Annual Report • Apr 5, 2018
Annual Report
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Kamux Corporation Annual Report
WWW.KAMUX.COM
At the end of the year, we served our customers in 53 showrooms.
The Annual Report is published in Finnish and English. In case of doubt, the Finnish version is authoritative
| Kamux's year 2017 | 4 |
|---|---|
| KAMUX IN 2017 | |
| Kamux's business model | 8 |
| Our year in numbers | 10 |
| CEO's review | 12 |
| Operating environment | 14 |
| Strategy and strategy implementation | 16 |
| Business in 2017 | 20 |
| Initial public offering | 22 |
| Kamux as an investment | 24 |
| CORPORATE RESPONSIBILITY | |
| Materiality analysis | 26 |
| Material responsibiity themes | 27 |
| CORPORATE GOVERNANCE | |
| Corporate governance statement | 30 |
| Board of Directors | 32 |
| CEO and Management Team | 36 |
| Remuneration report 2017 | 40 |
| FINANCIAL STATEMENTS | 44 |
KAMUX'S YEAR 2017
The year 2017 included significant milestones for Kamux. We were listed on the Nasdaq Helsinki main market and continued our growth and our journey to become the leading retail chain specializing in used cars sales in Europe. We expanded our showroom network and also our organization in the areas of internationalization.
• Official opening of Kamux's showroom in Nedderfeld, Germany, which opened its doors in December 2016.
• Finland's 37th showroom opened in Länsikeskus, Turku. • Kamux opened an online store in Finland during 2017. The consumer can now buy a car directly online. • Tero Törmänen started as Kamux's Purchasing Director and Management Team member.
• Olli Kilpi was appointed as Director of International Business and Management Team member.
• Kamux was listed on the Nasdaq Helsinki main market. The company raised EUR 20.5 million in gross proceeds in the share issue. • Finland's 38th showroom
was opened in Iisalmi.
showroom.
• An extension to the showroom in Örebro, Sweden was opened.
• A new lease was signed for Jönköping, Sweden. • The new premises, which enabled nearly tripling the size of the car selection in Jönköping, were taken into use at the start of 2018.
• Finland's 40th showroom was opened in Olarinluoma, Espoo. • The Kamux Vantaa Airport showroom was expanded by 1,300 square meters, bringing additional space for the passenger car and utility vehicle selections.
• Kamux was no,1 in the used car dealership category in the Auto Bild Finland Service 1 purchase study. • During Q3 2017, a quarterly record was achieved in the revenue, profit and number of used cars sold. Record revenue was also reached in integrated services.
• A utility vehicle point was opened in the Kuopio showroom.
• Oliver Michels was appointed as Country Director, Germany and Managing Director of Kamux Auto GmbH. Michels started in his position on January 1, 2018.
• A Training Manager in charge of training sales personnel started working in Finland. Kamux is increasingly investing in the training of its sales personnel.
• The first Kamux Green was opened in the Konala, Helsinki showroom. The shop-in-shop concept houses a
collection of hybrid, electric, gas and ethanol-powered cars in one location. • Finland's 41st showroom was opened in Kaarina,
• Mikko-Heikki Inkeroinen was appointed as Kamux's Chief Digital Officer and Management Team member. Inkeroinen started in his position on February 24, 2018.
• Sweden's 10th showroom was opened in Karlstadt. • Robin Toss was appointed as Country Director, Sweden. He started in his position on January 1, 2018. • The decision to open Kamux's training center in 2018 was made. The training center will enable training and further training to be tailored even better and according to each employee's needs. • During 2017, we recruited 175 new employees for Kamux in total for full-time and permanent positions.
Our vision is to be the leading retail chain specialising in used car sales in Europe.
YEAR 2017
To become the leading retail chain specialising in used car sales in Europe.
+ A wide selection of competitively priced used cars + Efficient car inventory management enables Kamux to acquire high volumes of used cars + Diverse selection of sourcing channels
+ A key component of Kamux's pricing model for both sourcing and sales + Minimizes depreciation in the value of its car inventory and the amount of capital tied up in the inventory
+ The majority of Kamux's operating expenses adapt, which mitigates the effect of fluctuations in revenue on Kamux's profitability + Kamux's operating expense model adapts to customers' changing purchasing habits
+ Kamux aims to increase the penetration rates of current integrated services and introduce new integrated services in the future.
ATTRACTIVE PRICING FOR CUSTOMERS – AFFORDABILITY Kamux offers used cars for prices that are attractive to customers
RELIABILITY Kamux is a reliable partner for its customers
BEST CUSTOMER EXPERIENCE Kamux offers the best customer service in the market
Enable serving the customer comprehensively
FINANCING + Quick and effortless financing through installment plan packages
+ Approximately 45% of Kamux's customers purchase financing
INSURANCE + Affordable comprehensive car insurance with If's vehicle insurance
KAMUX PLUS + A liability extension for possible car repair expenses
HOME DELIVERY + Delivery of the car to the customer's home or workplace
+ Nearly all Kamux's customers search for information on cars through digital channels before making a purchase decision
+ Internet is Kamux's most important marketing channel and Kamux has an online store through which the consumer can buy a car directly
+ Kamux's entire car selection – including cars from different countries – is available to customers at all of Kamux's showrooms
+ Over 25% of Kamux's sales are cars located in other showrooms
+ The car is delivered to the showroom selected by the customer
+ The home delivery service is valued by customers
+ Customers are served by an extensive network of showrooms combined with an online presence
›KAMUX WANTS TO BE A TRENDSETTER IN CAR SALES AND A FORERUNNER IN THE DIGITALIZATION OF THE BUSINESS
Over 160,000 sold cars between 2003 and 2017
* Operating profit adjusted for the costs related to the initial public offering, special items related to strategy planning, strategy implementation, geographical expansion and a cash settled share-based payment in the comparison period, totaling EUR 2.4 million for 1-12/2017 (1-12/2016: EUR 2.3 million).
Kamux has sold over 160,000 cars during it's history.
Our revenue grew 12.4 percent since last year.
on average by 28.3 percent between the years 2015-2017.
| EUR million | 2017 | 2016 | Change, % |
|---|---|---|---|
| Revenue | 454.9 | 404.8 | 12.4% |
| Gross profit | 53.8 | 49.2 | 9.3% |
| as percentage of revenue, % | 11.8 % | 12.2% | |
| Operating profit (EBIT) | 16.2 | 15.7 | 3.6% |
| as percentage of revenue, % | 3.6% | 3.9% | |
| Adjusted operating profit* | 18.6 | 18.0 | 3.4% |
| as percentage of revenue, % | 4.1% | 4.4% | |
| Revenue from integrated services | 22.8 | 19.3 | 18.6% |
| as percentage of revenue, % | 5.0% | 4.8% | |
| Number of cars sold | 40,957 | 36,290 | 12.9% |
| Gross profit per sold car, EUR | 1,314 | 1,357 | -3.1% |
| Sales growth of like-for-like showrooms, % | -4.9% | 12.2% | |
| Net debt | 7.3 | 30.9 | -76.5% |
| Inventories | 55.2 | 47.9 | 15.1% |
| Inventory turnover, days | 46.8 | 43.1 | 8.8% |
| Capital expenditures | 1.2 | 2.1 | -42.5% |
| Average number of employees during the period | 418 | 343 | 21.9% |
| Return on equity (ROE), % | 26.6% | 43.8% | |
| Return on capital employed (ROI), % | 17.2% | 22.5% | |
| Equity ratio, % | 57.2% | 36.9% | |
| EUR million | 2017 | 2016 | Change, % |
|---|---|---|---|
| Revenue | 454.9 | 404.8 | 12.4% |
| Gross profit | 53.8 | 49.2 | 9.3% |
| as percentage of revenue, % | 11.8 % | 12.2% | |
| Operating profit (EBIT) | 16.2 | 15.7 | 3.6% |
| as percentage of revenue, % | 3.6% | 3.9% | |
| Adjusted operating profit* | 18.6 | 18.0 | 3.4% |
| as percentage of revenue, % | 4.1% | 4.4% | |
| Revenue from integrated services | 22.8 | 19.3 | 18.6% |
| as percentage of revenue, % | 5.0% | 4.8% | |
| Number of cars sold | 40,957 | 36,290 | 12.9% |
| Gross profit per sold car, EUR | 1,314 | 1,357 | -3.1% |
| Sales growth of like-for-like showrooms, % | -4.9% | 12.2% | |
| Net debt | 7.3 | 30.9 | -76.5% |
| Inventories | 55.2 | 47.9 | 15.1% |
| Inventory turnover, days | 46.8 | 43.1 | 8.8% |
| Capital expenditures | 1.2 | 2.1 | -42.5% |
| Average number of employees during the period | 418 | 343 | 21.9% |
| Return on equity (ROE), % | 26.6% | 43.8% | |
| Return on capital employed (ROI), % | 17.2% | 22.5% | |
| Equity ratio, % | 57.2% | 36.9% | |
| Earnings per share, basic, EUR | 0.30 | 0.29 | 2.5% |
lenging market situation.
When looking at Kamux's operating countries, 2017 was a multifaceted year. New operators have entered the Finnish market, and some of the car industry's established names have become more active in used car sales. We are responding to this challenge by investing in the training and competencies of our personnel. A Training Manager started working at Kamux in 2017 and in February 2018 we opened the Kamux training center, allowing us to provide more focused and tailored training for all our sales personnel.
In Sweden, we finetuned our processes and focused on building the right kind of skills. The right implementation of the business concept improved Sweden's result in 2017. In Germany, we are still building our operations, and the implementation of Kamux's ways of working is ongoing. We hired a Country Director for Germany to complement Kamux concept with local market expertise.
Kamux's operating model is efficient, agile, and flexible. We are well positioned in our home market, and Kamux's culture provides a clear competitive advantage. We will continue our work in 2018 and focus on profitable growth according to our strategy. We will open new showrooms, develop the skills of our personnel and invest in the digital customer experience. Inventory management will continue to play a key part in our operations along with competitive pricing. Our vision is to be the leading retail chain specializing in used car sales in Europe.
JUHA KALLIOKOSKI CEO, Kamux Corporation
K AMUX HAS A UNIQUE concept and business model, proven by the company's strong, organic and profitable growth. We want to renew used car sales and serve customers better than traditional sales channels. We are a reliable partner for our customers, seeking to offer the best overall service and pricing that is attractive to customers. Factors important for our success include the ability to purchase the right cars for the right price
and low fixed costs. We also want to reward our sales personnel for clos-
ing sales.
STOCK EXCHANGE LISTING WAS ONE OF THE YEAR'S MILESTONES One milestone of the year was our listing on the Nasdaq Helsinki main market, resulting in over 1,200 new shareholders for the company. The listing was an important step for us on our journey towards becoming the leading retail chain specialising in used car sales in Europe. The status as a listed company has increased awareness of the company, and increased interest in Kamux as an employer both in Finland and abroad. Our goal is to be a trendsetter and pioneer in used car sales and to renew
industry practices.
OUR GROWTH CONTINUED
Our revenue, operating profit and number of employees increased, and our customer satisfaction remained high. Our profitability decreased slightly due to the relative decrease in gross profit, increase in operating expenses and operating profit adjusting items mainly related to the listing and strategy planning and implementation. Our revenue grew by 12.4 percent from the previous year and the operating profit margin was 3.6 percent. The profit growth was mainly due to the opening of new showrooms. We opened six new showrooms during the year and expanded four showrooms. In addition, in October, we opened a Kamux Green shopin-shop in the Konala showroom to respond to consumers' interest towards alternative fuel cars.
As proof of successful work for our customers, we were number 1 in the used car dealership category in the Auto Bild Finland Service 1 purchase study. We want to be a service-oriented and easily approachable car dealership where it is easy and pleasant to do business. The number one position in the mystery shopping based purchase study demonstrates that we have fulfilled our promise successfully.
During the year, we strengthened our company's management. With capable leadership, we support the company's growth. We also focused strongly on developing and unifying our processes and codes of practice as well as deploying them with our personnel and partners.
Nearly all of Kamux's customers use digital channels to search for cars. We want to be a trendsetter in car sales and a forerunner in digitalization in the industry. In February 2017, we opened an online store in Finland and at the end of the year, we appointed a Chief Digital Officer to lead the company's digital development.
The success of 2017 was the result of hard work. The year was extraordinary, marked by the question of car taxes connected to the Ministry of Transport and Communications' road transport report, published at the start of the year in Finland as well as the fuel discussion that took place throughout the year. These resulted in uncertainty among consumers and increased inventory levels, which affected pricing and the competitive landscape. On the other hand, the boost in the economy has strengthened consumers confidence in the future, particularly at the end of the year. Due to its operating model, Kamux has managed well in a chal-
2017 was a year of change and growth for Kamux. Our key accomplishments of the year were profitable growth, listing, strengthening the company's management, developing processes and investing in training our personnel.
The development and growth of the used car market is affected most by the general economic situation as well as the development of the size of the population and urbanization. In recent years, the general economic situation has had a positive effect, which is expected to continue. There has been an observable change in consumer behavior and willingness to own a car in recent years. However, different sharing economy models and new ways of transport are expected to have a minor impact on used car sales. There is political discussion around possible emission restrictions and bans, car or fuel taxing and increased minimum safety requirements, which may affect the development of the used car market, if realized.
Kamux's operating countries had different market situations in 2017. In Finland, the year was extraordinary and quite challenging for the car sales industry. The year was marked by the question of car taxes connected to the Ministry of Transport and Communications' road transport report at the start of the year as well as the fuel discussion that took place throughout the year. These created temporary uncertainty among consumers, and inventory levels in the industry grew, which affected pricing and the competitive landscape. On the other hand, the boost in the economy has strengthened consumers confidence in the future, especially at the end of the year.
In Sweden, the used car market saw a slight decline during 2017. However, Kamux increased its revenue and improved its profitability. The Swedish market is different from the Finnish market, as a large part of used car sales takes place between consumers. There is no similar national used car dealership in Sweden. Kamux has only approximately under 0.5% market share in Sweden and hence there is plenty of growth potential.
During the year, there was discussion in the German media around diesel emissions and limiting the use of diesel cars of older emission standards in the centers of certain big cities, where air quality is a concern. In 2017, diesel cars in Germany totaled approximately 15 million, and accounted for 30% of all private cars. The number of cars powered by energy other than gas or diesel accounted for less than two percent of the market in 2017.
1 Kamux's market regions include several different factors that strengthen and maintain the demand for cars. The number of registered cars has increased in all Kamux's markets since 2010, which increases the potential trade-in car stock. In Finland and Sweden, distances are long and the population is relatively small, which weakens the competitiveness of public transport outside of large cities compared to driving. In Germany, demand for cars is supported especially by the relatively long commuting distances and the popularity of commuting by car.
It is estimated that the amount of money spent on used cars is typically among the five largest categories of household consumption in all of Kamux's markets. The decrease in the average household size also supports demand for cars in Kamux's markets.
> Kamux has a professional business model focused on used cars retail, which the company develops continuously. Kamux is able to offer its customers a wide selection of competitively priced used cars and integrated services, serving consumer needs better than traditional sales channels.
3 One of the most important consumer trends has been the desire of consumers to make buying easy and convenient. Therefore, consumers selling their used cars may also be willing to pay extra for a new car if they can sell their old car as easily and conveniently as possible at the same time. This is believed to benefit online car dealers and brokerage sites, but also the procurement operations of car dealers that acquire used cars, if consumers find selling to them easier than selling directly to another consumer. Consumers seeking ease and convenience are believed to receive added value from having all of the services they need available from the same player.
> Kamux provides a fast and justified price appraisal for a trade-in car. Consumers have provided positive feedback on the pricing of trade-in cars, for example in the purchase study conducted by Auto Bild Finland. In addition to selling and procuring trade-in cars, Kamux offers its customers integrated solutions through financing products, insurance, and Kamux Plus. The customer service concept also includes a home delivery service. Hence the customer can get all the services they need to purchase a used car from Kamux.
2 The importance of digital channels in retail has increased significantly. Since 2000, approximately three quarters of the growth in retail has come through digital channels. Consumers are increasingly using several different channels for buying individual products. The
retail customer experience of today combines traditional stores alongside online visibility. Buyers are also using the internet to seek out other customers' opinions on different players. A good customer experience and comprehensive communication are central in the operations of used car showrooms.
> Internet is Kamux's most important marketing channel. The majority of Kamux's marketing is done through digital channels. The company opened an online store in February 2017. Kamux also launched a new Code of Conduct during the year to support the creation of a first-rate customer experience.
4There is more information available to consumers nowadays on products and their sellers than ever before and, accordingly, consumers are better able to compare various alternatives. Therefore, the so-called
smart shopping trend is seen to have gained popularity. The smart shopping trend is believed to make consumers even more price-conscious and more active in comparing prices. The trend is also believed to decrease consumers' willingness to pay for what they consider to be unnecessary features, services or settings.
>The procurement of the right cars at the right prices and offering used cars for the consumer with an attractive price has a significant role in Kamux's business model. The goal of Kamux's business model is to offer customers a total service offering that serves their needs better than traditional sales channels.
Kamux's operating environment is different in different market regions. A continuous need for cars, the digitalization of car sales, and creating a seamless and high-quality customer experience will characterize used car sales in the future.
Kamux's estimate of the end user market for used cars
At the core of our strategy are continuous profitable growth, improving profitability, offering excellent customer experience and the motivation and continuous professional development of our skilled personnel. For our customers, we are a reliable partner that aims to offer the best overall service and pricing that is attractive to customers. We want to be a trendsetter in used car sales and a forerunner in the digital customer experience. Recruiting the right people and training them is an important factor in implementing the strategy.
Kamux's stock exchange listing was of strategic importance and an important step on our journey to become the leading retail chain specialising in used car sales in Europe. The trading of Kamux's shares on the Nasdaq Helsinki main market started in May. The additional visibility resulting from the listing has increased the company's recognition and transparency, thereby creating trust in Kamux among consumers, and improving the company's competitiveness.
•Opening new car showrooms and increasing sales at existing car showrooms is a part of Kamux's growth strategy.
•Growing its digital footprint is one of the cornerstones of Kamux's growth strategy.
•In Finland, Kamux focuses on improving its profitability by streamlining operations through constant development of its functions, processes and concept.
•In Sweden and Germany, Kamux focuses on growing the business while gradually improving its profitability.
•Kamux aims to utilize benefits of scale to improve profitability, for example in negotiations with external partners.
•Kamux aims to improve profitability by introducing new integrated services.
BY OPENING NEW SHOWROOMS, STRENGT-HENING THE COMPANY'S MANAGEMENT AND DEVELOPING PROCESSES AND CODES OF PRACTICE ACCORDING TO GROWTH TARGETS
In 2017, Kamux opened six car showrooms in total, five in Finland and one in Sweden. The Kamux Green shop-in-shop was also opened in the Konala showroom in Helsinki. The Kamux Green concept helps consumers easily explore alternative energy-powered cars in both the store and online channels. The utility car selections in Kuopio and Lahti showrooms were expanded along with the showrooms in Vantaa Airport and Örebro, Sweden.
To support growth, Kamux strengthened its management by appointing a Director of International Business and Country Directors in Sweden and Germany. Skilled and target-oriented management enables Kamux to reach its growth targets and implement its strategy. A Chief Digital Officer was appointed as a member of the Management Team in November to further develop and build the Kamux customer experience, marketing and digital processes.
Also other company processes and codes of practice were advanced; concept elements have been sharpened and operations have been unified. Kamux also drafted and implemented Kamux's Code of Conduct for personnel and cooperation partners.
During 2017, measures were taken in Sweden to improve profitability and efficiency of operations. The effect of said measures were reflected in the development of 2017. Sweden's result in the third quarter was positive. In Germany, the focus continued to be on uniform implementation of the Kamux concept and bestablishing our business in the Hamburg economic region.
In Finland, Kamux continued to develop, im-
As part of its investments in digital channels, Kamux opened an online store in February 2017 where the customer can purchase a used car. If necessary, the customer can use a chat service when making online purchases.
In accordance with its strategy, Kamux's goal is to introduce different integrated services to customers to improve the service portfolio. The company will continue to further develop its integrated services.
Kamux was recognized for its successful work on a first class customer experience by ranking first in the Auto Bild Finland Service 1 purchase study in the used car dealership category. The mystery-shopping based study reveals how customers evaluate and experience car dealership service. The study measured, among other things, customer service, friendliness and politeness of sales personnel, and the functionality of online services.
prove and implement processes and codes of practice. Internal processes of the Group were unified. TRAINING AND WELL-BEING OF PERSONNEL Work well-being and satisfaction is a central theme at Kamux. Kamux wants to offer its personnel tools for developing their own well-being. The HeiaHeia application was introduced to personnel in 2017 to enable them to monitor and compete in maintaining and developing their physical condition in a fun In 2017, Kamux appointed a Training Manager who started working in December. Kamux Training Center was opened in February. A training plan will be made for each year, and all Kamux employees will regularly take part in trainings. The focus of trainings is on new salespersons, as a well-executed orientation to Kamux's operating model forms a solid base for salepersons' success as well as the success and growth of Kamux. The Kamux Training Center allows training to be tailored according to each salesperson's needs and for further training to be customized better.
Kamux received the full one hundred points for friendliness of sales personnel, appraisal of tradein cars, and checking contact information. Kamux was the best of all dealerships in online services. Kamux also received particular commendation for polite service and trade-in car appraisal. The study also commended Kamux's way of assessing the needs of their customers.
to at least EUR 700 million in 2019
percent in the long term
least 30 percent of the profit for the year as dividends
way. The company wants to provide tools which the employees can use to improve their personal well-being.
In 2017 we purposefully moved towards our strategic targets.
IN FINLAND, THE REVENUE increased from the previous year's EUR 343.2 million to EUR 372.4 million in 2017. The operating profit increased correspondingly from EUR 22.2 million to EUR 23.1 million. At the end of 2017, Kamux had 41 car showrooms in Finland, compared to 36 at the end of 2016. The increase in revenue was mainly due to the opening of new showrooms.
It was a multifaceted and challenging year for Kamux Finland. The discussion around car taxes and fuels since the start of the year caused uncertainty in the market and delays in consumers' decision-making. Regardless of this, Kamux further strengthened its position in the Finnish markets.
IN GERMANY, THE REVENUE increased from the previous year's EUR 10.8 million to EUR 22.8 million in 2017. The operating loss increased from EUR -0.7 million to EUR -1.9 million. At the end of 2017, Kamux had 2 car showrooms in Germany. The increase in revenue was due to the new car showroom opened in December 2016.
The focus of operations was on implemen-
IN SWEDEN, REVENUE increased from the previous year's EUR 60.9 million to EUR 73.2 million in 2017. The operating loss decreased from EUR -1.5 million to EUR -0.1 million. At the end of 2017, Kamux had 10 car showrooms in Sweden. The increase in revenue was due to the opening of a new showroom as well as measures taken in Sweden to develop processes.
The year 2017 was a turning point in Sweden. Clarifying the operating model and corrective measures were begun in Sweden at the end of 2016 and completed at the end of 2017. The
Due to its customer centric business model, Kamux can quickly react to different market situations and managed well in a challenging market situation. On the other hand, the boost in the economy has strengthened consumer confidence in the future, particularly during the later part of the year.
Competition in Finland increased and new players specialized in the sales of used cars entered the market. New car dealerships became interested in the used car market. The competitive landscape has also affected recruitment. Kamux aims to increasingly invest in the training and skills development of its personnel in the future.
ting Kamux's concept and ways of working to the new market. We continue this work in every area. Best practices have succesfully been implemented for example in purchasing and marketing. The work continues in the coming years while we continue to grow in Germany. One key success factor is right and successful recruitment.
operating model is aligned with the Kamux concept and takes into consideration the particular characteristics of the market. Attention has been paid to recruiting the right type of expertise in Sweden, and resources are aligned with the market situation and Kamux's targets. Improvement measures have also been taken with regards to inventory and different internal processes. The results started to show during 2017, and during the third quarter 2017 Sweden achieved a positive operating profit. Sweden also returned to a growth path in 2017.
