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jaarverslag engels
Annual Report 2006
SPECTOR PHOTO GROUP
Table of contents
Spector Photo Group
Parent company accounts 2006..................................................................................84
Key figures .......................................................................................................................1
Report of the Committee of Statutory Auditors ...............................................................84
Information for the shareholders .......................................................................................2
Report of the Board of Directors on the parent company accounts ................................86
Profile................................................................................................................................5
Balance sheet .................................................................................................................88
Imaging Group .............................................................................................................6
Income statement ...........................................................................................................89
Retail Group................................................................................................................10
Comments ......................................................................................................................90
Corporate ...................................................................................................................13
Summary of the bases of valuation .................................................................................92
Discontinued activities ................................................................................................13
Corporate Governance ................................................................................................95
Report of the Board of Directors on the consolidated financial statement
Internal measures to promote good Corporate Governance practices .........................96
Letter to the shareholders ...............................................................................................15
The Board of Directors ....................................................................................................96
Report ............................................................................................................................16
Management of the business ..........................................................................................99
Brief biographies of the members of the Board of Directors and
Notes to the balance sheet and the income statement ............................................23
of the executive committee ..........................................................................................101
Income statement ...........................................................................................................24
Shareholders .................................................................................................................109
Balance sheet .................................................................................................................25
Statutary Auditors .........................................................................................................109
Changes of statement in equity ......................................................................................26
General information on Spector Photo Group ...............................................................110
Consolidated cash flow statement ..................................................................................27
Concise notes to the consolidated cash flow statement .............................................28
Statement of compliance ................................................................................................31
Summary of significant accounting policies ....................................................................31
The image sets the format
The externally acquired customer relationships of Spector Photo Group under IFRS ..41
Most important changes from 2005 to 2006 ...................................................................43
Just as in the previous editions, this annual report also deliberately
Segment reporting and comments..................................................................................44
employs the same format. The horizontal landscape format also
Comments to the consolidated financial statements 2006 ........................................ 47-81
relates to the human field of visibility and consequently to the
Report of the Committee of Statutary Auditors ...............................................................82
format in which most photographs are taken. The ratio between
height and width of this annual report (3 to 4) is the same as the
image proportions for most digital compact cameras.
Key figures
Audited and consolidated figures prepared according to IFRS (in € ‘000)
INCOME STATEMENT FOR THE YEAR ENDING ON
31 DECEMBER
Operating income
Other operating income
Changes in invent. of finished goods & work in progress
Trade goods, raw materials and consumables
Remunerations
Depreciation and amortization expenses
Other operating expenses
Profit/(losses) from operating activities, before nonrecurring items
Non-recurring items from operating activities
Profit/(losses) from operating activities
Financial revenues
Financial costs
Financial cost-net, before non-recurring
financial items
Profit/(loss) before tax, before non-recurring
financial items
Non-recurring financial items
Profit/(losses) before tax
Income tax expenses (-)/income
Profit or loss (-) from continuing activities
for the period
Discontinued operations
Profit or loss (-) from discontinued operations
Profit or loss (-) for the period
Attributable to minority interests
Attributable to equity holders
of the parent company
CASH FLOW DATA
2005
2006
326 328
317 849
11 653
7 836
6
331
213 605
217 187
45 583
39 006
17 328
14 573
57 905
49 284
3 566
5 966
Selected cash flow data
REBITDA (1)
EBITDA (2)
EBITDA as % of revenue
Cash flow before taxes
Cash flow from continuing activities
Cash flow from continuing activities as %
of revenue
Cash flow of the period attributable to equity holders of
the parent company
- 7 496
- 3 834
- 3 930
2 132
1 646
2 790
-7 524
-5 628
- 5 878
- 2 838
BALANCE SHEET FIGURES
- 9 808
- 705
- 3 163
- 818
-12 971
- 1 523
355
- 1 496
Balance per 31 December (in € ‘000)
Balance sheet total
Gross financial debt
Net financial debt (1)
Solvency ratio (2)
Gearing ratio (3)
Current ratio (4)
-12 616
- 3 019
- 4 450
- 5 660
-17 067
- 8 679
-14
- 81
-17 053
- 8 598
2005
2006
20 483
19 919
15 092
17 418
4,6%
5,5%
9 311
14 580
8 025
12 828
`
2,5%
4,0%
7 923
11 761
(1) REBITDA: Profit (loss) from operating activities before non-recurring elements corrected for
depreciations, amortizations and provisions
(2) EBITDA: Profit (loss) from operating activities corrected for depreciations, amortizations and provisions
2005
2006
211 636
189 241
79 284
72 478
59 006
51 064
25,1%
22,1%
110,9%
121,9%
118,9%
116,8%
(1) Gross financial debt - (Cash and cash equivalents + Current investment securities)
(2) (Shareholders’ equity + minority interests) / balance sheet total
(3) Net financial debt / (shareholders’ equity + minority interests)
(4) Current assets / current liabilities
Spector Photo Group
1
Information for the shareholders
Spector share price/Next 150 index
Key figures per share
2005
2006
Number of shares
36 619 505
36 619 505
Number of shares with dividend rights
36 487 708
36 487 708
8,94
8,71
• ISIN code
: BE0003663748
-0,11
0,06
• SRW code
: 3663.74
• Stock code
: SPEC
0,56
0,55
Figures per share (in EUR, except for the number of
Koers (%)
shares)
Revenue
Profit/(Losses) from operating activities, after nonrecurring items
Cash flow from operating activities, before nonrecurring items
Cash flow from operating activities
Spector share
Next 150
Volumes January to December 2006
0,41
0,48
Profit/(Losses) before tax
-0,36
-0,04
Profit or Loss (-) from continuing
-0,35
-0,08
-0,47
-0,24
Cash flow before taxes
0,26
0,40
Cash flow from continuing activities
0,22
0,35
-0,47
-0,24
0,22
0,32
1,55
0,95
Profit or Loss (-) for the period attributable to equity
holders of the parent company
Cash flow for the period attributable to
equity holders
of the parent company
Share price per 31 December
Ordinary shares listed per 1 January
Price in EUR
Volume in millions
The financial servicing of the shares is carried out in
Belgium by Fortis Bank and KBC Bank free of charge for
the shareholders. In the event that the company should
change its policy concerning this matter it will publish this
in the Belgian financial press.
SPECTOR PHOTO GROUP 2006
6 761 253
29 858 252
36 619 505
Weighted average number of diluted ordinary shares
Financial services
2
Effect of the issued shares for the period
8 233 714,7
per 31 December 2005
Weighted average number of shares
Profit or Loss (-) for the period from continuing
8 233 715
-1,53
activities
Profit or Loss (-) for the period attributable to equity
holders of the parent company
The Spector Photo Group share is
listed on Euronext Brussels.
• Reuters code : SPEC.BR
Number of shares
The total number of shares listed
is 36,619,505. The structure of the
activities
Profit/(Losses) for the period
Listing
-2,07
shareholdership can be found on page
91 of this document.
Relevant figures of the shares
Diary for the shareholders
Average closing rate 2006
1,28 €
Highest day closing rate 2006
1,84 €
(6 January 2006)
Highest ‘intraday’ rate 2006
1,91 €
(9 January 2006)
Lowest day closing rate 2006
0,90 €
(15 December 2006)
Lowest ‘intraday’ rate 2006
0,89 €
(13 December 2006)
Total volume traded in 2006
16 075 748
63 042
Average daily volume in 2006
Trading Update first quarter 2007
9 May 2007 (2.00 p.m.)
Annual General Meeting
of Shareholders
31 August 2007 (after exchange closes)*
Publication of half-year results for 2007
29 November 2007 (after exchange closes)*
Trading Update third quarter 2007
8 February 2008 (after exchange closes)*
Trading Update fourth quarter 2007
7 March 2008 (after exchange closes)*
Publication of 2007 results
22 207 506 €
Total turnover in 2006
Estimation average daily turnover in 2006
Total volume traded in 2006
9 May 2007 (before exchange opens)
87 088 €
16 075 748
rotation 70,49%
(*) indicative data
Communication with the shareholders and investors
Spector Photo Group attaches particular importance to regular and
transparent communication to its shareholders and investors.
• Publication of Trading Updates and results (please see above)
• Separate “Investor Relations” section on the website
www.spectorphotogroup.com
• Free subscription to the press releases for investors via
the same website
SPECTOR PHOTO GROUP 2006
Spector Photo Group
3
SPECTOR PHOTO GROUP 2006
SPECTOR PHOTO GROUP 2006
Spector Photo Group
Share of the segments in the 2006 consolidated operating
income
Spector Photo Group is a diversified photo and multimedia group operating in 15 European countries, with 1,090 employees. The
Retail Group
Group has two core activities that are structured into two separate divisions. These two divisions – the Retail Group and the Imaging
Discontinued
Group – develop within Spector Photo Group with their own dynamics and their own risk profiles. Each division – using its own
operations
separate strategy – is managed centrally, as a result of which the best possible synergy and focus are aimed for within each group.
Imaging Group
Corporate
62%
6%
32%
0%
MISSION
THE DIVISIONS
The Imaging Group converts digital and analogue photo-
Spector Photo Group wants to provide the consumer with
The Retail Group comprises the retailing of consumer elec-
graphs into photo prints, photo calendars and diaries, photo
the opportunities to enjoy his or her audiovisual experiences
tronics and multimedia products, which is performed under
books and photo gifts. In addition, the Imaging Group provi-
to the maximum. Spector Photo Group offers consumers the
the brand names Photo Hall and Hifi International. There are
des a number of photo-related products, such as consumer
possibility of recording emotional moments in order to relive
four product lines: cameras and photo-related products,
non-durable goods for professional and other photographers.
and cherish them again later and wants to create added value
PCs, telecom and telephony and – finally – televisions. The
The Imaging Group uses ExtraFilm™ as the strategic brand
for both its shareholders and its employees. From this per-
Retail Group had 160 shops in 2006, spread across Belgium,
name for its mail order service, and Spector™ as brand name
spective, the company promotes itself as a solutions provider.
the Grand Duchy of Luxembourg, France and Hungary. The
for the partnership with specialised photographic businesses.
turnover of the Retail Group represented approximately 62%
The turnover of the Imaging Group represented 32% of the
of the group turnover in 2006.
group turnover in 2006.
Verslag
Spector
Raad Photo
van Bestuur
Group
5
IMAGING GROUP
MARKET
Segment or niche of
the photofinishing
market
Brand presence of
the Imaging Group
on this market
Estimated share
of the segment/
niche in the total
market
Belgium B2B via retail
networks
Spector
40%
Minilabs at photo trade specialists, CeWe (via retail chains such
as Kruidvat, ...)
20%
Belgium B2C market via
home delivery
ExtraFilm
Wistiti*
15%
Foto.com, Fotolabo
45%
The Netherlands B2B
via retail networks
Spector
50%
Minilabs at photo trade specialists, CeWe (via retail chains such
as Kruidvat, ...), Fujifilm (e.g. via
Hema)
10%
The Netherlands B2C
via home delivery
ExtraFilm
15%
Colormailer, Fastlab, Pixum,
Kruidvat, ...
40%
France B2C via home
delivery
ExtraFilm
Wistiti*
15%
Photoways, MyPixmania,
Bonusprint, Photo Service, Pixdiscount, ...
45%
Sweden
ExtraFilm
45%
Apport
70%
Norway
ExtraFilm
45%
Foto Knudsen, Foto Preus
65%
Finland
ExtraFilm
35%
Fotolabo (IFI)
20%
Denmark
ExtraFilm
10%
Pixum, Fotolabor
60%
Switzerland
ExtraFilm
50%
Kreuzlingen, Colormailer, Migros
15%
Italy
FLT
ExtraFilm* (B2C)
40%
Color 24, Fincolor, Unicolor
10%
Germany
ExtraFilm*
(started in 2006)
Pixum, Fastlab, Foto Quelle, ...
(started in 2006)
Spain
ExtraFilm*
(started in 2006)
Pixdiscount, ...
(started in 2006)
United Kingdom
ExtraFilm*
(started in 2006)
Snapfish, Photobox, Photoweb
(started in 2006)
Australia
ExtraFilm
The market in which the Imaging Group operates waw in
2006 still subject to the transition to digital photography.
Research, from among others Censydiam, shows that this
digital photo market is gaining an increasingly mature profile.
After all:
• The number of digital cameras is ever increasing
• More photos are being taken than ever before
• A large proportion of consumers who take digital
photos also want to print them
• The market for digital photo prints is growing
• The market consists of digital photo prints, analogue
prints and innovative photo products
At the end of 2006, the cost structure and the company
structure of the Imaging Group had evolved to the extent that
new investments for the future have become possible.
In this context, the group will focus on its two profitable
segments:
• the mail order activities (European with ExtraFilm™)
• the channel of the specialist photographic businesses
(Benelux with Spector™)
* exclusively via an e-commerce website
6
SPECTOR PHOTO GROUP 2006
5%
Main competitors
Kodak Gallery
Estimated share
of the Imaging
Group in this
segment
80%
THE MAIL ORDER ACTIVITIES
The driving force and the dynamics of the specialist photo
By selecting this strategy, the enterprise also chooses to be
In 2006, the Imaging Group continued the change towards
retailer is expressed in:
heavily competitive in a competitive market in 2007.
the web-to-post photofinishing market.
• advice to consumers
The Group aims to become a major player in the European
• photofinisher with minilab and kiosk
market. In 2006, a strong start was made towards this:
The Imaging Group will make tremendous efforts in 2007, and
the subsequent years to lower the reluctance of consumers
• with the further development of an integrated web platform
and is supported through:
• by adapting the company structure: unprofitable business
to entrust their digital memories to photo prints, photo books,
photo diaries and related products.
units were closed; employees with a more ICT-graphics
• targeted marketing campaigns
oriented profile were recruited
• schooling and courses at the headquarters in Wetteren
• With the principle “Safe & Simple” – focused on ease
In doing this, the Imaging Group is using the motto: “Con-
- simple steps
sumers want a simple way to keep their memories safe.’’
- encouragement to impulse response and buying
Starting in 2007, this motto will be further supported by:
- better technical solutions
• by investing in new, adapted systems of following up
of use:
and managing production and administration
THE SPECIALISED PHOTOGRAPHIC BUSINESS
- resulting in fidelisation and increasing turnover per
The photographers/photo specialists maintain a privileged
• a central marketing department with the following
place in the new dynamics. After all, they are the people most
costumor (*)
assignments:
suited to familiarising consumers with digital photography,
- product development and product launches
not only through their personal contact, but also through their
- market research
know-how. From the headquarters in Wetteren, we want to
- product management, “brand & brand positioning’’
be the preferred partner for specialised photo businesses.
(*) see page 9
• The logistical surplus value of the mail order sevices: supporting the logistics of the incoming order-flow. The experien-
Spector
• integrated consumer software with:
ce of the Imaging Group, acquired in the handling of analogue
- the website as interface with the end-user
print processes, is of vital importance in this.
- ”OOS’’ - the Offline Ordering Software, a program to
enable the creation of photo books and related
products on computers
- kiosk software at the specialised photo businesses
The central marketing department operates from the
headquarters in Wetteren. The aim of this is to be on the ball,
from the perspective of a shorter time to market.
st
peciali
Photo s
Consume
r
Spector Photo Group
7
photo books
photo gifts
photo cards
photo calendars and photo diaries
8
SPECTOR PHOTO GROUP 2006
Dynamics of the Digital Direct Marketing
INNOVATIVE PRODUCTS
The new products are more and more emphatically making
their entry into the turnover package of the Imaging Group.
Their innovative strength will allow them to continue growing
• Photo greeting cards, photo calendars and diaries. Specific
even more emphatically in coming years.
modules on the websites and in the Offline Ordering Software
• Photo books. Digital technology based on user-friendly
offer the consumer the option to integrate photos in cards,
software enables us to immediately incorporate digital photos
calendars and diaries.
(*) DATABASE MARKETING
in ready-to-use photo books. The Imaging Group wants to
• Photo gifts. Thanks to digital technology, is it also possible
This is an increasingly used tool to create loyalty among
make the production of these more user-friendly, as already
to print on a large scale and profitably on various types of ma-
the customers. Its importance increases as do the specific
indicated. An empty photo book appears on the PC screen.
terials (such as T-shirts, coffee cups, wall tiles, etc.).
offers for loyal customers. This requires a very strongly
Consumers can drag their own photos into it. They can add
focused communication and an accentuation of customer
captions and place selected photos as a background as
These innovative products already provided 20% of the digital
binding by means of the online versions of proven marke-
desired. After selecting the cover, they complete their own
turnover of the Imaging Group in 2006 and will break through
ting techniques, such as fidelity cards with loyalty points,
virtual album that the Imaging Group converts into a tangible
further in 2007, supported by a specially focused marketing
extra points for customers who introduce a new customer,
“real” photo book.
approach.
etc.
Spector Photo Group
9
RETAIL GROUP
• ACTIVITIES
• STRATEGY
C. Price
The activities of the Retail Group are organised under the um-
- Specific positioning
Photo Hall always provides the best price/quality ratio. This
brella of N.V. Photo Hall Multimedia. The Retail Group opera-
means it is not a player in the lower price ranges of B- and C-
tes in 4 countries: Belgium, the Grand Duchy of Luxembourg,
• Photo Hall positions itself as a solutions provider. This has
brand products. On the contrary, the Retail Group chooses
France and Hungary. In Belgium and Hungary this takes place
consequences for a number of aspects:
– always and for all product groups – to develop competitively
under the Photo Hall brand name, in Luxembourg and France
in the market of A-brands.
it is Hifi International.
A. Solutions
The Retail Group opts for controlled growth in the number of
Photo Hall offers the customer solutions. Photo Hall has
to have long-term relationships with its manufacturers and
own outlets in Belgium and Luxembourg. In Hungary it ope-
prepared an “advanced selection” for the customer. That
suppliers. This philosophy ensures strict control on the delive-
rates a mixture of its own retail outlets and franchise holders.
means that a strong range of A-class brands is offered, no
ries, the continuous availability of the most sold models and
In France there were 4 sales outlets in the Northeast of the
own brands or white products. The offer of leading brands is
equipment and contracted agreements concerning prices, as
country in 2006.
combined with excellent service in the outlet.
a result of which dumping practices are avoided.
B. Service
D. The range
Photo Hall does indeed offer a service that differs from that in
Photo Hall deliberately restricts the range to four product
large chains. Photo Hall selects enthusiastic sales employees
groups: cameras and photo-related products, PCs, telecom
who can provide consumers with personal advice based on
and telephony and – finally – televisions. Due to this unique
their expertise and experience. This means: no self-service,
positioning, Photo Hall reaches a specific type of consumer
no overabundance of different types within the same range.
who feels less comfortable with the competitive concepts.
In addition, customers are offered the opportunity to buy on
credit. This is free of conditions. The Retail Group chooses
But does mean: a cosy ambience, personal help and advice,
pleasure in shopping. A continually learning organisation with
mandatory training programmes for the sales staff help with
this.
10
SPECTOR PHOTO GROUP 2006
The turnover from consumer electronics can be split up as follows:
PC
GSM
Misc.
Photoprint
Photo
Audio-Hifi
V-DVD
TV
- The ambition, the future and the market
30%
17%
5%
3%
15%
9%
9%
12%
Photo Hall has clearly succeeded in resisting the competi-
In 2006, Photo Hall had 92 shop outlets in Belgium (2 fewer
tion in Belgium in 2006. Due to its positioning as a solutions
than 2005), 18 shops in Luxembourg (2 more than 2005),
• Retain and improve market position
provider, with personal service for a precisely defined product
4 in France (1 less than 2005), and 173 shops in Hungary
• Continue the success of a range of products
range, 4.9% growth in turnover was achieved. It was mainly
(- 27 franchises, + 3 own business compared to 2005).
• Continued renewal of the products by responding
3 product groups – flat-screen TVs, GPS, and laptop-PCs
to the demand and needs of the consumer
– that provided this turnover growth. The same trend was
• Extending the shop offerings
seen in Luxembourg as in Belgium. In this context, we should
• Optimising the shop premises in the current market
report that the range of portable audio, such as MP3 players,
enjoyed clear sales growth. The turnover increase in Luxem-
Photo Hall always wants – through its philosophy described
bourg amounted to 20.7%.
above – to remain a length ahead of the major distribution
chains. The know-how of a young sales team, combined with
Television, games consoles and telephones saw a significant
a clearly defined range of products, will ensure a continuing
rise in sales in France. In France, the shop in Nancy was
strong position in the market. The ever increasing interest
closed in 2006, as a result of which the turnover in France
by consumers for multimedia and its applications, already
decreased by 3.8%.
apparent in 2005, will continue unabated. A number of products will become even more successful. New product lines
In Hungary, there was a clear progression in the sale of TVs,
are always arriving in the broad market. The most obvious
computers and video. This increase in turnover was realised
examples are:
entirely by the 55 own outlets. Of the franchise businesses,
• Flat-screen TVs
27 were closed because they had too restricted shop areas
• GPS navigation systems
to enable them to offer the current Photo Hall range. This re-
• ICT applications for the home-user
sulted overall in a slight drop in turnover in Hungary by 4.3%.
• MP3 players
• GSM phones with camera equipment
Spector Photo Group
11
In Luxembourg in November 2006, the expansion of the shop concept was launched: on a large area of more than
1900 m2 in the shop outlet in Bertrange, beside the traditional offerings of the four recognised product categories of TV,
phones, computers and audio-video, a start was made with offering small and larger household appliances. A very promising
concept that plays its part in the growth scenario of Photo Hall.
12
SPECTOR PHOTO GROUP 2006
Corporate
The Corporate reporting segment refers to the
organisation within the Group which is responsible for strategic targeting and support for the
Retail Group and the Imaging Group. Internal
audit and financial consolidation also belong
to the tasks of the Corporate organisation.
Discontinued
operations
The loss from the discontinued operations
amounted to EUR 5.6 million. These figures
were mainly affected by the results of LittoColor. The turnover of Litto-Color Belgium,
the Netherlands and France amounted to
EUR 14 million (-28%) on an annual basis. On
18 December 2006, Photomedia N.V. (Spector’s
Imaging Group), the liquidators of Litto-Color N.V.
and a group of investors, reached an agreement with
which the activities of Litto-Color N.V. were transferred to
a new company. The impact of this operation on the 2006
results of Spector Photo Group amounts to minus EUR 3.9
million.
Spector Photo Group
13
SPECTOR PHOTO GROUP 2006
SPECTOR PHOTO GROUP 2006
Report from the Board of Directors concerning
the consolidated financial statements
The official report of the Board of Directors concerning the consolidated financial statements is presented on pages 16 to 77.
Letter to the Shareholders
The past year has been a year full of transitions.
The photographic world is indeed still making the transition from analogue to digital photos. This transition is actually also continuing to accelerate.
Responding to this in 2006 was an enormous challenge to our enterprise. We have succeeded in this due to a number of specific strategic actions within the Imaging Group. In 2006, we already invested
in the further development of a marketing driven web platform, and the recruitment of new employees with marketing and ICT skills. In 2007, these investments will also enable the further development of a
range of new products – already put into the market in 2006.
The developments within the Retail Group continue on a straight line. In a heavily competitive market, the Retail Group is maintaining its position. We are proud that this is possible because of its unique
position as a solutions provider. We also anticipate a growth scenario for the Retail Group in 2007.
Spector Photo Group is on the right track. This is also thanks to the efforts, the know-how and the vision of our employees. We would like to thank them for this.
More than ever, we also thank our shareholders, partners, suppliers, customers and consumers for the trust they have placed in us in 2006. We hope that we can also count on this trust in 2007.
Tonny Van Doorslaer
Luc Vansteenkiste
Managing Director
Chairman
Report Verslag
of the Board
Raad van
of Directors
Bestuur
a
15
Report of the Board of Directors
Retail Group:
This increase is attributable to the continuing growth of the
Furthermore, an additional write-down was entered against
• Turnover increases further to € 211 million (+ 8.2%)
operating income for the Retail Group. The total cost for
an unexpired outstanding receivable from Fotoinvest.
• EBIT rises by 16.6% to € 7.7 million
trade goods, raw materials, and consumables for Imaging
Imaging Group:
• Restructuring progressing according to plan
decreased by 18.6% in 2006, thus in proportion with the drop
TAXES
in operating income.
The tax amount of € 1.5 million is mainly attributable to the
positive results of the Retail Group.
• New digital photo products grew strongly to 20%
The employee benefits decreased by 14.4% in 2006. At the
of the digital turnover
year-end there were 1,090 staff members in service (versus
DISCONTINUED OPERATIONS
1,219 at the same time in 2005). This fall is mainly attributable
The loss from the discontinued operations amounted to € 5.6
to the Imaging Group.
million. This loss was mainly affected by the results of Litto-
Core items
Color. The turnover of Litto-Color Belgium, the Netherlands
In 2006, Spector Photo Group achieved a turnover of €
Depreciation and write-downs dropped by 15.9%.
317.8 million (- 2.6%) from continuing operations, on which
basis. On 18 December 2006, Photomedia N.V. (Spector’s
a recurring operating profit of € 6.0 million was realised. After
NON-RECURRENT ITEMS
Imaging Group), the liquidators of Litto-Color N.V. and a
deducting non-recurrent costs of € 3.8 million, the operating
The non-recurrent items for 2006 amount to minus EUR 3.8
group of investors, reached an agreement with which the
profit was € 2.1 million. The figures from the activities of Litto-
million. These are mainly for the Imaging Group (96.9%).
activities of Litto-Color were transferred to a new company.
Color and STL are recognised under discontinued operations.
The impact of this operation on the 2006 results of Spector
-
EUR 1 700 (000)
redundancy payments
The 2006 financial year was characterised, on the one hand,
-
EUR
500 (000)
write-downs
by further growth of the Retail Group, as a result of which
-
EUR
700 (000)
provisions
RESULT FOR THE FINANCIAL YEAR
both EBITDA and EBIT could further increase and, on the
-
EUR
900 (000)
other restructuring costs
After netting the result of the discontinued operations, this all
other, by intensive restructurings of the Imaging Group, with a
strong emphasis on reduction of the fixed overheads.
FINANCIAL RESULT
OPERATING COSTS
minus € 2.8 million, which is more than € 3 million better than
Trade goods, raw materials and consumables
in 2005. This is a result of lower interest expenses due to the
The cost of trade goods, raw materials, and consumables
decrease in the debts and positive exchange differences (€
rose slightly overall by 1.7%.
1.4 million in 2006, compared to minus € 0.5 million in 2005).
SPECTOR PHOTO GROUP 2006
Photo Group amounts to minus € 3.9 million.
resulted in a loss for the financial year of minus € 8.6 million
The financing result before non-recurring items amounted to
16
and France amounted to € 14 million (- 28%) on an annual
(this was minus € 17.1 million in 2005).
INVESTMENTS FOR THE CONTINUING ACTIVITIES
customer relationships amounted to EUR 17.6 million of
In Luxembourg in November 2006, the expansion of the shop
In 2006, the investment level for the continuing activities
which EUR 9.9 million is externally acquired customer
concept was put on track. On an area of more than 1900 m2
amounted to € 6.2 million, which is 44% less than in 2005.
relationships and EUR 7.7 million is directly attributable prepa-
in the shop outlet in Bertrange, a start was made with offering
This fall is mainly attributable to the lower capital expenditure
ratory costs.
small and larger household appliances. This range is offered
in the Imaging Group for the external acquisition of customer
besides the 4 traditional product groups (televisions, phones,
relations. In addition, however, the Imaging Group did invest
The Board of Directors agrees with the opinion of the audit
computers and audio-video). The initial months indicate a
in the further development of the web platform for web-to-
committee that the changed market in which the group is
promising future.
post orders. The Retail Group invested in the opening of a
currently operating does not provide a reason for a perma-
number of new Photo Hall shop outlets.
nent write-down on the company’s intangible assets.
DIVIDEND
The net working capital (continuing activities’ current assets
The Board of Directors will recommend the Annual General
less current non-financial liabilities) amounts to EUR 38.4
In Hungary, there was a clear progression in the sale of
Meeting of Shareholders not to pay a dividend for the 2006
million.
TVs, computers and DVD/video equipment. This increase in
There were still 4 shops in France that remained operational
in 2006.
financial year.
turnover was realised entirely by our own shops, of which a
large proportion have already been renovated. On the other
BALANCE SHEET POSITION
Results of each division - the Retail Group
The net financial debt (financial debts less cash, cash
hand, the number of franchise business was reduced by 28.
For this reason, the total turnover in Hungary decreased a
equivalents and other financial assets) amounted to EUR
RETAIL GROUP REALISED PROMISING GROWTH IN
51.0 million, compared to EUR 59.0 million in 2005. This
TURNOVER
corresponds with a net debt/equity ratio (net financial debt in
Due to its positioning in Belgium as a solutions provider, with
relation to the total equity) of 121.9%.
personal service for a precisely defined product range, growth
Non-core operations and their assets held for sale, are recog-
in turnover was achieved. Because of this unique position in
nised separately on the balance sheet.
Belgium, Photo Hall succeeded in resisting pressure from the
The externally acquired customer relationships of the Imaging
market during 2006.
Group were incorporated as intangible fixed assets in the
It was mainly 3 product groups – flat-screen TVs, GPS and
IFRS opening balance sheet as at 1 January 2004 in accor-
laptop-PCs – that provided successful turnover growth.
dance with the cost-price model (IAS 38, paragraph 74). As
In Luxembourg, under the Hifi international brand, these
at 31 December 2006, the value of the externally acquired
product categories also provided the turnover growth.
little.
Report Verslag
of the Board
Raad van
of Directors
Bestuur
a
17
Number of shops
Belgium
own
franchise
Luxembourg
France
Hungary
own
franchise
2005
2006
85
83
9
9
16
18
5
4
54
55
146
118
In this context, the group will focus on its two strategic
confirm itself as European partner for Windows Vista.
segments:
At the beginning of March, a partnership with Nokia
• the mail order activities (European with the ExtraFilm brand)
was also concluded with which (in an initial phase in
• the specialist photo businesses (Benelux with the
Scandinavia) a preinstalled service is offered that
Spector brand)
makes direct photo prints possible from mobile
phones via ExtraFilm.
DIGITAL PRINTS
To realise this, in 2006, the group has already invested in:
THE PROSPECTS
Results of each division - the Imaging
Group
• the further development of a marketing-driven web
platform,
(*) Progress since the closing of the financial
• the recruitment of new employees with marketing and
IMAGING GROUP ADAPTS ITS STRUCTURES WITHIN
year.
