Beter Bed Holding N.V. — Earnings Release 2012

Mar 8, 2013

BETER BED HOLDING N.V.

PRESS RELEASE

ANNUAL RESULTS 2012

Uden, the Netherlands, 8 March 2013

In the event of any differences in interpreting the half-year figures, the Dutch version shall prevail.

Contents

1.	Press release – annual results 2012…………………………………………………………	3
2.	Consolidated balance sheet…………………………………………………………………….	9
3.	Consolidated profit and loss account………………………………………………………	10
4.	Consolidated cash-flow statement……………………………………………………	11
5.	Consolidated statement of comprehensive income…………………………………	12
6.	Consolidated statement of changes in equity………………………………………………	13

1. Press release

Beter Bed posts lower profit in 2012 with steady revenue

• Further fall in consumer confidence in the Netherlands and Spain.
• 2012 net revenue nearly equal to previous year at € 397.3 million (2011: € 397.0 million).
• 2012 net profit including write-downs for Spain and non-recurring expenses fell by 49% to € 14.4 million (2011: € 28.0 million); earnings per share totalled € 0.67 (2011: € 1.29).
• Normalised net profit decreased by 21% in 2012 to € 22.2 million (2011: € 28.0 million); normalised earnings per share of € 1.02 (2011: € 1.29).
• Dividend proposal: € 0.47 per share, pay-out ratio of 70%.
• After taking the write-down, the Spanish activities were repositioned from a full service into a cash & carry formula.

Key figures for the year

(in millions of € unless stated otherwise)	2012	2011	Change
Revenue	397.3	397.0	0.1%
Change in revenue at comparable stores (%)	-4.7%	0.4%
Gross profit (%)	56.3%	56.5%
EBITDA	38.1	46.8	-18.5%
Operating profit/EBIT	23.7	38.3	-38.1%
Net profit	14.4	28.0	-48.6%
Earnings per share (in €)	0.67	1.29	-48.1%
Proposed dividend (in €)	0.47	1.10	-57.3%
Pay-out ratio (%)	70%	85%
Solvency (%)	50.4%	54.1%
Number of stores	1,219	1,187	2.7%
Normalised EBITDA	40.4	46.8	-13.6%
Normalised operating profit/EBIT	31.2	38.3	-18.5%
Normalised net profit	22.2	28.0	-20.8%
Normalised earnings per share (in €)	1.02	1.29	-20.9%
Pay-out ratio excluding write-down for Spain (%)	50%	85%

Key figures for the fourth quarter

(in millions of € unless stated otherwise)	Q4 2012	Q4 2011	Change
Revenue	100.8	108.0	-6.6%
Change in revenue at comparable stores (%)	-10.5%	1.8%
Gross profit (%)	58.0%	58.8%
Operating profit/EBIT	4.5	14.3	-68.3%
EBITDA	11.9	16.6	-28.2%
Net profit	0.9	10.2	-91.2%
Earnings per share (in €)	0.05	0.46	-89.1%
Normalised operating profit/EBIT	10.6	14.3	-26.1%
Normalised EBITDA	13.0	16.6	-21.7%
Normalised net profit	7.5	10.2	-26.4%
Normalised earnings per share (in €)	0.34	0.46	-26.1%

Ton Anbeek, Chief Executive Officer:

'Our company was hit badly in the course of 2012 by the further deterioration of the economy in many European countries. This is one factor that led to a write-down on our assets in Spain. The results deteriorated further in the Netherlands due to sharply declining consumer confidence. This was caused by the continuing crisis in the housing market, the pension crisis and measures introduced by the Dutch government such as the VAT increase that took effect in October 2012. Germany also had a somewhat more difficult second half of the year, in part owing to the strong comparative basis formed by the successful anniversary year of 2011. The cost-saving measures introduced in the third quarter of 2012 were already reflected in the results in the fourth quarter. The outlook for 2013 in countries including the Netherlands and Spain remain extremely challenging. A sharp focus on expenses remains warranted. A strong balance sheet, a healthy cash flow and our highly motivated employees give us confidence that we will be able to maintain our strong market position.'

Fourth quarter 2012

The revenue of Beter Bed Holding decreased by 6.6% to € 100.8 million in the fourth quarter of 2012 (fourth quarter 2011: € 108.0 million). The revenue at comparable stores fell by 10.5% (fourth quarter 2011: 1.8%). Revenue performance per country in the fourth quarter was as follows:

Germany	-3%
The Netherlands	-11%
Switzerland	+2%
Austria	-6%
Spain	-34%
Belgium	+24%

Revenue in Germany decreased by 3% in the fourth quarter. Revenue at comparable stores fell by 8% in the fourth quarter (fourth quarter 2011: +12%). In the Netherlands, a combination of a distinctly lower order portfolio at the end of the third quarter and a 13% decrease in revenue at comparable stores in the fourth quarter caused revenue to fall by more than 11%. In Spain, the drop in revenue at comparable stores amounted to 37% in the fourth quarter. This sharp decline began in September as a result of the deteriorating economic situation and the VAT increase in Spain.

