Beter Bed Holding N.V. operates in the European bedroom furnishings market. Its activities include retail trade through the chains Beter Bed, Matratzen Concord, Beddenreus, Sängjätten and El Gigante del Colchón (until 1 November 2018). Beter Bed Holding N.V. is also active in the field of developing and wholesaling branded products in the bedroom furnishing sector via its subsidiary DBC International. The registered office of Beter Bed Holding N.V. is in Uden, the Netherlands.
The consolidated financial statements have been prepared on a historical cost basis, except for land, which is carried at fair value. The consolidated financial statements have been prepared in conformity with International Financial Reporting Standards (IFRS) as adopted in the European Union and their interpretations as approved by the International Accounting Standards Board (IASB). Furthermore, the consolidated financial statements have been prepared in accordance with Part 9 of Book 2 of the Dutch Civil Code. Unless explicitly stated otherwise, the amounts stated in these notes refer to the consolidated figures. The consolidated financial statements have been prepared in euros and all amounts have been rounded off to thousands (€ 000), unless stated otherwise.
The 2018 consolidated financial statements of Beter Bed Holding N.V. have been prepared by the Management Board and discussed in the meeting of the Supervisory Board on 28 February 2019.
Extraordinary items in 2018
Throughout 2018, Beter Bed Holding N.V. has gone through a major and necessary restructuring and transformation. This has had significant influence on a number of accounts within the financial statements. The 2018 net result includes four items that will be further explained in the paragraphs below. These four items are specifically selected and, consequently, this section should not be seen as a fully comprehensive analysis of the 2018 results.
Restructuring of Matratzen Concord
In the fourth quarter of 2018 Beter Bed Holding N.V. decided to restructure its Matratzen Concord business. This included, amongst others, the following:
- Closure of 172 Matratzen Concord stores in Germany, Austria and Switzerland.
- Headcount reduction of the Matratzen Concord support organisation by 64 FTE.
- Inventory reduction by more than € 8 million.
The restructuring had a one-off cost impact of € 7.6 million which is within the communicated plan. These costs mainly related to the termination of rental contracts, termination of employee contracts and impairment of assets. These costs have been presented in the respective categories within the consolidated profit and loss account.
Discontinuation of Spanish operations
The evaluation of the performance of El Gigante del Colchón in Spain, as part of the Beter Bed Holding Group, led to the conclusion that sufficiently profitable operations were unlikely to be achieved in the short to medium term. Effective 1 November 2018 the operations have been successfully transferred to a third party via an asset deal. In the course of 2019 the legal entities in Spain will be liquidated which will result in a tax gain of € 4.9 million that, after the liquidation of all entities in Spain, will be realised in the Netherlands under the liquidation loss regulation as part of the Dutch Corporate Income Tax laws and regulations. Results of the Spanish activities are disclosed as discontinued operations (see note 18). The 2018 result of discontinued operations mainly consists of the operating result up to and including 31 October 2018 as well as the impairment of fixed assets and write-off of inventories.
Corporate Income Tax
Beter Bed Holding N.V. successfully settled two open tax items. Firstly, the tax gain in relation to the anticipated liquidation of the Spanish legal entities of € 4.9 million as mentioned before is recognised. Secondly, the settlement with the German tax authorities on the structure of the intercompany loans and its interest rates over the period 2011-2016 amounts to a tax charge of € 3.0 million. Both amounts are part of the effective tax rate calculation as disclosed in note 17.
Financing agreements and progress on the related covenants
At the Capital Markets Day on 26 October 2018, Beter Bed Holding N.V. presented its mid-term strategy with five strategic pillars. During the development of this new strategy a thorough analysis on the rapidly changing market and consumer dynamics was conducted. It became apparent that a severe transformation and restructuring of the Group had to be undertaken to ensure a future proof business model. This new strategy contains clear ambitions that are captured in the performance framework. The ambitions are set at a financial level, as well as at a customer, operational and commercial level. All ambitions are expected to be delivered in the mid-term and there is a clear plan for each of the elements how to get there. For some ambitions immediate steps have been taken, such as, the € 15 million cost reduction as key part of the cost leadership pillar. Other ambitions are expected to be achieved in a more gradual manner within the mid-term timing range, such as the 20% online channel share.
Beter Bed Holding N.V. developed a 2019 budget that aims to deliver a good first step towards these mid-term ambitions. The pace to deliver these ambitions will be accelerated as much as possible, but, given all restructuring efforts that had to be executed during Q4 2018, the company realistically expects to only gradually grow towards the mid-term ambitions, including the key financial ambitions of sales growth of 4-5% and an EBITDA margin of 7-9%.
