Annual Report 2014 - Flying Tiger Copenhagen...Zebra A/S – Annual Report 2014 Management Commentary 7 Key figures DKKm 2014 2013 2012 20111 20101 Income statement Revenue 2,464.2

Management Commentary

1Zebra A/S – Annual Report 2014

Zebra A/S

AnnualReport2014

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Content

This is Tiger

Key figures

Operating and financial review 2014

Strategy

Corporate social responsibility

Corporate governance

Risk management

Board of Directors

Executive Management

Consolidated financial statements

Financial statements – Parent Company

Management statement

Independent Auditors’ opinion

This is TigerZebra, the parent company of the TIGER stores, is a rapidly

growing international variety retailer offering a broad

range of mostly own-branded, own-designed products

that are marketed internationally through the Group’s

stores under the TIGER, Flying TIGER and TGR brand

names. By the end of 2014 the Group operated 411

stores in 26 countries.

Working continuously with innovative design and product

development, TIGER has a dynamic product assortment

and introduces up to 300 new products every month.

The assortment includes categories ranging from home,

hobby and party over toys, electronics and gadgets, to

food and accessories, with the products having a distinct

Scandinavian design DNA and often a humorous twist.

The products are sold at affordable prices and have broad

appeal across age and income groups.

Across markets, the Scandinavian decor is a differenti-

ating characteristic of the TIGER stores. They are bright,

easy to navigate and designed to provide customers with

a fun and pleasant shopping experience.

Founded in 1995 and headquartered in Copenhagen,

Denmark, Zebra employs more than 3,000 people world-

wide and generated revenue of DKK 2,464m and EBITDA

of DKK 364m in 2014.

1995 Today

The evolution of Tiger

Products launches

Pricing

Brand

Danish “one dollar” discount concept

Stylish internationalfun shopping concept

10 kroner Multi round price points (DKK 10, 20, 30, 40, 50, 100)

Sporadic 2 product campaigns per month

The name of a store

Clearance EuropeOwn brand,

packaging and design

a growing consumer brand

Concept

Products

Existing markets 2013

New markets 2014

Total number of stores 2014 (Net new stores 2014)

Markets and stores

1 (+1)

AUSTRIA

4 (+3)

BELGIUM

23 (+2)

FINLAND

44 (+23)

ITALY

5 (+0)LATVIA

6 (+0)LITHUANIA

26 (+4)NORWAY

8 (+5)POLAND

4 (+0)

SCOTLAND

52 (+18)SPAIN10 (+6)

PORTUGAL

1 (+1)FRANCE

23 (+7)GERMANY

9 (+2)

GREECE

12 (+2)

HOLLAND

1 (+1)

CYPRUS

3 (+3)

CZECH REPUBLIC

69 (+5)DENMARK

37 (+7)

SWEEDEN

1 (+0)

FAROE ISLAND

5 (+1)

ICELAND

36 (+11)

ENGLAND

3 (+2)

WALES13 (+5)

IRELAND

2 (+2)

ESTONIA

13 (+11)

JAPAN

2014 Highlights

Revenue growth

DKK 2,464 million

DKK 364 million

DKK 196 million

EBITDA growthBefore special items

Profit growthBefore special items, after tax

44%50%

68%

MARSHMALLOWS DKK 20

Zebra A/S – Annual Report 2014 Management Commentary

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Key figuresDKKm 2014 2013 2012 20111 20101

Income statement

Revenue 2,464.2 1,710.9 1,100.2 710.1 519.8

Gross profit 1,529.9 1,035.8 660.0 419.0 299.7

EBITDA before special items 364.2 242.3 164.9 109.6 73.0

EBIT before special items 286.5 194.3 137.6 93.1 62.4

EBIT 286.5 223.9 132.4 93.1 62.4

Profit before special items, after tax2 195.7 116.7 92.7 63.8 44.4

Profit for the year 195.7 147.7 88.8 63.8 44.4

Financial position at 31 December

Total assets 1,555.9 929.7 580.6 309.0 203.2

Net working capital 318.2 101.9 116.0 65.2 37.0

Net interest-bearing debt 155.2 12.2 27.6 (19.1) (28.9)

Equity before recognition of provisions for

acquisition of non-controlling interests 605.3 377.0 232.2 157.8 109.7

Provisions for acquisition of non-controlling interests 704.8 363.5 234.0 - -

Equity according to IFRS (99.5) 13.5 (1.8) 157.8 109.7

Cash flow and investments

Cash flow from operating activities 65.0 139.3 74.3 62.6 34.9

Cash flow from investing activities (199.8) (148.6) (97.6) (52.0) (25.2)

Free cash flow (134.8) (9.3) (23.3) 10.7 9.7

Key ratios

Revenue growth 44.0% 55.5% 54.9% 36.6% 29.0%

Gross margin 62.1% 60.5% 60.0% 59.0% 57.7%

EBITDA margin before special items 14.8% 14.2% 15.0% 15.4% 14.0%

EBIT margin before special items 11.6% 11.4% 12.5% 13.1% 12.0%

Profit margin before special items, after tax 7.9% 6.8% 8.4% 9.0% 8.5%

Profit margin 7.9% 8.6% 8.1% 9.0% 8.5%

Comparable store sales growth3 (1.0)% 1.0% 1.6% 4.2% 11.0%

Net working capital, % 12.9% 6.0% 10.5% 9.2% 7.1%

Leverage 0.4x 0.1x 0.2x (0.2)x (0.4)x

Number of stores, including joint ventures 411 289 197 120 86

Proforma consolidated financial information4

Proforma revenue 2,562.8 1,735.0 - - -

Proforma gross profit 1,582.9 1,049.2 - - -

Proforma EBITDA before special items 371.1 245.3 - - -

Proforma gross margin 61.8% 60.5% - - -

Proforma EBITDA margin before special items 14.5% 14.1% - - -

1 As of 1 January 2012, accounting policies were changed to IFRS. Comparative figures for 2010-2011 are presented in accordance with the Danish Financial Statements Act. Difference between the previous accounting policies and IFRS mainly relate to the accounting for put options held over non-controlling interests, amortisation of goodwill, and valuation of residual values regarding leasehold rights.

2 Profit before special items, after tax is defined in Note 1.1.3 Comparable store sales growth is defined in Note 1.1 and for 2010 includes Danish stores only.4 Proforma consolidated financial information reflect a proforma proportionate consolidation of the 50% owned Japanese joint venture.

TIGEROXFORD STREET LONDON New store opened in 2014


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Operating and financial review 20142014 was another year of profitable revenue growth, driven by new

store openings and a strengthened corporate backbone. The expansion

of the international store network – an average of more than two store

openings per week in 2014 – paved the way for record revenue of DKK

2,464m, an increase of 44% compared to 2013, and profit for the year of

DKK 196m. Management and the Board of Directors consider the oper-

ational and financial performance of 2014 to be satisfactory, and overall

in line with expectations. The increase in net working capital (“NWC”),

however, was higher than expected and consequently Management has

launched initiatives to reduce NWC.

Zebra opened net 122 new stores in 2014 (net 111 new stores exclud-

ing the Japanese joint venture) and entered 5 new markets. The TIGER

concept was well received in all new markets. By the end of 2014, Zebra

operated 411 stores in 26 countries.

Based on the progress made in 2014, Zebra is well positioned to continue

the growth in 2015, while at the same time continuing to strengthen the

organisation, processes and systems.

Revenue developmentTotal revenue for 2014 was DKK 2,464m, an increase of 44% compared to

2013. The increase was driven by net new store openings in 2014 and the

full-year effect of stores opened in 2013, contributing each with approx-

imately 23 percentage points of revenue growth, whereas there was a

slightly negative comparable store sales growth (1.0)%.

Management launched a number of initiatives to mitigate the negative

comparable store sales growth, including better product availability in

the central warehouses and improved in-store operations. Overall compa-

rable store sales growth improved throughout the year and was positive

in fourth quarter. In certain markets comparable store sales growth was

impacted negatively by cannibalisation as a consequence of the increas-

ing store penetration.

2014 revenue

Net Revenue Growth new (DKKm) (%) stores

Denmark 564 6% 5

Italy 323 110% 23

England 317 67% 11

Spain 313 67% 18

Sweden 181 23% 7

Subtotal 1,698 41% 64

Total 2,464 44% 111


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In 2014, Zebra opened 103 new stores in existing markets. More than

half of the new stores were opened in the Group’s top five markets,

which contributed with approximately 65% of the Group’s total revenue

growth. The top five markets made up approximately two thirds of the

Group’s total 2014 revenue.

The Group continued to expand into new markets in 2014. In May, Zebra

opened its first store in the Czech Republic. It soon proved to be a com-

mercial success and was followed by two additional store openings in

November. In October, Zebra entered the French market, opening a store

in Nice. Zebra also entered new markets in Austria, Estonia and Cyprus.

By the end of 2014, Zebra was present in most of the European countries.

Having only limited store penetration outside Denmark, the potential for

store expansion is considered to be significant.

Development in earningsEarnings before interest, tax, depreciation and amortisation (“EBITDA”)

before special items amounted to DKK 364m compared to DKK 242m in

2013. The EBITDA margin before special items increased to 14.8% – a 0.6

percentage point improvement from 2013. The margin increase was driv-

en by a higher gross margin of 62.1% compared to 60.5% in 2013. The

gross margin was positively affected by product mix.

Operating costs (staff costs and other external costs) were DKK 1,166m

in 2014 compared to DKK 794m in 2013, representing 47.3% of revenue

in 2014 compared to 46.4% in 2013. The absolute increase was primarily

driven by the opening of new stores, full-year impact of stores opened in

2013 and investments in the corporate backbone.

Profit before special items, after tax amounted to DKK 196m compared to

DKK 117m in 2013 corresponding to a 68% increase.

Free cash flow and net interest-bearing debtNWC increased significantly from DKK 102m in 2013 to DKK 318m in

2014. This was primarily a result of an increase in inventories due to the

opening of new stores but partly offset by higher trade payables.

To improve inventory turnover Management is strengthening process-

es and tools to enhance transparency, forecasting and stock allocation

between warehouses. Furthermore, the organization will be strength-

ened with additional resources and capabilities within supply chain

management. Going forward a new ERP platform will be a key lever

for improving inventory turnover.

Cash flow investing activities increased from DKK 149m to DKK 200m,

primarily driven by investments related to the opening of new stores. The

remaining investments related to existing stores as well as investments in

the corporate backbone.

EBITDA

DKK million 364 in 2014

Zebra A/S – Annual Report 2014


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Equity

DKKm 2014 2013

Equity before recognition of provisions for acquisition of non-controlling interests 605 377

Provisions for acquisition of non-controlling interests 705 364

Equity according

to IFRS (100) 14

Despite a strong EBITDA contribution from both existing and new stores,

the free cash flow ended at DKK (135)m due to the increase in NWC and

investments. Net interest-bearing debt was DKK 155m end of 2014, com-

pared to DKK 12m in 2013.

Provisions for the acquisition of non-controlling interest and equity With the exception of the joint venture in Japan, local partners hold a

non-controlling interest and a put option to sell their non-controlling in-

terest to Zebra, whereas Zebra holds a call option to acquire the partners’

non-controlling interest. Under IFRS, Zebra is considered to control these

partnerships which lead to full consolidation under IFRS. Accordingly, the

subsidiaries are fully consolidated in the consolidated financial statements

and provisions have been made for acquisition of the non-controlling

interests at estimated total amounts owed to the local partners upon

an exercise of the put option or the call option if Zebra has exercised its

call option. The exercise prices are determined by contractually defined

EBITDA multiples.

The calculation of the provisions under IFRS for the put options is based

on the general assumption that the local partners all exercise their put

options at year-end 2014 with the agreed notice period of 12 months.

It should be noted though that no local partners have currently exercised

their put options. For certain of the local partners, which constitute more

than 80% of the total provision, Zebra may under normal circumstances

limit the number of these partners allowed to exercise their put options

to one every financial calendar year.

In 2014, the provisions for acquisition of non-controlling interests,

non-current and current in total, increased to DKK 705m in 2014 from

DKK 364m in 2013. The increase was driven by EBITDA expectations in the

jointly owned local operating companies.

Equity under IFRS amounted to DKK (100)m at 31 December 2014, com-

pared to DKK 14m at 31 December 2013 primarily as a result of the DKK

341m increase in the provisions for the acquisition of non-controlling

interests offset by profit for the year of DKK 196m and comprehensive

income relating to hedging instruments of DKK 40m.

Japanese joint ventureFollowing a successful store opening of an own store in Osaka, the Japa-

nese joint venture was established together with a local partner in June

2013. Unlike the partner model applied in Europe, Zebra and the partner

have joint control of the operating company in Japan, which is why the

Japanese joint venture is not consolidated.

The Japanese joint venture reported strong growth in 2014. Revenue

grew from DKK 47m in 2013 (2013 revenue in Japan for the period before

establishment of the joint venture was DKK 26m) to DKK 211m in 2014

driven by new store openings. In 2014, Zebra opened 11 new stores

taking the total number of stores in the Japanese store network to 13.

Zebra A/S – Annual Report 2014Management Commentary

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However, following extraordinary interest during the first store openings,

store traffic is now at a more normalised level. EBITDA for 2014 was DKK

14m, compared to DKK 6m in 2013 (2013 EBITDA in Japan for the period

before establishment of the joint venture was DKK 5m) with correspond-

ing margins of 6.6% and 13.1%, respectively.

NWC increased from DKK 24m in 2013 to DKK 72m in 2014. The increase

was driven by new store openings. Management of the Japanese joint

venture considers the inventory too high and has launched improvement

initiatives to normalise inventory levels.

Proforma consolidated financial informationThe Group’s proforma consolidated revenue, which reflects its 50% own-

ership of the Japanese joint venture, was in 2014 DKK 2,563m compared

to DKK 1,735m in 2013. Proforma EBITDA before special items for 2014

was DKK 371m, representing an increase of 51% compared to 2013, and

corresponding to a margin of 14.5%. The proforma financials are provid-

ed in key figures.

