66 views

HEMA Annual Report 2016

Category: Business

Comment

Description

You can download, share and embed this document

Transcript

# annual report 2016\ HEMA annual report 2016\ HEMA B.V. annual report 2016\d This annual report\d is adopted \fy the g\deneral meeting o\b sh\dareholders April 13\d, 2017. Registration num\fer \dCham\fer o\b Commerce (‘\dKamer van Koophande\dl’) 34215639. 1 #’s 90 th birthday HEMA cele\frated its 90th \firthday. On 4 Novem\fer 1926,\d the ‘Hollandsche Eenheid\dsprijzen Maatschappij Amsterd\dam’ (Dutch Standard Price\ds Company Amsterdam), was \boun\dded. HEMA cele\frated the 90-\dyear milestone with empl\doyees and customers. MILESTONES 3 \fontents introduction 5 \binancial highlights \d2008 – 2016 7 message to our stak\deholders 11 report \brom the mana\dgement \foard 15 milestones o\b 2016 17 \binancial results 20 outlook 2017 31 report \brom the sup\dervisory \foard 33 corporate governance\d 39 \binancial statements\d 43 consolidated income s\dtatement 44 consolidated statemen\dt o\b comprehensive i\dncome 45 consolidated statemen\dt o\b \binancial posit\dion 46 consolidated statemen\dt o\b changes in equi\dty 47 consolidated statemen\dt o\b cash \blow 48 notes to the consol\didated \binancial stat\dements 50 company \binancial sta\dtements 97 company income statem\dent 98 company \falance sheet\d 99 notes to the company\d \binancial statement\ds 100 other in\bormation 111 independent auditor’\ds report 111 cautionary notice 117 de\binitions 118 contact in\bormation 119 #’s 90 th birthday \b five pilot stores Nether­ lands HEMA selected \bive pilo\dt stores to test its intern\dational store concept in the Nethe\drlands. The international stor\de concept that HEMA developed \bor citie\ds such as Barcelona, Paris\d and London has proven to \fe so\d popular with customers that HEMA has\d decided to introduce the con\dcept in the Netherlands as well\d. MILESTONES introdu\ftion about HEMA HEMA B.V. (‘HEMA’ or the\d ‘Company’) is a ge\dneral merchandise re\dtailer active in th\de Netherlands, Belg\dium, Luxem\fourg, France, G\dermany, Spain and t\dhe United Kingdom. HEMA\d designs, markets, s\dells and distri\futes\d products through its\d directly owned stor\des, as well as a n\detwork o\b \franded \bra\dnchise stores and e-\dcommerce plat\borms (including \dmo\file and ta\flet ap\dplications). The Co\dmpany’s products \beat\dure original and contemporary designs \dwhich are su\fstantia\dlly all HEMA \franded. HEMA\d o\b\bers an extensiv\de range o\b products \brom everyday \fasic h\dousehold necessities\d and a limited \bood a\dssortment to a\b\borda\d\fle non-discretionar\dy items, including cosme\dtics, stationery, \fa\dsic ladies and menswe\dar, \fa\fywear, towel\ds and ‘impulse-drive\dn’ purchases. HEMA is a limited lia\fi\dlity company with it\ds registered seat (\dnum\fer 34215639) an\dd support o\b\bice in A\dmsterdam, the Netherlands. HEMA’\ds shares are ultima\dtely held 100% \fy D\dutch Lion Coöperati\de\b U.A. (‘Dutch Lion\d Coop’), an investment company w\dhich is owned \fy sev\deral investment \bun\dds advised \fy Lion C\dapital. The direct p\darent o\b HEMA B.V. is Dutch Lio\dn B.V. (the ‘Paren\dt’). financing of the c\Tompany On June 17, 2014 (\dthe ‘Issue Date’),\d HEMA Bondco I B.V. and\d HEMA Bondco II B.V. (t\dogether, the ‘Issue\drs’) issued €250.0 million Seni\dor Secured Floating \dRate Notes due 2019\d, €315.0 million 6.\d25% Senior Secured F\dixed Rate Notes due 2019 (together, the ‘Senior Secured Notes’) and €150.0 million 8.50% Senior Notes due 2019 (the ‘Senior Notes’). The senior secured notes were issued \fy HEMA Bondco I B.V. and the senior notes were issued \fy HEMA Bondco II B.V., \foth\d o\b which are 100% o\dwned \fy Dutch Lion B\d.V. (the ‘Parent’)\d. The proceeds o\b th\de notes were used to repay exist\ding de\ft in \bull. On\d the Issue Date, t\dhe Company entered \dinto a Revolving Cr\dedit Facility Agreement, pursuant\d to which the Revol\dving Credit Facility\d was made availa\fle \d\bor drawing in the a\dmount o\b €80.0 million. On the Issue Date,\d the Parent issued \d€85.0 million Senio\dr PIK Notes due 202\d0 (the ‘Senior PIK\d Notes’). The proceeds o\b this\d issuance were used \dto repay the Paren\dt’s existing PIK \ba\dcility in \bull. On January 31, 201\d5, Dutch Lion B.V. \dmade a contri\fution o\d\b €221.4 million to\d the Company \fy way\d o\b conversion o\b the sh\dareholder loan into\d share premium. On June 30, 2015, \dHEMA entered into a €2\d5.0 million super s\denior secured purcha\dse money \binancing \ba\dcility (the “PMO Facility”\d) to \burther \folste\dr liquidity ahead o\d\b the annual peak i\dn the working capita\dl cycle. This piece o\b \binancing is\d a term loan \bacilit\dy with a maturity i\dn line with HEMA’s ex\disting Revolving Cr\dedit Facility (Decem\fer 2018). The\d cost o\b the PMO \baci\dlity is EURIBOR + \d7.00%, a portion o\d\b which is required \dto \fe paid in cash and the remainde\dr in non-cash inter\dest which accrues and\d capitalizes at the\d end o\b each interes\dt period. reporting In addition to the \dCompany’s statutory\d reporting requirem\dents, this annual \dreport also contain\ds a three-year overview o\b the cons\dolidated income state\dment and consolidated\d statement o\b cash \bl\dow, as required und\der the indentures gove\drning the Senior Se\dcured Notes, the Sen\dior Notes and the S\denior PIK Notes. The \binancial in\borma\dtion included herein\d is with respect to\d HEMA and its su\fsidiar\dies and does not in\dclude \binancial in\bormation\d o\b the Parent. The\d Parent is a holdin\dg company with no in\ddependent \fusiness o\dperations. The Parent has no \dmaterial assets oth\der than the shares\d it holds in HEMA and \dthe Issuers and int\dercompany loans to HEMA. The Pa\drent has no materia\dl lia\filities other\d than the Senior P\dIK Notes and a su\fo\drdinated shareholder loan. 5 3 four pilot stores Belgium HEMA selected \bour pilo\dt stores to test its internati\donal store concept in Belgium. The int\dernational store concept, which HEMA intr\doduced in cities such as Ba\drcelona, Paris and London, is so p\dopular with (international) cus\dtomers that HEMA has decided to introd\duce the same concept in Belgium. MILESTONES 7 finan\fial highlights\y \b008 – \b016 8 The graphs \felow sh\dow the \binancial hig\dhlights o\b HEMA B.V. (\d‘HEMA’ or the ‘Company\d’) \bor the \binancial\d years 2008 up to and inclu\dding 2016. The \binan\dcial year 2012 cover\ds 53 weeks, the ot\dher years consist o\d\b 52 weeks. € mln 800 1000 1200 1400 1600 1800 0,0 0,2 0,4 0,6 0,8 1,0 2008 2009 2011 1,546 1,510 1,566 1,662 2010 1,624 201320141,617 1,691 2015 2016 2012 1,578 1,650 gross sales Gross sales are to\dtal sales to custome\drs through HEMA’s own \dstores and deliveri\des \brom HEMA to its \bra\dnchisees. € mln 2014 2008 2009 2011 2010 2013 2012 1,049 1,082 1,150net sales1,0911,077 2016 2015 1,139 1,193 1,153 1,114 0,0 0,2 0,4 0,6 0,8 1,0 800 900 1000 1100 1200 … \  \   › \f\  9 € mln operating result adjusted EBITDA 0 25 50 75 100 125 150 1 75 2008 2009 2011 2010 20132014 2016 2015 2012 132 141 156 157 121 142 91 98 105 111 60103 86108 -91 -17 29 85 For the de\binition \do\b adjusted EBITDA, \dplease re\ber to the\d de\binitions paragra\dph. # stores 350 450 550 650 75 0 2008 2009 2011 2010 2014 2012 457 504 601 683 2013 666 555 638 stores2016 2015 720 696 The stores reporte\dd in the ta\fle rela\dte to the total nu\dm\fer o\b stores at th\de end o\b the \binancia\dl year and include directly operated st\dores in the Nether\dlands, Belgium, Luxe\dm\fourg, Germany, Uni\dted Kingdom, Spain a\dnd France and \branchise \dstores in the Neth\derlands. 4 flagship store Bar\fe­ lona HEMA opened in April 2\d016 a \blagship store in B\darcelona. This is one o\b HEMA’s \dlargest international stor\des. It has two \bloors and is locate\dd a stone’s throw away \brom the\d world- \bamous Ram\flas. It is HEMA’s \birst Cat\dalan store. MILESTONES 11 message to our stakeholders Thi\f year, we celebr\Tate\b important mile\T\ftone\f in our effor\Tt\f to expan\b our re\Tach an\b embrace the\T internationali\fatio\Tn of our bran\b. We \Thave \felecte\b four p\Tilot \ftore\f in Belgi\Tum an\b five pilot \ft\Tore\f in the Netherlan\b\f to t\Te\ft our internation\Tal \ftore concept. W\Te al\fo opene\b our 50th \ftore in France, l\Tocate\b in the centre of S\Ttra\fbourg. The open\Ting of our flag\fhip\T \ftore in Cologne m\Tark\f our \beci\fion to\T continue expan\fion in German\Ty a\f part of our ov\Terall expan\fion plan\T\f. Further internat\Tionali\fation i\f a ke\Ty pillar of our 2016 – 2018 g\Trowth \ftrategy. Our values are par\dt o\b our DNA. They \dre\blect our heritage\d and are at the hea\drt o\b everything we\d do. They help us create a customer\d-centric culture o\b co\doperation and colla\f\doration. They are \da guide \bor how we w\dork, with our \fusiness p\dartners and in our \dcommunities, to achie\dve great products an\dd services \bor our cu\dstomers. Our six core values\d are: putting our cu\dstomer \birst, insti\dlling quality in ev\derything we do, kee\dping things simple, \d doing what we say, \dwinning together an\dd ensuring that eve\dry penny counts. Another important p\dart o\b our strategy\d to accelerate growt\dh re\bers to our e-co\dmmerce activities. Th\dere\bore, we launched a redesi\dgned we\fsite, at hom\de and a\froad. The ne\dw we\fsite is inspir\dational, simple, ea\dsy to navigate and ena\fles\d customers to check a\dvaila\fility o\b any \dproduct in HEMA’s store\ds. We \fuild a \fridge \d \fetween the online \dand \frick and mortar \dstores \fy giving the\d we\fsite and the st\dores the same look \dand \beel. We aim to play a ke\dy role in the live\ds o\b our customers. \dOur am\fition is to \d\fe the \birst choice \b\dor daily needs with a sparkle. At\d the award ceremony \do\b the customer-centr\dic DNA Awards in 201\d6, we received the p\drize \bor most customer-cen\dtric o\b\bline retaile\dr. We also launched \da loyalty programme \dunder the name ‘more\d HEMA’ \bor our customers\d in the Netherlands\d. The launch o\b the \dprogramme comes in re\dsponse to demand \bor\d a loyalty programme \damong our loyal cust\domers. In 2018, the\d ‘more HEMA’ programme \dwill also \fe made availa\fle to custome\drs outside the Neth\derlands. Our company is a tru\de re\blection o\b socie\dty. Everyone comes t\do our stores \brom t\dime to time, regardl\dess o\b social, religious\d and political \fackgr\dound or sexual pre\b\derence. This is wha\dt makes HEMA a \frand \bo\dr everyone. We are p\droud o\b that \bact, \fu\dt this does come wit\dh an increasing num\fe\dr o\b challenges. To \dgain advice \brom a di\b\beren\dt perspective on is\dsues that involve \da wide range o\b inte\drests, issues in w\dhich we have a role to play in \dsociety, we install\ded a Children’s Cou\dncil. We will take \dthe advice o\b the Ch\dildren’s Council seriously, to help\d us as the \foard to\d make \fetter decision\ds. The Kids Council \dis an initiative o\d\b the Missing Chapter Foundation \d(MCF). Since 2014, \dMCF and UNICEF Neth\derlands have colla\fo\drated to ena\fle as \dmany organizations as po\dssi\fle to install a\d Kids Council. This \dgives children the ch\dance to have a say \dand \fe visi\fle in the decision-maki\dng process. The Miss\ding Chapter Foundat\dion (MCF) was \bound\ded in 2010 \fy HRH P\drincess Laurentien van Ora\dnje to contri\fute to\d \buture-proo\b solut\dions to social issu\des. welcoming new lea\ber\f\T In 2016 we strength\dened our Management \dBoard and Superviso\dry Board with new m\dem\fers. \ftrengthening the m\Tanagement boar\b Mariëlle de Macker (\d48) was appointed a\ds Director o\b HR and\d mem\fer o\b the Manage\dment Board on 1 Septem\fer 2016. M\dariëlle de Macker is\d a Dutch national w\dho has over 20 yea\drs o\b experience wit\dhin Human Resources. She work\ded \bor internationa\dl companies like Ran\ddstad Holding NV, mos\dt recently as Managi\dng Director Group HR a\dnd General Electric,\d in various HR sen\dior management roles\d. Mariëlle \frings a\d wealth o\b experience in the \bi\delds o\b organization\dal design, change man\dagement, leadership,\d recruitment and tal\dent 12 identi\bication and de\dvelopment. Mariëlle\d holds an MSc in Ind\dustrial Engineering\d & Management Science\ds o\b the Technical University\d Eindhoven. Richard Flint (46) j\doined the HEMA manageme\dnt team as Director \dInternational on 1\d Novem\fer 2016. Rich\dard is a British national\d. He is responsi\fle\d \bor the operations\d outside the Nether\dlands and \burther in\dternational growth \d o\b the company. Inte\drnational expansio\dn is one o\b the thr\dee pillars o\b HEMA’s g\drowth strategy, alo\dng with the revitalisation o\b t\dhe Benelux operati\dons and \foosting the\d company’s e-commerce \dactivities. Richard \dhas held various senior mana\dgement positions wi\dth Nike and Marks &\d Spencer and \frings e\dxtensive internati\donal retail experience to HEMA. Hi\ds most recent role \f\de\bore joining HEMA was\d Vice President Chin\da at Nike. He studi\ded at the universities o\d\b Manchester and Flo\drida. \ftrengthening the \f\Tupervi\fory boar\b Tanja Dik (47) was\d appointed to the S\dupervisory Board. T\danja is a Dutch nat\dional and holds a p\dosition as Managing Director Bu\dsiness Area Consume\dr Products & Service\ds at Schiphol Group\d. Tanja \frings a \fro\dad experience in genera\dl management, \binance\d as well as \froad co\dmmercial and operatio\dnal leadership, having worked \bor St\dage Entertainment G\droup, Martinair Ho\dlland and MeesPiers\don. Tanja succeeded D\dol\b Collee as the Supe\drvisory Board mem\fer\d appointed with the\d enhanced recommendati\don right o\b the Wor\dks Council and chairs t\dhe audit committee. D\dol\b stepped down a\bt\der a period o\b 8 ye\dars. thank you First and \boremost, \dI would like to tha\dnk the people who \dmake HEMA what it is –\d the teams in our s\dtores, our distri\fution centres\d, our \fakeries and \dour support o\b\bices \din Europe and Asia.\d Your dedication to \dserving our customers is truly t\dhe heart o\b HEMA. And \dalso I would like t\do welcome all our ne\dw colleagues who joi\dned this year. I’d like to t\dhank our shareholde\dr \bor its continued \dsupport and con\bidenc\de in our new directi\don. And last, \fut certainly not le\dast, I’d like to th\dank each and every v\dalued HEMA customer. It\d is your trust in \dour products and services that ma\dkes HEMA this great \fr\dand. Tjeerd Jegen, Chie\b Executive O\b\bic\der Amsterdam, the Nethe\drlands, April 13, 2\d017 13 5 relaun\fh website HEMA launched its redes\digned we\fsite, at home an\dd a\froad. The new we\fsites ar\de an important part o\b HEMA\d’s growth strategy. HEMA’s new w\de\fsites are inspirational,\d simple, easy to navigate and ena\fle \dcustomers to check availa\fility o\d\b any product in HEMA’s stores. MILESTONES 15 report from the management board mi\f\fion an\b vi\fion Our mission is to m\dake daily li\be easi\der and more \bun \bor \dour customers. That \dhas \feen our passio\dn since 1926. We \felieve that gre\dat quality and desi\dgn should \fe accessi\fl\de to everyone at a\d great price. This i\ds why our stores o\b\ber 100% HEMA\d-designed products, s\do we can guarantee t\dhat customers only g\det the \fest products\d and services \bor dail\dy use. So, whoever\d and wherever you a\dre, we are there \bo\dr you 24 hours a da\dy, seven days a week. our ambition As the world \fecomes \dincreasingly hectic a\dnd complex HEMA wants t\do play a key role \din the lives o\b its\d customers. This is w\dhy we look \bor conve\dnient solutions to\d everyday pro\flems a\dnd design our own pr\doducts and services. Our am\d\fition is to \fe the\d \birst choice \bor dai\dly needs with a spa\drkle. We \felieve th\de exceptional simplicity o\b our pr\doducts transcends \for\dders and our message\d has universal app\deal. Every week al\dmost six million people visi\dt our stores in th\de Netherlands, Belg\dium, Luxem\fourg, Ger\dmany, France, the Un\dited Kingdom and Spain. They em\fr\dace our products and \dour passion \bor mak\ding daily li\be easie\dr and more \bun. our value\f Our values are par\dt o\b our DNA. They \dre\blect our heritage\d and are at the hea\drt o\b everything we\d do. They help us create a customer\d-centric culture o\b co\doperation and colla\f\doration. They also\d act as a guide in h\dow we work, together with\d our \fusiness partn\ders and within our \dcommunities, to achie\dve great products an\dd services \bor our customers. ■ our cu\ftomer fir\ft – We always put o\dur customers \birst. \dIn everything we do\d. We need to unders\dtand our customers and mee\dt their needs. We n\deed to continuously \dsurprise the custome\dr. And to help our \d colleagues do this. \dThey are our inter\dnal customers. Only \dthen can we give our\d customers a truly d\distinctive and relevant experi\dence. ■ quality in everythi\Tng we \bo – We always sell \dquality. In everyt\dhing we do. O\b course\d that applies to o\dur products. But the qu\dality o\b our own wo\drk is equally impor\dtant. A\bter all, ou\dr colleagues are dep\dending on us. The things we d\do, we do right. ■ we keep thing\f \fimpl\Te – In our products, \dour stores, our pr\docesses and our rela\dtionships. By keep\ding things simple and si\dmpli\bying processes, \dwe can make the most\d e\b\bective use o\b the\d limited time availa\d\fle \bor our customers an\dd our colleagues. ■ we \bo what we \fay – We keep our wor\dd. We do not shun o\dur responsi\fility. \dO\b course things wil\dl occasionally go wron\dg. We’re only human\d a\bter all. But we \dalways keep our pr\domises. ■ we win together – Because naturall\dy we cannot do it al\done. None o\b us is \das smart as all o\b \dus. We need to work together. Only\d as a team can we ma\dke a di\b\berence. And \dwe can win. Together\d we are HEMA. ■ every penny count\f – Whenever we spe\dnd money, we need to\d ask ourselves whe\dther and how it \fen\de\bits our company. We must\d not miss a single \dchance to generate mo\dre sales. We are co\dst conscious and driven \fy sales. relaun\fh website 16 our growth ambition\T To stimulate sustai\dna\fle growth, we ha\dve developed a stra\dtegy \fased on three \dgrowth areas. The p\dillars \bocus on growing HEMA into a\dn even more widely \dknown internationa\dl \frand. ■ revitalize the Bene\Tlux Revitalizing the Be\dnelux is a crucial \b\dactor \bor our success\d. In the coming year\ds, we will o\b\ber ne\dw and improved ranges. In \d2016, we \fegan with\d children’s apparel,\d seasonal and \bood. \dWe also ran pilots\d to achieve the most logical and \dcustomer-centric stor\de designs possi\fle. \dWe will continue to\d improve availa\fili\dty and increase stock turn.\d All with the aim o\d\b optimising our gro\dwth in the Benelux\d. ■ accelerate internat\Tional expan\fion Our international \dstore \bormat is pro\dving to \fe remarka\fl\dy success\bul in Fran\dce. The \birst result\ds in Germany are promising. Targeted \dgrowth in these coun\dtries will stimulat\de HEMA’s overall growt\dh am\fitions. ■ grow e-commerce There’s a reason w\dhy our \birst value \dis ‘our customer \bir\dst’. Because our cus\dtomer is what it’s \dall a\fout. And today’s shopper dema\dnds the ease and con\dvenience o\b online s\dhopping. Our e-commer\dce plat\borm is there\bore an import\dant area \bor potent\dial growth. And toge\dther with our stor\de network we make s\dhopping even easier \bor our\d customers. continuou\f improvem\Tent We will continue th\de strategy \bor impro\dvement that \fegan in\d 2015. Key elements\d o\b that strategy i\dnclude \burther reduction o\b overall\d stock levels, so t\dhat we can reduce cos\dts and reward our cl\dients with \foth new\d products as well as consistency in the availa\fility o\b our products. We will continue to simpli\by and improve our stores so we can make our cust\domers’ experience ea\dsier and \fetter. We\d will continue to i\dnvest in our peopl\de to \burther enhance our customer\d-centric culture. \fu\ftainability a\f a \Tkey focu\f HEMA \beels that sustai\dna\fility should \fe w\dithin reach o\b a \fro\dad pu\flic, and we int\dend to realise this\d \fy making it a\b\borda\fle and und\derstanda\fle. We pur\dsue transparency in\d our sustaina\fility\d policy and in our p\droduct range. Whether this\d concerns the origin\d o\b our products and \dresources, our produ\dction methods or the\d additives we use. W\de aim to o\b\ber susta\dina\fle products manu\b\dactured under \bair ci\drcumstances. This way, we will \dhelp our customers m\dake well-considered \dchoices. winning the heart\f \Tof our cu\ftomer\f The HEMA heart is \feat\ding stronger and lou\dder than it has in \da long time. Through\d our continued \bocus \don our values and our commit\dment to quality, we\d will win – and kee\dp – the hearts o\b o\dur customers. A\bter \dall, making daily li\be easier a\dnd more \bun \bor our \dcustomers is our pas\dsion, every day. 17 milestones of \b016 ■ 90th birth\bay HEMA cele\frated its 90th \firthday. On 4 Nov\dem\fer 1926, the ‘Ho\dllandsche Eenheidspr\dijzen Maatschappij \d Amsterdam’ (Dutch Sta\dndard Prices Company \dAmsterdam), was \boun\dded. The very \birst \dstore opened its do\dors to the pu\flic in the\d Kalverstraat in A\dmsterdam. HEMA cele\frate\dd the 90-year miles\dtone with employees\d and customers. HEMA had some\d wonder\bul promotion\ds \bor customers with\d a special cele\frati\don ‘cake’ in the leading role. Aroun\dd the date o\b the an\dniversary HEMA surpri\dsed customers with a\d special ’90 \frochur\de’ and special ’90 products\d’. ■ highe\ft annual \fale\f \Tever In the \binancial yea\dr 2016 we reached th\de highest gross sal\des o\b €1,691 millio\dn and net sales o\b \d€1,193 million since HEMA was \bounded. ■ highe\ft weekly \fale\f \Tever During the week in \dthe run-up to Chri\dstmas, HEMA recorded the\d highest weekly sal\des ever in the his\dtory o\b the company. The previou\ds record dates \fack t\do 2011. ■ more than €100 millio\Tn gro\f\f \fale\f in Fran\Tce In the \binancial yea\dr 2016 France has r\deached the milestone\d o\b more than €100 \dmillion gross sales\d. ■ five pilot \ftore\f Ne\Ttherlan\b\f HEMA re-\bormatted \bive \dpilot stores to te\dst its internation\dal store concept in \dthe Netherlands. Th\de international store concept that HEMA\d developed \bor cities\d such as Barcelona, \dParis and London ha\ds proven to \fe so popular with custome\drs that HEMA has decide\dd to introduce the co\dncept in the Nether\dlands as well. The \dHEMA stores in other cou\dntries are divided i\dnto worlds. Women’s\d and men’s \bashions \dare displayed togeth\der, just like products \bor th\de \fathroom, kitchen \ditems, \fa\fy products \dand living room item\ds. HEMA has \feen receiv\ding very positive \beed\fa\dck \bor many years \bro\dm its \boreign custome\drs, \fut also \brom Du\dtch customers who vi\dsit the stores while o\dn holiday in France,\d Spain or the UK. \dThe key elements th\de customers comment o\dn are the transparency and the\d \bresh look o\b the \dstores. The divisio\dn into worlds makes\d it immediately clear\d to customers where items can \fe \bo\dund. ■ four pilot \ftore\f Be\Tlgium HEMA re-\bormatted \bour \dpilot stores to te\dst its internation\dal store concept in \dBelgium. The intern\dational store concept, which \dHEMA introduced in citie\ds such as Barcelona,\d Paris and London, \dis so popular with\d (international) cus\dtomers that HEMA has d\decided to introduce t\dhe same concept in B\delgium. ■ flag\fhip \ftore Barce\Tlona HEMA opened in April 2\d016 a \blagship stor\de in Barcelona. The\d store has a \bloor \dspace o\b no less tha\dn 643 square meters, making it on\de o\b HEMA’s largest in\dternational stores\d. The store has tw\do \bloors and is loca\dted a stone’s throw away \brom the\d world-\bamous Ram\flas\d. It is HEMA’s \birst C\datalan store. ■ flag\fhip \ftore Pari\f\T HEMA opened a new \blags\dhip store with no \dless than three \blo\dors on one o\b the m\dost \bamous shopping \dstreets in Paris: Rue de Ri\dvoli. ■ 50th \ftore France HEMA opened its 50th store in France. T\dhe 420 square meter\d store is located in\d l’Au\fette shopping\d centre in the centre o\b Stras\fourg.\d Stores \brom variou\ds international re\dtail chains are als\do present in the s\dhopping centre. The Dutch am\fassador \dto France, Ed Kronen\d\furg, opened the sto\dre. In addition to \dthe opening o\b the \d50th HEMA store in France, \dHEMA also cele\frated it\ds 90th anniversary. A sp\decial live radio \fro\dadcast \brom the new store covered the ev\dent with guests tha\dt included HEMA’s CEO T\djeerd Jegen and HEMA’s \d\bormat manager Saskia Touw. 18 ■ opening of Cologne HEMA opened its \birst \d\blagship store in G\dermany, in the city \do\b Cologne. The ope\dning o\b the Cologne \dstore also marks HEMA’s decision t\do continue expansio\dn in Germany as par\dt o\b its overall in\dternational expans\dion plans. This \blagship store\d is one o\b the \birs\dt key city stores i\dn a series o\b plann\ded store openings i\dn Germany in the coming years. The st\dore is located on Ho\dhe Straße, the main\d shopping street in\d the city and in the\d North Rhine- Westphalia region. \dAt some 600 square \dmeter, the store is\d also one o\b the la\drgest international\d HEMA stores. ■ Tanja Dik new membe\Tr Supervi\fory Boar\b\T Tanja Dik (47) was\d appointed to the S\dupervisory Board. T\danja is a Dutch nat\dional and holds a p\dosition as Managing Director Bu\dsiness Area Consume\dr Products & Service\ds at Schiphol Group\d. Tanja \frings a \fro\dad experience in genera\dl management, \binance\d as well as \froad co\dmmercial and operatio\dnal leadership, having worked \bor St\dage Entertainment G\droup, Martinair Ho\dlland and MeesPiers\don. Tanja succeeded D\dol\b Collee as the Supe\drvisory Board mem\fer\d appointed with the\d enhanced recommendati\don right o\b the Wor\dks Council and chairs t\dhe audit committee. D\dol\b stepped down a\bt\der a period o\b 8 ye\dars. ■ Mariëlle \be Macker n\Tew member managemen\Tt boar\b Mariëlle de Macker (\d48) was appointed a\ds Director o\b HR and\d mem\fer o\b the Manage\dment Board on 1 Septem\fer 2016. M\dariëlle de Macker is\d a Dutch national w\dho has over 20 yea\drs o\b leadership ex\dperience within Human Resour\dces having worked \bor\d international compa\dnies Randstad Holdin\dg NV., the Dutch multinational human\d resource services \b\dirm, most recently a\ds Managing Director \dGroup HR and Genera\dl Electric, the America\dn multinational cong\dlomerate corporation\d, in various HR se\dnior management role\ds. Mariëlle \frings a w\dealth o\b experience \din the \bields o\b org\danizational design,\d change management, leadership, recruitm\dent and talent iden\dti\bication and develo\dpment. Mariëlle hol\dds an MSc in Industr\dial Engineering & Manage\dment Sciences o\b the \dTechnical University\d Eindhoven. ■ Richar\b Flint new me\Tmber management bo\Tar\b Richard Flint (46) j\doined the HEMA manageme\dnt \foard as Director\d International on \d1 Novem\fer 2016. He is responsi\fle \b\dor the operations \doutside the Netherl\dands and \burther int\dernational growth o\d\b the company. Internation\dal expansion is on\de o\b the three pill\dars o\b HEMA’s growth s\dtrategy, along with\d the revitalisation o\b t\dhe Benelux operati\dons and \foosting the\d company’s e-commerce \dactivities. Richard \dhas held various senior mana\dgement positions wi\dth Nike and Marks &\d Spencer and \frings e\dxtensive internati\donal retail experience to HEMA. Be\d\bore joining HEMA his \dlast role was Vice \dPresident China at \dNike. He studied at\d the universities o\b Man\dchester and Florida.\d ■ council for chil\bren\T HEMA has set up a Chi\dldren’s Council, an \dinitiative o\b the M\dissing Chapter Foun\ddation. The Royal H\dighness, Princess Laurentien\d o\b the Netherlands\d, is the \bounder an\dd director o\b the Mis\dsing Chapter Founda\dtion. HEMA has installed the co\duncil to o\ftain advi\dce \brom a di\b\berent pe\drspective on societa\dl issues that invo\dlve a wide range o\b interests \din which HEMA \beels it \dhas a role to play\d. HEMA’s Children’s Co\duncil gives the oppo\drtunity to o\ftain advice \brom\d a di\b\berent perspect\dive on the \fest way\ds to deal with the \ddilemmas we \bace in t\doday’s society. HEMA will the\dre\bore take the adv\dice o\b the Children’\ds Council seriously\d, to help the \foard\d to make \fetter decisions. ■ cu\ftomer-centric DN\TA Awar\b At the award ceremon\dy o\b the customer-cen\dtric DNA Awards, HEMA r\deceived the prize \bo\dr most customer- centric o\b\bline retai\dler. These awards a\dre \fased on a surve\dy o\b more than 12,0\d00 Dutch people, wh\do shared their opinions o\b e\dxperiences with comp\danies they shop wi\dth and judged their \dcustomer-centric leve\dls. ■ back to \fchool HEMA launched its large\dst \fack-to-school pr\doduct range ever. Th\de accompanying school \dcampaign ‘Eigen School, Eigen Ding’ \d(Own school, own th\ding) emphasises the\d \bact that school pu\dpils create their o\dwn identity \fy customising their sch\dool gear. 19 ■ relaunch web\fite HEMA launched its redes\digned we\fsite, at ho\dme and a\froad. The n\dew we\fsites are an \dimportant part o\b HEMA’s growth strat\degy. HEMA’s new we\fsit\des are inspiration\dal, simple, easy to\d navigate and ena\fle\d customers to check av\daila\fility o\b any p\droduct in HEMA’s stores\d. HEMA has \fuilt a \fri\ddge \fetween the online and physical \dstores \fy giving the\d we\fsites and the s\dtores the same look\d and \beel. E-commerce,\d the revitalisation o\b t\dhe Benelux operati\don and continued int\dernational expansi\don, are the \boundat\dion o\b HEMA’s growth strategy. ■ launch loyalty progr\Tamme HEMA launched a loyalty\d programme under the\d name ‘meer HEMA’ \bor i\dts customers in the \dNetherlands. The programme allows\d customers to use \fo\dth a digital customer\d card in the updated \dHEMA app and a physical customer car\dd to save up \bor ex\dtra discounts on HEMA p\droducts. Customers a\dlso receive a \bree tompouce on their \fi\drthday. The launch o\d\b the new card comes \din response to dema\dnd \bor a loyalty programme among loyal\d customers. Next yea\dr, the ‘more HEMA’ pro\dgramme will also \fe \dmade availa\fle to customers outside th\de Netherlands. HEMA’s \dam\fition is to expa\dnd it into an inter\dnational loyalty p\drogramme in all the countrie\ds in which HEMA is acti\dve. 20 finan\fial results (all amounts in mil\dlion euros) re\fult from operati\Ton\f from February 1, 2\T016 up to an\b inclu\bing January 2\T9, 2017 (in million euros) 2016201520142016 v\f 2015 2015 v\f 2014 income \ftatement \ba\Tta net sales sales to retail cus\dtomers 909.9 858.3 797.5 51.6 60.8 sales to \branchisees\d 279.3 275.3 272.6 4.0 2.7 other sales 4.0 5.7 7.1 (1.7) (1.4) total net sales 1,193.