other employee benefits
1.5
1.6
property, plant & equipment
2.2
1.8
-
0.4
3.7
3.8
-
-
total recognised deferred tax assets
3.7
3.8
tax losses and tax credits
8.1
9.2
unrecognised tax losses and tax credits
(8.1)
(9.2)
-
-
3.7
3.8
98.6
98.6
3.8
4.9
102.4
103.5
98.7
99.7
fair value losses creditors
total gross deferred tax asset
unrecognised deferred tax assets
total recognised tax losses and tax credits
total net tax assets position
brand
customer relationships
total deferred tax liability
deferred income tax expense
net deferred tax liability
53
Deferred income tax assets and liabilities are offset in the consolidated balance sheet when there is a legally
enforceable right to offset current tax assets against current tax liabilities and when the deferred income taxes
are levied by the same fiscal authority. For 2013, the recognised deferred tax assets of 3.7 have been offset
with the deferred tax liability relating to the customer relationships of 3.8. This results in a net deferred tax
liability of 0.1. Together with the deferred tax liability relating to the HEMA brand of 98.6, a total deferred tax
liability of 98.7 is presented as non-current liabilities in the consolidated balance sheet. See the table below:
(in million euros)
deferred tax assets
February 2
2014
-
February 3
2013
-
deferred tax liabilities
98.7
99.7
net deferred tax liability
98.7
99.7
Refer to the table below when the deferred taxes are expected to be recovered
(in million euros)
February 2
2014
February 3
2013
deferred tax assets
■ deferred tax assets to be recovered after more than 12 months
2.2
3.3
■ deferred tax assets to be recovered within 12 months
1.5
0.5
3.7
3.8
101.4
102.4
1.0
1.1
102.4
103.5
98.7
99.7
deferred tax liabilities
■ deferred tax liabilities to be recovered after more than 12 months
■ deferred tax liabilities to be recovered within 12 months
deferred tax liability (net)
As of February 2, 2014 HEMA had unused tax losses, for which no deferred tax asset is recognised in the
balance sheet of a total nominal amount of approximately 26.4 (2012: 29.5) which is expiring as from 2014 and
onwards. Significant judgement is required in determining whether deferred tax assets are realisable. HEMA
determines this on the basis of expected taxable profits arising from the reversal of recognised deferred tax
liabilities and on the basis of budgets and cash flow forecasts. Where utilization is not considered probable,
deferred tax assets are not recognised.
54
8
property, plant and equipment
(in million euros)
leasehold
improve­
ments
technical
installations
hardware
furniture
and
fixtures
trucks
and
cars
work
in
progress
total
as of January 29, 2012
at cost
84.4
80.1
40.3
298.3
8.6
9.0
520.7
accumulated depreciation
and impairment losses
(35.3)
(36.9)
(34.5)
(236.7)
(3.1)
-
(346.5)
carrying amount
49.1
43.2
5.8
61.6
5.5
9.0
174.2
at cost
18.7
16.1
6.2
18.5
1.7
6.7
67.9
depreciation
(8.4)
(8.2)
(3.0)
(18.1)
(1.4)
-
(39.1)
impairment losses charged
to profit & loss
(0.1)
(0.1)
-
(1.6)
-
-
(1.8)
transfer from WIP
2.5
1.6
0.2
2.8
-
(7.1)
-
at cost
(1.1)
(0.6)
-
(28.1)
(0.3)
-
(30.1)
accumulated depreciation
1.1
0.6
-
28.1
0.3
-
30.1
at cost
104.5
97.2
46.7
291.7
10.0
8.5
558.7
accumulated depreciation
and impairment losses
(42.7)
(44.6)
(37.5)
(228.5)
(4.2)
-
(357.5)
61.8
52.6
9.2
63.2
5.8
8.5
201.2
at cost
13.2
12.7
1.7
16.5
0.9
6.9
51.9
depreciation
(9.6)
(9.6)
(3.2)
(18.4)
(1.5)
-
(42.3)
impairment losses charged
to profit & loss
(0.2)
(0.3)
-
(0.5)
-
-
(1.0)
1.9
1.7
0.5
2.2
-
(6.3)
-
at cost
(0.4)
(0.4)
(11.8)
(17.3)
(1.2)
-
(31.1)
accumulated depreciation
0.4
0.4
11.8
17.3
1.2
-
31.1
at cost
119.2
111.2
37.1
293.1
9.7
9.1
579.4
accumulated depreciation
and impairment losses
(52.1)
(54.1)
(28.9)
(230.1)
(4.5)
-
(369.7)
carrying amount
67.1
57.1
8.2
63.0
5.2
9.1
209.7
additions
disposals
as of February 3, 2013
carrying amount
additions
transfer from WIP
disposals
as of February 2, 2014
55
In 2013 1.0 was recognised as impairment (2012 1.8).
23.0 of the disposals relate to a clean up of the fixed asset register. These assets were disposed and/or
replaced several years ago. The clean up did not lead to an impairment loss, as all assets were already fully
depreciated. The other part of the disposals relate to main refurbishments of stores.
For the contractual commitments for the acquisition of property, plant and equipment, see note 28. The most
important component of work in progress is unfinished projects related to HEMA’s stores.
Vehicles and machinery includes the following amounts where the group is a lessee under a finance lease:
(in million euros)
February 2
2014
February 3
2013
capitalised finance lease – at cost
9.7
10.0
accumulated depreciation
(4.5)
(4.2)
carrying amount
5.2
5.8
The company leases various vehicles and machinery under non-cancellable finance lease agreements. The
lease terms are between 5 and 7 years, and ownership of the assets lies within the company.
Lease rentals amounting to 1.8 (2012: 1.6) relating to lease of vehicles are included in the income statement on
depreciation and finance costs (note 5 and 6).
Essentially all of the property, plant and equipment has been pledged to secure borrowings of the Company
(note 16).
56
9
intangible assets
(in million euros)
goodwill
brand
customer
relation­
ships
software
other
total
intangible
assets
under
development
as of January 29, 2012
at cost
accumulated amortisation
and impairment losses
carrying amount
732.7
732.7
394.4
394.4
1,246.8
43.7
68.6
4.6
2.8
(19.7)
(52.7)
(1.5)
-
24.0
15.9
3.1
2.8
1,172.9
(73.9)
additions
at cost
-
-
-
7.9
3.4
3.2
14.5
amortisation
-
-
(4.3)
(8.2)
(0.5)
-
(13.0)
transfer from assets under
development
-
-
-
3.1
-
(3.1)
-
at cost
-
-
-
-
-
-
-
accumulated amortisation
-
-
-
-
-
-
-
43.7
79.6
8.0
2.9
(24.0)
(60.9)
(2.0)
-
19.7
18.7
6.0
2.9
1,174.4
disposals
as of February 3, 2013
at cost
accumulated amortisation
and impairment losses
carrying amount
732.7
732.7
394.4
394.4
1,261.3
(86.9)
additions
at cost
-
-
-
3.2
1.1
4.3
8.6
amortisation
-
-
(4.3)
(9.3)
(0.7)
-
(14.3)
transfer from assets under
development
-
-
-
2.6
-
(2.6)
-
at cost
-
-
-
(1.6)
-
-
(1.6)
accumulated amortisation
-
-
-
1.6
-
-
1.6
disposals
as of February 2, 2014
at cost
accumulated amortisation
and impairment losses
carrying amount
732.7
732.7
394.4
394.4
43.7
83.8
9.1
4.6
(28.3)
(68.6)
(2.7)
-
15.4
15.2
6.4
4.6
1,268.3
(99.6)
1,168.7
57
1.3 of the disposals relate to a clean up of the fixed asset register. These assets were disposed and/or
replaced several years ago. The clean up did not lead to an impairment loss, as all assets were already fully
depreciated.
impairment test for goodwill and HEMA brand
Goodwill recognised relates to the acquisition of HEMA (old). Goodwill acquired in the business combination
is allocated, at acquisition, to the cash generating units (‘CGUs’) or group of CGUs expected to benefit from the
business combination. The carrying amounts of goodwill allocated to CGUs within HEMA are as follows:
goodwill per CGU
The Netherlands
Belgium & Luxembourg
Germany
total HEMA
February 2
2014
February 3
2013
688.6
688.6
43.6
43.6
0.5
0.5
732.7
732.7
As a result of the accounting for business combinations the Company has determined that it cannot reliable
measure separately the individual fair values of the complementary assets that together comprise the HEMA
brand. Therefore, the brand name HEMA was recognised as a single asset. The Company has determined that
the useful life of the HEMA brand is indefinite based on the history and reputation of the brand. The brand
name HEMA is tested for impairment annually, or more frequently if there are indications that the brand
name HEMA might be impaired. The brand name HEMA does not individually generate cash flows and should
therefore not be tested for impairment as a single asset. The HEMA brand name is tested together with the
CGUs that were tested for goodwill purposes. The carrying amounts of brand allocated to CGUs within HEMA
are as follows:
brand per CGU
The Netherlands
Belgium & Luxembourg
total HEMA
February 2
2014
February 3
2013
370.9
370.9
23.5
23.5
394.4
394.4
CGUs to which goodwill has been allocated are tested for impairment annually or more frequently if there
are indications that a particular CGU might be impaired. The recoverable amount of each CGU is determined
based on fair value less costs of disposal calculations (level 3). Fair value less costs of disposal sell calculations
use post-tax cash flow projections into perpetuity. The cash flow projections are based on assumptions
approved by company management. The continuing value is determined based on a ‘steady state’ set of
assumptions for the cash flows in the last forecast year and applying a terminal value multiple to those cash
flows.
