MÖBEL WALTHER ANNUAL REPORT - Hugin Online

M Ö B E L W A L T H E R A N N U A L R E P O R T

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K e y F i g u r e s o f t h e M ö b e l W a l t h e r G r o u p –F i v e - Y e a r C o m p a r i s o n

Financial year Change

Sales [ in million € ]

Orders received 602.5 732.3 817.2 802.8 802.8 0.0 %

Order backlog [as at year-end] 73.5 77.8 90.9 74.6 73.4 - 1.6 %

Sales [ total ] 532.9 677.8 689.7 698.4 679.6 - 2.7 %

Sales [ retail business ] 526.3 637.1 689.7 674.6 679.6 0.7 %

of which: Furnishing centers 407.9 513.4 561.2 539.2 535.6 - 0.7 %

SCONTO Germany 91.6 93.9 94.9 89.0 89.2 0.1 %

TICCO 21.2 21.7 18.6 17.3 17.3 - 0.1 %

International 4.1 5.6 11.8 27.9 37.3 33.8 %

E-commerce ––– ––– ––– ––– 0.2 [+ ]

Sales by regions [ in %]

Western Germany 29 39 43 44 46

Eastern Germany 70 60 55 52 49

International 1 1 2 4 5

Fixed assets [ in million € ]

Book values 301.9 334.1 363.2 349.5 338.0 - 3.3 %

Additions to fixed assets 52.0 50.6 56.3 25.5 21.2 - 16.7 %

Depreciation 57.7 22.8 26.2 27.7 28.2 2.0 %

of which: special depreciation 37.8 ––– ––– ––– –––

Capital and reserves [ in million € ]

Subscribed capital 25.6 25.6 25.6 25.6 25.6

Capital reserves 93.6 93.6 93.6 93.6 93.6

Revenue reserves 9.0 4.0 21.9 24.3 31.4

Distributable profit 9.5 18.7 13.1 14.0 6.8

Special items with partial reserve character [50 %] 53.4 52.8 51.7 49.3 46.0

Total capital and reserves 191.1 194.7 205.9 206.8 203.4 - 1.6 %

Equity ratio [ in %] 43.1 41.6 37.5 38.4 37.4

Total assets [ in million € ] 442.9 468.4 549.3 538.3 548.3 1.9 %

Staff [as at Dec. 31] 3,564 4,245 4,736 4,813 4,949 2.8 %

of which: International 57 69 232 365 515 41.1 %

Pre-tax income [ in million € ] 17.2 45.9 45.3 22.1 14.3 - 35.2 %

Cash flow [ in million € ] 65.8 43.3 44.2 34.2 28.2 - 17.4 %

Net income of the year [ in million € ] 8.7 21.5 20.2 10.8 6.1 - 43.6 %

Earnings per share [ in € ] 2.61 2.14 2.03 0.94 0.33 - 64.9 %

Dividend [ in million € ] 8.4 8.4 8.4 8.4 8.0

Profitability [ in %]

Return on sales 1] 3.2 6.8 6.6 3.2 2.1

Return on equity 2] 10.0 24.9 23.6 11.2 7.3

1996 1997 1998 1999 2000 99➔ 00

1] Pre-tax income/sales2] Pre-tax income/average equity [excl. dividend]

M Ö B E L W A L T H E R I N B R I E F

033800_WA_English_1RZ 16.05.2001 13:25 Uhr Seite 1

1990

127

1991

180

1992

237

1993

277

1994

409

1995

514

1996

602

1997

732

1998

817

1999

803

2000

803

million €

625

375

250

125

500

ORDERS RECEIVED

SALES BY DIVISIONS SALES BY REGIONS

POSITIONING OF SALES FORMATS

750

■ Furnishing Centers

■ TICCO

■ SCONTO Germany

■ International

HIG

H-Q

UA

LIT

Y

M O D E R N D E S I G N

NEWS

C O N S E R V A T I V E D E S I G N

LO

W-P

RIC

ED

SCONTO

Furnishing Centers

SPARKAUF

TICCO

welcome living

Ikarus[ from Jan. 1, 2001]

Germany East 48,6 %

GermanyWest 45,9 %

International5,5 %

Furnishing Centers 78,9 %

SCONTOGermany 13,1 %

International 5,5 %

TICCO 2,5 %


G R O U P S T R U C T U R E

S C O N T O G e r m a n y

11 Loca t ions w i th 82 ,000 sq m [ 882 ,600 sq f t ] o f se l l i ng space

D i s counte r fo r ca sh -and - ca r ry fu r n i tu re

■ SCONTO SB Der Möbelmarkt GmbH[100 %]

■ Full product range ■ Low prices ■ Ready availability

■ SCONTO NordMöbelmarkt GmbH[50 %]

T I C C O

4 Loca t ions w i th 12 ,000 sq m [ 129 ,200 sq f t ] o f se l l i ng space

Spec ia l ty out le t s fo r k i t chen and bath

■ TICCO Handelsgesellschaft mbH[100 %]

■ A wide selection of kitchens and baths ■ Comprehensive service

E - C O M M E R C E / M A I L O R D E R Ideas in l i v ing v ia In te r net o r ca ta log

■ Möbel Walther New Media AG[100 %]

■ Ikarus GmbH [51 %] from Jan. 1, 2001

■ Designer-oriented furniture ■ Accessories ■ Prompt delivery

I n t e r n a t i o n a l

5 Loca t ions w i th 31 ,000 sq m [ 333 ,700 ] o f se l l i ng space

Fur n i sh ing s to res

■ SCONTO Nábytek k.s.[100 %] [Czech Republic ]

■ SCONTO Polska Sp.z.o.o.[100 %] [Poland]

■ SCONTO Butor Kft.[100 %] [Hungary ]

■ Walther Meble Sp.z.o.o.[100 %] [Poland]

■ Full product range

■ Low prices

■ Ready availability

■ Basic service

■ Kiddy Land

■ Restaurants

S T O R E - B A S E D R E T A I L I N G

E - C O M M E R C E / M A I L O R D E R

F U R N I S H I N G C E N T E R S

11 Loca t ions w i th 290 ,000 sq m [ 3 ,121 ,500 sq f t ] o f se l l i ng space

A l l to the home fu r n i sh ings f rom a s ing le source

■ Möbel WaltherGründau GmbH [100 %]

■ Möbel WaltherPeißen GmbH [100 %]

■ Traditional living

■ Accessoires

■ Kitchen and bath

■ NEWS – fresh/moderncash-and-carry furniture

■ SPARKAUF – furnishingsat the lowest possible price

■ Comprehensive service

■ Kiddy Land

■ Restaurants

■ Möbel WaltherChemnitz GmbH [100 %]

■ Möbel WaltherDresden GmbH [100 %]

■ Möbel WaltherMagdeburg GmbH [100 %]

■ Möbel WaltherLeipzig GmbH [100 %]

■ Möbel WaltherCottbus GmbH [100 %]

■ Möbel Walther Berlin-Brandenburg GmbH [100 %]

■ Möbel WaltherSchwetzingen GmbH [100 %]

■ Möbel MutschlerGmbH & Co.[95 %]

■ Möbel Mutschler GmbH & Co. Leonberg[95 %]

■ Logistics companies[100 %]


M ö b e l W a l t h e r f i t f o r t h e f u t u r e

Consumer behavior is undergoing change. For today’s customers, all

options are open. Individuality is their highest priority. Moreover, con-

sumers seek »convenience«- all things that make life comfortable and

pleasant.

Retail strategies must be adapted to this change in customer behavior.

Retailing is on the move. And we are moving with the times by shifting

our focus to new directions:

■ We are addressing our target groups even more purposefully with

new sales formats and changes in existing marketing channels.

■ Our new range of services makes buying even simpler.

■ We are acquiring new customers by penetrating new regions.

In this annual report, we wish to inform you of our strategies and mea-

sures for securing the company’s future in a changing retailing environ-

ment.

M Ö B E L W A L T H E R 2 0 0 0 1


To our Shareholders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4

The Möbel Walther Share . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7

Business Environment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10

Business Development . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12

Profit & Dividend . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15

Investments & Finance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17

Employees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19

Outlook & Strategy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20

Risik Report . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31

Furnishing Centers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34

NEWS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36

Discount . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38

Kitchen & Bath . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40

Welcome Living . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42

Service & Logistics . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44

Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48

Locations in Germany . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 71

Management Report 2000

Sales Formats

Further Information

Annual Accounts 2000

2 M Ö B E L W A L T H E R 2 0 0 0


M A N A G E M E N T B O A R D

Gerhard Walther

Gründau-Lieblos, * 1949

Chairman of the

Board of Managing Directors

since 1986

Corporate development, logistics,

organization, specialty outlets,

and purchasing

Stephan Müller

Linsengericht, * 1964

Member of the


since 1997

Furnishing centers

Heiner Strungies

Bruchköbel, * 1947

Member of the


since 1986

Controlling, finance, and human

resources

from left to right

M Ö B E L W A L T H E R 2 0 0 0 3


4 M Ö B E L W A L T H E R 2 0 0 0

Your company is experiencing a process of rapid change. The business environ-

ment is changing. We are moving with the times in order to take advantage of

future opportunities for growth. This situation gives rise to many questions,

which I am pleased to answer here.

How has business developed over the last year?

There is no question that the way in which business developed in 2000 was

unsatisfactory all in all. Up to the end of the third quarter, figures were in line

with expectations. However, in the last quarter of 2000 demand for furniture –

as well as consumption in Germany as a whole – collapsed abruptly. As a

consequence, instead of the targeted 3% increase in sales, we experienced more or less

stagnation. At € 14.3 million, pre-tax profits were significantly below our targets and the

figures for the previous year. Nonetheless, we shall maintain the dividend level of the

previous year. With a dividend yield of 8.9 % for ordinary shares and 11.8 % for preference

shares [ including tax credit, based on the share price at the end of March 2001], we are

among the companies offering the highest dividend yields in Germany.

How would you evaluate the development of the share?

Many over-inflated share prices in the new economy have burst in recent months. In

contrast, our shares have demonstrated resilience: prices have even increased slightly over

the last year. Our performance was a little better than the SDAX. Admittedly, the level of

our shares is low. However, with shareholders‘ equity of more than € 200 million, strong

reserves in real estate, considerable profits and a high dividend yield, there is no doubt that

our market capitalization of € 121 million [March 2001] represents an undervaluation in

conventional terms.

Has the competitive situation changed over the last year?

We are still one of Germany‘s three biggest furniture retailers. Our sales figures have

developed in line with the industry in general. Naturally we have felt the comparatively

weaker demand in eastern Germany a little more than other companies who are only

active in the west. In eastern Europe, we have already achieved a very good and profi-

table position in the Czech Republic which we intend to expand further in the future. We

are only starting activities in Poland and Hungary.

Where does the new facility planned for Eschborn fit in?

Our Eschborn facility, located west of Frankfurt/Main and planned to open in 2002, is

certainly one of the best locations for furniture in Germany. This facility has been designed

as a theme center »World of Living« and concentrates on interior design – a unique

D e a r s h a r e h o l d e r s ,


M Ö B E L W A L T H E R 2 0 0 0 5

T O O U R S H A R E H O L D E R S

format for Germany. What makes this location so special is the fact that Möbel Walther

will not be the only furniture retailer in this center, but will share the space with other

suppliers whose business also lies in the area of home furnishings and interior design. The

wide range of products on offer will increase attractiveness, while also making it possible

to spread out the risk involved through additional income from rental.

What are your expectations for eastern Europe?

The neighboring countries of eastern Europe are markets with a solid future. Our early

entry into the market means that we have a perfect opportunity to participate in the re-

covery process in these countries. The success of our stores in the Czech Republic points

the way for future developments in Poland and Hungary.

Where do you see the strengths of Möbel Walther?

In the store-based retailing – this is and is set to remain the basis for our business – we are

well positioned in the most attractive market segments, while our comprehensive service

distinguishes us from the competition. The further development of Möbel Walther into a

multi-channel player [ store-based retailing, e-commerce and mail order ] will broaden the

company’s base, enabling us to address our customers through all sales channels. The

»World of Living« theme center in Eschborn near Frankfurt/Main is a business concept

that will provide good opportunities in the highly competitive environment of a stag-

nating market. Finally, we should emphasize our expertise in logistics. This also represents

an opportunity to become active in the growing market for logistical services in business

with third parties.

E-commerce: Is initial euphoria now at an end?

Yes, this is certainly true of companies whose business is based entirely on the Internet.

However, our structure is quite different because we have a strong base in store-based

business. The winners in e-commerce will be traditional retailers which expand their

activities from store-based business to include e-commerce. This has been our strategy.

We use the Internet to acquire new customer groups that would not have been available

to us through conventional business. To this are added synergy effects between the

various sales formats – particularly in the area of logistics. This is where we enjoy consider-

able competitive advantages over »pure« Internet dealers. Thus, e-commerce represents

a rational addition to our business activities with good prospects for the future.

Where do you identify risks?

Sales, and therefore profitability development in all business units, is largely determined

by the demand for furniture. We respond to this risk through the variety of our sales for-


6 M Ö B E L W A L T H E R 2 0 0 0

mats and increasing internationalization. The indicators for Germany point to stable mar-

ket development in the coming years. Interior design and home furnishings will continue

to enjoy a high profile. I believe that the risks involved in our international expansion can

be calculated. Our business in the Czech Republic is no longer in its infancy and is already

achieving good results. Prospects are also good in Poland and Hungary.

What is the intended path of Möbel Walther over the next five years?

We will further develop our market position in Germany and eastern Europe. Because of

its innovative concept, the new center in Eschborn will represent an important milestone

for business in Germany. For eastern Europe, we expect the share in consolidated sales to

treble to over 15 %. In the e-commerce/mail order sector we identify a sales potential

of approximately € 25 million in 2005. In addition, we will build up a new business field

in real estate in order to achieve much higher added value for our own property through

professional property management.

The way has been paved to a successful future.

Gerhard Walther, CEO


M Ö B E L W A L T H E R 2 0 0 0 7

T H E M Ö B E L W A L T H E R S H A R E

S h a r e p r i c e J a n u a r y 2 0 0 0 - F e b r u a r y 2 0 0 1

20

10

400,000

300,000

200,000

100,000

€ Shares traded

■ Preference shares ■ Ordinary shares ■ DAX■ SDAX

Möbel Walther is one of the very first SMAX companies. Its share has been listed on the quality segment

for small caps of predominantly traditional sectors since April 26, 1999. As a SMAX company, we publish

quarterly reports in German and English. We have designated a bank to serve as a market maker to en-

sure liquidity for trading in the Walther share. Our share has a weighting of approximately 0.7 % in the

SDAX, the index for the 100 largest SMAX companies.

In 2000, the Möbel Walter share performed better than the comparable SDAX index. Compared with the

previous year, the price of the ordinary share rose by 15 %; the preference share was up by 19 %. The

share performed well especially during the early months of the year. However, part of these gains were

erased during the second half of the year, especially in the case of the preference share. Overall, however,

clear gains persisted, although at a low level. The share continued to be quoted at a 40 - 50 % discount

of its book value.

D i s a p p o i n t m e n t o n t h e s t o c k m a r k e t s

T h e M ö b e l W a l t h e r s h a r e s t a b l e

Disappointment set in the German Stock Market in 2000. After an unparalleled price rally by the German

share index DAX beginning in October 1999, in March 2000 it became subject to a consolidation that

resulted in a downswing despite numerous hopes for a sustained rise. The DAX lost 7 % over the year and

the downward trend also continued into the beginning of the current year. The Neuer Markt was even

worse hit. The NEMAX50 lost 44 % and many price bubbles burst. In contrast, prices of the second and

third tier experienced a renaissance: not only did the MDAX increase, but the SDAX also performed posi-

tively and realized 5 % growth.


8 M Ö B E L W A L T H E R 2 0 0 0

Last year, a total of 3.8 million of our shares were traded

on the German Stock Exchange, compared with 4.1

million the previous year.This corresponds to a daily

trading volume of approximately 15,000 shares, which

were increasingly traded on the XETRA electronic tra-

ding platform; this platform already accounts for 30 %

of all transactions.

