Annual Report (ESEF) • Apr 13, 2023
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Download Source FileUntitled KID ASA ANNUAL REPORT 2022 Financial statements for 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 KID ASA ANNUAL REPORT Financial highlights 2022 ......................................................4 About KID ............................................................................6 Historical milestones & company facts .................................. 8 Nordic presence ................................................................. 12 At a glance 2022 ................................................................13 Letter from the CEO ............................................................14 Group management ............................................................16 Corporate governance ........................................................18 Board of Directors’ report ...................................................23 Consolidated financial statement ........................................30 Notes to the consolidated financial statement .....................37 Parent company financial statement ...................................71 Notes to the parent company financial statement .................76 Alternative performance measures and definitions ............... 84 Responsibility statement .................................................... 85 Independent Auditor’s report ...............................................87 Financial calendar .............................................................92 Contents FINANCIAL STATEMENTS KID ASA 2022 REPORTS STATEMENTS & KID ASA Annual Report 20224 FINANCIAL HIGHLIGHTS 2022 Financial hightlights KID ASA Annual Report 2022 5 Group 2022 Group 2021 Q4Q3Q2Q1 7.3 9.3 2.9 0.1 0.2 1.8 5.6 Group 2021 Group 2022 -0.4 2022 2021 Q4Q3Q2Q1 39.5 102.2 147.5 301.4 36.5 94.2 70.8 224.8 2021 2022 2022 2021 Q4Q3Q2Q1 2021 2022 569.8 676.3 750.6 1,100 604.6 730.1 734.7 1,108 Like-for-like growth (%) EBITDA (MNOK) * Excluding IFRS 16 effects Revenues (MNOK) 230 240 250 260 270 280 290 2022 2021 Q4Q3Q2Q1 277 279 281 286 283 284 283 286 2021 2022 Number of physical stores (Period end) Financial hightlights KID ASA Annual Report 20226 Kid and Hemtex is the leading pure-play specialist within home textile and interior market in Norway and Sweden, respectively. Both brands are beneting from unbeatable brand recognition and top-of-mind awareness. Hemtex is also present in Finland and Estonia. rough in-depth market analysis, monitoring and adapting to underlying consumer trends and demands, supported by in- house 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. e 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 oce and central warehouse for the Norwegian market is located, while Hemtex’ oces and warehouse facilities are located in Borås, Sweden. ABOUT KID 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. About Kid From the headquarter in Lier. KID ASA Annual Report 2022 7 About Kid Inspiration for every home OUR MISSION KID ASA Annual Report 20228 1937 2015 2019 195319941997 2005 2009 2012 1970 s Acquisition of Hemtex Kid Interior was established by Jul Andrew Gundersen as JAG shoe factory Hemtex was aquired May 2019 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 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 The company changed its name to Kid Interior and began using the Kid brand for selected products The third generation of the Gundersen family takes over the business, which has now grown to 24 stores 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 DNB Bank takes control of Kid Interior following a long-term debt default Gjelsten Holding takes 100 percent ownership of the company, which now comprises 111 stores after a successful turnaround An increased focus on interior textiles and the start of its own production COMPANY FACTS Company facts Oslo Stock Exchange Successful turnaround DNB Bank Shares sold Establishment The first shop Own production Change of name Growing KID ASA Annual Report 2022 9 Company facts 10.8% ONLINE SHARE 14.4% ONLINE SHARE of total revenue (Hemtex) 8.7% ONLINE SHARE of total revenue (Kid) 3,178 MILL NOK IN REVENUES 2,298 EMPLOYEES (Kid Interior + Hemtex) 6.13 EPS 3.1% LIKEFORLIKE GROWTH 2.8% (Hemtex) 3.2% (Kid) KID ASA Annual Report 202210 Kid, Sartor in Bergen Kid, Sartor in Bergen Hemtex Lippulaiva Finland KID ASA Annual Report 2022 11 Kid, Storgata in Oslo Kid, Sartor in Bergen Kid KID ASA Annual Report 202212 NORDIC PRESENCE 2022 286 NUMBER OF STORES AT YEAR END (KID 156 / HEMTEX 130) 156 116 6 8 CHANGES DURING THE YEAR 5 NEW STORES (Kid 3 / Hemtex 2) 18 REFURBISHED STORES (Kid 9 / Hemtex 9) 14 RELOCATED STORES (Kid 6 / Hemtex 8) 4 CLOSED STORES (Kid 0 / Hemtex 4) Nordic presence KID ASA Annual Report 2022 13 AT A GLANCE 2022 2.7 (Norway: 1.3 million / Sweden: 1.4 million) PROPOSED DIVIDEND PER SHARE PAID DIVIDEND IN DECEMBER 2022 AGGREGATED DIVIDEND OF DIVIDEND % OF ADJ. NET PROFIT 3.00 2.50 90% 5.50 58.1% (62.6% in 2021) 426.2 EBITDA OF MNOK At a glance Exclusive of IFRS 16 effects (MNOK 590.6 in 2021) MILLION CUSTOMER CLUB MEMBERS GROSS MARGIN OF KID ASA Annual Report 202214 DEAR SHAREHOLDERS, 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. e new categories include European manufactured furniture like beds and sofas. e concept was launched in one pilot store and on our Norwegian e-commerce platform before Christmas and has had a promising start. e gross margin for these new categories is expected to be 35-40% including logistics and last- mile distribution. We will continue to roll out Kid Extended pilots and expect to have launched a total of ve pilot stores in Norway by the end of Q2 2023. e 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 long- term 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 condence. 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 eorts 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 Letter from CEO 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. KID ASA Annual Report 2022 15 Kid Interior and Hemtex AB are nationwide companies for textiles, home & living, oering a large variety of curtains, bed linens and other interior products, with presence in Norway, Sweden, Finland and Estonia KID ASA Annual Report 202216 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. Anders Lorentzson (MD Hemtex) 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 Fjeld (CEO) Group management GROUP MANAGEMENT KID ASA Annual Report 2022 17 KID ASA Annual Report 202218 1. IMPLEMENTATION AND REPORTING OF CORPORATE GOVERNANCE PRINCIPLES Kid ASA (Kid or the company) consider good corporate governance key to create shareholder value through transparency, fairness and trustworthiness. e company has developed these principles in compliance with laws, regulations and ethical standards. e 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. e Code of Practise is available at www.nues.no 2. BUSINESS Kid’s objectives are dened in the company’s articles of association and state that: “e 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) e company’s strategy is to ensure growth while maintaining cost control to ensure a continued strong cashow through: a. Concept development and category expansion to ensure like-for-like sales growth b. Inspirational stores through continuous upgrading the store portfolio c. Opening of new stores d. Digital footprint and e-commerce e company’s risk prole is deemed to be low considering the nature of the business and the geographical span. Kid has a risk program which continuously identies and assesses current risks. 