Organisation and ManagementIn early 2015, Xavier Vidal joined Zebra replacing Christian Mariager as

the CEO of the Group. Xavier Vidal comes from a position as Managing

Director of EMEA (Europe, Middle East and Africa) of The Body Shop, the

personal beauty retailer with over 2,500 stores in more than 60 countries.

Xavier Vidal brings broad and international experience from the retail in-

dustry, having held several leadership positions during his five years with

The Body Shop and in previous positions with Sainsbury’s and Tesco.

Outlook for 2015In 2015, Zebra expects to continue the growth trajectory, primarily driven

by store roll-outs in existing geographies and expansion into selected

new geographies, while maintaining a stringent focus on comparable

store sales growth. Overall, revenue and earnings are expected to grow

significantly.

Proforma revenue

DKK million 2,563in 2014

TIGERKYOTO

New store opened in 2014

Design awards

ANDREAS SKOVGAARD Designer of the TEA BIRDDKK 100


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An integral part of the Group’s strategy is to grow market presence and

make the TIGER concept and products available to an increasing number

of consumers, while at the same time continuing to develop and refresh

the concept to ensure the Group’s long-term success.

Business modelZebra’s business model combines a retail concept with an attractive value

proposition and broad appeal, a partner-based expansion model enabling

rapid and sustainable growth and a scalable corporate backbone facilita-

ting operational leverage and solid profits.

Brand and retail conceptThe TIGER brand is all about the retail concept, from the design and

packaging of products to the atmosphere in the stores and how the store

personnel meets the customers. The brand is adventurous and friendly

and represents all that is current and relevant with a conversational and

relaxed tone of voice.

The retail concept is based on three core pillars – assortment, store and

customer experience – and has proven its worth in very different geog-

raphies and environments, helping Zebra to win a number of retailer

awards in Europe in 2014.

AssortmentThe assortment consists primarily of own-branded products with a Scan-

dinavian flavour and often a humorous twist. Most often the products

are designed by Zebra’s own design department or in close cooperation

with external designers. Zebra’s in-house design and development team

continually optimises the product portfolio, striving to maintain a fresh

product assortment that appeals to consumers by applying retail insight

and monitoring new trends.

While the products are offered at affordable round price points, it is a key

objective that the quality should meet or exceed the customer’s expec-

tations as well as Zebra’s CSR requirements (see CSR section). The price

range of the product offering is typically from 10 to 100 Danish kroner.

The assortment includes categories ranging from home, hobby and party

over toys, electronics and gadgets, to food and accessories and has a

broad appeal across age and income groups. Each month the assortment

is refreshed with up to 300 new products divided in two product cam-

paigns, typically adapted to seasonal themes and/or festive occasions, e.g.

summer, winter, Easter or Christmas, giving the customers a new experi-

ence every time they go into a TIGER store.

Strategy

Dynamicassortment

up to

300 new products every month


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StoreTIGER stores are located on high streets or in popular shopping malls.

The typical size is between 200 and 300 m2, but there are also a number

of stores between 400 and 600 m2. Across markets, the Scandinavian

decor is a differentiating store characteristic.

The stores are designed to create an inviting and welcoming setting in-

tended to make a visit to a TIGER store a fun and surprising shopping ex-

perience. The products are mainly displayed on pallet tables with discreet

price signs and warm lighting creating stylish but unpretentious product

presentations. The maze floor lay-out ensures that customers are guided

through the store and all main product categories.

Customer experienceThe store personnel serves thousands of customers daily. Their dedication

and commitment to the concept is critical for customers’ shopping expe-

rience and their positive perception of the brand. To sustain a positive

customer experience of the TIGER concept, Zebra is critically dependent on

the quality and commitment of the store staff, and is continuously working

to further improve training and professional development for the staff.

Expansion modelEstablishing new stores is generally achieved through 50/50 owned

partnerships with a local partner, which significantly increases Zebra’s

organisational capacity for international expansion and reduces the risks

when entering new markets.

A jointly owned local company is set up, and Zebra shares investments,

costs and profits with the local partner. In other words, the cooperation is

a business partnership, not a franchise operation. The local partnership is

assigned a certain territory, with the size of the territories ranging from a

city to an entire country.

Zebra owns the concept and brand and supplies the products, while the

local partner is responsible for store roll-outs and day-to-day operations

including staffing, training and local marketing under specific guidelines

set out by Zebra.

Partners are typically individuals or a small group of people with an en-

trepreneur mindset who are appointed after a thorough selection process

that involves evaluating candidates based on their understanding of the

concept, retail experience, local market knowledge and managerial and

financial capacity.

With the exception of the Japanese joint venture, the partnership model

has a contractually defined exit-mechanism, where the local partner holds

exercisable put options that grant them the right to sell their non-con-

trolling shareholding to Zebra with redemption prices at contractually

defined EBITDA multiples. At the same time, Zebra holds call options to

acquire a partner’s shareholding, which are exercisable at contractually

defined EBITDA multiples.

PALETTE DKK 20

Zebra A/S – Annual Report 2014 Management Commentary Strategy

17

TIGER STRATFORD

New store opened in 2014


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It is part of Zebra’s strategy to take full ownership of the local operating

companies when this is assessed to be more beneficial than the partner

model. Today, Zebra’s operating companies in Denmark, Finland, Iceland

and Scotland are all wholly owned.

Corporate backboneThe rapid growth is supported by a flexible and scalable supply chain

model, continuous investment in new IT infrastructure and continued

strengthening of the organisation and processes.

Financial and operating model Zebra has established an operating model with a governance structure

anchored with Executive Management for monitoring and reviewing the

local operation’s operational and financial performance aiming to pro-

actively address any potential disruptions in local markets and operating

companies. In addition there has been taken initiatives to strengthen the

process around the supply chain in order to improve working capital and

thereby freeing up capital for further store expansion and partner buy-

outs.

Supply chain modelWhile the continuous work with product selection, innovation and

product development is carried out by Zebra, production is outsourced

to external suppliers who subscribe to Zebra’s code of conduct and work

under Zebra’s supervision (see CSR section).

A large part of the logistics is outsourced to external operators facilitat-

ing an asset-light and highly scalable logistics operation. Transportation

is provided by external forwarders, and while the warehouse in Brøndby

(DK) is operated by Zebra, the warehouses in Horsens (DK) and Thrapston

(UK) are both operated by an external partner.

In 2014, Zebra decided to increase warehouse capacity and at the same

time reorganise the warehouse footprint to reduce lead time to the

stores. The warehouse in Horsens (DK) will relocate to Barcelona (ES) and

the warehouses in Brøndby (DK) and Thrapston (UK) will move to larger

facilities. An external partner has been selected to operate the ware-

house in Barcelona and to continue operating the warehouse in the UK.

The new set-up will support the expected growth going forward and is

expected to be fully implemented by the end of 2015.

IT infrastructureA new, group-wide ERP platform is currently being implemented. The first

stores were converted to the new system late in 2014 and in 2015 Zebra

expects to begin a gradual roll-out to the store network and administra-

tive functions. The new ERP platform will strengthen the Group’s infra-

structure and support the expected growth as well as enable optimisation

of the existing stores and supply chain.

ALARM CLOCK DKK 100


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People People are key to the continued success and future expansion of the TI-

GER concept. It is important that Zebra can continue to attract, motivate

and retain highly qualified personnel at all levels of the organisation to

support future growth.

At the head office creative minds are working to refresh the assortment,

improve aspects of the concept, marketing and brand, while administra-

tive staff works to enable the rapid expansion of the concept. In 2014,

Zebra strengthened the creative and administrative teams by adding

additional people and skills. This process will continue in 2015.

Growth leversZebra pursues four growth levers to strengthen the Group’s market posi-

tion and to increase revenue and profit:

• Increase comparable store sales growth

• Increase store penetration in existing markets

• Geographical expansion into new markets

• Increase operating margins from scale advantages

Increasing comparable store sales growthZebra designs and sells affordable products and aims to constantly im-

prove the product portfolio to meet consumer demand. The commercial

team continuously evaluates the assortment, retiring and introducing

products and designs in order to maintain an attractive, innovative and

fresh product offering. This is done through the development of new

innovative designs and products and by monitoring sales to consumers at

product level.

Each month, Zebra introduces new products adapted to the season and

with a common theme. A significant share of revenue is generated from

this campaign structure, and it is considered an important growth driver.

Zebra also strives to increase customers’ buying frequency and the value

of average basket size by continuously improving merchandising, in-store

execution, marketing and introducing products with higher price points.

Increase store penetration in existing marketsZebra has applied its partner-driven expansion model to establish new

stores in multiple countries at the same time with commercial success

across all countries so far. With only limited penetration in most markets

outside Denmark, there is a significant potential for store expansion in

existing markets.

Stores are leased to minimise upfront investment and are located on high

streets and in popular shopping malls. An experienced expansion team

assists the local partners in identifying and selecting locations for new

stores as well as assisting in lease negotiations. Zebra has a thorough new

store approval process anchored in the Executive Management to ensure

a continued high quality store portfolio.

Net new stores

122 in 2014


20

Geographical expansion into new marketsIn addition to a continued store roll-out in existing markets, it is part of

Zebra’s growth strategy to expand into new territories and markets in

order to facilitate future growth as existing markets gradually mature.

As a result of the concept’s commercial success in new markets, Zebra

is experiencing an increasing interest in partnerships from large corpo-

rations and highly qualified entrepreneurs. The potential partners go

through a thorough selection process before they are appointed. Zebra

has developed a market entry model, and when entering new markets,

the company establishes proof of concept by assessing how customers

receive the first shop before making a decision on further expansion.

Increase operating margin from scale advantagesWhile operating margin is impacted by considerable investments in the

corporate backbone to position the Group for future growth, operating

margin is expected to improve as a result of operational leverage of the

cost structure. The Group furthermore intends to capitalise on opportuni-

ties across the supply chain as the business grows and further economies

of scale are achieved.

BICYCLE BELL DKK 20

STORAGE SUITCASES DKK 50, 100 & 150

FLYING TIGERAMSTERDAM New store opened in 2014


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Policy and approachActing responsibly is deeply engrained in the values and practices of

Zebra and its employees. Zebra’s philosophy is to sell products that are

safe and produced with the greatest respect for human rights and with

due concern for social and environmental conditions, both in-house and

at the Group’s suppliers. This naturally entails that Zebra strives to control

its impact on society and on the environment.

Activities and resultsBased on an assessment of the Group’s existing and potential impact on

environment and society, Zebra’s CSR strategy targets three focus areas:

• Responsible supply chain management

• Product health and safety

• Environmental impact

Responsible supply chain managementZebra has more than 500 suppliers, the majority of which are located

in Asia, primarily China. Approximately 80% of the purchase volume is

sourced from Asia and the remaining part from Europe. All suppliers must

adhere to and duly sign the “Zebra Supplier Code of Conduct” (available

at www.tiger-stores.com). The code of conduct includes criteria in respect

of human rights and labour rights as well as protection of the environ-

ment and anti-corruption. The code of conduct applies to all Zebra sup-

pliers. Since a close relationship with the suppliers is an important factor

in ensuring supplier compliance with the code of conduct, Zebra aims to

build long-term relationships with core suppliers.

In 2014, the code of conduct and the supplier audit programme were

updated to meet the requirements of the new UN Guiding Principles on

Business and Human Rights.

Collaboration with suppliers and continuous improvements are central to

Zebra’s responsible supply chain management efforts. Thus, Zebra will not

conduct business with suppliers violating the zero tolerance policy includ-

ing criteria dealing with forced labour, child labour, disciplinary practices,

health and safety and protection of the environment.

Corporate social responsibility

HEART PUZZLEDKK 100


24

Supplier auditsZebra does not own the factories that manufacture TIGER products and

hence has no direct control of conditions at the factories. Therefore,

compliance with the code of conduct is monitored through a systematic

supplier audit programme. Suppliers must commit to correct any identi-

fied non-compliance issues, and they are subject to re-audits until they

can demonstrate satisfactory conduct.

In China, Zebra uses auditors who are trained and employed full-time by

Zebra as well as third party independent auditors. In other Asian coun-

tries, for example India, Nepal and Vietnam, where the number of sup-

pliers is limited, audits are carried out solely by independent third party

auditors. In 2014, Zebra conducted a total of 122 audits and re-audits in

Asia.

Apart from serving the important purpose of providing valuable informa-

tion about supplier compliance with the code of conduct, the audit pro-

gramme has a strong impact on working conditions at suppliers. Re-audits

reveal that Zebra’s responsible supply chain management efforts general-

ly lead to suppliers improving their CSR standards.

The audit programme will be scaled-up in 2015 with the employment of

an additional full-time auditor in China. The target for 2015 is to conduct

180 audits.

Product health and safetyZebra works systematically and proactively to ensure that all products are

in full legal compliance and meet international regulatory standards, are

safe to use and not detrimental to the customer’s health. Zebra strives

to ensure that health and safety issues are taken into consideration right

from product development and in the production process. Obtaining

required documentation from suppliers is an integral part of the Group’s

purchasing procedures.

The size and nature of the product portfolio, including the substantial

number of new products launched each year, poses a challenge to Zebra’s

own control environment, and the Group relies on accredited third party

laboratories for the mechanical and chemical testing of new products.

Product categories such as toys, electronics, cosmetics, food containers

and food are highly regulated by authorities in the countries where the

Group operates, and they are subject to extensive external testing.

In 2014, Zebra focused on building in-house capacity, including strength-

ening quality control, internal know-how and documentation. For 2015,

the goal is to further enhance internal procedures for product health and

safety as well as to expand cooperation with suppliers within this field.


25

EnvironmentDue to the nature of Zebra’s business, a large part of the environmental

impact of the products lies in the supply chain. Environmental concerns,

e.g. chemical storage, waste handling and emissions to air, water and soil,

are therefore integrated into Zebra’s supplier requirements and hence

also into the supplier audit programme.

Inside the Group’s own facilities, focus is currently on environmental

aspects, which are clearly within the Group’s sphere of control. In 2013,

Zebra introduced a guideline requiring all new or renovated stores to use

LED bulbs and FSC certified wood in store interiors. All new and renovat-

ed stores adhered to this guideline in 2014.

