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INTERIM REPORT for 1 January - 31 March 2019: Verkkokauppa.com continues to outgrow the market with revenue growth of 13% during Q1

Verkkokauppa.com Oyj - Interim report (unaudited) 10 May 2019, 8:00 a.m.

1 January - 31 March 2019 in brief

  • Revenue 116 million euros (1-3/2018: 103), growth of 13%
  • Gross profit 17.4 million euros (16.7), growth of 4%
  • Gross margin 15.0% of revenue (16.3%)
  • Operating profit 2.3 million euros (2.7)
  • Operating margin 2.0% of revenue (2.6%)
  • Profit for the period 1.5 million euros (1.8)
  • Earnings per share 0.03 euros (0.04)
  • The Board of Directors has resolved to pay a quarterly dividend of 0.049 euros per share
KEY RATIOS (IFRS) 1-3/2019 1-3/2018 Change% 1-12/2018
         
Revenue, € thousands 115,797 102,693 13% 477,833
Gross profit, € thousands 17,399 16,706 4% 72,020
Gross margin, % of revenue 15.0%   16.3% -8% 15.1%
EBITDA, € thousands 3,581 3,955 -9% 18,414
EBITDA, % 3.1% 3.9% -20% 3.9%
Operating profit, € thousands 2,301 2,663 -14% 13,324
Operating margin, % of revenue 2.0% 2.6% -23% 2.8%
Net profit, € thousands 1,525 1,813 -16% 9,334

             

BUSINESS OUTLOOK

Verkkokauppa.com Oyj's business operations are estimated to develop positively within a medium-term time frame. The management believes that the company will succeed in further growing its market share in chosen segments. The strong balance sheet enables the company to continue expanding its operations in accordance with its strategy. Nevertheless, the business outlook includes uncertainties, especially due to macroeconomic developments. The Finnish Ministry of Finance estimated on 4 April 2019 that the Finnish GDP will grow by 1.7% during 2019 and by 1.4% during 2020.

FINANCIAL GUIDANCE

In 2019, the company's revenue is expected to be between 500-550 million euros (2018: 478 million euros) and operating profit to be between 11-17 million euros (13.3 million euros).

CEO PANU PORKKA REVIEW

Verkkokauppa.com's revenue in Q1 grew by 13%, amounting to 116 million euros. Strong revenue growth has continued since Q3 2018 and the company is outgrowing the market while gaining market share in accordance to its strategy. Drivers for the growth in Q1 were continuous improvement of marketing activities, effective campaigning and sales through Raisio store which was opened 8 March 2018. Market remained very competitive and price-driven growing by 4.9% in January-March, according to GfK. The company responded by increasing marketing efforts significantly and with competitive pricing. These efforts resulted in outgrowing the market in almost all product categories, with sales growing more than 85% in best-performing categories.

Gross margin in Q1 amounted to 15.0% while operating profit was 2.3 million euros and slightly lower year-on year (Q1/2018 EUR 2.7 million) mostly due to lower gross margin and increased marketing investments.

Development projects are proceeding as planned with renewed marketing being one of the main growth drivers for the future. In addition to a significantly higher marketing budget and nationwide TV-campaigns Verkkokauppa.com has started brand advertising this year as part of a plan to reach all major customer groups. The company's assortment saw a major expansion with more than 1,300 new ball game products added to the sports category. This will help the company reach new audiences and visitors both online and offline. The company will continue improving and personalizing its website and will start renewing the Jätkäsaari flagship store to improve the customer experience in 2019.

Management Team was strengthened by two new appointments. The new HR Director Taina Suorsa started on 1 January 2019 and the new Chief Sales Officer Kalle Koutajoki on 25 February 2019.

Verkkokauppa.com's plans and investments are guided by targeting strong top line growth and market share gains. The company actively follows changes in the market and customer behavior to identify opportunities for new categories and assortment expansions in order to secure growth. In addition, the company is investing significantly in different marketing channels to reach a wider customer base and continues to improve the omnichannel customer experience.

