Quarterly Report • May 19, 2020
Quarterly Report
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In the first quarter of 2020, we were off to a good start with increased sales and activity. In March, however, all markets were hit by the Covid-19 outbreak, although with varying effects with regards to sales drop and store closures. As the impact of the outbreak situation has gradually normalised, we can conclude that the Kid and Hemtex organisations have safely navigated through troubled water, with double digit like-for-like sales development in April, and all stores in Norway, Sweden and Finland open after Easter.
These are the key takeaways from the first quarter:
Following the pandemic outbreak, our key focus in Q1 was safeguarding the health of our employees and customers, whilst securing stable and predictable operational continuity. By taking prompt measures such as temporary staff layoffs, postponed investment decisions, postponed instalment and reduced dividend, we have maintained a strong financial position. Furthermore, we are working closely with our suppliers in order to secure deliveries, and we expect only minor delays during 2020.
We have increased storage capacity in Kid Interior with a buffer storage facility in Drammen to enable continued growth and ensure more effective logistics during the high seasons of summer and autumn. Furthermore, the ongoing assembly of the Autostore unit in the central warehouse in Norway will further improve delivery efficiency from Q3 for both online customers and physical stores. In Sweden, the transition to a new third party logistics partner was completed according to plan without negative effects on operations.
As we are gradually facing some sort of normality, I would like to take the opportunity to thank all of my co-workers in Kid and Hemtex for their extraordinary efforts and contributions over the last few months. In order to proactively secure the health and interests of our employees, customers and shareholders, we have been compelled to take tough decisions. Notwithstanding this, the dedication and resolve demonstrated by our team has been second to none.
Going forward, we see continued demand for home and interior products following the Covid-19 outbreak and authorities' social distancing and travelling guidelines. Combined with a fresh and attractive summer and autumn assortment, the Kid Group should have a solid basis for continued growth for the remainder of 2020.
Yours sincerely,
Revenue, MNOK Like-for-like growth (%) Segmental EBITDA, MNOK No. of physical stores
107
2019 2020 2019 2020 2019 2020 2019 2020 Q1 Q2 Q3 Q4 Kid Interior Hemtex ¹
42
203
103
(period end)
¹ Hemtex AB figures are included in the group accounts from 15 May 2019 ² Calculated in constant currency. See definition page 20.
52 40 69
29 17
| (Amounts in NOK million) | Q1 2020 | Q1 2019 | FY 2019 |
|---|---|---|---|
| Revenue | 508.0 | 298.0 | 2,342.2 |
| Like-for-like growth including online sales ¹ | 0.9 % | 5.1 % | 6.8 % |
| COGS | -202.7 | -117.7 | -925.7 |
| Gross profit | 305.3 | 180.3 | 1,416.5 |
| Gross margin (%) | 60.1% | 60.5% | 60.5% |
| Other operating income | 0.3 | 0.0 | 2.1 |
| Employee benefits expense | -141.7 | -82.7 | -503.5 |
| Other operating expense | -172.8 | -82.6 | -574.8 |
| Other operating expense - IFRS 16 effect | 72.4 | 37.0 | 226.6 |
| OPEX | -242.2 | -128.3 | -851.6 |
| Integration costs | 1.2 | 0.0 | 14.1 |
| Opex excluding integration costs | -241.0 | -128.3 | -837.6 |
| Adj. EBITDA | 64.7 | 52.0 | 581.0 |
| Adj. EBITDA margin (%) | 12.7% | 17.5% | 24.8% |
| Depreciation | -15.0 | -9.7 | -50.5 |
| Depreciation - IFRS 16 effect | -68.6 | -33.0 | -214.4 |
| Adj. EBIT | -18.9 | 9.4 | 316.0 |
| Adj. EBIT margin (%) | -3.7% | 3.1% | 13.5% |
| Net financial income (expense) | 14.6 | -2.9 | -11.3 |
| Net financial expense - IFRS 16 effect | -7.7 | -7.1 | -29.7 |
| Adj. Profit before tax | -11.9 | -0.6 | 275.1 |
| Adj. Net income | -9.4 | -0.5 | 220.4 |