3. EQUITY AND DIVIDENDS Kid considers its equity ratio sucient considering the group’s strategy and risk prole. e dividend policy is to pay out 80-100 percent of adjusted net prot, where adjustments are made for signicant one-o events. e Annual General Meeting approved the proposed dividend of NOK 4.00 per share in May 2022. e 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. e dividend is subject to approval at the annual general meeting in May 2023. e board of directors has a mandate to increase the company’s share capital by up to NOK 4,877,419. e authority may only be used to issue shares as consideration and to raise new equity in order to strengthen the company’s nancing. e authority remains in force until the annual general meeting in 2023, but in no event later than 30 June 2023. 4. EQUAL TREATMENT OF SHAREHOLDERS AND TRANSACTIONS WITH RELATED PARTIES 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. 5. FREELY NEGOTIABLE SHARES All shares in the company have equal rights and are freely tradeable. 6. GENERAL MEETINGS e general meeting is the arena in which all investors can exercise their right to make fundamental decisions for the company. e 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 ecient forum for shareholders and the board to express their views. e 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. e date of the meeting is made available in the nancial calendar. e 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 suciently comprehensive and detailed to allow shareholders to form a view on all matters to be considered at the meeting. e 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. e 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. CORPORATE GOVERNANCE AT KID ASA Corporate governance at Kid ASA KID ASA Annual Report 2022 19 KID ASA Annual Report 202220 7. NOMINATION COMMITTEE e general meeting has elected a nomination committee and approved a set of guidelines for the committee’s work. e nomination committee is also laid down in the articles of association. e 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. e nomination committee consists of two members, who are independent of the board and the company’s executive management. e current members are Sten-Arthur Sælør and Geir Moe. 8. CORPORATE ASSEMBLY AND BOARD OF DIRECTORS: COMPOSITIONS AND INDEPENDENCE 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. e board of directors at Hemtex AB consists of Group Executive Management. e 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. e board members have a combined experience and competence in the elds of retail and consumer goods, as well as nance, 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. e 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. 9. WORK OF THE BOARD OF DIRECTORS e board of directors produces an annual plan for its work, with particular emphasis on objectives, strategy and implementation. e 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 nancial development and forecasted earnings and cashow. e board evaluates its performance and expertise annually. e 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. e 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. 10. RISK MANAGEMENT AND INTERNAL CONTROL Kid is exposed to nancial 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. e company provides the board with monthly reports on the group’s nancial performance and prepares quarterly reports that are made public. e 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. e board of directors, with assistance from the audit committee, carries out regular reviews of the company’s most signicant areas of risk exposure and its internal control arrangements. 11. REMUNERATION OF THE BOARD OF DIRECTORS e board of directors are presented separately in the annual report. e nomination committee proposes the remuneration of the board of directors at the annual meeting. e proposition takes into account the board’s responsibility, expertise, time commitment and the complexity of the company’s activities. e board has one sub-committee in the audit committee. e 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 specic 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. Corporate governance at Kid ASA KID ASA Annual Report 2022 21 12. REMUNERATION OF EXECUTIVE MANAGEMENT e board of directors has a set of guidelines for the remuneration of executive personnel. e board also directly determines the remuneration for the CEO. e CEO is, in consultation with the chairman of the board, responsible for determining the remuneration of other members of the executive management. e board of directors and GM have approved an incentive programme for executive management which aims to align the nancial interests of Kid’s senior management and its shareholders. e incentive programme is based on EBITDA budget achievement with a capped maximum level. e 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. e 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. e remuneration for the executive management is also disclosed in the notes to the consolidated accounts in the annual report. 13. INFORMATION AND COMMUNICATIONS 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. e company publishes a nancial calendar for the upcoming year in the fourth quarter. e 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. 