Gross profit amounted to 58.0% in the fourth quarter (fourth quarter 2011: 58.8%). Despite the fact that the average number of stores grew by a total of 42, the operating expenses decreased by 2.6% from € 49.2 million in 2011 to € 48.0 million in 2012. Average expenses per store decreased by more than 3% in the fourth quarter of 2012. Normalised operating profit (EBIT) totalled € 10.6 million in the fourth quarter of 2012 (10.5% of the revenue), compared to € 14.3 million (13.2% of the revenue) in 2011. Normalised net profit in the fourth quarter of 2012 decreased by 26% to € 7.5 million (2011: € 10.2 million).

Write-down for Spain and non-recurring expenses in 2012

As announced on 23 January 2013, Beter Bed took an impairment of € 4.9 million, which are deducted from operating profit, due to further decreasing consumer confidence and the uncertainty regarding the outlook for the activities in Spain. The company also took impairments of € 1.1 million on the tax assets. The negative effect of the impairments for Spain on net profit consequently totals € 6.0 million.

In 2012 the company has also deducted a total of € 2.5 million (€ 1.8 million after tax) in nonrecurring expenses from the operating profit for the closure of stores in Poland, reorganisation expenses in Spain and the Netherlands and the closure of stores in Spain, the Netherlands, Belgium and Germany (MAV).

Full year 2012

Revenue for the full year 2012 increased marginally by 0.1% to € 397.3 million (2011: € 397.0 million). This increase is partially the result of the growth in the number of stores by 32 to 1,219 (year-end 2011: 1,187 stores). Revenue at comparable stores decreased by 4.7% for the full year 2012 (2011: +0.4%). While revenue performance at comparable stores in the Netherlands (5% decrease) and Germany (5% increase) was still divergent in the first half of 2012, the performance in both the Netherlands and Germany was negative in the second half of 2012 at -11% and -6% respectively. Consumer confidence deteriorated further in the second half of 2012. Revenue performance at comparable stores was negative in all months of 2012, with the exception of the month of September preceding the VAT increase on 1 October 2012.

Revenue performance per country in the full year 2012 was as follows:

Germany	+3%
The Netherlands	-5%
Spain	-12%
Switzerland	+10%
Austria	+4%
Belgium	+34%

Gross profit decreased marginally to 56.3% in 2012 (2011: 56.5%). Operating expenses increased from € 186.1 million to € 190.1 million, primarily due to the increase in the number of stores. Expenses as a percentage of revenue rose from 46.9% to 47.8%.

Average expenses per store decreased marginally by 0.1% in 2012.

Operating profit totalled € 23.7 million for the full year 2012 (6.0% of revenue), compared to € 38.3 million (9.6% of revenue) for the full year 2011. Normalised operating profit decreased from € 38.3 million (9.6% of revenue) to € 31.2 million (7.9% of revenue). Net profit amounted to € 14.4 million in 2012 (2011: € 28.0 million). Normalised net profit totalled € 22.2 million in 2012 (2011: € 28.0 million). Earnings per share amounted to € 0.67 in 2012 (2011: € 1.29).

Total investments in 2012 amounted to € 10.9 million (2011: € 13.3 million). A total of € 7.2 million of this amount was invested in new and existing stores in 2012 (2011: € 9.8 million). The remaining amount has been invested primarily in IT. The cash flow (net profit plus depreciations and write-downs) amounted to € 28.8 million in 2012, compared to € 36.5 million in 2011. Solvency at year-end 2011 amounted to 50.4% (2011: 54.1%). Interest-bearing debt amounted to € 12.3 million at year-end 2012 (year-end 2011: € 8.3 million).

Operational

A total of 128 stores were opened and 96 stores were closed in 2012. The number of stores has consequently increased by 32 on balance. The company had 1,219 stores at the end of 2012.

Number of stores	31-12-2011	Closed	Opened	31-12-2012
Matratzen Concord (including MAV)	963	66	107	1,004
Beter Bed	87	1	2	88
El Gigante del Colchón	67	11	7	63
BeddenREUS	39	2	7	44
Slaapgenoten	16	1	1	16
Schlafberater.com	-	-	4	4
Matratzen-AbVerkauf	15	15	-	-
Total	1,187	96	128	1,219

Matratzen Concord

The revenue of the cash & carry retail formula Matratzen Concord amounted to € 251.2 million in 2012 (63.2% of the total group revenue). This represents growth of 3.8% compared to 2011. Revenue at comparable stores decreased by 1.8%. 83% of Matratzen Concord's revenue was realised in Germany in 2012. The initial results of Matratzen Concord's webshop that was launched in December 2012 appear to be positive. Online sales via a partner are also expected to be launched in Germany in the second quarter of 2013. A number of poorly performing stores in both the Netherlands and Belgium were closed.

