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Spector Photo Group 2005
Key figures
Key figures
Audited figures (consolidated) according to IFRS (in EUR 000)
INCOME STATEMENT FOR THE YEAR ENDING 31 DECEMBER
Operating income
Other operating income
Changes in inventories of finished goods & work in
progress
Work performed by enterprise and capitalised
Raw materials and consumables
Remunerations
Depreciation and amortisation expenses
Other operating expenses
Profit/(Losses) from operating activities, before nonrecurring items
Non-recurring items from operating activities
Profit/(Losses) from operating activities
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
2005
2004
349 087
353 092
12 287
13 172
0
-3
6
102
223 552
224 022
51 098
48 282
19 266
18 977
65 160
70 846
2 304
4 237
-8 059
3 995
-5 755
8 232
-6 059
-5 186
-11 814
3 046
-3 163
-12
-14 977
3 034
433
-1 276
-14 544
1 758
-2 522
-839
-17 067
919
14
-109
-17 053
810
CASH FLOW DATA
Selected Cash Flow data
Cash flow from operating activities, before non-recurring
items
Operating cash flow - EBITDA
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
2005
2004
21 201
23 288
15 716
27 266
4.5%
7.7%
9 753
22 059
8 298
21 086
2.4%
6.0%
7 676
20 007
BALANCE SHEET FIGURES
Balance on 31 December (in EUR 000)
Balance sheet total
Gross financial debt
Net financial debt (1)
Solvency ratio (2)
Gearing ratio (3)
Current ratio (4)
31 Dec 2005
31 Dec 2004
1 Jan 2004
211 636
223 776
222 369
79 284
107 252
107 852
59 006
97 106
90 086
25.1%
12.7%
13.4%
110.9%
342.5%
301.7%
118.9%
63.4%
86.0%
(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
p1
Spector Photo Group 2005
Key figures
Information for shareholders
Stock rate Spector/Next 150 index
Key figures per share
Figures per share (in Euro, except for the number of
2005
2004
36 619 505
6 761 253
Number of shares
Revenue
Profit/(Losses) from operating activities, after non-
9.53
52.22
-0.16
1.22
0.58
3.44
recurring items
Cash flow from operating activities, before non-
Listing
Spector Photo Group shares are listed on Euronext
Brussels and are traded on the first market (continuous
trading).
• ISIN code
: BE0003663748
• SRW code
: 3663.74
• Stock code : SPEC
• Reuters code : SPEC.BR
shares)
recurring items
0.43
4.03
Number of shares
Profit/(Losses) before tax
-0.41
0.45
Profit or Loss (-) from continuing activities
-0.40
0.26
Profit/(Losses) for the period
With the capital increase of December 2005,
29,858,252 new shares were created, resulting in a
total of 36,619,505 shares. The shareholders’ structure
can be found on page 89 of this document.
Cash flow from operating activities
Spector share
Next 150
Volumes January-December 2005
-0.47
0.12
Cash flow before taxes
0.27
3.26
Cash flow from continuing activities
0.23
3.12
-0.47
0.12
0.21
2.96
1.55
7.10
6 761 253
6 761 253
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
Effect of the issued shares for the period
29 858 252
Weighted average number of diluted ordinary shares
8 233 714.7
36 619 505
per 31 December 2005
Share price in EUR
Volume in millions
Weighted average number of shares
Profit or Loss (-) for the period from continuing
Financial service
activities
Spector Photo Group uses Fortis Bank and KBC Bank for
the financial services on behalf of the shareholder without
any costs for the shareholders. Any change of policy in
this matter will be published in the Belgian financial press.
Profit or Loss (-) for the period attributable to equity
p2
holders of the parent company
8 233 715
6 761 253
-1.77
0.26
-2.07
0.12
Spector Photo Group 2005
Key figures
Shareholders’ diary
Relevant figures of the shares
10 May 2006
Trading Update Q1 2006
(before opening of the Stock Exchange)
Average closing rate 2005
5.57 €
Highest day closing rate 2005
8.38 €
(11 January 2005)
10 May 2006 (2.00 PM)
General Meeting
Highest ‘intraday’ rate 2005
8.50 €
(12 January 2005)
Lowest day closing rate 2005
1.45 €
(21 December 2005)
4 September 2006*
(after closing of the Stock Exchange)
Publication of first half 2006
results
1.38 €
(12 December 2005)
6 November 2006 *
Trading Update Q3 2006
Lowest ‘intraday’ rate 2005
8 February 2007*
(after closing of the Stock Exchange)
Trading update Q4 2006 and
year 2006
Total volume traded in 2005
6 753 003
8 March 2007*
(after closing of the Stock Exchange)
Publication results 2006
Average daily volume in 2005
Average daily volume 30/11-31/12
Average daily volume 1/1-29/11
Total turnover in 2005
Estimation of the average daily turnover in
26 379
(*) these dates are only indicative
238 015
6 482
Communication with shareholders and investors
Spector Photo Group attaches great importance to regular and transparent communication with both its shareholders and investors.
16 323 370 €
63 325.71 €
• Publication of the trading updates and results (see above)
• Separate chapter “Investor Relations” on the new corporate Web site
www.spectorphotogroup.com
• Free subscription to relevant press releases for investors via the
corporate Web site.
2005 based on the closing rate
Estimation of the average daily turnover
392 801.79 €
30/11-31/12/2005 based on the closing rate
Estimation of the average daily turnover
32 349.33 €
01/011-29/11/2005 based on the closing
rate
Total volume traded in 2005
6 753 003
rotation 72.40%
Total volume 1/1-29/11/2005
1 516 674
rotation 22.43%
Total volume 30/11-31/12005
5 236 329
rotation 14.30%
(*) number of ordinary shares issued = (6761253*234/256)+(36619505*22/256)= 9,327,196.53
p3
Spector Photo Group 2005
p4
Snapshots
Spector Photo Group
Snapshots 2005
January
April
August
Following the agreement that had been concluded with
Fujifilm and Microsoft at the Photokina trade fair in October
2004, ExtraFilm now becomes the recommended photo-print
partner on the Windows XP versions that are brought to the
market in France, Germany, the United Kingdom and Spain.
This should be seen in the framework of a global agreement
between Fujifilm and Microsoft. Fujifilm proposes ExtraFilm for
the mail order option in Europe.
Spector Photo Group produces 25 million digital photo prints
in four months’ time, which illustrates the accelerated development of the digital photo print market.
The publication of the half-year results also reveals the need
to raise additional financial resources in the very short term,
in order to manage the transition in the Imaging Group. The
Retail Group’s performance is on schedule.
February
Spector Photo Group announces its intention to close the
photofinishing lab in Munster (France). The lab is servicing the
French and Swiss mail order market. Its activities are transferred to the lab in Wetteren, Belgium.
In the same month, the company also announces that its
negotiations with the Swiss listed holding company Valora
have been terminated without result. Consequently there is no
joint venture into which both companies would have contributed their mail-order activities in order to jointly manage the
transition from analogue to digital photography.
May
At the annual shareholders’ meeting, the Board of Directors
indicates that the accelerated evolution of the photo market
is prompting a vigorous approach for which the company
intends to make an appeal to the capital market to raise the
required financial resources
October
The company announces that it intends to raise its share
capital before the end of 2005. The group’s activities are
structured into two, centrally-managed, divisions: the Retail
Group and the Imaging Group.
June
November
The first version of the off-line photo ordering software is
launched. This software enables consumers to edit their digital
images and create virtual photo cards and photo books, which
can also be transformed into tangible quality products in the lab.
The company does not wait for the capital increase before
initiating its restructuring plan. One-off restructuring charges
impact the result after nine months. The extraordinary general
shareholders’ meeting approves the capital raising operation.
December
The capital increase transaction is successfully concluded.
Almost 30 million new shares are issued at EUR 1.40 per
share – representing EUR 41.8 million all together.
p5
Spector Photo Group 2005
Profile
Profile
Spector Photo Group is a diversified photo and multimedia
group with approximately 1,400 staff members in 14 European countries.
The mission of Spector Photo Group is to help consumers
enjoy audiovisual experiences and to capture emotional
moments in order to revive them and cherish them. In fulfilling
its mission, Spector Photo Group will also create added value
for its shareholders, its staff members and all other stakeholders, as well as for the community in which it operates.
Brand name per division and per country
Retail Group
Imaging Group
Belgium
Photo Hall
Spector
Kodak Images
ExtraFilm
Wistiti (*)
Filmobel
Luxembourg
Hifi International
ExtraFilm (*)
the Netherlands
Spector Photo Group has two core activities, each structured in a separate division: the Retail Group and the Imaging
Group. Each division is centrally managed in order to realise
optimum synergy and focus.
Breakdown of the segments’ shares in the consolidated
revenue of 2005
Retail Group
Discontinued
activities
Imaging Group
Corporate
55%
1.6%
43.4%
0%
• The Retail Group includes the retailing of consumer electronics and multimedia products, including photo cameras
and photo-related products, as well as PC, telecom,
and audiovisual products. The Retail Group operates
over 160 outlets in Belgium, the Grand Duchy of Luxembourg, France, and Hungary. The turnover of the Retail
Group represents approximately 55% of the consolidated
turnover of Spector Photo Group.
• The Imaging Group processes analogue and digital
photos and prints them onto a variety of media and in the
format of choice. The Imaging Group also offers photorelated goods for resale. The turnover of the Imaging
Group represents approximately 43% of the consolidated
turnover of Spector Photo Group.
Spector
Kodak Images
ExtraFilm
France
Hifi International
ExtraFilm
Wistiti (*)
Hungary
Photo Hall
-
Sweden
ExtraFilm
Norway
ExtraFilm
Finland
ExtraFilm
Denmark
ExtraFilm
Switzerland
ExtraFilm
Italy
FLT (49% participation)
ExtraFilm (*)
Spain
ExtraFilm (*)
Germany
ExtraFilm (*)
United Kingdom
ExtraFilm (*)
Austria
ExtraFilm (*)
Australia
ExtraFilm
(*) only available via an e-commerce website
p6
Spector Photo Group 2005
Imaging Group
Imaging Group
Market / country
Photofinishing activities
(brand name, chanel)
Internal supplier of
photofinishing services
Belgium
Spector (B2B)
Kodak Images (B2B)
ExtraFilm (B2C)
Wistiti* (B2B2C)
DBM Color, Wetteren
Litto Color, Oostende
DBM Color, Wetteren
DBM Color, Wetteren
(goods for resale)
Share in the 2005 turnover
of the Imaging Group
The activities of the Imaging Group
33.5%
the Netherlands
Spector (B2B)
Kodak Images (B2B)
ExtraFilm (B2C)
DBM Color, Wetteren
Litto Color, Oostende
DBM Color, Wetteren
Luxembourg
Kodak Images (B2B)
Litto Color, Oostende
France
ExtraFilm (B2C)
Wistiti* (B2C)
DBM Color, Wetteren
DBM Color, Wetteren
Sweden
ExtraFilm (B2C)
ExtraFilm, Tanumshede
(Sweden)
Norway
ExtraFilm (B2C)
ExtraFilm, Tanumshede
Finland
ExtraFilm (B2C)
ExtraFilm, Tanumshede
Denmark
ExtraFilm (B2C)
ExtraFilm, Tanumshede
Switzerland
ExtraFilm (B2C)
DBM Color, Wetteren
Italy
FLT (B2B)
ExtraFilm* (B2C)
FLT, Milan (Italy)
Germany
ExtraFilm* (B2C)
DBM Color, Wetteren
(start in 2006)
Spain
ExtraFilm* (B2C)
DBM Color, Wetteren
(start in 2006)
United Kingdom
ExtraFilm* (B2C)
DBM Color, Wetteren
(start in 2006)
Austria
ExtraFilm* (B2C)
DBM Color, Wetteren
(start in 2006)
Australia
ExtraFilm (B2C)
(outsourced)
2.1%
(*) exclusively via an e-commerce website
• Activities
• Market overview
• Strategy
26.0%
23.9%
8.2%
6.3%
The activities of the Imaging Group are performed under
Photomedia SA. The Imaging Group is directly active in 13
countries but its e-commerce activities encompass many
other countries.
Within the Imaging Group, the rounded ratio between the
turnover from photofinishing and goods for resale is 72%/28%
respectively (based on management figures for 2005).
In 2005, 25% of all prints originated from a digital image and
75% from a picture taken on film. It is expected that the ratio
of digital to analogue photography will evolve into a 50/50
balance by the end of 2006 and that digital photography will
gain the upper hand in 2007.
In parallel with this evolution, the share of innovative photo
products will expand. Thanks to digital photography, the
Imaging Group has succeeded in processing high-quality
ready-made albums, photo cards, photo calendars and photo
gifts on a profitable basis. Currently, 4.2% of all digital orders
contain an order for such innovative products. The Imaging
Group ultimately wants to generate 5% of its turnover from
photo gifts and 15% from photo books, photo cards, and
photo calendars.
47% of the turnover of the Imaging Group is generated
directly through the consumer (B2C), the remaining 53%
through distributor trade (B2B).
p7
Spector Photo Group 2005
The B2C activities include the standard mail-order formula
as well as Internet Web-to-post. In both cases, deliveries are
made to the end-consumer using postal services.
The Imaging Group has about 2.5 million clients that have
placed an order over the last 12 months. It is the market
leader in Europe in terms of photofinishing turnover.
-
-
Analogue photofinishing : the consumer puts his exposed
film in a specially designed bag, sends it by post to one of
the two specialised ExtraFilm labs (Wetteren, Belgium or
Tanumshede, Sweden) for developing and photo finishing
in the desired format. The finished products are delivered
to the customer by post.
Digital photofinishing : (1) Offline: the consumer writes his
order onto a memory card or a CD, puts the card or the CD
into a specially designed bag and sends it by post to one
of the two specialised ExtraFilm labs (Wetteren, Belgium
or Tanumshede, Sweden). The pictures are finished in the
desired format and delivered to the customer by post (2)
Online: the consumer loads his pictures onto the ExtraFilm
website and places his order on the same site. The finished
pictures in the desired format are delivered to the customer
by post.
The B2B-activities are run under the Spector brand, under
the Kodak Images licensed trademark or under the own brand
of the trading partners (Photo Hall, Blokker, etc.). Approximately 75% of the turnover in this segment is realised with
professional photographers in the Benelux, Italy, and France.
The remaining 25% of the turnover is achieved through distribution chains such as Blokker in Belgium and Esselunga in
Italy, or on the export markets.
Logistics are very important in this context: orders have to be
picked up at the trading partner speedily and efficiently and,
after processing, the final product has to be delivered to the
p8
Imaging Group
shops in an equally effective manner. Largeness of scale is
very important in this segment. The Imaging Group is market
leader in this segment in the Benelux market.
The markets in which the Imaging Group
operates
The Imaging Group is mainly active in various segments of the
photo print market.
Lack of neutral market data
In former days the market size and the corresponding market
shares were measured in a relatively correct way. There were
only a handful of producers of films, and each exposed film
roll led in principle to a number of photo prints that were
processed through the trade channel.
The rise of the digital photography has made this methodology inadequate. Up to now no new methodology has been
implemented. Hence, all estimates are only based on results
of various opinion surveys among sample audiences, volumes
reported in a fragmented way by companies in the sector,
extrapolations and experiences in the market.
Consequently, each estimate has an inherent margin for error.
Moreover, the market is still evolving every day, which can
make “today’s truth” completely outdated tomorrow. Therefore, all estimates mentioned below should be considered as
purely indicative for the underlying trends.
Assumptions
Digital photo prints. Consumers take seven times more
pictures with a digital camera than with a traditional camera,
but it is assumed that they have only about 12% printed. It
is also assumed that of these, about 50% are processed via
home printing, and 50% through the professional trade channels. Prospective market studies suggest that the share of
home printing will decrease over the coming years. Consequently, it is not excluded that – on a comparable basis – up
to 40% less pictures will be processed through the professional channel compared to the situation in the analogue era.
Analogue photo prints. The decrease of the number of
analogue prints is evolving at a different pace than the
increase of the number of digital prints. It is a misperception
that there are hardly any analogue prints being processed
today. Internal estimates indicate a cumulative decrease by
55% (over the period 2003 to 2005).
The total number of photo prints that are processed through
the professional channel would, according to these assumptions, arrive in 2005 at about 87% of the total volume in 2003.
This corresponds largely with the organic evolution of the
volumes in the Imaging Group. The Imaging Group would
process a proportionally larger share of the total number of
analogue prints, and a proportionally smaller share of the
digital prints. While the number of companies that process
analogue prints has been reduced during recent years, new
companies that print digital images have entered the market.
The further evolution of the photo print market depends
on a variety of factors including: the further replacement of
traditional cameras by digital cameras, the rediscovery by the
digital photo amateur of real photo prints (on photographic
paper) and the future evolution of the market for innovative
photo products.
Spector Photo Group 2005
Imaging Group
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
Kodak Images
40%
Minilabs at photo trade specialists, CeWe (via retail chains
such as Kruidvat,...)
50%
Belgium: B2C market
via home delivery
ExtraFilm
Wistiti*
10%
Foto.com, Fotolabo
40%
the Netherlands B2B
via retail networks
Spector
Kodak Images
40%
Minilabs at photo trade specialists, CeWe (via retail chains
as Kruidvat,...), Fujifilm (e.g. via
Hema)
25%
the Netherlands B2C
via home delivery
ExtraFilm
5%
Colormailer, Fastlab, Pixum,
Kruidvat,...
40%
France B2C via home
delivery
ExtraFilm
Wistiti*
15%
Photoways, MyPixmania,
Photo Service, Pixdiscount,
Photoweb...
45%
Sweden
ExtraFilm
45%
Apport
60%
Norway
ExtraFilm
45%
Foto Knudsen, Foto Preus
65%
Finland
ExtraFilm
35%
Fotolabo (IFI)
10%
Denmark
ExtraFilm
5%
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, Bonusprint
(started in 2006)
Australia
ExtraFilm
5%
Main competitors
Kodak Gallery
Estimated share
of the Imaging
Group in this
segment
80%
In March 2006, Valora Holding (Switzerland) announced that it has reached an
agreement with Foto Kreuzlingen (Switzerland) for the partial acquisition of the
Valora Imaging division (mail-order activities in the field of photofinishing, mainly in
Switzerland, France and Finland). Around the same time, the news arrived that Fujifilm would be closing its photofinishing lab in Sweden. When this document was
prepared, it was not yet fully clear whether Fujifilm would only stop its production
operations in this region or whether it would entirely withdraw from this market.
p9
Spector Photo Group 2005
• Focus on niche markets
• Restructuring in order to reduce the fixed overhead cost base
• Growing on the digital photo print market
1) Innovative photo products will complement the
current product assortment of (analogue and
digital) photo prints.
2) The Imaging Group will strengthen its customer
database for the new, digital market.
3) The Imaging Group will build on its market position
in specific niche markets and in distribution channels, but will also establish partnerships.
• Offer innovative photo products
The strategy of the Imaging Group
Mission
To help people tell “their story” in images
Ambitions
• To be a major supplier of innovative photo products (i.e.
not only photo prints)
• To become the leader in the web-to-post photofinishing
market in Western Europe
• To become the leader in the overall photofinishing market
in the Benelux (all distribution channels, both for analogue
and digital photo prints).
Focus on niche markets
The Imaging Group is focusing on niche markets that are not
(or to a lesser extent) targeted by competitors.
Restructuring in order to reduce the fixed overhead cost
base
The Imaging Group has budgeted for EUR 11 million in
expenses to carry out a restructuring plan, ultimately by the
p 10
Imaging Group
fourth quarter of 2007. These one-off costs mainly relate
to arrangements with employees and the development of
new systems to make central operations a reality. Once this
restructuring plan is implemented, it will result in repeated
annual savings of EUR 10.9 million.
Implementation of the restructuring plan will be mainly carried
out during 2006. No specific indication can yet be provided
about the actual time at which these restructuring costs will
be incurred.
From 2007 on, the restructuring must yield a surplus between
the restructuring costs and the savings realised within that
same financial year.
The key components of this plan are described below.
Various functions will be centralised, thus resulting in a further
20% decrease of the average number of jobs compared to
year-end 2005, when the Imaging Group employed 808 fulltime equivalents.
The production costs will be reduced, by:
- Turning analogue production lines into digital lines
- Optimally allocating production over the various sites
- Outsourcing non-core activities
- Standardising packaging components
- Reducing overall capacity, if necessary
The marketing and logistics cost will be reduced by:
- Favouring electronic communication to potential new
customers, thus avoiding postal charges and printing
costs;
- Phased downsizing of the commercial concept of the free
film roll, parallel to the transition of analogue to digital
photography;
- Identifying the most effective techniques to recruit new
-
digital customers (marketing efficiency);
Simplifying the logistics system to the retail outlets in
Belgium and the Netherlands;
Concluding cross-border agreements for home delivery by
mail.
Growing on the digital photo print market
The Imaging Group is convinced of the growth potential on the
photo print market, provided that: the product assortment is
expanded, that the customer database is enhanced, and that
partnerships are concluded.
1) Innovative photo products will complement the current
product assortment of (analogue and digital) photo prints.
“Regular” photo prints are not enough to achieve full-volume
compensation. Innovative photo products (photo cards, photo
calendars, photo books,…) address an unsatisfied consumer
need, for which home printing does not provide an adequate
solution. These products also make an interesting pricing and
margin policy possible. In time, the Imaging Group wants 5%
of its turnover to be generated from photo gifts and 15% from
photo albums, photo greeting cards and photo calendars.
The Imaging Group has adopted the strategy to accelerate the
market development for these innovative photo products. This
implies additional efforts in the field of product development,
graphic design and marketing.
2) The Imaging Group will strengthen its customer database for the new, digital market.
While the segments in the traditional photo market were rather
well defined, the digital environment offers opportunities to
reach for new consumer profiles. In France, for example, the
traditional mail-order channel represented a mere 4% to 5%
of the total photo market, while the web-to-post model is
appealing a much wider target audience.
Spector Photo Group 2005
In a first phase, the Imaging Group will strengthen its
customer database by offering attractive solutions for ordering
digital photo prints. The attractiveness will be reflected in the
convenience of placing orders, as well as in price setting. The
Imaging Group does not believe in a “one-solution-fits-all”
approach, but develops tailor-made solutions for the various
consumer profiles (niches). The Imaging Group currently offers
five options for ordering photo prints from digital images:
(1) Via digital-order kiosks established at points-of-sale, (2)
Via websites, (3) By burning images on a CD using a special
program and sending it by post using a traditional order
pouch, (4) By sending a memory card by post using an order
pouch and (5) By preparing the order offline on a PC and
sending it directly via the Internet. The Imaging Group continuously assesses the user-friendliness of each method by
means of a specialised panel study. Currently, every consumer
profile can find a ready solution in one of these five methods.
In contrast to certain competitors, the Imaging Group does
not intend to force all of its customers to use a single method.
Next, the Imaging Group intends to remove any remaining
hesitation on the part of new consumers through an attractive
price policy. The Imaging Group does not plan on conducting
any ‘hard-discount’ policies. However it does envisage a
price policy with attractive formulas that give consumers a
cost-effective experience when placing their first digital orders
— for example, by means of volume discounts resulting in a
competitive price per print.
As the digital market emerges from the build-up phase, the
Imaging Group
Imaging Group expects the consumer to be less swayed by
price. The Imaging Group will then focus on the consumer
profile that puts high convenience and good product quality
first and foremost, without always searching for the lowest
possible price.
3) The Imaging Group will build on its market position in
specific niche markets and in distribution channels, but
will all also establish partnerships.
Just as the Imaging Group does not believe in a “one-solution-fits-all” approach, nor is it convinced that the market can
justify a single-channel approach that is cost-efficient. Economies of scale are crucial.
Therefore, the Imaging Group will continue to support its
activities in the trade channel, in addition to its direct sales to
the end-consumer (through the ExtraFilm concept). While the
trade activities (B2B, business-to-business) of the Imaging
Group are concentrated in Belgium and The Netherlands,
the direct sales activities (B2C, business-to-consumer)
cover the whole of Western Europe. Today – in the transition
phase from analogue to digital photography – the Imaging
Group is market leader in both niche markets. The company
intends to maintain and strengthen this position. The Imaging
Group will also capitalise on its production, IT and marketing
platform to conclude partnerships in Western Europe. By
2010, the Imaging Group wants to generate over 10% of
the total number of digital photo prints through partnership
programmes.
Innovative photo products
• Photo books. Digital technology makes it possible, based
on user-friendly software, to immediately integrate digital
photos into ready-made photo books. An empty photo
book appears on the PC screen. Consumers can then
drag their own digital photos to it, insert captions under
the photos and then place the photos on a background
of their choice. After choosing the cover, the consumer’s
own ‘virtual album’ is complete. The Imaging Group then
converts it into a physical photo book, on photo or other
paper. The production of these innovative photo products
is being outsourced at present. The Imaging Group will
select the most appropriate technology, based on volume
growth and consumer preference, and make the necessary
investments beginning in 2007.
• Photo cards and photo calendars. Specific modules on the
websites and in offline order software offer consumers the
option of integrating photos in greeting cards and calendars.
• Photo gifts. Thanks to digital technology, it is also possible
to print large-scale digital photos profitably on all types of
items (T-shirts, coffee mugs, wall tiles, etc.). The Imaging
Group wants to expand one of its own labs into a centre of
expertise for photo gift products in the near future.
p 11
Spector Photo Group 2005
Imaging Group
The importance of scale
Production at the most competitive price is only possible with sufficiently large volumes. For digital prints, the Imaging Group
wants its production cost prices to be comparable with those of the traditional leader at that level.
The Imaging Group can gradually expand the digital production capacity without significant investment as the market grows. The
existing photofinishing facilities for analogue photo processing can generally be retained for digital photo processing. It will only
be necessary to replace the equipment for positive exposure. The equipment with chemical baths for developing the positives,
cutting, and packing the photographs can also be used for digital photos. With the digital production capacity currently installed,
the Imaging Group can easily process 150 million digital photos. Actually, double the number of digital photos can be processed
annually with the currently installed capacity. The required investment in a digital exposure machine for any additional growth is
around EUR 0.4 million per portion of 70 million prints.
Photo books
Photo cards and photo calendars
Database marketing
The graphical information above uses a fictitious example to illustrate the specific dynamics of database marketing. In the
traditional business model, there was a remunerative balance between recruitment and loyalty marketing (fidelisation), while the
graphical information reflects how this balance is built up in the digital business model. Since the digital market is currently in the
build-up phase, it is heavily weighted towards recruitment. The marketing costs to stimulate repeat orders by an existing client
remain limited. In other words, as loyalty marketing becomes more important, the business model becomes more profitable.
Photo gifts
p 12
Spector Photo Group 2005
Retail Group
Retail Group
• Activities
• Market data
• Strategy
Positioning: The Retail Group is uniquely positioned.
It combines expertise and increase in scale due to outstanding
distribution with the high service level of the independent
specialist.
-
The activities of the Retail Group
The activities of the Retail Group are performed under the
umbrella of the Photo Hall Multimedia NV public limited
company. The Retail Group operates in 4 countries.
Photo Hall is gradually modernising its Belgian and Luxembourg retail outlets and will open five new stores every year.
The project in France is evaluated every year. 2003 saw the
start of the conversion of the Hungarian retail outlets. In 2004,
it was decided to exclude smaller franchise stores in Hungary
from this conversion. After removing these franchise stores
from the equation, the total net increase in the number of retail
outlets of the Photo Hall group in 2005 was six stores to 168.
-
A sophisticated product range with four product categories
(photography, mobile telephony, PC, and TVD/DVD/audio)
includes a selection of A-brand models with the most
favourable price/performance. This helps the consumer in
making the most appropriate choice.
A long-term relationship with A-brand manufacturers
guarantees the availability of the most popular models,
prevents competitors from engaging in dumping practices,
and enables a strict control of supplies.
Thanks to a well thought-out location of the shops in city
and shopping centres, the Retail Group avoids direct
confrontation with hard discounters.
Product range: The turnover from consumer electronics
(mobile phones, photos, TV/DVD/audio) represents 96.5% of
the total turnover figure whereas the photofinishing turnover
represents 3.5%.
Number of retail outlets as
at 31 December 2005
Share in the 2005 turnover
of the Retail Group
Brand name
Belgium
95
54%
Photo Hall
Luxembourg
16
30%
Hifi International
52*
14%**
5
2%
168
100%
Hungary
France
Total
(*) excluding the franchised shops in Hungary
(**) including the turnover from franchised shops, which represent 28% of the total turnover in Hungary
Photo Hall
Hifi International
The turnover from consumer electronics can be split up as
follows:
PC
GSM
Misc.
Photo print
Photo
Audio-Hifi
V-DVD
TV
30%
17%
5%
3%
15%
9%
9%
12%
p 13
Spector Photo Group 2005
Retail Group
The markets in which the Retail Group
operates
After consulting the competitors’ websites, it appears that
Photo Hall is the current leader in terms of the number of
outlets in Belgium. Only Eldi has more outlets; however, this
company also includes white goods in its product range.
Retail outlets, Belgium
Photo Hall
Krëfel
Vandenborre
Media Markt
Euro Center
Eldi
Video Square
Dixons
Cora
Makro
Exell
Fnac
Total
December 2005
95
66
54
9
35
135
9
5
7
6
31
6
457
The market share of Photo Hall in Belgium cannot be defined
accurately, because the majority of the competitors in the
table above also offer other product types (e.g. white goods)
in their range.
For the following product types, however, more accurate
market shares can be provided:
PC and accessories (*)
TV, camcorder, DVD,....)
Audio
Hifi
Storage media
Mobile phones, telecom
Photo cameras and accessories
2005
6%
3%
6%
3%
5%
5%
6%
For all the geographic markets mentioned, the following sales
evolutions are expected for the various product types in the
range:
Photo
(hardware,
accessories)
slight decrease because of the price level
Video-DVD
moderate growth from the introduction
of video cameras with DVD or hard disk,
and from the introduction of high-end DVD
records
Audio-Hifi
slight decrease because of the price level
of current models, potentially corrected by
the introduction of the iPod range and by
the introduction of Home Cinema 21 and
combined offers for TV + Home Cinema
TV
increase fuelled by the attractive price
level for plasma and LCD screens, which
appeals to a wide audience – possibly
stimulated by World Cup Soccer in 2006
PC and
accessories
increase supported by the introduction of
stronger processors and a new operating
system (Vista™)
Mobile
phonesTelecom
moderate increase due to the growing
sales of sophisticated mobile phones,
(with AV option, integrated 2 megapixel
camera, etc.)
(*) the market research agency that provides these figures includes digital photo
cameras in the category “PC and accessories”.
In general, one can conclude that Photo Hall holds a market
share of 5% to 6% for its range, which puts the company at
a comparable level with Krëfel. Media Markt would hold an
estimated 8% market share.
In Luxembourg, the Retail Group holds the market leader position with the Hifi International brand name and an estimated
market share of 10% to 12%.
In France, Hifi International has only a limited presence in
the region, operating 5 outlets. On the French market for
consumer electronics, general retail chains such as Carrefour,
Auchan and Darty play a major role.
In Hungary, the Retail Group aims for a comparable market
share as that in Belgium. Media Markt is also present on this
market.
p 14
The Retail Group wants to further develop its leadership position in the channel of the specialised chains in Belgium and
Luxembourg. In Hungary, the Retail Group wants to develop a
similar retail network that can serve as a platform for potential
geographic expansion in a subsequent phase.
Spector Photo Group 2005
Retail Group
The strategy of the Retail Group
Ambitions
The Retail Group envisages achieving the growth by:
- Introducing new products
- Upgrading its retail outlets in existing markets
- Opening up new geographical markets in the medium term.
Specific positioning
Through its unique positioning, a specific consumer profile
is reached that finds competing concepts far less attractive.
Broadly speaking, four factors distinguish Photo Hall in the
consumer electronics retail trade:
• Quality: Photo Hall carries mainly only A-brand names
and does not sell off-name or home brands. A-names are
brands that consumers trust, which the manufacturers or
importers advertise, and which get involved in Photo Hall’s
marketing endeavours.
Number of stores
as at 31 December
2005
• Range: Photo Hall intentionally limits itself to selling only
four product categories: photo, PC, mobile phones, and
TV/DVD/Hifi. Thus, the consumer knows exactly what
to expect. The depth of the range is also deliberately
limited to the most popular A-brand models with the best
price/performance ratio. This selection avoids consumers
running the risk of purchasing a product that, in fact, is not
suited to their needs.