| Adjusted earnings per share | -0.23 | -0.01 | 5.42 |
| Liabilities to financial institutions | -619.2 | -425.0 | -674.5 |
| Lease liabilities - IFRS 16 effect | -824.6 | -656.8 | -802.3 |
| Cash | 70.0 | 141.9 | 339.2 |
| Net interest bearing debt | -1,373.8 | -939.8 | -1,137.5 |
Revenue growth (%) ² Adj. EBITDA margin (%) ² |
³ Adj. EPS (NOK) ² | ⁴
¹ Based on Hemtex Q1 2019 revenues of MNOK 206.2 according to Hemtex management accounts and calculated in constant currency
² Hemtex AB figures are included in the group accounts from 15 May 2019
³ Adjusted for transaction costs and integration costs. See page 6 for details on adjustments
⁴ Adjusted for transaction costs, integration costs and tax. See page 6 for details on adjustments
Except for the revenue impacts described below, there are no other financial impacts booked in the Q1 accounts related to the COVID-19 outbreak. The previous announced notice of temporally layoffs in Kid Interior had only minor effect in Q1. Remaining effects will materialize in the Q2 accounts together with other and similar actions implemented in Hemtex.
Proforma Group revenues increased by 0.7% to MNOK 508.0. Pro forma Q1 2019 revenues of MNOK 504.3 includes Hemtex revenues of MNOK 206.2. Proforma group revenues on a likefor-like basis were up by 0.9%.
Revenues had a positive development until the COVID-19 outbreak after which revenues were instantly down in all our markets. However, after the first days of initial sales drop, demand gradually improved in Norway and subsequently also in Sweden. Only a few stores were temporarily closed in Norway and no stores were closed in Sweden.
The situation in Finland has been challenging. No stores have been closed, but customer visits and revenues have been significantly reduced. In Estonia, all stores have been closed following governmental regulations, but are now reopened. Finland and Estonia accounted for less than 5% of Group revenues in the quarter and in 2019.
Gross margin was 60.1% which is a reduction of 0.4 pp. First quarter last year was positively influenced by favourable FX rates compared to the first quarter of this year.
Employee benefits expenses increased by MNOK 59 to MNOK 141.7, mainly due to the Hemtex acquisition. Employee benefits expenses are further described in the respective Segment sections.
Excluding IFRS16, Operating Expenses increased by MNOK 54.8 to MNOK 100.4 caused by the Hemtex acquisition. Operating expenses are in line with expectations, and are further described in the Segment sections.
Adjusted EBITDA increased from MNOK 52.0 to MNOK 64.7. Adjusted EBITDA includes an add-back of MNOK 1.2 in integration costs.
Exclusive of IFRS16 effects, EBITDA was negative with MNOK -7.7 compared to a positive EBITDA of MNOK 15.0 last year. The reduction of MNOK -22.7 is caused by the acquisition of Hemtex, accounting for a reduction of MNOK -4.9, and Kid Interior reduction of MNOK -13.8. The main reason for reduced Kid Interior EBITDA is the sales drop in March following the COVID-19 outbreak.
Net financial income of MNOK 14.7 mainly consists of an unrealised FX gain from intercompany loans of MNOK 19 and financial expenses related to external borrowings of MNOK 4.5.
For Adjusted EBITDA, Adjusted EBIT and Adjusted Net income, a complete overview of adjustments is provided in the following table:
| Adjustments overview | Q1 | Q1 | FY | FY |
|---|---|---|---|---|
| (MNOK) | 2020 | 2019 | 2020 | 2019 |
| Transaction cost related to Hemtex acquisition¹ |
8.8 | |||
| Intergration cost related to Hemtex acquisition |
1.2 | 1.2 | 5.3 | |
| EBITDA and EBIT adjustments | 1.2 | 1.2 | 14.1 | |
| Profit adjustments before tax | 1.2 | 1.2 | 14.1 | |
| Tax effects on adjustments (22%) | -0.3 | -0.3 | -1.6 | |
| Net income adjustments | 0.9 | 0.9 | 12.4 |
¹ For FY 2019 MNOK 6.7 of total MNOK 8.8 in transaction cost were not tax deductible
Excluding IFRS16 leasing liabilities, net interestbearing debt was MNOK 549.2 at the end of the quarter, equal to a 1.7 times LTM EBITDA.
