Annual Report 2019

Continuing operations

Cash flows

Total cash flow from operating activities in 2019 was € 3.2 million (2018: € 3.0 million). The operational cash flow generation of our continued business was positive, and we have achieved working capital improvements in all areas. The operating cash flow was significantly impacted by the continued losses of Matratzen Concord and IFRS 16.

Total cash flow from investing activities in 2019 was an inflow of € 12.7 million compared to an outflow of € 16.9 million in 2018. The investing cash flow included the proceeds of the sale-and-leaseback of the three distribution centers of € 19.1 million. As a result of the previously announced capex freeze program, the total amount of investments in both tangible and intangible fixed assets decreased to € 4.4 million in 2019, compared to € 8.7 million in 2018. The majority of these investments related to investments in IT and E-commerce platforms, two new stores and required maintenance in existing stores. The investing cash flow from the discontinued operations of Matratzen Concord amounted to € 15.5 million and was derecognised from the balance sheet at divestment date. Investments in the new strategic themes Online, Digital, Data Analytics and IT infrastructure will be continued in 2020.

Cash, liquidity and debt financing

The cash flow from financing activities for the year was an outflow of € 20.2 million (2018: inflow of € 19.9 million), due to the deleveraging and the significant improvements in our financial position. The financing cash flow included the issue of the shareholder loan in the amount of € 7.0 million - of which € 3.5 million has been converted to a perpetual loan - the equity issue to Magical Honour Limited of € 5.0 million, and the repayment of borrowings of € 19.5 million.

The net debt position, including cash and cash equivalents, changed significantly during 2019. At year-end 2019, the Group reported a net debt position of € 7.9 million (2018: € 16.8 million).

Financing and solvency

In July 2019, Beter Bed Holding agreed a transition plan with the banks and three major shareholders including: (i) waivers of the defaults that have taken place under the € 40 million credit facilities, (ii) amended covenants for the continuing operations until mid-2020, and (iii) additional shareholder loans of in total € 7.0 million to support the short-term liquidity. With these agreements, combined with the sale-and-leaseback of the three distribution centers, Beter Bed Holding managed to realise the transformation by divesting Matratzen Concord and decreased its total net debt. As a next step, the company reached agreement on new bank covenants in December 2019 and, resulting from its decreased outstanding bank debt, was able to further strengthen the equity of the Group by converting half of its outstanding shareholder loan of € 7.0 million in total into perpetual instruments, paying interest to its three shareholders and repaying a similar amount on its bank facilities, further reducing its outstanding debt.

The solvency ratio in 2019 was impacted by the introduction of IFRS 16 which increased the lease liability by € 45.6 million and almost doubled the Group’s balance sheet position. Solvency decreased due to the operating loss and impairments of the discontinued operations and stood at 3.1% as at 31 December 2019.

Highlights of our continuing operations


Revenue of the Beter Bed and Beddenreus stores in the Benelux in 2019 was € 163.7 million, which is 5.5% higher compared to € 155.1 million in 2018, with like-for-like revenue growth of 4.3%. The like-for-like order intake grew in 2019 by 2.6% compared to prior year. The continued positive trend in revenue is the result of a combination of ‘always on’ marketing activities, the continued strong online and digital proposition and the addition of new brands such as Tempur.

From a gross margin point of view the Benelux was unfortunately not able to secure the upside potential from Group synergies as a result of the announced divestment of Matratzen Concord. However, rationalisation of assortments and marketing activities prepared, in combination with suppliers, had a positive impact.

In 2019, costs increased compared to prior year, mainly relating to supply chain issues in the first half of the year. Supplier related issues had a negative impact on the internal supply chain. Consequently additional temporary personnel and transport was required to fulfil customer demands. Although this was largely solved in the second half of the year, the operation was not able to regain these additional costs. The cost synergies we expected to realise in 2019 as part of the centralisation of the organisation last year, did not materialize due to the divestment of Matratzen Concord. However, rationalisation of assortments and marketing activities done in conjunction with suppliers had a positive impact on gross margin.

Finally investments were made in the omni-channel proposition to further prepare the Company for a seamless customer journey between online and offline. The online activities within the Group have grown significantly at a growth rate of 27.4%.

New Business

The New Business operations comprise Sängjätten in Sweden and the DBC wholesale business. The total operations realised € 22.1 million revenue, representing a total growth of 25.3% and a like-for-like sales growth of 8.1% compared to previous year.

Revenue at Sängjätten continued to grow, with the expansion of the store network in 2018 contributing to this revenue growth, together with enhanced commercial activities (better pricing and promotions) and the addition of the new brands Tempur and Ecolife. Start-up investments weighed on the store performance of Sängjätten, resulting in a negative EBIT for 2019. As previously announced, an action plan is currently being executed in order to turn the Swedish activities into a profitable operation with a positive cash flow. These actions include (i) the launch of a new supply chain structure focused on local stores and hubs, (ii) the roll-out of the successful online and digital platform of the Benelux, and (iii) streamlining the store portfolio.

The DBC wholesale business continued to show strong revenue results, both for existing B2B customers and new customers to which the first orders have been delivered. We continue to add new B2B customers, including local dealers and international retailers. Going forward, we see ample opportunity for further acceleration of these activities. For DBC, this will include further investments in additional sales force to especially drive the M line brand in existing markets and a number of carefully selected new markets.