Vorwerk Annual Report 2011 · 2012-05-18 · Contents 6 A Review of Vorwerk Management Report 2011 11 General Section on Business Development 15 Direct Sales, Kobold 18 Direct Sales,

Vorwerk Annual Report 2011

So ist das Leben / That‘s life /C‘est la vie / / Así es la vida / È la vita / 就是这样享受生活 / It’s wonderful ...

Report on the 128th fi nancial year

Editorial What’s the best thing about life? Life itself, of course! Life is full of surprises, encounters and unexpected twists. Nothing could be more exciting or varied. The theme of this year’s Vorwerk Annual Report is life’s milestones. Join us on a journey from the first clumsy steps in life to well-earned retirement – and beyond. You will be delighted to discover just how colorful life can be. / It’s wonderful!

Editorial / 3

Contents

6 A Review of Vorwerk

Management Report 2011 11 General Section on

Business Development 15 Direct Sales, Kobold 18 Direct Sales, Thermomix 21 Direct Sales, JAFRA Cosmetics 23 Direct Sales, Lux Asia Pacific 26 Vorwerk Engineering 29 akf group 31 Vorwerk Carpets

4 / Contents

35 Vorwerk Direct Selling Ventures 37 HECTAS 38 Human Resources 42 Assets and Earnings Situation 43 Financial Situation 44 Opportunities and Risks

47 Consolidated Financial Statements 2011

62 The Main Companies in the Vorwerk Group

64 Sources / Imprint

Contents / 5

A Review of Vorwerk

HEADQUARTERS OF THE VORWERK GROUP (HOLDING COMPANY)

Vorwerk & Co. KGMühlenweg 17 - 3742270 Wuppertal, GermanyTelephone +49 202 564-0, Fax -1301www.vorwerk.de / www.vorwerk.com

EXECUTIVE BOARD

Walter Muyres (Managing Partner)Reiner Strecker (Managing Partner)Frank van Oers (since 11 January 2012)

SUPERVISORY BOARD

Dr. Jörg Mittelsten Scheid, Wuppertal (Chairman)Prof. Dr. Ing. Pius Baschera, Zurich/Switzerland (Vice Chairman)Dr. Axel Epe, Düsseldorf (Vice Chairman)Rainer Baule, Ettingen (since 23 May 2011)Günther Busch, Mülheim/RuhrDipl.-Ing. Rainer Christian Genes, StuttgartVerena Klüser, Munich Jens Mittelsten Scheid, Munich (until 31 December 2011)Dr. Timm Mittelsten Scheid, Munich (since 23 May 2011)Sabine Schmidt, Waltrop (since 1 January 2011)

6 / A Review of Vorwerk

A Review of Vorwerk / 7

KEY FIGURES FOR THE VORWERK GROUP

in million €* 2008 2009 2010 2011

Group sales (incl. turnover tax)** 1,832 1,826 2,372 2,367

Balance sheet total 1,648 1,734 2,720 3,066

Partners‘ equity 856 920 1,112 1,211

Partners‘ equity in % (akf group at equity) 52 53 61 65

Partners‘ equity in % (akf group fully consolidated) – – 41 39

Financial assets 53 67 55 112

Other fixed assets 422 427 928 938

Current assets 1,164 1,221 1,685 1,980

Cash and cash equivalents 600 670 658 709

Capital expenditure*** 48 45 226 307

Depreciation*** 38 39 185 183

Personnel costs 452 466 480 434

Number of employees 22,255 21,580 22,096 16,156

Self-employed advisers 555,718 589,251 601,664 590,733

* akf group was included using the equity method in the consolidated financial statements up to 2009 and fully consolidated since 2010; HECTAS until 30 June 2011

** The revenue figures stated are gross values unless indicated otherwise*** Without financial assets

SUBSIDIARIESAustria, Belgium, Brazil, China, Czech Republic, Dominican Republic, France, Germany, Hungary, India, Indonesia, Italy, Japan, Luxembourg, Mexico, Netherlands, Philippines, Poland, Portugal, Russia, Singapore, Spain, Switzerland, Taiwan, Thailand, United States of America, Vietnam

DISTRIBUTORSAlgeria, Angola, Argentina, Australia, Azerbaijan, Bahrain, Brunei, Canada, Caribbean, Chile, Columbia, Croatia, Cyprus, Denmark, Ecuador, Estonia, Finland, Greece, Hong Kong, Iceland, Israel, Kazakhstan, Kuwait, Latvia, Lebanon, Libya, Lithuania, Malaysia, Morocco, Mauritania, New Zealand, Norway, Oman, Peru, Qatar, Romania, Saudi Arabia, Slovakian Republic, Slovenia, South Africa, South Korea, Sweden, Tunisia, Turkey, Ukraine, United Arab Emirates, United Kingdom, Venezuela, Zimbabwe

INTERNATIONAL PRESENCE

8 / A Review of Vorwerk

THE VORWERK GROUP COMPRISED THE FOLLOWING BUSINESS

SEGMENTS IN THE YEAR 2011:

Direct Sales, Kobold / Direct Sales, Thermomix / Direct

Sales, JAFRA Cosmetics / Direct Sales, Lux Asia

Pacific / Vorwerk Engineering / akf group / Vorwerk

Carpets / HECTAS*

16%akf group

€ 382 m1%

Others € 17 m

31%Kobold€ 728 m

25%Thermomix€ 591 m

19%JAFRA Cosmetics

€ 439 m

1%Lux Asia Pacifi c

€ 34 m

3%Carpets

€ 74 m

4%HECTAS*

€ 103 m

VORWERK GROUP/

SALES BY DIVISION 2011

* HECTAS until 30 June 2011

A Review of Vorwerk / 9

Hello World.Day 3

The good Lord thought of everything when he put us on this earth – everything, that is, except a warm pair of shoes to protect our feet. The Chinese traditionally make up for this divine oversight by providing their newborn babies with terrifying tiger shoes. Legend has it that they ward off the evil spirits we encounter as we go through life – but do they also aff ord protection against evil mothers-in-law?

10 / That’s life in / CHINA

Management Report /General Section on Business DevelopmentThe Vorwerk Group is reflecting on a very satisfactory business year in 2011. In the 128th year of the

company’s history, total sales amounted to EUR 2.367 billion and was even as much as EUR 2.471 billion

if a full business year at HECTAS Group is taken into account i.e. an increase of 4.2 percent as against

previous year. Earnings before taxation could also be improved once again.

The business volume at the Vorwerk Group including the new business transacted at akf group amounted

to EUR 2.7 billion.

The direct sales companies again proved to be the main drivers with an increase in revenue worldwide of

5 percent. The direct sales companies in the Vorwerk Group in Germany achieved a plus of 5.4 percent,

with revenue running at EUR 301.3 million.

However, the Vorwerk Group also grew outside the direct selling operations, partly due to another increase

at Vorwerk Carpets. akf group grew its new business volume considerably by 51.4 percent.

To enable a far more distinct positioning on the market, the HECTAS companies were transferred as of

30 June 2011 to the Vorwerk Facility Management Holding KG, which is now a sister company of

Vorwerk & Co. KG.

Further progress was made in terms of the internationalization of the Vorwerk Group: the revenue gener-

ated outside Germany was 67 percent (previous year: 66 percent), in direct sales it was even as much as

83 percent. Vorwerk is present in Europe, Asia and on the American continent with its own sales compa-

nies and additionally has a wide network of distributors. The Vorwerk Group’s products and services are

therefore available in more than 70 countries.

A view to the individual divisions shows that Thermomix resolutely continued along the tremendous

growth path of recent years and thereby maintained its position as the most successful and dynamic

division. Sales of the versatile kitchen appliance increased by 16 percent and surpassed the 635,000 units

mark for the first time. The cornerstones of this success were the four largest Thermomix countries, Italy,

France, Germany and Spain, where far in excess of 110,000 Thermomix appliances could be sold in each

country.

The Kobold Division also recorded an increase in sales, particularly due here once again to the strong

Italian sales company – Vorwerk Folletto. In contrast, the German sales organization could not quite achieve

Management Report / General Section / 11

the figures of previous year. Kobold Germany, however, will benefit from a number of new impulses

resulting from the opening up of additional sales channels. New products in a fresh design, the opening

of Vorwerk Shops, the strengthening of e-commerce and not least the successful start of the first Vorwerk

flagship store in Hamburg prove the innovative power of the brand. All measures are closely interlinked

with the people-based direct sales activities and support our qualified customer advisers in their

predetermined areas.

Unfavorable exchange rates resulted in revenue at JAFRA Cosmetics being lower than the previous year.

However, the sales companies in Brazil, Europe and the still very young company in India grew once again.

Even the traditionally strong sales organization in Mexico was running at above the previous year when

measured in the local currency.

Lux Asia Pacific with its sales companies in the Asia-Pacific region was likewise able to increase revenue

in the year under review, in part thanks to the successful launch of new products. The strongest subsidiaries

continued to be Thailand and Indonesia.

The Vorwerk Group could once again improve both its revenue and its earnings in 2011. The partners’

equity capital ratio amounted to 39 percent – when including the full consolidation of the akf group. A

valuation of the akf group at equity would result in a partners’ equity capital ratio of 65 percent. Cash and

cash equivalents amounted to EUR 709 million as of the balance sheet date. Vorwerk takes advantage

of the entrepreneurial scope such figures allow and invests specifically in the expansion of its business

model, the opening of new subsidiaries as well as in the development of innovative products.

The Vorwerk Group was organized in seven divisions at the close of 2011. Management Boards run the

respective divisions. Strategic leadership of the entire Vorwerk Group is the responsibility of the Holding

Company in Wuppertal. The members of the Executive Board are the Managing Partners Walter Muyres

and Reiner Strecker. Executive Vice President Frank van Oers has been a member of the Executive Board

since January 2012. Dr. Jörg Mittelsten Scheid, member of the Vorwerk owner family, is Chairman of the

Supervisory Board at the Vorwerk Group.

THANKS AND OUTLOOK

More than 600,000 people worldwide were working for companies of the Vorwerk Group in the year 2011 –

either as self-employed advisers in one of the direct selling companies or as employees in one of the produc-

tion locations or the administration. It is thanks to the commitment and motivation of the staff and customer

advisers that the Vorwerk Group was able to further expand its position as an internationally successful

family-owned company. The Executive Board and the owner family would like to take this opportunity to

sincerely thank all “Vorwerkers” worldwide for their dedication. The basis for the shared success is consti-

tuted by the corporate values that are practiced at Vorwerk. Trusting relationships and a willingness to

change have always been characteristics of the Vorwerk culture. These aspects were reinforced and the

mutual exchange of ideas and concepts fostered in the year under review with the “ONE! Vorwerk” program.

12 / Management Report / General Section

That’s life in / GERMANY / 13

First Day At School.Day 2,235 (6)

Life has to start in earnest sometime and on the day

it does, candy sweetens the process. The Schultüte,

a colorful cardboard cone German parents present

to their children on their fi rst day at school, is fi lled

with all kinds of sweets and crunchy snacks. Once

upon a time, children were told that these cones

grew on trees and ripened just in time for the start

of school. The school cone still exists today – and so

do the parents who think they can kid their kids.

SALES BY DIVISION

in million € (incl. turnover tax) 2008 2009 2010 2011

Direct sales 1,530.3 1,540.1 1,706.7 1,792.4

Division Kobold incl. Fitted Kitchens* 695.8 695.4 717.9 728.3

Division Thermomix 386.2 419.8 509.6 591.1

Division Feelina** 3.3 0.9 0.0 0.0

Division JAFRA Cosmetics 409.1 390.2 447.5 438.9

Division Lux Asia Pacific 35.9 33.8 31.7 34.1

HECTAS*** 201.2 195.1 198.9 102.7

Vorwerk Carpets 79.1 69.5 69.4 73.9

akf group**** 375.7 381.5

Others 21.1 21.7 21.3 16.6

Group sales 1,831.7 1,826.4 2,372.0 2,367.1

The Group plans to further increase revenue and earnings in the coming two years. The focus of the strat-

egies of the individual divisions is to grow in existing markets and to further internationalization. The

appeal of the “customer adviser” profession is and will be of decisive importance for the success of the

direct sales companies. An increase in sales activities always presupposes a growth in staffing levels.

