Quarterly Report • Feb 16, 2022
Quarterly Report
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It has been an unusual last quarter of the year, caused by reduced capacity in the global value chain and hence delayed product deliveries for our peak season. However, after a slow first part of the quarter we saw a significant increase in revenues from late November as our classic Christmas assortment arrived – resulting in a top line growth of +2.5% for the quarter. I proudly note that we also managed to increase our gross margin despite the challenging logistics situation. Consequently, we passed the NOK 3 billion revenue milestone for the fiscal year and delivered the 7th consecutive quarter with year-on-year EPS growth.
These are the key takeaways from the fourth quarter:
In November, we entered into a commercial cooperation for the purpose of building a new warehouse facility in Borås (Sweden) for Hemtex with in-house storage and logistic operations, as well as headquarters. We expect construction to start in spring 2022, and the new warehouse to be operational during spring 2023. By operating our own in-house logistics organization, the group will operate more cost efficiently, reduce operational risk and better serve our customers.
Kid Interior is the main sponsor for the Pink Ribbon campaign in Norway and donated MNOK 2.0 to the campaign in 2021, while Hemtex donated MSEK 0.2 to SOS Children's Villages Sweden. Moreover, MNOK 0.6 worth of Bokhari dialect shopping bag products have been sold this year in Kid Interior stores, supporting safe and meaningful jobs for Pakistani craftsmen and women.
We are all happy to leave 2021 behind and to start a new year with optimism and a lot of new opportunities. We remain dedicated to keep on inspiring our customers, and by that contributing to making life more positive and joyful!
Yours sincerely,
259 299
661 676 729 751
2020 2021 2020 2021 2020 2021 2020 2021 Q1 Q2 Q3 Q4 Kid Interior Hemtex
287 326 411 418 470 452
22 1 244 249258
508 570
2020 2021 2020 2021 2020 2021 2020 2021 Q1 Q2 Q3 Q4 Kid Interior Hemtex
LFL growth (%), Group Revenue, MNOK EBITDA, MNOK No. of physical stores (period end)
Kid Interior Hemtex Hemtex (franchise)
694 687
4 2 7 0
26 4 3
403 413
1097 1100
| (Amounts in NOK million) | Q4 2021 | Q4 2020 | FY 2021 | FY 2020 |
|---|---|---|---|---|
| Revenue | 1 100,4 | 1 097,2 | 3 097,1 | 2 994,7 |
| Like-for-like growth including online sales ¹ | 0,2 % | 7,4 % | 11,5% | 14,8 % |
| COGS | -402,5 | -405,2 | -1 159,5 | -1 128,7 |
| Gross profit | 697,9 | 692,0 | 1 937,6 | 1 866,0 |
| Gross margin (%) | 63,4% | 63,1% | 62,6% | 62,3% |
| Other operating income | 6,2 | 0,9 | 10,0 | 1,7 |
| Employee benefits expense | -186,1 | -174,7 | -617,3 | -607,1 |
| Other operating expense | -216,7 | -219,0 | -739,8 | -726,6 |
| Other operating expense - IFRS 16 effect | 71,3 | 70,3 | 287,0 | 289,7 |
| OPEX | -331,4 | -323,4 | -1 070,0 | -1 044,1 |
| EBITDA | 372,7 | 369,6 | 877,6 | 823,6 |
| EBITDA margin (%) | 33,7% | 33,7% | 28,2% | 27,5% |
| Depreciation | -18,2 | -17,1 | -70,1 | -63,8 |
| Depreciation - IFRS 16 effect | -67,4 | -69,7 | -266,3 | -277,1 |
| EBIT | 287,1 | 282,8 | 541,2 | 482,7 |
| EBIT margin (%) | 25,9% | 25,8% | 17,4% | 16,1% |
| Net financial income (expense) | -5,0 | -5,6 | -29,1 | 2,2 |
| Net financial expense - IFRS 16 effect | -6,7 | -8,3 | -26,9 | -30,7 |
| Profit before tax | 275,3 | 268,9 | 485,2 | 454,3 |
| Net income | 219,1 | 209,7 | 384,4 | 356,1 |
| Earnings per share | 5,39 | 5,16 | 9,46 | 8,76 |
| Liabilities to financial institutions | -548,5 | -521,8 | -548,5 | -521,8 |
| Lease liabilities - IFRS 16 effect | -767,3 | -819,2 | -767,3 | -819,2 |
| Cash | 239,3 | 301,3 | 239,3 | 301,3 |
| Net interest bearing debt | -1 076,4 | -1 039,7 | -1 076,4 | -1 039,7 |
¹ Calculated in constant currency
We managed to increase revenues, increase gross margin, maintain cost control and thereby deliver yet another quarter with increased EBITDA compared to same quarter last year.
