HEMA B.V. annual report 2014

# annual report 2014

HEMA B.V. annual report 2014 This annual report is adopted by the general meeting of shareholders on May 13, 2015. Registration number Chamber of Commerce ( Kamer van Koophandel ) 34215639.

contents introduction 5 financial highlights 2008 2014 7 message to our stakeholders 11 report from the management board 15 financial results 19 outlook 2015 28 report from the supervisory board 31 corporate governance 35 financial statements 39 consolidated income statement 40 consolidated statement of comprehensive income 41 consolidated statement of financial position 42 consolidated statement of changes in equity 43 consolidated statement of cash flow 44 notes to the consolidated financial statements 46 company financial statements 95 company income statement 96 company balance sheet 97 notes to the company financial statements 98 other information 111 events after reporting date 111 independent auditor s report 112 statutory appropriation of the result 115 cautionary notice 116 definitions 118 contact information 119 3

HEMA design rules designed by HEMA

introduction about HEMA HEMA B.V. ( HEMA or the Company ) is a general merchandise retailer active in the Netherlands, Belgium, Luxembourg, France and Germany, with a recent expansion into Spain and the United Kingdom. HEMA designs, markets, sells and distributes products through its directly owned stores, as well as a network of branded franchise stores and e-commerce platforms (including mobile and tablet applications). The Company s products feature original and contemporary designs which are substantially all HEMA branded. HEMA offers an extensive range of products from everyday basic household necessities and a limited food assortment to affordable non-discretionary items, including cosmetics, stationery, basic ladies and menswear, babywear, towels and impulse-driven purchases. HEMA is a limited liability company with its registered seat and head office in Amsterdam, the Netherlands. HEMA s shares are ultimately held 100% by Dutch Lion Coöperatief U.A. ( Dutch Lion Coop ), an investment company which is owned by several investment funds advised by Lion Capital. The direct parent of HEMA B.V. is Dutch Lion B.V. (the Parent ). refinancing On June 17, 2014 (the Issue Date ), HEMA Bondco I B.V. and HEMA Bondco II B.V. (together, the Issuers ) issued 250.0 million Senior Secured Floating Rate Notes due 2019, 315.0 million 6.25% Senior Secured Fixed Rate Notes due 2019 (together, the Senior Secured Notes ). and 150.0 million 8.50% Senior Notes due 2019 (the Senior Notes ). The senior secured notes were issued by HEMA Bondco I B.V. and the senior notes were issued by HEMA Bondco II B.V., both of which are 100% owned by Dutch Lion B.V. (the Parent ). The proceeds of the notes were used to repay existing debt in full. On the Issue Date, the Company entered into a Revolving Credit Facility Agreement, pursuant to which the Revolving Credit Facility was made available for drawing in the amount of 80.0 million. On the Issue Date, the Parent issued 85.0 million Senior PIK Notes due 2020 (the Senior PIK Notes ). The proceeds of this issuance were used to repay the Parent s existing PIK facility in full. On January 31, 2015, Dutch Lion B.V. made a contribution of 221.4 million to the Company by way of conversion of the shareholder loan into share premium. reporting In addition to the Company s statutory reporting requirements, this annual report also contains the reporting requirements under the indentures governing the Senior Secured Notes, the Senior Notes and the Senior PIK Notes and under the Revolving Credit Facility Agreement. The financial information included herein is with respect to HEMA and its subsidiaries and does not include financial information of the Parent. The Parent is a holding company with no independent business operations. The Parent has no material assets other than the shares it holds in HEMA and the Issuers and intercompany loans to HEMA. The Parent has no material liabilities other than the Senior PIK Notes and a subordinated shareholder loan.

HEMA design rule 01 affordability should never be at the expense of quality

financial highlights 2008 2014 7

The graphs below show the financial highlights of HEMA B.V. ( HEMA or the Company ) for the year 2008 up to and including 2014. The financial year 2012 covers 53 weeks, the other years consist of 52 weeks. mln 1,750 1,500 1,250 1,000 750 500 250 0 1,510 1,566 1,624 1,662 2008 2009 2010 2011 1,650 1,578 1,546 gross sales 2012 2013 2014 Gross sales are total sales to customers through HEMA s own stores and to its franchisees. mln 1,200 1,000 800 600 400 200 0 1,049 1,082 1,114 1,150 1,153 1,091 1,077 net sales 2008 2009 2010 2011 2012 2013 2014 Net sales are gross sales minus value added taxes and rebates. 8

mln 175 150 125 100 75 50 25 0-25 -50 132 91 141 98 157 111 156 105 142 85 121 60 103-91 adjusted EBITDA operating result -75-100 2008 2009 2010 2011 2012 2013 2014 For the definition of adjusted EBITDA, please refer to the definitions paragraph. The operating result in 2014 is impacted by an impairment on goodwill of 118.0 million. # stores 700 600 500 400 300 457 504 555 601 638 666 683 stores 2008 2009 2010 2011 2012 2013 2014 9

HEMA design rule 02 good design lasts for generations

message to our stakeholders In 2014, the Dutch retail sector was once again challenging due to the economic climate, negative consumer confidence, high unemployment and unseasonal weather conditions throughout the year. And while we performed well in our international markets, results in the Netherlands came under pressure. Overall, these factors had a negative impact on HEMA s results. transitional year Last year HEMA started a transitional period. We made significant progress in transforming our business, to position the group for the opportunities ahead. We successfully refinanced our business through a high yield bond; we restructured our organisation and reshaped our strategy. As a part of this reorganisation, we took the difficult but necessary decision to dismiss a total of 90 people at the head office, our bakery operation and at our distribution centre. The actions we took in 2014 put us in a much stronger position to weather the challenging economic retail climate, while also being able to seize business opportunities as they arise. making the ordinary extraordinary HEMA is committed to serving our customers with well-designed, high-quality products at affordable prices. We do that by successfully executing our four-pillar strategy: offering amazing value; providing convenience; offering exceptional experience and ensuring sustainability throughout our operations. The highlights of our renewed strategy for our customers include the remodeling of all of our Dutch stores, the introduction of a new and successful product category Favourites and a sharper focus on our categories Beauty, Apparel and Food. We are also making sure that our marketing efforts put more emphasis on our unique brand essence of price, quality and design. Very importantly, we decided to lower our prices to meet the needs of our customers in these economically challenging times. To underline the changing business environment and to capture the essence of HEMA more effectively, we changed our slogan to HEMA makes the ordinary extraordinary. reaping the benefits At the end of 2014, we saw the first signs that we are starting to reap the benefits of our reshaped strategy. We continued to open more stores in France and successfully entered the UK and Spanish markets with the opening of three stores in London and one store in Madrid. HEMA was voted Most Indispensable Brand in the Netherlands for the seventh successive year. In line with our ambition to become the most indispensable brand in Europe, We obviously made an impression very quickly in UK, where we were crowned Best Newcomer to the UK market twice in a row in just three months. clicks and bricks Our e-commerce operations continued to grow successfully last year. HEMA is uniquely positioned, as it combines a well-stocked online store with a large number of stores in prime high street locations, in highquality shopping centres across the country, and also at high traffic locations, such as trainstations. This combination once again enabled us to create enormous synergies between our e-commerce and our store operations last year. We are therefore convinced that our renewed strategy will help us to continue to meet consumer expectations and make sure that we are distinctively positioned in the market. Delivering on our vision and mission of making daily life easier and more enjoyable for all our customers will remain our top priority. 11

thank you We would like to thank all our people for their commitment and passion in serving our customers. It is our people who make the difference in our everyday operations. We bid a warm welcome to our new colleagues in the UK, Spain and the newly-opened stores in France. We would like to thank our customers for shopping with us. We are proud that you value our well-designed and high quality products. Finally, we would also like to thank our valued shareholders for their confidence and support. Management Board, Amsterdam, the Netherlands, April 13, 2015 12

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HEMA design rule 03 a design is only as strong as its weakest link

report from the management board mission & vision Our mission has been to make daily life easier and more enjoyable for our customers since 1926. We believe that excellent quality and surprising design should be available to everyone at surprisingly low prices: a combination not found anywhere else. This is why our stores offer only the best products and services for every day needs. Whoever and wherever you are, we are there for you 24 hours a day, seven days a week. the brand For more than 88 years, we have been making simple things exceptional. We believe that pleasure can be found in small things. This is why, since the very beginning, we develop and test our products ourselves and sell them under our own brand. We want to be absolutely certain that every product in our stores is a genuine HEMA product that stands out because of its exceptional simplicity and its outstanding quality. We adhere to a number of key values to safeguard a unique combination of price, quality and design; that is our brand essence. HEMA is always optimistic, idiosyncratic, caring, clever and as famously straightforward as the Dutch. It is these characteristics that enable us to make the ordinary extraordinary. strategy At HEMA, we put our focus to our clients by committing to the four pillars of our strategy: amazing value a unique marriage of price, quality and design convenience comfort and accessibility experience even buying everyday things should be special sustainability fair trade, sustainable production, healthier food We achieve this through continuous change in all of our categories; by offering relevant products and services to everyone; by developing strong products at low prices; by making our stores even more attractive; by providing a mix of service, experience and affordability, both in store and online; by explaining the advantages of our products and by making sustainability and organic products accessible to a much wider audience. our ambition HEMA wants to play a key role in the lives of its customers as the world becomes increasingly hectic and complex. This is why we look for convenient solutions to everyday problems and design our own products and services. The exceptional simplicity of our products transcends borders and our message has universal appeal. These days, almost six million people visit our stores in the Netherlands, Belgium, Luxembourg, Germany, France, the UK and Spain. And we are targeting further international growth, as this will enable us to offer even more customers lower prices, as we are able to buy products at even better terms. This philosophy has enabled us to grow in the Netherlands and to become the country s most indispensable brand. We believe we can also become Europe s most indispensable brand. store formats Our store formats are designed to help our customers at any time of the day, no matter where they are. Over the coming years, we aim to become even more in tune with the pace of our customers lives. We have adjusted our store formats and we will continue to do so, including our online store, as the needs of our 15

customers change and develop. Our aim is to be aligned with our customer needs, whenever and wherever they are, 24 hours a day, seven days a week. low prices Over the coming years, a combination of high quality and low prices will be the key differentiating factor in the retail sector. This also applies to HEMA. We want our prices to correspond even more closely with the prices our customers are willing to pay, for high quality everyday goods. As always, we are there for customers who look for high quality products at good prices, as well as customers who look only for the lowest price. We have been faithful to our roots since 1926: low standard prices. products Since 1926, we have been making everyday products something special. We believe that little things can make life more fun. We design and develop our own products, to ensure they stand out thanks to their unique combination of exceptional simplicity and outstanding quality. We test all our products extensively in our own test laboratory, to guarantee the famous HEMA quality at all times. The best choice is in our stores: from our well-known HEMA heroes to all our surprising new products and services. And if you are still not satisfied, we will refund your money without any questions. design Making the ordinary extraordinary and surprising simplicity are the leading principles of all our designs. Products that are simply functional but are not considered special enough do not belong in HEMA stores. Equally, something is not a HEMA design if it is special but does not serve a specific purpose. It is the combination that makes it a HEMA product. All of our products are recognizable by their distinctive HEMA signature. It is what makes them stand out and truly unique. formulas Our store formats are designed to help our customers at any time of the day, no matter where they are. You can find us in seven countries and in some exciting locations: from the high street to train stations, and of course online. We offer our customers a variety of stores: local stores, medium-sized, flagship and high street stores to suit the needs of our customers, wherever they are at any time of the day. Even at home! omni-channel Because, wherever you are, we are there for you 24 hours a day, seven days a week, online and in our stores. We offer our customers an ever-growing omni-channel experience. Online customers, wherever they are, have access at all times to information on our prices, the full range of products we sell and where they are available. We are also making more and more of this information available to our customers in our stores. They can even purchase their product of choice directly online in store and then choose delivery at home or at one of our stores. This puts us in a unique position in today s retail landscape, as we are able to combine our well-stocked online shop with a large number of stores. We will continue to integrate our stores and our online shop, enabling us to serve our customers needs even more effectively. corporate social responsibility We aim for transparency in our sustainability strategy regarding the origins of our products, the production chain and the use of supplements and additives. This is how we help our customers to make well-informed, balanced choices. Not only do we want to make sustainability more transparent for a larger audience, we also want to make sustainable products affordable and accessible to more people. 16

milestones of 2014 3D printing In March last year, we were the first Dutch retailer to offer our customers the possibility of 3D printing. Our customers can now truly personalize products of their choice. HEMA makes 3D printing available and affordable to everyone. Germany online In March, we also launched our German online webshop - www.hemashop.de - offering our German customers only the best products and services for daily living, wherever they are, 24 hours a day, seven days a week. We are there for you. home shopping award At the end of March, we were proud to receive the Dutch Home shopping award. Dutch consumers chose us as their favourite webshop. bronze ADCN award In the same week, we won the important advertising year prize for the design of our series take away packaging which, according to the jury, truly supports the exceptional simplicity of our products. Better Life To emphasise our sustainable policy, products and initiatives, we introduced our own distinctive hallmark providing our customers with valuable information on the uniqueness of our sustainable products. In September this was followed by the introduction of the HEMA eco-bag a cooperation between our customers and HEMA to lower the use of plastic bags. The bag is made of recycled PET bottles and when purchased offers our customers a discount of 25% on weekly selected articles. HEMA opens in Madrid In April, we were proud to launch a new chapter in the expansion of our brand by entering the Spanish market. On April 2, we opened our first store in Madrid. San AccentAward In May, we won the famous Dutch SAN AccentAward in the category Financial Services for our Hurray for HEMA s health insurance campaign. HEMA opens in London In June, we opened no less than three stores in London: at Victoria station, Clarence Street in Kingston and in the The Glades shopping centre in Bromley. This was followed in September by the launch of our UK webshop. MOAM for HEMA June saw the start of a successful collaboration with designers collective MOAM. We gave four young and promising Dutch designers the opportunity to design a collection for HEMA, providing them with a great start to their career. refinancing In June, we successfully refinanced our business through a high-yield bond. favourites In September, we introduced a brand new category Favourites in all our HEMA stores across Europe. Favourites are low-priced, high-quality everyday gifts for everyone. This new category has been remarkably successful and turned out to be a true favourite of all our customers. distinctive HEMA Also in September, we launched our renewed strategy, putting even more focus even more on our customers by committing ourselves to four pillars: Amazing Value, Convenience, Experience and Sustainability. The noticeable elements of our renewed strategy for our customers were the remodeling of all of our Dutch 17

stores, the launch of a new and successful product category Favourites and the focus on our categories Beauty, Apparel and Food. Our marketing efforts now stress more than ever before our brand essence of price, quality and design. To capture and communicate the essence of our company more effectively, we also changed our slogan to HEMA makes the ordinary extraordinary. webshop awards During the ABN AMRO Best Chain store Event 2014, HEMA was elected as the best in the category baby and children s fashion and as the best department store. Another online award followed soon after, as we were singled out as the best online training institute by the institute for Home study and E-learning. most indispensable brand For the seventh year in a row, we were chosen by both men and women as the most indispensable brand. EURIB (European Institute for Brand Management) asked thousands of Dutch consumers which particular brand in the market they would miss the most. That turned out to be HEMA. HEMA best newcomer in UK More awards followed rapidly, as we were awarded the prize for best newcomer on the UK market twice in just three months by both the Dutch-UK Chamber of Commerce and the UK Trade & Investment agency. Both the Dutch ambassador in the UK as the UK ambassador in the Netherlands visited our stores in London to pay tribute to our successful entry on the UK market. HEMA smart phones and tablets In late 2014, we launched our own HEMA smart phones and tablets, effectively making us the first Dutch retailer with its own branded smart phones and tablets. 18

financial results (all amounts in million euros) result from operations (in million euros) 2014 2013 2012 (53 weeks, restated) 2014 vs 2013 2013 vs 2012 income statement data net sales sales to retail customers 788.7 786.9 820.4 1.8 (33.5) sales to franchisees 272.6 289.3 314.7 (16.7) (25.4) other sales 15.9 15.1 17.8 0.8 (2.7) total net sales 1,077.2 1,091.3 1,152.9 (14.1) (61.6) cost of sales (586.0) (589.6) (631.9) 3.6 42.3 gross profit 491.2 501.7 521.0 (10.5) (19.3) operating expenses labour costs (199.5) (202.9) (204.7) 3.4 1.8 housing and rents (124.9) (118.1) (111.7) (6.8) (6.4) other general expenses (72.8) (67.4) (68.3) (5.4) 0.9 other income and expense 2.2 3.9 2.4 (1.7) 1.5 depreciation and amortisation (57.5) (56.5) (51.8) (1.0) (4.7) impairments (120.0) (1.0) (1.8) (119.0) 0.8 restructuring costs (10.1) - - (10.1) - total operating expenses (582.6) (442.0) (435.9) (140.6) (6.1) operating result (91.4) 59.7 85.1 (151.1) (25.4) finance costs interest income 0.1 0.1 0.5 - (0.4) interest expense - cash (48.9) (39.8) (34.6) (9.1) (5.2) interest expense - non cash (30.5) (32.3) (29.4) 1.8 (2.9) amortised finance costs (17.3) (4.0) (3.8) (13.3) (0.2) other finance costs 0.3 (0.4) (4.3) 0.7 3.9 total finance costs (96.3) (76.4) (71.6) (19.9) (4.8) result before income taxes (187.7) (16.7) 13.5 (171.0) (30.2) income taxes (1.5) 0.3 (7.7) (1.8) 8.0 net result (189.2) (16.4) 5.8 (172.8) (22.2) 19