SPICESDKK 10

LERUMSweden

BOLOGNAItaly

KOBEJapan

BARCELONASpain

SELECTED STORE OPENINGS 2014

VOLOSGreece



Corporate Governance practices at ZebraZebra strives to apply at all times generally accepted corporate gover-

nance principles as required under the Danish Companies Act, the Danish

Financial Statements Act, IFRS as well as internal rules and procedures

described in the Company’s Rules of Procedure for the Board of Directors

and for the Executive Management, among others. As Zebra is controlled

by a member of the Danish Venture Capital and Private Equity Associa-

tion (“DVCA”), the Company applies the corporate governance guidelines

issued by DVCA. These guidelines are available on www.dvca.dk.

At Zebra, powers are distributed between the Board of Directors and the

Executive Management in accordance with standard practices for Danish

companies and are formalised by the Company’s Rules of Procedure.

The Executive Management handles all day-to-day operations while the

Board of Directors supervises the work of the Executive Management

and approves certain types of decisions and investments. Zebra’s Board of

Directors develops the Group’s overall strategies together with the Execu-

tive Management and oversees that the necessary skills and qualifications

are in place to support the Group’s development and strategic business

objectives.

Other key tasks for the Board of Directors are to ensure that Zebra has

the right management capabilities and adequate organisational structure

in place, and that the Company works towards implementing efficient

and transparent business procedures and responsible asset management.

The Board of Directors also oversees the financial development of Zebra

and related reporting and planning systems.

The content of the Board meetings is determined by the Board’s meeting

schedule, which is updated and approved by the Board of Directors at the

beginning of each financial year, and by on-going discussions between

the Board of Directors and the Executive Management.

Board activities in 2014The Board of Directors has seven members and held six board meetings

in 2014. Each meeting lasted at least a day, ensuring enough time for dis-

cussing performance, critical and strategic issues, follow-up on corporate

Corporate governance

VOLOSGreece


28

strategy, action plans and organisation, and review of internal controls

and procedures. The Board holds at least one meeting every year in one

of the Group’s strategically important markets and such meetings include

store visits, meetings with local partners and updates on the local retail

market.

Internal control systemThe responsibility for maintaining an adequate and efficient internal

control environment in connection with financial reporting lies with the

Executive Management. The Board of Directors has reviewed and assessed

the Group’s control environment and concluded that it is adequate at the

current stage of the Group’s development. Zebra will during 2015 con-

tinue to strengthen its control environment and processes both in local

operating companies and at head office.

Ownership and capital structure EQT holds approximately 67% of the shares in Zebra A/S through Zebra

Lux Holding S.a.r.l. Approximately 29% of the shares are held by Mitco

ApS, which is controlled by Lennart Lajboschitz, and approximately 4%

of the shares are held by the members of the Board of Directors, the

Executive Management and a small number of senior Zebra employees.

DiversityZebra aims to offer equal opportunities to men and women across its

organisation, and it is company policy to promote equal opportunities re-

gardless of gender, ethnicity, race, religion and sexual orientation. When

it comes to gender, Zebra aims at a balanced distribution among employ-

ees in leadership positions. Zebra’s Management is currently composed of

62% male and 38% female members. Relevant professional qualifications

remain the key selection criteria for all positions in the Zebra organisa-

tion, but Zebra’s Management will continue to focus on diversity and will

continue to evaluate the need for initiatives within this area.

The Board of Directors of Zebra is composed of 100% male members. It

is the board’s ambition to increase diversity, including with regards to

gender representation on the board where the target is to have at least

one female member within three years. This will be done in relation with

ongoing changes to the composition of the board, where special efforts

will be made to ensure that female candidates are identified and partici-

pate in the selection process. As the majority of the current Directors have

low tenure on the board and in consideration of a desired continuity in

the Board of Directors, this target will be sought achieved in relation to

ongoing changes to the composition of the Board.

NOTE BOOKS DKK 10 & 20

SUNGLASSES DKK 30

FLYING TIGERUTRECHT New store opened in 2014


31

Risk managementThe Board of Directors and Executive Management are responsible for

ensuring that the structure and control systems in the Group are suitable

and function satisfactorily. The Board of Directors regularly assesses the

overall and specific risks associated with the business and operation, and

seeks to ensure that such risks are managed in a proactive and efficient

manner. The Executive Management is working actively with risk man-

agement, including ongoing discussions and assessments of actual and

potential risks, and through integration of risk mitigation in the Group’s

ongoing activities and actions.

Financial riskThe nature of Zebra’s operations, investments and financing arrange-

ments exposes the Group to market risk by way of changes in foreign

exchange rates and interest rate levels. The Group’s treasury policy is to

actively address financial risk in order to mitigate the risk of material

impacts on the Group’s financial position.

Currency riskZebra’s international activities imply that the Group’s financial results,

cash flows and equity are exposed to fluctuations in various foreign

currencies.

The main exchange rate exposure faced by Zebra relates to the purchase

of goods in foreign currency, mainly USD, and translation of the financial

results and equity of the foreign subsidiaries into Danish kroner. It is the

Group’s policy at least on a half-year basis to hedge foreign exchange risk

for 80% of expected procurement 12 months ahead.

The exposure to exchange rate fluctuations of Zebra’s foreign subsidiaries

is to some extent mitigated by the fact that both revenue and adminis-

trative costs of the individual subsidiaries are denominated in the same

currencies.

For more information, see note 4.3 to the consolidated financial state-

ments.


32

Interest rate riskZebra is exposed to interest rate risk because entities of the Group

borrow funds at variable rates of interest. The risk is monitored by Zebra

and hedging is applied in order to maintain intended mix between fixed

and floating rate borrowings in accordance with the guidelines of the

management.

Credit riskThe Group has limited credit risk exposure, because its sales to customers

are mainly for cash, and the Group is not exposed to any major credit

risks from any single customer or other party.

Operational riskZebra has identified key operational risks within the areas of:

• Market place

• Reputation

• Infrastructure and people

Market placeCompetitionAs a retailer, Zebra is exposed to competition from other retailers with

a value proposition similar to Zebra’s as well as competition from online

formats.

To mitigate competition from other retailers, Zebra continues to invest

and develop the TIGER concept to sustain the concept’s edge and attrac-

tive value proposition. The initiatives include continued strengthening of

the Group’s creative capabilities within product design and innovation,

visual merchandising, marketing and branding as well as training of the

store staff in order to sustain or improve the level of service provided in

the stores.

ExpansionZebra’s growth ambitions require strong performance, both in existing

markets and when launching the TIGER concept in new markets. Failure

to adequately address performance issues in local markets may impact the

Group’s financial results. Zebra continuously works on improving its moni-

toring, business review and data analysis procedures, aiming to proactive-

ly address any potential disruptions in local markets and the corporate

organisation has been strengthened to address in a timely manner any

performance issues that may arise.

ReputationThe main reputational risks Zebra faces stem from the fact that Zebra

does not own the facilities in which the Group’s products are manufac-

tured. If suppliers fail to comply with Zebra’s code of conduct, the Group’s

PILLOW DKK 40


33

reputation and brand may be jeopardised. Suppliers must adhere to the

code of conduct and compliance is monitored through a systematic sup-

plier audit programme. See the corporate social responsibility section for

further information about Zebra’s CSR efforts and results achieved.

Infrastructure and peopleImplementation of ERP system and restructuring of warehouse setupSupply chain disruptions may have a negative impact on Zebra’s financial

results. Such disruptions may potentially occur as a consequence of the

current implementation of the new ERP system and warehouse changes

being made.

To mitigate such potentially negative impact from supply chain disrup-

tions, Zebra closely monitors the entire supply chain on an ongoing basis

and continues to invest and build supply chain capabilities.

With regards to the implementation of the new logistics arrangements

and ERP platform, Zebra has strengthened its project organisations and

project management capabilities. In addition, Zebra has implemented

governance structures anchored with the Executive Management ensur-

ing that the departments allocate sufficient attention and resources to

the projects.

Key peopleIn order to maintain the growth trajectory, Zebra relies critically on its

ability to continue to attract, motivate and retain highly qualified per-

sonnel at all levels of the organisation – from store staff and managers to

creative and administrative people at head office.

In 2014, Zebra established a group HR function for the purpose of sup-

porting the local operating companies. Among other initiatives, Zebra

has developed and partly rolled-out a recruitment kit designed to assist in

local recruitment of qualified talents for positions as store assistants, as-

sistant store managers and store managers as well as a talent programme

for store managers to ensure a pool of talent for future expansion.

An integral part of Zebra’s strategy is to take full ownership of local

operating companies when this is assessed to be more beneficial than

the partner model. The transformation process carries the risk of losing

traction due to loss of key managers with in-depth local market know-

ledge. To ensure a continued strong financial performance in and after

a transformation period, the partner model entails a put or a call notice

of one year allowing Zebra to develop a detailed transfer plan together

with the partner, ensure timely identification of new management and

deploy various measures to ensure retention of local key personnel.

LAMPDKK 100


34

M.Sc. Business Administration and Auditing, Copenhagen Business School. State Authorized Public Accountant

Professional Board Member

Danske Bank A/S (Chairman)Bang & Olufsen A/S (Chairman)Chr. Hansen Holding A/S (Chairman)EQT (Industrial Advisor)NASDAQ OMX Nordic (Member of the Nomination Committee)The Danish Committee on Corporate Governance (Member)

Educational background

Current Position

Other Positions

Ole Andersen (1956)Chairman, Member since 2013

MBA, IMD LausanneM.Sc., ESADE Business School Barcelona


PUIG, S.L. (Board Member)Privalia Venta Directa, S.A. (Board Member)


Current Position

Other Positions

Manel Adell Domingo (1961)Member since 2013

Executive training from Stanford, IMD, INSEAD


Pandora A/S (Board Member)IC Group A/S (Board Member)Santa Fe Group A/S (Board Member) Kwintet AB (Chairman)Michaso Holdings Ltd. (Director)EQT (Industrial Advisor)


Current Position

Other Positions

Michael Hauge Sørensen (1973)Member since 2013

Decorator


Hennes & Mauritz A/S (Board Member)


Current Position

Other Positions

Rolf Eriksen (1944)Member since 2013

Board of Directors


35

LLM, University of Copenhagen

Senior Advisor, Greenhill & Co. International LLP

Cruise I A/S (Chairman) Hos Fischer ApS (Board Member)Mitco ApS (Board Member)

Educational background Current Position Other Positions

Jacob Bier (1961)Member since 1998


Current Position

Other Positions

M.Sc. Economics, University of Copenhagen M.Sc. Finance, University of London

Head of EQT Partners in Denmark

Færch Plast A/S (Board Member)

Morten Hummelmose (1971)Member since 2013

Advisor and Founder, Zebra A/S

Hos Fischer ApS (Board Member)Mitco ApS (Chairman)J.H.L. ApS (Board Member)Lajbo Holding ApS (Board Member)

Current Position

Other Positions

Lennart Lajboschitz (1959)Member since 1998

Zebra A/S – Annual Report 2014

TIGER MADRIDNew store opened in 2014


37

Advanced Management Program (AMP), Harvard Business SchoolM.Sc. Marketing, Cranfield University

The Body Shop (Managing Director EMEA and other leadership positions)Sainsbury’s (Business Unit Director) Tesco Plc (Category Manager)Auchan (Buyer)

MBA (Strategy, Finance, HR & Innovation), The Open UniversityDiploma in Management (Improving Projects, Change & Performance), The Open UniversityCertificate in Management (Managing, Finance, Customers & Quality) The Open University

Dalberg (Head of Finance, Europe)Ditsch Ltd (Managing Director)Tate Gallery (Director of Finance & Operations)Yates Group Plc (Director of Operations)

M.Sc. Economics, Clemson University

Telenor A/S (Chief Financial Officer and other leadership positions)Accenture (Manager)


Previousexperience


Previousexperience


Previousexperience

Xavier Vidal (1974)Chief Executive Officer

Tahir Hussain (1971)International Director

Henrik Skov (1964)Chief Financial Officer


RAIN PONCHO DKK 30

Consolidated Financial Statements


40 42 44 45

4648

49505051

535557585859

60616365

66666667

Income statement Balance sheet Statement of changes in equity Cash flow statement Basis of preparation Section 1General accounting policies Note 1.1

Critical accounting estimates and judgments Note 1.2

Results for the year Section 2Staff costs Note 2.1

Special items Note 2.2

Financial expenses Note 2.3

Income taxes and deferred tax Note 2.4

Operating assets and liabilities Section 3Intangible assets Note 3.1

Property, plant and equipment Note 3.2

Investments in joint ventures Note 3.3

Inventories Note 3.4

Working capital changes Note 3.5

Guarantee commitments and contingent liabilities Note 3.6

Capital structure and financing Section 4Share capital Note 4.1

Financial assets and liabilities Note 4.2

Financial instruments Note 4.3

Provisions for the acquisition of non-controlling interests Note 4.4

Other disclosures Section 5Audit fee Note 5.1

Related parties Note 5.2

Events after the balance sheet date Note 5.3

List of group companies Note 5.4

Consolidated financial statements



Income statement1 January - 31 December

DKKm Note 2014 2013

Revenue 2,464.2 1,710.9

Cost of sales (934.3) (675.1)

Gross profit 1,529.9 1,035.8

Other external expenses (531.7) (373.4)

Staff costs 2.1 (634.0) (420.1)

EBITDA before special items 364.2 242.3

Amortisation and depreciation (77.7) (48.0)

Operating profit (EBIT) before special items 286.5 194.3

Special items 2.2 - 29.6

Operating profit (EBIT) 286.5 223.9

Share of profit in joint ventures 3.3 5.0 0.5

Financial income 1.8 1.2

Financial expenses 2.3 (34.0) (37.9)

Profit before tax 259.3 187.7

Tax on profit for the year 2.4 (63.6) (40.0)

Profit for the year 195.7 147.7



Statement of other comprehensive income for the group

DKKm Note 2014 2013

Profit for the year (brought forward) 195.7 147.7

Items that may be reclassified subsequently to profit or loss:Foreign currency translation adjustment, foreign entities – exchange differences

arising during the year 3.2 (0.3)

Value adjustment of hedging instruments for the year 52.4 (12.5)

Tax relating to items that may be reclassified subsequently (12.5) 3.0

Other comprehensive income 43.1 (9.8)