ICT skills.
BUDGET
In the context of the restructuring of Photo-
The turnover of the Imaging Group in 2006 was again
These investments enable quality improvements in products
media, by the end of March, four companies
strongly dictated by the transition from analogue to digital
such as photo books, photo diaries and make ordering incre-
have been placed in voluntary liquidation,
photography.
asingly user-friendly. Innovation in these product categories
i.e. Edro B.V.B.A., Spector Routing B.V.B.A.,
In 2006, without Litto-Color N.V., the Imaging Group
will be further continued in 2007.
Fotronic S.A. and Plastic Unit Production
processed more than 312 million (- 6.4%) analogue and
18
(*)
Holding S.A.
digital photos. The loss of analogue print volumes (- 37.9%)
Moreover, the privileged place of the photographers/photo
was further compensated by the increase of the digital print
specialists will be confirmed in the new dynamics. After all,
The Retail Group also assumes a growth scenario
volumes (+ 56.9%). In 2006, 43% of all photo prints origi-
they are the people most suited to familiarising consumers
for 2007. The market for flat-screen televisions, GPS
nated from digital pictures (compared to 25% in 2005). It is
with digital photography. Spector
and PCs will continue to increase. Opportunities to
anticipated that digital photography will clearly take the upper
specific brand for this market, with strong supporting marke-
open new shops in both Belgium and Luxembourg will
hand in 2007. This trend was already noticeable in the last
ting and training campaigns, as well as photo development,
be investigated.
quarter, in which the digital prints comprised 56% of the total
all photo products (such as cameras, etc.) and services being
In Hungary, there will be continued investment in the conver-
volume.
provided.
sion of the company’s own shops to the specific Photo Hall
On the basis of these strengths, the Imaging Group can
concept.
SPECTOR PHOTO GROUP 2006
TM
will be reserved as the
For 2007, the Imaging Group will
mainly focus on expansion of its
customer base and growth of
Other risks currently unknown to the company or which are
not considered material at present could prove detrimental to
the company or to the value of its shares.
digital by means of an increase
of the share in new products.
Commencing in 2008, this
FINANCIAL RISKS
must result in a sufficient
The most important financial risks to which the Group is
base to once again enter a
exposed are related to the Group’s financial liabilities, the
phase of general turnover
outstanding trade receivables and transactions in currencies
growth in Imaging.
other than the euro.
- In accordance with the realignment of the financial liabilities
that was agreed with the bank consortium in December
RISK MANAGEMENT
2005, at the end of 2010 the remainder of the unredeemed
loans and advances become due and payable and the loans
The management of risks
may have to be renegotiated or refinanced. The availability of
forms an integral part of the
credit therefore coincides with the degree to which the Group
way in which the Group is
succeeds in generating free cash flows with which it can
managed. The Group has taken
further reduce its debt position between 2007 and 2010. The
measures - and will continue to do
Group manages this risk by continuing to develop a transpa-
this - with a view to controlling these
risks as effectively as possible. These
measures include, among others, the
forming of provisions.
However, no assurance can be given that
rent and constructive relationship with the bank consortium.
- A significant proportion of the Imaging Group’s activities are
conducted by means of “remote sales” to the end-consumer.
This involves exposure to non-collectability of many, relatively
small, trade receivables.
these measures will be fully effective in any given
instance and therefore it is impossible to rule out
that some of these risks could arise and could have an
impact on the company.
Report of the Board of Directors
19
20
The Group manages this risk by, on the one hand, encoura-
yet taken into account. The Group manages these risks by
competitive position, the Group takes this factor into account
ging online payment for its e-commerce activities and, on the
keeping in touch permanently with the technological world,
in the further development of its plans and its operations.
other, conducting proper credit management. The Group has
the market and the consumers on this market so that, if
also taken out insurance contracts for this risk.
necessary, it can swiftly update not only its strategy, but also
- The company publishes its consolidated financial state-
its investment and business plans.
RISK CONCERNING TAX DISPUTES
ments in euros. A significant portion of its assets, liabilities,
- The future profitability of the company – both for the
The company and some of its subsidiaries are involved in
revenues and costs are expressed in currencies other than
Retail Group and the Imaging Group – will also depend
tax disputes that are pending in the tax courts, and provi-
the euro, including the Hungarian forint, the Swiss franc and
on the selling prices that it can realise for its products and
sions have been formed for these. For certain tax disputes,
the Swedish crown. Although exchange rate fluctuations can
services. The price elasticity of demand, combined with the
however, the company’s opinion is that no provision needs to
have an effect on the Group’s results, the company judges
development of the margins, involves a risk for the Group’s
be formed. On the one hand, this concerns the tax deducti-
this risk too small to take specific measures apart from strict
profitability. Although, for its business plan, the Group
bility of insurance premiums which the company and some
management monitoring.
assumes continued price pressure, it proactively manages
of its subsidiaries have paid to an insurance company that
other risks by reducing its fixed overhead costs, on the one
itself reinsured with a reinsurance company that is controlled
hand, and on the other by continuously developing new
by the company. The total of the unpaid disputed tax liability
MARKET RISKS
products that are less susceptible to the general price pres-
involved in this issue (including default interest charges up to
With the Imaging Group, the company mainly operates in
sure.
the start of 2006) amounts to approximately EUR 4.6 million.
a market that is highly susceptible to changes. The most
- Although less than 10% of the Imaging Group’s turnover
On the other hand, this mainly concerns discussions around
important market-related risks correspond to technological
is realised by means of integrated distribution channels, the
the tax deductibility of payments in the context of transac-
developments and their impact on consumer behaviour, the
Group takes account of the risk that part of its operating
tions with group companies. The total of the unpaid disputed
development of consumers prices, the competitive position
income depends on a limited number of important customers
tax liability involved in these other tax disputes (including
and the dependence on a limited number of major customers
in this sector. The Group manages this risk by combining
default interest charges up to the end of 2006) amounts to
of the Imaging Group.
the development of long-term business relationships with its
approximately EUR 5.2 million.
- The strategy of the Imaging Group is to a high degree based
customers and through a good price/quality ratio with high
A third dispute concerns the tax deductibility of the loss that
on the findings of prospective market research from which
quality service.
was incurred with the merger between Hifi International with
new opportunities emerge for the enterprise after the transi-
- The future market share and business figures of the
Hifi Video and Hifi Connection in 2001. The amount of the
tion from analogue to digital photography.
Group – both in the Retail Group and in the Imaging Group
dispute is approximately EUR 0.8 million. Furthermore, there
These findings have an inherent error risk and can also be
– can be affected by actions by existing competitors or the
is still a dispute with a supplier amounting to EUR 0.8 million.
effected by future technological developments that were not
entry of new competitors. By permanently monitoring its
SPECTOR PHOTO GROUP 2006
THE POSSIBLE CHANGING OR INTERPRETATION
FEES OF THE COMMITTEE OF THE STATUTORY
UNDER IAS/IFRS OF THE RULES ON THE ENTRY
AUDITORS
OF INTANGIBLE ASSETS (MORE SPECIFICALLY
The Committee of Statutory Auditors receive an annual fee
EXTERNALLY ACQUIRED CUSTOMER RELATIONSHIPS
of EUR 40 (000), in accordance with the decision of the
OF THE IMAGING GROUP)
General Meeting of Shareholders of 11 May 2005 and
The Board of Directors decided to value the externally
indexed according to the general consumer price index.
acquired customer relationships according to the cost
In addition, local auditors were granted total fees of EUR
model (IAS 38, paragraph 74) for the opening balance as at
322 (000) for work concerning the audits in the consolidated
1 January 2004. According to the Board of Directors, this
subsidiaries of Spector Photo Group.
means that the directly attributable preparatory costs are
considered as a component of the cost price of the externally
During the 2006 financial year, the Committee Statutory Audi-
acquired customer relationships, which is in accordance with
tors and the local auditors received an additional fee totalling
IAS 38, paragraph 27. At the time this annual report was
EUR 92 (000) for work outside the scope of their mandate.
drawn up, there has still been no official interpretation on this
This mainly concerned work in the area of simplification of the
from the competent body. It is not known whether such an
group structure, tax-related work and specific IFRS audits.
official interpretation will emerge, and thus what this might
mean. Depending on the issuing and the contents of such
Apart from these, no remunerations or benefits in kind were
an interpretation, or in possibly changed circumstances, the
granted – either by Spector Photo Group N.V., or by any
entry could be adjusted. For reasons of transparency, the
other of its subsidiaries.
company always publishes a breakdown.
There were also no payments made to persons with whom
Note: A more detailed explanation of the risks can be found in
the statutory auditors have concluded joint ventures, with the
the prospectus that was published for the increase of share
exception of the companies that conducted the local audits in
capital of December 2005. This document can be down-
the foreign branches of the Group.
loaded and inspected on the corporate website
www.spectorphotogroup.com
Report Verslag
of the Board
Raad van
of Directors
Bestuur
a
21
SPECTOR PHOTO GROUP 2006
Consolidated financial statements
Table of content
Notes to the balance sheet and the income statement
Income statement ..........................................................................................................24
Balance sheet ................................................................................................................25
Statement of changes in equity ..................................................................................26
Consolidated cash flow statement .................................................................................27
Concise notes to the consolidated cash flow statement ...............................................28
Statement of compliance ...............................................................................................31
Summary of significant accounting policies...................................................................31
The externally acquired customer relationships of Spector Photo Group
under IFRS .....................................................................................................................41
Most important changes from 2005 to 2006 .................................................................43
Segment reporting and comments........................................................................... 44-46
Comments to the consolidated financial statements 2006 ..................................... 47-81
Report of the Committee of Statutory Auditors .............................................................82
Consolidated financial statements 2006
23
Consolidated income statement
(in € ‘000)
Note
2005
2005
2006
355
-1 496
-12 616
-3 019
-4 450
-5 660
-17 067
-8 679
-14
-81
-17 053
-8 598
Number of shares
36 619 505
36 619 505
Shares with dividend rights
36 487 708
36 487 708
Profit/(loss) for the period from continuing
activities
-0,35
-0,08
Profit/(loss) for the period attributable
to equity holders of the parent company
-0,47
-0,24
Note
2006
Income tax expenses (-)/income
Revenue
6
326 328
317 849
Other operating income
7
11 653
7 836
6
331
Work performed by enterprise and capitalized
Trade goods, raw materials and consumables
8
213 605
217 187
Remunerations
9
45 583
39 006
Depreciation and amortization expenses
10
17 328
14 573
Other operating expenses
11
57 905
49 284
15
Profit or loss from continuing activities
Discontinued operations
Profit or (loss) discontinued operations
Profit or loss for the period
Profit/(losses) from operating activities,
before non-recurring items
Non-recurring items from operating activities
12
3 566
5 966
Attributable to minority interests
Attributable to equity holders of the
parent company
13
-7 496
16
-3 834
Revenue per share
Profit/(loss) from operating activities
-3 930
2 132
1 646
2 790
Financial costs
-7 524
-5 628
Financial cost-net, before non-recurring
items
-5 878
-2 838
Non-recurring financial items
-3 163
-818
-9 041
-3 656
Financial income
Financial result
14
Profit/(losses) before tax, before nonrecurring financial items
Profit/(losses) before tax
24
SPECTOR PHOTO GROUP 2006
-9 808
-705
-12 971
-1 523
Weighted average number of ordinary
shares (diluted) as at 31 December 2005
8 233 715
Weighted average number of shares
8 233 715
Profit/(loss) for the period from continuing
activities
-1,53
Profit/(loss) for the period attributable
to equity holders of the parent company
-2,07
Balance sheet
(in € ‘000)
ASSETS
Non-current assets
Property, plant and equipment
Consolidation goodwill and other goodwill
Intangible assets other
than goodwill
Investments in subsidiaries
Available-for-sale Investments
Investment securities - non-current
Note
2005
2006
17
38 769
29 502
18
24 096
22 665
19
22 906
19 439
20
11
0
21
25
25
22
60
49
Long term receivables
23
4 483
2 063
Deferred tax assets
24
8 682
8 181
99 033
81 924
Non-current assets
Current assets
Assets held for sale
Inventories
Trade and
other receivables
Investment securities - current
Cash and cash equivalents
Current income tax assets
Current assets
TOTAL ASSETS
25
9 234
8 771
26
40 190
40 058
27
35 528
28 807
3
3
28
20 275
21 411
29
7 373
8 266
112 604
107 317
211 636
189 241
(1)
of which Income has been recorded directly to the shareholders’ equity and which is related to a non-current asset that is
classified as held for sale, for an amount of EUR 289,000 as at 31 December 2005.
(1)
of which Income of EUR 154 (‘000) has been recorded directly to the shareholders’ equity and which is related to the
revaluation reserve surplus for buildings and lease rights to buildings and for which expenses of – EUR 588 (‘000) have
been taken directly to the shareholders’ equity that relates to the measurement at recoverable value of assets that are
classified as held for sale as at 31 December 2006.
EQUITY AND LIABILITIES
Note
2005
2006
64 194
64 194
-10 384
-19 417
Treasury shares
Currency translation adjustments
-1 304
-1 304
-370
-1 601
Shareholders’ equity
52 136
41 873
1 055
18
30
53 192
41 891
31
54 129
46 673
Total equity
Capital
Reserves and retained earnings (1)
Minority interests
Total equity
Non-current liabilities
Non-current interest bearing
financial obligations
Employee benefit liabilities
Provisions more than one year
Deferred tax liabilities
32
886
534
33
2 440
2 629
24-34
6 314
5 649
63 769
55 485
Non-current liabilities
Current liabilities
Liabilities held for sale
Current interest bearing financial obligations
Trade & other payables
Employee benefit liabilities
Current income tax liabilities
25-35
5 272
6 012
31
25 155
25 805
36
49 426
45 174
32
7 055
5 381
37
7 768
9 493
Current liabilities
94 675
91 865
TOTAL EQUITY
AND LIABILITIES
211 636
189 241
Consolidated financial statements 2006
25
Statement of changes in equity
(in € ‘000)
Balance as at 31 December 2004
Capital
Retained
earnings
Treasury
shares
Currency
translation
adjustments
Shareholders’
equity
Minority
interests
Total
equity
22 392
6 790
-1 304
-559
27 320
1 035
28 354
190
190
35
224
Currency translation differences
Net gains and losses not recognized in the income
statement
Net profit/loss for the period
Issue of share capital
-122
-122
-17 053
-17 053
41 802
-122
-14
41 802
-17 067
41 802
Others
Balance as at 31 December 2005
64 194
-10 384
-1 304
Currency translation differences
Net gains and losses not recognized in the income
statement
Net profit/loss for the period
-369
52 136
1 055
53 192
-1 231
-1 231
12
-1 219
-435
-435
-8 598
-8 598
Other (changes in consolidation method)
Balance as at 31 December 2006
26
64 194
SPECTOR PHOTO GROUP 2006
-19 417
-1 304
-1 600
41 873
-435
-81
-8 679
-968
-968
18
41 891
Consolidated cash flow statement
(in € ‘000)
2005
2006
Cash flow from operating activities
-17 053
-8 598
Investing activities
Depriciation, write-offs, impairment
of property, plant and equipment
10 278
10 415
Depriciation, write-offs, impairment
of goodwill and other goodwill
1 981
For the year ended
2005
2006
4 532
12 995
2 579
1 363
124
15
Operating activities
Net profit
Depriciation, write-offs, impairment
of intangible assets
Proceeds from sale of intangible assets
7 265
8 550
6 941
1 579
Provisions
273
70
Unrealized foreign exchange losses/(gains)
459
-25
Net interest (income)/expense
5 480
4 648
Loss/(gain) on sale of property, plant and equipment
- 220
-215
Write-offs, impairment on current and non-current assets
Loss/(gain) on sale of intangible assets
Income tax expenses
Cost warrant plan
Other non-cash costs
- 433
-264
134
1 802
-81
16 908
16 080
Decrease/(increase) in trade and other receivables
4 392
-2 513
Decrease/(increase) in inventories
2 523
344
- 13 374
2 749
Increase/(decrease) in provisions
0
264
Increase or decrease in provisions for employees
0
647
Cash generated from operations
10 449
17 572
Interest (paid)/received
-5 033
-3 461
-884
-1 116
Profit from operations before changes in working capital and
provisions
Increase/(decrease) in trade and other payables
Income tax (paid)/received
Proceeds from sale of investments
12
Proceeds from sale of subsidiaries
1 068
Acquisition of property, plant and equipment
-5 985
-2 890
Acquisition of intangible assets
-5 020
-3 692
Acquisition of other investements
-14
-381
Other
Cash flow from investing activities
-8 316
-4 505
Financing activities
14
- 14
Minority interest
Proceeds from sale of property, plant and equipment
Proceeds from the issue of share capital
37 719
Proceeds from borrowings
62 875
874
Repayment of borrowings
-86 297
-8 144
Cash flow from financing activities
14 297
-7 269
Net increase/decrease in cash and cash equivalents
10 513
1 221
Cash and cash equivalents at the beginning of the year
10 143
20 661
5
-34
20 275
21 411
386
437
20 661
21 848
Effect of exchange rate fluctuations
Cash and cash equivalents at end of the period
Cash and cash equivalents at end of the period in assets held for
sale
Total cash and cash equivalents
Consolidated financial statements 2006
27
Sale of subsidiaries
(in € ‘000)
Property, plant and equipment
Inventories
2005
2006
52
509
Trade and
other receivables
Cash and cash equivalents
Provisions more than one year
4 835
137
-172
Trade and other
payables
Total sale price
-4 156
Concise notes to the consolidated cash flow statement
1 205
Less cash
of
subsidiaries
-137
Cash flow on sales net cash
disposed off
The consolidated cash flow statement is based on the net
Spector Immobilien Verwaltung. In the 2006 financial year,
result, to which the non-cash items are then added in order to
EUR 1.6 million provisions, write-downs on fixed and current
recompile the cash flows in this way.
assets were taken of which EUR 1.0 million was in the
1 068
discontinued operations.
The cash flow from the operating activities is mainly affected
by the net result and the non-cash elements.
The interest expenses decrease from EUR 5.5 million in 2005,
to EUR 4.6 million in 2006. A portion of these, however, was
Details about the depreciations and write-downs can be
still not paid during 2006 and thus did not lead to a cash
found in the notes to the consolidated balance sheet on
outflow in 2006.
pages 52 to 57 of this document. This mainly concerns
depreciations on investments in plant and equipment, and
For the 600,000 warrants that were issued in December
amortisation of investments in externally acquired customer
2005, the theoretical value was deducted on the income
relationships.
statement and thus from net profit. Because there was no
cash outflow related to this, however, this amount is added
In the 2005 financial year, the EUR 6.9 million write-downs on
here.
fixed and current assets mainly referred to non-cash costs of
28
SPECTOR PHOTO GROUP 2006
non-recurring operating and financial costs.
The other non-cash expenses of EUR 1,802 (000) in 2005
These write-downs mainly relate to customer receivables,
are related to three receivables that were contributed in
inventories within the Imaging Group, an outstanding recei-
kind to the capital on the occasion of the capital increase of
vable from Fotoinvest C.V.B.A., and the current account of
December 2005. As this contribution in kind did not cause
any cash inflow, the corresponding amount is added here.
Cash flow from investments
The “proceeds from the sale of subsidiaries” item amounting
The items mentioned above led, in 2005, to a cash flow of
In both 2005 and 2006, there was a lower cash outflow for
to EUR 1.1 million concerns the earnings from the sale of the
EUR 16.9 million from ongoing and discontinued operations
investment activities, mainly for the purchase of intangible
subsidiaries Litto-Color B.V., Litto-Color S.A.R.L. and STL
prior to changes in working capital. In 2006, these items led
fixed assets in the form of externally acquired customer
France Belgium N.V.
to a cash flow of EUR 16.1 million.
relationships. It should be noted in this context that the
The consequence in the table above is an adjustment to the
Imaging Group, in 2005 and 2006, made relatively more use
cash flow by means of changes in the working capital.
of techniques to acquire customers that do not qualify for
The changes in the working capital concerning receivables
recognition as intangible assets. The cash that is applied for
and liabilities in 2006 are affected by the cash flows of the
this type of customer acquisition, however, is charged to the
sold entities Litto-Color B.V., Litto-Color S.A.R.L. and STL
operating income, and is therefore not included in cash flows
France Belgium N.V. For more details of this, please refer
for investment activities.
to the notes concerning this cash flow on page 28 of this
document.
The cash spent on investments in plant and equipment
decreased further in 2006.
The change in the inventories at group level between 2005
and 2006 is nihil. Within the divisions, the increase or
The sale of property, plant and equipment provided cash
decrease progresses in parallel with the increase or decrease
inflow amounting to EUR 2.6 million in 2005, compared to
of the operating income. At group level, the stock manage-
EUR 1.3 million in 2006. This includes the sale of the Munster
ment is kept strictly under control.
building in December 2006.
Consolidated financial statements 2006
29
Cash flow from financing activities
In 2006, the debts were reduced by EUR 7.3 million.
The financing activities resulted in a net-cash inflow in 2005.
The increase in share capital of December 2005 provided
This debt reduction is related to both the ongoing activities
fresh funds of EUR 37.8 million, specifically the amount of
and the liabilities held available for sale.
EUR 40 million cash raised, excluding the part that was
contributed in kind, as well as the costs associated with the
This finally resulted in an increase of EUR 10.5 million on the
transaction. An agreement was reached with the consor-
cash and cash equivalents from the start of the 2005 financial
tium of banks following this capital increase. Of the available
year to EUR 20.7 million at the 2005 financial year-end close.
cash from the increase of share capital, EUR 15 million
In 2006, this resulted in an increase of EUR 1.2 million at the
was allocated for the repayment of financial liabilities. The
financial year-end.
lines of credit could also be used less heavily. The outstanding financial debt was then rescheduled in new credit
agreements, with a workable spread between current and
non-current loans and borrowings. The new agreement with
the banking consortium is shown on two lines in the table
above: “Proceeds from borrowings” and “Repayments of
borrowings”.
30
SPECTOR PHOTO GROUP 2006
1. Statement of compliance
3. Summary of most significant accounting policies
Associates are those companies in which Spector Photo
Group has, directly or indirectly, significant influence over the
Spector Photo Group N.V. is a company domiciled in
Basis of preparation
financial and operating policies, but which it does not control.
Belgium. The consolidated balance sheet and income state-
The consolidated financial statements’ presentation currency
This is presumed by ownership of between 20% and 50% of
ment of Spector Photo Group comprises the company and
is the euro, rounded to the nearest thousand. The conso-
the voting rights.
its subsidiaries (together referred to as ‘Spector Photo Group’
lidated financial statements have been prepared under the
or the ‘Group’) and the Group’s interest in associates. The
historical cost convention. Any exceptions to this historical
Associates are recognised using the equity method
Board of Directors authorised the balance sheets and income
cost method will be disclosed in the accounting policies
of accounting, from the date that significant influence
statement for publication on 11 April 2007.
below.
commences until the date that significant influence ceases.
The consolidated financial statements comprise the financial
When Spector Photo Group’s share of losses exceeds the
The consolidated balance sheets and income statement have
statements of Spector Photo Group N.V. and its subsidiaries
carrying amount of the associate, the carrying amount is
been prepared in accordance with International Financial
drawn up as at 31 December each year. The consolidated
reduced to zero and recognition of further losses is discon-
Reporting Standards (IFRS) issued by the International
financial statements is presented before the profit allocation
tinued except to the extent that Spector Photo Group has
Accounting Standards Board (IASB), as approved by the
of the parent company proposed to the General Meeting of
incurred obligations or made payments on behalf of this
European Union, and with the interpretations issued by the
Shareholders.
associate.
International Financial Reporting Interpretations Committee
(IFRIC) of the IASB.
2. First application of IFRS
Available-for-sale financial assets are measured at their fair
Consolidation principles
value. If a reliable price quotation in an active market is not
Subsidiaries are those companies in which Spector Photo
available, or if the fair value of the investment cannot be
Group, directly or indirectly, has an interest of more than one
reliably measured, the available-for-sale investments are
half of the voting rights or otherwise has control, directly or
measured at cost.
The International Financial Reporting Standards (IFRS) were
indirectly, over the operations.
applied to the consolidated financial statements of Spector
Subsidiaries are recognised in the consolidation using the full
Investments in participating interests, in which Spector Photo
Photo Group for the first time with the preparation of the
consolidation method. The financial statements of subsidi-
Group’s interest is less than 20%, are recorded at historical
consolidated balance sheets and income statement concer-
aries are included in the consolidated financial statements
cost less appropriate allowances in the case of a permanent
ning 2005.
from the date on which control is obtained until the date that
impairment in value.
control ceases.
Joint ventures are companies over which the Group exercises
joint control. The financial statements of these companies are
consolidated using the proportional consolidation method.
Consolidated financial statements 2006
31
All intercompany transactions, balances, and unrealised gains
Rendering of services
Foreign currency translation
and losses on transactions between group companies have
If the outcome of a transaction involving the rendering of
The functional and presentation currency of Spector Photo
been eliminated. Accounting policies of subsidiaries have
services can be estimated reliably, revenue associated with
Group N.V. and its subsidiaries in countries of the Eurozone
been changed where necessary to ensure consistency with
the transaction is recognised by reference to the stage of
is the euro.
the policies adopted by Spector Photo Group.
completion of the transaction as at the balance sheet date.
A list of the company’s most significant subsidiaries and
associates can be found in the notes.
Revenue
Transactions in foreign currencies are recorded at the rates
Interest, royalties, and dividends
of exchange prevailing at the date of the transaction or at the
Interest is recognised in accordance with the effective interest
end of the month before the date of the transaction. Monetary
method. Royalties are recognised on an accrual basis in
assets and liabilities denominated in foreign currencies are
accordance with the terms of agreements. Dividends are
translated at the exchange rate prevailing at the balance
Sale of goods
recognised at the time when the shareholder’s right to receive
sheet date. Foreign exchange gains and losses are recog-
Revenue from the sale of goods is recognized in the income
payment is established.
nised in the income statement in the period in which they
statement when the significant risks and rewards of owner-
arise. Non-monetary assets and liabilities denominated in
ship have been transferred to the buyer; the entity does
Revenue is measured at the fair value of the payment for the
foreign currencies are translated at the exchange rate
not retain the effective control or involvement which usually
sale of goods and services, net of value-added tax, trade
prevailing on the date of the transaction.
belongs to the owner concerning the goods sold; the amount
rebates or volume discounts, and after eliminating sales within
of the income can be reliably established; it is probable that
the Group.
the economic benefits concerning the transaction will flow
Assets and liabilities of foreign subsidiaries are translated
at the rates of exchange prevailing at balance sheet date.
to the entity, and costs already incurred or still to be incurred
Costs
Income, expenses, cash flows, and other changes are
concerning the transaction can be measured reliably.
The financial costs comprise interests payable on borro-
translated at the average exchange rates for the period. The
wings. Other non-operating costs or income comprise foreign
components of the shareholders’ equity are translated at
exchange losses and gains with respect to non-operating
historical rates. Translation gains and losses arising from the
activities, and losses and gains on hedging instruments with
conversion to euros of the equity at the rate on balance sheet
respect to non-operating activities.
date, are disclosed as “Exchange rate differences reserve”
under the (shareholder’s) equity.
Financing costs are recognised in the period to which they
relate. Interest costs of repayments on financial leases are
recognised in the income statement using the effective interest method.
Operating lease payments are recognised as expenses in the
income statement on a straight-line basis over the term of the
lease.
32
SPECTOR PHOTO GROUP 2006
Property, plant and equipment
in the income statement for the same asset. If the carrying
Plant
10% - 20%
The cost of an item of property, plant, and equipment is
value of an asset decreases as a result of a revaluation, the
Machines
14% - 20%
recognised as an asset, if and only if, it is probable that future
decrease is recognised in the income statement. However,
Minilabs
20%
economic benefits associated with the item will flow to the
the decrease is taken directly to revaluation reserve in the
Office equipment
14%
entity and the cost of the item can be measured reliably. This
income statement in so far as it does not exceed the amount
Company cars
20%
principle applies both to initial costs incurred when the asset
recognised in revaluation reserve in the income statement for
Vehicles
33%
item is acquired or manufactured and to the costs of subse-
the same asset.
Computer hardware 20% - 33%
Buildings are depreciated using the straight-line method,
Improvements to buildings are capitalised and depreciated
The cost of a property, plant and equipment asset comprises
proportionately on a monthly basis, and the estimated useful
over the residual useful life of the buildings themselves,
the purchase price, including import duties and non-refun-
life is generally defined as follows:
whereas improvements to leased buildings are capitalised
quent additions after initial capitalisation.
dable purchase taxes less any trade discounts or rebates,
and depreciated over the lesser of the residual term of the
and any costs directly attributable to bring the asset to its
Buildings
lease or their expected useful life.
operating condition and location for its intended use. Cost is
- Administrative
3%
discounted to present value if payment is deferred beyond
- Production
5%
Derecognised assets
normal credit terms. Subsequent expenditure is capitalised
An item of property, plant, and equipment is derecognised on
when it can be clearly demonstrated that it has resulted in
Other property, plant, and equipment: cost model
disposal, or when no future economic benefits are expected
an increase in the future economic benefits expected to
For all other items of property, plant, and equipment, the
from its use and subsequent disposal. Gains and losses on
be obtained from the use of an item of property, plant, and
carrying amount is its cost reduced by any accumulated
derecognition of property, plant and equipment are taken to
equipment.
depreciation and impairment losses.
income statement.
The depreciable amount of an asset is allocated on a systeSubsequent measurement
matic basis over the useful life of the asset. The depreciation
is recognised in the income statement, unless it is included in
Land and buildings: revaluation model
the carrying amount of another asset.