Although the SDAX performed well and even the first

SMAX investment funds were launched last year, it should be stressed that analysts and investors still lar-

gely focus their attention on other market segments. The interest of the capital market in SMAX compa-

nies has not fundamentally improved. Small caps continue to dwell in the shadows. Nevertheless, we con-

tinue to feel that our participation in the SMAX is fundamentally correct, as doing so is acknowledged as

a signal for having more liquidity and transparency.

D i v i d e n d c o n t i n u i n g h i g h

At the Annual General Meeting, a continuation of the consistent dividend policy of previous years will be

proposed for financial year 2000 through the payout of an unchanged dividend of € 0.82/0.87 per

ordinary or preference share, respectively. Including a tax credit of 3/7 of the cash dividend, domestic

shareholders will consequently receive a dividend payout of € 1.17/1.24 per ordinary or preference

share, respectively. With a dividend total of € 8.0 million we will distribute 58 % of the net income of

Möbel Walther AG to our shareholders. Based on the share price at the end of March 2001, the dividend

yield reached 8.9 %/11.8 %, respectively [ including the tax credit ].

All figures in € per share 1996 1997 1998 1999 2000[Ordinary-/preference share ]

Number of shares [Ordinary/preference share ] 6 / 4 million 6 / 4 million 6 / 4 million 6 / 4 million 6 / 4 million

T h e M ö b e l W a l t h e r S h a r e – K e y P e r f o r m a n c e D a t a

1] Dividend for the respective financial year [ including tax credit ] in terms of the year-end price2] Year-end market capitalization in relation to equity

Dividend 0.82 / 0.87 0.82 / 0.87 0.82 / 0.87 0.82 / 0.87 0.82 / 0.87incl. corp. tax credit 1.17 / 1.24 1.17 / 1.24 1.17 / 1.24 1.17 / 1.24 1.17 / 1.24

Dividend yield in %1] 2.8 / 2.4 3.9 / 4.9 3.5 / 4.3 10.8 / 16.1 9.4 / 13.5

Earnings per share 2.61 2.14 2.03 0.94 0.33

Cash flow per share 6.58 4.33 4.42 3.42 2.82

Book value per share 19.11 19.47 20.59 20.68 20.34

Market/book value 2] 2.4 1.4 1.5 0.5 0.6

High 49.08 / 52.15 54.20 / 54.71 44.74 / 44.99 31.00 / 30.90 15.35 / 14.80

Low 23.52 / 22.75 22.50 / 19.94 28.63 / 25.26 9.60 / 7.70 11.11 / 8.05

Year-end price 42.44 / 51.64 29.65 / 25.26 32.98 / 29.14 10.80 / 7.70 12.40 / 9.20

Shares traded in million 3.5 2.5 2.3 4.1 3.8

June 26, 2001 Annual General Meeting, Gründau-Lieblos

August 15, 2001 Report of the first half of 2001

November 15, 2001 Report on 3rd quarter 2001 followed by analyst meeting

January 2002 Sales figures 2001

End of March 2002 Earnings figures 2001

End of April 2002 Annual financial statements 2001

June 28, 2002 Annual General Meeting, Gründau-Lieblos

FINANCIAL CALENDAR


M Ö B E L W A L T H E R 2 0 0 0 9

O p e n c o m m u n i c a t i o n s

We view investor relations as form of purposeful, ongoing communications with private and institutional

investors, financial analysts and economic journalists. We provide up-to-date information on the Group’s

development and management expectations in periodic interim reports, shareholders’ letters and press

releases. We enter into dialogue with our various target groups through events such as the Annual

General Meeting, analyst and press conferences, and numerous individual meetings.

We have intensified and expanded this dialogue through the Internet. At www.moebelwalther.de, all

company reports, share information and key performance data can be viewed in two languages [German

and English ]. Those interested can send us any questions or suggestions directly from the Web page or

sign up with an information service to regularly receive all reports in printed form or as e-mail.

We broke new ground in communications with private investors by directly targeting our furniture custo-

mers as potential investors. We printed about 100,000 »Discover the Möbel Walther Share« flyers and

enclosed them with furniture purchase documentation. The campaign’s attraction was enhanced by an

associated competition.

S h a r e h o l d e r s t r u c t u r e

The Walther family still holds a clear voting majority [58.4 % of ordinary shares at the time of the Annual

General Meeting 2000]. The company additionally holds 599,596 of its own ordinary shares [or 9.9 % of

the voting shares ]. It is planned to retain the shares as potential acquisition currency for strategic co-

operative agreements. The remaining ordinary shares are largely held

by institutional investors, among which, according to information avail-

able to us, are two Anglo-US investors that hold shares of more than

five percent each. In contrast, preference shares are widely distributed,

although here, too, the institutional investors are largely located in

North America and the UK.

As of December 31, 2000, Members of the Board of Managing Direc-

tors held a total of 775,434 shares [or 7.8 % of the total ]. Members of

the Supervisory Board held a total of 501 shares [or 0.005 % of the

total ]. All members of the executive staff receive part of their compensation in the form of shares and are,

therefore, shareholders of the company. A profit-sharing program is open to employees, through which

they may acquire preference shares up to DM 600 in value every year. Of this amount, DM 300 is subsi-

dized by the company. A total of nearly 750 employees [17 % of the German-based staff ] have already

taken part in this program. This is a high rate of participation compared to the industry as a whole. ■

SHAREHOLDER STRUCTURE ORDINARY SHARE

Walther family58.4 %

Institutional investorsNorth America 15.9 %*

Own shares9.9 %

Privately held and other9.9 %

Institutional investorsEurope 5.9 %*

* Retail investments funds

T H E M Ö B E L W A L T H E R S H A R E


1 0 M Ö B E L W A L T H E R 2 0 0 0

■ M A R K E T P E N E T R A T I O N I N H U N G A R Y

■ L A U N C H O F O N - L I N E S H O P

■ O P E R A T I N G S A L E S U P 0 . 7 %

■ F U R N I T U R E R E T A I L E R S W E A K

■ P R E - T A X P R O F I T A T € 1 4 . 3 M I L L I O N

■ C O N T I N U E D H I G H D I V I D E N D

R e t a i l i n g i m p r o v e s

The German economy again picked up perceptibly in 2000. The 3.0 % growth in inflation-adjusted gross

domestic product was the best performance since the reunification boom of 1991. The growth in GDP

almost doubled compared to 1999. The economic trend also contributed to improvements in the labor

market. Total employment rose on average for the year by 585,000 to 38.5 million, with total unemploy-

ment falling by 210,000 to 3.9 million. The improvement, however, was only felt in the western part of

Germany. The eastern part of the country failed to benefit from the improvement.

Consumer spending of private households rose by 1.6 % – a restrained figure when measured against the

performance of the economy as a whole. The strong increases in energy prices considerably weakened

the purchasing power of private households, which – with a largely unchanged propensity to save – was

no longer available to purchase other goods and services. The oil price related loss in real income amoun-

ted to € 13 billion in 2000, or 1 % of disposable income. For this reason, private consumption lagged

behind expectations, especially in the fourth quarter when it remained quite sluggish.

C o n s u m e r s p e n d i n g i n G e r m a n y w e a k e r t h a n o v e r a l l e c o n o m y

Real change in %

■ Gross domestic product

■ Private consumer spending

1996 1997 1998 1999 2000

+ 0.8

+ 1.0

+ 0.7

+ 2.0

+ 2.6

+ 1.6+ 1.4

+ 2.1

+ 1.6

+ 3.0

Traditional German retailers [ in other words, excluding auto retailing, gas stations, and pharmacies ]

generated sales of € 376 billion in 2000 – a nominal 1.6 % and a price-adjusted 1.2 % more than in the

previous year. Although this was the strongest growth rate recorded in eight years, retailers continued to

fall behind private consumption in total.

GERMAN ECONOMY/ CONSUMER SPENDING

1

2

3


M Ö B E L W A L T H E R 2 0 0 0 1 1

B U S I N E S S E N V I R O N M E N T

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E a s t e r n E u r o p e E c o n o m i e s c o n t i n u e s t r o n g

By contrast, our foreign activities enjoyed consistently favorable economic developments. The Czech

economy entirely overcame its recession, which had lingered since 1997. The economy benefitted from

the strong international environment in 2000, increasing overall by 3.1 %. In Poland, a restrictive mone-

tary policy with high real interest rates led to a slowdown in the pace of growth. Nevertheless, the Polish

economy grew by 4.1 %. The greatest vigor was displayed by the Hungarian economy, which attained a

5.3 % growth rate. ■

* excluding car, energy and pharmaceutical sectors.Source: Federal Statistical Office

Real change in %

■ Retail sales *

■ Furniture retail sales

1996 1997 1998 1999 2000

- 2.8 - 2.8

- 0.7

- 3.3

- 1.8

+ 1.1

- 1.1

+ 2.9

+ 0.5

+ 1.2

RETAILING/ FURNITURE RETAILING

- 1

1

3

2

- 2

- 3

F u r n i t u r e r e t a i l e r s w e a k

Furniture retailers in Germany enjoyed a good start to 2000, with increasing sales generated during the

first quarter. The industry benefitted from the solid economic conditions and the initially quite buoyant

consumer confidence. In the further course of the year, however, demand fell off more strongly from

quarter to quarter. Sales did not even reach their previous year’s level by year-end. The Statistical Federal

Office reported a nominal 0.5 % sales decline [ inflation-adjusted: -1.1 %] for retail sales of furniture,

accessories and household goods in 2000. The Institute for Trade Research at the University of Cologne

also reported a 1 % nominal drop in furniture retail sales.

Expectations of upward trends in the furniture sector during the year were disappointed. Especially in the

last quarter of 2000 the dramatic increase in energy prices led to a deterioration in consumer confidence

that manifested itself in a low propensity to consume goods such as furniture. Furnishings are personal,

long lasting consumer goods, the purchase of which can be brought forward or deferred in line with the

mood and confidence in future economic developments. With a weak performance in 2000, furniture

retailing continued its downward trend 1995 to 1999. A price-adjusted growth of 2.9 % was only re-

corded in 1998.


Business developments in 2000 were characterized by marked fluctuations from month to month.

Following the extremely favorable start in the first quarter, which posted a 9.4 % rise in incoming orders,

the subsequent months remained weaker despite slightly upward trends during the third quarter. From

October, however, demand suddenly plummeted, with the deterioration in confidence as a result of the

rise in energy prices reflected in a considerably restrained level of consumer spending. Due to the marked

declines during the fourth quarter, the annual volume of our incoming orders of € 802.8 million [ in-

cluding the value-added tax ] was remained at exactly its previous year’s level. We failed to reach our

announced target of a 3 % increase as a result of the unexpected

downturns in recent months. The order backlog amounted to €

73.4 million at year-end – slightly below the previous year’s figure of

74.6 million.

Invoiced sales in the retail furniture business rose slightly by 0.7 % to

€ 679.6 million. On a space-adjusted basis, this corresponds to a

sales decline of 2.9 % due to the addition of new selling space.

The previous year’s consolidated sales also included sales arising

from the invoicing of construction projects that the company com-

pleted itself and upon completion sold to lessors. In contrast, no

sales were generated by construction projects during the reporting

year. As a result, overall consolidated group sales fell by 2.7 % to the

above-mentioned figure of € 679.6 million.

A further important step towards market penetration in Eastern Europe was the opening of a new furni-

ture store in Budapest. This is our first outlet in Hungary. We are presently active with a total of five

furnishing outlets in three East European countries: the Czech Republic, Poland and now Hungary. The

Budapest store has a selling space of approximate 4,000 sq m [43,000 sq ft ] and experienced a solid

startup.

All in all, we generated considerable growth rates from our international business operations, with sales

rising by 33.8 % to € 37.3 million. Particularly worthy of mention is the high rate of growth of the three

furnishing outlets in the Czech Republic, which alone recorded a 30.6 % sales increase. Our outlet in the

eastern part of Prague, which opened in 1999, stands out in particular. This outlet has rapidly established

itself as our outlet with the highest level of sales in Eastern Europe. We now generate a total of 5.5 % of

our consolidated Group sales abroad.

1 2 M Ö B E L W A L T H E R 2 0 0 0

O p e r a t i n g s a l e s 0 . 7 % a b o v e p r e v i o u s y e a r

I n t e r n a t i o n a l : s u c c e s s f u l m a r k e t p e n e t r a t i o n i n H u n g a r y

1996 1997 1998 1999 2000

526.3

637.1

689.7 679.6674.6

€ million

50

200

350

500

650

OPERATING SALES

800


Sales in € million 2000 1999 Change

Furnishing centers 535.6 539.2 - 0.7 %

SCONTO Germany 89.2 89.0 + 0.1 %

TICCO 17.3 17.3 - 0.1 %

International 37.3 27.9 + 33.8 %

E-commerce 0.2 ––– [+] %

Other ––– 1.2 [–] %

Retail furniture business 679.6 674.6 + 0.7 %

Invoicing of construction projects ––– 23.8 [–] %

Group 679.6 698.4 - 2.7 %

In Germany, we were unable to avoid the general developments of the furniture sector. Domestic sales fell

by 0.5 % to € 642.3 million in line with sales declines in furniture retailing as a whole. Our space-adjusted

sales in Germany fell by 2.8 %.

Some outlets in western Germany even realized improvements, whereas East German locations in parti-

cular bore the brunt of losses. Overall, the portion of sales in Germany to west and east is now almost half

each. By way of comparison: in 1996, 70 percent of sales were generated in eastern Germany. Since then

this figure has continually fallen due to the continued strategic focus on western Germany.

The eleven furnishing centers in Germany [ including the associated

NEWS and Sparkauf specialty outlets ] continue to form the backbone

of our business, generating 78.9 % of consolidated Group sales.

Marked progress was made by the Schwetzingen outlet, which was

opened in 1998. With its 13.0 % boost in sales, this store expanded its

regional market position. Both of the Mutschler outlets boosted their

sales by 3.8 % overall – without, however, attaining their set targets.

Our Gründau Headquarters center realized a stable development. In

eastern Germany, although the Berlin outlet increased its sales, all the

other furnishing centers incurred losses. Overall, furnishing center

sales fell slightly by 0.7 % to € 535.6 million in 2000 [on a space ad-

justed basis, by - 2.1 %].

The eleven SCONTO discount outlets generated € 89.2 million in sales

– at previous year’s level – but they benefitted from the opening of a

new outlet in Lübeck at the end of 1999. Space-adjusted, sales fell by

7.5 %. SCONTO’s customers displayed a markedly restrained level of

consumer spending.

The four TICCO specialty outlets for kitchen and bath recorded € 17.3

million in sales – virtually unchanged from the previous year.

M Ö B E L W A L T H E R 2 0 0 0 1 3

B U S I N E S S D E V E L O P M E N T

D o m e s t i c b u s i n e s s : c y c l i c a l d e c l i n e s

SALES BY DIVISIONS

SALES BY REGIONS

Germany East 48.6 %

GermanyWest 45.9 %

International 5.5 %

Furnishing centers 78.9 %

SCONTOGermany 13.1 %

International 5.5 %

TICCO 2.5 % MA

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1 4 M Ö B E L W A L T H E R 2 0 0 0

Whereas up to now the Möbel Walther Group has based its operations exclusively on store-based fur-

niture retailing, we have begun to develop the company into a multi channel player. Our Internet shop,

which operates under the name »welcomeliving.de«, has been on-line since August 11, 2000. Industry

experts confirm that »welcomeliving« is setting new standards in the furniture business as far as product

range, navigation and service are concerned. The Internet shop is part of our e-commerce division and is

run by our newly founded subsidiary Möbel Walther New Media AG.

The market introduction of the on-line shop was supported by a cooperation with the TV cult series »Big

Brother«. All the furnishings of the TV house were provided by Möbel Walther and could be exclusively

bought at Möbel Walther stores or through the on-line shop. Between September and December,

containers built to the exact specifications of the original TV house were on display in all the furnishing

centers. These presented »Big Brother« furniture and furnishing accessories. The press campaign cover-

ing the cooperative arrangements with »Big Brother« generated enormous media response as well as

considerable attention for Möbel Walther and the on-line shop. The € 145 thousand in sales that were

generated is just the beginning.