Kamux's concept is based on professional procurement and sales of used cars, low fixed costs, rapid inventory turnover and sales of integrated services to the customer. Kamux's reporting segments are the geographical regions of Finland, Sweden and Germany.
THE OBJECTIVE OF THE LISTING WAS to support Kamux's growth strategy and internationalization, as well as to increase Kamux's visibility in Finland and abroad, among the public and as an employer. The initial public offering (IPO) was an important step on the journey towards becoming the leading industry player in Europe.
Trading on Kamux's shares started on May 12, 2017 on the pre-list of Nasdaq Helsinki and on the main market on May 16, 2017. Kamux received gross proceeds of approximately EUR 20.5 million in the IPO. In addition to the issuing of new shares, the IPO consisted of the sale of Intera Partners' and certain other Kamux shareholders' shares.
SHARES WERE OFFERED to private individuals and entities in Finland, Kamux's employees and institutional investors in Finland and internationally. Kamux's IPO and growth story interested investors, and the IPO was oversubscribed. The final subscription price of the IPO was EUR 7.20 per share, and the listing resulted in 1,200 new shareholders for the company. The total amount of shares, excluding treasury shares increased to 39,987,294 due to the listing.
"I FOUNDED KAMUX IN 2003 and have been involved in the company's success ever since. I'm excited to continue this work in the listed Kamux. Our vision is to be the leading retail chain specializing in used car sales in Europe. Going public provides us with better opportunities to realize this vision. I want to thank all of our new shareholders for their trust and for the year 2017. We will continue to work on Kamux's growth to the benefit of our shareholders, customers and employees," said Kamux's CEO Juha Kalliokoski in connection to the listing.
KAMUX WANTS TO BE a good dividend distributor to its shareholders in the future. The company's target is to distribute at least 30% of the profit for the year as dividends.
The objective of the initial public offering was to support the growth strategy and internalization.
The stock exchange listing was an important step on Kamux's journey towards becoming the leading retail chain specializing in used car sales in Europe.
• The European used car market is large, growing and fragmented.
• The total used car market size of Finland, Sweden and Germany was estimated to amount to over EUR 100 billion at the end of 2016, according to a company commissioned study.
• According to a company commissioned study, the amount of money spent on used cars is estimated to typically be among the five largest categories of household consumption in all of Kamux's markets.
• Kamux's business model is based on professional procurement and sales of used cars, and Kamux aims to offer an overall service that serves customer needs better than traditional sales channels.
• The professional business model provides Kamux a strong foundation for growing its market share in the fragmented used car market.
• The demand is expected to remain good in Kamux's domestic market due to market characteristics such as long geographical distances, weaker competitiveness of public transport outside the largest cities and decreasing average household size.
• Since launching its operations, Kamux has enjoyed strong growth based on increased sales at its existing car showrooms, opening of new car showrooms and a good customer experience.
• Kamux's revenue grew on average by approximately 28.3 percent during the years 2015-2017. • Kamux recognizes the importance of digital channels in used car sales and aims to be a forerunner in the field.
• Kamux's international growth is directed at mar-
• Kamux believes that its management's knowledge of the industry and experience, together with skilled personnel, provide it with a competitive advantage in the used car business.
• Kamux has a committed and experienced Management Team with extensive experience in the used car business. The management has the ability to make quick decisions and, therefore, Kamux is able to quickly react to any changes occurring in the market and take advantage of them.
• Kamux considers its professional, motivated and committed personnel to be one of its most important strengths and actively seeks to improve its personnel's competence, commitment to Kamux's strategy and to promote job satisfaction and proactivity in a changing operating environment.
• Kamux aims to align its own and its employees' interests through its incentive scheme. The sales personnel's incentive scheme takes into account sales, car procurements, car trade-ins and sales of integrated services when determining the amount of remuneration.
kets in which Kamux believes it can achieve a strong position as a retail chain specialising in used car sales.
• Achieving strong growth in Finland has created know-how within Kamux, which it aims to utilize when expanding abroad.
• The professional procurement and sales of used cars aims at enabling Kamux to offer its customers a broad selection of competitively priced used cars. Kamux's efficient car inventory management enables Kamux to procure high volumes of used cars.
• A key component of Kamux's pricing model for both procurement and sales is fast inventory turnover, the aim of which is to minimize depreciation in the value of its car inventory and the amount of capital tied up in the inventory.
• Financial flexibility of Kamux's business model is also reflected in low fixed costs and high proportion of operating expenses being variable.
• Offering integrated services forms an important part of Kamux's business model. Kamux aims to increase the share of customers who buy integrated services and expand the integrated services offering in the future.
• The CRM/ERP system directs car sales personnel's actions towards a certain process model defined by Kamux, the purpose of which is to increase the sales personnel's efficiency.
• The CRM/ERP system's customer, car, inventory and price information are updated in real time, enabling high sales volumes of cars and integrated services and reliability of operations.
• Kamux's management can access daily and longterm figures and development of sales using the CRM/ERP system.
potential as well as a professional business model focused on used cars are Kamux's strengths.
Kamux is 100 percent focused on selling used cars and and as such, Kamux's business is recycling business. In autumn 2017, Kamux defined the key material corporate responsibility themes of its operations. The definition of materiality was based on information gathered from Kamux's management, personnel and stakeholder groups in a Management Team workshop and stakeholder interviews. The criteria used for the themes were the economic effects of operations, including risks and opportunities; environmental impact, and the effects on people. A summary of Kamux's material corporate responsibility themes is presented on the following page.
A key business principle for Kamux is to operate responsibly and do things right. Kamux wants to be a car retail forerunner also in terms of creating a culture of trust and openness: every Kamux employee considers it a matter of honor to do what is promised. We comply with laws, regulations and good governance in all of our operations.
Our operations are guided by Kamux's ethical guidelines, the Code of Conduct, in all situations. Defined in 2017, the Code of Conduct instructs all Kamux employees in their daily work and operations. The Code of Conduct was implemented with the help of trainings to the entire Kamux personnel during the year. The Code of Conduct has been made in Finnish, English, Swedish and German and is available in Finnish and English on the company's website.
The Code of Conduct applies to Kamux's cooperation with our suppliers as well – we require that also our suppliers comply with good business practices. This principle, among others, has been incorporated into our procurement guidelines drafted in 2017.
The Code of Conduct describes Kamux's rules, which are:
The material themes of Kamux's corporate responsibility work include the Code of Conduct, fair and rewarding employer, excellent customer experience, profitable growth, and reasonable use of resources.
a whistle-blowing reporting channel. No reports were made through the whistle-blowing channel in 2017.
Kamux's enthusiastic, committed and skilled personnel form the foundation of our operations. Freedom, as well as responsibility, are important values at Kamux. A committed and motivated personnel is the key to success in the competitive car retail industry.
In 2017, the grade of the annual work satisfaction survey carried out annually at Kamux was 4/5. We treat our employees equally.
Personnel turnover across all Kamux's operations in 2017 was 17 percent(1. In 2017, 91 percent of Kamux's employees were men and 9 percent were women.
Kamux is a fair workplace that makes systematic investments in the well-being, training, and safety of its personnel. We want to offer our employees the possibility to do their best, grow and develop further in their careers. Employee commitment is supported by offering career development possibilities, training, orientation, and motivating compensation. In 2017, there were 13 occupational accidents, 10 of which occurred in the workplace and three during the commute.
Each Kamux employee has the possibility to report infringement or suspected infringement of rules, regulations, and the Code of Conduct through 1) Including full-time administrative employees
In 2017, a Training Manager in charge of training sales personnel started working in Finland. Kamux is increasingly investing in the training of its sales personnel, and a Kamux training center was opened in February 2018. With the help of the training center, sales training and further training can be tailored even better according to each employee's needs. In 2017 training days involved sales training and the implementation of Kamux's Code of Conduct. New salespersons received orientation training. Other than sales personnel received training in accordance with their field of competence.
The training days totaled 775 days in 2017 on the Group level.
Customer satisfaction is a strategically important indicator for Kamux, and several factors affect its improvement. We want to meet customer expectations through open and honest communication based on accurate information. All customers who have done business with Kamux are sent an electronic customer satisfaction survey after the sales, and its results can be viewed based on individual outlets, sales representatives and car showrooms. The survey consists of 12 questions, seven of which the customer answers on a scale of 1–5. Five questions are open questions.
4,702 customers took part in the survey in 2017. According to the survey, Kamux has succeeded the best in handling the customer situation and contacting, and reviewing customer needs. Based on the survey, customers are ready to recommend Kamux to their friends with a grade of 4.3/5.
Kamux also finds it important that possible claims are handled in the right way, openly, within a schedule that is reasonable for all parties and in accordance with Kamux's internal rules. Kamux's goal is to process a claim within one day of its arrival. Depending on the case, the study and solving of the problem can be fast or take a few days.
In 2017, the company established an after-sales service team in Finland, which was tasked with managing claims that require most technical expertise. The duty of the after-sales service team is to consult sales representatives in challenging situations, instruct on the most appropriate corrective measure and place and to acquire the most affordable parts, also from international markets. In Sweden and Germany, after-sales marketing coordinators support sales representatives in handling claims, repair and spare part related purchases, as well as technical matters.
The number of claims has grown slightly in recent years, as consumers' awareness of their rights and consumer protection has increased. However, no clearly detectable growth was encountered in 2017 relative to sold cars.
Kamux's aim is that our customers find doing business with Kamux to be affordable. On the other hand, we want the customer to feel that they get the right price when selling a trade-in car to Kamux. Nettiauto.com is Finland's largest vehicle sales advertisement website. Cars sold by Kamux get good visibility in the price-based listings on Nettiauto. This demonstrates the affordability of our pricing. Kamux's goal is to be among the first options in Nettiauto searches.
As proof of our successful work for first-class customer experience, Kamux was ranked first in the used car dealership category in the Auto Bild Finland Service 1 purchase study. The ranking in the mystery shopping based study describes how customers assess and experience the car sales service.
Kamux is committed to profitable growth. Responsible operations in different business areas are one of the conditions for growth and profitability and support the company in reaching the set financial targets. Kamux's target is to increase revenue to a minimum of EUR 700 million in 2019 and have a profit margin of 4−5 percent in 2019 as well as a ry management holds a key position in our operations, together with competitive pricing. Kamux's inventory turnover was 46.8 days in 2017, while it was 43.1 days in 2016. In 2017, there was uncertainty among consumers due to discussions around car taxes and fuel. Kamux's tax footprint in 2017 was EUR 39.5 million.
profit margin of at least 5 percent in the long term. In 2017, the group's revenue was EUR 454.9 million and the profit margin was 3.6 percent. We paid EUR 5.1 million in income tax in 2017 and EUR 3.2 million in 2016. Shareholders are an important stakeholder group for us, and by taking the right measures we seek to continuously increase shareholder value. Kamux's Board of Directors has made a proposal for the distribution of dividends for the year 2017, which is 40 percent of the profit for the accounting period. The success of our operations requires that we sell the right cars for the right price. Invento-Kamux's ability to affect the climate impact of the cars it sells is very limited and measuring it is challenging. The majority of climate effects of the cars sold by Kamux are created during their manufacturing and use. The average CO2 emissions of the cars sold by Kamux in 2017 were 166 g/km, while they were 173 g/km in 2016. Kamux has taken into its sales selection cars with variable power sources. Kamux has established the Kamux Green –shop-in-shop in connection with Kamux's Konala showroom to serve customers interested in hybrid, electricity, gas and ethanol cars.
when transferring cars. Kamux has internal guidelines with regards to the use of fuel, which stipulates that the cars to be transferred will be fueled up with only the necessary amount of fuel. Maximum liter and euro amounts for fueling cars have been defined for Kamux's operating countries. In addition, Kamux aims to use trucks carrying several cars at once as often as possible for moving cars. We also aim to optimize transfer routes between car showrooms.
REASONABLE USE OF RESOURCES We aim to actively influence the environmental impact of our operations. Kamux's environmental impact consists mainly of transfers of cars and people between our car showrooms, the consequent car fuel consumption, as well as car service and repair. The goal of Kamux's own energy consumption is to maintain energy consumption at a reasonable level while considering safety aspects in our showrooms. We also aim to minimize the amount of waste resulting from our operations. We also observe the reasonable use of resources Purchases are made in accordance with Kamux's procurement guidelines. The criteria for purchases are affordability, service, speed, quality and reliability. The most significant indirect environmental impacts are related to car repairs performed by Kamux's partners. Used parts are often used in car repairs. We expect that our partners take care of the environment by recycling problem waste related to cars in an appropriate manner. Old batteries and tires are left in the maintenance and repair shops as well as tire shops, which are responsible for recycling them in an appropriate manner.
Kamux's business operations cover the purchasing, sales and trading of passenger cars and vans with private persons and companies. All additional services and products, such as car wash, maintenance, and repairs as well as tires are purchased through subcontractors. Our partners include national companies as well as local operators. The total number of partners is approximately 4,000.
is an important precondition for growth and profitability
> Decision on the number of members of the Board of Directors;
> Election of the Board of Directors and the decision on their remuneration; and
> Election of the auditor and the decision on his/her compensation.
shares in total for the purpose of discussing a specific issue. The duties of the General Meeting are defined in Kamux's Articles of Association and include: > Decisions on changes to the Articles of Association; > Adoption of financial statements; > Use of the profit shown on the balance sheet; date of the General Meeting of shareholders. The notice of the General Meeting and the Board's proposals for the meeting are also published as a stock exchange release. The notice of the meeting, the documents to be presented at the General Meeting and the proposals for the decisions of the Board of Directors or other decision-making bodies will also be available on the company's website no later than 21 days before the General Meeting.
The notice convening the General Meeting must be delivered to the shareholders by publishing the notice on the company's website or by a newspaper announcement which is published in one or several widely circulated daily newspapers chosen by the Board of Directors, no earlier than three months and no later than three weeks before the meeting, and in any case at least nine days before the record
The Board of Directors is responsible for the governance of the company and the appropriate organization of its operations. The Board of Directors has not appointed any committees. The Board of Directors can decide on establishing an Audit Committee and a Nomination and Remuneration Committee as well as other permanent committees.
Under Kamux's Articles of Association, the Board of Directors must comprise a minimum of four and a maximum of eight members, who will be elected at the General Meeting. The term of all Board members expires at the end of the Annual General Meeting following their election.
During January 1–March 10, 2017 members of the Board of Directors of Kamux were Matti Virtanen (chairperson), Inka Mero, David Nuutinen, Jokke Paananen and Vesa Uotila.
In the Extraordinary General Meeting on March 10, 2017 Reija Laaksonen was elected as a new member to the Board of Directors. The company's shareholders decided unanimously on March 27, 2017 to elect Harri Sivula as a member of the Board, subject to the company's initial public offering. Sivula's board membership began on May 12, 2017.
In the Annual General Meeting on April 12, 2017, Matti Virtanen, Reija Laaksonen, David Nuutinen, Jokke Paananen, Harri Sivula and Vesa Uotila were elected as members of the Board. Annual General Meeting elected Matti Virtanen as chairperson of the Board.
Kamux Corporation's ("the company" or "Kamux") corporate governance complies with the Finnish Limited Liability Companies Act, regulations concerning listed companies, the company's Articles of Association, and rules and regulations of Nasdaq Helsinki Ltd. The company also adheres to the Finnish Corporate Governance Code 2015 issued by the Finnish Securities Market Association. An unofficial English translation of the Finnish Corporate Governance Code is available on the Security Market Association's website at http://cgfinland.fi/.
The Corporate Governance Statement is issued as a separate statement from the report of the Board of Directors. The report will not be updated during the accounting period, but the relevant information related to the subjects it contains as well as other necessary and up-to-date investor information is available in the investor section of the company's website at www.kamux.com.
The governing bodies of Kamux are its General Meeting of shareholders, the Board of Directors and the CEO. The highest decision-making power in Kamux is exercised by the company's shareholders at the General Meeting. The Board of Directors and the CEO are responsible for the management of the company. The Management Team assists the CEO in operative management of the company and the group.
The General Meeting of shareholders is the highest decision-making body of Kamux. The Annual General Meeting shall be held once a year by the end of June. It decides on matters in its authority, stipulated in the company's Articles of Association and on proposals made to the Board. The Annual General Meeting normally takes place in March–April.
An Extraordinary General Meeting can be convened if needed. The Board of Directors is required to organize an extraordinary meeting if requested in writing by a company auditor or shareholders holding a minimum of 10 percent of the company's
b. 1973, M.Sc. (Econ.), Finnish national Member of the Board of Directors 2017−
• Head of Digital at Fazer Confectionery 2015- • Head of Marketing at Fazer Confectionery 2014-
2015 • Vice President of Brand Management, Marketing and Media at Fazer 2013-2014 • Director of Media Design at Fazer 2012-2013 • Media Director at Unilever Nordic in Stockholm
2009-2012 • Various positions at Unilever Nordic and Unilever Finland Oy 2000-2009
• Member of the Board of Media Audit Finland Oy 2013-2015 • Member of Advertisers association 2009- and Chairman of the sourcing committee of Advertisers association 2017- • Vice Chairperson, Member of the Board of Directors of Marketing Executives Group 2018VESA UOTILA
Directors 2011−2016
Key work experience:
• Shareholder of Intera Partners Oy 2015- and
investment professional 2010- • Business management consultant at McKinsey & Company, Inc. 2008-2010
Positions of trust:
• Member of the Board of Normek Group Oy 2017- • Member of the Board of Normek Kiinteistöt Oy 2016-
• Member of the Board of KE Holding Oy 2014- • Chairperson of the Board and CEO of Paulatum
Oy 2010- • Deputy member of the Board of Kreate Oy 2014
• Deputy member of the Board of Delete Group Oy
• Member of the Board of PHX Invest Oy 2006-
• Auditor for Studentwork Sharper Oy 2006-2008
b. 1959, M.Sc. (Econ.), Finnish national Member of the Board of Directors 2012-, Chairperson of the Board of Directors 2012-2016
• CEO of DN Advisory Oy 2017- • CEO of Cloetta AB (publ.) 2015-2016 • CEO of Cloetta Suomi Oy 2013-2015 • CEO of Leaf Suomi Oy 2005-2013 • Commercial Director of Leaf Suomi Oy 2003-2005 • Consultant of PepsiCo Beverages International 2003 and Franchise Director 2000-2002
• Operations Director of McDonald's Finland 1996- 2000
• Various positions at Vaasa Mills Ltd/Cultor Group Finland 1986-1996
• Member of the Board of EasySoda Oy 2017- • Member of the Board of Splizzeria Oy 2014-2015 • Member of the Board of DNA 2010-2012 • Chairperson of the Board of Chocolate, Sugar, Confectionery and Biscuit Industries Association of the Finnish Food and Drink Industries Federation 2005-2012 • Member of the Board of Turun Vapaavarasto Oy
2005-2012
• Member of commercial practise action group of the Finnish Association of Advertisers 2005-2009 • Member of the Board of Upo-kodinkoneet Oy 1998-2000
b. 1962, M.Sc. (Admin.), Finnish national Member of the Board of Directors 2017−
• CEO of GS1 Finland Oy 2015-2017
• Various management positions at Kesko Corporation 1987-2006
• Member of the Board of TylöHelo AB 2017-
• Chairman of the Board of Tokmanni Group Plc 2012-
• Member of the Board of Atria Plc 2009-
b. 1972, M.Sc. (Econ.), Finnish national Member of the Board of Directors 2011-
• Founding partner and CEO of Intera Partners Oy 2013-
• Investment Director of CVC Capital Partners 2005-2007, before that Assistant Director of Industri Kapital
• Member of the Board of Intera Partners Oy 2007- • Chairperson of the Board of RGE Holding Oy, Intera's holding company, 2014-2015 and member of the Board 2015-
• Member of the Board of Evidensia Eläinlääkäripalvelut Oy (formerly Animagi Oy) 2013-2015 • Member of the Board of Normek Group Oy 2008- 2017
• Member of the Board of Consti Corporation 2008- 2009
b. 1958, M.Sc. (Tech.), Finnish national Chairperson of the Board of Directors 2016-, Board member 2016-
• Chairperson of the Board of Akaasia Invest AG 2010-
• Chairperson of the Board of Akaasia Oy 1993- • Member of the Board of Sponstore Oy 2015- • Chairperson of the Board of HopLop Holding Oy 2018-
According to the Corporate Governance Code, a majority of the Board members shall be independent of the company, with at least two of these members also being independent of the key shareholders of the company. The Board of Directors shall assess annually the independence of its members in relation to the company and its significant shareholders.
In 2017, members of Kamux's Board of Directors were assessed to be independent of the company in accordance with the Finnish Corporate Governance Code for listed companies, except for Matti Virtanen and David Nuutinen, and independent from shareholders, except for Jokke Paananen and Vesa Uotila. Matti Virtanen holds a consultancy agreement with Kamux through his company Virtanen Consulting GmbH. David Nuutinen held a consultancy agreement through his company DN Advisory Oy until September 30, 2017. Jokke Paananen and Vesa Uotila are partners of Intera Partners Oy.
The main duties of the Board of Directors and its Chairperson are defined in the written Rules of Procedure drafted by the Board. In accordance with the Rules of Procedure and the Finnish Limited Liability Companies Act, the duties of the Board of Directors include among others:
•Deciding on other statutory matters that fall within the purview of the Board.
The Board of Directors conducts an annual self-evaluation of its operations and working methods. The self-evaluation was carried out in 2017 as well.
The Board of Directors convenes regularly ten times a year and arranges additional meetings if needed. The Board of Directors convenes for a strategy meeting at least once a year to approve the Company's long-term strategic goals, amongst other things. The members of the Management Team who regularly attend Board meetings include the CEO and CFO, who are not Board members.
The Board of Directors constitutes a quorum when more than one-half of its members are present. The decisions of the Board require a simple majority. In case of a tie vote, the decision will be based on the opinion with which the Chairpersons of the meeting concurs.
In 2017, the Board of Directors convened 20 times in total, with an average attendance rate of 97.4 percent at the meetings. The members attended the meetings as follows: Matti Virtanen (20/20), Reija Laaksonen (16/16, on the Board starting March 10, 2017), Inka Mero (9/10, on the Board until April 12, 2017), David Nuutinen (20/20), Jokke Paananen (19/20), Harri Sivula (7/8, on the Board starting May 12, 2017) and Vesa Uotila (20/20).
Kamux's Board of Directors has adopted a diversity policy. Kamux's diversity policy promotes balanced gender diversity when electing Board members and includes Board members having skills and experience in different business areas (including international business, sales and marketing) that complement each other and support important Kamux functions. The diversity of the Board of Directors is supported by the diverse professional and educational background of members as well as consideration for the age distribution.
A person elected as a member of the Kamux Corporation's Board of Directors must have qualifications required for the task and skills fitting the competence profile of Kamux's Board of Directors, as well as adequate availability for carrying out their duties. When electing Board members, the goal is to ensure that the Board of Directors as a whole supports the development of Kamux Corporation's current and future business.
In 2017, Kamux's Board of Directors consisted of both genders in accordance with the diversity policy. During 2017 in the selection of new Board members was paid attention, that the representation of both genders was maintained. Reija Laaksonen was elected to the Board in 2017. Her membership strengthens especially the marketing and digitalization competence of the Board. In connection to the initial public offering, Harri Sivula was elected as a member of the Board. His membership significantly strengthens the knowhow of listed company operations as well as retail business knowledge. Sivula has experience both from the operative management of a listed company and from operations of the Board.
