Annual Report • Apr 13, 2023
Annual Report
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DISCLAIMER: This report includes forward-looking statements which are based on our current expectations and projections about future events. All statements other than statements of historical facts included in this report, including statements regarding our future financial position, risks and uncertainties related to our business, strategy, capital expenditures, projected costs and our plans and objectives for future operations, including our plans for future costs savings and synergies may be deemed to be forward-looking statements. Words such as "believe", "expect", "anticipate", "may", "assume", "plan", "intend", "will", "should", "estimate", "risk" and similar expressions or the negatives of these expressions are intended to identify forward-looking statements. By their nature, forward-looking statements involve known and unknown risks and uncertainties because they relate to events and depend on circumstances that may or may not occur in the future. Forward-looking statements are not guarantees of future performance. You should not place undue reliance on these forward-looking statements. In addition any forward-looking statements are made only as of the date of this notice, and we do not intend and do not assume any obligation to update any statements set forth in this notice. © KID ASA
FINANCIAL STATEMENTS KID ASA 2022
Contents
| Financial highlights 20224 | |
|---|---|
| About KID6 | |
| Historical milestones & company facts8 | |
| Nordic presence12 | |
| At a glance 202213 | |
| Letter from the CEO14 | |
| Group management16 | |
| Corporate governance 18 |
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| Board of Directors' report 23 |
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| Consolidated financial statement30 | |
| Notes to the consolidated financial statement | 37 |
| Parent company financial statement 71 |
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|---|---|
| Notes to the parent company financial statement76 |
| Alternative performance measures and definitions84 | |
|---|---|
| Responsibility statement85 | |
| Independent Auditor's report87 | |
| Financial calendar 92 |
Q1 Q2 Q3 Q4 2021 2022 569.8 676.3 750.6 1,100 730.1 734.7 1,108 Revenues (MNOK)
EBITDA (MNOK) * Excluding IFRS 16 effects
Kid ASA (listed on the Oslo Stock Exchange under the ticker symbol KID) operates as a home textile retailer through Kid Interior in Norway with 156 stores, and under the Hemtex brand in Sweden, Finland and Estonia with 130 stores. The Kid Group offers a full range of home and interior products, including textiles, curtains, bed linens, furniture, accessories and other interior products. We design, source, market and sell these products through our stores as well as through our online sales platforms. At the end of 2022 the Kid Group had 2.298 employees.
Kid and Hemtex is the leading pure-play specialist within home textile and interior market in Norway and Sweden, respectively. Both brands are benefiting from unbeatable brand recognition and top-of-mind awareness. Hemtex is also present in Finland and Estonia.
Through in-depth market analysis, monitoring and adapting to underlying consumer trends and demands, supported by inhouse design and sourcing competence, we bring high quality, yet value for money, products to our customers. Practically all our products are Kid branded, while some premium products are marketed as sub-brands such as Dekosol, Nordun and Premium Collection.
The Kid spirit is based on commitment to our values of entrepreneurial spirit, inspiration and dedication.
Kid is headquartered in Lier, Norway where the group head office and central warehouse for the Norwegian market is located, while Hemtex' offices and warehouse facilities are located in Borås, Sweden.
1953
8 KID ASA Annual Report 2022 1937 Kid Interior was established by Jul Andrew Gundersen as JAG shoe factory
The first shop was opened in Drammen in 1953, called "Fabrikkutsalget" (Factory Outlet). At first, the store sold just shoes, but moved into interior products, including sale of the first woollen versions of its duvet
An increased focus on interior textiles and the start of its own production
The company changed its name to Kid Interior and began using the Kid brand for selected products
1994
1970
s
The third generation of the Gundersen family takes over the business, which has now grown to 24 stores
Hemtex was aquired May 2019
2015 2019
2005 2009 2012
The company turns public as its shares are listed on the Oslo Stock Exchange. Kid registers a strong financial performance and central warehouse and administration functions are relocated to new facilities in Lier
Gjelsten Holding takes 100 percent ownership of the company, which now comprises 111 stores after a successful turnaround
DNB Bank takes control of Kid Interior following a long-term debt default
The Gundersen family relinquishes control of Kid as its majority shareholding is sold to IK Capital Partners. The Kid store network has grown to 92
Kid, Sartor in Bergen
Kid, Sartor in Bergen
Hemtex Lippulaiva Finland
Kid, Storgata in Oslo
Kid, Sartor in Bergen
Kid
PROPOSED DIVIDEND PER SHARE 3.00
PAID DIVIDEND IN DECEMBER 2022 2.50
AGGREGATED DIVIDEND OF
DIVIDEND % OF ADJ. NET PROFIT 90%
GROSS MARGIN OF
58.1%
(62.6% in 2021)
426.2 EBITDA OF MNOK
*Exclusive of IFRS 16 effects (MNOK 590.6 in 2021)
2.7
At a glance
5.50
(Norway: 1.3 million / Sweden: 1.4 million)
M I L L I O N C U S T O M E R CLUB MEMBERS
In a challenging retail environment, we are satisfied with presenting a revenue growth of 2.6% and deliver all-time-high revenue of NOK 3.2 billion. The main growth drivers were new product categories, in addition to continued investments in physical stores and our e-commerce platform. The historically high freight costs seen in 2022 affected margins negatively. However, as freight costs have come down significantly for shipments arriving in the beginning of 2023 onwards, we expect margins to improve throughout 2023.
Category development remain a key growth driver. Based on constant currency calculation, revenues from new categories launched since 2017 increased by 30% in 2022 to MNOK 360, with the highest growth coming from 'Outdoor range', 'Homewear' and 'Kitchen accessories', in addition to new initiatives under the 'Moment's concept'. During 2022, we decided to increase the targeted store size for our normal stores to make room for the full category range. Hence, we expect to drive growth from store expansions going forward.
Over the past years we have been developing a retail concept called "Kid Extended" which includes an extension of our current categories as well as new categories. The new categories include European manufactured furniture like beds and sofas. The concept was launched in one pilot store and on our Norwegian e-commerce platform before Christmas and has had a promising start. The gross margin for these new categories is expected to be 35-40% including logistics and lastmile distribution. We will continue to roll out Kid Extended pilots and expect to have launched a total of five pilot stores in Norway by the end of Q2 2023. The piloting phase will be closely monitored during 2023 before we will decide on any further ramp-up of the concept.
Online sales grew by 12.1% compared to last year, ending at MNOK 343.5 in 2022 which is equivalent to an online share of 10,8%. Additionally, 'Click & Collect' represented MNOK 168.2 in store revenues and makes our online platform directly involved in 16,1% of total revenues during the year. We expect our omni channel strategy to be an important growth driver going forward.
Based on our CO2 roadmap, we have submitted both our near-term and longterm CO2 reduction targets to the Science Based Target Initiative. With an ambition and commitment to reduce the absolute CO2 emissions in scope 1-3 with 50% from 2020 to 2030, we are aligned with the 1,5 °C goal in the Paris Agreement.
In 2022 we experienced a more challenging retail market as energy prices rocketed and higher prices on food and other household items impacted consumer confidence. However, based on our solid market position and retail experience, we nonetheless managed to deliver yet another year with growth. Looking into 2023, we will continue to strengthen our market position and drive growth through our initiatives related to Kid Extended, expansion of current stores, new omnichannel functionality and expanding functuinality and expansion of the store network in Finland and Estonia. Moreover, we look forward to opening our new warehouse in Sweden in May 2023.
A huge 'thank you' to all Kid and Hemtex employees for all your efforts and commitment in 2022, and of course to our customers, suppliers, partners, and shareholders for supporting the Kid Group to keep on growing.
Yours sincerely,
Anders Fjeld CEO, Kid Interior AS
Fjeld has been the Chief Executive Officer at Kid since November 2018. Prior to joining Kid, he held senior and executive positions in Elkjøp and XXL. His most recent position was Chief Operating Officer and Concept Development Director in XXL. Fjeld has a bachelor's degree from BI Norwegian Business School. He is a Norwegian citizen, and resides in Norway.
Anders Lorentzson was appointed Chief Executive Officer of Hemtex in May 2018. He started his Hemtex career as Commercial Director back in 2016 and, prior to joining the company, held senior and executive positions at the ICA-Group in Sweden and Estonia. Lorentzson has a solid background in the omnichannel retail business, with more than 20 years of experience. He is a Swedish citizen, and resides in Sweden.
Kid ASA (Kid or the company) consider good corporate governance key to create shareholder value through transparency, fairness and trustworthiness. The company has developed these principles in compliance with laws, regulations and ethical standards. The Norwegian Corporate Governance Board has, for companies listed on the Oslo Stock Exchange, issued the Norwegian Code of Practice for Corporate Governance (the "Code of Practice"). Kid complies with this Code of Practice and it is detailed in this report with section numbers that refer to the Code of Practice's articles. The Code of Practise is available at www.nues.no
Kid's objectives are defined in the company's articles of association and state that: "The business activities of the company are commercial activities, mainly based on the purchase and sale of interior textiles through import, wholesale, retail, franchise and other related activities, including investments in other enterprises and relevant real property". (Articles of association are made available at investor.kid.no)
The company's strategy is to ensure growth while maintaining cost control to ensure a continued strong cashflow through:
The company's risk profile is deemed to be low considering the nature of the business and the geographical span. Kid has a risk program which continuously identifies and assesses current risks.
Kid considers its equity ratio sufficient considering the group's strategy and risk profile. The dividend policy is to pay out 80-100 percent of adjusted net profit, where adjustments are made for significant one-off events.
The Annual General Meeting approved the proposed dividend of NOK 4.00 per share in May 2022. The board of directors were also given the authority to approve and distribute a half-year dividend considering the third quarter results in 2022. A halfyear dividend of NOK 2.50 was distributed in December 2022. A dividend of NOK 3.00 has been proposed by the Board for 2022 year end. The dividend is subject to approval at the annual general meeting in May 2023.
The board of directors has a mandate to increase the company's share capital by up to NOK 4,877,419. The authority may only be used to issue shares as consideration and to raise new equity in order to strengthen the company's financing. The authority remains in force until the annual general meeting in 2023, but in no event later than 30 June 2023.
Kid has one class of shares.
Any purchase or sale by the company of its own shares will either be carried out through the Oslo Stock Exchange or at prices quoted on the Oslo Stock Exchange.
All shares in the company have equal rights and are freely tradeable.
The general meeting is the arena in which all investors can exercise their right to make fundamental decisions for the company.
The company's goal is to ensure that as many shareholders as possible may exercise their rights by participating in general meetings of the company, and that the meetings are an efficient forum for shareholders and the board to express their views. The policy is to facilitate shareholder participation through video conference at the general meetings.
Notices of general meetings are made available at investor.kid.no and a separate notice to the Oslo Stock Exchange no later than 21 days prior to the AGM. The date of the meeting is made available in the financial calendar. The notice clearly states deadlines for shareholders to give notice of attendance and provides information on the procedure for casting their votes by proxy.
All supporting documentation for the AGM is sufficiently comprehensive and detailed to allow shareholders to form a view on all matters to be considered at the meeting. The information will be accessible on the company's website. In accordance with the Norwegian Public Act a shareholder can demand that documents concerning matters that are to be dealt with at a general meeting be sent to him or her by ordinary mail.
The board of directors and the person chairing the meeting will make appropriate arrangements for the general meeting to vote separately on each candidate nominated for election to the company's corporate bodies.
Members of the board, chairman of the nomination committee and the auditor will attend the general meeting.
The general meeting has elected a nomination committee and approved a set of guidelines for the committee's work. The nomination committee is also laid down in the articles of association. The nomination committee's main purpose is to propose candidates for election to the board and their respective remuneration. In order to achieve this, the committee has contact with shareholders, the board of directors and the company's executive management.
The nomination committee consists of two members, who are independent of the board and the company's executive management. The current members are Sten-Arthur Sælør and Geir Moe.
In accordance with the articles of association, the board of directors of Kid shall consist of a minimum of three and a maximum of nine members, as decided by the general meeting.
Kid ASA does not have a corporate assembly, but instead has three employee representatives on the board of Kid Interiør AS, which is 100% owned by Kid ASA, and the six board members of Kid ASA are also members of the board of Kid Interiør AS. Board meetings for both companies are held concurrently, at which the board of directors of Kid Interiør AS is responsible for reporting day-to-day operations, while the board of directors of Kid ASA, as the listed parent company, is responsible for equity, long-term debt and the incentive programme for executive management. The board of directors at Hemtex AB consists of Group Executive Management.
The composition of the board of directors ensures that the board can attend to the common interests of all shareholders and meets the company's need for expertise, capacity and diversity. The board members have a combined experience and competence in the fields of retail and consumer goods, as well as finance, property and experience from other listed companies.
50 percent of the board members are women, and no member of the executive management team is a member of the board of directors. The shareholder-elected members of the board of directors have a term of one or two years, and the chairman is elected by the general meeting.
The board of directors produces an annual plan for its work, with particular emphasis on objectives, strategy and implementation. The chairman of the board of directors and CEO have regular contact between the meetings to evaluate the business and they keep the board updated on any matters that need to be addressed. In an event where the chairman has been personally involved in consideration of any material matter, another board member will chair the board's consideration of this particular matter. Board meetings always include the CEO's perspective on current events and progress of business plans, while the CFO provides the board with an overview of the company's financial development and forecasted earnings and cashflow.
The board evaluates its performance and expertise annually.
The board has established an audit committee consisting of three board members.
Any transaction between the company and a related party will be based on arm's length terms. If relevant, the transaction will be supported with a valuation obtained from an independent third party. The company has guidelines to ensure that board members and senior management disclose any material interest to the board of directors in transactions where the company is a party.
Kid is exposed to financial risks related to foreign exchange (FX) and interest rates. FX risks are managed by hedging nine to eleven months forward. Interest rate risks are managed by a MNOK 395 interest SWAP and a MNOK 55 cross currency interest SWAP. Other operational risk areas are reported to the board on a regular basis.
The company provides the board with monthly reports on the group's financial performance and prepares quarterly reports that are made public. The audit committee and the auditor together review the quarterly and annual reports as well as the sustainability report before they are approved by the board.
The board of directors, with assistance from the audit committee, carries out regular reviews of the company's most significant areas of risk exposure and its internal control arrangements.
The board of directors are presented separately in the annual report.
The nomination committee proposes the remuneration of the board of directors at the annual meeting. The proposition takes into account the board's responsibility, expertise, time commitment and the complexity of the company's activities. The board has one sub-committee in the audit committee.
The remuneration of the board in 2022 is disclosed in the notes to the consolidated accounts as well as the Remuneration report for 2022.
Members of the board of directors and/or companies with which they are associated do not, as a general rule, take on specific assignments for the company in addition to those as members of the board. If, however, they do take on such assignments these will be disclosed immediately to the entire board and the remuneration for such additional duties will be agreed by the board.
The board of directors has a set of guidelines for the remuneration of executive personnel. The board also directly determines the remuneration for the CEO. The CEO is, in consultation with the chairman of the board, responsible for determining the remuneration of other members of the executive management.
The board of directors and GM have approved an incentive programme for executive management which aims to align the financial interests of Kid's senior management and its shareholders. The incentive programme is based on EBITDA budget achievement with a capped maximum level. The program includes no share options or rights, but a portion of the incentive program is paid out over a period of three years and is dependent on the share price development.
The board of directors prepare guidelines on the remuneration of executive personnel and prepare a yearly remuneration report as a separate appendix to the agenda for the AGM which is approved by the GM. The remuneration for the executive management is also disclosed in the notes to the consolidated accounts in the annual report.
Kid has established an investor relation policy (available at investor.kid.no) that clearly states that any communication with shareholders outside the company's general meeting will take place in accordance with applicable equal treatment requirements and applicable legislation regarding inside information.
The company publishes a financial calendar for the upcoming year in the fourth quarter. The calendar includes an overview of major events such as its AGM, publication of interim reports, publication of revenue reports and any planned public presentations.
All information distributed to shareholders is made available simultaneously on the company's web page. All information which the company is required to disclose will be given in English.
Kid has guidelines for how it will act in the event of a takeover bid in accordance with its code of conduct. These guidelines clearly state that the board will not take any obstructive action unless it is agreed upon at the general meeting. In the event of a takeover bid, the board will act in the best interests of the shareholders and ensure that the company's operations are affected as little as possible.
The shareholders will be provided with timely and sufficient information in the case of a takeover bid, with the intention to enable the investors to have an informed view of the situation. The board of directors will also issue a statement making a recommendation as to whether shareholders should or should not accept the offer.
The auditor annually submits to the audit committee the main features of its plan for the audit of the company. The auditor participates in meetings of the board of directors that deal with the annual accounts. At these meetings the auditor reviews any material changes in the company's accounting principles, comments on any material estimated accounting figures and reports all material matters on which there has been disagreement between the auditor and the executive management of the company.
The auditor presents annually to the audit committee a review of the company's internal control procedures, including identified weaknesses and proposals for improvement.
The CEO and CFO of Kid are present at all board meetings. Once a year the board of directors has a meeting with the auditor at which neither the chief executive nor any other member of the executive management is present.
Kid has clear guidelines for the use of the auditor by the company's executive management for services other than the audit. The board of directors reports the remuneration paid to the auditor at the AGM, including details of the fee paid for audit work and any fees paid for other specific assignments.
The Kid group consists of Kid ASA, the parent company for Kid Interior AS, Kid Logistikk AS, Hemtex AB, Hemtex OY, Kid Eiendom AS and Kid International Logistic AB, together defined as "the group".
The business activity of the Group is mainly purchase and sale of interior textiles through import, wholesale and retail, along with other related activities, including investments in other enterprises and relevant real estate.
Kid Interiør is the leading specialist home textile retailer in Norway, with 156 directly owned stores across Norway. Hemtex is the leading specialist home textile retailer in Sweden, with 105 directly owned stores and 11 franchise stores across Sweden. Hemtex also have a presence in Finland and Estonia, with 8 and 6 directly owned stores respectively. All products sold by Kid Interiør and Hemtex are also available through online platforms.
The product assortment ranges from curtains and bed linens to home accessories, decorations, and furniture. Kid's strategy is to provide an attractive value proposition to customers through an inspirational assortment, and quality Kid- and Hemtex-branded products offered at affordable prices both online and through stores located in major population centres. The group's head office is located in the municipality of Lier, Norway.
2022 was a strong year for the Group. Despite challenging market conditions, we continued the positive revenue development on top of strong performance in 2020 and 2021. Our profits were negatively impacted by volatility in freight cost that was not incorporated in our price calculation model. During the past year we have made several operational improvements and have launched several new growth initiatives.
