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pdf - Blokker Holding Anual Report 2013 > Home
ANNUAL REPORT 2013 The 2013 Annual Report provides a summary of the 2013/2014 financial year, which runs from 27 January 2013 to 25 January 2014 (a 52-week period) BLOKKER HOLDING ANNUAL REPORT 2013 CONTENTS Omnichannel 3 Foreword Overview of the Supervisory Board, Board of Directors, Management and Central Works Council Report of the Supervisory Board Blokker Holding B.V. – Key figures Highlights 2013 Report of the Board of Directors 6 10 11 12 13 14 HOUSEHOLD Household highlights Blokker in the Netherlands Blokker outside the Netherlands Casa Xenos Marskramer/Novy Big Bazar Budg7t Cook&Co Trend Center and Elektroblok 16 18 22 24 26 28 30 31 32 33 TOYs Toys highlights Bart Smit Intertoys Maxi Toys 34 36 38 40 LIVING & GARDEN Living and Garden highlights Leen Bakker Tuincentrum Overvecht 42 44 47 BLOKKER HOLDING B.V. FINANCIAL REPORT 49 Group balance sheet Group profit and loss account Cash-flow statement Accounting principles Notes to the group balance sheet Notes to the group profit and loss account Company balance sheet and profit and loss account Notes to the company balance sheet Other details Independent auditor’s audit report Addresses 50 51 52 53 55 57 58 59 61 62 63 -2- BLOKKER HOLDING ANNUAL REPORT 2013 OMNI-CHANNEL RETAILING: ANYWHERE, ANYTIME Within a short space of time, consumers have become accustomed to interacting with retailers in any location and at any time of the day to make their purchases, ask questions, or solve any problems they might have. In interacting with the retail format in question, they should be able to complete this customer journey seamlessly across all touch points, regardless of where this journey begins or ends. We believe that the future lies in national, clearly identifiable omnichannel retail formats where customer trust – combined with excellent customer services and a strong commercial proposition – form the basis of the revenue model. This means that Blokker Holding and its retail formats are working on increasing their presence at the touch points relevant to their customers and that we are working hard on, and investing in, this seamless journey for our customers. This requires an effort to take (sometimes substantial) steps forward, as we want our customers to be so satisfied that they automatically rely on our retail formats out of a sense of familiarity. We are proud of the fact that we run a well-distributed network of physical stores, with employees who manage these stores based on a customer-friendly approach, and intend to make maximum use of this network. Each of our retail formats is currently evolving, and we, as the holding company, benefit from economies of scale and knowledge. This is facilitated in part by a central web platform on which new developments are immediately available to all our formats. This web platform is designed to enable all retail formats which currently do not operate online stores but do have the facilities available (including Xenos Nederland and Blokker Belgium) to quickly launch high-quality online stores and the related services. Our formats also take advantage of the knowledge we have acquired both at the holding-company and format levels. The objective of all the minor and major steps we take to become the best possible omni-channel retailer we can be is to offer our customers a positive experience, so that we can continue to welcome them with great enthusiasm at any of our retail formats in the future, regardless of the touch point involved. -3- BLOKKER HOLDING ANNUAL REPORT 2013 BLOKKER HOLDING HOUSEHOLD OUR CHAINS The household items sold at our stores provide consumers with a convenient and enjoyable shopping Blokker Holding includes the household goods experience every day. retail chains Blokker, Marskramer, Novy, Cook&Co, Casa, Xenos, Big Bazar and Budg€t; toy chains Bart Smit, Intertoys and Maxi Toys; home furnishings chain Leen Bakker; garden supplies format Tuincentrum Overvecht; and pet supplies retailer Diervoordeel, along with the wholesalers Trend Center and Elektroblok. The majority of these chains operate in several countries. -4- BLOKKER HOLDING ANNUAL REPORT 2013 TOYS LIVING & GARDEN Our richly stocked toy stores and online stores offer Home and garden furnishings, blooming plants, pet a wide range of both traditional toys and modern supplies and original home accessories. video games. Logo te gebruiken vanaf 75 cm -5- BLOKKER HOLDING ANNUAL REPORT 2013 FOREWORD 2013 was a difficult year overall in terms of financial performance, with revenue down by 4% and profit declining by 5%. Continued low consumer confidence combined with increased online and offline competition led to lower results in three of our four top markets: the Netherlands, Belgium, France and Germany. in the number of stores during the year occurred in the Toy sector, which saw 15 net closures (including 5 E-Plaza stores) and a reduction from 753 to 738 stores. By country, the largest number of store closures occurred in France, with net closures of 22 stores during 2013: from 411 to 389 stores. Instead of store expansion, we will now focus on two key business areas: retail concept development and e-commerce, which will enable us to raise revenues once again. Germany was the outlier within these top four markets, with the highest level of consumer confidence and more than 9% revenue growth. Xenos, in particular, continued to successfully expand and grew its revenue in Germany by 19%, ending the financial year with 51 stores there altogether. FORMAT DEVELOPMENT We listened to our customers in the past year in order to gauge how they feel about our various chains. In the Household sector, we conducted an extensive customer survey for all our chains in the Netherlands, which has provided us with valuable feedback for updating our formats. We also launched a customer survey for our toy retailers in the Netherlands this year. In the Living & Garden sector, we have asked our customers to compare our current Leen Bakker format with the new format, of which several prototype stores are already in operation. Much of the company’s focus in the past year was on margin management, cost control and stock reduction in order to partially offset the lower revenues. These three measures resulted in the following outcomes during the year: (i) margin remained at an almost constant level, (ii) costs were reduced by 3% and (iii) stock was reduced by 7%. We continue to steer on these measures whilst also driving other initiatives across the company to get turnover back on track in the medium-term. Leen Bakker has also opened three new test stores: in Raamsdonksveer, Epe and Almelo. The new concept, which offers a contemporary take on home furnishings, has received positive customer feedback. Overall focus has shifted away from store expansion to format development and e-commerce Our survey reveals that Dutch customers view Blokker above all as a practical, functional store. As a strong and high-profile brand, it is renowned and valued for its reliability, good quality and customer For the first time in many years in 2013, we shifted the overall focus away from store expansion, resulting in a slightly lower total number of stores (2939, four fewer than in 2012). The largest decline LEEN BAKKER: NEW FORMAT IN EPE, THE NETHERLANDS -6- BLOKKER HOLDING ANNUAL REPORT 2013 New format development has become a skill in itself. There are roughly fifteen elements that help create a format’s look and feel, including product range, brand strategy, packaging, price, employees, service, store image, location, communication and online experience. We aim to be a modern retailer across each of these areas. service. Blokker will be launching its new retail concept in the Netherlands in August of this year, representing the first update since 2002. The stores will be given a more contemporary look and feel, designed to simplify customers’ shopping experience (customers will find it easier to locate items), while at the same time adding a little more inspiration both to the store layout and the product range. Each format also calls for a separate approach. The Xenos stores, for example, with their ‘oriental’-inspired look, were due for an update. The new format has retained the adventurous spirit of the old stores, but new store displays and rear walls have been added, along with a new logo, new, updated employee uniforms and improved in-store communications. A total of 67 Xenos stores (52 in the Netherlands and 15 in Germany) of the total number of 232 (approx. 30%) have now switched to the new format. It is pleasing to see that as a whole they considerably outperform the more outdated stores. Customers view Xenos – one of our other Household retail formats – as inspiring and trendy, especially for home decoration, accessories and gift items. They enjoy the Xenos shopping experience and appreciate its welcoming layout and its trends. The major challenge for the Xenos team today is to deliver new trends to the stores even faster in the future. Since one of the drawbacks of being a trendsetter is that copycats are always one step behind, Xenos needs to fill its new product pipeline more quickly than ever. Customers expect to find new items each time they visit Xenos and – as they indicated in our survey – if the store can continue to meet this expectation, they are confident that they will find something they like during each visit. Big Bazar launched a preview of its new store concept in Amsterdam’s Kalverstraat recently and will also be launching its first new XL store concept in the near future. This new store concept has been positively received by customers. BIG BAZAR KALVERSTRAAT NEW STORE UNIFORM AT BIG BAZAR -7- BLOKKER HOLDING ANNUAL REPORT 2013 BLOOMBIRD, NEW FORMAT FOR TUINCENTRUM OVERVECHT IN BEUNINGEN, THE NETHERLANDS WORKING AS ONE COMPANY Finally, Tuincentrum Overvecht successfully launched its new concept, rebranded as ‘Bloombird’, in Beuningen in the Netherlands. It has been heartening to see how the Tuincentrum Overvecht team managed to come together to create this all-new garden centre concept, which, since its launch, has consistently outperformed expectations both in terms of customer feedback and financial results. We will continue to develop and update our formats in the coming years as part of our efforts to bolster top-line growth. Instead of working on a decentralised basis with our various operating companies, we strive to work increasingly as a single company. As we take steps to implement these changes, it’s important that consumers will continue to recognise and perceive each of our formats as unique experiences. I would like to highlight the following four recent examples: SHARED SERVICE CENTRE QUALITY We established a Shared Service Centre (SSC) in the Netherlands in 2013, one of whose responsibilities is ensuring the product safety of the consumer items marketed by the Dutch operating companies. The Quality SSC has the following objectives: increasing and sharing knowledge and experience related to quality; professionalising the organisation; and achieving synergy gains. There are also external factors that necessitate the establishment of a Quality SSC: laws and regulations relating to product safety and the environment are proliferating, becoming more complex in their scope and are increasingly becoming interrelated. At the same time, they are also taking on a more generic nature rather than being aimed at specific products and/or product groups. E-commerce In early 2014, when we published our online results for 2013, we also communicated our plans to accelerate online growth and perfect our omni-channel retail strategy. We posted record online revenue in 2013 of EUR 79 million – 19 percent more than our 2012 online revenue. Revenue in the Toys sector grew by 17%, in the Living & Garden sector by 19%, and in the Household sector – comprising the websites blokker.nl, marskramer.nl and cookandco.nl – by an unprecedented 26%. The retail chains within the group which operate their own online stores generated nearly 4% of their total revenue online in 2013, which is not yet up to standard for a group of our size. We will continue to grow our existing online stores in 2014 and launch new ones for Xenos in the Netherlands and for Blokker in Belgium. Our target is to increase our online revenue to EUR 300 million by 2017, and we appointed an omni-channel director for Blokker Holding effective 1 May 2014 to help us achieve this target. He will be responsible for designing and implementing a central, integrated omni-channel strategy for our operating companies and will be working closely with the teams of our current online stores to help them boost their results. One thing is certain: omni-channel shopping will only increase further as a result of the early adoption of mobile phones and tablets. A case in point: Blokker’s online store saw its tablet customers increase explosively by 127%; mobile-phone purchases increased by 119%. On the blokker.nl website, a total of 18.5% of revenue was generated by mobile or tablet purchases (versus 11% in 2012). Examples include: • REACH Regulation (Registration, Evaluation, Authorisation and Restriction of Chemicals) • EU Timber Regulation (EUTR), entailing an obligation to prove that timber has been legally harvested. A product safety document (technical document) must be available for all items sold; without this document, sale is prohibited. Based on current data, the Quality SSC will review more than 40,000 technical files on an annual basis. Expertise in the following areas must be available in order to create these technical files: electrical products, toys, food, food-contact materials, textiles, chemicals, and the environment. Much of the required expertise extends across the operating companies and the separate sectors contained within these companies. -8- BLOKKER HOLDING ANNUAL REPORT 2013 GROUP-WIDE HR AND REGULAR EMPLOYEE FEEDBACK All these changes require a great deal of flexibility on the part of our employees, but we are confident that they will help drive Marskramer’s profits in the long term. Regular meetings between HR managers of the operating companies ensure that a single HR policy currently applies across the company, resulting in standardisation of processes. A recent example is our Employee Engagement Survey, in which six of our companies participated for the first time. It was encouraging to see that 9,500 of our employees (more than 70% of those surveyed) took the time to give feedback and share their thoughts and opinions about their specific roles, as well as offering ideas to continuously improve the company. The majority of employees who shared their feedback are employed either in our stores or in our logistics teams. The management teams in each of the companies that participated will be summarising that feedback in the coming months and, through interactive dialogue at all levels of the organisation, will be channelling the feedback into action plans for teams to implement. During my numerous store visits over the past year, I was once again impressed by the many good ideas contributed by our employees. I therefore fully support the Employee Engagement Survey and am certain it will be a powerful tool in enabling us to become a high-performing organisation. GROUP-WIDE IT SOLUTIONS The IT managers of our operating companies work closely together in sharing best practices. We have also set shared IT goals to support our group strategy. Over the past year, this has included the transition to a single online store platform for all companies and the decision to centralise our data centres. Our Toy sector team have taken the lead and worked hard together with our central IT team in developing one standard ERP (Enterprise Resource Planning) blueprint, which can serve as the basis for future rollouts at other operating companies. In addition to the four examples cited above, this form of cooperation continues in 2014, including for example the procurement of non-trading goods and supply chain management, where greater synergies will be achieved. I would like to thank all our employees for their hard work and commitment in 2013 and look forward to continue working with them in the future. INTEGRATION OF BLOKKER AND MARSKRAMER The Marskramer head office in Gouda closed its doors in October, which saw the team relocate to Amsterdam. Marskramer’s compact sales and marketing organisation has been working closely with the Blokker Netherlands team in order to achieve synergy gains. Marskramer maintains its own format organisation, which is also responsible for producing folders and for managing its successful online store. The back-office activities Human Resources, Finance and IT have been fully integrated into Blokker’s Amsterdam office as part of a shared operation. Laren, May 28th 2014 Roland Palmer Chairman of the Board of Directors -9- BLOKKER HOLDING ANNUAL REPORT 2013 SUPERVISORY BOARD BOARD OF DIRECTORS, MANAGEMENT AND CENTRAL WORKS COUNCIL SITUATION AS AT 28 MAY 2014 SUPERVISORY BOARD BOARD OF DIRECTORS MANAGEMENT COMPANY SECRETARY P.C. Klaver, Chairman A. Blokker Ms M.J. Poots-Bijl H.Th.E.M. Rottinghuis A.J.L. Slippens R.E. Palmer, Chairman L.M. de Kool, Deputy Chairman A.H.M. van der Horst, CFO T. Smit P.F. Botter (Logistics) A.J. Brouwer (Omni-channel) Ms S.J. van der Mispel (Real Estate) J. van de Schraaf (Group Control) Ms A. Schrijver (Human Resources) J.M. Vos (Real Estate) P.J. Krenn MANAGEMENT CENTRAL WORKS COUNCIL HOUSEHOLD TOYS BOARD OF DIRECTORS M.A. van der Vos (Intertoys), BLOKKER CASA France BART SMIT J. Peters, Chairman F.J.J. Letschert H. Schipper Ms A. Schrijver G.D.J. Avis, Deputy Ms W.J.M. Voss, Deputy A. Blokker, Chairman P.J.R. Douliez D.R. Van Spaendonk Mme. F.G.J. Battisti T. Smit, Chairman S.J.T. Hansen J.J.M. de Boer, Deputy H.C.A.M. Verbaandert, Deputy T.N.P. van Hees (Blokker), Deputy Chairman M. Hartog (Xenos, Cook&Co), Secretary COOK&CO INTERTOYS OTHER MEMBERS H.J.J. de Bie R.F. van den Noort, Chairman J. Nap S.J.M. Buffing E.H.L. Wubben Ms J. van den Berg (Big Bazar) Ms J.B.A.M. de Bont (Marskramer) D. Drenth (Bart Smit) Ms A.I. Drogt (Big Bazar) G.G.M. Garnier (Leen Bakker) A. Gebhard (Xenos, Cook&Co) M.J.M. Hijdra (Blokker) Ms M. Rapaic (Bart Smit) F.M. de Rijke (Intertoys) L. Verbeek (Marskramer) W.A.B. Verkooijen (Leen Bakker) J.G.M. Vullings (Tuincentrum Overvecht) Ms P.F. Wester (Tuincentrum Overvecht) BLOKKER België F.A.C. De Belie Marskramer/Novy Big BAZAR J.G.D. Groot Baltink, Chairman M. den Ouden, Deputy J. Pels, Deputy R.E. van Geest, Chairman B.J.H. Kasteel BUDGqT XENOS R.E. van Geest H.J.J. de Bie, Chairman L.R.M. Steenbekkers CASA International Wholesalers A. Blokker, Chairman P.J.R. Douliez D.R. Van Spaendonk A. Vonk Elektroblok A.F. van Hoogen TREND CENTER A. Vonk MAXI TOYS A.C. Mettens, Chairman G.M.M. Henrion A.E.G. Hellebaut LIVING & GARDEN Leen bakker A.J.J. van Schaik, Chairman J.W. Braafhart Ms M.N. Eijffinger, Deputy J.A.A. Krol, adj. Leen bakker België A.J.J. van Schaik TUINCENTRUM OVERVECHT/ DIERVOORDEEL W.J. van den Broek - 10 - Chairman BLOKKER HOLDING ANNUAL REPORT 2013 REPORT OF THE SUPERVISORY BOARD YEAR UNDER REVIEW 2013 2012/2013 financial statements in the presence of Mr Slippens. The second consultation meeting was attended by Mr De Kool. The Board’s attendance at these consultation meetings highlights the value the Supervisory Board places on an effective consultative structure. Consumers in the countries in which the group operates continued to keep their purse strings tight during the year under review. The austerity measures implemented in the Netherlands have had an impact on consumer spending. SUPERVISION The report of the Board of Directors contains detailed information on our revenues and profits in the Household, Toys and Living & Garden sectors. Net group revenue fell to EUR 2.5 billion during the year under review (versus EUR 2.6 billion in 2012), with profit before tax coming to EUR 61 million (2012: 64 million). During the year under review, the Supervisory Board met with the Board of Directors on a number of occasions, in accordance with the meeting schedule. The full Supervisory Board consulted with the Board of Directors on six occasions altogether; in addition, the Supervisory Board members also met without the Board of Directors on various occasions. A meeting was held between a delegation from the Council, the financial member of the Board of Directors, and the external auditor. Items discussed during this meeting included a summary of the audit results, and the audit report. During the year under review, the Board established from among its number an Audit Committee, a Nomination Committee and a Remuneration Committee. The Supervisory Board is presenting for approval the financial statements prepared by the Board of Directors for the 2013 financial year. The financial statements were audited by BDO Audit & Assurance B.V.; their audit report is included on page 62. We adopted the financial statements based on this report, their statement and other data, and recommend that you approve these financial statements. COMPOSITION OF THE BOARD OF DIRECTORS AND SUPERVISORY BOARD A key focus during the meetings with the Board of Directors was the new revenue model and how this is to be implemented; operational issues, the budget and the budgeting process, the investment budget, disposals, sales and profit at the various formats and of the Group, and human resources issues. The boards also discussed the strategy of the Group, which operates in a variety of