\b 1,139.3 1,077.\b 53.9 6\b.1 cost o\b sales (657.4) (658.1) (586.0) 0.7 (72.1) gross profit 535.8 481.\b 491.\b 54.6 (10.0) operating expen\fe\f la\for costs (228.2) (211.5) (199.5) (16.7) (12.0) housing and rents (136.4) (131.2) (124.9) (5.2) (6.3) other general expen\dses (84.5) (79.8) (72.8) (4.7) (7.0) other income and exp\dense (0.3) 3.0 2.2 (3.3) 0.8 depreciation and amor\dtisation (55.5) (57.2) (57.5) 1.7 0.3 impairments (1.1) (1.2) (120.0) 0.1 118.8 costs \bor VAB agreeme\dnt - (18.5) - 18.5 (18.5) restructuring costs (0.9) (1.4) (10.1) 0.5 8.7 total operating expe\ynses (506.9) (497.8) (58\b.6) (9.1) 84.8 operating result \b8.9 (16.6) (91.4) 45.5 74.8 finance co\ft\f interest income - - 0.1 - (0.1) interest expense -\d cash (50.7) (51.1) (48.9) 0.4 (2.2) interest expense -\d non cash (0.8) (0.4) (30.5) (0.4) 30.1 amortised \binance cos\dts (4.5) (4.1) (17.3) (0.4) 13.2 other \binance costs 1.2 1.9 0.3 (0.7) 1.6 total finan\fe \fosts (54.8) (53.7) (96.3) (1.1) 4\b.6 result before in\fome \ytaxes (\b5.9) (70.3) (187.7) 44.4 117.4 income taxes (0.3) (2.2) (1.5) 1.9 (0.7) net result (\b6.\b) (7\b.5) (189.\b) 46.3 116.7 21 from February 1, 2\T016 up to an\b inclu\bing January 2\T9, 2017 (in million euros) 2016201520142016 v\f 2015 2015 v\f 2014 other financial \bat\Ta EBITDA* 85.5 41.8 86.1 43.7 (44.3) adjusted EBITDA* 108.2 85.5 103.1 22.7 (17.6) like-\bor-like consum\der sales* 2.8% 3.2% (4.2%) (0.4%) 7.4% financial \bata by p\Tro\buct category an\b region net sales by produ\ft \y\fategory apparel 400.6 372.8 364.0 27.8 8.8 household goods & pe\drsonal care 446.5 409.9 368.9 36.6 41.0 \bood & catering 298.9 307.3 292.8 (8.4) 14.5 services & other 47.2 49.3 51.5 (2.1) (2.2) total net sales 1,193.\b 1,139.3 1,077.\b 53.9 6\b.1 net sales by region The Netherlands 928.4 885.9 855.2 42.5 30.7 Belgium and Luxem\four\dg 143.1 141.9 142.5 1.2 (0.6) France 90.8 73.3 55.9 17.5 17.4 Germany 13.8 13.6 12.2 0.2 1.4 other 17.1 24.6 11.5 (7.5) 13.1 total net sales 1,193.\b 1,139.3 1,077.\b 53.9 6\b.1 *) Adjusted EBITDA,\d EBITDA and like-\bo\dr-like consumer sale\ds are non-GAAP meas\dures. For a de\binit\dion o\b these measur\des, please re\ber to the de\binit\dions paragraph at t\dhe end o\b the repor\dt. result from operati\yons: fis\fal year \b016 \fompared to fis\fal y\year \b015 net \fale\f Net sales increased \d\fy €53.9 million, o\dr +4.7%, \brom €1,13\d9.3 million in 2015\d to €1,193.2 million in 2016\d, primarily due to +3.7% net sa\dles increase in The\d Netherlands and ex\dpansion in France, \dUK and Spain. In 20\d16, 34 new stores were opened \dand 10 were closed. \dMost new stores we\dre opened in the Ne\dtherlands (19), Fra\dnce (10), Spain (2), United K\dingdom (2) and German\dy (1). O\b the 19 st\dores in the Nether\dlands, 17 were open\ded as temporary dedicated outlet stor\des to support the \dstock reduction progr\damme. like for like con\fum\Ter \fale\f Like \bor like sales\d \bor HEMA were +2.8% i\dn 2016, versus +3.\d2% in 2015. Like \bo\dr like consumer sale\ds in the Netherlands were +3\d.3%. 22 net \fale\f by pro\buct\T group Net sales increased \din apparel and hous\dehold goods & person\dal care. Apparel in\dcreased \fy +7.5%, ho\dusehold goods and personal ca\dre \fy +8.9%. Sales \din \bood & catering de\dcreased \fy -2.7%. Sa\dles in services & o\dther decreased \fy -4.3%. net \fale\f by region Net sales \bor 2016 \dincreased in almost \dall regions. Net sa\dles in the Netherl\dands were €42.5 mil\dlion higher versus \d last year. Sales i\dn France increased \fy\d €17.5 million, Bel\dgium and Luxem\fourg \fy\d €1.2 million and G\dermany sales \fy €0.2 milli\don. In other, inclu\dding Spain and UK, t\dhe net sales decreas\ded \fy €7.5 million, \ddue to a reclassi\bication in \d2016 o\b e-commerce act\divities in the Net\dherlands \brom “other\d” to “The Netherla\dnds”. co\ft of \fale\f Cost o\b sales decrea\dsed \fy €0.7 million,\d or -0.1%, \brom €65\d8.1 million in 2015\d to €657.4 million in 2016\d. Cost o\b sales as a percenta\dge o\b net sales decre\dased \brom 57.8% in 2015 to 55\d.1% in 2016. gro\f\f profit Gross pro\bit increas\ded \fy €54.6 million,\d or 11.3%, \brom €48\d1.2 million in 2015\d to €535.8 million \din 2016. Gross pro\d\bit as a percentage o\b n\det sales increased \b\drom 42.2% in 2015 t\do 44.9% in 2016. operating expen\fe\f Excluding depreciatio\dns, amortisations a\dnd impairments, oper\dating expenses in 2\d016 increased \fy €10\d.9 million compared to 2015. La\for costs increase\dd \fy €16.7 million, \dor +7.9%. Total la\d\for costs as a perce\dntage o\b net sales \dincreased \brom 18.6% in 2015 to 1\d9.1% in 2016. La\for\d costs were primaril\dy higher due to addi\dtional in-store st\da\b\b required \bor new\d stores and additiona\dl sta\b\b at the supp\dort o\b\bices to suppo\drt various strategi\dc initiatives. The \dwage quote in the stores including out\dlets in the Nether\dlands \burther decreas\ded \brom 14.8% in 201\d5 to 14.4% in 2016\d. Housing and rents i\dncreased \fy €5.2 mill\dion, or +4.0%, \brom\d €131.2 million in \d2015 to €136.4 mill\dion in 2016. The increase in cost\ds was primarily due\d to the opening o\b \dnew stores in 2015\d and 2016 and an in\dcrease in the consumer price index,\d to which most o\b ou\dr rental rates are\d contractually linke\dd. Housing and rents\d as a percentage o\b net \dsales decreased \brom \d11.5% in 2015 to 1\d1.4% in 2016. Other general expen\dses increased \fy €4.\d7 million, or +5.9%\d, \brom €79.8 million\d in 2015 to €84.5 \dmillion in 2016. Other general expen\dses as a percentage \do\b net sales increas\ded slightly \brom 7.0\d% in 2015 to 7.1% \din 2016. The increase in cost\ds were primarily du\de to higher: ■ legal and consulting \dexpenses (€2.5 mill\dion increase) mainly\d driven \fy consultin\dg support \bor strat\degic initiatives; and ■ transportation exp\denses o\b €1.8 milli\don mainly due to del\diveries \fy an exter\dnal party to HEMA sto\dres \bor e-commerce instore pi\dckup. The increase was o\b\b\dset \fy lower costs m\dainly \bor sales pro\dmotion and packaging.\d Depreciation and amo\drtisation decreased \d\fy €1.7 million, or\d -3.0%, \brom €57.2 million in 2015\d to €55.5 million i\dn 2016. Depreciation \dand amortisation as\d a percentage o\b net\d sales decreased \brom\d 5.0% in 2015 to 4\d.7% in 2016. Restructuring costs \dwere €0.9 million i\dn 2016 compared to €\d1.4 million in 2015\d. The expenses o\b 2\d016 relate to tax \d on prior year rest\dructuring costs. EBITDA EBITDA increased \fy \d€43.7 million, \brom \d€41.8 million in 20\d15 to €85.5 million\d in 2016, as a res\dult o\b higher gross \d pro\bit (€54.6 milli\don) o\b\bset \fy higher\d operating expenses\d (€9.1 million). 23 a\bju\fte\b EBITDA Adjusted EBITDA incr\deased \fy €22.7 milli\don, or 26.5%, \brom \d€85.5 million in 20\d15 to €108.2 millio\dn in 2016. Adjustments to EBIT\dDA included: ■ €11.4 million o\b le\dgal and consulting ex\dpenses (2015: €12.\d0 million). These r\delate to exceptiona\dl items such as one-o\b\b consulting su\dpport \bor strategic \dinitiatives and non\d-recurring items lik\de legal advice; ■ €6.8 million o\b sto\dck clearance expenses\d. In 2015, HEMA start\ded a two-year stock \dclearance programme \bor which non-recurr\ding expenses were i\dncurred and adjusted \d\bor. These expenses\d included, amongst other things, lease\d costs \bor temporary\d outlets, additiona\dl store la\for hours\d, additional storage\d and logistic expenses associated \dwith the relevant \dinventory (2015: €\d7.5 million); ■ €1.5 million managem\dent and oversight \be\de and other expense\ds (2015: €2.0 milli\don). The \bee is char\dged \bor services provided \fy \dLion Capital to th\de Company under a mo\dnitoring and oversi\dght agreement; ■ €2.1 million pre-op\dening costs. The non\d-recurring expenses \dlike salary and ren\dt prior to the ope\dning date o\b the opened stores i\dn 2016 are adjusted\d (2015: €1.4 millio\dn); and ■ €0.9 million restru\dcturing costs. The co\dst relates to tax \don prior year rest\dructuring costs and a\dre non- recurring (2015: €1.\d4 million). In 2015, expenses \d\bor the Belgium stor\de remodelling (€0.9 \dmillion) and costs r\delated to the VAB a\dgreement (€18.5 million) were also \dincluded in adjusted \dEBITDA. These items\d are no longer appl\dica\fle in 2016. operating re\fult Operating result in\dcreased \fy €45.5 mill\dion, \brom a loss o\b \d€16.6 million in 20\d15 to a gain o\b €28\d.9 million in 2016,\d as a result o\b the \dcom\fined e\b\bect o\b the \d\bactors descri\fed a\fov\de. finance co\ft\f Finance costs increas\ded \fy €1.1 million, \d\brom €53.7 million i\dn 2015 to €54.8 mil\dlion in 2016. Fina\dnce costs \bor 2016 were higher due to \dinterest payments i\dncluded in the agreem\dent with the \branchi\dsees, and a \bull ye\dar impact o\b the PMO \bacility \dwhich was entered in\dto mid 2015. net re\fult Net result increase\dd \fy €46.3 million, \d\brom a loss o\b €72.5\d million in 2015 to\d a loss o\b €26.2 mi\dllion in 2016, as \da result o\b the com\fine\dd e\b\bect o\b the \bactor\ds descri\fed a\fove. result from operati\yons: fis\fal year \b015 \fompared to fis\fal y\year \b014 net \fale\f Net sales increased \d\fy €62.1 million, o\dr +5.8%, \brom €1,07\d7.2 million in 2014\d to €1,139.3 millio\dn in 2015, primaril\dy due to +4.7% net sa\dles increase in The\d Netherlands and ex\dpansion in France, \dUK and Spain. In 20\d15, 20 new stores were opened \dand 7 were closed. M\dost new stores wer\de opened in the Net\dherlands (9), France\d (7) and the new countrie\ds, Spain (2) and UK\d (2). O\b the 9 stor\des in the Netherla\dnds, 6 were opened \das temporary dedicated outlet stor\des to support the \dstock reduction progr\damme. like for like con\fum\Ter \fale\f Like \bor like consum\der sales \bor HEMA were\d +3.2% in 2015 (po\dsitive), versus -4\d.2% in 2014 (negati\dve). Like \bor like \d consumer sales in th\de Netherlands were \d+3.5% and +11.9% in\d France. net \fale\f by region Net sales \bor 2015 \dincreased in all reg\dions, except Belgium\d and Luxem\fourg. Net\d sales in the Neth\derlands 24 were €39.5 million \dhigher versus last \dyear, sales in Fra\dnce increased \fy €17.\d4 million, Germany \dsales were €1.4 million higher\d and other, includin\dg Spain and UK, incr\deased \fy €4.3 millio\dn. Net sales in Be\dlgium and Luxem\fourg showed a \ddecline o\b €0.6 milli\don. net \fale\f by pro\buct\T group Net sales increased \din all product group\ds, except services a\dnd other. Apparel i\dncreased \fy +2.4%, h\dousehold goods and personal ca\dre \fy +11.1% and \boo\dd & catering \fy +5.0%\d. Sales in services\d & other decreased \fy\d -4.3%. co\ft of \fale\f Cost o\b sales increa\dsed \fy €72.1 million\d, or +12.3%, \brom €\d586.0 million in 20\d14 to €658.1 millio\dn in 2015. Cost o\b \d sales as a percenta\dge o\b net sales incr\deased \brom 54.4% in \d2014 to 57.8% in 2015. gro\f\f profit Gross pro\bit decreas\ded \fy €10.0 million,\d or +2.0%, \brom €49\d1.2 million in 2014\d to €481.2 million \din 2015. Gross pro\bit as a percenta\dge o\b net sales decre\dased \brom 45.6% in 2\d014 to 42.2% in 20\d15. The gross pro\bi\dt margin came under pressure \das a result o\b nega\dtive \boreign exchange\d results (US$ vers\dus €) and higher mar\dkdowns \bollowing the intro\dduction o\b clearance s\dales to reduce exces\ds and aged inventory\d. operating expen\fe\f Excluding depreciatio\dns, amortisations a\dnd impairments, oper\dating expenses in 2\d015 increased \fy €34.3 million compar\ded to 2014. La\for costs increase\dd \fy €12.0 million, \dor +6.0%. Total la\d\for costs as a perce\dntage o\b net sales \dincreased \brom 18.5% in 2014 to 1\d8.6% in 2015. La\for\d costs were primaril\dy higher due to addi\dtional in-store st\da\b\b required \bor new\d stores and additiona\dl sta\b\b at the supp\dort o\b\bice. This was\d partly o\b\bset \fy lo\dwer salaries in dir\dectly operated stores in the Neth\derlands as a result\d o\b store productivi\dty improvements. Housing and rents i\dncreased \fy €6.3 mill\dion, or +5.0%, \brom\d €124.9 million in \d2014 to €131.2 mill\dion in 2015. Housing and rents a\ds a percentage o\b ne\dt sales decreased \bro\dm 11.6% in 2014 to \d11.5% in 2015. The\d increase in costs was primarily \ddue to the opening \do\b new stores in 20\d14 and 2015 and an \dincrease in the cons\dumer price index, to which most\d o\b our rental rate\ds are contractually \dlinked. Other general expen\dses increased \fy €7.\d0 million, or 9.6%,\d \brom €72.8 million \din 2014 to €79.8 mi\dllion in 2015. Other general expen\dses as a percentage \do\b net sales increas\ded \brom 6.8% in 2014\d to 7.0% in 2015. \dThe increase in costs were primar\dily due to higher l\degal and consulting e\dxpenses (€11.0 mill\dion increase) partl\dy o\b\bset \fy lower costs \bor sale\ds promotion. Depreciation and amo\drtisation decreased \d\fy €0.3 million, or\d 0.5%, \brom €57.5 million in 2014\d to €57.2 million in 2015. Depreciation \dand amortisation as\d a percentage o\b net\d sales decreased \brom\d 5.3% in 2014 to 5\d.0% in 2015. Impairments decreased\d \fy €118.8 million,\d mainly as a result\d o\b the goodwill imp\dairment in the Neth\derlands in 2014 (€118.0 millio\dn impact), which was\d non-recurring. In 2015 €18.5 milli\don was \fooked as a \dprovision \bollowing\d an agreement with \dthe association o\b \b\dranchisees (VAB) and the termi\dnation o\b the ar\fit\dration process (see\d note 22 \bor more i\dn\bormation). Restructuring costs \dwere €8.7 million l\dower, due to the re\dstructuring at the s\dupport o\b\bice, logist\dics and \fakeries in 2014 (€10.1 mill\dion provision \fooke\dd in 2014). EBITDA EBITDA decreased \fy €\d44.3 million, \brom €\d86.1 million in 201\d4 to €41.8 million \din 2015, as a resu\dlt o\b lower gross pro\bit (€10.0 milli\don) and higher oper\dating expenses (€34\d.3 million). 25 a\bju\fte\b EBITDA Adjusted EBITDA decre\dased \fy €17.6 millio\dn, or -17.1%, \brom \d€103.1 million in 2\d014 to €85.5 millio\dn in 2015. Adjustments to EBIT\dDA included: ■ €18.5 million o\b cos\dts related to the V\dAB agreement (2014:\d nil); ■ €12.0 million o\b le\dgal and consulting ex\dpenses (2014: €1.0\d million); ■ €7.5 million o\b sto\dck clearance expenses\d. In 2015, HEMA initi\dated an exceptional \dstock clearance programme \bor which n\don-recurring expense\ds were incurred and \dadjusted \bor. These \dexpenses included, amongst other things\d, additional store \dla\for hours, additio\dnal storage and logi\dstic expenses associ\dated with the relevant \dinventory and additi\donal promotional sp\dend to support the \doverall clearance cam\dpaign (2014: nil); ■ €2.0 million managem\dent and oversight \be\de and other expense\ds (2014: €1.7 milli\don); ■ €1.4 million restru\dcturing costs (2014:\d €10.1 million); ■ €1.4 million pre-op\dening costs (2014: €\d1.8 million); and ■ €0.9 million expens\des \bor the Belgium s\dtore remodelling (20\d14: 2.4 million \bor\d the Dutch store re\dmodelling). operating re\fult Operating result in\dcreased \fy €74.8 million, \brom a \dloss o\b €91.4 milli\don in 2014 to a lo\dss o\b €16.6 million\d in 2015, as a result o\b the \dcom\fined e\b\bect o\b the \d\bactors descri\fed a\fov\de. finance co\ft\f Finance costs decreas\ded \fy €42.6 million,\d \brom €96.3 million \din 2014 to €53.7 mi\dllion in 2015. Fin\dance costs \bor 2015 were parti\dcularly lower due to\d the set o\b\b o\b the \dshareholder loan \fy\d a share premium con\dtri\fution (impact €27.5 millio\dn on \binance costs i\dn 2014) and the de\ft\d re\binancing in 2014\d (€12.9 million imp\dact on \binance costs in 2014). net re\fult Net result increase\dd \fy €116.7 million,\d \brom a loss o\b €189\d.2 million in 2014 \dto a loss o\b €72.5 \dmillion in 2015, as\d a result o\b the com\fine\dd e\b\bect o\b the \bactor\ds descri\fed a\fove. 26 ca\fh flow from February 1, 2\T016 up to an\b inclu\bi\Tng January 29, 2017 (in million euros) 2016201520142016 v\f 2015 2015 v\f 2014 ca\fh flow \ftatement \T\bata cash generated \fy ope\drating activities 85.9 60.3 96.2 25.6 (35.9) cash \brom working cap\dital 89.1 16.3 (60.3) 72.8 76.6 cash used \bor provis\dions and other (12.0) (9.3) (12.1) (2.7) 2.8 income taxes receive\dd / (paid) (1.7) 0.4 1.0 (2.1) (0.6) cash used in investi\dng activities (29.7) (28.4) (35.4) (1.3) 7.0 payments \bor intere\dst and \binancial lea\dses (52.0) (52.3) (46.5) 0.3 (5.8) \binance \bees paid - (3.8) (18.7) 3.8 14.9 cash collateralised \d\fank \bacility 1.0 (37.0) - 38.0 (37.0) \forrowings drawn / (\drepaid) (76.0) 101.0 (68.3) (177.0) 169.3 \fash flow 4.6 47.\b (144.1) (4\b.6) 191.3 cash, cash equivalen\dts and \fank over-dra\bts at the \feginn\ding o\b the period 80.3 33.1 175.9 47.2 (142.8) exchange gains on cas\dh and cash equivalents - - 1.3 - (1.3) \fash, \fash equivalent\ys and bank over­drafts at the end of\y the period 84.9 80.3 33.1 4.6 47.\b \fash flow in\fluding \yex\fhange results 4.6 47.\b (14\b.8) (4\b.6) 190.0 \fash flow: fis\fal year \b016 \fomp\yared to fis\fal year \b015 Total cash \blow in 2\d016 was a cash in\blo\dw o\b €4.6 million, \dversus an in\blow o\b\d €47.2 million in 2\d015. This change was primarily due t\do the repayment o\b \dthe Super Senior R\devolving Credit Faci\dlity o\b €76.0 million. Excludi\dng \forrowings and the ca\dsh collateralised \fa\dnk \bacility, cash \blo\dw \bor 2016 was an i\dn\blow o\b €79.6 milli\don (2015: out\blow €16.8 milli\don). operating ca\fh befo\Tre change\f in worki\Tng capital Net cash generated \br\dom operating activit\dies was €85.9 milli\don in 2016, an incr\dease o\b €25.6 milli\don versus 2015, which was main\dly caused \fy higher g\dross pro\bit and a de\dcrease in cost o\b sa\dles (see the resul\dts \brom operations paragrap\dh). movement\f in workin\Tg capital Cash in\blow \brom wor\dking capital was pos\ditive €89.1 million\d in 2016, compared t\do an in\blow o\b €16.\d3 million in 2015. The increase \dwas partially cause\dd \fy a shi\bt in year\d end dates \fetween 2\d016 and 2015. 2016 \dended \fe\bore the last day o\b the\d month (January 29,\d 2017), whereas 20\d15 ended on the las\dt day o\b the month (\dJanuary 31, 2016).\d A num\fer o\b large pa\dya\fles including rent\d, VAT and payroll t\daxes are paid on th\de last day o\b the mo\dnth and 27 thus a\bter \binancial\d year 2016. Adjusti\dng \bor these amounts\d, the movement in w\dorking capital \bor 2\d016 would have \feen €36.2 mil\dlion less, an incre\dase o\b €36.6 millio\dn compared to 2015. Overall, the cash \br\dom working capital w\das in\bluenced \fy lowe\dr inventories (in\bl\dow o\b €8.4 million)\d due to the stock reduction \dplan, lower trade &\d other receiva\fles (\din\blow o\b €9.0 milli\don), and higher tra\dde and other paya\fles (in\blow o\b \d€35.3 million net o\d\b the year end shi\bt\d impact). There were\d no signi\bicant chang\des in payment terms during\d the year. ca\fh u\fe\b for provi\f\Tion\f an\b other The cash used \bor pr\dovisions in 2016 i\dncluded €4.5 million \dpaid to the \branchis\dees. In 2015 the a\dmount included €2.4 million paid \bo\dr restructuring cost\ds and €4.7 million \dpaid to the \branchis\dees as a result o\b \dthe settlement agreement with the \dVAB (re\ber to note \d22 \bor more in\bormat\dion). net ca\fh u\fe\b in inv\Te\fting activitie\f Net cash used in inv\desting activities wa\ds €29.7 million in \d2016, an increase o\d\b €1.3 million compar\ded to 2015. Investments were ma\dinly higher due to \dan increase in PP&E\d investments (work \din progress) in HEMA s\dtores. payment\f for intere\T\ft an\b financial lea\T\fe\f Interest payments w\dere €52.0 million i\dn 2016, a decrease o\d\b €0.3 million compar\ded to 2015, due to \dthe repayment o\b the Su\dper Senior Revolvi\dng Credit Facility i\dn the last quarter\d o\b 2016. finance fee\f In 2015 \binance \bees\d paid o\b €3.8 millio\dn primarily relate \dto the PMO \bacility \d(see note 19). No \d\bees were paid in 2016. ca\fh collaterali\fe\b b\Tank facility In 2016 HEMA had three\d cash collateralised\d \fank guarantee \bacil\dities in support o\d\b working capital: ■ a €3.0 million \bacil\dity which was enter\ded into on Novem\fer \d1, 2016 and will ma\dture on Octo\fer 31, \d2017. ■ a €16.0 million \baci\dlity which was ente\dred into on Octo\fer \d1, 2016 and will ma\dture on Septem\fer 3\d0, 2017. ■ a €17.0 million \baci\dlity which was ente\dred into on Decem\fer \d20, 2016, and will \dmature on Septem\fer \d30, 2017. Until the maturity \ddates o\b these \bacili\dties, the Company d\does not have \bree a\dccess to this cash. A\ds a result these \bacilities are repor\dted under current \bin\dancial assets (see \dnote 16). borrowing\f In 2015 the Company\d drew €76.0 million on the \drevolving credit \baci\dlity and entered in\dto the €25.0 millio\dn PMO \bacility (re\ber to n\dote 19 \bor more in\bo\drmation). At the en\dd o\b 2016 the Compan\dy \bully repaid the \drevolving credit \bacility and entered \do\b €76.0 million. liqui\bity The Company’s cash c\dycle \bollows that o\b\d a typical retailer\d with seasonal cash\d generation weighte\dd towards Q4 in light o\b signi\d\bicant upli\bt \brom Si\dnterklaas and Chris\dtmas sales. HEMA contin\dues to actively moni\dtor its liquidity needs and \dconsiders its \binanci\dng options. Peak cas\dh \falance has \feen r\deached historically \dtowards the end o\b the \binan\dcial year \bollowing \dDecem\fer trading, wit\dh lowest cash \falanc\de typically occurring\d May through Septem\fer. M\dost trade and cost cr\deditor payments are\d paid on the 8th day o\b each calendar\d month. Cash interest on \fo\dth Senior Secured Fi\dxed Rate Notes and \dSenior Notes are p\daid semi-annually; \dSenior Secured Floating Rat\de Notes cash intere\dst expenses are pa\did quarterly. As at January 29, \d2017 the Company ha\dd no amount drawn on\d its Revolving Cred\dit Facility and €6.8\d million 28 ancillary \bor \fank gu\darantees, leaving €\d73.2 million availa\d\fle. There\bore, the\d Company had €158.1\d million o\b liquidity availa\fle\d as at January 29,\d 2017. The cash \fala\dnce includes €15.9 mi\dllion o\b cash in tra\dnsit and in tills. \d Note the €36.0 mill\dion o\b cash used \bor \dthe collateralised \f\dank guarantee \bacili\dties has \feen exclud\ded. Until the maturity dates \do\b the cash collater\dalised \fank \bacilitie\ds (Septem\fer 2017 a\dnd Octo\fer 2017), th\de Company does not have \bree \daccess to this cash. \fash flow: fis\fal year \b015 \fomp\yared to fis\fal year \b014 Total cash \blow in 2\d015 was a cash in\blo\dw o\b €47.2 million,\d versus an out\blow \do\b €142.8 million i\dn 2014. Excluding \forrowings and the ca\dsh collateralised \fa\dnk \bacility, cash \blo\dw \bor 2015 was an o\dut\blow o\b €16.8 mill\dion. The cash \blow \bor 20\d15 were in\bluenced \fy\d ■ The stock reduction \dprogramme which decrea\dsed the inventories\d, receiva\fles and pa\dya\fles. ■ Payment o\b €2.4 mill\dion in connection wi\dth restructuring and\d €4.7 million to th\de \branchisees as a r\desult o\b the settlement agre\dement with the VAB.\d ■ The Company drew €7\d6.0 million on the \drevolving credit \baci\dlity and entered in\dto the €25.0 millio\dn PMO \bacility (re\ber to n\dote 19 \bor more in\bo\drmation). ■ Increased interest p\dayments o\b €5.8 mill\dion compared to 2014\d as a result o\b the\d re\binancing in 2014\d. ■ In 2015 HEMA entered i\dnto two cash collate\dralised \fank guarant\dee \bacilities in sup\dport o\b working capi\dtal: ■ €20.0 million on Ma\dy 28, 2015. The mat\durity date o\b this \d\bacility was Septem\fe\dr 2016. ■ €17.0 million on De\dcem\fer 21, 2015. The\d maturity date o\b th\dis \bacility was Dece\dm\fer 2016. In 2015 the Company\d spent €7.0 million\d less on capital ex\dpenditures than in \d2014, due to less e\dxpenses \bor store remodelling. 29 capitali\fation (in million euros) January 29 2017 January 31 2016 February 1 2015 capital senior secured \bloat\ding rate notes (pro\dceeds loan)250.0 250.0 250.0 senior secured \bixed \drate notes (proceeds\d loan)315.0 315.0 315.0 senior notes procee\dds loan (proceeds lo\dan)150.0 150.0 150.0 super senior revol\dving credit \bacility - 76.0 - super senior pmo \ba\dcility 26.2 25.4 - \binancial lease lia\f\dilities3.9 5.3 4.5 gro\f\f \bebt745.1821.7719.5 less: cash, cash equ\divalents and \fank o\dverdra\bts (84.9) (80.3) (33.1) less: cash in cash co\dllateralised \fank \ba\dcilities (36.0) (37.0) - net \bebt624.2704.4686.4 equity 274.5 299.1 374.4 total \fapital 898.7 1,003.5 1,060.8 leverage ratio net de\ft 624.2 704.4 686.4 EBITDA 85.5 41.8 86.1 adjusted EBITDA 108.2 85.5 103.1 leverage ratio (net d\yebt / EBITDA)7.3016.857.97 leverage ratio (net d\yebt / adjusted EBIT\yDA) 5.77 8.\b4 6.66 \fapitalisation: fis\fal year \b016 \fomp\yared to fis\fal year \b015 At the end o\b 2016 \dthe Company’s total\d net de\ft was €624.\d2 million, which was\d €80.2 million lowe\dr compared to 2015, mainly due\d to the repayment o\d\b the Super Senior \drevolving credit \baci\dlity. The Company’s net l\deverage ratio, \fase\dd on adjusted EBITDA\d was 5.77x at year\d-end 2016, versus 8\d.24x at year- end 2015. At the end o\b 2016,\d HEMA had a total revo\dlving credit \bacility\d o\b €80.0 million a\dnd €6.8 million anci\dllary \bor \fank guarantees, leaving\d €73.2 million avai\dla\fle at year-end 2\d016. Including the ca\dsh \falances, HEMA had i\dn total €158.1 million o\b ca\dsh availa\fle. 30 \fapitalisation: fis\fal year \b015 \fomp\yared to fis\fal year \b014 The Company’s total\d net de\ft at year-e\dnd 2015 was €704.4 \dmillion versus 686.\d4 million at year-e\dnd 2014. The Company’s lever\dage ratio, \fased on \dadjusted EBITDA was\d 8.24x at year-end \d2015, versus 6.66x\d at year-end 2014. HEMA has a total Revo\dlving Credit Facilit\dy availa\fle o\b €80.\d0 million, excluding \doutstanding \fank gua\drantees. Including outstanding\d \fank guarantees o\b \d€3.5 million, the C\dompany had €0.5 mill\dion availa\fle at ye\dar-end 2015. Including the \dcash \falances, HEMA had \din total €80.8 mill\dion o\b cash availa\fl\de. 31 outlook \b017 We will continue to\d revitalise our st\dores in the Benelu\dx, expand our inter\dnational operation\ds in our current markets \fy opening n\dew stores and inves\dt in our internati\donal e-commerce plat\b\dorm to support its \dcontinuous growth. We will also retai\dn a strong \bocus on \dworking capital mana\dgement. Based on rece\dnt cash \blow and ear\dnings analyses we consider\d it likely that th\de Company will have\d su\b\bicient liquidity\d availa\fle througho\dut 2017 to \bul\bil its o\fligations and \dwill \fe a\fle to compl\dy with its \binancial\d covenants under its\d \binancing \bacilities\d. We continue to actively monitor \dthe Company’s liqui\ddity and investment \dneeds and consider \bi\dnancing options. We are convinced tha\dt our reshaped stra\dtegy will help us m\deet consumer expecta\dtions and make sure\d we are distinctively positi\doned in the market.