Verkkokauppa.com Oyj
Report of the Board of
Directors and Financial
Statements 2022
2022
Verkkokauppa.com has published four separate reports, which together
form the company’s Annual reporting for 2022. The reports are available
in Finnish and English, and the reporting components are the Company
brochure, Report of the Board of Directors and the Financial Statements,
Statement of non-financial information, and Corporate Governance
statement including the Remuneration report. The Statement of non-
financial information is about company’s sustainability work and its
progress during 2022. Reports can be read and downloaded on the
Verkkokauppa.com website as separate pdf files.
Verkkokauppa.com’s Annual reporting 2022
Verkkokauppa.com Oyj
A year of market
turbulance
Company year 2022
2022
Verkkokauppa.com Oyj
Sustainability at
Verkkokauppa.com
Statement of non-nancial information 2022
2022
Verkkokauppa.com Oyj
Report of the Board of
Directors and Financial
Statements 2022
2022
Verkkokauppa.com Oyj
Corporate Governance
Statement 2022
and Remuneration Report
2022
2
Verkkokauppa.com · Report of the Board of Directors and Financial Statements 2022
2022
Report of the Board of Directors 4
Consolidated Financial Statements 2022 12
1 Consolidated statement of income 12
2 Consolidated statement of comprehensive
income 12
3 Consolidated Statement of financial position 13
4 Consolidated cash flow statement 14
5 Consolidated statement of changes in equity 15
6 Group accounting principles 16
6.1 Basic information on the Company 16
6.2 Basis of preparation 16
6.3 Accounting policies requiring judgment by
the management and key factors of uncertainty
related to estimates 17
6.4 Group Information 18
6.5 Effects of IFRS standards that become effective
during or after the financial year 18
7 Notes to the consolidated financial statements 19
7.1 Segment reporting 19
7.2 Revenue from contracts with customers 19
7.3 Other operating income 21
7.4 Materials and services 21
7.5 Employee benefits 21
7.6 Remuneration of key management personnel 21
7.7 Depreciation and amortization 23
7.8 Other operating expenses 23
7.9 Finance income and expenses 23
7.10 Income taxes 24
7.11 Earnings per share 24
7.12 Share-based payments 25
7.13 Intangible assets 26
7.14 Tangible assets 28
7.15 Leases 29
7.16 Deferred tax assets and liabilities 32
7.17 Trade receivables and other receivables 33
7.18 Inventory 34
7.19 Cash and cash equivalents 34
7.20 Business combinations 35
7.21 Equity 37
7.22 Cash flow information 38
7.23 Funding 39
7.24 Other current liabilities and accrued liabilities 43
7.25 Provisions 44
7.26 Transactions with related parties 44
7.27 Guarantees and commitments 44
7.28 Subsequent events 44
8. Financial Statements 2022 45
Income statement 45
Balance 46
Statement of cash flows 47
Notes to the Financial Statements 31.12.2022 48
8.1 Notes on the preparation of the financial statements 48
8.2 Revenue 49
8.3 Other operating income 49
8.4 Employee benefits 49
8.5 Management remuneration 49
8.6 Depreciation and amortization 50
8.7 Other operating expenses 50
8.8 Finance income and costs 51
8.9 Income taxes 51
8.10 Intangible assets 51
8.11 Property, plant and equipment 52
8.12 Investments 52
8.13 Trade receivables and other receivables 52
8.14 Receivables from companies of the same group 53
8.15 Other short-term receivables and accruals 53
8.16 Inventory 53
8.17 Cash and cash equivalents 53
8.18 Equity 53
8.19 Calculation of distributable funds 53
8.20 Financial statement transfers 53
8.21 Other current liabilities and accrued liabilities 53
8.22 Liabilities from companies of the same group 53
8.23 Long-term debt capital 53
8.24 Provisions 53
8.25 Guarantees and commitments 54
8.26 Bridge calculations in accordance with FAS 54
FAS notes 55
Signatures for the financial statements and
the Board of Directors’ report 57
Auditor’s Report 58
Report of the Board of Directors and Financial Statements 2022
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Verkkokauppa.com · Report of the Board of Directors and Financial Statements 2022
2022
Report of the Board of Directors
Fiscal year 2022 in brief
In 2022, the market environment was exceptionally challenging. The
crisis in Ukraine that started in February led to deepening economic
uncertainty over the course of the year. The strong acceleration of
inflation, the energy crisis, and the rise in interest rates weakened
consumers’ purchasing power and confidence in their own finances,
and thus postponed discretionary spending. Purchase intentions,
especially for larger items such as TV’s and other home electronics, fell
sharply, especially in the last quarter of the year. Verkkokauppa.com’s
revenue in 2022 declined 5.5 percent compared to the previous year
and was EUR 543.1 million (574.5). Company made its first acquisition
in its history, and e-ville.com was consolidated on Verkkokauppa.com’s
figures starting from April. e-ville.com’s impact on Verkkokauppa.com’s
revenue in 2022 was EUR 5.4 million. The financial development in
the fiscal year was particularly affected by the quiet consumer market,
which fell 10.9 percent. Operating profit for the financial period declined
EUR 18.0 million and was EUR 2.3 million (20.3) and its share of
revenue was 0.4 percent (3.5%). The operating profit was weakened by
an inventory write-down of 1.6 million euros related to the streamlining
of the assortment. The comparable operating profit was 3.5 million
euros (20.3) and the result for the period was 0.3 million euros (15.1).
In 2022, the items affecting the comparability of the operating profit
totaled EUR 1,2 million and were related to e-ville.com acquisition.
Revenue and profitability development
Verkkokauppa.com’s revenue in 2022 declined -5.5 percent compared
to the previous year and was EUR 543.1 million (574.5). The impact of
the e-ville.com acquisition that took place in April on Verkkokauppa.
com’s revenue in 2022 was EUR 5.4 million.
Verkkokauppa.com’s self-financed customer financing income was
EUR 4.7 million (4.3), including both interest income and commissions.
Provisions for credit losses remained at the level of the comparison
period and amounted to EUR 0.8 million (0.8) at the end of December.
Personnel costs increased 10.0 percent in January–December
and amounted to EUR 40.2 million (36.6). The growth was mainly due
to talent investments in IT and procurement organizations related to
the promotion of long-term strategic growth projects. Other operating
expenses for the review period increased and amounted to EUR 33.4
million (30.3). The increase was mainly due to higher costs related to
warehouse, logistics and technology development.
In 2022, the company’s operating profit (EBIT) declined by EUR 18.0
million and was EUR 2.3 million (20.3) and its share of total revenue
was 0.4 percent (3.5%). Profitability was weakened by an inventory
write-down of EUR 1.6 million related to streamlining of the assortment.
The comparable operating profit was EUR 3.5 million (20.3) and the
result for the period was EUR 0.3 million (15.1). The profitability of the
whole year was weakened by the tight price competition seen in all
product categories and the resulting lower sales margins, as well as
the lower sales volume resulting from declined consumer demand. In
addition, the increase in fixed costs and the e-ville.com acquisition also
affected the operating profit.
Earnings per share in January–December were EUR 0.01 (0.34).
Key events during the fiscal year
On 9 February, Verkkokauppa.com announced that it will acquire
e-ville. com to strengthen own brand offering.
On 23 March, the company issued a profit warning due to the
challenging operating environment and quietter-than-expected
consumer business, and lowered its financial guidance for 2022.
On 1 April, Verkkokauppa.com completed the e-ville.com acquisition
and executed the directed share issue connection with the transaction.
On 27 June was published the composition of the Shareholders’
Nomination Board. The Nomination Board consists of three members,
which represents the three largest shareholders at the end of May.
Company Board shareperson acts as an expert member. The following
members were appointed: Samuli Seppälä, Founder of Verkkokauppa.
com, representing himself; Erkka Kohonen (Chair), Senior Portfolio
Manager, appointed by Varma Mutual Pension Insurance Company;
Jukka Järvelä, Director, Head of Listed Equities, Mandatum Asset
Management, nominated by Mandatum Life Insurance Company Limited.
On 13 July, company gave a profit warning due to weak consumer
confidence and high inflation that undermines outlook for the second
half of the year, and lowered its financial guidance for 2022.
On 24 October, company gave a profit warning and lowered its
financial guidance for 2022. At the same time company provided
preliminary information on the financial development of the third quarter
of 2022.
On 20 December, due to the change into group structure,
Verkkokauppa.com announced that it will report the parent company
separately in accordance with Finnish Accounting Standards (FAS), and
the Group is reported in accordance with IFRS.
Operating environment
In 2022, the market environment was exceptionally challenging. The
crisis in Ukraine that started in February led to deepening economic
uncertainty over the course of the year. The strong acceleration of
inflation, the energy crisis and the rise in interest rates weakened
consumers’ purchasing power and confidence in their own finances and
thus postponed the making of discretionary purchases. Consumers’
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Verkkokauppa.com · Report of the Board of Directors
2022
purchase intentions, especially for larger purchases such as televisions
and other home electronics, fell sharply, especially in the last quarter of
the year. In this case, the quieting of demand was also seen in business
sales, which grew well at the beginning of the year, and especially in the
segment of small and medium-sized companies. As a positive factor,
we believe that our customers’ transition to doing business online to
an increasing extent will be permanent. In the last quarter of the year,
more than a third of the consumer market for home electronics took
place online.
The Finnish economy started to contract during the third quarter
of the year and the risk of an economic recession was obvious. In
2023, GDP is estimated to shrink by 0.2 percent in Finland. Private
consumption decreases when the rapid rise in prices weakens the
real disposable income of households. The energy crisis prolongs and
intensifies inflation, which started with production bottlenecks in 2021.
Source: Statista, Economic survey from the Finland’s Ministry of Finance,
December 2022, GfK.
Finance and investments
In 2022, the operating cash flow was a total of EUR 1.5 million (6.7).
Operating cash flow before the change in working capital was EUR 8.5
million (25.6). The operating cash flow was mainly impacted by the high
inventories and the development of EBITDA. Net finance costs were 1.6
(1.3) million euros.
Liquid assets totaled EUR 21.2 (20.9) million. Interest-bearing
liabilities totaled EUR 41.0 (20.1) million including lease liabilities.
Interest-bearing net debts totaled EUR 19.8 (-0.8) million. Equity ratio
was 15.8 percent (21.4%).
Investments totaled EUR 9.3 million euros (4.9) in 2022. The
investments were mainly aimed at the Jätkäsaari warehouse automation
project and the e-ville.com acquisition. During the year, the company
capitalized EUR 0.8 million (0.5) of wage costs in the balance sheet. In
January-December, a dividend of EUR 11.1 million (20.1) in total was
distributed to shareholders.
At the end of 2022, the Verkkokauppa.com group had a total of EUR
24.1 million loans from financial institutions (0.00). The company has
revolving credit facilities totaling EUR 25 million, which have not been
utilized and that are valid until 2025.