Subsequent to initial recognition as an asset, land and build-
The residual value of an asset is often insignificant and
ings are carried at a revalued amount, which is the fair value
therefore is immaterial in the calculation of the depreciable
at the date of the revaluation less any subsequent cumulative
amount. All other items of property, plant, and equipment are
depreciation and subsequent impairment losses.
depreciated using the straight-line method, proportionately
Increases in carrying value above depreciated costs are
on a monthly basis, and generally the depreciate rates are as
taken directly to equity in the revaluation reserve. However,
follows:
the increase is recognised in the income statement in so far
as it reverses a decrease in revaluation reserve recognised
Consolidated financial statements 2006
33
Leases
Investment Property
Goodwill is subjected to an impairment test, annually or more
Leases under which the Group substantially assumes all the
Investment property is measured at depreciated cost less any
frequently, if events or changes in circumstances indicate
risks and rewards of ownership are classified as financial
accumulated impairment losses. The fair value of the invest-
that the carrying value may be impaired. An impairment loss
leases. Property, plant, and equipment acquired by way of
ment property is disclosed in the notes to the consolidated
recognised for goodwill cannot be reversed in a subsequent
financial leases are capitalised at an amount equal to the
financial statements. An investment property is derecognized
period. Gains and losses on the disposal of a business
lower of their fair value and the present value of the minimum
on disposal or when the investment property is permanently
combination include the carrying amount of goodwill relating
lease payments at inception of the lease, less accumulated
withdrawn from use and no future economic benefits are
to the business combination sold. Goodwill is allocated
depreciation and impairment losses. The minimum lease
expected from its disposal. Gains or losses on the derecogni-
to cash-generating entities for the purpose of impairment
payments are partially recognised as financing costs and
tion of an investment property are calculated as the difference
testing.
partially as payment of the outstanding debt. The financing
between the net proceeds from disposal and the carrying
costs are allocated to each period during the term of the
amount of the asset, and are recognized in the income state-
If the acquirer’s interest in the carried net fair value of the
lease so that this results in a constant regular rate of interest
ment in the period of derecognition.
identifiable assets, liabilities, and contingent liabilities exceeds
on the remaining balance of the liability. The corresponding
the cost of the business combination, the acquirer reassesses
liabilities are classified as other non-current payables or
Goodwill
the identification and measurement of the acquired party’s
current liabilities, depending on the period in which they are
Goodwill acquired in a business combination is recognised
identifiable assets, liabilities, and contingent liabilities and the
due. Lease interest is charged to the income statement as a
as an asset and measured at its cost, being the excess of the
measurement of the cost of the combination. Any excess
financial cost over the duration of the lease.
cost of the business combination over the acquirer’s interest
remaining after that reassessment is recognised immediately
Capitalised leased assets are depreciated over the useful life
in the net fair value of the identifiable assets, liabilities, and
in the income statement.
of the asset, consistent with the depreciation policy for depre-
contingent liabilities. After initial recognition, goodwill acquired
ciable assets that are owned.
in a business combination is measured at cost less any accu-
Intangible assets
Leases under which substantially all the risks and rewards of
mulated impairment losses.
An intangible asset is recognised if, and only if, it is probable
ownership are effectively transferred to the lessor, are classi-
Goodwill resulting from acquisitions from 1 January 2004 and
that the expected future economic benefits that are attri-
fied as operating leases. Lease payments under an operating
later is not amortised, and goodwill previously carried on the
butable to the asset will flow to the entity, and the cost of
lease are recognised as an expense on a straight-line propor-
balance sheet is no longer amortised after 1 January 2004.
the asset can be measured reliably. An intangible asset is
tional basis over the lease term.
measured initially at cost. Cost is discounted to present value
if payment is deferred beyond normal credit terms.
34
SPECTOR PHOTO GROUP 2006
Research and development costs
Depreciation
Externally acquired customer relationships
Research costs are recognised as an expense at the time
For an intangible asset with a limited useful life, the
Capitalised customer relationships are measured at cost as
they are incurred. Expenditure on development activities, in
depreciatable amount is allocated on a systematic basis over
at the date of transition to IFRS. Based on an analysis of all of
which research findings are applied to a plan or design for the
its estimated useful life. Intangible assets are depreciated
the relevant factors, including the changing markets and the
production of new or substantially improved products, is capi-
using the straight-line method, proportionately on a monthly
transition from analogue to digital photography, the Board has
talised as an intangible asset if the product is technically and
basis. The depreciation is recognised in the income
decided to amortise the value of these assets in the opening
commercially feasible and the Group has sufficient resources
statement, unless it is included in the carrying amount of
balance sheet and the future capitalised externally acquired
to complete this development (and use or sell the asset).
another asset. Intangible assets are generally amortised using
customer relationships using the straight-line method over a
The expenditure capitalised includes the cost of materials,
the following rates:
period of seven years, with no residual value.
Other development expenditure is measured at cost less
- Trading securities 5%
Subsequent expenditure
any accumulated amortisation and impairment losses. Other
- Standard software packages are immediately taken
Externally acquired customer relationships are recognised as
direct labour and an appropriate proportion of overheads.
development costs are recognised as expenses at the time
they are incurred.
to expenses
- Other intangible assets 14% - 20%
intangible assets if they meet the following criteria:
- customer relationships are identifiable
- the company has control over the customer relationships
Other intangible assets
There is a refutable presumption that the useful life of an
Other intangible assets, acquired by the company, are stated
immaterial asset does not exceed 20 years.
- future proceeds must result from these customer
relationships
at cost less any accumulated amortisation and impairment
losses. Expenditure on internally generated goodwill and
Derecognition or disposal
The expenditure to acquire customer relationships is capita-
brands is recognised in the income statement as an expense
An intangible asset is derecognised on disposal, or when
lised as intangible assets if the acquisition corresponds to the
at the time they are incurred.
no future economic benefits are expected from its use and
following methods:
subsequent disposal. Gains and losses on derecognition
Subsequent expenditure
are taken to income statement at the time of the asset’s
Subsequent expenditure on capitalised intangible assets
derecognition.
is capitalised only when it increases the future economic
benefits embodied in the specific asset to which it relates
(and if this expenditure can be measured and attributed to
(1) purchase from companies possessing customer
relationships
(2) exchange with companies possessing customer
relationships
(3) purchase of the right to access a channel by which
the asset reliably). All other expenditure is considered as
customer relationships can be acquired in a privileged
expenses.
manner:
Consolidated financial statements 2006
35
(1) Purchase from companies possessing customer relations
Mail Order companies within the Group regularly
(3) Purchase of the right to access a channel by which
At each reporting date, the Group assesses whether there is
manner:
any indication that an item of property, plant, and equipment
purchase customer relationship files from other Mail Order
and other non-current assets may be impaired.
companies outside the photographic sector. In fact,
In contrast to acquisition methods (1) and (2), the first
If there is such an indication, the recoverable amount of the
these companies sell the right to consider their customer
customer-supplier transaction is only acknowledged at
asset is estimated in order to determine the extent of the
relationships as customer relationships of Spector Photo
acquisition. There is not yet an existing customer relation-
impairment loss. A full impairment test is performed annually
Group, and to treat them as such; as a result of this, they
ship, which is in fact the case in acquisition methods (1)
for goodwill and intangible assets with indefinite lives, or that
effectively become customer relationships of Spector
and (2). Yet, there is a privileged relation between the
are not yet available for use, by comparing their carrying
Photo Group.
customers and the entity, equal to a customer relationship.
amount with their recoverable amount. The recoverable
The costs incurred that are directly attributable to
In these cases, the possible customers have given their
amount of an asset is the higher of its net selling price and
the preparation of the asset for its intended use, are
explicit or implicit approval to be contacted by the entity in
its value in use. The value in use is the net present value of
recognised in the balance sheet in accordance with IAS 38,
order to close a sales transaction leading to the acquisition
the estimated future cash flows arising from the use of an
paragraph 27.
of a customer relationship by the entity. The underlying
asset or a cash-generating unit. For an asset to which no
invoices for the right to develop a future relationship are
future cash flows can be attributed, the recoverable amount
the basis for these externally acquired relationships to be
is calculated for the cash-generating unit to which the asset
recognised in the balance sheet.
belongs. Where an asset’s recoverable amount is below the
(2) Exchange with companies possessing
customer relationships
In line with the acquisition method described in (1),
In addition, as under (1), the directly attributable costs
carrying amount, the latter is reduced to the recoverable
incurred in preparation of the immaterial asset for its
amount. This impairment is immediately recognised in the
intended use, are capitalised.
income statement. Where a previously recorded impairment
customer relationships are exchanged between mail order
no longer exists, the carrying amount is partially or totally
companies of different industrial sectors. The related
Financing costs
raised to its recoverable amount. An impairment loss recog-
purchase invoices are the basis for the capitalisation of
Borrowing costs directly attributable to the acquisition,
nised for goodwill is not reversed in a subsequent period.
such exchange transactions, in accordance with IAS 38,
construction, or production of an asset requiring a long
paragraph 16.
preparation period prior to its intended use or sale, are
In addition, as under (1), the directly attributable costs
capitalised as part of the cost of this asset. Such borrowing
incurred in preparation of the immaterial asset for its
costs are capitalised as part of the cost of the asset when
intended use, are capitalised.
it is probable that they will result in future economic benefits
to the entity and the costs can be measured reliably. Other
borrowing costs are recognised as an cost in the period in
which they are incurred.
36
Impairment of assets
customer relationships can be acquired in a privileged
SPECTOR PHOTO GROUP 2006
Inventories
Income taxes
A deferred tax asset is reduced to the extent that it is no
Inventories are measured at the lower of cost and net
Income tax on the profit or loss for the year comprises both
longer probable that the related tax benefit will be realised.
realisable value. The cost of inventories comprises all costs
current and deferred taxes.
Deferred tax assets and liabilities are measured at the tax
of purchase, costs of conversion, and other costs incurred
rates that are expected to apply to the period when the asset
in bringing the inventories to their present location and
Current tax for current and prior periods is, to the extent
is realised or the liability is settled, based on tax rates (and
condition. The cost of the inventories is calculated using
that it remains unpaid, recognised as a liability. If the amount
tax laws) that have been enacted or substantively enacted in
the weighted-average cost method. The group continually
already paid in respect of current and prior periods exceeds
legislation on the balance sheet date.
examines the inventories to identify damaged, obsolete or
the amount due for those periods, the excess is recognized
unmarketable stocks. Such inventories are written down to
as an asset. The possible refunding of taxes paid in prior
Current and deferred tax assets and liabilities are measured
the net realisable value, provided this is less than the cost
periods as a result of a tax loss in subsequent years, is also
using the government’s announced tax rates (and tax laws)
price according to the method stated above. Net realisable
recognised as an asset.
provided that these announced rates (and laws) have the
value is the estimated selling price in the ordinary course of
substantive effect of actual enactment.
business, less the estimated costs of completion and any
Current tax liabilities (assets) for the current and prior periods
necessary selling costs. If inventories are sold, the carrying
are measured at the amount expected to be paid to (reco-
Derivative financial instruments
amount of those inventories is recognised as an expense
vered from) the tax authorities, using the tax rates (and tax
Derivative financial instruments are recognised initially at
in the period in which the corresponding revenue is recog-
laws) that have been enacted or substansively enacted in
cost. Subsequent to initial recognition, derivative financial
nised. The amount of any write-down of inventories to net
legislation at the balance sheet date.
instruments are stated at fair value. The effective part of the
realisable value and all losses of inventories is recognised as
gains or losses from the changes in fair value of derivatives,
an expense in the period that the write-down or loss occurs.
Deferred income tax liabilities and assets are calculated,
which are specifically recognised as hedging instruments for
The amount of any reversal of any write-down of inventories,
using the ‘balance sheet liability method’, for all temporary
hedging the variability of cash flows of an asset or liability
arising from an increase in net realisable value, is recognized
differences arising between the tax base of assets and liabi-
recognised in the balance sheet, an off-balance sheet firm
as a reduction in the amount for inventories recognised as an
lities and their carrying amounts in the consolidated financial
commitment or an expected transaction, is recognised
expense in the period in which the reversal occurs.
statements.
in equity. Changes in fair value of derivatives not formally
recognised as hedging instruments or not eligible for hedge
Trade and other receivables
Deferred tax assets are recognised to the extent that is
Trade and other receivables are carried at nominal value less
probable that future taxable profits will be available against
impairment losses. At each reporting date, an estimate is
which the unallocated taxable losses and tax assets can be
made for bad debts when it is probable that the entity will not
utilised.
accounting, are recognised in the income statement.
be able to collect all amounts due. Bad debts are written off
during the year in which they are identified as such.
Consolidated financial statements 2006
37
Cash and cash equivalents
Trade debts and other payables
the employees complete the related performance, are
Cash and cash equivalents comprise cash in hand and at
Trade debts and other payables are measured at nominal
discounted to their present value.
banks, on-demand deposits with an original maturity of three
value.
months or less, and highly liquid investments that are readily
- Defined benefit pension plans
convertible to known amounts of cash and for which the risk
Employee benefits
For defined benefit plans, the amount recognised in the
of change in value is negligible.
Employee benefits are recognised as an expense when the
balance sheet is determined as the present value of the
Group utilises the economic benefit arising from services
gross defined benefit plan commitments, taking account of
The cash and cash equivalents include current account
performed by an employee in exchange for employee bene-
the unrecognised actuarial gains and losses, and less any
overdrafts which are payable on demand at the request of the
fits, and as a liability when an employee has provided service
past service costs not yet recognised and the fair value of
bank.
in exchange for employee benefits to be paid in the future.
any of the plan’s assets. Where this calculation results in
a net surplus, the recognised asset is limited to the total
Share capital
Current employee benefits
of any cumulative unrecognised net actuarial losses and
Repurchase of own shares
Current employee benefits are employee benefits that are
past service costs and the present value of any economic
When share capital recognised under shareholders’ equity is
entirely payable within twelve months after the end of the
benefits available in the form of refunds from the plan or
repurchased, the amount paid, including directly attributable
period in which the employees have completed the related
reductions in future contributions to the plan.
costs, is recognised as a change in equity. Repurchased own
performance.
shares are classified as treasury shares and presented as a
deduction from shareholders’ equity.
The recognition of actuarial gains and losses is determined
Post-employment benefits
separately for each defined benefit plan. To the extent
Post-employment benefits include pensions and other post-
that the net cumulative unrecognised gain or loss exceeds
Dividends
employment benefits, such as life insurance policies, and
10% of the greater of the present value of the gross
Dividends are recognised as the moment the General Meeting
medical care benefits after leaving the company’s service.
defined benefit commitments and the fair value of plan
of Shareholders approves their payment.
assets, that surplus is recognised in the income statement
- Defined contribution pension plans
38
over the expected average remaining working lives of the
Interest-bearing loans and borrowings
Contributions to defined contribution benefit pension plans
Interest-bearing loans and borrowings are recognised initially
are recognised as en expense in the income statement for
at cost, taking no account of transaction costs incurred.
the year to which they are related.
Past service costs are recognised as an expense allocated
Subsequent to initial recognition, interest-bearing loans and
Any contributions already paid in advance of the balance
on a straight-line basis over the average period until the
borrowings are stated at amortised cost, with any diffe-
sheet date, which are in excess of the payable contribution
benefits become vested. To the extent that the benefits are
rence between cost and redemption value being recognised
for performance, are reflected as assets under prepaid
already vested following the introduction of, or changes to,
proportionately in the income statement over the period of
expenses and accruals. Any accrued contributions to
a defined benefit plan, past service costs are immediately
borrowing on an effective interest rate basis.
a defined contribution plan that do not fall due within
recognised as an expense.
12 months beyond the balance sheet date in which
The present value of the gross defined benefit
SPECTOR PHOTO GROUP 2006
employees participating in that plan.
commitments and the related service costs are calculated
balance sheet date are discounted to present value.
exceed the expected economic benefits to be received from
by a qualified actuary using the projected unit credit
a contract. Provisions are not recognised for future operating
method. The discount rate used is the market yield at
Remuneration in the form of shares or other equity instruments
balance sheet date on high quality corporate bonds
The share programme allows the Group’s employees to
that have maturity dates approximating the terms of the
acquire shares of Spector Photo Group N.V. The option exer-
Group’s estimated gross commitments related to pension
cise price equals the average market price of the underlying
benefit payments. The amount recognised in the income
shares during an agreed period shortly before the options are
statement consists of current service costs, interest costs,
granted. No employee compensation cost or commitment is
the expected return on any plan assets, and actuarial gains
recognised. When the options are exercised, equity is
and losses.
increased by the amount of the proceeds received.
Other non-current employee benefits
Provisions
The net obligation for non-current employee benefits, other
Provisions are recognized when the Group has a present legal
than pension plans, post-employment life insurance, and
or constructive obligation as a result of a past event, if it is
medical care, is the net amount of future benefits that
probable that an outflow of resources embodying economic
employees have earned in return for their service in current or
benefits will be required to settle the obligation, and a reliable
prior periods.
estimate can be made of the amount of the obligation.
losses.
These benefits are accrued over the employees’ periods of
employment using the accounting methodology similar to that
A provision for restructuring is recognised provided the
for defined benefit pension plans. However, actuarial gains
Group has approved a detailed and formal restructuring
and losses and any past service cost are immediately recog-
plan, identifying at least the following: the operation or part
nised with no bandwidth.
of the business concerned, the principal locations affected,
the location, function and estimated number of employees
Termination benefits
who will be compensated for terminating their services, the
Termination benefits are recognised as a liability and an
costs related to this, and when the plan will be implemented.
expense when the Group is demonstrably committed to
Moreover, the Group has raised a valid expectation among
either terminate the employment of an employee or group
those affected that the restructuring will be carried out. Costs
of employees, before the normal retirement date, according
relating to the ongoing activities of the company are not
to a detailed formal plan without possibility of withdrawal
provided for.
of the plan, or provide termination benefits as a result of an
offer made to the employees in order to encourage voluntary
A provision for onerous contracts is recognised if the
redundancy. Benefits falling due more than 12 months after
unavoidable cost of meeting its obligations under the contract
Consolidated financial statements 2006
39
Government grants
Group’s activities and operations. The secondary segmen-
segment or can be allocated to the segment on a reasonable
Government grants are recognized at their fair value where
tation is based on the following geographical segments:
basis. Segment assets and liabilities do not include income
there is reasonable assurance that all associated conditions
‘European Union’ and ‘Other’.
tax items.
will be met and the grant will be received. Government grants
Segment results include revenue and expenses directly gene-
Transfer prices between business segments are set ‘at arm’s
should be recognised as income over the periods neces-
rated by a segment, including the relevant portion of revenue
length’ basis in a manner similar to transactions with third
sary to allocate the grant on a systematic basis to the related
and expenses reasonably attributable to the segment.
parties.
costs that it is intended to compensate.
Segment assets and liabilities consist of those operating
Where the grants relate to the purchase of an asset, the fair
assets and liabilities that are
value is recorded as a deferred income item that is systemati-
directly attribu-
cally and rationally released to the income statement over the
table to the
expected useful life of the asset.
Segmented information
The Group’s primary reporting format is business segments
and its secondary format is geographical segments.
The Group’s internal organisational and management structure and internal financial accounting is
based on the nature of the goods or services or
groups of related goods or services that the
companies produce or provide. The primary
segmentation is based on the following
operating segments: ‘Imaging’, ‘Retail’
and ‘Corporate’.
The Group’s geographical segments
are determined by the location of the
40
SPECTOR PHOTO GROUP 2006
The externally acquired customer relationships of Spector Photo Group under IFRS
Customer relationships are classified as intangible
ships must meet the following criteria:
is not formally recognised. Legally speaking, Spector
assets by IFRS
possesses an exclusive property. For that matter, the
Customer relationships have an undeniable economic value.
a. customer relationships must be identifiable
company is also legally responsible for the protection
After all, the investments in customer relations represent the
b. the company must have control over the customer
of the information regarding these customer relations
future yield of the business.
relationships
(the legal and judicial aspects are dealt with in several
c. future proceeds must result from these customer
The concept of ‘customer relationships’ is recognised by IAS,
European guidelines, translated into legal provisions
relationships
by each member state). Finally, the afore-mentioned
which state in IAS 38, paragraph 16:
exchange, rental, and sales transactions also demonstrate
The customer relationships of Spector Photo Group’s
the existence of control. The fact that, in addition to rental
‘An entity may have a portfolio of customers or a market
Mail Order businesses meet all these criteria:
and sales transactions, exchange transactions can also be
share and expect that, because of its efforts in building
a. The Spector Photo Group’s Mail Order companies have
concluded, demonstrates that access by third parties can
customer relationships and loyalty, the customers will
databases at their disposal that contain the name and
continue to trade with the entity. However, in the absence of
address of each customer relationship, supplemented
legal rights to protect, or other ways to control, the rela-
by important details of each individual customer’s order
tionships with customers or the loyalty of the customers to
and payment behaviour (such as date of last order, order
business volume with each customer relation on a
the entity, the entity usually has insufficient control over the
frequency, ordered products, preference for certain
statistical basis. These are not assessments or estimates,
expected economic benefits from customer relationships and
promotions, correct payment, etc.).
but mathematical calculations according to the ‘Lifetime
loyalty for such items (e.g., portfolio of customers, market
The customer relations are therefore identifiable and they
Value Model”. This model allows the calculation of the ‘Net
shares, customer relationships and customer loyalty) to meet
are the subject of exchange, rental, and sales transactions
Present Value’ of future economic benefits for a group
the definition of intangible assets. In the absence of legal
with Mail Order companies from other sectors. They are
of customer relationships, and takes all elements of the
rights to protect customer relationships, exchange trans-
therefore detachable (see IAS 38, paragraph 12: an asset
income statement into account. Because it has sufficient
actions for the same or similar non-contractual customer
meets the identification criterion if it is detachable and can
statistical data on each individual customer, Spector
relationships (other than as part of a business combination)
be sold, rented, or exchanged).
can apply this model to the customer relationships of its
provide evidence that the entity is nonetheless able to control
the expected future economic benefits flowing from the
be restricted.
c. The Mail Order companies can determine the future
Mail Order organizations to a high degree of certainty
b. In compliance with all legal provisions, the Spector
and reliability. Because of the changing market in which
customer relationships. Because such exchange transactions
Photo Group’s Mail Order companies can approach
the Group operates today, verification of these statistical
also provide evidence that the customer relationships are
these customer relationships autonomously without any
models is required on an annual basis.
separable, those customer relationships meet the definition of
obligations to any third parties. In addition, the existence
an intangible asset.’
of previous transactions between the company and
To be considered an intangible asset, the customer relation-
the customer indicates a contractual tie, even if this
Consolidated financial statements 2006
41
Recognition of intangible assets according to IFRS
These are customer relationships of companies such as La
These costs are thoroughly audited, and only those costs
IAS 38, paragraph 21 states that an intangible asset must be
Redoute, 3 Suisses, etc.
that the Board of Directors believes meet the definition of
recognised if it will in all probability generate future economic
Additionally, an invoice is drawn up for each of these trans-
“preparatory costs” as specified in IAS 38, paragraph 27 are
benefits for the entity and can be reliably measured. The
actions.
selected. These only include the costs that can effectively
probability criterion is always considered to be met by separately acquired intangible assets (IAS 38, paragraph 25).
be directly attributed to the preparation of the asset for its
To acquire customer relationships from another company,
intended use. For Spector Photo Group, thus, these directly
the Mail Order organisations must incur costs to prepare
attributable costs do not include any advertising or promo-
The acquisition cost of the customer relationships is substan-
the asset for its intended use. For example, a specific offer
tional costs, but only specific preparatory costs. Expenses
tiated by purchase invoices.
must be prepared for the customer relationships of the selling
that cannot be part of the cost of an intangible asset, as
company. This comprises mainly the postal charges and
specified in IAS 38, paragraph 29 are excluded from this.
The separate acquisition of customer relationships is accom-
specially printed envelopes containing separate acquisition
Also, in accordance with IAS 38, paragraph 30, the initial
plished using various methods. The most common external
codes, which effectively enable customers accept the offer,
operating losses are excluded from the intangible asset’s
acquisition methods, besides the acquisition of trading
after which they become acquired customer relationships of
carrying amount.
companies securities, retained under IFRS are:
the Spector companies. Since these costs are necessary to
a. purchase from companies possessing customer
realise the intangible asset, they are considered part of this
relationships
intangible asset. Gifts and business presents, for example,
b. exchange with companies possessing customer
are not included in this context.
relationships
relationships
Fully in line with the acquisition method described above,
customer relationships are sometimes exchanged between
c. purchase of the right to access a channel by
An essential difference with publicity is the fact that such
Mail Order companies from different industries, for example
which customer relationships can be acquired in a
transactions involve not merely the communication of a
between 3 Suisses France, and ExtraFilm France.
privileged manner
message, but that an actual specific offer is made to a
specific target group of the public. Thus, not everyone can
The invoices concerned in this context demonstrate that
make use of this offer. For each of these offers, a separate
these are also separate external acquisitions. Since for each
acquisition code is defined, which is necessary to grant the
outgoing invoice in such exchange transactions there is an
Mail Order companies within the Group regularly purchase
customers access to the offer, and is also subsequently used
incoming invoice for the same amount, there is no actual
customer relationships files from other Mail Order companies
by Spector to gain a detailed insight into the company’s
cash flow.
outside the photographic sector.
economic benefit per customer relationship.
a. Purchase from companies possessing customer
relationships
42
b. Exchange with companies possessing customer
SPECTOR PHOTO GROUP 2006
4. Most important changes from 2005 to 2006
In addition, directly attributable expenses are incurred to
In view of the privileged relation, in which the consumer
prepare the intangible asset for its intended use.
grants the right for developing a future customer relation-
The invoices for these costs are also capitalised.
ship, these relationships also effectively apply as customer
The most important changes between 2005 and 2006 can be
relationships. These are also externally procured customer
reduced to the following factors:
c. Purchase of the right to access a channel by
relationships, as an invoice is also drawn up for this right – in
which customer relationships can be acquired in a
certain cases even based on a fixed amount for each effecti-
- The allocation of the result of the financial year;
privileged manner
vely acquired customer relationship, or on a commission for
- The reclassification of and restatement of certain assets
This acquisition method differs from the preceding ones
each effective order.
as “assets held for sale”;
because the first customer-supplier transaction occurs upon
- The reclassification of certain activities as
acquisition. In other words: the selling company has not
This last method differs from a ‘normal’ commission arran-
necessarily already concluded any sales transaction with
gement because, at the same time, the Spector companies
“discontinued operations”;
its customer relations. Yet these persons and the company
acquire the right to approach the customer directly for the
involved have an actual privileged relationship, equal to a
following transaction - in other words, because they have
- Sale of 2% of the shares of FLT S.p.A.;
customer relationship. In all cases, the people involved have
acquired control over these customer relationships.
- Merger of the companies ExtraFilm France and
- Sale of the operations of STL France Belgium N.V.,
Litto-Color B.V., and Litto-Color S.A.R.L.;
indeed explicitly or implicitly consented to being contacted
Maxicolor France.
by the company, resulting in the acquisition of a customer
Measurement of the customer relations
relationship. As with the previous acquisition methods, these
After examination of the ‘external acquisition’ matter by the
customer relationships can make use of a special offer, with
Statutory Auditors Committee, under IFRS, the decision was
its own unique acquisition code that is not valid for everyone.
taken to retain the three methods mentioned above, selected
Specifically, for example, these concern customer relation-
from a total of eight methods. All other acquisition methods
ships from companies selling the Boîtes Roses and Boîtes
were excluded, because they do not qualify for capitalisation
Bleues (the pink and blue packages). Such packages contain
under IFRS.
specific offers by several companies, specifically distributed
The value at which the externally-acquired customer relation-
among new mothers or mothers of toddlers, who have expli-
ships are recognised according to the cost-price model of IAS
citly or implicitly agreed to receive these offers.
38, paragraph 74, are also separated for the sake of clarity
In the internet world, this involves the acquisition of relations
into the costs of externally-acquired customer relationships
that have registered on a specific website, thereby expli-
and the directly attributable costs.
citly consenting to a privileged relation with a view to future
transactions.
Consolidated financial statements 2006
43
5. Segmented information - business segments
CORPORATE
(in € ‘000)
2005
Revenue
External revenue
Inter-segment
Total revenue
Ext. other operating income
Inter-segment
Other operating income
Operating result before nonreccuring items
Operating result
(EBIT)
RETAIL
IMAGING
Continued
activities
Eliminations
2006
2005
2006
2005
2006
2005
2006
120
1
195 066
211 082
131 143
106 766
960
1 089
14
7
3 509
5 185
4 483
8 052
1 080
1 090
195 080
211 089
134 652
111 951
-4 483
-8 052
598
-63
3 853
867
1 161
5
4 858
7 203
3 041
0
447
114
1 320
1 411
1 465
1 097
3 858
4 858
7 650
3 154
-1 320
-1 411
-241
-702
6 890
7 793
-3 083
-2 790
-681
6 582
7 673
-7 721
Total operating segment liabilities
Unallocated liabilities
2005
2006
2005
2006
2005
2006
326 328
317 849
28 450
21 361
354 779
339 210
1 772
326 328
317 849
28 450
23 132
354 779
339 210
11 653
7 835
88
162
11 741
7 997
11 741
7 997
136
7 835
88
298
-1 125
3 566
5 966
-1 619
-4 976
-4 860
-3 930
2 132
-4 152
-5 309
-9 041
-3 656
355
-1 496
-12 616
-3 019
7 545
7 723
211 636
189 241
158 445
147 350
38 010
10 455
77 027
81 331
101 007
81 375
9 716
37 600
179
889
9 486
10 817
2 379
915
26 176
32 881
53 333
21 720
1 817
2 369
64 219
60 413
40 910
54 319
-31 335
-4 450
-5 660
-17 067
-8 679
-14
-81
-17 053
-8 598
-9 434
184 709
163 727
-31 515
19 382
17 790
-22 080
-9 434
59 807
46 082
933
8 786
-12 972
-31 515
93 974
85 586
3 730
6 896
In view of the restructuring of Spector Photo Group at the end of 2005, there have been shifts between the segments that mainly concern personnel costs and charging on of costs. The information from
the 2005 annual report has been adjusted for this, to enable a comparison between the situations as at 31 December 2005 and 31 December 2006.
