Stock Exchange release – 2021

Verkkokauppa.com Oyj: Strong performance with an additional dividend proposed – strategy now set towards 1 billion in sales by 2025

FINANCIAL STATEMENT RELEASE for 1 January – 31 December 2020: Strong performance with an additional dividend proposed – strategy now set towards 1 billion in sales by 2025

Verkkokauppa.com Oyj – Financial Statement Release (unaudited) 12 February 2021, 8:00 a.m.

1 October – 31 December 2020 in brief

  • Revenue 176 million euros (10-12/2019: 160), growth of 10.1%
  • Gross profit 26.7 million euros (22.2), growth of 20.1%
  • Gross margin 15.1% of revenue (13.9%)
  • Operating profit 6.2 million euros (4.5)
  • Operating margin 3.5% of revenue (2.8%)
  • Comparable operating profit 6.2 million euros (4.5)
  • Comparable operating margin 3.5% (2.8%)
  • Profit for the period 4.7 million euros (3.2)
  • Earnings per share 0.10 euros (0.07)
  • Investments 0.4 million euros (0.4)
  • Operating cash flow 10.4 million euros (11.6)       
KEY RATIOS 10-12/202010-12/2019Change%1-12/20201-12/2019Change%
       
Revenue, € million176.0159.910.1%553.6504.19.8%
Gross profit, € million26.722.220.1%88.473.919.7%
Gross margin, % of revenue15.1%13.9%9.1%16.0%14.7%9.0%
EBITDA, € million7.55.731.4%24.616.350.6%
EBITDA, %4.3%3.6%19.4%4.4%3.2%37.1%
Operating profit, € million6.24.538.9%19.611.373.5%
Operating margin, % of revenue3.5%2.8%26.2%3.5%2.2%57.9%
Comparable operating profit, € million6.24.538.9%20.411.380.6%
Comparable operating margin, % of revenue3.5%2.8%26.2%3.7%2.2%64.4%
Net profit, € million4.73.244.1%14.67.887.2%
       
Investments, € million0.40.410.4%1.41.28.9%
Operating cash flow, € million10.411.6-10.8%16.99.774.2%


1 January – 31 December 2020 in brief

  • Revenue 554 million euros (1–12/2019: 504), growth of 9.8%
  • Gross profit 88.4 million euros (73.9), growth of 19.7%
  • Gross margin 16.0% of revenue (14.7%)
  • Operating profit 19.6 million euros (11.3)
  • Operating margin 3.5% of revenue (2.2%)
  • Comparable operating profit 20.4 million euros (11.3)
  • Comparable operating margin 3.7% (2.2%)
  • Profit for the period 14.6 million euros (7.8)
  • Earnings per share 0.33 euros (0.17)
  • Investments 1.4 million euros (1.2)
  • Operating cash flow 16.9 million euros (9.7)
  • The Board of Directors proposes to the annual general meeting that for the financial year 2020 a total dividend of 0.45 euro per share be distributed (0.230 euro per share in quarterly installments and an additional dividend of 0.220 euro per share be distributed in conjunction with the annual general meeting)

BUSINESS OUTLOOK

Verkkokauppa.com Oyj’s business operations are estimated to develop positively in the future. The company believes that it will succeed in further growing its market share in the chosen categories. The strong balance sheet enables the company to continue expanding its operations in accordance with its strategy.

The company has benefited from the shifting consumer behavior accelerated by the COVID-19 pandemic, as the sales in the online sales channel have shown strong growth. The company expects this trend to continue the longer the COVID-19 pandemic persists and that the accelerated shift to online sales channels continues.

At the same time, the prolongation of the COVID-19 pandemic continues to have a negative impact on spending on travel and service sectors. On the one hand, this has positively affected the consumer demand for goods, but on the other hand, it has limited the lower-margin wholesale business. The short-term risk is that COVID-19 situation and related restrictions continues longer than anticipated in Finland. This may have an impact on the company’s operations and its ability to safely serve customers in the brick-and-mortar stores.

The uncertainties concerning the future business outlook remain and relate to macroeconomic developments and the prevailing COVID-19 situation. The pandemic may still cause unforeseen impacts on the overall economic development, consumer demand as well as consumer purchase behavior and B2B sales in the future. Nevertheless, the company believes that it is well positioned and will be a relative winner in the “new normal” business environment of the future.

FINANCIAL GUIDANCE

The company expects the revenue to be between 570–620 million euros (2020: 554 million euros) and comparable operating profit to be between 20–26 million euros (2020: 20.4 million euros) in 2021.

CEO PANU PORKKA’S REVIEW

In 2020, online shopping became the preferred way of shopping for a growing number of Finns. This migration from offline to online was accelerated by the COVID-19 pandemic when people had to reduce visits to physical stores and got used to the convenience of online shopping and home deliveries. As a pioneer of ecommerce, Verkkokauppa.com clearly benefitted from this trend.

The peak shopping season began on Black Friday and continued until Christmas. During this online shopping season of all times, the increased preference for shopping online could also be seen in Verkkokauppa.com’s business, as already 66% of all purchases from Verkkokauppa.com were done online and 65% of these online purchases were delivered home. In the same period, the number of visitors on Verkkokauppa.com’s website grew by 25% compared to the same period last year and reached an all-time high of 14.2 million (11.4 million).

Verkkokauppa.com’s revenue returned to double-digit growth, increasing by 10.1% to 176 million euros (160) in the fourth quarter. The growth was driven by the strong performance of mid-sized product categories, especially major domestics appliances (MDA) and sports equipment. The development of MDA category was especially satisfying, and it is growing from a mid-sized category to one of Verkkokauppa.com’s core categories. At the same time, the export business continued to suffer from travel restrictions due to COVID-19.

Verkkokauppa.com’s profitability continued to develop favorably in the fourth quarter. The company’s gross margin grew to 15.1% of revenue (13.9%), especially driven by the strong performance of mid-sized, higher-margin categories. Also, the comparable operating profit grew, reaching a record-high 6.2 million euros (4.5). In each quarter of 2020, the company has delivered the best-ever comparable operating profit of that respective quarter. In the fourth quarter, Verkkokauppa.com’s comparable operating profit was the best quarterly comparable operating profit in the company’s history.

