Annual Report • Mar 24, 2016
Annual Report
Open in ViewerOpens in native device viewer
OUR MISSION
Shaping the bodies and minds of women
Our gratitude goes out to all of our employees. Their involvement in the realization of the company objectives and their dynamism enable us to achieve the reported results and to have confidence in the future.
Thibaut de Saint Chamas (Marie Jo) Zeb Daemen (PrimaDonna) Txema Yeste (Andres Sarda)
Lannoo Drukkerij 151649 | www.lannooprint.be
Deze jaarbrochure is eveneens beschikbaar in het Nederlands, bij de hoofdzetel van de onderneming.
For clarification of the information in this annual report please contact: Stefaan Vandamme Financial Director Tel.: (09) 365 21 00 Fax: (09) 365 21 70
Van de Velde NV Lageweg 4 9260 Wichelen Tel.: (09) 365 21 00 Fax: (09) 365 21 70 VAT number : BE0448 746 744 Company number RPR 0448 746 744 Dendermonde website: www.vandevelde.eu
| 1. | The year 2015 | 5 |
|---|---|---|
| Message from the Chairman | 5 | |
| Activity report by the CEO and Prospects for 2016 | 8-11 | |
| 2. | Description of the company and its activities | 13 |
| 3. | Corporate Governance | 15 |
| Remuneration report | 18 | |
| Information to shareholders | 22 | |
| 4. | Consolidated key figures 2015 | 24 |
| 5. | Consolidated financial statements and related notes | 29 |
| 6. | Auditor's report on the consolidated financial statements | 63 |
| 7. | Concise version of the statutory financial statements of Van de Velde NV | 64 |
| 8 | Statement of responsible persons | 68 |
| 9. | Employment, environment and contribution to the BelgianTreasury | 70 |
| Social report | 70 | |
| Environmental report | 75 | |
| Contribution to the BelgianTreasury | 76 |
Van de Velde has enjoyed 18 years of uninterrupted growth since the IPO in 1997. That has been a constant trend since 1945, with the exception of a brief period during the crisis in the 1970s.
A growth record like that is no fluke. It is the result of entrepreneurial spirit, hard work, intellectual insight, courage and the gift of making the right decisions when opportunities arise. Luck is also a factor, but one that is ranked below all those other things. It is the luck of sporting world champions who always have the best equipment and are always in the best physical and mental condition. It is not the luck of a gambler in a casino. It is not only wrong to make such a comparison but actually insulting. To the entrepreneur, to management and to the employees.
Van de Velde is facing some very big challenges. The primary reason why we are very successful is that we have achieved such a level of excellence in our core businesses and concepts that not a single direct competitor has been able to copy us. This is because we have a clear strategic vision, which we translate into operational excellence, leading in turn to outstanding financial efficiency.
That has made us neither arrogant nor reckless. Under-promise and over-deliver is part of our DNA. But we are proud of what we have achieved.
Martin Whitmarsh – CEO of McLaren F1 for 25 years, in which time the company grew from 100 to 3,000 employees – tells a story from his early years at British Aerospace. Due to the Falklands War, his team had five weeks and almost no money to convert Harrier jet fighters so that they could land and take off from an aircraft carrier. He managed it and not a single Harrier crashed. Without that state of urgency the process would no doubt have taken five years with endless committees, meetings, consultants, red tape and sky-high budget overruns.
Van de Velde is a company that is in a constant state of urgency. That is because we are a fashion company and our collections have to be ready on time every single season. 65% of our turnover is generated by products that did not exist six months earlier. The knowledge that things can go awry every six months teaches us to be modest. But it also makes us very strong, very thorough, disciplined, methodical and hardened against setbacks. We run, fall, get up and go again. Every day. Without losing sight of the long term.
Van de Velde is all about 'Sustainability' and 'Heritage'. Our 'Sustainability' is our capacity to continue our 'Heritage' unobstructed. Our state of mind is to continually upgrade the value scale of our products and services. In a creative, functional, purely technical, emotional and customer-oriented way.
Van de Velde is also about 'Focus'. In the early seventies I had a card on my desk with the text 'Simplicity is no Simple Thing'. The words are Charlie Chaplin's.
Passed on from one generation to the next that 'Simplicity is no Simple Thing' attitude has enabled us to get better and better at what we already did well and had a talent for. For that to succeed there must be a readiness to cut away everything that does not make a positive contribution, and to not accept that you need to take the bad with the good. Being able to say 'no', 'no' and 'no' again. And saying 'yes' only when the time is right and then going for it unflinchingly.
Simplicity is what should bring us to focus on the essence. Only that which is strictly necessary should be set down in rules and procedures. In a company everything that is not strictly necessary must be cut away; that is the only right way for a well functioning, affordable administration. It is the only right way to free up budgets and energy for creative projects that are truly innovative.
Today's economic world is controlled by 'Blur' and 'Disruption'. Is our attitude at odds with that? Not at all.
For consumers the range of products – the embarrassment of choice – on today's market is all an incredible blur. No wonder that the most successful companies are the ones that manage to clearly convey their range to consumers and to link it to a similarly clear brand identity. This is a basic reason why Van de Velde endeavours to build the strongest possible partnership with multi-brand shops and why we have set up our retail business unit. We now develop alternatives, but never in opposition to the interests of our independent multi-brand shops. Bottom line: we do not care whether a product is sold through an independent retailer, a franchise, one of our own stores or any other concept, as long as the fitting room is central. The shop is the final stage the product passes through before it reaches the consumer. Our number one priority is that consumers buy the product that meets their expectations fully, backed by service that offers added value, so that they are not left with any niggling doubts about their decision. In other words: the primary responsibility of our broad retail vision is removing the 'Blur'. That is a never-ending task that always adapts to modern techniques without neglecting the depth of consumer need.
'Disruption': however important our sustainability and heritage may be to us, we are not blind to the disruptive developments in our environment. But that is not really new. We have already survived a number of them. The first, life-threatening one concerned the relevance of our product. Two generations ago lingerie was still corsetry and the relevance of the product was one of 'decency and looking presentable'. The sixties turned that upside down. Bras were burned or in the bestcase scenario downgraded to the status of functional underwear. By adding the aspects of luxury and fashion to the product we created a new relevance. That of self-indulgence and seduction. And we were back on track again.
Another highly radical disruption came in ready-to-wear clothes. It was one of the biggest branches of industry and unquestionably the biggest employer for women in our region after the Second World War. But business went global and Western Europe could no longer compete with the huge production capacity possibilities across the world. Labour costs were just one aspect of this. The pattern of social expectations and demographic factors, such as the falling birth rate, played a role. Needlework schools quickly started closing in every provincial town. There are none left now. Education and training went in other directions. The culture changed: no mother or father saw a future for their daughter in ready-to-wear clothes making.
Van de Velde adapted accordingly. Clothes production moved to the Far East and North Africa, although the parent company controlled every last detail by means of strict regulations and procedures. Because the primary policy demand is not simply delivering the highest quality, but also constantly raising the quality bar.
The enemy – disruption – is routine. The remedy is resilience. Internet has made knowledge and education accessible to all. No line of business can feel protected or safe. The government has no role to fulfil here. It should not protect industry. Companies need to develop from within the strength needed to survive in a disruptive society. If they cannot it is preferable that they die. However, the government must create an environment in which entrepreneurs want to work. In the past it has often shown that it can be an outstanding stimulator of tremendous economic growth. That is because it is able to set up large-scale infrastructure and macro-economic projects: in the 19th century the rail network in Europe; in the 20th NASA in the United States.
Once the government has created that context it must give entrepreneurs complete freedom to work. That is why Silicon Valley is in the United States and not in Eastern Europe.
Being an entrepreneur is about trying, failing and trying again. That has to be more than something you like doing, it is a 'Destiny'.
Entrepreneurs are doers. They do not know what the result will be when they start. They do not know what the likelihood of success is. But entrepreneurs are not speculators or gamblers. They do not do it for the money. However, the paradox is that they would not do it without the money.Those who do their best and take the risks deserve the prize. Those who go for it and get something back should be able to keep it. The right, the freedom and the incentive to create a business are inextricably linked to the right to property and the right to keep it. The entrepreneur must be able to use the money he earns as he sees fit. Being the boss, having the freedom to make decisions, is the soul of entrepreneurship. It is that freedom that makes society dynamic. That is where the most diverse projects arise. If the entrepreneur, large or small, can no longer do that he will come to a shuddering halt or he will relocate. Anyone who says otherwise is mistaken. That has been proven plenty of times throughout history.
Entrepreneurship is a matter of minimal rules. Entrepreneurship is diametrically opposed to supervision and bureaucracy.
The government constantly creates more and more rules. The more regulation we have the less we have left to regulate and the more rules we have that address trivialities. This is an illness that affects not only government. As a company grows it must be strictly on its guard to ensure this does not creep in.
Entrepreneurship is a game played by individuals and small groups of like-minded people. They are the ones that need to be encouraged. Clearly, they must follow the universal rules of human values and rights in full, without concession, and translate this vision into the policy of their company. Clearly, there must be laws to that end and there must be supervision. But preferably as little as possible.
Simplicity is no simple thing.
Lucas Laureys Chairman of the Board of Directors
Companies can never think in terms of the next twelve months or the next three or five years. Budgets and multi-year plans are only snapshots on an unending path; companies need to dare to think about the never-ending strengthening of their business concept, with no more than one step in the right direction every year. Never stop growing and improving is the mission. The goal is better service every year towards a clear solution to consumer needs and customer demands; new ideas and engaged employees are other key factors here.
2015 was another very good year for Van de Velde, not only because of the year's results, but also because of the continuation and modernisation of the vision and, from that, the launch of a number of concrete initiatives that will only start to pay off in the years to come. We are building a company whose main focus is the self-image of the woman, a fitting room vision to the left of her and a brand world to the right of her. We have been building for years and we are making progress. We do that because we are convinced that going forward women will always look for confidence and high-quality, trendy lingerie linked to a contemporary fitting room concept. We have to fill that need.
2015 saw the release of Episode VII of Star Wars in which the good and the bad side of the Force confronted each other once again. Van de Velde experienced two sides of the coin this year, too. In the wholesale department performance exceeded expectation virtually across the board, in terms of both brand perception and customer management. Throughout the company we have continued to roll out a performance ethics culture that creates an ever-better balance between job satisfaction and result. Progress was unsatisfactory within the retail department, however. A number of old supply chain issues were tackled, which is expected to further improve product quality and delivery reliability in the future.
It was a good decision to merge Marie Jo and Marie Jo L'Aventure in 2014 and run them as a single team under the same management. The Marie Jo L'Aventure collection has made great strides, following on from Marie Jo, which made similar advances the previous year. The brand team conducted an in-depth analysis of the essence of the brand, which led to the 'Created for living and loving' campaign. The vision will only lead to more improvements, based on a single starting point, providing stylists and marketers with the inspiration to develop the collections, add new categories and run incisive campaigns. 2013 and 2014 were years in which Marie Jo found new energy, confirmed in 2015 by the slightly higher turnover, better consumer comments and higher sell-out at stores.
PrimaDonna was given a strategic boost in 2010 by focus in sales and marketing, and providing additional resources and space for new categories. PrimaDonna Twist (2010) and PrimaDonna Swim (2014) have become very important parts of the total brand image. The campaign has been clearly established for many years and the brand has been given more and more resources. So growth in 2015 is not only due to time and energy invested during the year, but also the strategic vision and the work done in the preceding years. In 2015, the campaign was given the name 'Ode to Curves'. This perfectly reflects the work of past years and offers a great many opportunities going forward.
Andres Sarda has grown since the price adjustment for the lingerie collection. New point-of-sales material did its job well at customers in
The three strategic programmes that have been implemented to build and grow our brands were greatly enhanced in 2015:
For decades, Van de Velde has favoured the fitting room channel. We have not allowed ourselves to be discouraged by the fact that this channel is losing market share around the world except in the Benelux.
The Lingerie Styling programme was launched in 2007 and it is Van de Velde's most successful channel programme. Lingerie Styling encourages independent retailers to make advancements with regard to their positioning and service, through training, mystery shopping and marketing incentives. There are three growth areas in our wholesale channels:
In 2015 Van de Velde grew in virtually all geographical markets. First and foremost, this is due to the quality and engagement of our people. Growth in all core markets – especially Europa and North America – was moderate or strong. Only smaller countries (Austria, Russia and Sweden) went backwards. That means that our philosophy works.
New dimensions were added to Lingerie Styling in 2015 that will be important going forward:
Currently activated in three markets, the programme will be rolled out to three more (France, United Kingdom and Switzerland).The acceleration begun and tested in 2015 will have its biggest impact in 2016.
We need to think not only about today and tomorrow, but also the days after tomorrow. The disruptive board was set up in 2015. Twelve managers take the time to think about long-term possibilities, challenged by two external experts. As their starting point they take the same consumer and customer needs, but are able to approach them differently. What will the fitting room look like in 10 to 20 years? How can we combine e-commerce with the fitting room? What product developments can we expect? Which players have arrived that challenge our current fitting room model? What route do our brands take to consumers? These questions do not generate income during the first few years, but it is essential that our company stays on the ball in the long term without throwing the traditional fitting room out with the bathwater. The goal is to achieve a smooth transition between today and tomorrow, with the needs of consumers as starting point.
Retail is a constant process of trial and error.There is no doubt whatsoever that retail has inspired a number of new developments in wholesale, but on its own that is not enough. The goal remains to create a brand at the high end of the market with Lingerie Styling as positioning tool. However, whatever the positioning of the concept, quality, drive and teamwork are what makes the difference.
Continental Europe. Moderate progress was made in both Germany and the Netherlands after a strong 2014. There was limited organic growth (store by store). In the Netherlands the Lincherie formula is attracting new franchisees at a good pace and the first new franchises were also opened in Germany. However, geographical expansion in Germany was below expectations.
United Kingdom. The performance during the first half of the year was below expectations and even negative.The change of the local managing director in the summer of 2015 proved to be a turning point. The team has again focused on consumers and the drive of store staff, which ushered in a change of fortunes, although it was not enough to generate organic growth on an annual basis. However, growth was posted in the second half of the year.
United States. Intimacy no longer exists. The name has been changed to Rigby & Peller USA. A new country manager was appointed at the beginning of October.The consumer service was improved. It is important that our US organisation now shows that it can grow. In both 2014 and 2015 Intimacy made a negative cash contribution to our result, whereas our wholesale business is growing steadily in the United States and Canada. So the market is not to blame, we are. We need to improve our positioning and our service package to consumers.
Hong Kong and Dubai. After three reasonable years, the joint venture in China experienced an unexpected downturn. Two important locations were lost, which strongly impacted turnover growth. In Dubai a licensing contract was signed and a new location will hopefully open in 2016. Van de Velde does not manage either initiative, it does steer the concept.
The priorities are clear in our supply chain: (i) supplying high-quality products (ii) on time (iii) in the most cost-effective way. The increase in the number of product references makes it important that our basic processes are improved. An increase in the number of stock keeping units (SKU) is comparable to a rise in the number of cars on the roads. The last 500 cars cause huge traffic jams if the road infrastructure is not upgraded.
The quality of our products is an important issue for our company. Because of the increase in the number of references, an eye must be kept on the number of customer complaints. A problem with wires in 2014 led to a slight rise in the number of complaints, but the issue was firmly tackled in early 2015 and has now been resolved. Our teams work hard with suppliers to ensure they fully understand how vital product quality is and act accordingly. A 'passion for product' task force has been set up to work on systematic improvement and training.
Delivery reliability was above our internal expectations in the first half of the year, but fell short of expectations in the second half of the year, which means we were on target over the year as a whole. This is not
acceptable, however. We need to tackle two core problems that have their roots far in the past: (i) the internal discipline in our design department with regard to meeting agreed deadlines and (ii) the quality and delivery reliability with regard to incoming raw materials. Systematic programmes were developed in 2015 and these will be rolled out in 2016, producing better results from 2017.
Since the closure of Hungary a number of years ago, our product assembly is consolidated in two geographical regions, Asia (Top Form) and Tunisia (our own plant and two suppliers). We are satisfied with these cornerstones. Top Form is a dynamic, competitive company that has experienced a smooth handover to the next generation. The political situation inTunisia is stable at the moment. Both cornerstones offer good value for money. That said, in today's geopolitical context it is wise to develop a third cornerstone. As such, tests are underway with a number of companies in Sri Lanka.
Culture is essential in every company and is increasingly a competitive weapon. Culture is all about 'what' and 'how'. What brings and keeps us together? What do we all want to achieve together? How do we treat each other? What do we expect from one another? What is our social contract? Under our leadership only one thing counts: 'performance ethics'. We must expect each other to improve our performance and exceed our goals, but we must do that in a transparent, open and respectful way. Customer focus, clarity, a system without excessive administration, permanent feedback, attention for implementation, open dialogue with the works council in the interests of all, speed of action, keeping promises. In this culture there can be no privileges.
Besides the annual growth interviews (for the past three years management has held open group discussions with all people and departments in the company on how the values are experienced) extra informal sessions were held between the CEO and the shopfloor in 2015. The best example of this are the sandwich lunches in which the participants talk openly about what is going well and what can be improved.
The annual performance interviews have been done away with for office workers and replaced with a permanent feedback system. This way of working will be extended to the other staff in 2016.
For the first time a dedicated 'Employee Day' was scheduled to explain to the whole company where Van de Velde's future lies. That is one project we all work on together, everyone in the same room, one vision made accessible. It was followed by relaxation and teambuilding.
The SA 8000 label was renewed. Van de Velde is committed to treating people right not only informally but also formally.
We pushed on with our customer friendliness drive. We are gradually moving in the right direction in our efforts to improve our consumer and customer service. This project now has strong support throughout the company.
Nothing can be achieved without the quality and engagement of management. Various training programmes have been set up (Vlerick, Unicorn). There is extra attention for self-knowledge, feedback, entrepreneurship and teamwork. We must not think in terms of the interest of our department, but our department's role in improving the products and the customer experience. We have make short work of the concept of the 'internal customer'. There is only one customer: the external customer.
2014 was a record year and 2015 went even further. We are very confident that 2016 will again take it to the next level.
For a detailed description of the mission, core business and history, please visit our website at www.vandevelde.eu.
The current Group structure is as follows:
Van de Velde is a listed family company and as such it gives special attention to gearing its operations and organization to the provisions of the Corporate Governance Code.
On 18 February 2014 the Board of Directors of Van de Velde NV approved the Corporate Governance Charter, which is available on the company's website.