• Service: Photo Hall offers a level of products, service,
and advice that is not found in large discount chains. This
is made possible by the composition of the range, the
store concept (i.e. the customer does not have to rely on
self-service), and a permanent and continuous training
programme for its sales staff.
• Price: Photo Hall always provides the best price/performance/quality ratio for each product it carries. Accordingly,
Photo Hall does not intend to be a budget supplier with
inferior B- and C-brand products. Photo Hall’s pricing is
always competitive for the most popular A-brands models.
Planned new
shop openings
Planned shop
closures
Planned shop
re-furbishments
Target 2006
Belgium
95
+1
-3
5
93
Grand Duchy of Luxembourg
16
+2
-1
0
17
52*
+5
-6**
0
51
5
+0
-1
0
4
168
+8
-11
5
165
Hungary
France
Total
(*) excluding the franchised shops in Hungary
(**) excluding the scheduled, additional closures of 10 franchised shops
Growth by introducing new products
GfK foresees that 56% of the Western European market for
consumer electronic sales in 2005 will consist of new products
based on technologies such as flat-screen TVs, MP3 players,
navigation systems, camera phones, and digital cameras. All
important manufacturers of such products view the concept
of the ‘digital living room’ as the medium-term reality. Since
this involves products with a relatively high unit price, the
Company foresees an increase in the value of trading stock.
This requires imposed discipline in order to control working
capital.
Growth by upgrading the retail outlets in existing markets
Photo Hall is gradually modernising its Belgian and Luxembourg retail outlets and opening five new stores every year.
The project in France is evaluated every year. The conversion
of the Hungarian retail outlets started in 2003. It was decided
in 2004 to exclude smaller franchise stores in Hungary from
this conversion. After removing these Hungarian stores from
the equation, the total net reduction in the number of retail
outlets of the Photo Hall group in 2004 was five stores to 159,
followed by a total net increase in 2005 by nine stores to 168.
Internal analyses show that there is scope in Belgium for a
total of 120 Photo Hall stores. In particular, specific regions
in Flanders offer good opportunities. The ideal locations have
already been mapped. When they will materialise depends to
a large extent on the timing of when these locations can come
onto the market under favourable conditions.
In Luxembourg, the Photo Hall group covers almost the entire
geographical market. Here the strategy is to gradually move
certain store premises to larger locations, where a wider range
of products can be sold in an even more attractive manner.
At the same time there is a programme whereby Photo Hall
is gradually refurbishing some outlets. The purpose of this
programme is to ensure that the look and feel of the stores is
p 15
Spector Photo Group 2005
in keeping with contemporary trends. In addition, the layout
is also being adapted so that certain new products (such as
home cinema and flat-screen TVs) can be best displayed.
Through this approach, Photo Hall continues to distinguish
itself from discount chains.
Growth from opening up new geographic markets
The growth scenarios described above are currently in
progress. The opening and refurbishing of stores is financed
from the available cash flow. With the exception of the current
conversion of the Hungarian store network, there is no
specific short-term plan of action for the geographical growth
scenario. Nonetheless, the Photo Hall concept has proved
itself to such an extent that the first on-site studies have been
carried out in central Europe and the Baltic states.
p 16
Corporate
Spector Photo Group 2005
Corporate
Corporate
The reporting segment “Corporate” refers to the organisation
within the group that provides strategic guidance and support
for both the Retail Group and the Imaging Group. Internal
audit and financial consolidation are also part of the responsibilities of the Corporate organisation.
Discontinued
activities
The Board of Directors has decided to process a number of
non-core activities and related assets from the Imaging Group
in the accounts as ‘assets held for sale’. On the one hand,
this concerns the businesses of Sacap France and Spector
Fotohandel (Austria), and on the other, the land and buildings
of Spector Grand-Est (France) and Fotronic (Belgium). This
decision yields an even better view of the performance of both
core activities of the group.
p 17
Spector Photo Group 2005
p 18
Letter to the shareholders
Report of the Board of Directors
on the consolidated annual accounts
The official Report of the Board of Directors on the consolidated annual accounts is included in this document on the pages 20 to 73
Letter to the shareholders
2005 has been a turbulent year for our company. By the end of the year, we have succeeded in
implementing long-term solutions with both our credit providers and our shareholders, and this
in a difficult environment. Apart from these non-operational challenges, we have also worked
hard in 2005 in order to match our business with the new market conditions and to prepare our
organisation for the future.
The conditions against which this could be achieved were strongly affected by external factors.
What really matters, however, is that the company has been able to make a new start.
During the course of 2006 we will further restructure the activities of the Imaging Group. Simultaneously, we will enhance the efforts in the field of marketing and information technology in
order to construct sound foundations for our future in the world of digital photography.
In the Retail Group, too, we face major decisions. In 2006 we aim to sustain the successful
operational transition of the retail network in Hungary. In parallel, we intend to further develop
the Photo Hall concept – which has always proved to be a sound concept – in order to even
better anticipate the challenges on the market.
Success is never assured, but needs to be earned time and time again. We can assure you that
our team does not spare any effort in order to make success happen, which should become
visible in the 2007 figures.
We want to take this opportunity to thank the current and the previous reference shareholders
for being prepared to enable the company to make a new start. We also want to thank all our
shareholders and stakeholders for their contribution to the development of our company.
Tonny Van Doorslaer
Managing Director
Luc Vansteenkiste
President
p 19
Spector Photo Group 2005
Report of the Board of Directors
Report of the board of directors
• Operating revenue remains steady in a turbulent year
(-1.1% versus 2004)
• EUR 11.2 million non-recurring costs and EUR 2.5 million
loss from discontinued operations
• Recurring operating result amounts to EUR 2.3 million
(-45.6%)
• Improved balance sheet following the capital increase of
December 2005
• Restructuring and development of new business model
for the Imaging Group being implemented
In 2005, Spector Photo Group achieved turnover of EUR 349.1
million (-1.1%) from continuing operations, on which a recurrent operating result of EUR 2.3 million was realised. After
deducting one-off costs (EUR 8.1 million) the operating result
was a loss of EUR 5.8 million. The parent company’s shareholders’ share in the net loss amounted to EUR 17.1 million.
CONSOLIDATED RESULTS FOR THE 2005
FINANCIAL YEAR
For a correct view on the figures for the year under review, it
should be mentioned that Litto-Color NV became one of the
consolidated companies with effect from November 2004.
Considering the time of its acquisition and the seasonal nature
of its activities, Litto-Color NV had little impact on the figures
for 2004 – as opposed to its impact on the 2005 figures, as
Litto-Color NV represents 12.5% of the operating revenue of
the Imaging Group.
p 20
EUR 13.7 million from non-recurring items and
discontinued operations
The transition from analogue to digital photography has
necessitated a number of measures, both directly in the
Imaging Group, which is active in this market, and indirectly
for the entire company.
Total non-recurring operating costs of EUR 8.1 million are allocated as follows: 64% to the Imaging Group, 4% to the Retail
Group, and for 32% to Corporate. This amount includes:
-
EUR 2.2 million charges related to the closure of the lab in
Munster, France (Imaging Group)
EUR 0.6 million for dismissal charges resulting from
restructuring (Imaging Group)
EUR 0.8 million of extraordinary value reduction on
customer accounts from 2004 (Imaging Group)
EUR 1.7 million of value reductions of goodwill and other
impairments (Imaging Group)
EUR 0.3 million of restructuring charges in the Retail Group
EUR 2.5 million of external advice fees primarily related
to the development of the restructuring plan and the new
business model (Corporate).
In addition, there was EUR 3.2 million in non-recurring costs,
i.e. value reductions on financial assets. Finally, the result of
the assets held for sale amounted to minus EUR 2.5 million.
This amount includes a value reduction of EUR 1.5 million on
buildings to their fair value, less selling costs.
Operating revenue
Spector Photo Group has retained its level of operating
revenue (-1.1%) in a turbulent year. The Retail Group has
registered a slight increase in the operating revenue (+2.3%).
Despite major changes on the photo market, the decrease
in the operating revenue of the Imaging Group has remained
limited to 5.0%. In 2005, the decreasing revenue from
analogue photography was not yet fully compensated for by
the growing income from digital photography.
In both divisions, the average price level remained relatively
flat.
Operating expenses
Operating expenses (-0.8%) have evolved almost in parallel
with operating revenue (-1.1%). The cost of trade goods,
raw materials, and consumables has decreased by 0.2%
versus 2004. Remunerations have grown by 5.8%. This can
be primarily attributed to the remunerations of Litto-Color,
since 2005 was the first full year that it has been included as
a consolidated company. The average number of full-time
equivalents has been reduced by 243 (from 1,711 in 2004 to
1,468 in 2005). The effect of this reduction will only become
fully visible in remuneration costs for 2006. Depreciation and
amortisation expenses have increased by 1.5%, while 8.0%
savings have been achieved for other operating expenses.
EBITDA
The recurring operating cash flow (REBITDA) amounted to
EUR 21.2 million, 8.9% lower than in 2004. This decrease
strongly reflects the direct impact of the transition from
analogue to digital photography. Non-recurring operating
items involved a negative cash flow effect of EUR 5.5 million,
thus leading to an operating cash flow (EBITDA) of EUR 15.7
million.
Spector Photo Group 2005
Report of the Board of Directors
EBIT
Taxes
Balance sheet situation
Before non-recurring items, the operating result (REBIT)
amounted to EUR 2.3 million (-45.6%). After non-recurring
elements, this yields a negative operating result of EUR 5.8
million versus a positive operating result of EUR 8.2 million
in 2004. The decrease of the recurring operating result
(REBIT) indicates the necessity to structurally reduce the fixed
overhead costs in the Imaging Group. In this respect, the
measures that have already been implemented last year need
to be completed in 2006. The commercial business model
also needs to be developed further.
Because of the loss-making situation in a number of subsidiaries, certain deferred tax assets could be appropriated, thus
leading to a tax credit of EUR 0.4 million.
Financial result
Last year the investment level reached EUR 11.0 million. This
amount is composed as follows: EUR 4.7 million for externally
acquired customer relationships for the Imaging Group; EUR
2.7 million investments in the outlets of the Retail Group; EUR
1.5 million investments in the labs of the Imaging Group; EUR
0.9 investments in order stations and minilabs for the Imaging
Group; and EUR 1.2 million other investments.
The 2005 investment level (EUR 11.0 million) is 37.5% below
2004. This is entirely due to a lower investment level for
externally acquired customer relationships for the mail-order
activities of the Imaging Group, as well as other intangible
fixed assets. Investments in plant and equipment have maintained their normal level, both for the Retail Group and the
Imaging Group.
Capital has increased by EUR 41.8 million, which refers to the
secondary public offering of December 2005. Furthermore, the
equity is impacted by the 2005 net result, the costs related to
the SPO and a number of re-valuations of buildings.
An amount of EUR 15 million from the capital increase has
been appropriated to reduce financial debts. Together with the
repayment of a number of short-term financial debts, the total
of outstanding financial debts has been reduced to EUR 79.3
million as at 31 December 2005. These financial debts have
also been rescheduled between short-term (EUR 25.2 million)
and long-term (EUR 54.1 million) in December 2005. The net
financial debt (financial debts reduced by cash, cash equivalents, and investment securities) now amounts to EUR 59.0
million. This corresponds with a gearing ratio (net financial
debts as a percentage of the total equity) of 110.9%.
Non-core activities and their assets are held for sale, and are
accounted for separately on the balance sheet. This involved a
change of the related asset items.
The externally acquired customer relationships of the Imaging
Group are included according to the cost model (IAS 38 §74)
in the opening balance as of 1 January 2004. The externally
acquired customer relationships amount to EUR 21.5 million,
of which EUR 11.6 million externally acquired customer
relationships and EUR 9.9 million are directly attributable
preparatory costs as at 31 December 2005. The Board of
Directors confirmed the opinion of the Audit Committee that
the changing market environment in which the group operates
does not give cause for an extraordinary write-down of the
intangible fixed assets
The net working capital (current assets from continued
operations, reduced by the short-term non-financial liabilities
of continued operations) amounts to EUR 39.1 million. As
at 31 December 2004, this level was EUR 27.8 million. This
impacted heavily on operations throughout the greater part of
2005.
Before non-recurring financial items, the financial result
amounted to minus EUR 6.0 million. This is EUR 0.9 million
worse than in 2004, and includes EUR 0.3 million less favourable currency exchange differences and a higher interest
burden because of bridging loans required between the start
of the year and the capital increase in December 2005.
In addition, the value of a number of financial assets has been
reduced, resulting in EUR 3.2 million non-recurring financial
costs. It mainly concerns value reduction of an outstanding
account receivable from Fotoinvest CVBA, in view of the
evolution of the price of the Spector shares, which are the only
assets of this company, and which represent the underlying
coverage for the account receivable concerned. In addition there is also a value reduction of the current account of
the German company, Spector Immobilien Verwaltung, with
Spector Coordination Centre. The latter is related to the estimate of the current value of the building in Dresden, which is
the only asset of the German company.
Profit/(loss) of the period
After inclusion of the discontinued operations result, there is a
loss of EUR 17.1 million for the period.
Investments (Capex)
Dividend
The Board of Directors will propose to the Annual General
Shareholders Meeting that no dividend is paid out for the 2005
financial year.
p 21
Spector Photo Group 2005
RESULTS PER DIVISION
Retail Group holds firm against competition
and achieves moderate sales growth
The Retail Group achieved a turnover of EUR 195 million
(+2.3%) in 2005, and an operating result of EUR 5.5 million
(+14.5%). In 2005, the operating result represented 2.8% of
the operating revenue, versus 2.5% in 2004. The gross margin
(as a percentage of the operating revenue) remained fairly
stable compared to 2004. Cost control of support services
enabled the Retail Group to have its operating result grow
relatively stronger than the increase in its operating revenue.
In Belgium, Photo Hall was faced with the arrival of a number
of new competitors. Some of the traditional electro-chains
broadened their product range to include product categories offered by Photo Hall. In addition, reluctant consumer
behaviour occurred during the month of October due to
increasing oil prices. Notwithstanding these events, Photo
Hall succeeded in keeping turnover stable through specific
marketing efforts, without having to noticeably reduce prices.
In Luxembourg, Hifi International was able to strengthen its
position as market leader and realize a considerable growth
in turnover. In France, the reduction in the number of shops
from five to four led to a small decrease in sales. In Hungary,
the continuing introduction of the Photo Hall concept resulted
in a 10% growth in turnover. This increase was realised by the
52 shops that were opened or renovated in the course of 2004
and 2005. In 2005, Photo Hall Hungary has again contributed
to the operating result.
Despite some minor differences in the composition of the
product range in the four countries mentioned above, a
number of general trends could be determined. The TV and
PC product category is growing rapidly, primarily due to
p 22
Report of the Board of Directors
increased sales of flat screen TVs and laptop computers. The
photography category is performing well, especially the digital
reflex camera range. But this category is past the explosive
growth rate of the previous two years. Audio and Hifi are
under a great deal of pressure. The strong revival in sales of
mobile phones, thanks to the success of more sophisticated
models, is especially apparent in Hifi Luxembourg.
Imaging Group
The turnover of the Imaging Group in 2005 has been strongly
affected by the transition from analogue to digital photography. On a yearly basis, the turnover amounted to EUR
154 million (-5.0%), EUR 31.5 million of which was realised in
the fourth quarter (-10.7%). However, it should be noted that
for the first three quarters of the year, a different comparable
basis was used in relation to 2004, since Litto-Color entered
the consolidation scope only in November 2004.
In 2005, the Imaging Group processed over half a million
analogue and digital photos (+20%). The loss in analogue
print volume has been further compensated by the growth
in digital print volumes. In 2005, 25% of all prints originated
from a digital image and 75% from a picture taken on film. It is
expected that the ratio of digital to analogue photography will
Photo prints
%
evolution
2005
2004
Analogue photo prints
366 692
373 952
-1.9%
Digital photo prints
124 116
25 890
379.4%
Total number of photo
prints
490 808
399 842
22.8%
excluding Litto-Color
(organic evolution)
326 870
373 022
-12.4%
in thousands
evolve into a 50/50 balance by the end of 2006 and that digital
photography will gain the upper hand in 2007.
Before non-recurring items, the operating result reached EUR
-3.7 million versus EUR 1.2 million in 2004. Both the average
price level and the variable production cost level remained
stable in 2005. On the one hand, the negative impact on
the operating result can be attributed to fixed production
costs that could not be reduced as fast as the decline in the
analogue volumes in the labs. On the other hand, the Imaging
Group has spent more on marketing during the build-up phase
of the digital market for which there was not yet an immediate
return in 2005.
After taking non-recurring items into account, the operating
result amounted to minus EUR 8.9 million in 2005 versus EUR
6.7 million a year before. In 2004, the non-recurring items
referred to the ‘badwill’ of the Litto-Color acquisition.
Prospects
These forward-looking statements are based on internal
estimates and expectations as at 18 April 2006. These
forward-looking statements contain inherent risks and apply
exclusively on the date on which they are announced. It
cannot be excluded that actual results differ substantially from
those included in the forward-looking statements.
While the Retail Group forecasts a moderate increase in
its operating revenue, the Imaging Group expects that
the growing revenue from digital activities in 2006 will not
yet entirely compensate for the decrease in revenue from
analogue activities. The Imaging Group expects that the total
number of photo prints (analogue and digital combined) may
still drop 5% to 10% in 2006. The risk of price pressure (up to
10%) for photo prints is also being taken into account.
Spector Photo Group 2005
Because of the low visibility on the market evolution and the
variety of factors that can have an impact on business, the
operating revenue at group level (Spector Photo Group) can
in the best-case scenario remain relatively flat, but a further
decrease remains also possible.
No major changes are expected in the purchase price level
for variable production items. Even while the Imaging Group
will enhance its digital marketing efforts in 2006, the total
marketing spending of Spector Photo Group will decrease
slightly to below EUR 25 million. The main challenge for the
Imaging Group – and for the entire group – is to structurally
reduce the fixed overhead cost base.
Cash flow and operating result will be determined to a
considerable extent by the timing of the implementation of
restructuring within the Imaging Group and by the degree to
which these measures may already be generating a payback
effect during the course of 2006. This makes it virtually impossible to provide a quantifiable forecast at this time.
Excluding restructuring measures, investments are likely to be
at a slightly lower level than in 2005. Spector Photo Group has
also scheduled a repayment of EUR 3 million in debts during
2006.
Report of the Board of Directors
Status of the business since the closing of the
financial year
In the prospectus for the secondary public offering of
December 2005, the company indicated that it has budgeted
EUR 11 million for restructuring costs, to be spread between
the fourth quarter of 2005 and the fourth quarter of 2007.
The Imaging Group has reduced full-time equivalent employment from 916 at year-end 2004 to 808 as of 31 December
2005. As of 31 January 2006 there were 627 full-time equivalents in the 100% subsidiaries ((excluding FLT in Italy and
Digital Photoworks in Australia, that had on average 87 fulltime equivalents in 2005), of the Imaging Group. In addition,
there are 37 staff members in their notice term, thus implying
that the total number of staff will soon reach 590.
The majority of the measures of this restructuring plan will be
implemented in 2006 as scheduled. A major part of IT services
have been outsourced to IBM. This avoids stepwise investments in the future.
The analysis related to the production site in Tanumshede,
Sweden, has also been finalised. Commercial operations in
Scandinavia remain supported by a local — albeit strongly
reduced — production cell. The number of personnel at
this site has already been reduced by 53 between 30 June
2005 and 31 January 2006 (from 135 to 82 full-time equivalents). This reduction will continue in stages to the level of
approximately 75 staff members. Also in this framework,
Scandinavian Internet activities will be transferred later to the
central platform that is managed from Belgium.
The Imaging Group has decided this month to transfer the
activities of FIlmobel in Forest (Brussels, Belgium) to the
headquarters in Wetteren, Belgium. Filmobel Forest is active in
the Belgian wholesale market for photo-related products such
as photo cameras, photo frames, and albums. Discussions
with the staff involved have already started. It is our intention
to relocate all of these activities to the offices and warehouse
space in Wetteren that have become available following the
recent job reductions there. The relocation will also make
support services (IT and administration) more efficient.
Finally, the Fotronic activities will be continued since the
trading in photographic paper has become more attractive
with the market withdrawal of a number of important companies. Fotronic will also use some of the recently freed-up
warehousing space in Wetteren.
Risk management
Risk management is an integral part of the way that Spector
Photo Group is managed. The Company has taken – and will
continue to take – measures with a view to manage these risks
as effectively as possible. These measures also include the
creation of provisions. However, no assurance can be given
that these measures will be fully effective in any given instance
and therefore it is not possible to rule out that some of these
risks may arise and could have an impact on the Company’s
operations, business, financial position and results. 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.
p 23
Spector Photo Group 2005
p 24
Report of the Board of Directors
Financial risks
Market risks
The main financial risks that the group is managing are related
to: the financial debt position of the group, the outstanding
accounts receivable and the transactions in currencies other
than the euro.
- In accordance with the rescheduling of the financial debts
that was agreed in December 2005 with the banking
consortium, the remainder of the loans not yet redeemed
by the end of 2010 then become due and payable and
the loans might be renegotiated or refinanced. The availability of credit lines is therefore related to the degree
to which the group will succeed in generating free cash
flows between 2007 and 2010 in order to further reduce its
financial debt position. The group is mitigating this risk by
developing and fostering a transparent and constructive
relationship with the banking consortium.
- A major part of the activities of the Imaging Group can be
considered as selling at distance to the end-consumers.
These activities have the inherent risk of non-collection of
numerous, relatively small, trade receivables. The group is
mitigating this risk, on the one hand, by promoting on-line
payment for its e-commerce activities and, on the other, by
an adequate debtor management programme. The group
has also taken out an insurance policy for this risk.
- The Company publishes its consolidated financial statements in euros. A significant portion of its assets, liabilities,
revenues and costs are expressed in currencies other than
the euro, including the Hungarian forint, the Swiss franc
and the Swedish krona. As result of this, and of the fact
that important income is generated in currencies other
than that in which the costs are incurred, the Company is
exposed to price fluctuations of these currencies in relation to the euro. Although currency fluctuations can have
a significant effect on the operating results, the company
has judged this risk too small for taking specific measures
other than a strict management follow-up.
The company, and the Imaging Group in particular, is active
on a market that is to a great extent subject to change. The
main market risks are related to: the technological evolutions
and their impact on the consumer behaviour; the evolution
of the consumer price level; the competitive position of the
company; and the Imaging Group’s dependence on a relatively small number of key customers.
- The strategy of the Imaging Group is to a strong degree
based on the findings of prospective market research, which
reveals new opportunities for the company following the
transition of analogue to digital photography. These findings
have an inherent risk for errors and can also be impacted
by future technological evolutions that were not taken into
account when conducting the research studies. The group is
managing these risks by permanently monitoring the technologic evolutions, the market situation and the consumers
on this market – in order to adjust its strategy, its investment
and business plans, should that be required.
- The future profitability of the Company – both for the
Retail group and the Imaging group – will also depend on
the selling prices that it can realise for its products and
services. Their profitability depends partially on the price
elasticity of the demand for these products, combined
with the margin evolution. While the group has assumed
a continued price pressure when developing its business
plan, it also manages further risks in this area by developing new products that are less vulnerable to general
price pressure.
- Although less than 10% of the turnover of the Imaging
Group is realised by means of integrated distribution
chains, the group is taking account of the risk that a part of
its operating revenue depends on a limited number of key
customers. The group is managing this risk by fostering
long-term trade relationships with its key customers and
by combining a good price/quality ratio with a high level of
service.
-
The future market share and business figures of the group
– both in the Retail Group and in the Imaging Group – can
be affected both by actions of existing competitors as well
as by the market entrance of new competitors. By permanently monitoring the competitive landscape, the group is
taking this factor into account for the further development
of its plans and for its way of working.
Risk concerning tax disputes
The company and some of its subsidiaries are involved in
tax disputes that have been submitted to the tax courts and
for which provisions have been recorded. For certain tax
disputes, the company’s opinion, following advice from its
tax advisors, is that no provision needs to be recorded. On
the one hand, this concerns the tax deductibility of insurance
premiums which the Company and some of its subsidiaries
have paid to an insurance company that itself reinsured with a
reinsurance company that is controlled by the Company. The
total of the unpaid disputed tax liability involved in this issue
(including default interest charges up to the beginning of 2006)
amounts to approximately EUR 4.6 million. On the other hand,
these tax issues mainly concern discussions around the tax
deductibility of payments in the context of transactions with
group companies. The total of the unpaid disputed tax liability
involved in these other tax disputes (including default interest
charges up to the beginning of 2006) amounts to approximately EUR 5.2 million. The final outcome of the tax disputes
is uncertain.
The possible changing or interpretation under IAS/IFRS
of the rules on the recognition of intangible assets (in
particular, externally acquired customer relations of the
Imaging Group)
The Board of Directors decided to value the externally
acquired customer relationships according to the cost model
(IAS 38, §74) for the opening balance as at 1 January 2004.
The directly attributable preparatory costs are considered
Spector Photo Group 2005
Report of the Board of Directors
as a component of the cost price of the externally acquired
customer relations, which the Board of Directors believes is
in accordance with IAS 38, §27. At the time this document
was drawn up, there has been no official interpretation on
this from a competent body. It is not known whether such an
official interpretation will emerge, and what this might carry
with it. Depending on the issuing and the contents of such an
interpretation, or depending on changed circumstances, the
bookkeeping entry could possibly be adjusted. For reasons of
transparency, the Company always publishes a breakdown.
Compensation of the committee of statutory
auditors
Note: more detailed comments on this risk can be found in
the prospectus that has been issued for the secondary
public offering of December 2005. This document can be
consulted and downloaded from the corporate website
www.spectorphotogroup.com.
In the 2005 financial year, the committee of statutory auditors have been granted an additional remuneration for a total
of EUR 203,000 for activities that went beyond their regular
mandate. These were mainly related to the editing of the
extraordinary reports with respect to the capital increase
of December 2005 as well as to the interim audit as at 30
September 2005 and a number of specific IFRS-related audits.
The committee of statutory auditors are granted an annual
remuneration of EUR 38,000 in accordance with the decision
of the Ordinary General Shareholder Meeting of 11 May 2005.
In addition, a total remuneration of EUR 333,000 has been
granted to the local auditors for activities related to the audit
in the associated companies that form a group with Spector.
Beyond these remunerations, no payments or advantages in
kind have been made, either by Spector Photo Group N.V. or
by any of its associated companies. No payments have been
made to any persons with whom the statutory auditors would
have concluded a cooperative agreement, with the exception of the companies that perform local audits at the foreign
companies of the group.
p 25
Spector Photo Group 2005
p 26
Consolidated financial statements 2005
Consolidated financial statements
NOTES TO THE BALANCE SHEET AND THE INCOME STATEMENT
Table of content
Notes to the balance sheet and the income statement
Income statement ..........................................................................................................28
Balance sheet ................................................................................................................29
Statement of changes in equity ..................................................................................30
Consolidated cash flow statement .................................................................................31
Concise notes to the consolidated cash flow statement .........................................32
Statement of compliance ...............................................................................................34
Summary of significant accounting policies...................................................................34
The externally acquired customer relationships of Spector Photo Group
under IFRS .....................................................................................................................42
Most important changes from 2004 to 2005 ..................................................................44
Segment reporting and comments.................................................................................45
Comments to the consolidated financial statements 2005 ..................................... 48-77
Report of the Committee of Statutory Auditors .............................................................78
p 27
Spector Photo Group 2005
Consolidated financial statements 2005
(in € ‘000)
INCOME STATEMENT
notes
Revenue
Other operating income
Changes in inventories of finished goods & work in
progress
Work performed by enterprise and capitalised
6
349 087
353 092
7
12 287
13 172
Raw materials and consumables
Remunerations
Depreciation and amortisation expenses
Other operating expenses
8
Profit/(Losses) from operating activities, before
non-recurring items
Non-recurring items from operating activities
Profit/(Losses) from operating activities
Financial cost-net, before non-recurring financial
items
0
-3
6
102
223 552
224 022
9-33
51 098
48 282
10
19 266
18 977
11
65 160
70 846
12
13
14
Profit/(Losses) before tax, before non-recurring
financial items
Non-recurring financial items
Profit/(Losses) before tax
15
Income tax expenses (-)/income
16
Profit or Loss (-) from continuing activities
Discontinued Operations
Profit or Loss (-) from discontinued operations
26
Profit or Loss (-) for the period
Attributable to Minority Interests
Attributable to equity holders of the parent
company
p 28
31.12.2005 31.12.2004
17
2 304
4 237
-8 059
3 995
-5 755
8 232
-6 059
-5 186
-11 814
3 046
-3 163
-12
-14 977
3 034
433
-1 276
-14 544
1 758
-2 522
-839
-17 067
919
14
-109
-17 053
810
notes
Revenue per share
Number of shares
Profit or Loss (-) for the period from continuing
activities
Profit or Loss (-) for the period attributable to equity
holders of the parent company
Weighted average number of (diluted) ordinary
shares at 31 December 2005
Weighted average number of shares
Profit or Loss (-) for the period from continuing
activities
Profit or Loss (-) for the period attributable to equity
holders of the parent company
31.12.2005 31.12.2004
36 619 505
6 761 253
-0.40
0.26
-0.47
0.12
8 233 715
6 761 253
8 233 715
6 761 253
-1.77
0.26
-2.07
0.12
Spector Photo Group 2005
Consolidated financial statements 2005
Balance sheet
(in € ‘000)
ASSETS
Non-current assets
Property, plant & equipment
Investment property
Consolidation goodwill and other goodwill
Intangible assets other than goodwill
Investments in subsidiaries
Investments available for sale
Investment securities - Non Current
Long term receivables
Deferred tax assets
notes
31.12.2005 31.12.2004 01.01.2004
18
38 769
45 290
45 271
19
0
4 570
4 789
20
24 096
26 045
23 015
21
22 906
25 574
25 425
22
11
11
2
22
25
12
12
23
60
286
402
24
4 483
8 545
8 989
25
8 682
8 127
8 985
99 033
118 459
116 890
EQUITY AND LIABILITIES
Total equity
Capital
Reserves and retained earnings (1)
Treasury shares (-)
Currency translation adjustments
notes
31
64 194
22 392
- 10 384
6 791
8 415
-1 304
-1 304
-1 068
-370
-559
-824
52 136
27 320
28 915
1 055
1 035
941
53 192
28 354
29 856
32
54 129
18 629
58 906
33
886
1 029
999
34
2 440
2 202
2 047
25-35
6 314
7 464
7 853
63 769
29 324
69 805
Shareholders’ equity
Minority interests
31
Total equity
Non-current assets
Current assets
Assets held for sale
Inventories
Trade and other receivables
Investment securities - Current
Cash and cash equivalent
Current income tax assets
26
9 234
0
0
27
40 190
44 961
43 378
28
35 528
42 106
44 331
3
3
3
29
20 275
10 143
10 206
30
7 373
8 104
7 560
Current assets
112 604
105 317
105 479
TOTAL ASSETS
211 636
223 776
222 369
Non-current liabilities
Non-current interests bearing financial
obligations
Employee benefit liabilities
Provisions more than one year
Deferred tax liabilities
Non-current liabilities
Current liabilities
Liabilities held for sale
Current interest bearing financial obligations
Trade and other payables
Employee benefit liabilities
Current income tax liabilities
Current liabilities
TOTAL EQUITY AND LIABILITIES
31.12.2005 31.12.2004 01.01.2004
22 392
26-36
5 272
0
0
32
25 155
88 623
48 946
37
49 426
61 783
59 663
33
7 055
7 975
6 086
38
7 768
7 716
8 012
94 675
166 097
122 707
211 636
223 776
222 369
(1) including revenue that is directly processed in equity, and that is related to a fixed asset classified as ‘held with the
intention for divestiture’, for an amount of EUR 289 (000) as of 31/12/2005.
p 29
Spector Photo Group 2005
Consolidated financial statements 2005
Statement of changes in equity
(in € ‘000)
Balance as at 1 January 2004
Capital
22 392
Share
premium
Retained
earnings
Treasury
shares
Currency
translation
adjustments
Shareholders’
equity
Minority
interests
Total equity
8 415
-1 068
-824
28 915
941
29 856
265
265
-15
249
Currency translation differences
Acquisitions/Sale of treasury shares
-236
-236
-236
Net gains and losses not recognised in the Income
statement
Net profit/Loss for the period
Dividends
810
810
-2 434
-2 434
109
919
-2 434
Issue of share capital
Balance as at 31 December 2004
22 392
6 790
-1 304
Currency translation differences
-559
27 320
1 035
28 354
190
190
35
224
Acquisitions/Sale of treasury shares
Net gains and losses not recognised in the Income
statement
Net profit/Loss for the period
-122
-122
-17 053
-17 053
-122
-14
-17 067
Dividends
p 30
Issue of share capital
41 802
Balance as at 31 December 2005
64 194
41 802
-10 384
-1 304
-370
52 136
41 802
1 055
53 192
Spector Photo Group 2005
Consolidated financial statements 2005
Consolidated cash flow statement
(in € ‘000)
For the year ended
2005
2004
-17 053
810
Operating activities
Net profit
-5 242
10 278
9 970
Proceeds from sale of property, plant and equipment
Proceeds from sale of intangible assets
1 981
286
Amortisation, write-offs, impairment of intangible assets
7 265
8 502
Write-offs, impairment on current and non-current assets
6 941
62
Acquisition of other investments
Provisions
273
75
Cash flow from investing activities
Unrealised foreign exchange losses/(gains)
459
-144
5 480
5 039
-220
-17
Loss/(gain) on sale of property, plant and equipment
Loss/(gain) on sale of intangible assets
Income tax expenses
Cost of warrant plan
Other non-cash costs
Minority interests
Profit from operations before changes in working capital and
provisions
14
-433
134
1 802
109
16 908
20 725
6 390
2 523
-1 057
-13 374
-1 592
0
76
Cash generated from operations
10 449
24 542
Interest (paid)/received
-5 033
-6 630
Cash flow from operating activities
192
1 942
Acquisition of property, plant and equipment
-5 985
-5 736
Acquisition of intangible assets
-5 020
-11 884
-14
-4
-8 316
-13 884
Financing activities
Proceeds from the issue of share capital
37 719
-236
Proceeds from borrowings
62 875
Repayments of borrowings
-86 297
-861
Cash flow from financing activities
14 297
-3 530
Net increase/decrease in cash and cash equivalents
10 513
-94
Cash and cash equivalents at the beginning of the year
10 143
10 206
5
30
20 275
10 143
Dividends paid
-14
4 392
Income tax (paid)/received
49
Purchases of own shares
1 276
Decrease/(increase) in inventories
Increase/(decrease) in provisions
1 556
124
Acquisition of subsidiary Litto Color, net of cash acquired
Decrease/(increase) in trade and other receivables
Increase/(decrease) in trade and other payables
2 579
Proceeds from sale of investments
Amortisation, write-back of amortisation and impairment of goodwill
and other goodwill
Net interest (income)/expense
2004
Investing activities
Badwill Litto Color
Depreciation, write-offs, impairment of property, plant and equipment
2005
-884
-591
4 532
17 320
Effect of exchange rate fluctuations
Cash and cash equivalents at the end of the period
Cash and cash equivalents at the end of the period in assets held for
sale
Total cash and cash equivalents
-2 434
386
20 661
10 143
p 31
Spector Photo Group 2005
Consolidated financial statements 2005
Concise notes to the consolidated cash flow statement
General notes: because Litto-Color entered the scope of the
consolidation in November 2004, this only had a two-month effect
in 2004, whereas it was consolidated for the complete 2005
financial year.
