Annual reportAnnual report
EKORNES QM HOLDING
|
2021
Annual report Ekornes QM Holding 2021
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Annual report Ekornes QM Holding 2021
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COMPANY
Company history and ownership 4 - 5
Group management 6 - 9
Board of directors in Ekornes AS 10 - 11
CORPORATE GOVERNANCE
Code of Conduct 12 - 13
Environmental Social and Governance 14 - 25
BOARD OF DIRECTORS’ REPORT
Board of directors 28
Board of directors’ report 29 - 37
FINANCIAL STATEMENTS
Consolidated nancial statements 38 - 43
Notes to the consolidated nancial statements 44 - 72
Financial statements Ekornes QM Holding AS 74 - 77
Notes to the nancial statements Ekornes QM Holding AS 78 - 83
Statement pursuant to section 5-5 of the securities trading act 84
Independent auditor’s report 86 - 91
Content
COMPANY HISTORY AND OWNERSHIP Annual report Ekornes QM Holding 2021
4
acquiring the Ekornes Group. In May 2018, an offer was made to purchase
the shares of all Ekornes shareholders. The share purchase was completed
in August 2018 and Ekornes AS was delisted from the Oslo Stock Exchange
in October 2018.
Norwegian ultimate parent company Ekornes QM Holding AS is a wholly
owned subsidiary of Qumei Home Furnishing Group. The Ekornes Group is
the only operational part of the Ekornes QM Holding Group. The Ekornes
Group is consolidated from the acquisition date.
The consolidated nancial statements comprise the nancial statements of
the parent company Ekornes QM Holding AS and its subsidiaries as at 31
December 2021. Ekornes QM Holding AS had as at 31 December 2021 100%
shareholding and voting rights in Ekornes AS who in its turn has a 100%
ownership share and voting rights for all other consolidated companies.
Company history and ownership
Annual report Ekornes QM Holding 2021 COMPANY HISTORY AND OWNERSHIP
COMPANY HISTORY AND OWNERSHIP Annual report Ekornes QM Holding 2021
5
GROUP STRUCTURE AND BOND TRANSACTION OVERVIEW:
(China)
Zhimei Chuangshe Home Furnishings
(Shanghai) Co., Ltd. (China)
(Luxembourg) (Parent)
Ekornes QM Holding AS
Ekornes AS (OpCo)
Ekornes Group Entities
NOK 2 billion
secured bond
Up to NOK 1 250m
bank facilities
100%
100%
100%
FREDRIK ØDEGÅRD NILSEN (1988)
Group CFO
Education: Masters of Economics and Business Administration at the Norwegian
School of Economics (NHH) and Master in Management at the University of
Mannheim.
Experience: Various position at ISS Facility Services within Finance, Pricing and
Business Development. CFO at Haut Nordic. Business Analyst and SVP Strategy
& Business Development at Ekornes.
CFO of Ekornes since April 2021. Member of Ekornes Group Management since
August 2020.
ROGER LUNDE (1970)
Group CEO
Education: Masters degree in Management & Economics from Växjö University
(Sweden).
Experience: CEO in Brødrene Dahl AS , Senior Vice President in Kongsberg Oil & Gas,
Chief Operating Ofcer in Scatec Solar AS, Executive Vice President for Lean Banking
in DNB, Senior Vice President Operations in Aker Solutions, Logistics Director in
Emo AS/ Rich Andvord AS.
CEO of Ekornes since February 2020.
Group management
GROUP MANAGEMENT Annual report Ekornes QM Holding 2021
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Annual report Ekornes QM Holding 2021 GROUP MANAGEMENT
PETER BJERREGAARD (1965)
SVP Commercial North America
Education: Bachelor Business Administration, Various management course
Henley Business University.
Experience: EVP Commercial for Stressless
®
in North America since 2004 and
from 2017 also for IMG in North America. Prior to this senior Vice President
ECCO Shoes (Several positions within the ECCO Organization), General Manager
Bang & Olufsen Chicago.
SVP Commercial North America and member of Ekornes Group Management
since March 2020.
GROUP MANAGEMENT Annual report Ekornes QM Holding 2021
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JAMES TATE (1978)
SVP IMG Business
Education: BSc (Macquarie University Sydney), Graduate Diploma in Management
(University of London).
Experience: More than 10 years at Ekornes (various positions, including CEO for
Stressless
®
UK/Ireland and Australia/New Zealand). Sales Director for Leggett &
Platt Europe and furniture industry consultant.
SVP IMG Business since March 2020, and a member of Ekornes Group Management
since autumn of 2017.
MARK KELSEY (1974)
SVP Commercial Asia Pacic (APAC)
Education: BSc in Physics from Imperial College, London.
Experience: More than 11 years at Ekornes (several positions including President
Ekornes APAC and President Ekornes Asia), Country Manager UK & Ireland Fritz
Hansen.
SVP Commercial APAC, and member of Ekornes Group Management since March
2020.
JAMES THOMPSON (1979)
SVP Commercial Europe
Education: BA Business Studies (University of South Wales), C. Dir (CGTI).
Experience: Managing Director of Ekornes Ltd since 2017, prior to this 20 years
management experience in retail and hospitality, including Director at Sandals,
Harrods and Heal’s. SVP Commercial Director Europe and MD Ekornes Ltd.
SVP Commercial Europe and a member of Ekornes Group Management since
March 2020.
GROUP MANAGEMENT Annual report Ekornes QM Holding 2021
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Annual report Ekornes QM Holding 2021 GROUP MANAGEMENT
Group management
LARS WITTEMANN (1963)
SVP Sourcing & Supply Chain
Education: Handelsakademiet/BI Business School, MBA BI Norwegian
Business School, Oslo.
Experience: VP Operations ASSA ABLOY Hospitality Divisjon,
General Manager at VingCard Elsafe in Norwa y and China.
SVP Sourcing & Supply Chain in Ekornes from November 2015.
Member of Ekornes Group Management since March 2020.
TROND VEIBUST (1985)
SVP IT & Projects and SVP Operations IMG
Education: Msc in Accounting and Auditing, Norwegian School of Economics
(NHH).
Experience: Employed in Ekornes since 2015 in various management roles.
Worked in the nancial services assurance practice in EY prior to joining Ekornes.
SVP IT & Projects in Ekornes since March 2021. Also continuing position of SVP
Operations IMG. Member of Ekornes Group Management since March 2020.
OLE BASTIAN EMDAL (1980)
SVP Product Development and SVP Commercial Nordic
Education: Various management courses (BI Norwegian Management School).
Experience: 16 years experience from the furniture industry. Category Manager at
Bohus (Retail), Category & Market Manager at Møbelringen (Retail), Sales & Market
Manager at Martinsen AS (Wholesale), Owner, sales and purchasing at Vest Møbel
AS, Owner and Managing Director at Stjernemadrassen.
SVP Commercial Nordic. Started new position as SVP Product Development in
January 2022. Member of Group Management since March 2020.
OLA ARNE RAMSTAD (1962)
SVP Production Stressless
®
Education: Administration (BI).
Experience: Started in production at Ekornes in 1984. Various positions
within factory production management.
SVP Production Stressless
®
and member of Ekornes Group Management
since March 2020.
PÅL AAGE NORDAHL (1961)
Managing Director, Ekornes Beds AS
Education: Hedmark College, graduate in nance and administration. Various
leadership programs business and nance at Copenhagen Business School and
Norwegian School of economics. (NHH/Solstrand).
Experience: Partner and Sales Director Edge Innovation Group, Sales Director
Cloetta AS, Sales Director and Business Development Director Ringnes AS
(Carlsberg Group), Marketing Manager Mills DA, General Manager Bama Gruppen
AS, Nordic Marketing Manager Chiquita Brands International.
Managing Director in Ekornes Beds AS since February 2019, and member of Ekornes
Group Management since March 2020.
GROUP MANAGEMENT Annual report Ekornes QM Holding 2021
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SVEIN LUNDE (1961)
SVP Marketing & Commercial Excellence (Until January 2022)
Education: Dipl. Management.
Experience: Bank and travel industry. With Ekornes since 1994; Country Manager
UK/Ireland, International Marketing Director and SVP Marketing.
SVP Marketing & Commercial Excellence since March 2020. Will retire from
January 2022. Member of Ekornes Group Management since 2003.
JANNE STRØMMMEN (1972)
SVP Marketing (from January 2022)
Education: MBA Brand Management at the Norwegian School of Economics (NHH)
and Bachelor in Marketing at BI Norwegian Business School/Suffolk University
Madrid, Spain.
Experience: Brand Marketing from Stokke, Devold and various advertising agencies.
Before joining Ekornes she held the position as Global Brand Communication
Director for Stokke.
Will join Ekornes as SVP Marketing in January 2022 and be member of Ekornes
Group Management.
Stian Ekornes (1963), Director
Position: Investor.
Education: The Norwegian Merchants Institute (today BI Varehandel).
Experience: 30 years’ experience of the furniture industry. Extensive experience
as CEO, board chair and director within the furniture industry, chain management
and property development.
Annual report Ekornes QM Holding 2021 THE BOARD OF DIRECTORS IN EKORNES AS
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The Board of Directors in Ekornes AS
Ruihai Zhao (1965), Chair
Position: Chair and CEO of Qumei Group.
Education: MBA (Cheung Kong Graduate School of Business, China), degrees in
global business management from Tsinghua University, China and University of
Minnesota, USA.
Experience: Founder and chair of Qumei Home Furnishings Group, with more
than 30 years’ experience of the furniture industry.
Lars I. Røiri (1961), Vice-chair
Position: CEO of Flokk Holding AS.
Education:
Master of Economics and Business Administration (BI Norwegian
Business School).
Board memberships: Director of Cappelen Holding AS, Glamox AS and the
Norwegian Federation of Industries’ Design Industry Association.
Experience: Commercial management positions at Tomra ASA, Mølnlycke AB
and Jordan AS, CEO of Coloplast AS and HÅG ASA. Membership of the boards
of numerous companies, including Molift AS, Netonnet AB, Enghav AS and
Design & Architecture Norway, and of the Norwegian Advisory Board of the
private equity company Ratos.
Atle Berntzen (1967), Director (employee elected)
Position: Team leader and deputy manager, warehouse/goods inwards at
Ekornes Beds AS.
Education: Upper secondary school (commercial studies major).
Experience: Sales person and warehouse operative at General Motors AS.
Warehouse operative at Ekornes Beds AS.
THE BOARD OF DIRECTORS IN EKORNES AS Annual report Ekornes QM Holding 2021
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Sveinung Utgård (1962), Director (employee elected)
Position: Production manager Foam dept. at J.E Ekornes.
Education:
Electrical studies, Mechanical studies, Production and management studies,
Nordvest Forum Changing Leadership course, Management development programme
at J.E.Ekornes.
Board memberships: Employee-elected director of Møre Trafo AS, Municipal board
member Sykkylven.
Experience: Production worker, Assembly operator at Formn Møbler AS,
Operator/electrical and manager at Møre Trafo AS. Shift leader at J.E.Ekornes.
Ove Per Skåre (1956), Director (employee elected)
Position: Work in upholstery department of J.E.Ekornes AS.
Education: Diverse courses in Norwegian Confederation of Trade Unions
.
Experience: Prodcution worker in Velledalen Møbler AS; Foam production in
Porolon AS; Foam, steal and upholstery department in J.E.Ekornes AS; UN Veteran
served in Lebanon; Union representative and health & safety representative in
J.E.Ekornes AS; board member of the Trade Union (ITAF).
Annual report Ekornes QM Holding 2021 CODE OF CONDUCT
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Ekornes has a Code of Conduct and anti-corruption policy. Both are presented below.
Anti-corruption policy – UNs Global Compact
Ekornes has endorsed the UN Global Compact since 2009. Through participation in the UN Global Compact, Ekornes is
committed to operating its business responsibly in line with the UN Global Compact’s ten principles, which also cover
anti-corruption. Ekornes also encourages its business associates to comply with these principles. Ekornes has drawn up a
new system with which to assess its suppliers’ performance against the Global Compact’s principles. The system went into
effect in 2013.
The UN Global Compact is based on openness, both with respect to the company’s dealings with all stakeholders and the
challenges Ekornes meets at the local and global level. Since 2012 Ekornes has been a member of the UN Global Compact’s
Nordic network. Participation in the network enables Ekornes to exchange experiences with other businesses which have
social responsibility high on the agenda.
Through the UN Global Compact, Ekornes is obligated to set goals for and work continuously to improve its practices in this
area. Each year Ekornes reports its performance to the UN in the form of a Communication on Progress (COP). This may be
found on the company’s website under ir.ekornes.no/environmental-and-social-responsibilities.
Ekornes will conduct its business activities responsibly, and will operate in compliance with all relevant laws, regulations and
strict ethical norms. We support, and strive to live up to the UN’s Global Compact. This means that in all parts of our
operations we will maintain high standards with regard to:
1. Respect for and compliance with the Universal Declaration of Human Rights.
2. Respect for workers’ rights and needs.
3. Environmental responsibility.
4. Combatting corruption in Norway and abroad.
This document, “Ethical Values and Anti-Corruption Policy”, as well as “Objectives and Values”, have been distributed to all
employees. These regulations have also been distributed to external relations and have been published on the company’s
website https://www.ekornes.com/en/sustainability. Everyone within the company has a duty to follow up and comply with
these regulations. Managers in all parts of the company have a special responsibility for their follow-up.
Code of Conduct for the Ekornes Group
1. ‘Objectives and Values’, company regulations, employment contracts and job descriptions also contain ethical rules with
which the Ekornes Group complies. The rules contained in this overview should therefore not be considered exhaustive
with respect to the Group’s ethical standards.
2. A duty of condentiality contained in company regulations, employment contracts or job descriptions does not prevent
you from informing a superior should you become aware of breaches of regulations, legislation or rules laid down by the
authorities. This also applies to internal guidelines, provisions or issues that might harm Ekornes’ reputation or other
parties’ trust in Ekornes.
3. Ekornes shall comply with the laws, rules and regulations in the countries in which Ekornes companies have been
established or in which business connections have been established.
4. In all contact with suppliers of raw materials, machinery, subsidiary materials and services of any kind, and contact with
customers and other business connections, we shall aspire to honesty, integrity, openness, as well as correct and responsible
business conduct. The objective is to arrive at the best offer for Ekornes.
Code of conduct
CODE OF CONDUCT Annual report Ekornes QM Holding 2021
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5. Ekornes or employees of Ekornes shall not take part in “bribery” or its equivalent in order to achieve special advantages or
access to such.
6. Business connections such as those mentioned above shall not be furnished with more information about Ekornes than
they need to provide a satisfactory offer with respect to price, level of service, delivery times, technology and specications,
or what they need to exercise their business relationship with Ekornes.
7. Suppliers and business connections shall under no circumstances receive information about other suppliers and business
connections via Ekornes.
8. Employees of Ekornes shall participate in trips, dinners and events arranged by suppliers and business connections only
when there is a professional reason for the event/trip or it provides business-related opportunities. In cases of such
participation the travel, entertainment and accommodation of employees of Ekornes shall always be paid by Ekornes.
9. Employees of Ekornes are not permitted to receive benets or gifts (in the form of products, services or trips, etc) from
business connections other than small promotional items of limited value. The same applies to private purchases of
goods at discounts from suppliers to Ekornes without the approval of a superior. Individuals must also avoid becoming in
any way beholden to customers or suppliers.
10. Suppliers and business connections shall be made aware of the contents of this document and also be made aware that
any attempt to contravene these ethical rules could result in exclusion.
Accounting and internal control requirements
Ekornes requires transparency in all operations. All Ekornes entities shall therefore ensure that transactions are correctly
registered and supported by proper documentation in accordance with local and international accounting principles.
Anti-corruption law requires that Ekornes has in place effective internal accounting controls and maintains books and
records that accurately reect the companies’ transactions. All entities within the Group must correctly account for income
and expenditures, and must ensure that payments are not recorded falsely in company books.
All expenses shall be approved under standard company procedures, documented and recorded in accordance with
appropriate accounting standards.
Organisation and follow-up
This document, “Ethical Values and Anti-Corruption Policy”, as well as “Objectives and Values”, have been distributed to all
employees. These regulations have also been distributed to external relations and have been published on the company’s
website www.ekornes.no. Everyone within the company has a duty to follow up and comply with these regulations.
Managers in all parts of the company have a special responsibility for their dissemination and follow-up. In the autumn of
2018, a new vision “We improve everyday living” and a new set of values was adopted. The new values are Honest, Authentic,
Enthusiastic and Adaptable. These were communicated to all employees through staff meetings, internal communications
channels and eLearning courses.
Annual report Ekornes QM Holding 2021 ENVIRONMENTAL SOCIAL AND GOVERNANCE
ENVIRONMENTAL SOCIAL AND GOVERNANCE Annual report Ekornes QM Holding 2021
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Environment and social responsibility
The Ekornes Group has made quality furniture for over 80 years. Sustainability has been part of our heritage and history
throughout. We aim to make more from less and continue to produce long-lasting quality products that reduce the
environmental footprint through the lifecycle. Our mindset is that a sustainable Ekornes shares the value it creates between
its shareholders, employees and the communities affected by its operational activities.
Ekornes aims to take a leading position in creating a more sustainable value chain. Our efforts alone will not change the
world, but we aim to make a difference and set new standards for our industry.
During 2022, Ekornes will launch its sustainability strategy towards 2030. This will embark us on an 8-year journey of
change, where we lean forward and challenge existing solutions to protect the climate, create sustainable furniture and run
a responsible business.
Our purpose is simply dened by our vision: “Ekornes for life”. To us, this means to:
• Create quality furniture that last for generations and increase the quality of life.
• Treat customers, suppliers, employees and stakeholders well.
• Create economic growth.
Accordingly, our new sustainability path denes three different pillars for Ekornes: People, Product and Planet. Each has
specic focus areas to guide us towards the operational levers we need to use to reach our goals.
Our sustainable development goals
Ekornes has used the UN Sustainable Development Goals (SDGs) as our compass and set our direction towards six of the
SDGs. These are connected to our focus areas and thus link our strategy to global and common ambitions for sustainability.
Products
Products for life
Planet
Carbon neutral company
People
Improving everyday living
Focus areas Materiality aspects
Quality &
design
Materials
Packaging
After sales
• Quality products
• Product responsibility
• Environmental friendly
materials
• Circular design
• Recyclable materials
Focus areas Materiality aspects
Climate / CO2
Energy
Water and
chemicals
Waste
• Climate impact
• Responsible suppliers
• Chemical usage
• Animal welfare
• Environmental friendly
production
• Energy efciency
• Industrialized production
• Waste management
Focus areas Materiality aspects
Employees
Partners
Customers
Communities
• Diversity and equality
• Safe word
environment
• Engaged in local
community
ENVIRONMENTAL SOCIAL AND GOVERNANCE Annual report Ekornes QM Holding 2021
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Our materiality analysis
The sustainability strategy also needs to be rmly anchored with our stakeholders. We have therefore conducted a
materiality analysis based on experience from the industry, input from experts within the Ekornes Group and a desktop
analysis of expectations from various stakeholders. The results are illustrated below, where the position of each materiality
aspect indicates the relation between the importance of stakeholders focus and the impact of our business.
Making our strategy operational
Within each of the three pillars – Product, Planet and People, we have developed operational focus areas for our efforts to
reach our sustainability goals. These focus areas are aligned with the Group’s overall strategy to grow the company by enhanced
customer focus, optimal utilization of its global production facilities and dedication to innovation and product development.
The focus areas will develop into key sustainability targets and KPIs that will monitor our progress towards 2030.
The ambitions and efforts are described in more detail in the following chapters.
Products
Planet
People
Annual report Ekornes QM Holding 2021 ENVIRONMENTAL SOCIAL AND GOVERNANCE
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Materiality analysis
Ekornes has devoted considerable resources in recent years towards increasing the focus on continuous improvement and
has implemented numerous measures to reduce the company’s environmental impact.
New technologies, more environmentally friendly materials and new product solutions have resulted in one of the most
efcient manufacturing environments in the furniture industry today. By engaging in sustainable production, the Ekornes
Group reduces the environmental impact of its products measured over their entire lifespan. This contributes to a sustainable
development of the products, as well as the Group as a whole. Anything that help increase quality or reduce wastage of raw
materials, time and energy is a step in the right direction. We are now ready to step up our efforts.
Key environmental targets
Waste management
Furniture production generates waste and Ekornes perceives it as a highly important environmental target to reduce the
waste from its facilities. Efforts to reduce the volume of waste and to increase recycling are therefore important. Ekornes
sorts all its waste at source in such a way that the bulk of the waste is reused, recycled or used for energy recovery at its own
plants. For the Svane
®
and Stressless
®
factories, sorting and recycling accounted for 80 per cent of all recorded waste. This
meets the current recycling target.
Ekornes has over time devoted resources to reduce the wastage from our production and have been able to lift the waste
recycling percentage in the Norwegian and American factory to 80 per cent. This has been a target for the factories since
2015. We have now set an even more ambitious target of achieving > 90 per cent in the same plants by 2025. To achieve this,
we seek to focus on the utility value from the byproducts from our production. We are also expanding the recycling target to
an overall target of 100 per cent for the Group by 2030. To reach this, Ekornes welcomes collaboration partners to make it a
joint effort.
To achieve its waste-reduction target, Ekornes monitors the volume of waste from its production facilities. Efforts are also
made to increase the individual employee’s awareness in this area, so that everyone can contribute to target realization.
Going forward, Ekornes will continue enhancing the waste focus in the facilities with a new and easier recycling system. The
recycling system has been implemented at the Norwegian factories. Ekornes aims to implement this in the other factories in
the following year.
Planet
Element Base Year Achieved by ‘21 New target Target year
Increase recycling rate in Stressless production n.m. 80% > 90% 2025
Overall recycling 2015 80% 100% 2030
Outbound transport 2015 58% > 70% on ships n.m.