58
The key assumptions used in financial year 2013 for fair value less costs of disposal calculations are as follows:
2013
The Netherlands
2012
Belgium &
Luxembourg
The Netherlands
Belgium &
Luxembourg
gross margin (average)
■ next 10 years
47.1%
60.2%
47.3%
61.3%
■ after that
47.1%
60.5%
46.7%
61.5%
■ next 10 years
1.5%
2.0%
2.3%
3.0%
■ after that
1.5%
1.5%
1.5%
1.5%
discount rate
7.6%
8.0%
7.8%
8.2%
growth rate (average)
The calculation of fair value less cost to sell for the cash generating units is most sensitive to the following
assumptions:
■gross margins: the Company determined budgeted gross margin based on past performance and its
expectations for the market development.
■the discount rate is based on the (post-tax) weighted average cost of capital (‘WACC’): the market-based
weighted average of the after-tax cost of debt and cost of equity. The target long-term level of debt
and equity in HEMA’s capital structure is estimated using the median of market-based values for debt
and equity based on a peer group of comparable listed companies. The cost of equity for both CGUs is
calculated based on the Capital Asset Pricing Model (‘CAPM’), including (1) a risk free rate based on a 30-year
country specific government bonds, (2) an estimated company specific levered beta (based on the median
beta of the peer group) multiplied by the excess market return and (3) an additional risk premium that takes
into account the illiquidity and size of each CGU as compared to the peer group of listed companies. The
cost of debt for both CGUs is calculated by adding a (default) spread to the risk-free rate. The spread has
been derived by deducting the country specific risk free rate from the yields for listed bonds with similar
credit ratings as the listed peer group companies.
■growth rate: future growth rates are displayed in the table above and differ by geography. The growth
rate of 1.5% for CGU NL is lower than the average growth rates achieved in the years 2008-2012, but higher
when including 2013. Management believes that the lost sales in 2013 should not be reflected in the future
growth expectations, since the year 2013 is not representative of HEMA’s anticipated future performance
and an improvement in the economic environment will result in increasing sales. This is justified by the
improvement of the consumer confidence in The Netherlands in the second half of 2013.
sensitivity analysis key assumptions
The key assumptions are mainly based on historical achieved results and in line with long term expected
inflation developments. However, in the case of certain unexpected future developments, currently not
reflected in the cash flow projections, the carrying amount might exceed the recoverable amount. For
that reason, the Company included a sensitivity analysis. In case of a higher discount rate of 1.0%-point, the
recoverable amount of CGU NL will be lower than the carrying amount, leading to an impairment loss of
72 million. In case the economic recovery will take longer than expected, sales growth might be lower. For
example a 1.0%-point lower growth rate for CGU NL for the next five years lead to an impairment loss of 47
million. This impairment loss is including an offset of costs which are highly correlated with the level of sales.
customer relationships
As a result of the accounting for business combinations, customer relationships relating to franchise
agreements and insurance policies have been recognised in 2007. The customer relationships are amortised
over the expected economic life time of the contracts being 10 respectively 13 years. The remaining expected
59
economic life time of the customer relationships relating to franchise agreements and insurance policies are
3.4 years and 6.4 years.
other
Other intangibles relates to key money. In France it is necessary to acquire the lease rights (e.g. key money)
from the previous tenant before the full benefits of a lease agreement can be enjoyed. The lease rights give
the holder the right to a free and peaceful use of the premises, the right to rent control and rights relating to
the duration of the lease and renewal rights. When a new tenant takes over a property, the lease rights are
sold to the new tenant. Key money is amortised over the expected economic life time of the lease contracts
being 10 respectively 12 years.
intangible assets under development
The most important component of intangible assets under development are unfinished IT projects.
All of the intangible assets represented by legal titles or of similar status have been pledged to secure
borrowings of the Company (note 16).
10 other non-current assets
(in million euros)
February 2
2014
February 3
2013
other
2.0
1.6
total other non-current assets
2.0
1.6
The other non-current assets mainly relate to warranties paid for rental contracts in Germany and France.
11
inventories
(in million euros)
trade inventory
February 2
2014
February 3
2013
152.3
152.8
raw materials
2.3
2.2
other inventories
2.1
2.7
valuation allowance
total inventories
156.7
157.7
(9.1)
(9.9)
147.6
147.8
The raw materials and other inventories concern food, photo and packaging materials. An amount of 0.4 has
been recognised as write-offs of inventories in the consolidated income statement (2012: 0.7). The valuation
allowance for inventories is 9.1 (2012: 9.9). All of the inventories are pledged to secure borrowings of the
Company (note 16).
60
12
trade and other receivables
(in million euros)
February 2
2014
trade receivables
February 3
2013
37.5
39.6
provision for impairment
(0.8)
(0.7)
trade receivables - net
36.7
38.9
3.8
3.6
14.3
18.0
8.7
8.5
63.5
69.0
receivables from related parties
prepayments
other receivables
total trade and other receivables
The ageing of the trade receivables was as follows:
(in million euros)
February 2
2014
February 3
2013
0 – 30 days
37.0
39.0
31 – 60 days
0.1
0.1
61 – 90 days
-
0.1
91 – 180 days
0.1
-
> 181 days
0.3
0.4
37.5
39.6
total trade receivables
Movements on the provision for impairment were as follows:
(in million euros)
February 2
2014
February 3
2013
beginning of the year
(0.7)
(0.4)
additions
(0.2)
(0.3)
used
0.1
-
(0.8)
(0.7)
end of the year
The other classes within trade and other receivables do not contain impaired assets.
The maximum exposure to credit risk at the reporting date is the carrying value of each class of receivable
mentioned above. The Company does not hold any collateral as security.
All of the trade and other receivables are pledged to secure borrowings of the Company (note 16).
61
13
other current financial assets
(in million euros)
February 2
2014
February 3
2013
derivative financial instruments
0.3
-
total other current financial assets
0.3
-
14
cash and cash equivalents
(in million euros)
February 2
2014
cash on hand
February 3
2013
15.6
15.6
cash in banks and cash equivalents
160.3
146.7
total cash and cash equivalents
175.9
162.3
Cash and cash equivalents include all cash on hand balances, cheques, debit and credit receivables in
transfer. Bank overdrafts that are part of HEMA’s cash-pool arrangements are offset with bank balances that
are part of this arrangement. Cash on hand mainly relates to cash in tills.
All of the bank accounts are pledged to secure borrowings of the Company (note 16)
15
equity attributable to shareholders
shares and share capital
As of February 2, 2014, the Company has 90,000 authorised shares with a par value of € 1, of which 18,000 are
fully paid. This is unchanged compared to previous year.
share premium
The total amount paid by the shareholders at the issuance of the shares was 108.9 of which 108.9 has been
allocated to share premium. The share premium recognised in 2011 amounting to 219.3 consists of the capital
contribution by Dutch Lion which is subsequently settled with part of the shareholder loan (see note 17). In 2009
a similar sett-off was executed for an amount of 80.
legal reserves
HEMA is a company incorporated under Dutch law. In accordance with B2 DCC, legal reserves have to be
established in certain circumstances. The cash flow hedging reserve is a legal reserve. Legal reserves are not
available for distribution to the Company’s shareholders. If the cash flow hedging reserve has a negative
balance, distributions to the Company’s shareholders are restricted to the extent of the negative balance.
62
(in thousand euros)
other
reserves
currency
translation
reserve
total
(12,846)
478
-
(12,368)
-
225
-
225
(12,846)
703
-
(12,143)
■fair value gains
3,432
-
-
3,432
■transfers to inventory
(3,172)
-
-
(3,172)
■transfers to income statement
4,692
(478)
-
4,214
-
600
-
600
(7,894)
825
-
(7,069)
■fair value gains
2,813
-
-
2,813
■transfers to inventory
2,388
-
-
2,388
■transfers to income statement
1,464
-
-
1,464
-
-
50
50
(1,229)
825
50
balance as of January 29, 2012
(as previously reported)
effect of changes in accounting standards (IAS19R)
balance as of January 29, 2012 (restated)
cash flow
hedging
reserve
cash flow hedges
remeasurements of employee benefits
balance as of February 3, 2013 (restated)
cash flow hedges
currency translation difference
balance as of February 2, 2014
(354)
Items in the statement above are disclosed net of tax. The total change in 2013 in the cash flow hedging
reserve amounts to 6.7 (2012: 5.0).
Gains and losses on forward contracts recognised in cash flow hedging reserve will be released to the
income statement in the next year. Gains and losses on the interest rate swaps recognised in cash flow
hedging reserve will be released to the income statement in the next year.
The cash flow hedging reserve amounting to (1.2) (negative) is the fair value of the interest rate swaps and the
foreign exchange forward contracts for which hedge accounting is applied.
other reserves
The other reserves relate to remeasurements of employee benefit obligations.
