Komplett ASA (KOMPL) Earnings Call Transcript & Summary

Good morning, and welcome to the presentation of Komplett's Fourth Quarter 2021 Results. We are happy to see all of you here and are pleased to welcome both those of you in the room as well as those attending through the webcast solution. Today, we will begin with the presentation of our fourth quarter results, which will take approximately 20 minutes. We will then hold the presentation detailing the upcoming transaction with NetOnNet that we informed the market about this morning. That presentation is estimated to take around 30 minutes. Afterwards, we will hold a joint Q&A session for both fourth quarter and for the transaction. And that Q&A session is estimated to last around 40 minutes, concluding today's presentation at 10:30. Now please welcome Komplett's CEO, Lars Olav Olaussen, who will take you through our fourth quarter.

Good morning. Last year, Komplett's turned 25. And before we get into the quarterly figures, I'd like to take a moment to reflect a bit on how we've positioned the company for the next 25 years to come. Moving up to 2018. After a period of broader category focus, owning companies within categories like pharmacies, beauty care and baby care, Komplett's Board of Directors felt there was untapped potential in the core business, namely consumer electronics. And a decision was made to create a single-minded focus -- to create a business in a single-minded focus on consumer electronics. Since then, we've been the fastest-growing electronics retailer in the Nordics, but we've not only been growing fast. We've also positioned the company well for future growth. As we are in structurally growing markets, we are well positioned to capitalize on the online migration taking part, and we target attractive customer groups. Further, we've also created a scalable business model that is operating extraordinarily efficient and it's given us a clear cost leadership position in the Nordics. As said, last year, we accelerated our 25th anniversary. And I can think of no better way to celebrate than to see how the organization has executed on this new back to core strategy. Looking at the highlights for the quarter. It's a mixed picture on the top line. In total, we saw 4% revenue decline, driven by market headwinds in the B2C market as well as supply chain constraints and component shortages, especially hitting us in the gaming and components category. Parts of this decline was offset by record performance in both the B2B and Distribution segment. Our gross margin continues to improve, driven by the B2B and distribution segment. While at the same time, our B2C segment holds up its gross margin versus last year despite a fierce price competition in the market. We continue to operate efficient and our scalable business model proves itself well, resulting in a record low operating expense and an increased EBIT margin. In some, also, the Board of Directors has in line with our dividend policy, proposed a dividend of NOK 2.9 per share, which is also in line with our financial targets. If we start by taking a look at the electronics market, after a period of unparalleled growth, the B2C market has leveled off over the last few months. This does not come as a surprise as consumers again are able to shift spending back to categories like out-of-home dining and travels, it's natural that we will experience a period of softer market -- a period with the softer market before we again see growth normalizing. Also, supply chain constraints, especially in the gaming and components category, is expected to continue for the larger part of 2022. In the short term, complex multichannel model will serve us well in this. We continue to see strong momentum in both B2B and distribution, providing us a natural hedge in a situation with a softer market environment in B2C. In the mid to long term, our belief in the attractiveness of the B2C market remains unchanged. We do think the underlying historical market growth has been driven by strong innovation with new phones and tablets coming to the market trading is up to newer and better models. We see new video games requiring more per standard from our computers, and we see new categories like robot vacuum cleaners and electrical kickbacks driving new demand altogether. And this will continue also going forward. And during the pandemic, electronics has taken a larger part in our lives. We see that there are more devices installed in households, and this will create a larger replacement cycle. So we do believe that the market is fundamentally larger coming out of the pandemic. And lastly, I want to say the migration to online retailing has been going on for several years and will continue, and we're well positioned to capitalize that. And then some -- we remain -- we continue to believe in the attractiveness of the consumer electronics market going forward. If we look at our revenue for the quarter, it's -- we land the quarter at -- with 4% decline, driven by the B2C market and offset by B2B and distribution. For the year, we land the year with 12% growth on the back of very strong comparables with 31% growth last year. In sum, it's a strong year despite some headwinds on top line in the fourth quarter. Moving to gross margin. Our gross margin holds up very well. For the quarter, our gross margin increases by 0.1%, driven by gross margin increase, both in B2B and the Distribution segment, while the B2C segment maintains this gross margin versus last year, which is a strong performance given the intense promotion pressure we saw in the market, including key competition prolonging Black Week offers into December. For the year, it's also a strong -- it's a strong performance on gross margin. Our total gross margin declined by 0.2%, but that is primarily driven by a new large distribution agreement and a fantastic growth in the distribution segment, where we have lower margins. So a mix effect. Looking at the B2C and the B2B segment, both areas increased their gross margin for the year. On an EBIT level, our EBIT margin continues to improve. For the quarter, our total EBIT is sustained at NOK 118 million despite lower volumes as a group, improving the scalability and effectiveness of our model and supported also by a strong performance on gross margin. For the full year, our operating expenses, including depreciation, is reduced down to 9.7% and placing us clearly as the cost leader and the most efficient player in the Nordics. Our EBIT margin then grows by 0.7% to a total of NOK 388 million. And in sum, we delivered an EBIT growth of 41% for the full year. If we turn to the segments and start with B2C. The fourth quarter is, we see softer market conditions and a 12% decline on the back of both a softer market and component shortages hitting us especially hard in the gaming and component categories. We expect this trend to be sustained during the larger part of 2022. We also saw more price campaigns as said during the quarter, but we are able to sustain our gross margin. The EBIT does, however, decline in absolute terms due to lower volume. And -- but for the full year, we see an increase in EBIT margin from 3.2% to 3.6%. And also despite the soft market in quarter 4, our top line grows by 4% on the back of very strong comparables from last year. In the B2B segment, we end a record year with a record quarter. Our turnover surpasses NOK 1.5 billion, and the all-time high revenue is driven by an ever increasing average order value. Our customers keep returning and buying more and more, which is a strength in our business model. The growth comes also together with a broad-based gross margin improvement, both for the quarter and for the year. And coupled with a very efficient operations, our EBIT margin increases both for the quarter and for the year, our EBIT margin is up by more than a percentage point, delivering a total of NOK 146 million of EBIT. It's basically the same story in the distribution segment. We end a record year with a record quarter, surpassing NOK 3 billion of revenue. This very strong performance is driven by new large distribution agreements. We saw 8% revenue growth in the quarter on the back of 87% growth last year and a very strong results. Margin grew a bit in the quarter, driven by mix and very efficient operations, increased the EBIT margin for the quarter to 3%. For the year, we see 29% growth on the back of 59% last year but a slight gross margin decline. The gross margin decline is driven by a mix of where the new large distribution agreements come at lower gross margins. But at the same time, the gross -- the new distribution agreements can be handled by our supply chain in an extraordinarily efficient way, meaning that we can -- that while we have lower margins, our EBIT margin continues to expand and is up to 2.5% for the year, delivering a total of NOK 79 million. I will now hand the word to our CFO, Krister Pedersen, who will take us through the details of the financials. Krister?