The table above is based on the net result, to which the non-cash
items are then added in order to recompile the cash flows in this
way.
Cash flow from operating activities
The cash flow from the operating activities is mainly affected by
the net result and the non-cash elements.
In 2004, the consolidation of Litto Color included badwill, which
is recognised in the result. However, as this is not associated with
a cash inflow, a negative amount is recognised in the cash flow
statement.
Details about the depreciation, amortisation and impairments can
be found in the notes to the consolidated balance sheet on pages
52 to 57 of this document. This mainly concerns depreciation on
investments in property, plant and equipment, and amortisation of
investments in externally acquired customer relationships.
The impairments on non-current and current assets amounting
to EUR 6.9 million mainly relate to the non-cash costs of the nonrecurring operating and financing expenses, which are explained in
the report from the Board of Directors. These impairments mainly
concern customer receivables, inventories within the Imaging
Group, an outstanding receivable from Fotoinvest CVBA, and the
current account of Spector Immobilienverwaltung. See also the
notes on pages 58 and 59 of this document.
p 32
Because of the bridging loan between the start of the year and the
realisation of the capital increase in December 2005, the interest
expenses are higher than in 2004. A portion of this loan, however,
was still not repaid during 2005 and thus did not lead to a cash
outflow in 2005.
The tax payments, which did not lead to a cash outflow in 2005,
are added to this.
For the 600,000 warrants that were issued in December 2005, the
theoretical value was deducted on the income statement and thus
from net profit. Since however no cash outflow was related to this,
this amount is added here.
The other non-cash expenses of EUR 1,802 (000) are related to
reimbursements to former directors that were contributed in kind
to the capital on the occasion of the capital increase of December
2005. As this contribution in kind did not cause any cash inflow,
the corresponding amount is added here.
The items mentioned above lead, in 2005, to a cash flow of EUR
15.1 million from ongoing and discontinued operations prior to
changes in working capital. In 2004 this was still EUR 20,7 million.
The decrease is mainly caused by the lower operating result of the
Imaging Group.
Then the cash flow in the table above is adjusted in function of the
changes in the working capital.
As in 2004, the outstanding customer receivables were reduced.
This is partly a result of the decreased operating income at the
mail-order organisations of the Imaging Group, which repre-
sents an important part of the customer receivables. However,
tightened-up credit management also led to fewer receivables
remaining unpaid.
The lower operating income in specific Group entities, coupled to
stricter inventory management, has also resulted in a lower cash
requirement for the inventories.
On the other hand, the trade and other payables that required
cash outflows were sharply reduced in 2005. It should be noted in
this context that the trade payables at year-end 2004 – because of
the less than ideal financial position of the group – did not present
a normal picture. This was normalised after the capital increase in
December 2005.
Since the tight credit and stock management was unable to free
up as much cash as required to bring the trade payables down
to a better workable level, the difference between the cash flows
from 2004 and 2005 on this line in the table has become even
bigger.
Cash flows from investing activities
This was partly compensated by a lower cash outflow for investing
activities, mainly for the purchase of non-current intangible assets
in the form of externally acquired customer relationships. It should
be noted in this context that the Imaging Group, in 2005, made
relatively more use of techniques to acquire customers that do not
qualify for recognition as intangible assets. The cash that is applied
for this type of customer acquisition, however, is charged against
the operating income, and is therefore not included in cash flows
for investing activities.
Spector Photo Group 2005
Consolidated financial statements 2005
The cash spent on investments in plant and equipment remained
at a level similar to 2004.
The sale of property, plant and equipment provided a cash inflow
amounting to EUR 2.6 million. This included sales of equipment
from the lab in Munster, which was closed in the first half-year of
2005.
Cash flow from financing activities
The financing activities resulted in a net-cash inflow in 2005. The
increase in share capital of December 2005 provided fresh funds
of EUR 37.8 million, that is the amount of EUR 40 million cash
raised, thus excluding the part that was contributed in kind, and
diminished with the costs associated with the transaction.
An agreement was reached with the consortium of banks following
this capital increase. Of the available cash from the increase of
share capital, EUR 15 million was allocated for the repayment
of financial liabilities. The lines of credit could also be used less
heavily. The outstanding financial debt was then rescheduled in
new loan 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”.
This finally resulted in an increase of EUR 10.5 million on the cash
and cash equivalents from the start of the 2005 financial year to
EUR 20.7 million at the financial year-end closing. A part of these
funds will be applied during 2006 to finance the restructuring from
the prospectus of November 2005.
p 33
Spector Photo Group 2005
Consolidated financial statements 2005
1. Statement of compliance
3. Summary of significant accounting policies
Spector Photo Group NV is a company domiciled in Belgium.
The consolidated balance sheet and income statement for 2005
according to IFRS of Spector Photo Group comprise the company
and its subsidiaries (together referred to as ‘Spector Photo Group’
or the ‘Group’) and the Group’s interest in associates. The balance
sheets and income statement were authorised for issue by the
Board of Directors on April 18, 2006.
Basis of preparation
The Group’s presentation currency is the euro, rounded to the
nearest thousand, and the monetary unit in which the majority of
the Group’s investments and operating expenses are denominated.
The consolidated financial statements have been prepared under
the historical cost convention. Any exceptions to this historical
cost convention will be disclosed in the accounting policies below.
The consolidated financial statements comprise the financial statements of Spector Photo Group NV and its subsidiaries drawn up
as of 31 December each year.
The consolidated financial statements are presented before the
effect of the profit appropriation of the parent company proposed
to the general assembly of shareholders.
The consolidated balance sheets and income statement have
been prepared in accordance with International Financial
Reporting Standards (IFRS) issued by the International Accounting
Standards Board (IASB) and approved by the European Commission and with the interpretations issued by the International
Financial Reporting Interpretations Committee (IFRIC) of the IASB.
2. First time adoption of IFRS
The “International Financial Reporting Standards” (IFRS) is applied
to the consolidated financial statements of the Spector Photo
Group for the first time in 2005. IFRS has already been applied to
the figures for the financial year 2004, based on IFRS 1, so that
they can be used as a relevant basis for comparison.
Principles of consolidation
Subsidiaries are those companies in which Spector Photo Group,
directly or indirectly, have an interest of more than one half of the
voting rights or otherwise has control, directly or indirectly, over the
operations so as to obtain benefits from the companies’ activities.
Acquisitions of subsidiaries are accounted for using the purchase
method of accounting. The financial statements of subsidiaries are
included in the consolidated financial statements from the date on
which control is transferred until the date that control ceases.
Joint ventures are companies over which the Group exercises joint
control. The financial statements of these companies are consolidated using the proportionate consolidation method.
p 34
Associates are those companies in which Spector Photo Group
have, directly or indirectly, significant influence over the financial
and operating policies, but which it does not control. This is
presumed by ownership of between 20% and 50% of the voting
rights. Associates are accounted for by the equity method of
accounting, from the date that significant influence commences
until the date that significant influence ceases. When Spector
Photo Group’s share of losses exceeds the carrying amount of the
associate, the carrying amount is reduced to nil and recognition
of further losses is discontinued except to the extent that Spector
Photo Group has incurred obligations or made payments on
behalf of the associate.
Available-for-sale financial investments are measured at their
fair value. If a reliable price quotation in an active market is not
available or if the fair value of the investment cannot be reliably
measured, the available-for-sale investments are measured at
cost.
Investments, in which Spector Photo Group’s interest is less than
20%, are recorded at cost less appropriate allowances in the case
of a permanent impairment in value.
All inter-company transactions, balances, and unrealized gains
and losses on transactions between group companies have been
eliminated. Accounting policies of subsidiaries have been changed
where necessary to ensure consistency with the policies adopted
by Spector Photo Group.
A listing of the company’s significant subsidiaries and associates
can be found in the notes hereafter.
Spector Photo Group 2005
Revenue recognition
Sale of goods
Revenue is recognized in the income statement when the significant risks and rewards of ownership have been transferred to the
buyer and no significant uncertainties remain regarding recovery
of the consideration due, the associated costs or the possible
return of goods; the amount of revenue can be measured reliably;
it is probable that the economic benefits associated with the transaction will flow to the enterprise; and the costs incurred or to be
incurred in respect of the transaction can be measured reliably.
Rendering of Services
Net sales consist of sales to third parties, less value added taxes
and any trade discounts.
When the outcome of a transaction involving the rendering of
services can be estimated reliably, revenue associated with the
transaction is recognized by reference to the stage of completion
of the transaction at the balance sheet date.
Interests, royalties, and dividends
Interest is recognized on a time proportion basis that reflects the
effective yield on the asset.
Royalties are recognized on an accrual basis in accordance with
the terms of agreements.
Dividends are recognized when the shareholder’s right to receive
payment is established.
Revenue comprises the fair value for the sale of goods and
services, net of value-added tax, rebates and discounts, and after
eliminating sales within the Group.
Consolidated financial statements 2005
Expenses
Interest expense comprises interest payable on borrowings. Other
non-operating expense (income) comprises foreign exchange
losses and gains with respect to non-operating activities and
losses and gains on hedging instruments with respect to nonoperating activities.
All interest and other costs incurred in connection with borrowings are expensed as incurred. The interest expense component
of finance lease payments is recognized in the income statement
using the effective interest rate method. Operating lease payments
are recognized in the income statement on a straight-line basis
over the term of the lease.
Foreign currency translation
The functional and presentation currency of Spector Photo Group
NV and its subsidiaries in countries of the Euro zone is the euro.
Transactions in foreign currencies are recorded at the rates of
exchange prevailing at the date of the transaction or at the end
of the month before the date of the transaction. At the end of the
accounting period, the unsettled balances on foreign currency
receivables and liabilities are valued at the rates of exchange
prevailing at the end of the accounting period. Foreign exchange
gains and losses are recognized in the income statement in the
period in which they arise. Non-monetary assets and liabilities
denominated in foreign currencies are translated at the exchange
rate ruling at the date of the transaction.
Assets and liabilities of foreign subsidiaries are translated at the
rates of exchange prevailing at balance sheet date. Income,
expenses, cash flows, and other movement items are translated
at the average exchange rates for the period. The components
of the shareholders’ equity of foreign subsidiaries are translated
at historical rates. Translation gains and losses are accumulated
and separately disclosed as cumulative translation adjustments in
shareholder’s equity.
Property, plant and equipment
An item of property, plant, and equipment is recognized as an
asset, if and only if, it is probable that future economic benefits
associated with the item will flow to the entity and the cost of the
item can be measured reliably. This principle applies both to costs
incurred when the item is acquired and to the costs of subsequent
additions.
The cost is determined as the purchase price, including import
duties and non-refundable purchase taxes less any trade
discounts or rebates, and any costs directly attributable to bring
the asset to its working condition and location for its intended use.
Cost is discounted to present value if payment is deferred beyond
normal credit terms.
Subsequent expenditure is capitalized when it can be clearly
demonstrated that it has resulted in an increase in the future
economic benefits expected to be obtained from the use of an
item of property, plant, and equipment in excess of its original
assessed standard of performance.
Subsequent measurement
Land and buildings: Revaluation model
Subsequent to initial recognition as an asset, land and buildings
are carried at a revalued amount, being its fair value at the date
p 35
Spector Photo Group 2005
Consolidated financial statements 2005
of the revaluation less any subsequent accumulated depreciation
and subsequent impairment losses.
Increases above depreciated cost are taken directly to equity as
a separate revaluation surplus, and decreases below depreciated
cost are recognized as an expense. However, decreases that
reverse previous increases (and vice versa) on the same asset are
first applied so as to reverse the previous entry.
Buildings are depreciated using the straight-line method, pro rata
on a monthly basis, and defined in general as follows:
Buildings:
- administrative
3%
- production
5%
Other property, plant, and equipment: Cost model
For all other items of property, plant, and equipment, the carrying
amount is its cost reduced by any accumulated depreciation and
impairment losses.
The depreciable amount is allocated on a systematic basis over
its estimated useful life. The depreciation costs are expensed
unless they are included in the carrying amount of another asset.
The residual value of an asset is often insignificant and therefore is
immaterial in the calculation of the depreciable amount. All other
items of property, plant, and equipment are depreciated using the
straight-line method, pro rata on a monthly basis, and defined in
general as follows:
Installations
Machines
Mini-labs
Office equipment
Company cars
Vehicles
Computer hardware
p 36
10% - 20%
14% - 20%
20%
14%
20%
33%
20% - 33%
Improvements to buildings are capitalized and depreciated over
the remaining useful life of the buildings themselves, where
improvements to leased buildings are capitalized and depreciated
over the remaining term of the lease or their expected useful life if
shorter.
Investment property
Investment property is measured at depreciated cost less any
accumulated impairment losses. The fair value of the investment
property is disclosed in the notes to the consolidated financial
statements hereafter.
De-recognition
An item of property, plant, and equipment is derecognized on
disposal, or when no future economic benefits are expected from
its use and subsequent disposal. Gains and losses on de-recognition are taken to income statement.
An investment property is derecognized on disposal or when the
investment property is permanently withdrawn from use and no
future economic benefits are expected from its disposal. Gains or
losses on de-recognition of an investment property are recognized
in the income statement in the period of de-recognition.
Leases
Leases under which the Group assumes substantially all the risks
and rewards of ownership are classified as finance leases. Property, plant, and equipment acquired by way of finance leases are
capitalized at an amount equal to the lower of their fair value and
the present value of the minimum lease payments at inception of
the lease, less accumulated depreciation and impairment losses.
Goodwill
Goodwill is recognized as an asset and measured at its cost,
being the excess of the cost of the business combination over the
acquirer’s interest in the net fair value of the identifiable assets,
liabilities, and contingent liabilities.
Each lease payment is allocated between the liability and finance
charges so as to achieve a constant periodic rate of interest on
the remaining balance of the liability for each period. The corresponding rental obligations, net of finance charges, are classified
as other long-term payables or current liabilities, depending on
the period in which they are due. Lease interest is charged to
the income statement as a financial cost over the lease period.
Capitalized leased assets are depreciated over the useful life of
the asset, consistent with the depreciation policy for depreciable
assets that are owned.
Leases under which substantially all the risks and rewards of
ownership are effectively retained by the lesser are classified as
operating leases. Lease payments under an operating lease are
recognized as an expense on a straight-line basis over the lease
term.
Goodwill is measured at cost less any accumulated impairment
losses. Goodwill relating to acquisitions from 1 January 2004 is
not amortized and goodwill already carried in the balance sheet
is not amortized after 1 January 2004. Goodwill is reviewed for
impairment, annually or more frequently, if events or changes in
circumstances indicate that the carrying value may be impaired.
An impairment loss recognized for goodwill is not reversed in a
subsequent period. Gains and losses on the disposal of an entity
include the carrying amount of goodwill relating to the entity sold.
Goodwill is allocated to cash-generating units for the purpose of
impairment testing.
If the acquirer’s interest in the net fair value of the identifiable
assets, liabilities, and contingent liabilities exceeds the cost of the
business combination, the acquirer reassesses the identification
and measurement of the acquired entity’s identifiable assets, liabilities, and contingent liabilities and the measurement of the cost of
the combination. Any excess remaining after that reassessment is
recognized immediately in profit or loss.
Spector Photo Group 2005
Consolidated financial statements 2005
Intangible assets
An intangible asset is recognized if, and only if, it is probable that
the expected future economic benefits that are attributable to the
asset will flow to the enterprise, and the cost of the asset can be
measured reliably. An intangible asset is measured initially at cost.
Cost is discounted to present value if payment is deferred beyond
normal credit terms.
Amortization
If the useful life is finite, the depreciable amount is allocated on a
systematic basis over its estimated useful life. Intangible assets are
amortized using the straight-line method, pro rata on a monthly
basis. The amortization is expensed unless it is included in the
carrying amount of another asset. Intangible assets are generally
amortized as follows:
Research and development costs
Research costs are expensed as incurred. Expenditure on
development activities, whereby research findings are applied
to a plan or design for the production of new or substantially
improved products, is capitalized if the product is technically and
commercially feasible and the company has sufficient resources
to complete development and use or sell the asset. The expenditure capitalized includes the cost of materials, direct labor and
an appropriate proportion of overheads. Other development
expenditure is recognized in the income statement as an expense
as incurred. Capitalized development expenditure is stated at cost
less accumulated amortization and impairment losses.
- Local goodwill
- Standard software packages
immediately recorded as expenses
- Other intangible assets
Other intangible assets
Other intangible assets, including local goodwill, acquired by the
company, are stated at cost less accumulated amortization and
impairment losses. Expenditure on internally generated goodwill
and brands is recognized in the income statement as an expense
as incurred.
Subsequent expenditure
Subsequent expenditure on capitalized intangible assets is capitalized 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 the asset reliably. All other expenditure is expensed as incurred.
Subsequent expenditure
Externally acquired customer relationships can be recognized as
an intangible asset if they meet the following criteria:
-
customer relationships have to be identifiable
the entity controls the customer relationships
future economic benefits should flow from the customer relationships
5%
14% - 20%
There is a rebuttable assumption that the useful life of an intangible
asset will not exceed 20 years.
De-recognition
An intangible asset is derecognized on disposal, or when no future
economic benefits are expected from its use and subsequent
disposal. Gains and losses on de-recognition are taken to income
statement.
Externally acquired customer relationships
Capitalized customer relationships have been measured at cost
price at the date of transition. Based on an analysis of all of the
relevant factors, including the changing markets and the transition
from analogue to digital photography, the Board has decided to
depreciate the value of these assets in the opening balance sheet
and the future capitalized externally acquired customer relationships on a straight-line method, pro rata on a monthly basis, over
a period of seven years, with no residual value.
To meet these criteria, expenditure to acquire customer relationships is capitalized if the acquisition corresponds to the following
methods:
(1) Purchase of customer relationships from other mail order
companies
(2) Exchange transactions of customer relationships with other
mail order companies
(3) Purchase of the right to access a channel through which
customer relationships can be acquired in a privileged manner
(1) Purchase of customer relationships from other mail order
companies:
Mail order companies of the Group acquire databases of
customer relationships from other mail order companies. In
fact, these companies sell the right to consider their customer
relationships as customer relationships of Spector Photo
Group and, to treat them as such; as a result of which, they
effectively become customer relationships of Spector Photo
Group.
Directly attributable costs of preparing the asset for its intended
use are capitalized according to IAS 38.27.
p 37
Spector Photo Group 2005
(2) Exchange transactions of customer relationships with other
mail order companies:
In line with the acquisition method described in (1), customer
relationships are being exchanged between mail order
companies of different industrial sectors. The related incoming
invoices are the basis for the capitalization of such exchange
transactions, in accordance with IAS 38.16.
Similar to (1), directly attributable costs to prepare the intangible asset for its intended use, are capitalized.
(3) Purchase of the right to access a channel where customer
relationships can be acquired in a privileged manner:
Contradictory to the acquisition methods (1) and (2), the first
customer/supplier transaction is only acknowledged at acquisition. There is not yet an existing customer relationship between
the sales organization and the entity as is the case in acquisition methods (1) and (2). Yet, there is a privileged relation
between the customers and the entity, equal to a customer
relationship. In these cases, the possible customers have given
their explicit or implicit approval to be contacted by the entity in
order to close a sales transaction leading to the acquisition of a
customer relationship by the entity. The underlying invoices for
the right to develop a future relationship are the basis for these
externally acquired relationships.
Expenditures directly attributable for preparing the asset for
their intended use are capitalized.
Borrowing costs
Borrowing costs directly attributable to the acquisition, construction, or production of an asset requiring a long preparation period
are added to the cost of this asset until it is ready for use. Such
p 38
Consolidated financial statements 2005
borrowing costs are capitalized as part of the cost of the asset
when it is probable that they will result in future economic benefits
to the Group and the costs can be measured reliably. Other
borrowing costs are recognized as an expense in the period in
which they are incurred.
Impairment
At each reporting period, the Group reviews whether there is any
indication that an item of property, plant, and equipment and other
non-current assets may be impaired. If there is, a full impairment
review is performed to estimate the recoverable amount of the
asset in order to determine the extent of the impairment loss. A
full review is performed annually for goodwill and intangible assets
with indefinite lives, or that are not yet available for use.
The recoverable amount is the higher of the net selling price of the
asset and its value in use. The value in use is the net present value
of the estimated future cash flows arising from the use of an asset
and from its disposal at the end of its useful life. The recoverable
amount is calculated at the level of the cash-generating unit to
which the asset belongs. Where the recoverable amount is below
the carrying amount, the latter is reduced to the recoverable
amount. The impairment is immediately charged to the income
statement. Where the previously recorded impairment no longer
exists, the carrying amount is partially or totally re-established.
An impairment loss recognized for goodwill is not reversed in a
subsequent period.
Inventories
Inventories are measured at the lower of cost and net realizable
value. The cost of inventories comprises all costs of purchase,
costs of conversion, and other costs incurred in bringing the
inventories to their present location and condition.
The cost of inventories is determined by the weighted average
method. The Group reviews inventories for slow-moving or obsolete items on an ongoing basis and establishes provisions when
the net realizable value of any inventory item is lower than the
value calculated according to the above-mentioned method.
Net realizable value is the estimated selling price in the ordinary
course of business, less the estimated costs of completion and
selling costs.
When inventories are sold, the carrying amount of those inventories is recognized as an expense in the period in which the
related revenue is recognized. The amount of any write-down of
inventories to net realizable value and all losses of inventories is
recognized as an expense in the period the write-down or loss
occurs. The amount of any reversal of any write-down of inventories, arising from an increase in net realizable value, is recognized
as a reduction in the amount of inventories recognized as an
expense in the period in which the reversal occurs.
Trade and other receivables
Trade and other receivables are carried at cost less impairment
losses. At each reporting date, an estimate is made for doubtful
debts when it is probable that the entity will not be able to collect
all amounts due. Bad debts are written off during the year in which
they are identified.
Income taxes
Income tax on the profit or loss for the year comprises current and
deferred tax.
Current tax for current and prior periods is, to the extent unpaid,
recognized as a liability. If the amount already paid in respect
of current and prior periods exceeds the amount due for those
periods, the excess is recognized as an asset. The benefit relating
Spector Photo Group 2005
to a tax loss that can be carried back to recover current tax of a
previous period is recognized as an asset.
Current tax liabilities (assets) for the current and prior periods is
measured at the amount, expected to be paid to (recovered from)
the taxation authorities, using the tax rates (and tax laws) that have
been enacted or substantively enacted by the balance sheet date.
Deferred income tax is provided, using the liability method, on all
temporary differences arising between the tax base of assets and
liabilities and their carrying amounts in the consolidated financial
statements.
Deferred income tax assets are recognized to the extent that is
probable that future taxable profits will be available against which
the asset can be utilized. A deferred tax asset is reduced to the
extent that it is no longer probable that the related tax benefit will
be realized.
Deferred tax assets and liabilities are measured at the tax rates
that are expected to apply to the period when the asset is realized
or the liability is settled, based on tax rates (and tax laws) that have
been enacted or substantively enacted by the balance sheet date.
Current and deferred tax assets and liabilities are measured using
the announced tax rate (and tax laws) in case announcements of
tax rates (and tax laws) by the government have the substantive
effect of actual enactment.
Derivative financial instruments
Derivative financial instruments are recognized initially at cost.
Subsequent to initial recognition, derivative financial instruments
are stated at fair value. Changes in fair value linked to designated
and effective cash flow hedges of a recognized asset or liability,
a firm commitment or a highly probable forecasted transaction,
are recognized immediately in equity. Changes in fair value not
linked to cash flow hedging operations are recorded in the income
statement.
Consolidated financial statements 2005
Cash and cash equivalents
Cash and cash equivalents comprise cash on hand, cash at bank,
short-term deposits with an original maturity of three months or
less and highly liquid investments that are readily convertible to
known amounts of cash and where the risk of change in value is
negligible.
The cash and cash equivalents are net of any outstanding bank
overdrafts.
Share capital
Repurchase of share capital
When share capital recognized as equity is repurchased, the
amount of the consideration paid, including directly attributable
costs, is recognized as a change in equity. Repurchased shares
are classified as treasury shares and presented as a deduction
from total equity.
consumes the economic benefit arising from service provided by
an employee in exchange for employee benefits, and as a liability
when an employee has provided service in exchange for employee
benefits to be paid in the future.
Short-term employee benefits
Short-term employee benefits are employee benefits that are
entirely payable within twelve months after the end of the period in
which the employees have achieved the related performance.
Post-employment benefits
Post-employment benefits include pensions, post-employment life
insurance, and medical care benefits.
-
Defined contribution plans
Contributions to contribution benefit plans are recognized
as en expense in the income statement when incurred. Any
contributions paid in advance or arrears are reflected as
prepayments or accruals. Any accrued contributions that do
not fall due within twelve months beyond the balance sheet
date are discounted to their present value.
-
Defined benefit plans
For defined benefit plans, the amount recognized in the
balance sheet is determined as the present value of the
defined benefit obligation adjusted for the unrecognized
actuarial gains and losses and less any past service costs not
yet recognized and the fair value of any plan assets. Where
the calculation results in a net surplus, the recognized asset
does not exceed the total of any cumulative unrecognized net
actuarial losses and past service costs and the present value of
any economic benefits available in the form of refunds from the
plan or reductions in future contributions to the plan.
The recognition of actuarial gains and losses is determined
separately for each defined benefit plan. To the extent that the
Dividends
Dividends are recognized as a liability in the period in which they
are declared.
Interest-bearing loans and borrowings
Interest-bearing loans and borrowings are recognized initially at
cost, less attributable transaction costs. Subsequent to initial
recognition, interest-bearing loans and borrowings are stated at
amortized cost with any difference between cost and redemption
value being recognized in the income statement over the period of
borrowings on an effective interest basis.
Trade and other liabilities
Trade and other liabilities are stated at cost.
Employee benefits
Employee benefits are recognized as an expense when the Group
p 39
Spector Photo Group 2005
net cumulative unrecognized gain or loss exceeds ten percent
of the greater of the present value of the defined benefit obligation and the fair value of plan assets, that excess is recognized
in the income statement over the expected average remaining
working lives of the employees participating in that plan.
Past service costs are recognized as an expense on a straightline basis over the average period until the benefits become
vested. To the extent that the benefits are already vested
following the introduction of, or changes to, a defined benefit
plan, past service costs are recognized as an expense immediately.
The present value of the defined benefit obligations and the
related service costs are calculated by a qualified actuary using
the projected unit credit method.
The discount rate used is the yield at balance sheet date on
high quality corporate bonds that have maturity dates approximating the terms of the Group’s obligations. The amount
charged to the income statement consists of current service
costs, interest costs, the expected return on any plan assets,
and actuarial gains and losses.
Other long-term employee benefits
The net obligation in respect of long-term employee benefits,
other than pension plans, post-employment life insurance, and
medical care, is the net amount of future benefit that employees
have earned in return for their service in current and prior periods.
These benefits are accrued over the period of employment using
the accounting methodology similar to that for defined benefit
pension plans. However, actuarial gains and losses and any past
service cost are immediately recognized.
p 40
Consolidated financial statements 2005
Termination benefits
Termination benefits are recognized as a liability and an expense
when the enterprise is demonstrably committed to either terminate
the employment of an employee or group of employees before the
normal retirement date according to a detailed formal plan without
possibility of withdrawal or provide termination benefits as a result
of an offer made in order to encourage voluntary redundancy.
Benefits falling due more than twelve months after balance sheet
date are discounted to present value.
Equity compensation benefits
The stock option plans allow Group employees to acquire shares
of Spector Photo Group NV. The option exercise price equals the
average market price of the underlying shares during an agreed
period shortly before the grant and no employee compensation
cost of the obligation is recognized at this time. When the options
are exercised, equity is increased by the amount of the proceeds
received.
Provisions
Provisions are recognized when the Group has a present legal or
constructive obligation as a result of a past event, it is probable
that an outflow of resources embodying economic benefits will
be required to settle the obligation, and a reliable estimate can be
made of the amount of the obligation.
A provision for restructuring is recognized when the Group has
approved a detailed and formal restructuring plan, identifying at
least the business or part of the business concerned, the principal
locations affected, the location, function and approximate number
of employees who will be compensated for terminating their
services, the expenditures that will be undertaken, and when
the plan will be implemented. Plus, the Group has raised a valid
expectation in those affected that the restructuring will be carried
out. Costs relating to the ongoing activities of the company are not
provided for.
A provision for onerous contracts is recognized when the unavoidable cost of meeting its obligations under the contract exceed the
expected economic benefits to be received from a contract.
Provisions are not recognized for future operating losses.
Government grants
Government grants are recognized at their fair value where there
is reasonable assurance that the grant will be received and all
attaching conditions will be complied with. When the grant relates
to an expense item, it is recognized as income over the years
necessary to match the grant on a systematic basis to the costs
that it is intended to compensate. Where the grants relates to an
asset, the fair value is credited to a deferred income account and
is released to the income statement over the expected useful life
of the relevant asset by equal annual installments.
Segment reporting
The Group’s primary reporting format is business segments and its
secondary format is geographical segments.
