Finland's largest fishing and hunting store

Ruoto

Ruoto Oy (“Ruoto”) is Finland’s largest retail and online store specializing in fishing and hunting products. Ruoto has developed a strong, growing business concept based on high-quality Ruoto Mega Stores and an efficient online store that reaches a wide range of customers. Ruoto Group consists of Ruoto Oy and Ruoto Invest Oy, which is the Group’s parent company.

Ruoto’s competitive advantage is built on skilled and committed staff and professional management. All staff members are passionate fishing and hunting enthusiasts. The Company employs, for example, a member of the clay shooting national team, a world champion in fly tying, and many other sport shooters as well as competing anglers.

Ruoto’s customers are fishing and hunting enthusiasts. Fishing is one of the most popular leisure activities in Finland and one of the cornerstones of national identity. Every year, about 1.5 million people fish in Finland (source: www.mmm.fi/kalat/vapaa-ajankalastus). In addition, more than 300,000 Finns pay an annual game management fee, which is required for a hunting permit.

Ruoto is a high-growth company. The Company’s business has strong growth in 2019–2021. In 2019, the Company’s revenue was EUR 3.8 million and in 2021, EUR 14.3 million. The revenue has grown by an average of 91.6 % per year and Ruoto aims for continuous growth in 2022 and beyond. Revenue in 2022 is expected to be EUR 20–23 million. The Company’s goal over the next three years is to grow profitably and reach a revenue of more than EUR 30 million. The Company’s profitability has been good, and its EBITDA in 2021 was EUR 1.46 million (10.2%). Ruoto aims for an EBITDA of EUR 2.0–2.5 million in 2022.

Ruoto Invest Oy seeks equity financing with a EUR 3.6 million share issue. The capital will be used for implementing the Group’s growth strategy. The equity may be used for implementing new store concepts, financing working capital for growth or acquisitions.

Company information

Our story

Ruoto's growth

Ruoto’s growth is based on the opening of new Mega Stores and the development of the online store in recent years. After Tuusula, the Company has opened two Mega Stores, one in Tampere and one in the Turku region. At the same time, transactions through the Company’s online store have increased from 10,393 (2019) to 31,592 (2021). The revenue of e-commerce has increased by 304% from 2019 to 2021. The growth is expected to continue in 2022 and beyond.

In the future, Ruoto Group will invest in the development of both business models and seek a balance between in-store and e-commerce sales. Ruoto’s goal is to open 1–2 new stores a year and bring new store concepts to the market. Another goal is to actively invest in e-commerce.

In addition to normal organic growth, Ruoto Invest Oy is actively exploring opportunities to make acquisitions in both of its business segments. Acquisitions may be targeted at existing stores and their remodeling to Ruoto’s business model. Acquisitions may also be targeted at e-commerce operators. Through acquisitions, Ruoto Group would be able to expedite its growth.

Company structure

Ruoto Group consists of Ruoto Oy and Ruoto Invest Oy, which is the Group’s parent company. Ruoto Invest Oy is a holding company by its nature, and Ruoto Invest Oy has no activities other than owning Ruoto Oy’s shares (100%). Ruoto Oy is an operating company that sells hunting and fishing products. Ownership in Ruoto Oy takes place through Ruoto Invest Oy, where the current owners also own their shares. Invesdor’s financing round offers investors the opportunity to invest in Ruoto Invest Oy. The current owners will subscribe for new shares for EUR 540,000 on the same terms as the new shareholders.  

Distribution of ownership

Ruoto Invest Oy shares are owned by the following parties: Otti Fund I Ky private equity fund, Ruoto Co-Investment Fund I Ky private equity fund, CEO & founder Joonas Oksanen and CFO Kari Rantamäki. Investors in the private equity funds consist of individuals with experience in previous investments in growth companies, business development and successful business exits and listings. Due to these investors, Ruoto Group has the know-how for profitable business development, high growth and access to knowledge and experience in retail, marketing, e-commerce and finance.

Ruoto Invest Oy has 7,929,980 shares. A minimum of 600,000 and a maximum of 1,440,000 new shares will be issued in the funding round. The subscription price is EUR 2.5 per share. The total number of shares in the Company after the issue is a minimum of 8,529,980 and a maximum of 9,369,980 shares. The issue will raise a minimum of EUR 1,500,000 and a maximum of EUR 3,600,000 of equity. The new shareholders commit to the Company through a shareholder agreement.