As we have seen, the operating revenue declined by 4% in the quarter, driven by a softer B2C segment. However, B2B and distribution delivered record quarter, both in revenue and operating results. As a group, it is important to maintain the cost leader position that we have. We maintained at 9.2% OpEx to sales ratio even with decline in revenue. For the full year, OpEx percentage ended at 9.7%, which is all-time record low for Komplett Group, down from 10.6% last year, including depreciations and one-off items. Regarding tax, we had a positive effect of a booking of losses carried forward last year, fourth quarter last year, which we didn't have this year, 2021. However, we did have a similar effect in the first quarter of 2021. So on a yearly basis, the effective tax cost is around 13% for both years. Profit for the period in 2021 in total, including IPO and M&A cost was up by 36%. On the cash flow, as mentioned, that we have a great improvement in operating result. However, the cash flow is hampered by increased net working capital, where inventory is the main driver. We entered 2021 with a low net working capital driven by very strong sales in the fourth quarter of 2020, and we needed to fill up inventory after that season. Further, we ended 2021 with softer sales, leading to higher outgoing inventory. The cash flow lost in both ends. Important note is that inventory is still healthy. Another element is the high growth in B2B and distribution segments, leading to higher accounts receivable. On the investment chart, the most important single element of the year is the acquisition of Ironstone in the third quarter booked NOK 65 million. There are no big movements on the financials. They are still strong. Leverage ratio, excluding IFRS 16, ended at 1.3, which makes room for dividend payout. And the Board of Directors are proposing a dividend payout of NOK 2.90 per share.

Summing up. Komplett delivers 12% top line growth for the year despite a softer market and a revenue decline in quarter 4. Looking at the January development on the top line, it's in line with the fourth quarter. We have a strong start with good momentum in both B2B and distribution and while we experienced continued headwinds in the B2C segment. It's been a record year in both B2B and distribution, and it's backed by solid EBIT margin expansion. EBIT in quarter 4 is sustained despite lower volumes and for the year, we delivered 41% EBIT growth. In sum, it's been another solid year and in line with our dividend policy, the Board proposes a dividend of NOK 2.9 per share. Marking this done, I'm now going to hand over to you to introduce the next topic.

