Inter IKEA Group

Annual Report 2013

Inter IKEA Group is defined as

Inter IKEA Holding S.A. and its subsidiaries
www.inter.ikea.com
Inter IKEA Holding S.A.
Registered as a socit anonyme (public limited company)
under Luxembourg law with a capital of EUR 300,000,000
Registered office: 2, Rue Jean Bertholet
1233 Luxembourg (Luxembourg)
Luxembourg Trade and Companies Register B38952
2

INTER IKEA GROUP 2013

Consolidated Financial Statements

as of 31st December 2013 and independent auditors report

Index
Management Report

Inter IKEA Group

Group Structure

Key figures consolidated (under Lux GAAP)

Franchise Division

Retail Centre Division

10

Property Division

12

Finance Division

14

Corporate Governance

16

Main Risks and Uncertainties

17

Consolidated Annual Accounts of Inter IKEA Holding S.A.

INTER IKEA GROUP 2013

Message from the Chairman and CEO

18

Consolidated balance sheet as of 31st December 2013

18

Consolidated Income statement

for the year ending 31st December 2013

19

Consolidated Cash-Flow statement

for the year ending 31st December 2013

20

Notes to the Inter IKEA Holding S.A.

consolidated financial statements

21

Independent Auditors report

28

Management report
Message from the Chairman and CEO
The overall purpose of Inter IKEA Group is to secure
continuous improvement and a long life of the IKEA
Concept. Inter IKEA Systems B.V. is the worldwide
franchisor and owner of the IKEA Concept and
trademarks. The Concept showed again good
strength with a retail sales increase of 4.2% in 2013.
The overall revenues increased by 7.4% to 2.856
in 2013. Franchise fees increased by 1.2% and
other IKEA related revenues increased by 13.5%.
Revenues from our real estate divisions increased
by amodest 4.7%; growth that is mainly related to
thedelivery of newly developed properties.

Generally we continued to see a tough business climate in Europe. In the second half of
2013 some pick-up in the retail activity could
be seen, but its still unevenly spread between
countries. Demand for IKEA products also
improved over the year in Europe. We continue to see strong growth in North America,
Asia Pacific and especially in the Middle East.
Most retailers are faced with the challenge
of adapting their business to multi-channel
retailing; a fast growing consumer demand.
More than ever we need to create own opportunities with a long term value building perspective. With this in mind, our financial independence is important to us.
The expansion of the Retail Centre Division
in Europe remained selective due to market
limitations. Through a flexible development
approach, we have successfully opened our
first centre in Italy, opened two strip malls in
Switzerland, Poland and added/refurbished in
many locations to strengthen our portfolio.
The division is now far advanced in building
and leasing the first two centres in China, due
to open in 2014. The current development
plan is programmed to deliver over 730,000m2
in the next three years, of which 340,000m2
will be completed during 2014.

The Property Division has a building program

of over 100,000 m2 of offices and hotels and
owns over 125 hectares of land for future
development. The MOXY Hotel program
(Branded by Marriott International and operated by partners) kicked-off in December
2013 with the start of construction of the first
hotel at Malpensa Airport (Italy). Sites are
being acquired around Europe to fulfil an
ambitious expansion plan.
A regulated fund management activity was
added to the Finance division, increasing our
investment competence by a further 20 coworkers. Generally, the division produced a
good return during 2013, thanks to all the
patient and persistent work over many years.
Sustainability and CSR remains high on the
agenda. The IKEA sustainability direction was
launched to all stakeholders operating under
the IKEA Brand. A revised Inter IKEA Code of
Conduct is being launched to engage all coworkers to an open dialogue, a way to revisit
and strengthen connection with our core Inter
IKEA values. Actions to minimise the environmental impact in our real estate development
activities are well on the way.
During December 2013, Inter IKEA Group,
through Inter IKEA Systems B.V., donated an

INTER IKEA GROUP 2013

additional 29 million to the Kamprad Family

Foundation for Entrepreneurship, Research
and Charity, based in Vxj, Sweden. This
donation is a follow-up on our commitment
to the foundation initiated during 2011.
The 2013 result increased from 446 million
in 2012 to 516 million in 2013. The good
performance of the Finance division was the
main contributor to the increased profit. All
other divisions have performed to set plans for
the year. Due to rapid expansion and high
investments, the Retail Centre and Property
divisions contributed with a negative effect on
the Group result.
All of this was made possible by all our
dedicated co-workers who made 2013 a
successful year for Inter IKEA Group.

Sren Hansen, CEO and Mathias Kamprad, Chairman

INTER IKEA GROUP 2013

Inter IKEA Group

Our business in brief

The overall purpose of Inter IKEA Group is to
secure continuous improvement and a long life
of the IKEA Concept. Since this will require
investments in both good and bad times, we
strive to be financially independent.
In our effort to live up to the purpose, our
business is decentralized and organised into
four divisions, each with a different role:
The Franchise Division is the core of our
business. We have found franchising to be the
best way to expand the business based on the
IKEA Concept, to keep the Concept together
and to maintain an entrepreneurial spirit. Inter
IKEA Systems B.V. franchises systems, methods and proven solutions to franchisees worldwide for sale of IKEA home furnishing products
under the IKEA trademarks. Inter IKEA Systems B.V. is the owner of the IKEA Concept
including the IKEA trademarks. Their role is to
control, safeguard and develop the IKEA Concept, and to ensure that IKEA Concept knowhow is continuously developed, transferred
and made available to all IKEA franchisees.
This is done in order to serve the many people
over generations.
The Retail Centre Division Inter IKEA Centre Group A/S invests in, develops and manages retail destinations anchored by IKEA
stores. The division creates unique retail and
6

entertainment destinations, where the shared

location creates synergies benefitting the IKEA
store, the tenants in the shopping centre and
the many people.
The Property Division creates long-term
value through property investments. The cornerstones of the operations are management
of portfolio properties and development of
commercial real estate.
The Finance Division supports the goal of
maintaining financial independence through
long term investments. The division includes
fund management, non-listed equity investments and treasury management.
Our strategic investments in Retail Centres
as well as our asset management investments
in the Property and Finance divisions aim to
ensure financial stability and create long term
value.
Our heritage
The values and culture of Inter IKEA Group
reflect the entrepreneurial spirit of our founder
Ingvar Kamprad, who was born and grew up in
the Smland region of Sweden. Smlanders
have a reputation for being thrifty and innovative with a straightforward, no-nonsense
approach to problem-solving in general and to
business challenges in particular. This Sm-

land legacy is built into Inter IKEA Group culture and values.
In practice, our values encourage a constant desire for renewal and a willingness to
make change, as well as a cost-conscious
mindset in all areas of operation. Trying new
solutions, daring to be different, humbleness
in approaching our task and simplicity in our
way of doing things are also cornerstones of
the Inter IKEA culture.
Our spirit is based on a belief that no
method is more effective than a good example. We believe that each co-worker is important, that all of us have a responsibility, and
that it is by working together, tillsammans in
Swedish, that we really make a difference.
Our values have proven to be viable in an
international context and we strongly believe
that they are one of the most important factors behind our achievements. By keeping
them alive and well-rooted, it will help us
continue to turn future challenges into opportunities.