The Group has cash and available credit facilities of MNOK 397 as further detailed in Note 6.
| (Amounts in NOK millions) | Q1 2020 | Q1 2019 | FY 2019 |
|---|---|---|---|
| Revenue | 287.1 | 298.0 | 1,606.3 |
| Revenue growth | -3.6% | 8.4 % | 9.5 % |
| LFL growth including online sales | -4.0% | 5.1 % | 6.8 % |
| COGS | -117.7 | -117.7 | -622.6 |
| Gross profit | 169.5 | 180.3 | 983.7 |
| Gross margin (%) | 59.0 % | 60.5 % | 61.2 % |
| Other operating revenue | 0.1 | 0.0 | 0.2 |
| Employee benefits expense | -82.8 | -82.7 | -349.1 |
| Other operating expense | -85.5 | -82.6 | -351.4 |
| Other operating expense - IFRS 16 effect | 38.7 | 37.0 | 148.3 |
| EBITDA | 40.0 | 52.0 | 431.7 |
| EBITDA margin (%) | 13.9 % | 17.5 % | 26.9 % |
| No. of shopping days | 77 | 76 | 303 |
| No. of physical stores at period end | 143 | 142 | 144 |
| (Amounts in NOK millions) | Q1 2020 | Q1 2019 ¹ | FY 2019 ¹ |
|---|---|---|---|
| Revenue | 220.9 | - | 735.9 |
| Revenue growth ² | 6.6 % | - | 13.1 % |
| LFL growth including online sales ² | 7.9 % | - | 12.5 % |
| COGS | -81.0 | - | -290.5 |
| Gross profit | 139.9 | 445.4 | |
| Gross margin (%) | 63.4 % | - | 60.5 % |
| Other operating revenue | 0.2 | - | 1.9 |
| Employee benefits expense | -58.1 | - | -154.4 |
| Other operating expense | -87.0 | - | -209.3 |
| Other operating expense - IFRS 16 effect | 33.7 | - | 78.4 |
| EBITDA | 28.8 | - | 161.9 |
| EBITDA margin (%) | 13.0 % | - | 21.9 % |
| No. of shopping days | 91 | - | 91 |
| No. of physical stores at period end (excl. franchise) | 120 | - | 123 |
¹ Hemtex AB figures are included in the group accounts from 15 May 2019
² Calculated in constant currency. See definition page 20. FY 2019 is for the period 15 May until the end of FY19.
Revenues in Kid Interior decreased by -3.6% to MNOK 287.1.
Until the outbreak, like-for-like revenues were up by +2.5% in Kid Interior. Following the World Health Organization's declaration of the COVID-19 outbreak as a pandemic on 11 March and the subsequent actions taken by governments, sales dropped instantly and were down by -23.9% for the remainder of the quarter. Loss of revenues from physical stores have been partly offset by increased online sales of +31.7% during the quarter.
Gross profit was reduced by MNOK 10.8 compared to last year. MNOK 6.5 was due to reduced revenues following the COVID-19 situation and the remaining MNOK 4.3 was caused by reduced gross margin mainly due to a weakened NOK versus USD. The gross margin last year was positively affected by a favourable FX rate position.
Employee expenses increased by 0.2% to MNOK 82.8:
Other operating expenses excluding IFRS16, increased by 3.6% to MNOK 85.5:
+3.5 percentage points related to an increase in marketing costs. Marketing costs in percentage of sales are expected to remain at the same level as last year for FY2020.