Verkkokauppa.com’s latest ranking in the YouGov BrandIndex is also source of pride. Verkkokauppa.com is the most recommended brand in its comparison group. Our brand is clearly and positively on people’s mind when they are making purchase decisions. These results show that persistent and systematic work in developing the brand is paying off.

Today, Verkkokauppa.com’s announced its refined strategy. The company’s vision is to remain as a pioneer of ecommerce also in the next decades through continuous innovation. The company’s success will be built on five pillars: excellent customer experience and strong brand, efficient fulfilment, superior technology backbone, extensive assortment and cost competitiveness. Verkkokauppa.com is seeking growth both within its core categories as well as by expanding into segments with attractive margin potential, especially online. Additionally, the company sees attractive growth opportunities in the B2B segment, private labelling and in value added services. We are also keeping our eyes open for potential M&A opportunities. By getting all this right, Verkkokauppa.com will aim to reach an annual revenue of one billion euros and a 5% EBIT margin by the end of 2025.

I’m proud of Verkkokauppa.com’s performance in 2020 and wish to thank our personnel for their hard work during these unusual times, and our shareholders and customers for their continued trust. Verkkokauppa.com is in an excellent position to benefit from the ecommerce boom. In 2021, we want to increase Verkkokauppa.com’s market share, especially online, and continue to deliver on the company’s customer promise of “Probably always cheaper prices”.


REVENUE AND PROFITABILITY DEVELOPMENT

October–December 2020

In October–December 2020, Verkkokauppa.com Oyj’s revenue grew by 10.1% year on year. Revenue grew by 16.1 million euros, totaling 176 million euros (159.9). Sales increased particularly in Major domestic appliances, Small domestic appliances, Sports, Toys, Office & Supplies, and Home & Lighting.

The company-financed customer financing proceeds were 1.0 million euros (0.9) including both interest income and fee income. The credit loss allowance was increased by 0.2 million euros (0.1) in the fourth quarter.

Personnel costs increased in October–December by 14.3% to 10.4 million euros (9.1). The increase resulted mainly from the growing personnel costs in IT administration, purchasing, retail stores, customer service and from bonus payment covering the whole staff. During the reporting period, other operating expenses increased by 18.6% to 8.9 million euros (7.5). The increase resulted mainly from higher external logistics service costs, increased IT and marketing expenses and increased credit loss allowance.

Operating profit in October–December 2020 was 6.2 million euros (4.5), comparable operating profit was 6.2 (4.5) and profit for the period 4.7 million euros (3.2).

 10-12/10-12/1-12/1-12/
EUR million2020201920202019
Operating profit6.24.519.611.3
- advisory costs related to transfer to official list of Nasdaq Helsinki--0.8-
Comparable operating profit6.24.520.411.3

Earnings per share were 0.10 euros (0.07) in October–December 2020. In January–December 2020 earnings per share were 0.33 euros (0.17).

January–December 2020

In January–December 2020, Verkkokauppa.com Oyj’s revenue grew by 10.1% year on year. Revenue grew by 49.5 million euros, totaling 553.6 million euros (504.1). Sales increased particularly in Major domestic appliances (MDA), Sports, Audio & Hi-Fi, Office & Supplies, BBQ and Toys.

The company-financed customer financing proceeds were 3.6 million euros (3.3) including both interest income and fee income. To reflect the prevailing uncertainty related to customers’ payment behavior in the future and changes in continues debt sales pricing, the credit loss allowance was increased compared to the end of 2019 and totaled 1.1 million euros (0.6). As of April 2019, Verkkokauppa.com has been selling past due receivables in a so-called continuous debt sales model, where receivables overdue more than 60 days will be sold to third parties. This decreases company’s accounts receivable risk.

Personnel costs increased in January–December by 9.1% to 35.6 million euros (32.6). The increase resulted mainly from the growing personnel costs in IT administration, marketing, retail stores and from bonus payment covering the whole staff. During the reporting period, other operating expenses increased by 13.1% to 28.8 million euros (25.5). The increase was mainly driven by advisory costs relating to transferring to the official list of Nasdaq Helsinki, increased credit loss allowance, external logistics service costs and IT-related costs.

Operating profit in January–December 2020 was 19.6 million euros (11.3), comparable operating profit was 20.4 (11.3) and profit for the period 14.6 million euros (7.8). Items affecting comparable operating profit totaled 0.8 million euro (0.0).

FINANCE AND INVESTMENTS

Operating cash flow was 16.9 million euros (9.7) in January–December 2020. In the reporting period, the relative improvement of the operating cash flow resulted from improved sales margin.

Ordinary seasonal fluctuations are reflected in cash and cash equivalents, cash flow and accounts payable, which usually reach the highest point at the end of the fourth quarter and the lowest point at the end of the second quarter.

Investments totaled 1.4 million euros (1.2) in January–December 2020. During the reporting period the company invested and capitalized 0.6 million euros (0.1) in salary costs and external technology consulting fees related to new IT systems and the development of new ERP features. Capital expenditures totaled 0.3 million euros (0.4) in October–December 2020.

Verkkokauppa.com has revolving credit facilities totaling 20 million euros, which have not been utilized. Of these credit facilities, 15 million euros are for three years, and 5 million euros for five years as of 1 July 2019.

SHARE TRADING AND SHARES

During the reporting period, 26,714,366 shares were exchanged until 4 June on the First North Growth Market of Nasdaq Helsinki Ltd marketplace and on 5 June onwards on the official list of Nasdaq Helsinki Ltd, representing 59.3% of all shares in the company. The highest share price was 7.90 euros and the lowest 2.49 euros. The average price in share trading was 4.95 euros. The total of the share trading was 132.3 million euros. The closing price was 7.12 euros, and the market capitalization of all shares was 320.9 million euros at the end of the period.

The total number of shares in the company was 45,065,130 on 31 December 2020, including treasury shares. In 2020, the company has transferred a total of 25,318 treasury shares as part of the remuneration of Board members. The company held 352,898 treasury shares on 31 December 2020. These treasury shares accounted for 0.78% of all shares. The treasury shares have no voting rights and no dividend is paid on them.