The company's family nature is also an important ingredient in good governance. That is because the family has an interest in the company being managed in a professional and transparent way.That is expressed among other things by the presence of experienced family members on the Board of Directors.
Corporate governance and transparency are also discussed in other chapters of this annual report.
The Board of Directors of Van de Velde NV is composed as follows:
Honorary director: Henri-William Van de Velde, son of the founder, Doctor of Laws.
EBVBA Benoit Graulich, BVBA Dirk Goeminne and Emetico NV are considered to be independent directors.
Lucas Laureys, Bénédicte Laureys, Mavac BVBA and Herman Van de Velde NV represent Van de Velde Holding NV, the majority shareholder of Van de Velde NV and are non-executive directors.
EBVBA 4F is managing director and also a member of the Management Committee.
As from 1 January 2016 Herman Van de Velde NV chairs the Board of Directors.
The company secretary is Nathalie De Kerpel, legal counsel.
Van de Velde's Board of Directors directs the company in accordance with the principles laid down in Belgium's Companies Code and makes decisions on the general policy. These comprise the assessment and approval of strategic plans and budgets, supervision of reports and internal controls and other tasks assigned by law to the Board of Directors.
Pursuant to Article 524bis of Belgium's Companies Code, the Board of Directors has established a Management Committee to which it has delegated its managerial powers, with the exception of general policy and all actions that are reserved to the Board of Directors by statutory provisions.
The Board of Directors has also established the following advisory committees: an Audit Committee, a Nomination and Remuneration Committee and a Strategic Committee.
For a detailed description of the operation and responsibilities of the Board of Directors we refer to the company's Corporate Governance Charter, which is published on the company's website.
In 2015 the Board of Directors met six times. There was an additional meeting of the Board of Directors attended only by the non-executive directors for the purpose of evaluating the interaction between the Board of Directors and the Management Committee. Mavac BVBA and EBVBA Benoit Graulich were excused during one board meeting. BVBA Dirk Goeminne was excused during two board meetings. For the rest, all board meetings were fully attended.
The objective of the Audit Committee is to assist the Board of Directors in carrying out its control tasks with respect to Van de Velde's financial reporting process, including supervision of the integrity of the financial statements, and the qualifications, independence and performance of the statutory auditor.
The Audit Committee advises the Board of Directors on the following:
;
– External audit.
The Audit Committee is composed as follows:
1 Nominated by means of co-optation as from 1 January 2016 as replacement of Lucas Laureys NV, who resigned as a director as of the same date.
2 Nominated as of 1 January 2016 in replacement of Lucas Laureys NV.
The members of the committee possess sound knowledge of financial management.
The chairman of the Audit Committee is EBVBA Benoit Graulich, always represented by Benoit Graulich.
The Audit Committee meets no fewer than three times a year and as often as considered necessary for its proper operation. In 2015 the Audit Committee met five times. BVBA Dirk Goeminne was excused during two Audit Committees. For the rest, all Audit Committees were fully attended.
(b) Strategic Committee
The role of the Strategic Committee is to assist the Board of Directors in establishing the company's strategic direction. Other important strategic themes can be discussed ad hoc, including:
The Strategic Committee is composed as follows:
The chairman of the Strategic Committee is Lucas Laureys. Other members of the Board of Directors can be invited to participate in the Strategic Committee on an ad hoc basis.
The Strategic Committee meets no fewer than two times a year and as often as considered necessary for its proper operation.
The Nomination and Remuneration Committee formulates recommendations to the Board of Directors concerning the company's remuneration policy, the remuneration of the directors and members of the Management Committee and the appointment of the directors and members of the Management Committee, and is responsible for the selection of suitable candidate directors.
The Nomination and Remuneration Committee is composed as follows:
The chairman of the Nomination and Remuneration Committee is BVBA Dirk Goeminne, represented by Dirk Goeminne. All members of the committee possess sound knowledge of remuneration policy.
The Nomination and Remuneration Committee meets as often as is needed for its proper operation, but never less than two times every year. The Nomination and Remuneration Committee met four times in 2015. All members attended these meetings.
No director attends the meetings of the Nomination and Remuneration Committee in which his or her own remuneration is discussed or may be involved in any decision concerning his or her remuneration.
For a detailed summary of the responsibilities and the operation of the various committees established by the Board of Directors, see the company's Corporate Governance Charter, which is published on the company's website.
In accordance with Article 23.4 of the Articles of Association and Article 524bis of Belgium's Companies Code, the Board of Directors established a Management Committee on 2 March 2004.
The Management Committee meets on average every three weeks and is responsible for managing the company. It exercises the managerial powers that the Board of Directors has delegated to the Management Committee.
The Management Committee is composed as follows:
As of 1 February 2016 Dirk De Vos will no longer be a member of the Management Committee.
The chairman of the Management Committee is EBVBA 4F, always represented by Ignace Van Doorselaere (CEO).
The members of the Management Committee are appointed and dismissed by the Board of Directors on the basis of the recommendations of the Nomination and Remuneration Committee. The members of the Management Committee are appointed for an indefinite period, unless the Board of Directors decides otherwise. The ending of the tenure of a member of the Management Committee has no impact on the agreements between the company and the person involved as regards additional duties over and above this tenure.
1 Nominated as of 1 January 2016 in replacement of Lucas Laureys NV.
2 Nominated as member of the Nomination and Remuneration Committee as of 1 January 2016 in replacement of Lucas Laureys NV.
In addition to the Management Committee, Van de Velde's daily management is in the hands of EBVBA 4F, always represented by Ignace Van Doorselaere, managing director.
At least every three years, the Board of Directors, headed by its chairman, conducts an evaluation of its size, composition and performance, and the size, composition and performance of its committees, as well as the interaction with the Management Committee. The directors give their full cooperation to the Nomination and Remuneration Committee and any other persons, within or outside the company, responsible for this evaluation. Based on the findings of the evaluation, the Nomination and Remuneration Committee will, where applicable and in consultation with any external experts, submit to the Board of Directors a report of the strengths and weaknesses and any proposal to appoint new directors or refrain from renewing a directorship.
The Board of Directors evaluates the performance of the committees at least every three years.
The non-executive directors evaluate their interaction with the Management Committee annually.
The CEO together with the Nomination and Remuneration Committee evaluates the functioning and performance of the Management Committee annually.
The remuneration report provides transparent information on Van de Velde's remuneration policy for its directors and members of the Management Committee, in accordance with the Belgian Corporate Governance Act of 6 April 2010 and the Belgian Corporate Governance Code. The underlying remuneration report will be submitted for approval to the General Meeting of 27 April 2016 and presented to the works council, in accordance with the provisions of the Act.
The company's remuneration policy is focused on attracting and retaining profiles with the experience needed to ensure the continuity and growth of the company. The aim of the reward policy is to ensure employees are properly compensated, based on the performance of the employee and the company. The evolution of the total reward is linked to the results of the company and individual performance.
The Nomination and Remuneration Committee makes recommendations to the Board of Directors with regard to the compensation for directors, including the chairman of the Board of Directors. These recommendations are subject to the approval of the Board of Directors.
The compensation for the non-executive directors is proposed to the General Meeting. They receive only fixed remuneration for their membership of the Board of Directors and the advisory committees on which they have a seat. The amount of the remuneration will only take into account their role in the Board of Directors and various committees, the ensuing responsibilities and time spent.
The non-executive directors receive no performance-related remuneration such as bonuses, long-term payments, non-cash benefits or pension plans. Non-executive directors are not granted any options or warrants.
For his chairmanship, his membership of the Nomination and Remuneration Committee, the Audit Committee and the Strategic Committee, the chairman of the Board of Directors (Lucas Laureys NV) received an annual gross remuneration of 60,000 euro. As from 1 January 2016 Herman Van de Velde NV, permanently represented by Herman Van de Velde, was appointed as chairman. Herman Van de Velde NV will receive an annual gross remuneration of 25,000 euro for its chairmanship, his membership of the Nomination and Remuneration Committee and the Strategic Committee. The other non-executive members receive annual remuneration of 15,000 euro for their membership of the Board of Directors and 2,500 euro for their membership of the Audit and/or Nomination and Remuneration Committee respectively. BVBA Dirk Goeminne and EBVBA Benoit Graulich are both a member of the Nomination and Remuneration Committee and Audit Committee, and therefore receive a total annual remuneration of 20,000 euro.
The members of the Board of Directors who are also members of the Management Committee receive no remuneration for their membership of the Board of Directors.
A directorship may be terminated at any time without any form of compensation. There are no employment contracts or service contracts that provide for notice periods or severance payments between the company and the members of the Board of Directors who are not members of the Management Committee.
The level and structure of the remuneration for the members of the Management Committee must be such that qualified and expert professionals can be attracted, retained and motivated, bearing in mind the nature and scope of their individual responsibilities. To this end, an international HR consultant is given the task of proposing the job weighting and the corresponding customary salary package in the relevant market. The compensation is regularly benchmarked on the basis of a relevant sampling of listed companies.
The managing director makes proposals to the Nomination and Remuneration Committee with regard to members' remuneration on an individual basis.
Other principles on which the remuneration policy is based:
A variable annual remuneration ('team bonus') is granted to the CEO and the members of the Management Committee. This is based on the attainment of annual targets relating to the fiscal year for which the variable remuneration is payable, as set by the Nomination and Remuneration Committee. These targets are based on objective parameters and are closely linked to the results of the Group. Every year, the Nomination and Remuneration Committee evaluates the degree to which the targets1 have been met and submits this report to
1 In respect of the targets related to the results of the Group, the audited accounts are used as a basis to determine whether these targets have been reached.
the Board of Directors for approval.The maximum amount of this team bonus, not including the CEO, is 37,500 euro per member. For the CEO the maximum amount is 308,454 euro, half of the bonus shall be paid after the closing of the financial year and the other half at the latest in February 2017.
There is also an individual bonus scheme for some members of the Management Committee, including the CEO, based on the attainment of individual targets relating to the fiscal year for which the variable remuneration is payable, as set down every year in writing by the Nomination and Remuneration Committee. These targets are based on objective parameters and are closely dependent on the responsibilities of the member in question. The Nomination and Remuneration Committee evaluates the degree to which these individual targets have been attained and submits this report to the Board of Directors for approval. For the CEO, this individual bonus will be paid at the latest in February 2017.
The maximum amount of the individual variable remuneration is 27% of the gross basic remuneration2 , not including one member whose maximum bonus is 45% of the gross basic remuneration. In addition to the variable remuneration system, the Board of Directors retains the discretionary power to grant an additional bonus to the CEO and one or more members of the Management Committee to reward a specific performance or merit, on the proposal of the Nomination and Remuneration Committee.
There are no special agreements or systems that entitle the company to claim back variable remuneration that has been paid out if it has been granted erroneously on the basis of data that subsequently proves to be incorrect. In such cases, the company will invoke the possibilities found in common law.
With regard to the relative importance of the variable remunerations, see below.
Plans in which members of the Management Committee are compensated in shares, share options or any other rights to acquire shares are subject to prior shareholder approval at the annual General Meeting. The approval relates to the plan itself and not to the individual grant of share-based benefits under the plan. In principle, shares are not permanently acquired and options are not exercisable within less than three years.
The total gross remuneration (in 000 euro) (including remunerations received from other companies that form part of the Group) awarded in 2015 to the members of the Management Committee and the CEO amounted to:
| Management Committee 3 | CEO | |
|---|---|---|
| Basic remuneration | 1,095 | 511 |
| Variable remuneration | 334 | 371 4 |
| Pensions/disability/guaranteed income | 37 | 0 |
| Other benefits | 34 | 0 |
The variable remuneration is the bonus acquired during the year under review. There are various types of grant, including cash, deferred payment and deposit into a supplementary pension plan.The members of the Management Committee who are also employees are also entitled to a company car with fuel card as per the company car policy, meal vouchers, a group insurance (pension plan including a disability and decease coverage) and hospitalization insurance.
Currently, all members of the Management Committee, with the exception of the managing director and Isabelle Massagé, are employed on the basis of an employment contract, which can be terminated, subject to the notice term calculated in accordance with the applicable labour laws. This notice term can be replaced by a corresponding termination indemnity as the company sees fit. No other termination indemnity is provided for. The employment agreement of Isabelle Massagé can be terminated by the company, with due regard for a notice term or corresponding termination indemnity of 8 months' fixed and variable salary, provided Isabelle Massagé has been employed within the Group for less than 10 years5 . As from the moment Isabelle Massagé has been employed within the Group for 10 years or more, this notice period will be increased to 12 months. However, in the event of a termination for urgent cause, the contract can be terminated with immediate effect.
The CEO is employed on an independent basis. During the course of 2015 this agreement, which was initially for an indefinite duration, was transformed into an agreement with a fixed term which will automatically end on 31 December 2016.
In 2015 Dirk De Vos has terminated his employment agreement with the company. His notice period runs till the end of January 2016.
No extraordinary changes are expected to be made to the remuneration policy for coming years and the above-mentioned provisions will remain in force.
2 For some members of the Management Committee, the maximum is lower.
3 Excluding the CEO.
4 A part of this bonus (237 thousand euro) will be paid at the latest in February 2017.
5 Only the basic salary shall be taken into account for the calculation of any termination indemnity, which shall not exceed 8 or 12 months' basic salary if the employee in question has not satisfied the performance criteria established to determine entitlement to any bonus.
The General Meeting of 29 April 2015 approved the 2015 option plan giving the Nomination and Remuneration Committee the power to grant options on the company's shares to the members of the Management Committee for a term of five years. These options are granted at no charge. The exercise price per share of the options is equal to (i) the average closing price of the share in the course of the thirty calendar days prior to the date of the offer or (ii) the closing price of the final trading day preceding the date of the offer, whichever is lowest. An option remains valid for ten years. The company and the option holder may decide by mutual agreement to reduce the terms of validity of the option below ten years but never below five years. The options cannot be exercised before the end of the third calendar year after the year in which they are offered.
In 2015 no options were granted to the members of the Management Committee. Besides, no unexercised options expired.
| Options end 2014 | Granted and accepted in 2015 | Exercised in 2015 | Options end 2015 | ||||
|---|---|---|---|---|---|---|---|
| Number | Number | Exercise price | |||||
| EBVBA 4F | 13,500 | 0 | 0 | 13,500 | |||
| Herman Van de Velde NV | 10,000 | 0 | 0 | 10,000 | |||
| Dirk De Vos | 5,000 | 0 | 5,000 | 29.29 | 0 | ||
| Hedwig Schockaert | 20,000 | 0 | 10,000 | 5,000 to 29.29 | 10,000 | ||
| 5,000 to 34.00 | |||||||
| Stefaan Vandamme | 5,000 | 0 | 5,000 | 29.29 | 0 | ||
| 53,500 | 0 | 20,000 | 33,500 |
The Management Committee leads the company within the framework of careful and effective control, which makes it possible to evaluate and manage risks. The Management Committee develops and maintains appropriate internal controls that offer reasonable assurance on the attainment of the goals, the reliability of the financial information, compliance with applicable laws and regulations, and the execution of internal control processes.
The Board of Directors oversees the proper functioning of the control systems through the Audit Committee. The Audit Committee evaluates the effectiveness of the internal control and risk management systems at least once a year. It must ensure that significant risks are properly identified, managed and brought to its attention.
In monitoring the financial reporting, the Audit Committee especially evaluates the relevance and coherence of the financial statement standards applied by the company and its Group. This entails an assessment of the accuracy, completeness and consistency of the financial information. The Audit Committee discusses significant financial reporting issues with executive management and the external auditor.
The Board of Directors bears responsibility for analysis and proactive measures and plans with regard to strategic risks. The Board of Directors approves the strategy and goals every year. An annual growth plan for the following year is presented to the Board of Directors for approval.The growth plan is monitored systematically during the meetings of the Board of Directors, and may be adapted on the basis of changed prospects.
Operational risks are regularly identified, updated and evaluated. The operational risks were documented and a number of actions are taken to manage the risks. The financial department is responsible for monitoring and reporting these. The Management Committee bears the responsibility for analysis, proactive measures and plans with regard to operational risks.
For each process, internal controls should be in place guaranteeing, where possible, the proper functioning of this process. The effectiveness of the internal controls that are important for the completeness and correctness of the reported figures is regularly verified by the financial department, on the basis of random sampling. An example is the permanent stock system for raw materials and finished products.
Additional information is provided in the company's Corporate Governance Charter as published on the website.
With respect to risk management, we also refer to note 29 related to 'Business risks with respect to IFRS 7'.
The subscribed capital is 1,936,173.73 euro. It is represented by 13,322,480 shares.
Within the framework of Belgium's Transparency Act of 2 May 2007 stakes must be made public in accordance with the thresholds provided for by the Articles of Association. The thresholds in Van de Velde's Articles of Association are:
Van de Velde Holding NV holds 7,496,250 (56.27%) shares. It does so through the Vesta foundation as well as Hestia Holding NV and Ambo Holding NV. Vesta foundation and Hestia Holding NV together represent the interests of the Van de Velde family; Ambo Holding NV represents the interests of the Laureys family.
A majority of Van de Velde NV's directors are appointed from the candidates nominated by Van de Velde Holding NV, as long as it directly or indirectly holds no less than 35% of the company's shares.
The members of the Board of Directors and some employees that may possess important information ('insiders') have signed the protocol preventing abuse of privileged information. This means that anyone wishing to trade in Van de Velde shares must first request the permission of the Compliance Officer.
Insiders are not permitted to trade in securities in the following periods:
The Board of Directors can impose a general transaction ban on all insiders in other periods that may be considered to be sensitive.
All other staff at Van de Velde have been notified in writing of the statutory stipulations concerning abuse of insider knowledge.
The company's Corporate Governance Charter, which is published on the company's website, explains the rules applicable to transactions and other contractual links between the company, including its affiliated companies, and its directors and members of the Management Committee that are not covered by the conflict of interests scheme.
During 2015 no such transactions nor other contractual links occurred.
The General Meeting of 24 April 2013 of Van de Velde NV appointed Ernst & Young Bedrijfsrevisoren BVCBA, Moutstraat 54, 9000 Ghent, represented by Paul Eelen, as the statutory auditor. This appointment runs until the Ordinary General Meeting of 2016.
Regular consultations are held with the statutory auditor, who is also invited to the Audit Committee for the half-year and annual reporting. The statutory auditor has no relationship with Van de Velde that could impact his opinion.