63
retained earnings
(in thousand euros)
at January 29, 2012 (as previously reported)
(60,074)
effect of changes in accounting standards (IAS19R)
(225)
at January 29, 2012 (restated)
(60,299)
net profit for the year
5,806
478
change in other reserves
at February 3, 2013 (restated)
(54,015)
net profit for the year
(16,420)
-
change in other reserves
at February 2, 2014
16
(70,435)
borrowings
February 2, 2014
(in million euros)
non-current
portion
February 3, 2013
current portion
non-current
portion
current portion
borrowings
755.0
10.8
761.0
18.3
total
755.0
10.8
761.0
18.3
The current portion of the borrowings amounts to 10.8 (2012: 18.3) and relates to the mandatory repayment as
required under the senior facility agreement.
The fair values of these borrowings, corresponding derivatives and the foreign exchange and interest rate risk
management policies applied by HEMA are disclosed in note 24.
borrowings
On July 5, 2007 the Company signed two facilities with a syndicate of two banks: a senior facility agreement
(the ‘Senior Facilities Agreement’) and a mezzanine facility agreement (the ‘Mezzanine Facility Agreement’). The
Senior Facility Agreement comprises of three loan facilities (‘Facility B’, ‘Facility C’, ‘Facility D’). On August 1, 2013,
HEMA amended and extended (A&E) on average more than 90% of its borrowings.
The amount and due dates of the facilities as of February 2, 2014 are as follows (see next page):
64
principal
(in million euros)
facility b
extended facility b
facility c
extended facility c
due
within
1 year
between 1
and 5 years
after
5 years
February 2
2014
July 2015
0.5
24.8
-
25.3
December 2017
4.9
236.4
-
241.3
July 2016
0.4
17.9
-
18.3
December 2017
5.0
243.3
-
248.3
facility d
January 2017
-
2.0
-
2.0
extended facility d
January 2018
-
78.0
-
78.0
April 2018
-
120.0
-
120.0
10.8
722.4
-
733.2
-
47.0
-
47.0
10.8
769.4
-
780.2
deferred financing costs
(4.0)
(10.4)
-
(14.4)
total
6.8
759.0
-
765.8
extended mezzanine facility
total
rolled up interest mezzanine
All facilities carry a floating interest rate of 1-months EURIBOR plus a spread. The average spread for all
borrowings in 2013 was 4.8% (2012: 4.0%). The spreads have increased, starting August 1, as a result of the amend
and extend of the borrowings.
The amount and due dates of the facilities as of February 3, 2013 were as follows:
principal
(in million euros)
due
within 1 year
between 1
and 5 years
after 5 years
January 29
2012
facility b
July 2015
9.1
266.6
-
275.7
facility c
July 2016
9.2
266.6
-
275.8
facility d
January 2017
-
80.0
-
80.0
July 2017
-
120.0
-
120.0
18.3
733.2
-
751.5
-
38.8
-
38.8
18.3
772.0
-
790.3
deferred financing costs
(3.8)
(7.2)
-
(11.0)
total
14.5
764.8
-
779.3
mezzanine facility
total
rolled up interest mezzanine
All borrowings have to be repaid at maturity subject to certain mandatory prepayments (e.g. for received
considerations for disposals) and repayment of excess cash flow as defined in the facilities agreements.
Fees and other costs directly related to the issuance of the facilities and the amend and extend of August 1,
2013, are deferred and are amortised over the term of maturity of the loans.
group credit facility
Before the amend and extend, HEMA had a revolving credit facility (RCF) of 70, to expire in July 2014. As a result
of the A&E, 55 of the RCF has been extended with three years to July 2017. 15 has not been extended and will
mature in July 2014. HEMA currently does not use the RCF.
65
exposure to market interest rates
The exposure of the Company’s borrowings (excluding the shareholder loan, finance leases and bank
overdrafts) to interest rate changes and the contractual re-pricing dates before and after the effect of the
interest rate swap on the balance sheet dates are as follows:
(in million euros)
2014
2015
2016
602.4
577.6
557.7
mezzanine facility
175.6
184.7
194.2
interest rate swaps
(500.0)
total
278.0
senior facility
762.3
751.9
2017
2018
-
-
204.2
204.2
-
The table above is based on the following:
■the mezzanine facility will increase as a result of accrued interest.
■repayments on the senior facilities will be likely, but is not taken into account, since they depend on the
annual cash flows of the company in the future, which are unknown at balance sheet date.
■in 2015, 2016, 2017 and 2018 parts of the facilities reach their due dates and need to be repaid (refer to the
tables above in this note). As at 2018 all borrowings are repaid.
■HEMA has hedged an amount of 500 with interest rate swaps, until September 2015. As a result exposure
increases significantly from that point. It is expected that the company will enter into new swaps in order
to keep the volatility to interest rate changes on a low level. However, future contracts are not taken into
account, since they do not exist at balance sheet date.
covenants
The facilities contain customary covenants that place restrictions on disposals, mergers, acquisitions,
investments and the incurrence of debt by the Company and its subsidiaries. In addition, the facilities are
subject to two financial covenants: the net debt ratio (net debt over EBITDA) and cash interest cover ratio
(EBITDA over cash interest). These covenants were applicable as of the first quarter of 2008. In financial year
2013 the Company has not been in breach with these covenants.
Substantially all of HEMA’s assets have been pledged to secure the facilities.
17
shareholder loan
The shareholder loan has a principal of 269.6 and carries a fixed interest rate of 13.5% per annum. The interest
is added to the principal and will only be paid in cash at the election of the Company’s Board of Managing
Directors or at redemption. The shareholder loan has a maturity of 49 years and is due June 30 2056. Fees and
other costs directly related to the issuance of the shareholder loan are deferred and are amortised over 9
years. The shareholder loan is, with respect to payment rights, redemption and rights of liquidation, winding
up and dissolution, subordinated to all other present and future obligations of the Company. In 2009 and 2011
Dutch Lion B.V. made a contribution of respectively 80 and 219.3 to the Company by way of conversion of the
shareholder loan into share premium.
66
The movements in the shareholder loan are as follows:
(in million euros)
February 2
2014
net opening balance
168.7
deferred financing costs
146.9
1.1
gross opening balance
1.5
169.8
148.4
24.1
rolled up interest
gross closing balance
net closing balance
21.4
193.9
169.8
(0.8)
(1.1)
deferred financing costs
18
February 3
2013
168.7
193.1
other non-current financial liabilities
(in million euros)
February 2
2014
February 3
2013
financial lease liabilities
4.1
4.7
derivative financial instruments
6.4
11.6
14.4
14.5
24.9
30.8
long term lease incentives
total other financial liabilities
For more information on derivative financial instruments, see note 24.
financial lease liabilities
Financial lease liabilities are payables as follows:
(in million euros)
February 2, 2014
future
minimum
lease
payments
interest
portion
February 3, 2013
present
value of
minimum
lease
payments
future
minimum
lease
payments
interest
portion
present
value of
minimum
lease
payments
within one year
1.8
0.1
1.7
1.8
0.1
1.7
between one and five years
4.6
0.8
3.8
5.0
0.9
4.2
after five years
0.5
0.2
0.3
0.7
0.3
0.5
total
6.9
1.1
5.8
7.5
1.3
6.4
current portion
1.7
1.7
non-current portion
4.1
4.7
5.8
6.4
67
The financial leases primarily relate to trucks used for logistic operations. Lease terms range from 6 to 7 years.
At the time of entering into finance lease agreements, the commitments are recorded at their present value
using the interest rate implicit in the lease, if this is practicable to determine; if not, the operating company
specific interest rate applicable for long-term borrowings is used. During financial year 2013, new financial
lease contracts are discounted at a rate of 7.8 percent (financial year 2012: 7.9 percent).
The Company has options to purchase the trucks for a nominal amount at the end of the lease agreements.
For some contracts the Company has the obligation to purchase the trucks for a nominal amount at the end of
the lease term. This obligation is included in the financial lease liabilities.
The Company’s obligations under finance leases are secured by the lessors’ title to the leased assets.
19
employee benefits
(in million euros)
February 2
2014
February 3
2013
(restated)
balance sheet obligations for
retirement benefit obligations
1.3
2.0
other long-term benefits
5.8
5.9
7.1
7.9
current portion
1.2
1.3
non-current portion
5.9
6.6
retirement benefit obligations
(0.1)
-
other long-term benefits
0.7
1.5
0.6
1.5
income statement charge for
retirement benefit obligations
HEMA operates unfunded defined benefit plans for qualifying employees of its subsidiaries in The Netherlands
and Belgium. Under the plans, the employees are entitled to retirement benefits as a percentage of final salary
on attainment of an early retirement age of 61 to 63. No other post-retirement benefits are provided to these
employees. For the plan in The Netherlands, the expected expiry date is the first quarter of 2015.
68
Movements in the present value of the defined benefit obligation in the current year were as follows:
(in million euros)
February 2
2014
February 3
2013
(restated)
opening defined benefit obligation
2.0
3.8
current service costs
(0.2)
(0.1)
interest costs
0.1
0.1
(0.1)
-
■ experience gains
-
(0.8)
■ assumptions losses / (gains)
-
-
-
(0.8)
contributions from plan participants
-
0.3
liabilities extinguished on settlements
(0.2)
(1.1)
benefits paid
(0.4)
(0.2)
1.3
2.0
remeasurements
closing defined benefit obligation
The amounts classified under liabilities extinguished on settlement relate to lump sum payments to BpfD
(‘stichting bedrijfstakpensioenfonds voor de detailhandel’). HEMA pays a lump sum to BpfD the moment
an employee decides to make use of the plan. After settlement, HEMA has no further legal or constructive
obligation to pay further amounts should the BpfD not pay the employee benefits.