Total comprehensive income for the year 238.8 137.9



Balance sheet31 December

AssetsDKKm Note 2014 2013

Intangible assets 3.1 57.3 35.9

Property, plant and equipment 3.2 296.2 209.5

Investment in joint ventures 3.3 45.5 40.7

Leasehold deposits 32.6 19.6

Deferred tax 2.4 15.9 6.1

Non-current assets 447.5 311.8

Inventories 3.4 719.1 368.7

Income tax receivables 10.3 4.5

Other receivables 67.2 21.8

Prepayments 49.4 24.9

Cash and cash equivalents 4.2 262.4 198.0

Current assets 1,108.4 617.9

Assets 1,555.9 929.7



Balance sheet31 December

Equity and liabilities

DKKm Note 2014 2013

Share capital 4.1 0.5 0.5

Reserves 33.6 (9.5)

Retained earnings (133.6) 22.5

Equity (99.5) 13.5

Bank debt 4.2 150.0 5.8

Provisions for the acquisition of non-controlling interests 4.4 638.5 363.5

Deferred tax 2.4 17.8 1.0

Non-current liabilities 806.3 370.3

Bank debt 4.2 239.2 187.9

Provisions for the acquisition of non-controlling interests 4.4 66.3 -

Loans provided by shareholders of non-controlling interests 28.4 16.5

Trade payables 232.7 127.2

Income tax payable 50.1 28.9

Other payables 232.4 185.4

Current liabilities 849.1 545.9

Liabilities 1,655.4 916.2

Equity and liabilities 1,555.9 929.7



Statement of changes in equity

DKKmShare

capital ReservesRetainedearnings Total

2014

Equity at 01.01. 0.5 (9.5) 22.5 13.5 Profit for the year - - 195.7 195.7

Other comprehensive income for the year, net of tax - 43.1 - 43.1

Transactions with owners:Dividend paid - - (11.0) (11.0)

Change in non-controlling interests' ownership share - - 0.7 0.7

New provisions for the acquisition of non-controlling interests - - (7.1) (7.1)

Adjustment to provisions for the acquisition of non-controlling

interests - - (334.9) (334.9)

Contribution from non-controlling interests - - 0.5 0.5

Equity at 31.12. 0.5 33.6 (133.6) (99.5)

2013

Equity at 01.01. 0.5 0.3 (2.6) (1.8)Profit for the year - - 147.7 147.7

Other comprehensive income for the year, net of tax - (9.8) - (9.8)

Transactions with owners:Dividend paid - - (4.6) (4.6)

Change in non-controlling interests' ownership share - - (10.0) (10.0)

New provisions for the acquisition of non-controlling interests - - (33.4) (33.4)

Adjustment to provisions for the acquisition of non-controlling

interests - - (102.9) (102.9)

Share capital increase 0.0 - 28.3 28.3

Equity at 31.12. 0.5 (9.5) 22.5 13.5



Cash flow statement

DKKm Note 2014 2013

Operating profit (EBIT) 286.5 223.9 Gain related to the partial sale of the Japanese business - (39.8)

Depreciation, amortisation and losses from disposal of assets 77.7 47.9

Working capital changes 3.5 (215.4) (5.4)

Interest income received 1.8 1.2

Interest expenses paid (31.9) (37.9)

Taxes paid (53.7) (50.6)

Cash flow from operating activities 65.0 139.3

Change in non-controlling interests' ownership share - (7.1)

Investment in intangible assets (27.1) (7.5)

Investment in property, plant and equipment (159.7) (130.0)

Investment in other non-current assets (13.0) (4.0)

Cash flow from investing activities (199.8) (148.6)

Free cash flow (134.8) (9.3)

Contribution from non-controlling interests 0.5 -

Share capital increase - 28.3

Change in loans provided by shareholders of non-controlling interests 11.9 10.6

Proceeds from borrowings 195.5 68.5

Dividend paid (11.0) (4.6)

Cash flows from financing activities 196.9 102.8

Increase in cash and cash equivalents 62.1 93.5

Cash and cash equivalents at 1 January 198.0 104.5

Unrealised exchange gains/(losses) included in cash and cash equivalents 2.3 0.0

Cash and cash equivalents at 31 December 262.4 198.0



1.1 General accounting policies

The Consolidated Financial Statements for the Group

have been prepared in accordance with International

Financial Reporting Standards (IFRS) as adopted by the EU

and Danish disclosure requirements applying to entities

of reporting class C (large).

The consolidated financial statements are presented in

Danish kroner (DKK), which also is the functional currency

of the parent company.

The accounting policies are unchanged from last year.

Presentation of accounting policies Where possible the accounting policies for an accounting

area are presented in the individual notes for that area.

Accounting policies not directly related to an area cov-

ered by a note are presented below.

Defining materiality In the preparation of these consolidated financial state-

ments, an evaluation of what information is considered

relevant and useful has been performed by the Executive

Management. With the aim of providing consolidated

financial statements which enable users to more clear-

ly focus on issues which are considered important for

decision-making purposes, certain measures have been

undertaken to remove immaterial clutter, including:

• Aggregating immaterial line items on the primary

statements (income statement, balance sheet and cash

flow statement)

• Moving disaggregated items from the primary state-

ments to the notes

• Including disclosure requirements of accounting

standards only to the extent they are material to the

Group.

Consolidation The Consolidated Financial Statements comprise the

financial statements of the parent company Zebra A/S

and entities controlled by the parent company.

Financial statement items of controlled entities are rec-

ognised in full in the Consolidated Financial Statements.

Non-controlling interests´ pro rata shares of the profit/

loss and the net assets are disclosed as separate items in

the income statement and the balance sheet, respective-

ly, except those non-controlling interests that are fully

consolidated as a result of the put options in place, ref.

note 4.4.

Although the parent company does not own a majority of

the voting rights in certain subsidiaries, ref. note 5.4, the

Executive Management has assessed that the Group has

control by virtue of other contractual agreements with

the entities, and these entities are thus fully consolidated

in the consolidated financial statement.

When the Group loses control of a subsidiary, a gain or

loss is recognised in profit or loss and is calculated as the

difference between (i) the aggregate of the fair value

of the consideration received and the fair value of any

retained interest and (ii) the previous carrying amount

of the assets (including goodwill), and liabilities of the

subsidiary and any non-controlling interests.

All amounts previously recognised in other comprehen-

sive income in relation to that subsidiary are accounted

for as if the Group had directly disposed of the related

assets or liabilities of the subsidiary. The fair value of any

investment retained in the former subsidiary at the date

when control is lost is regarded as the fair value on initial

recognition.

Translation of foreign currencies Foreign currency transactions are translated into the func-

tional currency defined for each company using the ex-

change rates prevailing at the transaction date. Monetary

items denominated in foreign currencies are translated

into the functional currency at the exchange rates prevail-

ing at the balance sheet date.

Receivables, payables and other monetary items denom-

inated in foreign currencies that have not been settled

at the balance sheet date are translated at the exchange

rates at the balance sheet date. The differences between

the exchange rates at the balance sheet date and the rates

at the time the receivable or payable is created or rec-

ognised in the latest consolidated financial statements are

recognised in the income statement under net financials.

Financial statements of foreign subsidiaries are translated

into the functional currency at the exchange rates prevail-

ing at the balance sheet date for assets and liabilities, and

at average exchange rates for income statement items.

Exchange differences arising from the translation of both

the balance sheets and the income statements of the

foreign subsidiaries are recognised under other compre-

hensive income.

Exchange adjustments of outstanding accounts with in-

dependent foreign subsidiaries which are considered part

of the total investment in the subsidiary in question are

classified directly as equity.

Unrealised gains/losses relating to hedging of future cash

flow are recognised in other comprehensive income.



1.1 General accounting policies (continued)

Key figures and ratiosThe figures and ratios have been compiled based on the following definitions and formulas:

Gross margin =Gross profit x 100

Revenue

EBITDA margin

before special items =

EBITDA margin before special items

Revenue

Net interest-bearing debt =Bank debt + Loans provided by shareholders of non-controlling

interests – cash and cash equivalents

Net working capital % =Net working capital

Revenue

Leverage =Net interest-bearing debt

EBITDA before special items

Profit before special items, after tax = Profit for the year adjusted for special items and tax on special items

Profit margin before special items, after tax =Profit before special items, after tax

Revenue

Revenue Revenue is measured at the fair value of the consideration

received or receivable. Revenue is reduced for estimated

customer returns, rebates and other similar allowances.

Revenue from the sale of goods is recognised when the

goods are delivered and titles have passed.

Standards issued but not yet effectiveThe standards and interpretations which have been is-

sued, but are not yet effective, up to the date of issuance

of the Group’s financial statements, and which are consid-

ered to have an effect on the Group are disclosed below.

New standards and amendments which are not yet effec-

tive and which are not considered to have an impact on

the Group are not disclosed. The Group intends to adopt

these standards, if applicable, when they become effective.

Comparable store sales growth

• Comparable store sales include the following:

Stores open for at least 13 full months at the reporting

date.

Stores that have been expanded but not changes

significantly in size.

Stores that are relocated but remain within the same

trade area, and not changed significantly in size.

IFRS 9 Financial Instruments

In July 2014, the IASB issued the final version of IFRS 9

Financial Instruments, which reflects all phases of the

financial instruments project and replaces IAS 39 Financial

Instruments: Recognition and Measurement, and all previ-

ous versions of IFRS 9.

IFRS 9 is currently awaiting EU endorsement. The stan-

dards introduces new requirements for classification and

measurement, impairment and hedge accounting. IFRS

9 is effective for annual periods beginning on or after 1

January 2018, with early application permitted.

The Group is currently assessing the impact of IFRS 9,

and plans to adopt the new standard on the required

effective date.

• Comparable store sales exclude the following:

If a store is closed for refurbishment, it is excluded

in the months where the store is closed plus on full

calendar month following reopening.

If a store is relocated within the same trade area and the

old store remains temporarily open, the old store will be

excluded from the month where the new store opens.

• Comparable store sales growth excludes foreign

currency translation effects.



1.2 Critical accounting estimates and judgments

The consolidated financial statements of Zebra A/S have

been prepared to give a true and fair view of the Group’s

assets, liabilities and financial position at 31 December

2014. The Executive Management makes various account-

ing estimates and judgments which affect the consolidat-

ed financial statements. The most significant accounting

estimates and judgments are presented below.

The judgments, estimates and assumptions made are

based on historical experience and other factors that

the Executive Management considers to be reliable, but

which by their very nature are associated with uncer-

tainty and unpredictability. These assumptions may

prove incomplete or incorrect, and unexpected events

or circumstances may arise. The most critical judgments,

estimates and assumptions for the individual items are

described below.

The Group is subject to risks and uncertainties that may

lead to actual results differing from these estimates, both

positively and negatively.

Assumptions about the future and estimation of uncer-

tainty on the balance sheet date are described in the

notes where there is a significant risk of changes that

could result in material adjustments to the carrying

amounts of assets or liabilities within the next financial

year.

Critical accounting estimates and judgmentsThe Executive Management regards the following as the

key accounting estimates and assumptions used in the

preparation of the Consolidated Financial Statements:

• Consolidation of entities in which the Group holds a

50% ownership interest, cf. below

• Goodwill (note 3.1 and note 3.3)

• Provisions for the acquisition of non-controlling

interests (note 4.4)

Apart from these, a number of other key accounting esti-

mates and assumptions have been applied. Please refer to

the notes for further information.

Consolidation of entities in which the Group

holds a 50% ownership interest

The Group considers that it controls a number of entities

(refer to note 5.4 List of Group companies) even though

it does not hold the majority of the voting rights in the

entities. The assessment of whether the Group controls

an entity is based on an evaluation of whether the Group

has the current ability to direct the relevant activities of

the entity. The Group holds call options to acquire all

remaining outstanding shares, including the voting rights

related to these shares. The majority of the call options

are currently exercisable. Zebra A/S has also entered

into shareholders agreements with the other investors

(partners) and supply agreement etc. that give Zebra A/S

substantial rights, including in connections with a dead

lock situation. Accordingly, the Group considers at a bal-

anced view that these potential voting rights and other

rights in all substance give rise to the existence of control

at the reporting date.



2.1 Staff costs

DKKm 2014 2013

Salaries and wages 532.9 367.3

Pension contributions 23.0 21.6

Other social security costs 57.3 23.0

Other staff costs 20.8 8.2

Total 634.0 420.1

Remuneration for the Executive Management and the Board of DirectorsTotal remuneration, Executive Management 12.9 10.7

Total remuneration, Board of Directors 1.2 1.0

Total 14.1 11.7

Remuneration for the Executive Management and the Board of DirectorsSalaries and wages 13.8 10.8

Pension expenses 0.3 0.9

Total 14.1 11.7

Average number of employees 3,001 1,939



2.3 Financial expenses

DKKm 2014 2013

Bank charges 11.2 20.4

Interests 20.7 12.0

Exchange rate adjustments 2.1 5.5

Total 34.0 37.9

Accounting policies Financial expenses comprise interest payable, realised

and unrealised capital losses on securities, payables and

transactions in foreign currencies as well as tax surcharge

and tax relief under the Danish Tax Payment Scheme.

2.2 Special items

DKKm 2014 2013

Gain related to the partial sale of the Japanese business - 35.8

Costs associated with the establishment of new management team - (4.1)

Costs associated with the restructuring of the Finnish business - (2.1)

Total - 29.6

Accounting policies Special items include significant income and expenses of

a special non-recurring nature in terms of the Group’s

revenue-generating operating activities which cannot

be attributed directly to the Group’s ordinary operating

activities. Such income and expenses relate to significant

restructuring of processes and fundamental structural

adjustment, as well as gains or losses arising in this con-

nection, and which are significant over time.

These items are classified separately in the income state-

ment, in order to provide a more accurate and transpar-

ent view of the Group’s recurring operating profit.



