Gabriel A/S - Annual report 2012

ANNUAL REPORT 2011/2012 | GABRIEL HOLDING A/S

Growth in revenue and operating profi t (EBIT)

Record revenue in the FurnMaster business unit

ZenXit upholstery material in continued development

Continued investment in sales and development

2

Revenue increased by 2% to DKK 247.6 million. The profi t before tax was almost unchanged and amounted to DKK 22.3 million against DKK 22.5 million last year.

The level of activity increased during the fi nancial year. Further resources were allocated to sales and development-oriented activities in order to ensure that the group will realise its potential on both existing and new markets.

SUMMARY ∙ Revenue increased to DKK 247.6 million (DKK 242.6 million). ∙ Operating profi t (EBIT) was DKK 21.4 million (DKK 18.2 million). ∙ The operating margin was 8.7% (7.5%). ∙ The profi t after tax was DKK 17.8 million (DKK 16.9 million). ∙ Financial items affected the profi t negatively with a net charge of DKK 0.6 million against a netincome of DKK 0.8 million last year.

∙ The return on invested capital (ROIC) before tax was 11.2% (9.4%). ∙ The cash fl ow from operations in the period was DKK 28.0 million (DKK 26.7 million).

∙ Gross expenditure on research and development during the fi nancial year was DKK 7 million, equivalent to 3% of revenue and at the level of the preceding year.

∙ The board of directors recommends an increase in dividend to DKK 4.50 (DKK 4.25) per DKK 20 share to the general meeting.

∙ The expectations for the 2012/13 fi nancial year are encumbered by a high level of uncertainty concerning developments in inter-national economic conditions. The market for contract furniture is judged to be stable to mildly decreasing, but given the group’s outreach activities and constantly increasing initiatives in the fi eld of development and sales activities, management expects organic growth in revenue of the order of 5-10% in the forthcoming 2012/13 fi nancial year and a corresponding increase in the operating profi t (EBIT).

The board of directors recommends as follows to the general meeting of Gabriel Holding A/S on 13 December 2012: ∙ Distribution of a dividend of DKK 4.50 per DKK 20 share. ∙ The board of directors proposes approval of the general guidelines for incentive payments to the executive board.

∙ The board of directors proposes re-election of directors Jørgen Kjær Jacobsen, Kaj Taidal and Søren B. Lauritsen, and election of Knud Erik Hansen, director, as the company’s board-members elected by the general meeting.

∙ The board of directors proposes re-election of the company’s auditors. ∙ The annual report is recommended for approval by the company’s general meeting at 2:00 p.m. on 13 December 2012 at the com-pany’s offi ce in Aalborg.

The offi cial annual report will be published on the company’s website at the latest three weeks before the general meeting, and the printed version of the annual report will be available at the company’s offi ce on 4 December 2012.

GROWTH IN REVENUE AS EXPECTED, WHILE OPERATING PROFIT (EBIT) EXCEEDED THE GROUP’S EXPECTATIONS FOR THE 2011/2012 FINANCIAL YEAR

Summary

Argos 2 and Digital 2 upolstered on Viveros furniture model Hanabi. Designed by Yuki Abe.

33

Key fi gures

Revenue

Of which exports

Export percentage

Operating profi t (EBIT)

Net fi nancing, etc.

Profi t before tax

Tax

Profi t after tax

Cash fl ows from:

operating activities

investing activities

fi nancing activities

Cash fl ows for the year

Investments in property, plant and equipment

Depreciation/amortisation and impairment losses

Equity

Balance sheet total

Invested capital

Number of employees

Revenue per employee

Financial ratiosOperating margin (EBIT margin)

Return on invested capital (ROIC) before tax

Return on invested capital (ROIC) after tax

Earnings per share (EPS)

Return on equity

Solvency ratio

Net asset value at year end

Market price at year end

Price/book value

Price earnings (PE)

Price cash fl ow (PCF)

Dividends proposed per DKK 20 share

Dividends yield

Payout ratio

The basis year applied for the index fi gures is 2007/08. Earnings per share were calculated in accordance with IAS 33.

Other fi nancial ratios are calculated in accordance with the Danish Society of Financial Analysts’ “Recommendations and fi nancial Ratios 2010”.

2010/11

242.6

87

221.2

91

18.2

4.3

22.5

-5.6

16.9

26.6

-3.7

-8.8

14.1

4.5

6.2

136.7

228.8

195.2

64

3,791

7.5

9.4

8.7

8.9

12.8

59.7

72

80

1.1

9.0

5.7

4.25

5.3

48

2011/12

247.689

227.992

21.40.9

22.3-4.517.8

28.08.7

-10.626.1

2.96.1

146.6229.4189.2

693,589

8.711.2

9.29.4

12.5

63.978

1001.3

10.66.7

4.504.548

Unit

DKK million

Index

DKK million

%

DKK million

DKK million

DKK million

DKK million

DKK million

DKK million

DKK million

DKK million

DKK million

DKK million

DKK million

DKK million

DKK million

DKK million

Number

tDKK

%

%

%

DKK

%

%

DKK

DKK

DKK

DKK

DKK

%

%

2009/10

220.4

79

200.1

91

10.4

2.5

12.9

-2.7

10.2

-8.4

-11.0

4.4

-15.0

13.6

4.5

125.8

221.7

193.8

63

3,499

4.7

5.8

5.7

5.4

8.4

56.7

67

68

1.0

12.6

-

3.25

4.8

60

2008/09

204.7

73

182.8

89

2.0

-0.3

1.7

-0.4

1.3

18.5

-58.5

34.5

-5.5

24.3

4.4

115.4

197.1

163.9

92

2,225

1.0

1.4

0.9

0.7

1.1

58.6

61

69

1.1

99

6.5

0.00

0

0

2007/08

279.7

100

243.8

87

23.0

0.0

23.0

-5.9

17.1

23.3

-35.0

- 8.4

-20.1

32.1

4.9

122.6

154.5

122.7

117

2,391

8.2

19.5

14.5

9.0

14.5

79.3

64

118

1.8

13.1

9.6

4.00

3.4

49

FINANCIAL HIGHLIGHTS FOR THE GROUP

Annual report 2011/12

4

Page

02 Summary

03 Financial highlights for the Group

06 Gabriel profi le

16 CSR must never go out of fashion

18 Financial review

18 Sales and earnings for 2011/12

18 Main points

20 Outlook

20 Sales activities in 2011/12

22 Product development and innovation in Gabriel

22 Gabriel Asia Pacifi c

22 ZenXit A/S

23 FurnMaster UAB, Lithuania

23 Scandye UAB, Lithuania

23 Gabriel Erhvervspark

26 Bene brings fabric into the offi ce

28 Management of business risks

30 Gabriel and corporate governance

34 Tailor-made solution for Finnish design fi rm

36 Corporate Social Responsibility

40 Shareholder information

44 Company details

45 Statement by the Executive Board and the Board of Directors

46 Textiles with exceptional qualities

50 Independent auditors’ report

52 Income statement for the year

53 Statement of comprehensive income for the year

54 Balance sheet at 30.09.2012 – Assets

55 Balance sheet at 30.09.2012 – Liabilities

56 Statement of equity – Group

57 Statement of equity – Parent Company

59 Cash fl ow statement

60 Notes to the fi nancial statements

Gabriel Holding A/S

Company registration no. 58868728

Hjulmagervej 55 ∙ 9000 Aalborg, Denmark

Tel.: +45 9630 3100 ∙ Fax: +45 9813 2544

E-mail: [email protected] ∙ www.gabriel.dk

CONTENTS

Contents

Luna 2 upholstered on EFG’s model Gaia.

6

MISSIONInnovation and value-adding partnerships are fundamental values of Gabriel’s mission statement.

Gabriel is a niche company which, in the entire value chain from concept to furniture user, develops, manufactures and sells up-holstery fabrics, components, upholstered surfaces and related products and services.

Gabriel develops its services to be used in fi elds of application where product features, design and logistics have to meet invariable requirements and where quality and environmental management must be documented.

VISION ∙ Gabriel is to be the preferred development partner and supplier to selected leading international manufacturers and lead users of upholstered furniture, seats and upholstered surfaces.

∙ Gabriel is to achieve Blue Ocean status through an innovative business concept, patents, licences, exclusivity agreements or similar rights.

∙ Gabriel is to enjoy the status of an attractive workplace and partner company among competent employees and companies.

FINANCIAL TARGETSGabriel aims at achieving:

∙ A return on invested capital (ROIC) of at least 15% before tax. ∙ An increasing operating margin (EBIT margin). ∙ An average annual increase in earnings per share of minimum 15%.

∙ An average annual increase in revenue of minimum 15%.

GROWTH STRATEGY – GROWING WITH THE LARGEST MARKET PARTICIPANTSGabriel’s growth is ensured in close co-operation with selected key account customers in a global strategy.

Gabriel strives to account for the largest share of the selected key account customers’ purchases of furnishing fabrics, other refi ned components and related services in the value chain.

Gabriel is constantly attentive to potential acquisitions, alliances and business areas to optimise its competitiveness and value adding. Management advised in the annual report for the 2010/11 fi nancial year that the goal of an average growth of 15% p.a. will be achieved via a combination of organic growth and acquisitions. A structured acquisition process was therefore developed in which a pipeline of relevant items will be established.

GABRIEL’S PROFILE

Sancal’s sofa Float upholstered in Step and Step Melange. Designed by Karim Rashid.

Gabriel’s profi le

7

Gabriel’s value-adding model

Finance

Customers

Processes

Innovation and learning

Gabriel’s history, business concept and vision

Market share

Earnings

growth

SatisfactionKey Account/Distributor/End user

Competent employees/partners

User groupsKnowledge sharing

Strategy understanding

Organisational learning

IT platform development

Satisfaction employees/partners

PotentialInvested

capital

Idea generation and analyses

Revenue

growth

Operating margin

(EBIT-margin)

Return on invested

capital (ROIC)

Pricecompetitiveness

LogisticsGlobal Account Management

Resourceoptimisation

Product and process innovation

FIELDS OF APPLICATIONGabriel’s services are directed towards the following fi elds of application:

∙ Contract (contract furniture and seats for transport vehicles, theatres, concert halls, cinemas, auditoriums, hospitals and care institutions etc.).

∙ Home (furniture for private homes, including beds etc.).

CORPORATE MODELGabriel’s focus on innovation and value-adding partnerships is ensured via carefully selected and effective management systems and core processes and a high level of expertise.

The basis for Gabriel’s value-adding model is the use of the following Balanced Scorecard Model (applied since 2003) and the four perspectives:

The fi nancial perspective sets out Gabriel’s targeted return on invested capital (ROIC) specifi cally defi ned as revenue potential with Gabriel’s selected customers and targeted sales and earnings growth.

The customer perspective is focused only on customer satisfaction. Both perspectives include achievement goals only and these are supported by leading initiatives in the core and support processes.

The core processes have been selected on the basis of the Group’s strategy, and goals for initiatives results (KPIs) have been set for each of the selected core processes:

∙ Key Account Management (KAM). ∙ Logistics. ∙ Product and process innovation. ∙ Price competitiveness.

The objective of Innovation and Learning is to ensure a con-tinuous focus on innovation and learning among all employees.


8

GABRIEL’S PROCESS OUTLINE – STRATEGIC BUSINESS UNITSGabriel’s business model requires a process-oriented approach intro-duced in the organisation over several years. The increasingly import-ant strategic business units (Masters) with their own visions, targets, strategies and budgets carry out some of the supporting processes.

The strategic business units are run as independent profi t centres with their own business concepts, visions, targets, strategies, action plans and budgets. Intra-unit settlement takes place on an arm’s length basis and in competition with external suppliers. The indi-vidual profi t centre is entitled, and under an obligation, to generate earnings growth through external trading in goods and services where relevant. In addition, the individual business units are expected to buy services at the most competitive prices – both from intra-Group and extra-Group sources.

The strategic business units are to:

∙ deliver future growth through new channels without comprom-ising the overall strategy in the core processes

∙ ensure a progressively increasing return on invested capital ∙ reduce dependency on overheads in the core business ∙ ensure competitive power throughout the entire value chain from conception to user.

FurnMaster (established in 2003/04) offers subsupplies in the form of logistics solutions, cutting, sewing, upholstering and mounting of furniture and screens for Gabriel’s key account customers. FurnMaster’s services are deemed central to Gabriel’s core business and in 2011/12 they again provided an increasing positive contribution to the Group’s operating profi t, comprising over 10% of the Group’s revenue.

The business unit holds major growth potential, which is brought to life through the strategy “Fabrics in action” and strengthened via the upholstery unit FurnMaster UAB.

FurnMaster UAB (established 2012) is a competitive upholstery unit whose object is to support the Group’s strategy “Fabrics in action” via production services within sewing and upholstering of components and completed furniture.

Gabriel Asia Pacifi c (formerly Gabriel China) (established 2003), which comprises Gabriel’s representative offi ce and the trading com-pany Gabriel (Tianjin) International Trading Co. Ltd., sources products and services to Gabriel in Europe and develops and sells products and services to leading furniture manufacturers in Asia and the USA.

In 2011/12, both sourcing and sales were strongly increasing, and Gabriel Asia Pacifi c enjoyed growth both through sales to leading local manufacturers on the Chinese market and to other Asian and North American markets.

Gabriel’s process outline

Managerial processes

Core processes

Supporting processes

– strategic

business units

Strategy

process

A and B1 customers

KAM from potential to regular customer relations

Product and process innovation – from

conception to product ready for sale/new process

Employee

information

Management

follow-up

Resource

optimisation

Investor

Relations

Shareholders,

Analysts, etc.

KAM-Master SampleMaster DesignMaster FurnMaster QEP-Master LogisticsMaster

InnovationMaster MarketingMaster TransportMaster

HR-Master ProjectMasterTechnology and

Facilities

FinanceMasterGabriel

Asia Pacific

Gabriel

Erhvervspark

A Customers

All customers

Logistics from customer order to product supplied

Price competitiveness lowest cost

Suppliers


9

SampleMaster (established in 2000/01) develops and manufactures samples and sales literature as well as valued-adding solutions in the form of effective and attractive sales tools. The business unit’s revenue developed positively and is making a positive contribution to the Group’s profi t. The business unit is expected to be able to generate growth in both revenue and profi t in 2012/13.

Gabriel Erhvervspark – Gabriel Ejendomme A/S (established 2011), comprising the Group’s building complex in the centre of Aalborg, develops and lets offi ce premises to internal and external tenants. The building was awarded a prize in 2010 by the Com-mittee on prize awards for buildings in Aalborg “for its respectful refurbishment of old factory buildings, which underpins Aalborg’s transformation from industrial city to a knowledge-based city”.

Reference is made to the fi nancial review on page 23.

InnovationMaster (established 2006/07) continued its work in 2011/12 on development projects offering major but uncertain earnings potential. The projects are focused on the development of technical textiles and related products expected to be used primarily within Gabriel’s existing value chain.

In addition to product-oriented innovation processes, Innovation-Master masterminded a large number of internal process innova-tions in 2011/12 in order to boost Gabriel’s general competitiveness.

DesignMaster (established 2006/07) is engaged in design-based activities and advisory services revolving around customer and end user behaviour. Such activities are facilitated by strong market insight and targeted research activities with a “time-to-market” horizon of 3-18 months.

The projects are carried out in Gabriel’s existing value chain and set out to realise the potential of upholstered textiles, techniques and related products. The business unit regularly engages in activ-ities relying on core competences such as textile design and fi nish-ing, upholstery design and technologies. In addition, design and production of complete furniture components are included in the solutions offered to customers.

Based on the concept “Fabrics in action” and through tar-geted communication of Gabriel’s innovation and development strategies, the business unit has developed a close relationship with designers, development teams and decision-makers of designated furniture manufacturers.

At the beginning of the 2012/13 fi nancial year, DesignMaster is, in addition to internally generated assignments, engaged in a number of assignments for external Gabriel Key Accounts.

KAM-Master (established in 2006/07) co-ordinates the cooperation between the individual Key Account’s organisation and Gabriel’s business units to foster maximum long-term value for each Key Account and KAM-Master. In 2011/12, Gabriel’s Key Account Managers are organised in six individual business units in charge of designated customer activities within their area.

The KAM unit was expanded throughout the 2011/12 fi nancial year by the appointment of additional staff in Denmark, Norway, Sweden and Germany, and additional appointments are expected in 2012/13. The workforce is a part of the continuing development of the Group’s focused initiatives towards selected leading manufacturers.

LogisticsMaster (established 2006/07), handles the fl ow of goods and inventory management throughout the entire value chain from raw material to textile to product supplied, and represents the primary supporting function in one of Gabriel’s core processes, logistics.