W e l c o m e l i v i n g . d e : O n - l i n e s h o p l a u n c h e d o n t h e I n t e r n e t


M Ö B E L W A L T H E R 2 0 0 0 1 5

P R O F I T & D I V I D E N D

Due to the weak development of sales in the fourth quarter, the earnings for the last months, which

normally contribute a very large proportion to the annual profits, were much lower than in the previous

year and failed to meet our expectations, largely because of circumstances in the industry. Accordingly,

we show a pre-tax profit of € 14.3 million, significantly less than the previous year’s figure of € 22.1

million. These profits include amounts released from the special item with a partial reserve portion total-

ling € 6.6 million [previous year € 4.7 million] – amounts that up until 1996 were booked against special

depreciation under Section 4 of the Law on Development Areas.

The gross profit margin on operative business [ that is excluding the influence of the invoicing of con-

struction projects in the previous year ] improved by 0.7 percentage points to 43.8 %. This shows that it

was possible to combat increasing price pressure on special offers through counter-measures - such as the

increased direct import of furniture through our subsidiary Walther Trading Service GmbH. Personnel ex-

penses corresponded to a quota of 20.4 % of sales, 0.8 percentage points more than in the previous year.

The reasons: employment rose abroad – in particular in anticipation of the new openings in Budapest and

Warsaw [2001]. At home, an increase in the wage bill had to be accepted, while sales dropped off slightly.

In addition, there was considerable additional personnel expenditure as part of the changeover in the

material management system. The other operating expenses rose by 1.3 percentage points to a quota of

18.1 % of sales. This was due on the one hand to increased spending on advertising. On the other hand,

space costs increased due to expansion and higher energy costs.

The consolidated pre-tax profits are made up of the results from the five business segments/divisions –

plus the results of the group headquarters, including other companies [ in particular real estate companies

abroad] and consolidation items.

In our core business, i.e. the furnishing centers, profits dropped

by € 3.9 million to € 14.3 million. This decrease originates in

the fourth quarter as profits up to the end of September were

slightly above the figures for the previous year. It should be

emphasized that all furnishing centers – with the exception of

Schwetzingen and Mutschler – are operating profitably, al-

though at a lower level than in the previous year. The Berlin

store actually managed to increase its profits to a marked

degree. The outlet in Schwetzingen, which was opened in 1998,

is showing a pleasing upward trend, so that losses have been

lowered by 2/3 to a current level of € 2.5 million. Progress is also being made in Mutschler, however this

has been severely curtailed by the weakness in the market in the fourth quarter, so that, in the final

analysis, a reduction in losses of only € 1.6 million was achieved, leaving a deficit of € 7.8 million.

The development of profits at SCONTO Germany reflects the weakness in the development of sales in this

sales format, particularly in the first half year. Profits dropped to € 2.2 million. TICCO closed with a loss

almost identical with that of the previous year.

P r e - t a x p r o f i t a t € 1 4 . 3 m i l l i o n

Pre-tax profits in € million 2000 1999

Furnishing centers 14.3 18.2

SCONTO Germany 2.2 4.1

TICCO - 0.4 - 0.4

International - 0.1 - 1.0

E-commerce - 1.1 –––

Other/Head Office/Consolidation - 0.6 1.2

Group 14.3 22.1

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Abroad, SCONTO in the Czech Republic achieved a major in-

crease in profits. The company has established itself very well in

the market and, with a return on sales of 8.3 % [pre-tax ] is one

of the most profitable units in the group. In contrast, SCONTO

Poland was not able to reduce the loss of the previous year.

Start-up losses had to be accepted in Hungary due to the ope-

ning of the market in September. Overall, the contribution of

foreign business to profits improved markedly due to growth in

profits in the Czech Republic.

The new e-commerce Division is built around the »welcome

living.de« on-line shop which was launched on the Internet in

August 2000. Advertising and personnel expenditure while

sales were still low, led to an initial loss of € 1.1 million.

Decreasing profits from other/head office/consolidation were caused by expenditure on the changeover

to a new materials management system, the introduction of which is now almost complete. On the other

hand, this deduction was balanced against increased release of special items with a partial reserve

character [§ 4 Law on Development Areas ] at Möbel Walther AG.

1 6 M Ö B E L W A L T H E R 2 0 0 0

1st quarter

8.5

6.0

2.8 2.6

- 5.7 - 4.8

16.5

10.5

2nd quarter 3rd quarter 4th quarter

€ million

15

10

5

- 5

QUARTERLY RESULTS [ pre-tax ]

■ 1999

■ 2000

The net income for the Group is € 6.1 million [€ 10.8 million in

the previous year ] and €13.8 million for Möbel Walther AG

[compared with € 19.6 million for the previous year ]. At

€ 0.33, the DVFA earnings per share are less than that of the

previous year [€ 0.94]. The DVFA adjustments only take

account of the release of the special item with a partial reserve

character and the share of profit held by third parties.

N e t i n c o m e o f € 6 . 1 m i l l i o n

Due to a high profit carried forward [€ 32.7 million], the distributable profit of Möbel Walther AG is

€ 41.4 million. In order to follow a consistent policy on dividends, the Supervisory Board and the Board of

Management propose to the Annual General Meeting held on June 26, 2001 that an unaltered dividend

of € 0.82/0.87 be paid per ordinary share/preference share. Including the tax credit of 3/7 of the cash

dividend, eligible shareholders will thus receive a dividend payment of € 1.17/€ 1.24 per ordinary share/

preference share. In terms of the share price at the end of March 2001, the dividend yield [ including tax

credit ] amounts to 8.9 %/11.8 %. ■

H i g h d i v i d e n d

Results in € million 2000 1999

Earnings before interest and taxes [EBIT ] 24.0 31.3

- Interest expense/ income 9.7 9.2

Pre-tax profits 14.3 22.1

- Taxes 8.2 11.3

Net income 6.1 10.8

DVFA adjustments - 3.0 - 1.7

DVFA earnings 3.1 9.1

DVFA earnings per share [ in € ] 0.33 0.94


The balance sheet total rose by 1.9% to € 548.3 million. The

key individual items developed as follows:

Fixed assets dropped by 3.3 % to € 338.0 million. This reflects

our prudent investment policy: Capital expenditures of € 21.2

million were offset by current depreciation of € 28.2 million

and disposals of € 8.6 million. Of the fixed assets at the end of

2000, € 275.4 million was accounted for by land and buildings,

whose share of the balance sheet total thus amounted to

50.2 %.

Trade inventories rose slightly by 1.0 % to € 108.9 million. The

increase has resulted solely from the opening of the outlet in

Budapest.

A key reason for expanding the balance sheet total lies in the

rise in other assets, which increased by € 14.9 million to € 39.7

million. In the year under review we made down-payments for

the purchase of the site in Eschborn to the tune of € 14.3

million, which are indicated separately as a claim against the

leasing company under the heading of other assets.

Because we purchased our own shares to a value of € 5.2

million, holdings rose to € 7.6 million. Liquid funds amounted

to € 23.1 million at the end of the year and were therefore

€ 5.7 million higher than the previous year’s figure.

A h e a l t h y b a l a n c e s h e e t

Fixed assets increased by € 21.2 million, in comparison with € 25.5 million in the previous year. This

means we are continuing our prudent investments policy. Investments mainly affected our foreign activi-

ties, where we began with the construction work for the furniture outlet in Warsaw. This is planned to

open in May 2001. With a sales area measuring around 16,000 m2 [171,000 sq ft ], the Warsaw store will

be the leading furnishing center in Poland and will service the region around the capital, where purcha-

sing power is much higher than the national average. In Germany, investments mainly covered necessary

maintenance work, as well as a number of smaller projects.

Cash flow amounted to € 28.2 as compared with € 34.2

million in the previous year. Investments in tangible assets were

financed entirely out of cash flow.

M Ö B E L W A L T H E R 2 0 0 0 1 7

I N V E S T M E N T S & F I N A N C E

€ million ■ Cash flow

■ Investments

I n v e s t m e n t s a n d c a s h f l o w

1996 1997 1998 1999 2000

65.8

52.0

43.344.2 28.2

34.2

25

50

75

INVESTMENT AND CASH FLOW

50.656.3

25.5

21.2

BALANCE SHEET STRUCTURE

1999 2000 1999 2000

61.9 %

Fixed assets

65.0 %

Equity funds

37.1 %

23.4 %Inventories

24.1 %

Long-termborrowedfunds41.1 %

Accounts receivableand liquid funds

10.9 %

Short-termliabilities21.8 %20.1 %14.7 %

41.5 %

38.4 %

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Equity [ including 50 % of the special item with reserve portion] dropped slightly by 1.6 % to € 203.4

million. The equity ratio reached 37.1 % after 38.4 % in the previous year. The equity share of Möbel

Walther AG amounts to 51.6 % [51.4 % in the previous year ]. Thus, we continue to demonstrate a high

level of capital.

Liabilities to banks rose by € 4.6 million to € 177.2 million. It

should be remembered that we made payments to the tune of

€ 14.3 million as bridging finance for the purchase of the site in

Eschborn.

It was possible to considerably increase the down-payments

received from customers, rising by € 8.5 million to € 19.7

million. This also contributed to a considerable reduction in

working capital [ trade inventories and trade accounts receiv-

able minus trade accounts payable and advance payments from

customers ]. In all, the capital tied up in working capital was

reduced by € 17.4 million to € 25.0 million.

The coverage of fixed assets by equity capital in the Group

amounts to 60.2 % [59.2 % in the previous year ], while fixed assets and inventories together are funded

by equity capital and long-term borrowed funds to 91.9 % [89.7 % in the previous year ]. These coverage

figures indicate a healthy financial structure. ■

1 8 M Ö B E L W A L T H E R 2 0 0 0

Cash flow statement in € million[abrigded] 2000 1999

Cash flow from operatingactivities 42.4 19.0

Outflow of funds forinvestments - 15.6 - 9.1

Outflow of funds fromfinancing activity - 21.1 - 12.4

Change in liquid funds 5.7 - 2.5

Liquid funds as of Dec. 31 23.1 17.4

Cash flow 28.2 34.2

Cash flow as a % of sales 4.2 4.9


M Ö B E L W A L T H E R 2 0 0 0 1 9

E M P L O Y E E S

At end of 2000, the Group had a total of 4,949 employees, of which 10 % are meanwhile employed

abroad. On average for the year, the number of employees in the Group rose by 1.9 % to 4,861. This

growth is due exclusively to our increasing international business. Approximately 60 new jobs were

created in the new Budapest furnishing outlet. By year-end we had already recruited 140 employees for

training at our Warsaw store, which is due to be opened in May 2001.

The number of employees at furnishing centers in Germany and

TICCO fell slightly. The number of employees of SCONTO Germany

remained more or less stable, but it should be noted that an addi-

tional outlet was opened.

The personnel structure has changed little. Approximately two-

thirds are employed on a full-time basis. The share of part-time em-

ployees increased slightly to 23.3 % in 2000. The average employee

age is 35.2 years. The rate of sick leave taken further decreased,

reaching a low 3.7 %.

Variable working hour systems supported by electronic time recor-

ding have enabled us to better adapt our personnel availability to

daily and weekly fluctuations in staff requirements.

Consolidated Group personnel expenses rose by 4.6 % to € 138.4

million. Each full-time employee incurred costs of € 30,023 – 2.4 %

more than in the previous year. This growth was in line with the

wage increases.

In retailing business, a company’s most important capital is a committed, competent and friendly staff. We

therefore view the training of junior staff not only as a significant contribution to the securing of the

future of the Walther Group but as a socio-political commitment as well. For many years, the number of

our trainee staff has represented over 10 % of our total employees.

Last year, this share rose to 11.3 % in Germany [ the only country

with dual education/ training system]. A total of 502 apprentices

were in the process of receiving fundamental training at the finan-

cial year-end. Due to our focus on trainees, training at Möbel

Walther has an outstanding reputation at local chambers of industry

and commerce. ■

N e a r l y 5 , 0 0 0 e m p l o y e e s

S t r o n g c o m m i t m e n t t o t r a i n i n g

1996 1997 1998 1999 2000

3,564

4,245

4,736 4,9494,813

1.000

2.000

3.000

4.000

5.000

EMPLOYEES[As at year-end]

Employees [average for the year ] 2000 1999 Change

Furnishing centers 3,601 3,643 - 1.2 %

SCONTO Germany 454 448 + 1.3 %

TICCO 98 101 - 3.0 %

International 427 329 + 29.8 %

E-commerce 11 ––– [+] %

Head Office/Other 270 251 + 7.6 %

Group 4,861 4,772 + 1.9 %

[on a full-time basis ] 4,408 4,336 + 1.7 %

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2 0 M Ö B E L W A L T H E R 2 0 0 0

■ E N T R Y I N T O T H E M A I L O R D E R B U S I N E S S

■ G O O D P R O S P E C T S I N E A S T E R N E U R O P E

■ E - C O M M E R C E H A S P O T E N T I A L

■ T H E E S C H B O R N C E N T E R : A U N I Q U E C O N C E P T

■ R E A L E S T A T E A S T H E T H I R D P I L L A R O F B U S I N E S S

■ E X P E C T A T I O N S F O R 2 0 0 1

With effect from January 1, 2001 we have acquired a 51 % shareholding in the mail order company

Ikarus GmbH in Linsengericht. Ikarus was founded in 1993 and specializes in designer furniture and

accessories. The mail order company has around 2,000 products in its catalog and achieved sales of

€ 2 million in the year 2000.The shares in Ikarus GmbH are held by Möbel Walther New Media AG.

The company founder and former sole proprietor Volker Hohmann will stay on as managing director

at Ikarus.

This majority shareholding represents another important step on the way to becoming a multi-channel

player that runs e-commerce and mail order operations as well as store-based retailing. This acquisition

will give rise to synergy effects, particularly for our on-line sales. With effect from April 2001, products

from Ikarus will supplement the Internet range on offer from »welcomeliving«.

E n t r y i n t o t h e m a i l o r d e r b u s i n e s s

German consumers are the highest spenders in Europe on furniture and interior design. In 1999, sales per

capita in Germany were € 415 compared with € 245 on average in the EU. In all, the turnover for

furniture and interior design products in the EU amounted to € 91.8 billion in 1999. According to the

European Retail Institute, a total of € 34.0 billion was achieved in Germany alone, € 4.1 billion in the

commercial sector and € 29.9 billion in the private consumer sector.

Furniture retailers enjoyed a 74 % share of this market volume of € 34.0 billion. The rest is shared among

such sales channels as DIY stores, office specialists and mail order companies. In particular, mail order

companies were able to expand their share of furniture market sales in recent years. This underpins our

decision to enter the mail order business.

P r o s p e c t s f o r t h e G e r m a n f u r n i t u r e m a r k e t


M Ö B E L W A L T H E R 2 0 0 0 2 1

O U T L O O K & S T R A T E G Y

The prospects for the German furniture market are characterized by the following trends:

■ The population is set to continue to grow until 2006. The number of households is also increasing. One-

person households are particularly prevalent in large cities. In some cases, their share has increased to

over 40 % of all household units.

■ Active consumers are inheriting a great deal of wealth.

■ »Cocooning«, i.e. the increasing value placed on one’s own four walls, will continue to support the

demand for furniture in the future.

■ The situation in the labor market is improving. It is expected that the number of unemployed, which

lay at 3.9 million in 2000, will drop back to 3.4 million by 2002.

■ The resistance to making purchases among consumers in recent years has meant a backlog in the need

for replacement furniture.

■ However, no additional impulses are to be expected from the building of new homes in coming years.

The number of new homes is set to stagnate.

■ There is a continued trend towards the expansion of selling space in the industry. This means that com-

petitive pressure is set to increase.

Against this background, corporate consultants BBE, which specialize in the retail sector, forecast an

increase in sales in the home furnishing and interior design sector of 6.8 % by 2004, whereby the growth

prospects for furniture and kitchens is seen as above average.