Hemtex was acquired in May 2019, and we continue to capitalize on integrating our concepts, organizations, and market approach. The gradual introduction of the Kid assortment in Hemtex has successfully renewed and expanded our categories across Sweden, Finland and Estonia. Our key focus in these markets is to expand stores size to drive growth through our full category range.
Our priority is to offer our customers a seamless omnichannel experience by connecting inspirational physical stores with our online platform. In late 2021, we launched a new group e-commerce platform in all markets. In 2022, our e-commerce team has been established to operate and further develop our omnichannel across the group. Our online growth was 12.1% during 2022 and accounted for 10.8% of revenues.
Assortment renewal and expansion remain key growth drivers. During 2022, we decided to increase the standard store size in all segments to make room for our full category range. Our physical store network is an important part of our growth potential, and during 2022 we opened net one new store, relocated 14 stores and refurbished/expanded 18 stores.
Kid Extended was launched as a new concept during Q4. The concept includes extension of current categories and new categories (e.g. European manufactured furniture like beds and sofas). The concept was launched in one pilot store in addition to our Norwegian e-commerce platform and has shown a promising start. We will open four additional pilot stores in Norway by the end of Q2 2023.
The global freight markets have been challenging due to lock down and higher oversea freight costs over the past year. To mitigate uncertain delivery times we decided to increase our inventory level during the year. However, the volatility in freight cost was not incorporated in our price calculation model at a satisfactory level, which resulted in an unexpected and temporary gross margin drop. Necessary actions have been taken to secure a normalised margin on future goods purchases, and we expect the gross margin to normalise during 2023.
(Figures from last year are in brackets, unless otherwise specified)
Revenues for 2022 were MNOK 3 178.0 (MNOK 3 097.1). The like-for-like sales growth1 was 3.2% and 2.8% for Kid Interiør and Hemtex, respectively. Online sales2 grew by 12.1% in 2022, accounting for 10.8% of total revenues.
Gross margin was 58.1% (62.6%) for 2022. Other operating expenses including and employee benefit expenses, ended at 35.7% of revenues up from 34.6% in 2021.
Due to decreased gross margins and higher operating expenses, operating profit (EBIT) was reduced to MNOK 369.2 (MNOK 541.2).
Net financial expenses amounted to MNOK 47.5 (MNOK 56.0).
Net income for 2022 was MNOK 249.2 (MNOK 384.4).
1 Like-for-like revenue are revenue from stores that were in operation from the start of last fiscal year all through the end of the current reporting period.
2 Calculated in constant currency
Total assets were MNOK 3.485.9, a decrease of MNOK 48.9 from 2021. Fixed and intangible assets increased by MNOK 50.4 due to investments in stores and new online platform, the new warehouse in Sweden and technical infrastructure and backoffice systems. Inventories amounted to MNOK 668.8 at the end of the year, an increase of MNOK 22.0 as a result of an increased number of stores and new categories. Inventory levels have been reduced during the last half of 2022 according to plan and are now at a more normalised level. Total receivables were MNOK 106.8, an increase of MNOK 42.3 from 2021, mainly driven by increased value of derivative financial instruments.
Net interest-bearing debt was MNOK 1 257.7 of which MNOK 781.8 is related to financial leases. Net interest-bearing debt excluding financial leases as defined by IFRS 16 was MNOK 475.9 (MNOK 307.3). Long-term interest-bearing debt excluding leases was MNOK 521.6 (MNOK 451.6) at the end of 2022, short-term interest-bearing debt was MNOK 30.0 (MNOK 95.0), and cash and bank deposits were MNOK 75.7 (MNOK 239.3). The group has an additional overdraft facility of MNOK 247, a revolving credit facility of MNOK 130 and a short-term credit facility of MNOK 100, of which MNOK 0 was drawn at year end.
The equity ratio at the end of the year was 36.5 % compared to 35.7% in 2021.
Cash flow from operations was MNOK 547.8 (MNOK 673.7). The inventory level increased by MNOK 29.2 (MNOK 180.3) due to an increased number of stores and new categories. Other significant changes from 2021 included decreased trade creditors following delayed and reduced goods purchases, and lower bonus provisions.
Cash flow from investments was MNOK -143.1 (MNOK -92.6). The investment level in 2022 reflects opening, relocation, and refurbishment of stores as well as investments in the new warehouse in Sweden and technical infrastructure and backoffice systems.
Cash flow from financing was MNOK -569.1 (MNOK -643.7), negatively affected by dividend payments of MNOK -264.2 (MNOK -365.8) and lease payments of MNOK -263.4 (MNOK -264.9). During the year, the revolving credit facility have been drawn and subsequently repaid, and we have repaid MNOK 30 of the long-term loan.
Net change in cash and cash equivalents was MNOK -164.3 (MNOK -62.6), mainly driven by decreased profit, investments and dividend payments. The board of directors finds that the group had a solid liquidity position as of 31. December 2022.
Petter Schouw-Hansen (1982) is currently Director with Gjelsten Holding AS, the majority shareholder in KID ASA. He was the Chief Financial and Strategic Officer at Kid from 2011 to 2018. Prior to this, he served as senior consultant at Bearing Point. Schouw-Hansen is currently on the board of directors of various companies and is the chairperson of the board in Sport Holding AS and Bergans Fritid AS. Schouw-Hansen has experience from operationalizing strategy, performance management, M&A and management coaching within several industries, including retail. Schouw-Hansen holds a M.SC from the Norwegian School of economics, specialized in Finance. He is a Norwegian citizen, and resides in Norway.
Rune Marsdal Board Member Appointed: May 2019
Rune Marsdal (1971) is currently CFO and member of the board of directors of Gjelsten Holding AS. Marsdal has previously worked as a financial analyst in Danske Securities and as an analyst in Schøyen Finans Forvaltning and Norway Seafoods. Marsdal holds a Master of Business and Economics degree from BI Norwegian Business School, as well as a Certified Financial Analyst degree from Norwegian School of Economics. Marsdal is currently on the board of directors of various companies, including Sport Holding AS and Bergans Fritid AS. Marsdal has previously served on the board of directors of Kid Interiør AS and Nordisk Tekstil Holding AS (later Kid ASA), both as a director (2012-2015) and as special advisor to the board of directors (2015-2019), and BEWiSynbra Group AB (publ). Marsdal is a Norwegian citizen and resides in Norway.
Earnings per share was NOK 6.13 in 2022. The board of directors proposes a dividend of NOK 3.00 per share to be paid in May 2023. Including the prepayment of NOK 2.50 per share paid in December 2022, the total dividend of NOK 5.50 represents 90% of Group net income for 2022.
KID ASA 2022 profit was distributed as follows:
| Dividend pay-out | TNOK | 121,935 |
|---|---|---|
| Dividend prepayment | TNOK | 101,613 |
| Transferred to other equity | TNOK | -26,957 |
| Total allocated | TNOK | 196,591 |
The board of directors has made appropriate enquiries and formed a judgement at the time of approving the financial statements that there is a reasonable expectation that Kid ASA has adequate resources to continue in operational existence for the foreseeable future. For this reason, the board of directors continues to adopt the going concern basis in preparing the financial statements in accordance with the Norwegian Accounting Act and the Norwegian Company Act. This is further supported by the group's budget and strategy.
As of the end of the accounting year 2022, the equity ratio of the parent company was 43.6%. The board of directors believes the equity and liquidity are sufficient, given the company's operational commitments, future plans and achieved results. This is further supported by the results of the Group as a whole.
The group had a total of 2,298 employees, which corresponded to 958 full-time equivalents at the end of 2022. The parent company had no employees.
The group keep records of total absence due to sickness, in accordance with laws and regulations. Total sick leave was 7.13% in 2022 (6.42% in 2021). Sick leave is monitored on a monthly basis at store and department level, and appropriate actions are taken in relation to the sick leave that the company is able to influence. The working environment is monitored continuously and is considered to be good.
During the year, no severe workplace accidents or other accidents occurred or were reported that resulted in serious personal injury or material losses. All divisions of the group operate with a dedicated focus on occupational health, environment and safety.
Kid ASA has a Directors and Officers liability insurance with AIG Europe S.A. covering pure financial loss claims against the Board of Directors and Executive Management as a consequence of compensatory acts and/or omissions in their respective duties, with an adequate insurance limit.
Karin Bing Orgland (1959) is currently a professional board member in various companies including Eksfin, Storebrand ASA and Entur AS . She has extensive experience from various management and board member positions within the DNB Group between 1985 and 2013. Bing Orgland resides in Oslo, Norway and holds a Master of Business and Economics degree from the Norwegian School of Economics.
Liv Berstad (1961) is currently the Retail Manager for the clothing company KappAhl in Sweden, Norway, Finland, Poland and UK. Berstad has extensive experience from the aviation industry and retail trade in the Nordic region, mainly from construction material, fashion and cosmetics. She is a Business Economist from BI Norwegian School of Management. Berstad has had several board appointments the last twenty years for companies both in Norway and Scandinavia. She is a Norwegian citizen and resides in Norway.
For information on remuneration, please refer to Remuneration report 2022 as approved by the Board of Directors. The Remuneration report is subject to approval by the General Meeting in 2023, and published as part of the appendices to the Notice of Annual General Meeting at investor.kid.no
For information on corporate governance policies, please refer to separate section in the annual report.
The group encourages diversity and pursues a nondiscrimination policy, with full gender equality. Furthermore, the group promotes 'equal pay for equal work', whereby the most qualified candidate shall hold a position, regardless of gender, religion or sexual orientation. The group promotes the objective of laws against discrimination through recruitment, salary and employment conditions, promotion, development possibilities and protection against harassment.
The group prohibits harassment of any kind, and will take appropriate and immediate action in response to complaints or knowledge of violations of this policy.
Despite an average, acceptable gender equality balance, there are still some traditional patterns of employment within the retail division where more than 97% of in-store employees are women. At the warehouse, the gender equality balance has shifted from traditional patterns previous years, and per year-end 2022 approximately 37% of the employees in the warehouse were women. By year-end 2022, approximately 80% of employees at the head office are women and the management team consisted of three men. The board of directors of the parent company consists of three women and three men.
The group aims to be a workplace in which no discrimination occurs based on disabilities. As far as possible, individual adjustments are made to adapt the workplace and work tasks for employees or job applicants with disabilities.
Kid believes that environmental and financial performance often go hand-in-hand and is constantly striving to identify and implement measures that support this. The group is working on several initiatives to reduce carbon dioxide emissions in the value chain, increase sustainable materials and production, supporting a more circular economy, and more.
Climate change affects us all and climate emission issues are material for the Kid Group. The Group is calculating its greenhouse gas (GHG) emissions and has started to implement actions to mitigate the climate related risks.
In 2022 Kid ASA submitted both near-term and long-term CO2e reduction targets for validation to the Science Based Target Initiative. The Kid Group commits* to reduce absolute scope
* Target yet to be validated by Science Based target
Appointed: May 2020
Gyrid Skalleberg Ingerø (1967) is currently EVP & Group CFO in Kongsberg Gruppen ASA. Her previous experience includes Bank experience from Nordea, CFO / Investor Relation of Komplett Group ASA, Financial restructuring and turnaround of Expert and 1881, SVP & CFO of Telenor Norge AS and CFO at Telenor Digital Businesses AS. Prior to her CFO positions, Ingerø worked for 8 years in KPMG. She holds a Master in Accounting and Auditing from Norwegian School of Economics. Skalleberg Ingerø is currently on the board of Flytoget AS, Itera ASA and various companies within Kongsberg Gruppen. Skalleberg Ingerø is a Norwegian citizen and resides in Norway.
Espen Gundersen was born in 1964 and is a Norwegian citizen. He has had several positions within Tomra Systems ASA in the period 1999 to 2022, including CFO from 2003 and deputy CEO from 2009. Prior to joining Tomra, he served as VP Business Development of Selmer ASA for five years. He started his career with Arthur Andersen in 1989. He holds an MBA from the Norwegian School of Management in Oslo and a CPA from the Norwegian School of Economics and Business Administration in Bergen.
Espen Gundersen is also Board member in Scatec ASA, Hexagon Purus ASA (including head of audit committee and head of compensation committee) and Kitron ASA (including head of audit committee).
1, 2 as well as scope 3 category 1, 3, 4 GHG emissions 50% by 2030 from a 2020 base year. In addition, the Group shall reduce absolute GHG emissions with 90% by 2045 from a 2020 base year within the same scopes. With the ambition and commitment to reduce the GHG emissions, Kid ASA is aligned with the 1,5 °C goal in the Paris Agreement. Throughout 2022 the focus has been to create a CO2e reduction roadmap and to evolve the work with CO2e reduction for the coming years.
The group works actively to prevent adverse environmentaland ethics-related issues, human rights and anti-corruption. It works with suppliers to ensure that Kid's products are produced in clean and safe environments, that workers are treated with respect, earn a reasonable wage and that suppliers work within the relevant local laws and regulations. As a member of Ethical Trade Norway, the group commits to working actively with due diligence for responsible business conduct as described by Guiding Principles on Business and Human Rights (UNGP) and the OECD guidelines for responsible business conduct.
More information about organisation, working environment, sustainability and the environment is provided in our separate sustainability report and can be downloaded at investor.kid.no.
The sustainability report also includes the Group's reporting adhering to the Transparency Act, a Norwegian legislation, which requires companies to promote respect for human rights and decent working conditions. Kid ASA will also publish a statement of due diligence assessments in accordance with the Transparency Act on www.investor.kid.no under Corporate Governance before June 30, 2023.
To reduce foreign currency risks, Kid hedges net foreign currency cash flows by entering into futures contracts. This is done in order to mitigate the currency risk for approximately 100 % of goods sourced.
In order to mitigate currency risk, future contracts must be entered into at least nine months before payment of goods, as prices and quantities are set with a long lead-time. The company has a policy to hedge 100 % of USD and EUR currency goods purchases for 9-11 months forward. The policy has been formally approved by the board of directors.
Exchange rate fluctuations may impact Kids income statement, balance sheet and/or cash flows as a result of the reporting currency being different from the functional currency of the foreign subsidiaries in Hemtex. The Group mainly operates in the Nordic markets and its foreign exchange rate fluctuation risk
is therefore limited. Both revenue and operating expenses are incurred in local currency, reducing the exposure to foreign exchange rate fluctuations in the statement of profit or loss.
Kid has limited exposure to credit risk. The clear majority of revenue transactions are settled in cash or by debit card. Trade receivables relate mainly to the B2B customers which are still a relatively small part of total revenues and historically involve limited losses.
Projected cash flow is updated regularly, and the group has sufficient cash and credit facilities available.
Kid has a floating interest rate for MNOK 551.6 of outstanding long-term debt. Of this amount, MNOK 395 have been hedged through an interest rate swap agreement at a fixed interest rate of 1.876% maturing August 2029 and MSEK 55 has been hedged through a cross-currency interest swap agreement securing a fixed interest rate of 1.460 % and the exposure to SEK maturing November 2024.
To the extent of the board of directors' knowledge, the abovementioned risk factors represent the most material financial risk factors that may be of importance in order to evaluate the company's assets, liabilities, financial position and profits.
Our combination of unique and continually renewed assortment, inspirational stores and e-commerce platform, friendly and knowledgeable customer service, and a responsible brand makes customers return to Kid Interior and Hemtex as their preferred home textile and furnishing retailer.
Kid will continue to optimise, refurbish and grow the store portfolio. Expansion of store square meters in a large portion of the stores, especially for Hemtex, remains a high priority as this enables the stores to offer our full assortment range and maintain growth. In 2020, the board of directors approved a strategic profitable decision to increase the footprint of Hemtex in Finland and Estonia with an ambition to reach twenty stores in Finland and eight in Estonia within the next five years, with a potential revenue of NOK 100 million.
We are currently piloting the "Kid Extended" concept which includes a new range of products as extension of current categories as well as new categories (e.g. furniture). During Q2 a total of five pilot stores will be operational in Norway, all of which are approximately three times as large in floor space compared
to our current average store. The extended assortment is also available in our Norwegian online store, which is expected to be the most important sales channel. The concept has shown a promising start, and during 2023 we will monitor the progress and results closely before deciding on a further roll-out of the concept.
In order to secure logistics capacity for further growth, Kid entered into an agreement in 2021 to build a new warehouse and headquarter facility in Borås, Sweden. The construction of the warehouse is progressing as planned and we expect to be fully operative in May. We are confident that Hemtex will operate more cost efficiently, reduce operational risk and better serve its customers by operating its own in-house logistics organization in the same way as Kid Interior does in Norway. Furthermore, the warehouse provides capacity for further growth for the Group.
The integration of the Kid and Hemtex concepts has been successful so far. We still see a potential to increase earnings by further integrating the market approach, organisations and IT systems. During 2023 we expect to have an integrated IT platform which will enable us to operate more seamlessly and cost efficiently across segments.
The historically high freight costs affected the Q4 margin negatively. However, as freight costs have been materially reduced on shipments arriving in the beginning of 2023 onwards, we expect a gradual margin improvement during 2023.
The group paid a total of MNOK 291 in 2022 related to fixed store- and warehouse rent. The rent is subject to an annual index regulation. Due to unusual high inflation in all our markets in 2022, the index regulation for 2023 will be in the range of 8-10%. Cost effectiveness remains a high priority for the Group.
The board of directors remains confident in Kid's solid financial situation and liquidity.