The Board holds a valid authorization to issue a maximum of 4,506,513 shares on a share issue by one or several decisions (share issue authorization of 2020). The Board has utilized its share issue authorization solely for transferring shares as part of the remuneration of Board members.

LONG-TERM INCENTIVE PLANS

Verkkokauppa.com has two share-based incentive plans for the CEO and members of the Management Team, the Matching Share Plan 2018–2020 and the Performance Matching Share Plan 2020–2022. The aim of the plans is to align the objectives of the shareholders and the management in order to increase the company’s value in the long term, to encourage the management to personally invest in the company shares, to retain the members of the Management Team at the company and to offer them a competitive reward plan that is based on acquiring, earning and accumulating the company’s shares.

In the Matching Share Plan 2018–2020, the participant may earn a number of matching shares, determined by the Board of Directors, based on their investment in Verkkokauppa.com Oyj’s shares. The Matching Share Plan has two matching periods: 2018–2020 and 2019–2021. The rewards to be paid on the basis of the matching period 2018–2020 correspond to the value of maximum total of 50,000 Verkkokauppa.com Oyj’s shares, and on the basis of the matching period 2019–2021 to the value of maximum total of 45,000 Verkkokauppa.com Oyj’s shares, including also the proportions to be paid in cash.

In the Performance Matching Share Plan 2020–2022, a person may earn a number of matching shares based on their investment in Verkkokauppa.com Oyj’s shares and the Total Shareholder Return (TSR) of the share. The Performance Matching Share Plan includes one performance period, calendar years 2020–2022. The reward to be paid to participants is based on the achievement of the required TSR levels set by the Board of Directors. A maximum of three performance-based matching shares is paid for each allocated share. The rewards to be paid on the basis of the plan correspond to the value of approximately 540,000 Verkkokauppa.com Oyj shares in total (gross amount).

PERSONNEL

During the reporting period, the number of employees increased by 7.9%, and the total number of employees was 818 (758) at the end of December 2020. The number of employees includes both full- and part-time employees.

SHAREHOLDERS’ NOMINATION BOARD

On 22 September 2020, Verkkokauppa.com announced that the Shareholders' Nomination Board had been appointed, based on ownership on the last banking day in May. At its organizational meeting on 22 September 2020, the following members of the Nomination Board were appointed:

  • Samuli Seppälä, Founder of Verkkokauppa.com, representing himself,
  • Peter Lindell, Partner and Chairman of Rite Ventures, appointed by Rite Ventures Finland AB,
  • Erkka Kohonen, Senior Portfolio Manager, appointed by Varma Mutual Pension Insurance Company,
  • Christoffer Häggblom, Chair of the Board of Verkkokauppa.com Oyj

The Chair of the Nomination Board is Peter Lindell.

Verkkokauppa.com’s Shareholders’ Nomination Board was established in 2020 by the Annual General Meeting. Its duty is to prepare proposals on the number, election and remuneration of the members of the Board to the General Meeting. Its proposal will be published by the end of February 2021 at the latest.

RISKS AND UNCERTAINTIES

Verkkokauppa.com Oyj’s risks and uncertainties reflect the market and general economic trends, for example, demand for consumer electronics, wholesale trade business, the business environment and competition. The company’s business operations are also influenced by risks and uncertainties relating to, for example, business strategy, investments, procurement and logistics, information technology, and other operative aspects of the business. The aforementioned risks and uncertainties may affect the company’s operations, financial position and performance both positively and negatively. Risks and uncertainties have been presented in more detail in the Annual Report.

Uncertainty in the development of the economy and the financial markets in Finland, Europe and the world may have a negative impact on the business and growth opportunities of Verkkokauppa.com. The COVID-19 pandemic affects people’s lives and the operation of businesses in Finland and globally alike. The COVID-19 pandemic continues, and its overall impacts on the Company’s business are difficult to assess.

LITIGATION AND DISPUTES

Verkkokauppa.com has no open litigation issues nor any significant disputes.

ANNUAL GENERAL MEETING 2020

The Annual General Meeting was held in Helsinki on 31 March 2020. The financial statements for the year 2019 were approved, the Remuneration Policy was considered, and the Board members and the CEO were discharged from liability with respect to financial year 2019. It was resolved to pay a dividend of 0.052 euros per share, totaling 2,339,612.96 euros.

The Annual General Meeting authorized the Board of Directors to decide in its discretion on the distribution of dividends as follows: The total amount of the dividend distribution based on this authorization shall not exceed EUR 0.162 per share (the instalments may differ from another). The authorization is valid until the opening of the next Annual General Meeting. Unless the Board of Directors decides otherwise, the authorization will be used to distribute dividend three times during the period of validity of the authorization and the payment dates of the dividends will be on 6 May 2020, 4 August 2020 and 3 November 2020. The Board of Directors will decide on the record date in connection with each dividend payment decision and the company will make separate announcements of Board resolutions.

The number of Board members was confirmed as six. All current Board members, Christoffer Häggblom, Robert Burén, Mikael Hagman, Kai Seikku, Arja Talma and Samuli Seppälä, were re-elected. After the meeting, the Board elected Christoffer Häggblom as the Chair of the Board and resolved to continue with an Audit Committee and Remuneration Committee. The Audit Committee consists of Board members Kai Seikku (Chair), Arja Talma (Vice Chair), Christoffer Häggblom and Samuli Seppälä. The Remuneration Committee consists of Board members Christoffer Häggblom (Chair), Samuli Seppälä and Kai Seikku.

The Authorized Public Accountant PricewaterhouseCoopers Oy was re-elected as the auditor, who has notified the company that Authorized Public Accountant Ylva Eriksson will be acting as the Principal Auditor.

The Annual General Meeting authorized the Board to decide on the repurchase of a maximum of 4,506,513 shares in one or several instalments using the unrestricted equity of the Company, however taking into account the provisions of the Finnish Limited Liability Companies Act on the maximum number of the treasury shares held by the company or its subsidiaries. The proposed number of shares represents a maximum of ten (10) per cent of the total number of shares in the company. The authorization is valid until the close of the following Annual General Meeting, however, no longer than until 30 June 2021. The authorization revokes previous unused authorizations for the repurchase of the company’s own shares.