The annual remuneration in 2015 for auditing of the statutory and consolidated financial statements of Van de Velde NV was 49,995 euro (excl. VAT). The total costs for 2015 for the auditing of the annual accounts of all companies of the Van de Velde Group were 187,064 euro (excl. VAT), including the aforementioned 49,995 euro.
In accordance with Article 134 of Belgium's Companies Code, Van de Velde announces that the remuneration given to the statutory auditor for exceptional and special tasks and to the persons with whom the statutory auditor has a professional relationship was 79,365 euro (excl. VAT), all of which was for tax advice and compliance tasks.
Van de Velde NV complied with the principles laid down in the Belgian Code on Corporate Governance.
In 2015 no conflicts of interests were declared in the Board of Directors within the meaning of Article 523 of Belgium's Companies Code.
The shares of Van de Velde have been quoted on the Brussels stock exchange, currently Euronext Brussels, since 1 October 1997, under the abbreviation 'VAN' (MNENO).
Van deVelde's shares can be traded using the ISIN code BE 0003839561.
Euronext Brussels lists Van de Velde on the spot market (continuous market) of Euronext Brussels in compartment B (market capitalization between 150 million and 1 billion euro).
In line with its series of local indexes, Euronext Brussels maintains a BEL20, BEL Mid and BEL Small index, the components of which are selected on the basis of liquidity and free float market capitalization.
Van de Velde is listed in the BEL Mid index. The weight in this index was 1.49% at the end of 2015.
Van de Velde concluded a liquidity agreement with Bank Degroof in July 2002.
A liquidity provider guarantees the constant presence of bid and offer prices at which investors can conduct transactions and sets a permanent maximum spread between purchase and selling price of 5%.This allows the increase in share velocity and the reduction of the spreads between bid and offer prices. Major price fluctuations can be avoided on small traded volumes and the listing on the continuous segment of Euronext Brussels can be guaranteed.
The General Meeting of Shareholders is held at the seat of the company (unless other place is mentioned in the convocation) at 5 pm on the last Wednesday of April. If this day is an official holiday the meeting is held on the next working day.
An Extraordinary General Meeting can be convened whenever the interests of the company so demand it and must be convened whenever the shareholders representing one-fifth of the capital so demand it.
The Board of Directors is authorized for a period of five years from the announcement in the annexes to Belgisch Staatsblad/Moniteur belge (21 May 2012) to raise the subscribed capital one or more times by a total amount of 1,936,173.73 euro, under the conditions stated in the Articles of Association.
On 30 April 2014 the Extraordinary General Meeting of Shareholders authorized the Board of Directors to buy or sell its own shares. This authorization is valid for a period of (i) three years as from 27 May 2014 if the acquisition is necessary to avoid a serious threatened disadvantage and (ii) five years as from 30 April 2014 if the Board of Directors, in accordance with Article 620 of Belgium's Companies Code, acquires the legally permitted number of its own shares at a price equal to the price at which they are listed on Euronext Brussels.
In 2015 7,000 own shares were acquired by Van de Velde NV. At the end of 2015 Van de Velde NV has no own shares in its possession.
The treasury shares owned by Van de Velde NV are held with the intention of offering them to the management within the framework of a stock option programme initiated in 2005. See note 13 to the consolidated financial statements for more information.
Van de Velde's objective is to pay out a stable and gradually increasing annual dividend. In doing so, it takes the following factors into consideration:
The dividend policy of Van de Velde consists in paying out at least 40% of the consolidated profit, Group share, excluding the result based on the equity method. Furthermore, Van de Velde does not retain excess cash in the organization.
Based on a decision of the Board of Directors of 28 August 2015 Van de Velde paid out an interim dividend of 1.3500 euro gross per share.
The financial services are provided by ING as main payment agent.
The dividend on distributable profit will be allocated to the shares with rights that are not suspended. In other words, the treasury shares held for which no profit share is retained are not taken into account to reduce distributable profit. This concerns zero own shares purchased within the framework of the option programme (see above). Reference is made to Article 622 of Belgium's Companies Code.
The number of shares with dividend rights is accordingly not reduced and amounts to 13,322,480 shares.
The application of the pay-out percentage (40% of consolidated profit, Group share, excluding result based on the equity method) produces a dividend per share of 1.22 euro.
Van de Velde has the policy of not retaining excess cash in the organization, but distributing it in one way or another to the shareholders. Cash required for operating and investing activities is evaluated on an annual basis. For 2015 this implies that the Board of Directors will propose to the General Meeting the payment of a gross dividend for the fiscal year 2015 of 3.5000 euro per share. After the payment of withholding tax, this represents a net dividend of 2.5820 euro per share. Of this amount, 1.3500 euro per share (or 1.0125 euro net per share) was paid out as an interim dividend in November 2015. After approval by the General Meeting of Shareholders, the final dividend of 2.1500 euro per share (net dividend of 1.5695 euro per share) will be paid out as from 4 May 2016.
| Closing of fiscal year | 31 December 2015 |
|---|---|
| Announcement of 2015 turnover figures | 7 January 2016 |
| Announcement of annual results | 23 February 2016 |
| Publication of annual financial report | 25 March 2016 |
| General Meeting of Shareholders | 27 April 2016 |
| Ex-coupon date | 2 May 2016 |
| Record date | 3 May 2016 |
| Dividend payment date | 4 May 2016 |
| Announcement of H1 2016 turnover figures | 7 July 2016 |
| Publication of 2016 half-year results | 31 August 2016 |
| Closing of fiscal year | 31 December 2016 |
| Profit and loss account (in millions of euro) | 2015 | 2014 | 2013 | 2012 | 2011 |
|---|---|---|---|---|---|
| Operating income | 214.5 | 203.3 | 186.8 | 186.8 | 184.5 |
| Turnover | 209.0 | 198.4 | 182.4 | 181.8 | 179.8 |
| Recurring EBITDA (1) | 61.9 | 57.7 | 48.7 | 48.8 | 53.8 |
| Recurring EBIT (2) | 53.7 | 49.5 | 41.1 | 42.7 | 49.4 |
| Consolidated result before taxes (3) | 54.0 | 18.8 | 40.5 | 38.0 | 54.3 |
| Consolidated result after taxes (3) | 40.6 | 2.5 | 31.7 | 28.0 | 41.0 |
| Profit for the period (4) | 41.0 | 2.5 | 31.8 | 25.6 | 41.2 |
| Operating cash flow (5) | 50.3 | 45.9 | 34.8 | 30.8 | 46.7 |
(1) EBITDA is earnings before interest, taxes, depreciation and amortization on tangible and intangible assets. The recurring EBITDA for 2013 does not include the non-recurring restructuring cost for Eurocorset in the amount of 1.7 million euro. For 2014, the recurring EBITDA on a comparable basis (including comparable deliveries) is 55.9 million euro. For 2015, the recurring EBITDA on a comparable basis (including comparable deliveries) is 60.4 million euro.
(2) EBIT is earnings before interest and taxes. The recurring EBIT for 2013 does not include the non-recurring restructuring costs.
3) Result of the Group (Group share) before share in the profit / (the loss) of associates (equity method).
4) Result of the Group (Group share) after share in the profit / (the loss) of associates (equity method).
5) Operating cash flow is net cash from operating activities.
| Balance sheet (in millions of euro) | 2015 | 2014 | 2013 | 2012 | 2011 |
|---|---|---|---|---|---|
| Fixed assets | 70.8 | 68.0 | 100.9 | 109.4 | 103.9 |
| Current assets | 90.9 | 91.9 | 96.3 | 87.7 | 96.6 |
| Shareholders' equity | 129.2 | 134.0 | 173.5 | 170.0 | 168.1 |
| Balance sheet total | 161.7 | 159.9 | 197.2 | 197.1 | 200.4 |
| Net debt position (1) | -27.8 | -34.2 | -38.9 | -31.1 | -40.5 |
| Working capital (2) | 35.9 | 37.2 | 42.3 | 39.0 | 35.7 |
| Capital employed (3) | 106.8 | 105.2 | 143.2 | 148.4 | 139.6 |
(1) Financial debts less cash and cash equivalents (a negative position refers to a cash position; a positive position refers to a debt position).
(3) Fixed assets plus working capital.
(2) Current assets (excluding cash and cash equivalents) less current liabilities (excluding financial debts).
| Financial ratios (in %, except liquidity) | 2015 | 2014 | 2013 | 2012 | 2011 |
|---|---|---|---|---|---|
| Return on equity (1) | 30.9 | 1.6 | 18.5 | 16.5 | 25.5 |
| Return on capital employed (2) | 38.4 | 2.0 | 21.7 | 19.4 | 30.7 |
| Solvency (3) | 79.9 | 83.8 | 88.0 | 86.3 | 83.9 |
| Liquidity (4) | 3.3 | 4.5 | 6.4 | 5.0 | 4.7 |
(1) Consolidated result after taxes / Average of equity at end of fiscal year and previous fiscal year. In case impairment in 2014 is not taken into account, the return on equity is 22.0%.
(3) Equity / Balance sheet total.
(4) Current assets / Current liabilities.
(2) Consolidated result after taxes / Average of capital employed at end of fiscal year and previous fiscal year. In case impairment in 2014 is not taken into account, the return on capital employed is 27.3%.
| Margin analysis and tax rate (in %) | 2015 | 2014 | 2013 | 2012 | 2011 |
|---|---|---|---|---|---|
| Recurring EBITDA (1) | 29.6 | 29.1 | 26.7 | 26.9 | 29.9 |
| Recurring EBIT (2) | 25.7 | 25.0 | 22.5 | 23.5 | 27.5 |
| Tax rate (3) | 24.5 | 32.6 | 24.4 | 24.2 | 25.7 |
(1) Recurring EBITDA on turnover.
(2) Recurring EBIT on turnover.
(3) Income taxes on Consolidated result before taxes. In 2011 the extraordinary finance gain on the Intimacy business combination was excluded from the consolidated result before taxes. In 2012 the extraordinary finance gain on the Intimacy business combination and
the impairment of goodwill and intangible assets with indefinite useful life were excluded from the consolidated result before taxes. In 2013 the extraordinary finance gain on the Intimacy business combination was excluded from the consolidated result before taxes and the reversal of the tax provision is excluded from the income taxes. In 2014 the impairment is not taken into account.
| Stock market data | 2015 | 2014 | 2013 | 2012 | 2011 |
|---|---|---|---|---|---|
| Average daily volume in pieces | 8,503 | 6,226 | 6,885 | 6,281 | 5,329 |
| Number of shares at year end | 13,322,480 | 13,322,480 | 13,322,480 | 13,322,480 | 13,322,480 |
| Number of traded shares | 2,176,758 | 1,587,689 | 1,755,685 | 1,607,998 | 1,369,623 |
| Velocity | 16.3% | 11.9% | 13.2% | 12.1% | 10.3% |
| Turnover (in thousands of euro) | 115,242 | 60,210 | 62,165 | 58,314 | 50,269 |
| (in euro per share) | |||||
| Highest price | 62.75 | 39.62 | 38.44 | 42.49 | 40.97 |
| Lowest price | 38.80 | 35.81 | 32.01 | 33.02 | 32.25 |
| Closing price | 62.75 | 38.94 | 36.40 | 34.20 | 35.33 |
| Average price | 53.58 | 38.16 | 35.36 | 36.30 | 37.47 |
| Key figures per share (in euro) | 2015 | 2014 | 2013 | 2012 | 2011 |
|---|---|---|---|---|---|
| Book value (1) | 9.7 | 10.1 | 13.0 | 12.8 | 12.6 |
| Recurring EBITDA (2) | 4.6 | 4.3 | 3.7 | 3.7 | 4.0 |
| Profit for the period (3) | 3.1 | 0.2 | 2.4 | 1.9 | 3.1 |
| Gross dividend (4) | 3.50 | 3.50 | 2.15 | 2.15 | 2.15 |
| Net dividend (4) | 2.58 | 2.63 | 1.61 | 1.61 | 1.61 |
| Dividend yield (5) | 4.11% | 6.74% | 4.43% | 4.71% | 4.56% |
(1) Shareholders' equity / Number of shares at year end.
(2) Recurring EBITDA / Number of shares at year end.
(3) Profit for the period / Number of shares at year end. In case impairment of 2014 is not taken into account, profit for the period per share is 2.5.
(4) Gross dividend is 3.50 euro per share of which 1.35 euro per share was paid out as an interim dividend in November 2015. The net dividend is 2.58 euro per share (of which 1.01 euro per share was paid out as interim dividend).
(5) Net dividend / Closing price.
| Value determination (in millions of euro) | 2015 | 2014 | 2013 | 2012 | 2011 |
|---|---|---|---|---|---|
| Book value (1) | 129.2 | 134.0 | 173.5 | 170.0 | 168.1 |
| Market capitalization (2) | 836.0 | 518.8 | 484.9 | 455.6 | 470.7 |
| Enterprise value (EV) (3) | 793.6 | 469.9 | 432.2 | 408.2 | 414.9 |
(1) Shareholders' equity.
(2) Number of shares at 31 December multiplied by the closing price.
(3) Enterprise value is equal to market capitalization plus net debt position less participations (equity method).
| Multiples | 2015 | 2014 | 2013 | 2012 | 2011 |
|---|---|---|---|---|---|
| EV/Recurring EBITDA (1) | 12.8 | 8.1 | 8.9 | 8.4 | 7.7 |
| Price/Profit (2) | 20.4 | 213.2 | 15.4 | 18.1 | 11.5 |
| Price/Book value (3) | 6.5 | 3.9 | 2.8 | 2.7 | 2.8 |
(1) Enterprise value / Recurring EBITDA.
(2) Closing price / Profit for the period. In case impairment in 2014 is not taken into account, the price/profit multiple is 15.3.
(3) Market capitalization / Book value.
Stock market price in 2015
Consolidated balance sheet Consolidated income statement Consolidated statement of changes in equity Consolidated cash flow statement Notes to the financial statements
| 000 euro | 2015 | 2014 | (Note) |
|---|---|---|---|
| Assets | |||
| Total fixed assets | 70,836 | 67,980 | |
| Goodwill | 4,546 | 4,546 | 3 |
| Intangible assets | 16,518 | 18,107 | 4 |
| Tangible fixed assets | 34,204 | 29,339 | 5 |
| Participations (equity method) | 14,628 | 14,708 | 6 |
| Deferred tax asset | 0 | 333 | 15 |
| Other fixed assets | 940 | 947 | 7 |
| Total current assets | 90,898 | 91,936 | |
| Inventories | 39,158 | 37,149 | 9 |
| Trade and other receivables | 16,733 | 13,570 | 10 |
| Other current assets | 6,859 | 5,945 | 11 |
| Cash and cash equivalents | 28,148 | 35,272 | 12 |
| Total assets | 161,734 | 159,916 | |
| Equity and liabilities | |||
| Shareholders' equity | 129,231 | 133,979 | |
| Share capital | 1,936 | 1,936 | 13 |
| Treasury shares | 0 | -833 | 13 |
| Share premium | 743 | 743 | 13 |
| Other comprehensive income | -9,132 | -9,063 | |
| Retained earnings | 135,684 | 141,196 | |
| Non-controlling interests | 865 | 717 | 13 |
| Total non-current liabilities | 4,461 | 4,665 | |
| Provisions | 841 | 877 | 14 |
| Pensions | 30 | 32 | 21 |
| Other non-current liabilities | 3,284 | 3,237 | 16 |
| Deferred tax liability | 306 | 519 | 15 |
| Total current liabilities | 27,177 | 20,555 | |
| Trade and other payables | 15,822 | 15,707 | 17 |
| Other current liabilities | 1,632 | 937 | 18 |
| Income taxes payable | 9,732 | 3,911 | 18 |
| Total equity and liabilities | 161,734 | 159,916 |
| 000 euro | 2015 | 2014 | (Note) |
|---|---|---|---|
| Turnover | 208,958 | 198,366 | 27 |
| Other operating income | 5,537 | 4,889 | |
| Cost of materials | -46,192 | -46,247 | |
| Other expenses | -62,266 | -56,540 | |
| Personnel expenses | -44,099 | -42,769 | 21 |
| Depreciation and amortization | -8,270 | -8,158 | 4,5 |
| Operating profit | 53,688 | 49,541 | |
| Impairment of goodwill and intangible assets with indefinite useful life | 0 | -31,448 | 3 |
| Finance income | 5,971 | 2,989 | 20 |
| Finance costs | -5,652 | -2,301 | 20 |
| Share in result of associates | 302 | 34 | 6 |
| Profit before taxes | 54,289 | 18,815 | |
| Income taxes | -13,235 | -16,382 | 22 |
| Profit for the year | 41,054 | 2,433 | |
| Other comprehensive income | |||
| Currency translation adjustments related to Group entities and non-controlling interests | 357 | 546 | |
| Currency translation adjustments related to participations (equity method) | -382 | -53 | |
| Total other comprehensive income (fully recyclable in the income statement) | -25 | 493 | |
| Total of profit for the period and other comprehensive income | 41,029 | 2,926 | |
| 000 euro | 2015 | 2014 | (Note) |
| Profit for the year | 41,054 | 2,433 | |
| Attributable to the owners of the company | 40,950 | 2,484 | |
| Attributable to non-controlling interests | 104 | -51 | |
| Total of profit for the period and other comprehensive income | 41,029 | 2,926 | |
| Attributable to the owners of the company | 40,881 | 2,923 | |
| Attributable to non-controlling interests | 148 | 3 | |
| Basic earnings per share (in euro) | 3.08 | 0.19 | 23 |
| Diluted earnings per share (in euro) | 3.07 | 0.19 | 23 |
| Weighted average number of shares | 13,314,477 | 13,295,354 | 23 |
| Weighted average number of shares for diluted profit per share | 13,332,203 | 13,304,828 | 23 |
| Proposed dividend per share (in euro) (1) | 3.50 | 3.50 | 24 |
| Total dividend (in 000 euro) (2) | 46,622 | 46,538 | 24 |
(1) For financial year 2014 and 2015, of this amount, 1.35 euro per share was paid out as interim dividend in respectively November 2014 and November 2015.