Financial key figures
2022
2021 2020
Revenue, MEUR 543.1
574.5
553.6
Opertaing profit, % 0.4%
3.5%
3.5%
Comparable operating profit, % 0.6%
3.5%
3.7%
Equity ratio, % 15.8%
21.4%
24.5%
Gearing, % 74.6%
-2.2%
-52.2%
Investments, MEUR 9.3
4.9
1.4
Cash flow from the operations, as stated
in the cash flow statement, MEUR
1.5
6.7
16.9
Personnel at the end of the period 838
825
818
Personnel
In 2022, the number of employees increased, and the total number of
employees was 838 (825) at the end of December. The increase related
mainly to the e-ville.com acquisition. The number of employees includes
both full- and part-time employees.
In 2022, Verkkokauppa.com put efforts on corporate and learning
culture, coaching management, well-being and occupational safety.
More than 30 different types of coaching and training were offered
to supervisors during the year. An internal mentoring program and a
Talent management process was launched. Also, a new online learning
platform was launched, which improved the way we produce learning
content and learn in everyday life. Almost 60 of the employees trained
in studies leading to a degree, and skills were also developed in face-
to-face and hybrid training.
Non-financial information statement
Verkkokauppa.com reports on corporate responsibility matters in
compliance with legislation on the reporting of non-financial information.
The section of non-financial information is published separately from
the Board report and has not been verified by a third party. The figures
presented in the financial statement and repeated in the sustainability
part have been audited. In the preparation of the material, general key
figures and subject-specific key figures according to GRI Standards
2016-2021 have been used.
Information presented in the notes to
the financial statements
Information on the Company’s personnel and related parties are
provided in the notes to the financial statements.
Share trading and shares
Trading or Verkkokauppa.com shares on the Nasdaq Helsinki Ltd began
on 5 June 2020.
Verkkokauppa.com share (VERK) in Nasdaq Helsinki stock
exchange in January-December 2022:
No. of
shared traded
Share of no. of
total shares, %
Total value,
EUR million
Last,
EUR
High,
EUR
Low,
EUR
Average,
EUR
9,196,645
20.28
42.2
2.84
7.43
2.83
4.59
Verkkokauppa.com Market Capitalization
and Shareholders
31 December 2022
Market capitalization (excl. Own shares), EUR million 127.8
Number of shareholders (of which nominee shareholders) 20,963 (8)
Nominee registrations and direct foreign shareholders, % 10.0
Households, % 56.4
Financial and insurance corporations, % 14.0
Other Finnish investors, % 19.5
At the end of the year, the company’s largest shareholders were Samuli
Seppälä (35.2%), Varma Mutual Pension Insurance Company (8.5%),
Mandatum Life Insurance Company Limited (5.0%), Ilmarinen Mutual
Pension Insurance Company (4.8%) and Nordea Small Cap Fund
(3.1%).
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Verkkokauppa.com · Report of the Board of Directors
2022
On 31 December 2022, the share capital was EUR 100,000 and
the total number of shares in the company was 45,354,532 including
271,257 treasury shares held by the company. The treasury shares
have no voting rights, and no dividend is paid on them. The treasury
shares accounted for 0.6 percent of all shares. In January-December
2022, the company transferred a total of 52,140 treasury shares as part
of the remuneration of Board members and key employees.
On April 1, 2022, the company announced a directed share issue of
EUR 2 million as part of financing the acquisition. The number of newly
issued shares is 289,402, representing approximately 0.64 percent of
Verkkokauppa.com’s shares and votes after the share issue. Trading
with the new shares started on the official list of Nasdaq Helsinki Oy
on April 8, 2022.
More information about verkkokauppa.com's shares and share holders
and management holdings can be found on the company's investor
website https://investors.verkkokauppa.com/fi
Flagging notifications
Verkkokauppa.com Oyj received on 15 March 2022, a notification
in accordance with Chapter 9, Section 5 of the Finnish Securities
Market Act according to which Mandatum Life Insurance Company
Ltd’s direct holding of Verkkokauppa.com shares and votes exceeds
the five percent threshold. According to the notification, Mandatum
Life Insurance Company directly held a total of 2,255,206 shares in
Verkkokauppa.com on 15 March 2022, an amount that corresponds to
5.0 percent of all shares in the company.
Long-term incentive plans
Verkkokauppa.com has one share-based incentive plan for the CEO
and members of the Management Team, the Performance Matching
Share Plan 2020–2022. For more detailed information on the share-
based incentive plan, see Note 7.12.
On 2 March 2022, Verkkokauppa.com transferred a total of 20,000 of
its own shares held by the company to seven key persons in accordance
with the second matching period 2019–2021 of the Matching share plan
2018–2020 in order to pay share rewards. Additionally, a part of the
reward was paid in cash intended to cover taxes and tax-related costs
arising from the reward to the participant.
No new shares will be issued in connection with the payment of the
share rewards and therefore the resolution has no diluting effect. On 31
December 2022, Verkkokauppa.com Oyj held 271,257 treasury shares.
Board authorizations
The Annual General Meeting held on 24 March 2022 authorized the
Board of Directors to decide on the repurchase of a maximum of 4 506
513 shares of the company.
At the end of December 2022, the Board of Directors had valid
authorization to decide on the issuance of a maximum of 4,506,513
shares by one or more decisions (Share Issue Authorization 2022). The
Board has utilized authorization for Board remuneration and part of the
financing of the e-ville.com acquisition.
On April 1, 2022, the company announced a directed share issue
of EUR 2 million as part of financing the e-ville.com acquisition. The
number of newly issued shares is 289,402, representing 0.64 percent
of Verkkokauppa.com’s shares and votes after the share issue. The
new shares represent approximately 0.64 percent of the shares and
votes in Verkkokauppa.com Oyj following the share issue. Following
the registration of the new shares, the total amount of issued shares in
Verkkokauppa.com Oyj is 45,354,532. The new shares was registered
in the Finnish Trade Register on 7 April 2022. The shares will be
admitted to trading on the Nasdaq Helsinki Ltd on 8 April 2022.
Verkkokauppa.com Oyj’s board decided on the directed share issue
and the deviation from shareholders’ pre-emptive rights based on the
authorization given by the annual general meeting on March 24, 2022.
Verkkokauppa.com also exercised its share issue authorizations
during the financial year 2022 to transfer a total of 52,140 shares to
Board members as part of Board remuneration. The authorization is
valid until the following Annual General Meeting, which is planned to be
held on 30 March 2023.
In addition to the above, the Board has no other authorizations valid
related to shares.
Verkkokauppa.com’s management team
On 22 August 2022, Verkkokauppa.com announced that it strengthens
its management team and appoints Nina Anttila as a new Chief Supply
Chain Officer and Perttu Meldo as Chief Strategy and Innovation
Officer. Miika Heinonen, Verkkokauppa.com’s Logistics Director and a
member of the management team since 2011, took up a new role within
the company. Kalle Koutajoki, Verkkokauppa.com’s Chief Strategy and
Development Officer did not continue in the service of the company.
On 22 October 2022, Suvituuli Tuukkanen was appointed as
the new Marketing and Communications Director. Seppo Niemelä,
Verkkokauppa.com’s Marketing and Communications Director at the
time and a member of the management team since 2018, did not
continue working for the company.
As a result of these appointments, the Verkkokauppa.com
Management Team will comprise the following members as of 1
November 2022:
Panu Porkka, CEO
Mikko Forsell, CFO
Nina Anttila, Chief Supply Chain
Vesa Järveläinen, Commercial Director
Pekka Litmanen, Chief Experience Officer
Perttu Meldo, Chief Strategy and Innovation Officer
Saara Tikkanen, HR Director
Jyrki Tulokas, Chief Technology Officer
Suvituuli Tuukkanen, Marketing and Communications Director
Acquisitions
On 1 April 2022, Verkkokauppa.com acquired the Finnish online store
e-ville.com. The purchase price was approximately EUR 4.0 million, and
an additional purchase price installments of approx. EUR 6.7 million.
The total aggregate purchase price can amount to EUR 10.7 million.
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Verkkokauppa.com · Report of the Board of Directors
2022
The acquired business has a positive impact of EUR 5.4 million on
Verkkokauppa.com's revenue in 2022. The business was consolidated
into Verkkokauppa.com figures as of April 2022. For more information
on the acquisition, see Note 7.20. Business combinations.
Company strategy
Verkkokauppa.com reviews and updates its long-term strategy during
the first half of 2023. The vision to remain a pioneer of ecommerce
is strong, and the customer focus continues to be emphasized in
innovation and operational development. In the coming years, the
company will continue to invest in optimizing and enhancing core
business functions through technology and data. Through this, the
company is increasingly seeking to free up resources for scaling new
profitable growth innovations and renewing the trade sector.
Board authorizations
The Annual General Meeting held on 24 March 2022 authorized the
Board of Directors to decide on the repurchase of a maximum of 4 506
513 shares of the company.
At the end of December 2022, the Board of Directors had valid
authorization to decide on the issuance of a maximum of 4,506,513
shares by one or more decisions (Share Issue Authorization 2022). The
Board has utilized authorization for Board remuneration and part of the
financing of the e-ville.com acquisition. The authorization is valid until
the next Annual General Meeting, which is scheduled to be held on 30
March 2023.
On 1 April 2022, the company announced a directed share issue
of EUR 2 million as part of financing the e-ville.com acquisition. The
number of newly issued shares is 289,402, representing 0.64 percent
of Verkkokauppa.com's shares and votes after the share issue. The
new shares represent approximately 0.64 percent of the shares and
votes in Verkkokauppa.com Oyj following the share issue. Following
the registration of the new shares, the total amount of issued shares in
Verkkokauppa.com Oyj is 45,354,532. The new shares were registered
in the Finnish Trade Register on 7 April 2022. The shares were be
admitted to trading on the Nasdaq Helsinki Ltd on 8 April 2022.
Verkkokauppa.com Oyj's board decided on the directed share issue
and the deviation from shareholders' pre-emptive rights based on the
authorization given by the annual general meeting on March 24, 2022.
Verkkokauppa.com also exercised its share issue authorizations
during the financial year 2022 to transfer a total of 52,140 shares to
Board members as part of Board remuneration. The authorization is
valid until the following Annual General Meeting, which is planned to be
held on 30 March 2023.
In addition to the above, the Board has no other authorizations valid
related to shares.
Board of Directors
The AGM confirmed as the amount of board members to be seven. The
following members were re-elected to the Board of Directors: Christoffer
Häggblom, Mikko Kärkkäinen, Frida Ridderstolpe, Johan Ryding, Kai
Seikku, Samuli Seppälä and Arja Talma.
