Tokmanni Group Corporation 10 February 2023 at 8:00 am

Tokmanni Group Corporation's Financial Statement Bulletin 2022

Revenue grew but operating profit declined due to higher costs

FOURTH QUARTER 2022 HIGHLIGHTS

Revenue grew by 1.5% (2.3%) and was EUR 339.0 million (334.1)
Like-for-like revenue decreased by 1.0% (-0.3%)
Comparable gross profit was EUR 119.5 million (120.8) and comparable gross profit percent was 35.2% (36.2%)
Comparable EBIT amounted to EUR 35.8 million (40.5), 10.5% of revenue (12.1%)
Cash flow from operating activities amounted to EUR 92.2 million (74.9)
Earnings per share, diluted was EUR 0.41 (0.52)

JANUARY-DECEMBER 2022 HIGHLIGHTS

Revenue grew by 2.3% (6.4%) and was EUR 1,168.0 million (1,141.8)
Like-for-like revenue decreased by 0.7% (+4.8%)
Comparable gross profit was EUR 398.0 million (396.4), and comparable gross profit % was 34.1% (34.7%)
Comparable EBIT amounted to EUR 85.8 million (105.7), 7.3% of revenue (9.3%)
Cash flow from operating activities amounted to EUR 86.3 million (126.8)
Earnings per share, diluted was EUR 1.00 (1.33)

DIVIDEND PROPOSAL

Tokmanni's Board of Directors proposes to the Annual General Meeting a dividend of maximum EUR 0.76 per share, which would be paid in two instalments.

TOKMANNI'S OUTLOOK FOR 2023

In 2023, Tokmanni expects its revenue to be EUR 1,200–1,270 million. Comparable EBIT is expected to be EUR 85–100 million.

TOKMANNI'S PRESIDENT AND CEO MIKA RAUTIAINEN

2022 was a challenging year for Tokmanni. The shift in consumer behaviour resulting from weaker purchasing power was larger than we had predicted. After years of rapid growth, adjusting to declining volumes and sharply rising costs was more difficult than we expected. What was positive, though, was that we were able to grow Tokmanni's sales measured in euros in 2022 with our excellent offering of grocery and non-grocery products. In 2022, about 51.2% (49.9%) of Tokmanni's revenue came from grocery products and about 48.8% (50.1%) came from non-grocery products.

The strengthening of Tokmanni's grocery sales and maintaining low prices meant that our gross profit percentage declined. The comparable gross margin for the full year was 34.1% (34.7%). The weakening of purchasing power meant that discounts and campaign sales accounted for a larger share of total sales, which also contributed to the lower gross profit.

The biggest negative impact on profit came from the general rise in costs. Rents and electricity costs contributed the most to the cost increases. Due to increased costs and a lower gross profit percentage, comparable EBIT fell to EUR 85.8 million (105.7).

During 2022, Tokmanni's inventories were elevated due to a shift in consumer behaviour. However, we succeeded in considerably reducing our inventories during the fourth quarter. At the end of the year, the value of inventories was EUR 281.3 million (263.6). The increase in the value of inventories at the end of the year was mainly due to higher purchase prices driven by inflation. Tokmanni will continue to increase the efficiency of its supply chain and to purposefully manage its inventories.

Despite the challenging market, we are highly confident in executing Tokmanni's growth strategy. The conditions for variety discount retail are very good in a price-driven market. In addition, the actions taken to implement the strategy have been successful. Our private labels, especially Miny, have grown nicely. The popularity of Tokmanni Klubi exceeded our expectations, there are almost 2 million members.

I would like to thank all Tokmanni customers, partners and especially Tokmanni's employees for the year 2022.

Key figures
	10–12/	10–12/	Change	1–12/	1–12/	Change
	2022	2021	%	2022	2021	%
Revenue, MEUR	339.0	334.1	1.5%	1 168.0	1 141.8	2.3%
Like-for-like revenue development, %	-1.0	-0.3		-0.7	4.8
Customer visit development %	0.3	-0.1		0.8	0.8
Gross profit, MEUR	117.8	121.1	-2.7%	396.8	397.8	-0.3%
Gross profit, %	34.7	36.2		34.0	34.8
Comparable gross profit, MEUR	119.5	120.8	-1.1%	398.0	396.4	0.4%
Comparable gross profit, %	35.2	36.2		34.1	34.7
Operating expenses	-67.3	-63.8	5.5%	-243.7	-226.9	7.4%
Comparable operating expenses	-66.2	-63.9	3.6%	-243.1	-227.6	6.8%
EBITDA, MEUR	51.7	58.4	-11.5%	157.1	174.5	-10.0%
EBITDA, %	15.3	17.5		13.5	15.3
Comparable EBITDA, MEUR	54.5	58.1	-6.1%	158.9	172.5	-7.9%
Comparable EBITDA, %	16.1	17.4		13.6	15.1
Operating profit (EBIT), MEUR	33.0	40.9	-19.3%	84.1	107.7	-22.0%
Operating profit (EBIT), %	9.7	12.2		7.2	9.4
Comparable EBIT, MEUR	35.8	40.5	-11.7%	85.8	105.7	-18.8%
Comparable EBIT, %	10.5	12.1		7.3	9.3
Net financial items, MEUR	-2.9	-2.5	18.3%	-10.7	-10.1	6.3%
Net capital expenditure, MEUR*	20.9	6.9	204.3%	54.7	21.7	151.5%
Net debt / comparable EBITDA				2.4	1.8
Net cash from operating activities, MEUR	92.2	74.9		86.3	126.8
Return on capital employed, %				12.8	18.0
Return on equity, %				26.9	37.9
Equity ratio, %				31.2	30.0
Number of shares, weighted average during
the financial period (thousands)	58 818	58 732		58 815	58 731
Diluted number of shares, weighted average
during the financial period (thousands)	58 860	58 781		58 858	58 776
Earnings per share, basic (EUR/share)	0.41	0.52		1.00	1.33
Earnings per share, diluted (EUR/share)	0.41	0.52		1.00	1.33
Personnel at the end of the period	4 241	4 105		4 241	4 105
Personnel on average in the period	4 229	4 102		4 236	4 132

* Net capital expenditure, excluding non-current receivables from others

Adjustments affecting comparability

Tokmanni reports EBITDA and EBIT as its key performance indicators and makes adjustments to improve comparability and provide a better view of Tokmanni's operational performance. EBITDA is a non-IFRS indicator that represents operating profit before depreciation. Comparable EBITDA and comparable EBIT represent the same indicators excluding items that Tokmanni's management considers to be exceptional and non-recurring, including changes in the fair value of electricity and currency derivatives, which are adjusted by Tokmanni, as they are unrealised gains or losses related to Tokmanni's open cash flow hedge positions and are therefore not related to Tokmanni's operational performance during the review periods.

Tokmanni's management uses the comparable EBITDA margin and comparable EBIT margin as key performance indicators to assess Tokmanni's underlying operational performance.

Adjustments affecting comparability
MEUR	10–12/2022	10–12/2021	1–12/2022	1–12/2021
Gross profit	117.8	121.1	396.8	397.8
Changes in fair value of currency derivatives	1.7	-0.2	1.2	-1.4
Comparable Gross Profit	119.5	120.8	398.0	396.4

Operating expenses	-67.3	-63.8	-243.7	-226.9
Changes in fair value of electricity derivatives	1.1	-0.1	0.5	-0.6
Comparable operating expenses	-66.2	-63.9	-243.1	-227.6

EBITDA	51.7	58.4	157.1	174.5
Operating profit (EBIT)	33.0	40.9	84.1	107.7
Changes in fair value of currency derivatives	1.7	-0.2	1.2	-1.4
Changes in fair value of electricity derivatives	1.1	-0.1	0.5	-0.6
Comparable EBITDA	54.5	58.1	158.9	172.5
Comparable operating profit (adj. EBIT)	35.8	40.5	85.8	105.7

TOKMANNI'S BUSINESS

Tokmanni is the largest nationwide variety discount retailer in Finland. At the end of 2022, Tokmanni had 198 Tokmanni stores across the country, four Miny stores as well as extensive online services. Tokmanni is an easily accessible variety discount retailer whose competitive advantages are low prices, interesting and broad product assortment, committed staff, a combination of online store and nationwide store network, and an efficient and agile business model. Tokmanni aims for stable and profitable long-term growth.

Tokmanni operates in the Finnish retail market, focusing on the variety discount retail market. The retail market can be divided into the grocery and the non-grocery market. In 2022, about 51.2% (49.9%) of Tokmanni's sales came from grocery products and about 48.8% (50.1%) came from non-grocery products. The grocery trade market consists of the sale of food, beverages, household papers, newspapers and magazines, cleaning products and daily cosmetics, among others. The non-grocery market consists of the sale of apparel, housing, garden, and leisure products, among others.

Tokmanni's assortment consists of private label and exclusive brand products as well as non-branded products and leading Finnish and international brands. Tokmanni has a wide range of products with a good price-to-quality ratio, for example in the following categories: home cleaning, personal care, apparel, tools and electrical equipment, home and decoration, garden, yard and balcony, leisure, home electronics, and groceries. At the end of 2022, 18 out of Tokmanni's 198 stores sold fresh foods.

MARKET DEVELOPMENT

Tokmanni continuously monitors market developments and the competitive field and actively develops its own business to maintain its competitive advantages. Tokmanni's target markets are broad. In addition to the store network, Tokmanni's sales channels include its online store and direct sales to companies, association and public sector. In Tokmanni's view, companies with strong know-how in online retail, combined with a comprehensive network of brick-and-mortar stores, are best positioned to succeed over their competition in the future.

The retail market is undergoing a structural transformation and a digital revolution. With regard to the structural transformation, Tokmanni believes that consolidation into larger companies will probably continue in the European discount retail market. As for the digital revolution, Tokmanni aims to utilise solutions that have become standard in the market to support its business.