markets, countries and industries and is represented with several formats in each sector. Key factors in this process are the fast-changing markets, the impact of omni-channel trends, and customer behaviour, which is becoming increasingly more erratic and hard to predict. Mr L.M. de Kool retired from the Board by rotation during the General Meeting of Shareholders on 13 September and was subsequently reappointed by the Meeting. In October, the Supervisory Board, in agreement with the Board of Directors, appointed Mr De Kool as a member and Deputy Chairman of the Board of Directors effective 1 November. The General Meeting of Shareholders was notified of this proposed appointment. Ms M.J. Poots-Bijl was appointed to the vacant position on the Board with effect from 1 March, having been nominated by the Central Works Council. Mr A. Blokker announced in March of the current year that he would be retiring from the Board of Directors effective 1 April 2014. On the recommendation of the Supervisory Board, the General Meeting of Shareholders subsequently appointed Mr Blokker as a member of the Supervisory Board effective 1 April 2014. Furthermore, the Supervisory Board and Board of Directors also discussed and evaluated the performance of, and collaboration between, both boards. The Supervisory Board discussed the annual report and financial statements in a meeting with the Board of Directors; this meeting was also attended by the external auditor. The Supervisory Board would like to thank the Board of Directors and the management and employees for their efforts during the challenging year under review. The Board is pleased that, as a result of Mr Blokker’s appointment to the Board, the Group will continue to benefit from his vast knowledge of the non-food retail sector. The Board is greatly indebted to Mr Blokker for his contribution over the past 40-plus years to the growth of the family business and the successful expansion of the company’s various formats. We would like to take this opportunity to wish Ms Poots-Bijl and Mr Blokker every success during their tenure. Laren, the Netherlands, 28 May 2014 Supervisory Board P.C. Klaver, Chairman A. Blokker Ms M.J. Poots-Bijl H.Th.E.M. Rottinghuis A.J.L. Slippens CENTRAL WORKS COUNCIL Members of the Supervisory Board attend consultation meetings with the Central Works Council. The consultation meeting held with the Central Works Council in June included a review of the - 11 - BLOKKERHOLDING HOLDINGANNUAL JAARVERSLAG BLOKKER REPORT2013 2013 BLOKKER HOLDING KEY FIGURES 2013/14 2012/13 2011/12 2010/11 2009/10 2008/09 2007/08 Consumer sales 3,120 2,503 Net revenue Operating profit (loss) (EBIT) 77 Income and expenditure -1 Profit (loss) from ordinary business activities before tax 76 Tax 15 rofit (loss) after tax P 61 3,234 3,367 3,433 3,434 3,469 3,400 2,609 2,723 2,770 2,760 2,778 2,711 82 - 167 - 211 -2 216 -4 219 -5 243 4 82 18 64 167 39 128 209 51 158 212 54 158 214 58 156 247 68 179 Amounts in millions of EUR Depreciation Cash flow Investments Group equity 89 150 68 486 84 148 69 508 82 210 75 499 80 238 90 518 79 237 97 480 74 231 89 484 75 255 83 431 Return on initial capital Solvency Tax burden Profit as a % of net revenue 12.0% 52.1% 20.5% 2.4% 12.8% 52.1% 22.2% 2.5% 24.7% 52.1% 23.4% 4.7% 33.0% 52.1% 24.4% 5.7% 32.7% 52.0% 25.3% 5.7% 36.2% 52.0% 26.9% 5.6% 43.3% 49.0% 27.4% 6.6% Number of employees 25,652 25,985 25,547 25,094 24,546 24,571 23,926 STORES Company-owned stores in the Netherlands Company-owned stores outside the Netherlands Franchised stores in and outside the Netherlands 1,460 1,442 1,411 1,372 1,304 1,244 1,201 1,063 1,065 1,047 1,039 1,015 962 914 416 436 449 473 506 565 607 Blokker 832 asa C 526 Xenos 229 Marskramer 220 Big Bazar 113 Novy 31 Cook&Co 27 Budg7t 25 Novalux 2,003 836 523 212 234 70 35 29 42 10 1,991 839 516 202 241 39 40 26 835 519 192 240 31 48 24 821 517 181 238 16 51 20 813 508 167 239 12 53 19 810 510 158 236 11 51 18 11 1,914 13 1,902 18 1,862 19 1,830 17 1,811 Intertoys 305 Bart Smit 250 Maxi Toys 183 E-Plaza 738 306 252 189 6 753 307 248 182 58 795 305 247 177 57 786 304 241 166 60 771 301 239 172 47 759 299 236 159 37 731 Leen Bakker Tuincentrum Overvecht Diervoordeel Total 180 19 178 20 176 20 172 20 163 19 162 18 199 2,943 198 2,907 196 2,884 192 2,825 182 2,771 180 2,722 NUMBER OF STORES PER RETAIL FORMAT HOUSEHOLD TOYS LIVING & GARDEN 178 18 2 198 2,939 The year under review runs from 27 January 2013 to 25 January 2014 (inclusive). The results of the combined group companies in the Netherlands and abroad for this period are shown in this report. Solely the 2009/2010 financial year reports on a 53-week period; all other financial reports cover a 52-week period. Novalux Estonia changed from a joint venture to a wholly-owned subsidiary during the 2011/2012 financial year and has been fully included in the financial data since the 2011/2012 financial year (formerly: 50%). The Estonian business was sold in early 2013. - 12 - BLOKKER HOLDING ANNUAL REPORT 2013 HIGHLIGHTS 2013 BLOKKER HOLDING NUMBER OF EMPLOYEES 2013/14 • Revenue of EUR 2.5 billion: a 4% decline from last year • Revenue from online sales continues to grow: by 19% to EUR 79 million • 122 new stores opened; 126 stores closed; total number of stores falls slightly to 2,939 • Net group profit: EUR 61 million 56 3,023 5,236 Household Toys Living & Garden Wholesale / other Total 25,652 (2012/13: 25,985) HOUSEHOLD • Number of stores tops 2,000 • Further expansion of Xenos in Germany • Big Bazar continues growth across the Netherlands and Belgium • Casa: strong growth in Italy • Continued strong growth in online sales at Blokker, Marskramer and Cook & Co 17,337 NUMBER OF STORES 2013/14 198 TOYS • I ncrease in profit at Maxi Toys despite weak toy market •B art Smit and Intertoys struggled in tough market conditions •C ontinued strong growth in online sakes Household Toys Living & Garden 738 Total 2,939 (2012/13: 2,943) LIVING & GARDEN • Leen Bakker launched new format • Strong growth in online sales at Leen Bakker • Another weak year for Overvecht Garden Centre 2,003 NET REVENUE (€ million) NUMBER OF STORES 3,000 Household Toys Living & Garden Year-end 2013/14 Company-owned stores 1,730 604 189 Franchise stores 273 134 9 Total 2,003 738 198 Online share 3 5 3 Year-end 2012/13 Company-owned stores 1,704 614 189 Franchise stores 287 139 10 Total 1,991 753 199 Online share 3 6 3 New store openings 2013/14 Company-owned stores 103 8 4 Franchise stores 6 1 0 Total 109 9 4 Store closures 2013/14 Company-owned stores 77 18 4 20 6 1 Franchise stores Total 97 24 5 Online share 1 2,500 Total 2,000 2,523 416 2,939 11 1,500 1,000 500 0 2.507 436 2,943 12 2007 2008 2009 2010 2011 2012 2013 2011 2012 2013 NET PROFIT (€ million) 200 115 7 122 150 100 99 27 126 1 50 0 - 13 - 2007 2008 2009 2010 BLOKKER HOLDING ANNUAL REPORT 2013 REPORT OF THE BOARD OF DIRECTORS PERIOD UNDER REVIEW Mr A. Blokker retired from the Board of Directors effective 1 April 2014 and joined the Supervisory Board as of the same date. For more than four decades, Mr Blokker was a member of, in successive order, the Blokker management and the Board of Directors of Blokker Holding. During this period, Mr Blokker focused mainly on procurement for various operating companies, the international expansion of the group, and management of the retail formats based outside the Netherlands, including Casa, Blokker Belgium and Maxi Toys. The Board of Directors is greatly indebted to Mr Blokker for his substantial contribution to the growth of the family business. The Board of Directors is exceptionally pleased that he will continue to be able to share his in-depth knowledge of non-food retail and the Blokker group following his appointment to the Board of Directors. Blokker Holding follows a non-calendar fiscal year, which runs from the fifth week in January until the fourth week in January of the following year. The 2013/2014 financial year ran from 27 January 2013 until 25 January 2014. This financial year is also referred to below as the ‘year under review’ or the ‘year 2013’. BLOKKER HOLDING REVENUE Net group revenue (exclusive of VAT) reached EUR 2,503 million in the year under review, representing a decline of roughly 4% from 2012, when net revenue was EUR 2,609 million. This net revenue was distributed as follows across three strategic retail divisions of our group and our wholesalers: NET REVENUE in thousands of euros Household Toys Living & Garden Retailers Wholesalers Total net revenue 2013/14 1,454,507 655,744 366,412 2,476,663 25,928 2,502,591 2012/13 1,512,461 681,494 388,380 2,582,335 26,517 2,608,852 Under the Dutch Management and Supervision (Public and Private Companies) Act, we currently do not comply with the requirement of a balanced distribution of management and supervisory positions among men and women. The company’s main consideration in appointing new members is the candidates’ calibre and skills. Index 96.2 96.2 94.3 95.9 97.8 95.9 NET PROFIT (LOSS) ONLINE STORES The consolidated net group profit for 2013 was EUR 60.7 million (2012: EUR 64.1 million). This profit was realised under difficult conditions, with net revenue falling by more than EUR 100 million. Thanks to the measures implemented, the formats managed to reduce their costs. The retailer to outperform all others in 2013 was our international toy store chain Maxi Toys, which managed to increase its profit in several weak markets. The company took measures during the year under review so as to be able to benefit in 2014 from the expected economic upswing with a number of rejuvenated formats. We once again achieved strong growth in revenue for our online stores in 2013. Consumer sales (including VAT) through these online channels increased by 19% to EUR 79 million. The number of online stores in the group decreased by one, to eleven stores, following the closure of the E-Plaza chain. The group employed a total of 25,652 people during the year under review – down slightly from the previous year. Dispersed across the three sectors, both wholesalers and the holding activities, these employees work in the following sectors: ONLINE STORES NUMBER OF EMPLOYEES The revenue from retail sales including VAT generated by companyowned stores and franchise stores plus the revenue of our wholesalers at invoice amounts exclusive of VAT totalled EUR 3,120 million, versus 3,234 million in 2012 – a 4% decline. At the end of the year under review, the group operated a total of 2,939 stores, including 2,523 company-owned stores (of which 11 are online stores) and 416 franchise stores, along with two wholesalers. bartsmit.com intertoys.nl intertoys.de leenbakker.nl leenbakker.be tuincentrumovervecht.nl en diervoordeel.nl cookandco.nl blokker.nl maxitoys.be maxitoys.fr marskramer.nl Household Toys Living & Garden Retailers Other *) Total number of company employees Franchise employees Total number of employees GROUP ORGANISATION One change occurred within the Board of Directors during the year under review. In November, Mr L.M. de Kool retired from the Supervisory Board and was appointed Deputy Chairman of the Board of Directors. In October, the organisation of Blokker Holding was expanded following the appointment of Ms S.J. van der Mispel as Director of Real Estate Operations. The team was expanded in spring 2014 with the appointment of Mr P.F. Botter as Chief Operating Officer (COO), responsible for logistics, supply chain management and IT; Mr J. van de Schraaf as Group Control Director; and Mr A.J. Brouwer as Omni-channel Director. The Netherlands International Total number of company employees * Wholesale and Holding activities - 14 - 2013/14 17,337 5,236 3,023 25,596 56 Employees 2012/13 2013/14 17,067 10,863 5,616 3,361 3,251 1,984 25,934 16,208 51 52 FTEs 2012/13 11,062 3,499 2,109 16,670 47 25,652 3,050 28,702 25,985 3,200 29,185 16,260 16,717 18,167 7,485 18,680 7,305 10,375 5,885 10,881 5,836 25,652 25,985 16,260 16,717 BLOKKER HOLDING ANNUAL REPORT 2013 INVESTMENTS An employee participation report, drafted in conjunction with the CEO and completed in May, sets out the objective, organisation and procedures of the employee participation bodies within our group. The financial statements for 2012/2013 were discussed in June. During the year under review, the Central Works Council was consulted, among other things, on the publication of the Social Media Policy; the establishment of a Shared Service Centre for Quality; a policy for the acquisition of stores; and the proposed decision to transition to a self-insurance plan under the new Sickness Benefits Act. The Central Works Council made favourable recommendations for each of these requests for advice. Mr L.M. de Kool was appointed Deputy Chairman of the Board of Directors effective 1 November. Ms M.J. Poots-Bijl was appointed to the Supervisory Board effective 1 March (having been nominated by the Central Works Council). Mr A Blokker retired from the Board of Directors effective 1 April 2014, going on to join the Supervisory Board. The Central Works Council has responded positively to Mr Blokker’s appointment. The meetings with the Central Works Council are characterised by a good, open atmosphere and mutual respect and trust. The Board of Directors greatly appreciates the positive attitude of the group’s employee participation bodies. The total amount invested in 2013 was virtually equal to that for the previous year: EUR 68.5 million net, versus 69.3 million in 2012. Major investment areas in 2013 included e-commerce, IT, logistics, and the store network. Of the total investment amount, EUR 23.6 million (34%) was spent on our subsidiaries outside the Netherlands. NET INVESTMENTS x C million New stores Existing stores Logistics and information systems Other Total 2013/14 32.0 17.4 18.0 1.1 68.5 2012/13 37.6 21.8 8.3 1.6 69.3 Depreciation came to EUR 89.6 million this year (2012: 84.2 million), bringing cash flow (net profit plus depreciation) to EUR 150.3 million (2012: EUR 148.3 million). A total of 45.6% of cash flow, then, was used for investment purposes (2012: 46.7%). Net cash flow from operating activities reached EUR 185 million (2012: EUR 117 million), thanks to a significant improvement in working capital management. OUTLOOK The first signs of economic recovery are expected to become visible during the 2014 financial year in the European countries in which the group operates. However, there will be no significant improvement in consumer confidence in the majority of countries. The first few months of the current financial year have seen tentative sales figures at our various retail formats. The Leen Bakker, Blokker and Tuincentrum Overvecht chains all reported strong early sales of garden furniture and garden supplies, boosted by the warm spring weather. Nevertheless, it is too soon to make any pronouncements on profit for the current financial year at this stage. The company closed the year under review with a balance sheet total of EUR 932.4 million (2012: EUR 975.3 million). The decline is due, among other factors, to lower stock levels at the majority of operating companies. Shareholders’ equity fell to EUR 486.2 million. At 52.1%, solvency (defined as the ratio between shareholders’ equity and borrowed funds) was equal to last year. PROFIT APPROPRIATION A portion of the dividend to be paid to shareholders based on the proposal for profit appropriation will benefit employees who participate in the Oranje Boven Participation Plan. The value of certificates is determined based on a standard valuation rule, based on the average of Blokker Holding’s net profits for the past two years. The value decreased in 2012 and 2013 on account of the company’s financial performance. Investments in the current year are likely to turn out higher than those in the year under review. Specifically, a substantial amount will be invested in optimising the e-commerce activities of the formats which currently operate an online store and in increasing the number of online stores. The number of full-time equivalents is expected to increase slightly as a result of expansion. CENTRAL WORKS COUNCIL We would like to thank all our employees for their dedication and efforts to our group during the year under review. The Central Works Council (in Dutch: Centrale Ondernemingsraad) is composed of members of the works councils of our subsidiaries in the Netherlands (see page 10 of this annual report). The Council convened on seven occasions during the year under review, including three consultation meetings with the CEO. Consultation meetings are traditionally attended by a member of the Supervisory Board. In addition, the executive committee of the Central Works Council held several meetings with the CEO. The meeting conducted in February focused on current issues and included a review of developments in the past year. The request for advice concerning the reorganisation of Marskramer and Blokker was discussed with the Central Works Council in April 2013. The employee participation bodies and management were frequently consulted throughout the process. Laren, the Netherlands, 28 May 2014 Board of Directors R.E. Palmer, Chairman L.M. de Kool, Deputy Chairman A.H.M. van der Horst, CFO T. Smit - 15 - BLOKKER HOLDING ANNUAL REPORT 2013 HIGHLIGHTS 2013 The household supplies market is characterised by a wide variety of suppliers. Besides sales by retail chains, this segment also increasingly sells products online. The Blokker, Marskramer and Cook&Co formats have also seen a significant increase in their online sales. The ‘Household Supplies’ retail category is becoming more fragmented, as many other companies operating in other industries also offer household items. Blokker Holding has been operating in this market since 1896, initially only with the Blokker format, but it has since added several other well-known retail formats in the Dutch and international markets, which have been going for many years. These formats all have their own distinctive product ranges. Blokker, Marskramer, Novy, Big Bazar, Budg€t and Cook&Co specialise in household supplies and related items, with some diversification into other product groups. Within the group, the Casa and Xenos chains offer a markedly different range within the household supplies market. The wholesaler Elektroblok offers mostly household products, while the international wholesaler Trend Center has diversified its range somewhat more over the years. NUMBER OF STORES – HOUSEHOLD 2013/14 31 27 113 25 220 832 Total 2,003 229 (2012/13:1,991) 526 Blokker Casa Xenos The Blokker and Big Bazar formats also operate internationally, within the Benelux market. The international chain Casa operates solely outside the Netherlands and currently has stores in nine countries. Market trends in the Netherlands also affect the profits of our chains. These trends continued to be challenging overall in Western Europe in 2013. It is difficult to compare the various household supply markets on account of the variety of suppliers operating in these markets. In 2013, the Dutch market for household supplies shrank by 5% from 2012, mainly because of a decline in the second half of the year. Sales are generally strongest in the Netherlands during the months of November and December. Trends and developments in the Household Supplies sector showed a consistent picture overall during the year under review. The continued low consumer spending in the nonfood sector caused total retail revenue in our household sector to fall by 3.4% overall. However, the decline in total revenue remained in check thanks to the strong growth of the Big Bazar chain and revenue increases at Cook&Co, Xenos Germany, and at the Casa stores in Southern Europe. Preparations were underway during the year under review to revamp several retail formats. The first prototype store of the new Big Bazar format opened its doors in spring 2014, along with new stores of the successful new Xenos format ‘Xenos 101%’. Five new-style Blokker prototype stores are scheduled to open in August 2014. The focus in 2014 is on online sales. A group-wide web platform is to be launched which will improve the services provided to online customers. The Xenos online store is also set to go live by the end of 2014. The main priority of the group and the Household Supplies sector is optimising online sales by increasing product ranges and through an integrated omni-channel strategy. NUMBER OF STORES – HOUSEHOLD Blokker CasaXenosMars- Novy Big Bazar Budg7t Cook&Co Novalux Total kramer Household Year-end 2013/14 Company-owned 717 458 228 164 113 25 25 1,730 Franchise 115 68 1 56 31 2 273 Total 832 526 229 220 31 113 25 27 2,003 Year-end 2012/13 Company-owned 718 453 211 173 70 42 27 10 1,704 Franchise 118 70 1 61 35 2 287 Total 836 523 212 234 35 70 42 29 10 1,991 - 16 - Marskramer Novy Big Bazar BudgPt Cook&Co KEY FIGURES – HOUSEHOLD (RETAIL) Net revenue (x C 1.000) 2013/14 2012/13 1,454,507 1,512,461 Employees 2013/14 2012/13 17,337 17,067 Number of stores 2013/14 2012/13 2,003 1,991 BLOKKER HOLDING ANNUAL REPORT 2013 HOUSEHOLD opeen op n in g Nu! Spectaculaire openings knallers! - 17 - BLOKKER HOLDING ANNUAL REPORT 2013 COMPANY-OWNED STORES 504 (including one online store) FRANCHISE STORES 112 EMPLOYEES 6,914 COUNTRY The Netherlands BLOKKER FORMAT Blokker is the market leader In the Dutch market for household supplies. With more than 600 stores, the chain is a high-street fixture. The quintessentially Dutch retail chain always provides an up-to-date range of items in the household supplies, cookware and dining categories, in addition to an extensive selection of garden supplies, multimedia items and toys. Blokker