Energy consumption per product 2015 -15% * - 40% 2030
GHG Emissions, Scope 1+2 2015 -10% -55% 2030
* Stressless and Svane plants
*currently only comprehends Norwegian and US factories. Key priority to include total operations in reporting going forward.
Wood waste for
energy recovery
Residual waste
for energy recovery
Recycled waste
Hazardous waste/
electrical items
Landll
Total*
Morganton
Fetsund
Grodås
Aure
Tynes
Ikornes
Waste Mix, Stressless
®
and Svane
®
factories
0 % 10 % 20 % 30 % 40 % 50 % 60 % 70 % 80 % 90 % 100%
ENVIRONMENTAL SOCIAL AND GOVERNANCE Annual report Ekornes QM Holding 2021
17
Ekornes also generates waste outside of its direct production. In 2021, Ekornes became a member of the Atea 100% club,
which is our IT-supplier Atea’s own initiative for enhanced reuse and recycle of IT-products. During 2021, Ekornes saved 11
025 kg CO2 equivalents through the Atea program. Of the collected units by the initiative, 43% were reused and 57% were
recycled.
Climate impact
Ekornes works to reduce the total emissions from the group and its facilities. Our target since 2015 has been to reduce the
Group’s GHG emissions from its own activities (scope 1 and 2) by 10%.
By 2021, the Group has increased total Greenhouse gas emissions by 9%from 2015, primarily due to increased production
from the Thailand factory, which has a different energy mix than the rest of the Group. This number also betrays the fact that
the number of factories in the Group has increased substantially, with a corresponding rise in revenues. The GHG intensity,
as measured by total annual GHG emissions divided by revenues, has been reduced by 31% in the same period.
We have now set a new target of achieving a 55% reduction in scope 1 and 2 GHG emissions by 2030 from the 2015 level.
Ekornes reports its greenhouse gas emissions in three “scopes”. For Ekornes, emissions in Scope 1 (direct emissions) come
from internal transport, heating with natural gas and oil, as well as carbon dioxide released during polyurethane foam
production. Scope 2 encompasses indirect emissions derived from the generation of third-party electricity.
Scope 3 is associated with the treatment of waste, air travel and authorized business use of motor vehicles. This includes only
parts of the Scope 3 emissions of the Group and Ekornes targets mapping more of the Scope 3 emissions in the full-cycle
value chain in its reporting from 2022 and onwards.
The table below shows a breakdown of annual emissions by scope and conrms a reduction in total greenhouse gas emissions
from 2017 to 2021.
2018 2019 2020 2021
GHG Emissions
Emission itensity
Schope 3
Scope2
Scope 1
’000tCO2e
Total Emission / Revenues
1.80
1.60
1.40
1.20
1.00
0.80
0.60
0.40
0.20
0.00
0
1000
2000
3000
4000
5000
6000
Annual report Ekornes QM Holding 2021 ENVIRONMENTAL SOCIAL AND GOVERNANCE
18
One of Ekornes scope 3 emission factors has been business travels. In the past few years, Ekornes has had a strong focus on
reducing the total greenhouse gas emissions from business travels and has implemented this in the Group’s travelling policy.
The Covid-19 pandemic has naturally had an impact on the amount of business travel, but it has also shown that using
technological solutions as a substitute for long distance travel is a perfectly viable way to maintain cooperation between the
Group’s global locations, as well as with the business partners.
Ekornes monitor the direct emissions from the production. There are conducted emission measurements on an annual basis,
to be compliant with local regulations. Direct emissions to air from the manufacturing process are primarily generated by oil
and solid fuel boilers. Three of Ekornes’ Stressless factories are subject to licenses granted by the local County Governor.
Ekornes also have diffuse emissions of diisocyanate gas and carbon dioxide from the production of polyurethane foam at
factories in Norway, Lithuania, Thailand and Vietnam.
Green transport plan
Transport materially affects our carbon footprint. Ekornes has a goal to ship >70% of its outbound transportation on ships.
Throughout 2021, Ekornes achieved 58% percent of the transportation from Ikornnes with ships. Long lead times to market
led to a priority shift in transportation for central Europe during 2021.
The aim of using sea transportation to reduce the total carbon footprint per produced seat and to reduce the impact on the
road infrastructure.
Externally, transportation locally in Norway is needed by road and Ekornes has, together with its transportation supplier DB
Schenker, made an agreement to secure a biofuel transportation line between Oslo and Ikornnes, which will indirectly reduce
our carbon footprint. According to plan, the biofuel transportation line will be effective from summer 2022.
Internally, during 2021, Ekornes has received two electrical vehicles for internal transportation. These new vehicles which
will go directly to reduce our local emissions. This is an inhouse eet of vehicles to transport components between the factories.
Energy efciency
Our production facilities consume a high level of electricity in the production of our quality products. For all Ekornes production
facilities in Norway, the energy consumed is based on 100% renewable hydropower. This has been certied in accordance
with the EU Renewable Directive. Despite this, reducing electricity use is one of Ekornes’ main environmental objectives.
In 2015, we set a target to reduce the electricity consumption at the Norwegian and American production plants by 10% and
we are pleased to report that we have received a reduction of 15% by 2021. Moving forward, with all plants included, we
have raised the bar with a new goal to reduce the energy consumption per product with 40% before 2030 at all Ekornes plants.
All factories aim to implement renewable energy sources and to seek solutions to reduce overall energy use:
• During 2021, the Ekornes Thailand facility has worked on nding good solutions for solar cell power for the factory.
• Our factory in Lithuania holds an A+ energy certication, which has been achieved through use of geothermal energy, a
high level of insulation and exterior use of LED and sensor-controlled lightening.
• The Group’s Norwegian plants primarily use bioenergy for heating. Woodchips, which is a by-product from the
manufacturing process, constitute the primary energy source for heating at the factories on the northwest coast of
Norway, while the Svane
®
plant at Fetsund uses a combination of woodchips, electricity and gas.
• The factory in Lithuania primarily uses geothermal heating.
• The factories in the USA, Thailand and Vietnam are less affected by ambient temperatures, and their energy consumption
relates largely to their machine park.
• The use of daylight at the factories in Vietnam and Thailand has improved in the past year, which has reduced the need for
articial lighting.
• The factory at Fetsund has switched to LED lighting in its premises, which has also reduced energy consumption.
ENVIRONMENTAL SOCIAL AND GOVERNANCE Annual report Ekornes QM Holding 2021
19
The graph below shows the Ekornes Group’s consumption of electricity, woodchips, fuel oil and natural gas in kWh.
0
5
10
15
20
25
30
35
Water management
Stressless’ main facility is located at Ikornnes close to Sykkylvsfjorden. The company has therefore made discharges to water
as a measurable parameter. Ekornes shall not have any unwanted incidents resulting in discharges to water. The production
processes involving water consumption are performed in closed-loop systems. Discharges to water are normally channeled
through our own and local authority waste treatment facilities, or it is delivered to an approved recipient. In recent years, the
factories in Thailand and Vietnam have increased the recirculation of water from their surface coating facilities to reduce
their overall water consumption.
Water is an important resource for our production. Moving forward Ekornes will aim to measure its water consumption and
set 2022 as baseline target.
2018 2019 2020 2021
Energy Consumption
kWh/Revenue unit
District Heating
Wood pellets
Fuel oil and natural gas
Electricity
10
9,5
9
8,5
8
7,5
7
6,5
6
GWh
kWh/NOK Revenue
Electricity
2017 24 875 823 3 505 178 8 866 734
2018 24 774 878 1 839 582 8 509 231
2019 25 007 005 3 796 291 8 382934
2020 25 223 815 2 913 643 7 700 647
2021 28 883 443 3 124 472 9 209 702
WoodchipsFuel oil and natural gas
35 000 000
30 000 000
25 000 000
20 000 000
15 000 000
10 000 000
5 000 000
0
kWh
Annual report Ekornes QM Holding 2021 ENVIRONMENTAL SOCIAL AND GOVERNANCE
ENVIRONMENTAL SOCIAL AND GOVERNANCE Annual report Ekornes QM Holding 2021
20
Product
Our vision “Ekornes for Life” means that our goal is to create furniture that is loved, used and reused for generations and
crafted from sustainable and renewable materials. Our ambitions going forward is to design good quality furniture, ready for
generations, for a circular future.
For Ekornes, a sustainable piece of furniture is one that is robust and does not need to be replaced often. A high-quality piece
of furniture will also have a high second-hand value.
Environmental practice is a part of the Ekornes culture and encourages “More with less” through the whole value chain.
Based on life-cycle considerations, Ekornes acknowledges that the extraction, rening and transportation of raw materials
for production of components going into our products represent the largest impact on the environment. Since Ekornes only
has indirect inuence on these processes, we take responsibility by continuously improving the efciency of in-house
processes, through maximizing the utilization of raw materials and other resources.
Circular perspective
Designing products that will last for generations means designing for the future. Ekornes are working on constructing
products that will meet the future demands for separability of components when the products meet the end-of-life phase. A
product that can be more easily recycled or reused promotes the circular economy and reduces waste.
Ekornes has a focus to utilize byproducts from the furniture production. Utilizing byproducts from the production is
conducted to reduce the waste generated and focusing on a lifecycle perspective. One of the resources that are recycled on
site, directly into the production cycle, are offcuts of foamed plastic or ber. The offcuts are collected, shredded and
remolded. In addition to reusing some by-products from production at Ekornes’s own factories, other by-products can
represent valuable raw materials for other enterprises. Leather hides are a valuable raw material, which Ekornes is continuously
seeking to make maximum use of. Investments in modern technology have helped to reduce the volume of offcuts. Remaining
leather offcuts are collected and sold to producers of small articles.
Ekornes has now succeed in producing the Stressless
®
Dining chairs completely separable. Plastic construction, foam, steel
and textiles can all be separated at the end of life of the product. A separable product improves the possibility to repair
specic parts if needed. During 2021, Ekornes launched Stressless Dining with removable covers. These washable covers
can also be changed with a new design which suits the customers’ lifestyle.
Ekornes aims to make more circular products for the future. This is embedded into the product development focusing on
every step of the product lifespan.
Environment Product Declarations (EPD) has become an important tool for Ekornes to evaluate the total environmental
impact through the product lifespan. Ekornes aims to obtain EPD for all products.
There is still a way to go to make our products completely separable and Ekornes will continue its effort to make products
that will t for future generations.
Quality products
Ekornes has always focused on producing high quality products, with long lasting comfort and a good secondhand value.
To determine the quality of our furniture, Ekornes follows the requirements for strength, stability and security set by the
Norwegian “Møbelfakta”. This is a Norwegian industry initiative to promote high furniture standards. Membership in
Møbelfakta requires ISO 14001 certication of the organization.
Through its membership, Ekornes commits to environmental and quality certied production and certication of the
products according to current requirements and criteria (see www.mobelfakta.no).
ENVIRONMENTAL SOCIAL AND GOVERNANCE Annual report Ekornes QM Holding 2021
21
Quality Certication of furniture requires extensive quality testing by an accredited furniture testing laboratory according
to current specications in accordance with international standards (EN standards).
The furniture is tested by the following criteria:
• Strength and durability, function
• Stability and security, risk
• Material quality (wood, textiles, leather)
• Surface treatment
• Fire resistance
These standards meet European requirements. Furthermore, Ekornes test towards international requirements to ensure
that our products are compliant in the markets where we operate. All new products are tested at accredited laboratories, but
Ekornes also performs internal testing prior to ofcial testing. Quality requirements in the various commodity and component
categories is a work done in interdisciplinary collaboration with manufacturing and purchasing.
Ekornes will further seek to enhance the customer experience through a lifecycle perspective. The future should involve
products developed with the same high quality and comfort with more circular product solutions.
Materials
Our production complies with the comprehensive European chemical legislations REACH. As a global company, the Ekornes
Group also comply with other important governmental regulations in the markets where we operate. Chemical usage is
monitored, evaluated and controlled by an internal resource group.
In 2021, Ekornes decided to use only materials certied by the Forest Stewardship Council (FSC) in our products to ensure
that our products only come from sustainable sources. Ekornes has started the process of obtaining FSC Chain of Custody
Certication to verify that FSC materials have been used in the entire supply chain, from forest to nished product.
Recycled packaging
Packaging is important as it ensures safe transport of the product to its destination without damages. A damaged product
becomes waste and requires the production of a replacement product. Hence, safe packaging is an important environmental
driver for Ekornes.
For many years, Ekornes has used engineered expanded styropor, together with cardboard and plastic to safely secure our
products to its destination. We have now started putting this into a more circular perspective and have collaborated with our
supplier, Vartdal, to think new. In 2021, Ekornes launched its recycled styropor, Styropor
®
Ccycled™, packaging as the rst
furniture manufacturer in Europe. Compared with conventional Styropor
®
, the production of Styropor
®
Ccycled™ saves at
least 50 percent of CO2.
People
Annual report Ekornes QM Holding 2021 ENVIRONMENTAL SOCIAL AND GOVERNANCE
ENVIRONMENTAL SOCIAL AND GOVERNANCE Annual report Ekornes QM Holding 2021
22
The working environment and the employees
Ekornes recognizes that its employees are the group’s most important resource. The Group therefore wants to promote a
healthy, safe and fair working environment, offering equal opportunities regardless of gender, ethnicity or religion, in line
with prevailing legislation and regulations.
The Group’s policy states that Ekornes shall act as a responsible enterprise and operate within all relevant laws, regulations
and to strict ethical standards.
Ekornes clearly states, both internally and externally, that the company endeavours to comply with the UN’s Global
Compact’s ten principles. This policy is presented in on the websites and available for all stakeholders (Ekornes Ethical values
and anti corruption policy).
Our main PEOPLE goal is to enhance the life quality for the people around us and building better local communities.
As of 31 December 2021, Ekornes employed a total of 3 321 people, of whom women accounted for 45%. Of the total
number of employees, 60 % work outside Norway.
Ekornes gives high priority to the safety of its workforce and aims for zero work-related personal injuries. The Group is
working actively in the areas of prevention and emergency preparedness to reduce the number of personal injuries incurred.
Total employees Women Women % Men Men %
Norway 1324 516 39 % 808 61 %
Europe (Except Norway) 337 202 60 % 135 40 %
US 130 56 43 % 74 57 %
APAC 1530 730 48 % 800 52 %
TOTAL GROUP 3321 1504 45 % 1817 55 %
35
30
25
20
15
10
5
0
4,5
4,0
3,5
3,0
2,5
2,0
2019 2020 2021 2019 2020 2021
3,20%
2,50%
3,50%
4,00%
3,50%
3,00%
2,50%
2,00%
1,50%
1,00%
0,50%
0,00%
Personal Injutires Absence Rate
Lost Time Injuries (I.h. scale) LTI Rate (r.h. scale)
ENVIRONMENTAL SOCIAL AND GOVERNANCE Annual report Ekornes QM Holding 2021
23
Ekornes has a goal that sick leave shall not exceed 5 % in the Norwegian companies. In companies outside Norway the sick
leave shall not exceed the average level for the respective countries.
The working environment is considered to be good, and efforts for improvements are made on an ongoing basis. Group climate
survey will be performed during 2022. The Group’s various working environment committees held regular meetings in
2021. Several issues have been discussed in the committees, which have resulted in recommendations of improvements to
the related departments.
The cooperation with employee trade unions has been constructive and contributed positively to operations.
Improving diversity and inclusion throughout the group is becoming a higher priority in a globalized workforce where rms
compete for a new generation of talent that views diversity as the norm, not the exception, and where more diverse teams
can deliver greater success.
Ekornes places great emphasis on meeting the objective of the Norwegian Anti-Discrimination Act and the Norwegian
Anti-Discrimination and Accessibility Act (Likestillings- og diskrimineringsloven). Through physical access and the formation
of work tasks, working hours and workplaces, the company has conducted arrangements to enable people with disabilities to
enjoy equal treatment and provide individual adaptation. Providing individual adaptation is also contributing to lower
absentee rates. One way of providing individual adaptation is through the Green working stations. These working stations
are designed for eased work for employees with smaller disabilities.
Ekornes received the Diversity Prize for 2021 in Møre og Romsdal county, for “the conscious work to exploit the potential of
diversity - for the benet of both the company and employees with a multicultural background” – jury description.
Ekornes has Inclusive Working Life agreements for all Norwegian entities for the period 2019–2022. The Inclusive Working
Life scheme stems from a tripartite agreement between employers’ organizations, trade unions and the government, to
make it possible for everyone who is able and willing to work.
Ekornes has an active goal to have zero impositions from external controls/ inspections through pro-active HSE management.
More information about Ekornes’ statement of equality and non-discrimination for the legal companies Ekornes AS, J E
Ekornes AS and Ekornes Beds AS in Norway is available from the company’s website www.ekornes.com/en/people.
Ekornes supply chain governance
Ekornes works systematically with its value chain pursuant to its Supplier Code of Conduct (Ekornes Supplier Code of Conduct).
The Code includes a requirement for suppliers to have management systems that ensures compliance with the Code.
The Code species requirements relating to compliance with internationally recognized principles for labour, such as health
and safety, freedom of association and collective bargaining, child labour, forced labour, as well as requirements for minimum
wages, working hours and regular employment.
The Code covers key human rights principles such as no tolerance for discrimination and inhumane treatment, as well as
anti-corruption and bribery provisions.
Every year all suppliers are risk and precision evaluated. The supplier risk assessment is a part of the basis for the annual
supplier audit programme. These audits are social audits which reects upon the Ekornes Supplier principles and the Ekornes
code of conduct. Additionally, Ekornes performs specic due diligence analysis on the different materials, such as wood materials.
Annual report Ekornes QM Holding 2021 ENVIRONMENTAL SOCIAL AND GOVERNANCE
ENVIRONMENTAL SOCIAL AND GOVERNANCE Annual report Ekornes QM Holding 2021
24
Partnerships for the goals
The board of Ekornes has adopted the UN’s Global Compact ten principles to clarify what we expect and require of ourselves
and our business partners. The UN Global Compacts ten principles serve as the overarching framework for our Internal
Code of Conduct and the external Ekornes Supplier Code of Conduct. The code of conduct is, in addition, based on
internationally acclaimed conventions and norms which are embodied in national laws and regulations. Ekornes expects that
our carefully selected suppliers and business partners endeavor to comply to these principles.
Through the UN Global Compact, the Ekornes Group is determined to conduct a sustainable manufacture of durable
products. To ensure that our products are completely safe, our suppliers are prompted to comply to these regulations
through our supplier principles. Striving to comply with these regulations gives us the security that our quality products are
in compliance with the strictest requirements and regulations.
UN Sustainability goal number 17 is an important goal for Ekornes. Working together for better sustainable solutions.
Ekornes is currently a member/ participating in the following arenas
Partnerships for sustainable development
WATTN ENERGI ARENA Through the network, Ekornes learn from the experiences of other manufacturers in the Sunnmøre
area. A part of this network is training on energy management theory based on the principles of the ISO 50001 standard.
LEATHER WORKING GROUP is organisation that focus on sustainable valuechains in the leather industry. LWG provide
auditing tools to assess the environmental performance of leather manufacturing facilities – and certify according to their
standards.
UNITED FUTURE LAB Ekornes is a partner of the Norwegian future lab located in Aalesund.The labs main goal is to help
partners achieve The UN Sustainable Development Goals.
This sustainability report for the scal year of 2021 addresses the Ekornes Group legal requirements for business reporting
specied in the Norwegian Accounting Act (“Regnskapsloven”) §3-3 c – Statement of corporate social responsibility.
The Sustainability report 2021 is additionally our Communication on Progress (COP) for 2021 to the UN Global Compact.
Our Sustainability report reects upon our consciously commitment to the ten principles of the UN Global Compact.
ENVIRONMENTAL SOCIAL AND GOVERNANCE Annual report Ekornes QM Holding 2021
25
Environmental Disclosures
Unit Target Target Year 2021 2020 2019
Energy
Transportation MWh 525 403 431
Stationary Combustion MWh 3 893 3 260 4 979
Direct Energy Consumption (Scope 1) MWh 4 419 3 663 5 410
Electricity purchased MWh 29 299 25 758 25 126
District Heating MWh 211 142 211
Indirect Energy Consumption (Scope 2) MWh 29 509 25 900 25 337
Total Energy Consumption (Scope 1+2) MWh - 40% * 2030 33 928 29 563 30 747
Energy per revenue unit kWh/NOK 7,9 8,5 9,7
Share from Renewable Energy % 61 % 70 % 67 %
GHG emissions
Scope 1 emissions tCO2e 1 015 883 1 112
Scope 2 emissions tCO2e 3 243 2 448 2 251
GHG emissions Scope 1+2 tCO2e 2140 ** 2030 4 258 3 331 3 363
Scope 3 emissions tCO2e 577 475 860
Total GHG emissions Scope 1+2+3 tCO2e 4 834 3 806 4 223
Scope 1+2 emissions per revenue unit gCO2e/NOK 0,99 0,96 1,06
Transportation
Share of nished goods transported by sea % > 70% 58 % 68 % 61 %
Waste
Total Waste generated t 6 857 4 394 4 098
Non-Hazardous Waste generated t 6 760 4 212 4 000
Hazardous Waste t 98 182 98
Hazardous Waste Share % 1,4 % 4,1 % 2,4 %
Recycled Waste 5 334 3 076 2 797
Recycled waste Svane and Stressless factories % > 90% 2025 80 % 80 % 77 %
Recycled waste Group % 100 % 2030 78 % 70 % 68 %
Total Waste per revenue unit t/NOK 1,6 1,3 1,3
Social Disclosures Unit Target Target Year 2021 2020 2019
Employees
Norway % 40 % 50 % 50 %
Intenational % 60 % 50 % 50 %
Total number of employees # 3 321 2 846 2 287
Health and Safety
Lost time injuries (LTI) # 0 30 17 18
Lost time injuries rate LTI/Mill hrs 0 4,2 3,4 4,0
Absence rate % 3,5 % 2,5 % 3,2 %
Workforce composition
Male % 55 % n.a. n.a.