The operating businesses are organized and managed separately
according to the nature of the products and services provided,
with each segment representing a strategic business unit that
offers different products and serves different markets. The primary
reporting format represents the following segments: Imaging,
Retail and Corporate.
Spector Photo Group 2005
Consolidated financial statements 2005
The Group’s geographical segments are determined by the
location of the Group’s assets and operations. The secondary
reporting format represents the following segments: European
Union (EU) and Other.
Segment results include revenue and expenses directly attributable to a segment and the relevant portion of revenue and
expenses that can be allocated on a reasonable basis.
Segment assets and liabilities comprise those operating assets
and liabilities that are directly attributable to the segment or can be
allocated to the segment on a reasonable basis.
Segment assets and liabilities do not include income tax items.
Transfer prices between business segments are set at arm’s
length basis in a manner similar to transactions with third parties.
p 41
Spector Photo Group 2005
Consolidated financial statements 2005
The externally acquired customer relationships of Spector Photo Group under IFRS
Customer relationships are intangible assets as specified
by IFRS
Customer relationships are an undeniable economic value. Indeed,
investments in customer relationships represent the future yield of
the company.
The concept of ‘customer relationships’ is recognized by IAS. IAS
38 paragraph 16 states:
“An entity may have a portfolio of customers or a market share
and expect that, because of its efforts in building customer relationships and loyalty, the customers will continue to trade with the
entity. However, in the absence of legal rights to protect, or other
ways to control, the relationships with customers or the loyalty
of the customers to the entity, the entity usually has insufficient
control over the expected economic benefits from customer relationships and loyalty for such items (e.g. portfolio of customers,
market shares, customer relationships and customer loyalty) to
meet the definition of intangible assets. In the absence of legal
rights to protect customer relationships, exchange transactions for
the same or similar non-contractual customer relationships (other
than as part of a business combination) provide evidence that the
entity is nonetheless able to control the expected future economic
benefits flowing from the customer relationships. Because such
exchange transactions also provide evidence that the customer
relationships are separable, those customer relationships meet the
definition of an intangible asset.”
To be considered an intangible asset, the customer relationships
must meet the following criteria:
a. Customer relationships must be identifiable
b. The company must have control over the customer relationships
c. Future proceeds must result from these customer relationships
The customer relationships of Spector Photo Group’s Mail Order
businesses have met all of these conditions:
p 42
a. The Spector Photo Group’s Mail Order companies have databases at their disposal that include the name and address of
each customer relationship, supplemented by important details
of each individual customer relationship’s order and payment
behaviour (such as date of last order, order frequency, ordered
products, preference for certain promotions, correct payment,
etc.).
The customer relationships are therefore identifiable and they
are the subject of exchange, rental, and sales transactions with
Mail Order companies from other sectors. They are therefore
detachable (see IAS 38, 12: an asset meets the identification
criterion if it is detachable and can be sold, let, or exchanged).
b. In compliance with all legal provisions, the Spector Photo
Group’s Mail Order companies can approach these customer
relationships autonomously without any obligations to any
third parties. In addition, the existence of previous transactions
between the company and the customer relationship indicates
a contractual tie, even if not formally recognized. Legally
speaking, Spector possesses an exclusive property. For that
matter, the company is also legally responsible for the protection of the information regarding these customer relationships
(the legal and judicial aspects are dealt with in several European guidelines, translated into legal provisions by country).
To conclude, the aforementioned exchange, rental, and sales
transactions also demonstrate the existence of control.
The fact that, in addition to rental and sales transactions,
exchange transactions can also be concluded, demonstrates
that access by third parties can be restricted.
c. The Mail Order companies can determine the future business
volume with each customer relationship on a statistical basis.
These are not assessments or estimates, but mathematical
calculations according to the ‘Lifetime Value’ model. This
model allows the calculation of the ‘Net Present Value’ of future
economic benefits for a group of customer relationships. The
model considers all elements of the profit-and-loss account.
Because it has sufficient statistical data on each individual
customer, Spector can apply this model to the customer
relationships of its Mail Order organizations to a high degree
of certainty and reliability. Because of the changing market
in which the group is operating today, a verification of these
statistical models is required on an annual basis.
Recognition of an intangible asset according to IFRS
IAS 38 paragraph 21 states that an intangible asset must be
recognized if future economic benefits are likely to be expected
and if the cost of the asset can be reliably determined. The
probability criterion is always considered to be met by separately
acquired intangible assets (IAS 38 paragraph 25).
The acquisition cost of the customer relationships is substantiated
by purchase invoices.
The separate acquisition of customer relationships is accomplished through various methods. The most common external
acquisition methods, besides the acquisition of trade funds,
retained under IFRS are:
a) Purchase from companies possessing customer relationships
b) Exchange with companies possessing customer relationships
c) Purchase of access rights to a channel through which
customer relationships can be procured in a privileged manner
a) Purchase from companies possessing customer relationships
Mail Order companies within the group purchase customer
relationships files from other Mail Order companies outside the
photographical sector on a regular basis. These are customer relationships of companies such as La Redoute, 3 Suisses, et cetera.
An invoice is drawn up for each of these transactions.
For the acquisition of customer relationships from a different
company, the Mail Order organizations incur costs for preparing
the assets for their intended use. For example, a specific offer
must be prepared for the customer relationships of the selling
Spector Photo Group 2005
company. This includes mainly the postal charges and a purposeprint envelope containing a separate acquisition code which
enables the customer to effectively accept the offer, after which
he becomes an acquired customer relationship of the Spector
companies. Since these costs are necessary to realize the intangible fixed asset, they are considered part of this intangible fixed
asset. Customer gifts and business presents, for example, are not
included.
An essential difference with publicity is the fact that such transactions involve not merely the communication of a message, but that
an actual specific offer is made which is not available to everyone.
For each of these offers, a separate acquisition code is developed,
necessary to grant the customer access to the offer, and is also
subsequently used by Spector to gain a detailed insight into the
company’s economic benefit per customer relationship.
The related costs have been thoroughly audited. Only those costs
that – in the Board’s opinion – meet the definition of “directly
attributable costs of preparing the asset for its intended use” as
specified in IAS 38 §27 have been selected. These only include
the costs that can be in effect directly attributed to the preparation
of the asset for its intended use. For Spector Photo Group, these
directly attributable costs do not include any advertising or promotional costs, but only specific preparatory costs. The expenditures
that are not part of the cost of an intangible asset, as specified in
IAS 38 §29, have been excluded. Also, the initial operating losses
are excluded from the carrying amount of the intangible fixed
asset, as specified in IAS 38 §30.
b) Exchange with companies possessing customer
relationships
Fully in line with the acquisition method described above,
customer relationships are sometimes exchanged between Mail
Order companies from different industries, for example between
3 Suisses France, and ExtraFilm France.
The invoices concerned demonstrate the fact that this too is a
separate external acquisition. Since each outgoing invoice has an
Consolidated financial statements 2005
incoming invoice for the same amount, there is no actual money
flow for such exchange transactions.
In addition, directly attributable costs are incurred to prepare the
intangible asset for its intended use. The invoices for these costs
are also entered as an asset.
c) Purchase of access rights to a channel through which
customer relationships can be procured in a privileged
manner
This acquisition method differs from the preceding in the sense
that the first customer-supplier transaction occurs upon acquisition. In other words: the selling company has not necessarily
already concluded any sales transaction with its customer
relationships. Yet these persons and the company involved have
an actual privileged relationship, equal to a customer relation. In
all cases, the persons involved have indeed explicitly or implicitly
consented to being contacted by the company, resulting in the
acquisition of a customer relationship. As with the preceding
acquisition methods, these customer relationships can respond to
a specific offer (with the unique acquisition code that goes with it,
which is not valid for everyone).
In practice these are, for example, customer relationships from
companies commercializing the Boîtes Roses and Boîtes Bleues.
Such packages contain specific offers by several companies,
focusing specifically on the distribution among new mothers or
mothers of toddlers, who explicitly or implicitly agreed to receive
these offers.
an invoice is even drawn up for this entitlement based on a fixed
sum per actual acquired customer relation, or on a commission for
each actual order.
This last method differs from a regular commission arrangement
because the Spector companies acquire the right to approach
the customer relationships directly for the next transaction at the
same time. In other words, they have gained control over these
customer relationships.
Measurement of the customer relationships
After examination of the ‘external acquisition’ matter by the
Committee of Statutory Auditors, the decision was taken to retain
the three above-mentioned methods under IFRS, selected from a
total of eight methods. All other acquisition methods were banned
since they cannot be considered for entering as an asset under
IFRS.
The values at which the externally-acquired customer relationships
are recognised are according to the IAS 38 § 74 cost-price model,
and are also separated for the sake of clarity into the costs of the
externally-acquired customer relationships and directly attributable
costs.
In the Internet world, this involves the acquisition of relationships
that have registered on a specific Web site, thereby explicitly
consenting to a privileged relation with a view to future transactions.
In view of the privileged relationship, in which the consumer grants
the right to develop a future customer relationship, these relationships also effectively count for customer relationships. These are
also externally procured customer relationships, in some cases
p 43
Spector Photo Group 2005
Consolidated financial statements 2005
4. Most important changes from 2004 to 2005
The most important changes from 2004 to 2005 can be reduced
to the following factors:
-
the appropriation of the result for the financial year;
the share capital increase in December 2005;
the rescheduling of the financial liabilities resulting from this;
the reclassification of certain assets as “assets held for sale”;
and
the reclassification of certain activities as “discontinued operations”.
The share capital has been increased by EUR 41.8 million. This
refers to the capital increase of December 2005. An amount of
EUR 15 million from the capital increase was applied to reduce
the financial liabilities. The net working capital (current assets
of continuing operations less current non-financial liabilities of
continuing operations) amounts to EUR 39.1 million after the
capital increase. As at 31 December 2004, this only amounted
to EUR 27.8 million, as a result of which the operational activities
p 44
were seriously hampered during the largest part of 2005. The
still unallocated portion of the capital increase is reflected in the
increased amount under “cash and cash equivalents”.
Partly by repayment of a number of other current debts, the total
outstanding financial liabilities as at 31 December 2005 were
reduced to EUR 79.3 million. In December 2005, these debts
could also be appropriately restated separately in non-current
liabilities (EUR 54.1 million) and current liabilities (EUR 25.2 million).
The net financial debt (financial debts less cash, cash equivalents
and other financial assets) now amounts to EUR 59.0 million. This
corresponds with a net debt/equity ratio (net financial debt in relation to the total shareholders’ equity) of 110.9%.
Non-core operations and their assets are held with a view to their
sale, and are therefore recognized separately on the balance
sheet. As a result, the asset and liability items involved were
restated.
Spector Photo Group 2005
Consolidated financial statements 2005
5. Segment reporting - Business Segments
(in € ‘000)
CORPORATE
Dec. 2005
Revenue
External revenue
Inter-Segment
Total revenue
External Other operating income
Inter-Segment
Other operating income
Profit/(Losses) from operating
activities, before non recurring
items
Profit/(Losses) from operating
activities (EBIT)
RETAIL
IMAGING
Eliminations
Dec. 2004
Dec. 2005
Dec. 2004
Dec. 2005
Dec. 2004
Dec. 2005
Dec. 2004
120
279
195 066
190 724
153 902
162 089
3 841
5 614
14
27
5 374
5 342
9 229
10 983
3 961
5 893
195 080
190 751
159 276
167 431
-9 229
-10 983
Total operating segment liabilities
Unallocated liabilities
Discontinued
operations
Dec. 2004
Dec. 2005
Dec. 2004
Dec. 2005
Dec. 2004
349 087
353 092
5 692
4 006
354 779
357 098
349 087
353 092
5 692
4 006
354 779
357 098
12 287
13 172
33
6
12 321
13 179
12 287
13 172
33
6
12 321
13 179
-544
-618
-6 300
7 613
7 545
2 116
211 636
223 776
158 445
195 422
598
443
3 853
3 536
7 837
9 193
2 173
5
129
449
481
2 532
2 783
2 675
2 616
3 858
3 665
8 286
9 674
-2 532
-2 783
206
-2 114
5 771
5 183
-3 673
1 168
2 304
4 237
-2 343
-3 247
5 462
4 771
-8 874
6 707
-5 755
8 232
-9 222
-5 198
433
-1 276
-14 544
1 758
-2 522
-839
38 010
100 523
77 027
78 332
101 007
140 278
-31 335
-119 683
Spector Photo
Group
Dec. 2005
2 077
Financial cost-net
Income tax expenses (-)/income
Profit or loss (-) for the period from
continuing activities
Profit or loss (-) from discontinued
operations
Profit or loss (-) for the period
Attributable to Minority interests
Attributable to equity holders of the
parent company
Total operating segment assets
Unallocated assets
Continued
operations
-17 067
919
14
-109
-17 053
810
184 709
199 449
19 382
22 211
2 379
22 735
26 176
37 929
53 333
39 478
-22 080
-35 060
59 807
65 082
933
7 178
1 817
78 653
64 219
55 615
40 910
72 745
-9 255
-84 623
93 974
122 390
3 730
772
p 45
Consolidated financial statements 2005
Spector Photo Group 2005
5. Segment reporting - Business Segments (continued)
(in € ‘000)
CORPORATE
IMAGING
Dec. 2004
Dec. 2005
Dec. 2004
Dec. 2005
Dec. 2004
38
114
3 019
3 657
2 887
142
265
Continued
operations
Eliminations
Dec. 2005
Total capital expenditure Property,
plant & equipment
Total capital expenditure consolidation goodwill and other Goodwill
Total capital expenditure
Intangible assets other than
Goodwill
Depreciation and other non-cash
expenses
Impairment losses recognised
in operating result
in equity
Average number of persons
employed in full time equivalents
RETAIL
Dec. 2005
Dec. 2004
Dec. 2004
Dec. 2005
Dec. 2004
Dec. 2005
Dec. 2004
1 963
5 943
5 734
42
2
5 985
5 736
76
3 173
76
3 314
76
3 314
4 944
8 569
18 875
18 920
2 513
-17
318
39
16
4 906
8 235
4 944
8 569
1 384
4 132
3 646
14 561
14 021
18 958
19 051
-35
32
2 481
19
2 513
-17
47
636
733
808
-83
-54
1 450
916
-131
-235
1 696
-289
18
15
Segment reporting - Geographical Segments
European Union
Revenue
External revenue
Inter-Segment
Total revenue
Total operating segment assets
Unallocated assets
Total capital expenditure Property, plant &
equipment
Total capital expenditure consolidation
goodwill and other goodwill
Total capital expenditure Intangible assets
other than Goodwill
p 46
Spector Photo
Group
Dec. 2005
-54
6
Discontinued
operations
Other
Eliminations
Dec. 2005
Dec. 2004
Dec. 2005
Dec. 2004
329 611
332 809
19 475
20 283
7 396
6 287
1 192
337 008
339 096
193 852
202 234
Spector Photo Group
Dec. 2005
Dec. 2004
Dec. 2005
Dec. 2004
1 713
8 588
8 000
349 087
353 092
20 667
21 996
-8 588
-8 000
349 087
353 092
47 457
43 515
-49 054
-44 184
192 255
201 565
19 382
22 211
5 985
5 516
0
220
5 985
5 736
76
1 925
0
1 389
76
3 314
4 115
7 907
829
662
4 944
8 569
1 468
1 711
Spector Photo Group 2005
The Spector Photo Group reporting covers two segments
(Imaging Group and Retail Group), and is completed by Corporate
and Discontinued Operations.
Retail segment
The Retail segment consists entirely of the Retail Group operating
division. This division consists of the legal entity Photo Hall Multimedia NV (Belgium) and its wholly-owned subsidiaries Photo Hall
France SARL, Hifi International SARL (Luxembourg) and Föfoto
Kft (Hungary). The Retail Group is centrally organised under Photo
Hall Multimedia NV and is also centrally managed at operational
level by the managing director of Photo Hall Multimedia NV, who
reports directly to the Chief Executive Officer of Spector Photo
Group NV on all of his Group’s activities.
This division and its entities are all active in the same field: the retail
trade in consumer electronics and related products.
The customers in this segment are also the final consumers in the
countries in which this division’s entities operate.
All this division’s entities primarily put their products on the market
via the channel of retail outlets. Although all of the entities also
operate websites on internet, the total turnover of internet sales is
not yet significant.
These entities have similar levels of investment requirements,
working capital and generate comparable gross margins and EBIT
margins. The Retail Group has a different risk profile compared to
that of the Imaging Group.
Imaging segment
The Imaging segment also consists entirely of one operating division – the Imaging Group. This division contains the legal entity
Photomedia NV (Belgium) and its full or partial subsidiaries. The
Imaging Group is centrally organised under Photomedia NV and
is also centrally managed at operational level by the managing
director of Photomedia NV, who reports directly to the Chief
Executive Officer of Spector Photo Group NV on all of his Group’s
activities.
Consolidated financial statements 2005
The operating entities within Imaging provide goods and services
that are directly concerned with both analogue and digital photography. These are mainly products and services concerned with
the production of photo prints, which implies a specific production
process for “photofinishing”. A limited number of entities in the
Imaging Group trade in goods that are required for this production
process.
The ultimate customers for these activities are almost always the
consumers. For the majority of the Imaging Group’s entities, the
end-consumer is also the direct customer. The marketing concept
that Filmobel NV uses under the Spector™ brand name is also
aimed at the end-user, although the photographer is the direct
customer. The same applies for the Kodak Images™ commercial
concept and the distribution brands that are supported by Litto
Color NV. Incidentally, it is also Litto Color that develops websites
for the distribution customers and manages them for endconsumers.
The returns from virtually all the entities in this division are of similar
size – notwithstanding any national, culture-related or channelspecific differences. These entities have similar levels of investment
requirements, working capital and generate comparable gross
margins and EBIT margins. One of the most significant challenges
confronting the Imaging Group concerns reducing the fixed overhead costs considerably. This goal can only be realized within the
Imaging Group as a whole, and not in a smaller entity or group.
Specific key performance indicators (KPIs) have been identified for
the development of the digital operations of the Imaging Group.
The returns of these entities clearly differ from entities in the Retail
Group (see above). The criteria for internal control are not relevant
for the Retail Group. The Imaging Group has a different risk profile
compared to that of the Retail Group.
The distribution channels are aligned with the market characteristics, which are often determined nationally and culturally. While
these distribution channels in the traditional analogue market can
be used to justify separate segmentation, this is being flattened
out in the new, digital, market. Generally speaking, the differences
between mail order and trade appear to be smoothing out on the
digital market. An early trend can be identified in which the pricing
in these distribution channels is converging and, at the same time,
so are the relative marketing efforts. It is also already clear today
that the boundaries between the distribution channels will not only
blur, but will even be abandoned, so that a cross-channel concept
will emerge. For example, consumers will increasingly often order
photo prints via internet, then sometimes want the photos delivered to their homes by mail and, at other times, want to collect
the photos from a retail outlet in their neighbourhood.
p 47
Spector Photo Group 2005
6. Revenue
Spector Photo Group has maintained the level of revenue from the
continuing operations in 2005 relatively well (-1.1%) in an eventful
year. Without Litto Color, which joined the scope of the consolidation in November 2004, the consolidated revenue of the Group
would have fallen by 6.5%.
The Retail Group showed a slight increase in its revenue (+2.3%).
Notwithstanding the considerable changes in the photo market,
the decline in the revenue of the Imaging Group (including Litto
Color) was still limited at 5.0%. In 2005, the decrease of revenue
from analogue photography could not completely be compensated by the increasing income from digital photography. The
average price levels in both divisions remained relatively stable.
More detailed information on the revenue is provided in the
segment reports on page 45 of this document.
7. Other operating income
Virtually 80% of the other operating income was realised via three
important items. The marketing contributions from key suppliers
represent more than 60% of the other operating income. The
sales of waste materials from the labs of the Imaging Group to
recycling companies and re-users comprise some 7% of the other
operating income, as do the overdue payments of mail-order
customers recovered by debt-collection agencies.
The total amount of other operating income decreased by 6.7%
in 2005 from 2004. This is almost entirely attributable to the lower
marketing contributions for the Imaging Group. The increase in the
marketing contributions for the Retail Group could not compensate for this effect.
8. Raw materials and consumables
The cost of raw materials and consumables decreased slightly
(-0.2%) in 2005, and is thus somewhat less than the fall in the
revenue (-1.1%).
p 48
Consolidated financial statements 2005
9. Remunerations
(in € ‘000)
2005
2004
Wages and salaries
38 808
36 628
Social security contributions
10 611
9 904
1 423
1 445
Contributions defined contribution plans
355
323
Decrease in the defined benefit obligations
-45
-15
-54
-3
51 098
48 282
Other employee expenses
Decrease in the other long term
employee benefit liabilities
Remunerations
The remunerations rose by 5.8%. This is mainly due to remunerations of Litto Color, which was fully consolidated for the first time
for the entire 12 months in 2005. Furthermore, a wage indexation
also contributed, mainly in de Retail Group.
The average number of full time equivalent (FTE) members of staff
dropped by 243, from 1,711 in 2004 to 1,468 in 2005. Against
the 12-month average number of 1,468 FTEs for 2005, there were
effectively 1,401 FTEs on 31 December 2005. The effect of this
drop will only be fully visible in the remunerations for 2006.
Spector Photo Group 2005
Consolidated financial statements 2005
Summary of the remuneration for the members of the supervisory and regulatory bodies
10. Depreciation and amortisation
Remuneration and interests of the executive committee members (in € ‘000)
Executive committee
member
Fixed
remuneration
component (1)
Variable
remuneration
component
Other
remuneration
components
(1) (2)
(1) (3)
Number of share options
(date of option plan,
exercise price) (4)
Number of
warrants (exercise
price per warrant)
1 900 (1999 - EUR 37.16)
4 000 (2001 - EUR 9.69)
7 500 (2002 – EUR 10.45)
400 000 (EUR 3.36)
1 900 (1999 - EUR 37.16)
4 000 (2001 - EUR 9.69)
5 500 (2002 – EUR 10.45)
150 000 (EUR 3.36)
Depreciation and amortisation have risen by 1.5%. This also
reflects the impact from the inclusion of Litto Color in the scope
of the consolidation in November 2004. This only related to two
months in 2004, whereas it was for the entire year in 2005.
11. Other operating expenses
(in € ‘000)
1.Tonny Van Doorslaer
335
60
7
2. Stef De corte
3. Christophe Levie
50 000 (EUR 3.36)
4. Dominique le Hodey (5) (6)
5. Chris Van Raemdonck (5)
Total 2, 3, 4 and 5
1 505
278
1 900 (1999 - EUR 37.16)
4 000 (2001 - EUR 9.69)
4 500 (2002 – EUR 10.45)
Not applicable
No outstanding share
options owned any longer
Not applicable
2005
2004
Services & other costs
60 557
65 275
Other operating taxes
1 287
1 268
Loss on disposal of Property, Plant &
Equipment
91
480
Loss on disposal of trade receivables
1 666
2 588
Other operating charges
1 828
1 142
-270
92
65 160
70 846
Other operating charges: provisions
Other operating expenses
42
(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 includes financial
targets.
(3) The other components refer to the costs for pensions, insurances, and the cash value of the other benefits in kind (expense allowances, company car, etc.).
(4) For the exercise periods, please see page 69 of this document.
(5) Now no longer an executive committee member.
(6) The amount of the higher fixed remuneration component also contains EUR 750,000 for the golden handshake arrangement with Mr le Hodey. Mr le Hodey has
used this amount to purchase new shares, as reported in the prospectus for the capital increase of December 2005.
The total cost for the 2004 financial year amounts to EUR 1,530 (000).
Total directors’ reimbursements are EUR 139 (000) paid out during the 2005 financial year, and EUR 124 (000) for the 2004 financial year.
In 2005, 8% savings were achieved on the other operating
expenses. Expenditure was strictly controlled, especially on
marketing and general expenses (services and other costs).
12. Profit from operating activities, before non-recurring
items
The result from operating activities before non-recurring items
(REBIT) amounted to EUR 2.3 million (-45.6%). This drop comes
exclusively from the Imaging Group, which still suffered mainly
from the negative impact of the transition in photography in 2005,
while the growing digital activities have not yet contributed enough
to the operating result.
The drop in the recurring operating result indicates the necessity
to structurally reduce the fixed overhead costs, especially in the
Imaging Group. The measures already implemented in this context
last year will be extended further during 2006. The commercial
business model will also continue to be developed in more detail.
p 49
Consolidated financial statements 2005
Spector Photo Group 2005
13. Non-recurring items from operating activities
(in € ‘000)
Impairment of Property, Plant &
Equipment
2005
2004
-695
Impairment of Goodwill + other
impairments
-1 818
17
Restructuring charges
-3 370
-1 263
Closing lab in Munster
-2 176
Badwill from Litto Color
Non-recurring (income)/expenses
5 242
-8 059
3 995
The transition from analogue to digital photography has made a
number of measures essential – both for the Imaging Group that
operates in this market – and indirectly for the Group as a whole.
The total non-recurring operating expenses for the 2005 financial
year amount to EUR 8.1 million and consist of 64% for the Imaging
Group, 4% for the Retail Group and 32% for Corporate.
This amount roughly breaks down as follows:
- EUR 695 (000) Impairment losses on property, plant and
equipment, mainly on minilabs and other equipment within the
Imaging Group
- EUR 1,818 (000) Impairment losses of goodwill and other
impairments, with the items: EUR 798 (000) concerning
customer receivables of the Imaging Group: EUR 110 (000) for
inventories within the Imaging Group, EUR 470 (000) impairments on goodwill of the entities in the Imaging Group that are
held for sale, and EUR 440 (000) on the buildings concerned
- 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 the restructuring plan
and the new business model
p 50
EUR 2,176 (000) costs related to the closing of the lab in
Munster, France (Imaging Group )
In 2004, the net non-recurring operating income amounted to
EUR 3,995 (000), mainly due to the ‘badwill’ in the acquisition of
Litto Color. The net amount of EUR 1,263 (000) for restructuring
costs is the result of various expenditure and income. The main
restructuring costs were the EUR 1,168 (000) fees for external
advice during preparations for the joint venture with Valora Imaging
that could not be realised. An additional EUR 303 (000) was spent
on restructuring at ExtraFilm in Scandinavia, and EUR 412 (000) at
Photo Hall in Hungary. Against this, among other items, was nonrecurring income of EUR 410,000 from the release of a blocked
bank account of Porst Holding in Switzerland. Since the liquidation of Porst Holding, this amount had been kept blocked for the
external shareholders of Porst Holding. However, as this amount
was still not claimed by the external shareholders, it has been
granted to Spector Photo Group.
14. Financial cost-net, before non-recurring financial
items
(in € ‘000)
Interest income
Interest expense
Net (gains)/losses on sale of financial
assets
Net foreign exchange (gains)/losses
Other financial (income)/charges
Financial cost-net, before non-recurring financial items
2005
2004
454
566
-5 934
-5 605
5
-10
-572
-263
-12
127
-6 059
-5 186
The financial result before non-recurring financial items amounted
to minus EUR 6.0 million. This is EUR 0.9 worse than in 2004. This
was partially caused by EUR 0.3 million less favourable foreign
exchange differences than in 2004 (mainly between the euro and
the Swedish krona), and partially by higher interest expenses due
to the bridging loan between the start of the year and the realization of the capital increase in December 2005.
The financial statements were prepared using the following
exchange rates.
Currency
exchange rates
Closing rate
Average rate
2005
2004
2005
2004
Australian dollar
1.6109
1.7459
1.6273
1.6926
Swiss franc
1.5551
1.5429
1.5479
1.5443
Danish krone
7.4605
7.4388
7.4525
7.4395
Hungarian forint
2.5287
2.4597
2.4860
2.5053
Norwegian krone
7.9850
8.2365
8.0044
8.3615
Swedish krona
9.3885
9.0206
9.3032
9.1273
American dollar
1.1797
1.3621
1.2379
1.2474
15. Non-recurring financial items
Several financial assets were written down in 2005, which resulted
in a non-recurring financial expense of EUR 3.2 million. This was
mainly for the write-down of an outstanding account receivable
not yet due with Fotoinvest CVBA, seen the price developments in
the Spector shares, which are the company’s only assets and thus
constituting the underlying security for the receivable concerned.
There is also a write-down on the current account of the German
company Spector Immobiliën Verwaltung with Spector Coordination centre. The latter is linked to the estimate of the fair value of
the building in Dresden, which is this company’s only asset.
Spector Photo Group 2005
Consolidated financial statements 2005
Reconciliation of effective income tax expenses (-)/Income
16. Income tax expenses (-)/Income
2005
2004
-1 411
-4 309
Profit / (Losses) before tax
-14 977
3 037
Theoretical tax rate *
30.35%
30.89%
61
1 451
(in € ‘000)
Recognized in the income statement
Tax calculated at the theoretical tax rate*
(in € ‘000)
2005
2004
Current tax expenses (-)/Income
Taxes on the result for the financial year
-1 188
-1 125
Adjustments to taxes for preceding periods
-268
152
Impact of non-deducteble expenses
-1 154
-1 471
Utilization and write-back from/(addition to) provisions for taxes
-121
-81
Impact of reversed (utilized) tax losses
1 552
1 705
-1 576
-1 054
Increase in provisions concerning tax claims
-121
-81
Over/(under) provided in preceding years
-268
152
Other (mainly withholding taxes and social statute Coordination centre)
-235
1 499
-1 576
-1 054
2 009
-222
433
-1 276
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
1 816
631
-111
-1 112
304
259
2 009
-222
433
-1 276
Impact of tax exempt revenues
Effective current income tax expenses (-)/Income
Impact of deferred taxes
Income tax expenses (-)/Income recognized in the income
statement
* The theoretical tax rate is calculated as the weighted average of the domestic theoretical tax
rates applicable to profits of the taxable entities in the countries concerned.
In view of the overall loss situation, an effective tax rate is not applicable for the Group as a whole
for 2005.
The effective tax rate for the Group as a whole for 2004 amounted to 42.06%.
17. Attributable to Minority Interests
The minority interests concern Digital Photoworks Ltd. (Australia) and FLT (Italy). During the
2004 financial year, both minority interests contributed to the profit, whereas in 2005 they both
recorded a loss.
p 51
Consolidated financial statements 2005
Spector Photo Group 2005
18. Assets
Property, plant and equipment
(in € ‘000)
Land & buildings
Plant, machinery &
equipment
Furniture, fixtures &
vehicles
Assets under construction
Total
33 921
95 631
20 363
257
150 172
265
3 120
2 577
23
5 985
-771
-9 454
-702
-1
-10 928
2 355
0
0
0
2 355
-4 859
-43
-67
0
-4 969
Other transfers
-350
-5 124
5 978
-247
257
Translation differences
-265
-602
-63
-4
-934
0
6
1
0
7
30 298
83 533
28 087
30
141 947
14 918
78 464
11 500
104 882
1 193
5 826
2 105
9 124
439
695
0
1 134
-140
-7 889
-540
-8 569
-2 822
-35
-33
-2 889
Other transfers
-242
-2 666
3 076
168
Translation differences
-104
-541
-33
-678
0
6
1
7
13 243
73 860
16 076
0
103 178
at end of 2004
19 003
17 167
8 862
257
45 290
at end of current period
17 055
9 673
12 011
30
38 769
Gross carrying amount
Balance at end of previous year
Changes :
Acquisitions
Sales & Disposals
Revaluation increase/decrease
Transfer to assets classified as held for sale
Other changes
Balance at end of current period
Depreciation and impairment
Balance at end of previous year
Changes :
Depreciation
Impairment losses recognized/reversed
Sales and disposals
Transfer to assets classified as held for sale
Other changes
Balance at end of current period
Carrying amount
p 52
Spector Photo Group 2005
Consolidated financial statements 2005
The impairment losses on land and buildings recognized in the table above concern the buildings
intended for sale and can be found under non-recurring items from operating activities.
things, the commercial and physical ageing of the buildings, the cyclic economic conditions, and
expenses associated with any sale.
Leased assets recognized in the table above, which the Group leases under the form of financial
lease contain:
Without the selected option of recognizing land and buildings at their fair value, then the net
carrying amount at the prior financial year-end would amount to EUR 15,145 (000) instead of EUR
19,003 (000). As at the end of the current period under review, this would have produced a net
carrying amount of EUR 11,963 (000) instead of EUR 17,055 (000).