began preparations during the year under review for the launch of a new retail format. Although many of these activities took place behind the scenes, the more visible initial steps generated immediate results in the stores. The nineteen stores at which the routing was changed and the carpet floors were replaced with a wooden-style floor immediately improved their sales. The first prototype stores based on the new concept are scheduled to open sometime in 2014. There was a sharp increase in both visitor numbers and sales in the online stores. The online product range was significantly expanded, service was improved, and the online store was supported by a strong advertising drive. A new logistics centre became operational in August in order to be able to meet online demand and the future growth of online sales. Current efforts focus on the revamped online store, which went live in spring 2014. Despite a shrinking household supplies market, Blokker managed to increase its share in the market for household electronics. Sales from cleaning items grew as well. was able to increase the online product range. The online stores and physical stores are increasingly reinforcing each other, with more than half the customers who made purchases online collecting their order at a Blokker retail store. Of this group, another 50% ended up making a follow-up purchase at the store. This additional traffic to the offline stores, initiated online, generated additional sales. PROFIT/LOSS LOGISTICS & IT The increase in Blokker’s market share for household electronics – including coffeemakers and espresso machines – can be credited at least in part to effective partnerships with manufacturers of premium brands. These partnerships took on the form of in-store presentations, the expertise of employees, and through special promotions and promotional campaigns through the distribution of leaflets and flyers. Another factor was Blokker’s competitive prices for brand products. The sale of cleaning items increased, and the retail chain received positive publicity for its toy division: a comparative survey conducted by the Dutch Consumer Association among 40 toy stores and online toy retailers showed that Blokker is 8% cheaper than its competitors when it comes to toy brands. Nevertheless, total sales of toy products were lower than 2012. There was also a decline in sales of garden furniture and accessories, outdoor toys and outdoor clothes-drying solutions, all of which are key sales categories for the chain. Staffing at the stores was optimised during the year under review, without having any effect on services to consumers. In late August 2013, Blokker transferred its logistics operations for its online store to a new e-fulfilment centre in Houten, near Utrecht. Blokker employees at this facility work closely with their counterparts at TopPak, the division of mail company PostNL which handles all online sales for Blokker. The e-fulfilment centre is responsible for sorting and packaging online orders, which are then shipped by PostNL to destinations across the country. Returned items are also processed at the facility. This expansion makes it possible to accommodate the anticipated future increase in the number of online transactions and offer a more extensive product range. The company also began using social media in 2013 for aftersales purposes and sales and marketing campaigns. In order to manage the flow of goods as effectively as possible, the company began preparing the implementation of a new warehouse management system during the year under review, which will be piloted during the first half of 2014. BLOKKER PROTOTYPE STORE FOR NEW FORMAT ORGANISATION Following the announcement, in April 2013, of the relocation of the Marskramer organisation to an office building located beside the Blokker head office in Amsterdam, several support departments of this household goods retailer were integrated into the Blokker organisation, namely Accounts, Human Resources, IT, Facility Services and Procurement Support. These departments currently E-commerce Online sales continued to grow sharply in 2013. The number of products available for sale online increased, making it easier for Blokker to meet customer needs with its product range. A prime focus was an analysis of online visitors. Based on these results, the company - 18 - BLOKKER REPORT2012 2013 BLOKKERHOLDING HOLDINGANNUAL JAARVERSLAG BLOKKER AT THE FIRST HIGH-END SHOPPING CENTRE IN THE NETHERLANDS INTERVIEW RIK BRAND Rik Brand a 34-year-old Economics graduate and marketing expert, first began working part-time at Blokker as a student fifteen years ago, helping out in the store on Saturdays. Having caught the retail bug, Rik ended up staying with the company and currently manages one of the country’s largest and busiest Blokker stores. After managing several Blokker stores in the greater Haarlem area, he became the manager of the separate, subterranean store at the upscale Stadshart Amstelveen shopping centre in the Amsterdam suburb of Amstelveen two years ago. Rik is married to a former Blokker colleague, Lisette, who works as an education expert and runs a home day-care. The couple live in Hoofddorp with their three young daughters. Largest-size Blokker store As the first luxury shopping centre in the Netherlands, Stadshart Amstelveen highlights its upmarket credentials in its promotional materials: ‘Enjoyable, stylish indoor shopping experience offering a mix of more than 200 stores, including De Bijenkorf, Nespresso, Guess, Swarovski, Björn Borg, and many other prestigious retailers’. Such a high-end shopping centre would obviously not be complete without a Blokker store. The store entrance is located in a strategic, prominent corner of the shopping centre’s central meeting place – hard to miss for the shopping crowd. A wide escalator takes shoppers to the retail space beneath the ground floor. With an area of roughly 700 square metres, the branch is one of the country’s larger Blokker stores. Loyal clientele Rik Brand: ‘This shopping centre attracts huge numbers of customers. Just about everyone who lives in Amstelveen shops here, including many regular Blokker customers. These people tend to have a little more disposable income than average, which obviously doesn’t hurt us. Instead of Best Budget items, they tend to pick similar but more high-end brand products. It gets really busy here, especially on Fridays, when there’s an open-air market nearby and many shoppers like to pop in to see what’s new. We tend to see a lot of the same faces, and most of them come because they enjoy the social aspect – they come in just to say ‘hello’ and have a chat. And in my experience, they never go home empty-handed.’ Day out The shopping centre’s magnetic pull extends beyond Amstelveen alone, with customers from all over the region shopping there, including Amsterdam, Uithoorn, Aalsmeer, and further afield. The recreational shoppers tend to show up on the weekends – they like to make a day of it. And who can blame them, really? The shopping centre has many exclusive stores – including several anchor stores – and there’s lots of parking space. There are also excellent dining spots, and even a cineplex. The theatre is right next door, and for art lovers there’s the famous Cobra Museum. Our store attracts a lot of people looking for various household devices, toys, gifts and other competitively priced bargains. Sure, we get a lot of traffic at our store – you certainly won’t hear me complain!’ - 19 - Prototype store for the new Blokker format Rik Brand was both surprised and honoured when he was told that his store had been selected as one of the prototype stores to be used to test the future Blokker retail format. He feels this development is both stimulating and challenging: ‘These are going to be exciting times for Blokker with the new format. The store will be totally stripped down and remodelled, and our product arrangement will be improved and become more intuitive. We will also have access to the latest technologies, which, in terms of procedures, will both save us time and will allow us to serve our customers even better. Take the new omni-channel trend, for example, where the physical stores and online store are fully integrated. I’m really excited about all these changes. If the trial turns out to be successful, Dutch Blokker fans are in for a real surprise!’ BLOKKER HOLDING ANNUAL REPORT 2013 BLOKKER.NL LOGISTICS CENTRE AT TOPPAK, HOUTEN, THE NETHERLANDS OUTLOOK provide support services to Blokker, Marskramer, Big Bazar and Budg€t. Blokker also saw various organisational changes during the year under review. Although a significant economic revival and boost in consumer confidence are not on the cards at this stage, Blokker is cautiously optimistic about the current year. The online product range will be significantly expanded this year, and in addition the upgrading of a number of stores will help boost sales. The sale of items related to the FIFA World Cup in summer 2014 will also result in a bump in sales, followed by the launch of the new Blokker retail concept in autumn. RETAIL FORMAT AND STORES Blokker operated a total of 616 stores in the Netherlands at the end of the year under review. Four company-owned stores were closed and four new stores were opened. In addition, two company-owned stores switched to the franchise format. There were a total of 112 franchise stores in the Netherlands at the end of the year under review. Of the franchise stores, two garden centres were closed while three franchise stores were turned into company-owned stores. The company worked hard on developing the new Blokker retail format in the year under review. A prototype store was created at the head office in November. Based on further surveys among customers, retail staff and other employees, this concept was subsequently further developed and modified. Key elements tested in the prototype store included product range, routing, in-store communications, aisle arrangement, atmosphere, up-to-dateness, functionality and customer experience. The prototype store was further tested and improved during the first half of the current year. The same concept will be launched at a number of stores later this year. In anticipation of these launches, Blokker used limited resources during the year under review to remodel a number of older stores, where several elements of the new format were implemented. The results were instantly visible, with a clearer aisle arrangement for customers, positive customer feedback and higher sales. An additional number of stores will be converted based on this principle in the current year. Stichting Sociaal Fonds Stichting Sociaal Fonds Jacob Blokker Pz. paid a total of more than EUR 95,000 to employees, former employees and the survivors of deceased employees in 2013. At year-end 2013, the Foundation had assets of more than EUR 2.3 million. EMPLOYEES As reported above, Blokker has been undergoing a number of substantial organisational changes in the past year. The focus was on the recruitment and selection of employees possessing specific new skills and expertise. Employee training, education and development were another priority, including the development of various modules to train retail staff in the use of digital sales-support tools. In conjunction with the works councils of both formats, several Marskramer support services were integrated into the Blokker organisation. Of the nearly 7,000 Blokker employees, five celebrated their 40th anniversary at the company: Ms M.C. Buis, Ms A.J. Linneman, Ms A.C. Visser, Mr J.W. Idzinga and Mr C.H.F. Brouwer. Another 72 employees celebrated their 25th anniversary; 262 celebrated twelve and a half years at the company. - 20 - BLOKKER HOLDING ANNUAL REPORT 2013 SAVING OUR HERITAGE With start-up capital of one thousand guilders, ‘Japie’ Blokker and his wife Saapke moved into retail premises at 22 Breed in the Northern Dutch town of Hoorn. The date was April 1896, the day after their wedding. That thousand guilders turned out to be a good investment, as the couple possessed both an eye for quality and strong business acumen. Japie and Saapke called their business Goedkoope IJzer- en Houtwinkel (‘The Low-Cost Iron and Wood Shop’) and, besides selling agricultural tools and accessories such as spades and rakes, they also carried household supplies, including washtubs and coffee pots. Seven years down the line, their thriving business had outgrown its space and they needed to relocate to larger premises, so they purchased the building next door, 24 Breed. The product range sold by the Blokker family business was further expanded to include gift items, and the business continued to grow rapidly, with the couple again being forced to leave their premises and move into a larger building. Now, 118 years later, the Blokker Holding family business includes 14 retail formats with nearly 3,000 stores based across 11 countries. In 2010, Blokker Holding took advantage of the opportunity to reacquire the building. An alarming letter sent by a distressed neighbour revealed the building’s poor condition. An architectural firm was enlisted to assist with the drawings, and the renovation is currently underway. This ensures that an important part of Blokker’s heritage and history remains preserved. The renovation is scheduled to be completed in summer 2014. Just like in 1896, Blokker will then once again have reason to be proud of the iconic building at 22-24 Breed – the place where it all began over a century ago. - 21 - BLOKKER HOLDING ANNUAL REPORT 2013 COMPANY-OWNED STORES 213 FRANCHISE STORES 3 EMPLOYEES 1,153 COUNTRIES Belgium, Luxembourg and Suriname BLOKKER FORMAT The Blokker chain is also well-represented in Belgium and customers a clear overview of the product range available in the store. In addition, the stores were redesigned to give them a calmer look, and the aisles are now more conveniently arranged. Blokker entered into several new partnerships with various companies in the year under review in order to provide even better services to consumers. Blokker also partnered with the women’s magazines Libelle and Femmes d’Aujourd’hui to launch a special home furnishing range, including items such as wicker bean bags, wooden serving trays, candle holders, and a NEW PRESENTATION OF PANS range of linen with original graphic prints. This collection featured prominently in both magazines, as well as on the various websites. Several successful partnerships were also established with the Belgian entertainment company Studio 100 (whose properties include the girl group K3), the multinational e-commerce company Zalando, and Nieuwslijn, a current-affairs programme produced by public broadcaster VRT. Luxembourg. Operating company-owned stores only, Blokker is a leading retail format in these markets, offering a wide selection of household items, toys and garden furniture. There are three stores altogether in the Surinamese market, all operated by a single franchisee. The prime focus at the Belgian and Luxembourg stores was improving store image and the launch of a new in-store communications system. The new method used to present products and product categories – divided into different ‘customer experiences’ – makes it easy for customers to find the products they’re looking for. The new set-up has helped increase sales. The investment in new communication devices for employees has made it easier for employees to respond to market trends from within the company and share best practices with each other in real-time. Blokker entered into partnerships with the women’s magazines Libelle and Femmes d’Aujourd’hui in 2013 to ensure visibility among the target demographic. At the same time, the partnership also improved the retail format’s image. While there was a slight bump in consumer confidence in 2013, unemployment in Belgium nevertheless continued to rise. This caused Blokker’s overall sales at the Belgian stores to decline. The company nevertheless managed to achieve a modest profit thanks to strict cost management. REVENUE AND COSTS Although Blokker’s overall revenue in Belgium declined, profits in the Garden product group increased slightly in the spring, and particularly in June. Wage costs were reduced through the more efficient deployment of employees at the stores. At the same time, energy costs increased as a result of the persistent harsh winter weather. Electricity costs were reduced thanks to the measures implemented. OUTLOOK There is growing concern in Belgium about a further rise in unemployment. Consumer confidence, which had been increasing steadily since April 2013, took a dive again in March 2014. Blokker Belgium has noted that customers – as in 2013 – are more price-conscious and are less likely to be enticed into making impulse purchases. Profit is expected to recover, however. Blokker has a strong marketing and sales programme planned for 2014, including promotions organised in association with Visa/MasterCard, Zalando, and several amusement parks. The Blokker-Libelle home collection will be continued, with new items to be added. Blokker Belgium also has high expectations of the launch of its online store and the opening of five new stores. LOGISTICS, IT AND E-COMMERCE Blokker does not currently operate an online store in Belgium, but plans to open one by the end of the year. The website featured prominently in the retail chain’s promotional activities during the year under review, resulting in a 15% increase in online visitors. The number of subscribers to Blokker’s newsletter rose by 47%. All stores were equipped with new communication devices in preparation of the launch of the online store in 2014. This made it easier for the stores to keep track of both stocks and sales, as well as respond more quickly to market trends. The new technical aids enable employees to share their best practices, including pictures of product presentations. All these new elements helped improve the stores’ image and appearance. Suriname Sales at our franchise store here (which represents a looser association than is customary in other markets, with greater liberty for the franchisee) were virtually the same as the previous year. At the end of the year under review, the franchisee operated three small stores in Paramaribo. Purchasing power in Suriname has yet to recover, but expectations for the current year are optimistic. STORES AND RETAIL FORMAT A total of four stores were closed in Belgium, while four new stores were opened and two stores were relocated. The stores themselves launched a new product presentation system. Various products were grouped into different types of ‘customer experiences’, giving - 22 - BLOKKER HOLDING ANNUAL REPORT 2013 29-YEAR-OLD ILSE MELIS is the manager of the Cook&Co store in Eindhoven’s city centre, having previously worked at stores in the Southern Dutch towns of Breda, Bergen op Zoom and Tilburg. Ilse was born and raised in Oisterwijk (also located in Brabant province), where she and her partner, Paul, share a home. Surge of new, younger customers Cook&Co, located on Eindhoven’s bustling Vrijstraat, opened its doors only in September 2013. ‘I found it exciting and challenging to become the manager of an all-new store. It’s up to you to turn it into a success, and I think my team and I have done a pretty good job so far. Things started out a little slow, but customers gradually began to find their way to our store, and our clientele is still growing.’ This clientele is a mix of former customers of the old store, and a newer contingent. ‘The loyal customers of the old Cook&Co store are glad to have a place to shop for cookware again. We’re seeing a lot of new customers – including lots of young people and amateur chefs – who know that we sell quality products, ranging from premium-brand potato peelers to luxury food-processors to high-end pots and pans. Quality is our top priority – that’s why people keep coming back.’ ‘QUALITY IS OUR TOP PRIORITY - THAT’S WHY PEOPLE KEEP COMING BACK’ TV cooking shows: a major influence Cooking has been ‘hot’ for a while now, and its popularity continues to grow. TV cookery programmes, which are very popular with the Dutch public, have had a lot of influence on how people prepare their food. The most successful by far is the 24-hour food network 24Kitchen, which features Dutch celebrity chefs such as Rudolph van Veen. ‘A lot of people visit our store after seeing a particular cooking utensil on TV and want to learn more about it. We anticipate that demand and make a point of purchasing items shown on TV cookery shows. Unfortunately, we sometimes don’t have what the customer is looking for, but we do always have some kind of alternative, a similar product, to offer them from our range. Cooking shows are really a major influence on customer demand at our store.’ More male amateur chefs Another trend is the growing number of men who have been frequenting the store in recent years. ‘We’re seeing a lot of amateur chefs. Men tend to go for technical gadgets and the more expensive kitchen utensils – a digital thermometer, say, or a high-quality steel pan. Women are usually a bit more practical and also tend to keep a tighter eye on their purse strings.’ Interaction with online stores Both the Vrijstraat store itself – which happens to be the only specialised cookware retailer in all of Eindhoven – and its product range are fairly compact. ‘For that reason, we don’t carry the full product range. But fortunately we do have our online store as backup – it’s a very dynamic sort of place that doesn’t just sell products but also promotes the whole ‘cooking experience’. We have found that customers find all that very inspiring and stimulating. Some customers who come into our store may have seen a food processor that they really like in our online store. Since those machines are relatively expensive, many customers like to come into the store first so they can see the machine up close and know what it feels like in their hands – a phenomenon known in the retail industry as “showrooming”. But since those machines are quite heavy, large, and difficult to transport, they usually prefer to buy it in the online store. I have no problem with that at all – it just goes to show that we complement each other, and at least I won’t have to disappoint any customers by not having something in stock.’ ‘Cooking paradise’ It turns out Ilse Melis herself also knows her way around the kitchen pretty well: ‘Ha! You could say that again. I’m mad about cooking. I love preparing tasty meals and treats for friends and family. I guess it’s probably in my genes – my parents have always been very passionate about cooking as well. So you can imagine that, for a foodie like me, this shop is like paradise. I try to pass that sense of enthusiasm on to my customers, although a lot of the time that’s not even necessary. The people who visit our store tend to love all things culinary anyway.’ - 23 - BLOKKER HOLDING ANNUAL REPORT 2013 COMPANY-OWNED STORES 458 FRANCHISE STORES 68 EMPLOYEES 3,250 COUNTRIES Belgium, France, Spain, Portugal, Italy, Luxembourg, Switzerland, Austria and Aruba CASA FORMAT an inspiring, international retail format offering trendy decora- LOGISTICS, IT AND E-COMMERCE tive and gift Items, household linen and garden and home furnishings. The format is the most international retail formula in the Blokker Group, operating in the largest number of markets. Casa manages a website which provides up-to-date information on the format and its product range, and is active in various social media. The company does not operate an online store, partly because it operates in so many different countries and due to the large distances between the central warehouses in Belgium and the European consumers. The company will begin launching a number of e-commerce activities in 2014. Casa reached a record number of customers in 2013 with its mission of helping people rediscover the joys of domesticity. The international homeware retailer opened 21 new stores in Italy, eight of which share retail space with the Maxi Toys toy chain. Unlike Belgium and France, where consumer confidence remains low, revenue in Southern European countries such as Italy, Spain and Portugal actually grew sharply last year. Coupled with the poor summer weather across Europe, this caused overall sales to fall slightly. Casa’s 2013 campaign of ‘achieving more with fewer resources’ resulted in improved operating margins and higher profits. The chain celebrated its 25th anniversary as a Blokker Holding retailer in 2013. Under the inspiring leadership of Albert Blokker – who announced his retirement from the Blokker Holding Board of Directors effective 1 April 2014 – Casa became the most international of all the group’s retail chains. MARKET The international company Casa clearly noticed the difference between the Southern and Northern European markets in 2013. Whereas Spain, Portugal and Italy all saw a tentative rise in consumer confidence, consumer spending in Northern Europe remained weak. Consumer confidence in France even reached a record low in May 2013. The bad spring weather led to lower sales of seasonal products such as garden furniture and accessories. REVENUE, OPERATING MARGIN AND COSTS Due to a variety of factors including the continued downturn in France, Casa’s total revenue was down slightly from the previous year. Fortunately, the company did manage to improve its operating margins. All Casa stores implemented measures to reduce their stock. Thanks to efficient procurement policies, the chain was able to improve its operating margin slightly, despite the consumer discounts. The company once again opened a large number of new stores in Italy during the year under review, while closing several stores in the French market. The company also changed its processes and procedures in order to improve efficiency at the store, including a simplification of the process of unpacking products and arranging them in the aisles. This enabled the company to reduce the number of hours spent on these operations. - 24 - BLOKKER HOLDING ANNUAL REPORT 2013 CASA, AUVELAIS BELGIUM RETAIL FORMAT AND STORES OUTLOOK The company focused in 2013 on expansion in the Italian market, where the retail format opened 21 new stores. The massive crowds that turned out for the opening days of two stores located in the towns of Jesolo and Sarzana despite the dismal May weather bode well for the future of the retail chain in Italy. The sales generated during the first few days were promising as well, even reaching the kind of numbers usually found during the Christmas season. A total of eight exclusive Casa/Maxi Toys stores were opened in Italy in 2013, with the two separate retailers sharing the same cash register area. The total number of Casa stores increased by three and currently stands at 526. A total of 29 stores were closed and 32 were opened. An additional advantage of the closure of non-profitable stores and the opening of new stores is that the store design and overall look remain fresh and up-to-date that way. Combined with the new retail concept launched in 2012, this gives the retail chain a more contemporary feel. This effect was enhanced by arranging best-selling products more clearly in the aisles. The collection of lanterns, jewellery racks and paper napkins was expanded and is currently displayed separately at the cash registers. The stores reported a sharp spike in sales of these products. Sales of baking supplies and cupcake accessories also rose during the year under review, along with deli food items. The economic situation in Western Europe is not expected to improve to any significant extent this year. France – Casa’s largest market – is likely to see a further drop in consumer confidence, on account of the uncertainty of its political future. This is all the more reason for Casa to continue its current strategy of optimising opportunities in the Southern European countries and remodelling outdated stores. EMPLOYEES The various store closures and openings required a great deal of effort on the part of Casa’s employees. The company introduced a standardised evaluation system for store employees in 2013 to recognise their achievements and motivation and manage these if necessary. This has facilitated the introduction of more efficient procedures and processes at the stores, as well effective in-store measures to reduce stock. SPRING CATALOGUE 2013 - 25 - BLOKKER HOLDING ANNUAL REPORT 2013 COMPANY-OWNED STORES 228 FRANCHISE STORES 1 (Based in Germany) EMPLOYEES 3,699 COUNTRIES The Netherlands and Germany XENOS FORMAT A progressive retail chain offering household, gift and home decoration items, along with an attractive range of food products. Xenos celebrated its fortieth anniversary in 2013 by launching a number of successful anniversary campaigns. The product design competition Xenos organised to celebrate the anniversary resulted in the submission of 800 entries from engaged Xenos customers, many of which hewed closely to the chain’s design style. This style is characterised mainly by fun, affordable products sold exclusively by the chain, as well as wellknown food brands, and feature an ‘exotic’ look and feel. Xenos pursued a policy of cost management and strict stock management in 2013, and continued to invest in new stores, IT, logistics and the introduction of the new design style – which is just as contemporary, colourful and fresh as it always has been. Xenos believes that shopping at its stores should be nothing short of an adventure. REVENUE, OPERATING MARGIN AND COSTS OPENING OF XENOS STORE, BREDA, THE NETHERLANDS Xenos’ revenue in the Netherlands was up slightly. In Germany, which has a stronger economy, the chain saw its revenue rise more sharply. This growth was the result both of new store openings and of revenues from existing stores. Despite the lower revenue in the Netherlands, Xenos has managed to maintain its operating margins at virtually the same level. Stock levels were sharply reduced, and staffing and – by extension – management of wage costs in the sales organisation were critically reviewed. Xenos sources the majority of products directly from manufacturers, which guarantees a consistently original and innovative product range. RETAIL AND STORES The new ‘101% Xenos’ retail format – developed in 2012 – opened new stores during the year under review. The format (including new store displays, rear walls, logo, visuals and a contemporary design) was launched across six existing stores in 2013. During the year under review, Xenos introduced a number of interesting new themes in its stores, including the successful ‘Royal’ theme, which features practical and decorative products in the categories Maison Royale, Cuisine Royale and Bain Royale. Another bestseller is the extensive, elegant collection of picture frames and photo collages. Xenos opened a large number of new stores in the year under review: ten in the Netherlands and seven in Germany, all of which are designed in the new ‘101% Xenos’ style, featuring the all-new look and feel. No stores were closed during the year under review. LOGISTICS AND IT Efforts to expand the Xenos distribution centre were underway in the autumn, including a new high-rise warehouse and a dynamic order collection system. The new state-of-the-art distribution centre has made Xenos better equipped to handle the expansion anticipated in the next several years. E-COMMERCE Xenos maintained an active social-media presence during the year under review, as well as adding new content to its website, such as a blog and a platform offering customers useful and creative tips. Xenos is set to launch an online store in 2014. ANNIVERSARY BAG - 26 - BLOKKER HOLDING JAARVERSLAG 2013 OUTLOOK Xenos anticipates another challenging year for Dutch retailers, characterised by low consumer confidence and lower spending. Xenos Germany is again expected to grow its revenue. The chain is preparing to launch an online store in the Netherlands so as to complement the all-new Xenos retail format and offer customers an inspiring, user-friendly omni-channel experience. OPENING OF XENOS STORE IN KOBLENZ, GERMANY EMPLOYEES Employee training and education continued as usual in the year under review, including additional modules for store managers. New modules were also introduced for various management positions. The annual Xenos volleyball tournament was held in June, in which more than 400 company employees competed: 40 teams altogether, cheered on by a large crowd of supporters. Peter van Leeuwen, store manager of the Xenos store in Nijmegen, celebrated his fortieth anniversary at the company during the year under review. Ninety-two employees celebrated their twelve-and-a-half-year anniversary at Xenos and eight employees marked their twenty-fifth anniversary. ANNIVERSARY Leaflet XENOS STORE, LEIDSCHENDAM, THE NETHERLANDS - 27 - BLOKKER HOLDING ANNUAL REPORT 2013 COMPANY-OWNED STORES 164 (including one online store) FRANCHISE STORES 56 EMPLOYEES 1,093 COUNTRY The Netherlands FRANCHISE STORES 31 COUNTRY The Netherlands MARSKRAMER FORMAT A retail format specialising in household items and toys geared to smaller communities, whose stores have an average area of 300 square metres. The chain also operates the Novy franchise format (which has a looser association with the head office than the other retail formats) and the Groothandel Gouda wholesaler. Established In 1940, Marskramer has been part of Blokker Holding since 1993. Both the organisation and the stores saw a large number of changes during the year under review. A number of stores were designed based on a new format and given a more contemporary look and feel. A large-scale reorganisation was initiated in April of the year under review, as part of which Marskramer’s profits should improve consistently over the next two years. Marskramer saw its revenue fall, but did manage to increase its profit by reducing its overhead, closing several stores and pursuing a strict cost management policy. REVENUE AND COSTS Despite an overall drop in revenue in 2013, Marskramer’s sales revenues did increase during the warm summer months, driven by the strong sales of home furniture, cushions and outdoor toys. Unfortunately, this was not enough to offset the weak revenue in the spring and autumn. Profit was slightly higher despite the lower revenue; Marskramer managed to find the perfect balance between customer traffic at the stores and the stores’ sales staff. The company was also able to reduce losses thanks to the installation of a new security camera system. Marskramer underwent a large-scale organisational change, beginning in April, whose objective was to provide it with a healthy foundation for the future. The downsized head office relocated from Gouda to Amsterdam. Marskramer’s support services (Procurement and Procurement Support, Finance & Accounts, IT, Human Resources and Store Construction) were integrated in October into their equivalent departments at Blokker’s Amsterdam head office. The objectives of these organisational changes are reducing overhead, increasing procurement capacity, improving advertising and promotional opportunities, and offering a wider range of products, both at the stores and online. The initial results of these organisational changes became visible in spring 2014. LOGISTICS, IT AND E-COMMERCE The number of orders placed through the online store increased by 36% in the year under review. Consumers can choose themselves where and/or when to collect their orders. Additionally, Marskramer - 28 - BLOKKER HOLDING ANNUAL REPORT 2013 PROTOTYPE STORE, VAN DER MADEWEG, AMSTERDAM has made preparations to align the online store in 2014 with the new group-wide web platform. This will make it possible to significantly expand the online product range and bring the online and offline ranges more in line with each other. Pettenburg, Ms D. Bijkerk, and Ms G. Blijsie. Sixteen employees celebrated their twenty-fifth anniversary and 45 employees marked their twelve-and-a-half-year anniversary at the company.. RETAIL FORMAT AND STORES The first few months of the current year have not yet seen a rise in consumer spending. However, Marskramer expects to be able to reap the benefits of the organisational change this year – including an expansion of the product range at the stores and online and additional promotional opportunities generated by the partnership with Blokker. OUTLOOK The number of Marskramer and Novy stores fell by a total of eighteen. Two stores were converted into Big Bazar stores in 2013 and two former franchise stores became company-owned stores. The new store concept launched across a number of stores resulted in a significant boost in sales. Measures to more efficiently arrange the product range into core groups, use different colours for each group, and lower the store displays made the stores easier for customers to navigate. The new lighting system also helped Marskramer to improve the presentation and organisation of its product range. Best-selling products during the year under review included the colour-changing candle and the Safe Wallet cardholder, of which no fewer than 85,000 units were sold. Other popular items included the Kakelbont and Hartelust china sets launched by the popular Dutch TV presenter Yvon Jaspers. These sets, which were created exclusively for Marskramer, were snapped up in large numbers by customers. A special Kakelbont mug, the proceeds of which went to the Ronald McDonald Children’s Fund, was another major success. A new store range was developed for the smaller franchise stores, which was successfully launched under the name ‘Prima’. This range was further expanded in 2014. EMPLOYEES This was something of an eventful year for employees at the head office, with a number of staff being let go following the reorganisation and the relocation of the head office from Gouda to Amsterdam. A number of these employees could be transferred to other divisions of the group. Of the roughly 1,100 employees, three colleagues were rewarded for their fortieth anniversary at the company: Ms M.J. - 29 - BLOKKER HOLDING ANNUAL REPORT 2013 COMPANY-OWNED STORES 113 EMPLOYEES 906 COUNTRIES The Netherlands and Belgium BIG BAZAR FORMAT A discount store offering competitive prices to customers in a pleasant setting, featuring a dynamic, up-to-date product range including cleaning supplies, household items, chemist’s and personal care products, toys, arts and crafts supplies, pet supplies and bicycle accessories, along with decorative items, confectionery and chocolate. Big Bazar also sells a number of premium brands at rock-bottom prices. Big Bazar operated 70 stores at the start of the year under review and had 113 by the end of the year, including eight in Belgium. Having opened 37 new stores, the innovative discounter was the fastest-growing discount chain in the Netherlands. The sharp increase in the number of stores also resulted in a rise in revenue and an increased market share. The discounter’s XL format has proved to be particularly successful and currently serves as the benchmark for expansion at Big Bazar. The range of beauty products and personal care products attracted many customers to the stores and generated a great deal of social-media ‘buzz’. ‘Shoplog’ videos enabled consumers to share news about the product range, offers, and competitively priced premium brands. Big Bazar carries a strategic and appealing range of low-priced products. BIG BAzar, leeuwarden REVENUE AND ORGANISATION The rapid growth in the number of stores saw a spike in revenue and higher market share in the year under review. Major revenue drivers included the premium brands in the Beauty & Personal Care section, along with cleaning supplies. One challenge for discounters is to find an effective balance between offering a high-quality, low-priced product range and keeping the organisation’s operating expenses in check. Big Bazar shares a variety of services with Blokker, including Human Resources, Logistics and Quality Assurance, which enabled it to focus on growth and to create a competitive advantage in the discount sector. MARKET Discount formats are growing in popularity and have become a fixture in the retail landscape. While their emergence was initially driven by the economic crisis, they have clearly demonstrated that ‘consumers want more quantity and higher quality for less’. There is undoubtedly room in the market to accommodate Big Bazar’s plans for expansion. Discounters that offer a better retail experience and a higher quality than their competitors are likely to attract the attention of consumers, who continued to have low confidence in the economy in 2013 and kept a tight grip on their wallets. RETAIL FORMAT AND STORES Following an increase in the number of stores in 2013, Big Bazar again opened forty-three new stores in 2013, including thirty-seven in the Netherlands and six in Belgium. Of this number, eighteen stores are XL stores with retail space of between 650 and 1,000 square metres. These XL stores, in particular, have proved very successful in terms of revenue and returns. By the end of the financial year, Big Bazar operated twenty-two XL stores, including two in Belgium. The discounter began efforts in the autumn to alter the retail format. The objective of this campaign was to maintain the current discount format and carry a dynamic and innovative product range, while at the same time offering customers an exceptional retail experience. A prototype store was created behind the scenes, which was further developed using a number of resources, including consumer test panels. A small-sized version of the new retail format was opened on Amsterdam’s busy main street Kalverstraat in April 2014. An XL version is slated to be opened in autumn of this year. BIG BAzar, leeuwarden - 30 - BLOKKER HOLDING ANNUAL REPORT 2013 COMPANY-OWNED STORES 25 EMPLOYEES 107 COUNTRY The Netherlands BUDghT EMPLOYEES FORMAt Pop-up discount format offering a product range patterned A large number of new people were hired to staff the new stores: of the more than 900 current Big Bazar employees, approximately 500 were hired in 2013. on Big Bazar, consisting mainly of household supplies and other brand items. OUTLOOK The opening of the new Big Bazar store on Amsterdam’s Kalverstraat based on the new retail format was widely covered in the media, with the majority of coverage being positive. The first new-style XL store is scheduled to be opened in autumn 2014. Meanwhile, Big Bazar will continue its expansion this year as a discounter offering an exceptional retail experience to its customers. Launched in 2013, Budg€t shares the same management as Big Bazar. These pop-up stores are located in (closed) stores of other formats of the group, pending the expiry of the existing leases. Blokker Holding focuses on the discount format Big Bazar. Budg€t is positioned as the pop-up format of the Blokker Group. The number of Budg€t stores was reduced by seventeen during the year under review; there were twenty-five stores altogether by the end of the year of review. NEW-FORMAT BIG BAZAR STORE, KALVERSTRAAT, AMSTERDAM - 31 - BLOKKER HOLDING ANNUAL REPORT 2013 COMPANY-OWNED STORES 25 (including an online store) FRANCHISE STORES 2 EMPLOYEES 182 COUNTRY The Netherlands COOK&CO FORMAT Established in 2005, Cook&Co, is a relatively recent addition EMPLOYEES & ORGANISATION to the Blokker retail family. The format is aimed at consumers with an interest in cooking and provides a range of trendy household items and cookware, cookbooks and a wide selection of food products. Cook&Co is a continuation of, and successor to, the Hoyng retail format, which became part of Blokker Holding in 1988. Eleven employees celebrated their twelve-and-a-half-year anniversary at the company in 2013; three employees celebrated their twenty-fifth anniversary. A new software application was launched in 2013 to support the operating processes, which will be further rolled out in 2014. Cook&Co, a retail chain for contemporary cooking aficionados, was transformed during the year under review from a physical retailer into an online store which also operates stores throughout the country. The Cook&Co format increased its revenue following a spike in online sales. This online success was driven by improved customer services, an all-new product experience in the stores, a more extensive product range and the launch of a nationally distributed advertising circular. OUTLOOK The sales and marketing activities at the physical stores will continue to reinforce each other in 2014. MARKET The Cook&Co product range includes a wide selection of highquality cookware and other kitchen items. Dutch consumers reduced their consumption of ready meals in 2013 and dined out less frequently. Cooking elaborate meals at home became more popular among the Dutch public, sometimes inspired by TV cookery programmes. The retailer responded to this trend effectively by positioning itself as the go-to store for amateur chefs. Products that combine convenience, speed and a sense of domesticity also sold extremely well, with best-sellers including the Pizzarette, a tabletop pizza oven. REVENUE Cook&Co increased its revenue during the year under review, resulting in higher revenue overall. Profit was lower, however, due to higher stock levels at the distribution centre as a result of the explosive growth of the online store. RETAIL FORMAT AND STORES One store was closed during the year under review; another store was converted into a Big Bazar store. The stores worked hard on developing the ‘cooking experience’ for customers at the stores, including various in-store product presentations. E-commerce The increase in revenue from the online store was driven by improved online services and a combination of online and offline activities. New service elements were introduced, including a guaranteed next-day delivery policy for products ordered by 9 p.m., free shipping for orders over 50 euros, the option for customers to select the date of delivery, a free-return policy, and the option to pay after delivery/purchase on credit. The mix of an extensive product range online, promotional campaigns in the stores and a nationally distributed advertising leaflet offer customers a comprehensive omni-channel product range. AUTUMN 2013 PRODUCT CATALOGUE - 32 - BLOKKER HOLDING ANNUAL REPORT 2013 WHOLESALERS TREND CENTER AND ELEKTROBLOK FORMAT Blokker Holding operates two independent wholesalers. ELEKTROBLOK Trend Center (established in 1978) Is a trading company which sources its products directly from the Far East and subsequently exports these items to various countries in Europe and beyond. The wholesaler’s two main markets are Germany and France. Trend Center offers an exclusive range of interior design items and gift items and supplies primarily to retail chains and several major buyers. Wholesaler Elektroblok specialises in household supplies, including both general brands and whitelabel brands, and luxury items and toys. Elektroblok mainly targets customers in the Netherlands, and also has operations in Belgium, Germany, Suriname, Curacao and Bonaire. The majority of its customers are independent retailers operating stores in small- to medium-sized cities and towns. Elektroblok clearly suffered from the economic downturn in the Netherlands, a market which accounts for the bulk – more than 80% – of its revenue. Many regular customers saw a sharp decline in their revenues, which impacted the number of orders placed. More frequently even than in the previous financial year, some customers were unable to meet their financial obligations, which meant that Elektroblok was compelled to discontinue the delivery of goods to these customers. Substantially lower revenues even drove some customers to close their stores altogether. New business development was able to offset these revenue losses only to a limited extent. Overall, revenue across the retail segments was significantly lower than last year. The Wholesale sales channel also suffered revenue losses. Fortunately, there was a sharp growth in exports (which account for around 16% of total revenue), particularly to Suriname and Bonaire. Elektroblok’s overall revenue declined, however. The profit during the year under review was slightly lower than in the previous year under review. The consumer leaflets proved their value once again: in offering this communication channel to retailers, they are provided with an important sales and marketing tool for consumers. Elektroblok published a total of fifteen leaflets for retailers: thirteen featuring household items and two featuring toys. The publication of these leaflets accounted for slightly less than 40% of revenue. The increased frequency (from four to ten) of the leaflets also boosted business in Curacao, where consumer sales from a single customer increased by 45%. Elektroblok expects to once again contribute to the group profit in the current year. A new and exciting product range, attractive promotional campaigns and well-produced consumer leaflets are all important tools in achieving this objective. The diversity of the clientele of these two wholesalers – which is distributed across the entire retail landscape – has proved to be something of a bellwether for the European retail economy as a whole. A large number of smaller customers were unable to stay afloat in 2013. Many customers also saw their credit scores decline and a growing number had difficulty gaining access to good loan facilities. None of this pointed to an improvement in the European business climate, but both wholesalers nevertheless helped increase group profit. TREND CENTER Despite the tough market, Trend Center saw its revenue fall only marginally and actually increased its profit over last year. Revenue in Germany – Trend Center’s largest market – fell slightly. Secondlargest market France, in contrast, achieved strong revenue growth. Revenue in the other countries in which Trend Center operates – accounting for approximately 15% of all sales – fell sharply. The company once again managed to purchase innovative new products in 2013, which enabled its customers to compete in the market. Trend Center also managed to keep its loss ratio down and cut costs, despite the reduced creditworthiness of several of its customers. The value/volume ratio improved in 2013, resulting in lower costs for storage, handling and transport. Since the role of fairs and exhibitions is diminishing, employees more frequently visited customers onsite. New business development will remain a top priority in the current year, and in addition the number of touch points with existing customers will be increased, both at fairs and exhibitions and elsewhere. The calendar for this year also includes an upgrade of the existing software applications, which will enable the company to improve its customer services. Although there are no clear signs of a recovery in the market as yet, Trend Center had a stronger order book at the start of the year and expects to realise modest revenue in the current year. UPDATED EXHIBITION STAND, TREND CENTER, FRANKFURT, GERMANY - 33 - BLOKKER HOLDING ANNUAL REPORT 2013 HIGHLIGHTS 2013 Bart Smit, Intertoys and Maxi Toys are the retailers in our group operating in this sector. In addition, a large number of Blokker stores and the discount chains Big Bazar and Budg€t also carry toys. Marskramer stores offer their own in-store toy section under the name Toys2Play. The Casa stores in Italy also began selling toys during the year under review at several stores, where they share space with Maxi Toys. Maxi Toys has also opened a standalone toy store in Italy. Trends in the Toys sector tended to fluctuate during the year under review. Despite the continued lower consumer spending in non-food retail and the sharp increase in competition both online and offline, the group’s toy formats recovered somewhat during the year under review. Total retail revenue for our toy formats fell by 3.1% overall. This decline was caused mainly by the lack of revenue from the E-Plaza retail chain, which was closed at the end of 2012. The toy market has been struggling for several years now, and the Dutch toy market as a whole shrank once again in 2013. The multimedia market (consisting of games and game consoles) saw a tentative revival in autumn 2013 following new releases of several popular games. There are significant differences in the economies in which the group operates with its toy stores. In the Toy sector, Bart Smit’s revenue was slightly lower in the year under review due to weak multimedia sales. Intertoys saw its revenue fall only slightly. Thanks to its strong market position in traditional toys and despite a decline in the number of stores, our Maxi Toys toy retail chain – which has stores in France, Belgium, Luxembourg and Switzerland – managed to keep its revenue stable. Maxi Toys and its sister company Casa opened several combination stores in Italy during the year under review; these stores offer a limited selection from the Maxi Toys range, in addition to the Casa product range. The first standalone Maxi Toys store also opened in Italy in late 2013. Optimising online sales is also one of the main strategic objectives for the toy formats. Product ranges will be expanded and an integrated omni-channel approach will be introduced across the board. NUMBER OF STORES – TOYS 2013/14 183 250 Total 738 (2012/13: 753) 305 Bart Smit Intertoys Maxi Toys KEY FIGURES – TOYS Net revenue (x C 1,000) 2013/14 2012/13 655,744 681,494 Employees 2013/14 2012/13 5,236 5,616 Number of stores NUMBER OF STORES –TOYS Bart Smit E-Plaza IntertoysMaxi Toys Year end 2013/14 Company-owned 250 176 178 Franchise 129 5 Total 250 305 183 Year end 2012/13 Company-owned 252 6 173 183 Franchise 133 6 Total 252 6 306 189 U - 34 - Total Toys 604 134 738 614 139 753 2013/14 2012/13 738 753 BLOKKER HOLDING ANNUAL REPORT 2013 TOYS - 35 - BLOKKER HOLDING ANNUAL REPORT 2013 COMPANY-OWNED STORES 250 (including an online store) EMPLOYEES 1,864 COUNTRIES The Netherlands, Belgium and Luxembourg Logo te gebruiken vanaf 75 cm BART SMIT FORMAT Toy retailer selling traditional toys, board games, gifts and a range of multimedia items. Bart Smit was established in 1967 and has been part of Blokker Holding since 1985. Bart Smit has always maintained a policy of offering an up-todate product range and responding to the latest toy trends. Highlights for Bart Smit in 2013 included the launch of the Space Scooter, the introduction of a new store design, and an all-new web platform. The chain managed to maintain its strong position in the traditional toy market in the year under review, both in the physical stores and online. Preparations were made behind the scenes for the further implementation of the omni-channel strategy. In-store activities were geared to help customers find the gift they’re looking for more quickly and easily. A trial involving interactive ordering units in the stores was successful and demonstrated the added value of online and offline shopping to both customers and retailers. BARBIE DOLLS AT BART SMIT tools to compete in the fiercely competitive online market. The logistics for the online ordering system have been improved, along with the service provided directly to customers and to the stores. This enables Bart Smit to provide a wider range of new products, generating additional revenue in the process. The number of consumers who collected online orders from one of the physical stores increased during the year under review. A pilot project was launched at five stores in 2013 involving an in-store ordering system, where consumers can order online items currently not in stock at the store. Gifts ordered by customers can be delivered to their homes or collected at the store. The results of the pilot project/trial are promising: customers were satisfied and employees did not have to turn away customers due to items being out of stock. MARKET Besides low consumer confidence, the toy market also faced growing competition in 2013, particularly online. The video-game market also shrank appreciably, because new releases of game consoles – including Microsoft Xbox One – were delayed in the Netherlands or (as in the case of PlayStation 4) were not launched into the market until the late autumn. REVENUE, OPERATING MARGIN AND COSTS Revenue fell slightly during the year under review, the main factor being the lower multimedia sales. Nevertheless, Bart Smit maintained its market share in the traditional toy market both online and in the physical stores, with revenue from traditional toys even increasing slightly. EMPLOYEES The operations of E-Plaza – a multimedia retail formula established as part of the Bart Smit organisation – were discontinued in 2012. By early 2013, only two stores remained in operation in the Netherlands and two in Belgium. These last two stores also closed in 2013, and terms and conditions were agreed with the Works Council regarding the future of the staff. A large number of employees could be redeployed at Bart Smit or at the other operating companies of the Blokker Group. Two Bart Smit employees celebrated their fortieth anniversaries: Mr J. Schilder and Mr K. Oudshoorn. Thirtyseven employees celebrated twenty-five years at the company and 56 employees marked their twelve-and-a-half year anniversary. RETAIL FORMAT AND STORES Bart Smit remodelled its stores during the year under review. The stores have become easier for customers to navigate thanks to new signage, the introduction of special images, and changes to the design. The main priority in the stores is for customers to easily find a gift item that a child will really enjoy. Children tend to switch to toys for the next age category at increasingly younger ages, and interest in specific types of toys tends to fade fast. This prompted Bart Smit to design the product range based on currency and quality even more so than in the past. Besides providing an up-to-date product range, the company also worked on further improving service and store layout. For example, store displays were changed on a regular basis in order for them to coincide with the publicity campaigns launched by toy manufacturers. Bart Smit closed three stores in 2013, one of which has since been converted into a Big Bazar store. OUTLOOK The slump in the toy market is expected to continue into 2014. Nevertheless, Bart Smit does expect more opportunities in multimedia sales than during the year under review. The Dutch Xbox One is set to be launched and PlayStation 4 will become more widely available. Innovations in traditional toys look promising as well. LOGISTICS, IT AND E-COMMERCE Bart Smit has operated an online store in the Netherlands since 1999. The new web platform launched by the company in 2013 gives it the - 36 - BLOKKER HOLDING ANNUAL REPORT 2013 THE MOST CUSTOMER-FRIENDLY BART SMIT STORE Deciré Mulder was aged just sixteen when she joined Bart Smit as a full-time employee. Retail work turned out to suit her, and she was promoted to store manager after just two years. Having been with the company for twelve years now, Deciré has been running the store at the Hoog Catharijne shopping centre at Utrecht’s central railway station for the past decade. Deciré and her partner, Gert-Jan – a fellow Bart Smit employee – share a home in Veenendaal. Challenge trophy The Bart Smit store at Hoog Catherijne was voted ‘most customerfriendly store’ in a national internal competition. The challenge trophy presented to the store in the second half of 2013 has been given pride of place in the employee cafeteria. Deciré: ‘We’re extremely proud of winning the title and will do everything we can to make sure that trophy stays put!’ Transformation ‘Of course, our store happens to be in a fantastic location, right near the main entrance. It’s a very high-traffic store with strong sales. The store underwent a complete transformation in the late summer of 2013: the building was adapted to suit the needs of today’s consumers – in fact, the entire Hoog Catherijne shopping centre is scheduled to be upgraded over the next while. If you look at our store exterior, you’ll see that it’s made completely of glass – shoppers can see how clean, cheerful and inviting the store is from the outside, which makes them want to come in and check it out.’ Variety on the job The number-one requirement for a good store manager is that they must enjoy their work, according to Deciré, who believes you can only truly motivate your team if you have a passion for the job yourself. Having an actual interest in the product range obviously doesn’t hurt either. Despite their young ages, the majority of employees have been working at the store for some time. ‘They stay because they like working here’, she says. Variety on the job is essential to people’s morale: ‘You should never let someone work the cash register for an entire day, as it gets very repetitious. The trick is to assign people different types of work throughout the day. What aspect of working here do employees enjoy the most? A lot of people like creating goodlooking in-store presentations – that type of work calls for a bit of creativity. But the most important thing for us all is providing the best possible customer service – we didn’t receive that customer-friendliness trophy for nothing! I also feel it’s important that Bart Smit involves us in its company policies. We regularly attend meetings at the head office, where we’re briefed on new products and new plans.’ Something for everyone The store carries a wide range of items. ‘Our multimedia products are very popular: tablets, PlayStations and so on all sell like gangbusters. We also sell all the accessories for those items. A lot of girls also love multimedia.’ As popular as multimedia items are among today’s youth, there’s still plenty of demand for traditional toys as well. ‘Dolls, and board games such as Monopoly and Stratego are mainstays in toy retail. And don’t forget the Space Scooters – these kick scooters which are popping up everywhere. They’re really fun to play around with and a huge hit with kids.’ - 37 - Trendy bracelets and ‘Secret Snugglies’ One of Deciré’s personal favourites is the Loom bracelets, which slightly older kids can create themselves using a miniature loom. ‘And those cuddly toys over there are called Zorgenvriendjes (‘Secret Snugglies’). They’re traditional plushies that kids can confide their innermost secrets to. A lot of children tend to keep their secrets to themselves, but the Secret Snugglies let them write down what’s troubling them on a piece of paper, or they can make a drawing. The cuddly toys have a special zipper pouch in which they can place the notes. Confiding in their stuffed animals this way brings them relief. And it gives parents who later find one of those notes or drawings an opening to talk to their child about what’s bothering them, which they might otherwise be clueless about. It’s a brilliant idea, don’t you think?’ BLOKKER HOLDING ANNUAL REPORT 2013 COMPANY-OWNED STORES 176 (including two online stores) FRANCHISE STORES 129 EMPLOYEES 2,217 COUNTRIES The Netherlands, Belgium, Germany INTERTOYS FORMAT A modern toy and juvenile-products retailer offering a wide range of traditional toys alongside an up-to-date selection of multimedia items and a selection of attractive gifts and jewellery. Established in 1976, the chain has been part of the Blokker Group since 1993. LOGISTICS, IT AND E-COMMERCE Intertoys invested heavily in online marketing during the year under review. A more targeted use of search-engine optimisation, new online marketing tools and mobile applications have all increased the importance of the internet as a sales channel. The online product range was extended again and a new service was introduced that allows customers to select their own delivery date. The extension of the product range focused mainly on ‘long-tail products’, which are not purchased by consumers in large numbers but which nevertheless account for a share of total sales revenues. These tend to be larger products for which there is insufficient space in the smaller Intertoys stores, as well as books or jigsaw puzzles of which only a limited selection can be displayed in the stores. Intertoys aims to meet customers’ needs on a 24/7 basis. Consumers expect to be able to purchase, pay, collect, receive or research products at a time that suits them. Investments during the year under review focused on facilitating this and on achieving Intertoys’ other omni-channel objectives. A new software system to support operating processes and the new web platform will both be implemented in the near future. Intertoys was voted ‘Toy Retailer of the Year’ by Dutch consumers for the sixth consecutive year in 2013. The chain stood out by its extensive and up-to-date range, excellent product knowledge and customer-friendliness. Intertoys’ market share continued to grow in 2013, despite the shrinking toy market overall. The company even managed to increase its online revenue, in spite of the growing number of online toy retailers. The online store also expanded its catchment area in the German State of North-Rhine Westphalia, where the bulk of the company’s German revenue is generated. While Intertoys’ total revenue declined, its profit rose thanks to a strategic pricing policy and cost management. MARKET The toy market continued to contract during the year under review, while new toy manufacturers entered the online market and existing online toy retailers stepped up their game. Intertoys, the largest toy retailer in the Netherlands, has maintained steady revenue in this shrinking market. The heavy hitters in the toy market in 2013 were major brands such as LEGO, Playmobil and Mattel. The game market continued to decline due to the emergence of tablet and smartphone games. REVENUE The relatively strong summer, Saint Nicholas and Christmas periods and a differentiated pricing strategy ensured that Intertoys’ total revenue fell only slightly during the year under review. Bestsellers included LEGO, Playmobil, Barbie, the Space Scooter, and Furby. The new ‘Princess Castle’ – complete with dress-up clothes and accessories which children can use to decorate their bedroom – was a massive success. The School section, which was introduced in 2012 and which offers a fun range of stationery items, books and other school supplies, continued to expand in 2013. Popular items in the Gifts & Jewellery section included the nail care and fashion accessories product groups. Although the overall game market is shrinking, Intertoys ended the year under review with growth in this area. This growth was driven by the highly successful release of Grand Theft Auto 5, the launch of PlayStation 4 in December, and a revised marketing strategy. The launch of Disney’s ‘Infinity’ game also turned out to be a huge success. Intertoys’ market share for tablets in the cut-price segment stabilised owing to growing competition from other (new and existing) providers. In order to keep profit at a stable level, the organisational structure was modified so as to allow employees to work even more efficiently. INTERTOYS CATALOGUE 2013 - 38 - BLOKKER HOLDING ANNUAL REPORT 2013 RETAIL FORMAT AND STORES EMPLOYEES The total number of stores, at 305, remained virtually level. One new franchisee was added in 2013, based in Oisterwijk. The franchise store in Zwanenburg was closed down, along with the companyowned store in Avenhorn. In addition, four franchisees became part of the network of company-owned stores. There was a focus on the power of presentations in the stores themselves. With an eye for detail and in conjunction with the franchisees, specific products were grouped into categories in order to create inspiring in-store presentations. The Princess Castle is a good example of this type of display. The Intertoys Speel-en Leermodel™ (Playing and Learning Model) was launched in the Baby and Toddler section as a way of inspiring parents and assisting them in selecting fun and educational toys. Customer-friendliness is a top priority for Intertoys and is one of the aspects in which the format always scores high in the annual Retailer of the Year competition. Mystery shoppers visit all stores twice a year in order to assess and maintain customer-friendliness. As in previous years, employees of the highest-performing store were treated to a weekend break, with the Intertoys management taking over their duties during their absence. Employee training and motivation continued to be a priority during the year under review. The continued strong sense of loyalty of the employees and a variety of training courses (including e-learning courses) made it possible for the company to continue competing in a tough market. Fifty-four employees celebrated their twelve-and-ahalf-year anniversary at the company; fourteen employees marked their twenty-fifth anniversary. DISTRIBUTION CENTRE, WADDINXVEEN, THE NETHERLANDS www.intertoys.nl OUTLOOK Intertoys expects to further strengthen its position in the toy market with a strong pricing, marketing and omni-channel distribution policy. The integration of the strengths of the stores and the online store has improved the product range available to consumers. The new online store is also scheduled to be launched during the year under review. A trial is also on the calendar, involving an online kiosk for employees at twenty-five stores. - 39 - BLOKKER HOLDING ANNUAL REPORT 2013 COMPANY-OWNED STORES 178 (including two online stores) FRANCHISE STORES 5 EMPLOYEES 1,143 COUNTRIES Belgium, France, Italy, Luxembourg and Switzerland MAXI TOYS FORMAT Maxi Toys is a large-scale specialised toy retailer operating in five European countries. The stores have an area of between 600 and 1,000 square metres and are located mainly on the periphery of major cities. The head office and distribution centre are located in HoudengGoegnies, Belgium. Maxi Toys has been part of the Blokker Group since 1997. Maxi Toys ventured into the Italian market during the year under review, opening a 1,000-square-metre store in the vicinity of Milan. In addition, eight Casa/Maxi Toys combination stores were opened in the Italian market during the year under review. The retail chain also began the substantial expansion of the Belgian-based distribution centre. The larger Maxi Toys stores (which are generally based in peripheral locations in shopping centres that include a hypermarket) were a great success, particularly for large toys. Maxi Toys closed the year with a slight decline in like-for-like sales. Maxi Toys’ total revenue remained stable, and operating margin did not change from the previous year under review. By significantly reducing stock and through strict cost management, Maxi Toys was able to boost profit, and even saw its profit rise despite growing competition. MARKET The international toy market underwent a large number of changes during 2013. The traditional retail market struggled, particularly in Belgium and France. In the online market, the ‘pure players’ showed their strength and increased in number. A growing number of retailers in other sectors also added toys to their product range. Physical retail stores experienced difficulties in France, due to factors such as the emergence of more online players and because hypermarkets have lost market share. The latter has negative implications for Maxi Toys, because hypermarkets tend to attract large numbers of customers to the retail areas where Maxi Toys stores are based. Market conditions in Luxembourg and Switzerland were more favourable. REVENUE Total revenue in the spring of 2013 remained below expectations on account of the early Easter and early Carnival. The bad weather during this period slowed down consumer purchases, whereas usually sales are strong around the time of these two holidays. Poor weather conditions later in the spring caused a slump in the sales of outdoor toys, a key sales category. Fortunately, sales rebounded sharply during July’s heatwave, largely making up for the slow sales in the spring. Revenue was down again in November and December. The main factor was that consumers, more so than in previous years, put off their Christmas shopping until the very last minute. Maxi Toys managed to offset the previous slump in sales almost completely during the last two weeks of the year. The chain saw its revenue from games and multimedia products decline in all countries except Luxembourg, but its tablet sales continued to increase. The white-label brands of traditional toys and well-known traditional brands such as Playmobil, LEGO and Mattel continued to show strong sales. Although Maxi Toys was forced to offer these products at rock-bottom prices in order to be able to compete in the market, the company did manage to keep total operating margin in 2013 at the same level as 2012. BUCCINASCO, ITALY - 40 - BLOKKER HOLDING ANNUAL REPORT 2013 LOGISTICS, IT AND E-COMMERCE of action figures); ‘Professor Pi’ (a collection of chemistry and science-related items); and ‘Wooloomooloo’ (a collection of bags and backpacks). The packaging for ‘Ouatoo Baby’ (preschool; 0-24 months) and the ‘Qweenie Dolls’ doll collection was redesigned. Bestsellers in 2013 included the sandbox shells and 15-kilogram sand bags sold along with the shells. Smaller toys by existing and new, trendy brands were also popular items. France, the main market for Maxi Toys, saw a decline in the number of stores following the closure of five company-owned stores and one franchise store. This brought the number of stores in this market to 141, including three franchise stores and one online store. There were no new store openings in France in 2013. One store was sold in Belgium, bringing the total number of stores in the Belgian market to 32, including the online store. The situation in Luxembourg and Switzerland remained unchanged: there were five stores altogether, including two franchises in Luxembourg and four company-owned stores in Switzerland. Italian consumers were introduced to Maxi Toys in April 2013, with the opening of the first combined Maxi Toys/ Casa home furnishings store. These combination stores have a single cash register area, which allows for cost-effective operation. The combination stores were well received by the Italian public. The first 1,000-square-metre standalone Maxi Toys store opened its doors in Buccinasco (near Milan) in December. The licensing agreements and deliveries to franchisees in Turkey and Morocco were successfully continued. Online sales in Belgium continued to rise steadily. Maxi Toys saw its online sales rise slightly in France. The company strengthened its e-commerce platform during the year under review and integrated the omni-channel activities into its 2014 marketing plans. The extension of the logistics centre in Houdeng, Belgium began in 2013, and the centre was opened and became operational in April 2014, resulting in the addition of 15,000 square metres to the existing 30,000 square metres. In addition to this extension, Maxi Toys also changed its supply chain with the objective of better serving both omni-channel customers and the physical stores. These changes must accommodate Maxi Toys’ expansion plans in existing and new markets, including Italy. RETAIL FORMAT AND STORES One key element of the Maxi Toys retail format is the range of exclusive and up-to-date white-label brands sold by the toy retailer in addition to the well-known toy brands. Through the strength of this combination, Maxi Toys has managed to attract a variety of consumer categories. The company continues to invest in whitelabel brands on an ongoing basis. A number of Maxi Toys brands were also further developed in 2013, and the company updated and rejuvenated the packaging of its white-label brands. New brands launched in 2013 include ‘Mission Destruction’ (a line EMPLOYEES Following the closure of several stores in France, the number of Maxi Toys employees fell from 1,164 at year-end 2012 to 1,143 at year-end 2013. OUTLOOK In view of global economic trends and growing competition in the toy market, Maxi Toys expects this to be another challenging year. Fortunately, Maxi Toys is well positioned to meet these challenges. The chain will be promoting its upcoming twenty-fifth anniversary in 2014 with advertising, special offers, creative collections and online publicity. The new e-commerce platform and the supporting logistics organisation will become fully operational as 2014 progresses, which will enable Maxi Toys to provide the best possible service to consumers. SPRING CATALOGUE 2013 - 41 - BLOKKER HOLDING ANNUAL REPORT 2013 HIGHLIGHTS 2013 Three of our formats operate in this sector. Leen Bakker is our home furnishings retailer, offering a broad selection of items and stores in the Benelux market, Curacao, Bonaire and Aruba. Tuincentrum Overvecht, which has stores throughout the Netherlands, offers both a comprehensive range of garden supplies and indoor and outdoor items. Besides garden centres, Tuincentrum Overvecht also operates two pet supply discount stores, which offer a broad range of pet supplies for dogs, cats, rodents and birds. The formats operating in the Living & Garden sector suffered as a result of the housing slump. Due to the limited number of moves, there were fewer homes and gardens to decorate. Another factor that held back sales in 2013 – particularly at the garden centres – was the weather. The cold spring and late summer caused the sale of outdoor plants, garden furniture and garden accessories to slow down. The weather is one of the significant factors that determine sales in the garden sector. Good spring weather means strong sales of outdoor plants and garden furniture. Sales in the home decoration sector in the Netherlands as a whole once again fell sharply in 2013. Leen Bakker managed to limit the decline in sales and gained market share in the process. The housing market was healthier in Belgium and Luxembourg, where Leen Bakker also operates a number of stores. Leen Bakker’s revenue in Belgium even showed a modest increase. Besides garden centres and the online stores, Tuincentrum Overvecht also runs two standalone pet supply discount stores, which offer a comprehensive range of pet supplies. NUMBER OF STORES - LIVING & GARDEN 2013/14 2 18 Total 198 (2012/13:199) 178 Leen Bakker Tuincentrum Overvecht Diervoordeel KEY FIGURES LIVING & GARDEN Net revenue (x C 1,000) 2013/14 NUMBER OF STORES - LIVING & GARDEN 2012/13 Leen Bakker Tuincentrum Diervoordeel Total Overvecht Living & Garden Year-end 2013/14 Company-owned 170 17 2 189 Franchise 8 1 9 Total 178 18 2 198 Year-end 2012/13 Company-owned 171 18 189 Franchise 9 1 10 Total 180 19 199 366,412 388,380 Employees 2013/14 2012/13 3,023 3,251 Number of stores 2013/14 2012/13 - 42 - 198 199 BLOKKER HOLDING ANNUAL REPORT 2013 LIVING & GARDEN - 43 - BLOKKER HOLDING ANNUAL REPORT 2013 COMPANY-OWNED STORES 170 (Including two online stores) FRANCHISE STORES 8 EMPLOYEES 2,274 COUNTRIES The Netherlands (including Aruba, Bonaire and Curacao), Belgium and Luxembourg LEEN BAKKER FORMAT Home furnishings store which makes contemporary living MARKET accessible to all. The retail format specialises in home and bedroom furnishings, floor covering, home and bed linens, lighting, home and window decoration, and on a seasonal basis it offers an extensive range of garden furniture and Christmas items. Leen Bakker was established in 1918 and became part of Blokker Holding in 1988. The Dutch interior design market shrank for the fifth consecutive year in 2013. The number of moves declined by 50% over 2008. Players in this sector therefore continued to struggle to meet their revenue and profit targets. Sales declined further on account of the fast-growing competition, including from the DIY/home improvement sector. Markets in the Belgian and Luxembourg interior design sector also showed a downward trend. Online sales increased once again in 2013 in both the Netherlands and Belgium. More Leen Bakker stores were redesigned in 2013; other efforts focused on increasing employees’ product knowledge. The home furnishings retailer successfully competes in the market with the latest products and several well-known brands, including ‘lief!’ [‘Sweet!’] and ‘101 woonideeën’ [‘101 housing tips’]. These new products also attract new consumer groups. Promotional campaigns such as the ‘Top-10 daagse’, a 10-day discount campaign, and the ‘Megakortingsweken’ [Mega-Discount Weeks’] were revisited in the year under review and helped boost sales. Customers also appreciate the additional space created in the store for the bedding department. Although total revenue was lower than last year, profit increased slightly as a result of a strict cost management policy. The number of visitors to the stores declined, but the number of visitors who actually made a purchase increased. This was the case both online and in the stores, where average purchases per customer increased. This can be credited in part to the increased expertise and customer focus of the store staff. Part of the second half of the year under review was devoted to developing an all-new retail format. The first newstyle Leen Bakker was opened in Epe in April 2014: a store offering the same product range and familiar low prices, but providing an all-new retail experience. REVENUE Like-for-like revenue in the Netherlands, Belgium and Luxembourg fell during the year under review. Several product categories showed growth: beds, bed linens and carpets, in particular, sold well during the year under review. The furniture and accessories created to coincide with the ‘101 woonideeën’ and ‘lief!’ brands were popular as well. Total revenue in Belgium increased slightly following the opening of two new stores at the end of 2012. Leen Bakker was able to maintain its profit by launching various initiatives to improve the efficiency of its business operations. INVESTMENT, IT AND E-COMMERCE Leen Bakker invested in a new retail format in the year under review, purchased a new carpet cutter, and strongly improved the online store. Customers can now also use their tablets and mobile phones to place orders. The company’s online range was expanded and visualisation was improved. Online conversion rates improved, resulting in a strong bump in online sales in the Netherlands. Revenue from online purchases also increased significantly in Belgium, even though, until recently, customers were only able to collect the orders from the physical stores. Preparations were underway during the year under review for the launch of a new web platform, which is slated to become operational in 2014. This platform provides customers with the option to place and complete orders both in the stores and at home. Investments in the distribution centres have resulted in improved stock management and efficiency across the entire logistics chain. One of the purposes of the extension of the distribution centre is to offer an even wider product range through the online store in the future. RETAIL FORMAT AND STORES Two company-owned stores were opened during the year under review and three were closed. The franchise store in Curacao was completely destroyed by fire and is scheduled to be reopened in November 2014. Leen Bakker operated a total of 178 stores at the end of the year under review. More than 25% of these stores were redesigned in 2012 and 2013, giving them a more contemporary look. The Leen Bakker format was likewise restyled, with a new logo and contemporary in-store presentations using different store materials. The routing in the stores was changed as well. The first ‘new-style’ Leen Bakker stores were opened at the start of the current year in Epe and Raamsdonksveer in the Netherlands, and in St. Georges-sur- A UNIQUE PLACE (WITH ‘ATTITUDE’) IN RAAMSDONKSVEER, THE NETHERLANDS - 44 - BLOKKER HOLDING ANNUAL REPORT 2013 LEEN BAKKER IN GOUDA: FROM UGLY DUCKLING TO BEAUTIFUL SWAN INTERVIEW TIM VINK Tim Vink At 25 years old, was, and continues to be, Leen Bakker’s youngest store manager, running the branch on Goudkade in the Dutch town of Gouda. Tim lives in Sliedrecht with his partner Annika and their little boy, Brent. From perfect store to ‘problem’ branch Before being transferred to the Gouda store, Tim was the manager of the recently refurbished and fully redesigned Leen Bakker store on Rotterdam’s Schiekade. Tim: ‘The transition to Gouda was a bit of a shock. The store I’d been managing before was picture-perfect, whereas the store here in Gouda was filthy and outdated. The store was badly in need of an upgrade. The layout was all wrong, and it was practically impossible to put together a decent display. There were even grey wheelie bins inside the store! The contrast with my former store couldn’t have been greater. Our General Manager, Alex van Schaik, joked around with me and said: “You’ve been transferred from the best-looking store to the ugliest store”, and then he wished me the best of luck.’ ‘Knock yourself out’ Tim and his team of twelve employees were pretty much given carte blanche. ‘When a new store is opened, there’s a specific plan that needs to be followed, but in this old building I was given the freedom to change the layout and redesign the store as I saw fit, provided that we stuck to a tight budget. “Knock yourself out”, they told me – which is exactly what we did. It took a lot of time and effort, but we now have a home furnishings store we can really be proud of.’ Attractive mood displays and enticing in-store presentations The team worked on their project for many months. ‘We had to squeeze in the time in between serving customers, since obviously we had to keep the store running the whole time.’ The team used existing materials and aisles as much as possible in order to keep expenses down. They created an attractive store layout, moved aisles to more strategic locations, created in-store mood displays, and a small wall was torn down so as to create the impression of more space. ‘In short, everything was upgraded and we now have an attractive, well-organised store. We were finally also able to create good-looking displays. I can really say that our store can now compete with any recently renovated store in our network. I’m extremely proud of it, just as I’m proud of this team. This is really the result of our teamwork.’ A new and improved store and increased sales So there you have it: the Gouda store was transformed from an ugly duckling into a beautiful swan, and the former ‘problem branch’ changed from being a less-than-desirable place to work to an inviting home furnishing store where the team serves its customers with a renewed sense of enthusiasm. ‘Good customer service is Leen Bakker’s top priority. A number of e-learning courses have been introduced to teach sales staff about the latest sales techniques and product information. It’s really an ongoing process. Our product range is expanding all the time, and you need to familiarise yourself with the features and details of the various products in order to be able to assist your customers as well as possible. Our employees now also take a much more active approach to customers, which is reflected in the increased traffic at the store and the higher sales. People enjoy shopping at our store in Gouda again, and, at the end of the day, that’s why we bother in the first place, isn’t it?’ - 45 - BLOKKER HOLDING ANNUAL REPORT 2013 NEW-FORMAT LEEN BAKKER STORE, RAAMSDONKSVEER Meuse in Belgium. Based on customer needs, the size of the bedding department was increased during the year under review. With its highly affordable, high-quality box-spring beds, Leen Bakker was able to cater to customer budgets during these times of crisis and their need for a luxury bedroom environment. In introducing these measure, the company made one of its key product groups even more successful. Expert staff assist customers in making their selection. The collections of furniture and accessories created in association with the ‘101 woonideeën’ and ‘lief!’ brands add extra elegance and style to the stores. The launch of a fashionable box bed by the ‘lief!’ brand, in particular, caught the eye of many customers. The launch of the ‘lief!’ brand drew more than 14,000 responses on social media. while eight workers celebrated twenty-five years at the company. In Belgium, thirteen employees marked their twelve-and-a-half year anniversary and one employee was honoured for having been with the company twenty-five years. OUTLOOK The year 2014 continues to bring uncertainty in the Netherlands about opportunities for revenue growth. It is likely that the interior design sector has not yet bottomed out. Revenue in Belgium is expected to stabilise this year. The new format positions Leen Bakker for the future, and the company also sees ample opportunity for the small-furniture category. The launch of new digital tools in the stores also provides additional opportunities for optimising revenue. With the new online store and larger product range, Leen Bakker expects that shopping convenience and online revenue will continue to increase. EMPLOYEES The total number of employees decreased during the year under review. This decline occurred in all markets and extended to the stores, the logistics facilities and the head office. The e-learning program, which was developed in-house and was further implemented across the organisation during the year under review, enables employees to improve and maintain their product knowledge remotely in a fun and easy way. In the Netherlands, a total of 102 employees celebrated their twelve-and-a-half-year anniversary, AUTUMN 2013 LEAFLET ‘FIND THE RIGHT DUVET FOR YOU’, RAAMSDONKSVEER - 46 - BLOKKER HOLDING ANNUAL REPORT 2013 COMPANY-OWNED STORES 19 (including one online store and two pet supply discount stores) FRANCHISE STORES 1 EMPLOYEES 743 COUNTRY The Netherlands TUINCENTRUM OVERVECHT MARKET Of all retail categories, no sector is as dependent on the weather and as seasonal in nature as the garden sector, and the main reason for the weak sales across the sector as a whole in 2013 was the exceptionally bad weather during the period from March to May. Besides low consumer confidence, garden centres are increasingly struggling with growing competition from supermarkets and DIY stores, whose product ranges are becoming increasingly diversified. It is up to garden centres to entice customers with a wide range of products and a premium shopping experience. FORMAT A retail chain with eighteen attractively designed stores across the Netherlands, Tuincentrum Overvecht provides a full range of garden products for indoors and outdoors, alongside a very wide selection of pet supplies and a comprehensive range of garden furniture, indoor and outdoor pottery items and trendy, decorative and seasonal items. Tuincentrum Overvecht (established in 1969) has been part of Blokker Holding since 1998. REVENUE AND COSTS Tuincentrum Overvecht underwent substantial changes in 2013. For one, the stores were given a more contemporary and fresher look, and the retailer introduced a new logo. It also undertook a number of activities to ensure that the shopping public would become less dependent on weather conditions and the seasons. The garden centres were able to reverse the trend of lower sales by focusing more on the pet supply, trend and mood ranges and by providing attractive, relevant services. Total annual revenue did initially decline, but began to increase again over the previous year. Two standalone Diervoordeel stores (animal supply discount stores) were opened during the year under review in addition to the existing online store www. diervoordeel.nl. New elements in these stores delivered a new and unexpected retail experience to customers, including a ‘doggie wash’, ‘vertical gardening’ and ‘animal-friendly plants’ Tuincentrum Overvecht’s redesign marks the first step towards an all-new retail concept for the garden centre. The first new-style garden centre, named ‘BloomBird’, was opened in Beuningen, the Netherlands in April 2014. Total like-for-like sales fell slightly, mainly due to weak sales in garden products and garden furniture. Sales in the pet supplies, manual tools and Trend & Mood improved over last year. The revenue growth over the same period last year, which began in November 2013, continued in the spring. Despite Tuincentrum Overvecht’s slight drop in revenue in 2013, it performed better than other garden centres, resulting in an increased market share. Tuincentrum Overvecht was also adversely affected in the year under review by price pressure in the market and the rising cost of accommodation. The increased housing costs were driven mainly by the higher energy costs of maintaining temperatures in the greenhouses during the cold months. Efficiency improvements resulted in lower wage costs in the stores and at the head office. HANGING GARDEN PLANTS AT THE BLOOMBIRD STORE IN BEUNINGEN, THE NETHERLANDS - 47 - ‘DOGGIE WASH’ AT THE BLOOMBIRD STORE IN BEUNINGEN BLOKKER HOLDING ANNUAL REPORT 2013 NEW SIGNS AT LISSE STORE LOGISTICS, IT AND E-COMMERCE OUTLOOK Tuincentrum Overvecht invested in new web platforms in 2013 for the garden centre and for the Diervoordeel pet supply discount stores. These online stores have been in operation since April 2014. Navigation of the web stores has been greatly improved and the product range has been expanded; in addition, new tips and information have been added. Interactive information kiosks were created for the stores in 2013, which have been in operation at the new BloomBird store since April of this year. While revenues in the Dutch garden market are expected to continue to decline slightly in 2014, Tuincentrum Overvecht does expect to be able to grow its revenue. The redesigned garden centres, the BloomBird pilot store with its extensive, exciting range of products, and the Diervoordeel stores all add value for consumers. The initial financial performance of these stores looks promising. RETAIL FORMAT AND STORES Tuincentrum Overvecht operated eighteen stores at the end of the year under review, including an online store. All Tuincentrum Overvecht stores were redesigned in 2013: the exterior walls and interior have all been updated and the retailer’s logo was changed. Product presentation was improved in terms of category arrangement, giving customers an easier and more enjoyable shopping experience. The company also focused more on the Animal Supplies, Tools and Mood categories, and employees were given specific training to increase the expertise required in these areas. At the store in Beuningen in the Netherlands, these elements were further developed into a pilot store. This store, which opened in April 2014, will be used to test an all-new format launched by the garden centre under the name BloomBird. There were two standalone Diervoordeel stores at the end of the year under review. These two stores, located in Roermond (1,000 sq. m.) and Hengelo (550 sq. m.) were opened in 2013 under the management of Tuincentrum Overvecht. Besides an extensive range of competitively priced pet supplies and expert advice, this new format also managed to delight customers with a kids’ adventure zone, a ‘canary island’, a bona fide doggie wash, and, at the Roermond store, even a doggie day-care. EMPLOYEES A large number of employees at the garden centres completed training courses and other educational opportunities in 2013 with the objective of improving customer service in the stores. The training focused on raising the level of customer service and enhancing the expertise of store employees. NEW SIGNS AT LISSE STORE - 48 - BLOKKER HOLDING ANNUAL REPORT 2013 BLOKKER HOLDING B.V. FINANCIAL REPORT - 49 - BLOKKER HOLDING JAARVERSLAG 2013 CONSOLIDATED BALANCE SHEET AS AT 25 JANUARY 2014 in thousands of euros, after proposal for profit appropriation 25 January 2014 26 January 2013 Intangible assets 9,688 Property, plant and equipment Land and buildings 180,216 197,389 Other non-current operating assets 116,875 122,326 297,091 Financial fixed assets Associates 1,124 Current assets 8,192 ASSETS Non-current assets Stocks 319,715 1,124 439,563 471,669 Receivables Trade debtors 26,186 26,021 Other receivables 55,387 48,807 Prepayments and accrued income 47,128 45,974 128,701 120,802 Cash and cash equivalents 56,211 932,378 53,841 975,343 486,231 508,492 LIABILITIES Shareholders’ equity Provisions Tax 20,243 19,311 Other provisions 48,052 55,075 68,295 Non-current liabilities 44 87 Debts to credit institutions Other debts 71,474 102,986 71,518 Current liabilities Debts to trade creditors 90,365 85,467 Tax and social insurance contributions 104,329 103,459 278 309 Other debts Accruals and deferred income 111,362 100,157 306,334 932,378 - 50 - 74,386 103,073 289,392 975,343 BLOKKER HOLDING ANNUAL REPORT 2013 CONSOLIDATED INCOME STATEMENT FOR 2013/14 2013/14 2012/13 Net revenue 2,502,591 2,608,852 Cost of sales Gross sales revenues -1,730,353 772,238 -1,810,589 798,263 Selling expenses 613,525 611,278 General administrative expenses 82,000 83,101 Restructuring expenses - 21,500 Total costs -695,525 -715,879 in thousands of euros Operating income (EBIT) 76,713 82,384 Financial income 448 692 Financial expenses -877 -699 Total financial income and expenses -429 -7 Income from ordinary operations before tax 76,284 82,377 Tax Income after tax -15,622 60,662 -18,256 64,121 - 51 - BLOKKER HOLDING ANNUAL REPORT 2013 CASH FLOW STATEMENT FOR 2013/14 2013/14 2012/13 76,713 82,384 Depreciation 89,601 84,191 Changes in provisions -6,091 14,070 Changes in working capital in • Stocks 32,106 -26,491 -7,899 -9,201 • Receivables • Current liabilities 16,942 -9,709 124,659 201,372 Cash flow from operating activities 52,860 135,244 Financial income and expenses -429 -7 Tax on profit -15,622 -18,256 -16,051 Net cash flow from operating activities 185,321 -18,263 116,981 Net investment in • intangible assets -5,673 -2,784 • plant, property and equipment -62,800 -66,469 Net cash flow from operating activities -68,473 -69,253 Dividend -83,000 -54,000 Changes in long-term loans -31,555 4,385 Other 77 -268 Net cash from financing activities -114,478 Net cash flow 2,370 -49,883 -2,155 Cash and cash equivalents at start of financial year Cash and cash equivalents at end of financial year 55,996 53,841 in thousands of euros Operating income (EBIT) - 52 - 53,841 56,211 BLOKKER HOLDING ANNUAL REPORT 2013 FINANCIAL REPORTING PRINCIPLES GENERAL DETAILS CONSOLIDATION PRINCIPLES Blokker Holding B.V. and the associates, as well as the group companies over which Blokker Holding B.V. has primary control or which are centrally managed, are consolidated. Financial data of Blokker Holding B.V., along with those of the group companies, are recognised based on the integrated consolidation method. Debts, liabilities and transactions between the group companies have been eliminated in the Group Financial Statements. Inter-company results included in the available stocks on the balance sheet date are eliminated for the purpose of the preparation of the consolidated financial statements. A legal reserve is created for the retained earnings from associates which are not freely accessible to the company. LOCATION Blokker Holding B.V. has its registered office in Amsterdam. The company’s principal place of business is Laren in the province of North Holland. FINANCIAL YEAR In accordance with the Articles of Association, the financial year ends on the Saturday of the fourth week of the calendar year. The 2013/2014 financial year included 52 weeks (versus 52 weeks in 2012/2013). The last day of the 2013/14 financial year was 25 January 2014 and that of the previous financial year was 26 January 2013. The data of the companies included in the consolidation as at 25 January 2014 were filed with the Chamber of Commerce. GENERAL ACCOUNTING PRINCIPLES The financial statements are prepared in accordance with the provisions of Part 9 Book 2 of the Dutch Civil Code. The valuation principles described below relate to both the company financial statements and the consolidated financial statements. The general accounting principles for the valuation of assets and liabilities, as well as for determining the results, are based on the purchase or manufacturing price. Assets and liabilities are shown at nominal value unless otherwise stated. For the preparation of the income statement in the company financial statements, the exemption provided for in Section 2:402 of the Dutch Civil Code is applied. The financial statements are drawn up in thousands of euros. The results of the acquired companies are included in the consolidation from the date from which Blokker Holding BV bears the risk and expense for these companies. In principle, the exemption provided for in Section 2:403(1) of the Dutch Civil Code is applied for the individual financial statements of the Dutch associates. PRINCIPLES FOR THE VALUATION OF ASSETS AND LIABILITIES INTANGIBLE ASSETS USE OF ESTIMATES Intangible assets are valued at cost, less depreciation calculated on a straight-line basis, based on expected economic life (5 years) and, if applicable, including impairments. In the year of investment, depreciation is calculated on a pro rata basis. In preparing the financial statements, the company’s management must, in accordance with generally accepted accounting principles, make specific estimates and assumptions which help determine the amount stated in the financial statements. Actual results may vary from these estimates. The estimates and underlying assumptions are assessed on an ongoing basis. Revised estimates are recognised during the period in which the estimate is being revised and during future periods for which the revision has implications. Goodwill paid on the acquisition of a company, by means of shares or through acquisition of the operating activities and the associated assets and liabilities, is directly deducted from shareholders’ equity in accordance with the statutory provisions of Part 9 Book 2 of the Dutch Civil Code. FOREIGN CURRENCIES Specific leasehold rights (droits au bail) are not capitalised with effect from the 2004/05 financial year. Assets and liabilities in foreign currency are converted at the exchange rates prevailing on the balance sheet date. Transactions in foreign currency are converted at the exchange rates prevailing on the date of the transaction. The resulting exchange rate differences are shown in the income statement. Financial statements of foreign associates which are not denominated in euros are converted into euros at the exchange rate prevailing at the end of the reporting period. The effect of the recalculation of the assets and liabilities of associates at the beginning of the year at the exchange rates at the end of the year is recognised in shareholders’ equity. PROPERTY, PLANT AND EQUIPMENT Property, plant and equipment are valued at cost, less straight-line depreciation, based on the expected economic life of the asset, and less impairments where applicable. In the year of investment, depreciation is calculated on a pro rata basis. Land is not depreciated. Insofar as property, plant and equipment have been acquired through the acquisition of the companies concerned, these are valued at the current cost on acquisition of the shares. - 53 - BLOKKER HOLDING ANNUAL REPORT 2013 In the event of a deficit or surplus of the sectoral pension fund, the company has no obligations other than the payment of future higher or lower contributions. In determining depreciation, the following expected economic lives are assumed: Company buildings Renovations of company buildings Other non-current operating assets 25 – 50 years 10 – 12 years 5 – 7 years NON-CURRENT LIABILITIES Non-current liabilities include debts with a remaining term of more than one year. Payments due in the short term (within one year) are shown in current liabilities. FINANCIAL FIXED ASSETS Associates over which significant control can be exercised are shown at net asset value. This is calculated by valuing the assets, provisions and debts and calculating the result on the basis of the valuation principles applicable to the parent company. CURRENT LIABILITIES Current liabilities have an expected term of one year maximum, unless otherwise stated in the notes. INCOME RECOGNITION Capital interests in other companies, over which no significant control can be exercised, are valued at cost. Dividend income is recognised in the income statement in the year of receipt. GENERAL DETAILS Profit is determined as the difference between net revenue and all related costs allocated to the reporting year. Costs are determined in accordance with the above valuation principles. Profits are recognised in the year in which the revenue is realised. Losses are shown in the year in which these are foreseeable. Other income and expenses are recognised in the reporting period to which they relate. The remaining financial fixed assets are shown at nominal value, less a provision for the risk of irrecoverable debts where necessary. STOCKS Stocks of trade items are valued at cost or the lower market value, plus additional procurement costs. If necessary, a provision for obsolescence is deducted from the value of the stocks. NET REVENUE Net revenue comprises the sales of the retail chains to consumers at the market value (exclusive of VAT) as well as other deliveries of goods and services to customers, less discounts and VAT. RECEIVABLES Receivables are shown at nominal value, less a provision for the risk of irrecoverable debts where necessary. COST OF SALES CASH AND CASH EQUIVALENTS Unless otherwise stated, cash and cash equivalents are freely accessible to the company. The cost of sales is the purchase value plus the costs directly and indirectly related to procurement. These costs also include movements in the provision for the risk of obsolescence. PROVISIONS FINANCIAL INCOME AND EXPENSES Provisions are formed for all legally enforceable or constructive obligations resulting from an event prior to the balance sheet date, the settlement of which is likely to require an outflow of funds, the extent of which can be reliably estimated. The provision for deferred tax liabilities involves the calculation of the temporary differences between valuation principles for commercial and tax purposes. Current liabilities with equal durations are deducted if these relate to the same tax entity. The provision for restructuring is shown at nominal value and is intended to cover costs related to reorganisations of parts of the group and unprofitable contracts. The provision for warranty obligations is shown at the estimated costs expected as a result of current guarantee obligations as at the balance sheet date relating to goods and services delivered. The provision for long-service bonuses is based on long-service plans applicable as at the balance sheet date, taking account of the staff turnover risk, future changes in wage costs and the discount rate. The provision for legal proceedings concerns ongoing disputes, claims and lawsuits. The company has contracted a pension scheme for its employees, which qualifies as a defined-contribution plan. This means that contributions payable during the financial year are recognised as costs. Factors such as wage changes, price indexation and investment returns on fund assets could lead to future adjustments in the annual contributions to the pension fund. Financial income and expenses comprise interest received (or receivable) and paid (or payable) as well as the revenue from nonconsolidated interests. TAX Corporation tax is calculated on the basis of the commercial result according to the consolidated income statement, at the applicable rate, taking account of tax facilities. CASH FLOW STATEMENT The cash flow statement is prepared on the basis of the indirect method, where the financial income and expenses and profit tax are based on the income statement. COMPARATIVE FIGURES The classification of the comparative figures is adjusted where necessary for the purposes of comparison. - 54 - BLOKKER