JOINT GLOBAL COORDINATORS AND JOINT BOOKRUNNERS JOINT BOOKRUNNER

Transcription

1 Invitation to acquire shares in Boozt AB (publ) JOINT GLOBAL COORDINATORS AND JOINT BOOKRUNNERS JOINT BOOKRUNNER

2 IMPORTANT INFORMATION TO INVESTORS This offering circular (the Offering Circular ) has been prepared in connection with the offering to the public in Sweden and Denmark and listing on Nasdaq Stockholm (the Offering ) of shares in Boozt AB (publ) (a Swedish public limited liability company). In the Offering Circular, Boozt, the Company or the Group refers to Boozt AB (publ), the group in which Boozt is the parent company or a subsidiary of the group, as the context may require. The Selling Shareholders refers to Sunstone Technology Ventures Fund II K/S, Verdane Capital VII K/S, ECCO Holding A/S, Sampension KP Livsforsikring A/S and Kent Stevens Larsen. The Joint Global Coordinators refers to Carnegie Investment Bank AB (publ) ( Carnegie ) and Danske Bank A/S, Danmark, Sverige filial ( Danske ). The Joint Bookrunners refers to Carnegie, Danske and Joh. Berenberg, Gossler & Co. KG ( Berenberg ). See section Definitions for the definitions of these and other terms in the Offering Circular. The figures included in the Offering Circular have, in certain cases, been rounded and, consequently, the tables contained in the Offering Circular do not necessarily add up. All financial amounts are in Swedish kronor ( SEK ), unless indicated otherwise, and MSEK indicates millions of SEK. Except as expressly stated herein, no financial information in the Offering Circular has been audited or reviewed by the Company s auditor. Financial information relating to the Company in the Offering Circular that is not part of the information audited or reviewed by the Company s auditor as outlined herein has been derived from the Company s internal accounting and reporting systems. The Offering is not directed to the general public in any country other than Sweden and Denmark. Nor is the Offering directed to such persons whose participation would require additional offering circulars, registrations or measures other than those prescribed by Swedish law. No measures have been or will be taken in any jurisdiction other than Sweden and Denmark that would allow any offer of the shares to the public, or allow holding and distribution of the Offering Circular or any other documents pertaining to the Company or the shares in such jurisdiction. Applications to acquire shares that violate such rules may be deemed invalid. Persons into whose possession the Offering Circular comes are required by the Company and the Joint Bookrunners to inform themselves about and to observe such restrictions. Neither the Company nor either of the Joint Bookrunners accepts any legal responsibility for any violation by any person, whether or not a prospective investor, of any such restrictions. The Offering and the Offering Circular are governed by Swedish law. The courts of Sweden have exclusive jurisdiction to settle any conflict or dispute arising out of or in connection with the Offering or the Offering Circular. A separate prospectus in Swedish has been approved and registered by the Swedish Financial Supervisory Authority (Sw. Finansinspektionen) in accordance with Chapter 2, Sections 25 and 26 of the Swedish Financial Instruments Trading Act (1991:1980) (Sw. lagen (1991:980) om handel med finansiella instrument). The prospectus will be passported to Denmark through application to the Danish financial supervisory authority according to Chapter 2, Section 35 of the Swedish Financial Instruments Trading Act (1991:980). In the event of discrepancies between the Offering Circular and the Swedish prospectus, the Swedish prospectus shall prevail. NOTICE TO INVESTORS IN THE UNITED STATES The shares in the Offering have not been recommended by any U.S. federal or state securities commission or regulatory authority. Furthermore, the foregoing authorities have not confirmed the accuracy or determined the adequacy of the Offering Circular. Any representation to the contrary is a criminal offence in the United States. The shares in the Offering have not been and will not be registered under the U.S. Securities Act of 1933, as amended, (the Securities Act ) or with any securities regulatory authority of any state of the United States, and may not be offered or sold within the United States unless the shares are registered under the Securities Act or pursuant to an exemption from, or in a transaction not subject to, the registration requirements of the Securities Act. In the United States, the shares are only being offered and sold to persons reasonably believed to be qualified institutional buyers ( QIBs ) as defined in and in reliance on Rule 144A under the Securities Act ( Rule 144A ) or pursuant to another exemption from, or in a transaction not subject to, the registration requirements of the Securities Act. All offers and sales of shares outside the United States will be made in compliance with Regulation S under the Securities Act ( Regulation S ). Prospective purchasers are hereby notified that the sellers of the shares in the Offering may be relying on the exemption from the provisions of Section 5 of the Securities Act provided by Rule 144A. In the United States, the Offering Circular is being furnished on a confidential basis solely for the purpose of enabling a prospective investor to consider purchasing the particular securities described herein. The information contained in the Offering Circular has been provided by the Company and other sources identified herein. Distribution of the Offering Circular to any person other than the offeree specified by the Joint Bookrunners or their representatives, and those persons, if any, retained to advise such offeree with respect thereto, is unauthorised, and any disclosure of its contents, without the Company s prior written consent, is prohibited. Any reproduction or distribution of the Offering Circular in the United States, in whole or in part, and any disclosure of its contents to any other person is prohibited. The Offering Circular is personal to each offeree and does not constitute any offer to any other person or to the general public to acquire shares in the Offering. NOTICE TO INVESTORS IN THE EUROPEAN ECONOMIC AREA In relation to each Member State of the European Economic Area that has implemented the Prospectus Directive (each a Relevant Member State ) (with the exception of Sweden and Denmark), no offer of the shares in the Offering may be made to the public in that Relevant Member State, except that offers of the shares in the Offering may be made under the following exemptions under the Prospectus Directive as implemented in that Relevant Member State: to any legal entity that is a qualified investor as defined in the Prospectus Directive; to fewer than 150 natural or legal persons (other than qualified investors as defined in the Prospectus Directive), as permitted under the Prospectus Directive, subject to obtaining the prior consent of the Joint Global Coordinators for any such offer; or in any other circumstances falling within Article 3(2) of the Prospectus Directive, provided that no such offer of shares in the Offering shall result in a requirement for the publication by the Company, the Selling Shareholders or any Joint Bookrunner of a prospectus pursuant to Article 3 of the Prospectus Directive or of a supplement to a prospectus pursuant to Article 16 of the Prospectus Directive. For the purposes of this provision, the expression offered to the public in relation to any shares in the Offering in any Relevant Member State means the communication in any form and by any means of sufficient information on the terms of the Offering and the shares in the Offering so as to enable an investor to decide to purchase any shares in the Offering, as the same may be varied in that Relevant Member State by any measure implementing the Prospectus Directive in that Relevant Member State. The expression Prospectus Directive means Directive 2003/71/EC (with amendments thereto) and includes any relevant implementing measure in each Relevant Member State. NOTICE TO INVESTORS IN THE UNITED KINGDOM The Offering Circular is only being distributed to and is only directed at (i) persons who are outside the United Kingdom, or (ii) to qualified investors who are (a) investment professionals falling within Article 19(5) of the Financial Services and Markets Act 2000 (Financial Promotion) (the Order ) or (b) high net-worth entities falling within Articles 49(2)(a) to (d) of the Order (all such persons together being referred to as Relevant persons ). In the United Kingdom, any investment activity to which this Offering Circular relates is only available to, and will be engaged in only with, Relevant persons. Persons who are not Relevant persons should not take any action on the basis of this Offering Circular and should not act or rely on it. STABILISATION In connection with the Offering, the Joint Global Coordinators may carry out transactions aimed at supporting the market price of the shares at levels above those which might otherwise prevail in the open market. Such stabilisation transactions may be effected on Nasdaq Stockholm, in the over-the-counter market or otherwise, at any time during the period starting on the date of commencement of trading in the shares on Nasdaq Stockholm and ending no later than 30 calendar days thereafter. The Joint Global Coordinators are, however, not required to undertake any stabilisation and there is no assurance that stabilisation will be undertaken. Stabilisation, if undertaken, may be discontinued at any time without prior notice. In no event will transactions be effected at levels above the price in the Offering. No later than by the end of the seventh trading day after stabilisation transactions have been undertaken, the Joint Global Coordinators shall disclose that stabilisation transactions have been undertaken in accordance with article 5(4) in the Market Abuse Regulation 596/2014.Within one week of the end of the stabilisation period, the Joint Global Coordinators will make public whether or not stabilisation was undertaken, the date at which stabilisation started, the date at which stabilisation last occurred and the price range within which stabilisation was carried out, for each of the dates during which stabilisation transactions were carried out. FORWARD-LOOKING STATEMENTS The Offering Circular contains certain forward-looking statements and opinions. Forward-looking statements are statements that do not relate to historical facts and events and such statements and opinions pertaining to the future that, by example, contain wording such as believes, deems, estimates, anticipates, aims, expects, assumes, forecasts, targets, intends, could, will, should, would, according to estimates, is of the opinion, may, plans, potential, predicts, projects, to the knowledge of or similar expressions, which are intended to identify a statement as forward-looking. This applies, in particular, to statements and opinions in the Offering Circular concerning the future financial returns, plans and expectations with respect to the business and management of the Company, future growth and profitability and general economic and regulatory environment and other matters affecting the Company. Forward-looking statements are based on current estimates and assumptions made according to the best of the Company s knowledge. Such forward-looking statements are subject to risks, uncertainties, and other factors that could cause the actual results, including the Company s cash flow, financial condition and results of operations, to differ materially from the results, or fail to meet expectations expressly or implicitly assumed or described in those statements or to turn out to be less favourable than the results expressly or implicitly assumed or described in those statements. Accordingly, prospective investors should not place undue reliance on the forward-looking statements herein, and are strongly advised to read the Offering Circular, including the following sections: Summary, Risk factors, Business overview and Operating and financial review, which include more detailed descriptions of factors that might have an impact on the Company s business and the market in which it operates. None of the Company, the Selling Shareholders or any of the Joint Bookrunners can give any assurance regarding the future accuracy of the opinions set forth herein or as to the actual occurrence of any predicted developments. In light of the risks, uncertainties and assumptions associated with forward-looking statements, it is possible that the future events mentioned in the Offering Circular may not occur. Moreover, the forward-looking estimates and forecasts derived from third-party studies referred to in the Offering Circular may prove to be inaccurate. Actual results, performance or events may differ materially from those in such statements due to, without limitation: changes in general economic conditions, in particular economic conditions in the markets on which the Company operates, lack of attractive products to sell, changes affecting interest rate levels, changes affecting currency exchange rates, changes in competition levels, changes in laws and regulations, and occurrence of accidents or environmental damages and systematic delivery failures. After the date of the Offering Circular, none of the Company, the Selling Shareholders or any of the Joint Bookrunners assume any obligation, except as required by law or Nasdaq Stockholm s Rule Book for Issuers, to update any forward-looking statements or to conform these forward-looking statements to actual events or developments. BUSINESS, FINANCIAL AND MARKET DATA The Offering Circular includes industry and market data pertaining to Boozt s business and markets. Such information is based on the Company s analysis of multiple sources, including Euromonitor International. Industry publications or reports generally state that the information they contain has been obtained from sources believed to be reliable, but the accuracy and completeness of such information is not guaranteed. The Company has not independently verified and cannot give any assurances as to the accuracy of industry and market data contained in the Offering Circular that were extracted or derived from such industry publications or reports. Business and market data are inherently predictive and subject to uncertainty and not necessarily reflective of actual market conditions. Such data is based on market research, which itself is based on sampling and subjective judgements by both the researchers and the respondents, including judgements about what types of products and transactions should be included in the relevant market. Information provided by third parties has been accurately reproduced and, as far as the Company is aware and has been able to ascertain from information published by such third parties, no facts have been omitted which would render the reproduced information inaccurate or misleading. This Offering Circular also presents historical financial data for the years ended December 31, 2016, 2015 and 2014 and interim financial data for the three months ended March 31, 2017 and March 31, 2016, including non-ifrs measures derived therefrom. For more information see section Selected financial and performance information. IMPORTANT INFORMATION ABOUT THE SELLING OF SHARES Note that notifications about allotment to the public in Sweden and Denmark will be made through distribution of contract notes, expected to be distributed on May 31, Institutional investors are expected to receive notification of allotment on or about May 31, 2017 in particular order, whereupon contract notes are dispatched. After payments for the allocated shares have been processed by Carnegie and Danske, the duly paid shares will be transferred to the securities depository account or the securities account specified by the acquirer. The time required to transfer payments and transfer duly paid shares to the acquirers of shares means that these acquirers will not have shares available in the specified securities depository account or the securities account until June 2, 2017, at the earliest. Trading in the shares on Nasdaq Stockholm is expected to commence on or around May 31, Accordingly, if shares are not available in an acquirer s securities account or securities depository account until June 2, 2017 at the earliest, the acquirer may not be able to sell these shares on the stock exchange as from the time trading in the shares commences, but first when the shares are available in the securities account or the securities depository account.

3 TABLE OF CONTENTS 1 Summary 2 2 Risk factors 8 3 Invitation to acquire shares in Boozt 19 4 Background and reasons 20 5 Market overview 21 6 Business overview 25 7 Selected financial and performance information 37 8 Operating and financial review 47 9 Capitalisation, indebtedness and other financial information Board of directors, Group Management and auditor Corporate governance Share capital and ownership structure Articles of association Legal considerations and supplementary information Tax considerations in Sweden Tax considerations in Denmark Certain U.S. federal income tax considerations Selling and transfer restrictions Definitions Historical financial information F-1 21 Auditors' report regarding historical financial information F Addresses A-1 SUMMARY OF THE OFFERING Price range SEK per share Application period for the general public May 18 May 29, 2017 FINANCIAL CALENDAR Interim report for the period January June 2017, Q2 August 24, 2017 Interim report for the period January September 2017, Q3 November 22, 2017 Announcement of offering price May 31, 2017 First day of trading in Boozt s shares May 31, 2017 Settlement Date June 2, 2017 Other information Ticker: BOOZT ISIN code: SE CERTAIN DEFINITIONS Boozt, the Company or the Group Carnegie Cornerstone Investors Danske Berenberg Euroclear Sweden Joint Global Coordinators Joint Bookrunners Nasdaq Stockholm Selling Shareholders SEK Boozt AB (publ), the group in which Boozt is the parent company, or a subsidiary of the group, as the context may require. Carnegie Investment Bank AB (publ). Arbejdsmarkedets Tillægspension, Catella Fondforvaltning AB on behalf of managed funds, Ferd AS and Friheden Invest A/S. Danske Bank A/S, Danmark, Sverige filial. Joh. Berenberg, Gossler & Co. KG. Euroclear Sweden AB. Carnegie and Danske. Carnegie, Danske and Berenberg. The regulated market operated by Nasdaq Stockholm AB. Sunstone Technology Ventures Fund II K/S, Verdane Capital VII K/S, ECCO Holding A/S, Sampension KP Livsforsikring A/S and Kent Stevens Larsen. Swedish krona. 1

4 Summary Summary The summary is drawn up in accordance with information requirements in the form of a number of paragraphs which should include certain information. The paragraphs are numbered in sections A E (A.1 E.7). This summary contains all the paragraphs required in a summary for the relevant type of security and issuer. However, as certain paragraphs are not required, there may be gaps in paragraph numbering sequences. Even if it is necessary to include a paragraph in the summary for the security and issuer in question, it is possible that no relevant information can be provided for that paragraph. In such instances, the information has been replaced by a brief description of the paragraph, along with the specification not applicable. SECTION A INTRODUCTION AND WARNINGS A.1 Introduction and warnings This summary should be read as an introduction to the Offering Circular. Any decision to invest in the securities should be based on an assessment of the Offering Circular in its entirety by the investor. Where statements in respect of information contained in an offering circular are challenged in a court of law, the plaintiff investor may, in accordance with member states national legislation, be forced to pay the costs of translating the offering circular before legal proceedings are initiated. Under civil law, only those individuals who have produced the summary, including translations thereof, may be enjoined, but only if the summary is misleading, incorrect or inconsistent with the other parts of the offering circular or if it does not, together with other parts of the offering circular, provide key information to help investors when considering whether to invest in the securities. A.2 Consent for use of the Offering Circular by financial intermediaries Not applicable. Financial intermediaries are not entitled to use the Offering Circular for subsequent trading or final placement of securities. SECTION B ISSUER AND ANY GUARANTOR B.1 Company and trading name Boozt AB (publ), reg. no B.2 Issuer s registered office and corporate form B.3 Description of the Issuer s operations Boozt s registered office is in Malmö, Sweden. The Company is a Swedish public limited liability company founded in Sweden under Swedish law and operating under Swedish law. The Company s form of association is governed by the Swedish Companies Act (2005:551). Boozt is a leading 1), fast-growing and profitable Nordic technology company selling fashion online. The Company offers its customers a curated and contemporary selection of fashion brands, relevant to a variety of lifestyles, mainly through its multi-brand webstore Boozt.com. The Company s webstores attract more than five million sessions per month 2), as a result of a convenient shopping experience with high service levels (including consistent user experiences across both mobile devices and desktop), quick deliveries and easy returns. The Boozt brand is becoming a recognised name for fashion in the Nordics through high customer satisfaction, as evidenced by a net promoter score ( NPS ) of 65 3), a Trustpilot score of 9.0 4) and a growing base of returning customers. The Company has continuously grown net revenue in the last years to reach SEK 1.4 billion in 2016, and built a base of over 862,000 active customers, as of March 31, 2017, on Boozt.com. The Company operates a tailor-made, integrated technology platform that enables the Company to manage the customer experience and to accommodate further growth. Fulfilment is executed through the automated fulfilment centre, strategically located in Ängelholm, Sweden, with 43,500 sqm of warehouse area (77,000 sqm at maximum build-out), 130 picking robots and a capacity exceeding 450,000 stock keeping units ( SKU ) which enable next-day delivery to many Nordic areas. 1) The Company s calculations are based on information, from Euromonitor International (a statistics database), on revenues from the apparel online market in the Nordic area in 2016 of Boozt s competitors, of which the online revenue of the largest actors (Zalando, H&M, Boozt, Ellos, Nelly, Stylepit and Bestseller) have been analysed with publicly available information, such as company annual reports for 2016, press releases as well as other available information on the companies website, respectively. 2) Company information; monthly average based on Company data for ) Trustpilot and Company information; fourth quarter ) Trustpilot; May B.4a Trends The online apparel market is characterised by rapid growth, which can be attributed to several factors including availability, selection and convenience. Many offline retailers have been unsuccessful in tapping the online opportunity due to a lack of, for example, focus or flexibility. More mature e-commerce customers typically exhibit higher return rates. With further maturation of the online apparel market, this trend is expected to continue. 2

5 Summary SECTION B ISSUER AND ANY GUARANTOR B.5 Description of the Group and the issuer s position within the Group B.6 Major shareholders, control over the Company and notifiable individuals, larger shareholders and control The Group comprises the parent company Boozt AB (publ) and nine directly and indirectly owned subsidiaries. Per the date of this Offering Circular, Boozt has 30 shareholders. The table below shows all shareholders which, per the day of this Offering Circular, have more than 5% of the shares of the Company, Name Number of shares Shareholding, % Sunstone Technology Ventures Fund II K/S 12,259, Verdane Capital VII K/S 11,450, ECCO Holding A/S 8,440, Sampension KP Livsforsikring A/S 7,908, Arbejdsmarkedets Tillægspension, Catella Fondförvaltning AB on behalf of managed funds, Ferd AS and Friheden Invest A/S have undertaken, provided that certain conditions are met and to the same price as the other investors, to acquire shares in the Offering in accordance with what is stated in the table below. The undertakings correspond to a total of approximately 17 per cent of the total number of shares in the Company immediately following the completion of the Offering provided that an Offering Price is determined at the midpoint of the Price Range (SEK 58.50). Thus, the undertakings cover approximately 36.5 per cent of the Offering. Cornerstone Investors Subscription undertaking (in SEK) Number of shares 1) Per cent of the number of shares in the Offering (%) 1) Per cent of the total number of shares in the Company after the Offering (%) 1) Arbejdsmarkedets Tillægspension 200 million 3,418, Catella Fondförvaltning AB on behalf of managed funds 125 million 2,136, Ferd AS 200 million 3,418, Friheden Invest A/S 39,818,785 1) 680, Total 564,818,785 9,655, ,7 1) Based on full subscription in the Offering and the midpoint of the Price Range in the Offering (SEK 58.50). B.7 Financial information in summary Unless otherwise stated, the selected financial and performance information presented below has been derived from (i) Boozt s audited consolidated financial statements as of and for the financial years ended December 31, 2016, 2015 and 2014, which have been prepared in accordance with International Financial Reporting Standards, as adopted by the EU ( IFRS ), and audited by Boozt s independent auditors, as set forth in their report included therewith and (ii), as regards information for the first quarter of 2016 and 2017, the reviewed interim financial statements for the period January 1, 2017 to March 31, 2017, prepared in accordance with IAS 34. The Group s income statement For the three-month period ended March 31 For the fiscal year ended December 31 (SEK million) unaudited audited Net revenue , Other operating income Total operating income , Cost of goods for resale External fulfilment and distribution costs External marketing costs Other external costs Personnel costs Depreciations Other operating expenses Total operating costs , OPERATING PROFIT/LOSS (EBIT) Financial income Financial expenses Net interest income/expense EARNINGS BEFORE TAX Income tax EARNINGS FOR THE PERIOD

6 Summary SECTION B ISSUER AND ANY GUARANTOR The Group s balance sheet As of March 31 As of December 31 (SEK million) unaudited audited ASSETS NON-CURRENT ASSETS Intangible Assets Web platform Tangible Assets Equipment Other Non-Current Assets Deposits Deferred tax asset Total non-current assets CURRENT ASSETS Goods inventory Accounts receivable Other receivables Current tax assets Pre-paid expenses and accrued income Derivatives 3.2 Cash and cash equivalents Total current assets TOTAL ASSETS EQUITY AND LIABILITIES EQUITY Share capital Other capital contributions Retained earnings including profit for the period Equity attributable to parent company shareholders Total equity NON-CURRENT LIABILITIES Convertible loan 0.3 Interest bearing liabilities non-current Bank overdraft 8.2 Other provisions Total non-current liabilities CURRENT LIABILITIES Interest bearing liabilities Accounts payable Current tax liabilities Other liabilities Accrued expenses and prepaid income Total current liabilities Total liabilities TOTAL EQUITY AND LIABILITIES

7 Summary SECTION B ISSUER AND ANY GUARANTOR The Group s cash flow statement For the three-month period ended March 31 For the fiscal year ended December 31 (SEK million) OPERATING ACTIVITIES unaudited audited Operating profit 26,1 17,1 21,0 7,7 69,7 Adjustments for items not included in cash flow Non-cash expenses from share based payments 2,1 2,0 20,1 6,9 1,4 Depreciations 3,0 2,2 12,4 5,3 10,5 Other items not included in cash flow 0,1 0,0 0,1 0,1 0,1 Interest received 0,0 Interest paid 0,4 0,1 0,5 5,5 3,2 Paid income tax 8,9 0,1 0,1 0,5 0,3 CASH FLOW BEFORE CHANGES IN WORKING CAPITAL 30,4 12,9 53,1 1,4 60,6 WORKING CAPITAL Changes in goods inventory 108,3 59,1 148,9 120,8 55,9 Changes in current assets 43,2 26,4 45,3 15,6 4,4 Changes in current liabilities 2,8 39,6 181,8 80,8 42,0 CASH FLOW FROM OPERATING ACTIVITIES 98,3 58,9 40,7 57,0 78,9 INVESTMENTS Acquisition of subsidiaries, net liquidity effect 0,7 Acquisition of fixed assets 2,9 18,4 23,6 2,2 0,4 Acquisition of financial assets 0,3 1,2 0,4 4,8 1,8 Acquisition of intangible assets 2,2 1,0 10,5 3,4 3,6 CASH FLOW FROM INVESTMENTS 5,4 18,1 33,7 10,4 5,2 FINANCING Share capital increases 104,0 177,4 46,0 New loans 1,0 12,0 5,0 14,0 Loan repayments 1,2 1,2 24,9 1,2 Changes in overdraft facility 8,2 8,2 CASH FLOW FROM FINANCING 0,2 114,8 149,2 67,1 Cash flow for the period 103,7 77,1 121,8 81,8 17,0 Currency exchange gains / losses in cash and cash equivalents 0,0 0,0 0,1 0,0 0,0 Cash and cash equivalents at beginning of period 221,8 99,9 99,9 18,1 35,1 CASH AND CASH EQUIVALENTS AT END OF PERIOD 118,1 22,8 221,8 99,9 18,1 Significant events during the period January 1 March 31, 2017 On February 24, 2017, Boozt retrieved access to the new Boozt Fulfilment Centre ( BFC ). Element Logic has delivered an automated storage and retrieval system called AutoStore to BFC. AutoStore will enable Boozt to create a more efficient picking and packing process and thereby cutting costs significantly. During March 2017 the operations within the old warehouse was moved to the new fulfilment centre. On March 31, Boozt opened Beauty by Boozt, a physical retail store for cosmetics in Roskilde, Denmark. The shop carries more than 70 brands. As of March 31, 2017, four full time employees and three part-time employees are working in the store. Significant events after March 31, 2017 The Group has entered into an agreement with Castellum regarding rent of office space (4,938 sqm office premises) for the Groups headquarters in Hyllie, Sweden, as per January 1, The lease totals SEK 64 million over the 5 year contractual period. B.8 Proforma accounting Not applicable. The Offering Circular does not contain proforma accounting. B.9 Profit/loss forecast Not applicable. The Company has not presented any profit/loss forecast. B.10 Audit remarks The Company s auditor remarked in the auditor s report for the annual report of the financial year 2014 that only consideration for performed services, as regards commission sales, should be accounted for in the net revenue. According to the auditor, such classification error affected reported net revenue and cost of goods for resale, which should have been reported to a lower amount. The classification error has been corrected in the numbers presented in this Offering Circular. B.11 Net working capital Not applicable. Boozt believes that the Company s existing levels of net working capital is sufficient to meet the Company's estimated needs over the next twelve month period. 5

8 Summary SECTION C SECURITIES C.1 Securities offered Shares in Boozt AB (publ), reg. no ISIN number SE Boozt AB (publ) has not issued shares of different class or category. C.2 Denomination The shares are denominated in SEK. C.3 Total number of shares in the Company C.4 Rights associated with the securities C.5 Restrictions in free transferability As at the date of this Offering Circular, there are 46,695,540 shares, each with a quota value of SEK All issued shares have been fully paid and are freely transferrable. The Offering comprises up to 24,464,607 shares, of which the Company is offering up to 6,837,000 newly issued shares and the Selling Shareholders are offering up to 17,627,607 existing shares, based on the full acceptance of the Offering and a final Offering Price equal to the midpoint of the Price Range. The Selling Shareholders have reserved the right to extend the Offering by up to 1,983,831 shares, assuming the Offering Price corresponding to the midpoint of the Price Range. If the Selling Shareholders extend the Offering in full, the Offering will correspond to approximately 47 per cent of the total number of shares. In addition, the Selling Shareholders will issue an option to the Joint Global Coordinators, exercisable in whole or in part for 30 days following the first day of trading in the shares on Nasdaq Stockholm, to purchase up to 4,048,931 additional existing shares from the Selling Shareholders, equal to 15 per cent of the maximum total number of shares comprised by the Offering, at the Offering Price, to cover any potential overallotments in connection with the Offering. Each share entitles the holder to one vote at general meetings and each shareholder is entitled to cast votes equal in number to the number of shares held by the shareholder. If the Company issues new shares, warrants or convertibles in a cash issue or a set-off issue, shareholders shall, as a general rule, have preferential rights to subscribe for such securities proportionally to the number of shares held prior to the issue. The shares carry the right to payment of dividend for the first time on the record date for distribution which falls immediately after the listing. All shares give equal rights to dividends and the Company s assets and possible surpluses in the event of liquidation. Not applicable. The shares are not subject to any restrictions on transferability. C.6 Admission to trading Nasdaq Stockholm s listing committee decided on May 5, 2017 to admit the shares to trading on Nasdaq Stockholm, subject to certain conditions, such as that the distribution requirements in respect of the shares being fulfilled no later than on the first day of trading. In case the Company s board of directors ultimately resolves to list the shares, trading in the shares is expected to begin on or about May 31, C.7 Dividend policy When free cash flow exceeds available investments in profitable growth, the surplus will be distributed to shareholders. The Company does not intend to pay dividends in the medium term and there can be no assurances that in any given year a dividend will be paid. Declaration of dividends, if any, and the amounts and timing thereof, will depend on a number of factors, including financial position, investment needs, acquisition opportunities, general economic and business conditions and such other factors as the board of directors may deem relevant in such decision. SECTION D RISKS D.1 Main risks related to the issuer or the industry D.3 Main risks related to the securities Main risks relating to Boozt and its operations consist of: risks related to negative macroeconomic developments or a weakened online retail market that could result in changes in consumer behaviour and purchasing power, which could have a material adverse effect on Boozt s business, results of operations and financial condition; the risk that the trend towards online sales stagnates or regresses, which could have a material adverse effect on Boozt s business, results of operations and financial condition; risks related to market entries or expansions by competitors or new entrants, which could reduce Boozt s market share and have a material adverse effect on Boozt s business, results of operations and financial condition; the risk that Boozt may not be able to manage its growth effectively or that the expected growth on which Boozt s business plan is based may not materialise, which could have a material adverse effect on Boozt s business, results of operations and financial condition; the risk that Boozt could fail to anticipate and respond in a timely manner to fashion trends, which could lead to Boozt being unable to sell its products and having to make write-downs, which could have a material adverse effect on Boozt s business, results of operations and financial condition; the risk that Boozt s reputation and brand name could be impaired, which could result in Boozt losing business or growth opportunities, which could have a material adverse effect on Boozt s business, results of operations and financial condition; the risk of failure or interruption of Boozt s logistics infrastructure which could impair Boozt s ability to timely deliver customers purchases, harm Boozt s reputation and have a material adverse effect on Boozt s business, results of operations and financial condition; and the risk that suppliers may change their terms and conditions or that brands may terminate or limit Boozt s right to sell some or all of their products, which could limit Boozt s ability to offer a wide product assortment and have a material adverse effect on Boozt s business, results of operations and financial condition. Main risks relating to the Offering and Boozt s shares consist of: the risk that the Offering Price will not correspond to the price at which the shares will be traded on the stock market following completion of the Offering and the risk that an active and liquid market is not developed for the Boozt share; the risk that the Selling Shareholders, which are likely to continue to have substantial influence over Boozt after the Offering, may have interests that differ from, or compete with, Boozt s and/or other shareholders interests; and the risk that shareholders in certain jurisdictions may be subject to restrictions limiting or impeding their opportunity to participate in future new share issues and that such issues, should such shareholders not be able to participate, would mean that their ownership in the Company could be diluted. 6

9 Summary SECTION E OFFERING E.1 Issue proceeds and issue costs E.2a Motive and use of proceeds E.3 Offering forms and conditions E.4 Interests and conflict of interests E.5 Selling shareholders/ Lock-up agreements In connection with the Offering, the Company is making a new share issue which is expected to generate proceeds of SEK 400 million, before issue costs. The Company has agreed to pay the Joint Bookrunners a base commission calculated against the proceeds from the new issue. In addition, the Company may, at its sole discretion, pay to the Joint Bookrunners a so-called incentive fee also calculated against the proceeds. The total issue costs, consisting of base commission and incentive fee, are estimated to SEK 16 million which means that the net proceeds after deduction of issue costs will amount to SEK 384 million. The issue costs are paid by the company to the Joint Bookrunners. The board of directors and the management of Boozt, together with the shareholders, believe that it is now an appropriate time to broader the shareholder base and to apply for a listing of the shares on Nasdaq Stockholm. The Offering and the listing is expected to support future growth, provide the Company with improved access to capital markets and a diversified base of new Swedish and international shareholders. Boozt also expects that the listing on Nasdaq Stockholm will promote broader awareness among customers and suppliers. The Offering will comprise of the sale of both existing shares and new shares. Boozt expects to receive proceeds of approximately SEK 400 million, before deduction of approximately SEK 16 million in costs to be paid by the Company in relation to the Offering. Consequently, through the Offering, Boozt expects to obtain net proceeds of approximately SEK 384 million. Boozt intends to primarily use the net proceeds to fund the continued long-term growth of the Company, as well as also for general corporate purposes. The Company anticipates that fund the continued long-term growth might include, but will not necessarily be limited to, investments in the new automated warehouse in Ängelholm, expansion into new or related lines of business, targeted marketing efforts and selective acquisitions, in each case in furtherance of the strategy for profitable growth. General corporate purposes might include for instance unexpected expenses or investments. The Company has not made any resolution regarding the distribution of the net proceeds between these areas, but it will be controlled by needs. The Company will not receive any proceeds from any sale of existing shares. The Offering: The Offering is made to the public in Sweden and Denmark and to institutional investors in Sweden and abroad. The Offering comprises up to 7,407,000 newly issued shares offered by the Company and up to 19,633,359 existing shares offered by the Selling Shareholders. The Selling Shareholders have reserved the right to extend the Offering by up to 2,001,534 shares. The Offering may comprise up to 4,048,931 additional existing shares if the Overallotment option is exercised. The Offering Price: The Offering Price is set by a book-building process and is expected to be set within the range of SEK per share and is expected to be announced on May 31, 2017 by way of a press release. The Offering Price to the general public will not exceed SEK 63 per share. Brokerage commission will not be charged. The Price range is set by the Selling Shareholders in consultation with Joint Bookrunners, based on the anticipated investment interest from institutional investors. Application: Application for acquisition of shares from the public in Sweden and Denmark can be made during the period May 18 May 29, 2017 and shall relate to a minimum of 200 shares and a maximum of 20,000 shares in even trading lots of 100 shares. Application is binding. Institutional investors in Sweden or abroad apply for subscription in accordance with specific instructions. Employees: Employees within Boozt who are residents in Sweden for tax purposes, except executive management, will be allotted shares with a value of up to SEK 30,000 per employee. Allotment: Allotment of shares will be determined by the Company s board of directors and the Selling Shareholders in consultation with the Joint Bookrunners. Settlement: Settlement is expected to occur on June 2, Carnegie, Danske and Berenberg act as Joint Bookrunners in connection with the Offering. The Joint Bookrunners provide financial advisory and other services to the Company and the Selling Shareholders in connection with the Offering. From time to time, the Joint Bookrunners provide services in the ordinary course of business to the Selling Shareholders and parties affiliated to the Selling Shareholders in connection with other transactions. Under the placing agreement which is expected to be entered into on or around May 30, 2017, the Selling Shareholders, shareholding members of the board of directors and certain shareholding employees within the Group, including Group Management, will undertake, with certain exceptions, not to sell their respective holdings for a certain period after trading on Nasdaq Stockholm has commenced (the Lock-up period ). The Lock-up period for the Selling Shareholders will be 180 days, and the Lock-up period for the shareholding of members of the board of directors and certain shareholding employees within the Group, including Group Management, will be 365 days. At the end of the respective Lock-up periods, the shares may be offered for sale, which may affect the market price of the share. Joint Bookrunners may unilaterally make exceptions from these undertakings. Exemptions from the lock-up undertakings will be deter mined from case to case, and may be of personal as well as business character. Pursuant to the agreement, the Company will undertake, with certain exceptions, towards the Joint Bookrunners not to, e.g. resolve upon or propose to the general meeting an increase of the share capital through issuance of shares or other financial instruments for a period of 180 days from the first day of trading of the shares on Nasdaq Stockholm without a written consent from the Joint Bookrunners. E.6 Dilution effect The new share issue in the Offering can result in an increase in the number of shares up to 7,407,000, corresponding to a dilution of 13 per cent. E.7 Costs imposed on investors by the issuer or offerer Not applicable. Brokerage commission will not be charged. 7

10 Risk factors Risk factors An investment in Boozt s shares involves various risks. A number of factors affect, or could affect, Boozt s business, both directly and indirectly. Described below, in no particular order and without claim to be exhaustive, are the risk factors and significant circumstances considered to be material to Boozt s business and future development. The risks described below are not the only risks to which Boozt and its shareholders may be exposed. Additional risks that are not currently known to Boozt, or that Boozt currently believes are immaterial, may also adversely affect Boozt s business, results of operations or financial condition. Such risks could also cause the price of Boozt s shares to fall significantly, and investors could potentially lose all or part of their investment. In addition to this section, investors should also take into consideration the other information contained in the Offering Circular in its entirety. The Offering Circular also contains forward-looking statements that are subject to future events, risks and uncertainties. Boozt s actual results could differ materially from those anticipated in these forwardlooking statements as a result of many factors, including the risks described below and elsewhere in the Offering Circular. RISKS RELATED TO BOOZT Boozt is dependent on the Nordic apparel market and the shift from offline to online shopping As a technology company selling apparel online, Boozt depends on its customers use of online channels for shopping. Boozt s net revenue is affected by developments in online sales. The products offered by Boozt are generally also offered by offline retailers, making the Company s future success dependent on continued incentives for consumers to shop online. If, however, the trend towards online sales stagnates or regresses, it could have a material adverse effect on Boozt s business, results of operations and financial condition. The Nordic online apparel market is fragmented and highly competitive The Nordic online apparel market is fragmented and highly competitive. Boozt competes with a diverse group of retailers of different size and types which operate under several different business models, offline and online. There is a risk that Boozt s competitors will consolidate and benefit from economies of scale and other competitive advantages, or leverage their offline presence to enter the online market or further develop their online presence, and Boozt s competitors may thus better cater to customer tastes and shopping preferences and gain market share at Boozt s expense. Competitors currently focused on other customer segments or other geographical markets, such as Amazon, Alibaba and ebay, or offline department or smaller retail stores, could expand their focus to Boozt s target segment and compete with Boozt. Entry into the market by competitors or new entrants could result in Boozt losing business opportunities or being forced to change its business model. Additionally, there is a risk that Boozt could lose market share or could be under increased competitive pressure as a result of competitors expansion or growth in Boozt s target segment. For example, in January 2017, Zalando, a competitor, announced that it intends to open a satellite warehouse in Sweden in the course of Furthermore, competitors or new market participants, which may be better funded or organised, or which sell brands that are more recognised or offer a wider assortment of recognised brands, may engage in pricing or marketing tactics which could lead to Boozt being forced to reduce its prices or increase marketing or distribution costs in order to compete. If competitors lower their prices at the expense of their gross margins 1) or widen their product offerings with new brands or categories or improved service levels, Boozt may be forced to take the same actions in order to compete, which could have a material adverse effect on Boozt s business, results of operations and financial condition. Most of the brands sold by Boozt also sell their products directly to end-customers. If such brands initiate or successfully expand their own online retail operations, it could increase the competitive pressure on Boozt, as these brands have access to their merchandise at lower costs and may be able to sell such merchandise at lower prices while maintaining higher margins than Boozt. In addition, Boozt is dependent on a competitive supplier market. If the competitive environment of the supplier market changes, for example, due to consolidation between suppliers, the dominant position of any individual supplier or other factors, the prices of products that the Company purchases could increase. The realisation of any of these risks could have a material adverse effect on Boozt s business, results of operations and financial condition. Boozt may incur significant operating losses For the fiscal years ended December 31, 2014 and December 31, 2015, Boozt incurred operating losses. The Company incurred net losses after tax of SEK 29.2 million for the fiscal year ended December 31, 2014 and SEK 12.4 million for the fiscal year ended December 31, Boozt has a limited operating history, and there is therefore a risk that the Company could incur further operating losses. As Boozt continues to improve its brand awareness and customer experience and further develop its integrated technology platform and fulfilment infrastructure, Boozt expects to continue to incur significant costs, including planned investments 2) to further develop its fulfilment capabilities. These efforts might prove more expensive than Boozt currently anticipates. Boozt may, from time to time, also make other significant investments 3) that could impact the Company s profitability and results of operations, either temporarily or over an extended period of time. Further, external adverse developments, which may be unforeseeable or beyond Boozt s control, could offset the positive effects of efficiency 1) See section Selected financial and performance information Financial and performance definitions. 2) See section Selected financial and performance information Financial and performance definitions. 3) See section Selected financial and performance information Financial and performance definitions. 8

11 Risk factors improvements that Boozt may be able to achieve. For any of these reasons, Boozt could be unable to maintain profitability over time, which would have a material adverse effect on Boozt s business, results of operations and financial condition. Boozt may not be able to manage its growth effectively The rapid growth of Boozt s business to date has placed, and any future growth is expected to continue to place, significant demands on Boozt s management and operational and financial infrastructure. As Boozt s operations continue to grow, the Company plans to continue to improve, upgrade and invest in its systems and infrastructure to deal with the greater scale and complexity of operations, in particular its integrated technology platform and fulfilment infrastructure. For example, Boozt has invested in the system AutoStore from Element Logic AS for its automated fulfilment centre, and expects to make further investments in 2018 as part of its growth strategy, which will affect the Company s cash position during this period 4). Investments 5) in the business will require Boozt to commit substantial Company management, operational and other resources. Such investments may not increase the Company s revenue and profit. Continued growth could, in particular, also strain Boozt s ability to maintain reliable service levels, attract, train, motivate and retain employees, and develop and improve its operational, financial and management controls. In addition, continued growth could result in Boozt s business and IT systems being unable to accommodate the additional number of customers or orders, particularly if the Company s automated fulfilment centre is operating at or near capacity. Boozt s business plan involves significant investments 6) that are intended to achieve scale, based on the expectation of continued growth. If this anticipated growth does not materialise, the Company will be left with a higher fulfilment and distribution cost ratio, mainly affecting its cost base. Any failure to effectively manage the increasing size and complexity of Boozt s business resulting from future growth could have a material adverse effect on Boozt s business, results of operations and financial condition. The demand for Boozt s products is dependent on general economic conditions and is primarily affected by developments in online retail Boozt primarily conducts its operations in the Nordics and purchases products from suppliers in Europe. For this reason Boozt is, like other companies, affected by general economic, financial and political conditions, and particularly those conditions in the Nordics. The demand for Boozt s products is affected by general macroeconomic conditions such as recession, inflation or deflation, a general weakening in the online retail market and changes in consumer purchasing power. A deterioration in global conditions or negative developments in Nordic, European or worldwide economies, for example a recession or structural changes in the Eurozone, could have a material adverse effect on Boozt s business, results of operations and financial condition. Negative economic developments have historically had a disproportionately negative impact on consumer confidence and purchasing habits regarding apparel and fashion, as consumption of such products is possible to refrain from in times of economic downturn. Macroeconomic changes can negatively alter consumer behaviour and spending, weakening demand for fashion and apparel products from Boozt or other apparel retailers. Such weakened demand could have a material adverse effect on Boozt s collection of accounts receivable, business, results of operations and financial condition. Boozt might fail to anticipate and respond in a timely manner to fashion trends Boozt s ability to sell a sufficient number of products at satisfactory price levels depends on its ability to predict and respond to fashion trends and changing consumer preferences in a timely manner. Boozt operates in the apparel market, which is highly sensitive to changes in consumer preferences, fluctuations in fashion trends and weather patterns. Consumer preferences with respect to fashion design, quality and price tend to change rapidly and accurate forecasting of the selection and quantities required in future periods is difficult. Boozt endeavours to predict these trends correctly in advance and to avoid the overstocking or understocking of products. However, the demand for products can change significantly between the time products are ordered and the date of sale. There is a risk that Boozt will not buy the right products from its diversified group of suppliers, which could lead to the Company being unable to sell the ordered and stocked products and instead being forced to make write-downs. In addition, the lead times Boozt must incur in taking delivery of merchandise from many of its suppliers pose challenges by increasing, in some cases significantly, the time it takes the Company to respond to changes in product trends, consumer demand and market prices. As a result, Boozt faces the risk of not having the appropriate selection or the required quantities of products in order to satisfy customer demand. Boozt also faces the risk of carrying excess inventory, which the Company could be unable to sell during the relevant selling seasons, or could only be able to sell by offering significant discounts. After holding inventory for 18 months, Boozt has a policy of gradually writing down such inventory over the course of the following six months. Thus, the full value of such inventory is written down after a total of 24 months. Boozt s inability to sell products as anticipated could therefore impact its financial condition. In addition, significant discounting could damage Boozt s relationship with suppliers and the Boozt brand. If Boozt fails to anticipate and respond in a timely manner to fashion trends and consumer preferences and adjust its purchases and inventory accordingly, this could result in lost sales, sales at lower than anticipated margins and/ or write-offs of inventories, any of which would have a material adverse effect on Boozt s business, results of operations and financial condition. There is a risk that Boozt will be a passive foreign investment company ( PFIC ) for U.S. federal income tax purposes In general, a non-u.s. corporation is a PFIC for any taxable year if (i) 75% or more of its gross income consists of passive income or (ii) 50% or more of the average quarterly value of its assets consists of assets that produce, or are held for the production of, passive income. If a corporation owns at least 25% (by value) of the stock of another corporation, the corporation will be treated, for purposes of the PFIC tests, as owning its proportionate share of the 25%-owned subsidiary s assets and receiving its proportionate share of the 25%- owned subsidiary s income. Based on the nature of its business and the expected price of its Shares in the offering, Boozt does not expect to be a PFIC for our current taxable year or in the foreseeable future. However, because a determination of whether a company is a PFIC must be made annually after the end of each taxable year and Boozt s PFIC status for each taxable year will depend on facts, including the composition of its income and assets and the value of its assets (which may be determined in part by reference to the market value of Boozt s Shares), at such time and because Boozt has and will continue to have significant passive assets on its consolidated balance sheet, there is a risk that Boozt will not be a PFIC for the current or any future taxable year. If Boozt were a PFIC for any taxable year during which a U.S. 4) See section Selected financial and performance information Financial and performance definitions. 5) See section Selected financial and performance information Financial and performance definitions. 6) See section Selected financial and performance information Financial and performance definitions. 9

12 Risk factors investor owns Shares, the U.S. investor will generally be subject to adverse U.S. federal income tax consequences, including increased taxes on gains and certain distributions. Boozt is dependent on its ability to expand its customer base and increase its sales to existing customers In order to reach new customers, and increase net revenue to existing customers, Boozt may need to expand the Company s offerings to include more products, launch adjacent categories, optimise the assortment offered, enter new geographical markets, develop new businesses, websites, apps, promotions, sales formats or services and devote time to marketing efforts as well as efforts aimed at increasing the average order value 7) ( AOV ) or providing an inspiring and engaging online fashion experience. In order to take such measures Boozt may be required to allocate significant management time and resources. For example, as a part of Boozt s strategy to expand its sales to adjacent product categories, Boozt s management will be required to evaluate different acquisition opportunities and analyse market data. Further, the Company has recently opened a physical store for cosmetics at Ro s Torv in Roskilde (40 kilometres west of Copenhagen) and plans to launch a cosmetics section on Boozt.com during the second quarter of There is a risk that Boozt s current logistics, experience or business model will not be suited for such expansions, and Boozt could fail to properly handle the cosmetic products or to sell them before their expiry date. Furthermore, as part of Boozt s strategy to increase sales to existing customers, the Company aims to maintain its current level of AOV 8). AOV is based on the number of items in the basket and the price per item, which depend on external factors such as customer behaviour and the demand for fashion and apparel products. A decrease in the AOV 9) might increase Boozt s marginal costs and its needs on customer base expansion, which could have a material adverse effect on Boozt s business, results of operations and financial condition. Boozt has made significant investments 10) aimed at raising brand awareness and increasing customer acquisition and retention, and expects to continue spending significant amounts to attract new customers and retain existing ones. For example, Boozt has incurred and expects to continue to incur significant expenses in marketing through a broad range of media to attract website traffic, increase customer engagement and drive repeat purchases in order to increase revenue and maintain Boozt s brand awareness and recognition. These expenses include substantial outlays for offline marketing, in particular TV, radio and outdoor, and online marketing, such as search engine marketing ( SEM ) and search engine optimisation ( SEO ), which involve paying third parties to refer visitors from their websites to Boozt s websites. Boozt s methods of advertising could become less effective, be prohibited or otherwise be unavailable in the future. Further, Boozt s online partners might be unable to deliver the anticipated number of customer visits or impressions, or visitors that are attracted to the Company s websites by such campaigns might not make purchases according to its expectations. Moreover, changes to search engine algorithms or terms of services could exclude Boozt s websites from, or rank them lower in, the search results. Any failure in the efforts mentioned could be detrimental to Boozt s ability to successfully reach new customers and increase net revenue to existing customers and could have a material adverse effect on Boozt s business, results of operations and financial condition. Damages to Boozt s reputation could result in Boozt losing business or growth opportunities Boozt is dependent on its reputation, which is important to the Company in relation to both new and existing customers choosing where to purchase. Boozt s ability to expand its customer base and increase its sales to existing customers is dependent on the Company having a good reputation with consumers. Boozt s reputation and brand name could be impaired, for example, due to losses of well-known brands or as a consequence of customer complaints or negative publicity associated with Boozt as a company (including Boozt s websites, products, marketing, assortment, delivery times, returns processes, customer data handling and security practices, or customer support, including on internet-based platforms such as blogs, online ratings, review services and social media websites). Customer dissatisfaction can result in a deteriorating net promoter score ( NPS ) or negative Trustpilot reviews, which could harm Boozt s reputation. In addition, Boozt faces the risk that its employees and other persons affiliated with Boozt may take actions which are unethical, criminal (including, but not limited to, with respect to violation of applicable anti-corruption or anti-bribery legislation) or otherwise contravene Boozt s internal guidelines and policies. If Boozt is associated with such misconduct, it could have a material adverse effect on Boozt s reputation. Furthermore, Boozt s reputation is also important in relation to the Company s business partners, such as suppliers. Boozt is dependent on good relations with its suppliers and a good brand image with the apparel industry is beneficial to the Company s ability to maintain and further develop its wide assortment of products. Supplier dissatisfaction could lead to Boozt losing existing suppliers or being unable to establish relationships with new suppliers. Boozt relies on information provided by suppliers in order to establish product material and origin. As a consequence, there is a risk that the Company may be sold counterfeit products or fur products in breach of its fur-free declaration. If Boozt is associated with counterfeit products or breaches of declarations, it could have a material adverse effect on Boozt s reputation. Boozt s Code of Conduct is one of its most important policies. If the employees of or other persons affiliated with Boozt are unable to comply with Boozt s Code of Conduct, there is a risk that Boozt s reputation could be harmed. For example, because Boozt sources its products from suppliers, the Company s may not always be able to control where its products originate from and under what conditions they are manufactured. As a consequence, there is a risk that some of Boozt s products will be made in countries from which the Company is not allowed to source (due to international sanctions or contractual restrictions) or where the production is not conducted in accordance with the Company s Code of Conduct. To the extent that any such potential misconduct is reported by media or otherwise becomes public knowledge, it could have a material adverse effect on Boozt s reputation. Damage to Boozt s reputation could result in a loss of business or growth opportunities, which could have a material adverse effect on Boozt s business, results of operations and financial condition. Customer returns could negatively affect Boozt s costs and net revenue Boozt s current return rate is per cent over a year but return rates vary across countries depending on consumer behaviour for e-commerce, with more mature e-commerce customers typically exhibiting higher return rates. This also partly applies to more 7) See section Selected financial and performance information Financial and performance definitions. 8) See section Selected financial and performance information Financial and performance definitions. 9) See section Selected financial and performance information Financial and performance definitions. 10) See section Selected financial and performance information Financial and performance definitions. 10

13 Risk factors expensive products. Boozt usually offers a 30-day free return period on Boozt.com, which is typically in excess of legally required return periods in the countries in which the Company operates. If Boozt fails to manage and meet customer expectations with regard to purchased products, or if return rates increase for other reasons, such as changes in customer behaviour or abuse of Boozt s return policy, this could increase the Company s costs and result in a loss of existing or potential customers. In addition, Boozt s return policy could be abused by customers returning counterfeit products. The realisation of any of these risks could have a material adverse effect on Boozt s business, results of operations and financial condition. Boozt is dependent on its brand and other intellectual property rights Boozt believes that the Boozt and Boozt.com brands, customer data, copyrights, trade secrets, proprietary technology and similar intellectual property are critical to the Company s success, and Boozt relies on trademark, copyright and trade secret protection, agreements and other methods with employees and others to protect Boozt s proprietary rights. If Boozt fails to establish, manage and protect its intellectual property, and particularly, its brand, and if Boozt becomes subject to claims or demands related to brand names, trademarks or other intellectual property that limit the use of such brand and/or intellectual property or entail significant costs, it could have a material adverse effect on Boozt s business, results of operations and financial condition. Boozt s operations and business strategy are linked to the integrated technology platform developed by the Company. Boozt incurs costs for the establishment, protection and enforcement of its integrated technology platform. If Boozt fails to protect its integrated technology platform, the Company could lose competitive advantages which could have a material adverse effect on Boozt s business, results of operations and financial condition. The success of Boozt s business depends on the continuing development, maintenance and operation of Boozt s IT systems Boozt s success is dependent on the reliability, functionality, maintenance, operation and continuing development of its integrated technology platform, including the Company s websites and business, sales, customer management, financial and accounting, marketing, purchasing, warehouse management, online retail and mobile systems, as well as its operational platforms, including voice, data and power systems. The quality and Boozt s utilisation of the information generated by its information technology systems, and Boozt s success in implementing new systems and upgrades, affects, among other things, Boozt s ability to: make future sales to its customers; effectively conduct business with its customers; manage its inventory and accounts receivable; purchase, sell, ship and invoice products efficiently and on a timely basis; and maintain a cost-efficient operating model while scaling the business. The integrity of Boozt s information technology systems is vulnerable to external disruptions. An increasing number of companies have recently experienced cyber-attacks, some of which have involved sophisticated and highly targeted attacks on their computer networks. Because the techniques used to obtain unauthorised access, disable or degrade service or sabotage systems change frequently and are often not recognised until launched against a target, Boozt may be unable to anticipate these techniques or implement effective and efficient countermeasures in a timely manner. Furthermore, Boozt uses open-source software. This could present additional security risks, as the source code for open-source software is publicly available, making it easier for hackers and other third parties to determine how to breach the Company s sites and systems. In addition, the use of certain open-source software can be riskier than use of third-party commercial software because open-source licensors generally do not provide contractual protections with respect to the software. Additionally, open-source licensors are not obliged to maintain their software or provide any support. There is a certain risk that the authors of the open-source software may cease updating and attending to the software. If unauthorised parties attempt to or manage to disable Boozt s network or access its integrated technology platform, they may be able to misappropriate confidential information, cause interruptions in the Company s operations, damage its computers or process-control systems or otherwise damage its reputation and business. In such circumstances, Boozt could be held liable or become subject to regulatory or other actions for breaching confidentiality and personal data protection rules. Any disruption to or infiltration of Boozt s integrated technology platform and websites could result in liability for damages or have a major impact on Boozt s sales and its ability to service customer needs, which could have a material adverse effect on Boozt s business, results of operations and financial condition. Failure to adopt technological advances or adapt to user behaviour in a timely manner could limit Boozt s growth New advances in technology can increase competitive pressures, as the online retail sectors are characterised by rapid technological developments. Boozt s success is dependent on its ability to improve its current integrated technology platform and to develop new online apps for a variety of platforms in a timely manner in order to remain competitive. If Boozt fails to adopt and apply technological advances in a timely manner, the attractiveness of Boozt s websites could be diminished, limiting its growth and resulting in a material adverse effect on Boozt s business, results of operations and financial condition. Purchases by and traffic from customers using mobile devices such as mobile phones and tablets have increased significantly. During 2016, approximately 66 per cent of Boozt.com s traffic came from mobile devices, and approximately 50 per cent of the sales were generated through mobile orders. As new mobile devices and platforms are released, it may be difficult to predict potential problems in developing mobile websites and apps that operate on such devices and platforms. Such developments could require significant resources and investments 11), for both development and maintenance, which could have a material adverse effect on Boozt s business, results of operations and financial condition. Boozt s interoperability is dependent on the providers of mobile operating systems, such as ios and Android, and changes in such systems that diminish the functionality of Boozt s sites or that give preferential treatment to competing sites could adversely impact the Company s mobile offerings and traffic. If Boozt s interoperability is limited, this could have a material adverse effect on Boozt s business, results of operations and financial condition. Threats to data security could significantly impact Boozt s business negatively If third parties or Boozt s employees are able to breach Boozt s network security or otherwise misappropriate customers personal information or credit card information, or other information for which Boozt agrees to be responsible in connection with service contracts, or if Boozt gives third parties or its employees improper access to any such personal 11) See section Selected financial and performance information Financial and performance definitions. 11

