IN MOTION For profitable growth

Tokmanni 2017

STRATEGY AND FINANCIAL TARGETS

Material responsibility themes

Tokmanni as an investment Table of contents This is Tokmanni Tokmanni is ’s leading discount retailer. We offer our customers DIRECTION an interesting and wide assortment at affordable prices in 175 stores around Finland and an online store. 3 This is Tokmanni 11 Strategy 4 Year 2017 in brief 13 Tokmanni's strengths Our target is to grow by improving our Our strengths are: Responsibility as part Like-for-Like growth and by opening new stores. • Low price image Interim CEO's review 6 14 of business strategy In addition, we seek improved profitability • Attractive and wide through an increased Private Label and direct product assortment Operating environment and Tokmanni as an investment sourcing share of sales. • A strong national brand 8 Tokmanni's markets 15 Corporate responsibility is a strategic focus • A pleasant customer area for Tokmanni and we respect people and the experience environment. • A nationwide store Tokmanni is in motion. We work hard for smart shopping and more The company is listed on the Nasdaq Helsinki network sustainable discount retailing. Our vision and strategy define the direction main list. In 2017 Tokmanni’s revenue totaled we are heading towards. EUR 796,5 million and it had 3,255 employees.

RESULTS We want to offer our customers an inspirational shopping experience in all our sales channels. We have a wide range of products at low prices in six product categories: Consolidated statement of Key figures 18 20 financial position

Consolidated income Consolidated statement of 19 statement 21 cash flows

Groceries Home cleaning Clothing and personal care

Global trends and phenomena impacting retail in general and Tokmanni are described in detail in Tokmanni's Responsibility Report 2017.

Tools and electrical Home, decoration Leisure and home equipment and garden electronics

2 IN MOTION – FOR PROFITABLE GROWTH IN MOTION – FOR PROFITABLE GROWTH 3 Year 2017 in brief

Tokmanni opened a record high Tokmanni's marketing amount of new stores concept was recognized in A total of 13 net new and 2 relocated stores several competitions were opened during 2017. Thereby, Tokmanni Tokmanni's The world's best buyer increased its selling space by approximately marketing concept, launched in the 24,000 square meters. Tokmanni’s target is to fall of 2016, attracted attention and increase the amount of net new selling area by won several awards during 2017. approximately 12,000 square meters annual- ly, translating into approximately five new or relocated stores. Tokmanni continued to develop its private labels Tokmanni continued to develop its Tokmanni's store openings are very popular not assortment and seasonal offering least because the company is distributing red and launched, among others, a new buckets containing a surprise at the openings. Kotikulta home-lighting series in the Hundreds of people are queuing for the surprise fall. Kotikulta is Tokmanni's private buckets at the openings. label and the product range includes nearly 130 decorative and Christmas Tokmanni distributed lights and LED candles. Customers have welcomed the new light series 16,500 very well and demand has been high. surprise buckets during Tokmanni will launch in the spring of Tokmanni's store network its store openings in 2017 2018 among others a new Brücke tool 796.5 2.7% series and Namipäivä candies. Both Revenue, MEUR Revenue growth brands are Tokmanni's private labels. Tokmanni established a Sustainability Advisory Board In 2017 Tokmanni set up a Sustainability Advisory Board to support its responsibility Tokmanni as an employer for work. The Advisory Board consists of exter- young people 46.4 175 3,255 Million baskets Stores employees nal experts and aims to support Tokmanni by In the summer 2017, Tokmanni providing the company with an outside view of employed a total of about one the company's responsibility work and sparring thousand full-time summer work- the company in, among others, sustainability ers or minors around Finland. The trends, risks and best practices. youngsters were very interested in Tokmanni and the company re- -1.3% ceived over 15,000 summer job and Like-for-Like revenue development training applications. In the autumn, Tokmanni’s customers are served Mika Rautiainen was appointed as Tokmanni decided to launch a train- through 175 stores around Finland new CEO of Tokmanni Group ee program aimed at newly grad- and an online store. In 2017 Tokmanni’s Board of Directors appointed M.Sc. uated or nearly graduating college Tokmanni opened a record high (Econ.) Mika Rautiainen as new CEO of Tokmanni students who want to be involved in 6.9% amount of new stores: 13 net new Group. He will take up his position in June 2018. building a new kind of Tokmanni. EBITDA margin stores and 2 relocated stores.