1

2

3

4

5

6

7

8

9

10

IKEA Germany ............................................................................ 1.79

Porta .................................................................................................... 0.95

Möbel Walther ...................................................................... 0.80

Roller .................................................................................................. 0.69

Höffner.............................................................................................. 0.66

Segmüller ........................................................................................ 0.56

Kraft .................................................................................................... 0.56

Lutz/ Neubert .............................................................................. 0.40

Mann .................................................................................................. 0.33

Dänisches Bettenlager ........................................................ 0.31

TOP 10 GERMAN FURNITURE RETAILERS

Store-based retailers Sales [€ billion]

1

2

Quelle/ Neckermann [Karstadt ] ................................ 1.09

Otto...................................................................................................... 0.59

Mail order Sales [€ billion]

Source: möbelkultur, figures for 1999, sales inclusive of VAT

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2 2 M Ö B E L W A L T H E R 2 0 0 0

Prospects for consumer spending in Germany in 2001 are positive: Employment has grown over the last

year and is expected to increase further. People’s worries about being made redundant have receded. Net

incomes are also increasing tangibly, due also to the drop in income tax with effect from January 1, 2001.

Overall, disposable income for private households is increasing by more than € 50 billion, representing a

yearly figure of around € 1,300 per household. According to forecasts, private consumption will in-

crease by about 2.2 % in real terms, thereby growing slightly faster than the overall gross national

product at 2.1 %, thanks to tax relief.

This is why the Association of German Retailers is cautiously optimistic in its forecasts of a real growth in

sales in the retail sector of 2.0 %. Expectations are mainly based on the second half of the year. The

German Association of Furniture, Kitchen and Interior Retailers forecasts a [nominal ] growth in sales of

3 to 4 % for 2001.

B e t t e r p r o s p e c t s f o r c o n s u m p t i o n i n 2 0 0 1

We have been active on the international front since 1995. We have chosen this step very consciously in

order to reduce our dependence on the German market. We see above-average opportunities in the neigh-

boring countries of eastern Europe [Czech Republic, Poland and Hungary ]. The need to catch up with

furniture and interior fittings is considerable here, while these economies are growing much faster than

Germany or the EU territory.

Over € 400 per capita is spent on furniture every year in Germany. Spending on furniture in the adjoining

countries of eastern Europe is only about one tenth of this figure [ see table p. 24]. There is a lot of

catching up to be done here, even if this is not going to be an over-night development. However, Poland,

the Czech Republic and Hungary, which a have a total population of almost 60 million will become mem-

bers of the European Union in the foreseeable future, binding them even closer to central Europe, in

particular Germany. The economic strength of the region around Prague in the Czech republic is already

greater than the EU average.

T h e C z e c h R e p u b l i c , H u n g a r y a n d P o l a n d a s m a r k e t s o f t h e f u t u r e

In Germany, the furniture industry has been struggling with a restrained level of consumer spending

since 1995. This has considerably increased the pressure for structural adjustments among the 10,000

firms in the industry. Since the mid 1990’s the number of bankruptcies has been around 100 per year,

while the yearly average prior to this was only 50 closures. These figures do not include the silent closures

of many small companies without legal proceedings, a number which is estimated to be higher than that

of official bankruptcies.

This development will intensify in the future. Structural streamlining will shift weight even further in favor

of large retailers such as Möbel Walther, which have gained further market shares in recent years. In view

of our market position and our broadly based sales formats, both in conventional business and in e-

commerce and mail order, we believe we are well prepared for this structural process.

S t r u c t u r a l s t r e a m l i n i n g


M Ö B E L W A L T H E R 2 0 0 0 2 3


Until now, we have used the SCONTO discount format to enter into the markets of the future in the Czech

Republic, Poland and Hungary. Through the addition of several service elements – for example, a Kiddy

Land, a restaurant, and delivery services – the eastern European SCONTO outlets have moved in the

direction of inexpensive furnishing stores. We now have five outlets in the countries listed and sales in

2000 totalled € 37.3 million, or 5.5 % of Group sales.

Two more new stores are to be added in 2001. The furnishing outlet planned to open in Warsaw in May

2001 will mark our first large store in eastern Europe, with sales floors measuring around 16,000 sq m

[171,000 sq ft ], more than twice the size of the previous SCONTO stores. However, the location is attrac-

tive and regional purchasing power in the Polish capital is almost twice the national average. In addition,

we intend to open a second SCONTO outlet in Hungary now that the first store, which started in

September 2000, is well established.

T r e b l i n g t h e e a s t e r n E u r o p e a n s h a r e i n s a l e s

SLOVAKIA

HUNGARY

CZECH REPUBLIC

GERMANY

AUSTRIABudapest

Miskolc

Györ

Warsaw

Berlin

BratislavaWien

Radom

Kielce

Krakow

Zabrze

Czestochowa

SosnowiecBytom

Gdynia

Wroclaw

Poznan

Bydgoszcz

Torun

Lódz

Szczecin

Gdansk

Székesfehérvár

PlzenOstrava

Debrecen

Ceske-Budejovice

Hradec Králove

Brno

Liberec

Bialystok

PécsSzegedin

Katowice

Gliwice

F u r n i s h i n g s t o r e s i n e a s t e r n E u r o p e

POLAND

Prague

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@e

Positive overall economic impulses are on the increase in our foreign markets. In the Czech Republic it is

expected that the domestic economy will speed up growth in GDP to 3.5 %. In 2002 the Czech economy

may grow by more than 4 % for the first time since 1996. The Polish economy is losing some of its buoy-

ancy due to restrictive monetary policy. Growth in GDP is expected to drop to 3.5 %. However, increasing

dynamism is expected for 2002 with a growth of 4.5 %. In Hungary, economic activity is set to slow

down as growth in the Euro zone weakens, but is still expected to reach 4.3 %. However, growth is ex-

pected to speed up again to 5 % in the following year.

Local competitive landscape in the Czech Republic, Poland and Hungary is characterized by local, dome-

stic retailers, many of them acting as sales outlets for furniture manufacturers. With the exception of IKEA

in all three countries, Asko and Europamöbel in the Czech Republic and Austria’s KIKA / Leiner in Hungary,

there is no foreign competition. We see a huge opportunity for achieving high market penetration with

additional stores. Our aim is to treble the eastern European share of consolidated sales to more than 15 %

by 2005.

B u s i n e s s o n t h e u p i n e a s t e r n E u r o p e

Economic figures Czech Republic Poland Hungary

Population 10 million 39 million 10 million

Area 79,000 sq km 313,000 sq km 93,000 sq km

Economic power per capita *[EU average = 100 %, Germany = 108 %] 60 % 39 % 49 %

GDP growth [ real ]2000 3.1 % 4.1 % 5.3 %2001 3.5 % 3.5 % 4.3 %2002 4.4 % 4.5 % 5.0 %

Number of new homes completed2000 25,800 90,000 25,0002001 25,500 97,000 28,0002002 26,000 107,000 30,000

Furniture consumption per capita € 35 € 25 - 30 € 20 - 25

* GDP per capita [at purchasing power parities ] in comparison with EU averageSource: db research, Euroconstruct, Eurostat, own data


M Ö B E L W A L T H E R 2 0 0 0 2 5


@-commerceSelling through the Internet [e-commerce] is a relatively new sales channel, which was born in a state

of euphoria. However, a number of businesses have already failed – particularly companies solely based

on the Internet. Our structure is quite different because we already have a strong base in conventional

store-based business. The winners in e-commerce will be traditional retailers who have expanded their

activities – starting with store-based business – to include e-commerce, just as we have done with

»welcomeliving«.

Our »welcomeliving« on-line shop has been available on the Internet since August 2000. With almost

3,000 items on offer, the shop currently offers the broadest range of furnishings available on the Internet.

Our aim is to develop »welcomeliving« as a comprehensive living and lifestyle portal.

We see the advantage of Internet business not only in the direct sales generated in this way, but also in

access to new target groups that could not be reached through store-based business. To this are added

synergy effects between the various sales formats. Our furniture stores mean that we have the advantage

of already being well-known in several regions in Germany, providing a good basis for trust in Internet or

mail order business. Tomorrow’s customers will feel free to switch between the various sales formats,

depending on what is most convenient and least time-consuming for him. Both pre-selection and

product comparisons can take place in the store, by means of the Internet or using the catalog, as well as

a whole range of combinations of all of these options.

It should also be emphasized that we can also use key elements from our conventional retail business

for the new sales formats – starting with the organization of purchasing, advertising, IT, through to the

whole of logistics. We therefore regard the e-commerce/mail order business area as an important

supplement to our conventional offers. All three sales channels will complement and enhance each other.

In the long term, the e-commerce/mail order business area is expected to become an important pillar

for sales and revenue. We expect sales of around € 25 million by the year 2005.

I n t e r n e t – p a r t o f t h e m i x

E - c o m m e r c e : P o t e n t i a l f o r m u l t i - c h a n n e l p l a y e r s

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The fundamental trends in on-line shopping continue to point upwards:

■ Purchasing through the Internet is the fashionable thing to do. This is because it is convenient

for the customer – no need to worry about business hours, no queues, no searching for parking,

time-saving, uncomplicated. Of course, the customer also expects that the goods he has ordered will

be delivered quickly and efficiently. This particular area – in other words, logistics – is one of our key

strengths.

■ Penetration with on-line connections will continue to grow rapidly.

■ An increasing number of people are prepared to buy over the Internet. Surveys point to an increasing

willingness to make on-line purchases. Forsa estimates the number of Germans who went on a

shopping spree in the Internet in 2000 at 7.3 million. More than 34 % of all Internet users have made

on-line purchases more than five times.

The Association of German Retailers estimates retail sales over the Internet at around € 2.5 billion in the

year 2000. Although this represents a modest 0.5 % of total retail sales, it is expected that the proportion

will increase to between 5 and 10 % in ten years time. By that time, Internet sales for some product groups,

such as CDs, books and computer equipment, will be as standard as conventional sales.

What is the potential for furniture retailing on the Internet? There is no doubt that some furniture is of

limited suitability for on-line shopping. This includes products requiring a lot of planning or furniture

where tactile experience is an essential part of the selection process. However, investigations show that

almost 20 % of all on-line buyers have ordered goods from the furnishings or homewares categories. The

fact that mail order companies achieve major sales with furniture [ see table on page 21] underlines the

potential for sales channels that complement conventional furniture sales. Finally, our own experience

with »welcomeliving« demonstrates that furniture can be sold over the Internet. Around two thirds of

sales achieved with »welcomeliving« are for furniture and only one third is for home accessories.


M Ö B E L W A L T H E R 2 0 0 0 2 7


In addition to conventional store-based business – our bread and butter – and e-commerce/mail order,

we intend to set up a third business area in the future: real estate. To date we have used our real estate

almost exclusively for our own purposes in order to operate store-based business. In the future we intend

to achieve much higher added value through professional real estate management.

The book value of our land and buildings is € 275 million. Cost of acquisition total € 348 million and

market values are even higher. We mainly have very good locations with the option of extending and

leasing additional space to third parties. This increases the attraction of the locations and generates

additional revenue. We have three locations in eastern Europe that are big enough to be developed into

shopping centers, thereby rounding off our planned furnishing centers. The same applies to the site at

Eschborn near Frankfurt. However, we also have locations in which it makes sense to optimize our sales

areas by subletting. All in all, there is an enormous potential for added value in our own properties and

this is to be exploited in the future.

As a first step in building up this business area, we have obtained approval from the General Shareholders’

Meeting in August 2000 to transfer the real estate business into an independent subsidiary. We expect to

complete this transaction this year.

R e a l e s t a t e a s a n e w b u s i n e s s a r e a

MÖBEL WALTHER AG

Store-based retailing E-commerce/mail order Real estate

Eschborn, west of Frankfurt/Main, is an extremely attractive location: High spending power, but up to

now insufficient supply of furniture make Eschborn one of the best locations for furniture in Germany.

We have developed a concept that is completely new to Germany: we are not planning to build a classic

furniture store, but rather a theme center »World of Living«, placing the emphasis on interior design.

What makes this project special is the fact that Möbel Walther will not be the only furniture retailer in

this store, but will share the space with other suppliers from the furnishings and interiors industry. This

solution means that the location will be much more attractive thanks to the wide range of products on

offer. It also means that the risk is spread out because returns on our investment come not only from

our retail activities, but also from property rental. The theme center in Eschborn is thus also a perfect

example of planned further development of real estate within the Group.

T h e E s c h b o r n c e n t e r : a u n i q u e c o n c e p t

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A powerful logistics system that gets goods to customers quickly and reliably is essential if customers

are to be offered »convenience« when they come to buy furniture. This is precisely one of our key areas

of expertise which we intend to further extend by developing our logistics structure. We are planning

to expand our regional logistics centers to enable associated stores to be supplied with new products.

The new system will mean that even more product will be available for the customer to drive away –

a response to the customer’s wish to avoid waiting and lead times. At the same time, overall stocks will

actually be reduced.

Our strength in logistics is useful not only in conventional business. Internet sales and mail order business

require a high level of expertise in handling and delivery. Our competitive advantage lies in the fact

that our logistics system can be bundled together for all three sales channels – store-based business,

e-commerce and mail order – so as to take advantage of synergies in this way. At the same time we are

opening up potential for participating in the growing market for logistical services in business with third

parties.

L o g i s t i c s a s a k e y a r e a o f e x p e r t i s e

Today’s customers have little time. They wish to make their purchases without stress and without

unnecessary wasting of time. This is why they not only expect convenient purchasing facilities, but also

smooth handling after a purchase has been made. This means that customers are looking not only for

products, but also for the associated service. Services are thus becoming a decisive factor in successful

sales.

The introduction of the round-the-clock service in 2000 marked the creation of a service quality that

clearly distinguishes us from the competition. The offer to deliver and install furniture on a round-the-

clock basis generated considerable agitation in the industry. Further ambitious goals have been set.

The reduction in the complaint quota by more than 20 % in the last three years also serves to make

the purchasing of furniture as convenient as possible for the customer. This is why we shall continue to

work on the constant improvement of complaint quotas and on the speeding up of customer service

procedures.

S e r v i c e s a s a s u c c e s s f a c t o r


M Ö B E L W A L T H E R 2 0 0 0 2 9


O U T L O O K 2 0 0 1 We intend to continue the restrained line with our investments in the current year. As was the case

last year, the focus for investments will be in the international arena. We have only planned two new

openings for 2001. The furnishing store planned to open in Warsaw in May 2001 will mark our first large

store in eastern Europe. In addition, we will start with another SCONTO outlet in Hungary. It is also plan-

ned to begin the construction of a furnishing store in Prague. Overall we expect additions in fixed assets

of around € 30 million in 2001, most of it to be financed from expected cash flow. The construction of

the furnishing center in Eschborn near Frankfurt in 2002 will be the next major project in Germany.

Despite the positive signs for consumption and retailing in Germany, we have planned conservatively and

assume constant domestic sales with an unchanging sales area. Additional sales are only expected in new

locations abroad. This yields an expected growth in sales totalling approx. 4 %.

We expect pre-tax profits for the current year to be comparable with those for 2000. This takes into

account the costs of opening new outlets abroad and the promotion of the on-line shop. In contrast, the

net income and earnings per share are set to rise due to the drop in corporation tax in Germany.

In subsequent years, we expect the increasing market success of our new sales formats and regions

to result in a stabilizing of conventional business and the successes of structural measures aimed at

reducing costs to lead to a further increase in profits.

O u t l o o k f o r i n v e s t m e n t s , s a l e s a n d p r o f i t s f o r 2 0 0 1

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A number of important measures have been taken that should pave the way to a successful future:

■ The development of Möbel Walther into a multi-channel player means that the company is set to

extend its already broad base. The various sales channels will increasingly cross-pollinate, enabling

new customer groups to be tapped, while the demand bottleneck for furniture in Germany is ex-

pected to be overcome. In the e-commerce/ mail order sector we identify a sales potential of approx.

€ 25 million by 2005.

■ With the »World of Living« theme center in Eschborn near Frankfurt/Main we are developing a sales

format that is unique in Germany. This business concept is expected to offer good opportunities in the

face of tough competition in a stagnating market.

■ The neighboring countries of eastern Europe are markets with a solid future. Our early entry into

the market means that we have a perfect opportunity to participate in the recovery process in these

countries, in particular in view of the pending eastward expansion of the EU. For eastern Europe, we

expect the share in Group sales to treble to over 15 % by 2005.