2.4 Income taxes and deferred tax

DKKm 2014 2013

Current tax 68.4 39.9

Adjustment to current tax concerning previous years 0.7 0.1

Change in deferred tax (1.4) 0.5

Adjustment to deferred tax concerning previous years (4.1) (0.5)

Total 63.6 40.0

Reconcilation of tax rates:

Percentage 2014 2013

Danish income tax rate 24.5 25.0

Difference in tax rates of non-Danish entities from Danish income tax rates 1.4 (1.1)

Effect from partial sale of the Japanese business - (4.7)

Effect from adjustment to current tax concerning previous years 0.2 0.1

Effect from adjustment to deferred tax concerning previous years (1.6) 2.0

Average effective tax rate 24.5 21.3

Accounting policiesCorporate income tax for the year, which consists of the

year’s current tax and the change in deferred tax, is rec-

ognised in the income statement as regards the amount

that can be attributed to the net profit or loss for the

year and under other comprehensive income as regards

the amount that can be attributed to items under other

comprehensive income.

Deferred tax is recognised on temporary differences be-

tween the carrying amount of assets and liabilities in the

consolidated financial statements and the corresponding

tax bases used in the computation of taxable profit. No

deferred tax is recognised for goodwill, unless amortisa-

tion of goodwill for tax purposes is allowed.

Deferred tax is measured on the basis of the tax rules

and the tax rate in force in the respective countries on

the balance sheet date. Changes in deferred tax due to

tax rate changes are recognised in the income statement,

except to the extent that they relate to items recognised

either in other comprehensive income or directly in Share-

holders’ equity.

Accounting estimates and judgmentsThe Group recognises deferred tax assets including the

expected tax value of tax loss carryforwards, if the Exec-

utive Management assesses that these tax assets can be

offset against positive taxable income in the foreseeable

future and liabilities. The Executive Management assesses

tax assets and liabilities at least annually based on dia-

logue with tax advisors, business plans for the coming

years, including other planned commercial initiatives.



2.4 Income taxes and deferred tax (continued)

DKKm

Deferredtax

01.01

Realised inprofit

and loss

Realisedin othercompre-hensiveincome

Deferredtax

31.12

2014Intangible assets (2.3) (3.4) - (5.7)

Property, plant and equipment (3.7) (2.1) - (5.8)

Inventories 1.8 7.8 - 9.6

Provisions etc. 6.1 (0.2) - 5.9

Cash flow hedging 3.0 - (12.5) (9.5)

Tax losses to be carried forward 2.2 0.7 - 2.9

Other (2.0) 2.7 - 0.7

Temporary differences 5.1 5.5 (12.5) (1.9)

DKKm

Deferredtax

01.01

Realised inprofit

and loss


Deferredtax

31.12

2013Intangible assets (1.9) (0.4) - (2.3)

Property, plant and equipment (2.7) (1.0) - (3.7)

Inventories 4.1 (2.3) - 1.8

Provisions etc. 2.6 3.5 - 6.1

Cash flow hedging - - 3.0 3.0

Tax losses to be carried forward 0.3 1.9 - 2.2

Other (0.3) (1.7) - (2.0)

Temporary differences 2.1 0.0 3.0 5.1

Deferred taxDKKm 2014 2013

Deferred tax assets 15.9 6.1

Deferred tax liabilities (17.8) (1.0)

Total (1.9) 5.1



3.1 Intangible assets

Accounting policies Goodwill

Goodwill represents the excess of the cost of an acquisi-

tion over the fair value of the identifiable net assets of

the acquired business.

Other intangible assets

Leasehold rights are measured at cost less accumulated

amortisation and impairment losses.

Development and implementation of software and IT

systems are capitalised and amortised over their expected

useful lives.

Trademarks are recognised at cost and amortised over

their expected useful lives.

Amortisation is carried out systematically over the expect-

ed useful lives of the assets:

• Leasehold rights 20 years

• Trademarks 5-20 years

• Licenses and software 5 years

Intangible assets in progress are measured at cost less

impairment losses.

Critical accounting estimates and judgments Goodwill

Goodwill relates primarily to acquisition of a number of

Danish stores in 2006 to 2011.

Goodwill is tested annually for impairment. The recover-

able amount is calculated as the present value of future

net cash flows (value in use) from the activity to which

the goodwill is allocated.

The estimate of the future free net cash flows is based

on budgets and business plans for 2015 and on projec-

tions for 2016. Key parameters are revenue develop-

ment, profit margins, proposed capital expenditure and

growth expectations for the following years. Key factors

that could trigger an impairment test include a macro

economy down-scaling and changes to the competitive

environment.

The discount rate used to calculate recoverable amounts

is the weighted average cost of capital before tax.

Development projects in progress

For development projects in progress, the Executive Man-

agement estimates on an ongoing basis whether each

project is likely to generate future economic benefits

for the Group in order to qualify for recognition. The

development projects are evaluated on technical as well

as commercial criteria.



3.1 Intangible assets (continued)

DKKm GoodwillLeasehold

rights TrademarksLicenses and

software

Intangible assets in progress Total

2014Cost 01.01. 12.5 33.8 - - - 46.3

Exchange rate adjustment - (0.7) - - - (0.7)

Additions - 9.4 1.1 6.9 9.7 27.1

Transfer - - - 8.5 (8.5) -

Disposals - (0.5) - - - (0.5)

Cost 31.12. 12.5 42.0 1.1 15.4 1.2 72.2

Amortisation 01.01. - (10.4) - - - (10.4)

Exchange rate adjustment - 0.3 - - - 0.3

Amortisation - (4.2) - (0.8) - (5.0)

Disposals - 0.2 - - - 0.2

Amortisation 31.12. - (14.1) - (0.8) - (14.9)

Carrying amount 31.12. 12.5 27.9 1.1 14.6 1.2 57.3

2013Cost 01.01. 12.5 27.3 - - - 39.8

Exchange rate adjustment - (0.7) - - - (0.7)

Additions - 9.6 - - - 9.6

Disposals - (2.4) - - - (2.4)

Cost 31.12. 12.5 33.8 - - - 46.3

Amortisation 01.01. - (8.1) - - - (8.1)

Exchange rate adjustment - - - - - -

Amortisation - (3.4) - - - (3.4)

Disposals - 1.1 - - - 1.1

Amortisation 31.12. - (10.4) - - - (10.4)

Carrying amount 31.12. 12.5 23.4 - - - 35.9

No impairment losses on intangible assets have been recognised in 2014 (2013: No impairment losses recognised).



3.2 Property, plant and equipment

Accounting policies Property, plant and equipment is measured at cost less

accumulated depreciation and impairment losses.

Cost comprises the acquisition price, costs directly at-

tributable to the acquisition, and preparation costs of

the asset until the time when it is ready to be put into

operation.

The basis of depreciation is cost less estimated residual

value after the end of useful life. Straight-line depreci-

ation is made on the basis of the following estimated

useful lives of the assets:

• Leasehold improvements 6 years

• Store furniture 4 years

• Other fixtures and equipment 3-4 years

Profits and losses from the sale of property, plant and

equipment are calculated as the difference between

selling price minus selling costs and carrying amount at

the time of sale.

Accounting estimates and judgments If there is any indication that an asset may be impaired,

the value in use of the asset is estimated and compared

with the current value. The value in use calculation is

based on the discounted cash flow method using esti-

mates of future cash flows from the continuing use of the

asset. The key parameters are expected utilisation of the

asset, expected growth in sales of products produced by

the asset, expected growth in cash flow in the terminal

period etc. All these parameters are based on estimates

of the future and may give rise to changes in future

accounting periods.



3.2 Property, plant and equipment (continued)

DKKmLeasehold

improvementsStore

furnitureOther

equipment Total

2014Cost 01.01. 123.1 134.5 52.6 310.2

Exchange rate adjustment 1.4 (1.9) 0.8 0.3

Additions 71.2 65.4 23.1 159.7

Disposals (5.1) (5.1) (2.2) (12.4)

Cost 31.12. 190.6 192.9 74.3 457.8

Depreciation 01.01. (36.7) (38.9) (25.1) (100.7)

Exchange rate adjustment (0.2) 0.3 0.4 0.5

Depreciation (23.4) (35.6) (12.6) (71.6)

Disposals 4.1 4.0 2.1 10.2

Depreciation 31.12. (56.2) (70.2) (35.2) (161.6)

Carrying amount 31.12. 134.4 122.7 39.1 296.2

2013Cost 01.01. 78.4 76.3 34.0 188.7

Exchange rate adjustment 0.2 (1.8) (2.0) (3.6)

Additions 49.1 61.9 21.3 132.3

Disposals (4.6) (1.9) (0.7) (7.2)

Cost 31.12. 123.1 134.5 52.6 310.2

Depreciation 01.01. (25.8) (21.3) (17.5) (64.6)

Exchange rate adjustment - 0.3 0.2 0.5

Depreciation (14.1) (19.1) (8.1) (41.3)

Disposals 3.2 1.2 0.3 4.7

Depreciation 31.12. (36.7) (38.9) (25.1) (100.7)

Carrying amount 31.12. 86.4 95.6 27.5 209.5

Gains and (losses) on property, plant and equipment amounts to DKK 1.1m (2013: DKK 3.2m).



3.3 Investments in joint ventures

Accounting policies Investments in joint ventures are accounted for using the

equity method of accounting. Under the equity method,

the investment in joint ventures is initially recognised at

cost, and the carrying amount is increased or decreased

to recognise Zebra´s share of profit or loss of the investee

after the date of acquisition. The Group´s investment in

joint ventures includes goodwill identified on acquisition.

When a group entity transacts with a joint venture of the

Group, profits and losses resulting from the transactions

with the joint ventures are recognised in the Group´s con-

solidated financial statements only to the extent of inter-

ests in the joint venture that are not related to the Group.

Critical accounting estimates and judgmentsThe carrying amount of the investment (including good-

will) is tested for impairment on an annually basis. Any

impairment loss recognised forms part of the carrying

amount of the investment. The estimate of the future

free cash flows is based on business plans, budget for

2015 and projections for subsequent years. The discount

rate used to calculate recoverable amounts is the weight-

ed average cost of capital before tax.

The Group discontinues the use of the equity method

from the date when the investment ceases to be a joint

venture, or when the investment is classified as held for

sale.

DKKm

Investments in joint

ventures

2014Cost 01.01. 40.2

Additions -

Cost 31.12. 40.2

Adjustment 01.01. 0.5

Exchange rate adjustment (0.2)

Share of profit for the year after tax 5.0


Carrying amount 31.12. 45.5

2013Cost 01.01.2013 -

Additions 40.2

Cost 31.12.2013 40.2

Adjustment 01.01. -

Share of profit for the year after tax 0.5


Carrying amount 31.12. 40.7

No impairment losses on goodwill have been recognised in 2014 (2013: No impairment losses recognised).



3.3 Investments in joint ventures (continued)

DKKm 2014 20132

Revnue1 98.6 24.1

Profit for the period1 5.0 0.5

Other comprehensive income 5.0 0.5


Current assets 128.9 72.8


Equity 48.1 38.4

Net working capital 71.9 24.3

Number of stores 13 2

1 Share of profit and loss in joint venture using the equity method.2 The Group´s portion of the profit in Zebra Japan K.K. from the establishment of the joint venture in 1 June 2013.

3.4 Inventories

3.5 Working capital changes

DKKm 2014 2013

Finished goods 725.5 372.5

Write-down to net realizable value (6.4) (3.8)

Total 719.1 368.7

DKKm 2014 2013

Change in inventories (350.4) (115.8)

Change in other receivables 7.0 (2.8)

Change in prepayments (24.5) 2.8

Change in trade payables 105.5 58.3

Change in other payables 47.0 52.1

Total (215.4) (5.4)

Accounting policies Inventories are measured at the lower of cost using the

FIFO method and net realisable value. Cost of goods sold

consists of purchase price plus delivery costs as well as

freight and handling costs.

Summarised financial information in respect of the

Group´s joint venture is set out below. The summarised

financial information below represents amounts shown

The net realisable value of inventories is calculated as the

estimated selling price less costs incurred to execute sale.

in the joint venture´s financial statements prepared in ac-

cordance with the IFRS adjusted by the Group for equity

accounting purposes:



3.6 Guarantee commitments and contingent liabilities

DKKm 2014 2013

Non-cancellable operating lease commitmentsNot later than 1 year 343.6 206.0

1-5 years 681.8 454.4

Later than 5 years 165.8 59.9

Total 1,191.2 720.3

Operating leases relate to leases of stores and equipment with lease terms of between 1 and 10 years. The majority of

leases contain no contingent rents.

DKKm 2014 2013

Pledged assetsLeasehold rights 11.7 12.5

Goodwill 12.5 12.7

Leasehold improvements 22.6 37.6

Other equipment 10.1 9.9

Store furniture 17.5 24.4

Inventories 547.5 274.5


Total 627.0 378.4

Litigation A few legal proceedings are pending which are not esti-

mated to inflict losses on the Group other than what has

been provided for in the financial statements.

Other guarantees The Group has provided a bank guarantee to HRMC,

UK which amounts to DKK 29m. The Group has provided

a bank guarantee to the Japanese joint venture´s bank

which amounts to DKK 54m.

Pledged assets A letter of indemnity (company charge) of DKK 30m

nominal (2013: DKK 30m) has been deposited

by the parent as security for the parent’s bank debt.

Bank debt is secured by a mortgage of DKK 25m nominal

deposited by the Parent on assets, including the Parent’s

goodwill, leasehold rights, furniture, including store fur-

niture, in the Parent’s stores (2013: DKK 25m).

The foreign-owned companies’ bank debt is secured by

mortgages on their movable property and inventory of a

total nominal amount of DKK 38m (2013: DKK 21m).

The carrying amount of the above-mentioned pledged

assets is stated below:

Accounting policies Operating lease payments are recognised as an expense

on a straight-line basis over the lease term. Contingent

rentals arising under operating leases are recognised as

an expense in the period in which they are incurred.

The aggregate benefit of any lease incentives is recognised

as a reduction of rental expense on a straight-line basis

over the lease term.



4.1 Share capital

The share capital consists of shares at DKK 0.1 or multiples thereof.

The shares have been divided into classes:

Class A 3,361,220

Class B 894,920

Class C 894,920

Class D 0

Special economical rights and special voting rights apply to the different share classes.

Changes in share capital in the past five financial years:

DKK'000

Share capital at 1 January 2009 550

Capital reduction 2012 (45)

Capital increase 2013 10

Share capital at 31 December 2014 515



4.2 Financial assets and liabilities

Accounting policies Loans and receivables

Loans and receivables are measured at amortised cost

using the effective interest method, less any impairment.