This formula opened a net total of 41 new stores in 2012, of which 52 were opened in Germany and five in both Austria and Switzerland. There were a net total of twelve store closures in the Netherlands and three in Belgium. The last remaining store in Poland was closed in December 2012.

Number of stores	31-12-2011	Closed	Opened	31-12-2012
Germany	800	43	95	852
Austria	62	-	5	67
Switzerland	47	1	6	52
The Netherlands	39	13	1	27
Belgium	9	3	-	6
Poland	6	6	-	-
Total	963	66	107	1,004

Beter Bed

This formula operates in the Netherlands and has also been active in Belgium since 2011. The number of Beter Bed stores grew by one store from 87 to 88 as a result of two openings and one closure. Revenue decreased by 5.1% in 2012 to € 102.4 million (2011: € 107.9 million). This formula consequently contributes 25.8% to the total group revenue. Revenue at the comparable stores of Beter Bed declined by 6.2% for the full year 2012. The online revenue via the own webshop and the partnership with wehkamp.nl developed positively and now amounts to approximately 5% of the revenue.

Other formulas

The revenue of the other formulas amounted to € 43.7 million in 2012 (2011: € 47.1 million). This includes the revenue of the retail formulas BeddenREUS (The Netherlands), Slaapgenoten (The Netherlands), El Gigante del Colchón (Spain), Schlafberater.com (Germany), the wholesaler DBC and the Matratzen-AbVerkauf formula that was closed in 2012. Revenue in 2012 was 7.4% lower than in 2011. These other formulas contribute 11.0% to the total group revenue.

Dividend

Beter Bed Holding N.V.'s dividend policy is aimed at maximising shareholder return while at the same time maintaining a solid capital position. The company aims to distribute at least 50% of its net profit to the shareholders provided that its solvency is not less than 30% and the net-interestbearing debt/EBITDA ratio does not exceed two.

In November 2012, the company paid an interim cash dividend of € 0.35 per share. A proposal will be submitted to the Annual General Meeting of Shareholders, scheduled for 25 April 2013, to distribute a final cash dividend of € 0.12.This brings the dividend for 2012 to € 0.47 per share (2011: € 1.10 per share), with 70% of net profit to be distributed to the shareholders. Adjusted for the write-down in Spain, the pay-out ratio amounts to 50%. This payment is in line with the aforementioned dividend policy.

Auditor's report

The financial information in the appendices is taken from the consolidated financial statements of Beter Bed Holding N.V., which will be submitted for adoption to the Annual General Meeting of Shareholders on 25 April 2013, and for which an unqualified auditor's report has been issued by the independent auditor.

Developments and outlook first months of 2013

The company does not expect the economic situation to improve in 2013, particularly in the Netherlands and Spain. The focus in both the Netherlands and Spain will remain fully on continuing cost reductions, closure of poor performing stores and a further increase in conversion, service and customer satisfaction. The company expects to be able to save an amount of € 1.3 million in 2013 on top of the cost-savings totalling € 2.2 million that have already been implemented.

The company foresees a distinct decrease in revenue in the first quarter of 2013, despite the realised cost-savings and stable gross profit, which will lead to a considerably lower operating profit than in the first quarter of 2012. This is caused by a lower order portfolio in the Netherlands at year-end 2012, historically low consumer confidence in the Netherlands and lower visitor numbers due to winter weather conditions in January and February in the Netherlands and Germany.

Financial Calendar

Analysts' Meeting annual results 2012	week 10	08.03.2013
Publication Annual Report 2012	week 10	08.03.2013
Annual General Meeting of Shareholders	week 17	25.04.2013
Publication Q1 2013 results	week 19	08.05.2013
Publication Q2 2013 trading statement	week 29	19.07.2013
Publication interim figures 2013	week 35	30.08.2013
Analysts' Meeting interim figures 2013	week 35	30.08.2013
Publication Q3 2013 results	week 44	01.11.2013
Publication Q4 2013 trading statement	week 4	22.01.2014

For more information, please contact: Ton Anbeek, Chief Executive Officer Tel. +31 (0)413 338819 / Fax +31 (0)413 338829 / Mob. +31 (0)6 53662838 E-mail: ton.anbeek@beterbed.nl / Website: www.beterbedholding.nl