The company is focused on improving its profitability by keeping its costs at a competitive level and its processes efficient. The company expects the consumer electronic market to remain tough and competitive pricing to continue throughout the year. Regardless of the competitive situation, Verkkokauppa.com is prepared to take all required actions to win market share and become the leader in Finnish consumer electronics market. The increasing purchasing volumes will help the company in achieving medium term profitability targets. Key competitive advantages supporting the company in achieving these targets include improved product availability, best-known brand and larger assortment than that of competitors are key competitive advantages that will support this mission. In addition, growth in the future will be supported by changing consumer behavior trends. Retail is going online and mobile fast, as outlined in the strategy. An estimated one per cent, or approximately 400 million euros of brick-and-mortar retail sales will go online this year in Finland. The e-commerce share of the total retail market in Finland is approximately 12%.

REVENUE AND PROFITABILITY DEVELOPMENT

January-March 2019

In January-March, Verkkokauppa.com Oyj's revenue grew by 12.8% year on year. Revenue grew by 13.1 million euros, totaling 115.8 million euros (102.7). Sales increased particularly in small domestic appliances (SDA), computers, mobile phones, peripherals and major domestic appliances (MDA).

According to GfK, the demand for consumer electronics increased by 4.9% during January-March in Finland.

The company-financed customer financing grew year on year. Its proceeds were 0.8 million euros (0.7) including both interest income and fee income. The credit loss allowance increased to 0.7 million euros (0.5). Verkkokauppa.com sold its past due receivables as part of its risk management during the reporting period. As of April 2019, Verkkokauppa.com sells 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.

Applying the IFRS 16 Leases standard has an impact on other operating expenses, depreciations and interest costs. A right-of-use asset and a lease liability is recognized in the statement of financial position. The accounting policies are described in more detail in a separate company release published on 12 February 2019.

In January-March depreciations from the right-of-use assets totaled 1.0 million euros (1.0) and interest from lease liabilities totaled 0.4 million euros (0.4). During the reporting period right-of-use assets decreased by 0.7 million euros and lease liabilities decreased by 0.6 million euros compared to year-end. Right-of-use assets totaled 21.1 million euros (Dec 31, 2018: 21.8) and respective liabilities totaled 25.7 million euros (Dec 31, 2018: 26.3). The decrease in lease liabilities resulted from the fact that the company did not sign new leases and the lease term of existing leases shortened.

Personnel costs increased in January-March by 5.3% to 7.8 million euros (7.4). The increase resulted mainly from the growing number of personnel in purchasing and IT. During the reporting period, other operating expenses increased by +15.1% to 6.2 million euros (5.4). The increase resulted from the renewal and increase of Verkkokauppa.com's marketing efforts when compared to the previous year.

Operating profit in January-March 2019 was 2.3 million euros (2.7) and profit for the period 1.5 million euros (1.8).

Earnings per share were 0.03 euros (0.04).

FINANCE AND INVESTMENTS

Operating cash flow was -11.2 million euros (-20.7) in January-March 2019. In the reporting period, the improvement of the operating cash flow resulted mainly from a decrease in inventory, an increase of accounts payables and a decrease of accounts receivables.  

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. Verkkokauppa.com's practice has been to utilize the maximum amount of cash discounts in the current interest rate environment.

During the reporting period, the company invested in new IT systems and in development of new ERP features, and as a result capitalized 0.1 million euros of the IT department's employee benefit expenses and external technology consulting fees. The company also invested in the ordinary store equipment and furniture. Net capital expenditures totaled 0.1 million euros (0.6) in January-March 2019.

FINANCIAL TARGETS

The company targets an annual revenue growth of 10-20% in the medium term. The company targets a growing operating profit and an operating profit margin of 2.5-4.5% in the medium-term. The Company's dividend policy is to pay out a quarterly growing dividend.

SHARES AND SHARE TRADING

The total number of shares in the company was 45,065,130 on 31 March 2019, including the treasury shares.

During the reporting period, 2,545,523 shares were exchanged on the Nasdaq First North Finland market place, representing 5.6% of all shares in the company. The highest share price was 4.455 euros and the lowest 3.76 euros. The average price in share trading was 4.06 euros. The total of the share trading was 10 million euros. The closing price was 3.99 euros, and the market capitalization of all shares was 180 million euros at the end of the period.