Female % 45 % n.a. n.a.
Female gender ratio per geographical region
Norway % 39 % n.a. n.a.
International % 49 % n.a. n.a.
Management composition
Male % 92 % 98 % 88 %
Female % 8 % 2 % 13 %
Appendix
Performance overview
* From 2015 level of 44.7 GWh
** From 2015 level 3 890 tCO2e
Annual report Ekornes QM Holding 2021
26
Annual report Ekornes QM Holding 2021
27
The Board of Directors
Ekornes QM Holding AS
Annual report Ekornes QM Holding 2021 BOARD OF DIRECTORS EKORNES QM HOLDING AS
BOARD OF DIRECTORS’ REPORT Annual report Ekornes QM Holding 2021
28
The board of directors
Ruihai Zhao (1965), Chair
Position: Chair and CEO of Qumei Group.
Education: MBA (Cheung Kong Graduate School of Business, China), degrees in
global business management from Tsinghua University, China and University of
Minnesota, USA.
Experience: Founder and chair of Qumei Home Furnishings Group, with more
than 30 years’ experience of the furniture industry.
Mogens Falsig (1950), representitative of Qumei, Europe
Position: Board member and CEO of Ekornes QM Holding AS.
Education: PhD in Chemistry, University of Aarhus, Denmark.
Experience: More than 25 years’ experience in Furniture industry.
BOARD OF DIRECTORS’ REPORT Annual report Ekornes QM Holding 2021
29
Report of The Board of Directors
2021 was a record-breaking year for Ekornes both in terms
of revenues and orders, where consumer demand for home
furnishing products remained high after a strong uplift
during the Covid-19 pandemic. Although the pandemic
continued to impact operations and markets, Ekornes was
well positioned to capitalize on the strong market momentum.
Throughout the year, Ekornes prioritized operational and
nancial exibility to maintain the ability to deliver under
rapidly changing market conditions. Along with persisting
high demand, production capacity was increased and
maintained at a high level. Combined with successful launches
of new products, particularly within the power segment,
sales reached new heights.
As seen across the industry, challenging logistics and
inated prices on critical input factors increased Ekornes’
overall cost base in 2021, impacting margins particularly
towards the end of the year. The company initiated mitigating
actions at an early stage to address the situation, mainly
through price increases. Furthermore, in a situation with
sea freight constraints, signicant efforts were taken to
secure distribution capacity, limiting the impact on operations.
Ekornes’ key success factors to ensure ability to deliver
have been a solid distribution network combined with
favourable geographical diversication of production and
sales channels. With continued high spending on household
and furnishing products across all regions, Ekornes has
increased sales in all segments where the Group operates.
Ekornes has a relentless focus on optimizing efciency, and
is currently integrating the Stressless
®
and IMG activities to
create synergies across the two segments. To fuel further
growth Stressless
®
is entering new product categories such
as outdoor, dining and sleeping. For the sleeping segment,
Svane
®
will remain the selling brand in the Nordic markets,
while leveraging the Stressless
®
brand outside the Nordic
region.
Even as demand remains high entering 2022, Ekornes is
prepared for a gradual easing towards pre-pandemic levels.
The Group has, however, strengthened its market position
during the pandemic, fuelled by reliable deliveries and
strong market responses to new products. By continuing the
development of existing and new markets, while maximizing
operational efciency, the Group expects to benet from
market dynamics as a renowned global premium furniture
manufacturer.
Company history and ownership
Ekornes QM Holding AS was founded on 4 January 2018
with the purpose of acquiring the Ekornes Group. In May
2018, an offer was made to purchase the shares of all
Ekornes shareholders. The share purchase was completed
in August 2018 and Ekornes AS was delisted from the Oslo
Stock Exchange in October 2018.
Norwegian ultimate parent company Ekornes QM Holding
AS is a wholly owned subsidiary of Qumei Home Furnishing
Group. The Ekornes Group is the only operational part of
the Ekornes QM Holding Group. The Ekornes Group is
consolidated from the acquisition date.
The consolidated nancial statements comprise the nancial
statements of the parent company Ekornes QM Holding AS
and its subsidiaries as at 31 December 2021. Ekornes QM
Holding AS had as at 31 December 2021 100% shareholding
and voting rights in Ekornes AS who in its turn has a 100%
ownership share and voting rights for all other consolidated
companies.
Nature of the business and strategy
Sales primarily target the home furnishings market, where
Stressless
®
and IMG are marketed globally, while Svane
®
is
marketed in the Nordic region and selected markets in
Central Europe.
Stressless
®
is currently the most well-known furniture
brand in Europe, and more than 85 million people recognize
the brand worldwide. Stressless
®
is the Group’s premium
brand, and investments are made to maintain and expand
consumer awareness. IMG’s goal, on the other hand, is to
build a strong brand awareness among furniture distributors,
positioned as in the mid-range price segment.
The Group sells all its brands through selected distribution
partners. These are primarily furniture chains and independent
retailers, but other relevant distribution channels are also
deployed.
The Group’s corporate headquarters is located at Ikornnes
in Sykkylven, Norway. The Group has sales ofces in
Norway, Denmark, Finland, Germany, the UK, France, the
USA, China, Japan, Thailand, New Zealand and Australia.
Annual report Ekornes QM Holding 2021 BOARD OF DIRECTORS’ REPORT
30
Production takes place at ten factories in Norway (5),
Thailand (1), Vietnam (2), the USA (1) and Lithuania (1).
As at 31 December 2021, Ekornes employed a total of 3
321 people, of which about 40% are employed in Norway.
Financial performance
Ekornes QM Holding Group generated operating revenue
of NOK 4 318 million in 2021, up 24% from NOK 3 481
million in 2020. The increase in revenues was mainly driven
by sustained high consumer spending on home furnishings
as demand surged during the Covid-19 pandemic. Sales
momentum remained strong in all markets across segments
throughout the year.
All segments have experienced higher sales than in 2020.
Underlying sales revenue from the Stressless
®
segment
was NOK 3 167 million (2 539), revenue from IMG was
NOK 850 million (672), while revenue from Svane
®
amounted
to NOK 301 million (271).
Total operating expenses for the year amounted to NOK 3
804 million, a 22% increase from NOK 3 118 million in
2020, mainly reecting increased capacity and higher
activity. Cost of goods sold share of total revenues were
28% up from 26% in 2020, reecting increased cost on raw
material and input factors, particularly during the second
half of the year, negatively impacting margins in the fourth
quarter. To address cost development, Ekornes has increased
prices on most products, initiatives expected to come into
effect during the rst half of 2022.
Payroll expenses also amounted NOK 1 210 million or 28%
of total revenues. This is down from 29% in 2020, reecting
increased activity and higher capacity utilisation.
Other operating expenses, mainly costs related to sales and
marketing, ended at NOK 1 083 million, up from NOK 875
million in 2020, the increase mainly related to campaigns and
extraordinary marketing activities towards the end of the
year. As share of operating revenues, other operating
expenses were unchanged from 2020 at 25%.
In 2021, research and development costs totalled NOK 45
million (NOK 39 million in 2020). These costs relate to
salaries and other expenses, as well as the depreciation of
capitalized R&D costs. Costs directly associated with the
development of a xed operating asset are included in the
capitalized value of the asset if all the criteria for capitalization
have been met. Expenses that arise early in the project phase,
as well as maintenance costs, are recognized in expenses as
they arise. The Group did not capitalize development costs
in 2021 (NOK 0 million in 2020).
Operating earnings (EBIT) for the full year 2021 came in at
NOK 514 million compared with NOK 363 million in 2020.
This corresponds to an EBIT margin of 11.9%, up from
10.4% in 2020. The earnings increase is related to higher
sales and improved operational efciency, driven by higher
capacity utilization and reduced costs.
Net nancial items were negative at NOK 176 million (-185).
This includes nancial expenses of NOK 191 million (210),
partly offset by net gains from foreign exchange of NOK 6
million (13) and nancial income of NOK 9 million (12).
Earnings before tax for the year ended at NOK 338 million
(178). Tax expenses amounted to NOK 64 million (36),
which gave a net result for 2021 of NOK 274 million (142).
Cash ow
Net cash ow from operating activities in 2021 was NOK
241 million. Cash ow is driven by good underlying operational
performance, partly offset by paid taxes of NOK 90 million
and an increase in net working capital* of NOK 399 million
due to an inventory increase throughout the year.
Net cash ow from investing activities during the year was
negative at NOK 109 million, mainly related to ongoing
investments in day-to-day operations and capacity increases
at production facilities.
Net cash ow from nancing activities was negative NOK
238 million. This includes Ekornes QM Holding AS’ purchase
of Ruisi Holding Companys ownership share of 9.5% in
Ekornes Holding AS of NOK 741 million, which was mainly
funded by drawing NOK 600 million in short-term debt.
Furthermore, the gure includes payment of lease liabilities
and dividend payments to non-controlling interest Ruisi
Holding Company for the rst three quarters.
Net change in cash and cash equivalents during the year
was negative by NOK 107 million, and as at 31 December
2021, total holding of cash and cash equivalents stood at
NOK 350 million.
The board considers the Group’s liquidity position to be
satisfactory.
*Working capital = trade receivables + inventory – trade
payables
BOARD OF DIRECTORS’ REPORT Annual report Ekornes QM Holding 2021
31
Financial position
At the close of 2021, the Group’s working capital totalled
NOK 1 389 million, compared with NOK 990 million the
year before. During the year, inventory rose by NOK 454
million, while receivables increased by NOK 33 million.
Trade payables increased by NOK 89 million.
As at 31 December 2021, Ekornes had total assets of NOK
8 090 million, compared with NOK 7 748 million 12 months
earlier. Book value of properties, plants and equipment
amounted to NOK 1 492 million. Total intangible assets
totalled NOK 4 388 million, of which brand name and
goodwill accounted for NOK 1 521 million and NOK 1 561
million, respectively.
Total equity amounted to NOK 3 083 million, corresponding
to an equity ratio of 38%, which is down from 46% the year
before. Total interest-bearing debt amounted to NOK 3
098 million, up from NOK 2 501 million at the end of 2020.
The increase in debt follows the acquisition of Ruisi Holding
Companys 9.5% ownership share mainly being funded by
drawing on short-term debt.
The interest-bearing debt includes unsecured bank loans
with DNB and Sparebanken Møre for a total of NOK 1 088
million. The Group is in the process of renancing the bank
facilities maturing in September 2022. However, as at 31
December 2021, NOK 1 088 million were classied as
short-term debt and available short-term credit facilities
amounted to NOK 150 million.
Financial covenants and bond agreement
In April 2019, Ekornes QM Holding AS issued a stock
exchange listed bond to renance the Ekornes QM Holding
Group. The bond agreement is subject to a set of nancial
covenants, including a minimum liquidity of NOK 125 million
and a maximum leverage ratio of 5.25. The covenants are
measured quarterly on a 12-month rolling basis for Ekornes
QM Holding Group.
Following the outbreak of the Covid-19 pandemic in March
2020, Ekornes experienced an immediate and signicant
drop in order receipts and sales. Due to the new situation,
Ekornes performed stress tests on key nancial indicators,
with satisfactory results. However, with the outlook for a
negative impact on earnings being substantial short- to
mid-term and the risk of a covenant breach in the bond
agreement by the end of second quarter 2020, Ekornes
entered an agreement with bondholders for amendments
to covenants until June 2021 (see note 12 to the nancial
statements for 2020 for more details).
At 31 December 2021, the Group was compliant with the
original covenants under the bank and the bond agreements.
The leverage ratio was 3,42.
Ekornes has call options to redeem the bond with the rst
expiry date in April 2022. The bond matures in October 2023.
The Group is in the process of evaluating a renancing
process to nd an optimal long-term nancing structure.
Dividend
The bond and bank agreements include restrictions on
dividend payments from the issuer, and Ekornes QM Holding
AS is not in position to distribute any dividends for the
nancial year 2021.
Allocation of net prot
It is proposed that the company Ekornes QM Holding AS’s
net prot for the year, in the amount of NOK 11,2 million be
transferred to other equity. The company’s equity and
liquidity are deemed to be satisfactory.
Going concern
In accordance with section 3-3 of the Norwegian Accounting
Act, it is hereby conrmed that the nancial statements
have been prepared on the assumption that the entity is a
going concern. The board considers that the annual
nancial statements for Ekornes QM Holding AS and the
Group provide a true and fair picture of the company’s
results for the 2021 nancial year and the company and
Group’s nancial position at the close of the year.
Risk exposure and risk management
Market and business risk
Ekornes seeks to develop products and concepts that can
provide international market opportunities. Distribution of
sales across several markets offers possibilities for continued
growth, at the same time as it spreads market risk and
reduces the Group’s dependence on individual markets and
individual customers. Ekornes’ business risk relates to
economic cycles, market conditions, political and legislative
and changes in the competitive climate, as well as the
general pattern of consumption in the markets in which it
operates. The Group competes in a fragmented international
market, with many players on both the production and the
distribution side. The most signicant structural changes
with respect to the players’ size have been, and remain, on
the distribution side. In several markets, the extensive
formation of retail chains has taken place. Online selling is
also changing the distribution environment to a greater and
greater extent. With respect to furniture manufacturing, a
Annual report Ekornes QM Holding 2021 BOARD OF DIRECTORS’ REPORT
BOARD OF DIRECTORS’ REPORT Annual report Ekornes QM Holding 2021
32
growing proportion takes place in low-cost countries in
Europe and Asia. Ekornes is aware of the challenges these
changes entail and seeks to respond through continuous
improvements in its production processes, sourcing, market
concepts, product development and business relations.
Financial risk
Financial risk for Ekornes relates primarily to uctuations
in exchange rates (the NOK against other countries’
currencies) and to credit risk, i.e., the ability of the Group’s
customers to repay what they owe.
Foreign exchange risk
Ekornes’ competitiveness is over time affected by movements
in the value of the NOK in relation to other currencies. The
Group sells its products internationally and bills its customers
largely in the respective countries’ domestic currencies.
The Group manages all matters relating to foreign currencies
and foreign exchange risk from its head ofce. Currency
hedging is an integrated part of the operational activities.
As part of the Group’s efforts to reduce its currency risk/
exposure, it also seeks to purchase goods and services for
use in Norway from abroad, where this is cost-effective.
This, combined with the Group’s distribution, sales and
marketing activities, along with the associated administrative
organization required, provides a natural operational hedge
for the exchange rate risk (natural hedging) associated with
part of its cash ow.
In addition to natural hedging, the Group makes use of
forward contracts for further currency hedging. This does
not reduce the long-term foreign exchange risk but provides
predictability within the hedging period.
Customer and credit risk
The Group’s customers are largely furniture retailers, and
there are more than 4 000 customers, with the largest
individual customer representing around 4 % of total
revenues. The Group’s customer and credit risk is considered
low. Trade receivables are followed up on an ongoing basis,
to detect payment irregularities and limit bad debts.
Interest rate risk
The Group’s interest rate risk is associated with both short-
term borrowings and the bond issued in April 2019. Loans
at oating interest rates constitute an interest rate risk for
the Group’s cash ows. The Group has a stable nancial
structure. Lenders are well-reputed Norwegian banks.
Operational risk
At any given time, Ekornes is exposed to the risk of
unforeseen operational problems, which may lead to higher
operating costs and lower earnings than predicted and
expected. To reduce the nancial consequences of unforeseen
events, the Group has insurance covering losses deriving
from major incidents or lengthy business interruptions.
To ensure operational efciency, the Group has good
systems and routines for maintenance, training and quality
assurance – all factors which help to reduce the risk of
operational non-conformance. IMG is considered to
represent a slightly higher operational risk than Stressless
®
production.
Supplier risk
An important element in Ekornes’ strategy for ensuring
efcient operations is reliable access to raw materials and
other input factors of consistent quality, including securing
distribution and transportation capacity. The Group seeks
to always have at least two or three actual or potential
suppliers for its strategically most important input factors.
In some cases, however, this is neither possible nor expedient.
The objective is nevertheless that sole-supplier situations
should be the exception, and preferably be avoided altogether.
Segments and markets
The division into product areas is based on Ekornes’
management and internal reporting structures and coincides
with the division into segments.
Stressless
®
Performance for Stressless
®
in 2021 continued the strong
momentum from last year, with strong sales in all markets.
The demand surge experienced after the outbreak of the
Covid-19 pandemic, has remained high throughout the
year and Stressless
®
has been able to capitalize on the
strong demand for furniture and household products.
Stressless
®
has over time focused on improving commercial
conditions, including initiatives within product development
and innovation, distribution optimization, closer customer
partnerships and targeted market initiatives with new and
relevant customer offerings. Reliable and timely deliveries,
successful launches of new products, particularly in the
power category, and increased promotional activities, drove
sales of Stressless
®
products substantially up in 2021.
Full year operating revenue for Stressless
®
ended at NOK
3 167 million, representing a 25% increase from 2020.
BOARD OF DIRECTORS’ REPORT Annual report Ekornes QM Holding 2021
33
Operating earnings (EBIT) came in at NOK 417 million (276),
corresponding to an operating margin of 13.2% (10.9%).
Despite European markets being periodically impacted by
Covid-19 related restrictions throughout the year, the
overall development in the region was good, with full year
sales well above 2020 levels. While 2021 sales mainly came
from recliners, sofas and power products, the newly
launched Stressless
®
Dining collection was the fastest
growing category.
Sales development in the Nordic markets was solid
throughout the year, especially in Denmark and Norway,
with the highest demand within the recliner and dining
categories. Rolling out dining products to other regions will
be a priority going forward.
Germany is the single most important market for Ekornes
in Europe. Despite a challenging rst half year, heavily
impacted by shut-downs, full year order intake increased,
even compared to a strong 2020. During the lock down
periods a broad range of initiatives were taken to secure
availability of Stressless
®
products. This, combined with a
good reception of long-awaited motorized products and
retailers reorganising shop oors to favour brands and
near shore production, paved the way for a strong second
half and a satisfactory full year.
North America continued the strong sales performance
seen last year through 2021. Retail demand across all home
furnishing products was strong, with Stressless
®
maintaining
its competitive advantage through reliable and precise
deliveries, ending the year with orders up more than 60%.
After a somewhat lagging re-opening, performance in
Canada returned to pre-pandemic levels during the last
part of the year.
Power was the best-selling category of the Stressless
®
collection in North America, with Stressless
®
Mary and
Emily as the strongest selling brands in the sofa line-up.
Introduction of new commercial variants of Stressless
®
Emily will broaden consumers’ options and is expected to
drive sales of power sofas further into 2022. In the recliner
line-up, Stressless
®
Mike and Stressless
®
Max sales were
high as demand for recliners persisted.
Overall, Asian markets showed solid growth in 2021,
despite being periodically impacted by lockdowns and
restrictions. Chinese markets have developed positively,
especially during the second half of the year, with particularly
strong growth in order intake in the fourth quarter. Being
highly dependent on customers’ ability to see products in
the stores, Ekornes continues its efforts to build a wide
Stressless
®
distribution network in China, based on a broad
range of showrooms channelling trafc to major agship
stores. Ekornes has ambitions to signicantly expand its
dealer network going forward.
As seen across the industry, inated prices of input material
and higher distribution costs increased the overall cost
base. To address the situation, Stressless
®
increased prices
and adjusted campaign programmes early in 2021. However,
as increased distribution costs came into effect immediately,
measures taken to increase prices take longer to materialize,
impacting margins in the short near term. However, as
price increases are rolled out and the strong demand for
premium products in the Stressless
®
product offering
continues, the situation is expected to normalize during the
rst half of 2022.
A key priority for Stressless
®
is to secure product availability
for retailers and to broaden the distribution network while
introducing new relevant products. This includes entering
new product segments such as outdoor and sleeping,
leveraging the Stressless
®
brand and rolling out Stressless
®
Dining to regions outside the Nordics. Furthermore,
improving operational efciency is key, including efforts to
combine Stressless
®
and IMG operations into one.
Generally, the robust supply chain of Stressless
®
and ability
to deliver is a signicant competitive advantage. While lead
times have increased slightly during the year, the situation
is signicantly better than amongst peers with limited stock
availability and more distant production. Entering the new
year, Stressless
®
is well positioned to maintain its strong
position, with stock levels well aligned with expected demand.
IMG
IMG has continued the strong performance in 2021, driven
by sustained consumer focus on the home furnishing
sector, but also by the solid development in IMG’s customer
base in key markets such as North America and Australia.
The reliable supply chain and exible production have
further aided the ability to service customers as well as
gaining new distribution.
The brand remains committed to the white label strategy,
which includes agreements with large industry players to
promote and sell selected IMG recliner models. The strategy
showed signicant effect in 2021, with big orders from
leading distributors such as US wholesaler Costco. The
company is pursuing similar agreements with other major
retailers.
Annual report Ekornes QM Holding 2021 BOARD OF DIRECTORS’ REPORT
34
IMG recorded revenues of NOK 850 million in 2021, an
increase of 27% compared to 2020. Operating earnings
(EBIT) came in at NOK 93 million, a 23% increase from
NOK 75 million in 2020.
Demand in the furnishing sector remained buoyant with a
high order reserve, and with a reliable supply chain and high
production capacity, IMG delivered persistent performance
throughout the year. The growth seen in 2020 extended
through 2021, with orders rising by 25% to NOK 1.0 billion.
Performance was driven by good development in all core
markets, particularly North America. In Europe, Scandinavia
was leading the way, with the reminder of the region a
target for growth as IMG leverages its group structure. In
the APAC region, Australia and New Zealand have been
well established businesses with strong growth. Looking
forward, growth expectations for the region are highest in
Northern Asia as IMG continues to expand distribution.