At the Board of Directors’ constitutive meeting held after the Annual
General Meeting, Arja Talma was elected as Chairperson of the Board
of Directors and Christoffer Häggblom as Vice Chairperson. The
compositions of the Board committees were decided to be as follows:
the Audit Committee consists of Kai Seikku (Chairperson), Arja Talma
(Vice Chairperson), and Christoffer Häggblom; the Remuneration
Committee consists of Arja Talma (Chairperson), Christoffer Häggblom,
Johan Ryding, and Kai Seikku.
Annual general meeting 2022
The Annual General Meeting of Verkkokauppa.com Oyj was held in
Helsinki on 24 March 2022.The AGM adopted the financial statements
and discharged the members of the Board of Directors and the CEO
from liability for the financial year 2021 and approved the company’s
remuneration report for governing bodies as well as authorized the
board of Directors to decide on a repurchase of the company’s own
shares and the issuance of shares. In addition, the AGM approved
shareholders nomination board’s proposals concerning Board and
auditor selection and remuneration.
Audit firm PricewaterhouseCoopers Oy was elected as the
company's auditor and APA Ylva Eriksson as the principal auditor.
Dividend
Verkkokauppa.com Oyj’s Annual General Meeting resolved to distribute
a dividend of EUR 0.060 per share to be paid on 4 April 2022. In addition,
the Board of Directors resolved to pay the first dividend installment of
EUR 0.061 per share on 9 May 2022; the second dividend installment of
EUR 0.062 per share on 25 July 2022; and the third dividend installment
of EUR 0.063 per share on 7 November 2022.
After the dividend distribution decided by the Board of Directors on
27 October 2022 and paid 7 November 2022, the company does not
have valid dividend authorisations.
Corporate governance statement and remuneration
reports
The Corporate Governance Statement will be published in connection
with the Company's Financial Statements for 2022 and on the
company's website https://investors.verkkokauppa.com/en/governance.
Most significant risks and uncertainties
Verkkokauppa.com’s risks and uncertainties reflect the operating
environment and general consumer behavior, such as demand
for consumer electronics, availability of products, the competitive
environment and the regulatory environment. The company’s business
operations involve risks and uncertainties relating to, for example,
business strategy, execution of corporate transactions and investments,
risks related to the sourcing operations and logistics, and risks related to
information technology, and other operational factors of the company’s
business.
There is uncertainty about geopolitical conflicts in the world, the
crisis in Ukraine, and macroeconomics. General economic uncertainty,
growing inflation, and thereby the uncertainty about the behavior of
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Verkkokauppa.com · Report of the Board of Directors
2022
financial markets can further weaken the purchasing power and
investment ability of consumers and companies. In addition, global
economic cycles may cause intensified volatility between economic
growth and recession. Finland’s economy is expected to shrink, and
due to the slowdown in economic growth in the euro area, the risk of a
recession overshadows the development of Finland’s economy. At the
moment, the visibility of economic development is very limited.
Competition in the consumer electronics market is fierce. As a result,
the Company’s operating result and profitability are subject to changes
and uncertainties in the market and the industry, including changes in
consumer behavior and the development of the economy. Changes in
the competitive situation may be caused by the company’s expansion to
cover more and more new product categories. The company’s business
is seasonal and focused on the early summer and the fourth quarter.
The company is also dependent on the uninterrupted operation of its
website and IT systems. The further development of the company
requires expertise and change management skills from key personnel.
The company is affected by risks associated with the implementation
of the business strategy or investments and corporate transactions.
Operational business risks include logistics and supply chain
management, as well as business continuity in the event of exceptional
situations. The geographical concentration of product manufacturers
into certain countries or areas in those countries increases risks related
to the supply chain and the availability of goods. Delays and disruptions
in the supply chain, logistics or information systems and uncertainties
related to logistics partners may have a negative impact on operations.
Every effort is made to manage these operational risks by developing
appropriate backup systems and alternative operating models, and by
investing in the uninterrupted operation of IT systems. Operational risks
are also covered by insurance policies.
Changes and increasing complexity in legislation may require
significant changes in operations and may result in additional costs.
Noncompliance with laws may result in fines or claims for damages.
The company’s reputation, brand awareness and trust among
consumers are a competitive advantage – negative publicity related
to, for example, regulation or the product safety or sustainability of the
Company’s own brands could have adverse financial impacts on the
company. Verkkokauppa.com aims to produce and publish reliable
and timely financial information to the market. There is a risk that the
company’s reporting might fail to meet the requirements. A prolonged
business disruption or poor profitability could impact the company’s
liquidity or financial position.
The aforementioned risks and uncertainties may affect the
company’s operations, financial position and performance positively
or negatively. The company’s Board of Directors has approved a risk
management operating model for the company based on the ISO 31000
standard. The risks are managed and governed in accordance with the
company’s risk management policy
Events after the reporting period
On 16 January 2023, Verkkokauppa.com issued a profit warning
and intends to adjust its business to meet the declined demand. As
part of the adjustment, the company streamlines its assortment and
makes a write-down of EUR 1.6 million related to the inventory, which
negatively impacted the Q4 and full year 2022 results. At the same
time, preliminary information on the financial development of 2022 was
announced.
On 16 January 2023, Verkkokauppa.com launched of a profit
improvement program to secure profitability, and in connection with
that started change negotiations in January. The annualized profit
improvement goal of a program was approximately EUR 10 million,
of which around EUR 5-8 million is expected to be realized in 2023.
The change negotiations cover Verkkokauppa.com’s entire personnel,
approximately 770 employees. Possible redundancies, part-time shifts
and essential changes to employment contracts apply to a maximum
of 110 people. The planned measures aim to achieve annual savings of
EUR 6 million in personnel costs. Of the savings, EUR 3-4 million are
expected to be realized in the second half of 2023 and in full in 2024.
Depending on the outcome of the negotiations, the planned restructuring
is estimated to result in costs of approximately EUR 1.3 million.
Board proposal for profit distribution
The dividend distribution policy of Verkkokauppa.com states that the
company pays out a quarterly growing dividend. The dividend policy
is based on Verkkokauppa.com’s ambition to continuously grow its
business and profit. During the financial year 2022, the company’s
revenue declined, and its profit and equity ratio declined markedly.
Due to the company’s financial performance during 2022, and the
prevailing uncertainties in the economic development going forward,
the board of directors proposes to the Annual General Meeting that
Verkkokauppa.com deviates from its dividend distribution policy and
no dividend will be distributed from the profit of the 2022 financial year.
Business outlook
Due to the factors mentioned in the risks section, the consumer demand
and business is estimated to continue to be challenging and it is difficult
to predict the development of business environment for this year.
The company believes that it will succeed in taking advantage of the
online consumer transition and increasing its market share in its chosen
product categories. The company estimates that the shift of customers
to online is permanent.
Financial guidance for 2023
In 2023, Verkkokauppa.com expects the revenue to decline (2022: EUR
543.3 million) and comparable operating profit (comparable EBIT) to
improve (2022: EUR 3.5 million) compared to 2022.
8
Verkkokauppa.com · Report of the Board of Directors
2022
Distribution of shareholders at 31 December 2022
Size of shareholding, shares Number of shareholders % of shareholders Number of shares % of shares
1–100 10,655 50.8 414,822 0.9
101–500 6,743 32.2 1,727,304 3.8
501–1,000 1,854 8.8 1,431,475 3.2
1,001–5,000 1,461 7.0 3,065,190 6.8
5,001–10,000 140 0.7 1,016,830 2.2
10,001–50,000 79 0.4 1 615,207 3.6
50,001–100,000 6 0.0 384,217 0.8
100,001–500,000 14 0.1 3,523,361 7.8
500,001– 11 0.1 32,176,126 70.9
Total
20,963
100.0
45,354,532
100.0
Nominee registered 8 4,495,692 9.91
Shareholder breakdown by sector at 31 December 2022
Number of shareholders % of shareholders Number of shares % of shares
Private corporates 529 2.5 2,350,778 5.2
Financial and insurance institutions 32 0.2 6,368,609 14.0
Public entities 6 0.0 6,053,984 13.3
Non-profit organizations 57 0.3 431,981 1.0
Households 20,292 96.8 25,604,325 56.5
Non-Finnish shareholders 55 0.2 4,544,855 10.0
Total 20,971 100.0
45,354,532
100.0
Major shareholders at 31 December 2022
Shareholder Number of shares % of shares
Seppälä Sam Samuli 15,957,000 35.18
Keskinäinen Työeläkevakuutusyhtiö Varma 3,865,932 8.52
Mandatum Henkivakuutusosakeyhtiö 2,287,307 5.04
Keskinäinen Eläkevakuutusyhtiö Ilmarinen 2,174,309 4.79
Nordea Nordic Small Cap Fund
1,411,669
3.11
Sijoitusrahasto Evli Suomi Pienyhtiöt 861,000 1.90
Skogberg Ville Johannes 634,266 1.40
Keskinäinen Vakuutusyhtiö Kaleva 566,475 1.25
Säästöpankki Kotimaa-sijoitusrahasto 403,933 0.89
Erikoissijoitusrahasto Aktia Mikro Markka 350,628 0.77
10 biggest shareholders, total 28,512,519 62.87
Other shareholders 16,842,013 37.13
Total
45,354,532
100.0
9
Verkkokauppa.com · Report of the Board of Directors
2022
Alternative performance measurement
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.
Key performance indicators
Financial key figures
2021
2020 2019
Revenue, thousand euros 543,117
574,514
553,636
Gross profit, thousand euros 80,595
91,191
88,413
Gross margin, % 14,8%
15,9%
16,0%
EBITDA, thousand euros 7,836
25,279
24,593
EBITDA, % 1,4%
4,4%
4,4%
Operating profit, thousand euros 2,285
20,296
19,583
Operating profit, % 0,4%
3,5%
3,5%
Comparable operating profit,
thousand euros
3,520
20,296
20,390
Comparable operating profit, % 0,6%
3,5%
3,7%
Profit for the period, thousand euros 324
15,093
14,622
Equity ratio, % 15,8%
21,4%
24,5%
Gearing, % 74,6%
-2,2%
-52,2%
Personnel at the end of the period 838
825
818
Share performance indicators
2021
2020 2019
Basic earnings per share, EUR 0.01
0.34
0.33
Diluted earnings per share, EUR 0.01
0.33
0.32
Number of issued shares 45,354,532
45,065,130
45,065,130
Number of treasury shares 271,257
323,397
352,898
Weighted average number of shares outstandaing 45,083,275
44,731,007
44,906,590
Dilutes weighted average number of shares outstandaing 45,341,608
45,204,923
45,544,173
Equity per share, EUR 0.59
0.79
0.90
Dividend per share, EUR* -
0.246
0.450
Payout ratio, % 0%
73%
138%
Effective dividend yield, % 0%
3.5%
6.3%
Price per earnings ratio (P/E ratio)
21.13
21.87
Lowest share price 2,83
6,610
2,490
Highest share price 7,43
10,340
7,900
Average share price 4,59
8,167
4,952
Period end share price 2,84
7,130
7,120
Market value of the shares at period end, MEUR 128,6
321,3
320,9
The number of traded shares 9 196 645
20 923 735
26 714 366
Traded shares of all shares, % 20.28%
46.4%
59.3%
* 2022: The Board proposes to the AGM of 2023, that no dividend to be distributed from the profit of the 2022 financial year.