Land & buildings
Plant, machinery & equipment
Furniture, fixtures & vehicles
Acquisition
value
Accumulated
depreciation
and
impairment
Carrying
amount
166
-92
74
1 245
-679
566
0
0
0
1 411
-771
640
Recognition at fair value used as its deemed cost
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 its deemed cost at that date.
As a result of this option in the transition to IFRS on 1 January 2004, an additional value of EUR
3,167 (000) was recognized for the land. This additional value concerns land of the subsidiaries
Photo Hall Multimedia, Fotronic, ExtraFilm Scandinavia, and Promo Concept Investment (PCI).
As a result of the entry of Litto-Color into the consolidation scope on 31 December 2004, an
additional revaluation of EUR 691 (000) was recognized in land.
On 31 December 2005, an additional revaluation of EUR 2,066 (000) was recognized for the site
in Budapest (Hungary), which includes EUR 701 (000) for the land and EUR 1,365 (000) for the
building. Furthermore, the revaluation gain of EUR 543 (000) for buildings of Fotronic in Braine
l’Alleud (Belgium) and EUR 289 (000) for the buildings in Munster and Colmar have been removed
from this category because of the classification of these buildings as assets held for sale.
The valuations of the fair value of land and buildings mentioned above were appraised by the
accredited assessors Valorem Expertises (Belgium), Ateamus (Hungary) and Claesson Konsult
(Sweden). The properties were valued as unencumbered by tenancy. 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 data available, in view of
the specialised category of the fixed assets and considering these are seldom sold except as
premises being used by a company, these assets – in accordance with IAS 16 – were recognized
at their “depreciated replacement value”. This means that the starting 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
Net carrying amount
The net carrying amount of the property, plant and equipment decreased between 2004 and
2005 by EUR 6.5 million.
The decrease in land, buildings, plant, machinery and equipment is mainly attributable to the
reclassification of the buildings of Spector Grand-Est ( France) and Fotronic, and of the activities
of Sacap France and Spector Fotohandel (Austria) as “assets held for sale”. The further decrease
of the carrying amount relates to a capitalization rhythm that has been systematically reduced
since 2002, whereas the depreciation over the years has remained relatively stable.
Only furniture, fixtures and vehicles have increased by EUR 3.1 million, which is almost exclusively
attributable to the Retail Group.
Interests in other companies
During the past period, no significant interests were taken in other companies, with exception
of the acquisition of Litto-Color NV in November 2004 – with its lab in Ostend, Belgium – which
increased the property, plant and equipment at that time by EUR 5.3 million. There was also the
sale of the building in Aartselaar, Belgium, as an offset to this increase in 2004.
Investments in the labs of the Imaging Group
In 2003, the Group’s subsidiaries still possessed four labs: in Wetteren (Belgium), Tanumshede
(Sweden), Budapest (Hungary), and Munster (France).
The lab building in Budapest was converted into offices and storage space during 2004. Specific
plant and equipment and other assets were then sold, because the photofinishing activities for
the Hungarian market had been outsourced since that time. As a result of the changes on the
photo market, the lab in Munster was closed in 2005 and the production activities have been
transferred to Wetteren.
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 investment. The lab in Ostend was already equipped for digital photofinishing activities at the time of its
acquisition.
p 53
Spector Photo Group 2005
Consolidated financial statements 2005
Investments in the Retail Group
Almost all shops in the Retail Group are rented. However, the main building of Photo Hall in
Forest, Belgium is owned by the group, as is the main building of Photo Hall in Budapest,
Hungary, to which the former building of the Budapest lab was added in 2004. The capitalizations mainly refer to the interior decoration of new shops and the refurbishments of existing shops
— mostly under the brand of Photo Hall or Hifi International.
2005
Total
47 700
17 574
65 274
76
76
Sales & Disposals
-45
-45
Translation differences
-30
-30
47 700
17 574
65 274
28 988
10 242
39 229
-0
1 511
1 511
470
-0
470
Sales and disposals
-0
-11
-11
Translation differences
-0
-21
-21
Other changes
-0
-0
-0
29 458
11 720
41 178
At end of 2004
18 712
7 332
26 045
At end of current period
18 242
5 854
24 096
Gross carrying amount
Balance at end of current period
6 897
Changes :
Balance at end of current period
Other
Goodwill
Acquisitions
Acquisition value
Transfer to assets classified as held for sale
Consolidation
Goodwill
Changes :
This balance sheet item had no value as at 31 December 2005, because the asset concerned
– the building in Graz, Austria – was restated as an “asset held for sale”.
Balance at end of previous year
(in € ‘000)
Balance at end of previous year
19. Investment property
(in € ‘000)
20. Consolidation goodwill and other goodwill
Amortisation and impairment
-6 897
0
Balance at end of previous year
Changes :
Amortisation
Depreciation and impairment
Balance at end of previous year
Depreciation
Impairment losses recognized/reversed
Transfer to assets classified as held for sale
Balance at end of current period
Impairment losses recognised/reversed
2 326
164
-143
-2 347
Balance at end of current period
0
Carrying amount
Carrying amount
At end of 2004
At end of current period
4 570
0
The impairment losses from the table above relate to Spector Fotohandel (Austria) and have been
recognized under losses from discontinued operations.
p 54
Spector Photo Group 2005
This heading concerns, on the one hand, the consolidation goodwill with its main components:
EUR 7.4 million for Photo Hall (Belgium, Luxembourg, Hungary) and EUR 5.3 million for ExtraFilm
Scandinavia. On the other, this category also contains local goodwill of EUR 3.1 million for shops
in the Retail Group and EUR 2.7 million goodwill for the customer database of KodaPost in Scandinavia, which was acquired by the Imaging Group in 2004. There were no acquisitions in 2005,
as a result of which the net carrying amount was further amortised.
The impairment losses from the table above include EUR 409 (000) for Sacap France, EUR 47
(000) for Fotronic, EUR 1 (000) for Spector Fotohandel, and EUR 13 (000) for the subsidiary
Plastic Unit Production (PUP). These are recognized under non-recurring items from operating
activities.
At the end of December 2005, in accordance with IAS 36, the company performed impairment
tests on the 13 identified cash-generating units to examine whether an impairment loss should
be recognized. These tests demonstrate that in each case the recoverable amount of these units
was higher than the carrying amount of these units. Consequently, no impairment losses needed
to be recognized for the continuing activities.
The results of the tests for the four most important cash-generating units are more detailed below.
These four units together represent 90.50% of the total net carrying amount of the consolidation
goodwill. This concerns: ExtraFilm Scandinavia, Hifi International Luxembourg, Photo Hall Belgium
and ExtraFilm BeNeFra & Central Europe (Belgium, the Netherlands, France, and Switzerland).
ExtraFilm Scandinavia
The net carrying amount of the consolidation goodwill that was attributed to this unit was EUR
5.25 million as at 31 December 2005.
The realisable value is higher than the net carrying amount stated above. The realisable value is
calculated on the basis of the value in use.
This calculation takes the projections of the future free cash flows for the coming five financial
years and adds a continuing annual growth of 2%. The projections for 2006 and 2007 correspond with the budgets approved by the Board of Directors, without taking into account the
cost savings that may nevertheless result from the restructuring measures that still have to be
performed. The projections for 2008, 2009 and 2010 are based on prudent extrapolations by
the management. The continuing annual growth of 2% is justified by the permanent character of
the activities and a conservative development in turnover that takes into account the changing
market conditions. The most important assumptions are: (i) a further drop of turnover in 2006,
but growing turnover, however, by an average of 12% per annum starting in 2007; and (ii) a slight
fall in the average selling prices in 2006, which will increase with effect from 2007 on the basis
Consolidated financial statements 2005
of the changing product mix. These assumptions correspond with market analysts’ consensus
concerning the future trends on the photo market.
The results of this calculation are discounted at 15.23%. This discount rate reflects: a market-level
return on equity and loan capital, the current balance between equity and loan capital for this
cash-generating unit and the estimation of additional risks and volatility for the potential developments in the market in which this unit operates.
Hifi International Luxembourg
The net carrying amount of the consolidation goodwill that was attributed to this unit was EUR
3.59 million as at 31 December 2005.
The realisable value is higher than the net carrying amount stated above. The realisable value is
calculated on the basis of the value in use.
This calculation takes the projections of the future free cash flows for the coming four financial
years and adds a continuing annual growth of 2%. While the projections for 2006 and 2007
correspond with the budgets approved by the Board of Directors, the projections for 2008 and
2009 have been based on extrapolations by the management. The permanent character of the
activities justifies the continuing annual growth of 2%. The most important assumptions are an
average annual increase of the free cash flow of 10% for the period 2006-2009, and a stable
gross margin.
The results of this calculation are discounted at 7.47%. This discount rate reflects a market-level
return on equity and loan capital in their current mutual balance.
Photo Hall Belgium
The net carrying amount of the consolidation goodwill that was attributed to this unit was EUR
3.34 million as at 31 December 2005.
The realisable value is higher than the net carrying amount stated above. The realisable value is
calculated on the basis of the value in use.
This calculation takes the projections of the future free cash flows for the coming four financial
years and adds a continuing annual growth of 2%. While the projections for 2006 and 2007
correspond with the budgets approved by the Board of Directors, the projections for 2008 and
2009 have been based on extrapolations by the management. The permanent character of the
activities justifies the continuing annual growth of 2%. The most important assumptions are an
average annual increase of the free cash flow by 30% for the period 2007-2009, and a stable
gross margin.
This calculation also uses a discount rate of 7.47 and reflects a market-level return on equity and
loan capital in their current mutual balance.
p 55
Spector Photo Group 2005
ExtraFilm BeNeFra & Central Europe
The net carrying amount of the consolidation goodwill that was attributed to this unit was EUR
4.30 million as at 31 December 2005.
The realisable value is higher than the net carrying amount stated above. The realisable value is
calculated on the basis of the value in use.
This calculation takes the projections of the future free cash flows for the five coming financial
years and adds a continuing annual growth of 2%. The projections for 2006 and 2007 correspond with the budgets approved by the Board of Directors, without taking into account the cost
savings that may result, however, from the restructuring measures that still have to be performed.
The projections for 2008, 2009 and 2010 are based on prudent extrapolations by the management. The continuing annual growth of 2% is justified by the permanent character of the activities
and a conservative development in turnover that takes account of the changing market conditions. The most important assumptions are: (i) a further drop of turnover in 2006, but will grow,
however, with average 12% per annum starting in 2007; and (ii) a slight fall in the average selling
prices in 2006, which will increase with effect from 2007 on the basis of the changing product
mix. These assumptions correspond with market analysts’ consensus concerning the future
trends on the photo market.
The results of this calculation are discounted at 15.23%. This discount rate reflects: a market-level
return on equity and loan capital, the current balance between equity and loan capital for this
cash-generating unit and the estimation of additional risks and volatility for the potential developments in the market in which this unit operates.
p 56
Consolidated financial statements 2005
Spector Photo Group 2005
Consolidated financial statements 2005
21. Non-current intangible assets other than goodwill
(in € ‘000)
Concessions,
patents,
licenses, etc.
Development
costs
Externally
acquired
customer
relationships
Total
17 655
1 251
61 880
80 786
Acquisition value
Balance at end of previous year
Changes :
Additions from internal development
6
0
138
75
4 726
4 939
-3
-194
0
-197
-27
0
0
-27
-257
0
0
-257
-73
0
-496
-570
17 438
1 132
66 110
84 679
15 792
1 119
38 300
55 212
579
67
6 619
7 265
0
-124
0
-124
-27
0
0
-27
-137
0
0
-137
-62
0
-354
-416
16 145
1 063
44 565
61 773
At end of 2004
1 863
132
23 580
25 574
At end of current period
1 292
69
21 545
22 906
Acquisitions
Sales & Disposals
Transfer to assets classified as held for sale
Other transfers
Translation differences
Balance at end of current period
6
Non-current intangible assets mainly concern the externallyacquired customer relationships of the mail-order companies in
the Imaging Group (EUR 21.5 million) and, to a lesser degree,
patents, licences and software developed in-house. Page 42 of
this document provides more detailed information on the externally
acquired customer relationships.
Up until 2004, there was a relative balance between the newly
acquired customer relationships and the related amortizations.
Because of the transition from analogue to digital photography,
the Imaging Group calls on other techniques and instruments
to acquire new customers. These techniques qualify less for
recognition as intangible assets. Compared to EUR 4.7 million
acquisitions of external customer relationships, there was EUR 6.6
million in amortisation of external customer relationships.
In addition, the amount of new development costs for patents and
in-house developed software is less than the amortisation.
Amortisation and impairment
Balance at end of previous year
Changes :
Amortisation
Sales and disposals
Transfer to assets classified as held for sale
Other transfers
Translation differences
Balance at end of current period
Carrying amount
p 57
Spector Photo Group 2005
Consolidated financial statements 2005
22. Investments in subsidiaries
23. Non-current investment securities
This category concerns the shares of Norden Inkasso, a Scandinavian debt-collection agency
that is related to the mail-order operations. These shares are held in the Group by ExtraFilm
Norway.
This category contains a number of investments that are held by subsidiaries of the Group.
(in € ‘000)
Investments in
subsidiaries
Shares
Non-current investment securities, opening balance
Gross amount
Accumulated impairment losses (-)
Investments in subsidiaries, opening balance
Gross amount
(in € ‘000)
4 676
-4 390
11
Impairment losses
Accumulated impairment losses (-)
Translation differences
Impairment losses
-219 (*)
-7
Translation differences
Non-current investment securities, ending balance
Investments in subsidiaries, ending balance
Gross amount
11
Accumulated impairment (-)
Accumulated impairment (-)
Investments in subsidiaries
Gross amount
3 039
-2 978
11
Non-current investment securities
Investments available for sale
In 2005, Promo Concept Investment (PCI), a subsidiary, acquired the remaining shares of Spector
Immobilien Verwaltung. This explains the increase in this category. The 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.
60
(*) The impairment losses concern the EUR 216 (000) negative change in value of shares of
Fotoinvest, which are held by the subsidiary Alexander Photo and have been recognized under
non-recurring financial items.
The differences between the opening and closing balances, besides factors mentioned above,
also relate to write-offs of non-current financial assets.
p 58
Spector Photo Group 2005
Consolidated financial statements 2005
24. Long term receivables
(in € ‘000)
2005
2004
Trade receivables
615
0
Cash guarantees
377
1 827
Other receivables
3 491
6 717
4 483
8 545
The decrease from 2004 to 2005 results mainly from the write-down by EUR 1.2 million of an
outstanding account receivable owed by Fotoinvest CVBA (see the Report from the Board of
Directors, on page 21 of this document), and from the write-down of the EUR 1.4 million owed
by Spector Immobilien Verwaltung (SIV). Both impairment losses combined amount to EUR 2.6
million and are recognized in the income statement as non-recurring financial charges.
As mentioned in the previous note, an impairment loss (EUR 1.2 million) was recorded on the
outstanding account receivable owed by Fotoinvest. This account receivable is recognized
under the “Other related parties”. The other accounts receivable from the subsidiaries involve an
account receivable from SIV for EUR 1,213 (000) and an amount owed by a joint venture, which
is recognized according to proportionate consolidation as an amount of EUR 2,183 (000). The
balances of the trade accounts receivable and trade payables as well as the purchase and sale of
goods relate to the joint venture.
The remunerations of managers in key positions is mentioned on page 49.
Joint ventures
Spector Photo Group holds, via its Filmobel subsidiary, a 50% interest in the company STL
France Belgium. Because there is joint control, the interests in STL France Belgium are recognized in the consolidation using proportionate consolidation.
The Interests that are recognized in the consolidated financial statements concerning STL France
Belgium are as follows:
Related parties:
(in € ‘000)
2005
Subsidiaries
Trade receivables
79
Other receivables
3 396
Other
related
parties
2 114
(in € ‘000)
2004
Total
Subsidiaries
79
127
5 510
4 729
Other
related
parties
Total
2004
26
9
1 966
1 628
Non-current liabilities
164
137
Current liabilities
855
708
10 014
8 378
9 484
7 767
Non-current assets
Current assets
127
3 345
2005
8 074
Operating income
Operating expenses
Liabilities with related
parties
Trade payables
277
Other liabilities
277
377
700
377
700
553
553
Transactions with
related parties
Sale of goods
Purchase of goods
10
10
6
6
878
878
1 556
1 556
p 59
Consolidated financial statements 2005
Spector Photo Group 2005
25. Deferred tax assets
(in € ‘000)
Balance
at end of
previous year
Recognized in
result
Translation
differences
Other movements
Balance at the
end of current
period
Property, plant and equipment
0
62
0
0
62
Intangible assets
0
315
0
0
315
Provisions
96
-13
1
0
83
Unused Tax Losses
8 031
193
-3
0
8 221
8 127
557
-2
0
8 682
This category consists mainly of the recoverable tax losses of Spector Photo Group NV, for which a capitalized tax deferral is recognized.
Deferred tax assets are recognized to the extent that is probable that future taxable profits will be available against which the asset can be
utilized.
The accumulated fiscally transferable losses on which no capitalized tax deferrals are recognized, amount to EUR 21.2 million. For these
losses, no capitalized tax deferrals were recognized because it is improbable that there will be sufficient taxable profit available to be able
to realize the tax benefits.
The summary below shows not only the deferred tax credits, but also deferred tax liabilities and the net effect.
Assets
(in € ‘000)
Property, plant and equipment
2004
2005
Net
2004
2005
2004
62
0
1 919
1 704
-1 857
-1 704
315
0
4 328
5 696
-4 013
-5 696
Inventories
0
0
0
0
0
0
Provisions
83
96
66
64
17
31
0
0
0
0
0
0
Tax losses carried forward
8 221
8 031
0
0
8 221
8 031
Deferred tax assets/(liabilities)
8 682
8 127
6 314
7 464
2 368
663
Intangible assets
Other Debtors
p 60
2005
Liabilities
Spector Photo Group 2005
Consolidated financial statements 2005
26. Assets held for sale
Discontinued operations
Spector Fotohandel
In the third quarter of 2005, the Board of Directors decided to discontinue the operations of
Spector Fotohandel in Austria. Spector Fotohandel is a company that derives income from renting
out industrial and commercial buildings in which the former Austrian shop outlet activities of the
group had been conducted until 2001, when the Group withdrew from the Austrian photofinishing
market.
Sacap France
The Board of Directors also decided in the third quarter of 2005 not to continue the activities of
Sacap France in the long term. Sacap France is a company that operates in the wholesale trade
of plant, machinery, equipment and goods for resale for the self-employed professional photographer. Sacap France also deals in, among other things, minilabs, order kiosks, photographic paper
and developing chemicals, cameras and accessories, photo frames and photo albums.
As at 31 December 2005, the assets and liabilities of these companies were classified respectively “assets held for sale and liabilities directly related to them”.
The result and cash flow from these discontinued operations can be summarized as follows:
(in € ‘000)
2005
2004
-2 522
-839
5 692
4 006
33
6
-6 704
-4 833
-979
-821
0
-19
-1 543
0
Cash flow from operating activities
651
-254
Cash flow from investing activities
-42
0
Cash flow from financing activities
-431
-27
Post-tax profit or loss from discontinued operations
Revenue from ordinary activities
Other income from ordinary activities
Expenses from ordinary activities
Pre-tax profit or loss from discontinued operations
Taxes
Loss recognized on the re-measurement to fair value
The amount of minus EUR 1,543 (000) includes an impairment loss concerning Spector Fotohandel amounting to minus EUR 1,529 (000) of which minus EUR 1, 672 (000) is related to a
guarantee accrued in recent years for a call option on the building. The EUR 143 (000) difference
can be found in the table of changes for the heading “Investment property”.
Assets held for sale and liabilities directly related to them
The assets held for sale and liabilities directly related to them concern:
- the discontinued operations of Spector Fotohandel and Sacap France; and
- two buildings from the segment of the Imaging Group that are classified as assets held for
sale.
The decision on this classification for the activities of Spector Fotohandel and Sacap France was
made on the basis of the observation that the activities involved no longer belong to the core
activities of the Group. This decision was partially motivated by the need to concentrate the use of
the Group’s inherently scarce financial and human resources on the real core activities. Prior to the
increase in share capital of December 2005, the group was restructured into two divisions – one
for each core activity – each of which is centrally managed. This approach must lead to synergy,
which is essential in making a successful transition from analogue to digital photography. A plan
has been drawn up to eliminate both activities outside the consolidation scope of the company
by the end of 2006. In this context, discussions have meanwhile been started up with potential
candidates for the scenarios that are identified in the plan mentioned above.
The classification of the two buildings as assets held for sale was decided on a similar basis. The
buildings involved can no longer be integrated within the Group’s future strategy. The building in
Munster (France) has been out of use since the photofinishing activities that had been carried
out there were transferred to the lab in Wetteren (Belgium) during the first half-year of 2005. As
a result of the staff reduction achieved during the course of 2005, offices and storage space has
become available within Imaging in Belgium. Consequently, it is no longer economically justifiable to retain the building in Braine l’Alleud, which as a matter of fact is currently already partially
let to third parties. Action plans have already been agreed with estate agents for the sale of both
buildings.
p 61
Spector Photo Group 2005
Consolidated financial statements 2005
The revaluation to fair value, less the costs related to the sale of these buildings, amounts to EUR
439 (000). This is recognized in the income statement as a non-recurring item from the operating
activities.
(in € ‘000)
2005
Assets
Property, plant & equipment
Inventories
Non-current receivables
Cash and cash equivalents
Assets held for sale
6 630
994
1 225
386
9 234
Liabilities
Interest-bearing financial obligations
Employee benefit liabilities
268
Trade and other payables
693
Liabilities directly linked to assets held for sale
p 62
4 310
5 272
27. Inventories
(in € ‘000)
2005
2004
1 662
1 817
Work in progress
8
8
Finished Goods
54
44
40 847
44 428
20
13
Total gross carrying amount
42 591
46 310
Write-downs
-2 401
-1 348
Net carrying amount
40 190
44 961
Raw materials and consumables
Goods purchased for resale
Advance Payments
The changes in “Inventories “ between 2004 and 2005 are mainly in line with the decrease of
the operating revenues from the continuing operations. This mainly concerns the activities of
the Imaging Group, which finds itself in a strongly changing photo market. More effort was also
provided for optimization of the working capital – including by means of even stricter inventory
management.
These significant changes on the photo market have also led to higher depreciation on inventories. In 2004, the depreciation of inventories amounted to EUR 101 (000), whereas they
amounted to EUR 1,085 (000) in 2005. Of the latter amount, EUR 975 (000) was taken to the
income statement under the continuing operations (depreciation and impairments), and EUR
110 (000) under non-recurring items of the operating activities.
Spector Photo Group 2005
Consolidated financial statements 2005
28. Trade and other receivables
(in € ‘000)
follows:
2005
2004
38 465
43 635
5
0
7 578
9 268
Total gross carrying amount
46 048
52 904
Allowance for bad and doubtful debts in trade receivables (-)
-9 813
-10 271
Allowance for bad and doubtful debts in other receivables (-)
-707
-527
35 528
42 106
Trade receivables
Derivative financial instruments
Other receivables
Net carrying amount
The current trade and other receivables has considerably decreased between 2004 and 2005.
This decrease is strongly in line with the decreasing operating revenues from the continuing
operations – mainly of the Imaging Group, which was confronted with considerable changes on
the photo market. Moreover, extra attention was paid to an even faster and more accurate collection of outstanding customer accounts. This was already the case in 2004, but then, on the other
hand, there was the effect of the entry of Litto-Color into the consolidation scope.
Of the accumulated write-downs on dubious trade receivables in 2004, EUR 146 (000) was
recorded in the income statement. In 2005, minus EUR 227 (000) of these has been recorded in
the income statement as profit or (loss) from continuing operations, and minus EUR 798 (000) as
non-recurring items.
Of the accumulated write-downs on dubious other receivables in 2004, minus EUR 21 (000) have
been recorded in the income statement. In 2005, minus EUR 94 (000) has been recorded in the
income statement under the financial result and EUR 290 (000) as non-recurring financial items.
The net other receivables (after deduction of the accumulated write-downs) are composed as
(in € ‘000)
2005
2004
680 (9.9%)
456 (5.2%)
5 938 (86.4%)
8 146 (93.2%)
Other
253 (3.7%)
139 (1.6%)
Total
6 871 (100%)
8 742 (100%)
Retail Group
Imaging Group
The net other receivables for the current financial year consist of three major items: EUR 2,183
(000) receivable for STL, a subsidiary in the Imaging Group, which is proportionately consolidated
because of joint control; EUR 1,588 (000) receivables related to VAT; and EUR 1,472 (‘000)
charged-on marketing contributions.
29. Cash and cash equivalents
(in € ‘000)
2005
2004
Short-term bank deposits
14 534
429
Cash at bank and in hand
5 741
9 714
20 275
10 143
The increased amount under “cash and cash equivalents” is the unallocated portion of the capital
increase as at 31 December 2005 that is included under this heading.
30. Current income tax assets
This heading concerns income tax assets in certain consolidated entities related to pending tax
assessment objections, and should be considered jointly with the current income tax liabilities
(under “Equity and liabilities”).
p 63
Spector Photo Group 2005
31. Total Equity
Consolidated financial statements 2005
Movements in number of shares
See also page 30, Statement of changes in equity.
The group owns 131,797 of its own shares, of which 22,993 were acquired during the course of
2004, and 27,773 during the course of 2003, at a price equal to or below the exercise price of
the stock option plans (see page 69 of this document). In 2005, no 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 54,526 by the subsidiary Alexander Photo. In accordance with IFRS, these treasury shares
are recognized at cost in their first recognition in the IFRS balance sheet on 1 January 2004. This
amount is deducted from the shareholders’ equity.
The increase in share capital of December 2005 is of course a determining factor in the table
above.
The amount of minus EUR 122 (000) for “net gains (losses) not recognized in the income
statement” is the combined result of: (a) the transaction costs for the increase in share capital
amounting to minus EUR 2,281 (‘000), which is recognized according to IAS 32, (b) the recognition of the theoretical EUR 134 (000) value of the warrants that were issued at the same time, and
(c) the revaluation increases in value of buildings for EUR 2,025 (000). The revaluation increase in
value for the building in Budapest 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 jointly
amount to EUR 289 (000). The buildings in Munster and Colmar are both recognized as assets
held for sale.
Ordinary
shares
Preference
shares
Total
6 761 253
-
6 761 253
29 858 252
-
29 858 252
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
1. Number of shares, opening balance
2. Number of shares issued
6. Number of shares, ending balance
As a result of the increase in share capital of 14 December 2005, 29,858,252 new ordinary
shares were issued at an issue price of EUR 1.40 per new share. On the same occasion, 600,000
warrants were created, that at exercise (exercise price EUR 3,36) each give the right to a Spector
share to be newly created.
Other information
1. Nominal value of shares
The minority interests 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 turnover. Digital Photoworks is the company that
operates the mail-order activities in Australia, under the ExtraFilm brand name. In 2001, this entity
was fully included in the consolidation scope for the first time, but represents less than 1% of the
group turnover.
p 64
2. Number of shares owned by the company or
related parties
3. Interim dividends paid during the year
-
-
-
131 797
-
131 797
-
-
-
Spector Photo Group 2005
Consolidated financial statements 2005
Earnings per share calculation
1. Number of shares
1.1. Weighted average number of shares
8 233 715
1.2. Adjustments to calculate the weighted average number of shares,
diluted :
Issuance of 600,000 warrants on 16 December 2005, each exercisable
into one newly to be created share of the company
600 000
2. Net profit
2.1. Profit (loss) attributable to equity holders
of the parent (in thousands of euros)
Net profit
(from
continuing
operations)
Net profit
(from
discontinued
operations)
Net profit
(total)
(14 530.6)
(2 522.3)
(17 052.9)
(1.7648)
(0.3063)
(2.0711)
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)
For the calculation of the earnings per share, the ordinary and the diluted weighted average
number of shares are calculated. For the ordinary weighted average, the shares created on
14 December 2005 were counted 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/(loss) does not apply as at 31 December 2005.
p 65
Spector Photo Group 2005
32. Non-current and current interest-bearing financial obligations
The changes between the 2003, 2004 and 2005 financial years refer to the repayment plan that
was agreed with the lenders in 2001. In this plan, a restatement of the financial liabilities between
non-current and current was foreseen for end 2004 - beginning 2005. As this discussion had
not yet been formally completed by 31 December 2004, all the financial liabilities concerned for
the consortium of banks were recognized as current as at 31 December 2004. With the capital
increase of December 2005, EUR 15 million of the new capital was applied for the repayment of
financial liabilities, on top of which a new agreement was reached with the lenders concerning the
rescheduling of the financial liabilities between non-current and current. 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 year-end 2005
compared to EUR 107,252 (000) at year-end 2004. The restatement between non-current and
current is shown in the table on the following page.
As at the 2005 balance sheet date, 96.6 % of the total borrowings were in EUR, 1.9 % in HUF
and 1.6 % in SEK. As at 31 December 2004, 3.6 % of the total borrowings were in SEK and 2.6
% in HUF. The balance of 93.8 % was in EUR.
p 66
Consolidated financial statements 2005
The interest rates for the Group’s loans are: for the current loans in EUR, at EURIBOR + 1% to
EURIBOR + 3%, and in HUF at BUBOR + 0.35% to BUBOR + 0.40%.
At year-end 2004, the interest rates for the current loans in EUR were between EURIBOR +
1.25% and 5.1%. The interest rates for the current loans in HUF amounted to 10.32% and
10.43%, en and in SEK 2.87% and 4.5%
The interest rates for the Group’s loans for the non-current loans in EUR are from 4.176% to 7.5
%, and in SEK from 3.115% to 3.365%. The non-current loans in HUF are subject to interest at
BUBOR + 0.6%.
In 2004, the interest rates for the non-current loans in EUR were from 4.25% to 7.5%, and in SEK
at 3.115 % to 3.365 %.
The secured loans have been guaranteed for EUR 15,594 (000) by mortgages on land and buildings, for EUR 6,779 (000) by mortgage powers of attorney on land and buildings, for EUR 19,250
(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 specific
companies included in the consolidation have been given as collateral.
Spector Photo Group 2005
Consolidated financial statements 2005
Note concerning the financial obligations
2005
(in € ‘000)
Up to
1 year
2007
2008
2004
2009
2010
More
than
5 years
Total
Up to
1 year
2006
2007
2008
2009
More
than
5 years
Total
Interest-bearing borrowings
Secured bank loans
Unsecured bank loans
3 435
4 786
4 786
4 786
26 818
87
44 698
4 410
396
222
222
222
277
5 748
192
72
65
60
19
12 500
12 908
2 032
24
32
12
12
12 512
14 624
222
117
24
363
700
674
572
496
490
2 456
5 388
21 240
21 240
79 773
79 773
43
43
84
84
Financial leases
Secured lease liabilities
Unsecured lease liabilities
Bank overdrafts
Secured bank loans
Unsecured bank loans
Other borrowings
Unsecured other borrowings
Total interest-bearing
borrowings according to their
maturity
23
1
1
1
1
4
32
1 625
1
1
1
1
5
1 635
25 155
4 976
4 877
4 847
26 838
12 591
79 284
88 623
1 095
827
731
726
15 250
107 252
444
450
470
490
510
1 946
4 310
Liabilities held for sale
Secured financial lease liabilities
p 67
Spector Photo Group 2005
Consolidated financial statements 2005
Financial lease liabilities (in € ‘000)
2005
2004
Payments
2005
Interest
Capital
Outstanding
current
Outstanding
non-current
Outstanding
interest
current
Outstanding
interest
non-current
Payments
2004
Interest
Capital
Outstanding
current
Outstanding
non-current
Outstanding
interest
current
Outstanding
interest
non-current
269
24
245
222
142
18
31
829
164
665
700
4 688
119
994
444
3 867
192
752
Financial lease liabilities held for sale
543
96
447
Operational lease liabilities
Leasing as lessee
Leasing as lessor
Non-cancellable operating lease rentals are payable as follows :
The group lets parts of buildings and minilabs under operating leases
(in € ‘000)
2005
2004
Renting during the year
10 086
9 739
Less than one year
10 109
9 761
Between one and five years
28 696
More than five years
14 757
2005
2004
Renting during the year
1 739
1 529
Less than one year
1 353
1 351
27 710
Between one and five years
2 030
2 708
14 250
More than five years
475
588
The most important liabilities for the Retail Group concern the retail outlets over a period of 9
years, with an option to renew the leasing after that date. The rent is raised annually to reflect
market rental rates.