INTER IKEA GROUP 2013

Group Structure

Inter IKEA Holding S.A. is the parent company

of Inter IKEA Group. The operations of Inter
IKEA are decentralised and organised in divisions with far-reaching responsibility for their
operations and business.
Around the globe, a large number of companies operate under the IKEA trademarks.
All IKEA franchisees are separate and independent from Inter IKEA Group. Some of them

share the same founder and a common history

and heritage, but are independent companies.
A large group of franchisees are owned and
operated by INGKA Group. Inter IKEA Group
and INGKA Group are separate groups of companies and have different owners, board members and managers.

Key figures consolidated (under Lux GAAP)

2013

2012

Total revenues

mil

2,856

2,660

EBITDA

mil

911

959

Net profit for the year

mil

516

446

Total assets

mil

16,059

14,950

Shareholders equity (incl. result of the year)

mil

8,039

7,529

Equity ratio

50%

50%

Co-workers (year average)

Nb

1,754

1,644

Financial year starting 1st January and closing 31st December

Interogo Foundation
(Liechtenstein)

Inter IKEA Group

Inter IKEA Holding S.A.

(Luxembourg)
Group Services
Inter IKEA
Holding Services SA
(Belgium)

51%
Franchise
Inter IKEA Systems
Holding BV & subs.
(The Netherlands)

INTER IKEA GROUP 2013

Retail Centre
Inter IKEA Centre Group A/S
& subsidiaries
(Denmark)

Property
Vastint Holding BV
& subsidiaries
(The Netherlands)

Finance
(Various companies
and jurisdictions)

Franchise Division

The business
The Franchise Division includes Inter IKEA
Systems B.V., worldwide IKEA franchisor
and owner of the IKEA Concept, including
the IKEA trademarks. The division has
the overall responsibility to safeguard the
continued success of the IKEA Concept
throughout the world. The IKEA Concept
rests on a firm foundation: a low-price
offer in home furnishings.
As the franchisor, Inter IKEA Systems
B.V. focuses on expanding the IKEA Concept by franchising, developing the IKEA
Concept and transferring IKEA know-how
to IKEA franchisees. The IKEA franchisees
were present on 43 markets as of 31st
December 2013.

Franchisee

Markets
(as of 31st December
2013)

Al-Futtaim Group

Egypt, Qatar, United Arab

Emirates

Al Homaizi

Kuwait

Al-Sulaiman

Saudi Arabia

Cebas

Australia

Dairy Farm Group

China, Taiwan

House Market Group Bulgaria, Cyprus, Greece

IKANO Group

Malaysia, Singapore,
Thailand

INGKA Group

Australia, Austria,
Belgium, Canada, China,
Czech Republic,
Denmark, Finland,
France, Germany,
Hungary, Ireland, Italy,
Japan, the Netherlands,
Norway, Poland, Portugal,
Romania, Russia,
Slovakia, Spain, Sweden,
Switzerland, United
Kingdom, United States

Mapa

Turkey

Miklatorg Group

Iceland, Lithuania

Northern Birch

Israel

Sarton Group

Dominican Republic,
Spanish islands

INTER IKEA GROUP 2013

FRANCHISE DIVISION

Inter IKEA Systems B.V. also owns and

operates the IKEA store in the IKEA Concept Center in Delft, the Netherlands. With
the exception of the IKEA store in Delft,
all IKEA retailers operate under franchise
agreements with Inter IKEA Systems B.V.
IKEA franchisees implement the IKEA
Concept by marketing and selling the IKEA
product range and operate IKEA stores
under franchise agreements with Inter
IKEA Systems B.V. The IKEA franchisees
have the responsibility to run, manage
and develop their local business.
The Franchise Division also includes
service companies and companies selling
IKEA products to franchisees on certain
markets.
Key figures
(under Lux GAAP)

2013

2012
340

IKEA Stores

Nb

349

Markets

Nb

43

40

Total revenues

mil

2,615

2,395

Co-workers
(year average)

Nb

964

954

INTER IKEA GROUP 2013

Market conditions and performance

The evolution of revenues is directly linked
with the expansion and performance of
IKEA franchisees worldwide. A 3% franchise
fee on IKEA sales forms the base for the
franchise revenues. During 2013, worldwide IKEA sales increased by 1.7% or 4.2%
using constant foreign exchange rates to
the Euro. Growth in North America, Asia
Pacific and Middle East has been substantial, whereas Central and South Europe are
still facing a challenging economic climate.
Ten new IKEA stores opened during
2013, of which one was a relocated store.
Three of the new stores were in new markets: Lithuania, Qatar and Egypt. These
first stores on new markets have all been
well received by their respective communities. IKEA Vilnius in Lithuania is a first
store in the Baltic States and it has
already attracted customers from neighbouring countries: Latvia, Estonia and
Belarus. IKEA Doha in Qatar, which has a
diverse customer base, focused efforts on
adapting room settings in the store to
present IKEA products and home furnishing solutions that accurately reflects local
home traditions and living situations.
Other businesses have shown mixed
performance during 2013. The distribution

IKEA Retail Sales consolidated in Euros

millions
30,000
25,000
20,000
15,000
10,000

2009

2010

2011

2012

2013

of IKEA products, mainly in the Middle East

and Far East, increased by more than 20%;
reflecting the growth in those regions.
The IKEA store in Delft saw a 5% decrease
in sales.
Key activities
During 2013, the IKEA Brand turned 70.
Founded by Ingvar Kamprad in 1943, IKEA
is based on an acronym of his name and the
first letters of Elmtaryd and Agunnaryd, the
farm and village where he grew-up in Smland, Sweden. More than the meaning of
the letters, the IKEA Brand represents a
way of improving life at home through good
quality home furnishing products, that are
affordable, functional and well-designed.
One way to share home furnishing inspiration is through the IKEA catalogue. In
last years edition, the digital catalogue

was developed even further to offer more

of the inspiration, ideas and knowledge
needed to furnish a home. Popular features
of the catalogue application for mobile
devices included a possibility to step into a
room to view it in 360 and to place IKEA
furniture in your own home to see how it
fits. The 360 experience and other
extended content such as films and images
were used 10 million times and one million
3D models were placed in peoples homes.
Inter IKEA Systems B.V. launched The
IKEA sustainability direction during the
year in order to secure one common
approach for all companies operating under
the IKEA trademarks. It is a framework for
all local and/or franchisee specific sustainability strategies, plans and activities.
The division has taken the initiative to
open a facility in Shanghai, China, for
transferring IKEA Concept know-how. This
will support the IKEA expansion in China
and other countries in the region.
On 1st September 2013, Torbjrn Lf
took over from Thomas Bergstrm as CEO
of Inter IKEA Systems B.V.
More information about Inter IKEA
Systems B.V., the IKEA Concept and the
IKEA franchise structure is available at
franchisor.IKEA.com.
9

Retail Centre Division

Developed square meters 31 Dec. 2013

PL,
DE,
ES,
CZ,
FR,
SK,
PT,
IT,
CH,

32%
16%
13%
12%
6%
6%
6%
5%
4%

IICG has a clear long-term approach to

management and continuity, which means
every decision taken focuses on driving
long-term value for retail partners and
shoppers.
Inter IKEA Group is the majority owner
of IICG with a 51% ownership. The
remaining 49% is owned by INGKA Group.
Key figures
(under Lux GAAP)

The business
The Retail Centre Division Inter IKEA
Centre Group A/S (IICG) was established
in 2001 and develops and manages retail
destinations for the many people, anchored
by IKEA stores. IICG creates unique retail
and entertainment destinations where both
the IKEA store and tenants benefit from
the synergy created by the retail centre
and the IKEA store being located side by
side. This, ultimately, enhances the customers shopping experience.