44
SPECTOR PHOTO GROUP 2006
Spector Photo
Group
11 653
Financial cost-net
Income tax expense
Profit or loss (-) from continued
activities
Profit or loss (-) from discontinued
operations
Profit or loss (-) for the period
Attributable minority interests
Attributable to equity holders of the
parent company
Total operating segment assets
Unallocated assets
Discontinued
Operations
(in € ‘000)
CORPORATE
2005
Total capital expenditures
property, plant and equipment
Total capital expenditures in
goodwill
Total capital expenditures in
intangible assets other than
goodwill
Depreciations and other non-cash
expenses
RETAIL
2006
38
265
IMAGING
Continued
activities
Eliminations
2005
2006
2005
2006
3 019
1 690
2 887
2005
2006
Discontinued
Operations
Spector Photo
Group
2005
2006
2005
2006
2005
2006
815
5 943
2 505
42
385
5 985
2 890
76
100
76
100
76
100
4 944
3 592
39
57
4 906
3 534
4 944
3 592
161
4 132
3 760
13 768
11 248
18 165
15 169
4 032
4 504
22 198
19 673
-49
32
343
825
-178
857
116
303
7
1 160
124
-54
588
-54
588
-54
588
571
407
1 219
1 090
1 401
1 166
Impairment losses recognised
in operating result
in equity
Number of persons
employed in FTE end of the period
6
4
642
679
182
76
5. Segmented information – geographical segments
(in € ‘000)
Revenue
External revenue
Inter-segment
Total revenue
Total operating segment assets
Unallocated assets
Total cap. expend. property, plant, equipm.
Total capital expenditures goodwill
Total capital expenditures intangible assets
other than goodwill
European Union
Non-European Union
Eliminations
2005
2006
2005
2006
306 853
304 121
19 475
13 728
7 396
5 252
1 192
314 249
309 373
193 852
167 378
Spector Photo Group
2005
2006
2005
2006
0
8 588
5 252
326 328
317 849
20 667
13 728
-8 588
-5 252
326 328
317 849
47 457
12 829
-49 054
-8 757
192 255
171 450
19 382
17 790
211 636
189 241
5 985
2 878
0
12
5 985
2 890
76
100
0
0
76
100
4 115
3 267
829
325
4 944
3 592
Consolidated financial statements 2006
45
The Spector Photo Group reporting covers two segments
(Belgium) and its wholly or partially owned subsidiaries. The
(Imaging Group and Retail Group), and is completed by
Imaging Group is centrally organised under Photomedia N.V.
An early trend can be identified in which the pricing in these
Corporate and Discontinued Operations.
and is also centrally managed at operational level by the
distribution channels is converging and, at the same time, so
managing director of Photomedia N.V., who reports on all of
are the relative marketing efforts. It is also already clear today
Retail segment
his Group’s activities directly to the Chief Executive Officer of
that the boundaries between the distribution channels will
The Retail segment consists entirely of the Retail Group
Spector Photo Group N.V.
not only blur, but will also eventually be abandoned, so that a
operating division. This division consists of the legal entity
cross-channel concept will emerge. For example, consumers
Photo Hall Multimedia N.V. (Belgium) and its wholly-owned
The operating entities within Imaging provide goods and
will increasingly often order photo prints via internet, then
subsidiaries Photo Hall France S.A.R.L., Hifi International
services that are directly related to both analogue and digital
sometimes want the photos delivered to their homes by mail
S.A.R.L. (Luxembourg) and Föfoto Kft. (Hungary). The Retail
photography. These are mainly products and services related
and, at other times, want to collect the photos from a retail
Group is centrally organised under Photo Hall Multimedia
to the production of photo prints, which implies a specific
outlet in their neighbourhood.
N.V. and is also centrally managed at operational level by the
production process for “photofinishing”. A limited number of
managing director of Photo Hall Multimedia N.V., who reports
entities in the Imaging Group trade in goods that are required
The returns from virtually all the entities in this division are of
on all of his Group’s activities directly to the Chief Executive
for this production process.
similar level – notwithstanding any national, culture-related or
Officer of Spector Photo Group N.V. This division and its entities are all active in the same field: the retail trade in consumer
The ultimate customers for these activities are almost always
of investment requirements and working capital, and generate
electronics and related products.
the consumers. For the majority of the Imaging Group’s
comparable gross margins and EBIT margins. One of the
The customers in this segment are also the final consumers
entities, the end-consumer is also the direct customer. The
most significant challenges confronting the Imaging Group
in the countries in which this division’s entities operate. All this
marketing concept that Filmobel N.V. operates under the
consists of substantially reducing the fixed overhead costs.
division’s entities primarily put their products on the market
Spector™ brand name is also aimed at the end-consumer,
This goal can only be realised within the Imaging Group as a
via the channel of retail outlets. Although all of the entities
although the specialist photographic business is the direct
whole, and not in a smaller entity or group.
also operate websites on internet, the internet sales are not
customer. The distribution channels are aligned with the
significant for their total turnover. These entities have similar
market characteristics, which are often determined natio-
Specific key performance indicators (KPIs) have been
levels of investment requirements and working capital, and
nally and culturally. While these distribution channels in the
identified for the development of the digital operations of the
generate comparable gross margins and EBIT margins. The
traditional analogue market can be used to justify separate
Imaging Group. The returns of these entities clearly differ from
Retail Group has a different risk profile compared to that of
segmentation, this is being flattened out in the new, digital,
entities in the Retail Group (see above). The criteria for internal
the Imaging Group.
market. Generally speaking, the differences between mail
control are not relevant for the Retail Group. The Imaging
order and trade appear to be smoothing out on the digital
Group has a different risk profile compared to that of the
market.
Retail Group.
Imaging segment
The Imaging segment also consists entirely of one operating
division – the Imaging Group.
This division contains the legal entity Photomedia N.V.
46
channel-specific differences. These entities have similar levels
SPECTOR PHOTO GROUP 2006
6. Revenue
9. Remunerations
price and not under other income.
Other important elements for the Imaging Group are: the
The operating income from the continuing operations of
selling of waste materials from the labs to recycling compa-
Spector Photo Group has decreased in 2006 by 2.6%.
nies, the recovered outstanding payments from mail order
The Retail Group achieved an increase in turnover of 8.2%.
customers, unredeemed discount vouchers, and marketing
It was mainly 3 product groups – Flatscreen TVs, GPS and
contributions from the channel of the photo specialists.
(in € ‘000)
Laptop-PCs – that provided successful growth in both
Wages and salaries
2005
2006
34 807
29 818
Belgium and Luxembourg.
8. Trade goods, raw materials and consumables
Social security contributions
9 197
7 784
graphy in 2006. The decrease of the external revenues
The cost of trade goods, raw materials, and consumables
Other employee expenses
1 342
1 207
amounted to 18.6%.
rose slightly overall by 1.7%. This increase is attributable to
The loss in analogue turnover is more clearly being compen-
the continuing growth of the operating income for the Retail
Contributions to defined
sated by the continued growth of the digital turnover. More
Group. The total cost for trade goods, raw materials, and
contribution plans
346
271
detailed information on the operating income is provided in
consumables for Imaging decreased by 18.6% in 2006, thus
the segment reports on page 44 of this document.
in proportion with the drop in operating income.
benefit obligations
-63
-161
Increase/(decrease) in the other long
-46
87
45 583
39 006
The turnover of the Imaging Group was again strongly
dictated by the transition from analogue to digital photo-
7. Other income
Increase/(decrease) in the defined
term employee benefit liabilities
The other income decreased by 32.8%.
The increase in the other income for the Retail Group is in line
Total
with the increase of turnover.
The marketing support from strategic suppliers represents
The employee benefits have decreased by 14.4% as a result
more than 60% of this item. The other income for the Retail
of past and current restructuring. The number of employees
Group is mainly related to rental income, charged-on costs,
expressed as full time equivalents (FTEs) dropped as at the
and income that was repaid by the insurance on loss or
year-end to 1,090 compared to 1,219 as at year-end 2005.
damage claims.
The fall of the other income for the Imaging Group corresponds mainly with the fall of turnover. Furthermore, a number
of suppliers that formerly paid marketing contributions, opted
this year for volume discounts that are settled in the purchase
Consolidated financial statements 2006
47
Summary of the remunerations of the members of the management and supervisory bodies
10. Depreciations & amortisation expenses
The Retail Group recorded a light fall for the depreciations,
Remunerations and interests of the members of the executive committee (in € ‘000)
and amortisations (-1,7%). The depreciations and amortisaExecutive
Fixed
Variable
Other
Number of share
Number of
tions for the Imaging Group decreased by 18.9%. This mainly
committee
remuneration
remuneration
remuneration
options (date of option
warrants (exer-
reflects the fact that during recent years there has been less
member
component
component
components
plan, exercise price)
cise price per
investment in machines and equipment for the labs. There
(1)
(1) (2)
(1) (3)
(4)
warrant)
was also a noticeable fall in the write-downs on inventories.
400 000 (EUR 3,36)
11. Other operating expenses
1.Tonny Van Doorslaer
310
15
7 1 900 (1999 - EUR 37,16)
4 000 (2001 - EUR 9,69)
7 500 (2002 – EUR 10,65)
2. Stef De corte
1 900 (1999 - EUR 37,16)
2005
2006
Services & other costs
53 831
47 405
Other operating taxes
1 079
720
90
30
0
37
Loss on disposal of trade receivables
1 577
790
Other operating charges
1 630
848
-302
-546
57 905
49 284
(in € ‘000)
150 000 (EUR 3,36)
4 000 (2001 - EUR 9,69)
5 500 (2002 – EUR 10,65)
3. Christophe Levie
Total 1, 2 and 3
50 000 (EUR 3,36)
636
259
12
(1) Cost to the enterprise, i.e. gross amount including social security contributions (employee’s and employer’s).
(2) The variable component is provided in the form of a bonus plan that is determined each year by the remuneration committee. This bonus plan contains financial targets.
(3) The other components refer to the costs for pensions, insurance policies, and the cash value of the other benefits in kind (expense allowances, company car, etc.).
(4) For the exercise periods, please see page 72 of this document.
The total cost for the 2006 financial year amounts to EUR 907 (000).
Loss on disposal of intangible assets,
propery, plant and equipment
Loss on disposal of financial assets
Other operating expenses: provisions
Total directors’ reimbursements are EUR 89 (000) paid out for the 2006 financial year, and EUR 139 (000) for the 2005 financial year
Total
48
SPECTOR PHOTO GROUP 2006
The other expenses decreased by 14.9%, which is mainly
the restructuring plan and the new business model.
attributable to the Imaging Group. Expenditure was strictly
- EUR 2,176 (000) costs related to the closing of the lab in
controlled, especially on marketing, transport and overhead
Munster, France (Imaging Group)
costs.
14. Financial cost-net
(in € ‘000)
The non-recurrent elements for 2006 amount to - EUR 3.8
12. Profit from non-recurring items of the operating
activities
2005
2006
836
1 113
-6 098
-5 333
5
-104
million. These are mainly for the Imaging Group (96.9%).
Interest income
- EUR 1 700 (‘000) redundancy payments
Spector Photo Group achieved a recurrent operating result of
- EUR
500 (‘000) write-downs
EUR 6.0 million from the continued operations in 2006.
- EUR
700 (‘000) provisions
- EUR
900 (‘000) other restructuring costs
13. Non-recurring items from the operating
activities
Interest expense
Net (gains)/losses on sale of financial
assets
Write off (impairment)
The total non-recurring operating expenses for the 2005
on current &
financial year amounted to EUR 7.5 million and consist of
financial assets
-96
62% for the Imaging Group, 4% for the Retail Group and 34%
for Corporate. This amount roughly breaks down as follows:
Net foreign exchange (gains)/losses
-572
1 445
47
42
- EUR 88 (000) impairment losses on property, plant and
equipment, mainly on minilabs and other equipment within
Other financial (income)/charges
the Imaging Group
- EUR 1,862 (000) impairment losses on goodwill and other
Financial cost-net, before non-
impairments with, as the most important elements: EUR
recurring items
-5 878
-2 838
Non-recurring financial items
-3 163
-818
Financial cost-net
-9 041
-3 656
798 (000) concerning customer receivables of the Imaging
Group from 2004, EUR 110 (000) for inventories within the
Imaging Group, and EUR 470 (000) impairments on goodwill
of the entities in the Imaging Group that are held as available
for sale.
- EUR 3,370 (000) restructuring costs, of which EUR
601 (000) was for redundancy payments in the Imaging
Group and EUR 159 (000) in the Retail Group, plus EUR
2,610 (000) fees for external advice on the development of
Consolidated financial statements 2006
49
Recurring financial items
Non-recurring financial items
The financial result before non-recurring items amounted
Several financial assets were written down in 2005, which resulted in a non-recurring financial expense of EUR 3.2 million.
to minus EUR 2.8 million, which is more than EUR 3 million
This was mainly for the write-down of an outstanding account receivable from Fotoinvest C.V.B.A., taking account of the price
better than in 2005. This is a result of lower interest expenses
developments in the Spector shares, which are the company’s only assets and constitute the underlying security for the receivable
due to the decrease in the debts and positive exchange rate
concerned. There was also a write-down on the current account of the German company Spector Immobilien Verwaltung with
differences (EUR 1.4 million in 2006, compared to minus EUR
Spector Coördinatiecentrum. The latter is linked to the estimate of the fair value of the building in Dresden, which is this company’s
0.5 million exchange rate differences in 2005).
only asset.
An additional write-down was recorded in 2006 on the unmatured receivable from Fotoinvest amounting to - EUR 0.8 million.
The financial statements were prepared using the following
exchange rates.
15. Income tax expenses (-)/income
Currency
Closing
Average
exchange rates
rate
rate
2005
2006
2005
Amounts recognised in the income statement
2006
2005
2006
-1 016
-1 497
Adjustments to taxes for preceding periods
-270
-255
Utilization and write-back from/(addition to)
provisions for taxes
-121
-64
-1 407
-1 816
1 569
574
-111
-253
304
0
1762
321
355
-1 495
(in € ‘000)
50
Australian dollar
1,6109
1,6691
1,6273
1,6682
Swiss franc
1,5510
1,6069
1,5479
1,5758
Danish crown
7,4605
7,4560
7,4525
7,4591
Hungarian forint
2,5287
2,5177
2,4860
2,6403
Norwegian crown
7,9850
8,2380
8,0044
8,0394
Swedish crown
9,3885
9,0404
9,3032
9,2524
American dollar
1,1797
1,3170
1,2379
1,2635
SPECTOR PHOTO GROUP 2006
Current tax expenses (-)/income
Taxes on the result for the financial year
Deferred taxes
Originating and reversal of temporary differences
Utilization of preceding years’ losses
Deferred taxes on losses of current financial year
Income tax expenses (-)/income recognized in the income
statement
Reconciliation of effective income tax expenses (-)/incomle
(in € ‘000)
2005
2006
-1 244
-2 884
Profit/(losses) before tax
-12 971
-1 523
Theoretical tax rate*
29,92%
21,21%
61
1 735
-1 059
-8 165
0
409
1 460
7 463
Tax calculated at the theoretical tax rate*
* The theoretical tax rate is calculated as the weighted
Impact of tax exempt revenues
average of the domestic theoretical tax rates applicable to
profits of the taxable entities in the countries concerned.
Impact of non-deductible expenses
In view of the overall loss situation, an effective tax rate was
Tax deduction for risk capital
Impact of reversed (utilized) tax losses
not applicable for the Group as a whole for 2005, or for 2006.
16. Minority Interest
Increase in provisions concerning tax claims
-121
-64
The minority interests concern Digital Photoworks Ltd.
Over/(under) provided in preceding years
-270
-255
(Australia) and FLT S.p.A. In the fourth quarter of 2006, 2%
of the shares of FLT S.p.A. were sold. In the current financial
Other
-233
-55
year, the profit and loss account of FLT S.p.A. was still fully
consolidated and minority interests were entered. From 2007,
Effective current income tax expenses (-)/income
Impact of deferred taxes
Income tax expenses (-)/income recognized in the income
-1 407
-1 816
1 762
321
355
-1 496
FLT S.p.A. will be proportionally consolidated.
statement
Consolidated financial statements 2006
51
17. Property, plant and equipment
(in € ‘000)
Land & buildings
Plant, machinery &
equipment
Furniture, fixtures &
vehicles
Assets under
construction
Total
30 298
83 533
28 087
30
141 947
16
1 355
1 453
67
2 890
-243
-19 312
-3 322
-1
- 22 877
0
-227
-24
0
-251
Acquisition value
Balance at end of previous year
Mutation
Acquisitions
Sales & disposals
Disposals through business divesture
Revaluation increase/decrease
140
0
0
0
140
-3 473
-14 728
-116
0
-18 316
92
15
3
-19
91
166
523
30
1
720
0
-2 643
-163
0
-2 806
26 996
48 516
25 949
78
101 539
13 243
73 860
16 075
103 178
1 103
5 136
2 980
9 219
-243
-19 070
-3 250
-22 563
0
-122
-10
-131
-1 706
-14 017
-149
-15 872
86
488
14
588
0
-2 301
-81
-2 382
12 482
43 974
15 581
72 037
at end of previous year
17 055
9 673
12 011
30
38 769
at end of current period
14 514
4 542
10 368
78
29 502
Transfer to assets classified as held for sale
Other transfers
Translation differences
Other changes
Balance at end of current period
Amortization and impairment
Balance at end of previous year
Mutation
Depreciation
Sales and disposals
Disposals through business divestiture
Transfer to assets classified as held for sale
Translation differences
Other changes
Balance at end of current period
Carrying amount
52
SPECTOR PHOTO GROUP 2006
Leased assets recognised in the table above, which the Group leases in the form of financial
The measurements of the fair value of land and buildings mentioned above were appraised
lease contain:
by the accredited assessors Valorem Expertises (Belgium), Ateamus (Hungary) and Claesson
Konsult (Sweden). The properties were valued as unencumbered by tenancy in the calculations.
The costs of the transaction, such as costs for registration, civil-law notary, possible VAT, publicity
and estate agent’s fees, were not included. Since the assessors noted that there are no market
Acquisition
Accumulated
Carrying
data available, in view of the specialised category of the fixed assets and considering these are
value
depreciation
amount
seldom sold except as premises being used by a company, these assets – in accordance with
and
IAS 16 – were recognised at their “depreciated replacement value”. This means that the starting
impairment
point is an estimate of the cost for rebuilding the property, including the cost of deeds, the costs
of preparing the yard, the construction costs and all relevant taxes. This initial value is then depreciated for, among other things, the commercial and physical ageing of the buildings, the cyclic
economic conditions, and expenses associated with any sale.
Plant, machinery & equipment
1 127
-700
427
Without the selected option of recognising land and buildings at their fair value, the net carrying
amount at the prior financial year-end would amount to EUR 11,963 (000) instead of EUR
17,055 (000). As at the end of the current period under review, this would have produced a net
Recognition at fair value used as the deemed cost
carrying amount of EUR 9,708 (000) instead of EUR 14,514 (000).
In accordance with IFRS 1, it was decided to measure buildings and land at the date of transition
to IFRS at fair value and to use this fair value as the deemed cost at that date.
Net carrying amount
As a result of this option in the transition to IFRS on 1 January 2004, an additional value of EUR
The net carrying amount of the property, plant and equipment decreased between 2005 and
3,169 (000) was recognised for the land. This additional value concerns land of the subsidiaries
2006 by EUR 9.3 million.
Photo Hall Multimedia, Fotronic, ExtraFilm Scandinavia, and Promo Concept Invest (PCI). On 31
In 2005, the buildings of Spector Grand-Est (Munster, France), Sacap France (Colmar) and
December 2005, a revaluation addition of EUR 2,040 (000) was recognised – translated at the
Fotronic, and the assets and liabilities of the activities of Sacap France and Spector Fotohandel
closing exchange rate on 31December 2006 - for the site in Budapest (Hungary), which includes
(Austria) were reclassified as “assets held for sale”. As at the 2006 year-end, a compromise
EUR 705 (000) for the land and EUR 1,335 (000) for the buildings. On the basis of the annual
was agreed for the sales of the buildings in Colmar and Braine-l’Alleud. The assets and liabilities
calculation of the fair value of the land and buildings freehold owned by the Hungarian subsidiary,
involved in the operations of Sacap France are no longer recognised as “available for sale”
as at 31 December 2006 an additional revaluation surplus of EUR 140 (000) was recognised for
(+ EUR 42,7(000) in the items Machines, Equipment, and Furniture and Vehicles). As at the end
the buildings.
of 2006, the property, plant and equipment of Litto-Color N.V. were recognised under the assets
In 2005, the buildings of Fotronic in Braine-l’Alleud (Belgium), Munster and Colmar were removed
available for sale (minus EUR 2.5 million), of which EUR 1.8 million is for Land and Buildings.
from the ‘Land and Buildings’ category because of the classification of these buildings as “asset
held for sale”.
Consolidated financial statements 2006
53
Furthermore the net carrying amount decreased due to derecognition of the assets of entities
18. Goodwill and other goodwill
sold during the current financial year, Litto-Color B.V., Litto-Color S.A.R.L. and STL France
Belgium (minus EUR 0.12 million) and by the change of consolidation method of the Italian subsi-
Cons. Goodwill (acq. c.)
Other Goodwill (acq. c.)
Total
47 700
17 574
65 274
Acquisitions
0
100
100
Sales & disposals
0
-2 008
-2 008
Translation differences
0
36
36
47 700
15 702
63 402
29 458
11 720
41 178
Amortization
0
1 541
1 541
Sales and disposals
0
-2 008
-2 008
Translation differences
0
27
27
29 458
11 279
40 736
at end of previous year
18 242
5 854
24 096
at end of current period
18 242
4 423
22 665
(in € ‘000)
diary FLT S.p.A. (minus EUR 0.424 million).
The main decrease of the net carrying amount relates to an investment rhythm that has been
Cross carrying amount
systematically reduced since 2002, whereas the writing-down over the years has remained rela-
Balance at end of the previous year
tively stable. For the 2006 financial year, the investments amounted to EUR 2.9 million, whereas
the write-downs totalled minus EUR 9.2 million.
Investments in the labs of the Imaging Group
The labs in Wetteren and Tanumshede were equipped for digital photofinishing during 2005.
This new equipment, however, is mainly rented and therefore involved no substantial capital
Mutation
Balance at end of current period
investment. The lab in Ostend was already equipped for digital photofinishing activities at the time
of its acquisition in 2005. In 2006, the labs in Wetteren, Ostend and Italy were further equipped
for digital photofinishing (+ EUR 1.2 million), of which EUR 0.4 million related to the lab in Ostend.
Amortization
and impairment
Balance at end of previous year
Investments in the Retail Group
The majority of the Retail Group’s shops are rented. However, the main building of Photo Hall in
Vorst, Belgium is owned by the Group, as is the main building of Photo Hall in Budapest, and
a number of the Hungarian entities’ shops. The investments this year also mainly concern the
setting up of new shops and the refurbishment of existing shops — mostly under the brand of
Photo Hall or Hifi International (+EUR 1.7 million).
Mutation
Balance at end of current period
Carrying amount
54
SPECTOR PHOTO GROUP 2006
On the one hand, this item concerns the consolidation
implemented in ExtraFilm Scandinavia. Thus, the day-to-day
consensus concerning the future trends on the photo market.
goodwill, with the main components being: EUR 7.4 million
management was assigned to the general manager of the
The results of this calculation are discounted at 15.48%, a
for Photo Hall (Belgium, Luxembourg, Hungary) and EUR 5.3
other mail order entities, the marketing function was further
rate that reflects a market-level return on equity and loan
million for ExtraFilm Scandinavia. On the other hand, this item
incorporated in the central marketing department and, during
capital, the current balance between equity and loan capital
also contains local goodwill of EUR 2.8 million for shops in the
the course of 2007, the local IT platform will be replaced
for this cash-generating unit and the estimates of additional
Retail Group and EUR 1.6 million goodwill for the customer
by the new applications that will be used by all mail order
risks and volatility for the potential developments in the
file of KodaPost in Scandinavia, which was acquired by the
entities.
market in which this unit operates.
there any substantial acquisition, in the net carrying amount is
Mail Order
Hifi International Luxembourg
thus being further written down.
The net carrying amount of the consolidated goodwill that
The net carrying amount of the consolidated goodwill that
was attributed to this entity was EUR 9.6 million as at 31
was attributed to this entity was EUR 3.59 million as at 31
At the end of December 2006, in accordance with IAS 36,
December 2006.
December 2006.
the company performed impairment tests concerning the
The recoverable amount is higher than the net carrying
The recoverable amount is higher than the net carrying
identified cash-generating entities to examine whether they
amount stated above. The recoverable amount is calculated
amount stated above. The recoverable amount is calculated
have undergone an impairment loss. These tests demonstrate
on the basis of the value in use. This calculation takes the
on the basis of the value in use.
that in each case the recoverable amount of the entity was
projections of the future free cash flows for the five coming
This calculation takes the projections of the future free
higher than the carrying amount of the entity. Consequently,
financial years and adds a continuing annual growth of 2%.
cash flows for the coming four financial years and adds a
no impairments needed to be recognised for the continuing
The projections for 2007 and 2008 correspond with the
continuing annual growth of 2%. While the projections for
operations.
budgets approved by the Board of Directors, without really
2007 and 2008 correspond with the budgets approved by
taking account of cost savings that could still result from
the Board of Directors, the projections for 2009 and 2010 are
The results of the tests for the four most important cash-
the restructuring measures still to be implemented. The
based on prudent extrapolations by the management. The
generating entities are examined in more detail below.
projections for 2009, 2010 and 2011 are based on prudent
continuing annual growth of 2% is justified by the permanent
These four business units together represent 93.7% of the
extrapolations by the management. The continuing annual
character of the activities. The most important assumptions
total net carrying amount of the goodwill. These are the
growth of 2% is justified by the permanent character of the
are a stabile free cash flow for the period 2007-2010, and a
cash-generating business units: Mail Order (Belgium, the
activities and a conservative development in turnover that
stable gross margin.
Netherlands, France, Switzerland, Scandinavia...), Hifi Interna-
takes account of the changing market conditions. The most
The results of this calculation are discounted at 8.92%.
tional Luxembourg, Photo Hall Belgium, and Spector BeNe.
important assumptions are: (i) a further drop of turnover in
This discount rate reflects a market-level return on equity and
2007, but starting in 2008 an average growth of 13% per
loan capital in their current mutual balance.
Imaging Group in 2004. Neither in 2005, nor in 2006, was
As at 31 December 2005, ExtraFilm Scandinavia was consi-
annum, and (ii) a light fall in the average selling prices, which
dered as a separate cash-generating unit, whereas as at 31
will howerver increase again in 2007 on the basis of the
December 2006 it is part of the Mail Order cash-generating
changing product mix.
unit. During 2006, the central organisation continued to be
These assumptions correspond with market analysts’
Consolidated financial statements 2006
55
Photo Hall Belgium
2008 correspond with the budgets approved by the Board
intangible assets. Compared to EUR 4.7 million acquisitions
The net carrying amount of the consolidated goodwill that
of Directors, the projections for 2009, 2010 and 2011 are
of external customer relationships, there was EUR 6.6
was attributed to this entity was EUR 3.34 million as at 31
based on prudent extrapolations by the management. The
million amortisation of external customer relationships in
December 2006.
continuing annual growth of 2% is justified by the permanent
2005. In 2006, this was EUR 2.3 million acquisitions of
The recoverable amount is higher than the net carrying
character of the activities and a conservative development in
external customer relationships compared to EUR 6.3 million
amount stated above. The recoverable amount is calculated
turnover that takes account of the changing market condi-
amortisation.
on the basis of the value in use.
tions. The assumptions concerning the turnover show a
This calculation takes the projections of the future free cash
further drop in turnover up to 2009, which will grow again
The net carrying amount for concessions, patents and
flows for the coming four financial years and adds a conti-
starting from 2010, however, with average 1.2% per annum.
licences has increased by EUR 0.5 million compared with
nuing annual growth of 2%. The projections for 2007 and
The results of this calculation are discounted at 12.72%. This
2005. The investments amounted to EUR 1.3 million for the
2008 correspond with the budgets approved by the Board
discount rate reflects: a market-level return on equity and loan
2006 financial year, and mainly concern investments in the
of Directors, without taking account of the cost savings that
capital, the current balance between equity and loan capital
framework of the new applications for central IT platform
could result from the restructuring measures still to be imple-
for this cash-generating unit and the estimates of additional
(+ EUR 0.8 million) and the switch to new reporting software
mented, however. The projections for 2009 and 2010 are
risks and volatility for the potential developments in the
(+ EUR 0.3 million). In-house developed software amounts to
based on prudent extrapolations by the management. The
market in which this unit operates.
EUR 0.3 million of the total investments.
continuing annual growth of 2% is justified by the permanent
Amortisation in the 2006 financial year amounted to EUR 0,6
character of the activities. The most important assumptions
million for this item.
are a stable free cash flow for the period 2007-2010, and a
19. Intangible assets other than goodwill
stable gross margin. This calculation also uses a discount
rate of 8.92% and reflects a market-level return on equity and
Intangible assets mainly concern the externally acquired
loan capital in their current mutual balance.
customer relationships of the mail-order enterprises in the
Imaging Group (EUR 17.6 million) and, to a lesser degree,
Spector BeNe
patents, licences and software developed in-house.
The net carrying amount of the consolidated goodwill that
Page 41 of this document provides more detailed information
was attributed to this unit was EUR 0.6 million as at 31
on the externally acquired customer relationships.
December 2006.
56
The recoverable amount is higher than the net carrying
Up until 2004, there was a relative balance between the
amount stated above. The recoverable amount is calculated
newly acquired customer relationships and the amortisation
on the basis of the value in use.
associated with them. Because of the transition from
This calculation takes the projections of the future free cash
analogue to digital photography, the Imaging Group calls
flows for the coming five financial years and adds a continuing
on other techniques and instruments to acquire new
annual growth of 2%. While the projections for 2007 and
customers. These techniques qualify less for recognition as
SPECTOR PHOTO GROUP 2006
(in € ‘000)
Concessions,
patents,
licenses, etc.
Development
expenses
capitalized
Customer
relationships
Total
17 438
1 132
66 110
84 679
Additions from internal development
331
0
0
331
Acquisitions
933
0
2 328
3 261
-1 712
-1 023
0
-2 736
Acquisition value
Balance at end of previous year
Mutation
Sales & disposals
Revaluation increase/decrease
Transfer to assets classified as held for sale
Other transfers
Translation differences
Other changes
Balance at end of current period
13
13
-290
0
0
-290
-91
0
0
-91
41
0
282
323
-84
0
0
-84
16 579
108
68 719
85 407
16 145
1 063
44 565
61 773
685
66
6 258
7 009
-1 708
-1 023
0
-2 731
-290
0
0
-290
42
0
257
299
Amortization and impairment
Balance at end of previous year
Mutation
Amortization
Sales and disposals
Transfer to assets classified as held for sale
Translation differences
Other changes
-92
0
0
-92
14 784
105
51 080
65 969
at end of previous year
1 292
69
21 545
22 906
at end of current period
1 796
3
17 640
19 439
Balance at end of current period
Carrying amount
Consolidated financial statements 2006
57
20. Investments in subsidiaries
22. Other non-current financial assets
The shares of Norden Inkasso, a Scandinavian debt-collection agency that is related to the mail-
This category contains a number of investments that are held by subsidiaries of the Group.
order operations, were sold on 7 March 2006.