Therefore, great importance will be attached in the coming years to recruiting sales and management

staff, particularly for direct sales activities.

In the financial services sector, akf group anticipates a further increase in new business volume in the

coming two years. The planned extension of consumer finance for Kobold and Thermomix will contribute

to this: following the German, Spanish and Polish markets, the Italian market will now be developed, too.

Moreover, the general public in Germany will be offered additional, attractive investment products in

2012 as part of the deposit-taking operation.

Vorwerk Carpets is also looking confidently towards the coming years with their clear up-market posi-

tioning. The high degree of brand awareness and innovative power will enable Vorwerk Carpets to further

enhance its market position as a niche provider in the premium segment.

The respective outlook of the individual divisions will be described in more detail in the following sections

of the Management Report.

* Fitted Kitchens until 30 June 2008** Feelina until 31 January 2009*** HECTAS until 30 June 2011**** akf group was included using the equity method in the consolidated financial statements up to 2009 and fully consolidated since 2010

14 / Management Report / General Section

Management Report /Direct Sales Kobold/ NEW PRODUCTS, FRESH DESIGN

/ ITALY AGAIN STRONGEST SALES COUNTRY

Superior cleaning performance in all areas: people who buy a Kobold from the house of Vorwerk can look

forward to an innovative product in the very best quality. Intelligent technology, simple handling and a

modern design are the hallmarks of the Kobold product range. In the year under review, two new vacuum

cleaners were launched on the market to complement the Kobold VK140 upright cleaner and the VT265

canister-type vacuum cleaner: the first Vorwerk vacuum cleaning robot VR100 and the VC100 tabletop

vacuum cleaner. Both reflect the high demands placed on technology and design, aspects that have been

essential constituent elements of the corporate philosophy at Vorwerk for generations. In this respect, the

Kobold VR100 vacuum cleaning robot successfully came out on top in its category in several comparative

tests. The testers’ verdict: the Kobold displays just how intelligent suction robots can be nowadays.

The Kobold Division once again increased its revenue in the year under review, achieved a volume of

EUR 728 million and thereby continued to be the division of the Vorwerk Group with the highest level of

sales. Vorwerk operates in a total of nine countries in Europe and Asia with its own subsidiaries and steers

numerous other distributorships through its export unit.

CLEANED AS IF BY MAGIC

Spring clean your home without lifting a finger – with the Kobold VR100, the first vacuum cleaning robot from Vorwerk. This nifty little mover elegantly and systematically covers every inch of your floor while you sit back and relax with your feet up. Whatever your flooring – carpet, tiles or parquet – the Kobold VR100 does away with dust bunnies in a jiffy thanks to its ingenious brush that rotates an amazing 1,440 times per minute. It pauses only briefly before circumnavigating any obstacle its laser eye identifies in its path. The result is worth seeing – as is the robot itself in a sleek new Vorwerk design.

1,440 U/min

Management Report / Kobold / 15

Vorwerk Folletto with its registered offices in Milan/Italy was once again able to increase its revenue consid-

erably and remains the strongest Kobold sales company. Vorwerk Folletto achieved a new record level of

EUR 450 million (an increase of 4.7 percent compared to the previous year) and defended its position as

undisputed market leader in Italy. Vorwerk Folletto was established as long ago as 1938 and was the first

foreign subsidiary of Vorwerk & Co. KG. Over the years, the term “Folletto” has become a synonym for

vacuum cleaners in Italy.

In Germany, the second largest sales country, revenue decreased to EUR 170 million (a fall of 6.5 percent)

in the course of the switch to the new sales system. Kobold Germany once again sees good opportunities

for growth in the coming years: the new multichannel approach will make it easier for potential customers

to access Kobold products. The Kobold customer adviser will become established in a predefined area as

a competent contact person on all aspects of cleaning. This system is not only appealing for customers,

but also for advisers. In parallel, the e-commerce offerings are being extended. The Vorwerk Shops –

mainly former service centers that have now moved to good city centre locations – will enable the brand

a far greater public presence. And with opening of the first flagship store on Hamburg’s Jungfernstieg in

December 2011, Vorwerk now reaches new target groups and clearly positions itself as a modern and

innovative market player. The strategy’s core remains people-based direct selling: all the channels are

closely interrelated and the customer can still rely on their adviser’s consultation expertise after

purchasing in a shop or online.

Of the somewhat smaller Kobold countries in terms of revenue, China, Spain and Japan contributed to

the positive development of the division. Sales increased slightly in China and reached EUR 34 million in

the year under review. Vorwerk therefore numbers among the market leaders in the vacuum cleaner

segment and will profit from the growth rates expected in this sector in the coming years. The positive

development in Spain (revenue in 2011: EUR 19 million, plus 15.2 percent) could not have been expected

in view of the general economic situation on the Iberian Peninsula. The measures already initiated there

in 2010 to enhance the motivation of the Spanish sales advisers and the cautious fine-tuning of the sales

system have had sustained, positive effects. Japan, a relatively small sales country, could even record an

increase in revenue (sales in 2011: EUR 4.5 million, plus 16 percent); the same is valid for Switzerland.

The sales companies in Austria and the Czech Republic are slightly below the level of previous year. The

same also applies for exports channeled through independent distributors.

In the coming years, the focus of the Kobold Division will be on strengthening and further developing the

existing sales companies. The strategic measures already initiated and the modifications to the sales

systems, particularly in Germany, and the product policy have created the preconditions for continued

positive development of the division in the coming years.

16 / Management Report / Kobold

Happy Quinceanera!Day 5,479 (15)

The best birthday of all for every girl in Argentina is her quinceanera, her sweet fi � eenth, which accor-ding to ancient custom marks her coming of age. On this day, the daughter of the house is decked out in a magnifi cent gown that could be a wedding dress – except that it’s pink. This pleases her parents, too, because it means they still have a few more years to go before the big day arrives when she is all in white …

That’s life in / Argentina / 17

Management Report /Direct Sales Thermomix/ ANOTHER MARKED INCREASE IN REVENUE

/ HIGHEST QUALITY, INNOVATIVE TECHNOLOGY, AWARD-WINNING DESIGN

The ideal partner for contemporary nutrition – that is the Thermomix. Our customers serve up delicious

and healthy meals out of fresh ingredients simply and rapidly with the Thermomix. It is captivating on

account of its very high quality, innovative technology and award-winning design. The Thermomix can

chop, stir, cook and weigh in just one single appliance without any need to change attachments. It replaces

almost all kitchen appliances with its diverse range of functions. Numerous cookbooks and the Thermomix

internet recipe world offer proven recipes for all occasions. Absolutely new in the year under review was

the market launch of the Thermomix app with international recipe ideas, a shopping list, a weekly menu

planner and an overview of the nutritional value of the individual meals.

The Thermomix Division again recorded a marked increase in revenue and has now reached EUR 591 million,

an increase of 16 percent against previous year.

This growth was primarily attributable to the four large Thermomix countries of Italy, France, Germany and

Spain, which were all able to sell well over 110,000 appliances each. Additionally, however, even the medium-

sized and smaller Thermomix countries as well the export operation were able to improve revenue levels.

In Italy, the largest Thermomix country, revenue rose to EUR 146 million, an increase of 2.6 percent. Vorwerk

Contempora has thereby once again maintained its leading position among the large Thermomix countries.

Double-digit growth rates in France and Germany meant that they were finally able to establish themselves

in the top flight. Revenue in France increased by almost 33 percent to just under EUR 130 million. This

followed on from the year 2010 when an increase of 52 percent could already be recorded. Germany managed

to advance beyond the mark of 120,000 appliances sold and reported a revenue level of EUR 121 million (an

increase of 29 percent). Spain was also able to sell more Thermomix appliances than in previous year, with

a sales volume of EUR 112 million despite the continuing tense general economic situation there.

18 / Management Report / Thermomix

The sales companies in Poland, Portugal, Taiwan, Mexico and the Czech Republic also increased their

revenues. Exports also contributed to the positive development of the entire division: the business conducted

with independent sales partners, the so-called distributors, rose by 45.8 percent to EUR 19 million.

The main reason for these, in some cases, distinct increases was the continued and pleasing growth in the

number of representatives. The benefits of the Thermomix are convincing more and more people world-

wide. This also applies to the approach of the sales organisation: Thermomix offers attractive career

opportunities, particularly for women. The number of representatives active on behalf of Thermomix rose

in the year under review to 24,428, an increase of 11.1 percent.

A great deal of effort has been put into extending the services offered around the Thermomix: professional

structures for developing recipes were created for all countries to enable Thermomix to give a “success

guarantee” for its own recipes. Moreover, every customer should have the opportunity, if possible, of

being able to refine her or his handling of the appliance in cooking courses so as to fully utilize the poten-

tial of the Thermomix to enable use on a daily basis.

In the coming years, the division will focus on a number of projects in the medium-sized and smaller

Thermomix countries with the objective of achieving further growth in the existing markets. Great atten-

tion will also be attached to developing new sales areas. In this respect, the focus is particularly on Asia.

TASTY MEALS AT THE TOUCH OF A BUTTON

The word has clearly spread about the talents of the Thermomix, the multifunctional kitchen appliance from Vorwerk. Today, an incre dible seven million customers around the world have acquired a taste for the Thermomix and are now mincing, chopping, stirring, mixing and cooking to their hearts’ content. What sounds mira culous is actually down to some pretty sophisticated technology, which is also really simple to operate – at the touch of a button, in fact. The Thermomix brings creativity into any household and makes cooking fun and preparing healthier meals a breeze. It even comes with a success guarantee.

7 million

Management Report / Thermomix / 19

Sei pazzo!You’re nuts!

Non lo so!

I don’t know!

Vieni qui!

Come here!

Andiamo!

So, so!

Che fai?

What are youdoing there?

Va’all’inferno!

Go to hell!

Grown Up At LastDay 6,575 (18)

Mama mia! Avanti, avanti! Things just don’t move fast enough on Italy’s roads. The important thing to know here are the ins and outs of the local sign lan-guage, which every learner driver should master. We show you the most important gestures – for your next traffi c adventure in an Italian metropolis. We accept no liability, however, for their use or any consequential damage that might arise.

20 / That’s life in / ITALY

Management Report /Direct Sales JAFRA Cosmetics/ HIGH QUALITY PRODUCTS, EXCELLENT SERVICE

/ MOTIVATING INCOME SYSTEM FOR CONSULTANTS

JAFRA Cosmetics is active in a total of eleven countries with its own companies and operates in another

six through distributors. It allows predominantly women the opportunity to achieve an income that is self-

determined and related to their own performance through the direct sale of high quality cosmetics.

Depending on the country and the cultural background, JAFRA consultants either present their products

at a sales party or in person-to-person consultations. The product range at JAFRA Cosmetics comprises

skin and body care, color cosmetics, fragrances and spa products. The focus of sales activities is in Mexico

and the USA. Besides the high quality products and an excellent customer service, it is particularly the

attractive and motivating income system for the consultants that is one of the success factors. The company

has been a part of the Vorwerk Group since 2004.

In the year under review, JAFRA Cosmetics achieved revenues of US dollar 611 million and was thereby

2.9 percent above the level of previous year. By contrast, unfavorable exchange rate developments meant

that revenue in euros was slightly below the level of previous year (EUR 439 million, a drop of 1.9 percent).

NATURAL BEAUTY IN ALL SHADES

Algae extracts, apricot kernel oil, cactus, ginger, winter cherry, mung beans, and shiitake extracts – all of these may sound rather culinary, but here their purpose is, in fact, purely cosmetic. Yes, we even grate licorice sticks to produce the best in beauty and skin care for you. In our compelling port -folio of JAFRA products, we blend over 3,000 high-grade ingredients to create superb cosmetic compositions, but how we make these combinations, however, remains strictly our own, closely guarded beauty secret.