The Annual General Meeting authorized the Board of Directors to decide on a share issue by one or several decisions. A maximum of 4,506,513 shares may be issued on the basis of the authorization. The proposed maximum authorized number represents ten (10) percent of the company’s entire share capital. The authorization is valid until the close of the following Annual General Meeting, however, no longer than until 30 June 2021. The authorization revokes previous unused share issue authorizations.

In addition, the Annual General Meeting resolved to establish a Shareholders’ Nomination Board, to prepare proposals on the election and remuneration of the members of the Board of Directors for the Annual General Meeting as well as confirm the charter of the Shareholders’ Nomination Board. The Nomination Board consists of four members, three of which represent the Company’s three largest shareholders, or the representatives nominated by such shareholders. The Chair of the Board of Directors shall be the fourth member of the Nomination Board. The right to nominate members to represent shareholders rests with three shareholders who are registered in the shareholders’ register maintained by Euroclear Finland Ltd or another operator on the last business day of May in the year preceding the Annual General Meeting and who hold the largest number of votes conferred by shares according to the shareholder register.

DIVIDEND

The Annual General Meeting 2020 resolved to pay 0.052 euros (2,339,612.96 euros in total) per share as dividend. The dividend payment date was 9 April 2020.

The Board resolved on 24 April 2020 to pay a dividend of 0.053 euros per share (2,384,605.52 euros in total). The dividend payment date was 6 May 2020.

The Board resolved on 24 July 2020 to pay a dividend of 0.054 euros per share (2,413,923.34 euros in total).
The dividend payment date was 4 August 2020.

The Board resolved on 23 October 2020 to pay a dividend of 0.055 euros per share (2,458,892,92 euros in total). The dividend payment date was 3 November 2020.

Verkkokauppa.com’s Annual General Meeting authorized the Board of Directors to decide in its discretion on the distribution of dividends not exceeding 0.162 euro per share to be paid in three instalments during 2020. Following the distribution of dividends resolved on 23 October 2020 by the Board, the Company does not have any valid authorizations for distribution of dividends.

DIVIDEND DISTRIBUTION PROPOSAL

Verkkokauppa.com Oyj’s distributable funds as of 31 December 2020 totaled 40,014,114.29 euro. The Board of Directors will propose to the Annual General Meeting that Verkkokauppa.com Oyj net income for period 14,621,552.33 euro will be transferred to retained earnings. The Board will propose to the Annual General Meeting that for the financial year 2020 a total dividend of 0.450 euro per share be distributed, divided into a dividend of 0.230 euro paid quarterly and an additional dividend of 0.220 euro paid in conjunction with the Annual General Meeting 2021. The proposal is based on the strong performance in 2020 and company’s strong liquidity position.

OTHER EVENTS DURING THE REPORTING PERIOD

On 13 February 2020 Verkkokauppa.com announced that the company is currently evaluating the possibility of transferring to the main list of Nasdaq Helsinki during 2020.

On 13 February 2020 Verkkokauppa.com announced to establish a new share-based incentive plan for the CEO and the members of the Management Team.

On 24 April 2020 Verkkokauppa.com announced that it will start purchasing the company’s own shares.

Between 14 May and 1 July 2020 Verkkokauppa.com announced several (26) daily share repurchase announcements.

On 28 May 2020 Verkkokauppa.com announced that it will apply for its shares to be listed on the official list of Nasdaq Helsinki Ltd.

On 29 May 2020 Verkkokauppa.com announced that the Finnish Financial Supervisory Authority has approved Verkkokauppa.com Oyj’s Finnish-language prospectus.

On 4 June 2020 Verkkokauppa.com announced that Verkkokauppa.com Oyj’s listing application has been approved and trading of the company’s shares on the official list of Nasdaq Helsinki Ltd will commence on 5 June 2020.

On 2 July 2020 Verkkokauppa.com announced that it has completed the repurchase of the company’s own shares.

On 21 July 2020 Verkkokauppa.com provided preliminary information on its second-quarter revenue and comparable operating profit and issued a positive profit warning.

On 24 September 2020 Verkkokauppa.com issued a positive profit warning and upgraded its guidance for 2020.

On 27 November 2020 Verkkokauppa.com announced that HR Director and member of the management team Taina Suorsa has resigned to take on new challenges outside Verkkokauppa.com.

SUBSEQUENT EVENTS

On 4 January 2021 Verkkokauppa.com announced that Board member Mikael Hagman had resigned from the company’s Board.

On 27 January 2021 Verkkokauppa.com announced that Saara Tikkanen has been appointed HR Director and member of the management team.

On 12 February 2021 Verkkokauppa.com announced company’s refined strategy and long-term financial targets until end of 2025.


PRESS CONFERENCES

A press conference for analysts, investors and media will be held in Finnish by LiveStream webcast on Friday, 12 February 2021 at 10:00 a.m., in which Verkkokauppa.com Oyj’s CEO Panu Porkka will present the developments in the reporting period.

A press conference in English will be held by LiveStream webcast on Friday, 12 February 2021 at 11:00 a.m. (EET). Questions can be sent beforehand or during the presentation via e-mail to investors@verkkokauppa.com.

Presentation materials for both events are available at https://investors.verkkokauppa.com/en/presentations. For both press conferences, a LiveStream is available at www.verklive.com.