(in € ‘000)
(in € ‘000)
Shares
Investments
subsidiaries
Non-current investment securities, opening balance
Gross amount
Investments in subsidiaries, beginning balance
11
Accumulated impairment losses (-)
3 039
-2 978
Gross amount
Decreases through sales (-)
-11
Investments in subsidiaries, ending balance
Decreases through sales (-)
-14
Translation differences
8
Accumulated impairment losses (-) decreases
through sales
2
0
Gross amount
Accumulated impairment losses (-) from
translation differences
-8
Non-current investment securities, ending balance
21. Investments available for sale
Gross amount
3 033
Accumulated impairment
-2 985
Non-current investment securities
49
Promo Concept Investment (PCI), a subsidiary, owns the shares of Spector Immobilien Verwaltung. This investment in the German company Spector Immobilien Verwaltung is held as available
for sale, and has a building in Dresden as its most important asset.
The participating interests Sogesal and Ricorda SCRL were sold during the financial year.
58
SPECTOR PHOTO GROUP 2006
2005
23. Trade and other receivables (non-current portion)
(in € ‘000)
2005
2006
Trade receivables
615
301
Cash guarantees
377
403
Other receivables
3 491
1 359
Net carrying amount
4 483
2 063
(in € ‘000)
The decrease in the trade receivables (non-current portion) results from the proportional consoli-
With
subsidiaries
Other liabilities
2006
With other
related
parties
Total
377
377
With
subsidiaries
With other
related
parties
Total
Transactions with
related parties
Sale of goods
Purchases of
goods
10
10
878
878
dation of the Italian subsidiary. This was a fully consolidated subsidiary in 2005. During the 2006
financial year, 2% of the shares were sold and consequently this subsidiary is consolidated on a
As mentioned under the previous note, the receivable from Fotoinvest C.V.B.A. is entered under
proportional basis.
the current receivables. An impairment loss of EUR 818 (000) is entered against this receivable
The other receivables decreased by EUR 2,132 (000), of which EUR 2,114 (000) is a restatement
and the receivable is recognised under the “Other related parties” items for an amount of EUR
of the receivable from Fotoinvest C.V.B.A. from non-current to current. This receivable is due at
2,114 (000) in 2005, compared to EUR 1,296 (000) in 2006.
the end of 2007.
The other amount owed by subsidiaries concerns a receivable from Spector Immobilien Verwaltung amounting to EUR 1,213 (000).
Related parties
In 2005, there was also an amount owed by the joint venture STL France Belgium amounting to
EUR 2,183 (000) recognised under this category. The joint venture STL France Belgium, which
2005
(in € ‘000)
With
subsidiaries
With other
related
parties
2006
Total
With
subsidiaries
With other
related
parties
was recognised according to the proportional consolidation in 2005, was sold as the end of
Total
December 2006.
The remunerations for managers in key positions are reported on page 48.
Assets with related
parties
Joint Ventures
Receivables
Trade receivables
79
Other receivables
3 396
Spector Photo Group held a 50% interest in the firm STL France Belgium via its Filmobel subsi-
79
2 114
5 510
1 213
1 296
2 509
diary. Because there was joint control, the interests in STL France Belgium were recognised in
the consolidation using proportional consolidation. As reported above, these shares were sold at
the end of the financial year under review. Only the results are recognised under the discontinued
Liabilities
with
related parties
Trade payables
operations item.
277
277
Consolidated financial statements 2006
59
In the fourth quarter of 2006, 2% of the shares of FLT S.p.A. were sold. These shares were held
24. Deferred tax assets
via Photomedia, a subsidiary of Spector Photo Group. In the current financial year, this subsidiary
was consolidated on a proportional basis (49%) in the balance sheet accounts and fully recognised in the income statement accounts.
(in € ‘000)
STL is recognised proportionally under the continuing operations of the consolidated financial
statements for the following amounts:
Balance
Recognized
Translation
Other
Balance
at end
in result
differences
move-
at the end
ments
of current
of previous
year
2005
(in € ‘000)
Non-current assets
2006
26
Current assets
1 966
Non-current liabilities
164
Current liabilities
855
Operating income
Operating expenses
Property, plant and
equipment
Intangible
period
62
0
0
93
155
315
0
0
-285
30
84
-48
0
35
8 221
-253
-7
7 961
8 682
-302
-7
assets
10 014
8 376
9 484
8 230
Provisions
Unused tax
losses
FLT is recognised proportionally under the continuing operations of the consolidated financial
statements for the following amounts:
2005
(in € ‘000)
1 976
Current assets
1 449
Non-current liabilities
380
Current liabilities
1 379
Operating income
Operating expenses
60
2006
Non-current assets
SPECTOR PHOTO GROUP 2006
-192
8 182
This category consists mainly of the recoverable tax losses
(in € ‘000)
Assets
Liabilities
Net
of Spector Photo Group NV, for which a capitalised tax
deferral is recognised. Deferred tax assets are recognised to
2005
2006
2005
2006
2005
2006
62
30
1 919
2 134
-1 857
-2 103
315
155
4 328
3 509
-4 013
-3 354
83
35
66
7
17
27
0
0
0
0
0
0
8 221
7 961
0
0
8 221
7 961
8 682
8 181
6 314
5 649
2 368
2 531
the extent that it is probable that future taxable profits will be
available against which the unallocated taxable losses and tax
Property, plant and equipment
assets can be utilised.
Intangible assets
The cumulative tax transferable losses, for which no
capitalised tax deferrals are recognised, amount to EUR
Provisions
20.9 million. For these losses, no capitalised tax deferrals
were recognised because it is improbable that there will be
Other debtors
sufficient taxable profit available to be able to realise the tax
benefits.
Tax losses
carried forward
The summary below shows not only the deferred tax assets,
but also deferred tax liabilities and the net effect.
Deferred tax assets/(liabilities)
25. Assets held for sale
former Austrian shop outlet activities of the Group had been
conducted until 2001, when the Group withdrew from the
Discontinued operations
Austrian photofinishing market.
Spector Fotohandel
Sacap France
In the third quarter of 2005, the Board of Directors decided to
The Board of Directors also decided in the third quarter of
discontinue the operations of Spector Fotohandel in Austria.
2005 not to continue the activities of Sacap France in the
Spector Fotohandel is a company that derives income from
long term. Sacap France is a company that operates in the
renting out industrial and commercial buildings in which the
wholesale trade of plant, machinery, equipment and goods for
resale to self-employed professional photographers.
Consolidated financial statements 2006
61
Sacap France also deals in, among other things, minilabs,
STL
order kiosks, photographic paper and developing chemicals,
The shares of STL France Belgium N.V. were sold at the end of 2006. The results of this company are also recognised under the
cameras and accessories, photo frames and photo books. In
discontinued operations item. The activities of STL include wholesale trade in multimedia and photography products.
2006, the Board of Directors decided no longer to recognise
the assets and liabilities of Sacap France as available for sale.
As at the financial year-end, the assets and liabilities of these companies were classified respectively as assets held for sale, and
Since the Group had opted to focus on the channel of the
liabilities directly related to them.
photographers in Belgium and the Netherlands, this entity
was put up for sale in 2005 (The channel of the professional
photographers represents only a small percentage of the
market in France, which is dominated by the major chains).
The result and cash flow from these discontinued operations can be summarized as follows:
After various conversations with candidate buyers, no buyer
was ultimately found. Therefore it was decided to present
2005
2006
Post-tax profit or loss of discontinued operations
-4 450
-5 660
Revenue from ordinary activities
28 450
23 132
88
298
-33 067
-29 070
-4 528
-5 640
78
-20
-1 543
-1 196
Cash flow from operating activities
762
937
the assets and liabilities of this company were classified
Cash flow from investing activities
-1 284
-348
as “assets and liabilities held for sale”. Litto Color operated
Cash flow from financing activities
217
-376
this entity no longer under “non-current assets held for sale”.
The operating result (as an item of the continuing operations) of Sacap France amounts to –EUR 348 (000) as at 31
December 2005 and –EUR 1,067 (000) as at 31 December
2006.
(in € ‘000)
Other income from ordinary activities
Expenses from ordinary activities
Pre-tax profit or loss from discontinued activities
Litto-Color
Taxes
The shares of the companies Litto-Color B.V. and Litto-Color
S.A.R.L. were sold at year-end 2006. For these two compa-
Loss recognized on the re-measurement to fair value
nies, only the results were still recognised under the category
of discontinued operations. Litto-Color N.V. was put into
liquidation on 6 November 2006. As at 31 December 2006,
mainly in the Wholesale Photofinishing market.
62
SPECTOR PHOTO GROUP 2006
The amount of minus EUR 1,543 (000) as at 31 December
The building in Munster (France), classified as an asset held
2005, includes an impairment loss concerning Spector Foto-
for sale in 2005, was sold on 21 December 2006.
handel that is mainly related to a guarantee accrued in recent
A non-recurring loss on this transaction of EUR 384 (000) is
years for an option to buy the building.
recognised in the income statement.
For the 2006 financial year, an amount of minus EUR
A compromise was agreed for the buildings of Sacap France
1,196 (000) was taken to the income statement. This amount
and Fotronic. The notarial deed will be executed soon. The
also relates to an impairment loss on the building of Spector
recoverable amount, less the selling costs has remained
Fotohandel to its recoverable amount. Minus EUR 353 (000)
unaltered for the building in Braine-l’Alleud. For the building in
was also taken directly to the equity.
Colmar, a reversal was entered for the revaluation surplus of
EUR 181 (000).
Assets held for sale and liabilities directly related to them
The assets held for sale and liabilities directly related to them
concern:
2005
2006
6 630
6 616
994
280
Trade and other receivables
1 225
1 439
Cash and cash equivalents
386
437
9 234
8 771
(in € ‘000)
- the discontinued operations of Spector Fotohandel and
Litto-Color N.V.; and
- the building of Sacap France in Colmar and Fotronic in
Braine-l’Alleud from the Imaging Group’s segment.
The decision on this classification for the operations of
Spector Fotohandel and Sacap was taken in 2005. In 2006,
Assets
Property, plant & equipment
Inventories
it was decided to recognise no longer the Sacap France
Assets held for sale
operation as available for sale. Litto-Color N.V., operating in
Liabilities
the Wholesale Photofinishing market, was put into liquidation
Provisions
on 6 November 2006, and this activity was also classified
Interest bearing liabilities
with the assets held for sale and the liabilities directly related
to them.
920
4 310
3 332
Employee benefit liabilities
268
1 038
Trade and other payables
693
723
5 272
6 012
Liabilities directly linked to liabilities
held for sale
Consolidated financial statements 2006
63
26. Inventories
27. Trade and other receivables (current portion)
(in € ‘000)
Raw materials and consumables
2005
2006
1 662
887
Work in progress
8
Finished goods
2005
2006
38 465
28 844
5
2
7 578
8 063
Total gross carrying amount
46 048
36 909
(in € ‘000)
Trade receivables
Derivative financial instruments
54
26
40 847
41 020
20
161
Allowance for bad and
doubtful debts trade receivables(-)
-9 813
-5 331
Total gross carrying amount
42 591
42 095
Allowance for bad and
doubtful debts other receivables(-)
-707
-2 771
Write-downs
-2 401
-2 037
Net carrying amount
35 528
28 807
Net carrying amount
40 190
40 058
Goods purchased for resale
Advance payments
Other receivables
The current portion of the trade and other receivables decreased substantially between 2005
and 2006. This decrease is in line with the decreasing operating revenues from the continuing
The change in the inventories item at group level between 2005 and 2006 is nihil. The changes in
operations – mainly of the Imaging Group, which was confronted with substantial changes on the
the inventories within the Retail division are mainly in line with the increase of the revenues. There
photo market. The sale of STL, the proportional consolidation of FLT and the recognition of Litto-
was a drop of 33.18% in the Imaging division. This drop is mainly related to the decrease of the
Color N.V. under “assets held for sale” also affected this decrease. Moreover, extra attention was
operating income, the sale of STL, the proportional consolidation of FLT and the recognition of
paid to an even faster and more accurate collection of outstanding customer accounts.
Litto-Color N.V. under “assets held for sale”.
In 2005, the write-downs on inventories amounted to EUR 1,085 (000), of which EUR 975 (000)
Of the cumulative write-downs on dubious trade receivables in 2005, EUR 183 (000) has been
are accounted for under the recurring elements for the continued operations, and EUR 110 (000)
recognised in the income statement under the recurring elements from the continued operations,
under non-recurring items. In the current financial year, a reversal of EUR 630 (000) was entered
and minus EUR 798 (000) as non-recurring items. In 2006, minus EUR 104 (000) is incorporated
on the one hand, and an impairment amounting to EUR 266 (000) on the other.
in the income statement.
Of the cumulative write-downs on dubious other receivables, minus EUR 94 (000) was taken
to the income statement under the recurring financial result in 2005, and EUR 290 (000) as
64
SPECTOR PHOTO GROUP 2006
non-recurring financial items. In 2006, minus EUR 818 (000)
EUR 1,477 (000) receivable related to VAT; and EUR
has been taken to the income statement as non-recurring
727 (000) charged-on marketing contributions.
30. Total equity
financial items.
Also, please see page 26, statement of changes in equity
28. Cash and cash equivalents
The group owns 131,797 of its own shares, of which 22,993
The net other receivables, after deduction of the cumulative
were acquired during the course of 2004, and 27,773 during
write-downs, are composed as follows:
the course of 2003, at a price equal to or below the exercise
price of the stock option plans (see page 72 of this docu-
(in € ‘000)
(in € ‘000)
2005
2006
680 (9,9%)
870 (16,4%)
5 937 (86,4%)
4 264 (80,5%)
253 (3,7%)
161 (3,0%)
6 870 (100%)
5 295 (100%)
Short term bank
deposits
2005
2006
14 534
10 755
5 741
10 656
ment). In 2006, none of the company’s own shares were
acquired. Of the 131,797 total of the company’s own shares,
77,271 are held by Spector Photo Group NV and 54,326 by
the subsidiary Alexander Photo. In accordance with IFRS,
Retail Group
Cash at bank and
in hand
Imaging Group
recognition in the IFRS balance sheet on 1 January 2004.
This amount is deducted from the shareholders’ equity.
20 275
Other
these treasury shares are recognised at cost in their first
21 411
The capital increase of December 2005 is, of course, a decisive factor in the statement of changes in equity for the 2005
Net carrying amount
Also, please see the cash flow statement on page 27 of this
financial year.
annual report.
In 2005, the amount of minus EUR 122 (000) for “net gains
The net other receivables for the 2005 financial year consist
of three major items: EUR 2,183 (000) receivable from STL,
or losses not recognised in the income statement” is the
29. Current income tax assets
a subsidiary in the Imaging Group, which was proportion-
combined result of: (a) the transaction costs for the increase
in share capital amounting to minus EUR 2,281 (‘000), which
ally consolidated because of joint control; EUR 1,588 (000)
This heading concerns corporation tax assets in certain
is recognised according to IAS 32, (b) the recognition of the
receivable related to VAT; and EUR 1,472 (000) charged-on
consolidated entities related to pending tax assessment
theoretical EUR 134 (000) value of the warrants that were
marketing contributions.
objections, and should be considered jointly with the current
issued at the same time, and (c) the revaluation increases in
The net other receivables for the 2006 financial year consist
corporation tax liabilities (under “Liabilities and Equity”).
value of buildings for EUR 2,025 (000).
of three major items:
EUR 1,296 (‘000) receivable from Fotoinvest C.V.B.A. This
receivable has been restated from non-current to current;
Consolidated financial statements 2006
65
The revaluation increase in value for the building in Budapest
Changes in the number of shares
amounts to EUR 1,736 (000) after deferred tax liabilities of
EUR 331 (000), while the revaluation increases in value on the
buildings in Munster and Colmar amount to EUR
Ordinary
Preference
shares
shares
36 619 505
-
Total
289 (000) combined. The buildings in Munster and Colmar
were both recognised as assets held for sale in 2005. In
1. Number of shares, opening balance
36 619 505
2006, the amount of minus EUR 435 (000) for “net gains
or losses not recognised in the income statement” is the
2. Number of shares issued
-
combined result of: EUR -54 (‘000) derecognition of the
revaluation surplus on the building in Munster that was sold,
3. Number of ordinary shares cancelled or reduced
-
-
-
4. Number of preference shares redeemed, converted or reduced
-
-
-
5. Other increase (decrease)
-
-
-
36 619 505
-
36 619 505
-
-
-
131 797
-
131 797
-
-
-
the reversal of the revaluation surplus for the building in
Colmar amounting to minus EUR 181 (000), and minus EUR
354 (000) for the building in Graz that was written down to its
current recoverable amount. The positive revaluation surplus
of EUR 154 (000) was entered on the buildings and rental
rights of buildings in Hungary.
6. Number of shares, ending balance
The minority interests in 2005 refer to Fotolabore Tagliabue
(for 49%) and Digital Photoworks (for 49.26%). Fotolabore
Tagliabue (FLT) is a company with a photofinishing lab in the
north of Italy, which contributes 2% of the consolidated group
Other information
turnover. Digital Photoworks is the company that operates
the mail order activities in Australia, under the ExtraFilm brand
1. Nominal value of shares
name. In 2001, this entity was fully included in the consolidation for the first time, but represents less than 1% of the
2. Number of shares owned by the company or related parties
consolidated group turnover. In 2006, 2% of the shares of
Fotolabore Tagliabue were sold in accordance with the agreement in the original purchase contract. From 2006 onwards,
FLT S.p.A. is therefore proportionally consolidated for 49%,
and minority interest now only refers to Digital Photoworks.
66
SPECTOR PHOTO GROUP 2006
3. Interim dividends paid during the year
Calculation of the earnings per share (2005)
Calculation of the earnings per share (2006)
1. Number of shares
1. Number of shares
1.1. Weighted average number of shares
8 233 715
1.2. Adjustments to calculate the diluted weighted average number
of shares:
Issue on 16 December 2005 of 600,000 warrants that each
give rights to one new share of the company to be created
when exercised
600 000
2. Net profit
-12 603
Net profit
(from
discontinuing
operations)
1.2. Adjustments to calculate the diluted weighted average number
of shares:
Issue on 16 December 2005 of 600,000 warrants that each
give rights to one new share of the company to be created
when exercised
-4 450
Net profit
(total)
-17 053
2.2. Adjustments to compute net profit
(loss) available to ordinary shareholders:
calculation of amount per share (in euros)
on the basis of the weighted average
number of shares
(see 1.1.)
2.3. Profit (loss) available to ordinary
shareholders
(per share, amount in euros)
36 487 708
600 000
2. Net earnings
Net profit
(from
continuing
operations)
2.1. Profit (loss) attributable to equity
holders of the parent
(in thousands of euros)
1.1. weighted average number of shares
2.1. Profit (loss) attributable to equity
holders of the parent
(in thousands of euros)
Net profit
(from
continuing
operations
Net profit
(from
discontinuing
operations
Net profit
(total)
-2 938
-5 660
-8 598
-0,0805
-0,1551
-0,2356
2.2. Adjustments to compute net profit
(loss) available to ordinary shareholders:
calculation of amount per share (in euros)
on the basis of the weighted average
number of shares
(see 1.1.)
-1,5306
-0,5405
-2,0711
2.3. Profit (loss) available to ordinary
shareholders
(per share, amount in euros)
For the calculation of the earnings per share, the ordinary and the diluted weighed average
Only shares with dividend rights are taken into account for the calculation of the earnings per
number of shares are computed. For the ordinary weighted average, the shares created on
share.
14 December 2005 were counted in for the remaining 18 calendar days in 2005 [6,761,253 +
(29,858,252 x 18/365)]. Because the warrants are “out of the money” as at 31 December 2005,
the calculation of the diluted net profit or loss does not apply as at 31 December 2005.
Consolidated financial statements 2006
67
31. Non-current and current interest-bearing financial obligations
With the capital increase of December 2005, EUR 15 million of the new capital
was earmarked for the repayment of financial liabilities, on top of which a new
agreement was reached with the lenders concerning the rescheduling of the
loans and borrowings between non-current and current liabilities. Moreover, the
non-current interest-bearing loans and borrowings that are linked to the assets
held for sale were restated under the heading “liabilities held for sale”.
The interest-bearing loans and borrowings amount to EUR 79,285 (000) at yearend 2005 compared to EUR 72,478 (000) at year-end 2006. The restatements
between non-current and current are shown in the table on pages 69 and 70.
As at 31 December 2005, 96.6% of the total borrowings were in EUR, 1.9% in HUF and
1.6% in SEK. As at the 2006 balance sheet date, 96.9% of the total borrowings were in
EUR, 1.6% in HUF and 1.5% in SEK.
The interest rate for the Group’s current loans in EUR, went from EURIBOR + 1% to EURIBOR
+ 3%, and in HUF from BUBOR + 0.35% to BUBOR + 0.40% for the 2005 financial year. As at
year-end 2006, the rates for the interest expenses in EUR ranged from EURIBOR + 1.25% to
EURIBOR + 4%, in HUF from BUBOR + 0.40% to BUBOR + 0.60%, and was in SEK 4.1%.
In 2005, the interest rate for the Group’s loans for the non-current loans in EUR range from
The secured loans have been guaranteed for EUR 15,661 (000) by mortgages on land and
4.176% to 7.5%, and in SEK from 3.115% to 3.365%. The interest expense for the HUF loans
buildings, for EUR 6,892 (000) by mortgage powers of attorney on land and buildings, for EUR
amounted to BUBOR + 0.6%.
21,750 (000) by pledges on business assets of specific companies, and for EUR 2,750 (000) by
powers of attorney on pledged business assets of specific companies. Furthermore, shares of
As at year-end 2006, the interest rate in EUR was between 4.176% and 7.39%. The interest rate
payable on the loans in SEK amounted to 3.893%. For the non-current loans in HUF, the interest
rate has remained unchanged.
68
SPECTOR PHOTO GROUP 2006
specific companies included in the consolidation have been given as collateral.
Notes concerning the liabilities and payables
2005
(in € ‘000)
Up
2007
2008
2006
2009
2010
Total
More
Up
2008
2009
2010
2011
Total
More
to
than
to
than
1 year
5 years
1 year
5 years
Interest-bearing borrowings
Secured bank loans
Unsecured bank loans
3 435
4 786
4 786
4 786
26 818
87
44 698
192
72
65
60
19
12 500
12 908
222
117
24
8 038
5 011
5 011
23 824
47
33
7
42 067
184
12 500
12 587
Finance leases
Secured lease liabilities
363
122
147
21 240
21 240
17 617
17 617
43
43
15
15
25
Unsecured lease liabilities
Bank overdrafts
Secured bank overdrafts
Unsecured bank overdrafts
Other borrowings
Unsecured other borrowings
Total interest-
23
1
1
1
1
4
32
13
13
13
1
1
1
44
25 155
4 976
4 877
4 847
26 838
12 591
79 284
25 805
5 096
5 057
23 833
185
12 501
72 478
444
450
470
490
510
1 946
4 310
391
411
431
451
471
1 178
3 332
bearing borrowings according
to their maturity
Liabilities held
for sale
Secured lease liabilities
Consolidated financial statements 2006
69
Finance lease liabilities (in € ‘000)
2005
Payments
Interest
Capital
Outstan-
Outstan-
2005
269
24
2006
245
Outstan-
Outstan-
Payments
2006
Interest
Capital
Outstan-
Outstan-
Outstan-
Outstanding
ding
ding
ding
ding
ding
ding
ding
interest
short
long
interest
interest
short
long
interest
long
term
term
short term
long term
term
term
short term
term
222
142
18
31
122
25
7
2
Outstan-
Outstan-
Outstan-
Outstanding
238
17
220
Finance lease liabilities held for sale (in € ‘000)
2005
Payments
Interest
Capital
2005
543
70
96
447
2006
Outstan-
Outstan-
Outstan-
Outstan-
Payments
2006
Interest
Capital
ding
ding
ding
ding
ding
ding
ding
interest
short
long
interest
interest
short
long
interest
long
term
term
short term
long term
term
term
short term
term
444
3 867
192
752
391
2 942
149
461
SPECTOR PHOTO GROUP 2006
1 049
66
982
32. Non-current and current employee benefits
Operating lease obligations
The free offer of the options will be considered as a benefit
of every nature that is taxable as remuneration to the
Leasing as a lessee
Leasing payments from non-breachable operating lease
The ‘non-current personnel benefits’ concern the pension
employees. In view of the fixed measurement of this benefit,
contracts are payable as follows:
liabilities for the companies in the consolidation. The decrease
as provided for in the Act of 26 March 1999, concerning the
between 2004 and 2005 reflected the reduction of the total
Belgian Action Plan for Employment and containing miscellaneous provisions, this constitutes a form of remuneration that
2005
2006
employment within the Group. The decrease between 2006
Renting during the year
10 086
9 074
and 2005 is mainly related to the further slimming down of
is beneficial for tax purposes.
Less than one year
10 109
8 413
the workforce, the proportional consolidation of FLT S.p.A.
The table below shows the exercise price, the number of
Between one and five years
28 696
23 869
and the reclassification of Litto-Color N.V. to “liabilities held
options offered, the number of options accepted and the
More than five years
14 757
14 727
for sale”.
number still outstanding, which have been offered in the
(in € ‘000)
implementation of this plan in three portions:
The current personnel benefits are liabilities concerning remu-
The most important obligations for the Retail Group concern
neration and social security charges. They mainly comprise
the retail premises over a period of 9 years with an option
the payable wages and salaries, as well as the corresponding
to renew the leases after the expiry date. The rent is raised
social security contributions, the payroll withholding tax and
annually to reflect market rental rates. Furthermore, the Group
the provisions for holiday pay. In 2005 they amounted to
rents a number of business offices and other operating facili-
EUR 7,055 (000) compared to EUR 5,381 (000) in 2006. The
ties with contracts that run for several years.
reason for the drop between 2006 and 2005 is in parallel with
the decrease in the non-current employee benefits.
Leasing as a lessor
The Group lets a part of the buildings and the minilabs under
Share option plans
operating leases.
The Board of Directors decided unanimously at its meeting
on 26 November 1999 to introduce share option plans for
2005
2006
the benefit of Employees and Consultants of Spector Photo
Renting during the year
1 739
1 331
Group N.V. and associated companies (in the sense of
Less than one year
1 353
1 092
Between one and five years
2 030
1 365
475
0
(in € ‘000)
More than five years
Section IV part 1:4 (a) of the appendix to the Belgian Royal
Decree of 8 October 1976 concerning the financial statements of companies).
Consolidated financial statements 2006
71
Year of offer per portion
1999
2001
2002
Warrant plan
The Extraordinary General Meeting of Shareholders of Spector Photo Group N.V. on 28
Exercise price
€ 37,16
€ 9,69
€ 10,65
November 2005 resolved to issue 600,000 warrants in the sense of Section 42 of the Law of 26
March 1999 concerning the Belgian 1998 Action Plan for Employment and containing various
Number of options offered
52 000
85 200
67 500
provisions (the “Share Options Act”). Each warrant gives the right to apply for a single share.
Number of accepted options
29 550
65 250
61 250
This warrant plan is designed to create a long-term incentive for the beneficiaries who, as directors or consultants, can make a significant contribution to the success and the growth of the
Number of outstanding options
23 350
58 850
55 500
04/2003
04/2005
04/2006
04/2004
04/2006
04/2007
12/2004
12/2006
12/2007
04/2006
04/2008
04/2009
04/2007
04/2009
04/2010
company. In addition, this warrant plan aims to create a common interest among the beneficiaries
and the shareholders that is directed towards an increase in the company’s share price.
Initial exercise periods
Additional exercise
periods in accordance with
the Law of 24 December 2002
12/2007
12/2009
Year of offer
2005
Exercise price
€ 3.36
Number of warrants offered
600 000
Number of outstanding/accepted warrants
600 000
Initial exercise periods
03/2006
12/2010
As a result of the Law of 24 December 2002, the beneficiaries of the option plans were asked to
agree to an extension of the exercise periods by three years. All the beneficiaries have agreed to
03/2007
this in the meantime and this proposal is therefore approved. At the exercising of these options,
the company will initially use shares held by the company, recognised under current investments,
03/2008
and secondly the remaining balance of the shares to be supplied will be bought by the company.
A share option committee has been set up for the general administration of the share option plan
03/2009
(see Corporate Governance).
03/2010
72
SPECTOR PHOTO GROUP 2006
The theoretical value of the warrants, calculated according to a conventional valuation method
Amounts recognised in the income statement under the ‘Employee benefits’ item.
(Black & Scholes), amounts to EUR 0.22366 per warrant or a total of EUR 134,198. For this
theoretical measurement of the value, account was taken of the last closing price of the share
prior to the offer of these warrants, which was EUR 1.48, and with the exercise price of the
2005
2006
Current service costs
+2
+3
Interest costs on benefit obligations
+2
+3
Expected return on plan assets
-6
-6
Gains/(Losses) on settlements
or curtailments
-27
-131
Actuarial gains/(losses) recognized during the year
-16
(in € ‘000)
warrants that is EUR 3.36.
Granting and exercising the warrants will have an effect on the employee benefit expenses and
thus on the results of the company, because of the application of IFRS 2 “payments based on
shares”. The theoretical value of the warrants has been entered as an employee benefit expense
for the financial year in which they were issued (2005).
Post-employment benefits
Defined contribution pension plans
With defined contribution plans, contributions are paid to insurance institutions, after payment of
these contributions the companies of the Group have no further obligations. The contributions
-45
-131
(in € ‘000)
2005
2006
Present value of funded obligations
+194
+62
Present value of unfunded obligations
+42
+41
Fair value of plan assets
-68
-66
Unrecognized actuarial gains/(losses)
+72
+70
+240
+107
are recognised as an expense in the income statement for the year to which they are related. For
2005, the costs of the Group’s defined contribution plans amounted to EUR 355 (000), recognised under the ‘Employee benefits’ item. These costs amounted to EUR 271 (000) for 2006.