14 Risk factors information or credit card information, Boozt could be held liable. This liability could include claims for unauthorised purchases with credit card information, identity theft or other similar fraud-related claims. This liability could also include claims for other misuses of personal information, including for unauthorised marketing purposes. Other liability could involve claims alleging misrepresentation or claims based on Boozt s privacy and data security practices. Any such liability for misappropriation of this information could have a material adverse effect on Boozt s business, results of operations and financial condition. Advances in computer capabilities, new discoveries in the field of cryptography or other events or developments may result in breaches of the algorithms that Boozt uses to protect sensitive customer transaction data. A party who is able to circumvent Boozt s security measures could misappropriate proprietary information or cause interruptions in the Company s operations. Boozt could be required to expend significant resources to protect against such security breaches or to alleviate problems caused by such breaches. Boozt s security measures are designed to protect against security breaches, but the Company s failure to prevent such breaches could cause it to incur significant expenses to investigate, respond and correct problems caused by such breaches, subject it to liability, damage its reputation and diminish the value of its brand. Should any of the abovementioned risks materialise, it could have a material adverse effect on Boozt s business, results of operations and financial condition. A new Data Protection Regulation, the General Data Protection Regulation (EU) 2016/679 (the Regulation ), has been adopted at EU level and will become applicable, effective May 25, The Regulation will apply immediately throughout the EU and will replace the Swedish Personal Data Act (Sw. Personuppgiftslagen). The Regulation contains provisions that currently exist in the Swedish Personal Data Act, but there are additional new or changed provisions. The Regulation also contains more stringent sanctions for failure to comply with the rules. Among other things, the supervisory authority is given the right to impose administrative fines of up to EUR 20 million, or four per cent of a company s annual global turnover, if certain rules are breached. There is a risk that Boozt s current assessment of being compliant with the Regulation could prove to be incorrect, and any failure to comply with the Regulation could subject Boozt to litigation, civil or criminal penalties and adverse publicity that could have a material adverse effect on Boozt s business, results of operations and financial condition. Efficient logistics management and capacity are crucial to Boozt s business Boozt has designed its own logistics infrastructure, including for inbound receipt of items for sale, storage and fulfilment systems, packaging, outbound freight and receipt, screening and handling of returns. Boozt s own fulfilment infrastructure and the automatic infrastructure in the fulfilment centre are linked. These processes are complex and depend on sophisticated know-how and computerised systems, which Boozt has tailored to meet the specific needs of its business. Any failure or interruption of these systems, resulting from software malfunctions, natural disasters, acts of terrorism, vandalism or sabotage or any other such events could impair Boozt s ability to timely deliver customers purchases and harm the Company s reputation. Additionally, if Boozt miscalculates its logistics capacity such that it has overhead it cannot expense or merchandise it cannot ship, it could harm Boozt s reputation and have a material adverse effect on Boozt s business, results of operations and financial condition. If Boozt continues to add new products or categories with different logistical requirements or changes the mix of products offered, the Company s logistics infrastructure could become increasingly complex and operating it could become even more challenging. Boozt could encounter operational difficulties that result in shipping delays and customer dissatisfaction or cause Boozt s logistics costs to increase, making the Company less competitive. Any failure to successfully address such challenges in a cost-effective and timely manner could disrupt Boozt s business and harm its reputation and, as a result, have a material adverse effect on Boozt s business, results of operations and financial condition. Inefficiencies in the supply chain could have a material adverse effect on Boozt s result of operations Boozt s inventory is costly to move, store and handle. If Boozt does not operate and optimise its warehouse successfully and efficiently, it could result in excess or insufficient logistical capacity, increased costs or harm Boozt s business in other ways. Any inefficiency in managing inventory (including errors or omissions in forecasting or ordering) could result in Boozt storing wrong, excessive or insufficient inventory of a particular product or group of products. Boozt may decide to carry high-inventory levels of certain products that have limited or no return privileges due to customer demand or request. These actions could increase Boozt s exposure to inventory obsolescence. In addition, any excessive inventory of certain products, e.g. due to large purchase orders being placed, could result in a risk that inventory would need to be impaired or discarded due to Boozt s inability to sell such products. The associated costs can be substantial, and there is a risk that Boozt could be unable to recover such costs from its customers, which could have a material adverse effect on Boozt s business, results of operations and financial condition. Boozt is dependent on the accuracy of its logistics and product information management systems, in particular Boozt s warehouse management system Fastlane. In the event that Boozt does not have the ordered products in store, whether due to wrong product assortment or insufficient inventory, there is a risk that deliveries to customers may be delayed or impossible to carry out. Furthermore, if Boozt does not coordinate its campaigns correctly and promotes products that are not in store, or offers products at a lower, incorrect price due to technical errors, Boozt s reputation could be harmed and the Company might have to incur costs by accepting to sell the product at the lower price or offering compensation to dissatisfied customers. The materialisation of any of these risks could have a material adverse effect on Boozt s business, results of operations and financial condition. Boozt s fulfilment centre or the equipment therein may be damaged and the fulfilment centre may have to close Inventory is an important part of Boozt s operations. Boozt has its automated fulfilment centre in Ängelholm. At the fulfilment centre, logistics operations include deconsolidation of goods received from suppliers, as well as sorting, packing, cargo loading and customised distribution and inventory management services. Boozt has recently introduced cosmetic products in its assortment, certain of which constitute flammable goods. If Boozt s fulfilment centre or the equipment therein is damaged as a result of events such as fire, if the equipment is malfunctioning or breaks down, if the fulfilment centre has to close or if the Company s inventory is stolen, Boozt could suffer losses and delays in delivery, which in turn could have a material adverse effect on Boozt s business, results of operations and financial condition. In addition, if the inventory is damaged as a result of events such as flooding, Boozt could be forced to write down such inventory and could have to arrange for delivery of ordered products directly from its suppliers, which could lead to increased prices and delayed deliveries. Boozt could be unable to recover such increased costs from 12

15 Risk factors its customers, while delayed deliveries could adversely affect Boozt s reputation, both of which could result in a material adverse effect on Boozt s business, results of operations and financial condition. The operation of Boozt s new fulfilment centre might not be successful As of February 2017, Boozt operates a new leased automated fulfilment centre in Ängelholm. The new fulfilment centre has increased capacity and costs relative to the Company s previous warehouse, and entails a significant initial investment. This investment is premised on the scalability of Boozt s operations, however, there is a risk that Boozt will be unable to grow its business to the extent necessary to take advantage of the expanded capacity and meet the increased fixed costs, which could result in reduced margins and profitability. The majority of personnel in the new fulfilment centre are hired externally from a third-party provider, and there is a risk that the third-party provider will not be able to provide Boozt with adequate staffing. Furthermore, the fulfilment centre is automated by the use of equipment owned by Boozt and the Company bears the risk of operational or maintenance problems in relation to this equipment. In addition, the operation of the fulfilment centre is based on an AutoStore solution, a technology that Boozt has not used for warehouse operation previously. Due to the technical additions in the new fulfilment centre, there is a risk that Boozt misjudges the risk of technical failure or miscalculates the costs associated therewith. There is also a risk that Boozt fails to realise the cost efficiencies anticipated from automation, which could result in Boozt being forced to alter its projections and plans. If Boozt fails to sufficiently grow its business to meet increased costs, to realise cost efficiencies or to accurately assess the risks associated with the new technology, this could have a material adverse effect on Boozt s business, results of operations and financial condition. While Boozt is now occupying the warehouse, the County Administrative Board has rendered a decision that revoked the building permit for the warehouse that was previously issued by the municipality of Ängelholm. Ängelholm municipality is considering a revised development plan that would allow a new building permit to be granted for the fulfilment centre. If a new building permit does not become effective, the property owner may need to take remedial actions to conform the fulfilment centre to the development plan, including demolition of a portion of the fulfilment centre, which could lead to potential disruptions to Boozt s fulfilment centre operations that adversely impact Boozt s business. Boozt is dependent on suppliers and third-party service providers in order to sell its products Boozt s suppliers are either the brands themselves, or agents of such brands in the Nordic market. For example, Boozt buys products from Ralph Lauren and Odd Molly directly from the brands themselves, whereas Under Armour and LA Martina products are bought from agents. One of Boozt s competitive advantages is its wide product assortment, and Boozt is thus dependent on its suppliers continuing to provide such assortment. In addition to offering a wide product assortment, Boozt s suppliers offer rebates and return policies which are important to Boozt s business model. If Boozt s suppliers change their current practice and/or terms and conditions, for example with respect to payment, this could result in a material adverse effect on Boozt s business, results of operations and financial condition. From time to time, brands may terminate or limit Boozt s right to sell some or all of their products or change the terms and conditions or reduce or discontinue the incentives that they offer to Boozt. Brands may begin to sell directly to end users or through other resellers. Additionally, if brands decide that certain products will no longer be sold online, this could limit or curtail the availability of their products to Boozt. Any such termination, limitation or implementation of such changes could have a material adverse effect on Boozt s business, results of operations and financial condition. A significant portion of the products Boozt sells are manufactured or purchased by Boozt s suppliers in Asia. Political, social or economic instability in Asia, or in other regions in which Boozt s suppliers purchase or manufacture the products Boozt sells, could cause disruptions in trade, including exports to Europe. Other events that could also cause disruptions to Boozt s supply chain include: the imposition of additional trade law provisions or regulations; the imposition of additional duties, tariffs and other charges on imports and exports; natural disasters or other adverse occurrences at, or affecting, any of Boozt s suppliers facilities; restrictions on the transfer of funds; the financial instability or bankruptcy of manufacturers; and significant labour disputes, such as strikes. Boozt cannot predict whether the countries in which the products Boozt sells are purchased or manufactured, or may be purchased or manufactured in the future, will be subject to new or additional trade restrictions or sanctions imposed by the authorities or foreign governments, including the likelihood, type or effect of any such restrictions. Trade restrictions, including new or increased tariffs or quotas, embargoes, sanctions, safeguards and customs restrictions against the products Boozt sells, as well as foreign labour strikes and work stoppages or boycotts, could increase the cost or reduce the supply of products available to Boozt and have a material adverse effect on Boozt s business, results of operations and financial condition. Furthermore, Boozt is dependent on its suppliers being able to deliver ordered products and relevant product data in a timely manner. If any supplier terminates its relationship with Boozt or goes into bankruptcy, Boozt could be unable to receive products within the same time frame. In addition, Boozt delivers products to its customers via different third party logistics companies e.g. PostNord, Bring, DHL and UPS. Strikes, inclement weather, natural disasters or other service interruptions by such logistic companies could affect Boozt s ability to deliver products on a timely basis. In addition, negative customer experiences from pick-up points can impair the overall shopping experience and thus negatively affect Boozt s NPS score or Trustpilot score. If any of these risks would materialise, it could have a material adverse effect on Boozt s business, results of operations and financial condition. Increases in VAT rates, labour costs or the prices of energy, cotton and fuel could negatively affect Boozt s result of operations Boozt is exposed to fluctuations in the market price of certain commodities such as energy, cotton and fuel, which are used in connection with the manufacturing and transport of products Boozt purchases. Any increase in such prices could impact the price at which Boozt purchases products, and thereby the cost of goods for resale. Energy prices impact manufacturing and freight costs, which significantly affect cost of goods for resale. Increases in crude oil prices often result in higher energy and freight costs. In addition, labour shortages and labour costs in the countries from which Boozt sources its products could also increase its cost of goods for resale. There is a risk that Boozt may not be able to pass on these increased costs to customers by raising sales prices or that it suffers delays or restrictions in such actions. Furthermore, there is a risk that value added taxes on products are raised without a corresponding modification in the suppliers price lists, reducing Boozt s revenue. The realisations of any 13

16 Risk factors of these risks could have a material adverse effect on Boozt s business, results of operations and financial condition. Inability to retain and recruit executive management and other key employees could have a material adverse effect on Boozt s operations Boozt is dependent on its management team. Being able to attract, develop, engage and retain executive management and other key employees is important to Boozt s future operations and business plan. If Boozt would fail to attract or retain executive management and other key employees, it could have a material adverse effect on Boozt s business, results of operations and financial condition. Dissatisfaction with Boozt s customer service could affect the Company s ability to retain customers A satisfied and loyal customer base is crucial to Boozt s continued growth. Strong customer service is required to ensure customer satisfaction and that customer complaints are dealt with in a timely manner and to the customer s satisfaction. Because Boozt does not have direct face-to-face contact with customers, the interaction with customers through its customer service team, is crucial to maintaining positive customer relationships. Boozt responds to customer requests and inquiries through and over the phone. Any actual or perceived failure or unsatisfactory response by Boozt s customer service could negatively affect customer satisfaction and harm customer engagement. Dissatisfaction with Boozt s customer service could affect Boozt s ability to retain customers, which could have a material adverse effect on Boozt s business, results of operations and financial condition. Boozt is dependent on third-party payment providers, and the broad variety of payment methods offered by Boozt exposes the Company to operational, regulatory and fraud risks Boozt s payment platform currently offers different payment methods tailored to meet local customer payment preferences. Boozt s payment methods include credit and debit cards, PayPal, online bank transfer, invoicing, payment against SAS EuroBonus points and gift cards. Due to the complexity of this broad variety of payment methods, Boozt faces the risk of operational failures in Boozt s checkout process, which could adversely impact Boozt s conversion rate 12). There is also the risk that, in connection with the methods of payment Boozt offers, Boozt could become subject to additional regulations, compliance requirements, and various types of payment fraud or cyber-attacks. Furthermore, Boozt faces risks relating to unauthorised or improperly authorised orders or payments, orders transmitted in error, insufficient funds in customer accounts and fraud. For certain payment methods, such as credit and debit cards, Boozt also pays interchange and other fees, which could increase over time and cause Boozt s operating costs to rise. In addition, adverse economic developments in the countries in which Boozt generates its revenue could adversely affect the collection of accounts receivable from customers due to a deterioration in credit quality, which could impair Boozt s ability to serve short-term liabilities. There is a risk that the acquiring banks cease to pay receivables, extend the payment terms or require deposits from Boozt. Under Boozt s current payment terms, Boozt receives payment from the credit card companies and Collector Bank within two to three days from the customer transaction. Payments with SAS EuroBonus points, which represent less than one per cent of Boozt s net revenue, expose Boozt to a third party risk with respect to the company administering these payments for up to 45 days. Any negative changes in Boozt s payment terms could extend the time during which Boozt stands the risk of non-payment for products already delivered to the customer, and could imply significant problems in relation to Boozt s cash position. In addition, there is a risk that third-party payment providers terminate their relationships with Boozt or refuse to renew their agreements on commercially reasonable terms, and Boozt could have difficulties in finding alternative providers on similar terms and within an acceptable timeframe. The realisation of any of these risks, alone or in combination, could have a material adverse effect on Boozt s business, results of operations and financial condition. Boozt s international presence exposes Boozt to different local legal, regulatory and tax payment standards Boozt operates in a European environment and is consequently exposed to various risks, such as the introduction of new or amended laws, rules or regulations. Trade restrictions implemented in the countries where Boozt operates, or in other countries where Boozt may conduct operations in the future, or sanctions or other measures imposed by associations and organisations, such as the EU and the UN, could restrict the Company s operations, delay or impede planned investments 13) or negatively impact Boozt s financial results. Boozt s operations are also exposed to risk associated with its business activities, such as: differences and unexpected changes in regulatory environments, including accounting, environmental, health and safety, detailed development plans, labour and consumer protection laws; the implementation or application of stricter product rules and standards as well as the cost associated therewith; exposure to various legal standards and enforcement measures as well as the costs involved in complying with these standards; being subject to various tax systems, including regulations pertaining to internal pricing and tax deductions on transfers and other payments to or from a subsidiary; being subject to several, potentially overlapping regulations and rules, particularly concerning export and import controls, anticorruption and anti-bribery; customs duties, levies, export controls, import restrictions and other trade barriers; variations in pricing restrictions; exchange controls and restrictions on the reversal of funds; and political and social unrest and instability. Because Boozt mainly operates within the EU, the Company is exposed to EU legal and regulatory developments. For example, terms and conditions in distance contracts in business-to-consumer relationships are subject to EU legislation. Therefore, any change in the EU legal framework regarding distance contracts could result in a large number of Boozt s terms and conditions of sale and delivery being negatively affected or having to be amended in a manner that is disadvantageous to Boozt. The Swedish anti-bribery legislation is applicable to the Company and, given the Company s global presence, the Company may be subject to anti-bribery legislations in other jurisdictions, including the UK s comprehensive Bribery Act of Lack of adequate procedures may expose the Company, as well as board members, to liability under Swedish or other applicable anti-bribery legislation for offences conducted by employees, agents, sub-contractors and other representatives. There is a risk that Boozt could fail to develop and implement systems, policies and practices to effectively manage these risks or 12) See section Selected financial and performance information Financial and performance definitions. 13) See section Selected financial and performance information Financial and performance definitions. 14

17 Risk factors comply with applicable regulations without incurring substantial costs. The materialisation of any of these risks could have a material adverse effect on Boozt s business, results of operations and financial condition. Boozt uses standardised terms and conditions Boozt maintains legal relationships with a large number of persons, including suppliers. Boozt mainly uses standardised documents, standard-form contracts and standardised terms and conditions. If such documents, contracts or terms and conditions are found to contain provisions that are disadvantageous to Boozt, or if clauses in such documents or contracts are declared invalid and thus replaced by statutory provisions that are unfavourable to Boozt, a large number of standardised documents, contracts or terms and conditions could be affected. In addition, some of Boozt s agreements with brands and agents are undocumented, and there is a risk that the Company would be unable to successfully make claims under such agreements or that the agreements could be terminated without notice. The realisation of any of these risks could have a material adverse effect on Boozt s business, results of operations and financial condition. The apparel industry is subject to seasonal revenue fluctuations Boozt s business has historically been, and will most likely continue to be, seasonal. For example, the second quarter (the start of the spring/ summer season) and the fourth quarter (the start of the fall/winter season) are especially important with respect to generating revenue. By contrast, the first and third quarters of each year are traditionally the discount seasons when revenue and margins can be pressured and apparel spending is reduced. Sales volumes are normally higher in the second half of the year as prices of fashion products for the winter season are typically higher. Due to this seasonality in Boozt s business, revenue and profit could be disproportionally affected by any negative factors during these periods. Such negative factors include unfavourable economic conditions in the markets in which Boozt operates and adverse weather conditions, such as unusually warm winters or late summers, which could result in reduced spending on seasonal items. Seasonal weather fluctuations could therefore have a material adverse effect on Boozt s business, results of operations and financial condition. Seasonal variations could also cause Boozt s inventories, working capital requirements and cash flows to vary from quarter to quarter. The Company s cash requirements for the year typically peak in the first quarter. As Boozt builds up its inventory in advance of each season, the Company s inventory levels are largely based on the Company s expectations for future net revenue. However, net revenue visibility is limited and there is a risk that the Company will fail to achieve the expected net revenue if the Company makes the wrong assumptions with respect to demand. In addition, special event days such as Black Friday and Cyber Monday further increase the fluctuations of the apparel industry, as such days tend to generate temporary surges in sales. If Boozt fails to accurately estimate demand during an important season or a relevant special event day it could have a material adverse effect on Boozt s business, results of operations and financial condition. Boozt relies on online marketing channels and restrictions on sending s or messages or changes to search algorithms could negatively affect Boozt s business More than half of the Boozt.com visits are generated by organic traffic such as direct type-ins (including the ad-word Boozt ) or SEM and SEO. Search engine marketing and optimisation are important parts of Boozt s online marketing strategy, as the Company has built up a portfolio of more than one million keywords for which it actively bids. Boozt s SEO strategy is adapted to search algorithms used by, for example Google and Facebook. It such algorithms were to change, there is a risk that the Company would have to allocate significant resources to updating the SEO strategy and there is a risk that such updated SEO strategy would not be as successful as the current strategy, resulting in fewer visits to Boozt.com generated by SEO. In addition, Boozt depends on and other messaging services to promote Boozt.com and the products offered. If Boozt is unable to deliver s or other messages, if such messages are delayed or if recipients decline to open them, this could adversely affect the Company s business. Categorisation functions in services or any actions by third parties to block, impose restrictions on or charge for the delivery of s or other messages, as well as legal changes limiting the right to send such messages, could impair Boozt s ability to communicate with existing and potential customers. Furthermore, Boozt relies on social networking services and messaging services to communicate with customers, such as a system for customer relationship management ( CRM ) delivered by SalesForce. The CRM system enables Boozt to personalise and automatize its marketing as well as build sustainable customer engagement. If the terms and conditions of these services were to change, this could limit Boozt s promotional capabilities and result in a decline in the use of such social networking services by existing and potential customers. Any limitations in Boozt s marketing possibilities could have a material adverse effect on Boozt s business, results of operations and financial condition. Boozt may not be able to successfully implement its strategy for continued profitable growth The markets in which Boozt operates exhibit varying degrees of maturity with respect to online shopping and demand for online retail services, and have cultural, economic and competitive differences. Successful implementation of strategic initiatives by Boozt is, among other things, dependent on the Company s ability to foresee developments and meet customer needs in the markets where it operates as well as adapt its organisation and processes as needed. Boozt may not be able to implement new or announced strategic initiatives and realise benefits of strategic initiatives already carried out. If Boozt is unable to execute its business strategy for continued profitable growth, this could have a material adverse effect on Boozt s business, results of operations and financial condition. Boozt may in the future carry out acquisitions or enter into partnerships that could negatively affect the Company s operations In the future, Boozt may enter into joint ventures or other partnerships or acquire new companies, to supplement Boozt s current product portfolio or to gain access to new segments or markets and increase the Company s sales to selected customer categories. Boozt has evaluated, and expects to continue to evaluate, potential strategic transactions to support the Company s strategy for continued profitable growth. There is a risk that the Company will not find suitable investments 14) or candidates for acquisition or partnerships, or that the Company will be unable complete acquisitions or enter into partnerships on acceptable terms and conditions, if at all. Acquisitions, partnerships or new ventures may also be regarded as negative developments by financial markets and investors. In addition, acquisitions, partnerships or new ventures could lead to difficulties in integrating personnel and operations and in retaining and motivating key employees, disrupt Boozt s current business activities, entail obligations and liabilities, increase Boozt s expenses and have a material negative effect on the Company s operations, operating profit 14) See section Selected financial and performance information Financial and performance definitions. 15

18 Risk factors or financial position. Furthermore, future acquisitions, partnerships or new ventures could reduce Boozt s cash and cash equivalents and increase its indebtedness, and any of these risks could have a material adverse effect on Boozt s business, results of operations and financial condition. Product recalls, product liability claims and breaches of corporate social responsibility could harm Boozt s reputation and business There is a risk that goods sold by Boozt could cause injury to other property or to Boozt s customers. For example, products may contain harmful substances or be flammable or otherwise unsafe. The sale of defective products could also result in product recalls, product liability claims and/or administrative fines. Product liability generally lies with the supplier if the supplier is situated in Europe, but the negative publicity surrounding any assertion that products sold by Boozt caused injury or damage or an allegation that the goods sold by Boozt were defective, could nonetheless adversely affect both the Company s reputation with existing and potential new customers and its corporate and brand image. The realisation of any of the foregoing risks, alone or in combination, could have a material adverse effect on Boozt s business, results of operations and financial condition. Boozt s insurance cover could prove to be inadequate to protect Boozt against all liabilities that arise in its operations Boozt has insurance against property damage including goods, machinery and equipment and business interruption losses, including IT-interruption insurance. In addition, Boozt has a general liability insurance as well as insurance policies for personnel, legal protection, crime against property, fire, water damage, business travel, directors and officers liability, and product liability (effective in all countries except the US and Canada). Certain types of losses are generally not covered by insurance since they are deemed impossible to insure or are excluded from the insurance policies in question. This could include, for example, damage caused by war or terrorism and professional or personal liability in the event of negligent, intentional or criminal acts. Most of Boozt s insurance policies have exclusions and limitations, and there is a risk that all material events or damage or loss will not be fully or adequately covered by the applicable insurance policy. Compensation is also generally dependent on the insured party having paid the excess amount or deductible and on the maximum amount of an insurance policy not already having been paid. Incidences of uninsured loss, a loss that exceeds the specified limit or any consequential losses, could have a material adverse effect on Boozt s business, results of operations and financial condition. Boozt is exposed to tax related risks Boozt is subject to complex tax laws in each of the jurisdictions in which it operates. Changes in tax laws could have a material adverse effect on Boozt s tax situation, including the amount of taxes it is required to pay. Boozt conducts intra-group transactions between legal entities in Sweden and Denmark. The intention is to follow generally accepted principles of transfer pricing, such as the arm s length principle, but Boozt s interpretations could be challenged. Boozt is currently initiating a project to ascertaining that relevant transfer pricing documentation is established. The tax legislations in the various jurisdictions in which Boozt operates may be interpreted in different ways, and there is a risk that Boozt s interpretation of the laws may differ from the interpretations of relevant tax authorities and courts. Boozt could, thus, be subject to possible retroactive adjustments to previously assessed taxation, which can also affect the availability of the substantial tax losses reported in Sweden and the recorded deferred tax asset of SEK 36.8 million. Tax losses can also be affected in case of a future change of control, or as a consequence of a change in legislation. A challenge to Boozt s tax position by the relevant authorities could lead to payment by Boozt of additional taxes, and potentially fines, which could be significant. Any such challenge could also result in Boozt s employees not receiving the tax treatment expected. This could have a material adverse effect on Boozt s business, results of operations and financial condition. Boozt is exposed to currency risks Currency risk refers to the risk that currency exchange rate changes result in material adverse effects on Boozt s income statement, balance sheet or cash flow. Exposure to currency risks is the results of subsidiaries in the Group making purchases and sales of goods and services in currencies other than the respective subsidiary s functional currency (transaction exposure) and of the conversion of the balance sheets and income statements in foreign currencies into SEK (conversion exposure). Changes in currency exchange rates can also affect Boozt s own and its customers competitiveness and thus indirectly affect the Company s sales and profits. Boozt is particularly exposed to changes in NOK, due to having NOK revenue but no matching cost basis, as well as changes in DKK, EUR and GBP, compared to SEK. In addition, there is a risk that the price lists for products sourced by Boozt s suppliers in USD could lead to currency exposures with respect to the Company s Nordics currency revenues. Any currency exchange rate fluctuations could have a material adverse effect on Boozt s business, results of operations and financial condition. Boozt is exposed to interest rate risks Interest rate risk is the risk that changes to market interest rates cause financial income and expenditure, as well as the values of financial instruments, to fluctuate adversely. The interest rate risk can lead to negative changes in fair values, negative changes in cash flows and negative fluctuations in Boozt s profit. As per March 31, 2017, with addition for the investments 15) in warehouse equipment in the new fulfilment centre, Boozt had a net cash position of SEK million including an overdraft facility of SEK 49.0 million. A change of +1 percentage point in the interest rate on the debt would have affected profits for the financial year 2016 by MSEK 0.1. Changes in interest rates could have a material adverse effect on Boozt s business, results of operations and financial condition. Boozt may not be able to obtain loans at favourable terms, or obtain loans at all In connection with the listing of the Company s shares on Nasdaq Stockholm, the Group will refinance certain parts of its existing indebtedness by entering into of a multicurrency revolving credit facility agreement with Danske as lender (the Revolving Credit Facility Agreement ). The Revolving Credit Facility Agreement will consist of a SEK 140,000,000 committed multicurrency revolving credit line (available for drawing in SEK, NOK, DKK and EUR) (the Revolving Credit Facility ), which can be used for general corporate and working capital purposes, including the funding of potential acquisitions. The Revolving Credit Facility Agreement will contain customary undertakings for the Company and certain of its subsidiaries, such as maintaining authorisations, complying with laws (including sanctions and anti-corruption), not changing the business of the Group, restrictions on mergers, restrictions on disposals, negative covenants on the incurrence of financial indebtedness, restrictions on providing loans and guarantees and restrictions on acquisitions. 15) See section Selected financial and performance information Financial and performance definitions. 16

19 Risk factors The Revolving Credit Facility Agreement will also include financial covenants requiring that the relationship between the Group s EBITDA ratio and Net Debt and interest coverage ratio not deviate above certain levels. 16) The Revolving Credit Facility may terminate upon the occurrence of certain customary events, including in connection with a change of control of the Company or a delisting of the Company from Nasdaq Stockholm. Further, the Revolving Credit Facility may be due in full or in part if certain events occur, including, but not limited to, nonpayment, insolvency and cross default. Boozt s capacity to pay its debts and otherwise comply with its obligations and the terms and conditions of its loan arrangements as well as Boozt s general capacity to refinance its loans and make payments in accordance with Boozt s financial undertakings depends on, among other things, Boozt s future results. Some aspects of Boozt s future results depend on economic, financial and competitive factors and other factors beyond Boozt s control. Should Boozt fail to meet its obligations under its loan arrangements or breach any covenant, it could have a material adverse effect on Boozt s business, results of operations and financial condition. Many of Boozt s suppliers rely on credit insurance to protect their receivables, and any changes to, or too slow adjustments or withdrawals of, such credit insurance might lead suppliers to seek to reduce their credit exposure to Boozt Many of Boozt s suppliers rely on credit insurance to protect their receivables against risks involving of bad debts, insolvency or protracted default of their buyers, including Boozt. If there is a significant decrease in the availability of credit insurance to Boozt s suppliers, or if an increase in credit levels is administered too slowly or such insurance is withdrawn in its entirety, and if such suppliers are unwilling or unable to take credit risk themselves or find alternative credit sources, they might choose to reduce their credit exposure to Boozt, including seeking to change their credit terms, require premature payment or refusing to contract with Boozt. For example, Boozt has historically experienced problems related to the Company s high growth rate since the suppliers have found it difficult to be granted the corresponding increase in credit levels, resulting in an increased credit exposure to Boozt. If Boozt s suppliers choose to reduce their credit exposure to Boozt, this could have a material adverse effect on Boozt s cash position, lead to an increase in Boozt s indebtedness or have a negative impact on its product offering and, thus, on revenue, which could have a material adverse effect on Boozt s business, results of operations and financial condition. Disputes, claims, investigations and proceedings could lead to Boozt having to pay damages or cease with certain operations Group companies could become involved in disputes within the framework of their normal business activities and risk being subject to various claims. For example, Boozt sells its products under the product names provided by the brand. There is a risk that names of the products are trademarked in other countries. The Company is usually reimbursed by the brand, but any claim in relation to such trademark can entail costs and management resources from Boozt. In addition, Group companies (or Group companies management, board members, employees or affiliates) could become subject to criminal investigations and proceedings. Disputes, claims, investigations and proceedings of this kind can be time consuming, disrupt normal operations, involve large claim amounts and result in considerable costs. Moreover, it can be difficult to predict the outcome of complex disputes, claims, investigations and proceedings. Future disputes, claims, investigation and proceedings could have a material adverse effect on Boozt s business, results of operations and financial condition. RISKS RELATING TO THE OFFERING An active, liquid and orderly trading market for the shares may not develop, the price of the shares may be volatile, and potential investors could lose a portion or all of their investment Prior to the Offering, there has been no public market for the shares. There is a risk that an active and liquid market will not develop or, if developed, that it will not be sustained after completion of the Offering. The Offering Price will be determined through a bookbuilding procedure and will, consequently, be based on demand and overall market conditions. The Offering Price will be set by the Selling Shareholders in consultation with the Joint Bookrunners. This price will not necessarily reflect the price at which investors in the market will be willing to buy and sell the shares following the Offering. Investors may, thus, not be able to resell shares at or above the Offering Price. Sales of shares by existing shareholders could cause the share price to decline The market price of Boozt s share could decline if there are substantial sales of the shares, particularly sales by the Company s directors, Group Management, and significant shareholders, or otherwise when a large number of shares are sold. The Selling Shareholders and certain members of Boozt s board of directors and Group Management have each agreed, subject to certain exceptions, for a certain period of time, not to sell their shares or enter into transactions with a similar effect without the prior written consent of the Joint Bookrunners. After the expiry of the relevant lock-up period, the shareholders subject to lock-up will be free to sell their shares. Any sales of substantial amounts of the shares in the public market by the Selling Shareholders or Boozt s other current shareholders, or the perception that such sales might occur, could cause the market price of the Boozt share to decline. The Selling Shareholders will continue to have substantial influence over Boozt after the Offering and could delay or prevent a change in control over the Company After completion of the Offering, the Selling Shareholders will own on aggregate approximately 47 per cent of the shares (based on the midpoint of the Price Range in the Offering SEK and assuming that the Offering is not increased and the Overallotment option is not exercised). Assuming that the Offering is increased and the Overallotment option is exercised in full, the Selling Shareholders will own on aggregate approximately 36.5 per cent of the shares after the Offering (based on the midpoint of the Price Range in the Offering SEK 58.50). Thus, the Selling Shareholders are likely to continue to have a significant influence over the outcome of matters submitted to Boozt s shareholders for approval, including the election of directors and any merger, consolidation or sale of all or substantially all of Boozt s assets. In addition, the Selling Shareholders could have significant influence over Group Management and Boozt s operations. The interests of the Selling Shareholders may differ significantly from or compete with Boozt s interests or those of other shareholders, and the Selling Shareholders could exercise influence over Boozt in a manner that is not in the best interest of other shareholders. For example, there could be a conflict between the interests of the Selling Shareholders on the one hand, and the interests of the Company or 16) See section Selected financial and performance information Financial and performance definitions. 17

20 Risk factors its other shareholders on the other hand with respect to distribution of dividends. Such conflicts could have a material adverse effect on Boozt s business, results of operations and financial condition. Boozt s ability to pay dividends is dependent upon its future earnings, financial condition, cash flows, net working capital requirements, capital expenditures and other factors The amount of any future dividends that Boozt will pay, if any, will depend upon a number of factors, such as future earnings, financial condition, cash flows, net working capital requirements, capital expenditures 17) and other factors. Boozt also may not have sufficient distributable funds and Boozt s shareholders may not resolve to pay dividends in the future. Differences in currency exchange rates could materially adversely affect the value of shareholdings or dividends paid The shares will be quoted in SEK only, and any dividends will be paid in SEK. As a result, shareholders outside Sweden could experience adverse effects on the value of their shareholding and their dividends, when converted into other currencies if SEK depreciates against the relevant currency. Shareholders in the United States or other countries outside Sweden may not be able to participate in any potential future cash offers If the Company issues new shares in a cash issue, shareholders shall, as a general rule, have preferential rights to subscribe for new shares proportionally to the number of shares held prior to the issue. Shareholders in certain other countries may, however, be subject to limitations that prevent them from participating in such rights offerings, or that otherwise makes participation difficult or limited. For example, shareholders in the United States may be unable to exercise any such rights to subscribe for new shares unless a registration statement under the Securities Act is effective in respect of such subscription rights and shares or an exemption from the registration requirements under the Securities Act is available. Shareholders in other jurisdictions outside Sweden may be similarly affected if the rights and the new shares being offered have not been registered with, or approved by, the relevant authorities in such jurisdiction. Boozt is under no obligation to file a registration statement under the Securities Act or seek similar approvals under the laws of any other jurisdiction outside Sweden in respect of any subscription rights and shares and doing so in the future may be impractical or costly. To the extent that shareholders in jurisdictions outside Sweden are not able to exercise their rights to subscribe for new shares in any future rights issues, their ownership in the Company could be diluted or reduced. The commitments from Cornerstone Investors are not secured and may therefore not be met Arbejdsmarkedets Tillægspension, Catella Fondförvaltning AB on behalf of managed funds, Ferd AS and Friheden Invest A/S have undertaken to acquire shares in the Offering, corresponding to approximately around SEK 565 million 18). The Cornerstone Investors will hold approximately 20.7 per cent of the total number of shares and votes in the Company after the implementation of the Offering. However, the Cornerstone Investors commitments are not secured by bank guarantee, blocked funds or pledge of collateral or similar arrangements, for which reason there is a risk that the Cornerstone Investors will not be able to, entirely or partly, meet their commitments. Moreover, the Cornerstone Investors commitments are associated with certain conditions, such as achieving a certain distribution of the Company s shares in connection with the Offering as well as that the Offering is implemented within a certain period of time. In the event that any of these conditions is not fulfilled, there is a risk that the Cornerstone Investors will not fulfill their commitments, which could have a negative impact on implementation of the Offering. 17) See section Selected financial and performance information Financial and performance definitions. 18) Based on full subscription in the Offering and the midpoint of the Price Range in the Offering (SEK 58.50). 18

21 Invitation to acquire shares in Boozt Invitation to acquire shares in Boozt In order to facilitate Boozt s continued profitable growth and development, Boozt and the Selling Shareholders have resolved to diversify the distribution of ownership of the shares. Boozt s board of directors has therefore applied for listing of the Company s shares on Nasdaq Stockholm. On May 5, 2017, Nasdaq Stockholm s Listing Committee decided to admit the shares to trading subject to certain conditions, including that customary conditions regarding distribution of shares are met not later than by the first day of listing, which is expected to be May 31, Pursuant to the terms and conditions set forth in the Offering Circular, investors are hereby offered to acquire a maximum of 24,991,348 shares, of which the Company offers up to 7,407,000 newly issued shares and the Selling Shareholders offer up to 17,584,348 existing shares. The price of the Offering will be determined through a book-building process. The final price per share in the Offering (the Offering Price ) will be set by the board of directors of Boozt and the Selling Shareholders in consultation with the Joint Bookrunners, based on the discussions preceding the undertakings made by the Cornerstone Investors (see below), contacts with certain other institutional investors, current market conditions and a comparison with the market price of other comparable listed companies, and will be established within the price range SEK (the Price Range ). Arbejdsmarkedets Tillagspension, Catella Fondforvaltning AB on behalf of managed funds, Ferd AS and Friheden Invest A/S have undertaken to acquire shares in the Offering, corresponding to approximately SEK 565 million 1). The Cornerstone Investors will hold approximately 20.7 per cent of the total number of shares and votes in the Company after the implementation of the Offering. The Offering Price is expected to be made public through a press release around May 31, The board of directors intends to, by power of authorisation from an extraordinary general meeting held on May 16, 2017, resolve on the final terms of the new issue of shares, which is expected to provide Boozt with gross proceeds of approximately SEK 400 million before issue costs, with a minimum of 6,349,000 shares and a maximum of 7,407,000 newly issued shares, depending on the subscription price established within the Price Range of SEK Based on the full acceptance of the Offering and a final Offering Price equal to the midpoint of the Price Range, SEK 58.50, the Company s share capital (following the Offering) will amount to SEK 4,723,409 divided into 56,680,944 shares, of which the newly issued shares in the Offering represent approximately 12 per cent. The Selling Shareholders have reserved the right to extend the Offering by up to 2,001,534 shares, corresponding to a maximum of 3.5 per cent of the total number of shares, assuming the Offering Price corresponding to the midpoint of the Price Range. The Selling Shareholders offer up to 19,611,438 existing shares, which, based on a full subscription in the Offering and an Offering Price corresponding to the midpoint of the Price Range, SEK 58.50, represents approximately 74 per cent of the shares in the Offering. The Selling Shareholders will issue an option to the Joint Global Coordinators, which can be utilised in whole or in part for 30 days from the first date of trading in the shares on Nasdaq Stockholm, to acquire additional existing shares from the Selling Shareholders, equal to 15 per cent of the maximum total number of shares encompassed by the Offering, including, as applicable, additional shares following an expansion of the Offering, at the Offering Price, to cover any overallotment in connection with the Offering (the Overallotment Option ). Provided that the Offering is expanded in full, the Overallotment Option will include the right to purchase an additional maximum of 4,048,931 shares from the Selling Shareholders, corresponding to 15 per cent of the maximum total number of shares encompassed by the Offering. Provided that the Offering is extended in full by the Selling Shareholders, that the Overallotment Option is exercised in full and that the final Offering Price established corresponds to the midpoint of the Price Range, SEK 58.50, the Offering encompasses a maximum of 30,415,701 shares, which represents approximately 54 per cent of the shares and votes in the Company. The total value of the Offering, based on the Price Range of 54 63, amounts to approximately SEK 1,350 1,513 million, and approximately SEK 1,676 1,882 million if the Offering is extended in full and the Overallotment Option is exercised in full. Malmö, May 17, 2017 Boozt AB (publ) The board of directors Selling Shareholders 1) Based on full subscription in the Offering and the midpoint of the Price Range in the Offering (SEK 58.50). 19

22 Background and reasons Background and reasons Boozt is a leading 1), fast-growing and profitable Nordic technology company selling fashion online. The Company offers its customers a curated and contemporary selection of fashion brands, relevant to a variety of lifestyles, mainly through its multi-brand webstore Boozt.com. The Company s webstores attract more than five million sessions 2) per month as a result of a convenient shopping experience with high service levels (including consistent user experiences across both mobile devices and desktop), quick deliveries and easy returns. Boozt targets Nordic fashion followers, primarily consumers aged 25 54, that value convenience and a relevant offer in their customer experience and which tend to generate a high AOV 3). Boozt was founded in 2007 to conduct outsourced, online, mono-brand operations for fashion brands. The current management team joined Boozt in to assist the Company in the 2011 relaunch, following the termination of the largest customer contract, and Boozt.com was established. In the following years, significant investments 4) have been made to support growth and increase the number of customers. The Company has continuously grown net revenue in the last years to reach SEK 1.4 billion in 2016, with gradually improved profitability. The board of directors and the management of Boozt, together with the Selling Shareholders, believe that it is now an appropriate time to broaden the shareholder base and to apply for a listing of the shares on Nasdaq Stockholm. The Offering and the listing is expected to support future growth, provide the Company with improved access to capital markets and establish a diversified base of new Swedish and international shareholders. Boozt also expects that the listing on Nasdaq Stockholm will promote broader awareness among customers and suppliers. The Offering will comprise of the sale of both existing shares and newly issued shares. Boozt expects to receive proceeds of approximately SEK 400 million, before deduction of approximately SEK 16 million in costs to be paid by the Company in relation to the Offering. Consequently, Boozt expects to obtain net proceeds of approximately SEK 384 million. Boozt intends to primarily use the net proceeds to fund the continued long-term growth of the Company, as well as also for general corporate purposes. The Company anticipates that fund the continued long-term growth might include, but will not necessarily be limited to, investments 5) in the new automated fulfilment centre in Ängelholm, expansion into new or related lines of business, targeted marketing efforts and selective acquisitions, in each case in furtherance of the strategy for continued profitable growth. General corporate purposes might include for instance unexpected expenses or investments. The Company has not made any resolution regarding the distribution of the net proceeds between these areas, but it will be controlled by needs. Boozt will not receive any proceeds from any sale of existing shares. In other respects, reference should be made to the full particulars of this Offering Circular, which has been prepared by the board of directors of Boozt in connection with the application for listing of the shares on Nasdaq Stockholm and the Offering made in connection with the listing. The board of directors of Boozt is responsible for the contents of this Offering Circular. It is hereby assured that all reasonable precautionary measures have been taken to ensure that the information contained in this Offering Circular, as far as the board of directors is aware, corresponds to the facts and that nothing has been omitted that would affect its import. Information provided by third parties has been accurately reproduced and no facts have been omitted which would render the reproduced information inaccurate or misleading. Malmö, May 17, 2017 Boozt AB (publ) The board of directors The board of directors of Boozt AB (publ) alone is responsible for the content of this Offering Circular. However, the Selling Shareholders confirm their commitment to the terms and conditions of the Offering in accordance with what is set out in Terms and conditions. Selling Shareholders 1) The Company s calculations are based on information, from Euromonitor International (a statistics database), on revenues from the apparel online market in the Nordic area in 2016 of Boozt s competitors, of which the online revenue of the largest actors (Zalando, H&M, Boozt, Ellos, Nelly, Stylepit and Bestseller) have been analysed with publicly available information, such as company annual reports for 2016, press releases as well as other available information on the companies website, respectively. 2) See section Selected financial and performance information Financial and performance definitions. 3) See section Selected financial and performance information Financial and performance definitions. 4) See section Selected financial and performance information Financial and performance definitions. 5) See section Selected financial and performance information Financial and performance definitions. 20

23 Market overview Market overview Information provided on the market environment, market developments, growth rates, market trends and on the competitive situation in the markets and regions in which the Company operates is based on data, statistical information and reports by several independent third parties and/or prepared by the Company based on its own information and information derived from such third-party sources, including Euromonitor International and other publicly available sources. Boozt compiled the market and competitive data in part on the basis of this historical data and in part on the basis of assumptions, estimates and methods which it believes to be reasonable. Considering the limited publicly available information on a significant proportion of participants in the industry, the data on market sizes, market shares and other competitive data should be viewed with caution. INTRODUCTION Boozt is a leading 1), fast-growing and profitable Nordic technology company selling fashion online. The Company offers its customers a curated 2) and contemporary selection of fashion brands, relevant to a variety of lifestyles, mainly through its multi-brand webstore Boozt.com. The Nordic region 3) offers an attractive market opportunity for online apparel retail, supported by one of the highest annual apparel spending per capita globally, being one of the largest consumer categories. The apparel market has relatively low online penetration compared to other categories. 4) While the total Nordic apparel market developed fairly stably between 2014 and 2016, the online apparel market gained market share from the offline segment, resulting in an annual online market growth ( CAGR 5) ) of 11 per cent over the 2014 to 2016 period. The online penetration in the Nordic apparel market has increased steadily over the past five years, but remains below those achieved in for example the United Kingdom and USA. Apparel is a category well-suited for online sales, mainly due to attractive gross margins 6) and high frequency of shopping, and can offer attractive unit economics at scale. Boozt ranks among the top five largest players in the Nordic online apparel market 7), which together have increased their combined online market share between 2014 and ). Despite the market concentration, the online market is fragmented with approximately 60 per cent being served by smaller players 9). According to Euromonitor International, Boozt was the fastest growing among the largest players in terms of Nordic online apparel sales in the period 10). THE LARGE PLAYERS DRIVE ONLINE MARKET GROWTH WITH BOOZT GROWING THE FASTEST Retail value including VAT 11) (CAGR 12) ) % % Total 11% Online 16% Five largest online players (excl. Boozt) 64% Boozt Note: Total represents the development of the total apparel market including online. Online represents the development of the online apparel market. Five largest online players excluding Boozt refers to combined online retail value development of Zalando, H&M, Ellos, Nelly and Stylepit. Source: Euromonitor International, Retailing 2017 edition and Company data (for Boozt based on net revenue). APPAREL IN THE NORDICS IS A LARGE MARKET The total Nordic apparel market was valued at approximately SEK 242 billion in ), making it the largest consumer category after food and drink. The Nordic online apparel market has grown by a CAGR 14) of 11 per cent since 2014 to reach SEK 33 billion in ), while the total market has remained fairly stable. Boozt s management believes that the Nordic online apparel market will continue to show fairly similar growth rate in the coming years, which is supported by Euromonitor s forecast. 16) 1) The Company s calculations are based on information, from Euromonitor International (a statistics database), on revenues from the apparel online market in the Nordic area in 2016 of Boozt s competitors, of which the online revenue of the largest actors (Zalando, H&M, Boozt, Ellos, Nelly, Stylepit and Bestseller) have been analysed with publicly available information, such as company annual reports for 2016, press releases as well as other available information on the companies website, respectively. 2) Curated approach is defined as a brand strategy where the customer offering is tailored to the demand of a particular customer target group. 3) The Nordic region refers to Sweden, Denmark, Finland and Norway. 4) Euromonitor International, Apparel and Footwear 2017 edition. Apparel retail market is defined as the aggregation of the clothing and footwear market (including sports). The market data covers retail sales of apparel through both store-based retailers and non-store retailers. It excludes black market sales (i.e. untaxed, generated within informal retailing) and duty free sales (travel retail). Items must be new when sold to the consumer; second-hand/used items are excluded. Antique and/or vintage clothing and footwear is also excluded. All data from Euromonitor International used in this section is based on retail sales prices (including VAT), expressed in nominal terms and assumes fixed currency rates against SEK of 9.44 (EUR), 1.07 (NOK), 1.27 (DKK), (GPB) and 8.88 (USD). 5) See section Selected financial and performance information Financial and performance definitions. 6) See section Selected financial and performance information Financial and performance definitions. 7) Top 5 largest players refers to Zalando, H&M, Boozt, Ellos and Nelly. Source: Management estimate and Euromonitor International. 8) Based on the share of the Nordic apparel market online. Source: Euromonitor International, Retailing 2017 edition. 9) Smaller players defined as other than the top 5 players. Source: Euromonitor International, Retailing 2017 edition. 10) Euromonitor International, Retailing 2017 edition. 11) As defined by Euromonitor International. Boozt CAGR based on net revenue excluding VAT. 12) See section Selected financial and performance information Financial and performance definitions. 13) Euromonitor International, Beauty and Personal Care 2016 edition, Consumer Electronics 2017 edition, Consumer Appliances 2017 edition, Consumer Health 2017 edition, Apparel and Footwear 2017 edition. 14) See section Selected financial and performance information Financial and performance definitions. 15) Euromonitor International, Retailing 2017 edition. 16) Euromonitor International, Retailing 2017 edition. Forecasted CAGR of 9 per cent between

24 Market overview APPAREL IS ONE OF THE LARGEST CONSUMER CATEGORIES Nordic market size by category (2016 in SEK billion) SEK bn Apparel Consumer electronics Beauty and personal care Consumer appliances Consumer health Online Total Source: Euromonitor International Beauty and Personal Care 2016 edition, Consumer Electronics 2017 edition, Consumer Appliances 2017 edition, Consumer Health 2017 edition, Apparel and Footwear 2017 edition. Euromonitor research does not cover Apparel, Consumer Electronics and Consumer Appliances in Finland, therefore, to estimate the total Nordic market, management uses the following estimates for Finland: Apparel: SEK 35 billion; Consumer electronics: SEK 35 billion and; Consumer appliances: SEK 6 billion. Apparel spend per capita is driven by a combination of factors such as GDP per capita, demographics, consumer confidence and climate. The USA, the Nordics and the United Kingdom have some of the highest spending per capita globally according to Euromonitor International. The development of the online market depends on the number of people having access to the internet and on the continued inclination of customers to make purchases online as well as on the rates at which they move from offline to online shopping. THE NORDIC REGION HAS ONE OF THE HIGHEST ANNUAL APPAREL SPENDING PER CAPITA Total apparel spending per capita (2016 in SEK, rounded to the nearest hundred) SEK 10,000 8,000 6,000 4,000 2, ,700 USA 9,200 Nordics 8,600 United Kingdom 5,300 Europe Note: Calculations based on total apparel retail value and total population size by region. Europe includes Western Europe and Eastern Europe. Source: Euromonitor International, Apparel and Footwear 2017 edition. Euromonitor research does not cover Apparel in Finland, therefore, to estimate the total Nordic market, management uses the following estimates for Finland: Apparel: SEK 35 billion. Data regarding the population has been gathered from United Nations database. STRUCTURAL TRENDS DRIVING ONLINE MIGRATION The rapid growth of online retail has put pressure on offline retailers (i.e. traditional retailers generating the majority of their revenue from physical stores), resulting in decreasing store sales and closure of stores. At the same time, many offline retailers have been unsuccessful in tapping the online opportunity due to a lack of, for example, focus or flexibility. The rapid growth of the online apparel market can be attributed to several factors including availability, selection and convenience. Availability: Consumers have increased time spent online in recent years. The online environment provides a convenient shopping experience that is available at any time, without regard to location of the customer and across devices (including mobile, desktops and other mobile devices). Selection: By browsing online shops, consumers are able to access a relevant selection in a matter of seconds, providing online retailers an advantage over offline retailers. Online retailers can optimise selection based on customer preferences by utilising big data and algorithms to pinpoint consumer behaviour, providing customers with a focused and relevant offering. At the same time, brands are able to make their entire selections available in webstores, which in turn increases the probability for the customer to find the desired product. Convenience: The ability to order merchandise at any time, at any location, and with a relevant selection of products offered and services provided, results in high levels of convenience for online shoppers. This is further enhanced by fast deliveries, easy returns and secure payment solutions. INCREASING NORDIC APPAREL ONLINE PENETRATION The growth of the online apparel market is positively influenced by the ongoing general shift from traditional offline to online shopping. Online penetration in the Nordic apparel market remains low compared to other consumer categories, such as books, consumer electronics and consumer appliances. The Nordic apparel market had an online penetration of approximately 13 per cent 17) in 2016, which remains below those achieved in for example the United Kingdom and USA. Despite online penetration being higher in other consumer categories and in other geographical apparel markets, the online market in general continues to grow across consumer categories and geographies. LOW ONLINE PENETRATION IN APPAREL COMPARED TO OTHER CONSUMER CATEGORIES Online retail penetration by category in the Nordics (2016) % % Books 44% Consumer electronics 26% Consumer appliances 13% 50% 11% 10% Apparel Consumer Beauty and health personal care Note: Online penetration defined as internet retailing value divided by total market value, expressed as a percentage. Source: Euromonitor International Beauty and Personal Care 2016 edition, Consumer Electronics 2017 edition, Consumer Appliances 2017 edition, Consumer Health 2017 edition, Apparel and Footwear 2017 edition, Retailing 2017 edition. Euromonitor research does not cover Apparel, Consumer Electronics and Consumer Appliances in Finland, therefore, to estimate the total Nordic market, management uses the following estimates for Finland: Apparel: SEK 35 billion; Consumer electronics: SEK 35 billion and; Consumer appliances: SEK 6 billion; Books is based on data for Sweden including e-books, taken from Boken 2017 (Svenska Bokhandlareföreningen and Svenska Förläggareföreningen) 17) Euromonitor International, Apparel and Footwear 2017 edition. 22

25 Market overview Along with the increasing popularity of online shopping in recent years, some apparel features that have generally been difficult to assess online (such as product appearance, fit and comfort) have been facilitated by online retailers through, for instance, more accurate visualisations and sizing, improved product information, fast deliveries and easy returns. The United Kingdom and USA have historically been at the forefront of online apparel retailing, which suggests further growth potential for the Nordic online apparel market. GROWTH POTENTIAL IN COMPARISON WITH UNITED KINGDOM AND USA Online apparel penetration by countries and regions (2016) % % United Kingdom 15% USA 13% Nordic 12% Europe Note: Europe includes Western Europe and Eastern Europe. Online penetration defined as internet retailing value divided by total market value, expressed as a percentage. Source: Euromonitor International, Apparel and Footwear 2017 edition, Retailing 2017 edition. Euromonitor doesn t research Apparel in Finland, therefore to estimate the total Nordic market, management estimates for Finland used as follows: Total apparel market value: SEK 35 billion. APPAREL IS WELL SUITED FOR ONLINE SALES Based on the Company s analysis of publicly listed e-commerce companies, online apparel retail provides attractive gross margins 18) compared to other categories. The attractive gross margins, which are reinforced by the use of recommended retail prices, can among other things facilitate investments to improve the customer experience, in operations and to expand the customer base. 19) Average gross margin per category of selected online retailers % ~ 40% Apparel Furniture Sports Food & beverages Pharmacy Electronics Source: Company information; average segment gross margins of latest reported full year from publicly available information of selected publicly listed e-commerce companies. Apparel: ASOS, Boozt, Global Fashion Group, Nelly, Zalando and Yoox Net-A-Porter Group; Furniture: Home24 and Westwing; Sports: Sportamore; Food & beverages: mat.se and Ocado; Pharmacy: Shop Apotheke Europe; Electronics: AO World, Dustin and Verkkokauppa.com. While attractive gross margins 20) in the online apparel retail market provide incentives for new entrants, the market rewards scale and poses significant barriers to entry. Successful online apparel retailers must achieve sufficient scale with their platforms to create efficient operations. However, to achieve such scale, sufficient order volume is required. With sufficient scale, supported by customers purchase frequency, attractive unit economics can be achieved for returning customers. Unit economics is a concept to describe the relationship between direct revenues and costs associated with a particular business model expressed on a per unit basis. The relevant unit in online sales is typically the total number of orders attributable to a single customer. There are two fundamental concepts in unit economics, customer acquisition cost ( CAC ) and customer lifetime value ( CLV ) 21). CAC is defined as the average cost for acquiring a new customer. CLV is defined as the total contribution margin, after fulfillment, distribution and marketing costs, a customer is expected to generate during the entire duration as a customer to the company. 22) When CLV 23) exceeds CAC, the business model is expected to create value. As such, each customer becomes more valuable while a large share of operating costs of the business is fixed or relatively independent of quantity sold. Such scale advantages enable companies to improve the customer experience which form the basis for attractive bottom-line margin potential and continued growth. Key factors affected by scale include, but are not limited to: Brand partnerships: The most in-demand brands within each corresponding segment are able to attract customers and strengthen the retailers attractiveness. In turn, brands generally put high demands on its suppliers and may be reluctant to take risks that can harm their brand equity, for instance through associations with unproven or sub-scale online retailers. Fulfilment and distribution: Fulfilment and distribution costs are one of the largest cost items for online retailers, in addition to costs of goods sold. These costs are generally improved by scale, providing lower fulfilment cost per order and better terms with distribution partners. One of the key challenges for online apparel retailers is to effectively handle the volume of products returned by customers. Simultaneously, an easy return process is an important factor to sustain customer satisfaction and to reduce perceived purchase risk, making return management a substantial entry barrier for new potential entrants. Marketing and customer insight: Efficiency in acquiring new customers is affected by scale, for example the ability to reach attractive agreements with media providers. Scale also allows for investments 24) in resources to systematically use, analyse and monitor customer data for allocation of resources to those channels that show favourable return on investment. Technology platform and efficiency of operations: As consumers place emphasis on overall shopping experience, scale further enables online retailers to invest in new attractions to drive traffic and increase the time consumers spend in their webstores. The swiftness and efficiency of a webstore displaying relevant content and proper utilisation of customer data can positively impact the number of orders, the average order value 25) and customer engagement. Strong operational infrastructure and execution, supported by the wide usage of technology in various business processes, enable efficient operations and increase the ability to offer a competitive customer experience. 18) See section Selected financial and performance information Financial and performance definitions. 19) See section Selected financial and performance information Financial and performance definitions. 20) See section Selected financial and performance information Financial and performance definitions. 21) See section Selected financial and performance information Financial and performance definitions. 22) See section Selected financial and performance information Financial and performance definitions. 23) See section Selected financial and performance information Financial and performance definitions. 24) See section Selected financial and performance information Financial and performance definitions. 25) See section Selected financial and performance information Financial and performance definitions. 23