COMPANY RELEASES IN 2021/2022

Verkkokauppa.com Oyj will publish its financial reports as follows:

  • Annual Report 2020 will be published online during week 9, 2021
  • Interim Report January–March 2021, Friday 23 April 2021
  • Half-year Report January–June 2021, Friday 16 July 2021
  • Interim Report January–September 2021, Friday 22 October 2021

Helsinki, Finland, 12 February 2021

Verkkokauppa.com Oyj

Board of Directors

More information:

Panu Porkka, CEO
e-mail panu.porkka@verkkokauppa.com
Telephone +358 10 309 5555

Mikko Forsell, CFO
e-mail mikko.forsell@verkkokauppa.com
Telephone +358 50 434 2516

Distribution:

Nasdaq Helsinki
Key media
www.verkkokauppa.com

VERKKOKAUPPA.COM OYJ FINANCIAL STATEMENTS RELEASE 1 Jan – Dec 31, 2020

Income statement

  10-12/10-12/1-12/1-12/
EUR thousandNote2020201920202019
      
Revenue1.3176,009159,908553,636504,113
      
Other operating income 188153558555
Materials and services -149,348-137,710-465,222-430,239
Employee benefit expenses -10,419-9,115-35,560-32,595
Depreciation and amortization -1,306-1,246-5,010-5,040
Other operating expenses -8,920-7,523-28,818-25,504
      
Operating profit 6,2034,46719,58311,290
      
Finance income 321164
Finance costs -363-421-1,423-1,591
      
Profit before income taxes 5,8424,04818,1719,763
      
Income taxes -1,180-812-3,550-1,953
      
Profit for the period 4,6623,23614,6227,810
      
Profit for the period attributable to     
Equity holders of the company 4,6623,23614,6227,810
      
Earnings per share calculated from the profit attributable to equity holders     
Earnings per share, basic (EUR) 0.100.070.330.17
Earnings per share, diluted (EUR) 0.100.070.320.17

Statement of comprehensive income

  10-12/10-12/1-12/1-12/
EUR thousand 2020201920202019
      
Profit for the period 4,6623,23614,6227,810
      
Comprehensive income for the period 4,6623,23614,6227,810
      
Comprehensive income for the period     
Equity holders of the company 4,6623,23614,6227,810


Statement of financial position 

EUR thousandNote31 Dec 202031 Dec 2019
Non-current assets   
Intangible assets 835592
Property, plant and equipment 2,2222,381
Right-of-use assets1.517,34718,770
Equity investments 266266
Deferred tax assets 1,3491,195
Trade receivables1.6/1.73,2011,882
Other non-current receivables 425435
Non-current assets, total 25,64625,521
    
Current assets   
Inventories 75,38466,702
Trade receivables1.6/1.718,65014,620
Other receivables 1,4621,143
Income tax receivables 278
Accrued income 9,4469,424
Cash and cash equivalents1.743,09942,495
Current assets, total 148,041134,662
    
Total assets 173,687160,183
    
Equity   
Share capital 100100
Treasury shares -2,206-701
Invested non-restricted equity fund 25,81625,707
Retained earnings 2,2173,647
Profit for the period 14,6227,810
Total equity 40,54936,563
    
Non-current liabilities   
Lease liabilities1.718,04519,676
Deferred tax liabilities 7
Provisions 766660
Non-current liabilities, total 18,81120,343
    
Current liabilities   
Lease liabilities1.73,8833,758
Advance payments received 8,4753,819
Trade payables1.770,17173,068
Other current liabilities 12,2967,892
Accrued liabilities 18,03914,741
Income tax liabilities 1,463-
Current liabilities, total 114,327103,277
    
Total liabilities 133,138123,620
    
Total equity and liabilities 173,687160,183



Statement of cash flows

 1-12/1-12/
EUR thousand20202019
Cash flow from operating activities  
Profit before income taxes18,1719,763
Adjustments  
Depreciation and impairment5,0105,040
Finance income and costs1,3841,527
Other adjustments458476
Cash flow before change in working capital25,02516,806
Change in working capital  
Increase (-) / decrease (+) in non-current non-interest-bearing trade receivables-1,309-335
Increase (‒) / decrease (+) in trade and other receivables-4,3711,653
Increase (‒) / decrease (+) in inventories-8,682-918
Increase (+) / decrease (‒) in current liabilities9,576-3,650
Cash flow before financial items and taxes20,23913,557
Interest paid-66-59
Interest received57
Interest of lease liabilities-1,323-1,483
Income tax paid-1,970-2,333
Cash flow from operating activities16,8849,690
   
Cash flow from investing activities  
Purchases of property, plant and equipment-769-1,016
Purchases of intangible assets-587-186
Proceeds from equity investments57
Cash flow from investing activities-1,356-1,145
   
Cash flow from financing activities  
Decrease (-) in lease liabilities-3,821-3,690
Dividends paid-9,597-8,908
Acquisition of treasury shares-1,505-198
Cash flow from financing activities-14,923-12,796
   
Increase (+) / decrease (‒) in cash and cash equivalents604-4,251
   
Cash and cash equivalents at beginning of financial year42,49546,746
Cash and cash equivalents at end of financial year43,09942,495



Statement of changes in equity

A   Share capitalD   Fair value reserve    
B   Treasury sharesE   Retained earnings    
C   Invested non-restricted equity fundF   Total equity    
       
       
EUR thousandABCDEF
Equity 1 Jan 2020100-70125,707011,45736,563
Profit for the period----14,62214,622
Changes in fair values of equity investments-----0
Comprehensive income for the period, total----14,62214,622
Dividend distribution-----9,597-9,597
Acquisition of treasury shares--1,505----1,505
Disposal of treasury shares -Board fees--109--109
Share-based incentives----358358
Transactions with owners, total--1,505109--9,239-10,635
Equity 31 Dec 2020100-2,20625,816016,83940,549
       
       
EUR thousandABCDEF
Equity 1 Jan 2019100-50225,585-3312,41637,565
Profit for the period----7,8107,810
Changes in fair values of equity investments---33-33
Comprehensive income for the period, total---337,8107,843
Dividend distribution-----8,908-8,908
Acquisition of treasury shares--198----198
Disposal of treasury shares -Board fees--122--122
Share-based incentives----139139
Transactions with owners, total--1981220-8,769-8,845
Equity 31 Dec 2019100-70125,707011,45736,563



Notes

1.1  Accounting principles applied in this Financial Statements Release

Verkkokauppa.com Oyj is a public limited company, the shares of which were quoted until 4 June 2020 on the First North Growth Market of Nasdaq Helsinki Ltd marketplace and are quoted on 5 June 2020 onwards on the official list of Nasdaq Helsinki Ltd. The registered address of its head office is Tyynenmerenkatu 11, Helsinki.