Defined benefit pension plans
Reconciliation of assets and liabilities recognized in the balance sheet
The Group has defined benefit pension plans in Norway and France. The pension plans are
drawn up in accordance with statutory provisions and local customs. The pension plans are
related to salary and seniority. No investments are held for the defined benefit plans in France.
The income concerning pensions for the Group concerning defined benefit plans amounted to
EUR 45 (000) for 2005, and EUR 131 (000) for 2006.
These pension funds do not contain any shares issued by the Group or any of the Group companies‘ property.
Consolidated financial statements 2006
73
The other changes from the current year relate, on the one hand,
Movements in the assets/ (liabilities) recognized in the balance sheet
(in € ‘000)
2005
2006
Balance at end of previous year
+283
+240
-45
-131
+2
-2
+240
+107
Income recognized in the income statement
Translation difference
to the change in the consolidation method for FLT S.p.A. to
proportional (minus EUR 267 (000)) and, on the other,
to the classification of Litto-Color N.V. held as
“assets and liabilities held for sale”, whereas
in the previous financial year, the changes
only related to the classification of Sacap
Balance at end of current period
France as “assets and liabilities held
for sale”.
The principal actuarial assumptions at the balance sheet date are:
Discount rate
Expected return on plan assets
Expected rate of salary increase
Expected rate of pension adjustments
2005
2006
4% - 5%
4% - 5%
6%
6%
2% - 3%
2% - 3%
2,5%
2,5%
Other long term employee benefit liabilities
The other long term employee benefit liabilities consist mainly of pre-pension provisions of the
different underlying entities.
(in € ‘000)
2005
2006
Balance at end of previous year
+746
+646
-54
+87
+2
-1
-48
-306
+646
+427
Increase (decrease) employee benefit liability recognized in the
income statement
Translation differences
Other movements
Balance at end of current period
74
SPECTOR PHOTO GROUP 2006
(in € ‘000)
Opening balance
Additional provisions
Provisions for
Provisions for
Other
taxation
restructuring
provisions
1 489
521
430
2 440
64
440
298
802
-163
-163
-60
-443
-1
-1
Disposals through business divestiture (-)
Amounts of provisions used (-)
-383
Foreign currency exchange increase (decrease)
Other changes
Balance at end of the year
33. Provisions for more than one year
Total
-27
51
-30
-6
1 526
629
474
2 629
In 2006, an additional provision of EUR 440 (000) was entered for further restructuring within
the Imaging Group. There were also minus EUR 383 (000) applied from the provisions formed in
In 2006, additional provisions of EUR 64 (000) were formed for tax
claims. An amount of minus EUR 27 (000) was also transferred to
2005 for restructuring already completed. An amount of EUR 51 (000) was transferred from the
Other Provisions item. The Other Provisions contain an additional provision formed for an amount
other provisions. The total provisions for taxes amount to EUR
of EUR 298 (000), of which EUR 280 (000) concerns a claim with a supplier. The decrease of
1,526 (000). In 2005, an amount of EUR 521 (000) was formed as
minus EUR 163 (000) due to a company spin-off relates to STL which was sold at the end of
provisions for restructuring that mainly concerned the Imaging Group,
2006.
to bring the organisation into line with the new circumstances on the
photo market, in which a structural reduction of the fixed overhead costs
is essential.
The other decrease totalling minus EUR 30 (000) is related to the reclassification with the two
items above amounting to minus EUR 24 (000), the proportional consolidation of FLT amounting
to plus EUR 25 (000) and the transfer to “liabilities for sale” amounting to minus EUR 32 (000).
Consolidated financial statements 2006
75
34. Deferred tax liabilities
(in € ‘000)
36. Current trade and other payables
Balance
at end of
previous
year
Recognized
in
result
Translation
Other
differences movements
Balance
at the end
of current
period
Property, plant and
equipment
1 919
189
7
18
2 134
Intangible
assets
4 328
-752
-12
-56
3 509
Provisions
66
-59
6 314
-622
7
-5
-37
5 649
2005
2006
36 493
31 487
3 728
3 728
0
519
Dividends payable
190
145
Other amounts payable
850
766
Other taxes and V.A.T. payable
5 502
5 614
Accrued charges and deferred income
2 663
2 916
49 426
45 174
(in € ‘000)
Trade payables: Suppliers
Trade payables: Bills of exchange payable
Advances received on contracts in progress
The change between 2005 and 2006 mainly concerns intangible assets – more specifically the
deferred tax liabilities incurred for the externally acquired customer relationships by the mail order
organisations of the Imaging Group. The drop is mainly explained because the amortization on
these customer relationships during the current financial year has been higher than the invest-
Net carrying amount
ments in externally-acquired customer relationships, as a result of which the tax deferrals have
been reduced. The other changes amounting to minus EUR 37 (000) are related to FLT S.p.A.,
which is proportionally consolidated with effect from 2006.
The current trade and other payables fell by minus EUR 4,252 (000). The changes between 2005
and 2006 are mainly in line with the decrease of the operating revenues from the continuing
operations of the Imaging Group. The sale of STL, the proportional consolidation of FLT and the
35. Liabilities held for sale
recognition of Litto-Color N.V. under the “liabilities held for sale” also affected this decrease. The
Because a number of assets have been held for sale since the third quarter of 2005, the corres-
changes in the current trade and other payables within the Retail division are mainly in line with
ponding liabilities from the respective categories have been transferred to this separate heading
the increase of the revenues.
(see also pages 61 to 63 “Assets held for sale”).
76
SPECTOR PHOTO GROUP 2006
Financial instruments
which the company and some of its subsidiaries have
For the transaction with Kodak, Spector Photo Group granted
The most important derivatives used by the Group are
paid to an insurance company that itself reinsured with a
a put option to Kodak on this for the possible liabilities still
forward exchange contracts, with which the Group hedges
reinsurance company that is controlled by the company. The
outstanding as at 1 May 2007. Since the transaction date, the
itself against exchange rate risks on the US dollar used to
total of the unpaid disputed tax liability involved in this issue
risk for Spector Photo Group has decreased from EUR 3.5
purchase goods.
(including default interest charges up to the end of 2006)
million to EUR 175 (000) as at 31 December 2006.
amounts to approximately EUR 4.6 million. A second dispute
mainly concerns discussions around the tax deductibility of
(in € ‘000)
2005
2006
payments in the context of transactions with group compa-
(less than one
(less than one
nies. The total of the unpaid disputed tax liability involved in
year)
year)
40. Remuneration of the Committee of Statutory
Auditors and members of their network for the Group
these other tax disputes (including default interest charges
up to the end of 2006) amounts to approximately EUR 5.2
Outstanding derri-
million. A third dispute concerns the tax deductibility of the
Committee of Statutory Auditors:
vative financial
373
292
loss that was incurred with the merger between Hifi Interna-
Remuneration EUR 40 (‘000)
instruments:
tional with Hifi Video and Hifi Connection in 2001. The amount
Audit fees Auditors and their network related to subsidiaries:
of the dispute is approximately EUR 0.8 million. Furthermore,
EUR 259 (‘000)
there is still a dispute with a supplier amounting to EUR 0.8
million.
37. Current income tax liabilities
Current income tax liabilities for the current or prior periods,
Auditor
Network
39. Significant liabilities
Tax advice
EUR 15 (‘000)
EUR 4 (‘000)
Spector Photo Group N.V. granted a put option to Kodak in
Other asignments
EUR 27 (‘000)
EUR 31 (‘000)
Total
EUR 42 (‘000)
EUR 35 (‘000)
for which objections have been submitted, are recognised as
debt.
2001 in the context of the sale of its laboratories in France,
Germany and Austria. One of the French companies sold had
38. Disputes and possible claims
granted a supplier’s credit to its most important customers,
LLP, which was covered by a pledge on shares in a third
The company and some of its subsidiaries are involved in
French company.
tax disputes that have been submitted to the tax courts,
and provisions have been formed for these. For certain tax
disputes, however, the Company’s opinion is that no provisions need to be formed.
These concern the tax deductibility of insurance premiums
Consolidated financial statements 2006
77
Affiliated subsidiaries
A. SUBSIDIARIES, FULLY CONSOLIDATED (❚), OR PROPORTIONAL CONSOLIDATION (❍)
Name, full address of registered office
V.A.T.- or
Share in
national number
the capital
(in %)
❚
ALEXANDER PHOTO SA
1999 2234 620
100.00
BE 402.247.617
100.00
Boulevard Royal 11, 2449 Luxembourg, Luxembourg
❚
DBM COLOR NV
Kwatrechtsteenweg 160, 9230 Wetteren, Belgium
❚
DIGITAL PHOTOWORKS LTD (EXTRA FILM Australia)
50.74
Ferry Road 53, Southport, QLD 4215, Australia
❚
EDRO BVBA
BE 437.051.118
100.00
SE 556 069 600 601
100.00
CH 213.717
100.00
NO 919 322 942
100.00
ATU 575 167 44
100.00
BE 447.697.065
100.00
DK 17 42 19 05
100.00
FI 0107865-1
100.00
BE 425.953.625
100.00
FR 48 331 704 122
100.00
Kwatrechtsteenweg 160, 9230 Wetteren, Belgium
❚
EXTRA FILM AB
14 V. Götalands Län, 35 Tanum Kommun, Sweden
❚
EXTRA FILM AG
Hauptstrasse 70, 4132 Muttenz, Switzerland
❚
EXTRA FILM A/S
Konvallueien, 1777 Halden, Norway
❚
EXTRA FILM AUSTRIA GmbH
Auhofstrasse 1/2/10, 1130 Wenen, Austria
❚
EXTRA FILM BELGIUM NV
Kwatrechtsteenweg 111, 9230 Wetteren, Belgium
❚
EXTRA FILM DENMARK A/S
Peder Hesselvej 52, 2880 Bagsvaerd, Denmark
❚
EXTRA FILM FINLAND OY
P.B. 1440, 00002 Helsingfors, Finland
❚
EXTRA FILM EUROPE NV
Kwatrechtsteenweg 160, 9230 Wetteren, Belgium
❚
EXTRA FILM FRANCE SA
Rue Papin 6, 59650 Villeneuve d’Ascq, Cédex, France
78
SPECTOR PHOTO GROUP 2006
A. SUBSIDIARIES, FULLY CONSOLIDATED (❚), OR PROPORTIONAL CONSOLIDATION (❍)
Name, full address of registered office
V.A.T.- or
Share in
national number
the capital
(in %)
❚
EXTRA FILM LOGISTICS AG
562 363
100.00
NL 6400334B01
100.00
BE 408.058.709
100.00
IT 13146200152
49.00
BE 404 888 886
100.00
BE 423.052.731
100.00
10655302-2-44
100.00
LU 190.388.17
100.00
NL 813828545B01
100.00
BE 414 004 215
100.00
FR 11 306 642 737
100.00
FR 04 424 299 014
100.00
FR 51 348 331 281
100.00
NL 6511004B01
100.00
Zugerstrasse 50, 6340 Baar, Switzerland
❚
EXTRA FILM NEDERLAND BV
Postbus 10274, 1311 AG Almere, The Netherlands
❚
FILMOBEL NV
Kwatrechtsteenweg 160, 9230 Wetteren, Belgium
❚
FLT SPA
Galleria Passerella 1, 20122 Milaan, Italy
❚
FOTOCOOP NV
Kwatrechtsteenweg 160, 9230 Wetteren, Belgium
❚
FOTRONIC SA
Avenue Victor Hugo 7, 1420 Braine l’Alleud, Belgium
❚
FÖFOTO KFT
Fehérvári út 104, 1119 Budapest, Hungary
❚
HIFI INTERNATIONAL SA
Route de Luxembourg, BP 1, 3201 Bettembourg, Luxembourg
❚
LITTO-COLOR BV *
Postbus 10274, 1301 AG Almere, The Netherlands
❚
LITTO-COLOR NV (in liquidation)
Zandvoordestraat 530, 8400 Oostende, Belgium
❚
LITTO-COLOR SARL *
Route de Contournement 442, 59223 Roncq, France
❚
OMNINET SARL,
Avenue des Ternes, 88, 75017 Paris , France
❚
ORC EUROPE SARL,
Rue Papin 6, 59650 Villeneuve d’Ascq , France
❚
PHOTO FINANCE BV
Postbus 10274, 1311 AG Almere, The Netherlands
Consolidated financial statements 2006
79
A. SUBSIDIARIES, FULLY CONSOLIDATED (❚), OR PROPORTIONAL CONSOLIDATION (❍)
Name, full address of registered office
V.A.T.- or
Share in
national number
the capital
(in %)
❚
PHOTO HALL FRANCE SARL
FR 70 391 700 440
100.00
BE 477.890.096
100.00
659 45 42 I
100.00
BE 439.476.019
100.00
659 5115 R
100.00
BE 431.368.205
100.00
BE 423.852.188
100.00
Lotissement Augny 2000, 57685 Augny, France
❚
PHOTO HALL MULTIMEDIA NV
Lusambostraat 36, 1190 Brussel, Belgium
❚
PHOTO HOLDINGS IRELAND Ltd
38/39, Fitzwilliam Square, Dublin 2, Ireland
❚
PHOTOMEDIA NV
Kwatrechtsteenweg 160, 9230 Wetteren, Belgium
❚
PHOTO RE Ltd
38/39, Fitzwilliam Square, Dublin 2, Ireland
❚
PLASTIC UNIT PRODUCTION HOLDING SA
Avenue Victor Hugo 7, 1420 Braine-l’Alleud, Belgium
❚
PROMO CONCEPT INVESTMENT BVBA
Kwatrechtsteenweg 158, 9230 Wetteren, Belgium
❚
SACAP Ltd
100.00
Unit A, 19/F, One Capital Place - 18, Luard Road, Wanchai, Hong Kong
❚
SACAP SA
FR 19 353 224 694
100.00
BE 437.663.406
100.00
ATU 151 36 500
100.00
FR 01 312 519 317
100.00
NL 005129679B01
100.00
BE 432.931.289
100.00
Rue Logelbach 124, 68000 Colmar, France
❚
SPECTOR COORDINATIECENTRUM NV
Kwatrechtsteenweg 160, 9230 Wetteren, Belgium
❚
SPECTOR FOTOHANDEL GmbH
Babenbergerstrasse 88, 8020 Graz, Austria
❚
SPECTOR GRAND EST SAS (in liquidation)
Rue de clefs 6, 68320 Muntzenheim, France
❚
SPECTOR NEDERLAND BV
Postbus 10274, 1301 AG Almere, The Netherlands
❚
SPECTOR ROUTING BVBA
Kwatrechtsteenweg 160, 9230 Wetteren, Belgium
80
SPECTOR PHOTO GROUP 2006
❍ STL FRANCE BELGIUM NV *
BE 438.407.039
50.00
SE 556334-810001
100.00
BE 428.718.323
100.00
Chaussée de Ruisbroek 81, 1190 Brussel, Belgium
❚
VIVIAN FOTO AB
14 V Götalands Län, 35 Tanum Kommun, Sweden
❚
VIVIAN PHOTO PRODUCTS NV
Kwatrechtsteenweg 160, 9230 Wetteren, Belgium
B. SUBSIDIARIES EXCLUDED FROM THE CONSOLIDATION AND ASSOCIATED ENTERPRISES NOT ACCOUNTED FOR
USING THE EQUITY METHOD
Name, full address of registered office
GEOPAR NV (in liquidation)
V.A.T.- or
Share in
Reason for
national number
the capital
the exclusion
(in %) (2)
(a-b-c-d-e) (1)
40.00
E
100.00
A
DE 811 24 22 68
100.00
A
214 116 20551
100.00
A
BE 427.390.611
100.00
A
BE 422.858.038
Rue de l’usine 1, 6010 Couillet, Belgium
SPECTOR IMMOBILIEN VERWALTUNG (3)
Laufamholzstrasse 171, 90482 Nurnberg, Germany
INTERCOLOR FOTOLABORBETRIEBE GmbH (1)
Laufamholzstrasse 171, 90482 Nürnberg, Germany
SPECTOR VERWALTUNG GmbH (1)
Laufamholzstrasse 171, 90482 Nürnberg, Germany
V.H. SERVICE SA (3)
Avenue Victor Hugo 7, 1420 Braine l’Alleud, Belgium
(1) Reason for the exclusion (sections 107 and 175 of the Belgian Royal Decree of 30 January 2001 on the implementation
of the Belgian Company Code):
A. Subsidiaries of no material significance.
E. Associates of no material significance to the principle of the true and fair view.
(2) Part of the capital of these companies that is held by companies included in the consolidation and people who act in their
own name but at the cost of these companies.
*
These companies were no longer part of the Group as at 31 December 2006.
Consolidated financial statements 2006
81
Report
COMMITTEE OF STATUTORY AUDITOR’S REPORT TO THE GENERAL MEETING OF SHAREHOLDERS
of the financial statements, which are free of material misstatement caused by fraud or errors,
OF SPECTOR PHOTO GROUP ON THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR
the choice and application of appropriate accounting policies for financial reporting and
ENDED 31 DECEMBER 2006
determination of estimates which are reasonable considering the circumstances.
It is our responsibility to express an opinion on these consolidated financial statements
In accordance with the legal and statutory requirements, we report to you on the performance
based on our audit. Our audit of the consolidated financial statements was carried out in
of the audit mandate which has been entrusted to us. This report comprises our opinion on
accordance with the legal requirements and the auditing standards applicable in Belgium,
the true and fair view of the consolidated financial statements and the required additional
as issued by the Institut des Reviseurs d’Entreprises / Instituut der Bedrijfsrevisoren. These
certifications (and information).
auditing standards require that we plan and perform our audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement
Unqualified audit opinion on the consolidated financial statements with an explanatory
caused by fraud or errors.
paragraph
In accordance with those standards, we considered the company’s administrative and
We have audited the consolidated financial statements for the year ended December 31,
accounting organisation, as well as its internal control procedures. Company officials have
2006, prepared on the basis of the International Financial Reporting Standards as adopted by
responded clearly to our requests for explanations and information. We have examined,
the European Union, which show a balance sheet total of EUR (000) 189.241 and a loss for
on a test basis, the evidence supporting the amounts included in the consolidated financial
the year of EUR (000) 8.598.
statements. We have assessed the accounting policies, the significant accounting estimates
made by the company and the overall financial statement presentation. We believe that our
82
The preparation of the consolidated financial statements is the responsibility of the board of
audit provides a reasonable basis for our opinion.
directors. This responsibility includes amongst others : the set-up, the implementation and
In our opinion, taking into account the International Financial Reporting Standards as
follow-up of the internal control system with regard to the drafting and the true and fair view
adopted by the European Union, the consolidated financial statements for the year ended
SPECTOR PHOTO GROUP 2006
December 31, 2006 give a true and fair view of the group’s financial position, financial perfor-
its situation, its foreseeable evolution or the significant influence of certain facts on its future
mance and cash flows.
development. We can nevertheless confirm that the matters disclosed do not present any
obvious contradictions with the information of which we became aware during our audit.
Notwithstanding our unqualified opinion, we draw the attention to the consolidated director’s
report in which the valuation of the intangible assets is motivated, taken into account the
changing market conditions.
Gent, 12 April 2007
The motivation of the valuation of the intangible assets is strongly linked to the success of the
“business plan” including the reorganisation measures already taken and to be taken, and the
transition to digital photography.
The Committee of Statutory Auditors
Additional certifications
PKF bedrijfsrevisoren
Grant Thornton, Lippens &
Rabaey
The preparation and the information included in the consolidated directors’ report is the
Represented by
Represented by
- The consolidated director’s report includes the information required by law and is consi-
D. De Jonge
J. Lippens
stent with the consolidated financial statements. We are, however, unable to comment on
STATUTORY AUDITOR
STATUTORY AUDITOR
responsibility of the board of directors.
It is our responsibility to include in our report the following certifications (and information)
which do not modify our audit opinion on the consolidated financial statements:
the description of the principal risks and uncertainties which the company is facing, and of
Consolidated financial statements 2006
83
Parent company accounts 2006
Report
In accordance with the articles 104, 105 and 874 of the Company Law Code of 7 May 1999,
Our responsibility is to express an opinion on these financial statements based on our
this annual report includes only an abbreviated version of the parent company accounts of
audit. We conducted our audit in accordance with the legal requirements and the Auditing
Spector Photo Group N.V.
Standards applicable in Belgium, as issued by the Institute of Registered Auditors (Institut
The annual report, the parent company accounts of Spector Photo Group N.V. and the state-
des Reviseurs d’Entreprises / Instituut der Bedrijfsrevisoren). Those standards require that we
ment of the Committee of Statutory Auditors shall be deposited with the National Bank of
plan and perform the audit to obtain reasonable assurance as to whether the financial state-
Belgium. These documents are likewise available at the company’s registered office.
ments are free from material misstatement, as to whether due to fraud or error.
The Committee of Statutory Auditors has issued an unqualified audit opinion with an
In accordance with the above-mentioned auditing standards, we considered the compa-
explanatory paragraph concerning the parent company accounts: “We have audited the
ny’s accounting system, as well as its internal control procedures. We have obtained from
financial statements for the year ended 31 December 2006, prepared in accordance with
management and the company’s officials, the explanations and information necessary for
the financial reporting framework applicable in Belgium, which show a balance sheet total of
executing our audit procedures. We have examined, on a test basis, the evidence supporting
127.155.946,71 Euro and a loss for the year of 8.811.443,01 Euro.
the amounts included in the financial statements. We have assessed the appropriateness of
accounting policies and the reasonableness of the significant accounting estimates made by
Management is responsible for the preparation and the fair presentation of these financial
the company as well as the overall financial statement presentation. We believe that these
statements. This responsibility includes: designing, implementing and maintaining internal
procedures provide a reasonable basis for our opinion.
control relevant to the preparation and fair presentation of financial statements that are free
from material misstatement, whether due to fraud or error; selecting and applying appropriate
In our opinion, the financial statements for the year ended 31 December 2006 give a true and
accounting policies; and making accounting estimates that are reasonable in the circumstan-
fair view of the company’s assets and liabilities, its financial position and the results of its
ces.
operations in accordance with the financial reporting framework applicable in Belgium.
Notwithstanding our unqualified opinion, we draw the attention to the annual report of the
84
SPECTOR PHOTO GROUP 2006
Board of Directors in which the current valuation of the participation in Photomedia is motivated, taken into consideration the changing market conditions. In our
opinion, the current valuation of the participations is dependant upon the success
of the ‘business plan’ and the transition to digital photography.”
For the period 2005 the Committee of Statutory Auditors has issued an unqualified
audit opinion with an explanatory paragraph.
PKF bedrijfsrevisoren
Potvlietlaan 6
2600 Antwerpen
Grant Thornton, Lippens & Rabaey
Lievekaai 21
9000 Gent
Parent company accounts 2006
85
Board of Directors report regarding the parent company accounts 2006
Balance sheet information as at 31 December 2006
Assets
In accordance with Section 624 of the Belgian Company
Liabilities
Code, it should be reported that the company holds seventy
The intangible assets decrease from EUR 0.07 million to EUR
seven thousand two hundred and seventy one (77,271) of
The equity decreased by EUR 8.81 million due to the result
0.04 million as result of the depreciation during the 2006
its own shares. Furthermore, a subsidiary of Spector Photo
for the financial year.
financial year.
Group N.V., Alexander Photo, holds 54,526 shares in Spector
The increase by EUR 0.004 million of the provisions for liabi-
Photo Group. These therefore jointly comprise 131,797
lities and charges, on the one hand, the result of the release
The property, plant and equipment were further depreciated
company shares, which represent 0.36% of the total number
of the special provision that, at year-end 2002, was prudently
from EUR 0.08 million to EUR 0.06 million. This concerns the
of 36,619,505 existing shares. None of the company’s own
reserved for the winding-up costs concerning Spector
combination of, on the one hand, the sale of machines to the
shares were acquired in 2006.
Verwaltung and, on the other, the provision that was formed
appropriate divisions of the Imaging Group and, on the other,
This bundle of the company’s own shares will initially be
for the pending tax disputes.
depreciation recognised during the financial year.
applied to supply the exercising of the options which were
Amounts payable within one year dropped from EUR 3.4
subscribed to in the context of the share option plan for the
million to EUR 2.5 million. The main change was in the trade
The financial assets decreased by EUR 8.33 million. This
benefit of Employees and Consultants of Spector Photo
payables that fell by EUR 0.90 million. The taxes, remune-
is the result of, on the one hand, write-downs that were
Group N.V. and associates (see pages 71 and 72 of this
ration, social security charges and other amounts payable
recorded on the participation in Photomedia N.V. amounting
document). The company’s own shares are valued at the
remained at the same level as 2005.
to EUR 10.34 million and, on the other, an increase in the
listed price of EUR 0.95 as at 31 December 2006.
item Receivables from Associates with EUR 2.00 million as a
The bundle of the company’s own shares held by Spector
result of the allocation of the interest amounts.
Photo Group N.V. represents a net amount of EUR 73,407.45
recognised under the cash equivalents.
The write-down on the participation Photomedia N.V. is the
The split at the end of last year of the two core activities of
the Group into two coordinating companies (Retail Group
result of the Group’s adapted business plan for the coming
The “other investments” item amounts to EUR 2.06 million,
and Imaging Group) has had a strong impact on the income
years, which takes into account the changing market condi-
and concerns mainly a short-term futures investment position
statement.
tions, as well as the stopping and the sale of the activities of
Litto-Color N.V. and of STL France-Belgium N.V. Amounts
receivable within one year decreased by EUR 0.467 million.
86
Income statement
SPECTOR PHOTO GROUP 2006
A comparison with the figures of the previous financial year is
Allocation of the result
therefore meaningless.
The Board of Directors proposes the following allocation of
The EUR 1.09 million turnover of Spector Photo Group N.V.
the result:
was achieved by providing support services, mainly in the
field of management, to the Retail Group and Imaging Group.
Loss for the financial year:
EUR –8 811 443,01
The other operating income consists of invoices to the various
Profit brought forward of
divisions for costs that are recognised under the category of
previous financial year:
EUR 58 074 034,02
other operating charges. Furthermore, a major portion of the
Profit to be carried forward:
EUR 49 262 591,01
operating costs consists of services and other goods item
amounting to EUR 1.19 million, and the employee benefits for
an amount of EUR 0.26 million. This results in an operating
Valuation and continuity
loss of EUR 0.575 million.
The income statement of the last two financial years show a
The financial result is positive: EUR 2.00 million.
loss, consequently section 96, 6° of the Belgian Company
The main financial income came from interest earnings on
Code applies.
loans and deposits.
The Board of Directors takes the view that the loss incurred is
of a temporary nature and that the assumption of continuity in
The exceptional income amounts to EUR 0.12 million, being
the application of the measurement principles is justified.
the proceeds from the sale from our participation in Maxicolor
France and Sogesal. The EUR 10.34 million write-down on
our participation in Photomedia ultimately determined the
exceptional loss of EUR 10.21 million.
The result for the financial year before taxes showed a loss of
EUR 8.78 million.
Income taxes amount to EUR 0.03 million, resulting in a loss
for the financial year of EUR 8.81 million.
Parent company accounts 2006
87
Balance sheet (after profit allocation) (Belgian GAAP)
2005
ASSETS
Fixed assets
I. Formation expenses
II. Intangible fixed assets
III. Tangible fixed assets
A. Land and buildings
B. Plant, machinery en equipment
IV. Financial fixed assets
A. Associated companies
1. Participation
2. Amounts receivable
B. Companies in which participations have
been taken
1. Participations
C. Other financial fixed assets
1. Shares
2. Amounts receivable and cash
guarantees
Current assets
V. Amounts receivable after one year
B. Other amounts receivable
VII. Amounts receivable within one year
A. Trade debts
B. Other amounts receivable
VIII. Investments
A. Own shares
B. Other investments
IX. Cash at bank and in hand
X. Differed charges and accrued income
Total assets
2006
126 608 188,70 118 231 365,42
72 208,18
44 110,43
75 041,30
60 664,02
73 263,89
60 334,65
1 777,41
329,37
126 460 939,22 118 126 590,97
126 369 368,05 118 036 569,14
99 140 595,63
88 805 532,63
27 228 772,42
29 231 036,51
1 549,34
0,00
1 549,34
0,00
90 021,83
90 021,83
28 817,63
28 817,63
61 204,20
61 204,20
10 362 287,81
8 924 581,29
300 000,00
225 000,00
300 000,00
225 000,00
6 988 521,74
6 521 526,60
692 960,07
304 488,07
6 295 561,67
6 217 038,53
2 869 004,76
2 138 014,27
119 770,05
73 407,45
2 749 234,71
2 064 606,82
155 870,65
3 782,42
48 890,66
36 258,00
136 970 476,51 127 155 946,71
LIABILITIES
Shareholders’ equity
I. Share capital
A. Called-up capital
IV. Reserves
A. Legal reserves
B. Reserves not available for distribution
1. In respect of own shares held
C. Untaxed reserves
D. Reserves available for distribution
V. Profit/loss carried forward
VI. Investment grants
Provisions for liabilities and charges
VII. A. Provisions for liabilities and charges
1. Taxes
4. Other liabilities and charges
Creditors
VIII. Amounts payable after one year
A. Financial debts
1. Subordinated loans
4. Credit institutions
5. Other loans
IX. Amounts payable within one year
A. Current portion of amounts payable after
one year
B. Financial debts
1. Credit institutions
2. Other loans
C. Trade debts
1. Suppliers
E. Amounts payable regarding taxes,
remuneration and social security
1. Taxes
2. Remuneration and social security
F. Other amounts payable
X. Accrued charges and deffered income
Total liabilities and shareholders’ equity
88
SPECTOR PHOTO GROUP 2006
2005
2006
131 274 122,79 122 462 527,55
64 193 915,58
64 193 915,58
64 193 915,58
64 193 915,58
9 005 801,23
9 005 801,23
4 086 099,26
4 086 099,26
119 770,05
73 407,45
119 770,05
73 407,45
2 616 219,74
2 616 219,74
2 183 712,18
2 230 074,78
58 074 034,02
49 262 591,01
371,96
219,73
580 809,86
584 990,35
580 809,86
584 990,35
555 809,86
575 198,15
25 000,00
9 792,20
5 115 543,86
4 108 428,81
1 500 000,00
1 500 000,00
1 500 000,00
1 500 000,00
1 200 000,00
1 200 000,00
300 000,00
300 000,00
3 411 502,72
2 519 678,80
23 150,24
0,00
11 369,38
0,00
11 369,38
0,00
1 008 976,20
188 485,71
1 008 976,20
188 485,71
1 854 948,23
1 841 041,07
1 804 893,15
1 803 121,11
50 055,08
37 919,96
513 058,67
490 152,02
204 041,14
88 750,01
136 970 476,51 127 155 946,71
INCOME STATEMENT
I.