The key changes in the market environment affecting Tokmanni are rising inflation and the weakening of consumer purchasing power. Consumer purchasing power has been eroded particularly by higher prices of products and services and the rise in interest rates. The uncertainty caused by the war in Ukraine and deterioration of consumer purchasing power had a negative impact on volumes in the Finnish retail market in 2022. On the other hand, the sharp rise in prices during 2022 supported retail sales measured in euros.

Impacts of Russia's attack on Tokmanni's business

Russia's attack against Ukraine has increased market uncertainty. Even though, Russia's war in Ukraine has not had significant direct effects on Tokmanni's financial performance, the crisis has impacted the general economic environment through higher energy prices, a rise in market interest rates, weaker consumer confidence and an increase in geopolitical tensions.

Tokmanni has no business operations in Russia. Tokmanni ceased procuring oils and techno chemicals from Teboil and other products of Russian origin in February 2022.

Competitive landscape

In Tokmanni's view, competition from Finnish and international rivals continues to intensify both in brick-andmortar stores and online. As a result of changing market conditions and stiffer competition, there is a need to boost operational and cost efficiency. The current market conditions favour companies that are agile and able to rapidly react to changes in consumer needs and that possess swift implementation capabilities.

Tokmanni's competitors in the variety discount retail market are hypermarkets and several smaller local variety discount retailers and international variety discount retailers. Tokmanni's size gives it a competitive advantage against other variety discount retailers in the Finnish market. Tokmanni also aims to differentiate itself from other variety discount retailers in addition to its low prices through an interesting and extensive product assortment, a better customer experience, the wellbeing of its personnel, sustainability, and the efficiency of its operations.

Hypermarkets carry a large product assortment, from fresh food to consumer goods. Hypermarkets are mostly located in the suburbs of the largest cities and benefit from frequent visits driven by their fresh food offering. Tokmanni's low prices and its interesting product assortment that sets it apart from hypermarkets, as well as the convenience of shopping at its stores, give it a competitive edge over hypermarkets.

Specialty discount retailers with low prices and a strong assortment of private label goods offer a comprehensive assortment in individual product groups, such as sports products or home electronics. Tokmanni's primary competitive advantages over specialty discount retailers come from its lower price level, nationwide store network and a more extensive assortment of products in other product categories. At Tokmanni, customers can purchase the products they need from several different categories at once.

In recent years, the importance of international online stores has also increased in Finland. Competition has increased especially in the product categories of apparel and home electronics, and online stores are expected to grow further over the next few years. Tokmanni continuously develops its digital services to meet the changed needs of its consumers and to develop the total customer experience. Tokmanni's competitive advantages over other online stores are the low prices of its products, its interesting and extensive product assortment, quick delivery and a nationwide store network. Tokmanni has combined the operations of brick-and-mortar stores and the online store in a way that makes it quick and easy for customers to search, buy, pick up and return products.

STORE NETWORK DEVELOPMENT

Expanding the store network is one of the ways to grow Tokmanni's revenue and profit. Tokmanni has an efficient process of establishing and launching new stores. Tokmanni's target is to expand its store network to include more than 220 Tokmanni stores in Finland by the end of 2025. The Miny stores are not included in this target. The company increased its retail selling space by approximately 8,800 square metres during 2022. At the end of 2022, the retail selling space of stores totalled about 495,000 square metres (31 December 2021: about 487,000).

At the end of 2022, Tokmanni had 198 Tokmanni stores (31 December 2021: 196). During 2022, Tokmanni carried out major refurbishment of its stores in Kivikukkaro in Turku, Tervaharju in Kemi, Porttipuisto in Vantaa, Arabia shopping centre in Helsinki, and our store in Tornio. The stores in Kaarina, Kuusamo, Hyvinkää, Ikaalinen, in Tammisto in Vantaa and Koskikeskus in Tampere were renewed and expanded. In addition, Tokmanni opened new stores in the Lippulaiva shopping centre in Espoo, in Nurmijärvi and in Kontula in Helsinki. At the end of 2022, Tokmanni closed its store in the Veturi shopping centre in Kouvola due to the expiry of its lease.

Tokmanni has signed agreements to open new stores in Konala in Helsinki, the Keljo district of Jyväskylä and in Söderkulla in Sipoo. In addition, Tokmanni acquired the business of Jyskän Varastomyymälä Oy in Jyskä, Jyväskylä. Tokmanni celebrated the opening of the Jyskä store on 26 January 2023.

Tokmanni's stores are usually located just outside urban centres. The stores mostly operate out of leased premises. Tokmanni considers a store to be new or relocated over the duration of its opening year and the following calendar year.

Miny shop-in-shop departments and dedicated stores

Miny is a lifestyle brand launched by Tokmanni in February 2022. At the end of 2022, there were four dedicated Miny stores: in the Lippulaiva shopping centre in Espoo, the Forum Jyväskylä shopping centre in Jyväskylä, the IsoKristiina shopping centre in Lappeenranta and the Jumbo-Flamingo entertainment and shopping centre in Vantaa. In addition, Miny products were available in Tokmanni's online store and in shopin-shop departments in 20 Tokmanni stores.

More information about Tokmanni's stores and the Miny lifestyle brand is available on the 'New store development' page at https://ir.tokmanni.fi/en/investors/tokmanni-as-an-investment/new\_stores, and on the 'News and media' page athttps://ir.tokmanni.fi/en/news-and-media andhttps://www.tokmanni.fi/miny (in Finnish).

FINANCIAL DEVELOPMENT

Seasonality

Tokmanni's business is seasonal, which has a significant effect on its revenue, profitability and cash flows. Tokmanni's revenue, profitability and cash flows are usually lowest in the first quarter and highest in the fourth quarter due to Christmas sales.

Revenue

October–December 2022

Tokmanni's revenue grew by 1.5% (2.3%) to EUR 339.0 million (334.1) in the fourth quarter of 2022. Sales of grocery products grew by 4.9% compared to the previous year. Measured as a percentage, the biggest growth took place in the sales of pet products, groceries, apparel and craft supplies. Correspondingly, the sales of home electronics and kitchen products and toys declined. Tokmanni's online sales accounted for 1.7% (2.0%) of its total revenue, a decrease of 15.6% (+44.4%) year-on-year.

Like-for-like revenue decreased by 1.0% (-0.3%). Like-for-like customer visits decreased by 2.0% (-2.9%), and the total number of customers grew by 0.3% (-0.1%) year-on-year. The like-for-like average basket in stores grew by 1.0% to EUR 22.40 (22.16).

Direct imports accounted for 32.0% of sales (30.4%). These can be broken down into products purchased using Tokmanni's sourcing company in Shanghai, which accounted for 20.6% (19.9%), and other direct imports, which accounted for 11.4% (10.5%). The brands managed by Tokmanni (private label products, exclusive brands and non-branded products) represented 35.9% of fourth-quarter sales (34.3%). In 2022, Tokmanni made changes to the definitions of imports, which impacted the comparison figures for 2021.

January–December 2022

Revenue for January–December 2022 grew by 2.3% (6.4%) to EUR 1 168.0 million (1,141.8). All in all, sales in January–December were characterised by higher sales of grocery products due to the price increase. Sales of grocery products grew by 4.8% compared to the previous year. Measured as a percentage, the biggest growth was in the sales of pet products and food, apparel and cleaning products. Correspondingly, the sales of kitchen products and toys decreased the most. Tokmanni's online sales accounted for 1.7% (1.8%) of total revenue, a decrease of 2.0% (+58.7%) year-on-year.

Like-for-like revenue decreased by 0.7% (+4.8%) in 2022. Like-for-like customer visits decreased by 2.1% (-0.8%), and the total number of customers grew by 0.8% (0.8%) year-on-year. The like-for-like average basket grew by 1.4% to EUR 21.05 (20.76).

Direct imports accounted for 27.1% of sales (27.1%). These can be broken down into products purchased using Tokmanni's sourcing company in Shanghai, which accounted for 18.2% (18.3%), and other direct imports, which accounted for 8.9% (8.8%). The brands managed by Tokmanni (private label products, exclusive brands and non-branded products) represented 32.2% (32.5%) of sales in January–December. In 2022, Tokmanni made changes to the definitions of imports, which impacted the comparison figures for 2021.

Profitability

October–December 2022

Fourth-quarter gross profit in euros amounted to EUR 117.8 million (121.1), and the gross margin was 34.7% (36.2%). Comparable gross profit was EUR 119.5 million (120.8), corresponding to a comparable gross margin of 35.2% (36.2%). The gross margin was negatively affected in particular by increased campaign sales based on special offers and by the sales structure, which focused more on groceries than in the comparison period.

In the fourth quarter, operating expenses continued to increase, totalling EUR 67.3 million (63.8), or 19.8% of revenue (19.1%). Comparable operating expenses were EUR 66.2 million (63.9), or 19.5% of revenue (19.1%). The increase in expenses was mostly due to higher property costs. Personnel expenses represented EUR 36.1 million (35.7) of the operating expenses. The relative proportion of personnel expenses of revenue remained unchanged from the previous year at 10.7% (10.7%). The salaries of employees covered by the commercial sector's collective agreement were raised by 2.0% on 1 May 2022.

EBITDA amounted to EUR 51.7 million (58.4), and the EBITDA margin was 15.3% (17.5%). Comparable EBITDA totalled EUR 54.5 million (58.1), and the comparable EBITDA margin was 16.1% (17.4%).

EBIT in the fourth quarter totalled EUR 33.0 million (40.9), corresponding to an EBIT margin of 9.7% (12.2%). Comparable EBIT was EUR 35.8 million (40.5), and the comparable EBIT margin was 10.5% (12.1%). Compared with the previous year, the weaker result was mainly due to the aforementioned increase in operating expenses and an increase in depreciation. The increase in depreciation resulted from higher depreciation on normal property, plant and equipment and an increase in depreciation arising from leased facilities. Leased facilities are recognised on the balance sheet as assets and liabilities in accordance with IFRS 16. These are depreciated on the balance sheet over their lease terms in accordance with the standard.