Furthermore, the group rents a number of business offices and other operating facilities with
contracts that run for several years.
p 68
(in € ‘000)
Spector Photo Group 2005
Consolidated financial statements 2005
33. Non-current and current employee benefit liabilities
The non-current employee benefit liabilities concern the pension liabilities for the companies of the
consolidation scope. The increase between 2003 and 2004 resulted from Litto-Color NV’s entry
as a company in the consolidation scope, whereas the decrease between 2004 and 2005 reflects
the reduction of the total employment within the Group.
The current employee benefit liabilities are liabilities concerning remuneration and social security
charges. They mainly comprise the payable wages and salaries, as well as the corresponding
social security contributions, the payroll withholding tax and the provisions for holiday pay. In 2005
they amounted to EUR 7,055 (000) compared to EUR 7,975 (000) in 2004. The change between
2004 and 2005 mainly reflects the reduction of the workforce during the course of 2005.
Share option plans
The Board of Directors decided unanimously at its meeting on 26 November 1999 to introduce
share option plans for the benefit of Employees and Consultants of Spector Photo Group NV
and associated companies (in the sense of Section IV part 1:4 (a) of the appendix to the Belgian
Decree of 8 October 1976 concerning the financial statements of companies). The free offer of
the options will be considered as a benefit and thus taxable as remuneration to the employees.
In view of the fixed measurement of this benefit, as provided for in the law of 26 March 1999,
concerning the Belgian Action Plan for Employment and concerning miscellaneous provisions,
this constitutes a form of remuneration that is beneficial for tax purposes.
The table below shows the exercise price, the number of offered options, the number of options
accepted and the number still outstanding, which have been offered in the implementation of this
plan in three portions:
1999
2001
2002
Exercise price
€ 37.16
€ 9.69
€ 10.45
Number of options offered
52 000
85 200
67 500
Number of accepted options
29 550
65 250
61 250
Number of outstanding option
27 450
59 850
56 500
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
12/2007
12/2009
12/2010
Year of offer per portion
Initial exercise periods
Additional exercise periods in accordance with
the law of 24 December 2002
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
this in the meantime and this proposal is therefore approved. At the exercise of these options, the
company will initially use shares held by the company, 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 (see Corporate Governance).
Warrant plan
The Extraordinary General Meeting of Shareholders of Spector Photo Group NV on 28 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 provisions (the
“Share Options Act”). Each warrant gives the right to apply for a single share.
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
company. In addition, this warrant plan aims to create a common interest among the beneficiaries
and the shareholders that is targeted towards an increase in the Company’s share price.
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
09/2006
03/2007
09/2007
03/2008
09/2008
03/2009
09/2009
03/2010
09/2010
The “theoretical value” of the warrants, calculated according to a conventional valuation method
(Black & Scholes), amounts to EUR 0.22366 per warrant or a total of EUR 134,198. For this
theoretical measurement of the value, the last closing price of the share prior to the offer of
these warrants was taken into account, which was EUR 1.48, and with the exercise price of the
warrants that amounts to EUR 3.36.
Granting and exercising the warrants will have an effect on the remunerations 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 recorded as “remunerations” for the financial year in
which they were issued (2005).
p 69
Consolidated financial statements 2005
Spector Photo Group 2005
Post-employment benefits
Defined contribution plan
For defined contribution plans, contributions are paid to insurance companies. Once the
contributions have been paid, the group entities have no further obligations. The contributions to
defined contribution plans are recognized in the income statement when incurred. For 2005, the
expenses for defined contributions amounted to EUR 355 (‘000) for the group, recognized under
the heading ‘Remunerations’.
Movements in the assets/ (liabilities) recognized in the balance sheet
(in € ‘000)
2005
2004
Balance at end of previous year
283
297
Income recognized in the income statement
-45
-15
2
1
240
283
2005
2004
4% - 5%
5% - 6%
Translation differences
Defined benefit plans
The group has defined benefit plans in Norway and France. The defined benefit plans have been
established according to applicable legal requirements and common practice in each country.
The defined benefit plans are linked to salary and years of service. The defined benefit plans in
France are unfunded.
The principal actuarial assumptions at the balance sheet date are:
The post-employment benefits income concerning defined benefit plans amounted to EUR 45
(‘000) for 2005 for the group.
The plan assets do not include shares issued by the company or any property of the company.
Discount rate
Expected return on plan assets
6%
7%
Expenses/(Income) recognized in the income statement under the heading ‘Remunerations’.
Expected rate of salary increase
2% - 3%
3% - 4%
2,5%
2,5%
(in € ‘000)
2005
2004
Current service costs
2
20
Interest costs on benefit obligations
2
8
-6
-8
Gains/(Losses) on settlements or curtailments
-27
-36
Actuarial gains/(losses) recognized during the year
-16
1
-45
-15
Expected return on plan assets
Reconciliation of assets and liabilities recognized in the balance sheet
(in € ‘000)
Present value of funded obligations
Present value of unfunded obligations
Fair value of plan assets
Unrecognized actuarial gains/(losses)
p 70
Balance at end of current period
Expected rate of pension adjustments
Other non-current employee benefit liabilities
The other non-current employee benefit liabilities consist mainly of pre-pension provisions of the
different underlying entities.
Movements in the assets/ (liabilities) recognized in the balance sheet
(in € ‘000)
2005
2004
Balance at end of previous year
746
702
Decrease in employee benefit liability recognized in the income
statement
-54
-3
2
-1
2005
2004
194
229
Translation differences
42
173
Other movements
-48
48
-68
-119
Balance at end of current period
646
746
72
0
240
283
The other movements of the current financial year relate to the classification of certain assets held
for sale, while the other movements of the previous year resulted from the entry of Litto Color into
the consolidation scope.
Spector Photo Group 2005
Consolidated financial statements 2005
34. Provisions more than one year
(in € ‘000)
Other provisions
Total
820
2 202
50
692
Amount of provisions used (-)
-166
-166
Release of unused provisions (-)
-153
-153
-120
-135
430
2 440
Balance at the end of 2004
Additional provisions
Other increases (decreases)
Balance at the end of 2005
Provisions
for taxes
Provisions for
restructuring
1 382
121
521
-15
1 489
521
In 2005, additional provisions of EUR 121 (000) were formed for tax claims.
The provision of EUR 521 (000) for restructuring mainly concerns the Imaging Group, which must 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 balance of the other provisions at the end of 2004 concerned a EUR 177 (000) provision for a German subsidiary, a EUR 137
(000) provision for after-sales service, EUR 134 (000) provisions for claims for damages, and EUR 302 (000) in provisions for personnel
disputes. The other provisions have decreased as a result of being applied, release of unused provisions and other decreases. The most
important other provisions in 2005, concern EUR 163 (000) for after-sales service of the Retail Group; EUR 63 (000) supplementary provisions for the closure of the lab in Munster (France); and EUR 81 (000) in provisions for a number of claims for damages.
p 71
Spector Photo Group 2005
Consolidated financial statements 2005
37. Current trade and other payables
35. Deferred tax liabilities
(in € ‘000)
(in € ‘000)
Balance
at end of
previous
year
Recognized in
the income
statement
Effect of
currency
translation
differences
Other
movements
Property, plant and
equipment
1 704
-161
-13
331
Non-current intangible
assets
5 696
-1 293
64
2
7 464
-1 452
Provisions
-16
Balance
at end of
current
year
1 861
4 387
66
-28
331
2005
2004
36 492
44 983
3 728
5 359
0
628
Dividends payable
190
234
Other amounts payable
850
3 035
Other Taxes and VAT payable
5 502
4 655
Accrued charges and deferred income
2 663
2 889
49 426
61 783
Trade payables: Suppliers
Trade payables: Bills of exchange payable
Advances received on contracts in progress
6 314
The change from 2004 to 2005 mainly concerns non-current 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 fall is mainly explained because the amortisation on these customer relationships during the current financial year has been higher than the
investments in externally-acquired customer relationships, as a result of which the tax deferrals
have been reduced.
The changes between 2004 and 2005 are mainly in line with the decrease of the operating revenues from the continuing operations. This mainly concerns the activities of the Imaging Group,
which finds itself in a considerably changing photo market.
Financial instruments
The most important derivatives used by the group are forward exchange contracts, with which
the group hedges itself against exchange rate risks on the US dollar used to purchase goods.
The other changes of EUR 331 (000) are related to the deferred tax liabilities associated with the
revaluation of the building in Budapest. In compliance with IFRS, in this case the shareholders’
equity has been adjusted accordingly.
36. Liabilities held for sale
Because a number of assets have been held for sale since the third quarter of 2005, the corresponding liabilities from the respective categories have been transferred to this separate heading.
p 72
Outstanding derivative financial instruments:
2005
(less than one
year)
2004
(less than one
year)
373
212
Spector Photo Group 2005
Consolidated financial statements 2005
38. Current income tax liabilities
Current tax liabilities for current or previous periods are, in so far as these are not yet paid
because of pending notices of objection to the tax, recognised as debt.
39. Disputes and possible receivables
The Company and some of its subsidiaries are involved in 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 provision needs to be formed. On the one hand, this concerns
the tax deductibility of insurance premiums which the Company and some of its subsidiaries have
paid to an insurance company that itself reinsured with a reinsurance company that is controlled
by the Company. The total of the unpaid disputed tax liability involved in this issue (including
default interest charges up to the start of 2006) amounts to approximately EUR 4.6 million. On the
other hand, there is an issue that chiefly concerns discussions with respect to the tax deductibility of payments in the context of transactions with group companies. The total of the unpaid
disputed tax liability involved in these other tax disputes (including default interest charges up to
the start of 2006) amounts to approximately EUR 5.2 million.
40. Significant obligations
Spector Photo Group NV granted a put option to Kodak in 2001, within the context of the sales
of its laboratories in France, Germany and Austria. One of the French companies sold had
granted a supplier’s credit to its most important customers, LLP, which was covered by a pledge
on shares in a third French company. For the transaction with Kodak, Spector Photo Group
granted a put option to Kodak on this for the possible liabilities still outstanding as at 1 May 2007.
Since the transaction date, the risk for Spector Photo Group has decreased from EUR 3.5 million
to EUR 1.05 million (position as at 31 December 2005).
p 73
Spector Photo Group 2005
Consolidated financial statements 2005
Affiliated subsidiaries
A.
SUBSIDIARIES, FULLY CONSOLIDATED () OR PROPORTIONAL CONSOLIDATION ()
Name, full address
V.A.T. or
of registered office
national number
 ALEXANDER PHOTO SA
Boulevard Royal 11, 2449 Luxembourg, Luxembourg
 DBM COLOR NV
Kwatrechtsteenweg 160, 9230 Wetteren, Belgium
 DIGITAL PHOTOWORKS LTD (EXTRA FILM AUSTRALIA)
Ferry Road 53, Southport, QLD 4215, Australia
 EDRO BVBA
Kwatrechtsteenweg 160, 9230 Wetteren, Belgium
 EXTRA FILM AB
14 V. Götalands Län, 35 Tanum Kommun, Sweden
 EXTRA FILM AG
Gewerbestrasse 18, 4123 Allschwil, 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 24, 59650 Villeneuve d’Ascq, Cédex, France
 EXTRA FILM LOGISTICS AG
Zugerstrasse 50, 6340 Baar, Switzerland
 EXTRA FILM NEDERLAND BV
Antennestraat 74, 1322 AS Almere, the Netherlands
 FILMOBEL NV
Kwatrechtsteenweg 160, 9230 Wetteren, Belgium
p 74
Share in
the capital
(in %)
1999 2234 620
100.00
BE 402.247.617
100.00
50.74
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
562 363
100.00
NL 6400334B01
100.00
BE 408.058.709
100.00
Spector Photo Group 2005
A.
Consolidated financial statements 2005
SUBSIDIARIES, FULLY CONSOLIDATED () OR PROPORTIONAL CONSOLIDATION ()
Name, full address
V.A.T. or
of registered office
national number
 FLT SPA
Galleria Passarella 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
Antennestraat 74, 1322 AS Almere, the Netherlands
 LITTO-COLOR NV
Zandvoordestraat 530, 8400 Oostende, Belgium
 LITTO-COLOR SARL
Route de Contournement 442, 59223 Roncq, France
 MAXICOLOR FRANCE SA
Rue Denis Papin 24, 59650 Villeneuve d’Ascq, France
 OMNINET SARL,
Avenue des Ternes, 88, 75017 Paris, France
 ORC EUROPE SARL,
Rue Papin, 24, 59650 Villeneuve d’Ascq, France
 PHOTO FINANCE BV
Antennestraat 74, 1322 AS Almere, the Netherlands
 PHOTO HALL FRANCE SARL
Lotissement Augny 2000, 57685 Augny, France
 PHOTO HALL MULTIMEDIA NV
Lusambostraat 36, 1190 Brussel, Belgium
Share in
the capital
(in %)
IT 13146200152
51.00
BE 404 888 886
100.00
BE 423.052.731
100.00
10655302-2-44
100.00
LU 124.90.336
100.00
NL 813828545B01
100.00
BE 414 004 215
100.00
FR 11 306 642 737
100.00
FR 22 409 495 074
100.00
FR 04 424 299 014
100.00
FR 51 348 331 281
100.00
NL 6511004B01
100.00
FR 70 391 700 440
100.00
BE 477.890.096
100.00
(1) The activities of this daughter company have already been discontinued in view of its liquidation
p 75
Spector Photo Group 2005
Consolidated financial statements 2005
A.
SUBSIDIARIES, FULLY CONSOLIDATED () OR PROPORTIONAL CONSOLIDATION ()
Name, full address
V.A.T. or
of registered office
national number
 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
Unit A, 19/F, One Capital Place - 18, Luard Road, Wanchai, Hong Kong
 SACAP SA
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
Rue des Artisans 10, BP 33, 68140 Munster, France
 SPECTOR NEDERLAND BV
Antennestraat 74, 1322 AS Almere, the Netherlands
 SPECTOR ROUTING BVBA
Kwatrechtsteenweg 160, 9230 Wetteren, Belgium
 STL FRANCE BELGIUM NV *
Rue des Lutins 8, 1190 Vorst, Belgium
 VIVIAN FOTO AB
14 V Götalands Län, 35 Tanum Kommun, Sweden
 VIVIAN PHOTO PRODUCTS NV
Kwatrechtsteenweg 160, 9230 Wetteren, Belgium
Share in
the capital
(in %)
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
100.00
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
BE 438.407.039
50.00
SE 556334-8100
100.00
BE 428.718.323
100.00
* Proportional consolidation is being applied for mutual subsidiaries. Spector holds 50% of the shares. The policy orientation is being determined with mutual consent.
p 76
Spector Photo Group 2005
Consolidated financial statements 2005
B. SUBSIDIARIES EXCLUDED FROM THE CONSOLIDATION AND ASSOCIATED ENTERPRISES NOT ACCOUNTED FOR
USING THE EQUITY METHOD
Name, full address of registered office
T.V.A. or Share in the
Reason for
national number
capital
the exclusion
(in %) (2)
(a-b-c-d-e) (1)
GEOPAR NV (in liquidation)
Rue de l’usine 1, 6010 Couillet, Belgium
NORDEN INKASSO A/S (3)
Kirkegata 75 A, 7600 Levanger, Norway
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
VHS SA (3)
Avenue Victor Hugo 7, 1420 Braine l’Alleud, Belgium
BE 422.858.038
40.00
E
976762622
75.00
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
(1) Reason for the exclusion (Article 107 and Article 157 of the Royal Decree of 30th January 2001, in execution of the Belgian Company Code) :
A. The enterprise is of negligible importance (one enterprise or several taken together).
E. Associated enterprises whose inclusion in the consolidated accounts is not material for the purpose of giving a true and fair view.
(2) Held in these subsidiaries by the enterprises included in the consolidation and by parties acting in their own names but on behalf of these
enterprises.
(3) Norden Inkasso is a cash collecting agency, historically operating in parallel with Scandinavian mail order activities, but has no longer a significant
role. The objective of Spector Immobilien Verwaltung, a daughter company, is to let or sell the remaining real estate of the group in Germany (the
building in Dresden). VHS is a corporation formerly active in the sale of medical imaging equipment. The business and other assets of VHS were sold
over the course of 2003.
p 77
Spector Photo Group 2005
Consolidated financial statements 2005
Report
Statutory Auditor’s report to the General Meeting of Shareholders of Spector Photo Group NV on the consolidated
financial statements for the year ended 31 December 2005
In accordance with the legal and statutory requirements, we report
to you on the performance of the audit mandate which has been
entrusted to us.
We have audited the consolidated financial statements for the
year ended 31 December 2005, prepared in accordance with the
International Financial Reporting Standards (IFRS) and the legal
and regulatory requirements applicable in Belgium, which show
a balance sheet total of TEUR 211,636 and a loss for the year of
TEUR 17,053. We have also carried out the specific additional
audit procedures required by law. With respect to the financial
statements of the affiliated companies, audited by other chartered
accountants, we relied on their opinion.
The preparation of the consolidated financial statements and the
assessment of the information to be included in the consolidated
directors’ report, are the responsibility of the Board of Directors.
Our audit of the consolidated financial statements was carried out
in accordance with the auditing standards applicable in Belgium,
as issued by the Institut des Reviseurs d’Entreprises / Instituut der
Bedrijfsrevisoren.
Unqualified audit opinion on the consolidated financial
statements with an explanatory paragraph
The above mentioned 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.
p 78
In accordance with those standards, we considered the group’s
administrative and accounting organisation, as well as its internal
control procedures. Company officials have responded clearly
to our requests for explanations and information. We have
examined, on a test basis, the evidence supporting the amounts
included in the consolidated financial statements. We have
assessed the accounting policies, the consolidation principles, the
significant accounting estimates made by the company and the
overall consolidated financial statement presentation. We believe
that our audit and the work performed by our colleagues who
have audited affiliated companies, provides a reasonable basis for
our opinion.
-
The consolidated director’s report includes the information
required by law and is consistent with the consolidated financial statements. We are, however, unable to comment on the
description of the principal risks and uncertainties which the
group is facing, and of its situation, its foreseeable evolution or
the significant influence of certain facts on its future 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.
Gent, 19 April 2006
In our opinion, taking into account the legal and regulatory
requirements applicable in Belgium, the consolidated financial
statements of SPECTOR PHOTO GROUP NV for the year ended
31 December 2005 give a true and fair view of the group’s assets,
liabilities, financial position, results of operations, statement of
changes in equity, cash flow statement and the notes in accordance with the International Financial Reporting Standards.
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.
The motivation of the valuation of the intangible assets is strongly
linked to the success of the “business plan” including the reorganisation measures to be taken, and the transition to digital
photography.
Additional certifications and information
We supplement our report with the following certifications and
information which do not modify our audit opinion on the consolidated financial statements:
The Committee of Statutory Auditors
PKF bedrijfsrevisoren
Represented by :
D. De Jonge
Statutory auditor
Grant Thornton, Lippens & Rabaey
Represented by :
J. Lippens
Statutory auditor
Spector Photo Group 2005
Consolidated financial statements 2005
p 79
Spector Photo Group 2005
Parent company accounts 2005
Parent company accounts 2005
Report
In accordance with the articles 104, 105 and 874 of the Company Law Code of 7 May 1999, this annual report includes only an
abbreviated version of the parent company accounts of Spector Photo Group N.V..
The annual report, the parent company accounts of Spector Photo Group N.V. and the statement of the Committee of Statutory Auditors shall be deposited with the National Bank of Belgium. These documents are likewise available at the company’s
registered office.
The Committee of Statutory Auditors has issued an unqualified audit opinion with an explanatory paragraph concerning the
parent company accounts : “Those standards require that we plan and perform the audit to obtain reasonable assurance about
whether the financial statements are free of material misstatement, taking into account the legal and regulatory requirements
applicable to financial statements in Belgium. In accordance with those standards, we considered the company’s administrative
and accounting organisation, as well as its internal control procedures. Company officials have responded clearly to our requests
for explanations and information. We examined, on a test basis, evidence supporting the amounts in the financial statements. We
assessed the accounting principles used and significant estimates made by the company, as well as the overall presentation of
the financial statements. We believe that our audit provides a reasonable basis for our opinion.
In our opinion, taking into account the applicable legal and regulatory requirements, the financial statements present fairly the
company’s net worth and financial position as of 31 December 2005 and the results of its operations for the year then ended,
and the information given in the notes to the financial statements is properly presented.
Notwithstanding our unqualified opinion, we draw the attention to the annual report of the Board of Directors in which the current
valuation of the participations 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 2003 the Committee of Statutory Auditors has issued an unqualified audit opinion and for the period 2004 an
unqualified audit opinion with an explanatory paragraph.
PKF Bedrijfsrevisoren
Potvlietlaan 6
2600 Antwerpen
Grant Thornton, Lippens & Rabaey
Lievekaai 21
9000 Gent
p 80
Spector Photo Group 2005
Parent Company accounts 2005
Board of Directors report on the statutory annual accounts 2005
Statutory notes to the 2005 figures
Balance sheet information as at 31 December 2005
Following the Capital Increase on 14 December 2005, the two
core activities of the group were structured in two coordinating
companies. The new loan agreements were concluded with these
subsidiaries of Spector Photo Group NV. These events are mainly
responsible for the changes on the balance sheet between 2004
and 2005.
Assets
The non-current intangible assets decreased from EUR 1.00
million to EUR 0.07 million as a result of the sale of the investments to the divisions in which the investments are effectively
used.
There is also a decrease by EUR 0.22 million to EUR 0.08 million
in the Property, plant and equipment. This concerns the combination of, on the one hand, the sale of electronic equipment to the
appropriate divisions and, on the other, depreciation recognized
during the financial year.
The non-current financial assets decreased from EUR 158.55
million to EUR 126.46 million. This fall is a result of the application
of the new organisational structure, in which all shares of the
companies belonging to the Imaging Group were contributed
to Photomedia NV as a contribution in kind amounting to EUR
72,084,013.00.
For this contribution, Spector Photo Group NV received 146,934
new shares in Photomedia NV.
The shares of the companies belonging to the Retail Group were
sold to Photo Hall Multimedia NV. In the same framework, the
receivables belonging to the non-current financial assets were also
simply allocated to the two divisions.
The fall of the various receivables, both older than one year and
less than one year, is also the result of the new group structure
implemented at the end of 2005. In this context, Photomedia NV
has taken over all the liabilities and receivables that the Imaging
Group companies had outstanding with Spector Photo Group NV.
In accordance with Section 624 of the Belgian Company Code, it
should be reported that the company holds seventy-seven thousand two hundred and seventy-one (77,271) of its own shares.
Furthermore, a subsidiary of Spector Photo Group NV, Alexander
Photo, holds 54,526 shares in Spector Photo Group. These therefore jointly comprise 131,797 company shares, which represent
0.36% of the total number of 36,619,505 existing shares. None of
the company’s own shares were acquired in 2005.
This bundle of the company’s own shares will initially be applied to
supply the exercising of the options which were subscribed to in
the context of the Share option plan for the benefit of Employees
and Consultants of Spector Photo Group N.V. and associated
companies (see page 69 of this document).
The company’s own shares are valued at the listed price of EUR
1.55 as at 31 December 2005.
The bundle of the company’s own shares held by Spector Photo
Group NV represents a net amount of EUR 119,770.05 recognised under the non-current investments item.
The other investments increased to EUR 2.75 million. This
concerns a short-term future position for a part of the funds that
were raised by the Capital Increase of December 2005.
Liabilities
The shareholders’ equity increased by EUR 37.05 million as a
result of the successfully realized Capital Increase and the result
for the financial year.
The public offering for subscription led to the creation of
28,571,428 new bearer shares for a total amount of EUR 40.00
million. The issue price per new share with VVPR strip amounted
to EUR 1.40. Furthermore, because of the termination of the
management agreements between a number of directors and the
company, it was decided to contribute the resulting debt to the
company’s capital. The total of this debt contribution amounts to
EUR 1.8 million and the creation of 1,286,824 new shares. Following the Capital Increase, it was decided also to issue 600,000
warrants. The total number of shares amounts to 36,619,505 after
the aforementioned Capital Increase.
The decrease by EUR 0.70 million of the provisions for risks and
costs to EUR 0.58 million is mainly the result of the write-back of
the exceptional provision that, at year-end 2002, was prudently
reserved for the winding-up costs concerning Spector Verwaltung.
The decrease of the other loans after one year and the decrease
of the other amounts payable within one year was also the result
of the new group structure implemented as reported above.
The main change in the liabilities, a decrease by EUR 72.07
million, occurs in the current financial liabilities to credit institutions
within one year. As a result of the Capital Increase, these liabilities
were settled with the bank and it was agreed with the bank
lenders not to conclude the new loans in the name of Spector
Photo Group NV, but divide them between the coordinating
companies of the two new divisions (Photomedia NV and Photo
Hall Multimedia NV).
Income statement
The increase of the operating result by EUR 3.07 million was
mainly a result of an important decrease in the operating costs
by EUR 3.90 million. Two items show a significant change: first
the ‘personnel costs’ that shows a fall of EUR 2.22 million, and
secondly the ‘services and other goods’ that decreased by EUR
1.78 million. The explanation for the fall of both these items lies
in the transfer of both the personnel and the expenses to their
respective divisions. The most important activity of Spector Photo
p 81
Spector Photo Group 2005
Group NV is currently the supply of supporting services mainly
in the field of management. The transfer of the supporting IT
services, except SAP, explains the fall in the operating income by
EUR 0.83 million.
The financial income fell by EUR 0.60 million. This comes from the
decrease in the balances of the permitted funding to the subsidiaries, as well as from the acquisition by Photomedia NV of the
liabilities of companies belonging to the Imaging Division.
The increase of EUR 0.37 million in the financial charges is the
result of the higher interest expenses that were paid on financial
debts to the lenders, as well as the write-down amounting to
EUR 0.43 million (EUR 428,854.05) that was booked against the
company’s own shares due to the sharp fall in the share price.
The extraordinary income increased by EUR 30.47 million. The
main increase is the gain on value for the realisation of non-current
assets, as a result of the contribution in kind to Photomedia NV of
the shares of the companies belonging to the Imaging Group. The
loss on disposal of fixed assets shows an increase of EUR 36.24
million for the same reason.
The valuation of the operational companies was based on the
expected results from the business plan for the 2007 financial
year.
In accordance with Section 602 of the Belgian Company Code, a
report on this contribution in kind was prepared by the Member of
the Joint Statutory Auditors of the beneficiary company Photomedia NV.
Another factor for the increase of the exceptional costs is the
advisory fees for several recommendations and activities in the
area of restructuring activities carried out and planned as well as
for the Capital Increase.
The result for the financial year before taxes showed a loss of EUR
4.73 million.
p 82
Parent company accounts 2005
Taxes on the result amount to EUR 0.2 million, which, with the loss
for the financial year, comes to EUR 4.75 million.
Appropriation of the result
The Board of Directors proposes the following appropriation of the
result:
Loss for the financial year:
Profit carried forward from prior
financial year:
Profit to carry forward:
- EUR 4,753,890.62
EUR 62,827,924.64
EUR 58,074,034.02
Risk management
The most important risk to the company is the change in value of
its participating interests.
The financial risks are related to the collectability of accounts receivable from associated companies. Please see the prospectus that
was published for the Capital Increase of December 2005. This
document can be downloaded and inspected on the corporate
website www.spectorphotogroup.com.
The Company is involved in several tax disputes that have been
submitted to the tax courts. For certain tax disputes, after advice
from its tax advisors, the Company’s opinion is that no provision
needs to be formed.
On the basis of its estimation of the chances of success for the
various payables to the tax authorities, and after advice from its
tax advisors, the Company has recorded a provision of EUR 0.6
million.
Conflicts of interest
During the course of 2005, the Board of Directors applied the
conflict of interests rules once, specifically concerning the deliberations and decisions summarised below, which made up the
agenda of the meeting of the Board of Directors on 19 October
2005:
1. Deliberations concerning an approval or ratification of the
termination and renewing of existing management agreements and concluding of certain arrangements;
2. Deliberations concerning the intended Capital Increase for
the Company by contribution in kind (the Capital Increase by
Contributions as described in more detail below);
3. Deliberations concerning the proposal to the Extraordinary
General Meeting of the Company concerning the issue of
warrants (the Warrant issue, as defined in more detail below)
and approval of the Warrant plan that shows the terms and
conditions of the Warrant issue;
4. Approval of the special report concerning the agenda items
stated above.
The deliberations and decisions of this meeting are attached as an
Appendix.
After approval of this warrant plan by the Extraordinary General
Meeting on 28 November 2005, the exercise price was set at EUR
3.36 per warrant. This exercise price is significantly higher than
the issue price of EUR 1.40 for the new shares that were issued in
December 2005.
Wetteren, 18 April 2006
Spector Photo Group 2005
Appendix: excerpt from the deliberations and decisions of
the Board of Directors’ meeting on 19 October 2005
“Before the commencement of the deliberation concerning the
items on the agenda, Mr Tonny Van Doorslaer, Mr Dominique le
Hodey (represented at this meeting by Mr Tonny Van Doorslaer
with power of attorney), Mr Wim the Buck, and De Bommels NV
represented by Ms Marijke Mussche-Vermeiren, explained that
they had a possible conflict of interests as referred to in article 523
of the Belgian Company Code.
More specifically stated:
(i) Mr Tonny Van Doorslaer had a possible conflict of interests
concerning the approval at this meeting of (i) the settlement
agreement and the management agreement between the
Company and T.C.L. NV referred to in agenda item 1, and (ii)
the Warrant plan referred to in agenda item 3;
(ii) Mr le Hodey, represented at this meeting by Mr Van
Doorslaer, had a possible conflict of interests concerning
the approval at this meeting of the settlement agreement
between the Company and himself or with the companies
associated with him as referred to in agenda item 1, and
concerning the ensuing contribution in kind referred to in
agenda item 2;
(iii) Mr W. De Buck had a possible conflict of interests concerning
the approval at this meeting of the settlement agreement
between the Company and Olca NV, a company associated
with him, as referred to in agenda item 1, and concerning the
ensuing contribution in kind referred to in agenda item 2; and
(iv) De Bommels NV, represented by Ms Marijke MusscheVermeiren, had a possible conflict of interests concerning
the approval at this meeting of the settlement agreement
between the Company and De Bommels NV, as referred to
in agenda item 1, and concerning the ensuing contribution in
kind referred to in agenda item 2.
As far as Mr Van Doorslaer is concerned, the conflict of interests arises from (i) that T.C.L. NV, a company associated with
Parent Company accounts 2005
him, is a contract party to the settlement agreement and in the
Management agreement that have been submitted to the Board
of Directors for their approval at the meeting, and (ii) that he is the
beneficiary of a total of 400,000 warrants under the Warrant plan
that has been presented for approval at this meeting.
Within the framework of the planned restructuring of the Spector
Group, it is logical and justifiable to revise the existing agreement
with the management in such a manner that the Company realises
certain cost savings, while at the same time providing remuneration to the management that is sufficient and at a market rate,
including T.C.L. NV represented by Mr Van Doorslaer, which is
in accordance with the responsibilities and the duties that are
expected of the management. The financial consequences of
entering into the settlement agreement to terminate the existing
management agreement between the Company and T.C.L. NV
and concluding a new revised management agreement with
T.C.L. NV, represented by Mr Van Doorslaer, will be limited to the
payment of the remunerations at a market rate, as determined
therein, in exchange for the management services that T.C.L.
NV will provide, which will result in annual cost savings for the
Company of approximately EUR 100,000.
The granting of warrants to Mr Van Doorslaer (or to companies
associated with him) falls within the same point of view that the
Company must be able to provide sufficient incentives to its top
management and/or executive directors to compensate them
for the assigned responsibilities and the services provided. The
granting of warrants will not require any cash expenditure on the
part of the Company. Granting the warrants as a result of the
Warrant plan, however, will have an effect on the personnel 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 will be stated as a personnel benefit expense
for the financial year in which they are issued. This theoretical
value of the warrants will be calculated by the Company according
to a conventional valuation method (Black & Scholes) based on
the exercise price of the warrants and the list price of the share
on the date the warrants are issued. For a hypothetical calculation
of this theoretical value, please refer to the special report of the
Board of Directors in accordance with Sections 582, 583, 596
and 598 of the Belgian Company Code and the report of the
Joint Statutory Auditors concerning the issue of warrants with an
exercise price possibly below the fraction unit value of the existing
shares.