In 2019, the company has transferred a total of 7,469 treasury shares as part of the remuneration of Board members.

The company held 57,164 treasury shares on 31 March 2019. These treasury shares accounted for 0.14% 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 2019). The Board has not utilized its share issue authorization.

Share-based incentive plan

On 16 May 2018 Verkkokauppa.com Oyj established a new share-based incentive plan for key employees. The aim of the incentive plan is to increase the value of the company in the long-term by aligning the objectives of the shareholders and key employees, to encourage key employees to personally invest in the company's shares, to retain key employees at the company and to offer them a competitive share-based reward plan.

In the Matching Share Plan, the participant receives a fixed number of matching shares against an investment in Verkkokauppa.com Oyj's shares. The Matching Share Plan includes three matching periods 2018-2020, 2019-2021 and 2020-2022. The Board will resolve annually on the commencement and details of matching periods. The prerequisite for receiving a reward based on this plan is that a person participating in the plan allocates freely transferable company shares they hold in the plan or acquires company shares up to the number determined by the Board of Directors. The payment of reward is based on the participant's employment or service upon reward payment.

PERSONNEL AND MANAGEMENT

During the reporting period, the number of employees stayed flat, and the total number of employees was 657 (657) at the end of March 2019. The number of employees includes both full- and part-time employees.

Taina Suorsa was appointed to the Management Team as of 1 January 2019. Vesa Järveläinen was appointed as Commercial Director as of 1 January 2019. Järveläinen continues as a member of the Management Team. Kalle Koutajoki was appointed as Chief Sales Officer (CSO) and Management Team member on 21 December 2018. Koutajoki started in his role on 25 February 2019.

Verkkokauppa.com Oyj's Management Team:

  • Panu Porkka, CEO
  • Jussi Tallgren, CFO
  • Henrik Weckström, CTO
  • Miika Heinonen, Logistics Director
  • Vesa Järveläinen, Commercial Director, started on 1 January 2019 and continues as a member of the Management Team
  • Seppo Niemelä, Marketing and Communications Director
  • Taina Suorsa, HR Director, started on 1 January 2019
  • Kalle Koutajoki, CSO, started on 25 February 2019

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 2018.

LITIGATION AND DISPUTES

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

ANNUAL GENERAL MEETING 2019

The Annual General Meeting was held in Helsinki on 28 March 2019. The financial statements for the year 2018 were approved and the Board members and the CEO were discharged from liability with respect to financial year 2018. It was resolved to pay a dividend of 0.048 euros per share, totaling 2,160,382.33 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 0.150 per share (the instalments may differ from each one), in total not exceeding EUR 6,759,769,50. 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 21 May 2019, 20 August 2019 and 5 November 2019. 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. Before the Board of Directors implements the resolution regarding the distribution of dividend, it must assess, from the viewpoint of Company's solvency and/or financial position, whether the requirements in the Finnish Companies Act for dividend distribution are fulfilled.

At the Annual General Meeting held on 28 March 2019, all Board members were re-elected until the end of the next Annual General Meeting. Christoffer Häggblom, Robert Burén, Mikael Hagman, Kai Seikku, Arja Talma and Samuli Seppälä were elected as members of the Board of Directors. The Board elected Christoffer Häggblom as the Chairman of the Board. Panu Porkka is the company's CEO.

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.

After the Annual General Meeting Verkkokauppa.com Oyj Board of Directors held an organizational meeting, where it resolved on the Board committees. It decided to continue with the following board committees: Audit Committee and Nomination and Remuneration Committee. The Audit Committee consists of Board members Kai Seikku (Chairman), Samuli Seppälä, Arja Talma and Christoffer Häggblom. The Nomination and Remuneration Committee consists of Board members Christoffer Häggblom (Chairman), Samuli Seppälä and Kai Seikku.

DIVIDEND

Annual General Meeting 2019 resolved to pay 0.048 euros (2,160,382.33 euros in total) per share as dividend. The record date for the dividend distribution was 31 March 2018 and the dividend payment date was 8 April 2018.

Verkkokauppa.com's Annual General Meeting authorized the Board of Directors to decide in its discretion on the distribution of dividends not exceeding 0.150 euro per share to be paid in three instalments during 2019.