(2) For financial year 2014, of this amount, 17,951 thousand euro was paid out as interim dividend in November 2014. For financial year 2015, of this amount, 17,979 thousand euro was paid out as interim dividend in November 2015.
| Attributable to the shareholders of the parent | |||||||||
|---|---|---|---|---|---|---|---|---|---|
| Share | Other compre |
Non | |||||||
| 000 euro Change in equity |
Share capital |
Share premium |
Treasury shares |
Retained earnings |
based payments |
hensive income |
Equity | controlling interests |
Total equity |
| Equity at 31/12/2013 | 1,936 | 743 | -1,182 | 180,942 | 523 | -9,502 | 173,460 | 3,976 | 177,436 |
| Profit for the period | 2,484 | 2,484 | -51 | 2,433 | |||||
| Other comprehensive income | 492 | 492 | 54 | 546 | |||||
| Sale of treasury shares for stock options | 495 | 495 | 495 | ||||||
| Purchase of treasury shares | -146 | -146 | -146 | ||||||
| Amortization deferred stock compensation | 116 | 116 | 116 | ||||||
| Granted and accepted stock options | 171 | -171 | 0 | 0 | |||||
| Reserves at Top Form | 821 | -53 | 768 | 768 | |||||
| Dividends | -46,540 | -46,540 | -46,540 | ||||||
| Adjustments to non-controlling interests | 2,850 | 2,850 | -3,262 | -412 | |||||
| Equity at 31/12/2014 | 1,936 | 743 | -833 | 140,728 | 468 | -9,063 | 133,979 | 717 | 134,696 |
| Profit for the period | 40,950 | 40,950 | 104 | 41,054 | |||||
| Other comprehensive income | 313 | 313 | 44 | 357 | |||||
| Sale of treasury shares for stock options | 1,200 | 1,200 | 1,200 | ||||||
| Purchase of treasury shares | -367 | -367 | -367 | ||||||
| Amortization deferred stock compensation | 123 | 123 | 123 | ||||||
| Granted and accepted stock options | 301 | -301 | 0 | 0 | |||||
| Reserves at Top Form | -382 | -382 | -382 | ||||||
| Dividends | -46,585 | -46,585 | -46,585 | ||||||
| Adjustments to non-controlling interests | 0 | 0 | |||||||
| Equity at 31/12/2015 | 1,936 | 743 | 0 | 135,394 | 290 | -9,132 | 129,231 | 865 | 130,096 |
| 000 euro | 2015 | 2014 |
|---|---|---|
| Cash flows from operating activities | ||
| Cash receipts from customers | 260,413 | 251,377 |
| Cash paid to suppliers and employees | -196,211 | -191,161 |
| Cash generated from operations | 64,202 | 60,216 |
| Income taxes paid | -7,235 | -8,537 |
| Other taxes paid | -6,379 | -5,546 |
| Interest and bank costs paid (note 20) | -234 | -234 |
| = Net cash from operating activities | 50,345 | 45,899 |
| Cash flows from investing activities | ||
| Interest received (note 20) | 144 | 351 |
| Received dividends (note 20) | 641 | 828 |
| Purchase of fixed assets (note 4 and 5) | -10,605 | -5,665 |
| Investment / Recovery investment in subsidiary (1) | 0 | -412 |
| Investments in other participating interests | 0 | 0 |
| Sale of treasury shares for stock options (note 13) | 1,027 | 500 |
| Purchase of treasury shares (note 13) | -367 | 146 |
| = Net cash used in investing activities | -9,160 | -4,544 |
| Cash flows from financing activities | ||
| Dividends paid (note 24) | -46,614 | -46,567 |
| Repayment of long-term borrowings / increase in financial debt | 0 | 0 |
| Repayment of short-term borrowings / increase in financial debt | -753 | 581 |
| Net financing of customer growth fund | 88 | 146 |
| = Net cash used in financing activities | -47,279 | -45,840 |
| Net increase/(decrease) in cash and cash equivalents | -6,094 | -4,485 |
| Cash and cash equivalents at the beginning of the period (note 12) | 35,272 | 39,310 |
| Exchange rate differences | -1,030 | 447 |
| Net increase/(decrease) in cash and cash equivalents | -6,094 | -4,485 |
| Cash and cash equivalents at the end of the period (note 12) | 28,148 | 35,272 |
(1) For 2014, this relates to the acquisition of the remaining 15% of Intimacy Management Company LLC shares.
The Van de Velde Group designs, develops, manufactures and markets fashionable luxury lingerie together with its subsidiaries. The company is a limited liability company, with its shares listed on Euronext Brussels.
The company's main office is located in Wichelen, Belgium.
The consolidated financial statements were authorized for issue by the Board of Directors on 23 February 2016, subject to approval of the statutory non-consolidated accounts by the shareholders at the Ordinary General Meeting to be held on 27 April 2016. In compliance with Belgian law, the consolidated accounts will be presented for informational purposes to the shareholders of Van de Velde NV at the same meeting. The consolidated financial statements are not subject to amendment, except conforming changes to reflect decisions, if any, of the shareholders with respect to the statutory non-consolidated financial statements affecting the consolidated financial statements.
This annual report is in accordance with article 119 of Belgium's Companies Code. The different components as prescribed by article 119 are spread across the various chapters in this annual report.
The accompanying consolidated financial statements have been prepared in compliance with 'International Financial Reporting Standards (IFRS)', as adopted for use in the European Union as of the balance sheet date.
The amounts in the financial statements are presented in thousands of euro unless stated otherwise. The financial statements were prepared in accordance with the historical cost principle, except for valuation at fair value of derivative financial instruments.
The preparation of financial statements in conformity with IFRS requires that management make certain estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes.
Estimates made on each reporting date reflect the conditions that existed on those dates (e.g. market prices, interest rates and foreign exchange rates). Although these estimates are based on management's best knowledge of current events and actions that the Group may undertake, actual results may differ from those estimates.
The most important application of estimates relates to:
Intangible fixed assets with indefinite useful life, including goodwill in relation to business combinations, are subject to an annual impairment test. This test requires an estimation of the value-in-use of these assets. The estimate of the value-in-use requires an estimate of the expected future cash flows related to these assets and the choice of an appropriate discount rate to determine the present value of these cash flows. For the estimate of the future cash flows, management must make a number of assumptions and estimates, such as expectations with regard to growth in revenues, development of profit margin and operating costs, period and amount of investments, development of working capital, growth percentages for the long term and the choice of a discount rate that takes into account the specific risks. More details are given in note 3.
The Group values the costs of the share option programmes on the basis of the fair value of the instruments on the grant date. The estimate of the fair value of the share-based payments requires a valuation depending on the terms and conditions of the grant. The valuation model also requires input data, such as the expected life of the option, the volatility and the dividend yield. The assumptions and the model used to estimate the fair value for share-based payments are explained in note 21.
A contingent consideration, resulting from business combinations, is valued at fair value at the acquisition date as part of the business combination. When the contingent consideration meets the definition of a derivative and so a financial liability, it is subsequently remeasured to fair value at each reporting date, based on estimations of future performances.
Unused gift cards and store credits are recognized in profit and loss after a period of 2 years based on estimated percentages. For gift cards and store credits without expiry date, the redemption patterns are based on historical data of the last five years and are reviewed annually.
The accounting policies adopted are consistent with those of the previous fiscal year except for the following new, amended or revised IFRSs and interpretations effective as of 1 January 2015:
The first adoption of these changes did not have an impact on the annual accounts of the Group.
Van de Velde NV has direct or indirect control over an entity if and only if it has all the following:
The financial statements of subsidiaries are included in the consolidated financial statements of the Group from the date that control commences until the date that control ceases. They are prepared as of the same reporting date and using the Group accounting policies. Intragroup balances, transactions, income and expenses are eliminated in full.
Associated companies are companies in whichVan deVelde NV directly or indirectly has a significant influence. This is assumed to be the case when the Group holds at least 20% of the voting rights attached to the shares. The financial statements of these companies are prepared in accordance with the same accounting policies used for the Group. The consolidated financial statements contain the share of the Group in the result of associated companies in accordance with the equity method from the day that the significant influence is acquired until the day it ends. If the share of the Group in the losses of the associated companies is greater than the carrying amount of the participation, the carrying amount is set at zero and additional losses are recognized only insofar as the Group has assumed additional obligations.
Participations in associated companies are revalued if there are indications of possible impairment or of the disappearance of the reasons for earlier impairments. The participations valued in the balance sheet in accordance with the equity method also include the carrying amount of related goodwill.
Business combinations are accounted for using the purchase method. The cost of a business combination is valued as the total of the fair value on the date of exchange of assets disposed of, issued equity instruments, and obligations entered into or acquired. Identifiable acquired assets, acquired obligations and contingent obligations that are part of a business combination are initially valued at fair value at the acquisition date, regardless of the existence of any minority shareholding.
Costs directly attributable to the business combination are directly recorded in the income statement.
Non-controlling interests represent the portion of profit or loss and net assets not held by the Group and are presented separately from the parent's shareholders' equity in the consolidated income statement and in the consolidated balance sheet.
The reporting currency of the Group is the euro. Foreign currency transactions are recorded at the exchange rate on the transaction date. Monetary assets and liabilities denominated in foreign currencies are converted at the exchange rate on the balance sheet date. Gains and losses resulting from the settlement of foreign currency transactions and from the conversion of monetary assets and liabilities denominated in foreign currencies are recognized in the income statement. Non-monetary assets and liabilities denominated in foreign currencies are converted at the foreign exchange rate on the date of the transaction.
Van de Velde's foreign operations outside the euro zone are considered to be foreign activities. Accordingly, assets and liabilities are converted to euro at foreign exchange rates on the balance sheet date. Income statements of foreign entities are converted to euro at exchange rates approximating the foreign exchange rates on the dates of the transactions. The components of shareholders' equity are converted at historical rates. Exchange differences arising from the conversion of shareholders' equity to euro at year-end exchange rates are recorded in 'Other comprehensive income'. On sale or disposal of a foreign operation, the deferred cumulative amount recognized in equity relating to that particular foreign operation is recognized in the income statement.
The Group treats goodwill and intangible assets with an indefinite useful life, arising from business combinations, as assets of the parent. Therefore, those assets are already expressed in the functional currency and are treated as non-monetary items.
The nature of the development costs within the Van de Velde Group is such that they do not meet the criteria set out in IAS 38 for recognition as intangible assets. They are therefore expensed when incurred.
Brands acquired as part of business combinations are deemed to be intangible assets with an indefinite useful life. These are measured at the value established as part of the allocation of fair value of the identifiable assets, obligations and contingent obligations on the acquisition date, less accumulated impairment losses. These brands are not amortized, but are tested annually for impairment (for more details, see note 3). The correctness of classification as intangible assets with indefinite useful life is also evaluated.
Key money refers to the 'droit au bail' or right to rent the shops in France, Germany, Denmark and Spain, and is recorded at cost. The value of the French right does not decrease in relation to the lease period but changes with the market for this type of commercial right. Therefore the useful life of this key money is considered to be indefinite, but reviewed periodically for impairment. The German key money (related to a rent agreement of 2012) is amortized over a period of 5.5 years. The Danish key money (related to a rent agreement entered into in 2013) was impaired in 2014. The Spanish key money (related to rent agreement entered into in 2014) is amortized over the tenor of the rent agreement.
Other intangible assets acquired by Van de Velde are recognized at cost (purchase price plus all directly attributable costs) less accumulated amortization and accumulated impairment losses. Expenses for the registration of trade names and designs are recorded as brands with finite useful life to the extent that this relates to new registrations in the country of registration. Other expenditure on internally generated goodwill and brands are recognized in the income statement when incurred.The useful life of intangible assets other than acquired brands and key money is considered to be finite. Amortization begins when the intangible asset is available using the straight-line method. The useful life of intangible assets with a finite life is generally estimated at five years. Other intangible assets include acquired distribution rights and similar rights, which are amortized over a period of 5 years.
Goodwill represents the excess of the cost of an acquisition over the fair value of the Group's share of the net identifiable assets of the acquired subsidiary/associate at the date of acquisition.
Goodwill is tested annually for impairment or more frequently if events or changes in circumstances indicate that the asset might be impaired. Goodwill is treated by the Group as an asset of the parent and is considered as a non-monetary item.
Goodwill is recorded at cost less accumulated impairment losses.
If the Group's interest in the net fair value of the identifiable assets, liabilities and contingent liabilities exceeds the cost of the business combination, Van de Velde will immediately recognize any negative difference through profit or loss.
Tangible fixed assets are recognized at cost less accumulated depreciation and accumulated impairment losses. Cost is determined as being the purchase price plus other directly attributable acquisition costs, such as non-refundable tax and transport.
Subsequent expenditures are capitalized only when it increases the future economic benefits embodied in the item of property, plant and equipment. Otherwise, it is recognized in profit or loss when incurred.
The depreciable amount equals the cost of the asset less its residual value. Depreciation starts from the date the asset is ready for use, using the straight-line method over the estimated useful life of the asset. Residual value and useful life are reviewed at least at each fiscal year-end.
The depreciation rates used are as follows:
| Buildings | 15-50 years | |
|---|---|---|
| Production machinery and equipment | 2-10 years | |
| Electronic office equipment | 3-5 years | |
| Furniture | 5-10 years | |
| Vehicles | 3-5 years |
Land is not depreciated as it is deemed to have an indefinite life.
The carrying amount of Van de Velde's fixed assets, other than deferred tax assets, financial assets and other non-current assets are reviewed on each balance sheet date to determine whether there is any indication of impairment. If any such indication exists, the asset's recoverable amount is estimated. An impairment test is conducted annually on intangible assets that are not yet available for use, intangible assets with an indefinite useful life and goodwill, regardless of whether there is any indication of impairment. An impairment loss is recognized in profit or loss whenever the carrying amount of an asset exceeds its recoverable amount.
The realizable value of an asset is the greater of its fair value less cost to sell and value-in-use. In assessing value-in-use, the estimated future cash flows are discounted to their present value using a discount rate that reflects current market assessments of the time value of money and the risks specific to the asset. For an asset that does not generate largely independent cash inflows, the recoverable amount is determined for the cash-generating unit to which the asset belongs.
Impairment losses on goodwill and intangible fixed assets with indefinite useful life are not reversed. For any other assets, an impairment loss is reversed if there has been a change in the estimates used to determine the recoverable amount. An impairment loss is reversed only to the extent that the asset's carrying amount does not exceed the carrying amount that would have been determined, net of depreciation or amortization, if no impairment loss had been recognized.
Raw materials, work in progress, merchandise and finished goods are valued at the lower of cost or net realizable value. Cost of inventories comprises all purchase costs, conversion costs and other costs incurred in bringing the inventories to their present location and present condition.
Purchasing costs include:
Conversion costs include:
The provision for obsolescence is calculated consistently throughout the Group based on the age and expected future sales of the items at hand.
Trade receivables are recognized at cost less impairment losses. If there is objective evidence that an impairment loss has been incurred on trade receivables, the impairment loss recognized is the difference between the carrying amount and the present value of estimated future cash flows. An assessment of impairment is made for all accounts receivable individually. If no objective evidence of impairment for individual receivables exists, a collective assessment for impairment is performed.
Leases through which the Group acquires the right to use assets and the lessor substantially retains all the risks and the benefits of ownership of the asset are classified as operating leases. Operating lease payments (as contractually defined) are recognized as an expense in the income statement on a straight-line basis over the lease term (including the construction period). The difference between the actual cash payment to the lessor and the expense recognized in the income statement is recorded on the balance sheet as a debt. Lease incentives received as part of the lease contract are recognized over the lease term in accordance with the principles of SIC 15 and are deducted from the recorded rent expense.
Van de Velde applies derivative financial instruments only in order to reduce the exposure to foreign currency risk. These financial instruments are entered into in accordance with the aims and principles laid down by general management, which prohibits the use of such financial instruments for speculation purposes.
Derivative financial instruments are initially measured at fair value. Although they provide effective economic hedges, they do not qualify for hedge accounting under the specific requirements in IAS 39 (Financial Instruments: Recognition and Measurement). As a result, at reporting date all derivatives are measured at fair value with changes in fair value recognized immediately in the income statement. The fair value of derivatives is calculated by discounting the expected future cash flows at the prevailing interest rates. All spot purchases and sales of financial assets are recognized on the settlement date.
Investments in collateralized debt obligations (CDOs) are measured at fair value with recognition of changes in value through profit and loss. Fair value is based on market value at the balance sheet date. CDOs are recognized in the balance sheet as other fixed assets. In the fiscal year 2009 the decision was taken to impair CDOs completely, regardless of the reported fair value.This applies to 1 CDO with initial value of 1,450 thousand euros which expired in 2015.
Cash and cash equivalents comprise cash at bank and in hand and short-term deposits. Interest income is recognized based on the effective interest rate of the asset.
When there is an increase or decrease in Van de Velde's share capital, all directly attributable costs relating to that event are deducted from equity and not recognized in profit or loss when incurred.
Dividends are recognized as a liability in the period in which they are declared.
Provisions are recognized when Van de Velde has a present legal or constructive obligation as a result of past events, it is probable that an outflow will be required to settle the obligation and a reliable estimate of the amount of the obligation can be made. If the effect is material, provisions are determined by discounting the expected future cash flows at a rate that reflects current market assessments of the time value of money and, where appropriate, the risks specific to the liability.
The company has established a group insurance scheme for its Belgian employees. Considering that the company is obliged to make additional payments in case the annual return on contributions to the pension plan falls below 3.25%, the classification of the plan as defined contribution plan might change. The statutory minimum guarantee was achieved in 2014 and 2015.
The company's obligations to contribute to 'defined contribution' plans (also outside Belgium) are charged to the income statement as incurred.
The fair value of the share options awarded under the Group's share option plan is established on the grant date, with due consideration for the terms and conditions under which the options are granted and using a valuation technique corresponding to generally accepted valuation methods for establishing the price of financial instruments and with due consideration for all relevant factors and assumptions. The fair value of the share options is recognized as personnel expenses for the period until the beneficiary acquires the option unconditionally (i.e. vesting date).
Income tax on the profit or loss for the year comprises current and deferred tax. Income tax is recognized in the income statement except insofar as it relates to items included in other comprehensive income or shareholders' equity. In that case, income tax is included in other comprehensive income or shareholders' equity.
Current tax is the expected tax payable on the taxable income for the year, using applicable tax rates on the balance sheet date, and any adjustments to tax payables with respect to previous years.
For financial reporting purposes, deferred income tax is calculated using the liability method based on temporary differences at the balance sheet date between the tax bases of assets and liabilities and their carrying amounts.
Deferred income tax assets are recognized only insofar as it is probable that taxable profit will be available against which the deductible temporary differences, the carryforward of unused tax credits and unused tax losses can be utilized.
Deferred income tax assets and liabilities are measured at the tax rates that are expected to apply in the year in which the asset is realized or the liability is settled, based on tax rates (and tax laws) that have been implemented or substantively implemented at the balance sheet date.