For the reasons above, the Board of Directors considers that
the decisions to make the settlement agreement and the new
Management agreement with T.C.L. NV, represented by Mr Van
Doorslaer, as well as the issue of the warrants to Mr Van Doorslaer, are in the interests of the Company.
As far as Mr Le Hodey is concerned, the conflict of interest lays
in the fact that he himself and/or companies associated to him,
are party to the settlement agreement with the Company whereby
all existing management agreements with himself or with these
associated companies are terminated. Concluding this settlement
agreement falls within the framework of the planned restructuring
of the Company and its subsidiaries and the rationalisation of the
cost structure. The Company and Mr le Hodey (on his own behalf
and on behalf of the companies associated with him) have agreed
that the compensation that they have determined, in joint consultation, for the termination of the aforementioned management
agreements, amounting to the total amount of EUR 750,000,
will be invested in the Company’s capital following the Extraordinary General Shareholders’ Meeting of 28 November 2005 (as
described in section 2.11 of the Transaction Memorandum). This
amount was determined in accordance with the contractual conditions and stipulations laid down in the management agreements.
The settlement agreement was concluded under the suspensive
condition of adoption of the Transaction. Concluding this settlement agreement will therefore not require any cash expenditure on
the part of the Company. For this reason the Board of Directors
considers this decision to be justifiable and takes the interests of
the Company into account.
p 83
Spector Photo Group 2005
As far as Wim De Buck is concerned, the conflict of interests lays
in the fact that Olca NV, a company associated with him, is a party
to a settlement agreement with the Company, whereby Olca NV
commits itself to invest in the Company’s capital the compensation amount of EUR 117,400, which it will receive in connection
with the termination of its management agreement with the
Company, following the Extraordinary General Shareholders’
Meeting of 28 November 2005. This amount was determined in
accordance with the contractual conditions and stipulations laid
down in the management agreement. Concluding this settlement
agreement falls within the framework of the planned restructuring
of the Company and its subsidiaries, and the rationalisation of the
cost structure. The settlement agreement was concluded under
the suspensive condition of adoption of the Transaction. Concluding this settlement agreement will therefore not require any cash
expenditure on the part of the Company. For this reason the
Board of Directors considers this decision to be justifiable taking
the Company’s interests into account.
As far as De Bommels NV is concerned, the conflict of interest
lays in the fact that it is a party to the settlement agreement with
the Company whereby De Bommels NV commits itself to invest in
the Company’s capital the compensation amount of EUR 934,155
that was agreed between the parties in connection with the termination of the management agreement between De Bommels NV
and the Company, following the Extraordinary General Shareholders’ Meeting of 28 November 2005. Concluding this settlement
agreement falls within the framework of the planned restructuring
of the Company and its subsidiaries and the rationalisation of
the cost structure. The settlement agreement was concluded
under the suspensive condition of adoption of the Public Capital
Increase. Concluding this settlement agreement will therefore not
require any cash expenditure on the part of the Company. For this
reason the Board of Directors considers this decision to be justifiable taking into account the interests of the Company.
p 84
Parent company accounts 2005
Deliberation
The Board of Directors deliberated on the various items on the
agenda and discussed the documents.
Mr Van Doorslaer, Mr le Hodey, Mr W. De Buck, and De Bommels
NV did not take part in the deliberation and decision on the items
on the agenda in which they had a conflict of interests and will
inform the Joint Statutory Auditors about their respective conflicts
of interests in accordance with Section 523 of the Belgian
Company Code.
Decisions
The Board of Directors adopted each of the following decisions
unanimously, taking into account that for certain items on the
agenda certain directors had to leave the meeting because of a
conflict of interests as explained above:
1. Termination and renewal of management agreements/concluding settlement agreements
The Board of Directors decided to approve the settlement
agreement with De Bommels NV, represented by Ms M. Mussche,
in which De Bommels NV committed itself to contribute the
reimbursement that was agreed between parties as a result of the
suspension of the management contract between De Bommels
NV and the Company, of a total amount of EUR 934,155, to the
capital of the Company (see further agenda item 2). The coming
into effect of the settlement agreement and the commitment to
contribute the aforementioned debt are subject to the suspensive
condition of the adoption of the Public Capital Increase.
The Board of Directors decided to approve the settlement
agreement with Mr Dominique le Hodey and with his associated
companies in which (i) all current management agreements that
the Company had concluded with him and with his associated
companies are terminated, and (ii) Mr le Hodey and his associated
companies have, among other things, committed to contributing the entire receivable by virtue of this settlement agreement,
amounting to EUR 750,000, to the capital of the Company (see
further agenda item 2), under the suspensive condition of the
adoption of the Public Capital Increase.
The Board of Directors decided to approve the settlement agreement with Olca NV, represented by Mr Wim De Buck, in which
Olca NV committed itself to contribute the reimbursement that
was agreed between parties as a result of the suspension of its
management agreement with the Company, amounting to EUR
117,400, to the capital of the Company (see further agenda item
2).
The Board of Directors decided to approve the settlement agreement with T.C.L. NV, represented by Mr Van Doorslaer, in which
the existing management agreement between T.C.L. NV and the
Company was terminated. At the same time, the Board of Directors decided to approve the new management agreement with
T.C.L. NV, represented by Mr Tonny Van Doorslaer.
A copy of the deliberations and of the management agreement
are attached to these minutes as Appendices 1 and 2 respectively.
2. The Capital Increase by Contributions
Besides the Public Capital Increase, the Board of Directors
proposes to take additional measures to strengthen the balance
sheet position of the Company. To this end, the Board of Directors
has decided to approach De Bommels NV (represented by Ms M.
Mussche), Mr Dominique le Hodey (and his associated companies, RNA SA and Five Tops SA), and Olca NV (represented by Mr
Wim De Buck) with the aim of achieving agreement about rearranging certain of the Company’s debts (see agenda point 1).
De Bommels NV, Mr Dominique le Hodey and Olca NV have
accordingly decided to contribute their rights for their respective
receivables from the Company, as further described in the report
from the Joint Statutory Auditors in compliance with Sections 602
Spector Photo Group 2005
Parent Company accounts 2005
and 582 of the Belgian Company Code on this, to the capital of
the Company. This contribution will take place in exchange for new
shares of the Company, possibly below the fraction unit value of
the existing shares and under the same conditions as the issue
of new shares under the Public Capital Increase, in particular with
respect to the issue price. The commitments to implement the
Capital Increase are subject to the suspensive condition of the
adoption of the Public Capital Increase.
The Board of Directors decided consequently to propose to the
Extraordinary General Meeting of Shareholders to contribute an
amount of at least EUR 1,801,555 to the Capital Increase for
the entitlements under the respective Company payables to De
Bommels NV, Mr D. le Hodey (and associated companies) and
Olca NV, as described in detail in the relevant reports from the
Joint Statutory Auditors and from the Board of Directors.
The Capital Increase by Contributions can be broken down as
follows:
Capital Increase by Contributions
Contribution of the amount payable to De
Bommels NV
EUR 934 155
Contribution of the amount payable to Mr
D. le Hodey (and associated companies)
EUR 750 000
Contribution of the amount payable to
Olca NV
EUR 117 400
Total
EUR 1 801 555
3. The Warrant issue
Besides the Capital Increase by Contributions, the Board of
Directors decided to propose to the Extraordinary General
Meeting of Shareholders to resolve to issue a number of warrants,
with elimination of the preferential right, mainly to the benefit of
certain persons who are not staff members of the Company or
of one of its subsidiaries (the Warrant issue). The convocation of
the Extraordinary General Meeting will contain the names of the
beneficiaries of the Warrant plan who are not staff members of the
Company or of one of its subsidiaries. One of the beneficiaries will
be Tonny Van Doorslaer (see also agenda item 1).
The total number of warrants that will be issued on the basis of the
Warrant plan will amount to 600,000 units.
The conditions and details of the Warrant issue are explained in
the Warrant plan, a copy of which is attached to these minutes
such as Appendix 3.
Consequently, it is possible that the warrants entitle subscription to
shares of the Company at an exercise price that is possibly lower
than the fraction unit value of existing shares of the Company at
that time.
The Board of Directors proposes the Warrant issue in order to (i)
create an incentive in the long term for the beneficiaries (as defined
in the Warrant plan), who are closely involved with the Company
because of their role as director or consultant of the Company
and who provide an important contribution for the success and
the growth of the Company, and (ii) create a common interest
between the beneficiaries, on the one hand, and the shareholders
of the Company, on the other, which is aimed at an increase in
value of the share of the Company. This common interest between
the beneficiaries of the warrants and the shareholders should have
a favourable effect on the value of the share.
• special report in accordance with Sections 602 and 582 of
the Belgian Company Code
• special report in accordance with Sections 582, 583 and 596
of the Belgian Company Code
In accordance with the Warrant plan, each warrant will provide
entitlement to the subscription to one share of the Company,
without indication of the nominal value, with the entitlements as
defined in the Articles of Association. The beneficiaries, as defined
in the Plan, will not pay a warrant price for the granting of the
warrants.
4. Approval of special reports
As a result of the decisions taken under the agenda items 1
to 3, the Board of Directors decided to approve the following
special reports, copies of which are attached to these minutes as
Appendix 4:
These reports will be mentioned in the convocation of the Extraordinary General Meeting of Shareholders and made available to
the public according to the law and the Articles of Association’s
provisions about this.
Since all points of the agenda had been addressed, the Chairman
closed the meeting.
These minutes were drawn up as proof of this meeting and, after
they had read them, all persons who attended this meeting signed
them on 19 October 2005.”
The exercise price of the warrants will be, per share, at least equal
to the average of the closing prices of the share of the Company
on the stock exchange during the thirty days that precede the
date the warrants are issued. There is a possibility that the aforementioned average share price will lie below the fraction unit value
of the existing shares at the moment the issue of the warrants is
presented to the Extraordinary General Meeting of the Company.
p 85
Spector Photo Group 2005
Balance sheet
Parent company accounts 2005
after profit allocation (Belgian GAAP)
ASSETS
(in € 000)
Fixed assets
I. Formation expenses
II. Intangible fixed assets
III. Tangible fixed assets
A. Land and buildings
B. Plant, machinery and equipment
IV. Financial fixed assets
A. Associated companies
1. Participation
2. Amounts receivable
B. Companies in wich 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. Deferred charges and accrued income
Total assets
31.12.2005 31.12.2004 31.12.2003
126 608
159 772
159 001
72
1 002
1 507
75
219
476
73
128
291
2
91
185
126 461
158 551
157 018
126 369
158 457
156 812
99 140
106 071
104 425
27 229
52 386
52 387
2
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
31.12.2005 31.12.2004 31.12.2003
131 274
94 227
91 642
64 194
22 392
22 392
64 194
22 392
22 392
9 006
9 006
9 006
4 086
4 086
4 086
120
549
542
120
549
542
2 616
2 616
2 616
2 184
1 755
1 762
58 074
62 828
60 243
1
1
581
702
753
581
702
753
556
536
517
25
166
236
5 115
102 175
114 499
1 500
3 778
36 953
1 500
3 778
36 953
1 200
1 200
112
2
112
90
94
94
29
29
29
61
65
65
10 362
37 332
47 893
300
23 934
32 188
300
23 934
32 188
6 988
12 622
13 800
693
2 356
3 410
6 295
10 266
10 390
2 869
629
1 523
542
120
549
2 749
80
981
156
39
230
49
108
152
136 970
197 104
206 894
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 deferred income
Total liabilities and shareholders’ equity
p 86
(in € 000)
1 200
33 179
300
2 578
2 574
3 411
98 062
74 635
23
2 500
16 230
11
72 081
23 329
11
72 081
23 329
1 009
2 365
2 660
1 009
2 365
2 660
1 855
2 323
2 357
1 805
1 945
1 941
50
378
416
513
18 793
30 059
204
335
2 911
136 970
197 104
206 894
Spector Photo Group 2005
Parent company accounts 2005
(Belgian GAAP)
INCOME STATEMENT
I.
II.
III.
IV.
V.
VI.
VII.
(in € 000)
Operating income
A. Turnover
C. Fixed assets - own construction
D. Other operating income
Operating charges
A. Raw materials, consumables and goods for
resale
1. Purchases
2. Increase/Decrease in stocks
B. Services and other goods
C. Remuneration, social security costs and
pensions
D. Depreciation of and other amounts written
off formation expenses, intangible and
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
B. Income from current assets
C. Other financial income
Financial charges
A. Interests 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 depreciation of financial
fixed assets
C. Adjustments to provisions for extraordinary
liabilities and charges
D. Gain on disposal of fixed assets
E. Other extraordinary income
31.12.2005 31.12.2004 31.12.2003
INCOME STATEMENT
(in € 000)
3 629
5 409
5 563
VIII. Extraordinary charges
A. Extraordinary depreciation of and amounts
written off formation expenses, intangible
and tangible fixed assets
B. Amounts written off financial fixed assets
C. Provisions for extraordinary liabilities and
charges
D. Loss on disposal of fixed assets
E. Other extraordinary charges
IX. Profit/Loss for the period before income taxes
349
2 570
2 684
X.
11 788
12 622
15 255
4 669
5 895
6 100
102
786
7 119
6 625
8 369
(5 823)
(9 724)
(10 531)
748
797
(49)
166
1 100
49
(54)
(50)
(33)
1 381
11
932
732
892
5 965
2 898
4 724
5 087
5 687
3 767
5 046
5 635
3 737
41
52
30
(5 313)
(4 948)
(6 770)
4 752
4 710
5 733
519
242
(20 762)
42
(4)
21 799
5 739
3 637
1 721
33 654
3 182
60 330
1 926
3 132
1 670
91
2 232
31 637
56 343
50
Income taxes
A. Income taxes
B. Adjustments of income taxes and
write-back of tax provisions
XI. Profit/Loss for the period
XIII. Profit/Loss for the period to be allocated
31.12.2005 31.12.2004 31.12.2003
(44 123)
(4 219)
(830)
562
181
(744)
39 293
3 052
4 830
1 167
831
(4 730)
2 600
61 221
(24)
(16)
(111)
(24)
(19)
(111)
(4 754)
2 584
61 110
(4 754)
2 584
61 110
58 074
62 828
62 677
(4 754)
2 584
61 110
62 828
60 244
1 567
(58 074)
(62 828)
(60 243)
3
ALLOCATION ACCOUNT
A. Profit/Loss to be allocated
1. Profit/Loss of the financial year
2. Brought forward profit/loss of previous
financial year
D. Profit carried forward
1. Profit carried forward
F. Profit to be distributed
1. Dividends
(2 434)
(2 434)
85
p 87
Spector Photo Group 2005
Parent company accounts 2005
Notes
Statement of the capital
(In EUR)
A.
C.
E.
p 88
EQUITY
1. Called up
• As at the end of the preceding period
• As at the end of the period
2. Composition of the capital
2.1. Types of shares
Ordinary shares without nominal value
2.2. Nominative and bearer shares
Nominative
Bearer
Amounts
22 392 361.52
64 193 915.72
64 193 915.72
36 619 505
2 655 729
33 963 776
OWN SHARES HELD BY
• the company itself
• its subsidiaries
AUTHORISED, UNISSUED CAPITAL
Number
of shares
77 271
54 526
64 193 915.72
Spector Photo Group 2005
Parent Company accounts 2005
G.
NOTES :
STRUCTURE OF THE SHAREHOLDERSHIP OF THE COMPANY AT THE END OF THE PERIOD
Overview of the shareholdership based on
the received announcements of participation
Most recent
announcement
Number
of shares
% of total
shares (1)
% of total
shares (2)
A.
FOTOINVEST CVBA
Kwatrechtsteenweg 160, 9230 Wetteren
16/12/2005
1 075 275
2.89%
2.94%
B.
PARTIMAGE CVA
Kwatrechtsteenweg 160, 9230 Wetteren
16/12/2005
84 044
0.23%
0.23%
C.
ALEXANDER PHOTO SA
Boulevard Royal 11, L-2449 Luxembourg
16/12/2005
54 526
0.15%
0.15%
D.
SPECTOR PHOTO GROUP NV
Kwatrechtsteenweg 160, 9230 Wetteren
16/12/2005
77 271
0.21%
0.21%
E.
CONSORTIUM VIT NV, LUTHERICK NV,
04/01/2006
6 859 479
18.43%
18.73%
1 708 995
2 512 566
215 703
2 173 643
212 500
4.59%
6.75%
0.58%
5.84%
0.57%
4.67%
6.86%
0.59%
5.94%
0.58%
MERCURIUS INVEST NV, MIDELCO NV
(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 the percentages that only
need adjusting due to changes in the denominator.
(2) Calculating with the denominator of 36,619,505 shares – being
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 associated companies.
(C) is a daughter company of Spector Photo Group NV.
and CECAN INVEST NV
p/a Walle 113, 2500 Kortrijk
- VIT NV
- LUTHERICK NV
- MERCURIUS INVEST NV
- CECAN INVEST NV
- MIDELCO NV
- Natural people, associated with, and acting
in mutual consultation
36 072
0.10%
0.10%
F.
KORAMIC FINANCE COMPANY NV
Kapel Ter Bede 84, 8500 Kortrijk
06/01/2006
4 150 577
11.15%
11.33%
G.
AUDHUMLA SA
Boulevard Royal 11, L-2449 Luxembourg
06/01/2006
1 514 304
4.07%
4.14%
p 89
Spector Photo Group 2005
Parent company accounts 2005
Summary of the bases of valuation
PRINCIPLES
percentages :
The valuation rules are determined in accordance with the rules
laid down in chapter II of title II of the Royal Decree of 30 January
2001, in execution of the Belgian Company Code.
• buildings and constructions
5 to 7%
• revalued buildings and constructions
5 to 7%
• plant, equipment and furniture
10-25%
• rolling stock
20%
• minilabs
1/3 per year
• machinery
20 to 25%
• computers
20 to 25%
The depreciation is calculated according to the straight-line and/or
declining balance method. In the first accounting year during
which the assets have been acquired, depreciations are calculated
“pro rata temporis”.
With respect to the true and fair view, no exceptions to the above
valuation rules are necessary.
The valuation rules have not changed compared with last year’s.
The profit and loss account is not in any major way affected by
income and expenses attributable to any other financial year.
Finally, the figures for the previous financial years are comparable.
Special Rules
I. Assets
1. Formation expenses
The recording of formation expenses and running-in expenses as
assets is done within the legal bounds and to the extent that their
future profitability is given a positive appraisal.
In principle, these expenses are written off over a five-year period
using the straight-line method.
The issue costs related to the bond loan are written off for 100%.
2. Intangible fixed assets
The intangible fixed assets are valued at their acquisition cost.
They are written off using the straight-line method at 20%.
3. Tangible fixed assets
The tangible fixed assets are valued at their acquisition cost, i.e.
the purchase price (including additional costs), their cost price or
their value ascribed.
The depreciation is calculated on the basis of the following
p 90
4. Financial fixed assets
The shares are recorded at their purchase price, exclusive of
additional costs, which are charged to the profit and loss account.
Their value is re-appraised each year. The appraisal is done by
means of the net accounting value, or the estimated contractual
value when sold, or by means of the criteria which were applied
when acquiring the shares, if the participation was bought at a
price which was not its book value.
Amounts written off are recorded if the valuation, calculated in
accordance with the rules stipulated above, turns out to be lower
than the book value and if the Board of Directors judges the
amounts written off to be of a lasting nature, which can be justified
by the position, the earning power, the estimated realization value
and the prospects of the participation.
Amounts written off can be adjusted if the appraised value
exceeds the book value which took account of amounts written
off, and if the Board of Directors judges the difference to be of a
lasting nature.
5. Amounts receivable within one year
These amounts receivable are valued at their nominal value.
Amounts receivable in foreign currencies are translated at the
day’s rate.
The results of this translation shall be recorded in the annual
accounts under caption V.c., “Other Financial Charges and Financial Income”.
The Board of Directors shall take a position with respect to any
decreases in value deemed necessary.
The VAT involved shall be retained on the assets and is only
recorded in the profit and loss account if it turns out to be irrecoverable.
Write-downs are always recorded for individual amounts receivable; this also applies to any adjustments to amounts written
down.
6. Investments and short-term investments
In general, the same rules apply as those under the caption
“Financial fixed assets”. Nevertheless, the Board of Directors shall
record any decrease in value, irrespective of whether it is lasting
or not.
7. Deferred charges and accrued income
The deferred charges cover the part of costs which have been
incurred during the current financial year but relate to the next
financial year, and the accrued income, i.e. the part of the income
which will only be received in the course of the following financial
year but which concerns the current financial year.
Spector Photo Group 2005
II. LIABILITIES AND SHAREHOLDERS’ EQUITY
1. Share capital
This is the nominal value of the issued share capital.
2. Investment grants
The investment grants are gradually reversed, at the same rate as
the amounts written off of the fixed assets for which the investment grants were granted, taking into account the taxation effect.
3. Liabilities
All liabilities are recorded at their nominal value.
Liabilities in foreign currencies are translated at the official rate on
the balance sheet date.
4. Provisions for liabilities and charges
The Board of Directors shall each year proceed to a full examination of the provisions made in the past to cover the risks and costs
to which the company is exposed.
The Board of Directors shall deliberate on the necessity of continuing or reducing these provisions; to this end, it shall analyze the
Parent Company accounts 2005
accounts item per item, and it shall scrutinize all data which may
lead to risks not provided for, such as litigation.
The Board shall determine the valuation methods appropriate to
the major risks.
The provisions for risks and costs shall be made or reduced systematically, and the decision for doing so shall not be dependent on
the result of the financial year.
5. Accruals and deferred income
Accruals cover the pro rata of costs which will only be paid in a
subsequent financial year but which concern the current financial
year. These costs are stated at their nominal value.
Deferred income covers the part of the income which was
received in the course of the current or previous financial year but
which concerns a subsequent financial year.
Statement in respect of the consolidated annual accounts:
The consolidated annual accounts and a consolidated annual
report shall be drawn up in application of the Royal Decree of 30th
January 2001.
p 91
Spector Photo Group 2005
p 92
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
relevant statutory provisions concerning Corporate Governance
and also subscribes to all principles from the Belgian Corporate
Governance Code, which came into effect on 1 January 2005.
Spector Photo Group published its Corporate Governance
Charter via its website www.spectorphotogroup.com at the end
of December 2005. This Charter was last updated in February
2006, exclusively in textual and grammatical areas. The most
recent version of this Charter is always available on the website
mentioned above.
In this section, the company also states those recommendations
from the Belgian Corporate Governance Code of 9 December
2004 with which it does not comply and explains the reason in
each case. This concerns two recommendations that are indicated with a margin bullet (  ) in this section.
p 93
Spector Photo Group 2005
Internal measures to promote good Corporate
Governance practices
Ms Dorrit Hondius has been appointed secretary-general with
effect from 3 April 2006. She is, however, not a member of the
Board of Directors, or of the executive committee. Ms Hondius
will also take on the duties of Compliance Officer, as stipulated
in Appendix B (3.7./1.) of the Belgian Corporate Governance
Code, with other additional duties specified in the Company’s own
Corporate Governance Charter. She will also be responsible for
proper execution of the relevant provisions of the Belgian Royal
Decree of 5 March 2006 concerning misuse of the markets/insider
trading, which comes into effect on 10 May 2006.
Corporate Governance
Board of Directors
Composition of the Board of Directors
The table below shows the situation up to 28 November 2005.
On the basis of the provisional timetable of publications for 2006,
the Board of Directors has set the following ‘closed periods’ for
itself :
•
•
•
•
from 8 February 2006 to 9 March 2006 inclusive
from 3 to 11 May 2006 inclusive
from 4 August 2006 to 5 September 2006 inclusive
from 30 October 2006 to 7 November 2006 inclusive
A
B
C
p 94
Name
Function
M. Luc
Vansteenkiste
Chairman (non-executive director)
(B/C)
M. Dominique
le Hodey
Vice-chairman (non-executive director)
M. Werner
Bruggeman
Director (non-executive director)
(A/B)
Capital & Finance
N.V.
Director, represented by Mr Bernard
Woronoff (non-executive director)
De Bommels N.V.
Director, represented by Ms Marijke
Mussche-Vermeiren (non-executive
director)
M. Wim De Buck
Director (executive director)
M. Hendrik De Buck
Director (non-executive director)
M. Patrick De Greve
Director (non-executive director) (A)
Lessius N.V.
Director, represented by Mr Wilfried
Vandepoel (non-executive director) (A)
M. Jonas Sjögren
Director (non-executive director) (C)
M. Tonny
Van Doorslaer
Managing Director (executive director)
(B/C)
Mevr. Isabelle Vlerick
Director (non-executive director)
M. Philippe Vlerick
Director (non-executive director)
(B/C)
member of the Audit Committee
member of the Remuneration Committee
member of the Appointment Committee
The Extraordinary General Meeting of Shareholders on 28
November 2005 dismissed those directors mentioned above who
are not reappointed, reappointed five directors, and appointed one
new director – Mr Vanderstappen. The appointment of Mr Vanderstappen as a new director was recommended by the Board of
Directors because it believes that Mr Vanderstappen possesses
the required professional qualities for this position on the basis of
his wide professional experience. Mr Vanderstappen holds directorships in his own name or as permanent representative of Mondi
Food NV, Buy-Out Fund Beheer NV and Maple Finance Group NV.
With effect from 28 November 2005, therefore, the Board of
Directors is composed as follows :
•
•
•
•
•
•
De heer Luc Vansteenkiste, chairman;
De heer Philippe Vlerick, vice-chairman;
De heer Tonny Van Doorslaer, managing director;
De heer Jonas Sjögren, director;
De heer Patrick De Greve, director;
De heer Geert Vanderstappen, director.
Note : the Extraordinary General Meeting of Shareholders of 28
November 2005 discontinued the exclusive right of Fotoinvest
CVBA to nominate candidates for the majority of the members of
the Board of Directors.
Absolutely no member of the Board of Directors has family
connections with other members of the executive, supervisory or
regulatory bodies of the company.
Spector Photo Group 2005
Board of Directors’ report on activities in 2005
The Board of Directors is mainly occupied with the regular
reporting concerning the results of the group and the financial
position of the enterprise. They confer about the strategy, the
management structure, and acquisition or disposal proposals and
suchlike.
In 2005, extra attention was paid to restructuring – not only to the
future plan for the two core activities of the company, but also to
the debt rescheduling and increase of share capital, both of which
were realised in December 2005.
In 2005, 14 meetings were held under the chairmanship of Luc
Vansteenkiste.
Corporate Governance
One executive and five non-executive directors
With the exception of Mr Van Doorslaer, managing director,
the other board members fulfil no executive duties within the
company.
Three independent directors
The Board of Directors considers the following members to be
independent directors:
Audit committee:
• Mr Geert Vanderstappen, independent director and
chairman of the committee;
• Mr Patrick De Greve, independent director; and
• Mr Jonas Sjögren
Nomination and remuneration committee:
• Mr. Luc Vansteenkiste;
• Mr. Patrick De Greve; and
• Mr. Geert Vanderstappen.
The Extraordinary General Meeting of Shareholders on 28
November 2005 established the independence of Messrs
Vansteenkiste, De Greve and Vanderstappen, in accordance with
Section 524:4 of the Belgian Company Code. It also determined
that Messrs De Greve and Vanderstappen also meet the independence criteria of the Belgian Corporate Governance Code.
•
•
•
•
Mr Luc Vansteenkiste, chairman of the committee;
Mr Philippe Vlerick;
Mr Jonas Sjögren; and
Mr Tonny Van Doorslaer
Of 154 possible attendees ([10 meetings x 13 directors] + [4
meetings x 6 directors]), there were 14 apologies for absence. The
 The presented composition of nomination and remuneration
following directors excused themselves once: Messrs Ph. Vlerick,
committee deviates from the recommendations on the issue, as
B. Woronoff (Capital & Finance) and J. Sjögren. Two apologies for
stated in Appendix D to the Belgian Corporate Governance Code
absence were minuted for Messrs D. le Hodey, W. Bruggeman, H.
of 9 December 2004. According to these recommendations, the
De Buck and W. Vandepoel (Lessius). Ms I. Vlerick apologised for
 Mr Vansteenkiste also satisfies all independence criteria of the
nomination committee should consist of a majority of independent
absence three times in 2005.
Belgian Corporate Governance Code, with one exception (he is
directors, and the remuneration committee exclusively of nonThe four meetings that the current Board of Directors held in 2005
managing director of Recticel N.V. where Mr Van Doorslaer is a
executive directors. However, this committee’s composition was
were all attended by all the directors.
non-executive director). The Board of Directors believes, however,
motivated by a balanced division of tasks between the nominated
that the independent decision-making of Mr Vansteenkiste, as
directors, taking into account the fact that only six directors have
Although the Articles of Association state that the decisions can
director of the Company, is not compromised by this, which has
been appointed and that each director is appointed once for a
be made by a majority of votes, all decisions made in 2005 were
been effectively demonstrated by experience over recent years.
position in a committee (with exception of Mr Jonas Sjögren, who
unanimous.
is appointed to two committees). It should also be noted that Mr
Committees of the Board of Directors and their
Tonny Van Doorslaer, in accordance with the provisions of the
Directorships at other companies
composition
Corporate Governance Code, as CEO, does participate in meetThe brief biographies of the board members (please see page 98
The Board of Directors has established two committees: an audit
ings at which the remuneration of other members of the executive
of this document) each contain their main directorships at other
committee, and a nomination and remuneration committee. The
management is handled, but does not join in the decision-making;
companies.
regulations of both committees have been incorporated in the
and when it comes to his own remuneration, he neither particiCorporate Governance Charter.
pates nor takes part in decision-making.
Term of the current appointments
The appointment of the six directors mentioned above runs until
after the Annual General Meeting of Shareholders concerning
2008, which will take place on 14 May 2009.
p 95
Spector Photo Group 2005
Remuneration and interests of the Board members
Non-executive directors each received a reimbursement of EUR
12,395 per annum. This amount was increased to EUR 12,500
per annum by the Extraordinary General Meeting of Shareholders on 28 November 2005. This meeting also decided that
the chairman is entitled to a total annual fee of EUR 25.000. The
remuneration of the Managing Director – also Chief Executive Officer – is reported on page 97 of this document (under
“Remunerations and interests of the members of the executive
committee”).
There are no separate reimbursements provided for the members
of the committees, except for the three non-executive directors
who are members of the audit committee. As a supplement to
their general annual fee, they each received an annual fee of EUR
2,479 for this, which was increased to EUR 2,500 by the Extraordinary General Meeting of Shareholders on 28 November 2005.
There is no contract between the company or its associated
companies and the members of the Board of Directors that
provides for any payment on their retirement as director. Such
a scheme does exist, however, for Mr T. Van Doorslaer, but
exclusively in his capacity as member of the executive committee
(please see brief biographies on pages 98 and 99 of this document).
p 96
Corporate Governance
The non-executive directors were not permitted to subscribe to
the current share option plans, nor to the warrant plan (please see
page 69).
The directors directly hold a total of 221,665 shares of the
company. Certain directors represent another reference shareholder, and are indirect shareholders. A breakdown of these
indirect interests can be found on pages 89, 98 and 99 of this
document.
Only executive directors were allowed to subscribe to the current
share option plan and warrant plan. Their applications are
contained in the figures reported for the executive committee (see
below).
None of the directors has received a loan granted by Spector
Photo Group N.V. or any other associated company.
Relationships between the Board of Directors and the associated enterprises
Except for FLT (Fotolabore Tagliabue) and Extra Film Australia,
Spector Photo Group holds — directly and/or indirectly — a
minimum of 95% of the shares in all its affiliated enterprises.
(For a complete overview including the exact holdings: see page
107).
Spector Photo Group 2005
Corporate Governance
(in € ‘000)
Executive committee
member
1.Tonny Van Doorslaer
Fixed remuneration
component (1)
335
Variable
remuneration
component(1)
Other remuneration
components
(2)
(1) (3)
60
Number of share options
(date of option plan,
exercise price) (4)
7
2. Stef De corte
Number of
warrants (exercise
price per warrant)
1 900 (1999 - EUR 37.16)
4 000 (2001 - EUR 9.69)
7 500 (2002 – EUR 10.45)
400 000 (EUR3.36)
1 900 (1999 - EUR 37.16)
4 000 (2001 - EUR 9.69)
5 500 (2002 – EUR 10.45)
150 000 (EUR 3.36)
3. Christophe Levie
50 000 (EUR 3.36)
4. Dominique le Hodey (5) (6)
1 900 (1999 - EUR 37.16)
4 000 (2001 - EUR 9.69)
4 500 (2002 – EUR 10.45)
Not applicable
5. Chris Van Raemdonck (5)
No outstanding share
options owned any longer
Not applicable
Total 2, 3, 4 and 5
1 505
278
42
(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 includes financial targets.