The objectives for Kid ASA in the medium-term are:
Lier, 13 April 2023 The board of directors, KID ASA
Petter Schouw-Hansen Chairperson
Gyrid Skalleberg Ingerø Board member
Rune Marsdal Board member
Karin Bing Orgland Board member
Anders Fjeld Chief Executive Officer
Liv Berstad Board member
Espen Gundersen Board member
| (All amounts in NOK 1000 unless otherwise stated) | |||
|---|---|---|---|
| Year ended 31st December | |||
| The notes are an integral part of these financial statements. | Note | 2022 | 2021 |
| Revenue | 4 | 3,177,991 | 3,097,096 |
| Other operating income | 5,236 | 10,010 | |
| Total revenue | 3,183,227 | 3,107,106 | |
| Cost of goods sold | 15 | 1,331,613 | 1,159,506 |
| Employee benefits expense | 6, 20 | 629,892 | 617,303 |
| Depreciation and amortisation expense | 11, 12, 24 | 348,296 | 336,376 |
| Other operating expenses | 19 | 504,198 | 452,730 |
| Total operating expenses | 2,813,999 | 2,565,916 | |
| Operating profit | 369,228 | 541,190 | |
| Financial income | 7 | 4,948 | 7,361 |
| Financial expense | 7 | 52,476 | 63,384 |
| Net financial income (+) / expense (-) | -47,528 | -56,023 | |
| Share of result from joint ventures | 8 | -2,787 | 0 |
| Profit before tax | 318,912 | 485,167 | |
| Income tax expense | 9 | 69,668 | 100,741 |
| Net profit | 249,244 | 384,426 | |
| Other comprehensive income | |||
| Items that may be reclassified to P&L | |||
| Cash flow hedges | 22 | 163,076 | 54,662 |
| Tax effect from cash flow hedges | 22 | -35,877 | -12,026 |
| Currency translation differences | 22 | -8,924 | -12,041 |
| Total other comprehensive income net of tax | 118,275 | 30,595 | |
| Total comprehensive income | 367,520 | 415,021 | |
| Basic and diluted Earnings per share (EPS): | 10 | 6.13 | 9.46 |
| Group | ||||
|---|---|---|---|---|
| The notes are an integral part of these financial statements. | Note | 31st December 2022 | 31st December 2021 | |
| ASSETS | ||||
| Goodwill | 12 | 65,479 | 70,286 | |
| Trademark | 12 | 1,510,224 | 1,511,788 | |
| Other intangible assets | 12 | 35,326 | 19,096 | |
| Deferred tax asset | 9 | 1,859 | 22,968 | |
| Total intangible assets | 1,612,888 | 1,624,140 | ||
| Right of use asset | 24 | 760,734 | 756,940 | |
| Property, plant and equipment | 11 | 237,245 | 203,159 | |
| Total fixed assets | 997,979 | 960,099 | ||
| Investments in joint ventures | 8 | 0 | 30 | |
| Loans to associated companies and joint ventures | 21 | 23,795 | 0 | |
| Total financial fixed assets | 23,795 | 30 | ||
| TOTAL TANGIBLE ASSETS | 2,634,663 | 2,584,268 | ||
| Inventories | 15 | 668,753 | 646,764 | |
| Trade receivables | 13, 14 | 12,094 | 21,999 | |
| Other receivables | 14 | 35,241 | 25,023 | |
| Derivative financial instruments | 3, 13, 22 | 59,449 | 17,439 | |
| Total receivables | 106,784 | 64,461 | ||
| Cash and cash equivalents | 13, 16, 23 | 75,721 | 239,331 | |
| TOTAL CURRENT ASSETS | 851,259 | 950,556 | ||
| TOTAL ASSETS | 3,485,922 | 3,534,824 |
| Group | |||||
|---|---|---|---|---|---|
| The notes are an integral part of these financial statements. | Note | 31st December 2022 | 31st December 2021 | ||
| EQUITY AND LIABILITIES | |||||
| Share capital | 17 | 48,770 | 48,774 | ||
| Share premium | 17 | 321,050 | 321,050 | ||
| Other paid-in equity | 64,617 | 64,617 | |||
| Total paid-in-equity | 434,436 | 434,440 | |||
| Other reserves | 22 | 30,645 | 4,975 | ||
| Retained earnings | 808,296 | 823,248 | |||
| TOTAL EQUITY | 1,273,380 | 1,262,663 | |||
| Deferred tax liability | 20 | 322,723 | 332,280 | ||
| Long term lease liabilities | 24 | 523,528 | 517,550 | ||
| Long term liabilities to financial institutions | 3, 13, 18, 23 | 521,646 | 451,628 | ||
| Total long-term liabilities | 1,367,898 | 1,301,458 | |||
| Short term lease liabilities | 24 | 258,257 | 249,737 | ||
| Short term liabilities to financial institutions | 3, 13, 18, 23 | 30,000 | 95,000 | ||
| Trade creditors | 13 | 122,459 | 159,751 | ||
| Taxes payable | 9 | 57,745 | 90,335 | ||
| Public duties payable | 167,139 | 172,851 | |||
| Derivatives | 3, 13, 22 | 7,229 | 5,166 | ||
| Other short-term liabilities | 19 | 201,815 | 197,865 | ||
| Total short-term liabilities | 844,644 | 970,705 | |||
| TOTAL LIABILITIES | 2,212,542 | 2,272,162 | |||
| TOTAL EQUITY AND LIABILITIES | 3,485,922 | 3,534,824 |
(All amounts in NOK 1000 unless otherwise stated)
Petter Schouw-Hansen Chairperson
Gyrid Skalleberg Ingerø Board member
Lier, 13 April 2023 The board of directors, KID ASA
Rune Marsdal Board member
Karin Bing Orgland Board member
Espen Gundersen Board member
Liv Berstad Board member
Anders Fjeld Chief Executive Officer
| Group | ||||||
|---|---|---|---|---|---|---|
| The notes are an integral part of these financial statements. | As at 31st December | |||||
| Share capital |
Share premium |
Other paid - in equity |
Other reserves |
Retained earnings |
Total equity |
|
| Balance at 1 January 2021 | 48,774 | 321,050 | 64,617 | -54,466 | 804,614 | 1,184,589 |
| Profit for the year | - | - | - | - | 384,426 | 384,426 |
| Realized cash flow hedges | - | - | - | 28,846 | - | 28,846 |
| Other comprehensive income | - | - | - | 30,595 | - | 30,595 |
| Total comprehensive income for the year | - | - | - | 30,595 | 384,426 | 415,021 |
| Transactions with owners - Dividends | - | - | - | - | -365,807 | -365,807 |
| Balance as at 31 December 2021 | 48,774 | 321,050 | 64,617 | 4,975 | 823,248 | 1,262,663 |
| Balance at 1 January 2022 | 48,770 | 321,050 | 64,617 | 4,975 | 823,248 | 1,262,663 |
| Profit for the year | - | - | - | - | 249,244 | 249,244 |
| Realized cash flow hedges | - | - | - | -92,609 | - | -92,609 |
| Other comprehensive income | - | - | - | 118,275 | - | 118,275 |
| Total comprehensive income for the year | - | - | - | 118,275 | 249,244 | 367,520 |
| Transactions with owners - Dividends | - | - | - | - | -264,194 | -264,194 |
| Balance as at 31 December 2022 | 48,770 | 321,050 | 64,617 | 30,645 | 808,296 | 1,273,380 |
| Group | |||||
|---|---|---|---|---|---|
| The notes are an integral part of these financial statements. | Year ended 31st December | ||||
| Note | 2022 | 2021 | |||
| Cash flow from operations | |||||
| Profit before income taxes | 318,912 | 485,167 | |||
| Taxes paid in the period | 9 | -105,571 | -105,964 | ||
| Depreciation & impairment | 11, 12, 24 | 348,296 | 336,376 | ||
| Effect of exchange fluctuations | 1,341 | 16,861 | |||
| Change in working capital | |||||
| Change in inventory | 15 | -29,170 | -180,317 | ||
| Change in trade receivables | 14 | 9,135 | -4,448 | ||
| Change in trade creditors | -34,347 | 71,228 | |||
| Change in other short-term liabilities | -7,176 | 15,515 | |||
| Net interest | 46,435 | 39,283 | |||
| Net cash flow from operations | 547,855 | 673,701 | |||
| Cash flow from investments | |||||
| Purchase of fixed assets | 11, 12 | -119,264 | -92,614 | ||
| Loans to associated companies and joint ventures | 22 | -23,795 | |||
| Net cash flow from investments | -143,059 | -92,614 | |||
| Cash flow from financing | |||||
| Proceeds from long term borrowings | 18, 23 | 230,000 | 130,000 | ||
| Repayment of revolving credit facility | 18, 23 | -195,119 | -65,000 | ||
| Repayment of Term loans | 18, 23 | -30,000 | -38,678 | ||
| Net interest | 7 | -46,435 | -39,283 | ||
| Lease payments for the principal portion of lease liability | 24 | -263,350 | -264,951 | ||
| Dividend payments to shareholders | -264,194 | -365,807 | |||
| Net cash flow from financing | -569,098 | -643,719 | |||
| Cash and cash equivalents at the beginning of the period | 16 | 239,331 | 301,276 | ||
| Net change in cash and cash equivalents | -164,302 | -62,631 | |||
| Exchange gains / (losses) on cash and cash equivalents | 690 | 683 | |||
| Cash and cash equivalents at the end of the period | 16 | 75,721 | 239,331 |
Kid ASA and its subsidiaries (together, `the group') sell interior products through wholly owned stores. The group has 156 stores in Norway under the brand name Kid. Hemtex has 116 stores in Sweden, 8 in Finland and 6 in Estonia. Out of the 130 Hemtex stores, 119 is owned by Hemtex and 11 is operated through franchise. The group also has online stores, under both Kid and Hemtex. The domicile of the group is Lier, Norway.
Group's head office is at Gilhusveien 1, 3426 Gullaug.
The principal accounting policies applied in the preparation of these consolidated financial statements are set out below. These policies have been consistently applied to all the years presented, unless otherwise stated.
The consolidated financial statements of Kid ASA have been prepared in accordance with International Financial Reporting Standards (IFRS) and IFRS Interpretations Committee (IFRS IC) interpretations as adopted by the European Union and the Norwegian Companies Act 1998 applicable to companies reporting under IFRS. The consolidated financial statements have been prepared under the historical cost convention, as modified by the revaluation of financial assets and financial liabilities (including derivative instruments) at fair value through profit or loss.
The accounts were approved and authorized for issue by the Board 13. April 2023.
The preparation of financial statements in conformity with IFRS requires the use of certain critical accounting estimates. It also requires management to exercise its judgement in the process of applying the group's accounting policies. The areas involving a higher degree of judgement or complexity or where the assumptions and estimates are significant for the consolidated financial statements are disclosed in note 5.
There are no new or amended standards adopted by the Group during the year with impact on the amounts recognised in prior periods or that would significantly affect the current or future periods.
Several amended standards and interpretations are effective for annual periods beginning after January 1. The group has not early adopted any new or amended standards and they are not expected to have a significant impact on the group's consolidated financial statements.
Subsidiaries are all entities over which the group has control. The group controls an entity when the group is exposed to, or has rights to, variable returns from its involvement with the entity and has the ability to affect those returns through its power over the entity. Subsidiaries are fully consolidated from the date on which control is transferred to the group. They are deconsolidated from the date that control ceases. Further information on entities included in the consolidated financial statements is presented in note 8.
The group applies the acquisition method to account for business combinations. The consideration transferred for the acquisition of a subsidiary is the fair values of the assets transferred, the liabilities incurred to the former owners of the acquiree and the equity interests issued by the group. The consideration transferred includes the fair value of any asset or liability resulting from a contingent consideration arrangement. Identifiable assets acquired and liabilities and contingent liabilities assumed in a business combination are measured initially at their fair values at the acquisition date. The group recognises any non-controlling interest in the acquiree on an acquisition-by-acquisition basis, either at fair value or at the non-controlling interest's proportionate share of the recognised amounts of acquiree's identifiable net assets.
Inter-company transactions, balances and unrealised gains on transactions between group companies are eliminated. Unrealised losses are also eliminated. When necessary, amounts reported by subsidiaries have been adjusted to conform with the group's accounting policies.
Interests in joint ventures are accounted for using the equity method, after initially being recognised at cost in the consolidated balance sheet. Under the equity method of accounting, the investments are initially recognised at cost and adjusted thereafter to recognise the group's share of the post-acquisition profits or losses of the investee in profit or loss, and the group's share of movements in other comprehensive income of the investee in other comprehensive income. Dividends received or receivable from associates and joint ventures are recognised as a reduction in the carrying amount of the investment. Unrealised gains on transactions between the group and its associates and joint ventures are eliminated to the extent of the group's interest in these entities. Unrealised losses are also eliminated unless the transaction provides evidence of an impairment of the asset transferred.
Accounting policies of equity-accounted investees have been changed where necessary to ensure consistency with the policies adopted by the group. The carrying amount of equity-accounted investments is tested for impairment. Further information on joint ventures is presented in note 8.
Operating segments are reported in a manner consistent with the internal reporting provided to the chief operating decision maker which is the group' Board of Directors (BoD). The group sells home textiles across Norway, Sweden, Finland and Estonia under the name KID Interiør and Hemtex. Within the Group, segment Kid relates to all operations in Norway and segment Hemtex relates to Sweden, Estonia and Finland. The Group also sells home interior products through the Group's online websites which is considered part of the operating segments Kid and Hemtex respectively as the online platforms are considered supplements to the stores and not separate segments.
Each entity in the group determines its functional currency based on the economic environment in which it operates, and items included in the financial statements of each entity are measured using that functional currency. When preparing the financial statements of each individual group entity, transactions in currencies other than the entity's functional currency are recognised in the functional currency, using the transaction date's currency rate. The consolidated financial statements are presented in NOK, which is the group's presentation and functional currency.
Foreign currency transactions are translated into the functional currency using the exchange rates prevailing at the dates of the transactions or valuation where items are re-measured. Foreign exchange gains and losses resulting from the settlement of such transactions and from the translation at year-end exchange rates of monetary assets and liabilities denominated in foreign currencies are recognised in the income statement, except when deferred in other comprehensive income as qualifying cash flow hedges and qualifying net investment hedges. Foreign exchange gains and losses that relate to borrowings and cash and cash equivalents are presented in the income statement within `finance income or costs'.
Property, plant and equipment is stated at historical cost less depreciation. Historical cost includes expenditure that is directly attributable to the acquisition of the items. Cost may also include transfers from equity of any gains/losses on qualifying cash flow hedges of foreign currency purchases of property, plant and equipment.
Subsequent costs are included in the asset's carrying amount or recognised as a separate asset, as appropriate, only when it is probable that future economic benefits associated with the item will flow to the group and the cost of the item can be measured reliably. Repairs and maintenance are charged to the income statement during the financial period in which they are incurred.
Depreciation on assets is calculated using the straight-line method to allocate their cost or revalued amounts to their residual values over their estimated useful lives, as follows:
| Leased movables and shop fittings | 5 years |
|---|---|
| Fixtures | 3-5 years |
The assets' residual values and useful lives are reviewed, and adjusted if appropriate, at the end of each reporting period.
An asset's carrying amount is written down immediately to its recoverable amount if the asset's carrying amount is greater than its estimated recoverable amount (note 2.7).
Gains and losses on disposals are determined by comparing the proceeds with the carrying amount and are recognised within `Other (losses)/gains – net' in the income statement.
Property, plant and equipment classified as facilities under construction is held at cost less any recognised provision for impairment. Depreciation is not initiated until the assets are brought into use on store opening.
Goodwill on acquisitions of subsidiaries is included in intangible assets. Goodwill is not amortised but it is tested for impairment annually, or more frequently if events or changes in circumstances indicate that it might be impaired, and is carried at cost less accumulated impairment losses. Gains and losses on the disposal of an entity include the carrying amount of goodwill relating to the entity sold. Goodwill is allocated to cash-generating units for the purpose of impairment testing. The allocation is made to those cash-generating units or groups of cash-generating units that are expected to benefit from the business combination in which the goodwill arose. The units or groups of units are identified at the lowest level at which goodwill is monitored for internal management purposes, being the operating segments KID and Hemtex.
Separately acquired trademarks and licences are shown at historical cost. Trademarks and licences acquired in a business combination are recognised at fair value at the acquisition date. Amortisation is calculated using the straight-line method to allocate the cost of licences over their estimated useful lives of 9 to 10 years. Trademarks ("Kid Interior" brand name) have an indefinite useful life.
Acquired computer software licences are capitalised on the basis of the costs incurred to acquire and bring into use the specific software. These costs are amortised over their estimated useful lives of four to seven years.
Goodwill and intangible assets that have an indefinite useful life or intangible assets not ready to use are not subject to amortisation and are tested annually for impairment. Assets that are subject to amortisation are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. An impairment loss is recognised for the amount by which the asset's carrying amount exceeds its recoverable amount. The recoverable amount is the higher of an asset's fair value less costs of disposal and value in use. For the purposes of assessing impairment, assets are grouped at the lowest levels for which there are largely independent cash inflows (cash-generating units). Prior impairments of non-financial assets (other than goodwill) are reviewed for possible reversal at each reporting date.
The Group classifies its financial assets in the following categories: at fair value (either through OCI or profit or loss) or amortised cost. The classification is based on the SPPI model (Solely payments of principal and interest) in IFRS 9 and based on the Groups business model.
Financial assets at fair value through profit or loss are derivative instruments not designated as hedging instruments. The Group currently have one cross currency interest swap contract defined as financial asset at fair value through profit or loss.
Trade receivables, based on the classification model SPPI are held at amortized cost. All trade receivables are classified as current assets.
Financial assets at fair value through OCI are derivative instruments designated as hedging instruments. The Group currently have one interest swap contract and several currency forward contracts defined as financial asset at fair value through OCI.
Trade receivables are initially recognised at their fair value and subsequently measured at amortised cost. Trade receivables are evaluated for possible impairment each reporting period using the simplified credit loss model. See section 2.11. Trade receivables are derecognised when the right to receive cash flows has expired.
Financial assets and liabilities are offset and the net amount reported in the balance sheet when there is a legally enforceable right to offset the recognised amounts and there is an intention to settle on a net basis or realise the asset and settle the liability simultaneously. The legally enforceable right must not be contingent on future events and must be enforceable in the normal course of business and in the event of default, insolvency or bankruptcy of the company or the counterparty.
The majority of the Group's sales are "over the counter" in the KID and Hemtex stores to individuals, where payment is received from the customer at the time of the sale. Therefore in the majority of sales transactions, a trade receivable is not recognised. Sales to businesses or government institutions, for example schools or hospitals, a trade receivables is recognised at delivery of the inventory to the customer. These receivables have low credit risk and the majority of receivables over the past several years have been collected in full and on time. The group applies the simplified approach, whereby expected lifetime losses are recognised from initial recognition of the receivables is used.
The Group enters into certain derivative contracts to provide economic hedges for parts of the Group's exposure to currency rate risk and interest rate risk. These contracts meet the criteria of hedge accounting.
Derivatives are initially recognised at fair value on the date a derivative contract is entered into, and they are subsequently remeasured to their fair value at the end of each reporting period. Derivatives that are designated as hedging instruments for cash flow hedges are measured at fair value over Other comprehensive income as long as the hedge meets IFRS 9 hedge criteria. The Group does not designate any derivatives as fair value hedges.