4 IN MOTION – FOR PROFITABLE GROWTH IN MOTION – FOR PROFITABLE GROWTH 5 Interim CEO Harri Sivula: In 2018, we focus heavily on sharpening our private label strategy and marketing to 2017 started increase their share of sales. with challenges but through slightly negative at -1.0%. Our Christmas Expanding the store network our determined sales were record high but October and is one of Tokmanni's revenue and earnings November Like-for-Like sales were a slight- drivers. Over the last few years, we have ly behind last year’s sales mainly due to invested exceptionally heavily in the open- actions the strong market competition as a result of the ing of new stores and our store network challenging first part of the year. Our gross has grown by nearly 20 stores over the last trend turned margin was slightly below the correspond- couple of years. In 2017, we opened a re- ing quarter last year but our comparable cord number of new stores, 13 net new and towards the EBITDA margin remained at the previous 2 relocated stores. In our investment pro- year’s good level. gram for 2018, we will invest more heavily in the maintenance of our store network than end of the Full-year revenue increased in the previous years, especially in updat- 2.7% but Like-for-Like revenue decreased ing our grocery stores, and in Tokmanni's year 1.3% from the previous year. This digital services to support was mainly due to the weak Like-for-Like sales. In 2018 we beginning of the year, will open approximately stronger competition five new stores. especially in groceries, and the impact from In 2017, we have We predict The beginning of 2017 some new stores and good sales growth paid even more was challenging sales wise for Tokmanni store size reductions in 2018. attention to our pricing due to Tokmanni's internal system prob- on Like-for-Like sales. strategy, the develop- lems as well as external circumstances. The strong competition ment of our custom- At the same time, the market development brought on by online er-focused assortment was slower than we had expected. Despite stores and specialty dis- as well as the continuous the strong recovery in the Finnish economy, count retailers could be seen development of our store signs of a turn in the non-grocery market especially in the clothing and tools concept to improve our Like-for- were seen only at the end of the year. product categories. When analyzing the Like sales. At the same time, we continue However, due to our resolute measures, we numbers, it is also good to keep in mind to develop our private labels and direct managed to stabilize the situation towards that 2017 had one selling day less than the imports to improve our profitability. In 2018, the end of the year and the performance of previous year. As we had anticipated, our we focus heavily on sharpening our private the fourth quarter was good measured by profitability weakened from the previous label strategy and marketing to increase many metrics. year. This was mainly due to the sales mix their share of sales. and the high amount of new stores opened Fourth quarter Group revenue during the period. In 2017, the financial We predict good sales growth developed well and our revenue grew 4.4% structure of the Group was clearly lighter in 2018. Based on the actions mentioned based on revenue from new stores opened than in the previous year, as a result of above we expect Like-for-Like revenue to in 2016 and 2017. During the last quarter which our financial expenses declined turn to low single digit growth and at the of the year we opened six new stores. The significantly and net income was almost at same time for new stores opened in 2017 Like-for-Like revenue development was the previous year's level. and 2018 to bring good revenue growth.

6 IN MOTION – FOR PROFITABLE GROWTH IN MOTION – FOR PROFITABLE GROWTH 7 Operating environment and target market Tokmanni’s markets

Tokmanni's target market is large and the competitive field is value fragmented. The competitive environment includes direct competitors such as hypermarkets, general discount stores and department stores, Tokmanni as well as indirect and product-group specific competitors such as Kärkkäinen online and specialised stores. Motonet

Gigantti Halpa-Halli Tokmanni is the market leader in Finland tronics. Tokmanni's primary competitive in the discount retail market. In this market advantage compared to specialty retailers Puuilo Hong Kong Tokmanni's competitors are several smaller is its considerably wider assortment and a regional companies and Tokmanni is the nationwide store network. Ikea only discount retailer with a nationwide In the centers of large cities, Tokmanni store network. In addition to its low per- also competes with department stores, Citymarket ceived price image, Tokmanni has focused such as Sokos and Stockmann. Depart- H&M on its store concept and the continuous ment stores offer a wide assortment of con- Price image development of the customer experience in sumer goods but because their perceived Clas order to distinguish itself from other dis- price image is higher, their sales have Ohlson count retailers. decreased in recent years. Hypermarkets carry a large product In recent years, the importance of inter- assortment, from fresh food to consum- national online stores has also increased in Sokos Stockmann er goods. They are mostly located in the Finland. Competition has increased espe- suburbs of the main cities and benefit from cially in the product categories of clothing repeated visits thanks to their fresh food and home electronics, and online stores offering. Tokmanni also has a wide range of are expected to further grow over coming