The objective of the core process, logistics, is to ensure a strong delivery performance to all Gabriel’s customers. The reliability of supply throughout the 2011/12 fi nancial year was at a high level, judged to be at the absolute top of the market.

TransportMaster (established 2009/10) is responsible for transport services and optimum freight solutions to all Gabriel’s business units and customers. TransportMaster also plays an important role in the Group’s operation and development of established ware-house units and in the establishment of new distribution centres.

FinanceMaster (established 2006/07) is responsible for fi nancial management and regular fi nancial reporting. FinanceMaster participates actively in pinpointing value adding throughout the entire Group and is in charge of fi nancial and risk management. The Group’s IT operations and development were placed under Finance-Master in 2011/12 with the object of basing the Group’s IT develop-ment on continuous business development and optimisation.

MarketingMaster (established 2006/07) is a full-service advertising agency offering services to Gabriel’s business units and customers.


10

QEP-Master, Quality, Environment and Production (established 2006/07) supports Gabriel’s business development by optimising quality and environmental matters in connection with products, services and processes. QEP-Master is responsible for the quality of products and services and is accountable to its customers for all quality-related and environmental decisions in the supply chain. QEP offers competences within quality and environmental manage-ment, product labelling, working environment and production.

Technology and facilities (established 2006/07) is in charge of the repair and maintenance of textile machines, including forging, machining and electricity as well as the refurbishment of buildings. This service is offered to all Gabriel’s business units and partners.

MANAGEMENT SYSTEMSGabriel has been DS/ISO 9001 and EMAS/ISO 14001 certifi ed since 1991 and 1996 respectively. Gabriel’s Chinese subsidiary Gabriel “Tianjin” International Trading Co. Ltd. gained DS/ISO 9001 certifi cation in 2006.

In addition to the Balanced Score Card model implemented in 2002, Gabriel has taken the following important initiatives on which further information is available on Gabriel’s website

∙ EU Flower ecolabel carried by the company’s main products since 2003

∙ Development – Blue Ocean Strategy since 2005. ∙ Innovation Cup participant in 2006, 2007, 2009, 2010 and 2011. ∙ Division of Gabriel into independent Master units from 2006/07. ∙ First company in Denmark with C2C certifi cation since November 2010.

VALUE CHAINGabriel’s value chain covers all steps from concept to furniture user, and the Group supplies products and services from all stages in the value chain. Gabriel terms the complete value chain perspective “One Stop Gabriel”. The One Stop model’s intention is that custom-ers can ensure development and delivery of products and services in all stages of the value chain via a single contact person.

INNOVATIONUnder Gabriel’s Blue Ocean strategy, new products and services should offer exceptional functional or emotionally utility value to the user. Close interplay with Gabriel’s network of customers, users, suppliers, advisers and qualifi ed employees ensures the evaluation of new concepts and business potential. Gabriel’s goal is to ensure that at least 30% of revenue derives from products and services launched within the past fi ve years. In 2011/12, these products and services amounted to 27%.

The number of products released serves as an “early warner”. With eight new products realised in 2011/12, Gabriel met its target for the fi nancial year. The products were well received by the market, and they are expected to contribute to the Group’s growth as early as 2012/13.

HUMAN RESOURCESGabriel must be able to attract and retain staff with the right skills and knowledge required to create innovation and growth as an international company. Gabriel gives priority to everyone’s using, developing and sharing knowledge and skills. All employees are familiarised with Gabriel’s vision, strategy, targets and activity plans and are regularly updated on their work situation as part of appraisal reviews and staff meetings. Accordingly, targets and areas of responsibility have been clearly defi ned for all employees for the purpose of stimulating professional and personal development.

”One Stop Gabriel” – innovation in the value chain

Con-ception

Design/development

Raw material Yarn

Greige piece

Dyeing/Finishing

Cutting/sewing

Upholsterymaterial Upholstery Fitting

Piece goods/coupon

Fabriccut/cover

sewn

Partly fitted fabric

Furniture part

Finished furniture

GabrielContract

GabrielHome

KeyAccounts

OtherAccounts

Distributors

Furniture users


PERCENTAGE OF REVENUE GENERATED BY NEW PRODUCTS AND NUMBER OF PRODUCTS LAUNCHED

Percentage of revenue

Number of products launched

30

25

20

15

10

5

0

Real.

07/08

Real.

08/09

Real.

09/10

Real.

10/11

Real.

11/12

Skandiform’s Concorde Easy-chair upholstered in Luna Fleur 2. Designed by Mattias Ljunggren.

Inspiration in DesignMaster.

13

EMPLOYEE SATISFACTIONGabriel makes an effort to be an attractive workplace for all em-ployees. Employee satisfaction measurements were therefore again made in 2012 for both Danish and foreign employees. The average satisfaction measured on a scale from 1-5 was 4.1.

BOARD MEMBERS ELECTED BY THE EMPLOYEESIn accordance with the Danish Executive Order on Employee rep-resentation in public limited companies, employee representatives and alternates for service on the Board of Directors are elected every fourth year. Currently two employee representatives and two alternates are elected.

CORPORATE SOCIAL RESPONSIBILITYCorporate social responsibility is an integrated element in the business of the Group. To Gabriel, CSR means that the company takes responsibility for adding value which contributes, directly or indirectly, to social developments. The Company accedes to the principles laid down in the UN’s Global Compact.

Gabriel’s services and products must be in line with the require-ments and expectations of its customers. Production and distribution are to promote a regular reduction in resources and in environ-mentally harmful emissions. Gabriel enjoys a status as a quality- and environmentally conscious company rendered visible by its certifi cations under the ISO 9001, ISO 14001 and EMAS schemes.

Gabriel’s customers should be able to choose an environmentally sound and healthy product, for which purpose the Company applies the fl ower ecolabel and the Oeko-Tex label. These schemes enjoy a high level of trust from consumers, and awareness of the schemes is also increasing.

Dynamobel’s Slat16 offi ce chair upholstered in Runner. Designed by Dynamobel Design Team.


FURTHER INFORMATIONFor further information on environmental considerations and

CSR, please see page 36 and www.gabriel.dk. The environmental

report can also be downloaded from the company’s website in

January 2013.

14

A targeted environmental strategy yields competitive advantages via exceptional value adding for customers, users and society, now and in the future. Gabriel has shown that it is possible to deliver products which are both environmentally optimal and competitive.

GABRIEL’S GREEN VALUES

16

CSR is central to the way we run Gabriel as a company and is a permanent point on the strategic agenda. CSR at Gabriel is no mere fashion phenomenon but a strategic driver on a par with product development, sales and other activities.

CSR MUST NEVER GO OUT OF FASHION

17

Gabriel’s continuous work with CSR ensures that:

∙ we deliver healthy, quality products,

∙ we make products with maximum consideration for the environment

and resource consumption,

∙ we ensure a healthy working environment everywhere we produce,

and with our customers,

∙ we can document the relationship between words and actions – at a

minimum, we meet the requirements under the UN Global Compact.

Our CSR activities make a positive contribution to all areas in our com-

pany because this creates healthy and valuable business ethics which

are visible at all levels in the supply chain. We do not believe that it can

pay to compromise on, for example, working conditions, the environ-

ment or animal welfare, because all these areas have an infl uence on

the company’s health and they provide the necessary security for our

customers, explains CEO Anders Hedegaard Petersen.

THERE’S A PERSON BEHIND THE PROCESSHere at Gabriel we put a fi ngerprint on society all the way from raw

materials to the fi nished upholstered product, and we therefore share

responsibility at all stages, both locally and globally. Our approach

to textile production therefore always has CSR and value adding in

mind. For example, we’re strongly focused on animal welfare for the

100,000 sheep which supply wool for Gabriel’s textiles; we ensure

that our dye works in Lithuania operates with safe technology and

environ mentally correct machinery; we require that our Chinese

suppliers comply with western CSR standards, and that there is no

corruption at any time, or child labour or breaches of human rights at

any point throughout the process.

– We may never lose consciousness of the person behind the pro-

cesses in the supply chain. We must always assume responsibility

here and ensure orderly conditions. We therefore also make heavy

demands on our partners and advisers, says Business Manager for

QEP (Quality, Environment and Production) Kurt Nedergaard.

EXCEPTIONAL VALUE FOR CUSTOMERS AND USERSOur continuous serious work with CSR ensures that we as a company

can vouch for the conditions under which our products are made. For our

customers, our work ensures that their furniture products are easier to

document and attract no negative attention with respect to CSR.

We work globally with customers who specify the most stringent

requirements with respect to documentation for our products. This

also applies to social impacts, and we believe that our CSR activities

provide exceptional assurance, and therewith also value here.


Product practice at Gabriel.

18

SALES AND EARNINGS 2011/12The Group achieved revenue of DKK 247.6 million in the 2011/12 fi nancial year against DKK 242.6 million in the previous year, an increase of 2%. The revenue increase for Q4 was 7%.

The operating profi t (EBIT) was DKK 21.4 million (DKK 18.2 million). The operating margin improved to 8.7% (7.5%).

The profi t before tax was DKK 22.3 million (DKK 22.5 million). The share of the profi t after tax from the associate, Scandye UAB, was DKK 1.4 million against DKK 3.4 million last year. The profi t after tax was DKK 17.8 million (DKK 16.9 million).

Financial income and expenses had a negative effect on the profi t, with net costs of DKK 0.6 million against a net income of DKK 0.8 million last year.

Return on invested capital (ROIC) before tax was 11.2% (9.4%).

Cash fl ows from operating activities in the period were DKK 28.0 million. (DKK 26.6 million).

Management expressed expectations of revenue and a primary operating profi t (EBIT) on a par with those for 2010/11 in the Q3 report for 2011/12. Profi t before tax was expected to be DKK 18-20 million. However, both revenue and earnings exceeded expectations in Q4, and the year’s total operating profi t and profi t before tax were thus better than expected.

Given the current market conditions, management fi nds the profi t for the year satisfactory.

MAIN POINTSRevenueThe Group’s revenue increased by 2% to DKK 247.6 million against DKK 242.6 million in the preceding year.

Cost of sales – gross profi tThe Group’s realised gross profi t in 2011/12 was 40.5% against 41.9% in 2010/11. The gross profi t fell because optimisations, productivity improvements and sales price adjustments were unable to compensate for increases primarily in global wool and polyester raw material prices.

Other external costsThe Group’s external costs fell by DKK 3.0 million, equivalent to 7%. The fall is primarily attributable to savings in freight and participation in trade fairs, where by comparison, 2010/11 was affected by the Group’s substantial costs for the “Orgatec” fair which is held every second year in Cologne.

FINANCIAL REVIEW

Financial review

Contribution in tDKK

CONTRIBUTION MARGIN PER EMPLOYEE

200

400

600

800

1.000

1.200

1.400

1.600

1.800

0

07/08 08/09 09/10 10/11 11/12

OPERATING PROFIT (EBIT)

DKK million

25

20

15

10

5

0

07/08 08/09 09/10 10/11 11/12

19

Staff costsConsolidated staff costs fell by 2% to DKK 35.2 million in 2011/12 against 36.0 million in the preceding year.

Staff costs for the fi nancial year were 26% (30%) for administration, 14% (14%) for development and 60% (56%) for sales promotion costs. The increased share of sales costs refl ects the fact that the Group’s effi ciency gains in administration were used in sales promotion activities to ensure a broadening of potentials in both mature and growth markets.

The average number of employees for the fi nancial year was 69 against 64 in 2010/11. The number of employees in the Group at the end of the 2011/12 fi nancial year was 72.

Depreciation/amortisationConsolidated depreciation/amortisation was DKK 6.1 million against DKK 6.2 million in the preceding year.

Profi t/loss from investment in Scandye UABThe profi t for the year includes a total share of the result of the invest-ment in Scandye UAB of DKK 1.4 million against DKK 3.4 million last year. The share of results increased from 40% to 49.3% in connection with further acquisition of shares in the Company with effect from June 2012. The profi t in the dye works, which was negatively affected by a single major customer’s reduced purchases of piecework dyeing during the year, is considered satisfactory and better than expected.

Financial income and expensesFinancial income and expenses shows net costs of DKK 0.6 millionagainst net income last year of DKK 0.8 million. This item was

negatively affected by exchange rate losses in 2011/12, the low interest rate and the low interest on the Group’s bond portfolio.

Balance sheet totalThe consolidated balance sheet total is DKK 229.4 million against DKK 228.8 million last year.

InventoriesThe Group’s inventories were DKK 40.5 million against DKK 40.7 million last year.

ReceivablesReceivables totalled DKK 42.9 million against DKK 44.5 million last year. Consolidated trade receivables increased to DKK 32.9 million against DKK 32.6 million on 30 September 2011.

The consolidated Lithuanian VAT receivables were reduced from DKK 4.9 million at 30 September 2011 to DKK 3.0 million at 30 September 2012.

Financing and capital resourcesConsolidated cash fl ows from operating activities in 2011/12 accounted for DKK 28.0 million against DKK 26.6 million in the same period last year. The improvement occurred even though the payment of corporation taxes in 2011/12 reduced liquidity by DKK 8.3 million against a net refund of DKK 3.1 million in 2010/11.

Gabriel made total investments of DKK 2.9 million in property, plant and equipment in 2011/12 against DKK 4.5 million in the previous year. The investments primarily concerned a number of minor acquisitions.


14% Development

14% Development

26%Administration

30%Administration

60%Sales

56%Sales

Distribution of staff costs for the 2011/12 fi nancial year

Distribution of staff costs for the 2010/11 fi nancial year

20

The net balance of liquid holdings at the end of the year was DKK 19.7 million. The Group also has undrawn credit facilities via its bank and a liquidity reserve of DKK 11.9 million invested in Danish mortgage credit bonds.

EquityConsolidated equity was DKK 146.6 million at 30 September 2012 against DKK 136.7 million at the same time in the preceding year. Equity thus increased by DKK 9.9 million, DKK 17.8 million of which is attributable to the profi t for the year and DKK 0.1 million to other comprehensive income, while DKK 8.0 million in dividends was paid.

DividendsThe Board of Directors recommends to the general meeting that dividends of DKK 4.50 per share be distributed for 2011/12, equivalent to total dividends of DKK 8.5 million.

OUTLOOKA number of activities to increase growth and potential were carried out in the 2011/12 fi nancial year, thereby creating a better basis for growth. These activities included:

1. The focus for a number of years has been on product develop-ment, which was largely done together with strategic customers with global distribution. DKK 7 million, equivalent to 3% of revenue, was invested in 2011/12 alone.

2. The introduction of the upholstery material ZenXit is proceeding as planned. At 1 October 2012, a project manager was appointed with responsibility for the commercial development.

3. The sales force was increased by Key Account Managers in Sweden, Denmark, Norway and Germany.

4. The sales force was increased in China and remains in step with the recruitment which it is possible to implement, and regional sales offi ces in the country are regularly being added.

An acquisition committee on which the Executive Board and the Board of Directors are represented was established at the end of the 2010/11 fi nancial year with a view to achieving growth via acquisitions. The committee’s task is to structure and extend the initiatives for iden-tifi cation and assessment, and to contact targets and intermediaries.

The committee added and analysed a number of possibilities during the fi nancial year without implementing or planning specifi c pur-chases apart from the increased ownership interest in the dye works Scandye UAB. FurnMaster UAB was established in Lithuania after the end of the fi nancial year. Please see page 23 for further details.

The expectations for the 2012/13 fi nancial year are encumbered by a high level of uncertainty concerning developments in international economic conditions. The market for contract furniture is judged to be stable to mildly decreasing, but given the Group’s outreach acti vities and constantly increasing initiatives in the fi eld of devel-opment and sales activities, management expects organic growth in revenue in the order of 5-10% for the forthcoming 2012/13 fi nancial year and a corresponding increase in operating profi t (EBIT).

SALES ACTIVITIES IN 2011/12The Group’s revenue rose by 2% in the fi nancial year to DKK 247.6 million against DKK 242.6 million in the preceding year.

The growth derives from upholstery fabrics for contract furniture and products and services which the Group sells to the same customers but which belong to the next link in the value chain, e.g. cutting, sewing and upholstering of furniture components. A minor portion of the growth in revenue derives from increased rental income from Gabriel Erhvervspark.

The FurnMaster business unit experienced continuing positive development throughout the fi nancial year in both revenue and the establishment of new potential.