3,000

Management Report / JAFRA Cosmetics / 21

This tendency can also be observed when Mexico, the largest market for JAFRA Cosmetics, is considered.

The Mexican sales organization achieved revenue of EUR 342 million, which was 2.7 percent below the level

of previous year, yet recorded a moderate increase when measured in Mexican pesos. This still positive

development is all the more remarkable when the general economic situation there is taken into account.

The average income of a Mexican household fell by 12.3 percent in the years 2008 to 2010. Moreover, the

population is becoming increasingly concerned about the deteriorating security situation in some parts of

the country. Despite all this, JAFRA Mexico managed to maintain the productivity of the consultants and

compensate for a temporary drop in their number.

In the second largest JAFRA market, the USA, sales revenues were running at EUR 51.3 million. A distinct

increase was achieved by the dynamically growing company in Brazil: founded barely three and a half years

ago, JAFRA Brazil achieved revenue of almost EUR 14 million and thereby grew by more than 44 percent

against previous year. JAFRA sees great potential for the future in the third largest market for direct sales

worldwide and the largest in Latin America. The established European JAFRA companies have recovered

well from the financial and economic crisis. Germany, Austria and the Netherlands were in part well above

previous year, whereas Italy and Switzerland were able to maintain their sales volumes at a stable level.

Overall, these companies grew by 6.3 percent to EUR 28.0 million. JAFRA Russia, still a relatively small

subsidiary, was also able to grow (plus 55 percent) and recorded an overall sales volume of EUR 1.2 million.

This also applies to the commitment in Asia, where JAFRA India – albeit still at a low level – grew at a

treble-digit rate. The Asian market will continue to offer growth opportunities for the direct sale of high

quality cosmetics in the coming years.

All JAFRA products are developed at the company R&D facilities at its headquarters in Westlake Village,

California, in close cooperation with renowned laboratories in the USA, France, Switzerland, Germany

and Italy.

A newly developed, up-market color cosmetics series was successfully launched to the market in the year

under review. The introduction of the JAFRA PRO care series, a range based on the very latest technologies,

was started in Mexico, the USA, Germany, Austria and the Netherlands, with the other markets to follow

in 2012. The roll-out of digital media to support the consultants continued to be advanced. The new website

with extended functionality also went live at the beginning of 2011.

JAFRA Cosmetics is looking forward to even higher sales revenues in the coming years. Besides the expected

positive development of the existing markets, the opening up of new markets should contribute to this.

22 / Management Report / JAFRA Cosmetics

Management Report /Direct Sales Lux Asia Pacific/ LUX ASIA PACIFIC ACHIEVES REVENUE INCREASE

/ NEW PRODUCTS FOR RAPIDLY GROWING MARKETS

Vorwerk sells high quality household appliances such as water purifiers, air cleaners and vacuum clean ers

under the brand name of Lux in the Asian region. Lux Asia Pacific is one of the few direct selling companies

that has focused on the sale of high-ticket household products in the rapidly growing Asian market. The

division achieved revenue of EUR 34 million in 2011, an increase of 7.4 percent against previous year. The

operating profit situation also continued to improve. Lux Asia Pacific therefore continued the trend that

had suggested itself in the last quarter of 2010 attributable to sustainable changes in the sales and

product concepts.

Lux Indonesia and Lux Royal Thailand are the most significant subsidiaries in the division; both compa-

nies were able to increase their revenues. Particularly Thailand benefited from the launch of new products:

a new water purifier as well as an improved air cleaner. This type of development could not really be

expected in Thailand, especially after the devastating flood disaster, and clearly illustrates the strong

performance of the sales organization.

The new products are to be launched on other markets in 2012. Furthermore, measures aimed at improving

customer relationship management and the service quality will be adopted. The division is again looking

forward to growth in 2012.

TODAY WE’RE TALKING ABOUT NOTHING AT ALL

We have good news for allergy sufferers. When they take a really deep breath, they feel or smell … that’s right – nothing at all. That is, if they have a Lux Ventus air cleaner with the patented HEPASilent filtration technology set up in their home. Even incredibly small air particles no larger than 0.0001 mm are retained in it. What remains is fresh, clean air – and the joy of recovered health and quality of living.

0.0001mm

Management Report / Lux Asia Pacific / 23

24 / That’s life in / MEXICO

The Best DayDay 10,595 (29)

Money, gold and a carefree life: these are what señoras expect of a happy marriage – especially in Mexico. At the wedding, the bride-groom traditionally presents his bride with 13 gold coins. These represent the sacred marriage vow – but originally also stood for the man placing control of his worldly goods and his pocket money in his wife’s hands. Could that perhaps be the reason why Latin American machos sometimes look so glum?

Management Report /Vorwerk Engineering/ NEW PRODUCTS LAUNCHED

/ EXTRA SHIFTS FOR THE THERMOMIX

The Vorwerk Engineering Division develops and manufactures high quality household appliances exclu-

sively for the Vorwerk direct sales organizations. This division is therefore very much dependent on the

development of the Vorwerk sales companies. The largest manufacturing facilities are located in

Wuppertal, but the division also operates its own production plants in Cloyes (France), Arcore (Italy) and

Shanghai (China). The department Research & Development is also domiciled in Wuppertal.

Vorwerk Engineering developed as many as four new products for the Kobold Division in 2011. Besides

the new Kobold VR100 suction robot and the Kobold VC100 cordless cleaner, the SP 520 suction mop was

also made available as an additional attachment for the Kobold vacuum cleaner. Additionally, an improved

version of the canister-type cleaner, the Kobold VT265, was launched in the year under review.

The employment situation at the Engineering Division remains stable. A slight reduction in the numbers

of employees was mainly the result of normal fluctuation or of staff entering into early retirement. Thanks

to the introduction of the new products and again to the outstandingly positive development of the

Thermomix, workplaces could be secured at all locations. The Thermomix plant in Cloyes even reached

its capacity limits. Extra shifts had to be worked to be able to meet demand. The motor plant in Wuppertal

also benefited from this development with the SR30 Thermomix motor being produced at near to capacity

level. The division invested in increasing its capacity since the number of units produced is expected to

rise in the future.

The Engineering Division needs to implement an efficient, international value chain to satisfy the growth

strategy at the Vorwerk direct sales organizations. Both R & D and manufacturing are therefore oriented

towards a clear allocation of value-creating elements and assignment profiles as well as focusing region-

ally on competencies. Every location has a clearly defined task in the international production network.

26 / Management Report / Vorwerk Engineering

Engineering believes it is more exposed to the risk of currency and raw material price fluctuations than

in the past due to the increasing significance of the international markets. This applies both for procure-

ment as well as for sales and manufacturing. To reduce this risk, the prices of important raw materials

such as copper were hedged towards the end of 2010.

All processes in the creation of a product were analyzed and redefined in the year under review with the

support of a renowned consultancy company. The target: to optimize the entire product creation process

i. e. from the initial product idea to market launch and, of course, to observe the quality and cost targets.

Implementation of the new processes started with development of the products mentioned above.

The Engineering Division anticipates more or less unchanged capacity utilization of the manufacturing

facilities in the current business year. Investments of some EUR 36 million were approved for the planned

launch of new products in the coming two years.

MULTIMILLIONAIRE KOBOLD

The first Vorwerk electric vacuum cleaner known as the “Kobold” caused quite a sensation when it was first launched in 1929. Today the Kobold is a household name. In 2012, the 100 millionth Kobold product will roll off the production line, and more and more will join its ranks every day. The reason? In addition to the small, agile hand-held VK140, new additions such as the convenient VR100 vacuum cleaning robot are constantly joining the hard-working Kobold troop and pointing the way for the future. So it looks like the Kobold population is set to grow by a few more millions.

100 million

Management Report / Vorwerk Engineering / 27

The Joys of Work.Day 13,907 (38)

Faith can move mountains, but not crumbs. This is something the eager monk was forced to acknowl-edge when he was attempting to give the Thai temple Wat Chetuphon a spring clean and quickly discovered the limitations of his rice broom. Instead, he decided to put his faith in the secular as-sistance of the master of all vacuum cleaners, which is so thorough and quiet, it doesn’t even disturb his colleagues while they are engaged in their true “work” – meditation. Ommmmmm!

28 / That’s life in / THAILAND

Management Report /akf group/ NEW BUSINESS AND REVENUE INCREASE

/ STRONG PARTNER OF SMES AND THE AUTOMOTIVE TRADE

Although the dynamic recovery of the world economy – after the recession of the years 2008 and 2009 – has

recently slowed somewhat, the very export-oriented German economy was able to grow by about 3 percent

in the year under review. The revival in the overall total level of investment in 2010 also continued

through out 2011 and an increase of 6.9 percent could be recorded for the entire year. Additionally, the

number of new car registrations rose by 8.8 percent as against previous year to 3.17 million. Against this

background, all business segments at akf group were able to contribute to a considerable growth in the

level of new business (plus 51.4 percent to EUR 675.4 million). Revenue also developed positively.

The strategic focus of akf group continues to be on endeavoring to act as a partner to small and medium-

sized enterprises (SMES) in investment financing and in vendor finance for automotive dealers. More-

over, consumer finance services were extended for the companies of the Vorwerk Group in Germany,

Poland and Spain.

FROM AMARENA CHERRY TO LEMON

How many different ice cream flavors actually exist? An estimated 130 in Germany and 180 in Italy, but that’s nothing compared with the number of mobile assets currently individually financed or leased by akf bank, namely 139,143. So what does all this have to do with ice cream? Well, last year one of the mobile assets financed was an ice cream machine.

139,143

Management Report / akf group / 29

As a consequence of the strategic alignment to more diversification, the bank’s loan transactions portfolio

revealed that the proportion of vehicle finance deals in the new business volume had fallen (from 65 percent

to 49 percent) and had thereby contributed less to the total level of business than in previous years. The

proportion of business stemming from the finance of machinery and other equipment amounted to

32 percent (26 percent in previous year). The position of akf bank in the marine finance sector could also

be maintained, and the institute continues to number among the established market players in this segment.

Additionally, consumer finance within the scope of the vendor funding of Kobold and Thermomix

appliances also made a distinct contribution to the success of the business in the year under review with a

17 percent share of the loan transactions concluded (previous year: 7 percent).

akf group has been active in the deposit-taking business for clients since the beginning of 2011. Accounts

can be opened and business transacted online under www.akf24.de. Diversification of the refinancing base

with extension of the deposit-taking operation has made the bank even more independent.

The group is looking forward to continued positive development in the coming years. The acquisition of the

operations of akf industriefinanz GmbH (formerly CIT Industriebank Germany GmbH) including its

subsidiary company will open up opportunities to address portfolio customers in the strategically

important graphics and metal processing industries.

The development of the agricultural sector was successfully advanced in the year under review. Additionally,

akf group will develop new business opportunities with cooperation agreements with premium automotive

manufacturers and thereby enhance brand awareness throughout the vehicle financing sector.

Additionally, the extension of the consumer finance activities for Kobold and Thermomix and the planned

opening of the Italian market will have a positive impact on business.

30 / Management Report / akf group

Management Report /Vorwerk Carpets/ DISTINCT REVENUE INCREASE DESPITE DIFFICULT ENVIRONMENT

/ NEW COLLECTIONS SUCCESSFULLY LAUNCHED

Vorwerk Carpets achieved revenue of EUR 74 million and improved by 6.5 percent as against previous

year. Carpets was therefore once again able to elude the slightly declining market trend and benefited

from its resolute brand policy. Particularly exports grew strongly, as did the domestic demand when

compared with the year before.

Overall, 2011 was a year characterized by economic growth despite the euro crisis, which also had a

positive impact on the construction industry. However, the entire textile flooring manufacturers sector

could not participate in this economic upswing according to the Association of the German Home Textiles

Industry (Verband der Deutschen Heimtextilien-Industrie). By contrast, the distinct positioning of

Vorwerk Carpets in the premium segment was again rewarded by the market.