10

2013

2012

Leased centres

Nb

32

30

Developed
markets

Nb

Developed
centres

Tm2

1,189

1,105

Centres under
development
(3 years)

Tm2

737

635

Total assets

mil

3,093

2,394

Total revenues

mil

162

204

Co-workers
(year average)

Nb

594

523

INTER IKEA GROUP 2013

RETAIL CENTRE DIVISION

The drop in revenues from previous year

is mainly related to the sale of shopping
centres in Austria during 2012. On a like
for like basis, rental income increased by
2.2% during 2013.
Market conditions
The decline in retail sales across Europe,
0.2% during 2013, has been more pronounced in Southern Europe. Food sales
have declined more than non-food. Multichannel retailing continued to gain ground
over physical stores, forcing shopping
centres to find new business solutions.
The downward pressure on rent levels
remained a challenge throughout 2013,
especially in non-prime locations. Even
though many European markets are
showing signs of stability, some even a
positive turnaround, the redefinition of the
retail landscape will continue to pressure
retail destinations to adapt.
The expansion plan is closely linked
with the opening of new IKEA stores in
Europe and China. While putting a foot-

INTER IKEA GROUP 2013

step into the Chinese market, the European expansion perspective has become
highly selective due to market conditions.
Key activities
In 2013, two new strip malls were open,
one in Rothenburg (Switzerland) and one
in Poznan (Poland) as an add-on to an
existing retail destination. A first shopping
centre was successfully opened in Villesse
(Italy) and an existing shopping centre,
Wola Park in central Warsaw (Poland) was
acquired. The reconstruction of a section
of Ostrava (Czech Republic) shopping centre was also completed during the year.
The developments in Europe are currently on the reconstruction of a shopping
centre in Wroclaw (Poland), the construction of a shopping centre in Lbeck (Germany) and the construction of two additional retail parks in Germany.
Three shopping centres are being built
in China: Wuxi, Beijing and Wuhan.
Together they represent 392 Tm2, where
Wuxi and Beijing are scheduled to open in

2014, followed by Wuhan in 2015. The

increased number of co-workers during
the year was solely dedicated to China.
Sustainability is under increased focus
on matters related to environment, economic and social well-being. The reduction
of CO2 emissions has been prioritised,
where initial actions led to a reduction of
energy and water consumption. Each
market is working on finding renewable
energy sources. The polish subsidiary,
with the most significant portfolio in operation, already made the conversion to
renewable sources during 2013.
Retail centres are actively working
in becoming an integrated part of their
community and engage in local social
initiatives.
Furthermore, IICG is preparing to certify
new constructions using known international standards (LEED / BREEAM) as an
ambition to align with best practice in the
industry within the next years to come.

11

Property Division

Developed square meters 31 Dec. 2013

NL, 62%
PL, 20%
BE, 9%
LT, 6%
LV, 3%

The Property Division actively manages

developed properties in six countries: the
Netherlands, Poland, Belgium, Lithuania,
Latvia and the United Kingdom. Sites for
future development are owned in Poland,
Lithuania, Latvia, Romania, Germany,
Italy and the United Kingdom.
Key figures
(under Lux GAAP)

Futuris apartment building in the centre of Riga, Latvia.

12

The business
The Property Division Vastint Holding
B.V. (Vastint) was established in 1989 in
the Netherlands. The goal of the Property
Division is to create long-term value
through property investments. The markets are defined in order to achieve critical
mass and concentration.
The cornerstones of the operations in
the Property Division are the management
of portfolio properties and the development of commercial real estate, including
residential development and sales. There
is no development of IKEA stores conducted within the Property Division.

2013

2012

Leased buildings

Nb

41

40

Developed
markets

Nb

Developed
properties

Tm2

428

418

Under
construction

Tm2

104

42

Total assets

mil

927

838

Total revenues

mil

57

43

Co-workers
(year average)

Nb

93

84

Total revenues increased by 33% during

the year, mainly as a result of completed
projects/refurbishments during 2012 and
2013 in the Netherlands, Poland, Latvia
and Lithuania.

INTER IKEA GROUP 2013

PROPERTY DIVISION

Market conditions
The uncertainty in the European office and
residential sector continued throughout
2013. The market remained fragmented
due to a variety of economic conditions in
different countries. As a general trend,
investment activities have increased,
while take-up and new supply is stabilizing. Activities within the hospitality sector
continued to grow throughout Europe.
Key activities
The development activities within the
Property division include land acquisition,
master planning, detailed design, construction and leasing.
Currently over 125 hectares of land is
owned for future planning and development. The most recent acquisitions were
in Poland, Italy, Germany and the United
Kingdom.
During 2013, two office properties
located in Amsterdam (Netherlands) and
Brussels (Belgium) were acquired for
redevelopment. A logistic centre in
Utrecht (Netherlands), as well as the

INTER IKEA GROUP 2013

majority of the Futuris apartments in

Riga (Latvia), were sold.
The properties under construction at
year end are: Hotel Atlas Arena Amsterdam, Offices & Hotel Gdynia Waterfront,
Offices & Hotel Business Garden Poznan,
Offices G12 Vilnius, Industrial building
Corzano and a MOXY Hotel at Malpensa
airport.
An organisation is specifically dedicated
to the development of the hospitality sector. The division is dedicated to build a
large program of MOXY Hotels (branded
by Marriott International) in the coming
years. Sites are being secured around
Europe to fulfil this program. The first
MOXY Hotel will open during 2014 at Malpensa airport (Italy). All hotels will be
operated by third parties.
Environmental and sustainability factors continue to be important for tenants,
landlords and investors. The Property
Division is working towards social, economical and environmental solutions that
are sustainable in the long term.

All new buildings and refurbishments

should have an adequate level of environmental certification according to internationally recognised standards (LEED /
BREEAM). During 2013, Hotel Atlas Arena
Amsterdam received a BREEAM Good precertification, Offices Business Garden
Poznan and Business Garden Wroclaw
received LEED Gold pre-certification and
Offices Brama Portowa Szczecin received
LEED Gold certification.

13

Finance Division

The business
The Finance Division supports the Inter
IKEA Group goal of maintaining financial
independence through long term investments.
The division is built around three
core areas:
Non listed holdings in funds, coinvestments and direct investments
Treasury management
Fund management
Each of the above parts of the Finance
division is managed by separate teams
with special skill sets and an organisation
of its own.