(in million euros) 2014 2013 2012 (53 weeks, restated) 2014 vs 2013 2013 vs 2012 other financial data EBITDA* 86.1 117.2 138.7 (31.1) (21.5) adjusted EBITDA* 103.1 120.5 141.8 (17.4) (21.3) like-for-like sales* (4.2%) (5.5%) (5.3%) 1.3% (0.2%) financial data by product category and region net sales by product category apparel 364.0 377.4 403.9 (13.4) (26.5) household goods & personal care 368.9 365.8 390.8 3.1 (25.0) food & catering 292.8 294.2 290.3 (1.4) 3.9 services & other 51.5 53.9 67.9 (2.4) (14.0) total net sales 1,077.2 1,091.3 1,152.9 (14.1) (61.6) net sales by region The Netherlands 846.4 882.6 956.1 (36.2) (73.5) Belgium and Luxembourg 142.5 143.5 145.5 (1.0) (2.0) France 55.9 39.0 21.9 16.9 17.1 Germany 12.2 11.1 11.7 1.1 (0.6) other 20.3 15.1 17.7 5.2 (2.6) total net sales 1,077.2 1,091.3 1,152.9 (14.1) (61.6) *) For a definition of (adjusted) EBITDA and like-for-like sales, please refer to the definitions paragraph at the end of the report. result from operations: fiscal year 2014 compared to fiscal year 2013 net sales Net sales decreased by 14.1 million, or 1.3%, from 1,091.3 million in 2013 to 1,077.2 million in 2014, due to lower net sales in The Netherlands, partly offset by the opening of new stores. In 2014, 20 new stores were opened and 3 were closed. Most new stores were opened in France (9) and the new countries, Spain (1) and UK (3). like-for-like sales like-for-like sales were -4.2% in 2014, versus -5.5% in 2013. net sales by region Net sales in the Netherlands were 36.2 million lower versus last year, which was partly offset by an increase in sales in France (+ 16.9 million), Germany (+ 1.1 million) and other, including Spain and UK (+ 5.2 million). 20

net sales by product group The total decrease in net sales was for a significant part caused by lower apparel sales (- 13.4 million). Household goods and personal care showed an increase of 3.1 million. cost of sales Cost of sales decreased by 3.6 million, or 0.6%, from 589.6 million in 2013 to 586.0 million in 2014. Cost of sales as a percentage of net sales increased from 54.0% in 2013 to 54.4% in 2014. gross profit Gross profit decreased by 10.5 million, or 2.1%, from 501.7 million in 2013 to 491.2 million in 2014 as a result of the combined effect of the factors described above. Gross profit as a percentage of net sales decreased from 46.0% in 2013 to 45.6% in 2014. operating expenses Operating expenses increased by 140.6 million, or 31.8% from 442.0 million in 2013 to 582.6 million in 2014, primarily due to a 120.0 million impairment, mainly of goodwill for the Netherlands, 10.1 million of cost incurred in connection with the restructuring of the head office, logistics and bakeries, 2.4 million of additional labour costs, incurred during the remodelling of our stores in the Netherlands, and 1.0 million legal expenses, all of which we consider to be non-recurring items. Excluding non-recurring items, the total increase in operating expenses was 7.1 million, from 2013 to 2014, primarily as a result of higher housing and rent expenses. These costs were higher due to expansion and inflation, as most rental contracts increase with the consumer price index. Labor costs decreased by 3.4 million, or 1.7%, as a result of the restructuring of our head office, logistics and bakeries, and the optimisation of labour hours in the stores, which were partly offset by 2.4 million in additional labour costs incurred during the remodeling and an increase in staff as a result of expansion. Other general expenses increased by 5.4 million, or 8%, largerly due to increased spending on sales promotion in The Netherlands. Depreciation, amortisation and impairments increased by 120.0 million, or 208.7%, from 57.5 in 2013 to 177.5 in 2014, as a result of a 120.0 million impairment in 2014, mainly of goodwill for the Netherlands. EBITDA EBITDA decreased with 31.1 million, from 117.2 million in 2013 to 86.1 million in 2014. 13.5 million of this decrease is attributable to the 10.1 million in costs incurred in connection with the restructuring of our head office, 2.4 million of additional labour costs incurred during the remodeling of our stores in the Netherlands and 1.0 million in legal expenses during 2014. The remainder is primarily the result of lower net sales in The Netherlands. adjusted EBITDA Adjusted EBITDA decreased by 17.4 million, or 14.4%, from 120.5 in 2013 to 103.1 in 2014, mainly as a result of lower sales in The Netherlands. operating result Operating result decreased by 151.1 million, from a profit of 59.7 million in 2013 to a loss of 91.4 million in 2014, as a result of the combined effect of the factors described above, particularly the impairment of goodwill in the Netherlands and cost incurred in connection with the restructuring. 21

finance costs Finance costs increased by 19.9 million, from 76.4 million in 2013 to 96.3 million in 2014. Finance costs were influenced by the refinancing which took place in June 2014, pursuant to which the company s bank loans were refinanced with senior secured notes and senior notes. As a result of the refinancing, 12.9 million of unamortised finance costs related to the previous borrowings were recorded in 2014. Excluding this one-off write down of finance costs, total finance costs would be 7.0 million higher versus 2013. net result Net result decreased by 172.8 million, from a loss of 16.4 million in 2013 to a loss of 189.2 million in 2014, mainly due to non-recurring items, including 120.0 million impairments, 10.1 million restructuring costs, 2.4 million of additional labour costs, incurred during the remodeling of our stores in the Netherlands, 1.0 million legal expenses, and a 12.9 million write down of finance costs. Excluding these non-recurring items, net result would have been a loss of 42.8 million. result from operations: fiscal year 2013 compared to fiscal year 2012 net sales Net sales decreased by 61.6 million, or 5.3%, from 1,152.9 million in 2012 to 1,091.3 million in 2013. This decrease was partially the result of the additional week in 2012. Sales in the Netherlands were negatively influenced by the continued challenging macroeconomics environment and lower consumer demand. In total, 29 new stores were opened in 2013, including 13 new stores opened in France. Like-for-like sales performance in France has been very strong, with a 7.7% growth in 2013. like-for-like sales Like-for-like sales were negative 5.5% as a result of the continued challenging macroeconomic environment and lower consumer demand. net sales by region Net sales in the Netherlands decreased by 73.5 million, or 7.7%, primarily due to the continued challenging macroeconomic environment in the Netherlands caused by the double dip recession which led to a reduction in consumers disposable income and consumer spending. Net sales in Belgium and Luxembourg decreased by 2.0 million, or 1.4%, primarily due to the fact that there were 52 weeks in 2013 as compared to 53 weeks in 2012. Net sales in France increased by 17.1 million, or 78.1%, due to 13 new stores opened in France in 2013, as well as a 7.7% increase in like-for-like sales in the period. Net sales in Germany decreased by 0.6 million, or 5.1%, due, in part, to the remodelling of two of our ten stores in 2013. net sales by product group Net sales from apparel decreased by 26.5 million, or 6.6%, primarily due to the deterioration of market conditions and consumer spending in The Netherlands, the additional week in 2012 as compared to 2013 and the mild winter in 2013, which reduced sales of seasonal merchandise such as coats, gloves, and other coldweather apparel. Net sales from household goods & personal care decreased by 25.0 million, or 6.4%. Net sales from food & catering increased by 3.9 million, or 1.3%. Net sales from services & other decreased by 14.0 million, or 20.6%. 22

cost of sales Cost of sales decreased by 42.3 million, or 6.7%. Cost of sales as a percentage of net sales decreased from 54.8% in 2012 to 54.0% in. gross profit Gross profit decreased by 19.3 million, or 3.7%. Gross profit as a percentage of net sales increased from 45.2% in 2012 to 46.0% in 2013. operating expenses Operating expenses increased by 6.1 million, or 1.4%, from 435.9 million in 2012 to 442.0 million in 2013, due to an increase in housing and rent costs as a result of the opening of new stores, which was partly offset by the effects of the additional week in 2012. Operating expenses as a percentage of net sales increased from 37.8% in 2012 to 40.5% in 2013 resulting from a decline in sales over that period and the largely fixed nature of our cost base. Total labor costs decreased by 1.8 million, or 0.9%, due to the addition of employees in connection with the opening of new stores, which was offset by targeted cuts to labor costs across our existing stores. Housing and rents increased by 6.4 million, or 5.7% due to housing and rents connected with new stores opened and to an increase in rental costs as a result of an increase in the consumer price index, to which most of our rental rates are contractually linked. Depreciation, amortization and impairments increased by 3.9 million, or 7.3%, due to the opening of new stores and the write-down of fixed assets that resulted from the closure of certain of our existing stores for refurbishment in 2013. EBITDA EBITDA decreased by 21.5 million, or 15.5%, as a result of the combined effect of the factors described above. adjusted EBITDA Adjusted EBITDA decreased by 21.3 million, or 15.0%, as a result of the combined effect of the factors described above. operating result Operating result decreased by 25.4 million, or 29.8%, as a result of the combined effect of the factors described above. Operating income as a percentage of net sales decreased from 7.4% in 2012 to 5.5% in 2013. finance costs Finance cost including cash and non-cash interest increased by 4.8 million, or 6.7%, primarily due to an increase in our interest expense, including amortization of fees, attributable to the renegotiation and extension the borrowings on August 1, 2013. net result Net result decreased by 22.2 million, or 382.8%, from 5.8 million profit in 2012 to 16.4 million loss in 2013, as a result of the combined effect of the factors described above. 23

cash flow (in million euros) 2014 2013 2012 (53 weeks, restated) 2014 vs 2013 2013 vs 2012 cashflow statement data cash generated by operating activities 96.2 117.2 138.7 (21.0) (21.5) cash from working capital (60.3) 26.5 29.9 (86.8) (3.4) cash used for provisions and other (12.1) (3.0) (5.6) (9.2) 2.6 income taxes received / (paid) 1.0 (1.2) (11.4) 2.2 10.2 cash used in investing activities (35.4) (59.6) (80.7) 24.2 21.1 payments for interest and financial leases (46.5) (41.0) (35.2) (5.5) (5.8) finance fees paid (18.7) (7.0) - (11.7) (7.0) borrowings repaid (68.3) (18.3) (7.8) (50.0) (10.5) cash flow (144.1) 13.6 27.9 (157.8) (14.3) cash, cash equivalents and bank overdrafts at the beginning of the period exchange gains on cash and cash equivalents cash, cash equivalents and bank overdrafts at the end of the period 175.9 162.3 134.4 13.6 27.9 1.3 - - 1.3-33.1 175.9 162.3 (142.8) 13.6 cash flow: fiscal year 2014 compared to fiscal year 2013 Total cash flow in 2014 was an outflow of 142.8 million, versus an inflow of 13.6 million in 2013. The cash flows for 2014 were influenced by the refinancing and cash out due to the restructuring: 18.7 million in fees paid in respect of the refinancing, including underwriting bank fees, legal fees and consultant fees; a net repayment of debt in the amount of 68.3 million; payment of 9.1 million in connection with the restructuring. In total these items had an impact of 96.1 million on the cash flows. Excluding these items, cash flow for 2014 was an outflow of 46.7 million, a significant part of which was caused by investments in working capital and a shift in timing of payments: The VAT payment for Q4 2013 was paid in Q1 2014, resulting in a cash out of 22.0 million. In 2014 HEMA had five quarterly VAT payments, versus three quarterly payments in 2013; Inventories increased by 39.3 million in 2014 as compared to 2013. In 2014 the Company spent 24.2 million less on capital expenditures than in 2013, due to fewer store openings and expenses for store refurbishments. 24

cash flow: fiscal year 2013 compared to fiscal year 2012 Total cash flow in 2013 was an inflow of 13.6 million. Cash generated from operating activities decreased by 21.5 million, primarily due to decreased operating income. Cash from working capital was 26.5 million, mainly as a result of a shift of 22.0 million in VAT payments into the first quarter of 2014. Net cash used in investing activities decreased by 21.1 million, due to the store refurbishment program and a new point of sale system introduced in our stores in the Netherlands in 2012, for which most payments were made in 2012. In August 2013, the Company amended and extented the interest rates and maturities of the borrowings, relating to higher payments for interest and financial leases of 5.8 million and payment for related finance fees of 7.0 million. In 2013, the Company prepaid 18.3 million on the borrowings, which was 10.5 million more than in 2012. 25

capitalization (in million euros) February 1 2015 February 2 2014 February 3 2013 (restated) capital previous facilities - 780.2 790.3 senior secured floating rate notes (proceeds loan) 250.0 - - senior secured fixed rate notes (proceeds loan) 315.0 - - senior notes proceeds loan (proceeds loan) 150.0 - - super senior revolving credit facility - - - financial lease liabilities 4.5 5.8 6.4 gross debt 719.5 786.0 796.7 less: cash, cash equivalents and bank overdrafts (33.1) (175.9) (162.3) net debt 686.4 610.1 634.4 shareholder loan (excluding unamortised finance costs) - 193.9 169.8 equity 374.4 337.5 347.2 total capital 1,060.8 1,141.5 1,151.4 leverage ratio net debt 686.4 610.1 634.4 EBITDA 86.1 117.2 138.7 adjusted EBITDA 103.1 120.5 141.8 leverage ratio (net debt / EBITDA) 7.97 5.21 4.57 leverage ratio (net debt / adjusted EBITDA) 6.66 5.06 4.47 capitalization: fiscal year 2014 compared to fiscal year 2013 At the end of 2014 the total gross debt, excluding the shareholder loan, was 66.5 million lower versus 2013. During the refinancing mid 2014, excess cash was used to repay part of the debt. At January 31, 2015, Dutch Lion B.V. made a contribution of 221.4 million to the Company by way of conversion of the shareholder loan into share premium. Total net debt at year-end 2014 was 686.4 million versus 610.1 million at year-end 2013, as a result of the negative cash flow. The leverage ratio, based on adjusted EBITDA was 6.66x at year-end 2014, versus 5.06x at year-end 2013. HEMA has a total revolving credit facility available of 80.0 million, excluding outstanding bank guarantees, which was undrawn at February 1, 2015. Including outstanding bank guarantees of 3.7 million, the company has 76.3 million available at year-end 2014. Including the cash balances, HEMA has in total 109.4 million cash available. 26

capitalization: fiscal year 2013 compared to fiscal year 2012 At the end of 2013 the total gross debt, excluding the shareholder loan, was 10.7 million lower versus 2012, as a result of mandatory prepayments on the borrowings, partly offset by non-cash interest on the mezzanine facility, which were added to the principal amount of the borrowings. Total net debt at year-end 2013 was 610.1 million versus 634.4 million at year-end 2012, as a result of a positive cash flow and prepayments on the borrowings. The leverage ratio, based on adjusted EBITDA was 5.06x at year-end 2013, versus 4.47x at year-end 2012. 27

outlook 2015 Although there are signs that the Dutch economy is picking up, we remain cautious in our outlook. Consumer confidence recovered last year, but was still in negative territory. And while the unemployment rate slighty decreased in 2014, it is still at a relatively high level. As a result, we expect consumers to remain cautious in their spending. We will continue to expand our international operations in our current markets by opening new stores and by investing in our international e-commerce platform to support its continuous growth. No additional financing is required for the budgeted capital expenditure. We are convinced that our reshaped strategy will both help us to meet consumer expectations and make sure that we are distinctively positioned in the market. Delivering on our mission and vision of making daily life easier and more enjoyable for our customers will remain our top priority for the year ahead and beyond. Management Board, Amsterdam, the Netherlands, April 13, 2015 28

29

HEMA design rule 04 before any product goes to the store: test, test and test again 30

report from the supervisory board HEMA s Supervisory Board is a corporate body responsible for supervising and advising the Board of Managing Directors in performing its management tasks. In carrying out its duties, the Supervisory Board is guided by the interests of the Company and its business. The Supervisory Board has adopted rules of procedure, including a profile as to its size and composition. The Supervisory Board is responsible for monitoring and assessing its own performance. composition of the supervisory board In accordance with its rules of procedure, the Supervisory Board aims for an appropriate combination of knowledge, experience and expertise among its members in relation to HEMA s business. The independence of its members best enables the Supervisory Board to carry out its responsibilities. The Supervisory Board of HEMA consists of four members. There were no changes during the year 2014. The Supervisory Board does not consist of at least 30% women. The current members have been appointed based on their qualities, and they were the best possible candidates for the function of Supervisory Board member at the time of appointment. In the future, as in the past, the Supervisory Board will continue to consider female candidates for the position of Supervisory Board member of HEMA, as well as male candidates, in case a new member needs to be appointed. reappointment schedule name date of birth date of initial appointment date of possible reappointment gender Robert Darwent October 12, 1972 July 6, 2007 April 2016 male Mary Minnick November 27, 1959 July 6, 2007 April 2016 female Dolf Collee October 24, 1952 April 1, 2008 April 2016 male Anders Moberg March 21, 1950 April 8, 2009 April 2017 male meetings of the supervisory board In 2014 the Supervisory Board held nine meetings either in person or via conference call. None of its members were absent from these meetings. The members of the Supervisory Board have regular contact with the CEO, CFO and other members of the Management Board of HEMA outside the scheduled meetings of the Supervisory Board. activities of the supervisory board The Supervisory Board devotes considerable time to discuss HEMA s strategy with the Management Board of HEMA, including objectives, associated risks and mechanisms for controlling financial risks. Furthermore, the Supervisory Board reviews and approves quarterly and annual financial statements and annual budgets. 31

Other topics of discussion included the performance and the remuneration of the Board of Managing Directors, risk management, international expansion, supply chain, financing and cash flow of HEMA. Regular agenda items included the financial and operational performance, market share development and the general course of business. members of the supervisory board Robert Darwent (1972) Mr. Robert Darwent was first appointed as member and chairman of the Supervisory Board on July 6, 2007, and has remained in this position since then. Mr. Darwent was reappointed by the Annual Meeting of Shareholders in April 2012. Mr. Darwent is a founding partner of Lion Capital. In the past Mr. Darwent was employed by private equity firm Hicks, Muse, Tate & Furst and by the private equity group of Morgan Stanley. Mr. Darwent currently serves as Board member for Weetabix, AS Adventures, and All Saints being other investments held by Lion Capital. Mr. Darwent is a British citizen residing in the United Kingdom. Mary Minnick (1959) Ms. Mary Minnick was first appointed as member and vice-chairman of the Supervisory Board on July 6, 2007, and has remained in this position since then. Ms. Minnick was reappointed by the Annual Meeting of Shareholders in April 2012. Ms. Minnick is a partner of Lion Capital. In the past Ms. Minnick held various management and marketing positions with the Coca-Cola Company. Ms. Minnick currently serves as Board member for Target Corporation (a US based retailer), Heineken, WhiteWave Foods and Ad van Geloven, the latter being another investment held by Lion Capital. Ms. Minnick is a US citizen residing in the United Kingdom. Dolf Collee (1952) Mr. Dolf Collee was first appointed as member of the Supervisory Board on April 1, 2008, and has remained in this position since then. The first appointment of Mr. Collee was made in accordance with the enhanced right of recommendation of the works counsel. Mr. Collee was reappointed by the Annual Meeting of Shareholders in April 2012. Mr. Collee is Chairman of HEMA s Audit Committee. Mr. Collee is currently a consultant. In the past Mr. Collee was amongst others a member of the Managing Board of ABN AMRO Bank and a member of the Board of VNO-NCW. Mr. Collee currently serves as a Supervisory Board member for Ewals Cargo B.V., Ajax N.V., Arena N.V., Central Industrial Group N.V., Abis Shipping B.V. and Wealth Management Partners N.V. Furthermore Mr. Collee is member of the Investment Committee of Project Holland Fonds and advisor of ITDS B.V. Mr. Collee is a Dutch citizen residing in the Netherlands. Anders Moberg (1950) Mr. Anders Moberg was first appointed as member of the Supervisory Board on September 1, 2009, and has remained in this position since then. Mr. Moberg was reappointed by the Annual Meeting of Shareholders in April 2013. Mr. Moberg is currently a consultant. In the past Mr. Moberg was amongst others CEO of Majid Al Futtaim (MAF) Group LLC (one of the biggest retailers in the Middle East), CEO of Royal Ahold (the world s fourth largest food retailer), President International of Home Depot and CEO of IKEA. Mr. Moberg currently serves as a board member for Ahlstrom Corporation, ZetaDisplay AB, ITAB AB, Amor Gmbh, OBH Nordica AB, Rezidor AB, Byggmax AB and Bergendahl & Son AB. Mr. Moberg is a Swedish citizen residing in Dubai. audit committee In 2011 the Supervisory Board has founded an Audit Committee as a sub-committee of the Supervisory Board. The Audit Committee has adopted rules of procedures, including an overview of tasks and powers and in relation towards independent external auditors. 32

The Audit Committee assists the Supervisory Board in its responsibilities to oversee the financing, financial statements, financial reporting process, system of internal controls and risk management of HEMA. The Chief Financial Officer is invited to the Audit Committee meetings, as well as other members of senior management and the independent external auditor when the Audit Committee deems it necessary or appropriate. Mr. Collee acts as Chairman of the Audit Committee. During 2014 the Audit Committee held four meetings. During three meetings the independent external auditor attended to discuss internal and external control as well as the endorsement of the financial statements and the audit thereof. Main topics discussed during the meetings of the Audit Committee include quarterly and annual financial statements, the quality of the internal control environment, tax, financing, the relationship with the franchisees and internal and external audits. Robert Darwent, chairman Mary Minnick, vice-chairman Dolf Collee Anders Moberg Amsterdam, the Netherlands, April 13, 2015 33