The drop in revenue occurred instantly late March. Hence, even with actions taken immediately as described in our Revenue and Business Update dated 7 April, with minor exceptions no cost effects will materialize before April.
Following the integration of Hemtex, certain group costs and capital expenditures have been booked in Kid Interior. Such costs will during 2020 be further assessed and allocated to the respective segments in which they belong, based on common accepted methodology.
EBITDA decreased by MNOK 12.0 mainly due to a lower Gross Profit as described above.
During the first quarter, no new stores were opened, and one store was closed at Hillevåg. Two stores were refurbished in Årnes and Hamar. The total number of physical stores at the end of the quarter was 143 compared to 142 first quarter last year.
Revenues in Hemtex increased by 6.6% (pro forma) to MNOK 220.9.
Until the COVID-19 outbreak, like-for-like revenues were up by +18.3% in Hemtex. Following the World Health Organization's declaration of the COVID-19 outbreak as a pandemic on 11 March and the subsequent actions taken by governments, sales dropped instantly and were down by -22.8% for the remainder of the quarter. Loss of revenues from physical stores have been partly offset by increased online sales of +38.0% during the quarter.
Gross margin increased compared to 2019 due to reduced rebate levels during January sales and a one-off effect of freight costs adjustments of MNOK 4. Actual freight costs were lower than calculated due to of changes in sourcing.
Gross margin for the Hemtex segment is based on FX derivatives entered into before the acquisition in May 2019. Reference is made to the Q3-2019 report for further details.
Employee benefit costs was MNOK 58.1 and reflects a reduction of employees at Hemtex HQ.
Operating expenses includes relocation cost to a new third party logistics provider in Sweden of MNOK 2.6 and use of external temporary consultants and personnel at a total cost of MNOK 1.8.
Following the integration of Hemtex, certain group costs and capital expenditures have been booked in Kid Interior. Such costs will during 2020 be further assessed and allocated to the respective segments in which they belong, based on common accepted methodology.
Capital Expenditures during Q1 amounted to NOK 1.8 million.
During the first quarter, three stores in Sweden were closed (Kristianstad, Eskilstuna and Bålsta). Three stores in Sweden were refurbished with the Kid concept (Norrköping Ingelsta, Örebro Krämaren and Upplands Väsby). The total number of physical stores including franchise stores at the end of the quarter was 132 compared to 141 last year.
As described above, the COVID-19 outbreak has affected revenues in all markets. However, the situation significantly improved during April.
Group revenues increased by 9.3% in April compared to last year. Like-for-like growth was 10.5%. In the first four months of 2020, total revenues were up by 2.7% and like-for-like growth was 3.2%.
Revenues in Kid Interior increased by 16.0% and like-for-like growth was 15.2% in April. In the first four months of 2020, total revenues were up by 1.1% and like-for-like growth was 0.6%.
Revenues in Hemtex decreased by -0.2% and likefor-like growth was 2.0% in April. In the first four months of 2020, total revenues were up by 5.1% and like-for-like growth was 6.6%.
The Board of Directors proposes a half-year dividend of NOK 1.20 per share in May 2020. Kid also paid a half-year dividend of NOK 1.20 per share in November 2019. In total, these payments represent 44% of the Group adjusted net income for 2019.
The board of directors will also propose to the annual general meeting that the board is given the authority to distribute an additional half-year dividend in November 2020 in accordance with the current dividend policy and also in light of the third quarter 2020 results.
There have been no other significant events after the end of the reporting period.
