Consolidated annual report 2017/2018

Transcription

1 Consolidated annual report 2017/2018

2 egetæpper a/s Industrivej Nord 25, 7400 Herning Tel. no.: Fax no.: Registration No. CVR-no.: Board of Directors Ebbe Malte Iversen, director (chairman) Hans Olesen Damgaard, director (deputy chairman) Kaja Møller, director Anne Mette Zachariassen, self-employed consultant Jørgen Stender Clausen, smith (staff representative) Maja Lorenzen, office clerk (staff representative) Management Svend Aage Færch Nielsen, CEO John Vestergaard, CFO Auditors Ernst & Young Morten Friis, state authorised public accountant Karsten Mehlsen, state authorised public accountant Solicitors DAHL, Herning Bankers Danske Bank Handelsbanken Disclaimer In order to make this report more manageable and user-friendly, egetæpper a/s has decided to publish a consolidated annual report that does not include the financial statements for the parent company. In accordance with section 149 of the Danish Financial Statements Act, this consolidated annual report is an extract of the Company's complete annual report. The full report, including the annual report for the parent company, is available in Danish at The Consolidated Annual Report is published in English. Only the original Danish text is legally binding. The translation has been prepared solely for practical reasons.

3 Contents Financial highlights for the ege Group... 2 Management statement... 3 Management report... 4 Report on Corporate Social Responsibility... 7 Income statement 1 May 30 April Group... 8 Consolidated income statement 1 May 30 April Group Balance sheet at 30 April Group Cash flow statement 1 May 30 April Group Statement of changes in equity Group Notes without reference Group Contacts Mr. Svend Aage Færch Nielsen, CEO Tel: Mr. John Vestergaard, CFO Tel: egetæpper a/s Herning, 29 June 2018

4 Financial highlights of the Group DKK million 2017/ / / / /14 Turnover 1,157 1, Result before financial entries and taxation (EBIT) * Financial entries (net) Result before taxation * Group net result * Total assets at end of period 1, Share capital Capital and reserves at year-end excl. of minority holdings Net working capital Cash flows from operating activity Number of employees Investments in long-term assets (excl. acquisition of subsidiary) Net investments by acquisition of subsidiary Depreciations Net profit ratio (EBIT-margin) Return on invested capital (ROIC) Profit on equity after taxation (p.a.) Solvency ratio Net working capital in percentage of turnover * Incl. of profit from sale of property in Vejle (20 mio. DKK before taxation 16 mio. DKK after taxation). 2 FINANCIAL HIGHLIGHTS FOR THE GROUP

5 Management statement The Board of Directors and the Executive Board have today discussed and approved the annual report of egetæpper a/s for the financial year 1 May April The annual report has been prepared in accordance with the International Financial Reporting Standards as approved by EU as well as the Danish Financial Statement Act. In our opinion, the interim report gives a true and fair view of the Group s assets, liabilities and financial state as per 30 April 2018 as well as of the result of the Group and the company s activities and cash flows for the financial year 1 May April Moreover, we find that the management report gives a true statement of the development of the Group s activities and financial state, of the profit for the period, cash flows and of the Group s financial state as a whole, as well as a description of the major risks and elements of uncertainties the Group is facing. We recommend that the annual report be approved at the annual general meeting. Herning, 29 June 2018 Management: John Vestergaard CFO Svend Aage Færch Nielsen CEO Board of directors: Ebbe Malte Iversen Hans Olesen Damgaard Kaja Møller Chairman Deputy chairman Anne Mette Zachariassen Jørgen Stender Clausen Maja Lorenzen Staff representative Staff representative 3

