Beter Bed Holding N.V. — Interim / Quarterly Report 2005

Oct 28, 2005

B E T E R B E D H O L D I N G Hard at work on a good night's rest

PRESS RELEASE

Uden, The Netherlands, 28 October 2005

BETER BED ACHIEVES 60% INCREASE IN NET PROFIT IN FIRST NINE MONTHS OF 2005

Highlights:

• Sales increase in third quarter 11.7% to € 71.3 million
• Comparable stores growth in third quarter almost 7%
• Substantial growth order portfolio in third quarter
• Net profit increase in third quarter 31.9% to € 2.6 million
• 78 new stores added in the year to date (total 760)
• Interim dividend of € 0.40 (2004: € 0.25)

Outlook:

• Profit forecast for the entire year 2005 has been revised upward: expected increase in net profit of at least 50%

Beter Bed Holding N.V. realised sales totalling € 206.4 million in the first nine months of 2005. This marks an increase of 9.9% in comparison to the first nine months of 2004 (€ 187.8 million). Sales rose by 11.7% in the third quarter to a total of € 71.3 million compared to € 63.8 million in the same period of 2004. Net profit increased by 60.3% in the first nine months of this year to a total of € 8.5 million compared to € 5.3 million in the same period of last year. In the third quarter net profit grew by 31.9% to € 2.6 million (third quarter of 2004: € 2.0 million).

First nine months of 2005

The company achieved sales totalling € 206.4 million in the first nine months of this year, an increase of 9.9% compared to the same period of last year when sales totalled € 187.8 million. The total growth in sales in the first nine months of 2005 in the countries in which the company operates was as follows:

The Netherlands: +7% Germany: +12% Austria: +21% Switzerland: +17% Spain: +13%

In September Beter Bed announced the acquisition of the Spanish bedroom furniture chain El Gigante del Colchón. The results of El Gigante have been included in the consolidated figures since 1 September 2005.

The 13% growth in sales in Spain relates to the figures of El Gigante del Colchón in September 2005 in comparison to September 2004.

The average sales development at comparable stores to the Beter Bed Holding formulas was +5.2% during the period under review. During the first six months of 2005 the growth at comparable stores was 3.8%. The development at comparable stores in the first nine months was positive in all countries with the exception of Switzerland.

A large proportion of the growth in the order volume of Beter Bed Netherlands in the third quarter was not yet apparent in an increase in delivered sales. This will result in additional growth in sales in the fourth quarter.

Beter Bed Holding N.V. Q3 results 2005

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During the first nine months a total of 83 stores were opened, 20 stores were acquired and 25 stores were closed. A net total of 78 stores has consequently been added since the end of 2004, when the total number of stores was 682. The growth in the number of stores was primarily realised by Matratzen Concord in Germany (a net total of 45 stores) and through the acquisition of El Gigante del Colchón, where one store was closed resulting in a net total of 19 stores.

Gross profit in the first nine months of 2005 amounted to 52.4% compared to 52.0% in the previous year. Operational expenses as a percentage of sales decreased from 47.1% in the first nine months of 2004 to 45.8% in the first nine months of 2005. The average expenses per store decreased by 3% in the first nine months of 2005 in comparison to the same period last year. Operating profit (EBIT) rose from € 9.3 million (5.0% of the sales) to € 13.7 million (6.7% of the sales). Net profit amounted to € 8.5 million (€ 0.98 per share). This represents an increase of 60.3% in comparison to the first nine months of 2004, when net profit totalled € 5.5 million (€ 0.62 per share). Net profit is generally lower in the second and third quarters than in the first and fourth quarters due to the seasonal pattern.

Despite the cash payment of € 5 million for the acquisition of El Gigante del Colchón in the third quarter, Beter Bed Holding still had a positive balance of € 1.7 million in cash minus interest-bearing debt at the end of the third quarter. In contrast, at the end of 2004 Beter Bed still had a net debt position of € 5.5 million. Solvency improved over the first nine months of this year from 36.8% at the end of 2004 to 42.2% at the end of the third quarter of 2005. A goodwill entry of € 3.7 million appears on the balance sheet at the end of September 2005; this pertains to the goodwill paid in connection with the acquisition of El Gigante del Colchón.

Third quarter

The company believes that the fiscal measure to release funds saved within the Dutch employee savings scheme, which are generally spent in part on large purchases, and the poor weather during the summer months contributed to the, for Beter Bed, favourable market conditions in the Netherlands in the third quarter. The underlying trend in consumer confidence, however, remained at an historically low level. Beter Bed consequently does not at present see reason to expect a continuing increase in spending on bedroom furniture products.

