Ege Carpets A/S

Management's review

mDKK2023/242022/232021/222020/212019/20Revenue 1,2061,1631,0859151,156EBITDA 134123 89 85130Profit before net financials and tax (EBIT) 7057 20 14 63Net financials -8 -7-7-7-17Profit before tax 62 50 137 46The Group's net profit 4338-2126Total assets, end of year 969 960 960 1,0141,161Share capital 2424242426Equity, end of year, Excluding minority interests 47945543132 493Net working capital 255244218245282Net interest bearing debt 171207242202194Cash flows from operating activities 10677 99 108108Number of employees 605 578587616715Investments in property, plant, and equipment (excluding acquisition of enterprise) 5631 20 1267Acquisition of subsidiary 0 0 0 0 5Depreciation and amortisation 64 66 69 7167Financial ratios Profit margin (EBIT margin) 6 5225Return on invested capital (ROIC) 8 7-1 0 4Return on equity after tax 9 8 -1 0 5Solvency ratio 49 47454342Ratio of net working capital to revenue 2121 20 2724Ege Carpets' purpose – "Designing beautiful carpets for a sus- tainable future" – continues to be the lodestar that guides all the work taking place at Ege Carpets. In 2023/2024, Ege Carpets managed to grow revenue to 1,206 mDKK, which is only the second time in the company's almost 90-years history that rev- enue has topped 1,200 mDKK. Growth was generated in both established and new geographical markets. 2023/2024 was a key step in Ege Carpets' strategic journey "double impact for a better tomorrow", in which the company targets to increase our revenue to above 2,000 mDKK. Together with the aim of doubling revenue, Ege Carpets has joined the Science Based Targets initiative (SBTi). In 2023/2024, Ege Carpets' near term science based targets were approved, which means that the company has, based on its benchmark emissions in 2019, committed to reduce Scope 1 and 2 CO2 emissions by 50.6% by 2030. Thus, Ege Carpets has committed to decouple the growing revenue/activity levels with the CO2 emissions. In 2023/2024, Ege Carpets made a significant dou- ble digit million kroner investment in switching from natural gas to electricity. In doing so, Ege Carpets has managed to reduce its CO2 emissions by over 40%. The company is very proud of this achievement, but the journey does not end here – the aim is to cut CO2 emissions even further. In 2023/2024, Ege Carpets launched its new Rugs concept, which gives customers complete freedom to custom design rugs in a wide range of quality materials, including 100% wool for luxurious and natural softness or regenerated nylon for a mod- ern look. As part of the concept, a market-leading online con- figurator tool, Rug Creator, has been developed, which makes it possible to explore the different collections, colours, shapes and edge solutions that are available as well as to visualise the rugs in different environments. In Ege Carpet's new Rugs concept, the carpets can be delivered in "any size and any shape", hence the concept provides almost infinite possibilities for customers, whether furnishing a modern office landscape, a unique bou- tique hotel or a stylish concept store. The concept also allows customers to choose rugs from our Designer or Colour collec- tions, in which Ege Carpets has collaborated with, for example, Monsieur Christian Lacroix, the designer duo Laura Bilde and Linnea Blæhr, Tom Dixon, and Margrethe Odgaard, to create iconic designs that makes the concept a unique experience. In 2023/2024, Ege Carpets also expanded its 100% wool pro- duct range, which contrasts with the industry standard of 80% wool and 20% nylon. Using 100% wool – a renewable natural material – to produce the carpets reduces the consumption of virgin plastic materials. In addition, carpets made of 100% wool have a higher insulation value than comparable carpets made of other fibre types, so the room temperature feels higher than it actually is, which reduces energy costs. At Ege Carpets, con- siderable interest is already being shown by customers in the 100% wool carpets. "There is a strong demand for innovative material so- lutions today. In particular, we serve customers in the hotel, office and cruise industries, who are increasingly being measured in terms of their sustainability efforts. The new carpet quality meets this requirement without compromising on quality or design. On the contrary." says CEO Rune Stephansen. Over the past two years, Ege Carpets has invested in upgrading and modernising its headquarters in Herning. The investment that was completed in 2023/2024 includes, among other things, new canteen