6 Management report Accounting policies The annual report for egetæpper a/s is prepared in accordance with the International Financial Reporting Standards (IFRS) as approved by the EU and additional requirements in the Danish Financial Statements Act. Except from below comments, the used accounting policies are unchanged compared to last year. egetæpper has implemented the standards and contributions to interpretation which enter into force as of 1 May The implementation has not affected factoring and measurement. The company has made a reclassification of 80,089 t. DKK of certain liabilities to minority interests. The reclassification is due to the fact that the counterparty has the opportunity to make use of the put option even though this is not expected by the management to take place before expiry. The comparative figures are adjusted accordingly. In the same context, the company s investment in Foamtex A/S will from now on be called capital investments in joint venture instead of an associate as previously. This change has no real significance to the accounting of the capital investment as equity value continues to be used as a method, just like the company s investment in Foamtex A/S as a joint venture has not in real resulted in additional liabilities other than an investment in an associate. The annual report is prepared in Danish Kroner. Accounting report Group Turnover The Group turnover amounts to 1,157 mio. DKK against 1,016 mio. DKK last year, representing an increase of 14%. Adjusted for the inclusion of Carpet Concept, the organic growth constitutes 6%. Other operating income Other operating income amounts to 4.6 mio. DKK against 5.2 mio. DKK last year. Costs Other external costs amount to 209 mio. DKK and have increased by 23.0 mio. DKK compared to last year. Staff charges amount to 321 mio. DKK against 288 mio. DKK last year. In all, the increase in costs amounts to 57.1 mio. DKK corresponding to 13%. Adjusted for the inclusion of Carpet Concept costs have increased by 5% compared to last year. Depreciations amount to 43.3 mio. DKK against 39.2 mio. DKK last year. Financial entries Financial entries amount to mio. DKK against mio. DKK last year - of which 4.2 mio. DKK are attributable to exchange rate adjustments. Profit of the year The result before taxation hereafter amounts to 61.5 mio. DKK against 62.6 mio. DKK. After tax charge of the year of 17.5 mio. DKK against 19.2 mio. DKK last year, the result of the year amounts to 44.0 mio. DKK against 43.4 mio. DKK last year. Equity The equity of the Group excl. of minority holdings amounts to 511 mio. DKK against 488 mio. DKK last year. The solvency ratio constitutes 50% against 49% last year. Interest-bearing net assets Interest-bearing net assets amount to mio. DKK and have increased by 31 mio. DKK compared to last year. The increase is attributed to the present high investment level as well as increased binding of working capital Cash flow statement Cash flows from operation amount to 60 mio. DKK against 86 mio. DKK last year. Cash flows for investments amount to -66 mio. DKK against -156 mio. DKK last year. Cash flows from financing amount to -13 mio. DKK against 86 mio. DKK last year. Dividend paid this accounting year amounts to 17 mio. DKK. Changes in cash equivalents amount to -19 mio. DKK constituting 14 mio. DKK in cash equivalents at the end of the year. Investments Investments of the year in long-term assets were 68 mio. DKK. Subsequent events No subsequent events have occurred by year-end closing of significant importance to the financial position in the Group or in the parent company. Prospects 2018/ strategic focus areas We work determinedly with egetæpper s general strategy Sustainable Carpet Design 2022 as well as initiatives and focus areas of the new Group structure and on this basis we have the following expectations: For the brand ege the markets of UK, France and DACH (Germany, Austria and Switzerland) are still intended to be the 4 MANAGEMENT REPORT

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8 primary drivers of growth. The coming year is characterised by investments in expanding the sales force, execution of an international sales conference as well as various marketing initiatives. The cruise market is generally growing. To take advantage of this situation Hammer Carpets market persuasion will be intensified by an increased sales force and development of new service concepts. The UK domestic market will also be subject to an increased market persuasion. Carpet Concept did not meet the expected activity and revenue during the financial year 2017/18 this is expected to change during the coming financial year and we therefore expect increased activity and earnings. Carpet tiles are a major focus area. Furthermore work is carried out regarding a digital marketing strategy and further development of acoustic systems for office design. The long term expectations remain positive. Moreover Carpet Concept contributes with significant synergies to ege and Bentzon Carpets. At Bentzon Carpets there are also expectations to increased activity and revenue in line with the strategic objectives of the Group. New products are being developed for the highend domestic segment as well as further development of existing markets. Bentzon Carpets is the internal supplier of flat woven carpets Carpet tiles are a central focus area and essential for the realisation of our long-term objectives. During the financial year 2017/18 we have seen a growth rate of 20%. We expect growth rates at the same level in the coming financial year. The construction of the new tile factory in Herning is proceeding as planned. The investment project makes up a little under 70% of the coming years investment frame of 100 mio. DKK. Information to shareholders Share and dividend key figures 2017/ / / / /14 Share capital, nominal t. DKK 26,210 26,210 26,210 26,210 26,210 Number of A-shares 330, , , , ,340 Number of B-shares 2,290,720 2,290,720 2,290,720 2,290,720 2,290,720 Number of own B-shares Number of B-shares in circulation 2,290,720 2,290,720 2,290,720 2,290,720 2,290,720 Earnings per diluted share, DKK Earnings per share, DKK Recommended dividend per share, DKK Net asset value of share, DKK Stock exchange price Stock exchange price/net asset value Dividend rate (calculated against market value) 2.6% 2.7% 5.2% 2.9% 3.6% 6 MANAGEMENT REPORT

