Kid ASA — Investor Presentation 2021

Feb 17, 2021

5 November 2020 Kid ASA 17 February 2021

Kid ASA

Q3 2020 Presentation available Q4 2020

Q3 2020

Q4 2020

Kid ASA

17 February 2021

Presentation available at investor.kid.no

5 November 2020

Presentation available at investor.kid.no

at investor.kid.no Presentation available at investor.kid.no

Financial fourth quarter in brief

• Solid financial quarter with record quarterly EBITDA!
• Group revenues increased by 6.6%¹ and LFL growth was 7.4%¹
• Kid Interior revenue growth of 15.3% (LFL growth of 13.6%)
• In local currency, Hemtex revenue decreased by -5.7% (LFL declined by -1.9%)
• Gross margin increased by 3.0 pp due to change in product mix, less rebating and improved purchasing terms following higher volumes
• Adjusted EBITDA exclusive of IFRS16 effects increased by MNOK 70.0 which is an increase of 30.5% compared to Q4 2019
• The Board propose an ordinary dividend payment of NOK 3.40 per share with an additional NOK 1.00 due to strong financial performance and liquidity position
• Revised dividend policy with 80-100% pay-out ratio of Net Profit

2 Kid ASA Q4 2020 1) Calculated in constant currency. Actual reported revenues Q4 2019 was MNOK 989.5 which gives an increase of 10.9%

Full year summary

• Strong financial performance¹
• Group Revenue growth of 28%
• EBITDA (ex IFRS16) growth of 51%
• EBITDA margin (ex IFRS16) increased from 15.1% to 17.9%
• Net Profit growth of 62% with EPS of 8.78 (5.42)
• Online growth of 151%, accounted for 8.9% (6.4%² ) of total revenues
• Hemtex EBITDA (ex IFRS16) of MNOK 137.4 (MNOK 83.5) which surpassed the original target well ahead of plan
• Full-year dividend of NOK 9.00 per share (incl pre-payment of NOK 4.60 from November 2020)

Operational focus in Q4

• Successful product and category development a key driver for growth during the quarter
• Rebuilt Kid Interior stores to include kitchen departments
• Improved margins through centralised sourcing and increased volumes from organic growth and inclusion of Hemtex volumes
• Substantially increased online sales with record number of deliveries proving the robustness of the logistic operations in both segments
• We remain committed to CSR-activities and donated in totalt MNOK 3.7 to:
• Main sponsor for the Pink Ribbon campaign in Norway
• NRK Telethon
• SOS Children's Village
• The Bokhari project where Kid is supporting craftsmen's ship and education for children in Pakistan is high on our agenda

Pan-Nordic presence

Store information Q4

• Kid Interior (147 stores)
• Four new stores were opened; Mosseporten, Nittedal, Røa and Åkrehamn
• Lambertseter and Kremmerhuset (Lillehammer) were refurbished
• One store was relocated in Triaden (Lillestrøm)
• No closed stores
• Hemtex (131 stores, incl. 12 franchise stores)
• One store was opened in Valbo (Sweden)
• Three stores were refurbished in Örnskoldsvik, Varberg and Lund City (Sweden)
• One store was relocated in Uppsala Gränby (Sweden)
• No closed stores

Revenues and market share

Group revenues increased by 6.6%¹

Revenue (MNOK) Like-for-like growth (%)

• Group like-for-like of 7.4% including online sales
• Kid Interior revenue growth of 15.3% (11.0%)
• Like-for-like growth of 13.6% (8.8%) including online sales
• Online sales growth of 59.2% to MNOK 49.2 (MNOK 30.9)
• The index for sale of home textiles in specialised stores in Norway increased by 10.9%
• Hemtex revenue decreased by -5.7%

6

• In local currency, revenues decreased by -5.7% due to drop in footfall as well as four less stores and reduced revenues from Hemtex24H
• Like-for-like decline of -1.9% (+22.0%) including online sales
• Online sales growth of 46.4% to MSEK 55.4 (MSEK 37.8).
• The index for sale of home textiles in specialised stores in Sweden increased by 8.7%

Gross margin

• Group gross margin was 63.1 % for the quarter, up by 3.0 pp due to improved product mix, improved purchasing terms and less rebating
• Kid Interior gross margin increased by 2.1 pp from 61.2 % to 63.3% because of a more favorable product mix and less rebating
• Hemtex gross margin increased by 2.3 pp from 60.3% to 62.6%. The increase was caused by changes to a more favorable product mix with a higher proportion Kid products, and reduced cost of goods sold following increased volumes sourced through Kid