In order to gradually grow towards the financial ambitions, Beter Bed Holding N.V. reached an agreement with their two main banks on the conditions of the existing credit facility. The agreements are based on the key assumption that the existing cash and credit facilities are sufficient for both executing the 2018 restructuring and delivering all mid-term ambitions. The agreements included an amendment of the net debt/EBITDA covenant to an absolute EBITDA measure per 31 December 2018 as a consequence of the business performance in the second half of 2018 and the restructuring during Q4 2018. The 2018 results were within the proactively amended agreement with the banks.
Beter Bed Holding N.V. and the banks agreed to return to the original covenant of operating within the net debt/EBITDA ratio with a maximum of 2.5 as of 1 January 2019. All activities that are taken as part of the new strategy lead to an assumed financial result that remains within the maximum ratio for the mid-term future. For the specific next measurement on 30 June 2019, Beter Bed Holding N.V. is confident that the commercial, operational and restructuring initiatives that have been conducted already foresee in operating within this ratio. In order to deliver this, Beter Bed Holding N.V. continuously reviews all internal and external sensitivities. These sensitivities include several opportunities, but also some business and market challenges. Beter Bed Holding N.V. estimates that the net impact of all these opportunities and challenges will have a positive effect on the leverage ratio measured on 30 June 2019. In the unlikely event that none of the opportunities materializes within the first six months of 2019, but all challenges become real in that same period, the net impact could lead to a net debt/EBITDA ratio exceeding the maximum ratio of 2.5. Beter Bed Holding N.V. carefully monitors the development of this ratio and remains in frequent and constructive contact with the banks to ensure that, when needed, appropriate actions are taken accordingly.
- Applications of new standards
A number of new standards, amendments to and interpretations of existing standards entered into effect in 2018, like IFRS 9 Financial instruments and IFRS 15 Revenue from contracts with customers.
IFRS 9 Financial instruments, effective 1 January 2018
IFRS 9 is the new standard voor reporting financial instruments and replaces IAS 39 'Financial instruments'. This standard has been implemented within Beter Bed Holding N.V. per 1 January 2018 based on the modified retrospective approach. This standard comprises specific requirements for recognition and valuation of financial assets as well as financial liabilities. Compared to the prior standard, the main changes for Beter Bed Holding N.V. are related to the classification and valuation of financial assets and liabilities and the determination of the provision for expected credit losses. Previously, financial assets and liabilities were valued at amortised cost and consequently, the implementation of IFRS 9 has no significant impact on the classification and valuation of these positions. Given the non-significant size of the debtor balance and associated provision, the implementation of IFRS 9 also has no material impact on the determination of the provision for expected credit losses. In summary, the implementation of IFRS 9 per 1 January 2018 has had no significant impact on the consolidated financial statements of Beter Bed Holding N.V.
IFRS 15 Revenue from contracts with customers, effective 1 January 2018
IFRS 15 is the new standard for reporting revenue from contracts with customers, and as such it is replacing IAS 18 Revenue. This standard has been implemented by Beter Bed Holding N.V. per 1 January 2018. Beter Bed Holding N.V. has analysed the five steps within IFRS 15, which are: identify the contract, identify the 'performance obligation' within the contract, determine the transaction price, allocate the transaction price to the performance obligations in the contract and recognize revenue. Following this analysis, it has been concluded that the new standard has no significant impact on the consolidated financial statements of Beter Bed Holding N.V.
The following standard and its related interpretations were issued on the date of publication of the financial statements, but was not yet applicable for the 2018 financial statements. Only those standards and its related interpretations are listed below, of which Beter Bed Holding N.V. reasonably expects to have an impact on the disclosures, the financial position or the results of the company upon future application. Beter Bed Holding N.V. intends to apply this standard and its interpretations as soon as it becomes effective.
IFRS 16 Leases, effective 1 January 2019
IFRS 16 Leases is the new reporting standard for lease accounting and as such replaces reporting under IAS 17 Leases.
Beter Bed Holding N.V. has a large portfolio of around 1,000 rented stores. The Group has adopted IFRS 16 through application of the ‘modified retrospective approach’ and applies the standard to its rented stores, car and truck leases in countries in which Beter Bed Holding N.V. is active.