HEMA design rule 05 always start with the question: can we make this greener? 34

corporate governance HEMA has adopted the structure regime (governance rules applicable to large companies in the Netherlands). The company s articles of association are available at the trade register of the chamber of commerce and industry of Amsterdam. management board HEMA s formal board is the Board of Managing Directors, consisting of the CEO and the CFO. Operationally the company is managed by its Management Board. In addition to the CEO and the CFO, the Management Board consists of three other members: the Director Buying and Merchandising, the Director Supply Chain and the Director Operations. supervisory board The Supervisory Board supervises the policies pursued by the Board of Managing Directors and the company s general affairs and the business connected with it. The Supervisory Board also assists the Board of Managing Directors by providing advice. In carrying out its duties, the Supervisory Board is guided by the interests of the company and its business. The Supervisory Board is supported in its work by the Audit Committee on specific matters including financial reporting, risk management, internal controls and advising the Supervisory Board on the appointment of the independent external auditors of HEMA. general meeting of shareholders HEMA s shares are ultimately 100% held by Dutch Lion Coöperatief U.A., an investment company which is owned by several investment funds, advised by Lion Capital as its members. In addition, certain members of HEMA s management have an indirect economic interest in Dutch Lion Coöperatief U.A. risk factors HEMA aims to increase the transparency of risk management to its stakeholders by describing its risk management and control systems and procedures, and has identified key risks specific for HEMA. risk management and control systems and procedures HEMA has implemented the following risk management and control systems to create an appropriate control environment and to monitor performance closely: an annual sign off for compliance to HEMA s Code of Conduct by management and a selection of personnel; an internal certification procedure related to the fair presentation of HEMA s financial condition and operations in the quarterly and annual financial statements; a bill of authority with clear procurement authorizations; a whistle blower policy to enable Dutch employees to anonymously report any misconduct within the company; a formal planning and control cycle, which includes the preparation and approval of a long-term business plan, annual budget, quarterly forecast, monthly management reporting and weekly KPI reports; procedural manuals and an integrated, detailed description of the accounting policies applied; 35

an information security policy; control self assessments for certain key parts of the business; an internal Audit & Risk department, which conducts and assists with risk assessments within the company and performs audits on all key areas in the business; an annual monitoring report to the Management Board on the follow up of recommendations from internal and external audits. The Management Board reports on and accounts for the internal control environment and the risk management and control systems and procedures within the company to the Audit Committee. The content and progress on the follow up of recommendations from internal and external audits is annually reported to and discussed with the Audit Committee. The Audit & Risk department plays an important role in providing an objective view and ongoing affirmation of the effectiveness of the overall internal risk management and control systems and procedures. risk profile We take strategic and operational risks as a part of doing business. We want to promote entrepreneurship and enter into new businesses but monitor results closely. We seek to minimise compliance and financial reporting risks. A summary of principal risk factors which we currently consider material for HEMA is provided below. strategic risk The implementation of our strategy is subject to external risks such as a general economic and financial downturn in the countries we operate, new and stronger competitors in specific product groups, price and promotion management by our competitors, rapidly changing consumer preferences, and fluctuation of foreign exchange rates, prices of raw materials, such as cotton, oil prices and exposure to potential negative publicity. operational risk Operations may be affected by disruptions in our IT systems, as a result of strikes or calamities at our facilities. Unseasonal or severe weather conditions are known to impact sales. A significant dependency on suppliers outside the European Union exposes us to a variety of related risks. In 2015 we will continue our efforts to improve operational execution, shorten lead times and achieve more flexibility in vendor agreements to meet sudden changes in customer demand. Our results of operations can be impacted by amongst others shoplifting, fraud, higher labour costs, pension fund contributions and a rise in rental costs for new and expiring lease agreements. Other identified principal operational risk factors include the recruitment and retention of key personnel, our payment terms with suppliers, information security and the risks associated with our franchise structure. compliance risk HEMA and its contract parties are subject to laws and regulations related amongst others to product safety, health safety, quality, employee protection, consumer protection and the environment. Non compliance could lead to liability claims, fines, closure of stores or facilities, delays, an increase in compliance costs and reputational damage. We continuously strive to comply with laws and regulations, to avoid legal action and, when necessary, resolve disputes. financial risk For a detailed description of financial risks we kindly refer you to note 27 of the financial statements. financial reporting risk Our financial statements are prepared in accordance with International Financial Reporting Standards ( IFRS ), as adopted by the European Union. Changes in these standards or interpretations thereof, issued by standardsetting bodies for IFRS, may adversely impact our reported financial results or position. At this moment, HEMA is not subject to specific financial reporting risks due to changes in these standards or interpretations thereof. 36

The Management Board and management are responsible for developing and testing internal risk management and monitoring systems designed to identify significant risks, monitor the achievement of targets and ensure compliance with relevant legislation and regulations. The Management Board bears ultimate responsibility for determining the maximum acceptable level of risk. HEMA has adopted the structure regime (governance rules applicable to large companies in the Netherlands). The company s articles of association are available at the trade register of the chamber of commerce and industry of Amsterdam. 37

HEMA design rule 06 the tiniest detail can make all the difference 38

financial statements 39

consolidated income statement from February 3, 2014 up to and including February 1, 2015 (in million euros) note 2014 2013 2012 (restated) net sales 6 1,077.2 1,091.3 1,152.9 cost of sales 7 (586.0) (589.6) (631.9) gross profit 491.2 501.7 521.0 operating expenses 8 (582.6) (442.0) (435.9) operating result (91.4) 59.7 85.1 finance costs 9 (96.3) (76.4) (71.6) result before income taxes (187.7) (16.7) 13.5 income taxes 10 (1.5) 0.3 (7.7) net result (189.2) (16.4) 5.8 attributable to: shareholder (189.2) (16.4) 5.8 net result (189.2) (16.4) 5.8 The accompanying notes on pages 46 to 92 are an integral part of these consolidated financial statements. 40

consolidated statement of comprehensive income from February 3, 2014 up to and including February 1, 2015 (in million euros) note 2014 2013 net result (189.2) (16.4) other comprehensive income items that will not be reclassified to profit and loss remeasurements on post-employment benefit obligations - - tax effect on remeasurements on post-employment benefit obligations - - items that may subsequently be reclassified to profit and loss cash-flow hedges, net of tax 18 4.8 6.7 other comprehensive income for the year, net of tax 4.8 6.7 total comprehensive loss for the year (184.4) (9.7) attributable to shareholder (184.4) (9.7) total comprehensive loss for the year (184.4) (9.7) The figures presented above are disclosed net of tax. See note 10 for more information on income taxes. The accompanying notes on pages 46 to 92 are an integral part of these consolidated financial statements. 41

consolidated statement of financial position as at February 1, 2015 (in million euros, after appropriation of current year result) note February 1 2015 February 2 2014 assets property, plant and equipment 11 192.0 209.7 intangible assets 12 1,044.2 1,168.7 other non-current assets 13 2.4 2.0 total non-current assets 1,238.6 1,380.4 inventories 14 186.9 147.6 trade and other receivables 15 68.6 63.5 other current financial assets 16 8.8 0.3 current tax assets 10 1.7 3.0 cash and cash equivalents 17 57.8 175.9 total current assets 323.8 390.3 total assets 1,562.4 1,770.7 share capital 18 0.0 0.0 share premium 18 629.6 408.2 other reserves 18 4.4 (0.4) retained earnings 18 (259.6) (70.4) total equity 374.4 337.5 liabilities borrowings 19 700.8 755.0 shareholder loan 20-193.1 other financial liabilities 21 22.0 24.9 employee benefits 22 7.0 7.1 deferred tax liabilities 10 99.9 98.7 provisions 23-0.1 total non-current liabilities 829.7 1,078.9 trade and other payables 24 320.5 336.4 borrowings 19-10.8 bank overdrafts 17 24.7 - other financial liabilities 25 9.2 5.7 current tax liabilities 10 2.8 1.4 provisions - short term 23 1.1 - total current liabilities 358.3 354.3 total equity and liabilities 1,562.4 1,770.7 The accompanying notes on pages 46 to 92 are an integral part of these consolidated financial statements. 42

consolidated statement of changes in equity from February 3, 2014 up to and including February 1, 2015 attributable to the shareholders (in million euros) note share capital share premium other reserves retained earnings total equity balance as of February 3, 2013 (restated) 0.0 408.2 (7.1) (54.0) 347.2 comprehensive income net result for the year - - - (16.4) (16.4) other comprehensive income - cash flow hedges, net of tax 18 - - 6.7-6.7 change in other reserves 18 - - 0.1-0.1 total comprehensive income - - 6.7 (16.4) (9.7) transactions with owners share premium contribution 18 - - - - - change in other reserves 18 - - - - - total transactions with owners - - - - - balance as of February 2, 2014 0.0 408.2 (0.4) (70.4) 337.5 comprehensive income net result for the year - - - (189.2) (189.2) other comprehensive income - cash flow hedges, net of tax 18 - - 4.7-4.7 change in other reserves 18 - - 0.1-0.1 total comprehensive income - - 4.8 (189.2) (184.4) transactions with owners share premium contribution 18-221.4 - - 221.4 change in other reserves 18 - - - - - total transactions with owners - 221.4 - - 221.4 balance as of February 1, 2015 0.0 629.6 4.4 (259.6) 374.4 The accompanying notes on pages 46 to 92 are an integral part of these consolidated financial statements. 43

consolidated statement of cash flow from February 3, 2014 up to and including February 1, 2015 (in million euros) note 2014 2013 2012 (restated) cash flow from operating activities result before income taxes (187.7) (16.7) 13.5 restructuring provision recognised in the income statement 22 10.1 - - finance costs recognised in the income statement 8 96.3 76.4 71.6 depreciation, amortisation and impairment of non-current assets 7 177.5 57.5 53.6 operating cash before changes in working capital 96.2 117.2 138.7 movements in working capital, provisions and other (increase)/decrease in trade and other receivables 14 (5.1) 5.5 (4.5) (increase)/decrease in inventories 13 (39.3) 0.2 3.0 (decrease)/increase in trade and other payables 23 (15.9) 20.8 31.4 decrease in provisions 21/22 (9.9) (0.8) (1.0) change in other assets/liabilities (2.2) (2.2) (4.6) cash generated from operations 23.8 140.7 163.0 Income taxes received/(paid) 1.0 (1.2) (11.4) net cash generated by operating activities 24.8 139.5 151.6 cash flow from investing activities payments of property, plant & equipment 10 (28.5) (51.0) (66.2) payments of intangible assets 11 (6.9) (8.6) (14.5) net cash used in investing activities (35.4) (59.6) (80.7) The accompanying notes on pages 46 to 92 are an integral part of these consolidated financial statements. 44

(in million euros) note 2014 2013 2012 (restated) cash flow from financing activities interest paid 9 (45.4) (39.8) (34.6) interest received 9 0.1 0.1 0.5 payments for financial leases 21 (1.2) (1.3) (1.1) repayments of borrowings 19 (783.3) (18.3) (7.8) senior (secured) notes proceeds loans 19 715.0 - - finance fees paid 19 (18.7) (7.0) - net cash used in financing activities (133.5) (66.3) (43.0) net (decrease)/increase in cash, cash equivalents and bankoverdrafts (144.1) 13.6 27.9 cash, cash equivalents and bankoverdrafts at the beginning of the year 17 175.9 162.3 134.4 exchange gains on cash and cash equivalents 1.3 - - cash, cash equivalents and bank overdrafts at the end of the year 17 33.1 175.9 162.3 non cash transactions The principal non-cash transaction is the set-off of the shareholder loan to share premium. The accompanying notes on pages 46 to 92 are an integral part of these consolidated financial statements. 45

notes to the consolidated financial statements (all amounts in million euros, unless otherwise stated) 1 the company and its operations HEMA B.V. ( HEMA or the Company ) is a limited liability company with its registered seat and head office in Amsterdam, the Netherlands. The principal activities of the Company are retail operations in the Netherlands, Belgium, Luxembourg, Germany, France, Spain and the UK. The activities of HEMA are subject to seasonal influences. HEMA s business generally experiences an increase in net sales in the fourth quarter of each year. HEMA s shares are ultimately held 100% by Dutch Lion Coöperatief U.A. ( Dutch Lion Coop ), an investment company which is owned by several investment funds advised by Lion Capital. 2 significant accounting policies 2.1 basis of preparation The consolidated financial statements have been prepared in accordance with International Financial Reporting Standards ( IFRS ) as endorsed by the European Union. The financial information relating to HEMA is presented in the consolidated financial statements. Accordingly, in accordance with section 402, part 9, book 2 of the Dutch Civil Code ( B2 DCC ), the company financial statements only contain an abridged income statement. The consolidated financial statements have been prepared on the historical cost convention, except for the revaluation of financial instruments. The principal accounting policies are set out below. The preparation of financial statements in conformity with IFRS requires the use of certain critical accounting estimates. It also requires management to exercise its judgement in the process of applying the group s accounting policies. The areas involving a higher degree of judgement or complexity, or areas where assumptions and estimates are significant to the consolidated financial statements are disclosed in note 3. HEMA s reporting calendar is based on 12 periods of four weeks or five weeks. The financial year is a 52- or 53- week year ending on the Sunday nearest to January 31. Financial year 2014 consists of 52 weeks and ended on February 1, 2015. The comparable financial year 2013 consisted of 53 weeks and ended on February 2, 2014. 2.1.1 changes in accounting policies and disclosures (a) standards and interpretations effective in the current year In the current year the Company has adopted the following International Financial Reporting Standard: HEMA has adopted IFRS 8 Operating Segments. IFRS 8 sets out requirements for disclosure of information about an entity s operating segments and also about the entity s products and services, the geographical areas in which it operates, and its major customers. Operating segments are reported in a manner consistent with the internal reporting provided to the chief operating decision-maker (CODM). The chief operating decision-maker, who is responsible for allocating resources and assessing performance of the operating segments, has been identified as the board of managing directors. The board of managing directors consists of the Chief Executive Officer and the Chief Financial Officer. The CODM periodically reviews the Company s performance, primarily focused on the sales regions. 46

The Company distinguishes five reporting segments: The Netherlands Belgium and Luxembourg France Germany other The reporting segment other includes Bakeries, Financial services, E-commerce sales in the Netherlands (home deliveries and wholesale), Spain, UK and other. Segment performance is evaluated based on net sales and adjusted EBITDA per segment, however headoffice and logistic costs are not allocated to operating segments. For more information on adjusted EBITDA, please refer to note 4 and the definitions paragraph. Although the France and Germany segments do not meet the quantitative thresholds required by IFRS 8 for reportable segments, management has concluded that this segment should be reported, as it is closely monitored by the CODM. In the current year the Company has adopted the following amendments to International Financial Reporting Standards: Amendment to IAS 32, Financial instruments: Presentation, on asset and liability offsetting: These amendments are to the application guidance in IAS 32, Financial instruments: Presentation, and clarify some of the requirements for offsetting financial assets and financial liabilities on the balance sheet. HEMA has applied this amendment from February 3, 2014. This amendment does not have a material impact on the financial statements of HEMA. Amendment to IAS 36, Impairment of assets on recoverable amount disclosures: This amendment addresses the disclosure of information about the recoverable amount of impaired assets if that amount is based on fair value less costs of disposal. HEMA has applied this amendment from February 3, 2014. This amendment has a material impact on disclosures. Amendment to IAS 39 Novation of derivatives : This amendment provides relief from discontinuing hedge accounting when novation of a hedging instrument to a central counterparty meets specified criteria. HEMA has applied this amendment from February 3, 2014. This amendment does not have a material impact on the financial statements of HEMA. (b) standards, amendments and interpretations to existing standards that are not yet effective, have not been early adopted by the Company and are endorsed by the European Union The following standards and amendments to existing standards have been published and are mandatory for the Company s accounting years beginning on or after February 2, 2015, and the Company has not early adopted them: Annual improvements 2012: These annual improvements amend the standards from the 2010-2012 reporting cycle. It includes changes to IFRS 2, IFRS 3, IFRS 8, IFRS 13, IAS 16 and IAS 24. These improvements are not expected to have a material impact on the financial statements of HEMA. Annual improvements 2013: These annual improvements amend the standards from the 2011-2013 reporting cycle. It includes changes to IFRS 1, IFRS 3, IFRS 13 and IAS 40. These improvements are not expected to have a material impact on the financial statements of HEMA. Amendment to IAS 19, Employee benefits regarding employee or third party contributions to defined benefit plans. This amendment is not expected to have a material impact on the financial statements of HEMA. IFRIC 21, Levies : This is an interpretation of IAS 37, Provisions, contingent liabilities and contingent assets. IAS 37 sets out criteria for the recognition of a liability, one of which is the requirement for the entity to have a present obligation as a result of a past event (known as an obligating event). The interpretation addresses what the obligating event is that gives rise to the payment of a levy and when a liability should be recognised. This is not expected to have a material impact on the financial statements of HEMA. 47

2.2 basis of consolidation Subsidiaries are all entities (including structured entities) over which the Company has control. The Company controls an entity when the Company is exposed to, or has rights to, variable returns from its involvement with the entity and has the ability to affect those returns through its power over the entity. Subsidiaries are fully consolidated from the date on which control is transferred to the Company. They are deconsolidated from the date that control ceases. Intercompany transactions, balances and unrealised gains on transactions between companies are eliminated. Unrealised losses are also eliminated. When necessary, amounts reported by subsidiaries have been adjusted to conform with the Company s accounting policies. The consolidated statement of cash flow has been prepared using the indirect method. Cash flows in foreign currencies are restated into euros at average rates. HEMA s significant subsidiaries are listed in note 33. 2.3 foreign currency translation functional and presentation currency Items included in the financial statements of each of the Company s entities are measured using the currency of the primary economic environment in which the entity operates ( the functional currency ). The consolidated financial statements are presented in Euro, which is the Company s functional and presentation currency. transactions and balances Foreign currency transactions are translated into the functional currency using an average rate that approximates the actual rate at the date of the transaction. Whenever exchange rates fluctuate significantly, the exchange rates prevailing at the dates of the transactions are used. Foreign exchange gains and losses resulting from the settlement of such transactions and from the translation at year-end exchange rates of monetary assets and liabilities denominated in foreign currencies are recognised in the income statement, except when deferred in the hedge reserve in equity as qualifying cash flow hedges. group companies Some subsidiaries have a functional currency that is different from the presentation currency. None of these entities has a currency of a hyperinflationary economy. The results and financial position of all these entities that have a functional currency different from the presentation currency are translated into the presentation currency as follows: assets and liabilities for each balance sheet presented are translated at the closing rate at the date of that balance sheet; income and expenses for each income statement are translated at average exchange rates (unless this average is not a reasonable approximation of the cumulative effect of the rates prevailing on the transaction dates, in which case income and expenses are translated at the rate on the dates of the transactions); and all resulting exchange differences are recognised in equity. 2.4 net sales HEMA generates and recognises net sales to retail customers at the point of sale in its stores and upon delivery of products to internet customers. HEMA also generates revenues from the sale of products to retail franchisees, which are recognised upon delivery. HEMA recognises franchise fees as revenue when all material services relating to the contract have been substantially performed. Discounts earned by customers are recognised as a reduction of sales at the time of the sale. Generally, net sales and cost of sales are recorded based on the gross amount received from the customer for products sold and the amount paid to the vendor for products purchased. However, for certain products or services, such as the sale of insurance 48

contracts and customised photo books, HEMA acts as an agent and consequently records the amount of commission income in its net sales. Net sales exclude value-added taxes. 2.5 cost of sales Cost of sales includes the net purchase price of the products sold and other costs incurred in bringing the inventories to their present location and condition. These costs include costs of purchasing, styling, quality control, storing, rent, salaries and transporting products to the extent it relates to bringing the inventories to their present location and condition. The depreciation costs are allocated to the inventory, however when the inventory is sold the depreciation costs (of the costs mentioned above) are recorded under depreciation and not under the cost of sales. 2.6 finance cost Finance cost covers all interest income and expense attributable to the reporting year on a timeproportionate basis, by reference to the principal outstanding and at the effective interest rate applicable. This item also includes gains and losses on hedging activities and amortisation of capitalised financing costs. 2.7 income taxes Income tax expense represents the sum of the tax currently payable and deferred tax. current tax The tax currently payable is based on taxable profit for the year. Taxable profit differs from profit as reported in the consolidated income statement because it excludes items of income or expense that are taxable or deductible in other years and it further excludes items that are never taxable or deductible. The Company s liability for current tax is calculated using tax rates that are applicable for the year. deferred tax Deferred tax is recognised on differences between the carrying amounts of assets and liabilities in the consolidated financial statements and the corresponding tax bases used in the computation of taxable profit, and is accounted for using the balance sheet liability method. Deferred tax liabilities are generally recognised for all taxable temporary differences, and deferred tax assets are generally recognised for all deductible temporary differences to the extent that it is probable that taxable profits will be available against which those deductible temporary differences can be utilised. Such assets and liabilities are not recognised if the temporary difference arises from goodwill or from the initial recognition (other than in a business combination) of other assets and liabilities in a transaction that affects neither the taxable profit nor the accounting profit. The carrying amount of deferred tax assets is reviewed at each balance sheet date and reduced to the extent that it is no longer probable that sufficient taxable profits will be available to allow all or part of the asset to be recovered. Deferred tax assets and liabilities are measured at the tax rates that are expected to apply in the year in which the liability is settled or the asset realised, based on tax rates (and tax laws) that have been enacted or substantively enacted by the balance sheet date. The measurement of deferred tax liabilities and assets reflects the tax consequences that would follow from the manner in which the Company expects, at the reporting date, to recover or settle the carrying amount of its assets and liabilities. Deferred tax assets and liabilities are offset when there is a legally enforceable right to set off current tax assets against current tax liabilities and when they relate to income taxes levied by the same taxation authority and the Company intends to settle its current tax assets and liabilities on a net basis. current and deferred tax for the year Current and deferred tax are recognised as an expense or income in the income statement, except when they arise from the initial accounting for a business combination. In the case of a business combination, the tax effect is taken into account in calculating goodwill or in determining the excess of the acquirer s interest in the net fair value of the acquiree s identifiable assets, liabilities and contingent liabilities over the cost of the business combination. 49