2. Consolidated balance sheet

(* EUR 1,000)	31-12-2012	31-12-2011
Tangible fixed assets	30,936	32,466
Intangible fixed assets	2,855	5,331
Financial fixed assets	978	1,930
Stocks	60,712	59,461
Debtors	10,150	8,308
Cash and cash equivalents	5,224	7,075
TOTAL ASSETS	110,855	114,571
Equity attributable to equity holders of the
parent	55,832	62,015
Long-term liabilities	3,400	5,000
Credit institutions	11,327	5,314
Other current liabilities	40,296	42,242
TOTAL LIABILITIES	110,855	114,571

3. Consolidated profit and loss account

		(* EUR 1,000)
	Fourth quarter		Cumulative
2012	2011		2012	2011
100,844	107,960	Revenue	397,288	397,035
(42,363)	(44,480)	Cost of sales	(173,445)	(172,625)
58,481	63,480	Gross profit	223,843	224,410
58.0%	58.8%		56.3%	56.5%
23,342	23,532	Wage and salary costs	91,126	87,757
		Depreciation and impairments of
7,387	2,323	fixed assets	14,424	8,510
23,222	23,342	Other operating expenses	94,574	89,855
53,951	49,197	Total operating expenses	200,124	186,122
53.5%	45.6%		50.4%	46.9%
4,530	14,283	Operating profit (EBIT)	23,719	38,288
4,5%	13,2%		6.0%	9.6%
(68)	(241)	Financial income and expenses	(402)	(434)
4,462	14,042	Profit before taxation	23,317	37,854
(3,569)	(3,890)	Income tax expense	(8,899)	(9,829)
893	10,152	Net profit	14,418	28,025
0.9%	9.4%		3.6%	7.1%
0.05	0.46	Earnings per share in €	0.67	1.29
0.04	0.47	Diluted earnings per share in €	0.66	1.29

4. Consolidated cash flow statement

(* EUR 1,000)

		Cumulative
	2012		2011
Cash flow from operating activities
Profit before taxes	23,317		37,854
Income tax paid	(6,308)		(10,389)
Depreciation and impairments	14,424		8,510
Costs employee stock options	202		489
Movements in:
Stocks	(1,251)		(2,828)
Debtors	(1,842)		(2,655)
Short-term liabilities	(3,308)		(1,416)
Other	(168)		255
		25,066		29,820
Cash flow from investing activities
Additions to (in)tangible fixed assets	(10,910)		(13,336)
Disposals of (in)tangible fixed assets	648		254
Changes in long-term accounts receivable	87		(106)
		(10,175)		(13,188)
Cash flow from financing activities
Repayment of loan	(2,000)		(2,000)
Share reissuance	492		542
Dividend paid	(21,247)		(28,174)
		(22,755)		(29,632)
Change in net cash and cash equivalents		(7,864)		(13,000)
Cash and cash equivalents at the end of the reporting period	5,224		7,075
Current bank overdraft not including repayment obligations
at the end of the reporting period	(9,327)		(3,314)
Net cash and cash equivalents at the end of the reporting period		(4,103)		3,761
Cash and cash equivalents at the start of the reporting
period	7,075		16,761
Current bank overdraft not including repayment obligations
at the start of the reporting period	(3,314)		-
		3,761		16,761
Change in net cash and cash equivalents		(7,864)		(13,000)

5. Consolidated statement of comprehensive income

		(* EUR 1,000)
	Fourth quarter			Cumulative
2012	2011		2012	2011
893	10,152	Net profit Change in revaluation reserve	14,418	28,025
-	18	- due to change in tax rates	-	18
107	-	- due to revaluation land	107	-
		Movements in reserve for currency
(28)	60	translation differences	(155)	264
972	10,230	Total comprehensive income	14,370	28,307

6. Consolidated statement of changes in equity

(* EUR 1,000)		Issued	Share	Reserve for currency
	Total	share capital	premium reserve	translation differences	Revaluation reserve	Other reserves	Retained earnings
Balance on 1 January 2011	60,851	436	16,145	504	2,722	13,107	27,937
Net profit for 2011	28,025	-	-	-	-	-	28,025
Other components of comprehensive income 2011	282	-	-	264	18	-	-
Profit appropriation 2010	(17,988)	-	-	-	-	9.949	(27,937)
Interim dividend 2011	(10,186)	-	-	-	-	(10,186)	-
Reissuance of shares	542	-	-	-	-	542	-
Costs of employee stock options	489	-	-	-	-	489	-
Balance on 31 December 2011	62,015	436	16,145	768	2,740	13,901	28,025
Net profit for 2012	14,418	-	-	-	-	-	14,418
Other components of comprehensive income 2012	(48)	-	-	(155)	107	-	-
Profit appropriation 2011	(13,655)	-	-	-	-	14,370	(28,025)
Interim dividend 2012	(7,592)	-	-	-	-	(7,592)	-
Reissuance of shares	492	-	-	-	-	492	-
Costs of employee stock options	202	-	-	-	-	202	-
Balance on 31 December 2012	55,832	436	16,145	613	2,847	21,373	14,418