DESIGN AROUND THE WORLD

Vorwerk carpets are a global success – literally! The yarn that flowed off the bobbins and into our carpets last year alone could encircle the earth 662 times over. As impressive as it is, we much prefer to focus on what became of that yarn: superb carpets of every conceivable color, structure and pattern that turn any floor into a design space – meter by metre.

662 x

Management Report / Vorwerk Carpets / 31

Where Now?Day 16,525 (45)

It always comes right out of the blue: the midlife crisis. Suddenly, there you are, middle-aged, asking yourself if that was it and wishing you could break right out of your daily round – like Wilbur, whose wife, Thelma, had been serving him fresh fruit and vegetables for breakfast for 25 years. He finally confessed that there was nothing he enjoyed less and today, he gets juicy bacon, beans and sau-sages – and is clearly very happy with his Thelma.

That’s life in / GREAT BRITAIN / 33

Vorwerk Carpets remains committed to outstanding quality and on its specific innovative power. The

Hameln-based company was once again the undisputed number 1 in a survey of customers conducted

by “BTH Heimtex/B+L-Kundenbarometer” as well as in a study of wholesalers (“BTH Heimtex Großhan-

dels-Umfrage”).

The Carpets Division used 2011 to successfully conclude the launch of its new “Projection” collection

targeting the contract business. Moreover, cooperation with joint venture partners was intensified. The

furniture and design fair “Qubique” in Berlin was the setting for presentation of the new “Scale Living”

collection, the first compilation to include free-form tiles for the home. The three fascinating tile designs

can be composed in any number and ways to individual carpet creations.

New developments also include environmentally-friendly, self-adhesive floor covering that utilizes phys-

ical adhesion properties to rapidly affix the article to the floor without the use of any adhesives. The

Carpets Division continues to cooperate with internationally renowned designers and architects such as

Ulf Moritz and Hadi Teherani.

Vorwerk Carpets anticipates a continuation of the increasing levels of revenue in the coming years.

Further development of the “Fascination” trade collection due to be launched on the market from summer

2012 should also contribute to this. Furthermore, to extend the offer, cooperation with an external partner

is planned for the current year within the scope of a purchasing agreement. The target: to develop and

market non-textile, designer floor covering that does not contain PVC, a concept that duly considers the

carpet company’s sustainability principles.

34 / Management Report / Vorwerk Carpets

Management Report /Vorwerk Direct Selling Ventures / FUNDING OF DYNAMICALLY GROWING COMPANIES IN DIRECT SELLING

/ EARLY ACCESS TO INNOVATIVE DEVELOPMENTS

By investing in young companies, Vorwerk gains insights into innovations in direct selling and thereby

advances the process of change and renewal. The Vorwerk Group has been investing since 2007 in compa-

nies pursuing novel, promising direct selling concepts through its investment unit, Vorwerk Direct Selling

Ventures. This venture capital entity makes its investment decisions without any compelling regard for the

strategy of the Vorwerk Group and consequently has the scope to invest in completely new segments that

have the potential for rapid growth and high profitability.

The objective of Vorwerk Ventures is to create the fundamental conditions for a productive know-how

transfer between the young innovative entities and the various companies within the Group to the mutual

benefit of both the associated companies and Vorwerk. The venture capital activities support Vorwerk in

recognizing at an early point in time any sweeping developments in direct selling as well as in finding

potential partner companies.

Vorwerk Ventures has participations in companies in Germany, Austria and the USA. In 2011, Vorwerk

Ventures invested particularly in the area of social selling, where online direct selling is combined with the

opportunities presented by social networks. Participations in dawanda.com, pauldirekt.de and stylefruits.

de have been added to the range of investments. Additionally, companies such as Dinner-for-Dogs, Enjo,

meinauto.de, Ringana and Stowa are a part of the portfolio at the company. Vorwerk Ventures has been

making a positive contribution to the Group’s earnings for some years.

Management Report / Vorwerk Direct Selling Ventures / 35

}Jacques’

Boules Strategy

}

Jacques is a really nice guy but he takes hisgame of boules very seriously. His strategy

involves an element of risk, but it’s promising,too. He calls it “pulling the piglet,” whichmeans he tries to knock the small ball, or

cochonnet, away from his opponents’boules and toward his own group

of boules. Crafty … if only he couldpull it off occasionally.

Farewell Work! Day 22,700 (62)

Time at last to take things easy, to enjoy a quiet game of boules,

perhaps. For Jules, Jacques and Gilles, that’s not just wish -

ful thinking but reality. The three French retirees cannot wait

to outdo one another in their daily games of boules in the

shade of the plane trees in the marketplace. Jacques gauges

the distance. Gauloise drooping from the corner of his mouth,

he swings his arm like a pendulum and – plop! – the boule

lands ... in the wrong place! Oh well, that’s life. So what? He

can try his luck again tomorrow.

36 / That’s life in / FRANCE

Management Report /HECTAS/ ANOTHER INCREASE IN REVENUE ACHIEVED

/ ACTIVITIES TRANSFERRED TO VORWERK FACILITY MANAGEMENT HOLDING KG

HECTAS Group provides infrastructural services in eight European countries and offers its customers

individual services around their facilities. The prices in the cleaning sector, which came under pressure

during the course of the financial and economic crisis, continued to stagnate in the year under review,

whereas the proportion of infrastructural services awarded externally remained at almost the same level

as previous year. Generally speaking the market is characterized by very fierce competition. The winners

are providers who can offer their customers a reliable service quality for favorable conditions and can

react quickly to additional customer needs when required. Good customer loyalty can generally be main-

tained when these preconditions are satisfied.

The strategic alignment as a Europe-wide, highly professional, industrial service company again proved

to be successful for HECTAS. The Group had achieved an increase in revenue of 4.4 percent to

EUR 102.7 million before the transfer to Vorwerk Facility Management Holding KG, albeit with an oper-

ating result that was not fully satisfactory.

To achieve a more distinct positioning for business customers, all activities were transferred to Vorwerk

Facility Management Holding KG as of 30 June 2011. As a sister company of Vorwerk & Co. KG, there is

cooperation between the two groups of companies.

SPOTLESS

HECTAS employs around 12,000 in Europe to make the world a wholesome place. They leave buildings gleaming, offices clean and provide safety and security. They clean 25,000 square metres of glass every day – that’s the equivalent of 3.5 football fields or 98 tennis courts. And they also tend green areas too, keeping parks and gardens tidy and attractive.

98

Management Report / HECTAS / 37

Management Report /Human Resources/ ATTRACTIVE CAREER OPPORTUNITIES

/ INDIVIDUAL DEVELOPMENT POSSIBILITIES

Vorwerk – as one of the leading direct selling companies worldwide – offers high-quality products, recog-

nized sales systems and a fair approach towards self-employed advisers and customers. We can therefore

provide attractive career opportunities and scope for personal and professional development both for

employees as well as for self-employed customer advisers. Thanks to the continued growth of our

business, committed and motivated persons continue to be sought in all sectors of the Vorwerk direct

selling organization. More and more women – even in growing and emerging markets – are recognizing,

for example, that there are greater opportunities for more personal and financial independence in the

reputable direct sale of high-quality products. For many, Vorwerk offers a flexible and attractive return

to working life both during as well as after some years of parental leave. People like taking advantage of

the possibilities of determining earnings for themselves and of thereby contributing to the family income.

The identification of our management with Vorwerk and the leadership culture are of particular signifi-

cance for our business and continued growth. It is the task of every manager to assist customer advisers

and staff in their strengths and to define individual and coherent training and development measures for

every member of the team. We support our staff and management within the scope of our global “Talent

Management” process: the target – to give everyone an individual development opportunity.

The Vorwerk Group pursues a policy of continual development of management staff to secure the successor

planning process. Annual dialogues and the measures derived, the identification and targeted application

of development functions as well as the implementation of development centers for the assessment of

potential are just some of the instruments. These activities are carried out internationally across all loca-

tions at regular intervals.

Vorwerk attaches importance to a corporate culture that is based on trust with open communication and

good working conditions. Measures were agreed and implemented, for example, to foster the “work-life

balance” of staff as a part of the “Career and Family” audit. Besides the flexible design of workplaces and

working locations, the focus is on individual measures. The satisfaction of “Vorwerkers” is regularly

evaluated in an international employee survey.

In 2011, an average of 606,889 people were active either as employees or as self-employed customer

advisers and sales partners for the companies of the Vorwerk Group. The number of employees is now at

16,156 due to the transfer of the HECTAS Group to Vorwerk Facility Management Holding KG as of

30 June 2011. 590,733 people were working as self-employed advisers.

38 / Management Report / Human Resources

Management Report / Human Resources / 39

STAFF (ANNUAL AVERAGE)

2008 2009 2010 2011

Direct sales

Division Kobold 4,625 4,416 4,157 3,856

Division Thermomix 954 1,062 1,377 1,556

Division Feelina 23 7 0 0

Division Lux Asia Pacific 2,411 2,241 2,084 2,193

Division JAFRA Cosmetics 1,635 1,726 1,952 2,004

HECTAS* 12,105 11,647 11,848 5,865

Vorwerk Carpets 352 345 329 324

akf group** 220 216 222 237

Others 150 136 127 121

Total*** 22,475 21,796 22,096 16,156

SELF-EMPLOYED SALES ADVISERS (ANNUAL AVERAGE)

2008 2009 2010 2011

Division Kobold 9,335 9,140 8,788 8,486

Division Thermomix 18,569 20,670 21,979 24,428

Division Feelina 152 4 0 0

Division Lux Asia Pacific 1,799 1,622 1,720 1,561

Self-employed sales advisers “household appliances” 29,855 31,436 32,487 34,475

Self-employed sales advisers JAFRA Cosmetics 525,863 557,815 569,177 556,258

Self-employed sales advisers in total 555,718 589,251 601,664 590,733

Total Vorwerk workforce 578,193 611,047 623,760 606,889

of which sales advisers*** 558,872 592,322 604,496 593,587

* HECTAS until 30 June 2011** akf group was included using the equity method in the consolidated financial statements up to 2009 and fully consolidated since 2010*** Including employed sales advisers

Bye-bye!Day 29,978 (82)

Goodbye, adieu, life’s been good! In Ghana, people send their loved ones on their very last journey in an imaginative vehicle, a casket that may take the form of a camera, a fruit or even an airplane. The exact form it will take depends on the profession, passion and hobby of the worthy deceased. Well then: bon voyage!

That’s life in / GHANA / 41

Management Report /Assets and Earnings Situation

The consolidated balance sheet total of the Vorwerk Group was EUR 346.1 million higher at

EUR 3,066.4 mil lion as of balance sheet date on 31 December 2011, a rise that was mainly attributable

to the growth in business at the akf group.

The increase of EUR 67.4 million in the fixed assets was essentially due to the financial assets which

increased especially on account of a higher portfolio of securities at the akf group (EUR 24.5 million).

Additionally, investments were made at Vorwerk Direct Selling Ventures (EUR 12.5 million) and addi-

tional shares of EUR 6.6 million were acquired in closed real estate funds.

The considerable increase in balance sheet total was particularly the result of higher current assets

(increase of EUR 295 million), which could primarily be attributed to the expansion in the instalment loan,

investment credit and forfeiting business at akf group (EUR 179 million). The launch of a number of new

products in the high ticket items and the securing of the supply capability resulted in inventory levels being

some EUR 25.8 million higher. Further, trade accounts receivable in the Kobold und Thermomix divisions

increased (EUR 18.7 million). The transfer of the HECTAS Group to Vorwerk Facility Management Holding

KG had a contrary effect (EUR 28.4 million). The increase of other assets was mainly due to reporting the

shareholding book value of a company, including its subsidiary, acquired in the 2011 business year. After

acquisition, considerable parts of the operative business were transferred to the buyer.

The liabilities side was characterized by partners’ equity (EUR 1,211 million). This only resulted in a negli-

gibly lower partners’ equity capital ratio of 39 percent (previous year 41 percent). Based on an assumed

consolidation of the akf group at equity, the partners’ equity capital ratio would be 65 percent compared

to 61 percent the year before. The equity to fixed assets ratio was at 100 percent. Moreover, 13 percent of

the inventories, receivables and other assets were financed long-term with equity capital.

