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ContentsThE YEaR In BRIEF 1cEo’s sTaTEMEnT 2sTRaTEGIc oRIEnTaTIon 4MaRKET oVERVIEW 8oPERaTIons 12The brand and our marketing 12sales channels 16Purchasing and product range 20own brands 21logistics, IT and security 22Risks and factors of uncertainty 24shaREs anD shaREholDERs 28sUsTaInaBlE DEVEloPMEnT 34Key steps for sustainable operations 34our employees and the clas olson spirit 36our social responsibilityand human rights efforts 40our responsibility for the environment 44clas ohlson’s GRI profile 48annUal REPoRTDirectors’ report 50Five-year summary 54comments on the five-year trend 55consolidated income statementand cash-flow statement 56consolidated balance sheet and change in equity 57Parent company income statementand cash-flow statement 58consolidated balance sheet and change in equity 59accounting policies and notes 60certification of the annual accounts 72audit report 73coRPoRaTE GoVERnancE 74Internal control 76BoaRD oF DIREcToRs 78sEnIoR ManaGEMEnT 79QUaRTERlY REsUlTs 80DEFInITIons 80aDDREssEs 81Clas Ohlson in briefClas Ohlson is a retailing company with sales inSweden, Norway, Finland and the UK. At the end ofthe financial year, there were 106 stores in additionto our mail order/Internet service. We offer a broadrange of products in the areas of electrical andelectronics, mobile phones, computer accessories,hifi/stereo, tools, household, home and storage. Wehave 15,000 different products in our range. Thecompany is listed on the Nordic Exchange. Thehead office and distribution centre are located inInsjön in Sweden. Our sales exceed SEK 4.9 billionand we have a total of around 3,100 employees.

The year in brief• Sales totalled SEK 4,930 M (4,662)• Operating profit totalled SEK 503 M (578), correspondingto an operating margin of 10.2% (12.4)• Profit after tax amounted to SEK 365 M (422)• Earnings per share amounted to SEK 5.62 (6.43)• Dividend of SEK 3.00 per share (5.00) is proposed• 20 new stores opened• Stores opened in the United KingdomSales, SEK M5,0004,0003,0002,0001,00002,9553,5684,10104/05 05/06 06/07 07/08 08/09Operating profit, SEK M4,9304,662Key ratios 2008/09 2007/08 ChangeNet sales, SEK M 4,930 4,662 6 %Operating profit, SEK M 503 578 –13%Profit before tax, SEK M 504 588 –14%Profit after tax, SEK M 365 422 –13%Operating margin, % 10.2 12.4 –2.2Return on equity, % 24.4 29.4 –5.0Return on capital employed, % 32.6 41.8 –9.2Equity/assets ratio, % 58.1 68.4 –10.3Earnings per share, SEK 5.62 6.43 –13%Dividend per share, SEK 3.00*5.00 –40%Total number of stores 106 86 23 %Number of full-time equivalent employees 1,927 1,801 7 %600500400300200100420484531578503004/05 05/06 06/07 07/08 08/09* Proposed dividendClas Ohlson 2008/09The year in brief

it is convenient to solve the little practicalproblems in everyday life through us. Ourstores will preferably be located in strongcentral shopping centres. A total of 20 newstores were opened during the financialyear, compared with 15 in the precedingyear.or expanded, while certain duplicates, forexample similar goods, will be phased out.Greater variation between catalogue andstore products will be introduced, partly inorder to operate with a more seasonal rangeand items to order.Number of new storesNumber of new products252,400201515202,0001,6001,600 1,700 1,650 1,7001,2002,000101210118005400004/05 05/06 06/07 07/08 08/09Objective 08/09 20-25 new stores004/05 05/06 06/07 07/08 08/09Objective > 15% new productsResponsibility for people and theenvironmentWe take responsibility for our own operationsand for our impact on people and theenvironment. We also stipulate requirementsfor our suppliers with regard toworking conditions, working environmentand environmental impact.Sub-objectivesAs part of the work to meet our objectives,we have established a number ofsub-objectives regarding market position,customer satisfaction and employees,logistics and sustainability.Strengthening the Clas Ohlson brandThe Clas Ohlson brand is already regardedas strong in Sweden and Norway. The levelof familiarity with the brand is lower inFinland and the UK because the companyhas been in operation in these countries fora shorter time. Marketing includes cataloguemailing, direct marketing and advertising.The brand will be further strengthenedthrough continued development of thecompany’s marketing, particularly in newmarkets where the company is not alreadyknown.Adapting and modernising the productrangeSince we aim to offer our customers a broadand attractive range, 10–15 per cent of therange is renewed every year, by introducingnew product areas and adding to and replacingproducts in existing areas. The breadthof the product range will be maintainedFor the first time in Clas Ohlson’s history,the company published a spring catalogueas a supplement to the annual cataloguetraditionally published in the late summer.This venture provides greater flexibility interms of adapting both the range and prices.The year’s catalogues contained almost2,000 new products, compared with 1,700 inthe preceding year. This means that 17 percent of the catalogue range was changed inrelation to 2008/09. Many new products andproduct lines have been added, for instancein computer accessories, boat accessoriesand household items.Clas Ohlson supplements familiarbrands with a range of unknown brandsand own-brand goods such as Clas Ohlson,Cotech, Cocraft, Coline and Exibel. Theobjective is for the proportion of own-brandgoods to account for at least 25 per cent ofsales. At the end of the financial year, theproportion slightly exceeded 20 per cent.High level of serviceThe level of service in both stores and inmail order/Internet channels is high. Weachieve this by having an integrated andautomated logistics and sales system. Ourexperience is that the level of service instores, meaning that items are in the storewhen the customer wishes to purchasethem, exceeds 95 per cent.Rate of stock turnover 6–7 times inthe distribution centreWarehouses tie up capital, which meansthat the rate of stock turnover is animportant measure of efficiency. We aimfor a rate of stock turnover of 6-7 times inthe distribution centre. Strategic orientationClas Ohlson 2008/09

Rate of stock turnover,distribution centre10864206.86.7 6.76.4 6.304/05 05/06 06/07 07/08 08/09Objective 6-7 times per yearThe rate of stock turnover in the distributioncentre during the financial year was6.7 times, compared with 6.8 times in thepreceding financial year. This means thatwe replace the entire stock more often thanonce every two months.Rate of stock turnover in in-storeinventoriesInventories in our stores principally consistof the products held in the store. The objectiveis a rate of stock turnover of 8-10 timesin stores. Our large stores meet the objectiveof 8–10 times a year, while the mediumsizedstores have individual objectives basedon their annual sales.Satisfied and reassured customersGood customer service is the key to ClasOhlson’s business concept. All employeesin our stores are trained in dealingwith complaints. Our customer-servicepolicy specifies that humility and servicemindednessshould be apparent in everycustomer contact. The aim is a satisfiedcustomer after every contact. For extrareassurance, we also apply a 30-day openpurchase/cancellation right for customers instores as well as mail order/Internet shoppingcustomers. Because we firmly believethat good customer care will be one of theprincipal competitive tools in the future,we make continuous efforts to becomeeven more professional in our contactswith customers.Motivated, knowledgeable and committedstaffOur focus on our employees is evident inthe low rate of staff turnover in the Group.Staff turnover among full-time employeesin the Group averaged 8.8 per cent duringthe financial year (preceding year: 9.0 percent).Staff turnover among our staff at thehead office and in the distribution centre inInsjön during the same period was 2.1 percent (preceding year: 1.9 per cent). All newDuring the year, Clas Ohlson received awards forBest In-store and Telephone/Internet CustomerService. The level of service and corporate cultureis instilled at extensive training programmesheld for all new employees in Insjön, Dalarna.permanent employees begin their employmentwith introductory training in Insjönin Sweden with the aim of creating sharedvalues based on service-mindedness. Thenumber of hours of training in the Groupwas 56,123, compared with 69,630 hours inthe preceding year.Responsibility for people and theenvironmentWe aim to offer our customers high-qualityand affordable products while contributingto sustainable development for people andthe environment. Clas Ohlson’s generalenvironmental objective is that, togetherwith its suppliers, emissions of carbondioxide will be reduced by 30 per cent pertonne-kilometre by 2020. Our customersshould also feel assured that the productswe sell have been manufactured underacceptable conditions with respect to peopleand the environment. The aim is to visit allmanufacturers at least once every two years.During the financial year, Clas Ohlsonconducted 357 plant audits to ensure compliancewith the Code of Conduct.Clas Ohlson 2008/09 Strategic orientation

Market overviewWeaker retail sales markedby global recessionRetail trade in Sweden, Norway, Finlandand the UK was negatively impacted bythe strong slowdown in economic activitythat became evident from September2008. Although Clas Ohlson sells productsthat are needed in everyday life,sales were negatively affected by thisweaker trend in retail trade.Nevertheless, Clas Ohlson’s broad andreasonably priced range is less sensitive toeconomic fluctuations than many otherretailers. More than 80 per cent of theproducts sold by the company have a pricethat is lower than SEK 300. Clas Ohlson’swide range, with five different productcategories, also entails less risk as demandin one product category can increase whiledemand in another category decreases.Retail sales in SwedenA lower rate of growth was noted forSwedish retail in 2008, which increased byan average of 1.1 per cent in terms of fixedprices compared with 5.6 per cent in 2007,according to Statistics Sweden. A similartrend was apparent in trading in consumerdurables, which rose an average of 2.5 percent in fixed prices in 2008, compared with7.9 per cent in 2007.The Swedish Research Institute for Trade(HUI) anticipates continued sluggishgrowth in Swedish retail sales. This willmean an increase of 0.5 per cent in fixedprices in 2009 and of 1.5 per cent in 2010,according to HUI. Lower growth in salesof consumer durables is also expected. HUIforecasts unchanged sales in 2009 and anincrease of 1.5 per cent in 2010.Retail sales in Norway10A lower growth rate was reported for retail9sales in Norway during the financial year.8According to Statistics Norway, SSB, retail7sales increased by an average of 2.2 per cent6in fixed prices in 2008, compared with 7.45per cent in 2007.43210Private 04consumption 05 and 06 retail 07 sales 08Trend Retail in private sales, Sweden consumption and retail sales infixed prices Private consumption, in Norway Sweden 2004-2008, %Norway10987654321Private consumption and retail salesTrend in private consumption and retail sales infixed prices in Sweden 2004-2008, %Sweden1098765432101004 05 06 07Retail sales, SwedenPrivate consumption, Sweden9Private consumption declined by an averageof 0.2 per cent, compared with a rise87of 3.0 per cent in 2007. In current prices,6Clas Ohlson’s sales in Sweden and the UK5dropped 1 per cent in 2008/09.432108Source: Statistics Sweden010904 05 06 07 08Retail sales, NorwaySource: Statistics NorwayPrivate consumption, NorwayPrivate 8 consumption increased 1.3 per centin72008, compared with a rise of 6.1 per cent6in 2007. Clas Ohlson’s sales in Norway rose512 per cent in current prices in 2008/09.4According to the Federation of NorwegianCommercial and Service Enterprises32(HSH), the weak trend is expected to continuefor the next few years. The forecast1004 05 06 07 08for 2009 is that retail sales will increase byRetail sales, Finland1.5 per Private cent consumption, in fixed Finland prices.Retail sales in Finland10Lower growth in retail sales was also9reported in Finland. According to Statistics8Finland, retail sales increased by an average7of 1.8 per cent in fixed prices in 2008, comparedwith 5.6 per cent in62007.54320104 05 06 07 08Retail sales, Norway0 Market overviewPrivate consumption, Norway04 05 06 07 08Clas Ohlson 2008/09Retail sales, UKPrivate consumption, UK

987654321004 05 06 07Retail sales, SwedenPrivate consumption, Sweden081010998877665544332211004 05 06 07Retail sales, SwedenPrivate consumption, Sweden08004 05 06 07 08Retail sales, NorwayPrivate consumption, Norway109876543210Finland1098765432101004 05 06 07 08Retail sales, NorwayPrivate consumption, NorwayPrivate consumption and retail salesTrend in private consumption and retail sales infixed prices in Finland 2004-2008, %04 05 06 07 08Retail sales, FinlandPrivate consumption, FinlandSource: Statistics FinlandPrivate consumption in Finland rose 2.0 per9cent during 2008, compared with 3.3 per8cent 7 in 2007. Clas Ohlson’s sales in Finlandincreased 6 21 per cent in current prices during5 2008/09.4Retail 3 sales in the UKLower 2 growth in retail sales was also1reported in the UK during the financial0year. According 04 05 to UK 06 National 07 Statistics, 08Retail sales, UKretail sales rose an average of 2.6 per cent inPrivate consumption, UKfixed prices in 2008, compared with 4.2 percent in 2007.109876543210Private 04consumption 05 and 06 retail 07sales08TrendRetailin privatesales, Finlandconsumption and retail sales inPrivate consumption, Finlandfixed prices in the UK 2004-2008, %UK10987654321004 05 06 07 08Retail sales, UKPrivate consumption, UKSource: National StatisticsPrivate consumption in the UK increased1.5 per cent in 2008, compared with 2.3 percent in 2007.Market trendsThe market for the type of products sold byClas Ohlson continues to increase throughoutEurope, but is starting to becomerelatively mature. This applies in particularto the largest markets, including Germany,France and the UK. The sector has previouslybeen dominated by local chains ineach country, which have been able to growDuring the financial year, UK consumersbecame acquainted with a brand new businessconcept. The launch of Clas Ohlson was wellreceived,with positive feedback from customersregarding the product range, prices andstores, as well as the pleasant and knowledgeableservice they received.and increase their market shares, mainly atthe expense of individual specialist retailers.Large chains such as Clas Ohlson havemajor purchasing volumes, more efficientlogistics and benefit from other economiesof scale. Accordingly, larger chains aregenerally able to offer better prices andhave more extensive resources to applyto marketing. They are often also able tooffer completely new products at an earlierstage than individual specialist retailers. Asthe growth rate is now starting to decline,chains are increasingly branching outbeyond national borders. In recent years,large chains in the Nordic countries havealso captured market shares at the expenseof individual specialist retailers. Chainstend to opt for large stores, often away fromtown centres. The exception is Clas Ohlson,whose stores are primarily located in townand city centres that people frequent intheir everyday lives. International playersare still quite rare in the Nordic region.Exceptions are the Swiss company Bauhaus,Clas Ohlson 2008/09 Market overview

which has established a presence in theNordic region with approximately 20 homeimprovement stores, Hornbach, whichhas opened three stores, and the Germancompany Mediamarkt, which has 15 storesin Sweden. At the same time, the weakerretail sales have also resulted in a few playerschoosing to withdraw from the Swedishmarket, including PC City and Silvan.Examples of cross-border Nordic players,apart from Clas Ohlson, are the Swedishcompany Biltema with stores in Sweden,Norway, Finland and Denmark, the Danishcompany Harald Nyborg with storesin Denmark and Sweden, and the Finnishcompany K-rauta with home improvementstores in Finland and Sweden.Larger storesAnother trend is that the size of stores isincreasing. In large European countries, it isnot unusual to find stores of between 5,000and 10,000 square metres, primarily locatedclose to out-of-town shopping centres. Thisruns completely contrary to Clas Ohlson’sstore-opening strategy, which aims insteadto open stores of between 500 and 2,500square metres in prime, preferably towncentre,locations.The ones who come closest in the Nordiccountries are Jula in Sweden and Norway,and Biltema, with stores in all the Nordiccountries, which have a similar productrange and conduct sales through stores andmail order/Internet channels. In addition,Clas Ohlson competes in specific productareas with a number of companies, suchas Mediamarkt, Järnia, Bauhaus, K-rauta,Teknikmagasinet and Kjell & Co. Thecompany also competes to some extent withsupermarkets and superstores, such as CoopForum and Ica Maxi in Sweden, Obs inNorway and Anttila in Finland. Teknikmagasinetand Kjell & Co are the only competitorsmentioned above that have a storeopeningphilosophy similar to that of ClasOhlson, with stores located in town centres,preferably next to busy shopping centres.In the UK, Clas Ohlson will be competingin particular with the British retail chainArgos and such retailers as Maplin andRobert Dyas, which offer a range in someof Clas Ohlson’s product areas. However,no competitor in the UK has a concept thatresembles that of Clas Ohlson.Own-brand goodsIt is becoming increasingly common forretail chains to market products under theirown brands. By developing own brands,Clas Ohlson is able to offer customers highquality at lower prices since developmentcosts and marketing costs are lower.CompetitorsFew competitors can rival the breadth ofproduct range offered by Clas Ohlson.Clas Ohlson compared with a selection of competitorsMain competitors and the number of stores in each countrySweden Norway Finland UK Year started*50 38 16 2 1918 • • • • •Biltema 20 26 8 1963 • • • • •Jula 28 6 1979 • • • • •Teknikmagasinet 70 20 1 1989 • •Kjell & Co 39 1990 • •Jernia 160 1951 • •Obs 43 1907 • • •Maxbo 75 1995 • •Anttila 29 1953 • • • •K-rauta 20 42 1940 • • •Argos 700 1973 • • • •Maplin 160 1972 • •Robert Dyas 105 1872 • • •ElectricalMultimediaLeisureHardwareHome* Source: Websites10 Market overviewClas Ohlson 2008/09