facilities, refurbished offices, a new corporate design and the establishment of a new showroom as well as facades and outdoor areas which now tie in naturally with the biodiversity project Gjellerup Enge – a meadow area situated just outside the factory in Herning. The new facilities are frequently used by visitors and em- ployees at Ege Carpets, and clearly show Ege Carpets' expertise and commitment within design. Moreover, new showrooms were completed in Gothenburg, Hamburg, Munich, Bielefeld, Cologne, and New York during the financial year – all operational elements in the strategic plan "double impact for a better tomorrow". The biodiversity project Gjellerup Enge, which lies next to one of Ege Carpet's factories in Herning, was inaugurated in 2023/2024. The project covers 90 hectares, or the equivalent of about 130 football pitches. Ege Carpets has been one of the driving forces behind the project together with the Municipality of Herning, the water utility Herning Vand, The Danish Nature Fund, and lo- cal landowners. Ege Carpets has donated approx. 33% of the total area for use as a biodiversity area. When establishing Gjel- lerup Enge, Ege Carpets decided to measure the effect of the biodiversity project by commissioning an independent firm of consultants to calculate the Danish Nature Indicator (DNI) score. The result of the first measurement shows that the bioscore has increased by 142% since Gjellerup Enge was established. The bioscore for Gjellerup Enge is now 63% higher than the average bioscore for the Municipality of Herning and 4% higher than the national average in Denmark. Naturrådgiverne Eskildsen & Buur, a firm of nature consultants, says the following about Gjellerup Enge: "The nature restoration project in Gjellerup Enge is one of the best Danish examples of how companies can take responsibility for restoring nature on their own land on a larger scale. Nature's recovery is documen- ted and followed over time by using a completely new monitoring method: the Danish Nature Indicator (DNI). In this way, Ege Carpets leads the way for other compa- nies that want to carry out professionally credible local biodiversity efforts." – Naturrådgiverne Eskildsen & Buur Ege Carpets is continually working to create a diverse and ac- commodating workplace with equal opportunities for everyone. In 2023/2024, Ege Carpets had 76% more students than the target set by the Danish Ministry of Children and Education. In 2023/2024, the proportion of female managers at Ege Carpets increased by 6 percentage points to 30%, while the company has also expanded the commitment to Ege Go2Work. Ege Go2Work is one of Ege Carpets' ESG initiatives. Under Ege Go2Work, the cardboard spools are collected with leftover yarn from Ege Car- pets' Danish factories, ensuring that both the yarn and cardboard are recycled rather than being sent for incineration. The Ege Go2Work employees may be in job training schemes, have vari- ous mental disorders, reduced functional capacity, or social is- sues and might generally have difficulty in finding or holding down a job in the ordinary labour market. As part of the "double impact for a better tomorrow" strategy, new company values were implemented at Ege Carpets in 2023/2024. The values must support the journey and the culture as the company work to achieve its strategic goals. The values reflect the strengths on which Ege rests, while the ambitions and development focus are being further developed. It is important for Ege Carpets to have values that all business units in Denmark and abroad can relate to and feel a part of. Values are central to the daily activities and the corporate culture. A continuing strong Ege culture is what will drive the customer satisfaction, the strategy and the goals of the group. The values were rolled out in autumn 2023, and it was already clear by the end of the year that they are already having a big impact in the organisa- tion. In 2023/2024, Ege Carpets conducted an employee satisfaction survey via an internationally recognised firm of consultants. The results showed, among other things, that Ege Carpets' employer Net Promoter Score (eNPS), which reflects employee satisfaction and loyalty, is twice as high as the global average and more than three times higher than the average for the sector. There is every reason to feel proud! Read more about Ege Carpets' ESG work in the ESG Policy at egecarpets.com. Group Revenue Revenue of the Group amounts to 1,206 mDKK against 1,163 mDKK last year, corresponding to an increase of 4%. This