26 Market overview As a result of the increasing importance of scale in the market, the five largest Nordic online apparel market players 26) Zalando, H&M, Boozt, Nelly and Ellos have increased their combined online apparel market share from approximately 20 per cent in 2011 to approximately 40 per cent in 2016 in terms of online sales. 27) Despite the market concentration, the online market remains highly fragmented with approximately 60 per cent of the market being served by smaller companies 28). According to Euromonitor International, Boozt was the fastest growing company among the five largest players in terms of Nordic online sales in the period. 29) COMPETITIVE LANDSCAPE The Nordic apparel retail market can be divided into four segments: traditional retailers, vertically integrated apparel retailers, online apparel retailers and online general retailers. The different segments differ in the degree of online presence and business model. Traditional retailers: Mainly focused on traditional offline retail sales and can be split into two categories: Department stores. Offer a curated, multi-brand offering but with presence generally limited to larger cities. Examples include NK, Magasin, Åhléns and Stockmann. Small and local shops. Offer a curated offering, but typically with a limited number of relevant brands and assortment depth. As more than 60 per cent of the population in the Nordics lives in municipalities of less than 100,000 people 30), a large share of the overall Nordic apparel demand is still served by small and local shops. Vertically integrated apparel retailers: Retailers with an offline and online presence. However, historically the focus among these retailers has been in the offline segment with a reactive, rather than proactive, move towards the online segment, and currently, the supply-chain of such retailers is geared towards servicing offline rather than online stores. Examples of vertically integrated apparel retailers include H&M and Zara. Online apparel retailers: Retailers primarily focused on online sales. There are several online apparel retailers in the Nordic market, but only a few with significant size. Online apparel retailers benefit from being able to provide a large selection of products at a competitive cost, based on an organisational structure that is designed for online sales. In many cases, these players also offer adjacent product categories such as cosmetics, accessories and jewellery. Examples of online apparel retailers include Boozt, Zalando, ASOS, Ellos, Nelly and Yoox Net-a-Porter Group. Many retailers also operate webstores for a single brand or a small number of brands, such as Bestseller and Filippa K. Online general retailers: Retailers that operate across a broad range of categories, including apparel. Due to their general lack of localisation and apparel focus, these market participants currently do not have a large presence in the Nordic online apparel market. Examples of online general retailers include Amazon, Alibaba and ebay. Online apparel retailers are segmented based on their product segment focus and their brand strategy. Product segments can be divided into premium, mid-market or entry priced brands. A brand strategy can be characterised by a curated or catch-all 31) approach. Boozt, for example, offers a curated assortment, geared towards Nordic customers, and mainly focuses on mid-market and premium brands. ASOS and Nelly are further examples of offering a curated selection, however mainly focused on the entry price segment. Yoox Net-A-Porter Group, which is currently selectively active in the Nordic region, focuses primarily on a curated offering of premium and luxury brands. Zalando, H&M and Zara can be characterised as having catch-all strategies, of which H&M and Zara are positioned in the entry price segment, while Zalando primarily targets the entry price and midmarket segments. BOOZT HAS A DISTINCT POSITION BASED ON A CURATED SELECTION OF RELEVANT NORDIC BRANDS Illustrative Nordic online market landscape Selectively active in the Nordic region Product segment focus Entry price Mid-market Premium Catch-all Curated Brand strategy Source: Management estimates is based on publicly available information such as companies reports and the range of products in each retailers online stores, respectively. 26) Company information. 27) Based on the share of the Nordic apparel market online. Source: Euromonitor International, Retailing 2017 edition. 28) Smaller players defined as other than the top 5 players (Zalando, H&M, Boozt, Nelly and Ellos). Source: Euromonitor International, Retailing 2017 edition. 29) Euromonitor International, Retailing 2017 edition. 30) Statistiska Centralbyrån (SCB), Statistisk sentralbyrå (SSB), Danmarks Statistik (DST), Kuntaliitto Kommunförbundet. 31) Catch-all approach is defined as a brand strategy where the customer offering is adapted to attract people with diverse viewpoints and thus appeal to a broad range of customer groups. 24

27 Business overview Business overview INTRODUCTION Boozt is a leading 1), fast-growing and profitable Nordic technology company selling fashion online. The Company offers its customers a curated and contemporary selection of fashion brands, relevant to a variety of lifestyles, mainly through its multi-brand webstore Boozt.com. The Company s webstores attract more than five million sessions 2) per month 3) as a result of a convenient shopping experience with high service levels (including consistent user experiences across both mobile devices and desktop), quick deliveries and easy returns. The Boozt brand is becoming a recognised name for fashion in the Nordics through high customer satisfaction, as evidenced by a NPS of 65 4), a Trustpilot score of 9.0 5) and a growing base of returning customers. The Company has shown steady growth in net revenue in the last years to reach SEK 1.4 billion in 2016, and has as of March 31, 2017 built a base of over 862,000 active customers 6) on Boozt.com. The Company operates a tailor-made, integrated technology platform that enables the Company to manage the customer experience and to accommodate further growth. Fulfilment is executed through the automated fulfilment centre, strategically located in Ängelholm, with 43,500 m 2 (77,000 m2 at maximum build-out), 130 picking robots and capacity exceeding 450,000 stock keeping unit ( SKU ), that enable next-day delivery to many Nordic areas. Boozt has a strong track-record of growth, mainly driven by the fast evolution of Boozt.com, which grew net revenue by a CAGR 7) of 69 per cent between 2014 and 2016, with gradually improving profitability. The fast growth is primarily attributable to Boozt s strong online market position and its competitive customer offering, which has enabled Boozt to attract new customers and increase the number of orders from returning customers. The Company, which is headquartered in Malmö, has run current operations since ) and had 193 employees from more than 25 countries as of December 31, Financial overview Adjusted EBIT margin 13.1% 0.1% 2.1% Selected KPIs 2016 YoY change 1) Transactional net revenue 2) 1, % Net revenue 1, % Net revenue 1, % Boozt.com AOV 2) (SEK) # of orders (000 s) 777 1, SEK +61% # of orders per active customer % Breakdown of net revenue (2016) Transactional net revenue Segment Booztlet.com Other 2% 5% Geography Rest of Europe RoE 11% 37% Sweden Assortment Entry brands Net revenue % Boozt.com 52% 89% Rest of Nordics Nordics Premium brands Mid market brands 1) 2016 compared to ) Transactional net revenue includes consignment sales which arise when Boozt sells goods or services as an agent. See also section Selected financial and performance information Financial and performance definitions. 1) The Company s calculations are based on information, from Euromonitor International (a statistics database), on revenues from the apparel online market in the Nordic area in 2016 of Boozt s competitors, of which the online revenue of the largest actors (Zalando, H&M, Boozt, Ellos, Nelly, Stylepit and Bestseller) have been analysed with publicly available information, such as company annual reports for 2016, press releases as well as other available information on the companies website, respectively. 2) See section Selected financial and performance information Financial and performance definitions. 3) Company information; monthly average based on Company data for ) Trustpilot and Company information; fourth quarter ) Trustpilot; May ) See section Selected financial and performance information Financial and performance definitions. 7) See section Selected financial and performance information Financial and performance definitions. 8) The Company was originally founded as an outsourced, online mono-brand business in

28 Business overview OVERVIEW As a leading 9) Nordic technology company selling fashion online, operating under the current model since 2011, Boozt has been an important part of the development of the Nordic online apparel market and continues to be as it remains to achieve above-market growth rates. More than 60 per cent of the population in the Nordic countries lives in municipalities with less than 100,000 people 10) that typically do not have access to a broad selection of relevant fashion brands. Boozt targets Nordic fashion followers, primarily consumers aged that value convenience in their customer experience. To efficiently address the growing Nordic online market opportunity and the target customer groups, Boozt s operations consist of three main activities: Boozt.com segment consists of the operational activities related to the multi-brand webstore Boozt.com. Boozt.com mainly operates in the Nordic region (with Nordic visits representing over 95 per cent of visitors) but is available in ten geographic areas 11) and in nine languages sharing the same platform and common backend. Boozt.com is an online destination for fashion, tailored to deliver convenience and a curated selection from the Company s over 500 brand partners. To support a convenient online shopping experience, Boozt.com offers free and fast deliveries as well as free and easy returns, with limited minimum order sizes, and free customer support. Booztlet.com segment consists of the operational activities related to Booztlet.com. The Booztlet.com webstore primarily operates as the Company s channel for inventory clearance, retailing items that do not sell within an allotted timeframe on Boozt.com. Customers at Booztlet.com are charged for deliveries and returns. Sales and marketing activities related to Booztlet.com are limited. The Other segment consists of the operational activities related to the mono-brand business and other activities in the Company. The mono-brand business, where Boozt manages online sales on behalf of a brand, has historically contributed to net revenue and knowledge and has partly funded Company growth. As of March 31, 2017, Boozt s last mono-brand customer agreement with ECCO expired and the Company anticipates no further mono-brand revenue. The Other segment also includes the Company s two physical retail stores in Denmark. Boozt constantly strives to leverage technology as a tool to create better ways for its customers to be inspired and shop for fashion. The Company has built an integrated technology platform which Boozt believes is robust, secure and highly scalable. The Company collects large amounts of data that is used to drive optimisation of the business, such as demand forecasting, marketing and customer engagement. Data is managed and analysed through a combination of home grown systems and prominent third party systems. The integrated technology platform enables Boozt to provide a customer-centred online fashion experience, to develop targeted marketing campaigns, to improve management and sourcing of inventory and to enhance contribution margins by product. HISTORY Boozt was originally founded in 2007 to conduct outsourced, online, mono-brand operations for fashion brands. The original business idea failed, as the largest customer (representing 99 per cent of the revenues) terminated the mono-brand agreement, due to lack of operational control from Boozt s side. The original founders left the company, a new management team stepped in and it was decided to relaunch the company with the main objective of building the multibrand fashion store, Boozt.com, and to have an opportunistic approach to the mono brand business. The company launched Boozt.com as well as a mono-brand store for ECCO shoes on August 1, 2011, thus marking a new start for the company. The current management team joined Boozt in to assist the Company in the 2011 relaunch. The management team launched a new strategy in 2011, including EARLY YEARS LAUNCH OF BOOZT.COM BUILDING NORDIC SCALE ONLINE LEADERSHIP Originally founded in late 2007 current operations since 2011 Development of platform Initial focus on mono-brand businesses Current management team joined in New strategy launched and multi-brand shop opened On-boarding of brands Investments in tech platform Marketing focus in Denmark and Sweden Nordic roll-out Assortment expansion Increase share of wallet and number of returning customers Opening of Booztlet.com and a physical outlet store outside of Copenhagen Strive towards Nordic market leadership Continue to enhance brand awareness across the Nordics Leverage the integrated technology platform Maintain disciplined portfolio management strategy ) Taken from Boozt Fashion AB s annual report 2011 (prepared in accordance with the Swedish Annual Reports Act and Swedish Accounting Standards Board s guidelines). 9) The Company s calculations are based on information, from Euromonitor International (a statistics database), on revenues from the apparel online market in the Nordic area in 2016 of Boozt s competitors, of which the online revenue of the largest actors (Zalando, H&M, Boozt, Ellos, Nelly, Stylepit and Bestseller) have been analysed with publicly available information, such as company annual reports for 2016, press releases as well as other available information on the companies website, respectively. 10) Statistiska Centralbyrån (SCB), Statistisk sentralbyrå (SSB), Danmarks Statistik (DST), Kuntaliitto Kommunförbundet. 11) Sweden, Denmark, Norway, Finland, Germany, United Kingdom, France, the Netherlands, Poland and other European countries. 26

29 Business overview in-sourcing of business activities, marking the start of Boozt s current operations. During , large investments 12) were made in Boozt s organisation, technology platform and marketing. In the period, Boozt focused on building Nordic scale, complementing the product assortment and increasing the number of customers. Since 2016, Boozt has strived for Nordic online leadership and has created a roadmap for continued profitable growth. Since the start of the current operations in 2011, transactional net revenue 13) has increased almost tenfold and reached SEK 1.6 billion in VALUE PROPOSITION Boozt s value proposition to customers Boozt.com is an online destination for Nordic fashion followers and has over 862,000 active customers 14) as of March 31, The Company believes its customers are attracted to Boozt.com because it: provides a curated Nordic selection of fashion articles; provides easy access to its products from anywhere at any time, regardless of the device used and; offers convenience in terms of speed of delivery and service level. Boozt s value proposition to brands Boozt is a strategic partner for fashion brands who wish to get exposure to the Nordic online market. Brand partners are attracted to Boozt because it: offers another channel for fashion brands to sell their products outside of traditional offline retail; provides access to over 862,000 active customers and more than five million sessions per month through a Nordic-oriented store that caters primarily to Nordic customers and tastes; 15) is a local brand partner for campaigns and product launches; provides insight to brand partners into the fashion preferences of its customer database through, for example, data analysis; and does not compete with brand partners through private label or own production. THE SOLAR SYSTEM, BOOZT S INTEGRATED TECHNOLOGY PLATFORM Since its relaunch in 2011, Boozt has continuously invested in its technology platform in order to deliver a customer-focused fashion experience. Referred to internally as the Solar System, Boozt s integrated technology platform is founded on home-grown systems, which are complemented by prominent third party systems. The systems are technically complementary and built on open standards. The integrated technology platform brings several benefits such as efficient handling of products, control over the work flow and efficient processes that enable the organisation to grow while still providing an outstanding customer experience. STRENGTHS AND COMPETITIVE ADVANTAGES The Company believes that it has a number of significant strengths and competitive advantages that enable Boozt to carry out its strategy and achieve its financial targets. Large Nordic apparel market with strong online momentum The Nordic apparel market is characterised by one of the highest fashion spending per capita in Europe, making it a large consumer category with a value of around SEK 242 billion in 2016 according to Euromonitor International. The overall apparel market has shown a stable development between 2014 and 2016, while the online market grew at a CAGR 16) of 11 per cent in the same period. As a result, online penetration has increased rapidly from four per cent in 2006 to approximately 13 per cent in ). The Company expects that the online channel will continue to grow, which indicates an appealing growth potential for online-based players such as Boozt. The apparel category offers attractive gross margins relative to other consumer categories, based on a comparison of gross margins for selected listed e-commerce companies 18). Industry dynamics supporting this circumstance include the personal nature of fashion purchases, fashion brands focus on brand equity and traditional offline retail s requirement for an elevated gross margin level to cover their costs. As a result, online apparel retailers can generate appealing gross margins as in-season merchandise is primarily sold based on recommended retail prices 19). BOOZT S INTEGRATED TECHNOLOGY PLATFORM Combination of home grown systems and prominent third party systems Apps Affiliates Order management Salesforce Mobile Webstore Sales information Product information QlikSense campaigns Data Purchasing PIM 2) Marketing material WMS Google Analytics Partner Portal Integration Services Brand management Campaign management Content management Accounting Traffic management Reporting Distribution Case management Fraud management Hadoop NetSuite 1) Application programming interphase. 2) Product information management. Source: Company data. 12) See section Selected financial and performance information Financial and performance definitions. 13) Transactional net revenue also includes consigment sales which arise when Boozt sells goods or services as an agent. 14) See section Selected financial and performance information Financial and performance definitions. 15) See section Selected financial and performance information Financial and performance definitions. 16) See section Selected financial and performance information Financial and performance definitions. 17) Euromonitor International, Apparel and Footwear 2017 edition. 18) See section Selected financial and performance information Financial and performance definitions. 19) See section Selected financial and performance information Financial and performance definitions. 27

30 Business overview Attractive position in a market where scale matters Boozt has a leading position in the Nordic online apparel market and is distinguished by various characteristics that put the Company in a strong position to take advantage of a significant market opportunity for online apparel retail. Boozt s distinct market position is based on a curated fashion selection geared towards Nordic tastes, with a focus on mid-market and premium brands and evidenced by a high AOV 20). HIGH AVERAGE ORDER VALUE IN COMPARISON WITH ZALANDO AOV incl. VAT in SEK (2016) VAT 777 Boozt +51% 636 Zalando The AOV of Boozt including VAT totals SEK 963. The AOV of Zalando is based on a reported average basket of goods amounting to EUR 66.6 in the financial year Recalculated by an exchange rate (EUR/SEK) of Source: Company data and Zalandos annual report for the financial year According to Euromonitor International, Boozt was the fastest growing company among the five largest players in the Nordic online apparel market between 2014 and 2016 in terms of online sales. Boozt reported net revenue of SEK 1.4 billion and transactional net revenue of SEK 1.6 billion in 2016, in a business where scale is a critical success factor. 21) Scale allows the Company to benefit from a powerful network effect as further scale improves Boozt s recognition and relevance to both its customers and its brand partners. In addition, Boozt benefits from attractive unit economics mainly due to its high AOV 22) on Boozt.com, as fulfilment and distribution costs per order are relatively fixed in absolute terms. The Company believes that its leading market position, in conjunction with an outstanding shopping experience, can enable higher operating leverage and support higher operating margins relative to competitors with lower market share. This enhances rewards to scale as Boozt seeks to acquire new customers while maintaining or reducing total cost per customer. Large and growing loyal Nordic customer base Boozt has established an online destination for Nordic fashion. Boozt. com, which attracts more than five million sessions per month 23) and has grown visitors by a CAGR exceeding 60 per cent in the period 2014 to Approximately half of the visits are generated by organic traffic, such as direct type-ins (including the ad-word Boozt ) or SEO, despite a large number of new customers being acquired during the period. Boozt believes such strong awareness is a testament to its top-of-mind position when it comes to a curated Nordic online fashion experience as well as a growing awareness of the Boozt brand and high customer satisfaction as Boozt.com enjoys a NPS of 65 24) and a Trustpilot score of ) Increased number of sessions and active customers also improve attractiveness for the brand partners, creating a powerful network effect as the Company grows 26). The self-reinforcing nature of this network effect enables Boozt to strengthen its market position and enhance its profitability. Hence, the Company has historically focused on targeted marketing investments in new customers and increasing order frequency among its existing customers. Boozt constantly monitors customer lifetime value (CLV) to optimise customer acquisition cost (CAC 27) ). New customers on Boozt.com show attractive economics, CAC is recovered after approximately 20 months and generate a growing CLV in the following years driven by the recurring nature of fashion purchases. 28) As Boozt defines CLV 29) as net contribution after marketing spend, this indicates an attractive financial profile for returning customers that have shopped with the Company for more than 20 months. The true frequency, i.e. the number of orders in a given 12-month period among a cohort of customers who have shopped on Boozt.com during the previous 12-months period, has increased from 3.2 orders in 2013 to 5.2 orders in Well-invested, data-driven operating platform Boozt operates a purpose-built infrastructure that enables control over the customer experience. The Company strives to use technology as a tool to create a better fashion experience and more efficient operations. This approach (internally referred to as the Halo ) is central to the Company s organisational activities, which are built on the Company s integrated technology platform (the Solar System ). Key business functions (including for example buying, merchandising, marketing, customer service, IT and finance) for all geographical areas are provided in-house on a centralised basis. As a result, a large number of Boozt s personnel operate out of the Company s headquarters, which Boozt considers to be a cost effective organisational structure. The solar system s Soc. media TV Marketing Affiliate The halo Ads Discounts Fraud check Sales advice Sales Filter + search Payment validation Return + refund Pickup + delivery Open package Fulfilment Review Rating Chat s Customer service Phone Exchange Soc. media Scalable, purpose-built and integrated technology platform Boozt operates an integrated technology platform that has been purposively developed and continuously enhanced and is designed to deliver an outstanding fashion experience to both its customers and brand partners. Boozt is device-agnostic, which provides a consistent 20) See section Selected financial and performance information Financial and performance definitions. 21) See section Selected financial and performance information Financial and performance definitions. 22) See section Selected financial and performance information Financial and performance definitions. 23) Company information; monthly average based on Company data for ) Trustpilot and Company information; fourth quarter ) Trustpilot; May ) See section Selected financial and performance information Financial and performance definitions. 27) See section Selected financial and performance information Financial and performance definitions. 28) See section Selected financial and performance information Financial and performance definitions. 29) See section Selected financial and performance information Financial and performance definitions. 28

31 Business overview customer experience across devices. By, for example, combining the efficiency of dedicated servers with the flexibility of cloud-hosting, the Company believes its technology platform to be robust, secure and highly scalable. This was exemplified during the Black Friday weekend 2016 (November 25 27), when the number of visitors and orders temporarily increased by a factor of four times compared to the average daily rate during Despite this, Boozt.com maintained normal response times and customer orders were delivered within the promised time period. Focus on an integrated platform also allows the Company to reduce development time and maintenance costs on an aggregate basis. Data-driven marketing, buying and merchandising The Company continuously collects and analyses data across business processes to optimise execution. The customer base is segmented daily based on annual spending and time since last order. Such insights contribute as a main input to allocation of marketing spending. The allocation of the marketing budget is data-driven, performed in-house and distributed to the channels that are estimated to generate the highest return on investment ( ROI ). Boozt is channel agnostic and spends a large share of marketing on offline channels, such as TV and outdoor, in addition to online channels such as Google and Facebook. The current level of marketing costs is impacted by the large number of new customers, which are more costly to acquire than returning customers. The Company has a systematic, analytical approach to buying and merchandising, which to a large extent is based on the behaviour of the existing customer base, to reduce inventory risks. Furthermore, selected data-driven insights are of strategic value to the Company s suppliers. To take further advantage of such insights, the Boozt Media Partnership was launched as an initiative in 2016 to execute co-campaigns with Boozt s over 500 brand partners. Through Boozt Media Partnership, Boozt can provide customised digital marketing tools and advanced consumer insights. Efficient supply chain process enabling fast delivery Boozt operates a scalable logistics infrastructure that aims to deliver a convenient shopping experience through fast delivery and easy returns. Fulfilment is executed in the automated fulfilment centre, strategically located in Ängelholm, with a projected storage area of 43,500 m2 ( 77,000 m 2 at maximum build-out), 130 picking robots and a capacity exceeding 450,000 SKU locations, which enable next-day delivery to many Nordic areas. The automated fulfilment centre is equipped with an AutoStore solution that is integrated through Boozt s proprietary warehouse management system and has been operational since the end of March Through the use of automation, the Company expects to save up to approximately one third of picking costs when fully operational, compared to the previous warehouse set-up. At maximum build-out capacity Boozt anticipates that the current warehouse location could support over six times the net revenue the Company generated in 2016, assuming constant AOV 30). Warehouse staffing and distribution are operated by external partners. Financial profile combining growth and profitability Boozt has been successful in converting traffic to the Company s webstores to customer orders, which resulted in over 862,000 active customers 31) as of March 31, 2017 and over 1.8 million orders on Boozt. com in Orders from returning customers on Boozt.com have been the primary driver of overall growth in the number of orders, increasing from 59 per cent of total orders in 2014 to 71 per cent in Cohort analysis also indicates high customer engagement, as value by vintage has increased over time, driven by a healthy survivor rate of new customers. Returning customers also enable Boozt to generate incremental sales at low effective marketing costs. AOV 32) on Boozt. com has increased by SEK 137 to SEK 777 during the same period, as Boozt has increased its focus on mid and premium fashion brands. The Company s growing customer base and net revenue have enabled significant investments in marketing, fulfilment, technology and in the organisation 33). Boozt was profitable in 2016, having achieved an adjusted EBIT margin 34) of 2.1 per cent in The EBIT margin expansion has primarily been driven by an increasing share of returning customers, attractive unit economics and scale, partly offset by deliberate marketing investments 35). As the Company continues to grow, it expects to gradually improve profitability. The profitability improvement is expected to be supported by net revenue growth, the attractive unit economics and the targeted nature of marketing spending (based on number of new customers and customer mix). Furthermore, Boozt expects to use its scalable technology platform to permit expansion. Other and overhead costs are expected to decline as a percentage of net revenue with growing scale. Executive management team with proven track-record since relaunch Boozt s strong track-record has been achieved through its highly dedicated management team that possess complementary skillsets and long experience in the fashion, media and tech sectors. The management team, led by CEO Hermann Haraldsson, has been with the Company since the 2011 relaunch. The management team has been instrumental in growing the business organically from less than ten million SEK in transactional net revenue from continuous operations during the third quarter 2011, when a large customer contract expired, to SEK million in transactional net revenue during the fourth quarter of ) Boozt has also developed a strong mid-level management team in charge of various business functions. The management team has created an entrepreneurial and results-oriented culture based on freedom, trust and responsibility. STRATEGIC OBJECTIVES Boozt has created a clear roadmap expected to lead to continued profitable growth. The strategy is intended to benefit from increasing online penetration in the market and increased efficiency within the organisation. The strategic plan encompasses the following key elements. Maintain and expand market position in the Nordic region According to Euromonitor International, the Nordic apparel market was valued at SEK 242 billion in 2016 and the online market was estimated to 13 per cent. Boozt expects the transition from offline to online shopping to continue, and aims to capitalise on this trend. Increasing online penetration entails a larger addressable market for Boozt and an opportunity to grow without being dependent on growth in the overall apparel market. 30) See section Selected financial and performance information Financial and performance definitions. 31) See section Selected financial and performance information Financial and performance definitions. 32) See section Selected financial and performance information Financial and performance definitions. 33) See section Selected financial and performance information Financial and performance definitions. 34) See section Selected financial and performance information Financial and performance definitions. 35) See section Selected financial and performance information Financial and performance definitions. 36) See section Selected financial and performance information Financial and performance definitions. 29

32 Business overview Boozt recognises that providing an outstanding online fashion experience is essential to its long-term success. Hence, the Company plans to continue to improve the customer experience through continuous optimisation of the products offered and services provided. Furthermore, Boozt intends to drive cross-selling to encourage higher order frequency through selective campaign efforts and addition of brands relevant to Boozt s customers. As indicated in a customer survey (commissioned by the Company in January 2017), Boozt s share of total fashion spend for the customers surveyed was approximately 25 per cent, indicating potential for Boozt to further increase its share of customers total consumption of fashion. Boozt believes that the network effect from a growing customer base and relevant portfolio of brand partners bolsters its position relative to new market entrants and improves its position in the overall market. Continue to enhance brand awareness across countries Boozt has steadily increased the number of active customers 37) at Boozt.com since its relaunch 2011 to over 862,000 as of March 31, However, this number represents only about three per cent of the total population in the Nordic countries (approximately 26 million people) and is tilted towards female customers. The Company plans to continue to engage in an active marketing strategy, particularly in underrepresented regions and customer groups, to build brand awareness, drive growth of the customer base and increase order frequency. Brand awareness surveys (commissioned by the Company) show that Boozt s unaided brand awareness is significantly lower than its aided brand awareness, in all Nordic countries. As such, Boozt plans to invest in both online and offline campaigns to increase brand awareness in each of the Nordic markets. Boozt intends to continue to have a strict ROI-driven marketing approach. Leverage the technology platform to drive efficiency Boozt is committed to continuing to improve and develop its integrated technology platform. This will allow the Company to continue to provide its customers and brand partners with an outstanding online fashion experience in an efficient manner. Boozt also expects to leverage its large amount of data, artificial intelligence and machine learning principles to drive increased order frequency and AOV 38). The Company further believes that it is well-equipped to accommodate additional growth without significant expansion of its operational infrastructure due to the inherent scalability of the integrated technology platform, centralised organisation and automated fulfilment centre in Ängelholm. Improve profitability and cash flow generation Boozt operates an online-based business model with attractive unit economics, mainly resulting from the Company s comparatively high AOV 39) and efficient operations. Boozt has a strategy that is expected to enable continued profitable growth and intends to sustain growth at above-market rates, by growing the base of active customers 40) and taking a higher share of such customers fashion spend. All major cost lines below gross profit 41) have contributed to the margin improvement between 2014 and 2016, and Boozt sees large potential to further improve profitability and cash flow. While other investments 42) in further growth opportunities are possible, Boozt has identified specific opportunities to improve buying terms and increased marketing contribution from suppliers (e.g. through the Boozt Media Partnership). Maintain disciplined portfolio management Boozt is focused on maximising value on the Nordic market. The Company intends to maintain its focus on online fashion, but has also identified opportunities to add adjacent or complementary lifestyle product categories to the offering. The launch of cosmetics on Boozt. com, which is expected during the second quarter 2017, is an example of this. As a result of being a trusted partner, Boozt has attracted well-known cosmetics brands such as L Oréal and Estée Lauder. In connection with the launch of cosmetics, Boozt has conducted a survey of existing and prospective customers to better understand customer preferences with respect to cosmetics and the extent to which customers rely on online channels for cosmetics purchases. The survey indicates that approximately half of existing and potential customers already buy or have bought cosmetics online. Further, the cosmetics market in the Nordics has several other attractive features such as being a sizable category that is characterised by lower online penetration than apparel and a stable consumption over time. Boozt may also selectively pursue strategic acquisition opportunities that facilitate growth and support Boozt s strategy. Potential targets could include complementary webstores, technologies or services. The Company also monitors the long-term potential of adding new geographies. VISION, MISSION AND FINANCIAL TARGETS Vision Become the leading player in Nordic online fashion. Mission Deliver an outstanding online fashion shopping experience with unrivaled customer service. Financial targets The board of directors has adopted the following financial targets that form the overall basis for the business plan. Net revenue Boozt targets annual net revenue growth in the range of per cent in the medium term. Adjusted EBIT margin 43) Boozt targets an adjusted EBIT margin 44) exceeding six per cent in the medium term. Boozt expects to increase the adjusted EBIT margin annually as the cost base is further leveraged by net revenue growth 45). Dividend policy When free cash flow exceeds available investments in profitable growth, the surplus will be distributed to shareholders. 46) The Company does not intend to pay dividends in the medium term and there can be no assurances that in any given year a dividend will be paid. Declaration of dividends, if any, and the amounts and timing thereof, will depend on a number of factors, including financial position, investment needs, acquisition opportunities, general economic and 37) See section Selected financial and performance information Financial and performance definitions. 38) See section Selected financial and performance information Financial and performance definitions. 39) See section Selected financial and performance information Financial and performance definitions. 40) See section Selected financial and performance information Financial and performance definitions. 41) See section Selected financial and performance information Financial and performance definitions. 42) See section Selected financial and performance information Financial and performance definitions. 43) See section Selected financial and performance information Financial and performance definitions. 44) See section Selected financial and performance information Financial and performance definitions. 45) See section Selected financial and performance information Financial and performance definitions. 46) See section Selected financial and performance information Financial and performance definitions. 30

33 Business overview business conditions and such other factors as the board of directors may deem relevant in such decision. Boozt s financial targets set forth above are subject to considerable uncertainty. The financial targets are based upon a number of assumptions relating to among other things, the development of Boozt s industry, business, results of operations and financial condition as well as the assumptions referred to above. Boozt s business, results of operations and financial condition, and the development of the industry and macroeconomic environment in which Boozt operates, may differ materially from, and be more negative than, those assumed by Boozt when preparing the financial targets set out above. As a result, Boozt s ability to reach these financial targets is subject to uncertainties and contingencies, some of which are beyond its control, and no assurances can be given that Boozt will be able to reach these targets or that Boozt s financial condition or results of operations will not be materially different from these financial targets. OFFERING AND OPERATIONS Boozt adds significant value to both its customers and brand partners enabling it to attain a strong position in the Nordic apparel market. The Company strives for high quality in all dimensions of the customer experience to fulfil its mission of delivering an outstanding online fashion shopping experience with unrivaled customer service. As such, Boozt carries out a large share of operating activities in-house. To efficiently address the growing Nordic online market opportunity and the target customer groups, Boozt s operations consists of three business segments: Boozt.com, Booztlet.com and Other. Boozt.com segment The Boozt.com segment consists of the operational activities related to the multi-brand webstore Boozt.com. Boozt.com primarily operates in the Nordic region (with Nordic countries representing over 95 per cent of visits) but is available in ten geographic areas (Sweden, Denmark, Norway, Finland, Germany, United Kingdom, France, the Netherlands, Poland and other European areas), in nine languages based on a shared platform and common backend. Boozt.com is an online destination for fashion tailored to deliver convenience and offers a curated selection from the Company s over 500 brand partners. Boozt.com offers fashion products split into the main categories women, men, kids and sports & activewear. In the second quarter of 2017, Boozt.com aims to introduce cosmetics as a new main category. To support the convenient online shopping experience, Boozt.com offers free and fast deliveries, free and easy returns, free customer support and a curated selection catered to modern Nordic fashion followers, with limited minimum order sizes. In 2016, approximately 75 per cent of Boozt s sales were attributable to orders placed by women. Approximately 85 per cent lived together in a relationship and a majority has children. The majority of Boozt s customers are between 25 and 54 years old. Boozt has more customers aged 55+ than below 25 years old. The typical customer is a 35 year old woman. The Company initially focused its sales and marketing activities during the weekdays when management assessed target customers would typically have limited time for traditional fashion shopping. The Company has observed a steady increase in the weekend sales share of Boozt.com s net revenue, growing from 27 per cent in ) to 36 per cent in The Company believes that this increase, combined with an increasing true frequency 48), indicates that customers show increasing confidence in online shopping in general and engagement with Boozt.com in particular. The Boozt.com segment generated net revenue of SEK 1,303 million, transactional net revenue 49) of SEK 1,370 million and an EBIT margin of 0.8 per cent in Boozt.com had over 862,000 active customers 50) as of March 31, Booztlet.com segment The Booztlet.com segment consists of the operational activities related to Booztlet.com. The Booztlet.com segment primarily operates as the Company s channel for inventory clearance, retailing items that do not sell within an allotted timeframe at Boozt.com. Customers at Booztlet.com are charged for deliveries and returns. Sales and marketing activities related to Booztlet.com are limited. The Booztlet.com segment generated net revenue of SEK 31 million, transactional net revenue of SEK 31 million and an EBIT margin of 13.4 per cent in ) Other segment The Other segment consists of the operational activities related to the mono-brand business and other activities in the Company. Mono-brand business, where Boozt manages online sales in Europe on behalf of a brand, has historically contributed to net revenue and business insights and has partly funded the Company s growth. As of the first quarter 2017, when the Boozt s last material mono-brand customer agreement with ECCO expired, the Company anticipates no further mono-brand revenue following a deliberate decision to focus on Boozt s own stores in The other segment also includes the Company s two physical retail stores in Denmark: The Booztlet outlet store in Taastrup, which opened during the fourth quarter 2016, and the Beauty by Boozt flagship store in cosmetics in Roskilde, which opened at the end of the first quarter BOOZT SERVES A DIVERSIFIED CUSTOMER BASE ACROSS GENDERS 47) Information derived from Boozt s regularly maintained records and accounting and support systems, i.e. unaudited information. 48) See section Selected financial and performance information Financial and performance definitions. 49) See section Selected financial and performance information Financial and performance definitions. 50) See section Selected financial and performance information Financial and performance definitions. 51) See section Selected financial and performance information Financial and performance definitions. 31

34 Business overview The Other segment generated net revenue of SEK 63 million, transactional net revenue of SEK 227 million and an EBIT margin of 11.0 per cent in Net revenue and EBIT margin 52) for the Other segment are expected to decrease in the coming years as a result of the changing operational activities in the segment. 53) TECHNOLOGY AND BIG DATA Boozt manages and analyses data through a combination of proprietary home-grown systems, developed in-house, and prominent third-party systems. The internally developed systems include the webstore management system Propilot, the front-end module Podium, the fulfilment management system Fastlane, the customer service Software CS Eye, the supplier portal Partner Portal and coordination system Integration Services. The third-party systems mainly include solutions related to CRM (Salesforce), traffic analytics (Google Analytics), traffic management (Cloudflare) and finance (NetSuite). Boozt believes the effective utilisation of its integrated technology platform and big data solutions is integral to its business as it enables optimisation and educated decision-making across the organisation. The technology platform is purpose-build and is designed (and regularly tested) to accommodate significantly higher volumes of traffic, customers and orders. By, for example, combining the efficiency of dedicated servers with the flexibility of cloud-hosting, the Company believes that it has built a robust platform that is secure and highly scalable. Boozt conducts continuous monitoring of cyber security trends which allows for proactive risk mitigation. For purposes of creating a personalised shopping experience, Boozt maintains sophisticated tools for gathering large amounts of data regarding the browsing and shopping behaviour patterns of its customers. The Company uses business intelligence, such as big data, artificial intelligence and machine learning principles, for segmenting the customer base, marketing activities as well as to improve operations and to optimise operating costs. The Company has, for example, established a data lake ( Date lake ) combining data for several sources such as desktop, mobile or via the app. This covers e.g. customer behaviour data, product preferences, pricing information, shopping and return patters as well as visitor channels. Big data, artificial intelligence and machine learning are used to extract relevant information, improve business efficiency and customer service across the platform. Boozt has a dedicated team providing support to the organisation, which is regularly supported by a scalable set-up of external consultants. Social data Distribution data Boozt solar system Payment data Market data Data lake Examples Customer segmentation Brand classification Return patterns Data analysis Data quantification Data model Examples Prediction of next purchase Personalized product recommendation Customer service categorisation SOURCING Brand selection Boozt offers its customers a curated and contemporary selection consisting of over 500 brands, relevant to a variety of lifestyles. The Company offers a wide assortment of the apparel category including shoes, clothing, accessories, sportswear and cosmetics (planned to be launched during the second quarter 2017). Most of Boozt s customers do not search for specific brands but rather browse to mix and match different garments and products. Resulting from strong relationships with the brands, Boozt offers a combination of international and local brands, existing and new, that are relevant for Nordic customers. Boozt categorises its brand partners into three categories; midmarket brands, premium brands and entry brands. The Company has during the recent years increased its focus on mid-market and premium brands as these carry a higher average item price and hence contribute to a higher AOV 54). Entry brands also have considerably shorter sales periods and significantly shorter order lead times than those of mid-market and premium suppliers. The Company s brands include Ralph Lauren, J. Lindeberg, Hugo Boss, Mango, Tiger, Under Armour, Ganni and By Malene Birger. Buying and merchandising Boozt separates buying and merchandising activities to optimise operations and mitigate inventory risk. The buying team is mainly responsible for assortment width, including product selection and sizes. The buying team s expertise is focused on fashion know-how and understanding of customer tastes. The merchandising team is mainly responsible for the assortment depth, including planning, in-season management and end-of season management as follows: Planning is based on a detailed analytical framework for demand projection. For example the Company s demand model is based on historical data, projected customer evolution and expected resulting demand by item. 52) See section Selected financial and performance information Financial and performance definitions. 53) See section Selected financial and performance information Financial and performance definitions. 54) See section Selected financial and performance information Financial and performance definitions. 32

35 Business overview In-season management includes Boozt s re-order process and buying of additional supplies of fast-moving items. Re-ordering allows Boozt to operate at lower inventory risk and to react to fashion trends in-season. Boozt s re-order rate has increased as the Company has increased scale, from 10 per cent of total buys for the spring and summer season 2015 to 21 per cent of total buys for the spring and summer season 2016, and from 19 per cent of total buys for the fall and winter season 2015 to 27 per cent of total buys for the fall and winter season Re-ordered products are typically well performing, hence contribute an important driver of profitability and reduce inventory risk. The Company also negotiates supplier returns or exchanges for slow-moving items. Within its end-of-season management Boozt taps supplier clearance channels, undertakes joint discount campaigns together with its suppliers and from time to time works with its brand partners through risk-sharing agreements, whereby the supplier agrees to takeback or provide rebates on certain unsold inventory. Boozt has limited dependence on individual brands and suppliers. The largest brand represented less than five per cent of Boozt s purchases and the largest supplier represented less than ten per cent of Boozt s purchases in 2016, excluding the mono-brands arrangements 55). Boozt carries more than 500 different brands and deals directly with approximately 80 per cent of these. As collections in fashion are to a large extent driven by season, Boozt typically commits to buying quantities before start of the season. Cosmetics products have a considerably shorter order cycle. To manage inventory and optimise sales, Boozt focuses on sell-through targets and disciplined inventory management. Boozt has a strict policy of initiating a gradual write-down of inventory that has been held for at least 18 months or for a longer period, with a full write-down of such inventory occurring at the 24-month mark. Boozt does not operate a discount model and aims to sell in-season merchandise at full price. It uses pricing as a tool to reach its target sellthrough for products which show low stock turnover in order to manage fashion risk. Product sales are monitored and benchmarked against the expected sell-through curve in real-time. The monitoring is made on product level in order to take immediate action on deviations, enabling the launch of campaigns and discounts for products that are lagging the curve and re-order consideration for products that are ahead of the sell-through curve. On average, approximately 90 per cent has been sold after the first season sale and approximately one per cent of inventory remained in stock 18 months after delivery in the period between 2014 and Boozt s continuous clearance strategy front-runs traditional retailer s clearance strategy since the latter is typically focused on the Christmas and summer periods. Furthermore, Boozt s clearance strategy seeks to reduce inventory risk and generate attractive gross margins 56) during the year. Items that do not sell within an allotted timeframe on Boozt.com are sold via Booztlet.com and then finally passed on to the physical Booztlet retail store. In addition, the outlets offer pricesensitive customers high value for money and help the Company to move outdated or slightly damaged merchandise. LOGISTICS Boozt s logistics processes include fulfilment activities (inbound logistics, storage, outbound logistics and return handling) and distribution activities (transportation and shipping services). Fulfilment Boozt s fulfilment centre is strategically located in Ängelholm, and enables next day delivery to many Nordic areas including the capitals. The new automated fulfilment centre has been operating since March 2017 and encompasses 43,500 m 2 (up to 77,000 m 2 at maximum build-out capacity), of which 30,000m 2 is initially accommodated. The automated fulfilment centre is currently equipped with over 130,000 bins, 130 picking robots and over 450,000 SKU locations. During the first quarter in 2017, the fulfilment centre stored approximately two million items, as an average during that period. The fulfilment centre is integrated with Fastlane, Boozt s fulfilment system, and is equipped and managed with recent automation technology (AutoStore). AutoStore allows for a speedy and cost-effective management and operation of the fulfilment centre. Boozt expects that approximately 90 per cent of the products in the warehouse will be handled by AutoStore equipment. The Company s management expects to make additional investments 57) in AutoStore equipment when the warehouse space is expanded. The automated fulfilment centre also has a photo studio with four automated photo ramps for photographing merchandise and six stations for taking detailed photos of e.g. shoes and jewelry. The automated fulfilment centre is primarily staffed by an external provider and Boozt is leasing the facilities under a multiannual lease contract. At maximum build-out capacity, Boozt anticipates that the current fulfilment centre location could support over six times the net revenue the Company generated in 2016, assuming a constant AOV. 58) Distribution Boozt uses a combination of well-reputed third-party distribution partners that vary by country to enable fast delivery to customers. Boozt has a flexible process to use different distribution partners and can easily integrate additional partners. Orders are picked up several times per day at the fulfilment centre to permit fast deliveries. In 2016, over 80 per cent of orders were delivered in 1 2 days in the Nordics. In order to efficiently serve Boozt s customers in each of its markets Boozt has negotiated attractive terms with local distribution partners. Boozt partners with e.g. PostNord, Bring, DHL and UPS. Boozt regularly reviews the contract terms for all of its markets, to maintain competitive prices, improve cost efficiency and increase customer satisfaction. Returns are a necessary part of Boozt.com s business model In order to create a convenient experience, Boozt aims to create the fitting-room experience at home. For this purpose a return form and free shipping label is included in each parcel from Boozt.com, offering customers 30-day free returns, with limited minimum order sizes. Customers on Booztlet.com pay for freight and returns. Returns are managed in the automated fulfilment centre in Ängelholm. The average return rate is currently approximately per cent 59) but the return rates vary across countries depending on consumer behavior for e-commerce, with more mature e-commerce customers typically exhibiting higher return rates. The Company s management expects return rates on cosmetics to be significantly lower than the current Company average. Approximately 95 per cent 60) of returned items pass Boozt s quality assurance process and can be made available for re-sale. The remaining items are sold via the outlets. Easy returns is a fundamental pillar in Boozt.com s customer proposition, and Boozt believes that a more restrictive policy would reduce return cost, but at the same time it would lead to a decrease in 55) As of the first quarter 2017, when the Boozt s last material mono-brand customer agreement expired, the Company anticipates no further mono-brand revenue. 56) See section Selected financial and performance information Financial and performance definitions. 57) See section Selected financial and performance information Financial and performance definitions. 58) See section Selected financial and performance information Financial and performance definitions. 59) Company information; average based on Company data for ) Company information; average based on Company data for

36 Business overview CLV 61). However, Boozt aims to reduce avoidable returns to a minimum, for example through better product presentation and sizing information and recommendations. In addition, Boozt also aims to make the return process more efficient to further reduce cost for returns, by inter alia the use of automation. MARKETING Boozt believes that the most effective form of marketing is to continually enhance the customer experience, since satisfied customers will not only continue buying for themselves, but are also more likely to recommend Boozt to friends and family. Boozt continuously measures customer satisfaction through NPS 62) and Trustpilot score. The Company believes that the Boozt brand is one of the most important success factors, as evidenced by continuing investments to strengthen the brand through targeted marketing. Repeat orders enable Boozt to generate incremental sales with lower effective marketing costs, which results in lower overall marketing costs as a percentage of net revenues. In order to better understand customer spending habits, preferences and awareness of the Boozt brand, Boozt conducts surveys of prospective and existing customers. These surveys are intended to enable Boozt to enhance the customer experience, effectively respond to shifts in customer preferences and to assess the effectiveness of Boozt s marketing efforts. According to the surveys, Boozt s unaided brand awareness has increased in all Nordic countries between January 2015 and January The highest unaided brand awareness is observed in Denmark and Sweden, which Boozt believes is a result of a longer period of marketing activities in these markets. Boozt s marketing process is data-driven, co-ordinated and analytical with a strict ROI-focus in the allocation of marketing resources. Media is bought directly and hence no fees are paid to agencies and other intermediaries. Marketing is split into online and offline marketing as Boozt is device agnostic. Marketing spend is currently allocated to online and offline marketing in relatively similar proportions. Online marketing Web traffic can be split into two groups depending on how the customer is driven into the website organic traffic and paid traffic. Organic traffic mainly includes direct type-ins such as Boozt.com (including the ad-word Boozt ), free traffic such as or referrals to the website in relation to CRM. Paid traffic includes Google, Criteo and Facebook. The organic share of total traffic has remained stable at approximately 50 per cent in 2014 to 2016, despite rapid growth in total traffic driven by a high intake of new customers. The Company s online marketing aim s to maximise traffic to its website at the lowest possible cost. Boozt conducts a daily cost/benefit analysis of the online marketing tools and channels. SEO is organic traffic generated from various sources and is an important part of the online marketing strategy since it provides a constant inflow of organic traffic, increases brand awareness and constitutes a long term online marketing strategy. Boozt has built up a portfolio of more than one million keywords for which Boozt actively bids and through which Boozt seeks to generate traffic to its website. Offline marketing Boozt s offline marketing consists mainly of TV, radio and outdoor advertising campaigns as well as vouchers and direct mail. The focus of offline marketing is on increasing awareness, building the brand, improving customer retention and increasing the conversion rate 63). The majority of offline marketing, with the exception of TV, is produced and procured internally. ROI-approach to marketing The Company s marketing spending, irrespective of channel, follows a data-driven strategy with a strict ROI-focus. Boozt employs customer acquisition costlogic to determine an adequate level of marketing investment to acquire new customers and constantly monitors CLV to optimise CAC 64). Boozt applies customer segmentation and the customer base is updated overnight. Boozt collects and structures data on customer level, up to 350 attributes are collected including favourite brand, logins, NPS and return rate. The segmentation is based on annual spend and time since last order. Each customer is marked with a classification which enables the marketing team to optimise allocation of efforts in a structured process. This customer data can also be shared with the brand partners to provide customer insight. Boozt has split its customer base into three main segments: Top-tiers: have an annual spend above SEK 7,000 and represent approximately 10 per cent of the customer base. Boozt aims to keep the top tiers. Volume customers: have an annual spend between SEK 1,500 and SEK 7,000 and represent approximately 50 per cent of the customer base. Boozt aims to keep the volume customers and aims to increase their annual spend. Question marks: have an annual spend up to SEK 1,500 and represent approximately 40 per cent of the customer base. Boozt aims to get the questions marks to place further orders and increase AOV 65), or alternately direct them to Booztlet.com where they pay for shipping and returns. 61) See section Selected financial and performance information Financial and performance definitions. 62) NPS is a customer loyalty metric, measuring the loyalty that exists between a provider and a consumer based on the evaluation of customer responses to the question: How likely is it that you would recommend our company to a friend or colleague?. NPS can be as low as -100 (everybody is a detractor) or as high as +100 (everybody is a promoter). An NPS that is positive is considered good, whereas an NPS of over 50 is considered excellent. 63) See section Selected financial and performance information Financial and performance definitions. 64) See section Selected financial and performance information Financial and performance definitions. 65) See section Selected financial and performance information Financial and performance definitions. 34

37 Business overview CUSTOMER SEGMENTATION IS THE FOUNDATION OF MARKETING STRATEGY Top-tiers Volume Customer value Win back focus Question marks Booztlet Reactivation Entry Active Sleeper Was active Dead since entry # of orders 1-2 orders >3 orders >3 orders >3 orders 1-2 orders Time since last order <365 days <90 days days >365 days >365 days The period until CLV exceeds CAC for acquiring a new customer is around 20 months on average. Boozt defines CLV as contribution margin after marketing spend, which indicates an attractive financial profile for returning customers that shop with the Company for more than 20 months 66). The Company regards the return on its marketing as favourable and has therefore committed a high degree of reinvestment of net revenue in marketing. Marketing cost as a proportion of net revenue amounted to 14.7 per cent in 2016, decreasing from 25.1 per cent in In 2016, the Boozt Media Partnership was launched to enable brands to connect with their target customer groups. To accomplish this, Boozt provides its brand partners with customised digital marketing tools. The brand partners can purchase different engagement packages for branding purposes, to attract new audiences and incentivise sales via Boozt s demand side platform, including newsletter banners, category positions and on-site banners in a range of formats. The Boozt Media Partnership strengthens the relationship with brands and offers relevant content targeted to customers individual preferences. Webstores When customers enter Boozt s webstore via a mobile device, such as mobile phones and tablets, app or desktop Boozt strives to provide tailored, engaging content and guide them to the products that are most relevant for each customer. Boozt aims to provide the customer with the right set of tools for different approaches to shop for fashion across devices. Boozt offers filters and search algorithms to guide customers to the specific product. In December 2016, Boozt experienced on average a total of around 20,000 search queries per day on Boozt.com. In order to build a personalised shopping experience for its customers Boozt leverages its big data capabilities. Boozt collects large amounts of data on a daily basis which is analysed to improve the relevance and personalisation for the customers by for example generating recommendations for similar products. Boozt has a philosophy of letting the customer decide on their preferred channel mix. Boozt seeks to synchronise functionality and content regardless of whether customers use a desktop, tablet, mobile site or the app to access Boozt. As a result, Boozt has observed an increasing share of customers that browse across devices. In 2016, slightly more than 66 per cent of the traffic to Boozt.com came from mobile devices such as mobile phones and tablets, compared to approximately 35 per cent in Boozt s app was launched in December 2014 and had been downloaded more than 250,000 times by December 31, CUSTOMER SERVICE Boozt regards customer service as an important part to its business as it provides the most direct feedback from customers and provides a sense of overall customer sentiment and satisfaction. The Company offers customers free customer support and regularly invests in training and coaching of its customer care representatives. The customer service team is responsible for complaints, questions, product information, invoice payments, stock inquiries, shipping and other requests. The team interacts with customers through s, telephone, social media and review platforms and deals in nine languages, handling over 25,000 calls and over 30,000 s per month. Customer service Key performance indicators ( KPIs ) are closely monitored in real-time. In 2016, over 90 per cent of incoming calls were answered within 60 seconds and 85 per cent of s were answered within 24 hours. The customer service team uses advanced tools in its support, primarily the computer program CS Eye, which provides quick access to detailed customer information (e.g. latest orders, customer segment, and supply information) in a user-friendly interface. The customer service employees have a forward-thinking approach in order to handle unsatisfied customers. Boozt s mission is to proactively contact customers during the same workday when they have given an NPS below six or a Trustpilot score of three or less stars. In the view of Boozt, the customer service employes have a relatively high grade of education (many have a master examina) as customer service is used as an entry position in the organization. During the last years many customer service employees have advanced within customer service as well as taken other career paths within Boozt. 66) See section Selected financial and performance information Financial and performance definitions. 35

38 Business overview PAYMENTS As preferences for payment methods differ across markets Boozt s webstore offers a variety of more than 10 payment methods. These include invoice, credit card, PayPal, direct-payment (through internet bank), part-payments and SAS Eurobonus. The broad range of payment options helps Boozt optimise its customer satisfaction and check-out conversion rate 67), i.e. the number of customers who complete the checkout process in order to pay for a product in a webstore. Boozt accepts, for example, credit cards from Visa, Visa Electron, Mastercard, Dankort, Eurocard, Maestro, Diners Club and American Express. The majority of payments are done by credit card and invoice. During 2016, approximately 50 per cent of the total number of payments were made by credit card. For the same period less than five per cent of payments we related to part-payment options. Partpayments in Sweden, Denmark, Norway, Finland and Germany are handled by the Swedish payment service provider Collector Bank. ORGANISATION AND EMPLOYEES The Company s operations are to a large extent centralised and the majority of Boozt s employees are based in the head office in Hyllie, a city district in Sweden located between Malmö and Copenhagen. Main business functions at the head office include buying, merchandising, marketing, technology and finance. Staffing of the automated warehouse in Ängelholm is primarily provided by an external supplier. Boozt s executive management team consists of the CEO, the CFO, the CTO, the COO, the CMO and the Head of Investor Relations and Corporate Communication. Further, Boozt has a group of business managers with daily responsibilities over business functions. Over 25 nationalities are represented among Boozt s employees and several departments communicate in English to a large extent. As of March 31, 2017, Boozt had 204 employees including part-time staff. Since then, there has been no material change in the number of employees until the date of this Offering Circular. The Company believes that it will be able to continue to increase net revenue without expanding its work force proportionally. Boozt considers its relations with its employees to be satisfactory. ORGANISATION STRUCTURE Head of Investor Relations & Corporate Communications CEO Hermann Haraldsson Business support CTO COO CMO CFO CEO Technology Logistics, payments and customer service Marketing Finance Sourcing Executive management team BREAKDOWN OF EMPLOYEES IN 2014, 2015 AND 2016 Total number of employees (period end) Executive management Technology Logistics, payments and customer service Marketing Finance Sourcing Total ) See section Selected financial and performance information Financial and performance definitions. 36