Similar to the rise on the assets side, the increase in the liabilities of EUR 251.2 million was mainly due to

the growth in business at the akf group. Liabilities to banks could almost entirely be attributed to the akf

group following a repayment of EUR 115.2 million. Liabilities from the deposit-taking business only

existed at akf group. They increased by EUR 281.6 million in the year under review due to the successful

assumption of the deposit-taking business and could be used as planned to refinance the expansion of

business. Liabilities to affiliates only accrued for a subsidiary company of the akf group.

Vorwerk achieved Group sales of EUR 2,367.1 million in the 2011 business year, which was approximately

at the level of the previous year, despite the above-mentioned transfer of the HECTAS Group. Taking into

account a full business year for the HECTAS Group, sales would amount to EUR 2.471 billion or 4.2 percent

42 / Management Report / Assets and Earnings Situation

above the previous year. Regarding more detailed explanations about the sales development, reference is

hereby made to the respective explanations about the divisions.

The reduction in the level of other operating income was particularly attributable to lower income from the

reversal of accruals. The high increase in cost of materials – when compared to sales – was essentially due to

the transfer of the HECTAS Group to Vorwerk Facility Management Holding KG. The considerable reduction

in personnel costs was mainly the result of the deconsolidation of the HECTAS Group. However, this was

partly compensated by higher personnel expenses at the akf group and in the Thermomix division. Interest

income fell due to lower earnings from installment receivables for high ticket items and special funds. Interest

expense could be reduced on account of a repayment of bank liabilities.

Management Report /Financial Situation

The European debt crisis was and continues to be the dominating theme concerning the development of

the global economy and the capital markets. Whereas the interest rates on German bonds and US

trea suries again fell markedly, the rates for Italian and Spanish sovereign debt increased sharply. The

policy of the IMF and the ECB is still focused on finding a crisis mechanism that will restore confidence

in European public finance, support the required debt reduction programs without impairing economic

growth too much.

The strategic alignment of the Vorwerk Group (without the akf group) to reduce both the absolute amount

as well as the term of our investments in government bonds resulted in lower interest income on account

of the development of interest rates, in particular those for German government issues. This combined

with a defensive investment policy in the global equity markets meant that we closed the year on a period

to period basis with a negative result for our financial investments – when taking realized and unrealized

income into account. As a consequence of the sharp, strategic reduction in (state) bonds, hidden reserves

were realized in the past; therefore, a significantly positive result from our investments was reported on

the whole.

The akf group consists of the bank and a leasing operation. The active business was refinanced as in

previous years with matching maturities. In the 2011 business year, receivables were sold within the scope

of an asset-backed commercial paper (ABCP) transaction. In addition, receivables were sold to the special-

purpose vehicle KMU Portfolio S.A. within the scope of an ABS bond issued in the previous year, however

with the main risks being retained. All recognizable risks ensuing from loan transactions have been

adequately accounted for with individual value adjustments.

Management Report / Financial Situation / 43

Management Report /Opportunities and Risks

The Vorwerk Group is greatly diversified in terms of products and sales systems as well as on account of

its international positioning. The Group will also benefit from positive market developments in the future

as a result of this structure. The focus will continue to be on direct selling in this respect and thereby on

a sales approach that grows dynamically. Since Vorwerk combines different types of direct selling “under

one roof ” and ensures regular know-how transfer between the product divisions, new growth trends can

be recognized at an early point and taken advantage of to further develop the company. The investments

of Vorwerk Direct Selling Ventures in young companies provides Vorwerk with access to innovations in

direct selling and thus fosters the process of change and renewal.

At the same time the Vorwerk Group is exposed to a range of risks. Effective planning, reporting and

control systems have been put in place in the individual companies to protect against risks. In principle,

uniform guidelines apply across all divisions. They are defined by the Executive Board at Vorwerk & Co.

KG and are monitored in the form of a reporting process to ensure they are adhered to. The processes are

continually reviewed – even in manufacturing – and adjusted when risks are identified.

The investment strategy at the Vorwerk Group primarily pursues the target of securing assets long-term.

The internal Finance Committee regularly reviews the strategy with the aim of avoiding any identified

risks. Risks ensuing from exchange rate fluctuations are also taken into consideration and hedged as far

as possible for operative business activities.

The opportunities and risks for the future development of the Vorwerk Group arise from focusing on

direct selling. The great opportunities offered by this sales channel are offset by the specific risks.

The share of direct sales to total sales of the sector, for instance, is rather low, which could potentially lead

to a lack of perception among legislators at national and international level. Vorwerk therefore runs PR

campaigns targeted at decision-makers, is a member of associations such as Direct Selling Europe (DSE)

and runs its own information bureau at the European Union in Brussels. The objective is to provide infor-

mation about the development opportunities offered by direct selling and to sensitize decision-makers to

the specifics of the system. In particular, the attractive income and career opportunities for customer

advisers may not be allowed to be pushed into the background of public perception. Reputable direct selling

creates the possibility worldwide of achieving self-earned income that is based on the principle of indi-

vidual performance and commitment.

44 / Management Report / Opportunities and Risks

To further spread the risks, Vorwerk pursues a policy of internationalization of the business segments.

The target is to further reduce the risks that could result from an unbalanced dependency on the develop-

ment of individual subsidiaries. The Vorwerk Group operates in a constantly changing competitive

environment, one in which the high quality of the products continues to play a decisive role in the

differentiation to potential competitors.

Fundamentally, direct selling is very much dependent on the recruitment and training of sales advisers

and management staff. A centrally-steered, “Talent Management” program and a Group-wide personnel

policy based on uniform guidelines take this factor into account.

A differentiated approach also has to be taken with respect to the opportunities and risks at the akf group.

The euro debt crisis will probably not be definitively resolved in the coming year. Much will depend upon

the extent to which the fundamentally correct steps – such as the introduction of a debt cap linked with

tough sanction mechanisms – can be politically implemented. The continuing political unrest in the Arab

world could also lead to fluctuations on the capital markets from time to time. The refinancing base will

be strengthened by the continued expansion of the deposit-taking operation in terms of new client groups

and products. This will result in an even greater independence of the bank.

Overall, existing default risks and those arising from future developments continue to be steered and

monitored on the basis of proven, stringent standards and the IT-supported rating system. Following the

2010 business year in which high provisions for risks had to be made, a distinct reduction in the default

rate became noticeable in the year under review. A continued downward trend and a significant easing of

the situation are expected for the current business year.

From today’s point of view there are no risks that could have a negative impact on the Vorwerk Group’s

ability to continue as a going concern. In recent years the high equity capital ratio and the improvement

in the worldwide strategic position have led to the creation of higher, risk-covering volumes. Moreover,

this broad base on the global market means that Vorwerk is generally well-protected against implications

for the corporation resulting from problems experienced in regional, industry or product-specific areas.

There have been no events of any material significance that have occurred since the balance sheet date

for the year 2011.

Management Report / Opportunities and Risks / 45

“Every man is more than just himself; he also represents the unique, the very special and always

signifi cant and remarkable point at which the world’s phenomena intersect, only once in this way, and never again. That is why every man’s story is important and

worthy of consideration.”

H E R M A N N H E S S E

46 / That’s life

Consolidated Financial Statements 2011

48 ConsolidatedBalance Sheet

50 Consolidated Profitand Loss Account

52 Movements inFixed Assets

54 Explanatory Notes

61 Auditors’ Report

Consolidated Financial Statements / 47

48 / Consolidated Financial Statements / Consolidated Balance Sheet

Consolidated Balance SheetAs at 31 December 2011

31.12.2011 31.12.2010

Assets € 000 € 000A. Fixed assets

I. Intangible assets

1. Concessions, industrial property and similar rights and assets,

and licences in such rights and assets 13,408 16,643

2. Goodwill 250,349 261,561

3. Prepayments 247 65

264,004 278,269

II. Tangible assets

1. Land, similar rights and buildings

including buildings on leasehold land 50,373 55,368

2. Technical equipment and machinery 48,325 51,109

3. Other equipment, factory and office equipment 28,482 36,470

4. Rental assets 539,607 501,901

5. Prepayments and construction in process 6,768 4,490

673,555 649,338

III. Financial assets

1. Participations in associated companies 300 310

2. Other participations 22,291 13,455

3. Loans to companies in which the company has a participating interest 3,719 –

4. Long-term securities 58,013 41,049

5. Other financial assets 28,095 155

112,418 54,969

Fixed assets 1,049,977 982,576

B. Current assets

I. Inventories

1. Raw materials and supplies 33,272 27,407

2. Work in progress 7,236 4,746

3. Finished goods and merchandise 83,455 66,363

4. Prepayments 449 93

124,412 98,609

II. Receivables and other assets

1. Trade receivables; 398,632 410,537

of which with a remaining term of more than 1 year: (1,358) (1,268)

2. Receivables from customers from banking and leasing business; 623,672 440,073

of which with a remaining term of more than 1 year: (390) (1,137)

3. Receivables from companies in which the company has a participating interest 265 357

4. Other assets; 124,250 77,339

of which with a remaining term of more than 1 year: (15,936) (4,228)

1,146,819 928,306

III. Other securities 340,278 356,076

IV. Cheques, cash on hand, bank balances 368,711 302,178

Current assets 1,980,220 1,685,169

C. Prepaid expenses and deferred charges 11,365 9,596

D. Deferred tax assets 24,831 42,960

3,066,393 2,720,301

Consolidated Financial Statements / Consolidated Balance Sheet / 49

As at 31 December 2011

31.12.2011 31.12.2010

Equity and Liabilities € 000 € 000A. Partners’ equity

1. Capital shares, reserves, capital contributions

of silent partners, net profit share of parent company,

currency conversion difference 1,211,014 1,110,386

2. Compensating item for minority interests

in capital and reserves 318 1,493

in profits -386 -129

-68 1,364

1,210,946 1,111,750

B. Accruals

1. Accruals for pensions and similar obligations 122,998 122,626

2. Tax accruals 33,325 34,406

3. Other accruals 183,128 179,086

339,451 336,118

C. Accounts payable

1. Bank loans and overdrafts 390,577 505,742

2. Liabilities from the deposit-taking business 286,721 5,144

3. Customer advances 31,164 29,474

4. Trade payables 338,239 335,219

5. Drafts and notes payable 53 89

6. Payables to affiliated companies 89,843 –

7. Payables to companies in which the company has a participating interest 5,098 2,979

8. Other liabilities; 249,009 260,875

of which taxes: (29,713) (52,066)

of which social security payables: (11,720) (12,984)

1,390,704 1,139,522

D. Deferred income 125,292 130,019

E. Deferred tax liabilities 0 2,892

3,066,393 2,720,301

Contingent liabilities

1. Bills of exchange 84 –

2. Secondary liability for pension obligations transferred to the provident fund 10,302 9,840

3. Liability for sureties 43 508

4. Irrevocable lending commitments 72,736 55,065

50 / Consolidated Financial Statements / Consolidated Profit andLoss Account

Consolidated Profit and Loss Account*

For the Period 1 January to 31 December 2011

2011 2010

€ 000 € 000 1. Sales a) External sales (gross) 1,985,579 1,996,324

b) Income from loan and leasing transactions (gross) 381,540 375,681

2,367,119 2,372,005

less turnover tax 345,015 346,534

2,022,104 2,025,471

2. Change in finished goods and work in progress 15,960 11,610

3. Other own work capitalized 421 372

2,038,485 2,037,453

4. Other operating income; 103,257 108,252

of which income from currency translation: (8,686) (9,497)

5. Cost of materials:

a) Cost of raw materials, supplies and merchandise 272,863 269,158

b) Cost of purchased services 16,539 21,363

289,402 290,521

6. Cost of loan and leasing transactions 141,733 132,086

1,710,607 1,723,098

7. Personnel expenses:

a) Wages and salaries 352,354 390,718

b) Social security, pension and other benefits; 81,694 89,308

of which relating to pensions: (13,779) (12,650)

434,048 480,026

8. Amortization and depreciation of fixed intangible and tangible assets 182,999 185,097

9. Income from participating interest; 1,140 1,137

of which from associated companies: (50) (44)

10. Income from other long-term securities and other financial assets 497 224

11. Other interest and similar income; 35,083 54,294

of which income from the discounting of provisions: (0) (881)

12. Write-down of long-term financial assets and current securities 2 19

13. Interest and similar expenses; 17,440 29,017

of which expenditure from accrued interest on provisions: (7,293) (8,040)

14. Collective heading; 1,112,838 1,084,594

of which expenditure from currency translation; (11,809) (14,771)

Other items not shown separately

(other operating expenses, taxes, net profit for the year)

* HECTAS until 30 June 2011

76Our family is growing – internationally. The Vorwerk Group now operates in 76 countries around the globe; ten more than in the previous year.