non-grocery goods, and its low perceived years. Tokmanni continuously develops its expensive price image provides it with a competitive digital services to meet the changing needs advantage over hypermarkets. of its customers and to develop the total narrow Assortment wide Specialty discount retailers with afford- customer experience. able prices and a strong assortment of private label goods offer a comprehensive Market development 2017 Discount stores Specialty retailers The size of the circles is assortment in individual product groups, According to the Finnish Grocery Trade illustrative. such as sports products or home elec- Association statistics, the total sales of the Hypermarkets Department stores non-grocery market, the market closest Source: Tokmanni's year 2017 comparable to Tokmanni, decreased by Discount grocery estimate Tokmanni 6.1% during the year 2017. Department stores continuously stores and hypermarket chain sales decreased by 0.5% in the same period develops its digital according to the statistics. According to services to meet Tokmanni’s estimate, the non-grocery mar- ket decreased by 0.7% and the total sales the changing needs of department stores and hypermarket of its customers chains grew 1.6% during the review period January-December 2017 when Anttila’s and to develop estimated sales is adjusted from the 2016 the total customer comparable numbers. FGTA member department stores and experience. hypermarket chains are K-Citymarket,

8 IN MOTION – FOR PROFITABLE GROWTH IN MOTION – FOR PROFITABLE GROWTH 9 Strategy and financial targets

Tokmanni's goal is to continue strengthening its position as the leading general discount retailer by exploiting our key competitive advantages: a low price image, an attractive and wide product assortment and a good customer experience. Tokmanni aims at steady and profitable long-term growth.

Like-for-Like growth is supported by the striking and targeted marketing utilising Tokmanni’s unified brand image. Tokmanni contin- uously develops its customer-focused assortment and at the same time strives to increase the share of Like-for-Like revenue its own private labels by offering interesting prod- growth ucts at good prices. To ensure a pleasant customer experience Tokmanni continuously develops its store concept according to customer needs. Prisma, Sokos, Stockmann, Tokmanni and Although the weak economic In addition, Tokmanni is increasingly focused on Minimani. In addition, Anttila is included situation has accelerated the growth digital solutions and a multichannel approach to in the comparable numbers. Department support Like-for-Like revenue growth. store Anttila went bankrupt in 2016. It is of discount retailers in the Finnish important to note that the FGTA statistics retail market, growth is expected to only partially cover Tokmanni’s address- able market. Tokmanni’s target is to devel- continue as the economy recovers. op its market coverage to be able to provide We continue expanding our store network a more detailed picture of the development. Growth through store by some 12,000 square metres each year, which network expansion However, the challenges of access to topi- to grow in all product categories, especially means opening around five net new or re-located cal quarterly information will limit the possi- in home electronics and clothing. Special- stores each year. bility to provide a complete picture. ty stores are also expected to continue strengthening their positions. Market outlook Although the weak economic situation In 2017, the Finnish economy recovered and has accelerated the growth of the share of GDP grew over 3%, significantly more than discount retail stores in the Finnish retail what had been expected at the beginning market, growth is expected to continue as of the year. The Finnish Ministry of Finance the economy recovers. As customers have Our goal is to further increase direct forecasts GDP growth of 2.4% in 2018 and taken discount retailers as regular shop- sourcing and the share of private labels 1.9% in 2019. Unemployment is projected ping places, have become accustomed in all product categories and to reduce the use of to decrease to 8.1% and real disposable to discount stores and found the value for agents and wholesalers. In addition, we improve income to rise by more than 2%, as inflation money of their products to be good, they Improving the management of working capital through better profitability only accelerates slightly. are likely to remain regular customers sourcing processes and tools, supply chain man- Tokmanni expects the Finnish retail mar- even when the economy recovers. The agement and product group management, and by ket to grow slightly, but the competition to long-standing global trend which empha- developing our store efficiency. The goal is to main- continue to be fierce, especially in grocer- sizes good value-for-money, is expected tain operating expenses at least at the current level in ies. The share of E-commerce is expected to continue. relation to revenue.