Management does not expect substantial changes in the contribution to the plan.
multi-employer plan
The Company has a multi-employer plan that should be accounted for as a defined benefit plan. Virtually all
employees of the Company are covered by such a plan that is financed by employees and employer. The
plan is insured with BpfD and is a defined benefit scheme in respect of the retirement pensions. Paid pensions
are related to the employee’s average salary and the total employment period covered by the plan. This
means that the Company should report its proportional share of the defined benefit commitments and the
assets under management and expenses associated with the plan in the same manner as any other defined
benefit plan, and provide the information required for such plans.
BpfD, however, is unable to provide sufficient information to report the Company’s proportional share of the
defined-benefit commitments and the assets under management and expense associated with the plan. There
is also no agreement on how any surplus or deficit should be distributed to the participants in the pension
plan. As a result, the scheme is reported as a defined contribution plan and accordingly cannot provide the
disclosure requirements in respect of defined-benefit plans in IAS 19 Employee Benefits.
long term employee benefits
The company provides a jubilee plan for all active employees under the collective labour agreement. The
most recent actuarial valuations of the present value of the long term employee benefits were carried out at
February 2, 2014 by independent actuaries.
69
Movements in the present value of the jubilee plan obligation in the current year were as follows:
(in million euros)
February 2
2014
February 3
2013
opening obligation
5.9
5.0
current service costs
0.3
0.3
interest costs
0.2
0.2
actuarial losses
0.2
1.0
benefits paid
(0.8)
(0.6)
closing obligation
5.8
5.9
The amounts recognised in the income statement are as follows:
(in million euros)
2013
current service costs
0.3
0.3
interest costs
0.2
0.2
actuarial losses
0.2
1.0
total, included in labour costs (note 5) and financial
expenses (note 6)
0.7
1.5
2012
The principal assumptions used for the purposes of the actuarial valuations were as follows:
(in million euros)
February 2
2014
February 3
2013
discount rate (s)
2.6%
2.6%
expected rate (s) of salary increase
2.0%
2.0%
Five year history of retirement benefit obligation and jubilee plan
The assumptions used in the actuarial calculations of the defined benefit require a large degree of judgement.
Actual experience may differ from the assumptions made. The following table provides a summary of the
defined benefit obligations and adjustments arising from changes in experience and assumptions over the
past five years:
70
(in million euros)
2013
2012
2011
2010
2009
■ retirement benefit obligation
1.3
2.0
3.8
5.4
7.4
■ jubilee plan
5.8
5.9
5.0
5.0
5.0
total obligation
7.1
7.9
8.8
10.4
12.4
-
(0.8)
(0.3)
(0.2)
(0.3)
■ jubilee plan
0.2
1.0
0.1
(0.0)
0.1
total loss / (gain)
0.2
0.2
(0.2)
(0.2)
(0.2)
present value of defined benefit
obligations
experience and assumptions
(gains) / losses on defined benefit
obligations
■ retirement benefit obligation
20 provisions
The table below specifies the change in total provisions (current and non-current):
(in million euros)
restruc­turing
as of February 3, 2013
current portion
non-current portion
0.1
0.1
charged / credited to the income statement
additions charged to income
-
used during the year
-
release to income
-
interest accretion
-
closing carrying amount
0.1
as of February 2, 2014
current portion
non-current portion
0.1
0.1
71
restructuring
The provision for restructuring and termination costs represents the present value of management’s best
estimate of the direct costs of the restructuring that are not associated with the ongoing activities of HEMA,
including termination benefits.
21
trade and other payables
(in million euros)
February 2
2014
February 3
2013
trade payable
174.8
177.5
accrued expenses
59.9
57.4
payroll taxes, social security and VAT
33.1
13.2
amounts due to related parties
16.6
15.0
payroll accruals
40.4
41.8
11.6
10.7
336.4
315.6
February 2
2014
February 3
2013
financial lease liabilities – current portion
1.7
1.7
interest
3.5
2.4
derivative financial instruments
0.5
2.4
total other financial liabilities
5.7
6.5
other
total trade and other payables
22 other financial liabilities
(in million euros)
23 cash flow
The following table presents a reconciliation between the cash flow statements and the cash and cash
equivalents as presented in the consolidated balance sheet:
(in million euros)
cash and cash equivalents at the beginning of the year
net cash from operating, investing and financing activities
cash and cash equivalents at the end of the year
February 2
2014
February 3
2013
162.3
134.4
13.6
27.9
175.9
162.3
For the purposes of the cash flow statement, cash and cash equivalents include cash on hand and in banks
net of outstanding bank overdrafts. Cash and cash equivalents at the end of the financial year as shown in the
cash flow statement can be reconciled to the related items in the balance sheet. Also see note 14.
72
24 financial risk management and financial
instruments
financial risk management
HEMA’s activities expose it to a variety of financial risks: market risk (including foreign exchange risk and
interest rate risk), credit risk and liquidity risk. Management focuses on the unpredictability of financial markets
and seeks to minimise potential adverse effects on HEMA’s financial performance and capital. HEMA uses
derivative financial instruments solely for the purpose of hedging exposure which corresponds to managing
the interest rate and foreign exchange rate risks arising from the Company’s operations and its sources of
finance. HEMA does not enter into derivative financial instruments for speculative purposes.
HEMA’s primary market risk exposures relate to foreign currency exchange rate and interest rate. In order to
manage the risk arising from these exposures, various financial instruments may be utilised.
foreign exchange rate risk
The international purchase activities expose HEMA to a foreign cash flow exchange risk. It is HEMA’s policy to
cover foreign exchange transaction exposure in relation to existing firm purchase commitments. To protect
the value of future foreign currency cash flows, HEMA enters into forward contracts.
■ F
oreign currency sensitivity analysis - The total purchasing volume in U.S. dollar and Hong Kong dollar
is approximately 115 million euro. Assuming the Euro strengthens (weakens) by 1% against the U.S. dollar
and Hong Kong dollar the direct result on cost of sales would be a decrease (increase) of circa 1.1 million
euro. Market conditions determine if these changes actually occur and whether there is a simultaneous,
offsetting effect on selling prices.
interest rate risk
HEMA’s interest rate risk arises primarily from its debt. To manage interest rate risk, HEMA has an interest rate
management policy aimed at reducing volatility in its interest expense. HEMA’s financial position is largely
fixed by long-term debt issues and the use of derivative financial instruments such as interest rate swaps. As
at February 2, 2014, after taking into account the effect of interest rate swaps, approximately 64 percent of
HEMA’s long term borrowings are at a fixed rate of interest.
■ I nterest rate sensitivity analysis – As a result of the interest rate swap, changes in EURIBOR only have an
impact on the non-hedged part of the debt (36 percent). A change of 1%-point in EURIBOR has an impact of
2.8 on financial expenses and cash flow.
credit risk
Credit risk arises from cash and cash equivalents, derivative financial instruments as well as wholesale
customers including outstanding receivables and committed purchase transactions. For banks and financial
institutions only independently rated parties with a minimum rating of A are accepted. For wholesale
customers contracts of guarantee are used. Also the credit quality is monitored bi-weekly. HEMA has no
significant concentrations of credit risk. Sales to retail customers are settled in cash or by use of a credit card
of one of the major credit card companies.
The majority of HEMA’s past due but not impaired financial assets as of February 2, 2014, consists of receivables
and is past due less than three months. The concentration of credit risk with respect to receivables is limited
as it relates to the deliveries to the franchisees (there is no significant backlog in payments). As a result,
management believes there is no further credit risk provision required in excess of the normal individual and
collective impairment (based on an aging analysis) performed as of February 2, 2014. For further discussion on
HEMA’s receivables, see note 12.
liquidity risk
HEMA manages its liquidity risk on a consolidated basis with cash provided from operating activities being a
primary source of liquidity in addition to debt issuances in the capital markets, committed and uncommitted
credit facilities, and available cash. HEMA manages short-term liquidity based on projected cash flows on
a daily basis. As of February 2, 2014, HEMA has a multi-currency revolving credit facility of 70 (from July 2014:
73
55), which can be drawn on for working capital and general corporate purposes and 175.9 of cash balances
available to manage its liquidity. Based on the current operating performance and liquidity position, the
Company believes that cash provided by operating activities and available cash balances will be sufficient
for working capital, capital expenditures, interest payments, dividends and scheduled debt repayment
requirements for the next 12 months and the foreseeable future.
The following tables summarise the maturity profile of the Company’s derivative and non-derivative financial
liabilities as of February 2, 2014, and February 3, 2013, respectively, based on contractual undiscounted
payments. Regarding the table below please note that the shareholder loan including accrued interest is not
included since it is not likely that the shareholder loan will be paid at maturity date (for more details regarding
the shareholder loan refer to note 17).