2.8 property, plant and equipment Items of property, plant and equipment are stated at cost less accumulated depreciation and impairment losses. Cost includes expenditures that are directly attributable to the acquisition or construction of an asset. Subsequent expenditures are capitalised only when it is probable that future economic benefits associated with the item will flow to the Company and the costs can be measured reliably. All other subsequent expenditures represent repairs and maintenance and are expensed as incurred. Depreciation is computed using the straight-line method based on the estimated useful lives of the items of property, plant and equipment, taking into account the estimated residual value. Where an item of property, plant and equipment comprises major components having different useful lives, each such part is depreciated separately. The assets useful lives are reviewed, and adjusted if appropriate, at each balance sheet date. The estimated useful lives of property, plant and equipment are: leasehold improvements technical installations hardware furniture & fixtures trucks & cars 10 years 10 years 3 5 years 7 years 7 years Assets that are expected to have a shorter useful life are depreciated in this shorter period. Depreciation of assets subject to finance leases and leasehold improvements is calculated on a straight-line basis over either the lease or the estimated useful life of the asset, whichever is shorter. 2.9 leasing Leases are classified as finance leases whenever the terms of the lease transfer substantially all the risks and rewards of ownership to the lessee. All other leases are classified as operating leases. Assets held under finance leases are initially recognised as assets of HEMA at their fair value at the inception of the lease or, if lower, at the present value of the minimum lease payments. The corresponding liability to the lessor is included in the balance sheet as a finance lease obligation. Lease payments are apportioned between finance charges and reduction of the lease obligation so as to achieve a constant rate of interest on the remaining balance of the liability. Finance charges are charged directly to the income statement unless they are directly attributable to qualifying assets in which case they are capitalised in accordance with HEMA s policy on borrowing costs. Operating lease payments are recognised as an expense on a straight line basis over the lease term, except where another systematic basis is more representative of the time pattern in which economic benefits from the leased asset are consumed. Contingent rentals arising under operating leases are recognised as an expense in the year in which they are incurred. 2.10 intangible assets goodwill and impairment of goodwill Goodwill represents the excess of the cost of an acquisition over the Company s interest in the net fair value of the identifiable assets, liabilities and contingent liabilities at the date of acquisition, and is carried at cost less accumulated impairment losses. For the purposes of impairment testing, goodwill is allocated to each of the cash generating units (or groups of cash generating units) that is expected to benefit from the synergies of a business combination. Each unit (or group of units) to which the goodwill is allocated, represents the lowest level within the Company at which the goodwill is monitored for internal management purposes and that is not larger than a segment. Cash-generating units to which goodwill has been allocated are tested 50

for impairment annually, or more frequently when there is an indication that the cash-generating unit may be impaired. An impairment loss is recognised for the amount by which the cash-generating unit s carrying amount exceeds its recoverable amount. The recoverable amount is the higher of a cash generating unit s fair value less costs of disposal and its value in use. An impairment loss is allocated first to reduce the carrying amount of the goodwill and then to the other assets of the cash generating unit pro rata on the basis of the carrying amount of each asset in the cash-generating unit. An impairment loss recognised for goodwill is not reversed in subsequent years. other intangible assets Intangible assets acquired in a business combination are identified and recognised separately from goodwill where they satisfy the definition of an intangible asset and their fair values can be measured reliably. The cost of such intangible assets is their fair value at the acquisition date. brand Brands with indefinite useful lives are tested for impairment on an annual basis. As a result of the accounting for business combinations the Company has determined that it cannot reliably measure separately the individual fair values of the complementary assets that together comprise the HEMA brand. Therefore, the brand name HEMA was recognised as a single asset. The Company has determined that the useful life of the HEMA brand is indefinite based on the history and reputation of the brand. The brand name HEMA is tested for impairment annually, or more frequently if there are indications that the brand name HEMA might be impaired. The brand name HEMA does not individually generate cash flows and should therefore not be tested for impairment as a single asset. The HEMA brand name is tested together with the CGUs that were tested for goodwill purposes. For more information, refer to note 12. customer relationships The customer relationships have a definite useful life and are carried at cost less accumulated amortisation and impairment. Amortisation is calculated using the straight-line method to allocate the cost of customer relationships over their estimated useful lives. computer software and others Acquired computer software licenses are capitalised on the basis of the costs incurred to acquire and bring to use the specific software. These costs are amortised over their estimated useful lives. Costs associated with developing or maintaining computer software programs are recognised as an expense as incurred. Costs that are directly associated with the development of identifiable and unique software products controlled by the Company, and that will probably generate economic benefits exceeding costs beyond one year, are recognised as intangible assets. Key money has a definite useful life and is carried at cost less accumulated amortisation and impairment. Amortisation is calculated using the straight-line method to allocate the key money over their estimated useful lives. Amortisation is computed using the straight-line method based on the estimated useful lives, which are as follows: customer relationships software other 10 13 years 3 10 years 3 12 years For software, lives in excess of six years are used only when management is satisfied that the lives of these assets will clearly exceed that year. The useful lives are reviewed, and adjusted if appropriate, at each balance sheet date. HEMA assesses on a yearly basis whether there is any indication that other intangible assets may be impaired. impairment of non-current assets other than goodwill and brand HEMA assesses on a yearly basis whether there is any indication that non-current assets may be impaired. If indicators of impairment exist, HEMA estimates the recoverable amount of the asset. Where it is not possible 51

to estimate the recoverable amount of an individual asset, HEMA estimates the recoverable amount of the cash-generating unit to which it belongs. Individual stores are considered separate cash-generating units for impairment testing purposes. Stores are evaluated based on store-ebitda. Corporate costs and assets are not allocated to individual stores, as these items cannot be allocated on a reasonable and consistent basis to individual stores. The recoverable amount is the higher of an asset s fair value less costs of disposal and its value in use. In assessing value in use, the estimated future cash flows are discounted to their present value using a post-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset. An impairment loss is recognised in the consolidated income statement for the amount by which the asset s carrying amount exceeds its recoverable amount. In subsequent years, HEMA assesses whether indications exist that impairment losses previously recognised for non-current assets other than goodwill may no longer exist or may have decreased. If any such indication exists, the recoverable amount of that asset is recalculated and its carrying amount is increased to the revised recoverable amount, if required. The increase is recognised in operating result as an impairment reversal. An impairment reversal is recognised only if it arises from a change in the assumptions that were used to calculate the recoverable amount. The increase in an asset s carrying amount due to an impairment reversal is limited to the depreciated amount that would have been recognised had the original impairment not occurred. 2.11 inventories Inventories are stated at cost or net realisable value, whichever is lower. Cost consists of all costs of purchase, cost of conversion and other costs incurred in bringing the inventories to their present location and condition, net of vendor allowances attributable to inventories. The cost of the majority of inventories is determined using a moving average price method. Net realisable value represents the estimated selling price for the inventories less all estimated costs of completion and costs necessary to make the sale. Inventories are recognised in the balance sheet when the significant risks and rewards of ownership of the goods have been transferred to HEMA. 2.12 financial assets Regular purchases and sales of financial assets are recognised on the trade-date the date on which the group commits to purchase or sell the asset. Financial assets are derecognised when the group has transferred substantially all risks and rewards of ownership. loans and receivables Trade receivables, loans, and other receivables that have fixed or determinable payments that are not quoted in an active market are classified as loans and receivables. Loans and receivables are intitially measured at fair value and subsequently measured at amortised cost using the effective interest method, less any impairment. Interest income is recognised by applying the effective interest rate, except for short-term receivables when the recognition of interest would be immaterial. 2.13 cash and cash equivalents Cash and cash equivalents include cash on hand, deposits held at call with banks, other short-term highly liquid investments with original maturities of three months or less, and bank overdrafts. Bank overdrafts are shown within current liabilities on the balance sheet. 2.14 financial liabilities and equity instruments issued by the company classification as debt or equity Debt and equity instruments are classified as either financial liabilities or as equity in accordance with the substance of the contractual arrangement. 52

equity instruments An equity instrument is any contract that evidences a residual interest in the assets of an entity after deducting all of its liabilities. Equity instruments issued by HEMA are recorded at the proceeds received, net of direct issue costs. financial liabilities Financial liabilities are classified as either financial liabilities at fair value through profit and loss or other financial liabilities. The other financial liabilities including borrowings, are initially measured at fair value, net of transaction costs. They are subsequently measured at amortised cost using the effective interest method, with interest expense recognised on an effective yield basis. Other financial liabilities relating to financial lease agreements are stated at the net present value of future lease instalments. Gift cards (included in other liabilities) are carried at nominal value minus a non-redemption percentage, which is based on historical redemption figures. Each year at balance sheet date, the nonredemption percentage will be reassessed and adjusted accordingly. All other liabilities are carried at the nominal value. Repayment commitments on long term liabilities that are payable within one year are included under short-term borrowings. derecognition of financial liabilities The Company derecognises financial liabilities when, and only when, the Company s obligations are discharged, cancelled or they expire. 2.15 derivative financial instruments The Company enters into derivative financial instruments to manage its exposure to interest rate and foreign exchange rate risk, including foreign exchange forward contracts and interest rate swaps. Further details of derivative financial instruments are disclosed in note 27. Derivatives are initially recognised at fair value at the date a derivative contract is entered into and are subsequently remeasured to their fair value at each balance sheet date. The resulting gain or loss is recognised in profit or loss immediately unless the derivative is designated and effective as a hedging instrument, in which event the timing of the recognition in profit or loss depends on the nature of the hedge relationship. A derivative is presented as a non-current asset or a non-current liability if the remaining maturity of the instrument is more than 12 months and it is not expected to be realised or settled within 12 months. Other derivatives are presented as current assets or current liabilities. hedge accounting HEMA designates certain cash flow hedging instruments. These hedges are accounted for as cash flow hedges. The effective portion of changes in the fair value of derivates that are designated and qualify as cash flow hedges are recognised in other comprehensive income and allocated to the other reserves within equity. The gain or loss relating to the ineffective portion is recognised immediately in the income statement, and is included in the other financial gains and losses in the income statement. Hedge accounting is discontinued when the Company revokes the hedging relationship, the hedging instrument expires or is sold, terminated, or exercised, or no longer qualifies for hedge accounting. Amounts deferred in equity are recycled in the income statement in the years when the hedged item is recognised in the income statement, in the same line of the income statement as the hedged item. Any cumulative gain or loss deferred in equity at that time remains in equity and is recognised when the forecast transaction is ultimately recognised in the income statement. When a forecast transaction is no longer expected to occur, the cumulative gain or loss that was deferred in equity is recognised immediately in the income statement. 53

2.16 pensions and other post- and longterm-employment benefits The net liabilities recognised in the consolidated balance sheet for defined benefit plans represent the present value of the defined benefit obligations. Contributions to defined contribution plans are recognised as an expense when they are due. Postemployment benefits provided through industry multi-employer plans, managed by third parties, are generally accounted for under defined contribution criteria. For other long-term employee benefits, such as long-service awards, provisions are recognised on the basis of discount rates and other estimates that are consistent with the estimates used for the defined benefit obligations. For these provisions all remeasurements are recognised in the consolidated income statement immediately. 2.17 provisions Provisions are recognised when the Company has a present (legal or constructive) obligation as a result of past events, it is more likely than not that an outflow of resources will be required to settle the obligation and the amount can be reliably estimated. The amount recognised is the best estimate of the expenditure required to settle the obligation. Provisions are discounted whenever the effect of the time value of money is significant. Restructuring provisions are recognised when the Company has approved a detailed formal restructuring plan, and the restructuring either has commenced or has been announced to those affected by it. The expected settlements within one year are included under short term provisions. 2.18 share-based payments Key personnel of HEMA has been offered the opportunity to invest in Dutch Lion Coop. The investment consists of a membership rights component that is recognised as a share-based payment transaction in accordance with IFRS 2. In addition part of the investment consists of a loan component that is also disclosed by HEMA in accordance with IAS 24 Related party transactions for the loan components issued to management. In accordance with IFRS 2, that provides guidance on whether share-based payment transactions should be accounted for as equity-settled or cash-settled share based payment transactions, HEMA has the opinion that the membership right instruments purchased under the Management Equity Plan qualify as an equity settled share-based payment transaction. The instrument is not settled by HEMA as the investment is not in equity instruments of HEMA. Dutch Lion Coop, the ultimate parent of the Company, has the obligation to settle the investment in equity instruments of Dutch Lion Coop. In accordance with IFRS 2, HEMA has the obligation to disclose any information regarding share based payments settled by its shareholder. For equity settled share based payment arrangements, the fair value of membership right instruments is measured at the grant date and, if applicable the fair value is recognised as an expense with a corresponding increase recognised in equity. The fair value of the membership right instruments purchased under the Management Equity Plan is equal to the difference between (i) the fair market value of the membership right instruments at the date of grant; and (ii) the subscription price payable for the membership right instruments acquired. Where vesting conditions are applicable the expense is recognised over the vesting period of the instruments granted. 3 critical accounting estimates and judgements The preparation of HEMA s consolidated financial statements requires management to make a number of estimates and assumptions. These estimates and assumptions affect the reported amounts of assets and liabilities, of income and expenses and the disclosure of contingent assets and liabilities. Estimates and assumptions may differ from future actual results. The estimates and assumptions that management considers most critical and that have a significant inherent risk of causing a material adjustment are the following: impairment of non-current assets (note 11 and 12). Determining whether non-current assets are impaired requires an estimation of the recoverable amount of the asset (or cash generating unit). For this purpose the Company is required to make estimations and assumptions in respect of future cash flows and the 54

appropriate discount rate. The carrying amount of non-current assets that are subject to an annual impairment test is 614.7 million (goodwill) and 394.4 million (brand name). income taxes (note 10). HEMA has significant tax loss carry forward positions. Significant judgement is required in determining the consolidated provision for income taxes and the recoverable amounts of deferred tax assets related to tax loss carry forward positions. Currently no deferred tax asset is recognised. The carrying amount of the deferred tax liability is 99.9 million. inventories (note 14). The obsolete stock provision amounts to 12.4 million (2013: 9.1 million). Judgement is required to determine the size of the provision. employee benefits (note 22). The employee benefit obligations consists of a jubilee plan ( 6.0 million) and early retirement plans ( 0.9 million). The calculations for the jubilee plan are determined by independent actuaries. The early retirement plans are calculated based on Company assumptions. financial derivatives (note 27). The balance sheet includes financial derivatives mainly currency forward contracts and interest rate swaps, with a net fair value of 5.4 million (asset). The fair value of financial instruments that are not traded in an active market (for example over-the-counter derivatives) is determined on the basis of valuation techniques performed by the counterparty. share-based payment (note 29). HEMA calculates the fair value of the share based payment components of the Management Equity Plan. Significant judgement is required to determine the equity component in this Plan. contigent liabilities (note 31). In September 2014 two franchisees initiated arbitration with the support of the VAB, which is the association of franchisees representing the collective interest of almost all of HEMA s franchisees. These two franchisees claim they are entitled to a portion of HEMA s Marketing Strategy Fund ( MSF ). This fund has been set up by HEMA in 2008 and is funded by contributions from HEMA suppliers and used for sales promotion. In March 2015 HEMA received their official statement of claim, in which the two franchisees claim an amount of 44.7 million excluding interest, on behalf of all franchisees, over the years 2009 to 2015 and a corresponding share of future MSF contributions. Judgement is required to determine the likelihood of the potential outcome. Based on information currently available, HEMA is unable to provide an estimate of the expected outcome. 55

4 adjusted EBITDA from February 3, 2014 up to and including February 1, 2015 (in million euros) 2014 2013 bridge to adjusted EBITDA operating result (EBIT) (91.4) 59.7 depreciation and amortisation 57.5 56.5 impairments 120.0 1.0 EBITDA 86.1 117.2 management & oversight fees 1.7 1.8 pre-opening costs 1.8 1.5 restructuring costs 10.1 - legal expenses 1.0 - remodelling expenses 2.4 - adjusted EBITDA 103.1 120.5 For a definition of adjusted EBITDA, please refer to the definitions paragraph at the end of this report. 5 segment reporting Operating segments are reported in a manner consistent with the internal reporting provided to the chief operating decision-maker. The chief operating decision-maker, who is responsible for allocating resources and assessing performance of the operating segments, has been identified as the Chief Executive Officer and the Chief Financial Officer. The CODM periodically reviews the Company s performance, primarily focused on the sales through retail stores in regions. The Company identified the following five reporting segments: The Netherlands Belgium and Luxembourg France Germany other The reporting segment other includes: bakeries financial services e-commerce sales in the Netherlands (home deliveries and wholesale) retail store sales in Spain and the UK other Segment performance is evaluated based on net sales and adjusted EBITDA per segment, however head office and logistics costs are not allocated to operating segments, as these costs cannot be allocated to stores on a consistent and reasonable basis. For more information on adjusted EBITDA, please refer to the definitions paragraph. Although the France and Germany segments do not meet the quantitative thresholds required by IFRS 8 for reportable segments, management has concluded that these segments should be reported, as they are closely monitored by the CODM. 56

from February 3, 2014 up to and including February 1, 2015 (in million euros) 2014 2013 net sales by region The Netherlands 846.4 882.6 Belgium and Luxembourg 142.5 143.5 France 55.9 39.0 Germany 12.2 11.1 other 20.3 15.1 total net sales 1,077.2 1,091.3 adjusted EBITDA by region The Netherlands 162.9 181.2 Belgium and Luxembourg 31.1 33.6 France 10.4 8.2 Germany 0.9 0.7 other 27.6 26.6 total adjusted store EBITDA 232.9 250.3 head office (95.4) (95.3) logistics (37.5) (34.7) other 3.1 0.2 total adjusted EBITDA 103.1 120.5 The adjusted EBITDA of the other segment is based on the intersegment sales (2014: 49.0 million) and external sales. The total net sales does not include the intersegment sales within the segment other, as these sales are recognized in the respective segment as external sales. The following table shows the non-current assets by country. Please note that the non-current assets by country are including corporate assets, such as head offices and logistics. As a result this information is not prepared on the same basis as the net sales and adjusted EBITDA by region. (in million euros) February 1 2015 February 2 2014 The Netherlands 1,116.4 1,258.7 Belgium & Luxembourg 86.1 88.2 France 24.7 22.8 Germany 3.1 3.3 other 8.3 7.4 total non-current assets 1,238.6 1,380.4 57

6 net sales from February 3, 2014 up to and including February 1, 2015 (in million euros) 2014 2013 2012 sales to retail customers 788.7 786.9 820.4 sales to franchisees 272.6 289.3 314.7 other sales 15.9 15.1 17.8 net sales 1,077.2 1,091.3 1,152.9 from February 3, 2014 up to and including February 1, 2015 (in million euros) 2014 2013 2012 apparel 364.0 377.4 403.9 household goods & personal care 368.9 365.8 390.8 food & catering 292.8 294.2 290.3 services & other 51.5 53.9 67.9 net sales 1,077.2 1,091.3 1,152.9 During the year, some articles may shift between product categories. These shifts are retrospectively adjusted on the figures of 2013. The figures of 2012 are unchanged as a result of product category changes in 2014. 7 cost of sales The cost of sales can be specified as follows: from February 3, 2014 up to and including February 1, 2015 (in million euros) 2014 2013 2012 net purchase value 535.7 540.9 581.1 labour costs 35.7 35.6 37.7 transportation costs 4.5 3.8 3.3 rents 4.6 4.4 4.5 other general and administrative expenses 5.5 4.9 5.3 total cost of sales 586.0 589.6 631.9 58

8 operating expenses The operating expenses can be specified by nature as follows: from February 3, 2014 up to and including February 1, 2015 (in million euros) 2014 2013 2012 (restated) salaries 150.9 154.3 159.0 taxes and social securities 29.7 29.0 26.5 employee benefit expenses 12.3 12.7 11.7 other personnel expenses 6.6 6.9 7.5 total labour costs 199.5 202.9 204.7 housing and rents 124.9 118.1 111.7 other general expenses 72.8 67.4 68.3 other income and expense (2.2) (3.9) (2.4) depreciation and amortisation 57.5 56.5 51.8 impairments 120.0 1.0 1.8 restructuring costs 10.1 - - total operating expenses 582.6 442.0 453.9 The housing and rents expenses includes 4.3 million sublease income. The employee benefit expenses mainly relate to defined contribution plans. For more information see note 22. 9 finance costs from February 3, 2014 up to and including February 1, 2015 (in million euros) 2014 2013 2012 interest income (0.1) (0.1) (0.5) interest expense cash interest expense 48.9 39.8 34.6 non cash interest expense 30.5 32.3 29.4 amortised finance costs 17.3 4.0 3.8 other financial expense (0.3) 0.4 4.3 total finance costs 96.3 76.4 71.6 Interest income is attributable to the interest on cash and cash equivalents. The cash interest expense is attributable to the interest on borrowings (see note 19), financial liabilities, and outstanding balances on the revolving credit facility. The non-cash interest is attributable to the interest on the shareholder loan (see note 20). The non-cash interest is added to the principal of the shareholder loan. As a result of the refinancing of the borrowings, 12.9 million of unamortised finance costs related to the previous borrowings were recorded in the profit and loss in 2014. The previous borrowings were settled earlier than the due date. Refer to note 19 for more information about the refinancing. 59