Total export revenue increased by 3% to DKK 227.9 million against DKK 221.2 million last year. The proportion exported increased from 91% to 92%. Sales in Denmark fell by 8% to DKK 19.7 million against DKK 21.5 million last year. The fall in revenue in Denmark is primarily attributable to continued outsourcing by Danish furniture manufac-turers and the bankruptcy of a major Danish furniture manufacturer.

Gabriel is maintaining its strategy of “growing with the largest”, ensuring targeted efforts towards selected key account customers. Gabriel’s focus on product and process innovation with assistance from several business units is having a positive effect on sales. The sales force was expanded during 2011/12 by the addition of Key Account Managers who will develop the markets in Germany, Sweden, Norway, Denmark and China.

Gabriel was represented at Scandinavia’s largest furniture trade fair in Stockholm in February 2012. The fair confi rmed to Gabriel that our strategy “Fabrics in action” produces results and contributes to increasing the success rates of a number of Gabriel’s business units.

Financial review

21

DKK million

250

200

REVENUE

300

150

100

50

0

07/08 08/09 09/10 10/11 11/12

Comfort+ upholstered on Ohlab’s “Precious Boxes”. Designed by Paloma Hernaiz and Jaime Oliver. Photographed by José Hevia Furniture module: Decágono

22

At NEOCON, North America’s biggest furniture fair, held every year in Chicago, Gabriel noted strong representation of its textiles and textile solutions among a number of market leading manufacturers. The share of the American market increased during the year, and this meant marked growth in sales to the leading American manufacturers.

The Group’s most important sales activity, participation in the con-tract furniture fair “Orgatec” in Cologne, Germany, was held after the end of the fi nancial year. The Group introduced a large number of new textiles and solutions at the fair. The introduction of these new products, which was done in cooperation with leading contract furniture manufacturers, was performed positively, providing an expectation that these products and solutions can help to retain and extend the Group’s position as the preferred partner and supplier.

PRODUCT DEVELOPMENT AND INNOVATION IN GABRIELNotwithstanding the continued subdued demand, the leading man-ufacturers of contract furniture are showing a high level of interest in new products and solutions. Development activities among these customers are being intensifi ed, and they include both textiles and services/solutions from the Group’s other business units.

Gabriel’s product and process innovation system from concept to upholstered product continued to be a high priority core activity in 2011/12. Gross expenditure on research and development during the fi nancial year was DKK 7 million, equivalent to 3% of revenue. New products and solutions are being developed in coordination with the Group’s most important customers. The coordinated initiatives are helping to increase the accuracy of targeting and the speed of intro-duction of products, solutions and services launched on the market.

The Group’s goal of deriving least 30% of revenue from products which are less than fi ve years old was not met in 2011/12 as the share of revenue from new products was 27%. The share was 31% in 2010/11. The share of revenue from new products among top customers was 35% in 2011/12. This refl ects the Group’s focused strategy, where product development and inbound selling are targeted to this very customer group.

Product development and innovation take place in all of Gabriel’s strategic business units (Masters), which collectively support the core process “product and process innovation”. The individual units’ unique market potentials are identifi ed, developed and activated, while the value of a joint coordinated effort is utilised and targeted towards the market’s leading furniture manufacturers.

The DesignMaster business unit performs ongoing design-based development and provides consultancy activities on the basis of customers’ and end users’ needs and wishes. This is done on the basis of a fundamental understanding of the market and targeted research based on a “time-to-market” of 3-18 months.

On the basis of the theme “Fabrics in action” and through tar-geted communication of Gabriel’s innovation and development strategy, close relationships have been established with selected furniture manufacturers’ designers, development teams and decision makers.

A number of projects were performed, and new ones initiated, on this basis. Eight new products were launched during the fi nancial year, meeting the goal for the year. Please see www.gabriel.dk for product news and cases.

GABRIEL ASIA PACIFIC (FORMERLY GABRIEL CHINA)Sales development in the 2011/12 fi nancial year continued to be positive, and the unit’s performance on profi t growth was satisfactory. Gabriel Asia Pacifi c is an important part of the total strategy of being able to service global contract furniture manufac-turers and distributors and to ensure the production of innovative and competitive products for all markets.

New products were developed and regular deliveries established to new strategic customers in the USA and Asia. New development projects are constantly in the pipeline and local efforts are being intensifi ed.

The Asian market is generally price-sensitive, but the leading players in the market are increasingly showing an interest in Gabriel Asia Pacifi c, which occupies the niche for highly improved furniture fabrics and related textile products, where there are indis-pensible requirements regarding design, quality, and products with documentation for environmental and energy-related sustainability, competitive prices and short delivery times.

ZENXIT A/SThe development project ZenXit, concerning an environmentally friendly upholstery material, was transferred to Gabriel Innovation A/S from the sister company Gabriel A/S during the 2011/12 fi nan-cial year. Gabriel Innovation A/S also changed its name to ZenXit A/S. On 1 October 2012, a project manager was employed both to ensure the continued development of the material’s potential and

Financial review

23

Nobel 2 upholstered on Vidon-Gerlier’s “Hommage (à Jean Prouvé)”. Designed by Céline Lhuillier.

to bring the product on to the market in close collaboration with Gabriel’s sales organisation. The Company had no activities until the development project was taken over.

The ZenXit product is not included in the sales expectations for 2012/13, and it is expected that the development will incur special costs for the forthcoming product adaptation and introduction in this and future fi nancial years.

UPHOLSTERY COMPANY FURNMASTER UAB, LITHUANIAThe operating company Gabriel A/S established the subsidiary FurnMaster UAB in Lithuania after the end of the fi nancial year. The ownership interest in the company is 90%. FurnMaster UAB was established as a production unit to support the Group’s con-tinuing strategic initiatives to promote the use of upholstery fabric.

DYE WORKS SCANDYE UAB, LITHUANIAThe share of the profi t (after tax) from the associate Scandye UAB was DKK 1.4 million against DKK 3.4 million last year. The decrease in profi t is attributable to a reduction in activity by a single major customer. The ownership interest in the company was increased to 49.3% in the fi nancial year by a pro rata takeover of a former share-holder’s ownership interest.

Increases in both revenue and profi t are expected in 2012/13.

GABRIEL ERHVERVSPARK – GABRIEL EJENDOMME A/SThe valuation of the property complex in the consolidated fi nancial statements was again stated at cost less cumulative depreciations, corresponding to a carrying amount of DKK 68.0 million at 30 September 2012.

The Group’s building complex in Aalborg, which has been trans-ferred to the subsidiary Gabriel Ejendomme A/S, was stated at calculated fair value of DKK 82.5 million, which is equivalent to addi-tional value of DKK 14.5 million on the carrying amount recognised in the consolidated fi nancial statements at 30 September 2012.

Profi t after tax for 2011/12 for Gabriel Ejendomme A/S was DKK 1.9 million. New leases with external tenants were entered into during the fi nancial year, and slightly increasing revenue and earnings are expected in 2012/13.

At 30 September 2012, Gabriel Ejendomme A/S had leased out approximately 6,000 m2, equivalent to almost full rental of the renovated building. Management regularly assesses how the property’s value and income can be developed and optimised for the benefi t of both tenants and owners.

Gabriel Erhvervspark is well established in its role as one of sev-eral meeting places in Aalborg for business and university people. This was facilitated partly on initiatives by external business and educational institutions and partly by Gabriel and other tenants of Gabriel Erhvervspark.


24

Gabriel’s growth strategy of growing with the largest is working. Gabriel’s goal is to achieve the greatest possible share of the selected customers’ purchases of furniture fabrics, processed components and services throughout the value chain. A targeted initiative that works and year by year consolidates Gabriel’s position as the industry’s preferred development partner and supplier.

GABRIEL IS GROWING WITH THE LARGEST

25

Runner upholstered on Wilkhahn’s ON offi ce chair. Designed by Wiege Exhibited at Orgatec 2012

26

BENE BRINGS FABRIC INTO THE OFFICE

Space, shapes and multifunctional interactive areas are important concepts in PARCS, Bene’s innovative popular offi ce furniture concept. Many offi ces around the world have now been transformed by PARCS’ modern functional design with its practical approach to interactive offi ce areas.

27

The Austrian furniture manufacturer Bene introduced its innovative

offi ce furniture concept PARCS in 2009, and it was an immediate hit.

PARCS is designed for the central areas in our modern offi ces, where

the employees work together on various activities away from their

respective workplaces. Wolfgang Neubert from Bene AG’s Executive

Board Sales and Marketing explains:

– We wanted to create areas for informal communication and cooper-

ation which could counterbalance the traditional workplaces. Our

PARCS solutions take account of productivity as well as the company’s

employees’ wellbeing by enabling different working methods such as

brainstorming, meetings or reading.

RAISING THE BAR FOR FABRICS– When Bene expanded its range to include PARCS, there was a need

for a big range of standard fabrics – and lots of them, given the size

and design of the furniture. Today, one of the company’s best selling

PARCS fabrics is Europost, which is designed and made by Gabriel.

- We chose Europost because it offers a combination of qualities which

meet our criteria for the PARCS line of furniture. Of course there were

specifi c requirements regarding quality, design, colour palette and

price level, but qualities such as being fi re-resistant, easy to clean and

sustainable were also important factors in the choice. It’s not without

reason that Europost is one of the more popular PARCS fabrics – it’s

perfect for comfortable offi ce furniture, explains Bene’s product

manager Nicole Schemerl-Streben.

Europost 2 is a classic textile which highlights the furniture’s design.

It has a homogeneous surface without visible direction, and the

design’s felt-like character gives the surface a uniform and clean

expression. The wool’s sheen and quality give the colours life and

depth. Europost carries both the EU Ecolabel and the Oeko-Tex

100 label – a guarantee of health and sustainability.

Bene recently introduced two new fabrics in the PARCS range,

Step and Step Melange, also from Gabriel. The expectations are high:

– We expect that the Step and Step Melange fabrics will become very

popular, especially because of the many design possibilities offered by

the melange effect, but also because of the colours, the fi re-retardant

properties and the price level, says Schemerl-Streben.

CREATING TOMORROW’S SOLUTIONSPARCS has conformed Bene’s growing reputation as a design-controlled

organisation which sets the agenda and raises the bar for innovative

furniture solutions for offi ce environments. Bene and Gabriel expect to

continue their partnership on future furniture projects:

– It’s a delight to work with Bene because it’s a recognised brand with

outstanding products. Our partnership has played, and will continue to

play, an important role in the creation of tomorrow’s solutions for the

furniture sector, concludes Anders H. Petersen, Gabriel’s CEO.

Europost 2 upholstered on Bene’s PearsonLloyd, Parcs, Toguna low, American Diner mid-high and Idea wall with table and club chairs.


28

The nature of Gabriel’s business area includes a number of com-mercial and fi nancial risks of importance to the Group’s future. The management makes an effort to counter and minimise any risks manageable by the Company’s own actions. Gabriel’s policy is also not to engage in active speculation in fi nancial instruments. Risk management only covers risks arising directly from the Group’s operations, investments and fi nancing.

THE COMPETITIVE SITUATION Gabriel is a niche company which is primarily concerned with cus-tomers and areas where product features, design and logistics have to meet invariable requirements and where quality and environ-mental management must be documented. Gabriel is a well-known global brand within its niche. Gabriel’s activities are constantly directed towards developing and consolidating a position as the preferred supplier of upholstery fabrics and associated components to strategically selected interna-tional contract furniture manufacturers. This is done via a consist-ent development of Blue Ocean products and services within the value chain. The company constantly strives to strengthen its competitiveness via ongoing development of the business model so that Gabriel is in the best possible position to satisfy the market’s requirements and structural development. Outsourcing of support processes, which are optimally located in low wage countries, and further focusing on the selected core processes, have consolidated Gabriel’s position as a primary supplier and business partner.

CUSTOMERS AND MARKETS Gabriel targets its product development at selected key account customers. 92% of the company’s revenue derives from exports, mainly to European countries, but increasingly also to overseas countries such as the USA and China.

PRODUCTS Relying on its business model, Gabriel aims at diversifying risks by offering new product solutions throughout a large part of the value chain. This takes place in co-operation with strategically designated key account customers by developing furniture fabrics, parts and services for future use.

RAW MATERIALS The prices of Gabriel’s primary raw materials, wool and polyester, have fl uctuated greatly in recent years. On the basis of projected future production, Gabriel strives to meet its requirements by entering into short-term or long-term supply agreements with the Group’s primary suppliers.

CURRENCY RISKSThe Group hedges currency exposure considering projected future cash fl ows and projected future exchange rate movements. Sales to customers in Europe are generally invoiced in the customer’s currency. Other countries are mainly invoiced in euros. Currency risks on the income side are thus limited as they are very largely invoiced in euros. The company’s most important purchases are settled in Danish kroner, euros or US dollars. To ensure an optimum interest level and to match fi nancing in euros, the Group has raised a mortgage loan and entered into lease agreements denominated in euros. Bank fi nancing is in the form of open credits denominated in euros or Danish kroner.

See note 23 for a more detailed description of currency risks.

INTEREST RATE RISKSThe Group’s bank loans are open fl oating-rate business credits, while the mortgage loan is an adjustable-rate loan denominated in euros and subject to annual adjustment. The bond portfolio consists primarily of short-dated bonds denominated in Danish kroner, adjusting interest to the general societal interest level. The Group’s fi nancial receivables carry a fi xed interest rate during their entire life as laid down by contract.

See note 23 for a more detailed description of interest rate risks.

CREDIT RISKSIn line with Group credit risk policy, all major customers and other business partners are regularly credit rated. Credit risk manage-ment is based on internal credit lines for customers. Since the fi n-ancial crisis, the Group has intensifi ed its focus on the approval of customer credit lines as well as on the management and monitoring of customers. Group trade receivables are distributed on numerous customers, countries and markets, ensuring a high degree of risk diversifi cation. Gabriel has been provided with collateral in pro-ductive equipment leased out to business partners.

MANAGEMENT OF BUSINESS RISKS

Management of business risks

29

CAPITAL RESOURCESThe Group regularly assesses the need for adjusting its capital structure to hold the required higher return on equity up against the higher degree of uncertainty surrounding external fi nancing. In 2009, the Group chose to raise a mortgage loan to fi nance a construction project and to strengthen the Group’s cash resources. A portion of the proceeds, equivalent to DKK 11.9 million, is still placed in Danish mortgage credit bonds. Gabriel had no net bank debt at the end of 2011/12 and an unused line of credit in the Group’s bank. On this basis, the Group is deemed to have suffi cient liquidity to fi nance future operations and investments.

PLACES OF BUSINESSThe Group performs its activities in China and other places. The per-formance of activities in China involves risks which are not normally present in traditional European markets. The tax and other legisla-tion is characterised by frequent changes which can result in risks and other problems. The Group is attempting to minimise these risks via regular contact with its partners and use of local advisers.

INSURANCEGabriel’s policy is to take out insurance against risks of material im-portance to the fi nancial position of the Group. Insurance has been taken out against operating losses and product liability. The company has also taken out all risks insurance covering the Group’s property, plant and equipment and inventories in Denmark and abroad.

ENVIRONMENTAL RISKSCertifi cations for the Environmental Management Standard ISO 14001, the Eco Management and Audit Scheme (EMAS), the EU Ecolabel scheme, Oeko-Tex and the Quality Management Stand-ard ISO 9001 ensure that neither the activities nor the company’s products are associated with any signifi cant environmental risks. The objectives of Gabriel’s environmental policy are to prevent spillage/accidents and to ensure that the company’s products do not contain any substances which are hazardous to health.

IT RISKSThe Group has chosen to outsource the operation of its IT platform to external service partners, ensuring regular updating of security systems and minimising the risk of a major operational break-down.

TRADE RISKSThe majority of raw materials, semi-manufactured products and fi nished goods used by Gabriel are available from alternative suppliers in the event of non-delivery by the usual suppliers.

CONTINGENCY PLANSIn accordance with its quality and environmental management systems, Gabriel in Aalborg continuously develops its contingency plans and communicates these to its staff. Gabriel holds regular fi rst-aid and fi re-fi ghting courses, and all areas have prepared an operational contingency plan in case of spillage/accidents.

Fame and Argos upholstered on Normann Copenhagen’s Sumo Pouf. Designed by Simon Legald.


30

Gabriel’s strategy and planned activities are implemented and performed to create added value for customers, employees, shareholders and other stakeholders.

THE STOCK EXCHANGE’S RECOMMENDATIONS ON CORPORATE GOVERNANCENASDAQ OMX Copenhagen A/S has adopted a set of corporate governance recommendations which were most recently revised in 2011. The recommendations on corporate governance can be obtained from the Committee for Corporate Governance’s website www.corporategovernance.dk.