The financial benefits of the Board members have been reported in the separate Kamux Remuneration Report.
| Member | Shares December 31, 2017 |
|---|---|
| Matti Virtanen | 135,610 |
| Reija Laaksonen | 4,348 |
| David Nuutinen | 22,400 |
| Jokke Paananen | - |
| Harri Sivula | 35,000 |
| Vesa Uotila | - |
CEO
The CEO's task is to manage Kamux's operations in accordance with the rules and instructions given by the Board of Directors as well as to report to the Board of Directors on the development of Kamux's business and financial situation.
The CEO appointed by Kamux's Board of Directors is responsible for the operative management of Kamux. The CEO's duties include preparing matters to be decided by the Board of Directors, developing Kamux's operations together with the Board of Directors in accordance with the set objectives and ensuring the appropriate implementation of the decisions of the Board of Directors. The CEO is also responsible for the organization of Kamux's day-to-day governance and he oversees that the company's financial matters are organized in a reliable manner. The CEO also ensures that Kamux complies with the existing laws and applicable regulations. The CEO chairs the meetings of Kamux's Management Team.
The Board of Directors appoints the CEO and decides on the remuneration and other terms and conditions of the position of CEO. The terms and conditions of the position of the CEO are defined in a written CEO contract approved by the Board of Directors. The CEO is appointed for the post until further notice. The financial benefits of the CEO are reported in the separate Remuneration Report of Kamux Corporation. The Board of Directors has the right to dismiss the CEO. The CEO cannot be elected as Chairperson of the Board of Directors.
Juha Kalliokoski serves as the CEO of Kamux Corporation, appointed by Kamux's Board of
Directors.
MEMBERS OF THE MANAGEMENT
TEAM DECEMBER 31, 2017
The Management Team supports the CEO in implementing the company's strategy. The role of the Management Team is to manage Kamux's business operations as a whole. The members of Kamux's Management Team have specific authority in their individual areas of responsibility, and their duty is to develop Kamux's operations in line with the targets set by the Board of Directors and the CEO of the company. The Management Team
convenes regularly each month or when necessary.
Director of International Business b. 1966, M.Sc. (Econ.), Finnish national
• Kamux's Director of International Business and member of the Management Team 2017- • CEO of Svenska McDonald's AB 2014-2016
McDonald's Oy 2004-2007 • Nordic Marketing Director of Henkel Norden Lau-
ndry & Homecare Division 1998-2004 • Various positions at Procter & Gamble 1993-1998
SATU HEIKKILÄ
Key work experience:
• Kamux's Director of Marketing and Communications and member of the Management Team 2015- • Marketing Director of Suomen Terveystalo Oy
2009-2011 • Marketing Director of Fonecta Oy 2007-2009 • Marketing Manager of ISS Palvelut Oy 2003-2007 • Communications Consultant at Viestintä Oy Preemio 2002-2003 • Account Director and copywriter/journalist at OnePartner Oy advertising agency 2000-2002 • Training Manager and Deputy Head of Department at Adulta Oy 1992-2000
• Member of the Supervisory Board at Ilkka-Yhtymä
Corporation 2010- • Member of the Board of Teollisuuden Vesi Oy 2016-
JUSSI MÄKINEN Country Director, Finland b. 1977, M.Educ., Finnish national
Key work experience:
• Kamux's Finnish Country Director 2015-, member of the Management Team 2010-
• Kamux Suomi Area Manager 2013-2015
• Kamux Suomi Sales Director 2010-2013 • Autotalo Laakkonen Oy Director 2008-2010
• Sales Manager of Oy Autokuvio Ab 2005-2008 • Sales Manager of Forssan Laatuauto 2003-2005 • Primary school teacher in the municipality of
Renko 2002-2003
b. 1974, Vocational Qualification in Business and Administration, Executive Development Program for Automotive Industry, Finnish national
• Kamux's Purchasing Director and member of the Management Team 2017-
b. 1972, M.Sc. (Econ.), MBA, Harvard Business School Program for Leadership Development, Finnish national
• Kamux's CFO and member of the Management Team 2015-
• Director of channel operations in the Microsoft Mobile Sales Operations Department of Microsoft Corporation 2014-2015
• Finance Director in the Smart Devices unit of Microsoft Corporation/Nokia Corporation 2012-2014 • Finance Director in different units of Nokia Corpo-
ration 2005-2011 • Nokia Corporation Mobile Phones, Entry Business
Line Business Controller 2004-2005 • Manager, Mergers and Acquisitions at Nokia Corporation 2000-2004
• Analyst at Goldman Sachs International Investment Banking Division 1997-2000
• Member of the Board of Blueberry Capital Oy 2015-
b. 1977, Officer from the Finnish National Defence University, Finnish national
• Kamux's HR Director and member of the Management Team 2015-,
• Director of Human Resources of CHS Group and Managing Director of Tempro Oy 2011-2015 • Assistant Chief of Department of the Army Academy of the Finnish Defence Forces 2010-2011 • Watchkeeper of the European Union Forces in
Chad/CAR 2008-2009 • Cadet Course Director of the Army Academy of
the Finnish Defence Forces 2008-2010 • Section Leader of the Army Academy of the Finnish Defence Forces 2003-2008
• Instructor officer at the Reserve Officer School of the Finnish Defence Forces 2001-2003 • Entrepreneur 1995-1997
CEO b. 1970, police officer and trade technician, Finnish national
• Kamux's CEO and member of the Management Team 2001-
• Local Director of Forssan Laatuauto 2000-2003 • Sales Manager and Partner of Skapat Oy 1999-
2000 • Car Salesman and Sales Manager of Oy Autokuvio
Ab 1994-1999 • Representative of Edustusliike Juha Kalliokoski representative business and entrepreneur 1990-1991
Positions of trust: • Member of the Board of Stofix Oy 2014- • Member of the Board of Silmäasema Fennica Oy
| Member | Shares December 31, 2017 |
|---|---|
| Juha Kalliokoski | 5,635,500 |
| Tapio Arimo(1 | 276,038 |
| Satu Heikkilä | 37,501 |
| Tommi Iiskonmäki | 37,947 |
| Olli Kilpi | 26,100 |
| Jussi Mäkinen | 1,365,000 |
| Tero Törmänen | 52,174 |
| 1) The shares are owned by investment company Blueberry Capital Oy, which is under Tapio Arimo's authority |
The aim of risk management is to ensure the keeping of customer promises, profit development, the ability to pay dividends, shareholder value, responsible operating practices and the continuity of business. Kamux has harmonized and efficient methods to identify, assess and manage risks and their consequences.
Kamux complies with the internal control and risk management principles approved by the company's Board of Directors.
Risk management is a systematic activity, the purpose of which is to guarantee comprehensive and appropriate identification, assessment, management and monitoring of risks. It is an essential part of Kamux's planning and management process, decision-making, daily leadership, operations, and supervision and reporting procedures. Risks are assessed and managed in a business-oriented fashion and comprehensively. This means that the key risks are identified, assessed, managed, monitored and reported on systematically as part of business.
The Group's CEO and other members of the Management Team are each responsible for their own areas. The Management Team regularly reports to the Board of Directors about risks and management measures. The Board of Directors processes the most significant risks and measures to manage them and assesses the effectiveness and efficiency of risk management. The CFO is responsible for coordinating risk management.
Kamux has documented the common operating principles as a Code of Conduct, which is available in Finnish, Swedish, German and English. The Code of Conduct is part of preparatory risk management.
The objective of internal control in Kamux is to ensure that business operations are efficient and profitable, financial reporting is reliable, and that laws and regulation applicable to the company's business, as well as the company's internal instructions, are followed. The specific objective of the internal control over financial reporting is to ensure that interim reports, half-yearly reports, financial statement bulletins and other financial reporting as well as financial statements and annual reports are reliable and are prepared in accordance with the accounting and reporting principles adopted by the company. The Board of Directors of the company is responsible, in accordance with its rules of procedure, for monitoring the process of financial reporting and the effectiveness of the company's internal control and risk management system.
The CEO is operationally responsible for the organization of internal control. This includes ensuring that the company has implemented adequate internal control mechanisms as stipulated in the operating principles defined by the Board of Directors. The CEO, supported by the Management Team, is responsible for ensuring that the Group operates in accordance with the agreed principles in day-to-day operations, follows laws and regulations, reacts to identified exceptions and deficiencies and takes adequate corrective actions.
As part of the listing process, Kamux developed internal controls related to the preparation of the financial statements and financial reporting processes. This initiative consisted of assessment of essential risks relating to the financial statements and financial reporting process, and identification and documentation of the key control points for related processes in a consistent documentation model. In connection with this process, a responsible person has been defined for each control point, and the adequacy of the control design has been evaluated. Development of internal controls continued in 2017 and included the design of the monitoring process of the controls' effectiveness, and assessments to review that the control environment has been implemented in all Kamux operating countries.
Kamux's Board of Directors has assessed that due to the nature of the company's operations, number of employees and geographical scope, it is not appropriate to organize internal audit as a separate function. The Board of Directors shall evaluate on a yearly basis whether such function should be established. The company's Board of Directors may use either internal or external resources to carry out specific internal audit assignments.
The statutory audit covers the company's accounting, financial statements and administration for the accounting period. The auditor of the parent company must also audit the consolidated financial statements. The auditor provides the company's shareholders with a statutory auditor's report in connection with the company's annual financial statements and regularly reports its audit observations to the Board of directors. Kamux's financial period is the calendar year.
According to the company's Articles of Association, the company's auditor must be an auditing organization approved by the Central Chamber of Commerce. The auditor is elected at the Annual General Meeting of shareholders for a term that ends at the conclusion of the Annual General Meeting following the election.
In 2017, PricewaterhouseCoopers Oy was the auditor for Kamux, with CPA Janne Rajalahti as the principal auditor.
In 2017, the auditors were paid a total of EUR 96 thousand for auditing services and a total of EUR 592 thousand for other advisory services related to auditing.
Kamux Corporation observes the insider guidelines approved by the Board of Directors, which is based on the market abuse regulation, the insider guidelines of Nasdaq Helsinki Ltd and other appropriate rules and regulations.
The CFO is responsible for insider matters at Kamux Corporation. The company compiles a list of permanent insiders and also maintains a list of project or event-specific insiders needed at a given time. The insider lists are maintained in the SIRE service of Euroclear Finland Ltd.
People in management positions at Kamux and their immediate circle are required to declare their business transactions in shares of Kamux Corporation or other financial instruments based on them.
People in management positions at Kamux and possible permanent insiders defined by Kamux may not, on their own account or on the account of a third party, carry out business transactions in the shares of Kamux Corporation or other financial instruments based on them during the silent period. The silent period begins 30 days before the publication day of the Kamux financial statement bulletin, half-yearly report, interim report or preliminary information thereof including the publication day.
Kamux has an internet-based notification channel that enables anonymous reporting of suspected infringement of rules and regulations concerning financial markets.
The following Kamux Remuneration Report 2017 complies with the Finnish Corporate Governance Code for Listed Companies (2015).
The objective of the remuneration scheme at Kamux is to support the company's competitiveness and long-term success. The objective of remuneration programs is to encourage key persons and the entire personnel to commit to persevering work towards reaching their personal and common goals and to create shareholder value.
Kamux Corporation's Annual General Meeting annually decides on remuneration paid to the Board of Directors and the principles for the compensation of expenses.
The company's shareholders decided on April 27, 2017 by unanimous decision that the Chairperson of the Board of Directors will be paid EUR 36,000 per year for Board duties, and other members of the Board of Directors will be paid EUR 20,000 per year for Board duties.
Board members will not be paid separately for Board meetings. Travel expenses resulting from Board meetings will be compensated against reasonable invoices. Remuneration for the company's Board members does not include pension payments.
Kamux and Virtanen Consulting GmbH (consultancy firm under Chairperson of the Board Matti Virtanen's authority) signed a consultancy agreement on February 1, 2016, based on which Virtanen Consulting GmbH will be paid a separate contractual fee of EUR 9,000 per month for consultancy services related to Kamux's internationalization. In addition, Kamux has paid EUR 62,000 to Virtanen Consulting GmbH for work related to Kamux's IPO during the second quarter of 2017.
Kamux and DN Advisory Oy (consultancy firm under Board member David Nuutinen's authority) signed a consultancy agreement on January 5, 2017, which ended on September 30, 2017. Based on the agreement, DN Advisory Oy was paid a separate contractual fee of EUR 7,500 per month for consultancy services related to the development and management of Kamux's business operations in Sweden. In addition to a monthly fee, the company compensated for DN Advisory Oy's travel expenses and the parties agreed separately on a bonus based on the results of the consultancy services.
The company's Board of Directors decides on the remuneration of the CEO and the Management Team members and the principles of remuneration.
The remuneration of the CEO and Management Team members comprises a monthly salary as well as a bonus, the terms of which are decided by the Board of Directors annually. The bonuses to be paid to the CEO and members of the Management Team are based on personal targets and certain profitability targets set for the financial period. The share of the result-based remuneration can be a maximum of 50 percent of the fixed salary for the CEO and other Management Team members.
The CEO and other members of the Management Team are entitled to a car and mobile phone benefit. Other members than the CEO are entitled to car benefit. One of the Management Team members has a internet connection benefit.
Kamux's CEO Juha Kalliokoski is entitled to a statutory pension. The CEO's retirement age is determined by the statutory pension system and is 63 years according to applicable legislation.
The CEO's period of notice determined by the CEO contract is six months, with a right to receive salary during the notice period. If the company terminates the contract of employment, the CEO is, under certain conditions, entitled to a severance payment corresponding to 12 months' full salary.
The notice period of other Management Team members is three months excluding one member of the Management Team whose notice period is six months. The members of the Management Team are entitled to salary during their notice period. The retirement age of the members of the Management Team is determined by the statutory pension system and is 63 years according to the applicable legislation.
On April 27, 2017, Kamux's Board of Directors decided to establish a share-based incentive program for Kamux's key personnel. The objective of the share-based incentive program is to align the targets of shareholders and key personnel in order to increase the long-term value of Kamux as well as to strengthen the commitment of the key personnel to Kamux and offer them a competitive incentive program based on earning and accruing of shares. Kamux did not have a long-term share-based incentive program for 2017.
As part of a share-based incentive program, the Board of Directors of Kamux Corporation decided on 13 December 2017, to approve the detailed terms and conditions of the share-based incentive plan for the Group's key personnel for 2018. The earnings period for the share-based incentive plan is the 2018 calendar year. The amount of any gross reward paid pursuant to the plan for the earnings period will be determined by the achievement of goals set as the earnings criteria. According to the decision by the Board of Directors, the earnings criterion applicable for the 2018 earnings period is achieving the EBIT target for 2018 set by the Board of Directors. Any reward resulting from the plan will be paid after the end of the earnings period, by the end of May 2019, in the company's shares unless the Board of Directors decides to pay the reward partly or fully in cash. The reward to be paid will consist of the net number of shares that remain after deducting the monetary sum required to cover the taxes for the confirmed reward. If a key person's employment or service relationship ends before the payment of the reward, no reward will normally be paid.
The Board of Directors has selected approximately 20 key persons as eligible to participate in the incentive plan. According to the terms and conditions of the share-based remuneration plan , the Board of Directors may decide to accept new participants in the scheme during the earnings period.
If the maximum target level set for the earnings criterion is achieved, the total amount of rewards paid under the 2018 share-based remuner-
ation plan would be up to approximately EUR 1,0 million (gross), which is estimated to correspond to up to approximately 150,000 Kamux shares, calculated on the basis of the average price of the Kamux share in November 2017.
The net shares paid as a reward will be subject to a transfer restriction during the commitment period. The commitment period begins when the reward is paid and ends on 31 December 2020. A member of the Group's Management Team must own half of the net shares received as a reward based on the plan until his/her shareholding in the company corresponds to the value of his/her annual salary (ownership obligation). Each participant must own this number of shares for as long as he/she remains a member of the Group's Management Team.
The issuance of shares in accordance with the terms and conditions of the share-based incentive plan is based on the authorisation given to the Board of Directors of Kamux on 12 April 2017 by the shareholders of the company by a unanimous decision. The Board of Directors of Kamux is authorised to decide on issuing a maximum of 300,000 new and/or existing shares to reward Kamux's key personnel in accordance with the share-based incentive program. The intention is to extend the share-based incentive plan with corresponding new earnings periods beginning annually at the discretion of the Board of Directors.
Kamux has implemented co-investment arrangements for certain key personnel pursuant to which the employees covered by the arrangement have invested in Kamux's shares. The co-investment arrangements have been implemented between 2011 and 2017 with key personnel employed by Kamux and members of the company's Board of Directors. The co-investment arrangement option ended when the company was listed on the stock exchange.
The holdings of the key personnel who have invested in shares after the 2011 arrangement are in the scope of the IFRS 2 – Share-based Payment. Investments made by key personnel have been carried out on the same valuation basis and substantially on the same terms as the investments made by Intera.
Key personnel subscribed for shares for a total value of EUR 676 thousand in directed share issues in early 2017.
By unanimous decision made by the shareholders on April 27, 2017, it was decided that
• the Chairperson of the Board of Directors will be paid EUR 36,000 annually
• the members of the Board will be paid EUR 20,000 annually
• the members of the Board will not receive a separate remuneration for Board meetings.
During the financial period that ended on December 31, 2017, the members of the Board of Directors were paid the following remuneration decided by the General Meeting:
Remuneration of Kamux's CEO and members of the Management Team consists of an annual salary and a bonus. The terms of the bonus are decided by the company's Board of Directors each year. The bonuses of Kamux's CEO and Management Team are based on personal targets and certain profitability targets set for the financial period. The share of the result-based remuneration can be a maximum of 50 percent of the fixed salary for the CEO and 50 percent of the fixed salary for other Management Team members.
| 2017 2016 | ||
|---|---|---|
| Salaries, bonuses and benefits | 232 249 | |
| Pension costs – payment-based arrangements 58 | 61 | |
| Total | 290 311 |
(EXCL. CEO) (EUR THOUSAND)
| 2017 2016 | ||
|---|---|---|
| Salaries, bonuses and benefits | 768 776 | |
| Pension costs – payment-based arrangements 191 185 | ||
| Total | 959 960 | |
| 2017 2016 | ||
|---|---|---|
| Matti Virtanen (from Jan 29, 2016)* | 198 137 | |
| Reija Laaksonen (from Mar 3, 2017) | 15 | - |
| David Nuutinen** | 107 13 | |
| Jokke Paananen | 13 | - |
| Harri Sivula (from May 12, 2017) | 13 | - |
| Vesa Uotila | 13 | - |
| Inka Mero (from Jan 29, 2016 until April 12, 2017) 4 | 11 | |
| Alexej von Bagh (until Mar 24, 2016) | - | 3 |
| Total | 365 163 |
* Matti Virtanen's benefits include EUR 166 thousand (EUR 117 thousand in 2016) consulting fees of Virtanen Consulting GmbH. ** David Nuutinen's benefits include EUR 90 thousand (EUR 0 thousand in 2016) consulting fees and bonuses of DN Advisory Oy.
42 KAMUX CORPORATION ANNUAL REPORT 2017 43
| REPORT BY THE BOARD OF DIRECTORS 2017 | 48 |
|---|---|
| Shares and share ownership | 55 |
| Key performance measures | 58 |
| Calculation of key figures and alternative performance measures | 60 |
| PRIMARY STATEMENTS OF THE CONSOLIDATED FINANCIAL STATEMENTS | 62 |
| Consolidated statements of comprehensive income | 63 |
| Consolidated balance sheet | 64 |
| Consolidated statements of changes in equity | 65 |
| Consolidated statements of cash flows | 66 |
| 1 BASIS OF PREPARATION AND INFORMATION ON KAMUX | 67 |
| 1.1 Basis of preparation | 68 |
| 1.2 Short presentation of Kamux | 69 |
| 2 KEY PERFORMANCE METRICS OF KAMUX GROUP | 70 |
| 2.1 Results by segment | 71 |
| 2.2 Revenue | 73 |
| 2.3 Repair Costs | 75 |
| 2.4 Expenses | 76 |
| 2.5 Income taxes | 78 |
| 2.6 Earnings per share | 79 |
| 3 NET WORKING CAPITAL | 80 |
| 3.1 Inventory | 81 |
| 3.2 Trade and other receivables | 82 |
| 3.3 Trade and other payables | 83 |
| 5.1 Group structure and consolidation | 91 |
|---|---|
| 5.2 Intangible assets and property, plant and equipment | 92 |
| 5.3 Related party transactions | 94 |
| 5.4 Share capital and reserves | 97 |
| 5.5 Deferred taxes | 98 |
| 5.6 Events after the reporting date | 99 |
| 5.7 New and forthcoming IFRS standards | 100 |
| 4 NET DEBT AND CONTINGENCIES | 84 |
|---|---|
| 4.1 Capital management and net debt | 85 |
| 4.2 Finance costs | 88 |
| 4.3 Lease obligations and commitments | 89 |
| 5 OTHER NOTES | 90 |
| 5.1 Group structure and consolidation | 91 |
| 5.2 Intangible assets and property, plant and equipment | 92 |
| 5.3 Related party transactions | 94 |
| 5.4 Share capital and reserves | 97 |
| 5.5 Deferred taxes | 98 |
| 5.6 Events after the reporting date | 99 |
| 5.7 New and forthcoming IFRS standards | 100 |
| PARENT COMPANY FINANCIAL STATEMENTS | 102 |
| Parent company income statement (FAS) | 103 |
| Parent company balance sheet (FAS) | 104 |
| Parent company cash flow statement (FAS) | 106 |
| Accounting principals of the parent company financial statements | 107 |
| Notes to the parent company's financial statements | 108 |
| SIGNATURES FOR THE REPORT BY THE BOARD OF DIRECTORS AND THE FINANCIAL STATEMENTS |
113 |
| AUDITOR'S REPORT | 114 |
The Financial Statements are published in Finnish and English. In case of doubt, the Finnish version is authoritative
| 4.1 Capital management and net debt |
|---|
| 4.2 Finance costs |
| 4.3 Lease obligations and commitment: |
Kamux's (Company ID 2442327-8) business is based on an effective integrated business model in the sale of used cars. Kamux's goal is to continuously develop its operations and services to better meet customers´ needs. In the presentation of consolidated financial statements, Kamux also focuses on information relevant to the users of financial statements and strives to report Kamux's financial performance in 2017 and 2016 clearly and concisely. In addition to primary statements the consolidated financial statements include five sections: Basis of Preparation and Information on Kamux, Key Performance Metrics of Kamux Group, Net Working Capital, Net Debt and Contingencies and Other Notes. Each part also explains related significant accounting principles. This manner of presenting information aims at providing the reader with a clear understanding of the Group's financial position and on how the applied accounting policies impact the figures presented in the financial statements.
Kamux is a retail chain specialising in used car sales. Kamux had 41 car showrooms in Finland, 10 in Sweden and 2 in Germany as of December 31, 2017.
The development and growth of the used car market is most affected by general economic conditions, the development of the population and urbanization. Consumer behavior and consumers' willingness to own a car have changed noticeably in recent years. However, the impacts of the sharing economy and new forms of mobility on the used car market are expected to be small. Political debate on possible emission limitations and bans, car or fuel taxes and increased safety requirements is ongoing in Europe. These factors, if realized, can have an impact on the development of the used car market.
In 2017 the market situation in Kamux's operating countries varied. In Finland the year was a challenging one for car sales. In the beginning of the year, the car taxation issue, which was part of the road transport report published by the Ministry of Transport and Communications, and the public fuel debate caused temporary uncertainty among consumers. This lead to increasing inventories of used cars, impacting pricing and the competitive situation in the marketplace. On the other hand, economic recovery has increased consumer confidence, especially in the latter half of the year, and the overall used car market grew slightly in Finland in 2017.