39 Selected financial and performance information Selected financial and performance information The financial information should be read in conjunction with the sections Operating and financial review, Capitalisation, indebtedness and other financial information and the financial statements contained in the section Historical financial information. Figures recognised in this section have in some cases been rounded and therefore the tables do not necessarily always add up exactly. PRESENTATION OF SELECTED FINANCIAL AND PERFORMANCE INFORMATION Unless otherwise stated, the selected financial and performance information presented below has been derived from (i) Boozt s audited consolidated financial statements as of and for the financial years ended December 31, 2016, 2015 and 2014, which have been prepared in accordance with International Financial Reporting Standards, as adopted by the EU ( IFRS ), and audited by Boozt s independent auditors, as set forth in their report included therewith and (ii), as regards information for the first quarter of 2016 and 2017, the reviewed interim financial statements for the period January 1, 2017 to March 31, 2017, prepared in accordance with IAS 34. Where financial data in the following tables is labelled audited, this means that it has been taken from the audited financial statements mentioned above. The label unaudited is used in the following tables to indicate financial data that has not been taken from the audited financial statements mentioned above but rather was taken from either Boozt s unaudited condensed interim consolidated financial statements or Boozt s internal reporting system, or has been calculated based on such information. All of the financial data presented in the text and tables below are shown in millions of SEK, except as otherwise stated. Certain financial data (including percentages) in the following tables have been rounded according to established commercial standards, whereby aggregate amounts (sum totals, subtotals, differences or amounts put in relation) are calculated based on the underlying unrounded amounts. As a result, the aggregate amounts in the following tables may not correspond in all cases to the corresponding rounded amounts contained in the following tables. Furthermore, in those tables, these rounded figures may not add up exactly to the totals contained in those tables. Financial information presented in parentheses denotes the negative of such number presented. In respect of financial data set out in this Offering Circular, a dash ( ) signifies that the relevant figure does not exist, while a 0.0 signifies that the relevant figure is available but has been rounded off. The following selected financial and performance information should be read together with the section Operating and Financial Review, the consolidated financial statements including the related notes contained in this Offering Circular and additional financial information contained elsewhere in this Offering Circular. Boozt s historical results are not necessarily indicative of the results that should be expected in the future, and Boozt s interim results are not necessarily indicative of the results that should be expected for the full year or any other period. This Offering Circular presents certain financial measures that are not measures defined under IFRS, including certain measures such as adjusted EBIT and adjusted EBITDA. See section Financial and performance definitions for a description of these items. The Company believes these non-gaap financial measures provide a better understanding of the trends in financial performance, excluding certain nonrecurring and other items. A non-ifrs financial measure is defined as one that measures historical or future financial performance, financial position or cash flows but which excludes or includes amounts that would not be so adjusted in the most comparable IFRS measure. These non-ifrs financial measures are unaudited and should not be considered in isolation or as an alternative to performance measures derived in accordance with IFRS. In addition, such measures, as defined by the Company, may not be comparable to other similarly titled measures used by other companies, because the abovementioned non-ifrs measures are not uniformly defined and other companies may calculate them in a different manner than Boozt does, limiting their usefulness as comparative measures. The selected key performances metrics set forth below in section Selected key performance indicators have been derived from Boozt s regularly maintained records and accounting and support systems. See section Financial and performance definitions for definitions and concepts of certain terms set out in the tables below. 37

40 Selected financial and performance information SELECTED CONSOLIDATED INCOME STATEMENT DATA The following table shows selected financial information from Boozt s consolidated statement of comprehensive income for the three-month periods ended March 31, 2017 and March 31, 2016, and the fiscal years ended December 31, 2016, December 31, 2015 and December 31, 2014: For the three-month period ended March 31 For the fiscal year ended December 31 (SEK million) (unaudited) Net revenue , Other operating income Total operating income , (audited) Cost of goods for resale External fulfilment and distribution costs External marketing costs Other external costs Personnel costs Depreciations Other operating expenses Total operating costs , OPERATING PROFIT/LOSS (EBIT) Financial income Financial expenses Net interest income/expense EARNINGS BEFORE TAX Income tax EARNINGS FOR THE PERIOD Result per ordinary share, SEK Result per ordinary share after dilution, SEK Number of ordinary shares 3,891,295 3,467,254 3,684,537 3,180,986 2,698,980 Number of ordinary shares after full dilution 3,891,295 3,467,254 3,684,537 3,180,986 2,698,980 SELECTED CONSOLIDATED BALANCE SHEET DATA The following table shows selected financial information from Boozt s consolidated balance sheet as of March 31, 2017 and March 31, 2016, and as of December 31, 2016, December 31, 2015 and December 31, 2014: As of March 31 As of December 31 (SEK million) (unaudited) (audited) ASSETS NON-CURRENT ASSETS Intangible Assets Web platform Tangible Assets Equipment Other Non-Current Assets Deposits Deferred tax asset Total non-current assets CURRENT ASSETS Goods inventory Accounts receivable Other receivables Current tax assets Pre-paid expenses and accrued income Derivatives 3.2 Cash and cash equivalents Total current assets TOTAL ASSETS

41 Selected financial and performance information As of March 31 As of December 31 (SEK million) (unaudited) (audited) EQUITY AND LIABILITIES EQUITY Share capital Other capital contributions Retained earnings including profit for the period Equity attributable to parent company shareholders Total equity NON-CURRENT LIABILITIES Convertible loan 0.3 Interest bearing liabilities Bank overdraft 8.2 Other provisions Total non-current liabilities CURRENT LIABILITIES Interest bearing liabilities Accounts payable Current tax liabilities Other liabilities Accrued expenses and prepaid income Total current liabilities Total liabilities TOTAL EQUITY AND LIABILITIES SELECTED CONSOLIDATED CASH FLOW STATEMENT DATA The following table shows selected financial information from Boozt s consolidated statement of cash flows for the three-month periods ended March 31, 2017 and March 31, 2016, and the fiscal years ended December 31, 2016, December 31, 2015 and December 31, 2014: For the three-month period ended March 31 For the fiscal year ended December 31 (SEK million) OPERATING ACTIVITIES (unaudited) Operating profit Adjustments for items not included in cash flow (audited) Non-cash expenses from share based payments 1) Depreciations Other items not included in cash flow Interest received 0.0 Interest paid Paid income tax CASH FLOW BEFORE CHANGES IN WORKING CAPITAL 2) CASH FLOW FROM CHANGES IN WORKING CAPITAL 3) Changes in goods inventory Changes in current assets Changes in current liabilities CASH FLOW FROM OPERATING ACTIVITIES INVESTMENTS Acquisition of subsidiaries, net liquidity effect 0.7 Acquisition of fixed assets Acquisition of financial assets Acquisition of intangible assets CASH FLOW FROM INVESTMENTS FINANCING Share capital increases New loans Loan repayments Changes in overdraft facility CASH FLOW FROM FINANCING Cash flow for the period Currency exchange gains / losses in cash and cash equivalents Cash and cash equivalents at beginning of period CASH AND CASH EQUIVALENTS AT END OF PERIOD ) See section Financial and performance definitions. 2) See section Financial and performance definitions. 3) See section Financial and performance definitions. 39

42 Selected financial and performance information SELECTED SEGMENTAL AND GEOGRAPHIC INFORMATION Boozt s internal structure is based on a sales-channel perspective. The main sales channel, Boozt.com, consists of a webstore through which Boozt sells fashion online. The sales channel is divided into three segments for IFRS reporting purposes: Boozt.com, Booztlet.com and Other, which consists primarily of consignment sales. The following table shows the breakdown of Boozt s net revenue and operating profit/loss (EBIT) by segment for the three-month periods ended March 31, 2017 and March 31, 2016, and the fiscal years ended December 31, 2016, December 31, 2015 and December 31, 2014: For the three-month period ended March 31 For the fiscal year ended December 31 (SEK million) ) NET REVENUE (unaudited) Boozt.com , Booztlet.com Other TOTAL NET REVENUE , (audited) OPERATING PROFIT/LOSS (EBIT) Boozt.com Booztlet.com Other TOTAL OPERATING PROFIT/LOSS (EBIT) PROFIT LOSS BEFORE TAX Boozt.com Booztlet.com Other TOTAL PROFIT LOSS BEFORE TAX ) Prior to 2015, Boozt had only two segments, Boozt.com and Other. The Booztlet.com segment was launched in Q3 of Booztlet.com s net revenue and operating profit/loss (EBIT) for 2014 was nil. For more information, see section Operating and financial review Key factors affecting results of operation and the financial condition. The following table shows the breakdown of Boozt s net revenue by region for the three-month periods ended March 31, 2017 and March 31, 2016, and the fiscal years ended December 31, 2016, December 31, 2015 and December 31, 2014: For the three-month period ended March 31 For the fiscal year ended December 31 (SEK million) NET REVENUE (unaudited) Sweden Rest of Nordics Rest of Europe TOTAL NET REVENUE ,

43 Selected financial and performance information SELECTED KEY PERFORMANCE INDICATORS Some of the key performance measures presented below are non-ifrs financial measures, i.e. financial and non-financial measures that are not measures defined under IFRS. For a description of the calculation of the non-ifrs financial measures and the reason for their use, see Presentation of selected financial and performance information and Financial and performance definitions. The following table shows selected key performance metrics for the three-month periods ended March 31, 2017 and March 31, 2016, and the fiscal years ended December 31, 2016, December 31, 2015 and December 31, 2014, which have been derived from Boozt s financial and operating systems, including the Company s audited consolidated financial statements and notes as of and for the periods presented, which are included in this Offering Circular. For the three-month period ended March 31 For the fiscal year ended December 31 (SEK million unless otherwise indicated) GROUP (unaudited) (audited, unless otherwise stated) Transactional net revenue 2) 3) , , Net revenue 1) , Net revenue growth, % 2) 62.1% 85.3% 70.9% 56.8% n.m Gross margin, % 2) 44.4% 43.6% 45.1% 48.7% 52.3% Fulfilment and distribution cost ratio, % 2) 20.5% 17.9% 16.1% 17.0% 19.0% Marketing cost ratio, % 2) 15.1% 17.0% 14.7% 15.1% 25.1% Admin & other cost ratio, % 2) 15.0% 15.4% 12.8% 17.5% 21.6% Operating profit/loss (EBIT) 1) EBIT margin, % 2) 3) 6.2% 6.6% 1.5% 0.9% 13.4% Adjusted EBIT 2) 3) Adjusted EBIT margin, % 2) 3) 0.6% 5.8% 2.1% 0.1% 13.1% Adjusted EBITDA 2) 3) Adjusted EBITDA margin, % 2) 3) 0.1% 5.0% 3.0% 0.6% 11.1% Cash flow from operations 1) Net working capital 2) 3) Capital expenditure 2) Net debt /- net cash 2) 3) Equity / asset ratio 2) 3) 44.8% 41.9% 46.0% 48.1% 22.2% SEGMENTS Boozt.com Transactional net revenue 2) 3) , Net revenue 1) , Operating profit/loss (EBIT) 1) EBIT margin, % 2) 3) 7.3% 9.2% 0.8% 3.0% 17.8% Sessions, 000 2) 19,737 14,342 63,054 43,569 33,378 Number of orders, 000 2) ,764 1, Conversion rate, % 2) 2.6% 2.5% 2.8% 2.5% 2.3% True frequency 2) Average order value, SEK 2) Active customers, 000 2) Number of orders per active customer 2) Booztlet.com Transactional net revenue 2) 3) Net revenue 1) Operating profit/loss (EBIT) 1) EBIT margin, % 2) 3) 6.1% 11.3% 13.4% 13.8% Other Transactional net revenue 2) 3) Net revenue 1) Operating profit/loss (EBIT) 1) EBIT margin, % 2) 3) 17.0% 21.0% 11.0% 22.7% 18.2% 1) IFRS-based measure presented in the Company s audited consolidated financial statements as of and for the years ended December 31, 2016, 2015 and 2014, and the Company s unaudited interim financial statements as of and for the three months ended March 31, 2017 and 2016, which are included in this Offering Circular. See section Financial and performance definitions. 2) Unaudited measure not defined under IFRS. For further information on these measures, including definitions and rationale for their use, see section Financial and performance definitions. 3) For derivation, see section Reconciliation tables. 41

44 Selected financial and performance information RECONCILIATION TABLES The following section presents the reconciliation of transactional net revenue for the Group and by segment, net revenue growth for the Group, 2 years CAGR of net revenue for Boozt.com, gross margin for the Group, operating profit/loss (EBIT) for the Group, EBIT margin for the Group, EBITDA for the Group, EBITDA margin for the Group, adjusted EBIT for the Group, adjusted EBIT margin for the Group, adjusted EBITDA for the Group, adjusted EBITDA margin for the Group, net debt, equity to asset ratio, and net working capital and admin and other cost ratio for the Group, fulfilment and distribution cost ratio for the Group and marketing cost ratio for the Group. For further information on these measures, including definitions and rationale for their use, see section Financial and performance definitions. Transactional net revenue for the Group and by segment For the three-month period ended March 31 For the fiscal year ended December 31 (SEK million) GROUP (unaudited) (audited, unless otherwise stated) Net revenue , Consignment sales Less other revenue Transactional net revenue 1) , , SEGMENTS Boozt.com Net revenue , Consignment sales Less other revenue Transactional net revenue 1) , Booztlet.com Net revenue Consignment sales Less other revenue Transactional net revenue 1) Other Net revenue Consignment sales Less other revenue Transactional net revenue 1) ) Unaudited measure not defined under IFRS. For further information on these measures, including definitions and rationale for their use, see section Financial and performance definitions. Net revenue for the Group For the three-month period ended March 31 For the fiscal year ended December 31 (SEK million) ) (unaudited) (audited, unless otherwise stated) Net revenue , Net revenue growth 2) 62.1% 85.3% n.a. 70.9% 56.8% n.a. 1) As derived from its internal reporting system. 2) Unaudited measure not defined under IFRS. For further information on these measures, including definitions and rationale for their use, see section Financial and performance definitions. 2 years CAGR of net revenue for Boozt.com For the three-month period ended March 31 For the fiscal year ended December 31 (SEK million) (unaudited) (audited, unless otherwise stated) Net revenue , years CAGR (%) 1) n.a. n.a. 68.9% n.a. n.a. 1) Unaudited measure not defined under IFRS. For further information on these measures, including definitions and rationale for their use, see section Financial and performance definitions. Gross margin for the Group For the three-month period ended March 31 For the fiscal year ended December 31 (SEK million) (unaudited) (audited, unless otherwise stated) Net income , Cost of goods for resale Gross profit/loss Gross margin, % 1) 44.4% 43.6% 45.1% 48.7% 52.3% 1) Unaudited measure not defined under IFRS. For further information on these measures, including definitions and rationale for their use, see section Financial and performance definitions. 42

45 Selected financial and performance information Fulfilment and distribution costs ratio for the Group For the three-month period ended March 31 For the fiscal year ended December 31 (SEK million) (unaudited) (audited, unless otherwise stated) Net revenue , External fulfilment and distribution costs Fulfilment and distribution cost ratio, % 20.5% 17.9% 16.1% 17.0% 19.0% Marketing cost ratio for the Group For the three-month period ended March 31 For the fiscal year ended December 31 (SEK million) (unaudited) (audited, unless otherwise stated) Net revenue , External marketing costs Marketing cost ratio, % 15.1% 17.0% 14.7% 15.1% 25.1% Admin and other cost ratio for the Group For the three-month period ended March 31 For the fiscal year ended December 31 (SEK million) (unaudited) (audited, unless otherwise stated) Net revenue , Total operating costs , Other operating income Reduced with cost of goods for resale Reduced with external fulfilment and distribution costs Reduced with external marketing costs Admin and other cost Admin and other cost ratio, % 15.0% 15.4% 12.8% 17.5% 21.6% Operating profit/loss (EBIT) and EBITDA for the Group For the three-month period ended March 31 For the fiscal year ended December 31 (SEK million) (unaudited) (audited, unless otherwise stated) Net income Income tax Net interest income/expense Operating profit/loss (EBIT) EBIT margin, % 1) 6.2% 6.6% 1.5% 0.9% 13.4% Depreciations EBITDA 1) EBITDA margin, % 1) 5.5% 5.8% 2.4% 0.3% 11.4% 1) Unaudited measure not defined under IFRS. For further information on these measures, including definitions and rationale for their use, see section Financial and performance definitions. Adjusted EBIT for the Group For the three-month period ended March 31 For the fiscal year ended December 31 (SEK million) (unaudited) (audited, unless otherwise stated) Operating profit/loss (EBIT) Share-based payments 2) related to employees IPO-related costs Other items affecting comparability 1) 19.0 Adjusted EBIT 2) Adjusted EBIT margin, % 2) 0.6% 5.8% 2.1% 0.1% 13.1% 1) Costs related to warehouse move. 2) Unaudited measure not defined under IFRS. For further information on these measures, including definitions and rationale for their use, see section Financial and performance definitions. 43

46 Selected financial and performance information Adjusted EBITDA for the Group For the three-month period ended March 31 For the fiscal year ended December 31 (SEK million) (unaudited) (audited, unless otherwise stated) EBITDA 1) Share-based payments 1) related to employees IPO-related costs Other items affecting comparability 2) 19.0 Adjusted EBITDA 1) Adjusted EBITDA margin, % 1) 0.1% 5.0% 3.0% 0.6% 11.1% 1) Unaudited measure not defined under IFRS. For further information on these measures, including definitions and rationale for their use, see section Financial and performance definitions. 2) Costs related to warehouse move. Net debt, equity to asset ratio and net working capital For the three-month period ended March 31 For the fiscal year ended December 31 (SEK million) (unaudited) (audited, unless otherwise stated) Cash and cash equivalents Convertible loan 0.3 Interest bearing liabilities Bank overdraft 8.2 Net debt / - net cash 1) Total equity Total assets Equity / asset ratio 1) 44.8% 41.9% 46.0% 48.1% 22.2% Inventory Accounts receivables Other receivables Current tax assets Pre-paid expenses and accrued income Accounts payable Current tax liabilities Other liabilities Accrued expenses and pre-paid income Net working capital 1) ) Unaudited measure not defined under IFRS. For further information on these measures, including definitions and rationale for their use, see section Financial and performance definitions. 44

47 Selected financial and performance information FINANCIAL AND PERFORMANCE DEFINITIONS NON-IFRS FINANCIAL MEASURE DEFINITION REASON FOR USE OF THE MEASURE Active customers: Adjusted EBIT: Adjusted EBIT margin, %: Adjusted EBITDA: Adjusted EBITDA margin, %: Admin and other cost ratio: Average orders per active customer: Average order value (AOV): CAGR: Capital expenditure: Conversion rate: Customer acquisition cost (CAC): Customer lifetime value (CLV): Number of customers that placed at least one order in the preceding twelve-month period. For further details see section Operating and financial review Definitions of and trends in Boozt s key performance metrics. Profit/loss before financial items, tax, share-based payments related to employees, warehouse moving costs and IPO-related costs. Adjusted EBIT divided by net revenue, expressed as a percentage. Profit/loss before financial items, tax, depreciation, impairments, share-based payments related to employees, warehouse moving costs and IPO-related costs. Adjusted EBITDA divided by net revenue, expressed as a percentage. The total operating income plus other revenue, minus cost of goods for resale, external fulfilment and distribution costs, external marketing costs divided with net revenue, expressed in per cent. For more information, see section Operating and financial review Definitions of and trends in Boozt s key performance Metrics. Average number of orders each active customer has placed during the past twelve months. For further details see section Operating and financial review Definitions of and trends in Boozt s Key Performance Metrics. Transactional net revenue divided by number of orders in the measurement period. AOV is minus discounts, excluding VAT and after returns. For further details see section Operating and financial review Definitions of and trends in Boozt s Key Performance Metrics. Compound Annual Growth Rate is a measure used to calculate the average annual growth rate over a specified period of time. Investments in fixed and intangible assets, excluding financial assets. Total number of orders divided by sessions, expressed as a percentage. CAC is defined as average cost for acquiring a new customer defined as total marketing costs during a specific period divided by the number of new customers acquired during the same period. CLV is defined as gross profit less fulfilment, distribution and marketing costs attributable to a particular customer cohort (i.e. the customers of which were all acquired during a specific period of time) since the acquisition of such customers. This number measures the Company s ability to attract and retain customers. Adjusted EBIT is adjusted for items impacting comparability and is thus considered a useful measure of the Company s underlying profit/loss generated by operating activities. Adjusted EBIT margin is adjusted for items impacting comparability and is thus considered a useful measure for showing the Company s profit/loss generated by the operating activities. Adjusted EBITDA is adjusted for items impacting comparability and is thus considered a useful measure for showing the Company s profit/loss generated by the operating activities before depreciation and amortisation. Adjusted EBITDA margin is adjusted for items impacting comparability and is thus considered a useful measure for showing the Company s underlying profit/loss generated by the operating activities before depreciation and amortisation. This ratio provides the Company with an indication of external costs not attributable to fulfilment, distribution or marketing, on each SEK of net revenue generated, and thus provides an indicator of the efficiency of the Company s operations. This measure allows the Company to assess the level of purchasing activity of the active customer base. AOV is measured as an indicator of monetisation. This ratio is considered a key metric for the desirability of the Company s products and sites to customers. The Company uses the measure to assess development over a certain period. This ratio provides the Company a view of investments in the operating activities. This ratio allows the Company to measure its ability to convert sessions to purchases. CAC allows the Company to measure the effectiveness of its marketing. CAC is calculated at a high level of detail for each marketing activity. CLV allows the Company to measure the value of each customer, often expressed in terms of cohort value. CLV is calculated at a high level of detail for each marketing activity. Boozt uses the measure to assess how profitable new customers are expected to be by comparing the customer lifetime value of a particular customer cohort with the customer acquisition cost attributable to such cohort. EBIT margin, %: EBIT divided by net revenue, expressed as a percentage. EBIT margin provides an understanding of the profit/loss that has been generated from the operating activities. EBITDA EBITDA margin, %: Equity / asset ratio: Free cash flow: Earnings before interest, tax, depreciation and amortisation. EBITDA divided by net revenue, expressed as a percentage. Total equity divided by total assets, expressed as a percentage. Total of cash flow from operating activities and cash flow from investing activities. EBITDA provides an overall picture of profit/loss generated by the operating activities before depreciation and amortisation. EBITDA margin is used for the analysis of value creation. This ratio shows which proportion of the balance sheet total that is financed by equity and is used to monitor the Company s financial position. Free cash flow is used by management to evaluate cash flow generated by operating activities after investments. 45

48 Selected financial and performance information NON-IFRS FINANCIAL MEASURE DEFINITION REASON FOR USE OF THE MEASURE Fulfilment and distribution cost ratio: Gross margin, %: Marketing cost ratio: Fulfilment and distribution cost, divided by net revenue, expressed as a percentage. For further details see section Operating and financial review Definitions of and trends in Boozt s Key Performance Metrics. Net profit (net revenue less cost of goods for resale) divided by net revenue, expressed as a percentage. Marketing cost, divided by net revenue, expressed as a percentage. For further details see section Operating and financial review Definitions of and trends in Boozt s Key Performance Metrics. This ratio provides the Company with an indication of the costs attributable to fulfilment and distribution on each SEK of net revenue generated and thus provides an indicator of the efficiency of the Company s operations. Gross profit provides an indication of contribution margins by operating activities. This ratio allows the Company to track the marketing efficiency of operations and thus provides an indicator of the efficiency of the Company s operations. Net debt / net cash: Interest bearing liabilities less cash and cash equivalents. Net debt / net cash is a measure showing the Company s total net indebtedness. Net revenue growth, %: Net working capital: Number of orders: Sessions: Share based payments: Transactional net revenue: True frequency: Annual net revenue growth, calculated in comparison with previous year, expressed as a percentage. Current assets excluding cash and cash equivalents less with non-interest bearing current liabilities. Number of orders that is placed during the measurement period, less cancellations and returns. The number of a series of page requests from the same device and source in a defined time period (irrespective of device). For further details see section Operating and financial review Definitions of and trends in Boozt s key performance metrics. Costs incurred by the Company, which are settled via the issurance of shares. Gross sales (incl. shipping and invoice income) less discounts, excluding VAT and after returns. Transactional net revenue includes sales of commission from the Company s mono-brand and other partners, to end consumers. For further details see section Operating and financial review Definitions of and trends in Boozt s Key Performance Metrics. True frequency is measured during a specific period and is defined as the average number of orders for an existing customer cohort, over a specified 12-month period. A customer cohort consists of customers that placed an order with Boozt in the preceding 12-month period. For example, if a cohort of 1,000 customers placed orders with Boozt during 2015 and the same cohort placed 5,500 orders in total on Boozt during 2016, true frequency would be 5.5 orders per customer in For further details see section Operating and financial review Definitions of and trends in Boozt s Key Performance Metrics. This measure allows the Company to compare its growth rate between different periods and with the overall market and competitors. This measure shows the amount of net working capital locked up in operations and can be analysed relative to adjusted net revenue to assess how effectively net working capital is used. Number of orders is a measure that is used to measure customer engagement. This number allows the Company to gauge its reach and customer activity. This cost is a non-cash item and share based payments to employees have been adjusted for in adjusted EBIT and adjusted EBITDA. Management believes that excluding share-based compensation expense better reflects the operating performance of the business because expenses are calculated using graded vesting, which means that the expense, which is recorded gradually, becomes smaller over the course of the vesting period, leading to a so-called frontloading of share-based compensation expense. This measure the total consumer value of the orders processed. Transactional net revenue can also be calculated as average order value multiplied with number of orders. This measure allows the Company to assess the level of engagement of returning customers once they have made an order and is hence not impacted by orders from new customers acquired during a specific period. 46

49 Operating and financial review Operating and financial review The following discussion and analysis is based on, and should be read in conjunction with, the audited consolidated financial statements and notes of Boozt and its subsidiaries as of December 31, 2016, 2015 and 2014, prepared in accordance with IFRS (the Annual Financial Statements ) and Boozt s reviewed interim financial statements for the period January 1, 2017 to March 31, 2017, prepared in accordance with IAS 34. References to the years 2016, 2015 and 2014 refer to Boozt s results as of and for the fiscal years ended December 31, 2016, 2015 and 2014, respectively. References to Q and Q refer to Boozt s results as of and for the three-month periods ended March 31, 2017 and March 31, 2016, respectively. Certain information in the discussion and analysis set forth below and elsewhere in this Offering Circular includes forward looking statements that involve risks and uncertainties. See section Risk factors for a discussion of important factors that could cause actual results to differ materially from the results described in the forward-looking statements contained in this Offering Circular. This discussion and analysis should be read in conjunction with the financial statements described above and included in this Offering Circular, including the notes thereto, Selected Financial and Performance Information, Annual Financial Information and Interim Financial Information. OVERVIEW Boozt is a leading 1), fast-growing and profitable Nordic technology company selling fashion online. The Company offers its customers a curated and contemporary selection of fashion brands, relevant to a variety of lifestyles, mainly through its multi-brand webstore Boozt.com. The Company s webstores attract more than five million sessions 2) per month 3), as a result of a convenient shopping experience with high service levels (including consistent user experiences across both mobile devices and desktop), quick deliveries and easy returns. The Boozt brand is becoming a recognised name for fashion in the Nordics through high customer satisfaction, as evidenced by a NPS of 65 4), a Trustpilot score of 9.0 5) and a growing base of returning customers. During the last years, the Company has continuously increased its net revenue to reach SEK 1.4 billion in 2016, and has as of March 31, 2017 built a customer base of over 862,000 active customers 6) on Boozt.com. Boozt has operated under the current model since The Company has been an important part of the development of the Nordic online apparel market and continues to be as it remains to achieve above-market growth rates. More than 60 per cent of the population in the Nordic countries lives in municipalities with less than 100,000 people 7) that typically do not have access to a broad selection of relevant fashion brands. Boozt targets Nordic fashion followers, primarily consumers aged that value convenience in their customer experience. To efficiently address the growing Nordic online market opportunity and the target customer groups, Boozt s operations consist of three main activities: Boozt.com segment consists of the operational activities related to the multi-brand webstore Boozt.com. Boozt.com mainly operates in the Nordic region (with Nordic visits representing over 95 per cent of visitors) but is available in ten geographic areas 8) and in nine languages sharing the same platform and common backend. Boozt.com is an online destination for fashion, tailored to deliver convenience and a curated selection from the Company s over 500 brand partners. To support a convenient online shopping experience, Boozt.com offers free and fast deliveries as well as free and easy returns, with limited minimum order sizes, and free customer support. Booztlet.com segment consists of the operational activities related to Booztlet.com. The Booztlet.com webstore primarily operates as the Company s channel for inventory clearance, retailing items that do not sell within an allotted timeframe on Boozt.com. Customers at Booztlet.com are charged for deliveries and returns. Sales and marketing activities related to Booztlet.com are limited. The Other segment consists of the operational activities related to the mono-brand business and other activities in the Company. The mono-brand business, where Boozt manages online sales on behalf of a brand, has historically been an important source of net revenue 9) and has funded historical Company growth. As of March 31, 2017, Boozt s last mono-brand customer agreement expired and the Company anticipates no further mono-brand revenue. The other segment also includes the Company s two physical retail stores in Denmark. 1) The Company s calculations are based on information, from Euromonitor International (a statistics database), on revenues from the apparel online market in the Nordic area in 2016 of Boozt s competitors, of which the online revenue of the largest actors (Zalando, H&M, Boozt, Ellos, Nelly, Stylepit and Bestseller) have been analysed with publicly available information, such as company annual reports for 2016, press releases as well as other available information on the companies website, respectively. 2) See section Selected financial and performance information Financial and performance definitions. 3) Company information; monthly average based on Company data for ) Trustpilot and Company information; fourth quarter ) Trustpilot; May ) See section Selected financial and performance information Financial and performance definitions. 7) Statistiska Centralbyrån (SCB), Statistisk sentralbyrå (SSB), Danmarks Statistik (DST), Kuntaliitto Kommunförbundet. 8) Sweden, Denmark, Norway, Finland, Germany, United Kingdom, France, the Netherlands, Poland and other European countries. 9) See section Selected financial and performance information Financial and performance definitions. 47

50 Operating and financial review Boozt constantly strives to leverage technology as a tool to create better ways for its customers to be inspired and shop for fashion. The Company has built an integrated technology platform which Boozt believes is robust, secure and highly scalable. The Company collects large amounts of data that is used to drive optimisation in all parts of the business, such as demand forecasting, marketing and customer engagement. Data is managed and analysed through a combination of home grown systems and prominent third party systems. The technology platform enables Boozt to provide a customer-centred online fashion experience, to develop targeted marketing campaigns, to improve management and sourcing of inventory and to enhance contribution margins by product. KEY PERFORMANCE METRICS Overview of Boozt s key performance metrics As a data-driven company, Boozt tracks numerous key performance metrics that enable it to measure the performance of its business and make decisions on how to allocate resources. Boozt believes that there are distinct advantages to observing and analysing these metrics on a regular basis. Definitions of and trends in Boozt s key performance metrics Definitions and trends regarding Boozt s key performance metrics are described below. The metrics sessions, active customers, number of orders, average orders per active customer, true frequency and AOV are only measured for the segment Boozt.com. Other metrics below are measured for all of Boozt s operations. Sessions 10). Boozt measures the number of sessions as an indicator of its overall reach and customer activity. Since the Company sells its merchandise through its webstores and, to an increasing extent, via mobile devices, the number of sessions is a key indicator of the success of its marketing efforts and the popularity of its online shops. In 2016, approximately 66 per cent of Boozt s traffic came from mobile devices. Boozt defines a session as each unique session from the same device and source, irrespective of the device used, length of session or number of page requests for each session. Over the period from January 1, 2014 to December 31, 2016, the number of sessions for Boozt.com grew at a CAGR of 37.0 per cent, increasing from 33.4 million in 2014 to 63.1 million in In Q1 2017, Boozt.com had 19.5 million sessions, which represents an increase of 33 per cent from Q Boozt believes that the increase in sessions was driven by the Company s gradually growing brand recognition, targeted marketing activities, engagement of existing customers and general growth of the fashion market online. Boozt believes that a higher number of sessions results in a higher number of orders and increased net revenue. Active Customers 11). Boozt measures its ability to attract and retain customers by measuring active customers. The Company defines active customers as customers that have made a purchase in the preceding 12-month period. The analysis of active customers is typically linked to other key performance metrics, such as number of orders and net revenue. Over the period from January 1, 2014 to December 31, 2016, active customers for Boozt.com grew by a CAGR 12) of 39.2 per cent, from 423,000 in 2014 to 820,000 in In Q1 2017, Boozt.com had 862,000 active customers which represented an increase of 35.5 per cent from Q The increases in active customers were driven by Boozt s continued acquisition of new customers through targeted marketing efforts and a high share of returning customers. Boozt believes it is able to retain a high share of existing customers by offering an engaging online and mobile shopping experience and convenience, including through mobile phones and tablets, and by maintaining customer engagement through targeted marketing campaigns, particularly focusing on reactivating inactive customers. Number of Orders 13). Alongside active customers 14), number of orders is a key performance metric used to measure customer engagement. Boozt defines number of orders as the number of customer orders placed in the measurement period, irrespective of cancelations or returns. An order is counted on the day the customer places the order. Orders placed and orders delivered may differ due to orders that are either in transit at the end of the measurement period or that have been cancelled. Over the period from January 1, 2014 to December 31, 2016, number of orders for Boozt.com grew at a CAGR of 52.0 per cent, increasing from approximately 766,000 in 2014 to approximately 1.8 million in In 2016, 71 per cent of orders were from returning customers. In Q1 2017, Boozt.com had 510,000 orders, which represented an increase of 44.1 per cent in number of orders compared to Q These increases in number of orders were mainly driven by Boozt s ability to convert visitors into purchasers and fostering growth in existing markets and categories. Average Orders per Active Customer 15). Another indicator of customer engagement is the average number of orders each active customer has placed during the past twelve months. This measure allows Boozt to assess the level of purchasing activity of its active customer base. The Company s goal is to encourage its active customers 16) to place an increasing number of orders, which has the effect of increasing the lifetime value of customers (CLV) 17) and improving cross-selling opportunities. As Boozt has improved its offering and improved its cross-selling activities, average orders per active customer have gradually increased between 2014 and Average orders per active customer for Boozt.com grew in each of the past three years, from 1.81 orders per customer in 2014 to 2.15 orders per customer in In Q1 2017, Boozt.com recorded 2.23 average orders per active customer, compared with 1.96 in Q The increases in average orders per active customers were primarily due to increased engagement of Boozt s customer base. True Frequency 18). True frequency is defined as the average number of orders for a customer cohort, over a specified 12-month period. A customer cohort consists of customers that placed an order with Boozt in the preceding 12-month period. For example, the true frequency for a cohort of 1,000 customers that placed orders with Boozt during 2015 and that cohort placed 5,500 orders in total on Boozt during 2016, would be 5.5 orders per customer in This measure allows the Company to assess the level of engagement of customers after they have placed an order and irrespective of orders from new customers during a specific period. True frequency for Boozt.com grew in each of the past three fiscal years, from 3.7 in 2014 to 5.2 in In Q1 2017, Boozt.com had a true frequency of 5.9, compared with 4.8 in Q These developments were primarily due to Boozt s increased brand awareness, continued customer satisfaction with purchased products and increased online shopping engagement. 10) See section Selected financial and performance information Financial and performance definitions. 11) See section Selected financial and performance information Financial and performance definitions. 12) See section Selected financial and performance information Financial and performance definitions. 13) See section Selected financial and performance information Financial and performance definitions. 14) See section Selected financial and performance information Financial and performance definitions. 15) See section Selected financial and performance information Financial and performance definitions. 16) See section Selected financial and performance information Financial and performance definitions. 17) See section Selected financial and performance information Financial and performance definitions. 18) See section Selected financial and performance information Financial and performance definitions. 48

51 Operating and financial review Transactional Net Revenue 19). Transactional net revenue is a non- IFRS financial measure and a key performance metric for tracking the total revenue of the business. Transactional net revenue represents total sales (excluding VAT and returns) and includes the gross value of sales of consignment goods from Boozt s mono-brand and other partners to end consumers. Transactional net revenue is part of the calculation of AOV (as defined below) and other metrics and allows Boozt to compare its growth with the overall market and its competitors 20). It also helps the Company track the success of market roll-outs and specific marketing and operating initiatives, in particular in combination with other key performance metrics. Boozt uses this information to evaluate future operating decisions, including the impact of advertising campaigns and allocation of capital to specific markets. Over the period from January 1, 2014 to December 31, 2016, the Group s transactional net revenue grew at a CAGR of 67.0 per cent, increasing from SEK million in 2014 to SEK 1,628.4 million in Transactional net revenue increased by SEK million, or 36.2 per cent, from SEK million in Q to SEK million in Q These increases in transactional net revenue over the periods under review were primarily driven by a significant increase in traffic on Boozt.com, increases in the number of returning customers, higher AOV and conversion of new customers. 21) Average Order Value 22). Boozt measures average order value ( AOV ) as an indicator of monetization. AOV is defined as transactional net revenue 23) divided by the number of delivered orders in the measurement period. The Company views AOV as a key metric for assessing the desirability of its products and appeal of its sites to customers, as well as its unit economics relative to the overall market and competitors. Over the period from January 1, 2014 to December 31, 2016, AOV for Boozt.com increased from SEK 644 in 2014 to SEK 777 in AOV for Boozt.com also increased from SEK 727 in Q to SEK 788 in Q1 2017, driven by increased sales of mid-market and premium brands. Fulfilment and Distribution Cost Ratio 24). The fulfilment and distribution cost ratio provides an indication of the costs attributable to fulfilment and distribution on each SEK of net revenue generated and thus provides an indication of the fulfilment efficiency of Boozt s operations. The fulfilment and distribution cost ratio is defined as external fulfilment and distribution costs divided by net revenue for the measurement period. External fulfilment and distribution costs are mainly comprised of incoming and outgoing goods and returns, including delivery and return costs and order processing costs, such as picking costs. The Group s fulfilment and distribution cost ratio has decreased in each of the three fiscal years. The Company was able to decrease the fulfilment and distribution cost ratio by 2.9 percentage points, from 19.0 per cent in 2014 to 16.1 per cent in These improvements in the fulfilment and distribution cost ratio were primarily driven by efficiency improvements in logistics operations, an improvement in the terms negotiated with distributors and scale effects. For Q1 2017, the fulfilment and distribution cost ratio was 20.5 per cent, which represented an increase of 2.6 percentage points compared with a fulfilment and distribution cost ratio of 17.9 per cent for Q due primarily to expenditures related to the move to Boozt s new warehouse. Boozt is targeting further improvements in its fulfilment and distribution cost ratio from the transfer of operations to its new automated fulfilment centre. Marketing Cost Ratio 25). Boozt measures its marketing cost ratio to track the marketing efficiency of its operations. The marketing cost ratio is defined as external marketing costs divided by net revenue for the measurement period. External marketing costs mainly consist of advertising expenses, including expenses for search engine marketing, television, online display and other marketing channels, all allocated based on ROI. Although the acquisition costs of attracting new customers tend to increase over time, as the business grows and customer awareness increases, Boozt believes that lower marketing costs (in relation to net revenue) tend to be needed with respect to new customers. As such, the Company believes that further growth in scale could result in additional marketing efficiency. Boozt constantly monitors customer lifetime value to optimise customer acquisition cost. 26) See section Business overview Large and growing loyal Nordic customer base. See also Key factors affecting results of operations and financial condition Customer engagement. The Group s marketing cost ratio decreased in each of the three fiscal years. The marketing cost ratio decreased by 10.4 percentage points from 25.1 per cent in 2014 to 14.7 per cent in In Q1 2017, Boozt recorded a marketing cost ratio of 15.1 per cent, which represented a decrease of 1.9 percentage points from 17.0 per cent in Q The decreases in marketing cost ratio for these periods were mainly driven by more efficient customer targeting, increasing brand awareness in the Nordics, increased spending per customer and scale effects. See section Business overview. Admin and Other Cost Ratio 27). Boozt measures its admin and other cost ratio to assess the administrative efficiency of its operation. The admin and other cost ratio is defined as total administrative and other expenses, which include other external costs, as well as costs of personnel and depreciation and impairment losses, along with applicable adjustments for other operating income and other operating costs, divided by net revenue for the measurement period. The admin and other cost ratio provides Boozt with an indication of all costs not attributable to cost of goods, fulfilment, distribution or marketing on each SEK of net revenue generated. The Group s admin and other cost ratio decreased in each of the three fiscal years. The admin and other cost ratio decreased by 8.8 percentage points from 21.6 per cent in 2014 to 12.8 per cent in 2016, reflecting the Group s ability to manage administrative cost growth while increasing net revenues and scale. In Q1 2017, Boozt s admin and other cost ratio was 15.0 per cent, reflecting a decrease of 0.4 percentage points from 15.4 in Q1 2016, mainly driven by improved operating leverage, partily offset by IPO-related costs. KEY FACTORS AFFECTING RESULTS OF OPERATION AND FINANCIAL CONDITION Key factors affecting Boozt s results of operations and financial condition in the periods for which financial information is presented in this Offering Circular include: Online apparel marketing dynamics Boozt s performance has been positively influenced by the ongoing trend away from traditional brick-and-mortar stores and toward the online retail model. While the overall fashion market remains fairly 19) See section Selected financial and performance information Financial and performance definitions. 20) See section Selected financial and performance information Financial and performance definitions. 21) See section Selected financial and performance information Financial and performance definitions. 22) See section Selected financial and performance information Financial and performance definitions. 23) See section Selected financial and performance information Financial and performance definitions. 24) See section Selected financial and performance information Financial and performance definitions. 25) See section Selected financial and performance information Financial and performance definitions. 26) See section Selected financial and performance information Financial and performance definitions. 27) See section Selected financial and performance information Financial and performance definitions. 49

52 Operating and financial review stable, the Company expects to benefit from a continued shift of spending from offline to online. See section Market overview. This trend toward online retail has enabled the growth and expansion of the Company s business and Boozt expects to make further investments 28) to remain in-step with shifting customer demands and expectations. Boozt s move to a new fulfilment centre, is a part of its continued effort to meet customer demands and expectations and to anticipate the further growth of online market. Costs associated with the transition to the fulfilment centre are primarily reflected in Q See section Fulfilment. Business development Boozt was originally founded in 2007 to provide mono-brand operations for fashion brands through the operation of their online stores. After the end of its largest customer contract, Boozt s management team launched a new strategy in Boozt has made significant investments 29) to implement this strategy that include the transitioning of operations to a new fulfillment centre, which is equipped with state-of-the-art technology from AutoStore and currently encompasses 43,500 square meters of floor space that can be expanded to 77,000 square meters at maximum built-out capacity. The Company s mono-brand business, which ended as of March 31, 2017, contributed to Boozt s net revenue through commissions on consignment sales on behalf of fashion brands. Because the monobrand operations, by agreement, entailed no cost of goods for resale or external costs for Boozt, gross margins 30) were by definition, 100 per cent for those operations. As a result, since the size of the mono-brand business declined in 2016 and 2017, the Group s gross and operating margin were negatively impacted. Boozt also launched Booztlet.com in Q as a channel for inventory clearance. Moreover, the Company plans to offer cosmetics on Boozt.com starting Q2 2017, as part of a strategy to add adjacent or complementary lifestyle product categories to its offering. See section Business overview. While results from the mono-brand business are reflected in the historical financial periods, future financial periods are not expected to include such results. Scale effects Successful online apparel retailers must achieve sufficient scale with their platforms to enable more efficient operations. The online apparel market provides incentives for attractive margins, while rewarding scale and creating barriers to entry. Boozt has been able to grow its net revenue from SEK million in 2014 to SEK 1,396.4 million in Boozt believes that a leading market position, in conjunction with an outstanding shopping experience, enables lower operating leverage and supports higher operating margins than what competitors with lower market share are able to achieve. To that end, the Company has incurred significant costs and operating losses as it continues to improve brand awareness and customer experience, to further develop its technology platform and fulfilment infrastructure in order to build the scale required for success. In February and March 2017, the Company moved its operations to a new automated fulfillment centre, which is equipped with state-of-the-art technology from AutoStore and which the Company believes is positioned to support further expansions in scale. Additionally, Boozt has made significant investments 31) in its integrated technology platform with the aim of optimising execution with respect to customer, sales and marketing management. The Company expects increased scale to result in overall efficiency improvements of the operations. Additionally, Boozt believes that with increased scale it could be able to secure more favorable payment terms from suppliers, leading to improvements in cash flow and reduction in net working capital 32). Moreover, Boozt believes that increased scale also has a positive impact on marketing efficiency and brand awareness and the Company s ability to more effectively leverage technology investments. 33) Customer engagement Sessions is a critical variable that affects Boozt s net revenue and financial results, as the number of sessions is an indicator of its potential customer base. 34) Once the Company has attracted potential new customers to its sites, the goal is to convert them into active customers 35) and to encourage additional purchases. It is significant for Boozt s net revenue and financial results to maintain a high conversion of sessions 36) into orders by new customers and strengthen purchasing by existing customers. The Company believes attracting visitors in a cost-efficient way and converting them into returning customers is critical to the Company s continued growth. Moreover, Boozt applies strict customer segmentation to existing customers, based on customer lifetime value 37) and time since last order, marking each customer with a classification that enables the marketing team to better target such customers and drive additional purchases. Boozt has incurred and will continue to incur significant expenses in marketing through a broad range of channels to drive website traffic, win new customers, grow net revenue and enhance Boozt s overall brand awareness. The Company closely monitors its marketing cost ratio in order to effectively manage marketing spend relative to net revenue developments. Boozt s allocation of its marketing budget is data-driven and distributed to the channels that generate the most attractive return on investment. See section Business overview Strengths and competitive advantages Well-invested, data-driven operating platform Data-driven marketing, buying and merchandising. Product mix The Company s products and categories are characterized by a range of price points and margin profiles, where the selection of its product mix can have a significant impact on net revenue. Boozt categorises its brand offerings into three categories: premium, mid-market and entry brands. The Company has, since 2014 and 2015, increased its focus on premium and mid-market brands. See section Business overview Sourcing Brand selection. Most of Boozt s net revenue is generated from sales of products from Nordic brands with strong local appeal as well as global brands that are popular in the Nordic market. Boozt.com has greatly diversified its product mix since it first began operations and offers a curated brand selection, currently consisting of over 500 brands, catered to Nordic fashion followers. See section Business overview Sourcing Brand selection. The Company aims to continuously monitor developments in demand, including for major and local brands. This allows the Company to adapt its business to meet such demand and to enable further expansion of its product offerings. Fulfilment The Company believes that the quality of its fulfilment services and its ability to anticipate and satisfy customer needs and expectations are 50 28) See section Selected financial and performance information Financial and performance definitions. 29) See section Selected financial and performance information Financial and performance definitions. 30) See section Selected financial and performance information Financial and performance definitions. 31) See section Selected financial and performance information Financial and performance definitions. 32) See section Selected financial and performance information Financial and performance definitions. 33) See section Selected financial and performance information Financial and performance definitions. 34) See section Selected financial and performance information Financial and performance definitions. 35) See section Selected financial and performance information Financial and performance definitions. 36) See section Selected financial and performance information Financial and performance definitions. 37) See section Selected financial and performance information Financial and performance definitions.

53 Operating and financial review critical to improving net revenue and profitability. Boozt focuses on customer satisfaction and cost efficiency as the two cornerstones of its overall fulfilment strategy. The Company s warehouse and distribution processes cover outbound logistics, including delivery and return and order processing costs, including picking costs, which represent critical execution steps along the customer value chain, making fulfilment service excellence a prerequisite for customer satisfaction and loyalty. In addition, by emphasizing the delivery of an outstanding customer experience, the Company offers customers free shipping and returns across all markets, with the limitation of a minimal order value. At the same time, the Company considers its fulfilment capabilities, structures and systems to be a key competitive advantage in the Nordic fashion online market. Boozt tracks its fulfilment and distribution cost ratio as a measure of the costs attributable to fulfilment and distribution on each SEK of net revenue generated and as an indicator of the fulfilment efficiency of Boozt s operations. Boozt has undertaken several measures to increase fulfilment efficiency and achieved significant cost efficiency over the last few years. Boozt decreased external fulfilment and distribution costs as a proportion of net revenue from 19.0 per cent in 2014 to 16.1 per cent in External fulfilment and distribution costs as a proportion of net revenue were 20.5 per cent for Q1 2017, as these costs were impacted by one-off costs associated with the move to the new fulfilment centre. In the future the Company aims to benefit from further efficiency improvements and consolidation of its fulfilment centers, reducing external fulfilment and distribution costs as a percentage of net revenue. Starting in February 2017, the Company began transferring its operations to the new automated fulfilment centre, located in Ängelholm, which has been fully operational at the end of March As such, historical financial periods through Q do not reflect the effects of the new fulfilment centre. In connection with the transition to the new fulfilment centre, the Company has agreed to make an initial investment of approximately SEK 100 million in equipment from AutoStore and other investments 38) in the warehouse. Approximately 70 per cent of this investment is expected to be financed through instalment arrangements with Danske Bank, with a repayment period of five years. Danske Bank has a right to repossess the assets in case of non-payment. Boozt expects to begin making payments toward the amount drawn from the debt in Q and the amount of the investment is planned to be amortised over the course of five years. The remainder of the investment is expected to be financed with cash. Boozt expects to make an additional investment of a similar amount in equipment for AutoStore in The costs Boozt incurred in connection with the move of the fulfilment centre and other warehouse equipment has been reflected in its Q results. As a result of this move, the Company expects increased topline rent and logistical costs resulting from the increased size and capability of the fulfilment centre. However, the Company expects the increased scale enabled by the new fulfilment centre operations to result in overall efficiency improvements with respect to fulfilment. The Company s believes that the transfer of operations to its new fulfilment centre could reduce picking costs by approximately one third, leading to a reduction of its fulfilment and distribution cost ratio by c. 2 3 percentage points in the medium-term. Return rate Returns are a necessary part of Boozt s business model. In order to create a convenient experience, Boozt aims to re-create the fittingroom experience at home. Boozt s average return rate during 2016 was approximately per cent, which Boozt believes is comparable or more favourable than the rate of return among its competitors. Return rates in the online apparel market vary across countries, with more mature e-commerce customers typically exhibiting higher return rates. With further maturation of the online apparel market, these trends are expected to continue. Boozt aims to reduce avoidable returns to a minimum through, for example, better product presentation, including sizing information and recommendations and use of data to better anticipate customer preferences. In addition, Boozt aims to make the return process more efficient to further reduce costs associated with returns. See section Business overview. Currencies Boozt is exposed to certain fluctuations in currency exchange rates by virtue of purchases and sales of goods and services being carried out in currencies other than SEK (transaction exposure) and of the conversion of the balance sheets and income statements in foreign currencies into SEK (conversion exposure). The Group s main transaction currency exposure consists of fluctuations in the value of the SEK, DKK, EUR and NOK. A 3 per cent stronger SEK against the EUR would have resulted in a negative impact on profit of approximately SEK 1.8 million in Boozt seeks to naturally hedge the cost base in a given currency to a net revenue stream in that currency. However, the Group has greater exposure to some currencies, such as the NOK, due to currently having significantly more operating revenues than operating expenses in this currency. To manage currency exposures, the Group also seeks to maintain bank account balances with corresponding currency distribution for the future payment of shortterm debts. The Group has hedged between 60 and 100 per cent of the expected net NOK exposure for the year For further information, see Note 25 under section Historical financial information on pages F-39 F-41. Inventory management Boozt actively manages its inventories and sell-through rates and uses, among other things, marketing and discounts in an effort to reach its target rates. Items that do not sell within an allotted timeframe of 18 months on Boozt.com are sold through secondary channels, including Booztlet.com and the Company s physical store Booztlet. The gross margin 39) for items that are channelled to Booztlet.com as a result of not being sold on Boozt.com within a specified period of time is approximately 100 per cent, making the operations of Booztlet.com profitable even at lower net revenue levels. Additionally, items that can no longer be sold via Boozt.com, due to, e.g., minor defects, are sold through the Company s physical outlet store in Taastrup. Boozt does not operate a discount model and aims to sell in-season merchandise at full price. However, it uses pricing as a tool to reach its target sell-through for products which show low stock turnover in order to manage risk that the product does not sell. Sales are monitored and benchmarked against the expected sell-through curve in real-time. Boozt monitors inventory on item level in order to take action on deviations, such as the launch of campaigns and discounts for products that are lagging the sell-through curve and re-orders of products that are ahead of the curve. Boozt aims to sell approximately 90 per cent of acquired products within a first season cycle (7 months) and 99 per cent within 18 months. If an item remains in inventory for more than 18 months, it is gradually written down over the course of six months, with the full value written down after 24-months. See section Business overview Sourcing Buying and merchandising. Boozt s write-downs of inventories, as a percentage of net revenue, have been relatively stable during Additionally, because of the seasonal nature of the fashion business, Boozt s ordering of goods to 38) See section Selected financial and performance information Financial and performance definitions. 39) See section Selected financial and performance information Financial and performance definitions. 51

54 Operating and financial review be sold occurs in advance of each season. Spring and summer season orders are generally placed between April and July, while fall and winter season orders are placed between September and February. Boozt typically receives spring and summer orders between January and March, while fall and winter orders are received between June and August. Boozt also engages in in-season inventory management, which includes Boozt s re-order process and buying of additional supplies of fast-moving items. Re-ordering allows Boozt to operate at lower inventory risk and to react to fashion trends in-season. Boozt s re-order rate has increased as the Company has increased scale. Boozt s re-order rate increased from 10 per cent of total buys for the spring and summer season in 2015 to 21 per cent of total buys for the spring and summer season in 2016 and from 19 per cent of total buys for the fall and winter season in 2015 to 27 per cent of total buys for the fall and winter season in The Company also negotiates supplier returns or exchanges for slow-moving items. Net working capital The development of Boozt s net working capital is a key factor for its operating cash flow. Boozt defines net working capital as current assets, excluding cash and cash equivalents, less non-interest bearing current liabilities. 40) Boozt uses net working capital 41) as a measure of short-term financial health as it indicates whether the Company has sufficient short-term assets to cover short-term debt. See section Quarterly Results of Operation Data and Seasonality and Liquidity and capital resources Net working capital. Deferred tax assets As of March 31, 2017, Boozt has Deferred Tax Assets ( DTAs ) in the aggregate amount of SEK 42.2 million. The existing DTAs are attributable to tax losses carried forward from previous periods and may be offset against future profits. As of December 31, 2016, Boozt had an outstanding balance of SEK 309 million in net losses carried forward, SEK 36.8 million of which was recognized on the balance sheet as a deferred tax asset. While Boozt has reported its net losses carried forward with the relevant tax authorities, it is uncertain that the Company can utilize all such losses to offset taxable trading income in future periods. To the extent such losses can be used to offset taxable income, the expected reduction of future tax burden is expected to lead to a reduction in tax expenses, positively impacting the Company s results. Seasonality Boozt s business is generally subject to seasonal net revenue, inventory and net working capital fluctuations that could lead to fluctuations of net revenue and profitability, see section Quarterly Results of Operations Data and Seasonality. Investment in Talent Boozt believes that its employees are one of its most important assets and the Company intends to continue investing in hiring and retaining talented employees to find better ways to serve its customers and grow its business. As of December 31, 2016, Boozt had 193 employees, an increase of 54.4 per cent from The Company believes it will be important for it to attract, develop and retain key employees in order to continue to grow and manage its business successfully, as it expects to grow headcount in selected functions. RESULTS OF OPERATIONS Components of results of operations Net revenue Boozt s net revenue predominantly derives from the products ordered by its customers through the Boozt.com website. The Company also sells stock that is at the end of its lifetime through Booztlet.com at high discounts in order to make room for newer and more current stock. Boozt recognizes net revenue, excluding VAT, returns and discounts and after eliminating intra-company sales, when it has transferred the significant risks and rewards of ownership of the goods to its customer, provided that it is likely that economic benefits will flow to the Group and the amount can be reliably measured. Net revenue is measured at the fair value of the consideration received or receivable. Net revenue is recorded net of sales deductions. With regards to the accounting treatment of expected returns, Boozt uses the gross method. The gross method implies that net revenue is fully reduced by the amount of sales that the Company estimates will be returned. On average, the return rate amounts to approximately per cent. See section Business overview Logistics Returns are a necessary part of Boozt.com s business model. For more information on how Boozt accounts for net revenue recognition, see section Significant Accounting Policies, estimates and judgements Significant accounting policies. Net revenue is also divided among Boozt s three segments: Boozt.com, Booztlet.com and Other. See section Business overview Offering and operations. Boozt s main segment is the Boozt.com website, through which it currently sells shoes, clothing and accessories and which will be expanded to offer cosmetics. Through its Booztlet.com segment, the Company sells stock that is at the end of its lifetime. The third segment is the Other segment, which included the Company s mono-brand business through Q and now includes its two physical stores. In connection with the mono-brand business, through which Boozt operated e-commerce stores for brands such as ECCO and Day Birger et Mikkelsen, the Company earned commissions on the sale of goods owned by its mono-brand partners, which were reflected in net revenue. The relative importance of the mono-brand business has declined over time from 12.4 per cent in 2014 to 4.4 per cent in Boozt ended the mono-brand business at the end of Q and to focus primarily on the Company s own stores. The cooperation with respect to the ECCO mono-brand store ended on March 31, ECCO s full assortment of products will continue to be offered on Boozt.com. Cooperation with Day Birger et Mikkelsen, regarding operation of their mono-brand store, ended on November 7, 2016, which resulted in slightly lower net revenue for the Other segment in Q4 2016, and traffic from its website Day.dk was redirected to the brand s wall on Boozt.com. Other operating income Other operating income includes miscellaneous minor income from non-product sales activities. Goods for resale Cost of goods for resale mainly consists of cost of products purchased from suppliers, inventory write-downs, fraud, theft, and other costs of sales. Cost of goods for resale for an item is typically recognized only at the time of sale or write-down. Inbound logistics costs include all costs accrued before inventories reach the places in which they are stored in fulfilment centers, and consist mainly of inbound transportation costs (including personnel expenses relating thereto). Other costs of goods for resale mainly comprise, third-party services, and office 40) See section Selected financial and performance information Financial and performance definitions. 41) See section Selected financial and performance information Financial and performance definitions. 52