(in million euros)
net carrying
amount
contractual cash flows
within 1
year
between 1
and 5 years
after
5 years
total
1,108.0
398.9
931.9
0.5
1,331.3
755.0
49.9
927.3
-
977.2
finance lease liabilities
5.8
1.8
4.6
0.5
6.9
short term borrowings
10.8
10.8
-
-
10.8
336.4
336.4
-
-
336.4
6.6
6.3
0.8
-
7.1
(60.7)
(0.5)
-
(61.2)
67.0
1.3
-
68.3
405.2
932.7
February 2, 2014
non derivative financial liabilities
borrowings
trade and other payables
derivative financial liabilities
derivatives inflow (including interest)
derivatives outflow (including interest)
1,114.6
(in million euros)
net carrying
amount
0.5
1,338.4
contractual cash flows
within 1
year
between 1
and 5 years
after
5 years
1,101.3
379.6
887.3
0.7
1,267.6
761.0
43.9
882.3
-
926.2
finance lease liabilities
6.4
1.8
5.0
0.7
7.5
short term borrowings
18.3
18.3
-
-
18.3
315.6
315.6
-
-
315.6
14.0
9.7
3.9
-
13.6
(56.6)
(1.4)
-
(58.0)
66.2
5.3
-
71.6
389.3
891.2
February 3, 2013
non derivative financial liabilities
borrowings
trade and other payables
derivative financial liabilities
derivatives inflow (including interest)
derivatives outflow (including interest)
1,115.3
74
0.7
total
1,281.1
All instruments held at the reporting date and for which payments are already contractually agreed have
been included. Amounts in foreign currency have been translated using the reporting date closing rate. Cash
flows arising from financial instruments carrying variable interest payments have been calculated using the
forward curves interest rates as of February 2, 2014, and February 3, 2013, respectively.
capital risk management
The Company’s primary objective when managing capital is optimisation of its debt and equity balance in
order to sustain the future development of the business and to maximise shareholder value. The Company
is restricted by capital requirement. The Company cannot directly or indirectly, redeem, retire or otherwise
withdraw any capital contributions made to the capital reserves. Nor can the Company convert such capital
contributions into shareholder loans or redeem, purchase, retire or otherwise acquire for consideration any
shares or warrants issued. The capital structure of the Company consists of the following elements:
(in million euros)
note
February 2
2014
February 3
2013
total borrowings (excluding unamortised finance costs)
16
780.2
790.3
financial lease liabilities
18
5.8
6.4
less: cash & cash equivalents
14
(175.9)
(162.3)
610.1
634.4
net debt
shareholder loan (excluding unamortised finance costs)
17
193.9
169.8
equity
15
337.5
347.2
1,141.5
1,151.3
total capital
financial instruments - categories
The following tables present the carrying amounts for each of the categories of financial instruments as at
February 2, 2014:
(in million euros)
loans and
assets at fair
receivables value through
profit and loss
derivatives
used for
hedging
total
February 2, 2014
assets as per balance sheet
trade and other receivable excluding prepayments
49.2
-
-
49.2
cash and cash equivalents
175.9
-
-
175.9
225.1
-
-
225.1
total
75
(in million euros)
liabilities at
fair value
through profit
and loss
derivatives
used for
hedging
other
financial
liabilities at
amortised
costs
total
February 2, 2014
liabilities as per balance sheet
shareholder loan
-
-
193.1
193.1
borrowings (current)
-
-
10.8
10.8
borrowings (non-current)
-
-
755.0
755.0
financial lease liabilities
-
-
5.8
5.8
derivative financial instruments
-
6.9
-
6.9
trade and other payables
-
-
total
-
6.9
336.4
336.4
1,301.1
1,308.0
The following tables present the carrying amounts for each of the categories of financial instruments as at
February 3, 2013:
(in million euros)
loans and
assets at fair
receivables value through
profit and loss
derivatives
used for
hedging
total
February 3, 2013
assets as per balance sheet
trade and other receivable excluding prepayments
cash and cash equivalents
total
(in million euros)
51.0
-
-
51.0
162.3
-
-
162.3
213.3
-
-
213.3
liabilities at
fair value
through profit
and loss
derivatives
used for
hedging
other
financial
liabilities at
amortised
costs
total
February 3, 2013
liabilities as per balance sheet
shareholder loan
-
-
168.7
168.7
borrowings (current)
-
-
18.3
18.3
borrowings (non-current)
-
-
761.0
761.0
financial lease liabilities
-
-
6.4
6.4
derivative financial instruments
-
14.0
-
14.0
trade and other payables
-
-
total
-
14.0
76
315.6
315.6
1,270.0
1,284.0
financial instruments – fair values
Of HEMA’s categories of financial instruments, only derivatives are measured at fair value using level 2.
These derivatives are valued using quoted prices as input. These quoted prices are observable in the market,
either directly (i.e. as prices) or indirectly (derived from prices). The fair value of the derivative instruments is
based on the rates and quotations obtained from third parties, credit risk and the company’s own riks of nonperformance.
The carrying amount of receivables, cash and cash equivalents, accounts payable and other current financial
assets and liabilities approximate their fair values because of the short-term nature of these instruments and,
for receivables, because of the fact that any recoverability loss is reflected in an impairment loss.
There is no active liquid market for the Company’s bank loans and consequently the fair value of the bank
loans cannot be determined based on quoted market prices. Therefore, the fair value of the bank loans
has been estimated using information on current secondary trading levels. Based on this information the
approximate fair value of the bank loans would be 765.0 (2012: 747.2) versus nominal 780.2 (2012: 790.3).
offsetting financial assets and liabilities
Bank overdrafts that are part of HEMA’s cash-pool arrangements are offset with bank balances that are part
of this arrangement. As at February 2, 2014 and February 3, 2013 nothing was offset, since all balances within
the cash-pool were positive.
derivatives
The number and maturities of derivative contracts, the fair values and the qualification of the instruments for
accounting purposes are presented in the next table:
February 2, 2014
(in million euros)
# contracts
assets
February 3, 2013
liabilities
# contracts
assets
liabilities
interest rate swaps – cash
flow hedges
within one year
1
-
(5.0)
-
-
-
between one and five
years
1
-
(1.4)
1
-
(11.6)
-
-
-
-
-
2
-
(6.4)
1
-
(11.6)
62
0.3
(0.5)
136
-
(2.4)
-
after five years
total interest rate swaps –
cash flow hedges
foreign currency
forwards – cash flow
hedges
within one year
between one and five
years
-
-
-
-
-
-
after five years
-
-
-
-
-
-
foreign currency
forwards – cash flow
hedges
62
0.3
(0.5)
136
-
(2.4)
total derivative financial
instruments
64
0.3
(6.9)
137
-
(14.0)
Interest rate swaps designated as cash flow hedges are used to hedge cash flow EURIBOR interest rate risk
on floating rate debt. Foreign currency forwards designated as cash flow hedges are used to hedge the
variability in future cash flows denominated in foreign currencies.
77
The notional amounts of the derivative financial instruments outstanding as of February 2, 2014, are
summarised below. The summary is based on the currency of the exposures being hedged and includes the
gross amount of all notional values for outstanding contracts.
(in million original currencies)
HKD
GBP
USD
EUR
within one year
-
-
-
(500.0)
between one and five years
-
-
-
(500.0)
after five years
-
-
-
-
63.0
-
73.0
-
between one and five years
-
-
-
-
after five years
-
-
-
-
interest rate swaps
foreign currency forwards
within one year
As of the balance sheet date the forward contracts and hedge instruments are valued at fair value. HEMA has
opted for hedge accounting for its derivatives. Gains and losses recognised in cash flow hedging reserve in
equity will be released to the income statement over the remaining term of the interest rate swap. In 2013 2.6
(gain) fair value changes were recognised in the income statement. The amount that was recognised in equity
of the interest rate swaps and foreign currency contracts was 6.7 (gain).
The stated value of the financial instruments is based on the mark-to-market value and is derived from the midmarket price as of the balance sheet date which is obtained from third parties.
25 related party transactions
Lion Capital LLP (‘Lion Capital’) is a leading private equity firm focused on the consumer sector. Entities
managed by and/or related to Lion Capital own, or have an economic interest in (derivatives related to)
capital and loan instruments of HEMA, HEMA’s parent Dutch Lion B.V. and/or HEMA’s ultimate shareholder Dutch
Lion Coop. HEMA and Lion Capital have entered into a monitoring and oversight agreement under which Lion
Capital provides consultancy and advisory services for an annual advisory fee. Dutch Lion Coöperatief U.A.
produces financial statements available for public use.
78
HEMA has intercompany balances with its parent companies as follows (see note 12 and 21):
(in thousand euros)
Dutch Lion Management B.V.
February 2
2014
February 3
2013
114
79
2,871
2,797
(16,756)
(15,050)
stichting Administratiekantoor Dutch Lion A
184
159
stichting Administratiekantoor Dutch Lion B
405
343
stichting Administratiekantoor Dutch Lion C
242
192
(12,940)
(11,480)
Dutch Lion Coöperatief U.A.
Dutch Lion B.V.
total intercompany
The amounts due from parent companies relate to a recharge of finance costs and invoices that have been
paid by HEMA on behalf of these companies. The amount payable to Dutch Lion B.V. relates to corporate
income taxes paid by HEMA on behalf of the fiscal unity and invoices paid by HEMA on behalf of Dutch Lion
B.V. The balances will be settled at the time of an exit and accordingly it is uncertain when the amounts are
settled. Considering the fact that it is uncertain when these amount are repaid the receivable is presented
under the current assets and liabilities.
HEMA’s parent Dutch Lion B.V. issued a shareholderloan. The interest on this shareholderloan is added to the
principal of the loan. Refer to note 17 for more information.