\d Delivering on our \dmission and vision \do\b making daily li\be \deasier and more \bun \bor our customers\d will remain our to\dp priority. Board o\b Managing Di\drectors, Tjeerd Jegen, Chie\b \dExecutive O\b\bicer Ivo Vliegen, Chie\b \dFinancial O\b\bicer Amsterdam, the Nethe\drlands, April 13, 2\d017 6 flagship store Paris HEMA opened a new \blags\dhip store with no less than \dthree \bloors on one o\b the most \bamo\dus shopping streets in Paris: \dRue de Rivoli. MILESTONES 33 report from the supervisory board HEMA’s Supervisory Bo\dard is a corporate \f\dody responsi\fle \bor \dsupervising and advi\dsing the Board o\b Managing Directors i\dn per\borming its man\dagement tasks. In ca\drrying out its duti\des, the Supervisor\dy Board is guided \fy the intere\dsts o\b the Company \dand its \fusiness. The Supervisory Bo\dard has adopted rule\ds o\b procedure, inclu\dding a pro\bile as to\d its size and compos\dition. The Supervisory Bo\dard is responsi\fle \d\bor monitoring and a\dssessing its own pe\dr\bormance. compo\fition of the \T\fupervi\fory boar\b In accordance with it\ds rules o\b procedure\d, the Supervisory \dBoard aims \bor an ap\dpropriate com\finatio\dn o\b knowledge, experien\dce and expertise amo\dng its mem\fers in re\dlation to HEMA’s \fusin\dess. On April 13, 2015,\d Andrew Jennings wa\ds appointed as an a\ddditional mem\fer and \dchairman o\b the Supe\drvisory Board. Since April 1\d3, 2015 the Superv\disory Board consists\d o\b \bive mem\fers, two\d A- mem\fers, each rep\dresenting 2 votes, and three \dB mem\fers, each repre\dsenting 1 vote. On \dJuly 2, 2015 Mary \dMinnick stepped down\d \brom the Supervisory Board a\dnd was succeeded \fy Ja\dmes Cocker. On April\d 19, 2016 Ro\fert Da\drwent stepped down \d\brom the Supervisory Bo\dard at the end o\b hi\ds second \bour-year t\derm a\bter which he w\das reappointed \bor \danother \bour-year term. On \dApril 19, 2016 Dol\d\b Collee stepped dow\dn \brom the Supervis\dory Board at the en\dd o\b his second \bour-year term. On \dMay 18, 2016 Tanja\d Dik was appointed \das his successor wit\dh the enhanced recomm\dendation o\b the Works Council\d. The Supervisory Bo\dard consisted o\b the \d\bollowing mem\fers dur\ding 2016: namedate of birthdate of initial appointmentdate of possible reappointmentgendersupervisory board member Andrew JenningsSeptem\fer 17, 1948April 13, 2015\birst general meetin\dg a\bter April 13, 201\d9maleB, chairman since April 13, 2015 Ro\fert DarwentOcto\fer 12, 1972July 6, 2007\birst general meetin\dg a\bter April 19, 202\d0maleA, chairman until April 13, 2015 James CockerNovem\fer 22, 1982July 2, 2015\birst general meetin\dg a\bter July 2, 2019maleA Anders Mo\fergMarch 21, 1950April 8, 2009\birst general meetin\dg a\bter April 19, 201\d7maleB, chairman remunera\dtion & nomination committee Tanja DikDecem\fer 8, 1968May 18, 2016\birst general meetin\dg a\bter April 19, 202\d0\bemaleB, chairman audit com\dmittee since May 18, 2016 Mary MinnickNovem\fer 27, 1959July 6, 2007not applica\fle, step\dped down July 2, 2015\bemaleA Dol\b ColleeOcto\fer 24, 1952April 1, 2008not applica\fle stepp\ded down April 19, 2016\dmaleB, chairman audit com\dmittee until april 19, 20\d16 34 The Supervisory Bo\dard does not consist\d o\b at least 30% wo\dmen. The current mem\f\ders have \feen appoi\dnted \fased on their qual\dities, and they wer\de the \fest possi\fle\d candidates \bor the \b\dunction o\b Superviso\dry Board mem\fer at the time o\d\b appointment. In t\dhe \buture, as in th\de past, the Superv\disory Board will con\dtinue to consider \bemale candid\dates \bor the positi\don o\b Supervisory B\doard mem\fer o\b HEMA, as \dwell as male candidates, in case a\d new mem\fer needs to\d \fe appointed. meeting\f of the \fup\Tervi\fory boar\b In 2016 the Superv\disory Board held 8 \dmeetings either in \dperson or via con\ber\dence call. The mem\fer\ds o\b the Supervisory Board h\dave regular contact \dwith the CEO, CFO \dand other mem\fers o\b \dthe Management Boar\dd o\b HEMA outside the schedu\dled meetings o\b the \dSupervisory Board. activitie\f of the \f\Tupervi\fory boar\b The Supervisory Bo\dard devotes considera\d\fle time to discuss HEMA\d’s strategy with th\de Management Board o\b HEMA, including o\fject\dives, associated ris\dks and mechanisms \bor\d controlling \binancia\dl risks and corporat\de governance. Furtherm\dore, the Superviso\dry Board reviews an\dd approves quarterl\dy and annual \binanci\dal statements and annu\dal \fudgets. Other topics o\b discu\dssion included the a\dppointment, per\borma\dnce and remuneration\d o\b the Management Board, risk manageme\dnt, international \dexpansion, marketin\dg, e-commerce, \branchis\de, supply chain, \bin\dancing and cash \blow o\b HEMA. R\degular agenda items \dincluded the \binancia\dl and operational p\der\bormance, market share development a\dnd the general cours\de o\b \fusiness. member\f of the \fupe\Trvi\fory boar\b An\brew Jenning\f (194\T8) Mr. Andrew Jennings\d was \birst appointe\dd as mem\fer and chairm\dan o\b the Superviso\dry Board on April 1\d3, 2015 and has remained in \dthis position since\d then. Mr. Jennings has ov\der 45 years o\b expe\drience as an executi\dve in the retail s\dector. He has led so\dme o\b the world’s most \bamous \dand most prestigious\d department stores,\d such as Harrods and\d House o\b Fraser in\d London, Brown Thomas in Ire\dland, Holt Ren\brew \din Canada, Saks Fi\b\dth Avenue in the U\dS, Woolworths in S\douth A\brica and Karstadt in Germany\d. Mr. Jennings is k\dnown \bor his leader\dship and per\bormance-\ddriven management st\dyle. He has extensive e\dxpertise in consumer\d trends, sales netw\dorks and retail. In\d a world in which ev\derything is changing ever more ra\dpidly, he has a uni\dque a\fility to tran\dslate traditional o\dperating models into\d modern retailing. Mr. Jenn\dings is currently se\dnior retail advisor\d at Myer Department\d Stores in Austral\dia and Majid Al Futtaim Ventures in\d the Middle East. H\de is also a mem\fer o\d\b the PLC Board at \dTed Baker. Mr. Jenn\dings is a British citizen residing in \dthe United Kingdom. Robert Darwent (197\T2) Mr. Ro\fert Darwent \dwas \birst appointed\d as mem\fer and chairma\dn o\b the Supervisor\dy Board on July 6, \d 2007, and has remai\dned in this positio\dn since then. Mr. D\darwent was reappoi\dnted \fy the Annual \dMeeting o\b Shareholders in Apr\dil 2016. Mr. Darwent is a \bo\dunding partner o\b Li\don Capital. In the\d past Mr. Darwent \dwas employed \fy priv\date equity \birm Hicks, Muse, Tate &\d Furst and \fy the p\drivate equity group\d o\b Morgan Stanley.\d Mr. Darwent receiv\ded his BA and MA \brom Cam\fridge Uni\dversity. Mr. Darwe\dnt is a British cit\dizen residing in th\de United Kingdom. Jame\f Cocker (1982)\T Mr. James Cocker was\d appointed as mem\fer\d o\b the Supervisory\d Board on July 2, 2\d015, and has remain\ded in this position since then\d. Mr. Cocker is a par\dtner o\b Lion Capita\dl. Prior to joinin\dg Lion Capital, he \dwas employed \fy McKin\dsey & Company in London where he \d\bocused on the consum\der and retail sector\ds. Mr. Cocker receiv\ded his BA and MA \bro\dm Ox\bord University. \dMr. Cocker is a Bri\dtish citizen residin\dg in the United Kin\dgdom. 35 An\ber\f Moberg (1950)\T Mr. Anders Mo\ferg wa\ds \birst appointed a\ds mem\fer o\b the Supe\drvisory Board on Se\dptem\fer 1, 2009, an\dd was reappointed on Apri\dl 19, 2013. He has\d remained in this p\dosition since then.\d Mr. Mo\ferg is curren\dtly working as a con\dsultant. In the pa\dst Mr. Mo\ferg was a\dmongst others CEO o\d\b Majid Al Futtaim (MAF) Gr\doup LLC (one o\b the\d \figgest retailers i\dn the Middle East),\d CEO o\b Royal Ahold\d, President International o\b Ho\dme Depot and CEO o\b \dIKEA. Mr. Mo\ferg is\d a Swedish citizen r\desiding in Du\fai. Tanja Dik (1968) Mrs. Tanja Dik was\d appointed as mem\fer\d o\b the Supervisory\d Board on May 18, 2\d016 with the enhan\dced right o\b recommendation o\b the\d works counsel as s\duccessor o\b Mr. Coll\dee. Mrs. Dik has a\dlso succeeded Mr. Col\dlee as chairman o\b the Audit\d Committee. Mrs. Dik is Directo\dr Consumer Products \d& Services o\b Schiph\dol Group. Mrs. Dik\d received her master\d degree in Clinical Psychology \d\brom the University\d o\b Amsterdam and mas\dter degree in Busin\dess Administration \d\brom the University Nijenro\dde. Mrs. Dik is a D\dutch citizen residin\dg in the Netherland\ds. Dolf Collee (1952) Mr. Dol\b Collee was\d \birst appointed as\d mem\fer o\b the Super\dvisory Board on Apr\dil 1, 2008, and rea\dppointed on April 10, 2012.\d He has stepped dow\dn \brom the Supervis\dory Board on April \d19, 2016. The appo\dintment and reappointment o\b Mr\d. Collee was made i\dn accordance with the\d enhanced right o\b re\dcommendation o\b the works counsel. Mr. Collee was Cha\dirman o\b HEMA’s Audit C\dommittee. During the\d \binancial year Mr. \dCollee was CEO o\b A.F.C. Ajax N.V. I\dn the past Mr. Col\dlee was a mem\fer o\b \dthe Managing Board o\d\b ABN Amro Bank. Mr\d. Collee is a Dutch citizen residi\dng in the Netherlan\dds. Mary Minnick (1959\T) Ms. Mary Minnick wa\ds \birst appointed a\ds mem\fer and vice-chai\drman o\b the Supervi\dsory Board on July \d6, 2007, and was reappointed\d \fy the Annual Meet\ding o\b Shareholders \don April 10, 2012.\d Ms. Minnick steppe\dd down \brom the Supervisory Bo\dard on July 2, 2015\d. Ms. Minnick is a pa\drtner o\b Lion Capit\dal. In the past Ms\d. Minnick held vario\dus management and mar\dketing positions with the\d Coca-Cola Company. \dMs. Minnick is a dua\dl US and UK citizen.\d au\bit committee In 2011 the Superv\disory Board has \bou\dnded an Audit Committ\dee as a su\f-committee\d o\b the Supervisory\d Board. The Audit Committee \dhas adopted rules o\d\b procedures, includi\dng an overview o\b t\dasks and powers and\d in relation towards in\ddependent external \dauditor. The Audit Committee \dassists the Superv\disory Board in its \dresponsi\filities to\d oversee the \binanci\dng, \binancial statements, \binancia\dl reporting process,\d system o\b internal\d controls and risk m\danagement o\b HEMA. The \dChie\b Financial O\b\bicer is \dinvited to the Audi\dt Committee meetings\d, as well as other\d mem\fers o\b senior ma\dnagement and the independent \dexternal auditor wh\den the Audit Committ\dee deems it necessar\dy or appropriate. Mr. Collee acted as \dChairman o\b the Audi\dt Committee until h\dis resignation. Ms.\d Dik has succeeded Mr\d. Collee on May 18, 2016. D\during 2016 the Audi\dt Committee held \bou\dr meetings. During t\dwo meetings the inde\dpendent external auditor at\dtended to discuss the\d \bindings in relatio\dn to the audit on t\dhe \binancial stateme\dnt to express an opinion. Main topics discusse\dd during the meetings\d o\b the Audit Commit\dtee include quarterl\dy and annual \binanci\dal statements, the qua\dlity o\b the interna\dl control environmen\dt, tax, \binancing, t\dhe relationship wi\dth the \branchisees and internal and ex\dternal audits. 36 remuneration & nom\Tination committee In 2015 the Superv\disory Board has \bou\dnded a Remuneration \d& Nomination Committ\dee as a su\f-committee\d o\b the Supervisory Bo\dard. The Remuneration & \dNomination Committee\d assists the Super\dvisory Board in its\d responsi\filities t\do oversee the nomination and remun\deration o\b the Mana\dgement Board o\b HEMA. T\dhe Chie\b Executive O\d\b\bicer is invited to \dthe Remuneration & Nomi\dnation Committee mee\dtings, as well as o\dther mem\fers o\b seni\dor management when t\dhe Remuneration & Nomi\dnation Committee dee\dms it necessary or a\dppropriate. Mr. Mo\ferg acts as C\dhairman o\b the Remun\deration & Nominatio\dn Committee. During \d2016 the Remunerati\don & Nomination Committee\d held \bour meetings.\d Andrew Jennings, cha\dirman Ro\fert Darwent James Cocker Dol\b Collee Anders Mo\ferg Tanja Dik Amsterdam, the Nethe\drlands, April 13, 2\d017 37 7 opening of Cologne HEMA opened its \birst \d\blagship store in Germany, in the \dcity o\b Cologne. The opening o\b the \dCologne store also marks HEMA’s decis\dion to continue expansion \din Germany as part its overall e\dxpansion plans. MILESTONES 39 \forporate governan\fe HEMA has adopted the s\dtructure regime (gove\drnance rules applica\d\fle to large companie\ds in the Netherlan\dds). The Company’s articl\des o\b association ar\de availa\fle at the \dtrade register o\b th\de cham\fer o\b commerce a\dnd industry o\b Amsterda\dm. management boar\b HEMA’s \bormal \foard is \dthe Board o\b Managin\dg Directors, consist\ding o\b the CEO and t\dhe CFO. Operationa\dlly the Company is managed \fy\d its Management Boa\drd. In addition to t\dhe CEO and the CFO,\d the Management Boa\drd consists o\b seven ot\dher mem\fers: the Dir\dector o\b Buying & Me\drchandising Food & Ha\drd Goods, the Direct\dor o\b Buying & Merchandisi\dng Apparel, the Dir\dector o\b Internation\dal, the Director o\b \dthe Netherlands, th\de Director o\b HR, the Director o\b \dLogistics & Supply C\dhain and the Directo\dr o\b Format & Marke\dting. \fupervi\fory boar\b The Supervisory Bo\dard supervises the \dpolicies pursued \fy \dthe Board o\b Managin\dg Directors and the \dCompany’s general a\b\bairs and \dthe \fusiness connect\ded with it. The Sup\dervisory Board also\d assists the Board \do\b Managing Directors \fy providi\dng advice. In carryin\dg out its duties, t\dhe Supervisory Boa\drd is guided \fy the i\dnterests o\b the Company and its \fusi\dness. The Supervis\dory Board is suppor\dted in its work \fy \dthe Audit Committee \don speci\bic matters including \bin\dancial reporting, ri\dsk management, inter\dnal controls and adv\dising the Superviso\dry Board on the appointment \do\b the independent e\dxternal auditor o\b \dHEMA. The Supervisory\d Board is supported\d in its work \fy the Remuner\dation & Nomination \dCommittee on speci\bic\d matters with regar\dds to remuneration \dand nomination o\b senio\dr management. general meeting of \T\fharehol\ber\f HEMA’s shares are ult\dimately 100% held \fy\d Dutch Lion Coöpera\dtie\b U.A., an inves\dtment company which i\ds owned \fy several in\dvestment \bunds, advi\dsed \fy Lion Capital\d as its mem\fers. In \daddition, certain mem\d\fers o\b HEMA’s management have \dan indirect economic i\dnterest in Dutch Li\don Coöperatie\b U.A.\d ri\fk factor\f HEMA aims to increase t\dhe transparency o\b r\disk management to it\ds stakeholders \fy de\dscri\fing its risk management and contro\dl systems and procedu\dres, and has identi\d\bied key risks speci\d\bic \bor HEMA. ri\fk management an\b\T control \fy\ftem\f an\b \T proce\bure\f HEMA has implemented th\de \bollowing risk man\dagement and control s\dystems to create an \dappropriate control\d environment and to \dmonitor per\bormance c\dlosely: ■ an annual sign o\b\b \b\dor compliance to HEMA’s\d Code o\b Conduct \fy ma\dnagement and a select\dion o\b relevant personnel; ■ an internal certi\bic\dation procedure rela\dted to the \bair pre\dsentation o\b HEMA’s \bi\dnancial condition an\dd operations in the \dquarterly and annua\dl \binancial statemen\dts; ■ an authorisation p\dolicy with clear pro\dcurement authorisati\dons; ■ a whistle \flower po\dlicy to ena\fle emplo\dyees to anonymously\d report any miscondu\dct within the Compan\dy; 40 ■ a con\bidentiality & \ddisclosure policy an\dd an insider trading\d policy \bor people w\dith access to potent\dially \fond price sensitive\d in\bormation; ■ a \bormal planning an\dd control cycle, which\d includes the prepar\dation and approval \do\b a long-term \fusin\dess plan, annual \fudget,\d quarterly \borecast,\d monthly management \dreporting and weekl\dy KPI reports; ■ procedural manuals a\dnd an integrated, de\dtailed description o\d\b the accounting poli\dcies applied; ■ an in\bormation secur\dity policy; ■ control sel\b-assessm\dents \bor certain key\d parts o\b the \fusin\dess; ■ an internal Audit &\d Risk department, w\dhich conducts and assi\dsts with risk asse\dssments within the \dCompany and per\borms audits \don key areas in th\de \fusiness; ■ an annual monitorin\dg report to the Man\dagement Board on the\d \bollow up o\b recomme\dndations \brom internal and extern\dal audits. The Management Boar\dd reports on and acco\dunts \bor the intern\dal control environme\dnt and the risk management and contro\dl systems and procedu\dres within the Comp\dany to the Audit Co\dmmittee. The content\d and progress on the\d \bollow up o\b recomme\dndations \brom intern\dal and external aud\dits is annually re\dported to and discussed with\d the Audit Committee\d. The Audit & Risk \ddepartment plays an\d important role in \dproviding an o\fjective view an\dd ongoing a\b\birmation\d o\b the e\b\bectiveness\d o\b the overall int\dernal risk managemen\dt and control systems and \dprocedures. ri\fk profile We take strategic an\dd operational risks\d as a part o\b doing \d\fusiness. We want t\do promote entrepren\deurship and enter into new \d\fusinesses \fut monit\dor results closely.\d We seek to minimis\de compliance and \bina\dncial reporting risks. A \dsummary o\b principal \drisk \bactors which w\de currently consider\d material \bor HEMA is \dprovided \felow. \ftrategic ri\fk The implementation \do\b our strategy is \dsu\fject to the recru\ditment and retentio\dn o\b a strong manage\dment team a\fle to implement th\de a\borementioned str\dategy, general econo\dmic and \binancial condi\dtions in the countr\dies we operate, new an\dd stronger competitor\ds in speci\bic product \dgroups, price and pr\domotion management \fy\d our competitors, rap\didly changing consumer\d pre\berences, \bluctua\dtion o\b \boreign excha\dnge rates, prices o\b\d raw materials, such as c\dotton, oil prices, \dnew legislation in \dthe countries in wh\dich we and our suppl\diers operate and exposure to potent\dial negative pu\flici\dty. operational ri\fk Operations may \fe a\d\b\bected \fy disruptions\d in our IT systems,\d as a result o\b str\dikes or calamities a\dt our \bacilities. Unseasonal or seve\dre weather condition\ds are known to impa\dct sales. A signi\bica\dnt dependency on sup\dpliers outside the Europea\dn Union exposes us\d to a variety o\b re\dlated risks. In 201\d7 we will continue \dour e\b\borts to improve operational\d execution, shorten\d lead times and achie\dve more \blexi\fility \din vendor agreements\d to meet sudden changes i\dn customer demand. Ou\dr results o\b operat\dions can \fe impacted \d\fy amongst others shopli\bting, \braud, \dhigher la\for costs, \dpension \bund contri\fu\dtions and a rise in\d rental costs \bor ne\dw and expiring lease agreements. O\dther identi\bied prin\dcipal operational r\disk \bactors include r\disks associated with\d recruitment and retention o\b a \dstrong work\borce, ou\dr payment terms wit\dh suppliers, in\borm\dation security and o\dur \branchise structure. compliance ri\fk HEMA and its contract p\darties are su\fject t\do laws and regulati\dons related amongst \dothers to product sa\d\bety, health sa\bety, qual\dity, employee prote\dction, consumer prot\dection and the envir\donment. Non-complian\dce could lead to lia\fili\dty claims, \bines, clo\dsure o\b stores or \b\dacilities, delays, a\dn increase in compli\dance costs and reputational damage.\d We continuously st\drive to comply with \dlaws and regulation\ds, to avoid legal a\dction and, when necessary, res\dolve disputes. 41 financial ri\fk For a detailed descri\dption o\b \binancial r\disks, we kindly re\b\der you to note 26 \do\b the \binancial sta\dtements. financial reporting\T ri\fk Our \binancial statem\dents are prepared i\dn accordance with Int\dernational Financia\dl Reporting Standar\dds (‘IFRS’), as adopted \fy the Eu\dropean Union. Chan\dges in these standa\drds or interpretati\dons thereo\b, issued\d \fy standard- setting \fodies \bor I\dFRS, may adversely \dimpact our reported \d\binancial results or\d position. The new\d standard \bor leases (IFRS 16) w\dill have a signi\bica\dnt impact on HEMA’s \bin\dancial statements. F\dor HEMA B.V. this new\d standard is e\b\bective \brom Januar\dy 2019, thus \binanci\dal reporting year 2\d019 which starts at\d Fe\fruary 6, 2019. \d(Please re\ber to note 2.1.1) The Management Boar\dd and management are \dresponsi\fle \bor deve\dloping and testing i\dnternal risk management and monito\dring systems designe\dd to identi\by signi\bi\dcant risks, monitor \dthe achievement o\b t\dargets and ensure compliance\d with relevant legi\dslation and regulat\dions. The Managemen\dt Board \fears ultima\dte responsi\fility \bor \ddetermining the maxi\dmum accepta\fle level \do\b risk. HEMA has adop\dted the structure re\dgime (governance rules ap\dplica\fle to large com\dpanies in the Neth\derlands). The Compa\dny’s articles o\b ass\dociation are availa\fle at th\de trade register o\b \dthe cham\fer o\b commerce\d and industry o\b Ams\dterdam. 8 50 th store Fran\fe HEMA opened its 50th store in France. The 420 squ\dare meter store is located in l’Au\fe\dtte shopping centre in the centre\d o\b Stras\fourg. MILESTONES 43 finan\fial statements The accompanying note\ds on pages 50 to 95\d are an integral pa\drt o\b these consolid\dated \binancial state\dments. 44 \fonsolidated in\fome s\ytatement from February 1, 2\T016 up to an\b inclu\bi\Tng January 29, 2017\T (in million euros) note201620152014 net \fale\f5/6 1,193.2 1,139.3 1,077.2 cost o\b sales7 (657.4) (658.1) (586.0) gro\f\f profit 535.8 481.2 491.2 operating expenses8 (506.9) (497.8) (582.6) operating re\fult 28.9 (16.6) (91.4) \binancial expenses9 (56.0) (55.6) (96.7) \binancial income9 1.2 1.9 0.4 re\fult before incom\Te taxe\f (25.9) (70.3) (187.7) income taxes10 (0.3) (2.2) (1.5) net result (\b6.\b) (7\b.5) (189.\b) attributable to shareholder (26.2) (72.5) (189.2) net result (\b6.\b) (7\b.5) (189.\b) The accompanying note\ds on pages 50 to 95\d are an integral pa\drt o\b these consolid\dated \binancial state\dments. 45 \fonsolidated statemen\yt of \fomprehensive in\y\fome from February 1, 2\T016 up to an\b inclu\bi\Tng January 29, 2017\T (in million euros) note20162015 net re\fult (26.2) (72.5) other comprehen\five\T income item\f that will not \Tbe recla\f\fifie\b to p\Trofit an\b lo\f\f remeasurements on p\dost-employment \fene\b\dit o\fligations18 - - tax e\b\bect on remeasu\drements on post-emp\dloyment \fene\bit o\fligations18 - - item\f that may \fub\fe\Tquently be recla\f\fif\Tie\b to profit an\b lo\T\f\f cash \blow hedges18 2.1 (3.8) other reserves18 - (0.2) tax e\b\bect relating o\dn these items18 (0.5) 0.8 other comprehen\five\T (lo\f\f) / income for\T the year, net of \Ttax 1.6 (3.2) total comprehen\five\T lo\f\f for the year (24.6) (75.7) attributable to shareholder (24.6) (75.7) total \fomprehensive l\yoss for the year (\b4.6) (75.7) The \bigures present\ded a\fove are disclose\dd net o\b tax. Re\ber \dto note 10 \bor more\d in\bormation on inco\dme taxes. The accompanying note\ds on pages 50 to 95\d are an integral pa\drt o\b these consolid\dated \binancial state\dments. 46 \fonsolidated statemen\yt of finan\fial posit\yion a\f at January 29, 2\T017 (in million euros, \da\bter appropriation\d o\b current year res\dult) note January 29 2017 January 31 2016 a\f\fet\f property, plant an\dd equipment11150.3169.0 intangi\fle assets121,033.51,040.0 other non-current a\dssets134.93.4 total non-current a\T\f\fet\f 1,188.71,212.4 inventories14147.9156.3 trade and other rece\diva\fles1549.758.7 other current \binanc\dial assets16 40.2 38.6 current tax assets10 0.8 - cash and cash equiva\dlents1784.981.0 total current a\f\fet\f\T 323.5334.6 total assets 1,51\b.\b1,547.0 share capital18 0.0 0.0 share premium18 629.6 629.6 other reserves18 2.2 0.6 retained earnings a\dnd net result \bor t\dhe year18 (357.3) (331.1) total equity 274.5 299.1 liabilitie\f \forrowings19730.3726.1 other non-current \bi\dnancial lia\filities2017.819.2 employee \fene\bits214.95.4 de\berred tax lia\fili\dties1098.698.6 provisions - long-t\derm22 4.7 9.2 total non-current l\Tiabilitie\f 856.3858.5 trade and other pay\da\fles23368.0296.3 \forrowings19 - 76.0 \fank overdra\bts17 - 0.7 other current \binanc\dial lia\filities247.910.3 current tax lia\filit\dies10 0.5 1.5 provisions - short\d term22 5.0 4.6 total current liabi\Tlitie\f 381.4389.4 total equity and lia\ybilities 1,51\b.\b1,547.0 The accompanying note\ds on pages 50 to 95\d are an integral pa\drt o\b these consolid\dated \binancial state\dments. 47 \fonsolidated statemen\yt of \fhanges in equit\yy from February 1, 2\T016 up to an\b inclu\bing January 2\T9, 2017 attributable to the\T \fharehol\ber\f (in million euros)note\fhare capital \fhare premium other re\ferve\f retaine\b earning\f total equity balance a\f of Febru\Tary 1, 2015 0.0 629.6 4.4 (259.6) 374.4 comprehen\five incom\Te net result \bor the \dyear - - - (72.5) (72.5) other comprehen\five\T income - cash \blow hedges, net\d o\b tax18 - - (3.0) - (3.0) change in other rese\drves18 - - (0.8) 1.0 0.2 total comprehen\five\T income - - (3.8) (71.5) (75.3) tran\faction\f with ow\Tner\f share premium contri\d\fution18 - - - - - change in other rese\drves18 - - - - - total transa\ftions w\yith owners ­ ­ ­ ­ ­ balance a\f of Janua\Try 31, 2016 0.0 629.6 0.6 (331.1) 299.1 comprehen\five incom\Te net result \bor the \dyear - - - (26.2) (26.2) other comprehen\five\T income - cash \blow hedges, net\d o\b tax18 - - 1.6 - 1.6 change in other rese\drves18 - - - - - total comprehen\five\T income - - 1.6 (26.2) (24.6) balan\fe as of Januar\yy \b9, \b017 0.0 6\b9.6 \b.\b (357.3) \b74.5 The accompanying note\ds on pages 50 to 95\d are an integral pa\drt o\b these consolid\dated \binancial state\dments. 48 \fonsolidated statemen\yt of \fash flow from February 1, 2\T016 up to an\b inclu\bi\Tng January 29, 2017\T (in million euros) note201620152014 ca\fh flow from opera\Tting activitie\f result \fe\bore income \dtaxes(25.9) (70.3) (187.7) provisions recognise\dd in the income stat\dement22 0.4 18.5 10.1 \binance costs recognis\ded in the income sta\dtement9 54.8 53.7 96.3 depreciation, amorti\dsation and impairmen\dt o\b non-current assets8 56.6 58.4 177.5 operating ca\fh befo\Tre change\f in worki\Tng capital 85.9 60.3 96.2 movement\f in workin\Tg capital, provi\fio\Tn\f an\b other ■ decrease / (increase\d) in trade and othe\dr receiva\fles15 9.0 9.9 (5.1) ■ decrease / (increase\d) in inventories14 8.4 30.6 (39.3) ■ (decrease) / increas\de in trade and othe\dr paya\fles23 71.7 (24.2) (15.9) ■ decrease in provisio\dns21/22 (4.5) (7.5) (9.9) ■ change in other asse\dts / lia\filities (7.5) (1.8) (2.2) ca\fh generate\b from\T operation\f 163.0 67.3 23.8 Income taxes receive\dd / (paid) (1.7) 0.4 1.0 net \fash generated by \yoperating a\ftivities\y 161.3 67.7 \b4.8 ca\fh flow from inve\f\Tting activitie\f purchase o\b property\d, plant & equipment\d11(24.1) (20.2) (28.5) purchase o\b intangi\fl\de assets12 (5.6) (8.2) (6.9) net \fash used in inves\yting a\ftivities (\b9.7) (\b8.4) (35.4) 49 from February 1, 2\T016 up to an\b inclu\bi\Tng January 29, 2017\T (in million euros) note201620152014 ca\fh flow from finan\Tcing activitie\f interest paid9 (50.8) (51.1) (45.4) interest received9 - - 0.1 payments \bor \binancia\dl leases21 (1.2) (1.2) (1.2) repayments o\b \forrow\dings19 - - (783.3) senior (secured) not\des proceeds loans19 - - 715.0 super senior PMO \ba\dcility19 - 25.0 - super senior revol\dving credit \bacility19 (76.0) 76.0 - \binance \bees paid19 - (3.8) (18.7) cash collateralised \d\fank \bacility*16 1.0 (37.0) - net ca\fh u\fe\b in fin\Tancing activitie\f (127.0) 7.9 (133.5) net (decrease)/incre\dase in cash, cash eq\duivalents and \fankoverdra\bts 4.6 47.2 (144.1) cash, cash equivalen\dts and \fankoverdra\bt\ds at the \feginning o\b the year17 80.3 33.1 175.9 exchange gains on cas\dh and cash equivalen\dts - - 1.3 \fash, \fash equivalent\ys and bank overdraft\ys at the end of the year17 84.9 80.3 33.1 *) The 36.0 million\d o\b cash collaterali\dsed \fank \bacilities a\dre reported under cu\drrent \binancial asse\dts. 50 notes to the \fonsolid\yated finan\fial statem\yents (all amounts in mil\dlion euros, unless\d otherwise stated) 1 the Company an\b it\f\T operation\f HEMA B.V. (‘HEMA’ or the\d ‘Company’) is a li\dmited lia\fility compa\dny with its registe\dred seat and suppor\dt o\b\bice in Amsterdam, the Nethe\drlands. The principal activi\dties o\b the Company\d are retail operat\dions in the Nether\dlands, Belgium, Luxe\dm\fourg, Germany, France, Spa\din and the UK. The \dactivities o\b HEMA are \dsu\fject to seasonal \din\bluences. HEMA’s \fusi\dness generally experience\ds an increase in ne\dt sales in the \bour\dth quarter o\b each y\dear. HEMA’s shares are 100\d% held \fy Dutch Lion\d B.V., an intermedi\date holding company. \dDutch Lion B.V.’s s\dhares are 100% held \fy Du\dtch Lion Coöperatie\d\b U.A. (‘Dutch Lion \dCoop’), an investme\dnt company which is \downed \fy several investment \d\bunds advised \fy Lion\d Capital. The \bollowing parti\des are a mem\fer o\b D\dutch Lion Coop and t\dhe ultimate controll\ding party: ■ Lion Capital (Guer\dnsey) II Limited; ■ Lion Capital Fund I\dI L.P.; ■ Lion Capital Fund I\dI B L.P.; ■ Lion Capital Fund I\dI SBS L.P.; ■ Stichting Administrat\diekantoor Dutch Lio\dn A; ■ Stichting Administrat\diekantoor Dutch Lio\dn B; ■ Dutch Lion Managemen\dt B.V. (Dutch Lion \dManagement B.V. is \da su\fsidiary o\b and \dultimately owned \fy \d Stichting Administrat\diekantoor Dutch Lio\dn C). 2 \fignificant account\Ting policie\f 2.1 ba\fi\f of preparatio\Tn The consolidated \bina\dncial statements hav\de \feen prepared in \daccordance with Inter\dnational Financial \d Reporting Standards \d(‘IFRS’) as endorse\dd \fy the European U\dnion. The \binancial in\borma\dtion relating to HEMA \dis presented in the\d consolidated \binanci\dal statements. Accor\ddingly, in accordance with se\dction 402, part 9, \d\fook 2 o\b the Dutch \dCivil Code (‘B2 DCC\d’), the Company \bin\dancial statements only cont\dain an a\fridged income\d statement. The consolidated \bina\dncial statements hav\de \feen prepared on \dthe historical cost \dconvention, except \b\dor the revaluation o\b \bina\dncial instruments. T\dhe principal accounti\dng policies are set \dout \felow. The preparation o\b \d\binancial statements\d in con\bormity with \dIFRS requires the \duse o\b certain criti\dcal accounting estimates. It also \drequires management \dto exercise its judg\dement in the process\d o\b applying the gro\dup’s accounting policies. \dThe areas involvin\dg a higher degree o\b \djudgement or complexi\dty, or areas where\d assumptions and est\dimates are signi\bican\dt to the consolidate\dd \binancial statement\ds are disclosed in n\dote 3. HEMA’s reporting calend\dar is \fased on 12 p\deriods o\b \bour weeks\d or \bive weeks. The\d \binancial year is a\d 52- or 53- week year ending on\d the Sunday nearest\d to January 31. Fi\dnancial year 2016 co\dnsists o\b 52 weeks \dand ended on January 29, 2017. \dThe compara\fle \binanc\dial year 2015 consi\dsted o\b 52 weeks an\dd ended on January 3\d1, 2016. change\f pre\fentatio\Tn or cla\f\fification I\b HEMA changes the pre\dsentation or classi\d\bication o\b items in \dthe \binancial statem\dent, the comparative\d amounts are reclassi\bied unless reclassi\bication is impractical. HEMA shall disclose (including as at the \feginning o\b the preceding peri\dod): ■ The nature o\b reclas\dsi\bication; 51 ■ The amount o\b each i\dtem or class o\b items\d that is classi\bied;\d and ■ The reason \bor the \dreclassi\bication. going concern Considering the curr\dent operating per\bo\drmance, the liquidit\dy position o\b HEMA B.V\d. and anticipated cas\dh and earning developments\d \bor the coming year,\d management \felieves\d the going concern as\dsumption \bor this annual report is a\dppropriate. Management monitors \dcash and liquidity \bo\drecasts on a detaile\dd \fasis. The liquidi\dty \borecast \bor the \dupcoming 12 months shows tha\dt the Company is cap\da\fle o\b continuing it\ds \fusiness activitie\ds, as well as real\dising its investments plans. \dThe cash\blow \borecast\d is \fased on the sa\dme growth and pro\bit\da\fility assumptions\d as the goodwill impairment \dtest (\bor assumptio\dns applied, re\ber t\do note 12). The Company’s cash c\dycle \bollows that o\b\d a typical retailer\d with seasonal cash\d generation weighte\dd towards Q4 in light o\b signi\d\bicant upli\bt \brom Si\dnterklaas and Chris\dtmas sales. Peak cas\dh \falance has \feen r\deached historically towards\d the end o\b the \bina\dncial year \bollowing\d Decem\fer trading, wi\dth lowest cash \falan\dce typically occurring M\day through Septem\fer\d. Most trade and cos\dt creditor payments \dare paid on the 8th day o\b each calendar mont\dh. De\ft service paym\dents under the curre\dnt capital structure\d peak during June a\dnd Decem\fer. Cash inter\dest on \foth Senior \dSecured Fixed Rate N\dotes and Senior Not\des are paid semi-an\dnually; Senior Secured Float\ding Rate Notes cash \dinterest expenses \dare paid quarterly.\d During the months w\dith the lowest cash\d \falances (typically\d May through Septem\d\fer), a signi\bicant s\dhort\ball in sales and/or a mate\drial reduction in pa\dyment terms, could dr\dive the company to e\dxplore additional s\dources o\b \binancing. The Company continue\ds to actively monito\dr its liquidity and\d investment needs a\dnd consider its \binan\dcing options. \b.1.1 \fhanges in a\f\founting \ypoli\fies and dis\flos\yures (a) \ftan\bar\b\f an\b int\Terpretation\f effect\Tive in the current\T year In the current year\d the Company has ad\dopted the \bollowing \damendments to Intern\dational Financial R\deporting Standards: ■ Amendment IAS 1, Pre\dsentation o\b \binanci\dal statements’ discl\dosure initiative ■ Annual improvements\d 2012: These annua\dl improvements amend\d the standards \brom \dthe 2010-2012 repo\drting cycle. It includes cha\dnges to IFRS 2, IFR\dS 3, IFRS 8, IFRS \d13, IAS 16 and IAS \d24. ■ Annual improvements\d 2014: These annua\dl improvements amend\d the standards \brom \dthe 2012-2014 repo\drting cycle. It includes cha\dnges to IFRS 5, IFR\dS 7, IAS 19 and IAS\d 34. O\b which only I\dAS 19 is applica\fle.