Hello, warm welcome to Tokmanni conference call regarding acquisition of Dollarstore, leading variety discount retailers in Sweden. My name is Mika Rautiainen, today, together with me to do the presentation is Tokmanni CFO, Mr. Tapio Arimo, and Tokmanni Head of IR, Miss Maarit Mikkonen. Tapio will later on dig deeper with the financials, and Maarit will be coordinating the questions. If you will have questions in the end of the presentation, there are two options. You can basically do the questions in our chat service or join with the Teams and set the questions over there. We'll come back to that a little bit later. In the previous Tokmanni Capital Markets Day, which was held 2021, we said that there's space for more than 220 Tokmanni stores in Finland. Today, we have 200 Tokmanni stores in Finland. In the same Capital Markets Day, we also said that Tokmanni will be actively evaluating the opportunity for an international expansion. Basically, today, or actually some time ago, when Peter Ahlberg, the Founder and the Owner of Dollarstore, decided to sell his great company, it was basically a fantastic opportunity for Tokmanni to start growing from a leading Finnish variety discount retailer to a leading Nordic variety discount retailer together with Dollarstore. Let's have a closer look at the transaction. Here are the figures. Dollarstore, enterprise value, EUR 345 million. The purchase price is EUR 170.4 million. Multiplier 6.9 for EV/EBITDA on a standalone basis. EUR 15 million estimated annual net synergies, and fully debt financed, with closing expected on the August 1st, 2023. Here are the key figures. About Dollarstore. It's one of the leading Swedish discount retail chains. As you can see, it's actually 130 stores in Sweden nationwide. Actually, also several white spots in Sweden. Dollarstore is also already growing in Denmark. There are two stores in Denmark at the moment. Dollarstore market share in Sweden is from the discount retail market, is approximately 10%. Personally, I've had more than 30 years of experience in retail business, and very, very seldom have I seen this kind of sales growth as what Dollarstore has been doing. It's just fantastic figures. Dollarstore people have been making absolutely great job. It's a really great company. When we look at the two companies, Dollarstore and Tokmanni, basically, they are operationally and strategically similar companies joining forces. Basically, to start with, it's variety discount business where we're working. The low price image is extremely important for both companies. Private label shares, private label ranges are very important for both companies. Of course, doing this business is the both Dollarstore, Tokmanni people, all together, close to 5,500 people. With SKU level, Tokmanni has a little bit more SKUs, or actually three times more SKUs compared with Dollarstore. Dollarstore has also informed that the future growth will be by growing the current SKU level. Obviously, Tokmanni is able to support Dollarstore with this growth path very well. When we look at the product groups, this is probably one of the best part also with this acquisition, because the product groups are well aligned with both companies. The destination categories are practically exactly the same. Some wordings, a little bit different, but basically, there are some product groups where basically Dollarstore is extremely strong in Sweden, for example, with seasonal and party. On the other hand, Tokmanni in Finland with yard and garden, very strong. Obviously, the fact that both companies are having exactly the same product groups will give a lot of promises when we think about the future synergies. If we look at the total picture, how these two companies look together, it will definitely be a leading Nordic discount retailer with combined net sales. If we look at the 2022 numbers, almost EUR 1.6 billion revenues, 5,400 employees, more than 360 stores in Finland, Sweden, and Denmark. A true leader in the Nordic discount retail market. The strategic rationale for the acquisition is obviously, Dollarstore has already a strong position in Sweden. At the same time, Dollarstore has a lot of white spots for the network, store network in Sweden, which is, of course, a great story. At the moment, Dollarstore is growing very fast in Sweden. Obviously, complementary Nordic footprint. Together, Tokmanni and Dollarstore will form one of the leading variety discount retailers in the Nordic market. Obviously, the Danish market is already very interesting. Obviously, we will definitely be looking at the Nordic market in total together with Dollarstore. The most important job that variety discounters have is to serve customers all the time, better and better. With this acquisition, Tokmanni and Dollarstore will be able to better serve customers through an improved and optimized product offering, better prices, and a wider private label assortment. That's, of course, a very important part of the whole business. We will increase the benefits of scale, especially in purchasing and distribution, when negotiating the prices and deciding for the future assortment. Of course, the leveraging the capabilities to accelerate the growth. Dollarstore is on a very good speed with the growth. Tokmanni with a little bit, let's say, more experienced, can support and give strong capabilities for Dollarstore growth, which has already been really great. Here's, like, a short introduction with the acquisition, and