Key management personnel are those persons having authority and responsibility for planning, directing
and controlling the activities of the Company as a whole. The Company determined that key management
personnel consists of members of the management board. The compensation paid or payable to key
management for employee services is shown below:
(in million euros)
2013
2012
2.5
1.8
termination benefits
-
-
share based payments (see note 26)
-
-
0.3
0.2
2.8
2.0
salaries and other short-term employee benefits
post-employment benefits
These amounts are including a, temporary, tax imposed on salaries above € 150.000 (“crisisheffing”). In 2013
HEMA has accrued 0.2 for this tax (2012: 0.2).
See note 18 to the company financial statements for information on the remuneration of the board of
managing directors.
79
26 share-based payment
Following the acquisition of HEMA on 6 July 2007, circa 70 senior managers of HEMA were offered the
possibility to invest in Dutch Lion Coop, the ultimate parent of the Company. Under the plan introduced in
February 2008, eligible management was offered, subject to certain terms and conditions, an investment in
financial instruments of Dutch Lion Coop at the same conditions as Lion Capital. In December 2008 the plan
was amended to reflect the new fiscal legislation related to this investment. The outstanding rights before
and after the amendments were equal to each other. At the same time, but not related, a relatively small
amount of additional investment was offered to the senior managers that participated in the plan at the
same conditions as the earlier investment. All financial instruments are issued through foundations (Dutch:
administratiekantoren) that hold the voting rights of the underlying instruments. The members of the board
of managing directors were part of the senior managers who were offered the possibility to invest. The
investment contains a loan component and a membership right component. The investment in the loan
component is disclosed by HEMA in accordance with IAS 24 ‘Related party transactions’. The membership right
component falls under the scope of IFRS 2 ‘Share based payments’.
The total amounts invested by senior management with respect to the plan are:
February 2
2014
February 3
2013
amount of outstanding balances at beginning of the year
0.9
0.9
amounts purchased by senior management
0.1
-
amounts sold by senior management
(0.1)
-
amount of outstanding balances at the end of the year
0.9
0.9
(in million euros)
According to IFRS 2 the membership right component of the investment is considered to be an equity
settled share-based payment transaction, since HEMA has no obligation to settle the share-based payment
transaction (Dutch Lion Coop the ultimate parent of the Company has the obligation to settle). HEMA has
prepared a valuation of the investment of the managers at each grant date. The fair market value applied
for the underlying membership rights is based on the shareholder value, which has been derived from
the Enterprise Value (‘EV’) for the Company. For the determination of the fair value, EV/EBITDA multiples are
applied which are based on a market approach by using trading multiples of comparable companies as a
benchmark. No expense with respect to the investment has been incorporated in the income statement.
27 operating leases
HEMA leases all of its stores, as well as distribution centres, offices and other assets, under operating lease
arrangements. Various properties leased under operating leases are (partially) subleased to third parties. The
aggregate amounts of HEMA’s minimum lease commitments payable to third parties under non-cancellable
operating lease contracts are disclosed in the table below.
(in million euros)
February 2
2014
within one year
94.9
87.6
between one and five years
272.5
262.7
after five years
221.6
233.3
589.0
583.6
total
80
February 3
2013
Commitments for rent exclude total sub-lease payments to be received amounting to 12.6 (2012: 12.6).
Certain store leases provide for contingent additional rentals based on a percentage of sales. Substantially all
of the store leases have renewal options for additional terms. None of HEMA’s leases impose restrictions on
the ability of HEMA to pay dividends, incur additional debt, or enter into additional leasing arrangements.
The annual costs of HEMA’s operating leases from continuing operations are disclosed in the table below.
(in million euros)
2013
2012
minimum rentals
87.4
83.5
sublease income
(4.3)
(4.2)
total
83.1
79.3
28 commitments and contingencies
The contracted capital expenditure and purchase commitments at the end of the reporting year but not yet
incurred is as follows
(in million euros)
purchase (volume)
commit­ments
no later than 1 year
capital expenditure commitments
P, P&E
capital expenditure commitments
Intangible assets
total
9.5
1.8
163.6
152.3
later than 1 year but no
later than 5 years
-
-
-
-
later than 5 years
-
-
-
-
9.5
1.8
total
152.3
163.6
Bank guarantees totalling of 3.3 have been issued by HEMA mainly relating to the rent of the headquarters (1.3),
the customs (1.1) and other (0.9).
29 independent auditor’s fee
The independent auditor’s fees paid per category can be summarised as follows:
(In thousand euros)
audit of the financial statements
other audit engagements
tax consultancy
other non-audit engagements
total
2013
2012
202.7
202.7
23.7
23.7
182.0
134.4
408.4
9.0
369.8
81
30 list of subsidiaries
The following are HEMA’s significant subsidiaries as of February 2, 2014. Unless otherwise indicated these are
wholly owned consolidated subsidiaries.
The Netherlands
HEMA Bakkerijen B.V.*, Amsterdam*
HEMA Duitsland B.V.*, Amsterdam
HEMA Financial Services B.V.*, Amsterdam
HEMA financiering B.V., Amsterdam
Europe
HEMA België B.V.B.A.*, Ukkel, Belgium
HEMA Deutschland GmBH, Essen
HEMA GmbH & CO KG**, Essen
HEMA France S.A.S., Paris, France
HEMA Retail Limited, London, United Kingdom
HEMA Spain S.L., Barcelona, Spain
rest of the world
HEMA Far East Ltd., Hong Kong
31
employees
The table below shows the average number of employees and FTE for the years 2013 and 2012.
number of employees and full-time equivalents
2013
2012
employees
fte
employees
fte
10,232
4,340
10,215
4,428
857
576
853
589
Germany
113
57
122
62
Luxembourg
27
18
28
18
207
167
130
98
11,436
5,157
11,346
5,194
the Netherlands
Belgium
France
total
For salaries, pensions and social security charges, please refer to note 5.
For information on the remuneration of the board of managing directors and the Supervisory Board see note
18 to the company financial statements.
*
Pursuant to section 403 B2 DCC, HEMA has issued declarations of liability for these subsidiaries.
**HEMA GmbH & Co. KG, Essen, Germany, makes use of the exemption clause under Section 264b of the German Commercial
Code regarding the preparation, auditing and publication of its financial statements.
82
83
nous offrons
à nos clients
exactement
ce qu’ils veulent
we give our customers exactly what they want
company financial
statements
85
company income statement
from February 4, 2013 up to and including February 2, 2014
(in million euros)
2013
2012
(restated)
income from subsidiaries after income taxes
16.8
13.8
other income after income taxes
(33.2)
(8.0)
net profit
(16.4)
5.8
The accompanying notes on pages 89 to 99 are an integral part of these company financial statements.
86
company balance sheet
as at February 2, 2014
(in million euros, after appropriation of current year result)
note
February 2
2014
February 3
2013
assets
property, plant and equipment
2
164.4
163.7
intangible assets
3
1,161.5
1,167.8
financial assets
4
47.6
33.4
other non-current assets
5
0.1
0.2
total non-current assets
1,373.6
1,365.1
inventories
6
130.9
132.0
trade and other receivables
7
106.1
112.0
other current financial assets
0.3
-
current tax asset
2.9
2.3
134.1
131.7
374.3
378.0
1,747.9
1,743.1
cash and cash equivalents
8
total current assets
total assets
share capital
-
share premium
other reserves
retained earnings
-
408.2
408.2
(0.4)
(7.1)
(70.4)
(54.0)
total equity
9
337.5
347.2
employee benefits
13
5.9
6.6
98.7
99.7
10.8
15.5
115.4
121.8
deferred tax liabilities
provisions
14
total provisions
liabilities
borrowings
10
755.0
761.0
shareholder loan
11
193.1
168.7
other financial liabilities
12
22.9
28.6
971.0
958.3
total non-current liabilities
trade and other payables
15
308.0
291.5
borrowings
10
10.8
18.3
other financial liabilities
16
5.2
6.0
-
-
current tax liabilities
total current liabilities
total equity and liabilities
324.0
315.8
1,747.9
1,743.1
The accompanying notes on pages 89 to 99 are an integral part of these company financial statements.
87
Spain
since 2014
1 store
On 2 April, HEMA opened the doors of its first store at
Calle Fuencarral in Madrid. Spanish customers responded
enthusiastically to the arrival of ‘GEMA’.
favourite products in the first week after opening
pop socks, Dutch breakfast cake, rubber stamps
notes to the company
financial statements
1
significant accounting policies
basis of preparation
The company financial statements of HEMA B.V. have been prepared in accordance with Section 402,
Part 9, Book 2 of the Dutch Civil Code (‘B2 DCC’). In accordance with subsection 8 of section 362, B2 DCC, the
measurement principles applied in these company financial statements are the same as those applied in the
consolidated financial statements (see note 2 of the consolidated financial statements).
In accordance with Section 402, Part 9, B2 DCC, the income statement is presented in condensed form.
investments in subsidiaries
In the company financial statements, investments in subsidiaries are stated at net asset value if the
Company effectively exercises influence of significance over the operational and financial activities of
these investments. The net asset value is determined on the basis of the accounting principles applied by
the Company. In case the net asset value of an investment in subsidiaries is negative, a provision for group
companies is set up only in case the Company is legally held liable for the subsidiaries’ liabilities. As long as the
net asset value of subsidiaries is negative no result from participations is recorded.