Verkkokauppa.com Oyj’s Financial Statements Release for January–December 2020 has been prepared in line with IAS 34, ‘Interim Financial Reporting’ and should be read in conjunction with Verkkokauppa.com Oyj’s financial statements for 2019, published on 4 March 2020. Verkkokauppa.com Oyj has applied the same accounting principles in the preparation of this Financial Statements Release as in its Financial Statements for 2019.

Verkkokauppa.com Oyj has not adopted any new accounting policies during 2020 that would have a material impact on this Financial Statements Release.

The information presented in this Financial Statements Release has not been audited. The figures are rounded, and therefore the sum of individual figures may deviate from the aggregate amount presented. All amounts in this report are presented in EUR thousands, unless otherwise stated.

Management judgement related to the choice and application of accounting policies and measures following the COVID-19

The preparation of this Interim Financial Report required management to make judgements, estimates assumptions that affect the application of accounting principles and the reported amounts of assets and liabilities, income and expenses. Actual results may differ from these estimates.

Since the outbreak of COVID-19 pandemic the company has started several initiatives to secure business continuity and staff safety. The company is monitoring and reporting on the COVID-19 situation on a frequent basis. As the conditions surrounding the COVID-19 pandemic are constantly changing, it is still difficult to estimate its impact on the economy, consumer demand as well as purchase behavior, B2B sales and wholesale. Since March 2020, the company has monitored customers’ payment behavior and the development of account receivables on a daily basis and has managed credit limits and potential credit losses. No significant changes have been observed in customers’ payment behavior. COVID-19 has also not had a significant effect on inventory turnover or impairment. There have been no significant changes in the Company’s leases or payment terms as a result of COVID-19 that would have affected the company’s right-of-use assets or their lease liabilities. The current strong cash position and unused RCF facilities (20.0 million euros) will secure business continuity even under these exceptional circumstances.

1.2          Segment reporting

Verkkokauppa.com Oyj has one reportable segment. The management of Verkkokauppa.com Oyj has exercised judgement when it has applied the aggregation criteria to aggregate the operating segments into one reportable segment. The customers are the same across all operating segments, which offer the same goods and services in uniform conditions in one main market i.e. Finland. At the core of the company’s business model is a strong integration of webstore and retail stores, common support functions serving the entire business as well as the volume benefits enabled by centralized business.

1.3          Revenue from contracts with customers

The revenue streams of the company consist of the sale of goods and services. There are more than 65,000 products in 26 different main product categories that the company sells to consumers through its own webstore and four retail stores in Finland. The sale of services rendered by the company includes, for example, installation and maintenance services, subscription sales and visibility sales. Revenue is accumulated geographically mainly from Finland.

Revenue from sales of products is recognized at a point in time when the control has been transferred. The revenue from services is recognized mainly over time.

Disaggregation of revenue

Satisfaction of performance obligations

 10-12/10-12/1-12/1-12/
EUR thousand2020201920202019
At a point in time174,554158,266549,062498,343
Over time1,4551,6414,5745,770
Revenue, total176,009159,908553,636504,113

Revenue by external customers’ location

 10-12/10-12/1-12/1-12/
EUR thousand2020201920202019
Finland165,945135,145506,185442,540
Rest of the world10,06524,76347,45161,573
Revenue by external customers' location176,009159,908553,636504,113

Income recognized from customer financing

The company presents all income from customer financing as part of revenue in the primary financial statements.

The table below presents the income recognized from company- financed Apuraha customer financing divided into income recognized using the effective interest rate method and other income. Other income consists of other fees.

 10-12/10-12/1-12/1-12/
EUR thousand2020201920202019
Interest income recognized using effective interest rate method5853462,0341,293
Other income from company-financed customer financing3665191,5581,983
Income from company-financed Apuraha, total9518653,5923,276

1.4          Seasonality of business

The nature of the business of the company includes seasonality. Ordinary seasonal fluctuations are reflected in cash and cash equivalents, cash flow and accounts payable, which usually reach the highest point at year-end and the lowest point at the end of the second quarter.

1.5          Right-of-use assets

EUR thousand31 Dec 202031 Dec 2019
Carrying amount 1.1.18,77021,764
Increases                     2,221113
Increase/decrease due to remeasurement201700
Disposals-62-33
Depreciation-3,783-3,774
Carrying amount at the end of period17,34718,770

The remeasurements made during 2019 and 2020 relate to index adjustments and renegotiated rental agreements.

1.6          Trade receivables

   31 Dec 202031 Dec 2019
EUR thousand  Trade receivablesLoss allowanceTrade receivablesLoss allowance
Not due   17,964 656 12,226 101
Past due 1-60 days   4,878 357 4,399 331
Past due 61-120 days   84 61 419 110
Past due over 121 days   49 49 17 17
Total   22,975  1,123  17,061  559

1.7          Financial assets and liabilities by measurement category

31 Dec 2020Recognized at fair value through other comprehensive incomeAt amortized costLease liabilities 
  
EUR thousandCarrying amount
Non-current financial assets    
Equity investments (level 3)266--266
Trade receivables and other financial receivables-3,626-3,626
Non-current financial assets, total2663,626-3,892
     
Current financial assets    
Trade receivables-18,650-18,650
Cash and cash equivalents-43,099-43,099
Current financial assets, total-61,750-61,750
     
Financial assets by measurement category, total26665,375-65,642
     
Non-current financial liabilities    
Lease liabilities--18,04518,045
Non-current financial liabilities, total--18,04518,045
     
Current financial liabilities    
Lease liabilities--3,8833,883
Trade payables-70,171-70,171
Current financial liabilities, total-70,1713,88374,054
     
Financial liabilities by measurement category, total-70,17121,92892,099
     
     
     
31 Dec 2019Recognized at fair value through other comprehensive incomeAt amortized costLease liabilities 
  
EUR thousandCarrying amount
Non-current financial assets    
Equity investments (level 3)266--266
Trade receivables and other financial receivables (level 2)-2,317-2,317
Non-current financial assets, total2662,317-2,583
     
Current financial assets    
Trade receivables (level 2)-14,620-14,620
Cash and cash equivalents (level 2)-42,495-42,495
Current financial assets, total-57,116-57,116
     
Financial assets by measurement category, total26659,432-59,698
     
Non-current financial liabilities    
Lease liabilities (level 2)--19,67619,676
Non-current financial liabilities, total--19,67619,676
     
Current financial liabilities    
Lease liabilities (level 2)--3,7583,758
Trade payables (level 2)-73,068-73,068
Current financial liabilities, total-73,0683,75876,826
     
Financial liabilities by measurement category, total-73,06823,43496,502


Determining fair values

Level 1: Fair values are based on the (unadjusted) quoted prices of identical assets or liabilities publicly traded in active markets.