In accordance with the practical expedients the standard proposes, Beter Bed Holding N.V. has made no specific distinction in type of costs for car and truck leases and subsequently full lease costs will be capitalised. Also, all lease contracts for which the underlying asset value is defined to be below € 5,000 are exempted from capitalisation as lease assets.
Beter Bed Holding N.V. has implemented a software tool which enables transparent, efficient and effective reporting of lease contracts under the new IFRS 16 standard. This tool provides insights in leased assets and its associated liabilities per country and per category. Lease contracts will be capitalised for the duration of non-cancellable periods and renewal periods are only taken into account if deemed reasonably certain. The discount rates (incremental borrowing rates) to value the lease contracts are between 0% and 1.5%, depending on their duration and associated country.
Aforementioned variables and applied practical expedients have resulted in an identification of right of use assets in a range between € 120 million and € 150 million and will therefore result in an increase of the total balance sheet of this magnitude per 1 January 2019. Moreover, the profit and loss statement will display a shift from operational lease costs to depreciation costs and interest charges. Adoption of this standard also has an inevitable and significant impact on several ratios, including solvency and the net interest-bearing debt/EBITDA. However, the covenants with credit institutions are not impacted, given the fact that the covenants include conditions stating that ratios concerned are calculated excluding the impact of new reporting standards.
- Principles of consolidation
The consolidated financial statements comprises of the financial statements from Beter Bed Holding N.V. and its group entities. Group entities are defined as entities controlled by the company, meaning the company is exposed to or is entitled to the variable results following the company's involvement and ability to influence these results in her power to steer on the activities of that entity. Group entities are included in the consolidation at the date when the entities are identified as such. As of the date an entity does not meet the afore mentioned criteria of a group entity, the entity is no longer included in the consolidation.
For consolidation purposes, the Group has applied the full consolidation method. Financial relations and results between consolidated companies are eliminated.The following companies are included in the consolidation of Beter Bed Holding N.V.:
BBH Beteiligungs GmbH1
BBH Services GmbH & Co K.G.¹
Bedden & Matrassen B.V.
Uden, The Netherlands
Beter Bed B.V.
Uden, The Netherlands
Beter Bed Holding N.V. y Cia S.L.
Beter Beheer B.V.
Uden, The Netherlands
DBC International B.V.
Uden, The Netherlands
DBC Nederland B.V.
Uden, The Netherlands
El Gigante del Colchón S.L.
M Line Bedding S.L.
Matratzen Concord (Schweiz) AG
Matratzen Concord GmbH¹
Matratzen Concord GesmbH
Sängjätten Sverige AB
Sängjätten Sverige Wholesale AB
- 1 These statutory interests make use of the exemption in accordance with article 264 (3) en 264b of the German Commercial Code.
- Principles for the translation of foreign currencies
The consolidated financial statements have been prepared in euros. The euro is the functional currency of Beter Bed Holding N.V. and is the Group's reporting currency. Assets and liabilities in foreign currencies are converted at the rate of exchange on the balance sheet date; profit and loss account items are converted at the rate of exchange at the time of the transaction. The resulting exchange differences are credited or debited to the profit and loss account. Exchange differences in the financial statements of foreign group companies included in the consolidation are taken directly to equity through other comprehensive income. The results and assets and liabilities of consolidated foreign participations are translated into euros at the average exchange rate per month and the closing rate for the year under review respectively. Upon a disposal of a foreign entity, the deferred accumulated amount recognised in equity of that foreign entity concerned is taken to the profit and loss account.
- Principles of valuation
Tangible assets other than land are valued at the cost of purchase or construction less straight-line depreciation and impairments (if applicable) based on the expected economic life or lower recoverable amount. Land is carried at fair value on the basis of periodic valuations by an external expert. Any revaluations are recognised in equity through other comprehensive income, with a provision for deferred taxation being formed at the same time. Land and other tangible assets under construction are not depreciated.
Tangible assets are derecognised in the event of disposal or if no future economic benefits are expected from its use or disposal. Any gains or losses arising from its derecognition (calculated as the difference between the net proceeds on disposal and the carrying amount of the asset) are taken to the profit and loss account for the year in which the asset is derecognised. Any residual value of an asset, its useful life and valuation methods are reviewed and if deemed necessary, adapted at the end of the financial year.
The determination whether an arrangement forms or contains a lease is based on the substance of the agreement and requires an assessment to determine whether the execution of the agreement is dependent upon the use of a certain asset or certain assets and whether the agreement provides the right to actually use the asset. Beter Bed Holding only has operating lease agreements up to and including financial year 2018. Operational lease payments are recorded as expenses in the profit and loss statement.