HOLDING ANNUAL REPORT 2013 NOTES TO THE CONSOLIDATED BALANCE SHEET AS AT 25 JANUARY 2014 ASSETS in thousands of euros Total INTANGIBLE ASSETS Opening balance Cost price Cumulative depreciation Book value Changes during the financial year Investments Disposals, impairment and translation differences Depreciation on disposals, impairment and translation differences Depreciation Total changes Closing balance Cost price Cumulative depreciation Book value The ‘Intangible assets’ relate primarily to software/licenses and websites. in thousands of euros Land and buildings Other current operating assets 15,958 -7,766 8,192 5,844 -3,486 3,315 -4,177 1,496 18,316 -8,628 9,688 Total PROPERTY, PLANT AND EQUIPMENT Opening balance Cost price Cumulative depreciation Book value 452,759 -255,370 197,389 311,004 -188,678 122,326 763,763 -444,048 319,715 Changes during the financial year Investments Disposals, impairment and translation differences Depreciation on disposals, impairment and translation differences Depreciation Total changes 24,334 -48,786 48,099 -40,820 -17,173 40,852 -51,219 49,520 -44,604 -5,451 65,186 -100,005 97,619 -85,424 -22,624 Closing balance Cost price Cumulative depreciation Book value 428,307 -248,091 180,216 300,637 -183,762 116,875 728,944 -431,853 297,091 RECEIVABLES The ‘Land and buildings’ item relates primarily to renovations of leased premises. Receivables in the amount of approximately EUR 3.2 million (2012/13: EUR 0) have a term exceeding one year. ‘Other receivables’ include an amount of EUR 13.6 million (2012/13: EUR 11.5) in respect of profit tax and EUR 2.8 million (2012/13: EUR 0) in relation to deferred tax. The total amount in tax losses not recognised in the valuation of deferred tax liabilities is approximately EUR 4.1 million (2012/13: EUR 6.1 million). FINANCIAL FIXED ASSETS ASSOCIATES The ‘Associates’ item represents a 20% interest in in Dennenhoorn B.V., registered in Laren. - 55 - BLOKKER HOLDING ANNUAL REPORT 2013 LIABILITIES SHAREHOLDERS’ EQUITY For an explanation of changes in shareholders’ equity, please see the Notes to the Company Balance Sheet. PROVISIONS Opening balance financial year In thousands of euros Taxes Restructuring Guarantee Long-service bonuses Legal proceedings Other Total 19,311 27,383 16,047 4,060 2,367 5,218 74,386 The provision for deferred tax liabilities concerns future tax liabilities resulting from temporary differences between valuation principles for commercial and tax purposes. The provision for deferred tax liabilities is intended to cover the costs related to reorganisations of parts of the group and unprofitable contracts. Additional 2,104 8,563 - 1,131 1,305 2,428 15,531 Withdrawals -1,172 -9,662 -7,616 -611 -695 -1,866 -21,622 Closing balance financial year 20,243 26,284 8,431 4,580 2,977 5,780 68,295 amount: approximately EUR 643 million) while other contracts have a remaining term of more than five years (total rental/lease amount is roughly EUR 431 million). BANK GUARANTEES AND LETTERS OF CREDIT An amount of approximately EUR 20 million has been frozen in the bank accounts (versus EUR 23 million in 2012), including EUR 8 million at Dutch companies (2012: EUR 10 million). The provision for warranty obligations is recognised for the estimated costs expected to arise from the warranty obligations at the balance sheet date in relation to goods and services provided. Costs arising from meeting warranty obligations are deducted from the provision. Additions and withdrawals were netted in the transition summary. The change in the provision includes a release of EUR 6.9 million relating to the results of new, improved information system for measuring data relating to returns and warranties, with the decline being caused in part by an improvement in product quality. The provision for long-service bonuses is recognised based on the long-service policy at the balance sheet date, taking into account the likelihood of the employee remaining at the company, future trends in wage costs, and discount rate. The provision for legal proceedings relates to current disputes, claims and court cases. The remaining provisions include, among other things, a provision for the large-scale maintenance of buildings owned by the company. INVESTMENT COMMITMENTS Investment commitments at year-end 2013/14 totalled approximately EUR 27.7 million (2012: EUR 5.4 million). PURCHASING COMMITMENTS At the balance sheet date, outstanding purchasing commitments totalled approximately EUR 270 million (2012: EUR 290 million). FINANCIAL INSTRUMENTS The risks associated with financial instruments are detailed below. CURRENCY EXCHANGE RISKS Currency exchange risks are almost exclusively related to purchases of goods in currencies other than the euro. The Group’s currency policy is aimed at managing currency exchange risks. In this context, forward foreign currency exchange contracts are used. The foreign currency component of forward currency exchange contracts, which serve as hedge instruments for future transactions, are stated at cost as long as the hedged position has not yet been included in the balance sheet. The fair value of forward foreign currency exchange contracts on the balance sheet date was EUR -0.7 million (versus EUR 1.9 million in 2012). Of the total balance of provisions, approximately EUR 28.5 million (2012: EUR 33 million) are current liabilities; the remainder is expected to be non-current in nature. NON-CURRENT LIABILITIES Most of the non-current liabilities have a term of up to five years and consist mainly of payable to affiliated companies. Liabilities to affiliated companies amount to EUR 71 million (previous year: EUR 103 million). The interest rate is fixed on a quarterly basis and comprises the average of the three-month and twelve-month Euribor rates at the start of each quarter (average for 2013/14: 0.375%; previous year: 1.03%). No collateral is provided INTEREST RATE RISKS The company has not used any instruments in connection with hedging interest rate risks. INFORMATION NOT SHOWN IN THE CONSOLIDATED BALANCE SHEET CREDIT RISKS RENT AND LEASE COMMITMENTS Credit risks relate to receivables and other current liabilities. Sufficient provision has been made for these. An amount of approximately EUR 274 million (2012: EUR 265 million) is payable in relation to long-term leasing contracts and leases. Contracts expire each year, and a number of contracts in effect at the balance sheet date have a remaining term of one to five years (total lease - 56 - BLOKKER HOLDING ANNUAL REPORT 2013 NOTES TO THE CONSOLIDATED CASH FLOW STATEMENT FOR 2013/14 in thousands of euros 2013/14 2012/13 1,426,875 171,169 1,598,044 1,501,680 189,067 1,690,747 847,895 56,652 904,547 2,502,591 858,684 59,421 918,105 2,608,852 391,691 69,749 28,650 490,090 404,334 68,279 28,262 500,875 4,177 85,424 89,601 2,467 81,724 84,191 - 21,500 18,167 7,485 25,652 18,680 7,305 25,985 Revenue Revenue is divided as follows: The Netherlands • Retail • Wholesale International • Retail • Wholesale Net group revenue Salaries Salaries Social insurance contributions Pension charges Depreciation Intangible assets Property, plant and equipment Depreciation includes impairment in the amount of EUR 11.5 million (2012/13: EUR 3.8 million) relating to long-term impairment. Restructuring costs The amount for 2012/13 concerns expenses related to the termination of the E-Plaza retail format and the restructuring of the Marskramer organisation. Personnel (number of employees) The Netherlands International REMUNERATION OF MANAGING DIRECTORS AND SUPERVISORY DIRECTORS Converted to full-time equivalents (FTEs), the total number of employees is 16,260 (2012/13: 16,717). The income statement includes an amount, also covering pension contributions of some EUR 2.2 million (previous year: EUR 2.2 million) for the remuneration of the current and former Managing Directors of Blokker Holding B.V. This includes the amount pursuant to Section 32bd of the Income Tax Act 1964 [Wet op de Loonbelasting 1964] [crisis tax]. (2012/13: same). For the remuneration of the Supervisory Directors of Blokker Holding B.V., an amount of EUR 191,000 (2011/12: EUR 191,000) was payable by the company for the 2013/14 financial year. AUDIT FEES Pursuant to Section 382a, Book 2 of the Dutch Civil Code, the fees of the auditors, BDO Audit & Assurance B.V., to be paid by the company in the financial year amount to EUR 267,000 (2012/13: EUR 293,000). Of this amount, EUR 260,000 related to the audit of the financial statements (2012/13: EUR 275,000) and EUR 7,000 related to remaining audit tasks (2012/13: EUR 18,000). TAX The effective tax rate for the 2012-2013 financial year is 20.5% (2012/13: 22.2%). - 57 - BLOKKER HOLDING ANNUAL REPORT 2013 COMPANY BALANCE SHEET AS AT 25 JANUARY 2014 25 January 2014 26 January 2013 Non-current assets Intangible assets Property, plant and equipment Financial fixed assets 260 2,893 680,500 3,005 695,727 Current assets Other receivables, prepayments and accrued income Cash and cash equivalents Total 12,106 47,584 743,343 8,977 51,346 759,055 Shareholders’ equity Paid-up capital 25,000 25,000 Premium reserve 114,427 114,427 Other reserves 346,804 369,065 486,231 508,492 in thousands of euros, after proposal for profit appropriation ASSETS LIABILITIES Provisions 13,295 13,110 Non-current liabilities 237,372 229,880 Current liabilities Suppliers 121 370 Other receivables, prepayments and accrued income 6,324 7,203 6,445 Total 743,343 7,573 759,055 COMPANY INCOME STATEMENTS FOR 2013/14 in thousands of euros Result of associates after tax Net other income and expenses after tax Result after tax - 58 - 2013/14 2012/13 54,346 6,316 60,662 62,757 1,364 64,121 BLOKKER HOLDING ANNUAL REPORT 2013 NOTES TO THE COMPANY BALANCE SHEET AS AT 25 JANUARY 2014 ASSETS in thousands of eurosn duizenden euro’s Total PROPERTY, PLANT AND EQUIPMENT Opening balance Cost price Depreciation Book value Changes during the financial year Investments Disposals and impairments Depreciation of disposals and impairments Depreciation Total changes Closing balance Cost price Depreciation Book value 4,514 -1,509 3,005 63 -140 140 -175 -112 4,437 -1,544 2,893 574,012 FINANCIAL FIXED ASSETS Associates Opening balance Share in result Dividend Other changes Closing balance 552,654 54,346 -50,427 17,439 Receivables from group companies Opening balance Changes Closing balance 143,073 -36,585 Total financial fixed assets at end of financial year An interest rate of 5% is calculated on receivables from group companies that have a long-term nature (previous year: 5%). - 59 - 106,488 680,500 BLOKKER HOLDING ANNUAL REPORT 2013 LIABILITIES SHAREHOLDERS’ EQUITY The authorised capital on the balance sheet date totals EUR 100,000,000 and is divided into 90,000,000 shares, each with a nominal value of EUR 1, and 10,000,000 Class P shares, each with a nominal value of EUR 1. Of these shares, 22,500,000 ordinary shares and 2,500,000 Class P shares have been issued and paid-up. The changes in shareholders’ equity are as follows: in thousands of euros Other reserves Balance as at 28 January 2012 359,212 114,427 Profit appropriation for previous financial year 10,121 - Translation difference foreign associates -268 - 369,065 114,427 Closing balance Dividend from other reserves -22,338 - Translation difference foreign associates 77 - 346,804 114,427 Closing balance Share capital Total The company’s total loss (profit/loss after tax and direct movements in capital) is EUR 63,9 million (previous year: EUR 128.5 million). Total Premium reserve 473,639 10,121 -268 483,492 -22,338 77 461,231 25,000 486,231 The balance of the translation difference foreign associates is approximately EUR 1.6 million (2012/13: EUR 1.6 million). PROVISIONS in thousands of euros Opening balance Additions / withdrawals Closing balance The provisions almost exclusively concern deferred tax liabilities and are assumed to be long term in nature. Total 13,110 185 13,295 The company and the various group companies form a Dutch tax entity for the purposes of corporation tax and VAT and are therefore jointly and severally liable for the tax liabilities of these tax entities. NON-CURRENT LIABILITIES The bulk of the non-current liabilities has a term of up to five years. Of the total non-current liabilities, EUR 165.9 million (2012/13: EUR 126.9 million) relates to group companies at interest rates ranging from 1.0% to 2.2%. The remaining debts concern debts to affiliated companies. The interest rate is fixed on a quarterly basis and comprises the average of the three-month and twelve-month Euribor rates at the start of each quarter (average for 2013/14: 0.375%; previous year: 1.03%). No collateral has been provided for these liabilities. AVERAGE NUMBER OF EMPLOYEES Signed Board of Directors Supervisory Board INFORMATION NOT SHOWN IN THE BALANCE SHEET R.E. Palmer, Chairman L.M. de Kool, Deputy Chairman A.H.M. van der Horst, CFO T. Smit P.C. Klaver, Chairman A. Blokker Ms M.J. Poots-Bijl H.Th.E.M. Rottinghuis A.J.L. Slippens During the year under review, the company employed an average of 42 persons (2012/13: 36 persons). Laren, the Netherlands, 28 May 2014 Liability disclosures have been submitted for virtually all Dutch companies, on the basis of which Blokker Holding B.V. is liable for the payables arising from legal acts of these group companies. In this respect, the provisions of Section 2:403(1) of the Dutch Civil Code apply to the consolidated group companies. - 60 - BLOKKER HOLDING ANNUAL REPORT 2013 OTHER INFORMATION REGULATIONS OF THE ARTICLES OF ASSOCIATION FOR THE APPROPRIATION OF PROFIT PROPOSED PROFIT APPROPRIATON In relation to the profit appropriation, the company proposes to pay out the profit as dividend. The company’s issued capital is EUR 25 million, divided among two share classes. For the shares issued, the following summarised provisions apply with regard to the appropriation of profit. Allocation, payment and distribution of the profit to shareholders take place after approval of the financial statements that show the profit available for allocation, payment and distribution. Profit distribution charged to a reserve takes place only insofar as the company’s shareholders’ equity exceeds the capital in issue plus the statutory reserves. Both share classes qualify for their share of the results in the same way. The General Meeting decides to distribute profit or to allocate this to a dividend reserve, which is allocated for each type of share. The General Meeting may decide to distribute the profit to the holders of one type of share, while a corresponding amount is set aside in a dividend reserves for the holders of the other share class. Payments charged to a dividend reserve may be made at any time, but only pursuant to a resolution adopted by the General Meeting, either at the request of the meeting of the holders of the share class in question. SPECIAL SUPPORT WAS PROVIDED THIS YEAR TO ORGANISATIONS INCLUDING: The Helen Dowling Institute; Gooi- en Eemland Sports Club for the Disabled Foundation; Skate4Air (Cystic Fibrosis research); VUmc CC Project for early diagnosis of colon cancer; Sophia Children’s Hospital; Make-A-Wish Foundation Netherlands; Stichting Gastenverblijven VUmc Amsterdam (VU Medical Centre guest residences), Stichting Kinderen Kankervrij (Kika) (Children’s Cancer Foundation); the Alpe d’ Huzes Foundation ‘Giving up is not an option’; Tergooi Hospitals, Stad Gods convent – Zuster Augustinessen convent; and the Almere Children’s Clinic. - 61 - BLOKKER HOLDING ANNUAL REPORT 2013 INDEPENDENT AUDITOR’S REPORT In making those risk assessments, the auditor considers internal control relevant to the entity’s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by management, as well as evaluating the overall presentation of the financial statements. To: the General Meeting, Supervisory Board and Board of Directors of Blokker Holding B.V. REPORT ON THE FINANCIAL STATEMENTS We have audited the financial statements of Blokker Holding B.V., Laren for the financial year ending on 25 January 2014, as set out in this Annual Report on pages 50 to 60, which comprise the consolidated and company balance sheet as at 25 January 2014, the consolidated and company income statements for 2013/14 and the notes, comprising a summary of the accounting policies and other explanatory information. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion. MANAGEMENT’S REPONSIBILITY OPINION WITH RESPECT TO THE FINANCIAL STATEMENTS Management is responsible for the preparation and fair presentation of these financial statements and for the preparation of the management board report, both in accordance with Part 9 of Book 2 of the Dutch Civil Code. Furthermore management is responsible for such internal control as it determines is necessary to enable the preparation of the financial statements that are free from material misstatement, whether due to fraud or error. In our opinion, the financial statements give a true and fair view of the size and composition of Blokker Holding B.V. as at 25 January, 2014 and of its result for 2013/14 in accordance with Part 9 of Book 2 of the Dutch Civil Code. REPORT ON OTHER LEGAL AND REGULATORY REQUIREMENTS Pursuant to the legal requirement under Section 2:393 sub 5 at e and f of the Dutch Civil Code, we have no deficiencies to report as a result of our examination whether the management board report, to the extent we can assess, has been prepared in accordance with Part 9 of Book 2 of this Code, and whether the information as required under Section 2:392 sub 1 at b-h has been annexed. Further we report that the management board report, to the extent we can assess, is consistent with the financial statements as required by Section 2:391 sub 4 of the Dutch Civil Code. AUDITOR’S RESPONSIBILITY Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with Dutch law, including the Dutch Standards on Auditing. This requires that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor’s judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. Amstelveen, the Netherlands, 28 May 2014 BDO Audit & Assurance B.V. On its behalf, A.D. den Braber, Chartered Accountant - 62 - BLOKKER HOLDING ANNUAL REPORT 2013 ADDRESSES HOUSEHOLD TOYS LIVING & GARDEN Big Bazar B.V. Marskramer B.V. Bart Smit B.V. Leen Bakker B.V. Van der Madeweg 9 NL-1099 BS Amsterdam P.O. Box 94072 The Netherlands NL-1090 GB Amsterdam The Netherlands T +31 (0)20 5683500 E [email protected] I www.bigbazar.eu Van der Madeweg 11 NL-1099 BS Amsterdam P.O. Box 94072 The Netherlands NL-1090 GB Amsterdam The Netherlands T +31 (0)20 5683100 E [email protected] I www.marskramer.nl Bellstraat 3-4 NL-1131 JV Volendam The Netherlands P.O. Box 69 NL-1130 AB Volendam The Netherlands T +31 (0)299 399599 E [email protected] I www.bartsmit.com Karperweg 3 NL-4941 SH Raamsdonksveer The Netherlands P.O. Box 43 NL-4940 AA Raamsdonksveer The Netherlands T +31 (0)162 583100 E [email protected] I www.leenbakker.nl Blokker B.V. Novy Intertoys Holland B.V. Leen Bakker België N.V. Van der Madeweg 13-15 NL-1099 BS Amsterdam P.O. Box 94072 The Netherlands NL-1090 GB Amsterdam The Netherlands T +31 (0)20 5683568 E [email protected] I www.blokker.nl Van der Madeweg 11 NL-1099 BS Amsterdam The Netherlands T +31 (0)20 5683100 I www.novy.nl Handelsweg 15 NL-2742 RD Waddinxveen P.O. Box 29 NL-2740 AA Waddinxveen The Netherlands T +31 (0)180 333500 E [email protected] I www.intertoys.nl Terlindenhofstraat 36 B-2170 Merksem Belgium T +32 (0)3 6418500 E [email protected] I www.leenbakker.be Xenos B.V. Antwerpsestraat 36 B-2500 Lier, Belgium T +32 (0)3 2882200 E [email protected] I www.blokker.be Schutweg 8 NL-5145 NP Waalwijk The Netherlands P.O. Box 94072 NL-1090 GB Amsterdam The Netherlands T +31 (0)416 674747 E [email protected] I www.xenos.nl BUDghT Wholesalers Blokker N.V. Van der Madeweg 9 NL-1099 BS Amsterdam P.O. Box 94072 The Netherlands T +31 (0)20 5683500 E [email protected] I www.budgetwinkel.eu Casa International N.V. Karel Govaertsstraat 14 B-2222 Itegem, Belgium T +32 (0)15 259311 E [email protected] I www.casashops.com Cook&Co Schutweg 8 NL-5145 NP Waalwijk The Netherlands P.O. Box 1038 NL-5140 CA Waalwijk The Netherlands T +31 (0)416 675299 E [email protected] I www.cookandco.nl Elektroblok B.V. De Flinesstraat 6 NL-1099 CB Amsterdam The Netherlands P.O. Box 94072 NL-1090 GB Amsterdam The Netherlands T +31 (0)20 5683556 E [email protected] I www.elektroblok.nl Maxi Toys SA Rue Athena 4 B-7110 Houdeng-Goegnies Belgium T +32 (0) 64516100 E [email protected] I www.maxitoys.com Toys2Play Tuincentrum Overvecht Atoomweg 99 NL-3542 AA Utrecht The Netherlands P.O. Box 40294 NL-3504 AB Utrecht The Netherlands T +31 (0)30 2634263 E [email protected] I www.tuincentrumovervecht.nl Van der Madeweg 11 NL-1099 BS Amsterdam The Netherlands T +31 (0)20 5683100 I www.toys2play.nl Trend Center B.V. Van der Madeweg 13-15 NL-1099 BS Amsterdam The Netherlands T +31 (0)20 5683356 E [email protected] I www.trend-center.nl Blokker Holding B.V. Naarderstraat 50 NL-1251 BD Laren The Netherlands P.O. Box 6 NL-1250 AA Laren The Netherlands T +31 (0)35 5393333 E [email protected] I www.blokkerholding.nl - 63 - BLOKKER HOLDING ANNUAL REPORT 2013 coloPHon Concept and design Monter, Amsterdam Photography Sander Foederer, Den Haag Ivo de Bruijn, Amsterdam Archive images Blokker Holding Copy and editing Jos Busker Ad van der Horst Peter Krenn Sandra Maas Donald Nijsen Astrid Nissen Roland Palmer Jos van de Schraaf Printing Drukkerij Tesink, Zutphen This report is printed on FSC-certified paper: 300 gr. cardboard, Matterhorn and 130 gr. semi matt mc. - 64 -
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