The shares of Ruoto Invest Oy are distributed before the issue in accordance with the table below.

Ruoto's reviews and rewards

Management

Executives

The Board Members

Turo Levänen

Turo Levänen, 1960, Chairman of the Board. Turo has extensive working experience in both private equity and industry. Prior to his current position, Turo was a managing partner and founder of a European private equity fund. Prior to this, he was an investment director at Finnish Industry Investment Ltd. His earlier experience includes working as the managing director of a company that manufactures medical equipment and, before that, a director at Sitra, Finnish Innovation Fund. Turo started his career at Dow Chemical (US) in the Netherlands. He has served as a member of the board in many different companies and has been instrumental in a large number of private investments. He has experience in private investments in SMEs, business development and highly successful divestments, both to strategic buyers and through IPO processes. Turo holds a M.Sc. (Engineering) degree from Helsinki University of Technology, Finland, and is an MBA graduate from Henley Management College (UK).

Erkki Moisander

Erkki Moisander, s. 1953, Board Member. Erkki is a well-known Finnish corporate director and former CEO of the LähiTapiola Group. During 1997–2006 he was entrepreneur and CEO of the Finnish leading pet supply company called Kerox Oy (current Best Friend Suomi Oy) and the boat factory called Tristan Boats Oy. In 1987–1997, Erkki served as a President and Deputy President of Kera Oyj and in 1983–1987 as a Member of Parliament in the National Coalition Party from the Kuopio region. In 1981–1987, Erkki was the regional director of the Fennia insurance company. During 1980–1981, he was the CEO of Savon Yrittäjät. Erkki is an economist, and he is known as an avid fly fisherman in his spare time.

Olli-Pekka Pohjanmäki

Olli-Pekka Pohjanmäki, s. 1966,  Board Member. Olli-Pekka is a marketing professional and from 2016 to 2020, he served as LähiTapiola’s Chief Marketing Officer and a member of the management team. From 2001 to 2009, Olli-Pekka served as Partner and CEO of Aspectum Oy in Helsinki. He worked as a principal consultant or expert in various customer strategy and transformation projects for several leading companies and organizations (for example, Siemens, OP-Pohjola, Sampo, SOK, Otava Publishing Company, Mehiläinen, Tekes, Finnet, Elisa, Lindström, Marimekko, Vacon and several others). Several of his projects received international and national recognition (for example, CERS Award 2005, Frost & Sullivan Award 2006). At the same time, in 1999–2021, Olli-Pekka has been a lecturer at various universities. He has a master’s degree in economics and aims to complete his doctoral thesis by 2025.

Petri Lappalainen

Petri Lappalainen, s. 1964, Board Member. Petri is the owner of Finland’s largest K-Rauta hardware store in Suomenoja, Espoo. Petri has many years of experience in retail business and he also shares that experience with Ruoto’s management. Petri is a long-standing entrepreneur in many fields and gives strong support to Ruoto in growing the store network.

Ruoto Oy’s products and services

Business model

The concept of Ruoto Oy is based on the following key factors:

• Broad and high-quality product range both in stores and e-commerce
• Professional staff and customer-based service

• Accurately selected retail stores locations that guarantee a sufficiently large customer base in each Ruoto Mega Store market area
• A significant market share in the Finnish fishing and hunting e-commerce market
• Increasing e-commerce sales in the Nordic countries and throughout Europe
• Effective online/digital marketing via multiple channels

The Ruoto Mega Store concept is unique. Furthermore, there are no other similar concepts which combine mega stores with an online store in the Finnish fishing and hunting sector. Also, there are no other significant operators specializing in hunting and fishing products on the e-commerce side either. In this respect, Ruoto Oy's concept is unique in the Finnish and Nordic markets.

The strong growth and good profitability of Ruoto’s business serve as evidence of the concept’s feasibility. The  business concept can be scaled and extended to other Nordic countries. Ruoto is the market leader in e-commerce in Finland and aims to be the market leader in Northern Europe in the future.