Companies must follow these recommendations and in particular provide explanations where their practice deviates from the recom-mendations. The supreme governing body has considered their position on the recommendations, with which Gabriel essentially complies. The supreme governing body has adopted a different practice in the following areas:

1. Composition and organisation of the supreme governing bodyGabriel does not disclose the required and actual competencies of its supreme governing body.

Gabriel does not comply with the recommendation on independ-ence, as none of the Company’s board members elected by the annual general meeting is considered independent. Gabriel attaches importance to the individual board member’s capacity, competencies and contribution to Group management. Accordingly, the Company has not defi ned an age limit for its board members.

Gabriel does not disclose the size of shareholdings etc. in the Gabriel Group held by individual members of the supreme governing body.

Due to the size and complexity of Gabriel, the supreme governing body has chosen not to set up any other board committees than the audit committee.

2. Management’s remunerationTotal remuneration of the Board of Directors and the Executive Board is disclosed in the annual report. The annual report does not specify any individual remuneration as this is personal information of limited relevance to the shareholders. Remuneration of the supreme govern-ing body and the Executive Board is effected on market terms for a listed company of this size. Given the size of the Company, the Board of Directors does not fi nd it relevant to prepare a remuneration policy for the supreme governing body and the Executive Board.

GABRIEL AND CORPORATE GOVERNANCE

Gabriel and corporate governance

Runner upholstered on Wilkhahns’ offi ce chair ON. Designed by Wiege.

31

3. Risk management and internal control systemsAs recommended, Gabriel has considered the establishment of a Whistleblower scheme and, given the Company’s size and com-plexity, has not found it relevant at this time.

A more systematic review of Gabriel’s management practice in relation to NASDAQ OMX Copenhagen A/S’s recommendations is available on the Company’s website http://www.gabriel.dk/fi leadmin/Download/Diverse/God%20Selskabsledelse%20november%202011%20UK.pdf.

REPORTING ON INTERNAL CONTROL AND RISK MANAGEMENT SYSTEMSGabriel’s supreme governing body has general responsibility for the Group’s risk management and internal controls in relation to fi nancial reporting, including compliance with relevant legislation and other fi nancial reporting regulations.

The objective of the Group’s risk management and internal controls is to avoid any material misstatements and omissions during the fi nancial reporting process. The Board of Directors/audit commit-tee and the Executive Board regularly assess risks and internal controls arising from the Group’s activities and any impact on the fi nancial reporting process.

Control environmentManagement regularly assesses the organisational structure and staffi ng of the Group and lays down and approves overall policies, procedures and controls in relation to the fi nancial reporting process, with emphasis on clear reporting policies and segregation of duties.

Risk assessmentWhen the annual business plan is prepared, material business risks are identifi ed, and against this background Management makes an overall risk assessment, including an assessment of material risks arising from the fi nancial reporting process. As part of the risk assessment, Management considers the risk of fraud and any other improper infl uence on the fi nancial reporting process annually.

The Group’s Risk Management policy strives to eliminate and/or reduce the risks identifi ed on the basis of an assessment of materi-ality and cost-benefi t analyses.

The Board of Directors assesses Gabriel’s IT security and insurance coverage annually. The most important risks arising from the fi nan-cial reporting process are disclosed in Management’s review and notes to the fi nancial statements, to which reference is made.

Control activities At the board meetings, the Executive Board reports on the status of any risk factors attributable to strategy, organisation or operations. The Group has a systematic internal reporting system comparing monthly reporting with the budget and regularly evaluating per-formance and the meeting of specifi c targets through Key Perform-ance Indicators etc. The system highlights the different corporate activities and allows Management to gain an insight into and know-ledge of issues relating to the entire fi nancial reporting process.

Each quarter, the Board of Directors is provided with a detailed account of fi nancial performance compared with the budget and prior periods. The reporting also describes and assesses material balance sheet items, cash fl ows, forecast future activities and earnings and other matters with an impact on operations.

InformationThe Board of Directors lays down the general requirements for the result and the external fi nancial reporting in accordance with relevant legislation and regulations. The Group also aims to offer adequate, complete and precise information refl ecting corporate performance at all times.

Within the framework for listed companies, the Board of Directors attempts to promote open communication and to ensure that each employee is familiar with his/her function in the internal control process. The Group has chosen to divide operations and internal reporting into independent strategic business units. The strategic business units are run as independent profi t centres with their own business concepts, visions, targets, strategies, action plans and budgets, ensuring that skills, following-up and delegation of responsibilities are distributed on all organisational levels and that relevant information is communicated effectively and reliably throughout the entire system.

MonitoringGabriel monitors the functioning of its internal control and risk man-agement system at all Group levels on a regular basis and for each quarter. The scope thereof is determined primarily on the basis of the risk assessment and the effectiveness of controls and procedures.

Weaknesses, failings in controls or non-compliance with guidelines are reported to the Executive Board or the Board of Directors on the basis of materiality. The reporting is typically discussed at the next board meeting, at which the Board of Directors is informed of actual fi ndings and recommendations on procedural changes etc.


32

In their long-form audit report to the Board of Directors, the aud-itors appointed by the annual general meeting report any material failings in the Group’s internal control systems in relation to the fi nancial reporting process.

The Board of Directors follows up on the implementation of any planned optimisation of risk management procedures and internal controls in relation to the fi nancial reporting process.

AUDIT COMMITTEEIn accordance with Section 31 of the Danish Act on Approved Auditors and Audit Firms, Gabriel Holding A/S set up an audit committee in 2009, on which the entire Board of Directors serves. The vice-chairman of the Board of Directors acts as chairman of the audit committee, which meets quarterly.

The audit committee’s tasks are:

1. to monitor the fi nancial reporting process,2. to monitor the effective functioning of the company’s internal

control and risk management systems,3. to monitor the statutory audit of the fi nancial statements etc., and4. to monitor and check the auditor’s independence.

In 2011/12, the audit committee focused on the Group’s IT strategy and security and reporting from subsidiaries.

Gabriel and good corporate governance

Runner upholstered on Studio Färg & Blanche’s item Succession. Designed by Fredrik Färg & Emma Marga Blanche.

Europost 2 and Europost EW upholstered on Boss Design’s module Cega.

When the Finnish furniture design fi rm Avarte chose a total solution from FurnMaster for their auditorium chair, we put together the optimal value chain for the product with focus on cost optimisation of components and processes.

TAILOR-MADE SOLUTION FOR FINNISH DESIGN FIRM

35

When an older auditorium in Turku, Finland was to be modernised, the

Finnish furniture design fi rm Avarte was awarded the project: Design

new chairs. Avarte had worked previously with FurnMaster on a range

of furniture and auditorium assignments, and it was thus entirely

natural to place the total contract with FurnMaster:

– Our partnership with FurnMaster means that we can order the entire

furniture production from a single supplier. They take over the project

management and we’re spared the task of having to fi nd suppliers

for every single component in the chairs, from textile and upholstery

to veneer, foam and metal parts, and then having to hire an assembly

fi rm. As FurnMaster takes care of all these sourcing and coordination

processes for us, our resources are freed for the benefi t of such other

areas as sales, design and development, explains Avarte Partner and

Manager Andreas Haufe.

First, Avarte received the sketches of the auditorium from the architect

who had ordered the chair “Salina”, designed by Jenni Roininen. The

technical drawings were then prepared by Avarte, and we then collab-

orated on optimising the details. When everybody was agreed, we took

over project management and launched the sourcing process. Avarte

was not involved again until the delivery details were to be coordinated,

says project manager Kim Jakobsen of FurnMaster.

OPTIMISATION WITHOUT COMPROMISEAvarte elected to work with FurnMaster because, with our extensive

international supplier and partner network, we can put the entire value

chain together and supply a total solution for furniture production.

– When FurnMaster is at the helm in the production process, they’re in a

position to minimise the costs of components so that the end product is

cost-competitive with no compromise on quality. I personally also attach

great importance to the company’s Danish management, which has an

eye for detail and helps to ensure that the end product is unique and

tailor-made for its intended purpose. My end customer in Turku is very

satisfi ed with the result, says Andreas Haufe.

The auditorium chairs in Turku are upholstered with the textile Fame

by Gabriel, one of the softest and absolutely strongest textiles on the

market. Fame has outstanding upholstering qualities and an exclusive

structure. The body of the seat and the arm rests are made from oak

veneer and the seat is fi tted with a laminated table.

Auditorium chairs designed with Fame.


36

CSR POLICIESCSR work is a natural part of the Group’s work. For Gabriel, CSR means taking responsibility for adding value which contributes to positive social development. Gabriel accepts the principles in the UN’s Global Compact and focuses on the following areas:

∙ Gabriel’s products and services are developed and manufactured with consideration for the safety and health of users. Gabriel strives in the production process to minimise environmental impacts, and animal welfare is respected.

∙ A sound working environment is ensured in the entire supply chain together with compliance with country-specifi c legislation and Gabriel’s own requirements. These requirements comprise specifi c technical specifi cations and matters specifi ed in Gabriel’s Code of Conduct.

∙ Continuous job and competence development of all employees. ∙ Gabriel desires to support students on traineeships and to enter into educational projects for the benefi t of both students and the company.

∙ Gabriel communicates openly on its CSR activities, promoting CSR as a management activity.

THE CSR ACTIVITIESGabriel’s CSR policies are realised in the actions below, where the results obtained are also described.

A high value in products and services supplied to our customers and end users is ensured via certifi ed quality management pursuant to ISO 9001 and compliance with stringent requirements specifi ed in a large number of international product standards. Gabriel regularly measures customer satisfaction. The measurement taken in mid-2012 shows both a very high level and an increase in customer satisfaction.

Gabriel makes it easy to choose products with good environmental and health qualities and highlights this in a number of environmental labels, including the EU Ecolabel (formerly the EU Flower) and the Oeko-Tex health label as well as Cradle to Cradle (C2C).

Gabriel’s Cradle to Cradle (C2C) certifi ed upholstery fabric in pure new wool “Gaja C2C” was introduced in 2010 and it has been partic-ularly well received on the market. For several customers, C2C has become a part of their development work in the creation of innovative new solutions which comply with market requirements concerning resource consumption, health and environmental impact.

The increasing popularity of C2C includes supplying consultancy services by the Master unit QEP which, together with the con-sultancy fi rm Milestone Pro, has most recently advised the com-pany KE Fibertec on obtaining C2C certifi cation.

Gabriel is a member of the sector organisation Danish Fashion and Textile’s CSR committee for the promotion of CSR in the sector.

Gabriel’s active CSR initiatives prevent both risks to end users and employees in the production stages and the risk of fi nancial losses and loss of trust. To promote knowledge and the advantages of a systematic CSR effort, Gabriel has contributed to several confer-ences focusing on CSR and C2C.

The partnership with students from Aalborg University and other educational institutions is intensive and in constant development.

Gabriel has an intensive partnership with suppliers throughout the supply chain, and CSR is a high-priority element. We ensure that our suppliers work in accordance with the UN’s Global Compact. The wool used is from New Zealand, and requirements concerning animal welfare are monitored.

Gabriel regularly assesses the requirements for its suppliers’ reporting on CSR matters and follows up via audits of the individual supplier.

The Lithuanian dye works Scandye UAB is certifi ed under ISO 9001, ISO 14001 and the health and safety standard OHSAS 18001.

Action plans which support continued development of the working environment are prepared on the basis of the company’s workplace evaluation. All employees in Aalborg are covered by the company’s health insurance, and a subsidy is provided for sporting activities.

Gabriel’s environmental action programme includes specifi c goals for the development of environmental qualities in the company’s product range, e.g. focusing on recycling.

CORPORATE SOCIAL RESPONSIBILITY

FURTHER INFORMATIONFor further information on CSR, please see www.gabriel.dk

or contact Gabriel’s business unit QEP.

Corporate Social Responsibility

3737373737373773

A high value in products and services supplied to our customers and end users is ensured via certifi ed quality

management pursuant to ISO 9001 and compliance with stringent requirements

specifi ed in a large number of international product standards.

9001ISO 9001

38

Under Gabriel’s Blue Ocean strategy, new products and services should contain exceptionally functional or emotional utility value for the user. Innovation is created in close collaboration with customers, users, partners and others, meaning that the solutions meet not only customers’ current wishes, but also needs which the users have yet to express.

THE BLUE OCEANS

40

SHARE CAPITAL Gabriel Holding A/S’s share capital comprises 1,890,000 shares of DKK 20 each. Gabriel Holding A/S has one class of shares, and no shares have special rights. All shares are freely negotiable securities. Gabriel Holding A/S is listed on the NASDAQ OMX Copenhagen A/S under the ticker symbol GABR and the ID code DK0060124691. The share is traded under the Small Cap Index.

PRICE MOVEMENTThe 2011/12 fi nancial year opened with a price of 80 and closed with a price of 100. The total market capitalisation was DKK 189.0 million on 30 September 2012.

CAPITAL MANAGEMENTThe Group regularly assesses the need for adjusting its capital structure to hold the required higher return on equity up against the higher degree of uncertainty surrounding external fi nancing.

A high solvency ratio has always been a top priority of Gabriel in order to ensure room for manoeuvring in all situations. The Group’s solvency ratio on 30.09.12 was 64%, four percentage points higher than last year. There is continuing focus on regular reduction of the Group’s working capital.

The Group aims at providing its shareholders with a regular return on their investments while maintaining an appropriate equity level to ensure the company’s future development. The Board of Direct-ors proposes that dividends of DKK 4.50 per share be distributed for 2011/12, equivalent to total dividends of DKK 8.5 million. The dividend amounts to 5.8% of the equity and 47.9% of the profi t for the year after tax paid for the Group.

Against this background, the present capital resources are deemed adequate in the present economic climate.

SHAREHOLDER INFORMATION

DIVIDENDS AND EARNINGS PER SHARE

Dividends per share in DKK

Earnings per share in DKK

1

2

3

4

5

6

7

8

9

10

0

07/08 08/09 09/10 10/11 11/12

Shareholder information

20%Svend Mathiesen A/S,

Aarhus

11% Fulden Holding

A/S, Aarhus

Composition of shareholders

22%Other registered

shareholders

7%Other shareholders

40%Gabol A/S, Aarhus

MARKET PRICE AND NET ASSET VALUE

Market price in DKK

Net asset value in DKK

125

100

75

50

25

0

07/08 08/09 09/10 10/11 11/12

Runner upholstered on Phoneon’s Sound Butler®. Designed by Susanne Friebel and Frank Sander.

424242422

Gabriel Holding’s market value increased by 25% in the fi nancial year

to DKK 189 million.

25%INCREASED

MARKET VALUE

Move upholstered on EF’s Novah. Designed af Cevin.

43

STOCK EXCHANGE ANNOUNCEMENTS IN THE 2011/12 FINANCIAL YEAR15.11.11 Announcement of the annual report for 2010/11: “Increase in revenue and earnings”22.11.11 Notice of annual general meeting22.11.11 Annual report 2010/11.15.12.11 Information on today’s general meeting.15.12.11 Minutes of the annual general meeting.26.01.11 Subsidiary Gabriel Innovation A/S changes its

name to ZenXit A/S.09.02.12 Q1 report 2011/12: “Gabriel Holding A/S’s management maintains expectations”.15.05.12 First half-yearly report 2011/12: “Revenue and operating profi t (EBIT) as expected”.19.06.12 Gabriel A/S increases its stake in the dye works

Scandye UAB.14.08.12 Q3 report 2011/12: “Management maintains expectations for

operating profi t (EBIT) for the year”.14.08.12 Financial calendar 2012/13.

FINANCIAL CALENDAR 2012/1315.11.12 Announcement of the annual report 04.12.12 The printed annual report for 2011/12 is available 13.12.12 Annual general meeting 05.02.13 Q1 report 14.05.13 Half-yearly report 22.08.13 Q3 report 14.11.13 Announcement of the annual report12.12.13 Annual general meeting

INVESTOR RELATIONSGabriel Holding aims to provide a satisfactory and uniform level of information to its investors and analysts, ensuring stable price move-ments and refl ecting the forecast corporate performance at all times.

Gabriel’s website www.gabriel.dk is the stakeholders’ primary source of information and it is regularly updated with new and relevant information on Gabriel’s profi le, activities, line of business and results.

Investor relations contact:Anders Hedegaard Petersen, CEOPhone: +45 9630 3100

ANNUAL GENERAL MEETINGThe annual general meeting will be held at 2:00 p.m.

Thursday 13 December 2012 at the company’s offi ce in Aalborg.