Deferred tax assets and deferred tax liabilities are offset when a legally enforceable right exists to set off current tax assets against current tax liabilities and the deferred taxes relate to the same taxable entity and the same taxation authority.
Trade and other payables are stated at cost. Trade payables are noninterest bearing and are normally settled on 30-day terms. Other payables are non-interest bearing and have an average term of six months.
In relation to the sale of goods, revenue is recognized when goods have been invoiced and shipped to the buyer. The possible return of goods or non-settlement of invoices is currently not taken into account. Cash discounts granted are recorded in the income statement upon collection of the outstanding balance. These discounts are recorded as a deduction of revenue.
Sales of products to the customers of the Group's retail network are recognized at the point of sale when the transaction is entered into the cash register. Sales are recorded net of sales taxes, value-added taxes, discounts and incentives.
The Group's retail network sells gift cards and issues credits to its customers when merchandise is returned. The cards and credits do either not expire or have an expiry date in 24 months. The Group recognizes sales from gift cards when they are redeemed by the customer and when the likelihood of the gift cards and credits being redeemed by the customer is remote (breakage). The company determines breakage income on unused gift cards and store credits based on the historical redemption pattern. Management has determined that redemption would be remote after a period of 2 years. Breakage income is recognized as part of turnover.
Financial income comprises dividend income and interest income. Royalties arising from the use by others of the company's resources are recognized when it is probable that the economic benefits associated with the transaction will flow to the company and the revenue can be measured reliably. Dividend income is recognized in the income statement on the date that the dividend is declared. Interest income is recognized based on the effective interest rate of the asset.
A government grant is recognized when there is reasonable assurance that it will be received and that the company will comply with the attached conditions. Grants that compensate the company for expenses incurred are recognized as revenue in the income statement on a systematic basis in the same periods in which the expenses are incurred. Grants that compensate the company for the cost of an asset are recognized as income over the life of a depreciable asset by means of a reduced depreciation charge.
All interest and other costs incurred in connection with borrowings and finance lease liabilities are recognized in the income statement using the effective interest rate method.
Research, advertising and promotional costs are expensed in the year in which these costs are incurred. Development costs and system development costs are expensed in the year in which these costs are incurred if they do not meet the criteria for capitalization. If the development expenditure meets the criteria, it will be capitalized.
issued but not yet effective as at 31 December 2015.
Standards and interpretations issued but not yet effective up to the date of issuance of the Group's financial statements are listed below:
The Group is currently assessing the impact of these changes. Specifically in relation to IFRS 15, the impact will be further analysed in the course of 2016.
1 Not yet endorsed by the EU as per 31 December 2015.
Goodwill is allocated and tested for impairment at the cash-generating unit level that is expected to benefit from synergies of the combination the goodwill resulted from.
The carrying value of goodwill (after impairment and other adjustments) was allocated to each of the cash-generating units (in thousand euro) as follows:
| 000 euro | Andres Sarda | Intimacy | Rigby & Peller | Re-tail (1) | Total |
|---|---|---|---|---|---|
| Carrying value, gross | |||||
| At 01/01/2015 | 6,357 | 26,189 | 1,749 | 2,797 | 37,092 |
| Acquisition through business combinations | 0 | 0 | 0 | 0 | 0 |
| At 31/12/2015 | 6,357 | 26,189 | 1,749 | 2,797 | 37,092 |
| Impairment and other adjustments | |||||
| At 01/01/2015 | 6,357 | 26,189 | 0 | 0 | 32,546 |
| Impairment and other adjustments | 0 | 0 | 0 | 0 | 0 |
| At 31/12/2015 | 6,357 | 26,189 | 0 | 0 | 32,546 |
| At 31/12/2015 | |||||
| Accumulated acquisitions | 6,357 | 26,189 | 1,749 | 2,797 | 37,092 |
| Accumulated impairment/other adjustments | 6,357 | 26,189 | 0 | 0 | 32,546 |
| Goodwill, net 31/12/2015 | 0 | 0 | 1,749 | 2,797 | 4,546 |
(1) Re-tail refers to the former Donker stores in the Netherlands.
The carrying value of brands with indefinite useful life (after impairment and other adjustments) was allocated to each of the cash-generating units (in thousand euro) as follows:
| 000 euro | Andres Sarda | Intimacy | Rigby & Peller | Re-tail (1) | Total |
|---|---|---|---|---|---|
| Carrying value, gross | |||||
| At 01/01/2015 | 11,000 | 7,784 | 6,734 | 0 | 25,518 |
| Acquisition through business combinations | 0 | 0 | 0 | 0 | 0 |
| At 31/12/2015 | 11,000 | 7,784 | 6,734 | 0 | 25,518 |
| Impairment and other adjustments | |||||
| At 01/01/2015 | 5,531 | 7,784 | 0 | 0 | 13,315 |
| Impairment and other adjustments | 0 | 0 | 0 | 0 | 0 |
| At 31/12/2015 | 5,531 | 7,784 | 0 | 0 | 13,315 |
| At 31/12/2015 | |||||
| Accumulated acquisitions | 11,000 | 7,784 | 6,734 | 0 | 25,518 |
| Accumulated impairment/other adjustments | 5,531 | 7,784 | 0 | 0 | 13,315 |
| Brand names with indefinite useful life, net 31/12/2015 |
5,469 | 0 | 6,734 | 0 | 12,203 |
(1) Re-tail refers to the former Donker stores in the Netherlands.
In the fourth quarter of 2015 the Group conducted its annual impairment test for each cash-generating unit. The following intangible assets allocated to each of the cash-generating units were subject to an impairment test in 2015:
| 000 euro | Andres Sarda | Intimacy | Rigby & Peller | Re-tail | Total |
|---|---|---|---|---|---|
| Goodwill | 0 | 0 | 1,749 | 2,797 | 4,546 |
| Brands with indefinite useful life | 5,469 | 0 | 6,734 | 0 | 12,203 |
| Total intangible assets | 5,469 | 0 | 8,483 | 2,797 | 16,749 |
In the first half of 2014, an impairment charge of 16,307 thousand euro was recorded in relation to the intangible assets of Intimacy (goodwill and brand with indefinite useful life). The impairment test conducted early 2015 indicated that the remaining goodwill balance of 15,141 thousand euro should also be written off. As a consequence, the value of both goodwill and brand with indefinite useful life related to Intimacy were recorded at zero in the balance sheet at 31/12/2014 and an impairment charge of 31,448 thousand euro was recorded in the consolidated income statement for financial year 2014. As a result of this, there are no impairment charges in the financial year 2015 and no impairment test has been carried out for the cash-generating unit Intimacy. For further details on the methodology and assumptions regarding the impairments at half-year 2014 and end of year 2014, please refer to the financial report for first half-year 2014 and the annual report for financial year 2014.
In 2015 the impairment test showed that the realizable value for all cash-generating units (Andres Sarda, Rigby & Peller and Re-tail) exceeded the carrying value and hence no impairment was required.
As referred to above, impairment tests in 2014 resulted in impairment charges of 31,448 thousand euro, entirely related to the cash-generating unit Intimacy.
Further information on the impairment test is provided below.
This test aims to compare the realizable value and the carrying value of each cash-generating unit:
The calculation of the value-in-use for all cash-generating units is most sensitive to the following assumptions:
The assumptions related to turnover and EBITDA developments are based on available internal data as well as historical percentages on the basis of experience, which are determined for each of the cashgenerating units separately. The growth rate and discount rates are checked against external sources insofar as possible and relevant.
For the three cash-generating units, the growth plan as approved by the Board of Directors is the starting point for the first year in the forecast period (2016).
For Andres Sarda, the expected average growth rate during the period 2016-2019 is a double-digit percentage, also due to the low starting point. This takes into account the turnover developments within the Andres Sarda business as well as any synergies as a result of the Andres Sarda acquisition, being a larger customer base for the Van de Velde brands in Spain.
For the planning period (2016-2019) moderate turnover growth on a like-for-like basis has been applied to the cash-generating units Rigby & Peller and Re-tail. For Rigby & Peller, one new store opening per year has been provided for starting in 2017.
Fully aligned with the segment reporting, the turnover estimates for the cash-generating units Rigby & Peller and Re-tail include the retail turnover realized by the stores as well as the wholesale turnover for the Van de Velde products sold by these retail channels. Furthermore, the turnover forecast for Rigby & Peller takes into account only further developments in the UK market and does not reflect the fact that this brand will be rolled out as Van de Velde's global retail brand (except in the Netherlands).
A development towards the target EBITDA margin is assumed for Andres Sarda. The improved margin for Andres Sarda should mainly be achieved through turnover growth in the wholesale business and continued penetration of Andres Sarda in Van de Velde's own stores. The cost developments will also be monitored very strictly.
For the cash-generating units Rigby & Peller and Re-tail, a gradual increase in the EBITDA margin is assumed towards the target EBITDA margin for a (partially) integrated retail chain.The target EBITDA margin is achieved through high gross margins, limited cost increases and the envisioned market share of the Van de Velde products.
The long-term percentage applied to extrapolate cash flows beyond the forecast period is assessed in line with the expected long-term inflation for all cash-generating units (1%).
The discount rates represent the current market assessment of the risks specific to the Van de Velde Group on the one hand and the cashgenerating units on the other. The discount rates are estimated on the basis of the weighted average cost of capital after tax and are for the three cash-generating units in a range between 7.9% and 9.0%. This corresponds to a cost of capital before tax of between 10.0% and 11.1%.
With regard to the assessment of value-in-use of the Andres Sarda, Rigby & Peller and Re-tail units, management believes that on the basis of the performed sensitivity analysis no reasonably possible change in any of the above key assumptions would cause the carrying value of the unit to materially exceed its recoverable amount. This is also reflected in the reasonable headroom1 in the three cash-generating units. The tested sensitivities related to:
1 Headroom refers to the difference between the calculated realizable value and the carrying value for a specific cash-generating unit.
| Brands with | Brands with | Distribution rights and |
||||
|---|---|---|---|---|---|---|
| 000 euro | Total | finite useful life |
indefinite useful life |
similar rights |
Software | Key money |
| Intangible assets, gross | ||||||
| At 01/01/2014 | 39,618 | 1,719 | 27,193 | 3,734 | 6,669 | 303 |
| Investments | 700 | 93 | 0 | 0 | 534 | 73 |
| Disposals | -175 | 0 | 0 | 0 | -39 | -136 |
| Exchange adjustments | 25 | 25 | 0 | 0 | 0 | 0 |
| At 31/12/2014 | 40,168 | 1,837 | 27,193 | 3,734 | 7,164 | 240 |
| Amortization and impairment | ||||||
| At 01/01/2014 | 12,688 | 1,087 | 5,531 | 1,446 | 4,462 | 162 |
| Amortization | 1,756 | 164 | 0 | 747 | 777 | 68 |
| Impairment | 7,784 | 0 | 7,784 | 0 | 0 | 0 |
| Disposals | -176 | 0 | 0 | 0 | -40 | -136 |
| Exchange adjustments | 9 | 9 | 0 | 0 | 0 | 0 |
| At 31/12/2014 | 22,061 | 1,260 | 13,315 | 2,193 | 5,199 | 94 |
| Intangible assets, net 31/12/2014 | 18,107 | 577 | 13,878 | 1,541 | 1,965 | 146 |
| Intangible assets, gross | ||||||
| At 01/01/2015 | 40,168 | 1,837 | 27,193 | 3,734 | 7,164 | 240 |
| Investments | 772 | 190 | 0 | 0 | 582 | 0 |
| Disposals | 0 | 0 | 0 | 0 | 0 | 0 |
| Other adjustments | 0 | 1,675 | -1,675 | 0 | 0 | 0 |
| Exchange adjustments | 30 | 30 | 0 | 0 | 0 | 0 |
| At 31/12/2015 | 40,970 | 3,732 | 25,518 | 3,734 | 7,764 | 240 |
| Amortization and impairment | ||||||
| At 01/01/2015 | 22,061 | 1,260 | 13,315 | 2,193 | 5,199 | 94 |
| Amortization | 2,391 | 832 | 0 | 747 | 784 | 28 |
| Impairment | 0 | 0 | 0 | 0 | 0 | 0 |
| Disposals | 0 | 0 | 0 | 0 | 0 | 0 |
| Exchange adjustments | 0 | 0 | 0 | 0 | 0 | 0 |
| At 31/12/2015 | 24,452 | 2,092 | 13,315 | 2,940 | 5,983 | 122 |
| Intangible assets, net 31/12/2015 | 16,518 | 1,640 | 12,203 | 794 | 1,763 | 118 |
The expenses of brands with a finite useful life relates among other things to registration costs of developed in-house brands.
Brands with indefinite useful life are:
These brands are deemed to be brands with an indefinite useful life because the Group considers them to be full-fledged additions to its existing brand portfolio.
Distribution rights and similar rights refer to the distribution agreement and the intangible assets that the Group acquired at the start of the Private Shop joint venture with Getz Bros. (Hong Kong) Limited ('Getz') in 2012. The investment for the acquisition of the distribution agreement and the intangible assets is estimated at 5,000 thousand American dollar, 3,000 thousand American dollar of which was settled. The remaining amount of 2,000 thousand American dollar has been recognized as a liability payable to Getz and will be settled dependent on certain milestone criteria being fulfilled. The amortization period is 5 years.
The investment in software in 2015 relates among other things to implementation of software for among other things e-commerce, exchange of information and online collaboration, integration of applications, renewal of shop management system and miscellaneous improvements to ERP software.
Key money relates to stores in Germany and Spain.
Expenditure on research activities undertaken to acquire new scientific or technical knowledge and understanding, is recognized as expense when incurred.
| 000 euro | Total | Land and buildings |
Installations, machinery and equipment |
Assets under construction |
|---|---|---|---|---|
| Tangible fixed assets, gross | ||||
| At 01/01/2014 | 73,854 | 33,039 | 39,895 | 920 |
| Investments | 5,028 | 1,155 | 2,461 | 1,412 |
| Transfer | 0 | 16 | 764 | -780 |
| Disposals | -2,602 | -1,114 | -1,488 | 0 |
| Exchange adjustments | 502 | 356 | 146 | 0 |
| At 31/12/2014 | 76,782 | 33,452 | 41,778 | 1,552 |
| Depreciation and impairment | ||||
| At 01/01/2014 | 43,450 | 16,315 | 27,135 | 0 |
| Depreciation | 6,402 | 3,081 | 3,321 | 0 |
| Disposals | -2,449 | -1,053 | -1,396 | 0 |
| Exchange adjustments | 64 | 33 | 31 | 0 |
| At 31/12/2014 | 47,467 | 18,376 | 29,091 | 0 |
| Tangible fixed assets, net | ||||
| Tangible fixed assets (without grants) | 29,315 | 15,076 | 12,687 | 1,552 |
| Grants at 31/12/2014 | 0 | 0 | 0 | 0 |
| Grants utilized in 2014 | 24 | 10 | 14 | 0 |
| At 31/12/2014 | 29,339 | 15,086 | 12,701 | 1,552 |
| Tangible fixed assets, gross | ||||
| At 01/01/2015 | 76,782 | 33,452 | 41,778 | 1,552 |
| Investments | 10,218 | 1,984 | 4,243 | 3,991 |
| Transfer | 0 | 47 | 44 | -91 |
| Disposals | -2,471 | -993 | -1,478 | 0 |
| Exchange adjustments | 1,190 | 699 | 491 | 0 |
| At 31/12/2015 | 85,719 | 35,189 | 45,078 | 5,452 |
| Depreciation and impairment | ||||
| At 01/01/2015 | 47,467 | 18,376 | 29,091 | 0 |
| Depreciation | 5,879 | 2,506 | 3,373 | 0 |
| Disposals | -2,232 | -876 | -1,356 | 0 |
| Exchange adjustments | 401 | 190 | 211 | 0 |
| At 31/12/2015 | 51,515 | 20,196 | 31,319 | 0 |
| Tangible fixed assets, net | ||||
| Tangible fixed assets (without grants) | 34,204 | 14,993 | 13,759 | 5,452 |
| Grants at 31/12/2015 | 0 | 0 | 0 | 0 |
| Grants utilized in 2015 | 0 | 0 | 0 | 0 |
| At 31/12/2015 | 34,204 | 14,993 | 13,759 | 5,452 |
In 2015 the investments primarily relate to the expansion of the mini-load system and the transport installation for the distribution center and other investments in Wichelen, the renovation costs of the building in Schellebelle as well as to the opening of new stores and/or store enhancements in the United Kingdom, Germany and Spain.
In 2015, the disposals mainly relate to the closure of shops in the United States, Germany and Spain.
Investments in associates consist of the following Group interests:
| Net carrying amount 000 euro |
Top Form Ltd. |
Private Shop Ltd. |
Total |
|---|---|---|---|
| At 01/01/2014 | 11,849 | 2,057 | 13,906 |
| Results for the fiscal year | 313 | -279 | 34 |
| Reserves | 821 | 0 | 821 |
| Other comprehensive income (1) | -53 | 0 | -53 |
| At 31/12/2014 | 12,930 | 1,778 | 14,708 |
| At 01/01/2015 | 12,930 | 1,778 | 14,708 |
| Results for the fiscal year | 459 | -157 | 302 |
| Reserves | 0 | 0 | 0 |
| Other comprehensive income (1) | -382 | 0 | -382 |
| At 31/12/2015 | 13,007 | 1,621 | 14,628 |
(1) Before intercompany eliminations.
In relation toTop Form accumulated changes to fair value in the amount of -18,306 thousand euro were in the past recognised in equity. These changes continue to be recognised in equity until the stake is sold or until the stake included in accordance with the equity method is impaired.
Key figures per participation are as follows:
| Key figures | Top Form Ltd. HKD 000 (31/12/2015) |
Private Shop Ltd. HKD 000 (31/12/2015) |
|---|---|---|
| Tangible fixed assets | 95,912 | 3,458 |
| Other fixed assets | 117,868 | 4,673 |
| Current assets | 511,739 | 24,491 |
| Non-current liabilities | 25,122 | 0 |
| Current liabilities | 135,945 | 4,883 |
| Total net assets | 564,452 | 27,739 |
| Turnover | 618,047 | 53,756 |
| Net result | 20,030 | -9,030 |
The figures relating to Top Form International Ltd. in the above table refer to the half-year closing at 31/12/2015 (first half-year fiscal year 2016) and therefore refer to turnover and net profit for a period of six months.
