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31.12.2023.The annual report is presented in accordance with the Danish Financial Statements Act.In our opinion, the consolidated financial statements and the parent financial statements give a true and fair view of the Group's and the Parent's financial position at 31.12.2023 and of the results of their operations and the consolidated cash flows for the financial year
01.01.2023 - 31.12.2023.We believe that the management commentary contains a fair review of the affairs and conditions referred to therein.We recommend the annual report for adoption at the Annual General Meeting.EbeltoftAnders ByrielMette Rønn BendixCEOProduct DirectorLars Monrad-GyllingAnders ByrielMette Rønn BendixTorsten Leif MoeClaire MidwoodChairmanTo the shareholder of Kvadrat A/SWe have audited the consolidated financial statements and the parent financial statements of Kvadrat A/S for the financial year 01.01.2023 - 31.12.2023, which comprise the income statement, balance sheet, statement of changes in equity and notes, including a
summary of significant accounting policies, for the Group as well as the Parent, and the consolidated cash flow statement. The consolidated financial statements and the parent financial statements
are prepared in accordance with the
Danish Financial Statements Act.
In our opinion, the consolidated financial statements and the parent financial statements give a true and fair view of the Group's and the Parent's financial position at 31.12.2023 and of the results of their operations and the consolidated cash flows for the financial year 01.01.2023 - 31.12.2023 in accordance
with the Danish Financial Statements Act.We conducted our audit in accordance with International Standards on Auditing (ISAs) and additional
requirements
applicable in Denmark. Our responsibilities under those standards and requirements are further
described in the "Auditor’s responsibilities for the audit of the consolidated financial statements and the parent financial statements" section of this auditor’s
report. We are independent of the Group in accordance
with the International Ethics Standards Board for Accountants’ International Code of Ethics for Professional
Accountants (IESBA Code) and the additional ethical requirements applicable in Denmark, and we have fulfilled
our other ethical responsibilities in accordance with these requirements and the IESBA Code. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis
for our opinion.Management is responsible for the preparation of consolidated financial statements and parent financial statements that give a true and fair view in
accordance
with the Danish Financial Statements Act, and for such internal control as Management determines
is necessary to enable the preparation of consolidated financial statements and parent financial statements that are free from material misstatement,
whether due to fraud or error.
In preparing the consolidated financial statements and the parent financial statements, Management is responsible for assessing the Group's and the Entity’s ability to continue
as a going concern, for disclosing, as applicable, matters related to going concern, and for using the going concern basis of accounting in preparing the consolidated financial statements and the parent financial statements unless Management either intends to liquidate
the Entity or to cease operations, or has no realistic alternative but to do so.Our objectives are to obtain reasonable assurance about whether the consolidated financial statements and the parent financial statements as a whole are
free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes
our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted
in accordance with ISAs and the additional requirements applicable in Denmark will always detect a material
misstatement when it exists. Misstatements can arise from fraud or error and are considered material if,
individually or in the aggregate, they could reasonably be expected to influence the economic decisions of
users taken on the basis of these consolidated financial statements and parent financial statements.
As part of an audit conducted in accordance with ISAs and the additional requirements applicable in Denmark,
we exercise professional judgement and maintain professional scepticism throughout the audit. We also:<br />Identify and assess the risks of material misstatement of the consolidated financial statements and the parent financial statements, whether due to
fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a
material misstatement resulting from fraud is higher than for one resulting from error, as fraud may
involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.
<br />Obtain an understanding of internal control relevant to the audit 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 Group's and the Entity’s internal control.
<br />Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates
and related disclosures made by Management.
<br />Conclude on the appropriateness of Management’s use of the going concern basis of accounting in
preparing the consolidated financial statements and the parent financial statements, and, based on the audit evidence obtained, whether a material
uncertainty exists related to events or conditions that may cast significant doubt on the Group's and the Entity’s ability to
continue as a going concern. If we conclude that a material uncertainty exists, we are required to
draw attention in our auditor’s report to the related disclosures in the consolidated financial statements and the parent financial statements or, if such
disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence
obtained up to the date of our auditor’s report. However, future events or conditions may cause the
Group and the Entity to cease to continue as a going concern.
<br />Evaluate the overall presentation, structure and content of the consolidated financial statements and the parent financial statements, including the disclosures
in the notes, and whether the consolidated financial statements and the parent financial statements represent the underlying transactions and
events in a manner that gives a true and fair view.<br />We communicate with those charged with governance regarding, among other matters, the planned scope
and timing of the audit and significant audit findings, including any significant deficiencies in internal control
that we identify during our audit.Management is responsible for the management commentary.
Our opinion on the consolidated financial statements and the parent financial statements does not cover the management commentary, and we do not express
any form of assurance conclusion thereon.
In connection with our audit of the consolidated financial statements and the parent financial statements, our responsibility is to read the management
commentary and, in doing so, consider whether the management commentary is materially inconsistent with
the consolidated financial statements and the parent financial statements or our knowledge obtained in the audit or otherwise appears to be materially
misstated.
Moreover, it is our responsibility to consider whether the management commentary provides the information
required by relevant law and regulations.<br />Based on the work we have performed, we conclude that the management commentary is in accordance with
the consolidated financial statements and the parent financial statements and has been prepared in accordance with the requirements in the relevant law and regulations. We did not identify any material misstatement of the management commentary.AarhusMichael BachJens Lauridsenmne19691mne34323State Authorised Public AccountantState Authorised Public AccountantFinancial highlights2023
DKK'0002022
DKK'0002021
DKK'0002020
DKK'0002019
DKK'000Key figuresRevenue1,757,7651,868,1631,596,0571,452,9931,722,654Gross profit/loss639,030661,063604,926522,182593,359Operating profit/loss(11,521)35,41744,41514,38495,798Net financials(56,356)(11,464)(16,868)(9,429)(7,104)Profit/loss for the year(74,801)16,57627,1906,49582,391Profit for the year excl
.
minority interests(74,173)20,28518,90936375,186Balance sheet total1,339,2521,549,5241,527,2131,245,4201,198,004Investments in property, plant and equipment39,24643,494152,02640,99292,412Equity327,076411,644433,386375,940417,093Equity excl. minority interests306,480378,604396,927364,380403,603Average number of
employees9861,057986898981RatiosGross margin (%)36.3535.3937.9035.9434.44Return on equity (%)(21.65)5.234.970.0918.88Equity ratio (%)22.8824.4325.9929.2633.69Financial highlights are defined and calculated in accordance with the current version of "Recommendations &
Ratios" issued by the CFA Society Denmark.Gross margin (%)
:Gross profit/loss * 100
RevenueReturn on equity (%)
:Profit/loss for the year excl. minority interests * 100
Average equity excl. minority interestsEquity ratio (%)
:Equity excl. minority interests * 100
Balance sheet totalPrimary activitiesKvadrat has been leading the field in textile innovation since 1968 when our company was founded.
We develop, produce and sell contemporary high-quality textiles and textile-related products for architects, designers and private consumers to specify in public spaces and domestic interiors.
Development in activities and financesThe revenue for the Group for 2023 amounted to DKK 1.758m compared to DKK 1.868m in 2022. Operating profit/loss amounted to DKK -11m compared to DKK 35m in 2022 and profit before tax amounted to DKK -60m compared to DKK 34m in 2022.
The revenue for the Parent company for 2023 amounted to DKK 734m compared to DKK 837m in 2022. Operating profit/loss amounted to DKK -55m compared to DKK -17 in 2022 and Profit before tax amounted to DKK -73m compared to DKK 13m in 2022.
The result for both the Group and the Parent company has in FY 2023 been significantly affected primarily by the following three circumstances.
Firstly, the marketplaces in which we operate were challenged in both activity levels and short-term outlooks during FY 2023 resulting in a decrease in consolidated revenue of 110 mDKK or roughly 6 % compared to FY 2022. This is – in our perspective – attributable to an array of different factors and variables but contributing factors are without any doubts increases in inflation in the markets on which we operate, higher cost of capital bringing a slowdown to especially the construction and real-estate industries as well as the increasing regional and global insecurity brought to life from a number of conflicts.