OTHER EVENTS DURING THE REPORTING PERIOD

On 16 January 2019, Verkkokauppa.com Oyj gave a profit warning and preliminary information on the company's revenue and comparable EBITDA for the year 2018.

On 12 February 2019 Verkkokauppa.com Oyj published IFRS comparative information.

On 13 February 2019 Verkkokauppa.com Oyj gave a profit warning and preliminary information on the company's comparable EBITDA for the year 2018.

On 15 February 2019 Verkkokauppa.com published its medium-term financial targets restated according to IFRS.

SUBSEQUENT EVENTS

The Board resolved on 10 May 2019 to pay a dividend of 0.049 euros per share (2,208,191.37 euros in total). The record date for the dividend distribution is 14 May 2019 and the dividend payment date is 21 May 2019.

There are no other subsequent events that differ from usual business events, after the reporting period.

PRESS CONFERENCES

A press conference for analysts, investors and media will be held in Finnish at the Jätkäsaari premises in Helsinki at Tyynenmerenkatu 11, 6th floor, at 10:00 a.m. (EET) on Friday, 10 May 2019, 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, 10 May 2019 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 www.verkkokauppa.com in the section Investors > Presentations. For both press conferences, a LiveStream is available at www.verklive.com.


COMPANY RELEASES IN 2019

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

  • Half-year report January - June on Friday 9 August 2019
  • Interim report January - September on Friday 25 October 2019

Helsinki, Finland, 10 May 2019

Verkkokauppa.com Oyj

Board of Directors

More information:

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

Jussi Tallgren, CFO
e-mail jussi.tallgren@verkkokauppa.com
Telephone +358 10 309 5555

Certified Adviser Nordea Bank Plc
Telephone +358 9 5300 6785

Distribution:

Nasdaq Helsinki
Key media
www.verkkokauppa.com


VERKKOKAUPPA.COM OYJ INTERIM REPORT (IFRS) 1 Jan -31 Mar 2019

1 Accounting policies applied in this interim report 9
2 Primary financial statements 10
2.1 Income statement (IFRS) 10
2.2 Statement of comprehensive income (IFRS) 10
2.3 Statement of financial position (IFRS) 11
2.4 Statement of cash flows (IFRS) 12
2.5 Statement of changes in equity (IFRS) 13
3 Notes 14
3.1 Segment reporting 14
3.2 Revenue from contracts with customers 14
3.3 Seasonality of business 14
3.4 Quarterly income statement 15
3.5 Right-of-use assets 16
3.6 Trade receivables 16
3.7 Financial assets and liabilities by measurement category 17
3.8 Dividends 19
3.9 Transactions with related parties 20
3.10 Guarantees and commitments 20
4 Additional information 21
4.1 IFRS Standards not yet effective 21
4.2 Financial and share-specific information 21
4.3 Formulas for key ratios 22



1       Accounting policies applied in this interim report

Verkkokauppa.com Oyj is a public limited company, the shares of which are quoted on First North of Nasdaq Helsinki Ltd. The registered address of its head office is Tyynenmerenkatu 11, Helsinki.

Verkkokauppa.com Oyj's Interim Report for January-March 2019 has been prepared in line with IAS34, 'Interim Financial Reporting' and should be read in conjunction with Verkkokauppa.com Oyj's financial statement for 2018, published on March 7, 2019. Verkkokauppa.com Oyj has applied the same accounting principles in the preparation of this interim report as in its Financial Statement for 2018, however so that IFRS 16 Leases has been applied early.  Verkkokauppa.com Oyj has adopted IFRS 16 fully retrospectively.

Verkkokauppa.com Oyj published on 12 February 2019 with a separate company release the comparative information according to IFRS compared to Finnish Accounting Standards (FAS). The major changes to accounting policies are also explained in the company release.

The information presented in this interim report has not been audited. The figures are rounded, and therefore the sum of individual figures may deviate from the aggregate amount presented.

Use of estimates
The preparation of these financial statements required management to make judgements, estimates assumptions that affect the application of accounting policies and the reported amounts of assets and liabilities, income and expenses. Actual results may differ from these estimates.