then next thing is that Tapio will dig deeper with the figures, financial figures. We just finalized the agreement last night. Tapio is, at the moment, a little bit on the road. Tapio won't be joining with live picture, but with his picture. Tapio, please go ahead. Is the connection okay? All right. Thanks. Thanks, Mika, great to be here on the road. Like Mika said, this is a great transaction for us, on this page, you can see a little bit of the illustrative combined financial information of the combined company. When you look at the net sales, Dollarstore has a little bit less than EUR 400 million in 2022, Tokmanni had a little bit less than EUR 1.2 billion worth of net sales. Together, the combined company is a little bit less than EUR 1.6 billion in net sales in 2022. In terms of gross profit and gross margin, Dollarstore gross profit just below EUR 150 million last year, Tokmanni's gross profit just below EUR 400 million last year. Combined, they are roughly EUR 550 million and about 35% combined gross margin percent. In terms of EBITDA, Dollarstore had last year about EUR 50 million of EBITDA, and Tokmanni had EUR 157 million of EBITDA. Together, they are a little bit more than 200, so EUR 207 million of EBITDA last year, with a 13% EBITDA margin. In terms of EBIT, Dollarstore had just below EUR 60 million of EBIT last year, and Tokmanni had about EUR 84 million worth of EBITDA. Together, the combined company last year would have had about exactly EUR 100 million of EBIT, and these numbers, of course, exclude any synergies. In terms of total net debt, Dollarstore, about EUR 183 million worth of net debt last year or end of last year, and Tokmanni about EUR 383 million. Together, the combined net debt last year would have been about EUR 566 million. Maarit, if you turn to the next slide. Going on a little bit deeper into the synergies. Like Mika said, this is a highly synergistic transaction, and we have broken down the synergies here into four main areas. The first one is just a simple price list matching between the two companies. We compare our prices from the suppliers and utilize the lower in both companies. The second one is synergies from the common suppliers. By leveraging and aligning purchasing to the same suppliers and distribution processes, we can create benefits from scale in sourcing and also the distribution capacity and optimize the supply chain. The third point is also very important, synergies from aligning our assortments. Like Mika said, we have very similar categories, and we will, of course, try to combine the assortment of both companies to the extent reasonable and have the same products for sale in both companies. The last major part is synergies from reducing wholesale. Especially Dollarstore has utilized wholesale quite a lot in the past, and with our private label focus, we can definitely increase the combined portion of private label products in the combined companies. Looking a little bit at the integration costs. There's obviously gonna be additional running costs to support the public company requirements and continued growth of Dollarstore and Tokmanni combined. There's gonna be an amount of one-time integration-related costs. The net effect is still very positive, and we estimate the annual synergies to be north of EUR 50 million, and we expect them to be fully realized within the next 30 months. If you go to the next slide, Maarit. Just a little bit more detail then on the transaction structure that Mika already described. Like, the enterprise value, EUR 345 million, and the purchase price is the value of the equity that we purchased, EUR 170.4 million, and that gives an EV to EBITDA multiple of 2022 figures of Dollarstore, about 6.9. If you add the estimated full impact of the net synergies, then the multiple drops to about 5.3. In the financing structure, we have added a new debt facility to our existing financing agreement, which is worth EUR 180 million. With the full debt purchase, we expect the illustrative combined net debt to EBITDA ratio at the end of last year to be about 3.6. As before, our net debt to comparable EBITDA leverage target is below 3.2, and we expect to reach that quite comfortably in the next couple of years. I think still, I think Mika already mentioned this, the expected closing date is the August 1st, and the transaction is subject to the normal closing conditions, but we do not have to file for any regulatory approval, so there is a very high level of certainty in the transaction. With that, I'd like to give the mic back to Mika to conclude. Thank you, Tapio. Basically, this was just a short recap on the acquisition. As already mentioned several times, the closing will take place by the end of July. Obviously, starting from the beginning of August, we will be able to show a lot more light with our plans for the future. Of course, our second quarter result presentation will take place on the August 4th, we will be able to come back already right in the beginning of August with our new future plans, new future growth plans. I think now it's time for questions. Maarit, could you please help us with this? Please, if you have any questions here online on Teams lines, please, you know, you can ask the questions.... It seems that we don't have any questions here online, but we have some question on chat. The first question is, "Will purchase of Dollarstore have negative impact on dividend? Yeah, Tapio, would you like to refer to this? Be a major