The UK – our fourth marketDuring the financial year, Clas Ohlson launched its expansion into the UK. The firststore was opened in November 2008 in Croydon, London. An additional store wasopened in April 2009 in the Arndale Shopping Centre in Manchester. Clas Ohlson’sbusiness concept was well received and UK consumers that visited either of thestores were positive toward the range as well as prices and service. The objective is toopen an additional four to eight stores in the UK during the 2009/10 financial year.Excellent opportunitiesWith a population of 60 million, the UK presents excellent long-term opportunitiesfor Clas Ohlson. The factors that have had a bearing on the choice of a new marketinclude the number of potential customers. Other factors in favour of the UK arethe country’s strong purchasing power and the generally favourable prices of ClasOhlson’s products. Town-centre trading is strong and a large proportion of shoppingis carried out in centrally located shopping malls. This fits Clas Ohlson’s concept ofhaving stores in strong shopping centres in city locations.Extensive customer surveys of the target group also indicate favourable demandfor a chain like Clas Ohlson in the UK market. No other chain currently offers anequivalent concept in central retail locations. Clas Ohlson’s range, stores and servicerepresent a new, sensational and appreciated element in UK retailing. However,Clas Ohlson expects it to take time to establish the brand and market position in anentirely new market.Product range and deliveriesCertain aspects of Clas Ohlson’s range require adaptation to the UK market, ascertain standards differ, such as with regard to electrical products. Of the standardcatalogue range, approximately 1,400 products will have to be adapted, changed orreplaced. The company is also conducting a review to ensure that it offers brandswith which the UK consumer is familiar and used to buying. Deliveries to the UKstores will initially be conducted from the distribution centre in Insjön. As theoperation expands, Clas Ohlson will regularly assess other alternatives that entailshorter transport routes.Clas Ohlson in the UK was launched through an intensivemarketing campaign in the area around the first stores.Since Swedish retailers have an excellent reputationin the UK, the advertising campaign highlighted ClasOhlson’s Swedish origins in a playful, attention-grabbingmanner.Clas Ohlson’s first store in the UKClas Ohlson’s first store was opened in November 2008 in the Whitgift ShoppingCentre in Croydon, south-east London. The store has 1,900 square metres of retailspace and a catchment area of approximately 512,000 inhabitants. The store, whichis on two levels, has a main entrance from a pedestrian street and another entranceinside the shopping centre. The shopping centre has a total of 140 stores, 7,000 parkingspaces and 25 million visitors per year.In April 2009, Clas Ohlson opened its second store in the Arndale Shopping Centrein Manchester. The store space is 2,500 square metres on three levels. It is one ofthe five most-frequented shopping centres in the UK, with a total of 240 stores and39 million visitors per year.Clas Ohlson’s entrance into the UK is a long-term venture and the deterioratingeconomic climate is entailing opportunities to sign contracts for attractive storelocations that were not previously available. The rent levels have also decreased dueto weakening retail sales.Local marketing has an impactClas Ohlson’s marketing focuses on highlighting the business concept in the catchmentarea in which its stores are established. Since Swedish retailers have an excellentreputation in the UK, the company has increased the emphasis on Clas Ohlson’sorigins and history. In the UK, it is common for retail chains to be named after theirfounders, which means that the Clas Ohlson name is excellent in this market as well.To clarify Clas Ohlson’s offering, we have introduced the company as a modernhardware store that sells useful products that make everyday life easier. Marketinghas reached consumers through outdoor advertisements, direct-mail advertising,radio commercials and local distribution of the Clas Ohlson catalogue in the areawhere stores are located.Through surveys conducted in Clas Ohlson’s stores in Croydon, London, andArndale, Manchester, we know that customers generally appreciate the company’sbusiness concept in terms of range, prices and service, and readily recommend ClasOhlson to others.Clas Ohlson 2008/09 Market overview 11

OperationsOur brand and marketingThe Clas Ohlson brand is one of thecompany’s greatest assets. ClasOhlson’s market position as a problemsolver in everyday life was furtherstrengthened during the year through thecontinued development of the businessconcept and communication with customers.A number of changes were made duringthe year, including an updated store conceptintended to make it easier for customers tonavigate Clas Ohlson’s stores, a more modernvisual identity, an updated product rangeand a clearer approach to marketing.New countries mean new challengesClas Ohlson is a well-established andwell-known brand in Sweden and Norway,where we are focusing on strengtheningrelationships with existing customers.In new markets, such as the UK, manypotential customers have not yet discoveredClas Ohlson. In both cases, however, a clear,consistent and, in certain respects, locallyadapted approach to marketing is necessary.Knowledge about our consumersCustomer surveys and competitor analysesform the basis of the continuous developmentof Clas Ohlson’s business concept,offering and market communications, withthe aim of establishing a distinct position innew and existing markets.Customer surveys were performed inall of Clas Ohlson’s markets during thefinancial year, which have provided us witha clear picture of how the Clas Ohlson brandis perceived and the frequency of visits. Atotal of 98 per cent of the population betweenthe ages of 18 and 69 are familiar with ClasOhlson in Sweden. The equivalent figureis 97 per cent in Norway and 76 per cent inFinland. The proportion of female customersis slightly more than 40 per cent. Themost-frequent visitors are men between theages of 25 and 35.Clas Ohlson received a number of distinctionsduring the year, including nominationsas the retail chain of the year in Swedenand Norway (Swedish Federation of Tradeand NSCS), and was named the third-hottestretail chain in Sweden (all categories).The company also received a distinction foroutstanding customer service, both in storesand through Clas Ohlson’s telephone/Internetchannels.Innovative product rangeClas Ohlson’s range is renewed continuously,with a focus on finding smart, new solutionsand new products based on vibrant trends.A broad and attractive range is a keycomponent of the company’s success. ClasOhlson’s product range is divided into fivecategories: Hardware, Home, Multimedia,Electrical and Leisure. This classificationreflects customer needs and areas of use. ClasOhlson’s range should have sufficient depth,with several price levels for different situations.The customer should always be offeredan exciting shopping experience.Continued focus on own-brand goodsCustomers continue to appreciate our focuson own-brand goods, which accounted forslightly more than 20 per cent of sales duringthe financial year. The objective is to increasethe proportion of own-brand goods to at least25 per cent.Clas Ohlson’s five product areasHardware Home Multimedia Electrical Leisure2 OperationsClas Ohlson 2008/09

Clas Ohlson has placed considerable emphasis on exporting its corporate cultureto the UK. The store personnel were given a warm welcome to their introductoryweek in Insjön, in the midst of a snowstorm in March.The store personnel from the new store in Manchesterwere handpicked based on their experience and personalattributes. Prior to the opening of the new store,the employees received support from experiencedcolleagues from Insjön, Sweden, and other parts ofthe company.Export of Clas Ohlson’s corporate cultureIn March 2009, 11 employees from the UK travelled from Manchester toInsjön, Sweden, to undergo “Insjön training.” Most of these employeeshad never visited Sweden and travelling to the town of Insjön in Sweden’sDalarna region was a major adventure and a memory for life. Upon arrivingat Hjultorget in Insjön in the middle of a snow storm, many were wonderingwhere they were – but our new colleagues quickly thawed out after receivinga warm welcome, an approach that characterised the entire training processin Insjön.“We began recruiting at the end of January and selected our new colleaguesfrom 250 people,” explains Robert Rahm, head of the trainee groupthat recruited employees in Croydon and most recently in Manchester. Inhis everyday job, Robert works as a Store Manager at the Gallerian shoppingcentre in central Stockholm.”“A total of 90 per cent of the employees had previous retail experience,which is obviously a plus, but what they are like as people is more important.”To learn about the character and concept of Clas Ohlson, these full-timeemployees participated in a one-week introductory programme in Insjön.“During that week, we mainly focused on our corporate culture, businessconcept, products and values, but we also organised various teambuildingactivities,” explains Per Dahler, who was also involved in the training programme.Although the rigorous week involved considerable theoretical training forthe Manchester employees, the programme also included various practicalelements. For example, the employees were given the chance to attempt toassemble a PC. Carpentry and product-range knowledge were also includedin the practical section of the training programme. The introductory weekconcluded with practical training at the store in Croydon, London.Clas Ohlson 2008/09 Operations 13

Catalogue showcases diversityA total of 5.5 million copies of the main catalogue,printed in Swedish, Norwegian andFinnish, were published during the financialyear. In March 2009, the company’s first springcatalogue, which also contained a section onboat accessories, was published in Swedish,Norwegian and Finnish. The first Clas Ohlsoncatalogue in the UK was released in April andquickly gained popularity, particularly due toits convenient format. Special catalogues formultimedia and mobile phone accessories werepublished twice during the financial year, inAugust 2008 and March 2009.The introduction of two main cataloguesper year entails significant advantages, as itincreases the company’s flexibility to update itsrange and prices more often.Prior to store openingsIn the run-up to the establishment of a newstore, Clas Ohlson markets itself in the localarea for several months before the openingoccurs. This is carried out through direct advertising,advertisements in publications, radioadvertisements and public relations activities.Marketing efforts are intensified in the final fewdays prior to opening. Clas Ohlson conductedextensive marketing in conjunction with thelaunch of the company’s first stores in the UK toensure that the brand was established quickly inthe respective catchment areas of the stores.Trade fairsWhen Clas Ohlson participates in trade fairs,the focus is on meeting existing and prospectivecustomers. The company has the opportunityto sell its products, distribute its catalogues andgather valuable information through dialoguewith visitors. During the financial year, ClasOhlson had stands at three major trade fairs,including Stora Nolia, a consumer products fairheld every year in Piteå, with approximately120,000 visitors, and the Stockholm InternationalBoat Show in Stockholm in March, atwhich we presented our new spring catalogue,which also included a range of boat accessories.Sponsorship linked to DalarnaOur policy regarding sponsorship is to primarilysupport clubs, associations and events in theSwedish region of Dalarna, where Clas Ohlsonwas founded and the company’s head officeand distribution centre are located. Our majorcommitments include sponsoring the ice hockeyteam Leksands IF and the Olympic rower LassiKaronen. During the financial year, Clas Ohlsonalso supported Dalhalla outside Rättvik, oneof the largest music scenes in Sweden.Clas Ohlson sponsors Leksands IF, havingcooperated with the ice-hockey club formany years. This sponsorship is highlyappreciated by both employees and customers,particularly in the Dalarna region, butalso in other areas of Sweden where manyfans support the clubMany of Clas Ohlson’s sponsorship venturesare linked to the Dalarna region, where thecompany has its roots. Among other associations,the company sponsors Dalhalla outsideRättvik, one of the largest music scenes inSweden.Photo: Martin Litens Photo: Jessica Ström/www.leksandsif.se14 OperationsClas Ohlson 2008/09

OperationsSales channelsIncrease in salesComparable storesin local currency – 7 per centNew stores+ 12 per centExchange-rate effects + 1 per centTotal+ 6 per centClas Ohlson started as a mail-ordercompany 90 years ago, and a long periodof successful mail-order activity laidthe foundation for what the company istoday. The stores now account for 98per cent of sales and the company had106 stores in Sweden, Norway, Finlandand the UK at the end of the financialyear.StoresStore locationsOur stores should preferably be located instrong, centrally located shopping centreswhere we work together with other storesand chains to bring about repeat visits. Mostof the product range is easily accessible forself-service in each store. Less than 10 percent of products are sold over the counter.Because Clas Ohlson manages its storesitself, it does not operate on a franchisebasis. The store premises are rented onlong-term leases. The company has threedifferent concepts regarding its store sizes:large stores with 1,200-2,500 square metresfor large catchment areas, medium-sizedstores of 800-1,200 square metres and a newconcept for smaller stores of 500-800 squaremetres. The new smaller concept, namedLill-Clas, or “Little Clas,” enables thecompany to open stores in smaller towns oras a complement to existing stores in largertowns. These Lill-Clas stores have a smallerrange of products than the larger storesand focus on the most popular products.Other items in the range can be ordered andcollected from the store within 48 hours.The concept has been positively receivedand is now found in Motala, Hudiksvall,Marieberg (Örebro) and Kullagatan (Helsingborg).Attractive stores in shopping centresClas Ohlson is an attractive store for a shoppingcentre. Its store openings often resultin a substantial increase in the numberof visitors to the entire centre. The storesattract new customer groups, and theirbroad range brings in visitors of all ages,both men and women. A Clas Ohlson storeis often also the preferred neighbour forother stores in a shopping centre. Accordingto a survey conducted by the SwedishResearch Institute of Trade (HUI) in 2008,Clas Ohlson is one of the five most popularstores in Sweden to be located next to. Duringthe year, Clas Ohlson was also nominatedfor the award of Retail Chain of theYear in both Sweden and Norway (SwedishTrade Federation and Nordic Council ofShopping Centers).New store conceptClas Ohlson launched a new store conceptin 2008 that will make it easier for customersto find their way around the stores. Thechanges also involve generally updating andmodernising stores in terms of, for example,décor, signs, customer terminals, informationand order counters and checkouts.The new concept was launched during thethird quarter of 2008/09 and has generallybeen positively received by customers andpersonnel.The new concept will be applied to allnew stores.Existing stores will be gradually adaptedover the next few years. The new conceptis expected to have a marginal impact onstart-up costs for new stores. Investments inand costs of conversion of existing stores areestimated to total about SEK 40 M per year.Up to ten stores are expected to be remodelledaccording to the new concept duringthe 2009/10 financial year.Financial commitmentA new store initially entails a financial commitmentof SEK 12–14 M, broken downinto SEK 3 M in start-up expenses, SEK4–5 M in investments in store interiors andcomputer systems and SEK 5–6 M in inventories.Start-ups costs for our first stores inthe UK are initially higher, mainly due tohigher marketing costs.New stores in Sweden and Norway havealready become profitable in the first twelvemonths of trading. The same applies tosome stores in Finland. It generally takeslonger to achieve profitability in countriesin which Clas Ohlson is a new name andwhere the brand is new.Rate of store openingsClas Ohlson is continuing to open newstores in established markets but is adjust-Sales in stores, SEK M5,0004,0003,0002,0001,0002,8353,4453,9864,541 4,830004/05 05/06 06/07 07/08 08/0916 OperationsClas Ohlson 2008/09