Supply chain and logistics risk remain the most important
limitations to performance for IMG in the near term. In
addition, consumer demand is expected to soften as the
world opens up, opening additional competing avenues for
consumer’s discretionary spending. Despite these challenges,
IMG remains positive on the outlook for the business.
Svane
®
After a challenging start of the year with performance
being impacted by shutdowns, sales picked up gradually
throughout the year. As within the industry in general, the
overall cost base increased for Svane
®
and prices were
increased to mitigate the effect. Demand for Svane
®
products
still developed positively and, combined with an improved
product offering and successful campaigns, the brand has
performed well in 2021.
Operating revenue ended at NOK 301 million, up from
NOK 271 million in 2020. Operating earnings (EBIT) came
in at NOK 6 million, down from NOK 15 million in 2020,
mainly reecting increased costs.
The development for Svane
®
was positive in all markets. In
Norway, the demand was high, but the market for beds was
characterized by aggressive pricing and discounting campaigns.
A reliable supply chain and timely deliveries is a competitive
advantage for Svane
®
in the Norwegian market.
In Denmark, performance showed a positive trend with
sales activity high, especially during the second half of the
year. In Finland, however, the situation for complete bed
concepts was more challenging, with a continued negative
sales trend and decreasing demand, also for beds in general.
Performance in Central Europe has varied with the impact
from Covid-19 related restrictions during the year, but
sales gradually picked during the second half of the year,
especially for mattresses.
Going forward, inationary costs, combined with dampened
“home nesting” effects are expected to characterize the
market for beds. Svane
®
aims to mitigate effects from higher
prices on raw materials by adjusting prices and focusing
sales on more expensive premium products while maintaining
a key competitive advantage – the ability to deliver. In
addition, Svane
®
is closely collaborating with key customers
to nd suitable targeted campaign programmes. Going
forward, Svane
®
sees potential in utilizing the Stressless
®
brand, introducing new product categories and targeting
new customer segments.
Production
Due to the severe uctuations in market conditions
following the Covid-19 outbreak, capacity utilization at
Ekornes’ production facilities has varied signicantly
throughout the year. However, the company has high
operational exibility to adapt swiftly to changes in market
conditions.
However, the design capacity varies also with the number
of models being produced and will also be affected by the
production of new models as they normally will have a
longer production time in the beginning.
To meet demand during the market rebound seen during
the second half of the year, production ran at full capacity in
all Ekornes’ production facilities. Production capacity may
be increased by increasing the number of employees. This
applies to both Stressless
®
, IMG and Svane
®
.
Related parties
The Group’s related parties comprise members of the
board and management, as well as companies those individuals
control or have a signicant inuence over.
Ruihai Zhao, who chairs the board of directors, is one of the
primary shareholders of Qumei Home Furnishings Group.
IMG sells furniture in the Chinese market through Qumei’s
stores in China. The agreement regulating these transactions
has been entered into at market terms and on the basis of
the arm’s length principle.
30 July 2021, Ekornes QM Holding acquired the remaining
9.5% of the shares in Ekornes Holding AS Ruisi Holding
Companys for NOK 741 million. Following the transaction
BOARD OF DIRECTORS’ REPORT Annual report Ekornes QM Holding 2021
35
Ekornes QM Holding controls all shares in Ekornes
Holding AS.
No other material transactions with related parties took
place during the reporting period.
The working environment and the employees
Ekornes recognizes that its employees are the group’s most
important resource. The Group therefore wishes to
promote a healthy, safe and fair working environment,
offering equal opportunities regardless of gender, ethnicity
or religion, in line with prevailing legislation and regulations.
As of 31 December 2021, Ekornes employed a total of 3
321 people, of whom women accounted for 45%. Of the
total number of employees, 60 % work outside Norway.
Ekornes gives high priority to the safety of its workforce
and aims for zero work-related personal injuries. The
Group is working actively in the areas of prevention and
emergency preparedness to reduce the number of personal
injuries incurred. There were 30 lost-time injuries in 2021,
compared with 17 injuries in 2020. This gives an H1-value
for the period of 4.2, compared to 3.4 the year before.
The Group had a sickness absence rate of 3.5 % in 2021,
compared to 2.5 % the year before.
See the chapter “Environment and Social Responsibility”
and section “The working environment and the employees”
for more information
Environment responsibility
The Ekornes Group has made quality furniture for over 80
years. Sustainability has been part of our heritage and
history throughout. We aim to make more from less and
continue to produce long-lasting quality products that
reduce the environmental footprint through the lifecycle.
Our mindset is that a sustainable Ekornes shares the value
it creates between its shareholders, employees and the
communities affected by its operational activities.
Ekornes aims to take a leading position in creating a more
sustainable value chain. Our efforts will not alone change
the world, but we aim to make a difference and set new
standards for our industry.
During 2022, Ekornes will launch its sustainability strategy
towards 2030. This will embark us on an 8-year journey of
change, where we lean forward and challenge existing
solutions to protect the climate, create sustainable furniture
and run a responsible business.
See the chapter “Environment and Social Responsibility”
for more information.
Report on corporate governance
Risk management and internal control
The Board of Directors places a high priority on managing
risk and has and is responsible to ensure that the company
has good risk management and internal controls in accordance
with the regulations that apply to its business activities.
The Board conducts an annual review of the company’s
most important areas of risk exposure, and its internal
control arrangements. Ekornes’ risk management is based
on the principle that risk assessment is an integral part of all
business activities. As a company with global operations,
Ekornes is exposed to various risk factors of a nancial and
operational nature, which may affect business activities
and the company’s nancial position.
The systems and procedures related to risk management
and internal control shall ensure efcient operations, timely
and correct nancial reporting, and compliance with the
laws and regulations to which the company is subject. The
rules and guidelines take into account the extent and
nature of the company’s activities and the integration of
stakeholder considerations in the company’s value creation
through its corporate values, ethical guidelines and corporate
social responsibility policies.
The internal control systems relating to the field of
accounting/nance comprise job descriptions, procedures,
control routines and guidelines/ templates for organising
and performing the company’s nancial reporting and for
its content/quality. Together with supervision of the
organisation and performance of Health, Safety and
Environment activities, this is intended to ensure that the
company operates in compliance with relevant laws and
regulations, and its internal rules and guidelines.
Evaluation of operational risk, which includes marketing
and sales developments, production and developments in
the raw materials markets, are among those areas that are
continuously reported to and reviewed by the board of
directors. Relevant areas of risk, including exchange rates,
HSE, internal auditing, nance and IT, as well as strategic
risk, are reviewed no less than once a year.
Ekornes considers it important that the Group’s values and
ethical guidelines form an integral part of its business
operations. The company guidelines, laid down in “Objectives
and Values for the Ekornes Group” and “Code of Conduct”,
provide guidance for employees in order to reduce the
possibility of the company being placed in situations that
may harm its reputation or nancial standing. It is expected
that employees and business associates comply with them. In
addition, routines have been established for the reporting
and follow-up of wrongdoing and other causes for concern,
and efforts are constantly being made to further develop
and follow up the Group’s corporate social responsibility.
Ekornes QM Holding AS and Ekornes AS has no provisions
in the articles of association that regulate the appointment
and replacement of members of the board of directors.
Ekornes QM Holding AS and Ekornes AS has no provisions
in the articles of association and any mandates that authorize
the board of directors to resolve that the Issuer shall buy
back or issue own Shares.
Management reports monthly to the Board of Directors
on key operational developments, including project risk
assessments, and on nancial performance. In addition,
quarterly nancial reports are prepared and distributed to
the nancial market, in accordance with the Oslo Stock
Exchange’s recommendation
Insurance for board members and general manager
Ekornes has liability insurance for directors and ofcers in
all group companies and the insurance covers claims made
anywhere in the world resulting from a claim rst made
against insured persons during the policy period. The limit
of liability is NOK 100 million per claim and in the annual
aggregate.
Shares and shareholders
At the close of 2021, Ekornes QM Holding AS had a total of
30 000 outstanding shares, all of which were held by one
shareholder. The company’s ultimate owner is Qumei Home
Furnishing Group, with 100% ownership.
As at 31 December 2021, Ekornes QM Holding AS has 100%
voting and ownership in all other group companies through
Ekornes AS.
Subsequent events
The Company is in the nal stage of negotiating extensions
of existing loan facilities with Sparebanken Møre and DNB
for a total of NOK 1 250 million until 15 April 2023. The loan
extensions are expected to be conrmed during April 2022.
No other signicant events have occurred between the
balance sheet date and the date of publication of the
nancial statements which have materially affected the
Company’s nancial position, and which should have been
reected in the nancial statements here presented.
Outlook
Ekornes’ long-term ambition is to deliver protable growth
while improving commercial conditions through product
development and innovation. A key priority is to capitalize
on the strong demand for power products, while developing
and introducing new relevant products in new product
categories. In addition, by combining Stressless
®
and IMG
into one operational unit, the company aims to improve
operational efciency leveraging on the competitive
advantages across the two brands.
Global supply chain and logistics challenges have increased
prices from all Ekornes’ suppliers and partners. To mitigate
the impact, the company has already increased prices on its
products, and protability is expected to improve once
price increases come into effect during rst half of 2022.
Due to the situation in Ukraine there is however a lot of
uncertainties for the further development. The company
expect material and logistic costs to continue to increase,
and that the global supply chain imbalances will continue
throughout 2022. To mitigate for the impacts of this the
company will continue its repricing efforts throughout 2022.
Entering 2022 the sales momentum however remains strong,
with high spending on furniture across all regions. Ekornes
has a solid distribution network, which combined with a high
operational exibility and ability to deliver relevant products
at acceptable lead times, positions the company well to meet
demand and maintain the positive development in the coming
year. Alongside continued development and introduction of
new products, the company is well prepared to utilize
emerging market opportunities also going forward, despite
challenging circumstances. Ekornes remain committed to
support its customers and to maintain the ability to deliver
relevant products with competitive delivery times.
Ruihai Zhao
Chair
Mogens Falsig
Director and CEO
Oslo, 6 April 2022
The Board of Directors of Ekornes QM Holding AS
Annual report Ekornes QM Holding 2021 BOARD OF DIRECTORS’ REPORT
36
Ekornes QM Holding Group
Consolidated nancial statements
Annual accounts 2021
Page
Consolidated income statement 38
Consolidated statement of comprehensive income 39
Consolidated balance sheet 40-41
Consolidated statement of cash ow 42
Consolidated statement of changes in equity 43
Notes to the accounts
Note 1 - Accounting principles 44-49
Note 2 - Business areas – segments - markets 50
Note 3 - Salary and personnel expense 51
Note 4 - Remuneration management and board of directors 52-53
Note 5 - Other operating expenses 54
Note 6 - Research & development 54
Note 7 - Net nancial items 55
Note 8 - Tax related costs 56-57
Note 9 - Earnings per share 57
Note 10 - Estimation uncertainty 58
Note 11 - Property, plant, equipment and intangible assets 59-61
Note 12 - Leasing agreements 62-63
Note 13 - Other receivables and other liabilities 63
Note 14 - Inventory 64
Note 15 - Accounts receivable 64
Note 16 - Cash and bank deposits 65
Note 17 - Shares and shareholders 66
Note 18 - Interest-bearing loans and credit facilities 66-67
Note 19 - Reconciliation for liabilities arising from nancing activities 68
Note 20 - Financial risk 68-71
Note 21 - Group entities 72
Note 22 - Subsequent events 72
37
Annual report Ekornes QM Holding 2021 CONSOLIDATED INCOME STATEMENT
38
Consolidated income statement
(Figures in NOK 000) Notes Y 2021 Y 2020
Operating revenues 2 4 317 868 3 481 709
Cost of goods sold 14 1 205 332 910 103
Payroll expenses 3 , 4 1 209 578 1 017 873
Depreciation and write downs 11 , 12 319 274 303 219
Other operating expenses 5 , 6, 12 1 082 817 874 848
Net other losses (gains) 20 -13 166 12 300
Total operating expenses 3 803 835 3 118 343
OPERATING EARNINGS 514 032 363 366
Financial income and expenses
Financial income 7 8 999 12 022
Net gains (losses) on foreign exchange 7 6 087 13 034
Financial expenses 7 191 067 210 333
Net nancial items -175 981 -185 277
Earnings before tax 338 052 178 089
Tax expense 8 64 108 35 709
EARNINGS FOR THE YEAR 273 944 142 379
Earnings are attributable to:
Controlling interests 246 241 114 857
Non-controlling interests 27 702 27 523
Basic earnings per share 9 9 131,46 4 745,98
Diluted earnings per share 9 9 131,46 4 745,98
The following notes form an integral part of the consolidated nancial statements.
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME Annual report Ekornes QM Holding 2021
Consolidated statement of comprehensive income
(Figures in NOK 000)
Y 2021 Y 2020
Earnings for the year 273 944 142 379
Other comprehensive income
Items which may be reclassied to prot and loss
Translation differences -1 846 -2 995
Translation difference - net nancing subsidiaries 0 61
Change in deferred tax - net nancing subsidiaries 0 -13
Total other comprehensive income -1 846 -2 948
TOTAL COMPREHENSIVE INCOME FOR THE PERIOD 272 097 139 432
39
The following notes form an integral part of the consolidated nancial statements.
Annual report Ekornes QM Holding 2021 CONSOLIDATED BALANCE SHEET
Consolidated balance sheet
(Figures in NOK 000)
Notes 31.12.2021 31.12.2020
ASSETS
Non-current assets
Buildings and sites 11 945 664 1 001 596
Machinery and equipment 11 277 837 278 713
Operating movables and xtures 11 24 478 26 281
Assets under construction 11 26 847 19 319
Right-of-use assets 12 217 321 152 909
Total property, plant and equipment 1 492 148 1 478 818
Software and licences 11 36 075 44 967
Goodwill 11 1 561 115 1 561 115
Customer relations 11 1 162 394 1 221 969
Brand name 11 1 520 841 1 561 515
Deferred tax assets 8 107 661 67 622
Total non-current intangible assets 4 388 087 4 457 189
Other receivables and investments 24 070 20 861
Total non-current nancial assets 24 070 20 861
Total non-current assets 5 904 304 5 956 868
Current assets
Inventory 14 1 272 320 818 136
Trade receivables 15 448 900 415 585
Value of forward contracts 20 4 130 22 732
Other short-term receivables 13 110 388 80 267
Cash and bank deposits 16 350 083 454 624
Total current assets 2 185 822 1 791 344
TOTAL ASSETS 8 090 126 7 748 212
40
The following notes form an integral part of the consolidated nancial statements.
CONSOLIDATED BALANCE SHEET Annual report Ekornes QM Holding 2021
Consolidated balance sheet (contd.)
(Figures in NOK 000)
Notes 31.12.2021 31.12.2020
Contributed equity
Share capital 17 120 120
Premium paid 2 807 354 2 807 354
Total contributed equity 2 807 474 2 807 474
Retained earnings
Translation difference 58 881 61 455
Other equity 216 615 200 551
Total retained earnings 275 497 262 006
Owners of the company 3 082 970 3 069 480
Non-controlling interests 0 500 030
Total equity 3 082 970 3 569 510
Non-current liabilities
Pension liabilities 3 7 855 8 438
Provisions 2 983 3 586
Deferred tax 8 791 052 841 897
Lease liabilities 12 176 289 119 341
Interest-bearing debt - Bond 18 2 010 444 2 001 348
Interest-bearing debt - Bank 18 0 500 000
Total non-current liabilities 2 988 622 3 474 610
Current liabilities
Trade payables 332 135 243 247
Public charges payable 84 331 77 439
Tax payable 8 116 394 62 718
Dividend 21 0 9 241
Interest-bearing debt - Bank 18 1 087 500 0
Other current liabilities 13 346 551 272 567
Lease liabilities 12 51 622 38 880
Total current liabilities 2 018 534 704 092
Total liabilities 5 007 156 4 178 702
TOTAL EQUITY AND LIABILITIES 8 090 126 7 748 212
41
The board of Ekornes QM Holding AS
Oslo, 6 April 2022
Ruihai Zhao
Chair
Mogens Falsig
Director and CEO
The following notes form an integral part of the consolidated nancial statements.
Annual report Ekornes QM Holding 2021 CONSOLIDATED STATEMENT OF CASH FLOW
(Figures in NOK 000) Notes Y 2021 Y 2020
Cash ows from operating activities
Earnings before tax (EBT) 338 052 178 089
Tax paid for the period 8 -90 094 -38 202
Depreciation and write downs 11 , 12 319 274 303 219
Change in inventory 14 -454 183 -242 705
Change in trade receivables 15 -33 315 -33 652
Change in trade payables 88 888 90 078
Change in other time limited records 71 966 33 655
Net cash ow from operating activities 240 588 290 483
Cash ows from investing activities
Proceeds from sale of PP&E 11 242 2 737
Payments for purchase of PP&E 11 -109 662 -80 435
Net Cash ows from investing activities -109 420 -77 698
Cash ows from nancing activities
Payment of lease liabilities 12 , 19 -58 110 -48 547
Payment of dividend 19 -26 877 -22 442
Repayment of borrowings 18 -12 500 0
Proceeds from borrowings 18 600 000 0
Transactions with non-controlling interests 21 -741 000 0
Net cash ow from nancing activities -238 488 -70 988
Change in net cash & cash equivalents -107 320 141 797
Effect of exchange gains / (losses) on cash and cash equivalents 2 780 24
Net cash & cash equivalents at the start of the period 16 454 624 312 804
Net cash & cash equivalents at the close of the period 16 350 083 454 624
Restricted cash at the end of the period 152 970 152 315
Unrestricted cash at the end of the period 197 113 302 309
Consolidated statement of cash ow
42
In the statement of cash ow, cash and bank deposits are recognised as cash. In April 2019, Ekornes QM Holding AS issued a
stock exchange bond to renance the Group and part of the condition is to have a minimum liquidity in Ekornes QM Holding of
NOK 125 million. The rest of the restricted cash at 31 December 2021 are related to the payment of employee tax deductions.
The following notes form an integral part of the consolidated nancial statements.
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY Annual report Ekornes QM Holding 2021
Consolidated statement of changes in equity
(Figures in NOK 000)
Share
capital
Premium
paid
Translation
difference
Other
Total
Non-controlling
interests
Total equity
Equity 31.12.2019 120 2 807 354 64 123 85 694 2 957 291 493 924 3 451 215
Earnings for the period 0 0 0 114 857 114 857 27 523 142 379
Other comprehensive income
Dividend 0 0 0 0 0 -21 137 -21 137
Equity 31.12.2020 120 2 807 354 61 455 200 551 3 069 480 500 030 3 569 510
Equity 31.12.2020
Earnings for the period 0 0 0 246 241 246 241 27 702 273 944
Other comprehensive income 0 0 -2 574 0 -2 574 727 -1 846
Dividend 0 0 0 0 0 -17 636 -17 636
Acquisition of non-controlling
interests*
Equity 31.12.2021 120 2 807 354 58 881 216 615 3 082 970 0 3 082 970
*Acquisition of non-controlling interests
30 July 2021, Ekornes QM Holding acquired the remaining 9.5% of the shares in Ekornes Holding AS from Ruisi Holding Company
Limited for NOK 741 million. Following the transaction Ekornes QM Holding controls all shares in Ekornes Holding AS.
43
Annual report Ekornes QM Holding 2021 NOTES
Notes to the consolidated nancial statements
REPORTING ENTITY AND PRESENTATION
Ekornes QM Holding AS is a limited company registered in Norway, with main ofce located in Oslo.
The consolidated nancial statements comprise Ekornes QM Holding AS and consolidated subsidiaries (Ekornes QM Holding
Group). The Group Ekornes QM Holding include the group Ekornes and its holding companies. Ekornes is the largest furniture
manufacturer in Norway, and owns the brands Ekornes
®
, Stressless
®
, Svane
®
and IMG.
Stressless
®
is one of the world’s most well-known brands within the furniture industry, while Ekornes
®
, Stressless
®
and Svane
®
are the
most well-known furniture brands in Norway. IMG is best known in Australia and the USA. Manufacture takes place at the Group’s
ten factories. The Group has ve factories in Norway, one in the USA, one in Thailand, two in Vietnam and one factory in Lithuania.
Products are sold in large parts of the world through own sales companies or through importers. Ekornes’ business idea is to develop
and manufacture products that are outstanding with respect to comfort and functionality, and whose price and design appeal to a
wide audience.
Ekornes QM Holding AS’ consolidated nancial statements for 2021 were approved at a board meeting on 6 April 2022. The
consolidated nancial statements were proposed for nal adoption at the ordinary General Meeting on 12 April 2022.
Presentation
The functional currency is determined for each company in the Group, based on the currency in the primary economic environment
in which each individual company operates. Ekornes QM Holding AS’ functional currency is Norwegian Kroner (NOK). The presentation
currency for the consolidated nancial statements of Ekornes QM Holding is Norwegian Kroner (NOK).
The consolidated nancial statements have been prepared in accordance with equable accounting principles for similar transactions
and events under otherwise same conditions. The accounting principles have been applied consistently by all group companies.
STATEMENT OF COMPLIANCE
The Ekornes QM Holding AS`s consolidated nancial statements have been prepared in accordance with International Financial
Reporting Standards (IFRS) which have been adopted by the EU and are mandatory for nancial years beginning on or after 1 January
2021, and Norwegian disclose requirements listed in the Norwegian Accounting Act as of 31.12.2021.
CHANGES IN ACCOUNTING POLICIES AND DISCLOSURES
No changes in IFRS effective for the 2021 nancial statements are relevant this nancial year.
MAIN ACCOUNTING PRINCIPLES
(A) PRINCIPLES FOR CONSOLIDATION
The consolidated nancial statements comprise the nancial statements of the parent company and its subsidiaries as at 31
December 2021. As at 31 December 2021, Ekornes QM Holding AS has 100% voting and ownership in all other group companies
through Ekornes AS.