250

200

MARKET PRICE AT YEAR END

Market capitalisation in DKK million

300

150

100

50

0

07/08 08/09 09/10 10/11 11/12


44

GENERAL MANAGERJØRGEN KJÆR JACOBSENChairman (60 years)

Joined the board of directors in 2010 (D)

Executive positionsRaskier A/S

DirectorshipsScandye UAB, Lithuania (CM)

Mekoprint Holding A/S (CM)

UNO Danmark A/S (CM)

Dolle A/S (CM)

A/S Peder Nielsen Beslagfabrik (CM)

Nordjyske Medier A/S (VC)

BKI Foods A/S

Utzon Center A/S

AM3D A/S

Gabol A/S

Raskier A/S

Shareholders’ committee and local councilSydbank A/S

TrustsMads Eg Damgaards Familiefond

GENERAL MANAGERSØREN BRAHM LAURITSEN(45 years)


Executive positionsONE Marketing A/S

DirectorshipsONE Marketing A/S (CM)

Stanesø A/S

GENERAL MANAGERKAJ TAIDALVice-chairman and chairman

of the audit committee (53 years)


Executive positionsA/S V. Sørensen

DirectorshipsA/S V. Sørensen

Dan-Iso Holding A/S (CM)

Dan-Iso A/S (CM)

EM-Fiberglas A/S (CM)

Impartex A/S (F)

Slovakian Farm Invest A/S (CM)

ENGINEERING WORKEROLE THOMSEN(60 years) elected by the employees

Joined the board of directors in 2009

GENERAL MANAGERCLAUS CHRISTENSEN(50 years)


Executive positionsHC Projects A/S

HCH A/S

IVON A/S

CC Holding ApS

HC Invest ApS

B&C Holding ApS

DirectorshipsBrøgger Arkitektfi rma A/S (VC)

DanPhone A/S (CM)

HC Projects A/S

HCH A/S

HESA Holding A/S (CM)

HESA Ejendomme A/S (CM)

House of BI A/S (CM)

Judex Holding A/S

Judex A/S

KPF Arkitekter A/S (VC)

M-Tec Holding A/S (CM)

M-Tec TrackUnit A/S (CM)

M-Tec Production A/S (CM)

Medical Insight A/S

IVON A/S

Novi Innovation A/S

Scape Technologies A/S

Sydbank A/S

Strøm Hansen A/S (CM)

Shareholders’ committee and local councilSydbank A/S

SALES SUPPORTERQUINTEN XERXES VAN DALM(40 years) elected by the employees

Joined the board of directors in 2010

D = Dependent member

I = Independent member

CM = Chairman

VC = Vice-chairman

CEOANDERS HEDEGAARD PETERSEN(36 years)

Employed in 2004

External executive positionsKAAN ApS

DirectorshipsGAB Invest ApS (CM)

Dansk Mode & Textil

AUDITORSKPMG, Statsautoriseret

Revisionspartnerselskab

BANKSydbank A/S

SUBSIDIARIESGabriel A/S, Aalborg

ZenXit A/S, Aalborg

Gabriel Ejendomme A/S, Aalborg

Gabriel (Tianjin) International

Trading Co. Ltd., China

ASSOCIATED COMPANIESScandye UAB, Litauen

REGISTERED OFFICE AND REPRESENTATIONThe registered offi ce with sales,

logistics, development, innovation

and accounts departments is

located in Aalborg.

Gabriel has its own representatives

in Denmark, Sweden, Finland,

Norway, Germany, France, Spain,

Italy, the UK and China.

COMPANY INFORMATION

EXECUTIVE BOARDBOARD OF DIRECTORS

Company information

45

The Board of Directors and the Executive Board have today discussed and approved the annual report of Gabriel Holding A/S for the fi nan-cial year 2011/12.

The annual report has been prepared in accordance with Interna-tional Financial Reporting Standards as adopted by the EU and Danish disclosure requirements for listed companies.

It is our opinion that the consolidated fi nancial statements and the parent company fi nancial statements give a true and fair view of the Group’s and the Parent Company’s fi nancial position at 30 September 2012 and of the results of the Group’s and the Parent Company’s operations and cash fl ows for the fi nancial year 1 October 2011 – 30 September 2012.

In our opinion, the Management’s review includes a fair review of the development in the Group’s and the Parent Company’s operations and fi nancial conditions, the results for the year, cash fl ows and fi nan-cial position as well as a description of the most signifi cant risks and uncertainty factors that the Group and the Parent Company face.

We recommend that the annual report be approved at the annual general meeting.

Aalborg, 15 November 2012

Management

Anders Hedegaard PetersenCEO

Board of directors

Kaj TaidalVice-chairman

Jørgen Kjær JacobsenChairman

Claus Christensen

Quinten Xerxes van DalmElected by the employees

Søren Brahm Lauritsen Ole ThomsenElected by the employees

STATEMENT BY THE EXECUTIVE BOARD AND THE BOARD OF DIRECTORS


46

At Gabriel, we’re constantly working with new concepts for the furniture of the future and regularly fi nding other ways to use the textiles and the underlying technology. The central point is always our close contact with customers and the market. This enables us to look ahead several years and identify the targets of the future for upholstery solutions.

TEXTILES WITH EXCEPTIONAL QUALITIES

47

– Central to our products is that not only are we focused on design as an

expression of appearance, but that we place just as much emphasis on

aesthetics, quality and functionality when we develop the textiles of the

future, says Inger Mosholt Nielsen, Business Manager, DesignMaster.

CRISP – A RICH EXPRESSION OF COLOURSCrisp is an upholstery fabric woven in an attractive strong woollen

yarn with a tight crisp expression which is relaxed by the melange

effect. Crisp is a multicolour textile without pattern but with a mottled

vibrant surface which creates variation and depth of expression.

The textile was developed with good upholstering qualities.

LEAF AND BREEZE – ELEGANT WOOLLEN TEXTILESLeaf has an elegant uncoloured leaf pattern which comes to life via

changing structures in play with light contrasts. The design can be cut

in any direction without regard to the position of the pattern. Breeze is

a modern new basic design with a living and soft structure based on

nature’s infl uence on the trends of the times.

HARLEQUIN – ANYTHING BUT ORDINARYNotwithstanding its 3D construction and semi-transparent character,

Harlequin is being launched as a self-supporting net textile. The almost

closed structure gives the textile an expression of classic upholstery

material. With Harlequin, a new trend is being introduced within net

textiles, where we’re moving away from the open techno-inspired net

and approaching the classic upholstery textiles’ values in expression.

STRING – INVISIBLE WITH EXCEPTIONAL STRENGTHA transparent, almost invisible net textile with incredible load-carrying

capacity and a tight graphic design. String signals strength and light-

ness and it can be used alone or in combination with other textiles.

The colour palette consists of a classic grey scale supplemented by

single accent colours.

OMEGA – A PLAY WITH COLOURSThe combination of classic 3D net structure with high stability of

shape and unique colour combinations makes Omega perfect as a

load-bearing textile in chair backs. Omega has a modern and sporty

look, and the relatively open net design gives space to play with colour

effects. In the individual colours, the textile’s always black reverse

side plays together with a colourful front, and attractive contrasting

colour combinations are developed.

MOMENT – FULL OF CONTRASTS Moment is a soft and comfortable two-tone fabric. The combination of

materials, design and colours adds movement and depth. The strong mix

of discreet colour tones creates a graphic contrast between light and dark.

INFINITY – SOFT AND ELEGANT Infi nity radiates elegance and naturalness. Its special weave and yarn

mix create a velvety textile with a light and modern look. With its mix

of different yarns in harmonious colour combinations, Infi nity presents

itself with a sprightly structure and an attractive colour play, concludes

Inger Mosholt Nielsen.


Leaf and Breeze upholstered on Steelcase Be Free lounge furniture.

48

Gabriel’s value chain covers all steps from concept to furniture user, and the Group supplies products and services from all parts in the value chain. Gabriel terms the complete value chain perspective “One stop Gabriel”. The model’s intention is that customers can ensure development and delivery of products and services in all parts on the value chain via a single contact person.

ONE STOP GABRIEL

50

TO THE SHAREHOLDERS OF GABRIEL HOLDING A/S

INDEPENDENT AUDITORS’ REPORT ON THE CONSOLIDATED FINANCIAL STATEMENTS AND THE PARENT COMPANY FINANCIAL STATEMENTSWe have audited the consolidated fi nancial statements and the parent company fi nancial statements of Gabriel Holding A/S for the fi nancial year 2011/12. The consolidated fi nancial statements and the parent company fi nancial statements comprise income statement, statement of comprehensive income, balance sheet, statement of changes in equity, cash fl ow statement and notes, including accounting policies for the Group as well as for the Parent Company. The consolidated fi nancial statements and the parent company fi nancial statements are prepared in accordance with International Financial Reporting Stand-ards as adopted by the EU and additional disclosure requirements in the Danish Financial Statements Act.

MANAGEMENT’S RESPONSIBILITY FOR THE CONSOLIDATED FINANCIAL STATEMENTS AND THE PARENT COMPANY FINANCIAL STATEMENTSManagement is responsible for the preparation of consolidated fi nancial statements and parent company fi nancial statements that give a true and fair view in accordance with International Financial Reporting Standards as adopted by the EU and additional disclosure requirements in the Danish Financial Statements Act and for such internal control that Management determines is necessary to enable the preparation of consolidated fi nancial statements and parent com-pany fi nancial statements that are free from material misstatement, whether due to fraud or error.

AUDITORS’ RESPONSIBILITYOur responsibility is to express an opinion on the consolidated fi nancial statements and the parent company fi nancial statements based on our audit. We conducted our audit in accordance with International Standards on Auditing and additional requirements under Danish audit regulation. This requires that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance as to whether the consolidated fi nancial statements and the parent company fi nancial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the consolidated fi nancial statements and the parent company fi nancial statements. The pro-cedures selected depend on the auditors’ judgement, including the assessment of the risks of material misstatement of the consolidated fi nancial statements and the parent company fi nancial statements, whether due to fraud or error. In making those risk assessments, the auditors consider internal control relevant to the Company’s preparation of consolidated fi nancial statements and parent com-pany fi nancial statements that give a true and fair view in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reason-ableness of accounting estimates made by Management, as well as evaluating the overall presentation of the consolidated fi nancial statements and the parent company fi nancial statements.

We believe that the audit evidence we have obtained is suffi cient and appropriate to provide a basis for our opinion.

Our audit has not resulted in any qualifi cation.

OPINIONIn our opinion, the consolidated fi nancial statements and the parent company fi nancial statements give a true and fair view of the Group’s and the Parent Company’s fi nancial position at 30 September 2012 and of the results of the Group’s and the Parent Company’s operations and cash fl ows for the fi nancial year 1 October 2011 – 30 September 2012 in accordance with International Financial Reporting Standards as adopted by the EU and additional disclosure requirements in the Danish Financial Statements Act.

STATEMENT ON THE MANAGEMENT’S REVIEWPursuant to the Danish Financial Statements Act, we have read the Management’s review. We have not performed any further procedures in addition to the audit of the consolidated fi nancial statements and the parent company fi nancial statements. On this basis, it is our opinion that the information provided in the Manage-ment commentary is consistent with the consolidated fi nancial state-ments and the parent company fi nancial statements.

INDEPENDENT AUDITORS’ REPORT

Aalborg, 15 November 2012

KPMGStatsautoriseret Revisionspartnerselskab

Hans B. VistisenState-authorised public accountant

Søren V. NejmannState-authorised public accountant

Independent auditor’s report

Code upholstered on BoConcept’s Nago. Designed by Anders Nørgaard.

52 Annual report 2011/12

tDKK

Revenue

Changes in inventories of fi nished goods and work in progress

Other operating income

Cost of sales

Other external costs

Staff costs

Depreciation/amortisation of intangible assets and property,

plant and equipment

Operating profi t/loss (EBIT)

Share of profi t/loss after tax in associates

Financial income

Financial expenses

Profi t before tax

Tax on profi t for the year

Profi t for the year

Proposed profi t appropriationProposed dividends

Retained earnings

Earnings per share (DKK)Earnings per share (EPS), basic

Earnings per share (EPS-D), diluted

2011/12

247,643

-1,9101,181

-145,493-38,770-35,157

-6,055

21,439

1,372

1,292-1,848

22,255

-4,488

17,767

9.49.4

Note

2

3

4

5

10

12

6

7

8

9

2010/11

242,611

1,800

558

-142,792

-41,778

-36,009

-6,167

18,223

3,430

2,481

-1,665

22,469

-5,610

16,859

8.9

8.9

2011/12

-

---

-1,311-1,100

-

-2,411

-

8,447-11

6,025

369

6,394

8,505-2,1116,394

2010/11

1,897

-

10,567

-

-1,907

-1,055

-538

8,964

-

4,782

-329

13,417

-2,060

11,357

8,033

3,324

11,357

Consolidated Parent Company

INCOME STATEMENT FOR THE FINANCIAL YEAR 01.10.2011 - 30.09.2012

53

STATEMENT OF COMPREHENSIVE INCOME 01.10.2011 - 30.09.2012


tDKK

Profi t for the year

Other comprehensive incomeValue adjustment to fair value

Tax thereon

Value adjustment of hedging transactions

Tax thereon

Value adjustment at the translation of foreign entities

Other comprehensive income after tax

Total comprehensive income

2011/12

17,767

-26-1

109-27

81

136

17,903

Note 2010/11

16,859

171

-38

-

-

33

166

17,025

2011/12

6,394

-26-1

--

-

-27

6,367

2010/11

11,357

171

-38

-

-

-

133

11,490


54

tDKK

Non-current assets

Intangible assets:

Development projects

Property, plant and equipment:

Land and buildings

Plant and machinery

Fixtures and fi ttings, other plant and equipment

Other non-current assets:

Investments in subsidiaries

Investments in associates

Amounts owed by associates

Other receivables

Securities

Total non-current asserts

Current assetsInventories

Receivables

Cash at bank and in hand

Total current assets

Total assets

2011/12

9,128

68,026971

8,838

77,835

-18,734

7,2691,470

11,864

39,337

126,300

40,51442,89919,676

103,089

229,389

Note

10

11

12

13

14

15

16

17

2010/11

7,061

69,500

1,488

8,957

79,945

-

15,104

8,633

1,470

27,524

52,731

139,737

40,721

44,464

3,885

89,070

228,807

2011/12

-

---

-

67,288---

11,864

79,152

79,152

-23,839

1,538

25,377

104,529

2010/11

-

-

-

-

-

67,288

-

-

-

27,524

94,812

94,812

-

13,300

818

14,118

108,930

ConsolidatedASSETS Parent Company

BALANCE SHEET AT 30.09.2012


55

tDKK

Equity

Share capital

Translation reserve

Reserve for fair value adjustments

Reserve for hedging transaction

Retained earnings

Proposed dividends

Total equity

LiabilitiesNon-current liabilitiesDeferred tax

Credit institutions

Lease liabilities

Total non-current liabilities

Current liabilitiesCredit institutions

Lease liabilities

Trade payables

Debt to associates

Corporation tax

Other debt

Total current liabilities

Total liabilities

Total equity and liabilities

2011/12

37,800223179

8299,786

8,505

146,575

7,22334,855

3,337

45,415

2,0991,281

19,956-

1,05413,009

37,399

82,814

229,389

Note

19

20

21

22

21

22

2010/11

37,800

142

206

-

90,524

8,033

136,705

7,960

36,907

4,003

48,870

12,388

1,086

13,029

-

4,072

12,657

43,232

92,102

228,807

2011/12

37,800-

179-

54,8858,505

101,369

---

-

--

696724795945

3,160

3,160

104,529

2010/11

37,800

-

206

-

56,996

8,033

103,035

58

-

-

58

-

-

358

-

3,685

1,794

5,837

5,895

108,930

ConsolidatedEQUITY AND LIABILITIES Parent Company


56

STATEMENT OF EQUITY

Reserve for

hedging

transactions

-

-

-

-

-

-

-

-

-

-

-

-

-

109

-27

82

82

-

82

Reserve for

fair value

adjustments

73

-

-

171

-38

133

133

-

206

206

-

-

-26

-

-1

-27

-27

-

179

Translation

reserve

109

-

33

-

-

33

33

-

142

142

-

81

-

-

-

81

81

-

223

Share

capital

37,800

-

-

-

-

-

-

-

37,800

37,800

-

-

-

-

-

-

-

-

37,800

Retained

earnings

81,698

8,826

-

-

-

-

8,826

-

90,524

90,524

9,262

-

-

-

-

-

9,262

-

99,786

Proposed

dividends

6,143

8,033

-

-

-

-

8,033

-6,143

8,033

8,033

8,505

-

-

-

-

-

8,505

-8,033

8,505

Total equity

125,823

16,859

33

171

-38

166

17,025

-6,143

136,705

136,705

17,767

81

-26

109

-28

136

17,903

-8,033

146,575

CONSOLIDATED


tDKK

2010/11Equity 01.10.10

Comprehensive income for the periodProfi t for 2010/11

Other comprehensive incomeExchange rate adjustment at

the translation of foreign entities

Value adjustment of fi nancial assets

available for sale

Tax on other comprehensive income

Total other comprehensive income

Total comprehensive income for the year

Transactions with shareholdersDistributed dividends

Equity 30.09.11

2011/12Equity 01.10.11


Other comprehensive incomeExchange rate adjustment at the

translation of foreign entities

Value adjustment of fi nancial assets

available for sale

Value adjustment of hedging transactions


Total other comprehensive income

Total comprehensive income for the year


Equity 30.09.12

57

tDKK

2010/11Equity 01.10.10


Other comprehensive incomeValue adjustment of fi nancial assets

available for sale




Equity 30.09.11

2011/12Equity 01.10.11

Comprehensive income for the periodProfi t/loss for 2011/12

Other comprehensive incomeValue adjustment of fi nancial assets

available for sale




Equity 30.09.12

PARENT COMPANY


Share

capital

37,800

-

-

-

-

-

37,800

37,800

-

-

-

-

-

37,800

Reserve for

fair value

adjustments

73

-

171

-38

133

-

206

206

-

-26

-1

-27

-

179

Retained

earnings

53,672

3,324

-

-

3,324

-

56,996

56,996

-2,111

-

-

-2,111

-

54,885

Proposed

dividends

6,143

8,033

-

-

8,033

-6,143

8,033

8,033

8,505

-

-

8,505

-8,033

8,505

Total equity

97,688

11,357

171

-38

11,490

-6,143

103,035

103,035

6,394

-26

-1

6,367

-8,033

101,369

59

tDKK

Cash fl ows from operating activitiesProfi t before tax

Adjustment for non-cash items:

