24.02.2015 Press release Van de Velde: annual results 2014 REBITDA ROSE ON A COMPARABLE BASIS BY 14.8%. RECURRING NET PROFIT INCREASED, BUT NET PROFIT WAS NEGATIVELY IMPACTED BY IMPAIRMENT ON INTIMACY GOODWILL AND INTANGIBLE ASSETS. THE BOARD OF DIRECTORS WILL PROPOSE TO THE GENERAL MEETING OF SHAREHOLDERS A TOTAL DIVIDEND OF 3.50 PER SHARE, OF WHICH 1.35 PER SHARE WAS PAID OUT AS INTERIM DIVIDEND IN NOVEMBER 2014. 1. CONSOLIDATED KEY FIGURES 2014 (ACCORDING TO IFRS STANDARDS AND AUDITED) Consolidated key figures 31.12.2014 31.12.2013 % INCOME STATEMENT (IN M ) Turnover 198.4 182.4 8.7% Other operating income 4.9 4.4 12.3% Cost of materials (46.2) (43.6) 6.1% Other expenses (56.5) (52.8) 7.1% Personnel expenses (including (2) ) (42.8) (43.4) (1.5%) Recurring operating profit before depreciation 57.7 48.7 18.6% and amortization ( REBITDA ) (1) Non-recurring restructuring cost (2) 0.0 (1.7) (100.0%) Operating profit before depreciation and 57.7 47.0 22.8% amortization ( EBITDA ) (1) Depreciation and amortization (8.2) (7.6) 7.5% EBIT or operating profit 49.5 39.4 25.8% Impairment of goodwill and intangible assets with (31.4) 0.0 100.0% indefinite useful life Financial result 0.7 1.1 (37.7%) Share of result of associates 0.0 0.1 (41.4%) Profit before taxes 18.8 40.5 (53.6%) Income taxes (16.4) (9.1) 80.5% Result of the period attributable to non-controlling (0.1) (0.3) (82.5%) interests Profit for the period attributable to the owners of 2.5 31.8 (92.2%) the company Recurring profit for the period (excluding impairment / non-recurring restructuring costs) 33.9 32.9 3.2% (1) EBITDA equals operating profit plus depreciation and amortization on fixed intangible and tangible assets. (2) The non-recurring restructuring costs in 2013 are related to the restructuring of the Andres Sarda organisation. Consolidated key figures 31.12.2014 31.12.2013 % BALANCE SHEET (IN M ) Fixed assets 68.0 100.9 (32.6%) Current assets 91.9 96.3 (4.5%) Total assets 159.9 197.2 (18.9%) Shareholders equity 134.0 173.5 (22.8%) Non-controlling interest 0.7 4.0 (82.0%) Non-current liabilities 4.7 4.6 2.1% Current liabilities 20.6 15.1 35.6% Total equity and liabilities 159.9 197.2 (18.9%) KEY FIGURES IN PER SHARE REBITDA 4.3 3.7 18.6% Recurring profit for the period attributable to the owners of the company 2.6 2.5 3.2%
2. REPORT OF THE STATUTORY AUDITOR ON THE ANNUAL INFORMATION AT 31 DECEMBER 2014 The statutory auditor has issued an unqualified opinion on the consolidated financial statements. The accounting figures in this release are consistent with the figures in the consolidated financial statements. 3. NOTES TO THE CONSOLIDATED KEY FIGURES TURNOVER GROWTH 2014 Consolidated turnover at Van de Velde rose by 8.7% in 2014 (from 182.4m to 198.4m). On a like-for-like basis (including comparable deliveries) consolidated turnover was up 7.2%. This turnover growth consisted of the following components: 9.6% growth in wholesale turnover. This growth is driven by the very successful launch of PrimaDonna Swim and the strong growth in lingerie. A fall in retail turnover at Intimacy by 16.0% (12.0% on a like-for-like basis) in local currency. 20.3% rise in retail turnover in continental Europe, especially due to strong like-for-like growth in Germany (14.8%) and the Netherlands (14.3%). Furthermore, the one-time Donker stores are included over 12 months in 2014 versus 9 months in 2013. A rise in retail turnover at Rigby & Peller in the United Kingdom by 6.8% (1.6% on a like-for-like basis) in local currency. The strengthening of the UK pound against the euro means the rise in euros is higher. REBITDA DEVELOPMENT Consolidated REBITDA was 57.7m, 18.6% higher than the previous year. On a like-for-like basis (including comparable deliveries), REBITDA rose by 14.8%. This is primarily due to the following factors: There was strong turnover growth in wholesale. The gross margin in wholesale is slightly higher on an annual basis compared to the previous year, mainly due to a positive price impact. This is offset to some degree by a negative currency impact. Strict cost constraints ensured that cost rises were limited without threatening strategic projects. The retail division s total REBITDA contribution was lower than in 2013, exclusively due to the less strong performance of Intimacy. The REBITDA contribution of all other retail chains (Europe, United Kingdom, Far East) increased. IMPAIRMENT OF GOODWILL AND INTANGIBLE ASSETS WITH INDEFINITE USEFUL LIFE Impairment tests in 2014 resulted in impairment charges of 31.4m, entirely related to Intimacy. Of this amount, 16.3m was already accounted for in the half-year figures. However, the impairment test conducted in 2015 indicates that the remaining balance of 15.1m should also be written off. As a consequence, the value of both goodwill and the brand with indefinite useful life is 0. The profitability of Intimacy continues to suffer from a further turnover decrease and the turnaround at Intimacy remained elusive in 2014. In addition to a significant loss on a stand-alone basis (Intimacy's stores),