Loans and receivables are assessed for indicators of im-

pairment at the end of each reporting period.

Bank debt and other financial liabilities

Bank debt and other financial liabilities are initially

recognised at fair value less transaction costs and subse-

quently measured at amortised cost using the effective

interest method. The difference between proceeds and

the nominal value is recognised as a financial expense

over the term of the loan.

Other debt is recognised at amortised costs. However,

derivative financial instruments are recognised as other

receivables/payables and measured at fair value. Refer,

note 4.3.

Accounting estimates and judgments The maturity analysis is based on all undiscounted cash

flows, including estimated interest payments, which are

estimated based on the current market conditions. The

undiscounted cash flows from derivative financial instru-

ments are presented in gross amounts. The contractual

cash flows for the acquisition of non-controlling interests

are based on estimated redemption amounts, as set out

in note 4.4.

DKKm

Duewithin 1

year

Duebetween

1 and 5year

Dueafter

5 year

Totalcontractualcash flows

Carryingamount

2014

Financial assetsOther receivables 67.2 - - 67.2 67.2

Cash and cash equivalents 262.4 - - 262.4 262.4

Total 329.6 - - 329.6 329.6

Financial liabilitiesBank debt 239.2 152.1 - 391.3 389.2

Loans provided by shareholders of non-controlling

interests 28.4 - - 28.4 28.4

Trade payables 232.7 - - 232.7 232.7

Other payables 232.4 - - 232.4 232.4

Provisions for the acquisition of non-controlling

interests 74.3 755.6 - 829.9 704.8

Total 807.0 907.7 - 1,714.7 1,587.5



4.2 Financial assets and liabilities (continued)

DKKm

Duewithin 1

year

Duebetween

1 and 5year

Dueafter

5 year

Totalcontractualcash flows

Carryingamount

2013

Financial assetsOther receivables 21.8 - - 21.8 21.8

Cash and cash equivalents 198.0 - - 198.0 198.0

Total 219.8 - - 219.8 219.8

Financial liabilitiesBank debt 187.9 6.4 - 194.3 193.7

Loans provided by shareholders of non-controlling

interests 16.5 - - 16.5 16.5

Trade payables 127.2 - - 127.2 127.2

Other payables - - - - -

Provisions for the acquisition of non-controlling

interests - 431.3 - 431.3 363.5

Total 331.6 437.7 - 769.3 700.9

Financial risk management The nature of the Group’s operations, investment and

financing exposes the Group to market risks in the form

of changes in foreign exchange rates and interest levels

as well as credit risks and liquidity risks.

The Group’s general policy with respect to financial risks

is that they should be ad-dressed in order to exclude the

risk of material impacts to the financial situation of the

Group, which could negatively influence the operations.

It is the Group’s policy not to engage in active speculation

in financial risks.



4.3 Financial instruments

DKKm Remaining maturityContract

value

Fairvalue

adjustment

Fair valueadjustmentrecognised

in othercompre-hensiveincome

2014Forward exchange contracts - USD 0-12 months 727.3 54.1 54.1

Total 727.3 54.1 54.1

DKKm Remaining maturityContract

value

Fairvalue

adjustment

Fair valueadjustmentrecognised

in othercompre-hensiveincome

2013Forward exchange contracts - USD 0-12 months 469.4 (9.4) (9.4)

Foreign exchange options - USD 0-6 months 163.7 (3.3) (3.1)

Total 633.1 (12.7) (12.5)

Accounting policies It is the Group´s policy to manage currency and inter-

est rate risks. Derivative financial instruments are not

used speculatively. On initial recognition, derivatives are

measured at their fair values at the settlement date. After

initial recognition, derivatives are measured at their fair

values at the balance sheet date. The positive or negative

fair values of derivatives are recognised as separate items

in the balance sheet. Forward exchange contracts and in-

terest swaps are measured based on current market data

and by use of commonly recognised valuation methods.

Any changes in fair values of derivatives classified as and

satisfying the conditions for effective hedging of future

transactions are recognised in other comprehensive in-

come. The ineffective portion is recognised directly in the

income statement. On realisation of the hedged transac-

tions, the accumulated changes are recognised together

with the particular transactions.

Derivatives not fulfilling the conditions for treatment as

hedging instruments are considered trading portfolios

and measured at their fair values, with fair value ad-

justments being recognised, on an ongoing basis, in the

income statement.

Foreign currency risk At 31 December 2014 and 31 December 2013, the Group

had not entered into financial instruments to hedge risk

of financial assets or liabilities.

It is the Group’s policy to hedge foreign currency risk

regarding 80% of expected procurement. Open foreign

exchange contracts at 31 December 2014 can be seen as

follows (the remaining maturities reflect the period for

which the hedged cash flows are expected to be realised):



4.3 Financial instruments (continued)

DKKmContractamount

Gain/(loss) at 31

December

Recognised in fair value

reserve

2014Interest rate swaps, expiry December 2016 150.0 (1.7) (1.7)

Total 150.0 (1.7) (1.7)

At 31 December 2013, there were no outstanding interest rate swaps.

The Group’s most material exchange rate risk is the expo-

sure to USD purchases. The Group’s foreign subsidiaries’

exposure to currency fluctuations are to some extent

mitigated by the fact that both revenue and administra-

tive costs of the individual subsidiaries are denominated

in the same currencies.

The income statement is affected to a minor extent by

changes in exchange rates, as the profit of foreign sub-

sidiaries is translated into Danish kroner using average

exchange rates.

Interest rate risk The Group is exposed to interest rate risk because entities

in the Group borrow funds at variable interest rates. The

risk is monitored by the Group in order to maintain an

appropriate mix between fixed and floating rate borrow-

The sensitivity analysis below has been determined based

on the exposure to interest rates for financial instruments

at the end of the reporting period. For floating rate liabil-

ities, the analysis is prepared assuming that the amount

of the outstanding liability at the end of the reporting

period was outstanding for the whole year.

A change in interest levels will impact the Group’s cash

holdings, bank debt and borrowings that are subject to

variable interest rates. An increase in interest levels of 1

percentage point annually compared to the interest rates

at 31 December 2014 would have a negative impact of

DKK 2.7m on the Group’s profit for the year and equity

(2013: DKK 2.1m). A corresponding decrease in interest

levels would mean a correspondingly positive impact on

profit for the year and equity.

Liquidity risk It is the Group’s policy in connection with securing financ-

ing to ensure the maximum flexibility via use of bank

deposits with banks with the highest credit rating and

treasury bills.

ings, and by the use of interest rate swap contracts and

forward interest rate contracts. Hedging activities are

evaluated regularly to align with interest rate views and

defined risk appetite, ensuring that the most cost-effec-

tive hedging strategies are applied.

The Group’s interest-bearing financial assets are limited

to cash holdings.

Interest-bearing financial liabilities relate to bank loans

and borrowings, as set out in notes 4.2.

Interest rate swaps are used for cash flow hedging, where

the underlying floating interest rates are hedged. At 31

December 2014, the outstanding interest swaps had the

following market value:

The Group’s liquid reserves consist of cash holdings and

undrawn credit facilities. The availability of cash and

cash equivalents held in subsidiaries that are less than

100% owned by the Group is restricted to the extent that

non-controlling interests in the respective subsidiaries

hold dividend rights over available liquidity.

Credit risk The Group’s sales to customers are mainly cash sales,

which limits the credit risk in the Group.

Optimising the capital structure The Group manages its capital to ensure that entities

in the Group will be able to continue as going concern

while maximising the return to stakeholders through the

optimisation of the debt and equity balance.

The capital structure of the Group consists of net inter-

est-bearing debt and equity of the Group, comprising

issued capital, reserves and retained earnings.

The Group is not subject to any externally imposed capital

requirements.



4.4 Provisions for the acquisition of non-controlling interests

Accounting policies Provisions for the acquisition of non-controlling interests

are stated at fair value. The value is determined by means

of the estimated present value of the expected cash out-

flows to settle the put option liability, based on projected

results and agreed EBITDA multiples and assuming that

the put options are exercised by the non-controlling in-

terests at 31 December 2014. It should however be noted

that at 31 December 2014, Zebra A/S has not received

notice of exercise of any put options.

In line with the nature of the put option, the liability is

classified as long term except for called options to be paid

within a year, which are classified as short term liabilities.

Changes in the value of these liabilities as well as differ-

ences upon settlement between the actual cash outflow

and the expected cash outflows, are accounted for as a

transaction directly in equity.

Subsidiaries whose non-controlling shareholdings are

subject to put options are fully consolidated, with no

recognition of a non-controlling interest.

Critical accounting estimates and judgments The Group has entered into put and call options with

non-controlling interests of certain Group entities.

The put option gives the non-controlling shareholder

the right to sell its non-controlling interest to the Group

at a defined exercise price that reflects EBITDA multi-

ples. At the same time, Zebra A/S has call options over

the non-controlling shareholdings with defined exercise

prices reflecting EBITDA multiples that differ from those

relevant for the aforementioned put options.

The exercise prices are determined by contractually

defined EBITDA multiples for the put options calculat-

ed on realised financial figures for two financial years.

The calculation of the provisions for the put options are

based on the general assumption that the local partners

all exercise their put options at year-end in the current

financial year (31 December 2014) with the contractually

determined notice period of 12 months. None of the local

partners has at year-end 2014 exercised their put options

and it should also be noted that Zebra for certain of the

local partners under the terms of these put options under

normal circumstances has the opportunity to limit the

number of these partners allowed to exercise their put

options to one every financial calendar year.

In accordance with IFRS, the put option over sharehold-

ings held by non-controlling interest is included as a pro-

vision in the financial statements, reflecting the estimated

present value of the expected cash outflows to settle the

liability based on projected results and based on the men-

tioned general assumption on collective exercise at 31

December 2014. As such, the actual cash outflows in the

regard might materially vary from the valuation of the

provisions for the acquisition of non-controlling interests

if the timing of the actual acquisition of the non-con-

trolling shareholders differs from the assumptions

applied, if the additional ownership interest is acquired

via exercise of the aforementioned call option rather than

the non-controlling shareholders´ respective put option or

if the results of the respective subsidiary companies vary

from the Executive Management´s projections.

The discount rate of 12% applied in discounting the

expected cash outflows is based on an interest rate that

reflects the current market assessment of the time value

of money, taking into account the expected settlement of

these liabilities.

DKKm 2014 2013

Balance 01.01. 363.5 234.0

New provision 7.1 33.4

Reduction of provisions due to acquisition of non-controlling interests (0.7) (6.8)

Changes in value 332.3 113.3

Foreign exchange adjustment 2.6 (10.4)

Balance 31.12. 704.8 363.5



5.3 Events after the balance sheet date

5.1 Audit fee

5.2 Related parties

DKKm 2014 2013

EY (2013: Deloitte)Statutory audit of financial statements 2.1 1.3

Other assurance engagements 0.1 0.1

Tax advisory services 1.0 0.1

Other services 1.7 2.5

Total 4.9 4.0

Zebra A/S is subject to controlling influence by Zebra Lux

Holding S.à.r.l., 23 rue Aldringen, L-1118, Luxembourg,

which holds 67% of the share capital.

Zebra A/S has registered the following shareholders who

hold 5% or more of the share capital:

- Zebra Lux Holding S.à.r.l., 23 rue Aldringen, L-1118

Luxembourg

- Mitco ApS, c/o Piaster Revisorerne, Abildgårdsparken 8A,

3460 Birkerød.

During 2014 and 2013 there were no transactions with

these related parties.

Balances and transactions between the Company and

its subsidiaries, which are related parties of the Compa-

ny, have been eliminated on consolidation and are not

disclosed in this note. Details of transactions between the

Group and other related parties are disclosed below.

ManagementRelated parties in Zebra A/S with significant influence

include the Group’s Executive Management and Board

of Directors and their close relatives. Related parties

also comprise companies in which these individuals have

material interests.

Other than remuneration as set out in note 2.1, there

has been no trading with members of key management

personnel or their close relatives.

Joint VenturesThe related parties of Zebra A/S also include the joint ven-

ture in which the company participates, Zebra Japan K.K.

During the year, the Group received royalty and service

fee in the amount of DKK 13.7m from joint venture com-

panies (2013: DKK 3.4m).

At 31 December 2014, joint venture companies owed the

Group DKK 1.8m (2013: DKK 0.8m). All amounts outstand-

ing are unsecured and will be settled in cash.

No events have occurred after the balance sheet date

that have a material impact on the financial position of

the Group.



Investment in subsidiary companies comprise the following at 31 December 2014 and 31 December 2013, unless

otherwise indicated.