10 income taxes The fiscal unity of which HEMA is part, is headed by the Company s ultimate shareholder Dutch Lion Coöperatief U.A. The fiscal unity consists of Dutch Lion Coöperatief U.A., Dutch Lion B.V., HEMA B.V., HEMA Bakkerijen B.V., HEMA Financiering B.V., HEMA Financial Services B.V., HEMA Bondco I B.V. and HEMA Bondco II B.V. All taxes for the fiscal unity are paid by HEMA. The current tax paid in these consolidated financial statements mainly relate to the income taxes for HEMA Belgium and the fiscal unity. As a result of losses in Dutch Lion B.V. and Dutch Lion Coop, HEMA records the share in current taxes of Dutch Lion B.V. and Dutch Lion Coop as a payable to or receivable from these entities (refer to note 28). The other tax positions in these consolidated financial statements, such as deferred taxes, only relate to the taxes for HEMA and its subsidiaries. current taxes The current tax asset of 1.7 million relates to the fiscal unity Dutch Lion Coöperatief U.A. The current tax liability of 2.8 million mainly relates to HEMA Belgium B.V. income tax recognised in profit or loss The following table specifies the current and deferred tax components of income taxes as recognised in the consolidated income statement. from February 3, 2014 up to and including February 1, 2015 (in million euros) 2014 2013 2012 (restated) current income taxes domestic taxes - 0.8 (8.5) foreign taxes Asia (0.1) (0.1) - Europe (1.4) (1.4) (1.3) total current tax expense (1.5) (0.7) (9.8) deferred income taxes domestic taxes - 1.0 2.1 foreign taxes Europe - - - total deferred tax expense - 1.0 2.1 total income taxes (1.5) 0.3 (7.7) effective income tax rate HEMA s effective tax rate in the consolidated income statement differs from the statutory income tax rate of the Netherlands, which is 25 percent in both 2014 and 2013. The following table reconciles the statutory income tax rate of the Netherlands with the effective income tax rate as shown in the consolidated income statement. 60

from February 3, 2014 up to and including February 1, 2015, (in million euros) 2014 2013 result before income taxes (187.7) (16.7) income tax expense at statutory rate 46.9 (25.0%) 4.2 (25.0%) adjustments to arrive at effective income tax rate: rate differential (local statutory rates versus the statutory rate of the Netherlands) effect of different tax rates of subsidiaries operating in different jurisdictions. (0.5) 0.3% (0.5) 3.0% loss carry forward not recognised (14.6) 7.8% (0.7) 4.2% non-deductible and other items (33.3) 17.8% (2.7) 16.0% total income taxes (1.5) 0.8% 0.3 (1.8%) deferred income tax The significant components of deferred income tax assets and liabilities as of February 1, 2015 and February 2, 2014 are as follows: (in million euros) February 1 2015 February 2 2014 February 3 2013 (restated) post-employment and other employee benefits 1.5 1.5 1.6 property, plant & equipment 2.3 2.2 1.8 revaluation of payables in foreign currencies - - 0.4 total gross deferred tax asset 3.8 3.7 3.8 unrecognised deferred tax assets - - - total recognised deferred tax assets 3.8 3.7 3.8 tax losses and tax credits 17.1 8.1 9.2 unrecognised tax losses and tax credits (17.1) (8.1) (9.2) total recognised tax losses and tax credits - - - total net tax assets position 3.8 3.7 3.8 brand 98.6 98.6 98.6 customer relationships 2.8 3.8 4.9 revaluation of payables in foreign currencies 1.1 - - fair value gains through other comprehensive income 1.2 - - total deferred tax liability 103.7 102.4 103.5 net deferred tax liability 99.9 98.7 99.7 61

Deferred income tax assets and liabilities are offset in the consolidated balance sheet when there is a legally enforceable right to offset current tax assets against current tax liabilities and when the deferred income taxes are levied by the same fiscal authority. For 2014, the recognised deferred tax assets of 3.8 million have been offset with the deferred tax liability relating to the customer relationships and revaluation of payables in foreign currencies of 5.1 million (which consists of 1.2 million of deferred tax liabilities through other comprehensive income). This results in a net deferred tax liability of 1.3 million. Together with the deferred tax liability relating to the HEMA brand of 98.6 million, a total deferred tax liability of 99.9 million is presented as non-current liabilities in the consolidated balance sheet. See the table below: (in million euros) February 1 2015 February 2 2014 February 3 2013 deferred tax assets - - - deferred tax liabilities 99.9 98.7 99.7 net deferred tax liability 99.9 98.7 99.7 Refer to the table below when the deferred taxes are expected to be recovered: (in million euros) February 1 2015 February 2 2014 deferred tax assets deferred tax assets to be recovered after more than 12 months 3.8 2.2 deferred tax assets to be recovered within 12 months - 1.5 3.8 3.7 deferred tax liabilities deferred tax liabilities to be recovered after more than 12 months 100.3 101.4 deferred tax liabilities to be recovered within 12 months 3.4 1.0 103.7 102.4 deferred tax liability (net) 99.9 98.7 As of February 1, 2015 HEMA had unused tax losses, for which no deferred tax asset is recognised in the balance sheet of a total nominal amount of approximately 66.5 million (2013: 26.4 million) which is expiring as from 2014 and onwards. Significant judgement is required in determining whether deferred tax assets are realisable. HEMA determines this on the basis of expected taxable profits arising from the reversal of recognised deferred tax liabilities and on the basis of budgets and cash flow forecasts. Where utilization is not considered probable, deferred tax assets are not recognised. 62

11 property, plant and equipment (in million euros) leasehold improvements technical installations hardware furniture and fixtures trucks and cars work in progress total as of January 29, 2012 at cost 84.4 80.1 40.3 298.3 8.6 9.0 520.7 accumulated depreciation and impairment losses (35.3) (36.9) (34.5) (236.7) (3.1) - (346.5) carrying amount 49.1 43.2 5.8 61.6 5.5 9.0 174.2 additions at cost 18.7 16.1 6.2 18.5 1.7 6.7 67.9 depreciation (8.4) (8.2) (3.0) (18.1) (1.4) - (39.1) impairment losses charged to profit & loss (0.1) (0.1) - (1.6) - - (1.8) transfer from WIP 2.5 1.6 0.2 2.8 - (7.1) - disposals at cost (1.1) (0.6) - (28.1) (0.3) - (30.1) accumulated depreciation 1.1 0.6-28.1 0.3-30.1 as of February 3, 2013 at cost 104.5 97.2 46.7 291.7 10.0 8.5 558.7 accumulated depreciation and impairment losses (42.7) (44.6) (37.5) (228.5) (4.2) - (357.5) carrying amount 61.8 52.6 9.2 63.2 5.8 8.5 201.2 additions at cost 13.2 12.7 1.7 16.5 0.9 6.9 51.9 depreciation (9.6) (9.6) (3.2) (18.4) (1.5) - (42.3) impairment losses charged to profit & loss (0.2) (0.3) - (0.5) - - (1.0) transfer from WIP 1.9 1.7 0.5 2.2 - (6.3) - disposals at cost (0.4) (0.4) (11.8) (17.3) (1.2) - (31.1) accumulated depreciation 0.4 0.4 11.8 17.3 1.2-31.1 as of February 2, 2014 at cost 119.2 111.2 37.1 293.1 9.7 9.1 579.4 accumulated depreciation and impairment losses (52.1) (54.1) (28.9) (230.1) (4.5) - (369.7) carrying amount 67.1 57.1 8.2 63.0 5.2 9.1 209.7 63

(in million euros) leasehold improvements technical installations hardware furniture and fixtures trucks and cars work in progress total as of February 2, 2014 at cost 119.2 111.2 37.1 293.1 9.7 9.1 579.4 accumulated depreciation and impairment losses (52.1) (54.1) (28.9) (230.1) (4.5) - (369.7) carrying amount 67.1 57.1 8.2 63.0 5.2 9.1 209.7 additions at cost 5.2 5.3 0.7 11.7-5.6 28.5 depreciation (10.9) (10.1) (3.3) (17.8) (1.3) - (43.4) impairment losses charged to profit & loss (1.0) (1.0) - - - - (2.0) transfer from WIP 1.7 2.0 0.4 2.3 - (7.2) (0.8) disposals at cost (0.1) - (0.1) (0.2) (0.2) - (0.6) accumulated depreciation 0.1-0.1 0.2 0.2-0.6 as of February 1, 2015 at cost 126.0 118.5 38.1 306.9 9.5 7.5 606.5 accumulated depreciation and impairment losses (63.9) (65.2) (32.1) (247.7) (5.6) - (414.5) carrying amount 62.1 53.3 6.0 59.2 3.9 7.5 192.0 In 2014 2.0 million was recognised as impairment (2013 1.0 million). In 2014 0.8 million of tangible assets in work in progress was transferred to intangible assets. For the contractual commitments for the acquisition of property, plant and equipment, see note 31. The most important component of work in progress is unfinished projects related to HEMA s stores. Vehicles and machinery includes the following amounts where the group is a lessee under a finance lease: (in million euros) February 1 2015 February 2 2014 capitalised finance lease at cost 9.5 9.7 accumulated depreciation (5.6) (4.5) carrying amount 3.9 5.2 The company leases various vehicles and machinery under non-cancellable finance lease agreements. The lease terms are between 5 and 7 years, and ownership of the assets lies within the company. Lease rentals amounting to 1.6 million (2013: 1.8 million) relating to lease of vehicles are included in the income statement on depreciation and finance costs (note 8 and 9). Essentially all of the property, plant and equipment has been pledged to secure borrowings of the Company (note 19). 64

12 intangible assets (in million euros) goodwill brand customer relationships as of January 29, 2012 software other intangible assets under development total at cost 732.7 394.4 43.7 68.6 4.6 2.8 1,246.8 accumulated amortisation and impairment losses - - (19.7) (52.7) (1.5) - (73.9) carrying amount 732.7 394.4 24.0 15.9 3.1 2.8 1,172.9 additions at cost - - - 7.9 3.4 3.2 14.5 amortisation - - (4.3) (8.2) (0.5) - (13.0) transfer from assets under development - - - 3.1 - (3.1) - disposals at cost - - - - - - - accumulated amortisation - - - - - - - as of February 3, 2013 at cost 732.7 394.4 43.7 79.6 8.0 2.9 1,261.3 accumulated amortisation and impairment losses - - (24.0) (60.9) (2.0) - (86.9) carrying amount 732.7 394.4 19.7 18.7 6.0 2.9 1,174.4 additions at cost - - - 3.2 1.1 4.3 8.6 amortisation - - (4.3) (9.3) (0.7) - (14.3) transfer from assets under development - - - 2.6 - (2.6) - disposals at cost - - - (1.6) - - (1.6) accumulated amortisation - - - 1.6 - - 1.6 as of February 2, 2014 at cost 732.7 394.4 43.7 83.8 9.1 4.6 1,268.3 accumulated amortisation and impairment losses - - (28.3) (68.6) (2.7) - (99.6) carrying amount 732.7 394.4 15.4 15.2 6.4 4.6 1,168.7 65

(in million euros) goodwill brand customer relationships as of February 2, 2014 software other intangible assets under development total at cost 732.7 394.4 43.7 83.8 9.1 4.6 1,268.3 accumulated amortisation and impairment losses - - (28.3) (68.6) (2.7) - (99.6) carrying amount 732.7 394.4 15.4 15.2 6.4 4.6 1,168.7 additions at cost - - - 2.6 0.1 4.2 6.9 amortisation - - (4.3) (9.0) (0.9) - (14.2) impairment losses charged to profit & loss transfer from assets under development (118.0) - - - - - (118.0) - - - 2.7 0.6 (2.5) 0.8 disposals at cost - - - (0.1) - - (0.1) accumulated amortisation - - - 0.1 - - 0.1 as of February 2, 2014 at cost 732.7 394.4 43.7 89.0 9.8 6.3 1,275.9 accumulated amortisation and impairment losses (118.0) - (32.6) (77.5) (3.6) - (231.7) carrying amount 614.7 394.4 11.1 11.5 6.2 6.3 1,044.2 In 2014 118.0 million was recognised as impairment on goodwill (2013: nil). See the goodwill paragraph below for more information. In 2014 0.8 million of tangible assets in work in progress was transferred to intangible assets. impairment test for goodwill and HEMA brand Goodwill recognised relates to the acquisition of HEMA (old). Goodwill acquired in the business combination is allocated, at acquisition, to the cash generating units ( CGUs ) or group of CGUs expected to benefit from the business combination. The carrying amounts of goodwill allocated to CGUs within HEMA are as follows: goodwill per CGU February 1 2015 February 2 2014 The Netherlands 570.6 688.6 Belgium & Luxembourg 43.6 43.6 Germany 0.5 0.5 total HEMA 614.7 732.7 66

The Company has determined that the useful life of the HEMA brand is indefinite based on the history and reputation of the brand. The brand name HEMA is tested for impairment annually, or more frequently if there are indications that the brand name HEMA might be impaired. The brand name HEMA does not individually generate cash flows and should therefore not be tested for impairment as a single asset. The HEMA brand name is tested together with the CGUs that were tested for goodwill purposes. The carrying amounts of brand allocated to CGUs within HEMA are as follows: brand per CGU February 1 2015 February 2 2014 The Netherlands 370.9 370.9 Belgium & Luxembourg 23.5 23.5 total HEMA 394.4 394.4 CGUs to which goodwill has been allocated are tested for impairment annually or more frequently if there are indications that a particular CGU might be impaired. The recoverable amount of each CGU is determined based on fair value less costs of disposal calculations (level 3). Fair value less costs of disposal calculations use post-tax cash flow projections into perpetuity. The cash flow projections are based on assumptions approved by company management. The continuing value is determined based on a steady state set of assumptions for the cash flows in the last forecast year and applying a terminal value multiple to those cash flows. To calculate the recoverable amount, the actual results for 2014 are used as a starting point. On top of these results, key assumptions are used to calculate the cashflows for the next years. The Company prepared a forecast for the next 10 years, in order to regain a steady financial state. The key assumptions used in financial year 2014 for fair value less costs of disposal calculations are (see below): 2014 2013 The Netherlands Belgium & Luxembourg The Netherlands Belgium & Luxembourg gross profit (average) next 10 years 47.3% 59.8% 47.1% 60.2% after that 47.4% 60.0% 47.1% 60.5% sales growth rate (average) next 10 years 1.3% 1.9% 1.5% 2.0% after that 0.5% 0.5% 1.5% 1.5% discount rate 6.3% 6.6% 7.6% 8.0% The calculation of fair value less cost to sell for the cash generating units is most sensitive to the following assumptions: Gross margins: the Company determined budgeted gross margin based on past performance and its expectations for the market development. The discount rate is based on the (post-tax) weighted average cost of capital ( WACC ): the market-based weighted average of the after-tax cost of debt and cost of equity. The target long-term level of debt and equity in HEMA s capital structure is estimated using the median of market-based values for debt and equity based on a peer group of comparable listed companies. The cost of equity for both CGUs is calculated based on the Capital Asset Pricing Model ( CAPM ), including (1) a risk free rate based on a 30-year country specific government bonds, (2) an estimated company specific levered beta (based on the median beta of the peer group) multiplied by the excess market return and (3) an additional risk premium that takes into account the illiquidity and size of each CGU as compared to the peer group of listed companies. 67

The cost of debt for both CGUs is calculated by adding a (default) spread to the risk-free rate. The spread has been derived by deducting the country specific risk free rate from the yields for listed bonds with similar credit ratings as the listed peer group companies. Growth rate for the next ten years: future growth rates are displayed in the table above and differ by geography. The growth rate of 1.3% for CGU NL is lower than the average growth rates achieved in the years 2008-2012, but higher when including 2013 and 2014. Management believes that the lost sales in the last two years should not be reflected in the future growth expectations, since these years are not representative of HEMA s anticipated future performance. HEMA management believes that the future sales performance will pick up thanks to the improved economic circumstances and the impact from commercial measures taken. Growth rate after ten years: management set the long term growth rate on 0.5%. outcome of the impairment test on the goodwill The calculation of the fair value less cost of disposal at year-end 2014 for CGU NL led to a recoverable amount of 1,004.9 million, which is lower than the carrying amount of 1,122.9. As the recoverable amount is lower than the carrying amount, an impairment charge of 118.0 million is recognised. The key factors in triggering this impairment were: The lower base assumption for sales in the Netherlands since the latest financial year is used as a basis for assumptions in future cash flows. The current sales level is 23.5 million lower than 2007 (the year that HEMA was taken over). The 2007 level is expected to be reached from 2017 onwards. The increase in SG&A - compared to 2007 this represents an amount of 26.1 million. sensitivity analysis key assumptions The key assumptions are mainly based on historical achieved results (excluding the last two years) and in line with long term expected inflation developments. However, in the case of certain unexpected future developments, currently not reflected in the cash flow projections, the carrying amount might exceed the recoverable amount. For that reason, the Company included a sensitivity analysis. A lower sales growth versus expected has a significant impact on the recoverable amount. For example a 1.0%-point lower growth rate for CGU NL for the next ten years leads to an additional impairment loss of 235.0 million. This impairment loss is including an offset of costs which are highly correlated with the level of sales. The impact of 1.0% lower gross profit percentage for CGU NL for the next ten years leads to an additional impairment loss of 96.0 million. In case of a higher discount rate of 1.0%-point, the recoverable amount of CGU NL will be lower than the carrying amount, leading to an additional impairment loss of 140.0 million. customer relationships As a result of the accounting for business combinations, customer relationships relating to franchise agreements and insurance policies have been recognised in 2007. The customer relationships are amortised over the expected economic life time of the contracts being 10 respectively 13 years. The remaining expected economic life time of the customer relationships relating to franchise agreements and insurance policies are 2.4 years and 5.4 years. other Other intangibles relates to key money. In France it is necessary to acquire the lease rights (e.g. key money) from the previous tenant before the full benefits of a lease agreement can be enjoyed. The lease rights give the holder the right to a free and peaceful use of the premises, the right to rent control and rights relating to the duration of the lease and renewal rights. When a new tenant takes over a property, the lease rights are sold to the new tenant. Key money is amortised over the expected economic life time of the lease contracts being 10 to 12 years. intangible assets under development The most important component of intangible assets under development are unfinished IT projects. All of the intangible assets represented by legal titles or of similar status have been pledged to secure borrowings of the Company (note 19). 68

13 other non-current assets (in million euros) February 1 2015 February 2 2014 other 2.4 2.0 total other non-current assets 2.4 2.0 The other non-current assets mainly relate to warranties paid for rental contracts in Germany and France. 14 inventories (in million euros) February 1 2015 February 2 2014 February 3 2013 trade inventory 195.4 152.3 152.8 raw materials 2.1 2.3 2.2 other inventories 1.8 2.1 2.7 199.3 156.7 157.7 valuation allowance (12.4) (9.1) (9.9) total inventories 186.9 147.6 147.8 The raw materials and other inventories concern food, photo and packaging materials. An amount of 0.3 million has been recognised as write-offs of inventories in the consolidated income statement (2013: 0.4 million). The valuation allowance for inventories is 12.4 million (2013: 9.1 million). All of the inventories are pledged to secure borrowings of the Company (note 19). 15 trade and other receivables (in million euros) February 1 2015 February 2 2014 February 3 2013 trade receivables 35.8 37.5 39.6 provision for impairment (0.9) (0.8) (0.7) trade receivables - net 34.9 36.7 38.9 receivables from related parties 4.2 3.8 3.6 prepayments 16.8 14.3 18.0 other receivables 12.7 8.7 8.5 total trade and other receivables 68.6 63.5 69.0 Refer to note 28 for more information on the related party receivable. 69