  

2       Primary financial statements

2.1          Income statement (IFRS)

  1-3/ 1-3/ 1-12/
EUR thousand 2019 2018 2018
Revenue 115,797 102,693 477,833
       
Other operating income 164 20 389
Materials and services -98,398 -85,987 -405,813
Employee benefit expenses -7,751 7,359 -30,300
Depreciation and amortization -1,281 -1,291 -5,090
Other operating expenses -6,231 -5,412 -23,696
       
Operating profit 2,301 2,663 13,324
       
Finance income 3 4 9
Finance costs -397 -436 -1,670
       
Profit before income taxes 1,906 2,232 11,662
       
Income taxes -381 -418 -2,328
       
Profit for the period 1,525 1,813 9,334
       
Profit for the period attributable to      
Equity holders of the company 1,525 1,183 9,334
       
Earnings per share calculated from the profit attributable to
equity holders
     
Earnings per share, basic and diluted (EUR) 0,03 0,04 0.21

2.2          Statement of comprehensive income (IFRS)

  1-3/ 1-3/ 1-12/
EUR thousand 2019 2018 2018
Profit for the period 1,525 1,813 9,334
       
Items that will not be reclassified to profit or loss      
Realized changes in fair values of equity investments - - -
Changes in fair values of equity investments  - - -15
Other comprehensive income after taxes, total  - - -15
Comprehensive income for the period 1,525 1,813 9,319
       
Comprehensive income for the period      
Equity holders of the company 1,525 1,813 9,319

2.3          Statement of financial position (IFRS)

EUR thousand 31 Mar 2019 31 Mar 2018 31 Dec 2018
Non-current assets      
Intangible assets 940 868 1,067
Property, plant and equipment 1,837 2,284 1,970
Right-of-use assets 21,101 24,377 21,764
Equity investments 275 294 275
Deferred tax assets 1,149 1,154 1,112
Trade receivables 1,471 1,475 1,544
Other non-current receivables 438 438 438
Non-current assets, total 27,212 30,889 28,171
       
Current assets      
Inventories 59,161 49,181 65,784
Trade receivables 13,925 10,832 15,266
Other receivables 1,839 1,146 1,752
Income tax receivables 208 220 199
Accrued income 5,401 4,652 9,823
Cash and cash equivalents 34,576 27,985 46,746
Current assets, total 115,111 94,018 139,570
       
Total assets 142,322 124,907 167,741
       
Equity     
Share capital 100 100 100
Treasury shares -502 - -502
Fair value reserve -33 -18 -33
Invested non-restricted equity fund 25,615 25,493 25,585
Retained earnings 10,294 9,239 3,082
Profit for the period 1,525 1,813 9,334
Total equity 37,000 36,627 37,565
      
Non-current liabilities      
Lease liabilities 22,121 25,241 22,753
Deferred tax liabilities 18 9 18
Provisions 723 567 560
Non-current liabilities, total 22,862 25,817 23,331
       
Current liabilities      
Lease liabilities 3,587 3,842 3,592
Advance payments received 2,611 2,303 4,301
Trade payables 55,333 42,627 80,695
Other current liabilities 6,444 2,639 4,077
Accrued liabilities 14,485 11,052 14,181
Current liabilities, total 82,460 62,462 106,845
       
Total liabilities 105,323 88,280 130,176
       
Total equity and liabilities 142,322 124,907 167,741


2.4          Statement of cash flows (IFRS)

EUR thousand 1-3/2019  

1-3/2018
1-12/2018
Cash flow from operating activities      
Profit before income taxes 1,906 2,232 11,662
Adjustments      
Depreciation and impairment 1,281 1,291 5,090
Gain on sales and losses on fixed assets and scrapping -   -
Finance income and costs 387 424 1,630
Other adjustments 194 -57 69
Cash flow before change in working capital 3,768 3,890 18,451
Change in working capital      
Increase (-) / decrease (+) in non-current non-interest-bearing trade
receivables
73
-436
-506
Increase (-) / decrease (+) in trade and other receivables 5,831 2,940 -7,384
Increase (-) / decrease (+) in inventories 6,623 -2,169 -18,772
Increase (+) / decrease (-) in current liabilities -26,502 -23,858 21,276
Cash flow before financial items and taxes -10,207 -19,633 13,065
Interest paid -13 -26 -38
Interest received 3 4 9
Interest of lease liabilities -384 -423 -1,632
Income tax paid -583 -611 -2,543
Cash flow from operating activities -11,185 -20,689 8,861
       