89
2
property, plant and equipment
(in million euros)
leasehold
improve­
ments
technical
installations
hardware
furniture
and
fixtures
trucks
and
cars
work
in
progress
total
as of January 29, 2012
at cost
66.7
61.3
36.5
234.3
5.6
7.8
412.3
accumulated depreciation
and impairment losses
(24.7)
(26.6)
(32.3)
(188.0)
(2.1)
-
(273.8)
carrying amount
42.0
34.7
4.2
46.3
3.5
7.8
138.5
at cost
16.3
13.8
4.7
14.4
1.5
6.2
56.9
depreciation
(7.1)
(6.5)
(2.2)
(13.5)
(0.9)
-
(30.2)
-
-
-
(1.4)
-
-
(1.4)
2.2
1.4
-
2.5
-
(6.2)
(0.1)
at cost
(1.1)
(0.4)
-
(26.9)
(0.3)
-
(28.7)
accumulated depreciation
1.1
0.4
-
26.9
0.3
-
28.7
at cost
84.1
76.1
41.2
224.3
6.8
7.8
440.4
accumulated depreciation
and impairment losses
(30.7)
(32.7)
(34.5)
(176.0)
(2.7)
-
(276.7)
carrying amount
53.4
43.4
6.7
48.3
4.1
7.8
163.7
at cost
9.3
8.7
0.9
9.8
0.6
5.5
34.8
depreciation
(8.0)
(7.6)
(2.4)
(14.0)
(1.2)
-
(33.2)
impairment losses charged
to profit & loss
(0.2)
(0.3)
-
(0.4)
-
-
(0.9)
1.8
1.7
0.4
2.0
-
(5.9)
-
at cost
(0.1)
(0.3)
(11.7)
(13.8)
(0.8)
-
(26.7)
accumulated depreciation
0.1
0.3
11.7
13.8
0.8
-
26.7
at cost
95.1
86.2
30.8
222.3
6.6
7.4
448.4
accumulated depreciation
and impairment losses
(38.8)
(40.3)
(25.2)
(176.6)
(3.1)
-
(284.0)
carrying amount
56.3
45.9
5.6
45.7
3.5
7.4
164.4
additions
impairment losses charged
to profit & loss
transfer from work in
progress
disposals
as of February 3, 2013
additions
transfer from work in
progress
disposals
as of February 2, 2014
90
3
intangible assets
(in million euros)
goodwill
brand
customer
relation­
ships
software
other
43.7
65.4
0.1
(19.7)
(49.7)
-
24.0
15.7
0.1
total
intangible
assets under
development
as of January 29, 2012
at cost
accumulated amortisation
and impairment losses
carrying amount
732.2
732.2
394.4
394.4
1,238.7
2.9
(69.4)
-
1,169.3
2.9
additions
at cost
-
-
-
7.8
-
3.1
10.9
amortisation
-
-
(4.3)
(8.1)
-
-
(12.4)
transfer from assets under
development
-
-
-
3.1
-
(3.1)
-
at cost
-
-
-
-
-
-
-
amortisation
-
-
-
-
-
-
-
disposals
as of February 3, 2013
at cost
accumulated amortisation
and impairment losses
carrying amount
732.2
732.2
394.4
394.4
1,249.6
43.7
76.3
0.1
2.9
(24.0)
(57.8)
-
19.7
18.5
0.1
2.9
1,167.8
(81.8)
-
additions
at cost
-
-
-
3.2
-
3.9
7.1
amortisation
-
-
(4.3)
(9.1)
-
-
(13.4)
transfer from assets under
development
-
-
-
2.4
-
(2.4)
-
at cost
-
-
-
(1.4)
-
-
(1.4)
amortisation
-
-
-
1.4
-
-
1.4
43.7
80.5
0.1
(28.3)
(65.5)
-
15.4
15.0
0.1
disposals
as of February 2, 2014
at cost
accumulated amortisation
and impairment losses
carrying amount
732.2
732.2
394.4
394.4
1,255.3
4.4
(93.8)
4.4
1,161.5
91
4
financial assets
The movements in the investments from subsidiaries are as follows:
(in million euros)
February 2
2014
February 3
2013
33.4
44.6
additions from investments
3.0
-
dividend
(1.1)
revaluation
0.1
-
income from subsidiaries
16.8
13.6
addition to provision for subsidiaries
(4.6)
0.2
47.6
33.4
opening balance
closing balance
(25.0)
For a list of significant subsidiaries see note 30 to the consolidated financial statements.
With respect to the separate financial statements of the Dutch legal entities included in the consolidation, these
companies availed itself of the exemption laid down in section 403, subsection 1 of B2 DCC. Pursuant to section
403 HEMA has issued declarations of liability for these subsidiaries (marked with an asterisk, see note 30 to the
consolidated financial statements).
5
other non-current assets
(in million euros)
February 2
2014
February 3
2013
other
0.1
0.2
total other non-current assets
0.1
0.2
(in million euros)
February 3
2013
January 29
2012
trade inventory
135.7
137.0
raw materials
0.7
0.6
other inventories
2.1
2.7
6
inventories
valuation allowance
total inventories
138.5
140.3
(7.6)
(8.3)
130.9
132.0
The raw materials and other inventories concern food, photo and packaging materials. An amount of 0.4 has
been recognised as write-offs of inventories in the income statement. All of the inventories are pledged to
secure borrowings of the Company.
92
7
trade and other receivables
(in million euros)
February 2
2014
February 3
2013
36.0
38.4
(0.8)
(0.7)
trade receivables - net
35.2
37.7
receivables from related parties
51.3
51.9
prepayments
12.1
14.6
7.5
7.8
106.1
112.0
February 2
2014
February 3
2013
trade receivables
provision for impairment
other receivables
total trade and other receivables
8
cash and cash equivalents
(in million euros)
cash on hand
cash in banks and cash equivalents
total cash and cash equivalents
12.1
12.4
122.0
119.3
134.1
131.7
93
9
equity
other reserves
(in thousand euros)
balance as of
January 29, 2012 (as
previously reported)
share
capital
18
cumulative effect of
changes in accounting standards
balance as of
January 29,
2012(restated)
share
premium
408,224
other
reserve
retained
earnings
net
profit /
(loss)
equity
attributable
to shareholders
(12,846)
478
(71,515)
11,441
335,800
-
-
225
-
(225)
-
408,224
(12,846)
703
(71,515)
11,216
335,800
-
18
cash flow
hedging
reserve
proceeds from share
premium contribution
-
-
-
-
-
-
-
cumulative effect
of changes in
accounting standards
-
-
-
600
-
(600)
-
appropriation of net
profit / (loss)
-
-
-
-
11,216
(11,216)
-
other equity
movements
-
-
4,952
(478)
478
6,406
11,358
18
408,224
(7,894)
825
5,806
347,158
balance as of
February 3, 2013
(restated)
(59,821)
Proceeds from share
premium contribution
-
-
-
-
appropriation of net
profit / (loss)
-
-
-
-
other equity
movements
-
-
18
408,224
balance as of
February 3, 2013
6,664
(1,230)
5,806
-
-
(5,806)
-
50
-
(16,420)
(9,706)
875
(54,015)
(16,420)
337,452
The changes as a result accounting standards relate to amendments in IAS19. Refer to note 2.1.1, IAS19 for more
information.
For further information on equity attributable to common shareholders see note 15 of the consolidated
financial statements
94
10 borrowings
For further information on borrowings and credit facilities see note 16 of the consolidated financial statements.
11
shareholder loan
For further information on the shareholder loan see note 17 of the consolidated financial statements.
12
other non-current financial liabilities
(in million euros)
February 2
2014
February 3
2013
financial lease liabilities
2.7
3.2
derivative financial instruments
6.4
11.6
long term lease incentive
13.8
13.8
22.9
28.6
total other non-current financial liabilities
financial lease liabilities
Financial lease liabilities are payables as follows:
(in million euros)
February 2, 2014
future
minimum
lease
payments
interest
portion
February 3, 2013
present
value of
minimum
lease
payments
future
minimum
lease
payments
interest
portion
present
value of
minimum
lease
payments
within one year
1.2
-
1.2
1.2
-
1.2
between one and five years
3.0
0.6
2.4
3.3
0.5
2.8
after five years
0.4
0.1
0.3
0.6
0.2
0.4
total
4.6
0.7
3.9
5.1
0.7
4.4
current portion
1.2
1.2
non-current portion
2.7
3.2
3.9
4.4
95
13
employee benefits
(in million euros)
February 2
2014
February 3
2013
(restated)
balance sheet obligations for
retirement benefit obligations
0.3
0.9
other long-term benefits
5.6
5.7
5.9
6.6
retirement benefit obligations
(0.3)
(0.3)
other long-term benefits
0.7
1.5
0.4
1.2
income statement charge for
Movements in the present value of the defined benefit obligation in the current year were as follows:
(in million euros)
February 2
2014
February 3
2013
(restated)
opening defined benefit obligation
0.9
2.7
current service costs
(0.3)
(0.3)
-
0.1
(0.3)
(0.3)
■ experience gains
-
(0.8)
■ assumptions losses / (gains)
-
-
-
(0.8)
contributions from plan participants
-
0.4
liabilities extinguished on settlements
(0.3)
(1.1)
closing defined benefit obligation
0.3
0.9
interest costs
remeasurements
96
long term employee benefits
Movements in the present value of the jubilee plan obligation in the current year were as follows:
(in million euros)
February 2
2014
February 3
2013
opening obligation
5.7
4.8
current service costs
0.3
0.3
interest costs
0.2
0.2
actuarial losses
0.2
1.0
benefits paid
(0.8)
(0.6)
closing obligation
5.6
5.7
2013
2012
current service costs
0.3
0.3
interest costs
0.2
0.2
actuarial losses
0.2
1.0
total
0.7
1.5
The amounts recognised in the income statement are as follows:
(in million euros)
five year history of retirement benefit obligation and jubilee plan
The assumptions used in the actuarial calculations of the defined benefit require a large degree of judgment.