14

Key figures
(under Lux GAAP)
Inter IKEA Group
assets under
management
Co-workers (year
average)

2013

2012

mil

2,341

2,081

Nb

77

57

Market conditions
The world economic growth levelled at
2.9% during 2013, where the most
advanced economies grew by 1.3% and
emerging economies by 4.5%. Stock markets recovered strongly during the year in
anticipation of improved economic growth
within mature economies. As a consequence, yields have tightened significantly on a wide variety of assets.
Mature markets are still facing significant challenges to rebalance their economies. The investment environment will
remain challenging in the short to medium
term.

INTER IKEA GROUP 2013

Investments activities
The majority of Inter IKEA Group assets
under management are invested in Europe
and North America. The non listed equity
investments represent around 40% of the
portfolio.
The investments in non listed companies continued to increase during the year.
More than ever, good companies lack support and have a need for financial backing
to expand and develop. This provides a
relevant investment opportunity in the
current economic climate.
The remaining Inter IKEA Group assets
under management are held as part of
the Group treasury management (bonds,
money market funds, deposits, etc.), producing modest returns.
At the start of 2013, the Group acquired
a regulated fund manager established in
Luxembourg, thus adding 20 specialist
co-workers to the overall competence.

INTER IKEA GROUP 2013

Fund management provides investment

management and advice to Interogo
Foundation.
Non-Euro investments are hedged back
to back to the Euro using foreign exchange
swaps.

15

Corporate Governance

Shareholder
Inter IKEA Holding S.A. is owned by Interogo
Foundation, an enterprise foundation
(Unternehmensstiftung) registered under
Liechtenstein law.
For more information about Interogo Foundation, please visit the Inter IKEA Group website, www.inter.ikea.com.
Board of Directors
On 31st December 2013, the board of Inter
IKEA Group had five non-executive members:
Mathias Kamprad (Chairman)
Hans Gydell (Vice Chairman)
Staffan Bohman
Lennart Sten
Birger Lund
Directors are elected at the general shareholder meeting and are normally appointed
for a period of six years.

16

The responsibility for the day-to-day management of the company is delegated to Sren
Hansen, the CEO. The board meets four times
per year, has a formal schedule of matters
reserved for it, including approval of the annual
overall budget, significant acquisitions and disposals, and the Groups financial statements.

of Inter IKEA Holding S.A. and meets two times

per year. The committee is composed of Staffan
Bohman (chairman of the committee) and Hans
Gydell. The CEO, the CFO and the principle
external audit partner are permanent invitees.

Divisional Boards
Board of directors meetings are held for each
division three times per year. The boards are
generally composed of the Group CEO, the managing director for each division, a selected panel
of Group executives and external members.
The divisional boards are supported by
advisory boards and investment committees
where appropriate.
Audit Committee
The board of directors has assigned an audit
committee to oversee financial reporting and
disclosure, and to oversee regulatory compliance and corporate governance. The audit
committee reports to the board of directors

INTER IKEA GROUP 2013

Main risks and uncertainties

The company faces certain risks associated with its business and sectors in which
it operates.
As a global franchisor of the IKEA Retail
Concept, franchise fee earnings are closely
related to the expansion of the worldwide
furniture market and the success of IKEA
franchisees on their respective markets.
The IKEA Concept has proven to be resilient in most markets, since market share
of IKEA products increased in the most
affected regions since 2008.
Since the start of the global financial
and economic crisis in 2008, furniture
markets in mature economies declined,
but North America and some parts of
Europe are progressively showing growth
again. The high level of unemployment in
Europe and a general contraction on consumers ability to spend remains a key
concern. The southern European market is
still contracting on average as austerity
measures to reduce public deficits are
being implemented.

INTER IKEA GROUP 2013

Around 55% of the franchise fees are

earned outside the euro zone, where the
euro is the companys reporting currency.
As a result, the company is exposed to the
volatility of foreign exchange market.
Distribution of IKEA products in the
Middle East, Asia Pacific and Southeast
Europe offers a yearly price guarantee to
IKEA franchisees for all products contained in the IKEA Catalogue. During the
guarantee period, manufacturing or transport prices can fluctuate and affect the
profitability of this operation. There is no
foreign exchange risk for this activity,
because all related currencies flows are
hedged on a yearly basis.
The Retail Centre Division is exposed to
the retail performance on European markets where it operates. With the progressive decline of retail sales since 2008,
many tenants have encountered financial
difficulties over the years, but this situation has now stabilised. Signing new tenants continues to be challenging on most

markets and rent levels have continued to

compress, although the level of vacancies
has remained stable. This situation
affected the profitability of centres in
operation and consequently the market
value of the asset base. An impairment of
32.8 million on tangible assets has been
taken during 2013.
The Property Division is mainly exposed
to the office and hotel market and to a
lesser extent the residential sector in
Europe. After years of decline, both in
take-up and supply, the market has now
stabilised. The Netherlands market, with
high office vacancies, remains the most
challenging market for the division, where
62% of the portfolio is invested. All other
countries have offered sustainable conditions for the development of its activities.
An impairment of 4 million on tangible
assets has been taken during 2013.
The Finance Division is exposed to the
sovereign debt market in Europe. The
investment strategy is limited to the high-

est rating quality amongst a limited number of European countries. The division is
also globally invested in non-listed equity
funds, co-investments and direct investments. Besides the risks inherent to equity
investments, a significant portion of the
portfolio is invested in USD and SEK. The
currency risk is managed through various
hedge instruments (currency loans or
swaps).
Through a strict financing policy, the
Inter IKEA Group has limited exposure
to bank financing (around 4% of total
assets).
Luxembourg, 15 May 2014

The board collectively

17

Consolidated Annual Accounts of Inter IKEA Holding S.A.

Consolidated balance sheet as of 31st December 2013

Notes

2013
( 000s)

2012
( 000s)

Intangible assets

9,000,000

9,000,000

Leased Land

179,639

210,799

Tangible assets

3,550,050

2,795,061

ASSETS

Property, Plant and equipment

Tangible assets under construction

Total non-current Assets

Amounts due within one year

Amounts due after more than one year

Other debtors
Amounts due within one year
Amounts due after more than one year

Cash at bank and in hand

Total current Assets
Deferred charges
Total Assets

2012
( 000s)

Share capital

11/12

300,000

300,000

Share Premium

11/13

4,500,000

4,500,000

Legal Reserve

11

30,000

30,000

11

2,684,236

2,238,359
445,877

2,908,864

2,218,827

641,186

576,234

Result of the year

11

515,860

Currency Transl. Adj.

11

9,396

17,667

Minority interests

14

468,717

340,174

8,508,209

7,872,077

30,559

101,478

101,842

12,831,167

12,107,702

8,832

8,049

529,886

460,334

529,886

460,334

Total Equity
Provisions

Trade receivables

Transferable securities

2013
( 000s)

Retained earnings

Current assets
Inventories

Notes

Equity

Non-current assets

Shares in undertakings linked by virtue

of particip. Interests

EQUITY AND LIABILITIES

202,956

114,437

122,306

98,601

80,650

15,836

2,163,844

1,918,581

290,898

312,288

3,196,416

2,813,689

31,210

28,431

16,058,793

14,949,821

The accompanying notes form an integral part of these consolidated annual accounts.