The ageing of the trade receivables was as follows: (in million euros) February 1 2015 February 2 2014 February 3 2013 0 30 days 35.1 37.0 39.0 31 60 days 0.1 0.1 0.1 61 90 days - - 0.1 91 180 days 0.1 0.1 - > 181 days 0.5 0.3 0.4 total trade receivables 35.8 37.5 39.6 Movements on the provision for impairment were as follows: (in million euros) February 1 2015 February 2 2014 February 3 2013 beginning of the year (0.8) (0.7) (0.4) additions (0.1) (0.2) (0.3) used - 0.1 - end of the year (0.9) (0.8) (0.7) The maximum exposure to credit risk at the reporting date is the carrying value of each class of receivable mentioned above. The Company does not hold any collateral as security. All of the trade and other receivables are pledged to secure borrowings of the Company (note 19). 16 other current financial assets (in million euros) February 1 2015 February 2 2014 derivative financial instruments 8.8 0.3 total other current financial assets 8.8 0.3 The derivative financial instruments at February 1, 2015, relates to the fair value of the foreign exchange contracts. Refer to note 27 for more information on these instruments. 17 cash and cash equivalents (in million euros) February 1 2015 February 2 2014 February 3 2013 cash on hand 15.2 15.6 15.6 cash in banks and cash equivalents 42.7 160.3 146.7 total cash and cash equivalents 57.8 175.9 162.3 bank overdrafts (24.7) - - total cash, cash equivalents and bank overdrafts 33.1 175.9 162.3 70

Cash and cash equivalents include all cash on hand balances, cheques, debit and credit receivables in transfer. Cash on hand mainly relates to cash in tills. The bank overdrafts relate to bank accounts with negative balances within the cash pool. For reporting purposes, the negative balances on accounts in the cash pool cannot be offset with positive balances. In total, the cash pool has a positive balance of 2.9 million. All of the bank accounts are pledged to secure borrowings of the Company (note 19). 18 equity attributable to shareholders shares and share capital As of February 1, 2015, the Company has 90,000 authorised shares with a par value of 1, of which 18,000 are fully paid. This is unchanged compared to previous year. share premium The total amount paid by the shareholders at the issuance of the shares was 108.9 million. The share premium recognised in 2014 amounting to 221.4 million consists of the capital contribution by Dutch Lion which is subsequently settled with part of the shareholder loan (see note 20). In 2009 and 2011 a similar sett-off was executed for an amount of 80.0 million and 219.3 million respectively. As of February 1, 2015, the total share premium contribution amounts to 629.6 million. legal reserves HEMA is a company incorporated under Dutch law. In accordance with B2 DCC, legal reserves have to be established in certain circumstances. The cash flow hedging reserve is a legal reserve. Legal reserves are not available for distribution to the Company s shareholders. If the cash flow hedging reserve has a negative balance, distributions to the Company s shareholders are restricted to the extent of the negative balance. (in thousand euros) cash flow hedging reserve other reserves currency translation reserve total balance as of February 3, 2013 (restated) (7.9) 0.8 - (7.1) cash flow hedges fair value gains 2.8 - - 2.8 transfers to inventory 2.4 - - 2.4 transfers to income statement 1.5 - - 1.5 currency translation difference - - 0.1 0.1 balance as of February 2, 2014 (1.2) 0.8 0.1 (0.4) cash flow hedges fair value gains 4.6 - - 4.6 transfers to inventory 0.2 - - 0.2 transfers to income statement 1.0 - - 1.0 currency translation difference - - 0.1 0.1 currency translation difference (1.0) (0.2) - (1.2) balance as of February 1, 2015 3.6 0.6 0.2 4.4 Items in the statement above are disclosed net of tax. The total change in 2014 in the cash flow hedging reserve amounts to 4.8 million (2013: 6.7 million). 71

Gains and losses on forward contracts recognised in cash flow hedging reserve will be released to the income statement in the next year. The cash flow hedging reserve amounting to 3.6 million is the fair value of the foreign exchange forward contracts and the unamortised part of the hedging reserve related to the restructured interest rate swap. other reserves The other reserves relate to remeasurements of employee benefit obligations. retained earnings (in million euros) at February 3, 2013 (restated) (54.0) net profit for the year (16.4) change in other reserves - at February 2, 2014 (70.4) net profit for the year (189.2) change in other reserves - at February 1, 2015 (259.6) 19 borrowings February 1, 2015 February 2, 2014 non-current current portion non-current current portion (in million euros) portion portion borrowings 700.8-755.0 10.8 total 700.8-755.0 10.8 The fair values of these borrowings, corresponding derivatives and the foreign exchange and interest rate risk management policies applied by HEMA are disclosed in note 27. borrowings On June 17, 2014 ( the Issue Date ), HEMA Bondco I B.V. issued (i) 250.0 million aggregate principal amount of its Senior Secured Floating Rate Notes due 2019 and (ii) 315.0 million aggregate principal amount of its 6.25% senior secured fixed rate notes due 2019; HEMA Bondco II B.V. issued 150.0 million aggregate principal amount of its 8.50% Senior Notes due 2019. HEMA Bondco I B.V. used the proceeds of the Senior Secured Notes to make a proceeds loan to the Company; and HEMA Bondco II B.V. used the proceeds of the Senior Notes to make a proceeds loan to the Company. On the Issue Date, HEMA entered into a Revolving Credit Facility Agreement with a syndicate of banks, pursuant to which a Revolving Credit Facility was made available for drawing in the amount of 80.0 million. The Company drew on the Revolving Credit Facility on the Issue Date in the amount of 20.0 million due to the seasonality of its business, as the Company reaches a low point in its annual cash cycle in the summer months. The Company rolled over approximately 3.3 million in outstanding and undrawn bank guarantees into the Revolving Credit Facility. On the Issue Date, the Company used the proceeds of the proceeds loans from HEMA Bondco I B.V. and HEMA Bondco II B.V. ( 715.0 million), together with cash on hand ( 59.8 million) and the drawings under the 72

Revolving Credit Facility ( 20.0 million), to: (a) repay in full, and thereby terminate, its existing credit facilities in the amount of 783.3 million; and (b) pay a significant part of fees and expenses incurred in connection with the transactions described above and the issuance of the Senior PIK Notes by Dutch Lion B.V., which were approximately 18.0 million (of which 10.9 million was paid on the issue date), including (i) fees, commissions and discounts payable in connection with the issuance of the notes, (ii) fees relating to the Revolving Credit Facility, (iii) professional and legal fees, (iv) financial advisory fees, (v) costs associated with unwinding or amending and extending existing hedging arrangements and (vi) other transaction costs. 16.2 million of the transaction fees are allocated to HEMA B.V. and 1.8 million are allocated to Dutch Lion B.V. On the issue date the revolving credit facility and the senior secured notes are secured by first-ranking security interests, including: Dutch law governed pledges over all the shares of the Senior Secured Notes Issuer, the Senior Notes Issuer, the Company and each of the other Senior Secured Notes Guarantors; Dutch law governed omnibus pledge agreements in respect of the assets of the Senior Secured Notes Issuer s, the Senior Notes Issuer, the Company and each of the other Senior Secured Notes Guarantors; Belgian law governed pledges over bank accounts, receivables and business and a business pledge mandate, each in relation to HEMA Belgie B.V.; Luxembourg law governed pledge over bank accounts of HEMA Belgie B.V.; and Dutch law governed security over intercompany receivables (including preferred equity certificates) owed to Dutch Lion B.V. by HEMA B.V. The amount and due dates of the facilities as of February 1, 2015 are as follows: principal (in million euros) due within 1 year between 1 and 5 years after 5 years February 1 2015 senior secured floating rate notes proceeds loan senior secured fixed rate notes proceeds loan June 2019-250.0-250.0 June 2019-315.0-315.0 senior notes proceeds loan December 2019-150.0-150.0 revolving credit facility December 2018 - - - - total - 715.0-715.0 deferred financing costs (3.2) (11.0) - (14.2) total (3.2) 704.0-700.8 The senior secured floating rate notes carry a floating interest rate of 3-months EURIBOR plus a spread of 5.25%. The senior secured fixed rate notes and the senior notes carry a fixed rate of 6.25% and 8.50% respectively. The interest for the floating rate notes are paid on a quarterly basis. The fixed rate notes are paid semi-annually. 73

The amount and due dates of the facilities as of February 2, 2014 were as follows: principal (in million euros) due within 1 year between 1 and 5 years after 5 years February 2 2014 facility b July 2015 0.5 24.8-25.3 extended facility b December 2017 4.9 236.4-241.3 facility c July 2016 0.4 17.9-18.3 extended facility c December 2017 5.0 243.3-248.3 facility d January 2017-2.0-2.0 extended facility d January 2018-78.0-78.0 extended mezzanine facility April 2018-120.0-120.0 total 10.8 722.4-733.2 rolled up interest mezzanine - 47.0-47.0 10.8 769.4-780.2 deferred financing costs (4.0) (10.4) - (14.4) total 6.8 759.0-765.8 All borrowings have to be repaid at maturity. Fees and other costs directly related to the issuance of the proceeds loans are deferred and are amortised over the term of maturity of the loans. group credit facility HEMA has a revolving credit facility (RCF) of 80.0 million, to expire in December 2018. exposure to market interest rates The exposure of the Company s borrowings (excluding the shareholder loan, finance leases and bank overdrafts) to interest rate changes and the contractual re-pricing dates before and after the effect of the interest rate swap on the balance sheet dates are as follows: (in million euros) 2014 2015 2016 2017 2018 senior secured floating rate notes proceeds loan 250.0 250.0 250.0 250.0 250.0 interest rate swaps (200.0) (200.0) - - - total 50.0 50.0 250.0 250.0 250.0 HEMA has hedged an amount of 200.0 million with interest rate swaps, until June 2016. As a result exposure increases from that point. It is expected that the company will enter into new swaps in order to keep the volatility to interest rate changes on a low level. However, future contracts are not taken into account, since they do not exist at balance sheet date. covenants The facilities contain customary covenants that place restrictions on disposals, mergers, acquisitions, investments and the incurrence of debt by the Company and its subsidiaries. In addition, the revolving credit facility is subject to one financial covenant and related to a minimum amount of EBITDA of 70.0 million as defined in the revolving credit facility agreement. The financial covenant only applies in case of drawing on the RCF of 16.0 million or more. The covenants were applicable as of June 17, 2014. In financial year 2014 the Company has not been in breach with these covenants. Substantially all of HEMA s assets have been pledged to secure the facilities. 74

20 shareholder loan At January 31, 2015, Dutch Lion B.V. made a contribution of 221.4 million to the Company by way of conversion of the shareholder loan into share premium. As a result, the outstanding amount at year-end 2014 is nil. The shareholder loan had a principal of 269.6 million and carried a fixed interest rate of 13.5% per annum. The interest was added to the principal and will only be paid in cash at the election of the Company s Board of Managing Directors or at redemption. The shareholder loan had a maturity of 49 years and was due June 30 2056. Fees and other costs directly related to the issuance of the shareholder loan were deferred and amortised over 9 years. The shareholder loan was, with respect to payment rights, redemption and rights of liquidation, winding up and dissolution, subordinated to all other present and future obligations of the Company. The movements in the shareholder loan are as follows: (in million euros) February 1 2015 February 2 2014 net opening balance 193.1 168.7 deferred financing costs 0.8 1.1 gross opening balance 193.9 169.8 rolled up interest 27.5 24.1 conversion with share premium contribution (221.4) - gross closing balance - 193.9 deferred financing costs - (0.8) net closing balance - 193.1 21 other non-current financial liabilities (in million euros) February 1 2015 February 2 2014 February 3 2013 financial lease liabilities 2.9 4.1 4.7 derivative financial instruments 3.4 6.4 11.6 long term lease incentives 15.7 14.4 14.5 total other financial liabilities 22.0 24.9 30.8 For more information on derivative financial instruments, see note 27. 75

financial lease liabilities Financial lease liabilities are payables as follows: (in million euros) February 1, 2015 February 2, 2014 future minimum lease payments interest portion present value of minimum lease payments future minimum lease payments interest portion present value of minimum lease payments within one year 1.6 0.1 1.6 1.8 0.1 1.7 between one and five years 3.3 0.5 2.8 4.6 0.8 3.8 after five years 0.2 0.1 0.1 0.5 0.2 0.3 total 5.1 0.7 4.5 6.9 1.1 5.8 current portion 1.6 1.7 non-current portion 2.9 4.1 4.5 5.8 The financial leases primarily relate to trucks used for logistic operations. Lease terms range from 6 to 7 years. At the time of entering into finance lease agreements, the commitments are recorded at their present value using the interest rate implicit in the lease, if this is practicable to determine; if not, the operating company specific interest rate applicable for long-term borrowings is used. During financial year 2014, new financial lease contracts are discounted at a rate of 7.6 percent (financial year 2013: 7.8 percent). The Company has options to purchase the trucks for a nominal amount at the end of the lease agreements. For some contracts the Company has the obligation to purchase the trucks for a nominal amount at the end of the lease term. This obligation is included in the financial lease liabilities. The Company s obligations under finance leases are secured by the lessors title to the leased assets. 22 employee benefits (in million euros) February 1 2015 February 2 2014 February 3 2013 (restated) balance sheet obligations for retirement benefit obligations 1.0 1.3 2.0 other long-term benefits 6.0 5.8 5.9 7.0 7.1 7.9 current portion 1.1 1.2 1.3 non-current portion 5.9 5.9 6.6 income statement charge for retirement benefit obligations 0.1 (0.1) - other long-term benefits 0.8 0.7 1.5 0.9 0.6 1.5 76

retirement benefit obligations HEMA operates unfunded defined benefit plans for qualifying employees of its subsidiaries in The Netherlands and Belgium. Under the plans, the employees are entitled to retirement benefits as a percentage of final salary on attainment of an early retirement age of 61 to 63. No other post-retirement benefits are provided to these employees. For the plan in the Netherlands, the expected expiry date is the first quarter of 2015. Movements in the present value of the defined benefit obligation in the current year were as follows: (in million euros) February 1 2015 February 2 2014 February 3 2013 (restated) opening defined benefit obligation 1.3 2.0 3.8 current service costs 0.1 (0.2) (0.1) interest costs - 0.1 0.1 0.1 (0.1) - remeasurements experience gains - - (0.8) assumptions losses / (gains) - - - - - (0.8) contributions from plan participants - - 0.3 liabilities extinguished on settlements (0.2) (0.2) (1.1) benefits paid (0.2) (0.4) (0.2) closing defined benefit obligation 1.0 1.3 2.0 The amounts classified under liabilities extinguished on settlement relate to lump sum payments to BpfD ( stichting bedrijfstakpensioenfonds voor de detailhandel ). HEMA pays a lump sum to BpfD the moment an employee decides to make use of the plan. After settlement, HEMA has no further legal or constructive obligation to pay further amounts should the BpfD not pay the employee benefits. Management does not expect substantial changes in the contribution to the plan. multi-employer plan The Company has a multi-employer plan. Virtually all employees of HEMA are covered by this plan that is financed by employees and employer. The plan is insured with BpfD and is a defined contribution scheme in respect of the retirement pensions. Paid pensions are related to the employee s average salary and the total employment period covered by the plan. HEMA has no further payment obligations once the contributions have been paid. The contributions are recognised as employee benefit expense when they are due. long term employee benefits The company provides a jubilee plan for all active employees under the collective labour agreement. The most recent actuarial valuations of the present value of the long term employee benefits were carried out at February 1, 2015 by independent actuaries. 77

Movements in the present value of the jubilee plan obligation in the current year were as follows: (in million euros) February 1 2015 February 2 2014 February 3 2013 opening obligation 5.8 5.9 5.0 current service costs 0.3 0.3 0.3 interest costs 0.6 0.2 0.2 actuarial losses (0.1) 0.2 1.0 benefits paid (0.6) (0.8) (0.6) closing obligation 6.0 5.8 5.9 The amounts recognised in the income statement are as follows: (in million euros) 2014 2013 2012 current service costs 0.3 0.3 0.3 interest costs 0.6 0.2 0.2 actuarial losses (0.1) 0.2 1.0 total, included in labour costs and (note 8) and financial expenses (note 9) 0.8 0.7 1.5 The principal assumptions used for the purposes of the actuarial valuations were as follows: (in million euros) February 1 2015 February 2 2014 February 3 2013 discount rate(s) 1.5% 2.6% 2.6% expected rate(s) of salary increase 2.0% 2.0% 2.0% 78

five year history of retirement benefit obligation and jubilee plan The assumptions used in the actuarial calculations of the defined benefit require a large degree of judgement. Actual experience may differ from the assumptions made. The following table provides a summary of the defined benefit obligations and adjustments arising from changes in experience and assumptions over the past five years: (in million euros) 2014 2013 2012 2011 2010 present value of defined benefit obligations retirement benefit obligation 1.0 1.3 2.0 3.8 5.4 jubilee plan 6.0 5.8 5.9 5.0 5.0 total obligation 7.0 7.1 7.9 8.8 10.4 experience and assumptions (gains) / losses on defined benefit obligations retirement benefit obligation - - (0.8) (0.3) (0.2) jubilee plan 0.3 0.2 1.0 0.1 (0.0) total loss / (gain) 0.3 0.2 0.2 (0.2) (0.2) 23 provisions The table below specifies the change in total provisions (current and non-current): (in million euros) restruc turing as of February 2, 2014 current portion - non-current portion 0.1 0.1 charged / credited to the income statement additions charged to income 11.1 used during the year (9.1) release to income (1.0) interest accretion - closing carrying amount 1.1 as of February 1, 2015 current portion 1.1 non-current portion - closing carrying amount 1.1 79

restructuring On February 17, 2014, HEMA announced a restructuring of its head office, bakeries and distribution centre to streamline the organization and allow better support for future commercial programs. This resulted in a redundancy of approximately 90 FTE across the head office, bakeries and distribution centre. The provision represents the present value of management s best estimate of the direct costs of the restructuring that are not associated with the ongoing activities of HEMA, including termination benefits. However, the actual termination benefits may differ from the expected amount as currently included in the provision. The total outstanding provision is expected to be settled within a year. 24 trade and other payables (in million euros) February 1 2015 February 2 2014 February 3 2013 trade payable 172.0 174.8 177.5 accrued expenses 75.2 59.9 57.4 payroll taxes, social security and VAT 8.4 33.1 13.2 amounts due to related parties 14.8 16.6 15.0 payroll accruals 39.3 40.4 41.8 other 10.8 11.6 10.7 total trade and other payables 320.5 336.4 315.6 Refer to note 28 for more information on the amount due to related parties. 25 other current financial liabilities (in million euros) February 1 2015 February 2 2014 financial lease liabilities current portion 1.6 1.7 interest 7.0 3.5 finance fees 0.6 - derivative financial instruments - 0.5 total other financial liabilities 9.2 5.7 80