55 Operating and financial review and infrastructure costs related to acquiring inventory. Allowances on inventories reflect write-downs of inventories to their net realizable value to allow for risks from slow-moving goods or reduced salability of goods. Cost of goods for resale is reduced by the estimated amount of cost of goods for resale that Boozt expects will be returned by its customers. In general, the return rate amounts to approximately per cent. See section Business overview Logistics Returns. As the Company has phased out its mono-brand business, cost of goods for resale as a percentage of net revenue has increased as the mono-brand business was associated with only minimal cost of goods for resale. External fulfilment and distribution costs External fulfilment and distribution costs consist mainly of outbound logistics costs, including delivery and return costs, as well as expenses for contracted warehouse personnel and warehouse rent. External fulfilment and distribution costs also include payment costs and content creation costs. Payment costs are all costs related to the payments process, including costs for bank charges on transactions and costs to third-party providers that handle customer invoicing. Content creation costs include costs incurred in respect of product descriptions, photos, graphics, and quality assurance, as well as costs incurred in hiring models. External marketing costs External marketing costs relate to online, offline, television, CRM, brand and performance marketing. Other external costs Other external costs consist of the residual of all other external costs that are not external fulfilment and distribution costs and external marketing costs. Cost of personnel Cost of personnel consists of all of all costs associated with the Company s own personnel, including personnel in Boozt s in-house customer service team, but not the costs of the contracted warehouse personnel. Cost of personnel includes accrued costs for equity incentive and share-based compensation plans. Depreciation and impairment losses Depreciation and impairment losses primarily consists of depreciation of equipment and fixtures and amortization costs related to the Company s web platform. Depreciation and impairment are accounted linearly in net income over the estimated period of use of the asset unless such periods of usage are indefinite. Intangible assets with finite usage period are depreciated from the time they are available for use. Periods of use are reviewed at least annually. Other operating costs Other operating costs primarily result from miscellaneous minor expenditures. Net financial income/expense Net financial income primarily consists of interest payments received relating to cash at banks. Net financial expenses mainly pertain to interest paid on interest-bearing liabilities and the Company s revolving credit facilities. Changes in net financial income/expense over the periods under review primarily reflect the incurrence of interestbearing liabilities during 2014 and repayment of those liabilities during Income tax Income tax includes any current income taxes paid or payable in the respective countries, as well as deferred income taxes. Historically, Boozt did not account for deferred tax assets on a quarterly basis, as accumulated losses had been substantial. From Q1 2017, Boozt has recognized deferred tax assets for tax losses carried forward, as Boozt expects to utilise the deferred tax assets in the next 2 3 years. Consolidated statement of comprehensive income The following table summarizes Boozt s consolidated statement of comprehensive income for the periods indicated: For the three months ended March 31 (unaudited) For the fiscal year ended December 31 (audited) (SEK million) Net revenue Other operating income Goods for resale Gross Profit External fulfilment and distribution costs External marketing costs Other external costs External costs Cost of personnel Depreciation and impairment losses Other operating costs Operating Profit/Loss Financial income Financial expense Net Financial Income/Expense Profit/Loss Before Tax Income tax Profit/Loss for the period

56 Operating and financial review Comparison of the three-month periods ended March 31, 2017 and March 31, 2016 Net revenue Boozt s net revenue increased by SEK million, or 62.1 per cent, from SEK million in Q to SEK million in Q primarily due to increased net revenues in the Boozt.com and Booztlet.com segments, and was partly offset by decreased net revenue in the Other segment. Boozt continued to successfully convert Boozt.com site traffic into a growing active customer base from 636,000 active customers at the end of Q to 862,000 by the end of Q The increase in Boozt.com net revenue was due to new customer intake, higher buying frequency for existing customers and higher AOV. 42) In addition, due to changed vendor agreements with certain former mono-brand suppliers, certain merchandise that was previously sold on commission (where only the commission fee was recognised as part of net revenue) was recognised at transactional value in Q in Group net revenue. Increased net revenues in the Booztlet.com segment were primarily due to increases in new customer intake, as well as a higher buying frequency for existing customers. The Other segment showed a slight decrease in net revenue due to the gradual decrease of commission sales for ECCO and the mono-brand operations ended, according to plan, as of March 31, The following table summarizes Boozt s segment net revenue for the periods shown: For the three months ended March 31 (SEK million) Boozt.com Booztlet.com Other Net revenue Other operating income There was no other operating income in Q and Q Goods for resale Cost of goods for resale increased by SEK 87.6 million, or 59.8 per cent, from SEK million in Q to SEK million in Q1 2017, broadly in line with the growth in net revenue. Cost of goods for resale as a proportion of net revenue decreased by 0.8 percentage points, from 56.4 per cent in Q to 55.6 per cent in Q1 2017, primarily reflecting improved gross margin in the Boozt.com segment which was partly offset by the decline in the Other segment net revenue, which mono-brand business net revenue does not involve any cost of goods for resale. External fulfilment and distribution costs External fulfilment and distribution costs increased by SEK 40.0 million, or 86.2 per cent, from SEK 46.4 million in Q to SEK 86.4 million in Q This increase was mainly due to costs related to the warehouse move, which amounted to SEK 19.0 million in Q1 2017, and growth in orders handled. The number of customer orders handled increased by 156,000, or 44.1 per cent, from 354,000 in Q to 510,000 in Q External fulfilment and distribution costs as a proportion of net revenue increased by 2.6 per centage points, from 17.9 per cent in Q to 20.5 per cent in Q External marketing costs External marketing costs increased by SEK 19.5 million, or 44.3 per cent, from SEK 44.0 million in Q to SEK 63.5 million in Q External marketing costs as a proportion of net revenue decreased by 1.9 percentage points, from 17.0 per cent in Q to 15.1 per cent in Q1 2017, mainly due to improvements in brand awareness, increased scale and improved efficiency in allocation of marketing spend. Other external costs Other external costs increased by SEK 13.4 million, or per cent, from SEK 12.9 million in Q to SEK 26.3 million in Q Other external costs as a proportion of net revenue increased by 1.2 percentage points, from 5.0 per cent in Q to 6.2 per cent in Q due to increased costs related to preparation for the IPO. Cost of personnel Cost of personnel increased by SEK 7.2 million, or 29.8 per cent, from SEK 24.2 million in Q to SEK 31.4 million in Q Total cost of personnel increased mainly due to headcount growth. Cost of personnel as a proportion of net revenue decreased by 1.8 percentage points from 9.3 per cent in 2015 to 7.5 per cent in 2016, attributable mainly to economies of scale enabled by the strong growth in net revenue. Depreciation and impairment losses Depreciation and impairment losses increased by SEK 0.8 million, or 36.4 per cent, from SEK 2.2 million in Q to SEK 3.0 million in Q1 2017, primarily arising from increased investments 43) in prior periods in Boozt s web platform and fulfilment infrastructure. Other operating costs Other operating costs increased by SEK 2.0 million from SEK 0.6 million in Q to SEK 2.6 million in Q Operating profit/loss Operating loss increased by SEK 9.0 million, or 52.6 per cent, from a loss of SEK 17.1 million for Q to a loss of SEK 26.1 million for Q primarily due to increased costs related to the warehouse move (SEK 19.0 million) and IPO preparations (SEK 2.5 million), as well as the gradual decrease in the mono-brand business recognised in the Other segment. The following table summarizes Boozt s segment operating profit/loss for the periods shown: For the three months ended March 31 (SEK million) Boozt.com Booztlet.com Other Operating profit/loss Net financial income/expense Net financial income/expense changed by SEK 2.9 million, from a net expense of SEK 0.1 million in Q to a net income of SEK 2.8 million in Q The change was mainly due to positive developments with respect to currency hedging activities. Income tax Income tax changed by SEK 5.4 million, from SEK 0.0 in Q to a tax credit of SEK 5.4 million in Q due to recognition of deferred tax assets relating to tax losses carried forward, as the Group expects to utilise the deferred tax assets within the coming 2 3 years. 42) See section Selected financial and performance information Financial and performance definitions. 43) See section Selected financial and performance information Financial and performance definitions. 54

57 Operating and financial review Profit/loss for the period Loss for the period increased by SEK 0.7 million, or 4.1 per cent from SEK 17.2 million in Q to SEK 17.9 million in Q for the reasons set forth above. Comparison of the fiscal years ended December 31, 2016 and December 31, 2015 Net revenue Net revenue increased by SEK million, or 70.9 per cent, from SEK million in 2015 to SEK 1,396.4 million in Boozt continued to successfully convert Boozt.com site traffic into a growing customer base from 569,000 active customers 44) at the end of 2015 to 820,000 by year-end The increase in Boozt.com net revenue stems from an increased number of orders from returning customers, new customer intake and higher AOV. 45) Booztlet.com also showed increased net revenue, reflecting a full year of operations in The Other segment showed a slight decrease in net revenue due to the end of the mono-brand agreement with Day Birger Et Mikkelsen in November 2016 and margin reductions in the mono-brand business. The following table summarizes Boozt s segment net revenue for the periods shown: For the fiscal year ended December 31 (SEK million) Boozt.com 1, Booztlet.com Other Net revenue 1, Other operating income In 2016, other operating income increased from SEK 0.0 in 2015 to SEK 4.3 million in Goods for resale Cost of goods for resale increased by SEK million, or 82.8 per cent, from SEK million in 2015 to SEK million in 2016, mainly due to increased sales on Boozt.com. Cost of goods for resale as a proportion of net revenue increased by 3.6 percentage points, from 51.3 per cent in 2015 to 54.9 per cent in This development in cost of goods for resale margin was mainly attributable to the reduced net revenue contributions from the mono-brand business. External fulfilment and distribution costs External fulfilment and distribution costs increased by SEK 85.1 million, or 61.2 per cent, from SEK million in 2015 to SEK million in This increase in external fulfilment and distribution costs was mainly due to growth in the number of customer orders handled. External fulfilment and distribution costs as a proportion of net revenue decreased by 0.9 percentage points, from 17.0 per cent in 2015 to 16.1 per cent in 2016, driven by efficiency improvements in the fulfilment process. External marketing costs External marketing costs increased by SEK 82 million, or 66.3 per cent, from SEK million in 2015 to SEK million in 2016, driven by increased marketing spend in connection with acquisition of new customers. External marketing costs as a proportion of net revenue decreased by 0.4 percentage points, from 15.1 per cent in 2015 to 14.7 per cent in 2016, achieved by improvements in brand awareness and improved efficiency in allocation of marketing spend. Other external costs Other external costs increased by SEK 19.9 million, or 37.1 per cent, from SEK 53.7 million in 2015 to SEK 73.6 million in Other external costs as a proportion of net revenue decreased from 6.6 per cent in 2015 to 5.4 per cent in Cost of personnel Cost of personnel increased by SEK 14.7 million, or 17.8 per cent, from SEK 82.5 million in 2015 to SEK 97.2 million in Total cost of personnel increased mainly due to headcount growth. Cost of personnel as a proportion of net revenue decreased, by 3.1 percentage points, from 10.1 per cent in 2015 to 7.0 per cent in 2016, driven mainly by the achievement of economies of scale and strong growth in net revenue. 46) Depreciation and impairment losses Depreciation and impairment losses increased by SEK 7.1 million, from SEK 5.3 million in 2015 to SEK 12.4 million in 2016, primarily due to increased investments 47) in prior periods in Boozt s web platform and fulfilment infrastructure. Other operating costs Other operating costs decreased by SEK 1.3 million, from SEK 1.3 million in 2015 to nil in Operating profit/loss Operating profit increased by SEK 28.7 million from a SEK 7.7 million loss in 2015 to SEK 21.0 million profit in The growth in operating profit was in line with the Company s net revenue development and was positively impacted by increased operating profit in the Boozt.com and Booztlet.com segments, which had losses of SEK 22.6 million and SEK 0.3 million, respectively, in 2015 and had operating profit of SEK 10.0 million and SEK 4.1 million, respectively, in The contribution of the Other segment to Boozt s operating profit decreased over this period as the segment s operating profit declined from SEK 15.1 million in 2015 to SEK 6.9 million in 2016 due to reduced activity and lower commission rates in the mono-brand business. Operating profit was also positively impacted by an increase in returning customers over the period, which typically require lower marketing expenditures. The following table summarizes Boozt s segment operating profit/loss for the periods shown: For the fiscal year ended December 31 (SEK million) Boozt.com Booztlet.com Other Operating profit/loss Net financial income/expense Net financial expense decreased by SEK 5.0 million, from SEK 5.5 million in 2015 to SEK 0.5 million in The decrease in net financial expense was mainly due to lower average liabilities in the period from December 31, 2015 to December 31, ) See section Selected financial and performance information Financial and performance definitions. 45) See section Selected financial and performance information Financial and performance definitions. 46) See section Selected financial and performance information Financial and performance definitions. 47) See section Selected financial and performance information Financial and performance definitions. 55

58 Operating and financial review Income tax Income tax changed by SEK 8.5 million, from a gain of SEK 0.8 million in 2015 to an expense of SEK 7.7 million in Profit/loss for the period Profit for the period increased by SEK 25.3 million, from a loss of SEK 12.4 million in 2015 to a profit of SEK 12.9 million in 2016 primarily due to scale effects, which drove down operational costs as a percentage of revenue. Comparison of the fiscal years ended December 31, 2015 and December 31, 2014 Net revenue Net revenue increased by SEK million, or 56.8 per cent, from SEK million in 2014 to SEK million in The overall net revenue increase was driven primarily by increased number of orders from returning customers, new customer intake and higher AOV. 48) Boozt continued to successfully convert Boozt.com site traffic into a growing customer base from 423,000 active customers at the end of 2014 to 569,000 by year-end 2015, driven primarily by new customer intake, as well as an increased number of orders from returning customers and higher AOV. 49) Boozt also generated additional net revenue from the launch of Booztlet.com in the third quarter of 2015 and increased activity and contributions from the mono-brand business. The following table summarizes Boozt s segment net revenue for the periods shown: For the fiscal year ended December 31 (SEK million) Boozt.com Booztlet.com 2.1 Other 1) Net revenue ) Prior to 2015, the Other segment was solely comprised of activity from the mono-brand business. Since 2016, the Other segment has also included the Company s physical stores. Other operating income Other operating income decreased by SEK 0.4 million, from SEK 0.4 million in 2014 to 0.0 in Goods for resale Cost of goods for resale increased by SEK million, or 68.7 per cent, from SEK million in 2014 to SEK in The increase in cost of goods corresponded to the expansion of business activities. Cost of goods for resale as a proportion of net revenue increased by 3.6 percentage points, from 47.7 per cent in 2014 to 51.3 per cent in This increase was due to a reduction of the proportion of Group net revenue generated from the Group s mono-brand segment. External fulfilment and distribution costs External fulfilment and distribution costs increased by SEK 40.1 million, or 40.5 per cent, from SEK 98.9 million in 2014 to SEK million in The increase in external fulfilment and distribution costs was predominantly driven by the expansion of business operations. External fulfilment and distribution costs as a proportion of net revenue decreased by 2.0 percentage points, from 19.0 per cent in 2014 to 17.0 per cent in This margin improvement was due primarily to more efficient fulfilment operations, achieved by the continued insourcing of fulfilment capacity. External marketing costs External marketing costs decreased by SEK 7.1 million, or 5.4 per cent, from SEK million in 2014 to SEK million in The Company also grew its active customer base and was thus able to improve marketing efficiency, with marketing costs as a proportion of net revenue decreasing from 25.1 per cent in 2014 to 15.1 per cent in Other external costs Other external costs increased by SEK 14.1 million, or 35.6 per cent, from SEK 39.6 million in 2014 to SEK 53.7 million in Other external costs as a proportion of net revenue decreased from 7.6 per cent in 2014 to 6.6 per cent in 2015, reflecting ongoing cost-efficiency initiatives. Cost of personnel Cost of personnel increased by SEK 20.3 million, or 32.8 per cent, from SEK 62.2 million in 2014 to SEK 82.5 million in 2015, due to the addition of personnel in connection with Boozt s scale build-up. In 2015, cost of personnel as a proportion of net revenue decreased, from 11.9 per cent in 2014 to 10.1 per cent, driven mainly due to efficiency improvements in overhead functions. Depreciation and impairment losses Depreciation and impairment losses decreased by SEK 5.2 million, from SEK 10.5 million in 2014 to SEK 5.3 million in 2015, primarily due to increased charges related to equipment investments 50) in prior periods. Other operating costs Other operating costs increased by SEK 0.6 million, or 85 per cent, from SEK 0.7 million in 2014 to SEK 1.3 million in Operating profit/loss Operating loss decreased by SEK 62.0 million, or 89.0 per cent, from a loss of SEK 69.7 million in 2014 to SEK 7.7 million in Operating loss as a percentage of net revenue improved from 13.4 per cent in 2014 to per cent in Operational improvements led to reduced external costs as a percentage of net revenue, which contributed to a decrease in operating loss that outpaced net revenue growth. Operating loss was positively impacted by a reduction in operating loss for Boozt.com, which decreased from a loss of SEK 81.4 million in 2014 to a loss of SEK 22.6 million in 2015, as well as an increase in operating profit from the Other segment, which increased from SEK 11.7 million in 2014 to SEK 15.1 million in The Booztlet.com segment began operations in the third quarter of 2015 and had a loss of SEK 0.3 million in The following table summarizes Boozt s segment operating profit/loss for the periods shown: For the fiscal year ended December 31 (SEK million) Boozt.com Booztlet.com 0.3 Other Operating profit/loss Net financial income/expense Net financial expense increased by SEK 2.3 million, or 73 per cent from 3.2 million in 2014 to SEK 5.5 million in 2015, while net financial expense as a proportion of net revenue remained stable, increasing only slightly from 0.61 per cent in 2014 to 0.67 per cent in The increase in net financial expense was mainly due to higher average liabilities in ) See section Selected financial and performance information Financial and performance definitions. 49) See section Selected financial and performance information Financial and performance definitions. 50) See section Selected financial and performance information Financial and performance definitions. 56

59 Operating and financial review Income tax Income tax changed by SEK 42.9 million, from a gain of SEK 43.7 million in 2014 to a gain of SEK 0.8 million in 2015, as 2014 represented the recognition of deferred tax losses for 2014, 2013 and 2012, and there was a reduced operating loss in Profit/loss for the period Loss decreased by SEK 16.8 million, from a loss of SEK 29.2 million in 2014 to a loss of SEK 12.4 million in 2015 for the reasons set forth above. QUARTERLY RESULTS OF OPERATIONS DATA AND SEASONALITY Boozt s results of operations are generally affected by significant seasonal trends that cause its net revenue to vary from quarter to quarter and that typically show resemblances from year to year, making quarterly reporting an important tool for analysing and managing its business. The Company s quarterly results of operations will vary in the future, and these quarterly results are not necessarily indicative of its results for any future period. The following table presents Boozt s consolidated income statement for each of the below-listed nine quarters, as derived from its internal reporting system. The quarterly income statement data presented in this table has not been adjusted to account for adjustments to certain line items made on an annual basis, and accordingly, the sum of all quarters for a given year may not equal the annual income statement figure for such year. (SEK million) March 31, 2017 For the period (unaudited), derived from the Company s internal reporting system. December 31, 2016 September 30, 2016 June 30, 2016 March 31, 2016 December 31, 2015 September 30, 2015 June 30, 2015 March 31, 2015 Net revenue Other operating income Goods for resale Gross Profit 1) External fulfilment and distribution costs External marketing costs Other external costs External costs Cost of personnel Depreciation and impairment losses Other operating costs Operating Profit/Loss ) See section Selected financial and performance information Financial and performance definitions. Demand for fashion products and, consequently, the Company s net revenue and profitability tends to be significantly seasonal. Since fall and winter fashion articles generally sell at higher prices than spring and summer fashion articles, Boozt typically realizes higher AOVs 51) during the second half of the year. Additionally, Boozt realizes higher net revenue in the second half of the year due to increased sales during the Christmas season and in connection with events, such as Black Friday. The peaks of the spring and summer fashion seasons occur during the second quarter of each year, while the peaks of the fall and winter fashion seasons occur during the fourth quarter. In addition, due to the timing of the peak fashion seasons, the Company typically has four months during each year in which it needs to discount a variety of items from the previous fashion season in order to clear inventories and reach the sell-through targets set for each season. These months are usually July and August (in which the Company clears leftover inventories from the spring and summer collections) and January and February (during which it clears inventories from the fall and winter collections). The interaction of these sell-down periods with the peak fashion seasons that precede them results in the second and fourth quarters generally have higher net revenue, while the first and third quarters generally exhibit lower net revenue. In addition to the foregoing seasonal patterns, which tend to recur in most years, unusual weather patterns, such as unusually warm and short winters or unusually wet and cold summers, can lead to lower sales of seasonal fashion products. The effect of such shifts in consumption on Boozt s net revenue can be exacerbated by industrywide discounting of the affected types of product in response to lower-than-expected sales. Boozt expects this sort of seasonality to continue in future periods. In addition to these net revenue effects, the Company s operating profit/loss can be similarly affected by these seasonal trends due to its fixed cost base. The Company expects these seasonal differences and their impact on its results to be similar in future periods. Boozt s quarterly net revenue increased for 2016 compared to corresponding quarters 2015 in reflecting increased demand for Boozt s products from its growing base of active customers 52). Additionally, because of the seasonal nature of the business, Boozt s ordering of goods to be sold occurs in relatively fixed intervals. Spring and summer season orders are generally placed between April and July, while fall and winter season orders are placed between September and February. Boozt typically receives spring and summer orders between January and March, while fall and winter orders are received between June and August. When goods are received, they are photographed and made available for sale as soon as practicable. As a result of these regimented orders, the Company s inventory is also subject to significant fluctuations. As noted above, due to the seasonality of the Company s business, net revenue for the first and the third quarters has typically been less than net revenue for the respective prior quarter (Q4 and Q2). Hence, Boozt believes that comparisons of net revenue and Operating Profit/Loss for a given quarter normally is most meaningful to the corresponding quarter in the prior fiscal year. However, considering results over the last twelve months also provides a more meaningful comparison of operating results. 51) See section Selected financial and performance information Financial and performance definitions. 52) See section Selected financial and performance information Financial and performance definitions. 57

60 Operating and financial review The following table presents Group net revenue and Operating Profit/ Loss for each of the below-listed nine quarters, derived from Boozt s internal reporting system: (SEK million) March 31, 2017 For the three months ended (unaudited), derived from the Company s internal reporting system December 31, 2016 September 30, 2016 June 30, 2016 March 31, 2016 December 31, 2015 September 30, 2015 June 30, 2015 March 31, 2015 Boozt.com Booztlet.com Other Net Revenue Boozt.com Booztlet.com Other Operating Profit/Loss LIQUIDITY AND CAPITAL RESOURCES Liquidity management is critical for the Company. Boozt monitors its liquidity daily and cash-position prognosis is evaluated monthly. Boozt seeks to maintain sufficient liquidity through a focus on its current operations, active working capital management, targeted investment activities and drawings under its credit facility from time to time. The aim of Boozt s financing policy is to secure sufficient liquid reserves at all times to satisfy the operating and strategic financial needs of Group companies. Boozt s liquidity risk is primarily attributable to seasonal variations as purchases are cyclical and inventories are built up before each season based on expected sales. As of December 31, 2016, the Group had SEK million in liquid funds. Boozt seeks to maintain access to its overdraft facilities to manage liquidity risk at certain times during the year when large purchases are made. For a description of the credit facilities Boozt expects to put in place in connection with the IPO, see section Capitalisation, indebtedness and other financial information Capital structure in connection with the listing Credit arrangement with Danske. Note 25 under section Historical financial information on pages F-39 F-41 for further information on Boozt s financial risk management, including its liquidity arrangements. Funding of investments The Company has historically financed its capital expenditures 54) and investments in intangible assets, comprising Boozt s web platform, primarily from contributions by its shareholders and, to a lesser extent, through bank loans. The outstanding amount under the bank loans described above was SEK 12.0 million as of March 31, 2017, primarily reflecting financing from ALMI. Because of Boozt s financial liability profile, interest risk is limited. A 3 per cent interest rate fluctuation in 2016 would have resulted in only a SEK 0.1 million change in profit before taxes for the year. Boozt plans to use cash flow from operating activities along with drawings under its credit facilities from time to time to fund further investments 55) intended to support continuing growth and strategic development. For further information, see section Capital expenditures. Historical consolidated cash flows The following table summarizes Boozt s cash flows for the periods indicated: For the three months ended March 31, audited For the fiscal year ended December 31, audited (SEK million) Cash flow from operating activities Cash flow from investing activities Cash flow from financing activities Cash Flow for Period Cash and cash equivalents at end of period Comparison of the three-month periods ended March 31, 2017 and March 31, 2016 Cash flow from operating activities Cash flow used in operating activities amounted to a cash outflow of SEK 98.3 million in Q compared to a cash outflow of SEK 58.9 million in Q The increase in cash outflow in Q mainly resulted from Boozt s increased net working capital 53) in Q compared to Q1 2016, as the Group increased inventory volumes and made significant payments to suppliers in preparation for the spring/ summer season Boozt s increased operating loss in Q due to the warehouse move and IPO preparation expenditures also negatively affected cash flow from operating activities. Cash flow from investing activities Cash flow used in investing activities amounted to a cash outflow of SEK 5.4 million in Q compared to a cash outflow of SEK 18.1 million in Q Investments in Q primarily relate to investments for the Group s new fulfilment center (SEK 2.9 million), as well as development costs for the Group s web platform (SEK 2.2 million). The decrease in cash outflow between the periods was primarily attributable to a significant investment 56) in warehouse equipment that was made in Q Cash flow from financing activities Cash flow from financing activities amounted to nil in Q compared to a cash outflow of SEK 0.2 million in Q ) See section Selected financial and performance information Financial and performance definitions. 54) See section Selected financial and performance information Financial and performance definitions. 55) See section Selected financial and performance information Financial and performance definitions. 56) See section Selected financial and performance information Financial and performance definitions. 58

61 Operating and financial review Comparison of the fiscal years ended December 31, 2016 and December 31, 2015 Cash flow from operating activities Cash flow from operating activities amounted to SEK 40.6 million in 2016 compared to a cash outflow of SEK 57.0 million in The cash flow in 2016 mainly resulted from Boozt s operating profit in 2016 compared to its operating loss in 2015, which was partly offset by increased net working capital. 57) Cash flow from investing activities In 2016, Boozt s cash flow from investing activities amounted to a cash outflow of SEK 33.7 million compared to a cash outflow of SEK 10.4 million in This increase in cash outflows was primarily attributable to investments 58) in fulfilment capabilities, particularly warehouse equipment, as well as capitalized IT costs. Cash flow from financing activities Cash flow from financing activities amounted to a cash inflow of SEK million in 2016, resulting from share capital increases of SEK million, a new loan facility of SEK 12.0 million and loan repayment of SEK 1.2 million. Cash inflow in 2016 decreased by SEK 34.4 million from SEK million in 2015, primarily due to a reduced level of share capital increases. Comparison of the fiscal years ended December 31, 2015 and December 31, 2014 Cash flow from operating activities In 2015, cash flow used in operating activities amounted to SEK 57.0 million compared to SEK 78.9 million in The decrease in cash outflow mainly resulted from the lower operating loss, which was partly offset by increased net working capital. 59) Cash flow from investing activities Cash flow used in investing activities amounted to a cash outflow of SEK 10.4 million in 2015 compared to a cash outflow of SEK 5.2 million in This increase was primarily attributable to increased order fulfilment investments 60) and technology. Cash flow from financing activities Cash flow provided by financing activities increased from SEK 67.1 million in 2014 to SEK million in This increase was primarily due to a SEK million equity financing in 2015 to fund Boozt s growth strategy and retain operational flexibility. Capital expenditures Capital expenditures have historically consisted of cash paid for investments in warehouse equipment and equipment primarily related to operations and IT equipment used in connection with the Company s web platform, as well as furniture and office equipment 61). Capital expenditures amounted to SEK 34.1 million, SEK 5.6 million and SEK 4.0 million in 2016, 2015 and 2014, respectively, with the capital expenditures relating to the Company s warehouse amounting to SEK 15.9 million in In Q1 2017, capital expenditures amounted to SEK 5.1 million. In connection with the transition to the new fulfilment centre, the Company has agreed to make an initial investment of approximately SEK 100 million in warehouse equipment for AutoStore and other warehouse costs. Approximately 70 per cent of this investment is expected to be financed through a lending arrangement in Q The remainder of the investment is expected to be financed with cash. Boozt expects to make an additional investment of a similar amount in equipment for AutoStore in See section Business overview Efficient supply chain process enabling fast delivery and Risk Factors Risks Related to Boozt The operation of Boozt s new fulfilment centre might not be successful. Net working capital Net working capital 62) is a non-ifrs measure, which Boozt defines as current assets, excluding cash and cash equivalents, less non-interest bearing current liabilities. See also section Key Factors affecting Results of operations and financial condition Net working capital. Net working capital increased during the periods under review in line with the development of Boozt s business, amounting to SEK 94.6 million, SEK 56.8 million and SEK 2.7 million as of December 31, 2016, 2015 and 2014, respectively. The following table presents the development of Boozt s net working capital development, as derived from its internal reporting system. As of (unaudited) (SEK million) March 31, 2017 December 31, 2016 September 30, 2016 June 30, 2016 March 31, 2016 December 31, 2015 September 30, 2015 June 30, 2015 March 31, 2015 December 31, 0214 Inventories Accounts receivables Other current assets 1) Current assets (ex cash) 2) Accounts payables Other current liabilities 3) Current liabilities Net working capital ) Comprises other receivables, current tax assets and prepaid expenses and accrued income. 2) Excluding cash and cash equivalents. 3) Comprises current tax liabilities, other liabilities and accrued expenses and prepaid income. 57) See section Selected financial and performance information Financial and performance definitions. 58) See section Selected financial and performance information Financial and performance definitions. 59) See section Selected financial and performance information Financial and performance definitions. 60) See section Selected financial and performance information Financial and performance definitions. 61) See section Selected financial and performance information Financial and performance definitions. 62) See section Selected financial and performance information Financial and performance definitions. 59

62 Operating and financial review Inventories primarily consist of shoes and articles of clothing Boozt markets for sale, and constitute Boozt s most significant current asset. Goods attributable to Boozt s mono-brand business were not included in inventory. Boozt s inventories have increased in line with its business development during the periods under review, amounting to SEK million, SEK million and SEK million as of December 31, 2016, 2015 and 2014, respectively, and SEK million as of March 31, Accounts receivables mainly consist of payments to be received from selling marketing services as well as invoiced expenses to suppliers and amounted to SEK 19.6 million, SEK 4.1 million and SEK 1.0 million as of December 31, 2016, 2015 and 2014, respectively, and SEK 10.1 million as of March 31, Current liabilities have increased in line with Boozt s business development during the periods under review, amounting to SEK million, SEK million and SEK million as of December 31, 2016, 2015 and 2014, respectively, and SEK million as of March 31, Accounts payables, reflecting amounts owed by Boozt for delivered merchandise (SEK million, SEK million and SEK 60.9 million as of December 31, 2016, 2015 and 2014, respectively, and SEK million as of March 31, 2017) and other current liabilities, reflecting current tax liabilities, other liabilities and accrued expenses and prepaid income (SEK million, SEK million and SEK 80.2 million, as of December 31, 2016, 2015 and 2014, respectively, and SEK million as of March 31, 2017) comprise Boozt s current liabilities. While net working capital is subject to significant seasonality, with the end of the first and third quarters of a given year typically reflecting the highest amount of net working capital, Boozt actively manages its net working capital. QUANTITATIVE AND QUALITATIVE DISCLOSURES ON SELECTED RISKS In the course of its ordinary activities, the Company is exposed to credit risks, liquidity risks and market risks (currency and interest rate risks). The aim of the Company s financial risk management is to limit the risks resulting from operating activities. The Group s management is responsible for the management of the risks. For further information, see Note 25 under section Historical financial information on pages F-39 F-41. WORKING CAPITAL STATEMENT Boozt believes that the Company s existing level of net working capital is sufficient to meet the Company s estimated needs over the next twelve-month period. SIGNIFICANT ACCOUNTING POLICIES, ESTIMATES AND JUDGEMENTS Significant accounting policies Boozt s Annual Financial Statements and Interim Financial Statements have been prepared in accordance with IFRS issued by the International Accounting Standards Board ( IASB ) as well as interpretations from the International Financial Reporting Interpretations Committee ( IFRIC ), as adopted by the EU. Recommendation RFR 1 Supplementary Accounting Rules for Corporate Groups of the Swedish Financial Reporting Board has also been applied. For significant accounting policies applicable to Boozt, see Note 1 Significant accounting principles to the Annual Financial Statements for the fiscal year ended December 31, 2016 and Note 1 Accounting principles for the fiscal period ended March 31, Boozt has also begun work on the planned implementation of revised IFRS accounting standards for Financial Instruments (IFRS 9), Revenue from Contracts with Customers (IFRS 15) and Leasing (IFRS 16). For further information on Boozt s implementation these revised standards, see Note 1 Significant accounting principles to the Annual Financial Statements for the fiscal year ended December 31, 2016 and Note 1 Accounting principles to the quarterly financial statements for the fiscal period ended March 31, Significant estimates and assessments For information on the estimates and assessments applied by Boozt in the preparation of its financial statements, see Note 1 Significant accounting principles to the Annual Financial Statements for the fiscal year ended December 31, 2016 and Note 1 Accounting principles to the quarterly financial statements for the fiscal period ended March 31, Boozt has issued two warrant programs with individual terms and conditions (warrant program 2012/2022 and warrant program 2015/2025). These programs are intended for key employees, the Group CEO is included in this group of people. If an exit happens, meaning either an IPO or a trade sale of the Company, the warrants give a right to purchase a share in the Company at a pre-defined price. If the Company does not perform an exit according to the pre-defined terms as stated above, all warrants void, and the warrant holders cannot purchase shares. At each reporting date, Boozt assesses the probability for an exit according to the definition provided in the terms and conditions for the warrant program to occur. For Q1 2017, Boozt made the assessment that it is not probable that an exit will occur during the duration for each program. Thus, the Company only recognised social charges for the 2012/2022 program and not for the 2015/2025 program. In relation to the warrant program 2012/2022 the company has used a probability assessment of 49 per cent to calculate the provision for social charges. If Boozt had assessed this as probable during Q1 2017, the effect in the financial reports would have been a cost of personnel amounting to the value of the earnings for the year, that relates to the fair value of the warrants distributed over the years that the earning is attributable to, with the corresponding amount recorded as increase of equity. The total accumulated effect in the income statement per March 31, 2017, if recorded, would have amounted to SEK 4.8 million whereof SEK 1.2 million corresponds to debt for social charges of personnel. With purpose to counteract cash flow implications of costs for social charges, the Company holds 77,343 warrants attributable to the warrant program 2012/2022 and 64,954 warrants attributable to the warrant program 2015/2025 in its own portfolio of warrants. If an exit takes place as described in the 2012/22 program s terms and conditions, the probability of exit would automatically be set to 100 per cent, and the company would have to account for an additional SEK 19 million in social charges compared to amounts already recognized in the Q financial statements. Assuming the Offering is successfully completed at the mid-point of the Price Range, Boozt expects to record a cost of SEK 19.0 million in connection with the 2012/2022 warrant program and a cost of SEK 12.5 million in connection with the 2015/2025 warrant program. Boozt expects to record no cash flow effect of the net loss. In the 2012/2022 warrant program, the net loss is evened out through share capital from the sale of warrants that the Company holds, which is sold in connection with the IPO. 60

63 Capitalisation, indebtedness and other financial information Capitalisation, indebtedness and other financial information The tables in this section describe the Company s capitalisation and indebtedness at Group level as of March 31, See section Share capital and ownership structure for further information about the Company s share capital and the shares. The tables in this section should be read in conjunction with section Operating and financial review and the Company s financial information, including the related notes, which may be found elsewhere in this Offering Circular. The adjustments in the tables 9.1 and 9.2 below apply to the extent that the Offering is successfully completed and the number of shares that are issued, of the Company, in the Offering are adjusted to receive a gross proceeds of SEK 400 million irrespective of the Offering Price, provided that it is within the Price Range. 9.1 CAPITALISATION (SEK million) As of March 31, 2017 Adjustments Current debt Adjusted for new issue of shares in connection with the Offering Guaranteed Secured 1) Unguaranteed/unsecured Total current debt Non-current debt Guaranteed Secured 2) Unguaranteed/unsecured Total non-current debt Shareholders equity Share capital Legal reserve Other reserves Total equity ) The security relates to a corporate mortgage. 2) The security relates to a corporate mortgage. NET INDEBTEDNESS Boozt s net indebtedness as of March 31, 2017 is presented in the table below. The table only includes interestbearing liabilities. As of March 31, 2017, the Company has no indirect indebtedness. As of March 31, 2017, the Company has no contingent indebtedness. (SEK million) As of March 31, 2017 Adjustments Adjusted for new issue of shares in connection with the Offering (A) Cash (B) Cash equivalents (C) Trading securities (D) Liquidity (A)+(B)+(C) (E) Current financial receivables (F) Current bank debt (G) Current portion of non-current debt (H) Other current financial debt (I) Other current financial debt (F)+(G)+(H) (J) Net current financial indebtedness (I)-(E)-(D) (K) Non-current bank loans (L) Bonds issued (M) Other current financial debt (N) Non-current financial indebtedness (K)+(L)+(M) (O) Net financial indebtedness (J)+(N)

64 Capitalisation, indebtedness and other financial information CAPITAL STRUCTURE IN CONNECTION WITH THE LISTING Credit arrangements with Danske In connection with the listing of the Company s shares on Nasdaq Stockholm, the Group expects to refinance certain parts of its existing indebtedness by entering into of a multicurrency revolving credit facility agreement with Danske as lender (the Revolving Credit Facility Agreement ). The Revolving Credit Facility Agreement consists of a SEK 140 million committed multicurrency revolving credit (available for drawing in SEK, NOK, DKK and EUR) (the Revolving Credit Facility ), which can be used for general corporate and working capital purposes, including the funding of potential acquisitions. All advances made under the Revolving Credit Facility shall be finally repaid on the date falling three years from the Offering. The Company s drawdown of funding under the Revolving Credit Facility is subject to a number of conditions, including the completion of the Offering. The Revolving Credit Facility Agreement contains customary representations and warranties made as of the signing date of the Revolving Credit Facility Agreement and, in relation to certain representations and warranties, as of certain subsequent dates. The Revolving Credit Facility Agreement contains customary undertakings for the Company and certain of its subsidiaries, such as maintaining authorisations, complying with laws (including sanctions and anticorruption), not changing the business, restrictions on mergers, restrictions on disposals, negative pledge, restrictions for incurring financial indebtedness, restrictions on providing loans and guarantees and restrictions on acquisitions. The Revolving Credit Facility Agreement also includes financial covenants requiring that the Group s Net Debt to adjusted EBITDA 1) ratio and interest coverage ratio does not increase above certain levels. However, the Revolving Credit Facility Agreement does not contain any restrictions on dividend payments by the Company. The Revolving Credit Facility may terminate upon the occurrence of certain customary events, including in connection with a change of control of the Company or a delisting of the Company from Nasdaq Stockholm. Further, the Revolving Credit Facility may be due in full or in part if certain events occur, including, but not limited to, non-payment, insolvency and cross default. The events of default are subject to carve-outs and qualifications in accordance with the Revolving Credit Facility Agreement. Pursuant to the Revolving Credit Facility Agreement, the Revolving Credit Facility may be utilised by way of establishing an overdraft facility (Sw. checkräkningskredit) in an amount of up to SEK 60 million. On June 15, 2016, the Group entered into instalment arrangements (Sw. avbetalningsarrangemang) for robotic machines for the automated warehouse system AutoStore acquired from Element Logic AS, which are repaid in instalments during a period of five years. The instalment arrangements will remain in place following the listing of the Company s shares on Nasdaq Stockholm, and the outstanding amount to be repaid amounts to approximately SEK 70 million. The Group will, pursuant to the Revolving Credit Facility Agreement, provide security to Danske in the form of corporate mortgages (Sw. företagshypotek), in a total amount of SEK 61 million within 61 million. SIGNIFICANT EVENTS DURING THE PERIOD JANUARY 1 MARCH 31, 2017 On February 24, 2017, Boozt received access to the new Boozt Fulfilment Centre ( BFC ). Element Logic has delivered an automated storage and retrieval system called AutoStore to BFC. AutoStore is expected to enable Boozt to create a more efficient picking and packing process and thereby is expected to cut costs. During March 2017, the move of operations from the old warehouse to the new fulfilment centre was finalized. On March , Boozt opened its first Beauty by Boozt physical retail store in Roskilde, Denmark. The shop carries more than 70 brands. As of March 31, 2017, four full-time employees and three parttime employees are working in the store. SIGNIFICANT EVENTS AFTER MARCH 31, 2017 The Group has entered into an agreement with Castellum to rent of office space (4,938 sqm office premises) for the Groups headquarters in Hyllie, Sweden, as of January 1, The lease totals SEK 64 million over the 5 year contractual period. 1) See section Selected financial and performance information Financial and performance definitions. 62

65 Capitalisation, indebtedness and other financial information The following table summarizes certain impacts on Boozt s Q2 financials that are expected to occur if the IPO is consummated in that period. Certain figures described in this table represent Boozt s calculations and estimates, and, accordingly, constitute forward-looking statements. The items presented below are non-ifrs financial measures, i.e., financial measures that are not measures defined under IFRS. (SEK million) Share-based payments related to employees INCOME STATEMENT BALANCE SHEET CASH FLOW Earnings for the period Balance sheet total Equity Liabilities Total Operating activities Investments Financing Warrant program 2012/2022 1) Sale of warrants 2012/2022 that Boozt holds in own custody Warrant program 2015/2025 1) Costs regarding the initial public offering Preparatory costs for the initial public offering (burden by the Company) 2) Transaction bonus (including social charges) 3) Lock up-bonus (including social charges) 4) Other items affection comparability Costs related to the warehouse move Investments related to BFC Warehouse equipment (AutoStore and other warehouse investments) 5) TOTAL ) Assuming the Offering is completed at the mid-point of the Price Range. 2) Costs primarily related to costs for auditors, attorneys, printing of the Offering Circular, management presentations, etc. 3) Transaction bonus reflects the payment to be made to the CEO and one of the other senior executives corresponding to 3.6 times their monthly base salary in case of an IPO. For further details, see Corporate governance Remuneration to the members of the board of directors, CEO and Group Management. 4) lock-up bonus reflects payments to be made to certain members of senior management in connection with the IPO. For further details, see Section Corporate governance Remuneration to the members of the board of directors, CEO and Group Management. 5) Investment of approximately SEK 100 million. Approximately 70 per cent of this investment is expected to be financed through instalment arrangements with Danske Bank, with a repayment period of five years. 63

66 Board of directors, group management and auditor Board of directors, group management and auditor BOARD OF DIRECTORS Boozt s board of directors consists of eight ordinary members, including the chairman of the board, with no deputy board members, all of whom are elected for the period up until the end of the annual general meeting 2018 unless anything to the contrary is stated below. The table below shows the members of the board of directors, when they were first elected and whether they are considered to be independent of the Company and/or the major shareholders. Name Position Member since The Company and Group Management Independent of Major shareholders Henrik Theilbjørn Chairman 2009 Yes Yes Gerd Rahbek-Clemmensen Board member 2013 Yes No Staffan Mörndal Board member 2012 Yes No Jimmy Fussing Nielsen Board member 2014 Yes No Jón Björnsson Board member 2012 Yes Yes Kent Stevens Larsen Board member 2009 Yes Yes Bjørn Folmer Kroghsbo 1) Board member 2015 Yes No Majt Ann-Charlotte Lundén Board member 2016 Yes Yes Charlotte Svensson 2) Board member 2017 Yes Yes 1) Bjørn Folmer Kroghsbo is elected for the period up until July 31, 2017 and is replaced by Charlotte Svensson on August 1, ) Charlotte Svensson is elected for the period from August 1, 2017 up until the end of the annual general meeting 2018, and has consequently not assumed the position as board member on the date of this Offering Circular. HENRIK THEILBJØRN Born Chairman of the board since Education: Master of Science in Economics and Management, Aarhus University. Other current assignments: Chairman of the board of directors of Boozt Fashion AB, PWT Holding A/S, PWT Group A/S, Wagner China ApS, Wagner (Yantai) Co. Ltd, ELKA Rainwear A/S, Kelly Invest A/S, Baum und Pferdgarten A/S, Scandinavian Designers A/S, Performance Group Scandinavia A/S, HTM Group ApS, Carl Ras A/S and Languagewire A/S. Board member of Sahva A/S, Langulize A/S, Bloomingville A/S, BV Holding Company Aps, SIGNAL A/S, Signal Ejendomme ApS and November 2009 Option Holding AB. CEO, founder and board member of EMMADS Invest A/S. Previous assignments (last five years):chairman of the board of directors of A-Tex Holding A/S, A-Tex A/S, 11/11 INVEST ApS, Onstage ApS, BORCH TEXTILE HOLDING ApS, BORCH TEXTILE GROUP A/S, modevirksomheden , BIRGER CHRISTENSEN CHINA HOLDING A/S, BIRGER CHRISTENSEN A/S, SAINT TROPEZ AF 1993 A/S, MUNTHE A/S and Bruuns Bazar A/S. Board member of BIRGER CHRISTENSEN GENERAL TRADING COMPANY A/S, JAMIST Holding A/S, JAMIST A/S, JAMIST Support A/S, JAMIST Invest A/S and HB Textil A/S. Shareholding in the Company: Henrik Theilbjørn holds 337,800 shares in the Company indirectly through a company. GERD RAHBEK-CLEMMENSEN Born Board member since Education: Master of Law, Copenhagen University. Other current assignments: Chairman of the board of directors of KRM (Sweden) AB, KRM (Great Britain) Limited, KRM (Danmark) A/S, KRM (Deutschland) GmbH, KRM Kenkä Oy, KRM (Poland) Sp. z.o.o., KRM Retail (Slovakia) s.r.o., KRM (Czech Republic) s.r.o., KRM (Austria) GmbH, KRM (Portugal) LDA, Kasprzak Retail Management (Spain), S.L., KRM (Hungary) kft., KRM Obutev SL d.o.o., KRM Footwear Romania s.r.l., KRM Adriatic d.o.o., KRM Baltic SIA, KRM Footwear d.o.o. Beograd, KRM (Norway) AS, KRM (Belgium) SPRL and KRM Switzerland AG u.e. Board member of Boozt Fashion AB, ECCO Sko A/S, KRM AG, HADA Holding A/S and Toosbuys Foundation. Previous assignments (last five years): CEO of ECCO Holding A/S. Board member of ECCO (Shanghai) Co. Ltd., ECCO Slovakia a.s., ECCO Shoe Production Pte. Ltd., ECCO Tannery Holding (Singapore) Pte. Ltd., ECCO China Wholesale Holding (Singapore) Pte. Ltd., ECCO (Xiamen) Co. Ltd., ECCO Business Management (Shanghai) Co. Ltd., ECCO Tannery (Xiamen) Co. Ltd., ECCO (Thailand) Co., Ltd., PT. ECCO Indonesia and ECCO Vietnam. Shareholding in the Company: Gerd Rahbek-Clemmensen holds no shares in the Company. 64

67 Board of directors, group management and auditor STAFFAN MÖRNDAL Born Board member since Education: Master of Science in Business Administration, University of Linköping and PLD program, Harvard Business School. Other current assignments: Chairman of the board of directors of Hemmalivs Sverige AB. CEO and board member of Morndal Holding AB. Board member of Boozt Fashion AB, Nordic Functional Group AB, VCA IX Hold Co II AB, VCA IX Hold-Co I AB, VC IX Invest AB, Verdane Capital IX (D) AB, Verdane Capital IX (E) AB, Verdane Capital Advisors IX AB, Verdane Capital Advisors Future AB, Verdane Capital Advisors AS, Verdane Capital Advisors VIII AS, Verdane Fund V-VIII Holding AS, Verdane Capital Advisors Holding AS, MMSports AB, Chris Hollywood Konfektions AB, Californian roots AB, Outnorth AB and MatHem i Sverige AB. Deputy board member of andmotion AB and Animail AB. Previous assignments (last five years): Board member of LensOn AB, NBIS Kalmar AB, Liaison Technologies NA, EasyArt NA, KSD Software AS, Ikivo AB and Prenax Global AB. Deputy board member of Åkerströms Björbo AB, Åkerströms Intressenter AB, eleven AB, eleven Holding AB, WRAP International AB and Wazoo Holding AB. Shareholding in the Company: Staffan Mörndal holds no shares in the Company. JIMMY FUSSING NIELSEN Born Board member since Education: Master of Science in Finance and Accounting, Copenhagen Business School. Other current assignments: CEO of White Pines ApS. CEO and board member of Sunstone TV Management A/S, Co-CEO and board member of Sunstone Capital A/S. Board member of Boozt Fashion AB, Grad ApS, CapitalAid DK ApS, Sourced Technologies S.L. and Oaxaca Group ApS. Previous assignments (last five years): Board member of Asetek Holding Inc., IPtronics A/S, Layer B.V., Epista Software A/S, Game Analytics ApS and Mofibo Books ApS. Shareholding in the Company: Jimmy Fussing Nielsen holds no shares in the Company. JÓN BJÖRNSSON Born Board member since Education: Bachelor of Science in Business Administration, Rider University. Other current assignments: CEO of Festi hf. Chairman of the board of directors of Elko (part of Festi), Intersport Iceland (part of Festi), Krónan (part of Festi) and Nóatún (part of Festi). Board member of Boozt Fashion AB, Åhléns AB, Copenhagen Chocolate Factory ApS, Festi fasteignir (part of Festi), Höfðaeignir (part of Festi), IC Group A/S and Joe and the Juice Iceland. Previous assignments (last five years): CEO of Magasin du Nord (DK). Chairman of the board of directors of Jysk (franchise for Iceland, Baltics and Canada). Board member of Vörður Insurance. Shareholding in the Company: Jón Björnsson holds 34,284 shares in the Company. KENT STEVENS LARSEN Born Board member since Education: Master of Science in Engineering, Technical University of Denmark and MBA, INSEAD. Other current assignments: CEO of Phoenix Capital ApS, Phoenix Advisors ApS and UM Properties ApS. Chairman of the board of directors of Hørsholm City Aps. Board member of Boozt Fashion AB, Sportamore AB (publ), Dansk Vækstkapital II Komplementar ApS and Dansk Vækstkapital II K/S. Previous assignments (last five years): Shareholding in the Company: Kent Stevens Larsen holds 1,639,008 shares in the Company. BJØRN FOLMER KROGHSBO Born Board member since Education: Finance/Business Administration (HD) part 1, Copenhagen Business School and Executive Board Leadership Masterclass, Copenhagen Business School. Other current assignments: Chairman of the board of directors of Kapitalforeningen Sampension Invest. Board member of Boozt Fashion AB, Sampension Administration A/S and Sampension KP Livsforsikring A/S. Previous assignments (last five years): Board member of Saxotech A/S. Shareholding in the Company: Bjørn Folmer Kroghsbo holds no shares in the Company. 65

68 Board of directors, group management and auditor MAJT ANN-CHARLOTTE LUNDÉN Born Board member since Education: Master of Science in Business and Economics, University of Linköping. Other current assignments: Board member of Boozt Fashion AB, FM Mattsson Mora Group AB, Bergendahl & Son AB, JB Education AB, Twilfit AB and Karl-Adam Bonnier Foundation. Deputy board member of Lundén & Partner AB. Previous assignments (last five years): Board member of Swedol AB (publ), Björn Emil Madeleine Zoe (B.E.M.Z.) Design AB, Lammhults Design Group AB, LGT LOGISTICS HOLDING AB, Frontit AB, MultiQ International AB, Bergendahl Fashion AB, Bergendahl Food Holding AB, Bergendahl Food AB, Mandelgren Magazine AB and Statoil Fuel and Retail ASA. Shareholding in the Company: Majt Ann-Charlotte Lundén holds no shares in the Company. CHARLOTTE SVENSSON Born Will assume the position as board member on August 1, Education: Mathematics, Data Science, System Engineering, Finance and Marketing, Chalmers University of Technology, Gothenburg University and Karlstad University. Other current assignments: Deputy board member of Tranholmen Invest AB. Owner of Tranholmen båtcharter HB. Previous assignments (last five years): CEO and board member of MWM Group AB. Board member of MWM System AB. Deputy board member of MWM Media Workflow Management Consulting AB and ITK Affärssystem AB. CIO of AB Dagens Nyheter. CIO, CDO and CMO of Bonnier News. CTO of Bonnier AB. Shareholding in the Company: Charlotte Svensson holds no shares in the Company. GROUP MANAGEMENT The numbers concerning the holding of shares for the group management are based on an assumption that the Offsett Issue is carried out to a subscription price equal at the midpoint of the Price Range. HERMANN HARALDSSON Born CEO since Education: Master of Science in Business Economics, Copenhagen Business School. IAA Diploma. Executive education, INSEAD, IMD, London Business School and Singularity University. Other current assignments: CEO of Boozt Fashion AB. Director of Buland Invest ApS, Egilsgata Invest ApS, Langanes ApS and MMFFC 2008 ApS. Chairman of the board of directors of Boozt M Partnership AB, Boozt Retail AB, Boozt Technology AB, Boozt Fashion ApS, Beauty by Boozt A/S and Boozt Retail A/S. Deputy board member of November 2009 Option Holding AB. Previous assignments (last five years): Director of Boozt Fashion ApS. Board member of Lucky Little Me AB, Blackwood Seven A/S and Baltic Farms A/S. Shareholding in the Company: Hermann Haraldsson holds personally and indirectly through a company, 976,223 shares and 288,000 employee stock options in the Company. ALLAN JUNGE-JENSEN Born CFO since Education: Master of Science in International Marketing & Management, Copenhagen Business School. Other current assignments: CEO of AFA Invest Aps. Board member of Boozt Retail AB, Boozt Technology AB, Boozt M Partnership AB, Boozt Retail A/S, Beauty by Boozt A/S and Boozt Fashion ApS. Previous assignments (last five years): CEO of Boozt Retail A/S and Beauty by Boozt A/S. Deputy board member of Lucky Little Me AB. Shareholding in the Company: Allan Junge-Jensen holds, personally and indirectly through a company, 321,079 shares and 252,000 employee stock options in the Company. PETER G. JØRGENSEN Born CMO since Education: Master of Science in International Marketing & Management, Copenhagen Business School. Executive MBA courses, London Business School. Other current assignments: Previous assignments (last five years): Shareholding in the Company: Peter G. Jørgensen holds 344,071 shares and 228,024 employee stock options in the Company. 66