Provision for deferred taxes

10

27,967

Other provisions

15

77,688

51,855

105,655

82,414

Total Provisions
Non-current & current liabilities
Amounts owed to credit institutions

700,957

581,776

due within one year

109,973

254,151

due after more than one year

590,984

327,625

288,551

194,571

288,551

194,571

Trade creditors
due within one year
due after more than one year

Other creditors
due within one year
due after more than one year

Total non-current & current liabilities

Deferred income
Total equity and liabilities

16

6,435,595

6,199,860

654,715

349,488

5,780,880

5,850,372

7,425,103

6,976,207

19,826

19,123

16,058,793

14,949,821

The accompanying notes form an integral part of these consolidated annual accounts.

18

INTER IKEA GROUP 2013

Consolidated income statement for the year ending

31st December 2013
INCOME STATEMENT

Notes

Net turnover
Other operating income

2013
( 000s)

2012
( 000s)

2,810,239

2,583,982

45,935

76,143

2,856,174

2,660,125

(1,539,476)

(1,328,201)

Staff expenses

(201,174)

(167,135)

Value adjustments

(156,810)

(127,000)

(157,157)

(126,860)

Operating income

18

Use of merchandise, raw material

and consumables

In respect of tangible assets

In respect of current assets

Other operating charges

Operating result

347

(140)

(203,776)

(205,509)

754,938

832,280

Financial income

19

236,246

146,712

Financial expenses

20

(437,314)

(454,045)

Share in profit/loss in Associates

2,537

(28,264)

Profit on ordinary activities

556,407

496,683

Income tax expense

(76,589)

(57,615)

Profit of the year before

minority interest

479,818

439,068

Attributable to:
Shareholders of the parent company

11

515,860

445,877

Minority interests

14

(36,042)

(6,809)

The accompanying notes form an integral part of these consolidated financial statements.

INTER IKEA GROUP 2013

19

Consolidated Cash-Flow statement for the year ending

31st December 2013
2013
( 000s)

2012
( 000s)
Acquisition of tangible fixed assets

Profit of the period

515,859

442,761

Minority interests

36,042

3,694

Depreciations, impairments and write-off

156,915

131,221

Acquisition of financial fixed assets

26,874

17,942

Disposal of financial fixed assets

981

636

197,343

90,932

356,178

363,884

Unrealized fair value adjustments

57,222

15,891

Profit / Loss in Associates

2,537

28,264

Deferred taxes
Gain / Loss on assets disposals
Interests expenses

Operating cash-flow before working capital

changes
Inventories
Trade and other receivables
Other current and non-current assets
Net variation of current assets

Disposal of tangible fixed assets

Other current liabilities

Net variation of current liabilities
Other adjustments
CASH-FLOW FROM OPERATING ACTIVITIES

20

967,906

439,224

86,492

142,752

28,721

24,090

1,270

Acquisitions / Disposals of short-term investments

121,531

272,177

CASH-FLOW FROM INVESTMENT ACTIVITIES

1,030,396

48,385

171,510

70,804

FINANCING ACTIVITIES
Increase / Decrease in Capital
Dividends paid

876,145

837,035

1,689

7,022

69,115

28,135

3,425

78

70,851

21,035

Interests paid

173,783

148,661

6,896

4,227

180,679

152,888

985,973

663,112

356,178

282,884

Increase / Decrease of loans

206,802

281,334

CASH-FLOW FROM FINANCING ACTIVITIES

22,134

493,414

22,289

121,313

312,288

190,917

NET CASH VARIATION

OPENING VALUE OF CASH ACCOUNTS
Non-cash movements on cash accounts

Trade and other payables

2012
( 000s)

INVESTMENT ACTIVITIES

OPERATING ACTIVITIES

Provisions

2013
( 000s)

CLOSING VALUE OF "FREE" CASH ACCOUNTS

900

58

290,899

312,288

The accompanying notes form an integral part of these consolidated financial statements.

INTER IKEA GROUP 2013

Notes to the Inter IKEA Holding S.A. Consolidated Financial Statements

Note 1 General

Inter IKEA Holding S.A. (hereafter Holding SA)

is a company incorporated in Luxembourg on
9th January, 1992 (Luxembourg Trade and Companies Register B38952) for an unlimited period
of time. The consolidated financial statements
for the year ending 31st December, 2013 comprise Holding SA, its subsidiaries and its participating interests (hereafter the Company or the
Group) accounted for according to the full or
equity consolidation methods. The consolidated
financial statements are prepared according to
Luxembourg legal and regulatory requirements.

Note 2

Basis for Preparation

The Group accounting year is from 1st January
to 31st December.
The consolidated financial statements are
presented in thousands of Euros, rounded to
the nearest thousand.
The accounting policies set out below are
applied consistently to all periods presented in
the financial statements.
For comparison reasons, certain reclassifications have been made to the consolidated
balance sheet as at 31st December 2012.

Note 3

Group Accounting Policies

Basis for consolidation
Subsidiaries
Subsidiaries are entities controlled by Holding
SA. Control exists when Holding SA has the
power, directly or indirectly, to govern the
financial and operating policies of an entity so
as to obtain benefits from its activities. Control
is presumed to exist when Holding SA, directly
INTER IKEA GROUP 2013

or indirectly through subsidiaries, owns more

than half of the voting rights of an entity
Participating interests
Participating interests are those entities in
which Holding SA has a significant influence.
Significant influence is presumed to exist when
Holding SA owns, directly or indirectly through
subsidiaries, between 20 and 50% of the voting
rights. The participating interest values include

the share owned by Holding SA in the total

recognized gains and losses of Participating
interests on an equity accounted basis.
Transactions Eliminated on Consolidation
Intra-group balances and any unrealized
gains and losses or income and expenses
arising from intra-group transactions, are
eliminated in preparing the consolidated
financial statements.

Entities included in consolidation

The most significant companies contributing to the Inter IKEA Group consolidation
Country

Ownership, %

Country

Ownership, %

Galliford SA

BE

100%

Inter IKEA Systems BV "IISBV"

NL

100%

Inter IKEA Systems SA

BE

100%

Inter IKEA Systems Holding BV*

NL

100%

Inter IKEA Treasury SA

BE

100%

Landprop Holding BV*

NL

100%

Inter IKEA Centre Switzerland AG

CH

51%

Pronam BV *

NL

100%

Inter IKEA Centre China Co Ltd

CN

51%

Vastint Holding BV*

NL

100%

Inter IKEA Distribution Cyprus Ltd

CY

100%

Vastint Land BV*

NL

100%

Inter IKEA Holding Ltd*

CY

100%

Inter IKEA Centre Polska SA*

PL

51%

Inter IKEA Centre Ceska Republica sro

CZ

51%

SwedeCenter Spzoo

PL

100%

Inter IKEA Centre Deutschland Gmbh*

DE

51%

Inter IKEA Centre Portugal SA

PT

51%

Inter IKEA Centre Group A/S*

DK

51%

Interprime Property SRL

RO

100%

Colgardie SA

ES

100%

Inter IKEA Culture Centre AB

SE

100%

Inter IKEA Centre Espana SL

ES

51%

Inter IKEA Investments AB*

SE

100%

Inter IKEA Centre France SAS*

FR

51%

Inter IKEA Systems Services AB

SE

100%

I.F.P.M. Ltd

HK

100%

Inter IKEA Distribution Far East Ltd

SG

100%

Inter IKEA Centre Italia Srl*

IT

51%

Inter IKEA Centre Slovensko sro

SK

51%

SIA Larix Property

LV

100%

UK Landprop Services Ltd

UK

100%

Inter Funds Management SA

LU

100%

Inter IKEA Systems Services inc.