Level 2: Financial instruments are not traded in active and liquid markets, but their fair values are calculable based on market data.

Level 3: Measuring of financial instruments is not based on verifiable market data, nor are other factors influencing the fair value of the instruments available or verifiable.

The equity investments in level 3 contain unquoted shares. According to the assessments of the management, measurement at cost is closest to fair value. There have been no changes in the carrying amounts during the financial year 2020. There have been no significant transfers between measurement categories during the review period.

1.8          Dividends

Dividends paid after the reporting period and year-on-year.

2020  
For the previous yearDate of paymentDividend per share, EUR
 9.4.20200.052
 6.5.20200.053
 4.8.20200.054
 3.11.20200.055
Total dividends, EUR thousand 9,597
2019  
For the previous yearDate of paymentDividend per share, EUR
 8.4.20190.048
 21.5.20190.049
 20.8.20190.050
 5.11.20190.051
Total dividends, EUR thousand 8,908

1.9          Transactions with related parties

Verkkokauppa.com Oyj’s related parties comprise the Board of Directors, the CEO as well as the other members of the Management Team and the close members of the family of said persons as well as their controlled entities. Transactions with related parties have been carried out on usual commercial terms. One of the company’s related parties is Board member Samuli Seppälä, who held 40.6% of all shares and votes in Verkkokauppa.com on 31 December 2020.

EUR thousand30 Dec 202031 Dec 2019
Sales of goods and services  
To key management personnel and their related parties7746
   
Purchases of goods and services  
From key management personnel and their related parties1-
   
   
EUR thousand30 Dec 202031 Dec 2019
Closing balances from purchases/sales of goods/services  
 Trade receivables from key management personnel and their related parties97
   
 Trade payables to key management personnel and their related parties--



LONG-TERM INCENTIVE PLANS

The Board of Directors of Verkkokauppa.com Oyj has on 13 February 2020 resolved to establish a new share-based incentive plan for the CEO and the members of the Management Team. The aim of the new plan is to align the objectives of the shareholders and the management in order to increase the value of the company in the long term, to encourage the management to personally invest in the company shares, to retain the members of the Management Team at the company and to offer them a competitive reward plan that is based on acquiring, earning and accumulating the company’s shares.

In the new Performance Matching Share Plan 2020–2022, a person may earn a number of matching shares based on their investment in Verkkokauppa.com Oyj’s shares and the Total Shareholder Return (TSR) of the share. The Performance Matching Share Plan includes one performance period, calendar years 2020–2022. The reward to be paid to participants is based on the achievement of the required TSR levels set by the Board of Directors. A maximum of three performance-based matching shares is paid for each allocated share. The prerequisite for participation and receiving of reward is that a participant allocates freely transferable company shares, held by them, in the plan, or acquires the company’s shares up to the number determined by the Board of Directors. Furthermore, payment of reward is based on the participant’s valid employment or service upon reward payment. As a rule, no reward will be paid if a participant’s employment or service ends before the reward payment.

The target group of the plan consists of eight persons, the CEO and all other members of the Management Team. In accordance with the terms of the plan each participant is entitled to get a gross number of shares. However, a net number of shares will be paid to the participant after the company has withheld and paid the value of a part of the shares to cover the employee’s tax obligation. The rewards to be paid on the basis of the plan correspond to the value of approximately 540,000 Verkkokauppa.com Oyj shares in total (gross amount).

1.10        Guarantees and commitments

EUR thousand30 Dec 202031 Dec 2019
Collateral given for own commitments  
Guarantees3,0822,652
   
Other commitments and contingent liabilities811

Guarantees are related to rent guarantees, the comprehensive guarantee for Finnish Customs and documentary credits. Other commitments are related to off-balance residual values.

1.11        IFRS Standards not yet effective

There are no IFRS, IFRIC interpretations, annual improvements or amendments to IFRS that are not yet effective that would be expected to have a material impact on the company’s financial statements.

1.12        Subsequent events

On 4 January 2021 Verkkokauppa.com announced that Board member Mikael Hagman had resigned from the company’s Board.

Verkkokauppa.com Oyj announced on January 27, 2021 that it has appointed Saara Tikkanen as the company's new HR Director and member of the Management Team.

Verkkokauppa.com Oyj announced on 12 February 2021 the company's updated strategy and long-term financial targets.

ADDITIONAL INFORMATION

Quarterly income statement

 10-12/7-9/4-6/1-3/10-12/
EUR thousand20202020202020202019
      
Revenue176,009129,321123,050125,255159,908
      
Other operating income188127116127153
Materials and services-149,348-108,394-101,645-105,835-137,710
Employee benefit expenses-10,419-8,105-8,417-8,619-9,115
Depreciation and amortization-1,306-1,228-1,246-1,230-1,246
Other operating expenses-8,920-6,116-7,503-6,280-7,523
      
Operating profit6,2035,6064,3563,4184,467
      
Finance income35222
Finance costs-363-339-359-362-421
      
Profit before income taxes5,8425,2723,9993,0574,048
      
Income taxes-1,180-1,055-701-613-812
      
Profit for the period4,6624,2183,2982,4443,236
      
Profit for the period attributable to     
Equity holders4,6624,2183,2982,4443,236
      
Earnings per share calculated from the profit attributable to equity holders     
Earnings per share, basic and diluted (EUR)0.100.090.070.050.07

Alternative performance measurement

In this Financial Statements Release, Verkkokauppa.com Oyj presents certain key figures that are not accounting measures defined under IFRS and therefore are considered as Alternative Performance Measures (APM). Verkkokauppa.com Oyj applies in the reporting of alternative performance measures the guidelines issued by the European Securities and Market Authority (ESMA).