On a full year basis, the Kid Group has in 2021 passed through the NOK 3 billion revenue milestone and has further increased its profitability.
The integration of Hemtex is ongoing, and the effects of joint sourcing, category expansion, joint marketing, refurbishment and expansion of stores in Hemtex is the main driver for the increased profitability for the Group during the quarter.
The Covid-19 cost reduction effect in the quarter is estimated at MNOK 2.9 (MNOK 7.8).
Group revenues increased by 2.5% (6.6%) to MNOK 1,100.5 (MNOK 1,073.3) based on a constant currency calculation, and by 0.3% when applying actual currency (MNOK 1,097.3). Group revenues on a like-for-like basis were up by 0.2% (7.4%) and by 7.3% compared to Q4 2019.
Both Kid Interior and Hemtex suffered from delays of goods delivery, but revenues increased significantly as products, including our traditional Christmas assortment, arrived in late November.
Carry-over Christmas products still in stock per yearend was approx. MNOK 45 which is MNOK 12 higher than last year.
Gross profit increased by MNOK 5.9 to MNOK 697.9 with Gross margin at 63.4%, up 0.3 percentage points compared to Q4 2020.
We managed to compensate increased freight costs by adjusting pricing and campaigning. Also, the USD/NOK and the product mix have influenced positively.
Increased freight costs have materialised from September and have further increased towards the end of the year. Hence, some of the products sourced during Q4 at higher freight rates remain in stock. The Kid Group has a comprehensive toolbox to control gross margins which includes price adjustments, bargaining power from joint sourcing, adjustment of campaigns and FX hedging.
We have prepared for the increase in sourcing cost, and we therefore remain confident of our Financial Objectives.
Employee benefits expenses increased by +6.5% to MNOK 186.1:
• +1.6 percentage points in headquarter costs mainly due to increased logistics activity in Kid Interior and less Covid-19 cost reduction effect this quarter
Other operating expenses excluding IFRS16 decreased by -1.1% to MNOK 216.7:
OPEX to sales margin was 36.6% (35.9%). When adding back Covid-19 related costs reduction effects OPEX to sales margin was 36.9% (36.6%).
Further details on employee benefits and operating expenses can be found in the segment sections below.
EBITDA increased by MNOK 3.1 to MNOK 372.7 due to increased gross profit partly offset by higher operating expenses. The EBITDA was positively affected by MNOK 5.0 in other income following a pay-out from the Swedish pensions association (FORA) as further described in the Hemtex section.
EBITDA:
EBITDA exclusive of IFRS16 effects increased by MNOK 2.1 to MNOK 301.4 from MNOK 299.3 last year.
Net financial expense excluding IFRS16 of MNOK 5.0 (MNOK 5.6) relates to net interest expenses of MNOK 4.1 (MNOK 3.8), other financial expenses of MNOK 0.4 (MNOK 0.3) and net foreign exchange loss of MNOK 0.5 (MNOK 1.5).
Excluding IFRS16 effects, net interest-bearing debt was MNOK 309.1 (MNOK 220.3) at the end of the quarter, corresponding to 0.52x (0.40x) of the LTM EBITDA excluding IFRS16 effects.
The Group had cash and available credit facilities of MNOK 651.3 (MNOK 678.3) as of 31 December 2021. The Group has a satisfactorily liquidity situation.
Capital Expenditures during Q4 amounted to MNOK 26.1 (MNOK 28.9) of which investment in the new ecommerce platform accounted for MNOK 4.1 (MNOK 2.7) and the remaining MNOK 22.0 (MNOK 26.2) mainly reflect store openings and refurbishments.