Thank you, Lars Olav. Thank you for the presentation. Thank you, Krister. That concludes the presentation of the fourth quarter results, and we will now present the big news of today, the upcoming transaction with NetOnNet that we announced this morning. And I would like to remind you that the Q&A session for both the first and the second session will be held after this. The transaction presentation will be held by Susanne Holmstrom from NetOnNet; and Lars Olav Olaussen from Komplett. Welcome.

All right. Here I am again. And I have to say, I'm very pleased to stand here to announce that Komplett Group has entered into an agreement to combine with NetOnNet. Last year, Komplett Group was introduced on the Oslo Stock Exchange main board. At the time, we said, we'd continue building a company that was well positioned for future growth. We would have strong local brands, enabling us to build strong relations to attractive customer groups and with leverage our increasing scale to improve our gross margin and to sustain our industry-leading cost structure. Joining forces with NetOnNet allows us to do just that. We are creating the undisputed leading e-commerce player in the Nordics, and we're solidifying our position as the largest online first consumer electronics player. Before we jump into the presentation, I have a great pleasure of introducing the CEO of NetOnNet, Ms. Susanne Holmstrom. Welcome.

Thank you. Thank you, Lars. Yes. My name is Susanne Holmstrom, and I'm the CEO of NetOnNet, the biggest e-commerce player within home electronics on the Swedish market. I joined NetOnNet in 2018. And before that, I have held positions in other industries like telecom and insurance. And since 2018, I am the CEO of NetOnNet, and I will be pleased to tell you a little more about NetOnNet in our journey later on in this presentation.