ing its rate of opening according to marketconditions. The opening of 15-20 new storesis planned for the 2009/10 financial year, ofwhich the UK will account for four to eight.The organisation will be continuouslyupgraded for continued growth in bothexisting and new markets. The breakdownbetween large, medium-sized and smallstores has not been fixed and depends onthe store locations for which contracts canbe signed.Operating profit, SEK M600450300150041047452556649504/05 05/06 06/07 07/08 08/09Sales and profitsStore sales during the financial year totalledSEK 4,830 M (4,541), up 6 per cent on thepreceding year. Accordingly, store salesaccounted for 98 per cent of total Groupsales.Operating profit for the stores totalledSEK 495 M (566), down 13 per cent upcompared with the preceding year, resultingin an operating margin of 10.2 per centcompared with 12.4 per cent in the precedingyear. New stores entailed start-up costsof SEK 67 M (51) during the financial year.Number of visitors, millions5040302010029.936.139.846.351.104/05 05/06 06/07 07/08 08/09SwedenClas Ohlson’s Swedish stores attracted 32.6million visitors in 2008/09, an increase of1.2 million or 4 per cent compared with2007/08. Of these visitors, 15.8 million madepurchases.The number of stores increased by fiveduring the financial year and the totalnumber of stores in Sweden at the end ofthe financial year was 50. To date, contractsClas Ohlson’s autumn catalogue, which isthe oldest mail-order catalogue in Sweden, istraditionally published in August in conjunctionwith Insjö Day, one of the year’s biggest festivalsin Insjön and the surrounding area. Visitors werekeen to get their hands on this year’s catalogueand find out all about the new products in thecatalogue.have been signed for seven new stores forthe 2009/10 financial year.The company believes that the Swedishmarket has yet to reach the saturation pointin terms of the continued opening of ClasOhlson stores. Several stores with catchmentareas with a population of 30,000-50,000 show that the company can alsoachieve favourable profitability in smallertowns. The new Lill-Clas smaller storeconcept allows Clas Ohlson to open stores insmall towns or as a complement to existingstores in larger towns.NorwayOur Norwegian stores attracted 12.2 millionvisitors in 2008/09, up 2.3 million or23 per cent on 2007/08. Of these visitors,7.9 million made purchases during theirvisit to the store. Nine stores were addedduring the financial year, and at the endof the financial year there were 38 storesClas Ohlson 2008/09 Operations 17

in Norway. To date, decisions have beenmade to open a further four stores duringthe 2008/09 financial year. The Norwegianmarket has also not yet reached saturationin terms of continued openings of Clas Ohlsonstores. Several stores have catchmentareas with a population of 30,000-50,000,demonstrating that we can also achievefavourable profitability in smaller towns.FinlandOur Finnish stores had 5.8 million visitorsin 2008/09, an increase of 0.7 million or14 per cent compared with 2007/08. Ofthese visitors, 2.5 million made purchases.Clas Ohlson strengthened its marketingactivities in Finland at the beginning of thefinancial year, thus enhancing knowledge ofthe brand and sales. The Finnish retail sectorweakened during the latter half of theyear, something that also had a substantialimpact on Clas Ohlson’s operations.Four stores were added during thefinancial year, and the number of storesin Finland at the end of the financial yearwas 16. To date, no decision has been madeabout opening additional stores in Finlandin the 2009/10 financial year. Potential toincrease sales in the existing store portfolioin Finland is considerable, for example, bycontinuing to clarify Clas Ohlson’s offeringin the Finnish market.UKClas Ohlson opened its first stores in theUK during the financial year. The firststore, with 1,900 square metres of retailspace, opened in Croydon in south-eastLondon in November 2008. The company’ssecond UK store was opened in Manchesterin April 2009. This store is located in theArndale Shopping Centre and has 2,500square metres of retail space. The responsefrom customers in these new stores in theUK has been positive, with high visitornumbers in both the Croydon and Arndalestores. The number of visitors to date tothe Croydon store is higher than the Groupaverage. The conversion rate and the averagepurchase were lower in the UK than theGroup average, which is a normal phenomenonassociated with entry into a newmarket. Clas Ohlson expects the establishmentof the brand and a position in a newmarket to take time and that the conversionrate and average purchase value will graduallyincrease over the next few years. Manyattractive store locations are expected tobecome available in the future.Mail order/InternetMail order/Internet sales totalled SEK 100M (121), corresponding to a 17 per centdecrease compared with the preceding year.The decline was primarily due to a generalslowdown in the retail sector combinedwith Clas Ohlson opening stores during theMail order/Internet sales, SEK M16012080400year in areas that previously were offeredonly the mail order/Internet channel. Mailorder/Internet sales accounted for 2 per centof the Group’s total sales in 2008/09.Operating profit from mail order/Internet sales, SEK M12963010 1004/05 05/06 06/07 07/08 08/09The operating profit for mail order/Internetchannel totalled SEK 8 M (11), down 27per cent compared on the preceding year.Accordingly, the operating margin amountedto 7.8 per cent, compared with 9.5 percent for the preceding financial year.The Internet accounted for 71 per cent (68)of the total number of orders received bythe mail order/Internet operation duringthe financial year.611Percentage of Internet orders, %80604020011954122 12111660636810004/05 05/06 06/07 07/08 08/0987104/05 05/06 06/07 07/08 08/0918 OperationsClas Ohlson 2008/09

Clas Ohlson’s mail order/Internet channelis of strategic importance to the Group.Customers are displaying a distinct trendof communicating via and making purchasesboth in stores and online. Our mailorder/Internet channel is currently limitedto Sweden and Norway, but we intendto expand the service to Finland and theUK in the future. The two channels, storeand Internet, complement each other welland offer new opportunities to furtherstrengthen relations with our customers.A new e-commerce platform will bedeveloped in 2009/10, which will form thebasis for expanding the mail order/Internetchannel.Clas Ohlson 2008/09 Operations 19

OperationsPurchasing and product rangeClas Ohlson’s product range is intendedto help our customers to solve theirlittle practical problems in everyday life.The rate of renewal of the range is high,focusing on technology, function andquality. Environmental and ethical issuesare other key factors in the choice ofproducts and suppliersExtensive, high-quality purchasingactivitiesClas Ohlson’s product range should beadapted to and focused on solving customers’practical problems in their everydaylives. The product range is broad andcontains a total of 15,000 items. In additionto the ordinary catalogue products,the range includes campaign products andaccessories. Clas Ohlson does not conductmanufacturing itself, nor does it hold anyproduct patents. The company does notdepend on any individual product area andconsiders its broad product range to be acompetitive advantage. The company isalso not dependent on any single supplier.An international product range council wasformed during the financial year, which isresponsible for continuously developingClas Ohlson’s product range strategy. Thiswork is taking on greater importance asthe company enters into new geographicalmarkets to ensure that Clas Ohlson’s rangeis always attractive, distinctive and competitiveat a European level.High rate of renewalThe company has had a high rate ofproduct-range renewal in recent years,replacing between 1,300 and 2,000 productsevery year. Annual profitability and theproduct lifecycle determine whether anitem remains in the range. Many of thecompany’s products have a high technicalcontent, and we aim to be at the leadingedge of technology, but without being pioneersor setting trends. The main selectioncriteria for potential new additions to theproduct range are technology, function andquality. Newer technology may replace anold one, or a product may be replaced byone that is equivalent, but has even betterdurability or function.ucts are also passed on to various testingorganisations, such as Semko and the SwedishNational Testing and Research InstituteWork of the purchasing departmentThe purchasing department is dividedinto five groups, one for each product area:Hardware, Home, Multimedia, Electricaland Leisure. Category and product managersattend large trade fairs and visit suppliersaround the world to find new products,but also to develop the existing range. Byvisiting the factories, we can also influencedesign, choice of materials, manufacturingmethod and manufacturing conditions interms of the work environment, workingconditions and environmental impact.An experienced organisationMany of our category and product managershave worked at Clas Ohlson for manyyears. Their knowledge and experience ispassed on to the next generation of productmanagers, thus providing us with goodcontinuity with regard to purchasing andrange development. The company believesit important for present-day buyers andproduct managers to feel the same curiosityabout new products as the company’sfounder Clas Ohlson did. This curiosityis part of our culture. Purchasers receivethorough training in the company’s Codeof Conduct and its methods and toolsfor checking and supporting suppliers.Purchasers have an important role to playin efforts to improve the work environmentand working conditions, and to ensure thatthe environmental properties of the productsare acceptable.More than 600 suppliers from 30 differentcountriesClas Ohlson’s approximately 600 suppliersare located in 30 different countries.Countries of purchaseOther, 1% Sweden, 58 %Rest of Europe, 6 %Asia, 35 %Purchasing policyOne of the stipulations of Clas Ohlson’spurchasing policy is that the companymust purchase its products as close to themanufacturers as possible so as to avoidintermediaries.Quality testsFunction tests and product-life tests areperformed before a new product is added tothe range. The products are tested in ClasOhlson’s own workshops, where stringentrequirements have to be met with regard toquality, safety and function. Several prod-Swedish suppliers accounted for 58 per centof total purchases during the financial year,compared with 62 per cent in the precedingyear. The largest Swedish suppliers aretrading houses or agents who hold import20 OperationsClas Ohlson 2008/09

ights or type approvals for various products.The places of origin of these productsare usually countries in Asia or Europe.When combined with the company’s 35per cent of direct purchases from Asia, thepercentage of Asian products exceeds 50per cent, unchanged compared with thepreceding year. This allows Clas Ohlson todevelop long-term partnerships and alsofacilitates efforts to monitor compliancewith the Code of Conduct.Own brandsClas Ohlson has about 15,000 products in its range. The range is divided into five differentproduct areas: Hardware, Home, Multimedia, Electrical and Leisure.In recent years, the company has invested heavily in own-brand goods, which nowaccount for approximately 20 per cent of sales. The objective is to increase this figure toat least 25 per cent. The products sold as own-brand goods are hallmarked by their highquality and attractive prices.Countries of originOther, 2 % Asia, 54 %Rest of Europe, 27 %Outdoor equipmentTelephony, videoand audioSweden, 17 %Purchasing company in ShanghaiAsia, and China in particular, is the singlemost important purchasing market forClas Ohlson. During the financial year,the company founded a wholly ownedpurchasing company in Shanghai to furtherstrengthen Clas Ohlson’s competitiveness inits continued expansion. Clas Ohlson strivesto reduce the number of suppliers and makebulk purchases from fewer suppliers thanin the past. The aim is to reduce purchasingcosts and intensify partnerships with suppliersand the manufacturers from whomthe company makes direct purchases.Additional information on the company’ssustainable development efforts is availableon pages 33-48 of the Annual Report.KitchenutensilsHand toolsFishing gearWatchesPurchasing policyOne of the stipulations of Clas Ohlson’spurchasing policy is that the companymust purchase its products as close to themanufacturers as possible so as to avoidintermediaries.DomesticappliancesAquatic sportsequipmentPower tools, batteriesand electrical componentsArtists’ materialsClas Ohlson offers a number of its own highqualitybrands at attractive prices in a broadrange of products. Along with other brands thatare well known in the market for various productcategories, this breadth allows customers toselect from products in different price rangesand based on the features that they need.Clas Ohlson 2008/09 Operations 2

OperationsLogistics, IT and securityThe distribution centre in Insjön is nowbeing expanded to accommodate thecontinued growth of the company.Automated systems facilitate high availabilityin stores and for mail order/Internetsales.LogisticsThe distribution centre in Insjön is thelogistics hub of the entire Group, and allgoods destined for Clas Ohlson stores andmail order/Internet customers pass throughit. The average rate of stock turnover inthe distribution centre during the financialyear was 6.7 times (6.8). This means that thecompany replaces its entire stock of a full15,000 items more often than once everytwo months. With this high rate of turnover,the distribution centre is more comparableto a terminal than a warehouse. Duringthe year, Clas Ohlson was nominatedfor Sweden Post’s and Schenkers’ LogisticsAwards based on the company’s work ondeveloping efficient logistics processes andits involvement in environmental issuesrelated to inward and outward freight.Distribution centre expanded toaccommodate continued growthClas Ohlson’s distribution centre in Insjönis now being expanded to create capacityto store and distribute products to at least150 stores in a highly efficient manner. Theinvestment totals SEK 615 M and will bemade in two stages. The new picking facilitywas deployed in May 2009 and the newadditional high-bay warehouse is expectedto be put into operation in late 2009. Followingthis expansion, the distributioncentre in Insjön will be the most modernand efficient logistics facility in the Nordicregion. Efficient logistics is one of ClasOhlson’s key success factors.Distribution during yearThe company’s inward delivery unitreceived about 245,000 pallets and 1,746freight containers during the financial year.The equivalent figures for 2007/08 were225,000 pallets and 1,838 freight containers.A total of 6.2 million (5.9) picking rowswere supplied to the stores during thefinancial year, representing an increase of 5per cent compared with the preceding year.The normal delivery time to the stores is 1-3days and ordering takes place automaticallyvia the in-store computer system. Clas Ohlsonalso delivered about 140,600 (176,600)mail order consignments, equivalent to 560a day.IT systems and securityClas Ohlson has been working to developIT systems that support the operations formany years. These systems make it easierto handle ordering, delivery, replenishing,picking and final delivery of goods. Allsystems affecting the handling of goods arefully integrated, meaning that the informationis only registered once and is displayedin real time. To ensure a high level ofservice, the systems are built up at three differentlevels: the central system, the in-storecomputer system and the checkout system.1. Central systemAll information relating to products,customers and suppliers, etc. is registeredin our shared central database system.Purchasing routines, warehousing routinesand shared functions, such as financial andaccounting systems, are run in this centralsystem. Many of the programs are customisedand developed in-house to suit ourparticular operation. An exception is thefinancial and accounting system, which is astandard system.2. In-store computer systemAll data relating to the flow of internalinformation within a store and betweenstores is available in the in-store computersystem. Ordering points for all items in thestore are entered into the system; for example,when an item reaches its re-orderingpoint, an order is automatically sent to thecentral system.3. Checkout systemA special checkout system is linked toeach in-store system that processes thesales transactions in the specific store.The checkout systems communicate withboth the in-store computer system and thecentral system at all times but can also workcompletely independently if communicationwith the other systems should fail.IT security a high prioritySince the operations are based on theintegrated systems working with as fewinterruptions as possible, IT security is ahigh priority. All the systems are duplicatedto ensure high availability and short downtime. This means quicker re-starts and ahigher level of security than if the systemswere run in a single-computer environment.All of the systems and transactionsare backed up every night. Firewalls and22 OperationsClas Ohlson 2008/09

virus protection are other elements of ClasOhlson’s security system.Insurance coverClas Ohlson has insurance policies thatprovide the company with adequate coverfor inventories, buildings, machinery andequipment, as well as interruptions andliability, including product liability. Thecompany reviews its insurance cover everyyear in consultation with its insurer.General safety activitiesClas Ohlson enhanced its general safetywork at the company during the financialyear. A central safety department wasestablished that works with such issues asin-store safety, fire safety and crisis management.Shrinkage is a major problem for theretail sector as a whole. Clas Ohlson hasadopted a long-term approach to its processesand procedures, training and technicaltools to minimise shrinkage within thecompany.To prevent fires, strict regulations governall handling of flammable substances. Allemployees receive training in fire safety andhave thorough knowledge of applicablefire-safety rules. A special emergency fireteam specialised in fire prevention is alsostationed in Insjön. The distribution centrein Insjön is divided into several fire compartments,which are separated by firewallsand fire shutters. The fire alarm system,which has about 625 fire detectors, is linkeddirectly to the emergency services switchboardand to the internal on-call team.The building is equipped with asprinkler system, consisting of about29,000 sprinkler valves. It is supplied withwater via a sprinkler control room withdirect-starting diesel pumps. The wateris taken from two reservoirs linked tothe sprinkler control room. A special firepond has been created next to the high-baywarehouse section to ensure that water forfire extinguishing is available. Flammablegoods are placed in a special part of thebuilding adapted for this specific purpose.Truck loading takes place in a specialtruck-loading room, which meets relevantrequirements.Clas Ohlson 2008/09 Operations 23