Group gross margin of 63.1% in Q4 Group gross margins in 2019 and 2020¹

7 Kid ASA Q4 2020 ¹ Hemtex figures are included in the group accounts from 15 May 2019

EBITDA

• Adjusted EBITDA excl. IFRS16 of MNOK 299.3 (229.3) for Q4
• Kid Interior EBITDA excl. IFRS16 of MNOK 213.5 (166.2)
• Increased EBITDA of MNOK 47.3 mainly due to increased revenues and improved gross margins
• Estimated COVID-19 cost saving effects during the quarter of MNOK 4.7
• Bonus provisions of MNOK 9.2 (MNOK 8.3) due to strong financial performance
• Stringent cost controlling with underlying cost base on target
• Hemtex EBITDA excl. IFRS16 of MNOK 85.8 (MNOK 70.3)
• Increased EBITDA of MNOK 15.5 due to improved margins and reduced costs
• Decreasing cost base in local currency following integration initiatives
• Estimated COVID-19 cost saving effects during the quarter of MNOK 3.1
• EBITDA was adjusted for transaction cost of MNOK 1.6 in Q4 2019¹ . No adjustments have been made in Q4 2020

Adjusted¹ Adjusted EBITDA of 369.6 (297.6) in Q4 EBITDA Q4 2020 versus Q4 2019

Cash flow

(Amounts million) in NOK	Q4 2020	Q4 2019	FY 2020	FY 2019 ¹
cash flow from operations Net	523,9	449,2	749,2	523,6
Cash flow from investments Net	-27,2	-46,9	-65,4	-92,9
cash flow from financing Net	-365,5	-115,8	-725,4	-333,0
change in cash and cash equivalents Net	131,2	286,6	-41,5	97,7
of Cash and cash equivalents the beginning the period at	173,7	52,7	339,2	242,2
/ (losses) Exchange gains on cash and cash equivalents	-3,7	0,0	3,6	-0,6
Cash and cash equivalents the end of the period at	301,3	339,2	301,3	339,2

Working Capital

(Amounts million) in NOK	Q4 2020	Q4 2019	FY 2020	FY 2019 ¹
Change in inventory	76,5	122,4	22,8	-77,2
Change trade debtors in	-10,9	-1,8	8,7	-15,7
Change trade creditors in	37,3	-25,6	-61,3	65,6
Change other in provisions ²	70,2	72,6	57,2	74,3
Change in working capital	173,0	167,5	27,3	47,1

Solid financial position and liquidity

• Cash flow from operations positively affected by increased profit
• Inventory reduced from Q3 following high sales in Q4
• Trade creditors have been reduced compared to last year because of changes to payment terms in Hemtex.
• Cash flow from financing impacted by down payment on RCF of MNOK 50 (0) and dividend payment of MNOK 235.7 (MNOK 48.8)
• Gearing ratio, exclusive of IFRS16 effects, of 0.40
• Net interest-bearing debt excluding IFRS16 leasing liabilities of MNOK 220.3 (MNOK 335.2)
• Cash and available credit facilities of MNOK 678.3 at the end of the quarter

Dividend and Revised Dividend Policy

Ordinary dividends of 91% of Net Profit for 2020

• The Board of Directors will propose to the Annual General Meeting a total dividend of NOK 4.40 per share to be paid 9 June 2021
• NOK 3.40 as an ordinary dividend payment
• Additional NOK 1.00 as an extraordinary dividend due to strong financial results
• Including dividend pre-payment of NOK 4.60 in November 2020, the ordinary dividends for 2020 is NOK 8.00 providing a pay-out ratio of 91% of Net Profit
• The proposed pay-out details are:
• Last day including right: 27 May 2021
• Ex-date: 28 May 2021
• Record date: 31 May 2021
• Payment date: 9 June 2021
• Date of approval: 27 May 2021 Annual General Meeting
• A target of 80-100 percent dividend pay-out ratio of adjusted net profit with semi-annual payments. The distribution policy is dynamic, and any excess capital will be returned to shareholders

Dividend per share (DPS) and Adj¹ Earnings per share (EPS)