26 cash flow The following table presents a reconciliation between the cash flow statements and the cash and cash equivalents as presented in the consolidated balance sheet: (in million euros) February 1 2015 February 2 2014 cash, cash equivalents and bank overdrafts at the beginning of the year 175.9 162.3 net cash from operating, investing and financing activities (144.1) 13.6 exchange gains on cash and cash equivalants 1.3 - cash, cash equivalents and bank overdrafts at the end of the year 33.1 175.9 For the purposes of the cash flow statement, cash and cash equivalents include cash on hand and in banks net of outstanding bank overdrafts. Cash and cash equivalents at the end of the financial year as shown in the cash flow statement can be reconciled to the related items in the balance sheet. 27 financial risk management and financial instruments financial risk management HEMA s activities expose it to a variety of financial risks: market risk (including foreign exchange risk and interest rate risk), credit risk and liquidity risk. Management focuses on the unpredictability of financial markets and seeks to minimise potential adverse effects on HEMA s financial performance and capital. HEMA uses derivative financial instruments solely for the purpose of hedging exposure which corresponds to managing the interest rate and foreign exchange rate risks arising from the Company s operations and its sources of finance. HEMA does not enter into derivative financial instruments for speculative purposes. HEMA s primary market risk exposures relate to foreign currency exchange rate and interest rate. In order to manage the risk arising from these exposures, various financial instruments may be utilised. foreign exchange rate risk The international purchase activities expose HEMA to a foreign cash flow exchange risk. It is HEMA s policy to cover foreign exchange transaction exposure in relation to existing firm purchase commitments. To protect the value of future foreign currency cash flows, HEMA enters into forward contracts. Foreign currency sensitivity analysis Refer to the table below for the impact of a 10% decrease or increase of the EURO versus foreign currencies. (in million euros) EURO EURO increases decreases versus FX versus FX + 10% - 10% impact on assets (8.7) 10.7 liabilities (1.1) 1.1 equity (6.9) 8.7 income statement (0.7) 0.9 81

interest rate risk HEMA s interest rate risk arises primarily from its debt. To manage interest rate risk, HEMA has an interest rate management policy aimed at reducing volatility in its interest expense. HEMA s financial position is largely fixed by long-term debt issues and the use of derivative financial instruments such as interest rate swaps. As at February 1, 2015, after taking into account the effect of interest rate swaps, approximately 93 percent of HEMA s long term borrowings are at a fixed rate of interest. Interest rate sensitivity analysis As a result of the interest rate swap, changes in EURIBOR only have an impact on the non-hedged part of the debt (7 percent). A change of 1%-point in EURIBOR has an impact of 0.5 million on financial expenses and cash flow. credit risk Credit risk arises from cash and cash equivalents, derivative financial instruments as well as wholesale customers including outstanding receivables and committed purchase transactions. For banks and financial institutions only independently rated parties with a minimum rating of A are accepted. For wholesale customers contracts of guarantee are used. Also the credit quality is monitored bi-weekly. HEMA has no significant concentrations of credit risk. Sales to retail customers are settled in cash or by use of a credit card of one of the major credit card companies. The majority of HEMA s past due but not impaired financial assets as of February 1, 2015, consists of receivables and is past due less than three months. The concentration of credit risk with respect to receivables is limited as it relates to the deliveries to the franchisees (there is no significant backlog in payments). As a result, management believes there is no further credit risk provision required in excess of the normal individual impairment analysis as performed as of February 1, 2015. For further discussion on HEMA s receivables, see note 15. liquidity risk HEMA manages its liquidity risk on a consolidated basis with cash provided from operating activities being a primary source of liquidity in addition to debt issuances in the capital markets, committed and uncommitted credit facilities, and available cash. HEMA manages short-term liquidity based on projected cash flows on a daily basis. As of February 1, 2015, HEMA has a multi-currency revolving credit facility of 80.0 million, excluding outstanding bank guarantees of 3.7 million, which can be drawn on for working capital and general corporate purposes and 33.1 million of cash balances available to manage its liquidity. Based on the current operating performance and liquidity position, the Company believes that cash provided by operating activities and available cash balances will be sufficient for working capital, capital expenditures, interest payments and scheduled debt repayment requirements for the next 12 months and the foreseeable future. The following tables summarise the maturity profile of the Company s derivative and non-derivative financial liabilities as of February 1, 2015, and February 2, 2014, respectively, based on contractual undiscounted payments. (in million euros) net carrying amount contractual cash flows within 1 year between 1 and 5 years after 5 years total February 1, 2015 non derivative financial liabilities 1,021.3 367.0 895.3-1,262.3 borrowings 700.8 46.5 895.3-941.8 trade and other payables 320.5 320.5 - - 320.5 derivative financial liabilities 3.4 2.3 1.1-3.4 derivatives inflow (including interest) - (0.3) (0.2) - (0.4) derivatives outflow (including interest) - 2.6 1.3-3.8 1,024.7 369.3 896.4-1,265.7 82

(in million euros) net carrying amount contractual cash flows within 1 between 1 after total February 2, 2014 year and 5 years 5 years non derivative financial liabilities 1,102.2 397.1 927.3-1,324.4 borrowings 755.0 49.9 927.3-977.2 short term borrowings 10.8 10.8 - - 10.8 trade and other payables 336.4 336.4 - - 336.4 derivative financial liabilities 6.6 6.3 0.8-7.1 derivatives inflow (including interest) - (60.7) (0.5) - (61.2) derivatives outflow (including interest) - 67.0 1.3-68.3 1,108.8 403.4 928.1-1,331.5 All instruments held at the reporting date and for which payments are already contractually agreed have been included. Amounts in foreign currency have been translated using the reporting date closing rate. Cash flows arising from financial instruments carrying variable interest payments have been calculated using the forward curves interest rates as of February 1, 2015, and February 2, 2014, respectively. capital risk management The Company s primary objective when managing capital is optimisation of its debt and equity balance in order to sustain the future development of the business and to maximise shareholder value. The Company is restricted by capital requirement. The Company cannot directly or indirectly, redeem, retire or otherwise withdraw any capital contributions made to the capital reserves. Nor can the Company convert such capital contributions into shareholder loans or redeem, purchase, retire or otherwise acquire for consideration any shares or warrants issued. The capital structure of the Company consists of the following elements: (in million euros) note February 1 2015 February 2 2014 total borrowings (excluding unamortised finance costs) 18 715.0 780.2 financial lease liabilities 20 4.5 5.8 less: cash, cash equivalents and bankoverdrafts 16 (33.1) (175.9) net debt 686.4 610.1 shareholder loan (excluding unamortised finance costs) 19-193.9 equity 17 374.4 337.5 total capital 1,060.8 1,141.5 83

financial instruments - categories The following tables present the carrying amounts for each of the categories of financial instruments as at February 1, 2015: (in million euros) loans and receivables assets at fair value through profit and loss derivatives used for hedging total February 1, 2015 assets as per balance sheet trade and other receivables excluding pre-payments 51.8 - - 51.8 derivative financial instruments - - 8.8 8.8 cash and cash equivalents 57.8 - - 57.8 total 109.6-8.8 118.4 (in million euros) liabilities at fair value through profit and loss derivatives used for hedging other financial liabilities at amortised costs total February 1, 2015 liabilities as per balance sheet borrowings (non-current) - - 700.8 700.8 derivative financial instruments - 3.4-3.4 trade and other payables - - 320.5 320.5 bank overdrafts - - 24.7 24.7 total - 3.4 1,046.0 1,049.4 The following tables present the carrying amounts for each of the categories of financial instruments as at February 2, 2014: (in million euros) loans and receivables assets at fair value through profit and loss derivatives used for hedging total February 2, 2014 assets as per balance sheet trade and other receivable excluding prepayments 49.2 - - 49.2 cash and cash equivalents 175.9 - - 175.9 total 225.1 - - 225.1 84

(in million euros) liabilities at fair value through profit and loss derivatives used for hedging other financial liabilities at amortised costs total February 2, 2014 liabilities as per balance sheet shareholder loan - - 193.1 193.1 borrowings (current) - - 10.8 10.8 borrowings (non-current) - - 755.0 755.0 derivative financial instruments - 6.9-6.9 trade and other payables - - 336.4 336.4 total - 6.9 1,295.3 1,302.2 financial instruments - fair values The following table presents the fair values of the Company s financial instruments, compared to the carrying amounts as included on the balance sheet. February 1, 2015 February 2, 2014 (in million euros) carrying fair value carrying fair value amount amount trade and other receivable excluding prepayments 51.8 51.8 49.2 49.2 total loans and receivables 51.8 51.8 49.2 49.2 cash and cash equivalents 57.8 57.8 175.9 175.9 derivative financial instruments 8.8 8.8 0.3 0.3 total financial assets 118.4 118.4 225.4 225.4 February 1, 2015 February 2, 2014 (in million euros) carrying fair value carrying fair value amount amount shareholder loan - - 193.1 193.1 borrowings (current) - - 10.8 10.8 borrowings (non-current) 700.8 529.8 755.0 739.8 trade and other payables 320.5 320.5 336.4 336.4 bank overdrafts 24.7 24.7 - - total liabilities at amortised cost 1,046.0 875.0 1,295.3 1,280.1 derivative financial instruments 3.4 3.4 6.9 6.9 total financial liabilities 1,049.4 878.4 1,302.2 1,287.0 Of HEMA s financial instruments, only derivatives are measured and recognised on the balance sheet at fair value using level 2. These derivatives are valued using quoted prices as input. These quoted prices are observable in the market, either directly (i.e. as prices) or indirectly (derived from prices). The fair value of the 85

derivative instruments is based on the rates and quotations obtained from third parties, credit risk and the company s own risk of non-performance. The carrying amount of receivables, cash and cash equivalents, accounts payable, the revolving credit facility and other current financial assets and liabilities approximate their fair values because of the short-term nature of these instruments and, for receivables, because of the fact that any recoverability loss is reflected in an impairment loss. There is no active liquid market for the Company s previous bank loans and consequently the fair value of the bank loans cannot be determined based on quoted market prices. Therefore, the fair value of the previous bank loans at February 2, 2014, has been estimated using information on current secondary trading levels. As the terms of the proceeds loans mirror the respective Notes, the fair value of the proceeds loans are set equal to the fair value of the respective Notes. The Notes are available for trading on a public market, however, as there is no active liquid market, the fair value of the notes are based on the average of bid and ask quotes (level 2). derivatives The number and maturities of derivative contracts, the fair values and the qualification of the instruments for accounting purposes are presented in the table below: February 1, 2015 February 2, 2014 (in million euros) # contracts assets liabilities # contracts assets liabilities interest rate swaps cash flow hedges within one year - - - 1 - (5.0) between one and five years 1 - (3.4) 1 - (1.4) after five years - - - - - - total interest rate swaps cash flow hedges 1 - (3.4) 2 - (6.4) foreign currency forwards cash flow hedges within one year 118 8.8-62 0.3 (0.5) between one and five years - - - - - - after five years - - - - - - foreign currency forwards cash flow hedges 118 8.8-62 0.3 (0.5) total derivative financial instruments 119 8.8 (3.4) 64 0.3 (6.9) Interest rate swaps are used to hedge cash flow EURIBOR interest rate risk on floating rate debt. For the current interest rate swap, HEMA has opted not to apply hedge accounting. Foreign currency forwards designated as cash flow hedges are used to hedge the variability in future cash flows denominated in foreign currencies. Due to timing differences in receiving the foreign currencies and the actual payment date, foreign exchange results might occur. In 2014 a gain of 2.1 million was recorded in the profit and loss, due to these timing differences (2013: 0.6 million gain). 86

The notional amounts of the derivative financial instruments outstanding as of February 1, 2015, are summarised below. The summary is based on the currency of the exposures being hedged and includes the gross amount of all notional values for outstanding contracts. (in million original currencies) HKD GBP USD EUR interest rate swaps within one year - - - - between one and five years - - - 200.0 after five years - - - - foreign currency forwards within one year 8.1-71.2 - between one and five years - - - - after five years - - - - As of the balance sheet date the forward contracts and interest rate swaps are valued at fair value. HEMA has opted for hedge accounting for its foreign exchange rate contracts. Fair value changes recognised in the income statement relate to the interest rate swap, for which hedge accounting was revoked as a result of a restructuring of the swap in June 2014. See note 18 for more information about fair value movements of derivative financial instruments. The stated value of the financial instruments is based on the mark-to-market value and is derived from the midmarket price as of the balance sheet date which is obtained from third parties. 28 related party transactions management and oversight fee Lion Capital Lion Capital LLP ( Lion Capital ) is a leading private equity firm focused on the consumer sector. Entities managed by and/or related to Lion Capital own, or have an economic interest in (derivatives related to) capital and loan instruments of HEMA, HEMA s parent Dutch Lion B.V. and/or HEMA s ultimate shareholder Dutch Lion Coop. HEMA and Lion Capital have entered into a monitoring and oversight agreement under which Lion Capital provides consultancy and advisory services for an annual advisory fee. Dutch Lion Coöperatief U.A. produces financial statements available for public use. intercompany balances within the Dutch Lion Coop group HEMA has intercompany balances with its parent companies as follows (see note 15 and 24): (in million euros) February 1 2015 February 2 2014 Dutch Lion Management B.V. 0.1 0.1 Dutch Lion Coöperatief U.A. 2.9 2.9 Dutch Lion B.V. (14.8) (16.7) Stichting Administratiekantoor Dutch Lion A 0.2 0.2 Stichting Administratiekantoor Dutch Lion B 0.6 0.4 Stichting Administratiekantoor Dutch Lion C 0.3 0.2 total intercompany (10.7) (12.9) 87

The amounts due from parent companies relate to finance costs and invoices that have been paid by HEMA on behalf of these companies. The amount payable to Dutch Lion B.V. relates to corporate income taxes paid by HEMA on behalf of the fiscal unity, which is partially settled with invoices paid by HEMA on behalf of Dutch Lion B.V. The balances will be settled at the time of exit and, accordingly, it is uncertain when the amounts will be settled. As a result, the amounts are presented under current assets and liabilities. shareholder loan with Dutch Lion B.V. HEMA s parent Dutch Lion B.V. issued a shareholder loan to the Company. The interest on this shareholder loan is added to the principal of the loan. At the end of 2014, the outstanding amount of the shareholder loan was converted to share premium. Refer to note 20 for more information. senior (secured) notes issued by HEMA Bondco I B.V. and HEMA Bondco II B.V. The Notes were issued by HEMA Bondco I B.V. and HEMA Bondco II B.V. ( the Issuers ), which are both 100% directly owned by Dutch Lion B.V. The proceeds are lent by the Issuers to HEMA on the same terms as those of the respective Notes. The agreements between HEMA and the Issuers provide that HEMA will ensure timely payments of Notes so that the Issuers can timely satisfy their obligations under indentures governing the Notes. For the amounts due relating the notes, refer to the tables below. (in million euros) February 1 2015 February 2 2014 HEMA Bondco I B.V. senior secured floating rate notes proceeds loan 250.0 - senior secured fixed rate notes proceeds loan 315.0 - HEMA Bondco II B.V. senior notes proceeds loan 150.0 - accrued interest on proceeds loans 6.4 - total 721.4 - (in million euros) 2014 2013 interest accrued for proceeds loans (income statement) 29.2 - interest paid for proceeds loans (cash flow statement) (22.8) - accrued interest on proceeds loans at year-end 6.4 - key management compensation Key management personnel are those persons having authority and responsibility for planning, directing and controlling the activities of the Company as a whole. The Company determined that key management personnel consists of members of the management board. The compensation paid or payable to key management for employee services is shown below: (in million euros) 2014 2013 salaries and other short-term employee benefits 1.7 2.5 termination benefits 0.1 - share based payments (see note 29) - - post-employment benefits (defined contribution) 0.3 0.3 2.1 2.8 These amounts are including a, temporary, tax imposed on salaries above 150.000 ( crisisheffing ). In 2014 HEMA has accrued 0.2 for this tax (2013: 0.2). 88

See note 18 to the company financial statements for information on the remuneration of the board of managing directors. supervisory board The remuneration of Mr. Darwent and Mrs. Minnick as members of the supervisory board is included in fees paid to Lion Capital. The remuneration with respect to 2014 for both Mr. Collee and Mr. Moberg as members of the supervisory board was 80 thousand euro in total (2013: 80 thousand euro in total). On top of their remuneration, travel expenses of Mr. Collee and Mr. Moberg are also reimbursed (if and when applicable). 29 share-based payment Following the acquisition of HEMA on 6 July 2007, circa 70 senior managers of HEMA were offered the possibility to invest in Dutch Lion Coop, the ultimate parent of the Company. Under the plan introduced in February 2008, eligible management was offered, subject to certain terms and conditions, an investment in financial instruments of Dutch Lion Coop at the same conditions as Lion Capital. In December 2008 the plan was amended to reflect the new fiscal legislation related to this investment. The outstanding rights before and after the amendments were equal to each other. At the same time, but not related, a relatively small amount of additional investment was offered to the senior managers that participated in the plan at the same conditions as the earlier investment. All financial instruments are issued through foundations (Dutch: administratiekantoren) that hold the voting rights of the underlying instruments. The members of the board of managing directors were part of the senior managers who were offered the possibility to invest. The investment contains a loan component and a membership right component. The investment in the loan component is disclosed by HEMA in accordance with IAS 24 Related party transactions. The membership right component falls under the scope of IFRS 2 Share based payments. The total amounts invested by senior management with respect to the plan are: (in million euros) February 1 2015 February 2 2014 amount of outstanding balances at beginning of the year 0.9 0.9 amounts purchased by senior management - 0.1 amounts sold by senior management (0.2) (0.1) amount of outstanding balances at the end of the year 0.7 0.9 According to IFRS 2 the membership right component of the investment is considered to be an equity settled share-based payment transaction, since HEMA has no obligation to settle the share-based payment transaction (Dutch Lion Coop the ultimate parent of the Company has the obligation to settle). HEMA has prepared a valuation of the investment of the managers at each grant date. The fair market value applied for the underlying membership rights is based on the shareholder value, which has been derived from the Enterprise Value ( EV ) for the Company. For the determination of the fair value, EV/EBITDA multiples are applied which are based on a market approach by using trading multiples of comparable companies as a benchmark. No expense with respect to the investment has been incorporated in the income statement. Although this does not directly relate to HEMA, this disclosure is made to comply with IFRS 2, as it relates to the ultimate parent company. 30 operating leases HEMA leases all of its stores, as well as distribution centres, offices and other assets, under operating lease arrangements. Various properties leased under operating leases are (partially) subleased to third parties. The aggregate amounts of HEMA s minimum lease commitments payable to third parties under non-cancellable operating lease contracts are disclosed in the table below (see next page). 89

(in million euros) February 1, 2015 February 2, 2014 discounted nominal discounted nominal within one year 96.5 99.6 94.9 98.5 between one and five years 300.9 360.4 272.5 337.3 after five years 227.9 375.3 221.6 414.8 total 625.3 835.3 589.0 850.6 At February 1, 2015, the lease payments are discounted with 6.3%, versus 7.6% last year. This decrease has an impact of 31.1 million on the aggregate amount. Based on last year s discount rates, the discounted amount would be 594.2 million. Commitments for rent exclude total sub-lease payments to be received amounting to 12.0 million (2013: 12.6 million). Certain store leases provide for contingent additional rentals based on a percentage of sales. Substantially all of the store leases have renewal options for additional terms. None of HEMA s leases impose restrictions on the ability of HEMA to pay dividends, incur additional debt, or enter into additional leasing arrangements. The annual costs of HEMA s operating leases are disclosed in the table below. (in million euros) 2014 2013 minimum rentals 92.3 87.4 sublease income (4.3) (4.3) total 88.0 83.1 31 commitments and contingencies The contracted capital expenditure and purchase commitments at the end of the reporting year but not yet incurred is as follows: (in million euros) purchase (volume) capital expendi- capital expendi- total commit ments ture commitments ture commitments P, P&E Intangible assets no later than 1 year 131.0 5.1 3.0 139.1 later than 1 year but no later than 5 years - - - - later than 5 years - - - - total 131.0 5.1 3.0 139.1 For the Netherlands, bank guarantees totalling of 3.7 million have been issued by HEMA mainly relating to the rent of the headquarters ( 1.3 million), the customs ( 1.1 million) and other ( 1.3 million). For France in total 0.4 million in bank guarantees have been issued. In total, at reporting date, HEMA has issued 4.1 million in bank guarantees. arbitration on Marketing Strategy Fund with HEMA s Franchisees In September 2014 two franchisees initiated arbitration with the support of the VAB, which is the association of franchisees representing the collective interest of almost all of HEMA s franchisees. These two franchisees claim they are entitled to a portion of HEMA s Marketing Strategy Fund ( MSF ). This fund has been set up by HEMA in 2008 and is funded by contributions from HEMA suppliers and used for sales promotion. In March 2015 90

HEMA received their official statement of claim, in which the two franchisees claim an amount of 44.7 million excluding interest, on behalf of all franchisees, over the years 2009 to 2015 and a corresponding share of future MSF contributions. Based on information currently available, HEMA is unable to provide an estimate of the expected outcome. 32 independent auditor s fee The independent auditor s fees paid per category can be summarised as follows: (In thousand euros) 2014 2013 audit of the financial statements 225.9 202.7 other audit engagements 25.4 23.7 tax consultancy 105.8 182.0 other non-audit engagements 720.7 - total 1,077.8 408.4 692.0 thousand of the other non-audit engagements relate to the high yield bond offering. 33 list of subsidiaries The following are HEMA s subsidiaries as of February 1, 2015. Unless otherwise indicated these are wholly owned consolidated subsidiaries. The Netherlands HEMA Bakkerijen B.V.*, Amsterdam HEMA Duitsland B.V.*, Amsterdam HEMA Financial Services B.V.*, Amsterdam HEMA Financiering B.V., Amsterdam Europe HEMA Belgie B.V.B.A.*, Ukkel, Belgium HEMA Deutschland GmBH, Essen HEMA GmbH & CO KG**, Essen ** HEMA France S.A.S., Paris, France HEMA Retail Limited, London, United Kingdom*** *** HEMA Spain S.L., Barcelona, Spain Rest of the world HEMA Far East Ltd., Hong Kong HEMA (Shanghai) trading Consultancy Co., Ltd., Shanghai, China * Pursuant to section 403 B2 DCC, HEMA has issued declarations of liability for these subsidiaries. ** HEMA GmbH & Co. KG, Essen, Germany, makes use of the exemption clause under Section 264b of the German Commercial Code regarding the preparation, auditing and publication of its financial statements. *** The entity opted for statutory audit exemption under s479a of the UK Companies Act 2006. 91