All right. Let's start by going through a summary of the combination. The combination is structured as an acquisition of NetOnNet by Komplett. Komplett will remain listed on the Oslo Stock Exchange, and the owner of NetOnNet SIBA Invest, will receive a mix of cash and shares in Komplett and becomes the second largest shareholder in Komplett with approximately 33% of shares before dilution from financing of the cash payment to SIBA Invest. Canica Invest remains the largest shareholder with approximately 40% shareholding. We have secured a 15-month bridge loan to settle the cash part of the purchase price. We intend to replace the bridge loan with equity in due course. The combination will result in a business with aggregated revenue of NOK 18.5 billion on 2021 numbers and an adjusted EBIT close to NOK 700 million. We expect to realize cost synergies in excess of NOK 200 million, as I will come back to in the course of the presentation. Our Board has proposed a dividend of NOK 2.9 per share. This dividend is also payable to all shares to be received by SIBA Invest. Okay. The rationale for the deal will also service the agenda for the day. As I said, through joining forces with NetOnNet, we're creating the leading consumer electronics player in the Nordic with online as a primary channel. But we're not only building scale. The company will be well positioned for future growth, both capitalizing on the online migration trend and through reaching complementing an attractive customer groups. Our efficient cost leadership position is sustained and both companies have proven to have efficient, scalable operations with superior cost positions. And as NetOnNet brings a leading position in the Swedish market, the combination of the 2 creates a true Nordic platform. There are material value creation opportunities available in the combined entity, and we expect to realize at least NOK 200 million of synergies. All in all, we're building a company with a healthy leverage ratio, solid financial and a company that is able to sustain the attractive dividend policy in the combined entity. Komplett Group and NetOnNet are complementary businesses. On the top row, we look at the geographic split. NetOnNet is adding a significant position in the Swedish market, creating a true Nordic entity. In the middle, we see that NetOnNet primarily plays in the B2C channel, increasing our share of B2C revenue from approximately 60% to 70%. At the same time, we do see exciting opportunities in the B2B space as Komplett brings a very efficient operating model within B2B and NetOnNet joins with a very exciting brand to build an increasing -- ever-increasing B2B business on. And last, but not least, on the bottom of the slide, I want to point out that this is the combination of 2 companies that are winning in the market. Both NetOnNet and Komplett have been taking market shares for the last year, and the combined entity will be well set up for continued market share growth in the years to come. If we start by looking at the right-hand side of the slide, we see that both companies come from a period of strong momentum across channels and a momentum that is also on top line that has translated into substantial EBIT margin expansion. And in sum, we're building a well-positioned company. We'll have the leading local brands with long heritage and loyal customers with limited overlap in the customer base. The 2 companies complement each other and not only in terms of geography and channels. But as you'll see over the course of the presentation, the company is also bringing an attractive combination of different strengths and competencies. There is more than NOK 200 million of synergies available to realize primarily from sourcing and improved cost of goods sold. It's the 2 companies with the best cost structures in the Nordics that are joining forces to create a low-risk combination. Most synergies are available through negotiating improved terms from suppliers. And we have spent significant resources in leading up to this day on conducting a clean team exercise where external consultants have compared our terms down to SKU level. Through this, we've been able to validate that the level of synergies are there and create strong confidence that the synergies are there to be realized. Combining NetOnNet and Komplett's Group places us comfortably as the largest consumer electronics player in the Nordics with online as a primary channel. If we were to include the traditional bricks-and-mortar players, it's a close race for a second with power. As long as we keep our distribution business, Itegra out of the equation. Where to include Itegra, we'll have a clear #2 position in the Nordics with a combined revenue in 2021 of NOK 18.5 billion. With the combined entity will not only achieve scale, it will be well positioned for future growth. As can be seen on the left-hand side, we see a sizing of the Scandinavian consumer electronics market. At the bottom, in blue, you see the B2B market, having grown at a rather low rate of 1.6% since 2016 on average. But both companies, both NetOnNet and Komplett have had a significantly higher growth rate and have models that have been winning in the market in the same period. On top, you see the B2C market is sizable and has been growing at a 6% average growth rate since 2016 represented an attractive underlying growth. As I said earlier, this growth is driven by innovation in the market where our very professional suppliers bring a constant stream of new products to the market, driving underlying market growth. And we do expect this trend to continue going forward. On the right-hand side of the slide, you will see the online -- slide showing the online migration in the market. The online migration has been going on for many years and has accelerated during the pandemic. Looking at consumer surveys done recently, trying to understand how consumer habits have changed during the course of the pandemic. It's a clear pattern that the people who have tested now online trade during the pandemic intend to continue doing so. As they see online shopping just as more convenient, it's more transparent and gives them access to a broader area of products. And if we look towards -- if we look outside of the Nordics towards the United States, we see that on the top right-hand bubble, we see that 69% of the market in the U.S. is now online, giving us good hopes that there is still significant headroom for growth also online migration in the Nordics. And the combined entity is well positioned to capitalize on that trend. Both NetOnNet and Komplett has been taking market share over the last year. And I do believe that our passion for creating unique customer experiences is an important reason for more and more customers to shop with us. In NetOnNet's customer club, Klubb Hyllan, there is now more than 1.3 million members, and it's a membership program without discounts. But to a program where customers receive a vast amount of interesting content and services that brings them closer to NetOnNet and brings NetOnNet closer to their customers. Similarly, we see Komplett and Webhallen are interacting closely with their target groups and especially well with the gaming community. An example on the left-hand slide comes from Black Week just last year, where we arranged a charity stream with our gaming community, raising money for the child cancer foundation. Over 48 hours, our gaming community raised NOK 2.5 million for the fight against child cancer, while at the same time, we had more than 80,000 from our gaming community watching us on average for more than an hour, creating a very -- creating a very close relation to their customers also. And so we built close relations to our customers, but in a tailored manner that is adapted to the interests of our unique customer groups. And our customers seem to appreciate the work we're doing. Since 2016, Komplett has consistently been awarded consumer electronics retailer of the year in Norway. NetOnNet is on their side, both are the preferred e-commerce player in Sweden and is also now acknowledged for offering the best prices in the market. While Webhallen is being acknowledged for the place to be if you want to buy your gaming gear. And we're -- and it's important to say, we're not only combining 2 great companies, but 3 strong local brands. And while Komplett and Webhallen, the Komplett and Webhallen brands, both target and more niched customer group, including the hardcore gamers, NetOnNet complements these positions with a broader customer reach. Taking a look at our supply chain. Komplett currently has warehouse operations in [indiscernible] an hours drive from Norwegian Capital Oslo and in Stockholm. With NetOnNet, we also get a warehouse in Boras outside of Gothenburg. This is a location that complements our current supply chain well and gives us an infrastructure with the potential of reaching the majority of our customers with same-day delivery. In addition, NetOnNet service centers over time will also provide additional potential for further market proximity. Komplett has previously announced that we're investing around NOK 400 million to unify our ERP systems and to build an automated and highly efficient supply chain based out of our warehouse in [indiscernible] and the new warehouse in the Stockholm region. Also, NetOnNet is planning to invest in further developing their warehouse. And both companies are looking at similar investments. The timing is this very, very good for joining forces and building a leading supply chain in the Nordics to serve the group as a whole. And we're confident that as we get this project going, we'll realize solid benefits from working as one group and it will give us the opportunity to offer our customers an unparalleled shopping experience. Both companies are running a very efficient operations and have industry-leading OpEx levels. Both companies have also proven to scale well as we see OpEx as a percentage of revenue declined as volume growth. In sum, we will have a clear cost leadership position in the Nordics. Looking at the Swedish market, where Komplett historically, have had a smaller footprint. We're now building a clear #2 position, and we're creating a true Nordic entity. What are most happy about is to join forces with a leading brand and a great company. It's a company that we've admired for quite some time, both for its highly efficient and well-run business model as well as their differentiated and clear concept, a very strong brand and not least an industry-leading customer satisfaction. I'm very happy to hand the word to Susanne, who will give us an introduction to NetOnNet.