Verkkokauppa.com Oyj uses alternative performance measures to reflect the underlying business performance and to enhance comparability between financial periods. The company’s management believes that these key figures provide supplementing information on the income statement and financial position.

Alternative performance measures do not substitute the IFRS key ratios.

 2020 2019 
 Q1Q2Q3Q4FY 2020Q1Q2Q3Q4FY 2019
           
Revenue, thousand euros125,255123,050129,321176,009553,636115,797107,848120,560159,908504,113
Gross profit, thousand euros19,42021,40520,92826,66188,41317,39915,32718,94922,19873,874
Gross margin-%15.5%17.4%16.2%15.1%16.0%15.0%14.2%15.7%13.9%14.7%
EBITDA, thousand euros4,6485,6026,8347,50924,5933,5811,4485,5885,71316,330
EBITDA-%3.7%4.6%5.3%4.3%4.4%3.1%1.3%4.6%3.6%3.2%
Operating profit, thousand euros3,4184,3565,6066,20319,5832,3011904,3334,46711,290
Operating profit-%2.7%3.5%4.3%3.5%3.5%2.0%0.2%3.6%2.8%2.2%
Comparable operating profit, thousand euros3,7544,8265,6066,20320,3902,3011904,3334,46711,290
Comparable operating profit-%3.0%3.9%4.3%3.5%3.7%2.0%0.2%3.6%2.8%2.2%
Profit for the period, thousand euros2,4443,2984,2184,66214,6221,525-1543,2033,2367,810
           
Interest-bearing net debt, thousand euros-22,339-13,024-14,654-21,171-21,171-8,869-895-10,078-19,061-19,061
Investments, thousand euros2663962844111,35695750283721,245
           
Equity ratio, %24.5%27.4%25.9%24.5%24.5%26.5%27.7%25.6%23.4%23.4%
Gearing, %-60.8%-35.8%-38.3%-52.2%-52.2%-24.0%-2.6%-28.4%-52.1%-52.1%
Personnel at the end of period*693747700818818657731688758758
           
Basic earnings per share, euros0.050.070.090.100.330.030.000.070.070.17
Diluted earnings per share, euros0.050.070.090.100.320.030.000.070.070.17
Number of issued shares, 1,000 pcs45,06545,06545,06545,06545,06545,06545,06545,06545,06545,065
Number of treasury shares, 1,000 pcs7335335835335357101918181
Weighted average number of shares outstanding, 1,000 pcs44,98744,97144,95244,90744,90745,00444,96444,94444,98444,984
Diluted weighted average number of shares outstanding, 1,000 pcs45,52745,51145,49245,44745,44745,09645,05845,05845,04245,042

*The number of personnel includes both full- and part-time employees.

Formulas for key ratios

KEY RATIODEFINITIONS BASIS OF ALTERNATIVE PERFORMANCE MEASURES ADOPTED
GROSS PROFIT 

Revenue – materials and services

 
 Gross profit shows the profitability of the sales
 

GROSS MARGIN, %

 
(Revenue – materials and services) /
Revenue
x 100Gross margin measures the profitability of the sales of Verkkokauppa.com
EBITDAOperating profit + depreciation + amortization EBITDA shows the operational
profitability
 

EBITDA, %

 
(Operating profit + depreciation + amortization) /
Revenue
x 100EBITDA measures the operational profitability of Verkkokauppa.com
 

OPERATING PROFIT

 
Result for the period before income taxes and net finance income and costs Operating profit shows result generated by operating activities
 

OPERATING MARGIN, %

 
Operating profit /
Revenue
x 100Operating margin measures operational efficiency of Verkkokauppa.com
ITEMS AFFECTING COMPARABILITYMaterial items which are not part of normal operating activities such as expenses related to possible transfer to official list of Nasdaq Helsinki, restructuring costs including workforce redundancy and other restructuring costs, impairment losses of fixed assets, gain or losses recognized from disposals of fixed assets/businesses, transaction costs related to business acquisition, compensations for damages and legal proceedings  
COMPARABLE OPERATING PROFITComparable operating profit is profit adjusted with items affecting comparability Comparable operating profit allows comparison of operating profit in different periods without the impact of extraordinary items not related to normal business operations
COMPARABLE OPERATING PROFIT MARGIN %Comparable operating profit / revenue 

 

 

x 100
Comparable operating margin measures
comparable operational efficiency of
Verkkokauppa.com

 
 

EQUITY RATIO, %

 
Total equity /
Balance sheet total – advance payments received
 Equity ratio measures Verkkokauppa.com’s solvency, ability to bear losses and ability to meet commitments in the long run
INTEREST-BEARING NET BEDTLease liabilities -cash and cash equivalents Interest-bearing net debt measures Verkkokauppa.com’s indebtedness
 

GEARING, %

 
Lease liabilities – cash and cash equivalents/
Total equity
x 100Gearing measures the relation of equity and interest-bearing net debt of Verkkokauppa.com and shows the indebtedness of the company
INVESTMENTSIncreases in intangible assets, property, plant and equipment during the financial period Investments provides additional information regarding operating cash flow demands
NET INVESTMENTInvestments in intangible and tangible assets - proceeds from the sale of fixed assets. Net investments do not include non-capitalized / work in progress  
EARNINGS PER SHARE,
BASIC
Profit for the period attributable to equity holders of the company /
Weighted average number of shares outstanding
 Earnings per shares measures the profit for the period attributable to equity holders of the company
EARNINGS PER SHARE, DILUTEDProfit for the period attributable to equity holders of the company /
  Weighted average number of shares outstanding + dilutive potential shares
  

Reconciliation of alternative key ratios

 10-12/10-12/1-12/1-12/
EUR thousand2020201920202019
Operating profit6,2034,46719,58311,290
- advisory costs related to transfer to official list of Nasdaq Helsinki--807-
Comparable operating profit6,2034,46720,39011,290


Attachments
Verkkokauppa.com Oyj Financial Statements Release 2020 published

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