Net financial items totalled EUR -2.9 million (-2.5). The result before taxes was EUR 30.0 million (38.4). Taxes amounted to EUR 5.9 million (7.7). The net result was EUR 24.1 million (30.6).

Diluted earnings per share were EUR 0.41 (0.52).

January–December 2022

January–December 2022 gross profit in euros amounted to EUR 396.8 million (397.8), and the gross margin was 34.0% (34.8%). Comparable gross profit was EUR 398.0 million (396.4), corresponding to a comparable gross margin of 34.1% (34.7%). The decrease in the gross margin was due, in particular, to the sales structure and the decision to maintain low prices despite higher sourcing prices.

Operating expenses increased to EUR 243.7 million (226.9), or 20.9% of revenue (19.9%). Comparable operating expenses were EUR 243.1 million (227.6), or 20.8% of revenue (19.9%). The growth in operating expenses in euros was mainly due to general increase in costs. Personnel expenses represented EUR 137.1 million (132.9) of the aforementioned operating expenses, or 11.7% (11.6%) of revenue.

EBITDA for 2022 amounted to EUR 157.1 million (174.5), and the EBITDA margin was 13.5% (15.3%). Comparable EBITDA totalled EUR 158.9 million (172.5), and the comparable EBITDA margin was 13.6% (15.1%).

Profitability decreased in January–December compared with the previous year, which was mainly due to the aforementioned increase in operating expenses and depreciation. EBIT was EUR 84.1 million (107.7), and the EBIT margin was 7.2% (9.4%). Comparable EBIT was EUR 85.8 million (105.7), and the comparable EBIT margin was 7.3% (9.3%).

Net financial items totalled EUR 10.7 million (10.1). The result before taxes was EUR 73.3 million (97.6). Taxes for the period amounted to EUR 14.6 million (19.6). The net result for 2022 was EUR 58.7 million (78.0).

Diluted earnings per share were EUR 1.00 (1.33). The return on capital employed was 12.8% (18.0%), and the return on equity was 26.9% (37.9%).

Balance sheet, financing and cash flow

At the close of 2022, Tokmanni's inventories amounted to EUR 281.3 million (263.6). The value of inventories reflects the increase in purchase prices.

Consolidated cash flow from operating activities amounted to EUR 92.2 million (74.9) in the fourth quarter of 2022. Cash flow amounted to EUR 86.3 million (126.8) in January–December. The decrease in the cash flow in January–December was due to the weaker result and the fact that the amount of capital tied to inventories was higher than in the previous year. Cash and cash equivalents amounted to EUR 9.1 million (81.3). Cash and cash equivalents were impacted in particular by investment in the construction of the logistics centre and the high level of inventories. At the close of 2022, the financial position was good. Tokmanni has a total of EUR 206.0 million in withdrawable funds, consisting of loan agreements with financial institutions and a commercial paper programme.

At the end of 2022, Tokmanni's interest-bearing debt totalled EUR 392.4 million (395.6), including EUR 100.0 million (100.0) in non-current loans from financial institutions and EUR 10.0 million (0) in current commercial paper debt and loans from financial institutions. The remainder of the liabilities consist of lease liabilities reported under IFRS 16.

The ratio of net debt to comparable EBITDA (rolling 12 months) was 2.4 (1.8) at the end of 2022. Tokmanni intends to maintain an efficient long-term capital structure. Tokmanni's long-term goal is to keep the ratio of net debt to comparable EBITDA at a level below 3.2.

Tokmanni's equity ratio was 31.2% (30.0%) at the end of 2022.

Capital expenditure

Net capital expenditure in the fourth quarter of 2022 totalled EUR 20.9 million (6.9). Net capital expenditure for the full year 2022 totalled EUR 54.7 million (21.7). Capital expenditure was mainly related to the expansion, development and maintenance of the store network, the development of digital services and the construction of a new logistics centre. Costs related to construction accounted for EUR 15.8 million of fourthquarter capital expenditure and EUR 35.8 million of full-year 2022 capital expenditure.

Capital expenditure in 2023 is expected to be at the same level as in 2022, excluding the capital expenditure related to the construction of the new logistics centre.

The construction of Tokmanni's new logistics centre, which will support and complement Tokmanni's existing logistics centre, is progressing as planned. Once completed, it will replace the extra warehouse capacity currently leased. The new logistics centre, which is located in the immediate vicinity of the current administrative and logistics centre, will be introduced into service in stages. The first section will be brought into service in April 2023, and it is estimated that the whole building will be completed in November 2023. The total value of the investment is estimated at EUR 65 million, and it will be recognised over 2022–2023. Once the logistics centre is completed in 2023, it will be sold to NREP, which will become Tokmanni's lessor under a 20-year lease.

ACQUIRED BUSINESSES

Tokmanni acquired the business of Jyskän Varastomyymälä Oy in Jyskä, Jyväskylä (https://ir.tokmanni.fi/en/news-and-media/pr-story?itemid=23204202507C47FB). The total revenue of the acquired business was EUR 7.2 million in the financial period ending in February 2022. Tokmanni took the control of the store's business operations as of 1 January 2023.

TOKMANN'S LONG-TERM FINANCIAL TARGETS AND ACHIEVEMENTS

In March 2021, Tokmanni updated its strategy for the years 2021 to 2025. Tokmanni's aim is to achieve a revenue of EUR 1.5 billion and a comparable EBIT of EUR 150 million by the end of 2025.

The targets of Tokmanni's strategic period 2021–2025 and achievements in 2022.

Target for 2021–2025	Achievement in 2022
Revenue EUR 1.5 billion	Revenue EUR 1,168.0 million
Over 220 stores in Finland*	At the end of year, the number of Tokmanni stores was
	198
Comparable EBIT EUR 150 million	Comparable EBIT EUR 85.8 million
Ratio of net debt to comparable EBITDA is	Ratio of net debt to comparable EBITDA was 2.4 as of
less than 3.2	31 December 2022
Dividend about 70% of net profit for the	The Board of Directors' dividend proposal for 2022 to
financial year**	the Annual General Meeting is 76% of the net profit for
	the financial year

*The aim is to increase the number of stores every year by about six new or relocated Tokmanni stores in Finland. **The decision to distribute dividend is always dependent on capital structure, financial position, general economic and business conditions and future outlook.

Strategic measures taken in 2022

The cornerstones of Tokmanni's strategy are enhancing customer confidence and loyalty and improving cost-effectiveness. Key measures to achieve customer confidence and loyalty are focus on low prices, expansion of the assortment, easy shopping, attractive customer experience, service-oriented personnel and sustainability.

• Low prices / price competitiveness

Low price is at the core of discount retail. Perceived price image is a valuable feature that should be risked as little as possible. For this reason, Tokmanni kept offering customer prices lower than its competitors in 2022, despite the rice in sourcing prices and cost inflation. In addition, Tokmanni announced at the end of September that it would lock the prices of more than a hundred products until the end of 2022.

• Wide assortment

Tokmanni's target is to double its product assortment during its current strategy period, i.e. by the end of 2025. It will be able to achieve this target by expanding the current destination product categories, adding new product categories to the selections, offering more A-brand products and reinforcing the private label offering. Tokmanni launched its Miny lifestyle brand in February 2022. Miny products are available in the Tokmanni online store, in shop-in-shop departments in selected Tokmanni stores and in designated Miny stores. Tokmanni launched a new nutritional supplement private label brand in September 2022. Arki 360°offers vitamins, protein bars and other daily wellness products. At the beginning of the year 2022, Tokmanni launched the Parco brand, which outdoor furniture and pots and other products related to decorating outdoor spaces complemented the company's yard, balcony and garden product group.

• Easy shopping

Over one million customers visit Tokmanni stores and more than one million people visit the company's website every week. Tokmanni's target is to offer all customers the opportunity to enjoy easy shopping at Tokmanni stores and at its online store. One of the key factors enabling this is the fact that Tokmanni's stores are located close to the customer. Tokmanni's target is to expand its store network to include more than 220 Tokmanni stores in Finland by the end of 2025. At the end of 2022, Tokmanni had 198 Tokmanni stores (196) and 4 Miny stores.

• Attractive customer experience

In August 2021, Tokmanni launched the Tokmanni Klubi customer loyalty programme, which has attracted great interest among customers and partners. Almost 2 million customers had joined Tokmanni's customer loyalty programme by the end of January 2023. The aim of Tokmanni Klubi is to improve customer confidence and loyalty as well as the shopping experience.

• Service-oriented personnel

Tokmanni's competent and motivated employees work together to serve their customers, thus enabling the company to achieve its targets. It is particularly important to ensure that the employees possess the proper expertise and that they are committed to achieving the common targets. Tokmanni's different personnel groups have varying needs regarding skills, and the company is active in providing its employees with training. At the center of everything are induction, management, coaching and rewarding. More information on the key achievements in Tokmanni's personnel work in 2022 is presented below in the Personnel section.

• Sustainability

Sustainability at Tokmanni arises from practical actions that are monitored and developed in line with common goals as part of day-to-day work. At the same time, Tokmanni can improve customer satisfaction and its employer brand, as well as grow its business operations. More information on the key achievements in Tokmanni's sustainability work in 2022 is presented below in the Corporate Responsibility section.

Cost efficiency is a core competence of the discount retailer and is a part of all decision making. Key measures to improve cost-effectiveness include investments in sourcing, the supply chain, digital solutions and operational efficiency.

• Sourcing

Tokmanni is constantly strengthening its sourcing operations and sourcing channels to guarantee affordable prices for its customers. One of the key ways for Tokmanni to offer its customers low prices is to introduce Tokmanni private label products to the market. In just over three years, Tokmanni has introduced the following seven: Pisara, Noixx, Perfekt+, Natur Premium Pet, Parco, Arki 360° and products related to the Miny-concept. Tokmanni will continue to develop new private labels for suitable product categories.

