Notes to the consolidated balance sheet
and profit and loss account

in thousand €, unless otherwise stated

• 1 Property, plant and equipment

  	Land	Buildings	Other fixed operating assets	Total
  Book value 1 January 2014	5,460	3,515	16,616	25,591
  Additions	-	79	11,293	11,372
  Currency adjustment	-	-	17	17
  Disposals	-	-	(1,002)	(1,002)
  Depreciation	-	(354)	(6,735)	(7,089)
  Book value 31 December 2014	5,460	3,240	20,189	28,889
  Accumulated depreciation	-	5,953	72,550	78,503
  Accumulated revaluation	(3,797)	-	-	(3,797)
  Purchase price	1,663	9,193	92,739	103,595
  Book value 1 January 2015	5,460	3,240	20,189	28,889
  Additions	1,719	1149	11,725	14,593
  Revaluation	(47)	-	-	(47)
  Currency adjustment	-	-	82	82
  Disposals	-	-	(591)	(591)
  Depreciation	-	(390)	(8,016)	(8,406)
  Book value 31 December 2015	7,132	3,999	23,389	34,520
  Accumulated depreciation	-	6,343	70,314	76,657
  Accumulated revaluation	(3,750)	-	-	(3,750)
  Purchase price	3,382	10,342	93,703	107,427

  The additions to land and the majority of the additions to buildings relate to the acquisition of the distribution centre in Nieuw-Vennep that was previously rented.

  The (reversal of the) revaluation of € 47 relates to the land in Uden, Nieuw-Vennep and Hoogeveen, as well as the value of the land forming part of the retail properties owned. These retail properties are located in Elst, Den Helder, ’s Hertogenbosch and Uden. The land forming part of the retail properties was valued on 30 June 2015 and the land forming part of the distribution centres in Uden and Hoogeveen was valued on 25 November 2015, both by an independent valuer. The valuation of the distribution centre in Nieuw-Vennep was performed on 25 July 2014 by an independent valuer. The valuations have been performed using the rental value capitalisation method.

  As a result of the modification of the Beter Bed stores and some of the Matratzen Concord stores to the updated image and the new logo a disposal with a carrying amount of € 591 took place; the cost of these other non-current operating assets was € 11,099.

  The items of property, plant and equipment are intended for own use.

• 2 Intangible assets

  		2015	2014
  Book value 1 January		3,517	2,833
  Additions		1,370	1,839
  Currency adjustment		9	-
  Disposals		-	(2)
  Amortisation		(1,419)	(1,153)
  Book value 31 December		3,477	3,517
  Accumulated amortisation		6,260	4,839
  Purchase price		9,737	8,356

  The intangible operating assets consist mainly of licences and software

• 3 Financial assets

  The financial assets consist on the one hand of non-current receivables of € 395 (2014: € 271) and on the other of deferred tax assets of € 1,185 (2014: € 497).

  The non-current receivables relate to guarantee deposits for the rental agreements for stores. These are classified under financial assets due to the non-current nature of these receivables.

  The deferred tax assets at 31 December 2015 can be broken down as follows:

  	2015	2014
  Tax loss carryforwards	632	31
  Difference tax and financial reporting valuation (in)tangible assets	291	323
  Difference tax and financial reporting valuation pension	251	141
  Difference tax and financial reporting valuation stock	11	2
  Balance at 31 December	1,185	497

  At year-end 2015, a deferred tax asset of € 632 (2014: € 31) was recognised in financial assets for future loss carryforwards. This asset arose on the acquisition of BettenMax. At the time of the acquisition, BettenMax had tax losses available for carryforward that had not been capitalised. As Beter Bed Holding expects, on the basis of the currently available information, to be able to set off these tax losses within five years, they have been capitalised in full.