10
Verkkokauppa.com · Report of the Board of Directors
2022
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 Group
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 Group
Operating profit (EBIT)
Result for the period before income taxes and net finance income and costs
Operating profit describes the business results and is a key metric used in
medium-term targets
Operating margin (EBIT), %
Operating profit / Revenue
x 100
Operating margin measures operational efficiency of Verkkokauppa.com Group
Items affecting comparability
Material items which are not part of noComparable operating profits 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 profit
Operating profit before taxes and financial net adjusted with items affecting comparability
With the help of a comparable operating profit, it is possible to compare the
operating profit realized in different accounting periods without the effect of
items that are not essentially part of the usual business
Comparable operating profit margin %
Comparable operating profit / revenue
Comparable operating margin measures comparable operational efficiency of
Verkkokauppa.com Group
Equity ratio, %
Total equity / Balance sheet total – advance payments received
x 100
Equity ratio measures Verkkokauppa.com Group’s solvency, ability to bear
losses and ability to meet commitments in the long run
Interest-bearing net debt
Lease liabilities – cash and cash equivalents
The indicator describes the group's debt position
Gearing, %
Lease liabilities – cash and cash equivalents / Total equity
x 100
Gearing measures the relation of equity and interest-bearing net debt of
Verkkokauppa.com group and shows the indebtedness of the company
Investments
Increases in intangible assets, property, plant and equipment during the financial period
Net investments
Investments in intangible and tangible assets - proceeds from the sale of fixed assets. Net investments do not include
non-capitalized/unfinished acquisitions.
Earnings per share, Basic
Profit for the period attributable to equity holders of the company Weighted average number of shares outstanding
The key figures describe the distribution of the group's profit to its owners.
Earnings per share, diluted
Profit for the period attributable to equity holders of the company / Weighted average number of shares outstanding + dilutive
potential shares
Equity per share
Equity / Number of shares at reporting day
Dividend per share
Dividend / Number of shares at reporting day revised by share split
Dividend payout ratio, %
Dividend per share revised by share split / Earnings by share revised by share split
x 100
Effective dividend yield %
Dividend per share / Share price at reporting day
x 100
Price per earnings ratio (P/E ratio)
Share price at reporting day / Earnings per share
Traded shares of all shares, %
The number of changed share during the reporting period /The average number of share during the reporting period
x 100
Reconciliation of alternative key ratios
EUR thousand 1–12/2022 1–12/2021
Operating profit 2,285 20,296
- costs related to acquisition 1,235 -
Comparable operating profit 3,520 20,296
11
Verkkokauppa.com · Report of the Board of Directors
2022
1 Consolidated statement of income 2 Consolidated statement of comprehensive income
EUR thousand Note
2022
2021
Revenue
7.2
Other operating income
7.3
Materials and services
7.4
-462,522
-483,323
Employee benefit expenses
7.5,7.6
-40,233
-36,570
Depreciation and amortization
7.7
-5,552
-4,983
Other operating expenses
7.8
-33,434
-30,263
Operating profit 2,285
Finance income
7.9
Finance costs
7.9
-1,686
-1,352
Profit before income taxes
Income taxes
7.10,7.16
-291
-3,856
Profit for the financial year 324
Profit for the financial year attributable to
Equity holders of the company 324
Earnings per share calculated from the profit attributable to equity holders
Earnings per share, basic (EUR)
7.11
Earnings per share, diluted (EUR)
7.11
The notes are an integral part of these financial statements.
EUR thousand
2022
2021
Profit for the financial year 324 15,093
Other comprehensive income items:
Conversion differences 30 -
Items that may be transferred to income in the future -
Realized fair value changes from equity investments 72 -
Income taxes related to items -14 -
Other comprehensive income after taxes, total
Comprehensive income for the financial year
Comprehensive income for the financial year attributable to
Equity holders of the company 412 15,093
Consolidated Financial Statements 2022
12
Verkkokauppa.com · Consolidated Financial Statements 2022
2022
3 Consolidated Statement of financial position
EUR thousand Note
31 Dec 2022
31 Dec 2021
Non-current assets
Intangible assets
7.13
Goodwill 2,846
Tangible assets
7.14
Right-of-use assets
7.15
Equity investments
7.22.2
Deferred tax assets
7.16
Trade receivables
7.17
Other non-current receivables 397
Non-current assets, total 33,687
Current assets
Inventories
7.18
Trade receivables
7.17
Loan receivables
7.23.1
Other receivables
7.17
Income tax receivables
7.10
Accrued income
7.17
Cash and cash equivalents
7.19
Current assets, total 138,506
Total assets
EUR thousand Note
31 Dec 2022
31 Dec 2021
Equity
Share capital 100 100
Treasury shares -1,410
-1,611
Invested unrestricted equity fund 27,472 25,938
Conversion differences 26 -
Retained earnings -42 -3,838
Profit for the financial year 324 15,093
Total equity
7.21
Non-current liabilities
Lease liabilities
7.15
Deferred tax liabilities
7.16
Financial institution loans, long-term
7.23.1
Provisions
7.25
Other long-term liabilities 30 896
Non-current liabilities, total 36,965 17,001
Current liabilities
Lease liabilities
7.15
Financial institution loans, short-term
7.23.1
Advance payments received 4,963 5,761
Trade payables 66,834 77,609
Other current liabilities
7.24
Accrued liabilities
7.24
Income tax liabilities 0 1,738
Current liabilities, total 108,758 119,638
Total liabilities 145,724
Total equity and liabilities 172,193 172,321
The notes are an integral part of these financial statements.
13
Verkkokauppa.com · Consolidated Financial Statements 2022
2022
4 Consolidated cash flow statement
EUR thousand Note
2022
2021
Cash flow from operating activities
Profit before income taxes 615
Adjustments
Depreciation and impairment
7.7
Finance income and costs
7.9
Other adjustments 704
Cash flow before change in working capital 8,541
Change in working capital
Increase (-)/decrease (+) in non-current non-interest-bearing trade receivables
-1,761
-615
Increase (-)/decrease (+) in trade and other receivables
-2,274
-5,892
Increase (-)/decrease (+) in inventories
-12,419
Increase (+)/decrease (-) in current liabilities
-12,445
Cash flow before financial items and taxes
Interest paid
-615
-155
Interest received
Interest of lease liabilities
-1,071
-1,198
Income tax paid
-2,967
-3,521
Cash flow from operating activities
Cash flow from investing activities
Acquisition of subsidiaries -4,571
Investments in tangible assets -2,773
-3 951
Proceeds from property, plant and equipment 0
Investments in intangible assets -2,254
-903
Proceeds from equity investments 339
Cash flow from investing activities -9,260
-4,854
EUR thousand Note
2022
2021
Cash flow from financing activities
Decrease (-) in lease liabilities -4,237 -3,868
Dividends paid -11,066 -20,129
Proceeds from long-term loans 25,000
Payments to long-term loans -1,250
Proceeds from short-term loans 5,030
Payments to short-term loans -5,531 -
Cash flow from financing activities
-23,996
Increase (+) / decrease (-) in cash and cash equivalents
-22,182
Cash and cash equivalents at beginning of financial year 20,917 43,099
Translation differences 96
Cash and cash equivalents at end of financial year
7.19
The notes are an integral part of these financial statements.