6
KID Interior
| (Amounts in NOK millions) | Q4 2021 | Q4 2020 ¹ | FY 2021 | FY 2020 ¹ |
|---|---|---|---|---|
| Revenue | 687,4 | 694,2 | 1 883,5 | 1 862,8 |
| Revenue growth | -1,0% | 15,3 % | 1,1 % | 16,0 % |
| LFL growth including online sales | -3,8% | 13,6 % | -1,8% | 14,8 % |
| COGS | -251,9 | -254,5 | -702,3 | -703,1 |
| Gross profit | 435,5 | 439,6 | 1 181,2 | 1 159,7 |
| Gross margin (%) | 63,4 % | 63,3 % | 62,7 % | 62,3 % |
| Other operating revenue | 0,0 | 0,1 | 0,5 | 0,2 |
| Employee benefits expense | -116,7 | -109,3 | -367,2 | -368,8 |
| Other operating expense | -115,8 | -113,8 | -395,9 | -376,8 |
| Other operating expense - IFRS 16 effect | 39,9 | 36,8 | 159,8 | 150,9 |
| EBITDA | 242,9 | 253,4 | 578,5 | 565,2 |
| EBITDA margin (%) | 35,3 % | 36,5 % | 30,7 % | 30,3 % |
| No. of shopping days No. of physical stores at period end |
81 | 80 147 |
308 | 308 147 |
| 153 | 153 |
| (Amounts in NOK millions) | Q4 2021 | Q4 2020 ¹ | FY 2021 | FY 2020 ¹ |
|---|---|---|---|---|
| Revenue | 413,0 | 403,0 | 1 213,6 | 1 131,8 |
| Revenue growth ² | 9,0 % | -5,7% | 10,1 % | 1,1 % |
| LFL growth including online sales ² | 7,8 % | -1,9% | 9,8 % | 6,7 % |
| COGS | -150,6 | -150,7 | -457,2 | -420,7 |
| Gross profit | 262,4 | 252,4 | 756,4 | 711,1 |
| Gross margin (%) | 63,5 % | 62,6 % | 62,3 % | 62,8 % |
| Other operating revenue | 6,2 | 0,9 | 9,5 | 1,4 |
| Employee benefits expense | -69,3 | -65,4 | -250,0 | -237,4 |
| Other operating expense | -100,8 | -105,2 | -343,9 | -349,5 |
| Other operating expense - IFRS 16 effect | 31,3 | 33,5 | 127,2 | 138,7 |
| EBITDA | 129,7 | 116,1 | 299,1 | 264,3 |
| EBITDA margin (%) | 30,9 % | 28,8 % | 24,5 % | 23,3 % |
| No. of shopping days No. of physical stores at period end (excl. franchise) |
91 121 |
91 | 363 121 |
362 |
| 119 | 119 |
¹ For reason of comparison, Q4 2020 have been restated with Segment Allocated Costs. Refer Note 5 for further details.
² Calculated in local currency
Revenues in Kid Interior decreased by -1.0% to MNOK 687.4. Like-for-like revenues including online sales were down by -3.8%.
The decrease in Q4 this year compared with a strong Q4 last year was driven by reduced footfall to physical stores in October and November following the freight delays. Footfall and revenues were significantly up from early December once products, including our traditional Christmas assortment, arrived.
Online revenues increased by 4.7% to MNOK 51.5.
Gross profit decreased by MNOK 4.1 compared to last year due to reduced revenues. The gross margin increased by 0.1 percentage points due to successful executed campaigns, pricing, a favourable product mix and improved FX-rates, partly offset by increased freight costs.
Employee expenses increased by 6.7% to MNOK 116.7:
Year to date bonus provision amounted to MNOK 19.7 (MNOK 42.7) of which store bonuses was MNOK 5.4 (MNOK 24.5), other management bonuses was MNOK 10.5 (MNOK 18.1) and the longterm management bonus program approved by the general meeting in May 2021 was MNOK 3.8 (MNOK 0).
Other operating expenses excluding IFRS16 increased by 1.7% to MNOK 115.8:
Covid-19 cost effect during Q4 has been estimated at MNOK 2.9 (MNOK 4.7), of which reduced employee expenses (social- and travelling costs) accounted for MNOK 2.6 (MNOK 4.7).
EBITDA excluding IFRS16 decreased by MNOK 13.6 to MNOK 203.0 (MNOK 216.6) mainly caused by reduced revenues and higher employee benefit expenses.
Capital Expenditure during Q4 amounted to MNOK 17.2 (MNOK 19.6) mainly reflecting refurbishments of stores and investments in the new ecommerce platform.