OperationsRisks and factors of uncertainty1,301,201,101,00USD/SEK exchange rate1086420M J J A S O N D J F M AM J J A S O N D J F M AThe USD is Clas Ohlson’s principalpurchasing currency. The exchange rateagainst the SEK at the start of the financialyear on 1 May 2008 was SEK 6.05.The exchange rate then strengthenedslightly during the summer and autumnbefore subsequently strengthening againin the spring. On 30 April 2009, the ratewas at SEK 8.00, up 32 per cent.The highest exchange rate during thefinancial year was SEK 9.30, recorded inMarch 2009, while the lowest was SEK6.00, noted in May 2008. The averageexchange rate for 2008/09 was approximatelySEK 7.30, compared with SEK6.50 in 2007/08.Clas Ohlson’s operations are associatedwith risks that to a varying extent mayhave a negative impact on the Group’searnings. These risks can be divided intothose related to operations, such as acompetitive product range or a changedcompetitive situation, and those relatedto financial considerations, principallyforeign-exchange exposure.Both operating and financial risks canhave an impact in the short and long termon the ability to attain the goals set out inthe business plan. The scope of work onthe company’s general risks was furtherextended during the financial year, firstly bycontinuing to conduct audits of the company’srisk profile, and secondly by continuingto develop processes for pursuing regularwork on the company’s risks. The regularwork, undertaken in a coordinated andsystematic manner, is principally aimed atrapidly visualising new risks, limiting exposureto risk and limiting the impact in theevent of a risk becoming reality. This work,which is undertaken in accordance withCOSO (Committee of Sponsoring Organisationsof the Treadway Commission) willcontinue to be assigned a high priority asthe company grows and develops.Operating risksStore openings in the United KingdomThe store openings in the United Kingdom,with its population of 60 million, give rise toopportunities for Clas Ohlson in the formof another market, but also entail risks. Oneof the risks is that the brand is unknown tomost people and is expected to take a longtime to establish. Further information onthe start-up of the UK operation is providedon page 11.Purchasing in AsiaClas Ohlson currently purchases about 35per cent of its products from Asia, mostlyfrom China. The percentage of purchasesmade in Asia is to be further increased byestablishing Clas Ohlson’s own purchasingcompany, thus strengthening the company’scompetitiveness in its continued expansion.The increased exposure to a single countrywill entail an increased risk (political risks,transport risk, etc.).CompetitionThere is a clear trend in the European retailsector for large nationwide chains to grow,generally at the expense of smaller, indi-vidual specialist dealers. The large chains arealso becoming established in more countriesboth with their own stores and throughacquisitions. The players in the market haveconsequently become both fewer in numberand larger in size. Competition intensifiedduring the year, particularly in Sweden, as aresult of more stores and shopping centres.LogisticsClas Ohlson’s distribution centre in Insjönrepresents the hub of the entire Group’slogistic chain. Goods are distributed fromhere to all the stores and to mail order/Internetcustomers. Further expansion is underway,which will further enhance the efficiencyof logistics. There are, however, risksin having logistics concentrated in one place.This applies for example to interruptions tocommunication and infrastructure, fires orstrikes. The investment in the distributioncentre also involves higher overheads, whichcould have a negative impact on profitabilityif Clas Ohlson’s growth rate declines. Forfurther information, see pages 22-23.Key individualsAn increasingly important factor for successis the ability to attract and retain key skills.Clas Ohlson’s principles of remunerationwere changed during the financial year tocontain a long-term share-related incentivescheme. For further information, see page76. The company’s geographical locationnecessitates flexible work patterns, which area key element in attracting key individualsfrom elsewhere. Without these options, thecompany would face the risk of key individualsmoving to other work locations.Corporate Social Responsibility (CSR)Society is increasingly focusing on issuesinvolving Corporate Social Responsibility(CSR). Clas Ohlson works actively on theseissues, which are regarded as strategicallyimportant and as an element in pursuingsustainable operations. If the company failsfrom this point of view, it risks losing salesand market shares. For further informationon Clas Ohlson’s sustainable developmentactivities, see pages 33-48.Product rangeThe company’s most important task is tooffer its customers a broad and attractiverange. If Clas Ohlson misjudges new trendsor product areas, this could result in lowergrowth and profitability.24 OperationsClas Ohlson 2008/09

Clas Ohlson 2008/09 Operations 25

NOK/SEK exchange rate1,301,201,101,00M J J A S O N D J F M ANorway accounts for more than onethird of Clas Ohlson’s sales. At the startof the financial year on 1 May 2008, the10exchange rate for the Norwegian krone(NOK)8was SEK 1.17 against SEK. Theexchange rate then weakened during thesummer 6 and autumn and subsequentlyappreciated considerably during the4winter. On 30 April 2009, it was SEK 1.22,up 2 4 per cent.0The highest exchange rate during theM J J A S O N D J F M Afinancial year was SEK 1.30, recordedin March 2009, while the lowest wasSEK 1.10, noted in October 2008. Theaverage exchange rate for 2008/09 wasapproximately SEK 1.18, compared withSEK 1.17 in 2007/08.ShrinkageClas Ohlson is exposed daily to variouskinds of shrinkage, such as shopliftingand theft. The company makes effortsto reduce shrinkage through long-termactive prevention in the form of trainingprogrammes, technical equipment andcontinuous follow-up and evaluation ofsecurity measures.Financial risksEconomic climateThe retail sector in Sweden, Norway, Finlandand the UK was negatively affectedby the sharp downturn in the economy thatemerged in September 2008. Although ClasOhlson sells products that people need intheir everyday lives, sales were adverselyimpacted by the weakening in retail sales.Nevertheless, the company’s broad andaffordable product range is less sensitiveto fluctuations in the economy than manyother retail companies. More than 80 percent of Clas Ohlson’s products cost lessthan SEK 300. The company’s wide range,with five different product categories, alsoentails a lower risk since demand in onecategory may rise, while demand in otherdiminishes.Wage inflation in manufacturing countriesClas Ohlson is affected by changes in wagelevels in the countries where the company’sproducts are manufactured. The changecan vary between different productsdepending on the percentage of the manufacturingprocess that is labour related.Sensitivity analysisImpact on profitFactor Change before tax, SEK MVolume of sales +/– 5 per cent +107/–118Currency– NOK +/– 5 per cent +/– 44– USD +/– 5 per cent –/+ 29– HKD +/– 5 per cent –/+ 13– EUR +/– 5 per cent +/– 4The company has relatively considerable exchange-rate exposure through its sales in Norway andthrough the Group’s purchasing.The table shows how earnings are affected by changes in the principal currencies.It also shows how earnings are affected by a change in volume of sales for comparable units.Commodities pricesPurchasing prices for the company’s productsare affected to a relatively large extentby prices for individual commodities on theworld market. This applies in particularto electrical equipment (copper), batteries(zinc), lighting (aluminium) and plasticproducts (oil). The company does not directlyhedge its purchases of raw materials, whichgives rise to a risk since the purchase pricesfor the products concerned are affected bytrends in commodities prices, while sellingprices are fixed during the catalogue period.CurrenciesThe company has relatively high exchangerateexposure through its sales in Norwayand through the Group’s purchasing.Approximately 42 per cent of purchases aredenominated in currencies other than SEK.The principal currencies for purchasingare the US dollar (USD), Hong Kongdollar (HKD) and euro (EUR). In addition,movements of SEK against the Norwegiankrone (NOK) are significant to the Groupsince Norway accounts for more than a thirdof sales. Net exposure to EUR is low, sincethe company is increasing its sales in EURthrough its expansion in the Finnish market.The table below shows how profit isaffected by a change in volume of sales forexisting units and changes in the principalcurrencies.Currency hedgingEstimated exchange rates for each currency,set in June and January each year, are usedwhen pricing products in the main catalogue.About 50 per cent of the expectedflow is hedged six months ahead. As a result,the company is guaranteed the estimatedexchange rate for a large proportion of itspurchases, but at the same time takes the riskof paying for the remaining purchases at thecurrent rate.Hedging in USD, HKD and NOK wascarried out during the financial year.Currency movementsNOK strengthened in relation to SEK duringthe financial year. The average exchangerate for NOK was SEK 1.18, up 1 per cent upon the average rate for the 2007/08 financialyear, when it was SEK 1.17. This had a positiveimpact on sales since more than a third ofsales take place in NOK.USD strengthened against SEK in thepreceding financial year. The averageexchange rate during the 2008/09 financialyear was 12 per cent higher than in thepreceding year (about SEK 7.30 comparedwith SEK 6.50). The same applies to HKD,since it is pegged to the USD exchange rate,and both currencies have therefore shown anidentical trend. The Chinese currency RMBstrengthened 35 per cent against SEK.26 OperationsClas Ohlson 2008/09

Clas Ohlson 2008/09 Operations 27

Shares and shareholdersOne of Sweden’s largestAnnual General MeetingsClas Ohlson B shares are listed on NasdaqOMX Nordic Exchange and have beenlisted on the Stockholm Stock Exchangesince 1999. The issue price was SEK 106,which following the split (4:1) in October2001 and the additional split (2:1) implementedin October 2004 became SEK 13.25.During the financial year, 1 May 2008 to30 April 2009, the share price declined fromSEK 98 to SEK 94, or by 4 per cent. TheAffärsvärlden General Index decreased 26per cent during the same period. The lowestprice paid during the period was SEK51, quoted in December, while the highestprice paid during the period was SEK 104,recorded in May.Share turnoverDuring the period, 12,958,612 Clas Ohlsonshares were traded on the Nasdaq OMXStockholm Exchange, equivalent to a turnoverrate of 22 per cent. The total turnoverrate on the OMX Nordic Exchange duringthe same period was 128 per cent.Clas Ohlson’s total market capitalisationon 30 April 2009 was SEK 6.2 billion.total of SEK 58.0 M at an average price ofapproximately SEK 90 per share duringthe first quarter of the financial year. On 30April 2009, the company held 645,000 sharescorresponding to 1 per cent (0) of the totalnumber of registered shares. The number ofoutstanding shares, net after the buy-back,was 64,955,000 at the end of the financialyear.ShareholdersOn 30 April 2009, the company had a total of22,747 shareholders, according to the registerof shareholders maintained by EuroclearSweden, compared with 22,747 on 30 April2008. The ten largest shareholders at thattime held 68 per cent of the capital and 82per cent of the votes.Shareholder categories,percentage of capitalNon-Swedishshareholders, 30 %Swedish privateshareholders, 42 %Market capitalisation, SEK billion1296309.19.89.96.46.204/05 05/06 06/07 07/08 08/09Swedeishinstitutions, 28 %Non-Swedish shareholders accounted for 30per cent of the capital and 38 per cent of thevotes. Swedish institutions accounted for 28per cent of the capital and 16 per cent of thevotes. Swedish private individuals accountedfor 42 per cent of the capital and 46 per centof the votes.Earnings per share, SEKShare capitalThe share capital of Clas Ohlson totalsSEK 82 million, represented by 5,760,000A shares and 59,840,000 B shares, eachwith a quotient value of 1.25. Each A sharecarries ten votes, while each B share carriesone vote. All shares carry equal rights topayment of dividends. Holders of A sharescan request that their A shares be convertedto B shares.Treasury sharesTo ensure the company’s undertakingregarding the conditional matching sharesand the employee stock options under theLTI (Long Term Incentive) 2008, ClasOhlson bought back 645,000 shares for a864204.655.375.886.435.6204/05 05/06 06/07 07/08 08/09Dividend policy and dividendFinancially, Clas Ohlson is positioned togenerate continued favourable growth in itsoperations and is ready to exploit businessopportunities. It is essential that expansioncontinues, as it has done to date, with no lossof financial strength or freedom of action.28 Shares and shareholdersClas Ohlson 2008/09

On this basis, the Board has considered thatthe level of dividend payments should beequivalent to around half the profit aftertax. In addition, the Board may proposethat surplus liquidity also be distributed.For the 2008/2009 financial year, theBoard proposes that a dividend of SEK 3.00per share (5.00) be paid.The Board’s proposal is equivalent toabout 54 per cent (78) of Group’s profit aftertax and 13 per cent (22) of Group equity.Dividend per share, SEK5432102,5024,004,505,0013,0004/05 05/06 06/07 07/08 08/091 Proposed dividend2 Including extraordinary dividend of SEK 1.00Shareholder informationSince Clas Ohlson is intent on keeping themarket continuously informed of its salesfigures, these figures are reported as oftenas once a month. The information is issuedin a press release mid-way though thefollowing month. Clas Ohlson’s financialresults are presented four times a year,at the end of each quarter. The companydistributes a printed annual report by postto all shareholders who so request and alsoregularly sends interim reports to those whoexpress an interest in receiving them. Theinterim reports can be received by e-mail orin a printed version by post, depending onpreference.All financial information regarding ClasOhlson is presented on the company’s website.Both press releases and reports appearthere the moment they are published.The website contains all the press releases,interim reports and annual reports that thecompany has published since its initial listingon the stock exchange in October 1999.The prospectus for the initial public offeringcan also be downloaded as a PDF file.In addition, analysts’ presentations thatthe company holds around the time of thepublication of its interim report can be viewedon the website, www.clasohlson.se.The Clas Ohlson Annual General Meeting is oneof the most well-attended shareholder meetings,attracting nearly 2,000 participants. Astradition dictates, the 2008 Meeting was held atthe distribution centre in Insjön.External analysesA number of stock market analysts regularlymonitor Clas Ohlson and presentanalyses of the company and its shares.These include:ABG Sundel CollierCarnegieDanske BankErik PenserHandelsbankenHQ BankNordeaRedeyeSEB EnskildaSwedbankÅlandsbankenÖhmanClas Ohlson 2008/09 Shares and shareholders 29