The market for used cars in Sweden decreased slightly in 2017. In Sweden, the structure of the market differs from Finland in that the consumer to consumer share of the total used car market is higher. There is no comparable nationwide retail chain specializing in the sale of used cars. Kamux's market share in Sweden is only about half a per cent, and the company therefore has abundant growth opportunities.
During the year, the German media discussed diesel emissions and restricting the use of older emission class diesel cars in the centers of certain major cities, in which the air quality is a concern. In Germany, the proportion of diesel cars in 2017 was over 30% of all passenger cars, or about 15 million cars. The number of vehicles powered by other
power sources than gasoline or diesel fuel was still below 2% in 2017. The German used car market declined slightly in 2017.
Revenue increased by 12.4% compared to the previous year and amounted to EUR 454.9 million (404.8). The increase in revenue was driven mainly by the opening of new showrooms. The growth was fully organic. The number of cars sold by Kamux in Finland, Sweden and Germany amounted to 40,957 (36,290). In connection with the sale of used cars Kamux offers its customers commission-based services such as insurance and financing services, and a liability extension, Kamux Plus, that supplements the seller's statutory liability. Kamux's integrated services revenue was EUR 22.8 million (19.3).
The adjusted operating profit increased by 3.4% and amounted to EUR 18.6 million (18.0), or 4.1% (4.4) of revenue. The adjustment items to the operating profit totaled EUR 2.4 million (2.3) for 2017. The adjustment items include EUR 1.2 million of expenses related to Kamux's listing, EUR 0.7 million related to strategic planning and implementation of the strategy, and EUR 0.4 million related to geographical expansion. In the comparison period, the adjustments also included a cash-settled share-based payment of EUR 0.3 million related to redemption of treasury shares.
Kamux's operating profit increased by 3.6% as compared to the previous year, amounting to EUR 16.2 million (15.7).
Net financial items were EUR -0.8 million (-1.0). The result before taxes amounted to EUR 15.5 million (14.6). Taxes amounted to EUR 3.8 million (3.6). The effective tax rate for the financial year is 24% (25%). Profit for the period amounted to EUR 11.7 million (11.0).
The basic earnings per share amounted to EUR
0.30 (0.29).
Revenue increased by 8.5% compared to the previous year, amounting to EUR 372.4 million (343.2). The number of cars sold during 2017 increased by 2,973, or 9.5% compared to the previous year, amounting to 34,348 (31,375). The growth was mainly due to the sales of the new showrooms.
Integrated services revenue increased to EUR 20.6 million (17.7) during 2017, or 5.5% of revenue (5.2). Operating profit increased by 4.0% compared to the previous year, amounting to EUR 23.1 million (22.2), or 6.2% of the revenue (6.5).
During 2017, Kamux opened 5 new showrooms in Finland: Turku in February, Espoo Koskelo and Iisalmi in May, Espoo Olarinluoma in August and Kaarina in November. We achieved a significant milestone in November by establishing a Kamux Green shop-in-shop in Helsinki's Konala showroom. The shop-in-shop has strong expertise in the sales of hybrid, electric, natural gas and ethanol cars. In addition, Kamux expanded its operations in Lahti utility vehicle showroom in July, in Vantaa Airport showroom in August and in Kuopio in October with the opening of a new utility vehicle point to complement the Kuopio showroom.
Revenue increased by 20.2% compared to the previous year, amounting to EUR 73.2 million (60.9). The number of cars sold during 2017 increased by 686 or 16.7%, and amounted to 4,784 (4,098). The growth was mainly due to the opening of a new showroom in July 2016 and the actions taken to further develop the operations in Sweden.
Integrated services revenue increased to EUR 1.8 million (1.4), or 3.0% (2.8) of the total external revenue. Operating loss decreased compared to the previous year, amounting to EUR -0.1 million (-1.5).
In June 2017, Kamux expanded its showroom in Örebro and in December Kamux opened a new showroom in Karlstad. In July Kamux signed a new lease agreement in Jönköping. The new showroom was taken into use in the beginning of 2018 and allows the car offering to nearly triple in Jönköping.
Robin Toss started as Country Director, Sweden on January 1, 2018. Mr. Toss has previously worked in several positions at McDonald's in Sweden and Finland and has excellent competences in chain management, building a retail network and business development.
Revenue increased by 110.4% compared to the previous year, amounting to EUR 22.8 million (10.8). The number of cars sold during 2017 increased by 1,008 or 123.4% compared to the previous year, amounting to 1,825 (817). The growth was mainly due to the new showroom opened in December 2016.
Integrated services revenue increased to EUR 0.5 million (0.1), or 2.2% (1.3) of the total external revenue. Operating loss increased compared to the previous year, amounting to EUR -1.9 million (-0.7). The increase in the operating loss was mainly due to the increase in expenses as the company builds the organization for future growth.
The main event in Germany during 2017 was the official opening in January 2017 of the showroom in Nedderfeld, which started its operations in December 2016. In October, Kamux appointed Oliver Michels as Country Director for Kamux Germany and Managing Director for Kamux Auto GmbH. Michels has previously worked as a Managing Director at GARPA and Orlen Deutschland and as a strategy consultant. Mr. Michels has experience in retail chain expansion, defining customer journeys, building up operations, and acquiring new customer segments. Mr. Michels started his duties in January 2018.
The group's consolidated balance sheet total amounted to EUR 103.0 million as of December 31, 2017 (78.4), of which total equity amounted to EUR 58.9 million (28.9). The amount of net debt was EUR 7.3 million (30.9). Non-current bank loans amounted to EUR 22.4 million (25.4). The balance sheet of the company is strong, allowing business growth in line with our strategy.
In 2017, the company issued a total of 117,622 new shares in share issues directed to the company's new key employee and the new members of the Board of Directors, resulting in gross proceeds of EUR 0.7 million to the company.
In May 2017, Kamux was listed on the Nasdaq Helsinki main market. Kamux issued 2,852,853 new shares in the initial public offering. Gross proceeds from the issue amounted to EUR 20.5 million. A total of EUR 0.8 million, net of taxes of related expenses was deducted from the gross proceeds.
Kamux has entered into a five-year loan facility agreement of EUR 50 million with Nordea Bank AB (publ), Finnish Branch. The facility agreement was amended in April 2017 and now includes a five-year term loan of EUR 30 million and a revolving credit facility of EUR 20 million. Of the revolving credit facility, EUR 10.0 million is available as a multi-currency facility, which Kamux entered into in December 2016. The term loan of EUR 30 million is currently repaid in bi-annual installments of EUR 1.5 million. In addition to the revolving facility, Kamux has a lease guarantee facility of EUR 0.4 million.
Net working capital amounted to EUR 49.5 million as of December 31, 2017 (43.3). Value of inventory amounted to EUR 55.2 million (47.9).
Kamux's cash flow from operating activities during year 2017 amounted to EUR 6.5 million (-1.1). Cash and cash equivalents at the end of the period amounted to EUR 18.1 million (0.7).
Equity ratio at the end of the period was 57.2% (36.9). Return on capital employed was 17.2% (22.5) and return on equity was 26.6% (43.8).
Kamux's capital expenditure for 2017 amounted to EUR 1.2 million (2.1), consisting mainly of IT systems and ordinary maintenance in the showrooms. Kamux's research and development costs are mainly related to further development of the company's retail concept and improving its business processes.
During 2017, Kamux invested in matters related to the opening of new showrooms, such as refurbishments, equipment and fixtures, as well as in digitalization projects, such as CRM/ERP systems, analytics, data management and financial administration systems. The company financed these investments with the existing cash and cash equivalents, and cash flow from operations.
Kamux's Board of Directors consisted of the following members at the beginning of 2017: Matti Virtanen, Inka Mero, David Nuutinen, Jokke Paananen and Vesa Uotila.
New members were elected and joined the Board during 2017: Reija Laaksonen on March 10, and Harri Sivula on May 12.
Development Manager Ismo Kiviniemi and Finland Country Director Jussi Mäkinen.
On February 1, 2017 Jyri Kalliola started as Operations Director, Kamux Germany and left the Kamux Management Team. Ismo Kiviniemi left the Kamux Management Team on February 28, 2017. New members who joined the Kamux Management Team in 2017 were Tero Törmänen, who started as Purchasing Director on February 1, 2017, and Olli Kilpi, who started as Director of International Business on May 2, 2017.
Inka Mero's Board membership ended on April 12, 2017 at the Annual General Meeting. MANAGEMENT TEAM Kamux Management Team consisted of the following members in the beginning of 2017: CEO Juha Kalliokoski, CFO Tapio Arimo, Communications and Marketing Director Satu Heikkilä, HR Director Tommi Iiskonmäki, Purchasing Director Jyri Kalliola, Business In autumn 2017, Kamux defined the material corporate responsibility themes of its operations. The materiality definition was based on information gathered from Kamux's management, personnel and stakeholder groups in a Management Team workshop and stakeholder interviews. The criteria used for the themes were the economic impacts of operations, including risks and possibilities, environmental impact, and the impacts on people. Kamux's material responsibility themes are Code
Kamux's number of employees on December 31, 2017 was 597 (552), including all active full-time and part-time employees. The number of personnel in the Group converted to full-time equivalent (FTE) employees was 418 (343). The Group's total number of personnel grew by 75 FTEs during the year. The growth in the number of personnel is due to the opening of new showrooms in Finland, Sweden and Germany, as well as the increase of staff in existing showrooms and head-office.
The average number of FTE employees was divided by country as follows:
During 2017, induction and additional training was given especially for employees in the customer interface in all countries.
| 2017 | 2016 | |
|---|---|---|
| Finland | 334 | 280 |
| Sweden | 59 | 47 |
| Germany | 26 | 16 |
| 2017 | 2016 | |
|---|---|---|
| Employees December 31 | 597 | 552 |
| FTE employees on average 418 | 343 | |
| Wages and salaries (EUR million) |
17.6 | 16.0 |
of Conduct, fair and rewarding employer, excellent customer experience, profitable growth and reasonable use of resources.
Our operations are guided by Kamux's ethical guidelines, the Code of Conduct, in all situations. Defined in 2017, the Code of Conduct instructs all Kamux employees in their daily work and operations. The Code of Conduct is available in Finnish, English, Swedish, and German. The Code of Conduct applies to Kamux's cooperation with our suppliers as well. We require that our suppliers comply with good business practices. This principle, among others, has been incorporated into our procurement guidelines drafted in 2017. Each Kamux employee has the possibility to report suspected infringements of rules, regulations, and the Code of Conduct through a whistleblowing channel. No reports were made through the whistleblowing channel in 2017.
Kamux's enthusiastic, committed and skilled personnel form the foundation of our operations. Freedom, as well as responsibility, are important values at Kamux. Committed and motivated personnel is the key to success in the competitive car retail industry. Kamux is a fair workplace, which makes systematic investments in the well-being, training, and safety of its personnel. We want to offer our employees the possibility to do their best, grow and further develop their careers. Employee commitment is supported by offering career development possibilities, training, and motivating compensation.
Kamux wants to meet customer expectations through open and honest communication based on accurate information. Kamux actively monitors customer satisfaction and customer promise vs. customer experiences. Kamux also finds it important that possible claims are handled appropriately, openly, with a schedule that is reasonable for all parties, and in accordance with Kamux's internal rules.
Kamux is committed to profitable growth. Acting responsibly in all business areas is one of the enablers of growth and profitability and supports the company in reaching its financial targets.
Kamux aims to actively decrease the environmental impact of its operations. Kamux's environmental impact consists mainly of transfers of cars and people between our car showrooms, the consequent car fuel consumption, as well as car service and repair. Kamux strives to maintain energy consumption at a reasonable level while considering safety aspects in our showrooms. We also aim to minimize the amount of waste resulting from our operations. Kamux's ability to affect the climate impact of the cars it sells is very limited and measuring it is challenging. The majority of climate impacts of the cars sold by Kamux are created during their manufacturing and use. The average CO2 emissions of the cars sold by Kamux was 166 g/km in 2017, and 173 g/km in 2016. Purchases are made in accordance with Kamux's procurement guidelines. The criteria for purchases is affordability, service, speed, quality, and reliability.
The aim of risk management is to ensure the keeping of customer promises, profit development, the ability to pay dividends, shareholder value, responsible operating practices and the continuity of business. Kamux has harmonized and efficient methods to identify, assess and manage risks and their consequences. Kamux complies with the internal control and risk management principles approved by the company's Board of Directors.
Risk management is a systematic activity, the purpose of which is to guarantee comprehensive and appropriate identification, assessment, management and monitoring of risks. It is an essential part of Kamux's planning and management process, decision-making, daily leadership, operations and supervision and reporting procedures. Risks are assessed and managed in a business-oriented fashion and comprehensively. This means that the key risks are identified, assessed, managed, monitored and reported on systematically as part of the business.
Kamux only takes conscious and calculated risks in expanding its business, strengthening its market position and creating new business. In assessing the risks, the company takes into account not only economic aspects but also the impact on people, the environment and reputation. Kamux creates a safe working environment for employees and minimizes the potential for crime or misconduct. The company secures business-critical operations and the resources needed to ensure continuity. Kamux prepares for the realization of risks, for example, by maintaining adequate insurance coverage and information security.
The Group's CEO and other members of the Management Team each have their own responsibility areas. The Management Team regularly reports to the Board on risks and risk management actions. The Board reviews most significant risks, measures to manage them, and assesses the effectiveness of risk management. The CFO is responsible for the coordination of risk management. Kamux has created common operating principles in its Code of Conduct, which is available in Finnish, Swedish, German and English. The Code of Conduct is one part of pre-emptive risk management.
Kamux considers its most significant risks to be:
General economic conditions may have an adverse effect on the used car retail market in which Kamux operates. The risk is managed by closely monitoring the general economic development and its impact on Kamux's business. Other risks related to the economy include interest rate, financing and tax risks, which are monitored and mitigated as described in the Group's Treasury Policy.
The used car retail market is highly fragmented, and Kamux's competitors range from large nationwide brand dealerships to private individuals in all of its geographical markets. Kamux responds to tightening competition through continuous competitive situation assessment and development of the Kamux concept.
Changes or expected changes in car taxes also affect the demand for used cars, especially in Finland, where car taxes form a significant part of the car's price. Political debate or political decisions about possible emission limitations and bans, car- or fuel taxes and increased safety requirements may, if implemented, affect the development of the used car market.
Kamux's brand and reputation among customers and other stakeholders are important factors of success. Kamux works to minimize reputation risk by monitoring the development of customer satisfaction, maintaining high customer service levels and operating in a responsible way.
Personnel risk
Skilled employees deliver Kamux's performance. Kamux's human resource strategy identifies employees as the most important resource of the Group, and employees are instrumental in achieving set business goals. Managing personnel growth has been identified as a risk. Personnel risk is minimized through a systematic recruitment process, tracking and developing employee satisfaction and well-being, training and a rewarding incentive system.
Kamux's IT systems are especially important and cover all key business areas such as customer information, inventory monitoring, logistics, human resources, finance and other administrative systems. Kamux collects, processes and retains confidential customer information in connection with its normal business. The business premises and systems of Kamux and its external service providers may be exposed to risks related to unauthorized use, misuse, employee mistakes or misconduct, computer viruses, hacker attacks or other similar threats. Kamux aims to prevent failures by means defined in its information security strategy.
Kamux's Annual General Meeting on April 12, 2017 approved the financial statements and discharged the members of the Board of Directors and the CEO from liability for the financial year 2016. The Annual General Meeting re-elected Matti Virtanen, Reija Laaksonen, David Nuutinen, Jokke Paananen and Vesa Uotila as members of the Board. In addition, it was noted that Harri Sivula's election to the Board of Directors was contingent on the execution of the initial public offering, and came into effect when trading in the company's share began on the pre-list of Nasdaq Helsinki on May 12, 2017. Matti Virtanen was elected as Chairman of the Board. The Annual General Meeting appointed PricewaterhouseCoopers Oy as its auditor for the financial year ending December 31, 2017. PricewaterhouseCoopers Oy appointed Janne Rajalahti, APA, as the principal auditor.
The Annual General Meeting decided on a dividend of EUR 0.06 per share outstanding at the time of the decision to be paid out from distributable earnings in 2016. The total dividend of EUR 2.2 million was paid on April 25, 2017.
The Annual General Meeting authorized Kamux's Board of Directors to resolve on a directed share issue. Based on the authorization, new and/or existing shares may be issued in deviation from the shareholders' pre-emptive rights in one or more occasions, such that the total number of shares issued may not exceed 300,000. Shares may also be issued without consideration. The issued shares may be used for rewarding Kamux's key employees under the company's share-based incentive plan. The Board of Directors is authorized to decide on other terms of the share issue. The share issue authorization is valid until December 31, 2019.
On May 3, 2016, the company's shareholders unanimously authorized the Board of Directors to resolve on a directed share issue against a consideration. Based on the authorization, a maximum of 6,000,000 new shares may be issued deviating from the shareholders' pre-emptive rights on one or more occasions. The authorization granted to the company's Board of Directors was in effect until June 30, 2017, and it revoked the share issue authorization granted by the General Meeting of the Shareholders on December 22, 2015. Based on the authorization mentioned above, the company's Board of Directors resolved on an issue of new shares on May 11, 2017. The company issued a total of 2,852,853 new shares in the share issue, and the number of the shares increased to 41,307,156 shares.
On December 13, 2017, the Board of Directors approved a share-based incentive scheme for the Group's key personnel for year 2018. Information on the scheme was published with a separate stock exchange release on December 13, 2017.
On January 30, 2017, the company issued a total of 52,174 new shares in a share issue directed to a new member of the company's management. The shares were registered in the Finnish Trade Register on February 14, 2017.
On March 27, 2017, the company issued a total of 39,348 new shares in a share issue directed to the new members of the company's Board of Directors. The shares were registered in the Finnish Trade Register on April 20, 2017.
The company issued a total of 26,100 new shares in a share issue directed to the company's new member of the company's management. The shares were registered in the Finnish Trade Register on April 26, 2017.
At the end of the financial year, Kamux had 1,319,862 treasury shares (1,319,862) corresponding to 3% (3%) of all shares.
On December 31, 2017 Kamux Corporation's distributable earnings were EUR 59,451,130.13 of which profit for the year was EUR 10,870,433.41. The Board of Directors proposes a dividend of EUR 0.12 per share to be distributed and that the other distributable earnings be held in unrestricted equity (for the year 2016 a dividend of EUR 0.06 per share was distributed).
Kamux appointed M.Sc. (Pol), Mikko-Heikki Inkeroinen as Chief Digital Officer (CDO) and member of the Management Team. Mr. Inkeroinen is responsible for the company's digital business development, end-toend customer experience and marketing. Mr. Inkeroinen joined Kamux from Power International AS, where he was Head of Digital Commerce. Mr. Inkeroinen is an expert in consumer and digital businesses and his task is to develop Kamux's digital services and customer experience in line with our strategy. Mr. Inkeroinen started in his position on February 24, 2018.
At the beginning of 2018, Robin Toss started as the Country Director of Sweden and Oliver Michels as the Country Director of Germany.
On January 2, Kamux opened a showroom in newer, larger premises in Jönköping in Sweden. Kamux opened its 42nd store in Finland in Savonlinna in February 2018.
Kamux's medium-term target is to achieve revenues of at least EUR 700 million and an operating profit margin of 4-5% in 2019.
The company has not issued loans to related parties. Related party transactions are presented in Note 5.3 to the consolidated financial statements.
Hämeenlinna March 8, 2018 Kamux Corporation Board of Directors
On May 2, 2017, Kamux applied for listing of its shares on the Nasdaq Helsinki main market and arranged an initial public offering (IPO). Prior to the IPO, the company's shares have not been traded on a regulated marketplace. Kamux's shares were offered to individuals and entities in Finland, Kamux employees and institutional investors in Finland and internationally. The final subscription price of the shares in the IPO was EUR 7.20 per share, and the company received more than 1,200 new shareholders in the IPO. The total number of shares in the company rose to 41,307,156 shares. The purpose of the listing was to support Kamux's growth strategy and internationalization and to increase the visibility of Kamux in Finland and abroad, both among the public and as an employer.
Trading in Kamux's shares commenced on the Nasdaq Helsinki pre-list on May 12, 2017 and on the main market on May 16, 2017. Kamux raised around EUR 20.5 million of gross proceeds in the IPO. The listing consisted of the sale of new shares, and the sale of shares of Intera Partners and certain other shareholders of Kamux.
ny's general meeting. The company owns 1,319,862 of its own shares, i.e. 3.2 per cent of the shares. During the financial year, a total of 16,531,609 Kamux shares were traded on the Nasdaq Helsinki marketplace. The highest trading price for the financial year was EUR 9.00 and the lowest EUR 6.40. The closing price of the share on the last trading day on December 29, 2017 was EUR 7.05. The trade volume weighted average price of the Kamux share during the year was EUR 7.34. The market value of the share capital without treasury shares was EUR 281.9 million at the end of the year. The trading symbol on the Nasdaq Helsinki main market is KAMUX, and Kamux is classified as a medium-sized company in the Retail sector.
SHARE Kamux's share capital at the end of the financial year was EUR 80,000 and the number of shares was 41,307,156. The company has one class of shares and each share has one vote at the compa-In accordance with the rules of the Securities Market Act, shareholders of publicly listed companies must notify both the Financial Supervisory Authority and the listing company of changes in their holdings. In 2017 Kamux received no flagging announcements.
At the end of 2017, the number of registered shareholders was 1,462 (including 6 nominee registered shareholders). Kamux's largest shareholders on December 31, 2017 were Intera Fund II Ky (29.38%), Kalliokoski Juha Antero (14.09%) and Elo Mutual Pension Insurance Company (6.95%).
| LARGEST SHAREHOLDERS DECEMBER 31, 2017 | Share ownership % of shares | ||
|---|---|---|---|
| 1 | Intera Fund II Ky | 11,748,596 | 29.38 |
| 2 Kalliokoski Juha Antero | 5,635,500 | 14.09 | |
| 3 Elo Mutual Pension Insurance Company | 2,777,778 | 6.95 | |
| 4 Etera Mutual Pension Insurance Company | 1,388,889 | 3.47 | |
| 5 Kalliola Jyri | 1,365,000 | 3.41 | |
| 6 Mäkinen Jussi Antero | 1,365,000 | 3.41 | |
| 7 Fondita Nordic Micro Cap Placeringsfond | 1,225,000 | 3.06 | |
| 8 Investment fund Aktia Capital | 1,150,000 | 2.88 | |
| 9 OP-Suomi Arvo – investment fund | 1,127,876 | 2.82 | |
| 10 Ilmarinen Mutual Pension Insurance Company | 600,000 | 1.50 | |
| 11 OP-Suomi Pienyhtiöt –investment fund | 473,005 | 1.18 | |
| 12 Pelkonen Henri Tapio | 409,500 | 1.02 | |
| 13 Salmela Jussi Pekka | 409,500 | 1.02 | |
| 14 Blueberry Capital Oy | 276,038 | 0.69 | |
| 15 Ahonen Ari Juhani | 273,000 | 0.68 | |
| 16 Kemppainen Jorma Petteri | 273,000 | 0.68 | |
| 17 Mänty Tero Juho | 273,000 | 0.68 | |
| 18 Pihlaja Ari Kalevi | 273,000 | 0.68 | |
| 19 Investment fund Aktia Nordic Small Cap | 250,000 | 0.63 | |
| 20 Fondita Equity Spice –investment fund | 197,889 | 0.49 | |
| 20 largest shareholders in total | 31,491,571 | 78.75 |
| Excludes nominee registered shares and treas | |||
|---|---|---|---|
| ury shares. As of December 31, 2017, Kamux held | |||
| 1,319,862 treasury shares. |
Kamux has received the following notifications of nominee registered owners on December 31, 2017: Investment funds managed by Swedbank Robur owned a total of 2,784,487 shares, corresponding to 6,96% of the outstanding shares and votes of the company, and family Dan Sten Olsson and trust owned a total of 1,060,000 Kamux shares, corresponding to 2.65% of the outstanding shares and votes of the company.