Fantastic. Thank you, Lars. Well, I don't know why, but this table feels a little bigger when I stand here compared to you. Yes, about NetOnNet, we are very excited to join forces with Komplett to create a leading e-commerce player within home electronics in the Nordic market. And as Lars previously mentioned, we believe that there will be significant complementary synergies in this combination. NetOnNet started as a pioneer within the digital business since launch. And we have gone from being a digital challenger to become a digital leader on the Swedish market. We have an online first concept that is complemented by service centers that we call Lagershops. And we have more than 100 million visitors in our digital and physical centers annually. And around 90% of our customer journey starts digitally. And we have a powerful value proposition to our customers based on a customer-centric offering, fast deliveries and best price. And our Lagershops differ from the incumbents in the sense that they make the service, service center and logistics hubs. They are designed for pickup, and I will, of course, give you another picture when I talk about this, sorry about that. They are designed for pickup of goods, and they are complementary to our online channel. That is being our main channel. This powerful combination has not only been valuable for our customers. It has also been valuable for NetOnNet generating growing profits year-by-year. And now a clear click. NetOnNet has had a long track record of profitable growth. We started our journey in 1999 with an online first business model. Already in '99, we started as a challenge here, and we have continued to challenge ever since. The successful introduction led to an IPO on the Stock Exchange around 2 years after. And already in 2001, we launched our first larger shop, developing a strong omni model even before the [ word omni ] existed, and we have continued to develop this model since then. We also established a sourcing office in Dongguan in China already in 2005, driven by increased control and of course, the opportunities in sourcing. SIBA Invest owned by the Bengtsson family, so a great potential in NetOnNet and took it private in 2011. I joined the company in 2018 and saw great potential in scale and partnership. And therefore, I'm very proud to stand here today. The last years have accelerated the growth for NetOnNet, and today, the company generates over NOK 7.4 billion in revenue. Our fantastic low profitable growth journey has been enabled by our passion for the customer and our customer-centric offerings. We strive to create a unique customer journey and the destination company where customers come to and where you could truly find the best prices. That's why it's always satisfying to get recognition and appreciation from our customers. And we believe that one significant success factor to the recognition and depreciation from our customers, it's that we give our loyal customers some extra benefits. Our loyalty membership, as Lars mentioned, Klubb Hyllan is designed to make an already seamless customer journey even easier. The membership does not consist of any discounts. It's based on services and content that is unique and adding value to the purchase and to the relationship with NetOnNet. This has generated the growth of our members in the -- to belong with around 41% the last 2 years. And today, we have 1.3 million members. And today, a little more than 50% of our revenue comes from loyalty members. To keep us relevant for our customers, we have created an offering with a healthy mix between [ A brands ], own brands and services. Meanwhile, [ A brands ] drives innovation and is very important for relevance, own brands offers an affordable alternative to the A brands and a unique local adaptation to the offering. Own brands is the key element in our product offering, and we focus on high-quality products to affordable prices. But also, we add new product lines when it makes sense, both from a technical and a profitable perspective. And one example of this is the launch of barbecue with the brand, [ Austin and barbecue ] that was made in 2017. And this business has generated a growth of 68% between 2018 and 2020. And in 2020, it represented 30% of sales in this category. In recent years, we have focused a lot on services and building services into our product offerings, and we are pushing the service offerings and positioning ourselves within the circular economy. And some of the initiatives that we have launched, the recent years is, for example, Vaxla Upp. It's a forward trade-in program. [ Byt In ] that is trade in of used home electronics. We're also selling Begagnat in Swedish, its sales of refurbished products. And Hyreshyllan, it's a rental of products, namely mobile and laptops. But in order to be able to offer a powerful value proposition for the customer, you need a well-developed supply chain and tailored back-end functions. Our local purchase office in China founded in 2005 enabled us to carefully source suppliers and products to ensure quality and the price, of course, of our own brands. Our central fulfillment center in Boras operates at the low cost and enable us to also deliver with high delivery position. We have integrated our terminal with PostNord, and we spend more than 2.1 million packages to our online customers annually. This back end is complemented with 29 Lagershops, service centers. We have 26 in Sweden and 3 in Norway. And we offer the same day delivered is to 50% of the inhabitants and people in Sweden if you purchase before 2:00 and to 90% we can deliver within 24 hours. As previously mentioned, our service centers differ from the incumbents. They are designed to serve as service center and logistic hubs for the customers. The first Lagershops was established already in 2001 due to customer requesting a physical touch point and also wanting access to their products even faster. Today, as I said, we have 29, 26 in Sweden and 3 in Norway. And it's a proven self-service concept with more than 6 million visitors annually and more than 60% of those visits also make a purchase in the Lagershop. The Lagershop also enabled us to build local awareness and increasing our online penetration in the area. And looking at Webhallen, it is clear that it will be a great complement to our existing service centers. NetOnNet focus has always been on large, efficient, low-cost self-service center outside the cities. Meanwhile, Webhallen store network on systems, smaller stores and more in city centers. We believe that there will be opportunities to both increase reach and enable faster deliveries in an efficient way for our customers now when we join forces with Komplett. And I just want to finish by saying that me and my team look very much forward to this continued journey together.

