Komplett : Annual Report 2020

ANNUAL REPORT 2020

Komplett AS / Komplett Group

Annual report 2020 Komplett Group.pdf

Signers:

Name		Method		Date
Thoresen, Lars Bjørn
	BANKID		2021-03-13 15:19 GMT+1
Koss, Jennifer Geun		BANKID		2021-03-14 08:50 GMT+1
Selte, Nils Kloumann		BANKID_MOBILE		2021-03-14 14:28 GMT+1
Johansen, Camilla		BANKID_MOBILE		2021-03-14 19:57 GMT+1
Odden, Anders		BANKID_MOBILE		2021-03-16 15:15 GMT+1
Lunder, Jo Olav		BANKID_MOBILE		2021-03-16 23:14 GMT+1
Olaussen, Lars Olav		BANKID_MOBILE		2021-03-17 09:00 GMT+1
Hagen, Carl Erik		BANKID		2021-03-19 10:12 GMT+1

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ANNUAL REPORT 2020

Group vision and business concept

Komplett Group is a leading player in the eCommerce segment for electronics in Scandinavia. The company headquarter is situated in Sandefjord, Norway, but Komplett also holds offices in Stockholm and Gothenburg to serve the Swedish and Danish markets. The Group is selling a broad range of products and services within categories such as components, gaming, brown goods, peripherals, white goods & home, handheld & accessories and PC for consumers, the business market and the public sector. In total, eight different web shops constitute the main sales channel together with 20 physical retail stores under the Webhallen brand.

The vision of Komplett Group is to be the «the obvious choice» for its for customers, suppliers, employees, the environment and our investors through competitive prices, great customer service, efficient supply chain and being the sole link between the producers and the end customers.

The market share of Komplett Group varies between different segments and markets. The Group has a particularly strong position in the B2C segment (Komplett and Webhallen) but is also well positioned in the B2B segment (Komplett Bedrift and Komplett Foretag) and in long term and large-scale distribution contracts through the Itegra brand. The Group has a significant competitive edge through superior customer satisfaction, a very efficient logistics operation shared for all three segments and lower costs than most business peers. As a result, Komplett is perfect positioned for continued profitable growth in the ongoing change of consumer and business shopping behavior from physical retail stores to eCommerce.

Financial results

Covid-19

The Covid-19 virus had significant impact in 2020 in many areas of the society. The freedom to travel and move around were restricted. Schools, offices, shopping centers etc. were forced to close down. The level of restrictions varied through the year, where the hardest restrictions were at the beginning of the period from 12 March.

For Komplett Group the Covid-19 virus had positive effect

Sandefjord, 01.03.2021

in total revenue driven by several factors. The two most important factors were the restrictions of freedom to move around and to visit shopping centers and physical stores. This has accelerated the shopping behavior trend from physical to ecommerce stores. The other was the limitation to spend money on restaurants, cinemas, theatre and other such services. This effect has led to a very high growth in PC, gaming and other home entertainment product categories during the year. Both factors were positive for Komplett and ecommerce trade. The impact on total revenue for Komplett Group is estimated to be in the area of MNOK 500-600. Further the impact has continued into 2021 is still present at the time of the signing of the financial statement for 2020.

It is important for the Board of Directors to emphasize that the negative effect of the virus in the society is huge and finds it difficult to be happy about the positive Komplett effect. However, the Board of Directors are happy about how the administration has handled the pandemic crisis and in addition done several improvements in the operations during difficult circumstances.

Financial results

Total Group revenues amounted to MNOK 9 865 in 2020, compared with MNOK 7 543 in 2019 an increase of MNOK 2 322 and equaling 31 per cent. The growth is driven by the covid-19 effects mentioned above, but also by improved operations in all areas, better sales campaigns, improved product offering and significant distribution agreements.