Secondly, the higher cost of capital also resulted in increased net financial costs of 56 mDKK in FY 2023 to service the net interest-bearing debts of the Group consisting primarily of short-term credit facilities, long-term credit facilities, lease liabilities as well as mortgage debts. The net financial costs in FY 2022 amounted to 11 mDKK resulting in an increase from FY 2022 to FY 2023 of 45 mDKK.
Third and final, Kvadrat Group is still in the process of developing and finetuning the sale to the North American markets which is managed via Kvadrat Inc. Previously, Kvadrat Group had a long-standing and successful partnership with a local partner ensuring the distribution and sale of Kvadrat products in North America. This partnership was terminated with effect from 1 January 2021 and Kvadrat has since been building, developing, and improving the direct sale of Kvadrat products via Kvadrat Inc. This is a strategic project for Kvadrat Group which has required a significant amount of resources and investments to make profitable within a relatively short time period in the future – as was predicted when the strategic project was started.Profit/loss for the year in relation to expected developmentsThe development in Group and Parent company revenue and profits must be compared to the primarily positive expectations for 2023 in the annual report for Kvadrat A/S for 2022.
The Executive Board and Board of Directors consider the results for 2023 to be unsatisfactory.
Uncertainty relating to recognition and measurementRecognition and measurement in the consolidated financial statements and Parent company financial statement are not subject to any material uncertainties.Unusual circumstances affecting recognition and measurementNo particular circumstances exert material influence on the consolidated financial statements and parent company financial statements.
Neither the Group nor the Parent company is exposed to particular risks apart from those generally occurring in our line of business.
OutlookWe expect that the slowdown and general uncertainty in the markets – in which we operate – will continue in FY 2024 at least partially and we therefore expect to see our revenues in FY 2024 to be close to or slightly above the level in FY 2023.
We do, however, expect our overall profitability to increase in FY 2024 compared to FY 2023 as we are working to optimize and adjust our organization and processes to the realities of the current economic climate.
The latter will also be significantly aided by a stabilization or reduction in the cost of capital.
Knowledge resourcesDespite a difficult 2023, we continue to work systematically in developing all employees in the organization to be able to best execute our Group strategy. Via our two annual Performance & Learning Conversations between all employees and their direct manager, we ensure that we are aligned on what learnings need to be applied on an individual-, team- and company-level.
We have more than 140 managers across our production-, sales-, development companies as well as our headquarters in Ebeltoft. We have continued our work with our senior management team as well as a larger group of managers with our People Partner set up, where we internally support managers in people and performance-related topics. Instead of working with external consultants to train and support our managers we do this from our own People Development department utilizing their knowledge of context and more direct availability. In 2023, we succeeded in insourcing all training activities of our managers facilitated by our People Development department. This creates strong social and professional ties across the organization when leaders from different parts of the company are trained and educated together.
We continue to work on the quality of our leadership and also work more proactively and formalized with our People and organizational reviews. We have our own new manager program and a program for High Potentials for employees that we believe could assume more responsibility in a managerial role going forward. This program has generated 41 new managers during the last 6 years. Finally, we are proceeding to build the necessary competencies through our Kvadrat Academy which serves as a training forum for all our employees. All training and competence development is organized as blended, a mix of digital and on-site learning.
In our employee surveys, the employees are interviewed about their general satisfaction and specific matters related to their everyday working life. In 2023 we achieved a score of 72 similarly to that of FY 2022.
Our strategic direction in Kvadrat
The aspiration in Kvadrat is to “Push the boundaries of high-quality textiles through design and innovation”. This is based on Kvadrat being a dynamic, forward-looking design company that continuously seeks to push the boundaries of aesthetics and sustainable textile design globally. Kvadrat collaborates with architects to shape spaces, designers, and furniture manufacturers to craft furniture, and encourages consumers to bring their personality and identity with tactility and color into their homes.
Success in Kvadrat is defined by four KPIs: Employee Temperature, Customer Pulse, Brand Reputation and Financial Health. These four KPIs are the ultimate objectives for both our short- and long-term success, and therefore, all activities must strive to maximize value across these dimensions. The four KPIs are included in Kvadrat’ s global incentive program.
The 2021 – 2024 Kvadrat Group strategy
The overall ambition of the 2021 – 2024 Kvadrat Group strategy is to win market shares, increase efficiency and strengthen the organization to become a truly global business. To support this ambition, three strategic themes have been selected:
• Win market share to maintain and develop our strong market position
• Reduce complexity to create a scalable business model and increase efficiency
• Strengthen the organization to sharpen our competitive edge
We will win market shares by outperforming within our core product categories upholstery and curtains. This includes a sharp focus on new product development, globalization, and an increase in customer’s wallet share. Sustainability is another important lever to increase our market share. Our aim in Kvadrat is to become market leader within Sustainability by 2030. In 2021, we defined our 2030 sustainability strategy, that includes a clear direction and ambitious targets for our products as well as our global activities.
In 2024 our focus is to: 1) grow our overseas markets by taking our North America, Middle Eastern and Asian business to the next level to release full market potential, 2) increase efficiency in selected processes to increase speed and profitability, 3) accelerating our transition towards a regenerative business, and 4) Continue strengthening our company culture. This for us to grow and simplify in accordance with our 2021 – 2024 strategy.
Environmental performanceKvadrat is a member of the Science Based Target initiative and aims to reach net zero greenhouse gas emissions by 2040. On this journey we build upon our long-term commitment to quality design, work with our production partners to reduce our impact on resources and the environment and continuously aim to innovate materials, our products and business models to rethink the way we operate in this world.
Communicating our impact transparently to our clients through quality data is key and in FY 2023 we therefore launched our first 10 Environmental Product Declarations (EPDs) for 120 of our textile products.
More detailed information regarding our overall sustainability performance and targets can be found in our sustainability report (see link below).
Research and development activitiesThe development of our products happens in close collaboration between external affiliated designers and our internal product development teams.
The costs related to research activities are expensed in the income statement. The costs related to development activities are either expensed in the income statement or capitalized in the balance sheet depending on the viability and economic return of the specific development project and whether the criteria for recognition in the balance sheet have been fulfilled.
The costs to research and development activities in 2023 exceeds the incurred costs in 2022.
Statutory report on corporate social responsibility
Our attitudes and initiatives regarding environmental issues, social responsibility and gender equality in management are described in our sustainability report under "Sustainability Statement" which can be found on our website at:
https://www.kvadrat.dk/en/about/sustainability-applied/sustainability-report
Our sustainability report outlines policies, performance and objectives for Kvadrat as a company and Group. It addresses the requirements outlined by the Danish Financial Statements Act § 99a & 99b on the reporting of corporate social responsibility (CSR).
We strive for full compliance with the upcoming Corporate Sustainability Reporting Directive (CSRD) and, thereby, the European Sustainability Reporting Standards (ESRS). Where reasonable, we complement the ESRS disclosure requirements with performance measurements of the Global Reporting Initiative (GRI) standards. We are a member of the UN Global Compact and annually submits our communication on progress (COP), detailing information about our activities and developments according to the Ten Principles of the UN Global Compact, the 17 UN Sustainable Development Goals (SDGs) as well as the general UN goals and principles.
The report is structured into four main sustainability topics – General information, Environment, Social, Governance.