14. TAKEOVERS Kid has guidelines for how it will act in the event of a takeover bid in accordance with its code of conduct. ese 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 aected as little as possible. e shareholders will be provided with timely and sucient information in the case of a takeover bid, with the intention to enable the investors to have an informed view of the situation. e board of directors will also issue a statement making a recommendation as to whether shareholders should or should not accept the oer. 15. AUDITOR e auditor annually submits to the audit committee the main features of its plan for the audit of the company. e 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 gures and reports all material matters on which there has been disagreement between the auditor and the executive management of the company. e auditor presents annually to the audit committee a review of the company’s internal control procedures, including identied weaknesses and proposals for improvement. e 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. e 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 specic assignments. Corporate governance at Kid ASA KID ASA Annual Report 202222 KID ASA Annual Report 2022 23 BOARD OF DIRECTORS’ REPORT 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”. e 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. e 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 oered at aordable prices both online and through stores located in major population centres. e group’s head oce is located in the municipality of Lier, Norway. SUMMARY OF THE YEAR 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 prots 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. e 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 oer 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. e concept includes extension of current categories and new categories (e.g. European manufactured furniture like beds and sofas). e 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. e 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. FINANCIAL RESULTS (Figures from last year are in brackets, unless otherwise specied) INCOME STATEMENT FOR THE GROUP Revenues for 2022 were MNOK 3 178.0 (MNOK 3 097.1). e like-for-like sales growth 1 was 3.2% and 2.8% for Kid Interiør and Hemtex, respectively. Online sales 2 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 benet expenses, ended at 35.7% of revenues up from 34.6% in 2021. Due to decreased gross margins and higher operating expenses, operating prot (EBIT) was reduced to MNOK 369.2 (MNOK 541.2). Net nancial expenses amounted to MNOK 47.5 (MNOK 56.0). Net income for 2022 was MNOK 249.2 (MNOK 384.4). Board of Directors’ report 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 KID ASA Annual Report 202224 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. 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 Petter Schouw-Hansen Chairman Appointed: May 2019 BALANCE SHEET FOR THE GROUP 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 back- oce 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 nancial instruments. Net interest-bearing debt was MNOK 1 257.7 of which MNOK 781.8 is related to nancial leases. Net interest-bearing debt excluding nancial leases as dened 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). e group has an additional overdra 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. e equity ratio at the end of the year was 36.5 % compared to 35.7% in 2021. CASH FLOW FOR THE GROUP Cash ow from operations was MNOK 547.8 (MNOK 673.7). e inventory level increased by MNOK 29.2 (MNOK 180.3) due to an increased number of stores and new categories. Other signicant changes from 2021 included decreased trade creditors following delayed and reduced goods purchases, and lower bonus provisions. Cash ow from investments was MNOK -143.1 (MNOK -92.6). e investment level in 2022 reects opening, relocation, and refurbishment of stores as well as investments in the new warehouse in Sweden and technical infrastructure and back- oce systems. Cash ow from nancing was MNOK -569.1 (MNOK -643.7), negatively aected 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 prot, investments and dividend payments. e board of directors nds that the group had a solid liquidity position as of 31. December 2022. Board of Directors’ report KID ASA Annual Report 2022 25 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. Karin Bing Orgland Board Member Appointed: August 2015 ANNUAL RESULT ALLOCATION Earnings per share was NOK 6.13 in 2022. e 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 prot 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 GOING CONCERN e board of directors has made appropriate enquiries and formed a judgement at the time of approving the nancial statements that there is a reasonable expectation that Kid ASA has adequate resources to continue in operational existence for the foresee- able future. For this reason, the board of directors continues to adopt the going concern basis in preparing the nancial statements in accordance with the Norwegian Accounting Act and the Norwegian Company Act. is 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%. e board of directors believes the equity and liquidity are sucient, given the company’s operational commitments, future plans and achieved results. is is further supported by the results of the Group as a whole. CORPORATE GOVERNANCE, ORGANISATION, WORKING CONDITIONS AND ENVIRONMENT e group had a total of 2,298 employees, which corresponded to 958 full-time equivalents at the end of 2022. e parent company had no employees. e 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 inuence. e 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 Ocers liability insurance with AIG Europe S.A. covering pure nancial 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. 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. Liv Berstad Board Member Appointed: May 2020 Board of Directors’ report KID ASA Annual Report 202226 For information on remuneration, please refer to Remuneration report 2022 as approved by the Board of Directors. e 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. GENDER EQUALITY, DISCRIMINATION, AND HARASSMENT e group encourages diversity and pursues a non- discrimination policy, with full gender equality. Furthermore, the group promotes ‘equal pay for equal work’, whereby the most qualied candidate shall hold a position, regardless of gender, religion or sexual orientation. e group promotes the objective of laws against discrimination through recruitment, salary and employment conditions, promotion, development possibilities and protection against harassment. e 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 shied 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 oce are women and the management team consisted of three men. e board of directors of the parent company consists of three women and three men. e 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. ENVIRONMENTAL REPORTING Kid believes that environmental and nancial performance oen go hand-in-hand and is constantly striving to identify and implement measures that support this. e 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 aects us all and climate emission issues are material for the Kid Group. e Group is calculating its green- house 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. e Kid Group commits to reduce absolute scope Board of Directors’ report 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). Gyrid Skalleberg Ingerø Board Member Appointed: May 2020 Espen Gundersen Board Member