14
Verkkokauppa.com · Consolidated Financial Statements 2022
2022
5 Consolidated statement of changes in equity
EUR thousand Note A B C D E F
Equity 1 Jan 2022
-1,611
Profit for the financial year
Changes in fair values of equity investments
Fair value changes from equity investments
Comprehensive income for the financial year, total
Dividend distribution
Acquisition of treasury shares
Disposal of treasury shares - Board fees
Share-based incentives
Share-based remuneration
Transactions with owners, total
Equity 31 Dec 2022
Equity 1 Jan 2021
-2,206
Profit for the financial year
Changes in fair values of equity investments
Comprehensive income for the financial year, total
Dividend distribution
0,0
-20,129
-20,129
Acquisition of treasury shares
Disposal of treasury shares - Board fees
-535
Share-based incentives
0,0
-13
Transactions with owners, total
-20,677
-19,960
Equity 31 Dec 2021
-1,611
A Share capital
B Treasury shares
C Invested unrestricted equity fund
D Fair value reserve
E Retained earnings
F Total equity
15
Verkkokauppa.com · Consolidated Financial Statements 2022
2022
16
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2022
17
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2022
18
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2022
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2022
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22
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2022
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2022
34
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2022
35
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2022
36
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2022
37
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2022
38
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2022
39
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2022
40
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2022
41
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42
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2022
43
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2022
8 Financial Statements 2022
Income statement
EUR thousand Note
2022
2021
Revenue
4.1
538,602
574,514
Other operating income
4.2
977
922
Materials and services
Materials and services
Purchases during the year -442,965
-494,566
Stock change -14,228
12,479
External services -1,205
-1,177
Materials and services total
-458,398
-483,263
Employee benefit expenses
Salaries and fees
4.3,4.4
-30,915
-29,130
Personnel incidentals
Pension expenses
4.3,4.4
-5,799
-4,863
Other personnel side costs
4.3,4.4
-1,128
-1,039
Employee benefit expenses total
-37, 8 42
-35,032
Depreciation and amortization
Planned depreciation
4.5
-1,615
-1,334
Depreciation and amortization total -1,615
-1,334
Other operating expenses
4.6
-38,673
-36,836
Operating profit 3,051
18,971
EUR thousand Note
2022
2021
Financial income and expenses
Other interest and financing income
From companies of the same group
4.7
22 -
From others
4.7
15 5
Interest expenses and other financial expenses
4.7
For others
4.7
-600 -155
Financial income and expenses total
-562 -149
Profit (loss) before appropriations and taxes
2,489
18,822
Financial statement transfers
Change in depreciation differences
4.19
-400 -
Financial statement transfers total
-400
0
Income taxes
Taxes for the financial year
4.8
-399 -3,796
Taxes of previous fiscal years
4.8
-20 -
Profit for the financial year
1,669 15,026
45
Verkkokauppa.com · Financial Statements
2022
Balance
EQUIVALENT
EUR thousand Note 2022 2021
NON-CURRENT ASSETS
Intangible assets
Other intangible asset
4.9
397
502
Immaterial rights
4.9
17
35
Other intangible assets
4.9
357
434
Prepaid expenses
4.9
2,530
392
Total intangible assets
3,300
1,364
Tangible assets
Land and water areas
4.10
2
2
Machines and hardware
4.10
5,491
2,254
Other tangible assets
4.10
433
546
Advance payments and unfinished purchases
4.10
812
2,412
Total tangible assets
6,738
5,214
Investments
Shares in companies of the same group
4.11
6 138
-
Other shares and participations 0
266
Total investments
6 138
266
NON-CURRENT ASSETS TOTAL
16,176
6,844
CURRENT ASSETS
Inventories
4.15
74,084
88,312
Long-term receivables
Accounts receivable
4.12
5,615
3,817
Receivables from companies of the same group
4.13
1,830
-
Other receivables
4.12
372
425
Total long-term receivables
7,817
4,241
Short-term receivables
Accounts receivable
4.12
28,709
23,124
Receivables from companies of the same group
4.13
232
00
Other receivables
4.12
2,629
3,699
Accruals
4.12
8,984
8,627
Income tax receivables
4.14
892
-
Total short-term receivables
41,445
35,450
Cash and cash equivalentses
4.16
20,667
20,917
CURRENT ASSETS TOTAL
144,014
148,921
ASSETS TOTAL
136 639
160,190
155,765
RESPONSIBLE
EUR thousand Note 2022 2021
EQUITY
Share capital
4.17
100 100
Invested unrestricted equity fund
4.17
28,069 25,938
Retained earnings
4.17
1,624 -2,323
Profit for the financial year
4.17
1,669 15,026
Total equity
31,462
38,741
Appropriations
Depreciation difference 4
4.19
400 -
Appropriations total
400
-
Provisions
Other provisions
4.23
745 896
Provisions total
745
896
Long-term liabilities
Long-term debt
Loans from financial institutions
4.22
22,500 -
Total long-term liabilities
22,500
-
Short-term debt
Loans from financial institutions
4.20
1,250
-
Received prepayments
6,433
7,132
Trade payables
66,677
77,609
Liabilities to companies of the same group
4.21
102
-
Other short-term liabilities
4.20
9,472
8,608
Accrued liabilities
4.20
21,149
21,041
Income tax liabilities
4.20
-
1,738
Total short-term liabilities
105,083
116,128
LIABILITIES TOTAL 127,583 116,128
EQUITY AND LIABILITIES TOTAL 160,190 155,765
46
Verkkokauppa.com · Financial Statements
2022
Statement of cash flows
EUR thousand Note
2022
2021
Cash flow from operating activities
Profit before income taxes 2,089
18,822
Adjustments
0,00
Depreciations and amortizations 1,615
1,334
Finance income and expense 563
149
Other adjustments 296
343
Cash flow before change in working capital 4,562
20,648
Change in working capital
Increase (-)/decrease (+) in non-current n-i-b trade receivables -1,745
-615
Increase (-)/decrease (+) in trade and other receivables -5,103
-5,892
Increase (-) /decrease (+) in inventories 14,228
-12,479
Increase (+) /decrease (-) in accounts payable and other current liabilities -10,557
4,810
Cash flow before financial items and taxes 1,385
6,471
Interest paid -21
-30
Other finance expenses paid -579
-124
Interest received 37
5
Income tax paid -3,049
-3,521
Cash flow from operating activities -2,227
2,801
EUR thousand Note
2022
2021
Cash flow from investing activities
Acquisition of subsidiary companies -2,888
,
Purchase of property, pland and equipment -2,771 -3,951
Purchases of intangible assets -2,304 -903
Granted loans -3,080 -
Sales proceed from disposal of equity investments 339 -
Cash flow from investing activities -10,705
-4,854
Cash flow from financing activities
Dividends paid -11,068 -20,129
Withdrawals of long-term loans 25,000 -
Repayments of long-term loans -1,250 -
Withdrawals of short-term loans Repayments of short-term loans 5,000 -
Repayments of short-term loans -5,000 -
Cash flow from financing activities 12,682 -20,129
Increase (+) / decrease (-) in cash and cash equivalents -250 -22,182
Cash and cash equivalents at beginning of financial year 20,917 43,099
Cash and cash equivalents at end of reporting period 20,667 20,917
47
Verkkokauppa.com · Financial Statements
2022
8.1 Notes on the preparation of the financial
statements
Verkkokauppa.com Oyj is the parent company of the group, which is
headquartered in Helsinki, Finland.
Verkkokauppa.com Oyj’s financial statements have been prepared
in accordance with local requirements and those generally accepted in
Finland in accordance with accounting principles (Finnish Accounting
Standards, FAS). The financial statements are presented in euros.
When preparing the financial statements, the company’s
management is subject to valid regulations and good accounting
practices accordingly to make estimates and assumptions that affect
the valuation of financial statement items and for periodization. Realized
figures may differ from the estimates made.
The parent company Verkkokauppa.com Oyj bought 100% of the
shares of e-Ville Distribution Oy on April 1, 2022.
Verkkokauppa.com Oyj’s wholly owned Finnish subsidiary Arc
Distribution Oy (founded in February 2022) on April 1, 2022, acquired
100% ownership of Digi Electronics Ltd. (Hong Kong) and Digital
Trading (Shenzhen) Co. Ltd (China) shares.
In 2022, Verkkokauppa.com Oyj has switched to reporting in
accordance with Finnish accounting principles (FAS).The company
presents the transition calculations between IFRS and FAS from
the income statement and balance sheet for 2021 in note 8.26. In
this regard, the comparative information has changed from the 2021
financial statements.
Net sales
Net Sales is calculated by deducting direct taxes and other sales related
adjustments from gross sales. Impaired receivables are accounted as
credit losses by applying good accounting principles. Credit losses are
reported in other operational expenses.
The company sells various visibility in brick-and-mortar stores,
the web and other media to its suppliers. Some of the suppliers pay
marketing support based on jointly agreed marketing activities. The
company posts the above mentioned marketing sales to revenue and
the corresponding costs are posted in raw materials purchases.
The revenue include income from customer financing service.
Revenue recognition
Revenue is recognized at the time of product delivery.
Items in foreign currencies
Transactions in currencies other than EUR are translated using the
transaction date exchange rate.
At year-end, the outstanding foreign currency receivables and liabilities
are translated to EUR using the closing date average exchange rates.
Receivable exchange rate differences are entered in the income
statement as sales adjustments and when translating account
payables, foreign exchange rate differences are booked as adjustments
to purchases. Exchange rate differences deriving from other posts are
booked as financial exchange rate differences.
Other operating income
Other income continuously includes income from subletting space and
the sale of fixed assets.
Intangible and tangible assets
Intangible and tangible assets are measured at their historical cost, less
depreciation according to plan. Planned depreciation is recorded on a
straight-line basis over the useful life of an asset.
IT-applications produced for the company’s own use have been
capitalized in other intangible assets and include the direct personnel
costs of the development work. These related staff expenses have
been reclassified from the profit and loss statement into other intangible
assets. The book value of the fixed assets does not contain any
appreciations. Maintenance and repair expenses are booked as running
costs with the exception of substantial upgrades to rented premises,
which are activated in fixed assets.
The carrying value of land and water areas as well as the carrying
value of other tangible assets are based on historical costs.
No write-downs have been done on land and water areas.
The periods for planned depreciations are as follows:
Intangible rights 5 years
Research and Development 3–5 years
Machinery and Equipment 3–10 years
Upgrades to premises 5–10 years
Accounts receivables
The expected credit losses are deducted from the value of the trade
receivables.
The expected credit losses are recognised based on the ageing and
the origin of the trade receivable.
All over 90 days past-due trade receivables are recognised entirely
as credit lossess.
Point of payment receivables
All payment and credit card etc. receivables are reported in the balance
sheet group cash in hand and at banks.
Income taxes
The income taxes include taxes based on the Verkkokauppa.com Oyj’s
taxable profit.
Deferred taxes
Deferred taxes are not booked in the financial statements.
Notes to the Financial Statements 31.12.2022
48
Verkkokauppa.com · Financial Statements
2022
Provisions
The company recognises a provision for product warranty obligations.
The provision is estimated based on realised warranty costs and on
assumptions on failure rates of sold products.
Inventory valuation
Inventories are stated at the lower of original acquisition costs or selling
price including
8.2 Revenue
Revenue by external customer location
EUR thousand
2022
2021
Finland
499,316
534,954
Rest of the world 39,286
39,560
Revenue by external customer location 538,602 574,514
8.3 Other operating income
EUR thousand 2022 2021
Lease income from subleasing right-of-use
assets
545
530
Other income 431
392
Other operating income, total 977
922
8.4 Employee benefits
EUR thousand
2022
2021
Salaries and fees
31,639
29,285
Pension costs - contribution-based
arrangements
5,956
4,921
Share-based payments
Other personnel-related expenses
1,173
1,249
Total personnel costs before activation
38,768
35,455
Capitalized employee benefits for the financial
year
Wages and salaries
-724
-353
Pension expenses -defined contribution plans
-157
-58
Other personal expenses
-45
-12
Capitalized employee benefits for the
financial year
-926
-423
Total personnel costs
37, 8 42
35,032
The capitalized personnel costs are mainly related to the development of
the company’s enterprise resource planning system, which is explained
more in note Intangible assets 8.10, and the logistics automation of the
Jätkäsaari warehouse.
2022
2021
Number of employees at the end of the
financial year
821
825
The number of employees includes both full-time and part-time
employees. The amount does not include temporary agency workers.
Information on management’s employee benefits is presented in the
note on Remuneration of key management personnel 4.4.
8.5 Management remuneration
The following table shows the remuneration of the president and CEO
and the Executive Committee, as well as the shareholdings and holdings
as a percentage of the total share capital. The amounts presented are
performance-based. The share-based payments are based on an
estimate of their realization at the end of the year. The performance
share-based payment includes the cost effect on the financial year,
regardless of the time of the share transfer.