Thanks, Susanne. Let's talk a bit about the value creation and the deal and the synergies. And I want to start by discussing a bit about sourcing. If we take a look at the industry-leading gross margins, we're confident that there's still significant headroom for growth for the group. The 2 companies build and bring complementary strengths to the table. At Komplett Group, we've over the last year, expanded our gross margin significantly driven primarily by improved terms from our suppliers. This is no coincidence. We have invested heavily in building solid capabilities within negotiations, within category management, supplier management and pricing. At the same time, NetOnNet brings long-standing and solid supplier relations and leading capability in sourcing directly from manufacturers, for example, in China and then building own brands that can compete directly with the traditional branded products. And through joining forces, we are doubling our addressable spend to NOK 13 billion. And as I said, we have conducted a clean team exercise with external adviser assessing the potential and joint sourcing down to a very detailed level. And it gives us a strong confidence that there's ample synergies to be realized. In sum, they're very capable people of the organization, the complementing capabilities and the scale of the group makes us confident that we will realize significant synergies by joining forces. And as I said, there are substantial and clearly identified synergies available, and we expect to realize in excess of NOK 200 million in synergies where the majority of synergies are to be realized from lower pricing from our suppliers in COGS and in an expansion of our own brands operations. We expect the full effect of the synergies to be realized within 24 months of closing. At the board -- looking at the Board level, at Komplett Group, we have the tradition of a close collaboration between the Board of Directors and the administration. And we're happy to announce that Mr. Fabian Bengtsson, representing the current owner of NetOnNet will join the Board. He will also be joined by NetOnNet's current Chairman, Mr. Roland Vejdemo, who'll be joining the Board as an observer. Mr. Nils Selte will continue as the Chairman of the Board, providing continuity in the collaboration we've had with -- and the administration have had with the Board, while at the same time, adding new competency to the Board with people who are very close with a close understanding of NetOnNet and a strong industry understanding and a very strong understanding of the Swedish market. I will now hand the word back to Krister, who will take us through a bit on the area of financials.

Thank you, Lars. I will take the finance part. Looking at the combined financial statement, we have become -- we will become a significant bigger consumer electronic player. 2 players with a solid market position and with solid growth finding each other and looking from a complex perspective, moving from left to right, net revenue base will increase by 67% from NOK 11 billion to NOK 18.5 billion. Cost position will be remained with a cost percentage around 10%, a clear cost leader position. EBIT base will be up by 74%, and that's even before the synergies mentioned earlier. We will check the synergies going forward and let you know as we progress. Also important, but not included here, a great number of new colleagues. On the balance sheet and excluding IFRS 16 effects, NetOnNet has very limited net interest-bearing debt, only NOK 90 million by year-end. Leading to a leverage ratio for the new group, down from 1.3 to 0.8, given the issuance of new shares, which I will come back to. With this, we will have a strong balance sheet for both future growth and for dividend payout. Going to the time line announcement is today. From the slide, regarding the transaction overview in the beginning of this presentation, we have a bridge facility to finance the cash consideration of NOK 1.5 billion for 15 months ahead. During March, we will have an extraordinary general meeting to approve the transaction with the issuance of the consideration shares to SIBA Invest and authorized to issue shares in a direct issue to replace the bridge facility. During second quarter, we expect the clearance from the competition authorities in both Norway and Sweden and shortly after that closed the deal. For the third quarter, we are planning a Capital Market Day, where we will tell you even more about the joint forces and what we aim to achieve together. Thank you, Lars.