Four new stores were opened, and three stores were refurbished during the fourth quarter. There were no closed or relocated stores. The total number of physical stores at the end of the quarter was 153 (147).
Revenues increased by MNOK 10.0 to MNOK 413.0. In local currency revenues increased by 9.0% to MSEK 419.3. Like-for-like revenues including online sales were up by 7.8%.
Footfall in October and November was at the same low level as last year, negatively impacted by delayed deliveries and more stringent COVIDrestrictions last year. Footfall and revenues were significantly up from early December 2021 once products, including our traditional Christmas assortment, arrived.
Online revenues decreased by -0.8% to MNOK 54.2. Online revenues were unusual high in Q4 2020 following the physical COVID-restrictions imposed just ahead of the 2020 Christmas shopping season.
The introduction of "Click & Collect" has contributed with increased revenues to our physical stores.
Gross profit increased by MNOK 10.0 due to increased revenues. The gross margin increased by 0.9 percentage points due to successful executed campaigns, pricing, favourable product mix and improved FX-rates, partly offset by increased freight costs.
Employee expenses increased by +6.1% to MNOK 69.3:
Year to date bonus provision amounted to MNOK 2.6 (MNOK 2.3), which was related to management bonuses.
Other operating expenses excluding IFRS16, decreased by -4.2% to MNOK 100.8:
Covid-19 cost reduction effect during Q4 has been estimated at MNOK 0 (MNOK 3.1).
EBITDA excluding IFRS16 increased by MNOK 15.7 to MNOK 98.4 (MNOK 82.7) mainly driven by increased gross profit following higher revenues and reduced operating expenses.
The Swedish pension association Fora is a non-profit organization and all excess returns on their investments is repaid to the Swedish employers. For Hemtex, this has resulted in a pay-out of MNOK 5.0, classified as other income, which has increased the Q4 EBITDA correspondingly.
Capital Expenditure during Q4 amounted to MNOK 8.9 (MNOK 6.9) and include opening and relocation of stores.
One new store was opened, one store was relocated, and two stores were refurbished during the quarter. There were no closed stores in the period. The total number of physical stores (excl. 12 franchise stores) at the end of the quarter was 121 (119).
Following the pandemic situation, the global overseas freight situation has been challenging causing delays in value chain and increased freight rates. Going forward, we have decided to place orders earlier than normal. We are confident that the spring and summer collections will arrive ontime. Even though it is too early to conclude we do see signs indicating that freight markets are starting to normalize with regards to both delays and freight rates.
The board will propose to the Annual General Meeting a dividend payment of NOK 4.00 payable in May 2022. Together with the prepayment of NOK
4.60 from November 2021 this represent 91% of the net profit - in line with our Financial Objectives.
The board of directors will also propose to the annual general meeting that the board is given the authority to distribute additional half-year dividend in November 2022 in accordance with the dividend policy and considering third quarter 2022 results.
There have been no other significant events after the end of the reporting period.
Lier, 16 February 2022
The board of Kid ASA
12
| (Amounts in NOK thousand) | Note | Q4 2021 | Q4 2020 | FY 2021 | FY 2020 |
|---|---|---|---|---|---|
| Unaudited | Unaudited | Unaudited | Audited | ||
| Revenue | |||||
| 1 100 391 | 1 097 191 | 3 097 096 | 2 994 658 | ||
| Other operating revenue | 6 220 | 943 | 10 010 | 1 693 | |
| Total revenue | 1 106 611 | 1 098 134 | 3 107 106 | 2 996 351 | |
| Cost of goods sold | -402 507 | -405 186 | -1 159 506 | -1 128 690 | |
| Employee benefits expense | -186 051 | -174 665 | -617 303 | -607 119 | |
| Depreciation and amortisation expenses | 9 | -85 587 | -86 782 | -336 376 | -340 840 |
| Other operating expenses | -145 380 | -148 720 | -452 730 | -436 973 | |