69 Board of directors, group management and auditor NIELS HEMMINGSEN Born COO since Education: Master Military Studies, Royal Danish Defense College. B.Sc. in Organisational Behaviour & Strategy, Copenhagen Business School. General Manager Program, Harvard Business School. Other current assignments: Board member of Homemate ApS. Previous assignments (last five years): Board member of Beauty by Boozt A/S and Boozt Retail A/S. Shareholding in the Company: Niels Hemmingsen holds 341,280 shares and 228,024 employee stock options in the Company. JESPER BRØNDUM Born CTO since Education: Master of Science in Image Analysis, Aalborg University. Ph. D in Multivariate Data Processing, Faculty of Science, Copenhagen University. Other current assignments: Board member of Boozt Fashion ApS. Previous assignments (last five years): Shareholding in the Company: Jesper Brøndum holds 349,656 shares and 228,024 employee stock options in the Company. JOHAN HOLMQVIST Born Head of Investor Relations & Corporate Communications since Education: Master of Science in Economics and Management, Lund University. Other current assignments: Previous assignments (last five years): Vice President Corporate Communications of ReadSoft AB (publ). Shareholding in the Company: Johan Holmqvist holds no shares in the Company. OTHER INFORMATION ABOUT THE BOARD OF DIRECTORS AND GROUP MANAGEMENT There are no family ties between any members of the board of directors or Group Management. The board member Kent Stevens Larsen is board member of Sportamore AB (publ), a company that partly competes against Boozt. The board member Gerd Rahbek-Clemmensen is board member of ECCO Sko A/S, a supplier to Boozt. There are no other conflicts of interest or potential conflicts of interest between the obligations of members of the board of directors and Group Management of the Company and their private interests and/or other undertakings. Henrik Theilbjørn was chairman of the board of directors of Bruuns Bazaar A/S when the company filed a petition for bankruptcy in 2016 and 11/11 Invest ApS when the company filed a petition for bankruptcy in Majt Ann-Charlotte Lundén is a board member of JB Education AB which was declared bankrupt on June 12, Staffan Mörndal is a board member of Ikivo AB which was declared bankrupt on July 10, Except as set out above, during the last five years, none of the members of the board of directors or the members of the Group Management have (i) been sentenced for fraud-related offences, (ii) represented a company which has been declared bankrupt or filed for liquidation, or been subject to administration under bankruptcy, (iii) been subject to accusations and/or sanctions by any agency authorised by law or regulation (including approved professional organisations) or (iv) been prohibited by a court of law from being a member of any company s administrative, management or supervisory body or from holding a senior or overarching position of any company. All members of the board of directors and the members of the Group Management are available at the Company s main office at Hyllie Boulevard 10 B, SE Malmö, Sweden. AUDITOR For the financial years 2014 and 2015, Thomas Swenson from Ernst & Young Aktiebolag was the Company s auditor. Thomas Swenson (born 1957) is an authorised public accountant and a member of FAR (professional institute for authorised public accountants). At the 2016 annual general meeting, the Company appointed Ernst & Young Aktiebolag as its auditor, with Thomas Swenson as the auditor in charge. The reason for the early dismissal was that the Company preferred appointing a registered accounting firm instead of an individual auditor. Ernst & Young Aktiebolag was re-elected at the 2017 annual general meeting to serve as auditor through the 2018 annual general meeting. Ernst & Young Aktiebolag s office address is Jakobsbergsgatan 24, SE Stockholm, Sweden. 67

70 Corporate governance Corporate governance CORPORATE GOVERNANCE Boozt is a Swedish public limited liability company. Prior to the listing on Nasdaq Stockholm, corporate governance in the Company was based on Swedish law and internal rules and instructions. Once the Company has been listed on Nasdaq Stockholm, the Company will also comply with Nasdaq Stockholm s Rule Book for Issuers and apply the Swedish Corporate Governance Code (the Code ). The Code applies to all Swedish companies with shares listed on a regulated market in Sweden and shall be fully applied in connection with the listing of a company. The Company is not obliged to comply with every rule in the Code as the Code itself provides for the possibility to deviate from the rules, provided that any such deviations and the chosen alternative solutions are described and the reasons therefore are explained in the corporate governance report (according to the so-called comply or explain principle ). The Company will apply the Code from the time of the listing of the shares on Nasdaq Stockholm. Any deviation from the Code will be reported in the Company s corporate governance report, which will be prepared for the first time for the 2017 financial year. However, in the first corporate governance report, the Company is not required to explain non-compliance with such rules that have not been relevant during the period covered by the corporate governance report. The Company will report a deviation from the Code with respect to its incentive programme due to the fact that the Code stipulates a vesting period of at least three years, see section Share capital and ownership structure Incentive programme. GENERAL MEETING According to the Swedish Companies Act (2005:551) (Sw. aktiebolagslagen), the general meeting is the Company s highest decision-making body. At the general meeting, the shareholders exercise their voting rights in key issues, such as the adoption of income statements and balance sheets, appropriation of the Company s results, discharge from liability of members of the board of directors and the CEO, election of members of the board of directors and auditors and remuneration to the board of directors and the auditors. The annual general meeting must be held within six months from the end of the financial year. In addition to the annual general meeting, extraordinary general meetings may be convened. According to the articles of association, general meetings are convened by publication of the convening notice in the Swedish National Gazette (Sw. Post- och Inrikes Tidningar) and on the Company s website. At the time of the notice convening the meeting, information regarding the notice shall be published in Svenska Dagbladet. Right to participate in general meetings Shareholders who wish to participate in a general meeting must be included in the shareholders register maintained by Euroclear Sweden on the day falling five workdays prior to the meeting, and notify the Company of their participation no later than on the date stipulated in the notice convening the meeting. Shareholders may attend the general meetings in person or by proxy and may be accompanied by a maximum of two assistants. Typically, it is possible for a shareholder to register for the general meeting in several different ways as indicated in the notice of the meeting. A shareholder may vote for all shares owned or represented by the shareholder. Shareholder initiatives Shareholders who wish to have a matter brought before the general meeting must submit a written request to the board of directors. Such request must normally be received by the board of directors no later than seven weeks prior to the general meeting. NOMINATION COMMITTEE Companies applying the Code shall have a nomination committee. According to the Code, the general meeting shall appoint the members of the nomination committee or resolve on procedures for appointing the members. The nomination committee shall, pursuant to the Code, consist of at least three members of which a majority shall be independent in relation to the Company and the Group Management. In addition, at least one member of the nomination committee shall be independent in relation to the largest shareholder in terms of voting rights or group of shareholders who cooperates in terms of the Company s management. At the annual general meeting held on May 15, 2017 it was resolved that the nomination committee for the annual general meeting 2018 shall be composed of representatives of the three largest shareholders listed in the shareholders register maintained by Euroclear Sweden as of August 31, 2017 and the chairman of the board, who will also convene the first meeting of the nomination committee. The member representing the largest shareholder shall be appointed chairman of the nomination committee, unless the nomination committee unanimously appoints someone else. If earlier than three months prior to the annual general meeting, one or more of the shareholders having appointed representatives to the nomination committee no longer are among the three largest shareholders, representatives appointed by these shareholders shall resign and the shareholders who then are among the three largest shareholders may appoint their representatives. Should a member resign from the nomination committee before its work is completed and the nomination committee considers it necessary to replace him or her, such substitute member is to represent the same shareholder, or, if the shareholder is no longer one of the largest shareholders, the largest shareholder in turn. Shareholders who have appointed a representative to be a member of the nomination committee shall have the right to dismiss such member and appoint a new representative of the nomination committee. Changes to the composition of the nomination committee must be announced immediately. The composition of the nomination committee for the annual general meeting shall normally be announced no later than six months before that meeting. Remuneration shall not be paid to the members of the nomination committee. The Company is to pay any necessary expenses that the nomination committee may incur in its work. The term of office for the nomination committee ends when the composition of the following nomination committee has been announced. BOARD OF DIRECTORS The board of directors is the second-highest decision-making body of the Company after the general meeting. According to the 68

71 Corporate governance Swedish Companies Act, the board of directors is responsible for the organisation of the company and the management of the company s affairs, which means that the board of directors is responsible for, among other things, setting targets and strategies, securing routines and systems for evaluation of set targets, continuously assessing the financial condition and profits as well as evaluating the operating management. The board of directors is also responsible for ensuring that annual reports and interim reports are prepared in a timely manner. Moreover, the board of directors appoints the CEO. Members of the board of directors are normally appointed by the annual general meeting for the period until the end of the next annual general meeting. According to the Company s articles of association, the members of the board of directors elected by the general meeting shall be not less than three and not more than ten members with no deputy members. According to the Code, the chairman of the board of directors is to be elected by the general meeting and has the special responsibility for the Company s management of the work of the board of directors and to ensure that the work of the board of directors is efficiently organised and carried out in an efficient manner. The board of directors applies written rules of procedure, which are revised annually and adopted by the inaugural board meeting every year. Among other things, the rules of procedure govern the practice of the board of directors, functions and the division of work between the members of the board of directors and the CEO. At the inaugural board meeting, the board of directors also adopts instructions for the CEO, including instructions for financial reporting. The board of directors meets according to an annual predetermined schedule. In addition to these meetings, additional board meetings can be convened to handle issues, which cannot be postponed until the next ordinary board meeting. In addition to the board meetings, the chairman of the board of directors and the CEO continuously discuss the management of the Company. Currently, the Company s board of directors consists of eight ordinary members elected by the general meeting, who are presented in section Board of directors, Group Management and auditor. Audit committee Boozt has an audit committee consisting of three members: Kent Stevens Larsen (chairman), Staffan Mörndal and Henrik Theilbjørn. The audit committee shall, without it affecting the responsibilities and tasks of the board of directors, monitor the Company s financial reporting, monitor the efficiency of the Company s internal controls, internal auditing and risk management, keep informed of the auditing of the annual report and the consolidated accounts, review and monitor the impartiality and independence of the auditors and pay close attention to whether the auditors are providing other services besides audit services for the Company, and assist in the preparation of proposals for the general meeting s decision on election of auditors. Remuneration committee Boozt has a remuneration committee consisting of four members: Jón Björnsson (chairman), Majt Ann-Charlotte Lundén, Jimmy Fussing Nielsen and Henrik Theilbjørn. The remuneration committee shall prepare matters concerning remuneration principles, remuneration and other employment terms for the CEO and the Group Management. THE CEO AND OTHER GROUP MANAGEMENT The CEO is subordinated to the board of directors and is responsible for the everyday management and operations of the Company. The division of work between the board of directors and the CEO is set out in the rules of procedure for the board of directors and the CEO s instructions. The CEO is also responsible for the preparation of reports and compiling information for the board meetings and for presenting such materials at the board meetings. According to the instructions for the financial reporting, the CEO is responsible for the financial reporting in the Company and consequently must ensure that the board of directors receives adequate information for the board of directors to be able to assess the Company s financial condition. The CEO shall continually report to the board of directors on the development of the Company s business, including the development of the results, prices, status and liquidity and information regarding important events. The CEO and Group Management are presented in section Board of directors, Group Management and auditor. REMUNERATION TO THE MEMBERS OF THE BOARD OF DIRECTORS, CEO AND GROUP MANAGEMENT Remuneration to the members of the board of directors Fees and other remuneration for members of the board of directors, including the chairman, are resolved by the general meeting. At the annual general meeting held on May 15, 2017, it was resolved that the fee for the chairman of the board of directors should be SEK 500,000 and that the fee for the other members should be SEK 250,000. The members of the board of directors are not entitled to any benefits following termination of their assignments as directors of the board. Further, at the annual general meeting held on May 15, 2017 it was resolved that the fee for the chairman of the audit committee should be SEK 100,000 and that the fee for other members should be SEK 50,000. At the annual general meeting held on May 15, 2017, it was also resolved that the members of the remuneration committee shall not receive any remuneration for their assignment as members of the remuneration committee. Remuneration to the board of directors during the 2016 financial year The table below presents an overview of remuneration to the board of directors elected by the shareholders for the 2016 financial year. Name Function Board fee (SEK) Henrik Theilbjørn Chairman 300,000 Gerd Rahbek-Clemmensen Board member Staffan Mörndal Board member Jimmy Fussing Nielsen Board member Jón Björnsson Board member 150,000 Kent Stevens Larsen Board member Bjørn Folmer Kroghsbo Board member Majt Ann-Charlotte Lundén 1) Board member 150,000 Total 600,000 1) Elected as member of the board of directors at the annual general meeting held on June 1, Guidelines for remuneration to the CEO and other members of Group Management At the annual general meeting held on May 15, 2017, guidelines were adopted on remuneration of the CEO and other members of Group Management. These guidelines are designed to attract, motivate and retain exceptional employees in a competitive and international market. The guidelines reflect the Company s objectives for good corporate governance as well as sustained long-term value creation for shareholders. Group management remuneration The remuneration of Boozt s Group Management shall be proposed by the Remuneration Committee and subsequently approved by the 69

72 Corporate governance board of directors. The total remuneration shall be based on market terms, be competitive, well-balanced and not wage leading as well as contribute to good ethics and company culture. The fixed salary shall be based on the Group Management s competence and area of responsibility, and shall normally be reviewed every year. Total remuneration shall be comprised as follows: A fixed base salary, set at a level aimed at attracting and retaining executives with professional and personal competences required to drive the Company s performance. Short-term incentives, based on the achievement of a number of individual, pre-defined financial and strategic business targets approved by the board of directors. Short-term incentives cannot exceed 50% of the fixed base salary, and must be partly related to financial targets and partly to non-financial, strategic business targets. Long-term incentives in the form of stock options, promoting a balance between shortterm achievements and long-term thinking. The Company s stock option program is further specified below. Pension contributions, if any, are made in accordance with applicable laws and employment agreements. Severance payments in accordance with termination clauses in employment agreements. Severance payments shall comply with local legal framework. No person will be eligible for severance pay in case of termination for wilful misconduct or gross negligence. Long term incentive programme Boozt s long term incentive programs shall have the objective of aligning interests of the Group Management and selected key employees with the long-term goals of the Company and its shareholders. The vesting period for long term incentive programs shall be at least three years. Long-term incentive programs shall always be based on shares or share-linked instruments. Long-term incentive programs shall ensure a long-term commitment to the development of the Company. Any share-based long term incentive programs shall be subject to shareholder approval before being launched. The board of directors shall be entitled to deviate from the guidelines in individual in case of special circumstances. Current employment agreements for the CEO and other Group Management Decisions as to the current remuneration levels and other conditions for employment for the CEO and the other members of the Group Management have been resolved by the board of directors. The table below presents an overview of remuneration to the CEO and other members of Group Management for the 2016 financial year. All amounts in SEK thousands Name Basic salary Variable remuneration Other benefits Pension costs Total Hermann Haraldsson, CEO 2, ,376 Other members of the Group Management 5,231 1, ,789 Total 7,469 2, ,165 The CEO is entitled to a fixed salary of SEK million annually. If certain goals are achieved, the fixed salary of the CEO will be raised to SEK million annually from 1 January In addition to the fixed salary, the CEO is entitled to severance pay equal to 12 times the fixed monthly salary if the Company terminates the employment. Other senior executives are entitled to a fixed monthly salary in the range of SEK 85,000 to 184,800. If certain goals are achieved, the fixed salary of other senior executives will be raised from 1 January In addition to the fixed salary, the CEO and the other senior executives are entitled to an annual bonus capped at 25 per cent of the fixed salary in accordance with their employment agreements. Certain senior executives are entitled to an extra increase in their bonuses, which increase is capped at 25 per cent of the fixed salary in accordance with their employment agreement. A mutual notice period of six months applies to the CEO. For other senior executives, the notice period is between six and eight months when the employment is terminated by the employer and three to six months when the employment is terminated by the employee. The CEO and the senior executives are not entitled to any pension contributions, except from one senior executive that is entitled to pension contributions. The CEO and one of the other senior executives are entitled to a transaction bonus corresponding to 3.6 times their monthly base salary in case of an IPO. Bonus in connection with the listing of the Company s shares The CEO and one of the other senior executives are entitled to a transaction bonus corresponding to 3.6 times their monthly base salary in case of an IPO. In addition, the Company has undertaken the obligation to pay a bonus ( Look up-bonus ) of 12 times the monthly base salary to five persons of the management, including the CEO, upon a listing of the Company s shares, provided that the Company exercises its right, to both require that (i) these persons reinvest at least 50 per cent of the net proceeds that each person receives when the Options Programme 2012 terminates, as well as (ii) these persons enter into a commitment not to sell shares in the Company that they hold due to the Options Programme The Company intends to exercise these rights and thus, the Lock up-bonus will be paid. The Company s costs resultry from the Lock up-bonus amount up to SEK million, excluding social security charges, and will be a recorded in the second quarter The senior executives that receive bonus, as mentioned above, have chosen to reinvest per cent of the received bonus, less tax. Incentive programme For a description of the Company s incentive programme, see section Share capital and ownership structure Incentive programme. INTERNAL CONTROL Internal control comprises the control of the Company s and the Group s organisation, procedures and support measures. The objective is to ensure that reliable and accurate financial reporting takes place, that the Company s and the Group s financial reporting is prepared in accordance with law and applicable accounting standards, that the Company s assets are protected and that other requirements are fulfilled. The system for internal control is also intended to monitor compliance with the Company s and the Group s policies, principles and instructions. Internal control also comprises risk analysis and follow-up of incorporating information and business systems. The Group identifies, assesses and manages risks based on the Group s vision and goals. Risk assessment of strategic, compliance, operational and financial risks shall be performed annually by the CFO and presented to the audit committee and the board of directors. The board of directors and the board s audit committee are responsible for internal control. Processes managing the business and delivering value shall be defined within the business management system. The CEO is responsible for the process structure within the Group. A self-assessment of minimum requirements of defined controls mitigating identified risks for each business process shall annually 70

73 Corporate governance be performed and reported to the audit committee and the board of directors. The CFO is responsible for the self-assessment process, which is facilitated by the internal controls function. In addition, the internal controls function performs reviews of the risk and internal controls system according to plan agreed with the board of directors and Group Management. AUDITING The auditor shall review the Company s annual reports and accounting, as well as the management of the board of directors and the CEO. Following each financial year, the auditor shall submit an audit report and a consolidated audit report to the annual general meeting. Pursuant to the Company s articles of association, the Company shall have not less than one and not more than two auditors and not more than two deputy auditors. The Company s auditor is Ernst & Young Aktiebolag, with Thomas Swenson as auditor in charge. The Company s auditor is presented in more detail in section Board of directors, Group Management and auditor. In 2016, the total remuneration to the Company s auditor amounted to SEK 1.2 million, of which SEK 0.5 million was attributable to the auditing assignments and SEK 0.7 million was attributable to other services. The Company s auditor remarked in the auditor s report for the annual report of the financial year 2014 that only consideration for performed services, as opposed to commission sales, should be accounted for in the net revenue. According to the auditor, such classification error affected reported net revenue and cost of goods for resale, which should have been reported to a lower amount. The classification error has been corrected in the numbers presented in this Offering Circular. 71

74 Share capital and ownership structure Share capital and ownership structure GENERAL INFORMATION Pursuant to the Company s articles of association, the Company s share capital may not be less than SEK 3,300,000 and not more than SEK 13,200,000, and the number of shares may not be less than 20,000,000 and not more than 80,000,000. As at the date of this Offering Circular, the Company has issued a total of 46,695,540 shares. The shares are denominated in SEK and the quota value of each share is SEK All shares have been issued pursuant to Swedish law. All issued shares have been fully paid and are freely transferrable. The offered shares are not subject to a mandatory offering, redemption rights or sell-out obligation. No public takeover offer has been made for the offered shares during the current or preceding financial year. The Selling Shareholders have undertaken the commitments which are stated in section Legal considerations and supplementary information Cornerstone investors in relation to the Cornerstone Investors. CERTAIN RIGHTS ASSOCIATED WITH THE SHARES The offered shares are all of the same class. The rights associated with the shares issued by the Company, including those pursuant to the articles of association, can only be amended in accordance with the procedures set out in the Swedish Companies Act. VOTING RIGHTS Each share entitles the holder to one vote at general meetings and each shareholder is entitled to cast votes equal in number to the number of shares held by the shareholder. PREFERENTIAL RIGHTS TO NEW SHARES ETC. If the Company issues new shares, warrants or convertibles in a cash issue or a set-off issue, shareholders shall, as a general rule, have preferential rights to subscribe for such securities proportionally to the number of shares held prior to the issue. RIGHTS TO DIVIDENDS AND BALANCES IN CASE OF LIQUIDATION All shares give equal rights to dividends and the Company s assets and possible surpluses in the event of liquidation. Resolutions regarding dividends are passed by general meetings. All shareholders registered as shareholders in the share register maintained by Euroclear Sweden on the record date adopted by the general meeting shall be entitled to receive dividends. Dividends are normally distributed to shareholders as a cash payment per share through Euroclear Sweden, but may also be paid out in a manner other than cash (in-kind dividend). If shareholders cannot be reached through Euroclear Sweden, such shareholder still retains its claim on the Company to the dividend amount, subject to a statutory limitation of ten years. Upon the expiry of the period of limitations, the dividend amount shall pass to the Company. There are no restrictions on the right to dividends for shareholders domiciled outside Sweden. Shareholders not resident in Sweden for tax purposes must normally pay Swedish withholding tax, see also section Tax considerations in Sweden. DIVIDEND POLICY When free cash flow exceeds available investments in profitable growth, the surplus will be distributed to shareholders. 1) The Company does not intend to pay dividends in the medium term and there can be no assurances that in any given year a dividend will be paid. Declaration of dividends, if any, and the amounts and timing thereof, will depend on a number of factors, including financial position, investment needs, acquisition opportunities, general economic and business conditions and such other factors as the board of directors may deem relevant in such decision. During the financial years , no dividend have been paid. CENTRAL SECURITIES REGISTER The shares are registered in a CSD register in accordance with the Swedish Financial Instruments Accounts Act (1998:1479). This register is managed by Euroclear Sweden AB, Box 191, SE Stockholm. No share certificates have been issued for the shares. The account operator is Carnegie. The ISIN code for the shares is SE ISSUE OF NEW SHARES IN CONNECTION WITH THE OFFERING The Offering includes up to 19,633,359 existing shares in Boozt offered by the Selling Shareholders and maximum 7,407,000 newly issued shares offered by the Company. By power of authorisation from an extraordinary general meeting held on May 16, 2017, the board of directors intends to resolve on the final terms of the new issue of shares. By the issue of new shares, Boozt will be provided SEK 400 million, prior to issuing costs, and the Company s share capital will be increased by SEK 569,748 2). This corresponds to a dilution effect of 12 per cent, corresponding to 6,837,000 shares and votes. 1) See section Selected financial and performance information Financial and performance definitions. 2) Provided that the Offering Price is determined at the midpoint of the Price Range (SEK 68.50). 72

75 Share capital and ownership structure SHARE CAPITAL DEVELOPMENT The below table shows historic changes in the Company s share capital since 2014, and the changes in the number of shares and the share capital which will be made in connection with the listing of the shares on Nasdaq Stockholm. Share capital (SEK) Time Event Change in number of shares and votes Number of shares and votes after the transaction Change Total ,106,185 2,106, Offset Issue 1) 79,915 2,186,100 79,915 2,186, Offset Issue 2) 190,478 2,376, ,478 2,376, Offset Issue 3) 95,236 2,471,814 95,236 2,471, Offset Issue 4) 96,564 2,568,378 96,564 2,568, New share issue 273,963 2,842, ,963 2,842, Offset Issue 5) 155,820 2,998, ,820 2,998, New share issue 415,352 3,413, ,352 3,413, New share issue 53,741 3,467,254 53,741 3,467, New share issue 322,796 3,790, ,796 3,790, Offset Issue 6) 101,245 3,891, ,245 3,891, Share split 1:12 42,804,245 46,695,540 3,891, Offset Issue 7) 2,372,544 49,068, ,711 4,089, New share issue 8) 6,837,000 55,905, ,748 4,658, Subscription based on warrants 9) 775,860 56,680,944 64,655 4,723,409 1) The issue price of the shares amounted to SEK and was offsett by a loan raised by the Company. 2) The issue price of the shares amounted to SEK and was offsett by a loan raised by the Company. 3) The issue price of the shares amounted to SEK and was offsett by a loan raised by the Company. 4) The issue price of the shares amounted to SEK and was offsett by a loan raised by the Company. 5) The issue price of the shares amounted to SEK and was offsett by a loan raised by the Company. 6) The issue price of the shares amounted to SEK and was offsett by a loan raised by the Company. 7) Assuming that the Offering Price is determined at the midpoint of the Price Range (SEK 58.50). The Offset Issue is implemented in order to set-off a debt against a previous holder of warrants, see section Incentive programme Options Programme 2012/ ) Assuming that the Offering Price is determined at the midpoint of the Price Range (SEK 58.50). 9) Assuming that the Offering Price is determined at the midpoint of the Price Range (SEK 58.50). The subscription based on warrants concerns the subscription that the acquirer carries out, see further section Incentive programme Options Programme 2012/2022. CONVERTIBLES, WARRANTS, ETC. Other than what is described below under Incentive programme, there will be no outstanding warrants, convertibles or other sharerelated instruments in the Company at the time of the listing of the Company s shares on Nasdaq Stockholm. INCENTIVE PROGRAMME Options Programme 2012/2022 In connection with the listing on Nasdaq Stockholm, 2,953,896 warrants that have been issued and allotted gratuitously in an incentive programme from 2012 will be converted to ordinary shares. The conversion will be carried out though a repurchase of warrants by the Company at a price that is based on the Offering Price, resulting in a debt to the previous holder of the warrants. Thereafter, the debt will be set off against the ordinary shares that are issued in the offset issue ( Offset Issue ). Conditional on the implementation of the listing, the extraordinary general meeting of the Company held on May 16, 2017 has passed a resolution to repurchase warrants and Offset Issue, as described above. The Offset Issue will be carried out to a subscription price equivalent to the Offering Price. As a result of the repurchase of the warrants, the Company is required to pay social security charges. The cost of social charges, attributable to the Options programme 2012, has been ensured through an issuance of 928,116 warrants to a wholly-owned subsidiary of Boozt, which may be exercised for subscription of ordinary shares in the Company. Conditional on the implementation of the listing, the subsidiary will transfer the warrants. The proceeds from the transfer will be used to pay social security charges. Thus, the effecting of the social security charges has no effect on Boozt s cash flow. Options Programme 2015/2025 Boozt has implemented an employee option programme for certain employees in the Company ( Options Programme 2015 ). In total, 2,442,540 employee options have been allotted under the programme. 767,460 warrants have gratuitously been issued to a subsidiary of the Company to cover social security charges. Vesting of the employee options in Options Programme 2015 is triggered by the IPO, whereby 33 per cent of the options will vest on the date that falls 12 months following the first day of trading of the Company s shares on Nasdaq Stockholm, 33 per cent of the options will vest on the date that falls 24 months following the first day of trading of the Company s shares on Nasdaq Stockholm and the remaining 34 per cent of the options will vest on the date that falls 36 months following the first day of trading of the Company s shares on Nasdaq Stockholm. As such, the Options Programme 2015 deviates from the Code which stipulates a vesting period of at least three years. The options may be exercised immediately following vesting. Each vested option will entitle the participant to subscribe for a new ordinary share in the Company at a subscription price of SEK plus compounded interest rate of 8 per cent per annum from June 30, 2015 capitalised yearly as of June 30 each year (first time on June 30, 2016) until the last date in the calendar month immediately preceding the day when an exercise of an option is made, subject to any recalculation according to the terms. The right to exercise options terminates automatically on the date that falls 60 months following the first day of trading of the Company s shares on Nasdaq Stockholm. Full utilisation of the employee options and warrants to cover social security charges entails a dilution effect of 5.4 per cent 3) of the share capital. For more information about the Options Programme 2015, see Note 1 under section Historial financial information on pages F-6 F-7. 3) Based on the number of issued shares as of the date of the Offering based on the midpoint in the Price Range (SEK 58.50). 73

76 Share capital and ownership structure EXISTING SHAREHOLDERS SALE OF SHARES In connection with the Offering, some existing shareholders, including members of the board of directors and the Group management, that through ownership of shares, and in some cases warrants, have a significant exposure in the Company will be given the opportunity to sell shares at a price equivalent to a maximum of 50 per cent of the value of the shares at a price each shareholder holds. In addition to this, persons that hold warrants in the Options programme 2012, and which have been imposed taxes in connection with the Company s purchase of warrants, have the right to sell shares to cover accrued tax debts. On average, these existing shareholders sell about 25 per cent of the value of their holdings, in addition to shares sold to cover tax liability related to the Options programme In order to carry out the sales in accordance with the above, these shareholders will sell the shares, which shall be sold in the Offering, to the Selling Shareholders. Thus, all existing shares acquired by investors in the Offering will be offered by the Selling Shareholders. OWNERSHIP STRUCTURE The table below sets forth Boozt s ownership structure immediately before the Offering and directly after completion of the Offering. The table has been prepared under the assumption that the Offset Issue is made to a subscription price in the middle of the Price Range in the Offering. Shareholder Shareholders with holdings exceeding 5 per cent of the shares before the Offering Shareholding before the Offering After the Offering (if the Offering is not increased and the Overallotment Option is not exercised) After the Offering (if the Offering is increased in full and the Overallotment Option is not exercised) After the Offering (if the Offering is increased in full and the Overallotment Option is exercised in full) Number Per cent Number Per cent Number Per cent Number Per cent Sunstone Technology Ventures Fund II K/S 1) 12,259, % 7,355, % 6,839, % 5,530, % Verdane Capital VII K/S 2) 11,450, % 6,870, % 5,937, % 4,605, % ECCO Holding A/S 3) 8,440, % 5,064, % 4,856, % 3,989, % Sampension KP Livsforsikring A/S 4) 7,908, % 6,010, % 6,010, % 5,552, % Other selling shareholders Kent Stevens Larsen 5) 1,639, % 1,311, % 983, % 983, % Shareholding members of the board of directors, Group Management and other shareholders Hermann Haraldsson, in person and indirect through a company 976, % 473, % 473, % 473, % Henrik Theilbjørn, indirectly through a company 337, % 241, % 241, % 241, % Peter G. Jørgensen 344, % 227, % 227, % 227, % Jesper Brøndum 349, % 213, % 213, % 213, % Jón Björnsson 34, % 28, % 28, % 28, % Niels Hemmingsen 341, % 255, % 255, % 255, % Allan Junge-Jensen, in person and indirectly through a company 321, % 195, % 195, % 195, % Cornerstone Investors Friheden invest A/S 2,109, % 2,789, % 2,789, % 2,789, % Ferd AS - - 3,418, % 3,418, % 3,418, % Arbejdsmarkedets Tillægspension (ATP) - - 3,418, % 3,418, % 3,418, % Catella Fondforvaltning AB on behalf of managed funds % 2,136, % 2,136, % Other existing shareholders 3,332, % 2,003, % 2,003, % 2,003, % Total 49,843, % 42,014, % 40,030, % 36,063, % New shareholders ,666, % 16,650, % 20,617, % Total 49,843, % 56,680, % 56,680, % 56,680, % 1) Sunstone Technology Ventures Fund II K/S address is: Lautrupsgade 7, 5, 2100 Copenhagen, Denmark. 2) Verdane Capital VII K/S address is: c/o Harbour House, Sundkrogsgade 21, 2100 Copenhagen, Denmark. 3) ECCO Holding A/S address is: Industrivej 5, 6261 Bredebro, Denmark. 4) Sampension KP Livsforsikring A/S address is: Tuborg Havnevej 14, 2900 Hellerup, Denmark. 5) Kent Stevens Larsen s address is: Østbanegade 3, 3.th Copenhagen, Denmark. LOCK UP-ARRANGEMENTS, ETC. Under the placing agreement which is expected to be entered into on or around May 30, 2017, the Selling Shareholders, shareholding members of the board of directors and certain shareholding employees within the Group, including Group Management, will undertake, with certain exceptions, not to sell their respective holdings for a certain period after trading on Nasdaq Stockholm has commenced (the Lock-up period ). The Lock-up period for the Selling Shareholders will be 180 days, and the Lock-up period for the shareholding of members of the board of directors and certain shareholding employees within the Group, including Group Management, will be 365 days. At the end of the respective Lock-up periods, the shares may be offered for sale, which may affect the market price of the share. Joint Bookrunners may unilaterally make exceptions from these undertakings. Any exception from the lock-up arrangements will be considered on a case-by-case basis and may be provided for on both personal and commercial reasons. Pursuant to the agreement, the Company will undertake, with certain exceptions, towards the Joint Bookrunners not to, e.g. resolve upon or propose to the general meeting an increase of the share capital through issuance of shares or other financial instruments for a period of 180 days from the first day of trading of the Company s shares on Nasdaq Stockholm without a written consent from the Joint Bookrunners. See section Legal considerations and supplementary information Placing agreement. 74

77 Articles of association Articles of association Articles of association for Boozt AB (publ), registration number , adopted by the extraordinary general meeting on May 10, NAME The company s name is Boozt AB (publ). 2 REGISTERED OFFICE The company s registered office shall be situated in Malmö, Sweden. 3 OBJECT OF THE COMPANY S BUSINESS The object of the company s business is to, directly or indirectly, sell and provide mail-order solutions to companies within the fashion industry and any other activities compatible therewith. 4 SHARE CAPITAL AND SHARES The share capital shall be not less than SEK 3,300,000 and not more than SEK 13,200,000. The number of shares shall be not less than 20,000,000 and not more than 80,000, EUROCLEAR COMPANY The company s shares shall be registered in a securities register in accordance with the Swedish Financial Instruments Accounts Act (1998:1479). 6 BOARD OF DIRECTORS The board of directors, to the extent elected by the general meeting, shall consist of not less than three and not more than ten with no deputy members. 7 AUDITOR The company shall have not less than one and not more than two auditors and not more than two deputy auditors. As auditor and, when applicable, deputy auditor, an authorised public accountant or a registered public accounting firm shall be elected. 8 NOTICE OF GENERAL MEETING Notice of general meetings shall be published in the Swedish Official Gazette and be kept available on the company s website. At the time of the notice, an announcement with information that the notice has been issued shall be published in Svenska Dagbladet. 10 PLACE FOR GENERAL MEETINGS General meetings shall be held in Malmö or Stockholm. 11 BUSINESS AT GENERAL MEETINGS The following business shall be addressed at annual general meetings: 1. Election of a chairman of the meeting; 2. Preparation and approval of the voting list; 3. Approval of the agenda; 4. Election of one or two persons who shall approve the minutes of the meeting; 5. Determination of whether the meeting was duly convened; 6. Submission of the annual report and the auditors report and, where applicable, the consolidated financial statements and the auditors report for the group; 7. Resolutions regarding: a. adoption of the income statement and the balance sheet and, when applicable, the consolidated income statement and the consolidated balance sheet; b. allocation of the company s profits or losses in accordance with the adopted balance sheet; c. discharge of the members of the board of directors and the managing director from liability; 8. Determination of the number of members and deputy members of the board of directors to be elected by the general meeting and, where applicable, the number of auditors and deputy auditors; 9. Determination of fees for members of the board of directors and auditors; 10. Election of the members of the board of directors; 11. Election of auditors and, where applicable, deputy auditors; 12. Other matters, which should be resolved by the general meeting according to the Swedish Companies Act or the company s articles of association. 12 FINANCIAL YEAR The company s financial year shall be January 1 December PARTICIPATION IN GENERAL MEETINGS Shareholders who wish to participate in a general meeting shall be registered as shareholders on a transcript of the entire share register as stipulated in Chapter 7, Section 28, third paragraph of the Swedish Companies Act (2005:551) that relates to the conditions prevailing five workdays prior to the meeting and shall also provide notification of their intention to attend the meeting no later than on the date stipulated in the notice convening the general meeting. The latter mentioned day must not be a Sunday, any other public holiday, Saturday, Midsummer s Eve, Christmas Eve or New Year s Eve and must not be more than the fifth weekday prior to the meeting. If a shareholder wishes to be joined by proxy (not more than two proxies) at the general meeting, the number of proxies must be stated in the notice of participation. 75

78 Legal considerations and supplementary information Legal considerations and supplementary information LEGAL GROUP STRUCTURE The Company s business is conducted in accordance with the Swedish Companies Act. The parent company Boozt AB (publ) (registration number ) is a Swedish public limited liability company which was founded on October 15, 2009 and registered with the Swedish Companies Registration Office on November 13, The Company s registered office is situated in Malmö, Sweden. The Company is currently the parent company of nine subsidiaries in Sweden and Denmark. The Group structure is shown is the chart below. Boozt AB (SE) Boozt Fashion AB (SE) Beauty by Boozt A/S (DK) Boozt Fashion ApS (DK) Boozt M Partnership AB (SE) Boozt Retail A/S (DK) Boozt Retail AB (SE) Boozt Technology AB (SE) Lucky Little Me AB (SE) November 2009 Option Holding AB (SE) MATERIAL AGREEMENTS Supplier agreements Boozt enters into supplier agreements with the various brands or directly with agents of such brands for the products offered. The vast majority of the supplier agreements are entered into on basis of the relevant supplier s template agreement and are in generally supplier friendly and may include provisions that limit the supplier s liability to direct damages (the amount of damages may also be capped) and warranty periods which are limited to cover only defects which appear within a certain time from delivery. Several of the agreements are entered into on further notice, however with a notice period of three to six months. Agreement with Element Logic AS In June 2016, Boozt Fashion AB entered into an agreement with Element Logic AS for the delivery of a new automated warehouse system referred to as AutoStore. Element Logic AS shall deliver the AutoStore-system including robots and software. The purchase price for the system is approximately SEK 90 million and the agreed takeover date is in June The agreement also contains certain options regarding extension of the system. Lease agreement In February 2016, Boozt entered into a lease agreement with Queenswall AB ( Queenswall ), a subsidiary in a group which has Catena AB as parent company, regarding premises under construction in Norra Varalöv, located in the municipality of Ängelholm. The premises comprise a total of square meters, of which square meters is a warehouse area (the Premises ). The construction of the Premises has been completed and the municipality of Ängelholm issued a final notice (Sw. slutbesked) on 17 February Boozt has on 25 February 2017 taken possession of the Premises and has commenced its operations there. After Boozt and Queenswall had entered into the lease agreement, the decision to grant a building permit for the Premises, which was previously rendered by the municipality of Ängelholm, was on 23 June 2016 appealed by neighbors to the County Administrative Board (Sw. Länsstyrelsen). The building permit was subsequently revoked by the County Administrative Board, based on the fact that a part of the Premises (4 472 square meters of the total warehouse area of square meters) was built on an area where building is prohibited according to the current development plan (Sw. detaljplan). According to information from Queenswall, Ängelholm municipality has communicated its continued support for the project. Queenswall appealed the County Administrative Board s decision to the Land and Environmental Court (Sw. Mark- och miljödomstolen) which in a judgement of 12 January 2017 dismissed Queenswall s appeal on the merits. The Land and Environmental Court of Appeal (Sw. Mark- och miljööverdomstolen) has on 21 March 2017 decided not to grant permission to appeal (Sw. prövningstillstånd),which means that the building permit in relation to the Premises remains revoked. Boozt and Queenswall are continuously discussing the situation at hand and Boozt has been informed that the municipality of Ängelholm is currently working on a new development plan for the area which, if adopted, would enable a building permit for the Premises as currently erected to be granted. In parallel, Queenswall has filed a new application for a building permit for the Premises. As the revocation of the decision to grant a building permit has gained legal force before a new development plan has been adopted, there is no valid building permit in place for the Premises. Thus, there is a risk that the municipality of Ängelholm will order Queenswall to take remedial action. This could be in the form of an obligation on Queenswall to demolish such parts of the Premises that are situated on land where, according to the present development plan, construction is prohibited. However, the municipality may refrain from imposing an obligation if it is likely that the conditions to issue a building permit 76

79 Legal considerations and supplementary information will be met after amendments to the present development plan have been made. The risk for a substantial impediment in Boozt s right of use of the Premises as a result of the complications described above is limited. Queenswall has informed Boozt that there is a possibility to erect additional buildings close to the Premises in accordance with the present development plan, which could compensate a loss of parts of the Premises that might result from a demolition order by the municipality of Ängelholm. INTELLECTUAL PROPERTY The Group is the registered owner of several trademark registrations. The trademark BOOZT (logotype and word mark) is reportedly the Group s most important trademark. Boozt Fashion AB holds trademark registrations for the word mark BOOZT in Sweden, EU and Switzerland and trademark applications for the word mark BOOZT in EU, Iceland and Norway. The Group holds more than 75 domain names inter alia boozt.com, booztlet.com and booztmedia.com. Further, the Group has developed software products for in-house use. DISPUTES The Group is not, and has not been, party to any legal or arbitration proceedings during the last 12 months which may have, or have had, significant effects on Boozt s financial condition or profitability. The Group does not know of any such proceedings which may arise. INSURANCE The Group has insurance against property damage including goods, machinery and equipment and business interruption losses, including IT-interruption insurance. In addition, the Group has a general liability insurance as well as insurance policies for personnel, legal protection, crime against property, fire, water damage, business travels, directors and officers liability, and product liability (effective in all countries but the US and Canada). The Group believes that its insurances are adequate for the risks normally associated to the Group s business. However, there is no guarantee that the Group will not suffer losses not covered by insurances. PLACING AGREEMENT According to the terms of an agreement on placing of shares which is intended to be signed on or around May 30, 2017 between the Company, the Selling Shareholders and the Joint Bookrunners (the Placing agreement ), the Selling Shareholders undertake to divest approximately 35 per cent of the shares in the Company to the purchasers indicated by the Joint Bookrunners, or if the Joint Bookrunners fail to indicate purchasers, they have undertaken to themselves acquire the shares comprised by the Offering. The Selling Shareholders also intend to grant an Overallotment Option, whereby it pledges at the request of the Joint Global Coordinators at the latest 30 days from the first day of trading in the shares to divest an additional maximum of 15 per cent of the total number of shares included in the Offering, corresponding to approximately seven per cent of the total number of shares in the Company. The Overallotment Option may only be exercised in order to cover possible overallotments within the framework of the Offering. Through the Placing agreement, the Company makes customary representations and warranties to the Joint Bookrunners, primarily in relation to the information in the Offering Circular being correct, the Offering Circular and the Offering fulfilling requirements in laws and regulation and that there are no legal, or other, hindrances for the Company to enter into the agreement or for the completion of the Offering. Pursuant to the Placing agreement, the Joint Bookrunners commitment to indicate purchasers to or, if the Joint Bookrunners fail to do so, themselves acquire the shares comprised by the Offering is conditional upon, among other things, the representations and warranties of the Company and the Selling Shareholders being correct. Under the Placing agreement, the Company will, subject to customary qualifications, undertake to indemnify the Joint Bookrunners against certain claims under certain conditions. Through the Placing agreement, the Selling Shareholders undertake, with customary conditions, not to sell their shares during the lock-up period (see further in section Share capital and ownership structure Lock up-arrangements, etc. ). Under the Placing agreement, the Company also undertakes, not to (i) issue, offer, pledge, sell, undertake to sell or otherwise transfer or divest, directly or indirectly, any shares or any other securities which are convertible to or can be exercised or exchanged for such shares, or (ii) purchase or sell options or other instruments or enter into swap agreements or other arrangements which wholly or partly assign financial risk associated with ownership of the Company to another party prior to 180 days at the earliest after the date when trading starts on Nasdaq Stockholm. The Joint Bookrunners may, however, grant exemptions from these limitations. STABILISATION In connection with the Offering, Carnegie may effect transactions aimed at supporting the market price of the shares at levels above those which might otherwise prevail in the open market. Such stabilisation transactions may be effected on Nasdaq Stockholm, in the over-the-counter market or otherwise, at any time during the period starting on the date of commencement of trading in the shares on Nasdaq Stockholm and ending not later than 30 calendar days thereafter. Carnegie is, however, not required to undertake any stabilisation and there is no assurance that stabilisation will be undertaken. Stabilisation, if undertaken, may be discontinued at any time without prior notice. In no event will transactions be effected at levels above the Offering Price. No later than by the end of the seventh trading day after stabilisation transactions have been undertaken, Carnegie shall disclose that stabilisation transactions have been undertaken in accordance with article 5(4) in the Market Abuse Regulation 596/2014. Within one week of the end of the stabilisation period, Carnegie will make public whether or not stabilisation was undertaken, the date at which stabilisation started, the date at which stabilisation last occurred and the price range within which stabilisation was carried out, for each of the dates during which stabilisation transactions were carried out. CORNERSTONE INVESTORS Arbejdsmarkedets Tillægspension, Catella Fondförvaltning AB on behalf of managed funds, Ferd AS and Friheden Invest A/S have undertaken vis-à-vis the Joint Bookrunners, the Selling Shareholders and the Company to acquire shares in the Offering, corresponding to approximately SEK 565 million 1). Following completion of the Offering, the Cornerstone Investors will thus hold approximately 20.7 per cent of the number of shares and votes in the Company. The Cornerstone Investors will not receive any compensation for their respective undertakings and the Cornerstone Investors investments are made on the same terms and conditions as those applicable for other investors in the Offering. Joint Bookrunners, the Selling Shareholders and the board of directors of the Company are of the opinion that the Cornerstone Investors creditworthiness are sound and thus that they will be able to meet their respective undertakings. 1) Based on full subscription in the Offering and the midpoint of the Price Range in the Offering (SEK 58.50). 77

80 Legal considerations and supplementary information The Cornerstone Investors undertakings are however not secured through bank guarantee, blocked funds or pledge of collateral or similar arrangements. The Cornerstone Investors undertakings are accompanied by certain conditions relating to inter alia a distribution of the Company s shares being achieved in conjunction with the Offering as well as the Offering being completed within a certain time. The Cornerstone Investors undertakings are applicable regardless of the determined Offering Price within the Price Range, in the Offering. Cornerstone Investors Arbejdsmarkedets Tillagspension Catella Fondförvaltning AB on behalf of managed funds Ferd AS Commitment (amount in SEK) 200 million 125 million 200 million Address Kongens Vænge 8, 3400 Hillerød, Denmark Birger Jarlsgatan 6, Stockholm, Sweden Strandveien 50, 1324 Lysaker, Norway Friheden Invest A/S ) Hørsholm, Denmark Høsterkøbvej 65, ) Based on full subscription in the Offering and the midpoint of the Price Range in the Offering (SEK 58.50). RELATED PARTY TRANSACTIONS Certain transactions with related parties are carried out within the Group. Related party transactions as from January 1, 2017 The Group has carried out transactions with companies that are owned by persons that have significant influence in the Group of Boozt AB. The majority of the related party transactions that have been conducted consist of commission sales in cooperation with ECCO group and a limited number of transactions consist of purchases of services from Rapp Management and EMMADS Invest A/S, which are operated by current and previous board members. All related party transactions are priced according to market conditions. Corresponding pricing principles that are used in transactions with external parties apply to purchases and sales between Group companies. The liability to related parties was SEK 8.5 (26.4) million at the end of the Q1 reporting period, and is attributable to KRM AG. After March 31, 2017, there have been no transactions with related parties. Related party transactions during the financial years 2014, 2015 and 2016 For further information about related party transactions during the financial years 2014, 2015 and 2016, see Note 24 under section Historical financial information on page F-38. INTERESTS OF ADVISORS The Joint Bookrunners provide financial advisory and other services to the Company and the Selling Shareholders in connection with the Offering, for which they will receive a commission from the Selling Shareholders equal to 2.5 per cent of the gross proceeds of the shares sold in the Offering to paid by the Company in respect of the sale of newly issued shares and of the Selling Shareholders with respect to the sale of existing shares. In addition, the Company and the Selling Shareholders may choose to pay to the Joint Bookrunners a discretionary fee, equal to a maximum of 1.25 per cent of the gross proceeds of the shares sold in the Offering. The resolution on discretionary fee will be determined within 35 days from the settlement date for the Offering. The total compensation received by the Joint Bookrunners is dependent on the success of the Offering. From time to time, the Joint Bookrunners provide services in the ordinary course of business to the Selling Shareholders and parties affiliated to the Selling Shareholders in connection with other transactions. Advokatfirman Vinge KB and Davis Polk & Wardwell London LLP have been legal counsels in connection with the Offering and the IPO, and might provide additional legal services to the Company. COSTS RELATED TO THE OFFERING The Company s costs for the Offering can be divided into two parts. One part is the issue costs attributable to the commission for the shares that investors subscribe for in the new issue. Such commissions, together with the discretionary incentive fee, is also calculated on the gross proceeds from the new issue amounting to SEK 16 million and are paid by the Company to the Joint Bookrunners. In addition to the issue costs, the Company has also had ongoing listing costs, primarily attributable to advisory services from lawyers and auditors in connection with the listing process, for example regarding the preparation of the Offering Circular and advice regarding securities law in connection with Nasdaq Stockholm s review of the Company. These ongoing listing costs amount to SEK 22.5 million. DOCUMENTS AVAILABLE FOR INSPECTION Boozt s and its subsidiaries (i) articles of association, and (ii) annual reports for the financial years 2014, 2015 and 2016, including auditors reports, are available for inspection during office hours at the Company s head office at Hyllie Boulevard 10 B, SE Malmö, Sweden. These documents are also available in electronic form on Boozt s website, booztfashion.com. 78

81 Tax considerations in Sweden Tax considerations in Sweden Below is a summary of certain Swedish tax issues related to the Offering and the admission for trading of the shares in the Company on Nasdaq Stockholm for private individuals and limited liability companies that are residents of Sweden for tax purposes, unless otherwise stated. The summary is based on current legislation and is intended to provide only general information regarding the shares in the Company as from the admission for trading on Nasdaq Stockholm. The summary does not cover: situations where shares are held as current assets in business operations; situations where shares are held by a limited partnership or a partnership; situations where shares are held in an investment savings account (Sw. investeringssparkonto) and subject to taxation on a standardised basis; the special rules regarding tax-free capital gains (including non-deductible capital losses) and dividends that may be applicable when the investor holds shares in the Company that are deemed to be held for business purposes (for tax purposes); the special rules which in certain cases may be applicable to shares in companies which are or have been so-called close companies or to shares acquired by means of such shares; the special rules that may be applicable to private individuals who make or reverse a so-called investor deduction (Sw. investeraravdrag); foreign companies conducting business through a permanent establishment in Sweden; or foreign companies that have been Swedish companies. Furthermore, special tax rules apply to certain categories of companies. The tax consequences for each individual shareholder depend on such shareholder s particular circumstances. Each shareholder is advised to consult an independent tax advisor as to the tax consequences that could arise from the Offering and the admission for trading of the shares in the Company on Nasdaq Stockholm, including the applicability and effect of foreign tax legislation (including regulations) and provisions in tax treaties. PRIVATE INDIVIDUALS For private individuals resident in Sweden for tax purposes, capital income, such as interest income, dividends and capital gains, is taxed in the capital income category. The tax rate for the capital income category is 30 per cent. The capital gain or the capital loss is computed as the difference between the consideration, less selling expenses, and the acquisition value. The acquisition value for all shares of the same class and type shall be added together and computed collectively in accordance with the so-called average method (Sw. genomsnittsmetoden). As an alternative, the so-called standard method (Sw. schablonmetoden) may be used at the disposal of listed shares. This method means that the acquisition value may be determined as 20 per cent of the consideration less selling expenses. Capital losses on listed shares are fully deductible against taxable capital gains realised in the same year on shares, as well as on listed securities taxed as shares (however not mutual funds (Sw. värdepappersfonder) or hedge funds (Sw. specialfonder) containing Swedish receivables only (Sw. räntefonder)). 70 per cent of capital losses not absorbed by these set-off rules are deductible in the capital income category. If there is a net loss in the capital income category, a reduction is granted of the tax on income from employment and business operations, as well as national and municipal property tax. This tax reduction is 30 per cent of the net loss that does not exceed SEK 100,000 and 21 per cent of any remaining net loss. A net loss cannot be carried forward to future tax years. For private individuals resident in Sweden for tax purposes, a preliminary tax of 30 per cent is withheld on dividends. The preliminary tax is normally withheld by Euroclear Sweden or, in respect of nomineeregistered shares, by the nominee. ALLOTMENTS OF SHARES TO EMPLOYEES Normally, the allotment of shares is not a taxable event. However, for employees allotment of shares may in certain situations give rise to benefits taxation. Benefits taxation should, however, not occur if the employees (including board members and deputy board members and existing shareholders), on the same terms and conditions as others, acquire not more than 20 per cent of the total number of shares offered and the employee does not acquire shares for more than SEK 30,000. LIMITED LIABILITY COMPANIES For limited liability companies (Sw. aktiebolag) all income, including taxable capital gains and taxable dividends, is taxed as income from business operations at a rate of 22 per cent. Capital gains and capital losses are calculated in the same way as described for private individuals above. Deductible capital losses on shares may only offset taxable capital gains on shares and other securities taxed as shares. A net capital loss on shares that cannot be utilised during the year of the loss may be carried forward (by the limited liability company that has suffered the loss) and offset taxable capital gains on shares and other securities taxed as shares in future years, without any limitation in time. If a capital loss cannot be deducted by the company that has suffered the loss, 79

82 Tax considerations in Sweden it may be deducted from another legal entity s taxable capital gains on shares and other securities taxed as shares, provided that the companies are entitled to tax consolidation (through so-called group contributions) and both companies request this treatment for a tax year having the same filing date for each company (or, if one of the companies accounting liability ceases, would have had the same filing date). Special tax rules may apply to certain categories of companies or certain legal persons (e.g. investment companies). SHAREHOLDERS THAT ARE NOT TAX RESIDENT IN SWEDEN For shareholders not resident in Sweden for tax purposes that receive dividends on shares of a Swedish limited liability company, Swedish withholding tax is normally withheld. The same withholding tax applies to certain other payments made by a Swedish limited liability company, such as payments as a result of redemption of shares and repurchase of shares through an offer directed to all shareholders or all holders of shares of a certain class. The withholding tax rate is 30 per cent. The tax rate is, however, generally reduced under an applicable tax treaty. For example, under the U.S.-Sweden tax treaty the tax rate on dividends paid to U.S. holders entitled to the benefits of the U.S.-Sweden tax treaty should not exceed 15 per cent. In Sweden, withholding tax deductions are normally carried out by Euroclear Sweden or, in respect of nominee-registered shares, by the nominee. The tax treaties Sweden has entered into generally enable the withholding tax deduction to be made in accordance with the tax rate stipulated in the treaty, provided that Euroclear Sweden or the nominee, as applicable, has received the required information concerning the tax residency of the investor entitled to the dividend (this applies also under the U.S. Sweden tax treaty). Further, investors entitled to reduced tax rates under applicable tax treaties may seek a refund from the Swedish tax authorities if the full withholding tax rate at 30 per cent has been withheld. Shareholders not resident in Sweden for tax purposes are normally not liable for capital gains taxation in Sweden upon disposals of shares. Shareholders may, however, be subject to taxation in their state of residence. According to a special rule, private individuals not resident in Sweden for tax purposes are, however, subject to Swedish capital gains taxation upon disposals of shares if they have been residents of Sweden due to a habitual abode in Sweden or a stay in Sweden for six consecutive months at any time during the calendar year of disposal or the ten calendar years preceding the year of disposal. In a number of cases though, the applicability of this rule is limited by tax treaties. 80