Includes only book-entry registered shareholders in Finland. The distribution of shareholdings is thus not illustrative of the distribution of the entire shareholding in the company.
Includes treasury shares held by Kamux.
| OWNERSHIP BY SECTOR, DECEMBER 31, 2017 |
Owners | % of owners | Shares | % of shares |
|---|---|---|---|---|
| Foreign owners | 5 | 0.34 | 4,625 | 0.01 |
| Households | 1,369 | 93.64 | 11,826,727 | 33.91 |
| Government entities | 4 | 0.27 | 4,767,167 | 13.67 |
| Financial and insurance institutions | 15 | 1.03 | 16,422,058 | 47.08 |
| Non-profit organizations | 2 | 0.14 | 6,100 | 0.02 |
| Companies and home associations | 67 | 4.58 | 1,851,343 | 5.31 |
| Total | 1,462 | 100.00 | 34,878,020 | 100.00 |
| OWNERSHIP DISTRIBUTION BY SIZE, DECEMBER 31, 2017 |
||||
|---|---|---|---|---|
| Shares | Owners | % of owners | Shares | % of shares |
| 1-100 | 500 | 34.20 | 24,744 | 0.06 |
| 101-500 | 613 | 41.93 | 163,575 | 0.40 |
| 501-1 000 | 145 | 9.92 | 112,780 | 0.27 |
| 1 001-5 000 | 112 | 7.66 | 241,392 | 0.58 |
| 5 001-10 000 | 29 | 1.98 | 218,474 | 0.53 |
| 10 001-50 000 | 33 | 2.26 | 733,023 | 1.77 |
| 50 001-100 000 | 5 | 0.34 | 297,284 | 0.72 |
| 100 001-500 000 | 12 | 0.82 | 3,402,719 | 8.24 |
| 500 001- | 13 | 0.89 | 36,113,165 | 87.43 |
| Total | 1,462 | 99.59 | 41,307,156 | 100.00 |
| Statement of comprehensive income | 2017 | 2016 | 2015 |
|---|---|---|---|
| Revenue | 454.9 | 404.8 | 309.9 |
| revenue growth, % | 12.4 % | 30.6 % | 44.2 % |
| Gross profit | 53.8 | 49.2 | 38.1 |
| as percentage of revenue, % | 11.8 % | 12.2 % | 12.3 % |
| Earnings before interest, tax, | |||
| depreciation and amortization (EBITDA) | 17.3 | 16.5 | 16.1 |
| as percentage of revenue, % | 3.8 % | 4.1 % | 5.2 % |
| Operating profit (EBIT) | 16.2 | 15.7 | 15.5 |
| as percentage of revenue, % | 3.6 % | 3.9 % | 5.0 % |
| Adjusted operating profit | 18.6 | 18.0 | 16.0 |
| as percentage of revenue, % | 4.1 % | 4.4 % | 5.2 % |
| Balance sheet | |||
| Equity | 58.9 | 28.9 | 21.3 |
| Non-current liabilities | 22.8 | 25.8 | 18.0 |
| Current liabilities | 21.3 | 23.7 | 19.4 |
| Balance sheet total | 103.0 | 78.4 | 58.7 |
| Net debt | 7.3 | 30.9 | 24.4 |
| Net working capital | 49.5 | 43.3 | 30.6 |
| Inventories | 55.2 | 47.9 | 36.2 |
| Other information | |||
| Number of cars sold | 40,957 | 36,290 | 28,515 |
| Gross profit per sold car | 1,314 | 1,357 | 1,337 |
| Sales growth of like-for-like showrooms, % | -4.9 % | 12.2 % | 13.9 % |
| Inventory turnover, days | 46.8 | 43.1 | 38.6 |
| Capital expenditures | 1.2 | 2.1 | 0.9 |
| Average number of employees during the period | 418 | 343 | 406 |
| Key figures | |||
| Return on equity (ROE), % | 26.6 % | 43.8 % | 67.7 % |
| Return on capital employed (ROI), % | 17.2 % | 22.5 % | 30.6 % |
| Equity ratio, % | 57.2 % | 36.9 % | 36.3 % |
| Gearing, % | 12.3 % | 107.0 % | 114.2 % |
| Per share data | 2017 | 2016 | 2015 |
|---|---|---|---|
| Earnings per share, basic, € | 0.30 | 0.29 | 0.30 |
| Cash flows from operating activities per share, € | 0.17 | -0.03 | -0.01 |
| Shareholders' equity per share, € | 1.43 | 0.75 | 0.57 |
| Dividend per share, € | 0.12* | 0.06 | 0.04 |
| Payout ratio, % | 39.9 % | 20.5 % | 13.3 % |
| Effective dividend yield, % | 1.7 % | NA | NA |
| Price/earnings (P/E) ratio | 23.5 | NA | NA |
| Highest share price, € | 9.00 | NA | NA |
| Lowest share price, € | 6.40 | NA | NA |
| Share price on December 31, € | 7.05 | NA | NA |
| Market capitalization of share stock, € million | 281.9** | NA | NA |
| Turnover of shares, total, kpcs | 16,532 | NA | NA |
| Relative turnover of shares, total, % | 41.3 % | NA | NA |
| Average no. of shares (1,000 shares), basic** | 38,937 | 37,566 | 38,253 |
| Average no. of shares (1,000 shares), diluted** | 38,941 | 37,635 | 38,459 |
| Total no. of shares (1,000 shares) on December 31** | 39,987 | 37,017 | 37,614 |
*Proposal of the Board of Directors to the Annual General Meeting **Excluding treasury shares
Kamux presents alternative performance measures as additional information to performance measures presented in the consolidated income statement, consolidated statement of financial position and consolidated statement of cash flows prepared in accordance with IFRS. In Kamux's view, the alternative performance measures provide significant additional information related to Kamux's results of operations, financial position and cash flows, and they are widely utilized by an-
alysts, investors and other parties.
The alternative performance measures should not be considered separately from measures under IFRS or as substitutes for corresponding measures under IFRS. All companies do not calculate alternative performance measures in a uniform way and therefore the alternative performance measures presented by Kamux may not be comparable with similarly named measures presented by other companies.
| OPERATING PROFIT | For the year ended December 31, | |||
|---|---|---|---|---|
| EUR million | 2017 | 2016 | ||
| Operating profit (EBIT) | 16.2 | 15.7 | ||
| Costs relating to the listing | 1.2 | 1.2 | ||
| Strategic investigations | 0.7 | 0.6 | ||
| Special items relating to | 0.4 | 0.2 | ||
| geographical expansion | ||||
| Share-based payments | - | 0.3 | ||
| Total adjustment items | 2.4 | 2.3 | ||
| Adjusted operating profit | 18.6 | 18.0 |
| Gross profit | = | Revenue + Other operating income – Materials and services |
|---|---|---|
| Earnings before interest, tax, depreciation, and amortization (EBITDA) |
= | Operating profit + Depreciation and amortization |
| Adjusted operating profit (EBIT) | = | Operating profit adjusted for costs relating to the listing, special items relating to strategic planning and strategy implementation, special items relating to geographical expansion of business and cash-settled share-based payments related to redemption of treasury shares. |
| Net debt | = | Non-current borrowings + Current borrowings – Cash and cash equivalents |
| Financial debt | = | Non-current borrowings + Current borrowings |
| Like-for-like showroom car sales | ||
| Like-for-like showroom revenue growth | = | -1 ) Like-for-like showroom car sales in the previous year |
| New showrooms are included in the calculation when they have been open for 13 months and, therefore, the first time the showroom is included in the measure is its 25th operating month. |
||
| Inventories (average for 12 months) | ||
| Inventory turnover | 365 * = |
Materials and services (rolling 12 months) |
| Profit for the period (rolling 12 months) | ||
| Return on equity (ROE), % | = 100 * |
Equity (average for 12 months) |
| Profit for the period + Finance costs (rolling 12 months) | ||
| Return on capital employed (ROI), % | 100 * = |
Equity + Financial debt (average for 12 months) |
| Equity ratio, % | 100 * = |
Equity Balance sheet total – Advance payments received |
| Net debt | ||
| Gearing, % | 100 * = |
Equity |
| Profit for the period (attributable to owners of the Company) | ||
| Earnings per share, basic | = | Weighted average number of outstanding shares adjusted for share issue for the period |
| Net working capital | = | Inventories + Trade and other receivables + Current income tax receivables – Trade and other payables – Current income tax liabilities – Non-current and current provisions |
| Dividend per share, EUR | = | Dividend per share approved by the Annual General Meeting with respect to the most recent year, the Board's proposal to the AGM |
| Dividend/share | ||
| Payout ratio, % | = 100 * |
Share of EPS belonging to parent company owners |
| Dividend/share adjusted for share issue | ||
| Effective dividend yield, % | 100 * = |
Final quotation at close of period adjusted for share issue |
| Price/earnings (P/E) ratio | = | Final quotation at close of period adjusted for share issue |
| Share of EPS belonging to parent company owners | ||
| Shareholders´equity per share, EUR | = | Equity attributable to equity holders of the parent |
| Basic number of shares at the end of period adjusted for share issue | ||
| Market capitalization of share stock, EUR = | Number of shares x closing price at the end of period |
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME CONSOLIDATED BALANCE SHEETS CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY CONSOLIDATED STATEMENTS OF CASH FLOWS
| EUR million | Note | 2017 | 2016 |
|---|---|---|---|
| Revenue | 2.2 | 454.9 | 404.8 |
| Other operating income | 2.2 | 0.7 | 1.1 |
| Materials and services | 2.3, 2.4 | -401.7 | -356.6 |
| Personnel costs | 2.4 | -21.7 | -19.9 |
| Other operating expenses | 2.4 | -14.8 | -12.8 |
| Depreciation and amortization | 2.4 | -1.1 | -0.8 |
| Operating profit | 16.2 | 15.7 | |
| Finance costs | 4.2 | -0.8 | -1.0 |
| Profit before income tax | 15.5 | 14.6 | |
| Income tax | 2.5 | -3.8 | -3.6 |
| Profit for the period | 11.7 | 11.0 | |
| Other comprehensive income | |||
| Items that maybe subsequently reclassified to profit or loss | |||
| Translation differences | -0.0 | 0.0 | |
| Other comprehensive income for the period, net of tax | -0.0 | 0.0 | |
| Total comprehensive income for the period | 11.7 | 11.0 | |
| Profit for the period attributable to | |||
| owners of the Company | 11.7 | 11.0 | |
| Total comprehensive income for the period attributable to | |||
| owners of the Company | 11.7 | 11.0 | |
| Earnings per share for profit attributable to owners of the Company | 2.6 | ||
| Earnings per share, basic and diluted, EUR | 0.30 | 0.29 |
The above consolidated statements of comprehensive income should be read in conjunction with the accompanying notes.
For the year ended December 31,
| At December 31, | |||
|---|---|---|---|
| EUR million | Note | 2017 | 2016 |
| ASSETS | |||
| Non-current assets | |||
| Intangible assets | 5.2 | 1.1 | 1.0 |
| Goodwill | 5.2 | 13.6 | 13.6 |
| Property, plant and equipment | 5.2 | 1.7 | 1.7 |
| Other receivables | 0.1 | 0.0 | |
| Deferred tax assets | 5.5 | 0.3 | 0.3 |
| Total non-current assets | 16.8 | 16.6 | |
| Current assets | |||
| Inventories | 3.1 | 55.2 | 47.9 |
| Trade and other receivables | 3.2 | 12.9 | 11.4 |
| Current tax assets | 0.0 | 1.8 | |
| Cash and cash equivalents | 4.1 | 18.1 | 0.7 |
| Total current assets | 86.2 | 61.8 | |
| TOTAL ASSETS | 103.0 | 78.4 | |
| EQUITY AND LIABILITIES | |||
| Equity attributable to owners of the Company | 5.4 | ||
| Share capital | 0.1 | 0.1 | |
| Reserve for invested unrestricted equity | 24.6 | 4.1 | |
| Translation differences | 0.0 | 0.1 | |
| Retained earnings | 22.5 | 13.7 | |
| Profit for the period | 11.7 | 11.0 | |
| Total equity attributable to owners of the Company | 58.9 | 28.9 | |
| LIABILITIES | |||
| Non-current liabilities | |||
| Borrowings | 4.1 | 22.4 | 25.4 |
| Derivative financial instruments | 4.1 | 0.1 | 0.1 |
| Provisions | 4.3 | 0.4 | 0.4 |
| Total non-current liabilities | 22.8 | 25.8 | |
| Current liabilities | |||
| Borrowings | 4.1 | 3.0 | 6.3 |
| Trade and other payables | 3.3 | 15.6 | 12.3 |
| Provisions | 2.3 | 2.2 | 1.7 |
| Current income tax liabilities | 0.4 | 3.4 | |
| Total current liabilities | 21.3 | 23.7 | |
| Total liabilities | 44.1 | 49.5 | |
| TOTAL EQUITY AND LIABILITIES | 103.0 | 78.4 |
The above consolidated balance sheets should be read in conjunction with the accompanying notes.
| EUR million | Note | Share capital |
Reserve for invested unrestricted equity |
Translation differences |
Retained earnings |
Total equity |
|---|---|---|---|---|---|---|
| Equity at Jan 1, 2017 | 0.1 | 4.1 | 0.1 | 24.7 | 28.9 | |
| Profit for the period | 11.7 | 11.7 | ||||
| Other comprehensive income | -0.0 | -0.0 | ||||
| Total comprehensive income | -0.0 | 11.7 | 11.7 | |||
| Transactions with owners: | ||||||
| Share issue | 20.5 | 20.5 | ||||
| Dividends for owners | -2.2 | -2.2 | ||||
| Price difference between the offering | ||||||
| for employees and the public offering | 0.1 | 0.1 | ||||
| Equity at Dec 31, 2017 | 0.1 | 24.6 | 0.0 | 34.2 | 58.9 | |
| Equity at Jan 1, 2016 | 0.1 | 0.9 | 0.1 | 20.3 | 21.3 | |
| Profit for the period | 11.0 | 11.0 | ||||
| Other comprehensive income | 0.0 | 0.0 | ||||
| Total comprehensive income | 0.0 | 11.0 | 11.0 | |||
| Transactions with owners: | ||||||
| Share issue | 3.2 | 3.2 | ||||
| Dividends to shareholders | -1.5 | -1.5 | ||||
| Acquisition of treasury shares | 5.4 | -5.2 | -5.2 | |||
| Equity at Dec 31, 2016 | 0.1 | 4.1 | 0.1 | 24.7 | 28.9 |
The above consolidated statements of changes in equity should be read in conjunction with the accompanying notes.
| For the year ended December 31, | |||
|---|---|---|---|
| EUR million | Note | 2017 | 2016 |
| Cash flows from operating activities | |||
| Profit for the period | 11.7 | 11.0 | |
| Adjustments for: | |||
| Depreciation and amortization | 2.4 | 1.1 | 0.8 |
| Finance costs | 4.2 | 0.8 | 1.0 |
| Change in provisions | 2.3, 4.3 | 0.6 | 0.8 |
| Write-down of inventories | 3.1 | -0.1 | 0.3 |
| Income taxes | 2.5 | 3.8 | 3.6 |
| Other non-cash items | 0.1 | 0.1 | |
| Changes in working capital: | |||
| Change in trade receivables and other receivables | 3.2 | -1.6 | -5.1 |
| Change in trade payables and other payables | 3.3 | 3.4 | 2.7 |
| Change in inventories | 3.1 | -7.3 | -12.2 |
| Interests paid | -0.5 | -0.7 | |
| Other financial items, net | -0.1 | -0.2 | |
| Income taxes paid | -5.1 | -3.2 | |
| Net cash inflow (outflow) from operating activities | 6.5 | -1.1 | |
| Cash flows from investing activities | |||
| Investments in property, plant and equipment | -0.6 | -1.5 | |
| Investments in intangible assets | -0.6 | -0.7 | |
| Net cash inflow (outflow) from investing activities | -1.2 | -2.1 | |
| Cash flows from financing activities | |||
| Proceeds from share issues Purchase of treasury shares |
5.4 5.4 |
20.5 - |
3.2 -5.2 |
| Proceeds from bank loans | 4.1 | - | 43.4 |
| Repayments of bank loans | 4.1 | -6.3 | -36.9 |
| Dividends paid | -2.2 | -1.5 | |
| Net cash inflow (outflow) from financing activities | 12.0 | 3.1 | |
| Net decrease/increase in cash and cash equivalents | 17.3 | -0.1 | |
| Cash and cash equivalents at the beginning of the period | 0.7 | 0.8 | |
| Effects of exchange rate changes on cash and cash equivalents | 0.1 | -0.0 | |
| Cash and cash equivalents at the end of period | 18.1 | 0.7 |
The above consolidated statements of cash flow should be read in conjunction with the accompanying notes.
1 BASIS OF PREPARATION AND INFORMATION ON KAMUX
66 KAMUX CORPORATION ANNUAL REPORT 2017 67
These are the financial statements of Kamux Corporation (the "Company") and its subsidiaries (together referred as "Kamux", or "Group"). Kamux is a rapidly grown retail chain operating in Finland, Sweden and Germany specialising in used car sales.
The parent company's company ID is 2442327-8, domicile is Hämeenlinna and the registered address of the head office is Parolantie 66 A, 13130 Hämeenlinna.
The Company's Board of Directors has approved these financial statements at its meeting on March 8, 2018.
According to the Finnish Companies Act, shareholders have the opportunity to approve or reject the financial statements at the General Meeting of Shareholders held after publication. It is also possible to amend the financial statements at the General Meeting of Shareholders.
The consolidated financial statements have been prepared in accordance with International Financial Reporting Standards (IFRS) as adopted by the European Union, conforming to the IAS standards and IFRS standards as well as IFRIC interpretations applicable as of December 31, 2017. The notes to the financial statements also comply with Finnish accounting and corporate legislation complementing the IFRS standards.
Assets and liabilities are measured at cost, except for derivative instruments that are measured at fair value through profit or loss. Financial statements are presented in millions of euros. The figures presented in the financial statements are rounded and therefore the sum of individual figures may differ from the presented sum figure.
The Company's functional currency is euro,
which is also the reporting currency for the Company and the Group. This means that financial statements are presented in euros.
In addition to primary statements the consolidated financial statements are divided into five sections: Basis of Preparation and Information on Kamux, Key Performance Metrics of Kamux Group, Net Working Capital, Net Debt and Contingencies and Other Notes. Each section includes related significant accounting policies.
Preparing the financial statements in accordance with IFRS requires management to make accounting estimates and judgments as well as assumptions that influence the application of the accounting policies and the carrying amounts of assets, liabilities, revenue and expenses. Actual outcomes may differ from these estimates and judgments.
Estimates and judgments are regularly reviewed. Changes in estimates are reported in the period in which the change is made if the change affects only that period, or in the period in which the change is made and in future periods if the change affects both the current and future periods.
Assumptions underlying management's estimates can be found in the following notes to the financial statements:
Kamux is a rapidly grown retail chain operating in Finland, Sweden and Germany and specialising in used car sales. The first Kamux car showroom began operations in Finland in 2003 and as of December 31, 2017, Kamux had 41 showrooms in Finland, 10 in Sweden and 2 in Germany. Since its incorporation, Kamux has sold more than 160,000 used cars.
Kamux's CEO Juha Kalliokoski founded Kamux in 2003 by opening its first car showroom in Hämeenlinna, where Kamux's head office is still located. Kamux opened its second car showroom in 2006 and by 2010 it had expanded its network to 14 car showrooms in Finland. In 2010 Kamux started to offer integrated services to its customers. In 2011 Finnish private equity investor Intera Partners acquired control of Kamux with the existing management staying as company shareholders. Intera's aim was to provide Kamux with additional resources and know-how for expanding operations in Finland and abroad. Kamux expanded into Sweden in late 2012 and into Germany in December 2015. Kamux acquires used cars from car auctions, leasing companies, other car dealers, financing companies, importers, private individuals, and other sources. The majority of the used cars sold by Kamux are acquired from its customers as part of trade-in car sales. All of Kamux's car sales personnel in Finland buy cars, and each of Kamux's car showrooms has set purchasing targets. In Sweden and Germany, pricing of purchased cars is the responsibility of the sourcing teams in these countries operating under the purchasing director. In addition, Kamux has a separate sourcing organization, which is responsible for acquiring cars at car auctions, among others. Kamux aims to align its own and its employees' interests through its incentive scheme. The sales personnel's incentive scheme takes into account sales, car procurements, car trade-ins and the sales of integrated services when
delivered to a location agreed with the customer and, if necessary, the possible trade-in car is simultaneously picked up. In February 2017 Kamux opened its online store in Finland.
Kamux's business is based on a combination of car showrooms and online presence, professional procurement of used cars, low fixed costs, rapid inventory turnover and sales of integrated services. Kamux's business model makes it possible to offer affordable used cars, and Kamux's aim is to continuously develop its operations to better address customers' needs. Kamux offers its customers financing products from third party service providers at all of its car showrooms in Finland, Sweden and Germany. In addition, Kamux offers insurance products and a liability extension product for car repair costs, Kamux Plus, in Finland and Sweden. A key component of Kamux's customer service concept is the home delivery, under which the car is determining the amount of remuneration. Kamux's entire car selection is available to all of its sales personnel at all Kamux's car showrooms in Finland as well as nationwide in Sweden and Germany. If needed, Kamux relocates a car from one car showroom or country to another once the sale is agreed upon. In 2017, 28 percent and in 2016, 27 percent of the cars sold by Kamux's were crosssold through another Kamux car showroom. The size of the car selection at each of Kamux's car showrooms in Finland and Sweden varies between approximately 50 and 150 used cars available for sale, and at its car showrooms in Germany, Kamux aims to have a selection of approximately 150 to 300 used cars available for sale.
| Source of uncertainty and managerial judgments |
Note |
|---|---|
| Repair liability costs | 2.3 |
| Valuation of used cars | 3.1 |
| Goodwill | 5.2 |
| Management holdings | 5.3 |
RESULTS BY SEGMENT REVENUE
REPAIR COSTS
EXPENSES
INCOME TAXES
EARNINGS PER SHARE
Kamux is a rapidly grown car retail chain operating in Finland, Sweden and Germany and specialising in used car sales. Its operational structure is as follows:
Management has defined the Group's reportable segments based on the reporting regularly presented to the CEO of the Group. This reporting forms the basis for the CEO's strategic and operative decisions to allocate resources and for assessing performance. The primary measure of performance is earnings before interest, tax, depreciation and amortization (EBITDA). The CEO also receives information about segments' revenue, gross profit and operating profit on a monthly basis. Reportable segments comprise the following geographical areas: Finland, Sweden and Germany. Other activities consists of head office and Group functions, including centralized procurement, marketing, finance and Group management.
Kamux had 41 showrooms in Finland on December 31, 2017. In Sweden Kamux opened its first showroom in December 2012 and at the end of December 2017, it operated 10 showrooms, all in different localities. Kamux's growth strategy includes expansion into new countries and, in accordance with the strategy, Kamux started its operations in Germany by opening its first showroom in Elmshorn near Hamburg in December 2015. At the end of 2016 a second store was opened in Nedderfeld, Hamburg.