Other fixed assets consist of the following:
| 000 euro | 2015 | 2014 |
|---|---|---|
| Security deposits for VAT | 217 | 217 |
| Other security deposits | 404 | 272 |
| Other participating interests | 25 | 25 |
| Prepaid rent expenses | 52 | 113 |
| Borrowings | 242 | 320 |
| Other fixed assets, net | 940 | 947 |
Prepaid rent expenses are recorded in the income statement on a straight-line basis over the lease term.
Grants that compensate the company for the cost of an asset are recognized in the income statement as a deduction of the depreciation charge on a straight-line basis over the useful life of the asset.
| 000 euro | 2015 | 2014 |
|---|---|---|
| At 1 January | 0 | 24 |
| Received during the year | 0 | 0 |
| Released to the income statement | 0 | 24 |
| Exchange rate adjustments | 0 | 0 |
| At 31 December | 0 | 0 |
In 2015 an amount of 87 thousand euro was recorded as other operating income related to other grants. In 2014 no amount was recorded as other operating income related to other grants.
Inventories by major components are as follows:
| 000 euro | 2015 | 2014 |
|---|---|---|
| Finished and merchandise goods | 21,495 | 21,744 |
| Work in progress | 9,288 | 8,271 |
| Raw materials | 13,321 | 12,404 |
| Inventories, gross | 44,104 | 42,419 |
| Less: Allowance for obsolescence | -4,946 | -5,270 |
| Inventories, net | 39,158 | 37,149 |
The allowance for obsolescence in 2015 relates to finished products (2,165 thousand euro) and raw materials (2,781 thousand euro). The allowance for obsolescence in 2014 relates to finished products (2,461 thousand euro) and raw materials (2,809 thousand euro).
The additional write-down on inventories amounted to 2,659 thousand euro in 2015, compared with 3,613 thousand euro in 2014. The additional write-down relates to raw materials (1,739 thousand euro in 2015 and 2,309 thousand euro in 2014) and finished products (920 thousand euro in 2015 and 1,304 thousand euro in 2014).
The allowance for obsolescence and the additional write-downs are recorded in the income statement under 'Cost of materials'.
Accounts receivable are as follows:
| 000 euro | 2015 | 2014 |
|---|---|---|
| Trade receivables, gross Less: allowance for doubtful debtors |
17,322 -589 |
14,029 -459 |
| Trade receivables, net | 16,733 | 13,570 |
Trade and other receivables are non-interest bearing. Standard payment terms are country-defined. In addition to payment terms, Van de Velde also applies customer-defined credit limits in order to assure proper follow-up. In the event of overdue invoices, a reminder procedure is initiated.
In 2015 there was a loss of 172 thousand euro with respect to trade receivables (125 thousand euro in 2014).
The allowance for doubtful debtors is recorded in the income statement under 'Other expenses'.
Total Neither past due nor impaired Past due but not impaired Past due and an impairment has been recorded 000 euro 1-60 days 60-90 days > 90 days 2015 17,322 12,649 2,769 611 1,293 2014 14,029 9,109 2,963 588 1,369
The aging analysis of the trade receivables at year-end is as follows:
Other current assets consist of the following:
| 000 euro | 2015 | 2014 |
|---|---|---|
| Prepaid expenses | 4,567 | 4,322 |
| Tax receivables (VAT & corporate income tax) | 1,428 | 1,198 |
| Accrued income | 80 | 47 |
| Sundry | 161 | 318 |
| FX forward contracts (note 19) | 623 | 60 |
| Other current assets, net | 6,859 | 5,945 |
Cash and cash equivalents consist of the following:
| 000 euro | 2015 | 2014 |
|---|---|---|
| Cash at banks and in hand Marketable securities |
7,819 20,329 |
13,600 21,672 |
| Cash and cash equivalents | 28,148 | 35,272 |
Marketable securities consist only of saving accounts and short-term investments at financial institutions.
Cash and cash equivalents recognized in the cash flow statement comprise the same elements as presented above.
| Authorized and fully paid | 2015 | 2014 |
|---|---|---|
| Nominative shares | 7,497,684 | 7,497,676 |
| Dematerialized shares | 5,824,796 | 5,822,369 |
| Bearer shares | 0 | 2,435 |
| Total number of shares | 13,322,480 | 13,322,480 |
At 31 December 2015 Van de Velde NV's share capital was 1,936 thousand euro (fully paid), represented by 13,322,480 shares with no nominal value and all with the same rights insofar as they are not treasury shares, whose rights have been suspended or cancelled. The Board of Directors of Van de Velde NV is authorized to raise the subscribed capital one or more times by a total amount of 1,936 thousand euro under the conditions stated in the Articles of Association. This authorization is valid for five years after publication in the annexes to Belgisch Staatsblad/Moniteur belge (21 May 2012).
The distributions from retained earnings of Van de Velde NV, the parent company, is limited to a legal reserve, which was built up, in previous years in accordance with Belgium's Companies Code, to 10% of the subscribed capital.
At the end of 2014 Van de Velde held 26,000 of its own shares with a total value of 833 thousand euro.
In accordance with Article 620 of Belgium's Companies Code, the Extraordinary General Meeting of Shareholders of 30 April 2014 gave the Board of Directors the power to acquire the company's own shares. In 2015 7,000 treasury shares were purchased to meet the commitments regarding the exercise of stock options in 2015.
Within the framework of the stock option plan a total of 33,000 options were exercised and the same number of treasury shares was made available to the option holders.
At the end of 2015 Van de Velde NV held no own shares.
| 000 euro | 2015 | 2014 |
|---|---|---|
| Share capital | 1,936 | 1,936 |
| Treasury shares | 0 | -833 |
| Share premium | 743 | 743 |
At the end of 2015, non-controlling interests include the 13% stake of the Kenton family in the equity and the net income of Rigby & Peller Ltd.
| 000 euro | Provisions |
|---|---|
| At 01/01/2014 Arising during the year Utilized |
1,034 18 -175 |
| Provisions 31/12/2014 | 877 |
| At 01/01/2015 Arising during the year Utilized |
877 7 -43 |
| Provisions 31/12/2015 | 841 |
At the end of 2014 a provision of 877 thousand euro was outstanding in relation to termination fees for sales agents and other planned measures. In 2015, 43 thousand euro of the provision was used (49
The deferred taxes consist of the following:
thousand euro in 2014) and an additional provision of 7 thousand euro (18 thousand euro in 2014) was recognized. The expected timetable of the corresponding cash outflows depends on the progress and duration of the negotiations with the sales agents.
In 2012 a provision for expenses to be incurred going forward (376 thousand euro) was recorded in relation to the contribution of knowhow in Private Shop Ltd. This provision was used over a period of 3 years; one third of it was used during 2014 (126 thousand euro). At the end of 2014, the provision was fully used.
Intimacy has been named as defendant in a potential class action suit alleging violation of FACTA ("Fair and Accurate Credit Transactions Act"). This Act stipulates the credit card details that can be stated on a cash receipt. In this case, Intimacy has reached a settlement with the opposing party and this settlement was approved by the US court on 1 September 2015. The settlement is in execution from 1 October 2015 till 31 May 2016. It is impossible at this point in time to assess whether this case will result in any cash outflow, however, management will do what it takes to avoid a possible cash outflow. It is expected that this settlement agreement will not have a material impact on the financial situation of the Group.
– Deferred tax assets on assets relate to differences between the statutory accounting policies and the accounting policies in accord-
| 000 euro | Deferred tax liabilities on fixed assets |
Deferred tax assets on assets |
Deductible losses |
Total |
|---|---|---|---|---|
| At 01/01/2014 | -1,498 | 973 | 333 | -192 |
| Changes | -113 | 119 | 0 | 6 |
| At 31/12/2014 | -1,611 | 1,092 | 333 | -186 |
| At 01/01/2015 | -1,611 | 1,092 | 333 | -186 |
| Changes | -41 | 254 | -333 | -120 |
| At 31/12/2015 | -1,652 | 1,346 | 0 | -306 |
The net deferred tax liability of 306 thousand euro consists of the following components:
ance with IFRS. The deductible losses are related to different entities and taxation authorities than the other components and are therefore reported
– Regarding the deferred tax liabilities on fixed assets, the depreciable amount of an item of property, plant and equipment should be allocated on a straight-line basis over its useful life. In the statutory financial statements, the double declining depreciation method is applied, which is restated for consolidation purposes. The deferred taxes were valued at the theoretical tax rate of 33.99%. separately as an asset.
Other non-current liabilities consist of the following:
| 000 euro | 2015 | 2014 |
|---|---|---|
| Deferred rent and lease incentives Liabilities from acquisition of a participation in joint venture |
1,454 1,830 |
1,781 1,456 |
| Other non-current liabilities | 3,284 | 3,237 |
Deferred rent and lease incentives relate to both the difference between the actual cash payment to the lessor and the expense recognized in the income statement and lease incentives received as part of the lease contract, which are recognized over the lease term as a deduction from the recorded rent expense.
The liabilities from acquisition of a participation in joint venture relate to Private Shop Ltd. The amount of 1,830 thousand euro (2,000 thousand American dollar) is a liability payable to Getz for the acquisition of a distribution agreement and intangible assets at the start of the joint venture in 2012. The change in 2015 is only due to a currency effect. This amount will be settled when certain milestone criteria are fulfilled. The Group is of the opinion that this amount will not be settled until after 2016.
Trade and other payables consist of the following:
| 000 euro | 2015 | 2014 |
|---|---|---|
| Trade payables | 5,640 | 4,505 |
| Payroll, social charges | 5,177 | 5,031 |
| Gift cards and credits issued | 710 | 889 |
| Accrued charges | 3,755 | 3,540 |
| Sundry | 185 | 673 |
| Short-term borrowings | 355 | 1,069 |
| Trade and other payables | 15,822 | 15,707 |
| 000 euro | 2015 | 2014 |
|---|---|---|
| Other current liabilities: taxes (VAT payable, local taxes, withholding taxes) |
1,632 | 937 |
| Taxes payable: corporate income taxes | 9,723 | 3,911 |
The increase in current liabilities and taxes payable in 2015 mainly relates to the outstanding payable of corporate income taxes covering income years 2014 and 2015 compared to income year 2014 only last year.
The Group applies derivative financial instruments to limit the risks of unfavourable exchange rate fluctuations originating from operations and investments.
The company applies FX forward contracts to manage transaction risks. These have a maturity date between 15/01/2016 and 15/12/2016 (maturities at 31 December 2014: between 15/01/2015 and 15/12/2015). As these contracts do not meet the hedging criteria of IAS 39, they are valued at fair value and recognized as trading contracts through profit or loss.
On 31 December the fair value of these FX forward contracts was 593 thousand euro, comprising an unrealized income of 623 thousand euro and an unrealized loss of 30 thousand euro.
By way of a summary, the various fair values are shown in the following table:
| 000 euro | 2015 | 2014 |
|---|---|---|
| Derivatives that do not qualify for hedge accounting: |
||
| Other current assets | 623 | 60 |
| Other current liabilities | -30 | -322 |
The valuation technique used to determine the fair value is level 2-compliant, with the various levels and related valuation techniques defined as follows:
The financial result breaks down as follows:
| 000 euro | 2015 | 2014 |
|---|---|---|
| Interest income | 138 | 336 |
| Interest costs | -27 | -13 |
| Interest result, net | 111 | 323 |
| Exchange gains | 5,192 | 1,738 |
| Exchange losses | -5,117 | -2,056 |
| Exchange result, net | 75 | -318 |
| Income from investments (dividends) | 641 | 828 |
| Other financial income | 0 | 87 |
| Other financial costs | -508 | -232 |
| Financial result | 319 | 688 |
Personnel expenses are as follows:
| 000 euro | 2015 | 2014 |
|---|---|---|
| Wages (1) | 8,581 | 8,712 |
| Salaries (2) | 27,031 | 25,334 |
| Social security contributions | 7,506 | 7,565 |
| Other personnel expenses | 981 | 1,158 |
| Personnel expenses | 44,099 | 42,769 |
(1) Figures for 2014 were adjusted to enhance comparibility with 2015.
(2) Figures for 2014 were adjusted to enhance comparibility with 2015.
| Workforce at balance sheet date | 2015 | 2014 |
|---|---|---|
| White collars Blue collars |
574 787 |
608 764 |
| Total | 1,361 | 1,372 |
At the moment the Group primarily has pension plans of the 'defined contribution' type. The cost of this plan amounted to 815 thousand euro in 2015 (818 thousand euro in 2014). A provision of 30 thousand euro (32 thousand euro in 2014) of the 'defined benefit' type remains.
The Group applies IFRS 2 Share-based payments since 2008. The fair value of the options on the grant date is recognized for the period until the beneficiary acquires the option unconditionally in accordance with the gradual acquisition method.
The impact of IFRS 2 on the result of the year 2015 was 123 thousand euro versus 116 thousand euro in 2014.
The option plans were valued using the Black-Scholes-Merton model for call options. The following assumptions were used to determine the weighted average fair value at grant date:
| PLAN | PLAN | PLAN | PLAN |
|---|---|---|---|
| 2012 | 2013 | 2014 | 2015 |
| Grant date 24/09/12 |
11/10/13 | 13/10/14 | 12/10/15 |
| Dividend right as of the grant date no |
no | no | no |
| Contractual term of the options 5-10 |
5-10 | 5-10 | 5-10 |
| Exercise price 34.88 |
34.89 | 37.85 | 55.87 |
| Expected volatility 35.00% |
35.00% | 35.00% | 35.00% |
| Risk-free interest rate 0.90% - 2.06% |
1.08% - 2.16% | 0.33% - 1.01% | 0.07% |
| Fair value of the share options (in euro) 9.62 |
10.26 | 9.97 | 14.45 |
| The share option plan has developed as follows: |
Option plan 2005 - 2015 |
|---|---|
| Outstanding at 01/01/2014 | 75,000 |
| Exercisable at 01/01/2014 | 42,000 |
| Movements during the year | |
| Accepted | 14,500 |
| Forfeited | 0 |
| Exercised | 16,000 |
| Expired | 0 |
| Outstanding at 31/12/2014 | 73,500 |
| Exercisable at 31/12/2014 | 26,000 |
| Movements during the year | |
| Accepted | 1,000 |
| Forfeited | 0 |
| Exercised | 33,000 |
| Expired | 0 |
| Outstanding at 31/12/2015 | 41,500 |
| Exercisable at 31/12/2015 | 0 |
The major components of income tax expense for the years ending 31 December 2015 and 2014 are:
| 000 euro | 2015 | 2014 |
|---|---|---|
| Current income tax Current income tax charge |
12,929 12,929 |
16,388 16,398 |
| Adjustments in respect of current income tax of previous years |
0 | -10 |
| Deferred income tax Relating to the origination and reversal of |
306 306 |
-6 -6 |
| temporary differences | ||
| Income tax expense reported in the consoli dated income statement |
13,235 | 16,382 |
The reconciliation of income tax expense applicable to income before taxes at the statutory income tax rate and income tax expense at the Group's effective income tax rate for each of the past two years ending 31 December is as follows:
| 000 euro | 2015 | 2014 |
|---|---|---|
| Profit before taxes (1) | 53,987 | 50,229 |
| Parent's statutory tax rate of 33.99% | 18,350 | 17,073 |
| Higher income tax rates in other countries | 41 | 115 |
| Lower income tax rates in other countries | -3,462 | -3,317 |
| Utilization tax losses and unrecognized losses | -1,945 | 1,388 |
| Disallowed expenses | 300 | 234 |
| Notional interest deduction | -313 | -110 |
| Other | 93 | -562 |
| Dividend received reduction ('DBI') | 171 | 1,561 |
| Total income taxes | 13,235 | 16,382 |
| Effective income tax rate | 24.52% | 32.61% |
(1) Profit before taxes excluding the share in the result of associates and impairment charges.
The decrease in the effective income tax rate is due to the following reasons:
Basic earnings per share are calculated by dividing the net income for the year attributable to ordinary shareholders by the weighted average number of ordinary shares outstanding during the year, excluding the shares purchased by the Group and held as treasury shares (note 13).
Diluted earnings per share are calculated by dividing the net income for the year attributable to ordinary shareholders by the weighted average number of ordinary shares outstanding during the year, both adjusted for the effects of dilutive potential ordinary shares (stock options).
| 2015 | 2014 | |
|---|---|---|
| Profit attributable to shareholders (in 000 euro) | 40,950 | 2,484 |
| Weighted average number of ordinary shares | 13,314,477 | 13,295,354 |
| Dilutive effect of stock options | 17,726 | 9,474 |
| Weighted average number of shares after impact of dilution |
13,332,203 | 13,304,828 |
| Basic earnings per share (euro) | 3.08 | 0.19 |
| Diluted earnings per share (euro) | 3.07 | 0.19 |
In 2014 all stock options granted over the period 2007-2013 were dilutive. In 2015 all stock options granted over the period 2007-2015 were dilutive.
| 000 euro | 2015 | 2014 |
|---|---|---|
| Dividend paid | 46,618 | 46,526 |
| Dividend paid: – in 2015: - 1.35 euro per share as interim dividend for fiscal year 2015. - 2.15 euro per share for fiscal year 2014. – in 2014 : - 1.35 euro per share as interim dividend for fiscal year 2014. - 2.15 euro per share for fiscal year 2013. |
||
| Dividend proposed | 46,622 | 46,538 |
| Dividend proposed: |
The Group rents sites for the shops of its own retail network and showrooms to present collections to customers. These rent contracts are operational leases with a contract term of one year or more. Rental expenses in respect of these operating leases amounted to 7,410 thousand euro in 2015 (6,982 thousand euro in 2014).