Ruoto’s competitive advantage, compared to small fishing and hunting equipment stores, is its wide product range, comprehensive and sufficient stock and the opportunity to offer its wide range of products also through the online store. Thanks to the extensive product range of Ruoto Mega Stores, the Company can offer different products to different customer groups on a completely different scale than small operators.

Efficiently managed and sufficient inventory is an investment that small businesses cannot afford due to a lack of space and working capital. As more valuable products, such as sonars and chartplotters, have became a more permanent part of the product range, the need for working capital is growing in the sector. 

Ruoto’s core strategy is to serve fishing and hunting enthusiasts with high quality and to increase Ruoto’s value in the long term. The key strategic goal is to increase the market share and win new customers.

Growth in recent years

Ruoto has significantly grown its customer base over the past two years. The growth has been based on positive market development, the systematic expansion of the retail stores and the development of digital sales channels.

The number of retail store transactions increased by 52% and the number of e-commerce transactions by 53% from 2020.

Goals for the coming years

Ruoto Oy’s business goal is to grow profitably and achieve a revenue of more than EUR 30 million over the next three years. The financing will be used to promote the Company’s growth. The Company’s revenue target for 3–5 years is over EUR 50 million. The EBITDA target is 12–15% of revenue.

These goals can be reached by strengthening the leading market position in Finland through a more extensive geographical coverage. In addition, Ruoto aims to achieve a significant market position in Nordic countries and launch operations in other European countries.

Responsibility

Read more in the Investment memorandum

Market demand

The popularity of fishing is growing again after many years. Fishing has become more popular, in particular, among young people and over 40-year-olds. The number of specialist fishing fields is also increasing. These vary, for example, in terms of the target catch, the season and the environment. More specialized ways of fishing have increased the overall interest in fishing among different consumers. Recreational fishing is the most popular nature activity among Finns.

For some enthusiasts, fishing is more of a recreational hobby. On the other hand, some of the enthusiasts are more professional, and their investments in equipment are significant. Due to the growing number of anglers who take the hobby seriously, fishing has become more technical. At the same time, customers spend more money on fishing equipment and electronics and other more advanced products have become more common. This has steadily increased the size of an enthusiast’s average purchases and the sales of accessories. For this reason, the Finnish market has grown significantly and the growth is expected to continue.

Hunting

More than 300,000 people pay for a hunting license in Finland every year. The share of hunters within the overall population is higher in Finland than in other European countries. Belonging to a hunting club gives a strong sense of community and social contacts. Attitudes towards nature as well as outdoor activities have changed. People have become more aware of the benefits of nature and being outdoors for human health and well-being in recent years. Nature has an extremely positive effect on physical, mental and social well-being.

Market size of fishing and hunting products 

Annual sales of fishing products in the Finnish market are estimated at EUR 100–120 million. The market for hunting products is estimated at EUR 80–100 million.The figures include the sales of various fishing-related accessories.

The fishing equipment market is clearly changing. Small fishing retailers have constraints to invest in large and valuable inventory that is needed to maintain an extensive and competitive product range. Fishing has become significantly more specialized in terms of gear and other supplies. Satisfying the customers’ product needs and the importance of service have become clearly more important in the industry. The change in demand favors companies that offer a wide and high-quality product range and expert service. 

Market structure of fishing and hunting products

According to Ruoto’s estimates, the EUR 100–120 million market for fishing products is shared between more than 50 retailers in Finland. The average size of retailers, measured in terms of revenue, is approximately EUR 2 million. The ordinary Finnish fishing specialty store has a revenue in the range of EUR 200,000–1,000,000. 

Ruoto is the market leader in fishing and hunting specialty stores. In comparison to other Finnish specialty stores, Ruoto’s product range is the widest, its stores are the largest, and Ruoto has the most employees and the highest revenue. 

Ruoto’s management has identified four different generic operating models among retailers of fishing products:

• General department store. Typically, fishing and hunting products are sold as part of the department store’s other offering. Moderately wide range of offering, but no special expertise or specialized service. Extensive opening hours.
• Small local retailers. Usually employ 1–2 people. Operating locally with small stock and quite a small range of products. Short opening hours. According to Ruoto’s estimates, there are 30–40 operators of this kind in Finland.
• Specialized retailers. Wide range of products and high-quality service. Moderately short opening hours.
• E-commerce. Online stores of different types and sizes. Some of these are part of a brick-and-mortar store or department store. There are also a few players in the field that are operate solely in e-commerce.