US

100%

Inter IKEA Finance SA

LU

100%

UAB Pinus Proprius*

LT

100%

Equity Estate BV*

NL

53%

Inter Hospitality Holding BV*

NL

100%

Entities

Entities

* These entities represent sub-groups present in AN, AT, BE, CH, CN, CY, CZ,
DE, DK, ES, FR, GH, HK, HR, IT, LT, LU, LV, MU, NL, PL, PT, RO, RS, SA, SE,
SG, SK, UK, US, VG, ZA.

21

Reporting Currency
The reporting currency of the Group is the EUR.

Foreign currency transactions

Transactions in foreign currencies other than
the reporting currency are translated at the
foreign exchange rate prevailing at the date of
the transaction. Monetary assets and liabilities
denominated in foreign currencies at the balance sheet date are translated at the foreign
exchange rate effective at that date. Foreign
exchange differences, arising from the settlement of foreign currency transactions or on
translation of monetary assets and liabilities,
are recognized in the income statement.
Foreign subsidiaries
The financial statements of foreign subsidiaries
are translated into EUR at year-end exchange
rates for Balance Sheet and average exchange
rates for Profit & Loss Accounts. The Equity
accounts are kept at historical cost. Resulting
differences are recorded under Currency
Translation Adjustment in equity.
Hedging policies
The Group is hedging two kinds of risks:
Interest rate risk: The risk that the value of
a financial instrument or loan will fluctuate
due to changes in market interest rates. For
example, the value of a fixed rate bond or
the NPV of a fixed rate loan may vary with
movements in market interest rate.
Currency risk: The risk that the value of a
financial instrument will fluctuate due to
changes in foreign exchange rates, e.g. the
value of financial liabilities such as foreign
currency denominated trade payable may
vary with movements in the exchange rate.
Transfer of this risk could be achieved by the
execution of forward exchange contracts,

22

fixing the exchange rates which could be

obtained at certain dates in the future.
The accounting treatment is as follows:
The cost or benefit of the hedge should be
deferred, and recognised over the term of
the contract.
Any gain or loss in re-measuring the hedging instrument at fair-value is recorded in
the income statement with a corresponding
effect on the balance sheet under prepayment / deferred income as positive, negative fair value hedges.
Any gain or loss on the hedged item attributable to the hedged risk is adjusted against
the carrying amount of the hedged item and
recorded in the income statement.
Intangible Assets
An intangible asset shall be recognised if, and
only if: (1) it is probable that the expected
future economic benefits that are attributable
to the asset will flow to the entity; and (2) the
cost of the asset can be measured reliably.
The probability shall assess expected future
economic benefits using reasonable and supportable assumptions that represent management's best estimate of the set of economic conditions that will exist over the useful life of the
asset.
An intangible asset shall be measured initially
at cost.
Intangible assets with definite useful life are
amortized over their respective useful life
period.
An intangible asset with an indefinite useful
life shall not be amortised but is investigated for
impairment on an annual basis by comparing its
recoverable amount with its carrying amount.
Impairment is recorded whenever there is a permanent indication that the intangible asset may
be impaired.

Leased Land
A leased land is a long term lease agreement
in which the tenant rents and uses the land to
erect buildings and infrastructures. The tenant
owns the temporary or permanent buildings
and infrastructures built upon it.
Leased lands are depreciated over the lease
period, which expires between the years 2015
and 2110.
Tangible Assets
Tangible assets are stated at cost less accumulated depreciation and impairment losses.
Depreciation is charged to the income statement from the date the asset is available for
use, on a straight-line basis over the estimated useful lives of each part of an item of
property, plant and equipment.
The estimated useful lives are as follows:
Maximum period
Buildings Retail

25 to 40 years

Buildings Other

33 years

Building installations

15 years

Leasehold improvements/leased
equipments
IT equipments

Lease period
5 years

Furniture, fixtures and fittings

10 years

Land is not depreciated.

Inventories
Inventories are measured at the lower of cost
and net realizable value. The cost of inventories
is based on the First-In-First-Out principle.
Inventories include costs incurred in relation to
the construction of buildings that are destined
to be sold.

INTER IKEA GROUP 2013

Trade and Other Receivables

Trade and other receivables are stated at cost,
less bad debt allowance, which are reversed
when the reason for which the allowance was
made have ceased to exist.

Employee Benefits
Pension Plans
Obligations for contributions to pension plans
are recognized as an expense in the income
statement as incurred.

Investments
Liquid investments are measured based on
their fair value. Non-liquid investments are
measured based on the Lower of Cost or
Market (LOCOM) principle.
Gains or losses arising from the change in fair
value or losses arising from LOCOM value are
recognised in the income statement in the
period in which they occur when they are considered by the Board of Directors as permanent.

Provisions
A provision is recognized if, as a result of a
past event, the Group has a present legal or
constructive obligation that can be estimated
reliably and it is probable that an outflow of
economic benefits will be required to settle
the obligation.

Deferred charges
Deferred charges are costs relating to a subsequent accounting period that are capitalized as
assets until they are actually used. (e.g. insurance premiums, rent, interest charges and sundry costs paid in advance, non-consumed
costs, maintenance contract fees).

Revenue recognition
Goods sold
Revenue from the sale of goods is measured at
the fair value of the consideration received or
receivable, net of returns and allowances,
trade discounts and volume rebates.

Share Capital
Legal reserve
In accordance with Luxembourg company law,
the Company is required to transfer a minimum of 5% of its net profit for each financial
year to a legal reserve. This requirement
ceases to be necessary once the balance on
the legal reserve reaches 10% of the issued
share capital. The legal reserve is not available
for distribution to the shareholders.
Dividends
Dividends are recognized in the period in which
they are declared by the Board of Directors.

INTER IKEA GROUP 2013

Trade and Other Payables

Trade and other payables are stated at cost.

Rental income
Rental income from the tenants is recognised
in the income statement on a straight-line
basis over the term of the lease.

Finance expenses
Finance expenses comprise interest expenses
on borrowings, foreign currency losses, changes
on fair value of financial assets, impairment
losses recognised on financial assets and
losses on hedging instruments. All borrowing
costs are recognised in the income statement
using the effective interest method.
Value adjustments are mainly related to the
activities within the financial assets and investments activities. Those adjustments result from
the compliance of the fair market value principle applied to financial instruments, such as
bonds, shares, warrants, options.
Income Taxes
Income tax on the profit or loss for the year
comprises current and deferred tax.
Current tax is the expected tax payable on
the taxable income for the year, using tax
rates enacted at the balance sheet date, and
any adjustment to tax payable in respect of
previous years.
Deferred tax is provided using the balance
sheet liability method, providing for temporary
differences between the carrying amounts of
assets and liabilities for financial reporting
purposes and the amounts used for taxation
purposes.