At inception of the hedge relationship, the group documents the economic relationship between hedging instruments and hedged items, including whether changes in the cash flows of the hedging instruments are expected to offset changes in the cash flows of hedged items. The group documents its risk management objective and strategy for undertaking its hedge transactions.
When a hedging instrument expires, or is sold or terminated, or when a hedge no longer meets the criteria for hedge accounting, any cumulative deferred gain or loss and deferred costs of hedging in equity at that time remains in equity until the forecast transaction occurs, resulting in the recognition of a non-financial asset such as inventory. When the forecast transaction is no longer expected to occur, the cumulative gain or loss and deferred costs of hedging that were reported in equity are immediately reclassified to profit or loss.
Inventories are stated at the lower of cost and net realisable value. Net realisable value is the estimated selling price in the ordinary course of business, less applicable selling expenses. The cost of purchased goods sold comprises the direct costs (purchase price), import duties and freight as well as the hedging reserve. A significant part of the inventory purchases are denominated in USD and hedged to Norwegian and Swedish kroner with currency derivatives designated as cash flow hedges. Cost of purchased goods sold is determined using a combination of specific identification and weighted-average costing. Changes in inventory also includes a provision for obsolescence and lost goods.
For the purpose of presentation in the statement of cash flows, cash and cash equivalents includes cash on hand, deposits held at call with financial institutions, other short-term, highly liquid investments with original maturities of three months or less that are readily convertible to known amounts of cash and which are subject to an insignificant risk of changes in value, and bank overdrafts. Bank overdrafts are shown within borrowings in current liabilities in the balance sheet. As of year-end 2021 and 2022 the Group did not have any outstanding bank overdrafts.
Cash is initially recognised at fair value and subsequently measured at amortised cost.
Ordinary shares are classified as equity.
Incremental costs directly attributable to the issue of new ordinary shares or options are shown in equity as a deduction, net of tax, from the proceeds.
Trade payables are obligations to pay for goods or services that have been acquired in the ordinary course of business from suppliers. Trade payables are classified as current liabilities if payment is due within one year or less (or in the normal operating cycle of the business if longer). If not, they are presented as non-current liabilities.
Trade payables are recognised initially at fair value and subsequently measured at amortised cost using the effective interest method.
Borrowings are recognised initially at fair value, net of transaction costs incurred. Borrowings are subsequently carried at amortised cost; any difference between the proceeds (net of transaction costs) and the redemption value is recognised in the income statement over the period of the borrowings using the effective interest method.
Fees and commission costs paid on the establishment and maintenance of short-term bank borrowing facilities are recognised as bank transaction costs in the accounting period when the costs are paid. These costs are not amortised and deferred as the loans are usually re-paid within a few months.
The tax expense for the period comprises current and deferred tax. Tax is recognised in the income statement, except to the extent that it relates to items recognised in other comprehensive income or directly in equity. In this case, the tax is also recognised in other comprehensive income or directly in equity, respectively.
The current income tax charge is calculated on the basis of the tax laws enacted or substantively enacted at the balance sheet date in the countries where the company and its subsidiaries operate and generate taxable income. Management periodically evaluates positions taken in tax returns with respect to situations in which applicable tax regulation is subject to interpretation. It establishes provisions where appropriate on the basis of amounts expected to be paid to the tax authorities.
Deferred income tax is recognised on temporary differences arising between the tax bases of assets and liabilities and their carrying amounts in the consolidated financial statements. However, deferred tax liabilities are not recognised if they arise from the initial recognition of goodwill; deferred income tax is not accounted for if it arises from initial recognition of an asset or liability in a transaction other than a business combination that at the time of the transaction affects neither accounting nor taxable profit or loss. Deferred income tax is determined using tax rates (and laws) that have been enacted or substantively enacted by the balance sheet date and are expected to apply when the related deferred income tax asset is realised or the deferred income tax liability is settled.
Deferred income tax assets are recognised only to the extent that it is probable that future taxable profit will be available against which the temporary differences can be utilised.
Deferred income tax liabilities are provided on taxable temporary differences arising from investments in subsidiaries, associates and joint arrangements, except for deferred income tax liability where the timing of the reversal of the temporary difference is controlled by the group and it is probable that the temporary difference will not reverse in the foreseeable future. Generally the group is unable to control the reversal of the temporary difference for associates. Only were there is an agreement in place that gives the group the ability to control the reversal of the temporary difference not recognised.
Deferred income tax assets are recognised on deductible temporary differences arising from investments in subsidiaries, associates and joint arrangements only to the extent that it is probable the temporary difference will reverse in the future and there is sufficient taxable profit available against which the temporary difference can be utilised.
Deferred income tax assets and liabilities are offset when there is a legally enforceable right to offset current tax assets against current tax liabilities and when the deferred income taxes assets and liabilities relate to income taxes levied by the same taxation authority on either the same taxable entity or different taxable entities where there is an intention to settle the balances on a net basis.
Provisions for legal claims, service warranties and make good obligations are recognised when the group has a present legal or constructive obligation as a result of past events, it is probable that an outflow of resources will be required to settle the obligation, and the amount can be reliably estimated. Provisions are measured at the present value of the expenditures expected to be required to settle the obligation using a pre-tax rate that reflects current market assessments of the time value of money and the risks specific to the obligation. The increase in the provision due to passage of time is recognised as interest expense.
Revenue is measured at the fair value of the consideration received or receivable, and represents amounts receivable for goods supplied, stated net of discounts, returns and value added taxes. The group recognises revenue when control of a good or service transfers to a customer. The group bases its estimate of return on historical results, taking into consideration the type of customer, the type of transaction and the specifics of each arrangement.
The group operates a chain of retail outlets for selling interior products. Sales of goods are recognised when a group entity sells a product to the customer. Retail sales are usually in cash or by debit/credit card.
It is the group's policy to sell its products to the retail customer with a right to return within 14 days in Kid and 30 days in Hemtex. Accumulated experience is used to estimate and provide for such returns at the time of sale. Revenue is adjusted for the value of expected returns. Kid does not operate any loyalty programmes. Hemtex has a royalty program where customers receive points based on the consideration paid. When 2 000 points is earned during half a year the customer receive av bonus check of 50 kroner and revenue is adjusted accordingly.
Revenue from the sale of goods over the internet is recognised at the point that control of the inventory have passed to the customer, which is the point of delivery to the carrier. Revenue is adjusted for the value of expected returns. The return policy for products sold over the internet is the same as for products sold in the stores. Transactions are settled by credit or payment card.
Interest income arises primarily from interest received on short-term bank deposits, and is recognised as earned.
Dividend distributions to the shareholders is recognised as a liability in the Group financial statements in the period in which the dividends are approved by the shareholders at the annual shareholder meeting.
The company has various pension schemes. The pension schemes are financed through payments to insurance companies, with the exception of the early retirement pension scheme (AFP). The company has both defined contribution plans and the AFP scheme.
For defined contribution plans, the group pays contributions to publicly or privately administered pension insurance plans on a mandatory, contractual or voluntary basis. The group has no further payment obligations once the contributions have been paid. The contributions are recognised as employee benefit expense when they are due. Prepaid contributions are recognised as an asset to the extent that a cash refund or a reduction in the future payments is available.
The company also has an agreed early retirement scheme (AFP). The new AFP-scheme, in force from 1 January 2011, is a defined benefit multi-employer scheme, but is recognised in the accounts as a defined contribution scheme until reliable and sufficient information is available for the group to recognise its proportional share of pension cost, pension liability and pension funds in the scheme. The company's liabilities are therefore not recognised as debt in the balance sheet.
The group leases various offices, warehouses, retail stores, equipment and vehicles. Rental contracts for the retail stores represent a significant part of the number of contracts and values, and are typically made for fixed periods of 6 months to 8 years. The contracts may include extension options.
Lease terms are negotiated on an individual basis and contain a wide range of different terms and conditions. The lease agreements do not impose any covenants other than the security interests in the leased assets that are held by the lessor. Leased assets may not be used as security for borrowing purposes.
Assets and liabilities arising from a lease are initially measured on a present value basis. Lease liabilities include the net present value of the following lease payments:
The lease payments are discounted using the interest rate implicit in the lease. If that rate cannot be readily determined, which is generally the case for leases in the group, the lessee's incremental borrowing rate is used, being the rate that the individual lessee would have to pay to borrow the funds necessary to obtain an asset of similar value to the right-of-use asset in a similar economic environment with similar terms, security and conditions. The incremental borrowing rate used takes into consideration the lenght of the contract as well as whether the location of the store is central or not.
The group is exposed to potential future increases in variable lease payments based on an index or rate, which are not included in the lease liability until they take effect. When adjustments to lease payments based on an index or rate take effect, the lease liability is reassessed and adjusted against the right-of-use asset. Lease payments are allocated between principal and finance cost. The finance cost is charged to profit or loss over the lease period so as to produce a constant periodic rate of interest on the remaining balance of the liability for each period.
Right-of-use assets are measured at cost comprising the following: the amount of the initial measurement of lease liability any lease payments made at or before the commencement date less any lease incentives received any initial direct costs, and restoration costs.
Right-of-use assets are generally depreciated over the shorter of the asset's useful life and the lease term on a straightline basis.If the group is reasonably certain to exercise a purchase option, the right-of-use asset is depreciated over the underlying asset's useful life.
Payments associated with short-term leases of equipment and vehicles and all leases of low-value assets are recognised on a straight-line basis as an expense in profit or loss. Short-term leases are leases with a lease term of 12 months or less. Low-value assets comprise IT equipment and small items of office furniture.
Some property leases contain variable payment terms that are linked to sales generated from a store. Variable lease payments that depend on sales are recognised in profit or loss in the period in which the condition that triggers those payments occurs.
Extension and termination options are included in a number of store leases across the group. These are used to maximise operational flexibility in terms of managing the assets used in the group's operations. The majority of extension and termination options held are exercisable only by the group and not by the respective lessor.
The group's activities expose it to a variety of financial risks: market risk (including currency risk and cash flow interest rate risk), credit risk and liquidity risk. The group's overall risk management programme focuses on the unpredictability of financial markets and seeks to minimise potential adverse effects on the group's financial performance. The group uses derivative financial instruments to hedge certain risk exposures. The company applies hedge accounting in accordance with IFRS 9.
The group's risk management is predominantly controlled by a central finance department under policies approved by the board of directors. Group Finance identifies, evaluates and hedges financial risks in close cooperation with the group's operating units in KID and Hemtex. The board provides written principles for overall risk management, as well as policies covering specific areas, such as foreign exchange risk, interest rate risk, credit risk, use of derivative financial instruments and non-derivative financial instruments, and investment of excess liquidity.
Exposures to currency exchange rates arise from the group's international purchases, which are primarily denominated in USD. The group uses foreign currency derivative contracts to hedge foreign exchange risk which are recorded at fair value over OCI.
At 31. December 2022, the group had future contracts for 100% of the anticipated USD cash flow for a period of 11 months. The Group has adopted IFRS 9 and uses hedge accounting, see note 22 for further information.
The following table illustrates the sensitivity on the company's financial instruments of a 10% change in USD against the Norwegian and Swedish kroner based on the year-end fair value of the instruments with all other variables (e.g. changes of prices on products sold) held constant. Due to the Groups hedging strategy, the change in fair value on unrealized forward contracts are recognised through OCI, and any gain/loss in P&L upon realization is offset against currency effects on the the hedged object. Se note 22 for more information.
| At 31 December 2022 | +10% change | -10% change |
|---|---|---|
| Effect on OCI (FX derivatives NOK/USD) | 40,109 | -40,109 |
| Effect on OCI (FX derivatives SEK/USD) | 21,637 | -21,637 |
| At 31 December 2021 | +10% change | -10% change |
| Effect on OCI (FX derivatives NOK/USD) | 29,136 | -29,136 |
The Group is exposed to currency risk related to the operations in Sweden, Finland and Estonia as these entities have a different functional currency than the Group reporting currency. This translation exposure do not result in an immediate cash flow effect, however it is closely monitored since it may have an impact on the covenants for the Group. The net profit from the foreign subsidiaries in 2022 was MNOK 53.9 and total assets at year end was MNOK 910.4.
The group's interest rate risk arises from long-term borrowings and bank deposits. Borrowings issued at variable rates expose the group to cash flow interest rate risk which is partially offset by cash held at variable rates and hedging contracts. As NIBOR and STIBOR will not be replaced in the near future, we have considered that the Group is not effected by the IBORreform as per 31 December 2022. The company is also subject to interest rate risk related to short term bank overdraft drawn during the financial year. Borrowings at variable rates expose the Group to cash flow interest rate risk. Fixed-interest contracts are used to reduce this risk.
The following tables illustrate the sensitivity on the company's financial instruments of a +/- 1% change in interest based on the year-end fair value of the instruments with all other variables held constant with the effect over OCI. Due to the Groups hedging strategy, the change in fair value on unrealized interest contracts are recognised through OCI, and any gain/loss in P&L upon realization is offset against interest effects on the the hedged object. Se note 22 for more information.
The sensitivity of the unhedged part of the long term loan is presented illustrating a +/- 1% change in interest based on the floating interest rate at year end and the outstanding unhedged part of the loan.
| Interest swap | |||||
|---|---|---|---|---|---|
| At 31 December 2022 | +1% change | -1% change | |||
| Effect on OCI | 15,847 | -15,847 | |||
| At 31 December 2021 | +1% change | -1% change | |||
| Effect on OCI | 1,799 | -1,799 | |||
| Cross currency interest swap | |||||
| At 31 December 2022 | +1% change | -1% change | |||
| Effect on interest cost | 10,064 | -10,064 | |||
| At 31 December 2021 | +1% change | -1% change | |||
| Effect on interest cost | 2,170 | -2,170 | |||
| Unhedged part of interest bearing loans | |||||
| At 31 December 2022 | +1% change | -1% change | |||
| Effect on interest cost | 1,016 | -1,016 | |||
| At 31 December 2021 | +1% change | -1% change | |||
| Effect on interest cost | 336 | -336 |
The group's turnover comes mainly from cash sales or debit/credit card based sales where settlement in cash takes place within a few days of the sales transaction. As such, the group has limited exposure to credit risk relating to accounts receivable balances. Credit risk also arises from derivative financial instruments and deposits with banks and financial institutions. However, counterparts are limited to financial institutions with high creditworthiness. Historically, default and losses related to credit risk have been low.
Liquidity risk is the risk that the group will not be able to meet its financial obligations as they fall due. The group has capitalintensive inventory in central warehouse and stores and has fluctuations related to working capital due to seasonality and the timing of the deliveries and payments.
Cash flow forecasting is performed in the operating entities of the group and aggregated by group finance. Group finance monitors rolling forecasts of the group's liquidity requirements to ensure it has sufficient cash to meet operational needs while maintaining sufficient headroom on its undrawn committed loan facilities (note 18) at all times so that the group does not breach borrowing limits or covenants (where applicable) on any of its borrowing facilities. Such forecasting takes into consideration the group's debt financing plans, covenant compliance and compliance with internal balance sheet ratio targets.
Surplus cash is used to pay out dividends and reduce long term borrowings.
The table below analyses the group's non-derivative financial liabilities and net-settled derivative financial liabilities into relevant maturity groupings based on the remaining period at the balance sheet date to the contractual maturity date. The amounts disclosed in the table are the contractual undiscounted cash flows.
| At 31 December 2022 | Less than 1 year |
Between 1 and 2 years |
Between 2 and 3 years |
Between 3 and 4 years |
Over 4 years |
|---|---|---|---|---|---|
| Borrowings (ex finance lease liabilities) | 40,067 | 39,505 | 38,942 | 465,042 | - |
| Lease liabilities | 273,020 | 212,366 | 153,213 | 106,496 | 126,741 |
| Trade and other payables | 324,275 | - | - | - | - |
| 637,362 | 251,871 | 192,155 | 571,538 | 126,741 |
| At 31 December 2021 | Less than 1 year |
Between 1 and 2 years |
Between 2 and 3 years |
Between 3 and 4 years |
Over 4 years |
|---|---|---|---|---|---|
| Borrowings (ex finance lease liabilities) | 104,365 | 38,192 | 37,630 | 37,067 | 365,023 |
| Lease liabilities | 259,278 | 206,871 | 149,997 | 96,301 | 138,602 |
| Trade and other payables | 357,615 | - | - | - | - |
| 721,258 | 245,063 | 187,627 | 133,368 | 503,625 |
Loans consist of one long term loan to Nordea refinanced during the year. Refer to note 18 for information on the external loan.
The group's objectives when managing capital are to safeguard the group's ability to continue as a going concern in order to provide returns for shareholders and benefits for other stakeholders and to maintain an optimal capital structure to reduce the cost of capital.
In order to maintain or adjust the capital structure, the group may adjust the amount of dividends paid to shareholders, return capital to shareholders, reduce excess loan repayments, exploit available credit facilities or sell financial assets. Kid's dividend policy is a pay-out ratio of 80-100% of adjusted net profit, with semi-annual payments. The company will deploy a dynamic distribution policy, and any excess capital will be returned to shareholders.
The group monitors capital on the basis of the gearing ratio. This ratio is calculated as net interest bearing debt divided by EBITDA. Net interest bearing debt is calculated as total borrowings (including `current and non-current borrowings' as shown in the consolidated balance sheet excluded financial derivatives) less cash and cash equivalents. EBITDA is calculated as earnings before interest, tax, depreciation and amortisation.
The company has had a strategic focus to reduced long term borrowings and reach and maintain a sustainable quarterly gearing ratio below 2,5. The gearing ratios at 31 December 2022 and 2021 were as follows:
| 2022 | 2021 | |
|---|---|---|
| Total external borrowings (note 18) | 551,646 | 546,628 |
| Less: cash and cash equivalents (note 16) | (75,721) | (239,331) |
| Net interest bearing debt | 475,925 | 307,297 |
| EBITDA | 717,524 | 877,567 |
| Gearing ratio | 0.66 | 0.35 |
The Group has covenants limits related to gearing ratio and EBITDA. For more information about covenant-limits, refer note 18.
The board of directors has proposed a dividend of NOK 3.00 per share to be paid in May 2023. Including the prepayment of NOK 2.50 per share paid in December 2022, the total dividend of NOK 5.50 represents 90 % of Group net income for 2022.