Initial measurement of intangible assets is at acquisition cost. The cost of intangible assets obtained through an acquisition is equal to the fair value as at the date of acquisition. Thereafter, valuation is at cost minus accumulated amortisation and impairments. Development costs are capitalised when they are likely to generate future economic benefits.
Intangible assets are assessed in order to determine whether they have a finite or indefinite useful life.
Intangible assets are amortised over their useful life and tested for impairment if there are indications that the intangible asset might be impaired. The amortisation period and method for an intangible asset with a finite useful life are assessed at least at the end of each period under review. Any changes in the expected useful life or expected pattern of the future economic benefits from the asset are recognised by means of a change in the amortisation period or method and must be treated as a change in accounting estimate. Amortisation charges on intangible assets with a finite useful life are recognised in the profit and loss account.
Any gains or losses arising from the derecognition of intangible assets are determined as the difference between the net disposal proceeds and the carrying amount of the asset and are recognised in the profit and loss account when the asset is derecognised.
Impairment of assets
The Group reviews at each reporting date whether there are indications that an asset has been impaired. If there is any such indication or if the annual impairment testing of an asset is required, the Group estimates the asset’s recoverable amount.
An asset’s recoverable amount is the higher of the fair value of an asset or the cash-generating unit (after deduction of the selling costs) and the value in use. If an asset’s carrying amount exceeds the recoverable amount, the asset is deemed to have been impaired and its value is written down to the level of the recoverable amount. When assessing the value in use, the present value of the estimated future cash flows is determined, applying a discount rate before tax that takes into account the current market assessment of the time value of money and the specific risks associated with the asset.
On each reporting date an assessment is made whether there are indications that an impairment loss recognised in prior periods no longer exists or has decreased. If there is any such indication, the recoverable amount is estimated. An impairment loss recognised in prior periods is only reversed if there has been a change in the estimates used to determine the asset's recoverable amount since the last impairment loss was recognised. In that case, the carrying amount of the asset is increased to the recoverable amount. This increased amount cannot exceed the carrying amount that would have been determined (net of amortisation) if no impairment loss had been recognised for the asset in prior years. Any such reversal is recognised in profit or loss.
Derecognition of financial assets and liabilities
A financial asset (or, if applicable, part of a financial asset or part of a group of similar financial assets) is derecognised if the group is no longer entitled to the cash flows from that asset or if substantially all risks and rewards of the asset have been transferred or – if substantially all risks and rewards of the asset have not been transferred – the entity has transferred ‘control’ of the asset.
A financial liability is derecognised when the obligation has been discharged or cancelled or has expired. If an existing financial liability is replaced by another from the same lender, under substantially different terms, or if substantial modifications are made to the terms of the existing liability, the replacement or modification is accounted for through recognition of the new liability in the balance sheet and derecognition of the original liability. The difference between the relevant carrying amounts is accounted for through profit or loss.
Tax liabilities for current or prior years are valued at the amount that is expected to be paid to the tax authorities. The amount is calculated on the basis of the tax rates set by law and enacted tax laws.
A provision is formed for deferred tax liabilities based on the temporary differences on the balance sheet date between the tax base of assets and liabilities and the carrying amount in these financial statements. Deferred tax liabilities are recognised for all taxable temporary differences. The deferred tax liabilities are valued at nominal value.
Deferred tax assets are recognised for available tax loss carry forwards and deferred tax assets arising from temporary differences at the balance sheet date between the tax base of assets and liabilities and the carrying amount in the financial statements. Deferred tax assets are valued at nominal value. Deferred tax assets arising from future tax loss carry forwards are only recognised to the extent that it is probable that sufficient future taxable profit will be available against which these can be utilised.
Deferred tax assets and deferred tax liabilities are measured at the tax rates that are expected to apply to the period when the asset is realised or the liability is settled, based on enacted tax laws.
Inventories are valued at the lower of cost and net realisable value. The cost consists of the latest purchase price less purchase discounts and plus additional direct costs. Net realisable value is the estimated selling price in the ordinary course of business less the estimated costs of completion and the estimated costs for settling the sale. Unrealised intercompany gains and losses are eliminated from the inventory valuation.
Cash and cash equivalents
Cash and cash equivalents on the balance sheet consist of bank balances and cash.