  An amount of € 8,824 (2014: € 7,623) in loss carryforwards has not been recognised. Beter Bed Holding’s policy is that tax losses available for carryfoward are capitalised only if reasonable possibilities for set-off are expected within five years on the basis of a substantiated forecast of the results for tax purposes. Set-off of these losses is insufficiently probable on the basis of the currently available information. These tax losses available for carryfoward expire as follows:

  Term
  1 year	-
  2 to 5 years	-
  6 to 10 years	695
  11 to 15 years	4,220
  Indefinite	3,909

  Movements in deferred tax assets in 2015 and 2014 were as follows:

  	2015	2014
  Balance at 1 January	497	549
  Through profit and loss account	(70)	(52)
  From takeover subsidiary	758	-
  Through equity	-	-
  Balance at 31 December	1,185	497

• 4 Inventories

  This comprises inventories held in stores of € 50,962 (2014: € 47,923) and inventories held in warehouses of € 6,964 (2014: € 5,558). The write-down for possible obsolescence included in this item can be broken down as follows:

  		2015	2014
  Balance at 1 January		1,673	2,357
  Additions		806	82
  Withdrawals		(846)	(766)
  Balance at 31 December		1,633	1,673

  In view of the amount of the gross profit, the turnover rate and the fact these products are generally not dependent on trends to any significant extent, the risk of obsolescence of inventories is comparatively low. The prices realised in sales of obsolescent inventories usually exceed their cost.

  The provision for obsolescent inventories consists mainly of returned goods that cannot be returned to suppliers, damaged products, showroom products, products that will no longer be carried and products with a very low turnover. The direct net realisable value is estimated for each of these categories. If the carrying amount exceeds the direct net realisable value, the inventories are written down by this difference.

  The total carrying amount of inventories for which there is a risk of obsolescence is € 3,240 (2014: € 3,616). The direct net realisable value of these inventories is € 1,607 (2014: € 1,943). Therefore the percentage of inventories for which there is a risk of obsolescence compared with total inventories was 5.4% (2014: 6.6%).

• 5 Receivables

  All receivables fall due within less than one year and are carried at amortised cost, which is equal to the nominal value. Sales in stores and deliveries are settled in cash. Receivables relate mainly to receivables due from wholesale customers and trade receivables arising from agreed bonuses.

  Provisions are recognised for individual receivables if there are objective indications that the probability of uncollectibility for them exceeds 50%. This assessment is performed on the basis of past experience and other relevant information, such as bankruptcy of the debtor concerned.

  A provision of € 67 (2014: € 60) has been recognised for receivables due from wholesalers. This is 47.9% (2014: 44.9%) of the overdue receivables.

• 6 Cash and cash equivalents

  This item relates to cash, cheques and bank balances. The amount consists of the following: cash € 301 (2014: € 260), bank balances € 23,495 (2014: € 19,361) and cash in transit € 1,716 (2014: € 1,262).

• 7 Equity

  Movements in equity items are shown in the consolidated statement of changes in equity. The company’s authorised share capital amounts to € 2,000, divided into 100 million ordinary shares with a nominal value of € 0.02 each.

  Movements in the number of issued and fully paid-up shares and movements in the number of treasury shares are shown below:

  		2015	2014
  Issued and paid-up shares as at 1 January		21,905,562	21,805,117
  Share issue on exercise of employee stock options		50,000	100,445
  Issued and paid-up shares as at 31 December		21,955,562	21,905,562
  Shares in portfolio as at 1 January		2,723	23,805
  Repurchased during the year		-	-
  (Re)issue on exercise of options		(2,723)	(21,082)
  Sale of shares in portfolio		-	-
  Shares in portfolio as at 31 December		-	2,723

  A total of 52,723 shares were sold at a price of € 15.23 with a view to the exercise of employee stock options, resulting in an increase in consolidated statement of changes in equity of € 803.

  The treasury shares have not yet been cancelled and therefore not been deducted from the number of issued and paid-up shares. These repurchased shares are no longer included in the earnings per share calculation.

  The revaluation reserve relates to land.

  A proposal will be submitted to the Annual General Meeting of Shareholders to distribute a final dividend in cash of € 0.48 per share. The total dividend for 2015 will therefore amount to € 0.87 per share (2014: € 0.65).

• 8 Provisions

  The formula portfolio in the Benelux was streamlined in 2014. The strategic focus is on the Beter Bed and Beddenreus formulas. The operations of the Matrassen Concord the Netherlands and Belgium and Slaapgenoten formulas were therefore discontinued in the course of 2014.

  A provision for onerous contracts has been formed for the long-term leases relating to the stores of these two formulas. This provision is based on the rent and the remaining term, taking account of a subletting probability and a mark-up for service costs.

  The provision for onerous rental contracts can be broken down as follows:

  		2015	2014
  Balance at 1 January		2,055	4,542
  Additions		-	-
  Withdrawals		(714)	(1,885)
  Releases		(443)	(602)
  Balance at 31 December		898	2,055
  Of which current (in other liabilities)		360	804
  Total provision for onerous rental contracts		538	1,251

  The release in 2015 is due to early termination and/or buy-out of five rental contracts (€ 293) as well as an adjustment of subletting probability (€ 150).