5.4 List of group companies

Name HomeYear of

establismentOwnership

interest

Tiger Ísland ehf. Reykjavík, Iceland 2001 100%Tiger Retail Ltd. London, England 2005 50%Tiger Deutschland GmbH Flensburg, Germany 2007 50%Tiger Stores Nederland B.V. Utrecht, the Netherlands 2008 50%Tiger Stores Spain, S.L. Madrid, Spain 2008 50%TZ-shops South Sweden AB Malmö Sweden 2008 50%SIA Tiger Shop Riga, Latvia 2009 50%Tiger Shop UAB Vilnius, Lithuania 2010 50%Tiger Hellas S.A. Thessaloniki, Greece 2010 50%TP Stores AB Segelstorp, Sweden 2011 50%Tiger Italia 1, S.r.l. Turin, Italy 2011 50%Tiger Warsaw Sp. Z.o.o. Warszawa, Poland 2011 50%Tiger Retail Ireland Ltd. Dublin, Ireland 2011 50%TGR Norge AS Oslo, Norway 2011 50%TZ Stores Ltd. Dunblane, Scotland 2011 100%Tiger Stores OY Espoo, Finland 2011 100%1

Zebra Japan K.K. Tokyo, Japan 2011 50%2

Tiger Trading GmbH Berlin, Germany 2012 50%HK China Trading Holding Ltd. Hong Kong 2012 100%HK Beijiang Retail Holding Ltd. Hong Kong 2012 100%HK Japan Holding Ltd. Hong Kong 2012 100%Tiger Forum ApS Copenhagen, Denmark 2012 100%Tiger Italy 2, S.r.l. Rome Italy 2012 50%Tiger Stores (NI) Ltd. Newry, Northern Ireland 2012 50%Tiger Portugal S.A. Carneca, Portugal 2012 50%Tiger Carnarias, S.L. Las Palmas, Spain 2013 50%Tiger South Spain, S.L. Malaga, Spain 2013 50%Tiger Italy 3, S.r.l. Mascalucia, Italy 2013 50%Tiger Stores North West Spain, S.L. La Coruña, Spain 2013 50%Tiger Cardiff Ltd. Newport, Wales 2013 50%Tiger Stores Spain 6, S.L. Madrid, Spain 2013 50%Tiger U.K. (Midlands) Ltd. Glostershire, England 2013 50%Tiger Stores Belgium, BVBA Antwerp, Belgium 2013 50%Sp/f Tiger Førorar Saltangará, Faroe Islands 2013 100%Zebra (Beijing) Trading Co., Ltd. Beijing, China 2013 100%Tiger Stores Austria GmbH Wien, Austria 2014 50%Tiger Stores Belgium 2 SPRL Chénée, Belgium 2014 50%Tiger Stores Cyprus Limited Nicosia, Cyprus 2014 50%Tiger Czech Republic s.r.o. Prague, Czech Republic 2014 50%Tiger Stores OU Estonia Tallinn, Estonia 2014 50%Tiger Stores Spain 5, S.L. Bilbao, Spain 2014 50%Tiger Stores France SAS Nice, France 2014 50%Tiger Poland 2 Sp. z. o. o. Poznan, Poland 2014 50%Tiger Magazacilik Ticaret Anonim Sirketi Istanbul, Turkey 2014 100%Tiger Retail Germany 03 GmbH Munich, Germany 2014 100%Tiger Retail Germany 04 GmbH Munich, Germany 2014 100%Tiger Retail Germany 05 GmbH Munich, Germany 2014 100%Tiger Stores Spain 7, S.L. Barcelona, Spain 2014 100%Tiger Stores France 2 SAS Paris, France 2014 100%Tiger Stores France 3 SAS Paris, France 2014 100%Zebra US Holding, Inc. Delaware, United States 2014 100%Tiger Retail East Coast, LLC New York, United States 2014 100%Tiger Stores Slovakia S.R.O. Bratislava, Slovakia 2014 50%

1 (75% until 31.12.2013)2 (100% until 31.05.2013)

The voting interest correspond to ownership interests. Please refer to note 1.2 regarding consolidation of 50% owner-

ship interests.

READING GLASSES DKK 30

Financial Statements – Parent Company


Income statement Balance sheet Statement of changes in equity Cash flow statement

Basis of preparation Section 1General accounting policies Note 1.1

Critical accounting estimates and judgments Note 1.2

Results for the year Section 2Revenue Note 2.1

Staff costs Note 2.2

Special items Note 2.3

Financial expenses Note 2.4

Income taxes and deferred tax Note 2.5

Operating assets and liabilities Section 3Intangible assets Note 3.1

Property, plant and equipment Note 3.2

Investments in subsidiaries and joint ventures Note 3.3

Receivables from subsidiaries Note 3.4

Working capital changes Note 3.5

Guarantee commitments and contingent liabilities Note 3.6

Capital structure and financing Section 4Share capital Note 4.1

Bank debt Note 4.2

Financial instruments Note 4.3

Other disclosures Section 5Audit fee Note 5.1

Related parties Note 5.2

Events after the balance sheet date Note 5.3

70727475

7677

7878797980

818283848485

868686

878788

Financial statements – Parent Company


70Zebra A/S Annual Report 2014

Income statement – Parent1 January - 31 December

DKKm Note 2014 2013

Revenue 2.1 1,455.0 1,068.1

Cost of sales (968.0) (659.8)

Gross profit 487.0 408.3

Other external expenses (165.0) (147.0)

Staff costs 2.2 (225.9) (175.1)

EBITDA before special items 96.1 86.2

Amortisation and depreciation (15.8) (15.4)

Operating profit (EBIT) before special items 80.3 70.8

Special items 2.3 - 31.7

Operating profit (EBIT) 80.3 102.5

Income from investments in subsidiaries 8.5 4.6

Financial income 2.3 2.7

Financial expenses 2.4 (20.6) (28.4)

Profit before tax 70.5 81.4

Tax on profit for the year 2.5 (17.4) (9.4)

Profit for the year 53.1 72.0

Proposed appropriation of profit for the year:Retained earnings 53.1 72.0

53.1 72.0



Statement of other comprehensive income – Parent

DKKm Note 2014 2013

Profit for the year (brought forward) 53.1 72.0

Items that may be reclassified subsequently to profit or loss:Value adjustment of hedging instruments for the year 52.4 (12.5)

Tax relating to items that may be reclassified subsequently (12.5) 3.0

Other comprehensive income 39.9 (9.5)

Total comprehensive income for the year 93.0 62.5



Balance sheet – Parent31 December

AssetsDKKm Note 2014 2013

Intangible assets 3.1 40.4 24.9

Property, plant and equipment 3.2 35.3 35.2

Investment in subsidiaries and joint ventures 3.3 72.6 71.7

Receivables from subsidiaries 3.4 60.6 44.8

Leasehold deposits 8.6 8.1

Deferred tax 2.5 - 3.7



Receivables from subsidiaries 118.5 101.8

Receivables from joint ventures 1.8 0.8


Prepayments 10.1 3.1

Cash and cash equivalents 8.2 25.1

Current ssets 741.0 405.0

Assets 958.5 593.4



Balance sheet – Parent31 December

Equity and liabilities

DKKm Note 2014 2013

Share capital 4.1 0.5 0.5

Reserves 30.4 (9.5)

Retained earnings 340.0 286.9

Equity 370.9 277.9

Bank debt 4.2 150.0 -

Deferred tax 2.5 13.6 -

Non-current liabilities 163.6 -

Bank debt 4.2 177.5 161.7

Trade payables 180.3 77.4

Amounts payable to subsidiaries 4.2 -

Other payables 51.3 68.8

Income tax payable 10.7 7.6


Liabilities 587.6 315.5

Equity and liabilities 958.5 593.4



Statement of changes in Equity – Parent

DKKmShare

capital ReservesRetainedearnings Total

2014

Equity at 01.01. 0.5 (9.5) 286.9 277.9 Profit for the year - - 53.1 53.1

Other comprehensive income for the year, net of tax - 39.9 - 39.9

Equity at 31.12. 0.5 30.4 340.0 370.9

2013

Equity at 01.01. 0.5 - 187.0 187.5 Profit for the year - - 72.0 72.0

Other comprehensive income for the year, net of tax - (9.5) - (9.5)

Adjustment - - (0.4) (0.4)

Transactions with owners:Share capital increase 0.0 - 28.3 28.3

Equity at 31.12. 0.5 (9.5) 286.9 277.9



Cash flow statement – Parent

DKKm Note 2014 2013

Operating profit (EBIT) 80.3 102.5 Gain related to the partial sale of the Japanese business - (39.8)

Depreciation, amortisation and losses from disposal of assets 15.8 15.5

Working capital changes 3.5 (210.9) (71.6)

Interest income received 2.3 2.7

Interest expenses paid (20.6) (28.4)

Income taxes, including surcharge paid (9.5) (28.5)

Cash flows from operating activities (142.6) (47.6)

Investment in intangible assets (16.2) (2.5)

Investment in property, plant and equipment (15.2) (20.7)

Investment in other non-current assets (1.4) (9.7)

Loans to subsidiaries (18.3) (4.1)

Income from investments in subsidiaries 11.0 4.6

Cash flow from investing activities (40.1) (32.4)

Free cash flow (182.7) (80.0)

Share capital increase - 28.4

Proceeds from borrowings 165.8 58.1

Cash flows from financing activities 165.8 86.5

Increase in cash and cash equivalents (16.9) 6.5

Cash and cash equivalents at 1 January 25.1 18.6

Cash and cash equivalents at 31 December 8.2 25.1



1.1 General accounting policies

Accounting policies The consolidated financial statements for Zebra A/S have

been prepared in accordance with International Financial

Reporting Standards as adopted by the EU and Danish

disclosure requirements applying to companies of report-

ing class C (large). Please see the Danish Executive Order

on IFRS adoption issued in accordance with the Danish

Financial Statements Act. Zebra A/S is a public limited

company registered in Denmark.

The Parent generally applies the same accounting policies

for recognition and measurement as the Group. Cases in

which the Parent´s accounting policies differ from those

of the Group are described below. For a detailed specifi-

cation of the Parent´s accounting policies, please see note

1.1 to the consolidated financial statements.

Cases in which the Parent´s accounting polices differ from those of the GroupForeign currency translation

Currency adjustments of receivables from or payables

to subsidiaries which are considered part of the Parent´s

total investment in the relevant subsidiary are recognised

in profit or loss in financial income or financial expenses.

In the consolidated financial statements, the currency

adjustment is recognised in other comprehensive income.

Options held to acquire non-controlling interests in subsidiariesPut and call options held for the acquisition of non-con-

trolling interests in subsidiaries are accounted for as

derivatives over the Company at fair value through profit

and loss.

Income taxThe Parent is jointly taxed with all Danish subsidiaries and

serves as the administration company in the joint taxation

arrangement. The current Danish income tax is allocated

among the jointly taxed entities proportionally to their

taxable income.

Balances calculated pursuant to the rule on interest de-

duction limitation of the Danish Corporation Tax Act have

been allocated among the jointly taxed entities under the

joint taxation arrangement entered into. Deferred tax li-

abilities in respect of these balances are recognised in the

balance sheet, whereas deferred tax assets are recognised

only if they qualify for recognition as deferred tax assets.

Investment in subsidiaries and joint ventures in the parent financial statementsInvestments in subsidiaries and joint ventures are mea-

sured at cost in the parent financial statements. If cost

exceeds the recoverable amount of the investments, the

investments are written down to such lower amount.

In connection with sale of investments in subsidiaries and

joint ventures, profits or losses are calculated as the dif-

ference between the carrying amount of the investments

sold and the fair value of the sales proceeds.

Effect of new and revised accounting standards not yet effectivePlease refer to note 1.1 to the consolidated financial

statements.



1.2 Critical accounting estimates and judgments

The Executive Management regards the following as the

key accounting estimates and assumptions used in the

preparation of the parent financial statements:

Options on non-controlling interests in certain subsidiariesThe parent company holds call options and the non-con-

trolling interests (the local partners) hold put options

over the remaining ownership interests in certain local

subsidiaries. These options are measured at fair value

through profit or loss unless the fair value cannot be de-

termined reliably. As the call options and the put options

are based on equity instruments for subsidiaries that do

not have a quoted price in an active market and due to

the impact of the contractual arrangements between the

parent company and the subsidiaries, it is believed that

the fair value of these options cannot be determined

reliably. Consequently, the options are measured at cost

which based on the initial assessment at conclusion of the

options amounts to a net amount of DKK 0.

Recoverable amount of investments in subsidiaries and joint venturesAll subsidiaries and joint ventures of the Group are con-

sidered independent cash-generating entities. If there is

any indication of the carrying amount (cost) of invest-

ments in subsidiaries or joint ventures being impaired,

any impairment loss is determined based on the calcula-

tion of the value-in-use of the relevant entity.

If dividends distributed exceed the comprehensive income

of the relevant entity in the period for which dividend

is distributed, this is considered an indication of impair-

ment. If, in the consolidated financial statements, write-

down of goodwill attributable to a subsidiary or a joint

venture is recognised, this is also considered an indication

of impairment. At the balance sheet date, it has been

assessed that there are no indicators of impairment and

no impairment losses have been recognised.

Other significant accounting estimates, assump-tions and uncertaintiesFor a description of other material accounting estimates,

assumptions and uncertainties, please refer to note 1.2 to

the consolidated financial statements.



2.1 Revenue

2.2 Staff costs

DKKm 2014 2013

Retail sale 546.2 525.9

Wholesale, mainly foreign subsidiaries 908.8 542.2

Total 1,455.0 1,068.1

DKKm 2014 2013

Salaries and wages 202.4 158.0

Pension contributions 15.7 9.8

Other social security costs 1.2 2.8

Other staff costs 6.6 4.5

Total 225.9 175.1

Remuneration for the Executive Management and the Board of DirectorsTotal remuneration, Executive Management 12.9 10.7

Total remuneration, Board of Directors 1.2 1.0

Total 14.1 11.7

Remuneration for the Executive Management and the Board of DirectorsSalaries and wages 13.8 10.7

Pension expenses 0.3 1.0

Total 14.1 11.7

Average number of employees 505 420



2.3 Special items

2.4 Financial expenses

DKKm 2014 2013

Gain related to the partial sale of the Japanese business - 35.8

Costs associated with establishment of new management team - (4.1)

Total - 31.7

DKKm 2014 2013

Bank charges 5.6 17.0

Interests 14.0 8.0

Exchange rate adjustments 1.0 3.4

Total 20.6 28.4



2.5 Income taxes and deferred tax

2014, DKKm

Deferredtax

01.01

Realised in profitand loss


Realiseddirectlywithinequity

Deferredtax

31.12

Intangible assets (2.4) (3.6) - - (6.0)

Property, plant and equipment (0.7) 0.5 - - (0.2)

Provisions 3.7 (1.7) - - 2.0

Cash flow hedging 3.1 - (12.5) - (9.4)

Temporary differences 3.7 (4.8) (12.5) - (13.6)

2013, DKKm

Deferredtax

01.01

Realised in profitand loss


Realiseddirectlywithinequity

Deferredtax

31.12

Intangible assets (1.9) - - (0.5) (2.4)

Property, plant and equipment (0.7) - - - (0.7)

Provisions - 3.7 - - 3.7

Cash flow hedging - - 3.1 - 3.1

Temporary differences (2.6) 3.7 3.1 (0.5) 3.7

DKKm 2014 2013

Current tax 11.9 13.1

Adjustment to current tax concerning previous years 0.7 -

Change in deferred tax 4.8 (3.7)