Actual experience may differ from the assumptions made. The following table provides a summary of the
defined benefit obligations and adjustments arising from changes in experience and assumptions over the
past five years:
(in million euros)
2013
2012
2011
2010
2009
■ retirement benefit obligation
0.3
0.9
2.7
4.5
6.6
■ jubilee plan
5.6
5.7
4.8
4.8
4.8
total obligation
5.9
6.6
7.5
9.3
11.4
-
(0.8)
(0.3)
(0.2)
(0.3)
■ jubilee plan
0.2
1.0
0.1
(0.0)
0.1
total loss / (gain)
0.2
0.2
(0.2)
(0.2)
(0.2)
present value of defined benefit
obligations
experience (gains) / losses on
defined benefit obligations
■ retirement benefit obligation
97
14
provisions
The table below specifies the change in total provisions (current and non-current):
(in million euros)
subsidiaries
as of February 3, 2013
current portion
15.5
non-current portion
15.5
changes in the provision during the year
additions
-
used during the year
(4.7)
release to income
-
interest accretion
-
closing carrying amount
10.8
as of February 2, 2014
current portion
10.8
non-current portion
10.8
The provision for subsidiaries represents the negative equity value of the Company’s subsidiary HEMA
Duitsland B.V.
15
trade and other payables
(in million euros)
February 2
2014
February 3
2013
158.4
162.2
amounts due to related parties
15.5
15.4
accrued expenses
54.0
54
trade payable
payroll taxes, social security and VAT
31.5
11.1
payroll accruals
36.9
38.5
11.7
10.3
308.0
291.5
other
total trade and other payables
98
16
other current financial liabilities
(in million euros)
February 2
2014
February 3
2013
interest
3.5
2.4
financial lease liabilities (current portion)
1.2
1.2
derivative financial instruments
0.5
2.4
total other current financial liabilities
5.2
6.0
17
commitments
See note 28 of the consolidated financial statements.
18
remuneration of the board of managing
directors and the supervisory board
In 2013 a total remuneration of 1.6 was accounted for with respect to the members of the board of managing
directors (2012: 1.0). These amounts are including a, temporary, tax imposed on salaries above € 150.000
(“crisisheffing”). In 2013 HEMA has accrued 0.2 for this tax (2012: 0.1).
The remuneration of Mr. Darwent and Mrs. Minnick as members of the supervisory board is included in fees
paid to Lion Capital. The remuneration with respect to 2013 for both Mr. Collee and Mr. Moberg as members
of the supervisory board was 40 thousand euro each (2012: 40 thousand euro each). On top of their
remuneration, travel expenses of Mr. Collee and Mr. Moberg are also reimbursed (if and when applicable).
19
employees
The average number of employees and full-time equivalents during 2013 was 9,930 and 4,071 respectively (2012:
9,884 and 4,136).
management board
Ronald van Zetten, Chief Executive Officer
Ad Walter, Chief Financial Officer
Rob Heesen, Director Buying and Merchandising Food and Buying desk
Machiel Lagerweij, Director Operations
Alex Jonker, Director Supply Chain
supervisory board
Robert Darwent, Chairman
Mary Minnick, Vice-Chairman
Dolf Collee
Anders Moberg
Amsterdam, the Netherlands, March 28, 2014
99
espaciosa
y funcional
inspiring, spacious and functional
inspiradora,
other information
events after reporting
date
As at February 17, 2014, HEMA announced a restructuring at its headoffice, bakeries and distribution centre. In
total 65 FTE will be become redundant. For the restructuring a provision of approximately 6 till 7 million will be
recorded in the first quarter of 2014. The cash out for the provision is expected to take place in 2014.
101
2014
opening 3 stores
At the beginning of 2014, HEMA announced it would
expand into two new countries this year: Spain and
England.
The English are particularly looking forward to HEMA’s
make-up, gifts and household items.
inspiring, spacious and functional
England
independent auditor’s
report
to the general meeting of HEMA B.V.
report on the financial statements
We have audited the accompanying financial statements 2013 of HEMA B.V., Amsterdam as set out on pages
32 to 99. The financial statements include the consolidated financial statements and the company financial
statements. The consolidated financial statements comprise the consolidated balance sheet as at 2 February
2014, the consolidated income statement, the consolidated statement of comprehensive income, changes in
equity and cash flows for the year then ended and the notes, comprising a summary of significant accounting
policies and other explanatory information. The company financial statements comprise the company
balance sheet as at 2 February 2014, the company income statement for the year then ended and the notes,
comprising a summary of accounting policies and other explanatory information.
management board’s responsibility
The management board is responsible for the preparation and fair presentation of these financial statements
in accordance with International Financial Reporting Standards as adopted by the European Union and with
Part 9 of Book 2 of the Dutch Civil Code, and for the preparation of the Report from the Management Board in
accordance with Part 9 of Book 2 of the Dutch Civil Code. Furthermore, the management board is responsible
for such internal control as it determines is necessary to enable the preparation of the financial statements that
are free from material misstatement, whether due to fraud or error.
auditor’s responsibility
Our responsibility is to express an opinion on these financial statements based on our audit. We conducted
our audit in accordance with Dutch law, including the Dutch Standards on Auditing. This requires that we
comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about
whether the financial statements are free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the
financial statements. The procedures selected depend on the auditor’s judgment, including the assessment
of the risks of material misstatement of the financial statements, whether due to fraud or error. In making
those risk assessments, the auditor considers internal control relevant to the company’s preparation and
fair presentation of the financial statements in order to design audit procedures that are appropriate in
the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the company’s
internal control. An audit also includes evaluating the appropriateness of accounting policies used and the
reasonableness of accounting estimates made by the management board, as well as evaluating the overall
presentation of the financial statements.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our
audit opinion.
103
opinion with respect to the consolidated financial
statements
In our opinion, the consolidated financial statements give a true and fair view of the financial position of
HEMA B.V. as at 2 February 2014, and of its result and its cash flows for the year then ended in accordance with
International Financial Reporting Standards as adopted by the European Union and with Part 9 of Book 2 of
the Dutch Civil Code.
opinion with respect to the company financial
statements
In our opinion, the company financial statements give a true and fair view of the financial position of HEMA
B.V. as at 2 February 2014, and of its result for the year then ended in accordance with Part 9 of Book 2 of the
Dutch Civil Code.
report on other legal and regulatory requirements
Pursuant to the legal requirement under Section 2: 393 sub 5 at e and f of the Dutch Civil Code, we have no
deficiencies to report as a result of our examination whether the Report from the Management Board, to
the extent we can assess, has been prepared in accordance with Part 9 of Book 2 of this Code, and whether
the information as required under Section 2: 392 sub 1 at b-h has been annexed. Further we report that the
Report from the Management Board, to the extent we can assess, is consistent with the financial statements as
required by Section 2: 391 sub 4 of the Dutch Civil Code.
Rotterdam, 28 March 2014
PricewaterhouseCoopers Accountants N.V.
Original signed by J.G. Bod RA
104
105
there is
no other store concept
like HEMA
in Europe
statutory
appropriation of the
result
The holders of common shares are entitled to one vote per share and to participate in the distribution of
dividends and liquidation proceeds. Pursuant to article 25 of the articles of association the income, after
reservations made by the Board of Managing Directors in consultation with the Supervisory Board, will be
available for distribution to the common shareholders upon approval at the General Meeting of Shareholders.
Amounts not paid in the form of dividends will be added to accumulated general reserves. Consequently, net
profit according to the company statements of operations is fully attributable to common shareholders. The
proposed profit-sharing statement reads as follows:
(in million euros)
net (loss) / profit
dividends
charged to the general reserves
February 2, 2014
February 3, 2013
(16.4)
5.8
(16.4)
5.8
107
cautionary notice
This annual report contains forward-looking statements, which do not refer to historical facts but refer to
expectations based on management’s current views and assumptions and involve known and unknown
risks and uncertainties that could cause actual results, performance or events to differ materially from those
included in such statements. Many of these risks and uncertainties relate to factors that are beyond HEMA’s
ability to control or estimate precisely. Readers are cautioned not to place undue reliance on these forwardlooking statements, which speak only as of the date of this annual report.
109
contact information
general information
HEMA corporate communication
NDSM-straat 10
1033 SB Amsterdam
The Netherlands
t 020 311 44 11
e [email protected]
visiting address
NDSM-straat 10
1033 SB Amsterdam
The Netherlands
p.o. box
postbus 37110
1030 AC Amsterdam
www.hema.nl
trade register no. 34215639
110
HEMA annual report 2013