Lier, 19th May 2020
The board of Kid ASA
| (Amounts in NOK thousand) | Note | Q1 2020 | Q1 2019 ¹ | FY 2019 ¹ |
|---|---|---|---|---|
| Unaudited | Unaudited | Audited | ||
| Revenue | 508,034 | 298,009 | 2,342,180 | |
| Other operating revenue | 326 | 40 | 2,082 | |
| Total revenue | 508,360 | 298,048 | 2,344,263 | |
| Cost of goods sold | -202,726 | -117,739 | -925,666 | |
| Employee benefits expense | -141,743 | -82,685 | -503,494 | |
| Depreciation and amortisation expenses | 9 | -83,520 | -42,677 | -264,974 |
| Other operating expenses | -100,409 | -45,576 | -348,153 | |
| Total operating expenses | -528,398 | -288,676 | -2,042,288 | |
| Operating profit | -20,039 | 9,372 | 301,975 | |
| Financial income | 20,697 | 575 | 9,510 | |
| Financial expense | -13,771 | -10,543 | -50,453 | |
| Net financial income (+) / expense (-) | 6,926 | -9,968 | -40,943 | |
| Profit before tax | -13,112 | -596 | 261,032 | |
| Income tax expense | 2,794 | 131 | -53,082 | |
| Net profit (loss) for the period | -10,319 | -465 | 207,950 | |
| Interim condensed consolidated statement of | ||||
| comprehensive income | ||||
| Profit for the period | -10,319 | -465 | 207,950 | |
| Other comprehensive income | -4,140 | 1,027 | -134 | |
| Tax on comprehensive income | 929 | -226 | -303 | |
| Total comprehensive income for the period | -13,529 | 336 | 207,513 | |
| Attributable to equity holders of the parent | -13,529 | 336 | 207,513 | |
| Basic and diluted Earnings per share (EPS): | -0.25 | -0.01 | 5.12 |
¹ Hemtex AB figures are included in the group accounts from 15 May 2019.
| (Amounts in NOK thousand) | Note | 31.03.2020 | 31.03.2019 ¹ | 31.12.2019 ¹ |
|---|---|---|---|---|
| Assets | Unaudited | Unaudited | Audited | |
| Goodwill | 9 | 72,079 | 0 | 65,402 |
| Trademark | 9 | 1,515,330 | 1,459,585 | 1,510,165 |
| Other intangible assets | 9 | 10,023 | 2,712 | 10,085 |
| Deferred tax asset | 26,274 | 0 | 2,185 | |
| Total intangible assets | 1,623,705 | 1,462,297 | 1,587,836 | |
| Right of use asset | 9 | 842,394 | 667,245 | 822,604 |
| Fixtures and fittings, tools, office machinery and equipment | 9 | 178,065 | 95,089 | 179,233 |
| Total tangible assets | 1,020,460 | 762,334 | 1,001,838 | |
| Total fixed assets | 2,644,165 | 2,224,631 | 2,589,674 | |
| Inventories | 567,516 | 283,340 | 484,988 | |
| Trade receivables | 6,035 | 3,773 | 23,201 | |
| Other receivables | 13,390 | 12,675 | 25,815 | |
| Derivatives | 20,651 | 1,689 | 2,305 | |
| Totalt receivables | 40,076 | 18,137 | 51,320 | |
| Cash and bank deposits | 69,965 | 141,932 | 339,241 | |
| Total currents assets | 677,558 | 443,409 | 875,549 | |
| Total assets | 3,321,723 | 2,668,040 | 3,465,223 |
¹ Hemtex AB figures are included in the group accounts from 15 May 2019.