■ Our key areas of expertise include logistics. This means not only do we have a well-founded basis

for building up new sales channels such as Internet or mail order business, but we also have the

opportunity to participate in the growing market for logistical services in business with third parties.

We believe that prospects are good. The measures implemented and the strategic directions chosen will

enable us to achieve significant increases in profits in the coming years. ■

S u m m a r y o f p r o s p e c t s

P R O S P E C T S


M Ö B E L W A L T H E R 2 0 0 0 3 1

R I S K R E P O R T

As a retailer, Möbel Walther is exposed to business risks that are typical for this sector of the economy. The

demand for furniture at retailing outlets largely determines the sales volume and with it the development

of earnings of all business units. These risks are lessened due to differences among sales formats and

increasing internationalization.

Along with the ongoing optimization of sales formats in store-based business [ furnishing centers,

discounting, kitchen & bath], we have begun to further develop Möbel Walther into a multi-channel

player. Our Internet shop, known as »welcomeliving.de«, has been on-line since August 2000. Through

the acquisition of a majority shareholding in Ikarus GmbH, we have entered into the mail-order business

for furniture and living accessories. Addressing our customers through several complementary marketing

channels gives us competitive advantages over retailers who are only represented in partial segments. We

simultaneously achieve a balance of risk among the various sales formats.

We have been active internationally since 1995. We anticipate above average business opportunities

especially in the rapidly growing economies of the East European countries bordering on Germany. The

application to join the EU by the Czech Republic, Poland and Hungary emphasizes the ambitious eco-

nomic objectives set by these countries. It also promises an even closer interrelationship with Central

Europe, especially with Germany. Nevertheless, the rapid growth of these economies entails greater

volatility and capital market risks.

The sales and earnings projections presented in the »Outlook« section are based on conservative

assumptions regarding economic trends. Nevertheless, these forecasts are, of course, subject to varied

probabilities of actually occurring. Individual risk factors are as follows:

Cyclical risks: In our planning, we assume that sales volumes at existing locations will remain stable and

that additional sales will only be generated by new openings. We hold this assumption to be rather con-

servative, as trends are stable in both German and foreign markets, which could point to a slight pickup

in demand. Nevertheless, another slump in furniture retailing cannot be fully ruled out in Germany, which

would also cause a deterioration in the business environment for Möbel Walther.

Numerous factors point to stable market development in Germany for the medium and long term. The

status of home living and furniture is as high as ever for the consumer. Germans spend more per capita on

home furniture than anywhere else in Europe. High levels of wealth transfers, the continual increase in the

number of single and two-person households, and growing replacement requirements following a

phase of restrained consumer spending are important factors stabilizing and boosting demand. However,

it cannot be ruled out that the lack of impetuses from the building of new homes will curb demand for

first-time furnishings. Nevertheless, the management consulting firm BBE anticipates 6.8 % greater sales

of home and household furnishings through 2004 with above average growth prospects for

furniture and kitchens.

B u s i n e s s r i s k s

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Competition: The German furniture market is characterized by increasing competition, with the trend

towards greater selling space. Möbel Walther consciously pursues a strategy of asserting and expanding

its market position by offering »the best service in Germany« and seizing growth opportunities in

attractive foreign markets. Structural adjustments in the German furniture market will further shift the

balance in favor of large-scale suppliers like Möbel Walther. Furthermore, the particular furniture and

residence preferences of German consumers render market penetration of competitors from non-

German-speaking countries highly unlikely.

Risks of non-payment: There are no significant risks of non-payment either in procurement activity

or from customers. As far as suppliers are concerned, Möbel Walther is not appreciably dependent

on individual furniture manufacturers. Due to the large number of furniture suppliers in Germany,

Italy, Denmark and Poland, our main supply countries, there are sufficient alternative supply sources.

Customers are almost exclusively private consumers who pay cash upon delivery at the latest. There is no

dependency on single large customers.

Operating risks: Insurance coverage has been taken out to cover potential damage and warranty ex-

posure to ensure that such damage would not have any adverse effect on the Group’s liquidity, financial

and earning position.

Foreign currency risks: Direct dollar-based imports from Asia, which account for only 1% of overall cost

of materials, are insignificant. Merchandise imports from the euro zone to our East European furniture

outlets account for only 5 % of the total cost of materials. Deutschmark-denominated investments in

our East European subsidiaries totalling € 50 million have been adequately hedged through interest rate

and foreign currency derivatives.

Repeal of the Law Governing Discounts: We are unperturbed by the planned repeal of the Law

Governing Discounts in the early summer of 2001. In the past, price negotiations with customers have

not been unusual in the furniture sector. We have already prepared ourselves by taking measures not

only in terms of price structuring, but also with our commission system and in the pricing authority of our

sales personnel.

Seasonal fluctuations: Our business figures, which are disclosed on a quarterly basis, show seasonal

fluctuations. As a rule, the demand for furniture in the winter months is up to 50 % higher than in the

summer, when consumers are less interested in home furnishing. Since the bulk of our costs are incurred

continually, throughout the year, earnings show a high degree of variation from quarter to quarter. The

July – September third quarter is the weakest of the year due to its lowest levels of invoicing, whereas

the fourth quarter contributes a high share of sales, and consequently earnings as well.

Overall assessment: Summing up the assessment of the current risk position and taking into consider-

ation the high equity ratio and the company’s strong substance primarily in real estate, there are no

current or future risks that that might substantially threaten the company’s future.


M Ö B E L W A L T H E R 2 0 0 0 3 3

R I S K R E P O R T

The Möbel Walther Group pursued risk management even before the Corporation Control and Trans-

parency Act came into force in May 1998. Modern controlling instruments of risk detection and commu-

nication have been set up and are applied in order to inform decision-makers in good time concerning

problems as they arise. In addition, Groupwide guidelines and data processing systems exist and reports

are also regularly submitted to the Management and Supervisory Boards.

A clear delegation of management tasks among local units emphasizes local responsibility. Each retailing

unit, which operates independently in the market with a complete management team, is equipped with

all the instruments required to manage business operations. All operating companies are integrated into

a Groupwide strategy, planning, and budgetary process. This ranges from an assessment of the market

and competitive environment and other »soft« factors all the way to detailed planning, which is the

objective and framework of operating management. The development of new locations is based on in-

depth analyses of the regional market environment and on unambiguous ratio analyses of purchasing

power potential. A core component is also a systematic, detailed benchmarking process. The monitor-

ing system is undertaken in line with reporting systems with daily [ incoming orders ] and monthly

components.

Möbel Walther’s service subsidiaries and its Corporate Office make their expertise available throughout

the Group. In doing so, some risks and risk management functions are thereby bundled at a single

location.

Internal auditors examine the structuring of operations to ensure security, appropriateness and the pro-

fitability of business operations. An important aspect is the detection of problem areas and irregularities

as well as the development of recommendations to avoid them in the future. ■

R i s k m a n a g e m e n t s y s t e m

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F l a g s h i p s o f t h e a r t o f f u r n i s h i n g

Our Furnishing Centers are flagships of the art of furnishing. They offer the customer everything they

need in order to choose their personal furnishings. The customer can find traditional home furnishings

and accessories at our main store within each center. In addition, Kitchen and Bath Center, NEWS and

SPARKAUF outlets, as well as Garden Paradise supplement the overall offerings, which are extensive but

at the same time segmented based on the target groups.

The displays offer a wide range of ideas and suggestions for living, and convey the simple delight and

joy of furnishing. A Kiddy Land, gastronomical offerings, and varied special presentations turn a visit to

one of our Furnishing Centers into a true »buying experience« for the entire family. And through our

extensive service package [ see also p. 44: »Service and Logistics«], buying at Möbel Walther becomes

advantageous and convenient. Today’s customer considers this area to be especially important.

We operate eleven Furnishing Centers in Germany, seven in the eastern part of the country and four in the

west. Together with the associated NEWS and SPARKAUF outlets, the Furnishing Centers contributed

a 79 % share to consolidated Group sales and are thereby the mainstay of overall business.

» V i l l a T o s c a n a « a n d o t h e r t h e m e w o r l d s

In order to lend a special accent to merchandise displays, we are establishing more and

more theme and taste worlds, which display a particular and harmonious furnishing

style, including furniture, accessories and decorations. »Villa Toscana« relates to fur-

nishing ideas of the Mediterranean lifestyle, including even red wine and an espresso

coffee maker. »Modern living« presents current designer worlds in their straightfor-

ward charm. »Pro Natur« focuses on natural home furnishings. »American Style« pre-

sents living ideas from across the Atlantic. This theme-related organization of furni-

ture, accessories, and decorations intensifies the customer’s emotional involvement and

establishes a strengthened joyful desire to furnish one’s home. Customers’ shopping ex-

perience is enhanced since they »find everything to their taste« in compact form. ■

The demand for furniture is differentiated. The willingness of customers to switch among

various price categories and styles and to harmoniously combine these is also on the rise.

Examples of this are the mixing of traditional furnishings with elements by modern designers,

or high-quality products with moderately priced but nevertheless stylish cash-and-carry furni-

ture. We take these demand-side developments into account by making available especially

extensive offerings in all price categories and furnishing styles. Through a clear-cut and target

group oriented segmentation of our Furnishing Centers we make it easy for the customers to

fulfill their personal furnishing wishes.

M Ö B E L W A L T H E R 2 0 0 0 3 5

F U R N I S H I N G C E N T E R S

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T h e u n i v e r s e o f f u r n i s h i n g


3 6 M Ö B E L W A L T H E R 2 0 0 0

T h e y o u n g c a s h - a n d - c a r r y s t o r e

N E W S – t h e f u r n i t u r e s t o r e w i t h a d i f f e r e n c e

R a p i d m a r k e t s u c c e s s

We opened the prototype of a NEWS outlet in November 1996, next door to the Gründau Furnishing

Center. All the extensive Möbel Walther Furnishing Centers have meanwhile been augmented by NEWS

outlets. Accounting for approximately 8 % of the consolidated Group sales, NEWS has developed into

an important sales format. ■

NEWS is a furniture outlet for cash-and-carry furnishing trends. It targets home furnishers

– generally younger customers – whose tastes go beyond what is available from conventional

furniture departments. These outlets thus ideally augment the traditional offerings of Möbel

Walther Furnishing Centers.

The main focus of NEWS is to quickly recognize the latest furnishing trends and introduce them for the

benefit of modern and comfortable home living. NEWS is in line with today’s trends. Light woods, young,

fresh, or simply different designs, the store’s modern architecture, and »Rick’s Café« complement the

shopping fun. Innovative multimedia applications offer not only shopping information, but primarily a

target group oriented customer appeal.

Especially targeting the young family, last year we augmented our product range through the addition of

furnishing articles for infants, toddlers and children, which are effectively presented in the »Childrens’

World«. With informal gift ideas, the »Hello Trend Shop« underscores enjoyment in the unconventional.


M Ö B E L W A L T H E R 2 0 0 0 3 7

N E W S

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NEWS –

young, fresh,

innovative


3 8 M Ö B E L W A L T H E R 2 0 0 0

D I S C O U N T – c a s h - a n d - c a r r y f u r n i t u r e f o r c l e v e r m o n e y s a v e r s

SCONTO stores are characterized by low prices and the immediate

availability of furniture. The systematically organized concept ensures

favorable cash-and-carry prices by avoiding such potentially costly factors

as a delivery fleet and a decorative interior. Large high-rack warehouses

make merchandise readily available. All SCONTO outlets offer a highly

diversified product range of furniture on a cash-and-carry basis. The

compact SPARKAUF product line also targets high-turnover articles that

are all in stock and can be taken home by the customer without a

delay.

With its eleven German outlets, SCONTO has successfully established

itself in the marketplace. SPARKAUF specialty discount outlets are pre-

sent in ten out of a total of eleven Furnishing Centers. We operate five

furnishing outlets under the SCONTO brand in Eastern Europe. However,

these outlets, which are located in the Czech Republic, Poland, and

Hungary, are not pure discounters. They operate rather as inexpensive

furniture stores, with the discount concept enhanced through the intro-

duction of some service elements – for example, Kiddy Land, a restaurant,

or delivery services. This concept makes it possible for us to meet local

consumer expectations.

People’s desire to furnish their homes inexpensively as well as their enjoyment from making

do-it-yourself purchases have for many years resulted in a continuous increase in the im-

portance of the market for cash-and-carry-furniture. Our SCONTO and SPARKAUF outlets are

tailored to this continuing trend.

Although both sales formats function as discounters, they differ in size and location. SCONTO

maintains independent locations as full range providers and has sales areas that average

7,000 sq m [75,000 sq ft ]. SPARKAUF outlets, on the other hand, which have sales areas of

4,000 sq m [43,056 sq ft ], are associated with Furnishing Centers but nevertheless always retain

their independent character through separate buildings or their own entrances. Overall, 28 %

of our sales are generated in the DISCOUNT segment, including both SCONTO and SPARKAUF.

C a s h - a n d - c a r r y f u r n i t u r e


M Ö B E L W A L T H E R 2 0 0 0 3 9

D I S C O U N T

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Until 1999, SCONTO and SPARKAUF were managed separately and each undertook its own purchasing

activity. Beginning in 2000 we merged the two sales channels both organizationally and in terms of

purchases under the umbrella of the DISCOUNT sales operation. The specific characteristics of the two

formats are being retained, and they also partially compete with each other. However, management is

now placed within a single organization. This is resulting in significant advantages, especially in pur-

chasing activity.

The operation of each SCONTO outlet is based on the SPARKAUF product line. This approach is enhanced,

however, by additional product line modules – in particular RESTEMAX, an integrated shop-in-shop that

offers special sale items and seconds. This thereby serves to additionally emphasize the outlets’ low-price

approach. ■

M e r g e r o f o p e r a t i o n s

Cash-and-carry furniture –

low-priced and readily available


4 0 M Ö B E L W A L T H E R 2 0 0 0


M Ö B E L W A L T H E R 2 0 0 0 4 1

K I T C H E N & B A T H

S p e c i a l t y s t o r e s f o r k i t c h e n a n d b a t h

As far back as in 1989, we developed a concept for a special furniture outlet for the kitchen and bath. The

first TICCO outlet was opened in Kriftel near Frankfurt. We put on display more than 120 brand name

kitchens and over 60 bathroom sets in a space in excess of 3,000 sq m [32,000 sq ft ]. We have meanwhile

successfully penetrated the Rhine/Main/Neckar growth region with additional outlets.

J o i n t T I C C O / M ö b e l W a l t h e r a d v e r t i s i n g

Equally applicable to the TICCO outlets as well as for the kitchen and bath centers within the Furnishing

Centers are the fact that as specialty outlets with a consistent focus on service, these stores primarily

address consumers who seek a broad selection and the special quality of service available from a capable

large supplier.

We have bundled our customer appeal and advertising offerings with this in mind. Since last year, all the

TICCO outlets as well as the kitchen and bath departments of the neighboring Furnishing Centers in

Schwetzingen and Gründau appear together as the leading market suppliers in the Rhine/Main/Neckar

region. This makes it possible to fully utilize synergic marketing potential and achieve even deeper

market penetration. In addition, TICCO benefits from the Möbel Walther umbrella brand. ■

The quality of life and one’s personal lifestyle have always found expression in the design of

the kitchen and the bath. The desire for a beautiful bath or a comfortable kitchen still plays a

crucial role in the realization of one’s own furnishing perceptions. Our Furnishing Centers

with their kitchen and bath departments as well as TICCO as an independent specialty outlet

are ideally adapted to this attractive market segment. Overall, the kitchen and bath

segment generates 18 % of our overall sales.

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T i c c o : s p e c i a l i s t f o r k i t c h e n a n d b a t h


4 2 M Ö B E L W A L T H E R 2 0 0 0

P r i z e - w i n n i n g s t a r t u p

W e l c o m e L i v i n g - I d e a s i n l i v i n g a t t h e c l i c k o f a m o u s e

Reactions in the industry and by on-line experts confirm that welcomeliving is setting new standards for

the furniture business in the Internet as far as product range, navigation, and service are concerned. For

example, of Europe’s five hundred growth-oriented companies, the Boston Consulting Group awarded

our Internet Shop two »Website Quality Awards«. We received the first prize in the category »Biggest

Improvement of the Website«, and second prize in the category »Best Transaction Website«.