Cash flow from investing activities      
Purchases of property, plant and equipment -8 -485 -582
Purchases of intangible assets -43 -90 -774
Proceeds from equity investments - - -
Cash flow from investing activities -51 -575 -1,356
       
Cash flow from financing activities      
Decrease (-) / increase (+) in lease liabilities -935 -972 -3,939
Dividends paid - -1,657 -8,195
Acquisition of treasury shares - - -502
Cash flow from financing activities -935 -2,629 -12,636
       
Increase (+) / decrease (-) in cash and cash equivalents -12,170 -23,893 -5,131
       
Cash and cash equivalents at beginning of financial year 46,746 51,878 51,878
Cash and cash equivalents at end of financial year 34,576 27,985 46,746

2.5          Statement of changes in equity (IFRS)

A  Share capital E  Retained earnings
B  Treasury shares F  Total equity
C  Invested non-restricted equity fund  
Fair value reserve    


EUR thousand A B C D E F
Equity 1 Jan 2018 (IFRS) 100 - 25,493 -18 11,222 36,797
Profit for the period - - - - 1,813 1,813
Changes in fair values of equity
investments
- - - - - -
Comprehensive income for the period,
total
- - - - 1,813 1,813
Dividend distribution - - - - -1,983 -1,983
Acquisition of treasury shares - - - - - -
Disposal of treasury shares -Board fees - - - - - -
Share-based incentives - - - - -
Transactions with owners, total - - -  - -1,983 -1,983
Equity 31 Mar 2018 (IFRS) 100 - 25,493 -18 11,053 36,627


EUR thousand A B C D E F
Equity 1 Jan 2019 (IFRS) 100 -502 25,585 -33 12,416 37,565
Profit for the period - - - - 1,525 1,525
Changes in fair values of equity
investments
- - - - - -
Comprehensive income for the period,
total
- - - - 1,525 1,525
Dividend distribution - - - - -2,160 -2,160
Acquisition of treasury shares - - - - - -
Disposal of treasury shares -Board fees - - 31 - - 31
Share-based incentives - - - 39 39
Transactions with owners, total - - 31  - -2,121 -2,091
Equity 31 Mar 2019 (IFRS) 100 -502 25,615 -33 11,820 37,000


EUR thousand A B C D E F
Equity 1 Jan 2018 (IFRS) 100 - 25,493 -18 11,222 36,797
Profit for the period - - - - 9,334 9,334
Changes in fair values of equity
investments
- - - -15 - -15
Comprehensive income for the period,
total
- - - -15 9,334 9,319
Dividend distribution - - - - -8,195 -8,195
Acquisition of treasury shares - -502 - - - -502
Disposal of treasury shares -Board fees - - 92 - - 92
Share-based incentives - - - 54 54
Transactions with owners, total - -502 92  - -8,141 -8,551
Equity 31 Dec 2018 (IFRS) 100 -502 25,585 -33 12,416 37,565

3       Notes

3.1          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 stores, common support functions serving the entire business as well as the volume benefits enabled by centralized business.

3.2          Revenue from contracts with customers

The revenue streams of the Company consist of the sale of goods and services. There are over 65.000 products in 26 different main product categories which 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

  1-3/ 1-3/ 1-12/
EUR thousand 2019 2018 2018
At a point in time 114,540 101,110 470,971
Over time 1,257 1,583 6,862
Revenue, total 115,797 102,693 477,833

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.

  1-3/ 1-3/ 1-12/
EUR thousand 2019 2018 2018
Interest income recognized using effective interest rate method 321 226 1,123
Other income from company-financed customer financing 511 442 2,019
Income from company-financed Apuraha, total 832 668 3,142

3.3          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.