Efficient sourcing and cooperation allow Tokmanni to widely utilise product innovations, conduct total price comparisons of several different sourcing markets, guarantee quick deliveries from nearby regions and react quickly if needed. Tokmanni engages in sourcing cooperation with Norwegian Europris chain in Asia (incl. China, India, Bangladesh, Myanmar, Thailand, Cambodia, Indonesia and Vietnam) and Eastern Europe (incl. Turkey, Poland, Bulgaria, Romania, Czechia, Slovakia, Hungary, Serbia, Bosnia, Slovenia, Croatia, Estonia, Latvia and Lithuania). The functions in Vietnam were launched in August 2022 through the joint sourcing company of Tokmanni and Europris, located in Shanghai.

• Supply chain

Tokmanni continued to take measures to boost the efficiency of its supply chain in 2022. Growth in line with the strategy will mean that goods flows to the stores will grow, which will have an impact on the stores and the supply chain, among other things. During 2022, the company continued to develop its operating models to ensure that, despite the growth in the volume of goods, the stores are always ready to serve their customers in the best possible way. In addition, Tokmanni introduced measures to reduce the value of inventories.

• Digital solutions

Tokmanni's digital projects will be planned and piloted gradually during the current strategy period. The experiences gained from the pilots will be used to decide which solutions will be deployed throughout the chain. Development of the customer loyalty program introduced in 2021 continued in 2022 to ensure a seamless digital customer experience. Additionally, Tokmanni introduced new digital shift planning software that will make it more efficient to plan work shifts. Existing systems such as the online store and enterprise resource planning systems were also developed.

• Operational efficiency

Logistics and the supply chain were integral to operational efficiency. At the end of 2021, Tokmanni decided to build a new logistics centre with a total area of around 55,000 square metres in Mäntsälä. The new logistics centre will considerably increase efficiency in Tokmanni's logistics and supply chain, supporting Tokmanni's aim of improving the company's profitability. More information on the new logistics centre is presented above in the Investments section.

PERSONNEL

Tokmanni had 4,241 (4,105) employees at the end of 2022. On average, Tokmanni employed 4,236 (4,132) people during 2022. Out of Tokmanni's total personnel, 85.3% (85.5%) worked at the stores, 7.5% (7.2%) at the warehouses and 7.2% (7.2%) in support functions.

Key achievements in personnel work in 2022

The year was characterised by the introduction of three new systems that support personnel management. The new HR system, shift planning system and recruitment system were introduced successfully, and efforts to utilise them even more effectively continue. During 2022, Tokmanni redesigned its careers pages and began systematically building cooperation with educational institutions across Finland.

During 2022, more than 260 Tokmanni employees participated in long apprenticeship training courses. The highest numbers of students were in the programmes aiming for a vocational qualification in business, a vocational qualification in first-line management and a garden salesperson qualification. The career paths of store salespeople were also developed. Finnish language courses that were launched in 2021 for store and warehouses employees who have moved to Finland from other countries were continued in 2022.

The training programme aimed at the extended management continued. In 2022, the training focused particularly on change management and wellbeing. The supervisors' coaching path was supplemented with a new coaching module in which participants learn to build trust and psychological safety within a team and to develop self-knowledge. One of the development projects carried out in 2022 was the educational coaching aiming at a Bachelor of Business Administration degree, for which 10 Tokmanni employees were accepted as degree students.

As part of its project called Onnistuneesti työuralle, the Finnish Institute of Occupational Health organised online coaching sessions for Tokmanni's young employees and training for their supervisors. Tokmanni also participated in the training project intended for immigrants, which was organised by Stadin AO (Helsinki Vocational College and Adult Institute). Tokmanni continued its cooperation with Plan International, recruiting young people with an immigrant background as trainees in the Tutustu työelämään ja tienaa programme. During 2022, Tokmanni employed 17 Ukrainians at its logistics centre and stores.

In 2022, Tokmanni paid particular attention to the prevention of mental health problems and musculoskeletal disorders. The occupational health care agreement concluded with Mehiläinen was supplemented with shortterm therapy and mood coaching for employees facing mental health challenges. In cooperation with occupational health care, Tokmanni planned and launched the Työfyssari Helppi operating model to support good ergonomics at work in the logistics centre and the stores.

In 2022, Tokmanni launched the Tokmanni Tsemppi wellbeing programme to promote coping at work and a healthy way of life for all employees. Personal wellbeing surveys were conducted on the supervisors and experts at the headquarters with the help of an external partner, and the results of the surveys were used to create various lectures. Occupational health care conducted a health survey among the store and warehouses personnel. The survey's purpose was to ensure that persons who were found to be in need of support, or who indicated this themselves, received treatment or were referred to various care paths.

In the area of occupational safety, the focus in 2022 was on instilling various operating methods. The safety walks started in 2021 continued to take place actively at all Tokmanni's locations in 2022, and any shortcomings detected were remedied in a timely manner. The Tokmanni Turva system was enhanced by including workplace surveys by occupational health care and observations that arose in inspections by the Regional State Administrative Agency in the system. Concentrating all information in a single system makes

it easier for Tokmanni to draw conclusions concerning the entire company and to take steps to remedy detected deficiencies.

Tokmanni continued its active work to promote diversity in 2022. The diversity coaching for warehouse supervisors was expanded so that it now also covers orientation mentors at warehouse. Having completed the coaching, many of the orientation mentors completed a vocational degree in service logistics alongside their work.

Remuneration of the personnel

All Tokmanni employees are covered by the quarterly incentive bonus scheme, with the exception of logistics personnel. Tokmanni's logistics employees are paid a personal productivity bonus based on their monthly performance, on top of their monthly basic salary. A description of Tokmanni's Board of Directors' and Executive Group's remuneration practices will be provided in the Remuneration Report to be published in the week beginning on 20 February 2023.

Changes in Tokmanni's Executive Group

Tokmanni's CFO and CIO Markku Pirskanen decided to move to a new position outside the company. Pirskanen's last working day at Tokmanni was 12 August 2022. Tokmanni's new CFO and CIO Tapio Arimo started in his position on 15 November 2022.

On 31 December 2022, Tokmanni's Executive Group included the following persons:

Mika Rautiainen, President and CEO as well as member of the Executive Group since 1 June 2018
Tapio Arimo, CFO and CIO, member of the Executive Group since 15 November 2022 and deputy to CEO since 23 November 2022
Timo Heimo, Vice President, Sales and Supply Chain, member of the Executive Group since 1 December 2018
Sirpa Huuskonen, Vice President, People, Culture and Sustainability, member of the Executive Group since 1 May 2016
Harri Koponen, Vice President, Store Network and Concept, member of the Executive Group since 1 February 2018
Matti Korolainen, Commercial Director, member of the Executive Group since 1 August 2019
Janne Pihkala, Vice President, Strategy, Business Development and eCommerce, member of the Executive Group since 1 April 2018
Juha Valtonen, Vice President, Sourcing, member of the Executive Group since 1 August 2020
Veli-Pekka Ääri, Vice President, Marketing and Communications, member of the Executive Group since 1 October 2021

More information on Tokmanni's governance is available on the company's website https://ir.tokmanni.fi/en/investors/corporate-governance/executive-group.

CORPORATE RESPONSIBILITY

Corporate responsibility is one of the factors that underpins the success of Tokmanni's strategy. The key corporate responsibility targets were updated in 2021 as part of Tokmanni's strategy update. The targets are related to the following themes: Products and Sourcing Chain, People, Climate and Business Integrity. Corporate responsibility work is carried out in line with the strategic objectives and in compliance with valid legislation.

Tokmanni takes climate change seriously, and reducing climate emissions is one of Tokmanni's key priorities in corporate responsibility. Tokmanni's climate work is guided by ambitious science-based climate targets (based on the Science Based Targets initiative) that are aligned with the Paris Agreement and aim to limit global warming to 1.5 degrees Celsius. Tokmanni set its science-based climate targets in 2020 as the third Nordic retail sector company to do so. Tokmanni is also aiming to achieve carbon neutrality in its own operations (Scope 1 and 2 emissions) in 2025.

Tokmanni's sustainability will be presented comprehensively in the Sustainability Report to be published in the week beginning on 20 March 2023 and which is prepared in accordance with the GRI standards. In addition, matters related to sustainability will be discussed in the 'Non-financial information' section in the Board of Directors' Report, which will be published in the week beginning on 20 February 2023.

Tokmanni has not identified any activities in its business that are covered by the classifications set out in the EU Taxonomy at this stage. Tokmanni's main operations that generate the Group's revenue are the sale of goods and services to customers. The sale of goods is not covered by the Taxonomy. The Taxonomy is the European Union's classification system for sustainable financing, with the aim of helping to identify sustainable economic activities that meet the needs of various parties. The aims of the Taxonomy are related to the European Union's sustainable development principles and the achievement of set environmental and climate targets.

Key sustainability achievements in 2022

Tokmanni will achieve its ambitious climate targets in stages by continuing to implement energy efficiency measures, using only emission-free electricity and transitioning gradually to renewable heating.

Tokmanni improved its score in the global CDP Climate Change assessment. Tokmanni's inclusion in the Management category (A-) in the Leadership category in the climate change assessment proves that Tokmanni is increasingly considering the risks and opportunities arising from climate change and actively taking measures to reduce emissions, combat climate risks and develop a low-carbon economy.

In 2022, Tokmanni recycled approximately 34% (34%) of its waste and reused 48% (48%). The latter consisted of the reuse of pallets in transport. To reduce food waste, Tokmanni continued to offer evening discounts on food products about to expire at all of its stores. Tokmanni also started selling products that are past their best before date but are safe to eat at a 70% discount. In addition, 145 (140) Tokmanni stores and the logistics centre made food donations.