34 employees The table below shows the average number of employees and FTE for the years 2014 and 2013. number of employees and full-time equivalents 2014 2013 employees fte employees fte The Netherlands 9,932 4,205 10,232 4,340 Belgium 870 619 857 576 Germany 117 58 113 57 Luxemburg 28 19 27 18 France 298 252 207 167 Hong Kong 17 16 25 25 China 29 29 25 25 Bangladesh 15 15 15 5 Spain 4 4 - - United Kingdom 14 11 - - Total 11,324 5,228 11,501 5,212 For salaries, pensions and social security charges, please refer to note 8. For information on the remuneration of the board of managing directors and the Supervisory Board see note 18 to the company financial statements. 92

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company income statement from February 3, 2014 up to and including February 1, 2015 (in million euros) 2014 2013 result from subsidiaries after income taxes 18.2 16.8 other income after income taxes (207.4) (33.2) net result (189.2) (16.4) The accompanying notes on pages 98 to 108 are an integral part of these company financial statements. 96

company balance sheet as at February 1, 2015 (in million euros, after appropriation of current year result) note February 1 2015 February 2 2014 assets property, plant and equipment 2 146.3 164.4 intangible assets 3 1,037.0 1,161.5 financial assets 4 33.9 47.6 other non-current assets 5 0.1 0.1 total non-current assets 1,217.3 1,373.6 inventories 6 169.2 130.9 trade and other receivables 7 106.3 106.1 other current financial assets 8.8 0.3 current tax asset 1.7 2.9 cash and cash equivalents 8 36.6 134.1 total current assets 322.6 374.3 total assets 1,539.9 1,747.9 share capital 0.0 0.0 share premium 629.6 408.2 other reserves 4.4 (0.4) retained earnings (259.6) (70.4) total equity 9 374.4 337.5 employee benefits 13 6.0 5.9 deferred tax liabilities 99.9 98.7 provisions 14 11.0 10.8 total provisions 116.9 115.4 liabilities borrowings 10 700.8 755.0 shareholder loan 11-193.1 other financial liabilities 12 17.7 22.9 total non-current liabilities 718.5 971.0 trade and other payables 15 296.8 308.0 borrowings 10-10.8 bank overdrafts 8 24.7 - other financial liabilities 16 8.6 5.2 total current liabilities 330.1 324.0 total equity and liabilities 1,539.9 1,747.9 The accompanying notes on pages 98 to 108 are an integral part of these company financial statements. 97

notes to the company financial statements 1 significant accounting policies basis of preparation The company financial statements of HEMA B.V. have been prepared in accordance with Section 402, Part 9, Book 2 of the Dutch Civil Code ( B2 DCC ). In accordance with subsection 8 of section 362, B2 DCC, the measurement principles applied in these company financial statements are the same as those applied in the consolidated financial statements (see note 2 of the consolidated financial statements). In accordance with Section 402, Part 9, B2 DCC, the income statement is presented in condensed form. investments in subsidiaries In the company financial statements, investments in subsidiaries are stated at net asset value if the Company effectively exercises influence of significance over the operational and financial activities of these investments. The net asset value is determined on the basis of the accounting principles applied by the Company. In case the net asset value of an investment in subsidiaries is negative, a provision for group companies is set up only in case the Company is legally held liable for the subsidiaries liabilities. As long as the net asset value of subsidiaries is negative no result from participations is recorded. 98

2 property, plant and equipment (in million euros) leasehold improvements technical installations hardware furniture and fixtures trucks and cars work in progress total as of February 3, 2013 at cost 84.1 76.1 41.2 224.3 6.8 7.8 440.4 accumulated depreciation and impairment losses (30.7) (32.7) (34.5) (176.0) (2.7) - (276.7) carrying amount 53.4 43.4 6.7 48.3 4.1 7.8 163.7 additions at cost 9.3 8.7 0.9 9.8 0.6 5.5 34.8 depreciation (8.0) (7.6) (2.4) (14.0) (1.2) - (33.2) impairment losses charged to profit & loss transfer from work in progress (0.2) (0.3) - (0.4) - - (0.9) 1.8 1.7 0.4 2.0 - (5.9) - disposals at cost (0.1) (0.3) (11.7) (13.8) (0.8) - (26.7) accumulated depreciation 0.1 0.3 11.7 13.8 0.8-26.7 as of February 2, 2014 at cost 95.1 86.2 30.8 222.3 6.6 7.4 448.4 accumulated depreciation and impairment losses (38.8) (40.3) (25.2) (176.6) (3.1) - (284.0) carrying amount 56.3 45.9 5.6 45.7 3.5 7.4 164.4 additions at cost 1.7 2.6 0.2 9.0-3.1 16.6 depreciation (8.8) (8.1) (2.2) (13.2) (0.9) - (33.2) impairment losses charged to profit & loss transfer from work in progress (0.8) (0.7) - - - - (1.5) 1.6 1.9 0.3 2.0 - (5.8) - disposals at cost - - - - (0.2) - (0.2) accumulated depreciation - - - - 0.2-0.2 as of February 1, 2015 at cost 98.4 90.7 31.3 233.3 6.4 4.7 464.8 accumulated depreciation and impairment losses (48.4) (49.1) (27.4) (189.8) (3.8) - (318.5) carrying amount 50.0 41.6 3.9 43.5 2.6 4.7 146.3 99

3 intangible assets (in million euros) goodwill brand customer relationships software other intangible assets under development total as of February 3, 2013 at cost 732.2 394.4 43.7 76.3 0.1 2.9 1,249.6 accumulated amortisation and impairment losses - - (24.0) (57.8) - - (81.8) carrying amount 732.2 394.4 19.7 18.5 0.1 2.9 1,167.8 additions at cost - - - 3.2-3.9 7.1 amortisation - - (4.3) (9.1) - - (13.4) transfer from assets under development - - - 2.4 - (2.4) - disposals at cost - - - (1.4) - - (1.4) amortisation - - - 1.4 - - 1.4 as of February 2, 2014 at cost 732.2 394.4 43.7 80.5 0.1 4.4 1,255.3 accumulated amortisation and impairment losses - - (28.3) (65.5) - - (93.8) carrying amount 732.2 394.4 15.4 15.0 0.1 4.4 1,161.5 at cost - - - 2.4-4.2 6.6 amortisation - - (4.3) (8.8) - - (13.1) impairment losses charged to profit & loss (118.0) - - - - - (118.0) transfer from assets under development - - - 2.4 (0.1) (2.3) - disposals at cost - - - (0.1) - - (0.1) amortisation - - - 0.1 - - 0.1 as of February 1, 2015 at cost 732.2 394.4 43.7 85.2-6.3 1,261.8 accumulated amortisation and impairment losses (118.0) - (32.6) (74.2) - - (224.8) carrying amount 614.2 394.4 11.1 11.0-6.3 1,037.0 100

4 financial assets The movements in the investments from subsidiaries are as follows: (in million euros) February 1 2015 February 2 2014 opening balance 47.6 33.4 additions from investments - 3.0 dividend (31.0) (1.1) revaluation - 0.1 income from subsidiaries 18.1 16.8 change in provision for subsidiaries (0.8) (4.6) closing balance 33.9 47.6 For a list of significant subsidiaries see note 33 to the consolidated financial statements. With respect to the separate financial statements of the Dutch legal entities included in the consolidation, these companies availed itself of the exemption laid down in section 403, subsection 1 of B2 DCC. Pursuant to section 403 HEMA has issued declarations of liability for these subsidiaries (marked with an asterisk, see note 33 to the consolidated financial statements). 5 other non-current assets (in million euros) February 1 2015 February 2 2014 other 0.1 0.1 total other non-current assets 0.1 0.1 6 inventories (in million euros) February 1 2015 February 2 2014 trade inventory 177.5 135.7 raw materials 0.6 0.7 other inventories 1.8 2.1 179.9 138.5 valuation allowance (10.7) (7.6) total inventories 169.2 130.9 The raw materials and other inventories concern food, photo and packaging materials. An amount of 0.3 million has been recognised as write-offs of inventories in the income statement. All of the inventories are pledged to secure borrowings of the Company. 101

7 trade and other receivables (in million euros) February 1 2015 February 2 2014 trade receivables 34.2 36.0 provision for impairment (0.9) (0.8) trade receivables - net 33.3 35.2 receivables from related parties 4.2 3.8 receivables from subsidiaries 45.4 47.5 prepayments 11.1 12.1 other receivables 12.3 7.5 total trade and other receivables 106.3 106.1 8 cash and cash equivalents (in million euros) February 1 2015 February 2 2014 cash on hand 11.2 12.1 cash in banks and cash equivalents 25.4 122.0 bank overdrafts (24.7) - total cash, cash equivalents and bank overdrafts 11.9 134.1 102

9 equity other reserves (in million euros) balance as of February 3, 2013 (restated) share capital share premium cash flow hedging reserve other reserve retained earnings net profit / (loss) equity attributable to shareholders 0.0 408.2 (7.9) 0.8 (59.8) 5.8 347.2 proceeds from share premium contribution appropriation of net profit / (loss) - - - - - - - - - - - 5.8 (5.8) - net result for the year - - - - - (16.4) (16.4) other equity movements balance as of February 2, 2014 - - 6.7 - - - 6.7 0.0 408.2 (1.2) 0.8 (54.0) (16.4) 337.5 proceeds from share premium contribution appropriation of net profit / (loss) - 221.4 - - - - 221.4 - - - - (16.4) 16.4 - net result for the year - - - - - (189.2) (189.2) other equity movements balance as of February 1, 2015 - - 4.7 0.1 - - 4.8 0.0 629.6 3.5 0.9 (70.4) (189.2) 374.4 For further information on equity attributable to common shareholders see note 18 of the consolidated financial statements. 10 borrowings For further information on borrowings and credit facilities see note 19 of the consolidated financial statements. 11 shareholder loan For further information on the shareholder loan see note 20 of the consolidated financial statements. 103

12 other non-current financial liabilities (in million euros) February 1 2015 February 2 2014 financial lease liabilities 2.0 2.7 derivative financial instruments 3.4 6.4 long term lease incentive 12.3 13.8 total other non-current financial liabilities 17.7 22.9 financial lease liabilities Financial lease liabilities are payables as follows: (in million euros) February 1, 2015 February 2, 2014 future minimum lease payments interest portion present value of minimum lease payments future minimum lease payments interest portion present value of minimum lease payments within one year 1.1-1.0 1.2-1.2 between one and five years 2.2 0.4 1.9 3.0 0.6 2.4 after five years 0.2 0.1 0.1 0.4 0.1 0.3 total 3.5 0.5 3.0 4.6 0.7 3.9 current portion 1.0 1.2 non-current portion 2.0 2.7 3.0 3.9 104

13 employee benefits (in million euros) February 1 2015 February 2 2014 balance sheet obligations for retirement benefit obligations 0.1 0.3 other long-term benefits 5.9 5.6 6.0 5.9 income statement charge for retirement benefit obligations - (0.3) other long-term benefits 0.8 0.7 0.8 0.4 Movements in the present value of the defined benefit obligation in the current year were: (in million euros) February 1 2015 February 2 2014 opening defined benefit obligation 0.3 0.9 current service costs - (0.3) interest costs - - - (0.3) remeasurements experience gains - - assumptions losses / (gains) - - - - contributions from plan participants - - liabilities extinguished on settlements (0.2) (0.3) closing defined benefit obligation 0.1 0.3 105

long term employee benefits Movements in the present value of the jubilee plan obligation in the current year were as follows: (in million euros) February 1 2015 February 2 2014 opening obligation 5.6 5.7 current service costs 0.3 0.3 interest costs 0.6 0.2 actuarial losses (0.1) 0.2 benefits paid (0.5) (0.8) closing obligation 5.9 5.6 The amounts recognised in the income statement are as follows: (in million euros) 2014 2013 current service costs 0.3 0.3 interest costs 0.6 0.2 actuarial losses (0.1) 0.2 total 0.8 0.7 five year history of retirement benefit obligation and jubilee plan The assumptions used in the actuarial calculations of the defined benefit require a large degree of judgment. Actual experience may differ from the assumptions made. The following table provides a summary of the defined benefit obligations and adjustments arising from changes in experience and assumptions over the past five years: (in million euros) 2014 2013 2012 2011 2010 present value of defined benefit obligations retirement benefit obligation 0.1 0.3 0.9 2.7 4.5 jubilee plan 5.9 5.6 5.7 4.8 4.8 total obligation 6.0 5.9 6.6 7.5 9.3 experience (gains) / losses on defined benefit obligations retirement benefit obligation - - (0.8) (0.3) (0.2) jubilee plan 0.3 0.2 1.0 0.1 (0.0) total loss / (gain) 0.3 0.2 0.2 (0.2) (0.2) 106

14 provisions The table below specifies the change in total provisions (current and non-current): (in million euros) subsidiaries restructuring total as of February 2, 2014 current portion - - - non-current portion 10.8-10.8 10.8-10.8 changes in the provision during the year additions - 11.1 11.1 used during the year - (9.1) (9.1) release to income (0.8) (1.0) (1.8) interest accretion - - - closing carrying amount 10.0 1.0 11.0 as of February 1, 2015 current portion - 1.0 1.0 non-current portion 10.0-10.0 10.0 1.0 11.0 The provision for subsidiaries represents the negative equity value of the Company s subsidiary HEMA Duitsland B.V. For more information on the restructuring provision, see note 23 of the consolidated financial statements. 15 trade and other payables (in million euros) February 1 2015 February 2 2014 trade payable 155.6 158.4 amounts due to related parties 14.8 15.0 amounts due to subsidiaries 2.1 0.5 accrued expenses 70.0 54.0 payroll taxes, social security and vat 8.7 31.5 payroll accruals 35.2 36.9 other 10.4 11.7 total trade and other payables 296.8 308.0 107

16 other current financial liabilities (in million euros) February 1 2015 February 2 2014 interest 7.0 3.5 financial lease liabilities (current portion) 1.0 1.2 finance fees 0.6 - derivative financial instruments - 0.5 total other current financial liabilities 8.6 5.2 17 commitments See note 31 of the consolidated financial statements. 18 remuneration of the board of managing directors and the supervisory board In 2014 a total remuneration of 1.3 million was accounted for with respect to the members of the board of managing directors (2013: 1.6 million). These amounts are including a, temporary, tax imposed on salaries above 150.000 ( crisisheffing ). In 2014 HEMA has accrued 0.1 million for this tax (2013: 0.2 million). The remuneration of Mr. Darwent and Mrs. Minnick as members of the supervisory board is included in fees paid to Lion Capital. The remuneration with respect to 2014 for both Mr. Collee and Mr. Moberg as members of the supervisory board was 80 thousand euro in total (2013: 80 thousand euro). On top of their remuneration, travel expenses of Mr. Collee and Mr. Moberg are also reimbursed (if and when applicable). 19 employees The average number of employees and full-time equivalents during 2014 was 9,668 and 3,963 respectively (2013: 9,930 and 4,071). management board Ronald van Zetten, Chief Executive Officer Ad Walter, Chief Financial Officer Rob Heesen, Director Buying and Merchandising Paul Havinga, Director Operations Alex Jonker, Director Supply Chain supervisory board Robert Darwent, Chairman Mary Minnick, Vice-Chairman Dolf Collee Anders Moberg Amsterdam, the Netherlands, April 13, 2015 108

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other information events after reporting date On April 1, 2015, HEMA made the following announcements: Ronald van Zetten steps down as CEO After 12 years Ronald van Zetten steps down as CEO as per April 13, 2015. appointment of Andrew Jennings as new member and Chairman of the Supervisory Board Andrew Jennings, an experienced senior executive in the global retail industry, has been nominated as a new member of the Supervisory Board and upon his appointment will become its Chairman. appointment of Tjeerd Jegen as CEO Tjeerd Jegen, a Dutch national and, most recently, Managing Director of Australian Supermarkets and Petrol for Woolworths Australia, will be joining as CEO on April 13, 2015. 111

independent auditor s report to the general meeting of HEMA B.V. report on the financial statements We have audited the accompanying financial statements 2014 of HEMA B.V., Amsterdam as set out on pages 40 to 108. The financial statements include the consolidated financial statements and the company financial statements. The consolidated financial statements comprise the consolidated statement of financial position as at 1 February 2015, the consolidated income statement, the consolidated statements of comprehensive income, changes in equity and cash flows for the year then ended and the notes, comprising a summary of significant accounting policies and other explanatory information. The company financial statements comprise the company balance sheet as at 1 February 2015, the company income statement for the year then ended and the notes, comprising a summary of accounting policies and other explanatory information. management board s responsibility The management board is responsible for the preparation and fair presentation of these financial statements in accordance with International Financial Reporting Standards as adopted by the European Union and with Part 9 of Book 2 of the Dutch Civil Code, and for the preparation of the report from the management board in accordance with Part 9 of Book 2 of the Dutch Civil Code. Furthermore, the management board 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. 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. In making those risk assessments, the auditor considers internal control relevant to the company 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 company s internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by the management board, as well as evaluating the overall presentation of the financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion. opinion with respect to the consolidated financial statements In our opinion, the consolidated financial statements give a true and fair view of the financial position of HEMA B.V. as at 1 February 2015, and of its result and its cash flows for the year then ended in accordance with International Financial Reporting Standards as adopted by the European Union and with Part 9 of Book 2 of the Dutch Civil Code. 112

opinion with respect to the company financial statements In our opinion, the company financial statements give a true and fair view of the financial position of HEMA B.V. as at 1 February 2015, and of its result for the year then ended 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 report from the management board, 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 report from the management board, 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. Rotterdam, 15 April 2015 PricewaterhouseCoopers Accountants N.V. Original has been signed by: J.G. Bod RA 113

HEMA design rule 9 surprising simplicity is the trademark of each HEMA product 114

statutory appropriation of the result The holders of common shares are entitled to one vote per share and to participate in the distribution of dividends and liquidation proceeds. Pursuant to article 25 of the articles of association the income, after reservations made by the Board of Managing Directors in consultation with the Supervisory Board, will be available for distribution to the common shareholders upon approval at the General Meeting of Shareholders. Amounts not paid in the form of dividends will be added to accumulated general reserves. Consequently, net profit according to the company statements of operations is fully attributable to common shareholders. The proposed profit-sharing statement reads as follows: (in million euros) February 1, 2015 February 2, 2014 net result (189.2) (16.4) dividends - - charged to the general reserves (189.2) (16.4) 115

cautionary notice This annual report contains forward-looking statements, which do not refer to historical facts but refer to expectations based on management s current views and assumptions and involve known and unknown risks and uncertainties that could cause actual results, performance or events to differ materially from those included in such statements. Many of these risks and uncertainties relate to factors that are beyond HEMA s ability to control or estimate precisely. Readers are cautioned not to place undue reliance on these forwardlooking statements, which speak only as of the date of this annual report. 116

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definitions adjusted EBITDA Adjusted EBITDA is defined as operating result of the company determined on the basis of IFRS plus depreciation, amortisation and impairments; provided, however, that there will not be included in such Adjusted EBITDA: pre-opening costs, defined as salary costs incurred with respect to new stores prior to such stores respective opening dates plus rent in respect of new stores incurred prior to such stores respective opening dates; an annual oversight fee, which refers to the annual fee for the services provided by Lion Capital to the Company under a monitoring and oversight agreement; any items of a non-recurring, extraordinary or exceptional nature. EBITDA EBITDA is defined as operating result of the company determined on the basis of IFRS plus depreciation, amortisation and impairments. like-for-like sales HEMA defines like-for-like sales as year-on-year percentage growth of the gross sales of the stores that have been open for the entire year prior to the period under review, including gross sales in respect of products ordered online and picked up in stores, items ordered online for home delivery, and deliveries from the bakeries to third parties. Gross sales for directly-owned stores represent the total sales transactions registered in the point of sale systems and are based on actual prices charged to customers. Gross sales for franchise stores represent the value of products delivered to the franchise stores, where the value of a product is the actual retail price of the product in the point of sale system at the time it is delivered to the franchise store. Gross sales for the purpose of determining like-for-like sales also includes commission the Company receives on insurances which HEMA provides as an agent and the full sale price of other products sold on behalf of third parties such as vouchers, which is different from the treatment of sales of such products under IFRS. Gross sales for both directly owned stores and for franchise stores include VAT which is 6% in respect of food and 21% in respect of virtually all other products and services. 118

contact information general information HEMA corporate communication NDSM-straat 10 1033 SB Amsterdam The Netherlands t 020 311 44 11 e info@hema.nl visiting address NDSM-straat 10 1033 SB Amsterdam The Netherlands p.o. box postbus 37110 1030 AC Amsterdam www.hema.nl 119

HEMA annual report 2014