\d ■ Amendment to IAS 19,\d ‘Employee \fene\bits’\d regarding employee \dor third party contr\di\futions to de\bined \d \fene\bit plans. ■ Amendment IFRS 10, ‘\dconsolidated \binancia\dl statements” and I\dAS 28, ‘Investments\d in associates and j\doint ventures’ on apply\ding the consolidatio\dn exemption. These amendments do \dnot have a material\d impact on the \binan\dcial statements. b) Stan\bar\b\f, amen\bm\Tent\f an\b interpreta\Ttion\f to exi\fting \ft\Tan\bar\b\f that are not\T yet effective, ha\Tve not been early a\bopte\b b\Ty the Cooperative \Tan\b are en\bor\fe\b by \Tthe European Union\T: The \bollowing standa\drds have \feen pu\flis\dhed and are not yet\d e\b\bective: ■ IFRS 9: Financial I\dnstruments (e\b\bective\d 1 January 2018). The Company does no\dt expect the new gui\ddance to have a sign\di\bicant impact on the\d classi\bication and measurement o\b its \b\dinancial assets. Th\dere will \fe no impa\dct on the accounting \d\bor \binancial lia\fili\dties, as the new requirement\ds only a\b\bect the acco\dunting \bor \binancial \dlia\filities that ar\de designated at \bair\d value through pro\bit or l\doss and HEMA does not \dhave any such lia\fil\dities. The derecogni\dtion rules have \fee\dn trans\berred \brom IAS\d 39 Financial Instr\duments: Recognition \dand Measurement and \dhave not \feen change\dd. The new hedge account\ding rules under IFR\dS 9 will align the \daccounting \bor hedging\d instruments more closely with the gro\dup’s risk management\d practices. While th\de Company is yet to\d undertake a detail\ded assessment, it woul\dd appear that the cu\drrent hedge relatio\dnships would quali\b\dy as continuing hedge\ds upon 52 the adoption o\b IFR\dS 9. Accordingly, the\d group does not exp\dect a signi\bicant imp\dact on the accounting\d \bor its hedging relation\dships. The Company does no\dt intend to adopt I\dFRS 9 \fe\bore its man\ddatory date. ■ IFRS 15: Revenue \br\dom contract with cust\domers (e\b\bective 1 Ja\dnuary 2018). The new standard is\d \fased on the princi\dple that revenue i\ds recognised when con\dtrol o\b a good or se\drvice trans\bers to a custo\dmer. Management is cu\drrently assessing t\dhe e\b\bects o\b applyin\dg the new standard on the \binancial sta\dtements, \fut IFRS 1\d5 is not expected to\d have a material im\dpact as the majority\d o\b the sales relate to cou\dnter sales. It is \donly expected to hav\de immaterial e\b\bect o\dn accounting \bor ‘mor\de HEMA’ loyalty programme an\dd the re\bunds to cust\domers. The Company \ddoes not intend to \dadopt IFRS 15 \fe\bore\d its mandatory date. ■ IFRS 16: Leases (e\d\b\bective 1 January 2\d019). IFRS 16 will have \da signi\bicant impact \don the \binancial sta\dtements o\b HEMA. The s\dtandard will a\b\bect p\drimarily the accounting \bor HEMA’\ds operating leases \das the standard eli\dminates the classi\bi\dcation o\b leases as \deither operating leases or\d \binance leases \bor \da lessee. The leas\des are ‘capitalised’\d \fy recognising the p\dresent value o\b the lease \dpayments and showin\dg them as lease ass\dets (right-o\b-use a\dssets). Accordingly, \di\b lease payments are made ov\der time, a company a\dlso recognises a \bin\dancial lia\fility rep\dresenting its o\fliga\dtion to make \buture leas\de payments. The \bin\dancial lease lia\fili\dty will increase gro\dss and net de\ft sign\di\bicantly which has impact on \dmeasures such as lev\derage ratios. Moreo\dver, IFRS 16 repla\dces the straight-lin\de operating lease exp\dense under IAS 17 w\dith: a. a depreciation charge\d \bor the lease asse\dt (operating costs);\d and \f. an interest expens\de (\binance costs) on\d the lease lia\filit\dy. Although the depreci\dation charge is typi\dcally even, the int\derest expense reduce\ds over the li\be o\b \dthe lease as lease payments a\dre made. This resul\dts in a reducing tot\dal expense as an i\dndividual lease matu\dres. The \bairly straight-lin\de operating expense\d will \fe replaced \fy \ddepreciation o\b the \dright-to-use asset \dand interest on the lia\fility, u\dnder IFRS 16, \foost\ding per\bormance measu\dres such as EBITDA.\d The accounting \bor l\dessors will not signi\bicant\dly change. As at the reportin\dg date, the group ha\ds non-cancella\fle op\derating lease commitm\dents o\b €728.7 mill\dion, see note 29. Howev\der, HEMA has not yet \ddetermined to what e\dxtent these commitmen\dts will result in \dthe recognition o\b an as\dset and a lia\fility\d \bor \buture payments\d and how this will \da\b\bect the group’s pr\do\bit and classi\bication o\b cash\d \blows. Some o\b the \dcommitments may \fe cov\dered \fy the exceptio\dn \bor short-term and low-value lease\ds and some commitments\d may relate to arra\dngements that will \dnot quali\by as leas\des under IFRS 16. The Company is in t\dhe process o\b evalua\dting the \bull impact \do\b these new standa\drds. At this stage,\d the Company does not in\dtend to adopt the s\dtandards \fe\bore its \de\b\bective date. 2.2 ba\fi\f of con\foli\batio\Tn Su\fsidiaries are al\dl entities (includin\dg structured entitie\ds) over which the C\dompany has control. \dThe Company controls an entity \dwhen the Company is\d exposed to, or has\d rights to, varia\fl\de returns \brom its \dinvolvement with the entity and has \dthe a\fility to a\b\bect\d those returns thr\dough its power over\d the entity. Su\fsidiaries are \bul\dly consolidated \brom \dthe date on which co\dntrol is trans\berre\dd to the Company. T\dhey are deconsolidated \brom th\de date that control \dceases. Intercompany transac\dtions, \falances and \dunrealised gains on\d transactions \fetwee\dn companies are eliminated. Unreali\dsed losses are also\d eliminated. When necessary, amou\dnts reported \fy su\fs\didiaries have \feen \dadjusted to con\borm w\dith the Company’s accounting policies. The consolidated sta\dtement o\b cash \blow h\das \feen prepared us\ding the indirect meth\dod. Cash \blows in \bo\dreign currencies are resta\dted into euros at a\dverage rates. HEMA’s su\fsidiaries ar\de listed in note 32\d. 53 2.3 foreign currency t\Tran\flation fun\ftional and present\yation \furren\fy Items included in the\d \binancial statement\ds o\b each o\b the Comp\dany’s entities are\d measured using the \dcurrency o\b the primary econo\dmic environment in w\dhich the entity ope\drates (‘the \bunction\dal currency’). The co\dnsolidated \binancial statements\d are presented in E\duro, which is the C\dompany’s \bunctional \dand presentation cur\drency. transa\ftions and bal\yan\fes Foreign currency tra\dnsactions are trans\dlated into the \bunct\dional currency using\d an average rate th\dat approximates the act\dual rate at the dat\de o\b the transaction\d. Whenever exchange \drates \bluctuate sign\di\bicantly, the exchange rates p\drevailing at the da\dtes o\b the transacti\dons are used. Forei\dgn exchange gains and\d losses resulting \brom the s\dettlement o\b such tr\dansactions and \brom t\dhe translation at \dyear-end exchange ra\dtes o\b monetary assets and\d lia\filities denomin\dated in \boreign curre\dncies are recognised \din the income statem\dent, except when de\berred \din the hedge reserv\de in equity as qua\dli\bying cash \blow hed\dges. group \fompanies Some su\fsidiaries ha\dve a \bunctional curr\dency that is di\b\beren\dt \brom the presenta\dtion currency. None \do\b these entities has a curr\dency o\b a hyperin\bla\dtionary economy. The\d results and \binanci\dal position o\b all \dthese entities that have a \bunction\dal currency di\b\berent\d \brom the presentat\dion currency are tra\dnslated into the pr\desentation currency as \bollows:\d ■ assets and lia\filit\dies \bor each \falance \dsheet presented are\d translated at the \dclosing rate at the \ddate o\b that \falance sheet; ■ income and expenses \d\bor each income state\dment are translated\d at average exchange\d rates (unless this average is not\d a reasona\fle appro\dximation o\b the cumul\dative e\b\bect o\b the r\dates prevailing on \dthe transaction dates, i\dn which case income a\dnd expenses are tra\dnslated at the rate\d on the dates o\b th\de transactions); and ■ all resulting exchan\dge di\b\berences are re\dcognised in other com\dprehensive income an\dd accumulated in equity. 2.4 net \fale\f HEMA generates and reco\dgnises net sales to\d retail customers at\d the point o\b sale \din its stores and u\dpon delivery o\b products \dto internet customer\ds. HEMA also generates\d revenues \brom the \dsale o\b products to \dretail \branchisees, which a\dre recognised upon de\dlivery. HEMA recognises\d \branchise \bees as r\devenue when all material services re\dlating to the contra\dct have \feen su\fstan\dtially per\bormed. Di\dscounts earned \fy cus\dtomers are recognised as a \dreduction o\b sales a\dt the time o\b the s\dale. Generally, ne\dt sales and cost o\b \dsales are recorded \fased on the\d gross amount receiv\ded \brom the customer \d\bor products sold and\d the amount paid to\d the vendor \bor produ\dcts purchased. Howev\der, \bor certain prod\ducts or services, su\dch as the sale o\b in\dsurance contracts and customis\ded photo \fooks, HEMA a\dcts as an agent and \dconsequently records\d the amount o\b commission income in \dits net sales. Net\d sales exclude value\d-added taxes. 2.5 co\ft of \fale\f Cost o\b sales includ\des the net purchase\d price o\b the product\ds sold and other cos\dts incurred in \fringi\dng the inventories to the\dir present location\d and condition. Thes\de costs include costs\d o\b purchasing, styl\ding, quality control, storing, re\dnt, salaries and tr\dansporting products \dto the extent it r\delates to \fringing t\dhe inventories to \d their present locat\dion and condition. T\dhe depreciation cost\ds are allocated to t\dhe inventory, howe\dver when the inventory is sold t\dhe depreciation cost\ds (o\b the costs ment\dioned a\fove) are re\dcorded under depreciat\dion and not under the cost o\d\b sales. 2.6 finance co\ft Finance cost covers a\dll interest income a\dnd expense attri\fut\da\fle to the reporti\dng year on a time- proportionate \fasis\d, \fy re\berence to th\de principal outstan\dding and at the e\b\bect\dive interest rate \dapplica\fle. This item also inclu\ddes gains and losses\d on hedging activitie\ds and amortisation \do\b capitalised \binanc\ding costs. 54 2.7 income taxe\f Income tax expense r\depresents the sum o\d\b the tax currently \dpaya\fle and de\berred \dtax. \furrent tax The tax currently p\daya\fle is \fased on t\daxa\fle pro\bit \bor th\de year. Taxa\fle pro\d\bit di\b\bers \brom pro\bi\dt as reported in the consolidated \dincome statement \feca\duse it excludes item\ds o\b income or expen\dse that are taxa\fle\d or deducti\fle in other y\dears and it \burther\d excludes items that\d are never taxa\fle \dor deducti\fle. The Co\dmpany’s lia\fility \bor curren\dt tax is calculated \dusing tax rates tha\dt are applica\fle \bor\d the year. deferred tax De\berred tax is reco\dgnised on di\b\berences \d\fetween the carrying\d amounts o\b assets \dand lia\filities in \dthe consolidated \binancia\dl statements and th\de corresponding tax \d\fases used in the co\dmputation o\b taxa\fle\d pro\bit, and is accoun\dted \bor using the \fa\dlance sheet lia\filit\dy method. De\berred t\dax lia\filities are \dgenerally recognised \bor all ta\dxa\fle temporary di\b\be\drences, and de\berred \dtax assets are gene\drally recognised \bor \dall deducti\fle temporary \ddi\b\berences to the ex\dtent that it is pr\do\fa\fle that taxa\fle \dpro\bits will \fe ava\dila\fle against which those deducti\fl\de temporary di\b\beren\dces can \fe utilised. \dSuch assets and lia\f\dilities are not re\dcognised i\b the temporary di\b\d\berence arises \brom g\doodwill or \brom the \dinitial recognition \d(other than in a \fu\dsiness com\fination) o\b other\d assets and lia\fili\dties in a transacti\don that a\b\bects neit\dher the taxa\fle pro\d\bit nor the accounting pro\bit. The carrying amount \do\b de\berred tax asse\dts is reviewed at e\dach \falance sheet dat\de and reduced to the \dextent that it is no longe\dr pro\fa\fle that su\b\b\dicient taxa\fle pro\bi\dts will \fe availa\fl\de to allow all or \dpart o\b the asset t\do \fe recovered. De\berred tax assets\d and lia\filities ar\de measured at the t\dax rates that are \dexpected to apply in\d the year in which the lia\fility \dis settled or the a\dsset realised, \fase\dd on tax rates (and\d tax laws) that ha\dve \feen enacted or su\fstantively en\dacted \fy the \falance \dsheet date. The mea\dsurement o\b de\berred \dtax lia\filities and\d assets re\blects the tax con\dsequences that woul\dd \bollow \brom the man\dner in which the Co\dmpany expects, at th\de reporting date, to \drecover or settle t\dhe carrying amount o\d\b its assets and li\da\filities. De\berred tax assets\d and lia\filities ar\de o\b\bset when there\d is a legally en\bor\dcea\fle right to set \do\b\b current tax assets against curre\dnt tax lia\filities \dand when they relat\de to income taxes le\dvied \fy the same tax\dation authority and the C\dompany intends to s\dettle its current t\dax assets and lia\fi\dlities on a net \fas\dis. \furrent and deferred t\yax for the year Current and de\berred\d tax are recognised \das an expense or i\dncome in the income s\dtatement, except whe\dn they arise \brom the\d initial accounting \d\bor a \fusiness com\fin\dation. In the case \do\b a \fusiness com\fina\dtion, the tax e\b\bect is taken \dinto account in calcu\dlating goodwill or i\dn determining the ex\dcess o\b the acquirer\d’s interest in the net \bair val\due o\b the acquiree’s\d identi\bia\fle assets\d, lia\filities and co\dntingent lia\filitie\ds over the cost o\b t\dhe \fusiness com\fination.\d 2.8 property, plant an\b\T equipment Items o\b property, \dplant and equipment\d are stated at cost \dless accumulated depr\deciation and impairme\dnt losses. Cost include\ds expenditures that\d are directly attri\f\duta\fle to the acquis\dition or constructio\dn o\b an asset. Su\fsequent expendit\dures are capitalise\dd only when it is p\dro\fa\fle that \buture \deconomic \fene\bits ass\dociated with the item will \d\blow to the Company\d and the costs can \fe\d measured relia\fly. \dAll other su\fsequen\dt expenditures repres\dent repairs and mai\dntenance and are exp\densed as incurred. Depreciation is comp\duted using the stra\dight-line method \fas\ded on the estimated \duse\bul lives o\b the\d items o\b property, plant an\dd equipment, taking \dinto account the est\dimated residual valu\de. Where an item o\b\d property, plant and equipment\d comprises major comp\donents having di\b\ber\dent use\bul lives, e\dach such part is dep\dreciated separately. The as\dsets’ use\bul lives \dare reviewed, and a\ddjusted i\b appropria\dte, at each \falance \dsheet date. 55 The estimated use\bul\d lives o\b property,\d plant and equipmen\dt are: leasehold improvemen\dts10 years technical installati\dons10 years hardware3 – 5 years \burniture & \bixture\ds7 years trucks & cars7 years Assets that are ex\dpected to have a sho\drter use\bul li\be ar\de depreciated in thi\ds shorter period. Depreciation o\b asse\dts su\fject to \binance\d leases and leaseho\dld improvements is ca\dlculated on a straig\dht-line \fasis over either t\dhe lease or the es\dtimated use\bul li\be \do\b the asset, whiche\dver is shorter. 2.9 lea\fing Leases are classi\bie\dd as \binance leases \dwhenever the terms \do\b the lease trans\b\der su\fstantially al\dl the risks and rewards o\b ownershi\dp to the lessee. A\dll other leases ar\de classi\bied as oper\dating leases. Assets held under \bi\dnance leases are in\ditially recognised a\ds assets o\b HEMA at th\deir \bair value at t\dhe inception o\b the lease or, i\b\d lower, at the pre\dsent value o\b the m\dinimum lease payment\ds. The corresponding\d lia\fility to the lessor is included i\dn the \falance sheet \das a \binance lease o\d\fligation. Lease payments are \dapportioned \fetween\d \binance charges and \dreduction o\b the lea\dse o\fligation so as\d to achieve a constant r\date o\b interest on \dthe remaining \falance\d o\b the lia\fility. Operating lease pay\dments are recognised \das an expense on a\d straight line \fasi\ds over the lease t\derm, except where another systematic \fasis is more representative o\b the time pattern in which economic \fene\bits \brom the leased asset are con\dsumed. Contingent re\dntals arising under\d operating leases a\dre recognised as an \dexpense in the year in whi\dch they are incurred\d. 2.10 intangible a\f\fet\f goodwill and impair\yment of goodwill Goodwill represents\d the excess o\b \bair \dvalue o\b considerati\don trans\berred over\d the Company’s inte\drest in the net \bair value \do\b the identi\bia\fle \dassets, lia\filities\d and contingent lia\fi\dlities at the date \do\b acquisition, and \d is carried at cost l\dess accumulated impai\drment losses. For t\dhe purposes o\b impa\dirment testing, good\dwill is allocated to each o\b \dthe cash generating \dunits (or groups o\b\d cash generating uni\dts) that is expecte\dd to \fene\bit \brom the synergies o\d\b a \fusiness com\finat\dion. Each unit (or \dgroup o\b units) to \dwhich the goodwill i\ds allocated, represents the low\dest level within t\dhe Company at which \dthe goodwill is moni\dtored \bor internal \dmanagement purposes and that i\ds not larger than a\dn operating segment.\d Cash-generating un\dits to which goodwil\dl has \feen allocated are t\dested \bor impairment\d annually, or more \d\brequently when the\dre is an indication \dthat the cash-generating unit\d may \fe impaired. An\d impairment loss is\d recognised \bor the a\dmount \fy which the ca\dsh- generating unit’s ca\drrying amount exceeds\d its recovera\fle amo\dunt. The recovera\fle\d amount is the high\der o\b a cash generating un\dit’s \bair value les\ds costs o\b disposal \dand its value in us\de. An impairment lo\dss is allocated \birst to reduce the \dcarrying amount o\b th\de goodwill and then \dto the other asset\ds o\b the cash genera\dting unit pro rata on the \fas\dis o\b the carrying a\dmount o\b each asset \din the cash-generati\dng unit. An impairme\dnt loss recognised \bor goodwil\dl is not reversed i\dn su\fsequent years.\d other intangible ass\yets Intangi\fle assets a\dcquired in a \fusines\ds com\fination are ide\dnti\bied and recognise\dd separately \brom go\dodwill where they satis\by \dthe de\binition o\b an\d intangi\fle asset a\dnd their \bair value\ds can \fe measured rel\dia\fly. The cost o\b such intangi\fle as\dsets is their \bair \dvalue at the acquis\dition date. 56 brand Brands with inde\bini\dte use\bul lives are\d tested \bor impairme\dnt on an annual \fas\dis. During the accou\dnting \bor \fusiness com\finations\d the Company has de\dtermined that it can\dnot relia\fly measur\de separately the i\dndividual \bair values o\b the \dcomplementary assets\d that together compr\dise the HEMA \frand. Th\dere\bore, the \frand n\dame HEMA was recognised as \da single asset. The\d Company has determi\dned that the use\bul\d li\be o\b the HEMA \frand\d is inde\binite \fased \don the history and \dreputation o\b the \f\drand. The \frand name\d HEMA is tested \bor imp\dairment annually, or more \b\drequently i\b there \dare indications that\d the \frand name HEMA mi\dght \fe impaired. The\d \frand name HEMA does not indi\dvidually generate ca\dsh \blows and should \dthere\bore not \fe te\dsted \bor impairment \das a single asset. The\d HEMA \frand name is tes\dted together with t\dhe CGUs that were \dtested \bor goodwill \dpurposes. For more in\bormation\d, re\ber to note 12.\d \fustomer relationshi\yps The customer relatio\dnships have a de\bin\dite use\bul li\be and \dare carried at cost \dless accumulated amor\dtisation and impairment. Amor\dtisation is calculat\ded using the straigh\dt-line method to al\dlocate the cost o\b cu\dstomer relationships over\d their estimated us\de\bul lives. \fomputer software an\yd others Acquired computer so\b\dtware licenses are \dcapitalised on the \f\dasis o\b the costs in\dcurred to acquire an\dd \fring to use the speci\bic \dso\btware. These cost\ds are amortised ove\dr their estimated u\dse\bul lives. Costs \dassociated with developing or mainta\dining computer so\btwa\dre programs are reco\dgnised as an expens\de as incurred. Costs\d that are directly as\dsociated with the de\dvelopment o\b identi\b\dia\fle and unique so\d\btware products contr\dolled \fy the Company, and \dthat will pro\fa\fly \dgenerate economic \fen\de\bits exceeding costs\d \feyond one year, a\dre recognised as intangi\d\fle assets. Key money has a de\bi\dnite use\bul li\be an\dd is carried at cost \dless accumulated amor\dtisation and impair\dment. Amortisation is calc\dulated using the st\draight-line method t\do allocate the key \dmoney over their es\dtimated use\bul lives Amortisation is comp\duted using the stra\dight-line method \fas\ded on the estimated \duse\bul lives, which \dare as \bollows: customer relationshi\dps10 – 13 years so\btware3 – 10 years other3 – 12 years For so\btware, lives\d in excess o\b six ye\dars are used only w\dhen management is sa\dtis\bied that the li\dves o\b these assets will clearly\d exceed that year. T\dhe use\bul lives are\d reviewed, and adjus\dted i\b appropriate,\d at each \falance sheet date. \dHEMA assesses on a ye\darly \fasis whether \dthere is any indicat\dion that other int\dangi\fle assets may \fe impair\ded. impairment of non­\furrent assets other \ythan goodwill and b\yrand HEMA assesses on a ye\darly \fasis whether \dthere is any indicat\dion that non-curren\dt assets may \fe impa\dired. I\b indicators o\b impairm\dent exist, HEMA estima\dtes the recovera\fle \damount o\b the asset\d. Where it is not \dpossi\fle to estimate the reco\dvera\fle amount o\b an\d individual asset, \dHEMA estimates the reco\dvera\fle amount o\b th\de cash-generating unit\d to which it \felongs\d. Individual stores\d are considered sepa\drate cash-generating\d units \bor impairment testing p\durposes. Stores ar\de evaluated \fased on\d store-EBITDA inclu\dding allocation o\b lo\dgistic costs. Corporate costs and \dassets are not all\docated to individual \dstores, as these i\dtems cannot \fe alloca\dted on a reasona\fle and consi\dstent \fasis to indi\dvidual stores. The \drecovera\fle amount i\ds the higher o\b an \dasset’s \bair value less costs o\b \ddisposal and its va\dlue in use. In ass\dessing value in use\d, the estimated \butu\dre cash \blows are discounted to their \dpresent value usin\dg a pre-tax discount\d rate that re\blects \dcurrent market asses\dsments o\b the time value o\b money \dand the risks speci\b\dic to the asset. An\d impairment loss is\d recognised in the co\dnsolidated income statement \bor \dthe amount \fy which \dthe asset’s carryin\dg amount exceeds its \drecovera\fle amount. \dIn su\fsequent years, HEMA\d assesses whether \dindications exist th\dat impairment losse\ds previously recogni\dsed \bor non-current assets \dother than goodwill\d may no longer exis\dt or may have decrea\dsed. I\b any such indi\dcation exists, the recover\da\fle amount o\b that \dasset is recalculate\dd and its carrying am\dount is increased to\d the revised recovera\fle amount, \di\b required. The in\dcrease is recognised \din operating result\d as an impairment r\deversal. 57 An impairment rever\dsal is recognised on\dly i\b it arises \bro\dm a change in the as\dsumptions that were\d used to calculate the recover\da\fle amount. The in\dcrease in an asset’\ds carrying amount due\d to an impairment r\deversal is limited to the de\dpreciated amount tha\dt would have \feen r\decognised had the ori\dginal impairment not\d occurred. 2.11 inventorie\f Inventories are st\dated at cost or net \drealisa\fle value, w\dhichever is lower. \dCost consists o\b all\d costs o\b purchase, \d cost o\b conversion a\dnd other costs incur\dred in \fringing the \dinventories to the\dir present location\d and condition, net o\b vendor allow\dances attri\futa\fle t\do inventories. The\d cost o\b the invento\dries is determined u\dsing a moving average price method.\d Net realisa\fle val\due represents the \destimated selling pr\dice \bor the inventor\dies less all estimated costs o\b co\dmpletion and costs n\decessary to make the\d sale. Inventories are re\dcognised in the \falan\dce sheet when the s\digni\bicant risks and \drewards o\b ownershi\dp o\b the goods have \feen tran\ds\berred to HEMA. 2.12 financial a\f\fet\f Regular purchases an\dd sales o\b \binancial \dassets are recognise\dd on the trade-date \d– the date on which \d the group commits to \dpurchase or sell th\de asset. Financial \dassets are derecogni\dsed when the group \dhas trans\berred su\fstant\dially all risks an\dd rewards o\b ownersh\dip. loans and re\feivables\y Trade receiva\fles, l\doans, and other rece\diva\fles that have \b\dixed or determina\fle\d payments that are \dnot quoted in an active \dmarket are classi\bie\dd as loans and recei\dva\fles. Loans and r\deceiva\fles are intit\dially measured at \bair val\due and su\fsequently\d measured at amortis\ded cost using the e\b\b\dective interest meth\dod, less any impairment. Int\derest income is reco\dgnised \fy applying t\dhe e\b\bective interes\dt rate, except \bor s\dhort-term receiva\fles when the\d recognition o\b inte\drest would \fe immate\drial. 2.13 ca\fh an\b ca\fh equiva\Tlent\f Cash and cash equiva\dlents include cash o\dn hand, deposits he\dld at call with \fank\ds, other short-ter\dm highly liquid investments \dwith original matur\dities o\b three mont\dhs or less, and \fan\dk overdra\bts. Bank \doverdra\bts are shown within curren\dt lia\filities on th\de \falance sheet. 2.14 financial liabilitie\f an\b equ\Tity in\ftrument\f i\f\fu\Te\b by the company \flassifi\fation as de\ybt or equity De\ft and equity ins\dtruments are classi\b\died as either \binan\dcial lia\filities or \das equity in accorda\dnce with the su\fstance o\b the cont\dractual arrangement.\d equity instruments An equity instrumen\dt is any contract th\dat evidences a resid\dual interest in th\de assets o\b an enti\dty a\bter deducting all o\b its lia\filit\dies. Equity instru\dments issued \fy HEMA ar\de recorded at the pr\doceeds received, net \do\b direct issue costs. finan\fial liabilitie\ys Financial lia\filitie\ds are classi\bied as \deither \binancial lia\d\filities ‘at \bair v\dalue through pro\bit\d and loss’ or ‘othe\dr \binancial lia\filitie\ds’. The other \binancial \dlia\filities includin\dg \forrowings, are in\ditially measured at\d \bair value, net o\b\d transaction costs. \d They are su\fsequent\dly measured at amort\dised cost using the \de\b\bective interest me\dthod, with interest\d expense recognised on an e\b\be\dctive yield \fasis. Other \binancial lia\f\dilities relating to\d \binancial lease agr\deements are stated \dat the net present\d value o\b \buture lease instalments. \dGi\bt cards (included i\dn other lia\filities\d) are carried at nom\dinal value minus a \dnon-redemption 58 percentage, which is\d \fased on historical\d redemption \bigures.\d Each year at \falanc\de sheet date, the n\don- redemption percentage\d will \fe reassessed\d and adjusted accordin\dgly. All other lia\f\dilities are carried \dat the nominal value. Repa\dyment commitments on \dlong-term lia\filitie\ds that are paya\fle \dwithin one year ar\de included under short-term \for\drowings. dere\fognition of fina\yn\fial liabilities The Company derecogni\dses \binancial lia\fil\dities when, and onl\dy when, the Company\d’s o\fligations are \d discharged, cancelled o\dr expired. 2.15 \berivative financia\Tl in\ftrument\f The Company enters \dinto derivative \bin\dancial instruments t\do manage its exposu\dre to interest rat\de and \boreign exchange rate risk, \dincluding \boreign exch\dange \borward contract\ds and interest rate\d derivative. Furthe\dr details o\b derivative \binanci\dal instruments are \ddisclosed in note 26\d. Derivatives are in\ditially recognised a\dt \bair value at the\d date a derivative \dcontract is entered \dinto and are su\fsequently re\dmeasured to their \ba\dir value at each \fal\dance sheet date. The\d resulting gain or \dloss is recognised in pro\bit \dor loss immediately \dunless the derivati\dve is designated and\d e\b\bective as a hedgi\dng instrument, in which\d event the timing o\d\b the recognition in\d pro\bit or loss dep\dends on the nature \do\b the hedge relationship. A der\divative is present\ded as a non-current \dasset or a non-curr\dent lia\fility i\b th\de remaining maturity\d o\b the instrument i\ds more than 12 mont\dhs and it is not ex\dpected to \fe realise\dd or settled within\d 12 months. Other derivatives are pre\dsented as current as\dsets or current lia\d\filities. hedge a\f\founting HEMA designates certain\d cash \blow hedging in\dstruments. These he\ddges are accounted \bor\d as cash \blow hedges. The e\b\bective\d portion o\b changes \din the \bair value o\d\b derivatives that \dare designated and q\duali\by as cash \blow hedges are \drecognised in other \dcomprehensive income \dand allocated to the\d other reserves wi\dthin equity. FX \borwards are use\dd to hedge the \borei\dgn currency exposure\d on purchases. The \de\b\bective portion o\b \dchanges in the \bair value o\d\b the hedging instru\dment is initially d\de\berred in equity. \dWhen the \borecasted \dtransaction that is hedged resul\dts in the recognitio\dn o\b a non-\binancial\d asset (\bor example\d, inventory) the ga\dins and losses previously de\berred \din equity are recla\dssi\bied \brom equity \dand included in the i\dnitial measurement \do\b the cost o\b the asset. This \dultimately results \din the recognition o\d\b the gain or loss \drelating to the e\b\be\dctive portion o\b the\d hedging instrument w\dithin the ‘Cost o\b \dgoods sold’ in the i\dncome statement at t\dhe moment the hedged \ditem a\b\bects the income st\datement. HEMA currently does not\d apply hedge accounti\dng on interest rate\d derivatives. The g\dain or loss arisin\dg \brom changes in the \bair \dvalue o\b interest r\date derivatives are\d recognized in the i\dncome statement with\din the ‘other \binancial cost’. Hedge accounting is di\dscontinued when the \dCompany revokes the\d hedging relationshi\dp, the hedging instrument expires \dor is sold, termina\dted, or exercised, o\dr no longer quali\bi\des \bor hedge accounti\dng. 2.16 pen\fion\f an\b other p\To\ft- an\b long-term-e\Tmployment benefit\f The net lia\filities\d recognised in the co\dnsolidated \falance sh\deet \bor de\bined \fene\b\dit plans represent\d the present value o\b the de\bined\d \fene\bit o\fligations\d. Contri\futions to de\d\bined contri\fution pl\dans are recognised a\ds an expense when \dthey are due. Post-\d employment \fene\bits \dprovided through ind\dustry multi-employe\dr plans, managed \fy \dthird parties, are \d generally accounted \b\dor under de\bined cont\dri\fution criteria. R\demeasurements \bor po\dst-employment \fene\bi\dt o\fligations are reco\dgnised in other compr\dehensive income. For other long-term\d employee \fene\bits, \dsuch as long-service\d awards, provisions\d are recognised on t\dhe \fasis o\b discount rates an\dd other estimates t\dhat are consistent \dwith the estimates \dused \bor the de\bined \d\fene\bit o\fligations. For th\dese provisions all\d remeasurements are\d recognised in the co\dnsolidated income sta\dtement immediately. 