Appointed: May 2022 * Target yet to be validated by Science Based target KID ASA Annual Report 2022 27 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. roughout 2022 the focus has been to create a CO2e reduction roadmap and to evolve the work with CO2e reduction for the coming years. e group works actively to prevent adverse environmental- and 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. e 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. FINANCIAL RISKS CURRENCY RISK To reduce foreign currency risks, Kid hedges net foreign currency cash ows by entering into futures contracts. is 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. e company has a policy to hedge 100 % of USD and EUR currency goods purchases for 9-11 months forward. e policy has been formally approved by the board of directors. Exchange rate uctuations may impact Kids income statement, balance sheet and/or cash ows as a result of the reporting currency being dierent from the functional currency of the foreign subsidiaries in Hemtex. e Group mainly operates in the Nordic markets and its foreign exchange rate uctuation risk Board of Directors’ report KID ASA Annual Report 202228 is therefore limited. Both revenue and operating expenses are incurred in local currency, reducing the exposure to foreign exchange rate uctuations in the statement of prot or loss. CREDIT AND LIQUIDITY RISK Kid has limited exposure to credit risk. e 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 ow is updated regularly, and the group has sucient cash and credit facilities available. INTEREST RATE RISK Kid has a oating 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 xed interest rate of 1.876% maturing August 2029 and MSEK 55 has been hedged through a cross-currency interest swap agreement securing a xed interest rate of 1.460 % and the exposure to SEK maturing November 2024. To the extent of the board of directors’ knowledge, the above- mentioned risk factors represent the most material nancial risk factors that may be of importance in order to evaluate the company’s assets, liabilities, nancial position and prots. OUTLOOK FOR 2023 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 oer our full assortment range and maintain growth. In 2020, the board of directors approved a strategic protable 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 ve 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 ve pilot stores will be operational in Norway, all of which are approximately three times as large in oor space compared Board of Directors’ report KID ASA Annual Report 2022 29 to our current average store. e extended assortment is also available in our Norwegian online store, which is expected to be the most important sales channel. e 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. e construction of the warehouse is progressing as planned and we expect to be fully operative in May. We are condent that Hemtex will operate more cost eciently, 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. e 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 eciently across segments. e historically high freight costs aected 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. e group paid a total of MNOK 291 in 2022 related to xed store- and warehouse rent. e rent is subject to an annual index regulation. Due to unusual high ination in all our markets in 2022, the index regulation for 2023 will be in the range of 8-10%. Cost eectiveness remains a high priority for the Group. e board of directors remains condent in Kid’s solid nancial situation and liquidity. e objectives for Kid ASA in the medium-term are: • A continued, strong nancial performance driven by like-for-like growth of 3-4 % in a normalised market, stable gross margins in line with the past 10 years, and operating expenses relative to sales below 45%. • An optimized store portfolio of approximately 320 fully owned stores. Capital expenditures related to maintenance is expected to run at a normalised annual level of MNOK 80-90, with an additional MNOK 2.0 per new store opening. • To maintain moderate leverage and an ecient balance sheet. • A target dividend pay-out ratio of 80-100% of adjusted net prot with semi-annual payments. e distribution policy is dynamic, and any excess capital will be returned to shareholders. Lier, 13 April 2023 e board of directors, KID ASA Petter Schouw-Hansen Chairperson Rune Marsdal Board member Liv Berstad Board member Gyrid Skalleberg Ingerø Board member Karin Bing Orgland Board member Espen Gundersen Board member Anders Fjeld Chief Executive Ocer KID ASA Annual Report 202230 CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME Consolidated statement of prot and loss The notes are an integral part of these financial statements. (All amounts in NOK 1000 unless otherwise stated) Year ended 31st December 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 KID ASA Annual Report 2022 31 CONSOLIDATED STATEMENT OF FINANCIAL POSITION Consolidated statement of nancial position The notes are an integral part of these financial statements. (All amounts in NOK 1000 unless otherwise stated) Group 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 KID ASA Annual Report 202232 CONSOLIDATED STATEMENT OF FINANCIAL POSITION Consolidated statement of nancial position The notes are an integral part of these financial statements. Lier, 13 April 2023 e board of directors, KID ASA Petter Schouw-Hansen Chairperson Rune Marsdal Board member Liv Berstad Board member Gyrid Skalleberg Ingerø Board member Karin Bing Orgland Board member Espen Gundersen Board member Anders Fjeld Chief Executive Ocer (All amounts in NOK 1000 unless otherwise stated) Group 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 KID ASA Annual Report 2022 33 KID ASA Annual Report 202234 CONSOLIDATED STATEMENT OF CHANGES IN EQUITY Consolidated statement of changes in equity (All amounts in NOK 1000 unless otherwise stated) 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 KID ASA Annual Report 2022 35 CONSOLIDATED STATEMENT OF CASH FLOWS The notes are an integral part of these financial statements. Consolidated statement of cash ows (All amounts in NOK 1000 unless otherwise stated) Group 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 Annual Report 202236 NOTES KID GROUP KID ASA Annual Report 2022 37 KID GROUP NOTES NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS NOTE 1 | GENERAL INFORMATION 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. NOTE 2 | SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES 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. 2.1 Basis of preparation 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. 2.1.1 New and amended standards adopted by the Group 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. 2.1.2 Standards issued but not yet effective 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. 