The Group has financial instruments carried at fair value. The different levels have been defined as follows:
The financial instruments carried at fair value relates to derivative instruments. These instruments are included in level 2. Refer to note 23 for further information on derivative instruments
The operating segments are identified on the basis of the reports which Group management (the chief decision-maker) uses to assess performance and profitability at a strategic level. The Group sells interior products mainly through wholly owned stores. Within the Group, Kid Interior relates to Norway and Hemtex relates to Sweden, Estonia and Finland. The Group also sells home interior products through the Group's online websites which is considered part of the operating segments Kid and Hemtex respectively. Over 99% of the products are sold under own brands.
Group management evaluates the results from the segments based on EBITDA. The method of measurement excludes the effect of non-recurring costs, such as restructuring costs and legal costs on acquisition.
Kid Group sells home interior products in 156 fully owned stores across Norway and 130 stores across EU, of which 116 were in Sweden, 8 in Finland and 6 in Estonia. Of the stores in EU, 119 are owned by Hemtex and 11 are franchises.
| Revenue | ||
|---|---|---|
| 2022 | 2021 | |
| Norway | 1,983,602 | 1,883,498 |
| Sweden | 1,062,366 | 1,096,695 |
| Finland | 83,024 | 80,771 |
| Estonia | 48,999 | 36,132 |
| Total | 3,177,991 | 3,097,096 |
Information reported to Group management from the reporting segments.
| 2022 | |||
|---|---|---|---|
| KID Interior | Hemtex | Total | |
| Revenue | 1,983,602 | 1,194,389 | 3,177,991 |
| Cost of goods sold | -827,978 | -503,635 | -1,331,613 |
| Gross profit | 1,155,624 | 690,754 | 1,846,378 |
| Other operating revenue | 106 | 5,130 | 5,236 |
| Operating expense (OPEX) | -657,867 | -476,227 | -1,134,093 |
| EBITDA | 497,863 | 219,657 | 717,521 |
| Operating profit | 296,485 | 72,740 | 369,225 |
| - | - | - | |
| Gross margin (%) | 58.3% | 57.8% | 58.1% |
| OPEX to sales margin (%) | -33.2% | -39.9% | -35.7% |
| EBITDA margin (%) | 25.1% | 18.4% | 22.6% |
| - | - | - | |
| Inventory | 421,992 | 246,762 | 668,753 |
| Total assets | 2,575,552 | 910,368 | 3,485,919 |
| KID Interior | Hemtex | Total | |
|---|---|---|---|
| Revenue | 1,883,498 | 1,213,598 | 3,097,096 |
| Purchased goods and change in inventory | -702,266 | -457,240 | -1,159,506 |
| Gross profit | 1,181,232 | 756,358 | 1,937,590 |
| Other operating revenue | 503 | 9,507 | 10,010 |
| Operating expense (OPEX) | -603,282 | -466,751 | -1,070,033 |
| EBITDA | 578,453 | 299,114 | 877,567 |
| Operating profit | 391,442 | 149,749 | 541,190 |
| - | - | - | |
| Gross margin (%) | 62.7% | 62.3% | 62.6% |
| OPEX to sales margin (%) | -32.0% | -38.5% | -34.6% |
| EBITDA margin (%) | 30.7% | 24.6% | 28.3% |
| - | - | - | |
| Inventory | 413,016 | 233,748 | 646,764 |
| Total assets | 2,632,304 | 902,520 | 3,534,824 |
Estimates and judgments are continually evaluated and are based on historical experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances.
Group management makes estimates and assumptions concerning the future. The resulting accounting estimates will, by definition, seldom equal the related actual results. The estimates and assumptions that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year are addressed below.
The Group tests annually whether the Group's trademark and goodwill has suffered any impairment in accordance with IAS 36. The recoverable amounts of the defined cash-generating units, KID Interiør and Hemtex, have been determined based on value-in-use calculations. These calculations require use of estimates, and included considerations of sustainability topics with possible financial materiality. The impairment tests are especially sensitive for negative changes in long-term revenue growth and gross margin.
See note 12 – Intangible assets for more information.
In determining the lease term, management considers all facts and circumstances that create an economic incentive to exercise an extension option, or not exercise a termination option.
Extension options (or periods after termination options) are only included in the lease term if the lease is reasonably certain to be extended (or not terminated). Most extension options in store leases have not been included in the lease liability, because the group has the market power to renegotiate rental terms rather than exercising options and also has the financial power to replace the stores without significant cost or business disruption.
The lease term is reassessed if an option is actually exercised (or not exercised) or the group becomes obliged to exercise (or not exercise) it. The assessment of reasonable certainty is only revised if a significant event or a significant change in circumstances occurs, which affects this assessment, and that is within the control of the lessee.
There has not been identified any other critical judgements in applying the entity's accounting policies.
| 2022 | 2021 | |
|---|---|---|
| Wages and salaries | 505,913 | 497,468 |
| Social security costs | 97,328 | 99,191 |
| Pension costs - defined contribution plans (note 20) | 18,289 | 12,517 |
| Other benefits | 8,362 | 8,128 |
| Total employee benefit expense | 629,892 | 617,304 |
| Average number of full-time employees | 958 | 930 |
There has not been any loans to employees or guarantees granted to employees for either 2022 or 2021. Refer to note 19 for specification of salary-related accruals included in Other short term liabilities.
6b Benefits key management personnel and board of directors
| 2022 | |||||
|---|---|---|---|---|---|
| Key Management Personnel | Salary | Pension | Accrued bonus |
Other Benefits |
Total |
| CEO, CFO, VD Hemtex | 8,611 | 605 | -892 | 377 | 8,702 |
| Board of directors | 2,128 | 2,128 |
| 2021 | |||||
|---|---|---|---|---|---|
| Key Management Personnel | Salary | Pension | Accrued bonus |
Other Benefits |
Total |
| CEO, CFO, VD Hemtex | 8,315 | 657 | 5,925 | 331 | 15,229 |
| Board of directors | 1,948 | 1,948 |
There has not been any loans or guarantees granted to key management personnel for either 2021 or 2022.
CEO have 6 months salary as termination benefit.
There are no share based payments.
For more information on remuneration, please refer to Remuneration report 2022 as approved by the Board of Directors. The Remuneration report is subject to an advisory vote by the General Meeting in 2023, and published as part of the appendices to the Notice of Annual General Meeting at investor.kid.no.
6c Audit fees
| Total fees | 2,430 | 2,086 |
|---|---|---|
| Other assistance | 0 | 7 |
| Tax related services | 137 | 44 |
| Other assurance services | 48 | 68 |
| Statutory audit | 2,245 | 1,967 |
| 2022 | 2021 |
| 2022 | 2021 | |
|---|---|---|
| Finance costs | ||
| Bank interest cost | 18,137 | 15,690 |
| Bank charges | 3,845 | 2,933 |
| Other finance costs* | 1,998 | 17,853 |
| Interest on lease liability | 28,497 | 26,908 |
| Total finance costs | 52,477 | 63,384 |
| Finance income | ||
| Interest income on short-term bank deposits | 1,178 | 3 |
| Other finance income* | 3,770 | 7,359 |
| Total finance income | 4,948 | 7,361 |
| Net finance costs | -47,528 | -56,023 |
* Realized and unrealized currency gain/loss and change in fair value of cross currency interest swap are included in other finance costs and other finance income.
The group had the following subsidiaries at 31 December 2022:
| Name | Place of business | Nature of business | Proportion of shares directly held by parent (%) |
|---|---|---|---|
| Kid Interiør AS | Norway | Interior goods retailer | 100 |
| Kid Logistikk AS | Norway | Logistics | 100 |
| Kid Eiendom AS | Norway | Logistics | 100 |
| Hemtex AB | Sweden | Interior goods retailer | 100 |
| Hemtex OY | Finland | Interior goods retailer | 100 |
| Kid International Logistic AB | Sweden | Logistics | 100 |
All subsidiary undertakings are included in the consolidation.
The group had the following joint ventures at 31 December 2022.
| Name | Place of | Nature of | Measurement | Ownership | Carrying |
|---|---|---|---|---|---|
| business | relationship | method | share | amount | |
| Prognosgatan Holding AS | Norway | Joint venture | Equity method | 50% | 30 |
As per year-end the the joint venture is reflected in the statement of financial position. Per 31 December 2022, the share of result from joint ventures is MNOK -2.8 (MNOK 0). The carrying amount is TNOK 0 (TNOK 0.3) and MNOK -2,7 has been classified as other short term liabilities related to the investment. Refer to note 21 for infomation for loans to JV.
In November 2021 Kid ASA entered into a commercial cooperation through its Norwegian wholly owned subsidiary Hemtex Logistikk AS with Fabritius Gruppen AS establishing a joint venture,"Prognosgatan Holding AS", for the purpose of a plot and for constructing a new warehouse facility in Sweden. The Joint Venture is controlled by Kid (through Hemtex Logistikk AS, renamed Kid Eiendom AS) and Fabritius on a 50/50% basis. Fabritius is wholly owned by Gjelsten Holding AS, which currently also holds 10.24% of the shares in Kid ASA.
An agreement with the construction entrepreneur was signed in December 2021. Kid Eiendom AS has provided a guarantee equal to 5% of the total contracted amount MNOK 147.5.
An updated lease agreement has been signed between Prognosgatan Fastights AB (lessor) and Kid International Logistic AB (lessee) for the use of the planned central warehouse and offices in the warehouse. Kid ASA will place a customary parent company guarantee in favour of the lessor for an amount equal to 12 months of rent inclusive VAT under the lease agreement.
| 2022 | 2021 | |
|---|---|---|
| Current tax | ||
| Current tax on profits for the year Norway | 57,997 | 81,174 |
| Current tax on profits for the year Sweden* | 12,360 | 25,968 |
| Total current tax in income tax expense | 70,357 | 107,142 |
| * |
Of which is prepaid during the year. Refer to reconciliation of payable tax below.
| Changes in deferred tax related to income tax expense | -689 | -6,402 |
|---|---|---|
| Income tax expense | 69,668 | 100,740 |
Reconciliation between tax expense and product of accounting profit, multiplied by the applicable tax rate:
| 2022 | 2021 | |
|---|---|---|
| Profit before tax | 318,912 | 485,167 |
| Tax calculated at domestic tax rate (22%) applicable to profits | 70,161 | 106,737 |
| Tax effects of: | ||
| Expenses not deductible for tax purposes/(Income not subject to tax) | -4 | -530 |
| Effect of different tax rates | -488 | -5,466 |
| Income tax expense | 69,669 | 100,741 |
| Tax charge in percent of profit before tax | 22 % | 21 % |
| Payable tax 31.12.22 | 57,745 | -0 | 57,744 |
|---|---|---|---|
| Tax receivable classified as other receiveables per 31.12.22 | 2,485 | 2,485 | |
| Payable tax on this years result | 58,136 | 12,360 | 70,496 |
| Paid taxes during the year | -81,565 | -24,006 | -105,571 |
| Payable tax 31.12.21 | 81,174 | 9,161 | 90,335 |
| Norway | Sweden | Total | |
| Reconciliation of payable tax |
The movement in deferred income tax assets and liabilities during the year, taking into consideration the offsetting of balances within the same tax jurisdiction, is as follows:
Specification of deferred tax/deferred tax asset
| 31.12.2022 | PP&E | Trademark and other intangible assets |
Right of use asset |
Derivatives | Other | Sum |
|---|---|---|---|---|---|---|
| Deferred tax liability (Norway) | 2,218 | -321,109 | 7,450 | -10,935 | -348 | -322,723 |
| Deferred tax asset (Sweden) | 6,619 | -10,837 | 3,862 | -2,117 | 4,331 | 1,859 |
| Net deferred tax | 8,838 | -331,946 | 11,312 | -13,052 | 3,983 | -320,865 |
| 31.12.2021 | PP&E | Trademark and other intangible assets |
Right of use asset |
Derivatives | Other | Sum |
|---|---|---|---|---|---|---|
| Deferred tax liability (Norway) | -332,280 | -332,280 | ||||
| Deferred tax asset (Norway) | 310 | 5,996 | -786 | 1,525 | 7,046 | |
| Deferred tax asset (Sweden) | 11,343 | 3,082 | -2,039 | 3,531 | 15,918 | |
| Net deferred tax | 11,653 | -332,280 | 9,079 | -2,825 | 5,056 | -309,317 |
The change in net deferred tax was:
| Net deferred tax per 31.12.21 | -309,317 |
|---|---|
| Recognized in P&L | -689 |
| Recognized in OCI | 22 -35,877 |
| Recognized directly in equity | 26,121 |
| Translation differences | -1,103 |
| Net deferred tax per 31.12.22 | -320,865 |
There exists only one class of shares.
| 2022 | 2021 | |
|---|---|---|
| Weighted average number of shares | 40,645,162 | 40,645,162 |
| Net profit for the year | 249,244 | 384,426 |
| Earnings per share (basic and diluted) (Expressed in NOK per share) | 6.13 | 9.46 |
| Dividends per share paid in May | 4.0 | 4.4 |
| Dividends per share paid in December (November) | 2.5 | 4.6 |
Refer to note 3.2 for proposed dividend at year end.
| Assets under construction |
Fixtures and fittings |
Autostore | Total | |
|---|---|---|---|---|
| Year ended 31 December 2022 | ||||
| Opening net book amount | 2,646 | 178,850 | 21,661 | 203,158 |
| Additions | 26,949 | 81,905 | 0 | 108,854 |
| Reclassifications | 0 | 0 | - | |
| Depreciation charge | 0 | -64,666 | -6,235 | -70,901 |
| Currency translation differences | 0 | -3,867 | 0 | -3,867 |
| Closing net book amount | 29,596 | 192,222 | 15,426 | 237,244 |
| At 31 December 2022 | ||||
| Cost or valuation | 29,596 | 785,301 | 31,177 | 846,074 |
| Accumulated depreciation | 0 | -579,651 | -15,751 | -595,402 |
| Currency translation differences | 0 | -13,428 | 0 | -13,428 |
| Net book amount | 29,596 | 192,222 | 15,425 | 237,244 |
| Year ended 31 December 2021 | ||||
| Opening net book amount | 2,646 | 168,969 | 27,897 | 199,512 |
| Additions | 0 | 74,541 | 0 | 74,541 |
| Reclassifications | 0 | 0 | 0 | |
| Depreciation charge | - | -62,091 | -6,235 | -68,327 |
| Currency translation differences | - | -2,569 | 0 | -2,569 |
| Closing net book amount | 2,646 | 178,850 | 21,661 | 203,157 |
| At 31 December 2021 | ||||
| Cost or valuation | 2,646 | 703,397 | 31,177 | 737,220 |
| Accumulated depreciation | - | -514,985 | -9,515 | -524,501 |
| Currency translation differences | - | -9,561 | 0 | -9,561 |
| Net book amount | 2,646 | 178,850 | 21,661 | 203,158 |
Assets under construction relates to fixed assets not ready for use, mainly related to the new warehouse in Borås as well as store refurbishings. As such, these items are not depreciated until ready for use.
Indicators of impairment of property, plant and equipment have been assessed. Management concluded that there were no indicators as per 31 December 2022.
| Software | Trademark | Goodwill | Total | |
|---|---|---|---|---|
| Cost | ||||
| At 1 January 2021 | 28,409 | 1,515,484 | 72,281 | 1,616,174 |
| Additions | 16,223 | - | - | 16,223 |
| Currency translation differences | -260 | -3,696 | -1,995 | -5,951 |
| As at 31 December 2021 | 44,371 | 1,511,788 | 70,286 | 1,626,446 |
| Additions | 20,871 | - | - | 20,871 |
| Currency translation differences | -775 | -1,564 | -4,807 | -7,146 |
| As at 31 December 2022 | 64,467 | 1,510,224 | 65,479 | 1,640,171 |
| Accumulated amortisation and impairment | ||||
| At 1 January 2021 | -22,784 | - | - | -22,784 |
| Amortisation charge | -2,489 | - | - | -2,489 |
| As at 31 December 2021 | -25,273 | - | - | -25,273 |
| At 1 January 2022 | -25,273 | - | - | -25,273 |
| Amortisation charge | -3,865 | - | - | -3,865 |
| As at 31 December 2022 | -29,138 | - | - | -29,138 |
| Net book value | ||||
| Cost | 44,372 | 1,511,788 | 70,286 | 1,626,446 |
| Accumulated amortisation and impairment | -25,275 | - | - | -25,275 |
| As at 31 December 2021 | 19,096 | 1,511,788 | 70,286 | 1,601,170 |
| Cost | 64,467 | 1,510,224 | 65,479 | 1,640,170 |
| Accumulated amortisation and impairment | -29,140 | - | - | -29,141 |
| As at 31 December 2022 | 35,326 | 1,510,224 | 65,479 | 1,611,029 |
| Useful life | 4-7 years | Indefinite | Indefinite |
The group tests whether trademark and goodwill has suffered any impairment on an annual basis. The recoverable amount is determined based on value-in-use calculations which require the use of assumptions. The calculations use cash flow projections based on financial budgets and assumptions approved by board covering a five-year period. Cash flows beyond the five-year period are extrapolated using an estimated growth rate of 1%. These growth rates are consistent with forecasts included in industry reports.
The trademark Kid was acquired in 2005 and is related to the original cost of the subsidiaries and the company brand Kid Interiør. Kid Interiør was founded in 1937 and has long traditions within its business area. Kid Interiør is a well known brand among the population in Norway and there is a clear intention to retain and further develop this brand. As a consequence, the brand name is not amortised, but tested for impairment annually.
| The following table sets out the key assumptions used in the impairment test: | 2022 | 2021 |
|---|---|---|
| Sales volume (% annual growth rate) | 1.6 | 2.0 |
| Gross margin (%) | 60.9 | 60.8 |
| Other operating costs (%) | 45.2 | 44.1 |
| Annual capital expenditure (MNOK) | 50.0 | 50.0 |
| Discount rate pre tax (%) | 10.3 | 9.2 |
The recoverable amount of the trademark is estimated to be MNOK 2755 (2021 – MNOK 3266). This exceeds the carrying amount of the trademark Kid Interiør at 31 December 2022 which is MNOK 1460 (2021 – MNOK 1460).
The recoverable amount of the trademark would equal the carrying amount if the key assumptions were to change as follows:
| 2022 | 2021 | |||
|---|---|---|---|---|
| From | To | From | To | |
| Sales volume (% annual growth rate) | 1.6 | -0.7 | 2.0 | -1.5 |
| Budgeted gross margin (%) | 60.9 | 56.0 | 60.8 | 51.3 |
| Discount rate pre tax (%) | 10.3 | 16.2 | 9.2 | 18.9 |
The Directors and management have considered and assessed reasonably possible changes for other key assumptions and have not identified any instances that could cause the carrying amount of the trademark to exceed its recoverable amount. These considerations and assessments includes sustainability topics with possible financial materiality.