59 2.17 provi\fion\f Provisions are reco\dgnised when the Comp\dany has a present \d(legal or constructi\dve) o\fligation as a\d result o\b past events, it is\d more likely than n\dot that an out\blow \do\b resources will \fe\d required to settle\d the o\fligation and \d the amount can \fe re\dlia\fly estimated. Th\de amount recognised i\ds the \fest estimate\d o\b the expenditure\d required to settle the o\flig\dation. Provisions \dare discounted whene\dver the e\b\bect o\b the\d time value o\b money\d is signi\bicant. Restructuring provis\dions are recognised \dwhen the Company ha\ds approved a detail\ded \bormal restructuri\dng plan, and the restr\ducturing either has \dcommenced or has \feen \dannounced to those a\d\b\bected \fy it. The expected settlem\dents within one ye\dar are included under\d short-term provisi\dons. 2.18 \fhare-ba\fe\b payment\f\T Key personnel o\b HEMA \dhave \feen o\b\bered th\de opportunity to i\dnvest in Dutch Lion\d Coop. The investme\dnt consists o\b a mem\fers\dhip rights component\d that is recognised \das a share-\fased pa\dyment transaction in accordance with IF\dRS 2. In addition, \dpart o\b the investm\dent consists o\b a lo\dan component that is\d also disclosed \fy HEMA in acco\drdance with IAS 24 –\d Related party tran\dsactions \bor the loa\dn components issued \d to management. In acc\dordance with IFRS 2,\d that provides guida\dnce on whether shar\de-\fased payment transactions should \d\fe accounted \bor as e\dquity-settled or cas\dh-settled share \fas\ded payment transacti\dons, HEMA has the opinion \dthat the mem\fership \dright instruments p\durchased under the M\danagement Equity Pl\dan quali\by as an equit\dy settled share-\fas\ded payment transacti\don. The instrument \dis not settled \fy HEMA\d as the investment is not i\dn equity instrument\ds o\b HEMA. Dutch Lion C\doop, the ultimate p\darent o\b the Compan\dy, has the o\fligation to settl\de the investment in\d equity instruments\d o\b Dutch Lion Coop.\d In accordance with I\dFRS 2, HEMA has the o\fligation \dto disclose any in\bo\drmation regarding sh\dare \fased payments s\dettled \fy its share\dholder. For equity settled \dshare \fased payment \darrangements, the \ba\dir value o\b mem\fersh\dip right instrument\ds is measured at the gran\dt date and, i\b appli\dca\fle the \bair value\d is recognised as an\d expense with a cor\dresponding increase recognised i\dn equity. The \bair \dvalue o\b the mem\fers\dhip right instrumen\dts purchased under t\dhe Management Equity P\dlan is equal to th\de di\b\berence \fetween \d(i) the \bair market\d value o\b the mem\fer\dship right instruments at the \ddate o\b grant; and (\dii) the su\fscription\d price paya\fle \bor t\dhe mem\fership right \dinstruments acquired. Where vest\ding conditions are a\dpplica\fle the expens\de is recognised over\d the vesting period\d o\b the instruments granted.\d 3 critical accounting\T e\ftimate\f an\b ju\bge\Tment\f The preparation o\b \dHEMA’s consolidated \bina\dncial statements req\duires management to \dmake a num\fer o\b estimates and assump\dtions. These estima\dtes and assumptions\d a\b\bect the reported \damounts o\b assets a\dnd lia\filities, o\b inco\dme and expenses and \dthe disclosure o\b con\dtingent assets and \dlia\filities. Estima\dtes and assumptions may di\b\be\dr \brom \buture actual \dresults. The estima\dtes and assumptions\d that management cons\diders most critical and tha\dt have a signi\bicant\d inherent risk o\b ca\dusing a material adj\dustment are the \bol\dlowing: ■ impairment of non-\Tcurrent a\f\fet\f (notes 11 and 12).\d Determining whethe\dr non-current asset\ds are impaired requires an estimat\dion o\b the recovera\f\dle amount o\b the as\dset (or cash generat\ding unit). For this\d purpose, the Company is requ\dired to make estimat\dions and assumption\ds in respect o\b \butu\dre cash \blows and th\de appropriate discount\d rate. The carrying \damount o\b non-curren\dt assets that are \dsu\fject to an annual\d impairment test is \d€614.7 million (goo\ddwill) and €394.4 million (\frand n\dame). ■ income taxe\f (note 10). HEMA has \dsigni\bicant tax loss\d carry \borward posit\dions. Signi\bicant ju\ddgement is required in determin\ding the consolidated \dprovision \bor income\d taxes and the recov\dera\fle amounts o\b de\berred tax assets \drelated to tax loss\d carry \borward posit\dions. Currently no\d de\berred tax asset \drelating to tax losses is r\decognised. The carryi\dng amount o\b the de\be\drred tax lia\fility \dis €98.6 million (2\d015: €98.6 million). ■ inventorie\f (note 14). The o\fs\dolete stock provisi\don amounts to €9.4 \dmillion (2015: €12.\d7 million). The siz\de o\b the provision is \fa\dsed on management ju\ddgement regarding disco\dunts needed to sell\d the o\fsolete stock.\d This judgement is am\dongst others \fased o\dn past experience r\delating to actual di\dscounts given on sol\dd o\fsolete stock. 60 ■ employee benefit\f (note 21). The emp\dloyee \fene\bit o\fliga\dtions consists o\b a \dju\filee plan (€4.5 \dmillion) and early retirement pl\dans (€0.4 million).\d The calculations \bo\dr the ju\filee plan \dare determined \fy in\ddependent actuaries. The earl\dy retirement plans \dare calculated \fased \don Company assumpti\dons. ■ provi\fion\f an\b conti\Tngencie\f (notes 22 and 30).\d Judgement is requir\ded to determine the \damount, likelihood and disclo\dsure o\b provisions \dand contingencies. ■ financial \berivativ\Te\f (note 26). The \fal\dance sheet includes \d\binancial derivative\ds mainly currency \bor\dward contracts and intere\dst rate derivative,\d with a net \bair va\dlue o\b €5.1 million\d (lia\fility). The \b\dair value o\b \binancial instrument\ds that are not tra\dded in an active mark\det (\bor example ove\dr-the-counter deriva\dtives) is determined on the \fa\dsis o\b valuation te\dchniques per\bormed \fy\d the counterparty. \d ■ \fhare-ba\fe\b payment (note 28). HEMA calcul\dates the \bair value\d o\b the share \fased \dpayment components o\b the Management Eq\duity Plan. Signi\bica\dnt judgement is requ\dired to determine th\de equity component i\dn this Plan. 4 a\bju\fte\b EBITDA from February 1, 2\T016 up to an\b inclu\bi\Tng January 29, 2017\T (in million euros) 20162015 bri\bge to a\bju\fte\b E\TBITDA operating re\fult (E\TBIT) 28.9 (16.6) depreciation and amor\dtisation 55.5 57.2 impairments 1.1 1.2 EBITDA 85.5 41.8 management & oversig\dht \bees and other e\dxpenses 1.5 2.0 pre-opening costs 2.1 1.4 restructuring costs 0.9 1.4 legal and consulting \dexpenses 11.4 12.0 remodelling expenses\d - 0.9 stock clearance expen\dses 6.8 7.5 VAB agreement - 18.5 adjusted EBITDA 108.\b 85.5 For a de\binition o\b \dadjusted EBITDA, pl\dease re\ber to the d\de\binitions paragrap\dh at the end o\b thi\ds report. 5 \fegment reporting Operating segments a\dre reported in a ma\dnner consistent wit\dh the internal rep\dorting provided to t\dhe chie\b operating decision-ma\dker. The chie\b opera\dting decision-maker, \dwho is responsi\fle \d\bor allocating resou\drces and assessing per\bor\dmance o\b the operati\dng segments, has \fee\dn identi\bied as the \dChie\b Executive O\b\bic\der and the Chie\b Financial \dO\b\bicer. The CODM periodicall\dy reviews the Compa\dny’s per\bormance, pr\dimarily \bocused on th\de sales through ret\dail stores in regions. \dThe Company identi\bi\ded the \bollowing \biv\de reporting segments\d: ■ The Netherlands ■ Belgium and Luxem\four\dg ■ France 61 ■ Germany ■ other The reporting segmen\dt “other” includes: ■ \fakeries ■ \binancial services ■ retail store sales\d in Spain and the U\dnited Kingdom ■ other In 2015 sales and a\ddjusted EBITDA o\b e-\dcommerce in the Nethe\drlands were included \din the reporting se\dgment “other”. In 2016 t\dhe net sales are r\deported in segment “\dThe Netherlands”. T\dhis reclassi\bication\d is made as the e-commerce home delive\dries o\b the Netherl\dands relate to the \dNetherlands, likewi\dse e-commerce home deliveries o\b other\d regions are classi\b\died to the correspon\dding region and not \dto “other”. In addi\dtion, the operational expens\des o\b e-commerce are \dreported under “logi\dstics” as the logist\dic expenses relate \dto e-commerce activities \d\bor all countries. C\domparative amounts \dare not reclassi\bied\d as it is impractica\dl. Segment per\bormance i\ds evaluated \fased on\d net sales and adju\dsted EBITDA per seg\dment, excluding suppo\drt o\b\bice and logistics co\dsts. These costs ar\de evaluated separat\dely \fy the CODM. Fo\dr more in\bormation o\dn adjusted EBITDA, pl\dease re\ber to the d\de\binitions paragrap\dh. Although the Fra\dnce and Germany segme\dnts do not meet the quanti\dtative thresholds r\dequired \fy IFRS 8 \bo\dr reporta\fle segment\ds, management has con\dcluded that these segments\d should \fe reported,\d as they are closel\dy monitored \fy the C\dODM. from February 1, 2\T016 up to an\b inclu\bi\Tng January 29, 2017\T (in million euros) 20162015 net \fale\f by region The Netherlands 928.4 885.9 Belgium and Luxem\four\dg 143.1 141.9 France 90.8 73.3 Germany 13.8 13.6 other 17.1 24.6 total net sales 1,193.\b 1,139.3 a\bju\fte\b EBITDA by r\Tegion The Netherlands 212.4 163.8 Belgium and Luxem\four\dg 27.7 26.2 France 17.8 14.2 Germany 1.9 1.4 other 9.4 24.5 total a\bju\fte\b \ftore \TEBITDA 269.2 230.1 support o\b\bice (116.2) (105.4) logistics (43.2) (37.6) other (1.6) (1.6) total adjusted EBIT\yDA 108.\b 85.5 The net sales in t\dhe Netherlands in 2\d016 includes a €16.7\d million reclassi\bica\dtion o\b the e-commerc\de sales home deliveries in the N\detherlands. In 2015\d the net sales o\b e\d-commerce were classi\b\died as “other”. The\d adjusted 62 EBITDA increase \brom\d the Netherlands is\d partially due to €\d7.2 million EBITDA \do\b e-commerce activiti\des which were classi\bied in 2\d015 as “other”. Th\de decrease o\b the adj\dusted EBITDA o\b “Lo\dgistics” is partiall\dy due to €9.2 million logistic cost\ds o\b the e-commerce a\dctivities which are \dper\bormed \bor all cou\dntries, and were cla\dssi\bied in 2015 as “other”. The adjusted EBITDA\d o\b the other segmen\dt is \fased on the i\dntersegment sales (\d2016: €47.1 million\d, 2015: €49.2 million) and extern\dal sales. The tota\dl net sales do not \dinclude the interseg\dment sales within t\dhe segment other, as these sales are\d recognised in the r\despective segment as\d external sales. The \bollowing ta\fle \dshows the non-curre\dnt assets \fy country\d. Please note that\d the non-current as\dsets \fy country are includin\dg corporate assets, \dsuch as support o\b\bi\dces and logistics. As\d a result, this in\d\bormation is not prepared on the sam\de \fasis as the net \dsales and adjusted E\dBITDA \fy region. (in million euros) January 29 2017 January 31 2016 The Netherlands 1,065.6 1,088.8 Belgium and Luxem\four\dg 82.4 84.3 France 28.7 27.7 Germany 2.4 2.3 other 9.6 9.3 total non­\furrent assets 1,188.7 1,\b1\b.4 6 net \fale\f from February 1, 2\T016 up to an\b inclu\bi\Tng January 29, 2017\T (in million euros) 201620152014 sales to retail cus\dtomers 909.9 848.5 788.7 sales to \branchisees\d 279.3 275.3 272.6 other sales 4.0 15.5 15.9 net sales 1,193.\b 1,139.3 1,077.\b from February 1, 2\T016 up to an\b inclu\bi\Tng January 29, 2017\T (in million euros) 201620152014 apparel 400.6 372.8 364.0 household goods & pe\drsonal care 446.5 409.9 368.9 \bood & catering 298.9 307.3 292.8 services & other 47.2 49.3 51.5 net sales 1,193.\b 1,139.3 1,077.\b These product categor\dies are sold in all\d countries, however\d the relative shar\de \fy country may di\b\be\dr. The \bood and catering products\d are mainly sold in\d the Netherlands. Please note that du\de to a reclassi\bicat\dion o\b €16.7 millio\dn net sales e-commer\dce home deliveries, \dthe net sales to retail customers \din 2016 increased co\dmpared to 2015. In \d2015 the net sales\d (€9.7 million) was\d classi\bied as 63 “other sales”. Thi\ds reclassi\bication i\ds made in 2016 as t\dhe e-commerce home del\diveries o\b the Neth\derlands relate to Sales to retail\d customers, likewise\d e-commerce home deliv\deries o\b other regi\dons are classi\bied a\ds Sales to retail customers and\d not to “other sal\des”. 7 co\ft of \fale\f The cost o\b sales ca\dn \fe speci\bied as \bol\dlows: from February 1, 2\T016 up to an\b inclu\bi\Tng January 29, 2017\T (in million euros) 201620152014 net purchase value 597.8 596.3 535.7 la\four costs 41.8 43.0 35.7 transportation cost\ds 7.0 5.8 4.5 rents 5.1 5.9 4.6 other general and a\ddministrative expen\dses 5.7 7.1 5.5 total \fost of sales\y 657.4 658.1 586.0 8 operating expen\fe\f The operating expen\dses can \fe speci\bied \d\fy nature as \bollow\ds: from February 1, 2\T016 up to an\b inclu\bi\Tng January 29, 2017\T (in million euros) 201620152014 salaries 177.6 163.8 150.9 taxes and social sec\durities 30.4 28.6 29.7 employee \fene\bit exp\denses 13.3 12.3 12.3 other personnel ex\dpenses 6.9 6.8 6.6 total labour \fosts \b\b8.\b \b11.5 199.5 housing and rents 136.4 131.2 124.9 other general expen\dses 84.5 79.8 72.8 other income and exp\dense 0.3 (3.0) (2.2) depreciation and amor\dtisation 55.5 57.2 57.5 impairments 1.1 1.2 120.0 costs \bor VAB agreeme\dnt - 18.5 - restructuring costs 0.9 1.4 10.1 total operating expe\ynses 506.9 497.8 58\b.6 The housing and ren\dts expenses includes\d €3.3 million su\fle\dase income (2015: €3\d.8 million). The employee \fene\bit\d expenses mainly re\dlate to de\bined contr\di\fution plans. For \dmore in\bormation see\d note 21. 64 9 finance co\ft\f from February 1, 2\T016 up to an\b inclu\bi\Tng January 29, 2017\T (in million euros) 201620152014 interest income - - (0.1) intere\ft expen\fe ■ cash interest expen\dse 50.7 51.1 48.9 ■ non cash interest e\dxpense 0.8 0.4 30.5 amortised \binance cos\dts 4.5 4.1 17.3 other \binancial (inc\dome) / expense(1.2) (1.9) (0.3) total finan\fe \fosts 54.8 53.7 96.3 Interest income is a\dttri\futa\fle to the \dinterest on cash an\dd cash equivalents. \dThe cash interest e\dxpense is attri\futa\fle to the\d interest on \forrow\dings (see note 19),\d \binancial lia\filiti\des, and outstanding \d\falances on the Revolving Credit Fa\dcility. The non-cash\d interest \bor 2015 \dand 2016 is attri\fu\dta\fle to a part o\b \dthe interest on the PMO \bacility (se\de note 19). The no\dn-cash interest is \dadded to the principa\dl o\b the PMO \bacilit\dy. The non-cash interest \bor 2014 r\delated to the share\dholder loan and the\d mezzanine \bacility.\d HEMA currently does not\d apply hedge accounti\dng on interest rate\d derivatives. The g\dain or loss arisin\dg \brom changes in the \bair \dvalue o\b interest r\date derivatives are\d recognized in the i\dncome statement with\din the ‘other \binancial cost’. The\d other \binancial inc\dome / expense includ\des €1.2 million (20\d15: €1.8 million) o\d\b gain or loss relating to changes \din the \bair value o\d\b the interest rate\d derivative. 10 income taxe\f The \biscal unity o\b \dwhich HEMA is part, is\d headed \fy the Compa\dny’s ultimate share\dholder Dutch Lion Coöperatie\b U.A. Th\de \biscal unity consi\dsts o\b Dutch Lion Co\döperatie\b U.A., Dut\dch Lion B.V., HEMA B.V\d., HEMA Bakkerijen B.V., HEMA\d Financiering B.V., \dHEMA Financial Services\d B.V., HEMA Bondco I B.\dV. and HEMA Bondco II B.V.. All taxes\d \bor the \biscal unit\dy are paid \fy HEMA. Th\de current taxes in \dthese consolidated \bi\dnancial statements mainly r\delate to the income \dtaxes \bor HEMA Belgium \dand the \biscal unity\d. The other tax po\dsitions in these consolidate\dd \binancial statement\ds, such as de\berred t\daxes, only relate \dto the taxes \bor HEMA \dand its su\fsidiaries. \furrent taxes The current tax ass\det o\b €0.8 million \dmainly relates to HEMA\d France S.A.S., caus\ded \fy prepaid income \dtax 2016, and a tax lia\fility\d which can \fe o\b\bset \dwith CICE tax (credi\dt on social security\d). The current tax \dlia\fility o\b €0.5 million mainly rela\dtes to HEMA België B.V\d. in\fome tax re\fognised \yin profit or loss The \bollowing ta\fle \dspeci\bies the curren\dt and de\berred tax co\dmponents o\b income ta\dxes as recognised in\d the consolidated income s\dtatement. 65 from February 1, 2\T016 up to an\b inclu\bi\Tng January 29, 2017\T (in million euros) 201620152014 \furrent in\fome taxes domestic taxes - - - \boreign taxes ■ Asia (0.1) (0.1) (0.1) ■ Europe (0.9) (1.5) (1.4) total current tax e\Txpen\fe (1.0) (1.6) (1.5) deferred in\fome taxes domestic taxes 0.7 (0.6) 2.9 \boreign taxes ■ Europe - - - total \beferre\b tax e\Txpen\fe 0.7 (0.6) - total in\fome taxes (0.3) (\b.\b) (1.5) effe\ftive in\fome tax r\yate HEMA’s e\b\bective tax ra\dte in the consolidat\ded income statement d\di\b\bers \brom the stat\dutory income tax rat\de o\b the Netherlands, wh\dich is 25 percent in\d \foth 2016 and 2015\d. The \bollowing ta\fl\de reconciles the sta\dtutory income tax rate o\b the Net\dherlands with the e\d\b\bective income tax r\date as shown in th\de consolidated income\d statement. from February 1, 2\T016 up to an\b inclu\bi\Tng January 29, 2017\T (in million euros) 20162015 result \fe\bore income \dtaxes (25.9) (70.3) income tax credit at \dstatutory rate 6.5 (25.0%) 17.6 (25.0%) adjustments to arri\dve at e\b\bective incom\de tax rate: ■ rate di\b\berential (l\docal statutory rate\ds versus the statutory rate o\b t\dhe Netherlands) – e\d\b\bect o\b di\b\berent tax rates o\b su\fsidi\daries operating in \ddi\b\berent jurisdictions. - - (0.5) 0.7% ■ loss carry \borward n\dot recognised(6.7) 25.9% (17.7) 25.2% ■ income tax returns p\drevious years 0.2 (0.8%) 0.4 (0.6%) ■ tax e\b\bect cash \blow \dhedge 0.5 (1.9%) (0.8) 1.1% ■ non-deducti\fle and ot\dher items(0.8) 3.0% (1.2) 1.7% total in\fome taxes(0.3) 1.\b% (\b.\b) 3.1% 66 deferred in\fome tax The signi\bicant compo\dnents o\b de\berred in\dcome tax assets and \dlia\filities as o\b J\danuary 29, 2017 an\dd January 31, 2016 are as \bollows\d: (in million euros) January 29 2017 January 31 2016 February 1 2015 post-employment and \dother employee \fene\d\bits 1.1 1.1 1.5 property, plant & \dequipment 1.9 2.4 2.3 revaluation o\b paya\d\fles in \boreign curre\dncies - - - total gro\f\f \beferre\b \Ttax a\f\fet 3.0 3.5 3.8 unrecognised de\berred \dtax assets (1.4) (1.5) - total recogni\fe\b \bef\Terre\b tax a\f\fet\f 1.6 2.0 3.8 tax losses and tax \dcredits 42.2 32.9 15.2 unrecognised tax los\dses and tax credits (42.2) (32.9) (15.2) total recogni\fe\b tax\T lo\f\fe\f an\b tax cre\bi\Tt\f - - - total \beferre\b tax a\T\f\fet\f po\fition 1.6 2.0 3.8 \frand (98.6) (98.6) (98.6) customer relationshi\dps (0.6) (1.7) (2.8) revaluation o\b paya\d\fles in \boreign curre\dncies (0.3) (0.1) (1.1) \bair value gains th\drough other comprehe\dnsive income (0.7) (0.2) (1.2) total \beferre\b tax l\Tiability (100.2) (100.6) (103.7) net deferred tax liab\yility (98.6) (98.6) (99.9) De\berred income tax a\dssets and lia\filiti\des are o\b\bset in th\de consolidated \falanc\de sheet when there\d is a legally en\borcea\fle right to \do\b\bset current tax a\dssets against curren\dt tax lia\filities a\dnd when the de\berred\d income taxes are levied \fy\d the same \biscal aut\dhority. For 2016, \d€1.6 million o\b the\d recognised de\berred t\dax assets has \feen o\b\bset with the\d de\berred tax lia\fil\dity relating to the\d customer relationsh\dips and revaluation\d o\b paya\fles in \boreign currencies\d o\b €1.6 million. T\dhis results in a de\d\berred tax lia\fility\d o\b €98.6 million, \dpresented as non- current. See the ta\d\fle \felow: (in million euros) January 29 2017 January 31 2016 February 1 2015 de\berred tax assets - - - de\berred tax lia\fili\dties (98.6) (98.6) (99.9) net deferred tax liab\yility (98.6) (98.6) (99.9) 67 Re\ber to the ta\fle \d\felow when the de\ber\dred taxes are expect\ded to \fe recovered: (in million euros) January 29 2017 January 31 2016 \beferre\b tax a\f\fet\f ■ de\berred tax assets \dto \fe recovered a\bter\d more than 12 month\ds 1.2 1.8 ■ de\berred tax assets \dto \fe recovered with\din 12 months 0.4 0.2 1.6 2.0 \beferre\b tax liabili\Ttie\f ■ de\berred tax lia\fili\dties to \fe recovered\d a\bter more than 12\d months (99.2) (99.2) ■ de\berred tax lia\fili\dties to \fe recovered\d within 12 months (1.0) (1.4) (100.2) (100.6) deferred tax liabili\yty (net) (98.6) (98.6) As o\b January 29, 2\d017, HEMA had unused t\dax losses, \bor which\d no de\berred tax ass\det is recognised in \dthe \falance sheet o\b a t\dotal nominal amount\d o\b approximately €\d178.6 million (2015\d: €131.6 million) w\dhich expire as per the ta\fle \fe\dlow. Signi\bicant judg\dement is required i\dn determining whethe\dr de\berred tax asset\ds are realisa\fle. HEMA deter\dmines this on the \f\dasis o\b expected tax\da\fle pro\bits arisin\dg \brom the reversal \do\b recognised de\berred ta\dx lia\filities and o\dn the \fasis o\b \fudget\ds and cash \blow \borec\dasts. Where utilis\dation is not considered pro\fa\fle, \dde\berred tax assets \dare not recognised. expiration of unre\Tcogni\fe\b tax lo\f\fe\f (in million euros) January 29 2017 to expire in: 20230.2 202456.6 202570.2 202627 no expiration 24.6 total unre\fognised ta\yx losses 178.6 68 11 property, plant an\b\T equipment (in million euros)lea\fehol\b improve-ment\f technical in\ftalla-tion\f har\bwarefurniture an\bfixture\f truck\f an\b car\f work in progre\f\f total a\f of February 2, 2\T014 at cost 119.2 111.2 37.1 293.1 9.7 9.1 579.4 accumulated depreciati\don and impairment losse\ds (52.1) (54.1) (28.9) (230.1) (4.5) - (369.7) carrying amount 67.1 57.1 8.2 63.0 5.2 9.1 \b09.7 additions at cost 5.2 5.3 0.7 11.7 - 5.6 \b8.5 depreciation (10.9) (10.1) (3.3) (17.8) (1.3) - (43.4) impairment losses ch\darged to pro\bit & loss (1.0) (1.0) - - - - (\b.0) trans\ber \brom WIP 1.7 2.0 0.4 2.3 - (7.2) (0.8) disposals at cost (0.1) - (0.1) (0.2) (0.2) - (0.6) accumulated depreciati\don 0.1 - 0.1 0.2 0.2 - 0.6 a\f of February 1, 2\T015 at cost 126.0 118.5 38.1 306.9 9.5 7.5 606.5 accumulated depreciati\don and impairment losse\ds (63.9) (65.2) (32.1) (247.7) (5.6) - (414.5) carrying amount 62.1 53.3 6.0 59.2 3.9 7.5 19\b.0 additions at cost 3.3 3.5 0.5 7.7 1.1 5.2 \b1.3 depreciation (11.1) (10.3) (2.9) (17.4) (1.3) - (43.0) impairment losses ch\darged to pro\bit & loss (0.6) (0.6) - - - - (1.\b) trans\ber \brom WIP 1.0 1.0 1.0 3.4 - (6.5) (0.1) disposals at cost (1.5) (0.6) (0.1) (2.3) (0.9) - (5.4) accumulated depreciati\don 1.5 0.6 0.1 2.3 0.9 - 5.4 a\f of January 31, 2\T016 at cost 128.8 122.4 39.5 315.7 9.7 6.2 6\b\b.3 accumulated depreciati\don and impairment losse\ds (74.1) (75.5) (34.9) (262.8) (6.0) - (453.3) carrying amount 54.7 46.9 4.6 52.9 3.7 6.2 169.0 69 (in million euros)lea\fehol\b improve-ment\f technical in\ftalla-tion\f har\bwarefurniture an\bfixture\f truck\f an\b car\f work in progre\f\f total additions at cost 2.8 4.5 0.7 4.9 0.3 11.2 \b4.4 depreciation (10.8) (10.2) (2.9) (16.9) (1.2) - (4\b.0) impairment losses ch\darged to pro\bit & loss (0.7) (0.4) - - - - (1.1) trans\ber \brom WIP 0.7 2.0 1.7 1.1 - (5.5) ­ disposals at cost (1.0) (0.7) (0.3) (4.0) (2.0) - (8.0) accumulated depreciati\don 1.0 0.7 0.3 4.0 2.0 - 8.0 a\f of January 29, 2\T017 at cost 131.3 128.2 41.6 317.7 8.0 11.9 638.7 accumulated depreciati\don and impairment losse\ds (84.6) (85.4) (37.5) (275.7) (5.2) - (488.4) carrying amount 46.7 42.8 4.1 42.0 2.8 11.9 150.3 The disposals mainl\dy relate to closed, \dre\bormatted or reloca\dted HEMA stores. For t\dhe contractual commitm\dents \bor the acquisition \do\b property, plant \dand equipment, see \dnote 30. The most i\dmportant component o\d\b work in progress is un\binis\dhed projects related\d to HEMA’s stores. Th\de impairment loss r\delates to non-movea\d\fle assets o\b HEMA stores which ar\de open \bor more tha\dn 1 year in the Be\dnelux and more than\d 2 years \bor other \dcountries, have a negative EBI\dTDA and are not exp\dected to improve in \dthe next years. Trucks and cars inclu\ddes the \bollowing am\dounts where the gro\dup is a lessee unde\dr a \binance lease: (in million euros) \dJanuary 29 2017 January 31 2016 capitalised \binance l\dease – at cost 8.0 9.7 accumulated depreciati\don (5.2) (6.0) \farrying amount \b.8 3.7 The Company leases \dvarious trucks and c\dars under non-cancel\dla\fle \binance lease \dagreements. The lea\dse terms are \fetween 5 and 7\d years. Lease rent\dals amounting to €1\d.6 million (2015: €\d1.9 million) relati\dng to lease o\b truck\ds and cars are included\d in the income state\dment on depreciation\d and \binance costs (n\dote 8 and 9). Essentially all o\b \dthe property, plan\dt and equipment has\d \feen pledged to secu\dre \forrowings o\b the\d Company (note 19). There are no capita\dlised \forrowing costs\d included in the pro\dperty, plant and eq\duipment as this is \dnot applica\fle. 70 12 intangible a\f\fet\f (in million euros)goo\bwillbran\bcu\ftomer relation-\fhip\f \foftwareotherintangible a\f\fet\f un\ber \bevelop-ment total a\f of February 2, 2\T014 at cost 732.7 394.4 43.7 83.8 9.1 4.6 1,\b68.3 accumulated amortisat\dion and impairment losse\ds - - (28.3) (68.6) (2.7) - (99.6) carrying amount 732.7 394.4 15.4 15.2 6.4 4.6 1,168.7 additions at cost - - - 2.6 0.1 4.2 6.9 amortisation - - (4.3) (9.0) (0.9) - (14.\b) Impairment losses charged to pro\bit & loss (118.0) - - - - - (118.0) trans\ber \brom assets\d under development - - - 2.7 0.6 (2.5) 0.8 disposals at cost - - - (0.1) - - (0.1) accumulated amortisat\dion - - - 0.1 - - 0.1 a\f of February 1, 2\T015 at cost 732.7 394.4 43.7 89.0 9.8 6.3 1,\b75.9 accumulated amortisat\dion and impairment losse\ds (118.0) - (32.6) (77.5) (3.6) - (\b31.7) carrying amount 614.7 394.4 11.1 11.5 6.2 6.3 1,044.\b additions at cost - - - 5.9 1.7 1.7 9.3 amortisation - - (4.4) (8.4) (0.9) - (13.7) Impairment losses charged to pro\bit & loss - - - - - - ­ trans\ber \brom assets\d under development - - - 6.2 0.1 (6.1) 0.\b disposals at cost - - - - - - ­ accumulated amortisat\dion - - - - - - ­ a\f of January 31, 2\T016 at cost 732.7 394.4 43.7 101.1 11.6 1.9 1,\b85.4 accumulated amortisat\dion and impairment losse\ds (118.0) - (37.0) (85.9) (4.5) - (\b45.4) carrying amount 614.7 394.4 6.7 15.2 7.1 1.9 1,040.0 71 (in million euros)goo\bwillbran\bcu\ftomer relation-\fhip\f \foftwareotherintangible a\f\fet\f un\ber \bevelop-ment total additions at cost - - - 1.3 0.6 4.8 6.7 amortisation - - (4.3) (8.0) (0.9) - (13.\b) impairment losses ch\darged to pro\bit & loss - - - - - - ­ trans\ber \brom assets\d under development - - - 1.5 (0.8) (0.7) ­ disposals at cost - - - - (0.2) - (0.\b) accumulated amortisat\dion - - - - 0.2 - 0.\b a\f of January 29, 2\T017 at cost 732.7 394.4 43.7 103.9 11.2 6.0 1,\b91.9 accumulated amortisat\dion and impairment losse\ds (118.0) - (41.3) (93.9) (5.2) - (\b58.4) \farrying amount 614.7 394.4 \b.4 10.0 6.0 6.0 1,033.5 impairment test for \ygoodwill and HEMA bran\yd Goodwill recognised r\delates to the acqui\dsition o\b HEMA. Goodwi\dll acquired in the \f\dusiness com\fination \dis allocated, at acquis\dition, to the cash \dgenerating units (‘\dCGUs’) or group o\b \dCGUs expected to \fen\de\bit \brom the \fusiness com\fination.\d The carrying amount\ds o\b goodwill allocat\ded to CGUs within HEMA\d are as \bollows: goo\bwill per CGU (in million euros) January 29 2017 January 31 2016 The Netherlands 570.6 570.6 Belgium & Luxem\fourg 43.6 43.6 Germany 0.5 0.5 total HEMA 614.7 614.7 The Company has det\dermined that the us\de\bul li\be o\b the HEMA \f\drand is inde\binite, \d\fased on the histor\dy and reputation o\b the \f\drand. The \frand name\d HEMA is tested \bor imp\dairment annually, o\dr more \brequently i\d\b there are indications that\d the \frand name HEMA mi\dght \fe impaired. The\d \frand name HEMA does n\dot individually generate cash \blows \dand should there\bore\d not \fe tested \bor i\dmpairment as a singl\de asset. The HEMA \fran\dd name is tested toget\dher with the CGUs \dthat were tested \bo\dr goodwill purposes\d. The carrying amoun\dts o\b \frand allocated to CGUs wi\dthin HEMA are as \bollo\dws: bran\b per CGU (in million euros) January 29 2017 January 31 2016 The Netherlands (‘C\dGU-NL’) 370.9 370.9 Belgium & Luxem\fourg \d(‘CGU-BELUX’) 23.5 23.5 total HEMA 394.4 394.4 72 CGUs to which goodwi\dll has \feen allocate\dd are tested \bor imp\dairment annually or\d more \brequently i\b \dthere are indications that\d a particular CGU mi\dght \fe impaired. The\d recovera\fle amount \do\b each CGU is deter\dmined \fased on \bair value \dless costs o\b dispos\dal calculations (lev\del 3). Fair value \dless costs o\b dispos\dal calculations use \d post-tax cash \blow p\drojections into per\dpetuity. The cash \bl\dow projections are \d\fased on assumptions\d approved \fy company management.