Statutory report on the underrepresented gender202320222021Supreme management bodyTotal number of members565Underrepresented gender (%)40.0033.0020.00Target figures (%)40.0040.0040.00Within our highest management level (Kvadrat A/S Board), we follow the recommendations of the Danish Business Authority to pursue a 40/60% distribution of either men or women employees. This 10% allowance ensures higher levels of flexibility in response to the labour marketDuring 2023, a change of composition in our Kvadrat A/S Board led to a 7 p.p. increase in the representation of women in ous A/S board, from 33% (2022) to 40%. Our short- and long-term goal for 2024 is to maintain this balance. 202320222021Other management levelsTotal number of members302830Underrepresented gender (%)40.0043.0050.00Target figures (%)40.0040.0040.00
Kvadrat follows the disclosure requirements on gender diversity within other management levels. Other management levels in Kvadrat A/S include two levels in accordance with the definition under 99b, (1) Kvadrat´s executive management, and (2) management within A/S with personnel responsibilities and with direct report to Kvadrat´s executive management.Kvadrat has the target to maintain a 40/60 gender distribution within its other management levels in Kvadrat A/S. Beyond this goal, we have the ambitious target to achieve 50% women leadership within our global middle management and executive management. To achieve our ambitions, we have developed various initiatives that foster transparency and encourage equal opportunities for women and men in other management levels and across the wider organisation. In 2023, we prepared a global roll out of minimum paid parental leave for all Kvadrat employees. Additionally, we updated our title and role system to create the foundation for higher pay transparency. During 2024 we will prepare a detailed assessment in the Kvadrat Group of our salary distribution including both roles and genders. This will serve as a base for performing a detailed pay assessment in 2025.Between 2022 and 2023, the representation of women within our other management level increased by 3 p.p. to 40%. We aim to maintain women representation in our other management level at a minimum at 40% in the short and long-run.5650.40.330.20.40.40.4Within our highest management level (Kvadrat A/S Board), we follow the recommendations of the Danish Business Authority to pursue a 40/60% distribution of either men or women employees. This 10% allowance ensures higher levels of flexibility in response to the labour marketDuring 2023, a change of composition in our Kvadrat A/S Board led to a 7 p.p. increase in the representation of women in ous A/S board, from 33% (2022) to 40%. Our short- and long-term goal for 2024 is to maintain this balance. 3028300.40.430.50.40.40.4
Kvadrat follows the disclosure requirements on gender diversity within other management levels. Other management levels in Kvadrat A/S include two levels in accordance with the definition under 99b, (1) Kvadrat´s executive management, and (2) management within A/S with personnel responsibilities and with direct report to Kvadrat´s executive management.Kvadrat has the target to maintain a 40/60 gender distribution within its other management levels in Kvadrat A/S. Beyond this goal, we have the ambitious target to achieve 50% women leadership within our global middle management and executive management. To achieve our ambitions, we have developed various initiatives that foster transparency and encourage equal opportunities for women and men in other management levels and across the wider organisation. In 2023, we prepared a global roll out of minimum paid parental leave for all Kvadrat employees. Additionally, we updated our title and role system to create the foundation for higher pay transparency. During 2024 we will prepare a detailed assessment in the Kvadrat Group of our salary distribution including both roles and genders. This will serve as a base for performing a detailed pay assessment in 2025.Between 2022 and 2023, the representation of women within our other management level increased by 3 p.p. to 40%. We aim to maintain women representation in our other management level at a minimum at 40% in the short and long-run.Statutory report on data ethics policyKvadrat has since 2021 a Data Ethics Policy, which sets a moral framework for collecting, processing, and protecting personal and non-personal data at Kvadrat. The statutory statement on our Data Ethics Policy is presented in the Sustainability Report (page 51).
https://www.kvadrat.dk/en/about/sustainability-applied/sustainability-report
Events after the balance sheet dateNo events have occurred after the balance sheet date to this date, which would influence the evaluation of this annual report. 175776500018681630007337930008367480000-56300035060002342800018780002168900073764500080973900049102100055152200038459600042135200097452000127783000639030000661063000147198000179132000568021000542630000170977000165385000821500008287000031358000304750003800001460002160000-1152100035417000-55353000-1672800080170009713000919000010777000880000614000251100086330005723600012078000437020009405000-5986000033666000-73218000127400001494100017090000955000-7545000-7480100016576000008017000-82190000-74173000-628000-7417300020285000023326000-97499000744010008929900068183000811870005148000317450001572800018476000826120008799500012340000163395000209039000839110009966300018182800018050800014342000014315400010981000107120003317000366400063881000135104000278720003307700066362000717420002176000447500032305200039806600017678500018437000047673000412350005253400046929000165950000165950000116930001252600017740001855000759610005376100036164300035931000056240800066086600062233900064334300027850008420000278500084200004104120004084660002365490002438810001350000498900013500004989000414547000421875000240684000257290000182269000247851000173880002303600040870004225000235000125500067335000153702000807000080700003995000039131000195270001984400018084000196840008407000139830005400001938300020139000117990001158100026486900033228500012526300022214600097428000134498000134498000161096000922800010282000776844000888658000375175000489718000133925200015495240009975140001133061000100000000100000000100000000100000000-2490000-46770007938000874100079380008741000146100014040002135400070990001995710002731360001202220002057980003064800003786040002059600033040000327076000411644000100000000-467700087410001404000273136000100000000-249000079380001461000199571000378604000330400004116440003064800002059600030648000037860400010000000087410007099000569660002057980001000000007938000213540005696600012022200037860400025900003005000190480001992500021638000229300005921000284200027587000276040002758700030414000824810001160520007328100097489000135340005898100062660008273000136540001330900013654000133090001372560002159460001207880001494850004048900055482000358540004718000057682100052451600038959200037012200096260003494100011610002312000100391000112736000529090006287200025400027640003465300047382000263730005133900025837000509880000599700097867000109387000243190002127400014610001842000853282000899004000564325000602130000990538000111495000068511300075161500013392520001549524000997514000113306100000-5816000-5816000021870006670000285400002854000020710007810002852000-10290000-10290000000-2000-2000-6000000-6002000038621000-386210000022600000226000022600022600000226000-86270008627000000-10504000105040000-10290000-1029000-1029000825320008301600021500000-52123000Changes in intercompany activitiesProfit from sale of shares-22526000-79330000-194540006998500038923000880000614000-57234000-12078000-22226000-3285000016520005075000-6943000-316000-14222000-7614000-390000-37878000-45740000108930006218000862700020471000-32619000-26665000-39562000-26981000-43996000-96964000-5816000-45972000523040001433190002492000383000-37070000-26598000974280001344980001 Revenue2023
DKK'0002022
DKK'000Other EU countries1,283,0881,380,529Other countries474,677487,634Total revenue by geographical market1,757,7651,868,163The Group’s business is divided into business segments and geographical markets.
The Group’s primary segment comprises development and sale of design textiles and textile-related products.
Secondary business areas are irrelevant. Referring to S. 96 of the Danish Financial Statements Act, Management does not want to provide additional information on the geographical distribution of revenue since a
detailed distribution of revenue by geographical market will be highly detrimental to the Group's competitive
situation. 1 Revenue2023
DKK'0002022
DKK'000Other EU countries611,145667,784Other countries122,648168,964Total revenue by geographical market733,793836,748The Company’s business is divided into business segments and geographical markets.