Clas Ohlson200B−share OMX Stockholm_PI SX255040 Speciality Retail_PINumber of sharestrades (000s)1501005010,0008,0006,0004,0002,00062000 2001 2002 2003 2004 2005 2006 2007 2008 2009© NASDAQ OMX110B−share OMX Stockholm_PI SX255040 Speciality Retail_PINumber of sharestrades (000s)1009080706050JUN JUL AUG SEP OCT NOV DEC JAN FEB MAR APR MAY JUN2008 2009© NASDAQ OMX1,4001,2001,000800600400200Data per share2008/09 2007/08 2006/07 2005/06 2004/053Number of shares, millions 65.1 65.6 65.6 65.6 65.6Earnings per share, SEK 5.62 6.43 5.88 5.37 4.65Gross cash flowper share, SEK 7.04 7.71 7.02 6.32 5.40Equity per share, SEK 22.99 22.86 20.84 19.16 16.14Share price at 30 April, SEK 94 98 150 149 1391 2Dividend per share, SEK 3.00 5.00 4.50 4.00 2.50P/E ratio, multiple 17 15 26 28 30Share price/gross cash flow, multiple 13 13 21 24 26Price/equity ratio, % 409 430 722 778 861Dividend yield, % 3.2 5.1 3.0 2.7 1.8Payout ratio, % 54 78 77 74 541Proposed dividend.2Including extraordinary dividend of SEK 1.00.3Average number of shares before and after dilution.30 Shares and shareholdersClas Ohlson 2008/09

Trend in share capitalAdditional Accumulated TotalYear Transaction shares no. of shares share capital1994 48,000 4,800,0001999 Split 10:1 432,000 480,000 4,800,0001999 Bonus issue 6,720,000 7,200,000 72,000,0001999 New share issue 1,000,000 8,200,000 82,000,0002001 Split 4:1 24,600,000 32,800,000 82,000,0002004 Split 2:1 32,800,000 65,600,000 82,000,000The major shareholders*Number of Number of Percentage PercentageShareholder A-shares B-shares of capital of votesMary Haid 2,735,880 11,905,200 22.3 33.4Helena Tidstrand 1,368,060 7,229,328 13.1 17.8Johan Tidstrand 1,368,060 4,809,328 9.4 15.7Håkan Thylén 288,000 1,186,800 2.2 3.5AFA Försäkring 4,170,026 6.4 3.6IF Skadeförsäkring 3,134,097 4.8 2.7Second Swedish National Pension Fund 2,682,800 4.1 2.3Anders Moberg 1,380,000 2.0 1.1Lannebo fonder 1,228,395 1.9 1.0Skandia Liv 1,000,600 1.5 0.9SEB Fonder 918,240 1.4 0.8Other shareholders 20,195,186 30.9 17.3Total 5,760,000 59,840,000 100.0 100.0Shareholder categories*Number of Number of Percentage PercentageShareholder A-shares B-shares of capital of votesSwedish private individuals 3,024,120 24,566,816 42.1 46.7Swedish institutions 18,527,831 28.2 15.8Non-Swedish shareholders 2,735,880 16,745,353 29.7 37.5Total 5,760,000 59,840,000 100.0 100.0Shareholding structure*Number ofSize interval Number of shares Percentage shareholders1–500 2,740,376 4.2 16,278501–1,000 3,282,631 5.0 4,0421,001–5,000 4,364,382 6.7 2,0495,001–10,000 1,528,193 2.3 20610,001–20,000 1,005,194 1.5 6920,001–100,000 2,937,772 4.5 79100,001–500,000 1,488,771 2.3 9500,001– 48,252,681 73.6 15Total 65,600,000 100.0 22,747*at 30 April 2009Clas Ohlson 2008/09 Shares and shareholders 31

32 Hållbar utvecklingClas Ohlson 2008/09

Sustainability reportPages 33 – 48Clas Ohlson 2008/09 Sustainable development 33

Sustainable developmentImportant steps for long-termsustainable operationsOrganisational outlineBoard of DirectorsGroup managementCSR forumThe establishment of a purchasingoffice in Shanghai is a vital step in ClasOhlson’s efforts to achieve sustainabledevelopment. For the 2008/2009 financialyear, we are conducting sustainabilityreporting according to the GlobalReporting Initiative for the first time.Clas Ohlson is a pure retailer that offers abroad range of hardware, home, multimedia,electrical and leisure products. We have106 stores in Sweden, Norway, Finland andthe UK. In Sweden and Norway, we alsosell through mail order/Internet.Our head office and distribution centreis in Insjön, Dalarna, and we have a total ofapproximately 3,000 employees. We have15,000 different articles in our range butown no factories. Instead we cooperate with600 suppliers and 750 manufacturers in 30countries. The impact of our operations onpeople and the environment is described inthis report, as is our work on sustainabilityissues.The following strategies are used to achieve the targets:StrategyCode of ConductEnvironmentalgroupThe CSR perspective shall be anintegral part of Clas Ohlson’s processes,such as purchasing, logistics, sales andcommunication, and HR.Establishment of operations in Asiato develop cooperation with oursuppliers and manufacturers.The CSR perspective shall bea commercial force and we shallrapidly act and react to relevant trendsand opportunities in the businesscommunity and our market.Cooperation with other organisations todevelop our CSR work and our ability toreport the improvements achieved.Open dialogue with our stakeholdersand opinion-builders pertaining to ourCSR work.Activity- Training of managers and employees- CSR forum including representativesof Clas Ohlson’s Group management.- Formation of a CSR organisationin China- Proactive search for strong trends thatgenerate business opportunities involving:• Logistics and purchasing• New products featuring smart solutionsthat contribute to improving conditionsfor people and the environment- Comply with leading standards that areaccepted among our stakeholders andopinion-builders.- GRI reporting.- Participation in the UN initiative forhuman rights, UN Global Compact.- Identify and develop relationships withindividuals and organisations inthe CSR area.- Improved CSR communication bothinternally and externally.Basis for Clas Ohlson’s CSR workOur business concept is to make it easy forpeople to solve the little practical problemsin everyday life. Our own operations andthose of our suppliers and manufacturersare subjected to demands concerning workingconditions and other human rights,work environment and environmentalimpact. Through a sustainable businessconcept and operations, Clas Ohlson aims tocreate value for its shareholders, customersand employees, as well as for the communityas a whole.Clas Ohlson aims to contribute tosustainable development and protect livingconditions for future generations.Work to contribute to sustainablecommunity development is of criticalimportance to our business operations;in part due to increasing demands fromcustomers, employees and other stakeholdersand in part due to the new businessopportunities that sustainability issuesgenerate for Clas Ohlson. All major investmentdecisions shall also take human rightsinto account.Our corporate culture is distinguishedby the specific Clas Ohlson spirit, which ischaracterised by responsibility, team spirit,mutual respect and an open exchange ofthoughts and ideas. Clas Ohlson’s cultureand tradition also include caring aboutcustomers, employees and the communityas a whole.Goals for Clas Ohlson’s CSR workClas Ohlson shall be viewed as a responsibleretailer whose environmental impact andcontrol of human rights and the work environmentare considered acceptable.Clas Ohlson’s CSR organisation andresponsibilityClas Ohlson’s CRS forum comprises theCEO, Director of Information, PurchasingManager, Head of the Distribution Centre,HR Manager, Environmental Coordinator,Internal Controller and the Code of ConductManager.The CSR forum makes decisions pertainingto goals, strategies and activities forthe entire Group’s CSR work and monitorswhether the company is effectively workingtoward the established goals.The CEO has overall responsibility,and the CSR work is integrated into andencompasses the entire organisation.34 Sustainable developmentClas Ohlson 2008/09

Clas Ohlson works according to the philosophythat sustainability issues require anoverall approach and that these issues mustpermeate the entire organisation and thevarious operations. This entails involvingthe entire organisation, down to eachindividual employee, in efforts to achieve asustainable society.Policies and reporting period for ClasOhlson’s sustainability reportThis is the first sustainability report thatClas Ohlson has prepared, and it is basedon recent guidelines from the GlobalReporting Initiative (GRI). Clas Ohlsonhas chosen to report at C level.* A crossreferencetable illustrating where in ClasOhlson’s Annual Report, sustainabilityreport and website the various GRI indicatorsare found is presented on page 48.The information and key figures providedin the sustainability report are selectedbased on significance and relevance fromClas Ohlson’s sustainability perspective andaccording to requests from our stakeholders.The sustainability report pertains to the2008/2009 financial year, meaning the 1May 2008 – 30 April 2009 period. In somesections, information, key figures and diagramsfor the 1 January 2008 – 31 December2008 period are presented.RestrictionsThe sustainability report encompasses ClasOhlson’s own operations, meaning ourdirect impact on people and the environment,but also the impact of our suppliers’and manufacturers’ operations on peopleand the environment.We consider the entire lifecycle of theproduct, meaning how it is manufacturedand used and its impact on the environmentwhen its operational life is over.In terms of suppliers and manufacturers,we are responsible for placing demands,developing long-term relations and supportingthese stakeholders in their efforts toachieve improvements concerning humanrights, working conditions, the work environmentand environmental impact. Wealso conduct continuous checks and auditsand terminate cooperation with manufacturersthat will not or cannot live up to ourdemands.Clas Ohlson’s stakeholders and targetgroupsClas Ohlson’s key stakeholders and targetgroups are customers, employees, shareholders,suppliers and manufacturers, as wellas the public.We engage in a continuous dialogue withkey stakeholders and also conduct internaland external surveys to ensure that we keepabreast of opinions and requests concerningthe company’s operations and development.Our stakeholders’ expectations anddemands concerning Clas Ohlson differ.An open dialogue will generate increasedknowledge and assist in establishing theaspects of our sustainability efforts thatneed improvement.We engage in regular meetings with anumber of funds and asset managementcompanies and their sustainability analystsconcerning various CSR issues and the opportunitiesand challenges facing Clas Ohlson.Several of these analysts have also beenon factory visits to monitor how we inspectand check our manufacturers in Asia.Employee surveysOur work environment survey shows ahigh level of job satisfaction and an excellentworking environment. In the comingfinancial year, an employee survey thatencompasses the entire Group will bedeveloped.Local commitmentClas Ohlson has a long tradition of supportingvarious local projects and organisationsin Dalarna, where Clas Ohlson wasfounded and where the head office and distributioncentre are located. Our major commitmentsinclude sponsoring the LeksandsIF ice hockey team and the Olympic rowerLassi Karonen. Clas Ohlson also supportsDalhalla, outside Rättvik, one of Sweden’slargest music stages. During the financialyear, we also opened a Clas Ohlson museumwhere customers, employees and the publiccan learn more about the company’s 90-yearhistory.For the 2008/2009 financial year, Clas Ohlsonintroduced sustainability reporting accordingto the international auditing standard GlobalReporting Initiative (GRI).Our storesIn conjunction with store establishments,Clas Ohlson cooperates with municipalities,regions and government authorities. Thestores share a common interest in creatinga vibrant local business community,particularly in the city locations where ClasOhlson primarily establishes stores. Centrallocations mean that people are able to shopwhere they spend their workdays, thusreducing the need for car journeys to shoppingcentres outside the city centre.Significant events during 2008/2009During the financial year, considerableenergy was devoted to establishing ourpurchasing office in Shanghai, where wenow also have a CSR division for monitoringsuppliers and manufacturers. Duringthe financial year, 357 factory visits wereconducted in Asia, compared with 40 in thepreceding year.Clas Ohlson is participating in theCarbon Disclosure Project, an internationalclimate initiative. During the financial year,Clas Ohlson’s report was ranked among thetop ten in the CDP Nordic Report 2008.We signed an agreement with Dalakraftpertaining to renewable electricity for thedistribution centre and offices at Insjön,as well as some 25 stores in Sweden. Inaddition, bio-based district heating is beingintroduced in our properties at Insjön.These changes imply a significant reductionin CO2 emissions.A decision was made to join the UNGlobal Compact and that Clas Ohlson willreport its sustainability work in accordancewith GRI.*GRI application levelsThe guidelines have three different applicationlevels: C, B and A. The reporting criteriaat each level reflect a measure of the extentof application or coverage of the GRI ReportingFramework. At each level, a “plus” (+)may be added, meaning that the item in thereport has been verified externally.Clas Ohlson 2008/09 Sustainable development 35

Sustainable developmentOur employees and the Clas Ohlson spiritClas Ohlson’s employees are the core ofthe Clas Ohlson brand. A comment wefrequently hear from our customers isthat they expect a little bit more of ClasOhlson, that we provide good service andthat we have pleasant and knowledgeablestaffClas Ohlson aims to be a responsibleemployer that can attract and retain the bestemployees in the industry. To attain this goal,we place great emphasis on recruitment, continuousdevelopment of skills and a corporateculture based on shared values.The Clas Ohlson spiritOur corporate culture is characterised byfounder Clas Ohlson’s strong entrepreneurshipand personal concern for both customersand staff. The special Clas Ohlson spiritdeveloped over the years is characterised byexcellent ethics, mutual respect, cooperationand an open exchange of thoughts and ideas.All contacts between staff and customersshould be characterised by respect, warmthand service-mindedness. The aim is thatthe customer shall always be satisfied withhis/her visit to our stores.Preserving and developing the corporateculture is one of our major challenges andthe responsibility of each employee. Ourmanagers have a specific responsibility to berole models, and great emphasis is placed ontheir ability to communicate, delegate anddevelop the employees in their teams. Ourrapid rate of expansion – with 20 new storesand more than 700 new members of staffduring the financial year – makes this all themore important.Rules and guidelinesNaturally, Clas Ohlson always complies withapplicable agreements and legislation concerningthe line of business pursued in eachcountry. With regard to work environmentissues, we comply with EU legislation. Tofacilitate HR work and ensure that Clas Ohlsonacts in the same manner in all markets,policies have been established by the Board ofDirectors that pertain to the entire GroupThe key policies in the HR area are:• Staff policy• Work environment policy• Gender equality policyAll new employees receive a personalcopy of the staff manual, which containspolicies and regulations as well as a detaileddescription of work assignments for variouspositions so that everyone is aware of whatcan be expected from the company andwhat the company expects of the employee.Organisation and responsibilityOn 30 April 2009, the number of employeestotalled 3,100. Of these, 1,754 were full-timeemployees and 1,346 part-time employees.During the financial year, 700 new storeemployees were recruited. Of these, 40 percent were employed in Norway, 21 per centin Sweden, 16 per cent in the UK and 14 percent in Finland.Total number of employees3,2002,4001,60080002,0302,3422,6452,9743,10004/05 05/06 06/07 07/08 08/09Successful HR work is crucial to the successof our expansion. In 2008, an HR manager,who is also a member of Group management,was appointed for the entire Group.We also have a Competency DevelopmentManager and a Training Manager in eachcountry.Diversity enrichesWe firmly believe that an inspiring workenvironment and good results are achievedthrough an even distribution of staff withdifferent experiences and background.No one shall be discriminated against dueto gender, age, belief, sexual preferenceTotal Store employees Supervisors Store managers SalariedworkersTotal number oftraining hoursAverage peremployeeOthermanagersStockroomworkersSupervisors,Distribution centre46,310 3,137 4,537 763 149 1,143 84 56,12322.1 14.2 42.8 3.0 4.6 2.8 4.9 30.0Total36 Sustainable developmentClas Ohlson 2008/09