Ruoto estimates that the volume of e-commerce in the Finnish fishing industry is approximately EUR 20 million (20%). The market share of e-commerce in fishing and hunting products is expected to grow to 30-40% over the next 4–6 years. Ruoto’s management believes that small local stores will lose part of their market share to e-commerce. This will affect small local retailers the most.

If the share of e-commerce increases to 40% of the total market, it means that the value of fishing equipment sales that will transfer to the online channel is EUR 20 million. As Ruoto is already in a good position in the domestic online market, the management estimates that EUR 10–15 million of this amount could be transferred to Ruoto.

The market for hunting products and the structure of the industry is very similar compared to fishing. There are many small retailers in Finland that operate locally. A key element in the sales of hunting products is the sale of weapons and cartridges. The sale and purchase of weapons is subject to a license. The National Police Board grants business licenses to retailers, and local police departments issue permits for the purchase of weapons.

Future market trends

The estimated sales of the largest retailer in the whole industry are around EUR 25 million. However, the strategic focus of this player is not on hunting or fishing products and, therefore, its product range is quite limited. As the focus in fishing shifts from traditional recreational style to increasingly specialized forms of fishing, the demand for products also changes. Consumers expect an even wider range of products and even more specialist knowledge. This trend is increasingly directing consumers to large specialty stores that offer excellent service.

According to Ruoto’s estimates, none of the companies operating in Finland dominates the market. Furthermore, the other operators do not appear to have a strategy to consolidate the market. No company is clearly stronger than others in the competitive field.

A fragmented or shattered market offers an opportunity for companies with a strong e-commerce concept to consolidate the market. In a fragmented market, operators that can enter the market and expand their market share most efficiently are the most likely to expand their e-commerce business, since the threshold for entering the market is usually low in these markets.

The companies operating in a fragmented market must spend a relatively large share of their resources on staying in the market instead of, for example, developing their brand to achieve a leading market position. Market consolidation offers a good opportunity to create significant added value because small and relatively weak competitors do not have the ability to respond to the challenger’s strategy and market disruption.

Professional service plays an important role in the competition with department store chains. The purchase of fishing products and hunting products is largely based on knowledge and, in part, an emotional expectation of the functionality of the equipment. Professional sales personnel can significantly influence the choice of products, and they play a major role in the customer’s choice of product features and price. In department stores, this kind of service is typically unavailable and product expertise is low.

A strong specialist store supports the growth of e-commerce, above all in the form of a wide range of products and customer service.

Read more in the Investment memorandum

Ruoto Oy is a high-growth company, and its revenue has grown strongly in 2019–2021. The average revenue growth was 91.6% in 2019–2021 (96.6% in 2018–2021). The profitability of Ruoto’s business has been good, EBITDA in 2021 was 10.2% and the Company targets for profitable growth and a significant increase in value for investors in the future, as well.

The goal of Ruoto Oy is to grow profitably in less than three years to achieve a revenue of more than EUR 30 million. The financing will be used to promote the Company’s growth. The Company’s revenue target for 3–5 years is over EUR 50 million. The Company’s EBITDA target is 12–15% of revenue. The Company’s growth target is to increase revenue by at least 20% annually.

Ruoto Oy

Financial report for 2021 (Ruoto Oy)

Ruoto Oy’s revenue in 2021 was EUR 14.3 million (EUR 8.7 million in 2020). The revenue increased by 66% from 2020. The Company’s budget for 2021, measured by revenue, was EUR 12.3 million and the Company exceeded its targeted budget by 16%. Sales were boosted by the growth of in-store sales (growth in comparable in-store sales) as well as growth in e-commerce sales. In-store sales increased by 64% and comparable in-store sales increased by 33%. E-commerce sales increased by 69% to EUR 4.1 million in 2021. E-commerce accounted for 28% of total sales (28% in 2020).

The Company’s EBITDA in 2021 was EUR 1,456,697 and it was increased by 74%. The Company’s EBITDA margin was 10.2% (9.7% in 2020). The improvement in the EBITDA margin was due to two reasons: an increase in sales resulted in an advantage on the purchase price of goods and not all fixed costs increased in line with the increase in sales.