Number of the year

Consolidated Financial Statements / 51

52 / Consolidated Financial Statements / Movements in Fixed Assets

Movements in Fixed Assets

From 1 January to 31 December 2011

Gross values

As at

1.1.2011

Currency

translation

differences Additions Disposals Disposals* Transfers

As at

31.12.2011

€ 000 € 000 € 000 € 000 € 000 € 000 € 000

I. Intangible assets

1. Concessions, industrial property

and similar rights and assets, and

licences in such rights and assets 52,019 -2,305 3,370 3,147 1,551 188 48,574

2. Goodwill 335,177 – – – 138 – 335,039

3. Prepayments 65 – 156 – – 40 261

387,261 -2,305 3,526 3,147 1,689 228 383,874

II. Tangible assets

1. Land, similar rights and

buildings, including

buildings on leasehold land 125,617 -1,605 749 82 3,854 1,086 121,911

2. Technical equipment and machinery 216,748 -1,370 9,472 2,542 749 3,503 225,062

3. Other equipment, factory

and office equipment 142,775 -1,840 11,108 5,535 28,258 354 118,604

4. Rental assets 854,622 – 273,779 252,686 366 -40 875,309

5. Prepayments and construction

in process 4,490 -57 8,643 1,175 2 -5,131 6,768

1,344,252 -4,872 303,751 262,020 33,229 -228 1,347,654

III. Financial assets

1. Participations in

associated companies 310 – 18 38 – 10 300

2. Other participations 13,515 – 9,106 – 260 -10 22,351

3. Loans to companies

in which the company

has a participating interest – – 3,719 – – – 3,719

4. Long-term securities 41,105 – 24,649 1,006 414 -6,280 58,054

5. Other financial assets 157 – 21,853 194 – 6,280 28,096

55,087 – 59,345 1,238 674 – 112,520

1,786,600 -7,177 366,622 266,405 35,592 – 1,844,048

* Disposals due to change in the consolidated group

Consolidated Financial Statements / Movements in Fixed Assets / 53

Accumulated depreciation/amortization Net values

As at

1.1.2011

Currency

translation

differences Additions Disposals Disposals* Write-ups

As at

31.12.2011

As at

31.12.2011

As at

31.12.2010

€ 000 € 000 € 000 € 000 € 000 € 000 € 000 € 000 € 000

35,376 -1,349 3,873 1,543 1,191 – 35,166 13,408 16,643

73,616 – 11,182 – 108 – 84,690 250,349 261,561

– – 14 – – – 14 247 65

108,992 -1,349 15,069 1,543 1,299 – 119,870 264,004 278,269

70,249 -6 3,197 67 1,835 – 71,538 50,373 55,368

165,639 -415 14,036 2,058 465 – 176,737 48,325 51,109

106,305 -1,160 10,932 4,994 20,961 – 90,122 28,482 36,470

352,721 – 139,763 156,518 264 – 335,702 539,607 501,901

– – – – – – – 6,768 4,490

694,914 -1,581 167,928 163,637 23,525 – 674,099 673,555 649,338

– – – – – – – 300 310

60 – – – – – 60 22,291 13,455

– – – – – – – 3,719 –

56 – 2 – – 17 41 58,013 41,049

2 – – 1 – – 1 28,095 155

118 – 2 1 – 17 102 112,418 54,969

804,024 -2,930 182,999 165,181 24,824 17 794,071 1,049,977 982,576

54 / Consolidated Financial Statements / Explanatory Notes

I. Introductory Remarks

Vorwerk & Co. KG is publicly disclosing its worldwide consoli-

dated financial statements and the Group Management Report

for the 2011 business year in accordance with the requirements

of the German Publication and Disclosure Law (PublG) and the

German Commercial Code (HGB).

There is no publication of the information pursuant to § 313

par. 2 HGB, which is a constituent element of these explana-

tory notes, for reasons of clarity. This information will be

published under the company’s name in the electronic German

Federal Gazette.

II. Consolidated Group

The parent company is Vorwerk & Co. KG (Holding Company).

The Group companies operate in the following commercial

segments: the manufacture and direct sale of high-quality

household appliances, cosmetics, facial and body-care prod-

ucts as well as carpeting.

As of 30 June 2011, a group of 23 companies was transferred

to a sister company of Vorwerk & Co. KG which operates in the

sector of infrastructural facility services. Two companies have

been removed from the consolidated group because they were

either liquidated or merged. These changes in the composition

of the companies included in the consolidated financial state-

ments are negligible, therefore the consolidated financial

statements of the previous year are still comparable.

As in the previous year, a foreign-based logistics company has

been included in the figures and valued at equity as an associ-

ated company in accordance with the provisions of §§ 311 and

312 HGB. Two associated companies have not been included in

the consolidated figures at-equity because of their minor

significance pursuant to § 311 par. 2 HGB, but instead have

been included at acquisition cost.

Explanatory Notes to the Consolidated Financial Statements pursuant

to §§ 13 par. 3 in association with 5 par. 5 PublG

In the 2011 business year, the akf group acquired all the shares

in two companies and transferred material parts of the opera-

tive business to the purchasing companies. Against this back-

ground they have not therefore been included as per § 296 par.

1 HGB. The participations net carrying value is stated under

others net carrying assets. Moreover, four companies of minor

significance have not been consolidated as per § 296 par. 2 HGB.

III . Classification, Accounting and Valuation Methods

The balance sheet and the profit and loss account are laid out

for reporting purposes in accordance with the format stipu-

lated in §§ 290 ff, 266 and 275 HGB for corporate entities. On

account of the full consolidation of the akf group, the balance

sheet and the profit and loss account have been enlarged to

include banking and leasing-specific items, insofar as the

assets and liabilities of the akf group could not be allocated to

already existing line items or allow for more transparent

reporting. The line item “liabilities from the deposit-taking

business” has been included in the balance sheet for the first

time in the 2011 business year. The previous year’s figure was

reclassified accordingly from trade payables. Obligations of

the akf group towards a special-purpose vehicle to the amount

of EUR 267.3 million are included in trade payables.

Other financial assets include not only loans but also non-secu-

ritized minority holdings in closed real estate funds, which

were included with long-term securities in the previous year.

The capital contributions of silent partners are also included

in partners’ equity since they are of an equity-capital-similar

nature because they are provided with a subordination clause.

The taxes and net profit reported in the consolidated profit and

loss account (for disclosure) pursuant to § 5 par. 5 PublG have

been included with other operating expenses under the collec-

tive heading “other items not shown separately”.

Consolidated Financial Statements / Explanatory Notes / 55

Vorwerk & Co. KG’s accounting and valuation principles also

pertain to the consolidated financial statements. Valuations at

the akf group have been adopted unchanged pursuant to § 308

par. 2, sentence 2 HGB. The financial statements of non-

German subsidiaries drawn up in accordance with national

rules and regulations and departing from German legal

requirements have been adjusted in line with what is known as

the Handelsbilanz II (Type II Commercial Balance Sheet). The

valuation methods applied correspond to uniform valuation

as defined in § 308 par. 1 HGB. They remain unchanged from

those applied in the previous year. Purchased intangible assets

have been capitalized at acquisition cost less straight-line

amortization over their estimated useful lives on a pro rata

temporis basis.

The period for scheduled straight-line depreciation of goodwill

acquired against payment is 30 years.

In the case of tangible fixed assets and rental assets (allowing

for contractual periods and residual carrying values), where

the useful life is definite, the acquisition or manufacturing cost

has been depreciated on a straight-line basis over their esti-

mated useful lives. Manufacturing cost includes the individu-

ally attributable costs from the consumption of goods and the

use of services as well as appropriate proportions of the

material and manufacturing overheads. Depreciation of

additions to the tangible fixed assets is generally effected on a

pro rata basis. If the fair market value of individual assets is

below their net carrying value, impairment charges are

recognized for permanent impairment.

Financial assets have been valued at acquisition cost and loans

at nominal value or at lower fair value.

The development of fixed assets is presented in the “Move-

ments in Fixed Assets” statement.

Inventories have been valued at acquisition cost or manufac-

turing cost in accordance with the lower of market cost prin-

ciple. The acquisition cost of raw materials, supplies and

merchandise is calculated using the average cost method.

Apart from the direct costs, the manufacturing costs of the

finished goods and work in progress include only the adequate

portions of the material and manufacturing overheads

required and depreciation on the fixed assets caused by manu-

facturing.

Receivables and other assets have been shown at nominal

value less appropriate valuation allowances. Receivables from

customers from factoring and hire purchase transactions have

been reported at their present value less an individual or

general valuation allowances.

Marketable securities have been stated at acquisition cost or

the lower fair value prevailing as of the balance sheet date.

Liquid funds have been stated at nominal value.

Business transactions denominated in foreign currencies are

principally stated at the historical rate of exchange at the date

first recorded. Receivables, other assets, payables and liquid

funds in foreign currencies have been valued at the mean spot

exchange rate on the balance sheet date. In the case of foreign

currency items with a remaining term of more than one year,

the acquisition cost and realization principle have been

adopted. The requirements of § 340 h HGB have been applied

to the foreign currency translation of the assets and liabilities

of the companies of the akf group.

Revaluations have been made, if applicable, in accordance

with § 253 par. 5 HGB.

Provisions have been accrued with the application of prudent

business judgment at the expected settlement amount.

The provisions for pensions – calculated in accordance with

the actuarial projected unit credit method – have been gener-

ally discounted over an estimated term of 15 years using

Heubeck 2005G Mortality Tables at the average market interest

rate of 5.14 percent, as published by the German Federal Bank.

The trend in salaries has been assumed to be 3.5 percent; in

pensions 1.1 percent. Fluctuation has been duly considered on

the basis of years of service and age-related probabilities.


Other accruals and provisions with a remaining term of more

than one year have been discounted – in accordance with their

remaining term – at the average market interest rate prevailing

over the past seven business years. In evaluating semi-retire-

ment and anniversary provisions, the same valuation param-

eters as for pension obligations are fundamentally applied,

except for term-specific interest rates for semi-retirement

obligations.

Liabilities have been shown at their settlement amounts. Pay -

ables to companies in which the company has a participating

interest concerns associated companies in the amount of

EUR 4.3 million. The capital with participation rights – included

under other liabilities – has been reported at nominal value.

Deferred income mainly includes special rental payments and

rental prepayments attributable to future business years as

well as accrued net present cash values from leasing receiva-

bles sold to banks. Such amounts will be reversed on a straight-

line basis in accordance with the underlying term and pursuant

to the principle of loss-free valuation.

To compensate for counteracting cash flows, liabilities and

pending business have been combined in financial instruments

(valuation unit). Insofar as the preconditions for the creation

of valuation units are not satisfied, the items are accounted for

in accordance with the general valuation principles.

IV. Foreign Currency Translation

All financial statements of the subsidiary companies of the

Group that are included in the consolidation, but which are

located outside the euro-zone have been translated into euros

from the respective local currency using the modified closing

rate method. The items of the balance sheet – with the excep-

tion of the equity capital item that is translated into euros at

historical rates – have been translated at the mean spot

exchange rate as of the balance sheet date.