2.2 Consolidation and equity accounting 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. Acquisition-related costs are expensed as incurred. 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. KID ASA Annual Report 202238 NOTES KID GROUP 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. 2.3 Segment reporting 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. 2.4 Foreign currency translation (a) Functional and presentation currency 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. KID ASA Annual Report 2022 39 KID GROUP NOTES (b) Transactions and balances 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 withinfinance income or costs’. 2.5 Property, plant and equipment 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. 2.6 Intangible assets Goodwill 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. Trademarks and licences 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. 2.7 Impairment of non-financial assets 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. KID ASA Annual Report 202240 NOTES KID GROUP 2.8 Financial assets 2.8.1 Classification 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. (a) Financial assets at fair value through profit or loss 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. (b) Financial assets at amortised cost Trade receivables, based on the classification model SPPI are held at amortized cost. All trade receivables are classified as current assets. (c) Financial assets at fair value through other comprehensive income 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. 2.8.2 Recognition and measurement 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. 2.9 Offsetting financial instruments 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. KID ASA Annual Report 2022 41 KID GROUP NOTES 2.10 Impairment of financial assets Financial assets carried at amortised cost - trade receivables 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. 2.11 Derivative financial instruments and hedge accounting policies 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. 2.12 Inventories, purchased goods and changes in inventory 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. 2.13 Cash and cash equivalents 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. 2.14 Share capital 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. 2.15 Trade payables 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. 2.16 Liabilities from financial institutions 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. KID ASA Annual Report 202242 NOTES KID GROUP 2.17 Current and deferred income tax 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. 2.18 Provisions 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. 2.19 Revenue recognition 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. a) Sales of goods 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. (b) Internet revenue 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. 2.20 Interest income Interest income arises primarily from interest received on short-term bank deposits, and is recognised as earned. KID ASA Annual Report 2022 43 KID GROUP NOTES 2.21 Dividend distribution 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. 2.22 Employee benefits 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. (a) Pension obligations 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. 2.23 Lease contracts 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: • fixed payments, less any lease incentives receivable • amounts expected to be payable by the group under residual value guarantees • the exercise price of a purchase option if the group is reasonably certain to exercise that option - and payments of penalties for terminating the lease, if the lease term reflects the group exercising that option. 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 straight- line 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. KID ASA Annual Report 202244 NOTES KID GROUP NOTE 3 | FINANCIAL RISK MANAGEMENT 3.1 Financial risk factors 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. (a) Market risk (i) Foreign exchange risk 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 Effect on OCI (FX derivatives SEK/USD) 16,169 -16,169 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. (ii) Interest risk 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 IBOR- reform 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. KID ASA Annual Report 2022 45 KID GROUP NOTES 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 (b) Credit risk 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. (c) Liquidity risk Liquidity risk is the risk that the group will not be able to meet its financial obligations as they fall due. The group has capital- intensive 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 KID ASA Annual Report 202246 NOTES KID GROUP 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. 3.2 Capital management 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 (includingcurrent 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. 3.3 Fair value estimation The Group has financial instruments carried at fair value. The different levels have been defined as follows: • Quoted prices (unadjusted) in active markets for identical assets or liabilities (Level 1). • Inputs other than quoted prices included within level 1 that are observable for the asset or liability, either directly (that is, as prices) or indirectly (that is, derived from prices) (Level 2). • Inputs for the asset or liability that are not based on observable market data (that is, unobservable inputs) (Level 3). 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 KID ASA Annual Report 2022 47 KID GROUP NOTES NOTE 4 | SEGMENT INFORMATION 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. Geographical information 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. KID ASA Annual Report 202248 NOTES KID GROUP 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 2021 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 KID ASA Annual Report 2022 49 KID GROUP NOTES NOTE 5 | CRITICAL ACCOUNTING ESTIMATES AND SIGNIFICANT JUDGEMENTS 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. 5.1 Critical accounting estimates and assumptions 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. 5.1.1 Estimated value-in-use to support the value of trademark and goodwill 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. 5.1.2 Critical judgements in determining the lease term 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. 