See Note 21 for a list of subsidiaries included in the consolidated nancial statements of Ekornes QM Holding AS.
(i) Acquisitions
The purchase of subsidiaries is recognized in accordance with the acquisition method at the date on which the group obtains
control. Both consideration and assets acquired are measured at fair value. Any excess value attributable to goodwill is tested
annually for impairment. Transaction costs are recognized as expense in the consolidated nancial statements.
(ii) Subsidiaries
Subsidiaries are entities controlled by the group. Control exists when the group has the power, directly or indirectly, to govern the
nancial and operating policies of an entity to obtain benets from its activities. In assessing control, potential voting rights that may
be exercised or converted are taken into account. Subsidiaries are included in the consolidated nancial statements from the date
that control commences until the date that control ceases. Ekornes has no associates or jointly controlled enterprises.
44
NOTES Annual report Ekornes QM Holding 2021
(iii) Elimination of transactions at consolidation
Translation differences arising from the translation of net investments in foreign operations are recognized in the statement of
comprehensive income. Foreign exchange gains or losses from receivables and liabilities against a foreign activity, the settlement of
which is neither planned nor probable in the foreseeable future, are considered as part of the net investment in the foreign operation
and are incorporated in the statement of comprehensive income and presented as translation differences in equity.
For all foreign operations, the translation differences are presented on separate line under equity (reserve for translation
differences). Additional compensation that is to be considered as settlement of future services under IFRS are recognized as expense
in the period over which the additional compensation can be earned.
(B) DERIVATIVES
The Group makes use of derivatives to hedge currency risks arising from its operational, nancing and investment activities. In
accordance with its treasury policy, Ekornes does not hold or issue derivative nancial instruments for trading purposes. Derivatives
are recognized at their fair value on acquisition. Gains or losses deriving from reassessment to changed fair value are recognized in
prot and loss immediately.
(C) BUSINESS COMBINATIONS
The acquisition method is used to account for all business combinations, independent of equity instruments or other assets acquired.
The consideration transferred for the acquisition of a subsidiary comprises:
- fair value of the assets transferred
- liabilities related to previous owner of the acquired activity
- equity interests issued by the group
- fair value of any assets or liabilities arising from a contingent consideration arrangement, and
- fair value of any existing owner interests in the subsidiary
Identiable assets acquired and liabilities and contingent liabilities assumed in a business combination, with few exemptions, are
initially measured at fair value at the time of acquisition. The group incorporates any non-controlling owners in the acquired activity
at acquisition either at fair value or in the non-controlling owners’ proportional share of the acquired entity’s net identiable assets.
The method to be used is assessed from acquisition to acquisition. Acquisition costs are recognized in the income statement as
incurred.
The positive difference between
- consideration
- value of non-controlling owners in the acquired entity, and
- fair value at the time of acquisition of previous shares in the acquired entity and fair value of net identiable assets acquired are
recognized as goodwill.
When the settlement of part of the cash consideration has been postponed, the future payments are discounted to the present value
at the date of measurement. The discount rate used is the entity’s incremental borrowing interest, which is the interest of a similar
borrowing that could be provided from an independent nancial institution under comparable conditions.
Contingent consideration is classied either as equity or nancial liability. Amounts classied as nancial liability are recalculated to
fair value with changes in fair value included in the income statement.
If the business combination takes place in several steps, the buyer’s previously held equity in the entity is reassessed to fair value at
the acquisition date. Any gains or losses arising from such reassessment are recognized in prot or loss.
(D) PROPERTY, PLANT AND EQUIPMENT
(i) Own assets
Items of property, plant and equipment are stated in the balance sheet at acquisition cost less accumulated depreciation (see below)
and impairment losses (see accounting policy I). The acquisition cost of self-constructed assets includes the cost of materials, direct
labor and an appropriate proportion of production overheads. When substantial parts of a non-current tangible asset have different
useful lives, they are deemed to be separate components for accounting purposes.
45
(ii) Subsequent costs
In the acquisition cost of an item of property, plant or equipment, Ekornes includes the cost of replacement of parts of any such item,
when the expenditure is expected to bring future economic benets to the Group, and the cost of the replaced parts can be measured
reliably. The carrying amount of the replaced part is deducted. All other expenses are recognized in prot and loss as they accrue.
(iii) Depreciation
Ordinary depreciations are charged linearly to prot or loss over estimated useful life for each individual operating asset. Land is not
depreciated.
(E) INTANGIBLE ASSETS
Intangible assets that are purchased separately are initially measured at cost recognized as intangible asset when the group has
control of the asset, future economic benets are expected to ow to the group and the cost can be reliably measured. For intangible
assets included in a business combination cost has been measured at fair value at the transaction date. Subsequently, intangible
assets are recognized at cost less accumulated amortization and possible impairment. Intangible assets with denite lifetime are
depreciated over useful life. Useful life and depreciation method for intangible assets with denite life are assessed at least once a
year. Linear depreciation is used for the intangible assets, as this is considered the best way to reect the use of the assets. Prot or
loss from disposal of intangible assets are calculated as the difference between net sales revenue and the recognized value of the
asset and is reported as part of other income or other expenses in the operating result of the income statement.
(i) Research and Development
Expenses relating to research activities are recognized in prot and loss as they incur. Development costs are capitalized to the extent
that the product or process is technically and commercially feasible, and Ekornes has sufcient resources to complete their development.
Capitalized costs include materials costs, direct payroll costs and a share of directly attributable overheads. Capitalized development
costs are recognized at acquisition cost less accumulated depreciation and write-downs. Capitalized development costs are depreciated
linearly over the asset’s estimated useful life.
(ii) Capitalized licenses and software
Expenses relating to the purchase of new software are capitalized as an intangible asset if these expenses are not part of the
acquisition cost of a piece of hardware. Software is normally depreciated linearly over its expected useful life. Expenses incurred as
a result of maintenance or to retain the software’s future utility are charged to expenses unless the changes in the software increase
its future economic utility.
(iii) Goodwill
Goodwill is recognised as the aggregate of the consideration transferred and the amount of any non-controlling interest and
deducted by the net of the acquisition-date amounts of the identiable assets acquired and the liabilities assumed. Goodwill is not
depreciated but is tested at least annually for impairment. In connection with this, goodwill is allocated to cash-generating units or
groups of cash-generating units that are expected to benet from synergies from the business combination.
(iv) Customer relations and brands
The value of customer relations and brands arising from the acquisition of subsidiaries is valued at acquisition cost less accumulated
depreciation, which is allocated linearly over expected useful life. Costs relating to the in-house development and maintenance of
brand names and other intangible assets are recognized as expenses in the income statement in the period they are incurred. Any
acquisition of such assets is recognized in the balance sheet.
(F) TRADE AND OTHER RECEIVABLES
Trade and other receivables are stated at cost less a provision for bad debts.
(G) INVENTORY
Inventory is recognized at the lower of acquisition cost and net sales price. Net sales price is the estimated sales price under ordinary
operating conditions, less estimated expenses for completion, marketing and distribution. Acquisition cost is based on the rst-in/
rst-out principle and includes expenditure incurred in acquiring the inventories and bringing them to their present location and
condition. Self-produced goods include variable costs and xed overheads which can be allocated on the basis of normal operating
capacity.
Annual report Ekornes QM Holding 2021 NOTES
46
(H) CASH AND CASH EQUIVALENTS
Cash includes cash in hand and bank deposits. Cash equivalents are short-term liquid investments which may be immediately
converted into a predetermined amount of cash and with a maximum term of three months. Funds which are originally tied up for
more than three months are not included in cash and cash equivalents (see Note 16).
(I) IMPAIRMENTS
An impairment arises when the book value of an asset or cash-generating entity (assessment entity) exceeds its recoverable value.
Impairment write-downs are recognized in prot and loss. The recoverable amount is dened at the higher of the asset or
cash-generating entity’s fair value less sales costs and value in use.
(J) EQUITY
Dividends are recognized as a liability in the period in which they are approved. Any proposed dividend remains part of equity until
the date of its nal approval.
Translation differences
Translation differences arise in connection with exchange-rate differences of consolidated foreign entities. Exchange-rate differences
in monetary amounts (liabilities or receivables) which are in reality a part of a company’s net investment in a foreign entity are also
included as translation differences. If a foreign entity is sold, the accumulated translation difference linked to the entity is reversed and
recognised in the statement of comprehensive income in the same period as the gain or loss on the sale is recognised.
Non-controlling interests
Non-controlling interests represent equity interests in subsidiaries held by other owners than Ekornes QM Holding AS. Non-controlling
interests are reported as a separate section of the Group’s equity in accordance with IFRS 10 Consolidated Financial Statements.
Results attributed to non-controlling interests are based on ownership interest, or other method of allocation if required by contract.
(K) EMPLOYEE BENEFITS
(i) Dened-contribution pension plans
Liabilities in respect of contributions to dened-contribution pension plans are recognized as an expense in prot and loss as they
accrue.
(ii) Dened-benets pension plans
Net liabilities in respect of dened-benet pension plans are calculated separately for each plan. This is achieved by estimating the
amount of future benet that employees have earned in return for their service in the current and prior periods. These future
benets are discounted to determine their present value, and the fair value of any plan assets is deducted to arrive at a net liability.
When the benets of a plan are improved, the portion of the increased benet relating to past accruals is recognized as an expense
in prot and loss on a straight-line basis over the average period until the benets become vested. To the extent that the benets vest
immediately, the expense is recognized immediately in prot and loss. Actuarial gains and losses are
recognized directly in equity when they arise.
(iii) Employee bonus payments (see also Note 3)
Most group employees are entitled to a bonus based on the protability of the group or company in which they are employed. The
bonus is calculated as a percentage of each employee’s monthly salary. Bonuses earned are paid in cash and are considered to be a
purely cash bonus. The fair value of accrued bonuses is recognized as an expense in prot and loss, and as a liability in the balance sheet.
(L) PROVISIONS
A provision is recognized when Ekornes has incurred an obligation (legal or self-imposed) as a result of a past event, and it is probable
(more probable than not) that this obligation will come to a nancial settlement and the amount payable can be reliably measured. If
the effect is substantial, the provision is calculated by discounting expected future cash ows by a discount rate before tax that
reects the market’s pricing of the time value of the money and, if relevant, risks specically linked to the obligation.
(i) Warranties
Costs relating to warranties are recognized on the date a claim is made.
NOTES Annual report Ekornes QM Holding 2021
47
(ii) Restructuring
Provisions for restructuring are recognized when the Group has approved a detailed and formal restructuring plan, and the
restructuring process has either started or has been publicly announced.
(M) REVENUE
(i) Revenue
IFRS 15 requires that the Group, for each contract with a customer, identify delivery liabilities, determine the transaction price,
match the transaction price to the delivery liabilities if the contract encompasses more than one delivery liability, decide if operating
revenues must be recognized over time or on one date, and recognize operating revenues on the date of or over the period for the
fullment of the delivery liability concerned.
The Group sells its products through sales companies it has established in the most important markets, while production takes place
at factories which supply the sales companies. Goods produced are sent directly from the factory to the customer, with the exception
of US and Asian customers where goods are sent to a dedicated storage facility. For IMG, goods are sent from factories in Vietnam,
Thailand and Lithuania directly to the customer or to storage facilities owned by IMG’s own sales companies. The goods sent from
the factories to dedicated storage facilities abroad are treated as goods in transit. IMG has both production to order and off-the-
shelf production.
The Group’s most important delivery liability derives from products made to the customer’s specication and orders. To determine
at when the delivery liability is fullled and control of the delivered products are transferred to the customer, Ekornes use the
principles of Incoterms. Thus, it is the Incoterms principles that determine when the delivery liability is fullled, and control of the
products are transferred to the customer. When control is achieved by the customer, all risks related to the products are transferred
from Ekornes to the customer as well. At the point when the delivery liability is fullled, control is transferred and the customer
bears the risks with the products, the Group recognizes operating revenues.
The Group’s most important discretionary judgement with respect to applying IFRS 15 relates to the calculation of the transaction
price. This is because the price to the customer includes several different discounts and bonuses. The estimation of bonuses for the
year in particular reacquire the exercise of discretionary judgement.
A breakdown of The Group’s operating revenues by segment and customer location may be found in Note 2 “Product areas, segments
and markets”.
(ii) Government grants
Grants that compensate the Group for the acquisition cost of an asset are recognized as a reduction in the asset’s acquisition
value. Grants that compensate for expenses incurred are recognized as a cost reduction in the financial statements covering
the same period as the expenses they are intended to cover.
(N) LEASES
At the inception of a contract, The Group assesses whether the contract is, or contains, a lease. A contract is, or contains, a lease if the
contract conveys the right to control the use of an identied asset for a period of time in exchange for consideration.
IFRS 16 requires all leases except short-term leases and small asset leases to be recognized on the balance sheet as a right-of-use asset
and a lease liability. The right-of-use asset is recognized according to the underlying asset, i.e. included in Property, plant and equipment.
The lease liability is included in non-current liabilities, with the short-term portion included in current liabilities.
The right-of-use asset is depreciated over the lease term. Contractual payments represent a combination of interest on the liability and
repayment of the principal amount.
Lease amounts representing variable payments based on such factors as specic cost elements in related services or usage, lease
amounts for short-term leases of a duration of up to 12 months as well as lease amounts for low value leases covering such elements as
PCs and other ofce equipment, is expensed as Other expenses over the lease term.
Annual report Ekornes QM Holding 2021 NOTES
48
(O) TAX
Tax on the year’s prot comprises tax payable and deferred tax. Tax is included in prot and loss with the exception of tax that is
recognized directly in equity or in other comprehensive income. Tax payable comprises the expected tax payable on the year’s
taxable earnings at the rate applicable on the balance sheet date, plus any corrections in tax payable for previous years. Deferred tax
is calculated on temporary differences between the recognized values of assets and liabilities in the nancial statements and their
value for tax purposes.
The following temporary differences are not taken into account:
Initial recognition of assets or liabilities which affect neither prot/loss in the accounts or for tax purposes, as well as differences
relating to investments in subsidiaries that are not expected to be reversed in the foreseeable future. Deferred tax liabilities and
assets are measured on the basis of expected future tax rates applicable to group companies in which temporary differences have
arisen. Deferred tax liabilities and assets are recognized at nominal value. Deferred tax assets are capitalized only to the extent that
it is probable that the asset may be utilized in connection with future taxable prots. Deferred tax assets are reduced to the extent
that it is no longer probable that the tax assets will be utilized.
(P) SEGMENT REPORTING
Under IFRS, a business segment is dened as a part of the Group engaged in business operations capable of generating revenues and
expenses, including revenues and expenses deriving from transactions with other group segments, and whose operating prot/loss
is reviewed regularly by the enterprise’s highest decision-maker for the purpose of determining which resources shall be appropriated
to the segment and evaluating its earnings.
Ekornes carries out its business within the segments/product areas:
• Stressless
®
, which covers furniture within the product area Stressless
®
• Svane
®
, which covers mattresses and furniture within the Svane
®
product area
• IMG, which covers furniture from the IMG product area
The division into product areas is based on the Group’s management and internal reporting structure. Note 2 includes a numerical
list of the segments that comply with Ekornes’ internal segment reporting.
(Q) STATEMENTS OF CASH FLOWS
Ekornes QM Holding group uses the indirect method to present cash ows from operating activities. Interest received as well as
interest paid are included in cash ows from operating activities. Dividends paid are included in cash ows from nancing activities.
NOTES Annual report Ekornes QM Holding 2021
49
The division into product areas is based on the Group’s management and internal reporting structures, and coincides with the
division into segments.
Ekornes QM Holding Group’s business is divided into the segments/product areas:
• Stressless
®
, which covers the Stressless
®
product area
• Svane
®
, which covers the Svane
®
product area
• IMG, which covers furniture produced by IMG
The Group’s administration expenses and other shared overheads are allocated to the segments. Internal pricing between the
segments is based on arm’s length prices at corresponding terms as transactions with independent third parties. Management
regularly monitors the business segments’ prot/loss and uses this information to perform analyses of their performance and to
make decisions regarding resource allocation. Each segment’s performance is assessed on the basis of its operating prot and is
measured consistently with the operating prot in the consolidated nancial statements.
Information relating to the Group’s reportable business segments is presented below:
(Figures in 000 NOK ) Y 2021 Y 2020
Operating revenues by product area
Stressless
®
3 166 625 2 539 120
IMG 850 014 671 658
Svane
®
301 229 270 932
Total 4 317 868 3 481 709
EBITDA per segment
Stressless
®
648 274 502 072
IMG 177 918 149 932
Svane
®
9 482 17 878
Other/eliminations * -2 368 -3 297
Total 833 307 666 585
*Other / eliminations contain results from activities carried out by the parent company in the group.
EBIT per segment
Stressless
®
417 483 276 108
IMG 92 989 75 381
Svane
®
5 928 15 174
Other/eliminations * -2 368 -3 297
Total 514 032 363 366
* Other / eliminations contain results from activities carried out by the parent company in the group.
Operating revenues by market
Norway 581 181 503 420
Other Nordic 230 642 204 289
Central Europe 730 192 639 962
Southern Europe 256 216 195 554
UK/Ireland 265 336 229 739
USA/Canada/Mexico 1 485 265 1 054 833
Japan 140 435 138 179
Australia 352 894 286 005
China 150 457 110 347
Other Markets 125 249 119 383
Total 4 317 868 3 481 709
Note 2 Business areas – segments – markets
Annual report Ekornes QM Holding 2021 NOTES
NOTES Annual report Ekornes QM Holding 2021
50
NOTES Annual report Ekornes QM Holding 2021
51
Board of Directors’ declaration on the remuneration policy applying to senior executives
A major element of the remuneration policy established with respect to Ekornes QM Holding AS and its subsidiaries is that executives
should be offered competitive terms, with a salary comparable to similar positions in their national labour markets. The Company has
established performance-related bonus schemes that form a major part of the overall compensation package offered to prot-centre
managers. Salary and other remunerations are mainly adjusted in accordance with developments in salary/price levels in the country in
which the position is located.
Pension commitments
A Group pension scheme (dened contribution plan) has been established for employees of the Group’s Norwegian companies and in
most of its foreign subsidiaries. The Group also has certain pension liabilities expensed continuously. For accounting purposes, pension
schemes are treated in accordance to IAS 19. Norway’s new AFP early retirement scheme is deemed to be a dened benet
multi-enterprise scheme. In principle, the liability shall be calculated and recognised. However, the scheme’s current administrator is,
for practical reasons, unable to perform these calculations. Until these calculations are made, the new AFP early retirement scheme
must be recognised as a dened contribution scheme. See table below.
Mandatory occupational pension scheme
Pursuant to the Norwegian Mandatory Occupational Pensions Act, all the Group’s Norwegian subsidiaries must establish a pension
scheme for their employees. These companies have pension schemes that comply with Norwegian law.
Pension costs
The pension costs of the Group for the nancial year was NOK 47,2 million, which is almost entirely comprised of dened contribution
pension; only two companies in the Group operate with dened benet pension; Ekornes K.K in Japan and Ekornes S.A.R.L in France.
Pension liabilities
Bonus-based incentives
Ekornes QM Holding Group has bonus-based remuneration for all employees in the operating companies who do not have any other
personal bonus scheme. The bonus-based remuneration will be based on achieved results for 2021. The bonus is paid on a pro rata basis
according to the number of months employed during the year. Only those employed as at 31 December 2021, as well as those retiring
during 2021, are entitled to receive a bonus for 2021. For accounting purposes, the bonus is treated as a cash bonus.
See Note 4 for details of remuneration and salary paid to key group management and board of directors.
(Figures in NOK 000)
2021 2020
Payroll expenses 1 022 502 847 308
Employer’s national insurance contributions 120 100 102 449
Pensions 47 194 39 683
Other personnel costs 19 783 28 433
Total personnel expenses 1 209 578 1 017 873
Average number of full-time equivalents 3 069 2 372
(Figures in NOK 000)
31.12.2021 31.12.2020
Accumulated pension liabilities 7 855 8 438
Note 3 Salary and personnel expenses
Annual report Ekornes QM Holding 2021 NOTES
NOTES Annual report Ekornes QM Holding 2021
52
Note 4 Remuneration to group management and board of directors
The Group’s related parties comprise members of the board and management, as well as companies those individuals control or have
a signicant inuence over.
Ruihai Zhao, who chairs the board of directors, is one of the primary shareholders of Qumei Home Furnishings Group. IMG sells
furniture in the Chinese market through Qumei’s stores in China. The agreement regulating these transactions has been entered
into at market terms and on the basis of the arm’s length principle.
Individual bonus agreements were entered into with group management for 2021. The bonuses payable to group management are
included in salary in the table below.
The following tables show the renumeration to the key members of Group Management, as well as to the members of the boards of
operating company Ekornes AS and the Group.
Remuneration to key member of Group Management in 2021
(Figures in NOK 000)
Salary including
bonus
Benets
in kind
Pension
cost
Total
remuneration
Roger Lunde ( Group CEO) 4 738 127 85 4 949
Remuneration to Board Members in 2021
(Figures in NOK 000) Board remuneration
Ruihai Zhao Chair 550
Lars Ivar Røiri Vice-chair 1 000
Stian Ekornes Director 350
Lei Yang Director 175
Sveinung Utgård Director (employee elected) 130
Per Ove Skåre Director (employee elected) 130
Atle Berntzen Director (employee elected) 130
Total remuneration 2 465
NOTES Annual report Ekornes QM Holding 2021
53
Remuneration to key members of Group Management in 2020
(Figures in NOK 000)
Salary including
bonus
Benets
in kind
Pension
cost
Total
remuneration
Roger Lunde ( Group CEO) - From February 2020 3 658 26 71 3 754
Olav Holst-Dyrnes ( Old Group CEO)* 4 480 34 10 4 524
Total remuneration 8 138 60 81 8 279
Remuneration to Board Members in 2020
(Figures in NOK 000) Board remuneration
Ruihai Zhao Chair 1 100
Lars Ivar Røiri Vice-chair 1 000
Stian Ekornes Director 350
Lei Yang Director 175
Sveinung Utgård Director (employee elected) 130
Per Ove Skåre Director (employee elected) 130
Atle Berntzen Director (employee elected) 130
Total remuneration 3 015
*CEO Olav Holst-Dyrnes resigned in 2020 and served as CEO for six years. Olav Holst-Dyrnes had an agreement which gave him the
right to a compensation after termination of employment that equals 100% of the salary the rst 12 months.