year's revenue is the second highest revenue in Ege Carpets' almost 90 years history. Five out of Ege Carpets' 13 sales divisions have achieved an all time high revenue in 2023/24. Other operating income Other operating income amounts to 6.2 mDKK against 2.1 mDKKlast year. The increase is predominantly due to profit on sale of assets.Expenses Other external expenses amount to 235 mDKK compared to 228 mDKK last year. The increase can be attributed to the increasing activity and market related activities. Staff costs amount to 317 mDKK against 303 mDKK last year. The increase is due to the increase in activity combined with commercial investments in e.g. USA, UK, and key resources in Denmark. Depreciations amount to 64 mDKK against 66 mDKK last year. Profit before net financials (EBIT) EBIT amounts to 70 mDKK (5.8%) against 57 mDKK (4.9%) last year, corresponding to an increase of 22%. Both revenue and EBIT % are within the forecasted interval for 2023/24. The result for 2023/24 is considered satisfactory taking the market conditions into account. Financial items Financial items make up -6.6 mDKK against -6.0 mDKK last year. The result of the year Profit before tax amounts to 62 mDKK against 50 mDKK last year, this is an increase of 23%. Tax on the profit for the year is 18.6 mDKK against 12.7 mDKK last year. Net profit for the year amounts to 43.3 mDKK against 37.6 mDKK last year, this equals an increase of 15% compared to last year. Equity The group's equity is 479 mDKK against 455 mDKK last year. The solvency ratio is 49.5% against 47.4% last year. Net interest bearing debt Net Interest debt amounts to 171 mDKK and has decreased by 36 mDKK during the fiscal year. Cash flow statement Cash flow from operating activities amount to 106 mDKK. This is an improvement of 29 mDKK compared to last year, which is primarily due to increased activity and improved handling of working capital. Cash flows for investments amount to -54 million mDKK against -32 mDKK last year. This has generated a free cash flow of 52 mDKK, compared to 45 mDKK last year. Cash flows from financing amount to -52 million mDKK against -33 mDKK last year. 15 mDKK has been paid in dividend in the fiscal year.Changes in cash and cash equivalents amount to -1 mDKK, and liquid assets thus amount to 37 mDKK at the end of the year. The group year on year continues to generate a healthy free cash flow, combined with the available capital from existing facilities the capital availability is more than sufficient to facilitate the group strategic growth journey. Investments Investments in long term assets of the year amount to 56 mDKK compared to 34 mDKK last year. The majority of the investments has been made in lowering Ege Carpets CO2 emissions and commercial initiatives. The parent company Proposed distribution of profit The year's result of 35.3 mDKK is proposed to be allocated as follows: kDKK Dividend20,000 Transferred to Retained earnings 15,32635,326In 2024/25 we expect a revenue between 1.2 and 1.3 billion DKK, combined with an EBIT margin of 6-8%. In the strategic work, growth potentials have been identified both in relation toproducts as well as geographical market growth potentials.Ege Carpets is partly owned by Ege Fonden, the sole purpose of which is to donate to charitable and non-profit projects in the local area of Ege Carpets. Ege Fonden thus sends all dividends from the company back to society in the form of donations, in line with “for a better tomorrow”. Risk management General risks Through Ege Carpets' operation and strategy Ege Carpets is subject to risk factors of both a commercial and financial nature. The risks may affect the value of the group's earnings as well as the value of assets and liabilities but are generally no different from what is usual for other companies in the carpet industry. Financial risks As a result of its operations, investments and financing, the group is exposed to changes in exchange rates and interest rates. Currency risks The Group is characterized by the fact that the majority of pro- duction takes place in Denmark, while invoicing primarily is in foreign currency. In 2023/24 87% of the revenue was exported and sold in foreign currencies, which is a small increase com- pared to last year. Interest rate risks The net interest bearing debt has decreased by 36 mDKK duringthe year to 171 mDKK.The vast majority of the group's interest bearing debt has a fixed interest. An increase in the interest rate level of 1% p.a. in relationto the year's actual interest rates, all other