83 Tax considerations in Denmark Tax considerations in Denmark The following is a summary of certain Danish income tax considerations relating to an investment in shares in the Company. The summary is for general information only and does not purport to constitute exhaustive tax or legal advice. It is specifically noted that the summary does not address all possible tax consequences relating to an investment in shares in the Company. The summary is based solely upon the tax laws of Denmark in effect on the date of this Offering Circular. Danish tax laws may be subject to change, possibly with retroactive effect. The summary does not cover investors to whom special tax rules apply, and therefore may not be relevant, for example, to investors subject to the Danish Act on Pension Investment Return Taxation (i.e. pension savings), professional investors, certain institutional investors, insurance companies, pension companies, banks, stockbrokers and investors with tax liability on return on pension investments. The summary does not cover taxation of individuals and companies who carry on a business of purchasing and selling shares. Sales are assumed to be sales to a third party. Potential investors in shares in the Company are advised to consult their tax advisers regarding the applicable tax consequences of acquiring, holding and disposing of shares in the Company based on their particular circumstances. Investors who may be affected by the tax laws of other jurisdictions should consult their tax advisers with respect to the tax consequences applicable to their particular circumstances as such consequences may differ significantly from those described herein. SALE OF SHARES Individuals Gains from the sale of shares are taxed as share income at a rate of 27 per cent on the first DKK 51,700 in 2017 (for cohabiting spouses, a total of DKK 103,400) and at a rate of 42 per cent on share income exceeding DKK 51,700 (for cohabiting spouses over DKK 103,400). Such amounts are subject to annual adjustments and include all share income (i.e., all capital gains and dividends derived by the individual or cohabiting spouses, respectively). Gains and losses on the sale of listed shares are calculated as the difference between the purchase price and the sales price. The purchase price is generally determined using the average method as a proportion of the aggregate purchase price for all the shareholder s shares in the company. Losses on the sale of listed shares can only be offset against other share income deriving from listed shares, (i.e. received dividends and capital gains on the sale of listed shares). Losses not utilized will automatically be offset against a cohabiting spouse s share income deriving from listed shares and additional losses can be carried forward indefinitely and offset against future share income deriving from listed shares. Losses on listed shares may only be set off against gains and dividends on other listed shares if the Danish Tax Authorities have received certain information concerning the ownership of the shares. This information is normally provided to the Danish Tax Authorities by the securities depositary Companies For the purpose of taxation of sales of shares traded on a regulated market, a distinction is made between Subsidiary shares, Group shares and Portfolio shares: Subsidiary shares is generally defined as shares owned by a shareholder holding at least 10 per cent of the nominal share capital of the issuing company. Group shares is generally defined as shares in a company in which the shareholder of the company and the issuing company are subject to Danish tax consolidation or fulfil the requirements for international tax consolidation under Danish law. Portfolio shares are shares that do not qualify as Subsidiary shares or Group shares. Gains or losses on disposal of Subsidiary shares and Group shares are not included in the taxable income of the shareholder. Special rules apply in order to prevent avoidance of the 10 per cent ownership requirement through certain holding company structures. These rules will not be described in further detail. Capital gains from the sale of listed Portfolio shares are taxable at a rate of 22 per cent irrespective of ownership period. Losses on such shares are deductible. Gains and losses on Portfolio shares traded on a regulated market are taxable according to the mark-to-market principle. According to the mark-to-market principle, each year s taxable gain or loss is calculated as the difference between the market value of the shares at the beginning and end of the tax year. Thus, taxation will take place on an accrual basis even if no shares have been disposed of and no gains or losses have been realised. If the Portfolio shares are sold or otherwise disposed of before the end of the income year, the taxable income of that income year equals the difference between the value of the Portfolio shares at the beginning of the income year and the value of the Portfolio shares at realisation. In the income year in which the Portfolio shares have been acquired, the taxable income of that income year equals the difference between the purchase price and the value of the Portfolio shares at tax year end. If the Portfolio shares have been acquired and realised in the same income year, the taxable income equals the difference between the acquisition sum and the value of the Portfolio shares at realisation. A change of status from Subsidiary shares/group shares to Portfolio shares traded on a regulated market (or vice versa) is for tax purposes deemed to be a disposal of the shares and a reacquisition of the shares at market value at the time of change of status. Special transition rules apply with respect to the right to offset capital losses realised by the end of the 2009 income year against taxable gains on shares in the 2010 income year or later. 81

84 Tax considerations in Denmark DIVIDENDS Individuals Dividends paid to individuals who are tax residents of Denmark are taxed as share income, as described above. All share income must be included when calculating whether the amounts mentioned above are exceeded. Companies Dividends paid on Portfolio shares are subject to the standard corporate tax rate of 22 per cent irrespective of ownership period. Dividends received on Subsidiary shares and Group shares will in general not be subject to taxation, irrespective of ownership period. TAX CREDIT Any Swedish tax withheld on dividend paid to a Danish tax resident shareholder on shares in the Company may be credited on Danish tax levied on the same dividend in accordance with the Nordic Tax Treaty. SHARE TRANSFER TAX AND STAMP DUTIES No Danish share transfer tax or stamp duties are payable on transfer of the shares. 82

85 Certain U.S. federal income tax considerations Certain U.S. federal income tax considerations The following is a description of certain U.S. federal income tax consequences to the U.S. Holders described below of the ownership and disposition of the shares, but it does not purport to be a comprehensive description of all tax considerations that may be relevant to a particular person s decision to acquire the shares. This discussion applies only to U.S. Holders that own shares as capital assets. In addition, this discussion does not describe all of the tax consequences that may be relevant to U.S. Holders in light of their particular circumstances, including alternative minimum tax consequences, any aspect of the Medicare contribution tax on net investment income and tax consequences applicable to U.S. Holders subject to special rules, such as: certain financial institutions; dealers or certain traders in securities; persons holding shares as part of a straddle, wash sale, conversion transaction or integrated transaction or persons entering into a constructive sale with respect to the shares; persons whose functional currency for U.S. federal income tax purposes is not the U.S. dollar; entities classified as partnerships for U.S. federal income tax purposes; tax-exempt entities, individual retirement accounts, or Roth IRAs ; persons that own or are deemed to own 10% or more of the Company s voting stock; or persons holding shares in connection with a trade or business outside the United States. If you are a partnership for U.S. federal income tax purposes, the U.S. federal income tax treatment to you and your partners generally will depend on the status of the partners and your activities. If you are a partnership owning shares or a partner in such partnership, you should consult your tax adviser as to your particular U.S. federal income tax consequences of owning and disposing of the shares. This discussion is based on the Internal Revenue Code of 1986, as amended (the Internal Revenue Code ), administrative pronouncements, judicial decisions, final, temporary and proposed Treasury regulations, and the income tax treaty between Sweden and the United States (the Treaty ), all as of the date hereof. These laws are subject to change, possibly with retroactive effect. You are a U.S. Holder for purposes of this discussion if for U.S. federal income tax purposes you are a beneficial owner of shares and are: a citizen or individual resident of the United States; a corporation, or other entity taxable as a corporation, created or organized in or under the laws of the United States, any state therein or the District of Columbia; or an estate or trust the income of which is subject to U.S. federal income taxation regardless of its source. Except as specifically discussed under Passive Foreign Investment Company Rules below, this discussion assumes that the Company was not, and will not become, a passive foreign investment company for U.S. federal income tax purposes. You should consult your tax adviser with regard to the application of the U.S. federal tax laws to your particular situation, as well as any tax consequences arising under the laws of any state, local or non-u.s. taxing jurisdiction. TAXATION OF DISTRIBUTIONS Distributions paid on the shares (including the amount of any Swedish taxes withheld), other than certain pro rata distributions of ordinary shares to all shareholders, will be treated as dividends to the extent paid out of the Company s current or accumulated earnings and profits, as determined under U.S. federal income tax principles. Because the Company does not maintain calculations of its earnings and profits under U.S. federal income tax principles, it is expected that distributions generally will be reported to you as dividends. Subject to applicable limitations and the passive foreign investment company rules described below, if you are a non-corporate U.S. Holder, dividends paid to you may be eligible for taxation as qualified dividend income and therefore may be taxable at reduced rates. You should consult your tax adviser regarding the availability of the reduced tax rate on dividends. Dividends will not be eligible for the dividendsreceived deduction generally available to U.S. corporations under the Internal Revenue Code. Dividends will generally be included in your income on the date of receipt of the dividends. The amount of any dividend income paid in SEK will be the U.S. dollar amount calculated by reference to the spot rate in effect on the date of receipt, regardless of whether the payment is in fact converted into U.S. dollars. If the dividend is converted into U.S. dollars on the date of receipt, you should not be required to recognize foreign currency gain or loss in respect of the amount received. You may have foreign currency gain or loss if the dividend is converted into U.S. dollars after the date of receipt, and any such gain or loss will be U.S.-source ordinary income or loss. Dividends will be treated as foreign-source dividend income for foreign tax credit purposes. Subject to applicable limitations, some of which vary depending upon your circumstances, Swedish income taxes withheld from dividend payments on shares at a rate not exceeding any applicable Treaty rate will be creditable against your U.S. federal income tax liability. Swedish income taxes withheld in excess of the applicable Treaty rate will not be eligible for credit against your U.S. federal income tax liability. See Tax Considerations in Sweden Shareholders that are not resident in Sweden for a discussion on how to obtain the Treaty rate. The rules governing foreign tax credits are complex, and you should consult your tax adviser regarding the creditability of foreign taxes in your particular circumstances. In lieu of claiming a foreign tax credit, you may elect to deduct foreign taxes, including any Swedish taxes, in computing your taxable income, subject to applicable limitations. An election to deduct foreign taxes instead of claiming foreign tax credits applies to all foreign taxes paid or accrued in the relevant taxable year. 83

86 Certain U.S. federal income tax considerations SALE OR OTHER TAXABLE DISPOSITION OF SHARES You generally will recognize taxable gain or loss on a sale or other taxable disposition of the shares equal to the difference between the amount realized on the sale or disposition and your tax basis in the shares, each as determined in U.S. dollars. This gain or loss will generally be capital gain or loss, and will be long-term capital gain or loss if at the time of sale or disposition the shares have been held for more than one year. Any gain or loss will generally be U.S.-source for foreign tax credit purposes. The deductibility of capital losses is subject to limitations. PASSIVE FOREIGN INVESTMENT COMPANY RULES In general, a non-u.s. corporation will be a PFIC for any taxable year in which (i) 75% or more of its gross income consists of passive income or (ii) 50% or more of the average quarterly value of its assets consists of assets that produce, or are held for the production of, passive income. For purposes of the above calculations, a non-u.s. corporation that directly or indirectly owns at least 25% by value of the shares of another corporation is treated as if it held its proportionate share of the assets of the other corporation and received directly its proportionate share of the income of the other corporation. Passive income generally includes interest, rents, dividends, royalties and certain gains. Based on the nature of its business and the expected price of its shares in the offering, the Company does not expect to be a PFIC for its current taxable year or in the foreseeable future. However, because a determination of whether a company is a PFIC must be made annually after the end of each taxable year and the Company s PFIC status for each taxable year will depend on facts, including the composition of the Company s income and assets and the value of its assets (which may be determined in part by reference to the market value of the Company s Shares), at such time and because the Company has and will continue to have significant passive assets on its consolidated balance sheet, we cannot assure you that the Company will not be a PFIC for the current or any future taxable year. Under attribution rules, if the Company were a PFIC and any subsidiaries or other entities in which the Company held a direct or indirect equity interest are also PFICs ( Lower-tier PFICs ), U.S. Holders would be deemed to own their proportionate share of any such Lower-tier PFICs and would be subject to U.S. federal income tax according to the rules described in the following paragraphs on (i) certain distributions by a Lower-tier PFIC and (ii) a disposition of equity interests of a Lower-tier PFIC, in each case as if the U.S. Holders held such interests directly, even though the U.S. Holders have not received the proceeds of those distributions or dispositions directly. Generally, if the Company were a PFIC for any taxable year during which you held the shares, gains recognized upon a disposition (including, under certain circumstances, a pledge) of shares by you would be allocated ratably over your holding period for such shares. The amounts allocated to the taxable year of disposition and to years before the Company became a PFIC would be taxed as ordinary income. The amount allocated to each other taxable year would be subject to tax at the highest rate in effect for that taxable year for individuals or corporations, as appropriate, and an interest charge would be imposed on the resulting tax liability. Further, to the extent that any distribution you receive on your shares exceeds 125% of the average of the annual distributions on such shares received during the preceding three years or your holding period, whichever is shorter, that distribution would be subject to taxation in the same manner. Certain elections may be available that would result in alternative treatments (such as mark-to-market treatment) of the shares. If the Company were a PFIC for any year during which you owned shares, we would generally continue to be treated as a PFIC with respect to you for all succeeding years during which you held the shares, even if we ceased to meet the threshold requirements for PFIC status. In addition, if the Company were a PFIC (or treated as a PFIC with respect to you) for the taxable year in which it paid a dividend or for the prior taxable year, the preferential dividend rates discussed above with respect to dividends paid to certain non-corporate U.S. Holders would not apply. If you own shares during any year in which we are a PFIC, you generally will be required to file annual reports together with its U.S. federal income tax returns, subject to certain exceptions. You should consult your tax advisers regarding whether the Company is a PFIC and the potential application of the PFIC rules to your ownership of shares for any taxable year. BACKUP WITHHOLDING AND INFORMATION REPORTING Payments of dividends and sales proceeds that are made within the United States or through U.S. or certain U.S.-related financial intermediaries will generally be subject to information reporting and backup withholding, unless (i) you are an exempt recipient or (ii) in the case of backup withholding, you provide a correct taxpayer identification number and certify that you are not subject to backup withholding. Any amounts withheld under the backup withholding rules will be allowed as a refund or a credit against your U.S. federal income tax liability, provided that the required information is timely furnished to the Internal Revenue Service. 84

87 Selling and transfer restrictions Selling and transfer restrictions UNITED STATES The shares in the Offering have not been and will not be registered under the Securities Act of 1933 or with any securities regulatory authority of any state of the United States, and may not be offered or sold within the United States unless the shares are registered under the Securities Act or an exemption from the registration requirements of the Securities Act is available. In addition, until the end of the 40th calendar day after commencement of the Offering, an offering or sale of shares within the United States by a dealer (whether or not participating in the Offering) may violate the registration requirement of the Securities Act if such offer or sale is made otherwise than in accordance with Rule 144A or another exemption from, or in a transaction not subject to, the registration requirements of the Securities Act. Each purchaser of the shares in the Offering within the United States purchasing pursuant to Rule 144A under the U.S. Securities Act or another exemption from the registration requirements of the U.S. Securities Act will be deemed to have represented and agreed that it has received a copy of the Offering Circular and such other information as it deems necessary to make an informed investment decision and that: i. the purchaser acknowledges that the shares in the Offering have not been and will not be registered under the Securities Act or with any securities regulatory authority of any state of the United States and are subject to significant restrictions on transfer; ii. the purchaser is authorised to consummate the purchase of the shares in compliance with all applicable laws and regulations; iii. the purchaser (i) is a QIB, (ii) is aware that the sale to it is being made in reliance on an exemption from the registration requirements of Section 5 of the Securities Act provided by Rule 144A or pursuant to another exemption from, or in a transaction not subject to, the registration requirements of the Securities Act, and (iii) is acquiring such shares in the Offering for its own account or for the account of a QIB; iv. the purchaser is aware that the shares in the Offering are being offered in the United States in a transaction not involving any public offering in the United States within the meaning of the Securities Act; v. if, in the future, the purchaser decides to offer, resell, pledge or otherwise transfer such shares in the Offering, such shares in the Offering may be offered, sold, pledged or otherwise transferred only (i) to a person whom the beneficial owner or any person acting on its behalf reasonably believes is a QIB in a transaction meeting the requirements of Rule 144A, (ii) in accordance with Regulation S, or (iii) in accordance with Rule 144 under the Securities Act (if available), in each case in accordance with any applicable securities laws of any state of the United States or any other jurisdiction; vi. the shares in the Offering are restricted securities within the meaning of Rule 144(a)(3) and no representation is made as to the availability of the exemption provided by Rule 144 for resale of any shares; vii. the purchaser will not deposit or cause to be deposited such shares in the Offering into any depositary receipt facility established or maintained by a depositary bank other than a Rule 144A restricted depositary receipt facility, so long as such shares are restricted securities within the meaning of Rule 144(a)(3); viii. the purchaser acknowledges that these representations and undertakings are required in connection with the securities laws of the United States and that the Company, the Selling Shareholders, the bookrunners and their respective advisers will rely upon the truth and accuracy of the foregoing acknowledgements, representations and agreements and undertakes to promptly notify the Company, the Selling Shareholders and the bookrunners if, at any time prior to the purchase of the shares, any of the foregoing ceases to be true; and ix. the Company shall not recognise any offer, sale pledge or other transfer of the shares in the Offering made other than in compliance with the above stated restrictions. Each purchaser of the shares in the Offering in compliance with Regulation S will be deemed to have represented and agreed that it has received a copy of the Offering Circular and such other information as it deems necessary to make an informed investment decision and that: i. the purchaser acknowledges that the shares in the Offering have not been and will not be registered under the Securities Act, or with any securities regulatory authority of any state of the United States, and are subject to significant restrictions on transfer; ii. the purchaser is authorised to consummate the purchase of the shares in compliance with all applicable laws and regulations; iii. the purchaser and the person, if any, for whose account or benefit the purchaser is acquiring the shares in the Offering was, located outside the United States at the time the buy order for the shares was originated; iv. the purchaser acknowledges that the shares in the Offering have not been and will not be registered under the Securities Act, or with any securities regulatory authority of any state of the United States, and, subject to certain exceptions, may not be offered or sold within the United States; v. the purchaser is aware of the restrictions on the offer and sale of the shares in the Offering pursuant to Regulation S described in this document; vi. the purchaser acknowledges that these representations and undertakings are required in connection with the securities laws of the United States and that the Company, the Selling Shareholders, the bookrunners and their respective advisers will rely upon the truth and accuracy of the foregoing acknowledgements, representations and agreements and undertakes to promptly notify the Company, the Selling Shareholders and the bookrunners if, at any time prior to the purchase of the shares, any of the foregoing ceases to be true; and vii. the Company shall not recognise any offer, sale, pledge or other transfer of the shares in the Offering made other than in compliance with the above stated restrictions. 85

88 Selling and transfer restrictions EUROPEAN ECONOMIC AREA In relation to each Member State of the European Economic Area (with the exception of Sweden and Denmark), no offer of the shares in the Offering may be made to the public in that Member State, except that offers of the shares in the Offering may be made under the following exemptions under the Prospectus Directive as implemented in that Member State: to any legal entity that is a qualified investor as defined in the Prospectus Directive; to fewer than 150 natural or legal persons (other than qualified investors as defined in the Prospectus Directive), as permitted under the Prospectus Directive, subject to obtaining the prior consent of the Joint Global Coordinators for any such offer; or in any other circumstances falling within Article 3(2) of the Prospectus Directive; provided that no such offer of shares in the Offering shall result in a requirement for the publication by the Company, the Principal Owner or any Joint Bookrunner of a prospectus pursuant to Article 3 of the Prospectus Directive or of a supplement to a prospectus pursuant to Article 16 of the Prospectus Directive. For the purposes of this provision, the expression offered to the public in relation to any shares in the Offering in any Member State means the communication in any form and by any means of sufficient information on the terms of the Offering and the shares in the Offering so as to enable an investor to decide to purchase any shares in the Offering, as the same may be varied in that Member State by any measure implementing the Prospectus Directive in that Member State. The expression Prospectus Directive means Directive 2003/71/EC (with amendments thereto) and includes any relevant implementing measure in each Relevant Member State. Any investment or investment activity to which this Offering Circular relates is available only to, and will be engaged in only with persons who: (i) are outside the United Kingdom or (ii) are qualified investors who (a) are investment professionals falling within Article 19(5) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005 (the Order ); or (b) fall within Article 49(2)(a) to (d) ( high net worth companies, unincorporated associations, etc. ) of the Order (all such persons together being referred to as Relevant persons ). Persons who are not Relevant persons should not take any action on the basis of this Offering Circular and should not act or rely on it. GENERAL No action has been or will be taken in any country or jurisdiction other than Sweden and Denmark that would, or is intended to, permit a public offering of the shares in the Offering, or the possession or distribution of this Offering Circular or any other offering material, in any country or jurisdiction where action for that purpose is required. Persons into whose hands this Offering Circular comes are required by the Company, the Principal Owner and the Joint Bookrunners to comply with all applicable laws and regulations in each country or jurisdiction in or from which they purchase, offer, sell or deliver shares in the Offering or have in their possession or distribute such offering material, in all cases at their own expense. None of the Company, the Principal Owner or the Joint Bookrunners accept any legal responsibility for any violation by any person, whether or not a prospective subscriber or purchaser of any of the shares in the Offering, of any such restrictions. UNITED KINGDOM Any offer or sale of the shares in the Offering may only be made to persons in the United Kingdom who are qualified investors as defined in Section 86(7) of the U.K. Financial Services and Markets Act 2000, as amended (the FSMA ) or otherwise in circumstances that do not require publication by the Company of a prospectus pursuant to section 85(1) of the FSMA. 86

89 Definitions Definitions The terms defined below are used in the Offering Circular: Annual Financial Statements The audited consolidated financial statements and notes of Boozt and its subsidiaries as of December 31, 2016, 2015 and 2014, prepared in accordance with IFRS-EU. AOV Berenberg BFC Boozt, the Company or the Group CAC CAGR Carnegie CLV Code Average order value excl. VAT. Joh. Berenberg, Gossler & Co. KG. Boozt Fulfilment Centre. Boozt AB (publ), the group in which Boozt AB (publ) is the parent company, or a subsidiary of the group, as the context may require. Customer acquisition cost. Compound annual growth rate. Carnegie Investment Bank AB (publ). Customer lifetime value. The Swedish Code of Corporate Governance. Cornerstone Investors Arbejdsmarkedets Tillægspension, Catella Fondforvaltning AB on behalf of managed funds, Ferd AS and Friheden Invest A/S. CRM Danske DKK DTAs EUR Euroclear Sweden Customer relationship management. Danske Bank A/S, Danmark, Sverige filial. Danish krone. Deferred Tax Assets. Euro. Euroclear Sweden AB. FSMA The U.K. Financial Services and Markets Act GBP IASB IFRIC IFRS Great Britain Pound. International Accounting Standards Board. International Financial Reporting Interpretations Committee. International Financial Reporting Standards. Internal Revenue Code The US Internal Revenue Code of Joint Bookrunners Joint Global Coordinators KPI Look up-bonus Lock-up period MSEK Nasdaq Stockholm NOK NPS Offering Offering Circular Carnegie, Danske and Berenberg. Carnegie and Danske. Key performance indicator. The Lock up-bonus described in in section Corporate Governance Remuneration to the members of the board of directors, CEO and group management Bonus in connection with the listing of the Company s shares. The lock-up period described under the section Share capital and ownership structure Lock up-arrangements, etc. Million Swedish kronor. The regulated market operated by Nasdaq Stockholm AB. Norwegian krone. Net promoter score. The offer of shares as set out in the Offering Circular. This offering circular. Offering Price The final offering price which is expected to be determined within the range of SEK Offset Issue The offset issue described in section Share capital and ownership structure Incentive programme Options Programme 2012/2022. Options Programme 2012 Options Programme 2015 Order Overallotment Option The Options Programme 2012/2022 described in section Share capital and ownership structure Incentive programme. The Options Programme 2015/2025 described in section Share capital and ownership structure Incentive programme. Article 19(5) of the Financial Services and Markets Act 2000 (Financial Promotion). The Over-Allotment Option described in section Invitation to acquire shares in Boozt. 87

90 Definitions PFIC Placing agreement Premises Price Range Prospectus Directive QIB Queenswall Passive foreign investment company. The agreement regarding placing of shares described in section Legal considerations and supplementary information Placing agreement. The warehouse premises described in section Legal considerations and supplementary information Material agreements Lease agreement. The price range of SEK 54 63, within which the Offering Price will be determined. Directive 2003/71/EC (with amendments thereto). Qualified institutional buyers. Queenswall AB. Regulation Regulation (EU) 2016/679. Regulation S Relevant Member State Relevant persons Revolving Credit Facility Revolving Credit Facility Agreement ROI Rule 144A Securities Act SEK Selling Shareholders SEM SEO SKU Treaty USD VAT Regulation S under the Securities Act. Each Member State of the European Economic Area that has implemented the Prospectus Directive. Persons who are outside the United Kingdom, or qualified investors who are investment professionals falling within Article 19(5) of the Financial Services and Markets Act 2000 (Financial Promotion) (the Order ) or high net-worth entities falling within Articles 49(2)(a) to (d) of the Order. A committed multicurrency revolving credit, amounted to SEK 140,000,000 (available for drawing in SEK, NOK, DKK and EUR), within the Revolving Credit Facility Agreement. The multicurrency revolving credit facility agreement with Danske as lender. Result on investment. Rule 144A under the Securities Act. U.S. Securities Act of 1933, as amended. Swedish krona. Sunstone Technology Ventures Fund II K/S, Verdane Capital VII K/S, ECCO Holding A/S, Sampension KP Livsforsikring A/S and Kent Stevens Larsen. Search engine marketing. Search engine optimisation. Stock keeping unit. The income tax treaty between Sweden and the United States. US Dollar. Value added tax. 88

91 Historical financial information CONTENTS Interim report for the period January 1 March 31, 2017 F-2 Historical financial information for the 2014, 2015 and 2016 financial years F-23 Auditor's report regarding historical financial information F-48

92 Historical Financial information Interim report for the period January 1 March 31, 2017 Interim consolidated financial statements Consolidated income statement SEK million unless otherwise indicated Note Jan 1 - Mar 31, 2017 Jan 1 - Mar 31, 2016 Rolling 12 months OPERATING INCOME Net revenue ,557.8 Other operating income ,562.7 OPERATING COSTS Goods for resale External fulfilment and distribution costs External marketing costs Other external costs Cost of personnel Depreciation and impairment losses Other operating costs Total operating costs ,550.7 OPERATING PROFIT/LOSS (EBIT) FINANCIAL INCOME AND EXPENSES Financial income Financial expenses Net financial items PROFIT/LOSS BEFORE TAX Income tax PROFIT/LOSS FOR THE PERIOD ATTRIBUTABLE TO: Parent company's shareholders Earnings per share (SEK) Earnings per share after dilution (SEK) Rounding differences may effect the summations. Consolidated statement of comprehensive income SEK million Note Jan 1 - Mar 31, 2017 Jan 1 - Mar 31, 2016 Rolling 12 months PROFIT/LOSS FOR THE PERIOD Items that may be reclassified to the income statement Translation differences Other comprehensive income TOTAL COMPREHENSIVE PROFIT/LOSS FOR THE PERIOD ATTRIBUTABLE TO Parent company's shareholders Rounding differences may effect the summations. Boozt AB / Quarterly report - first quarter F-2

93 Historical Financial information Interim consolidated financial statements Consolidated statement of financial position SEK million Note Mar 31, 2017 Mar 31, 2016 Dec 31, 2016 ASSETS Non-current assets Intangible assets Web platform Tangible assets Equipment Deposits Deferred tax asset Total non-current assets Current assets Inventories Accounts receivables Other receivables Current tax assets Prepaid expenses and accrued income Derivatives Cash and cash equivalents Total current assets TOTAL ASSETS EQUITY AND LIABILITIES Equity Share capital Other capital contributions Reserves Retained earnings including profit for the year Equity attributable to parent company shareholders Non-current liabilities Interest bearing liabilities Other provisions Total non-current liabilities Current liabilities Interest bearing liabilities Accounts payables Current tax liabilities Other liabilities Accrued expenses and prepaid income Total current liabilities Total liabilities TOTAL EQUITY AND LIABILITIES Rounding differences may effect the summations. 16 Boozt AB / Quarterly report - first quarter 2017 F-3

94 Historical Financial information Interim consolidated financial statements Consolidated statement of changes in equity SEK million Share capital Other capital contributions Reserves Profit brought forward incl. profit/loss for the year Total equity attributable to parent company shareholders Equity brought forward Profit for the year Translation differences COMPREHENSIVE PROFIT/LOSS FOR THE YEAR Total transactions with owners Equity carried forward Rounding differences may effect the summations. SEK million Share capital Other capital contributions Reserves Profit brought forward incl. profit/loss for the year Total equity attributable to parent company shareholders Equity brought forward Profit for the year Translation differences COMPREHENSIVE PROFIT/LOSS FOR THE YEAR Total transactions with owners Equity carried forward Rounding differences may effect the summations. Boozt AB / Quarterly report - first quarter F-4

95 Historical Financial information Interim consolidated financial statements Consolidated statement of cash flow SEK million Note Jan 1 - Mar 31, 2017 Jan 1 - Mar 31, 2016 Rolling 12 months CASH FLOW FROM OPERATING ACTIVITIES BEFORE CHANGES IN WORKING CAPITAL Operating profit Adjustments for non-cash items: Non-cash renumeration from share based payments Depreciation and impairment losses Other items not included in cash flow Interest received Interest paid Paid income tax CASH FLOW FROM OPERATING ACTIVITIES BEFORE CHANGES IN WORKING CAPITAL CASH FLOW FROM CHANGES IN WORKING CAPITAL Changes in inventory Changes in current assets Changes in current liabilities CASH FLOW FROM OPERATING ACTIVITIES CASH FLOW FROM INVESTING ACTIVITIES Acquisition of subsidiaries Investments in fixed assets Investments in financial assets Investments in intangible assets CASH FLOW FROM INVESTING ACTIVITIES CASH FLOW FROM FINANCING ACTIVITIES New share issue New loans Repayment of loans Change in overdraft facility CASH FLOW FROM FINANCING ACTIVITIES Cash flow for the period Currency exchange gains/losses in cash and cash equivalents Cash and cash equivalents beginning of period Cash and cash equivalents end of period Rounding differences may effect the summations. 18 Boozt AB / Quarterly report - first quarter 2017 F-5

96 Historical Financial information Interim consolidated financial statements Note 1 - Accounting principles The report is prepared in accordance with IAS 34 Interim Financial Reporting and the Swedish Annual Accounts Act. The accounting and measurement policies, as well as the assessment bases, applied in the 2016 Annual Report have also been applied in this quarterly report. During the first quarter of 2017 the Group for the firsttime applied hedge accounting with purpose to manage translational exposure for transactions relating to sales in foreign currencies. The Group has entered into agreements whereby the Group has a right to purchase EUR at a pre-defined price at a given time with purpose to manage translational exposure of NOK. Realised profits/losses related to the agreement is recognised in the Group s income statement. An assessment of un-realised future cash flows are caluculated at each reporting date to discounted value on the spot market (rate at balance sheet day) and are recognised as derivative assets respectively liabilities. No new or revised IFRS-standards that came into force in 2017 have had any significant impact on the Group. New or amended accounting standards that come into force after 2017 IFRS 15 replaces all previously issued standards and interpretations which manage revenue with a comprehensive model for revenue recognition. With the purpose to identify whether the Group s existing accounting policies are effected by the implementation of IFRS 15 a pre-study has been initiated. In the pre-study an analysis of all revenue-streams are analysed in accordance with the five-step-model that is described in IFRS 15. The pre-study is expected to be finalised during the second quarter of Important assessments Boozt have issued two warrant programs with individual terms and conditions (warrant program 2012/2022 and warrant program 2015/2025). The programs are intended for key employees, the Group CEO is included in this group of people. If an exit happens, meaning either an IPO or a trade sale of the company, the warrants give a right to purchase a share in the company at a pre-defined price. If the company does not perform an exit according to the pre-defined terms as stated above, all warrants void, and the warrant holders cannot purchase shares. At each reporting date, Boozt assesses the probability for an exit according to the definition provided in the terms and conditions for the warrant program to occur. For the reporting period, Boozt made the assessment that it is not probable that an exit will occur within the time-frame for each program. Thus, the company only recognised social charges for the 2012/2022 program and not for the 2015/2025 program. If Boozt had assessed this as probable, the effect in the financial reports would have been a personnel cost amounting to the value of the earnings for the year, that relates to the fair value of the warrants distributed over the years that the earning is attributable to, with the corresponding amount recorded as increase of equity. Cost and debt for social security charges for the taxable benefit should be added. Total accumulated effect in the income statement per March 31, 2017 if recorded, would amount to SEK 4.8 million whereof SEK 1.2 million corresponds to debt for social charges of personnel. With purpose to counteract cash flow implications of costs for social charges, the company holds 77,343 warrants attributable to the warrant program 2012/2022 and 64,954 warrants attributable to the warrant program 2015/2025 in its own portfolio of warrants. In relation to the warrant program 2012/2022 the company has used a probability assessment of 49% to calculate the provision for social charges. If the exit takes place as described in the program's terms and conditions the probability is Boozt AB / Quarterly report - first quarter F-6

97 Historical Financial information Interim consolidated financial statements automatically set to 100%, hence the company will have to account for additional SEK 19.0 million in social charges. During 2017, the Group continued to develop and prepare the business' capability to perform an IPO within a foreseeable future. It is still uncertain as to whether the Group will remain private or conduct an IPO. As per approval date of the quarterly report, no formal assessment from Nasdaq whether the company is deemed prepared to perform an IPO has been obtained. If an IPO is completed, the Group has a right, under an established lock-up agreement between the Group and Group Management, to request from Group Management that a certain number of shares received will be locked up for a 12-month period. If the Group makes use of this right, the Group Management will receive compensation amounting to approximately SEK 17.5 million including social charges. Estimates and assumptions are in all other aspects the same as stated in the Group s financial statement for Parent company For the Parent Company, Boozt AB, the financial statements have been prepared in accordance with the Swedish Annual Accounts Act and the Swedish Financial Reporting Board s recommendation RFR 2 Accounting for Legal Entities. The reporting currency is SEK and all figures in the interim report are rounded to the nearest million. 20 Boozt AB / Quarterly report - first quarter 2017 F-7

98 Historical Financial information Interim consolidated financial statements Note 2 - Segment reporting SEK million Jan 1 - Mar 31, 2017 Jan 1 - Mar 31, 2016 Change Rolling 12 months NET REVENUE Boozt.com ,464.9 Booztlet.com Other TOTAL NET REVENUE ,557.8 EBIT Boozt.com Booztlet.com Other TOTAL OPERATING PROFIT/LOSS PROFIT/LOSS BEFORE TAX Boozt.com Booztlet.com Other PROFIT/LOSS BEFORE TAX Rounding differences may effect the summations. The Group reports operating segments in accordance with IFRS 8. The Group s operations are divided into three segments which constitute 100% of the revenue generated. The Group reports net revenue, EBIT and Operating profit before tax for each of the operating segments. No information on segment assets or liabilities is provided. Boozt AB / Quarterly report - first quarter F-8

99 Historical Financial information Interim consolidated financial statements Note 3 - Financial instruments 31 mar 2017 Accounts receivable and loans receivable Other financial liabilitites Financial assets measured at fair value via income statement Total carrying amount Fair value ASSETS Deposits Accounts receivables Other receivables Derivatives Cash and cash equivalents Total assets Liabilities Liabilities to credit institutions Accounts payables Other liabilities Total liabilities mar 2016 Accounts receivable and loans receivable Other financial liabilitites Financial assets measured at fair value via income statement Total carrying amount Fair value ASSETS Deposits Accounts receivables Other receivables Derivatives Cash and cash equivalents Total assets Liabilities Liabilities to credit institutions Accounts payables Other liabilities Total liabilities Rounding differences may effect the summations. Calculation of fair value For the current financial year, the fair value of financial assets and liabilities is considered to be close to the carrying amount, after which the carrying amount is estimated to be the same as the fair value. Derivative instruments The fair value is calculated as defined for level 2 in IFRS 7. Long-term and short-term loans The Group has a bank loan amounting to SEK 12.0 million, the interest rate for the loan is floating and may change over time. The carrying amount of the loan is estimated to be close to the fair value. 22 Boozt AB / Quarterly report - first quarter 2017 F-9

100 Historical Financial information Interim consolidated financial statements Note 4 - Investments SEK million Jan 1 - Mar 31, 2017 Jan 1 - Mar 31, 2016 Rolling 12 months Acquisition of fixed assets (other capex) Acquisition of fixed assets (warehouse capex) Acquisition of financial assets Acquisition of intangible assets (capitalised development costs) Acquisition of intangible assets (other) CASH FLOW FROM INVESTMENTS Rounding differences may effect the summations. Boozt AB / Quarterly report - first quarter F-10

101 Historical Financial information Interim consolidated financial statements Parent company income statement SEK million OPERATING INCOME Jan 1 - Mar 31, 2017 Jan 1 - Mar 31, 2016 Net revenue Total operating income OPERATING COSTS Other operating expenses Total operating costs OPERATING PROFIT PROFIT/LOSS FOR THE PERIOD Rounding differences may effect the summations. Parent company statement of comprehensive income SEK million Jan 1 - Mar 31, 2017 Jan 1 - Mar 31, 2016 PROFIT/LOSS FOR THE PERIOD Other comprehensive income - - COMPREHENSIVE PROFIT/LOSS FOR THE PERIOD Rounding differences may effect the summations. 24 Boozt AB / Quarterly report - first quarter 2017 F-11

102 Historical Financial information Interim consolidated financial statements Parent company financial position SEK million Mar 31, 2017 Mar 31, 2016 Dec 31, 2016 ASSETS Fixed assets Financial assets Shares in Group companies Total fixed assets Current assets Short term receivables Receivables Group companies Current tax assets Prepaid expenses and accrued income Cash and cash equivalents Total current assets TOTAL ASSETS EQUITY AND LIABILITIES Equity Restricted equity Share capital Unrestricted equity Share premium reserve Retained earnings Net income Total equity LIABILITIES Current liabilities Accounts payables Liabilities to Group companies Other liabilities Accrued expenses and prepaid income Total current liabilities TOTAL EQUITY AND LIABILITIES Rounding differences may effect the summations. Boozt AB / Quarterly report - first quarter F-12

103 Historical Financial information Interim consolidated financial statements Parent company changes in equity SEK million Share capital Share premium reserve Profit/loss brought forward Total equity Equity as per Net income Other comprehensive income TOTAL COMPREHENSIVE INCOME Total transactions with owners Equity as per Rounding differences may effect the summations. SEK million Share capital Share premium reserve Profit/loss brought forward Total equity Equity as per Net income Other comprehensive income TOTAL COMPREHENSIVE INCOME Total transactions with owners Equity as per Rounding differences may effect the summations. 26 Boozt AB / Quarterly report - first quarter 2017 F-13

104 Historical Financial information Interim consolidated financial statements This is a translation of the Swedish original report. In case of differences between the English translation and the Swedish original, the Swedish text shall prevail. This report has not been reviewed by the Groups auditors in accordance with ISRE The undersigned certify that this quarterly report gives an overview of the Parent Company s and the Group s operations, financial position and performance and describes the material risks and uncertainties facing the Parent Company and the companies in the Group. Malmö on April 26, 2017 Hermann Haraldsson CEO In accordance with authorisation given by the Board of Directors Boozt AB / Quarterly report - first quarter F-14

105 Historical Financial information Interim consolidated financial statements Review report BOOZT AB CORPORATE IDENTITY NUMBER Introduction We have reviewed the condensed interim report for Boozt AB as at March 31, 2017 and for the three months period then ended. The Board of Directors and the CEO are responsible for the preparation and presentation of this interim report in accordance with IAS 34 and the Swedish Annual Accounts Act. Our responsibility is to express a conclusion on this interim report based on our review. Scope of review We conducted our review in accordance with the International Standard on Review Engagements, ISRE 2410 Review of Interim Financial Statements Performed by the Independent Auditor of the Entity. A review consists of making inquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with International Standards on Auditing and other generally accepted auditing standards in Sweden. The procedures performed in a review do not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion. Conclusion Based on our review, nothing has come to our attention that causes us to believe that the interim report is not prepared, in all material respects, in accordance with IAS 34 and the Swedish Annual Accounts Act regarding the Group, and in accordance with the Swedish Annual Accounts Act regarding the Parent Company. Malmö April 28, 2017 Ernst & Young AB Thomas Swenson Authorized Public Accountant 28 Boozt AB / Quarterly report - first quarter 2017 F-15

106 Historical Financial information Interim consolidated financial statements Additional information This report is published F-16 Boozt AB / Quarterly report - first quarter

107 Historical Financial information Additional information Information by quarter Net revenue and EBIT by segment SEK million Q Q Q Q Q Q Q Q Q Q Q Q Net revenue Boozt.com Booztlet.com Other NET REVENUE OPERATING PROFIT/LOSS (EBIT) Boozt.com Booztlet.com Other OPERATING PROFIT/LOSS (EBIT) OPERATING PROFIT/LOSS (EBIT) % Boozt.com -7.3% 10.2% -6.4% 1.3% -9.2% 5.0% -10.1% -2.5% -12.1% -8.3% -22.1% -18.5% Booztlet.com 6.1% 6.5% 18.6% 15.8% 11.3% -14.7% -9.3% n.a. n.a. n.a. n.a. n.a. Other 17.0% -3.7% 3.3% 17.8% 21.0% 13.0% 20.8% 28.5% 27.1% 15.3% 25.0% 13.6% OPERATING PROFIT/LOSS (EBIT) % -6.2% 9.8% -5.2% 2.4% -6.6% 5.3% -6.9% 0.1% -7.5% -6.3% -15.2% -14.5% Rounding differences may effect the summations. 30 Boozt AB / Quarterly report - first quarter 2017 F-17

108 Historical Financial information Additional information Definitions / glossary Active customers: Adjusted EBIT: Adjusted EBIT margin: Adjusted EBITDA: Adjusted EBITDA margin: Admin & Other cost ratio: Average order value: Conversion rate: Earnings per share: Earnings per share after dilution: Equity / asset ratio: Fulfilment cost ratio: Items affecting comparability: Marketing cost ratio: Net working capital: Net debt / net cash: Net revenue: No. of orders: No. of orders per active customer: Site visits: Share based payments: Transactional net revenue: True frequency: Number of customers which made at least one order in the last 12 months Profit/loss before interest, tax, share based payments related to employees and items affecting comparability Adjusted EBIT divided by net revenue Profit/loss before interest, tax, depreciation, amortisation, share based payments related to employees and items affecting comparability Adjusted EBITDA divided by net revenue Total operating costs less fulfilment costs, less marketing costs, less goods for resale plus depreciation and other operating income divided by net revenue Transactional net revenue divided by no. of orders Total number of orders divided by site visits Profit/loss for the period divided by weighted average number of shares outstanding during the period Profit/loss for the period divided by diluted weighted average number of shares outstanding during the period. The number of ordinary shares shall be the weighted average number of shares, used when measuring basic earnings per share, plus the weighted average number of shares that would be issued on the conversion of all the dilute potential shares into ordinary shares. Potential ordinary shares shall be treated as dilute when, and only when, their conversion to ordinary shares would decrease earnings per share or increase loss per share. In addition, dilute potential shares are only considered in the calculation of diluted earnings per share if the performance condition (i.e., IPO) are satisfied as of the end of the reporting period Total equity divided by total assets Fulfilment and distribution cost divided by net revenue Items that is not related with the operations and is the type of item that it is not expected to re-occur often or regularly and that it is an item of significant value Marketing cost divided by net revenue Current assets, excluding cash and cash equivalents, less non-interest bearing current liabilities Interest bearing liabilities less cash and cash equivalents Transactional net revenue less fees paid to consignment partners plus other revenue Number of orders placed by customers during the period, irrespective of cancellations or returns Number of orders in the last 12 months divided by the number of active customers Number of visits to a site or group of sites, irrespective of device used Costs of the Group which are settled via issuing of shares Gross sales (incl. shipping and invoice income) less discounts and returns, excl. VAT The number of orders among a cohort of customers in a given 12-month period Boozt AB / Quarterly report - first quarter F-18

109 Historical Financial information Additional information Rationale for the use of certain Alternative Performance Measures (APM) Adjusted EBIT: The aim of the figure is to display the operating profit excluding non-cash items and non-recurring items. Hence share based compensation related to employees and items affecting comparability are excluded from this metric. Adjusted EBITDA: The aim of this figure is to display profit/loss before depreciation and amortisation excluding non-cash items and non-recurring items, hence the operating profit/ loss from the day to day operation excluding effects from investments, share based compensation related to employees and items affecting comparability. EBITDA: The aim of this figure is to display the profit/loss before depreciation and amortisation. Hence the operating profit/loss from the day to day operation excluding effects from investments. Net working capital: The purpose of displaying net working capital is to display short-term financial health since the measure indicate if the company has enough short term assets to cover its short-term debt. Net working capital can be put in relation to net revenues to understand efficiency of net working capital tied up in operations. Transactional net revenue: The aim of the figure is to display the total consumer value of the orders processed less returns and excluding VAT. Transactional net revenue less fee to consignment partners plus other revenue not related to consumer orders equals net revenue. The transactional net revenue can be calculated as average order value (AOV) multiplied with no. of orders. 32 Boozt AB / Quarterly report - first quarter 2017 F-19

110 Historical Financial information Additional information Reconciliation of total operating income SEK million Jan 1 - Mar 31, 2017 Jan 1 - Mar 31, 2016 Rolling 12 months GROUP Transactional net revenue ,748.6 Less consignment sales Other revenue Net revenue ,557.8 Other operating income Total operating income ,562.7 BOOZT.COM Transactional net revenue ,514.6 Less consignment sales Other revenue Net revenue ,464.9 Other operating income Total operating income ,469.8 BOOZTLET.COM Transactional net revenue Less consignment sales Other revenue Net revenue Other operating income Total operating income OTHER Transactional net revenue Less consignment sales Other revenue Net revenue Other operating income Total operating income Rounding differences may effect the summations. Reconciliation of adjusted EBIT SEK million Jan 1 - Mar 31, 2017 Jan 1 - Mar 31, 2016 Rolling 12 months EBIT Share-based payments related to employees (cost of personnel) IPO preparation costs Other items affecting comparability* Adjusted EBIT Rounding differences may effect the summations. *Other items affecting comparability are related to the Group's warehouse move. Boozt AB / Quarterly report - first quarter F-20

111 Historical Financial information Additional information Reconciliation with financial statements according to IFRS SEK million unless otherwise indicated Jan 1 - Mar 31, 2017 Jan 1 - Mar 31, 2016 Rolling 12 months Cash and cash equivalents Convertible loan Interest bearing liabilities (current and non-current) Revolving credit facilities Net debt / -net cash Total equity Total assets Equity / asset ratio 44.8% 41.9% 44.8% No. of orders (000) ,920 Site visits (000) 19,737 14,342 68,450 Conversion rate (Boozt.com) 2.58% 2.47% 2.81% Inventory Accounts receivables Other receivables Current tax assets Pre-paid expenses and accrued income Accounts payables Current tax liabilities Other liabilities Accrued expenses and pre-paid income Net working capital Operating profit/loss (EBIT) Depreciation and amortisation EBITDA Share-based payments related to employees (cost of personnel) IPO preparation costs Other items affecting comparability* Adjusted EBITDA Rounding differences may effect the summations. *Other items affecting comparability are related to the Group's warehouse move. Some of the key ratios such as gross margin, earnings per share and EBIT margin may be easily calculated from the financial statements. Such metrics are regarded as reconciled and are not presented above. 34 Boozt AB / Quarterly report - first quarter 2017 F-21

112 Historical Financial information Historical financial information for the 2014, 2015 and 2016 finance years CONSOLIDATED INCOME STATEMENT 1) SEK million OPERATING INCOME Note Net revenue 3, 4 1, Other operating income , OPERATING COSTS Goods for resale External fulfilment and distribution costs External marketing costs Other external costs 6, Cost of personnel Depreciation and impairment losses Other operating costs Total operating costs OPERATING PROFIT/LOSS (EBIT) FINANCIAL INCOME AND EXPENSES Financial income Financial expenses Net financial items PROFIT/LOSS BEFORE TAX Income tax PROFIT/LOSS FOR THE YEAR ATTRIBUTABLE TO: Parent company's shareholders Earnings per share (SEK) Earnings per share after dilution (SEK) CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME 1) SEK million PROFIT/LOSS FOR THE YEAR Items that may be reclassified to the income statement Translation differences Total earnings after tax COMPREHENSIVE PROFIT/LOSS FOR THE YEAR ATTRIBUTABLE TO Parent company's shareholders ) The tables deviate from the determined numbers in the annual reports for 2014 and 2015 due to rectifying errors that have been done in accordance with the description in note 2 in the Company s annual report for the financial year F-22

113 Historical Financial information CONSOLIDATED STATEMENT OF FINANCIAL POSITION 1) SEK million Note ASSETS Non-current assets Intangible assets Web platform Tangible assets Equipment Other non-current assets Deposits Deferred tax asset Total non-current assets Current assets Inventories Accounts receivables Other receivables Current tax assets Prepaid expenses and accrued income Cash and cash equivalents Total current assets TOTAL ASSETS EQUITY AND LIABILITIES Equity Share capital Other capital contributions Reserves Retained earnings including profit for the year Equity attributable to parent company shareholders Non-current liabilities Convertible loan 0.3 Interest bearing liabilities Revolving credit facility 8.2 Other provisions Total non-current liabilities Current liabilities Interest bearing liabilities Accounts payables Current tax liabilities 0 0 Other liabilities Accrued expenses and prepaid income Total current liabilities Total liabilities TOTAL EQUITY AND LIABILITIES ) The tables deviate from the determined numbers in the annual reports for 2014 and 2015 due to rectifying errors that have been done in accordance with the description in note 2 in the Company s annual report for the financial year F-23

114 Historical Financial information CONSOLIDATED STATEMENT OF CHANGES IN EQUITY 1) SEK million Share capital Other capital contributions Reserves Profit brought forward incl. profit/ loss for the year Equity attributable to parent company shareholders Total equity Equity brought forward Profit for the year Translation differences COMPREHENSIVE PROFIT/LOSS FOR THE YEAR New share issue Share based payments Total transactions with owners Equity carried forward SEK million Share capital Other capital contributions Reserves Profit brought forward incl. profit/ loss for the year Equity attributable to parent company shareholders Total equity Equity brought forward Profit for the year Translation differences COMPREHENSIVE PROFIT/LOSS FOR THE YEAR New share issue Costs of share issue Share based payments Total transactions with owners Equity carried forward SEK million Share capital Other capital contributions Reserves Profit brought forward incl. profit/ loss for the year Equity attributable to parent company shareholders Total equity Equity brought forward Profit for the year Translation differences COMPREHENSIVE PROFIT/LOSS FOR THE YEAR New share issue Cost of share issue Share based payments Total transactions with owners Equity carried forward ) The tables deviate from the determined numbers in the annual reports for 2014 and 2015 due to rectifying errors that have been done in accordance with the description in note 2 in the Company s annual report for the financial year F-24

115 Historical Financial information CONSOLIDATED STATEMENT OF CASH FLOW 1) SEK million Note CASH FLOW FROM OPERATING ACTIVITIES BEFORE CHANGES IN WORKING CAPITAL Operating profit Adjustments for non-cash items: Non-cash renumeration from share based payments Depreciation and impairment losses Other items not included in cash flow Interest received 0.0 Interest paid Paid income tax CASH FLOW FROM OPERATING ACTIVITIES BEFORE CHANGES IN WORKING CAPITAL CASH FLOW FROM CHANGES IN WORKING CAPITAL Changes in inventory Changes in current assets Changes in current liabilities CASH FLOW FROM OPERATING ACTIVITIES CASH FLOW FROM INVESTING ACTIVITIES Acquisition of subsidiaries 0.7 Investments in fixed assets Investments in financial assets Investments in intangible assets CASH FLOW FROM INVESTING ACTIVITIES CASH FLOW FROM FINANCING ACTIVITIES New share issue New loans Repayment of loans Change in overdraft facility CASH FLOW FROM FINANCING ACTIVITIES Cash flow for the year Currency exchange gains/losses in cash and cash equivalents Cash and cash equivalents beginning of year Cash and cash equivalents end of year ) The tables deviate from the determined numbers in the annual reports for 2014 and 2015 due to rectifying errors that have been done in accordance with the description in note 2 in the Company s annual report for the financial year F-25

116 Historical Financial information GROUP NOTES NOTE 1 SIGNIFICANT ACCOUNTING PRINCIPLES These annual accounts and consolidated accounts include the Swedish parent company Boozt AB, corporate identity number , and its subsidiaries. The Group s main business is sale of clothes, shoes and accessories. The parent company is a limited liability company registered in Sweden domiciled in Malmö. The head office address is Hyllie Boulevard 10B, Malmö. The board of directors and the CEO has on April 26, 2017 approved the annual accounts and consolidated accounts which will be submitted for adoption at the Annual General Meeting on May 15, APPLIED RULES AND REGULATIONS The consolidated accounts have been prepared in accordance with the Swedish Annual Accounts Act and International Financial Reporting Standards (IFRS) issued by the International Accounting Standards Board (IASB) as defined by the European Union (EU). In addition, the consolidated accounts follow the recommendation of the Swedish Financial Reporting Board RFR 1 Supplementary accounting rules for Groups. NEW OR AMENDED ACCOUNTING STANDARDS 2016 No changes and interpretations of existing standards applied by the Group as per financial year of 2016 had any significant impact on the Group s or parent company s financial reports. NEW OR AMENDED ACCOUNTING STANDARDS THAT COME INTO FORCE AFTER 2016 The following updates have been decided by the IASB and will take effect on January 1, 2017 or thereafter unless another date of application has been adopted by the EU; IFRS 9 addresses accounting of financial assets and liabilities and replaces IAS 39 Financial Instruments. IFRS 9 will be effective as of January 1, As with IAS 39, financial assets are classified in different categories, some of which are measured at accrued acquisition cost and some at fair value. IFRS 9 introduces categories other than those contained in IAS 39. IFRS 9 also introduces a new model for the impairment of financial assets. The purpose of the new model includes that credit losses should be recognised earlier than under IAS 39. The revised principles for the provision and impairment of credit losses imply that the previous model based on incurred losses is replaced by a model that is based on expected customer losses. The impairment rules under IFRS 9 are based on a three-stage model in which the accounts should reflect changes in the credit risk. IFRS 9 also includes extended regulation regarding financial hedging with purpose to increase the flexibility regarding which types of transactions that hedge accounting can be applicable for. The standard gives extended possibilities to hedge risk components for non-financial items and increase the number of categories which can be included in a hedging transaction. A pre-study with the purpose to identify potential effects related to the introduction of IFRS 9 for the Group is ongoing and expected to be completed during the second quarter of The analysis will mainly describe the effects relating to the introduction of new classification categories, as well as the new model for the impairment of financial assets. Since the Group does not apply hedge accounting, changes within in this area are not expected to affect the Group, considering current conditions. The analysis also aims to identify the increased disclosure requirements that will be relevant for the Group when IFRS 9 is implemented. IFRS 15 replaces all previously issued standards and interpretations which manage revenue with a comprehensive model for revenue recognition. The standard is based on the principle that revenue should be recognised when a promised product or service has been transferred to the customer, that is, when the customer has received control of it. This may occur over time or at a time. IFRS 15 is effective as of January 1, The Group s current revenue streams consists to more than 99% of sale of goods with the right of return. When selling with a right of return revenue should not be recorded for expected returns. Any received payment should be accounted as a liability. The expected proportion of return should be calculated in a reliable manner. The Group s current accounting policy for revenues with the right of return is performed in accordance with the principle described above. Expected proportion of returns are calculated based on historical data, and reported consistently over time. Our assessment based on the above description is that the Group s accounting policy for the majority of the revenue transactions made in the Group will not be affected by the introduction of IFRS 15. With the purpose to identify whether the Group s existing accounting policies are effected by the implementation of IFRS 15 a pre-study has been initiated. In the pre-study an analysis of all revenue-streams are analysed in accordance with the five-step-model that is described in IFRS 15. The pre-study is expected to be finalised during the second quarter of IFRS 16 Leasing replaces IAS 17 as of January 1, Under the new standard, the majority of leased assets are to be reported in the balance sheet. For the Group the implementation of IFRS 16 is expected to affect the financial statements as all leases in the Group will be capitalized, which will have an effect on total balance sheet and key ratios such as solidity. The contracts that are deemed to have the greatest impact are leasing contracts relating to the premises for the fulfilment centre in Ängelholm, the headquarter and physical retail stores. The Group is yet to assess the full impact of IFRS 16 and will begin this analysis during The standard has not yet been adopted by the European Union. VALUATION BASIS Assets and liabilities are based on historical acquisition costs except for certain financial assets and liabilities measured at fair value. CURRENCY Functional currency is the currency of the primary economic environment in which companies operate. The parent company's functional currency is SEK, which is also the reporting currency for the parent company and the Group. This means that the financial reports are presented in SEK. All amounts, unless otherwise indicated, are rounded to the nearest million. F-26