The trademark Hemtex was acquired in May 2019 and relates to the Swedish interior goods retailer Hemtex International and its subsidiaries in Finland and Estonia. Hemtex was founded in 1973 and has long traditions within its business area. Hemtex is a well known brand among the population and there is a clear intention to retain and further develop this brand. As a consequence, the brand name is not amortised, but will be tested for impairment annually.
The group has tested whether the trademark and goodwill for impairment at year end.
| The following table sets out the key assumptions used in the impairment test: | 2022 | 2021 |
|---|---|---|
| Sales volume (% annual growth rate) | 2.2 | 2.1 |
| Gross margin (%) | 61.0 | 60.8 |
| Other operating costs (% of revenue) | 50.3 | 46.8 |
| Annual capital expenditure (MNOK) | 50.0 | 50.0 |
| Discount rate pre tax (%) | 10.1 | 8.7 |
The recoverable amount of the trademark and goodwill is estimated to be MNOK 891. This exceeds the carrying amount of the trademark and goodwill in Hemtex at 31 December 2022 which is MNOK 116.
The recoverable amount of the trademark and goodwill would equal its carrying amount if the key assumptions were to change as follows:
| 2022 | 2021 | |||
|---|---|---|---|---|
| From | To | From | To | |
| Sales volume (% annual growth rate) | 2.2 | -0.1 | 2.1 | -2.2 |
| Budgeted gross margin (%) | 61.0 | 57.0 | 60.8 | 51.9 |
| Discount rate pre tax (%) | 10.1 | 30.2 | 8.7 | 41.1 |
The Directors and management have considered and assessed reasonably possible changes for other key assumptions and have not identified any instances that could cause the carrying amount of the trademark to exceed its recoverable amount.
13.1 Financial instruments by category
| 31 December 2022 | |||||
|---|---|---|---|---|---|
| Financial assets at amortised cost |
Financial assets (cash flow hedge derivatives) at fair value over OCI |
Financial assets (derivatives not designated as instruments for hedge accounting) at fair value over P&L |
Total | ||
| Assets as per balance sheet | |||||
| Derivative financial instruments | - | 54,778 | 4,672 | 59,449 | |
| Trade receivables | 12,094 | - | 12,094 | ||
| Cash and bank deposits | 75,721 | - | 75,721 | ||
| Total | 87,815 | 54,778 | 4,672 | 147,264 |
| Other financial liabilities at amortised cost |
Financial liabilities (cash flow hedge derivatives) at fair value over OCI |
Financial assets (derivatives not designated as instruments for hedge accounting) at fair value over P&L |
Total | |
|---|---|---|---|---|
| Liabilities as per balance sheet | ||||
| Liabilities to financial institutions long term |
521,646 | 521,646 | ||
| Long term lease liability | 523,528 | 523,528 | ||
| Short term liabilities to financial institutions |
30,000 | 30,000 | ||
| Short term lease liability | 258,257 | 258,257 | ||
| Derivatives | 7,229 | 7,229 | ||
| Trade creditors | 122,459 | 122,459 | ||
| Total | 1,455,891 | 7,229 | 1,463,120 |
| 31 December 2021 | ||||||
|---|---|---|---|---|---|---|
| Financial assets at amortised cost |
Financial assets (cash flow hedge derivatives) at fair value over OCI |
Financial assets (derivatives not designated as instruments for hedge accountin) at fair value over P&L |
Total | |||
| Assets as per balance sheet | ||||||
| Derivative financial instruments | - | 17,439 | - | 17,439 | ||
| Trade receivables | 21,999 | - | 21,999 | |||
| Cash and bank deposits | 239,331 | - | 239,331 | |||
| Total | 261,330 | 17,439 | 0 | 278,769 |
| Other financial liabilities at amortised cost |
Financial liabilities (cash flow hedge derivatives) at fair value over OCI |
Financial assets (derivatives not designated as instruments for hedge accountin) at fair value over P&L |
Total | |
|---|---|---|---|---|
| Liabilities as per balance sheet | ||||
| Liabilities to financial institutions long term |
451,628 | 451,628 | ||
| Long term lease liability | 517,550 | 517,550 | ||
| Short term liabilities to financial institutions |
95,000 | 95,000 | ||
| Short term lease liability | 249,737 | 249,737 | ||
| Derivatives | 5,166 | 5,166 | ||
| Trade creditors | 159,751 | 159,751 | ||
| Total | 1,473,665 | 5,166 | 0 | 1,478,832 |
The carrying amounts of the Group's trade and other receivables are entirely denominated in the currency in the country in which the company operates, ie NOK, SEK and EUR.
The maximum exposure to credit risk at the reporting date is the carrying value of the trade receivables. The Group has not pledged any of the trade receivables as collateral or security. Management has evaluated the trade receivables credit risk to be insignificant and the trade receivables are recognised in the financial statements at full face value.
Other receivables consists mainly of prepayments for operating expenses and rental payments for retail locations.
| 2022 | 2021 | |
|---|---|---|
| Inventory at purchase cost | 674,815 | 654,013 |
| Inventory write-downs to net realizable value | -6,061 | -7,248 |
| Inventories | 668,753 | 646,764 |
| 2022 | 2021 | |
|---|---|---|
| Lost and damaged goods | 13,530 | 12,399 |
| Change in provision for obsolescence | -1,187 | 3,297 |
| Recognized loss on inventories in cost of goods sold | 12,343 | 15,696 |
| 2022 | 2021 | |
|---|---|---|
| Cash in bank and in hand | 63,458 | 230,169 |
| Short-term bank overnight deposits | 12,521 | 9,420 |
| Cash and cash equivalents (excluding bank overdrafts) | 75,721 | 239,331 |
The Group does not have any restricted cash bank accounts. See note 18 for further information on employee tax guarantee.
| Number of shares |
Ordinary shares |
Face value | Total face value |
|
|---|---|---|---|---|
| At 31 December 2022 | 40,645,162 | 40,645,162 | 1.2 | 48,774,194 |
| At 31 December 2021 | 40,645,162 | 40,645,162 | 1.2 | 48,774,194 |
The top 20 shareholders per 31.12 are the following:
| 31 December 2022 | |||
|---|---|---|---|
| Company | # Shares | Ownership | |
| Gjelsten Holding AS | 4,161,291 | 10.24 % | |
| Verdipapirfondet Alfred Berg Gamba | 2,908,652 | 7.16 % | |
| Pareto Aksje Norge Verdipapirfond | 2,268,735 | 5.58 % | |
| Société Générale | 2,050,000 | 5.04 % | |
| Folketrygdfondet | 1,892,193 | 4.66 % | |
| Verdipapirfondet Holberg Norge | 1,639,520 | 4.03 % | |
| Salt Value AS | 1,601,267 | 3.94 % | |
| Stenshagen Invest AS | 1,464,600 | 3.60 % | |
| J.P. Morgan SE | 1,105,802 | 2.72 % | |
| VJ Invest AS | 1,032,824 | 2.54 % | |
| State Street Bank and Trust Comp | 720,115 | 1.77 % | |
| Forsvarets Personellservice | 707,500 | 1.74 % | |
| Verdipapirfondet Eika Spar | 634,114 | 1.56 % | |
| Varner Equities AS | 613,176 | 1.51 % | |
| Verdipapirfondet Nordea Avkastning | 556,584 | 1.37 % | |
| The Bank of New York Mellon SA/NV | 535,031 | 1.32 % | |
| Verdipapirfondet KLP Aksjenorge | 517,769 | 1.27 % | |
| Verdipapirfondet Eika Norge | 461,834 | 1.14 % | |
| Goldman Sachs International | 440,161 | 1.08 % | |
| Verdipapirfondet Nordea Kapital | 418,730 | 1.03 % |
| 31 December 2021 | |||
|---|---|---|---|
| Company | # Shares | Ownership | |
| Gjelsten Holding AS | 4,161,291 | 10.24 % | |
| Verdipapirfondet Alfred Berg Gamba | 3,064,628 | 7.54 % | |
| Pareto Aksje Norge Verdipapirfond | 2,109,785 | 5.19 % | |
| Société Générale | 2,050,000 | 5.04 % | |
| Folketrygdfondet | 1,895,403 | 4.66 % | |
| Stenshagen Invest AS | 1,464,600 | 3.60 % | |
| Salt Value AS | 1,151,387 | 2.83 % | |
| State Street Bank and Trust Comp | 1,058,923 | 2.61 % | |
| Verdipapirfondet Holberg Norge | 950,000 | 2.34 % | |
| VJ Invest AS | 887,025 | 2.18 % | |
| J.P. Morgan Bank Luxembourg S.A. | 824,619 | 2.03 % | |
| Verdipapirfondet KLP Akjenorge | 742,769 | 1.83 % | |
| Forsvarets Personellservice | 682,300 | 1.68 % | |
| Verdipapirfondet Nordea Kapital | 663,988 | 1.63 % | |
| Verdipapirfondet Eika Spar | 630,752 | 1.55 % | |
| Verdipapirfondet Nordea Avkastning | 596,524 | 1.47 % | |
| Varner Equities AS | 538,877 | 1.33 % | |
| Verdipapirfondet Pareto Investment | 469,000 | 1.15 % | |
| Verdipapirfondet Eika Norge | 461,834 | 1.14 % | |
| Goldman Sachs International | 440,161 | 1.08 % |
| Share premium | Amount |
|---|---|
| At 31 December 2014 | 156,874 |
| Equity issue November 2015 | 164,175 |
| At 31 December 2022 | 321,049 |
| Key Management Personnel Share holdings | 31.12.2022 | 31.12.2021 |
|---|---|---|
| Anders Fjeld | 130,000 | 130,000 |
| Eystein Lund | 50,286 | 50,286 |
| Anders Lorentzson | na | na |
| Board of Directors | ||
| Petter Schouw-Hansen | 54,808 | 54,808 |
| Liv Berstad | 0 | 0 |
| Gyrid Skalleberg Ingerø | 3,007 | 3,007 |
| Karin Bing Orgland | 32,629 | 32,629 |
| Rune Marsdal | 20,427 | 20,427 |
| Espen Gundersen | 4,000 | n/a |
| 2022 | 2021 | |
|---|---|---|
| Long term | ||
| Bank loans | 521,646 | 451,628 |
| Total long term liabilities to financial institutions | 521,646 | 451,628 |
| Short term | ||
| Bank loans | 30,000 | 95,000 |
| Total short term liabilities to financial institutions | 30,000 | 95,000 |
| Total liabilities to financial institutions | 551,646 | 546,628 |
In April 2021, Kid ASA entered into a renewed agreement with Nordea securing a term loan structure of NOK 611.7 million. In addition, the group also renewed the existing revolving credit facility, overdraft agreement and the NOK 115 million L/C- and guarantee facility. An additional short term credit facility agreement of MNOK 100 was signed in December 2022. The bank loan mature May 2026. The interest rate of the majority of the total term loan is fixed through interest rate swap agreements. For the revolving credit facility and overdraft, the average interest rate was 3,12%.
Total loans include secured liabilities (bank and collateralised loan) of TNOK 551 646 (2021: TNOK 481 628) and revolving credit facility of TNOK 0 (2021: TNOK 65 000). The group has a bank overdraft of TNOK 247 000 which was partially used 284 days during the year (212 days), but not at year end. The Bank loans are secured by 100% of the shares in Kid Interiør AS.
TNOK 395 000 (included in the 1-5 years in table below) of the external loan with floating interest rate is swapped to a fixed interest rate of 1.876% by means of interest rate derivatives to maintain the desired split between fixed and floating interest rates and is subject to hedge accounting.
TSEK 55 000 (included in the 1-5 years in table below) of the external loan with floating interest rate is swapped to fixed interest rates of 1.460% and currency SEK by means of a cross currency interest rate derivative to maintain the desired split between fixed and floating interest rates and currency exposure. The effect of change in the fair value of the derivative is booked against financial income/expense.
The bank overdraft are secured by inventory, trade receivables, property, plant and equipment, 100% of the shares in Kid Logistikk AS and the rental agreement related to the HQ in Drammen. Since the bank overdraft was not utilized at year end 2022 or 2021, none of the assets were pledged as collateral.
The exposure of the Group's loans to interest rate changes and the contractual re-pricing dates at the end of the reporting period are as follows:
| 2022 | 2021 | |
|---|---|---|
| 6 months or less | 10,000 | 10,000 |
| 6-12 months | 20,000 | 85,000 |
| 1-5 years | 521,646 | 451,628 |
| Total liabilities to financial institutions | 551,646 | 546,628 |
The carrying amounts and fair value of the loans are as follows:
| 2022 | 2021 | |
|---|---|---|
| Bank loans | 551,646 | 546,628 |
| Total carrying amount of liabilities to financial institutions | 551,646 | 521,964 |
The fair value of current loans equals their carrying amount, as the loans bear a floating interest priced at market rate.
Included in the 1-5 years category in the table above is a TNOK 551 700 loan, where the group entered an interest swap agreement in 2019 covering TNOK 395 000 as well as a cross-currency interest swap covering TSEK 55 000. The carrying amounts of the Group's loans are denominated in the following currencies:
| 2022 | 2021 | |
|---|---|---|
| NOK | 496,646 | 461,628 |
| SEK (through swap-agreement) | 55,000 | 85,000 |
| Total | 551,646 | 546,628 |
The Group has the following granted loan facilities and guarantees:
| 2022 | 2021 | |
|---|---|---|
| Revolving credit facility | 130,000 | 130,000 |
| Short term credit facility | 100,000 | 0 |
| Unused bank overdraft | 247,000 | 247,000 |
| Employee tax guarantee | 21,300 | 16,800 |
| Letter of credit limit | 115,000 | 115,000 |
Following covenants is regulated by contract:
| Interval | Limit 2022 | Limit 2021 | |
|---|---|---|---|
| Gearing ratio (NIBD/EBITDA ex IFRS 16) | annually | 2.25 | 2.25 |
| EBITDA Last twelve monthes (in NOK millions) ex IFRS 16 | quarterly | 175 | 175 |
The Group has been compliant with covenants at all intervals.
| Other operating expenses | 2022 | 2021 |
|---|---|---|
| Rental costs for shops and storage (incl shared operating expenses) 24 |
109,812 | 92,318 |
| Advertising and other marketing costs | 133,551 | 123,230 |
| Other expenses | 260,835 | 238,091 |
| Total other expenses | 504,198 | 452,730 |
| Other short term liabilities | 2022 | 2021 |
| Salary related accruals | 96,042 | 111,743 |
| Goods in transit | 28,440 | 36,124 |
| Giftcards, store credits and other sales related accruals | 35,263 | 26,674 |
| Accrued rental expenses | 13,396 | 6,447 |
| Other accruals | 28,674 | 16,877 |
| Total other short term liabilities | 201,815 | 197,865 |
The table below outlines where the group's post-employment amounts and activity are included in the financial statements.
| Income statement charge included in operating profit for: | 2022 | 2021 |
|---|---|---|
| Pensions earned this year - the group pension scheme | 17,417 | 12,259 |
| Pensions earned this year - the agreed early retirement scheme (AFP) | 872 | 258 |
| Social security fees | 3,630 | 2,356 |
| Net pension expenses | 21,919 | 14,872 |
20.1 AFP scheme
The subsidiary Kid Logistikk AS and 11 of our stores have an agreed early retirement scheme (AFP). The AFP-scheme, in force from 1st of January 2011, is a defined benefit multi-enterprise scheme, but is recognised in the accounts as defined contribution scheme until reliable and sufficient information is available for the group to recognise its proportional share of pension cost, pension liability and pension funds in the scheme. The company's liabilities are therefore not recognised as debt in the balance sheet.
The Group's related parties include its associates, joint ventures, key management and members of the board.
None of the Board members have been granted loans or guarantees in the current year. Furthermore, none of the Board members are included in the Group's pension or bonus plans.
The following table provides the total amount of transactions that have been entered into with related parties during the total year of 2022 and 2021:
| Related party | 2022 | 2021 |
|---|---|---|
| Prognosgatan Holding AS (Loan) | 23,795 | - |
| Total | 23,795 | - |
Where all relevant criteria are met, hedge accounting is applied to remove the accounting mismatch between the hedging instrument and the hedged item. This will effectively result in recognising interest expense at a fixed interest rate for the hedged floating rate loans and inventory at the fixed foreign currency rate for the hedged purchases.
Derivatives are only used for economic hedging purposes and not as speculative investments.
Hedge effectiveness is determined at the inception of the hedge relationship, and through periodic prospective effectiveness assessments, to ensure that an economic relationship exists between the hedged item and hedging instrument.
For hedges of foreign currency purchases, the group enters into hedge relationships where the critical terms of the hedging instrument match or are closely aligned with the terms of the hedged item, being currencies, amount and maturity. The group therefore performs a qualitative assessment of effectiveness and monitor the forecasted purchases on a regular basis to ensure that the forward contracts match the purchases and are used within the acceptable period in accordance with the policy. If changes in circumstances affect the terms of the hedged item such that the critical terms no longer match exactly with the critical terms of the hedging instrument, the group assess effectiveness relating to the hedge ratio and rebalances the contracts to ensure effectiveness.
In hedges of foreign currency purchases, ineffectiveness may arise if the timing of the forecast transaction changes from what was originally estimated, or if there are changes in the credit risk of the group or the derivative counterparty.
The group enters into interest rate swaps that have similar critical terms as the hedged item, such as reference rate, reset dates, payment dates, maturities and notional amount. The group does not hedge 100% of its loans, therefore the hedged item is identified as a proportion of the outstanding loans up to the notional amount of the swaps. As all critical terms matched during the year, there is an economic relationship.
The company uses hedging instruments as part of its management of foreign currency risk associated with its highly probable inventory purchases. These include foreign currency forward contracts which are designated in the cash flow hedge relationships. To the extent these hedges are effective; the change in fair value of the hedging instrument is recognised in the cash flow hedge reserve through Other comprehensive income. The group treasury's risk management policy is to hedge up to a 100% of forecasted US dollar cash flows for inventory purchases up to 9-11 months in advance, subject to a review of the cost of implementing each hedge. In Kid, 100% of forecasted EUR cash flows for inventory purchases up to 9-11 months in advance are also hedged.