Annual report Ekornes QM Holding 2021 NOTES
NOTES Annual report Ekornes QM Holding 2021
54
The following is related to renumeration to auditor, both group auditor and other auditors:
Auditing fees are stated ex. VAT
In 2021, research and development costs totalling NOK 45,7 million (NOK 38,5 million in 2020) were recognised in expenses.
These costs relate to salaries and other expenses, as well as the depreciation of capitalised R&D costs.
Costs directly associated with the development of a xed operating asset are included in the capitalised value of the asset if all the
criteria for capitalisation have been met. Expenses that arise early in the project phase, as well as maintenance costs, are recognised
in expenses as they arise. Capitalised development costs totalled NOK 0,0 million in 2021 (NOK 0,0 million in 2020).
(Figures in NOK 000)
Breakdown of other operating expenses 2021 2020
Transport and other distribution cost 382 892 272 133
Marketing cost 208 279 209 181
Commission to representatives 92 348 64 491
Market support 69 251 58 166
ICT Cost 68 979 53 959
Maintanance expenses 52 332 35 379
Guarantee cost 44 672 36 047
Other 164 064 145 491
Total 1 082 817 874 848
(Figures in NOK 000)
Breakdown of auditing fees 2021 2020
Statutory auditing services 8 658 9 053
Other certication services 334 658
Other non-auditing services 542 814
Tax advisory services 1 168 1 508
Total 10 703 12 033
NOTE 5 Other operating expenses
NOTE 6 Research & Development
NOTES Annual report Ekornes QM Holding 2021
55
NOTE 7 Net nancial items
*Transactions cost amortizised
In April 2019, Ekornes QM Holding AS issued a stock exchange bond to renance the Group. The bond was listed on Oslo Stock
Exchange 10 July. Oslo Stock Exchange - Bond “FRN Ekornes QM Holding AS Senior Secured Callable Bond Issue 2019/2023”. See
note 18 for more information.
Transaction costs related to the issue of the bond has been amortized over the period from the settlement date to the maturity
date of the bond. The effective interest method has been used in calculating the amortised cost of the nancial liability and in the
allocation and recognition of the interest expense in income statement over the period.
(Figures in NOK 000)
2021 2020
Interest income 8 992 11 185
Financial income 7 837
Total nancial income 8 999 12 022
Gain/(loss) on foreign exchange 6 087 13 034
Interest expenses* 187 461 204 572
Financial expenses 3 606 5 761
Total nancial expense 191 067 210 333
Total nancial items -175 981 -185 277
Annual report Ekornes QM Holding 2021 NOTES
NOTES Annual report Ekornes QM Holding 2021
56
(Figures in NOK 000)
The Group recognises deferred tax assets and liabilities net only if the Group has a legal right to set them off against each other, and only
deferred tax assets and liabilities within the same tax regime.
As at 31 December 2021, the Group had a tax-loss carryforward of NOK 15.7 million. NOK 10.1 million of this was capitalised as at 31
December 2021. Deferred tax assets relating to tax-loss carryforwards in two of our subsidiaries have not been recognised as at 31
December 2021 since the companies does not expect to utilise the loss in the foreseeable future.
Tax expense included in net result: 2021 2020
Period taxes:
Tax payable in the period 154 398 80 855
Deferred tax
Changes in deferred tax liability
-90 290 -45 145
Tax expense 64 108 35 709
Reconciliation of effective tax rate:
Earnings before tax 338 052 178 089
Tax calculated at 22% (22 %) 74 371 39 180
Effect of other tax rates -8 100 -2 147
Permanent differences 311 247
Adjustment in respect of current income tax of previous years -2 475 -1 570
Tax expense 64 108 35 709
Deferred tax assets 107 661 67 622
Deferred tax liabilities 791 052 841 897
Net deferred tax -683 391 -774 275
NOTE 8 Tax related costs
Net deferred tax 2021 2020
Intangible assets
-661 320 -701 165
Property, plant & equipment
-98 691 -116 658
Inventory
50 520 29 587
Receivables
2 314 99
Pensions
126 2 932
Provisions
2 730 -88
Other items
10 847 -5 558
Tax-loss carried forward
10 082 16 577
Net Deferred tax at 31.12
-683 391 -774 275
Expensed tax payable is higher that the Group`s tax payable in the balance sheet as of 31. December 2021. This is because parts of
the year`s tax payable in foreign subsidiaries has been paid in advance.
NOTES Annual report Ekornes QM Holding 2021
57
The Group’s carry forward tax decit has the following maturity:
NOTE 8 Tax related costs (contd.)
NOTE 9 Earnings per share
Taxes from Consolidated Statement of Comprehensive Income
2021 2020
Translation differences
-600 5 201
Tax on translation differences for loans to subsidiaries
0 -13
Total transferred over comprehensive income
-600 5 188
31.12.2021 31.12.2020
2023
0 83
2024
1 847 3 263
2025
0 0
2026 1 637 0
No nal maturity date 12 214 13 812
Total tax loss carryforward 15 698 17 158
2021 2020
Prot for the period 273 943 721 142 379 448
Opening No. of shares 30 000 30 000
Closing No. of shares 30 000 30 000
Weighted average number of shares 30 000 30 000
Basic earnings per share 9 131,46 4 745,98
Diluted earnings per share 9 131,46 4 745,98
There are no instruments with a diluting effect.
Annual report Ekornes QM Holding 2021 NOTES
NOTES Annual report Ekornes QM Holding 2021
58
NOTE 10 Estimation uncertainty
In the process of applying the Group’s accounting policies in according to IFRS, management has made several judgements and
estimates. All estimates are assessed to the most probable outcome based on the managements best knowledge. Changes in key
assumptions may have signicant effect and may cause material adjustments to the carrying amounts of assets and liabilities, equity
and the prot for the year.
The company’s most signicant accounting estimates relate to the following items:
• Valuation of goodwill
• Depreciation and write-downs on property, plant & equipment and intangible assets
• Provision for expected credit losses on accounts receivables
• Write-down of inventory to net realisable value
Impairment assessments (see note 11 for further descriptions)
The Group has made signicant investments in tangible xed assets, intangible assets and goodwill. Valuation and remaining
economic life of xed assets and intangible assets are based on future expectations and will always involve discretionary assessments
with inherent estimation uncertainty. Goodwill is assessed for impairment annually or when there are indications of impairment,
while other assets are assessed when there are indications of impairment. Factors indicating impairment and triggering requirements
for testing the value of assets include: signicant reduction in market values, signicantly weaker results in relation to historical
results or in relation to expected results, signicant changes in the use of assets or in the overall business strategy, including assets
that are decommissioned or discontinued and assets that are damaged or decommissioned, signicant negative developments in the
industry or economies, substantial reduction of market share, signicant adverse regulatory decisions and court decisions, and
signicant cost overruns when developing assets.
According to IAS 36 Impairment of Assets, the recoverable amount of assets is the higher of value in use and fair value less costs to
sell. Value in use, especially when using discounted cash ow methods, must be largely based on management’s discretionary
estimates and expectations, including determining appropriate cash-generating units, discount rates, estimating future performance,
asset revenue-generating capacity, margins, required maintenance investments, and future market conditions assumptions. The
effects of recession and increased macroeconomic risk can affect estimates of future earnings and the discount rate used to estimate
the recoverable amount of the assets. For the assessment of impairment of goodwill, discounted cash ow models have been used to
determine recoverable amount, based on the latest nancial budgets and forecasts approved by the management. A forecast period
of ve years is assumed, during which the last year has been used as a basis for calculating a terminal value based on Gordon’s growth
model. Future developments in volume, sales prices and operating margins are important factors in the Group’s impairment
assessments. Expectations of future cash ows will vary over time as a result of changes in market conditions, demand and the
competitive situation, and long-term estimates of key assumptions in the individual countries and regions will be uncertain.
Provision for expected credit losses of trade receivables
The Group uses a provision matrix to calculate expected credit losses for trade receivables. The provision rates are based on days
past due for groupings of various customer segments that have similar loss patterns (i.e., by geography, product type, customer type
and rating, and coverage by letters of credit and other forms of credit insurance).
The provision matrix is initially based on the Group’s historical observed default rates. The Group will calibrate the matrix to adjust
the historical credit loss experience with forward-looking information. At every reporting date, the historical observed default rates
are updated and changes in the forward-looking estimates are analysed.
The assessment of the correlation between historical observed default rates, forecast economic conditions and expected credit
losses is a signicant estimate. The amount of expected credit lossess is sensitive to changes in circumstances and of forecast
economic conditions. The Group’s historical credit loss experience and forecast of economic conditions may also not be representative
of customer’s actual default in the future.
Write-down of inventory to net realisable value
The cost of inventories may not be recoverable if those inventories are damaged, if they have become wholly or partially obsolete, or
if their selling prices have declined. The cost of inventories may also not be recoverable if the estimated costs of completion or the
estimated costs to be incurred to make the sale have increased. The practice of writing inventories down below cost to net realisable
value is consistent with the view that assets should not be carried in excess of amounts expected to be realised from their sale or use.
A new assessment is made of net realisable value in each quarterly reporting. When the circumstances that previously caused
inventories to be written down below cost no longer exist or when there is clear evidence of an increase in net realisable value
because of changed economic circumstances, the amount of the write-down is reversed (i.e. the reversal is limited to the amount of
the original write-down) so that the new carrying amount is the lower of the cost and the revised net realisable value.
NOTES Annual report Ekornes QM Holding 2021
59
NOTE 11 Property, Plant, Equipment and Intangible assets
Depreciations and write-downs includes NOK 6,1 million in write-downs for “Software and licenses” and NOK 2,0 million in write-downs
for “Machinery and Equipment” in 2021.
Estimated useful lives are as follows:
• Buildings 25-50 years
• Machinery & equipment 5-16 year
• Operating movables and xtures 2-10 years
• Licences and patents 5 years
• Software 3 years
• No depreciation of Land property
Depreciation method, useful life and residual value are reassessed annually.
(Figures in NOK 000)
Sites and
buildings
Machinery
and equipment
Operating
movables
Asset under
construction
Total
Software
and licenses
Acquisition value 1.1.2021 1 795 261 1 141 997 124 883 19 319 3 081 460 242 660
Currency difference 1.1.2021 -3 452 -1 515 -1 418 0 -6 385 -60
+ additions 7 705 56 000 9 735 25 771 99 210 10 452
+/- reclassication 68 18 174 0 -18 242 0 0
- disposals -1 973 -26 024 -16 087 0 -44 083 -24 617
Acquisition value 31.12.2021 1 797 608 1 188 632 117 114 26 847 3 130 202 228 436
Accumulated dep. and write-downs
1.1.2021
793 665 863 283 98 602 0 1 755 550 197 693
Currency difference 1.1.2021 -22 -104 -866 0 -993 -17
Depreciations and write-downs in 2021 57 916 72 933 10 741 0 141 590 19 303
- Acc. depreciation on operating assets sold 387 -25 317 -15 841 0 -40 772 -24 617
Accumulated dep. and write-downs
31.12.2021 851 945 910 795 92 635 0 1 855 375 192 362
Book value 31.12.2021 945 664 277 837 24 478 26 847 1 274 826 36 074
Acquisition value 1.1.2020 1 777 206 1 147 313 116 968 16 615 3 058 101 230 800
Currency difference 1.1.2020 2 598 -1 579 1 158 1 183 3 361 -13
+ additions 18 590 42 287 11 588 1 685 74 150 12 136
+/- reclassication -2 652 -1 618 2 532 12 -1 726 177
- disposals -480 -44 407 -7 363 -176 -52 426 -440
Acquisition value 31.12.2020 1 795 261 1 141 997 124 883 19 319 3 081 460 242 660
Accumulated dep. and write-downs
1.1.2020
735 852 837 526 97 079 0 1 670 457 182 955
Currency difference 1.1.2020 -690 -1 491 -17 0 -2 197 1
Depreciations and write-downs in 2020 58 928 70 380 8 676 0 137 984 14 965
+/- reclassication -10 86 -125 0 -49 100
- Acc. depreciation on operating assets sold -416 -43 217 -7 011 0 -50 644 -328
Accumulated dep. and write-downs
31.12.2020
793 665 863 283 98 602 0 1 755 552 197 693
Book value 31.12.2020 1 001 596 278 713 26 281 19 319 1 325 908 44 967
60
NOTE 11 Property, Plant, Equipment and Intangible assets (contd.)
(Figures in NOK 000) Goodwill
Customer
relationships Brand name Total
Acquisition value 1.1.2021 1 561 115 1 302 291 1 656 419 4 519 825
Accumulated depreciation 1.1.2021 0 141 026 94 904 235 930
Depreciations in 2021 0 59 132 40 673 99 805
Accumulated depreciation 31.12.2021 0 200 157 135 578 335 735
Accumulated currency translation differences 1.1.2021 0 60 704 0 60 704
Currency translation differences in 2021 0 -443 0 -443
Accumulated currency translation 31.12.2021 0 60 261 0 60 261
Book value 31.12.2021 1 561 115 1 162 394 1 520 841 4 244 351
Acquisition value 1.1.2020 1 561 115 1 302 291 1 656 419 4 519 825
Accumulated depreciation 1.1.2020 0 78 033 54 231 132 264
Depreciations in 2020 0 62 993 40 673 103 666
Accumulated depreciation 31.12.2020 0 141 026 94 904 235 930
Accumulated currency translation differences 1.1.2020 0 44 711 0 44 711
Currency translation differences in 2020 0 15 993 0 15 993
Accumulated currency translation 31.12.2020 0 60 704 0 60 704
Book value 31.12.2020 1 561 115 1 221 969 1 561 515 4 344 599
Split per segment
Stressless
®
676 614 769 450 1 339 360 2 785 424
IMG 884 501 452 519 222 155 1 559 175
Book value 31.12.2020 1 561 115 1 221 969 1 561 515 4 344 599
Split per segment
Stressless
®
676 614 731 869 1 311 261 2 719 744
IMG 884 501 430 526 209 580 1 524 607
Book value 31.12.2021 1 561 115 1 162 394 1 520 841 4 244 351
Intangible assets from the purchase price allocations
Goodwill is not depreciated in the consolidated nancial statements, but is tested annually for impairment.
Customer relationships and brand names are depreciated on a straight-line basis over estimated lifetime. Estimated lifetime customer
relationships are rated at 25 years for the Stressless
®
segment and 20 years for the IMG segment. For brands, the estimated lifetime
is estimated at 50 years for the Stressless
®
segment and 20 years for the IMG segment. Depreciation expense is included in ordinary
depreciation in the income statement.
In connection with the purchase price allocation, excess values were identied related to brand names, customer relationships, real
estate and xed assets.
Group Financial statement 2021
Annual report Ekornes QM Holding 2021 NOTES
61
NOTE 11 Property, Plant, Equipment and Intangible assets (contd.)
NOTES Annual report Ekornes QM Holding 2021
(Figures in NOK 000)
Potential impairment at following changes Stressless
®
IMG
Growth in sales in forecast period -1 % 0 0
EBITDA-margin -1 % 0 0
Discount rate (WACC) +1 % 0 0
Impairment assessment goodwill
The Group has performed an impairment assessment of goodwill at 31 December 2021 in accordance with IAS 36 and based on the
methods as described in the standard. Book value of goodwill was NOK 1 561 millions at 31 December 2021, and was allocated to
the two operating segments Stressless
®
and IMG at the acquisition date as presented in the table. The operating segments represent
the lowest level within the entity at which the goodwill is monitored for internal management purposes. Each segment comprise
several production and sales companies which are closely integrated and dependent of each other. Thus, management consider each
of the operating segments as a joint group of cash generating units when performing impairment assessment for goodwill.
When performing impairment testing and measuring recoverable amount, value in use is calculated for each segment. Management
projections are based on budget for 2022 approved by the Board of Directors and a forecast period of ve years. Cash ow
projections beyond the forecast period is estimated by extrapolating the projections using a steady growth rate for subsequent
years equivalent to the expected ination rate of 2,0%. When calculating value in use the future expected cash ows after tax are
discounted applying an appropriate discount rate (WACC) after tax of 8,2% for both segments.
The most important assumptions when estimating future cash ows is management projections of revenue growth and operating
margin. In the forecast period, the average expected growth rate is expected to be 7% for Stressless and 10% for IMG. EBITDA-margin
are in the forecast period expected to be in line with budgeted margins per segment, Stressless
®
wiht an EBITDA-margin of 16% and
IMG with 17%.
Based on management impairment assessment at 31 December 2021, recoverable amount is higher than carrying amount for both
Stressless
®
and IMG, and the Group has concluded that it will not be necessary to make any impairments in the nancial statements
for 2021. Management has performed sensitivity analysis for changes in key assumptions when estimating recoverable amount. The
outcome of the sensitivity analysis performed at 31 December 2021 is presented in the table below.
Intangible assets
These are some of the company’s most important intangible assets:
- Registered trademarks (Ekornes
®
, Stressless
®
, IMG og Svane
®
)
- Registered domains
- Patents
- Registered designs
- Distribution network (international)
- Market concept
- Product consepts
- Manufacturing expertise
- International marketing
- International sourcing
With the exception of some patents and domains, none of these assets has been included in the balance-sheet.
62
Annual report Ekornes QM Holding 2021 NOTES
NOTES Annual report Ekornes QM Holding 2021
The Group has entered into several different operational leasing agreements. The leasing agreements are primarily associated with
non-Norwegian subsidiaries. The operating movables and machinery are leased in a 3-5-year period, while several of the ofce and
warehouse have a longer time frame.
Practical expedients applied
The Group has elected to apply the practical expedient and does not recognise lease liabilities or right-of-use assets for leases
presented in the table below:
• Short-term leases (dened as 12 months or less) or
• Low value assets (< NOK 25 000)
Variable lease payments
In addition to the lease liabilities below, the Group is committed to pay variable lease payments for some of their leases. The variable
lease payments are expensed as incurred.
Extension options
Several agreements involve a right of renewal which may be exercised during the last period of the lease terms. The Group assesses
at the commencement whether it is reasonably certain to exercise the renewal right.
Restrictions
The leases do not contain any restrictions on the Group’s dividend policy or nancing. The Group does not have signicant residual
value guarantees related to its leases to disclose.
(Figures in NOK 000)
Right-of-use assets
Operating
movables
Machinery and
equipment
Ofce, warehouse
and sites
Total
Acquisition cost 1.1.2021 20 804 4 198 207 976 232 978
Addition of right-of-use assets 4 932 292 118 284 123 508
- New leasing agreements 4 387 182 105 458 110 027
- Excisting leasing agreements adjusted or extended 545 110 12 825 13 481
Disposals 3 169 219 14 706 18 094
Currency exchange differences -132 882 -1 269 -518
Acquisition cost 31.12.2021 22 435 5 154 310 285 337 874
Accumulated depreciation and impairment 1.1.2021 10 746 1 615 67 709 80 069
Depreciation 2021 5 546 1 436 51 596 58 577
Disposals 3 169 219 14 706 18 094
Accumulated depreciation and impairment 31.12.2021 13 123 2 832 104 598 120 553
Carrying amount of right-of-use assets 31.12.2021 9 312 2 322 205 687 217 321
NOTE 12 Leasing agreements
63
NOTES Annual report Ekornes QM Holding 2021
NOTE 12 Leasing agreements (contd.)
Undiscounted lease liabilities and maturity of cash outows Total
Less than one year 52 369
One to ve years 138 335
More than ve years 57 483
Total undiscounted lease liabilities at 31.12.2021 248 187
Total lease liabilities at 31.12.2021
Current lease liabilities 51 622
Non-current lease liabilities 176 289
Total cash outows for leases 58 110
Interest expense on lease liabilities 5 793
Short term leases and low-value leases recognized on a straight-line basis as expense 7 720
Lease liabilities
(Figures in NOK 000)
Other receivables
31.12.2021 31.12.2020
Premium and contribution fund 1 334 1 891
Other receivables related to the production cycle 9 288 13 854
Prepayments to suppliers 17 095 7 418
Prepaid expenses 30 698 23 068
Prepaid tax and VAT refunds due 34 074 26 065
Other 17 900 7 972
Total other receivables 110 388 80 267
Other current liabilities
31.12.2021 31.12.2020
Salaries payable 181 229 158 008
Accrued bonus/market support to customers 42 595 37 032
Accrued other marketing costs 11 923 6 673
Accrued cash discounts to customers 4 430 4 017
Accrued commission to sales staff 9 204 4 886
Accrued administrative costs 11 948 8 780
Advances from customers (contract liabilities) 15 590 5 484
Accrued interest Bond 29 589 27 757
Accrued freight 23 151 2 285
Other 16 891 17 645
Total other liabilities 346 551 272 567
NOTE 13 Other receivables and other liabilities
64
Annual report Ekornes QM Holding 2021 NOTES
NOTES Annual report Ekornes QM Holding 2021
NOTE 14 Inventory
(Figures in NOK 000) 31.12.2021 31.12.2020
Inventory nished goods 434 930 281 547
Inventory semi-nished 112 842 66 299
Inventory raw materials 724 548 470 290
Total 1 272 320 818 136
All amounts are net after write-downs of NOK 46,7 million. Write downs of inventories at NOK 28,9 million have been recognised
as cost of goods sold in 2021.