The Company’s primary segment comprises development and sale of design textiles and textile-related products. Secondary business areas are irrelevant. Referring to S. 96 of the Danish Financial Statements Act,
Management does not want to provide additional information on the geographical distribution of revenue
since a detailed distribution of revenue by geographical market will be highly detrimental to the Company's
competitive situation.2 Other operating income2023
DKK'0002022
DKK'000Compensation73(35)Salary reimbursement2,1523,267Profit from sale of shares519,454Public grants1,270616Other income61263,50623,4282 Other operating income2023
DKK'0002022
DKK'000Compensation0(727)Salary reimbursement1,6542,735Profit from sale of shares019,454Other income22430Public grants098Gain on disposal of fixed assets0991,87821,6893 Fees to the auditor appointed by the Annual General Meeting2023
DKK'0002022
DKK'000Statutory audit services1,4741,378Other assurance engagements200Tax services228721Other services7346842,4562,7834 Staff costs2023
DKK'0002022
DKK'000Wages and salaries526,321502,508Pension costs41,70040,122568,021542,630Average number of full-time employees9861,057Remunerationof management
2023
DKK'000Remunerationof management
2022
DKK'000Executive Board7,3727,815Board of Directors1,1321,1668,5048,9813 Staff costs2023
DKK'0002022
DKK'000Wages and salaries157,363152,328Pension costs11,50810,935Other social security costs2,1062,122170,977165,385Average number of full-time employees218225Remunerationof
Manage- ment
2023
DKK'000Remunerationof Manage- ment
2022
DKK'000Executive Board7,3727,815Board of Directors1,1321,1668,5048,9819861057218225Remunerationof management
2023
DKK'000Remunerationof management
2022
DKK'000Executive Board7,3727,815Board of Directors1,1321,1668,5048,981Remunerationof
Manage- ment
2023
DKK'000Remunerationof Manage- ment
2022
DKK'000Executive Board7,3727,815Board of Directors1,1321,1668,5048,981737200078150001132000116600073720007815000113200011660005 Depreciation, amortisation and impairment losses2023
DKK'0002022
DKK'000Amortisation of intangible assets45,28742,815Depreciation on property, plant and equipment36,86340,05582,15082,8704 Depreciation, amortisation and impairment losses2023
DKK'0002022
DKK'000Amortisation of intangible assets19,33718,783Depreciation on property, plant and equipment12,02111,69231,35830,4756 Other financial income2023
DKK'0002022
DKK'000Other interest income8806148806145 Other financial income2023
DKK'0002022
DKK'000Financial income from group enterprises1,382966Other financial income1,1297,6672,5118,6337 Other financial expenses2023
DKK'0002022
DKK'000Other financial expenses57,23612,07857,23612,0782023
DKK'0002022
DKK'000Other financial expenses57,23612,07857,23612,078<br />6 Other financial expenses2023
DKK'0002022
DKK'000Financial expenses from group enterprises6650Other financial expenses43,0379,40543,7029,405<br />2023
DKK'0002022
DKK'000Financial expenses from group enterprises6650Other financial expenses43,0379,40543,7029,4058 Tax on profit/loss for the year2023
DKK'0002022
DKK'000Current tax15,94922,225Change in deferred tax(1,008)(5,135)14,94117,0907 Tax on profit/loss for the year2023
DKK'0002022
DKK'000Current tax9550Change in deferred tax0(7,993)Adjustment concerning previous years0448955(7,545)9 Proposed distribution of profit/loss2023
DKK'0002022
DKK'000Retained earnings(74,173)20,285Minority interests' share of profit/loss(628)(3,709)(74,801)16,5768 Proposed distribution of profit and loss2023
DKK'0002022
DKK'000Retained earnings(74,173)20,285(74,173)20,285-7417300020285000-7417300020285000-628000-370900010 Intangible assetsCompleted development projects
DKK'000Acquired trademarks
DKK'000Goodwill
DKK'000Development projects in progress
DKK'000Cost beginning of year151,26976,047173,317105Exchange rate adjustments7204240Transfers1055130(105)Additions3,79609,1031,234Disposals(24,227)(57,730)(2,385)0Cost end of year131,01518,830180,4591,234Amortisation and impairment losses beginning of year(61,970)(44,302)(85,322)(105)Exchange rate adjustments(70)0(338)0Transfers(105)(513)0105Amortisation for the year(18,557)(12,158)(14,572)0Reversal regarding disposals24,08843,2912,3850Amortisation and impairment losses end of year(56,614)(13,682)(97,847)0Carrying amount end of year74,4015,14882,6121,234Completed development projects
DKK'000Acquired trademarks
DKK'000Goodwill
DKK'000Development projects in progress
DKK'000Cost beginning of year151,26976,047173,317105Exchange rate adjustments7204240Transfers1055130(105)Additions3,79609,1031,234Disposals(24,227)(57,730)(2,385)0Cost end of year131,01518,830180,4591,234Amortisation and impairment losses beginning of year(61,970)(44,302)(85,322)(105)Exchange rate adjustments(70)0(338)0Transfers(105)(513)0105Amortisation for the year(18,557)(12,158)(14,572)0Reversal regarding disposals24,08843,2912,3850Amortisation and impairment losses end of year(56,614)(13,682)(97,847)0Carrying amount end of year74,4015,14882,6121,234<br />9 Intangible assetsCompleted development projects
DKK'000Acquired trademarks
DKK'000Cost beginning of year118,25342,709Additions3,7240Disposals(139)(15,230)Cost end of year121,83827,479Amortisation and impairment losses beginning of year(37,066)(24,233)Reversal of impairment losses015,230Amortisation for the year(16,589)(2,748)Amortisation and impairment losses end of year(53,655)(11,751)Carrying amount end of year68,18315,728<br />Completed development projects
DKK'000Acquired trademarks
DKK'000Cost beginning of year118,25342,709Additions3,7240Disposals(139)(15,230)Cost end of year121,83827,479Amortisation and impairment losses beginning of year(37,066)(24,233)Reversal of impairment losses015,230Amortisation for the year(16,589)(2,748)Amortisation and impairment losses end of year(53,655)(11,751)Carrying amount end of year68,18315,72811 Development projectsThe completed development projects and development projects in progress primarily consists of a new ERP-system as well as a digital trading platform as part of a substantial digital strategic plan onwards. The ERP-system was successfully launched in 2020 while the first phases of the digital trading platform has been launched at the end of 2021. Management expects a significant potential from the optimization and digitalization of the business, as future cash flows will ensure repayment of investments in the development projects, and Management does not see any indication of impairment to exist.10 Development projectsThe completed development projects primarily consists of a new ERP-system as well as a digital trading platform as part of a substantial digital strategic plan towards 2023 and onwards. The ERP-system was successfully launched in 2020 while the first phases of the digital trading platform has been launched at the end of 2021. Management expects a significant potential from the optimization and digitalization of the business, as future cash flows will ensure repayment of investments in the development projects, and Management does not see any indication of impairment to exist.12 Property, plant and equipmentLand and buildings
DKK'000Plant and machinery
DKK'000Other fixtures and fittings, tools and equipment
DKK'000Leasehold improvements
DKK'000Cost beginning of year225,34712,324277,142149,849Exchange rate adjustments101(134)410(2,005)Additions6,7032,26915,73514,539Disposals0(1,221)(90,620)(24,229)Cost end of year232,15113,238202,667138,154Depreciation and impairment losses beginning of year(44,839)(1,612)(142,038)(78,107)Exchange rate adjustments(12)(2)(236)374Transfers0017(17)Depreciation for the year(5,472)(1,854)(14,526)(15,011)Reversal regarding disposals01,21117,99720,969Depreciation and impairment losses end of year(50,323)(2,257)(138,786)(71,792)Carrying amount end of year181,82810,98163,88166,36211 Property, plant and equipmentLand and buildings
DKK'000Plant and machinery
DKK'000Other fixtures and fittings, tools and equipment
DKK'000Leasehold improvements
DKK'000Cost beginning of year183,8384,02389,49015,340Additions3,746936740Disposals00(167)0Cost end of year187,5844,11689,99715,340Depreciation and impairment losses beginning of year(40,684)(359)(56,413)(10,865)Depreciation for the year(3,480)(440)(5,802)(2,299)Reversal regarding disposals00900Depreciation and impairment losses end of year(44,164)(799)(62,125)(13,164)Carrying amount end of year143,4203,31727,8722,176Recognised assets not owned by entity006,289013 Financial assetsInvestments in associates
DKK'000Receivables from associates
DKK'000Deposits
DKK'000Cost beginning of year39,831012,526Transfers6,38100Additions016,5950Disposals00(833)Cost end of year46,21216,59511,693Revaluations beginning of year1,40400Exchange rate adjustments66700Amortisation of goodwill(371)00Share of profit/loss for the year7,97800Adjustment of intra-group profits41000Dividend(8,627)00Revaluations end of year1,46100Carrying amount end of year47,67316,59511,693Investments in associates comprise unamortised goodwill of DKK 742k at 31.12.2023.
Transfer amount of 6.381 tDKK is the equity value of Convert A/S that was previously classified as a subsidiary but from December 2023 classified as an associate company due to a reduction in ownership and control.
AssociatesRegistered inOwnership
%Wooltex UK Ltd.England46.003 Days of Design ApSDenmark20.00Innvik ASNorway30.00Convert A/SDenmark48.6712 Financial assetsInvestments in group enterprises
DKK'000Investments in associates
DKK'000Receivables from associates
DKK'000Deposits
DKK'000Cost beginning of year317,72639,83001,855Transfers(38,028)6,38100Additions10,315016,5950Disposals(14,304)00(81)Cost end of year275,70946,21116,5951,774Revaluations beginning of year(7,200)7,09900Exchange rate adjustments1,53353800Transfers31,647000Amortisation of goodwill(6,087)(371)00Share of profit/loss for the year18,5189,15100Adjustment of intra-group profits1,70541000Dividend(39,259)(10,504)00Investments with negative equity value depreciated over receivables (913)000Investments with negative equity value transferred to provisions 3,078000Other adjustments(379)000Reversal regarding disposals12,388000Revaluations end of year15,0316,32300Carrying amount end of year290,74052,53416,5951,774Investments in group enterprises comprise unamortised goodwill of DKK 34,8m at 31.12.2023.