We are determined to be more than just a seller of chairs, wardrobes, or beds. Our slogan is »Ideas in

Living at the Click of a Mouse«. High-style images of residential milieus show furniture and accessories

that are worth a closer look and a click. Nearly 3,000 products are available in such theme worlds as

»Cuddle Time«, »Modern Living«, »Country House«, etc. Should the selected article not meet the

customer’s desire, the right product can surely be found in the alternate lists.

Beside the pleasant user interface we have made every effort to provide an abundance of services:

gift suggestions, a downloadable furnishing planner, tips on the care of furniture, or up-to-date and

favorable sales offers. Book and furnishing tips round out this feel-good program. Delivery of the select-

ed articles is gratis for orders of € 50 or more.

The shop’s pages have already had over a million hits and some 150,000 visits per month, with the trend

upwards. Plans call for an expansion of welcomeliving.de into a marketplace for modern living and home

furnishings during the current year. Through skilled cooperating partners, users will have access to a

wide selection and the best service for furniture and accessories in the Internet.

The launch of our Internet shop, which we operate under the name »welcomeliving.de«, was

a milestone in 2000. Whereas up to now our business has been aligned exclusively on store-

based furniture retailing, with the startup of welcomeliving the company has begun to develop

into a multi-channel player.


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W E L C O M E L I V I N G

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C o o p e r a t i o n w i t h » B i g B r o t h e r «

The market introduction of the on-line shop was supported by a cooperation arrangement with the TV

cult series »Big Brother«, which was re-launched in September 2000 with a new team of participants. We

created all the furnishings for this project’s residential containers, which were made available for

purchase exclusively at Möbel Walther – either at an outlet or via the on-line shop. All of Furnishing

Centers displayed exact copies of the original container, in which the Big Brother furniture and residential

accessories were on display. The press campaign covering the cooperation with »Big Brother« was a big

success and generated considerable attention for Möbel Walther and the on-line shop. ■


4 4 M Ö B E L W A L T H E R 2 0 0 0

■ C O N V E N I E N C E F O R T O D A Y ’ S C U S T O M E R

■ U N I Q U E : A R O U N D - T H E - C L O C K S E R V I C E

■ Q U A L I T Y M A N A G E M E N T A N D C U S T O M E R S U R V E Y S

■ H I G H D E G R E E O F L O G I S T I C S E X P E R T I S E

A r o u n d - t h e - c l o c k s e r v i c e

Time is of the essence for the customer of today, who wants to make a purchase without stress

and an unnecessary loss of time. Therefore, not only convenience in making purchases is ex-

pected, but also trouble-free handling following the purchase. Customer convenience is the

benchmark for us, on which we orient all our services and assess the standard of our services.

Because only satisfied customers come back, again and again.

Convenience in making furniture purchases includes delivery and installation when the buyer wishes

– whether in the morning before going to work or in the evening after returning home from work;

whether on a Saturday or at midnight as a birthday surprise. Since early 2000 we have been offering

customers additional conveniences:

■ Delivery 24 hours a day, six days a week

■ Accessibility 24 hours a day

■ Customer service 24 hours a day

Since with these services we directly meet the wishes of customers for convenience, it was not surprising

that the reaction to the new service was highly favorable.

The offer to deliver and install furniture 24 hours a day is unique among German furniture retailers. This

service sets us notably apart from the competition. The introduction of the around-the-clock service has

accordingly generated considerable agitation in the industry. We view this service as an important con-

tribution to substantially improve the quality of service in Germany – a further step on the road to be-

coming the best in the country.

The around-the-clock delivery service, six days a week, is augmented by a 24-hour a day call center. Thus,

not only is furniture delivery available at all times – customer service is also available whenever our

customers need it.


M Ö B E L W A L T H E R 2 0 0 0 4 5

S E R V I C E & L O G I S T I C S

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A l l i a n c e f o r Q u a l i t y

Only quality can produce customer satisfaction, and with it the basis for a long-term customer

relationship. We place considerable value on this. For this reason, we are also very active in the »Alliance

for Quality«, a forum promoting a dialogue between furniture retailers, purchasing associations, and

furniture manufacturers. The Alliance offers a continually closer exchange of experiences among all the

participants of the entire supply chain. The path taken by many products, from the manufacturer to

the final customer, is followed and analyzed closely in order to eliminate possible sources of error – both

in the interest our customers and in order to lower costs.


4 6 M Ö B E L W A L T H E R 2 0 0 0

H i g h l e v e l o f l o g i s t i c s e x p e r t i s e

An efficient logistics system that delivers the merchandise quickly and reliably to customers is a necessary

precondition to ensuring convenient shopping for furniture. This is precisely where our core expertise is

found. And we intend to further improve upon it in the future through the further development of

our logistics structures. We plan to expand the regional logistics centers, which will be in a position to

quickly and efficiently supply the associated outlets. On balance, even more cash-and-carry merchandise

will become available. This will satisfy the customer’s preference for a reduction in waiting and delivery

times. Simultaneously, overall inventories are being even further cut back. Improvements in processing

also serve to boost efficiency.

Our strength in logistics is not only useful for store-based retail transactions. Also – or especially – selling

via the Internet [e-commerce] and mail order sales presuppose considerable know-how in processing and

delivery. Selling over the Internet is one side of the coin. The processing of shipping and delivery is

another, perhaps even more difficult aspect. Especially here is where we have the best prerequisites for

succeeding in the competition with »pure players«, who do not possess their own logistics know-how.

Our advantage lies primarily in our ability to use our logistics system for all three sales channels:

store-based retailing, e-commerce, and mail order. We are simultaneously laying the groundwork to also

become active with our logistics services in the rapidly growing business with third parties.


M Ö B E L W A L T H E R 2 0 0 0 4 7

S E R V I C E & L O G I S T I C S

C e r t i f i c a t i o n

Certification under the DIN/ ISO 9002 norm – a norm that concerns the quality of trading and service pro-

viders – has contributed significantly to the improvement in the complaint quota at our company. Since

the initial certification of some Furnishing Centers a few years ago, in-house processes have repeatedly

been subject to close scrutiny through regularly scheduled repeat audits by external auditors. This makes

certain that the high standards of quality are achieved and maintained.

K e e p i n g a c l o s e w a t c h o n t h e m a r k e t

There’s hardly another furniture retailer who keeps as close and continual a watch on the marketplace as

we do. We do this in order to become aware of the moods and opinions of both customers and visitors,

as a test of our quality of service. Last year, we undertook surveys of nearly 40,000 customers after a visit

to one of our stores. This instrument helps us obtain immediate feedback among customers concerning

their perception of our competence and friendliness. We phoned over 100,000 customers following

their furniture deliveries or requests for service in order to ask them if everything was adequately handled.

These after-sales contacts in particular triggered highly favorable reactions among buyers. They addition-

ally offer the opportunity of establishing the basis for long-term customer loyalty. ■

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C o m p r e h e n s i v e q u a l i t y m a n a g e m e n t

Furniture purchases are only really convenient for customers if no objections or complaints arise – or if

customer requests after a purchase are fulfilled as quickly as possible. Therefore, for many years we have

systematically worked to continuously lower complaint quotas and speed up customer service. Over the

past three years alone we have lowered the complaint quota in the Group by over 20 %.


4 8 M Ö B E L W A L T H E R 2 0 0 0

Dec. 31, 1999

€ ‘000 € ‘000 € ‘000

Assets

A. Start-up of operations 1,242 271

B. Fixed assets [5]

I. Intangible assets

1. Concessions, industrial property rightsand similar rights 5,833 5,444

2. Payments on account ––– 5,833 54

II. Tangible assets

1. Land and buildings, including buildings onthird-party land 275,435 292,690

2. Plant and machinery 9,153 10,084

3. Other fixtures and fittings,tools and equipment 28,301 33,938

4. Payments on account and tangible assetsunder construction 18,830 331,719 7,078

III.Financial assets

1. Investments in subsidiaries and associated companies 131 126

2. Other loans 282 413 69

C. Current assets

I. Inventories [6]

1. Raw materials and supplies 4 –––

2. Work in progress, land 19,629 21,865

3. Goods for resale 108,898 128,531 107,845

II. Accounts receivable and other assets [7]

1. Trade accounts receivable 7,226 11,271

2. Due from enterprises in which the company holds an interest 740 590

3. Other assets 39,719 47,685 24,831

III.Securities

1. Own shares 7,611 2,429

IV.Cash on hand and at banks [8] 23,096 17,395

D. Accrued and deferred items [9] 615 982

E. Minority interests in capital deficit 1,565 1,370

548,310 538,332

Dec. 31, 2000see NotesNo.

C o n s o l i d a t e d B a l a n c e S h e e t

M ö b e l W a l t h e r G r o u p


M Ö B E L W A L T H E R 2 0 0 0 4 9

M Ö B E L W A L T H E R G R O U P

Dec. 31, 1999

€ ‘000 € ‘000 € ‘000

Liabilities and shareholders’ equity

A. Capital and reserves [10]

I. Subscribed capital 25,565 25,565

II. Capital reserve 93,566 93,566

III.Revenue reserves

1. Reserve for own shares 7,611 2,429

2. Other revenue reserves 23,854 21,884

IV.Distributable profit 6,814 13,967

157,410 157,411

B. Special items with a partial reserve character [11] 92,043 98,667

C. Provisions [12]

1. Provisions for pensions andsimilar commitments 1,832 1,394

2. Provisions for taxes 1,120 3,316

3. Other provisions 11,824 14,776 11,212

D. Liabilities [13]

1. Liabilities to banks 177,204 168,696

2. Advance payments from customers 19,654 11,156

3. Trade accounts payable 71,547 65,663

4. Due to enterprises in which the companyholds an interest 31 31

5. Other liabilities 15,644 284,080 20,786

E. Accrued and deferred items 1 –––

548,310 538,332


C o n s o l i d a t e d B a l a n c e S h e e t

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5 0 M Ö B E L W A L T H E R 2 0 0 0

1999

€ ‘000 € ‘000 € ‘000

1. Sales revenues [14] 679,565 698,407

2. Increase / decrease in work in progress 326 – 5,241

3. Capitalized cost of self-constructed assets ––– –––

4. Other operating income [15] 17,110 13,172

5. Cost of materials [16]a] Cost of raw materials, consumables and

supplies, and of purchased materials 381,975 383,815b] Cost of purchased services 963 382,938 17,709

6. Personnel expenses [17]a] Wages and salaries 114,763 109,799b] Social security contributions, expenses for

pensions and other employee benefits 23,621 138,384 22,520

7. Depreciation 28,365 27,761

8. Other operating expenses [18] 123,265 113,420

9. Income from investments 1 1

10. Other interest and similar income [15] 487 415

11. Interest and similar expenses [19] 10,230 9,618

12. Results from ordinary business activity 14,307 22,112

13. Extraordinary expenses ––– –––

14. Taxes on income 7,437 10,210

15. Other taxes 810 8,247 1,135

16. Net income for the year 6,060 10,767

17. Profits attributable to minority interest 73 –––

18. Losses attributable to minority interest 267 586

19. Profit brought forward 5,741 4,797

20. Allocation to the reserve for own shares 5,181 2,183

21. Distributable profit 6,814 13,967

2000see NotesNo.


C o n s o l i d a t e d p r o f i t a n d l o s s a c c o u n t


M Ö B E L W A L T H E R 2 0 0 0 5 1

M Ö B E L W A L T H E R G R O U P

2000 1999

€ ‘000 € ‘000

Net income for the year 6,060 10,767

Depreciation 28,365 27,761

Decrease in special items with a partial reserve character - 6,624 - 4,686

Increase in provisions for pensions 439 336

Cash flow 28,240 34,178

Change in trade inventories andtrade accounts receivable 2,990 - 3,020

Increase in other current assets - 409 - 4,512

Increase in trade accountspayable and other liabilities 13,119 5,518

Change in provisions for taxes andother provisions - 1,583 - 13,158

Cash flow from current operating activities 42,357 19,006

Payments for capital investments - 21,213 - 25,465

Start-up expenses - 1,102 - 370

Interim financing of construction activities for leased buildings - 1,163 5,241

Disposals of fixed assets / currency differentials for fixed assets 7,895 11,483

Decrease in funds from capital expenditures - 15,583 - 9,111

Cash flow after capital expenditures 26,774 9,895

Dividend payments - 8,016 - 8,371

Increase in own shares - 5,181 - 2,183

Offset of balancing items resulting from the capital consolidation / other changes in equity 1,760 289

Interim financing Eschborn - 14,264 –––

Change in borrowings 4,628 - 2,147

Change in funds from financing activities - 21,073 - 12,412

Change in liquid funds 5,701 - 2,517

F l o w o f F u n d s S t a t e m e n t

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5 2 M Ö B E L W A L T H E R 2 0 0 0

Dec. 31, 1999

€ ‘000 € ‘000 € ‘000

Assets

A. Fixed assets [5]


1. Concessions industrial property rightsand similar rights 4,990 5,050

2. Payments on account ––– 4,990 51

II. Tangible assets

1. Land and buildings, including buildings on third-party land 243,185 261,911

2. Plant and machinery 8,151 9,035

3. Other fixtures and fittings, tools and equipment 1,089 998

4. Payments on account and tangible assetsunder construction 423 252,848 424


1. Holdings in affiliated companies 38,700 28,393

2. Loans to affiliated companies 74,365 71,150

3. Investments in subsidiaries and associated companies 130 126

4. Other loans 31 113,226 31

B. Current assets

I. Inventories [6]

1. Work in progress, land 11,690 11,439

II. Accounts receivable and other assets [7]

1. Trade accounts receivable 585 829

2. Due from affiliated companies 44,664 49,851

3. Due from enterprises in which the companyholds an interest 740 590

4. Other assets 30,556 76,545 19,464

III.Securities

1. Own shares 7,611 2,429

IV.Cash on hand and at banks [8] 3,097 2,842

C. Accrued and deferred items [9] 500 843

470,507 465,456


B a l a n c e S h e e t

M ö b e l W a l t h e r A G


M Ö B E L W A L T H E R 2 0 0 0 5 3

M Ö B E L W A L T H E R A G

Dec. 31, 1999

€ ‘000 € ‘000 € ‘000

Liabilities and Shareholders’ Equity

A. Capital and reserves [10]

I. Subscribed capital 25,565 25,565

II. Capital reserve 93,566 93,566

III.Revenue reserves

1. Reserve for own shares 7,611 2,429

2. Other revenue reserves 30,678 30,678

IV.Distributable profit 41,402 40,762

198,822 193,000

B. Special items with a partial reserve character [11] 87,471 92,158

C. Provisions [12]

1. Provisions for pensions andsimilar commitments 1,834 1,394

2. Provisions for taxes 666 2,782

3. Other provisions 1,574 4,074 1,434

D. Liabilities [13]

1. Liabilities to banks 164,551 161,213

2. Trade accounts payable 2,139 2,616

3. Due to affiliated companies 9,303 2,670

4. Due to enterprises in which the companyholds an interest 31 31

5. Other liabilities 4,116 180,140 8,158

E. Accrued and deferred items ––– –––

470,507 465,456


B a l a n c e S h e e t

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5 4 M Ö B E L W A L T H E R 2 0 0 0

1999

€ ‘000 € ‘000 € ‘000

1. Sales revenues [14] 57,883 50,678

2. Increase / decrease in workin progress 251 –––

3. Other operating income [15] 14,498 9,260

4. Cost of materials [16]a] Cost of raw materials, consumables and supplies

and of purchased materials ––– –––b] Cost of purchased services 251 251 378

5. Personnel expenses [17]a] Wages and salaries 12,693 11,998b] Social security contributions, expenses for

pensions and other employee benefits 2,253 14,946 2,060

6. Depreciation 15,042 13,900

7. Other operating expenses [18] 34,418 24,711

8. Income from investments ––– –––

9. Income from loans [19] 465 1,186

10. Other interest and similar income [15] 1,559 1,547

11. Income from profit-transferagreement 28,902 39,759

12. Interest and similar expenses [19] 10,247 9,391

13. Expenditure on assumption of losses 7,676 10,543

14. Results from ordinary business activity 20,979 29,449

15. Extraordinary expenses ––– –––

16. Taxes on income 6,531 9,224

17. Other taxes 610 7,141 631

18. Net income for the year 13,838 19,594

19. Profit brought forward 32,745 23,351

20. Allocation to the reservefor own shares 5,181 2,183

21. Distributable profit 41,402 40,762

2000see NotesNo.