Finance income
Finance income comprises interest income on
funds invested, dividend income, gains on disposal of financial assets, changes in fair value
of financial assets, realized foreign currency
gains and gains on hedging instruments that
are recognised in the income statement. Interest income is recognised as it accrues. Dividend income is recognised when declared by
the Board of Directors or Annual General Meeting of the shareholders.

23

Note 4

Note 5

Intangible assets
In 2012, IISBV, franchisor of the IKEA Concept and subsidiary company,
received from an affiliated company a contribution made of the IKEA Trademarks for a value of EUR 9 billion against a share premium issuance of
EUR 3.6 billion and a debt of EUR 5.4 billion.
This intangible asset has an indefinite useful life and is therefore not amortized.
In the opinion of the Management, no permanent diminution in value has
occurred and therefore no value adjustment was estimated necessary as at
31st December 2013.

Note 6

( '000s)
China
Poland
The Netherlands
Total Leased Land

1 Jan.
2013

Disposals

Amortisation

Translation

31 Dec.
2013

191,052

20,680

4,008

2,816

163,548

7,400

2,160,

711

4,529

12,347

785

11,562

210,799

22,840

5,504

2,816

179,639

Tangible Assets

( '000s)

Land &
building

Other assets,
Tangible
tools & assets under
Machinery
equipment construction

Total

At cost
As at January 1

2,799,181

68,960

44,279

Additions

505,478

7,525

6,451

463,481

982,935

Disposals

128,925

203

2,930

9,080

141,138

Transfers

371,621

2,643

1,039

375,303

14,146

20,759

Translation
adjustment

576,234 3,488,654

6,146

467

3,541,209

78,925

48,372

As at January 1

636,304

30,475

26,814

693,593

Additions

142,476

8,041

7,090

157,607

Disposals

81,941

120

2,040

84,101

Transfers

As at December 31

641,186 4,309,692

Accumulated
depreciation

Translation
adjustment

7,287

170

7,457

689,552

38,396

31,694

759,642

beginning of year

2,162,877

38,485

17,465

576,234 2,795,061

end of year

2,851,657

40,529

16,678

641,186 3,550,050

As at December 31
Net book value

24

Leased land

Tangible assets are mainly composed of land and buildings managed and developed by the Retail Centre and Property divisions.
The main realisations for the Retail Centre division were: opening of the first
shopping centre in Villesse (Italy), opening of two strip malls, one in Rothenburg
(Switzerland) and one in Poznan (Poland), acquisition of an existing shopping
centre in central Warsaw (Poland), completion of the reconstruction of a portion
of a shopping centre in Ostrava (Czech Republic) and the sale of a retail complex
in Vienna (Austria) and land use rights in China. The division invested a total
amount of EUR 830 million during the year, of which EUR 489 million was on the
construction of the first three shopping centres in China. The remaining amount
was invested in Europe for the completion of the above described realisations,
but also on the present construction of a shopping centre in Lbeck (Germany)
and the reconstruction of a shopping centre in Wroclaw (Poland) mainly.
The main realisations of the Property division were: the acquisition of two
properties, one in Amsterdam (Netherlands) and one in Brussels (Belgium), to
be redeveloped in coming years and the sale of a logistics centre in Utrecht
(Netherlands). The division invested EUR 130 million on the above described
realisations and also in the construction of a hotel and offices in Gdynia
(Poland), hotel and offices in Poznan (Poland), a hotel at Malpensa airport (Italy)
and various land acquisitions for future developments.
Impairment was recorded on a shopping centre in Spain for EUR 32 million
and on two office properties in the Netherlands for EUR 4 million.

INTER IKEA GROUP 2013

Note 7 Shares in undertakings linked by

Note 8 Inventories

virtue of participating interests

( '000s)
Other investments (gross)
Impairment

( '000s)

1 Jan.
2013

Additions

Disposal

Trans
lation

31 Dec.
2013

133,033

6,181

1,228

2,608

135,378

31,191

2,709

33,900

3,472 1,228

2,608

101,478

31 Dec. 2013

Raw material and consumables

Finished goods and goods for resale

31 Dec. 2012

983

764

5,002

5,029

Assets held for sale

2,847

2,256

Total Inventory

8,832

8,049

This caption solely comprises investments considered to be

permanent.

Raw material and consumables is mainly composed of paper

destined to the printing and publication of the next IKEA Catalogue. Finished goods for resale comprise IKEA products of the
IKEA Concept Store in Delft, the Netherlands. Assets held for
sale comprise residential apartments being sold in Riga (Latvia).

Note 9

Note 10

Total

101,842

Transferable securities

( '000s)

31 Dec. 2013

31 Dec. 2012

Deferred tax liabilities are attributable to the following items:

18,677

138,582

( '000s)

801,128

800,466

Goodwill

Government bonds & equivalent

1,344,039

979,533

Total Transferable Securities

2,163,844

1,918,581

Hedge funds
Non-listed equity investments

Provision for deferred taxes

31 Dec. 2013

31 Dec. 2012

8,228

6,253

Depreciation and amortization

19,739

24,306

Total deferred tax liabilities

27,967

30,559

Exess liquidity for Inter IKEA Group are held in government

bonds & equivalents. The sale of hedge funds and other excess
liquidities generated by group divisions during the year explain
the increase as at 31st December 2013.

Note 11

Shareholders equity
The movement in equity during the year can be summarized as follow:

( 000s)
Share capital
Share premium
Legal reserve

Balance at
1 Jan. 2013

Result
brought
forward

Result of
the year

Conversion
Difference

300,000

300,000

4,500,000

4,500,000

Balance at
31 Dec. 2013

30,000

30,000

Retained earnings

2,238,359

445,877

2,684,236

Result of the year

445,877

445,877

515,860

515,860

Currency Transl. Adj.

Total equity

INTER IKEA GROUP 2013

17,667

8,271

9,396

7,531,903

515,860

8,271

8,039,492

25

Note 12

Note 13

Share capital
As at 31st December 2013 and 31st December 2012, the subscribed capital is represented by 10,000,000 shares fully paidup of EUR 30 each.

Note 14

Share premium
As at 31st December 2013 and 31st December 2012, the share
premium amounted to EUR 4,500,000,000.

Minority interests

The movement in minority interests during the year can be summarized as follow:
( '000s)

Balance at
1 Jan. 2013

Result brought
forward

346,983
6,809
340,174

Minority interest
Minority result fo the year
Total

Result of
the year

Capital
increase

Conversion
Difference

Balance at
31 Dec. 2013

6,809

171,510

6,925

504,759

6,809

36,042

36,042

36,042

171,510

6,925

468,717

The most significant minority interest is the 49% participation of Ingka Pro Holding B.V., a company member of the Ingka Group,
into Inter IKEA Centre Group A/S (the Retail Centre Division).