3.4          Quarterly income statement

  1-3/ 10-12/ 7-9/ 4-6/ 1-3/
EUR thousand 2019 2018 2018 2018 2018
Revenue 115,797 155,852 116,874 102,414 102,693
           
Other operating income 164 175 121 73 20
Materials and services -98,398 -132,919 -99,517 -87,390 -85,987
Employee benefit expenses -7,751 -8,352 -7,043 -7,545 -7,359
Depreciation and amortization -1,281 -1,259 -1,261 -1,279 -1,291
Other operating expenses -6,231 -7,551 -5,474 -5,260 -5,412
           
Operating profit 2,301 5,946 3,702 1,012 2,663
           
Finance income 3 2 1 2 4
Finance costs -397 -399 -410 -426 -436
           
Profit before income taxes 1,906 5,550 3,293 588 2,232
           
Income taxes -381 -1,106 -678 -125 -418
           
Profit for the period 1,525 4,443 2,615 462 1,813
           
Profit for the period attributable to          
Equity holders 1,525 4,443 2,615 462 1,813
           
Earnings per share calculated from the profit
attributable to equity holders
         
Earnings per share, basic and diluted (EUR) 0.03 0.10 0.06 0.01 0.04

3.5          Right-of-use assets

EUR Thousand Mar 31, 2019 Mar 31, 2018 Dec 31, 2018
Carrying amount 1.1. 21,764 24,589 24,589
Increases - 78 284
Increase/decrease due to remeasurement 306 669 716
Depreciation -969 -960 -3,825
Carrying amount at the end of period 21,101 24,377 21,764

The remeasurements made during 2018 and 2019 relate to index adjustments and during 2018 also the change to the Jätkäsaari lease agreement based on the original contract terms.  

3.6          Trade receivables

  Mar 31, 2019 Mar 31, 2018 Dec 31, 2018
EUR thousand Trade receivables Loss allowance Trade receivables Loss allowance Trade receivables Loss allowance  
Not due 12,204 334 9,143 166 12,553 212  
Past due 1-60 days 3,633 278 3,306 282 4,305 173  
Past due 61-120 days 238 67 543 236 455 136  
Past due over 121 days 17 17 386 387 33 14  
Total 16,093 696 13,378 1,070 17,345 535  

3.7          Financial assets and liabilities by measurement category

Mar 31, 2019, EUR thousand        
  Recognized at
fair value
through other
comprehensive
income
At
amortized
cost
Lease
liabilities
 
   
Measurement category Carrying
amount
Non-current financial assets        
Equity investments (level 2) 9     9
Equity investments (level 3) 266     266 
Trade receivables and other financial receivables   1,909   1,909
Non-current financial assets, total 275 1,909   2,184
         
Current financial assets        
Trade receivables   13,925   13,925
Cash and cash equivalents   34,576   34,576
Current financial assets, total   48,501   48,501
         
Financial liabilities by measurement category, total 275 50,410   50,685
         
Non-current financial liabilities        
Lease liabilities     22,121 22,121
Non-current financial liabilities, total     22,121 22,121
         
Current financial liabilities        
Lease liabilities     3,587 3,587
Trade payables   55,333   55,333
Current financial liabilities, total   55,333 3,587 58,920
         
Financial liabilities by measurement category, total   55,333 25,707 81,040


Mar 31, 2018, EUR thousand        
  Recognized at
fair value
through other
comprehensive
income
At
amortized
cost
Lease
liabilities
 
   
Measurement category Carrying
amount
Non-current financial assets        
Equity investments (level 2) 9     9
Equity investments (level 3) 285     285
Trade receivables and other financial receivables   1,912   1,912
Non-current financial assets, total 294 1,912   2,205
         
Current financial assets        
Trade receivables   10,832   10,832
Cash and cash equivalents   27,985   27,985
Current financial assets, total   38,818   38,818
         
Financial liabilities by measurement category, total 294 40,723   41,023
         
Non-current financial liabilities        
Lease liabilities     25,241 25,241
Non-current financial liabilities, total     25,241 25,241
         
Current financial liabilities        
Lease liabilities     3,842 3,842
Trade payables   42,627   42,627
Current financial liabilities, total   42,627 3,842 46,468
         