| Total operating expenses | -819 525 | -815 353 | -2 565 916 | -2 513 622 | |
| Operating profit | 287 086 | 282 781 | 541 190 | 482 730 | |
| Financial income | 2 404 | 180 | 7 361 | 32 299 | |
| Financial expense | -14 141 | -14 048 | -63 384 | -60 735 | |
| Net financial income (+) / expense (-) | -11 738 | -13 868 | -56 023 | -28 435 | |
| Profit before tax | 275 348 | 268 913 | 485 167 | 454 295 | |
| Income tax expense | -56 226 | -59 226 | -100 741 | -98 196 | |
| Net profit (loss) for the period | 219 122 | 209 687 | 384 426 | 356 098 | |
| Interim condensed consolidated statement of comprehensive income |
|||||
| Profit for the period | 219 122 | 209 687 | 384 426 | 356 098 | |
| Other comprehensive income | 7 761 | -51 063 | 75 286 | -56 632 | |
| Tax on comprehensive income | -1 040 | 11 077 | -16 184 | 12 274 | |
| Total comprehensive income for the period | 225 843 | 169 701 | 443 528 | 311 740 | |
| Attributable to equity holders of the parent | 225 843 | 169 701 | 443 528 | 311 740 | |
| Basic and diluted Earnings per share (EPS): | 5,39 | 5,16 | 9,46 | 8,76 |
| (Amounts in NOK thousand) | Note | 31.12.2021 | 31.12.2020 |
|---|---|---|---|
| Assets | Unaudited | Audited | |
| Goodwill | 9 | 70 286 | 72 280 |
| Trademark | 9 | 1 511 788 | 1 515 485 |
| Other intangible assets | 9 | 19 096 | 5 623 |
| Deferred tax asset | 22 968 | 15 810 | |
| Total intangible assets | 1 624 140 | 1 609 197 | |
| Right of use asset | 9 | 756 941 | 821 683 |
| Fixtures and fittings, tools, office machinery and equipment | 9 | 203 158 | 199 512 |
| Total tangible assets | 960 099 | 1 021 195 | |
| Investments in associated companies and joint ventures | 10 | 30 | 0 |
| Total financial fixed assets | 30 | 0 | |
| Total fixed assets | 2 584 268 | 2 630 392 | |
| Inventories | 646 764 | 482 161 | |
| Trade receivables | 21 999 | 18 381 | |
| Other receivables | 25 023 | 32 725 | |
| Derivatives | 17 439 | 0 | |
| Totalt receivables | 64 461 | 51 106 | |
| Cash and bank deposits | 239 331 | 301 276 | |
| Total currents assets | 950 556 | 834 542 | |
| Total assets | 3 534 824 | 3 464 935 |
| (Amounts in NOK thousand) | Note | 31.12.2021 | 31.12.2020 |
|---|---|---|---|
| Equity and liabilities | Unaudited | Audited | |
| Share capital | 48 770 | 48 770 | |
| Share premium | 321 050 | 321 050 | |
| Other paid-in-equity | 64 617 | 64 617 | |
| Total paid-in-equity | 434 440 | 434 437 | |
| Other equity | 828 223 | 750 164 | |
| Total equity | 1 262 663 | 1 184 601 | |
| Deferred tax | 332 280 | 315 336 | |
| Total provisions | 332 280 | 315 336 | |
| Lease liabilities | 517 550 | 585 131 | |
| Liabilities to financial institutions | 6 | 451 628 | 461 480 |
| Total long-term liabilities | 969 177 | 1 046 612 | |
| Lease liabilities | 249 737 | 234 113 | |
| Liabilities to financial institutions | 6 | 95 000 | 60 297 |
| Trade payable | 159 751 | 92 316 | |
| Tax payable | 90 335 | 87 011 | |
| Public duties payable | 172 851 | 167 402 | |
| Other short-term liabilities | 197 865 | 198 883 | |
| Derivatives | 5 166 | 78 364 | |
| Total short-term liabilities | 970 705 | 918 385 | |
| Total liabilities | 2 272 162 | 2 280 333 | |
| Total equity and liabilities | 3 534 824 | 3 464 935 |
| (Amounts in NOK thousand) | Total paid-in equity | Other equity | Total equity |
|---|---|---|---|
| Balance at 1 Jan 2020 | 434 440 | 715 721 | 1 150 161 |
| PPA adjustment | 7 171 | 7 171 | |
| Adjusted Balance at 1 Jan 2020 ¹ | 434 440 | 722 892 | 1 157 332 |
| Profit for the period YTD 2020 | 0 | 356 098 | 356 098 |
| Other comprehensive income / Cash Flow Hedges | 0 | -44 359 | -44 359 |
| Dividend | 0 | -284 474 | -284 474 |
| Balance at 31 Des 2020 | 434 440 | 750 157 | 1 184 601 |
| Balance at 1 Jan 2021 | 434 440 | 750 164 | 1 184 601 |
| Profit for the period YTD 2021 | 0 | 384 426 | 384 426 |
| Other comprehensive income / Cash Flow Hedges | 0 | 59 440 | 59 440 |
| Dividend | 0 | -365 807 | -365 807 |
| Balance at 31 Des 2021 | 434 440 | 828 223 | 1 262 663 |
¹ PPA adjustment of deferred tax in Q1 2020.