Segment: Kid Interior

(Amounts millions) in NOK	Q4 2020	Q4 2019	FY 2020	FY 2019
Revenue	694,2	602,0	862,8 1	606,3 1
growth Revenue	% 15,3	% 11,0	16 % ,0	% 9,5
growth including online sales LFL	13,6 %	8 8 % ,	14,8 %	6 8 % ,
COGS	-254,5	-233,4	-703,1	-622 6 ,
profit Gross	439,6	368,5	1 159,7	983,7
(%) Gross margin	63 % ,3	61 % ,2	62 % ,3	61 % ,2
Other operating revenue	0,1	0,0	0,2	0,2
Employee benefits expense	-111,4	-106 ,2	-378 8 ,	-349,1
Other operating expense	-114,8	-96 ,1	-378 ,5	-351,4
Other effect operating expense - IFRS 16	36 8 ,	37,1	150,9	148 ,3
before allocated EBITDA costs	250,3	203,3	553,5	431,7
(%) margin EBITDA	36 % ,1	33,8 %	% 29,7	26 % ,9
Allocated employee benefits expense ³	1,7		1,7
Allocated other operating expense ³	10,0		10,0
EBITDA	262,0	203,3	565,3	431,7
of shopping days No.	80	80	308	306
of physical period end No. stores at	147	144	147	144

Segment: Hemtex

(Amounts millions) in NOK	Q4 2020	Q4 2019	FY 2020	FY ¹ 2019
Revenue	403,0	387,5	131,8 1	735,9
Revenue growth ²	-5,7%	19,6 %	% 1,1	% 13,1
growth including online sales LFL ²	-1,9%	% 22,0	6 % ,7	% 12,5
COGS	-150,7	-153,9	-420,7	-290,5
profit Gross	252,4	233,6	711,1	445,4
(%) Gross margin	62 6 % ,	60 % ,3	62 8 % ,	60 % ,5
Other operating revenue	0,9	0,1	1,4	1,9
Employee benefits expense	-63 ,3	-67 ,4	-227,4	-154,4
Other operating expense	-104,2	-96 ,0	-347,8	-209,3
Other effect operating expense - IFRS 16	33,5	32,7	138 ,7	78 ,4
before allocated EBITDA costs	119,3	103,0	276,1	161,9
(%) margin EBITDA	% 29,5	26 6 % ,	% 24,4	% 21,9
Allocated employee benefits expense	-1,7		-1,7
Allocated other operating expense	-10,0		-10,0
EBITDA	107,5	103,0	264,3	161,9
of shopping days No.	91	91	364	273
of physical period end (excl franchise) No. stores at	119	123	119	123

¹ Hemtex AB figures are included in the group accounts from 15 May 2019

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Kid ASA Q4 2020 ² Hemtex like-for-like revenue is derived from Hemtex management information and calculated in constant currency

Growth initiatives

Growth by assortment and store area expansion in 2021

• New products introduced after 2017 added revenue of MNOK 83 in Kid Interior during Q4, representing 25% of the growth
• We are now increasing our product teams from 4 to 5 in order to fuel further growth through category development and expansion into new categories for both Kid Interior and Hemtex
• Revenue growth by expanding current Kid Interior assortment into Hemtex
• All products in the group are now sourced by Kid Interior from Lier
• Majority of Hemtex stores (100) to have similar assortment as Kid Interior by end 2021 through 30% increased assortment
• In parallel, we are physically expanding store space to match current Kid Interior concept and reach full Kid Interior assortment range

Outlook

COVID-19 Trade Update

• Norwegian authorities decided to temporarily close retail trade stores in specific geographical areas from 22 January 2021
• 47 stores are currently closed and on average 38 stores have been closed since 22 January 2021
• Including closed stores, sales growth for the Kid Group year-to-date as per 14 February 2021 was positive with a like-for-like of +2.7%
• Stores in Kid Group that have been open since 1 January 2021 until 14 February 2021 including Online had a positive like-for-like growth of +10.0%

Income statement

(Amounts thousand) in NOK	Q4 2020	Q4 2019	FY 2020	FY ¹ 2019
Revenue	1 097,2	989 ,5	2 994,7	2 342,2
COGS	-405,2	-394,5	128 -1 ,7	-925,7
profit Gross	692 ,0	595,0	866 1 ,0	416 1 ,5
(%) Gross margin	63 % ,1	60 % ,1	62 % ,3	60 % ,5
Other operating revenue	0,9	0,1	1,7	2,1
OPEX	-323,4	-297,5	-1 044,1	-851 6 ,
EBITDA	369 6 ,	297,6	823 6 ,	566 ,9
(%) EBITDA margin	% 33,7	% 30,1	% 27,5	% 24,2
Adj EBITDA	369 6 ,	299,1	824 8 ,	581 ,0
(%) Adj margin EBITDA	% 33,7	% 30,2	% 27,5	24,8 %
Depreciation and amortisation	-86 8 ,	-80 6 ,	-340,8	-265 ,0
EBIT	282 8 ,	217,0	482 ,7	302,0
(%) margin EBIT	25,8 %	% 21,9	16 % ,1	% 12,9
finance Net	-13,9	-8 ,4	-28 ,4	-40,9
Profit before tax	268 ,9	208 6 ,	454,3	261 ,0
profit Net	209,7	170,4	356 ,1	207,9
Adj profit Net	209,7	171,6	357,0	220,4