Future minimum lease payments under operating leases were as follows at 31 December 2015:
| 000 euro | 2015 |
|---|---|
| Within one year | 6,792 |
| After one year but not more than five years | 18,108 |
| More than five years | 6,034 |
| Total | 30,934 |
The consolidated financial statements include the financial statements of Van de Velde NV and the subsidiaries listed in the following table.
| Name | Address | (%) equity interest 2015 |
Change on previous year |
|---|---|---|---|
| VAN DE VELDE NV | Lageweg 4 9260 SCHELLEBELLE, Belgium VAT BE0448.746.744 |
Parent company | |
| VAN DE VELDE GMBH & Co KG | Blumenstraße 24 40212 DUSSELDORF, Germany |
100 | 0 |
| VAN DE VELDE VERWALTUNGS GMBH |
Blumenstraße 24 40212 DUSSELDORF, Germany |
100 | 0 |
| VAN DE VELDE TERMELO ES KERESKEDELMI KFT |
Selyem U.4 7100 SZEKSZARD, Hungary |
100 | 0 |
| VAN DE VELDE UK LTD | Cannon Place, 78 Cannon Street, EC4N 6AF LONDON United Kingdom |
100 | 0 |
| VAN DE VELDE FRANCE SARL | 16, Place du General De Gaulle 59000 LILLE, France |
100 | 0 |
| MARIE JO GMBH | Blumenstraße 24 40212 DUSSELDORF, Germany |
100 | 0 |
| VAN DE VELDE IBERICA SL | Calle Santa Eulalia, 5 08012 BARCELONA, Spain |
100 | 0 |
| VAN DE VELDE CONFECTION SARL | Route De Sousse BP 25 4020 KONDAR, Tunisia |
100 | 0 |
| VAN DE VELDE FINLAND OY | Yliopistonkatu 34, 4 krs huone 401 20100 TURKU, Finland |
100 | 0 |
| VAN DE VELDE NORTH AMERICA INC | 171 Madison Avenue, Suite 201 NY 10016, NEW YORK, United States of America |
100 | 0 |
| VAN DE VELDE DENMARK APS | Lejrvejen 8 6330 PADBORG, Denmark |
100 | 0 |
| VAN DE VELDE RETAIL INC | 171 Madison Avenue, Suite 201 NY 10016, NEW YORK, United States of America |
100 | 0 |
| INTIMACY MANAGEMENT COMPANY LLC |
3980 Dekalb Technology Parkway 775 GA 30340 ATLANTA, United States of America |
100 | 0 |
| Name | Address | (%) equity interest 2015 |
Change on previous year |
|---|---|---|---|
| RIGBY & PELLER LTD | Second Floor, 37 North Row W1K 6DH, LONDON United Kingdom |
87 | 0 |
| VAN DE VELDE NEDERLAND BV | Corellistraat 27 1077 HB AMSTERDAM, Netherlands |
100 | 0 |
| VAN DE VELDE POLAND SP ZOO | Ul. Al Wyzwolenia 10 - lok 171 00570 WARSZAWA, Poland |
100 | 0 |
Sales of goods and services are at arm's length between Group companies.
Effective beginning of 2015 Eurocorset SA and Su Distribuidora Sul Tu Corpo SL have been merged into Van de Velde Iberica SL.
| Name | Address | (%) equity interest 2015 |
Change on previous year |
|---|---|---|---|
| TOP FORM INTERNATIONAL LTD | 15/F., Tower A, Manulife Financial Centre, No. 223-231 Wai Yip Street, Kwun Tong, Kowloon, Hong Kong |
25.7 | 0 |
| PRIVATE SHOP LTD | Wyler Centre I, 8th Floor 202-210 Tai Lin Pai Road Kwai Chung, Hong Kong |
50 | 0 |
In 2015 transactions between the Group and TFI totalled 10,387 thousand American dollar. On 31 December 2015 the Group had trade payables to TFI in the amount of 654 thousand American dollar. In 2014 transactions between the Group and TFI totalled 9,434 thousand American dollar. On 31 December 2014 the Group had trade payables to TFI in the amount of 124 thousand American dollar.
In 2015 sales between the Group and Private Shop Ltd totalled 587 thousand euro. On 31 December 2015, the Group had no accounts receivable to Private Shop Ltd. In 2014 sales between the Group and Private Shop Ltd totalled 752 thousand euro. On 31 December 2014, the Group had no accounts receivable to Private Shop Ltd.
Related to the acquisition of a distribution agreement and a number of intangible assets in relation to Private Shop Ltd, the Group had a debt to Getz of 2.0 million American dollar as per 31 December 2015. This amount will be paid to Getz as certain milestone criteria are achieved.
43.73% of the shares of Van de Velde NV are held by the general public. These shares are traded on Euronext Brussels. Van de Velde Holding NV, which groups the interests of the Laureys and Van de Velde families, holds the remainder of the shares.
See the remuneration report in chapter 3.
For his chairmanship, his membership of the Nomination and Remuneration Committee, the Audit Committee and the Strategic Committee, the chairman of the Board of Directors (Lucas Laureys NV) received an annual gross remuneration of 60,000 euro. As from 1 January 2016 Herman Van de Velde NV, permanently represented by Herman Van de Velde, was appointed as chairman. Herman Van de Velde NV will receive an annual gross remuneration of 25,000 euro for its chairmanship, his membership of the Nomination and Remuneration Committee and the Strategic Committee. The other non-executive members receive annual remuneration of 15,000 euro for their membership of the Board of Directors and 2,500 euro for their membership of the Audit and/or Nomination and Remuneration Committee respectively. The members of the Board of Directors who are also members of the Management Committee receive no remuneration for their membership of the Board of Directors. The total remuneration for the directors (excluding the managing director) was 160 thousand euro in 2015 and 145 thousand euro in 2014. The directors have not received any loan or advance from the Group.
For the year ended 31 December 2015, a total amount of 2,382 thousand euro (2,745 thousand euro in 2014) was awarded to the members of the Management Committee, including the managing director. See the remuneration report in chapter 3 for more details.
These total amounts include the following components:
| 000 euro | 2015 | 2014 |
|---|---|---|
| Basic remuneration | 1,606 | 1,946 |
| Variable remuneration | 705 | 736 |
| Group insurance premiums | 37 | 30 |
| Other benefits | 34 | 33 |
| Total | 2,382 | 2,745 |
In addition to these pecuniary advantages, share-based benefits have been granted to the Management Committee through stock option plans. The members of the Management Committee had the opportunity to participate in an employee stock option plan, through which they were granted 5,000 share options in 2015 (idem in 2014). There was no calculated cost of the options accepted by the Management Committee in 2015.
Van de Velde is a single-product business, being the production and sale of luxury lingerie. Van de Velde distinguishes two operating segments: Wholesale and Retail. No segments have been combined.
Van de Velde Group has identified the Management Committee as having primary responsibility for operating decisions and has defined operating segments on the basis of information provided to the Management Committee.
Wholesale refers to business with independent specialty retailers (customers external to the Group), retail refers to business through our own retail network (stores and franchisees).The integrated margin is shown within the retail segment for Van de Velde products sold through Van de Velde's own retail network. In other words, the retail segment comprises the wholesale margin on Van de Velde products and the results generated within the network itself.
Management monitors the results in the two segments to a certain level ('direct contribution') separately, so that decisions can be taken on the allocation of resources and the evaluation of performance. Performance in the segments is evaluated on the basis of directly attributable revenues and costs. General costs (such as overhead), financial result, the result using the equity method, tax on the result and minority interests are managed at Group level and are not attributed to segments. Costs that are not attributed benefit both segments and any further division of the costs, such as general administration, IT and accountancy, would be arbitrary.
Assets that can be reasonably attributed to segments (goodwill and other fixed assets as well as inventories and trade receivables) are attributed. Other assets are reported as non-attributable, as are liabilities. Assets and liabilities are largely managed at Group level, so a large part of these assets and liabilities are not attributed to segments.
The accounting policies of the operating segments are the same as the key policies of the Group. The segmented results are therefore measured in accordance with the operating result in the consolidated financial statements.
Van de Velde does not have any transactions with a single customer in Wholesale or Retail worth more than 10% of total turnover.
Transactions between operating segments are on an arm's length basis, comparable with transactions with third parties.
In the following tables, the segmented information is shown for the periods ending on 31 December 2015 and on 31 December 2014:
| Segment Income Statement | 2015 2014 |
|||||||
|---|---|---|---|---|---|---|---|---|
| 000 euro | Wholesale | Retail | Unallocated | Total | Wholesale | Retail | Unallocated | Total |
| Segment revenues | 164,093 | 44,865 | 0 | 208,958 | 155,015 | 43,351 | 0 | 198,366 |
| Segment costs | -79,298 | -40,797 | -26,925 | -147,020 | -75,911 | -39,098 | -25,658 | -140,667 |
| Depreciation | 0 | -4,135 | -4,135 | -8,270 | 0 | -4,141 | -4,017 | -8,158 |
| Segment results | 84,795 | -67 | -31,060 | 53,668 | 79,104 | 112 | -29,675 | 49,541 |
| Net finance profit | 319 | 688 | ||||||
| Impairment | 0 | -31,448 | ||||||
| Result from associates | 302 | 34 | ||||||
| Income taxes | -13,235 | -16,382 | ||||||
| Non-controlling interest | 104 | -51 | ||||||
| Net income | 40,950 | 2,484 |
| Segment Balance Sheet | 2015 | 2014 | ||||
|---|---|---|---|---|---|---|
| 000 euro | Wholesale | Retail | Total | Wholesale | Retail | Total |
| Segment assets | 55,575 | 26,220 | 81,795 | 50,046 | 28,704 | 78,750 |
| Unallocated assets | 79,939 | 81,166 | ||||
| Consolidated total assets | 55,575 | 26,220 | 161,734 | 50,046 | 28,704 | 159,916 |
| Segment liabilities | 0 | 0 | 0 | 0 | 0 | 0 |
| Unallocated liabilities | 161,734 | 159,916 | ||||
| Consolidated total liabilities | 0 | 0 | 161,734 | 0 | 0 | 159,916 |
| Capital expenditure | 2015 | 2014 | ||||||
|---|---|---|---|---|---|---|---|---|
| 000 euro | Wholesale | Retail | Unallocated | Total | Wholesale | Retail | Unallocated | Total |
| Tangible fixed assets | 0 | 1,596 | 8,622 | 10,218 | 0 | 2,240 | 2,788 | 5,028 |
| Intangible assets | 0 | 52 | 720 | 772 | 0 | 112 | 588 | 700 |
| Depreciation | 0 | 4,135 | 4,135 | 8,270 | 0 | 4,141 | 4,017 | 8,158 |
| Breakdown by region – turnover | 2015 | 2014 | ||||
|---|---|---|---|---|---|---|
| 000 euro | Eurozone | Elsewhere | Total | Eurozone | Elsewhere | Total |
| Turnover | 146,552 | 62,406 | 208,958 | 128,941 | 69,425 | 198,366 |
The most important markets, determined on the basis of the quantitative IFRS criteria, are:
– Belgium, Germany and the Netherlands for the Eurozone;
– United States for Elsewhere.
| Further information about the assets of the company – location (000 euro) | Belgium | Elsewhere | Total |
|---|---|---|---|
| Tangible fixed assets | 25,665 | 8,539 | 34,204 |
| Intangible assets | 9,385 | 7,133 | 16,518 |
| Inventories | 34,155 | 5,003 | 39,158 |
No events after the balance sheet date had a major impact on the financial position of the company.
Besides the strategic risks described in detail in the activity report, Van de Velde has identified the following risks with respect to IFRS 7:
Due to its international character, the Group is confronted with various exchange rate risks on sale and purchase transactions.
The transaction risk is mainly centralized within Van de Velde NV. In 2015 Van de Velde NV invoiced 25% to 30% of sales in currencies other than euro. In addition, a significant proportion of purchases are in foreign currency (e.g. purchases raw materials and subcontractors).
Where possible, currency risks are managed by offsetting transactions in the same currency or by fixing exchange rates through forward contracts.These risks are managed at the level of the parent company. The Group is aware that exchange risks cannot always be fully hedged.
Foreign operations increase the translation risk of the Group. Financial instruments are not used to hedge this risk.
The Group performed a sensitivity analysis in 2015 with regard to changes in foreign currencies for the positions EUR/GBP, EUR/CAD, EUR/DKK, EUR/NOK and EUR/USD. The outstanding trade receivables and trade payables of the Group at the balance sheet date have been converted with a sensitivity of 10%. In the event of a 10% rise or fall in the exchange rate, the impact on the financial statements will be presented as follows:
| 000 euro | +10% | -10% |
|---|---|---|
| GBP | 91 | -91 |
| CAD | 76 | -76 |
| DKK | 49 | -49 |
| NOK | 28 | -28 |
| USD | 22 | -22 |
| 266 | -266 |
As a consequence of the large diversified customer portfolio, the Group does not have a significant concentration of credit risks. The Group has developed strategies and additional procedures to monitor and to limit credit risk at its customers. Wholesale sales are generated through more than 5,000 independent retailers and a small number of luxury department stores. No single customer accounts for more than 2.0% of the annual turnover of the Group.
The insolvency risk is also covered by credit insurance. The part of trade receivables not covered by the credit insurer is considered to be impaired as soon as the due date exceeds 90 days.
With respect to e-commerce activities, the credit risk is limited by using country-specific payment methods and an external partner is cooperated with monitoring the creditworthiness of potential e-commerce customers.
The liquidity and cash flow risk is rather limited thanks to the large operational cash flow and the net cash position (28.1 million euro). Credit lines worth more than 10 million euro are also available.
Adequate measures have been taken in several areas to minimize interruptions in the supply chain and deal with any such interruptions that do occur. Examples of such measures are:
Moreover, business risks as a consequence of a potential interruption are covered by insurance. Adequate measures have been taken in consultation with insurers who also regularly inspect the various locations.
Van de Velde's business model entails risks with regard to raw materials and finished products. Raw materials are ordered and production launched before we have full insight into the orders. As far as possible, Van de Velde attempts to concentrate this risk at the level of raw materials rather than finished products.
Van de Velde also applies a strict policy regarding write-downs on inventories:
Sales are spread over about 50,000 stock references, over 10,000 of which are changed every season. Therefore, sales do not depend on the success of any one model.
Van de Velde Group is subject to federal, regional and local laws and regulations in each country in which it operates. Such laws and regulations relate to a wide variety of matters, such as data security, privacy, product liability, health and safety, import and export, occupational accidents, employment practices and the relationship with associates (regarding overtime and work place safety among other things), tax matters, unfair competitive practices and similar regulations, etc.
Compliance with, or changes in, these laws could reduce the revenues and profitability of the Group and could affect its business, financial conditions or the results of operations.
Van de Velde Group has been subject to and may in the future be subject to allegations of violating certain laws and/or regulations. Such allegations or investigations or proceedings may require the Group to devote significant management resources to defending itself against. In the event that such allegations are proven, Van de Velde may be subject to significant fines, damages awards and other expenses, and its reputation may be harmed.
Van de Velde Group actively strives to ensure compliance with all laws and regulations to which it is subject. A degree of insurance has been taken out to cover some of the above-mentioned risks.
As referred to in note 14, Intimacy has been named as defendant in a potential class action suit alleging violation of FACTA ("Fair and Accurate Credit Transactions Act"). This Act stipulates the credit card details that can be stated on a cash receipt. In this case, Intimacy has reached a settlement with the opposing party and this settlement was approved by the US court on 1 September 2015. The settlement is in execution from 1 October 2015 till 31 May 2016. It is impossible at this point in time to assess whether this case will result in any cash outflow, however, management will do what it takes to avoid a possible cash outflow. It is expected that this settlement agreement will not have a material impact on the financial situation of the Group.
The Group is also faced with other operational risks which (if possible) are monitored and for which (if available) correcting actions are taken.
As required by law and the Company's by-laws, we report to you in the context of our statutory auditor's mandate.This report includes our opinion on the consolidated statement of the financial position as at 31 December 2015, the consolidated statement of the realized and non-realized results, the consolidated statement of changes in equity and the consolidated statement of cash flows for the year ended at 31 December 2015 and the disclosures ( all elements together "the Consolidated Financial Statements") and includes as well our report on other legal and regulatory requirements.
We have audited the Consolidated Financial Statements of Van de Velde NV ("the Company") and her subsidiaries (together "the Group") as of and for the year ended 31 December 2015, prepared in accordance with the International Financial Reporting Standards as adopted by the European Union, which show a consolidated balance sheet total of € 161,734 thousand and of which the consolidated income statement shows a profit for the year (attributable to the equityholders of the parent) of € 40,950 thousand.
The Board of Directors is responsible for the preparation of Consolidated Financial Statements that give a true and fair view in accordance with the International Financial Reporting Standards, as adopted by the European Union. This responsibility includes: designing, implementing and maintaining internal control relevant to the preparation of Consolidated Financial Statements that give a true and fair view and that are free from material misstatement, whether due to fraud or error; selecting and applying appropriate accounting policies; and making accounting estimates that are reasonable in the given circumstances.
Our responsibility is to express an opinion on these Consolidated Financial Statements based on our audit. We conducted our audit in accordance with International Standards on Auditing ("ISAs"). Those standards require that we comply with the ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the Consolidated Financial Statements are free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the Consolidated Financial Statements. The procedures selected depend on the statutory auditor's judgment, including the assessment of the risks of material misstatement of the Annual Accounts, whether due to fraud or error. In making those risk assessments, the statutory auditor considers internal control relevant to the Group's preparation and presentation of the Annual Accounts that give a true and fair view, 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 Group's internal control. An audit also includes evaluating the appropriateness of accounting policies used, the reasonableness of accounting estimates made by the Board of Directors, as well as evaluating the overall presentation of the Consolidated Financial Statements.
We have obtained from the Board of Directors and the Company's officials the explanations and information necessary for performing our audit procedure and we believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
In our opinion, the Consolidated Financial Statements of the Group as at 31 December 2015 give a true and fair view of the net equity and financial position of the consolidated whole, as well as its consolidated results and its consolidated cash flows for the year then ended in accordance with the International Financial Reporting Standards as adopted by the European Union.
The Board of Directors is responsible for the preparation and the content of the Board of Director's report on the Consolidated Financial Statements, in accordance with article 119 of the Belgian Company Code.
In the context of our mandate and in accordance with the additional standard issued by the 'Instituut van de Bedrijfsrevisoren/Institut des Réviseurs d'Entreprises' as published in the Belgian Gazette on 28 August 2013 (the "Additional Standard"), it is our responsibility to perform certain procedures to verify, in all material respects, compliance with certain legal and regulatory requirements, as defined in the Additional Standard. On this basis, we make the following additional statement, which does not modify the scope of our opinion on the Consolidated Financial Statements.
– The Board of Director's report to the Consolidated Financial Statements includes the information required by law, is consistent with the Consolidated Financial Statements and does not present any material inconsistencies with the information that we became aware of during the performance of our mandate.
Ghent, 23 February 2016 Ernst & Young Bedrijfsrevisoren BCVBA Statutory auditor represented by Paul Eelen* Partner
In accordance with Article 105 of Belgium's Companies Act, the statutory financial statements are hereinafter presented in abbreviated form. The annual report and financial statements of Van de Velde NV and the auditor's report will be filed at the National Bank of Belgium within the month following approval by the General Assembly. A copy is available free of charge at the registered office.
The valuation rules applied for the statutory financial statements differ from accounting principles used for the consolidated financial statements: the statutory annual accounts are prepared in accordance with Belgian legal requirements, while the consolidated financial statements are prepared in accordance with International Financial Reporting Standards. There are no material changes to the accounting principles used for the statutory accounts.