9 Expansion and branding will also have a pivotal role during the financial year 2017/18. Our work on expanding the organisation and positioning in the market will continue under brand auspices. We expect growth but are at the same time realistic regarding the long-lasting and resource demanding process. Overall, our expectations to 2018/19 are as follows: A turnover of 1,225 mio. DKK An EBIT margin of 7-8% Cash flows from operating activity of mio. DKK Investments in long term assets of 100 mio. DKK The average investment frame of our 2022 strategy is given at approx. 50 mio. DKK. The doubling of the investment frame in 2018/19 is mainly due to the construction of the largest part of the new tile factory both building and machines - during the financial year 2018/19. Decisions made by the board and proposals for the annual general meeting The Board of Directors has proposed as follows: Based on dividend policy of the parent company, the Board of Directors proposes the dividend fixed at 6.50 DKK per share nominal 10 DKK, representing a total dividend distribution of 17.0 mio. DKK corresponding to approx. 40% of net profit of the year after tax and distribution to minority shareholders. The Board of Directors also recommends that the General Assembly authorises that own shares up to nominal 2.0 mio. DKK per year can be acquired. The authorisation is to be provided for a period of 5 years. The annual general meeting is to be held at egetæpper s corporate office in Herning on Friday 31 August 2018 at a.m. report, which also contains much other information about our CSR work. Interested readers can find information about how our business model relates to social responsibility, and what CSR risks we have identified and work with in the value chain. For the first time, the CSR report is a Group report with information from the entire Group. It provides greater transparency than previously. The report includes among other things an extract of our policy on human rights, social and employee relations, environmental and climate conditions and anti-corruption. We account for the exiting projects we work with in these areas as well as in good management, sound business practice and local community development and involvement. For example, you can read more about our work with Cradle to Cradle and Circular Economics and learn how the ege Group contributes to the UN s Global Goals (SDG s). As something new, we launch this year s CSR report under the hashtag #sustainablestories. Under the hashtag we focus on the good stories but also the challenges that often exist when working with social responsibility and there are definitely real challenges associated to ambitious goals for sustainability. The CSR report also encompasses a statement for the result of the year and the relevant KPI s we prospectively wish to measure. The statutory statement is stated in the CSR report, which will be published 29 June The report can be downloaded from the company website: Report on multiplicity in management In pursuance of the Danish Financial Statements Act 99 b egetæpper has to report on target figures etc. concerning the underrepresented sex in boardroom positions and also describe policy, actions and results regarding increasing the proportion of underrepresented sex at other management levels. The printed annual report The printed annual report is expected to be available mid August 2018 (week 33). The printed annual report may be requested at the company office in Herning. The annual report will also be available on the company s website (egecarpets.com), as well as on the website of NASDAQ OMX Copenhagen. Report of Corporate Social Responsibility In pursuance of ÅRL 99 a, the annual report must contain a statement of the Group s work with social responsibility (CSR). We have gathered the entire statement in the ege Group CSR The statutory report is stated at http//catalogs.egecarpet.com/redegoerelse99b_2018_dk According to the instruction from the Danish Business Authority, ege meets the requirements for equal distribution of men and women on the Board of Directors, but has an underrepresentation of women at other management levels. Generally, our policy is to secure a diverse workplace and work for advancing the number of women in leadership positions. We will secure our employees that they can use their skills in the best possible way regardless of sex, ethnicity, religion, political view, age, disability, sexuality etc. 7