Total 17.4 9.4

Reconciliation of tax rates:Percentage 2014 2013

Danish income tax rate 24.5 25.0

Permanent differences, disposal of subsidiary and non-taxable dividends (1.0) (13.4)

Other items, including prior-year adjustments 1.2 -

Average effective tax rate 24.7 11.6

Deferred taxDKKm 2014 2013

Deferred tax assets - 3.7

Deferred tax liabilities (13.6) -

Total (13.6) 3.7



3.1 Intangible assets

DKKm Goodwill Leasehold TrademarksLicenses and

software

Intangible assets in progress Total

2014Cost 01.01. 12.5 18.1 - - - 30.6

Additions - - 1.1 5.4 9.7 16.2

Transfer - - - 8.5 (8.5) -

Disposals - - - - - -

Cost 31.12. 12.5 18.1 1.1 13.9 1.2 46.8

Amortisation 01.01. - (5.7) - - - (5.7)

Amortisation - (0.7) - - - (0.7)

Disposals - - - - - -

Amortisation 31.12. - (6.4) - - - (6.4)

Carrying amount 31.12. 12.5 11.7 1.1 13.9 1.2 40.4

2013Cost 01.01. 12.5 16.7 - - - 29.2

Additions - 3.9 - - - 3.9

Disposals - (2.5) - - - (2.5)

Cost 31.12. 12.5 18.1 - - - 30.6

Amortisation 01.01. - (5.9) - - - (5.9)

Amortisation - (1.0) - - - (1.0)

Disposals - 1.2 - - - 1.2

Amortisation 31.12. - (5.7) - - - (5.7)

Carrying amount 31.12. 12.5 12.4 - - - 24.9



3.2 Property, plant and equipment

DKKm

Leaseholdimprove-

mentsStore

funiture

Otherequip-ment Total

2014Cost 01.01. 36.1 24.6 22.0 82.7

Additions 4.9 6.3 4.0 15.2

Disposals (4.1) (2.6) (0.4) (7.1)

Cost 31.12. 36.9 28.3 25.6 90.8

Depreciation 01.01. (19.1) (13.3) (15.1) (47.5)

Depreciation (5.1) (5.3) (4.4) (14.8)

Disposals 3.8 2.6 0.4 6.8

Depreciation 31.12. (20.4) (16.0) (19.1) (55.5)

Carrying amount 31.12. 16.5 12.3 6.5 35.3

2013Cost 01.01. 33.5 18.2 16.9 68.6

Additions 6.5 8.1 5.3 19.9

Disposals (3.9) (1.7) (0.2) (5.8)

Cost 31.12. 36.1 24.6 22.0 82.7

Depreciation 01.01. (17.6) (10.3) (11.7) (39.6)

Depreciation (4.6) (4.1) (3.5) (12.2)

Disposals 3.1 1.1 0.1 4.3

Depreciation 31.12. (19.1) (13.3) (15.1) (47.5)

Carrying amount 31.12. 17.0 11.3 6.9 35.2

Gains and (losses) on property, plant and equipment comprises to DKK 0.3m (2013: DKK 1.5m).



3.3 Investments in subsidiaries and joint ventures

DKKm

Investments in

subsidiaries

Invest-ments in

joint ventures Total

2014Cost 01.01. 31.6 40.1 71.7

Additions 3.5 - 3.5

Disposals (0.1) - (0.1)

Cost 31.12. 35.0 40.1 75.1

Impairment losses 01.01. - - -

Impairment losses (2.5) - (2.5)

Impairment losses 31.12. (2.5) - (2.5)

Carrying amount 31.12. 32.5 40.1 72.6

2013Cost 01.01. 22.8 - 22.8

Additions 9.1 40.1 49.2

Disposals (0.3) - (0.3)

Cost 31.12. 31.6 40.1 71.7

See note 5.4 to the consolidated Financial Statements for a list of Group companies.



3.4 Receivables from subsidiaries

3.5 Working capital changes

DKKm 2014 2013

Due between 1 and 5 yearsLoans to subsidiaries 60.6 44.8

Total 60.6 44.8

DKKm 2014 2013

Change in inventories (286.4) (83.0)

Change in receivables from subsidiaries (16.7) -

Change in receivables from joint ventures (1.0) (44.3)

Change in other receivables 10.6 (1.5)

Change in prepayments (7.0) 5.0

Change in trade payables 102.9 36.2

Change in payable to subsidiaries 4.2 -

Change in other payables (17.5) 16.0

Total (210.9) (71.6)



3.6 Guarantee commitments and contingent liabilities

Operating lease arrangements

DKKm 2014 2013

Non-cancellable operating lease commitmentsNot later than 1 year 36.5 32.8

1-5 years 39.1 40.3

Later than 5 years 8.3 1.2

Total 83.9 74.3

Operating leases relate to leases of stores and equipment with lease terms of between 1 and 10 years. The majority of

leases contain no contingent rents.

DKKm 2014 2013

Pledged assetsLeasehold rights 11.7 12.4

Goodwill 12.5 12.5

Leasehold improvements 16.5 17.0

Other equipment 6.5 6.9

Store furniture 12.3 11.3



Total 790.4 428.0

Litigation A few legal proceedings are pending which are not esti-

mated to inflict losses on the Parent other than what has

been provided for in the financial statements.

Other guarantees and contingent liabilitiesThe Parent has guaranteed or provided a bank guarantee

for banking facilities, etc. for subsidiaries at a total of

DKK 44m (2013: DKK 52m).

The Parent has provided a bank guarantee to HRMC,

UK which amounts to DKK 29m. The Parent has provid-

ed a bank guarantee to the joint venture´ bank which

amounts to DKK 54m.

With respect to a grant received from the Icelandic gov-

ernment, the Parent has repayment obligations should the

Company dispose its investments in Iceland before 2017.

Zebra A/S is the administration company of the joint

taxation arrangement with the Danish subsidiaries in the

Group and is under an unlimited and joint liability regime

for all Danish tax payments and withholding taxes on

dividends, interests and royalties from the jointly taxed

entities.

Pledged assets A letter of indemnity (company charge) of DKK 30m nom-

inal (2013: DKK 30m) has been deposited by the Parent as

security for the parent’s bank debt.

Bank debt is secured by a mortgage of DKK 25m nominal

deposited by the Parent on assets, including the Parent’s

goodwill, leasehold rights, furniture, including store furni-

ture, in the Parent’s stores (2013: DKK 25m).

The foreign entities’ bank debt is secured by mortgages on

their movable property and inventory of a total nominal

amount of DKK 38m (2013: DKK 21m).

The carrying amount of the above-mentioned pledged

assets is stated below:



4.3 Financial instruments

4.1 Share capital

4.2 Bank debt

The share capital consists of shares at DKK 0.1 or multiples thereof.

The shares have been divided into classes:

Class A 3,361,220

Class B 894,920

Class C 894,920

Class D 0

Special economical rights and special voting rights apply to the different share classes.

Changes in share capital in the past five financial years:

DKK'000

Share capital at 1 January 2009 550

Capital reduction 2012 (45)

Capital increase 2013 10

Share capital at 31 December 2014 515

DKKm

Duewithin 1

year

Duebetween

1 and 5year

Dueafter

5 year

2014Bank debt 177.5 150.0 -

Total 177.5 150.0 -

Options on non-controlling interests in certain subsidiariesAs further described in note 1.2, put and call options for

the acquisition of non-controlling interests in certain sub-

sidiaries are accounted for at fair value. At the balance

sheet date, is assessed that the fair value of these options

cannot be determined reliably and consequently the op-

tions are measured at cost which is a net amount of DKK

0m (2013: DKK 0).

Other derivative financial instruments and financial risksPlease refer to note 4.3 in the consolidated financial

statements for more information regarding other deriva-

tive financial instruments and financial risks.

Zebra A/S – Annual Report 2014 Financial Statements – Parent Company

87

5.1 Audit fee

5.2 Related parties

DKKm 2014 2013

EY (2013: Deloitte)Statutory audit of financial statements 0.5 0.5

Other assurance engagements - -

Tax advisory services 0.6 0.1

Other services 1.4 2.5

Total 2.5 3.1

DKKm SubsidiariesJoint

ventures Total

2014Sale of goods 895.1 - 895.1

Royalty and service fee - 13.7 13.7

Dividends received 11.0 - 11.0

2013Sale of goods 536.6 - 536.6

Royalty and service fee - 3.4 3.4

Dividends received 4.6 - 4.6

Please refer to note 5.2 to the consolidated financial

statements for information on related parties.

Subsidiaries and associated companiesRefer to note 5.4 to the consolidated financial statements

for a list of subsidiaries and investments in joint ventures.

In addition to the payment of dividends, the Parent has

had the following transactions with related parties:

There have been no transactions with the controlling

shareholder and companies owned or otherwise controlled

by EQT. Remuneration paid to key management personnel

are included in note 2.2.



5.2 Related parties (continued)

5.3 Events after the balance sheet date

Amounts receivable/payable with related parties, parent

DKKm 2014 2013

Current loans:Receivables from subsidiaries, long term 60.6 44.8

Receivables from subsidiaries, short term 118.5 101.8

Receivables from joint ventures 1.8 0.8

Total 180.9 147.4

No events have occurred after the balance sheet date

that have a material impact on the financial position of

the parent company.

The amounts outstanding are unsecured and will be set-

tled in cash. No guarantees have been given or received.

No expense has been recognised in the current or prior

years for bad or doubtful debts in respect of the amounts

owed by related parties.

HANGERDKK 10

PARTY PROPSDKK 20

Zebra A/S – Annual Report 2014 Management statement

91

The Board of Directors and the Executive Management have today discussed and approved the annual report of

Zebra A/S for the financial year 2014.

The annual report has been prepared in accordance with International Financial Reporting Standards as adopted

by the European Union and further disclosure requirements required according to the Danish Financial

Statements Act.

It is our opinion that the consolidated financial statements and the parent company financial statements give

a true and fair view of the Group’s and the Parent Company’s financial position at 31 December 2014, the

results of the Group and Parent Company’s operations and cash flows for the financial year 1 January –

31 December 2014.

In our opinion, the Management review includes a fair review of the development in the Group’s and the

Parent Company’s operations and financial conditions, the results for the year, cash flows and financial position

as well as a description of the most significant risks and uncertainty factors that the Group and the Parent

Company face.

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

Copenhagen, 29 April 2015


Xavier Vidal Henrik Skov Tahir Hussain

CEO CFO International Director

Board of Directors

Ole Andersen Michael Hauge Sørensen Manel Adell Domingo Rolf Eriksen

Chairman

Morten Hummelmose Lennart Lajboschitz Jacob Bier

Management statement

Zebra A/S – Annual Report 2014Independent Auditors’ opinion

92

To the shareholders of Zebra A/S

Report on the consolidated financial statements and the parent company financial statements

We have audited the consolidated financial statements and the parent company financial statements of Zebra

A/S for the financial year 1 January – 31 December 2014. The consolidated financial statements and the parent

company financial statements comprise income statement, statement of comprehensive income, balance sheet,

statement of changes in equity, cash flow statement and notes, including a summary of significant accounting

policies for the Group as well as for the parent company. The consolidated financial statements and the parent

company financial statements are prepared in accordance with International Financial Reporting Standards as

adopted by the EU and additional disclosure requirements in the Danish Financial Statements Act.

Management’s responsibility for the consolidated financial statements

and the parent company financial statements

Management is responsible for the preparation of consolidated financial statements and parent company finan-

cial statements that give a true and fair view in accordance with International Financial Reporting Standards as

adopted by the EU and additional disclosure requirements in the Danish Financial Statements Act and for such

internal control that Management determines is necessary to enable the preparation of consolidated financial

statements and parent company financial statements that are free from material misstatement, whether due to

fraud or error.

Auditors’ responsibility

Our responsibility is to express an opinion on the consolidated financial statements and the parent company

financial statements based on our audit. We conducted our audit in accordance with International Standards on

Auditing and additional requirements under Danish audit regulation. This requires that we comply with ethical

requirements and plan and perform the audit to obtain reasonable assurance as to whether the consolidated

financial statements and the parent company financial statements are free from material misstatement.

Independent Auditors’ opinion

Zebra A/S – Annual Report 2014 Independent Auditors’ opinion

93

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the

consolidated financial statements and the parent company financial statements. The procedures selected depend

on the auditors’ judgement, including the assessment of the risks of material misstatement of the consolidated

financial statements and the parent company financial statements, whether due to fraud or error. In making

those risk assessments, the auditors consider internal control relevant to the Company’s preparation of consol-

idated financial statements and parent company financial statements that give a true and fair view in order to

design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an

opinion on the effectiveness of the Company’s internal control. An audit also includes evaluating the appropri-

ateness of accounting policies used and the reasonableness of accounting estimates made by Management, as

well as evaluating the overall presentation of the consolidated financial statements and the parent company

financial statements.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our

opinion.

Our audit has not resulted in any qualification.

Opinion

In our opinion, the consolidated financial statements and the parent company financial statements give a true

and fair view of the Group’s and the parent company’s financial position at 31 December 2014 and of the results

of the Group’s and the parent company’s operations and cash flows for the financial year 1 January – 31 Decem-

ber 2014 in accordance with International Financial Reporting Standards as adopted by the EU and additional

disclosure requirements in the Danish Financial Statements Act.

Statement on the Management’s review Pursuant to the Danish Financial Statements Act, we have read the Management’s review. We have not per-

formed any further procedures in addition to the audit of the consolidated financial statements and the parent

company financial statements. On this basis, it is our opinion that the information provided in the Manage-

ment’s review is consistent with the consolidated financial statements and the parent company financial state-

ments.

Copenhagen, 29 April 2015

ERNST & YOUNG

Godkendt Revisionspartnerselskab

Torben Bender Thomas Bruun Kofoed

State Authorised State Authorised

Public Accountant Public Accountant

BALLOONS DKK 10

Zebra A/SRaadhuspladsen 59, 3 floorDK-1550 Copenhagen V DenmarkCentral Business Registration No: 15 69 04 88www.tiger-stores.com

Documents

Annual Report 2014 - Flying Tiger Copenhagen...Zebra A/S – Annual Report 2014 Management Commentary 7 Key figures DKKm 2014 2013 2012 20111 20101 Income statement Revenue 2,464.2