Gross margin (Total revenue - Cost of goods) increased from 12.7 per cent in 2019 to 13.4 per cent in 2020. The increase of 0.7 per centage points is strong and is despite a significant growth in Itegra with lower margins. The improvement is driven by both better operations, better campaigns and better terms from the suppliers.

Personnel expenses increased from MNOK 422 in 2019 to MNOK 465 in 2020, which is an increase of 10 per cent. Operating expenses without cost of goods increased from MNOK 912 in 2019 to MNOK 1 042 in 2020, which is an increase of 14 per cent. The increase is driven by growth in total revenue and projects to improve operations going forward. However, the total revenue increased by 31 per cent which proves significant improved efficiency and great economy of scale.

Komplett AS, Østre Kullerød 4 / P.O. Box 2094 / 3202 Sandefjord /Org.nr. 980 213 250 / komplett.com

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Operating result (EBIT) increased to MNOK 276 from MNOK 48 in 2019. Profit before tax amounted to MNOK 253 in 2020 from MNOK 26 in 2019. The profit is, in addition to the Covid-19 impact, driven by improved operational efficiencies in all areas. During 2020 a number of improvement activities has been performed to increase the competitiveness of the Group, where of improved gross margin is the most important going forward.

Parent company

For the parent company Komplett AS the profit before taxes was MNOK -8 in 2020, down from MNOK 18 in 2019. The reduction is related to changes in the financial items.

Financial position

The Group has continued to strengthen the financial position during 2020. The Group has a bank credit facility of MNOK 584 where of MNOK 48 was utilized at the end of 2020. With a cash position of MNOK 54 the total liquidity reserve was MNOK 590 at the end of 2020. Comparable liquidity reserve in 2019 was MNOK 178 including a credit facility of MNOK 500.

Including customer trade loans (Trade receivables from deferred payment arrangements) the net interest bearing dept in 2019 was MNOK 159. In 2020 the net cash position was MNOK 158 and no net interest bearing dept. The Equity ratio at the end of 2020 was 33.5 per cent compared with 26.2 per cent at the end of 2019.

Cash flow development

Cash flow was strong in 2020 compared to earlier years. Reported cash flow from operations was MNOK 472 up from MNOK 101 in 2019. The improvement was driven by the increase in revenues, improved operating margin and positive effect on working capital due to higher inventory turnover and increased accounts payable. Cash flow from finance activities was MNOK -430 compared with MNOK -- -151 in 2019 due to payment of loans of MNOK -324, driven by the positive cash flow from operations. As a result, net cash flow was positive MNOK 4 compared with MNOK 6 in 2019.

Sandefjord, 01.03.2021

sales price of the products against the development in purchase price including currency changes and by buying the currency at the same time the product arrives the warehouse. This currency risk is an industry risk, and not a specific Komplett risk.

This strategy of matching and changing sales prices combined with high level of product turnover has historically shown to be the best mitigation to reduce currency risk.

New suppliers and business customers are credit evaluated by the Group's own credit risk department. The risk on sales to end consumers is mitigated by limiting the average order size and by customer prepayment.

Liquidity risks

Komplett continuously work to improve working capital focusing on inventory management, current assets and liabilities. Improved working capital and improved profitability shall contribute to strengthen the group's liquidity. At the end of 2020 the short-term interest bearing dept was MNOK 48, which is low related to the profit generated by the year.

Market risks

Komplett Group provide products to consumers, businesses and the public sector in Scandinavia. The demand situation in the countries in which the Group sells its products is correlated with the general economic development of each country. The Group expects continued growth in the relevant markets in 2021, particular in eCommerce due to the structural shift from traditional stores and continued impact from Covid-19. However, it is uncertain what the market effect will be post Covid-19. One effect might be that more of the consumption will shift back from physical products to services.

The Board of Directors would however like to state that significant uncertainty exists in the assessment of the future development.