| (Amounts in NOK thousand) | Note | 31.03.2020 | 31.03.2019 ¹ | 31.12.2019 ¹ |
|---|---|---|---|---|
| Equity and liabilities | Unaudited | Unaudited | Audited | |
| Share capital | 48,774 | 48,774 | 48,774 | |
| Share premium | 321,049 | 321,049 | 321,049 | |
| Other paid-in-equity | 64,617 | 64,617 | 64,617 | |
| Total paid-in-equity | 434,440 | 434,440 | 434,440 | |
| Other equity | 723,481 | 650,426 | 715,721 | |
| Total equity | 1,157,921 | 1,084,866 | 1,150,161 | |
| Deferred tax | 323,917 | 319,711 | 315,398 | |
| Total provisions | 323,917 | 319,711 | 315,398 | |
| Lease liabilities | 596,210 | 537,337 | 584,848 | |
| Liabilities to financial institutions | 6 | 511,152 | 425,000 | 494,498 |
| Total long-term liabilities | 1,107,362 | 962,337 | 1,079,346 | |
| Lease liabilities | 228,384 | 119,429 | 217,427 | |
| Liabilities to financial institutions | 6 | 108,000 | - | 180,000 |
| Trade payable | 107,034 | 48,226 | 145,122 | |
| Tax payable | 29,092 | 7,485 | 51,239 | |
| Public duties payable | 79,215 | 66,176 | 154,233 | |
| Other short-term liabilities | 147,182 | 59,811 | 160,511 | |
| Derivatives | 33,616 | - | 11,787 | |
| Total short-term liabilities | 732,524 | 301,127 | 920,319 | |
| Total liabilities | 2,163,802 | 1,583,174 | 2,315,063 | |
| Total equity and liabilities | 3,321,723 | 2,668,040 | 3,465,223 |
¹ Hemtex AB figures are included in the group accounts from 15 May 2019.
| (Amounts in NOK thousand) | Total paid-in equity | Other equity | Total equity |
|---|---|---|---|
| Balance at 1 Jan 2019 | 434,440 | 656,247 | 1,090,687 |
| Profit for the period YTD 2019 | 0 | -465 | -465 |
| Other comprehensive income | 0 | 801 | 801 |
| Cash Flow Hedges | 0 | -6,157 | -6,157 |
| Balance at 31 Mar 2019 | 434,440 | 650,426 | 1,084,866 |
| Balance at 1 Jan 2020 ¹ | 434,440 | 715,721 | 1,150,161 |
| PPA adjustment | 0 | 7,171 | 7,171 |
| Adjusted Balance at 1 Jan 2020 ² | 434,440 | 722,892 | 1,157,332 |
| Profit for the period YTD 2020 | 0 | -10,319 | -10,319 |
| Other comprehensive income | 0 | -3,211 | -3,211 |
| Cash Flow Hedges | 0 | -5,441 | -5,441 |
| Translation differences | 0 | 19,559 | 19,559 |
| Balance at 31 Mar 2020 ¹ | 434,440 | 723,481 | 1,157,921 |
The accompanying notes are an integral part of the Interim condensed consolidated financial statements
¹ Hemtex AB figures are included in the group accounts from 15 May 2019.
² PPA adjustment of deferred tax in Q1 2020
| (Amounts in NOK thousand) | Note | Q1 2020 | Q1 2019 ¹ | FY 2019 ¹ |
|---|---|---|---|---|
| Unaudited | Unaudited | Audited | ||
| Cash Flow from operation | ||||
| Profit before income taxes | -13,113 | -596 | 261,032 | |
| Taxes paid in the period | -22,103 | -38,731 | -49,702 | |
| Depreciation & Impairment | 9 | 83,520 | 42,677 | 265,152 |
| Effect of exchange fluctuations | -21,163 | 0 | 0 | |
| Change in net working capital | ||||
| Change in inventory | -66,054 | -19,742 | -77,155 | |
| Change in trade debtors | 18,197 | -811 | -15,733 | |
| Change in trade creditors | -47,057 | 10,560 | 65,636 | |
| Change in other provisions ² | -107,457 | -40,004 | 74,322 | |
| Net cash flow from operations | -175,230 | -46,648 | 523,553 | |
| Cash flow from investment | ||||
| Purchase of Hemtex AB, net of cash acquired | 0 | 0 | 5,230 | |
| Purchase of fixed assets | 9 | -8,258 | -12,671 | -98,089 |
| Net Cash flow from investments | -8,258 | -12,671 | -92,859 | |
| Cash flow from financing | ||||
| Proceeds from long term loans | 25,000 | 0 | 674,375 | |
| Repayment of revolving credit facility | -80,000 | -397 | -627,775 | |
| Lease payments for principal portion of lease liability | -50,143 | -29,875 | -223,335 | |
| Dividend payment | 0 | 0 | -130,064 | |
| Net interest | 6,128 | -10,195 | -26,170 | |
| Net cash flow from financing | -99,015 | -40,467 | -332,969 | |
| Cash and cash equivalents at the beginning of the period | 339,246 | 242,152 | 242,152 | |
| Net change in cash and cash equivalents | -282,503 | -99,785 | 97,724 | |
| Exchange gains / (losses) on cash and cash equivalents | 13,223 | -435 | -634 | |
| Cash and cash equivalents at the end of the period | 69,966 | 141,932 | 339,242 |
¹ Hemtex AB figures are included in the group accounts from 15 May 2019.