\d The continuing valu\de is determined \fase\dd on a ‘steady stat\de’ set o\b assumptio\dns \bor the cash \blows i\dn the last \borecast \dyear and applying a\d terminal value mul\dtiple to those cash\d \blows. To calculate the reco\dvera\fle amount, the\d actual results \bor \d2016 and the \fudget \d\bor 2017 are used a\ds a starting point. On top o\b th\dese results, key a\dssumptions are used\d to calculate the cas\dh \blows \bor the nex\dt years. The Company prepare\dd a \borecast \bor the \dnext 10 years, in \dorder to regain a s\dteady \binancial stat\de. The key assumptions\d used in \binancial y\dear 2016 \bor \bair v\dalue less costs o\b d\disposal calculations\d are: 20162015 The Netherlan\b\fBelgium & LuxembourgThe Netherlan\b\fBelgium & Luxembourg gro\f\f profit (avera\Tge) ■ next 10 years49.8%61.9%46.1%59.3% ■ a\bter that49.8%62.2%46.3%59.6% \fale\f growth rate (a\Tverage) ■ next 10 years1.3%1.2%1.4%1.7% ■ a\bter that0.5%0.5%0.5%0.5% dis\fount rate6.8%7.3%6.6%6.9% a\bju\fte\b EBITDA marg\Tin (average) ■ next 10 years13.2%6.3%10.3%6.9% ■ a\bter that12.8%6.2%10.7%7.4% The calculation o\b \ba\dir value less cost \dto sell \bor the cash\d generating units i\ds most sensitive to\d the \bollowing assumptions: ■ Gross margins: The \dCompany determined \fu\ddgeted gross margin \fa\dsed on past per\borma\dnce, improvements like \fu\dying desk savings an\dd its expectations \b\dor the market devel\dopment. ■ The discount rate is\d \fased on the (post\d-tax) weighted aver\dage cost o\b capital (\d‘WACC’): the market\d-\fased weighted average o\b \dthe a\bter-tax cost o\d\b de\ft and cost o\b equ\dity. The target lon\dg-term level o\b de\ft \d and equity in HEMA’s ca\dpital structure is \destimated using the \dmedian o\b market-\fase\dd values \bor de\ft and equity \fased on \da peer group o\b compa\dra\fle listed companie\ds. The cost o\b equit\dy \bor \foth CGUs is \d calculated \fased on the Capital Asset Pricing Model (‘CAPM’), including (1) a risk \bree rate \fased on a 30-year country speci\bic government \fonds, (2) an estimated company speci\bic levered \feta (\fased on the median \feta o\b the peer gro\dup) multiplied \fy th\de excess market retu\drn and (3) an additi\donal risk premium t\dhat takes into account the ill\diquidity and size o\d\b each CGU as compare\dd to the peer group\d o\b listed companies.\d The cost o\b de\ft \bor \foth \dCGUs is calculated \fy\d adding a (de\bault) s\dpread to the risk-\b\dree rate. The spre\dad has \feen derived \fy deduct\ding the country spec\di\bic risk \bree rate \d\brom the yields \bor \dlisted \fonds with si\dmilar credit ratings as th\de listed peer group\d companies. ■ Growth rates: \butur\de growth rates are \ddisplayed in the ta\d\fle and di\b\ber \fy geog\draphy. 73 out\fome of the goodw\yill impairment analy\ysis The calculation o\b t\dhe \bair value less \dcost o\b disposal at \dyear-end 2016 \bor C\dGU-NL led to a recov\dera\fle amount o\b €1,346.2 million\d, which is higher th\dan the carrying amou\dnt o\b €882.1 millio\dn. As the recovera\fl\de amount is higher than the carr\dying amount, no impa\dirment charge is reco\dgnised. The headroom\d at year-end \bor CG\dU NL is €464.1 million. The calculation o\b t\dhe \bair value less \dcost o\b disposal at \dyear-end 2016 \bor C\dGU-BELUX led to a r\decovera\fle amount o\b €75.9 million, which i\ds higher than the ca\drrying amount o\b €55\d.3 million. As the \drecovera\fle amount is higher than the \dcarrying amount, no \dimpairment charge is \drecognised. The headr\doom at year-end \bor \dCGU- BELUX is €20.6 mill\dion. sensitivity analysis \ykey assumptions The key assumptions\d are mainly \fased on\d historical achieved\d results, strategic \dplans and market ex\dpectations. Certain unexpected \b\duture developments,\d currently not re\ble\dcted in the cash \blow\d projections, might \dresult in a goodwill impair\dment. For that reas\don, the Company incl\duded a sensitivity \danalysis. All sens\ditivities are calculated on all \but\dure years, except \bo\dr 2017. For example, a 0.5%\d-point lower sales\d growth rate \bor CG\dU-NL and CGU-BELUX \d\bor all years lead \dto a headroom o\b €296.4 million \bo\dr CGU-NL and €10.5 \dmillion \bor CGU-BEL\dUX. A higher discoun\dt rate o\b 1.0%-poin\dt will lead to a headroom o\b €282.6 m\dillion \bor CGU-NL a\dnd €10.0 million \bor\d CGU-BELUX. \fustomer relationshi\yps As a result o\b the \daccounting \bor \fusine\dss com\finations, cust\domer relationships \drelating to \branchis\de agreements and insur\dance policies have \f\deen recognised in 20\d07. The customer rel\dationships are amor\dtised over the expected ec\donomic li\be time o\b t\dhe contracts \feing 10\d respectively 13 ye\dars. The remaining \dexpected economic li\be time o\b \dthe customer relatio\dnships relating to \d\branchise agreements \dand insurance polici\des are 0.4 years and 3.4 y\dears. other Other intangi\fles r\delate to key money.\d In France it is ne\dcessary to acquire t\dhe lease rights (e.\dg. key money) \brom the previous t\denant \fe\bore the \bul\dl \fene\bits o\b a leas\de agreement can \fe en\djoyed. The lease ri\dghts give the holder the righ\dt to a \bree and pea\dce\bul use o\b the pre\dmises, the right to\d rent control and ri\dghts relating to the duration o\b the\d lease and renewal \drights. When a new \dtenant takes over \da property, the le\dase rights are sold to the new ten\dant. Key money is a\dmortised over the e\dxpected economic li\be \dtime o\b the lease co\dntracts \feing 10 to 12 year\ds. intangible assets und\yer development The most important \dcomponent o\b intangi\f\dle assets under dev\delopment are un\bini\dshed IT projects. All o\b the intangi\fl\de assets represent\ded \fy legal titles o\dr o\b similar status\d have \feen pledged t\do secure \forrowings o\b the Co\dmpany (note 19). 13 other non-current \Ta\f\fet\f (in million euros) January 29 2017 January 31 2016 other4.93.4 total other non­\furrent assets 4 .93.4 The other non-curre\dnt assets mainly re\dlate to deposits pa\did \bor rental contra\dcts in Germany, Spai\dn and France. 74 14 inventorie\f (in million euros) January 29 2017 January 31 2016 February 1 2015 trade inventory152.7164.7195.4 raw materials 2.72.32.1 other inventories \d1.921.8 157.3169199.3 provision \bor o\fsol\dete and slow moving \dinventory(9.4) (12.7) (12.4) total inventories 147.9156.3186.9 The raw materials a\dnd other inventorie\ds concern \bood, photo\d and packaging materi\dals. An amount o\b €1.2 mi\dllion has \feen recog\dnised as write-o\b\bs \do\b inventories in t\dhe consolidated incom\de statement (2015: €0\d.5 million). All o\b the inventor\dies are pledged to s\decure \forrowings o\b t\dhe Company (note 19\d). 15 tra\be an\b other rec\Teivable\f (in million euros) January 29 2017 January 31 2016 February 1 2015 trade receiva\fles27.829.535.8 provision \bor impai\drment (0.6) (0.8) (0.9) tra\be receivable\f - \Tnet27.228.734.9 receiva\fles \brom rela\dted parties 5.14.84.2 prepayments7.515.816.8 other receiva\fles9.99.412.7 total trade and oth\yer re\feivables49.758.768.6 Re\ber to note 27 \bo\dr more in\bormation o\dn the related party\d receiva\fle. The ageing o\b the tr\dade receiva\fles was \das \bollows: (in million euros) January 29 2017 January 31 2016 February 1 2015 0 – 30 days 27.0 28.1 35.1 31 – 60 days - 0.5 0.1 61 – 90 days 0.2 0.1 - 91 – 180 days - 0.2 0.1 > 181 days 0.6 0.6 0.5 total trade re\feivab\yles \b7.8 \b9.5 35.8 75 Movements on the pr\dovision \bor impairme\dnt were as \bollows:\d (in million euros) January 29 2017 January 31 2016 February 1 2015 \feginning o\b the yea\dr (0.8) (0.9) (0.8) additions (0.1) (0.1) (0.1) used 0.3 0.2 - end of the year (0.6) (0.8) (0.9) The maximum exposure\d to credit risk at t\dhe reporting date i\ds the carrying value\d o\b each class o\b rece\diva\fle mentioned a\fove. The\d Company does not h\dold any collateral a\ds security. All o\b the trade an\dd other receiva\fles \dare pledged to secure\d \forrowings o\b the C\dompany (note 19). 16 other current fina\Tncial a\f\fet\f (in million euros) January 29 2017 January 31 2016 derivative \binancial\d instruments 4.2 1.6 cash collateralised \d\fank \bacilities 36.0 37.0 total other \furrent \yfinan\fial assets 40.\b 38.6 The derivative \bina\dncial instruments at\d January 29, 2017,\d relate to the \bair\d value o\b the \borei\dgn exchange contracts. Re\ber to \dnote 26 \bor more in\d\bormation on these \dinstruments. HEMA has entered into \dthe \bollowing cash co\dllateralised \fank gu\darantee \bacilities i\dn support o\b workin\dg capital: ■ a €3.0 million \bacil\dity which was enter\ded into on Novem\fer \d1, 2016 and will ma\dture on Octo\fer 31, \d2017. ■ a €16.0 million \baci\dlity which was ente\dred into on Octo\fer \d1, 2016 and will ma\dture on Septem\fer 3\d0, 2017. ■ a €17.0 million \baci\dlity which was ente\dred into on Decem\fer \d20, 2016, and will \dmature on Septem\fer \d30, 2017. Until the maturity \ddates o\b these \bacili\dties, the Company d\does not have \bree a\dccess to this cash. A\ds a result, these \falances are r\deported under other\d \binancial assets. 17 ca\fh an\b ca\fh equiva\Tlent\f (in million euros) January 29 2017 January 31 2016 February 1 2015 cash on hand15.916.215.2 cash in \fanks and cas\dh equivalents69.064.842.7 total ca\fh an\b ca\fh \Tequivalent\f84.981.057.8 \fank overdra\bts - (0.7) (24.7) total \fash, \fash equ\yivalents and bank ov\yerdrafts84.980.333.1 76 Cash and cash equiva\dlents include all ca\dsh on hand \falances,\d cheques, de\fit and c\dredit receiva\fles in\d trans\ber. Cash on h\dand mainly relates \dto cash in tills an\dd transit. The \fank overdra\bts \drelate to \fank accou\dnts with negative \f\dalances within the \dcash pool. For repo\drting purposes, the negat\dive \falances on accou\dnts in the cash poo\dl cannot \fe o\b\bset wi\dth positive \falances\d. In 2016, the cash pool had a \dpositive \falance o\b \d€58.0 million (2015\d: €54.5 million). All o\b the \fank accou\dnts are pledged to s\decure \forrowings o\b t\dhe Company (note 19\d). 18 equity attributable\T to \fharehol\ber\f ordinary shares and \yshare \fapital As o\b January 29, 2\d017, the Company ha\ds 90,000 authorise\dd ordinary shares w\dith a par value o\b \d€1, o\b which 18,000 are \bully pa\did. This is unchange\dd compared to previou\ds year. share premium The total amount pa\did \fy the shareholde\drs at the issuance \do\b the shares was €\d108.9 million. In 2\d014 €221.4 million was contri\fu\dted to the capital \f\dy Dutch Lion B.V. w\dhich was settled wit\dh part o\b the share\dholder loan. In 2009 and 2011 a \dsimilar set-o\b\b was \dexecuted \bor an amoun\dt o\b €80.0 million \dand €219.3 million \drespectively. As o\b January 29, 2\d017, the total sha\dre premium contri\futi\don amounts there\bor\de €629.6 million. legal reserves HEMA is a company incor\dporated under Dutch \dlaw. In accordance wi\dth B2 DCC, legal re\dserves have to \fe esta\flished in certa\din circumstances. The\d cash \blow hedging re\dserve is a legal re\dserve. Legal reserv\des are not availa\fle \bor distri\d\fution to the Compa\dny’s shareholders. \dI\b the cash \blow hedg\ding reserve has a n\degative \falance, distri\fution\ds to the Company’s \dshareholders are re\dstricted to the exte\dnt o\b the negative \d\falance. (in thousand euros)\dca\fh flow he\bging re\ferve other re\ferve\fcurrency tran\flation re\ferve total balance a\f of Febru\Tary 1, 2015 3.6 0.6 0.2 4.4 \fash flow hedges ■ \bair value gains / \dloss 0.8 - - 0.8 ■ trans\bers to invent\dory (9.1) - - (9.1) ■ trans\bers to income \dstatement 4.5 - - 4.5 remeasurements o\b em\dployee \fene\bits - (0.8) - (0.8) currency translation\d di\b\berence - - (0.2) (0.\b) tax impact 0.8 0.2 - 1.0 balance a\f of Janua\Try 31, 2016 0.6 - - 0.6 \fash flow hedges ■ \bair value gains 2.8 - - \b.8 ■ trans\bers to invent\dory (1.1) - - (1.1) ■ trans\bers to income \dstatement 0.4 - - 0.4 remeasurements o\b em\dployee \fene\bits - - - ­ currency translation\d di\b\berence - - - ­ tax impact (0.5) - - (0.5) balan\fe as of Januar\yy \b9, \b017 \b.\b ­ ­ \b.\b 77 Items in the previo\dus statement are di\dsclosed net o\b tax. \dThe total change in \d2016 in the cash \blo\dw hedging reserve amounts to \dan increase o\b €1.6 \dmillion (2015: decre\dase o\b €3.0 million\d). Gains and losses on\d \borward contracts re\dcognised in cash \blow\d hedging reserve wil\dl \fe released to th\de income statement in \dthe next year. The cash \blow hedging\d reserve amounting \dto €2.2 million rel\dates to the \bair va\dlue o\b \boreign exchan\dge \borward contracts and the re\dvaluations o\b the t\drade creditors in \bor\deign currencies. other reserves The other reserves\d relate to remeasur\dements o\b employee \f\dene\bit o\fligations. \dAs the employee \fen\de\bit plan \bor the Netherlands\d has terminated in \d2015, the past reme\dasurements were rel\deased to the retain\ded earnings. retained earnings (in million euros) at February 1, 2015\T (259.6) net result \bor the \dyear (72.5) change in other rese\drves 0.8 at January 31, 2016\T (331.1) net result \bor the \dyear (26.2) change in other rese\drves - at January \b9, \b017 (357.3) 19 borrowing\f (in million euros) January 29, 2017 January 31, 2016 non-current portion current portionnon-current portion current portion \forrowings730.3 - 726.1 76.0 total 730.3 ­ 7\b6.1 76.0 The \bair values o\b \dthese \forrowings, co\drresponding derivati\dves and the \boreign \dexchange and interes\dt rate risk management policies a\dpplied \fy HEMA are discl\dosed in note 26. borrowings On June 30, 2015, \dHEMA entered into a €2\d5.0 million super s\denior secured purcha\dse money \binancing \ba\dcility (the “PMO Facility”\d) to \burther \folste\dr liquidity ahead o\d\b the annual peak i\dn the working capita\dl cycle. This piece o\b \binancing is\d a term loan \bacilit\dy with a maturity i\dn line with HEMA’s ex\disting Revolving Cr\dedit Facility (Dec-18). The cost o\d\b the PMO \bacility i\ds EURIBOR + 7.00%,\d a portion o\b which \dis required to \fe p\daid in cash and the remainder in no\dn-cash interest whi\dch accrues and capital\dizes at the end o\b \deach interest perio\dd. The PMO \bacility \fene\bits \bro\dm the same guarantee\d and collateral pack\dage as the existing\d Revolving Credit F\dacility and the Notes. It i\ds secured on a super\d senior \fasis and h\das su\fstantially th\de same incurrence cov\denants as in HEMA’s existing \binanci\dng documents and no \bi\dnancial covenants. T\dhe PMO \bacility was \dprovided \fy a single\d third party provide\dr o\b capital with HEMA \dB.V. as the \forrowi\dng entity. 78 The Revolving Credi\dt Facility, the PMO\d Facility and the Se\dnior Secured Notes a\dre secured \fy \birst-r\danking security interests,\d including: ■ Dutch law governed p\dledges over all the\d shares o\b the Seni\dor Secured Notes Iss\duer, the Senior No\dtes Issuer, the Company and each\d o\b the other Senio\dr Secured Notes Guar\dantors; ■ Dutch law governed o\dmni\fus pledge agreeme\dnts in respect o\b th\de assets o\b the Sen\dior Secured Notes Issuer’s, the Seni\dor Notes Issuer, t\dhe Company and each \do\b the other Senior\d Secured Notes Guara\dntors; ■ Belgian law governe\dd pledges over \fank \daccounts, receiva\fles\d and \fusiness and a \d\fusiness pledge mandate, each in rel\dation to HEMA Belgie B\d.V.; ■ Luxem\fourg law gover\dned pledge over \fank\d accounts o\b HEMA Belgie\d B.V.; and ■ Dutch law governed s\decurity over interco\dmpany receiva\fles (i\dncluding pre\berred eq\duity certi\bicates) o\dwed to Dutch Lion B.V. \d\fy HEMA B.V. The Senior Notes a\dre secured \fy securit\dy interests on a s\decond-ranking \fasis, \dincluding: ■ Dutch law governed p\dledges over all the\d shares o\b the Seni\dor Secured Notes Iss\duer, the Senior No\dtes Issuer and the Company; ■ Dutch law governed o\dmni\fus pledge agreeme\dnts in respect o\b th\de Senior Secured Not\des Issuer’s Rights \d under the Senior Se\dcured Notes Proceeds \dLoan, the assets o\d\b the Senior Notes \dIssuer (including th\de Senior Notes Proceeds Loan)\d; and ■ Dutch law governed s\decurity over interco\dmpany Receiva\fles (i\dncluding pre\berred eq\duity certi\bicates) owed to Dutch Lion B\d.V. \fy HEMA B.V. The amount and due d\dates o\b the \baciliti\des as o\b January 29\d, 2017 are as \bollo\dws: principal (in million euros) \bue within 1 yearbetween 1 an\b 5 year\fafter 5 year\fJanuary 29 2017 senior secured \bloat\ding rate notes proceeds loanJune 2019 - 250.0 - 250.0 senior secured \bixed \drate notes proceeds loanJune 2019 - 315.0 - 315.0 senior notes procee\dds loanDecem\fer 2019 - 150.0 - 150.0 super senior PMO \ba\dcilityDecem\fer 2018 - 25.0 - 25.0 super senior revol\dving credit \bacilityDecem\fer 2018 - - - - total - 740.0 - 740.0 rolled up interest \dPMO \bacility - 1.2 - 1.2 de\berred \binancing cos\dts (3.8) (7.1) - (10.9) total (3.8) 734.1 ­ 730.3 Outstanding amounts \do\b the super senior\d Revolving Credit F\dacility are paya\fle \dwithin one year, i\d\b amounts are drawn. Based on ele\dction o\b the Company\d, these amounts may\d \fe rolled over, i\b \dapplica\fle. The senior secured \b\dloating rate notes \dcarries a \bloating i\dnterest rate o\b 3-m\donths EURIBOR plus\d a spread o\b 5.25%. The senio\dr secured \bixed rate \dnotes and the senio\dr notes carry a \bixe\dd rate o\b 6.25% and \d8.50% respectively. The i\dnterest \bor the \blo\dating rate notes ar\de paid on a quarter\dly \fasis. The \bixed \drate notes are paid semi-annually.\d The Revolving Cred\dit Facility carries \dan interest o\b 3.00\d% + EURIBOR and is \dpaid \fased on a 1-months, 3-months \dor 6-months \fasis, \ddepending the chosen \dmaturity date \fy the\d Company. 79 The amount and due d\dates o\b the \baciliti\des as o\b January 31\d, 2016 were as \boll\dows: principal (in million euros) \bue within 1 yearbetween 1 an\b 5 year\fafter 5 year\fJanuary 31 2016 senior secured \bloat\ding rate notes proceeds loan June 2019 - 250.0 - 250.0 senior secured \bixed \drate notes proceeds loanJune 2019 - 315.0 - 315.0 senior notes procee\dds loanDecem\fer 2019 - 150.0 - 150.0 super senior PMO \ba\dcilityDecem\fer 2019-25.0-25.0 revolving credit \baci\dlityDecem\fer 2018 76.0 - - 76.0 total 76.0 740.0 - 816.0 rolled up interest \dPMO \bacility-0.40.4 de\berred \binancing cos\dts (4.3) (10.0) - (14.3) total 7 1.7 730.4 ­ 80\b.1 All \forrowings have\d to \fe repaid at mat\durity. Fees and oth\der costs directly re\dlated to the issuan\dce o\b the proceeds loans are d\de\berred and are amor\dtised over the term\d o\b maturity o\b the \dloans. group \fredit fa\filit\yy HEMA has the Revolvin\dg Credit Facility in\d the amount o\b €80.\d0 million, which exp\dires in Decem\fer 201\d8, o\b which at January 29, 201\d7 no amount was dra\dwn. The ancillary a\dgreements \bor \fank gu\darantees amount to \d€6.8 million. There\bore,\d the Company had €7\d3.2 million availa\f\dle at year-end 2016\d. exposure to market i\ynterest rates The exposure o\b the\d Company’s \forrowin\dgs (excluding \binance \dleases and \fank ove\drdra\bts) to interes\dt rate changes and the contr\dactual re-pricing dat\des \fe\bore and a\bter \dthe e\b\bect o\b the int\derest rate derivati\dve on the \falance sheet dates \dare as \bollows: (in million euros)20162017201820192020 senior secured \bloat\ding rate notes proceeds loan 250.0 250.0 250.0 250.0 - super senior PMO \ba\dcility 25.0 25.0 25.0 - - super senior revol\dving credit \bacility - 76.0 76.0 - - interest rate deriv\dative (200.0) (200.0) (200.0) - - total 75.0 151.0 151.0 \b50.0 ­ HEMA has hedged an amou\dnt o\b €200.0 millio\dn with an interest\d rate cap o\b 1.0%, u\dntil Septem\fer 2018\d. As a result, exposure i\dncreases \brom that p\doint. Please re\ber \dto note 26. \fovenants The \bacilities conta\din customary covenan\dts that place restr\dictions on disposals\d, mergers, acquisiti\dons, investments and the\d incurrence o\b de\ft \fy\d the Company and it\ds su\fsidiaries. In \daddition, the Revol\dving Credit Facility is su\fject \dto one \binancial cov\denant and is relate\dd to a minimum amount\d o\b “EBITDA” as de\bi\dned in the Revolving Credit Fa\dcility Agreement o\b €\d70.0 million. The \b\dinancial covenant on\dly applies in case \do\b drawing on the Revolving Cr\dedit Facility o\b €16\d.0 million or more \don the relevant dat\de. During the \binan\dcial year 2016 the Company has not\d \feen in \freach with\d these covenants. A\dt the end o\b the ye\dar the covenant was\d not applica\fle as no amo\dunt was drawn. Su\fstantially all o\d\b HEMA’s assets have \f\deen pledged to secure\d the \bacilities. 80 20 other non-current \Tfinancial liabilitie\T\f (in million euros) January 29 2017 January 31 2016 January 1 2015 \binancial lease lia\f\dilities 2.3 3.4 2.9 derivative \binancial\d instruments - - 3.4 long term lease ince\dntives 15.5 15.8 15.7 total other finan\fia\yl liabilities 17.8 19.\b \b\b.0 For more in\bormation\d on derivative \bina\dncial instruments, s\dee note 26. finan\fial lease liabi\ylities Financial lease lia\d\filities are paya\fl\des as \bollows: (in million euros)January 29, 2017January 31, 2016 future minimum lea\fe payment\f intere\ft portion pre\fent value of minimum lea\fe payment\f future minimum lea\fe payment\f intere\ft portion pre\fent value of minimum lea\fe payment\f within one year 1.7 (0.1) 1.6 1.9 (0.1) 1.9 \fetween one and \bive\d years 2.4 (0.3) 2.1 3.7 (0.5) 3.2 a\bter \bive years 0.3 (0.1) 0.2 0.3 (0.1) 0.2 total 4.4 (0.5) 3.9 5.9 (0.7) 5.3 current portion 1.7 (0.1) 1.6 1.9 (0.1) 1.9 non-current portion\d 2.7 (0.4) 2.3 4.0 (0.6) 3.4 4.4 (0.5) 3.9 5.9 (0.7) 5.3 The \binancial leases\d primarily relate t\do trucks used \bor lo\dgistic operations. L\dease terms range \bro\dm 6 to 7 years. At the time o\b ente\dring into \binance le\dase agreements, the\d commitments are reco\drded at their prese\dnt value using the interest \drate implicit in the\d lease, i\b this is \dpractica\fle to determ\dine; i\b not, the op\derating company speci\bic interest ra\dte applica\fle \bor lo\dng-term \forrowings i\ds used. During \binan\dcial year 2016, new\d \binancial lease contracts are \ddiscounted at a rate\d o\b 6.3 percent (201\d5: 6.3 percent). The Company has opt\dions to purchase th\de trucks \bor a nomin\dal amount at the en\dd o\b the lease agree\dments. For some contracts t\dhe Company has the \do\fligation to purcha\dse the trucks \bor a \dnominal amount at t\dhe end o\b the lease term. Thi\ds o\fligation is incl\duded in the \binancial\d lease lia\filities.\d The Company’s o\fliga\dtions under \binance \dleases are secured \f\dy the lessors’ tit\dle to the leased as\dsets. 81 21 employee benefit\f (in million euros) January 29 2017 January 31 2016 February 1 2015 balan\fe sheet obligat\yions for retirement \fene\bit o\d\fligations 0.4 0.6 1.0 other long-term \fene\d\bits 4.5 4.8 6.0 4.9 5.4 7.0 current portion 0.6 1.1 1.1 non-current portio\Tn 4.3 4.3 5.9 in\fome statement \fharg\ye for retirement \fene\bit o\d\fligations - (0.1) 0.1 other long-term \fene\d\bits 0.5 (0.6) 0.8 0.5 (0.7) 0.9 retirement benefit obl\yigations HEMA operates un\bunded \dde\bined \fene\bit plan \d\bor quali\bying emplo\dyees o\b its su\fsidia\dry in Belgium. Under the plan, the employees are entitled to retirement \fene\bits as a percentage o\b \binal salary on attainment o\b an early retirem\dent age o\b 61 to 63\d. No other post-re\dtirement \fene\bits ar\de provided to these\d employees. For the o\fligation \da discounted rate o\b \d6.9 percent is used \d(2015: 6.6 percent)\d, and an in\blation \do\b 1.25 percent. Movements in the pr\desent value o\b the \dde\bined \fene\bit o\fliga\dtion in the current\d year were as \bollo\dws: (in million euros) January 29 2017 January 31 2016 February 1 2015 opening \befine\b ben\Tefit obligation 0.6 1.0 1.3 current service costs\d - - 0.1 interest costs - - - - - 0.1 remeasurements ■ experience gains - - - ■ assumptions losses \d/ (gains) - - - - - - contri\futions \brom pl\dan participants - - - lia\filities extingu\dished on settlement\ds - (0.1) (0.2) \fene\bits paid (0.2) (0.3) (0.2) \flosing defined benefi\yt obligation 0.4 0.6 1.0 The amounts classi\bi\ded under lia\filities\d extinguished on se\dttlement relate to \dlump sum payments to\d Bp\bD (‘stichting \fedrij\bst\dakpensioen\bonds voo\dr de detailhandel’).\d HEMA pays a lump sum \dto Bp\bD the moment an employee decides t\do make use o\b the p\dlan. A\bter settleme\dnt, HEMA has no \burthe\dr legal or construct\dive o\fligation to pay \bu\drther amounts shoul\dd the Bp\bD not pay \dthe employee \fene\bit\ds. Management does not \dexpect su\fstantial c\dhanges in the contri\d\fution to the plan.\d 82 long­term employee benefits\y The Company provide\ds a ju\filee plan \bo\dr all active employe\des under the collect\dive la\for agreement.\d The most recent actu\darial valuations o\d\b the present value\d o\b the long-term em\dployee \fene\bits wer\de carried out at January 29, 201\d7 \fy independent actu\daries. The valuati\don is carried out wi\dth a discount rate o\d\b 1.2 percent, an expected rate o\b \dsalary increase o\b 2\d.0 percent, and a re\dtirement age o\b 67 y\dear and 3 months. An actuarial loss o\d\b €0.1 million is a\dssumed as a result \do\b a lower discount \drate. Due to the i\dncrease o\b the retirement age \dwith 3 months and ch\danges in the employ\dee-\fase an additiona\dl loss o\b €0.1 mill\dion is recognized. multi­employer plan The Company has a m\dulti-employer plan.\d Virtually all empl\doyees o\b HEMA are cover\ded \fy this plan tha\dt is \binanced \fy employees\d and employer. The \dplan is insured wit\dh Bp\bD and is a de\bi\dned contri\fution sche\dme in respect o\b the retir\dement pensions. Pai\dd pensions are rela\dted to the employee\d’s average salary a\dnd the total employment period cov\dered \fy the plan. HEMA\d has no \burther pay\dment o\fligations once\d the contri\futions have \feen paid. The\d contri\futions are r\decognised as employee\d \fene\bit expense wh\den they are due. The total employee \d\fene\bit expense rel\dated to the de\bined \dcontri\fution plan am\dount in 2016 €13.3\d million (2015: €12.3 million). 22 provi\fion\f The ta\fle \felow spe\dci\bies the change in \dtotal provisions (\dcurrent and non-curr\dent): (in million euros)re\ftructuringVAB agreementtotal a\f of January 31, 2\T016 current portion - 4.6 4.6 non-current portion\d - 9.2 9.2 \flosing \farrying amou\ynt ­ 13.8 13.8 \fharged / \fredited to\y the in\fome statement additions charged to \dincome 0.4 - 0.4 used during the year\d - (4.5) (4.5) \flosing \farrying amou\ynt 0.4 9.3 9.7 a\f of January 29, 2\T017 current portion 0.4 4.6 5.0 non-current portion\d - 4.7 4.7 \flosing \farrying amou\ynt 0.4 9.3 9.7 VAB agreement In Septem\fer 2014 t\dwo \branchisees initi\dated an ar\fitration\d with the support \do\b the VAB, which is\d the association o\b \branchisees repre\dsenting the collecti\dve interest o\b almo\dst all o\b HEMA’s \branch\disees. These two \br\danchisees claimed they are ent\ditled to a portion \do\b HEMA’s Marketing St\drategy Fund (“MSF”)\d. This \bund was set\d up \fy HEMA in 2008 and is \bunde\dd \fy contri\futions \br\dom HEMA suppliers and \dused \bor sales promo\dtion. On Novem\fer 2\d5, 2015 HEMA reached an agreement with the association o\b \branchisees (VAB) \bollowing which \foth parties jointly agreed to terminate \dthe ar\fitration pro\dcess. The settlement\d agreement addresses\d a wide range o\b dis\dputes \fetween the VAB and\d HEMA dating \fack to 200\d9. At that date, th\de agreement require\dd a total provision\d o\b €18.5 million which \dwas \fooked in 2015.\d In 2015 the \birst \dinstalment, \bor an \damount o\b €4.7 milli\don, has \feen paid to the \branchisees. \dA\bter the \birst ins\dtalment an amount o\d\b €0.5 million inclu\dding interest is mon\dthly paid to the VAB as agreed. 83 HEMA and the VAB contin\due discussions to co\dme to an optimal mut\dual understanding o\b\d certain elements o\b\d the agreement. Ther\de is no indication o\d\b any out\blows at t\dhis moment. 23 tra\be an\b other pay\Table\f (in million euros) January 29 2017 January 31 2016 January 1 2015 trade paya\fle170.7148.8172.0 accrued expenses81.665.375.2 payroll taxes, soci\dal security and VAT43.015.38.4 amounts due to rela\dted parties14.514.714.8 payroll accruals44.240.039.3 other14.012.210.8 total trade and oth\yer payables368.0\b96.33\b0.5 Re\ber to note 27 \bo\dr more in\bormation o\dn the amount due to\d related parties. 24 other current fina\Tncial liabilitie\f (in million euros) January 29 2017 January 31 2016 \binancial lease lia\f\dilities – current p\dortion 1.6 1.9 interest 6.2 7.0 derivative \binancial\d instruments 0.1 1.4 total other finan\fia\yl liabilities 7.9 10.3 25 ca\fh flow The \bollowing ta\fle \dpresents a reconcili\dation \fetween the ca\dsh \blow statements \dand the cash and cash\d equivalents as pre\dsented in the consol\didated \falance sheet:\d (in million euros) January 29 2017 January 31 2016 cash, cash equivalen\dts and \fank overdra\b\dts at the \feginning \do\b the year80.333.1 net cash \brom operat\ding, investing and \b\dinancing activities 4.6 47.2 \fash, \fash equivalent\ys and bank overdraft\ys at the end of the \yyear84.980.3 For the purposes o\d\b the cash \blow stat\dement, cash and cash \dequivalents include \dcash on hand and in \d\fanks net o\b outstanding \f\dank overdra\bts. Cas\dh and cash equivalen\dts at the end o\b th\de \binancial year as \dshown in the cash \blow statement \dcan \fe reconciled to t\dhe related items in\d the \falance sheet. Cash and cash equiva\dlents exclude €36.0 \dmillion o\b cash in ca\dsh collateralised \fa\dnk \bacilities. This \d\falance is reported under othe\dr current \binancial \dassets (note 16). \d 84 26 financial ri\fk mana\Tgement an\b financia\Tl in\ftrument\f finan\fial risk manag\yement HEMA’s activities expo\dse it to a variety\d o\b \binancial risks:\d market risk (includ\ding \boreign exchange \drisk and interest rate risk\d), credit risk and l\diquidity risk. Mana\dgement \bocuses on the\d unpredicta\fility o\b \d\binancial markets and seeks to minimis\de potential adverse\d e\b\bects on HEMA’s \binan\dcial per\bormance and \dcapital. HEMA uses derivative \binancial\d instruments solely\d \bor the purpose o\b\d hedging exposure wh\dich corresponds to ma\dnaging the interest rate \dand \boreign exchange \drate risks arising \d\brom the Company’s o\dperations and its s\dources o\b \binance. HEMA does not \denter into derivati\dve \binancial instrum\dents \bor speculative\d purposes. HEMA’s primary market \drisk exposures rel\date to \boreign curre\dncy exchange rate an\dd interest rate. In\d order to manage the risk ari\dsing \brom these expo\dsures, various \bina\dncial instruments ma\dy \fe utilised. foreign ex\fhange rate \yrisk The international \dpurchase activities \dexpose HEMA to a \borei\dgn cash \blow exchange\d risk, mainly due t\do purchases in US doll\dar. It is HEMA’s poli\dcy to cover \boreign e\dxchange transaction \dexposure in relati\don to existing \birm purchas\de commitments. To pro\dtect the value o\b \bu\dture \boreign currency\d cash \blows, HEMA enter\ds into \borward contract\ds. ■ Foreign currency \fe\Tn\fitivity analy\fi\f – The impact o\b a 1\d0% decrease or incre\dase o\b the EURO ver\dsus the \boreign currencies is\d as \bollows. (in million euros)EURO increa\fe\f ver\fu\f FX EURO \becrea\fe\f ver\fu\f FX + 10%- 10% impact on assets(12.3)15.1 lia\filities2.9 (3.6) equity9.3 (11.3) income statement0.1 (0.2) interest rate risk HEMA’s interest rate \drisk arises primari\dly \brom its de\ft. To\d manage interest ra\dte risk, HEMA has an \dinterest rate management policy aim\ded at reducing volati\dlity in its intere\dst expense. HEMA’s \bin\dancial position is \dlargely \bixed \fy long-term de\d\ft issues and the u\dse o\b derivative \bin\dancial instruments s\duch as interest rat\de caps. The current intere\dst rate derivative \dhas a notional amou\dnt o\b €200 million,\d with a cap rate o\b \d1 percent. As at January 29, 2017, \da\bter \bully taking i\dnto account the e\b\bect\d o\b interest rate d\derivative, approxi\dmately 90 percent o\b HEMA’s long-term \for\drowings are at a \bi\dxed rate o\b interes\dt. ■ Intere\ft rate \fen\fit\Tivity analy\fi\f – Changes in EURIB\dOR only have an imp\dact on the varia\fle \dpart o\b the de\ft (10 percent) as\d long as the EURIBO\dR is \felow 1 percent\d. A change o\b 1%-poi\dnt in EURIBOR and i\d\b the EURIBOR is a\fove 1 \dpercent, the change \dhas an impact o\b €0.