Depreciation/amortisation

Gain on the disposal of non-current assets

Share of profi t after tax in associates

Cash generated from operations before changes in working capital

Changes in inventories

Changes in receivables

Changes in trade and other payables

Corporation tax paid

Corporation tax refunded

Cash fl ows from investing activitiesAcquisition of intangible assets

Acquisition of property, plant and equipment

Disposal of property, plant and equipment

Purchase of shares in associates

Change in amount owed by associate

Acquisition/disposal of securities

Cash fl ows from fi nancing activitiesExternal fi nancing:

Repayment on long-term debt

Extension of lease

Repayment on lease

Shareholders:

Dividends distributed

Changes for the year in cash and cash equivalents

Opening bank loans/cash and cash equivalents

Closing bank loans/cash and cash equivalents

2011/12

22,255

6,055-

-1,372

26,938

2071,5657,575

-8,278-

28,007

-3,372-2,872

245-2,2581,364

15,621

8,728

-2,084723

-1,194

-8,033

-10,588

26,147

-6,471

19,676

2010/11

22,469

6,167

-

-3,430

25,206

-5,655

-879

4,835

-2,179

5,328

26,656

-2,650

-4,507

-

-

1,253

2,217

-3,687

-2,061

-

-637

-6,143

-8,841

14,128

-20,599

-6,471

2011/12

6,025

---

6,025

--5,010

-466-7,417

-

-6,868

-----

15,621

15,621

---

-8,033

-8,033

720

818

1,538

2010/11

13,417

538

-10,558

-

3,397

-

-2,921

1,074

-2,179

5,328

4,699

-

-

-

-

-

2,217

2,217

-

-

-

-6,143

-6,143

773

45

818


CASH FLOW STATEMENT


60 Notes to the fi nancial statements

OUTLINE OF NOTES

Note

01 Segment information

02 Other operating income

03 Cost of sales

04 Other external costs

05 Staff costs

06 Financial income

07 Financial expenses

08 Tax on profi t for the year

09 Earnings per share

10 Non-current assets

11 Investments in subsidiaries

12 Investments in associates

13 Amounts owed by associates

14 Other receivables

15 Securities

16 Inventories

17 Receivables

18 Research and development costs

19 Share capital

20 Deferred tax

21 Credit institutions

22 Lease liabilities

23 Financial risks and derivative fi nancial instruments

24 Operating leases

25 Contingent liabilities and collateral

26 Transactions with group companies, major shareholders,

Board of Directors and Executive Board

27 Accounting estimates and judgments

28 Events after the balance sheet date

29 New fi nancial reporting regulations

30 Accounting policies

61616616161

62

NOTES TO THE FINANCIAL STATEMENTS

tDKK

Denmark

Sweden

Germany

Other countries

Non-current assets except fi nancial assets etc., are distributed

as follows:

Denmark

Lithuania

Other countries

Products and servicesDistribution of revenue:

Textiles

Rental income

Other operating incomeGains on the sale of property, plant and equipment

Sale of services, etc.

Repayment of deduction for canteen VAT

Other income

Segment informationThe Gabriel Group has only one reportable business segment, as all its products relate to furniture fabrics and related

textiles. The products are sold to selected leading international manufacturers and key account customers specialised in

upholstered furniture, seats and upholstered surfaces. Gabriel A/S accounts for most of the activities. The manufacturing

processes are practically identical for the individual business areas, and the sales divisions service the same type of customer

groups. In addition, the product distribution channels are the same.

Revenue generated by the Western European markets accounts for more than 92% of total revenue, where the economic and

political climates, activities, risks and currency exposure remain undifferentiated. The Group is dependent to a lesser extent

on sales to individual customers, none of whom accounts for more than 10% of the Group’s total revenue.

Consequently, the Group’s income and expenses as well as assets and liabilities are not broken down on operating segments

in the notes.

The geographical break-down of revenue and non-current assets and the break-down of revenue on products and services

are disclosed. The information is based on the internal management reporting.

Geographical informationGeographical information specifi es revenue on geographical segments based on the geographical location of the customers.

The break-down of assets by geographical segments is based on the physical location of the assets.

Revenue is distributed on markets as follows:

2011/12

19,49350,97651,645

125,529247,643

85,744971248

86,963

244,7122,931

247,643

-430351400

1,181

Note

1

2

2010/11

21,457

49,859

50,950

120,345

242,611

85,413

1,488

105

87,006

240,649

1,962

242,611

-

72

-

486

558

2011/12

-----

2010/11

10,558

-

-

9

10,567


Notes to the fi nancial statements

63

tDKK

Cost of salesCost of sales

Write-down for the year of inventories

Reversal of write-downs on inventories

Reversal of write-downs on sales of inventories written-down

Other external costs Other external costs include fees to

auditors appointed at the general meeting as follows:

Statutory audit services

Other assurance engagements

Tax advisory services

Other services

Staff costsPayroll etc.

Defi ned contribution pension schemes

Other social security costs

Other payroll-related costs

Payroll costs capitalised regarding development projects

Payroll costs transferred to cost of sales

Remuneration of the Board of Directors of the Parent Company

Remuneration of the Executive Board of the Parent Company

Pension contribution to the Parent Company’s Executive Board

Remuneration of other managerial employees

Pensions for other managerial employees

Average number of employees

Financial incomeDividends from subsidiary

Interest income, cash, bonds, etc.

Interest income from subsidiary

Foreign exchange gains

Other fi nancial income

2011/12

-146,994-774

2,275-145,493

-308-

-35-154-497

-32,213-2,037-1,576-1,613

-37,439

2,022260

-35,157

-830-1,725

-152-9,643

-758

69

-1,098

--

1941,292

Note

3

4

5

6

2010/11

-142,393

-399

-

-142,792

-305

-14

-28

-439

-786

-33,287

-1,933

-1,390

-1,340

-37,950

1,941

-

-36,009

-830

-1,871

-109

-9,762

-813

64

-

1,180

-

1,301

-

2,481

2011/12

----

-45-

-10-55

-110

-1,100---

-1,100

--

-1,100

-655-400

---

-

7,500484463

--

8,447

2010/11

-

-

-

-

-45

-

-14

-128

-187

-1,055

-

-

-

-1,055

-

-

-1,055

-655

-400

-

-

-

-

4,000

606

176

-

-

4,782



Note tDKK 2011/12 2010/11 2011/12 2010/11

7 Financial expenses

Interest expenses, etc. -1,171 -1,181 - -216

Foreign exchange losses -203 -65 - -

Other fi nancial expenses -474 -419 -11 -113

-1,848 -1,665 -11 -329

8 Tax on the profi t for the year

Current tax -5,229 -5,060 0 0

Joint taxation contribution - - 310 529

Calculated tax on the disposal of

activity to subsidiary - - - -2,640

Adjustment of deferred tax 98 -676 59 -73

Adjustment re previous year 643 126 - 124

-4,488 -5,610 369 -2,060

Tax on profi t for the year is specifi ed as follows

Computed tax on profi t before tax, 25% -5,564 -5,617 -1,506 -3,354

Tax effect of:

Non-deductible costs -35 -187 - -45

Non-taxable dividends - - 1,875 1,000

Non-taxable interest - -9 - -9

Share of results after tax in associates 343 858 - -

Adjustment of tax in foreign subsidiaries to 25% 125 -655 - -

Transferred for taxation in subsidiary upon divestment

of activity - - - 348

Adjustment re. previous year 643 - - -

-4,488 -5,610 369 -2,060

Effective tax rate 20.2% 25.0% -6.1% 15.4%

9 Earnings per share

Profi t for the year after tax 17,767 16,859

Average number of shares 1,890,000 1,890,000

Average number of own shares 0 0

Average number of shares in circulation 1,890,000 1,890,000

Earnings per share (EPS), basic DKK 20 9.4 8.9

Earnings per share (EPS-D) diluted DKK 20 9.4 8.9


Notes to the fi nancial statements64

65

Gabriel at Orgatec.

66

Note tDKK Development

projects

Land and

buildings

Plant and

machinery

Fixtures and

fi ttings, other

plant and

equipment

10 Non-current assets

2010/11

Cost at 01.10.2010 9,877 99,323 27,378 31,384

Additions during the year 2,650 2,612 - 1,895

Disposals during the year -665 - -18,138 -11,758

Cost at 30.09.2011 11,862 101,935 9,240 21,521

Depreciation/amortisation at 01.10.2010 3,636 30,972 25,560 21,132


Depreciation/amortisation for the year 1,506 1,463 330 2,545

Write-downs for the year 324 - - -


Carrying amount at 30.09.2011 7,061 69,500 1,488 8,957

Thereof development projects/assets under construction 3,933 - - -

Thereof assets held under fi nance leases - - - 4,576

Depreciated/amortised over 5 years 10-25 years 3-8 years 3-8 years

2011/12

Cost at 01.10.2011 11,862 101,935 9,240 21,521

Value adjustment - - - 25

Additions during the year 3,372 21 - 2.851


Cost at 30.09.2012 15,184 101,956 7,664 21,040


Value adjustment - - - -3


Depreciation/amortisation for the year 1,255 1,495 517 2,723

Write-downs for the year 50 - - 15


Carrying amount at 30.09.2012 9,128 68,026 971 8,838

Thereof development projects/assets under construction 6,609 - - -

Thereof assets held under fi nance leases - - - 3,978

Depreciated/amortised over 5 years 10-25 years 3-8 years 3-8 years

In 2011/12, the Group performed an impairment test on the carrying amounts of recognised development projects in

progress. The test resulted in a total write-down of tDKK 50. The project development sequence in the form of expenses

paid and results obtained was also evaluated in relation to the approved project and business plans. It was judged on this

basis that the recoverable amount after the write-down exceeds the carrying amount.


Group

67

Note tDKK 2011/12 2010/2011

11 Investments in subsidiaries

Cost at 01.10. 67,288 36,419

Additions during the year on transfer of activity to subsidiary - 30,932

Disposals - -63

Cost at 30.09. 67,288 67,288

2011/12 2010/2011

12 Investments in associates

Cost at 01.10. 11,553 11,553

Acquisitions 2,258 -

Cost at 30.09. 13,811 11,553

Adjustments 01.10. 3,551 121

Share of profi t for the year 1,279 3,375

Internal profi t 122 122

Value adjustment of property -29 -67

Adjustments 30.09. 4,923 3,551

Carrying amount 30.09. 18,734 15,104

Name Registered

offi ce

Stake Company capital

tDKK

Equity

tDKK

Profi t before

tax tDKK

Profi t for the

year tDKK

Gabriel A/S Aalborg 100% 25,500 78,653 18,331 13,976

ZenXit A/S Aalborg 100% 1,000 1,047 -25 -19

Gabriel Ejendomme A/S Aalborg 100% 1,000 32,796 2,383 1,923

Gabriel (Tianjin) China 100% 1,516 5,288 3,435 2,701

117,784 24,124 18,581

Name

Re-

gistered

offi ce Stake

Revenue

tDKK

Profi t for

the year

tDKK

Assets

tDKK

Liabilities

tDKK

Equity

tDKK

Profi t for

the year

tDKK

Scandye UAB Lithuania 49% 31,976 2,829 58,409 31,306 13,359 1,279

Value adjustment, property 1,207 -29

Intra-group profi t -631 122

Goodwill 30.09.2012 4,799 0

Carrying amount at 30.09.2012 18,734 1,372

Parent Company

Gabriel’s share

Consolidated


68

14 Other non-current receivables

Cost at 01.10. 1,470 1,458

Additions - 12

Disposals - -

Carrying amount at 30.09. 1,470 1,470

The gross receivables are specifi ed as follows:

Due within 1 year 250 250

Due within 1-5 years 1,532 1,532

Due within 5 years - -

Unearned future fi nancing income -312 -312

Total receivables 1,470 1,470

Net receivables are specifi ed as follows:

Due within 1 year 148 148


Due after 5 years - -


Consolidated

The receivable arises from fi nance leasing of productive equipment to Scandye UAB. At the end of the lease term

of 5-8 years, the lessee has the option of acquiring the productive equipment. The assets leased out have been

provided as collateral for the Group’s receivables.

The receivable arises from fi nance leasing of productive equipment and loan to a business partner.

Note tDKK 2011/12 2010/2011

13 Non-current receivables from associates

Cost at 01.10. 8,633 9,898

Additions - -

Disposals -1,364 -1,265

Book value at 30.09. 7,269 8,633

Gross receivables are specifi ed as follows:

Due within 1 year 1,767 1,768


Due after 5 years - 177

Unearned future fi nancing income -921 -1,325


Net receivables are specifi ed as follows:

Due within 1 year 1,409 1,335


Due after 5 years - 300



69

Note tDKK 2011/12 2010/11 2011/12 2010/11

15 Securities

Cost at 01.10. 27,260 29,574 27,260 29,574

Additions during the year - 25,520 - 25,520

Disposals during the year -15,632 -27,834 -15,632 -27,834

Cost at 30.09. 11,628 27,260 11,628 27,260

Adjustments at 01.10. 264 93 264 93

Adjustments for the year -28 171 -28 171

Adjustments at 30.09. 236 264 236 264

Carrying amount at 30.09. 11,864 27,524 11,864 27,524

16 Inventories

Raw materials and consumables 9,170 10,063 - -

Work in progress 3,247 3,640 - -

Finished goods and goods for resale 28,097 27,018 -

40,514 40,721 - -

17 Receivables

Trade receivables 32,939 32,603 - -

Amounts owed by subsidiaries - - 23,606 12,285

Other receivables 9,960 11,861 233 1,015

42,899 44,464 23,839 13,300

Denmark 2,815 3,471

Scandinavia 9,927 8,767

EU 16,201 18,867

Other countries 3,996 1,498

32,939 32,603

Consolidated

The investment portfolio comprises fi xed- and variable-interest Danish mortgage bonds.

Other receivables include a total VAT receivable of tDKK 3,047. (2010/11: tDKK 4,932) concerning VAT returns in Lithuania.

The Group is still experiencing delays in the repayment process.

Credit risks depend primarily on the debtor’s home country. Based on the Group’s internal credit rating procedures and

external credit rating, receivables not subject to any write-down are deemed to hold high creditworthiness and to pose a low

risk of loss. See also note 23 for information on credit risks.

The Group’s trade receivables are distributed as follows by geographical area:

The Group has no inventories recognised at fair value.