I'm going to sum it up by saying I think it's a fantastic deal. We are creating the true online-first electronics champion in the Nordics. We're going to create a company that's attractively positioned towards attractive customer groups and well positioned to capitalize on the growth trends in the market. It's 2 companies that have a proven scalability, a leading cost structure and we'll have very efficient operations with a fantastic base for strong competitiveness. And we'll expand our footprint in Sweden, create a true Nordic entity, and there is fantastic value creation opportunities in there in excess of NOK 200 million in synergies, which will keep you updated on, as Krister said. And -- and it's a company with strong financials, low leverage ratio, solid balance sheet and a company that can sustain the attractive dividend policy that Komplett Group has had since we launched on the Oslo Stock Exchange. So in sum, for me, a great deal, a low-risk combination and a fantastic day for Komplett Group. So I'm going to give the word to you, Pedersen, and we'll go into a bit of Q&A, right?

Yes, that's right. Thank you. Thank you, Lars Olav, Susanne and Krister for holding that presentation. We will now open up for questions. We will take any questions from the room first before we proceed to take any questions from the webcast. And we would like to ask those of you asking questions, please wait to be handled the microphone from [ Elisa ] before asking a question. And also, please hold the microphone close to your face so that we ensure that all of those attending the webcast also can hear your questions.

Eirik from Carnegie. I've got 4. If we start first Lars Olav, I think you briefly talked about it on the synergy slide. What's your plan on product overlap? And more specifically, the NetOnNet owned brands potentially on the complex platform seems to be a very gross margin accretive? And also, my second question, I guess, it goes more to Krister. Looking at the OpEx to sales, you're taking a bit of a step back on a pro forma basis. Could we expect the combined entity to push down towards the 10% mark without synergies? Or are there some structural cost differences there, which makes the pro forma levels more reasonable also going forward? The third question, I could be wrong, but I couldn't find anything on integration cost in your communication. Just some scope there, I think, would be good. And then lastly, you've got the 3 very strong brand names. What's the plan there to stick with those 3 separately? Or you think merge over time would make sense?

So I'll maybe start with the first one. So NetOnNet has a fantastically strong portfolio of own brands, but also a very strong capability in sourcing, sourcing solid products, which is not easy and building own brands. And I think that is definitely an area where we see clear synergies that we can work together because if you look at NetOnNet, it's around 12% of their turnover is from private label. As you say, it's margin accretive, and we are around 2%. So yes, it's a clear part of the plan to create synergies to work together on private label. Was that sort of clear? Krister, do you want to take the…

The cost question. I think regarding cost percentage, that is a very important KPI for us, but we will come back to you on the financial targets in the Capital Market Day in Q3.

I can take the brand question. Yes, we have 3 strong brands in Komplett, NetOnNet and Webhallen on the market today, and we will continue to operate at 3 separate brands on the market. They are strong. They have had a strong growth, if you look historically, and they have great potential for the future. So they will continue as a brand, and then we will focus on the synergies on [ COGS ]. I think there was 4 questions? [ Wasn't there ]?

I think also -- we need to have a full plan for you in the Capital Market Day. So -- but on the integration, it's important for us to emphasize that we start with looking at purchase synergies, and that is the main target for us now, and that is not a big cost element to it.

If I just add, I think that -- I said in my presentation that I think it's a low-risk combination. And the rationale for that is that we do not want to go directly into large steps and integrating organizations or unifying brands. We're going after our COGS synergies, both on purchasing price and on private label [ our ] own brands. So that is our focus. And that to me, takes the -- moves this into a low-risk combination.

Any other questions from the room? No. Then I think we'll take a couple of questions from the webcast. And if anyone have a question later, we can take that then. We'll start with a question regarding the B2C in Q4. Did you say that the Q4 sales decline of 12% is something to expect for the full year? And do you expect any improvement in the component shortage situation during 2022? If so, when?

I don't -- I think what we said is that the B2C market will remain softer for the larger part of 2022, and we do expect there to still be component shortages in 2022. Will that be 12%, that is in no way what we're saying. But we do expect a softer market.

And then another question regarding the synergies in the transaction. You say that the NOK 200 million synergies mainly will be related to sourcing. Should we expect you to use a larger part of this SEK 200 million to secure even more competitive prices.