Management remuneration
2022
EUR Thousand
CEO
Panu Porkka
Management
team
2022,
total
Short-term employee
benefits
Fixed basic salaries and
fringe benefits
409 1,374 1,783
Incentive bonus
10 15 25
Statutory pension
78 217 295
Share-based payments
Share-based payments 0
Total
498 1,606 2,104
Shareholding, pcs
95,000 110,250
205,250
% of shares
0.20% 0.41% 0.61%
49
Verkkokauppa.com · Financial Statements
2022
2021
EUR Thousand
CEO
Panu Porkka
Management
team
2021,
total
Short-term employee
benefits
Fixed basic salaries and
fringe benefits
442 1,247 1,688
Incentive bonus 120 241 361
Statutory pension 92 245 337
Share-based payments
Share-based payments
60
164 224
Total
714
1,897 2,611
Shareholding, pcs 90,000 183,922
273,922
% of shares 0.20% 0.41% 0.61%
Board fees
EUR Thousand 2022 2021
Board members 31 Dec 2022
Arja Talma
, Chair of the Board 89
77
Christoffer Häggblom
, Vice Chair of the Board,
Chair of the Remuneration Committee
66
76
Kai Seikku
, Chairman of the Audit Committee 51
52
Samuli
Seppälä 35
36
Mikko Kärkkäinen
(member since 25 Mar 2021) 35
26
Frida Ridderstolpe (member since 25 Mar 2021)
35
26
Johan Ryding
(member since 25 Mar 2021) 39
26
Robert Burén
(member until 25 Mar 2021) -
10
Mikael Hagman (member until 25 Mar 2021) -
1
Remuneration of Board of Directors, total 350
331
During the financial year 2022, the company transferred 31,140 (14,501)
treasury shares for the payment of the fees.
Shareholding, pcs
2022
2021
Arja Talma
, Chair of the Board
23,780
15,290
Christoffer Häggblom
, Vice Chair of the Board,
Chair of the Remuneration Committee
33,339
26,669
Kai Seikku
, Chairman of the Audit Committee
150,809
146,564
Samuli
Seppälä
15,957,000
15,957,000
Mikko Kärkkäinen
(member since 25 Mar 2021)
5,858
1,613
Frida Ridderstolpe (member since 25 Mar 2021)
5,858
1,613
Johan Ryding
(member since 25 Mar 2021) 5,882 1,613
Number of shares, total 16,182,526
16,150,362
Board members' shareholdings on 31.12.
% of shares
2022
2021
Arja Talma
, Chair of the Board 0.05% 0.03%
Christoffer Häggblom
, Vice Chair of the Board,
Chair of the Remuneration Committee
0.07% 0.06%
Kai Seikku
, Chairman of the Audit Committee 0.33% 0.33%
Samuli
Seppälä
35.18% 35.41%
Mikko Kärkkäinen
(member since 25 Mar 2021) 0.01% -
Frida Ridderstolpe (member since 25 Mar 2021)
0.01% -
Johan Ryding
(member since 25 Mar 2021) 0.01% -
% of shares, total
35.68%
35.83%
8.6 Depreciation and amortization
EUR thousand
2022
2021
Intangible assets
Development costs 283 283
Other intangible assets 85 93
Amortization of intangible assets, total 367 375
Tangible assets
Machinery and equipment 1,095 823
Other tangible assets 152 136
Depreciation of tangible assets, total 1,247
959
Depreciation and amortization, total 1,615
1,334
8.7 Other operating expenses
EUR thousand 2022 2021
Premises maintenance and operation expenses 12,157 6,305
Financial transactions expenses 1,880 2,246
Marketing 7,652 8,389
Administrative services 11,231 10,298
Other expenses 5,753 9,597
Other operating expenses, total 38,673
36,836
Auditor fees
EUR thousand 2022 2021
Statutory audit 142 104
Other services 20 -
Auditor fees, total 162 104
The auditing firm chosen by the general meeting is Pricewaterhouse-
Coopers Oy. The non-auditing services performed by Pricewaterhouse-
Coopers Oy totaled 20 thousand euros.
50
Verkkokauppa.com · Financial Statements
2022
8.8 Finance income and costs
Finance income
EUR thousand
2022
2021
Interest income 15
5
Interest income from companies of
the same group
22
0
Capital gain on other financial investments 0
0
Total 37
6
Finance costs
EUR thousand 2022 2021
Other interest costs 21
30
Other finance costs 212
45
Exchange rate differences on cash and cash
equivalents
69
79
Monetary institution Loans interest expenses 298
0
Total 600
155
In addition to financial income and costs, exchange rate differences
have been recognized as adjustments to purchases for the financial
year.
8.9 Income taxes
EUR thousand 2022 2021
Current taxes 399
3,796
Taxes for previous accounting periods 20
-
Income taxes, total 420
3,796
8.10 Intangible assets
Tuhatta euroa Development costs
Other intangible
assets
Advance payments
and work in progress Total
Cost 1 Jan 2022
3,246 1,777 392 5,415
Increases
82 29 2,192 2,304
Disposals
Transfers between items
55 -55
Cost 31 Dec 2022
3,383 1,806 2,530 7,719
Accumulated amortization and impairment 1 Jan 2022
-2,743 -1,308 -4,051
Accumulated amortization on disposals
Transfers between items
Amortization for the financial year
-242 -125 -367
Accumulated amortization and impairment 31 Dec 2022
-2,986 -1,433 -4,419
Carrying amount 1 Jan 2022
502 469 392 1,364
Carrying amount 31 Dec 2022
397 373 2,530 3,300
EUR thousand Development costs
Other intangible
assets
Advance payments
and work in progress Total
Cost 1 Jan 2021
2,896
1,268
348
4,511
Increases
350
509
45
903
Disposals
Transfers between items
Cost 31 Dec 2021
3,246
1,777
392
5,415
Accumulated amortization and impairment 1 Jan 2021
-2,461
-1,215
0
-3,676
Accumulated amortization on disposals
Transfers between items
amortization for the financial year
-283
-93
0
-375
Accumulated amortization and impairment 31 Dec 2021
-2,743
-1,308
0
-4,051
Carrying amount 1 Jan 2021
435
53
348
835
Carrying amount 31 Dec 2021
502
469
392
1,364
51
Verkkokauppa.com · Financial Statements
2022
8.11 Property, plant and equipment
EUR thousand Land
Machinery and
equipment
Other tangible
assets
Advance payments
and work in progress Total
Cost 1 Jan 2022 2 8,717 3,012 2,412 14,142
Increases - 327 28 2,417 2,771
Disposals -
Transfers between items - 4,006 11 -4,017
Cost 31 Dec 2022 2 13,050 3,050 812 16,913
Accumulated depreciation 1 Jan 2022 - -6,463 -2,465 -8,928
Accumulated depreciation on disposals -
Transfers between items -
Depreciation for the financial year - -1,095 -152 -1,247
Accumulated depreciation 31 Dec 2022 - -7,558 -2,617 -10,176
Carrying amount 1 Jan 2022 2 2,254 546 2,412 5,214
Carrying amount 31 Dec 2022 2 5,491 433 812 6,738
EUR thousand Land
Machinery and
equipment
Other tangible
assets
Advance payments
and work in progress Total
Cost 1 Jan 2021 2 7,323 2,792 75 10,191
Increases - 1,394 220 2,337 3,951
Disposals -
Transfers between items -
Cost 31 Dec 2021 2 8,717 3,012 2,412 14,142
Accumulated depreciation 1 Jan 2021 - -5,640 -2,330 -7,970
Accumulated depreciation on disposals -
Transfers between items -
Depreciation for the financial year - -823 -136 -959
Accumulated depreciation 31 Dec 2021 - -6,463 -2,465 -8,928
Carrying amount 1 Jan 2021 2 1,683 462 75 2,222
Carrying amount 31 Dec 2021 2 2,254 546 2,412 5,214
8.12 Investments
EUR thousand 2022 2021
Holdings in group companies - -
Aqcuisition costs 1.1. - -
Increases 6,138 -
Carrying amount 31 Dec 6,138 -
Ownership of shares%
Country
Arc Distribution Oy
Finland
100% -
e-ville.com Distribution Oy
Finland
100% -
Digi Electronics Ltd
Hong
Kong
100% -
Digital Trading (shenzhen) Co. Ltd
China
100% -
8.13 Trade receivables and other receivables
EUR thousand
2022
2021
Non-current
Trade receivables 5,615 3,817
Other non-current receivables 372 425
Non-current receivables, total 5,987
4,241
Current
Trade receivables 28,709 23,124
Other accrued income 8,984 6,820
Income tax receivables 892
Other receivables 2,629 3,699
Current receivables, total 41,213 33,643
Non-current and current receivables, total 47,20 0 37,884
52
Verkkokauppa.com · Financial Statements
2022
8.14 Receivables from companies of the same group
EUR thousand 2022 2021
Group loan receivables, long-term 1,830
0
Group accounts receivable 205
0
Group accruals 5
0
Group interest receivables 22
0
Receivables from companies of the same
group in total
2,062
0
8.15 Other short-term receivables and accruals
EUR thousand
2022
2021
Prepayments 2,629
2,128
Support for purchases 6,481
7,302
Other transfer receivables 2,504
12,476
Income tax receivables
892
994
Other short-term receivables and accruals
12,505
30,496
8.16 Inventory
EUR thousand
2022
2021
Goods 74,084
88,312
Total 74,084
88,312
8.17 Cash and cash equivalents
EUR thousand 2022 2021
Cash in hand and at banks 20,667
20,917
Total 20,667
20,917
8.18 Equity
EUR thousand 2022 2021
Equity 1.1. 100 100
Invested unrestricted equity fund at the beginning
of the period
25,938 25,816
Invested unrestricted equity fund additions 2,131 122
Invested unrestricted equity fund at the end of
the period
28,069 25,938
Retained Earnings 12,692 17,806
Dividends, annual general meeting -11,068 -20,129
Profit/ Loss of the accounting period 1,669 15,026
Equity total 31,462 38,741
Restricted equity at the end of the period 100 100
Unrestricted equity at the end of the period 31,362 38,641
Unrestricted and restricted equity total 31,462 38,741
8.19 Calculation of distributable funds
EUR thousand
2022
2021
Invested unrestricted equity fund 28,069 25,938
Result from Previous years 12,692 2,323
- Dividends -11,068 -20,129
- Capitalization of development costs -2,589 -68
Profit/Loss of the accounting period 1,669 15,026
Distributable funds total 28,773 37,746
8.20 Financial statement transfers
EUR thousand
2022
2021
Financial statement transfers1 Jan 0 0
Increases in financial statement transfers 400 0
Financial statement transfers31 Dec 400 0
8.21 Other current liabilities and accrued liabilities
EUR thousand 2022 2021
Accrued personnel expenses 7,461 7,390
Other accrued liabilities 13,783 13,734
Withholding tax liability 821 929
VAT liability 8,556 7,596
Muut lyhytaikaiset velat ja siirtovelat 30,621
29,649
8.22 Liabilities from companies of the same group
EUR thousand
2022
2021
Group accounts payable 2 0
Group accrued liabilities 100 0
Liabilities from companies of the same group 102 0
8.23 Long-term debt capital
EUR thousand
2022
2021
Loans financial loans 22,500 753
Long-term debt capital 22,500 753
8.24 Provisions
EUR thousand 2022 2021
Provisions 1 Jan 896 766
Increases in provisions -78 134
Decreases in provisions -72
-5
Provisions 31 Dec 745
896
53
Verkkokauppa.com · Financial Statements
2022
8.25 Guarantees and commitments
EUR Thousand 2022 2021
Collateral given for own commitments
Guarantees 1,909
3,463
Leasing liability 30,658
9,075
Other commitments and contingent liabilities 1,940
3,473
8.26 Bridge calculations in accordance with FAS
IFRS balance on
31 December 2021
FAS adjustments
requirement
FAS balance on
31 December 2021
Revenue
574 513 965
574 513 965
Other operating income
921 848
921 848
Materials and services
-483 322 953
3b) 59 749 -483 263 203
Employee benefit expenses
-36 570 478
1b) 1 538 289
-35 032 189
Depreciation and amortization
-4 983 439
2) 3 649 630
-1 333 809
Other operating expenses
-30 263 077
1b), 2.) -6 572 454
-36 835 531
Operating profit 20 295 867 -1 324 786
18 971 081
Finance income
5 629
5 629
Finance costs
-1 352 447
2) 1 197 715 -154 732
Net financial costs
-1 346 818
1 197 715
-149 102
Profit before income taxes
18 949 049
-127 071
18 821 978
Taxes in the accounting period
-3 795 968
-3 795 968
Taxes from current accounting
periods
261
261
Income taxes
-60 205
5) 60 205
0
Income taxes total
-3 855 912