The statutory auditor has issued an unqualified opinion in regard to the statutory financial statements of Van de Velde NV.
| 000 euro | 31/12/2015 | 31/12/2014 (1) |
|---|---|---|
| Fixed assets | 102,449 | 102,022 |
| Intangible fixed assets | 5,297 | 4,112 |
| Tangible fixed assets | 20,836 | 15,896 |
| Financial fixed assets | 76,316 | 82,014 |
| Current assets | 87,362 | 95,444 |
| Amounts receivable after one year | 2,013 | 5,261 |
| Stocks and orders in production | 36,712 | 33,485 |
| Amounts receivable within one year | 18,804 | 20,494 |
| Financial investments | 7,832 | 2,478 |
| Cash at banks and in hand | 18,478 | 31,078 |
| Accrued income and deferred charges | 3,523 | 2,648 |
| Total assets | 189,811 | 197,466 |
| Shareholders' equity | 120,896 | 138,542 |
| Issued capital | 1,936 | 1,936 |
| Share premium | 743 | 743 |
| Reserves | 118,217 | 135,863 |
| Provisions, deferred taxes and tax liabilities | 739 | 782 |
| Provisions for risks and costs | 739 | 782 |
| Liabilities | 68,176 | 58,142 |
| Amounts payable after one year | 0 | 0 |
| Amounts payable within one year | 64,870 | 54,853 |
| Accrued charges and deferred income | 3,306 | 3,289 |
| Total liabilities | 189,811 | 197,466 |
(1) Figures for 31/12/2014 were aligned with the filed accounts.
| 000 euro | 31/12/2015 | 31/12/2014 |
|---|---|---|
| Operating income | 194,189 | 178,914 |
| Turnover | 186,056 | 175,298 |
| Changes in stocks unfinished goods and finished goods | 2,279 | -1,210 |
| Other operating income | 5,854 | 4,826 |
| Operating costs | 153,727 | 133,560 |
| Goods for resale, raw materials and consumables | 39,340 | 40,297 |
| Services and other goods | 71,741 | 65,091 |
| Salaries, social charges and pension costs | 25,741 | 24,640 |
| Depreciations | 4,732 | 5,599 |
| Write-downs and provisions | 229 | -2,295 |
| Other operating costs | 11,944 | 228 |
| Operating profit | 40,462 | 45,354 |
| Financial result | 7,112 | 88,903 |
| Finance income | 15,173 | 94,478 |
| Finance costs | -8,061 | -5,575 |
| Profits on ordinary activities before tax | 47,574 | 134,257 |
| Exceptional result | -5,654 | -11 |
| Exceptional income | 52 | 0 |
| Exceptional costs | -5,706 | -11 |
| Pre-tax profit for the fiscal year | 41,920 | 134,246 |
| Tax on the profit | -12,944 | -16,105 |
| Profit for the year | 28,976 | 118,141 |
| 000 euro | 31/12/2015 | 31/12/2014 |
|---|---|---|
| Distributable profit | 28,976 | 118,141 |
| Distributable profit for the fiscal year | 28,976 | 118,141 |
| Addition to reserves | 0 | 71,555 |
| Transfer from reserves | 17,646 | 0 |
| Profit to be distributed | 46,622 | 46,586 |
The statutory report is in accordance with article 96 of Belgium's Companies Code.
The financial statements show a balance sheet total of 189,811 thousand euro and a profit after tax for the fiscal year of 28,976 thousand euro.
No events after the balance sheet date had a major impact on the financial position of the company.
We refer readers to 'Prospects for 2016' in the chapter 'The year 2015'.
The design department of Van de Velde also comprises a research and development unit.The design department is responsible for the launch of new collections, whereas the research and development unit and the design department investigate new materials, new production technologies, new products and so on.
The General Meeting of Shareholders of 24 April 2013 of Van de Velde NV appointed Ernst & Young Bedrijfsrevisoren BVCBA, Moutstraat 54, 9000 Ghent, represented by Paul Eelen, as statutory auditor. The auditor is appointed until the annual meeting of 2016.
The annual remuneration in 2015 for auditing the statutory and consolidated annual accounts of Van de Velde NV was 49,995 euro (excl. VAT). The total costs for 2015 for the auditing of the annual accounts of all companies of the Van de Velde Group was 187,064 euro (excl. VAT), including the 49,995 euro mentioned above.
In accordance with Article 134 of Belgium's Companies Code, Van de Velde announces that the remuneration of the statutory auditor for exceptional and special tasks and to the persons with whom the statutory auditor has a professional relationship was 79,365 euro (excl. VAT), all of which relates to tax advisory and compliance tasks.
The following risks at Group-level were examined and where necessary possible coverage or preventive measures were taken:
At the end of 2014 Van de Velde held 26,000 of its own shares with a total value of 833 thousand euro.
In accordance with Article 620 of Belgium's Companies Code, the Extraordinary Meeting of Shareholders of 30 April 2014 gave the Board of Directors the power to acquire the company's own shares. In 2015 7,000 treasury shares were purchased.
Within the framework of the stock option plan a total of 33,000 options were exercised and the same number of treasury shares was made available to the option holders.
At the end of 2015 Van de Velde NV held no own shares.
| 000 euro | 2015 | 2014 |
|---|---|---|
| Share capital | 1,936 | 1,936 |
| Treasury shares | 0 | -833 |
| Share premium | 743 | 743 |
In 2015 the procedure laid down in Article 523 of Belgium's Companies Code was not applied as no such events occurred in the Board of Directors.
On 19 July 2011 Van de Velde formed a branch in Sweden (organization number 516407-5078), named "Van de Velde NV Belgium Filial Sweden".
We refer to chapter 3 of the annual report for the Corporate Governance statement.
The remuneration report provides transparent information on Van de Velde's reward policy for its directors and members of the Management Committee, in accordance with the Belgian Corporate Governance Act of 6 April 2010 and the Belgian Corporate Governance Code. Please see chapter 3 (Corporate Governance).
The Board of Directors proposes to the General Meeting of Shareholders payment of a gross dividend of 3.5000 euro per share. After payment of withholding tax, this represents a net dividend of 2.5820 euro per share. Of this amount, a gross interim dividend of 1.3500 euro per share (net dividend of 1.0125 euro per share) was paid in November 2015. The final dividend of 2.1500 euro per share (net dividend of 1.5695 euro per share) will be paid out after approval by the General Meeting from 4 May 2016.
Proposed profit distribution in thousands of euro:
| Distributable profit | 28,976 |
|---|---|
| Transfer from reserves | 17,646 |
| Gross dividend of 3.50 euro per share on 13,322,480 shares | 46,622 |
| – Of this amount, 1.35 euro per share was paid as interim dividend in November 2015 |
17,979 |
| – Of this amount, 2.15 euro per share as final dividend |
28,643 |
Within the framework of the dematerialisation of bearer shares, the statutory auditor has in accordance with article 11 of the Act of 14 December 2005 made a report to the Board of Directors. This report will be submitted in accordance with this same article to the 'Caisse des Dépôts et Consignations'.
Herman Van de Velde NV EBVBA 4F Represented by Represented by Herman Van de Velde Ignace Van Doorselaere Director Managing Director
The undersigned declare that, to the best of their knowledge:
EBVBA 4F, always represented by Ignace Van Doorselaere Stefaan Vandamme CEO CFO
| 69 |
The total number of employees of Van de Velde Group in 2015 was virtually unchanged compared with 2014.
| Headcount | 2000 | 2005 | 2010 | 2014 | 2015 |
|---|---|---|---|---|---|
| Tunisia | 183 | 420 | 672 | 429 | 471 |
| Belgium (including retail) | 417 | 416 | 474 | 526 | 507 |
| Hungary | 322 | 422 | 0 | 0 | 0 |
| Spain (excluding retail) | 0 | 1 | 65 | 27 | 29 |
| Other countries (excluding retail) | 29 | 35 | 56 | 65 | 69 |
| Retail (excluding Belgium) | 0 | 34 | 227 | 325 | 285 |
| Total | 951 | 1,328 | 1,494 | 1,372 | 1,361 |
We pursue a culture that encourages winning, benefits customers and employees and fosters passion in their work.
Van de Velde is a Conversation Company.
We want to truly connect with our customers and consumers. We create a community of brand ambassadors by listening to their needs and desires, by excelling in our service and exceeding their expectations, by creating authentic stories customers love to share.
We do that in all our businesses and channels:
1 Based on "The Conversation Company", Steven Van Belleghem, Kogan Page Publishers, 3 May 2012.
Our corporate values are expressed in the acronym GROEI (Growth), which stands for:
We want to reinforce an open culture:
In 2015 we strengthened this culture in our ambitious "People For Groei, Groei For People"- program.
"We want to continuously support leadership development"
The members of the executive team and the group of 35 leaders followed leadership and entrepreneurship training run by Vlerick Management School.
We held two hotdog sessions for all managers, in which an inspiring guest told us his or her story, giving us new insights and enabling outward thinking. The sessions were rounded off with a networking opportunity – with hotdogs.
New managers were trained in people management skills and the team leaders at our production departments received intensive training and coaching from an external trainer.
"We want to build a community of Van de Velde Ambassadors"
In May 2015 we launched our internal communication platform, the Conversation Room.
In the Conversation room news, calendars and more are shared with the whole group. Employees without access to a computer can read the newsletters on monitors.
In September 2015 we created the closed "Working at Van de Velde" Facebook group, where all group employees can share their news and views – however modest. Meanwhile, the group brings more than 300 colleagues from the whole world closer together.
On the day of publication of the annual and interim figures all employees are given the opportunity to attend an information meeting. The aim of this meeting is to tell them about Van de Velde's results and on-going projects. We want to keep employees informed and involved on what is going on in our organization.
We also expect all managers to regularly share the department and company results with their team.
Employee Day
We held our first Van de Velde Employee Day in Belgium on 29 September 2015. The theme was "Body and Mind". We closed the premises and took off for Ghent, for a day combining information and fun.
The morning was devoted to an inspiring interactive presentation on what kind of company we are building. After lunch, the focus shifted to the Body and Mind workshops, including yoga, games of kubb, a barista workshop, a pillow fight, kickboxing and a boat trip.
The day ended with a standing dinner, followed by a fabulous unexpected jam and dance party.
In mid 2015, after consulting our employees we decided to drop the compulsory annual employee Groei conversations with line managers in favour of permanent dialogue and feedback.
Our goal is to eliminate needless procedures and focus on what is really important: genuine feedback, dialogue and coaching. Managers will provide context and direction, but they will not control. This will put more emphasis on natural leadership: meetings will become an opportunity to show appreciation and give people constructive feedback.
We ask every manager to hold frequent work sessions and informal 'check-ins' with all their team members. Besides, we expect every employee to be a self-starter and to actively ask for and give feedback.
In consultation with our employees we decided to scrap the time registration for all white collar workers as part of our ambition to promote a result and responsibilityoriented culture, in which managers focus on providing context and coaching rather than control.
A pass-based activity time registration system remains in place for our blue collar workers in the production departments.
More flexible working hours have been introduced in those departments where possible, depending on the job. Start and end times and the length of the lunch break are flexible.
Van de Velde has taken a conscious decision to support a limited number of local charity projects, focusing on vulnerable women and children.
Our fight against breast cancer: In Belgium alone, every day 26 women are told they have breast cancer. Considering our product range and the fact that more than 90% of our employees are female, no other disease is more relevant to our company.
With that in mind, we have given support to the Anticancer Fund for the publication of a brochure on breast cancer treatments.
We give time to society. We give our employees the opportunity to invest time in social projects. In 2015 our employees invested 220 working hours in projects organized by Time4Society.
These include putting together educational materials for special needs children, arranging an active afternoon for children from deprived families and preparing an open day at a centre for disabled people.
The ethical and social commitments of Van de Velde Group are published in the Ethical and Social Charter. This charter can be accessed at www.vandevelde.eu. These commitments have earned the SA8000 label in Belgium (Wichelen and Schellebelle) since 2003. The label was renewed in November 2015.
Among other things, the SA8000 label (www. sa-intl.org) draws on the basic conventions of the International Labour Organization, the Universal Declaration of Human Rights and the UN Convention on the Rights of the Child. The standard was drawn up in consultation between NGOs, collective industrial organizations, industry and labelling bodies. Label holders are subject to two social audits per year.
SA8000 certification is not without obligation for the company. The whole company and all employees are closely involved in the audits and must observe the principles. On the other hand, the award is a commitment to the future. All business aspects covered by the SA8000 label are subject to discussions in the Management Committee. Under the conditions of award of the label, the company is obliged to regularly look itself in the mirror and systematically evaluate and fine-tune staff policy, health and safety policy and the monitoring of suppliers.
Our certified sites are audited twice a year, once in May and once in November, by independent auditors SGS (www.sgs.be).
The auditor's activities are not limited to contacts with HR, management and administration, but also extend to workplace visits and talks with employees. The auditor also spends a lot of time on supplier control and monitoring procedures.
"We want our employees to work safely and be healthy"
A fire drill is held at all sites every year. As well as being an opportunity to test all procedures, these fire drills enable our employees to refresh their knowledge of the fire safety instructions.
The persons responsible for safety and the employees responsible for first aid follow regular courses to brush up and improve their knowledge and skills.
Fire fighting exercise for our store managers:
In 2015 there were 12 minor occupational accidents at work in Belgium, as well as 4 accidents on the way to and from work (primarily falls). Although these were mainly very minor incidents, all accidents and near-accidents were thoroughly investigated by the risk prevention advisor. Where necessary, adaptations were made to our risk prevention policy, the use of personal protective equipment (such as safety boots and auditory protection) and employee training (such as lifting).
Safety is an issue that is given daily attention. The risk prevention advisor arranges weekly 'safety discussions' with employees to talk about any accidents and near-accidents and focus attention on the specific safety risks in their work.
Ensuring that employees adopt a good work posture that does not put undue stress on the body continues to be a priority. After a study by the ergonomist at the external medical service, we replaced all chairs in our stitching studio and adapted the tables and the way the work is organized in the quality control department.
In 2015 we again offered our employees the opportunity to improve their physical condition together with their colleagues in a number of sports initiatives. The weekly supervised runs continue to be a big success.
The Vitality workgroup made up of P&O staff, members of the prevention and protection at work committee and the prevention advisor establishes the main points of the policy and ensures it is properly implemented.
The absenteeism figures are analysed by P&O at least twice a year and discussed with the line managers.The focus is on preventing longterm absence and grey absenteeism.
When an employee resumes work after a long absence, a reintegration plan is drawn up together with the employee, the line manager, the external medical service and, where possible, the doctor.
In 2015 we cut electricity consumption at our Schellebelle site by 5.3% compared with the 2014 figure. This is a positive result bearing in mind the renovation work at Schellebelle, which meant that we had to heat a part of the building electrically. The work premises also provide electricity for the building site.
In Wichelen electricity consumption increased by 4.2% compared to 2014. That is mainly due to the new automated order picking system in the distribution centre. Electricity consumption over the two sites increased by 0.8%.
The cooling units are the biggest electricity consumers in Schellebelle. A cascade system was introduced during the first phase of the renovation, which will have a positive effect on energy consumption. The 18 kW compressor was another big electricity consumer. In March 2015 it was replaced by an 11 kW variable-frequency compressor.
These changes, together with a brand new eco-friendlier controller for the HVAC system should decrease electrical consumption in 2016. The warehouse will be relocated from Schellebelle to Wichelen in summer 2016, which will also cut power consumption (especially the Kardex system) in Schellebelle.
The cooling units in Wichelen are big electricity consumers too, but a cascade system will be set up there as in Schellebelle. Installation of the new HVAC system with an eco-friendlier controller began at Meerbos 22 at the end of 2015.
In 2015 gas consumption for heating purposes fell by 1.6% in Schellebelle, but increased by 26.2% in Wichelen compared to 2014. Gas consumption across the two sites increased by 12.8%. Gas consumption particularly depends on climatic conditions but the HVAC system controller also has a significant effect. The controller at Meerbos 24 was new in 2012 and the controller at Meerbos 22 will be replaced in early 2016. Insulation of the whole building in Schellebelle will be upgraded during the renovation project and a brand-new HVAC controller will be installed.
As part of the renovation project in Schellebelle the entire drainage system will be modernised to meet the new standards for a separate sewer system. We will also harvest and store rainwater, some of which will be used in the sanitary system. A similar system is already in place at Meerbos 24.
Waste will be sorted and collected separately within the company as much as possible. Paper, cardboard and residual waste are the largest waste flows from both production and the offices. Foil and films are collected and removed separately, as is PMD waste (plastic bottles, metal packaging and drink cartons). The small quantities of iron waste, electronics, strip lights, batteries and prunings are also sorted and collected separately.
In early 2015 the paper/cardboard compactor was decommissioned in Schellebelle and a new baler was taken into use in Wichelen, where most paper and cardboard waste is produced. This will reduce transports of this type of waste, which also cuts carbon emissions.
The class 2 environmental permit for Schellebelle was valid until January 2016.The renewal application has already been submitted.The following application will be for Meerbos 22, when its permit comes up for renewal in June 2017.
An external energy audit was also conducted on our Wichelen and Schellebelle premises in 2015, as well as on our shops in Germany.The focus was on the efficiency of our systems and how we manage the energy. The auditors recommendations will be implemented during 2016 as part of ongoing activities.
The total contributions made to the Belgian Treasury represent 73.6% of the operating profit of Van de Velde that was generated in Belgium. This operating profit is based on the statutory financial statements and amounted to 40,462 thousand euro at 31 December 2015.
| 000 euro | Total | Expense for Van de Velde |
Withheld by Van de Velde |
|---|---|---|---|
| Social security contribution | 5,221 | 5,221 | 0 |
| Withholding tax on wages | 3,513 | 0 | 3,513 |
| Income tax | 12,932 | 12,932 | 0 |
| Difference between recoverable and deductible VAT | 2,276 | 0 | 2,276 |
| Withholding taxes | 4,504 | 20 | 4,484 |
| Property taxes | 162 | 162 | 0 |
| Provincial and municipal taxes and other federal taxes | 65 | 65 | 0 |
| Taxes on insurance premiums | 81 | 81 | 0 |
| Import duties | 1,035 | 1,035 | 0 |
| Total | 29,789 | 19,516 | 10,273 |
Building tools?
Free accounts include 100 API calls/year for testing.
Have a question? We'll get back to you promptly.