impact. There might be a little bit, and that obviously depends then on what the board of directors propose and what the shareholders ultimately then approve. I don't, I don't expect any major impact. Okay. "How will the transaction affect the cooperation with Europris? Well, first of all, the cooperation with Europris is very, very important for Tokmanni. Of course, we will continue the cooperation. We have a 50/50 joint buying and sourcing office in Shanghai. Today also in Vietnam. We will continue working together for sure, very closely also with Europris. Good. "Will there be any need for a capital rise to finance the deal? No, we don't foresee any need to raise equity capital, so this is a fully debt-financed deal, and we expect to be able to then pay the debt down and manage the business with the cash flow that the business will generate going forward. Okay. Okay, the next one. "Dollarstore has a high gross margin, higher gross margin than Tokmanni, but low EBIT margin. What are the reasons behind that? Well, to my understanding, Dollarstore has been growing very, very, very fast, and obviously, starting with new stores, probably Dollarstore is one of the leading companies with expansion plans in Sweden. Obviously, this is, of course, taking costs, especially in the beginning when you start a store. Even though the stores, if I've understood correct, are fully profitable starting from the first month. Anyway, of course, it takes a lot of resources, energy, and also capital to start a new store. This has, of course, an effect on Dollarstore figures. It's true, the gross margin is very good with Dollarstore. The pricing strategy is very smart. It's, it fits very well with the Swedish market, and based on our surveys, Dollarstore has the best price image in Sweden at the moment, so it's really great. What is the net financial cost for the deal, and where will Tokmanni's net financial cost be post the deal? Obviously, this will raise the interest cost for Tokmanni from a couple of avenues. First of all, we get more IFRS 16 debt from the acquisition, of course, we get the new real debt, the EUR 180 million that we described earlier, it will also have a marginal impact on our loan margins because of the higher leverage that we have as a consequence. It will clearly raise our interest costs, the increased interest costs will be clearly lower than the additional EBIT that we generate with this transaction. It is a clear positive for the shareholders and should be EPS accretive pretty much immediately. Okay. Maarit, just for your notice, that I believe that there are some questions also in Teams. Yeah. Actually, Svante, please, if you have a question, you can ask it now. Thank you, Maarit, and. Hi ... congratulations on a sizable transaction. Very interesting. Thanks, Svante. I have a couple of questions. First one comes back to the previous one regarding the debt terms on the EUR 180 million additional loan that you take. Could you elaborate a bit on margins and so on? They are very similar to our existing loans. There's a small premium on the margin compared to our existing loans. I would say we got a very good rate on the financing, I would say. Thank you, and you elaborated a bit on the private label side, but could you open up a bit how it looks for Dollarstore currently? Dollarstore, the private label share is 24.4%. With Tokmanni, it's more than clearly more than 30. Private labels are very, very important for both companies. I'm 100% sure that we can benefit from both companies' private label ranges. I could believe that Tokmanni has a little bit stronger role with the private labels. We are able to share these, of course, with Dollarstore, but Of course, they have to fit the Dollarstore assortment, and it has to bring more value for customers. This is obviously one of the first parts for synergies in future. Thanks. Could you elaborate a bit on Dollarstore's logistics purchases? How much do they import from low-cost countries? Could you elaborate a bit on also on their logistics chain stores and on warehouses, and so on? Yes. Dollarstore has an central warehouse in Örebro. That, of course, is working very well. This kind of warehouses are, they are, of course, a little bit more difficult to share between Sweden and Finland, but when we look at the supply chain, obviously, Tokmanni will bring very good agreements for freight agreements, for example, for both companies. If I've understood correct, at the moment the direct imports, With Dollarstore, they don't play as important role as with Tokmanni. If I've understood correct, Anders Kind, the CEO of Dollarstore, has been visiting Far East in different countries to establish direct imports from India, Vietnam, China, and so on. This obviously will, through Tokmanni operations, it will, of course, open new possibilities for Dollarstore as well. Thanks. Then the last question regarding the synergies. You target at least EUR 15 million. I guess your purchases are somewhere around EUR 1 billion annually combined. EUR 15 million is 1.5%. What kind of, are you lowballing that number, or how should we look at it? Perhaps also on the timing of the synergies, what should we expect, apart from the 30 months that you mentioned? Yeah, of course. We probably haven't had enough of time to study each other's assortments. It's obviously the customers who will decide what kind of products will be joint products, and so on. Yeah, maybe this, the EUR 15 million, it's a little bit