Investments in associates comprise unamortised goodwill of DKK 742k at 31.12.2023.
Transfer amount of 6.381 tDKK is the equity value of Convert A/S that was previously classified as a subsidiary but from December 2023 classified as an associate company due to a reduction in ownership and control.
A specification of investments in subsidiaries is evident from the notes to the consolidated financial statements.Investments in
associatesRegistered inOwnership
%Wooltex UK Ltd. England 46.003 Days of Design ApS Denmark 20.00Innvik ASNorway 30.00Kvadrat Maharam Pty. Ltd.Australia50.00Convert A/SDenmark48.6714 Contract work in progress2023
DKK'0002022
DKK'000Contract work in progress22,29322,293Progress billings(18,206)(18,068)4,0874,22515 Deferred tax2023
DKK'0002022
DKK'000Intangible assets(13,684)(23,903)Property, plant and equipment(2,732)(18,814)Inventories5,4496,544Receivables(1,180)(1,283)Provisions7011,722Liabilities other than provisions1,5223,457Tax losses carried forward47,91558,403Deferred tax37,36036,126
Changes during the year2023
DKK'0002022
DKK'000Beginning of year36,12633,099Recognised in the income statement1,0085,135Recognised directly in equity226(2,108)End of year37,36036,126Deferred tax has been recognised in the balance sheet as follows2023
DKK'0002022
DKK'000
Deferred tax assets39,95039,131
Deferred tax liabilities(2,590)(3,005)37,36036,126Deferred tax assetsDeferred tax assets consist primarily of timing differences on depreciation of fixed assets as well as tax-loss
carryforwards from foreign subsidiaries and parent company, which are expected to use the losses within 1-5 years as a result of future positive operations. 13 Deferred tax2023
DKK'0002022
DKK'000Intangible assets(13,367)(16,833)Property, plant and equipment(2,798)(4,196)Inventories4,7786,001Provisions70104Liabilities other than provisions148611Tax losses carried forward30,69634,157Deferred tax19,52719,844
Changes during the year2023
DKK'0002022
DKK'000Beginning of year19,84413,959Recognised in the income statement07,993Recognised directly in equity226(2,108)Tax losses used by group enterprises(543)0End of year19,52719,844Deferred tax assetsDeferred tax assets consists primarily of timing differences on depreciation of fixed assets as well as tax-loss carryforwards, which the company expects to use within 1-5 years as a result of future positive operations. 16 PrepaymentsPrepayments comprise incurred costs relating to subsequent financial years. Prepayments are measured at
cost. 14 PrepaymentsPrepayments comprise incurred costs relating to subsequent financial years. Prepayments are measured at
cost. 17 Contributed capitalNumberNominal
value
DKK'000The shares are not divided into classes1,000100,0001,000100,00018 Other provisions Other provisions comprise primarily costs from other contractual obligations expected to be incurred by the Group.19 Other payables2023
DKK'0002022
DKK'000Holiday pay obligation13,65413,30913,65413,30916 Other payables2023
DKK'0002022
DKK'000Holiday pay obligation13,65413,30913,65413,30920 Non-current liabilities other than provisionsDue within 12
months
2023
DKK'000Due within 12
months
2022
DKK'000Due after
more than 12
months
2023
DKK'000Outstanding
after 5 years
2023
DKK'000Mortgage debt2,8272,81027,58716,174Bank loans35,02344,97682,4810Lease liabilities2,6397,69613,5340Other payables0013,65413,65440,48955,482137,25629,82817 Non-current liabilities other than provisionsDue within 12
months
2023
DKK'000Due within 12
months
2022
DKK'000Due after
more than 12
months
2023
DKK'000Outstanding
after 5 years
2023
DKK'000Mortgage debt2,8272,81027,58716,174Bank loans30,38839,64173,2810Lease liabilities2,6394,7296,2660Other payables0013,65413,65435,85447,180120,78829,82821 Other payables2023
DKK'0002022
DKK'000VAT and duties05,681Wages and salaries, personal income taxes, social security costs, etc. payable25,04816,025Holiday pay obligation19,85621,894Derivative financial instruments5,3724,185Other costs payable47,59161,60297,867109,387Derivative financial instruments are described in note 24.22 Deferred incomeDeferred income includes grants for DKK 5,3m related to development projects in progress, of which DKK 3,8m has been recognized in line with the depreciation of the associated development project. Deferred income is recognized as other income in the income statement and in note 2.18 Other payables2023
DKK'0002022
DKK'000VAT and duties1(1)Wages and salaries, personal income taxes, social security costs, etc. payable7,7956,860Holiday pay obligation7,4177,844Derivative financial instruments5,3724,185Other costs payable3,7342,38624,31921,274Derivative financial instruments are described in note 19.23 Changes in working capital2023
DKK'0002022
DKK'000Increase/decrease in inventories291(24,324)Increase/decrease in receivables71,480(26,946)Increase/decrease in trade payables etc.(50,271)(853)21,500(52,123)24 Derivative financial instrumentsThe Company have no hedged currencies at the balance date 31 December 2023.
Other payables include the negative fair value of an interest rate swap of DKK 5,4m. The interest swap was made to hedge a fixed interest rate on the Company's floating-rate mortgage loan. The interest swap has a principal amount of DKK 20,0m and ensures a fixed interest rate of 4,82% in the remaining term of 14 years.19 Derivative financial instrumentsThe Company have no hedges currencies at the balance sheet date 31 December 2023.
Other payables include the negative fair value of an interest rate swap of DKK 5.4m.
The interest rate swap was made to hedge a fixed interest rate on the Company’s floating-rate mortgage loan.
The interest swap has a principal amount of DKK 20m and ensures a fixed interest rate
of 4,82% in the remaining term of 14 years.25 Unrecognised rental and lease commitments2023
DKK'0002022
DKK'000Total liabilities under rental or lease agreements until maturity 243,036246,94820 Unrecognised rental and lease commitments2023
DKK'0002022
DKK'000Total liabilities under rental or lease agreements until maturity 10,07212,99226 Assets charged and collateralMortgage debt (Kvadrat A/S) is secured by way of mortgage on properties. The carrying amount of mortgaged buildings is
DKK 143m recognised under land and buildings. A owners mortgage of DKK 8m in properties has been pledged as security for outstanding balances with banks.
Kvadrat A/S has pledged its assets with a corporate mortgage as security for outstanding balances with banks. The nominal amount of the corporate mortgage is DKK 200m. The corporate mortgage includes acquired trademarks, plants and machinery, other fixtures and fittings, tools and equipment, inventories and trade receivables.
The carrying amount of acquired trademarks is DKK 15.7m.
The carrying amount of plants and machinery is DKK 3.3m.
The carrying amount of other fixtures and fittings, tools and equipment (leased not included) is DKK 21.6m.
The carrying amount of inventories is DKK 240.7m.
The carrying amount of trade receivables is DKK 17.4m.
22 Assets charged and collateralMortgage debt is secured by way of mortgage on properties. The carrying amount of mortgaged buildings is
DKK 143.4m recognised under land and buildings. A owners mortgage of DKK 8m in properties has been pledged as security for outstanding balances with banks.
The Company has pledged its assets with a corporate mortgage as security for outstanding balances with banks. The nominal amount of the corporate mortgage is DKK 200m. The corporate mortgage includes acquired trademarks, plants and machinery, other fixtures and fittings, tools and equipment, inventories and trade receivables.
The carrying amount of acquired trademarks is DKK 15.7m.
The carrying amount of plants and machinery is DKK 3.3m.
The carrying amount of other fixtures and fittings, tools and equipment (leased not included) is DKK 21.6m.
The carrying amount of inventories is DKK 240.7m.
The carrying amount of trade receivables is DKK 17.4m.