(3) The other components refer to the costs for pensions, insurances, and the cash value of the other benefits in kind (expense allowances, company car, etc.).
(4) For the exercise periods, please see page 69 of this document.
(5) Now no longer an executive committee member.
(6) The amount of the higher fixed remuneration component also contains EUR 750,000 for the golden handshake arrangement with Mr le Hodey. Mr le Hodey has used this
amount to purchase new shares, as reported in the prospectus for the capital increase of December 2005.
The total cost for the 2004 financial year amounts to EUR 1,530 (000).
Total directors’ reimbursements are EUR 139 (000) paid out during the 2005 financial year, and EUR 124 (000) for the 2004 financial year.
Management of the business
Managing Director
In accordance with Article 19 of the Articles of Association, the
management of the business is delegated to a Managing Director.
The Managing Director or two jointly acting directors represent the
company de jure and de facto.
The Board of Directors has appointed Mr Tonny Van Doorslaer as
Managing Director.
Executive committee
The managing director has selected an executive committee for
the day-to-day management of the enterprise.
During the largest part of 2005, the executive committee
consisted of Messrs Van Doorslaer, le Hodey, De corte, Levie and
Van Raemdonck. Mr le Hodey resigned in November 2005, and
Mr Van Raemdonck in March 2006.
Thus, the current executive committee consists of:
• Tonny Van Doorslaer, Chief Executive Officer (CEO)
• Stef De corte, Managing Director of the Imaging Group
• Christophe Levie, Managing Director of the Retail Group
Spector Photo Group has not installed a management committee
(‘directiecomité’) as specified by the Belgian Corporate Governance Act of 2 August 2002 .
Remuneration and interests of the executive committee
members
The remuneration components for the 2005 executive committee
members are shown alongside.
Guarantees or loans have not been granted to the members of the
executive committee by Spector Photo Group NV or associated
enterprises.
Separately from their remuneration, Messrs Van Doorslaer and
De corte also currently hold Spector Photo Group shares. (Details
can be found in the brief biographies later in this document).
p 97
Spector Photo Group 2005
Corporate Governance
Brief biographies of the members of the Board
of Directors and of the executive committee
Mr Vansteenkiste holds 225 company shares but no share options
of Spector Photo Group N.V. Neither does he have any other business relations with the group.
The information in these brief biographies reflects the situation as it
was known by the company as at 31 March 2006.
Philippe Vlerick
Professional address: Vlerick Asset
Management, Walle 113, 8500 Kortrijk
He does not hold any company shares on his personal behalf, but
he is the main shareholder of the companies that have grouped
themselves in the Consortium VIT, which holds 6,859,479 Spector
shares. Certain companies from this consortium also hold shares
in Fotoinvest CVBA, which in its turn holds 1,075,275 Spector
shares.
MEMBERS OF THE BOARD OF DIRECTORS
Luc Vansteenkiste
Professional address: Recticel, Plejadenlaan 15, 1200 Brussels (Belgium)
Chemical engineer. Wide experience as
director in various companies, and as
manager at Recticel, which has been
developed under his leadership to listed
company with activities in 20 countries.
Honorary president of the Federation
of Belgian Companies and also active
in several other sector federations and
interest groups in the corporate environment.
Director with the Company since 1995, and chairman of the board
of directors since 2001.
Current posts at other companies:
• Rec-Hold (director)
• Telindus N.V. (director)
• Sioen Industries N.V. (director)
• Ter Beke Vleeswaren N.V. (director)
• Compagnie Mobilière & Foncière du Bois Sauvage (director)
• Delhaize Group N.V. (director)
• Recticel N.V. (director)
• Fortis Bank N.V. (director)
In the past five years, Mr Vansteenkiste has also fulfilled a director’s post at C.B.R. N.V.
p 98
Mr Vlerick holds several degrees from
universities in Belgium and abroad
(philosophy, law, management, business
administration). He has wide experience
as a director and manager in various
companies, of which several are in the
financial and industrial sector. He is also
active in sector federations and interest
groups in the corporate environment (Federation of Belgian
Companies, Voka, etc.).
Tonny Van Doorslaer
Director of the Company since 1995.
He has been managing director of the
Company since 1987 and belongs to the family shareholders who
have grouped their holdings in the Stichting Administratiekantoor
ex-IPG.
Current posts at other companies:
• BIC Carpets N.V. (president)
• UCO N.V. (managing director)
• Exmar N.V. (director)
• KBC Groep (vice chairman)
• Gevaert N.V. (director)
• Fotoinvest CVBA (president)
• Besix N.V. (director)
• BMT N.V. (director)
• ETEX (director)
• Alcopa N.V. (director)
• Kredietbank Luxembourg (vice chairman)
• Vlerick Leuven Gent Management School (partner-director)
• In addition, Mr Vlerick is director at various family companies,
including VIT N.V., Lutherick N.V. and Mercurius Invest N.V.
Mr Vlerick holds no share options of Spector Photo Group N.V.
Professional address: Kwatrechtsteenweg
160, 9230 Wetteren, Belgium
Master in law. Following a ten-year career
in the financial environment at Kredietbank, Mr Van Doorslaer has fulfilled
various management functions in the
group – both in the field of finance and
general management.
Current posts at other (non-affiliated) companies:
• Recticel N.V. (director and member of the audit committee)
• Rec-Hold N.V. (director)
• Capital & Finance N.V. (independent director)
• Lessius N.V. (director)
• Transposia N.V. (director)
• Alfabyte N.V. (director)
• Fotoinvest CVBA (director)
• Roxette N.V. (director)
• Lennart N.V. (director)
• Stichting Administratiekantoor Consortium ex-IPG (director)
• TCL N.V. (director)
In the past five years, Mr Van Doorslaer has also fulfilled a direc-
Spector Photo Group 2005
tor’s post at the Affligem Brouwerij BDS N.V. and Area Productions
N.V.
Mr Van Doorslaer holds 221,440 shares and 13,400 share options
of Spector Photo Group N.V. He also holds depositary receipts for
shares of the Stichting Administratiekantoor Consortium ex-IPG,
which holds a 21% interest in Fotoinvest CVBA, which in its turn
holds 1,075,275 Spector shares.
There is an agreement between the Company or its affiliated
companies and Mr Van Doorslaer that provides for a compensation of maximum 12 times his monthly remuneration upon
termination of his post upon the Company’s request
Corporate Governance
• Lennart N.V. (director)
• Stichting Administratiekantoor Consortium ex-IPG (director)
In the past five years, Mr Sjögren has fulfilled no other director’s
post than those mentioned above.
Mr Sjögren has no share options of Spector Photo Group NV. He
holds no shares of the Company on his personal behalf, but he
represents Audhumla SA, which holds 1,514,304 Spector shares.
Audhumla also holds depositary receipts for shares of the Stichting Administratiekantoor Consortium ex-IPG, which holds a 21%
interest in Fotoinvest CVBA, which in its turn holds 1,075,275
Spector shares.
Geert Vanderstappen
Professional address: Houba de Strooperlaan 767, 1020 Brussels, Belgium
Civil engineer. Mr Vanderstappen was
finance director of the Company between
1993 and 1999 – i.e. over five years ago.
Being partner in the Buy-Out Fund NV, he
contributes a strong financial expertise.
Director of the company since 28
November 2005.
Current posts at other companies:
Jonas Sjögren
Patrick De Greve
Professional address: Landbovägen 2D
S-42166 Västra Frölunda, Sweden.
Mr Sjögren holds an MBA from Insead
and a master’s degree in Science and
Electrical Engineering’ from the Gothenburg University. Prior to having started his
own company, Mr Sjögren fulfilled various
management functions at companies of
the Ericsson group – mainly in the area
of ‘business development’. Since 1996
he has been involved in various projects in the field of IP network
solutions and Mobile Internet (3G) – which fields are of particular
significance to the Company as media are converging.
Mr Sjögren has been a director of the company since 1995 as a
representative of a reference shareholder.
Current posts at other companies:
• Exceca A.B., Sweden (managing director)
• Fotoinvest C.V.B.A. (director)
Professional address: Vlerick Leuven Gent
Management School, Reep 1, 9000 Gent
Master in Economic Science and
Management. General Director of a
management school with an international reputation, Mr De Greve is well
acquainted with various strategic and
operational aspects of major organisations. He also contributes his expertise in
the field of change processes in organisations and companies.
• Buy-Out Fund Beheer N.V.
• Maple Finance Group N.V.
• Mondi Food N.V.
Mr Vanderstappen holds no shares of Spector Photo Group NV
and has not subscribed to any share options.
He has been an independent director of the company since 2004.
In the past five years, Mr De Greve has only fulfilled a director’s
post at the Vlerick Leuven Gent Management School.
Mr De Greve holds no shares or share options of Spector Photo
Group NV. Neither does he have any other business relationship
with the group that would prevent him from acting as an independent director.
p 99
Spector Photo Group 2005
Corporate Governance
MEMBERS OF THE EXECUTIVE COMMITTEE WHO ARE NOT MEMBERS OF THE BOARD OF DIRECTORS
Stef De corte
Christophe Levie
Professional address: Kwatrechtsteenweg
160, 9230 Wetteren, Belgium
Professional address: Photo Hall, Lusambostraat 36, 1190 Brussels, Belgium
Civil engineer. Active for the company
since 1999, initially as Finance & Administration Manager, later manager of the
Wholesale Division which then included
18 labs throughout Europe, then Chief
Financial Officer and, since 8 September
2005, as Managing Director of the
Imaging Group.
Prior to his career with the company, he was active in consultancy
functions in the field of production, logistics and general management with Bekaert-Stanwick and with ABB Service.
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 included in the Company since
1996. Since 1998, Christophe Levie has
been managing director of Photo Hall
– with activities in Belgium, Luxembourg
and France – and since 2004 he is also responsible for Photo Hall
Hungary.
He has been a member of the executive committee since 1999.
Apart from his post as director of Acortis BVBA, Mr De corte does
not fulfil any post as director of any other non-affiliated company
– nor has he done so in the past five years.
There are no family relationships between Mr De corte and other
members of the directing or controlling bodies of the Company.
Mr De corte holds no shares of Spector Photo Group NV, but
Acortis NV holds 52,500 shares. Mr De corte has subscribed to
11,400 share options.
There is an agreement between the Company or its affiliated
companies and Mr De corte that provides for compensation - only
at resignation at the request of the company - of twelve times his
monthly remuneration.
p 100
He has been member of the executive committee of Spector Photo
Group since 2005.
Mr Levie fulfils no other posts as director with any other (non-affiliated) company – nor has he done so during the past five years.
There are no family relationships between Mr Levie and other
members of the directing or controlling bodies of the Company.
Mr Levie holds no Spector shares and has not subscribed to any
share options.
The management agreement with Mr Levie provides for a financial
compensation in case his agreement would be terminated on
request of the Company. This compensation would amount to
twice his average annual compensation over the past three years.
Spector Photo Group 2005
Corporate Governance
Annual Shareholders’ Meeting
The Annual General Meeting takes place on the second
Wednesday of the month of May at 2.00 p.m.
The right to attend the General Meeting is only granted either
on the grounds of entry of the shareholders in the register of the
registered shares or bonds or warrants of the company and upon
informing the Board of Directors by letter, telegram, telex, facsimile
or in other written form of their intention to attend the meeting,
unless otherwise stipulated in the invitation; or on the grounds of
the deposit of a certificate drawn up by the holder of the global
certificate or by the financial intermediary where the share, bond,
or warrant holder holds his or her shares, bonds, or warrants in a
securities account, which states the non-availability of the shares,
bonds, or warrants concerned up to the date of the General
Meeting at the locations and at the time stated in the letter of invitation; or on the grounds of the deposit of bearer shares or bonds
or warrants at the registered office of the company, unless otherwise stipulated in the invitation; or on the grounds of the deposit
of a certificate drawn up by the recognised account holder or by
the payment institution stating that dematerialised shares or bonds
or warrants will not be available up to the date of the General
Meeting at the locations stated in the letter of invitation. This must
be done no less than six working days before the date set for the
General Meeting. All of the above is subject to later changes in the
relevant legislation.
Structure of the shareholdership (pre-warrants)
Structure of the shareholdership (post-warrants)
Shareholders
Structure of the shareholdership
More detailed information on the shareholdership can be found on
page 89 of this document.
Reference shareholdership
Written agreements on pre-emptive rights and exit arrangements
exist at the level of the foundation ‘Stichting Administratiekantoor
Consortium ex-IPG’. In essence, these arrangements stipulate
that when a shareholder of the ‘Stichting’ wishes to exit, the other
shareholders are granted a pre-emptive right to purchase their
shares.
There are no mutual agreements on voting or other issues
between other shareholders who have submitted a shareholding
announcement.
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%
Communication with shareholders
Spector Photo Group attaches great importance to a regular
and transparent communication with both shareholders and
investors.
• Publication of annual results, mid-year results and quarterly
‘trading updates’
• Separate section ‘Investor Relations’ on the corporate web
site www.spectorphotogroup.com. This section also includes
the presentations to financial analysts
• Free subscription to relevant press releases for investors via
the corporate web site
• Regular participation at presentations and events for private
investors
Statutory Auditors
Committee of Statutory Auditors
• BCVBA PKF bedrijfsrevisoren, represented by D. De Jonge,
Statutory Auditor (current post until the AGM on 14 May
2008).
• Grant Thornton, Lippens & Rabaey BVCV, represented by J.
Lippens, Statutory Auditor (current post until the AGM on 14
May 2008).
Remuneration and interests of members of the supervisory
bodies: see page 96 of this document.
p 101
Spector Photo Group 2005
General information
General information on Spector Photo Group
I. GENERAL FACTS ABOUT THE COMPANY
1.1. Identity
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. Incorporation and duration
Spector was incorporated for an indefinite period of time
on 23 December 1964 under the name ‘DBM Color NV’ by
the execution of a deed before Notary Luc Verstraeten of
Assenede, and published in the appendices to the Belgian
Official Gazette of 15 January 1965.
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.
1.3. Legal form
Spector was formed as a public limited company under
Belgian law.
1.4. Purpose of the company
The purpose of the company is described in article 3 of the
Articles of Association as follows:
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,
multimedia, audiovisual media, telecommunication, office
equipment, photography, photoengraving, film, and software,
as well as their accessories and auxiliary services and related
items;
b) The purchase, production, exploitation, and development of
each image brand, word brand, and patent that may or may
not be related to the above-mentioned activities and granting
licenses;
p 102
c) The purchase, sale, refurbishment, rental, sub-rental, finance
rental, leasing, concession, and exploitation under all
possible forms, of all movables and immovable goods and
machinery, equipment, material, commercial vehicles, and
passenger vehicles that are related to the activities of the
company;
d) The investment, management, and exploitation of property
and assets;
e) The formation of, and the cooperation with, companies
and undertakings, the acquisition and management of
participations or sharers in companies and undertakings
of which the purpose is similar or related to the purpose
as specified above or is of such a kind that it stimulates
and promotes the fulfilment of that purpose, and in
financial companies; the financing of such companies and
undertakings through giving loans, securities, or through
any other form; the participation as member of the board
of directors or any other similar body to the direction and
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
financial nature, on account of the companies of which it is
shareholder or on account of third parties.
The company is entitled, in Belgium as well as abroad, on its
own account or on the account of third parties, to perform all
industrial, trade, and financial transactions that can directly or
indirectly expand or promote its venture.
1.5. Register
Spector is entered in the register of legal persons at Dendermonde, Belgium under the number 24.107. Its Value Added
Tax identification number is BE 405.706.755, registered at the
“Kruispuntbank voor Ondernemingen” under the number
0 405 706 755.
II. GENERAL FACTS ABOUT THE CAPITAL
2.1. Share capital issued
On 31 December 2005, Spector’s nominal and paid up capital
was EUR 64,193,915.72, represented by 36,619,505 company
shares with no nominal value, fully paid up. In addition, there
were 31,874,597 VVPR strips, which grant the right to reduced
withholding tax on dividends at 15% instead of 25%. To
be able to benefit from this advantage, shareholders must
surrender the coupon of their share at the same time as the
coupon of their VVPR strip to the paying institution before 30
November of the year in which the dividend was granted.
Authorised capital EUR 64,193,915.72.
2.2. Authorized capital, convertible bonds
Article 34 of the Articles of Association provides for,
among other things, the power of the Board of Directors to
increase the capital one or more times in the amount of EUR
64,193,915.72 over a period of five (5) years from the date of
publication in the Belgian Official Gazette of the amendment
to the Articles of Association of 14 December 2005 (5 January
2006):
The Board of Directors is authorised for a term of five years
starting from the publication of the resolution of the General
Shareholders’ Meeting of 28 November 2005 in the Supplements to the Belgian Official Gazette, within the statutory
limitations, to increase the issued authorised share capital
once or several times, both by contributions in cash and by
contributions in kind as well as by means of the incorporation
of reserves and/or issue premiums, with or without issuing
new shares, as well as by means of issuing, once or several
times, convertible bonds (that can be converted into shares),
bonds with warrants or warrants connected or not connected
to another security, and all this for a maximum global amount
of EUR 64,193,915.72.
This ceiling is applicable as far as the issue is concerned with
shares, convertible bonds, bonds with warrants or warrants
Spector Photo Group 2005
that are connected or not connected to another security, to
the amount of the capital increases that could result from the
conversion of these bonds or the exercising of these warrants.
The Board of Directors is hereby authorised by the General
Meeting of Shareholders, based on a resolution taken in
accordance with the provisions of Section 560 of the Belgian
Company Code, within the framework of issuing securities
within the authorised capital, to modify the respective rights of
the existing categories of shares or securities representing or
not representing the capital.
This authorisation is valid in so far as it is in accordance with
the applicable statutory provisions. The Board of Directors
will not in any case use this authorisation with the aim to, or in
such a way that this would prejudice the shareholders’ rights
connected to the existing shares.
The Board of Directors is explicitly authorised for a term of
three years starting from the publication of the resolution of
the General Meeting of Shareholders of the twenty-eighth
of November two thousand and five in the Supplements to
the Belgian Official Gazette, to use the authorisation granted
by the present clause to increase the capital, in the circumstances, under the conditions and within the restrictions of
Section 607 of the Belgian Company Code.
The Board of Directors determines the dates and the conditions of the capital increases upon which it has decided
pursuant to the previous paragraphs, including the possible
payment of the issue premiums. It determines the conditions
for the issue of bonds upon which it has decided pursuant to
the previous paragraphs.
When use is made of the previous paragraphs, the Board
of Directors determines, in accordance with Sections 592
and following of the Belgian Company Code, the period and
other conditions for the exercising of the pre-emptive rights
by shareholders when they are vested with this right by law.
The Board of Director can also, in accordance with the same
Sections 592 and following, in the interest of the Company
and under the conditions provided by law, restrict or exclude
General information
the pre-emptive rights of the shareholders, in favour of one or
several persons selected by the Board of Directors, regardless
whether these persons are staff members of the Company or
of its subsidiaries.
When an issue premium is paid as a consequence of the
present clause, it will automatically be transferred to a nondistributable account called “issue premiums” which can only
be disposed of under the conditions required for the capital
reduction. However, the premium can be incorporated in the
authorised share capital at any time, this resolution can be
taken by the Board of Directors in accordance with the first
paragraph.”
2.3. Profit-sharing certificates
None
2.4. Conditions for changes in the capital
Statutory conditions
2.5. Actions
a) 8 November 1991 (published in Belgian Official Gazette
29 November 1991) Capital increase in the context of the
share option plan, by introduction of cash in the value of
BEF 2,872,620 and the creation of 23,609 new shares.
As a consequence, the nominal capital became BEF
1,016,633,457, represented by 1,425,510 shares, of which
205,140 were AFV shares.
b) 5 June 1991 (published in Belgian Official Gazette 27 June
1992) Capital increase by the introduction of cash to the
value of BEF 117,166,543 BEF by the creation of 68,921
new shares. As a consequence, the capital became BEF
1,133,800,000 represented by 1,494,431 shares including
205,140 AFV shares.
c) 29 December 1992 (published in Belgian Official Gazette 23
January 1993) Capital increase in the context of the share
option plan by introduction of cash to the value of BEF
3,569,693 by the creation of 29,907 new shares.
As a consequence, the capital became BEF 1,137,369,693
represented by 1,524,338 shares including 205,140 AFV
shares.
d) 9 July 1993 (published in Belgian Official Gazette 3 July
1993) Capital increase in the context of the share option
plan by introduction of cash to the value of BEF 1,497,581
by the creation of 6,809 new shares. As a consequence, the
nominal capital became BEF 1,138,867,274 represented by
1,531,147 shares including 205,140 AFV shares.
e) Conversion of shares (published in Belgian Official
Gazette of 2 October 1993). In the light of the merger with
Prominvest, which was to take place on 29 October 1993,
the Extraordinary General Meeting of 7 September 1993
decided to convert all 1,531,147 existing Spector shares
into 2,703,317 new shares, with every existing share entitling
the holder to 1.76555 new shares. As a consequence, the
nominal capital was represented by 2,703,317 new shares,
including 362,185 AFV shares. This conversion was carried
out in order to obtain a swap ratio of one Spector share for
one Prominvest share. After this transaction, 96% of the
Spector shares were owned by Prominvest.
f) 29 October 1993 (published in Belgian Official Gazette 23
November 1993) Merger through takeover of Prominvest NV:
in the merger, Prominvest’s assets were added to Spector’s
assets. Spector’s nominal capital was thus increased to
BEF 2,265,805,017 by the creation of 2,675,000 new shares
so that the capital was represented by 5,378,317 shares.
After that, the capital was increased by the incorporation of
revaluation surpluses and issue premiums (BEF 341,690,111
and BEF 1,406,194,933 respectively), in each case without
the issue of new shares, to an amount of BEF 4,013,690,061.
Immediately after these transactions, the capital was reduced
by BEF 3,050,082,500, and 2,596,810 shares owned by
Spector, including all the AFV shares, were destroyed. Thus,
Spector’s capital was BEF 963,607,561 after the merger,
represented by 2,781,507 shares.
g) 15 February 1994 (published in Belgian Official Gazette 15
p 103
Spector Photo Group 2005
March 1994) Capital increase by the exercise of warrants:
following the exercising of the warrants, the capital was
increased to BEF 1,488,390,561 represented by 3,306,290
shares including 524,783 VVPR shares.
h) 10 May 1995 (published in Belgian Official Gazette 3 June
1995) Capital increase under deferred conditions in the
amount of the number of shares subscribed to on the basis
of warrants multiplied by the accounting par value of the
company shares in existence at the time the warrants were
exercised. The maximum number of shares to be created is
826,572 VVPR shares.
i) 4 October 1996: The ordinary and the VVPR shares are
made equivalent by the granting of the VVPR strip. As a
consequence, 524,783 VVPR strips are created and the
capital is represented by 3,306,290 ordinary shares.
j) 5 October 1996 (published in Belgian Official Gazette 29
October 1996) Capital increase by the exercise of 14,658
warrants, subscription at par, i.e. BEF 450 per share, plus
payment of an issue premium of BEF 1,125 per share, as a
result of which 14,658 new ordinary shares and the same
number of VVPR strips, were created. As a consequence,
the capital was increased by BEF 6,596,100 to BEF
1,496,986,661, represented by 3,320,948 ordinary shares,
and there are 539,441 VVPR strips in circulation.
k) 8 November 1996 (published in Belgian Official Gazette
3 December 1996): Capital increase in the context of the
authorised capital by the introduction of cash in the value
of BEF 2,159,176,311, i.e. BEF 664,189,650 in capital plus
an issue premium of BEF 2,088,507,455, by the creation
of 1,475,977 new ordinary shares and the same number of
VVPR strips. As a consequence, the capital became BEF
2,159,176,311 represented by 4,796,925 shares, and there
are 2,015,418 VVPR strips in circulation.
l) 13 May 1998 (published in Belgian Official Gazette of 6
June 1998): (i) Capital increase by incorporation of share
premiums in the amount of BEF 2,104,997,705, with no
creation of new shares. As a consequence of this the capital
p 104
General information
amounts to BEF 4,264,174,016 represented by 4,796,925
shares, with 2,015,418 VVPR strips in circulation. (ii) Issue of
600,000 transferable warrants in name, without preferential
right in favour of Fotoinvest CVBA or its legal successors.
Each warrant entitles subscription to one (1) new share in the
company at a price (per share) equal to the average closing
prices of the Spector share during the sixty (60) exchange
days preceding the exercise date, with a minimum equal to
the average exchange price during thirty (30) days preceding
the date of issue. The warrants may be exercised at any time,
separately or jointly, during a period of five (5) years to be
calculated from the date of issue, (i) from the notification by
the Banking and Finance Commission of a public takeover
bid on the shares of the company, or (ii) from the time
that a control announcement is made to the Banking and
Finance Commission and/or the company gains knowledge
of one or more persons acting in mutual agreement to
acquire 20% or more of the company’s securities bearing
a voting entitlement, or (iii) from the moment that the price
of the company’s shares on the Brussels Stock Exchange
are demonstrably and physically influenced by systematic
purchase orders or by ongoing rumours relating to a takeover
bid on the company’s shares, consequently an approval of a
capital increase, dependant and conditional on the exercise
of aforementioned warrants, in the amount of the maximum
amount, equal to the subscription rights represented by the
number of warrants multiplied by the fraction value of the
share at the time of the subscription.
m) 23 June 1998 (published in Belgian Official Gazette of 21
July 1998): Capital increase through exercising 115 warrants,
subscription at par, being BEF 889 per share, supplemented
with payment of a share premium of BEF 651 per share,
through which 115 new shares were created with an equal
number of VVPR strips. As a consequence of this, the capital
amounts to BEF 4,264,351,116, represented by 4,797,040
shares, with 2,015,533 VVPR strips in circulation.
n) 14 June 2000 (Publication Belgian Official Gazette 6 July
2000): Capital increase via the exercise of 812 warrants,
registration at par, i.e. BEF 889 per share, supplemented by a
payment of a share premium of BEF 651 per share, whereby
812 new shares with as many VVPR strips were created. As
a result thereof the capital amounts to BEF 4,265,601,596,
represented by 4,797,852 shares with 2,016,345 VVPR strips
in circulation.
o) 30 March 2001 (Publication in Belgian Official Gazette 20
April 2001): (i) Capital decrease by BEF 3,850,394,314 to
bring the nominal capital from BEF 4,265,601,596 to BEF
415,207,282 by incorporating the losses incurred in the
actually paid up capital without destruction of shares, with
proportional reduction of the residual value of the shares,
and approval of the corresponding modification of article 5 of
the Articles of Association related to the level of the nominal
capital; (ii) Capital increase, without preferential right, through
introduction of cash for an amount of BEF 300,000,000 —
and issuing 783,046 nominative shares without indication of
their nominal value; (iii) Incorporation of share premiums for
an amount of BEF 232,235,199 into the capital, thus resulting
in an increase of the subscribed nominal capital with an
amount of BEF 232,235,199 and bringing it from an amount
of BEF 482,972,083 to BEF 715,207,282 without the creation
of new shares; (iv) Converting the subscribed nominal capital
for an amount of BEF 715,207,282 into EUR 17,729,525.41
rounded, thus bringing the subscribed nominal capital after
converting to EUR 17,729,525.41.
p) 19 July 2002 (publication Belgian Official Gazette of 15
August 2002): (i) Capital increase with an amount of EUR
3,749,778.97 thus bringing it from EUR 17,729,525.41 to
EUR 31,479,304.38 through transfer in the framework of
the merger through absorption of Photo Hall SA which
involved the transfer of the entire patrimony of Photo Hall SA
without exception nor any reserve, to Spector Photo Group
— issuing 1,180,355 new shares, coupon number 11 and
following attached, without indication of the nominal value,
of the same kind and offering the same rights and benefits
Spector Photo Group 2005
General information
Summary of actions
year
number of shares
capital
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
1983
1 904
13 550 480 BEF
1987
500 752
50 864 428 BEF
1988
699 500
180 000 000 BEF
1989
791 402
383 000 000 BEF
1990
1 401 901
1 013 760 837 BEF
1991
1 425 510
1 016 633 457 BEF
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
1998
4 797 040
4 264 351 116 BEF
2000
4 797 852
4 265 601 596 BEF
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
as the existing shares — (ii) Incorporation of share premiums
for an amount of EUR 913,057.14 thus bringing it from EUR
21,479.88 to EUR 22,392.52 without creation of new shares.
q) 14 December 2005 (publication Belgian Official Gazette of
5 January 2006): (i) Capital increase by an amount of EUR
39,999,999.20 thus bringing it from EUR 22,392,361.52
to EUR 62,392,360.72 by the issue at EUR 1.40 per newly
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
shares with reduced withholding taxes (the VVPR shares); (ii)
Capital increase by EUR 1,801,555.00 thus bringing it from
EUR 62,392,360.72 to EUR 64,193,915.72, by contribution
in kind of a debt, belonging to De Bommels 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 share of 1,286,824
new Company bearer shares without indication of their
nominal value, offering the same rights and benefits as the
Company’s existing shares with reduced withholding taxes
(the so-called VVPR shares); (iii) Recording the issue of
600,000 warrants in total, which at their being exercised at
the exercise price of EUR 3.36 per warrant, give right to one
share with the same rights and benefits as the Company’s
existing shares with reduced withholding taxes (the so-called
VVPR shares); (iv) Recording the amount of the authorised
capital at EUR 64,193,915.72.
2.6. Summary actions
See table alongside.
During the 2005 financial year, no own shares have been
acquired.
2.7. Joint control
Spector is not aware of agreements between certain shareholders through which a joint policy is conducted with regard
to Spector.
2.8. Group structure
See page 107.
2.9. Own shares held by the company
See notes to the company’s annual accounts.
2.10. Share option plan
On 26 November 1999, the Board of Directors decided
unanimously to introduce a share option plan in favour of
employees and consultants of Spector Photo Group NV and
associated enterprises (in the sense of Chapter IV Part 1, 4a of
the Annex to the Royal Decree of 8 October 1976 concerning
companies’ annual accounts). The free offer of the options will
be regarded as a benefit in kind that is taxable as remuneration paid to the employees. This represents a tax-effective
payment method, in view of the set valuation of this benefit as
laid down in the law of 26 March 1999 concerning the Belgian
Action Plan for Employment.
The chart on the next page indicates the exercise price,
the number of options offered, and the number of options
accepted or still valid/outstanding that have been offered in
three portions in execution of the plan.
Following the law of 24 December 2002, the beneficiaries of
the share option plan have been proposed to agree with a
prolongation of the exercise periods with an additional three
(3) years. All beneficiaries have agreed with the proposal in
p 105
Spector Photo Group 2005
General information
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.
In second instance, the remaining shares to be delivered will
be purchased by the company. A share option committee has
been set up to conduct the general administration of the share
option plan (cf. Corporate Governance).
Year of offer per
portion
1999
2001
2002
Exercise price
€ 37.16
€ 9.69
€ 10.45
Number of options offered
52 000
85 200
67 500
Number of accepted
options
29 550
65 250
61 250
Number of outstanding
options
27 450
59 850
56 500
Initial exercise periods
Additional exercise
periods in accordance
with the law of
24 December 2002
p 106
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
2.11. Warrant plan
III. ADDITIONAL INFORMATION
The Extraordinary General Meeting of Shareholders of Spector
Photo Group NV on 28 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 provisions (the “Share Options Act”). Each
warrant gives the right to apply for a single share.
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
company. In addition, this warrant plan aims to create a common
interest among the beneficiaries and the shareholders that is
targeted towards an increase in the Company’s share price.
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
09/2006
03/2007
09/2007
03/2008
09/2008
03/2009
09/2009
03/2010
09/2010
3.1. Composition of the Board of Directors
see page 94.
3.2. Annual Shareholders’ Meeting and conditions for
admission
see page 101.
Spector Photo Group 2005
General information
p 107
Spector Photo Group 2005
Notes
p 108
General information

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