10 IN MOTION – FOR PROFITABLE GROWTH IN MOTION – FOR PROFITABLE GROWTH 11 Financial targets and dividend policy Tokmanni’s Long-term financial targets Target

Tokmanni Group’s long-term target is to achieve low Like-for-Like strengths single digit Like-for-Like revenue growth assuming Low single digit revenue growth current market conditions remain.

Tokmanni Group’s target is to, on average, expand A strong player in a changing market by approx. 12,000 square metres of new store space approximately 5 New stores annually, consisting of approximately 5 net new stores, p.a. / 12,000 sqm expansions and relocations.

Tokmanni Group’s long-term target is to progressively from suppliers and countries with low man- Comparable Tokmanni is Finland’s expand to an comparable EBITDA margin of approxi- Progressively EBITDA leading discount retailer ufacturing costs. We do this, for example, mately 10 per cent driven by improving gross margin reaching ~10% margin levels and stable operating expenses in relative terms. Measured by both revenue and number of in cooperation with Norwegian company stores, we are Finland’s leading discount Europris through our joint venture located Net Debt/ Tokmanni Group intends to maintain an efficient retailer. With a network of 175 stores we in Shanghai. By omitting intermediaries and Comparable long-term capital structure, defined as net debt in < 2x EBITDA relation to comparable EBITDA of below 2.0x. serve our customers from Hanko to sourcing products directly from suppliers, Rovaniemi. Our size also allows us to carry we are able to offer products at a lower Tokmanni targets a dividend payout ratio of approxi- Dividend mately 70 per cent of the net result of subject to capital approximately out more competitive sourcing operations, price. This also gives us more control of the policy structure, financial condition, general economic and 70% which means we are able to offer our cus- supply chain and its responsibility. business conditions and future prospects. tomers interesting products at low prices. Constantly developing our Low perceived price image customer-oriented store concept Tokmanni has a strong perceived price im- Tokmanni’s stores represent a Strategic measures during the review period age and market-based pricing. We support customer-oriented and modern discount our perceived price image with efficient retail concept. We want to guarantee our During 2017, Tokmanni continued to imple- Tokmanni continued to sharpen the marketing and campaign pricing. customers the most pleasant shopping ment its strategy and to develop the com- destination categories of its assortments experience and meet their changing needs pany according to its targets. as a part of its product category strategy. Attractive and wide assortment in the fastest and most agile way possible. Tokmanni continuously develops its cus- Tokmanni’s digital project proceeded as Our stores offer a large selection of differ- Therefore, we are developing our store tomer-focused assortment and offers inter- planned. In the first phase of the project, ent products in six product categories: concept based on a model of continuous esting products to its customers at attractive the company focuses on building a system • Groceries improvement. We are doing this, among prices. To ensure a pleasant experience for platform to enable an omni-channel • Home cleaning and personal care other things, by piloting various elements customers Tokmanni continuous- approach. The goal is to create • Clothing and new development trends in our pilot ly develops its store concept new tools for reaching and • Home, decoration and garden stores. This allows us to test and analyse according to customer needs. serving customers as well as • Tools and electrical equipment the solutions that best suit our customers During the review period, the At the end of to develop sales digitally and • Leisure and home electronics before their potential implementation at reinforcement of Tokmanni’s 2017 Tokmanni building a new online store. all of our stores. At the same time, we are store concept continued. The had 175 stores In addition to increasing Our target is to meet all the daily needs of digitising our store network and introducing around Finland company regularly analyzes Like-for-Like sales, Tokmanni our customers as well as possible. We offer digital services to the stores. the functionality of the concept, is seeking growth by opening our customers brand products of leading modifies solutions when needed new stores. In 2017 the com- manufacturers and private label products We operate responsibly and designs new elements to be pany opened 13 net new and at a low price. We continue to focus in- Responsibility is a strategic focus area embedded in the concept. The new elements 2 relocated stores net and consequently creasingly on our assortment of private for Tokmanni, and the company’s aim is of the store concept are tested in pilot stores exceptionally increased its selling space label products. to act responsibly, respecting humans and thereafter partially or completely imple- by as much as 24,000 square meters. and the environment, in everything it mented in stores. During the review period, At the end of the year Tokmanni had Low-cost sourcing model does. Tokmanni’s material corporate the company continued to improve its store 175 stores around Finland. The company We source products from several different responsibility themes are business efficiency. The aim of the project is to im- continues to expand its store network suppliers in, for example, Finland, other integrity, responsible sourcing and prove the store presentation work and releas- and negotiations for new store premises European countries and Asia. We are products, fair treatment of people, and es sales staff time to better customer service. continue. focusing on increasing our sourcing directly efficient use of resources.