117 Historical Financial information CONSOLIDATION Subsidiaries Subsidiaries are all entities over which the Group has control. The Group has a controling interest of a company when when it is exposed to or has the right to variable returns from its holdings in the company and has the opportunity to impact the return, through its influence in the company. Subsidiaries are consolidated from the date on which the control is transferred to the Group. They are excluded from the consolidated accounts from the date the control ceases. Acquisitions are accounted for using the purchase method. The method implies that the acquisition of a subsidiary is considered a transaction through which the Group indirectly acquires the subsidiary s assets and assumes its liabilities. The acquisition analysis/ purchase price allocation establishes the fair value at the acquisition date of the identifiable assets acquired and liabilities assumed and any non-controlling interests. Transaction costs, except for transaction costs that are attributable to the issuance of equity or debt instruments, are recognised immediately in profit/loss for the year. For acquisitions where the consideration transferred exceeds the fair value of acquired assets and assumed liabilities that are recognised separately, the difference is recognised as goodwill. When the difference is negative, known as a bargain acquisition, this is recognised directly in profit/loss for the year. Transactions eliminated in consolidation Group internal receivables and liabilities, revenues or costs and unrealised gains or losses relating to Group internal transactions between Group companies are eliminated when the Group s accounts are consolidated. CLASSIFICATION Fixed assets and long-term liabilities essentially consist of amounts expected to be recovered or settled after more than twelve months from the balance sheet date. Current assets and current liabilities essentially consist of amounts expected to be recovered or paid within twelve months from the closing date. SEGMENT REPORTING An operating segment is a component of the Group that conducts operations from which it can generate revenues and incur costs and for which independent information is available. Operating segments are reported in a manner consistent with the internal reporting provided to the chief executive decision-maker to allocate resources to the operating segment. Boozt has identified and reports three operating segments; Boozt.com, Booztlet.com and Other. The assumptions and key ratios for allocating resources to the operating segments have been consistent over time. For reporting by segment see note 4. Transactions in foreign currency Transactions in foreign currencies are translated into the functional currency at the exchange rate prevailing on the transaction date. Monetary assets and liabilities in foreign currencies are translated into the functional currency at the exchange rate prevailing at the balance sheet date. Exchange rate differences arising on translation are recognised in net profit/loss for the year. Exchange gains and losses on operating receivables and liabilities are recognised in operating profit/loss, while gains and losses on financial assets and liabilities are reported as financial items. Translation of foreign operations Assets and liabilities of foreign operations, including goodwill and other Group surpluses and deficits, are translated from their functional currency to the Group s reporting currency, Swedish kronor, at the exchange rate prevailing on the balance sheet date. Revenues and expenses of foreign operations are translated to Swedish kronor at an average rate that is an approximation of the exchange rates prevailing on the transaction dates. Translation differences arising on translation of foreign operations are recognised as comprehensive income and accumulated in a separate component in equity called translation reserve. On disposal of a foreign operation, the cumulative translation differences relating to the activities are realised, whereby they are reclassified from comprehensive income to net profit/loss for the year. REVENUE The Group recognises revenue when the amount can be measured in a reliable way, it is probable that future economic benefits will flow to the company and specific criteria have been met for each of the Group s businesses. Revenue comprises the fair value of the consideration that has been received or will be received for goods and services sold in the Group s operating activities. Revenue is recognised excluding VAT, expected returns and discounts and after eliminating inter-company sales. Commission Sales When the Group sells goods or services as an agent, revenue and payments to suppliers are recognised net under net revenue and represent the margin/commission earned by the Group. The Group is liable for any value added tax on the total value of items sold to end consumers. The Group recognises actual and expected returns in the same manner as for sale of goods. Whether the Group is considered as principal or agent in a transaction is based on an analysis of both the legal form and the content of the agreement between the Group and its business partner, these assessments affect the amount of recognised net sales and operating expenses, but not profit/loss for the year or cash flows. Sale of goods All sales are made on a 30-day return. Revenue recognised is reduced with the transactional price (excl. VAT) for the items that are expected to be returned. The reduced amount are accounted for as a provision for returns and complaints. The provision is based on sales statistics and an assessment of future complaints and returns, and occurs in the same period as the sale. Gift Cards Upon the sale of gift cards the entire amount is recognised as a provision and is recognised as revenue when the gift card is used, or when its validity expires. EMPLOYEE BENEFITS Current benefits Current employee benefits such as salary, social security contributions, holiday pay and bonus are expensed in the period when the employees provides the services. Pensions Boozt AB s pension obligations are covered by defined contribution plans. A defined contribution plan is a pension plan under which the Group pays fixed contributions into a separate entity. The Group has F-27

118 Historical Financial information no legal or informal obligations to pay further contributions if this legal entity does not have sufficient assets to pay all employee benefits relating to employee services in the current and prior periods. The Group has therefore no additional risk. The Group s obligations for contributions to defined contribution plans are recognised as an expense in profit or loss as they are earned by the employee performing services for the Group during a period. Compensation on termination An expense for remuneration in connection with termination of personnel is recognised only if the company is demonstrably committed, without realistic possibility of withdrawal, by a formal detailed plan to terminate an employment before the normal dismissal time. When remuneration is paid as an offer to encourage voluntary redundancy, a cost is recognised if it is probable that the offer will be accepted and the number of employees who will accept the offer can be reliably estimated. Share-based payments Key employees are invited to participate in stock option program in Boozt AB. At the programmes end, key employees, in case the conditions of the program are met, have the right to receive warrants to purchase shares for a pre-determined price. The Group recognises share-based payments for the warrants personnel in question may receive. A personnel cost is recognised, together with a corresponding increase in equity, distributed over the period in which the vesting conditions are met, which is the date on which the relevant employees become fully entitled to the compensation. The condition for the scheme to fall out is either an IPO or a sale of all shares. The cumulative expense recognised at each reporting date shows the extent to which the vesting period has been felled with an estimate of the number of shares that will finally become fully vested. At each balance sheet date the Group revises its estimate of the number of shares expected to be vested. Any deviations from the original assessments are reported in the income statement and the corresponding adjustments are made in equity. Social security costs attributable to share-based payments as above are expensed in the periods in which the services are provided. The liability for social security costs arising is revalued at each reporting date based on a new calculation of the fees expected to be paid when the shares are redeemed. This means that a new market valuation of the shares is made at each balance sheet date which is the basis for the calculation of the liability for social security charges. OTHER SHARE BASED PAYMENTS An agreement with a supplier regarding purchase of tv-spots to be delivered during was entered in The agreement has been settled by allotment of shares. The fair value of the transaction has been established jointly by the parties on the basis of the current market for this type of services. See note 7. LEASING The Group does not have any significant financial leasing agreements. The Group does not account for any financial leases during Operating lessee Leases in which a significant portion of the risks and rewards of ownership are retained by the lessor are classified as operating leases. Payments made under operating leases (net of any incentives received from the lessor) are expensed in the income statement over the lease period. The Group s major leases refer to rental contracts for premises. FINANCIAL COSTS Financial costs comprise mainly interest on loans and revaluation losses on financial assets/liabilities measured at fair value through profit or loss recognised in net financial income. Interest expense on borrowings is recognised using the effective interest method. Exchange gains and losses are recognised net. INCOME TAXES Reported tax comprises current tax and deferred tax. Income tax is recognised in profit or loss unless the underlying transaction is recognised in other comprehensive income or in equity, whereby the associated tax effect is recognised in other comprehensive income or in equity. Current tax is tax to be paid or received for the current year, using tax rates enacted or substantially enacted at the balance sheet date. Current tax also includes adjustments of current tax attributable to previous periods. Deferred tax is recognised in full, using the balance sheet method, on all temporary differences arising between the tax bases of assets and liabilities and their carrying amounts. Temporary differences are not considered in consolidated goodwill. Nor are temporary differences attributable to participations in subsidiaries and associated companies considered that are not expected to be reversed in the foreseeable future. The valuation of deferred tax is based on how underlying assets or liabilities are expected to be realised or settled. Deferred tax is calculated by applying the tax rates and tax rules enacted or announced at the balance sheet date and are expected to apply when the related deferred income tax asset is realised or the deferred income tax liability is settled. Deferred tax assets for deductible temporary differences and tax lossess carried forward are only recognised to the extent that it is probable that they can be utilised. The value of deferred tax assets is reduced when it is no longer considered probable that they can be utilised. INTANGIBLE ASSETS Web platform Development expenditure for new or improved processes within the Group s web platform designed for e-commerce is recognised as an asset if the process is technically and commercially feasible and the Group has sufficient resources to complete the process. Capitalised expenses relate mainly to software and software platform. Resources to capitalised proprietary software consisting of amongst others Fastlane, Propilot, Partner Portal and CSEye is allocated via number of codelines produced by the developers. Depreciation principles Depreciation is recognised in net income on a straight-line basis over the depreciable intangible assets estimated useful lives. The estimated useful lives are; Web platform 5 years The useful lives are reviewed at least annually. TANGIBLE ASSETS Tangible assets are recognised at acquisition cost less accumulated depreciation and any impairment losses. The cost includes the purchase price and expenses directly attributable to the asset to bring it in place and in condition to be used in accordance with the purpose F-28

119 Historical Financial information of the acquisition. The carrying amount of an asset is derecognised from the balance sheet on disposal or sale or when no future economic benefits are expected from the use or disposal/sale of the asset. The gain or loss arising on the disposal or disposal of an asset is the difference between the sale price and the asset's carrying amount less direct selling expenses. Gains and losses are recognised as other operating income/expenses. Subsequent expenditure Subsequent expenditure is capitalised only if it is probable that future economic benefits associated with the asset will flow to the Group and the cost can be measured in a reliable way. All other subsequent expenditure is expensed in the period they occur. Repairs are expensed continuously. Depreciation principles Depreciation is made on a straight-line basis over the asset s estimated useful life. The estimated useful lives are; Equipment, tools, fixtures and fittings 5 years Computers 3 years Depreciation methods, residual values and useful lives are reassessed at each year-end. IMPAIRMENT OF NON-FINANCIAL ASSETS Assets that are depreciated are assessed for impairment whenever events or changes in circumstances indicate that the carrying value may not be recoverable. An impairment loss is the amount by which the asset s carrying amount exceeds its recoverable amount. The recoverable amount is the higher of an asset s fair value less selling expenses and value in use. When assessing impairment, assets are grouped at the lowest levels for which there are separately identifiable cash flows (cash-generating units). When impairment has been identified for a cash-generating unit (group of units) the impairment loss is primarily allocated to goodwill. Thereafter, a proportional impairment of other assets in the unit (group of units) is made. The previously recognised impairment loss is reversed if the recoverable amount is estimated to exceed the carrying value. However, reversal must only be made with an amount so that the carrying value amounts to what it would have been if the impairment had not been recognised in previous periods. Impairment of goodwill is never reversed. FINANCIAL ASSETS AND LIABILITIES A financial asset or financial liability is recognised in the balance sheet when the Group becomes a party to the instrument s contractual terms. Accounts receivables are recognised when invoices are sent. Liabilities are recognised when the counterparty has performed and there is a contractual obligation to pay, even if an invoice has not yet been received. Accounts payables are recognised when invoices are received. A financial asset is derecognised in the balance sheet when the contractual rights are realised, expire or the Group loses control over them. The same applies to part of a financial asset. A financial liability is derecognised in the balance sheet when the obligation in the agreement is fulfilled or otherwise settled. The same applies to part of a financial liability. Financial assets and financial liabilities are offset and the net amount is recognised in the balance sheet only when there is a legal right to offset the amounts and there is an intention to settle the items on a net basis or to realise the asset and at the same time settle the liability. Purchases and sales of financial assets are recognised on the trade date. Trade date is the day when the company commits to acquire or sell the asset. Classification and valuation Financial instruments are initially recognised at acquisition cost, corresponding to fair value of the instrument plus transaction costs for all financial instruments except for those classified as financial assets/liabilities recognised at fair value through profit or loss which are recognised at fair value excluding transaction costs. A financial instrument is classified on initial recognition among others based on the purpose for which it was acquired. The classification determines how the financial instrument is valued after the initial recognition. The Group holds financial instruments in the following categories; Loan receivables and accounts receivables Other financial liabilities Loan receivables and accounts receivables Loan receivables and accounts receivables are financial assets that are not derivatives, that have fixed or deter-minable payments and that are not listed in an active market. These assets are valued at accrued acquisition cost. Accrued acquisition cost is determined using the effective interest rate calculated at the acquisition date. Receivables are recognised at the amount expected to be received i.e. after deductions for bad debts. Other financial liabilities Loans and other financial liabilities such as accounts payables are included in this category. Loans are initially recognised at fair value, net of transaction costs. Subsequently, they are recognised at accrued acquisition cost. Any difference between the amount received and the amount to be repaid is recognised as interest in the income statement over the loan period using the effective interest method. Accounts payables are obligations to pay for goods or services acquired in the ordinary course of business from suppliers. Accounts payables are classified as current liabilities if they fall due within one year or less (or in the normal operating cycle, whichever is longer). If not, they are reported as long-term liabilities. Accounts payables are recognised initially at fair value and subsequently at accrued acquisition cost using the effective interest method. IMPAIRMENT OF FINANCIAL ASSETS The Group assesses at the end of each reporting period if there is objective proof that there is a need for impairment of a financial asset. If impairment is required, the asset s carrying amount is written down and the impairment loss is recognised in the consolidated income. INVENTORIES Inventories are valued at the lower of cost and net realisable value. Cost is calculated under the so-called first-in first-out principle and includes expenditure incurred in acquiring the inventories and bringing them to their present location and condition. Net realisable value is defined as the selling price less costs of completion and selling expenses. Inventories are exposed to obsolescence. Factors that affect the risk of obsolescence includes risk that returned goods are unsaleable and risk of redundancy. F-29

120 Historical Financial information LIQUID FUNDS Liquid funds consist of cash deposited through banks and similar institutions. It may occur that parts are restricted. See note 19. CONTINGENT LIABILITIES A contingent liability is recognised when there is a possible obligation that arises from past events and whose existence is confirmed only by one or more uncertain future events or when there is a commitment that is not recognised as a liability or provision because it is not probable that an outflow of resources will be required. ESTIMATES AND ASSUMPTIONS Preparation of the financial reports in accordance with IFRS requires management to make assessments and estimates and assumptions that affect application of the accounting policies and the recognised amounts of assets, liabilities, income and expenses. Actual results may differ from these estimates. Estimates and assumptions are continually evaluated. Changes in estimates are recognised in the period the change is made if the change only affected that period or in the period the change is made and in future periods if the change affects both current and future periods. Important assessments An assessment item is expected returns on the sales reported for the period. The estimate is based on historical information on the return percentage on sales. Estimations are monitored and deviations are investigated. For the Group, the deferred tax assets are fully attributable to losses carried forward. The deferred tax asset is recognised to the extent that it is probable that future taxable profit will be available against which the accumulated deficits can be utilised. The Group s losses carried forward are attributable to Sweden, where losses carried forward are not time limited. It is the Group s assessment that the coming years will generate taxable income to the extent that the loss carried forwards can be utilised. Deferred tax assets related to tax loss carried forwards amounted to SEK 36.8 million (44.5) at the end of Inventories are recognised at the lower of cost and net realizable value. When calculating the net realisable value, an assumption is made of outgoing items, surplus items, damaged goods and the estimated sales value based on available information. Boozt have issued two warrant programs with individual terms and conditions (warrant program 2012/2022 and warrant program 2015/2025). The programs are intended for key employees, the Group CEO is included in this group of people. If an exit happens, meaning either an IPO or a trade sale of the company, the warrants can be converted to a share in the company at a pre-defined price. If the company does not perform an exit according to the pre-defined terms as stated above, all warrants will be void, and the warrant holders do not possess a right to purchase shares. Terms and conditions for the individual warrant programs are described in note 9. At each reporting date, Boozt assesses the probability for an exit according to the definition provided in the terms and conditions for the warrant program to occur. For the reporting period, Boozt has made the assessment that probability is below 50% for an exit to occur within the time-frame for each program. Since the warrant programs are issued at different dates the probability is only significant for the market value of the 2012/2022 program since the employees at the reporting date have vested all alloted warrants. Since the warrant program 2015/2025 is issued at a later date and the employees have not yet vested the rights for the warrants the probability assessment whether an exit will occur becomes significant for the estimation of the market value for this program. For the reporting period Boozt made the assessment that the probability for an exit is below 50% to occur within the time-frame of the 2015/2025 program. If Boozt had assessed the probability to be above 50%, the effect in the financial reports would have been a personnel cost amounting to the value of the earnings for the year, that relates to the fair value of the warrants distributed over the years that the earning is attributable to, with the corresponding amount recorded as increase of equity. Cost and debt for social security charges for the taxable benefit should be added. Total effect in the income statement per December 31, 2016 if recorded, would amount to SEK 4.0 million, whereof SEK 1.1 million corresponds to debt for social charges of personnel. With purpose to counteract cash flow implications of costs for social charges, the company holds 77,343 warrants attributable to the warrant program 2012/2022 and 64,954 warrants attributable to the warrant program 2015/2025 in its own portfolio of warrants. During 2016, the Group initiated strategic preparations to ensure capability for the Group to perform an IPO alternatively being sold in full or part within a foreseeable future. The alternative that no change in current ownership occur is also still probable. As per reporting date, no assessment from decision makers (such as Nasdaq OMX) whether the company is deemed prepared to perform an IPO has been obtained. Legal proceedings In accordance with IFRS, a liability is recognised when there is an obligation as a result of an event and it is probable that an outflow of resources will be required to settle the obligation and a reliable estimate of the amount can be made. A regular review is made of the outstanding legal cases. An assessment is then made of the need for provisions in the financial reports. The Group companies are only involved in minor disputes that are directly attributable to the business. Appropriate provisions are made when the assessment resulted in a risk. As per balance sheet day 2016 no liabilities related to legal proceedings are accounted for. F-30

121 Historical Financial information NOTE 2 CORRECTIONS OF ERRORS A detailed review of the Group s accounting of warrant programs has been performed. The Company has two warrant programs. During the review, errors related to the accounting of social charges for the warrant program 2012/2022 was identified. The errors have been corrected by restating all affected items retroactively as disclosed below: Items directly recognised in equity Jan 1, 2015 Social charges related to warrant program 2012/ TotaI 1.4 Financial position (extract) Increase/decrease 1) after correction Increase/decrease after correction Other provisions Net assets Retained earnings Total equity ) Correction refers to accumulated effect Income statement (extract 2015 Increase/decrease 2015 after correction Cost of personnel Profit/loss for the year Profit/loss for the year attributable to parent company s shareholders Further impact on the financial reports 2015 before correction Increase/decrease 2015 after correction Note 13 earnings per share Earnings per share before and after dilution Note 9 personnel costs Social charges Note 12 reconciliation of reported tax Profit/loss before tax Tax in accordanc e with current tax rates for parent company (22%) Non-deductible expenses Not recognised tax asset related to tax losses carried forward Total tax F-31

122 Historical Financial information NOTE 3 NET REVENUE PER REGION AND BREAKDOWN OF REVENUE SEK million Sweden Rest of the Nordics Rest of Europe TOTAL 1, SEK million Sale of goods 1, Commission sales Other services TOTAL 1, NOTE 5 OTHER OPERATING INCOME AND OTHER OPERATING COSTS Other operating income Currency exchange rate differences 4.3 Other Other operating costs Currency exchange rate differences Other NOTE 6 OTHER EXTERNAL COSTS NOTE 4 SEGMENT REPORTING SEK million NET REVENUE Boozt.com 1, Booztlet.com Other TOTAL NET REVENUE 1, EBIT Boozt.com Booztlet.com Other TOTAL OPERATING PROFIT/LOSS OPERATING PROFIT/LOSS BEFORE TAX Boozt.com Booztlet.com Other TOTAL OPERATING PROFIT/LOSS BEFORE TAX SEK million External costs are constituted by: Fulfilment and distribution costs Marketing costs Other external costs TOTAL Marketing costs includes SEK 12.1 million attributable to tv-spot time for a specific contract. The agreement covers the period , and was settled with a share based payment. The fair value of the services was determined to be SEK 36.4 million, and shares with corresponding fair value of SEK 36.4 million at grant date was issued. During 2016, SEK 12,1 million was recorded as a marketing cost in exchange for television advertising. The remaining amount of SEK 24,3 million is recorded as a prepaid expense that will be distributed during in exchange for pre-defined tv-spot time. The Group reports operating segments in accordance with IFRS 8. The Group s operations are divided into three segments which constitute 100% of the revenue generated. The Group reports net revenue, EBIT and operating profit/loss before tax for each of the operating segments. No information on assets and liabilities attributable to segments are reported to the highest operating decision maker. F-32

123 Historical Financial information NOTE 7 AUDIT FEES SEK million Ernst & Young AB Auditing assignments Tax advice 0.0 Other services TOTAL Other Auditing assignments Tax advice Other services TOTAL Auditing assignments include auditing of the annual accounts and bookkeeping as well as administration for the board of directors and the CEO, other duties undertaken by the Group s accountants, and advice or other assistance arising from observations during such auditing or implementation of similar tasks. Other services include advice in accountancy-related fields such as accounting, due diligence etc. NOTE 8 LEASING AGREEMENTS Operational leasing Leasing costs for assets held through operating lease contracts, such as rented premises, machinery and office equipment, are reported in operating expenses and amount to SEK 13.8 million ( 3.7), of which property rental charges amount to SEK 12.6 million ( 2.8). Future payments for non-cancellable operating lease contracts amount to SEK million ( 85.0) and are broken down as follows: SEK million Future minimum leasing costs Within 1 year Between 1-5 years More than 5 years Variable charges consist of variable interest rates. An increase in interest rates of one percentage point increases total leasing costs by SEK 0.0 million (0.0). Existing lease contracts vary in length from 1 to 15 years. There are no material subleases, no material contingent rents, no renewal or purchase options nor any restrictions imposed by leasing agreements. Financial lease The Group has not accounted for any financial leasing during NOTE 9 EMPLOYEES AND PERSONNEL COSTS Employees and personnel costs Average number of employees Men Average number of employees Men Average number of employees Sweden Denmark GROUP Men Gender balance among senior executives Board members CEO and other senior executives GROUP Salaries, other remuneration and social costs Costs for employee remuneration Salaries and remuneration Social costs Pension costs Senior executives Hermann Haraldsson (CEO): Salaries and remuneration hereof bonuses hereof share based payments Pension costs Other senior executives: Salaries and remuneration hereof bonuses hereof share based payments Pension costs Senior executives include the board of directors, the Group CEO, and other senior executives. The other senior executives includes the Group CFO, Group CMO, Group CTO, Group COO and Head of Investor Relations, whom together with the CEO constitutes the management team of the Group. Decision processes for remuneration Remuneration and terms for the CEO are decided by the board of directors. Remuneration of other senior executives is decided by the CEO, in some cases after consultation with the chairman of the board. The chairman of the board and members of the board of directors receive a fixed fee in accordance with the Annual General Meeting s decision. Remuneration and conditions for senior executives Remuneration to the CEO and other senior executives consists of basic salary, variable remuneration and other benefits such as a company car. Other senior executives include the five other C-level managers who together with the CEO, comprise the Group Management. Variable remunerations referes to bonus that is paid out depending on the performance according to pre-established goals. F-33

124 Historical Financial information The CEO has a notice period of 12 months plus 6 months severance payment if the termination is decided by the Group. If the CEO chooses to terminate his employment, the notice period is the same. No pension benefits are paid to the CEO and senior executives. Directors fees The 2016 Annual General meetings approved the 2016 directors fees amounting to SEK 0.6 million, whereof SEK 0.3 million to the Chairman and a total of SEK 0.3 million to other board members. Warrant programs in Boozt AB Boozt AB has issued two warrant programs with individual terms and conditions (the 2012/2022 program and the 2015/2025 program). The programs are directed to key employees. The Group CEO is included. Warrant program 2012/2022 The 2012/2022 program issued in 2012 constitutes 323,501 warrants, whereof 246,158 are allotted to employees free of charge. The remaining 77,343 are held by the Company to cover social charges. In the event that an exit takes place, defined as either a listing or a sale of the Company, the warrants can be converted into a right to purchase a share in the Company at a predefined price (the strike price). The strike price is calculated as 110 SEK per share accruing with an interest of 5% per year effective from 1 October If the Company does not experience an exit as defined above, all warrants void, hence the warrant holders have no right to purchase any shares. The expiry date of program 2012/2022 is 31 December The options are vested over a four-year period starting from the allotment date, with ¼ every year. If a participant s employment is terminated during the vesting period, the participant will be excluded from the program with regard to those options that are not vested at such time. Warrant program 2015/2025 The 2015/2025 program issued in 2015 constitutes 267,500 warrants, whereof 203,545 are allotted to employees free of charge. The remaining 63,955 are held by the Company to cover social charges. The 2015/2025 program is triggered if the Company is listed before a given point in time. The warrants are subject to a vesting period as follows; 33% will west 1 year after the listing, 33% will west 2 years after the listing and 34% 3 years after the listing. Once the options are vested, warrant holders may convert a warrant into the right to purchase a common share in the Company at a predefined price (the strike price). The strike price is calculated as 314 SEK per share accruing with an interest of 8% per year effective from 30 June All warrants void if the Company is not listed, hence the warrant holders have no right to purchase any shares. If the Company experience an exit different to a listing (i.e. a sale of the Company), 50% of the total warrants in the 2015/2025 program are converted to have the same right as those of the 2012/2022 program. The expiry date of the 2015/2025 program is 30 June If a participant s employment is terminated during the vesting period, the participant will be excluded from the program with regard to those options that are not vested at such time. For the warrant program 2012/2022 the Group at each reporting date assesses the probability for an exit to take place. The probability for an exit and market valuation of the shares are used to assess the cost of personnel as social charges recognised in the Group s income statement and as other provisions in the Group s balance sheet. For the warrant program 2015/2025 the Group at each reporting date assesses the probability for an exit to occur. Since no employees can vest any warrants until an exit takes place, the probability for the occurrence of an exit becomes essential for assessing the fair value of the program. For the reporting period Boozt has made an assessment that the probability is below 50% for an exit to occur within the timeframe of the warrant program 2015/2025. Financial reporting Further disclosures regarding effects in the income statement as per reporting date are stated in note 26 regarding significant events after year end and the section regarding important assessments in note 1. In accordance with IFRS 2: 49, the Group shall disclose the applied model for calculating the value of the Group s warrant programs. The Group has made use of Black Scholes model to arrive at the fair value of the issued warrants related to the 2012/2020 program. Since the program extends over several years the weighted average share price increase alongside the expected underlying value of the share price. The exercise price is calculated as strike price in 2012 with an interest of 5% per annum until expected exercise. The volatility is set at 35% for the entire calculations. Volatility is measured from historical volatility of listed companies in the same line of business as Boozt over the past five years. From this analysis volatility is estimated to be between 30%-40%. The program expires in October 2018 why warrant life is estimated at each reporting date. The warrant program holds no dividend rights and the risk free interest is estimated per year ranging from 0.85% in 2012 to -0.75% in Since the program besides service vesting conditions contains a non-vesting condition (the exit) the calculation has been expanded with a probability assessment of exit at each reporting date. By end of period the probability is set at 49% chance of an exit as defined in the program s terms and conditions. For the 2015/2025 program the volatility is set at 35% and the annual risk free interet rate is set at -0.5%. The exercise price is calculated as the strike price in 2015 with an interest of 8% per annum until expected exercise. Since the program includes a vesting condition prior to the service vesting conditions taking place the probability assessment for an exit is significant for assessing if the company should recognise a cost for the program. NOTE 10 DEPRECIATIONS AND IMPAIRMENT LOSSES SEK million Web platform Equipment Goodwill Recognition of costs associated with warrant schemes Both programs are classified as share based programs in the scope of IFRS 2. The programs are equity settled and will be recorded as a cost in the income statement for the services received by the employees that are part of the programs. The corresponding amount in the income statement is booked to equity. F-34

125 Historical Financial information NOTE 11 NET INTEREST EXPENSE SEK million Financial income Interest income 0 Financial Expenses 0 Arrangement fees and interest expenses Interest expenses on convertible loans NOTE 12 TAXES SEK million CURRENT TAX Tax on profit for the year 0.0 Deffered tax Change in deferred tax related to tax losses carried forward Reconciliation of reported tax Profit/loss before tax Tax in accordance with current tax rates for parent company (22%) Non-deductible expenses Not recognised tax asset related to tax losses carried forward The Group has no tax items accounted in other total income or direct in equity. The Group has historically not accounted for tax per quarter since accumulated losses have been of substantial nature. Further, the Group s profitability is affected by seasonality, implying that in certain quarters, the Group could realise an increased deferred tax asset attributable to tax losses carried forward. The Group has adopted a risk averse perspective, to avoid unnecessary changes to the Group s equity. Therefore, the Group has accounted for tax as per year end, considering the total profit/loss of the year. As per year end 2014 it was assessed that the Group would be able to use tax losses carried forward during the forthcoming 3 4 years hence a deferred tax asset of SEK 43.7 million was recognised. As per year end 2015 the loss before tax was considerably improved compared to previous years. An additional deferred tax asset of SEK 0.8 million was recognised, considering budgeted future cash flows and historical trend of profitability. During 2016 the Group accounted for a profit before tax of SEK 20.5 million for the full year, however the Group has realised losses in two quarters, why no recognition for deferred tax asset has been done quarterly. For risk averse reasons the Group has an unrecognised deferred tax asset relating to losses before The unrecognised deferred tax asset amounts to SEK 30.3 million. With an accumulated profit for 2016, the Group used SEK 7.7 million of accumulated tax losses carried forward which is recognised in the income statement for The Group will at each year end assess whether previous unrecognised deferred tax assets should be accounted for. A deferred tax asset is accounted for only if the probability that the Group will use the deferred tax asset is highly probable. The following table specifies the tax effect of the temporary differences: SEK million Deffered tax assets Deferred tax related to tax losses carried forward Total Specification of changes in deffered tax assets: SEK million Recognised deferred tax asset relating to tax losses carried forward Deferred tax asset incurred during the year TOTAL DEFERRED TAX ASSET Deferred tax assets for tax losses carried forwared are reported to the extent that it is likely that they will be able to be used. The Group expects to utilise the deferred tax assets recognised within the coming 2 3 years. There is no time limitation for the deferred tax asset relating to tax losses carried forward. NOTE 13 EARNINGS PER SHARE Earnings per share is calculated by dividing the profit/loss for the period with the weighted average number of shares outstanding during the period. With respect to the warrant programs issued by the company which is described in note 9, there is a potential future dilution effect of the company s issued shares given that certain criterias are met. The dilution effect per December is 0 since the criteras are not met. Since there is not dilution effect as per reporting date, earnings per share after dilution has been calculated in the same way as earnings per share. The calculation is presented below: ) 2014 Profit for the year Weighted average number of shares outstanding during the period Earning per share before and after dilution ) Comparative figures for 2015 have been restated as described in note 2. NOTE 14 WEB PLATFORM SEK million Web platform Accumulated acquisition values, opening balance Acquisitions ACQUISITION VALUES, CLOSING BALANCE Accumulated amortisation according to plan, opening balance Amortisation for the year ACCUMULATED AMORTISATION ACCORDING TO PLAN, CLOSING BALANCE F-35

126 Historical Financial information NOTE 15 TANGIBLE FIXED ASSETS SEK million Equipment, tools and installations Accumulated acquisition values, opening balance Acquisitions Operational acquisitions 0.2 Disposals ACQUISITION VALUES, CLOSING BALANCE Accumulated amortisation, opening balance Impairment losses Disposals Amortisations for the year Amortisation through acquisitions 0.1 ACCUMULATED AMORTISATIONS, CLOSING BALANCE NOTE 16 INVENTORIES SEK million Inventories - goods for resale Packing materials During the year, inventory items were written down, with a value of SEK 17.4 million (4.7). This amount is entirely accounted for in the income statement as Goods for resale and is related to inventory items written down in accordance with principle for write-downs described in note 1. Impaired goods are not discarded immediately. Sales of these products contributed to a gross margin of SEK 6.1 million (2.0). NOTE 17 ACCOUNTS RECEIVABLES SEK million Accounts receivables Provision for bad debt TOTAL There is no collateral or bank guarantees for accounts receivables. Accounts receivables are not pledged. NOTE 18 PREPAID EXPENSES AND ACCRUED INCOME SEK million Prepaid inventories Prepaid marketing expenses Prepaid rental charges Prepaid leasing fees Other prepaid expenses Other accrued income NOTE 19 CASH AND CASH EQUIVALENTS SEK million Cash and bank Restricted cash amounts to SEK 6.4 million and is attributable to the leasing agreement for the Boozt headquarter and to the Norwegian customs. NOTE 20 EQUITY Share capital As of December 31, 2016 the registered share capital amounts to 3,891,295 common shares (3,467,254) with a nominal value of SEK 1. Holders of ordinary shares are entitled to a dividend determined after the event and the shareholding entitles the holder to vote with one vote per share at the Annual General Meeting. All shares have the same right to the remaining net assets. All shares are fully paid and no shares are reserved for transfer. No shares are held by the company or its subsidiaries. Specification of changes in share capital below: Date Event No. of shares pre new issue Share issue New number of shares Opening balance 2,842, Setoff issue 2,842, ,820 2,998, New issue 2,998, ,352 3,413, New issue 3,413,513 53,741 3,467, New issue 3,467, ,796 3,790, Setoff issue 3,790, ,245 3,891, Closing balace 3,891,295 3,891,295 Other capital contributions Other capital contributions consist of equity contributed by the company s owners. Conversion reserve The conversion reserve includes the exchange differences arising on conversion of financial statements of foreign operations that have prepared their financial reports in a currency other than the operating currency in which the consolidated financial statements are presented. The Parent Company and the Group present their financial reports in Swedish kronor (SEK). Accumulated conversion differences are accounted in the statement of comprehensive income. Warrants There are two active stock option programs. The number of issued warrants amounted to 591,000 as per year end 2016, whereof each warrant has a right to acquire one share in Boozt AB. For more information on the stock option program see note 9. Average number of shares: Average no. of shares issued during the year (000) 3,685 3,181 2,699 Average no. of shares issued during the year after dilution (000) 3,685 3,181 2,699 F-36

127 Historical Financial information NOTE 21 LIABILITIES SEK million Non-current Convertible loan 0.3 Liabilities to credit institutions TOTAL Current Liabilitites to credit institutions TOTAL TOTAL BORROWING Loans to credit institutions are due in 2019 and carry an average effective interest rate of 5.5% per annum (7.4% per annum). Total borrowing includes bank loans and other secured lending with securities of SEK 12.0 million (7.0). Security for the bank loans consist of floating charges. SEK million Used overdraft facility 8.2 Available overdraft facility NOTE 22 ACCRUED EXPENSES AND PREPAID INCOME SEK million Accrued holiday pay Accrued social charges relating to personnel Accrued marketing costs Accrued costs - inventories Accrued costs for returns Accrued salaries Accrued marketing costs 13.4 Other NOTE 24 RELATED PARTY TRANSACTIONS The Group has transactions with companies owned by individuals with significant influence on Boozt AB. The transactions occurred with related parties are mainly sales of consignment goods in co-operation with the Ecco group companies ECCO EMEA B.V. and KRM AG and in lesser extent purchase of services performed by current- and former board members, EMMADS Invest A/S and Rapp Management. All related party transactions are priced at market conditions. Below is a summary of the transactions that have taken place with related parties. When purchases and sales are made between Group companies, the same pricing principles as transactions with outside parties are used. SEK million Purchase of services (+) and re-invoicing of costs Rapp Management & Emmads Invest A/S ECCO Holding A/S TOTAL SEK million Consignment sales ECCO EMEA B.V KRM AG TOTAL The liability to related parties was SEK 29.2 (28.0) million at the end of the reporting period, SEK 29.1 (0.0) million is attributable to KRM AG and SEK 0.1 (0.0) million to Rapp management. In 2015 the liability was attributable to ECCO EMEA BV SEK 27.9 million and SEK 0.1 million Emmads Invest A/S. Boozt AB has not provided guarantees or securities to or for the benefit of directors or other senior executives. None of the directors or other senior executives in 2016 or 2015 had any direct or indirect business transactions with the Group over and above the remuneration stated in this note and note 9. NOTE 23 PLEDGED ASSETS AND CONTINGENT LIABILITIES SEK million Floating charges Restricted cash Total Floating charges are attributable to loan from ALMI, and revolving credit facility. F-37

128 Historical Financial information NOTE 25 FINANCIAL RISKS The Group s business is exposed to various financial risks; currency risk, interest rate risk, credit risk and liquidity risk. The Group s overall risk management strategy is focused on managing uncertainty in the financial markets and strives to minimise potential adverse effects on the Group s financial results. The Group has developed a risk management framework in order to strengthen risk management in the Group. The framework establishes how risks are identified, assessed and monitored. The board of directors has decided on the general principles that applies to the management of financial risks through the adopted treasury policy. The treasury policy covers the following areas; capital structure, capital raising, debt financing and liquidity management. The key financial risks are described below. Currency risk Currency risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate due to changes in foreign exchange rates. The main exposure is derived from the Group s sales and purchases in foreign currencies. This exposure is called transactional exposure. Currency risks also exist in the translation of foreign operations assets and liabilities into the parent company s functional currency, known as translational exposure. The translational exposure for the Group is limited. According to the Group s treasury policy, transactional exposure is primarily managed through natural hedges, which means that the risk of major performance impact due to fluctuations in exchange rates is reduced by having available cash with the corresponding currency distribution as for future payments of current liabilities. The applied principle also implies that the Group will strive to make product purchases with the same currency distribution as budgeted revenues. Currency exposure 2016 (2015) in % SEK million Operating income Operating Expenditure SEK 37% (33%) 40% (40%) DKK 31% (30%) 32% (28%) EUR 17% (21%) 21% (23%) NOK 13% (11%) 4% (6%) GBP 2% (4%) 2% (2%) Other 0% (1%) 1% (1%) Currency exposure 2016 (2015) in % SEK million 100% (100%) 100% (100%) Short term Liabilities Cash and cash equivalents SEK 48% (42%) 29% (30%) DKK 30% (30%) 49% (27%) EUR 19% (24%) 14% (27%) NOK 2% (4%) 6% (8%) GBP 1% (0%) 1% (7%) Other 0% (0%) 1% (1%) 100% (100%) 100% (100%) As shown in the table above, the Group s main transaction exposure consists of SEK, DKK, EUR and NOK. A 3% stronger SEK against the EUR and DKK would have an negative effect on profit for the year of SEK 1.8 million. A 3% stronger NOK against the SEK would have a positive effect on profit for the year of SEK 3.4 million. The Group has significantly more operating revenue than operating expense in NOK. Due to a weak NOK/SEK relation beginning of 2016 the Group decided not to hedge any NOK exposure and await the market development before deciding on possible hedge strategies. By beginning of 2017 the NOK has appreciated considerably why the Group has started hedging part of the NOK exposure Interest rate risk The Group is exposed to interest rate risk on interest-bearing long-term and current liabilities. The Group is exposed to the impact of variable interest on liabilities. On fixed-rate loans, the Group is exposed to market risk. Given the Group s financial liability ratio the existing interest rate risk is limited. If interest rates had been 3 percentage point higher/ lower, with all other variables held constant, profit/loss for the year before taxes would have been approximately SEK 0.1 million lower/ higher. Credit risk Group principles states that customers who wish to trade on credit do so through a third-party solution in which the Group takes no credit risk. To a small extent other legal entities are invoiced. The accounts receivables ledger is monitored continuously and the value of doubtful debts is not significant. With regard to credit risks arising from the Group s other financial assets, which include cash and cash equivalents, the Group s main credit risk is associated with counterparties failure to comply with their commitments. The risk includes that the counterparty s failure to comply with commitments due to the counterparty going into bankruptcy. The Group s maximum exposure consists of the carrying value of the financial instruments. There is no significant credit risk within the Group as per year-end Liquidity risk The liquidity risk to which the Group is exposed is attributable to seasonal variations. Purchases are cyclical, and inventories are built up before each season, based on the Group s expected sales. This means that the timing of the outflow of cash for the purchase of stock items is not consistent with the timing of inflows of cash and cash equivalents attributable to sales, resulting in a liquidity risk. Liquidity risk is managed by the principle of financial flexibility covered by the Group's treasury policy and implies that there should be available liquid funds covering expected liquidity needs during the periods when the Group has the lowest access to liquid funds. By having access to overdraft facilities, as per year-end 2016 amounts to SEK 29 million and another SEK 20 million at certain times during the year when large purchases are normally made (February April and September November) risk is mitigated. Liquidity risk attributable to business growth include the need to improve, upgrade and invest in technology and infrastructure to manage increased sales volumes and complexity in operations. To manage the risk, the board of directors has set guidelines for liquidity reserves. Cash flow forecasts are prepared and followed up on a weekly basis (operational activities, credits and current liquidity). Rolling forecasts are prepared to ensure availability of sufficient liquidity to meet business needs. The Group monitors that credit limits or, where applicable, other binding financial commitments (financial covenants) linked to the Group s credit facilities are not violated. F-38

129 Historical Financial information Capital risk management The Group strives to secure the Group s ability to continue to operate and generate profits for shareholders by maintaining a sufficient capital structure. To maintain or adjust the capital structure, the Group can change any future dividends paid to shareholders, repay capital to shareholders, issue new shares or sell assets to reduce liabilities. The Group assesses the capital based on the debt/equity ratio. The debt/ equity ratio is calculated as net debt divided by external funding. Net debt is calculated as total borrowings (including current liabilities and long-term liabilities) less cash and cash equivalents. The Group has no covenant obligations. See note 21 for further information Assets Accounts receivables and loans receivables Other financial liabilitites Total carrying amount Fair value Deposits Accounts receivables Other receivables Cash and cash equivalents TOTAL ASSETS Liabilities Interest bearing liabilities Accounts payables Other liabilities TOTAL LIABILITIES Assets Accounts receivables and loans receivables Other financial liabilitites Total carrying amount Fair value Deposits Accounts receivables Other receivables Cash and cash equivalents TOTAL ASSETS Liabilities Interest bearing liabilities Accounts payables Other liabilities TOTAL LIABILITIES Assets Accounts receivables and loans receivables Other financial liabilitites Total carrying amount Fair value Deposits Accounts receivables Other receivables Cash and cash equivalents TOTAL ASSETS Liabilities Interest bearing liabilities Accounts payables Other liabilities TOTAL LIABILITIES Calculation of fair value For the current financial year, the fair value of financial assets and liabilities is considered to approximate the fair value, whereupon the carrying amount is deemed to be the same as the fair value. Long-term and short-term loans The Group has a loan amounting to SEK 12.0 million, the interest rate for the loan is floating and may change over time. The average interest rate was 5.5% during 2016, as per year end 2016 the interest rate was 4.6%. The carrying amount of the loan is assessed as being approximate to the fair value. Maturity structure of outstanding accounts receivables Accounts receivables Payment not due Due in 0 30 days Due in >30 days Doubtful accounts receivable TOTAL Other receivables Paid within 0 30 days Paid later than 30 days 0.0 Doubtful other receivable 0.0 TOTAL Due to the short-term nature of accounts- and other receivables, the effect of discounting is not deemed to be material and the carrying amount is considered to be consistent with the fair value. This is thus the maximum exposure. The credit quality is considered good for all outstanding not doubtful receivables. Impairment of receivables credit quality is performed on a case to case basis. F-39

130 Historical Financial information Maturity structure of borrowing 2016 Total borrowing Maturity within one year Maturity within one to two years Maturity within three to five years Maturity after five years Liabilities to credit institutions Accounts payables Other current liabilities Maturity structure of borrowing 2015 Total borrowing Maturity within one year Maturity within one to two years Maturity within three to five years Maturity after five years Liabilities to credit institutions Accounts payables Other current liabilities Maturity structure of borrowing 2014 Total borrowing Maturity within one year Maturity within one to two years Maturity within three to five years Maturity after five years Liabilities to credit institutions Accounts payables Other current liabilities NOTE 26 SIGNIFICANT EVENTS AFTER YEAR END In 2017, business growth continued in line with the budgeted growth targets. In 2017 ECCO gradually started operating its own web store, and as per March 31, 2017, the agreement with ECCO was terminated. This is in line with the Group s strategic decision to focus on its own operations. Boozt.com will however continue to sell the entire ECCO product range. As of January 1, 2017 the Group s senior executives employments has been transferred from Boozt Fashion AB to Boozt AB. Beauty by Boozt our first cosmetic store in Roskilde, Denmark opened on March 31, During February and March 2017 the Group moved its fulfilment centre to a new location. The move went according to plan. In the new fulfilment centre the Group installed Autostore an automated warehouse robot system. The investment of approximately SEK 100 million which will be reflected in the financial position as a tangible asset and financial liability. In April 2017, the Group signed an agreement with Castellum regarding rent of office space for the Groups headquarters. The agreement covers 5 years and is effective as per January 1, The contractual agreement totals to SEK 64.0 million for the 5 year contractual period. At the effective date, the company is released from contractual obligations related to the existing rental agreement with Castellum. The new office space is located in Hyllie, near our existing headquarters, a strategic location for our employees with great access from both sides of Öresund, where the employees have possibility to commute with environmentally friendly trains, as the Hyllie station is situated nearby. In the existing office space, we do not have the possibility to expand our office space to the extent that we expect to need to promote the expected growth, why we entered an agreement for new office space. During 2017, the Group continued to develop and prepare the business capability to potentially perform an IPO within a foreseeable future. It is still uncertain as to whether the Group will remain private or conduct an IPO. As per signing date of the annual report, no formal assessment from Nasdaq whether the company is deemed prepared to perform an IPO has been obtained. For the reporting period, Boozt has made the assessment that probability is below 50% for an exit to occur within the time-frame for each program. Since the warrant programs are issued at different dates the probability is only significant for the market value of the 2012/2022 program since the employees at the reporting date have vested all alloted warrants. Since the warrant program 2015/2025 is issued at a later date and the employees have not yet vested the rights for the warrants the probability assessment whether an exit will occur becomes significant for the estimation of the market value for this program. For the reporting period Boozt made the assessment that the probability for an exit is below 50% to occur within the time-frame of the 2015/2025 program. If Boozt had assessed the probability above 50%, the effect in the financial reports would have been a personnel cost amounting to the value of the earnings for the year, that relates to the fair value of the warrants distributed over the years that the earning is attributable to, with the corresponding amount recorded as a cost of earnings as an increase in equity and the cost related to social charges as a provision. Cost and debt for social security charges for the taxable benefit should be added. Total effect in the income statement per December 31, 2016 if recorded, would amount to SEK 4.0 million, whereof SEK 1.1 million corresponds to debt for social charges of personnel. With purpose to counteract cash flow implications of costs for social charges, the company holds 77,343 warrants attributable to the stock option program 2012/2022 and 64,954 warrants attributable to the warrant program 2015/2025 in its own portfolio of warrants. F-40

131 Historical Financial information PARENT COMPANY INCOME STATEMENT SEK million Note OPERATING INCOME Net revenue Total operating income OPERATING COSTS 2 Other operating expenses Total operating costs OPERATING PROFIT FINANCIAL INCOME AND EXPENSES 4 Results from shares in Group companies Interest expenses and similar items 3.2 Net financial items PROFIT/LOSS FOR THE YEAR CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME SEK million PROFIT/LOSS FOR THE YEAR Other comprehensive income COMPREHENSIVE PROFIT/LOSS FOR THE YEAR F-41

132 Historical Financial information PARENT COMPANY FINANCIAL POSITION SEK million Note ASSETS Fixed assets Financial assets Shares in Group companies TOTAL FIXED ASSETS Current assets Short term receivables Cash and cash equivalents Total current assets TOTAL ASSETS EQUITY AND LIABILITIES Equity 8 Restricted equity Share capital Unrestricted equity Share premium reserve Retained earnings Net income Total equity LIABILITIES Current liabilities 9 Accounts payables 0.1 Liabilities to Group companies Total current liabilities TOTAL EQUITY AND LIABILITIES F-42

133 Historical Financial information PARENT COMPANY CHANGES IN EQUITY SEK million Share capital Share premium reserve Profit/loss brought forward Total equity Equity as per Net income Other comprehensive income TOTAL COMPREHENSIVE INCOME Share capital increases Costs of share issue Share based payments Total transactions with owners Equity as per SEK million Share capital Share premium reserve Profit/loss brought forward Total equity Equity as per Net income Other comprehensive income TOTAL COMPREHENSIVE INCOME Share capital increases Costs of share issue Share based payments Total transactions with owners Equity as per SEK million Share capital Share premium reserve Profit/loss brought forward Total equity Equity as per Net income Other comprehensive income TOTAL COMPREHENSIVE INCOME Share capital increases Cost of share issue Share based payments Total transactions with owners Equity as per F-43

134 Historical Financial information PARENT COMPANY CASH FLOW SEK million Note CASH FLOW FROM OPERATING ACTIVITIES BEFORE CHANGES IN WORKING CAPITAL Operating profit Adjustments for non-cash items: Other items not included in cash flow Interest paid 3.2 Cash flow from operating activities before changes in working capital CASH FLOW FROM CHANGES IN WORKING CAPITAL Changes in current liabilities Cash flow from operating activities CASH FLOW FROM INVESTING ACTIVITIES Shareholder contributions Cash flow from investing activities CASH FLOW FROM FINANCING ACTIVITIES New share issue New loan 0.3 Cash flow from financing activities Cash flow for the year Cash and cash equivalents beginning of period Cash and cash equivalents end of period F-44

135 Historical Financial information PARENT COMPANY NOTES NOTE 1 PARENT COMPANY'S ACCOUNTING PRINCIPLES PARENT COMPANY ACCOUNTING PRINCIPLES The parent company has prepared its annual accounts in accordance with the Swedish Annual Accounts Act and the recommendation RFR2 Accounting for Legal Entities issued by The Swedish Financial Reporting Council. The differences between the Group s and the parent company s accounting principles are shown below. The below stated accounting principles of the parent company have been applied consistently to all periods presented in the financial reports, unless otherwise stated. SUBSIDIARIES AND ASSOCIATED COMPANIES Participations in subsidiaries and associated companies are recognised in the parent company using the acquisition cost method. This means that transaction costs are included in the carrying value of participations in subsidiaries. FINANCIAL ASSETS AND LIABILITIES Due to the connection between accounting and taxation, the rules on financial instruments in accordance with IAS 39 are not applied in the parent company as a legal entity, but the parent company applies in accordance with the Swedish Annual Accounts Act, the acquisition cost method. In the parent company, thus financial fixed assets are valued at acquisition cost less any impairment loss and financial current assets at the lower of cost or market. SHAREHOLDERS CONTRIBUTIONS Shareholders contributions are recognised directly against equity at the recipient and capitalised in shares and participations at the contributor to the extent impairment is not required. UNTAXED RESERVES The parent company recognises untaxed reserves including deferred tax liabilities. In the consolidated financial statements, untaxed reserves are however split between deferred tax liabilities and equity. ACCOUNTING OF GROUP CONTRIBUTIONS Paid and received Group contributions are recognised as an appropriation. NOTE 2 AUDIT FEES SEK million Ernst & Young AB Auditing assignments Tax advice Other services TOTAL NOTE 3 EMPLOYEES AND PERSONNEL COSTS Boozt AB had no employees during 2016 or 2015, thereby the company has not accounted for any personnel costs. NOTE 4 RESULTS FROM SHARES IN GROUP COMPANIES SEK million Write down of shares in Group companies NOTE 5 INTEREST EXPENSES AND SIMILAR ITEMS SEK million Interest costs and similar items Interest expenses related to convertible loan 3.2 NOTE 6 SHARES IN GROUP COMPANIES 3.2 SEK million OPENING BALANCE Shareholders' contributions Impairment losses for the year CLOSING BALANCE Company name Boozt Fashion AB Domicile/country Malmö, Sweden Org. no Share of ownership 100% Business Retail F-45

136 Historical Financial information NOTE 6 SHARES IN GROUP COMPANIES CONT. Company name Equity Profit for the year No. of shares Accounted value 2016 Accounted value 2015 Boozt Fashion AB , List of group companies Share Org. no. Place Boozt Fashion ApS second-tier subsidiary 100% Copenhagen, Denmark Boozt M Partnership AB second-tier subsidiary 100% Malmö, Sweden Boozt Retail AB second-tier subsidiary 100% Malmö, Sweden Boozt Technology AB second-tier subsidiary 100% Malmö, Sweden November 2009 Option Holding AB second-tier subsidiary 100% Malmö, Sweden Lucky Little Me AB second-tier subsidiary 100% Malmö, Sweden Beauty by Boozt A/S second-tier subsidiary 100% Boozt Retail A/S second-tier subsidiary 100% Copenhagen, Denmark Copenhagen, Denmark NOTE 7 CASH AND CASH EQUIVALENTS SEK million Cash and cash equivalents NOTE 10 SIGNIFICANT EVENTS AFTER YEAR END As of January 1, 2017, the Group s senior executives (includes Group CEO, CFO, CMO, CTO, COO and Head of Investor Relations) employments has been transferred from Boozt Fashion AB to Boozt AB. NOTE 8 EQUITY Share capital consists of 3,891,295 (3,467,254) common shares as per December 31, 2016 respectively December 31, Common shares have a nominal value of SEK 1. All shares holds the same voting and financial rights. Boozt AB does not hold any own shares. NOTE 9 CURRENT LIABILITIES NOTE 11 PROPOSED APPROPRIATION OF PROFITS SEK Premium fund 689,202, ,215, ,461,425 Retained earnings 330,514, ,149, ,930,245 Annual result 180,470 6,364,940 27,219,437 Total 358,507, ,700,556 48,311,743 The board proposes that profits be distributed as follows Profit/loss brought forward 358,507,152 (218,700,556) SEK million Current liabilities Accounts payables Liabilities to Group companies SUMMA F-46

137 Auditors report regarding historic financial information Auditor s report regarding historical financial information THE AUDITOR S REPORT ON HISTORICAL FINANCIAL STATEMENTS To the Board of Directors of Boozt AB (publ), reg. no We have audited the financial statements for Boozt AB (publ) on pages F-23 F-47, which comprise the consolidated bal-ance sheet as of 31 December 2016, 2015 and 2014 and the consolidated income statement, cash flow statement and statement of changes in equity for the years then ended, and a summary of significant accounting policies and other explanatory notes. The Board of Directors and the Managing Director s responsibility for the financial statements The board of directors and the managing director are responsible for the preparation of the financial statements and for ensuring that these financial statements provide a true and fair view of the financial position, financial per-formance, changes in equity and cash flows in accordance with International Financial Reporting Standards as adopted by the EU, and Annual Accounts Act and applicable supplementary standards. This responsibility includes designing, implementing and maintaining internal control relevant to preparing and appropriately presenting finan-cial statements that are free from material misstatement, whether due to fraud or error. The Board is also respon-sible for the preparation and fair presentation of the financial statements in accordance with the requirements in the Commission Regulation (EC) No 809/2004/EG. The auditor s responsibility Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with FAR s Recommendation RevR 5 Examination of Financial Information in Prospectuses. This recommendation requires that we comply with ethical requirements and have planned and performed the audit to obtain reasonable assurance that the financial statements are free from material misstatements. The firm applies ISQC 1 (International Standard on Quality Control) and accordingly maintains a comprehensive system of quality control including documented policies and procedures regarding compliance with ethical requirements, pro-fessional standards and applicable legal and regulatory requirements. We are independent of Boozt AB in accordance with professional ethical for accountants in Sweden and have oth-erwise fulfilled our ethical responsibilities in accordance with these requirements. An audit in accordance with FAR s Recommendation RevR 5 Examination of Financial Information in Prospectuses involves performing procedures to obtain audit evidence corroborating the amounts and disclosures in the financial statements. The audit procedures selected are based on our assessment of the risks of material misstatements in the financial statements, whether due to fraud or error. In making those risk assessments, we consider the internal control relevant to the company s preparation and fair presentation of the financial statements as a basis for de-signing audit procedures that are applicable under those circumstances but not for the purpose of expressing an opinion on the effectiveness of the company s internal control. An audit also involves evaluating the accounting policies applied and the reasonableness of the significant accounting estimates made by the Board of Directors and the Managing Director and evaluating the overall presentation of the financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opin-ion. Opinion In our opinion, the consolidated financial statements give a true and fair view in accordance with International Fi-nancial Reporting Standards as adopted by the EU and additional applicable framework of the consolidated finan-cial position of Boozt AB (publ) as of 31 December 2016, 2015 and 2014 and its consolidated financial performance, statements of changes in equity and cash flows for these years Malmö, May 17, 2017 Ernst & Young AB Thomas Swenson Authorized Public Accountant F-47

138 Addresses Addresses THE COMPANY Boozt AB (publ) Hyllie Boulevard 10 B SE Malmö Sweden Telephone number: +46 (0) booztfashion.com JOINT GLOBAL COORDINATORS AND JOINT BOOKRUNNERS Carnegie Investment Bank AB (publ) Regeringsgatan 56 SE Stockholm Sweden Danske Bank A/S, Danmark, Sverige filial Norrmalmstorg 1 SE Stockholm Sweden JOINT BOOKRUNNER Joh. Berenberg Gossler & Co. KG. Neuer Jungfernstieg Hamburg Germany AUDITOR Ernst & Young Aktiebolag Jakobsbergsgatan 24 SE Stockholm Sweden As to Swedish law Advokatfirman Vinge KB Smålandsgatan 20 SE Stockholm Sweden LEGAL ADVISORS TO THE COMPANY As to US law Davis Polk & Wardwell London LLP 5 Aldermanbury Square London EC2V 7HR United Kingdom LEGAL ADVISORS TO JOINT GLOBAL COORDINATORS AND JOINT BOOKRUNNERS AS TO SWEDISH LAW White & Case LLP Biblioteksgatan 12 SE Stockholm Sweden A-1

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