5.2 Critical judgements in applying the entity’s accounting policies There has not been identified any other critical judgements in applying the entity’s accounting policies. KID ASA Annual Report 202250 NOTES KID GROUP NOTE 6 | EMPLOYEE REMUNERATION AND AUDIT FEES 6a Employee benefit expense 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 2022 2021 Statutory audit 2,245 1,967 Other assurance services 48 68 Tax related services 137 44 Other assistance 0 7 Total fees 2,430 2,086 KID ASA Annual Report 2022 51 KID GROUP NOTES NOTE 7 | FINANCE INCOME AND COSTS 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. NOTE 8 | INVESTMENTS IN JOINT VENTURES AND SUBSIDIARIES 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 business Nature of relationship Measurement method Ownership share Carrying 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. KID ASA Annual Report 202252 NOTES KID GROUP Commitments and contingent liabilities in respect of joint ventures 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. NOTE 9 | INCOME TAX EXPENSE 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 % Reconciliation of payable tax Norway Sweden Total Payable tax 31.12.21 81,174 9,161 90,335 Paid taxes during the year -81,565 -24,006 -105,571 Payable tax on this years result 58,136 12,360 70,496 Tax receivable classified as other receiveables per 31.12.22 2,485 2,485 Payable tax 31.12.22 57,745 -0 57,744 KID ASA Annual Report 2022 53 KID GROUP NOTES 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 NOTE 10 | EARNINGS PER SHARE 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. KID ASA Annual Report 202254 NOTES KID GROUP NOTE 11 | PROPERTY, PLANT AND EQUIPMENT 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. KID ASA Annual Report 2022 55 KID GROUP NOTES NOTE 12 | INTANGIBLE ASSETS 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 Impairment tests for trademark and goodwill 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. Trademark Kid Interior 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. KID ASA Annual Report 202256 NOTES KID GROUP 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. Trademark and goodwill Hemtex 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. KID ASA Annual Report 2022 57 KID GROUP NOTES NOTE 13 | FINANCIAL INSTRUMENTS 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 KID ASA Annual Report 202258 NOTES KID GROUP 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 NOTE 14 | TRADE RECEIVABLES Trade receivables 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 Other receivables consists mainly of prepayments for operating expenses and rental payments for retail locations. KID ASA Annual Report 2022 59 KID GROUP NOTES NOTE 15 | INVENTORIES 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 Recognized loss on inventories 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 NOTE 16 | CASH AND CASH EQUIVALENTS 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. KID ASA Annual Report 202260 NOTES KID GROUP NOTE 17 | SHARE CAPITAL AND PREMIUM Share capital (all amounts in NOK) 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 % KID ASA Annual Report 2022 61 KID GROUP NOTES 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 KID ASA Annual Report 202262 NOTES KID GROUP NOTE 18 | LIABILITIES TO FINANCIAL INSTITUTIONS 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 (a) Bank loans 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. KID ASA Annual Report 2022 63 KID GROUP NOTES 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. KID ASA Annual Report 202264 NOTES KID GROUP NOTE 19 | OTHER OPERATING EXPENSES AND OTHER SHORT TERM LIABILITIES 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 NOTE 20 | POSTEMPLOYMENT BENEFITS 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. NOTE 21 | RELATED PARTIES 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 - KID ASA Annual Report 2022 65 KID GROUP NOTES NOTE 22 | HEDGE ACCOUNTING AND RESERVES Cash flow hedge reserve 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 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. KID ASA Annual Report 202266 NOTES KID GROUP Currency hedges 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. Interest hedges 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. Reconciliation of Other reserves 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 KID ASA Annual Report 2022 67 KID GROUP NOTES 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 - NOTE 23 | NET DEBT RECONCILIATION 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 KID ASA Annual Report 202268 NOTES KID GROUP 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 KID ASA Annual Report 2022 69 KID GROUP NOTES NOTE 24 | LEASES 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 KID ASA Annual Report 202270 NOTES KID GROUP NOTE 25 | SUBSEQUENT EVENTS There have been no significant events after the end of the reporting period. FINANCIAL STATEMENTS KID ASA 2022 Statement of income ..........................................72 Balance sheet - Assets .......................................73 Balance sheet - Equity and liabilities ...................74 Cash flow statement. .........................................75 Notes to the financial statements .......................76 Contents KID ASA Annual Report 202272 KID ASA STATEMENT OF INCOME (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 Kid ASA - Statement of Income KID ASA Annual Report 2022 73 KID ASA BALANCE SHEET / ASSETS (All amounts in NOK 1000 unless otherwise stated) Note 2022 2021 NONCURRENT 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 Kid ASA - Balance sheet KID ASA Annual Report 202274 KID ASA BALANCE SHEET / EQUITY & LIABILITIES (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. Kid ASA - Balance sheet Lier, 13 April 2023 e board of directors, KID ASA Petter Schouw-Hansen Chairperson Rune Marsdal Board member Liv Berstad Board member Gyrid Skalleberg Ingerø Board member Karin Bing Orgland Board member Espen Gundersen Board member Anders Fjeld Chief Executive Ocer KID ASA Annual Report 2022 75 KID ASA CASH FLOW STATEMENT (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 Kid ASA - Cash ow statement KID ASA Annual Report 202276 NOTES KID ASA KID ASA NOTES TO THE FINANCIAL STATEMENTS | ACCOUNTING PRINCIPLES General The annual accounts have been prepared in compliance with the Accounting Act and accounting principles generally accepted in Norway. Currency The parent company accounts are reported in Norwegian kroner (NOK) which is also the Functional currency for the parent company. Use of estimates 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. Measurement of revenues and costs 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. Investments in other companies 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. Classification of balance sheet items 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 long- term receivables are, however, not classified as short-term liabilities and current assets. Purchase costs 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. Asset impairments 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 Liabilities, with the exception of certain liability provisions, are recognised in the balance sheet at nominal amount. Taxes 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. KID ASA Annual Report 2022 77 KID ASA NOTES 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). Currency 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 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. Cashflow statement 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. KID ASA Annual Report 202278 NOTES KID ASA NOTE 1 | SUBSIDIARIES, ASSOCIATED COMPANIES, AND JOINT VENTURES Parent company 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. NOTE 2 | DEBTORS AND LIABILITIES 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 NOTE 3 | BALANCE WITH GROUP COMPANIES, ETC. 