or ethnic and national background. TheGroup’s gender equality policy underliesour gender equality plan, which is regularlyupdated. The aim in recent years has beento attain more even gender distribution ineach department, primarily through strategicskills development and secondarily byassigning priority to even gender distributionwhen filling new vacancies.The objective is that neither gendershould account for less than 40 per cent inthe occupational category concerned.Number of employees, men/womenWomen, 41 % Men, 59 %During the financial year, womenaccounted for 41 per cent of Group employees,which is unchanged compared withthe preceding year. The portion of womenamong senior management in the Grouptotalled 22 per cent, also unchanged comparedwith the preceding year. In Sweden,women accounted for 39 per cent of storemanagers, down 6 per cent, which also correspondsto the decrease at Group level.Many want to work at Clas OhlsonClas Ohlson is regarded as an attractiveemployer, and interest in working for us iskeen. This is particularly evident from thenumber of applications to work in our newstores. To make the recruitment processmore efficient and to ensure quality, ITsupport has been developed. This enables usto improve quality in the selection processand ensure that we cover the skills requiredto deal with customers in the best possibleway.During the recruitment process, we alsotake into account the individual’s potentialto develop in the company, thus securingClas Ohlson’s future requirement of goodleaders.Employees per countryUK, 4%Finland, 9%Norway, 28%Sweden, 59 %Expansion generates exciting careeropportunitiesClas Ohlson’s rapid expansion implies, andcreates the right conditions for ensuringthat, our employees develop within thecompany. A high proportion of internalrecruitment also facilitates the continuityand tradition we aim for. Of the 50new managers appointed in the financialyear, 50 per cent were recruited within thecompany.We regard internal recruitment as vitalto the development of the individual andthe company. Vacancies are always advertisedon our intranet to give all employeesthe opportunity to apply. Work is inprogress to clarify internal career routesand incorporate career planning and careeradvancement in employee-developmenttalks as part of managerial responsibility.In connection with the establishment ofnew stores, project teams are appointed inwhich staff from head office, the distributioncentre and various stores participatein the preparations required to open a newstore. We have high mobility between ourstores, and interest in working in othercountries is increasing.A solid introductionAt Clas Ohlson, considerable emphasisand care is devoted to introductory trainingcourses to integrate new staff into ourcorporate culture. The training coversClas Ohlson’s history and values, customerrelations, customer service policy, productknowledge, work procedures and informationabout Clas Ohlson’s social responsibility.The training courses are mainly held onsite at Insjön, in Dalarna.During the financial year, we customisednew training courses for the newly startedoperations in the UK, and slightly morethan 30 individuals from these operationsparticipated in training courses at Insjön.Other employees received the training onlocation in the UK.Continuous skills developmentThe Clas Ohlson Academy, our internalClas Ohlson 2008/09 Sustainable development 37

A young organisationEmployees younger than 29 account for alarge proportion of our staff, which is naturalas many of the employees in our storeswork part-time. It is common for studentsto work in one of the Clas Ohlson stores atweekends and evenings.Age breakdown – StoresOver 50 years30-49 yearsBelow 29 yearsAge breakdown – Distribution centreOver 50 years30-49 yearsBelow 29 yearsAge distribution – Salaried employeesOver 50 years30-49 yearsBelow 29 yearsdevelopment centre, combines our developmentand training operations. The purposeof the Clas Ohlson Academy is to ensurethat the company has the skills required forthe future and to create the necessary conditionsfor internal career paths. Anotherimportant task is to nurture, develop anddisseminate the Clas Ohlson spirit.A survey of the total training requirementfor the Group is conducted annually,and the range of courses includes both mandatoryand voluntary training programmes.Through video conferences andinteractive product training courses, werapidly and easily reach all employees in anenvironmentally and cost-effective mannerand make sure that our employees are wellprepared to provide advice and guidance onour products.The mandatory managerial coursesinclude training in employee-developmenttalks, labour law, the work environmentand rehabilitation. In autumn 2009, atrainee programme for young employeeswho want to grow with the company willbe introduced.Competitive salariesClas Ohlson’s annual work environmentsurvey includes all markets and all employees.It is also evident that Clas Ohlson ischaracterised by a high level of job satisfactionand an excellent work environment,which is also apparent in low staff turnoverand low sickness figures in relation to theindustry.According to Clas Ohlson’s salary policy,salaries shall be based on competency andperformance, be competitive and match orsurpass those of other companies in the industry,when the company achieves its goals. Allemployees have some form of profit-basedsalary, in addition to their fixed salary, regardlessof whether they work in stores, at thedistribution centre or at head office.Our employees also receive such benefits ashealthcare contributions and staff discounts.Staff turnoverStaff turnover among full-time employeesin the Group averaged 8.8 per cent (precedingyear: 9.0 per cent). Turnover is higheramong part-time employees (45.8), which isnatural as we have large numbers of studentsworking part-time during their studies. Staffturnover among our employees at Insjön, atthe head office and in the distribution centreover the same period was 3.2 per cent (precedingyear: 1.9 per cent).Staff turnover1296303.76.16.69.08.804/05 05/06 06/07 07/08 08/09Number of employees* Sweden Norway Finland UK TotalStores 1,170 796 270 108 2,344Distribution centre 324 0 0 0 324Salaried employees 332 78 16 6 432Total 1,826 874 286 114 3,100– of whom women, % 41 38 45 41 41Average period of employmentin the company is* Sweden Norway Finland UK TotalSalaried employees 7 6 4 0.5 6Stores/Distribution centre 6 2 2 0.5 4Average absencedue to sickness, % Sweden Norway Finland UK TotalTotal absence due to sickness 3.5 5.4 4.4 1.8 3.6– of which, long-term sick leave 28 41 8 0 27– of whom, men 2.7 3.8 4.0 1.9 2.8– of whom women, % 4.7 8.0 4.7 1.6 4.8– of whom, employees aged below 29 2.7 4.3 3.9 1.9 2.9– of whom, employees aged 30–49 4.0 6.8 5.0 1.7 4.1– of whom, employees aged over 50 4.4 7.1 0.0 0.2 4.5Preventive healthcareThe overall aim of our health and fitnessefforts is that Clas Ohlson shall offer a goodwork environment where our employeescan have a sense of security, job satisfactionand community. Our health strategy is basedon creating the necessary conditions forboth physical and mental well-being at theworkplace. The health perspective forms anatural part of our systematic work environmentactivities. In order to keep this alive,we regularly provide information to ourtrade union safety representatives and healthpromoters, who pass the information on totheir colleagues.Total sickness absence in 2008/09 was 3.6per cent, down by 0.3 percentage points on2007/08 (3.9 per cent). The proportion of totalsickness absence accounted for by staff onlong-term sick leave during the same perioddecreased from 31 per cent to 27 per cent.* 30 April 200938 Sustainable developmentClas Ohlson 2008/09

Clas Ohlson 2008/09 Sustainable development 39

Sustainable developmentOur social responsibilityand human rights effortsThe Code refers to:• UN Convention on Human Rights• UN Convention on the Rights of the Child(1989)• ILO Convention on the Minimum Age forEmployment (no. 138, 1973)• ILO Convention concerning the prohibitionand immediate action for the elimination ofthe worst forms of child labour (no. 182,1999)• ILO Declaration on Fundamental Principlesand Rights at Work (1998)Our Code of Conduct is currently availablein Swedish, Norwegian, Finnish, English andChinese.Clas Ohlson aims to contribute to promotinghuman rights in countries whereit operates. With our own employeeson location in China, we are able toinfluence and strive to improve conditionsfor the people who are involved inthe production of the products that wepurchase for our range.Clas Ohlson is a pure retailing companyand purchases approximately 15,000 differentarticles from more than 750 manufacturersworldwide, which we sell throughour store network and mail order/Internet.We want to contribute to an improvedwork environment and working conditionsfor the staff of the manufacturers withwhom we cooperate and to ensure that theenvironmental impact of the products is aslow as possible throughout their entire lifecycle.These are long-term and complicatedefforts that require commitment and inputfrom the entire organisation and from thesuppliers, manufacturers and other organisationswith which we cooperate.Challenges included insupplier-control effortsOf the products we sell, slightly more thanhalf are manufactured in Asia and one thirdof these are imported directly from varioussuppliers and manufacturers. We have aparticular responsibility and major opportunitiesto exert a positive influence onthese purchases by checking and supportingthe suppliers in their efforts to improveconditions for their employees and for theenvironment.Challenges faced by Clas Ohlson whenworking with suppliers in Asia include:• overtime wor• no or weak trade unions• low level of knowledge amongemployees about their rights• deficient work environment andinadequate protective equipment• corruption, for example falsified timereports, bribes and other practices thatmake it more difficult to conductchecks.All companies that directly or indirectlyoperate in Asia face these challenges and can,in various ways, contribute to improving theconditions. Clas Ohlson’s strategy is to use acombination of in-house CSR auditors andexternal audit firms. Our new purchasingoffice in Shanghai, with five CSR auditorson site, has increased our capacity to ensurecompliance with the Code of Conduct.For many manufacturers, Clas Ohlson isa small customer. To increase our opportunitiesto influence and change, we will lookfor ways to cooperate with other companiesand organisations to jointly influence variousmanufacturers.During the 357 audits conducted in thefinancial year, 16 observations were madeconcerning discrimination, primarily in theform of specific age and gender requirementsbeing stated in vacancy advertisements.In these cases, Clas Ohlson demandedthat the advertisements be changed and thatthe company adopt a policy against discrimination.During the audits, 29 observations weremade concerning restrictions on freedom ofassociation. Clas Ohlson has demanded thatthese suppliers introduce a system that willremove this obstacle.During the financial year, Clas Ohlsonmade an observation at a manufacturerregarding a case of suspected child labour,meaning a worker under the age of 16 years.In 23 additional cases, various factories didnot have satisfactory documentation in theform of ID documents to establish the ageof employees. In these cases, Clas Ohlsondemanded that the companies introduce apolicy against child labour and procedures tomaintain a register of ID documents.During the financial year, five observationswere made pertaining to the risk offorced labour. This involved requesting asalary deposit in order to work at the factory,the inability to guarantee that overtime workwas voluntary or the absence of a policy forpreventing forced labour. In these cases, ClasOhlson demanded that these activities ceaseand that the factory introduce policies orprocedures to prevent forced labour.History1998 Policy concerning child labour2001 Environmental policy2004 Launched process of developing and introducing a Code of Conduct2005 Adoption of the Clas Ohlson Code of Conduct for suppliers by the Board and publication2006 Adoption and testing of material for our systematic Corporate Social Responsibility work2007 First external Corporate Responsibility audits carried out2008 Establishment of a Corporate Social Responsibility organisation in ShanghaiWe shall contribute to promotinghuman rightsClas Ohlson shall contribute to promotinghuman rights in the countries in which itoperates. We have a responsibility not justfor our own employees but also for those40 Sustainable developmentClas Ohlson 2008/09

who work for our suppliers.Our responsibility includes exertingdemands and developing long-term relationshipsand supporting our suppliers andmanufacturers in their efforts to achievesustainable improvements in workingconditions, the work environment and thegeneral environment.Our Code of ConductThe Clas Ohlson Code of Conduct refers tointernational conventions and national legislationand regulations. It supports the UNGlobal Compact and the OECD guidelinesfor multinational companies. The Code ofConduct includes the demands concerningworking conditions, the work environmentand environmental impact that we place onour own operations and those of our suppliersand manufacturers.The Code of Conduct includes• Statutory requirements• Work environment- Health and safety- Housing• Working conditions- Discrimination- Forced labour- Disciplinary measures- Child labour- Pay and working hours- Freedom of association and the rightto collective pay bargaining- Alcohol and drugs• Environment• Application and follow-upWe aim for long-term relations with oursuppliers and manufacturers and place ourtrust in an active dialogue and cooperation.As we work with the Code and learn fromour experiences in its implementation, itwill be gradually adapted and developed.GoalsClas Ohlson aims to be a responsible companywith acceptable influence and controlof human rights and the work environmentfor its own employees as well as those of itssuppliers and manufacturers.During the financial year, Clas Ohlsonformed a control organisation in Chinawith the capacity to implement up to 400factory visits per year. With this controlorganisation on site, we can conduct regularinspections (at least every other year) atour manufacturers, check that our Codeof Conduct is followed and influencelong-term conditions for people and theenvironment.OrganisationOur CSR work shall be an integral part ofClas Ohlson. Certain divisions work moreon our internal CSR responsibility, forexample our HR division and the distributioncentre, while others work more on ourexternal CSR responsibility, primarily ourpurchasing division and the CSR division inShanghai.The work is targeted, planned andmonitored by Clas Ohlson’s CSR forum(read more on page 34).Our CSR division in Shanghai comprisesa CSR Manager, Supply Chain, a CSR coordinatorand five CSR auditors to conductaudits on manufacturers throughout China.Our CSR division is responsible for assessing,checking, monitoring and training/Clas Ohlson has established an office in Shanghai,China with purchasers and auditors whovisit our suppliers and manufacturers to checkcompliance with our Code of Conduct.informing suppliers and manufacturers.Clas Ohlson’s purchasing division andthe CSR organisation are jointly responsiblefor ensuring that suppliers and manufacturerssign and comply with our Code ofConduct requirements. A major portionof the assignment involves supporting oursuppliers in their efforts to implement continuousimprovements in their operations.Our tools and processesOur Code of Conduct is the principal tool inour efforts to improve working conditionsand the work environment. All suppliers,large and small, must sign the Code. Thevast majority of them are willing to sign theCode and to work, through dialogue withus, toward improving any aspects that arenot satisfactory at the outset. If a supplieris not willing to comply with the Code,cooperation is terminated.Manufacturers must also sign the Code,and all new factories will receive an initialvisit from us or one of our purchasingagents before they may supply products. Wealso work with self- assessments, wherebythe manufacturer completes a comprehensivequestionnaire to identify possibledeficiencies.The most extensive check is conductedduring audits, when our own or externalauditors review the manufacturing facility,interview the staff and study variousdocuments. An audit normally takes oneto two days, depending on the size of theClas Ohlson 2008/09 Sustainable development 41