• 9 Deferred tax liabilities

  The deferred tax liabilities relate mainly to the differences between the valuation of inventories and non-current assets, including land, in the Netherlands, Germany and Switzerland for tax and financial reporting purposes. These differences are long-term in nature. The deferred tax liabilities at 31 December 2015 can be broken down as follows:

  	2015	2014
  Revaluation of company land	937	949
  Difference tax and financial reporting valuation stocks	699	614
  Difference tax and financial reporting valuation tangible assets	563	655
  Difference tax and financial reporting valuation rent obligations	80	-
  Total	2,279	2,218

  Movements in this item in 2015 and 2014 were as follows:

  	2015	2014
  Balance at 1 January	2,218	2,424
  Through profit and loss account	73	(206)
  Through equity	(12)	-
  Balance at 31 December	2,279	2,218

• 10 Current liabilities

  To fund the group the company has current account facilities totalling € 41.5 million at its disposal. Furthermore, facilities totalling € 7.3 million are available for providing guarantees.

  For the purpose of the current account facilities, the company and its subsidiaries have undertaken not to encumber their assets with any security rights without the prior consent of the lenders.

  These current account facilities include two committed facilities in the amount of € 10.0 million each which will expire on 10 July 2020 and 15 July 2020 respectively. No security has been provided for the committed facilities. The main conditions of the credit facilities are a minimum solvency of 25% and a maximum interest-bearing debt/EBITDA ratio of 2.5.

  At the end of the year under review, the current account facilities were only used for providing bank guarantees, mainly for the purpose of rent payments in the amount of € 0.5 million (2014: € 0.7 million). Of the facilities available specifically to provide guarantees, a total € 6.0 million was used at year-end 2015 (2014: € 6.1 million).

  The other liabilities can be broken down as follows:

  	2015	2014
  Prepayments	8,525	7,532
  Accruals personnel and staf benefits	8,146	8,653
  Other	2,937	4,013
  Total	19,608	20,198

  The item accrual for staff costs and employee benefits includes a pension liability for a former employee. This liability of € 1.4 million (2014: € 1.4 million ) has been calculated on an actuarial basis.

• 11 Financial liabilities

  	up to 3 months	3 to 12 months	1 to 5 years
  2015
  Accounts payable	22,903	-	-
  Credit institutions	-	-	-
  Total	22,903	-	-
  2014
  Accounts payable	17,517	-	-
  Credit institutions	-	-	-
  Total	17,517	-	-

  The market value of the financial liabilities approximates their amortised cost.

• 12 Information by geographical area

  Revenue by country	2015	%	2014	%
  Germany	222,792	58	213,159	58
  The Netherlands	115,254	30	109,203	30
  Other countries	48,744	12	42,660	12
  Intercompany adjustment	(1,350)	-	(1,069)	-
  Total	385,440	100	363,953	100

  
  

  (In)tangible fixed assets by country			2015	2014
  The Netherlands			23,580	19,361
  Germany			10,853	10,194
  Other countries			3,564	2,851
  Total			37,997	32,406

• 13 Staff costs

  The operating expenses include the following wage and salary components:

  		2015	2014
  Wages and salaries		75,611	74,637
  Social security costs		14,106	13,371
  Pension costs		2,267	2,289
  Employee stock options		192	(439)
  Total		92,176	89,858

  The pension contributions relate virtually exclusively to defined contribution schemes or schemes designated as such. Within the costs of employee stock options, € 83 relate to the current and former members of the company’s Management Board (2014: release of € 116).

  Average number of employees

  The companies included in the consolidation had an average of 2,427 employees (FTE) in 2015 (2014: 2.388):

  		2015	2014
  Germany		1,560	1,558
  The Netherlands		586	576
  Spain		61	49
  Austria		122	117
  Switzerland		87	79
  Belgium		11	9
  Total		2,427	2,388

• 14 Option program

  The options are long-term in nature and can be exercised providing that the profit target has been met. Until 2013, the costs of the options programme were calculated using the Black & Scholes model. With effect from 2013, the costs of the options programme are calculated using a combined model of Black & Scholes and Monte Carlo simulations. An overview of the details of the options granted and still outstanding, as well as the values employed in the Black & Scholes model, is provided below.