In 2022, Tokmanni further boosted energy efficiency at the properties whose operation it can directly influence. Tokmanni continued to invest in solar power, commissioning the installation of new solar power plants on the roofs of 5 (12) stores in 2022. About 9% of Tokmanni's annual electricity consumption was produced with solar power. Tokmanni also installed LED lighting at 6 (20) of its Tokmanni stores and at its 4 Miny stores. As a result, all of Tokmanni's stores now have LED lighting. In addition, Tokmanni switched off outdoor and advertising lights earlier than before and controlled ventilation units more closely. The building automation systems at many properties were also upgraded. This included refrigeration automation systems, where an increase in energy efficiency was sought by lowering the consumption of electricity and water.

Tokmanni continued to develop its supply chain risk management from a sustainability perspective. Tokmanni conducted 75 (62) own factory inspections in 2022. In addition, Tokmanni commissioned 42 extra third-party factory audits. Tokmanni also ordered factory-specific human rights audits for two potential sourcing areas from an external auditing firm. Tokmanni prepared a biodiversity roadmap. In 2022, Tokmanni updated its policy concerning wood- and paper-based products and set a goal to increase the amount of certified wood-based products. In addition, Tokmanni set a policy of using certified coffee in all its private label coffee brand. Tokmanni continued to pursue the goals set in its sustainability policies for raw materials. Tokmanni continued to work with amfori BEPI (Business Environmental Performance Initiative) in order to influence the climate impacts of its factories in high-risk countries. During 2022, Tokmanni used around 830 factories in high-risk countries.

Tokmanni's social responsibility partnership with the Finnish Red Cross (FRC) continued. Its aim is to endorse work combatting loneliness and social exclusion across Finland by supporting the FRC's volunteer friend activities. In 2022, Tokmanni donated EUR 242,200 collected from the sale of Teboil products towards helping Ukrainians through the FRC Disaster Relief Fund. In addition, Tokmanni continued to support Hurstinapu ry together with Unilever Finland, and it participated in the Mielinauha campaign of MIELI Mental Health Finland and cooperated with the John Nurminen Foundation in a campaign in which EUR 15,000 from the sales of Pisara-branded products were donated through the foundation for the protection of the Baltic Sea. In total, Tokmanni's various forms of support for different charitable causes added up to an amount almost EUR 300,000 in 2022.

Tokmanni purchased packaging services from Eteva for the third year in a row, offering packaging work to members of Eteva's Duunarit ('worker') groups. Members of Eteva's Duunarit groups include people in need of special support, such as people with intellectual and developmental disabilities or autism spectrum disorders, or those participating in mental health rehabilitation.

Tokmanni's Compliance team convened regularly once every quarter during 2022, processing all reports received through the whistleblowing channel in an appropriate manner. There were 105 notifications during the year. The anonymous whistleblowing channel has been used since 2020 for reporting both internal and external incidents. The Ethical Code of Conduct e-learning course, which is compulsory for every Tokmanni employee, was completed by 3,143 (3,128) Tokmanni employees in 2022.

SHARES AND SHAREHOLDERS

Tokmanni Group Corporation's share capital amounted to EUR 80,000 on 31 December 2022. Tokmanni had 58,868,752 shares outstanding at the end of December 2022. During January-December 2022, a total of 48,595,707 Tokmanni shares were traded on the Nasdaq Helsinki for a total price of EUR 673.4 million. The final trade in Tokmanni shares on the Nasdaq Helsinki was executed at a price of EUR 11.29 on 31 December 2022. The highest quote for the share was EUR 20.26 and the lowest was EUR 10.77. The volume-weighted average price of the share was EUR 13.91. At the end of December 2022, the market value of the shares was EUR 664.6 million (1,156,8).

Tokmanni Group Corporation has one share class, with each share entitling its holder to one vote at a general meeting of the company. The shares have no nominal value.

During January–December 2022 a total of 33,475 of Tokmanni Group Corporation's own shares were conveyed without consideration to the employees participating in the incentive program under the terms and conditions of the plans. A total of 6,352 own shares returned to Tokmanni Group Corporation. At the end of December 2022, Tokmanni Group Corporation held a total of 50,063 own shares, which represented 0.09% of Tokmanni's share capital.

At the end of December 2022, Tokmanni had 51 619 registered shareholders. At the end of the year 2022, the largest shareholders of Tokmanni Group Corporation were Takoa Invest Oy with 17.91%, Varma Mutual Pension Insurance Company with 4.17%, Ilmarinen Mutual Pension Insurance Company with 2.38%, Elo Mutual Pension Insurance Company with 2.02%, and OP-Suomi investment fund with 1.75% ownership.

Households held 29.04% of the shares, while financial and insurance institutions held 27.33%, public-sector entities held 25.21%, non-financial corporations held 9.66%, and non-profit organisations held 4.33%. Direct foreign ownership accounted for 4.43%. 22.03% of shares were nominee registered.

The combined holding of Tokmanni's Board of Directors, the CEO and the Deputy CEO as well as the other members of the Executive Group in the shares issued by the company was 1.33% at the end of 2022.

Shareholding of the Board of Directors on 31 December 2022

	Shares
Juha Blomster	8,840
Thérèse Cedercreutz	6,380
Erkki Järvinen	4,279
Ulla Lettijeff	2,325
Seppo Saastamoinen*	111,987
Harri Sivula	214,574
Total	348,385

* One of the founders of Takoa Invest Oy, Chairman of the Board and CEO. Takoa Invest Oy owned 10,544,688 shares, or 17.91% of Tokmanni's shares on 31 December 2022. In addition, Jukka Saastamoinen Oy owned 274,000 Tokmanni shares, and Seppo Saastamoinen owned 30% of Jukka Saastamoinen Oy.

Shareholding of the Executive Group on 31 December 2022

	Shares
Tapio Arimo	2,000
Timo Heimo	48,247
Sirpa Huuskonen	21,474
Harri Koponen	39,287
Matti Korolainen	101,321
Janne Pihkala	6,732
Mika Rautiainen	174,915
Juha Valtonen	31,926
Veli-Pekka Ääri	11,112
Total	437,014

More information on Tokmanni's share and shareholders, as well as management's holdings, can be found on the company's website https://ir.tokmanni.fi/en/investors/share-and-shareholders/management shareholding.

Authorisation of the Board of Directors to decide on the repurchase of the company's own shares

The Annual General Meeting held in 2022 decided to authorise the Board of Directors to decide on the repurchase or acceptance as pledge, using the Company's unrestricted equity, of a maximum of 2,943,000 own shares, which corresponds to approximately 5% of the Company's total shares at the time of convening the Annual General Meeting. The repurchase may take place in one or more tranches. The authorisation includes the right of the Board of Directors to decide on all other matters related to the repurchase and/or the acceptance as pledge of shares. The authorisation is effective until the Annual General Meeting to be held in 2023, yet no further than until 30 June 2023.

The Annual General Meeting decided to authorise the Board of Directors to decide on the issuance of at most 2,943,000 new shares or shares held by the company in one or more tranches through a share issue and/or by issuing options or other special rights entitling to shares as referred to in Chapter 10 Section 1 of the Limited Liability Companies Act. 2,943,000 shares currently represent approximately 5% of Tokmanni's total number of registered shares. The authorisation includes the right of the Board of Directors to decide on any terms and conditions of the share issue and the issue of special rights referred to in Chapter 10 Section 1 of the Limited Liability Companies Act. The authorisation is effective until the Annual General Meeting to be held in 2023, yet no further than until 30 June 2023.

SHARE-BASED INCENTIVE PROGRAMME

The Board of Directors of Tokmanni Group Corporation resolved in February 2022 to continue its sharebased incentive program directed to the key employees. The aim of the program is to combine the objectives of the shareholders and the key employees in order to increase the value of the Company in the long-term, to commit the key employees to implement the Company's strategy, and to offer them a competitive reward program based on earning and accumulating the Company's shares.

The performance share program included the calendar year 2022. The potential reward of the program was based on the Company's earnings per share, on the market value development and emission reduction of own operations in 1.1.-31.12.2022.

The target group of the program includes the CEO, the members of the Executive Group as well as other key employees. The potential rewards, which by nature are taxable income, to be paid correspond to a maximum of 120,000 Tokmanni Group Corporation's shares based on the market value at the moment of granting and will be paid in Tokmanni Group shares and possibly partly in cash. The cash proportion covers taxes and tax-related costs arising from the reward to a key employee. The earned shares will be transferred to the participant's book-entry account in 2023 and will be released from restrictions in January 2025. If the employee's employment ends before the end of the restriction period, the shares will be returned to the company.

During 2022, Tokmanni Group Corporation assigned a total of 33,475 of the company's own shares to 58 persons covered by the company's incentive programme 2021 without consideration and in accordance with the terms and conditions of the incentive programme.

GOVERNANCE

Governance at Tokmanni Group Corporation is based on the Articles of Association approved by the General Meeting of Shareholders, the Finnish Limited Liability Companies Act and the rules and regulations by Nasdaq Helsinki Ltd. with regard to listed companies. Tokmanni complies with the Finnish Corporate Governance Code for listed companies issued by the Securities Market Association.

Decisions taken by the Annual General Meeting

Tokmanni Group Corporation's Annual General Meeting was held in Helsinki, Finland on 23 March 2022. The meeting was held based on the so-called temporary act so that shareholders participated in the meeting and exercised their shareholder rights only by voting in advance and by submitting counterproposals and asking questions in advance.

The meeting approved the financial statements, considered the Remuneration Report for governing bodies and discharged the responsible parties from liability for the financial period 1 January–31 December 2021.

Dividend payment

The General Meeting approved dividends in line with the Board of Director's proposal of EUR 0.96/share. The proposed dividend was paid to shareholders who are registered in the company's shareholders register, maintained by Euroclear Finland, on the record date of the payment of the dividend. The record date for the payment of the dividend was 25 March 2022 and the date for the payment of the dividend is 8 April 2022.

Board composition and remuneration

The number of Members of the Board of Directors was confirmed as six. Re-elected as Members of the Board were Seppo Saastamoinen, Harri Sivula, Thérèse Cedercreutz, Juha Blomster, Erkki Järvinen and Ulla Lettijeff. Seppo Saastamoinen was re-elected as the Chairman of the Board of Directors.