12 IN MOTION – FOR PROFITABLE GROWTH IN MOTION – FOR PROFITABLE GROWTH 13 Responsibility as part Tokmanni of business strategy as an investment

Corporate responsibility is an integral part of Tokmanni’s day-to-day Tokmanni's shares are quoted on the business. The company aims to minimise business risks, make use of Nasdaq Helsinki Mid Cap list. the opportunities associated with this, and produce added value for stakeholders. Tokmanni's Corporate Responsibility Report 2017 can be found on our website.

Value drivers Investor events in 2017 Tokmanni's material responsibility themes Leading position in the • Tokmanni’s representatives met discount retail market almost 100 institutional investors Strong brand in in London, Boston, New York, Finland and an attrac- Stockholm, Paris and Helsinki. Business integrity Responsible sourcing tive value proposition • In March, surprise buckets were Economic performance and products Faster-than-market handed out to shareholders at Employment Responsible sourcing growth the general meeting held at the Anti-corruption Responsible products Capacity to continue logistics centre in Mäntsälä Privacy protection and packaging growth by improving • Tokmanni participated in Ethical marketing Product safety Like-for-Like sales and numerous events for private Appropriate markings on by opening new stores investors, such as the products Good EBITDA and Finnish Foundation for Share clear measures to Promotion's stock exchange improve EBITDA evenings in Helsinki and Fair treatment Efficient use of margin further . In early autumn, Occupational health resources Strong cash flow- over 30 small investors from and safety Efficient use of materials generating business Central Uusimaa visited Employee training Energy efficiency model and generous Mäntsälä and development Efficient logistics dividend policy • In November, Tokmanni organi- Equality in work Efficient waste recycling sed a store visit for analysts and remuneration Non-discrimination

Share information Four initiatives were launched around the material themes 2017 in 2017, and further divided into projects. The initiatives are: Earnings per share 0.45 • Carbon neutral Tokmanni Dividend/share 0.41* • Tokmanni supporting circular economy Nr of shares (1,000) 58,869 • A diverse Tokmanni Average share price, EUR 8.17 • Tokmanni respecting human rights Year-end market value, MEUR 426.8 The initiatives will be implemented over the years 2017–2020 and there will be Name TOKMAN more information on them in the next Corporate Responsibility Report. List Mid Cap

* Board proposal for annual general meeting

14 IN MOTION – FOR PROFITABLE GROWTH IN MOTION – FOR PROFITABLE GROWTH 15 Tokmanni’s share price development Ownership structure on 31 December 2017, %* euro 12 2 Private Corporations 15 24 Banks and insurance companies 10 Public sector entities Households Outside Finland 21 8