  The conditions were changed with effect from the options series 2013. In the first three years after the award of the options granted, 33.3% of the options will vest annually if the ‘Total Shareholder Return’ (TSR = share price gains plus dividend distributed) of Beter Bed Holding N.V. exceeds the ‘Total Shareholder Return of the AScX, based on the year of the award. In addition, the employee is required to continue to be employed by the company for three years. Options can only be exercised if these conditions are met after three years. The previous options policy/options contract will continue to apply up to 2012 for options already granted.

  From the 2013 series, this means that the calculation will be based on three different Black & Scholes values, risk-free interest rates and volatility percentages. The ranges of those percentages are set out in the table below.

  	2015	2014	2013	2011	2010
  Number granted	186,000	166,700	166,500	218,000	218,000
  waarvan A.H. Anbeek	50,000	40,000	50,000	50,000	50,000
  waarvan B.F. Koops	40,000	32,000	0	0	0
  Number outstanding	186,000	162,700	50,500	158,050	152,625
  Value according to Black & Scholes	€ 2.19 - € 2.67	€ 1.78 - € 1.93	€ 1.26 - € 1.76	€ 1.58	€ 3.54
  Exercise from	19-5-2018	19-5-2017	25-4-2016	28-10-2013	29-10-2012
  Exercise through	19-5-2020	19-5-2019	25-4-2018	28-4-2017	29-4-2016
  Profit target (in millions)	-	-	€ 32.0	€ 32.0	€ 25.0
  Profit target achieved in year	-	-	-	-	-
  TSR > AScX	No	Partly (33,3%)	No	-	-
  Share price on the allotment date	€ 22.79	€ 17.37	€ 14.09	€ 14.67	€ 19.07
  Exercise price	€ 22.79	€ 17.37	€ 14.09	€ 14.67	€ 19.07
  Expected life	5 years	5 years	5 years	3.8 years	3.8 years
  Risk-free rate of interest (%)	0.30	0.78 - 0.46	0.75 - 0.48	1.71	2.25
  Volatility (%)1	26.58	27.50 - 21.94	31.93 - 30.19	32.15	40.40
  Dividend yield (%)	5.40	5.20	5.90	9.00	7.35

  1. ¹ Expected volatility is based on end-of-month closing prices for the most recent period with a length equalling the expected term with a maximum of five years.

  A total of 52,723 options were exercised in 2015 at a price of € 15.23. This related to 52,723 options from the 2009 series. In 2015, another 24,583 options expired, as a number of employees holding options left the company before the expiration dates. No options expired in 2015 due to the expiry of their term. However, a portion of the options expired because the vesting conditions were not satisfied. The series concerned is the series 2013 part II. Lastly, 186,000 new options were granted in 2015. See the summary of options series outstanding.

• 15 Depreciation and amortisation

  		2015	2014
  Depreciation and impairment on tangible assets		8,406	7,089
  Amortisation and impairment on intangible assets		1,419	1,153
  Total of depreciation, amortisation and impairment		9,825	8,242

  
  
  The depreciation and amortisation rates applied are based on expected economic life and are as follows:

  Company land	0%
  Buildings	3.33%
  Other fixed operating assets	10% tot 33%
  Software, licenses and other	10% tot 33%

• 16 Other operating expenses

  The other operating expenses comprise € 45.2 million in rental and lease costs (2014: € 45.6 million), with the remainder relating mainly to selling and distribution costs.

• 17 Income taxes

  The reconciliation between the tax liability and the results of the calculation of the profit before taxes, multiplied by the local tax rate in the Netherlands, was as follows on 31 December 2015 and 31 December 2014:

  	2015	2014
  Profit before taxes	30,648	22,743
  At the applicable legal rate of 25.0% in the Netherlands (2014: 25.0%)	7,662	5,686
  Adjustment profits tax previous years	(40)	109
  Permanent differences	(1,559)	(1,613)
  Future loss set-off not included	397	407
  Recognition of previously unrecognized deferred tax assets	-	-
  Effect of the tax rates outside the Netherlands	1,629	1,294
  At an effective tax rate of 26.4% (2014: 25.9%)	8,089	5,883
  Profit tax in the consolidated profit and loss account	8,089	5,883

  
  The item tax in the profit and loss account comprises the following:

