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2014-04-25

Verkkokauppa.com had a good start: revenue grew by 6% and operating profit improved significantly by 61%

VERKKOKAUPPA.COM HAD A GOOD START: REVENUE GREW BY 6% AND OPERATING PROFIT
IMPROVED SIGNIFICANTLY BY 61%

Verkkokauppa.com Oyj - Quarterly report (unaudited) 25 April 2014, 8:00 a.m.

1 January - 31 March 2014 in brief

* Revenue was 60.6 (57.1) million euros, growth 6.1%
* Operating profit was 2.1 (1.3) million euros, growth 61%
* Operating profit was 3.5% of net sales (2.3%)
* Net profit was 1.3 (1.0) million euros
* Earnings per share were 0.23 (0.20) euros
* Trading in the shares of Verkkokauppa.com Oyj commenced on the NASDAQ OMX
First North Finland marketplace on 4 April 2014.
* Non-recurring items relating to the initial public offering decreased net
profit. The non-recurring initial public offering costs totalled 0.3
million euros in financial costs in 1-3/2014 and are estimated to be
approximately 1.6 million euros in 4-6/2014.

BUSINESS OUTLOOK

Verkkokauppa.com Oyj's business operations are estimated to develop positively
within a medium-term time frame. The management believes that the Company
will grow its market share further. Proceeds received from the share issue
improve the Company's equity ratio and enable it to continue growth projects
according to the Company's strategy. Nevertheless, the business prospects
include uncertainties, especially due to macroeconomic development. Finnish
GDP is expected to grow between 0.3% - 1.0% during 2014. According to the
market research company GfK home electronics market has grown 0% 1-2/2014 in
Finland.

CEO SAMULI SEPPÄLÄ'S REVIEW

Finland's largest and most-visited Finnish online retailer, Verkkokauppa.com,
revenue grew by 6.1% and operating profit increased significantly by 61%. The
sales margin stayed at a competitive level and fixed costs remained low,
which resulted in market share growth in a competitive market. Operating
profit was strengthened by a strong increase in sales of small and major
domestic appliances (SDA and MDA) and increase in provisions from customer
financing. There were more sales days in March 2014 than a year ago due to
Easter, which in 2013 was in March. Cash flow was negative, but this is
typical for first quarter.

The NASDAQ OMX First North listing strengthened the financial position of the
Company, which enables the development of customer finance services and the
introduction of new product categories. The larger supply and wider use of
customer financing services in particular may increase sales margins in the
future. As retailing is going online, customers are looking for new types of
services. Company sees that there are more need for new types of flexible
logistics services and other services, instead of opening new stores.

The retail evolution is continuing in Finland. Retail business is moving
online and is growing in almost all product areas. Current developments are
significantly influencing traditional retail business models impacting their
sales and profitability. The Company's market position as the largest and
best-known retail store online sets up a good starting point for the Company
to utilize the ongoing changes, where traditional retail businesses are
forced to make significant changes especially in their bricks-and-mortar
store operations.

Verkkokauppa.com aims to utilize this current development and its head start
in online business to further take market share from traditional retailers,
while at the same time introducing new services and products as well as
increasing profitable sales.

FINANCIAL TARGETS

The Company strives to grow faster than its operating market and targets an
annual revenue growth of over 10 per cent in the medium-term. The Company's
objective is to improve its EBITDA margin in the medium-term compared to the
level in 2013. The Company strives to secure a sufficient equity ratio to
finance growth of its business and targets to maintain an equity ratio of
over 25 per cent taking into consideration the nature and seasonality of the
Company's business.

-------------------------------------------------------------------------------------------------
|Key ratios 1-3/2014 1-3/2013 1-12/2013 |
| |
|Net sales, € thousands 60,558 57,053 238,013 |
|EBITDA, € thousands 2,336 1,536 7,526 |
|EBITDA, % 3.9% 2.7% 3.2% |
|Operating profit, € thousands 2,111 1,311 6,640 |
|Operating profit, % of net sales 3.5% 2.3% 2.8% |
|Net profit, € thousands 1,344 1,022 4,204 |
|Equity ratio, % 28.6% 11.0% 14.6% |
|Equity ratio, % (including subordinate debt) 28.6% 20.7% 22.5% |
|Return on investment, % 45.9% 56.4% 48.3% |
|Net gearing, % -86.3% 16.1% -196.9% |
|Earnings per share (EPS) revised by share split, euros 0.23 0.20 0.80 |
|Earnings per share (EPS) revised by share split (diluted), euros 0.23 0.15 0.65 |
|Number of shares at end of period 6 690 855 10 490 5 255 490 |
|Average number of shares at end of period revised by share split 5 733 945 5 237 454 5 250 981 |
|Number of shares at end of period revised by share split 6 690 855 5 255 490 5 255 490 |
|Number of personnel* at end of period 444 393 446 |
| |
-------------------------------------------------------------------------------------------------
*The number of personnel includes both full and part time employees