Accounts receivables are non-interest bearing. The Group has more than 4,000 customers, with the largest group of stores
accounting for around 4 per cent of sales revenues. The largest single customer accounts for around 1.0 per cent of total sales
revenues. Bad debts are classied as other operating expenses in prot and loss. See Note 20 for details of credit and foreign
exchange risks relating to trade receivables.
Trade receivables
The change in provisions for bad debts is as follows:
NOTE 15 Accounts receivable
(Figures in NOK 000) 2021 2020
Opening balance 1.1. 9 155 7 054
Actual bad debts in the year 216 2 071
Change in bad debt provisions 3 990 4 172
Closing balance 31.12. 12 929 9 155
(Figures in NOK 000) 31.12.2021 31.12.2020
Receivables related to revenue from contracts with customers - external 461 829 424 740
Total accounts receivables (Gross) 461 829 424 740
Allowance for expected credit losses 12 929 9 155
Total accounts receivables (Net) 448 900 415 585
65
NOTES Annual report Ekornes QM Holding 2021
As of 31.12.2021, the Group had the following foreign currency exposure with respect to its group account scheme:
Currency
Amount in
000 currency
Exchange rate
31.12.2021
Amount in
000 NOK
AUD 3 849 6,42 24 693
DKK 4 623 1,34 6 212
JPY 1 893 0,08 145
NOK 281 954 1,00 281 954
NZD 1 593 6,03 9 612
SEK 990 0,97 964
Total deposits in group account scheme 323 580
EUR -10 743 9,99 -107 311
GBP -57 11,94 -675
SGD -359 6,54 -2 350
USD -16 495 8,84 -145 756
Total drawn down on group account scheme -256 092
Total group account 67 487
NOTE 16 Cash and bank deposits
In the statement of cash ow, cash and bank deposits are recognised as cash. Total restricted cash is NOK 153,0 million at
31.12.2021. In April 2019, Ekornes QM Holding AS issued a stock exchange bond to renance the Group and part of the condition
is to have a minimum liquidity in Ekornes QM Holding of NOK 125 million. The rest of the restricted cash, NOK 28,0 million at 31
December 2021 are related to the payment of employee tax deductions.
All the Norwegian subsidiaries in the Ekornes Group and its subsidiaries in Finland, Lithuania, Denmark, France and the UK
participate in a multi-currency group account scheme, with the parent company Ekornes AS as the principal account holder. The
parent company agrees permitted drawdowns on the group accounts for each individual subsidiary. All participants are jointly
and severally liable for the amount at any time outstanding on the group account. The parent company has entered into
agreements with respect to credit facilities with DNB and Sparebank Møre. See also Note 18.
(Figures in NOK 000) 31.12.2021 31.12.2020
Cash and bank deposits 350 083 454 624
66
Annual report Ekornes QM Holding 2021 NOTES
NOTES Annual report Ekornes QM Holding 2021
NOTE 18 Interest-bearing loans and credits facilities
Short-term borrowing agreement 31 December 2021
The Group has three loan agreements of a total of 1 087,5 million:
- The loan of NOK 337,5 million in DNB is unsecured. Quarterly instalments at NOK 12,5 million four times per year with the rst
instalment three months from disbursement date (27 July 2021) of the loan. Final maturity in September 2022. Interest expenses
are paid quarterly.
- The loan of NOK 500 million in DNB is unsecured. No instalments are payable before maturity in September 2022. Interest
expenses are paid quarterly.
- The loan of NOK 250 million in Sparebank Møre is unsecured. No instalments are payable before maturity in September 2022.
Interest expenses are paid quarterly
The Group is in the process of renancing the bank facilities maturing in September 2022. However, as at 31 December 2021, NOK
1 088 million were classied as short-term debt and available short-term credit facilities in DnB amounted to NOK 150 million.
During the fourth quarter of 2021 and as at 31 December 2021, Ekornes was compliant with all covenant requirements in the bank
agreements.
Senior Secured Bond at 31 December 2021
In April 2019, Ekornes QM Holding AS issued a stock exchange bond to renance the Group. The bond was listed on Oslo Stock
Exchange 10 July under the name ”Ekornes QM Holding AS 19/23 FRN FLOOR C” , Ticker: EKO01.
The bond is secured with a share pledge in Ekornes QM Holding AS. No instalments are payable before maturity in October 2023
and interest expenses are paid quarterly. NIBOR is adjusted at the end of each quarter and at 31. December 2021 the coupon was
7.58%. For rst quarter 2022 the coupon is 7.95%.
The Group regularly assesses its capital structure and risk prole. Total interest-bearing debt at the end of the period amounted to
NOK 3 098 million.
Shareholder Country No. of shares held Percentage
Qumei Runto S.A.R.L. Luxembourg 30 000 100 %
NOTE 17 Shares and shareholders
The Norwegian ultimate parent company Ekornes QM Holding AS is a wholly owned subsidiary of Qumei Home Furnishing Group
Co., Ltd in China. Qumei Home Furnishing Group Co., Ltd is listed on Shanghai Stock exchange.
As of 31 December 2020 and 31 December 2021, Ekornes QM Holding’s registered share capital comprised 30 000 ordinary
shares. All shares have a face value of NOK 4.00. All shares in the company have equal voting and dividend rights. All shares
give equal rights to the company’s net assets. Ekornes QM Holding AS has no treasury shares as of 31.December 2020 or 31.
December 2021.
The calculation of earnings per share and diluted earnings per share is shown in Note 9 Earnings per share.
As at 31 December 2020 and 31 December 2021, the company’s sole shareholder was
As at 31 December 2020 and 31 December 2021, the board has been granted the following authorisations:
The board has been granted no authorisations.
67
NOTES Annual report Ekornes QM Holding 2021
NOTE 18 Interest-bearing loans and credits facilities (contd.)
The bond was initially measured at fair value minus directly attributable transaction costs. Subsequent to initial recognition, the
bond is measured at amortized cost using the effective interest method. The effective interest method amortisation is included as
nance cost in the income statement. The nominal amount payable to the bondholders at maturity date is 2 020 MNOK, including a
fee of 20 MNOK.
Ekornes has call options to redeem the bond with the rst expiry date in April 2022. The bond matures in October 2023. The Group
is in the process of evaluating a renancing process to nd an optimal long-term nancing structure.
Financial covenants related to the bond
The bond agreement is subject to a set of nancial covenants, including a minimum liquidity of NOK 125 million and a maximum
leverage ratio of Net debt / Adj. EBITDA starting at 5.25x for year 1 and 2,5.00x for year 3, 4.50x for year 4 and 4.00x for year 5, with
equity cure (max. 3 times) counting as EBITDA for the subsequent three quarterly reporting periods. The covenants are measured
quarterly on a 12-month rolling basis for Ekornes QM Holding Group.
During the fourth quarter of 2021 and as at 31 December 2021, Ekornes was compliant with all covenant requirements in the bond
agreement. The leverage ratio at the end of the fourth quarter 2021 was 3,42, well within prevailing requirements.
The changes in interest-bearing debt through the period 1. January to 31. December 2021 are as follows:
(Figures in NOK 000)
Currency NOK
Issue Amount 2 000 000
Nibor 3M 0,58 %
Margin 7,00 %
Coupon 7,58 %
Tenor / redemption: 54 months /4,5 years
Settlement Date: 02.04.2019
Maturity Date: 02.10.2023
(Figures in NOK 000)
External interest-bearing debt Bond Bank loan Total
Opening balance 1.1.2021 2 001 348 500 000 2 501 348
Proceeds from borrowings 0 600 000 600 000
Capitalization 9 096 0 9 096
Repayment of borrowings 0 -12 500 -12 500
Closing balance external debt 31.12.2021 2 010 444 1 087 500 3 097 944
68
Annual report Ekornes QM Holding 2021 NOTES
Reconciliation of changes in liabilities arising from nancing activities is shown in the tables below:
NOTE 19 Reconciliation for liabilities arising from nancing activities
(Figures in NOK 000) 01.01.2021 Cash ows
Annual
meeting New leases Other 31.12.2021
Interest-bearing debt - Bond 2 001 348 0 0 0 9 096 2 010 444
Interest-bearing debt - Bank 500 000 587 500 0 0 0 1 087 500
Lease liabilities 158 221 -58 110 0 127 800 0 227 911
Payment of dividend 9 241 -26 877 17 636 0 0 0
Total liabilities from nancing activities
2 668 810 502 512 17 636 127 800 9 096 3 325 855
(Figures in NOK 000) 01.01.2020 Cash ows
Annual
meeting New leases Other 31.12.2020
Interest-bearing debt - Bond 1 981 555 0 0 0 19 794 2 001 348
Interest-bearing debt - Bank 500 000 0 0 0 0 500 000
Lease liabilities 134 645 -48 547 0 72 123 0 158 221
Payment of dividend 10 545 -22 442 21 137 0 0 9 241
Total liabilities from nancing activities
2 626 745 -70 988 21 137 72 123 19 794 2 668 810
Non-cash changes
Non-cash changes
NOTE 20 Financial risk
The Group operates in many markets, on both the sales and purchasing sides. The means the company has a natural spread with
respect to its market, foreign exchange and sourcing risk. For The Group, nancial risk is largely associated with uctuations in
exchange rates (NOK vs other countries’ currencies), interest rate risk deriving from changes in interest rates and credit risk in the
form of the ability of the Group’s customers to pay what they owe (trade receivables).
Customer and credit risk
The Group sells its products to distributors through its own sales companies and the customers are generally furniture retailers. The
Group has more than 4,000 customers, with the largest group of stores accounting for around 4 per cent of sales revenues. The
largest single customer accounts for around 1.0 per cent of total sales revenues. Routines have been established to ensure that sales
are made to creditworthy customers and within specic credit limits to lessen market and credit risk. Customer and credit risk is
considered low. Outstanding receivables are followed up on an ongoing basis and efforts are made to keep them at a reasonable
level. An analysis of expected losses is carried out at the close of each reporting period. The estimation reects the probability-weighted
outcome, the time-value of money and reasonable and veriable information about events and actual conditions available on the
reporting date. Trade receivables will generally be written off if they have fallen due for payment one year or more in the past and no
debt recovery process is ongoing. Based on the fact that The Group generally has B2B customers, few receivables overdue and
historically few bad debts, the assessment of expected losses has not led to any material change in the provision for bad debts as at
31 December 2021. The deposition matrix will be based on historical experiences, updated with todays expectations for the future
customized to the customers characteristics (Segment, geography, maturity on customer relations). The table below show details of
the Group’s exposure to credit risk on trade receivables using a provision matrix.
69
NOTES Annual report Ekornes QM Holding 2021
(Figures in NOK 000)
NOTE 20 Financial risk (contd.)
Interest-rate risk
Interest-rate risk is the risk of uctuations in future cash ows from a nancial instrument as a result of changes in market rates. The
Group’s exposure to interest rates is primarily related to its short-term and long-term borrowings at oating interest rates. Loans at
oating interest rates represent an interest-rate risk for the Group’s cash ow, which is partly offset by the opposite effect of cash
and cash equivalents at oating interest. The borrowing portfolio is currently at a oating rate of interest, which means the Group
is affected by changes in interest rates. At the close of 2021, the Group had total interest-bearing debt of NOK 3 087,5 million. The
Group has a stable nancing structure. Lenders are well-reputed Norwegian banks and a bond listed on Oslo Stock exchange. The
table below shows sensitivity to a potential change in interest rates on that part of the Group’s affected borrowings. The estimate
is based on actual loans at the end of 2021, and by keeping all other variables remaining constant the Group’s prot/loss and equity
before tax will be affected as follows by changes in debt instruments at oating interest rates.
(Figures in NOK 000)
Increase/decrease
in base points
Effect on prot/loss
before tax
Effect before tax
on equity
31.12.2021 100 30 875 30 875
31.12.2020 100 25 013 25 013
31.12.2021 Total Not due <30 d 30-60d 60-90d >90d
Trade receivables – gross 461 829 361 495 58 285 30 545 5 207 6 297
Expected default rate 2,8 % 1,0 % 0,5 % 0,5 % 49,4 % 100,0 %
Expected credit losses 12 929 3 615 291 153 2 573 6 297
31.12.2020 Total Not due <30 d 30-60d 60-90d >90d
Trade receivables – gross 424 740 346 587 52 375 11 449 3 799 10 529
Expected default rate 2,2% 0,4 % 0,4 % 0,4 % 0,4 % 73,0 %
Expected credit losses 9 155 1 232 186 41 14 7 682
Liquidity risk
Liquidity risk is the risk that the Group will not be able to meet its nancial obligations as they fall due. The Group manages this
risk by ensuring, as far as possible, that it always has sufcient liquidity available to meet its obligations both under normal and
challenging circumstances, and without incurring unacceptable losses or risk of damaging the Group’s reputation. At the close of
2021, the Group had cash reserves of NOK 350,1 million in the form of bank deposits, of which NOK 28,1 million was restricted
to the payment of employees’ tax deductions and NOK 125 million restricted is part of the bond condition is to have a minimum
liquidity in Ekornes QM Holding AS. In addition, the Group had unused drawing rights of NOK 150.0 million. The board considers
the Group’s liquidity situation to be satisfactory. The table below shows a maturity analysis for the Group’s nancial liabilities based
on contractual, non-discounted payments. When a counterparty has a choice about when an amount is to be paid, the liability is
included at the earliest date the business can expect to receive payment. Financial liabilities which must be repaid upon demand are
included in the ”<1 year” column.
70
NOTE 20 Financial risk (contd.)
(Figures in NOK 000)
31.12.2021 <1 1 to 2 2 to 3 3 to 5 > 5 Total
Financial liabilities
Interest-bearing debt – Bond 159 000 2 139 250 0 0 0 2 298 250
Interest-bearing debt –- Bank 1 105 036 0 0 0 0 1 105 036
Leasing 52 369 43 179 39 397 55 759 57 483 248 187
Trade payables and other liabilities 678 686 1 491 1 491 0 7 855 689 524
Total 1 995 091 2 183 921 40 888 55 759 65 338 4 340 997
(Figures in NOK 000)
31.12.2020 <1 1 to 2 2 to 3 3 to 5 > 5 Total
Financial liabilities
Interest-bearing debt - Bond 150 000 150 000 2 170 000 0 0 2 470 000
Interest-bearing debt - Bank 8 550 506 413 0 0 0 514 963
Dividend 9 241 0 0 0 0 9 241
Leasing 42 390 33 445 29 945 27 945 37 891 171 617
Trade payables and other liabilities 515 814 1 793 1 793 0 8 438 527 838
Total 725 996 691 651 2 201 738 27 945 46 329 3 693 659
Remaining term (years)
Remaining term (years)
Annual report Ekornes QM Holding 2021 NOTES
NOTES Annual report Ekornes QM Holding 2021
Foreign exchange risk
The Group sells its products internationally and bills its customers primarily in the respective countries’ own currencies. The Group
manages all matters related to currency and foreign exchange risk from head ofce. Currency hedging is an integral part of the
Group’s operational activities.
As part of the company’s efforts to reduce its foreign exchange risk/currency exposure the Group also seeks to purchase goods and
services for use in Norway on international markets, where cost-effective. Together with the Group’s distribution, sales and
marketing activities, and associated administrative organization, this provides natural operational hedging of the company’s foreign
exchange risk (natural hedging) for part of its cash ow. In addition to natural hedging, the company uses forward contracts for
additional currency hedging. This does not reduce the long-term foreign exchange risk, but provides predictability within the hedging
horizon. According to the group’s strategy, 80 per cent of the expected currency exposure in the coming six-month period is hedged
in currencies where the expected annual exposure exceeds NOK 75 million, and correspondingly for 50 per cent of the expected
exposure in the coming 6-12-month period. Financial risk is primarily associated with uctuations in exchange rates and the ability
of the Group’s customers to pay what they owe. The Group’s competitiveness is affected, over time, by movements in the value of the
NOK in relation to other currencies. The Group actively seeks to limit this risk.
The following average exchange rates applied to forward contracts exercised in 2021:
Valuta/
Currency
Volume
(Figures in NOK 000)
Volume
(Figures in Currency 000)
Average exchange rate
(In NOK)
AUD 120 192 18 450 6,51
DKK 74 244 51 660 1,44
EUR 348 215 32 480 10,72
GBP 127 610 10 665 11,97
USD 160 420 17 650 9,09
71
NOTE 20 Financial risk (contd.)
NOTES Annual report Ekornes QM Holding 2021
(Figures in NOK 000 )
Market value of forward contracts 31.12.2021 31.12.2020
Share in 2021 0 22 732
Share in 2022 4 130 0
Total 4 130 22 732
Total net other (losses)/gains comprises: 2021 2020
Realised (losses)/gains on new forward contracts 31 767 -37 584
Change in value of realised and unrealised contracts -18 601 25 283
Net other (losses)/gains 13 166 -12 300
New forward contracts
In 2021, the Group entered into forward contracts, and all realised and unrealised gains and losses associated with these
contracts are recognised in net other losses/(gains). In 2021, these contracts resulted in a NOK 31.8 million realised gains and
NOK 18,6 million in negative change in value of realised and unrealised contracts. All contracts that are open as at 31 December
2021 fall due for payment in the next 12 months. As at 31 December 2021, the market value of existing forward currency
contracts came to NOK 4,1 million.
Classications of nancial assets and nancial liabilities 31. December 2021
Classications of nancial assets and nancial liabilities 31. December 2020
(Figures in NOK 000)
Fair value through
prot and loss
Amortised cost Bank
and receivables
Amortised cost Other
nancial liabilities
Cash & cash equivalents 0 350 083 0
Forward currency contracts 4 130 0 0
Stocks & shares in other enterprises 1 333 0 0
Trade & other current receivables 0 559 288 0
Non-current receivables 0 22 737 0
Long-term debt related to bond issued 0 0 2 010 444
Short-term debt to credit institutions 0 0 1 087 500
Trade & other current payables 0 0 763 018
TOTAL 5 463 932 109 3 860 962
(Figures in NOK 000)
Fair value through
prot and loss
Amortised cost
Bank and receivables
Amortised cost Other
nancial liabilities
Cash & cash equivalents 0 454 624 0
Forward currency contracts 22 732 0 0
Stocks & shares in other enterprises 1 333 0 0
Trade & other current receivables 0 495 852 0
Non-current receivables 0 19 528 0
Long-term debt to credit institutions 0 0 500 000
Long-term debt related to bond issued 0 0 2 001 348
Trade & other current payables 0 0 665 212
TOTAL 24 065 970 004 3 166 560
72
Annual report Ekornes QM Holding 2021 NOTES
The following subsidiaries are included in Ekornes QM Holding AS’s consolidated nancial statements. Ekornes QM Holding AS
has 100% voting and ownership in all other group companies through Ekornes AS.
NOTE 21 Group entities
Changes in group structure in 2021
30 July 2021, Ekornes QM Holding acquired the remaining 9.5% of the shares in Ekornes Holding AS from Ruisi Holding Company
Limited for NOK 741 million. Following the transaction Ekornes QM Holding controls all shares in Ekornes Holding AS.
Ekornes QM Holding AS and Ekornes Holding AS have in December 2021 merged. Ekornes QM Holding AS had 100% voting and
ownership of Ekornes Holding AS. Ekornes QM Holding AS took over the entire business operations, comprising assets, rights and
liabilities from Ekornes Holding AS. The merger was undertaken with effect for accounting purposes from 1 January 2021. The
purpose of the merger was to simplify the Group structure.
Company Primary business activity Registered ofce Domicile
Ekornes AS HQ and Sales Ikornnes Norway
J. E. Ekornes AS Production and sales Ikornnes Norway
J. E. Ekornes ApS Sales Odense Denmark
Ekornes K.K Sales Tokyo Japan
OY Ekornes AB Sales Helsinki Finland
Ekornes Inc. Sales Somerset, NJ US
Ekornes Ltd. Sales London UK
Ekornes Möbelvertriebs GmbH Sales Hamburg Germany
Ekornes S.A.R.L Sales Pau France
Ekornes Iberica SL Sales Barcelona Spain
Ekornes Singapore PTE. Ltd Sales Singapore Singapore
Ekornes Pty Ltd Sales Sydney Australia
Ekornes Asia Pacic Co Ltd Sales Bangkok Thailand
Ekornes China Co Ltd Sales Shanghai China
J. E. Ekornes USA, Inc Production and sales Morganton, NC US
Ekornes Taiwan Ltd. Sales Taipei Taiwan
Ekornes Hong Kong Co, Ltd Sales Hong Kong SDR. China
Ekornes Beds AS Production and sales Fetsund Norway
Ekornes Beds GmbH Sales Hamburg Germany
IMG Group AS Holding og Sales Ikornnes Norway
IMG Holdco AS Holding Ikornnes Norway
IMG Europe GmbH Sales Hamburg Germany
IMG (Vietnam) Co, Ltd Production and sales Binh Duong Vietnam
IMG Australia PTY Ltd Sales Melbourne Australia
IMGC PTY Ltd Sales Melbourne Australia
Ekornes (THAILAND) Limited Production and sales Chachoengsao Thailand
IMG New Zealand Limited Sales Auckland New Zealand
Ekornes Lithuania UAB Production and sales Panevezys Lithuania
International Mobel Group USA, Inc Sales Corona, CA US
The Company is in the nal stage of negotiating extensions of existing loan facilities with Sparebanken Møre and DNB for a total of NOK
1 250 million until 15 April 2023. The loan extensions are expected to be conrmed during April 2022. No other signicant events have
occurred between the balance sheet date and the date of publication of the nancial statements which have materially affected the
Group’s nancial position and which should have been reected in the nancial statements here presented.
