Gabriel_Annual_Report_2024-25 - Flipbook - Page 89
CONTENTS // CONSOLIDATED FINANCIAL STATEMENTS AND PARENT COMPANY FINANCIAL STATEMENTS // NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS AND PARENT COMPANY FINANCIAL STATEMENTS
Goodwill
The carrying amount of goodwill of DKK 25.8 million is allocated between the cash-generating units (CGUs) Screen Solutions (DKK 5.5
million), UAB Gabriel Textiles (DKK 5.3 million) and Gabriel A/S (DKK 16.0 million).
The carrying amount of goodwill was impairment-tested using discounted cash flow models based on a “value in use” approach, on
2025/26 budgets approved by the Board of Directors and on projections for subsequent periods (a total of five years). Terminal value
must be added to this.
Impairment testing of the cash-generating units compares recoverable amount, equivalent to the net present value of the expected
future free cash flows, with the carrying amounts of the individual cash-generating units.
The key assumptions are revenue growth, EBIT margin and discount rate. Projected revenue growth for all CGUs is generally in line
with the Group’s realised growth. Projected EBIT rates are also supported by the EBIT rates realised for comparable Group activities. Discount rates (WACC) used to calculate net present value are after tax and reflect risk-free interest rate plus specific risks in the
individual geographical cash-flow generating units. Growth equivalent to the expected inflation rate (1.5-2.5%) was recognised in the
terminal period. Growth rates for the terminal value thus do not exceed the average long-term growth rate for the Group’s products/
markets.
Management prepared sensitivity analyses for the key assumptions.
Key assumptions and sensitivities are summarised as follows for cash-generating units:
Based on the current market price, the Group’s market capitalisation significantly exceeds book equity. The closing price at 30 September 2024 was DKK 270, the equivalent of market capitalisation of DKK 510 million.
Screen Solutions (UK)
The CGU comprises revenue from customers on the UK market, royalties, and sale of design services to the FurnMaster companies. The
company also provides storage and other services, including lamination production, to the Group’s fabric business.
In accordance with the business case, the FurnMaster companies produce Screen Solutions products and sell them to the Group’s
major furniture customers. The UK company also receives royalty income, which is part of the impairment test for Screen Solutions.
The impairment test is sensitive to revenue development in the FurnMaster companies and the royalty income deriving from it and to
income from services to the Group’s other business areas, including the fabric business on the UK market.
Revenue and operating profit did not meet expectations in 2024/25.
In management’s view, the UK market may generate greater revenue growth than assumed but due to general uncertainty in the
market and the ongoing outsourcing process, management considers that modest growth is more likely in the coming year.
The implemented adjustments contribute to a reduced cost base. Adjustments will continue throughout 2025/26 and, combined with
good opportunities for growth in direct sales to the UK market and, as a service partner for the Group, the company is expected to be
profitable from 2026/27.
On the basis of these assumptions, revenue and EBIT sensitivity is within the high interval.
CONSOLIDATED
2024/25
Screen Solutions (UK)
UAB Gabriel Textiles (Lithuania)
Gabriel A/S (Denmark)
Discount rate
(after tax)
11.4%
10.0%
11.0%
Discount rate
(before tax)
11.9%
10.6%
11.7%
Av. annual
revenue
growth
until terminal
period
10%
8%
10%
Av. EBIT rate
until terminal
period
5%
11%
14%
Sensitivity
revenue/EBIT
(minimum
index)*
94
82
89
* The sensitivity computed for revenue/EBIT shows the minimum share of expected revenue/EBIT that must be realised to avoid
impairment charges.
Based on the current market price, the Group’s market capitalisation significantly exceeds book equity. The closing price at 30 September 2025 was DKK 240, the equivalent of market capitalisation of DKK 454 million.
2023/24
Screen Solutions (UK)
UAB Gabriel Textiles (Lithuania)
Gabriel A/S (Denmark)
Discount rate
(after tax)
11.4%
10.8%
11.0%
Discount rate
(before tax)
11.9%
11.5%
11.7%
Following the acquisition, investments in production equipment and skills have developed UAB Gabriel Textiles into a knowledge centre
with competitive production units for weaving and knitting services. Against this background, the company makes a significant contribution to Gabriel’s value-adding on the global markets.
In accordance with the original business case, management considers that the acquisition has a positive synergy effect on Gabriel’s
earnings from fabrics. On this basis, most of the goodwill has been allocated to the CGU Gabriel A/S.
Growth assumed is in line with the generally projected revenue growth in the Group’s sales of fabrics. Production capacity increased
significantly over the last few years, and management considers that it supports projected growth. Overall, revenue and EBIT sensitivity is judged to be low.
Gabriel A/S
New customers and expansion of existing customer relationships are expected to drive revenue growth. Strong growth over the last
few years underpins the expectation that continued growth is realistic. Production capacity has increased significantly over the last few
years.
CONSOLIDATED
Av. annual
revenue
growth
until terminal
period
10%
10%
10%
UAB Gabriel Textiles (Lithuania)
UAB Gabriel Textiles has been the main weaving partner in the European fabric production since 2002. The aim of purchasing the
shares in the Lithuanian company in 2018 was to support the Group’s growth in the fabric business and to ensure continued high
reliability of supply, quality and competitiveness.
Av. EBIT rate
until terminal
period
9%
11%
19%
Sensitivity
revenue/EBIT
(minimum
index)**
96
87
89
** Sensitivity computed for revenue/EBIT shows the minimum share of projected revenue/EBIT that must be realised to avoid impairment charges.
As a result of the ample margin, probable changes in key assumptions are judged not to result in impairment charges.
Development projects
Development projects comprise the development of new fabrics. Impairment write-downs of development projects totalled tDKK 23
(2023/24: tDKK 472).
The Group performed an impairment test on the carrying amounts of the recognised development projects. The test included an evaluation of the project development sequence, in the form of expenses paid and results obtained relative to the approved project and
business plans. The values of a few finalised development projects will be maintained if sales are realised as expected in the coming
years.
It was judged on this basis that recoverable amount exceeds carrying amount. As in 2023/24, no public subsidies were received in
2024/25.
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