Financial liabilities by measurement category, total   42,627 29,083 71,709


Dec 31 ,2018 EUR thousand        
  Recognized at
fair value
through other
comprehensive
income
At
amortized
cost
Lease
liabilities
 
   
Measurement category Carrying
amount
Non-current financial assets        
Equity investments (level 2) 9     9
Equity investments (level 3) 266     266 
Trade receivables and other financial receivables   1,982   1,982
Non-current financial assets, total 275 1,982   2,257
         
Current financial assets        
Trade receivables   15,266   15,266
Cash and cash equivalents   46,746   46,746
Current financial assets, total   62,012   62,012
         
Financial liabilities by measurement category, total 275 63,994   64,269
         
Non-current financial liabilities        
Lease liabilities     22,753 22,753
Non-current financial liabilities, total     22,753 22,753
         
Current financial liabilities        
Lease liabilities     3,592 3,592
Trade payables   80,695   80,695
Current financial liabilities, total   80,695 3,592 84,287
         
Financial liabilities by measurement category, total   80,695 26,344 107,039

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 2019. There have been no transfers between measurement categories during the financial year or the comparative year.

3.8          Dividends

Dividends paid

2019    
For the previous year Date of payment Dividend per share, EUR
  8.4.2018 0.048
Total dividends, EUR thousand   2,160


2018    
For the previous year Date of payment Dividend per share, EUR
  3.4.2018 0.044
  16.5.2018 0.045
  21.8.2018 0.046
  6.11.2018 0.047
Total dividends, EUR thousand   8,195



3.9          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.

3.10        Guarantees and commitments

EUR Thousand Mar 31, 2019 Mar 31, 2018  Dec 31, 2018
Collateral given for own commitments      
Mortgages 27,001  
Guarantees 2,850 3,662 2,850
       
Other commitments and contingent liabilities 14 14 14

4       Additional information

4.1          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.

4.2          Financial and share-specific information

In this 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.

                                           

  1-3/ 1-3/ 1-12/
  2019 2018 2018
       
Revenue, thousand euros 115,797 102,693 477,833
Gross profit, thousand euros 17,399 16,706 72,020
Gross margin-% 15.0% 16.3% 15.1%
EBITDA, thousand euros 3,581 3,955 18,414
EBITDA-% 3.1% 3.9% 3.9%
Operating profit, thousand euros 2,301 2,663 13,324
Operating profit-% 2.0% 2.6% 2.8%
Profit for the period, thousand euros 1,525 1,183 9,334
       
Equity ratio, % 26.5% 29.9% 23.0%
Gearing, % -24.0% 3.0% -54.3%
Personnel at the end of period* 657 657 683
       
Basic earnings per share, euros 0.03 0.04 0.21
Diluted earnings per share, euros 0.03 0.04 0.21
Number of issued shares 45,065,130 45,065,130 45,065,130
Number of treasury shares 57,164 - 64,633
Weighted average number of shares outstanding 45,003,686 45,065,130 45,042,616
Diluted weighted average number of shares outstanding 45,096,269 45,065,130 45,092,616

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

4.3          Formulas for key ratios

KEY RATIO DEFINITIONS   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 100 Gross margin measures the
profitability of the sales of
Verkkokauppa.com
EBITDA Operating profit + depreciation +
amortization
  EBITDA shows the operational
profitability
 

EBITDA, %

 
(Operating profit + depreciation +
amortization)/
Revenue
x 100 EBITDA 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 100 Operating margin measures
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
 

GEARING, %

 
Interest bearing liabilities + lease liabilities
- cash and cash equivalents - interest
bearing receivables/
Total equity
x 100 Gearing measures the relation of
equity and interest-bearing net
debt of Verkkokauppa.com and
shows the indebtedness of the
company
EARNINGS PER SHARE,
BASIC
Profit for the period attributable to equity
holders of the company/
Weighted average number of shares
outstanding
   
EARNINGS PER SHARE, DILUTED Profit for the period attributable to equity
holders of the company/
Weighted average number of shares
outstanding + dilutive potential shares
   

Attachment

Attachments
Verkkokauppa.com Oyj_IFRS Interim report January - March 2019 - ENG.pdf

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