Intimacy recorded negative consolidated REBITDA (including the margin on Van de Velde brands sold through Intimacy) for the first time in 2014. The targets were not achieved and Intimacy s performance also fell short of the targets set when the majority stake was acquired in 2010, which were used as a basis for the valuation in 2010 of the goodwill and the other intangibles in accordance with IFRS. FINANCIAL RESULT AND MINORITY STAKES (SHARE OF RESULT OF ASSOCIATES) The financial result in 2014 was 0.4m lower than in the previous year. In 2013, the adjustment of outstanding balances between Van de Velde and the minority shareholders of Intimacy resulted in a profit of 0.9m. As the receivable from the selling party (the minority shareholder) was collected in full in 2013, there is no further adjustment in 2014. Interest and dividend income were higher in 2014 compared to 2013, but exchange results were lower. The result based on the equity method is in line with the previous year. This is mainly due to the contribution of Top Form, which is based on the change in shareholders equity up to and including 31/12/2014. Top Form reported profit of HK$ 17.1m for the first half of the financial year 2015 (1/7/2014-31/12/2014). INCOME TAXES AND PROFIT FOR THE PERIOD Income taxes were higher compared with the previous year. This was primarily due to the following reasons: The additional profit was mainly generated by the wholesale business, primarily in Belgium, taxed at the Belgian tax rate. As a consequence of administrative restructuring, the tax rate for 2014 rose on an annual basis. The recurring Group profit rose from 32.9m to 33.9m (3.2%) and the recurring profit per share rose from 2.47 to 2.55 (3.2%). When the non-recurring components are included, the fall in Group profit is 92.2%. CASH POSITION AND SOLVENCY / LIQUIDITY The cash position at the end of 2014 was 35.3m (versus 39.3m at the end of 2013). The payment of an interim dividend of 17.9m in November 2014 (versus no interim dividend in 2013) should be taken into account here. 2014 was actually a strong year with regard to cash generation and the operational cash flow was 45.9m versus 34.8m in 2013. Solvency (share of equity in total equity and liabilities) of Van de Velde Group remained very high (83.8% at the end of 2014 versus 88.0% at the end of 2013). The current assets represented 4.5 times the value of the current liabilities (versus 6.4 at the end of 2013), an indication of very strong liquidity. Furthermore, the Group is completely self-financed.
4. DIVIDEND For the financial year 2014 the Board of Directors will propose to the General Meeting of Shareholders a total dividend of 3.5000 per share (net dividend of 2.6250 per share). Of this amount, 1.3500 was paid out as an interim dividend in November 2014 (net dividend of 1.0125 per share). After approval by the General Meeting of Shareholders, the final dividend of 2.1500 per share (net dividend of 1.6125 per share) will be paid out as from 6 May 2015. There are sufficient remaining sources of finance (including cash position) to make all the investments needed to protect the competitiveness of the company. 5. EVENTS AFTER BALANCE SHEET DATE No events after the balance sheet date had a major impact on the financial position of the company. 6. PROSPECTS FOR 2015 Total pre-orders for spring/summer 2015 are higher than the figure for 2014. We accordingly expect growth in the wholesale division in the first six months of the year. Retail forecasts are always very difficult because the retail sector often has a short-term mindset. We assume that growth will continue in the Netherlands and Germany. We expect growth in the United Kingdom too, although this is more difficult to achieve than on the continent. As mentioned, the consolidated REBITDA for Intimacy was negative for the first time in 2014. Van de Velde will not allow this cash-drain to continue.
7. FINANCIAL CALENDAR Annual report 2014 23 March 2015 2014 General Meeting 29 April 2015 Ex-coupon date 4 May 2015 Record date 5 May 2015 Payment dividend 6 May 2015 H1 2015 turnover figures 7 July 2015 2015 half-year results 28 August 2015 Year-end closing 2015 31 December 2015 Van de Velde NV is a leading player in the luxury and fashionable women s lingerie sector. Van de Velde is convinced of the merits of a long-term strategy based on developing and expanding brands around the Lingerie Styling concept (fit, style and fashion), especially in Europe and North America. For more information, contact: Van de Velde NV 09 365 21 00 www.vandevelde.eu Stefaan Vandamme CFO EBVBA 4F, always represented by Ignace Van Doorselaere CEO