The Company’s sales margin was EUR 3.6 million and it was increased by 64%. The Company’s sales margin percentage was 25.1%.

Financial events after the 2021 financial year (Ruoto Oy)

Ruoto Oy’s revenue in January–March 2022 (Q1/2022) was EUR 3.37 million and in January–March 2021 (Q1/2021) EUR 2.37 million. The increase in revenue in Q1/2021 was 42.3% (EUR 1.00 million).

The Company’s revenue for the last 12 months (Q2/2021–Q1/2022) was EUR 15.29 million, and the revenue for the previous 12 months (Q2/2020–Q1/2021) was EUR 9.65 million. The increase in revenue for the previous 12 months was 58.40% (EUR 5.64 million).

In-store sales increased by 40.6% from Q1/2021 (EUR 661,000). E-commerce sales increased by 46.0% (EUR 340,000). E-commerce accounted for 32.0% of total sales (31.2% in Q1/2021).

During the first quarter of 2022, there were a total of 23,487 customer transactions (15,458 in Q1/2021); the number of customer transactions in stores was 15,666 or 66.7% (9,917 or 64.2 % in Q1/2021), and in the online store 7,821 or 33.3% (5,541 or 35.8% in Q1/2021). The number of customer transactions increased by a total of 51.9%; the number of customer transactions in stores increased by 58.0% and in the online store by 41.1%.

Ruoto Group and parent company Ruoto Invest Oy

Ruoto Group consists of Ruoto Oy and Ruoto Invest Oy, which is the Group’s parent company. Ruoto Invest Oy was founded on December 7, 2021. Ruoto Invest Oy has no activities other than owning Ruoto Oy’s shares. Ruoto Invest Oy’s balance sheet total in March 2022 was EUR 15.6 million and equity was EUR 7.9 million. The Company’s equity ratio is 50.6%.

Ruoto Group’s balance sheet total in March 2022 was EUR 23.3 million and equity was EUR 7.7 million. The Group's equity ratio was 33.0 %. Ruoto Group’s funds were EUR 570,600.

Prior to the current share issue, Ruoto Invest Oy holds 7,929,980 shares. In the issue, the value of the new share is defined as EUR 2.5 per share. The total value of Ruoto Invest Oy’s share capital after the share issue is EUR 21,324,950–23,424,950. The total value is affected by how many new shares will be subscribed for in the issue (min. 600,000–max. 1,440,000).

The possible realization of both exit options requires the Company’s success in developing its business in line with its growth and profitability targets. The current shareholders aim for a significant increase in the value of the share capital over the next 3 to 5 years.

Use of funds

Ruoto Group’s goals for the following years is to:

• open new Ruoto Mega Stores and other retail stores;
• invest in the further development of the online store;
• expand the product range;
• expand the business in Nordic countries and Europe;
• actively seek acquisition opportunities.

The funds raised in the share issue will be used for expansion investments, financing working capital and possible acquisitions. The financing is used to further enhance Ruoto Group’s growth.

If the share issue remains significantly short of the maximum of EUR 3,600,000, it will reduce the speed of the development plans presented in this investment memorandum from the point of view of possible acquisitions.

There are various risk factors associated with investing in the Company that may be significant if realized. Many of Ruoto Group’s risk factors are part of the nature of its business and are typical for the industry. Each risk may have an essential effect on Ruoto Group’s business, profits, and the Company’s potential ability to achieve its financial objectives. The risks associated with the Company can be divided into nine (9) different groups.

The groups are:

-           Macroeconomic risks;

-           Risks related to the Company’s business;

-           Risks related to selling hunting and fishing equipment;

-           Risks related to IT systems;

-           Risks related to management and staff;

-           Legal and regulatory risks;

-           Taxation risks;

-           Financial risks;

-           Risks related to the share issue.

Macroeconomic risks

1. Uncertainty in Ruoto Group’s core markets in Finland and the Nordic countries, as well as in the global economy and financial markets in general, may adversely affect the Company’s business and results of operations.