careful, but we'd like to have that as a steady starting point. Yes, we do see a lot more opportunities as well. Yeah, let's wait for the deal closing, then we can start work harder with the synergies. Yes, there is a lot of potential as well. Okay, thank you. That's all from me. Thank you. Okay. I will continue with the questions on chat. What has been the revenue growth drivers for Dollarstore? Have there been new stores or like-for-like growth? Basically, both. They've had a lot of new stores, but the like-for-like growth is extremely good. I could imagine it's one of the best in Sweden. Okay. Are the synergies coming in a stable base or are more front-ended or back-end loaded? Obviously, stable base, because the sourcing, joint sourcing and joint buying will start as soon as possible, and of course, we will continue with that, starting from the first of August. Of course, it will take a little bit time before we can establish joint sourcing and buying activities. Okay. Question about Swedish market. How many white spots are there in Sweden, and how many stores can Dollarstore open in Sweden? Well, let's take a reference from Tokmanni. In Finland, we have 5.6 million people, as we've said, there's space for 220 Tokmanni stores. At the moment, in Sweden, there are 130 Dollarstore stores. It's double the population. The consumption number is higher compared with Finland, obviously there's a lot of potential also for new stores in Sweden. Okay. One question about the purchase price. Doesn't the purchase price multiples sound a little high in this interest rate environment, despite of the synergies? Tapio, would you like to Tapio ... elaborate that? Tapio, can you hear us? Let's take the next question, and. Yeah Tapio will answer when he when he'll join again. Hopefully soon. Yeah. About the Nordic expansion, the question is that what does a Nordic mean really? Does Nordic mean Denmark, or is it Norway also part of the expansion plan? We'll come back to the expansion plans a little bit later, as soon as the deal has been closed and, when we've had enough of time to also make the necessary surveys regarding the customers and the markets and so on, and we'll come back to that, a little bit later. Can you bring any of Dollarstore's products, assortments to Tokmanni stores? Of course. There are excellent products with Dollarstore assortment. We really look forward in having some of those products in Tokmanni stores. I can imagine they will be very successful in Finland. Where do you see the biggest growth opportunities for Dollarstore? Is it opening more stores in Sweden or expanding in Denmark or something else? Well, first of all, Dollarstore, they've said they have, at the moment, 11,000 SKUs, and they want to grow like-for-like by growing the SKU level. I'm sure Tokmanni can support Dollarstore very much with this issue, and we can already see that with a slightly wider assortment, Dollarstore will be able to serve its customers even better. We're pretty sure that there will be a lot of growth through this SKU enlargement. Of course, there will be new stores in Sweden, as already mentioned several times. There is a lot of space in Sweden and also in Denmark, and we'll see afterwards. Two questions related to Dollarstore stores. What is the average age of Dollarstore stores, and how large are the stores on average? Again, one of the perfect backgrounds for this deal is the fact that the Dollarstore are approximately the same size as Tokmanni. Actually, slightly bigger in general. That's of course, with the same product groups, same size of stores, it's a very good starting point for joint sourcing and buying. Of course, personally, I like the Dollarstore concept very much, as the Swedish concepts usually are. They are world-class concepts. When it comes to variety, discount retail concept, Dollarstore is absolutely great. Tokmanni will be also copying Dollarstore store concept in several spots. Obviously, they are new stores, quite a lot of new stores, due to the rapid expansion very, very, very interesting, very good-looking stores. Good. Why is Dollarstore's gross margin higher than Tokmanni's? Is it due to the product mix? Yes, it is due to the product mix. Tokmanni has more groceries compared with the Dollarstore. Dollarstore pricing strategy is very smart. It's one of its kind in Sweden, and Towards customers, it's very reliable. It actually turns out that it also brings better gross margin compared with Tokmanni. Basically, one of the key issues is that there is much less groceries compared with Tokmanni. Okay, let's go back to the transaction. What are the possible risks in this transaction? Of course, everything with the risk on in this kind of mergers or, and acquisitions, it's especially when we're talking about a company or a group with 5,400 people, the company culture, the values, it's very important that we find a joint culture and values. Especially with this one, it's really pleasure to start working with Dollarstore, because we definitely feel that we have exactly the same kind of company culture, a low hierarchy, a very simple organization, very straightforward business operations, and so on. The values, of course, as we have in Tokmanni, we have pride in low prices. I can definitely say that the same value goes also for Dollarstore. Like I said, together with Dollarstore people, I do believe that we have same kind of company cultures. This is the usually one of the biggest risks. At this point of