27 Transactions with related partiesThe annual report only dislose transactions with related parties that have not been completed on market
terms. No such transactions have been completed during the financial year. 24 Transactions with related partiesThe annual report only dislose transactions with related parties that have not been completed on market
terms. No such transactions have been completed during the financial year. 28
Group relationsName and registered office of the Parent preparing consolidated financial statements for the largest group:
Kvadrat Holding A/S, CVR-nr. 15 12 00 02, Ebeltoft, Denmark.Name and registered office of the Parent preparing consolidated financial statements for the smallest group:
Kvadrat Holding A/S, CVR-nr. 15 12 00 02, Ebeltoft, Denmark. 29 Pro-rata consolidated companiesRegistered inOwnership
%Kvadrat Maharam Pty. Ltd.Australia50.0030 SubsidiariesRegistered inOwnership
%Febrik BVNetherlands83.90Kvadrat Weaving BVNetherlands99.80Kinnasand GmbH Germany100.00Kvadrat AB Sweden100.00Kvadrat AG Switzerland97.00Kvadrat Asia Investment Ltd. Hong Kong50.50Kvadrat China Co. Ltd. China50.50Kvadrat Singapore Pte. Ltd. Singapore50.50Kvadrat Austria GmbHAustria97.00Kvadrat BV Netherlands95.00Kvadrat Finland Oy Finland100.00Kvadrat GmbHGermany98.00Kvadrat Iberia S.L.Spain95.00Kvadrat Inc. USA100.00Kvadrat Japan Co. Ltd. Japan75.00Kvadrat Korea Co. Ltd. South Korea100.00Kvadrat Ltd.United Kingdom100.00Kvadrat Middle East DMCCUAE 100.00Kvadrat Norge AS Norway100.00Kvadrat SAFrance95.00Kvadrat Acoustics A/SDenmark79.00Fabric Systems Ltd.United Kingdom79.00Kvadrat Acoustics Inc. USA79.00Kvadrat Soft Cells Hong Kong Ltd. Hong Kong 79.00Kvadrat Acoustics Sp. Z.o.o.Poland79.00Kvadrat SpAItaly100.00Kvadrat Czech Republic s.r.o.Czech Republic100.00Registered inOwnership
%Personal Design SrLItaly100.00Kvadrat REALLY ApSDenmark98.10Sahco GmbHGermany100.00Kvadrat Shade Holding BVNetherlands100.00Kvadrat Shade Services BV Netherlands100.00Kvadrat High Performance Textiles BVNetherlands100.00Kvadrat Shade Assembly BVNetherlands100.00Kvadrat Shade Properties BV Netherlands100.00Verosol Australia Pty Ltd. Australia80.00Verosol Ibérica SAUSpain100.00Tecnologia de Control Solar Mexicana, SA de CVMexico100.00Tecnologia de Control Solar Mexicana de Servicios, SA de CVMexico100.00VW Solarflex SA de CVMexico100.00Magniberg Design ABSweden60.00Kvadrat Middle East Textiles LLCUAE100.001413600019463000290740000310526000569660005696600059210002842000-3925900039259000015 Provisions for investments in group enterprisesProvisions for investments in group enterprises is a result of investment in group enterprises with negative equity.21 Contingent liabilities2023
DKK'0002022
DKK'000Recourse and non-recourse guarantee commitments505,287413,165Contingent liabilities to group enterprises505,287413,165Recourse and non-recourse guarantee commitments6,5270Contingent liabilities to associates6,5270
The Company has provided a guarantee for the bank debt of subsidiaries and Kvadrat Holding A/S. The
secured bank debt amounts to DKK 512m at 31.12.2023, which consists of the subsidiaries drawing on the
credit facilities at their bank.
The Company has provided performance guarantees for DKK 29.2m at 31.12.2023. The Company participates in a Danish joint taxation arrangement with Kvadrat Holding A/S serving as the
administration company. According to the joint taxation provisions of the Danish Corporation Tax Act, the
Entity is therefore liable for income taxes etc for the jointly taxed companies and for obligations, if any,
relating to the withholding of tax on interest, royalties and dividends for the jointly taxed companies. The
jointly taxed entities' total known net liability under the joint taxation arrangement is disclosed in the administration company's financial statements. 23 Related parties with controlling interestThe Parent Kvadrat Holding A/S, Central Business Reg. No: 15 12 00 02, Ebeltoft holds all shares in the
Company and thus has a controlling interest in the Company. This annual report has been presented in accordance with the provisions of the Danish Financial Statements Act
governing reporting class C enterprises (large).The accounting policies applied to these consolidated financial statements and parent financial statements are consistent with those applied last year.
A few reclassifications of the comparative figures have been made in the consolidated financial statements
as well as in the parent financial statements to make the figures comparable with this year. The changes
have not had any impact on neither profit nor equity in the consolidated and parent financial statements. The reclassifications of the comparative figures has resulted in changes to the distribution of gross profit/loss and operating profit/loss.falseRecognition and measurementAssets are recognised in the balance sheet when it is probable as a result of a prior event that future economic
benefits will flow to the Entity, and the value of the asset can be measured reliably.
Liabilities are recognised in the balance sheet when the Entity has a legal or constructive obligation as a
result of a prior event, and it is probable that future economic benefits will flow out of the Entity, and the
value of the liability can be measured reliably.
On initial recognition, assets and liabilities are measured at cost. Measurement subsequent to initial
recognition is effected as described below for each financial statement item.
Anticipated risks and losses that arise before the time of presentation of the annual report and that confirm
or invalidate affairs and conditions existing at the balance sheet date are considered at recognition and
measurement.
Income is recognised in the income statement when earned, whereas costs are recognised by the amounts
attributable to this financial year. <br />Consolidated financial statementsThe consolidated financial statements comprise the Parent and the group enterprises (subsidiaries) that are controlled by the Parent. Control is achieved by the Parent, either directly or indirectly, holding more than 50% of the voting rights or in any other way possibly or actually exercising controlling influence.
Enterprises in which the Group, directly or indirectly, holds between 20% and 50% of the voting rights and exercises significant, but not controlling influence, are regarded as associates.<br />Basis of consolidationThe consolidated financial statements are prepared on the basis of the financial statements of the Parent and its subsidiaries. The consolidated financial statements are prepared by combining uniform items. On consolidation, intra-group income and expenses, intra-group accounts and dividends as well as profits and losses on transactions between the consolidated enterprises are eliminated. The financial statements used for consolidation have been prepared applying the Group’s accounting policies.
Subsidiaries’ financial statement items are recognised in full in the consolidated financial statements. Minority
interests’ proportionate share of profit or loss is presented as a separate item in Management’s proposal for
distribution of profit or loss, and their share of subsidiaries’ net assets is presented as a separate item in
group equity.
Investments in subsidiaries are offset at the pro rata share of such subsidiaries’ net assets at the takeover date, with net assets having been calculated at fair value.Business combinationsNewly acquired or newly established enterprises are recognised in the consolidated financial statements from
the time of acquiring or establishing such enterprises. Divested or wound-up enterprises are recognised in
the consolidated income statement up to the time of their divestment or winding-up.
The purchase method is applied at the acquisition of new enterprises, under which identifiable assets and
liabilities of these enterprises are measured at fair value at the acquisition date. Provisions for costs of
restructuring of the enterprise acquired are only made in so far as such restructuring was decided by the
enterprise acquired prior to acquisition. Allowance is made for the tax effect of restatements.Positive differences in amount (goodwill) between cost of the acquired share and fair value of the assets and
liabilities taken over are recognised under intangible assets, and they are amortised systematically over the
income statement based on an individual assessment of their useful life. If the useful life cannot be estimated
reliably, it is fixed at 10 years. Useful life is reassessed annually. Negative balances (negative goodwill) are
recognised as income in the income statement.
Profit or loss from divestment of enterprisesProfits or losses from divestment or winding-up of subsidiaries are calculated as the difference between
selling price or settlement price and the carrying amount of the net assets at the time of divestment or
winding-up, inclusive of non-amortised goodwill and estimated divestment or winding-up expenses. Foreign currency translationOn initial recognition, foreign currency transactions are translated applying the exchange rate at the transaction date. Receivables, payables and other monetary items denominated in foreign currencies that have
not been settled at the balance sheet date are translated using the exchange rate at the balance sheet date.