60 205 -3 795 706
Profit for the period 15 093 138 -66 866 15 026 272
IFRS balance on
31 December 2021
FAS adjustments
requirement
FAS balance on
31 December 2021
Intangible assets
Property, plant and equipment
1 363 597 1 363 597
Right-of-use assets
5 214 014 5 214 014
Equity investments
15 776 459 2) -15 776 459 0
Deferred tax assets
266 484 3a) -265 266 219
Trade receivables
1 289 163 5) -1 289 163 0
Loan receivables
3 816 537
3 816 537
Other non-current receivables
424 764 424 764
Non-current assets, total
28 151 019 17 065 887 11 085 132
Current assets
Inventories
87 802 963 3c) -509 341 88 312 304
Trade receivables
23 123 801 23 123 801
Other receivables
3 699 415
3 699 415
Accrued income
8 627 205 8 627 205
Cash and cash equivalents
20 917 082
20 917 082
Current assets, total
144 170 466 -509 341 144 679 807
Total assets
172 321 485 16 556 546 155 764 939
Equity
Share capital
100 000
100 000
Treasury shares
-1 610 616 4b)
-11 173
-1 599 443
Invested unrestricted equity fund
25 937 990 25 937 990
Retained earnings
-3 837 936 1.),2.),3.),4.),5.) -3 114 194
-723 742
Profit for the period
15 093 138 1.),2.),3.),4.),5.) 66 866 15 026 272
Total equity
35 682 576 -3 058 501 38 741 077
54
Verkkokauppa.com · Financial Statements
2022
IFRS balance on
31 December 2021
FAS adjustments
requirement
FAS balance on
31 December 2021
Non-current liabilities
Lease liabilities
16 104 849
2) -16 104 849
0
Provisions
895 743
895 743
Non-current liabilities, total
17 000 591
-16 104 849
895 743
Current liabilities
Lease liabilities
4 034 477
2) -4 034 477
0
Advance payments received
5 760 991
5 760 991
Trade payables
77 609 210
77 609 210
Other current liabilities
10 717 909
1a) -756 967
9 960 942
Accrued liabilities
19 777 727
1a),2.),4) 1 281 246
21 058 973
Income tax liabilities
1 738 004
1 738 004
Current liabilities, total
119 638 319
-3 510 198
116 128 120
Total liabilities
136 638 910
-19 615 047
117 023 863
Total equity and liabilities 172 321 485 -16 556 546 155 764 939
FAS notes
Outlined below are the accounting policies that have had the most
significant effects on the income statement, and statement of financial
position statement of Verkkokauppa.com Oyj due to the adoption of
FAS.
1. Changes in classification
a) Classification changes related to the balance sheet.
b) Voluntary personnel costsThe company has presented in the IFRS
financial statements that all personnel expenses included in employee
benefits are presented as part of personnel expenses.
In FAS, all voluntary personnel expenses are included in other
business expenses.
c) Own shares
In previous years, the company has recorded transaction costs resulting
from the acquisition cost of its own shares in equity as part of the IFRS
acquisition cost of the shares.
In FAS, the acquisition costs of the company’s own shares are
treated as expenses in the income statement.
2. Leases
The company is, according to IFRS, the company must record in the
balance sheet of all lease agreements the equivalent of the present
value of the minimum rents at the beginning of the lease agreement
asset and liability. The standard includes a practical aid for recording,
according to which low-value and short-term (less than 12 months)
leases may not be recorded. Verkkokauppa.com Corporation has
decided to apply both means of assistance. Asset and liability based
on leasehold the amount is calculated by discounting future minimum
rents. With the processing according to IFRS The rental expense shown
in the FAS is compensated by depreciation of the asset. In addition, it is
55
Verkkokauppa.com · Financial Statements
2022
recorded the interest expenses of the lease debt, which are presented
in the financial expenses of the income statement. As far as lease
agreement payments have been allocated to accrued liabilities, they
have been transferred as part of the lease agreement debt.
In FAS, the income statement records the costs of leases according
to the passage of time to other business expenses. At the end of the
accounting period, the rental obligations are reported on the balance
sheet as external items as part of liability commitments.
3. Financial instruments
a) Classification of equity investments at fair value through other
comprehensive income
IFRS requires the classification of financial assets based on the
business model. The company is IFRS evaluated the business model of
equity investments and made an irrevocable decision classify the equity
investments in question at fair value through other comprehensive
income. In FAS, the company treats investments initially at acquisition
cost.
According to IFRS, changes in the fair value of investments are
recorded in other comprehensive income. Equity in connection with
the transfer of conditional investments, related to accumulated other
items of comprehensive income the included balance is transferred to
retained earnings.
b) Annual credits for inventory
In accordance with IFRS, when determining the purchase costs of
inventory, it is minus annual credits. In accordance with FAS, not
all annual credits have been allocated to the acquisition cost of the
inventory.
In this regard, the company must adjust the book value of the
warehouse and the book adjusted deferred taxes. In the income
statement, the effect is reflected in the materials and services item, in
the change of current assets and as a change in deferred taxes.
4. Other adjustments
In 2021, Verkkokauppa.com had 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.
In 2021, Verkkokauppa.com handed over the rewards according to
the first commitment period of the Additional Share Program 2018–
2020 in a directed free share issue.
Share-based incentive plans has been classified in the IFRS
reporting as an equity-settled transaction, because Verkkokauppa.com
Oyj will deduct, on behalf of the employee, from the share award such
number of shares which covers taxes and tax-like charges paid in cash.
This equity-settled shared-based payment was measured at grant
date fair value and recognized as an expense and in retained earnings
during its validity period.
In FAS, the share-based payment is recognized as an expense and
accrued liabilities.
5. Deferred tax assets and liabilities
The company has recorded an IFRS deferred tax asset related to lease
agreements and inventory for correction. The company will not record
deferred taxes for these items in the FAS financial statements.
56
Verkkokauppa.com · Financial Statements
2022
Signatures for the financial statements and the Board of Directors’ report
Helsinki, 28 February 2023
Arja Talma
Chair of the Board
Christoffer Häggblom
Vice Chair of the Board
Kai Seikku
Board member
Samuli Seppälä
Board member
Frida Ridderstolpe
Board member
Johan Ryding
Board member
Mikko Kärkkäinen
Board member
Panu Porkka
Managing Director
57
Verkkokauppa.com · Signatures
2022
Auditor’s Report
(Translation of the Finnish Original)
Report on the Audit of the Financial Statements
Opinion
In our opinion
• the consolidated financial statements give a true and fair view of
the group’s financial position and financial performance and cash
flows in accordance with International Financial Reporting Standards
(IFRS) as adopted by the EU
• the financial statements give a true and fair view of the parent
company’s financial performance and financial position in
accordance with the laws and regulations governing the preparation
of the financial statements in Finland and comply with statutory
requirements.
Our opinion is consistent with the additional report to the Audit Committee.
What we have audited
We have audited the financial statements of Verkkokauppa.com Oyj
(business identity code 1456344-5) for the year ended 31 December
2022. The financial statements comprise:
• the consolidated balance sheet, statement of comprehensive income,
statement of changes in equity, statement of cash flows and notes,
including a summary of significant accounting policies
• the parent company’s balance sheet, income statement, statement
of cash flows and notes.
Basis for Opinion
We conducted our audit in accordance with good auditing practice
in Finland. Our responsibilities under good auditing practice are further
described in the Auditor’s Responsibilities for the Audit of the Financial
Statements section of our report.
We believe that the audit evidence we have obtained is sufficient
and appropriate to provide a basis for our opinion.
Independence
We are independent of the parent company and of the group companies
in accordance with the ethical requirements that are applicable in
Finland and are relevant to our audit, and we have fulfilled our other
ethical responsibilities in accordance with these requirements.
To the best of our knowledge and belief, the non-audit services that
we have provided to the parent company and to the group companies
are in accordance with the applicable law and regulations in Finland
and we have not provided non-audit services that are prohibited under
Article 5(1) of Regulation (EU) No 537/2014. The non-audit services that
we have provided are disclosed in note 7.8 to the Financial Statements.
Our Audit Approach
Overview
• Overall group materiality: € 5 400 000,
which represents 1 % of group´s revenue
• Audit scope: The audit scope includes
Verkkokauppa.com Oyj
• Timing of revenue recognition
• Valuation of inventories
As part of designing our audit, we determined materiality and assessed
the risks of material misstatement in the financial statements. In
particular, we considered where management made subjective
judgements; for example, in respect of significant accounting estimates
that involved making assumptions and considering future events that
are inherently uncertain.
Materiality
The scope of our audit was influenced by our application of materiality.
An audit is designed to obtain reasonable assurance whether the
financial statements are free from material misstatement. Misstatements
may arise due to fraud or error. They are considered material if
individually or in aggregate, they could reasonably be expected to
influence the economic decisions of users taken on the basis of the
financial statements.
Based on our professional judgement, we determined certain
quantitative thresholds for materiality, including the overall group
materiality for the consolidated financial statements as set out in the
table below. These, together with qualitative considerations, helped us
to determine the scope of our audit and the nature, timing and extent
of our audit procedures and to evaluate the effect of misstatements on
the financial statements as a whole.
Overall group
materiality
€ 5,400,000
How we
determined it
1% of the group’s revenue
Rationale for
the materiality
benchmark applied
We chose revenue as the benchmark because,
in our view, it is the benchmark against which the
performance of the company is most commonly
measured by users. We chose 1 % which is within the
range of acceptable quantitative materiality thresholds
in auditing standards.