| (Amounts in NOK thousand) | Note | Q4 2021 | Q4 2020 | FY 2021 | FY 2020 |
|---|---|---|---|---|---|
| Unaudited | Unaudited | Unaudited | Audited | ||
| Cash Flow from operation | |||||
| Profit before income taxes | 275 348 | 268 913 | 485 166 | 454 295 | |
| Taxes paid in the period | -40 947 | -5 900 | -105 964 | -50 103 | |
| Depreciation & Impairment | 9 | 85 587 | 86 782 | 336 376 | 340 840 |
| Effect of exchange fluctuations | 7 541 | 1 082 | 16 861 | -23 147 | |
| Change in net working capital | |||||
| Change in inventory | -66 513 | 76 477 | -180 317 | 22 777 | |
| Change in trade debtors | -7 375 | -10 889 | -4 448 | 8 685 | |
| Change in trade creditors | 81 689 | 37 257 | 71 228 | -61 333 | |
| Change in other provisions ¹ | 128 902 | 70 182 | 41 621 | 57 193 | |
| Net cash flow from operations | 464 231 | 523 904 | 660 525 | 749 207 | |
| Cash flow from investment | |||||
| Purchase of fixed assets | 9 | -23 774 | -27 208 | -79 436 | -65 398 |
| Net Cash flow from investments | -23 774 | -27 208 | -79 436 | -65 398 | |
| Cash flow from financing | |||||
| Proceeds from long term loans | 0 | 0 | 130 000 | 25 000 | |
| Repayment of revolving credit facility | 0 | -49 802 | -65 000 | -130 204 | |
| Repayment of Term Loans | -30 000 | 0 | -38 678 | -50 152 | |
| Lease payments for principal portion of lease liability | -65 795 | -66 938 | -264 951 | -274 956 | |
| Dividend payment | -186 968 | -235 700 | -365 807 | -284 474 | |
| Net interest | -10 549 | -13 063 | -39 283 | -10 575 | |
| Net cash flow from financing | -293 312 | -365 502 | -643 718 | -725 360 | |
| Cash and cash equivalents at the beginning of the period | 93 031 | 173 749 | 301 276 | 339 246 | |
| Net change in cash and cash equivalents | 147 146 | 131 196 | -62 628 | -41 545 | |
| Exchange gains / (losses) on cash and cash equivalents | -846 | -3 669 | 683 | 3 576 | |
| Cash and cash equivalents at the end of the period | 239 331 | 301 276 | 239 331 | 301 276 |
¹ Change in other provisions includes other receivables, public duties payable, short-term liabilities and accrued interest.
Kid ASA and its subsidiaries` (together the "company" or the "Group") operating activities are related to the resale of home textiles in Norway, Sweden, Finland and Estonia. The Kid Group offers a full range of home and interior products, including textiles, curtains, bed linens, smaller 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.
All amounts in the interim financial statements are presented in NOK 1,000 unless otherwise stated.
Due to rounding, there may be differences in the summation columns.
These interim financial statements for the third quarter of 2021 have been prepared in accordance with IAS 34, 'Interim financial reporting'. The interim financial statements should be read in conjunction with the consolidated financial statements for the year ended 31 December 2020, which have been prepared in accordance with IFRS as adopted by the European Union ('IFRS').
The accounting policies applied in the preparation of the consolidated interim financial statements are consistent with those applied in the preparation of the annual IFRS financial statements for the year ended 31 December 2020. The following accounting policies have become applicable during the period after the year ended 31 December 2020:
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 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.
Amendments to IFRSs effective for the financial year ending 31 December 2021 are not expected to have a material impact on the group.
The Preparation of interim financial statements requires management to make judgments, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets and liabilities, income and expenses. Actual results may differ from these estimates.