Sales in the third quarter of 2005 amounted to € 71.3 million, representing an increase of 11.7% in comparison to the same period of 2004 when sales amounted to € 63.8 million. Gross profit rose from 51.9% in the third quarter of 2004 to 52.1% in the third quarter of 2005. Operational expenses as a percentage of sales decreased from 46.3% in the third quarter of 2004 to 46.1% in the third quarter of 2005. The fact that the expense ratio did not decrease further despite the increase at comparable stores is primarily attributable to goods to be delivered being shifted to the fourth quarter. This reflects a decision to further optimise logistical capacity utilisation.

Operating profit (EBIT) totalled € 4.2 million compared to € 3.5 million in the third quarter of last year. Net profit in the third quarter of 2005 amounted to € 2.6 million (€ 0.30 per share), representing an increase of 31.9% in comparison to the third quarter of 2004 when net profit totalled € 2.0 million (€ 0.23 per share).

Despite tremendous commitment and dedication, the development of the four Beter Bed stores in Germany continued to lag behind during the period under review. While the average store size for Matratzen Concord is 240 m², this formula already has 150 stores in Germany with over 300 m² of floor space and more than 40 stores with floor space ranging from 400 to 600 m². The results achieved at the larger Matratzen Concord stores are better than the average results realised at smaller Matratzen Concord stores. The decision has been made to continue the four Beter Bed stores in Germany as Matratzen Concord stores. This will terminate a loss-making activity and at the same time will give added impetus to the development of profitable larger stores in Germany with a view to further maximising the potential of this formula in the German market.

Beter Bed Holding N.V. Q3 results 2005

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Beter Bed Holding N.V. Q3 results 2005

Dividend

The company will pay out an interim dividend of € 0.40 per share. This is 60% higher than last year when an interim dividend of € 0.25 per share was paid. The dividend will be made payable on 15 November 2005 and the share will be listed ex-dividend on 31 October 2005.

Outlook

The substantial growth in the order portfolio in the Netherlands in the third quarter and the inclusion of El Gigante del Colchón in the figures will have a positive effect on growth in sales and profit in the fourth quarter of this year. The company nonetheless remains cautious in its prognosis owing to the reticence of mainly the German consumers. Barring unforeseen circumstances, the company forecasts that growth in profit in the fourth quarter will exceed the level achieved in the third quarter. This would result in an increase in net profit of at least 50% for the entire year 2005. Upon the publication of the interim figures in August, the company still assumed that growth in net profit for the entire year 2005 would reach at least 45% in comparison to the entire year 2004.

Profile

Beter Bed operates in the European bedroom furniture market. The company's activities encompass retail operations with a total of 760 stores. The company operates via the chains Beter Bed (operating in the Netherlands), Matratzen Concord (operating in the Netherlands, Germany, Austria and Switzerland), El Gigante del Colchón (operating in Spain), Beddendump, Dormaël, Slaapgenoten (all three operating in the Netherlands) and WasserbettenDiscount (operating in Germany). Beter Bed Holding is also active in the development and wholesaling of branded products in the bedroom furniture market in the Netherlands, Belgium and in Germany via its subsidiary DBC International. Beter Bed Holding achieved net sales of EUR 255 million in 2004 and has been listed on the Eurolist of Euronext Amsterdam since December 1996 and is included in the NextPrime segment.

ENCLOSURES:

• Consolidated profit & loss account
• Consolidated balance sheet
• Consolidated cash-flow statement
• Quarterly balance sheets 2004 on IFRS basis

For further information: Frans Geelen, Chief Executive Officer Tel. +31 (0)413 338819 / Fax +31 (0)413 338829 / Mob. +31 (0)6 29565517 E-mail: frans.geelen@beterbed.nl / Website: www.beterbedholding.com

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Consolidated profit and loss statement

(*) EUR 1.000
Third quarter		Cumulative
2005	2004	2005	2004
71.336	63.841	Net sales	206.402	187.762
(34.194)	(30.736)	Cost of sales	(98.223)	(90.068)
37.142	33.105	Gross margin	108.179	97.694
52,1%	51,9%		52,4%	52,0%
15.649	14.390	Staff costs	45.803	42.817
1.618	1.517	Depreciation of tangible fixed assets	4.702	4.713
15.643	13.649	Other operating expenses	43.947	40.847
(32.910)	(29.556)	Total operating expenses	(94.452)	(88.377)
-46,1%	-46,3%		-45,8%	-47,1%
4.232	3.549	Operating result (EBIT)	13.727	9.317
5,9%	5,6%		6,7%	5,0%
(60)	(214)	Financial income and expense	(544)	(726)
4.172	3.335	Result on ordinary activities before taxation	13.183	8.591
(1.573)	(1.365)	Taxes on result on ordinary activities	(4.728)	(3.316)
2.599	1.970	Net result	8.455	5.275
3,6%	3,1%		4,1%	2,8%
0,30	0,23	Earnings per share €	0,98	0,62
0,30	0,23	Diluted earnings per share €	0,98	0,62

The figures presented are in line with the current IFRS standards and interpretations.