P r o f i t a n d l o s s a c c o u n t



M Ö B E L W A L T H E R 2 0 0 0 5 5

N O T E S

The financial statements as of December 31, 2000, were drawn up according to the provisions of the

German Commercial Code relating to the accounting of German companies as well as the Supplemen-

tary Provisions of the German Stock Corporation Law.

Möbel Walther AG also presents the Group financial statements, which were prepared according to the

provisions of Sec. 290 seqq. of the German Commercial Code.

The Group Notes to the Financial Statements and the Notes to the Financial Statements of Möbel Walther

AG have been combined. Unless otherwise indicated, the following explanations apply to both sets of

financial statements.

Möbel Walther AG operates exclusively as a holding company. Predominantly, the land and buildings

utilized by the retail outlets are the property of Möbel Walther AG. The profit and loss statement is based

on the expenditure type of presentation.

1 . G e n e r a l c o m m e n t s

Besides Möbel Walther AG, the Group financial statements cover all the affiliated companies in which the

parent company holds a 100% interest. A 95% participation is held in the Mutschler companies. The

participation in Sconto Nord Möbelmarkt GmbH amounts to 50 %. This company is under the uniform

management of the parent company. All significant companies are listed separately in the presentation of

shareholdings on pp 68 - 69.

2 . C o m p a n i e s i n c l u d e d i n t h e c o n s o l i d a t i o n

As prescribed by law, the annual statements of the individual companies included in the consolidation are

drawn up according to the uniform accounting and valuation principles applied by Möbel Walther

Aktiengesellschaft.

The capital consolidation was made according to the book-value method by offsetting the acquisition cost

against the pro-rata share in the equity capital of the subsidiaries at the time of their acquisition or initial

consolidation.

Intra-Group financial transactions as well as trade accounts receivable and payable are eliminated. In

the area of long-term funding, € 1.9 million in additional debt was posted. The difference between

[domestic ] receivables and [ foreign] debt is attributable to the foreign currency exchange rate increases

compared with the exchange rate in effect for the debt’s initial accrual at the time of loan disbursement.

The difference is included in the revenue reserves [and in the flow of funds statement in the item »other

changes in equity«].

The assets, liabilities, and income statement items of foreign subsidiaries are translated at the fiscal

year-end rate. Despite partial improvement in foreign currency exchange rates, the value of equity as of

January 1, 2000 differed only slightly in the consolidated balance sheet because of the offsetting of

income statements.

3 . P r i n c i p l e s o f c o n s o l i d a t i o n

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5 6 M Ö B E L W A L T H E R 2 0 0 0

Cost of Additions Disposals Re- Cost of Accumu- Book value Book value De-acquisition / groupings acquisition / lated de- preciationproduction + / - production preciation financial

yearJan. 1, 2000 Dec.31,2000 Dec.31,2000 Dec.31,2000 Dec.31,1999

€ ‘000 € ‘000 € ‘000 € ‘000 € ‘000 € ‘000 € ‘000 € ‘000 € ‘000

Start-up expenses 400 1,102 ––– ––– 1,502 260 1,242 271 153

Fixed assets


1. Concessions, industrial property rights amd similar goods 9,926 2,491 477 2 11,942 6,109 5,833 5,444 2,103

2. Payments on account 54 ––– 52 - 2 ––– ––– ––– 54 –––

Total intangible assets 9,980 2,491 529 ––– 11,942 6,109 5,833 5,498 2,103

II. Tangible assets

1. Land and buildings,including buildings onthird-party land 352,912 1,668 9,102 2,078 347,556 72,121 275,435 292,690 13,260

2. Plant and machinery 15,324 136 ––– ––– 15,460 6,307 9,153 10,084 1,067

3. Other fixtures and fittings, tools and equipment 91,303 5,984 3,101 228 94,414 66,113 28,301 33,938 11,782

4. Payments on account and tangible assets underconstruction 7,237 10,707 206 1,092 18,830 ––– 18,830 7,078 –––

Total tangible assets 466,776 18,495 12,409 3,398 476,260 144,541 331,719 343,790 26,109


1. Investments in subsidiariesand associated companies 126 5 ––– ––– 131 ––– 131 126 –––

2. Other loans 69 222 9 ––– 282 ––– 282 69 –––

Total financial assets 195 227 9 ––– 413 ––– 413 195 –––

Total fixed assets 476,951 21,213 12,947 3,398 488,615 150,650 337,965 349,483 28,212

F i x e d A s s e t s M ö b e l W a l t h e r G r o u p


M Ö B E L W A L T H E R 2 0 0 0 5 7

F I X E D A S S E T S

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F i x e d A s s e t s M ö b e l W a l t h e r A G

Cost of Additions Disposals Re- Cost of Accumu- Book value Book value De-acquisition / groupings acquisition / lated de- preciationproduction + / - production preciation financial

yearJan. 1, 2000 Dec.31,2000 Dec.31,2000 Dec.31,2000 Dec.31,1999

€ ‘000 € ‘000 € ‘000 € ‘000 € ‘000 € ‘000 € ‘000 € ‘000 € ‘000


1. Concessions, industrial property rights amd similar goods 8,064 1,705 369 ––– 9,400 4,410 4,990 5,050 1,764

2. Payments on account 51 ––– 51 ––– ––– ––– ––– 51 –––

Total intangible assets 8,115 1,705 420 ––– 9,400 4,410 4,990 5,101 1,764

II. Tangible assets

1. Land and buildings,including buildings onthird-party land 314,955 812 8,014 ––– 307,753 64,568 243,185 261,911 11,666

2. Plant and machinery 13,469 6 ––– ––– 13,475 5,324 8,151 9,035 889

3. Other fixtures and fittings, tools and equipment 5,866 814 1,273 ––– 5,407 4,318 1,089 998 723

4. Payments on account and tangible assets underconstruction 424 24 25 ––– 423 ––– 423 424 –––

Total tangible assets 334,714 1,656 9,312 ––– 327,058 74,210 252,848 272,368 13,278


1. Holdings in affiliatedcompanies 28,394 6,240 24 4,090 38,700 ––– 38,700 28,393 –––

2. Loans to affiliatedcompanies 71,149 13,232 5,926 - 4,090 74,365 ––– 74,365 71,150 –––

3. Investments and subsidiariesand associated companies 126 4 ––– ––– 130 ––– 130 126 –––

4. Other loans 31 ––– ––– ––– 31 ––– 31 31 –––

Total financial assets 99,700 19,476 5,950 ––– 113,226 ––– 113,226 99,700 –––

Total fixed assets 442,529 22,837 15,682 ––– 449,684 78,620 371,064 377,169 15,042


5 8 M Ö B E L W A L T H E R 2 0 0 0

As a matter of principle, intangible assets are valued at their cost of acquisition less scheduled deprecia-

tion according to the straight-line method.

Tangible assets subject to wear and tear are valued at their cost of acquisition or production less sche-

duled depreciation. The calculation of their useful life is based on the Company’s experience, which is

largely identical to the official tax depreciation tables. Depreciation is fundamentally on a straight-line

basis. Minor-value fixed assets are written off in full in the year of acquisition, except for the initial equip-

ment for new outlets and the thoroughgoing modernization of existing ones.

Financial assets are shown at their cost of acquisition.

Inventories are valued at their cost of acquisition or production or lower attributable value at financial year-

end.

Accounts receivable and other assets are shown at their nominal value less reasonable lump-sum adjust-

ments to cover the general credit risk. Individual adjustments are deducted for doubtful claims.

The special depreciation allowances under Sec. 4 of the Law to Promote Regional Development in

Germany are shown [as value adjustments ] under the special items with a partial reserve character.

Provisions for pensions are established in the actuarially determined amount on the basis of 6 % interest

pursuant to Sec. 6 a of the Income Tax Law.

Provisions for taxes and other provisions are established in amounts dictated by prudent commercial

judgment, taking all discernible risks and uncertain liabilities into account. Liabilities are carried on the

balance sheet in the amounts repayable.

4 . A c c o u n t i n g a n d v a l u a t i o n p r i n c i p l e s

Fixed assets movements are shown on pages 56 - 57.

■ Intangible assets

The intangible assets relate to computer software as well as (in the previous year) to advance payments

for the purchase of such assets.

■ Tangible assets

Capital expenditures made by Möbel Walther AG in the past financial year were € 1.7 million, compared

with € 11.0 million in the previous year.

At the Group level, additions to tangible assets are shown at € 18.5 million, compared with € 23.3

million the previous year.

5 . F i x e d a s s e t s

In the Group profit and loss account, revenues from intra-Group sales, cost allocations, interest earned

and other internal income are offset against the corresponding expenses or restated as the capitalized cost

of self-constructed assets.

The elimination of intra-Group profits was waived during the financial year, as no major intra-Group

profits were contained in either the valuation of fixed assets or inventories.


in € ‘000 2000 1999

Furnishing Centers

Möbel Walther Gründau GmbH 15,571 15,308

Möbel Walther Peißen GmbH 6,527 6,480

Möbel Walther Dresden GmbH 4,084 3,938

Möbel Walther Chemnitz GmbH 3,310 3,429

Möbel Walther bei Magdeburg GmbH 4,723 4,277

Möbel Walther Leipzig GmbH 5,510 5,423

Möbel Walther Berlin-Brandenburg GmbH 8,309 8,503

Möbel Walther Cottbus GmbH 4,371 4,476

Möbel Walther Schwetzingen GmbH 9,444 9,677

Möbel Mutschler GmbH & Co., Neu-Ulm 9,834 10,042

Möbel Mutschler GmbH & Co. Leonberg 5,499 6,108

Mutschler Logistik Service Ulm GmbH 567 ––––

Walther Trading Service GmbH Cottbus 4,205 3,158

81,954 80,819

M Ö B E L W A L T H E R 2 0 0 0 5 9

N O T E S

6 . I n v e n t o r i e s

The trade inventories shown in the consolidated financial statements are held by the following sub-

sidiaries:

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In the consolidated group development of fixed assets, the regrouping of € 3.4 million concerns land

including manufacturing costs accrued from the past arising from the construction of a furniture outlet in

Warsaw which was included in inventory the previous year.

Of disposals included in the development of fixed assets a total of € 7.9 million is attributable to the sale

of the central warehouse in Grünheide-Freienbrink that is used by Walther Logistik Service Brandenburg

GmbH under the terms of a sale and leaseback transaction. The sales price corresponds to the property’s

book value.

■ Financial assets

Besides other shareholdings, Möbel Walther AG holds a participation in Begros-Bedarfsgüter-Groß-

handelsgesellschaft mbH.

Of the addition to shares in affiliated enterprises reported by Möbel Walther Aktiengesellschaft, € 1.3

million is attributable to the new subsidiary Möbel Walther New Media AG. The remainder arises from

capital increases and payments to the capital reserves of affiliated enterprises that were already included

the previous year.


6 0 M Ö B E L W A L T H E R 2 0 0 0

7 . A c c o u n t s r e c e i v a b l e a n d o t h e r a s s e t s

The land and work in progress of Möbel Walther AG include a plot of land that will be transferred to a

leasing company.

The Group financial statements additionally include a leasing project in Poland.

in € ‘000 Dec. 31, 2000 Dec. 31, 1999 Dec. 31, 2000 Dec. 31, 1999

Trade accounts

receivable 585 829 7,226 11,271

Due from

affiliated companies 44,664 49,851 ––– –––

Due from companies in

which a participation is held 740 590 740 590

Other assets 30,556 19,464 39,719 24,831

76,545 70,734 47,685 36,692

Möbel Walther AG Möbel Walther Group

in € ‘000 2000 1999

SCONTO Germany

Sconto SB Der Möbelmarkt GmbH 14,106 14,110

Sconto Nord Möbelmarkt GmbH 1,700 1,881

15,806 15,991

TICCO 2,442 2,649

International

Sconto Polska Sp.z.o.o., Poland 1,980 1,915

Sconto Nábytek k.s., Czech Republic 5,217 6,470

Sconto Butor Kft., Hungary 1,272 –––

8,469 8,385

E-Commerce

Möbel Walther New Media AG 228 –––

108,898 107,845

Inventories, continued


Other assets include claims arising from cash in transit, bonuses and other credit balances with suppliers,

tax refunds, security deposits, and from employees. Other assets increased through partial payments for

the acquisition of land in Eschborn totalling € 14.3 million; these amounts are shown as claims against

the leasing company that is providing the financing.

The trade accounts receivable in the individual and Group financial statements include a claim with a term

to maturity of more than one year in the amount of € 583 thousand. Otherwise, the remaining term to

maturity of the accounts receivable and of other assets is one year or less.

The other assets of Möbel Walther AG include € 217 thousand in premium reserves and accumulated

shares of profits arising from insurance policies covering pension obligations.

In the Group financial statements, liquid funds total € 23,096 thousand. Of this amount, € 10,929 thou-

sand are liquid funds of foreign consolidated companies.

8 . L i q u i d f u n d s

The discount of € 286 thousand included in this item in both the parent company’s and the Group’s

financial statements is written down according to schedule and in line with the amount of interest paid

on the loans.

9 . A c c r u e d a n d d e f e r r e d i t e m s

■ Subscribed capital

Subscribed capital of € 25.56 million is broken down into 6,000,000 ordinary bearer no-par shares and

4,000,000 non-voting preference bearer no-par shares.

■ Own shares

The shareholders´ meeting of the Möbel Walther AG authorized the acquisition of own shares. The parent

company acquired a number of its own ordinary and preference shares. At the end of financial year, the

Company was holding 599,596 ordinary shares and 19,344 preference shares. The book value corres-

ponds to the market value of the shares at financial year-end.

Shares held as treasury stock were acquired in financial years 1999 and 2000. Möbel Walther is autho-

rized to transfer the shares in case of a corporate acquisition and/or participation in a company involving

the exclusion of subscription rights for existing shareholders.

Buying up preference shares serves primarily the purpose of providing them for sale to employees.

During the financial year, out of the pool of shares a total of 394,400 ordinary shares were acquired at an

average cost of € 13.15 per share and 10,100 preference shares were acquired at an average cost of

€ 8.50 per share.

1 0 . C a p i t a l a n d r e s e r v e s

M Ö B E L W A L T H E R 2 0 0 0 6 1

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■ Provisions for taxes

This item includes outstanding balances in the individual financial statements arising from taxes on

income for financial year 1999. The company capitalizes tax claims arising in financial year 2000

under other assets.

■ Other Provisions

By far the greatest part of other provisions relates to commitments arising from employees’ holiday and

bonus entitlements that were outstanding at financial year-end, as well as provisions for guarantees.

Further provisions are made among others for contributions for vocational accident and disability

insurance, equalization levies for the non-employment of disabled persons, auditing costs, emoluments

payable to the Supervisory Board and for remaining open invoices covering supplies and services.

1 2 . P r o v i s i o n s

The special items with a partial reserve character relate exclusively to special depreciation allowances

under Sec. 4 of the Law to Promote Regional Development in Germany, in particular for the construction

of buildings.

An amount of € 6,624 thousand was paid out of this item at the Group level.

Taking into consideration the income taxes resulting from dissolutions, the profit for the year is increased

by € 3,285 thousand.

Future tax burdens resulting from lower depreciation allowances will be spread over the largely long-term

depreciation period for these investments.

1 1 . S p e c i a l i t e m s w i t h a p a r t i a l r e s e r v e c h a r a c t e r

■ Capital reserve

The capital reserve of Möbel Walther AG comprises premiums received of € 93.57 million that were

generated by the capital increases in 1991 and 1994.

■ Revenue reserves

An amount of € 5,181 thousand was allocated to the reserve for the Company’s own shares for the

purpose of adjusting this reserve to the balance of own shares.

■ Distributable profit

A dividend of € 0.82 per ordinary share and € 0.87 per preference share is to be paid out of the dis-

tributable profit of the parent company of € 41.4 million [previous year € 40.8 million].