Risks related to the Company’s business

1. The failure of Ruoto Group to compete effectively with existing and potential new competitors or to respond to changes in the competitive environment may adversely affect the Company’s revenue, profitability, and customer loyalty.
2. In the multi-channel business model, Ruoto Group operates in a highly competitive e-commerce market and its success in competing with other e-commerce players is not guaranteed.
3. Ruoto Group may not be able to implement its expansion strategy and take full advantage of new business opportunities at the right time.
4. Opening new stores requires investment and may adversely affect Ruoto Group’s financial balance, which may weaken the Company's financial position.
5. The opening and location of new stores may prove less profitable than estimated and this will have a detrimental effect on Ruoto Group’s business.
6. Changes in customers’ consumption behavior may change and reduce Ruoto Group’s revenue and profitability.
7. Loss of significant suppliers or difficulties in obtaining products that meet Ruoto Group’s requirements, or decrease in product availability, or suppliers’ price increases may have an adverse effect on the Group’s customer relationships and competitive position.
8. There are disturbances in Ruoto Group’s warehouses and logistics that complicate the Ruoto Oy’s business and cause disruption to the Company's business.
9. Failure in Ruoto Group’s marketing, and marketing and advertising of and management of brands that Ruoto Group sells may adversely affect the Group’s customer relationships and demand for products and services.
10. Premises leased by Ruoto Group may be subject to risks that affect their operations, continuity, and unfavorable dismissals and that may adversely affect the Company’s business.

Risks related to selling hunting and fishing equipment

1. The value of the products or brands sold by Ruoto Group, such as the quality and safety of the products, may be related to factors that may have an adverse effect on customer relationships and business.
2. Factors beyond Ruoto Group’s control could have an adverse effect on the Group’s demand for, confidence in, and availability of its products.
3. Prices and availability of certain commodities, such as electronics, could affect Ruoto Group’s revenue and profitability.

Risks related to IT systems

1. Interruptions and disruptions in Ruoto Group’s IT, network, or communications systems, as well as possible cyber security breaches, may result in unexpected costs and disruptions.
2. Ruoto Group’s business and competitive position may be harmed if it is unable to protect and defend its intellectual property rights or if its own activities infringe or are alleged to infringe intellectual property rights held by third parties.

Risks related to management and staff

1. Ruoto Invest Oy and Ruoto Oy are dependent on its management and qualified personnel, and the loss of managers and qualified staff may be detrimental to Ruoto Group’s business.
2. Failure to recruit and engage qualified personnel may adversely affect the development of Ruoto Invest Oy’s and/or Ruoto Oy’s business.
3. Increasing the number of personnel can have a detrimental effect on Ruoto Invest Oy’s and/or Ruoto Oy’s profitability.

Legal and regulatory risks

1. Failure to comply with the legislation that affects Ruoto Group’s operations and products, and corporate social responsibility may result in sanctions and damage Ruoto Group’s public image among customer groups.
2. Claims or actions may be brought against Ruoto Group that may harm the Group and require management resources.
3. Ruoto Group fails to comply with data protection and privacy laws.
4. Duties and restrictions on products imported by Ruoto Group may result in additional costs and impede the financial position of the Group. 

Financial risks

1. Fluctuations in exchange rates of currencies may have an adverse effect on Ruoto Invest Oy’s and/or Ruoto Oy’s operations
2. Future impairments of Ruoto Group’s goodwill may have an adverse effect on the Group’s financial position.
3. Ruoto Invest Oy and Ruoto Oy are exposed to changes in loan interest rates.
4. Ruoto Invest Oy and Ruoto Oy are exposed to credit and counterparty risks.

Risks related to the share issue

1. There is no guarantee that any future dividend will be distributed to shareholders.
2. The share issue incurs costs and operational obligations, which involve costs for Ruoto Invest Oy.
3. Share subscriptions are irrevocable and it may not be possible to sell the shares.
4. An investor may lose the capital they have invested fully or in part.
5. The investment might not yield any profit.
6. The transferability of the investment target has been limited with a redemption clause in Ruoto Invest Oy’s articles of association and with the obligation to sign Ruoto Invest Oy’s shareholder agreement.