Segment revenue and expenses are items directly attributable to the operating segment. Certain expenses such as centralized procurement are allocated to the segments on a reliable basis in the internal management reporting. Other activities comprise Group level operations that are not directly employed by the individual segment in its operating activities. Sales between segments are carried out on arm's length and eliminated on consolidation. Segment reporting is based on the Group's IFRS reporting.
Kamux's business consists of retail and wholesale sales of used cars in Finland, Sweden and Germany and of integrated services sold to consumer and corporate customers. Sales are based on the network of physical showrooms and efficient online showrooms in Kamux's websites in these countries. Kamux offers a home delivery service, in which Kamux delivers the car to the place agreed with the client. The car delivered to the customer's home has a 14-day right of return. Kamux also sells used cars in auctions.
Kamux offers its customers financing and insurance products provided by third parties in connection with the sale of the used car. The credit and insurance risks for these products are borne by finance and insurance companies. Kamux is entitled to financing fees and insurance commissions from its sales of these products. Parts of the fees are contingent on the continuation of the agreement between the finance company and the client.
In addition, Kamux offers its customers a Kamux Plus –service, which extends the seller's statutory liability for defects. Kamux repairs predefined car defects that are detected within 12 months of the purchase of a car or until 17,500 driven kilometers, depending on which threshold is reached first. Kamux Plus is part of the car sales contract and it will therefore be taken into account when determining the sales price of a car.
Revenue from sales of used cars was EUR 432.0 million, or 95 percent of total revenue during the financial year 2017. In 2016 such revenue was EUR 385.5 million, or 95 percent of total revenue.
Financing fees and insurance commissions amounted to EUR 19.2 million during 2017, comprising 4 percent of total revenue. In 2016 fees and commissions were EUR 15.8 million or 4 percent of total revenue. Revenue from sales of the Kamux Plus service was EUR 3.6 million for the year ended December 31, 2017, and EUR 3.5 million in 2016.
External revenue generated in Finland was EUR 372.4 million and represented 82 percent of total Group revenue during 2017. In 2016 corresponding revenue was EUR 343.2 million, or 85 percent of total Group revenue. In Sweden external revenue amounted to EUR 60.7 million during 2017, and to EUR 51.3 million during 2016. In Germany external revenue amounted to EUR 21.8 million during 2017 and to EUR 10.3 million during 2016.
Other operating income includes rental income from premises, insurance compensations and car tax refunds.
| Segments | Group | ||||||
|---|---|---|---|---|---|---|---|
| EUR million | Finland | Sweden | Germany | total | functions | Eliminations | Group |
| 2017 | |||||||
| Revenue | 372.4 | 73.2 | 22.8 | 468.4 | -13.5 | 454.9 | |
| internal | 12.5 | 1.0 | 13.5 | -13.5 | |||
| external | 372.4 | 60.7 | 21.8 | 454.9 | 454.9 | ||
| Gross profit | 46.4 | 5.9 | 1.5 | 53.8 | 53.8 | ||
| EBITDA | 23.9 | 0.1 | -1.8 | 22.2 | -4.9 | 17.3 | |
| Depreciation and amortization | -0.8 | -0.1 | -0.1 | -1.1 | -0.0 | -1.1 | |
| Operating profit | 23.1 | -0.1 | -1.9 | 21.1 | -4.9 | 16.2 | |
| Finance costs | -0.8 | ||||||
| Profit before income tax | 15.5 |
| EUR million | Finland | Sweden | Germany | Segments total |
Group functions |
Eliminations | Group |
|---|---|---|---|---|---|---|---|
| 2016 | |||||||
| Revenue | 343.2 | 60.9 | 10.8 | 414.9 | -10.1 | 404.8 | |
| internal | 9.6 | 0.6 | 10.1 | -10.1 | |||
| external | 343.2 | 51.3 | 10.3 | 404.8 | 404.8 | ||
| Gross profit | 44.1 | 4.3 | 0.8 | 49.2 | 49.2 | ||
| EBITDA | 22.8 | -1.3 | -0.7 | 20.8 | -4.3 | 16.5 | |
| Depreciation and amortization | -0.6 | -0.1 | -0.0 | -0.8 | -0.0 | -0.8 | |
| Operating profit | 22.2 | -1.5 | -0.7 | 20.0 | -4.3 | 15.7 | |
| Finance costs | -1.0 | ||||||
| Profit before income tax | 14.6 |
| DEFINITION OF KEY MEASURES |
|
|---|---|
| Gross profit | Revenue + Other operating income – Materials and services |
| EBITDA | Operating profit + depreciation and amortization |
| Operating profit | Profit for the period + income tax + net finance costs |
Of the Group's non-current assets, except for deferred tax assets, EUR 15.2 million as of December 31, 2017 (EUR 15.0 million as of December 31, 2016) were located in Finland. The corresponding amounts for Sweden were EUR 0.4 million as of December 31, 2017 (EUR 0.4 million as of December 31, 2016) and for Germany EUR 0.9 million as of December 31, 2017 (EUR 0.9 million as of December 31, 2016).
| REVENUE | For the year ended December 31, |
||
|---|---|---|---|
| EUR million | 2017 | 2016 | |
| Sales of used cars | 432.0 | 385.5 | |
| Financing fees and | |||
| Insurance commissions | 19.2 | 15.8 | |
| Sales of Kamux Plus | 3.6 | 3.5 | |
| Total | 454.9 404.8 |
The sales of used cars are recognized as revenue upon delivery of the car to the customer. At the time of delivery, the customer pays the sales price by cash or the finance company provides Kamux an approved credit decision as a payment for the sales price. Home delivered cars have a 14-day right of return. Revenue on home delivered cars is recognized when the right of return has expired. Insurance commissions from insurance companies are recognized as revenue when the service is rendered, i.e. when the insurance contract is signed with the customer and Kamux is entitled to a commission fee in accordance with its agency contract.
Financing fees from finance companies comprise fixed withdrawal and invoicing fees, variable interest fees and annual bonus fees. Fees are recognized as revenue on an accrual basis when the contract is signed with the customer or during the term of the agreement when Kamux is entitled to a payment from the finance company.
The Kamux Plus service is recognized as revenue on a straight-line basis over the 12 months warranty period.
Revenue from sales is recognized according to the fair value of the sold car, net of discounts and value added taxes.
Estimated repair liability cost is recognized as repair liability provision when the car is sold. The amount of repair liability provision is based on historical statistics about realized repair liability costs and the estimated trend of repair liability costs.
Repair liability provision is recognized based on the actual repair costs and the estimate on the development of repair liability costs. There is uncertainty between actual and estimated repair liability costs because repair liability costs may not necessarily be realized as predicted. Typically repair liability costs are realized frontloaded during the repair liability period. Estimates and assumptions are reviewed quarterly. Differences between actual and estimated repair liability costs may impact the provision amounts recognized in future periods.
Kamux's customer service and customer satisfaction strategy are based on offering used cars that are high-quality and reconditioned. Any deficiencies in the cars are disclosed to the customer during the sale process.
Used cars include the seller's statutory repair liability. In Finland, Sweden and Germany a car dealer has a liability to repair undisclosed defects that become apparent within six months after the purchase of the car (unless Kamux can prove that the defects arose subsequent to the sale). After six months, the burden of proof is transferred from Kamux to the customer.
In addition to the statutory repair liability, Kamux offers its customers the Kamux Plus service, which extends the seller's liability for defects. Kamux repairs predefined defects that are detected within 12 months following the purchase of the car or within 17,500 driving kilometers, whichever comes first.
Repair liability provision amounted to EUR 2.0 million as at December 31, 2017 and EUR 1.7 million as at December 31, 2016. Repair- and maintenance costs have increased concurrently as the sales volumes have grown. Repair- and maintenance costs amounted to EUR 13.7 million during the financial year 2017, and to EUR 12.7 million during the financial year 2016. The repair liability provision is expected to be used in the following 12 months. Repair liability costs and other repair and maintenance costs are reported in "materials and services" in the consolidated statement of comprehensive income
| For the year ended December 31, |
||
|---|---|---|
| EUR million | 2017 | 2016 |
| Materials and services | ||
| Purchases during the period | 409.1 | 368.1 |
| Change in inventories | -7.4 | -11.9 |
| External services | 0.1 | 0.4 |
| Total | 401.7 | 356.6 |
| Personnel costs | ||
| Wages and salaries | 17.6 | 16.0 |
| Pension costs | 2.4 | 2.3 |
| Other employee benefit expenses | 1.6 | 1.7 |
| Total | 21.7 | 19.9 |
| Other operating expenses | ||
| Rents and lease costs | 6.3 | 4.8 |
| Marketing and advertising expenses | 2.6 | 2.5 |
| Other administrative expenses | 5.9 | 5.5 |
| Total | 14.8 | 12.8 |
| Auditors' fees (included in other administrative expenses above) | ||
| Audit fees | 0.1 | 0.2 |
| Other audit-related services | 0.5 | 0.6 |
| Total | 0.6 | 0.7 |
| Depreciation and amortization by class | ||
| Intangible assets | 0.5 | 0.3 |
| Property, plant and equipment | 0.6 | 0.5 |
| Total | 1.1 | 0.8 |
Kamux purchases most of its used cars as trade-in cars. Kamux also acquires cars from private individuals, car auctions, leasing companies, finance companies, other car dealers, importers and other sources. Materials and services include the cost to acquire used cars and the reconditioning and transportation costs associated with preparing cars for sale. It also includes repair costs associated with repair liability and change in inventories.
Kamux's average number of full-time equivalent employees was 418 during the financial period 2017 and 343 in 2016. Employee remuneration is based on fixed and variable salary. The proportionate share of the variable compensation is significant and is based on the achievement of individually determined sales targets. In addition, some employees have car allowance, telephone allowance and internet access at home.
Kamux's pension arrangements are classified as defined contribution plans. The Finnish statutory pension plan under TyEL is arranged through insurance companies and provides pension benefits based on the years of employment and earnings. The retirement age of the old-age pension under TyEL is 63–68 years. Employees in Sweden and Germany belong to defined contribution plans. In Sweden, retirement age is 61-67 years, and in Germany 65-67 years.
In defined contribution plans, insurance contributions are paid to insurance companies and recognized as an expense in the financial period the charge relates to. There are no other payment obligations in the defined contributions plans.
Other employee benefit expenses include EUR 0.1 million recorded as share-based payment from the price difference between the personnel offering and the public offering on the Nasdaq Helsinki main market in 2017, and EUR 0,3 million of sharebased compensation recognized as an expense in connection with the redemption of own shares during 2016.
Rents and lease costs consist of rental payments for showrooms and office space and related costs such as heating, cleaning and electricity. All Kamux's lease agreements are classified as operating leases with fixed rental periods and rents are expensed evenly over the rental period. Contracts are either cancellable or fixed-term of 1-10 years.
Read more about leasing obligations in note 4.3.
| For the year ended December 31, |
|||
|---|---|---|---|
| EUR million | 2017 | 2016 | |
| Current tax | 3.8 | 3.7 | |
| Tax on previous years | -0.0 | -0.0 | |
| Change in deferred tax assets and liabilities | -0.0 | -0.1 | |
| Total | 3.8 | 3.6 | |
| Reconciliation of income tax expense | |||
| Profit before income tax expense | 15.5 | 14.6 | |
| Tax calculated at the Finnish tax rate* | 3.1 | 2.9 | |
| Non-deductible expenses | 0.0 | 0.2 | |
| Difference in foreign tax rates | -0.3 | -0.1 | |
| Tax losses carried forward for which a deferred tax | |||
| asset has not been recognized | 0.9 | 0.6 | |
| Other temporary differences for which a deferred tax | |||
| asset has not been recognized | -0.0 | 0.1 | |
| Other items | - | -0.0 | |
| Income tax expense | 3.8 | 3.6 |
*Tax rate 20% in 2017 and 2016.
Read more about deferred tax balances in note 5.5.
| For the year ended December 31, |
||
|---|---|---|
| 2017 | 2016 | |
| Profit for the period attributable to owners of the Company (EUR million) | 11.7 | 11.0 |
| Weighted average number of shares outstanding during the period, | ||
| basic, in thousands of shares | 38,937 | 37,566 |
| Earnings per share, basic (EUR) | 0.30 | 0.29 |
| Impact of unregistered share issue on number of shares | 5 | 69 |
| Weighted average number of shares outstanding during the period, | ||
| fully diluted, in thousands of shares | 38,941 | 37,635 |
| Earnings per share, fully diluted (EUR) | 0.30 | 0.29 |
Income taxes for the period include current and deferred taxes. Current income tax is the tax to be paid or received with respects to the current financial year, with the application of tax rates that have been enacted or substantively enacted by the balance sheet date. Current income taxes are calculated on the basis of the tax regulations prevailing in the countries in which Kamux operates and generate taxable income. Current tax also includes adjustments for current income tax attributable to earlier periods.
Deferred taxes are recognized on temporary differences that arise between the taxable value and carrying value of assets and liabilities. Deferred tax assets are recognized to the extent that it is probable that they will be utilized against taxable income
Basic EPS is calculated by dividing the consolidated profit for the period attributable to the owners of the Company with the weighted average number of shares outstanding during the year excluding the treasury shares. Diluted EPS is calculated on the same basis as Basic EPS except that it reflects the impact of any potential commitments the Group has to issue shares in the future.
INVENTORY TRADE AND OTHER RECEIVABLES TRADE AND OTHER PAYABLES
Inventory is measured at lower of cost and net realizable value. The cost of an individual car included in the inventory balance is determined using the purchase price for the car including directly attributable repair costs for reconditioning the car for selling purposes.
At each reporting date, a detailed review for net realizable value is executed for cars that have been in inventory for more than 90 days. Any adjustments to net realizable value are recognized as expenses in profit or loss.
The estimated selling price of the car (net realizable value) at the reporting date is determined based on the managerial judgment, market information and historical data. If the estimated selling price of the car is lower than the cost, the inventory value for the car will be written down.
Due to its effective process to acquire used cars, Kamux is able to offer a broad collection of different car brands at competitive prices. Kamux acquires cars from car auctions, leasing companies, other car dealers, finance companies, importers, private persons and other sources. Kamux purchases most of the used cars from customers as trade-in cars as part of the used car sale. Inventory is located in different showrooms. Every salesman is able to sell used cars from all Kamux's showrooms utilizing the Group-wide inventory information. Inventory management is well organized and advanced IT-systems are utilized to achieve an optimal balance between cars in inventory and quick inventory turnover.
Inventories amounted to EUR 55.2 million on December 31, 2017. On December 31, 2016 inventories amounted to EUR 47.9 million.
Re-valuation of inventories to net realizable value amounted to EUR -0.1 million during 2017. In 2016 write-downs were EUR 0.3 million. These were recognized as an expense during the financial years and were included in changes in inventory in line item "materials and services".
Inventory turnover is calculated as follows: Inventory on average during the period (average of the beginning and ending inventory of the year) divided by "Materials and services" expense item during the reporting period, multiplied by 365.
| EUR million | 2017 | 2016 | |
|---|---|---|---|
| Trade receivables | 9.6 | 7.8 | |
| Prepaid expenses and accrued income | 2.3 | 1.9 | |
| Other receivables | 1.0 | 1.8 | |
| Total | 12.9 | 11.4 | |
| Material items included in prepaid expenses and accrued income | |||
| Insurance and finance commission fees | 1.8 | 1.3 |
Other 0.6 0.6 Total 2.3 1.9
| EUR million | 2016 | |||
|---|---|---|---|---|
| Trade payables* | 8.5 | 5.6 | ||
| Accrued expenses and deferred income | 4.8 | 4.9 | ||
| Other | 2.3 | 1.7 | ||
| Total | 15.6 | 12.3 | ||
| Material items included in accrued expenses and deferred income | ||||
| Accrued salaries | 2.9 | 2.8 | ||
| Accrued interests | 0.0 | 0.0 | ||
| Other accrued expenses** | 1.9 | 2.1 | ||
| Total | 4.8 | 4.9 |
| At December 31, | At December 31, | ||
|---|---|---|---|
| EUR million | 2017 | 2016 | |
| Trade payables* | 8.5 | 5.6 | |
| Accrued expenses and deferred income | 4.8 | 4.9 | |
| Other | 2.3 | 1.7 | |
| Total | 15.6 | 12.3 | |
| Material items included in accrued expenses and deferred income | |||
| Accrued salaries | 2.9 | 2.8 | |
| Accrued interests | 0.0 | 0.0 | |
| Other accrued expenses** | 1.9 | 2.1 | |
| Total | 4.8 | 4.9 | |
| TRADE RECEIVABLES AND CREDIT RISK | |
|---|---|
| ----------------------------------- | -- |
Trade receivables consist mainly of receivables from finance companies, with the exception of insignificant amounts of receivables from individual customers to whom Kamux has sold a car with a short-term payment period. Generally, receivables originate when there is a temporary time lag between the approved credit decision (i.e. when revenue is recognized) and a payment is made by the finance company. However, once the finance company has approved the credit application of Kamux's customer, the credit risk of the car sale is borne by the finance company.
Kamux has a temporary credit risk from finance companies between the approved credit decision and payment. The Company mitigates the credit risk by dealing with highly rated finance company counterparties.
Impairment losses recognized in profit or loss amounted to EUR 0.2 million during the year 2017. In 2016 impairment losses were EUR 0.4 million.
* Trade payables also include short term car financing-related loans transferred to Kamux in connection with the purchases of the trade-in cars of EUR 1.0 million as of December 31, 2017 and EUR 0.9 million as of December 31, 2016. Loans to the finance companies are paid within a short period after the purchase of the car.
** Other accrued expenses relate to deferred revenue from sales of Kamux Plus as of December 31, 2017
and 2016.
Carrying values of trade and other payables correspond to their fair values due to the short-term nature of these payables.
CAPITAL MANAGEMENT AND NET DEBT FINANCE COSTS LEASE OBLIGATIONS AND COMMITMENTS
The Group's objective when managing capital (net debt and total equity) is to ensure the continuity of its operations and maintain optimal returns to shareholders. Management aims to maintain an optimal capital and funding structure that ensures the lowest cost of capital available to the Group.
In order to maintain or adjust its capital structure, the Group may adjust the amount of dividends paid to shareholders or issue new shares. The Group monitors capital on the basis of net debt and equity. Net debt is calculated as borrowings ("current and non-current borrowings" in the consolidated balance sheet) less cash and cash equivalents.
The Group borrows money from financial institutions in the form of bank loans and bank overdrafts. The Group's loans have floating interest rates and the Group may use interest rate swaps to limit the interest rate risk related to floating interest rates of the loans.
| EUR million | 2017 | 2016 |
|---|---|---|
| Non-current | ||
| Bank loans | 22.4 | 25.4 |
| Total non-current borrowings | 22.4 | 25.4 |
| Current | ||
| Bank loans | 3.0 | 5.0 |
| Bank overdrafts | - | 1.3 |
| Total current borrowings | 3.0 | 6.3 |
| Total borrowings | 25.4 | 31.7 |
| Less cash and cash equivalents | -18.1 | -0.7 |
| Net debt | 7.3 | 30.9 |
Bank loans are measured initially at fair value, net of transaction costs. Bank loans are subsequently carried at amortized cost. Interest expenses and transaction costs are amortized over the term of the loan and recognized as finance cost using an effective interest rate method. Borrowings are derecognized when the loan has been repaid or liability has been extinguished for example in connection with refinancing.
As of December 31, 2017, borrowings consisted of a EUR 25.4 million five-year term loan, which has semiannual repayments of EUR 1.5 million in March and September. The loans mature on March 31, 2021.
Financial assets and liabilities recorded at fair value through profit and loss consist of derivatives. Derivatives are measured and recognized in the balance sheet according to their fair value at the trade date. Subsequent fair value changes of open derivatives are recognized directly in the finance income and finance costs in the statement of comprehensive income. The Group's derivatives consist of interest rate swaps used to hedge interest rate risk, and foreign exchange derivatives to hedge foreign exchange rate risk. These derivatives are not subject to hedge accounting.
Fair values for Kamux's borrowings are determined by discounting the estimated cash flows to be paid at the market rate of the reporting date, considering the risk premium. Different terms and conditions of the loans (maturity, subordination, collateral) are taken into account in the measurement. Bank loans are classified as Level 2 in the fair value hierarchy due to the use of unobservable inputs, including Kamux's own estimates for risk premium.
Derivatives consist of interest rate swaps and foreign exchange forwards. These derivatives are included in Level 2 and their fair value is calculated as the present value of the estimated future cash flows based on observable yield curves. On December 31, 2017 Kamux had no open interest rate swaps. Nominal values of open interest rate swaps was EUR 6.5 million on December 31, 2016. The nominal values of open foreign exchange forwards was EUR 7.2 million on December 31, 2017 and EUR 3.1 million on December 31, 2016.
Management of liquidity risk aims at to ensure that Kamux is able to meet its finance obligations. Kamux's financing requirement is covered by both optimizing of operating activities and external financing in order to ensure that Kamux has continually sufficient liquidity or has access to an adequate amount of committed credit facilities. Liquidity risks are monitored and managed centrally in the Group's finance department where the availability of financing is managed daily based on rolling forecasts.
The maturity of financial liabilities is monitored regularly. As of December 31, 2017 Kamux had cash and cash equivalents of EUR 18.1 million and as of December 31, 2016, EUR 0.7 million. In addition, Kamux has access to unused credit facilities and bank overdrafts of EUR 20.0 million as of December 31, 2017 and EUR 6.7 million as of December 31, 2016.
Kamux has entered into a five-year loan facility agreement of EUR 50 million with Nordea Bank AB (publ), Finnish Branch. The facility agreement was amended in April 2017 and it includes a five-year term loan of EUR 30 million and a revolving credit facility of EUR 20 million. Of the revolving credit facility, EUR 10.0 million is available as a multi-currency facility that Kamux entered into in December 2016. The term loan of EUR 30 million is currently repaid in bi-annual installments of EUR 1.5 million. In addition to the revolving facility, Kamux has a lease guarantee facility of EUR 0.4 million.
Loans from the financial institutions include the following covenants: net debt in proportion to adjusted EBITDA, equity as a portion of the balance sheet total and inventory turnover. The interest margin is variable and depends on the ratio of net debt and adjusted EBITDA. Kamux has given business mortgages amounting to EUR 104.0 million as of December 31, 2017 as a security for the loans from financial institutions. In addition, the Company has given an unlimited general guarantee on behalf of the subsidiaries in Finland, Sweden and Germany and pledged the shares of the Finnish, Swedish and German subsidiaries.
According to specific terms and conditions of the bank loan agreements, the most significant transactions require a prior written approval by the financial institution, including ordinary terms and conditions protecting the creditor.
The Group's bank loans comprise of long term floating rate loans and interest bearing credit limit facilities. Due to the Euribor-tied loans, Kamux is subject to the cash flow risk arising from floating rate loans.
To manage the interest rate risk, Kamux uses interest rate swaps in order to reduce the cash flow risk arising from floating rate loans. With this course of action, Kamux aims to limit the impact of interest rate volatility in the Group's finance costs to acceptable levels.
Effective interest rates of bank loans were 1.4%- 1.5% at the end of 2017 and 1.4%-1.5% at the end of 2016.
Based on the sensitivity analysis, if interest rates had been 1.0 percentage points higher with all other variables held constant, the recalculated post-tax profit for the period and equity would have been EUR 0.2 million smaller in 2017 and EUR 0.1 million smaller in 2016. Interest rate sensitivity has been calculated by shifting the interest curve by 1.0 percentage points (due to low market interest environment the lower scenario has not been presented). The interest position includes all external variable rate loans and interest rate swaps.