For the year ended 31 December 2022, approximately 100% of inventory purchases were hedged in respect of foreign currency risk. At 31 December 2022, approximately 100% of forecasted US dollar inventory purchases during 2022 qualified as 'highly probable' forecast transactions for hedge accounting purposes (for 2021, approximately 100% of inventory purchases were hedged and approximately 100% of the purchases qualified as 'highly probable' as at 31 December 2021). As such, no inefficiency was recognised in 2022 (or in 2021). The weighted average buy rate for SEK/USD currency hedges realized in 2022 was 8.88 compared to a weighted average spot rate of 10.19. For NOK/USD currency hedges realized in 2022 the weighted average buy rate was 8.82 compared to a weighted average spot rate of 9.64.
The company's interest exposure mainly arises from external funding in bank and debt capital markets. The company uses interest rate swaps to achieve the desired fixed/floating ratio of the external debt. Hedge accounting is applied using the cash flow model for interest rate swaps which means that gains and losses from floating to fixed interest rates as of December 31, 2022 are recognized through Other Comprehensive Income and will be continuously released to the income statement until the bank borrowings are repaid. This is done based on the periodic market-to-market revaluation of the interest rate swaps whose fair value tends to reach zero upon maturity.
Hedge ineffectiveness for interest rate swaps is assessed using the same principles as for hedges of foreign currency purchases. It may occur due to: the credit value/debit value adjustment on the interest rate swaps which is not matched by the loan, and differences in critical terms between the interest rate swaps and loans. TNOK 395,000 of the external loans with floating interest rates are swapped to a fixed interest rate of 1,876% with maturity 16 August 2029. The effect on interest expense in 2022 related to the interest rate swap was NOK -731,562 (NOK -6,559,801).
There was no recognised ineffectiveness during 2022 (or in 2021) in relation to the interest rate swap.
| Currency cash flow hedges |
Interest cash flow hedges |
Translation difference |
Total | |
|---|---|---|---|---|
| Opening balance net of tax 01.01.2022 | 11,309 | -2,163 | -4,171 | 4,975 |
| Changes in fair value through OCI | 131,210 | 31,866 | 163,076 | |
| Changes in deferred tax on cash flow hedges through OCI |
-28,866 | -7,010 | -35,877 | |
| Realized cash flow hedges net of tax | -92,609 | -92,609 | ||
| Translation difference | -8,920 | -8,920 | ||
| Closing balance net of tax 31.12.2022 | 21,044 | 22,692 | -13,091 | 30,645 |
| Currency cash flow hedges |
Interest cash flow hedges |
Translation difference |
Total | |
|---|---|---|---|---|
| Opening balance net of tax 01.01.2021 | -42,856 | -19,481 | 7,871 | -54,466 |
| Changes in fair value through OCI | 32,461 | 22,202 | 54,663 | |
| Changes in deferred tax on cash flow hedges through OCI |
-7,141 | -4,884 | -12,026 | |
| Realized cash flow hedges net of tax | 28,846 | 28,846 | ||
| Translation difference | -12,041 | -12,041 | ||
| Closing balance net of tax 31.12.2021 | 11,309 | -2,163 | -4,171 | 4,975 |
At year end the fair value of the hedging instruments were as follows:
| 31 December 2022 | Changes over OCI | Changes over P&L | |||
|---|---|---|---|---|---|
| Derivative assets |
Derivative liabilities |
Derivative assets |
Derivative liabilities |
||
| Currency cash flow hedges | 25,440 | 7,229 | |||
| Interest cash flow hedges | 29,338 | - | - | ||
| Cross currency interest swap | 4,672 | ||||
| Sum | 54,778 | 7,229 | 4,672 | - |
| 31 December 2021 | Changes over OCI | Changes over P&L | ||
|---|---|---|---|---|
| Derivative assets |
Derivative liabilities |
Derivative assets |
Derivative liabilities |
|
| Currency cash flow hedges | 15,742 | 2,638 | ||
| Interest cash flow hedges | 2,528 | - | ||
| Cross currency interest swap | 1,697 | |||
| Sum | 15,742 | 5,166 | 1,697 | - |
The below table sets out an overview over net debt.
| 2022 | 2021 | |
|---|---|---|
| Cash and cash equivalents | 75,721 | 239,331 |
| Borrowings - repayable within one year (including overdraft) | -30,000 | -95,000 |
| Borrowings - repayable after one year | -521,646 | -451,628 |
| Lease liabilities - payed within one year | -258,257 | -249,737 |
| Lease liabilities - payed after one year | -523,528 | -517,550 |
| Net debt | -1,257,710 | -1,074,584 |
| Cash and liquid investments | 75,721 | 239,331 |
| Gross debt - fixed interest rates | -551,646 | -481,628 |
| Gross debt - variable interest rates | - | -65,000 |
| Lease liabilities | -781,785 | -767,287 |
| Net debt | -1,257,710 | -1,074,584 |
| Lease liabilty |
Borrowings | Total debt |
Cash/ bank overdraft |
Total net debt |
|
|---|---|---|---|---|---|
| Opening balanse at 1 January 2022 | -767,287 | -546,628 | -1,313,915 | 239,331 | -1,074,584 |
| Cash flows | - | - | - | -164,302 | -164,302 |
| Proceeds from borrowings | - | -230,000 | -230,000 | - | -230,000 |
| Repayment of principals | 263,350 | 225,119 | 488,469 | - | 488,469 |
| - | |||||
| Non Cashflow activities | - | ||||
| New lease liabilities | -283,391 | - | -283,391 | - | -283,391 |
| Foreign exchange adjustments and other adjustments |
5,543 | -137 | 5,406 | 693 | 6,099 |
| Closing balanse at 31 December 2022 | -781,785 | -551,646 | -1,333,431 | 75,721 | -1,257,710 |
| Opening balanse at 1 January 2021 | -819,245 | -521,777 | -1,341,022 | 301,273 | -1,039,749 |
| Cash flows | - | - | - | -62,631 | -62,631 |
| Proceeds from borrowings | - | -130,000 | -130,000 | - | -130,000 |
| Repayment of principals | 264,951 | 103,678 | 368,629 | - | 368,629 |
| - | |||||
| Non Cashflow activities | - | ||||
| New lease liabilities | -221,459 | - | -221,459 | - | -221,459 |
| Foreign exchange adjustments and other adjustments |
8,466 | 1,471 | 9,937 | 689 | 10,626 |
| Closing balanse at 31 December 2021 | -767,287 | -546,628 | -1,313,915 | 239,331 | -1,074,584 |
| Right of-use-assets | 2022 | 2021 |
|---|---|---|
| Carrying amount at 01.01. | 756,940 | 821,683 |
| Additions and adjustments* | 283,391 | 221,459 |
| Depreciation | -273,530 | -266,273 |
| Currency translation differences | -6,067 | -19,929 |
| Net carrying amount 31.21. | 760,734 | 756,940 |
| Lease liabilities | 2022 | 2021 |
| Carrying amount at 01.01. | 767,287 | 819,245 |
| Additions and adjustments* | 283,391 | 221,459 |
| Interest expense | 28,497 | 26,908 |
| Lease payments | -291,320 | -287,034 |
| Currency translation differences | -6,070 | -13,291 |
| Total lease liabilities 31.12. | 781,785 | 767,287 |
*Included in additions and adjustments are new contracts, renegotiated contracts, extentions and index adjustments on existing contracts.
Lease contracts is mainly related to rental agreements for stores and warehouse. Indicators of impairment of right of use contracts have been assessed at the lowest CGU level, being the stores. Management concluded that there were no indicators as per 31 December 2022.
In addition to turnover based lease payments, variable rental costs such as shared operating costs and marketing costs are excluded from IFRS 16 leases. See below for expenses included in other operating expenses related to lease contracts:
| 2022 | 2021 | |
|---|---|---|
| Rental costs exluded from IFRS 16 | 18,040 | 13,229 |
| Shared operating costs | 71,374 | 59,571 |
| Marketing costs | 20,398 | 19,518 |
| Sum 19 |
109,812 | 92,318 |
| Lease payments | 291,320 | 287,034 |
| Total payments related to lease contracts | 401,132 | 379,352 |
| 2022 | 2021 | |
|---|---|---|
| Number of lease contracts | 288 | 305 |
| Right to renewal of lease contract | 83 | 70 |
| Percentage of lease contracts with option to renewal | 29% | 23% |
| Number of lease contracts by geography | 2022 | 2021 |
| Norway | 150 | 149 |
| Sweden | 124 | 140 |
| Finland | 8 | 10 |
| Estonia | 6 | 6 |
There have been no significant events after the end of the reporting period.
(All amounts in NOK 1000 unless otherwise stated)
| Note | 2022 | 2021 | |
|---|---|---|---|
| Management fee | 9 | 3,520 | 13,860 |
| Personnel expenses | 7 | 6,543 | 2,699 |
| Other operating expenses | 7 | 6,606 | 14,818 |
| Total operating expenses | 13,149 | 17,517 | |
| Depreciation | 3,206 | 954 | |
| Operating profit | -12,835 | -4,610 | |
| Income from subsidiaries and associated companies | 3 | 282,750 | 376,985 |
| Interest income from group companies | 3,513 | 3,740 | |
| Other interest income | 8 | 830 | 5 |
| Other financial income | 8 | - | 22 |
| Other interest expenses | 8 | 19,321 | 15,659 |
| Other financial expenses | 2,897 | 15,231 | |
| Profit before tax | 252,040 | 345,252 | |
| Tax on ordinary result | 6 | 55,449 | 76,276 |
| Net profit or loss for the year | 196,591 | 268,975 | |
| Profit attributable to: | |||
| Allocated dividend | 121,935 | 162,581 | |
| Dividend prepayment 2022 | 101,613 | 186,968 | |
| Allocated to other equity | -26,957 | -80,573 | |
| Total allocation | 196,591 | 268,975 |
Note 1 to 13 are an integral part of these financial statements
| Note | 2022 | 2021 | |
|---|---|---|---|
| NON-CURRENT ASSETS | |||
| Financial fixed assets | |||
| Investments in subsidiaries | 1, 2 | 1,324,500 | 1,286,130 |
| Loan to group companies | 3 | 78,509 | 110,402 |
| Total financial fixed assets | 1,403,008 | 1,396,532 | |
| Software | 11 | 31,945 | 17,313 |
| Total intangible assets | 31,945 | 17,313 | |
| Total non-current assets | 1,434,954 | 1,413,845 | |
| CURRENT ASSETS | |||
| Other receivables | 3 | 341,257 | 412,819 |
| Cash and bank deposits | 12 | 45,717 | 227,988 |
| Total current assets | 386,974 | 640,807 | |
| TOTAL ASSETS | 1,821,928 | 2,054,651 |
(All amounts in NOK 1000 unless otherwise stated)
(All amounts in NOK 1000 unless otherwise stated)
| Note | 2021 | 2021 | |
|---|---|---|---|
| EQUITY AND LIABILITIES | |||
| Paid-up equity | |||
| Share capital | 5 | 48,774 | 48,774 |
| Share premium reserve | 321,049 | 321,049 | |
| Other paid-up equity | 64,617 | 64,617 | |
| Total paid-up equity | 434,440 | 434,440 | |
| Retained earnings | |||
| Other equity | 360,201 | 387,158 | |
| Total retained earnings | 360,201 | 387,158 | |
| TOTAL EQUITY | 4 | 794,641 | 821,598 |
| Deferred tax | 6 | 367 | 1,612 |
| Other long-term liabilities | |||
| Liabilities to financial institutions | 2 | 551,541 | 481,492 |
| Total of other long term liabilities | 551,541 | 481,492 | |
| CURRENT LIABILITIES | |||
| Trade creditors | 1,532 | 1304 | |
| Tax payable | 6 | 56,812 | 81,223 |
| Dividend | 121,935 | 162,581 | |
| Other current debt | 3, 12 | 295,099 | 504,841 |
| Total short term liabilities | 475,379 | 749,949 | |
| Total liabilities | 1,027,287 | 1,233,053 | |
| TOTAL EQUITY AND LIABILITIES | 1,821,927 | 2,054,651 |
Note 1 to 13 are an integral part of these financial statements.
Petter Schouw-Hansen Chairperson
Gyrid Skalleberg Ingerø Board member
Lier, 13 April 2023 The board of directors, KID ASA
Rune Marsdal Board member
Karin Bing Orgland Board member
Espen Gundersen Board member
Liv Berstad Board member
Anders Fjeld Chief Executive Officer
(All amounts in NOK 1000 unless otherwise stated)
| Note | 2022 | 2021 |
|---|---|---|
| CASH FLOW FROM OPERATIONS | ||
| Profit before income taxes | 252,040 | 345,252 |
| Depreciation | 3,206 | 954 |
| Taxes paid in the period | -80,968 | -78,629 |
| Change in trade creditors | 228 | 559 |
| Change in other provisions and cash pool arrangement | -74,054 | -76,857 |
| Net cash flow from operations | 100,452 | 191,278 |
| CASH FLOW FROM INVESTMENTS | ||
| Increase in investments in subsidiaries | -38,371 | -30 |
| Investment in software | -13,341 | -15,632 |
| Net cash flow from investments | -51,712 | -15,662 |
| CASH FLOW FROM FINANCING | ||
| Proceeds from short/long term loans | 230,000 | 130,000 |
| Repayment of short/long term loans | -225,118 | -95,000 |
| Change in borrowings to group companies | 28,302 | 96,274 |
| Payment of dividends | -264,194 | -365,807 |
| Net cash flow from financing | -231,010 | -234,533 |
| Net change in cash and cash equivalents | -182,270 | -58,917 |
| Exchange gain /(losses) on cash and cash equivalents | - | - |
| Cash and cash equivalents at the beginning of the period | 227,988 | 286,905 |
| Cash and cash equivalents at the end of the period | 45,718 | 227,988 |
The annual accounts have been prepared in compliance with the Accounting Act and accounting principles generally accepted in Norway.
The parent company accounts are reported in Norwegian kroner (NOK) which is also the Functional currency for the parent company.
The preparation of financial statements in compliance with the Accounting Act requires the use of estimates. The application of the company's accounting principles also requires management to apply assessments. In areas which either to a great extent contain such assessments, a high degree of complexity, or areas in which assumptions and estimates are significant for the financial statements, these are described in the notes.
Revenues are recognised as they are earned. Revenues consist of management fees for services rendered from the Parent company to subsidiaries. Costs are recognised in the same reporting period as the corresponding revenues.
The cost method is applied to investments in other companies. The cost price is increased when funds are added through capital increases or when group contributions are made to subsidiaries. Dividends received are initially taken to income. Dividends exceeding the portion of retained equity after the purchase are reflected as a reduction in purchase cost. Dividend/group contributions from subsidiaries are reflected in the same year as the subsidiary makes a provision for the amount. Dividends from other companies are reflected as financial income when it has been approved.
Assets intended for long-term ownership or use have been classified as fixed assets. Assets relating to the trading cycle have been classified as current assets. Other receivables are classified as current assets if they are to be repaid within one year after the transaction date. Similar criteria apply to liabilities. First year instalments on long-term liabilities and longterm receivables are, however, not classified as short-term liabilities and current assets.
The purchase costs of assets includes the cost price for the asset, adjusted for bonuses, discounts and other rebates received, and purchase costs (freight, customs fees, public fees which are non-refundable and any other direct purchase costs). Purchases in foreign currencies are reflected in the balance sheet at the exchange rate at the transaction date.
For fixed assets and intangible assets, purchase costs also include direct expenses to prepare the asset for use,such as expenses for testing of the asset.
Interest expenses incurred in connection with the production of fixed assets are expensed.
Impairment tests are carried out if there is an indication that the carrying amount of an asset exceeds the estimated recoverable amount. The test is performed on the lowest level of fixed assets at which independent cashflows can be identified. If the carrying amount is higher than both the fair value less cost to sell and recoverable amount (net present value of future use/ownership), the asset is written down to the highest of fair value less cost to sell and the recoverable amount.
Previous impairment charges, except write-down of goodwill, are reversed in later periods if the conditions causing the write-down are no longer present.
Liabilities, with the exception of certain liability provisions, are recognised in the balance sheet at nominal amount.
The tax charge in the income statement includes both payable taxes for the period and changes in deferred tax. Deferred tax is calculated at relevant tax rates on the basis of the temporary differences which exist between accounting and tax values, and any carry-forward losses for tax purposes at year-end. Tax enhancing or tax reducing temporary differences, which are reversed or may be reversed in the same period, have been eliminated. The disclosure of deferred tax benefits on net tax reducing differences which have not been eliminated, and carryforward losses, is based on estimated future earnings. Deferred tax and tax benefits which may be shown in the balance sheet are presented net.
The tax reduction on group contributions given and tax on group contribution received, booked as a reduction of cost price or taken directly to equity, are booked directly against tax in the balance sheet (offset against payable taxes if the group contribution has affected payable taxes, and offset against deferred taxes if the group contribution has affected deferred taxes).
Monetary balance sheet items in foreign currency are recorded at year-end exchange rates. Realised currency exchange gains or losses are recorded at the time of payment in other financial income or expenses.
Derivative instruments are entered into to provide economic hedges for parts of the exposure to currency rate risk. In the Parent company, gains or losses on the derivative instruments are recognised when the instrument expires, is sold or terminated.
At inception of the hedge relationship, the group documents the economic relationship between hedging instruments and hedged items, including whether changes in the cash flows of the hedging instruments are expected to offset changes in the cash flows of hedged items. The group documents its risk management objective and strategy for undertaking its hedge transactions. Please refer to Note 3 in Kid ASA Group accounts for more information.
The cashflow statement has been prepared according to the indirect method. Cash and cash equivalents include cash, bank deposits, and other short-term investments which immediately and with minimal exchange risk can be converted into known cash amounts, with due date less than three months from purchase date.
Investments in subsidiaries, associated companies and joint ventures are booked according to the cost method.
| Subsidiaries | Location | Ownership/ voting right |
Equity last year (100%) |
Result last year (100%) |
Balance sheet value |
|---|---|---|---|---|---|
| Kid Interiør AS | Lier, Norway | 100% | 124,922 | 226,434 | 1,204,158 |
| Hemtex AB | Borås, Sweden | 100% | 352,445 | 54,486 | 81,942 |
| Kid Eiendom AS* | Lier, Norway | 100% | 643 | 634 | 30 |
| Kid International Logistics AB | Borås, Sweden | 100% | 37,842 | -72 | 38,369 |
| Balance sheet value 31.12.22 | 1,324,500 |
* Hemtex Logistikk AS changed Company name to Kid Eiendom AS during the year.
