Inter IKEA Holding B.V. Annual report FY19 Page 5 of 54
In December 2017, the European Commission opened a formal investigation, with their Opening
Decision published on 6 April 2018, to examine whether decisions by the tax authorities in The
Netherlands with regard to the corporate income tax paid by one of our subsidiaries, comply with
European Union rules on state aid. The Company co-operates and responds to questions which
the European Commission has in relation to this investigation.
At this moment, although we consider the risk of a cash out flow unlikely, it is not possible to
assess a financial impact, if any, of the outcome of this EC investigation. We are actively
monitoring and addressing these developments and believe that the corporate income tax
position is appropriately reflected in the financial statements.
Cash flows
The overall movement in the Group’s liquidity was limited as the cash generated by operating
activities after interest, investments and financial charges was mainly used to repay loans and
distribute dividend to the non-controlling shareholder, Interogo Holding AG. The Group monitors
its cash position by using a cash flow forecast model to ensure the cash position is always
sufficient to meet the financial obligations towards staff members, creditors, tax authorities and
other third parties.
Balance sheet
The Group’s balance sheet positions as per 31 August 2019 have not changed significantly when
compared to 31 August 2018. Fixed assets primarily comprise the IKEA Proprietary Rights (“IP
Rights”), relating to the IKEA trademark, protection rights, intellectual property rights and the
rights to the IKEA catalogue, with a book value of EUR 10.2 billion.
Additionally, the Group owns 38 IKEA furniture production units, mostly located in Europe, as well
as two factories that produce furniture components. In FY19, two IKEA furniture production units
were sold and one was announced to close down in December 2019. In most cases co-workers
have remained in the same units under new ownership or moved to new jobs in other nearby
units. We are investing in the extension of existing factories in Poland, Lithuania and Russia.
Additionally, we are building a new factory for furniture components in China.
The Group also owns several property buildings, offices and distribution centres around the
world, including the IKEA Delft store. We are currently building a new distribution centre in
Malaysia to better serve the South-East Asian markets.
Inventories mostly consist of IKEA products located in distribution centres. Inventory increased in
FY18 due to lower than expected sales growth and effective measures were taken to reduce the
inventory levels in FY19. Receivables mainly relate to IKEA retailers for franchise fees as well as
IKEA products sold and invoiced. The Company also holds receivables on related parties.
Group equity increased from EUR 7.3 billion to EUR 8.3 billion in FY19. Of the EUR 1.5 billion profit
achieved during FY19, EUR 850 million will be distributed as a dividend to our shareholder. The
remaining EUR 635 million will be added to Group equity.
Provisions for the majority comprise pension commitments. Other provisions have been
recognised for deferred taxes, legal disputes and product claims. Most of the non-current
liabilities, amounting to EUR 6.5 billion, concern two loans received from Interogo Holding AG. As
in FY19 and prior years, we will continue to repay EUR 500 million each year on one of these loans