Parent Company


70

tDKK 2011/12 2010/11

Scandinavia 130 203

EU 724 938

Other countries 146 163

1,000 1,304

Maturity

Up to 30 days 2,481 2,486

Between 30 and 90 days 358 603

Over 90 days 988 1,314

3,827 4,403

18 Research and development costs

Research and development costs incurred 7,773 6,961

Development costs recognised as intangible assets -3,372 -2,650

Research and development costs for the year

recognised in the income statement 4,401 4,311

19

Consolidated

The Group’s trade receivables at 30.09.2012 include receivables totalling tDKK 1,009 (2010/11: tDKK 1,366), which were

written down by tDKK 1,000 (2010/11: tDKK 1,304) based on an individual assessment. Other external costs comprise bad

debts of tDKK 704. (2010/11: tDKK 641). Write-downs of trade receivables are due to customer bankruptcy or anticipated

payment default.

Individually written-down receivables are distributed as follows by geographical areas:

Trade receivables due at 30.09.2012, but not impaired, were recognised as follows:

Share capital

The share capital comprises 1,890,000 shares of DKK 20 each. No shares carry special rights.

Neither the Group nor the Parent Company holds any treasury shares.

Capital management The Group’s ordinary activities still generate high cash fl ows, enabling the Group to maintain solid fi nancial resources. The

Group regularly assesses the need for adjusting its capital structure to hold the required higher return on equity up against

the higher degree of uncertainty surrounding external fi nancing. A high solvency ratio has always been a top priority of Gabriel

in order to ensure the greatest room for manoeuvre in all situations. At 30.09.2012, the solvency ratio was 64%, four percent-

age points higher than last year. Reducing tied-up funds is also constantly on the Group’s agenda.

The Group wishes to provide its shareholders with a return on their investment while maintaining an appropriate level of equity

to ensure the Company’s future operations.

Against this background, the present capital resources are deemed adequate in the present economic climate.

Interest income arising from receivables written down is not recognised.

The correlation between research and development costs incurred and expensed is specifi ed as follows:

Note

17 cont.


71

Note tDKK 2011/12 2010/11 2011/12 2010/11

20 Deferred tax

Deferred tax at 01.10. 7,960 6,998 58 3,706

Transferred to subsidiary - - - -3,751

Deferred tax for the year recognised in the income statement -98 676 -58 73

Deferred tax for the year recognised in equity 28 38 - 38

Adjustment in respect of previous years -667 248 - -8

Deferred tax at 30.09. 7,223 7,960 - 58

Deferred tax is incumbent on:

Intangible assets 2,282 1,765 - -

Land and buildings 3,542 4,019 - -

Plant and machinery, etc. 1,371 1,869 - -

Current assets 28 149 - 58

Current liabilities - 158 - -

7,223 7,960 - 58

21 Credit institutions

Amounts owed to credit institutions relate to:

Mortgage debt 36,954 38,939 - -

Overdraft facilities - 10,356 - -

Total carrying amount 36,954 49,295 - -

Amounts owed to credit institutions were recognised

on the balance sheet as follows:

Non-current liabilities 34,855 36,907 - -

Current liabilities 2,099 12,388 - -

Total carrying amount 36,954 49,295 - -

Fair value 38,316 50,922 - -

Debt falls due as follows:

0-1 years 2,659 13,134 - -

1-5 years 10,529 11,007 - -

> 5 years 28,621 32,588 - -


The loan is a fl oating-rate mortgage loan in EUR (F1) subject to annual adjustment. The current level of interest is 1.03%

p.a. with the principal of tEUR 5,920. The overdraft facility carries fl oating-rate interest denominated in Danish kroner.

The maturity analysis is based on all undiscounted cash fl ows, including estimated interest payments. Interest payments

are estimated on the basis of existing market conditions.


72

Consolidated 2011/12 Consolidated 2010/11

tDKK

Minimum

lease payment

Interest

element

Carrying

amount

Minimum

lease payment

Interest

element

Carrying

amount

0-1 years 1,406 -125 1,281 1,250 -164 1,086

1-5 years 3,471 -134 3,337 4,250 -247 4,003

>5 years - - - - - -

4,877 -259 4,618 5,500 -411 5,089

Lease liabilitiesLease liabilities are recognised as follows on the balance sheet:

Lease liabilities concern the fi nancing of a new ERP system, and fi nancing thereof has been agreed with the Group’s bankers.

The agreement runs for fi ve years and expires in 2016.

Financial risks and derivative fi nancial instruments Given its operations, investments and fi nancing, the Group is exposed to a number of fi nancial risks, including market risks

(currency risks, interest rate risks and risks relating to raw materials), credit risks and liquidity risks.

Gabriel’s policy is not to engage in active speculation in fi nancial risks. Risk management thus covers only risks arising

directly from the Group’s operations, investments and fi nancing.

Management monitors the Group’s risk concentration broken down on customers, geographical areas, currencies, etc.

Management also monitors whether the Group’s risks are correlated, and whether the Group’s risk concentration has

undergone any changes. The Group’s risk exposure and risk management have remained unchanged from 2010/11.

Reference is made to the balance sheet for a specifi cation of the different categories of fi nancial assets and liabilities. The

fair value of fi nancial assets and liabilities is in line with the carrying amount apart from amounts owed to credit institutions

(see note 21).

The Group measures its portfolio of bonds at market value (see note 15). Securities are classifi ed as level 1 “listed prices”

under the market value hierarchy. Derivative fi nancial instruments of foreign exchange contracts entered into to hedge

future cash fl ows are accepted under fi nancial assets at market value of tDKK 109. Foreign exchange contracts are

valued under generally recognised valuation techniques based on relevant observable exchange rates and classifi ed

as level 2 “other input” under the market value hierarchy.

Note

22

23


73

Currency risksThe Group’s foreign exchange positions in Danish kroner are specifi ed as follows at 30.09.2012:

Note

23 cont.

tDKK

Currency

Trade

receivables

Bank loans

Trade payables/

credit institutions

Hedged

by forward

contracts Net position

DKK 3,695 -954 - 2,741

EUR 22,616 -43,401 - -20,785

SEK 2,304 609 -5,608 -2,695

NOK 288 398 - 686

Other 4,036 2,805 - 6,841

Abroad 29,244 -39,589 -5,608 -15,953

tDKK

Currency

Trade

receivables

Bank loans

trade payables/

credit institutions

Hedged

by forward

contracts Net position

DKK 5,179 -22,733 - -17,554

EUR 21,932 -45,849 - -23,917

SEK 2,740 1,661 - 4,401

NOK 551 478 - 1,029

Other 2,201 -971 - 1,230

Abroad 27,424 -44,681 - -17,257

The Group’s foreign exchange positions in Danish kroner were as follows at 30 September 2011:


The Group has used forward exchange transactions to hedge its risks related to changes in cash fl ows resulting from

exchange rate movements. The effective part of the outstanding forward exchange contract’s market value at 30.09.2012,

which is used to fulfi l the terms for hedge accounting of future transactions, is recognised directly in equity until

the hedged transactions are recognised in the income statement. Forward exchange contracts were entered into with

a principal of tDKK 5,608 at 30.09.2012 to hedge exchange rate risks in SEK. A value adjustment of tDKK 109 is

recognised in equity at 30.09.2012.

The foreign exchange contracts mature within fi ve months.

74

The Group hedges currency risks considering projected future cash fl ows and projected future exchange rate movements.

The majority of sales in Europe are settled in the customer’s currency, while the euro is primarily used for settlement with

other international customers. Currency risks generated by income are only of a limited scale, as most income is invoiced

in the Scandinavian currencies or euros. Most purchases are settled in Danish kroner or euros.

Any changes in the exchange rates at 30.09.2012 are not deemed to have any material impact on results or equity as a

result of the low currency exposure at 30.09.2012.

Given the Group’s use of derivative fi nancial instruments to hedge the Group’s exposure in relation to expected sales trans-

actions and fi nancial instruments, the Group’s equity will be affected by the recognition of the effective part of the changes

in the hedging instruments’ market value in the reserve for cash fl ow hedging.

In 2012/13, the Group’s foreign currency exposure is expected to be essentially unchanged relative to 2011/12.

Liquidity and interest rate risks The Group has generated positive cash fl ows for many years and has thus not been dependent on external fi nancing. At

30.09.2012, the Group had liquid holdings of DKK 19.7 million and a further liquidity reserve of DKK 11.9 million in Danish

mortgage credit bonds. At 30.09.2012, the Group had no bank debt and an unused line of credit of DKK 30 million with the

Group’s bank. The Group is thus judged to have adequate liquidity to ensure the ongoing fi nancing of future operations

and investments.

The Group’s bank debt is an ongoing operating credit, while the mortgage loan was taken up as an adjustable rate loan

in euros with annual interest adjustments. The lease for the ERP system was drawn up in euros with a variable interest

rate. The agreement runs for fi ve years. The bond portfolio consists primarily of short-dated bonds denominated in Danish

kroner, adjusting interest to the general societal interest level.

Group receivables carry a contractual fi xed interest rate during their entire lives. On this basis, an isolated rise or fall of

one percentage point in the market rate is judged not to be of major signifi cance for the Group’s profi t.

Risks relating to raw materialsThe Group typically enters into cooperative agreements with its most important suppliers to ensure reliability of delivery and

to lock prices. As indicated in note 25, Gabriel has concluded purchase agreements for raw material supplies for 2012/13.

The Group is not exposed to any major price risks arising from its use of raw materials.

Credit risksIn line with Group credit risk policy, all major customers and other business partners are regularly credit rated. Credit risk

management is based on internal credit lines for customers. Prompted by the fi nancial crisis, the Group has intensifi ed its

focus on the approval of customer credit lines as well as on the management and monitoring of customers. Group trade

receivables are distributed on numerous customers, countries and markets, ensuring a high degree of risk diversifi cation.

On the basis of the Group’s internal credit procedures, it is judged that the quality of the Group’s receivables from sales

depends primarily on the debtor’s home country. The creditworthiness of debtors from Scandinavia and the EU is usually

higher than that of debtors from other countries.

The Group aims to reduce risk through effi cient monitoring, follow-up and credit insurance of major foreign and domestic

receivables or alternative collateral. Credit insurance has been taken out for all major foreign and domestic receivables at

30.09.2012. The Group’s trade receivables are usually due for payment no later than 1-2 months after delivery. The Group

has a past record of minor bad debts and is usually exposed to only a limited risk of major losses. We refer to note 17.

Note

23 cont.


75

The Group recognised production equipment for the associate Scandye UAB and another business partner as investments.

Gabriel has been provided with collateral in the leased equipment and with a guarantee for the amount. The lessees may

perform the contracts at their residual values.

Operating leasesAt 30.09.2012, the Group held operating leases for vehicles with a residual lease liability of tDKK 2,252, of which tDKK 979

is due within one year, while the rest is due within 1-3 years. An amount of tDKK 806 was expensed in the fi nancial year as

against tDKK 739 in 2010/11.

Contingent liabilities and collateralThe Parent Company has issued a letter of subordination to the bankers of the subsidiary Gabriel A/S covering the subsidiary’s

current bank loans.

The Parent Company is jointly taxed with other Danish companies in the Gabriel Holding Group. As administrative company,

the Company has unlimited joint and several liability with the other companies in the joint taxation unit for Danish withholding

taxes on dividends and interest within the joint taxation unit. Any subsequent corrections to withholding taxes could result in a

change in the company’s liability.

The subsidiary Gabriel A/S has issued a guarantee assuming primary liability of tDKK 1,094 to Scandye UAB’s bankers in

Lithuania as collateral for Scandye UAB’s bank business.

As part of usual Group operations, the Group has entered into purchase agreements for future raw material supplies at an

amount of tDKK 7,005 to ensure raw material supplies in 2012/13.

Claims and warranties do not represent a major expense for the Group. This is the result of the certifi cations for the ISO

9001 Quality Management Standard since 1991 and the Environmental Management Standard ISO 14001 since 1996.

Gabriel has provided collateral of tDKK 44,100 in land and buildings for amounts owed to credit institutions. The carrying

amount of land and buildings was tDKK 68,026 at 30.09.2012, while amounts owed to credit institutions (mortgage debt)

were tDKK 36,954.

Transactions with group companies, major shareholders, Board of Directors and Executive BoardThe Parent Company’s related parties comprise subsidiaries as well as their Boards of Directors and Executive Boards.

Related parties also comprise companies in which the above persons have substantial interests. Gabriel Holding A/S

has no related parties exercising control.

The Parent Company is jointly taxed with other Danish companies in the Gabriel Holding Group, which means that the com-

pany is liable for Danish withholding taxes, etc. within the joint taxation unit. Please see note 25 for further information.

Note

23 cont.

24

25

26


76

Trading with Group enterprises was as follows:

Transactions with group enterprises were eliminated in the consolidated fi nancial statements in accordance with the

accounting policy.

The related parties also include associates over which Gabriel exercises signifi cant infl uence.

Trading with the associate Scandye UAB comprised the following:

Apart from executive remuneration disclosed in note 5, the Group did not engage in any transactions with the Board of

Directors, Executive Board, executive employees, major shareholders and other related parties in the year under review.

Accounting estimates and judgmentsThe carrying amount of certain assets and liabilities is stated on the basis of Management’s estimated impact of future

events on the value of these assets and liabilities at the balance sheet date. Estimates important to the fi nancial reporting

include the calculation of provisions for inventory obsolescence, write-downs for bad debts, depreciation/amortisation and

impairment losses, and contingent liabilities.

Events after the balance sheet dateThe operating company Gabriel A/S established the subsidiary Furnmaster UAB in Lithuania after the end of the fi nancial

year. The ownership interest in the company is 90%. FurnMaster UAB is established as a production unit to support the

Group’s continuing strategic initiatives on “furniture fabric in use”.

New fi nancial reporting regulations The IASB has issued new fi nancial reporting regulations (IASs and IFRSs) and IFRICs which are not mandatory for adoption

by Gabriel Holding A/S in the preparation of the 2011/12 annual report. Gabriel Holding A/S expects to implement the

new accounting standards and IFRICs upon their mandatory adoption. The new standards and IFRICs are not expected

to materially affect Gabriel Holding A/S’s future fi nancial reporting.

Accounting policiesGabriel Holding A/S is a limited liability company domiciled in Denmark. The fi nancial section of the annual report for the

period 01.10.2011-30.09.2012 comprises the consolidated fi nancial statements of Gabriel Holding A/S and its subsidiaries

(the Group) and separate parent company fi nancial statements.

Note

26 cont.

27

28

29

30

tDKK

Rent from Group enterprises

Interest, etc. from Group enterprises

Dividends from Group enterprises

2011/12

-

462

7,500

2010/11

1,242

218

4,000

Parent Company

tDKK

Purchases from associates

Interest, etc. from associates

2011/12

23,740

432

2010/11

25,976

502

Consolidated


77

The consolidated fi nancial statements and the parent company fi nancial statements of Gabriel Holding A/S for 2011/12

were prepared in accordance with International Financial Reporting Standards (IFRS) as adopted by the EU, and disclosure

requirements in the Danish Financial Statements Act.

The Board of Directors and the Executive Board discussed and approved the annual report for 2011/12 of Gabriel Holding

A/S on 15 November 2012. The annual report is presented to the shareholders of Gabriel Holding A/S for approval at the

annual general meeting on 13 December 2012.

Basis for preparationThe consolidated fi nancial statements and the parent company fi nancial statements are presented in DKK rounded to the

nearest DKK 1,000.

The accounting policies as described below were applied consistently during the year under review and for the

comparative fi gures.

Comparative fi gures are not restated for standards to be implemented in the future. As the implemented standards and

IFRICs have not affected the balance sheet at 1 October 2011 and related notes, the opening balance sheet and related

notes have been omitted.

Change in accounting policiesWith effect from 1 October 2011, Gabriel Holding A/S has implemented:

∙ Amendments to IFRS 7 Disclosures – Transfer of Financial Assets.

∙ Amendments to IFRS 1 Severe Hyperinfl ation and Removal of Fixed Assets for First-Time Adopters.

∙ Amendments to IAS 12 Deferred Tax: Recovery of Underlying Assets.

The new standards and IFRICs did not affect the recognition and measurement in 2011/12.

ACCOUNTING POLICIES APPLIED

Consolidated fi nancial statementsThe consolidated fi nancial statements comprise the Parent Company Gabriel Holding A/S and subsidiaries in which Gabriel

Holding A/S exercises control, i.e. the power to govern the fi nancial and operating policies so as to obtain benefi ts from its

activities. Control is obtained when the Company directly or indirectly holds more than 50% of the voting rights in the subsi-

diary, or which it controls in some other way.

Enterprises over which the Group exercises signifi cant infl uence, but which it does not control, are considered associates.

Signifi cant infl uence is generally obtained by direct or indirect ownership or control of more than 20% of the voting rights

but less than 50%.

Whether Gabriel Holding A/S exercises control or signifi cant infl uence is determined on the basis of the potential voting

rights exercisable at the balance sheet date.