** Kid International Locistic AB was purchased from Hemtex AB during the year.
| 2022 | 2022 | |
|---|---|---|
| Liabilities secured by mortgage | -551,700 | -546,700 |
| Balance sheet value of assets placed as security: | ||
| Shares | 1,286,100 | 1,286,100 |
| Total | 1,286,100 | 1,286,100 |
| Loan to group comapnies | Other receivables | |||
|---|---|---|---|---|
| 2022 | 2021 | 2022 | 2021 | |
| Group companies | 78,509 | 110,402 | 335,472 | 410,863 |
| Total | 78,509 | 110,402 | 335,472 | 410,863 |
| Other current debt | |||
|---|---|---|---|
| 2022 | 2021 | ||
| Debt to Group companies | 285,439 | 437,683 | |
| Total | 285,439 | 437,683 |
Please also refer to note 12 Cash and cash equivalents for information regarding the Company's cash pool arrangement.
| Equity changes in the year | Share capital |
Share premium |
Other paid-in equity |
Other equity |
Total |
|---|---|---|---|---|---|
| Equity 01.01.21 | 48,774 | 321,049 | 64,617 | 387,158 | 821,597 |
| Profit for the year | - | - | - | 196,591 | 196,591 |
| Dividend pre-payment Dec 22 | - | - | - | -101,613 | -101,613 |
| Proposed dividends 31.12.22 | - | - | - | -121,935 | -121,935 |
| Equity 31.12.22 | 48,774 | 321,049 | 64,617 | 360,201 | 794,640 |
The share capital of NOK 48 774 194 consist of 40 645 162 shares with a nominal value of NOK 1.2 each. Kid ASA is listed on the Oslo Stock Exchange. Top 20 shareholders as of 31.12.22 was:
| Shareholder | Ownership |
|---|---|
| Gjelsten Holding AS | 10.24% |
| Verdipapirfondet Alfred Berg Gamba | 7.16% |
| Pareto Aksje Norge Verdipapirfond | 5.58% |
| Société Générale | 5.04% |
| Folketrygdfondet | 4.66% |
| Verdipapirfondet Holberg Norge | 4.03% |
| Salt Value AS | 3.94% |
| Stenshagen Invest AS | 3.60% |
| J.P. Morgan SE | 2.72% |
| VJ Invest AS | 2.54% |
| State Street Bank and Trust Comp | 1.77% |
| Forsvarets Personellservice | 1.74% |
| Verdipapirfondet Eika Spar | 1.56% |
| Varner Equities AS | 1.51% |
| Verdipapirfondet Nordea Avkastning | 1.37% |
| The Bank of New York Mellon SA/NV | 1.32% |
| Verdipapirfondet KLP Aksjenorge | 1.27% |
| Verdipapirfondet Eika Norge | 1.14% |
| Goldman Sachs International | 1.08% |
| Verdipapirfondet Nordea Kapital | 1.03% |
Basis for income tax expenses, changes in deferred tax and tax payable
| 2022 | 2021 | |
|---|---|---|
| Result before taxes | 252,040 | 345,252 |
| Permanent differences | 0 | 0 |
| Basis for the tax expense for the year | 252,040 | 345,252 |
| Change in temporary differences | 5,660 | 22,679 |
| Basis for payable taxes in the income statement | 257,700 | 367,931 |
| +/- Group contributions received/given | - | - |
| Taxable income (basis for payable taxes in the balance sheet) | 257,700 | 367,931 |
| 2022 | 2021 | |
|---|---|---|
| Tax rate | 22% | 22% |
| Payable tax on this year's result | 56,694 | 80,945 |
| Tax effect of differences between reported and booked tax last year | - | 321 |
| Total payable tax | 56,694 | 81,266 |
| Change in deferred tax based on original tax rate | -1,245 | -4,989 |
| Change in deferred tax due to change in tax rate | - | - |
| Tax expense | 55,449 | 76,276 |
| Tax expense as a percentage of profit before tax | 22% | 22.1% |
| Payable taxes in the balance sheet | ||
| Payable tax in the tax charge | 56,694 | 80,945 |
| Tax effect of group contribution | - | - |
| Tax effect of Skattefunn | -137 | |
| Payable tax in the balance sheet | 56,557 | 80,945 |
| Temporary differences included in the basis of deferred tax/tax asset | ||
| Unrealized currency gain/loss long term | 2,532 | 6,762 |
| Interest rate swap | -945 | 565 |
| Basis for deferred tax/tax asset | 1,588 | 7,327 |
| Deferred tax recognised | 367 | 1,612 |
Payroll expenses
| 2022 | 2021 | |
|---|---|---|
| Salaries/wages | - | - |
| Social security fees | 266 | 275 |
| Board remuneration | 3,187 | 2,426 |
| Total | 3,453 | 2,701 |
There are no employees in Kid ASA.
The CEO of Kid ASA has not received salary in relation to his role in this company.
No loans/securities have been granted to the general manager, board chairman or other related parties.
| Total audit fees | 719 | 621 |
|---|---|---|
| Other assistance (IFRS conversion and quarterly reports) | ||
| Tax advisory fee (incl. technical assistance with tax return) | - | - |
| Other assurance services | - | - |
| Statutory audit (incl. technical assistance with financial statements) | 719 | 621 |
| 2022 | 2021 |
| Total financial income | 4,343 | 3,767 |
|---|---|---|
| Other financial income incl currency gain | - | 5 |
| Interest income | 830 | 22 |
| Interest income from group entities | 3,513 | 3740 |
| 2022 | 2021 | |
| Financial income |
Financial expenses
| 2022 | 2021 | |
|---|---|---|
| Interest expenses | 17,941 | 15,659 |
| Other financial expenses incl currency loss | 4,277 | 15,231 |
| Total financial expenses | 22,218 | 30,890 |
The balance with group companies is disclosed in note 3.
Transactions with related parties
| 2022 | 2021 | |
|---|---|---|
| Transactions with Group companies | 3,520 | 16,305 |
| Interest income from Group companies | 3,513 | 3,740 |
Kid ASA is exposed to interest rate risk on long term debt and foreign exchange risk on long term receivable.
The company's interest rate risk arises from long-term borrowings and bank deposits. Borrowings issued at variable rates expose the group to cashflow interest rate risk which is partially offset by cash held at variable rates. Fixed-interest contracts are used to reduce this risk. In addition to the MNOK 551.7 long term loan, Kid ASA also have a MNOK 247 flexible credit facility and a MNOK 230 overdraft credit facility that are used during the year. At year-end MNOK 0 (MNOK 65) has been drawn of the overdraft facility. Please also refer to note 12 Cash and cash equivalents for information regarding the cash pool.
At year end, the Company had one interest rate swap contract at a fair value of MNOK 29.34 (MNOK - 2.53). Gains or losses on the derivative instrument is recognised when the instrument expires, is sold or terminated. In addition the Company entered into a cross-currency interest swap during 2021 of MNOK 115. The fair value at year end was MNOK 4.67 (MNOK 1.69). No contracts expired, was sold or terminated during the year, as such no gains or losses was recognised in 2022 or in 2021. Please refer to note 3 Financial risk management in Kid Group for further information on derivative contracts.
| Software | |
|---|---|
| At 1 January 2021 | 2,634 |
| Additions | 15,632 |
| Depreciation | -954 |
| Net book value as at 31 December 2021 | 17,313 |
| At 1 January 2022 | 17,313 |
| Additions | 17,839 |
| Depreciation | -3,206 |
| Net book value as at 31 December 2022 | 31,945 |
Useful life 4-7 years
The company policy for the purpose of optimizing availability and flexibility of cash within the Group is to use a cash pooling arrangement. The arrangement is organized with Nordea Sweden as a service provider and is a multi-currency arrangement consisting of currencies NOK, SEK, USD, EUR and HKD. Kid ASA as an owner of the pool is financially viable concerning repayment of any net deposits made by Kid Interiør AS, Kid Logistikk AS, Hemtex AB, Hemtex International AB and Hemtex OY. The cash pool has a maximum credit of MNOK 247, which has not been used at year end.
The following balances relate to the cash pool arrangement:
| 2022 | 2021 | |
|---|---|---|
| Cash and bank deposits | 45,717 | 228,026 |
| Current debt to Group companies | 284,519 | 432,624 |
There are no restricted funds. The Company has an employee tax guarantee limit of TNOK 1,000
There have been no significant events after the end of the reporting period.
• LIKE-FOR-LIKE REVENUE are revenue from stores that were in operation from the start of last fiscal year all through the end of the current reporting period.
• REVENUE GROWTH represents the growth in revenue for the current reporting period compared to the comparative period the previous year. Revenue growth for Hemtex is calculated in constant currency. Revenue growth is an important key figure for the KID Group and the user of financial statements as it illustrates the underlying organic revenue growth.
• GROSS PROFIT is defined as revenue minus the cost of goods sold (COGS). The gross profit represents sales revenue that the Group retains after incurring the direct costs associated with the purchase and distribution of the goods.
• GROSS MARGIN is defined as Gross profit divided by Revenue. The gross margin reflects the percentage margin of the sales revenue that the Group retains after incurring the direct costs associated with the purchase and distribution of the goods and is an important internal KPI.
• OPEX TO SALES MARGIN is the sum of Employee benefits expense and Other operating expenses divided by Revenue. The OPEX to sales margin measures operating cost efficiency as percentage of sales revenue and is an important internal KPI.
• EBITDA is earnings before tax, interests, amortisation of other intangibles and depreciation and write-down of property, plant and equipment and right-of-use assets. The performance measure is an important key figure for Kid Group and considered useful to the users of the financial statements when evaluating operational profitability on a more variable cost basis as it excludes amortisation and depreciation expense related to capital expenditure.
• EBITDA MARGIN is EBITDA divided by Total revenue. The performance measure is an important key figure for Kid Group and considered useful to the users of the financial statements when evaluating operational efficiency on a more variable cost basis as is excludes amortisation and depreciation expense related to capital expenditure.
• EBIT (earnings before interest, tax) is operating profit. The performance measure is considered useful to the users of the financial statements when evaluating operational profitability.
• EBIT MARGIN is EBIT divided by Total revenue. The performance measure is an important key figure for Kid Group and considered useful to the users of the financial statements when evaluating operational efficiency.
• NET CAPITAL EXPENDITURE represent the cash flow from the investment spending in property, plant and equipment and other intangibles, less sale such asset.
• NET INCOME is profit (loss) for the period.
• CONSTANT CURRENCY is exchange rates that the Group uses to eliminate the effect of exchange rates fluctuations when calculating financial performance numbers.
We confirm, to the best of our knowledge, that the financial statements for the period 1 January to 31 December 2022 have been prepared in accordance with current applicable accounting standards, and give a true and fair view of the assets, liabilities, financial position and profit or loss of the entity and the group taken as a whole. We also confirm that the Board of Directors' Report includes a true and fair review of the development and performance of the business and the position of the entity and the group, together with a description of the principal risks and uncertainties facing the entity and the group.
Lier, 13 April 2023 The board of directors, KID ASA
Rune Marsdal Board member
Petter Schouw-Hansen Chairperson
Gyrid Skalleberg Ingerø Board member
Karin Bing Orgland Board member
Espen Gundersen Board member
Liv Berstad Board member
Anders Fjeld Chief Executive Officer
To the General Meeting of Kid ASA
We have audited the financial statements of Kid ASA, which comprise:
In our opinion
Our opinion is consistent with our additional report to the Audit Committee.
We conducted our audit in accordance with International Standards on Auditing (ISAs). Our responsibilities under those standards are further described in the Auditor's Responsibilities for the Audit of the Financial Statements section of our report. We are independent of the Company and the Group as required by relevant laws and regulations in Norway and the International Ethics Standards Board for Accountants' International Code of Ethics for Professional Accountants (including International Independence Standards) (IESBA Code), and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
To the best of our knowledge and belief, no prohibited non-audit services referred to in the Audit Regulation (537/2014) Article 5.1 have been provided.
We have been the auditor of the Company for 18 years from the election by the general meeting of the shareholders on 23 June 2005 for the accounting year 2005.
Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the financial statements of the current period. These matters were addressed in the
PricewaterhouseCoopers AS, Dronning Eufemias gate 71, Postboks 748 Sentrum, NO-0106 Oslo T: 02316, org. no.: 987 009 713 MVA, www.pwc.no
context of our audit of the financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters.
The Group's business activities are largely unchanged compared to last year. We have not identified regulatory changes, transactions or other event that qualified as new Key Audit Matters for our audit of the 2022 financial statements. Furthermore, Valuation of the KID trademark has the same characteristics and risks as in the prior year, and therefore continues to be an area of focus this year.
The KID trademark amounts to a significant part of the Group's total fixed assets. Management performed an impairment test of the trademark's book value by estimating and discounting the expected net future cash flows. Estimates of net future cash flows and discount rate are dependent on management judgement. In the event of a write-down of the trademark, both operating profit and total equity would be impacted. No impairment charge was recognized in 2022.
We focused on valuation of the KID trademark due to its significance to the financial statements and the inherent risk that management judgement could affect the valuation.
For more information see note 5 "Critical accounting estimates and significant judgement" and note 12 "Intangible assets" where management explains the origin of the Trademark and the impairment test.
To challenge the judgement management used in the estimation of net future cash flows, we compared management's estimates of the future cash flows with the prior year's actual cash flows, approved budgets, and business plans. We did not find any inconsistencies between the estimated net discounted cash flows and the information used by management to estimate these cash flows.
To evaluate management's estimation accuracy, we compared the 2022 estimated cash flows used in last year's impairment test with the actual cash flows in 2022. Only minor deviations were noted.
To evaluate management's assumptions related to future long-term revenue growth, we compared management's estimates with the expectations in the marketplace. We found that management's estimates for long-term growth were in line with both the markets and our expectations.
To evaluate management's assumptions related to the discount rate, we compared the different input factors used in the determination of the discount rate with observable market data, market expectations and discount rates used by comparable companies. We found that management's discount rate contained the elements required by IFRS, and that the different elements were in line with what we observed in the marketplace and comparative companies.
To challenge management's sensitivity analysis, we simulated changes in key parameters and found that the estimated value of the trademark was most sensitive to changes in future sales, long-term growth and discount rate. A reasonable variation in the key parameters did not lead to a different conclusion on the impairment test.
We read the notes and found that the disclosures, including the sensitivity analysis, were satisfactory and provided meaningful information about the trademark and the valuation performed.
The Board of Directors and the Managing Director (management) are responsible for the information in the Board of Directors' report and the other information accompanying the financial statements. The other information comprises information in the annual report, but does not include the financial statements and our auditor's report thereon. Our opinion on the financial statements does not cover the information in the Board of Directors' report nor the other information accompanying the financial statements.
In connection with our audit of the financial statements, our responsibility is to read the Board of Directors' report and the other information accompanying the financial statements. The purpose is to consider if there is material inconsistency between the Board of Directors' report and the other information accompanying the financial statements and the financial statements or our knowledge obtained in the audit, or whether the Board of Directors' report and the other information accompanying the financial statements otherwise appear to be materially misstated. We are required to report if there is a material misstatement in the Board of Directors' report or the other information accompanying the financial statements. We have nothing to report in this regard.
Based on our knowledge obtained in the audit, it is our opinion that the Board of Directors' report
Our opinion on the Board of Director's report applies correspondingly to the statements on Corporate Governance and Corporate Social Responsibility.
Management is responsible for the preparation of financial statements that give a true and fair view in accordance with the Norwegian Accounting Act and accounting standards and practices generally accepted in Norway, and for the preparation and true and fair view of the consolidated financial statements of the Group in accordance with International Financial Reporting Standards as adopted by the EU, and for such internal control as management determines is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.
In preparing the financial statements, management is responsible for assessing the Company's and the Group's ability to continue as a going concern, disclosing, as applicable, matters related to going concern. The financial statements of the Company use the going concern basis of accounting insofar as it is not likely that the enterprise will cease operations. The consolidated financial statements of the Group use the going concern basis of accounting unless management either intends to liquidate the Group or to cease operations, or has no realistic alternative but to do so.
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor's report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with ISAs will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements.
As part of an audit in accordance with ISAs, we exercise professional judgment and maintain professional scepticism throughout the audit. We also:
We communicate with the Board of Directors regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit.
We also provide the Audit Committee with a statement that we have complied with relevant ethical requirements regarding independence, and to communicate with them all relationships and other matters that may reasonably be thought to bear on our independence, and where applicable, related safeguards.
From the matters communicated with the Board of Directors, we determine those matters that were of most significance in the audit of the financial statements of the current period and are therefore the key audit matters. We describe these matters in our auditor's report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should not be communicated in our report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication.
As part of the audit of the financial statements of Kid ASA, we have performed an assurance engagement to obtain reasonable assurance about whether the financial statements included in the annual report, with the file name KIDASA-2022-12-31-en, have been prepared, in all material respects, in compliance with the requirements of the Commission Delegated Regulation (EU) 2019/815 on the European Single Electronic Format (ESEF Regulation) and regulation pursuant to Section 5-5 of the Norwegian Securities Trading Act, which includes requirements related to the preparation of the annual report in XHTML format, and iXBRL tagging of the consolidated financial statements.
In our opinion, the financial statements, included in the annual report, have been prepared, in all material respects, in compliance with the ESEF regulation.
Management is responsible for the preparation of the annual report in compliance with the ESEF regulation. This responsibility comprises an adequate process and such internal control as management determines is necessary.
For a description of the auditor's responsibilities when performing an assurance engagement of the ESEF reporting, see: https://revisorforeningen.no/revisjonsberetninger
Oslo, 13 April 2023 PricewaterhouseCoopers AS
Geir Haglund State Authorised Public Accountant
Financial calendar 2023
Our financial calendar shows the dates on which we plan to publish our financial reports and conduct our annual general meeting. It also includes information about events that are relevant to our shareholders.
The accounts and presentation material are available from 07:30 (CET) on the day of publication, and can be downloaded from our website, http://investor.kid.no/
KID ASA will announce revenue updates on the following dates:
All dates are subject to change.
This information is published pursuant to the requirements set out in the Continuing obligations.
http://investor.kid.no
24 August 2023
Report
Half-
yearly
KID ASA Gilhusveien 1, N-3426 Gullaug Box 505, N-3412 Lierstranda Phone: +47 940 26 000
[email protected] www.kid.no
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