II.
III.
IV.
V.
VI.
VII.
Operating income
A. Turnover
C. Fixed assets - own construction
D. Other operating income
Operating charges
A. Raw mat., consumables & goods for resale
1. Purchases
2. Increase/decrease
in stocks
B. Services and other goods
C. Remuneration, social sec. costs & pensions
D. Depreciation of and other amounts written
off formation expenses, intangible &
tangible fixed assets
E. Decrease in amounts written off stocks,
contracts in progress and trade
debts
F. Provisions for liabilities and charges
G. Other operating charges
Operating profit
Financial income
A. Income from financial fixed assets
B. Income from current assets
C. Other financial income
Financial charges
A. Interest and other debt charges
B. Depreciation of current assets other than
mentioned under II.E
C. Other financial charges
Profit/loss on ordinary activities before income
taxes
Extraordinary income
B. Adjustments to depreciations of financial
fixed assets
C. Adjustments to provisions for extraordinary
liabilities and charges
D. Gain on disposal of fixed assets
E. Other extraordinary income
2005
2006
11 787 352,91
2 107 996,94
4 668 748,16
1 089 904,35
7 118 604,75
1 018 092,59
(5 822 805,60)
(2 683 174,56)
748 021,98
48 753,00
INCOME STATEMENT
VIII. Extraordinary charges
2005
2006
(44 123 457,51)
(10 335 062,00)
A. Extraordinary depreciation of and amounts written
off formation expenses,
intangible and fixed assets
10 335 062,00
B. Amounts written off financial fixed assets
796 774,98
(48 753,00)
48 753,00
3 629 044,94
1 192 829,84
348 629,52
261 493,73
166 373,67
42 474,82
48 753,00
(452 678,96)
(50 486,00)
(15 207,80)
C. Provisions for extraordinary liabilities and charges
D. Loss on disposal of fixed assets
39 293 431,03
E. Other extraordinary charges
4 830 026,48
IX. Profit/loss for the period before income taxes
932 468,49
1 605 509,93
5 964 547,31
(575 177,62)
5 087 464,96
2 174 966,78
31 238,16
5 046 013,46
2 143 516,50
41 451,50
212,12
(5 312 681,60)
(172 321,63)
4 751 674,62
78 691,19
519 152,00
30 966,77
41 854,98
62 663,67
5 739 330,67
1 427 467,53
33 654 397,63
124 439,64
X.
(4 729 729,21)
(8 783 154,83)
Income taxes
(24 161,41)
(28 288,18)
A. Income taxes
(24 197,03)
(28 288,18)
B. Adjustments of income taxes and write-back of tax
provisions
35,62
XI. Profit/loss for the period
(4 753 890,62)
(8 811 443,01)
XIII. Profit/loss for the period to be allocated
(4 753 890,62)
8 811 443,01
58 074 034,02
49 262 591,01
1. Profit/loss of the financial year
(4 753 890,62)
(8 811 443,01)
2. Brought forward profit/loss of previous financial
year
62 827 924,64
58 074 034,02
(58 074 034,02)
(49 262 591,01)
ALLOCATION ACCOUNT
A. Profit/loss to be allocated
1 925 967,63
91 021,97
31 637 408,03
103 133,85
21 305,79
D. Profit carried forward
1. Profit carried forward
F. Profit to be distributed
1. Dividends
Parent company accounts 2006
89
Statement of the capital
(In EUR)
A.
Amounts
Number of shares
EQUITY
1. Called up
• As at the end of the preceding period
64 193 915,58
• As at the end of the period
64 193 915,58
2. Composition of the capital
2.1. Types of shares
Ordinary shares without nominal value
64 193 915,58
36 619 505
2.2. Nominative and bearer shares
C.
E.
90
Nominative
2 655 729
Bearer
33 963 776
OWN SHARES HELD BY
• the company itself
77 271
• its subsidiaries
54 526
AUTHORISED UNISSUED
64 193 915,72
SPECTOR PHOTO GROUP 2006
G. STRUCTURE OF THE SHAREHOLDERSHIP OF THE COMPANY AT THE YEAR-END CLOSE DATE.
Overview of the shareholdership based on
the received announcements of participation
A. FOTOINVEST C.V.B.A.
Most recent
Number of
% of
% of
announcem.
shares
total (1)
total (2)
16/12/2005
1 075 275
2,89%
2,94%
16/12/2005
84 044
0,23%
0,23%
16/12/2005
54 526
0,15%
0,15%
16/12/2005
77 271
0,21%
0,21%
04/01/2006
6 859 479
18,43%
18,73%
Kwatrechtsteenweg 160, 9230 Wetteren
B. PARTIMAGE C.V.A.
Grote Steenweg Zuid 39, 9052 Zwijnaarde
C. ALEXANDER PHOTO S.A.
Boulevard Royal 11, L-2449 Luxembourg
D. SPECTOR PHOTO GROUP N.V.
Kwatrechtsteenweg 160, 9230 Wetteren
E. CONSORTIUM VIT N.V., LUTHERICK N.V.,
MERCURIUS INVEST N.V., MIDELCO N.V.
en CECAN INVEST N.V.
p/a Walle 113, 2500 Kortrijk
-
VIT N.V.
1 708 995
4,59%
4,67%
-
LUTHERICK N.V.
2 512 566
6,75%
6,86%
-
MERCURIUS INVEST N.V.
215 703
0,58%
0,59%
-
CECAN INVEST N.V.
2 173 643
5,84%
5,94%
-
MIDELCO N.V.
212 500
0,57%
0,58%
-
Natural people associated with and acting in mutual
consultation
F. KORAMIC FINANCE COMPANY N.V.
36 072
0,10%
06/01/2006
4 150 577
11,15%
0,10%
11,33%
06/01/2006
1 514 304
4,07%
4,14%
Ter Bede Business Center Kortrijk, 8500 Kortrijk
G. AUDHUMLA S.A.
Boulevard Royal 11, L-2449 Luxembourg
NOTES
(1) As in the official notifications, the percentages are calculated with
the denominator of 37,219,505 shares – this is the total number of
issued shares (36,619,505) plus the issued warrants (600,000). The
company calculates percentages that only need adjusting due to
changes in the denominator.
(2) Calculating with the denominator of 36,619,505 shares – which is
the total number of issued shares, excluding the warrants. The company calculates percentages that only need adjusting due to changes
in the denominator.
(A) and (B) are associates.
(C) is a subsidiary of Spector Photo Group N.V.
Parent company accounts 2006
91
SUMMARY OF THE ACCOUNTING RULES
2. Intangible assets
4. Financial assets
The intangible assets are measured valued at their acquisition
Shares are entered at their purchase price, excluding
BASIC PRINCIPLE
costs.
the additional expenses that are charged to the income
The accounting rules are determined in accordance with the
They are amortised according to the straight-line method
statement. They are measured separately each year. This
provisions of chapter II of part II of the Belgian Royal Decree
using the following rates: 20% to 33.33%.
measurement occurs on the basis of the net asset value of
of 30 January 2001 on the implementation of the Belgian
the shares in accounting terms, or the probable contractual
3. Property, plant and equipment
value at disposal, or according to the criteria applicable at the
Property, plant and equipment are measured at their
purchase of the shares when the participating interest was
No deviations from the accounting rules mentioned above are
actual cost; this is the purchase price (including additional
obtained at a price that deviates from its carrying value.
necessary for the true and fair view.
expenses), their cost price or their contribution value.
Company Code.
The accounting rules are unchanged in relation to last year.
Write-downs are applied if the estimated value, calculated
The income statement is not materially affected by revenues
For the depreciation calculations, the following rates are
as explained above, is less than the carrying value and if, in
and expenses that must be attributed to any other financial
applied:
the opinion of the Board of Directors, the write-down is of
year.
a permanent nature, which is justified by the position, the
Important restructuring was implemented in 2005. Please
• buildings and constructions: 3 to 7%
cost-effectiveness, the probable recoverable value and the
refer to the 2005 Annual Report for more details of this.
• revalued buildings and constructions: 3 to 7%
prospects of the participating interest.
• plant, equipment and furniture: 25%
The write-downs are reversed when the estimated value
• vehicles: 20%
is higher than the carrying value that took account of the
• minilabs: 20 to 33,33%
write-downs, and in so far as this difference is of a permanent
• machines: 25%
nature in the opinion of the Board of Directors.
SPECIAL RULES
I. ASSETS
• IT equipment: 25%
1. Formation expenses
5. Amounts receivable within one year
The capitalisation of the formation expenses and costs of
Depreciation takes place using the straight-line method
These receivables are measured at the nominal value.
initial establishment takes place within the legal limits and to
and/or the degressive method. The first financial year in which
Receivables in foreign currencies are converted according to
the extent that the cost-effectiveness is positively estimated
the assets are obtained, they are depreciated in proportion to
the daily rates.
for the future. In principle, these expenses are written down
the time they have been held.
over 5 years using the straight-line method.
The costs of issuing the bond loan are written down at 20%.
92
SPECTOR PHOTO GROUP 2006
The results of the conversion can be found in the financial
the same rhythm as the depreciation or amortisation on the
course of the financial year or the previous financial year, but
statements under the “Other financial expenses and other
assets for which those subsidies grants were granted, taking
which relates to a subsequent financial year.
financial income” item.
into account the tax impact.
The Board of Directors will make a decision concerning the
Statement concerning the consolidated financial statements:
possible necessary write-downs.
3. Debts
The VAT involved is retained in the assets and only taken to
All debts are entered at nominal value. Debts in foreign
Consolidated financial statements and a consolidated annual
the result if recoverability would appear impossible.
currencies are converted at the official rate on the balance
report are compiled with application of the Belgian Royal
A write-down is always entered separately for each recei-
sheet date.
Decree of 30 January 2001.
vable, which also applies to a possible reversal of the
write-down.
4. Provisions for risks and expenses
The Board of Directors will each year conduct a full review
6. Cash and cash equivalents
of the previously formed provisions to cover the risks and
These generally follow the same rules as those defined for
expenses to which the enterprise has been exposed.
the “Financial assets” category. Nevertheless, the Board of
The Board of Directors will consider the necessity of forming
Directors will enter every write-down, regardless of whether it
or releasing provisions, by analysing each line item of the
is permanent or not.
accounts and reviewing all information that can exclude
unhedged risks, such as disputes, etc.
7. Accruals and deferrals
These concern the proportional expenses incurred during the
It will specify the appropriate valuation methods for the main
financial year, but which are charged to the next financial year,
risks.
and the income earned, i.e. the proportional income that will
The provisions for risks and costs are formed or released
be only collected during the course of the next financial year,
systematically, and the formation or releasing of them cannot
but which are related to the financial year under review.
be made dependent on the profit or loss for the financial year.
II. LIABILITIES
5. Accruals and deferrals
These concern proportional expenses that will only be paid
1. Capital
in a later financial year, but which are related to the financial
The balance shows the actually contributed capital and is
year under review. These expenses are measured at nominal
measured at nominal value.
value. They also concern the income to be carried forward,
i.e. proportional income that has been collected during the
2. Investment grants
Investment grants received are written down gradually with
Parent company accounts 2006
93
SPECTOR PHOTO GROUP 2006
Corporate Governance
• Corporate Governance Charter
• Internal measures to promote good
Corporate Governance practices
• Board of Directors
• Day-to-day management
• Shareholders
• Statutory Auditors
• General information
Corporate Governance Charter
Spector Photo Group N.V. commits itself to comply with all the
This Charter was last updated in April 2006, exclusively in
relevant statutory provisions concerning Corporate Governance
textual and grammatical areas. The most recent version of this
and also subscribes to all principles from the Belgian Corporate
Charter is always available on the website mentioned above.
Governance Code, which came into effect on 1 January 2005.
In this section, the company also states those recommen-
Spector Photo Group published its Corporate Governance
dations from the Belgian Corporate Governance Code of 9
Charter via its website www.spectorphotogroup.com at the
December 2004 with which it does not comply and explains
end of December 2005.
the reason in each case. This concerns two recommendations
that are indicated with a margin bullet (•) in this section.
Corporate Governance
95
Internal measures to promote good
Corporate Governance practices
Board of Directors
Composition of the Board of Directors
Name
Function
periods’ for itself:
Mr. Luc Vansteenkiste
Chairman (non-executive director) (B/C)
• from 31 July 2007 to 3 September 2007 inclusive
Mr. Philippe Vlerick
Deputy Chairman (non-executive director (B/C)
Mr. Patrick De Greve
Director (non-executive director) (A)
Mr. Jonas Sjögren
Director (non-executive director) (A/C)
Mr. Tonny Van Doorslaer
Managing Director (executive director) (B/C)
Mr. Christian Dumolin
Director (non-executive director)
Mr. Geert Vanderstappen
Director (non-executive director) (A)
On the basis of the provisional timetable of publications for
2007, the Board of Directors has set the following ‘closed
• from 7 February 2008 to 10 March 2008 inclusive
A
B
C
member of the audit committee
member of the remuneration committee
member of the appointments committee
No member of the Board of Directors has family connections
with other members of the executive, supervisory or regulatory bodies of the company.
96
SPECTOR PHOTO GROUP 2006
Board of Directors’ report on activities in 2006
Term of the current appointments
•
Mr. Vansteenkiste also satisfies all independence criteria of
the Belgian Corporate Governance Code, with one excep-
The Board of Directors is mainly occupied with the regular
The appointment of the six directors mentioned above runs
tion (he is managing director of Recticel N.V. where Mr. Van
reporting concerning the results of the Group and the financial
until after the Annual General Meeting of Shareholders 2008,
Doorslaer is a non-executive director). The Board of Directors
position of the enterprise. They confer about the strategy, the
which will take place on 14 May 2008.
believes, however, that the independent decision-making of
management structure, and acquisition or disposal proposals
and suchlike.
Mr. Vansteenkiste, as director of the company, is not comproOne executive and five non-executive directors
mised by this, which has been effectively demonstrated by
experience over recent years.
In 2006, extra attention was paid to the restructuring of the
With the exception of Mr. Van Doorslaer, the managing direc-
Imaging Group.
tor, the other Board members fulfil no executive duties within
Committees of the Board of Directors and their
the company.
composition
Mr. Luc Vansteenkiste.
Three independent directors
The Board of Directors has established two committees: an
Of 39 possible attendees ([3 meetings x 6 directors] + [3
The Board of Directors considers the following members to
committee. The regulations of both committees have been
meetings x 7 directors]), there were 3 apologies for absence.
be independent directors:
incorporated in the Corporate Governance Charter.
In 2006, six meetings were held under the chairmanship of
audit committee, and an appointments and remuneration
The following directors excused themselves once: Messrs.
Vanderstappen, Sjögren, and De Greve.
• Mr. Luc Vansteenkiste;
• Mr. Patrick De Greve; and
Although the Articles of Association state that the decisions
• Mr. Geert Vanderstappen.
can be made by a majority of votes, all decisions made in
2006 were unanimous.
Audit committee:
• Mr. Geert Vanderstappen, independent director and
chairman of the committee;
• Mr. Patrick De Greve, independent director; and
The Extraordinary General Meeting of Shareholders on 28
• Mr. Jonas Sjögren, non-executive director.
November 2005 established the independence of Messrs.
Directorships in other companies
Vansteenkiste, De Greve and Vanderstappen, in accordance
with section 524, paragraph 4 of the Belgian Company Code.
The brief biographies of the Board members (please see
It also determined that Messrs. De Greve and Vanderstappen
pages 101 to 106 of this document) each contain their main
also meet the independence criteria of the Belgian Corporate
directorships in other companies.
Governance Code.
Corporate Governance
97
Appointments and remuneration committee:
Remunerations and interests of the Board members
• Mr. Luc Vansteenkiste, chairman of the committee;
independent director
current share option plan and warrant plan. Their applications are contained in the figures reported for the executive
Non-executive directors each receive a reimbursement of
committee (see below).
• Mr. Philippe Vlerick, non-executive director;
EUR 12,500 per annum. The chairman is entitled to a total
None of the directors has received a loan granted by Spector
• Mr. Jonas Sjögren, non-executive director; and
annual fee of EUR 25,000. The remuneration of the managing
Photo Group N.V. or any other associated company.
• Mr. Tonny Van Doorslaer, managing director.
director – also Chief Executive Officer – is reported on page
99 of this document (under “Remunerations and interests of
The relationship of the Board of Directors with the as-
the members of the executive committee”).
sociated companies
the issue, as stated in Appendix D to the Belgian Corporate
There are no separate reimbursements provided for the
In addition to the enterprises mentioned below, Spector
Governance Code of 9 December 2004. According to these
members of the committees, except for the three non-execu-
Photo Group holds – directly and/or indirectly – at least 95%
recommendations, the appointments committee should
tive directors who are members of the audit committee. As a
of the shares in all its subsidiaries: FLT (Fotolabore Tagliabue)
consist of a majority of independent directors, and the remu-
supplement to their general annual fee, they each receive an
and ExtraFilm Australia (please also see page 116 for a
neration committee exclusively of non-executive directors.
annual fee of EUR 2,500 for this.
complete summary showing exact holdings).
• The proposed composition of the appointments and remuneration committee deviates from the recommendations on
However, this committee’s proposed composition was motivated by a balanced division of tasks between the nominated
There is no contract between the company or its associated
directors, taking into account the fact that only six directors
companies and the members of the Board of Directors that
had been appointed at the time the committees were set
provides for any payment on their retirement as director.
up. It should also be noted that Mr. Tonny Van Doorslaer, in
Such a scheme does exist, however, for Mr. T. Van Doorslaer,
accordance with the provisions of the Corporate Governance
but exclusively in his capacity as member of the executive
Code, as CEO, does participate in meetings at which the
committee (please see brief biographies on pages 101 to
remuneration of other members of the executive management
106 of this document). The non-executive directors were not
is handled, but does not join in the decision-making; and
permitted to subscribe to the current share option plans, nor
when it comes to his own remuneration, he neither partici-
to the warrant plan (please see pages 71-72).
pates nor takes part in decision-making.
The directors directly hold a total of 221,665 shares of the
company. Certain directors represent other reference shareholders, and are indirect shareholders. A breakdown of these
indirect interests can be found on pages 91, and 101 to 106
of this document.
Only executive directors were allowed to subscribe to the
98
SPECTOR
SPECTOR
PHOTO
PHOTO
GROUP
GROUP
2006
2006
The managing director or two directors acting jointly represent
(in € ‘000)
the enterprise in and out of court and in fact. The Board of
Executive committee
member
Fixed remuneration
component
Variable
remuneration
component
Other
remuneration
components
Number of share
options (date of option
plan, exercise price)
(1)
(1) (2)
(1) (3)
(4)
Number of
warrants (exercise price per
warrant)
Directors of Spector Photo Group N.V. has appointed Mr. Tonny
Van Doorslaer as managing director.
Executive committee
1.Tonny Van Doorslaer
310
15
7 1 900 (1999 - EUR 37,16)
4 000 (2001 - EUR 9,69)
7 500 (2002 - EUR 10,65)
400 000 (EUR 3,36)
1 900 (1999 - EUR 37,16)
4 000 (2001 - EUR 9,69)
5 500 (2002 - EUR 10,65)
150 000 (EUR 3,36)
2. Stef De corte
3. Christophe Levie
The managing director has selected an executive committee
for the day-to-day management of the enterprise.
• Tonny Van Doorslaer, Chief Executive Officer (CEO)
• Stef De corte, managing director of the Imaging Group
• Christophe Levie, managing director of the Retail Group
50 000 (EUR 3,36)
Spector Photo Group does not have a management
Total 1, 2 en 3
(1)
(2)
(3)
(4)
636
259
12
Cost to the company, i.e. gross amount including social security contributions (employees and employers).
The variable component is provided in the form of a bonus plan that is determined each year by the remuneration committee. This bonus plan contains financial targets.
The other components refer to the costs for pensions, insurance policies, and the cash value of the other benefits in kind (expense allowances, company car, etc.).
For the exercise periods, please see pages 71 and 72 of this document.
committee in the sense of the Act of 2 August 2002 concerning Corporate Governance.
Remunerations and interests of the members of the
executive committee
The remuneration components for the executive committee
members are shown above. No guarantees or loans have
The total cost for the 2006 financial year amounts to EUR 907 (000).
been granted to the members of the executive committee by
Total directors’ reimbursements paid out are EUR 89 (000) for the 2006 financial year, and EUR 139 (000) for the 2005 financial year.
Spector Photo Group N.V. or associated enterprises.
Day-to-day management
Separately from their remuneration, Messrs. Van Doorslaer
and De corte also held Spector Photo Group shares as at 31
Managing Director
December 2006 (details can be found in the brief biographies
In accordance with article 19 of the Articles of Association, the authority of the executive committee has been delegated to a managing
further in this document).
director.
Corporate Governance
99
SPECTOR PHOTO GROUP 2006
Brief biographies of the Board of Directors
Philippe Vlerick
Luc Vansteenkiste
Office address:
• Sioen Industries N.V. (director)
Office address:
Recticel N.V., Plejadenlaan 15, 1200 Brussels, Belgium
• Ter Beke Vleeswaren N.V. (director)
Vlerick Asset Management N.V., Walle 113,
Chemical Engineer. Extensive experience as director in
• Compagnie Mobilière & Foncière du Bois Sauvage
8500 Kortrijk, Belgium
numerous enterprises and as a manager at Recticel, which
(director)
Holder of several degrees from Belgian and foreign universi-
under his leadership was developed into a listed company
• Delhaize Group N.V. (director)
ties (philosophy, law, management, business administration).
with activities in 20 countries. Honorary Chairman of the
• Recticel N.V. (director)
Extensive experience as director and manager in numerous
Federation of Belgian Enterprises (VBO-FEB) and also active
• Fortis Bank N.V. (director)
enterprises, of which several in the financial and the industrial
in several other sector federations and special interest groups
• Belgian Governance Institute (director)
sectors. Active in sector federations and special interest
of the entrepreneurial world.
groups of the entrepreneurial world (VBO-FEB, Voka, etc.).
Non-executive, independent director at the company since
Mr. Vansteenkiste has no family connections with other mem-
Non-executive director at the company since 1995. Deputy
1995, and chairman of the Board since 2001. Also chairman
bers of the executive, supervisory or regulatory bodies of the
chairman since 28 November 2005. Member of the appoint-
of the appointments and remuneration committee since 28
company. Mr. Vansteenkiste holds 1,009 shares but no share
ments and remuneration committee. His current appointment
November 2005. His current appointment runs until the An-
options of Spector Photo Group N.V. and also has no other
runs until the Annual General Meeting of Shareholders of
nual General Meeting of Shareholders of 2008.
commercial link with the Group. There is no contract between
2008.
the company or its associated companies and Mr. VansteenCurrent appointments with other companies:
kiste, which provides any benefit on resignation or retirement.
Current appointments with other companies:
• Rec-Hold (director)
• BIC Carpets N.V. (chairman)
• Telindus N.V. (chairman)
• UCO N.V. (chairman, managing director)
• Exmar N.V. (director)
Corporate Governance
101
Tonny Van Doorslaer
• KBC Groep (deputy chairman)
Mr. Vlerick holds no share options of Spector Photo Group
Office address:
• Besix N.V. (director)
N.V. He holds no shares of the company in a private capacity,
Spector Photo Group N.V, Kwatrechtsteenweg 160,
• BMT N.V. (director)
but is the main shareholder of the companies that have united
9230 Wetteren, Belgium
• ETEX (director)
in the VIT Consortium, which is holder of 6,859,479 shares
Master in law. Following a ten-year career in the financial
• Alcopa N.V. (director)
(18.4%) of Spector Photo Group. Certain companies from this
world at Kredietbank, Mr. Van Doorslaer has fulfilled several
• Kredietbank Luxembourg (deputy chairman)
consortium also hold shares of Fotoinvest C.V.B.A., which in
management functions within the Group - both in the field of
• Vlerick Leuven Gent Management School
turn is holder of 1,075,275 shares (2.9%) of Spector Photo
finance and general management.
Group.
Managing director at the company since 1987.
There is no contract between the company or its associated
Member of the appointments and remuneration committee.
companies and Mr. Vlerick, which provides any benefit on
His current appointment runs until the Annual General Mee-
resignation or retirement.
ting of Shareholders of 2008.
(partner-director)
• Photo Hall Multimedia N.V. (chairman)
Moreover, Mr. Vlerick is director of several family companies,
including VIT N.V., Lutherick N.V. and Mercurius Invest N.V.
Member of the Executive Committee since 1987 and Chief
Apart from an appointment as director in Fotoinvest C.V.B.A.
Executive Officer since 2001.
(until 16 June 2006), Mr. Vlerick fulfilled no directorships at
any companies not stated above during the last 5 years. Mr.
Current appointments with other disassociated
Vlerick has no family connections with other members of the
companies:
executive, supervisory or regulatory bodies of the company.
• Recticel N.V. (director and member of the audit
committee)
• Rec-Hold N.V. (director)
• Capital & Finance N.V. (independent director)
102
SPECTOR PHOTO GROUP 2006
Jonas Sjögren
• Lessius N.V. (chairman)
interest in Fotoinvest C.V.B.A., which in its turn is holder of
Office address:
• Transposia N.V. (director)
1,075,275 shares (2.9%) of Spector Photo Group. He has a
Landbovägen 2D, S-42166 Västra Frölunda, Sweden
• Alfabyte N.V. (director)
contract that - only on resignation at the company’s request
Mr. Sjögren has an MBA from Insead and a ‘Master degree
• Fotoinvest C.V.B.A. (managing director)
- provides him with financial compensation that amounts to a
in science and electrical engineering‘ from the Gothenburg
• Roxette N.V. (director)
maximum of 12 times his monthly reimbursement.
University. Before starting his own company, Mr. Sjögren
• Lennart N.V. (director)
fulfilled several management positions at enterprises from the
• Stichting Administratiekantoor Consortium
Ericsson group – mainly in the field of product management.
ex-IPG (director)
Since 1996 he was involved with several projects in the field
• TCL N.V. (managing director)
of IP network solutions and mobile internet (3G) – areas that
• CPAC Europe N.V. (director)
are highly relevant to Spector Photo Group as media are converging. Non-executive director at the company since 1995.
During the past five years, Mr. Van Doorslaer also fulfilled
Member of the audit committee and the appointments and
director appointments at the Affligem Brouwerij BDS N.V. and
remuneration committee. His current appointment runs until
Area Productions N.V.
the Annual General Meeting of Shareholders of 2008.
Mr. Van Doorslaer has no family connections with other
members of the executive, supervisory or regulatory bodies of
Current appointments with other companies:
the company. Mr. Van Doorslaer is holder of 221,440 shares,
• Exceca A.B., Zweden (managing director)
400,000 warrants and 13,400 share options of Spector Photo
Group N.V.
He is also a holder of a depositary receipt for shares in a 71%
Corporate Governance
103
Patrick De Greve
• Lennart N.V. (director)
There is no contract between the company or its associated
Office address:
• Stichting Administratiekantoor Consortium
companies and Mr. Sjögren, which provides any benefit on
Vlerick Leuven Gent Management School,
resignation or retirement.
Reep 1, 9000 Gent, Belgium
ex-IPG (director)
Master in Economic Sciences and in Management (MBA).
Apart from an appointment as director in Fotoinvest C.V.B.A.
General director of a management school with an internatio-
(until 16 June 2006), Mr. Sjögren fulfilled no directorships at
nal reputation, Mr. De Greve is well acquainted with various
any companies not stated above during the last 5 years. Mr.
strategic and operational aspects of major organisations. He
Sjögren has no family connections with other members of the
also contributes his expertise in the field of change processes
executive, supervisory or regulatory bodies of the company.
in organisations and companies.
Mr. Sjögren holds no share options of Spector Photo Group
Non-executive, independent director at the company since
N.V. He holds no shares of the company in a private capacity,
2004, and member of the audit committee since 2005. His
but represents Audhumla S.A. that holds 1,514,304 shares
current appointment as director runs until the Annual General
(4.1%) of Spector Photo Group and is holder of a deposi-
Meeting of Shareholders of 2008.
tary receipt for shares in the Stichting Administratiekantoor
During the past five years, Mr. De Greve only fulfilled a direc-
Consortium ex-IPG, holder of 71% of the shares of Fotoinvest
tor’s appointment at the Vlerick Leuven Gent Management
C.V.B.A., which in turn is holder of 1,075,275 shares (2.9%)
School.
of Spector Photo Group.
Mr. De Greve has no family connections with other members
of the executive, supervisory or regulatory bodies of the
company.
104
SPECTOR PHOTO GROUP 2006
Geert Vanderstappen
Mr. De Greve holds no shares or share options of Spector
Office address:
He has no family connections with other members of the
Photo Group N.V. and also has no other commercial link
Pentahold N.V, Bourgetlaan 50, 1130 Brussels, Belgium
executive, supervisory or regulatory bodies of the company.
with the Group, which enables him to act as an independent
Civil Engineer. Acted as the financial director with the com-
Mr. Vanderstappen holds no shares of Spector Photo Group
director.
pany between 1993 and 1999 – thus more than five years
N.V. and also has no subscription to any share options.
There is no contract between the company or its associated
ago. As partner at Pentahold N.V. and Buy-Out Fund C.V.A.,
There is no contract drawn up between the company or its
companies and Mr. De Greve, which provides any benefit on
Mr. Vanderstappen possesses sound financial expertise.
associated companies and Mr. Vanderstappen that provides
resignation or retirement.
Non-executive, independent director since 28 November
any benefit on resignation or retirement.
2005. Director and chairman of the audit committee. His current appointment as director with the company runs until the
Annual General Meeting of Shareholders of 2008.
Current appointments with other companies:
• Buy-Out Fund Beheer C.V.A.
• Pentahold N.V.
• Mondi Food N.V.