Note 15

Note 16

Other provisions

( 000s)

31 Dec. 2012

31 Dec. 2013

31 Dec. 2012

Provisions for pension

24,823

13,170

More than 5 years

181,870

121,811

Other provision

52,865

38,685

Between 1 to 5 years

409,114

205,814

Less than one year

109,973

254,151

700,957

581,776

Total Provision

77,688

51,855

Other provisions are mainly composed of risk and uncertainties

related to various litigations and by other risks related to the
activities of real estate developments.

Note 17 Off balance sheet

financial commitments
Group companies have issued guarantees towards third parties
for a total amount of EUR 22.1 million (EUR 20.9 million in
2012). The major part of it (EUR 19 million) relates to the disposal of retail properties in Austria in 2012.
As at 31st December 2013, the Company has unrealised
gains on spots, swaps and forwards on foreign exchange transactions for a total amount of EUR 7.9 million (2012: EUR 5.9
million) and unrealised losses amounting to EUR 3.8 million
(2012: EUR 8.0 million). The nominal value of transactions
amounts to EUR 1,247 million (2012: EUR 1,456 million).

26

Amounts owed to credit institutions

31 Dec. 2013

( 000s)

Total amounts owed to credit

institutions

The majority of the long-term loans are secured by the mortgages on properties and all bank loans are related to real estate
activities.

As at 31st December 2013, the Company also has interest payables and receivables related to Interest Rate Swaps: EUR 4.6
million (2012: EUR 21.4 million) payables and EUR 0.1 million
(2012: EUR 0.1 million) receivables. The nominal value of transactions amounts to EUR 269 million (2012: EUR 680 million).
The Group also has commitments into conditional land
purchase agreements for EUR 141.4 million (2012: EUR 126
million) and long term lease for EUR 13.4 million (2012: EUR
13.5 million).

INTER IKEA GROUP 2013

Note 18

Note 20

Operating income

( 000s)

31 Dec. 2013

31 Dec. 2012

147,096

155,540

1,413,285

1,174,600

Media sales

175,674

199,067

Franchise fees

871,217

Retail sales
Wholesales sales

Property rental income

202,967

Financial expenses

( 000s)

31 Dec. 2013

31 Dec. 2012

364,968

377,479

Loss on financial assets trading

23,738

43,265

860,841

Fair value adjustment on financial

assets

41,899

26,867

193,934

Net foreign exchange losses

5,627

1,082

6,434

437,314

454,045

Interest expenses

Service income

28,648

21,557

Other

Gain on disposal of tangible assets

15,477

50,471

Total financial expenses

Other
Total operating income

1,810

4,115

2,856,174

2,660,125

Retail sales relate to the IKEA Concept Store located in Delft

(Netherlands). Wholesale sales relate to the sales of IKEA products to IKEA franchisees located mainly in the Middle East and
Asia Pacific. Media sales are mainly composed of the sales
related to the IKEA Catalogue distributed yearly. Franchise fees
are related to the franchising of the IKEA concept and represent
a 3% franchise income levied on the worldwide IKEA sales.

Note 19

Financial income

( 000s)
Dividend income
Interest income
Gain on disposal of financial assets
Fair value adjustement on current
liquid assets
Net foreign exchange gain
Other financial income
Total Financial income

31 Dec. 2013

31 Dec. 2012

The average full time number of employees amount to 1,754

in 2013 (1,644 in 2012).

Note 22

Fees information
Fees expensed by the Group during the year 2013 can be
broken down as follow:
( 000s)

31 Dec. 2013

31 Dec. 2012

Audit fees

1,282

1,108

Other assurance services

104

28

Tax advisory services

151

334

83

83

1,620

1,553

7,562

5,762

12,659

10,987

205,644

83,816

Total audit fees

2,495

39,251

1,986

Note 23

7,886

4,910

236,246

146,712

The significant increase of gains on disposal of financial assets

relates to the good performance of investments activities performed by the Finance division.

INTER IKEA GROUP 2013

Note 21 Employees

Other services

Remuneration to the Board of Directors

The remuneration paid in 2013 by the Company and its sub
sidiaries to members of the Board of Directors amounts to
EUR 302,556 (EUR 1.39 million in 2012).

Note 24

Subsequent events
No major subsequent events to report for the year ended 31st
December 2013.

27

Independent Auditors Report

To the Shareholders of Inter
IKEA Holding S.A.

Report on the consolidated accounts

Following our appointment by the General
Meeting of the Shareholders dated 31st May
2013, we have audited the accompanying consolidated accounts of Inter IKEA Holding S.A.,
which comprise the consolidated balance
sheet as at 31st December 2013, the consolidated profit and loss account and the consolidated cash flow statement for the year then
ended, and a summary of significant accounting policies and other explanatory information.

Board of Directors responsibility

for the consolidated accounts
The Board of Directors is responsible for the
preparation and fair presentation of these
consolidated accounts in accordance with
Luxembourg legal and regulatory requirements relating to the preparation and presentation of the consolidated accounts and for
such internal control as the Board of Directors
determines is necessary to enable the pre
paration and presentation of consolidated
accounts that are free from material misstate
ment, whether due to fraud or error.
Responsibility of the
rviseur dentreprises agr
Our responsibility is to express an opinion on
these consolidated accounts based on our
audit. We conducted our audit in accordance
with International Standards on Auditing as

28

adopted for Luxembourg by the Commission

de Surveillance du Secteur Financier. Those
standards require that we comply with ethical
requirements and plan and perform the audit
to obtain reasonable assurance about whether
the consolidated accounts are free from material misstatement.
An audit involves performing procedures to
obtain audit evidence about the amounts and
disclosures in the consolidated accounts. The
procedures selected depend on the judgment
of the rviseur dentreprises agr, including
the assessment of the risks of material misstatement of the consolidated accounts,
whether due to fraud or error. In making those
risk assessments, the rviseur dentreprises
agr considers internal control relevant to
the entitys preparation and fair presentation
of the consolidated accounts 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 entitys internal control. An audit also
includes evaluating the appropriateness of
accounting policies used and the reasonableness of accounting estimates made by the
Board of Directors, as well as evaluating
the overall presentation of the consolidated
accounts.
We believe that the audit evidence we have
obtained is sufficient and appropriate to provide a basis for our audit opinion.

Opinion
In our opinion, the consolidated accounts give
a true and fair view of the financial position of
Inter IKEA Holding S.A. as of 31st December
2013, and of the results of its operations and
its cash flows for the year then ended in accordance with Luxembourg legal and regulatory
requirements relating to the preparation and
presentation of the consolidated accounts.
Report on other legal and regulatory
requirements
The management report, which is the responsibility of the Board of Directors, is consistent
with the consolidated accounts.

ERNST & YOUNG

Socit Anonyme
Cabinet de rvision agr

Luxembourg, 15 May 2014

Jeannot Weyer

INTER IKEA GROUP 2013

Inter IKEA Group

For further information please
visit the Inter IKEA Group website,
www.inter.ikea.com

Inter IKEA Holding SA