10 Income statement 1 May April 2018 Group t.dkk 2017/ /17 Turnover 1,157,370 1,016,105 Change in stock of finished goods, work in progress and commercial goods 9,540 8,232 Costs for raw materials, auxiliaries and commercial goods -517, ,128 Other external costs -209, ,410 Gross profit 440, ,799 Other operating income 4,620 5,210 Staff costs -321, ,562 Depreciations -43,326-39,200 Other operating costs -1, Profit before financial entries 78,536 73,663 Shares of result in joint venture Financial income 130 2,996 Financial expenses -18,141-14,359 Profit before tax 61,506 62,610 Tax on profit of the year -17,469-19,201 Profit of the year 44,037 43,409 Divided between Shareholders of egetæpper a/s 42,479 41,722 Minority shareholders 1,558 1,687 44,037 43,409 Earnings per share, DKK (EPS) Earnings per diluted share, DKK (EPS-D) INCOME STATEMENT GROUP

11 HIGHLINE LOOP ECOTRUST KÖLNER STADT-ANZEIGER AND EXPRESS GERMANY

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13 Consolidated income statement 1 May April 2018 Group t.dkk 2017/ /17 Financial entries which might be reclassified to the income statement Exchange rate adjustment of foreign subsidiaries -1,826-2,014 Tax on other comprehensive income 0 0 Other comprehensive income after tax -1,826-2,014 Profit of the year 44,037 43,409 Total recognised comprehensive income 42,211 41,395 Divided between Shareholders of egetæpper a/s 40,653 39,708 Minority shareholders 1,558 1,687 42,211 41,395 CONSOLIDATED INCOME STATEMENT GROUP 11

14 Balance sheet at 30 April 2018 Group t.dkk 30/4 30/ Assets Non-current assets Intangible assets Completed development costs 698 1,063 Customer relations 10,198 12,769 Agency rights 1,610 1,610 Goodwill 148, ,087 Intangible projects under construction 27,843 10, , ,766 Tangible fixed assets Land and buildings 165, ,168 Plant and machinery 143, ,169 Fixtures and fittings, tools and equipment 25,581 25,938 Property, plant and equipment under construction and prepayments 20,570 10, , ,297 Financial fixed assets Capital investments in joint venture 23,162 26,181 23,162 26,181 Total non-current assets 567, ,244 Current assets Inventories 269, ,087 Trade receivables 168, ,426 Cash and deposits 13,973 33,300 Total current assets 451, ,813 Total assets 1,018, , BALANCE SHEET GROUP

15 t.dkk 30/4 30/ Equity and liabilities Equity Share capital 26,210 26,210 Reserve for exchange rate adjustments -1, Retained earnings 464, ,352 Proposed dividend 17,037 17, , ,439 Minority shareholders' part 5,242 5,349 Total equity 511, ,788 Liabilities Long-term liabilities Deferred tax 30,381 30,385 Credit institutions 55,017 74,947 Debt relating to acquisition of minority interests 54,189 53, , ,954 Short-term liabilities Trade payables 55,863 53,299 Debts to joint venture 6,772 5,082 Debts to associates 25,000 0 Bank debts 93,453 86,252 Debt relating to acquisition of minority interests 87,089 80,720 Corporation tax 9,666 9,910 Other payables 89,867 94, , ,315 Total liabilities 507, ,269 Total equity and liabilities 1,018, ,057 13

16 Cash flow statement 1 May April 2018 Group t.dkk 2017/ /17 Turnover and other operating income 1,161,553 1,020,503 Operating costs -1,085, ,558 Depreciations 43,326 39,200 Changes in working capital -41,812-5,185 Cash flow from activities before financial items 77, ,960 Interest received and similar 728 2,996 Interest payments and similar -4,711-2,498 Dividend received 4,000 0 Cash flow from ordinary operations before taxation 77, ,458 Corporation tax paid -17,717-19,795 Cash flows from operating activity 59,997 85,663 Acquisition of tangible assets -49,081-31,293 Sale of tangible assets 2,140 2,370 Acquisition of intangible assets -18,831-8,668 Acquisition of subsidiary 0-118,202 Cash flows to investment activity -65, ,793 Borrowing 25,000 99,873 Instalment -19,894-5,045 Change in operating credits 7,165 28,001 Dividend paid -17,037-27,521 Dividend paid to minority shareholders -8,188-9,286 Cash flows from financing activity -12,954 86,022 Cash flow of the year -18,729 15,892 Cash equivalents at beginning of period 33,300 17,346 Value adjustment of cash equivalents Cash equivalents at end of period -13,973 33, CASH FLOW STATEMENT GROUP