² Change in other provisions includes other receivables, public duties payable and short-term liabilities
Kid ASA and its subsidiaries` (together the "company" or the "Group") operating activities are related to the resale of home textiles in Norway, Sweden, Finland and Estonia.
All amounts in the interim financial statements are presented in NOK 1,000 unless otherwise stated.
Due to rounding, there may be differences in the summation columns.
These interim financial statements for the first quarter of 2020 have been prepared in accordance with IAS 34, 'Interim financial reporting'. The interim financial statements should be read in conjunction with the consolidated financial statements for the year ended 31 December 2019, which have been prepared in accordance with IFRS as adopted by the European Union ('IFRS').
The accounting policies applied in the preparation of the consolidated interim financial statements are consistent with those applied in the preparation of the annual IFRS financial statements for the year ended 31 December 2019.
Amendments to IFRSs effective for the financial year ending 31 December 2019 are not expected to have a material impact on the group.
After the acquisition of Hemtex AB and its subsidiaries on 15 May 2019, the Group reports operating segments in accordance with how the corporate management (the chief operating decision maker) makes, follows up and evaluates its decisions. The operating segments have been identified on the basis of internal management information that is periodically reviewed by the management and used as a basis for resource allocation and key performance review. Hemtex operates in Sweden, Finland and Estonia.
The Group accounts for business combinations using the acquisition method when control is transferred to the Group. The consideration transferred in the acquisition is measured at fair value, as are the identifiable net assets acquired. Any goodwill that arises is tested annually for impairment. Transaction costs are expensed as incurred.
The Preparation of interim financial statements requires management to make judgments, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets and liabilities, income and expenses. Actual results may differ from these estimates.
In preparing these interim financial statements the significant judgements made by management inn applying the Group's accounting policies and the key sources of estimation uncertainty were the same as those applied to the consolidated financial statements for the year ended 31 December 2019.
Kid Group reports segments in accordance with how the chief operating decision maker makes, follows up and evaluates its decisions. Within the Group, Kid Interior relates to Norway and Hemtex relates to Sweden with a few stores in Estonia and Finland.
The Group also sells home textiles through the Group's online websites. Over 98% of the products are sold under own brands.
Group adjustments include integration costs.