NOTE 22 Subsequent events
73
Ekornes QM Holding AS
Financial statements
Annual accounts 2021
Page
Income statement 74
Balance sheet 75-76
Statement of cash ow 77
Notes to the accounts
Accounting principles 78
Note 1 - Subsidiary 79
Note 2 - Balance with related parties 79
Note 3 - Shareholders’ equity 80
Note 4 - Share capital and shareholder information 80
Note 5 - Taxes 81
Note 6 - Other operating expenses 81
Note 7 - Specication of nancial income and expenses 82
Note 8 - Bond 83
Note 9 - Subsequent events 83
Annual report Ekornes QM Holding AS 2021 INCOME STATEMENT
74
(Figures in NOK 000) Notes 2021 2020
Operating income and operating expenses
Other operating expenses 6 2 368 2 656
Total operating expenses 2 368 2 656
Operating prot -2 368 -2 656
Financial income and expenses
Income from subsidiaries 7 194 851 168 010
Other interest income 7 405 688
Net gains (losses) on foreign exchange 7 0 42
Other interest expenses 7 183 142 182 393
Net nancial items 12 114 -13 653
Earnings before tax 9 746 -16 309
Tax expense 5 -1 412 -24
EARNINGS FOR THE YEAR 11 158 -16 285
Brought forward
Allocated to/from other equity 11 158 -16 285
Net brought forward 11 158 -16 285
Income statement for Ekornes QM Holding AS
BALANCE SHEET Annual report Ekornes QM Holding AS 2021
75
(Continued on next page)
ASSETS (Figures in NOK 000) Notes 31.12.2021 31.12.2020
Financial xed assets
Investments in subsidiaries 1 5 667 114 4 489 885
Total nancial xed assets 5 667 114 4 489 885
Total xed assets 5 667 114 4 489 885
Current assets
Debtors
Other short-term receivables 168 163
Receivables from group companies 2 282 851 256 041
Total receivables 283 019 256 204
Cash and bank deposits 8 165 502 170 273
Total current assets 448 522 426 477
Total assets 6 115 635 4 916 362
Balance sheet for Ekornes QM Holding AS
Annual report Ekornes QM Holding AS 2021 BALANCE SHEET
76
EQUITY AND LIABILITIES (Figures in NOK 000) Notes 31.12.2021 31.12.2020
Equity
Contributed equity
Share capital 3 , 4 120 120
Premium paid 3 2 807 354 2 807 354
Total contributed equity 2 807 474 2 807 474
Retained earnings
Other equity 3 500 588 74 006
Total retained earnings 500 588 74 006
Total equity 3 308 062 2 881 480
Non-current liabilities
Deferred tax 5 3 838 5 250
Interest-bearing debt - Bond 8 2 010 444 2 001 348
Interest-bearing debt - Group companies 2 , 3 763 588 0
Total non-current liabilities 2 777 870 2 006 598
Current debt
Trade creditors 47 462
Other current debt 8 29 656 27 822
Total current debt 29 703 28 284
Total liabilities 2 807 573 2 034 883
Total equity and liabilities 6 115 635 4 916 362
Balance sheet for Ekornes QM Holding AS (contd.)
The board of Ekornes QM Holding ASOslo , 6 April 2022
Ruihai Zhao
Chair
Mogens Falsig
Director and CEO
77
STATEMENT OF CASH FLOW Annual report Ekornes QM Holding AS 2021
(Figures in NOK 000)
Note
2021 2020
Cash ow from operations
Prot before income taxes 9 746 -16 309
Dividend/Group contribution not received -194 851 -168 010
Gain / loss currency exchange 0 -42
Change in trade payables -852 -2 301
Change in other accruals 33 512 8 711
Net cash ow from operations -152 444 -177 951
Cash ow from investments
Dividends from subsidiary 172 834 168 535
Net cash ow from investments 172 834 168 535
Cash ow from nancing
Payment of dividend 1 -26 877 0
Proceeds from borrowings from Ekornes AS 8 741 000 0
Transactions with non-controlling interests 2 -741 000 0
Net cash ow from nancing -26 877 0
Exchange gains / (losses) on cash and cash equivalents 0 42
Net change in cash and cash equivalents -6 487 -9 374
Cash and cash equivalents at the beginning of the period 170 273 179 647
Cash and cash equivalents at the beginning of the period 1 717 0
Cash and cash equivalents at the end of the period 165 502 170 273
Statement of cash ow for Ekornes QM Holding AS
Annual report Ekornes QM Holding AS 2021 NOTES
78
BASIC PRINCIPLES – ASSESSMENT AND CLASSIFICATION
The nancial statements comprise the income statement, the balance sheet, cash ow statement and notes to the nancial
statements. They have been prepared in accordance with the Norwegian Accounting Act and generally accepted accounting practice
in Norway, as applicable at 31 December 2021. The notes are therefore an integral part of the nancial statements for the year.
The nancial statements are based on the fundamental principles of historic cost, comparability, going concern, congruence and
prudence. Transactions are recognized at the value of the consideration on the date of the transaction. Revenues are recognized
when they are earned and costs are matched with earned revenues.
The accounting principles are elaborated below. Assets/liabilities relating to the production cycle, and items falling due for payment
within a year of the balance date, are classied as current assets/current liabilities. Current assets/current liabilities are valued at the
lower/higher of acquisition cost and fair value. Fair value is dened as the estimated future sales price, less anticipated sales costs.
Other assets are classied as non-current assets. Non-current assets are valued at acquisition cost. Non-current assets, whose
value falls over time, are depreciated. If the value of an asset is impaired and the impairment is not expected to be of a temporary
nature, the value of the non-current asset is written down. Similar principles normally also apply to liabilities.
FOREIGN CURRENCY
Transactions in foreign currencies are translated based on monthly exchange rates. Monetary items denominated in foreign currencies
are translated at the rate of exchange on the balance sheet date. Translation differences are recognized in prot and loss as gain/loss on
foreign exchange. Non-monetary assets and liabilities that are measured at historic cost in a foreign currency are translated at the
exchange rate in effect when the transaction takes place. Non-monetary assets and liabilities that are recognized at fair value are
translated to NOK at the exchange rate in effect when fair value is determined.
SUBSIDIARIES
Subsidiaries are valued at cost in the company accounts. The investment is valued as cost of the shares in the subsidiary, less any
impairment losses. An impairment loss is recognised if the impairment is not considered temporary, in accordance with generally
accepted accounting principles. Impairment losses are reversed if the reason for the impairment loss disappears in a lather period.
Dividends, group contributions and other distributions from subsidiaries are recognised in the same year as they are recognised in
the nancial statement of the provider. If dividends / group contribution exceed withheld prots after the acquisition date, the excess
amount represents repayment of invested capital, and the distribution will be deducted from the recorded value of the acquisition in
the balance sheet for the parent company.
FINANCIAL LIABILITIES
Loans, borrowings and payables are recognised at fair value net of directly attributable transaction costs. After initial recognition,
interest-bearing loans and borrowings are subsequently measured at amortised cost using the effective interest method. The
effective interest method amortisation is included as nance costs in the income statement. Payables are measured at their nominal
amount when the effect of discounting is not material.
MAJOR INDIVIDUAL TRANSACTIONS
The effects of major individual transactions are shown on separate lines in the income statement and/or commented on in the notes.
RELATED PARTIES
Related parties are dened as group companies, major shareholders, directors of the Company or its subsidiaries, and senior
executives. Agreements relating to the remuneration paid to the board of directors and senior executives are detailed in note 6.
DEFERRED TAX AND TAX EXPENSE
Deferred tax liabilities are calculated on the basis of temporary differences between the carrying values recognized in the nancial
statements for the year and the carrying values recognized for tax purposes. A nominal tax rate is used for calculation purposes.
Positive and negative differences are set off against each other within the same period. A deferred tax asset arises if temporary
differences give rise to a future tax deduction. The tax expense for the year comprises changes in deferred tax liabilities and deferred
tax assets as well as tax payable for the nancial year.
Accounting principles
79
NOTES Annual report Ekornes QM Holding AS 2021
Note 1 Subsidiary
Ekornes QM Holding AS has 100% ownership and voting right in Ekornes AS.
Interest-bearing debt to Ekornes AS
In July 2021, Ekornes QM Holding acquired the remaining 9.5% of the shares in Ekornes Holding AS from Ruisi Holding Company
Limited for NOK 741 million. Following the transaction Ekornes QM Holding controls all shares in Ekornes Holding AS. The
transaction was funded with internal loan from Ekornes AS of NOK 741 million and with an interest rate of NIBOR 3 M and 6,5%
margin.
No instalments are payable before maturity in 31 December 2023. Interest expenses shall accrue each year and including the date
of disbursement to the maturity date 31 December 2023.
Financial income and expenses from / to related parties are listed in note 7.
Changes in group structure in 2021
30 July 2021, Ekornes QM Holding acquired the remaining 9.5% of the shares in Ekornes Holding AS from Ruisi Holding Company
Limited for NOK 741 million. Following the transaction Ekornes QM Holding controls all shares in Ekornes Holding AS.
Ekornes QM Holding AS and Ekornes Holding AS have in December 2021 merged. Ekornes QM Holding AS had 100% voting and
ownership of Ekornes Holding AS. Ekornes QM Holding AS took over the entire business operations, comprising assets, rights and
liabilities from Ekornes Holding AS. The merger was undertaken with effect for accounting and tax purposes from 1 January 2021.
The purpose of the merger was to simplify the Group structure.
Note 2 Balance with related parties
(Figures in NOK 000)
Location
Ownership/
voting right
Result last
year (100%)
Equity 31.12
(100%)
Book value
31.12
Ekornes AS Ikornnes 100 % 281 348 657 902 5 667 114
Book value investments in subsidiaries at 31.12.2021 100 % 281 348 657 902 5 667 114
(Figures in NOK 000)
31.12.2021 31.12.2020
Other short-term receivables
Group contribution from Ekornes AS 282 851 256 041
Total 282 851 256 041
Non-current liabilities
Interest-bearing debt to Ekornes AS 763 588 0
Total 763 588 0
Annual report Ekornes QM Holding AS 2021 NOTES
80
NOTES Annual report Ekornes QM Holding AS 2021
(Figures in NOK 000)
Share capital Share premium Other equity Total
Equity 31.12.2020 120 2 807 354 74 006 2 881 480
Prot for the year 0 0 11 158 11 158
Merger 0 0 415 425 415 425
Equity 31.12.2021 120 2 807 354 500 588 3 308 062
Note 3 Shareholders’ equity
Note 4 Share capital and shareholder information
As of 31 December 2021, Ekornes QM Holding’s registered share capital comprised 30 000 ordinary shares. All shares have a face
value of NOK 4.00. All shares in the company have equal voting and dividend rights. All shares give equal rights to the company’s net
assets. Ekornes QM Holding AS has no treasury shares as of 31.Deceember 2021.
As at 31 December 2021, the company’s sole shareholder was:
Ekornes QM Holding AS and Ekornes Holding AS have in December 2021 merged. Ekornes QM Holding AS had 100% voting and
ownership of Ekornes Holding AS. Ekornes QM Holding AS took over the entire business operations, comprising assets, rights and
liabilities from Ekornes Holding AS. The merger was undertaken with effect for accounting and tax purposes from 1 January 2021.
The purpose of the merger was to simplify the Group structure.
As at 31 December 2021, the board has been granted the following authorisations:
The board has been granted no authorisations.
Shareholder Country No. of shares held Percentage
Qumei Runto S.A.R.L. Luxembourg 30 000 100 %
81
NOTES Annual report Ekornes QM Holding AS 2021
(Figures in NOK 000)
2021 2020
Components of the income tax expense
Change of deferred tax -1 412 -24
Tax expense -1 412 -24
Basis for tax payable
Prot before taxes 9 746 -16 309
Permanent differences 0 16 201
Temporary differences -9 746 108
Taxable income (basis for payable taxes in the balance sheet) 0 0
Reconciliation of the tax expense
Result before taxes 9 746 -16 309
Calculated tax 2 144 -3 588
Tax of permanent differences 0 3 564
Adjustment in respect of current income tax of previous years -3 556 0
Sum -1 412 -24
Effective tax rate in % -14,5 % 0,1 %
Calculation of deferred tax/deferred tax benet 31.12.2021 31.12.2020 Change
Other 17 446 23 865 -6 419
Total 17 446 23 865 -6 419
Deferred tax/(Deferred tax benet) (22% / 22%) 3 838 5 250 -1 412
Note 5
Taxes
The company has no employees. Neither the chairman of the Board, nor the general manager, has any bonus agreement or any
severance pay agreement.
The following is related to renumeration to auditor:
Breakdown of auditing fees (Figures in NOK 000) 2021 2020
Statutory auditing services 1 107 340
Other non-auditing services 0 6
Tax advisory services 0 226
Total 1 107 572
Auditing fees are stated including VAT.
Note 6 Other operating expenses
Annual report Ekornes QM Holding AS 2021 NOTES
82
NOTES Annual report Ekornes QM Holding AS 2021
*Interest expenses to Ekornes AS. See note 2 for more information.
(Figures in NOK 000)
Financial income 2021 2020
Group Contribution form Ekornes AS 194 851 168 010
Other interest expenses 405 688
Total nancial income 195 256 168 698
Net gains (losses) on foreign exchange 0 42
Financial expenses
Interest expenses Bond 160 549 182 391
Interest expenses to Ekornes AS* 22 588 0
Other interest expenses 5 1
Total nancial expenses 183 142 182 393
Note 7 Specication of nancial income and expenses
83
NOTES Annual report Ekornes QM Holding AS 2021
Senior Secured Bond at 31 December 2021
In April 2019, Ekornes QM Holding AS issued a stock exchange bond to renance the Group. The bond was listed on Oslo Stock
Exchange 10 July under the name ”Ekornes QM Holding AS 19/23 FRN FLOOR C” , Ticker: EKO01.
The bond is secured with a share pledge in Ekornes QM Holding AS. No instalments are payable before maturity in October 2023
and interest expenses are paid quarterly. NIBOR is adjusted at the end of each quarter and at 31. December 2021 the coupon was
7.58%. For rst quarter 2022 the coupon is 7.95%.
No signicant events have occurred between the balance sheet date and the date of publication of the nancial statements which
have materially affected the Company’s nancial position and which should have been reected in the nancial statements here
presented.
The changes in interest-bearing debt through the period 1. January to 31. December 2021 are as follows:
The bond was initially measured at fair value minus directly attributable transaction costs. Subsequent to initial recognition, the
bond is measured at amortized cost using the effective interest method. The effective interest method amortisation is included as
nance cost in the income statement. The nominal amount payable to the bondholders at maturity date is 2 020 MNOK, including a
fee of 20 MNOK
Ekornes has call options to redeem the bond with the rst expiry date in April 2022. The bond matures in October 2023. The Group
is in the process of evaluating a renancing process to nd an optimal long-term nancing structure.
Financial covenants related to the bond
The bond agreement is subject to a set of nancial covenants, including a minimum liquidity of NOK 125 million and a maximum
leverage ratio of Net debt / Adj. EBITDA starting at 5.25x for year 1 and 2,5.00x for year 3, 4.50x for year 4 and 4.00x for year 5, with
equity cure (max. 3 times) counting as EBITDA for the subsequent three quarterly reporting periods. The covenants are measured
quarterly on a 12-month rolling basis for Ekornes QM Holding Group.
During the fourth quarter of 2021 and as at 31 December 2021, Ekornes was compliant with all covenant requirements in the bond
agreement. The leverage ratio at the end of the fourth quarter 2021 was 3,42, well within prevailing requirements.
Note 8 Bond
Note 9 Subsequent events
Currency (Figures in NOK 000) NOK
Issue Amount 2 000 000
Nibor 3M 0,58 %
Margin 7,00 %
Coupon 7,58 %
Tenor / redemption: 54 months /4,5 years
Settlement Date: 02.04.2019
Maturity Date: 02.10.2023
External interest-bearing debt (Figures in NOK 000) Bond
Opening balance 1.1.2021 2 001 348
Capitalization 9 096
Closing balance external debt 31.12.2021 2 010 444
Annual report Ekornes QM Holding AS 2021
84
We hereby conrm that the annual accounts for the Group and the company for 2021 to the best of our knowledge have
been prepared in accordance with applicable accounting standards and give a true and fair view of the assets, liabilities,
nancial position and prot or loss of the Group and the company taken as a whole.
The Directors’ report gives a true and fair view of the development and performance of the business and the position of the
Group and the company, as well as a description of the principal risks and uncertainties facing the Group.
Statement pursuant to section 5-5
of the securities trading act
The Board of Directors of Ekornes QM Holding AS Oslo, 6 April 2022
Ruihai Zhao
Chair of the Board
Mogens Falsig
Director and CEO
Annual report Ekornes QM Holding AS 2021
85
Annual report Ekornes QM Holding AS 2021 AUDITOR’S REPORT
86
PricewaterhouseCoopers AS, Sandviksbodene 2A, Postboks 3984 - Sandviken, NO-5835 Bergen
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 Ekornes QM Holding AS
Independent Auditor’s Report
Report on the Audit of the Financial Statements
Opinion
We have audited the financial statements of Ekornes QM Holding AS, which comprise:
• The financial statements of the parent company Ekornes QM Holding AS (the Company),
which comprise the balance sheet as at 31 December 2021, the income statement and
statement of cash flow for the year then ended, and notes to the financial statements,
including a summary of significant accounting policies, and
• The consolidated financial statements of Ekornes QM Holding AS and its subsidiaries (the
Group), which comprise the consolidated balance sheet as at 31 December 2021, the
consolidated income statement, consolidated statement of comprehensive income,
consolidated statement of changes in equity and consolidated statement of cash flow for the
year then ended, and notes to the consolidated 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 2021, and its financial performance and its cash flows for the year then ended in
accordance with the Norwegian Accounting Act and accounting standards and practices
generally accepted in Norway, and
• the financial statements give a true and fair view of the financial position of the Group as at 31
December 2021, 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.
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 laws and regulations 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
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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 4 years from the election by the general meeting of the
shareholders on 28 September 2018 for the accounting year 2018.
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
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 business activities are largely unchanged
compared to last year. We have not identified regulatory changes, transactions or other events that
qualified as new Key audit matters for our audit of the 2021 financial statements. The impairment
assessment of intangible assets continues to be an important focus area in our audit.
Key Audit Matter How our audit addressed the Key Audit Matter
Impairment assessment intangible assets
Ekornes QM Holding Group (Group) has
recognized goodwill of NOK 1 561 million,
brand name of NOK 1 521 million and
customer relationship of NOK 1 162
million in the balance sheet as of 31
December 2021. The goodwill and other
intangible assets are related to the
acquisition of Ekornes AS in August 2018.
Goodwill with an indefinite useful life is
subject to impairment assessments
annually. The Board of Directors have
carried out an impairment assessment as
of 31 December 2021 and concluded with
no recognition of impairment loss in the
income statement for 2021.
Goodwill and other intangible assets are
allocated to groups of cash generating
units identified in accordance with two of
the Group’s operating segments,
Stressless and IMG. The impairment
assessment of goodwill showed that the
recoverable amount was higher than
carrying amount for both segments, and
that consequently no impairment was
required.
We obtained and reviewed management’s impairment
assessment of goodwill. The documentation contained
an assessment of the cash generating units and key
assumptions applied by management. We considered
whether the model contained the elements and
methodology required by IFRS. We found the model to
be reasonable and in accordance with our expectations.
Our procedures to evaluate management’s impairment
assessment included challenging key assumptions such
as revenue growth, operating margins, reinvestments
and changes in net working capital. We assessed the
reasonableness of the prognosis for the two segments
compared to historical performance, budgets approved
by the Board, management forecast and long-term
strategic plans. We also considered external available
information relevant to the industry and our own
knowledge of the industry. In order to assess the
reasonableness of the discount rate applied by
management, we compared key components with
external market data. All together, we found
management's conclusion and assumptions to be
within a reasonable range.
Further, we evaluated the adequacy of the disclosures to
the financial statements and found them to
appropriately explain management’s valuation
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The valuations require that management
apply judgement related to, among other,
future cash flows and discount rate
applied. We focus on this area due to the
magnitude of the amount of goodwill and
other intangible assets recognised and
due to judgements made by management
when determining the assumptions
applied to support the valuation of
goodwill and other intangible assets.
We refer to disclosures in note 11 for the
Group’s accounting policy for impairment
of goodwill and other intangible assets,
and where the Board of Directors explain
their valuation process for the Group’s
goodwill and other intangible assets.
process and the uncertainties inherent in some of
management’s assumptions.
We also compared the booked value of the intangible
assets against the acquisition price of the non-controlling
interest of 9.5 % in the group. This transaction involved
two independent, professional parties. On a 100 % basis,
this acquisition price reflects a higher value than the
acquisition price in 2018 of which the value of the
goodwill is based upon. This supports our assessment of
no need for any impairment of the value of goodwill and
other intangible assets in 2021.
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 appears 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 legal requirements.
Our opinion on the Board of Director’s report applies correspondingly to the statements on Corporate
Social Responsibility.
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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:
• 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 or 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 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
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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.
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.
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Report on Other Legal and Regulatory Requirements
Report on compliance with Regulation on European Single Electronic Format
(ESEF)
Opinion
We have performed an assurance engagement to obtain reasonable assurance that the financial
statements with file name 52990054TSRF5YXFTY82-2021-12-31-en.zip have been prepared in
accordance with Section 5-5 of the Norwegian Securities Trading Act (Verdipapirhandelloven) and the
accompanying Regulation on European Single Electronic Format (ESEF).
In our opinion, the financial statements have been prepared, in all material respects, in accordance
with the requirements of ESEF.
Management’s Responsibilities
Management is responsible for preparing, tagging and publishing the financial statements in the single
electronic reporting format required in ESEF. This responsibility comprises an adequate process and
the internal control procedures which management determines is necessary for the preparation,
tagging and publication of the financial statements.
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
Bergen, 6 April 2022
PricewaterhouseCoopers AS
Jan Roger Hånes
State Authorised Public Accountant
EKORNES QM Holding AS
E-mail: ofce@ekornes.no
www.ekornes.com
Tel. +47 70 25 52 00
Foretaksregisteret NO 820 350 022