Risk factors

Financial risks

Komplett is exposed to financial risks on different areas including currency risks. The aim is to mitigate the financial risks as much as possible. The Group's current strategy does not imply the use of financial instruments. The currency risk is managed on an ongoing basis to match the

Organization

At the end of 2020 the Group had 647 employees compared with 628 at the beginning of year. This is corresponding to 529 FTEs on average in 2020.

Komplett is, during certain periods, using contracted personnel mainly within warehouses, logistics and

Komplett AS, Østre Kullerød 4 / P.O. Box 2094 / 3202 Sandefjord /Org.nr. 980 213 250 / komplett.com

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customer service. At the end of 2020, number of contracted or hired workers was engaged by the Group amounted to 261. The working environment is considered to be healthy among these hired workers. Komplett has since the end of 2019 introduced a tool to follow the working environment on a weekly basis. The tool is based on input from employees and is evaluated on an ongoing basis both by employees and managers in addition to the Executive management. Further, the tool is based on a broader system for following up on health, safety and environment.

Sick leave in 2020 was 4.7 per cent in 2020 an increase compared with 2019 primary due to covid-19. During 2020 no injuries were reported resulting in long term sick leave. There has not been any material damage during the year.

Activities on gender equality and non- discrimination

The Group has high priority on gender equality and non- discrimination measures. Komplett has developed a reporting structure for the status on gender equality, ethnical equality and dignity.

Sandefjord, 01.03.2021

Average salary was on average 13 percent lower for female employees in Komplett Group in 2020 compared with male employees. For Komplett and Webhallen respectively, average salary was on average respectively 2,4 percent higher for female employees and 20,0 percent higher for male employees. The latter largely driven by gender distribution in senior leadership positions at Webhallen. The Executive Management Team has initiated a Group wide measure to strengthen gender equality- and diversity efforts through conducting a gender gap audit, developing intervention plan and institutionalizing an annual gender gap monitoring. The company's personnel policy is to be gender equal.

The Board of Directors are not aware of any discrimination based in career development, salary, recruitment due to age, disabilities, ethnicity, nation of origin, sexual orientation, religion or view of life. Furthermore, the Board is not aware of any harassment in the business operations of the Group.

The Group does not perform any science end development in addition to development activities connected to technical solutions and functionality on the Group's webstores and infrastructure

The current gender distribution in Komplett Group is 75 per cent men and 25 per cent women. This imbalance varies between departments and is largely due to the proportion of male employees in the logistics department and warehouses. In parts of the company where warehouse activity is less extant, the distribution is more balanced. A total of 28 per cent are women in the Komplett Group leadership positions.

Women compose 26 per cent of full-time employees and 23 per cent of part-time employees. On employees with overtime and inconvenient workhours 23 per cent was comprised by women in 2020. The average weeks of parental leave taken by women was 43 in 2020 and average weeks parental leave among men was 17. On the HR development training and courses 33 per cent of the participants were women in 2020.

The parent company has two female Board members.

The composition of employees of the Group shall if possible, reflect the general population in the area of operation. Employees from 15 nationalities worked in the different businesses of the Group in 2020.

The environmental impact

The Komplett Group has webshops in Norway, Sweden and Denmark, and is certified under ISO 14001:2015 since 2011.

The environmental impact from the business operations of Komplett is estimated to be what is expected to be normal for these kinds of businesses. Komplett is compliant to relevant environmental acts and regulations and through partners the Group handle outdated ICT products and toxic waste.

For further information refer to Sustainability Report 2020 available on group web site www.komplettgroup.com.

CSR reporting

Komplett Group shall at all times comply with the regulatory requirements and follow the current law regulations for our products and services. The group shall be professional in relations with customers and business partners, which assumes good quality in every part of the organization. To meet the future needs and to ensure the quality of service at the right level, the Group shall focus on continuous improvement of processes and development of

Komplett AS, Østre Kullerød 4 / P.O. Box 2094 / 3202 Sandefjord /Org.nr. 980 213 250 / komplett.com

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