Kamux is mainly exposed to transaction risk related to the Swedish krona and the risk that arises when the parent company's investments in the Swedish subsidiaries are translated into euros.
Foreign exchange risk relating to Swedish operations arises basically from intra-Group finance transactions and trade payables from Swedish subsidiaries incurred in operating activities between the Group companies. Foreign exchange risk is not significant for the Group and these items are hedged as needed by using foreign exchange derivatives.
The remainder of the Group's income and ex-
| EUR million | Less than 3 months 3 months - 1 year | 1-2 years | 2-3 years | 3-4 years | 4-5 years More than 5 years | ||
|---|---|---|---|---|---|---|---|
| Dec 31, 2017 | |||||||
| Loans | 1.6 | 1.7 | 3.3 | 3.3 | 16.6 | - | - |
| Accounts payables | 8.5 | - | - | - | - | - | - |
| Derivatives | -0.1 | -0.0 | - | - | - | - | - |
| Dec 31, 2016 | |||||||
| Loans | 5.0 | 0.4 | 0.5 | 0.5 | 0.5 | 27.1 | - |
| Accounts payables | 5.6 | - | - | - | - | - | - |
| Derivatives | -0.0 | 0.1 | - | - | - | - | - |
penses are generated almost exclusively in euros. According to the Company's treasury policy, all intercompany financing is issued in the subsidiary's functional currency.
The Group's net investment in companies outside the Eurozone consists of subsidiary investments in Sweden. Foreign exchange risk associated with the net investment is not hedged.
Foreign exchange risk position includes debts denominated in Swedish krona of Group companies and loan receivables from Swedish subsidiaries. Krona denominated intra-group items, which are exposed to foreign exchange risk, translated at the rate of the balance sheet date were EUR 9.6 million as of December 31, 2017 and EUR 10.2 million as of December 31, 2016. Based on the sensitivity analysis, if the weakening or strengthening of the Swedish krona against euro had been 10 percent, the recalculated post-tax profit for the period and equity would have been EUR 0.7 million in 2017 and EUR 0.7 million in 2016 higher or lower.
Credit risk refers to the risk that a counterparty will default on its contractual obligations resulting in a financial loss to the Company. Kamux considers all of its material counterparties to be creditworthy as they represent large and well-established financial institutions. Kamux's exposure to credit risk is continuously monitored, in particular, if agreed payments are delayed.
The credit risk on cash and cash equivalents is limited because the counterparties are banks with high credit-ratings assigned by international credit-rating agencies. To spread the credit risk, Kamux deposits its cash reserves with different banks.
| EUR million | 2017 | 2016 |
|---|---|---|
| Interest expenses | 0.5 | 0.7 |
| Fair value changes for derivatives | 0.0 | -0.1 |
| Foreign exchange gains and losses, net | 0.1 | 0.3 |
| Other finance income and costs | 0.1 | 0.2 |
| Total | 0.8 | 1.0 |
Finance costs consist of interest expenses on bank loans and credit limits and realized and unrealized changes on interest rate swaps and foreign exchange derivatives as well as exchange rate differences. Transaction costs related to loans are expensed in profit or loss using effective interest rate method.
The effective interest rate is the rate that discounts the estimated future payments through the expected life of a loan to the net carrying amount of the financial liability. The calculation includes all fees paid by the contracting parties and transaction costs.
| Loans. | |
|---|---|
| guarantees given against loans |
| At December 31, | |||
|---|---|---|---|
| EUR million | 2017 | 2016 | |
| Loans | 25.4 | 31.7 | |
| guarantees given against loans | 104.0 | 104.0 |
| EUR million | At December 31, | ||
|---|---|---|---|
| 2016 | |||
| Rent and other payment guarantees | 0.4 | 0.3 |
Lease obligations consist mainly of rental payments of showrooms. Kamux displays its inventory and conducts the sales through showrooms. Rental contracts are typically either cancellable or 1- to 10-year fixed term contracts and without transfer of ownership or favorable purchase options, all of the leases of showrooms are classified as operating leases. Contracts usually include the option of extending the lease after the original date of termination. As the leasing contracts are considered to be operating leases, lease payments are charged to profit or loss over the lease contract period.
| EUR million | At December 31, | ||
|---|---|---|---|
| 2017 | 2016 | ||
| No later than 1 year | 7.2 | 5.0 | |
| Later than 1 year and no later than 5 years | 14.4 | 11.8 | |
| Later than 5 years | 0.6 | 1.0 | |
| Total | 22.2 | 17.8 |
Kamux has given business mortgages amounting to EUR 104.0 million at 31 December 2017 and EUR 104.0 million as of December 31, 2016 as a security for its loans from financial institutions. In
addition, the Company has given an unlimited general guarantee on the behalf of the subsidiaries of Finland, Sweden and Germany and pledged their shares.
Kamux owns a car showroom building in Nedderfeld, Germany, which is located on the land area Kamux is renting. Kamux has leased the land area for five years, and the lease may be extended. Kamux has an obligation to demolish the building at Kamux's own expense at the end of the lease. This obligation is recognized in the balance sheet on December 31, 2017 as a non-current provision of EUR 0.4 million.
GROUP STRUCTURE AND CONSOLIDATION INTANGIBLE ASSETS AND PROPERTY, PLANT AND EQUIPMENT RELATED PARTY TRANSACTIONS SHARE CAPITAL AND RESERVES DEFERRED TAXES EVENTS AFTER THE REPORTING DATE NEW AND FORTHCOMING IFRS STANDARDS
The consolidated financial statements include parent company and its subsidiaries. Subsidiaries refers to entities of which Kamux Group has control. Control exists, when the Group is exposed, or has rights, to variable returns from its involvement with the investee and has the ability to affect those returns through its power over the investee. Subsidiaries are consolidated from the date of acquisition, being the date on which the Group obtains control or if the subsidiaries have been founded by the Company, from the date of the inception of the subsidiary. Subsidiaries are consolidated until the date that control ceases.
Group's subsidiaries as of December 31, 2017 and December 31, 2016 were as follows:
Intra-Group receivables and liabilities, income or expenses and unrealized profits or losses arising from Intra-Group transactions between the Group companies and intra-Group profit sharing are eliminated in their entirety when preparing the consolidated accounts.
Assets and liabilities in Swedish subsidiaries are translated into euro at the rate prevailing on the balance sheet date. Income and expenses in Swedish subsidiaries are translated into euro using an average rate. Translation differences that arise when translating the financial statements of subsidiaries
are recognized in other comprehensive income and accumulated in a separate component of equity, called translation differences.
Foreign currency denominated transactions are translated into the functional currency using the exchange rates prevailing at the dates of the transactions or if items have been revalued, at the measurement dates exchange rates. Foreign exchange gains and losses arising in respect of business operations, such as sales and purchases, are recognized in EBIT. Foreign exchange differences arising from financing transactions are recognized in finance costs.
| Parent company | Country of incorporation |
Parent and Group ownership (%) |
Principal activities |
|---|---|---|---|
| Kamux Corporation | Finland | Holding company | |
| Subsidiaries | |||
| Kamux Suomi Oy | Finland | 100 | Sales of used cars |
| Suomen Autorahaksi Oy | Finland | 100 | Dormant company |
| KMX Holding AB | Sweden | 100 | Holding company |
| Kamux AB | Sweden | 100 | Sales of used cars |
| Kamux Auto GmbH | Germany | 100 | Sales of used cars |
Subsidiaries have share capital consisting solely of ordinary shares that are held directly by the Group, and the proportion of ownership interests equals the voting rights held by the Group. The country of incorporation of registration is also their principal place of business.
Goodwill is an intangible asset with indefinite useful life.Goodwill in the balance sheet formed when the parent company, a company established by Intera Fund II Ky, acquired Kamux Oy and its subsidiaries on December 7, 2011. The amount of goodwill was EUR 13.6 million as of December 31, 2017 and 2016. Goodwill is entirely allocated to the operating segment of Finland.
The Group performs impairment tests annually. The recoverable amount of goodwill related to Finland is based on fair value less costs of disposal (FV-LCD), which is determined using a discounted cash flow model. Key estimates used to determine the recoverable amount include sales growth rate, cost development and the post-tax discount rate. Inputs used in the discounted cash flow model are inputs that are not based on observable market data (Level 3 inputs). Calculations are based on 5 years' cash flow projections approved by the management. Longterm growth rate was estimated to be 1% and posttax discount rate was defined at 9.0% (2016 10.4%). In addition, management reviews observable market data of comparable entities, for example, EBITDA multiples to assess whether there is a significant difference between FLVCD of the group of CGUs tested and comparable entities market data, which would require Kamux to make changes to the assumptions used in goodwill impairment testing.
As part of the performance review, management has performed sensitivity analyses around the key parameters and the result suggests that a situation in which the carrying value of goodwill and other assets under impairment testing would exceed the recoverable amount is unlikely. Changed parameters used in the sensitivity analyses for 2017 and 2016 impairment testing were:
The sensitivity analyses did not indicate impairment when the parameters above were changed one at a time or all at the same time.
Kamux has capitalized development costs and intangible rights related to different IT systems as other intangible assets. Kamux has invested in a tailor-made CRM system which is one of the key enablers of Kamux's effective selling process and cost efficient inventory management. Microsoft Ax is a system for enterprise resource planning (ERP) and accounting, and it connects Kamux's inventory management and accounting. In 2016, Kamux invested in Basware's FPM system, which was implemented in the beginning of 2017. The capitalized costs consist of external service provider invoices and license fees.
Goodwill is an intangible asset with indefinite useful life. Goodwill is not amortized but tested for impairment at least annually, or whenever there is an indication that its carrying value would not be recoverable.
Management has determined that each showroom represents a separate cash generating unit (CGU). The impairment review is carried out for the group of cash generating units representing the geographical area of Finland which is the level at which goodwill is monitored by management (read more in Sources of uncertainty and managerial judgements – Goodwill).
Other intangible assets, which are separately identifiable and can be sold separately comprise development costs of IT software and intangible rights. Other intangible assets are amortized on a straight-line basis over the estimated useful life of 3 years.
Management makes significant estimates and judgments in determining the level at which the goodwill is tested and whether there are any indications of impairment.
The goodwill in the Kamux's balance sheet arose in December 2011 when the parent company, a company established by Intera Fund II Ky, acquired Kamux Oy and its subsidiaries. At the time of the acquisition, Kamux operated in Finland through five subsidiaries, including 16 showrooms. The Management views that the excess of the purchase price over the acquired net assets was paid for the business and business concept as a whole and therefore considers that goodwill should be tested at the level of group of CGU's which is Finland.
The forecasted cash flows are based on the Group's past performance and management's best estimate of future sales, cost development, general market conditions and applicable income tax rates.
Management tests the effects of changes to significant estimates used in forecasts by sensitivity analyses in a way described in the section "Goodwill".
Property, plant and equipment comprise of office furniture, machinery and equipment and capitalized renovation as well as modernization expenses which are depreciated on a straight line basis over the estimated useful life of 3-5 years. Property, plant and equipment also includes the car showroom building in Nedderfeld, Germany, which was acquired in 2016.
Intera Fund II Ky, which owned 29 % of the Company's outstanding shares on December 31, 2017 and 58 % on December 31, 2016, has significant influence over Kamux.
Related parties of the Group consist of the parent company, Group companies mentioned in note 5.1, and the companies controlled by the significant influence holder Intera Fund II Ky. Related parties are also key management personnel and their close family members as well as entities controlled by them. Key management personnel are the members of the Board of Directors, CEO and Management Team.
Kamux's key management personnel, members of the Board of Directors and their family members have a right to buy cars from Kamux and sell cars to Kamux in accordance with the personnel policy applicable to the whole staff.
The Group has leased from the CEO, his close family members and the companies controlled by them four locations with fixed-term lease contracts for 5-10 years. According to these contracts the Group has future lease obligations of EUR 2.6 million in 2017 and EUR 2.9 million in 2016.
Consulting expenses comprise consultancy fees paid to DN Advisory Oy, controlled by David Nuutinen, and to Virtanen Consulting GmbH, controlled by Matti Virtanen. The fees are related to the Group's geographical expansion and stock exchange listing.
Transactions with related parties were made on an arm's length basis.
The Company has established a management co-investment arrangement for certain key management personnel and other key employees. The co-investment arrangements have been made with key employees of the Company employed before or during 2011-2017. The co-investment arrangement includes shareholders who have been shareholders before the ownership structure was formed in December 2011 and shareholders who have joined the Company as key employees after the 2011 ownership changes. The co-investments of key employees who have invested after the 2011 ownership changes but before the Company's listing to Nasdaq Helsinki Oy stock exchange main list on May 2017, are subject to the IFRS 2 standard.
According to the agreements, the key employees of the arrangements have invested in shares issued by the Company. Investments made by key employees were carried out at the same valuation basis and substantially on the same terms as the investments made by the controlling owner.
The co-investment arrangement contains a share-based payment, but the valuation at the grant date indicates that the co-investments made and possible proceeds to employees do not contain additional benefits when compared to the controlling owner. As the Company does not have a contractual obligation to redeem the leavers in cash, and the Company has not, prior to 2016, used its right to redeem the shares of key employees' shares as their employment ends, the arrangement is classified as equity-settled share-based payment under IFRS. Accordingly, with the grant date fair value of the share-based payment being zero, no expense has been recognized in financial
| EUR million | 2017 | 2016 |
|---|---|---|
| Sales of used cars | 0.1 | 0.2 |
| Purchases of used cars | -0.1 | -0.1 |
| Rental expenses | -0.5 | -0.6 |
| Consulting expenses | -0.3 | -0.1 |
| For the year ended December 31, |
||
|---|---|---|
| EUR thousand | 2017 | 2016 |
| Management Team salaries and other benefits (except CEO) | ||
| Wages, salaries and benefits | 768 | 776 |
| Pension costs -defined contribution plans | 191 | 185 |
| Total | 959 | 960 |
| CEO salaries and benefits | ||
| Wages, salaries and benefits | 232 | 249 |
| Pension costs -defined contribution plans | 58 | 61 |
Total 290 311
| For the year ended |
|---|
| December 31, |
statements. In 2016 the Company redeemed one employee's shares and the difference between the subscription price and the redemption price was treated as a share based compensation expense. The share based expense was EUR 0.3 million in 2016.
Key employees subscribed to the Company's shares in directed share issues for EUR 0.7 million in the financial year 2017 and EUR 3.2 million in 2016. Key employees belonging to management subscribed to the Company's shares for EUR 0.7 million in 2017 and EUR 0.3 million in 2016 in the above-mentioned share issues. In addition to the directed share issues, key employees belonging to management and their close family members subscribed shares for a total of EUR 0.2 million in the public and personnel offerings of the IPO of Kamux on the NASDAQ Helsinki main market in May 2017.
Kamux acquired its own shares from key personnel for EUR 5.4 million in 2016. Of these shares EUR 5.4 million in 2016 was acquired from key employees belonging to management.
Holdings of the Board of Directors, CEO and Management Team of the Company's outstanding shares as of December 31, 2017 are presented in the table below:
| Members of the Board of Directors | 0.5 % |
|---|---|
| CEO | 14.1 % |
| Other Management Team | 4.5 % |
The Board of Directors decides on the remuneration and its criteria for the CEO and members of the Management Team. The salary of the CEO and members of Management Team consists of a monthly salary and bonus. The Board of Directors decides the terms of bonuses annually. The CEO's and Management Team's bonuses are paid on the basis of personal goals set for the financial year and certain profitability targets. The bonus percent of total wages may not exceed 50 percent for CEO and 50 percent for other Management Team members.
In December 2017, the Board of Directors of Kamux Corporation decided to approve a sharebased incentive scheme for the Group's key personnel for 2018. The amount of any gross reward paid pursuant to the scheme for the earnings period will be determined by the achievement of goals set for the earnings criteria. The earnings criterion applicable for the 2018 earnings period is achieving the EBIT target for 2018 set by the Board of Directors. Any rewards resulting from the scheme will be paid after the end of the earnings period, by the end of May 2019.
| EUR thousand | 2017 | 2016 |
|---|---|---|
| Board of Directors salaries and benefits | ||
| Matti Virtanen (from Jan 29, 2016)* | 198 | 137 |
| Reija Laaksonen (from March 3, 2017) | 15 | - |
| David Nuutinen** | 107 | 13 |
| Jokke Paananen | 13 | - |
| Harri Sivula (from May 12, 2017) | 13 | - |
| Vesa Uotila | 13 | - |
| Inka Mero (from Jan 29, 2016 until April 12, 2017) | 4 | 11 |
| Alexej von Bagh (until March 24, 2016) | - | 3 |
| Total | 365 | 163 |
| Management and Board of Directors compensation total | 1,614 | 1,434 |
For the year ended December 31,
* Matti Virtanen's benefits include EUR 166 thousand (EUR 117 thousand in 2016) consulting fees of Virtanen Consulting GmbH.
** David Nuutinen's benefits include EUR 90 thousand (EUR 0 thousand in 2016) consulting fees and bonuses of DN Advisory Oy.
The Group CEO is entitled to the statutory pension and the retirement age is determined within the framework of statutory earnings-related pension plans. The CEO's retirement age is 63 years under the current legislation. Termination period for the CEO's employment contract is 6 months, and he/she is entitled to the salary for the termination period as well as the performance bonus until the termination date. In addition, if the Company terminates the contract, CEO is entitled under certain conditions to the amount corresponding to six months' total salary.
In May 2017, the number of the Company's shares increased as a result of an initial public offering. Kamux issued 2,852,853 new shares in the initial public offering and the total amount of shares outstanding increased to 39,987,294 shares. Gross proceeds from the issue were EUR 20.5 million which were recognized as reserve for invested unrestricted equity.
The Company issued new shares of the Company to certain shareholders in February 2017, April 2017, November 2016 and February 2016. As a result of these share issues, the reserve for invested unrestricted equity of the Company increased by EUR 0.7 million in 2017 and by EUR 3.2 million in 2016.
In November 2016, the Company purchased 1,266,652 of its own shares from certain shareholders of the Company. Retained earnings of the Company decreased by EUR 5.2 million, taking into account the impact of the transfer tax and that EUR 0.3 million was recorded as a share based payment expense for the year 2016 as a result of the purchase.
The Group estimates whether the management holdings include an incentive plan. Judgment is required when classifying the plan (as cash or equity-settled payments or arrangement with alternatives) and measuring the plan. Fair values of grant dates of the benefits, including in the arrangements have to be assessed for measurement.
Movements in the number of outstanding shares, treasury shares and total registered shares during the financial periods were as follows:
* Of the amounts paid from the redeemed shares EUR 0.1 million have been recorded as a deduction of the Reserve for invested unrestricted equity and EUR 8.1 million as deduction of retained earnings.
| Number of shares, 1 000 pcs | Shares outstanding |
Treasury shares |
Total shares |
Treasury shares* EUR million |
|---|---|---|---|---|
| December 31, 2016 | 37,614 | 53 | 37,667 | -3.0 |
| Acquisition of own shares | -1,267 | 1,267 | - | -5.2 |
| Share issue | 193 | - | 193 | - |
| Share issue | 477 | - | 477 | - |
| December 31, 2016 | 37,017 | 1,320 | 38,337 | -8.2 |
| Share issue | 52 | - | 52 | - |
| Share issue | 39 | - | 39 | - |
| Share issue | 26 | - | 26 | - |
| Share issue in public listing | 2,853 | - | 2,853 | - |
| December 31, 2017 | 39,987 | 1,320 | 41,307 | -8.2 |
The Company has one share class and each share has an equal right to dividend. Each share carries one vote at the general meeting. All issued shares are fully paid and they do not have par value.
Dividend distribution, acquisition or redemption of the treasury shares or other distribution of funds to the Company's shareholders require the fulfilment of certain terms of the financing agreement. For the financial year 2017, the Board of Directors proposes a dividend of EUR 4.8 million (EUR 0.12 per share). The Company paid a dividend of EUR 2.2 million (EUR 0.06 per share) in spring 2017.
The subscription price of new shares is recognized as share capital unless it is determined in the share issue decision to be booked entirely or partly into the reserve for invested unrestricted equity. Payments to the reserve for invested
unrestricted equity can be also done without a share issue. The number of shares which have been paid but not yet registered at the end the financial year are entered to the share issue account.
The Company's share capital is EUR 80 thousand.
| EUR million | January 1, | Recognized through | profit or loss December 31, |
|---|---|---|---|
| 2017 | |||
| Deferred tax assets | |||
| Provisions and accrued expenses | 0.3 | 0.0 | 0.3 |
| Derivative instruments | 0.0 | -0.0 | - |
| Depreciation and amortization | - | 0,0 | 0,0 |
| Total | 0.3 | 0.0 | 0.3 |
| Deferred tax liabilities | |||
| Loans from financial institutions | 0.0 | -0.0 | 0.0 |
| Total | 0.0 | -0.0 | 0.0 |
| Total net | 0.3 | 0.0 | 0.3 |
| 2016 | |||
| Deferred tax assets | |||
| Provisions and accrued expenses | 0.2 | 0.1 | 0.3 |
| Derivative instruments | 0.0 | - | 0.0 |
| Total | 0.2 | 0.1 | 0.3 |
| Deferred tax liabilities | |||
| Loans from financial institutions | 0.0 | 0.0 | 0.0 |
| Total | 0.0 | 0.0 | 0.0 |
| Total net | 0.2 | 0.1 | 0.3 |
Deferred tax assets and liabilities are offset only when there is a legally enforceable right to offset current tax assets against current tax liabilities and when the deferred taxes relate to the taxes collected by the same fiscal authority. In Sweden, the Group had unused tax losses EUR 4.9 million as of December 31, 2017 and EUR 4.0 million as of December 31, 2016 and in Germany the Group had unused tax losses EUR 3.2 million as of December 31, 2017 and EUR 0.9 million as of December 31, 2016, for which no deferred tax asset has been recognized due to the operating losses of the early phase of operations. These losses will not expire under the current tax regulations.
Deferred tax is recognized on temporary differences arising between the tax bases of assets and liabilities and their carrying amounts in the consolidated financial statements. Deferred tax is determined using tax rates (and laws) that have been enacted or substantively enacted by the balance sheet date and are expected to apply when the related deferred tax asset is realized or the deferred tax liability is settled.
Deferred tax liabilities are recognized for all taxable temporary differences, except for deferred tax liability where the timing of the reversal of the temporary difference is controlled by the Group and it is probable that the temporary difference will not reverse in the foreseeable
future. Deferred tax assets are recognized on deductible temporary differences only to the extent that it is probable the temporary difference will reverse in the future and there is sufficient taxable profit available against which the temporary difference can be utilized.
Deferred tax assets and liabilities are offset when there is a legally enforceable right to offset current tax assets against current tax liabilities and when the deferred taxes assets and liabilities relate to income taxes levied by the same taxation authority on either the same taxable entity or different taxable entities where there is an intention to settle the balances on a net basis.
Kamux appointed M.Sc. (Pol), Mikko-Heikki Inkeroinen as Chief Digital Officer (CDO) and member of the Management Team. Mr. Inkeroinen is responsible for the Company's digital business development, end-to-end customer experience and marketing. Mr. Inkeroinen joined Kamux from Power International AS, where he was Head of Digital Commerce. Mr. Inkeroinen is an expert in consumer and digital businesses, and his task is to develop Kamux's digital services and customer experience in line with our strategy. Mr. Inkeroinen started in his position on February 24, 2018. At the beginning of 2018, Robin Toss started as the Country Director of Sweden and Oliver Michels as the Country Director of Germany. On January 2, Kamux opened a showroom in newer, larger premises in Jönköping in Sweden. Kamux opened its 42nd showroom in Finland in Savonlinna in February 2018.