| Group | ||||
|---|---|---|---|---|
| (Amounts in NOK thousand) | KID Interior | Hemtex | adjustments | Total |
| Revenue | 287,145 | 220,889 | 508,034 | |
| COGS | -117,656 | -80,951 | -4,118 | -202,726 |
| Gross profit | 169,488 | 139,937 | -4,118 | 305,307 |
| Other operating revenue | 115 | 212 | 326 | |
| Operating expense (OPEX) | -129,613 | -111,355 | -1,184 | -242,152 |
| EBITDA | 39,990 | 28,794 | -5,303 | 63,481 |
| Operating profit | -4,306 | -10,430 | -5,303 | -20,039 |
| Gross margin (%) | 59.0 % | 63.4 % | - | 60.1 % |
| OPEX to sales margin (%) | 45.1 % | 50.4 % | - | 47.7 % |
| EBITDA margin (%) | 13.9 % | 13.0 % | - | 12.5 % |
| Inventory | 339,582 | 227,230 | 704 | 567,516 |
| Total assets | 2,868,726 | 448,362 | 4,635 | 3,321,723 |
In Q2 2019 Kid ASA secured a NOK 922,000 thousand financing structure with Nordea Bank for the combined Kid and Hemtex group. In Q1 2020 the group obtained an additional NOK 25,000 thousand facility (TL C). At the balance sheet date, the Group has the following borrowing facilities:
| Utilised | Total | ||||
|---|---|---|---|---|---|
| (Amounts in NOK thousand) | 31.03.2020 | Facility Interest | Maturity | Repayment | |
| TL A | 150,000 | 150,000 3 months Nibor + 1.30% | 3 years | Installments ¹ | |
| TL B | 395,000 | 395,000 Fixed rate at 1,876% + 1.10% | 3 years | At maturity | |
| TL C | 25,000 | 25,000 3 months Nibor + 1.30% | 3 years | Installments ² | |
| Revolving credit facility | 50,000 | 130,000 3 months Nibor + 1.10% | 2 years | At maturity | |
| Overdraft | - | 247,000 1 week IBOR + 1.10% | 12 months | At maturity | |
670,902 947,000
¹ NOK 50,000 thousand annually in semiannual installments
² NOK 8,333 thousand anually in annual installments
The facilities are secured by NOK 1,200,000 thousand of inventory, accounts receivables and operating equipment in Kid Interiør AS and Hemtex AB and the shares in Kid Interiør AS and Hemtex AB. The overdraft facility is in addition secured by a floating charge of SEK 300,000 thousand.
In addition to the facilities described above, Kid has secured a NOK 115 million L/C- and guarantee facility.
| Q1 2020 | Q1 2019 | FY 2019 | |
|---|---|---|---|
| Weighted number of ordinary shares | 40,645,162 | 40,645,162 | 40,645,162 |
| Net profit or loss for the year | -10,319 | -465 | 207,950 |
| Earnings per share (basic and diluted) (Expressed in NOK per share) | -0.25 | -0.01 | 5.12 |
The Group's related parties include its associates, key management, members of the board and majority shareholders.
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 first quarter of 2020 and 2019:
| Related Party Transactions | Q1 2020 | Q1 2019 |
|---|---|---|
| Vågsgaten Handel AS with subsidiaries (Store rental) | 277 | 235 |
| Management for Hire | 375 | 0 |
| Total | 652 | 235 |
The chairman of the board, Petter Schouw-Hansen, has been employed by Kid Interiør AS to perform integration work related to Hemtex AB. For the first quarter of 2020 the payment of salary amounts to NOK 375 thousand. The work is approved by the board as per Kid corporate governance policies.
| (amounts in NOK thousand) | Right of use Asset | PPE | Trademark | Other Intangibles | Goodwill |
|---|---|---|---|---|---|
| Balance 31.12.2019 | 822,604 | 179,233 | 1,510,165 | 10,085 | 65,402 |
| Exchange differences | 22,990 | 4,958 | 5,164 | 671 | 6,677 |
| Additions | 67,481 | 7,853 | - | 424 | - |
| Depreciation and amortisation | -70,681 | -13,984 | - | -1,156 | - |
| Balance 31.03.2020 | 842,394 | 178,060 | 1,515,329 | 10,024 | 72,079 |
| (amounts in NOK thousand) | Right of use Asset | PPE | Trademark | Other Intangibles |
|---|---|---|---|---|
| Balance 31.12.2018 | - | 91,530 | 1,459,585 | 9,835 |
| IFRS 16 transition effects (see note 12) | 674,700 | - | - | -6,532 |
| Balance 01.01.2019 | 674,700 | 91,530 | 1,459,585 | 3,303 |
| Additions | 25,500 | 12,700 | - | - |
| Depreciation and amortisation | -33,500 | -9,100 | - | -600 |
| Balance 31.03.2019 ¹ | 666,700 | 95,130 | 1,459,585 | 2,703 |
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. Forwardlooking 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, Gilhusveien 1, 3426 Gullaug Main office: +47 940 26 000, Customer service: +47 00 20 00 www.kid.no
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