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18 Statement of changes in equity at 30 April 2018 Group t.dkk Share Reserve for Retained Proposed Total Minority Total capital exchange earnings dividends share- equity rate holders adjustment Equity 1 May , ,352 17, ,439 5, ,788 Transactions in equity 2017/18 Exchange rate adjustment of foreign subsidiaries 0-1, , ,826 Net profits recognised directly on equity 0-1, , ,826 Profit of the year ,442 17,037 42,479 1,558 44,037 Total consolidated income 0-1,826 25,442 17,037 40,653 1,558 42,211 Dividend paid ,037-17,037-1,665-18,702 Total transactions in equity 2017/18 0-1,826 25, , ,509 Total equity 30 April ,210-1, ,794 17, ,055 5, ,297 Reserve for exchange rate adjustment Reserve for exchange rate adjustment contains all adjustments occurring when accounts of subsidiaries in other functional currencies than DKK are converted. It also contains exchange rate adjustments concerning assets and liabilities which represent a part of the Group's net investment in subsidiaries and also exchange rate adjustments concerning hedging transactions which cover the exchange risk of the Group's net investment in subsidiaries. Dividend is recommended to 6.50 DKK per share equal to approx 40% of the Group's net result. 16 STATEMENT OF CHANGES GROUP

19 Statement of changes in equity at 30 April 2017 Group t.dkk Share Reserve for Retained Proposed Total Minority Total capital exchange earnings dividends share- equity rate holders adjustment Equity 1 May ,210 1, ,667 27, ,252 5, ,801 Transactions in equity 2016/17 Exchange rate adjustment of foreign subsidiaries 0-2, , ,014 Net profits recognised directly on equity 0-2, , ,014 Profit of the year ,685 17,037 41,722 1,687 43,409 Total consolidated income 0-2,014 24,685 17,037 39,708 1,687 41,395 Dividend paid ,521-27,521-1,887-29,408 Total transactions in equity 2016/17 0-2,014 24,685-10,484 12, ,987 Total equity 30 April , ,352 17, ,439 5, ,788 Reserve for exchange rate adjustment Reserve for exchange rate adjustment contains all adjustments occurring when accounts of subsidiaries in other functional currencies than DKK are converted. It also contains exchange rate adjustments concerning assets and liabilities which represent a part of the Group's net investment in subsidiaries and also exchange rate adjustments concerning hedging transactions which covers the exchange risk of the Group's net investment in subsidiaries. 17

20 Notes without reference Group As per 1 May 2018 we have established a new Group structure with 4 equal brands (areas of business) and a number of Group functions. Based on this situation, segments will be adjusted starting from the financial year 2018/19. Adjustment of comparative figures will be made accordingly. The segmentation in this annual report is prepared on the basis of the Group's internal management reporting and is based on the individual market (operating segment). Consolidation to reportable segments is based on differences in sales channels. The segment "Direct sale" includes sale performed by egetæpper's Danish sales organisation as well as foreign subsidiaries and sales offices. The segment "Indirect sale" is defined as sale via commercial agents or sale to importers/distributors abroad. As segmental result we use the internal phrase "market contribution". This is defined as external revenue with deduction of direct wages and material used for production as well as costs, which are directly referable to the individual markets. Segmental information Direct Indirect Total reportable sale sale segments 2017/18 External revenue 1,014, ,260 1,157,370 Depreciations 10, ,805 Financial costs 17, ,106 Profit from sale of assets Market contribution 162,961 43, ,376 Assets 348,820 12, , /17 External revenue 907, ,450 1,016,105 Depreciations 9, ,491 Financial costs 13, ,073 Profit from sale of assets Market contribution 165,148 34, ,953 Assets 342,839 5, , NOTES WITHOUT REFERENCE GROUP

21 Reconciliation of result for the period before tax 2017/ /17 Segmental result for reportable segments 206, ,953 Unallocated depreciations -32,521-29,709 Unallocated financial costs ,711 Unallocated profit from sale of assets Unallocated costs -111, ,614 Result for the period before taxation, cf. income statement 61,506 62,610 Reconciliation of assets 2017/ /17 Assets for reportable segments 361, ,460 Unallocated stock of goods 167, ,274 Unallocated cash and cash equivalents 2,361 2,580 Unallocated tangible fixed assets 487, ,743 Assets, cf. balance sheet 1,018, ,057 19

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