REVENUE AND PROFITABILITY DEVELOPMENT

Verkkokauppa.com Oyj's revenue grew by 6.1% in January-March 2014 compared to
the same period last year. Revenue growth was 3,505 thousand euros, being
cumulatively 60,558 (1-3/2013: 57,053) thousand euros. Profitability
developed positively due to a favourable sales mix and sales increases in TV,
gaming (especially consoles), and both small and major domestic appliances
(SDA and MDA).

The demand for home electronic devices has been satisfactory despite the
current market development. According to research by GfK, the market growth
was 0% in 1-2/2014.

Personnel costs were 4,374 (4,021) thousand euros, with growth being 8.8%.
Working hours increased by 7.4% during the period. Personnel costs grew
slightly faster than revenue and working hours due to new enforcement
recruits in purchasing and in internal technology departments. Other expenses
were 3,427 (3,307) thousand euros during the period in 2014, with growth of
3.6%.

The operating profit was 2,111 (1,311) thousand euros in January-March 2014
and net profit was 1,344 (1,022) thousand euros. Earnings per share were 0.23
(0.20) euros. Earnings per share in 2013 have been adjusted to make them
comparable to the share issue in May 2013 (i.e. share split).

Financing expenses include 339 (146) thousand euros in non-recurring items
related to preparations for listing on the First North marketplace.

FINANCE AND INVESTMENTS

Operating cash flow was -8,183 (-5,312) thousand euros in the 1-3/2014. The
negative change in operating cash flow resulted mainly from accounts payable
payments. Ordinary seasonal fluctuations are reflected in cash and cash
equivalents, cash flow and accounts payable, which usually reaches the
highest point at year-end and the lowest point at the end of the second
quarter.

Capital expenditures were 111 (31) thousand euros, mainly comprising store and
office furniture and equipment in January-March 2014.

Financing expenses include 339 (146) thousand euros in non-recurring items
relating to the listing.

Rite Internet Ventures Holding AB exercised the option granted to it to
subscribe for 1 435 365 new shares of the Company. The proceeds amounted to
5.6 million euros, of which the Company used 3.0 million euros to repay
capital loans to Rite Internet Ventures Holding AB. In addition the Company
repaid a 1.3 million euros capital loan to Samuli Seppälä.

PERSONNEL, THE BOARD AND ADMINISTRATION

The number of personnel was 444 (393) at the end of March 2014. The personnel
increase was 51 employees compared to the end of March 2013. The number of
personnel includes both full and part time employees.

The Board members were Christoffer Häggblom, Peter Lindell, Kai Seikku, Henrik
Weckström and Samuli Seppälä until the Annual General Meeting held on 13
March 2014. In the Annual General Meeting held on 13 March 2014 the board was
re-elected and Mikael Hagman and Antti Tiitola were elected as a new members
to the Board. Christoffer Häggblom was re-elected as the Chairman of the
Board and Samuli Seppälä continued as the company's Chief Executive Officer.

RISKS AND UNCERTAINTIES

Verkkokauppa.com Oyj's risks and uncertainties reflect the market and general
economic trends, demand for home electronics, business environment, and
competition. The company's business operations are also influenced by risks
and uncertainties relating to for example business strategy, investments,
procurement and logistics, information technology, and other operative risks.
The aforementioned risks and uncertainties may affect the company's
operations, financial position and performance both positively and
negatively. Risks and uncertainties have been presented in more detail in the
Offering document published on 21 March 2014.

Information on Verkkokauppa.com Oyj's legal dispute with Teosto ry is
presented in the financial statements of 31 December 2013 and in the Offering
document published on 21 March 2014.

ANNUAL GENERAL MEETING

The Annual General Meeting was held in Helsinki on 13 March 2014. The
financial statements for the year 2013 were approved and the Board Members
and the CEO were discharged from liability. It was decided to pay a dividend
of 0.04 euros per share, totalling 210 thousand euros.

The Annual General Meeting authorized the Board to resolve on the share
issues. According to the authorization, the Board may issue no more than 1
500 000 new shares in one or more instalments and the Board may resolve upon
price-related matters and payment periods. The Board has authorization to
decide upon all other share issue-related matters according to the Finnish
Limited Liability Companies Act. The authorization is valid for one year,
until 13 March 2015. The authorization does n...

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