Exchange differences that arise between the rate at the transaction date and the rate in effect at the payment
date, or the rate at the balance sheet date are recognised in the income statement as financial income or
financial expenses. Property, plant and equipment, intangible assets, inventories and other non-monetary
assets that have been purchased in foreign currencies are translated using historical rates.
When recognising foreign subsidiaries and associates that are independent entities, the income statements
are translated at average exchange rates for the months that do not significantly deviate from the rates at
the transaction date. Balance sheet items are translated using the exchange rates at the balance sheet date.
Goodwill is considered belonging to the independent foreign entity and is translated using the exchange rate
at the balance sheet date. Exchange differences arising out of the translation of foreign subsidiaries’ equity
at the beginning of the year at the balance sheet date exchange rates as well as out of the translation of income statements from average rates to the exchange rates at the balance sheet date are recognised directly in equity.
Exchange adjustments of outstanding accounts with independent foreign subsidiaries which are considered
part of the total investment in the subsidiary in question are classified directly as equity.Derivative financial instrumentsOn initial recognition in the balance sheet, derivative financial instruments are measured at cost and subsequently at fair value. Derivative financial instruments are recognised under other receivables or other payables.
Changes in the fair value of derivative financial instruments classified as and complying with the requirements
for hedging the fair value of a recognised asset or a recognised liability are recorded in the income statement
together with changes in the value of the hedged asset or the hedged liability.
Changes in the fair value of derivative financial instruments classified as and complying with the requirements
for hedging future transactions are recognised directly in equity. When the hedged transactions are realised,
the accumulated changes are recognised as part of cost of the relevant financial statement items.
For derivative financial instruments that do not comply with the requirements for being treated as hedging
instruments, changes in fair value are recognised currently in the income statement as financial income or
financial expenses.Public grantsPublic grants are recognised when a final commitment has been received from the grantor and it is probable
that
the conditions of the grant will be fulfilled. Grants are recognised as income in the income statement
as earned.
Grants awarded for acquisition of assets are recognised as deferred income in the balance sheet,
which is taken
to income on a straight-line basis over the useful life of the asset.RevenueRevenue from the sale of manufactured goods and goods for resale is recognised in the income statement
when delivery is made and risk has passed to the buyer. Revenue is recognised net of VAT, duties and sales
discounts and is measured at fair value of the consideration fixed.Contract work in progress is included in revenue based on the stage of completion so that revenue corresponds to the selling price of the work performed in the financial year (the percentage-of-completion
method). Own work capitalisedOwn work capitalised comprises #staff costs and other costs incurred in the financial year and recognised in
cost for proprietary intangible assets and property, plant and equipment.Other operating incomeOther operating income comprises income of a secondary nature as viewed in relation to the Entity’s primary
activities, including profit from the sale of intangible assets and property, plant and equipment, and salary refunds .Cost of salesCost of sales comprises goods consumed in the financial year measured at cost, adjusted for normal inventory
writedowns.Other external expensesOther external expenses include expenses relating to the Entity’s ordinary activities, including expenses for
premises, stationery and office supplies, marketing costs, etc. This item also includes writedowns of receivables recognised in current assets. Staff costsStaff costs comprise salaries and wages as well as social security contributions, pension contributions, etc
for entity staffDepreciation, amortisation and impairment lossesDepreciation, amortisation and impairment losses relating to property, plant and equipment and intangible
assets comprise depreciation, amortisation and impairment losses for the financial year, as well as revenue recognition of grants recieved related to the intagible fixed assets and gains and losses from the sale of intangible assets as well as property, plant and equipment.Other operating expensesOther operating expenses comprise expenses of a secondary nature as viewed in relation to the Entity’s
primary
activities, including loss from the sale of intangible assets and property, plant and equipment.Income from investments in group enterprisesIncome from investments in group enterprises comprises the pro rata share of the individual enterprises’ profit/loss after full elimination of intra-group profits or losses.
<br />Income from investments in associatesIncome from investments in associates comprises the pro rata share of the individual
associates’
profit/loss after pro rata elimination of intra-group profits or losses.
Other financial incomeOther financial income comprises dividends etc received on other investments, interest income, including
interest income on receivables from group enterprises, net capital or exchange gains on securities, payables
and transactions in foreign currencies, amortisation of financial assets as well as tax relief under the Danish
Tax Prepayment Scheme etc. Other financial expensesOther financial expenses comprise interest expenses, including interest expenses on payables to group enterprises, net capital or exchange losses on securities, payables and transactions in foreign currencies, amortisation of financial liabilities as well as tax surcharge under the Danish Tax Prepayment Scheme etc. Tax on profit/loss for the yearTax for the year, which consists of current tax for the year and changes in deferred tax, is recognised in the
income statement by the portion attributable to the profit for the year and recognised directly in equity by
the
portion attributable to entries directly in equity.The Parent is jointly taxed with all of its Danish group enterprises. The current Danish income tax is allocated
among
the jointly taxed entities proportionally to their taxable income (full allocation with a refund
concerning tax losses).GoodwillGoodwill is the positive difference between cost and fair value of assets and liabilities arising from acquisitions. Goodwill is amortised straight-line over its estimated useful life, which is fixed based on the experience
gained by Management for each business area. For amounts of goodwill, useful life has been determined based on an assessment of whether the enterprises are strategically acquired enterprises with a strong market position and a long-term earnings profile and whether the amount of goodwill includes intangible resources of a temporary nature that cannot be separated and recognised as separate assets. Useful lives are
reassessed annually. The amortisation periods used are 10 years.
Goodwill is written down to the lower of recoverable amount and carrying amount.<br />Intellectual property rights etc.Intellectual property rights etc comprise development projects completed and in progress with related intellectual property rights and acquired intellectual property rights. Development projects on clearly defined and identifiable products and processes, for which the technical rate
of utilisation, adequate resources and a potential future market or development opportunity in the enterprise
can be established, and where the intention is to manufacture, market or apply the product or process in
question, are recognised as intangible assets. Other development costs are recognised as costs in the income
statement as incurred. When recognising development projects as intangible assets, an amount equalling
the costs incurred less deferred tax is taken to equity under Reserve for development costs that is reduced
as the development projects are amortised and written down.
The cost of development projects comprises costs such as salaries, external costs and amortisation that are
directly and indirectly attributable to the development projects.
Indirect production costs in the form of indirectly attributable staff costs and amortisation of intangible assets
and depreciation on property, plant and equipment used in the development process are recognised in cost
based on time spent on each project.
Completed development projects are amortised on a straight-line basis using their estimated useful lives
which are determined based on a specific assessment of each development project. If the useful life cannot
be estimated reliably, it is fixed at 10 years. For development projects protected by intellectual property
rights, the maximum amortisation period is the remaining duration of the relevant rights. Intellectual property rights acquired are measured at cost less accumulated amortisation. Patents are amortised over their remaining duration, and licences are amortised over the term of the agreement.
Intellectual property rights etc are written down to the lower of recoverable amount and carrying amount. Property, plant and equipmentLand and buildings as well as other fixtures and fittings, tools and equipment are measured at cost less
accumulated depreciation and impairment losses. Land is not depreciated.
Cost comprises the acquisition price, costs directly attributable to the acquisition and preparation costs of
the asset until the time when it is ready to be put into operation. For assets held under finance leases, cost
is the lower of the asset’s fair value and present value of future lease payments.
The basis of depreciation is cost less estimated residual value after the end of useful life. Straight-line
depreciation is made on the basis of the following estimated useful lives of the assets:Useful life
Buildings30-40 yearsPlant and machinery3-5 yearsOther fixtures and fittings, tools and equipment3-5 yearsLeasehold improvementscontract periodFor leasehold improvements and assets subject to finance leases, the depreciation period cannot exceed
the contract period.
Estimated useful lives and residual values are reassessed annually.
Items of property, plant and equipment are written down to the lower of recoverable amount and carrying
amount.Investments in group enterprisesIn the parent financial statements, investments in group enterprises are recognised and measured according
to the equity method. This means that investments are measured at the pro rata share of the enterprises'
equity value plus unamortised goodwill and plus or minus unrealised intra-group profits and losses. Refer to
the above section on business combinations for more details about the accounting policies used on acquisitions of investments in group enterprises.