* of which nominee registered 16.57%. 37 6 1.1.2017 31.12.2017

Important events in 2017 Major shareholders by number of shares 31 December 2017

Tokmanni’s principal owner The Board of Directors of Shareholders Shares % of shares 2/17 7/17 Cidron Disco S.à r.l. reduced Tokmanni appointed M.SC. Rockers Tukku Oy 10,007,688 17.00 its holding in the company (Econ) Mika Rautiainen Elo Pension Company 4,750,000 8.07 from 30.5% to 15.21%. (54) as CEO of Tokmanni. Varma Mutual Pension Insurance Company 4,343,252 7.38 He will start in his position Nordea Pro Finland Fund 2,670,267 4.54 Markku Pirskanen was in June 2018. OP-Finland Value Fund 1,870,606 3.18 3/17 appointed CFO of Tokmanni Nordea Nordic Small Cap Fund 1,442,137 2.45 after his predecessor, Sixten Cidron Disco S.à r.l. sold its Ilmarinen Mutual Pension Insurance Company 915,000 1.55 9/17 Hjort, announced that he remaining holding in Fondita Nordic Small Cap Investment Fund 880,000 1.49 would retire from Tokmanni Tokmanni. At the same time, OP-Finland Small Firms Fund 802,936 1.36 in June. Rockers Tukku Oy increased Veritas Pension Insurance Company Ltd. 766,333 1.30 Tokmanni announced that its holding to 17.00%, making Nordea Fennia Fund 709,240 1.20 it had signed four agreements it the biggest shareholder. Ålandsbanken Premium 100 700,000 1.19 on opening new stores in store Säästöpankki Kotimaa 676,527 1.15 space released by Anttila. Tokmanni was made aware Etera Mutual Pension Insurance Company 675,000 1.15 11/17 In total, the company opened that Group had applied Säästöpankki Pienyhtiöt 629,474 1.07 nine stores in 2016–2017 in for an injunction from the Säästöpankki Korko Plus-Sijoitusrahasto 607,641 1.03 store space that was court requesting to prevent Savings Bank Europe Fund 550,000 0.93 previously occupied by Anttila. Mika Rautiainen from starting Evli Finnish Small Cap Fund 527,892 0.90 as Tokmanni Group OP Life Assurance Company Ltd 517,360 0.88 The company lowered its Corporation's CEO before Mandatum Life Unit-Linked 477,362 0.81 6/17 revenue and profitability January 2018. guidance due to weak performance at the beginning Rautiainen and Kesko 12/17 of the year. reached an agreement in Tokmanni appointed non-competition matter. Chairman of the Board Harri Contact information Sivula as interim CEO after CEO Heikki Väänänen Joséphine Mickwitz announced that he would Head of IR and Communications be leaving the company. +358 20 728 6535 Mob. +358 400 784 889 [email protected]

Read all of Tokmanni's stock exchange releases at https://ir.tokmanni.fi/en/news-and-media.

16 IN MOTION – FOR PROFITABLE GROWTH IN MOTION – FOR PROFITABLE GROWTH 17 Key figures Consolidated income statement

1 Jan–31 Dec 2017 1 Jan–31 Dec 2016 Change, % MEUR 1 Jan–31 Dec 2017 1 Jan–31 Dec 2016 Revenue, MEUR 796.5 775.8 2.7% REVENUE 796.5 775.8 Like-for-like revenue development, % -1.3 -0.1 Other operating income 3.9 3.4 Number of baskets, M 46.4 44.7 3.6% Materials and services -529.4 -507.4 Gross profit, MEUR 267.1 268.4 -0.5% Employee benefits expenses -97.9 -96.4 Gross margin, % 33.5 34.6 Depreciation and amortization -14.3 -15.1 Comparable gross profit, MEUR 268.1 267.9 0.1% Other operating expenses -119.9 -111.1 Comparable gross margin, % 33.7 34.5 Share of profit (loss) in joint ventures 0.0 0.0 Operating expenses, MEUR -217.8 -207.4 5.0% OPERATING PROFIT 38.8 49.2 Comparable operating expenses, MEUR -217.0 -208.5 4.1% Financial income 0.0 0.1 EBITDA, MEUR 53.1 64.3 -17.5% Financial expenses -5.9 -15.3 EBITDA, % 6.7 8.3 PROFIT/LOSS BEFORE TAX 32.9 34.0 Comparable EBITDA, MEUR 55.0 62.8 -12.5% Income taxes -6.6 -6.8 Comparable EBITDA, % 6.9 8.1 NET RESULT FOR THE FINANCIAL PERIOD 26.3 27.2 Operating profit (EBIT), MEUR 38.8 49.2 -21.3% Operating profit margin EBIT, % 4.9 6.3 Profit for the year attributable to Comparable EBIT, MEUR 40.6 47.7 -14.9% Equity holders of the parent company 26.3 27.2 Comparable EBIT, % 5.1 6.1 Net financial items, MEUR -5.8 -15.2 -61.7% Net capital expenditure, MEUR 8.1 9.8 -16.7% Consolidated statement of comprehensive income Net debt / adjusted EBITDA ** 2.4 1.8 Net cash from operating activities, MEUR 27.1 62.5 MEUR 1 Jan–31 Dec 2017 1 Jan–31 Dec 2016 Return on capital employed, % 11.4 14.5 Net result for the financial period 26.3 27.2 Return on equity, % 16.0 18.1 Number of shares, weighted average during the financial Other comprehensive income 58,869 54,095 period (thousands)* Items that may be reclassified subsequently to profit or loss Earnings per share (EUR/share)* 0.45 0.50 Exchange differences on translating foreign operations 0.0 0.0 Personnel at the end of the period 3,255 3,224 Personnel on average in the period 3,232 3,209 Comprehensive income for the financial period, net of tax 0.0 0.0