Corporate Governance
105
Christian Dumolin
Office address:
• USG People (NL) (supervisory director and
Koramic Investment Group N.V., Ter Bede Business Center,
8500 Kortrijk, Belgium
chairman of audit committee)
of Trustees)
• Director at various Belgian and foreign companies,
Chairman and CEO of Koramic Investment Group (and
including:
Mr. Dumolin has no family connections with other members
branches). Extensive experience as director and manager in
- Clear2Pay (B)
of the executive, supervisory or regulatory bodies of the
numerous enterprises, of which several in the financial and
- Auguria Residential Real Estate Fund (B)
company.
the industrial sectors. Active in sector federations and special
- Brinvest (B)
Mr. Dumolin holds no share options of Spector Photo Group
interest groups of the entrepreneurial world (VBO-FEB, Vlajo,
- E & L Real Estates (PL)
N.V. He holds no shares of the company in a private capacity,
Corporate Governance Institute). Non-executive director at
- EKY (TR)
but is the main shareholder of Koramic Finance Company,
the company since 2006. His current appointment as director
- Mercapital Sociedad de Capital Inversion (NL)
which holds 3,933,775 shares (10.74%) of Spector Photo
with the company runs until the Annual General Meeting of
Shareholders of 2008.
• Belgian Banking, Finance and Insurance Commission
(CBFA) (member of Supervisory Board)
• Overheid der Financiële Diensten (member of
Current appointments with other companies:
• Vitalo Industries (chairman)
• Wienerberger (A) (deputy chairman of Board
of Directors (Aufsichtsrat) and member of Strategic
Committee)
Superviory Board)
• Vlerick Leuven Gent Management School (member of
General Council)
• Verbond Belgische Ondernemingen (VBO-FEB)
(member of management committee)
• Nationale Bank van België (trustee)
• Vlaamse Jonge Ondernemingen (VLAJO) (member
of the Board of Directors)
106
• Corporate Governance Institute (member of the Board
SPECTOR PHOTO GROUP 2006
Group N.V. Koramic Finance Company N.V. is also holder
of 75,748 shares of Fotoinvest C.V.B.A., which in its turn is
holder of 1,075,275 shares (2.9%) of Spector Photo Group.
There is no contract between the company or its associated
companies and Mr. Dumolin, which provides any benefit on
resignation or retirement.
Stef De corte and the Imaging Team
Office Adress: Kwatrechtsteenweg 160, 9230 Wetteren,
Formerly active in consultancy functions in the field of
Mr. De corte has no family connections with other members
Belgium
production, logistics and general management, with Bekaert-
of the executive, supervisory or regulatory bodies of the
Stanwick and at ABB Service.
company. Mr. De corte holds no shares in Spector Photo
Civil Engineer. Active in the company since 1999, initially
Executive committee member since 1999.
Group N.V., but Acortis B.V.B.A. holds 52,500 shares. Mr. De
as Finance & Administration Manager, later manager of the
With the exception of his director’s appointment at Acortis
corte has subscribed to 11,400 share options and 150,000
Wholesale Division that then included 18 labs in Europe, then
B.V.B.A., Mr. De corte fulfils no director’s appointments at any
warrants. He has a contract that - only on resignation at the
Chief Financial Officer and since December 2005 as mana-
other disassociated company, nor has he done so during the
company’s request - provides him with financial compensa-
ging Director of the Imaging Group.
past five years.
tion of 12 monthly reimbursements.
Corporate Governance
107
Christophe Levie and the Retail Team
Office address:
Photo Hall Multimedia, Lusambostraat 36,
1190 Brussels, Belgium
Mr. Levie holds a master’s degree in law and has been active in
the Photo Hall organisation since 1986, fulfilling various
management functions. Photo Hall has been part of the Group
since 1996. Since 1998, Christophe Levie has been managing
director of Photo Hall – with activities in Belgium, Luxembourg
and France – and since 2004 has been responsible for Photo
Hall Hungary.
Member of the executive committee of Spector Photo Group
since 2005.
Mr. Levie fulfils no director’s appointments at any other associated company, nor has he done so during the past five years.
He has no family connections with other members of the
executive, supervisory or regulatory bodies of the company.
Mr. Levie holds no shares of Spector Photo Group N.V. and
also has no subscription to any share options. Mr. Levie holds
50,000 warrants. He has a contract that - only on resignation at
the company’s request - provides him with financial compensation that amounts to twice his average annual reimbursement
over the last three years.
108
SPECTOR PHOTO GROUP 2006
Shareholders
and after notification to the Board of Directors by letter, tele-
at most six working days before the date stipulated for the
Structure of the shareholdership
gram, telex, fax or in another written manner, of their insight in
Assembly of the General Meeting, all this subject to subse-
More detailed information on the shareholdership can be
order to take part in the meeting, unless stipulated otherwise
quent legal amendments concerning this.
found on page 91 of this document.
in the notice of the meeting; or on the basis of the depositing
of the shares or bonds or warrants to bearer at the registered
Communication with shareholders
Reference shareholdership
office of the company, unless stipulated otherwise in the
Spector Photo Group attaches particular importance to
Both at the level of the Stichting Administratiekantoor Consor-
notice of the meeting, or, in the case that shares or bonds
regular and transparent communication to its shareholders.
tium ex-IPG and at the level of Fotoinvest C.V.B.A., there are
or warrants are represented by a global depository receipt
This communication includes, among other things:
written agreements concerning preferential buying rights and
that is deposited at a settlement organisation, on the basis
• Publication of annual results, interim results and quarterly
withdrawal schemes. These agreements primarily stipulate
of the depositing of a declaration drawn up by the holder of
that, when a shareholder of the Stichting or Fotoinvest wishes
the global depository receipt or by the financial intermediary
to withdraw, the other shareholders are given a preferential
with which the holder of the share, bond or warrant holds
right to buy the shares concerned. There are no mutual
the shares, or bonds, or warrants, on a securities deposit
agreements on voting or other issues between other share-
accounts, whereby the unavailability of the shares or bonds
holders who have submitted a shareholding announcement.
or warrants concerned up until the date of the General
Trading Updates
• A separate Investor Relations section on the
corporate website
• Free subscription to the relevant press releases for
investors via the same website
• Regular presence at presentations and events for
Meeting are identified at the place and at the time given in the
General Meeting of Shareholders
notice of the meeting, or on the basis of the depositing of a
The Annual General Meeting takes place on the second
declaration from and by the recognised accountholder or by
Wednesday of the month of May at 2 p.m. The right to take
the settlement organisation in which the unavailability of the
part in the General Meeting is only granted, either on the
missing shares, or bonds, or warrants until the date of the
basis of the registration of the shareholders in the register of
General Meeting are identified at the places indicated in the
the shares or bonds or warrants in the name of the company
notice of the meeting, this at least three working days and
Structure of the shareholdership (pre-warrants)
Structure of the shareholdership (post-warrants)
private investors
Statutory Auditors
Committee of Statutory Auditors
• B.C.V.B.A. PKF bedrijfsrevisoren, represented by D. De
Free float
Fotoinvest
Consortium VIT
Koramic Finance
Audhumla
Own shares
Partimage
62,273%
2,936%
18,732%
11,334%
4,135%
0,360%
0,230%
Free float
Warrants
Fotoinvest
Consortium VIT
Koramic Finance
Audhumla
Own shares
Partimage
61,269%
1,612%
2,889%
18,430%
11,152%
4,069%
0,354%
0,226%
Jonge, Statutory Auditor (present appointment runs to the
Annual General Meeting of Shareholders on 14 May 2008)
• Grant Thornton, Lippens & Rabaey B.V.C.V, represented
by J. Lippens, Statutory Auditor (present appointment runs
until the Annual General Meeting of Shareholders on 14
May 2008)
Remunerations and interests of members of the supervisory bodies: see page 99 of this document
Corporate Governance
109
General information on Spector Photo Group
I. GENERAL FACTS ABOUT THE COMPANY
1.1. Identity
financial nature, on account of the companies of which it is
equipment, photography, photoengraving, film, and soft-
shareholder or on account of third parties.
ware, as well as their accessories and auxiliary services
The name of the company is ‘Spector Photo Group NV’
or ‘Spector’ for short. Its registered office is at Kwatrechtsteenweg 160, B-9230 Wetteren, Belgium.
1.2. Foundation and duration
Spector was incorporated for an indefinite period of time on
and related items;
The company is entitled, in Belgium as well as abroad, on its
b) The purchase, production, exploitation, and development
own account or on the account of third parties, to perform all
of each image brand, word brand, and patent that may or
industrial, trade, and financial transactions that can directly or
may not be related to the above-mentioned activities and
indirectly expand or promote its venture.
granting licenses;
c) The purchase, sale, refurbishment, rental, sub-rental,
1.5. Register
23 December 1964 under the name ‘DBM Color NV’ by the
finance rental, leasing, concession, and exploitation under
Spector is registered at the legal entities register of Dender-
execution of a deed before Notary Luc Verstraeten of Asse-
all possible forms, of all movables and immovable goods
monde under number RPR 0405.706.755. Its Value-Added
nede, and published in the appendices to the Belgian Official
and machinery, equipment, material, commercial vehicles,
Tax identification number is BE 405.706.755.
Gazette of 15 January 1965.
and passenger vehicles that are related to the activities of
The Articles of Association were last amended by a deed
executed before Notary Tom De sagher on 14 December
2005, and published in the appendices to the Belgian Official
Gazette of 5 January 2006.
the company;
II. GENERAL FACTS ABOUT THE CAPITAL
d) The investment, management, and exploitation of property
and assets;
e) The formation of, and the cooperation with, companies
1.3. Legal form
2.1. Share capital issued
On 31 December 2005, Spector’s nominal and paid up
and undertakings, the acquisition and management of
capital was EUR 64,193,915.72, represented by 36,619,505
participations or sharers in companies and undertakings
company shares with no nominal value, fully paid up. In
Spector was formed as a public limited company under
of which the purpose is similar or related to the purpose
addition, there were 31,874,597 VVPR strips, which grant the
Belgian law.
as specified above or is of such a kind that it stimulates
right to reduced withholding tax on dividends at 15% instead of
and promotes the fulfilment of that purpose, and in
25%. To be able to benefit from this advantage, shareholders
1.4. Purpose of the company
financial companies; the financing of such companies and
must surrender the coupon of their share at the same time as
The purpose of the company is described in article 3 of the
undertakings through giving loans, securities, or through
the coupon of their VVPR strip to the paying institution before
Articles of Association as follows:
any other form; the participation as member of the board
30 November of the year in which the dividend was granted.
of directors or any other similar body to the direction and
Authorised capital EUR 64,193,915.72.
a) The manufacture, import, purchase, sale, delivery, rental,
leasing, and storage of all products, materials, and
equipment for registration and reproduction of images,
signals, and audio in the field of electronics, informatics,
110
multimedia, audiovisual media, telecommunication, office
SPECTOR PHOTO GROUP 2006
through assuming a function of trustee in bankruptcy in
the above-mentioned companies;
f) The execution of all works, studies, and management
services of administrative, technical, commercial, and
2.2. Authorized capital, convertible bonds
Company Code, within the framework of issuing securities
and under the conditions provided by law, restrict or exclude
Article 34 of the Articles of Association provides for, among
within the authorised capital, to modify the respective rights of
the pre-emptive rights of the shareholders, in favour of
other things, the power of the Board of Directors to increase
the existing categories of shares or securities representing or
one or several persons selected by the Board of Directors,
the capital one or more times in the amount of EUR
not representing the capital.
regardless whether these persons are staff members of the
64,193,915.72 over a period of five (5) years from the date
This authorisation is valid in so far as it is in accordance with
Company or of its subsidiaries.
of publication in the Belgian Official Gazette of the amend-
the applicable statutory provisions. The Board of Directors will
When an issue premium is paid as a consequence of the
ment to the Articles of Association of 14 December 2005 (5
not in any case use this authorisation with the aim to, or in
present clause, it will automatically be transferred to a non-
January 2006):
such a way that this would prejudice the shareholders’ rights
distributable account called “issue premiums” which can only
The Board of Directors is authorised for a term of five years
connected to the existing shares.
be disposed of under the conditions required for the capital
starting from the publication of the resolution of the General
The Board of Directors is explicitly authorised for a term of
reduction. However, the premium can be incorporated in the
Shareholders’ Meeting of 28 November 2005 in the Supple-
three years starting from the publication of the resolution of
authorised share capital at any time, this resolution can be
ments to the Belgian Official Gazette, within the statutory
the General Meeting of Shareholders of the twenty-eighth
taken by the Board of Directors in accordance with the first
limitations, to increase the issued authorised share capital
of November two thousand and five in the Supplements to
paragraph.”
once or several times, both by contributions in cash and by
the Belgian Official Gazette, to use the authorisation granted
contributions in kind as well as by means of the incorporation
by the present clause to increase the capital, in the circum-
of reserves and/or issue premiums, with or without issuing
stances, under the conditions and within the restrictions of
new shares, as well as by means of issuing, once or several
Section 607 of the Belgian Company Code.
times, convertible bonds (that can be converted into shares),
The Board of Directors determines the dates and the
bonds with warrants or warrants connected or not connected
conditions of the capital increases upon which it has decided
to another security, and all this for a maximum global amount
pursuant to the previous paragraphs, including the possible
of EUR 64,193,915.72.
payment of the issue premiums. It determines the conditions
This ceiling is applicable as far as the issue is concerned with
for the issue of bonds upon which it has decided pursuant to
shares, convertible bonds, bonds with warrants or warrants
the previous paragraphs.
29 November 1991) Capital increase in the context of the
that are connected or not connected to another security, to
When use is made of the previous paragraphs, the Board
share option plan, by introduction of cash in the value of
the amount of the capital increases that could result from
of Directors determines, in accordance with Sections 592
BEF 2,872,620 and the creation of 23,609 new shares.
the conversion of these bonds or the exercising of these
and following of the Belgian Company Code, the period and
As a consequence, the nominal capital became BEF
warrants.
other conditions for the exercising of the pre-emptive rights
1,016,633,457, represented by 1,425,510 shares, of
The Board of Directors is hereby authorised by the General
by shareholders when they are vested with this right by law.
which 205,140 were AFV shares.
Meeting of Shareholders, based on a resolution taken in
The Board of Director can also, in accordance with the same
accordance with the provisions of Section 560 of the Belgian
Sections 592 and following, in the interest of the Company
2.3. Profit-sharing certificates
None
2.4. Conditions for changes of the capital
Statutory conditions
2.5. Transactions
a) 8 November 1991 (published in Belgian Official Gazette
b) 5 June 1991 (published in Belgian Official Gazette 27 June
1992) Capital increase by the introduction of cash to the
Corporate Governance
111
value of BEF 117,166,543 BEF by the creation of 68,921
new shares. As a consequence, the capital became BEF
made equivalent by the granting of the VVPR strip. As a
consequence, 524,783 VVPR strips are created and the
1,133,800,000 represented by 1,494,431 shares including
23 November 1993) Merger through takeover of Promin-
capital is represented by 3,306,290 ordinary shares.
205,140 AFV shares.
vest NV: in the merger, Prominvest’s assets were added
j) 5 October 1996 (published in Belgian Official Gazette 29
c) 29 December 1992 (published in Belgian Official Gazette
to Spector’s assets. Spector’s nominal capital was thus
October 1996) Capital increase by the exercise of 14,658
23 January 1993) Capital increase in the context of the
increased to BEF 2,265,805,017 by the creation of
warrants, subscription at par, i.e. BEF 450 per share, plus
share option plan by introduction of cash to the value of
2,675,000 new shares so that the capital was represented
payment of an issue premium of BEF 1,125 per share,
BEF 3,569,693 by the creation of 29,907 new shares.
by 5,378,317 shares. After that, the capital was increased
as a result of which 14,658 new ordinary shares and the
As a consequence, the capital became BEF
by the incorporation of revaluation surpluses and issue
same number of VVPR strips, were created. As a conse-
1,137,369,693 represented by 1,524,338 shares including
premiums (BEF 341,690,111 and BEF 1,406,194,933
quence, the capital was increased by BEF 6,596,100 to
205,140 AFV shares.
respectively), in each case without the issue of new
BEF 1,496,986,661, represented by 3,320,948 ordinary
d) 9 July 1993 (published in Belgian Official Gazette 3 July
shares, to an amount of BEF 4,013,690,061. Immediately
shares, and there are 539,441 VVPR strips in circulation.
1993) Capital increase in the context of the share option
after these transactions, the capital was reduced by BEF
plan by introduction of cash to the value of BEF 1,497,581
3,050,082,500, and 2,596,810 shares owned by Spector,
3 December 1996): Capital increase in the context of the
by the creation of 6,809 new shares. As a consequence,
including all the AFV shares, were destroyed. Thus,
authorised capital by the introduction of cash in the value
the nominal capital became BEF 1,138,867,274 repre-
Spector’s capital was BEF 963,607,561 after the merger,
of BEF 2,159,176,311, i.e. BEF 664,189,650 in capital
sented by 1,531,147 shares including 205,140 AFV
represented by 2,781,507 shares.
plus an issue premium of BEF 2,088,507,455, by the
shares.
g) 15 February 1994 (published in Belgian Official Gazette 15
e) Conversion of shares (published in Belgian Official
k) 8 November 1996 (published in Belgian Official Gazette
creation of 1,475,977 new ordinary shares and the same
March 1994) Capital increase by the exercise of warrants:
number of VVPR strips. As a consequence, the capital
Gazette of 2 October 1993). In the light of the merger
following the exercising of the warrants, the capital
became BEF 2,159,176,311 represented by 4,796,925
with Prominvest, which was to take place on 29 October
was increased to BEF 1,488,390,561 represented by
1993, the Extraordinary General Meeting of 7 September
3,306,290 shares including 524,783 VVPR shares.
1993 decided to convert all 1,531,147 existing Spector
shares, and there are 2,015,418 VVPR strips in circulation.
l) 13 May 1998 (published in Belgian Official Gazette of 6
h) 10 May 1995 (published in Belgian Official Gazette 3 June
June 1998): (i) Capital increase by incorporation of share
shares into 2,703,317 new shares, with every existing
1995) Capital increase under deferred conditions in the
premiums in the amount of BEF 2,104,997,705, with no
share entitling the holder to 1.76555 new shares. As a
amount of the number of shares subscribed to on the
creation of new shares. As a consequence of this the
consequence, the nominal capital was represented by
basis of warrants multiplied by the accounting par value of
capital amounts to BEF 4,264,174,016 represented by
2,703,317 new shares, including 362,185 AFV shares.
the company shares in existence at the time the warrants
4,796,925 shares, with 2,015,418 VVPR strips in circula-
This conversion was carried out in order to obtain a swap
were exercised. The maximum number of shares to be
tion. (ii) Issue of 600,000 transferable warrants in name,
ratio of one Spector share for one Prominvest share. After
created is 826,572 VVPR shares.
without preferential right in favour of Fotoinvest CVBA or
this transaction, 96% of the Spector shares were owned
112
by Prominvest.
f) 29 October 1993 (published in Belgian Official Gazette
SPECTOR PHOTO GROUP 2006
i) 4 October 1996: The ordinary and the VVPR shares are
its legal successors. Each warrant entitles subscription to
Summary of actions
year
number of shares
capital
one (1) new share in the company at a price (per share)
were created with an equal number of VVPR strips.
equal to the average closing prices of the Spector share
As a consequence of this, the capital amounts to BEF
during the sixty (60) exchange days preceding the exercise
4,264,351,116, represented by 4,797,040 shares, with
date, with a minimum equal to the average exchange
2,015,533 VVPR strips in circulation.
price during thirty (30) days preceding the date of issue.
n) 14 June 2000 (Publication Belgian Official Gazette 6 July
The warrants may be exercised at any time, separately
2000): Capital increase via the exercise of 812 warrants,
or jointly, during a period of five (5) years to be calculated
registration at par, i.e. BEF 889 per share, supplemented
from the date of issue, (i) from the notification by the
by a payment of a share premium of BEF 651 per share,
Banking and Finance Commission of a public takeover
whereby 812 new shares with as many VVPR strips were
1964
200
1 000 000 BEF
1966
400
2 000 000 BEF
1970
800
4 000 000 BEF
1976
1 124
8 000 000 BEF
bid on the shares of the company, or (ii) from the time
created. As a result thereof the capital amounts to BEF
1983
1 904
13 550 480 BEF
that a control announcement is made to the Banking and
4,265,601,596, represented by 4,797,852 shares with
1987
500 752
50 864 428 BEF
Finance Commission and/or the company gains know-
1988
699 500
180 000 000 BEF
ledge of one or more persons acting in mutual agreement
1989
791 402
383 000 000 BEF
to acquire 20% or more of the company’s securities
April 2001): (i) Capital decrease by BEF 3,850,394,314 to
bearing a voting entitlement, or (iii) from the moment that
bring the nominal capital from BEF 4,265,601,596 to BEF
the price of the company’s shares on the Brussels Stock
415,207,282 by incorporating the losses incurred in the
Exchange are demonstrably and physically influenced
actually paid up capital without destruction of shares, with
by systematic purchase orders or by ongoing rumours
proportional reduction of the residual value of the shares,
relating to a takeover bid on the company’s shares, conse-
and approval of the corresponding modification of article
quently an approval of a capital increase, dependant and
5 of the Articles of Association related to the level of the
1990
1 401 901
1 013 760 837 BEF
1991
1 425 510
1 016 633 457 BEF
2,016,345 VVPR strips in circulation.
o) 30 March 2001 (Publication in Belgian Official Gazette 20
1992
1 524 338
1 137 369 693 BEF
1993
2 781 507
963 607 561 BEF
1994
3 306 290
1 488 390 561 BEF
1996
4 796 925
2 159 176 311 BEF
conditional on the exercise of aforementioned warrants,
nominal capital; (ii) Capital increase, without preferential
1998
4 797 040
4 264 351 116 BEF
in the amount of the maximum amount, equal to the
right, through introduction of cash for an amount of BEF
2000
4 797 852
4 265 601 596 BEF
subscription rights represented by the number of warrants
300,000,000 — and issuing 783,046 nominative shares
multiplied by the fraction value of the share at the time of
without indication of their nominal value; (iii) Incorporation
the subscription.
of share premiums for an amount of BEF 232,235,199 into
2001
5 580 898
17 729 525,41 EUR
2002
6 761 253
22 392 361,52 EUR
2005
36 619 505
64 193 915,72 EUR
m) 23 June 1998 (published in Belgian Official Gazette
the capital, thus resulting in an increase of the subscribed
of 21 July 1998): Capital increase through exercising
nominal capital with an amount of BEF 232,235,199 and
115 warrants, subscription at par, being BEF 889 per
bringing it from an amount of BEF 482,972,083 to BEF
share, supplemented with payment of a share premium
715,207,282 without the creation of new shares; (iv)
of BEF 651 per share, through which 115 new shares
Converting the subscribed nominal capital for an amount
Corporate Governance
113
share of 1,286,824 new Company bearer shares without
thus bringing the subscribed nominal capital after conver-
indication of their nominal value, offering the same rights
On 26 November 1999, the Board of Directors decided
ting to EUR 17,729,525.41.
and benefits as the Company’s existing shares with
unanimously to introduce a share option plan in favour of
reduced withholding taxes (the so-called VVPR shares);
employees and consultants of Spector Photo Group NV
August 2002): (i) Capital increase with an amount of EUR
(iii) Recording the issue of 600,000 warrants in total,
and associated enterprises (in the sense of Chapter IV Part
3,749,778.97 thus bringing it from EUR 17,729,525.41
which at their being exercised at the exercise price of EUR
1, 4a of the Annex to the Royal Decree of 8 October 1976
to EUR 31,479,304.38 through transfer in the framework
3.36 per warrant, give right to one share with the same
concerning companies’ annual accounts). The free offer of
of the merger through absorption of Photo Hall SA which
rights and benefits as the Company’s existing shares with
the options will be regarded as a benefit in kind that is taxable
involved the transfer of the entire patrimony of Photo
reduced withholding taxes (the so-called VVPR shares);
as remuneration paid to the employees. This represents a tax-
Hall SA without exception nor any reserve, to Spector
(iv) Recording the amount of the authorised capital at EUR
effective payment method, in view of the set valuation of this
Photo Group — issuing 1,180,355 new shares, coupon
64,193,915.72.
benefit as laid down in the law of 26 March 1999 concerning
p) 19 July 2002 (publication Belgian Official Gazette of 15
number 11 and following attached, without indication of
the nominal value, of the same kind and offering the same
the Belgian Action Plan for Employment.
2.6. Summary of transactions
rights and benefits as the existing shares — (ii) Incorpora-
See opposite page.
The chart on the next page indicates the exercise price,
tion of share premiums for an amount of EUR 913,057.14
During the 2006 financial year, none of the company’s own
the number of options offered, and the number of options
thus bringing it from EUR 21,479.88 to EUR 22,392.52
shares were acquired.
accepted or still valid/outstanding that have been offered in
without creation of new shares.
q) 14 December 2005 (publication Belgian Official Gazette of
three portions in execution of the plan.
2.7. Joint control
5 January 2006): (i) Capital increase by an amount of EUR
Spector is not aware of agreements between certain share-
Following the law of 24 December 2002, the beneficiaries of
39,999,999.20 thus bringing it from EUR 22,392,361.52
holders through which a joint policy is conducted with regard
the share option plan have been proposed to agree with a
to EUR 62,392,360.72 by the issue at EUR 1.40 per newly
to Spector.
prolongation of the exercise periods with an additional three
created share of 28,571,428 newly created VVPR bearer
shares without indication of their nominal value, offering
the same rights and benefits as the Company’s existing
(3) years. All beneficiaries have agreed with the proposal in
2.8. Group structure
See Annual Report page 116
shares with reduced withholding taxes (the VVPR shares);
2.9. Own shares held by the company
it from EUR 62,392,360.72 to EUR 64,193,915.72, by
See notes to the company’s annual accounts.
NV, of a debt belonging to R.N.A. NV and of a debt to
Olca NV, by the issue at an issue price of EUR 1.40 per
SPECTOR PHOTO GROUP 2006
the mean time, and consequently this proposal has been
approved. Upon exercise of these options, the company shall
first utilise the own shares held in portfolio.
(ii) Capital increase by EUR 1,801,555.00 thus bringing
contribution in kind of a debt, belonging to De Bommels
114
2.10. Share option plan
of BEF 715,207,282 into EUR 17,729,525.41 rounded,
In second instance, the remaining shares to be delivered will
2.11. Warrant plan
be purchased by the company. A share option committee
The Extraordinary General Meeting of Shareholders of
has been set up to conduct the general administration of the
Spector Photo Group NV on 28 November 2005 resolved
share option plan (cf. Corporate Governance).
to issue 600,000 warrants in the sense of Section 42 of the
Year of offer
2005
Exercise price
€ 3,36
law of 26 March 1999 concerning the Belgian 1998 Action
Plan for Employment and containing various provisions (the
“Share Options Act”). Each warrant gives the right to apply for
a single share.
Number of warrants offered
600 000
This warrant plan is designed to create a long-term incentive
Year of offer per
portion
for the beneficiaries who, as directors or consultants, can
Number of outstanding/accepted
make a significant contribution to the success and the growth
warrants
600 000
Initial exercise periods
03/2006
09/2006
03/2007
09/2007
03/2008
09/2008
03/2009
09/2009
03/2010
09/2010
1999
2001
2002
Exercise price
€ 37,16
€ 9,69
€ 10,65
common interest among the beneficiaries and the sharehol-
Number of options
offered
52 000
85 200
67 500
ders that is targeted towards an increase in the Company’s
Number of accepted
options
29 550
65 250
61 250
Number of outstanding
options
23 350
58 850
55 000
04/2003
04/2005
04/2006
04/2004
04/2006
04/2007
12/2004
12/2006
12/2007
04/2006
04/2008
04/2009
04/2007
04/2009
04/2010
12/2007
12/2009
12/2010
Initial
exercise periods
Additional exercise
periods in accordance
with the Law of 24
December 2002
of the company. In addition, this warrant plan aims to create a
share price.
III. OTHER INFORMATION
3.1. Composition of the Board of Directors
Please see page 96
3.2. Annual General Shareholders’ Meeting and
conditions for admission
Please see page 109
Corporate Governance
115
SPECTOR PHOTO GROUP NV
100.00
100.00
INTERCOLOR
SPECTOR
VERWALTUNG GmbH
IMAGING
FOTOLABORBETRIEBE
GmbH
RETAIL
99.90
99.99
PHOTO HALL
MULTIMEDIA SA
PHOTOMEDIA NV
85.43
14.57
4.28
PHOTO
FINANCE BV
10.00
99,93
SPECTOR
NEDERLAND BV
90.00
SPECTOR
GRAND EST SA
50.74
*
3.39
DBM COLOR NV
79.36
5.00
EXTRA FILM
(SWITZERLAND) AG
BVBA
100.00
4.51
85.49
EDRO BVBA
10.00
76.00
24.00
SPECTOR COÖRDINATIE CENTRUM NV
19.24
80.76
EXTRA FILM
FRANCE SA
100.00
100.00
EXTRA FILM
NEDERLAND BV
FLT
FÖFOTO KFT
SPA
100.00
6,87
FILMOBEL SA
AB
100.00
99.88
100.00
EXTRA FILM
SWEDEN AB
EXTRA FILM
LOGISTICS AG
50.00
SACAP HONGKONG
LTD
100.00
EXTRA FILM EUROPE
NV
94.62
94.99
50.00
EXTRA FILM
FINLAND OY
99.98
FOTRONIC
FOTOCOOP NV
100.00
100.00
OMNINET SARL
ORC EUROPE SARL
100.00
100.00
49.00
PUP NV
VIVIAN FOTO
HIFI
INTERNATIONAL
SPECTOR
FOTOHANDEL GmbH
99.92
93,13
EXTRA FILM
AUSTRIA GmbH
*
SARL
94.94
100.00
SPECTOR ROUTING
100.00
LITTO-COLOR NV
VIVIAN PHOTO
PRODUCTS NV
4.93
2.00
PHOTO HALL
FRANCE SARL
99.99
DIGITAL
PHOTOWORKS LTD
20.64
ALEXANDER
PHOTO SA
100.00
EXTRA FILM
BELGIUM SA
SPECTOR IMMOBILIEN
VERWALTUNG
2.72
93.89
99.97
94.00
P.C.I. BVBA
0,07
93.07
95.07
4.98
EXTRA FILM
DENMARK AS
4,94
1,21
EXTRA FILM
NORWAY AS
SA
5.00
SACAP FRANCE SA
93.86
95.00
5.00
PHOTO HOLDINGS
IRELAND LTD
100.00
PHOTO RE LTD
*
116
SPECTOR PHOTO GROUP 2006
in liquidation
vereffening
in

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