things being equal, would have a negative impact on profit and equity of 0.2 mDKK(2022/23: 0.3 mDKK).Credit risks The group's receivables are generally not considered to be as- sociated with unusual credit risk. If more than usual uncertainty is attached to the credit assessment of trading partners, recei- vables are secured. Such security typically consists of financial guarantees or credit insurance. Research and development activities In the group there is continuous optimisation of existing pro- ducts, development of new products and new innovative pro- duction methods are explored. This work is done both internally, in collaboration with suppliers and other relevant contributors. Costs for this are recognised in the income statement. Subsequent events No subsequent events have occurred by year end closing of sig- nificant importance to the financial position in the Group or in the parent company. Rugs redefined Growing core business by rethinking the potential To help reach double impact, the rugs product category has been assigned further strategic priority. More specifically, we ex- pect rugs to account for 20% of our turnover by the fiscal year 2026/2027. To support this ambition, we've invested heavily in rethinking our existing rug selection and in adding new, com- plementary styles. Thus, the rug concept combines a carefully curated selection of our bestselling constructions with novelties primarily chosen for their ability to ensure product diversity since they're either crafted in 100% wool or polyamide with high pile weight. Ege CircleBack A ground-breaking take-back concept reducing your used carpet's end-of-life CO2 emissions by as much as 60% In Europe, only 1-3% of carpets are recycled. The rest finds space in landfill sites or goes up in smoke. It's time for a change and therefore, we've proudly introduced Ege CircleBack, a ground-breaking take-back programme that aims to minimise waste by recycling and reusingyour used carpet.Ege Carpets supplies carpets to the world's largest food companyThe Danish carpet giant Ege Carpets has delivered carpets to the food giant Nestlé's  square meter Scandinavian headquar-ter in Copenhagen, Denmark.Ege Carpets supplies carpets to a wide range of customers, in-cluding the international luxury hotel chain Marriott, Pepsico and ive-star cruise ships.Now employees at Nestlé, the world's largest food company, can enjoy Ege Carpets' creations at their new Scandinavian headquarter in Copenhagen, which are now itted with colourful rugs in the café and lounge areas as well as carpet tiles in muted shades in the more traditional desk zones.New showroomsNew showrooms were completed in Herning, Gothenburg, Ham-burg, Munich, Bielefeld, Cologne, and New York during the inan-cial year – all operational elements in the strategic plan "double impact for a better tomorrow".SHE: a new designer collection crafted from 100% woolSHE is Ege Carpets' irst WOOL designer collection and a natural embrace of renewable materials, luxurious comfort and uncompromising quality. Crafted from  pure new wool yarn, which is spun from extra-long ibres perfectly matching the durability of mixed wool/nylon qualities, the carpet collection holds a heavy commercial wear rating.A tribute to herSHE celebrates female artists in their time not obtaining the rec-ognition they deserved within the textile weaving, sculpture or painting handicrafts. Thus, SHE honours women who helped clear the way for future female artists, who, then and now, live and breathe design. The collection is a tribute to these women – a tribute to her.

Description of significant activities of entity

Ege Carpets in short Ege Carpets was founded by Mads Eg Damgaard in 1938. The company is one of Europe's leading carpet manufacturers and is driven by a strategy of "designing beautiful carpets for a sustain- able future". Production takes place at five factories in Denmark using the most advanced technology in the industry. Further- more, carpet yarns in primary wool are manufactured at a factory in Lithuania. Ege Carpets annually produces around 6.0 million m² carpets, which primarily are sold to the commercial market. Ege Carpets produces unique floor designs in a more sustainable way by turning waste into resources, while striving to keep the material components in closed loops. Via nine sales offices and more than 50 partners worldwide, Ege Carpets supplies Cradle to Cradle-certified carpets to e.g. hotel, office and marine projects in over 80 countries. Visit egecarpets.com for further details.