The General Meeting confirmed an annual compensation of EUR 84,000 for the Chairman of the Board and EUR 30,000 for the member of the Board.

The Chairman and the members of the Board of Directors will be paid an attendance fee per each meeting of the Board of Directors as follows:

EUR 1,000 for those members of the Board of Directors who are domiciled in Finland;
EUR 2,000 for those members of the Board of Directors who are domiciled elsewhere in Europe; and
EUR 3,000 for those members of the Board of Directors who are domiciled outside Europe.

In addition, the Chairman of the Finance and Audit Committee will be paid EUR 1,000 as monthly remuneration.

The annual remuneration of the members of the Board of Directors is paid in company shares and in cash so that approximately 40% of the annual fee is paid in the company shares and the rest is paid in cash. The company will pay any costs and transfer tax related to the purchase of the company shares. The shares purchased for the Board member cannot be transferred until 3 years have passed from the date of purchase or before the Board member's membership in the Board has ended, whichever is earlier.

Board members' meeting fees and the Chairman of the Finance and Audit Committee's remuneration will be paid in cash.

Selection of the auditor and remuneration

The authorised public accountants PricewaterhouseCoopers Oy was nominated as the auditor for the term 2022. The principal auditor is APA Ylva Eriksson. The auditor is paid remuneration in accordance with a reasonable invoice.

Authorising the Board of Directors to decide on the repurchase and/or on the acceptance as pledge of the Company's own shares

The Annual General Meeting decided to authorise the Board of Directors to decide on the repurchase or acceptance as pledge, using the Company's unrestricted equity, of a maximum of 2,943,000 own shares, which corresponds to approximately 5% of the Company's total shares at the time of convening the Annual General Meeting. The repurchase may take place in one or more tranches. The authorisation includes the right of the Board of Directors to decide on all other matters related to the repurchase and/or the acceptance as pledge of shares. The authorisation is effective until the Annual General Meeting to be held in 2023, yet no further than until 30 June 2023.

Authorising the Board of Directors to decide on the issuance of shares as well as the issuance of options and other special rights entitling to shares

Decisions taken in the constitutive meeting of the Board of Directors

At its constitutive meeting following the annual general meeting, the Board resolved to elect as members of the Finance and Audit Committee: Juha Blomster, Erkki Järvinen and Harri Sivula. Erkki Järvinen was elected as Chairman of the Finance and Audit Committee.

RISK MANAGEMENT

Tokmanni Group Corporation's risk management is guided by the risk management policy approved by the Board of Directors of Tokmanni. The purpose of Tokmanni's risk management is to support the Group's values and strategy and the continuity of its business operations by anticipating and managing any risks associated with its operations. The goal is to assess risks systematically to promote thorough planning and decision-making.

The Executive Group is responsible for the practical implementation of risk management. Risks are assessed regularly and managed comprehensively. The risks of Tokmanni Group Corporation are reviewed annually by the Finance and Audit Committee of the Board of Directors. The Chairman of the Finance and Audit Committee reports on risk management to the Board of Directors on a regular basis. The Board of Directors reports the key risks and factors of uncertainty to the markets in the Board of Directors' Report and communicates material changes to them in the business review and half-year financial report.

Description of the risks and uncertainties that are considered significant for Tokmanni

Data system and data security risks

Tokmanni has become increasingly dependent on data systems, data traffic and external service providers. The interconnectedness of networks, the outsourcing of services and online retail have made it more difficult for companies to monitor their data security effectively. Prolonged disturbances in data systems, payment transmission or elsewhere in the supply chain, or other exceptional situations such as a cyber-attack, could paralyse the company's operations or halt the flow of goods within the Group, causing significant losses in sales. Tokmanni is focusing increasingly on identifying data security risks and increasing its data security capabilities. In addition, Tokmanni is investing in the latest device infrastructure and back-up systems as well as keeping preparedness and recovery plans up to date.

Market risk

Tokmanni's profitability and profit from operations as well as sales growth are dependent on the behaviour of consumers and competitors operating in the Finnish retail market. New international market forces and online stores are transforming the sector and its market dynamics, creating pressure in the market and further intensifying competition. If Tokmanni is unable to correctly judge the direction of the market trend and the changes that it demands, it could have an adverse effect on Tokmanni's business. To manage market risks, Tokmanni tracks the market as part of the Group's day-to-day operational management, develops its business processes and services in an agile way, and adapts its sales promotion procedures and pricing strategies in order to respond to the changing market conditions.

Economic fluctuation

Changes taking place in the global economy and the Finnish economy, including a strong economic recovery, could raise the costs of transportation, components, energy and materials and potentially result in shortages in these. Prolonged high prices, shortages of components, problems in the distribution of electricity and disturbances in logistics chains could, for example, delay deliveries and otherwise weaken the availability of products as well as result in additional costs that we are unable to pass along fully to customer prices. Economic slumps have a clear impact on the retail sector, although they are likely to have less of an impact on variety discount retailers.

Inventory turnover and working capital management

Tokmanni aims to improve the management of working capital by developing the processes and tools used in sourcing and in supply chain and category management. A failure by Tokmanni to manage its working capital could have a negative effect on Tokmanni's financial position and profitability. Tokmanni continuously monitors the transportation of imported goods, the turnover of its inventory, the life cycles of products, depreciation on products, and its assortment management as part of the Group's day-to-day operational management, and takes corrective measures, if necessary.

Failure in the execution of strategic projects, as well as the competence and availability of personnel

The execution of Tokmanni's strategy and strategic transformation require new kinds of skills and competences from the personnel. Tokmanni's ongoing development projects and its need for special expertise increase the key person risk and the company's dependence on the competence of individual persons. Tokmanni focuses on recruiting people with the essential competence, developing competence through training and coaching and promoting learning on the job in order to mitigate the key person risk.

Risks of loss or damage

Accidents, natural disasters and pandemics, as well as restrictions on travel and transportation resulting from these, can result in significant damage to people, property and the business. Moreover, risks of loss or damage can cause delays and interruptions in business and imports that cannot be prevented in advance. Tokmanni has prepared for a possible lack of availability in goods by introducing alternative sourcing channels, among other measures. Tokmanni observes official recommendations and orders in all its activities.

Destruction of or damage at the logistics centre

Tokmanni is dependent on the uninterrupted operation of its logistics centre. If this logistics centre is destroyed or closed for any reason, or if its equipment is damaged to a significant extent, or if there are any other disruptions to operations, this will result in delays in the distribution of products according to timetable. Significant delays will lead to the loss of sales and to additional expenses. Tokmanni manages this risk with business continuity, safety and recovery plans and by carrying out preventive maintenance.

Risks relating to the health and working capacity of employees

Widespread absences by employees in various employee groups (e.g. logistics, sales, customer service, management) may impact the company's operations. The company strives to minimise risks relating to the health and working capacity of its employees, for example, through various safety solutions and, if necessary, by instructing employees to work from home if their work duties allow this. In addition, the company may acquire temporary labour force during possible peaks in sickness absences. Tokmanni has identified the critical key persons for its various functions and made arrangements for providing deputies for them.

Reputation risk

If Tokmanni fails, for example, in its supervision of product safety or in controlling responsibility in the supply chain, it could result in financial losses as well as an erosion or loss of customer trust. The importance of different aspects of responsibility in product manufacturing and sourcing as well as fair and equal treatment of employees is increasingly emphasised by stakeholders. Any failure to implement responsibility perspectives would result in negative publicity for Tokmanni, impacting Tokmanni's reputation. The abovementioned quality and reputation risks are managed with internal and external quality and responsibility audits, with the compliance requirements of the amfori BSCI Code of Conduct and Tokmanni's Ethical Code of Conduct, with good governance principles and a good corporate management model, and with internal audit measures and a large-scale Compliance programme. In addition, Tokmanni has a quality organisation that monitors product safety and quality in the country of origin, at the logistics centre and in the stores.

Geopolitical changes and political country risk in sourcing

There are direct and indirect risks involved in the uncertain global economic conditions and in geopolitical developments, including slower economic growth and potential unexpected political decisions. These factors may have an adverse effect on Tokmanni's business and on demand for the company's products. Moreover, Tokmanni's sourcing market is constantly undergoing changes that are beyond the company's control. China's changing environmental legislation and the impact of the country's political decisions on its economic development and legislation as well as political instability in such sourcing countries as Turkey, Bangladesh, Myanmar and Pakistan could increase sourcing prices or cause supply problems. Risks are assessed continuously by monitoring changes in the geopolitical situation, and the necessary plans and measures are prepared in order to react to changes that might take place. Tokmanni also focuses increasingly on developing its sourcing models, which would enable it to adjust its sourcing flexibly in the event that risks materialise.

Brand image and marketing risk

The growth of Tokmanni's like-for-like sales is partially dependent on the reach and effectiveness of advertising and marketing programmes. For advertising and marketing programmes to be successful, Tokmanni must, for example, effectively manage its advertising and marketing expenses relative to revenue. It must also increase its customer numbers through better brand awareness. To manage its marketing risk, Tokmanni tracks the markets and constantly measures the effectiveness of marketing and advertising. Tokmanni's marketing processes have been developed to be agile and flexible, to enable very rapid reaction to any adverse events.

Product quality and responsibility risk

Some of the key measures taken by Tokmanni to improve the gross margin include increasing direct imports and growing the contribution of its private label products to overall sales. Increasing imports rapidly could result in risks related to product quality and to responsibility. If monitoring and quality control in the supply chain fails, it could result in financial losses, an erosion of customer trust and the company's reputation or, in the worst case, risks to customers' health. Tokmanni focuses increasingly on extensive pretesting of products and ensures through self-supervision that products comply with regulations governing them. Effective handling of customer feedback forms a key aspect in the management of product quality. Tokmanni mitigates the responsibility risks related to products by striving to channel all direct sourcing from risk countries to factories audited by amfori BSCI or SA8000.