Statement of financial position

(Amounts in NOK thousand)	Note	31.12.2020	31.12.2019 1
Assets		Unaudited	Audited
Goodwill	9	72 280	65402
Trademark	9	1515485	1510 165
Other intangible assets	9	5623	10085
Deferred tax asset		15 810	2 18 5
Total intangible assets		1609197	1587836
Right of use asset	9	821 683	822604
Fixtures and fittings, tools, office machinery and equipment	9	199512	179 233
Total tangible assets		1021195	1001838
Total fixed assets		2630392	2589674
Inventories		482161	484 988
Trade receivables		18381	23 201
Other receivables		32725	25 815
Derivatives		$\circ$	2305
Totalt receivables		51106	51 320
Cash and bank deposits		301276	339 241
Total currents assets		834 542	875549
Total assets		3464 935	3465223

(Amounts in NOK thousand)	Note	31.12.2020	31.12.20191
Equity and liabilities		Unaudited	Audited
Share capital		48770	48 774
Share premium		321050	321049
Other paid-in-equity		64617	64 617
Total paid-in-equity		434 437	434440
Other equity		750164	715 721
Total equity		1184601	1150161
Deferred tax		315 336	315 398
Total provisions		315336	315 398
Lease liabilities		585 131	584848
Liabilities to financial institutions	6	461480	494498
Total long-term liabilities		1046612	1079346
Lease liabilities		234 113	217 427
Liabilities to financial institutions	6	60297	180000
Trade payable		92316	145 122
Tax payable		87 011	51239
Public duties payable		167402	154 233
Other short-term liabilities		198 883	160 511
Derivatives		78 364	11787
Total short-term liabilities		918385	920 319
Total liabilities		2280333	2 315 063
Total equity and liabilities		3464 934	3465223

Sales days and stores

Year	Q1	Q2	Q3	Q4	Total	Year	Q1	Q2	Q3	Q4	Total
2019	76	71	79	80	306	2019		90	92	91	273
2020	77	72	79	80	308	2020	91	90	92	91	364

2019	Q1	Q2	Q3	Q4	Total	2019	Q1	Q2	Q3	Q4	Total
New stores	1	0	1	2	4	New stores		0	0	0	0
Closed stores	2	0	0	1	3	Closed stores		1	4	1	6
Relocated stores	0	2	0	0	2	Relocated stores		0	2	2	4
Refurbished stores	7	7	1	1	1 6	Refurbished stores		2	1	6	9
Total number of stores	142	143	144	144		Total number of stores*	141	140	136	135
2020	Q1	Q2	Q3	Q4	Total	2020	Q1	Q2	Q3	Q4	Total
New stores	0	0	0	4	4	New stores	0	0	1	1	2
Closed stores	1	0	0	0	1	Closed stores	3	0	3	0	6
Relocated stores	0	0	0	1	1	Relocated stores	0	0	1	1	2
Refurbished stores	2	2	2	2	8	Refurbished stores	3	0	2	3	8
Total number of stores	143	143	143	147		Total number of stores*	132	132	130	131

Kid Hemtex

Number of sales days Number of sales days

Year	О1	O 2	О٦	Q4	Total
2019		90	92	91	273
2020	Q 1	90	Q 2	91	364

Number of store projects Number of store projects

2019	Q 1	Q 2	Q3	Q4	Total
New stores		0	$\circ$	$\Omega$	$\circ$
Closed stores		1	$\overline{4}$	1	6
Relocated stores		0	$\overline{2}$	$\overline{2}$	$\overline{4}$
Refurbished stores		$\overline{\mathbf{c}}$	$\mathbf{1}$	6	9
Total number of stores*	141	140	136	135
2020	Q 1	Q2	Q 3	Q4	Total
New stores	$\Omega$	0	$\mathbf{1}$	1	$\overline{2}$
Closed stores	$\overline{\mathbf{3}}$	0	$\overline{\mathbf{3}}$	$\Omega$	6
Relocated stores	$\Omega$	o	1	1	$\overline{2}$
Refurbished stores	$\overline{3}$	$\circ$	$\overline{2}$	3	8
Total number of stores*	132	132	130	131

*incl franchise stores