I think the -- I think the -- if you look at NetOnNet, the clear strategy of NetOnNet and the clear position as a cost leader. And I think as a retailer, you have to be cost -- you have to have a clear pricing that is transparent and competitive all the time. Otherwise, that is sort of the basis of driving a good retailer. So we will make sure we have competitive pricing. But I don't see any need for getting more terms to lower our prices. So I don't see a direct link there. We will follow competitive pricing in the market at all times. But the synergies are the synergies, and we are competitive now as well. So I don't -- there is no direct link there.

And to add on Komplett has a very efficient model and low cost. And these are 2 -- we are 2 strong actors joining forces becoming even stronger together. And I think this will make our relationship with the supplier, even tighter, and we will be able to source in a different way with higher power double power.

Will the acquisition of NetOnNet impact your expected investments in Sweden in the coming years?

As said, with NetOnNet, we get a new warehouse in Boras and that we've assessed the 3 locations quite carefully, and they complement each other. So having the 3 gives us a good market proximity. But what we'll do now, as soon as we come past closing and start working together to see how we can build a unified supply chain that is optimized for a full group and not only for competitive NetOnNet to standalone. And how that impacts sort of the dimensioning of the warehouses, et cetera, we have to come back to it. We need a bit of time to assess that.

On the CapEx targets that we have that they will remain. So we will still build a central warehouse in Sweden.

Yes. That's true.

And then a question regarding revenue and COVID effects. At the IPO, you guided for NOK 500 million positive revenue impact of COVID. How do you see this figure on the back of the recent trends you saw in Q4 with B2C? And furthermore, how do you see the impact of COVID on NetOnNet revenues?

I can start with Komplett. Of course, we did have a fantastic Q4 in 2020. Some of it helped by COVID-19, of course. And I think also for that quarter in 2020, a lot of the stores, physical stores were closed. So that's a very favorable market condition for online. So of course, we will have a negative effect for that in 2021, which we had. How much it is very difficult to say.

And looking at NetOnNet, we have not done any calculation specifically on COVID effects. But of course, we have the similar trends as you see, with a strong growth last year. We had a strong growth even before COVID. So we can see a great potential in future growth. We have also launched just recently a new product segment, white goods. That is also increasing our potential of continues to grow, even if we, of course, have had a strong 2021.

And a question regarding the supply constraints, how much did the lack of goods impact the Q4 revenues? And how should we think about the income for the coming quarters?

It's clear that the access to especially components and gaming products impacted our top line. It did. We're working very hard with our suppliers now to secure [ mortgage ], but it's -- but one of the things that has also happened during the pandemic is that our and our suppliers' ability to sort of forecast what is in the pipeline, the visibility we have on the coming pipeline is much shorter. So it's hard to say. We expect softer market conditions for 2022, but not necessarily the minus 12% we saw in B2C in 2020 in quarter 4 is not necessarily representative of the trend. We'll see going forward.

And then a question on the transaction and the synergies. Can you add some more color on where the synergies should come from? How much is revenues and how much is cost? How does the acquisition impact the 2 companies' ambition for expanding its warehouses? And is this a part of the calculated synergies?

The synergies that we have mentioned today is based on purchase of goods from COGS. So if we have any synergies on cost, I think that might be, for example, packaging material, transport costs and so on, but we haven't been through that yet. But it's important to say that we are 3 organization today with Webhallen, Komplett and NetOnNet, and that will remain going forward as well.

And expanding on that, NetOnNet has a strong P&L offering and sourcing, scaling this offering and part of the synergies that you're talking about.

We're referring to our own brands [indiscernible]. Yes, we will be working with own brands since start in 20 years. And of course, it's an integrated part of our offerings to the customers. And we can see that Komplett and Webhallen also working with own brands, and we are really looking forward to see what kind of -- how we can increase this offering and help each other to become even stronger in this area going forward. But of course, we are really eager to start working and to look at these synergies more carefully, but we need to have a little time to see what kind of synergies can we see. But our strong sourcing capabilities is, of course, something that is interesting to discuss with Komplett.

And how do you expect NetOnNet to impact the distribution segment in Sweden?

Currently, I think the -- our primary ambition for the distribution segment is in Norway. So there is no big plans to expand the distribution segment at any scale in Sweden at the moment.

And then a question on the transaction and why both a dividend and a share issue?

It's important for us to maintain the dividend policy that we have communicated. So I think that is the main reason.

That concludes the questions we had from the webcast. Any last questions from anyone in the room?

Thanks for showing up.

Thank you.

Thank you.