In preparing these interim financial statements the significant judgements made by management in applying the Group's accounting policies and the key sources of estimation uncertainty were the same as those applied to the consolidated financial statements for the year ended 31 December 2020.
Kid Group reports segments in accordance with how the chief operating decision maker makes, follows up and evaluates its decisions. Within the Group, Kid Interior relates to Norway and Hemtex relates to Sweden with a few stores in Estonia and Finland.
The Group also sells home textiles through the Group's online websites. Over 98% of the products are sold under own brands.
| (Amounts in NOK thousand) | KID Interior | Hemtex | Total |
|---|---|---|---|
| Revenue | 687 391 | 413 000 | 1 100 391 |
| COGS | -251 883 | -150 625 | -402 507 |
| Gross profit | 435 508 | 262 375 | 697 883 |
| Other operating revenue | 35 | 6 185 | 6 220 |
| Operating expense (OPEX) | -192 597 | -138 830 | -331 428 |
| EBITDA | 242 945 | 129 731 | 372 676 |
| Operating profit | 195 057 | 92 032 | 287 089 |
| Gross margin (%) | 63,4 % | 63,5 % | 63,4 % |
| OPEX to sales margin (%) | 28,0 % | 33,6 % | 30,1 % |
| EBITDA margin (%) | 35,3 % | 30,9 % | 33,7 % |
| Inventory | 413 016 | 233 748 | 646 764 |
| Total assets | 2 632 302 | 902 520 | 3 534 824 |
Certain group costs have been booked in Kid Interior and in the parent company Kid ASA and are allocated to the respective segments based on common accepted methodology. For 2020 the cost allocation was performed in Q4 for the entire year but starting 2021 performed on a quarterly basis. Hence, for reason of comparison, Q4 2020 figures have been restated. Please refer below table for details.
| Segment allocated costs | ||||||||||
|---|---|---|---|---|---|---|---|---|---|---|
| Total year | Total year | |||||||||
| (MNOK) | Q1 2021 Q1 2020 Q2 2021 Q2 2020 Q3 2021 Q3 2020 Q4 2021 Q4 2020 | 2021 | 2020 | |||||||
| Kid ASA and Kid Interior Segment allocated employee benefits expense Segment allocated other operating expense |
0,8 1,7 |
2,3 0,1 |
5,2 1,0 |
2,4 0,3 |
3,6 1,3 |
3,2 0,3 |
6,1 2,6 |
2,1 1,0 |
15,6 6,5 |
10,0 1,7 |
| Hemtex Segment allocated employee benefits expense Segment allocated other operating expense |
-0,8 -1,7 |
-2,3 -0,1 |
-5,2 -1,0 |
-2,4 -0,3 |
-3,6 -1,3 |
-3,2 -0,3 |
-6,1 -2,6 |
-2,1 -1,0 |
-15,6 -6,5 |
-10,0 -1,7 |
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. At the balance sheet date, the Group has the following borrowing facilities:
| Utilised | Available | ||||
|---|---|---|---|---|---|
| (Amounts in NOK thousand) | 31.12.2021 | Facility Interest | Maturity | Repayment | |
| Total term loan | 481 700 | 581 700¹ | 5 years | Instalments ² | |
| Of which: | |||||
| Denominated in NOK | 395 000 | 495 000 Fixed rate at 1,876% + 1.25% 3 | |||
| Denominated in SEK | 85 000 | 85 000 Fixed rate at 1,460% + 1.25% 4 | |||
| Revolving credit facility | 65 000 | 130 000 3 months Nibor + 1.10% | 3 years | At maturity | |
| Overdraft | - | 247 000 1 week IBOR + 1.10% | 12 months | At maturity | |
| 546 700 | 958 700 |
¹Of which 100 can be drawn at Kid's discretion within two years and with a maximum of two tranches
² NOK 30M in annual instalments with bi-annual payments. First instalment was due in November 2021 for the full yearly payment.