Beter Bed Holding N.V. Q3 results 2005

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Consolidated balance sheet

(* EUR 1.000)	30-9-2005	30-9-2004	31-12-2004
Intangible fixed assets	3.669	---	---
Tangible fixed assets	23.308	22.432	22.867
Stocks	35.078	30.467	31.595
Debtors, prepayments and accrued income	3.384	4.768	5.964
Cash at bank and in hand	4.976	9.493	8.562
TOTAL ASSETS	70.415	67.160	68.988
Capital and reserves	29.724	23.280	25.372
Provisions	1.430	1.830	1.595
Long-term liabilities	1.667	12.707	12.214
Short-term bankloans	1.628	2.495	1.858
Current liabilities, accruals and deferred income	35.966	26.848	27.949
TOTAL LIABILITIES	70.415	67.160	68.988

The figures presented are in line with the current IFRS standards and interpretations.

Beter Bed Holding N.V. Q3 results 2005

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Consolidated cash flow statement

(* EUR 1.000)

	cumulative
	2005-Q3	2004-Q3
Cash flow from/(used in) operating activities
Net group profit	8.455	5.275
Depreciation	4.702	4.713
Movements in:
Stocks	(2.752)	211
Debtors	2.868	(268)
Creditors	6.652	4.421
Provisions	(165)	(1)
Cash flow from/(used in) operating activities	19.760	14.351
Cash flow from/(used in) investing activities
Acquisitions	(5.074)	---
Additions to tangible fixed assets	(5.249)	(2.219)
Disposals of tangible fixed assets	175	148
Cash flow used in investing activities	(10.148)	(2.071)
Cash flow from/(used in) financing activities
Income from the issue of new shares	31	---
Movement in equity because of costs of employee share options	173	---
Exchange gain/(loss) on foreign participating interests	(7)	(7)
Issued long-term loans	---	---
Repayment of long-term liabilities	(10.547)	(1.382)
Dividend paid	(4.329)	(1.285)
Cash flow from/(used in) financing activities	(14.679)	(2.674)
Cash in acquisitions	1.711	---
Net cash flow for financial year	(3.356)	9.606
Cash at bank and in hand/short-term portion of amounts owed to credit institutions at the beginning of the period	6.704	(2.608)
Cash at bank and in hand/short-term portion of amounts owed to credit institutions at the end of the period	3.348	6.998

Beter Bed Holding N.V. Q3 results 2005

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Quarterly balance sheets 2004 on IFRS basis

Consolidated balance sheet based on IFRS

(* EUR 1.000)	31-12-2003	31-3-2004	30-6-2004	30-9-2004	31-12-2004
Tangible fixed assets	24.979	23.827	23.101	22.432	22.867
Stocks	30.678	32.878	30.739	30.467	31.595
Debtors, prepayments and accrued income	4.500	4.511	3.622	4.768	5.964
Cash at bank and in hand	2.589	4.825	2.159	9.493	8.562
TOTAL ASSETS	62.746	66.041	59.621	67.160	68.988
Capital and reserves	19.202	22.139	21.273	23.280	25.372
Provisions	1.831	1.831	1.830	1.830	1.595
Long-term liabilities	14.089	13.644	13.171	12.707	12.214
Short-term bankloans	5.197	2.132	3.049	2.495	1.858
Current liabilities, accruals and deferred income	22.427	26.295	20.298	26.848	27.949
TOTAL LIABILITIES	62.746	66.041	59.621	67.160	68.988

The only difference in equity based on IFRS and based on Dutch GAAP consists of a provision for deferred taxation regarding the revaluation reserve. This provision, to be created under IFRS, amounts to € 655.000 at the end of 2004. In the other periods the amount is € 572.000. The profit and loss statements for 2004 have not been changed as a consequence of IFRS

Beter Bed Holding N.V. Q3 results 2005

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Beter Bed Holding N.V. Q3 results 2005 8

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Beter Bed Holding N.V. Q3 results 2005 9