Provisions are recognised for legal or constructive obligations existing at the balance sheet date for which it is probable that an outflow of resources will be required and the amount can be reliably estimated. Provisions are carried at the best estimate of the amounts required to settle the obligation at the balance sheet date, being the nominal value of the expected expenditures, unless stated otherwise.
Non-derived financial instruments
Non-derived financial instruments include other financial fixed assets, trade and other accounts receivables, cash and cash equivalents, liabilities to credit institutions, trade and other payables. Initial recognition of non-derived financial instruments is at fair value. Thereafter, these non-derived financial assets are valued at amortised cost.
Impairments of financial assets
Beter Bed Holding N.V. applies a model of the impairments of financial assets against amortised cost. In order to determine the provision, Beter Bed Holding N.V. applies a general or simplified method.
For the general method, the following is applied:
- A 12-month expected credit loss; or
- Lifetime expected credit losses for financial assets when the credit risk increases significantly due to certain circumstances. All credit losses for the expected lifetime are accounted for; or
- Lifetime expected credit losses for financial assets, whereby interest is calculated based on the net receivable less impairment loss.
Loans granted to subsidiaries and receivables against suppliers following the supplier model, as well as all other receivables go through the process of impairment testing based on the aforementioned general method.
The simplified method is applied to other receivables. For these, at inception, lifetime expected credit losses are processed, which are determined following a historical set of average irrecoverable amounts (based on historical debt collection details).
- Determination of the result
The presentation of the profit and loss account is based on the categorical classification. Gross profit is the result of sales less cost of goods sold. Personnel costs, depreciation, amortisation and impairments of fixed assets and other operating expenses are presented immediately after gross profit due to short term influenceability and the fact that these costs do not directly relate to the level of sales.
The sales is understood as the proceeds of the sale of goods and services to third parties less discounts and similar rebates, and sales taxes. Sales are recognised when mutual contractual obligations are met. In the circumstance when goods are instantly being taken by consumers, this is at the time of payment at the cash register. In the circumstance when goods are assembled and/or delivered, the sale is recognised at the moment when the transfer has led to a physical delivery of the goods to the customer.
Cost of sales
This comprises the cost and associated services of the goods sold, after deduction of any payment discounts and purchase bonuses received, added with directly attributable purchase and supply costs.
The expenses are determined in accordance with the aforementioned accounting policies, and are allocated to the financial year to which they relate. Interest is recognised as an expense in the period to which it relates.
A variety of pension schemes are in use within the company. In the Netherlands, the majority of the employees participated in the Wonen Industrial Pension Fund, which was transferred into the Detailhandel Industrial Pension Fund with effect from 1 January 2018. This is an average pay scheme with a maximum pension accrual on the income for social security contributions. This arrangement is currently considered a ‘defined benefit’ scheme. This pension fund is, however, at present not able to provide data that enables a strict application of IAS 19. The principal reason for this is that the company’s share in the total of Detailhandel Industrial Pension Fund cannot be determined sufficiently reliable. Consequently this pension scheme is accounted for as a defined contribution scheme.
Virtually all other pension schemes are defined contribution schemes. The contributions paid to the Detailhandel Industrial Pension Fund and insurance companies respectively are recognised as expenses in the year to which they relate. There are no company-specific pension schemes in the other countries.
Depreciation and amortisation
Depreciation and amortisation are calculated using the straight-line method based on the expected economic life of the underlying assets. Additions in the year under review are depreciated and amortised from the date of purchase onwards.
- Cash flow statement
The cash flow statement is prepared using the indirect method. The ‘cash and cash equivalents’ item stated in the cash flow statement can be defined as cash and cash equivalents less current bank overdrafts, to the extent that these do not relate to the current component of non-current loans. Current bank overdrafts are an integral part of cash flow management.
- Share-based transactions
Members of the Management Board and a few other employees of the company receive remuneration in the form of payment transactions based on shares, whereby these employees provide certain services in return for capital instruments (transactions settled in equity instruments). The costs of the transactions settled with employees in equity instruments are valued at the fair value on the date of grant. Fair value is determined on the basis of a combined Black & Scholes model and Monte Carlo simulations. Performance conditions are taken into account when determining the value of the transactions settled in equity instruments.
The costs of the transactions settled in equity instruments are recognised, together with an equal increase in equity, in the period in which the conditions relating to the performance and/or services are met, ending on the date on which the employees concerned become fully entitled to the grant (the date upon which it vests). The accumulated costs for transactions settled in equity instruments on the reporting date reflect the degree to which the vesting period has expired and also reflects the company’s best estimate of the number of equity instruments that will eventually vest. The amount that is charged to the profit and loss account for a certain period reflects the movements in the accumulated expense.