Cost and income shown in the corresponding profit and loss

accounts have been translated at the average annual rate of

exchange for the year 2011. The translation difference of

EUR 3 million arising therefrom has been included without

profit effect within the partners’ equity after the reserves in the

line item “partners’ equity difference from currency trans-

lation”. The translation differences resulting from exchange

rate fluctuations have led to a EUR 8.6 million decrease in the

line item “partners’ equity difference from currency trans-

lation” without impact on profit or loss.

V. Balance Sheet Date and Consolidation Principles

The subsidiary companies included in the consolidated finan-

cial statements all have 31 December as their balance sheet date

with the exception of one subsidiary that has a balance sheet

date on 31 March. Consolidation of the balance sheets and

profit and loss accounts of the consolidated subsidiaries has

been carried out in accordance with the following principles:

1. Capital Consolidation

Capital consolidation for acquisitions up to 31 December 2009

was effected in accordance with the book value method. Capital

consolidation for first-time consolidations after 1 January

2010 has been carried out pursuant to the revaluation method.

In this respect, the book values of the holdings have been offset

against the allocable equity capital of the corresponding

subsidiary companies at the date of acquisition following a

revaluation of the assets and liabilities acquired and realiza-

tion of hidden reserves and hidden charges.

Capitalized differences from the first-time consolidation of the

JAFRA Group in the 2004 business year have been recognized

as goodwill on the assets side after the reversal of hidden

reserves in the assets.

Pursuant to § 253 par. 3 HGB, the goodwill of the JAFRA Group

will be amortized over the individual operational useful life of

more than five years. This is derived from the use of the brand

and brand-similar benefits which, besides the sales system

and the know-how of the staff in R&D, constitute essential

elements of the goodwill of the company. The remaining capi-

talized differences from previous years have been stated sepa-

rately within the partners’ equity section. Should any credit

differences have resulted from this netting in previous years,


such amounts have been combined with the reserves in

previous years on account of their reserve characteristic. In

the case of the deconsolidation of the subsidiaries in the year

under review, the netting of the goodwill against the

reserves without impact on profit or loss that was carried out

at the time of first consolidation has been kept.

Minority interests in the equity capital subject to consolidation

and in the results of the subsidiary companies included in

consolidation have been shown in the compensating item for

minority interests.

The consolidation of a foreign-based logistics company at

equity has been effected in accordance with the book value

method. In this respect the valuation principles applied by this

associated company have been adopted without change.

Vorwerk’s share of profits from companies consolidated at

equity has been included in the profit and loss account as

income from participations.

2. Debt Consolidation

Amounts due as receivables or payables in respect of compa-

nies within the consolidated group have been offset against

each other for dept consolidation purposes (§ 303 HGB).

3. Consolidation of Earnings

The consolidation of income and expenses contained in the

items shown in the consolidated profit and loss account comply

with § 305 HGB. Inter-company sales and the corresponding

expenses as well as the remaining inter-company income and

expenses from the consolidated companies’ profit and loss

accounts have been offset against each other.

4. Deferred Taxation

Deferred taxation is reported due to differences in the

approaches between the commercial and taxbase balance

sheets, insofar as such states a tax burden or relief. Moreover,

deferred taxation considers possible losses and interest carried

forward, provided they are expected to be taken up within the

next five years.

An excess of deferred tax assets over deferred tax liabilities is

not recognized in the individual financial statements.

Departing from this, the election to recognize this excess in the

consolidated financial statements pursuant to § 274 par. 1,

sentence 2 in conjunction with § 300 par. 2, sentence 2 HGB

has been exercised. Deferred tax assets and liabilities are

netted against one another when the preconditions for such

prevail. For the purposes of the consolidated financial state-

ments, an aggregated figure of the items is reported pursuant

to § 274 HGB (§ 306 sentence 6 HGB).

Deferred taxes for differences arising from the first time recog-

nition of goodwill are not reported. Additionally, deferred

taxes are not scheduled for differences between the taxbase of

subsidiaries or associated companies and the commercial

valuation of the net assets reported in the consolidated finan-

cial statements.

As of 31 December 2011, the balance of future tax burden/relief

calculated on the basis of the different approaches applied for

the commercial and taxbase balance sheets ensued mainly for

from the amounts receivables and payables from/to affiliated

companies, inventories and the provisions for pensions. When

calculating taxes for consolidation entries affecting profits

pursuant to § 306 HGB, a uniform Group-wide average tax rate

of 30 percent has been basically applied to dept consolidation

and the interim profit elimination; otherwise company-

specific tax rates have been applied. The calculation of deferred

taxes in the individual financial statements is based on tax

rates applying to the individual companies.


VI. Other Statutory Disclosures Pursuant to § 314 HGB and

Explanatory Notes to Various Items in the Consolidated

Balance Sheet and Consolidated Profit and Loss Account

1. Remaining Terms for Liabilities (RTL)

2. Securitised Liabilities

The akf group issued a bearer bond to a third party in the 2008

business year totaling EUR 27.0 million for a term of five years

and is included under other liabilities.

3. Contingent Liabilities, Other Financial Commitments and

Off-Balance Sheet Transactions

Obligations arising from rental, tenancy and leasing contracts

as of the balance sheet date amounted to EUR 102.9 million for

the following years, EUR 32.8 million of which falls due in

2012. Order obligations for investments in tangible fixed assets

amount to EUR 4.2 million (EUR 4.0 million in the previous

year). There are long-term obligations arising from contracts

with suppliers to the amount of EUR 27.8 million as of the

balance sheet date.

The risk of recourse from the joint liability for the pension obli-

gations that have been transferred to the provident fund as

well as from the joint liability on the basis of the Articles of

Association from the participation in the Liquiditäts-Konsor-

tialbank GmbH, Frankfurt/Main, can more or less be excluded

since the provident fund and the aforementioned company can

meet their long-term obligations from their own cash assets.

The risk of guarantees being called upon is estimated to be low

since it is mostly a case of contract fulfillment guarantees that

are limited to the term of the individual agreements.

4. Profit and Loss Account

Group sales divided according to business division are shown

in the Group Management Report.

5. Present Value of Derivative Financial Instruments

Commodity swaps, exchange rate futures and options, currency

swaps as well as interest-rate swaps and options are used at the

Vorwerk Group for hedging purposes, both for operative busi-

ness activities as well as in the area of foreign currency

financing. The present value of a derivative financial instru-

ment is the price at which a party would acquire the rights and/

or obligations entailed in this financial instrument from

another party. The net carrying and present values of the finan-

cial instruments of the Vorwerk Group are reported as follows:

Group Sales (incl. turnover tax) 2010 2011

Breakdown by Region € m € m

Germany 800.8 772.4

Europe 1,077.3 1,105.6

North America 422.0 411.1

Rest of world 71.9 78.0

Total 2,372.0 2,367.1

31.12.2010 31.12.2011

in € 000 RTL < 1 yr RTL > 5 yr Total RTL < 1 yr RTL > 5 yr Total

Bank loans and overdrafts 289,128 0 505,742 258,528 0 390,577

Liabilities from the deposit-taking business 5,144 0 5,144 259,049 320 286,721

Customer advances 29,474 0 29,474 31,164 0 31,164

Trade payables 333,969 102 335,219 336,029 0 338,239

Drafts and notes payable 89 0 89 53 0 53

Payables to affiliated companies 0 0 0 89,843 0 89,843

Payables to companies in which the company has a participating interest 2,979 0 2,979 5,098 0 5,098

Other liabilities 252,161 2,363 260,875 238,827 4,211 249,009

Liabilities 912,944 2,465 1,139,522 1,218,591 4,531 1,390,704


Derivative Financial Instruments

Provisions for onerous losses in the amount of EUR 0.95

million have been formed to cover specific currency futures,

commodity swaps and on account of negative market values

for the interest-rate swaps entered into by way of a hedge at the

portfolio level and which are not combined in a valuation unit.

Option premiums to the amount of EUR 0.3 million have been

reported under other assets.

The nominal value of the derivative financial instruments is

determined using the exchange rates on the closing date.

The present values of currency futures and currency swaps

are determined according to the closing rate as of the

balance sheet date, taking forward discounts and premiums

into account. The present values of currency options are

assessed on the basis of option price models pursuant to

Black & Scholes. The present values of interest-rate hedging

instruments (interest-rate swaps and options) as well as

commodity swaps are determined on the basis of discounted,

anticipated future cash flows with the current market

interest-rates or market rates for raw materials for the

remaining term of the financial instruments being applied.

To hedge the interest risks in its banking book from payment

fluctuations in its investment book, the akf group applies

portfolio hedges consisting of interest-rate swaps, caps and

collars with a nominal value of EUR 486.6 million. These are

combined with liabilities in the amount of EUR 540.3 million

into valuation units as defined by § 254 HGB. There was a

negative market value of the derivatives used as of the

balance sheet date of EUR 5.7 million, a sum that is not

considered in the balance sheet on account of the valuation

Present value as of 31.12.2011

in € 000 Nominal value value Positive Negative

Currency options 20,936 -88 255 -88

Currency futures 39,832 -269 216 -269

Interest rate swaps 321,163 0 1,758 -3,227

Interest rate options 235,000 311 88 -2,871

Currency swaps 4,906 0 0 0

Commodity swaps 4,177 -596 0 -596

unit created and the application of the net hedge presenta-

tion method. Likewise, there are positive differences to the

amount of EUR 1.8 million that are not reported either.

Since the liabilities and the derivates are exposed to the

same interest risk, the changes in cash flows are offset from

opposite effects. The effectiveness of the hedging relation-

ships is determined regularly by prospective regression

analyses.

6. Information on Shares in Investment Funds

Vorwerk & Co. KG holds 100 percent of the units of the VWUC

Fund. The VWUC Fund has mixed fund assets pursuant to

German investment law.

The target of the investment policy is to generate an attractive

increase in value in euro with a longer-term strategy. To

achieve this investment objective, the assets are invested in

fixed-interest securities as well as in money market instru-

ments and liquid funds. Moreover, the Fund can invest in secu-

rities on the equity markets and in units of open and closed

investment funds (shares, commodities and real estate). To

secure as well as to invest and efficiently manage the assets, the

Fund may, in addition, also deploy derivatives and other tech-

niques and instruments as well as securities lending.

Value of the Units and Variance to the Book Value

Vorwerk & Co. KG received a gross dividend of EUR 5.175 million

(EUR 2.5872 per unit) for the Fund’s business year (1 December

2010–30 November 2011).

The Fund’s units could be redeemed on any stock exchange

trading day in the year. In the year under review special fund

units were sold at a book value of EUR 114.3 million. Vorwerk

achieved a profit of EUR 38.0 million from this transaction.

The Fund’s units were evaluated throughout the entire year in

accordance with the lower of cost or market.

in € 000 Book value Market value Variance

VWUC Fund 325,718 362,752 37,034

Net carrying


7. Other Information

The akf bank makes use of an asset-backed commercial paper

(ABCP) program to refinance its customer receivables and in

this respect, sells customer receivables with the transfer of all

opportunities and risks. The sold receivables are as of this

point in time no longer reported in the balance sheet. The

program will continue for the time being and has a volume of

EUR 265.8 million, which had been fully utilized as of the

balance sheet date except for EUR 53 million. This program

strengthens the liquidity and the financial resources fund and

extends the number of refinancing channels. On the other

hand there are risks that emerge from the buyer’s right to serve

notice of cancellation.

In the year under review, the fees for the auditors amounted to

EUR 674,000, for tax consultancy EUR 120,000 and for other

services EUR 69,000.

Average Annual Number of Personnel

Management at the parent company Vorwerk & Co. KG is in the

hands of the Managing Partners, Walter Muyres, Jüchen, and

Reiner Strecker, Wuppertal.