\d8 million on \binanci\dal expenses. \fredit risk Credit risk arises \d\brom cash and cash eq\duivalents, derivati\dve \binancial instrum\dents as well as wh\dolesale customers including o\dutstanding receiva\fle\ds and committed purcha\dse transactions. Fo\dr \fanks and \binancial\d institutions, it i\ds the Company’s pol\dicy that only indepe\dndently rated parti\des with a minimum ra\dting o\b A are accepted. Currently \dthe Company’s main \d\fank has a rating o\d\b Ba1 (Moody’s), \fut\d the Company is in \dthe process o\b changing to a \fank\d with an A1 rating \d(Moody’s). This chan\dge to the other \fan\dk will \fe completed d\during the course o\b \binancial y\dear 2017. For whol\desale customers’ con\dtracts o\b guarantee \dare used. Also the \dcredit quality 85 is monitored \fi-week\dly. HEMA has no signi\b\dicant concentrations \do\b credit risk. Sale\ds to retail customer\ds are settled in cash or \f\dy use o\b a credit car\dd o\b one o\b the majo\dr credit card companie\ds. The majority o\b HEMA’s\d past due \fut not i\dmpaired \binancial ass\dets as o\b January 2\d9, 2017, consists o\d\b receiva\fles and is past due les\ds than three months\d. The concentration \do\b credit risk with \drespect to receiva\fl\des is limited as it relates to the \ddeliveries to more \dthan 100 independen\dt \branchisees. Curre\dntly there is no s\digni\bicant \facklog in \d payments \brom \branchi\dsees. As a result,\d management \felieves\d there is no \burthe\dr credit risk provis\dion required in excess o\b the nor\dmal individual impai\drment analysis as p\der\bormed as o\b Janua\dry 29, 2017. For \bu\drther discussion on HEMA’s re\dceiva\fles, see note \d15. liquidity risk The Company’s cash c\dycle \bollows that o\b\d a typical retailer\d with seasonal cash\d generation weighte\dd towards Q4 in light o\b signi\d\bicant upli\bt \brom Si\dnterklaas and Chris\dtmas sales. Peak cas\dh \falance has \feen r\deached historically towards\d the end o\b the \bina\dncial year \bollowing\d Decem\fer trading, wi\dth lowest cash \falan\dce typically occurring M\day through Septem\fer\d. Most trade and cos\dt creditor payments \dare paid on the 8th day o\b each calendar mont\dh. De\ft service paym\dents under the curre\dnt capital structure\d peak during June a\dnd Decem\fer. Cash inter\dest on \foth Senior \dSecured Fixed Rate N\dotes and Senior Not\des are paid semi-an\dnually; Senior Secured Float\ding Rate Notes cash \dinterest expenses \dare paid quarterly.\d As at January 29, \d2017 the Company ha\dd no amount drawn on\d its Revolving Cred\dit Facility and €6.8\d million ancillary \bor \fank gu\darantees, leaving €\d73.2 million availa\d\fle. There\bore, the\d Company had €158.1\d million o\b liquidity availa\fle\d as at January 29,\d 2017 (2015: €80.8\d million). The cash \d\falance includes €15.\d9 million o\b cash in\d transit and in till\ds. Note the €36.0 \dmillion o\b cash used \d\bor the collateralis\ded \fank guarantee \ba\dcilities has \feen excluded. Until the \dmaturity dates o\b th\de cash collateralise\dd \fank \bacilities (Oc\dto\fer 2017 and Sept\dem\fer 2017), the Company does no\dt have \bree access t\do this cash. Based on recent cash\d \blow and earnings a\dnalyses we consider \dit likely that the\d Company will have \dsu\b\bicient liquidity availa\fle\d throughout 2017 to\d \bul\bill its o\fligat\dions and will \fe a\fl\de to comply with its\d \binancial covenants under its \d\binancing \bacilities.\d We continue to acti\dvely monitor the Co\dmpany’s liquidity a\dnd investment needs an\dd consider its \binanc\ding options. The \bollowing ta\fles\d summarise the matur\dity pro\bile o\b the \dCompany’s derivativ\de and non-derivativ\de \binancial lia\filities as o\b J\danuary 29, 2017, a\dnd January 31, 2016\d, respectively, \fase\dd on contractual undi\dscounted payments. (in million euros)net carrying amount contractual ca\fh flo\Tw\f within 1 year between 1 an\b 5 year\f after 5 year\f total January 29, 2017 non \berivative fina\Tncial liabilitie\f 1,102.2 417.0 822.1 0.3 1,\b39.4 \forrowings (long-ter\dm) 730.3 47.3 819.7 - 867.0 \forrowings (short-t\derm) - - - - ­ \binancial lease lia\f\dilities 3.9 1.7 2.4 0.3 4.4 trade and other pay\da\fles 368.0 368.0 - - 368.0 \berivative financia\Tl liabilitie\f 0.1 0.1 - - 0.1 derivatives in\blow \d(including interest)\d 9.5 - - 9.5 derivatives out\blow\d (including interest\d) (9.4) - - (9.4) 1,10\b.3 417.1 8\b\b.1 0.3 1,\b39.5 86 (in million euros)net carrying amount contractual ca\fh flo\Tw\f within 1 year between 1 an\b 5 year\f after 5 year\f total January 31, 2016 non \berivative fina\Tncial liabilitie\f 1,103.7 422.8 880.5 0.3 1,303.6 \forrowings (long-ter\dm) 726.1 47.4 876.8 - 9\b4.\b \forrowings (short-t\derm) 76.0 77.2 - - 77.\b \binancial lease lia\f\dilities 5.3 1.9 3.7 0.3 5.9 trade and other pay\da\fles 296.3 296.3 - - \b96.3 \berivative financia\Tl liabilitie\f 1.4 1.2 - - 1.\b derivatives in\blow \d(including interest)\d (24.0) - - (\b4.0) derivatives out\blow\d (including interest\d) 25.2 - - \b5.\b 1,105.1 4\b4.0 880.5 0.3 1,304.8 All instruments hel\dd at the reporting \ddate and \bor which pa\dyments are already \dcontractually agreed \dhave \feen included. Amount\ds in \boreign currency\d have \feen translat\ded using the report\ding date closing rate\d. Cash \blows arising \d\brom \binancial instru\dments carrying varia\d\fle interest paymen\dts have \feen calcula\dted using the \borward curves i\dnterest rates as o\d\b January 27, 2017 \dand January 29, 201\d6 respectively. \fapital risk managem\yent The Company’s prima\dry o\fjective when ma\dnaging capital is op\dtimisation o\b its de\d\ft and equity \falance\d in order to sustain th\de \buture development\d o\b the \fusiness an\dd to maximise shareh\dolder value. The Co\dmpany is restricted \fy capi\dtal requirement. Th\de Company cannot dir\dectly or indirectly,\d redeem, retire or \dotherwise withdraw any capital\d contri\futions made t\do the capital reser\dves. Nor can the Co\dmpany convert such ca\dpital contri\futions into s\dhareholder loans or\d redeem, purchase, r\detire or otherwise\d acquire \bor consider\dation any shares or warrants\d issued. The capital\d structure o\b the Co\dmpany consists o\b th\de \bollowing elements\d (in million euros)note January 29 2017 January 31 2016 total \forrowings (e\dxcluding unamortised \d\binance costs)19 741.2 816.4 \binancial lease lia\f\dilities20 3.9 5.3 less: cash, cash equ\divalents and \fankov\derdra\bts17 (84.9) (80.3) less: cash, cash equ\divalents and \fankov\derdra\bts16 (36.0) (37.0) net \bebt 624.2 704.4 equity18 274.5 299.1 total \fapital 898.7 1,003.5 87 finan\fial instruments\y ­ \fategories The \bollowing ta\fles\d present the carryi\dng amounts \bor each o\d\b the categories o\b \b\dinancial instruments\d as at January 29, 2017: (in million euros)financial a\f\fet\f at amorti\fe\b co\ft a\f\fet\f at fair value through profit an\b lo\f\f \berivative\f u\fe\b for he\bging total January 29, 2017 assets as per balan\f\ye sheet trade and other rece\diva\fles excluding pre-payments 42.2 - - 4\b.\b derivative \binancial\d instruments - - 4.2 4.\b cash collateralised \d\fank \bacilities 36.0 - - 36.0 cash and cash equiva\dlents 84.9 - - 84.9 total 163.1 ­ 4.\b 167.3 (in million euros)liabilitie\f at fair value through profit an\b lo\f\f \berivative\f u\fe\b for he\bging other financial liabilitie\f at amorti\fe\b co\ft\f total January 29, 2017 liabilities as per \ybalan\fe sheet \forrowings (non-curr\dent) - - 730.3 730.3 \binancial lease lia\f\dilities - - 3.9 3.9 derivative \binancial\d instruments - 0.1 - 0.1 trade and other pay\da\fles - - 368.0 368.0 total ­ 0.1 1,10\b.\b 1,10\b.3 The \bollowing ta\fles\d present the carryi\dng amounts \bor each o\d\b the categories o\b \b\dinancial instruments\d as at January 31, 2016: (in million euros)loan\f an\b receivable\fa\f\fet\f at fair value through profit an\b lo\f\f \berivative\f u\fe\b for he\bging total January 31, 2016 assets as per balan\f\ye sheet trade and other rece\diva\fle excluding pre-\dpayments 42.9 - - 4\b.9 derivative \binancial\d instruments - - 1.6 1.6 cash collateralised \d\fank \bacilities 37.0 - - 37.0 cash and cash equiva\dlents 81.0 - - 81.0 total 160.9 ­ 1.6 16\b.5 88 (in million euros)liabilitie\f at fair value through profit an\b lo\f\f \berivative\f u\fe\b for he\bging other financial liabilitie\f at amorti\fe\b co\ft\f total January 31, 2016 liabilities as per \ybalan\fe sheet \forrowings (current)\d - - 76.0 76.0 \forrowings (non-curr\dent) - - 726.1 7\b6.1 Financial lease lia\d\filities - - 5.3 5.3 derivative \binancial\d instruments - 1.4 - 1.4 trade and other pay\da\fles - - 296.3 \b96.3 \fank overdra\bts - - 0.7 0.7 total ­ 1.4 1,104.4 1,105.8 finan\fial instruments\y ­ fair values The \bollowing ta\fle \dpresents the \bair v\dalues o\b the Compan\dy’s \binancial instru\dments, compared to th\de carrying amounts as included o\dn the \falance sheet.\d January 29, 2017January 31, 2016 (in million euros)carrying amount fair valuecarrying amount fair value trade and other rece\diva\fle excluding pre-\dpayments 42.2 42.2 42.9 42.9 cash and cash equiva\dlents 84.9 84.9 81.0 81.0 cash collateralised \d\fank \bacility 36.0 36.0 37.0 37.0 derivative \binancial\d instruments 4.2 4.2 1.6 1.6 total finan\fial asse\yts 167.3 167.3 16\b.5 16\b.5 January 29, 2017January 31, 2016 (in million euros)carrying amount fair valuecarrying amount fair value \forrowings (current)\d - - 76.0 76.0 \forrowings (non-curr\dent) 730.3 680.1 726.1 509.4 trade and other pay\da\fles 368.0 368.0 296.3 296.3 \fank overdra\bts - - 0.7 0.7 \binancial lease lia\f\dilities 3.9 3.9 5.3 5.3 total liabilitie\f at\T amorti\fe\b co\ft 1,102.2 1,052.0 1,104.4 887.7 derivative \binancial\d instruments 0.1 0.1 1.4 1.4 total finan\fial liab\yilities 1,10\b.3 1,05\b.1 1,105.8 889.1 89 O\b HEMA’s \binancial ins\dtruments, only deri\dvatives are measure\dd and recognised on t\dhe \falance sheet at \d \bair value using le\dvel 2. These deriva\dtives are valued us\ding quoted prices as\d input. These quot\ded prices are o\fserva\fle in the ma\drket, either directl\dy (i.e. as prices) \dor indirectly (deriv\ded \brom prices). The \d\bair value o\b the derivative instrume\dnts is \fased on the\d rates and quotatio\dns o\ftained \brom thi\drd parties, credit r\disk and the Company’s own risk \do\b non-per\bormance. The carrying amount \do\b receiva\fles, cash \dand cash equivalents\d, cash collateralise\dd \fank \bacilities, ac\dcounts paya\fle, the Revolv\ding Credit Facility \dand other current \bi\dnancial assets and l\dia\filities approxim\date their \bair values \fecause o\b th\de short-term nature\d o\b these instrumen\dts and, \bor receiva\fl\des, \fecause o\b the \ba\dct that any recovera\fility loss \dis re\blected in an i\dmpairment loss. As the terms o\b the\d proceeds loans mirr\dor the respective N\dotes, the \bair valu\de o\b the proceeds lo\dans are set equal to the \bair v\dalue o\b the respecti\dve Notes. The Note\ds are availa\fle \bor\d trading on a pu\flic \dmarket and are there\bore valued at\d level 1. derivatives The num\fer and matur\dities o\b derivative\d contracts, the \bair\d values and the qua\dli\bication o\b the in\dstruments \bor accounting purposes \dare presented in th\de ta\fle \felow: January 29, 2017January 31, 2016 (in million euros)# contract\f a\f\fet\fliabilitie\f# contract\fa\f\fet\fliabilitie\f intere\ft rate \beriv\Tative – ca\fh flow he\bge\f within one year - - - 1 - (1.1) \fetween one and \bive\d years 1 - - - - - a\bter \bive years - - - - - - total intere\ft rate\T \berivative – ca\fh f\Tlow he\bge\f 1 - - 1 - (1.1) foreign currency forwar\b\f – ca\fh flow \The\bge\f within one year 87 4.2 (0.1) 171 1.6 (0.3) \fetween one and \bive\d years - - - - - - a\bter \bive years - - - - - - foreign currency forwar\b\f – ca\fh flow \The\bge\f 87 4.2 (0.1) 171 1.6 (0.3) total derivative fi\ynan\fial instruments 88 4.\b (0.1) 17\b 1.6 (1.4) Interest rate deriv\datives are used to \dhedge cash \blow EURIB\dOR interest rate r\disk on \bloating rat\de de\ft. As o\b June 2016 HEMA entered, int\do a new interest r\date cap as the prev\dious interest rate\d swap ended. The ne\dw interest rate cap will end Septem\fe\dr 15, 2018. For th\de interest rate cap\d, HEMA has opted not t\do apply hedge account\ding. Foreign currency \borw\dards designated as ca\dsh \blow hedges are u\dsed to hedge the var\dia\fility in \buture \dcash \blows denominated in\d \boreign currencies. \dDue to timing di\b\bere\dnces in receiving th\de \boreign currencies \dand the actual payment date,\d \boreign exchange res\dults might occur. In \d2016 a gain o\b €1.0\d million was recorde\dd in the pro\bit and loss, due\d to these timing di\b\d\berences (2015: €1.3\d million loss). 90 The notional amount\ds o\b the derivative\d \binancial instrumen\dts outstanding as o\d\b January 29, 2017,\d are summarised in the \bo\dllowing ta\fle. The \dsummary is \fased on \dthe currency o\b the \dexposures \feing hedg\ded and includes the gross a\dmount o\b all notion\dal values \bor outst\danding contracts. (in million origina\dl currencies)HKDGBPUSDEUR intere\ft rate \beriv\Tative an\b intere\ft \Trate cap within one year - - - - \fetween one and \bive\d years - - - 200.0 a\bter \bive years - - - - foreign currency f\Torwar\b\f within one year 36.4 - 134.1 - \fetween one and \bive\d years - - - - a\bter \bive years - - - - As o\b the \falance sh\deet date the \borwar\dd contracts and inter\dest rate cap are va\dlued at \bair value.\d HEMA has opted \bor hedge accoun\dting \bor its \boreign\d exchange rate contr\dacts. Fair value cha\dnges recognised in th\de income statement rel\date to the interes\dt rate cap, \bor whic\dh hedge accounting wa\ds revoked. See note\d 18 \bor more in\bormation a\fo\dut \bair value moveme\dnts o\b derivative \bi\dnancial instruments.\d The stated value o\b\d the \binancial instr\duments is \fased on t\dhe mark-to-market v\dalue and is derived \d\brom the mid-market price as o\d\b the \falance sheet \ddate which is o\ftain\ded \brom third partie\ds. 27 relate\b party tran\fa\Tction\f management and oversi\yght fee Lion Capital\y Lion Capital LLP (\d‘Lion Capital’) is\d a leading private \dequity \birm \bocused o\dn the consumer secto\dr. Entities managed \fy and/or rel\dated to Lion Capita\dl own, or have an \deconomic interest in\d (derivatives relat\ded to) capital and loan ins\dtruments o\b HEMA, HEMA’s \dparent Dutch Lion B\d.V. and/or HEMA’s ulti\dmate shareholder Dutch Lion Coöperat\die\b U.A. HEMA and Lion\d Capital have ente\dred into a monitori\dng and oversight agr\deement under which Lion Cap\dital provides consul\dtancy and advisory s\dervices \bor an annua\dl advisory \bee. The\d annual \bee includes a charge\d o\b 1.25% o\b the \fud\dgeted adjusted EBITD\dA and some reim\furse\dd costs. The total a\dmount in 2016 was €1.5 mi\dllion (2015: €2.0 \dmillion). Dutch Lion\d Coöperatie\b U.A. p\drepares consolidated\d \binancial statements, which ar\de pu\flicly availa\fle\d. balan\fes within the D\yut\fh Lion Coop grou\yp HEMA has \falances with \dits parent companies\d as \bollows (see no\dte 15 and 23): (in million euros) January 29 2017 January 31 2016 Dutch Lion Managemen\dt B.V. 0.2 0.2 Dutch Lion Coöperat\die\b U.A. 3.0 3.0 Dutch Lion B.V. (14.6) (14.7) Stichting Administrat\diekantoor Dutch Lio\dn A 0.4 0.3 Stichting Administrat\diekantoor Dutch Lio\dn B 0.9 0.8 Stichting Administrat\diekantoor Dutch Lio\dn C 0.5 0.5 total inter\fompany (9.6) (9.9) 91 The amounts due \brom\d parent companies re\dlate to \binance cost\ds and invoices that \dhave \feen paid \fy HEMA \d on \fehal\b o\b these co\dmpanies. The amount\d paya\fle to Dutch Li\don B.V. relates to\d corporate income ta\dxes paid \fy HEMA on \fehal\b o\b th\de \biscal unity, whic\dh is partially set\dtled with invoices p\daid \fy HEMA on \fehal\b o\d\b Dutch Lion B.V.. The \fala\dnces will \fe settled\d at the time o\b exi\dt and, accordingly, i\dt is uncertain when\d these amounts will \fe settled. As\d a result, the amou\dnts are presented u\dnder current assets \dand lia\filities. Re\ber to note 1 \bor\d more in\bormation o\b\d the structure o\b th\de Dutch Lion Coop gr\doup. senior (se\fured) notes\y issued by HEMA Bond\fo \yI B.V. and HEMA Bond\fo \yII B.V. The Notes were iss\dued \fy HEMA Bondco I B.V\d. and HEMA Bondco II B.\dV. (“the Issuers”)\d, which are \foth 100\d% directly owned \fy Dut\dch Lion B.V. The pr\doceeds are lent \fy t\dhe Issuers to HEMA on\d the same terms as \dthose o\b the respective No\dtes. The agreements\d \fetween HEMA and the \dIssuers provide tha\dt HEMA will ensure ti\dmely payments o\b interes\dt on the Notes so \dthat the Issuers ca\dn timely satis\by th\deir o\fligations unde\dr indentures governing the Notes\d. For the amounts d\due relating the Not\des, re\ber to the ta\d\fles \felow. (in million euros) January 29 2017 January 31 2016 HEMA Bon\bco I B.V. ■ senior secured \bloat\ding rate notes proce\deds loan 250.0 250.0 ■ senior secured \bixed \drate notes proceeds \dloan 315.0 315.0 HEMA Bon\bco II B.V. ■ senior notes procee\dds loan 150.0 150.0 accrued interest on \dproceeds loans 6.1 6.0 total 7\b1.1 7\b1.0 from February 1, 2\T016 up to an\b inclu\bi\Tng January 29, 2017\T (in million euros)20162015 accrue\b intere\ft on\T procee\b\f loan\f at b\Teginning of year 6.0 6.4 interest accrued \bor \dproceeds loans (inco\dme statement) 45.8 46.0 interest paid \bor p\droceeds loans (cash \d\blow statement) (45.7) (46.4) a\f\frued interest on pr\yo\feeds loans at year­end 6.1 6.0 The terms o\b the pr\doceeds loans are at \darm’s length as the\dse terms exactly mat\dch the terms o\b the \dNotes. key management \fompensa\ytion Key management perso\dnnel are those per\dsons having authori\dty and responsi\fili\dty \bor planning, dir\decting and controlling the \dactivities o\b the Co\dmpany as a whole. T\dhe Company determine\dd that key managemen\dt personnel consists \do\b mem\fers o\b the man\dagement \foard. The co\dmpensation paid or \dpaya\fle to key management \bor employ\dee services is show\dn in the ta\fle \felo\dw: from February 1, 2\T016 up to an\b inclu\bi\Tng January 29, 2017\T (in million euros)20162015 salaries and other \dshort-term employee\d \fene\bits 4.5 5.6 termination \fene\bits\d 1.1 1.6 share \fased payments\d (see note 28) - - post-employment \fene\d\bits (de\bined contri\fu\dtion) 0.2 0.2 5.8 7.4 O\b the €5.8 million\d €1.3 million (2015\d: €3.8 million) is \dconsidered to \fe non-\drecurring. See note \d18 to the company \binancial statements\d \bor in\bormation on \dthe remuneration o\b\d the \foard o\b managin\dg Directors. 92 supervisory board The remuneration o\b\d Mr. Darwent, Mrs.\d Minnick and Mr. Coc\dker as mem\fers o\b th\de supervisory \foard\d is included in \bees paid\d to Lion Capital. \dThe remuneration wi\dth respect to 2016 \d\bor Mr. Jennings, M\dr. Collee, Mr. Mo\ferg and Mrs. \dDik as mem\fers o\b th\de supervisory \foard\d was €857 thousand euro in \dtotal (2015: €370 \d thousand euro in to\dtal). On top o\b the\dir remuneration, ex\dpenses o\b Mr. Jenni\dngs, Mr. Collee, Mr\d. Mo\ferg and Mrs. Dik are also \dreim\fursed (i\b and wh\den applica\fle). 28 \fhare-ba\fe\b payment Following the acquis\dition o\b HEMA on 6 Jul\dy 2007, circa 70 sen\dior managers o\b HEMA we\dre o\b\bered the possi\fility to inve\dst in Dutch Lion Co\dop, the ultimate pa\drent o\b the Company\d. Under the plan in\dtroduced in Fe\fruary 2008, elig\di\fle management was \do\b\bered, su\fject to ce\drtain terms and condi\dtions, an investmen\dt in \binancial instrument\ds o\b Dutch Lion Coop\d at the same conditi\dons as Lion Capita\dl. In Decem\fer 2008 \dthe plan was amended to re\ble\dct the new \biscal le\dgislation related t\do this investment. \dThe outstanding righ\dts \fe\bore and a\bter the amendme\dnts were equal to \deach other. At the \dsame time, \fut not r\delated, a relativel\dy small amount o\b additional\d investment was o\b\be\dred to the senior m\danagers that partici\dpated in the plan a\dt the same conditions as t\dhe earlier investme\dnt. All \binancial in\dstruments are issue\dd through \boundation\ds (Dutch: administratiekantor\den) that hold the v\doting rights o\b the \dunderlying instrumen\dts. The mem\fers o\b t\dhe \foard o\b managing Directors at\d the time were part\d o\b the senior mana\dgers who were o\b\bere\dd the possi\fility t\do invest. The investment conta\dins a loan component\d and a mem\fership ri\dght component. The i\dnvestment in the lo\dan component is disclose\dd \fy HEMA in accordance w\dith IAS 24 ‘Relate\dd party transactions\d’. The mem\fership ri\dght component \balls under\d the scope o\b IFRS 2\d ‘Share \fased paymen\dts’. The total amounts i\dnvested \fy senior ma\dnagement with respe\dct to the plan are:\d (in million euros) January 29 2017 January 31 2016 amount of out\ftan\bi\Tng balance\f at begi\Tnning of the year 0.4 0.7 amounts purchased \fy \dsenior management - - amounts sold \fy seni\dor management - (0.3) amount of outstandi\yng balan\fes at the end\y of the year 0.4 0.4 According to IFRS 2 t\dhe mem\fership right \dcomponent o\b the inv\destment is considere\dd to \fe an equity settled share-\fased \dpayment transaction,\d since HEMA has no o\fli\dgation to settle th\de share-\fased paymen\dt transaction (Dutch L\dion Coop the ultima\dte parent o\b the Co\dmpany has the o\fliga\dtion to settle). HEMA\d has prepared a valuatio\dn o\b the investment\d o\b the managers at \deach grant date. The\d \bair market value \dapplied \bor the underlying m\dem\fership rights is \d\fased on the shareh\dolder value, which h\das \feen derived \brom \d the Enterprise Val\due (‘EV’) \bor the C\dompany. For the det\dermination o\b the \ba\dir value, EV/EBITD\dA multiples are applied which are \fa\dsed on a market app\droach \fy using tradin\dg multiples o\b compar\da\fle companies as a \fenchmark. No expe\dnse with respect to\d the investment has\d \feen incorporated i\dn the income stateme\dnt. Although this does \dnot directly relate \dto HEMA, this disclosur\de is made to comply w\dith IFRS 2, as it \drelates to the ultimate parent comp\dany. 29 operating lea\fe\f HEMA leases all o\b its\d stores, as well a\ds distri\fution centr\des, o\b\bices and other\d assets, under oper\dating lease arrangements. Vario\dus properties leas\ded under operating l\deases are (partial\dly) su\fleased to th\dird parties. The aggregate amount\ds o\b HEMA’s minimum lea\dse commitments paya\fl\de to third parties \dunder non- cancella\fle operatin\dg lease contracts ar\de disclosed in the t\da\fle on the next pa\dge. 93 January 29 2017 January 31 2016(in million euros)nominalnominal within one year 94.9 103.0 \fetween one and \bive\d years 368.5 363.7 a\bter \bive years 265.3 303.4 total 7\b8.7 770.1 Commitments \bor rent\d exclude total su\f-l\dease payments to \fe\d received amounting t\do €11.9 million (2015: €12.2 millio\dn). Certain store leas\des provide \bor conti\dngent additional ren\dtals \fased on a per\dcentage o\b sales. Su\d\fstantially all o\b the store leases\d have renewal opti\dons \bor additional t\derms. None o\b HEMA’s l\deases impose restri\dctions on the a\fility o\b HEMA to\d pay dividends, incur\d additional de\ft, or\d enter into additio\dnal leasing arrange\dments. The annual costs o\b \dHEMA’s operating lease\ds are disclosed in t\dhe ta\fle \felow. from February 1, 2\T016 up to an\b inclu\bi\Tng January 29, 2017\T (in million euros)20162015 minimum rentals 99.2 96.1 su\flease income (3.3) (3.8) total 95.9 9\b.3 30 commitment\f an\b con\Ttingencie\f The contracted capita\dl expenditure and p\durchase commitments a\dt the end o\b the re\dporting year \fut no\dt yet incurred is as \bollo\dws: January 29, 2017 (in million euros) purcha\fe commit ment\f capital expen\bi- ture commitment\f total no later than 1 ye\dar 132.4 7.0 139.4 later than 1 year \d\fut no later than 5\d years - - ­ later than 5 years\d - - ­ total 13\b.4 7.0 139.4 January 31, 2016 (in million euros) purcha\fe commit ment\f capital expen\bi- ture commitment\f total no later than 1 ye\dar 111.1 3.6 114.7 later than 1 year \d\fut no later than 5\d years - - ­ later than 5 years\d - - ­ total 111.1 3.6 114.7 94 The purchase commitme\dnts are \fased on agr\deed purchase orders \d\bor €74.6 million and commi\dtments according contracts \bor €57.8 million. Prices and volume according contracts give direction \bor orders, \fut are actually agreed when\d the order is made. \dThe commitments will \d\fe exercised next re\dporting year unless\d, in the rare case, orders ar\de cancelled. The capital expendit\dure commitments are \f\dased on contracts o\b \dcurrent projects, an\dd will also exercise\d next reporting year\d. The capital expen\dditure commitments as\d per January 29, 2\d017 consists o\b €3.4\d million expenditures \bor HEMA \dstores, €3.1 millio\dn \bor IT and e-commer\dce and €0.6 million \d\bor other. For the Netherlands\d, \fank guarantees t\dotalling o\b €4.1 mil\dlion have \feen issu\ded \fy HEMA mainly relat\ding to the rent o\b the sup\dport o\b\bice in the N\detherlands (€1.3 mi\dllion), the customs \d(€2.1 million) and \dother (€0.6 million\d). For France in total\d €1.5 million and \bo\dr Germany in total \d€0.7 million in \fan\dk guarantees have \f\deen issued. In total, at repor\dting date, HEMA has is\dsued €6.3 million i\dn \fank guarantees. Received claims \brom t\dhe normal operation\ds are disclosed in a\dccordance with IAS 37\d. 31 in\bepen\bent au\bitor’\T\f fee\f The independent audi\dtor’s \bees paid per\d category can \fe summa\drised as \bollows: from February 1, 2\T016 up to an\b inclu\bi\Tng January 29, 2017\T (In thousand euros)\d20162015 audit o\b the \binancia\dl statements 489.1 361.6 other audit engageme\dnts 33.9 56.6 tax consultancy 426.2 164.8 other non-audit eng\dagements 47.4 463.7 total 996.6 1,046.7 32 li\ft of \fub\fi\biarie\f The \bollowing are HEMA\d’s su\fsidiaries as \do\b January 29, 2017\d. These are all wh\dolly owned consolida\dted su\fsidiaries. The Netherlands HEMA Bakkerijen B.V.*\d, Amsterdam HEMA Duitsland B.V.*, \dAmsterdam HEMA Financial Services\d B.V.*, Amsterdam HEMA Financiering B.V.,\d Amsterdam Europe HEMA Belgie B.V.B.A.*,\d Ukkel, Belgium HEMA Deutschland Gm\fH, E\dssen HEMA Gm\fH & CO KG**, E\dssen** HEMA France S.A.S., Pa\dris, France HEMA Retail Limited, L\dondon, United Kingdo\dm****** HEMA Spain S.L., Barce\dlona, Spain Rest of the world HEMA Far East Ltd., Ho\dng Kong * Pursuant to section\d 403 B2 DCC, HEMA has\d issued declarations\d o\b lia\fility \bor th\dese su\fsidiaries.** HEMA Gm\fH & Co. KG, Es\dsen, Germany, makes\d use o\b the exempti\don clause under Sect\dion 264\f o\b the Ger\dman Commercial Code regarding the prepar\dation, auditing and \dpu\flication o\b its \bi\dnancial statements.*** The entity opted \bo\dr statutory audit e\dxemption under s479\da o\b the United Kin\dgdom Companies Act 20\d06. 95 HEMA (Shanghai) tradin\dg Consultancy Co., L\dtd., Shanghai, Chin\da This list is unchan\dged compared to previ\dous year. 33 employee\f The ta\fle \felow sho\dws the average num\fe\dr o\b employees and F\dTE \bor the years 20\d16 and 2015. number of employee\f\T an\b full-time equiv\Talent\f 20162015 employee\ffteemployee\ffte The Netherlands 9,428 4,215 9,573 4,199 Belgium 858 632 873 649 France 487 428 392 339 Germany 110 60 110 59 Luxem\fourg 27 18 28 19 Hong Kong 9 9 9 8 China 35 35 33 33 Bangladesh 15 15 14 14 Spain 48 37 20 17 United Kingdom 60 47 37 32 total 11,077 5,496 11,089 5,369 For salaries, pens\dions and social secu\drity charges, please\d re\ber to note 8. For in\bormation on \dthe remuneration o\b\d the \foard o\b Managi\dng Directors and the\d Supervisory Board \dsee note 18 to the company \bi\dnancial statements. 9 \foun\fil for \fhildren HEMA has set up a Chi\dldren’s Council, an initiat\dive o\b the Missing \d Chapter Foundation.\d The Royal Highness, Princess L\daurentien o\b the Netherlands, is\d the \bounder and director o\b the M\dissing Chapter Foundation. HEMA has i\dnstalled the council to o\ftain adv\dice \brom a di\b\berent perspective\d on societal issues that involv\de a wide range o\b interests in which \dHEMA \beels it has a role to play. MILESTONES 97 \fompany finan\fial statements 98 \fompany in\fome stateme\ynt from February 1, 2\T016 up to an\b inclu\bi\Tng January 29, 2017\T (in million euros) 20162015 result \brom su\fsidia\dries a\bter income ta\dxes 13.0 18.3 other result a\bter \dincome taxes (39.2) (90.8) net result (\b6.\b) (7\b.5) The accompanying note\ds on pages 100 – 10\d9 are an integral p\dart o\b these company\d \binancial statement\ds. 99 \fompany balan\fe sheet \y a\f at January 29, 2\T017 (in million euros, \da\bter appropriation\d o\b current year res\dult) note January 29 2017 January 31 2016 assets property, plant an\dd equipment2 105.5 123.9 intangi\fle assets3 1,026.9 1,032.0 \binancial \bixed asset\ds4 19.7 37.9 other non-current a\dssets5 0.1 0.1 total non-current a\T\f\fet\f 1,152.2 1,193.9 inventories6 130.9 138.5 trade and other rece\diva\fles7 93.5 96.7 other current \binanc\dial assets8 40.2 38.6 cash and cash equiva\dlents9 71.0 57.5 total current a\f\fet\f\T 335.6 331.3 total assets 1,487.8 1,5\b5.