23 June 2022

The Board of Directors of Ruoto Invest Oy has decided, in accordance with the authorisation given to it by a unanimous resolution of the shareholders on 9.5.2022, to amend the Board's decision on the directed share issue made earlier on 9.5.2022 as follows: 

The maximum number of shares to be issued was increased from 1 440 000 shares to a total of 2 000 000 shares, corresponding to EUR 5 000 000. 

The subscription price of the shares is determined in stages according to the amount invested, with the subscriber receiving a discount on the subscription price if the amount invested exceeds a certain amount in euros. The subscription price and the discounts thereon are decided as follows:  

1. for a total investment of between EUR 500 and EUR 499 999, the subscription price of the shares is EUR 2,50 per share; and 

2. for a total investment of between EUR 500 000 and EUR 1 599 999, the subscription price of the shares is EUR 2,45 per share; and  

3. for investments of EUR 1 600 000 or more, the subscription price of the shares is EUR 2,15 per share. 

No fractions of shares are given, thusly if the number of shares to be subscribed for is not even, the number of shares to be subscribed for is rounded down to the nearest whole share. 

The subscription price of the shares corresponds to the Company's estimate of the fair market price of the shares, which is appropriate for the purpose of this directed share issue. 

With regard to shareholders' agreements, the decision was amended so that the acceptance of the subscription of shares is conditional on the subscriber's commitment to the Company's shareholders' agreement dated 25.1.2022 or the Minority Shareholders' Agreement dated 9.5.2022. Investors who invest at least EUR 100 000 in the Company in this financing round will be offered the possibility to join the shareholders' agreement dated 25.1.2022 by means of an adherence agreement. 

In addition, the shareholders' agreement was amended to provide that instead of a Board member appointed jointly by the Existing Shareholders, the Funding Shareholders shall have the right to appoint jointly one (1) Board member in accordance with the terms of the shareholders' agreement (capitalized words having the meaning as set forth in the shareholders' agreement). 

In addition, it was decided that the subscription price for the Shares may also be paid to the Company's bank account appointed by the Board of Directors of the Company in accordance with the instructions of the Board of Directors or the payment schedule set out in the subscription form, instead of the customer deposit account of Invesdor Ltd. 

2 June 2022

Questions to Ruoto, asked by investors

How much capital is committed to the warehouse each year?

ANSWER: The value of the inventory on current turnover varies between €4m and €9m per year. This variation is influenced by seasonal fluctuations in demand. In recent years, inventory levels have had to be maintained at high levels due to interest rates, because of supply problems for many products and the need to anticipate and increase orders. The average inventory turnover rate is 100-180 days. Some products also have to be ordered in large batches. As the supply problems caused by the corona crisis and the war fade away, just-on-time orders will be sought as far as possible. Systematic efforts are being made to reduce working capital levels (i.e. inventory turnover). If the supply problems are overcome in the near future, the business will tie up significantly less working capital than at present.

How much has the COVID-19 influenced Ruoto's growth in recent years?

ANSWER: The corona brought a lot of new enthusiasts to the fishing and hunting side. The number of hobbyists increased, especially in the "cottage fishermen" sector, and as a result, the basic products sold well in the two years of the corona.

The fishing sector as a whole experienced a 15-20% growth between 2020 and 2021. Hunting is more challenging to start due to the permit requirement and therefore hunting has not experienced a similar growth.

It has been noted that a large proportion of the "new" fishing crowd have stayed in the hobby and are now also purchasing much sophisticated/expensive products alongside the basic products. Much of Ruodo's growth has come from gaining a larger market share and offering a wider range of products than its competitors.

How is Ruoto responding to the competition from international online retailers?

ANSWER: Ruoto derives most of its turnover from local stores and the share of e-commerce is still relatively small (around 30%), so Ruoto is building a service-oriented Mega Store chain for fishermen and hunters and is constantly improving the e-commerce side. The growth potential for online sales is high and Ruoto has the know-how for a much larger e-commerce business. In general, the e-commerce side of the industry has grown strongly, but Ruoto has shown that its network of service outlets works well to support e-commerce.

What are the reasons for considering new locations and what is preventing new stores from opening at a faster pace?

ANSWER: New store locations will be weighed based on population, hobbyist base and competition. Ruoto is looking to expand quickly, but at the same time in a prudent manner. Management and key staff resources will be focused on key growth projects.