Materiality
Audit Scope
Key Audit
matters
To the Annual General Meeting of Verkkokauppa.com Oyj
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How we tailored our group audit scope
We tailored the scope of our audit, taking into account the structure of
the group, the accounting processes and controls, and the industry in
which the group operates.
Our audit scope includes Verkkokauppa.com Oyj. Verkkokauppa.
com Oyj has four subsidiaries which are not material to consolidated
financial statements and we have performed analytical procedures on
their balances
Key Audit Matters
Key audit matters are those matters that, in our professional judgment,
were of most significance in our audit of the financial statements of the
current period. These matters were addressed in the context of our
audit of the financial statements as a whole, and in forming our opinion
thereon, and we do not provide a separate opinion on these matters.
As in all of our audits, we also addressed the risk of management
override of internal controls, including among other matters
consideration of whether there was evidence of bias that represented a
risk of material misstatement due to fraud.
Key audit matter in the audit How our audit addressed the key audit matter
Timing of revenue recognition
Refer to note 7.2 of the consolidated financial statements and to note 8.1 and 8.2
of the parent company´s financial statements
The Group´s revenue, € 543 million, and Parent company´s revenue, € 539 million,
consist of sale of goods and services.
The transaction price of sale of goods consists of the list price of the goods, the
variable consideration related to the right to return, as well as the transportation fee.
The sale of goods is recognized when the customer assumes control of the goods.
When a customer is paying using Apuraha financing, the Company recognizes the
revenue from customer financing on a monthly basis according to the actuals.
The transaction price for service contracts with customers consists mainly of fixed
prices. The Company recognizes revenue from service contracts with customers
when the service has been rendered or over time.
Verkkokauppa.com´s revenue comprise a large amount of transactions and
revenue is a significant item in the consolidated financial statements and parent
company´s financial statements. Management exercises judgement e.g. when
defining the variable consideration related to sale of goods. Given these factors,
we have considered timing of revenue recognition to be a key audit matter.
Our audit procedures included test of controls related to timing of revenue
recognition and test of details procedures. Our test of details included e.g. the
following procedures:
• We gained an understanding of the nature of the revenue streams and
different contractual terms used.
• We assessed the Company’s accounting policies over revenue
recognition.
• We compared the accounting treatment of a sample of sales transactions
and variable consideration to the terms of underlying contracts.
• We tested a sample of sales transactions against incoming cash.
• We tested a sample of sales invoices recorded in December 2022 and
January 2023 to evaluate that revenue had been recognised in the right
period.
• We compared selected accounts receivable balances against payments
received after the period end.
Valuation of inventories
Refer to note 7.18 of the consolidated financial statements and to note 8.1 and 8.16
of the parent company´s financial statements
Inventories form a significant part of the Group’s assets, amounting to € 74.8
million, and Parent company´s assets, amounting to € 74.1 million, as of 31
December 2022.
Inventories are measured at the lower of cost and net realizable value. The cost
of inventory is assigned by using the FIFO (first-in, first-out) method. The cost
contains direct costs of purchase less rebates.
The goods inventory turnover and possible reduction in the net realizable value
below cost is assessed regularly and a write-down of inventories is recognized
when necessary. In addition, the Company recognizes a write-down of aged
products, based on days in stock.
Inventories are a significant item in the consolidated financial statements and
parent company´s financial statements. Management exercises judgement and
applies assumptions when estimating the need for an obsolescence provision.
Given these factors, we have considered valuation of inventories to be a key audit
matter.
Our audit procedures included test of controls and test of details procedures
related to valuation of inventories. Our test of details included e.g. the following
procedures:
• We assessed the adequacy of the obsolescence provision and checked
adherence to the Company’s accounting policy.
• We compared, on a sample basis, the value of inventory items against
purchase invoices and sales invoices to ensure that inventory items are
measured at the lower of cost and net realizable value.
• For a sample of warehouses, we attended the physical stock-take
counting or reconciled third party confirmations with the accounting
records.
There are no significant risks of material misstatement referred to in Article 10(2c) of Regulation (EU) No 537/2014 with respect to the consolidated financial
statements or the parent company financial statements.
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Responsibilities of the Board of Directors and
the Managing Director for the Financial Statements
The Board of Directors and the Managing Director are responsible for
the preparation of consolidated financial statements that give a true and
fair view in accordance with International Financial Reporting Standards
(IFRS) as adopted by the EU, and of financial statements that give
a true and fair view in accordance with the laws and regulations
governing the preparation of financial statements in Finland and comply
with statutory requirements. The Board of Directors and the Managing
Director are also responsible for such internal control as they determine
is necessary to enable the preparation of financial statements that are
free from material misstatement, whether due to fraud or error.
In preparing the financial statements, the Board of Directors and the
Managing Director are responsible for assessing the parent company’s
and the group’s ability to continue as a going concern, disclosing,
as applicable, matters relating to going concern and using the going
concern basis of accounting. The financial statements are prepared
using the going concern basis of accounting unless there is an intention
to liquidate the parent company or the group or to cease operations, or
there is no realistic alternative but to do so.
Auditor’s Responsibilities for the Audit
of the Financial Statements
Our objectives are to obtain reasonable assurance about whether the
financial statements as a whole are free from material misstatement,
whether due to fraud or error, and to issue an auditor’s report that
includes our opinion. Reasonable assurance is a high level of assurance,
but is not a guarantee that an audit conducted in accordance with good
auditing practice will always detect a material misstatement when it
exists. Misstatements can arise from fraud or error and are considered
material if, individually or in the aggregate, they could reasonably be
expected to influence the economic decisions of users taken on the
basis of these financial statements.
As part of an audit in accordance with good auditing practice, we
exercise professional judgment and maintain professional skepticism
throughout the audit. We also:
• Identify and assess the risks of material misstatement of the financial
statements, whether due to fraud or error, design and perform audit
procedures responsive to those risks, and obtain audit evidence that
is sufficient and appropriate to provide a basis for our opinion. The
risk of not detecting a material misstatement resulting from fraud
is higher than for one resulting from error, as fraud may involve
collusion, forgery, intentional omissions, misrepresentations, or the
override of internal control.
• Obtain an understanding of internal control relevant to the audit
in order to design audit procedures that are appropriate in the
circumstances, but not for the purpose of expressing an opinion on
the effectiveness of the parent company’s or the group’s internal
control.
• Evaluate the appropriateness of accounting policies used and the
reasonableness of accounting estimates and related disclosures
made by management.
• Conclude on the appropriateness of the Board of Directors’ and the
Managing Director’s use of the going concern basis of accounting and
based on the audit evidence obtained, whether a material uncertainty
exists related to events or conditions that may cast significant doubt
on the parent company’s or the group’s ability to continue as a
going concern. If we conclude that a material uncertainty exists, we
are required to draw attention in our auditor’s report to the related
disclosures in the financial statements or, if such disclosures are
inadequate, to modify our opinion. Our conclusions are based on
the audit evidence obtained up to the date of our auditor’s report.
However, future events or conditions may cause the parent company
or the group to cease to continue as a going concern.
• Evaluate the overall presentation, structure and content of the
financial statements, including the disclosures, and whether the
financial statements represent the underlying transactions and events
so that the financial statements give a true and fair view.
• Obtain sufficient appropriate audit evidence regarding the financial
information of the entities or business activities within the group to
express an opinion on the consolidated financial statements. We are
responsible for the direction, supervision and performance of the
group audit. We remain solely responsible for our audit opinion.
We communicate with those charged with governance regarding,
among other matters, the planned scope and timing of the audit and
significant audit findings, including any significant deficiencies in internal
control that we identify during our audit.
We also provide those charged with governance with a statement
that we have complied with relevant ethical requirements regarding
independence, and to communicate with them all relationships and other
matters that may reasonably be thought to bear on our independence,
and where applicable, related safeguards.
From the matters communicated with those charged with governance,
we determine those matters that were of most significance in the audit of
the financial statements of the current period and are therefore the key
audit matters. We describe these matters in our auditor’s report unless
law or regulation precludes public disclosure about the matter or when,
in extremely rare circumstances, we determine that a matter should not
be communicated in our report because the adverse consequences of
doing so would reasonably be expected to outweigh the public interest
benefits of such communication.
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Other Reporting Requirements
Appointment
We were first appointed as auditors by the annual general meeting on 15
March 2016. Our appointment represents a total period of uninterrupted
engagement of 7 years.
Other Information
The Board of Directors and the Managing Director are responsible for
the other information. The other information comprises the report of the
Board of Directors.
Our opinion on the financial statements does not cover the other
information.
In connection with our audit of the financial statements, our
responsibility is to read the other information identified above and,
in doing so, consider whether the other information is materially
inconsistent with the financial statements or our knowledge obtained
in the audit, or otherwise appears to be materially misstated. With
respect to the report of the Board of Directors, our responsibility also
includes considering whether the report of the Board of Directors has
been prepared in accordance with the applicable laws and regulations.
In our opinion
• the information in the report of the Board of Directors is consistent
with the information in the financial statements
• the report of the Board of Directors has been prepared in accordance
with the applicable laws and regulations.
If, based on the work we have performed on the other information, we
conclude that there is a material misstatement of this other information,
we are required to report that fact. We have nothing to report in this
regard.
Helsinki 28 February 2023
PricewaterhouseCoopers Oy
Authorised Public Accountants
Ylva Eriksson
Authorised Public Accountant (KHT)
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Note about English ESEF report.
Verkkokaupan.com Oyj's English-language ESEF financial statements have not been reviewed by an independent body.
The identical report in Finnish has been revied by PWC. The comments regarding PWC Esef review can be found at the
end of the Finnish version of financial statement (Tilinpäätös).
Management's responsibility for the ESEF financial statements
Verkkokauppa.com Oyj's management is responsible for preparing the ESEF financial statements in such a way that it
meets the requirements of Commission Delegated Regulation (EU) 2019/815 of 17 December 2018 ("ESEF
requirements"). This responsibility includes designing, implementing, and maintaining internal control relevant to the
preparation of ESEF financial statements that are free from material non-compliance with ESEF requirements, whether
due to fraud or error.
Verkkokauppa.com
empowers its customers to follow their passion by providing a wide product assortment of around
90,000 products. Verkkokauppa.com Oyj serves its retail and corporate customers through
its webstore, megastores, kiosk and network of collection points as well as fast deliveries and
various services. As Finland’s most popular and most visited domestic online retailer, its deliveries
cover around 75 percent of the Finnish population within the next day. The Company has four
megastores: in Oulu, Pirkkala, Raisio, and Helsinki, where its headquarters is also located.
Verkkokauppa.com employs more than 750 people and its shares are listed on the Nasdaq
Helsinki stock exchange with the ticker VERK.
linkedin.com/company/verkkokauppa.com twitter.com/verkkokauppacom facebook.com/verkkokauppacom/ instagram.com/verkkokauppacom/