  	2015	2014
  Tax for current year	7,985	5,929
  Adjustment of profit tax for prior years	(40)	109
  Temporary differences	(14)	(208)
  Utilization tax loss carryforwards	158	53
  Profit tax in the consolidated profit and loss account	8,089	5,883

• 18 Remuneration of the Management and Supervisory Boards

  The remuneration of members of the Management Board was as follows in 2015 and 2014:

  	A.H. Anbeek		B.F. Koops		Total
  	2015	2014	2015	2014	2015	2014
  Salary	350	323	250	200	600	523
  Variable remuneration	180	169	91	85	271	254
  Pension	105	97	63	50	168	147
  Employee stock options	52	(125)	31	9	83	(116)
  Social security charges	15	9	15	9	30	18
  Lease car	13	13	16	16	29	29
  Total	715	486	466	369	1,181	855

  The variable remuneration relates to the year under which it is classified and is recognised in the expenses of that year. The variable remuneration of the CEO is based for 50% on the achievement of quantitative targets; the remaining 50% depends on the achievement of qualitative targets. The CFO’s variable remuneration is based for 40% on the achievement of quantitative results while the remaining 60% is based on the achievement of qualitative targets. For more detailed information, see remuneration report.

  
  The costs listed under ‘Employee stock options’ represent the amount accounted for in the profit and loss account for that year.
  
  

  ­The remuneration of the members of the Supervisory Board was as follows in 2015 and 2014:
  

  	2015	2014
  D.R. Goeminne	40	37
  A.J.L. Slippens	26	23
  E.A. de Groot	30	27
  W.T.C. van der Vis	30	27
  Total	126	114

  The members of the Management Board and the Supervisory Board hold no shares or exercisable options on shares in Beter Bed Holding N.V.

• 19 Earnings per share

  The net profit of € 22.6 million divided by the average number of outstanding shares totalling 21,947,224 equates to earnings per share of € 1.03 in 2015. Due to the options series outstanding, the number of shares used for the calculation of diluted earnings per share is equal to 22,053,956. This results in diluted earnings per share of € 1.02.

• 20 Commitments not included in the balance sheet

  The company has entered into long-term rental and lease obligations concerning buildings and other operating assets. The minimum obligation on the balance sheet date can be broken down as follows:

  Duration	2016	2017	2018	2019	2020	after 2020
  Rental agreements	39,291	25,773	15,974	9,797	5,802	1,388
  Lease agreements	2,022	1,395	914	553	312	283
  Total	41,313	27,168	16,888	10,350	6,114	1,671

  The majority of the rental agreements for the company premises required for the Beter Bed formula are long-term agreements (between five and ten years), with options for renewal. The majority of the rental agreements for the Matratzen Concord formula have been concluded for a period between five to ten years, and include a clause stipulating that the agreements can be terminated without charge within the first two years.
  
  In the year under review, amounts of € 42.6 million (2014: € 43.1 million) arising from rental agreements and € 2.6 million (2014: € 2.5 million) arising from lease agreements were accounted for in the profit and loss account.

  At year-end 2015, the Wonen Industrial Pension Fund for the Home Furnishings Industry had an estimated funding ratio 98.6% (year-end 2014: 111.2%). As at 31 December 2015, the company had no additional obligation.

• 21 Audit fees

  The fees for the audit of the financial statements and other non-audit services by the independent auditor PwC Accountants N.V. (2014: Ernst & Young Accountants LLP) were:

  		2015	2014
  Audit of financial statements		205	207
  Other non-audit services		-	16
  Total		205	223

  The fees for the audit of the financial statements and other non-audit services performed by PwC Accountants N.V. in the Netherlands were €104.

  The other non-audit service in 2014 relates to the review of the interim figures.

• 22 Related parties

  The companies listed in principles of consolidation are included in the consolidation of Beter Bed Holding N.V. and its participating interests.

  Beter Bed Holding N.V. has issued declarations of joint and several liability for all Dutch group companies for the obligations arising from legal transactions entered into by these group companies. Pursuant to these letters of guarantees, the Dutch group companies have made use of the exemption options laid down in Section 403, paragraphs 1 and 3, of Part 9, Book 2 of the Dutch Civil Code.

  The financial relationships between Beter Bed Holding N.V. and its participating interests consist almost fully in receiving dividends and receiving interest on loans provided.

• 23 Events after the balance sheet date

  No events that are required to be disclosed occurred in the period between the end of the year under review and the preparation of these financial statements.