Kamux has not yet applied the following new and amended standards and interpretations already issued but not endorsed by the European Union. The Group will adopt them as of the effective date or, if the date is other than the first day of the financial year, from the beginning of the subsequent financial year.
IFRS 9 "Financial Instruments" replaces the multiple classification and measurement models in IAS 39 and it will bring changes to classification and measurement of financial assets their impairment assessment hedge accounting.
A debt instrument is measured at amortized cost only if the objective of the business model is to hold the financial asset for the collection of the contractual cash flows, and the contractual cash flows under the instrument solely represent payments of principal and interest. All other debt and equity instruments, including investments in complex debt instruments and equity investments, must be recognized at fair value.
All fair value movements on financial assets are taken through the statement of profit or loss, except for equity investments that are not held for trading, which may be recorded in the statement of profit or loss or in reserves (without subsequent recycling to profit or loss). In addition debt instruments can be classified at fair value through other comprehensive income according to entity's business model.
According to the analysis prepared by Kamux, the adoption of IFRS 9 does not have a significant impact on the classification of its financial assets due to the fact that the Company does not have investments in securities or bonds at the moment.
Impairment of financial asset will be based on new expected credit loss method. The significant financial assets of Kamux are trade receivables arising from normal business operations. For these trade receivables the group will apply a simplified provision matrix approach that is permitted by the standard. According to this approach, a loss is recognized by using the provision matrix, except for situations where financial assets are assessed to be impaired due to credit risk. The Group does not expect the adoption of the new credit loss method to have a significant impact due to the historically small amount of credit losses.
The new hedge accounting rules align hedge accounting more closely with common risk management practices.
The Group does not expect the amendments to increase applying hedge accounting in the Group, but as a general rule, it will be easier to apply hedge accounting going forward due to inter alia only prospective effectiveness assessment is required and the risk component can be designated as a hedged item.
The new standard also introduces expanded disclosure requirements and changes in presentation. IFRS 9 is effective from January 1, 2018, which is also the initial application date for Kamux Group.
A new standard for the recognition of revenue, IFRS 15 Revenue from Contracts with Customers, will replace IAS 18, which covers contracts for goods and services and IAS 11, which covers construction contracts. The new standard includes a five-step model, by which sales revenue is recognized when control of a good or service is transferred to a customer. Revenue is recognized in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services.
The Company has prepared an assessment about the effects of the adoption of IFRS 15 standard.
Kamux's business consists of retail and wholesale sales of used cars and integrated services sold to consumer and corporate customers. These goods and services have been identified in accordance with IFRS 15 as separate performance obligations.
In accordance with the Group's assessment, the adoption of the standard will have an effect on the different streams of net sales as follows:
In the sales of used cars, the customer obtains control over the sold product at the time of delivery of the car and the adoption of the standard does not have a material effect on the timing of obtaining control.
Regarding Kamux Plus -service which extends the seller's statutory liability for defects the adoption of the standard is assessed to have no material effect.
The analysis prepared by the Group shows that, in both under the present and new standard, the Group operates as an agent towards the customer regarding the finance and insurance products from third parties. Kamux shows the income derived from the sales of third-party finance and insurance products as net amount in its net sales at the time it has fulfilled its obligations from providing the services. In accordance with the Group's assessment, the adoption of the new standard does not have material effects on the variable contingencies derived from sales of third party finance services.
The management assesses that the adoption of the new standard will not have a material effect on the consolidated financial statements regarding the timing or amount of net sales to be recognized. However, adoption of the standard may have an effect on the consolidated financial statements through the new disclosure requirements.
The standard is effective for accounting periods beginning on or after January 1, 2018. The Group plans to adopt the IFRS 15 standard on January 1, 2018 by using the method of retrospective application. Adoption of the standard will increase the amount of disclosures.
IFRS 16 will primarily affect accounting of lessees and will result in the recognition of almost all leases on the balance sheet. The standard removes the current distinction between operating and financing leases and requires recognition of an asset (the right to use the leased item) and a financial liability to pay rentals for virtually all lease contracts. An optional exemption exists for short-term and low-value leases.
Currently, future lease payments are presented in the notes as operating lease commitments at their nominal value. The currently reported operat-
ing lease commitments of Kamux totaled EUR 22.2 million (see Note 4.3.) on December 31, 2017.
Kamux's statement of comprehensive income will also be affected, because in the new method the total expense is typically higher in the earlier years of a lease and lower in later years. Additionally, lease payment in operating expenses will be replaced with interest and depreciation, so key metrics like EBITDA and operating profit will change.
Operating cash flow will be higher, as cash payments for the principal portion of the lease liability are classified within financing activities. Only that part of the payments which reflects interest can continue to be presented as operating cash flow. Kamux has prepared a preliminary assessment of the total effects of adopting IFRS 16 standard in its consolidated financial statements and will update this assessment during 2018. Taking into consideration that Kamux has leased many showrooms and office premises from third parties for periods longer than one year and by cancellable contracts, the standard will have a significant effect on Kamux's consolidated financial statements. Kamux expects that the amount of leased assets and correspondent lease liabilities will increase significantly. In addition, the related rental costs are classified as depreciation and finance costs.
The standard is effective for accounting periods beginning on or after January 1, 2019. Kamux will adopt the standard on its effective date.
| Personnel expenses |
|---|
| Social security expenses |
| Depreciation and amortization |
| Financial income and expenses |
| Interest and other financial income |
| Interest and other financial expenses |
| Appropriations |
| For the year ended December 31, | ||
|---|---|---|
| EUR million | 2017 | 2016 |
| REVENUE | 3.0 | 2.4 |
| Other operating income | - | 0.0 |
| Personnel expenses | ||
| Salaries and fees | -1.1 | -0.8 |
| Social security expenses | ||
| Pension expenses | -0.2 | -0.2 |
| Other social security expenses | -0.0 | -0.0 |
| Total personnel expenses | -1.3 | -1.0 |
| Depreciation and amortization | ||
| Depreciation and amortization according to plan | -0.0 | -0.0 |
| Other operating expenses | -4.4 | -3.0 |
| Total expenses | -5.7 | -4.0 |
| OPERATING PROFIT | -2.7 | -1.7 |
| Financial income and expenses | ||
| Interest and other financial income | ||
| From Group companies | 2.4 | 1.3 |
| From other | 1.0 | 0.2 |
| Total | 3.4 | 1.5 |
| Interest and other financial expenses | ||
| To Group companies | - | -0.1 |
| To other | -1.6 | -1.2 |
| Total | -1.6 | -1.3 |
| Total financial income and expenses | 1.7 | 0.2 |
| LOSS BEFORE APPROPRIATIONS AND TAXES | -0.9 | -1.4 |
| Appropriations | ||
| Group contributions received | 14.5 | 18.7 |
| Total appropriations | 14.5 | 18.7 |
| Direct taxes | -2.7 | -3.5 |
| PROFIT FOR THE FINANCIAL YEAR | 10.9 | 13.8 |
| EUR million | 2017 | 2016 | |
|---|---|---|---|
| ASSETS | |||
| NON-CURRENT ASSETS | |||
| Intangible assets | |||
| Intangible rights | 0.1 | 0.0 | |
| Total | 0.1 | 0.0 | |
| Investments | |||
| Investments in subsidiaries | 29.2 | 26.2 | |
| Total | 29.2 | 26.2 | |
| CURRENT ASSETS | |||
| Non-current receivable | |||
| Non-current receivables from Group companies | 33.9 | 14.2 | |
| Total | 33.9 | 14.2 | |
| Current receivables | |||
| Receivables from Group companies | 33.2 | 34.0 | |
| Other receivables | 0.1 | 0.2 | |
| Prepaid expenses and accrued income | 0.1 | 0.0 | |
| Total | 33.4 | 34.3 | |
| Cash at hand and in banks | 17.4 | 0.0 | |
| TOTAL ASSETS | 114.1 | 74.7 |
| At December 31, | At December 31, | ||
|---|---|---|---|
| EUR million | 2017 | 2016 | |
| LIABILITIES AND EQUITY | |||
| Equity | |||
| Share capital | 0.1 | 0.1 | |
| Invested non-restricted equity reserve | 25.2 | 4.1 | |
| Retained earnings | 23.3 | 11.8 | |
| Profit for the year | 10.9 | 13.8 | |
| Total | 59.5 | 29.7 | |
| Liabilities | |||
| Non-current liabilities | |||
| Loans from financial institutions | 22.5 | 25.5 | |
| Derivatives | - | 0.1 | |
| Liabilities to Group companies | 4.7 | 4.8 | |
| Current liabilities | |||
| Interest-bearing | |||
| Loans from financial institutions | 3.0 | 6.3 | |
| Liabilities to Group companies | 23.6 | 3.3 | |
| Non-interest-bearing | |||
| Trade payables | 0.2 | 0.2 | |
| Liabilities to Group companies | 0.2 | 1.0 | |
| Other current liabilities | 0.0 | 0.0 | |
| Accrued expenses and deferred income | 0.3 | 3.7 | |
| Total | 54.6 | 45.0 | |
| TOTAL LIABILITIES AND EQUITY | 114.1 | 74.7 |
| For the year ended December 31, | ||
|---|---|---|
| EUR million | 2017 | 2016 |
| Profit for the financial year | 10.9 | 13.8 |
| Adjustments: | ||
| Financial income and expenses | -1.7 | -0.2 |
| Group contributions received | -14.5 | -18.7 |
| Depreciation and amortization | 0.0 | 0.0 |
| Direct taxes | 2.7 | 3.5 |
| Change in net working capital: | ||
| Change in trade and other receivables | 0.0 | -0.2 |
| Change in trade and other payables | -0.7 | 0.7 |
| Interests paid and payments on other operating expenses | -0.6 | -0.8 |
| Interests received | 0.0 | 0.0 |
| Taxes paid | -6.1 | -2.7 |
| Net cash from/in operating activities (A) | -10.0 | -4.7 |
| Payments for property, plant and equipment and intangible assets (-) | -0.0 | -0.0 |
| Investments in subsidiaries | -3.0 | -0.5 |
| Net cash from/in investing activities (B) | -3.1 | -0.5 |
| Repayments of bank loans | -6.3 | -29.4 |
| Proceeds from bank loans | - | 40.6 |
| Net change of intra-group receivables and payables | 17.9 | -2.4 |
| Dividends paid | -2.2 | -1.5 |
| Purchase of treasury shares | - | -5.5 |
| Proceeds from share issues | 21.1 | 3.2 |
| Net cash from/in financing activities (C) | 30.5 | 5.0 |
| Change in cash (A+B+C) | 17.4 | -0.2 |
| Cash at hand and in bank at the beginning of the financial year | 0.0 | 0.2 |
| Cash at hand and in bank at the end of the financial year | 17.4 | 0.0 |
The financial statements of Kamux Corporation are prepared in accordance with Finnish Accounting Standards (FAS). The accounting principles of the consolidated financial statements are applied to the appropriate extent in the preparation of the Company's financial statements. In the following paragraphs are described the accounting principles of the parent company to the extent they difdated financial statements.
bles are recognized in the balance sheet at lower of their nominal value and their probable value, whichever is lower. Liabilities are measured at their nominal value. Interest income and expenses relating to receivables and liabilities are recognized on accrual basis and accrued to the financial year on the basis of the time period.
fer from the accounting principles for the consoli-REVENUE Revenue of the Company consists of intra-group management fees. Loans from banks are recognized at their nominal value. Transaction costs related to loans are expensed at the time of taking out a loan. Interest expenses of the loans are recognized in the income statement on accrual basis and accrued to the financial year on the basis of the time period.
LIABILITIES Intra-group receivables and liabilities of the Company consist of intra-group transactions. Receiva-The Company does not recognize deferred tax assets in the financial statements of the parent company.
| EUR million | ||
|---|---|---|
| Revenue | 2017 | 2016 |
| Services to Group companies | 3.0 | 2.4 |
| Total | 3.0 | 2.4 |
| Revenue | 2017 | 2016 |
| Geographical distribution | ||
| Domestic | 2.4 | 2.0 |
| Other Europe | 0.6 | 0.4 |
| Total | 3.0 | 2.4 |
| Personnel expenses and fees | 2017 | 2016 |
| Salaries and fees | 1.1 | 0.8 |
| Pension expenses | 0.2 | 0.2 |
| Other social security expenses | 0.0 | 0.0 |
| Total | 1.3 | 1.0 |
| Number of personnel | 8 | 6 |
| Other operating expenses | 2017 | 2016 |
| Voluntary personnel expenses | 0.3 | 0.1 |
| Travel expenses | 0.1 | 0.1 |
| Marketing expenses | 0.4 | 0.3 |
| Administrative services | 3.4 | 2.4 |
| Other administrative expenses | 0.1 | 0.2 |
| Other operating expenses | 0.1 | 0.0 |
| Total | 4.4 | 3.0 |
| Auditor's remuneration | 2017 | 2016 |
| Audit fee | 0.1 | 0.1 |
| Other services from main auditor | 0.5 | 0.6 |
| Total | 0.6 | 0.7 |
| EUR million | ||
|---|---|---|
| Appropriations | 2017 | 2016 |
| Group contribution received | 14.5 | 18.7 |
| Total | 14.5 | 18.7 |
| Deferred tax asset | 2017 | 2016 |
| Derivatives measurement at fair value | - | 0.0 |
| Total | 0.0 | 0.0 |
| Deferred tax asset has not been recognized into balance sheet. | ||
| Non-current assets | 2017 | 2016 |
| Intangible rights | ||
| opening balance Jan 1 | 0.0 | 0.0 |
| additions during the financial year | - | 0.0 |
| amortizations during the financial year | 0.0 | 0.0 |
| closing balance Dec 31 | 0.0 | 0.0 |
| Investments | ||
| opening balance Jan 1 | 26.2 | 20.3 |
| additions during the financial year | 3.0 | 5.9 |
| closing balance Dec 31 | 29.2 | 26.2 |
| Non-current receivables from Group companies | 2017 | 2016 |
| Non-current loan receivables from Group companies | 33.9 | 14.2 |
| Total | 33.9 | 14.2 |
| Current receivables from Group companies | 2017 | 2016 |
| Current loan receivables from Group companies | 28.2 | 32.3 |
| Interest receivables | 4.0 | 1.7 |
| Trade receivables | 1.0 | - |
| Prepaid expenses and accrued income | - | 0.1 |
| Total | 33.2 | 34.0 |
Prepaid expenses and accrued income consist of ordinary accruals relating to financial statements.
| Shares | 2017 | 2016 |
|---|---|---|
| Group companies | ||
| Kamux Suomi Oy | 100 % | 100 % |
| Suomen Autorahaksi Oy (100 %) | ||
| KMX Holding AB | 100 % | 100 % |
| Kamux AB (100 %) | ||
| Kamux Auto GmbH | 100 % | 100 % |
| Changes in equity during the financial year | 2017 | 2016 |
| Share capital on Jan 1 | 0.1 | 0.1 |
| Share capital on Dec 31 | 0.1 | 0.1 |
| Invested non-restricted equity reserve on Jan 1 | 4.1 | 0.9 |
| Share issue | 21.1 | 3.2 |
| Invested non-restricted equity reserve on Dec 31 | 25.2 | 4.1 |
| Retained earnings on Jan 1 | 25.6 | 18.7 |
| Dividend distribution | -2.2 | -1.5 |
| Acquisition of treasury shares | - | -5.5 |
| Retained earnings on Dec 31 | 23.3 | 11.8 |
| Profit/loss for the financial year | 10.9 | 13.8 |
| Total equity | 59.5 | 29.7 |
| Distributable earnings Dec 31 | 2017 | 2016 |
| Retained earnings | 23.3 | 11.8 |
| Profit for the financial year | 10.9 | 13.8 |
| Invested non-restricted equity fund | 25.2 | 4.1 |
| Total | 59.5 | 29.7 |
| EUR million |
|---|
| Nordea Pankki Suomi Oyj |
| Loans from financial institutions | 2017 | 2016 |
|---|---|---|
| Nordea Pankki Suomi Oyj Instalments to be paid within one year |
3.0 | 6.3 |
| Instalments to be paid after one year | 22.5 | 25.5 |
| Total | 25.5 | 31.8 |
| Other liabilities | 2017 | 2016 |
| Current other liabilities | 0.0 | 0.0 |
| Total | 0.0 | 0.0 |
| Non-current loans to Group companies | 2017 | 2016 |
| Non-current loan liabilities to Group companies | 4.7 | 4.8 |
| Total | 4.7 | 4.8 |
| Current loans to Group companies | 2017 | 2016 |
| Current loans to Group companies | 23.6 | 3.3 |
| Accrued expenses and deferred income | 0.2 | 1.0 |
| Total | 23.9 | 4.4 |
| Accrued expenses and deferred income | 2017 | 2016 |
| Personnel expenses | 0.2 | 0.2 |
| Taxes | 0.0 | 3.4 |
| Other | 0.1 | 0.0 |
| Total | 0.3 | 3.7 |
| Derivatives | 2017 | 2016 |
| Interest rate swap, nominal value of underlying instrument | - | 6.5 |
| Interest rate swap, fair value | - | -0.1 |
| Total | - | 6.4 |
| Measurement at fair value through profit or loss | 0.1 | 0.1 |
| EUR million | At December 31, | ||||
|---|---|---|---|---|---|
| Pledges and guarantees | 31.12.2017 | 31.12.2016 | Hämeenlinna, March 8, 2018 | ||
| Loans | 35.5 | 31.0 | |||
| Amount in use | 25.5 | 30.5 | |||
| Guarantees given on loans | Matti Virtanen | Reija Laaksonen | David Nuutinen | ||
| General guarantee | Chairman of the Board | Member of the Board | Member of the Board | ||
| Business mortgages | |||||
| Total bearer bonds | 26.0 | 26.0 | |||
| Special guarantee | |||||
| Business mortgages | Jokke Paananen | Harri Sivula | Vesa Uotila | ||
| Total bearer bonds | 26.0 | 26.0 | Member of the Board | Member of the Board | Member of the Board |
| Pledged subsidiary shares | |||||
| Total shares of Kamux Auto GmbH | |||||
| Total shares of KMX Holding Ab | |||||
| Total shares of Kamux Suomi Oy | |||||
| Kamux Oyj has given non-restricted general guarantee on behalf of its subsidiaries | Juha Kalliokoski CEO |
||||
| in Finland, Sweden and Germany and pledged the shares of these subsidiaries. | |||||
| The Auditor's Note | |||||
A report on the audit performed has been issued today.
Helsinki, March 8, 2018
PricewaterhouseCoopers Oy Authorized Public Accountants
Janne Rajalahti Authorized Public Accountant
To the Annual General Meeting of Kamux Oyj
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 Board.
We have audited the financial statements of Kamux Oyj (business identity code 2442327-8) for the year ended
31 December 2017. 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.
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.
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 2.4 to the Financial Statements.
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.
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. Mis-
statements 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.
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 procedures covered all the significant countries and locations of Kamux group. The focus of our audit procedures has been on the most significant components in Finland and Sweden where we performed the full scope audit because of the magnitude and risk of the component in question. For the remaining components, we performed alternative procedures to ensure that there is no risk of material misstatement in the consolidated financial statements.
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.
• Overall group materiality: € 2.600.000, which represents a combination of adjusted profit before tax and revenue.
• Our audit procedures covered all the significant countries and locations of Kamux group. The focus of our audit procedures has been on the most significant components in Finland and Sweden.
How we determined it Average of 5% of adjusted profit before taxes and 1% of the total revenues. Both of the benchmarks were equally weighted when determining the overall group materiality.
| Overall group materiality | € 2,6 million |
|---|---|
| Rationale for the materiality benchmark applied |
|
The company is in a development phase and its strategy focuses on the increase of revenues. As the benchmark for the determination of the materiality, we chose the combination of revenue and adjusted profit before taxes. Based on our understanding the readers of the financial statements use these parameters when evaluating the performance of the group. As thresholds, we chose to use 1% of the revenues and 5% of the adjusted profit before taxes, which are within generally accepted thresholds according to auditing standards.
See note 3.1 in the financial statements
The inventory is valued to the lower of acquisition cost or net realisable value. The acquisition cost of individual cars included in the inventory, is determined based on the purchase price including directly attributable repair costs for reconditioning the car for selling purposes.
For the financial statements, the company evaluates the cars included over 90 days in the inventory. The impairment recorded is the value of cars according to net realisable value.
The valuation of inventory is considered a key audit matter because of the magnitude of the inventory and the management judgement included in the valuation.
Our audit procedures included understanding and evaluating the processes and controls for the valuation of inventory.
As part of our audit procedures, we evaluated the appropriateness of the accounting policies applied by the company for the inventory valuation.
We reviewed the management's detailed estimate for the need of adjustment for inventory valuation for financial statements. We evaluated the accuracy of recorded adjustment compared to company's accounting policy, sales occurred after the year-end and other identified circumstances.
We tested the acquisition cost of the cars included in the inventory for year-end 2017 on a sample basis. We compared the inventory value for selected cars to purchase price for the car including directly attributable repair costs for reconditioning the car for selling purposes.
We tested the net realisable value of the cars included in the inventory for year-end 2017 on a sample basis. We compared the inventory value for selected cars to sales price in 2018..
Estimated repair liability is recognised as repair liability provision when a car is sold. The amount of repair liability provision is based on historical statistics about realised liability costs and the estimated trend of repair liability costs.
Accuracy of the provision for repair costs is considered as a key audit matter because of the significant management judgement included in the accounting of the provision.
We evaluated the accuracy of the repair liability provision by comparing the estimate prepared by management to actual historical costs. We reconciled the recorded repair liability provision to calculation prepared by management.
In addition, we inquired of the management, if there were any circumstances, which would require changes to estimated trend of repair liability costs.
We also audited the payments made in 2018 to gain comfort that there are no significant costs occurred which should have been taken into consideration when calculating the provision.
We have no key audit matters to report with respect to our audit of the parent company financial statements.
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.
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.
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 man-
agement.
• 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 govern-
ance regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in in ternal control that we identify during our audit.
We also provide those charged with govern ance with a statement that we have complied with relevant ethical requirements regarding independ ence, and to communicate with them all relation ships 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 au dit of the financial statements of the current pe riod and are therefore the key audit matters. We describe these matters in our auditor's report un less law or regulation precludes public disclosure about the matter or when, in extremely rare cir cumstances, we determine that a matter should not be communicated in our report because the adverse consequences of doing so would reason ably be expected to outweigh the public interest benefits of such communication.
We were first appointed as auditors by the annual general meeting on 9 October 2015. Our appoint ment represents a total period of uninterrupted en gagement of three years.
The Board of Directors and the Managing Director are responsible for the other information. The oth er information comprises the report of the Board of Directors and the information included in the Annual Report, but does not include the financial statements and our auditor's report thereon. We have obtained the report of the Board of Directors prior to the date of this auditor's report and the An nual Report is expected to be made available to us after that date.
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, con sider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the audit, or otherwise ap pears to be materially misstated. With respect to the report of the Board of Directors, our responsi bility also includes considering whether the report of the Board of Directors has been prepared in ac cordance with the applicable laws and regulations.
• the information in the report of the Board of Di rectors is consistent with the information in the fi nancial statements
• the report of the Board of Directors has been pre pared in accordance with the applicable laws and regulations.
If, based on the work we have performed on the other information that we obtained prior to the date of this auditor's report, we conclude that there is a material misstatement of this other in formation, we are required to report that fact. We have nothing to report in this regard.
Helsinki 8 March 2018
Authorised Public Accountants
Authorised Public Accountant (KHT)
118 KAMUX CORPORATION ANNUAL REPORT 2017 119
KAMUX CORPORATION | PAROLANTIE 66A | 13130 HÄMEENLINNA | WWW.KAMUX.COM
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