factory and the number of employees. Thevisit is documented in a report that includesan action plan and measures that must betaken in cases where the manufacturer hasnot complied with the various criteria of theCode.Our aim is to continue cooperating andsupporting manufacturers in their workto improve the situation, providing thatcertain minimum criteria are met.If a serious deviation is identified, it mustbe rectified immediately for the manufacturerto be allowed to continue to act asa supplier to Clas Ohlson. Otherwise thecooperation is terminated.Evaluations and auditsAt the end of the financial year, more than97 per cent of our suppliers and manufacturershad read and signed the Clas OhlsonCode of Conduct.Of the manufacturers with whom wecooperate, 90 per cent had conducted selfassessmentsthat they reported to us.During the financial year, we conducted332 audits using our own auditors, and 25external audits, through an independentaudit firm specialised in social responsibilityand human rights. During the precedingyear, 40 audits were conducted, primarilythrough independent audit firms.At the end of the financial year, 56 percent of our manufacturers in Asia hadundergone an internal or external audit.During the financial year, cooperation wasterminated with 20 manufacturers due tounwillingness or inability to comply withour demands.Training courses and information – akey part of improvement workTraining courses and information areprobably the principal success factors inthe CSR work. During the financial year,we developed a video training courseabout Clas Ohlson’s social responsibility.When recruiting CSR auditors, we onlyemploy experienced auditors. During thefinancial year, they primarily underwentinternal training, but during 2009 they willundergo environmental training developedin cooperation with an external audit firmspecialising in social responsibility, humanrights and the environment.Our purchasing and CSR divisions areworking closely with these issues. Our purchasershave undergone a course in humanrights organised by Amnesty, and we haveheld internal courses with employees fromthe purchasing division.Our CSR division in Shanghai works as acontrol and support organisation that paysregular visits to suppliers and manufacturersto check compliance with the Code andassist them in their work to improve thesocial and environmental aspects of theirmanufacturing through information andtraining courses.Continued development areas during2009/2010Clas Ohlson will:• Continue efforts to assess, check andwork to improve conditions for peopleand the environment at our suppliersand manufacturers• Expand our work involvinginformation and training courses atour manufacturers• Continuously train our CSR auditors• Strive to cooperate with othercompanies and organisations to beable to influence and make furtherimprovements• Strive for improved communication,internally and externally.CSR (Corporate Social Responsibility)CSR means that companies, on their owninitiative, demonstrate active commitmentand responsibility in terms of socialdevelopment.Code of ConductA Code of Conduct encompasses guidelinesthat describe how a company shouldconduct operations, ethically, socially andenvironmentally. It is often based on variousinternational agreements, such as UNand ILO conventions, national legislationand regulations. Requirements can alsopertain to suppliers and manufacturers productionof products. Assisted by the Codeof Conduct, the company will ensure thatproducts are manufactured under satisfactoryworking conditions.Read moreThe complete Code of Conduct is availableon our website at www.clasohlson.se. Moreinformation about Clas Ohlson’s humanrights work is also available there.ILO – International Labour Organisationhttp://www.ilo.org/global/lang--en/index.htmUN – United Nations http://www.un.org/en42 Sustainable developmentClas Ohlson 2008/09

How a CSR audit is carried outAt Clas Ohlson’s office in Shanghai, a number of auditors areemployed to check conditions in factories.An audit normally takes one to two days, depending onthe size of the factory and the number of employees workingthere.Clas Ohlson carries out both internal audits using its ownauditors and external audits through independent organisations.An audit comprises the following steps:Opening meetingReview of current premisesChecking documentsInterviewsConcluding meetingItems that are checked include:Are the fire extinguishers easily accessible and labelled?Are the exits and evacuation routes clear?Do workers have sufficient protective equipment?Do they use hearing protection?Are the chemicals labelled?Are the machines protected?Is there first-aid equipment?Various documents are checked and employees are interviewed, bothindividually and in groups. The visit concludes with a review of anydeficiencies, and a plan is prepared that specifies when the deficienciesmust be rectified.A factory visit begins with a meeting with the manufacturer’s managementteam where the various elements of the audit are reviewed.One of Clas Ohlson’s auditors at the office in Shanghai isAlina. She shares a responsibility-intensive assignment withseveral other auditors whose task is to do everything possibleto ensure compliance with Clas Ohlson’s Code of Conduct.Her day involves a considerable amount of travel in China,where she conducts checks on Clas Ohlson’s various suppliers.“I visit factories several days a week. We auditors start withan opening meeting where we normally meet the owner or asenior executive. At that meeting, we inform them about whatwill occur during the audit. The factory also receives a list ofthe documents that will be reviewed during the audit.”A visual inspection of the factory premises is conducted to inspectsuch items as safety and protective equipment.After the opening meeting, a visual inspection of the factoryand all its premises is conducted, including lunch rooms andresidences. The auditors take photographs to document everythingthey see.The next phase is to review such documents as salary lists,timesheets, ID cards, employment contracts and various typesof certificates and licenses needed by the factory. This is followedby interviews with employees at the factory. Primarily,these occur individually, but sometimes they may also occur ingroups. All interviews are voluntary and it is vital to protectthe individual employee. All interviews are confidential.“Finally, we have a concluding meeting at the factorywhere the auditors provide information about became evidentduring the audit,” says Alina. “If there are deviations, ClasOhlson’s auditors and the factory representatives discussthe improvements that must be implemented, and they alsodecide on a schedule for implementation.”“Later, a follow-up is conducted to ensure that the factoryimplemented the improvements requested by Clas Ohlson’sauditors. This follow-up can be carried out by Clas Ohlson,our representatives or an independent organisation.”Liselott Holmgren is CSR Manager (Supply Chain) at theoffice in Shanghai.“We reserve the right to conduct both announced andunannounced audits of our suppliers. Clas Ohlson pays forthese audits.”Liselott believes that the CSR efforts are challenging andinvolves several aspects of development.“Clas Ohlson shall sell good products, and price, quality,service and the CSR efforts are linked. We have long-termagreements with many of the suppliers in China with whomwe cooperate, which is a clear advantage. Through our longtermrelationships, we have greater opportunities to achievefavourable results in our CSR efforts.”Clas Ohlson 2008/09 Sustainable development 43

Sustainable developmentOur responsibility for the environmentTransport and travel 2008 2007Outgoing freightEnvironmental impact per tonne-kilometreCarbon dioxide, grams 50.6 51.7Nitrogen oxides, grams 0.52 0.61Hydrocarbons, grams 0.023 0.020Total energy consumption, kWh 0.19 0.20Incoming freight – EuropeEnvironmental impact per tonne-kilometreCarbon dioxide, grams 24.1 28.8Nitrogen oxides, grams 0.23 0.28Hydrocarbons, gram 0.016 0.022Total energy consumption, kWh 0.19 0.23Incoming freight – AsiaEnvironmental impact per tonne-kilometreCarbon dioxide, grams 4.55 4.17Nitrogen oxides, grams 0.111 0.104Hydrocarbons, grams 0.004 0.004Total energy consumption, kWh 0.060 0.058Total carbon dioxide, tonnes 9,498 10,483Corporate travelEnvironmental impact per person-kilometreCarbon dioxide, grams 108 119Nitrogen oxides, grams 0.221 0.191Hydrocarbons, grams 0.052 0.070Total energy consumption, kWh 0.423 0.466Total carbon dioxide, tonnes 385 389Good Environmental ChoiceIn 2008, Clas Ohlson was one of the companiesthat fulfilled the criteria for GoodEnvironmental Choice according to thetransportation company Green Cargo.Clas Ohlson purchases products fromapproximately 600 suppliers in 30countries. The products are transportedby boat, aircraft, truck and rail to thedistribution centre in Insjön, Dalarna,where they are stored, sorted and distributedby truck to Clas Ohlson’s storesin Sweden, Norway, Finland and the UK.Mail order/Internet sales account for 2per cent of sales, which are also distributedby truckOur environmental impactClas Ohlson impacts the environment inmany ways, primarily through:• transportation of products, frommanufacturers via the distributioncentre and stores to the customer• products containing environmentallyharmful substances• printing and distribution of cataloguesand brochures• use of packaging• energy consumption in stores, thedistribution centre and offices• travelClas Ohlson’s long-term environmentalwork places specific emphasis on logisticsand products, which are the areas with thelargest environmental impact.Active environmental effortsClas Ohlson regards it as essential to minimisethe company’s environmental impact,and we work actively to achieve our environmentalgoals. Respect and responsibilityare part of our common core values.Clas Ohlson’s environmental policyestablishes that, in addition to complyingwith applicable laws and other environmentalrequirements, we shall includethe environmental perspective in all keydecisions to create long-term value for ClasOhlson’s customers, employees, shareholdersand for society in general. This means alifecycle perspective that includes the entirechain from manufacturing, transport anduse to waste management.Organisation and responsibilityEnvironmental efforts are part of ClasOhlson’s sustainability initiatives and arecoordinated in a CSR forum that formulatesgoals and strategies, and plans andfollows up the sustainability initiatives.Read more about Clas Ohlson’s CSR forumon page 34.From objectives to actionTo facilitate our environmental efforts, wehave broken down our overall environmentalobjectives into detailed targets withclearly distributed responsibility within theorganisation.TransportOur overall environmental goals for goodstransport entail that emissions of fossilcarbon dioxide per tonne/kilometre shalldecrease by 30 per cent by 2020, comparedwith 2007.Detailed environmental goals commencing in2007Boat: Reduction of fossil carbon dioxideby 5 per cent by 2012. From 3.7g/tonne-km to 3.5 g/tonne-km.Vehicle: Reduction of fossil carbon dioxideby 10 per cent by 2012. From 50.8g/tonne-km to 45.7 g/tonne-km.Train: Increase the portion of land transportby 10 per cent by 2012.From 17 per cent to 19 per cent.Air: Decrease the proportion of totalgoods transport by 10 per cent by2012. From 0.094 per cent to 0.085per cent.Of the major flow of goods arriving by boatin Gothenburg, more than 80 per cent istransported by rail to the terminal in Insjön,Dalarna. Goods from Swedish and Europeansuppliers are collected for consolidatedloading in several districts for furthertransport by truck to Insjön.Roads are currently used for outgoingfreight to stores. In cooperation with hiredhaulage contractors, we have increased thecapacity level through extensive coordination.The objective is to transfer this transportto rail in the long term, and simulationmodels show that this would reduce bothemissions and costs. A transition to intermodaltraffic, meaning cooperation amongvarious types of transport, is conditionalupon an expansion of the railway terminalin Insjön. In conjunction with SSAB andKvarnsveden Mill, Clas Ohlson is alsoworking to improve the rail capacity andquality of Dalabanan.ResultsClas Ohlson’s total carbon dioxide emissionsfrom goods transport amounted to9,498 tonnes in 2008, compared with 10,483tonnes in 2007. This entails 6.4 grams/tonne-km compared with 5.8 grams/tonne-44 Sustainable developmentClas Ohlson 2008/09

km in 2007. The increase in key figureswas attributable to lower capacity levels onfreight vessels as a result of the prevailingeconomic decline.Otherwise, our emissions per tonne-kilometregenerally continued to decrease in2008, both in terms of incoming freight andoutgoing freight. With regard to incomingfreight, the decrease was primarily attributableto the increased proportion of railtransport. The decrease in outgoing freightwas primarily attributable to the demandswe placed on our haulage contractors to usevehicles with engines that comply with atleast EURO3 (an EU standard). This resultsprimarily in lower emissions of nitrogenoxides and hydrocarbons.TravelDetailed environmental goalsThe average value for air/vehicle/raildeclined by 20 per cent fossil carbon dioxidefrom 2007 to 2012, from 119 g/pkm to 95g/pkm (person-kilometre).Clas Ohlson has suppliers and manufacturersin 30 countries and more than 100stores in four countries. This entails numerousbusiness trips. Our travel policy shallensure that business trips take into accountcosts, time and environmental aspects.All stores and conference premiseswithin Clas Ohlson have video conferenceequipment. This is an appreciated andresource-efficient meeting alternative, andin 2008, Clas Ohlson was named the videoconferencing equipment user of the year(Tandberg 2008).ProductsOverall environmental goalsWe develop both our product range andproduct information to assist our customersto reduce their own environmental impactthrough smart choices. The products we sellshall at least correspond to our customers’expectations pertaining to material, energyconsumption, quality and safety.Quality assurance for productsWith regard to demands on suppliers andmanufacturers, we work continuously withour risk assessment model. In brief, thismeans that we classify products based onsupplier category, brand, areas of use anduser groups. This classification is then usedas the basis for tough demands placed ondocumentation and checks of the product.Substances that are environmentally harmfulor hazardous to healthWe exceed the legal requirements for phasingout plasticisers and polycyclic aromatichydrocarbons (PAHs), in surfaces that comein contact with the skin. We also limit theamount of polyvinyl chlorides (PVCs) inour products, with the aim of also removingharmful additives, and have established aninternal guideline stating that our productsshall contain less than 5 per cent PVCs. Theremaining amount consists of PVCs thatare difficult to replace with other materials,for example in electrical cables. During athree-year period, we documented and limitedPVCs in products and packaging, andat the end of the 2008/2009 financial year,98 per cent of our product range met thePVC target. In 2007/2008, the proportionwas 95 per cent. All our products are freefrom harmful heavy metals and selectedMost of the transports to the distribution centrein Insjön, Dalarna occur by rail.plasticisers in surfaces that come in contactwith the skin.Similarly, we have reviewed and ensuredthat our products are free from PAHs,which may be found in plasticised plasticsand rubber products, on surfaces that comein contact with the skin.During the 2008/2009 financial year, wealso increased our resources in the chemicalarea by adding a new position and increasedour checks for hazardous additives includingheavy metals in our products, using anXRF instrument that comprises proprietarytesting equipment.This entails that we have expandedour requirements to include more typesof materials and hazardous substancesClas Ohlson 2008/09 Sustainable development 45