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. KID ASA Annual Report 2022 79 KID ASA NOTES NOTE 4 | SHAREHOLDERS’ EQUITY 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 NOTE 5 | SHARE CAPITAL AND SHAREHOLDER INFORMATION 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% KID ASA Annual Report 202280 NOTES KID ASA NOTE 6 | TAXES 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 Components of the income tax expenses 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 KID ASA Annual Report 2022 81 KID ASA NOTES NOTE 7 | PAYROLL EXPENSES, NUMBER OF EMPLOYEES, REMUNERATIONS, LOANS TO EMPLOYEES, ETC. 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. Expensed audit fees 2022 2021 Statutory audit (incl. technical assistance with financial statements) 719 621 Other assurance services - - Tax advisory fee (incl. technical assistance with tax return) - - Other assistance (IFRS conversion and quarterly reports) Total audit fees 719 621 NOTE 8 | SPECIFICATION OF FINANCIAL INCOME AND EXPENSES Financial income 2022 2021 Interest income from group entities 3,513 3740 Interest income 830 22 Other financial income incl currency gain - 5 Total financial income 4,343 3,767 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 NOTE 9 | RELATEDPARTY TRANSACTIONS 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 Annual Report 202282 NOTES KID ASA NOTE 10 | FINANCIAL MARKET RISK Kid ASA is exposed to interest rate risk on long term debt and foreign exchange risk on long term receivable. Interest risk 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. NOTE 11 | INTANGIBLE ASSETS 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 NOTE 12 | CASH AND CASH EQUIVALENTS 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 NOTE 13 | SUBSEQUENT EVENTS There have been no significant events after the end of the reporting period. KID ASA Annual Report 2022 83 KID ASA Annual Report 202284 ALTERNATIVE PERFORMANCE MEASURES AND DEFINITIONS Kid ASA - Alternative performance measures and denitions • LIKEFORLIKE REVENUE are revenue from stores that were in operation from the start of last scal 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 gure for the KID Group and the user of nancial statements as it illustrates the underlying organic revenue growth. • GROSS PROFIT is dened as revenue minus the cost of goods sold (COGS). e gross prot represents sales revenue that the Group retains aer incurring the direct costs associated with the purchase and distribution of the goods. • GROSS MARGIN is dened as Gross prot divided by Revenue. e gross margin reects the percentage margin of the sales revenue that the Group retains aer 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 benets expense and Other operating expenses divided by Revenue. e OPEX to sales margin measures operating cost eciency 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. e performance measure is an important key gure for Kid Group and considered useful to the users of the nancial statements when evaluating operational protability 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. e performance measure is an important key gure for Kid Group and considered useful to the users of the nancial statements when evaluating operational eciency on a more variable cost basis as is excludes amortisation and depreciation expense related to capital expenditure. • EBIT (earnings before interest, tax) is operating prot. e performance measure is considered useful to the users of the nancial statements when evaluating operational protability. • EBIT MARGIN is EBIT divided by Total revenue. e performance measure is an important key gure for Kid Group and considered useful to the users of the nancial statements when evaluating operational eciency. • NET CAPITAL EXPENDITURE represent the cash ow from the investment spending in property, plant and equipment and other intangibles, less sale such asset. • NET INCOME is prot (loss) for the period. • CONSTANT CURRENCY is exchange rates that the Group uses to eliminate the eect of exchange rates uctuations when calculating nancial performance numbers. KID ASA Annual Report 2022 85 RESPONSIBILITY STATEMENT We conrm, to the best of our knowledge, that the nancial 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, nancial position and prot or loss of the entity and the group taken as a whole. We also conrm 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. Kid ASA - Responsibility statement Lier, 13 April 2023 e board of directors, KID ASA Petter Schouw-Hansen Chairperson Rune Marsdal Board member Liv Berstad Board member Gyrid Skalleberg Ingerø Board member Karin Bing Orgland Board member Espen Gundersen Board member Anders Fjeld Chief Executive Ocer KID ASA Annual Report 202286 KID ASA Annual Report 2022 87 Kid ASA - Independent Auditor’s report PricewaterhouseCoopers AS, Dronning Eufemias gate 71, Postboks 748 Sentrum, NO-0106 Oslo T: 02316, org. no.: 987 009 713 MVA, www.pwc.no Statsautoriserte revisorer, medlemmer av Den norske Revisorforening og autorisert regnskapsførerselskap To the General Meeting of Kid ASA Independent Auditor’s Report Report on the Audit of the Financial Statements Opinion We have audited the financial statements of Kid ASA, which comprise: • the financial statements of the parent company Kid ASA (the Company), which comprise the balance sheet as at 31 December 2022, the statement of income and cash flow statement for the year then ended, and notes to the financial statements, including a summary of significant accounting policies, and • the consolidated financial statements of Kid ASA and its subsidiaries (the Group), which comprise the statement of financial position as at 31 December 2022, the statement of comprehensive income, statement of changes in equity and statement of cash flows for the year then ended, and notes to the financial statements, including a summary of significant accounting policies. In our opinion • the financial statements comply with applicable statutory requirements, • the financial statements give a true and fair view of the financial position of the Company as at 31 December 2022, and its financial performance