Risks related to Tokmanni's private label products and direct sourcing

Tokmanni is increasing the number of private label products in all its product categories in order to achieve its aim of improving profitability. Tokmanni's private label products usually have a low perceived price image and they offer better margins than the brand products the company sells. Tokmanni has also improved its capability to make direct procurements by dropping intermediaries and dealing directly with goods manufacturers. An increase in Tokmanni's direct procurements may increase operational risks related to the availability of products, the need for working capital and the quality and safety of products. A failure by Tokmanni to increase the number of its private label products or direct procurements could also jeopardise the company's strategic goals, which could have a negative effect on Tokmanni's business and financial position. To manage the above-mentioned risks, Tokmanni utilises its joint sourcing company in Shanghai, continues to utilise and develop its sourcing model and conducts audits of manufacturers.

Foreign exchange risks

Tokmanni is exposed to foreign exchange risks through its sourcing. Unfavourable changes in foreign exchange rates can raise the acquisition costs of products purchased in other currencies than the euro, and Tokmanni may not be able to pass on all such costs to its customers. The most important foreign currency for Tokmanni is the United States dollar. In the financial year that ended on 31 December 2022, approximately 82% of Tokmanni's product purchases were made in euros and approximately 18% in US dollars. Tokmanni hedges at least half of its purchases made in US dollars for an average period of six months.

EVENTS AFTER THE REVIEW PERIOD

The company's management is not aware of any events of material importance after the review period that might have affected the preparation of the financial statements release.

In the release published on 24 January 2023, the Shareholders' Nomination Board of Tokmanni Group Corporation proposes to the Annual General Meeting that the number of the members of the Board of Directors and their remuneration remain the same as previous year. The Nomination Board proposes that the current members of the Board of Directors Thérèse Cedercreutz, Erkki Järvinen, Ulla Lettijeff, Harri Sivula and Seppo Saastamoinen will be re-elected. The Nomination Board also proposes that Mikko

Bergman will be elected as a new member to the Board of Directors. Current Member of the Board of Directors Juha Blomster has notified that he is no longer available to be elected as a member of the Board.

BOARD OF DIRECTORS' PROPOSAL FOR THE DISTRIBUTION OF PROFIT

The parent company's distributable assets total EUR 218,360,938.40, of which profit for the period totalled EUR 58,612,761.23.

The Board of Directors proposes that a maximum dividend of EUR 0.76 per share, or a total of EUR 44,702,203.64, be distributed as dividend for the financial year ended 31 December 2022. Of this dividend, EUR 0.38 will be paid to shareholders who are registered in the company's shareholder register maintained by Euroclear Finland Ltd on the record date of the payment of the dividend, which is 24 March 2023. The Board of Directors proposes 12 April 2023 as the dividend payment date. The remainder of the distributable assets will remain in equity. The company's solvency is good, and the proposed dividend distribution will not endanger the company's solvency in the view of the Board of Directors.

In addition, the Board of Directors proposes that the 2023 Annual General Meeting authorise the Board of Directors to decide, at its discretion, on the distribution of a maximum dividend of EUR 0.38 per share in one instalment. This authorisation would be valid until 31 December 2023. The company will announce the possible decision taken by the Board of Directors on the distribution of dividend and, in connection with this, confirm the record date and payment date of the dividend. The dividend based on the authorisation will be paid to shareholders registered in the company's shareholder register maintained by Euroclear Finland Ltd on the dividend record date.

Tokmanni's Annual General Meeting is planned to be held on 22 March 2023. Tokmanni's Board of Directors will summon the meeting at a later date.

Tokmanni's 2022 Financial Statements including the Report of the Board of Directors will be published in the week beginning on 20 February 2023 after which it can be found on the Groups' webpages ir.tokmanni.fi/en.

Mäntsälä 10 February 2023

Tokmanni Group Corporation

Board of Directors

Tokmanni Group Corporation's financial report 2022

ACCOUNTING POLICIES

This Financial Statement Bulletin has been prepared in accordance with IAS 34 lnterim Financial Reporting using the same accounting policies and methods of computation as in the financial statements for 2021. AII figures in the accounts have been rounded. Consequently, the sum of individual figures can deviate from the presented sum figure.

Use of estimates

The preparation of the Financial Statement Bulletin in accordance with IFRS requires the management to make estimates and assumptions that affect the valuation of the reported assets and liabilities and other information, such as contingent liabilities and the recognition of income and expenses on the income statement. Although the estimates are based on the management's best knowledge of current events and actions, the actual results may differ from the estimates.

This interim report is unaudited.

Consolidated income statement (MEUR)
	10–12/2022	10–12/2021	1–12/2022	1–12/2021
Revenue	339.0	334.1	1 168.0	1 141.8
Other operating income	1.2	1.2	4.0	3.6
Materials and services	-221.2	-213.0	-771.2	-744.0
Employee benefits expenses	-36.1	-35.7	-137.1	-132.9
Depreciation	-18.8	-17.6	-73.1	-66.8
Other operating expenses	-31.2	-28.1	-106.7	-94.1
Share of profit in joint ventures	0.0	0.0	0.1	0.1
Operating profit	33.0	40.9	84.1	107.7
Financial income	0.0	0.1	0.1	0.1
Financial expenses	-2.9	-2.5	-10.8	-10.2
Profit/loss before tax	30.0	38.4	73.3	97.6
Income taxes	-5.9	-7.7	-14.6	-19.6
Net result for the financial period	24.1	30.6	58.7	78.0

Profit for the year attributable to
Equity holders of the parent company	24.1	30.6	58.7	78.0

Consolidated statement of comprehensive income (MEUR)
	10–12/2022	10–12/2021	1–12/2022	1–12/2021
Net result for the financial period	24.1	30.6	58.7	78.0

Other comprehensive income
Items that may be reclassified
subsequently to profit or loss
Exchange differences on translating
foreign operations	0.0	0.0	0.0	0.0

Comprehensive income for the
financial period, net of tax	0.0	0.0	0.0	0.0

Comprehensive income for the
financial period	24.1	30.7	58.7	78.0

Comprehensive income for the
financial period attributable to
Equity holders of the parent company	24.1	30.7	58.7	78.0

Earnings per share
Equity holders of the parent company	24.1	30.6	58.7	78.0

Earnings per share, basic (EUR/share)	0.41	0.52	1.00	1.33
Earnings per share, diluted (EUR/share)	0.41	0.52	1.00	1.33

Consolidated statement of financial position (MEUR)
	31 December 2022	31 December 2021
ASSETS

NON-CURRENT ASSETS
Property, plant and equipment	329.7	303.9
Goodwill	136.2	136.2
Other intangible assets	4.0	4.7
Non-current receivables	2.2	2.1
Investments in joint ventures	0.2	0.1
Other financial assets	0.7	0.2
Deferred tax asset	1.6	1.4
NON-CURRENT ASSETS, TOTAL	474.5	448.6

CURRENT ASSETS
Inventories	281.3	263.6
Trade and other receivables	26.4	23.0
Income tax receivables	2.5	0.0
Cash and cash equivalents	9.1	81.3
CURRENT ASSETS, TOTAL	319.3	367.9

ASSETS, TOTAL	793.8	816.5

EQUITY AND LIABILITIES
Equity attributable to the equity holders of the parent
company
Share capital	0.1	0.1
Reserve for invested unrestricted equity	109.9	109.9
Treasury shares	-0.8	-2.0
Translation differences	0.0	0.0
Retained earnings	137.8	136.7
EQUITY, TOTAL	247.0	244.7

NON-CURRENT LIABILITIES
Non-current interest-bearing liabilities	322.7	339.7
Non-current non-interest-bearing liabilities	4.8	5.3
NON-CURRENT LIABILITIES, TOTAL	327.5	345.0

CURRENT LIABILITIES
Current interest-bearing liabilities	69.7	55.9
Trade payables and other current liabilities	148.5	164.5
Income tax liabilities	1.1	6.4
CURRENT LIABILITIES, TOTAL	219.3	226.9

EQUITY AND LIABILITIES, TOTAL	793.8	816.5

Consolidated statement of cash flows (MEUR)
	1–12/2022	1–12/2021
Cash flows from operating activities
Net result for the financial period	58.7	78.0
Adjustments:
Depreciation	73.1	66.8
Capital gains and losses on non-current assets	0.0	0.2
Financial income and expenses	10.7	10.1
Income taxes	14.6	19.6
Other adjustments	0.6	-2.3
	0,0	0,0
Change in working capital:	0,0	0,0
Change in current non-interest-bearing receivables	-4.7	-0.6
Change in inventories	-17.1	-36.7
Change in current non-interest-bearing liabilities	-16.7	24.0

Interest paid	-10.1	-9.3
Other financing items	-0.1	-0.9
Income taxes paid	-22.7	-22.1
Net cash from operating activities	86.3	126.8

Cash flows from investing activities
Purchases of tangible and intangible assets	-54.3	-21.6
Proceeds from disposal of tangible and intangible assets	0.0	-
Losses on disposal of tangible and intangible assets	-	-0.2
Investments in other assets	-0.5	-
Loans granted	-0.2	0.0
Proceeds from repayments of loans	0.1	0.5
Net cash from investing activities	-54.7	-21.3

Cash flows from financing activities	0,0	0,0
Change in current loans	10.0	-100.0
Proceeds from non-current loans	-	100.0
Repayments of lease liabilities	-57.2	-52.3
Dividends paid	-56.5	-50.0
Net cash from financing activities	-103.7	-102.3

Net change in cash and cash equivalents	-72.1	3.2

Cash and cash equivalents at beginning of the financial period	81.3	78.1
Net change in cash and cash equivalents	-72.1	3.2
Effects of exchange rate fluctuations on cash held	-0.1	-
Cash and cash equivalents, corporate arrangements	-	0.0
Cash and cash equivalents at end of the financial period	9.1	81.3