6 2 M Ö B E L W A L T H E R 2 0 0 0


M Ö B E L W A L T H E R 2 0 0 0 6 3

L I A B I L I T I E S

Total of which with a residual term to maturity of of whichsecured by

liens on real estate

up to 1 to more thanMöbel Walther Group 1 year 5 years 5 years

€ ‘000 € ‘000 € ‘000 € ‘000 € ‘000

Liabilities to banks 177,204] 75,822] 51,554] 49,828] 115,806][168,696] [57,082] [58,675] [52,939] [127,522]

Advance payments 19,654] 19,654] –––] –––] –––]from customers [11,156] [11,156] [–––] [–––] [–––]

Trade accounts payable 71,547] 71,547] –––] –––] –––][65,663] [65,663] [–––] [–––] [–––]

Due to enterprises in which the 31] 31] –––] –––] –––]company holds an interest [31] [31] [–––] [–––] [–––]

Other liabilities * 15,644] 15,644] –––] –––] –––][20,786] [17,094] [3,692] [–––] [3,879]

284,080] 182,608] 51,554] 48,528] 115,806][266,332] [151,026] [62,367] [52,939] [131,401]

S c h e d u l e o f L i a b i l i t i e s

Total of which with a residual term to maturity of of whichsecured by

liens on real estate

up to 1 to more thanMöbel Walther AG 1 year 5 years 5 years

€ ‘000 € ‘000 € ‘000 € ‘000 € ‘000

Liabilities to banks 164,551] 75,149] 48,072] 41,330] 103,154][161,213] [56,575] [56,682] [47,956] [120,048]

Trade accounts payable 2,139] 2,139] –––] –––] –––][2,616] [2,616] [–––] [–––] [–––]

Due to affiliated companies 9,303] 9,303] –––] –––] –––][2,670] [2,670] [–––] [–––] [–––]

Due to enterprises in which the 31] 31] –––] –––] –––]company holds an interest [31] [31] [–––] [–––] [–––]

Other liabilities * 4,116] 4,116] –––] –––] –––][8,158] [4,466] [3,692] [–––] [3,879]

180,140] 90,738] 48,072] 41,330] 103,154][174,688] [66,358] [60,374] [47,956] [123,927]

* Including taxes € 2,260,000 [€ 3,384,000]* Including social security contributions € 269,000 [€ 248,000]

[Note: previous year’s figures in brackets.]

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* Including taxes € 4,174,000 [€ 8,281,000]* Including social security contributions € 3,607,000 [€ 3,477,000]


6 4 M Ö B E L W A L T H E R 2 0 0 0

in € ‘000 2000 1999

Sales revenues

a ] By products

House furniture 445,358 440,125

Kitchens and bathrooms 123,036 127,562

Garden furniture 7,172 5,963

Carpeting and carpet floorings 16,141 16,380

Boutique, curtains, and home textiles 56,429 53,718

Do-it-yourself and electrical appliances 22,506 22,015

Restaurant 8,922 8,812

679,565 674,575

b ] By regions

Western part of Germany 311,918 296,410

Eastern part of Germany 330,348 350,284

International 37,299 27,881

679,565 674,575

Invoicing of leased buildings ––– 23,832

Möbel Walther Group 679,565 698,407

The sales revenues of Möbel Walther AG largely comprise internal Group real estate income and earnings

from internal Group allocations and services. These earnings are eliminated in the Group profit and loss

statement. Real estate and other income arising from transactions with third parties are restated in the

Group profit and loss statement under other operating income.

1 4 . S a l e s r e v e n u e s

Details on the remaining terms to maturity of the Company’s liabilities and the security furnished for

these can be seen in the tables on page 63.

Liabilities to banks comprise mainly loans to finance land and buildings. Cash advances are additionally

included. The financial loan totalling € 3.9 million that was included under other liabilities the previous

year was repaid.

Other liabilities also include commitments arising from wage and salary settlements, sales and salary tax

obligations, and customer deposits. The breakdown of liabilities on page 63 shows liabilities arising from

taxes and in connection with social security contributions.

1 3 . L i a b i l i t i e s


M Ö B E L W A L T H E R 2 0 0 0 6 5

N O T E S

Pension costs totalled € 439 thousand compared with € 335 thousand the previous year.

1 7 . P e r s o n n e l e x p e n s e s

Other operating expenses consist mainly of rents paid, insurance premiums, maintenance, vehicle costs,

advertising and travel expenses, merchandise delivery costs, legal and consulting costs.

1 8 . O t h e r o p e r a t i n g e x p e n s e s

This item relates to interest on loans in general. Interest paid and received as a result of clearing trans-

actions between Möbel Walther AG and subsidiaries are eliminated in the Group profit and loss statement.

The profit and loss statement of Möbel Walther AG includes the following items, which arose in connec-

tion with financial transactions with affiliated companies:

1 9 . I n t e r e s t a n d s i m i l a r e x p e n s e s

in € ‘000 2000 1999

Möbel Walther AG

Income from loans 466 1,186

Interest income 1,519 1,330

Interest expenses 549 831

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The other operating income of the Group includes dissolutions of special items with a partial reserve

character amounting to € 6,624 thousand. The comparable figure in the profit and loss statement of

Möbel Walther AG totals € 4,687 thousand.

Consolidated other interest and similar income consists mainly of interest earned on bank time deposits.

1 5 . O t h e r i n c o m e

The cost of materials comprises all goods received for display and warehousing, taking into account price

reductions and inventory changes.

Expenses for purchased services arise largely from consolidated Group merchandise-related outside

services.

1 6 . C o s t o f m a t e r i a l s


6 6 M Ö B E L W A L T H E R 2 0 0 0

2 1 . O t h e r f i n a n c i a l c o m m i t m e n t s

in € ‘000 Dec. 31, 2000 Dec. 31, 1999 Dec. 31, 2000 Dec. 31, 1999

a ] Commitments under rental agreements

due 2001 16,192 16,235 23,089 22,534

due 2002 - 2005 [ total ] 64,030 64,257 93,263 86,657

due after 2005 [annual ] 16,001 16,011 22,269 19,988

b ] Commitments under leasing agreements

due 2001 6,036 5,251 9,564 8,469

due 2002 - 2005 [ total ] 21,422 19,352 34,470 27,103

due after 2005 [annual ] 4,997 4,411 8,186 5,566


Furnishing- SCONTO TICCO International E-Commerce Other/AGcenters Germany

Sales [net ] 535,665] 89,153] ]17,303] 37,299] 145] –––] 679,565][539,225] [89,028] [17,322] [27,881] [–––] [24,951] [698,407]

Pre-tax income 14,253] 2,234] - 371] - 135] - 1,059] - 615] 14,307][18,174] [4,110] [- 364] [- 973] [–––] [1,164] [22,112]

Depreciation 9,990] 1,681] 214] 974] 82] 15,424] 28,365][10,876] [1,624] [233] [712] [–––] [14,316] [27,761]

Fixed assets * 25,766] 3,970] 1,191] 6,740] 489] 299,397] 337,553][book value] [32,076] [5,145] [1,328] [5,832] [–––] [304,906] [349,287]

Trade inventories 81,953] 15,806] 2,442] 8,469] 228] –––] 108,898][80,820] [15,991] [2,649] [8,385] [–––] [–––] [107,845]

Investments * 3,797] 531] 77] 1,453] 571] 14,558] 20,986][5,190] [2,124] [649] [2,022] [–––] [15,480] [25,465]

Staff [ year average] 3,601] 454] 98] 427] 11] 270] 4,861][3,643] [448] [101] [329] [–––] [251] [4,772]

Selling space 290,000] 82,000] 12,000] 31,000] –––] –––] 415,000][square meter at year-end] [290,000] [82,000] [12,000] [27,000] [–––] [–––] [411,000]

Segments Group

* Tangible and intangible fixed assets* [Note: previous year’s figures in brackets. ]

€ ‘000

2 0 . S e g m e n t i n f o r m a t i o n


M Ö B E L W A L T H E R 2 0 0 0 6 7

N O T E S

2 3 . P e r s o n n e l

The average number of employees is as follows:

The emoluments of the Supervisory Board for 2000 were € 132 thousand. The Managing Directors

were paid € 1,188 thousand.

2 4 . E m o l u m e n t s

2000 1999 2000 1999

Wage and salary earners 213 188 3,253 3,215

Part-time employees 21 17 1,132 1,089

Junior trainees 19 17 476 468

253 222 4,861 4,772


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Contingent liabilities consist of indemnity agreements for liabilities arising under rental and leasing re-

lationships of affiliated enterprises. Annual rental liabilities total € 524 thousand. Lease payments amount

to € 2,527 thousand per annum. The guaranteed liability of the lessee to make continuous payment of a

loan to the lessor totals € 190 thousand per annum.

Möbel Walther AG holds a participation in Degenestor Grundstücksverwaltungsgesellschaft mbH & Co

Immobilien-Vermietungs KG as a general partner. Möbel Walther AG has liabilities as a limited partner in

Rosea Grundstücks-Vermietungsgesellschaft mbH & Co in the amount of:

Project Gründau Lieblos ......................€ 1.13 million

Langenselbold............................€ 3.58 million

Ulm-Himmelweiler ..................€ 3.58 million

The liability in Molat Beteiligungs GmbH & Co. KG totals € 0.67 million, in Ascenta Grundstücks-

verwaltungsgesellschaft mbH + Co Vermietungs KG € 5 thousand.

Möbel Walther AG has issued letters of comfort for foreign subsidiaries in favor of suppliers and banks.

At financial year-end, a total of € 27.2 million in bank debt was covered in this manner.

2 2 . C o n t i n g e n t l i a b i l i t i e s


6 8 M Ö B E L W A L T H E R 2 0 0 0

Name and registered office of company Share Share Result of theof capital in equity financial year

held capital 2000 [1999]

in % in DM in DM

Furnishing Centers [ incl. Logistics]

Möbel Walther Gründau GmbH 100 1,000,000 20,978,972]Gründau-Lieblos [24,658,970]

Möbel Walther Peißen GmbH 100 716,447 3,426,772]Peißen [7,979,825]

Möbel Walther Chemnitz GmbH 100 500,000 176,814]Chemnitz [2,657,966]

Möbel Walther Dresden GmbH 100 500,000 4,523,767]Altfranken [6,919,995]

Möbel Walther bei Magdeburg GmbH 100 500,000 2,288,802]Langenweddingen [3,207,777]

Möbel Walther Leipzig GmbH 100 500,000 1,903,200]Taucha [4,073,663]

Möbel Walther Cottbus GmbH 100 500,000 3,941,980]Willmersdorf [6,510,519]

Möbel Walther Berlin-Brandenburg GmbH 100 500,000 14,792,243]Vogelsdorf [11,715,113]

Möbel Walther Schwetzingen GmbH 100 500,000 - 3,647,281]Schwetzingen [- 12,078,813]

Möbel Mutschler GmbH & Co. 95 - 69,475 - 6,250,915]Neu-Ulm [- 7,371,193]

Möbel Mutschler GmbH & Co. Leonberg 95 - 7.058,152 - 4,227,413]Leonberg [- 6,867,269]

Walther Logistik Service GmbH 100 264,624 - 2,884,321]Langenselbold [- 1,597,588]

Walther Logistik Service Peißen GmbH 100 203,944 - 858,510]Peißen [38,655]

Walther Logistik Service Brandenburg GmbH 100 225,073 297,280]Grünheide [44,023]

Möbel Walther Sachsenring GmbH 100 520,833 - 542,609]Oberlungwitz [55,835]

Walther Logistik Service Kurpfalz GmbH 100 200,000 - 1,174,919]Schwetzingen [- 1,351,925]

Mutschler Logistik Service Ulm GmbH 100 195,583 - 4,912,245]Ulm [- 4,254,929]

Walther Trading Service GmbH Cottbus 100 200,000 - 203,553]Cottbus [906,406]

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1] Control and profit-transfer agreement [ result shown prior to transfer ]

[Note: previous year’s figures in brackets. ]


M Ö B E L W A L T H E R 2 0 0 0 6 9

G R O U P S H A R E H O L D I N G S

Name and registered office of company Share Share Result of theof capital in equity financial year

held capital 2000 [1999]

in % in DM in DM

SCONTO Germany

Sconto SB Der Möbelmarkt GmbH 100 500,000 4,073,158]Gründau-Lieblos [8,898,068]

Sconto Nord Möbelmarkt GmbH 50 - 291,190 284,738]Lübeck [- 869,303]

TICCO

Ticco Handelsgesellschaft mbH 100 554,800 - 731,865]Gründau-Lieblos [- 727,958]

International

Sconto Nábytek k.s. 100 5,319,941 3,175,023]Prague [563,271]

Sconto Polska Sp. z.o.o. 100 338,083 - 3,163,651]Warsaw [- 3,018,238]

Sconto Butor Kft. 100 - 1,353,282 - 1,996,073]Budapest [- 352,564]

Walther Meble Sp.z.o.o. 100 1,518,492 - 5,613]Warsaw

E-commerce

Möbel Walther New Media AG 100 373,781 - 2,071,007]Gründau-Lieblos

Other

Walther Trading Service GmbH 100 108,736 - 9,215]Gründau-Lieblos [- 146,786]

Walther Renovierungsservice GmbH 100 55,660 - 44,676]Gründau-Lieblos [- 459,534]

EGO Werbemittlung GmbH 100 155,999 124,041]Gründau-Lieblos [94,730]

Walther Management Sp. z.o.o. 100 1,774,110 284,828]Warsaw [1,292,075]

Walther Management Magyarorszag Kft. 100 - 298,055 - 646,178]Budapest [- 268,316]

Centro Zlicin s.r.o. 100 3,230,290 - 7,128]Prague [- 322,655]

Walther Immobilien s.r.o. 100 2,084,426 - 14,845]Prague [543,280]

Immobilien Walther s.r.o. 100 - 731,386 - 237,693]Bratislava [- 456,274]

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7 0 M Ö B E L W A L T H E R 2 0 0 0

The Board of Managing Directors and the Supervisory Board propose that the distributable profit of

€ 41,402,351.71 be appropriated as follows:

1. Payment of a dividend per share as follows:

a ] for ordinary share, ..........................................€ 0.82

b ] for preference shares ....................................€ 0.87

2. Carry-forward of the balance.

2 5 . P r o p o s a l f o r t h e a p p r o p r i a t i o n o f d i s t r i b u t a b l e p r o f i t

Gründau-Lieblos, Germany, April 2001

Möbel Walther Aktiengesellschaft

The Board of Managing Directors

Gerhard Walther Heiner Strungies Stephan Müller


F u r n i s h i n g C e n t e r s

T I C C O

S C O N T O

L o g i s t i c s C e n t e r s

BerlinChemnitzCottbusDresdenGründau-LieblosHalle/ PeißenLeipzigLeonbergMagdeburgNeu-UlmSchwetzingen

Darmstadt/ WeiterstadtKriftelMainz

Walldorf

Darmstadt/ WeiterstadtDessau

DresdenDresden/ CoswigHalle/ Bennstedt

Jena/ RothensteinKleinostheim

Leipzig/ GroßpösnaLübeck

Magdeburg/ IrxlebenZwickau

Berlin/ FreienbrinkChemnitz

CottbusGründau/ Langenselbold

Halle/ PeißenSchwetzingen/ Viernheim

Ulm/ Himmelweiler

M Ö B E L W A L T H E R 2 0 0 0 7 1


For locations in eastern Europe see p. 23

L O C A T I O N S I N G E R M A N Y

Schleswig-Holstein

Kiel

Bremen

Hamburg

Niedersachsen

Hannover

Nordrhein-Westfalen

Köln

Bayern

Baden-Württemberg

Saarland

Rheinland-Pfalz

Hessen

München

Nürnberg

HeadquartersGründau/Lieblos

Stuttgart

Frankfurt

Brandenburg

Berl in

Mecklenburg-Vorpommern

Sachsen-Anhalt

Magdeburg

Thüringen

SachsenDresden

Erfurt


Möbel Walther AktiengesellschaftRabenaustraße 3-963584 Gründau-LieblosInvestor Relations:Phone: ++49-60 51/ 8 37-0 or -5 64Fax: ++49-60 51/ 8 37-3 87Internet: www.moebelwalther.dee-mail: [email protected]

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