\b share capital 0.0 0.0 share premium 629.6 629.6 other reserves 2.2 0.6 retained earnings a\dnd net result \bor t\dhe year(357.3) (331.1) total equity10 274.5 299.1 employee \fene\bits13 4.4 4.6 de\berred tax lia\fili\dties 98.6 98.6 provisions - long-t\derm14 13.2 18.4 total provi\fion\f 116.2 121.6 liabilities \forrowings11 730.3 726.1 other \binancial lia\f\dilities12 12.9 14.9 total non-current l\Tiabilitie\f 743.2 741.0 trade and other pay\da\fles15 341.3 272.4 \forrowings11- 76.0 \fank overdra\bts9- 0.7 other \binancial lia\f\dilities16 7.6 9.8 provisions - short\d-term14 5.0 4.6 total current liabi\Tlitie\f 353.9 363.5 total equity and lia\ybilities 1,487.8 1,5\b5.\b The accompanying note\ds on pages 100 – 10\d9 are an integral p\dart o\b these company\d \binancial statement\ds. 100 notes to the \fompany \yfinan\fial statements 1 \fignificant account\Ting policie\f ba\fi\f of preparatio\Tn The company \binancial\d statements o\b HEMA B.\dV. have \feen prepar\ded in accordance with \dSection 402, Part 9, Book 2 o\b t\dhe Dutch Civil Code \d(‘B2 DCC’). In accor\ddance with su\fsection\d 8 o\b section 362, B\d2 DCC, the measurement principl\des applied in these\d company \binancial st\datements are the sa\dme as those applied\d in the consolidated \binancia\dl statements (see n\dote 2 o\b the consoli\ddated \binancial state\dments). In accordance with Se\dction 402, Part 9, \dB2 DCC, the income s\dtatement is present\ded in condensed \borm. inve\ftment\f in \fub\fi\T\biarie\f In the company \binan\dcial statements, inv\destments in su\fsidia\dries are stated at \dnet asset value i\b \dthe Company e\b\bectively e\dxercises in\bluence o\d\b signi\bicance over t\dhe operational and \d\binancial activities\d o\b these investments. \dThe net asset valu\de is determined on t\dhe \fasis o\b the accou\dnting principles app\dlied \fy the Company. In case\d the net asset val\due o\b an investment\d in su\fsidiaries is\d negative, a provis\dion \bor group companies is set up \donly in case the Co\dmpany is legally he\dld lia\fle \bor the su\d\fsidiaries’ lia\filit\dies. As long as the\d net asset value o\b \dsu\fsidiaries is nega\dtive no result \brom\d participations is \drecorded. 101 2 property, plant an\b\T equipment (in million euros)lea\fehol\b improve-ment\f technical in\ftalla-tion\f har\bwarefurniture an\bfixture\f truck\f an\b car\f work in progre\f\f total a\f of February 1, 2\T015 at cost 98.4 90.7 31.3 233.3 6.4 4.7 464.8 accumulated depreciati\don and impairment losse\ds (48.4) (49.1) (27.4) (189.8) (3.8) - (318.5) carrying amount 50.0 41.6 3.9 43.5 2.6 4.7 146.3 additions at cost 0.5 1.4 0.3 3.4 1.0 3.4 10.0 depreciation (8.5) (7.7) (1.9) (12.5) (0.9) - (31.5) impairment losses ch\darged to pro\bit & loss (0.3) (0.3) - - - - (0.6) trans\ber \brom work i\dn progress 0.2 0.5 0.8 2.5 - (4.3) (0.3) disposals at cost (1.4) (0.4) (0.1) (2.0) (0.9) - (4.8) accumulated depreciati\don 1.4 0.4 0.1 2.0 0.9 - 4.8 a\f of January 31, 2\T016 at cost 97.7 92.2 32.3 237.2 6.5 3.8 469.7 accumulated depreciati\don and impairment losse\ds (55.8) (56.7) (29.2) (200.3) (3.8) - (345.8) carrying amount 41.9 35.5 3.1 36.9 2.7 3.8 1\b3.9 a\b\bition\f at cost 0.7 1.9 0.3 2.1 0.2 7.4 1\b.6 depreciation (8.3) (7.8) (2.0) (12.0) (0.9) - (31.0) impairment losses ch\darged to pro\bit & loss - - - - - - ­ trans\ber \brom work i\dn progress 0.4 1.4 1.0 0.7 - (3.5) ­ disposals at cost (0.8) (0.4) (0.2) (3.0) (1.2) - (5.6) accumulated depreciati\don 0.8 0.4 0.2 3.0 1.2 - 5.6 a\f of January 29, 2\T017 at cost 98.0 95.1 33.4 237.0 5.5 7.7 476.7 accumulated depreciati\don and impairment losse\ds (63.3) (64.1) (31.0) (209.3) (3.5) - (371.\b) \farrying amount 34.7 31.0 \b.4 \b7.7 \b.0 7.7 105.5 102 3 intangible a\f\fet\f (in million euros)goo\bwillbran\bcu\ftomer relation-\fhip\f \foftwareotherintangible a\f\fet\f un\ber \bevelop-ment total a\f of February 1, 2\T015 at cost 732.2 394.4 43.7 85.2 - 6.3 1,\b61.8 accumulated amortisat\dion and impairment losse\ds (118.0) - (32.6) (74.2) - - (\b\b4.8) carrying amount 614.2 394.4 11.1 11.0 - 6.3 1,037.0 additions at cost - - - 4.5 1.3 1.8 7.6 amortisation - - (4.4) (8.1) (0.1) - (1\b.6) Impairment losses charged to pro\bit & l\doss - - - - - - ­ trans\ber \brom assets\d under development - - - 6.2 - (6.2) ­ disposals at cost - - - - - - ­ amortisation - - - - - - ­ a\f of January 31, 2\T016 at cost 732.2 394.4 43.7 95.9 1.3 1.9 1,\b69.4 accumulated amortisat\dion and impairment losse\ds (118.0) - (37.0) (82.3) (0.1) - (\b37.4) carrying amount 614.2 394.4 6.7 13.6 1.2 1.9 1,03\b.0 a\b\bition\f at cost - - - 1.6 (0.3) 5.6 6.9 amortisation - - (4.3) (7.3) (0.4) - (1\b.0) impairment losses charged to pro\bit & l\doss - - - - - - ­ trans\ber \brom assets\d under development - - - 1.5 - (1.5) ­ disposals at cost - - - - - - ­ amortisation - - - - - - ­ a\f of January 29, 2\T017 at cost 732.2 394.4 43.7 99.0 1.0 6.0 1,\b76.3 accumulated amortisat\dion and impairment losse\ds (118.0) - (41.3) (89.6) (0.5) - (\b49.4) \farrying amount 614.\b 394.4 \b.4 9.4 0.5 6.0 1,0\b6.9 103 4 financial fixe\b a\f\fe\Tt\f The movements in th\de investments \brom s\du\fsidiaries are as \d\bollows: (in million euros) January 29 2017 January 31 2016 opening balance 37.9 33.9 additions \brom inves\dtments - - dividend (30.5) (13.5) revaluation - - income \brom su\fsidiari\des 13.0 18.3 change in provision \d\bor su\fsidiaries (0.7) (0.8) \flosing balan\fe 19.7 37.9 For a list o\b signi\d\bicant su\fsidiaries s\dee note 32 to the \dconsolidated \binancia\dl statements. With respect to the\d separate \binancial \dstatements o\b the D\dutch legal entities \dincluded in the conso\dlidation, these companies availed it\dsel\b o\b the exemptio\dn laid down in secti\don 403, su\fsection 1\d o\b B2 DCC. Pursuan\dt to section 403 HEMA has issued de\dclarations o\b lia\fil\dity \bor these su\fsi\ddiaries (marked with\d an asterisk, see \dnote 32 to the consolidated \binancia\dl statements). 5 other non-current \Ta\f\fet\f (in million euros) January 29 2017 January 31 2016 other 0.1 0.1 total other non­\furrent assets 0.1 0.1 6 inventorie\f (in million euros) January 29 2017 January 31 2016 trade inventory 136.8 146.7 raw materials 0.9 0.9 other inventories \d 1.9 1.9 139.6 149.5 provision \bor o\fsol\dete and slow moving \dinventory(8.7) (11.0) total inventories 130.9 138.5 The raw materials a\dnd other inventorie\ds concern \bood, photo\d and packaging materi\dals. An amount o\b €1.2 mi\dllion has \feen recog\dnised as write-o\b\bs \do\b inventories in t\dhe income statement \d (2015: €0.5 million\d). All o\b the inven\dtories are pledged t\do secure \forrowings \do\b the Company. 104 7 tra\be an\b other rec\Teivable\f (in million euros) January 29 2017 January 31 2016 trade receiva\fles 26.4 28.3 provision \bor impai\drment (0.6) (0.8) tra\be receivable\f - \Tnet 25.8 27.5 receiva\fles \brom rela\dted parties 5.1 4.8 receiva\fles \brom su\fs\didiaries 51.0 44.9 prepayments 2.3 10.4 other receiva\fles 9.3 9.1 total trade and oth\yer re\feivables 93.5 96.7 8 other current fina\Tncial a\f\fet\f For \burther in\bormat\dion on \forrowings a\dnd credit \bacilities \dsee note 19 o\b the \dconsolidated \binancia\dl statements. 9 ca\fh an\b ca\fh equiva\Tlent\f (in million euros) January 29 2017 January 31 2016 cash on hand11.511.2 cash in \fanks and cas\dh equivalents59.546.3 \fank overdra\bts - (0.7) total \fash, \fash equ\yivalents and bank ov\yerdrafts71.056.8 105 10 equity other re\ferve\f (in million euros)\fhare capital\fhare premiumca\fh flow he\bging re\ferve other re\ferve\f retaine\b earning\fnet profit / (lo\f\f) equity attributable to \fhare-hol\ber\f balance a\f of February 1, 2015 0.0 629.6 3.5 0.8 (70.4) (189.2) 374.4 proceeds \brom share premium contri\fution - - - - - - ­ appropriation o\b ne\dt pro\bit / (loss) - - - - (189.2) 189.2 ­ net result \bor the \dyear - - - - - (72.5) (7\b.5) other equity movements - - (3.0) (0.8) 0.8 - (3.0) balance a\f of January 31, 2016 0.0 629.6 0.6 - (258.6) (72.5) 299.1 proceeds \brom share premium contri\fution - - - - - - ­ appropriation o\b ne\dt pro\bit / (loss) - - - - (72.5) 72.5 ­ net result \bor the \dyear - - - - - (26.2) (\b6.\b) other equity movements - - 1.6 - - - 1.6 balan\fe as of January \b9, \b017 0.0 6\b9.6 \b.\b ­ (331.1) (\b6.\b) \b74.5 11 borrowing\f For \burther in\bormat\dion on other curren\dt \binancial assets s\dee note 19 o\b the co\dnsolidated \binancial \dstatements. 12 other non-current \Tfinancial liabilitie\T\f (in million euros) January 29 2017 January 31 2016 \binancial lease lia\f\dilities 2.1 2.8 derivative \binancial\d instruments - - long-term lease ince\dntive 10.8 12.1 total other non­\furrent finan\fial lia\ybilities 1\b.9 14.9 106 finan\fial lease liabi\ylities Financial lease lia\d\filities are paya\fl\des as \bollows: (in million euros) January 29, 2017January 31, 2016 future minimum lea\fe payment\f intere\ft portionpre\fent value of minimum lea\fe payment\f future minimum lea\fe payment\f intere\ft portionpre\fent value of minimum lea\fe payment\f within one year 1.3 - 1.3 1.5 - 1.5 \fetween one and \bive\d years 2.2 (0.3) 1.9 3.1 (0.5) 2.6 a\bter \bive years 0.3 (0.1) 0.2 0.3 (0.1) 0.2 total 3.8 (0.4) 3.4 4.9 (0.6) 4.3 current portion 1.3 - 1.3 1.5 - 1.4 non-current portion\d 2.5 (0.4) 2.1 3.4 (0.6) 2.8 3.8 (0.4) 3.4 4.9 (0.6) 4.3 13 employee benefit\f (in million euros) January 29 2017 January 31 2016 balance \fheet obliga\Ttion\f for retirement \fene\bit o\d\fligations - - other long-term \fene\d\bits 4.4 4.6 4.4 4.6 income \ftatement ch\Targe for retirement \fene\bit o\d\fligations - (0.1) other long-term \fene\d\bits 0.6 (0.7) 0.6 (0.8) 107 14 provi\fion\f The ta\fle \felow spe\dci\bies the change in \dtotal provisions (\dcurrent and non-curr\dent): (in million euros)\fub\fi\biarie\fVAB agreement othertotal a\f of January 31, 2\T016 current portion - 4.6 - 4.6 non-current portion\d 9.2 9.2 - 18.4 9.2 13.8 - \b3.0 change\f in the prov\Ti\fion \buring the ye\Tar additions - - 0.4 0.4 used during the year\d - (4.5) - (4.5) release to income (0.7) - - (0.7) clo\fing carrying am\Tount 8.5 9.3 0.4 18.\b a\f of January 29, 2\T017 current portion - 4.6 0.4 5.0 non-current portion\d 8.5 4.7 - 13.\b 8.5 9.3 0.4 18.\b The provision \bor s\du\fsidiaries represe\dnts the negative eq\duity value o\b the C\dompany’s su\fsidiary \dHEMA Duitsland B.V.. For more in\bormation\d on the VAB agreeme\dnt provisions, see\d note 22 o\b the cons\dolidated \binancial st\datements. 15 tra\be an\b other pay\Table\f (in million euros) January 29 2017 January 31 2016 trade paya\fle 151.0 133.5 amounts due to rela\dted parties 14.6 14.7 amounts due to su\fsi\ddiaries 9.6 6.6 accrued expenses 74.7 59.6 payroll taxes, soci\dal security and VAT 39.6 10.5 payroll accruals 38.3 35.7 other 13.5 11.8 total trade and oth\yer payables 341.3 \b7\b.4 108 16 other current fina\Tncial liabilitie\f (in million euros) January 29 2017 January 31 2016 interest 6.2 7.0 \binancial lease lia\f\dilities (current po\drtion) 1.3 1.4 derivative \binancial\d instruments 0.1 1.4 total other \furrent \yfinan\fial liabilitie\ys 7.6 9.8 17 commitment\f See note 30 o\b the \dconsolidated \binancia\dl statements. 18 remuneration of th\Te boar\b of managing\T \birector\f an\b the \fu\Tpervi\fory boar\b In 2016 a total re\dmuneration o\b €3.0 \dmillion was accounte\dd \bor with respect t\do the mem\fers o\b the\d \foard o\b managing directors (2\d015: €6.3 million).\d See the ta\fle \felo\dw \bor more in\bormati\don. from February 1, 2\T016 up to an\b inclu\bi\Tng January 29, 2017\T (in million euros) 20162015 salaries and other \dshort-term employee\d \fene\bits 2.9 4.6 termination \fene\bits\d - 1.6 share \fased payments\d (see note 28) - - post-employment \fene\d\bits (de\bined contri\fu\dtion) 0.1 0.1 3.0 6.3 The remuneration o\b\d Mr. Darwent, Mrs.\d Minnick and Mr. Coc\dker as mem\fers o\b th\de supervisory \foard\d is included in \bees paid\d to Lion Capital. \dThe remuneration wi\dth respect to 2015 \d\bor Mr. Jennings, M\dr. Collee, Mr. Mo\ferg and Mrs. \dDik as mem\fers o\b th\de supervisory \foard\d was €857 thousand euro in \dtotal (2015: €370 \d thousand euro in to\dtal). On top o\b the\dir remuneration, ex\dpenses o\b Mr. Jenni\dngs, Mr. Collee, Mr\d. Mo\ferg and Mrs. Dik are also \dreim\fursed (i\b and wh\den applica\fle). 19 employee\f The average num\fer o\d\b employees and \bull\d-time equivalents d\during 2016 was 9,20\d0 and 3,990 respecti\dvely (2015: 9,332 and 3,\d974). 20 event\f after report\Ting \bate On April 1, 2017 T\dico Schneider (42) w\das appointed to the\d Management Board as\d Director o\b the Net\dherlands. Mr. Schneider has \fe\den with HEMA since 200\d2 in several posit\dions most recently a\ds head o\b e-commerce. \d And, on April 1, 20\d17 Adrian Porteous \d(53) was appointed \dto the Management B\doard as Director Log\distics & Supply Chain. Mr. \dPorteous has \feen w\dith HEMA since 2015 as\d head o\b supply chai\dn. 109 In April 2017 certa\din mem\fers o\b the Ma\dnagement Board and t\dhe Supervisory Boa\drd are o\b\bered to en\dter into, su\fject to cer\dtain terms and condit\dions, in \binancial i\dnstruments o\b Dutch \dLion Coop through n\dewly set up \boundations (Dut\dch: administratiekan\dtoren). The invest\dment re\blects mem\fersh\dip rights and \balls \dunder the scope o\b IFRS 2 ‘Sha\dre \fased payments’. 21 \ftatutory appropria\Ttion of the re\fult The holders o\b common\d shares are entitl\ded to one vote per \dshare and to partici\dpate in the distri\f\dution o\b dividends and liquida\dtion proceeds. Pursu\dant to article 25 o\d\b the articles o\b as\dsociation the income\d, a\bter reservations made \fy\d the Board o\b Managi\dng Directors in cons\dultation with the \dSupervisory Board, \dwill \fe availa\fle \bor distri\d\fution to the common \dshareholders upon a\dpproval at the Gen\deral Meeting o\b Sha\dreholders. Amounts not paid in\d the \borm o\b dividend\ds will \fe added to a\dccumulated general re\dserves. Consequent\dly, net pro\bit according to t\dhe company statement\ds o\b operations is \d\bully attri\futa\fle t\do common shareholders\d. The proposed pro\bit\d-sharing statement \dreads as \bollows: (in million euros) January 29 2017 January 31 2016 net result (26.2) (72.5) dividends - - \fharged to the genera\yl reserves (\b6.\b) (7\b.5) boar\b of managing \b\Tirector\f Tjeerd Jegen, Chie\b \dExecutive O\b\bicer Ivo Vliegen, Chie\b \dFinancial O\b\bicer \fupervi\fory boar\b Andrew Jennings, cha\dirman Ro\fert Darwent James Cocker Dol\b Collee Anders Mo\ferg Tanja Dik Amsterdam, the Nethe\drlands, April 13, 2\d017 10 ba\fk to s\fhool MILESTONES HEMA launched its large\dst \fack-to- school product range \dever. The accompanying schoo\dl campaign ‘Eigen Schoo\dl, Eigen Ding’ (Own school, o\dwn thing) emphasises the \bact \dthat school pupils create their\d own identity \fy customising their \dschool gear. 111 other information independent auditor’s\y report To: the general mee\dting and supervisor\dy \foard o\b HEMA B.V. report on the fina\Tncial \ftatement\f for\T the perio\b 1 February 2016 to \T29 January 2017 our opinion In our opinion: ■ the accompanying conso\dlidated \binancial sta\dtements give a true\d and \bair view o\b th\de \binancial position\d o\b HEMA B.V. as at 29 Ja\dnuary 2017 and o\b i\dts result and cash \b\dlows \bor the year t\dhen ended in accordan\dce with International Fina\dncial Reporting Stan\ddards as adopted \fy t\dhe European Union \d(EU-IFRS) and with \dPart 9 o\b Book 2 o\b the Dutch \dCivil Code; ■ the accompanying compa\dny \binancial stateme\dnts give a true and\d \bair view o\b the \bi\dnancial position o\b \d HEMA B.V. as at 29 Ja\dnuary 2017 and o\b i\dts result \bor the y\dear then ended in a\dccordance with Part 9\d o\b Book 2 o\b the Dutch Civil\d Code. what we have audited\y We have audited the\d accompanying \binancia\dl statements \bor th\de period 1 Fe\fruary\d 2016 to 29 Januar\dy 2017 o\b HEMA B.V., Amsterdam (‘\dthe company’). The \b\dinancial statements \dinclude the consolida\dted \binancial stateme\dnts o\b HEMA B.V. and its s\du\fsidiaries (togethe\dr: ‘the Group’) an\dd the company \binanci\dal statements. The consolidated \bina\dncial statements comp\drise: ■ the consolidated sta\dtement o\b \binancial p\dosition as at 29 J\danuary 2017; ■ the \bollowing state\dments \bor the perio\dd 1 Fe\fruary 2016 t\do 29 January 2017:\d the consolidated in\dcome statement and the co\dnsolidated statement\ds o\b comprehensive i\dncome, changes in equ\dity and cash \blows; \d and ■ the notes, comprisin\dg a summary o\b signi\b\dicant accounting poli\dcies and other expla\dnatory in\bormation.\d The company \binancial\d statements comprise\d: ■ the company \falance s\dheet as at 29 Janu\dary 2017; ■ the company pro\bit a\dnd loss account \bor t\dhe period 1 Fe\fruar\dy 2016 to 29 Janua\dry 2017; ■ the notes, comprisin\dg a summary o\b the a\dccounting policies an\dd other explanatory\d in\bormation. The \binancial report\ding \bramework that h\das \feen applied in \dthe preparation o\b \dthe \binancial statem\dents is EU-IFRS and the rel\devant provisions o\d\b Part 9 o\b Book 2 \do\b the Dutch Civil C\dode \bor the consolida\dted \binancial statements and Part\d 9 o\b Book 2 o\b the\d Dutch Civil Code \bo\dr the company \binanci\dal statements. the basis for our o\ypinion We conducted our audi\dt in accordance with \dDutch law, including \dthe Dutch Standards \don Auditing. Our responsi\filities un\dder those standards \dare \burther descri\fed\d in the section ‘Ou\dr responsi\filities \d\bor the audit o\b the \binancial statem\dents’ o\b our report\d. 112 independen\fe We are independent \do\b HEMA B.V. in accordan\dce with the ‘Verorde\dning inzake de ona\bh\dankelijkheid van accountants \fij \dassuranceopdrachten’\d (ViO) and other re\dlevant independence \drequirements in the\d Netherlands. Furthe\drmore, we have compl\died with the ‘Veror\ddening gedrags- en \fe\droepsregels accounta\dnts’ (VGBA). We \felieve that the\d audit evidence we h\dave o\ftained is su\b\b\dicient and appropria\dte to provide a \fas\dis \bor our opinion. report on the othe\Tr information inclu\T\be\b in the annual report In addition to the \d\binancial statements\d and our auditor’s \dreport thereon, th\de annual report con\dtains other in\bormation that con\dsists o\b: ■ the report \brom the\d management \foard; ■ the report \brom the\d supervisory \foard;\d ■ the corporate govern\dance report ■ the other in\bormati\don pursuant to Par\dt 9 o\b Book 2 o\b th\de Dutch Civil Code; Based on the procedu\dres per\bormed as set\d out \felow, we concl\dude that the other \din\bormation: ■ is consistent with \dthe \binancial statem\dents and does not co\dntain material miss\dtatements; ■ contains all in\borma\dtion that is requi\dred \fy Part 9 o\b Boo\dk 2 o\b the Dutch Civ\dil Code. We have read the ot\dher in\bormation. Ba\dsed on our knowledge\d and understanding o\d\ftained in our audit\d o\b the \binancial statem\dents or otherwise,\d we have considered \dwhether the other \din\bormation contains\d material misstatements. By per\borming our pr\docedures, we comply w\dith the requirement\ds o\b Part 9 Book 2 \do\b the Dutch Civil C\dode and the Dutch Standa\drd 720. The scope o\b\d such procedures was\d su\fstantially less\d than the scope o\b t\dhose per\bormed in our aud\dit o\b the \binancial \dstatements. The management \foard \dis responsi\fle \bor \dthe preparation o\b \dthe other in\bormati\don, including the dir\dectors’ report and the othe\dr in\bormation pursu\dant to Part 9 Book\d 2 o\b the Dutch Civi\dl Code. re\fpon\fibilitie\f for\T the financial \ftat\Tement\f an\b the au\bit responsibilities of \ythe management board \yand the supervisory \yboard for the finan\f\yial statements The management \foard \dis responsi\fle \bor:\d ■ the preparation an\dd \bair presentation\d o\b the \binancial st\datements in accordance\d with EU-IFRS and w\dith Part 9 o\b Book 2 o\b\d the Dutch Civil Co\dde, and \bor the prep\daration o\b the mana\dgement \foard report \din accordance with Part \d9 o\b Book 2 o\b the \dDutch Civil Code; an\dd \bor ■ such internal contro\dl as the management \d\foard determines is \dnecessary to ena\fle \dthe preparation o\b \dthe \binancial statements\d that are \bree \brom \dmaterial misstatemen\dt, whether due to \b\draud or error. As part o\b the prep\daration o\b the \bina\dncial statements, th\de management \foard is\d responsi\fle \bor as\dsessing the company’s a\fility to\d continue as a going\d concern. Based on t\dhe \binancial reporti\dng \bramework mention\ded, the management \foard \dshould prepare the \d\binancial statements\d using the going-conc\dern \fasis o\b accounti\dng unless the managemen\dt \foard either inte\dnds to liquidate th\de company or to ceas\de operations, or h\das no realistic alternati\dve \fut to do so. Th\de management \foard sh\dould disclose events\d and circumstances tha\dt may cast signi\bicant dou\ft\d on the company’s a\f\dility to continue a\ds a going concern in \dthe \binancial statem\dents. The supervisory \foa\drd is responsi\fle \bo\dr overseeing the com\dpany’s \binancial rep\dorting process. 113 our responsibilities\y for the audit of t\yhe finan\fial statements Our responsi\fility \dis to plan and per\b\dorm an audit engageme\dnt in a manner that\d allows us to o\ftai\dn su\b\bicient and approp\driate audit evidence\d to provide a \fasis\d \bor our opinion. O\dur audit opinion ai\dms to provide reasona\fle \dassurance a\fout whet\dher the \binancial st\datements are \bree \br\dom material misstate\dment. Reasona\fle assurance\d is a high \fut not \da\fsolute level o\b a\dssurance which makes\d it possi\fle that w\de may not detect all misstateme\dnts. Misstatements \dmay arise due to \bra\dud or error. They a\dre considered to \fe m\daterial i\b, individually or in \dthe aggregate, they \dcould reasona\fly \fe e\dxpected to in\bluence \dthe economic decisions\d o\b users taken on the\d \fasis o\b the \binanci\dal statements. Materiality a\b\bects \dthe nature, timing \dand extent o\b our a\dudit procedures and t\dhe evaluation o\b th\de e\b\bect o\b identi\bied misstateme\dnts on our opinion\d. A more detailed descr\diption o\b our respo\dnsi\filities is set \dout in the appendix\d to our report. Rotterdam, 13 April\d 2017 PricewaterhouseCoop\ders Accountants N.V.\d Original has \feen s\digned \fy P.J. Ro\f\fen \dRA 114 appen\bix to our au\b\Titor’\f report on th\Te financial \ftatement\f for the \Tperio\b 1 February 2\T016 to 29 January 2017 In addition to what\d is included in our \dauditor’s report we\d have \burther set o\dut in this appendix\d our responsi\filities \bo\dr the audit o\b the \d\binancial statements\d and explained what\d an audit involves.\d the auditor’s respo\ynsibilities for the \yaudit of the finan\fial statements We have exercised pr\do\bessional judgement\d and have maintaine\dd pro\bessional scept\dicism throughout the\d audit in accordance wi\dth Dutch Standards o\dn Auditing, ethical \drequirements and in\ddependence requiremen\dts. Our o\fjectives are t\do o\ftain reasona\fle\d assurance a\fout whe\dther the \binancial s\dtatements as a whol\de are \bree \brom material mi\dsstatement, whether\d due to \braud or err\dor. Our audit consisted,\d among other things \do\b the \bollowing: ■ Identi\bying and asse\dssing the risks o\b \dmaterial misstatemen\dt o\b the \binancial s\dtatements, whether \ddue to \braud or error, desi\dgning and per\borming \daudit procedures res\dponsive to those r\disks, and o\ftaining \daudit evidence that is su\b\d\bicient and appropri\date to provide a \fa\dsis \bor our opinion\d. The risk o\b not d\detecting a material misstatemen\dt resulting \brom \bra\dud is higher than \bo\dr one resulting \bro\dm error, as \braud ma\dy involve collusion, \borgery, \dintentional omissio\dns, misrepresentati\dons, or the intent\dional override o\b i\dnternal control. ■ O\ftaining an underst\danding o\b internal co\dntrol relevant to \dthe audit in order \dto design audit proce\ddures that are appropria\dte in the circumstan\dces, \fut not \bor the\d purpose o\b express\ding an opinion on t\dhe e\b\bectiveness o\b the \dcompany’s internal c\dontrol. ■ Evaluating the appr\dopriateness o\b accou\dnting policies used \dand the reasona\flen\dess o\b accounting estimates and relat\ded disclosures made \fy\d the management \foar\dd. ■ Concluding on the ap\dpropriateness o\b th\de management \foard’s \duse o\b the going conc\dern \fasis o\b accounting, and \fased \don the audit eviden\dce o\ftained, concludin\dg whether a materia\dl uncertainty exist\ds related to events a\dnd/or conditions tha\dt may cast signi\bican\dt dou\ft on the compan\dy’s a\fility to conti\dnue as a going concern. I\d\b we conclude that a \dmaterial uncertainty\d exists, we are re\dquired to draw atte\dntion in our auditor’s re\dport to the relate\dd disclosures in the\d \binancial statement\ds or, i\b such disclos\dures are inadequate, to modi\b\dy our opinion. Our\d conclusions are \fas\ded on the audit evi\ddence o\ftained up to \dthe date o\b our auditor’\ds report and are ma\dde in the context o\b\d our opinion on th\de \binancial statemen\dts as a whole. However, \but\dure events or condit\dions may cause the c\dompany to cease to c\dontinue as a going \d concern. ■ Evaluating the over\dall presentation, \dstructure and conten\dt o\b the \binancial s\dtatements, including \dthe disclosures, and eva\dluating whether the\d \binancial statement\ds represent the un\dderlying transaction\ds and events in a manner \dthat achieves \bair p\dresentation. Considering our ult\dimate responsi\filit\dy \bor the opinion o\dn the company’s cons\dolidated \binancial st\datements we are responsi\fle \d\bor the direction, s\dupervision and per\b\dormance o\b the group \daudit. In this conte\dxt, we have determined the natur\de and extent o\b the\d audit procedures \bor\d components o\b the gr\doup to ensure that\d we per\bormed enough wor\dk to \fe a\fle to give\d an opinion on the\d \binancial statement\ds as a whole. Dete\drmining \bactors are the geogr\daphic structure o\b t\dhe group, the signi\d\bicance and/or risk p\dro\bile o\b group enti\dties or activities, the accou\dnting processes and \dcontrols, and the in\ddustry in which the \dgroup operates. On \dthis \fasis, we selected group en\dtities \bor which an \daudit or review o\b \d\binancial in\bormation\d or speci\bic \falances \dwas considered necessary.\d We communicate with t\dhe supervisory \foar\dd regarding, among ot\dher matters, the pl\danned scope and timin\dg o\b the audit and sig\dni\bicant audit \bindin\dgs, including any sig\dni\bicant de\biciencies \din internal control\d that we identi\by during our \daudit. 115 11 laun\fh loyalty pro ­ gra mme MILESTONES HEMA launched a loyalty\d programme under the \dname ‘meer HEMA’ \bor its cus\dtomers in the Netherlands. Th\de programme allows customers to \duse \foth a digital customer ca\drd in the updated HEMA app and a \dphysical customer card to save\d up \bor extra discounts on HEMA produ\dcts. 117 \fautionary noti\fe This annual report\d contains \borward-lo\doking statements, w\dhich do not re\ber to\d historical \bacts \fut\d re\ber to expectations \fased o\dn management’s curren\dt views and assumpt\dions and involve kn\down and unknown risks and uncertaint\dies that could cause\d actual results, pe\dr\bormance or events \dto di\b\ber materially\d \brom those included in such stat\dements. Many o\b the\dse risks and uncerta\dinties relate to \ba\dctors that are \feyon\dd HEMA’s a\fility to control o\dr estimate precisely\d. Readers are cautio\dned not to place und\due reliance on thes\de \borward- looking statements,\d which speak only a\ds o\b the date o\b thi\ds annual report. 118 definitions adjusted EBITDA Adjusted EBITDA is \dde\bined as operating\d result o\b the compa\dny determined on the\d \fasis o\b IFRS plus\d depreciation, amorti\dsation and impairmen\dts; provided, howev\der, that there wil\dl not \fe included in \dsuch: ■ pre-opening costs, d\de\bined as salary cos\dts incurred with res\dpect to new stores \dprior to such store\ds’ respective opening d\dates plus rent in \drespect o\b new store\ds incurred prior to \dsuch stores’ respect\dive opening dates; ■ an annual oversight\d \bee, which re\bers t\do the annual \bee \bo\dr the services prov\dided \fy Lion Capital\d to the Company under a moni\dtoring and oversight\d agreement; ■ any items o\b a non-\drecurring, extraordi\dnary or exceptional\d nature. EBITDA EBITDA is de\bined as\d operating result o\d\b the company determi\dned on the \fasis o\b \dIFRS plus depreciati\don, amortisation and imp\dairments. \fonsumer sales HEMA de\bines consumer sa\dles as the total s\dales transactions r\degistered in the po\dint o\b sale systems\d and are \fased on actual \dprices charged to cust\domers \bor \foth direct\dly operated stores \dand \branchised stores\d. The consumer sales o\d\b the \branchised stor\de di\b\ber \brom the rep\dorted gross sales, \dwhich include the va\dlue o\b products delivered to\d the \branchise store\ds. Consumer sales \bor \dthe purpose o\b dete\drmining like-\bor-lik\de consumer sales (re\d\ber to \felow) also \dincludes commission the Compan\dy receives on insur\dances which HEMA provid\des as an agent and \dthe \bull sale price \do\b other products sold \don \fehal\b o\b third p\darties such as vouch\ders, which is di\b\bere\dnt \brom the treatmen\dt o\b sales o\b such products unde\dr IFRS. Consumer sa\dles \bor \foth directly\d owned stores and \bo\dr \branchise stores i\dnclude VAT which is 6% in \drespect o\b \bood and 2\d1% in respect o\b vir\dtually all other p\droducts and services.\d like­for­like sales HEMA de\bines like-\bor-l\dike consumer sales a\ds year-on-year per\dcentage growth o\b the\d consumer sales o\b t\dhe stores that have \fe\den open \bor the ent\dire year prior to \dthe period under re\dview, including consu\dmer sales in respect o\b product\ds ordered online an\dd picked up in store\ds, items ordered onl\dine \bor home deliver\dy, and deliveries \brom the \d\fakeries to third p\darties. \fonta\ft information general information\T HEMA corporate communicat\dion NDSM-straat 10 1033 SB Amsterdam The Netherlands t 020 311 44 11 e corporatecommunicatie@\dhema.nl vi\fiting a\b\bre\f\f NDSM-straat 10 1033 SB Amsterdam The Netherlands p.o. box post\fus 37110 1030 AC Amsterdam www.hema.nl www.hema.net trade register no. \d34215639 119 HEMA annual report 2016\