time, I'm very confident that we're able to deal with the risk. There are, of course, other risks as well, but we'll come back to that also a little bit later after the deal is closed. Tapio, can you hear us? I think the next question is for you. Yeah, I can hear you. I mean, a little bit. Yeah. Okay. Go ahead. Could you please comment on any new loan covenants? Yes, very simply, no new loan covenants. Okay. That was easy. Maarit, there was a previous question also for Tapio, I think. Yes. One question that we missed. I come to that later on. Okay. I have to look for it again. There might be some questions in Teams as well. Yes. Svante, please, you have a question. Yes, thank you. I have a couple of follow-up questions. Regarding the product mix, could you elaborate what is the grocery share? Could you give some other color also on the mix? You might have done it already, but I was cut off at one point. No, we haven't shared the information regarding the product mix, and the shares of the total business. Again, something that we will come back to a little bit later. We're basically saying or giving information of Tokmanni when it comes to groceries and non-food, this percentage, I have to say that the groceries part is much smaller with Dollarstore. With groceries, let's say with food products, it's mainly candy and drinks, snacks, and so on. This kind of cleaning products and papers and so on, they are exactly the same categories as with Tokmanni again, we'll be able to come with a little bit, more detailed picture of the product groups in future. Thanks. The last one, I might have missed it also, but, I mean, how long have you followed Dollarstore? Was it your favorite target here in the Nordics? What actually triggered the transaction to happen now? First of all, yes, we've for several years, we've been visiting Dollarstore, the stores, and we've been looking at the Swedish market. As already mentioned, the Swedish retail concepts are world-class concepts, it's always interesting to see how the retail business is being developed in Sweden. We know the company very well. It was just the fact that Peter Ahlberg decided to sell the company, obviously, it was a trigger for this deal. Yes, we've been following Dollarstore for quite some time, and every year, basically, we've been visiting Dollarstore as well as the other Swedish retailers, especially on the discount side in Sweden. Was this your number one pick, or would that there have been any even better targets, or is this the one that you have dreamed of? This is, at the moment, definitely the number one pick. Okay, thanks. That's all from me. There are quite many questions about Dollarstore. like how the year have started, regarding sales and earnings in Dollarstore. How the performance has been so far this year? Can you say something about that? It looks good. I guess at this point, we won't refer to the current figures, but it looks very good. As everybody could see, from the growth figures, they are continuing. Okay. How about Dollarstore's products and the business as you, and generally, is Dollarstore more or less cyclical than Tokmanni? I would say a little bit less. For Tokmanni, garden is very, very important. Tokmanni is the number one garden retailer in Finland. Obviously, it has a lot to do with the season, and the seasonality is extremely important. The spring season is the second most important season for Tokmanni. Dollarstore, of course, Dollarstore has yard and garden as well, but it's not as big as with Tokmanni. Dollarstore doesn't have. We have basically 150 separate garden stores together with our stores. There is not this kind of setup with Dollarstore, so this probably makes it one of the biggest differences between Tokmanni and Dollarstore. Less with the seasonals or cyclical offering. Okay. How about how independent will the operational structure of the group will be in the future, or are the functions going to be merged? Well, first of all, Dollarstore team has been doing an excellent job. We definitely, we will do our utmost to support the excellent job in future. Obviously, when it comes to sourcing and buying, that will be an area where we will definitely do some cooperation. We'll see also a little bit later with this kind of plans, like what's the smart thing to do? Okay. What is the reason for Dollarstore's large difference between EBITDA and EBIT? Some color on the depreciation schedule. Is this something, Tapio, you can answer? Yes, I can help with that. It's mostly due to the IFRS regulations. The Dollarstore has very, or on average, longer lease agreements than Tokmanni, and that's driving the large depreciation in the IFRS world. Let's see if there's any more. I guess we have quite good, quite well answered the questions. Okay. Yeah, that's all. In that case, I have to say that I'm extremely enthusiastic about this future cooperation with Dollarstore and Tokmanni, it will be very, very exciting to start working right away, starting from the first of August. Obviously, we will be sharing some more information on the second quarter result presentation on the fourth of August. Later on this year, there will be also a new Capital Markets Day, where we can share the Tokmanni-Dollarstore joint future plans. Thank you very much at this point. If you have any further questions, you can always send, for example, email to us, and we will answer the questions when possible, as soon as possible. Okay. Thank you. Thank you! Have a nice day.