Group enterprises with negative equity value are measured at DKK 0. Any receivables from these enterprises
are written down to net realisable value based on a specific assessment. If the Parent has a legal or constructive obligation to cover the liabilities of the relevant enterprise, and it is probable that such obligation
will involve a loss, a provision is recognised that is measured at present value of the costs necessary to settle
the obligations at the balance sheet date.
Upon distribution of profit or loss, net revaluation of investments in group enterprises is transferred to
reserve
for net revaluation according to the equity method in equity.
Goodwill is the positive difference between cost and fair value of assets and liabilities arising from acquisitions. Goodwill is amortised straight-line over its estimated useful life, which is fixed based on the experience
gained by Management for each business area. For amounts of goodwill, useful life has been determined
based on an assessment of whether the enterprises are strategically acquired enterprises with a strong market position and a long-term earnings profile and whether the amount of goodwill includes intangible resources of a temporary nature that cannot be separated and recognised as separate assets. Useful lives are
reassessed annually. The amortisation periods used are 10 years.
Investments in group enterprises are written down to the lower of recoverable amount and carrying amount.
Investments in associatesInvestments in associates are recognised and measured according to the equity method. This means that
investments are measured at the pro rata share of the enterprises' equity values plus unamortised goodwill and plus or minus unrealised pro rata intra-group profits and losses. Refer to the above section on business
combinations for more details about the accounting policies used on acquisitions of investments in associates.
Associates with negative equity value are measured at DKK 0. Any receivables from these enterprises are
written down to net realisable value based on a specific assessment. If the Parent has a legal or constructive
obligation to cover the liabilities of the relevant associate, and it is probable that such obligation will involve
a loss, a provision is recognised that is measured at present value of the costs necessary to settle the obligations at the balance sheet date.
Upon distribution of profit or loss, net revaluation of investments in associates is transferred to Reserve for
net revaluation according to the equity method under equity.
Goodwill is the positive difference between cost and fair value of assets and liabilities arising from acquisitions. Goodwill is amortised straight-line over its estimated useful life, which is fixed based on the experience
gained by Management for each business area. For amounts of goodwill, useful life has been determined
based on an assessment of whether the enterprises are strategically acquired enterprises with a strong market position and a long-term earnings profile and whether the amount of goodwill includes intangible resources of a temporary nature that cannot be separated and recognised as separate assets. Useful lives are
reassessed annually. The amortisation periods used are 10 years.
Investments in associates are written down to the lower of recoverable amount and carrying amount.
Investments in associates fall within the definitions of both participating interests and associates, yet in these consolidated financial statements they have been presented as investments in associates because this designation reflects more accurately the Group’s involvement in the relevant entities.
ReceivablesReceivables are measured at amortised cost, usually equalling nominal value, less writedowns for bad and
doubtful debts.InventoriesInventories are measured at the lower of cost using the FIFO method and net realisable value.
Cost consists of purchase price, design fee’s plus delivery costs.
The net realisable value of inventories is calculated as the estimated selling price less completion costs and
costs incurred to execute sale.Contract work in progressContract work in progress is measured at the selling price of the work carried out at the balance sheet date.
The selling price is measured based on the stage of completion and the total estimated income from the
individual contracts in progress. Usually, the stage of completion is determined as the ratio of actual to total
budgeted consumption of resources.
If the selling price of a project in progress cannot be made up reliably, it is measured at the lower of costs
incurred and net realisable value.
Each contract in progress is recognised in the balance sheet under receivables or liabilities other than provisions, depending on whether the net value, calculated as the selling price less prepayments received, is
positive or negative.
Costs of sales work and of securing contracts as well as finance costs are recognised in the income statement
as incurred.Deferred taxDeferred tax is recognised on all temporary differences between the carrying amount and the tax-based
value of
assets and liabilities, for which the tax-based value is calculated based on the planned use of each
asset.
However, no deferred tax is recognised for amortisation of goodwill disallowed for tax purposes and
temporary
differences arising at the date of acquisition that do not result from a business combination and
that do not have
any effect on profit or loss or on taxable income.
Deferred tax assets, including the tax base of tax loss carryforwards, are recognised in the balance sheet at
their estimated realisable value, either as a set-off against deferred tax liabilities or as net tax assets.
Deferred tax relating to retaxation of previously deducted losses in foreign subsidiaries is recognised on the
basis of an actual assessment of the purpose of each subsidiary.Tax payable or receivableCurrent tax payable or receivable is recognised in the balance sheet, stated as tax computed on this year's
taxable income, adjusted for prepaid tax.PrepaymentsPrepayments comprise incurred costs relating to subsequent financial years. Prepayments are measured at
cost.CashCash comprises cash in hand and bank deposits.Minority interestsOn initial recognition, minority interests are measured at the minority interests’ share of the acquiree’s net assets measured at fair value. No goodwill related to the minority interests’ equity interests in the acquiree is recognised.Other provisionsOther provisions comprise anticipated costs of decided and published restructuring, etc.
Other provisions are recognised and measured as the best estimate of the expenses required to settle the
liabilities at the balance sheet date. Provisions that are estimated to mature more than one year after the
balance sheet date are measured at their discounted value.Mortgage debtAt the time of borrowing, mortgage debt to mortgage credit institutions is measured at cost which corresponds to the proceeds received less transaction costs incurred. Mortgage debt is subsequently measured at
amortised cost. This means that the difference between the proceeds at the time of borrowing and the nominal repayable amount of the loan is recognised in the income statement as a financial expense over the term
of the loan applying the effective interest method. <br />Other financial liabilitiesOther financial liabilities are measured at amortised cost, which usually corresponds to nominal value.Lease liabilitiesLease liabilities relating to assets held under finance leases are recognised in the balance sheet as
liabilities
other than provisions, and, at the time of inception of the lease, measured at the present value of
future lease
payments. Subsequent to initial recognition, lease liabilities are measured at amortised
cost. The difference
between present value and nominal amount of the lease payments is recognised in the
income statement as a
financial expense over the term of the leases.Prepayments received from customersPrepayments received from customers comprise amounts received from customers prior to delivery of the
goods agreed or completion of the service agreed.Deferred incomeDeferred income comprises income received for recognition in subsequent financial years. Deferred income
include grants received for development projects according to the Danish Financial Statements Act's requirement for gross presentation cannot be offset in the development cost in the balance sheet, but must presented separately under liabilities. Prepayment are measured at cost less a straight line income recognition in line with the linear depreciation of the associated activated project.Cash flow statementThe cash flow statement shows cash flows from operating, investing and financing activities as well as cash
and cash equivalents at the beginning and the end of the financial year.
Cash flows from operating activities are presented using the indirect method and calculated as the operating
profit/loss adjusted for non-cash operating items, working capital changes and income taxes paid.
Cash flows from investing activities comprise payments in connection with acquisition and divestment of
enterprises, activities and fixed asset investments as well as purchase, development, improvement and sale,
etc of intangible assets and property, plant and equipment, including acquisition of assets held under finance
leases.
Cash flows from financing activities comprise changes in the size or composition of the contributed capital
and related costs as well as the raising of loans, inception of finance leases, instalments on interest-bearing
debt, purchase of treasury shares and payment of dividend.
Cash and cash equivalents comprise cash and short-term securities with an insignificant price risk less shortterm bank loans.
The cash flow statement shows cash flows from operating, investing and financing activities as well as cash
and cash equivalents at the beginning and the end of the financial year.
Cash flows from operating activities are presented using the indirect method and calculated as the operating
profit/loss adjusted for non-cash operating items, working capital changes and income taxes paid.
Cash flows from investing activities comprise payments in connection with acquisition and divestment of
enterprises, activities and fixed asset investments as well as purchase, development, improvement and sale,
etc of intangible assets and property, plant and equipment, including acquisition of assets held under finance
leases.
Cash flows from financing activities comprise changes in the size or composition of the contributed capital
and related costs as well as the raising of loans, inception of finance leases, instalments on interest-bearing
debt, purchase of treasury shares and payment of dividend.
Cash and cash equivalents comprise cash and short-term securities with an insignificant price risk less shortterm bank loans.
2024-04-25Lars Monrad-Gylling