Wuppertal, 18 April 2012

Walter Muyres

Reiner Strecker

2010 2011

Employees* 22,096 16,156

Advisers in direct sales 601,664 590,733

Kobold 8,788 8,486

Thermomix 21,979 24,428

JAFRA Cosmetics 569,177 556,258

Lux Asia Pacific 1,720 1,561

* Including employed sales advisers; HECTAS deconsolidated as of 30 June 2011

Consolidated Financial Statements / Auditors’ Report/ 61

Auditors’ Report

The foregoing consolidated balance sheet and profit and loss

account, the explanatory notes (without any listing of invest-

ment holdings) together with the Group Management Report as

intended for publication comply with the legal requirements.

PricewaterhouseCoopers Aktiengesellschaft Wirtschaftsprü-

fungsgesellschaft, Essen, expressed the following opinion on

the complete set of consolidated financial statements and the

Group Management Report:

“Audit opinion

We have audited the consolidated financial statements –

prepared by Vorwerk & Co. KG, Wuppertal, comprising the

balance sheet, profit and loss account and explanatory notes,

together with the Group Management Report for the business

year from 1 January to 31 December 2011. The preparation of

the consolidated financial statements and the Group Manage-

ment Report in accordance with German commercial law is the

responsibility of the Managing Partners of the company. Our

responsibility is to express an opinion on the consolidated

financial statements and the Group Management Report based

on our audit.

We conducted our audit of the consolidated financial state-

ments in accordance with § 317 of the HGB (German Commer-

cial Code) and the German generally accepted standards for

the audit of financial statements promulgated by the Institut

der Wirtschafts prüfer in Germany (IDW). Those standards

require that we plan and perform the audit such that misstate-

ments materially affecting the presentation of the net assets,

financial position and results of operations in the consolidated

financial statements in accordance with German principles of

proper accounting and in the Group Management Report are

detected with reasonable assurance. Knowledge of the busi-

ness activities and the economic and legal environment of the

Group and expectations as to possible misstatements are taken

into account in the determination of audit procedures. The

effectiveness of the accounting-related internal control system

and the evidence supporting the disclosures in the consoli-

dated financial statements and the Group Management Report

are examined primarily on a test basis within the framework of

the audit. The audit includes assessing the annual financial

statements of the companies included in consolidation, the

determination of the companies to be included in consolidation,

the accounting and consolidation principles used and signifi-

cant estimates made by the Managing Partners as well as evalu-

ating the overall presentation of the consolidated financial

statements and the Group Management Report. We believe that

our audit provides a reasonable basis for our opinion.

Our audit has not led to any reservations.

In our opinion, based on the findings of our audit, the consoli-

dated financial statements comply with the legal requirements

and give a true and fair view of the net assets, financial position

and results of operations of the Group in accordance with

German principles of proper accounting. The Group Manage-

ment Report is consistent with the consolidated financial state-

ments and as a whole provides a suitable view of the Group’s

position and suitably presents the opportun ities and risks of

future development.”

Essen, 18 April 2012

PricewaterhouseCoopers

Aktiengesellschaft

Wirtschaftsprüfungsgesellschaft

Peter Albrecht Thomas Hofmann

Auditor Auditor

62 / Companies in the Vorwerk Group

FranceVorwerk France s.c.s.5, rue Jacques Daguerre44306 Nantes Cedex 3

SpainVorwerk España M.S.L., S.C.Avda. Arroyo del Santo, 728042 Madrid

ChinaVorwerk HouseholdAppliances Co., Ltd. 9F, Vorwerk Plaza1768 Yishan Road201103, Shanghai

PortugalVorwerk Portugal Electrodomesticos LDARua Quinta do PaizinhoEdificio Bepor, Bloco 2-2° Esq.2790-237 Carnaxide/Lisboa

AustriaVorwerk Austria GmbH & Co. KGSchäfferhofstr. 156971 Hard/Bregenz

PolandVorwerk Polska Sp. z o. o.ul. Strzegomska 2-453-611 Wrocław

Czech RepublicVorwerk CS k.s.Pod Pekařkou 1/107147 00 Praha 4

JapanVorwerk Nippon K.K.Crescendo Bldg. 2F2-3-4 Shin-YokohamaKohoku-ku, Yokohama-shiKanagawa-ken222-0033

Taiwan R.O.C.Vorwerk Lux (Far East) Ltd.Taiwan Branch (H.K.)5F, No. 85, Section 1Chuang Hsiao East RoadTaipei City

MexicoVorwerk México S. de R.L. de C.V.Av. Paseo de las Palmas No. 320, LocalPB-ACol. Lomas de ChapultepecDelegación Miguel Hidalgo C.P. 11000México D.F

Vorwerk Engineering

GermanyVorwerk Elektrowerke GmbH & Co. KGMühlenweg 17 - 3742270 Wuppertal

FranceVorwerk Semco S.A.S.20, route de Montigny28220 Cloyes-sur-le-Loir

ItalyVorwerk Folletto Manufacturing s.r.l.Via Garibaldi, 2720043 Arcore-Milano

ChinaVorwerk Household ApplianceManufacturing (Shanghai) Co., Ltd.Songze Ave. 8777Qinpu District201700, Shanghai

Direct Sales, JAFRA Cosmetics

Headquarters & USAJAFRA Cosmetics International, Inc.2451 Townsgate RoadWestlake Village, CA 91361

MexicoJAFRA Cosmetics International, S.A. de C.V.Blvd. Aldolfo López Mateos #515Colonia TlacopacDelegación Alvaro Obregón01040 México, D.F.

BrazilDistribuidora JAFRA de Cosmeticos, Ltd.Alameda dos Maracatins 659Moema – São Paulo/SPCEP 04089-011

GermanyVorwerk & Co. KGMühlenweg 17 - 3742270 Wuppertal

Vorwerk & Co. Interholding GmbHMühlenweg 17 - 3742270 Wuppertal

Vorwerk & Co.Beteiligungsgesellschaft mbHMühlenweg 17 - 3742270 Wuppertal

Vorwerk Direct SellingVentures GmbHMühlenweg 17 - 3742270 Wuppertal

SwitzerlandVorwerk InternationalMittelsten Scheid & Co.Verenastr. 398832 Wollerau

BelgiumVorwerk & Co. KGBruxelles Bureau47, Rue Montoyer1000 Bruxelles

Direct Sales, Vorwerk

ItalyVorwerk Folletto s.a.s. di Vorwerk Management s.r.l.Via Ludovico di Breme, 3320156 Milano

Vorwerk Contempora s.r.l.Via Ludovico di Breme, 3320156 Milano

GermanyVorwerk Deutschland Stiftung & Co. KGGeschäftsbereich KoboldMühlenweg 17 - 3742270 Wuppertal

Vorwerk Deutschland Stiftung & Co. KGGeschäftsbereich ThermomixMühlenweg 17 - 3742270 Wuppertal

The Main Companies in the Vorwerk Group

Companies in the Vorwerk Group / 63

GermanyJAFRA Cosmetics GmbH & Co. KGLeonrodstr. 5280636 München

ItalyJAFRA Cosmetics S.p.A.Via Cesare Battisti 5821043 Castiglione Olona

SwitzerlandJAFRA Cosmetics AGRiedstr. 3/56330 Cham

AustriaJAFRA Cosmetics Handelsgesellschaft mbHSchäfferhofstr. 156971 Hard/Bregenz

NetherlandsJAFRA Cosmetics International B.V.Geograaf 306921 EW Duiven

RussiaJAFRA Cosmetics International LLC10 1st Pervyi Volokolamskiy proezd123060 Moskva

Dominican RepublicJAFRA Cosmetics Dominicana S.A.Gustavo Mejia Ricart No. 121Ensanche JulietaSanto Domingo

India JAFRA Ruchi Cosmetics (India) Private Ltd.Odeon CinemaD-BlockConnaught PlaceNew Delhi

ProductionJAFRA MANUFACTURINGAv. La Estacada #201Parque Industrial Querétaro Santa Rosa de Jauregui Querétaro, Querétaro CP 76220 Mexico

Direct Sales, Lux Asia Pacific

HeadquartersLux Asia Pacific Pte Ltd.390 Havelock Road #08-02 King’s CentreSingapore 169662

IndonesiaPT. Luxindo RayaLux BuildingJL. Agung Timur 9Blok O-1 No. 29-30Sunter Agung Podomoro14350 Jakarta

ThailandLux Royal (Thailand) Co., Ltd.523-525 Lux BuildingSukhumvit 71, Phra Khanong-NuaWattana, Bangkok 10110

Taiwan R.O.CVorwerk Lux (Far East) Ltd.Taiwan Branch (H.K.)2F, No. 2 Ruiguang RoadNeihu District11491 Taipei

PhilippinesLux Appliance Philippines, Inc.EDSA corner Standford St.Mandaluyong City 1550

VietnamLUX Company Ltd70 Huynh Van Banh StreetWard 15Phu Nhuan DistrictHi Chi Minh City

akf Financial Services

Germanyakf bank GmbH & Co KGFriedrichstr. 5142105 Wuppertal

akf leasing GmbH & Co KGFriedrichstr. 5142105 Wuppertal

akf servicelease GmbHJohannisberg 742103 Wuppertal

Spainakf bank GmbH & Co KG, S.E.P.E. La MoralejaAv. de Europa 12, 3a28108 Alcobendas/Madrid

akf equiprent S.A.P.E. La MoralejaAv. de Europa 12, 3a28108 Alcobendas/Madrid

akf servicelease España S.L.P.E. La MoralejaAv. de Europa 12, 3a28108 Alcobendas/Madrid

Polandakf leasing polska S.A.Al. Jana Pawla II 1500-828 Warszawa

Italyakf bank GmbH & Co KGSuccurale ItalianaVia Ludovico di Breme, 3320156 Milano

akf servicelease italia s.r.l.Via Ludovico di Breme, 3320156 Milano

Vorwerk Carpets

Vorwerk & Co. TeppichwerkeGmbH & Co. KGKuhlmannstr. 1131785 HamelnDeutschland

64 / Imprint

ImprintPublication: Vorwerk & Co. KG,

Mühlenweg 17 – 37, 42270 Wuppertal

+49 202 564-1247

www.vorwerk.com

[email protected]

Editorial staff: Michael Weber (responsibility),

Alexandra Stolpe,

Corporate Communications of the Vorwerk Group

Concept and Design: OrangeLab, Düsseldorf

Text: Vorwerk & Co. KG, Wuppertal,

OrangeLab, Düsseldorf

Pre-press: Die Qualitaner GmbH, Düsseldorf

Translation: Alan Hall, Wuppertal,

Lynda Matschke, Hamburg

Production: Druckhaus Ley + Wiegandt, Wuppertal

© Vorwerk & Co. KG, 2012

Our annual report is published in German and

English with a total circulation of 9,200 copies.

Wood products originating from responsibly managed forests

are marked with the FSC® trademark and are independently

certified in accordance with stringent Forest Stewardship

Council (FSC) criteria. Only FSC-approved paper was used in

the printing and preparation of this annual report. This

annual report was produced climate neutrally.

SourcesRomy Blümel, page 10;

Christian Lord Otto, page 10, 24f.;

Claudia Weber, page 13;

Fotolia – cristi180884, page 13; WestPic, page 15;

panthesja, page 23; nuttakit, rungrote, page 28;

felinda, page 31; witthaya, page 36;

Roman Sigaev, page 37;

iStockphoto – Richard Clark, page 13, S. 19;

Inga Ivanova, page 21; Cagri Özgür, page 29;

Trout55 page 46;

Sabine Hecher, page 15, 19, 21, 23, 27, 29, 31, 37, 51;

laif – Fabio Cuttica, page 17;

Paul Holland, page 20;

Getty Images – Frida Marquez, page 25;

Nico Büchsenschütz, S. 28;

Gil Jouin, page 32f.;

laif – Knechtel, page 36;

Stefano Riboli – nigerbend.com, page 41;

Hesse, Hermann: Demian. 5th Werkausgabe, 1920, page 7–8

Print compensatedId-No. 1215717

www.bvdm-online.de

Documents

Vorwerk Annual Report 2011 · 2012-05-18 · Contents 6 A Review of Vorwerk Management Report 2011 11 General Section on Business Development 15 Direct Sales, Kobold 18 Direct Sales,