Consolidated statement of changes in equity (MEUR)
						Equity
		Reserve for				attributable
		invested				to owners
	Share	unrestricted	Treasury	Translation	Retained	of the
	capital	equity	shares	differences	earnings	parent	Total equity
Equity 1 Jan 2022	0.1	109.9	-2.0	0.0	136.7	244.7	244.7
Comprehensive
income	0,0	0,0	0,0	0,0	0,0	0,0	0,0
Net result for the
financial period	0,0	0,0	0,0	0,0	58.7	58.7	58.7
Translation differences	0,0	0,0	0,0	0.0	0,0	0.0	0.0
Other comprehensive
income				0.0	0,0	0.0	0.0
Total comprehensive
income for the
financial period	0,0	0,0	0,0	0.0	58.7	58.7	58.7
Dividends	0,0	0,0	0,0	0,0	-56.5	-56.5	-56.5
Transfer of treasury
shares			1.2		-1.2	-	-
Incentive scheme	0,0	0,0	0,0	0,0	0.1	0.1	0.1
Equity 31 Dec 2022	0.1	109.9	-0.8	0.0	137.8	247.0	247.0

						Equity
		Reserve for				attributable
		invested				to owners
	Share	unrestricted	Treasury	Translation	Retained	of the
	capital	equity	shares	differences	earnings	parent	Total equity
Equity 1 Jan 2021	0.1	109.9	-2.2	0.0	108.6	216.4	216.4
Comprehensive
income	0,0	0,0	0,0	0,0	0,0	0,0	0,0
Net result for the
financial period	0,0	0,0	0,0	0,0	78.0	78.0	78.0
Translation differences	0,0	0,0	0,0	0.0	0,0	0.0	0.0
Other comprehensive
income				0.0	0,0	0.0	0.0
Total comprehensive
income for the
financial period	0,0	0,0	0,0	0.0	78.0	78.0	78.0
Dividends	0,0	0,0	0,0	0,0	-50.0	-50.0	-50.0
Transfer of treasury
shares			0.2		-0.2	-	-
Incentive scheme	0,0	0,0	0,0	0,0	0.3	0.3	0.3
Other change					0.0	0.0	0.0

PROPERTY, PLANT AND EQUIPMENT

MEUR	31 December 2022	31 December 2021
Property, plant and equipment
Property, plant and equipment	79.0	39.2
Right-of-use fixed assets	250.7	264.7
Total	329.7	303.9

INTEREST-BEARING DEBT

MEUR	31 December 2022	31 December 2021
Non-current interest-bearing liabilities
Loans from financial institutions*	99.5	99.3
Lease liabilities	223.3	240.4
Total	322.7	339.7

Current interest-bearing liabilities
Other current liabilities	10.0	-
Lease liabilities	59.7	55.9
Total	69.7	55.9

Total	392.4	395.6

* Loans from financial institutions, adjusted with arrangement fees paid

FINANCIAL ASSETS AND LIABILITIES MEASURED AT FAIR VALUE

MEUR	Carrying amounts of assets as per balance sheet 31 Dec 2022	Fair value 31 Dec 2022	Carrying amounts of assets as per balance sheet 31 Dec 2021	Fair value 31 Dec 2021
Financial assets
Derivatives (level 2)	0.0	0.0	1.3	1.3
Financial liabilities
Derivatives (level 2)	0.6	0.6	0.2	0.2

COLLATERAL, CONTINGENT LIABILITIES AND PLEDGES

Contingent liabilities, assets and commitments

Property has not been provided as collateral for loans from financial institutions, but a covenant term is related to such loans. The covenant term determines the required net debt to EBITDA ratio.

Non-cancellable lease liabilities

Tokmanni's lease liabilities consist of minimum lease liabilities related to low-value leases and short-term leases.

MEUR	31 December 2022	31 December 2021
No later than 1 year	9.2	8.9
Later than 1 year but no later than 5 years	21.4	21.0
Later than 5 years	3.8	2.5
Total	34.3	32.3

CALCULATION OF THE GROUP'S KEY FIGURES

Like-for-like revenue development, %	Like-for-like revenue development is calculated by taking into account the revenue growth of stores that are not considered to be net-new and the revenue growth of relocated stores, as defined by Tokmanni to include: (i) new stores opened; (ii) store relocations where the store size changes by = 30 per cent or more and the assortment increases or is reduced substantially; and (iii) store expansions where the store size changes by 30 per cent or more. If the store falls in one of these categories, it is regarded as a net-new or relocated store in its opening year and in the following calendar year.
Customer visit development, %	= Number of customer transactions
Gross profit	= Revenue - Materials and services
Comparable gross profit	= Gross profit - Changes in the fair value of currency derivatives
Operating expenses	= Employee benefits expenses + Other operating expenses
Comparable operating expenses	= Operating expenses - Changes in fair value of electricity derivatives
EBITDA	= Operating profit + Depreciation
Comparable EBITDA	= EBITDA - Changes in fair value of currency and electricity derivatives
Comparable EBIT	= EBIT - Changes in fair value of currency and electricity derivatives
Net financial items	= Financial income - Financial expenses
Net debt	= Interest-bearing debt - Cash and cash equivalents
Net debt / Comparable EBITDA	= Net debt Comparable EBITDA
Capital employed	Balance sheet total - Deferred tax liability and other non-interest-bearing = liabilities
Return on capital employed, %	= Profit before taxes + Interest and other financial expenses preceding 12 months Capital employed, average for the preceding 12 months
Return on equity, %	= Net result for the preceding 12 months Equity, average for the preceding 12 months
Number of personnel	= Number of personnel at the end of the period
Number of personnel on average	= Number of personnel on average in the period
Equity ratio	= Equity Balance sheet total - Advances received

CALCULATION OF THE GROUP'S PER-SHARE DATA

	= Net profit
Earnings per share, basic	Number of shares, weighted average during the period
Earnings per share, diluted	= Net profit Diluted number of shares, weighted average during the period
Equity per share	Equity = Number of shares excluding treasury shares, end of reporting period
Dividend per share	= Dividend for the period Number of shares, weighted average during the period
Earnings per share	= Net profit Number of shares excluding treasury shares, end of reporting period
Payout ratio, %	= Dividend per share Earnings per share
Effective dividend yield, %	= Dividend per share Closing price for the period
Price/earnings ratio (P/E)	= Closing price for the period Earnings per share
Closing price for the period	= Share price at balance sheet date
Average price during the period	Share turnover in euro terms divided by the number of shares traded during = the period
Share turnover	= Number of shares traded during the period
Market capitalisation	= Number of shares x Share price on the balance sheet date
Number of shares	= Number of shares on the balance sheet date

AI Terminal

Tokmanni Group Oyj

3298_er_2023-02-10_e2ff9bd9-6457-4e46-9caf-cacf43d36edc.pdf

Tokmanni Group Corporation's Financial Statement Bulletin 2022

Revenue grew but operating profit declined due to higher costs

FOURTH QUARTER 2022 HIGHLIGHTS

JANUARY-DECEMBER 2022 HIGHLIGHTS

DIVIDEND PROPOSAL

TOKMANNI'S OUTLOOK FOR 2023

TOKMANNI'S PRESIDENT AND CEO MIKA RAUTIAINEN

Adjustments affecting comparability

TOKMANNI'S BUSINESS

MARKET DEVELOPMENT

Impacts of Russia's attack on Tokmanni's business

Competitive landscape

STORE NETWORK DEVELOPMENT

Miny shop-in-shop departments and dedicated stores

FINANCIAL DEVELOPMENT

Seasonality

Revenue

October–December 2022

January–December 2022

Profitability

October–December 2022

January–December 2022

Balance sheet, financing and cash flow

Capital expenditure

ACQUIRED BUSINESSES

TOKMANN'S LONG-TERM FINANCIAL TARGETS AND ACHIEVEMENTS

The targets of Tokmanni's strategic period 2021–2025 and achievements in 2022.

Strategic measures taken in 2022

• Low prices / price competitiveness

• Wide assortment

• Easy shopping

• Attractive customer experience

• Service-oriented personnel

• Sustainability

• Sourcing

• Supply chain

• Digital solutions

• Operational efficiency

PERSONNEL

Key achievements in personnel work in 2022

Remuneration of the personnel

Changes in Tokmanni's Executive Group

On 31 December 2022, Tokmanni's Executive Group included the following persons:

CORPORATE RESPONSIBILITY

Key sustainability achievements in 2022

SHARES AND SHAREHOLDERS

Shareholding of the Board of Directors on 31 December 2022

Shareholding of the Executive Group on 31 December 2022

Authorisation of the Board of Directors to decide on the repurchase of the company's own shares

SHARE-BASED INCENTIVE PROGRAMME

GOVERNANCE

Decisions taken by the Annual General Meeting

Dividend payment

Board composition and remuneration

Selection of the auditor and remuneration

Authorising the Board of Directors to decide on the repurchase and/or on the acceptance as pledge of the Company's own shares

Authorising the Board of Directors to decide on the issuance of shares as well as the issuance of options and other special rights entitling to shares

Decisions taken in the constitutive meeting of the Board of Directors

RISK MANAGEMENT

Description of the risks and uncertainties that are considered significant for Tokmanni

Data system and data security risks

Market risk

Economic fluctuation

Inventory turnover and working capital management

Failure in the execution of strategic projects, as well as the competence and availability of personnel

Risks of loss or damage

Destruction of or damage at the logistics centre

Risks relating to the health and working capacity of employees

Reputation risk

Geopolitical changes and political country risk in sourcing

Brand image and marketing risk

Product quality and responsibility risk

Risks related to Tokmanni's private label products and direct sourcing

Foreign exchange risks

EVENTS AFTER THE REVIEW PERIOD

BOARD OF DIRECTORS' PROPOSAL FOR THE DISTRIBUTION OF PROFIT

Tokmanni Group Corporation's financial report 2022