The consolidated fi nancial statements comprise the Parent Company Gabriel Holding A/S and the subsidiaries Gabriel A/S,

Gabriel Ejendomme A/S, ZenXit A/S and Gabriel (Tianjin) International Trading Co. Ltd. Scandye UAB is considered an

associate and was recognised as an investment in associates in the annual report.

The consolidated fi nancial statements were prepared as a consolidation of the Parent Company’s and the individual subsidi-

aries’ fi nancial statements prepared according to the Group’s accounting policies. On consolidation, intra-group income and

expenses, shareholdings, intra-group balances and dividends and realised and unrealised gains on intra-group transactions

are eliminated. Unrealised gains on transactions with associates are eliminated in proportion to the Group’s ownership

share of the enterprise. Unrealised losses are eliminated in the same way as unrealised gains to the extent that impairment

has not taken place.

Note

30 cont.


78

Foreign currency translationA functional currency is set for each of the reporting group enterprises. The functional currency is the currency used in the

primary economic environment in which the individual reporting enterprises operate. Transactions denominated in other curren-

cies than the functional currency are transactions denominated in foreign currencies. At initial recognition, transactions denom-

inated in foreign currencies are translated to the functional currency at the exchange rates ruling at the transaction date. Foreign

exchange differences arising between the exchange rates at the transaction date and at the date of payment are recognised in

the income statement as fi nancial income or fi nancial expenses. Receivables, payables and other monetary items denominated

in foreign currencies are translated to the functional currency at the exchange rates on the balance sheet date. The difference

between the exchange rates on the balance sheet date and at the date on which the receivable or payable arose or was recog-

nised in the latest fi nancial statements is recognised in the income statement as fi nancial income or fi nancial expenses.

On recognition in the consolidated fi nancial statements of subsidiaries with a functional currency other than DKK, the income

statements are translated at the exchange rates at the transaction date and the balance sheet items are translated at the ex-

change rates at the balance sheet date. An average exchange rate for the month is used as the exchange rate on the transaction

date to the extent that this does not signifi cantly distort the presentation of the underlying transactions.

Foreign exchange differences arising on the translation of the share of the opening balance of equity of these enterprises at the

exchange rates on the balance sheet date, and on translation of the income statements from the exchange rates on the transac-

tion date to the exchange rates on the balance sheet date, are recognised as other comprehensive income in a separate transla-

tion reserve in equity.

On recognition in the consolidated fi nancial statements of associates with a functional currency other than DKK, the share of the

profi t/loss for the year is translated at average exchange rates, and the share of equity including goodwill is translated at the

exchange rates at the balance sheet date. Foreign exchange differences arising on translation of the opening equity of foreign

associates at the exchange rates on the balance sheet date and on translation of the share of profi t/loss for the year from average

exchange rates to the exchange rates on the balance sheet date are recognised as other comprehensive income in a separate

translation reserve in equity.

Derivative fi nancial instrumentsDerivative fi nancial instruments are recognised and measured on the balance sheet at fair value. Positive and negative

fair values of derivative fi nancial instruments are included in other receivables and payables, respectively. Fair values for

derivative fi nancial instruments are measured on the basis of current market data and acknowledged valuation methods.

Changes in the fair value of derivative fi nancial instruments designated as and qualifying for recognition as a hedge of the fair

value of a recognised asset or liability are recognised in the income statement together with changes in the fair value

of the hedged asset or liability as regards the portion hedged.

Changes in the fair value of derivative fi nancial instruments designated as and qualifying for recognition as a hedge of

future cash fl ows, and which effectively hedge changes in future cash fl ows, are recognised in equity under a separate

reserve for hedging transactions until the hedged cash fl ows affect the income statement. At this time, any gain or loss regarding

such hedging transactions is transferred from equity and recognised in the same item as the hedged item.

For derivative fi nancial instruments that do not qualify for hedge accounting, changes in fair value are recognised in

the income statement as fi nancial income or fi nancial expenses.

INCOME STATEMENT

RevenueRevenue from the sale of goods for resale and fi nished goods is recognised in the income statement provided that delivery and

transfer of risk to the buyer has taken place before year end and that the income can be reliably measured and is expected to be re-

ceived. Rental income is accrued and recognised on a straight-line basis over the period in accordance with contracts entered into.

Revenue is measured ex VAT, taxes and discounts in relation to the sale.

Note

30 cont.


79

Other operating incomeOther operating income comprises items secondary to the principal activities of the enterprise, including gains on the

disposal of intangible assets and property, plant and equipment.

Cost of salesCost of sales comprises costs incurred in generating revenue for the year. These costs include direct and indirect costs

of raw materials, consumables, goods for resale, power, etc.

Other external costsOther external costs are mainly costs concerning sales, distribution, maintenance, premises and administration.

Profi t/loss from investments in associates recognised in the consolidated fi nancial statementsThe proportionate share of the results after tax of the individual associates is recognised in the consolidated income

statement after full elimination of the proportionate share of intra-group profi ts/losses.

Financial income and expensesFinancial income and expenses comprise interest income and expenses, gains and losses as well as write-downs on

securities, payables and transactions denominated in foreign currencies, amortisation of fi nancial assets and liabilities

and surcharges and refunds under the on-account tax scheme, etc. Realised and unrealised gains and losses on

derivative fi nancial instruments which are not designated as hedging arrangements are also included.

Dividends received from investments in subsidiaries are recognised in the parent company income statement in the fi nan-

cial year in which the dividends are declared. If distributed dividends exceed comprehensive income for the relevant period,

an impairment test is made.

Tax on profi t/loss for the yearGabriel Holding A/S is jointly taxed with the subsidiaries Gabriel A/S, Gabriel Ejendomme A/S and Zenxit A/S. The current

Danish corporation tax is allocated between the jointly taxed Danish companies in proportion to their taxable incomes

(full absorption with deduction for tax losses). The jointly taxed companies are taxed under the on-account tax scheme.

The tax for the year comprises current tax and changes in deferred tax for the year. The tax expense relating to the profi t/

loss for the year is recognised in the income statement, and the tax expense relating to changes directly recognised in

equity is recognised directly in equity.

BALANCE SHEET

Development projectsDevelopment costs comprise salaries, amortisation and other costs directly or indirectly attributable to the Company’s

development activities. Public subsidies for the fi nancing of development projects are offset against the costs covered by

the subsidy and recognised when there is a reasonable degree of assurance that they will be received.

Development projects that are clearly defi ned and identifi able, where the technical utilisation degree, suffi cient resources

and a potential future market or development opportunities in the Company are evidenced, and where the Company intends

to produce, market or use the project, are recognised as intangible assets provided that the cost can be measured reliably

and that there is suffi cient assurance that future earnings can cover production and distribution costs, administrative

expenses and development costs. Other development costs are recognised in the income statement as incurred.

Capitalised development costs are measured at the lower of cost less cumulative amortisation and impairment losses and

recoverable amount.

Note

30 cont.


80

Following the completion of the development work, development costs are amortised on a straight-line basis over the

estimated useful life. The usual amortisation period is fi ve years.

Property, plant and equipmentLand and buildings, plant and machinery, fi xtures and fi ttings, other plant and equipment are measured at costs less

cumulative depreciation and impairment losses.

Cost comprises the purchase price and any costs directly attributable to the acquisition until the date on which the asset

is available for use. The cost of self-constructed assets comprises direct and indirect costs of materials, components,

suppliers, and wages and salaries as well as borrowing costs from specifi c and general borrowing directly relating to the

construction of the individual asset.

Where individual components of an item of property, plant and equipment have different useful lives, they are accounted for

as separate items which are depreciated separately.

The cost of fi nance leases is stated at the lower of fair value and the net present value of future minimum lease payments.

When the net present value of the future lease payments is calculated, the interest rate implicit in the lease or the incre-

mental borrowing rate is used as the discount factor.

Subsequent costs arising from e.g. the replacement of components of property, plant and equipment are recognised in the

carrying amount of the relevant asset when it is probable that future economic benefi ts will fl ow to the Group. The compon-

ents replaced will be derecognised on the balance sheet and the carrying amount will be transferred to the income state-

ment. All other ordinary costs of repair and maintenance will be recognised in the income statement as incurred.

Depreciation is provided on a straight-line basis over the expected useful lives of the assets/components as follows:

Buildings 10-25 years

Plant and machinery 3-8 years

Fixtures and fi ttings, other plant and equipment 3-8 years

Land is not depreciated.

The depreciation is calculated on the basis of the residual value less impairment losses. Depreciation period and residual

value are determined on the acquisition date and reassessed annually. If the residual value exceeds the carrying amount,

depreciation is discontinued.

When the depreciation period or the residual value is changed, the effect on depreciation is recognised prospectively as a

change in accounting estimates.

Gains and losses on the disposal of property, plant and equipment are determined as the difference between the sales price

less disposal costs and the carrying amount at the date of disposal. Gains or losses are recognised in the income statement

as other operating income or other operating costs, respectively.

Impairment of non-current assetsThe carrying amount of non-current assets is subject to an annual impairment test. When there is an indication that assets

may be impaired, the recoverable amount of the asset is determined. The recoverable amount is the higher of an asset’s net

selling price less anticipated disposal costs and its value in use. The value in use is calculated as the net present value of

forecast future cash fl ows from the cash-generating unit to which the asset belongs.

An impairment loss is recognised if the carrying amount of the net assets exceeds its recoverable amount.

Note

30 cont.


81

Investments in associates in the consolidated fi nancial statementsInvestments in associates are measured according to the equity method.

Investments in associates are measured at the proportionate share of the enterprises’ net asset values calculated in

accordance with the Group’s accounting policies plus or minus the proportionate share of unrealised intra-Group profi ts

and losses and plus or minus the carrying amount of goodwill. Investments in associates are tested for impairment when

there is an indication of impairment.

Amounts owed by associates are measured at amortised cost. Write-downs are made for losses on bad debts.

Investments in subsidiaries in the parent company fi nancial statementsInvestments in subsidiaries are measured at cost. Where the recoverable amount is lower than cost, investments are

written down to this lower value.

At the distribution of reserves other than retained earnings in subsidiaries, the distribution will reduce the cost of

investments when the distribution is characterised as repayment of the Parent Company’s investment.

Amounts owed by associatesAmounts owed by associates are attributable to lease contracts for assets of which the Group is the owner, but of which all

major risks and maintenance liabilities are incumbent on the associate. Finance leases are recognised on the balance sheet

at the net present value of future lease payments. The interest rate implicit in the lease is used for the calculation of the net

present value.

SecuritiesListed bonds classifi ed as available-for-sale are recognised as non-current assets at cost at the trade date and are meas-

ured at fair value corresponding to the market price. Unrealised value adjustments are recognised directly in equity except

for foreign exchange adjustments of bonds denominated in foreign currencies, which are recognised in the income state-

ment as fi nancial income or fi nancial expenses. On realisation, the cumulative value adjustment recognised in equity is

transferred to fi nancial income or fi nancial expenses in the income statement.

InventoriesInventories are measured at cost in accordance with the FIFO method. Where the net realisable value is lower than cost,

inventories are written down to this lower value.

Goods for resale, raw materials and consumables are measured at cost, comprising purchase price plus delivery costs.

Finished goods and work in progress are measured at cost, comprising the cost of raw materials, consumables, direct

wages/salaries and indirect production overheads. Indirect production costs comprise indirect materials, wages/salaries

and maintenance as well as depreciation of production equipment, buildings and equipment and factory administration and

management.

The net realisable value of inventories is calculated as the sales amount less costs of completion and costs necessary to

make the sale, and is determined taking into account marketability, obsolescence and development in expected sales price.

ReceivablesReceivables are measured at amortised cost. Write-downs are made for losses on bad debts when there is an objective

indication of an impairment loss. In such cases, a write-down is made individually for each specifi c receivable. Write-downs

are determined as the difference between the carrying amount and the net present value of projected cash fl ows, including

the net realisable value of any collateral.


Note

30 cont.

82

EquityDividends

Proposed dividends are recognised as a liability at the date on which they are adopted at the annual general meeting

(declaration date). The expected dividend payment for the year is disclosed as a separate item under equity.

Treasury shares

Cost of acquisition of, consideration received for and dividends received from treasury shares are recognised directly as

retained earnings in equity. Gains and losses on disposal are not recognised in the income statement.

Translation reserve

The translation reserve in the consolidated fi nancial statements comprises foreign exchange differences arising on

translation of fi nancial statements of foreign enterprises from their funtional currencies to Danish kroner.

Hedging reserve

The hedging reserve comprises the cumulative net change in the fair value of hedging transactions which qualify for

recognition as a cash fl ow hedge and where the hedged transaction has not been realised.

Reserve for fair value adjustment

The reserve for fair value adjustment comprises the cumulative change in the fair value of fi nancial assets available for

sale. The reserve, which forms part of the Company’s distributable reserves, is eliminated and transferred to the income

statement as the investment is sold or written down.

Current tax and deferred taxCurrent tax payable and receivable is recognised on the balance sheet as tax computed on the taxable income for the year,

adjusted for tax on the taxable income of prior years and for tax paid on account.

Deferred tax is measured using the balance sheet liability method on all temporary differences between the carrying

amount and the tax value of assets and liabilities.

Where alternative tax rules can be applied to determine the tax base, deferred tax is measured based on the planned use

of the asset or settlement of the liability.

Deferred tax assets are recognised at the expected value of their utilisation, either as a set-off against tax on future income

or as a set-off against deferred tax liabilities in the same legal tax entity and jurisdiction.

Deferred tax is measured according to the tax rules and at the tax rates applicable at the balance sheet date when the

deferred tax is expected to crystallise as current tax. The change in deferred tax as a result of changes in tax rates is

recognised in the income statement.

Financial liabilitiesAmounts owed to credit institutions etc. are recognised at the date of borrowing at the net proceeds received less trans-

action costs paid. In subsequent periods, the fi nancial liabilities are measured at amortised cost, corresponding to the

capitalised value using the effective interest rate. The difference between the proceeds and the nominal value is accordingly

recognised in the income statement as fi nancial expenses over the term of the loan. Financial liabilities also include the

capitalised residual obligation on fi nance leases measured at amortised cost.

Liabilities comprising trade payables, group enterprises and other payables are measured at nominal value.

Note

30 cont.


83

LeasingFor accounting purposes lease obligations are divided into fi nance and operating leases.

Leases are classifi ed as fi nance leases if they transfer substantially all the risks and rewards incidental to ownership to the

lessee. All other leases are classifi ed as operating leases.

The accounting treatment of assets held under fi nance leases and lease obligations is described under Property, plant

and equipment and Financial liabilities, respectively. Operating lease payments are recognised in the statement of

comprehensive income on a straight-line basis over the lease term.

CASH FLOW STATEMENTThe cash fl ow statement shows the cash fl ows from operating, investing and fi nancing activities for the year, the year’s

changes in cash and cash equivalents as well as cash and cash equivalents at the beginning and end of the year.

Cash fl ows from operating activities

Cash fl ows from operating activities are calculated as the share of the profi t/loss adjusted for non-cash operating items,

changes in working capital and corporation tax paid.

Cash fl ows from investing activities

Cash fl ows from investing activities comprise payments in connection with acquisitions and disposals of enterprises and

activities and of intangible assets, property, plant and equipment and other non-current assets as well as the acquisition

and disposal of securities not recognised as cash and cash equivalents.

Cash fl ows from fi nancing activities

Cash fl ows from fi nancing activities comprise the raising of loans, repayment of interest-bearing debt, acquisition of

treasury shares and payment of dividends to shareholders.

Bank loans/cash and cash equivalents

The item comprises cash and bank loans (overdraft facilities).

SEGMENT INFORMATIONThe Gabriel Group has only one reportable business segment, as all products relate to furniture fabrics and related textiles.

The products are sold to selected international leading manufacturers and key account customers specialised in uphol-

stered furniture, seats and upholstered surfaces. Gabriel A/S accounts for most of the activities. The manufacturing

processes are practically identical for the individual business areas, and the sales divisions service the same type of

customer groups. In addition, the product distribution channels are the same.

Revenue generated by the Western European markets accounts for more than 90% of total revenue, where the economic

and political climates, activities, risks and currency exposure remain undifferentiated.

Consequently, the Group’s income and expenses as well as assets and liabilities are not broken down on operating

segments in the notes.

The geographical break-down of revenue and non-current assets is disclosed based on internal management reporting.

Note

30 cont.

Annual Report 2011/12

Gabriel A/S - Annual report 2012

Documents

Transcript of Gabriel A/S - Annual report 2012