* The amount of shares 2016 has been adjusted with the effects of the bonus issue (‘share split’) carried out 04/2016. ** Rolling 12 months adjusted EBITDA Comprehensive income for the financial period 26.3 27.2

Comprehensive income for the financial period attributable to Equity holders of the parent company 26.3 27.2

Earnings per share

1 Jan–31 Dec 2017 1 Jan–31 Dec 2016 Equity holders of the parent company 26.3 27.2 Number of shares, weighted average during the financial period (thousands)* 58,869 54,095 Earnings per share (EUR/share)* 0.45 0.50

* The amount of shares 2016 has been adjusted with effects of the bonus issue ('share split') carried out 04/2016.

18 IN MOTION – FOR PROFITABLE GROWTH IN MOTION – FOR PROFITABLE GROWTH 19 Consolidated statement of Consolidated statement of financial position cash flows

MEUR 31 Dec 2017 31 Dec 2016 MEUR 1 Jan–31 Dec 2017 1 Jan–31 Dec 2016 ASSETS Cash flows from operating activities Non-current assets Net result for the financial period 26.3 27.2 Property, plant and equipment 88.6 90.7 Adjustments: Goodwill 128.6 128.6 Depreciation 14.3 15.1 Other intangible assets 4.8 3.6 Capital gains and losses on non-current assets 1.3 0.0 Non-current receivables 0.2 0.1 Financial income and expenses 5.8 15.2 Investments in joint ventures and other financial assets 0.2 0.2 Income taxes 6.6 6.8 Deferred tax asset 5.1 5.0 Other adjustments -0.2 -1.9 Non-current assets, total 227.5 228.1 Change in working capital: Current assets Change in current non-interest-bearing receivables -2.4 -2.4 Inventories 170.2 155.2 Change in inventories -14.7 4.7 Trade and other receivables 18.4 17.0 Change in current non-interest-bearing liabilities 3.8 13.1 Income tax receivables 3.8 0.7 Cash and cash equivalents 42.5 57.6 Interest paid -5.3 -11.2 Current assets, total 235.0 230.5 Other financing items -0.2 -0.1 Income taxes paid -8.3 -4.0 ASSETS, TOTAL 462.5 458.6 Net cash from operating activities 27.1 62.5

Cash flows from investing activities EQUITY AND LIABILITIES Purchases of tangible and intangible assets -11.7 -10.0 Proceeds from disposal of tangible and intangible assets 0.8 0.2 Equity attributable to the equity holders of the parent company Disposal of subsidiaries 0.1 0.0 Share capital 0.1 0.1 Loans granted -0.3 0.0 Reserve for invested unrestricted equity 109.9 110.0 Proceeds from repayments of loans 2.9 0.0 Translation differences 0.0 0.0 Net cash from investing activities -8.1 -9.8 Retained earnings 52.9 56.5 Equity, total 162.8 166.6 Cash flows from financing activities Proceeds from share issue -0.1 90.1 Non-current liabilities Dividends paid -30.0 0.0 Deferred tax liabilities 5.1 5.3 Repayments of finance lease liabilities -3.6 -3.4 Non-current interest-bearing liabilities 173.0 170.3 Proceeds from loans 0.0 125.0 Non-current non-interest-bearing liabilities 7.4 8.1 Repayment of loans 0.0 -255.8 Non-current liabilities, total 185.4 183.6 Net cash from financing activities -33.7 -44.1

Current liabilities Current interest-bearing liabilities 3.6 3.2 Net change in cash and cash equivalents -14.7 8.7 Trade payables and other current liabilities 107.3 103.5 Income tax liabilities 3.3 1.7 Cash and cash equivalents at beginning of the financial period 57.6 48.9 Current liabilities, total 114.2 108.4 Cash and cash equivalents, corporate arrangements -0.3 0.0 Cash and cash equivalents at end of the financial period 42.5 57.6 EQUITY AND LIABILITIES, TOTAL 462.5 458.6

20 IN MOTION – FOR PROFITABLE GROWTH IN MOTION – FOR PROFITABLE GROWTH 21 Tokmanni Oy HQ and Logistics Center Isolammintie 1 FIN-04600 MÄNTSÄLÄ FINLAND

+358-300-472 220

Business ID 1928426-9