and its cash flows for the year then ended in accordance with Norwegian Accounting Act and accounting standards and practices generally accepted in Norway, and • the consolidated financial statements give a true and fair view of the financial position of the Group as at 31 December 2022, and its financial performance and its cash flows for the year then ended in accordance with International Financial Reporting Standards as adopted by the EU. Our opinion is consistent with our additional report to the Audit Committee. Basis for Opinion 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 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 KID ASA Annual Report 202288 Kid ASA - Independent Auditor’s report 2 / 5 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. Key Audit Matters How our audit addressed the Key Audit Matter Valuation of the KID trademark 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 an d 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 manage ment 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. KID ASA Annual Report 2022 89 Kid ASA - Independent Auditor’s report 3 / 5 Other Information 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 • is consistent with the financial statements and • contains the information required by applicable statutory requirements. Our opinion on the Board of Director’s report applies correspondingly to the statements on Corporate Governance and Corporate Social Responsibility. Responsibilities of Management for the Financial Statements 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. Auditor’s Responsibilities for the Audit of the Financial Statements 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: KID ASA Annual Report 202290 Kid ASA - Independent Auditor’s report 4 / 5 • identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error. We design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control. • obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company's and the Group's internal control. • evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by management. • conclude on the appropriateness of management’s use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Company's and the Group's ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor’s report to the related disclosures in the financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor’s report. However, future events or conditions may cause the Company and the Group to cease to continue as a going concern. • evaluate the overall presentation, structure and content of the financial statements, including the disclosures, and whether the financial statements represent the underlying transactions and events in a manner that achieves a true and fair view. • obtain sufficient appropriate audit evidence regarding the financial information of the entities or business activities within the Group to express an opinion on the consolidated financial statements. We are responsible for the direction, supervision and performance of the group audit. We remain solely responsible for our audit opinion. 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. KID ASA Annual Report 2022 91 Kid ASA - Independent Auditor’s report 5 / 5 Report on Other Legal and Regulatory Requirements Report on Compliance with Requirement on European Single Electronic Format (ESEF) Opinion 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’s Responsibilities 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. Auditor’s Responsibilities 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 KID ASA Annual Report 202292 REVENUE UPDATES INVESTOR SITE 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: Q2-2023 revenue – 10.07.2023 Q3-2023 revenue – 09.10.2023 All dates are subject to change. This information is published pursuant to the requirements set out in the Continuing obligations. http://investor.kid.no Financial calendar 11 May 2023 Annual General Meeting 25 May 2023 Q1 24 August 2023 Half- yearly Report 09 November 2023 Q3 2023 KID ASA Annual Report 2022 93 KID ASA Gilhusveien 1, N-3426 Gullaug Box 505, N-3412 Lierstranda Phone: +47 940 26 000 [email protected] www.kid.no #2022157 5967007LIEEXZXH53K172022-01-012022-12-315967007LIEEXZXH53K172021-01-012021-12-315967007LIEEXZXH53K172022-12-315967007LIEEXZXH53K172021-12-315967007LIEEXZXH53K172020-12-31ifrs-full:IssuedCapitalMemberifrs-full:PreviouslyStatedMember5967007LIEEXZXH53K172021-01-012021-12-31ifrs-full:IssuedCapitalMember5967007LIEEXZXH53K172021-12-31ifrs-full:IssuedCapitalMember5967007LIEEXZXH53K172020-12-31ifrs-full:SharePremiumMemberifrs-full:PreviouslyStatedMember5967007LIEEXZXH53K172021-01-012021-12-31ifrs-full:SharePremiumMember5967007LIEEXZXH53K172021-12-31ifrs-full:SharePremiumMember5967007LIEEXZXH53K172020-12-31ifrs-full:AdditionalPaidinCapitalMemberifrs-full:PreviouslyStatedMember5967007LIEEXZXH53K172021-01-012021-12-31ifrs-full:AdditionalPaidinCapitalMember5967007LIEEXZXH53K172021-12-31ifrs-full:AdditionalPaidinCapitalMember5967007LIEEXZXH53K172020-12-31ifrs-full:OtherReservesMemberifrs-full:PreviouslyStatedMember5967007LIEEXZXH53K172021-01-012021-12-31ifrs-full:OtherReservesMember5967007LIEEXZXH53K172021-12-31ifrs-full:OtherReservesMember5967007LIEEXZXH53K172020-12-31ifrs-full:RetainedEarningsMemberifrs-full:PreviouslyStatedMember5967007LIEEXZXH53K172021-01-012021-12-31ifrs-full:RetainedEarningsMember5967007LIEEXZXH53K172021-12-31ifrs-full:RetainedEarningsMember5967007LIEEXZXH53K172020-12-31ifrs-full:PreviouslyStatedMember5967007LIEEXZXH53K172021-12-31ifrs-full:IssuedCapitalMemberifrs-full:PreviouslyStatedMember5967007LIEEXZXH53K172022-01-012022-12-31ifrs-full:IssuedCapitalMember5967007LIEEXZXH53K172022-12-31ifrs-full:IssuedCapitalMember5967007LIEEXZXH53K172021-12-31ifrs-full:SharePremiumMemberifrs-full:PreviouslyStatedMember5967007LIEEXZXH53K172022-01-012022-12-31ifrs-full:SharePremiumMember5967007LIEEXZXH53K172022-12-31ifrs-full:SharePremiumMember5967007LIEEXZXH53K172021-12-31ifrs-full:AdditionalPaidinCapitalMemberifrs-full:PreviouslyStatedMember5967007LIEEXZXH53K172022-01-012022-12-31ifrs-full:AdditionalPaidinCapitalMember5967007LIEEXZXH53K172022-12-31ifrs-full:AdditionalPaidinCapitalMember5967007LIEEXZXH53K172021-12-31ifrs-full:OtherReservesMemberifrs-full:PreviouslyStatedMember5967007LIEEXZXH53K172022-01-012022-12-31ifrs-full:OtherReservesMember5967007LIEEXZXH53K172022-12-31ifrs-full:OtherReservesMember5967007LIEEXZXH53K172021-12-31ifrs-full:RetainedEarningsMemberifrs-full:PreviouslyStatedMember5967007LIEEXZXH53K172022-01-012022-12-31ifrs-full:RetainedEarningsMember5967007LIEEXZXH53K172022-12-31ifrs-full:RetainedEarningsMember5967007LIEEXZXH53K172021-12-31ifrs-full:PreviouslyStatedMember5967007LIEEXZXH53K172020-12-315967007LIEEXZXH53K172022-05-012022-05-015967007LIEEXZXH53K172022-12-012022-12-01iso4217:NOKiso4217:NOKxbrli:shares
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