3 Fixed interest rate is secured through an interest rate swap of MNOK 395 maturing May 2029 and subject to hedge accounting 4 Fixed interest rate and denomination in SEK is hedged through a cross currency interest swap of MNOK 115 maturing November 2024
The effect of the change in fair value of the cross currency interest swap is booked against foreign exchange gains/losses in Statement of profit and loss
(a) the gearing ratio (NIBD/EBITDA) must now be below 2,25 at year end
(b) the EBITDA last twelve months at each quarter must exceed 175 MNOK
Assets pledged as security for the facilities are the shares in Kid Interior AS and Hemtex AB, NOK 1,200,000 thousand of inventory, accounts receivables and operating equipment in Kid Interior AS and SEK 300,000 thousand of assets in Hemtex AB.
| Q4 2021 | Q4 2020 | FY 2021 | FY 2020 | |
|---|---|---|---|---|
| Weighted number of ordinary shares | 40 645 162 | 40 645 162 | 40 645 162 | 40 645 162 |
| Net profit or loss for the year | 219 122 | 209 687 | 384 426 | 356 098 |
| Earnings per share (basic and diluted) (Expressed in NOK per share) | 5,39 | 5,16 | 9,46 | 8,76 |
The Group's related parties include its key management and members of the board. Gjelsten Holding AS and related companies are no longer considered a related party.
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 2021 and 2020:
| Related Party Transactions | FY 2021 | FY 2020 |
|---|---|---|
| Management for Hire | 0 | 375 |
| Total | 0 | 375 |
| Right of use | |||||
|---|---|---|---|---|---|
| (amounts in NOK thousand) | Asset | PPE | Trademark Other Intangibles | Goodwill | |
| Balance 01.01.2021 | 821 683 | 199 513 | 1 515 484 | 5 622 | 72 281 |
| Exchange differences | -19 929 | -2 569 | -3 696 | -260 | -1 995 |
| Additions, disposals and adjustments | 221 459 | 74 541 | 16 223 | ||
| Depreciation and amortisation | -266 273 | -68 327 | -2 489 | ||
| Balance 31.12.21 | 756 941 | 203 158 | 1 511 788 | 19 096 | 70 286 |
| Right of use | |||||
|---|---|---|---|---|---|
| (amounts in NOK thousand) | Asset | PPE | Trademark Other Intangibles | Goodwill | |
| Balance 01.01.2020 | 822 604 | 179 233 | 1 510 165 | 10 085 | 65 402 |
| Exchange differences | 23 513 | 7 129 | 5 319 | 471 | 6 879 |
| Additions, disposals and adjustments | 254 734 | 71 164 | - | -1 544 | - |
| Depreciation and amortisation | -279 168 | -58 014 | - | -3 389 | - |
| Balance 31.12.2020 | 821 683 | 199 512 | 1 515 485 | 5 623 | 72 280 |
The group had the following subsidiaries as of 31 December 2021
| 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 |
| Hemtex Logistikk AS* | Norway | Logistics | 100 |
| Hemtex AB | Sweden | Interior goods retailer | 100 |
| Hemtex OY | Finland | Interior goods retailer | 100 |
| Hemtex international AB | Sweden | Non operating company | 100 |
*Established during the quarter
All subsidiary undertakings are included in the consolidation.
The group had the following joint ventures on 31 December 2021:
| 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 2021, there are no material transactions in the joint venture, hence the "share of result from joint ventures" is not reflected in the Income Statement.
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) and Fabritius on a 50/50% basis. Fabritius is wholly owned by Gjelsten Holding AS, which currently also holds 10.24% of the shares in Kid ASA.
An agreement with the construction entrepreneur was signed in December 2021. Hemtex Logistikk AS has guaranteed 5% of the total contracted amount MNOK 147.5.
A lease agreement will be signed between Prognosgatan Fastights AB (lessor) and Hemtex 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.
We confirm, to the best of our knowledge, that the financial statements for the period 1 January to 31 December 2021 have been prepared in accordance with current applicable accounting standards and give a true and fair view of the assets, liabilities, financial position and profit or loss of the entity and the group taken as a whole. We also confirm that the Board of Directors' Report includes a true and fair review of the development and performance of the business and the position of the entity and the group, together with a description of the principal risks and uncertainties facing the entity and the group.
Lier, 16 February 2021
The board of Kid ASA
Adjusted EBITDA, adjusted EBITDA margin, adjusted EBIT and adjusted EBIT margin are no longer included in the Alternative Performance Measures because these performance measures are no longer considered relevant. Previous adjustments were due to integration costs. There were no such integration costs in 2021 and in the comparable periods these costs are not considered material.
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.
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