The main financial risk consists of failing to achieve the budgeted sales and therefore the planned cash margins, mainly as a result of changes in consumer behaviour in response to changing economic conditions. Sales and order intakes for each format are reported on a daily basis to manage this risk. On a weekly basis, data on realised margins, numbers of visitors, conversion and average order values are added to them and commented on.
Based on the analyses, adjustments are made in the marketing mix, including pricing policy and the use of advertising. In addition, cost budgets are periodically reviewed and adjusted if necessary. Economic and macroeconomic information from the market, including sector-specific reports, is also utilised.
Currency risks, arising mainly from purchases in dollars, are not hedged. A 5% change in the average dollar exchange rate would, on the basis of the purchasing volumes in the financial year, result in an effect of approximately € 83 (2017: € 97) on the operating profit (EBIT) if sales prices remain the same. There are virtually no financial instruments in foreign currencies. The currency risks owing to the presence and/or transactions in Sweden and Switzerland and the potential volatility of the Swedish krona and the Swiss franc are considered to be limited due to the fact that the majority of goods purchases takes place in euros.
Interest rate risk resulting from the current capital structure of the company is very limited. The effect on the result following a change (increase or decrease) in the interest rate of 50 basis points would be € 0.2 million before taxation (2017: € 0.1 million), on the basis of the use of the credit facilities at year-end 2018. The carrying amount of the financial liabilities is virtually equal to the fair value.
Credit risk is limited to the wholesale operations and trade receivables under bonus agreements. No specific measures are required for this, in addition to standard credit control. The fair value of receivables is equal to their carrying amount. The maximum credit risk equals the carrying amount of the receivables.
Liquidity risk is insignificant, resulting from the nature of the company’s operations and financial composition, of which a large portion is current stock. A description of the available credit facilities can be found in the chapter current liabilities. For an explanation of the other risks, please refer to the related section of the Report of the Management Board.
- Capital management
The company has a target solvency (equity/total assets) of at least 30% in accordance with the dividend policy. In addition, the ratio of net interest-bearing debt/EBITDA must not exceed two. The item inventories is by far the most important in the working capital. Targets have been defined for this for each format. These variables are included in the weekly reports.
Solvency at year-end 2018 was 33.2% (2017: 44.8%). The net interest-bearing debt was € 16.8 million in 2018. The EBITDA based on continuing operations, corrected for one-offs, was € 0.6 million.
EBITDA is defined as operating profit or loss before depreciation and amortisation of non-current assets and before disposals of non-current assets.
- Information by segment
Various operating segments have been identified within the Group as these segments are reviewed by the decision-makers within the entity. These operating segments independently generate sales and incur expenses. The principal operating segments are comparable in each of the following aspects:
- Nature of the products and services
The operating segments primarily sell mattresses, bedroom furnishings (including box springs), bed bases and bed textiles. The operating segments also provide the home delivery service.
- Customers for the products and services
The operating segments sell directly to consumers, focusing specifically on customers in the 'value-for- money' segment.
- Distribution channels for the products and services
The operating segments generate their sales in stores (the offline retail channel) and also have a webshop (online retail channel). Online sales compared with total sales is similar for the operating segments.
- Economic characteristics
The operating segments have similar economic characteristics, e.g. in terms of sales, gross profit and inventory turnover rate.
In view of the comparability of above characteristics, the operating segments are aggregated into a single reportable segment.
- Nature of the products and services
- Seasonal pattern
Owing to the seasonal pattern in consumer demand, sales and net result are usually lower in the second and third quarter than in the first and fourth quarter.
- Estimates and judgements
In preparing the financial statements, the Management Board is required to exercise judgement, make assumptions and estimates that affect the application of the accounting standards and the valuation of the recognised assets and liabilities and income and expenses. Following those judgments, assumptions and estimates, the actual valuation may subsequently differ materially from the reported valuation.
The actual timing of the utilisation of amounts in provisions is uncertain when determining these at inception. Judgements, assumptions and estimates are continually reviewed and are based on historical experience and other factors, including future expectations. These future expectations are based on reasonable expectations concerning the relevant factors affecting the financial statement item concerned.
Adjustments of estimates are recognised in the period in which those adjustments are made and, where relevant, in the future periods concerned.
Where significant estimates are made when preparing the financial statements, an explanation is provided in the notes for each item in question.