Energy consumptionPer square metre and year 2008 2007Store premises, kWh 136 128Offices, kWh 138 171Offices, litres of oil 0.86 0.12Distribution centre, kWh 98 100Distribution centre, litres of oil 1.75 1.70Distribution centre, kWh/pallet 19.6 22.8Energy consumption has been divided into threedifferent areas: electricity consumption in storesand the electricity consumption and oil consumptionof the head office and distribution centre. Thegoal is to improve the key indicators every year.Total electricity consumption,GWh 2008 2007Store premises 19.2 15.5Offices 2.5 2.5Distribution centre 3.7 4.8Total fuel oil, m 3 91.0 76.7Fossil carbon dioxide, tonnes 2008 2007Goods transport 9 499 10 484Travel 385 389Heating 233 196Electricity 507 455in accordance with the guidelines inthe REACH (Registration, Evaluation,Authorisation and Restriction of Chemicals)ordinance; refer to page 46.Energy efficiencyMuch of the product range compriseselectrical and electronic products. A reviewof the legislation pertaining to the energyefficiency of these products is in progress,including requirements for a decrease inelectricity consumption in the standby andoff positions. For Clas Ohlson, this entailsadapting our product range. In this respect,we also have proprietary testing equipmentto ensure that we can meet the new requirementsas early as possible.The phasing out of traditional light bulbswill commence early, in September 2009,and Clas Ohlson already offers a broadrange of energy-saving alternatives for mosttypes of light sources. As a phase in thischange, we are continuously developing therange and product information to assist ourcustomers.Sustainability and quality– After-sales serviceClas Ohlson has a large range of spare parts,with more than 9,000 different items forproducts that are sold in all of the company’smarkets. This is highly beneficial, sinceproducts can then be repaired, meaningthat the lifecycle of the products is extendedrather than discarding them. This serviceis appreciated by customers and results inenvironmental and other savings. Becauseof our employees’ knowledge and high levelof service as well as our spare parts inventory,Clas Ohlson was recognised for havingSweden’s best customer service in 2008.Laws and guidelinesOur operations and the products we sellshall at least fulfil the requirements ofapplicable laws and other environmentalrequirements. Environmental legislationhas become more extensive and detailed,and this trend is expected to continue. Aharmonisation of EU legislation pertainingto substances that are environmentallyharmful or hazardous to health will benefitClas Ohlson, which has operations in severaldifferent countries.WEEEThrough the EU directive WEEE (WasteElectrical and Electronic Equipment),which came into force in August 2005,producer responsibility was tightened, andsince it includes responsibility for wastecollection systems for electrical waste, itencompasses the entire lifecycle of theproduct.RoHSClas Ohlson also complies with theRoHS (Restriction of Certain HazardousSubstances) Directive issued in August2006, which aims to reduce the amount ofenvironmentally hazardous waste and settougher limit values for the use of mercury,cadmium, lead and chromium as well astwo types of brominated flame retardants innew electrical and electronic articles.REACHThe EU’s REACH (Registration, Evaluation,Authorisation and Restriction ofChemicals) chemicals legislation cameinto force in June 2007 and largely replacesnational laws pertaining to chemicals. Theregulations will come into effect in stages,and their application will be expanded duringthe next few years. The basic principleis that manufacturers and importers areresponsible for ensuring that the substancesthey manufacture or sell have no harmfulimpact on health or the environment.Energy efficiencyThe EuP directive (Energy-Using Products)regarding eco-design, which came intoforce in August 2007, is a framework directiveaimed at improving products’ energyefficiency by integrating environmentalaspects early in the design phase. To date,the energy consumption of 20 differentproduct groups is included. Examples ofproduct groups for which decisions havebeen made and requirements have beenestablished, which will affect our productrange in the coming financial year, are:• home lighting• standby and off-mode losses forenergy-consuming products• external power supply• simple digital boxesPackagingIn cooperation with our suppliers, we shallreduce the proportion of environmentallyharmful product packaging. Efforts tolimit PVCs continue, and at the end of the2008/2009 financial year, 98 per cent of ourpackaging met our PVC target.Our stores sell 7.5 million carrier bagsand 9 million bags annually. The majorityof these are manufactured from polyethyl-46 Sustainable developmentClas Ohlson 2008/09

enes (PE), but Clas Ohlson also has paperbags. The packaging used for items purchasedthrough Clas Ohlson’s mail order/Internet sales has been environmentallyadapted and comprises 38 per cent recycledfibre raw material as well as water- and biobasedadhesives. Clas Ohlson fulfils producerresponsibility for packaging throughits membership in Reparegistret AB(REPA, the Swedish register for producerresponsibility), which finances and managesrecycling stations throughout Sweden.Printed matterOverall environmental goalEnvironmental impact shall be part of thebasis for decisions in the choice of communicationchannels. We strive to increasethe proportion of customer and shareholdercommunication issued on the Internet. Theproduction of our printed matter shall takeplace using technology and materials thathave a well-documented low environmentalimpact. Printed matter shall be recoverableas high-quality fibre raw material.Clas Ohlson has issued a catalogue annuallysince 1918. The catalogue is printed inaccordance with the Nordic Swan ecolabelcriteria and distributed mainly withdeliveries of products to our stores. Fromthe 2008/2009 financial year, the cataloguewill be published twice annually to increaseflexibility in product range and prices. ClasOhlson also has a specific catalogue formultimedia products.In addition to the catalogue, we send outregular direct-mail advertising printed onSwan-labelled paper.The Clas Ohlson Annual Report isprinted on Nordic Swan eco-labelled paper.It is only distributed to shareholders whohave requested printed information fromthe company. This has led to a substantialreduction in printing, fewer dispatches anda consequent reduction in environmentalimpact.Energy consumptionOverall environmental goalsEnergy use in our own and leased premisesand properties will be documented. Effortswill be directed toward specified savingstargets for the distribution centre, headoffice and stores. Energy from fossil sourceswill be discontinued in our own operations.Detailed environmental goals• the distribution centre and head officeat Insjön will be heated usingrenewable energy.• Electricity for the distribution centre,head office and stores in Sweden shallcome from renewable sources.• Operational electricity consumptionat the distribution centre shall decreaseby 25 per cent, from 22.8 kWh/pallet(2007) to 17.1 kWh/pallet (2010).Distribution centreDuring the year, the heating system waschanged from electricity and oil to biofuelbaseddistrict heating. The change entails asignificant reduction in climate impact.OfficesClas Ohlson’s head office in Insjön, withGroup-wide functions including management,finance, purchasing, marketing andHR, comprises two buildings totalling20,000 square metres. From October 2008,only renewable electricity is used and thenew office portion has bio-based districtheating.StoresClas Ohlson owns no store premises, withthe exception of Insjön. The prerequisitesfor electricity and energy requirements varystrongly among various stores. Some storeshave internal escalators, additional electricsigns, etc., which entail increased electricityconsumption. Since October 2008, ClasOhlson has purchased renewable electricityfor 20 to 25 stores in Sweden. As electricityagreements for the company’s other Swedishstores expire, they will be replaced withagreements for renewable electricity.The annual increase in the key figurefrom 128 kWh/m 2 to 136 kWh/m 2 willbe followed up with measures to turn thetrend.WasteThe WEEE directive is applicable to allour markets, and Clas Ohlson assumes itsproducer responsibility through membershipin the national waste collection systemsEl-Kretsen in Sweden, Elretur in Norway,Serty in Finland and Valpak in the UK.For many years, the distribution centrein Insjön has had efficient systems for sortingat source and recycling. Surplus packagingis pressed into large bales that are soldand become raw material for new products.This also pertains to various fractions ofplastics. Other waste is sorted at source intoapproximately ten fractions.Read moreFor more detailed information about ourenvironmental work, please visit our websiteat www.clasohlson.se.Clas Ohlson 2008/09 Sustainable development 47

Sustainable developmentClas Ohlson’s GRI profileA complete version is available at www.clasohlson.se.Clas Ohlson reports at C level.Performance indicatorsPage ExtentEC1EC7Economic impactDirect economic value generated and distributed, including revenues, operating costs, employee compensation, donationsand other community investments, retained earnings, and payments to capital providers and governments.Procedures for local hiring and proportion of senior management hired from the local community at locations of significantoperation.56 •37 •Environmental impactEN3 Direct energy consumption by primary energy source. 46 •EN4 Indirect energy consumption by primary energy source. 46 •EN16 Total direct and indirect greenhouse gas emissions by weight. 46 •EN17 Other relevant indirect greenhouse gas emissions by weight. 46EN18 Initiatives to reduce greenhouse gas emissions, and reductions achieved. 35, 47 •Social impactLA1 Total workforce by employment type, employment contract and region. 63, not 31 •LA10 Average hours of training per year per employee per employee category. 36 •LA13Composition of governance bodies and breakdown of employees per category according to gender, age group, minoritygroup membership, and other diversity indicators.37 •Human rightsHR2 Percentage of significant suppliers and contractors that have undergone screening on human rights, and actions taken. 42 •HR4 Total number of incidents of discrimination, and actions taken. 40 •HR5HR6HR7Operations identified in which the right to exercise freedom of association and collective bargaining may be at significant risk,and actions taken to support these rights.Operations identified as having significant risk for incidents of child labour, and measures taken to contribute to the eliminationof child labour.Operations identified as having significant risk for incidents of forced or compulsory labour, and measures taken to contributeto the elimination of forced or compulsory labour.40 •40 •40 •PR1Product responsibilityLifecycle stages in which health and safety impacts of products and services are assessed for improvement, and percentageof significant products and services categories subject to such procedures.45 •Symbol explanations: • Reported, • Partly reported.48 Sustainable developmentClas Ohlson 2008/09

Clas Ohlson 2008/09 49

Directors’ reportClas Ohlson AB (publ), corporate identity number 556035-8672.The Board of Directors and Chief Executive Officer of ClasOhlson AB (publ), with registered office and head office inInsjön, in the Municipality of Leksand, present herewith theannual accounts for the financial year 1 May 2008 to 30 April2009. Unless otherwise stated, the figures relate to the Group.Figures in brackets relate to the previous year. All figures arestated in millions of Swedish kronor unless otherwise indicated.OperationThe operation of both the Parent Company and the Groupconsists in the sale of products for house and home, technologyand hobbies through the company’s own retail stores andby mail order/internet. The company has operated in Sweden,Norway, Finland and the UK. At the end of the period, thenumber of stores was 106, 50 of which were located in Sweden,38 in Norway, 16 in Finland and two in the UK. The productrange comprises around 15,000 items bought from a largenumber of suppliers in some 30 countries. The products arebought in to the distribution centre in Insjön and from thereare distributed to customers through the company’s own storesin Sweden, Norway, Finland and the UK or by mail order/internet direct to customers.Clas Ohlson is continuing to grow. The range is focusedon reasonably priced products that are needed in everydaylife regardless of the economic climate; however, the strongeconomic decline also had a negative impact on Clas Ohlson, inall markets and sales channels. As a result, sales in comparablestores were lower than the corresponding period of the precedingyear.Significant eventsTwenty new stores were opened during the financial year, fivein Sweden, nine in Norway, four in Finland and two in theUK. The stores in the UK were the company’s first. Croydonin south London was opened in November and Manchesterin April. The response from customers in the UK is positive,with many visitors to the Croydon and Manchester stores. Todate, the number of visitors has been higher than the Groupaverage. The conversion rate and average purchase have beenlower than average in the UK, which is generally the case inconjunction with the penetration of new markets. Clas Ohlsonanticipates that establishing its brand name and position in acompletely new market will take time and that the conversionrate and average purchase value will gradually increase in thenext few years. In the coming years, many attractive store locationsare expected to become available.In March 2009, Clas Ohlson launched its first springcatalogue. The catalogue contains a number of new featuresand includes a seasonal product range and the products thatpreviously comprised a separate boat accessory catalogue. Anew graphic profile that includes an update of Clas Ohlson’slogotype was launched simultaneously. The spring cataloguewas positively received and was the first catalogue launched inthe UK. The aim of releasing two catalogues per year insteadof one is to increase flexibility in terms of product range andprices.Clas Ohlson’s new store concept was launched in Novemberand has been established in new stores to date. The conceptwill make it easier for customers to navigate the broad productrange available at Clas Ohlson stores. The change also entailsan updated design and modernisation of Clas Ohlson’s currentstore concept. Existing stores will gradually be converted,which will lead to an estimated annual investment of SEK 40M. To date, one store in Norrköping has been converted to thenew concept.In January 2009, Clas Ohlson opened its first store with asmaller store format in Motala, Sweden. The aim of the newformat, with 500-800 square metres of retail space and someelements of the product range available for order, is to enablethe establishment of profitable Clas Ohlson stores in smallerlocations as a complement to large-scale stores in major locations.The new smaller store concept has also been launchedin Marieberg outside Örebro, in Larvik in Norway and inHudiksvall during the fourth quarter.Sales and profitsSales totalled SEK 4,930 M, a rise of 6 per cent compared withSEK 4,662 M in the preceding year.Sales are broken down as follows:Sales channelsPercentage2008/09 2007/08 changeStores 4,830 4,541 + 6Mail order/internet 100 121 – 174,930 4,662 + 6Country (SEK)Sweden and the UK 2,573 2,586 – 1Norway 1,923 1,717 + 12Finland 434 359 + 214,930 4,662 + 6The 6 per cent increase in sales by stores is broken down asfollows:Comparable stores in local currencyNew storesExchange-rate effectsTotal– 7 per cent+ 12 per cent+ 1 per cent+ 6 per centThe gross margin was 40.8 per cent, compared with 40.2 percent in the previous year. The margin was affected positivelyby the sales mix and favourable exchange-rate effects, while anumber of factors had a negative impact on the margin in theform of increased handling and distribution expenses as well asstart-up costs for the purchasing company in Shanghai, China.Costs of SEK 15 M in conjunction with a reorganisation of thedistribution centre at Insjön, Sweden had an adverse effect of0.3 percentage points on the gross margin.The share of selling expenses increased by 2.8 percentagepoints to 28.2 per cent (25.4). The increase is largely due to adecrease in sales in comparable stores and increased costs for50 Directors’ reportClas Ohlson 2008/09

new stores. During the year, 20 new stores were opened (15 inthe preceding year), which led to increased staff costs that havebeen partially offset by continued measures to increase productivityin comparable stores. Furthermore, the share of sellingexpenses was affected by the increase in lease expenses for existingstores compared with the same period in the previous year.Start-up costs for new stores totalled SEK 67 M (SEK 51 M).This includes start-up costs for the establishment of operationsin the UK, with two new stores in Croydon and Manchester.Depreciation for the year totalled SEK 92 M, compared withSEK 84.0 M in the previous year.Operating profit amounted to SEK 503 M, down 13 percent compared with the previous year (SEK 578 M). Operatingprofit was SEK 495 M (566) for stores and SEK 8 M (11) formail order/internet.The operating margin was 10.2 per cent (12.4). The operatingmargin for stores was 10.2 per cent (12.5) and 7.8 per cent(9.5) for mail order/internet.Profit after financial items amounted to SEK 504 M, down14 per cent compared with the previous year (588).The exchange rates for the most important currencies averaged1.18 for the Norwegian krone and 7.30 for the US dollar,compared with 1.17 and 6.50, respectively, in the previous year.Currency hedging was conducted in USD, HKD and NOK.The company’s policy is to hedge 50 per cent of expected flowsduring a catalogue period.Prospects for the next financial yearClas Ohlson’s business concept of offering a broad and reasonably-pricedproduct range to conveniently solve the practicalproblems of everyday life is highly attractive in establishedmarkets. The concept is unique in Europe and has the potentialto expand to several countries.Clas Ohlson’s long-term growth objectives stand firm. Thepowerful economic slowdown is generating opportunities andcreating a need for adjustment. Although Clas Ohlson has alsobeen affected by a general decline in consumption, the Groupexpects to be able to continue capturing market shares. Theslowdown also improves the opportunities for contracting andestablishing stores in attractive locations and at an attractiverent, primarily in the UK market.Clas Ohlson will continue to open new stores in establishedmarkets, but will adjust its rate of establishment to the prevailingmarket conditions. During the 2009/2010 financial year,the aim is to establish 15-20 stores, of which four to eight areplanned in the UK. The launch of Clas Ohlson’s new storeconcept in new and existing stores, combined with the new,smaller store format known as “Mini-Clas,” will generateadditional growth opportunities for the company.Clas Ohlson will continue adapting costs to mitigate theearnings effect of the lower growth rate caused by the declinein retail sales.The objective for long-term sales growth is 15 per cent,measured as the average annual sales increase over a five-yearperiod. The profitability objective is to achieve an operatingmargin of at least 10 per cent.Financial positionCash flow from operating activities during the financial yearwas SEK 340 M (480). Cash flow for the year was a negativeSEK 203 M (neg: 66). In September, a cash dividend of SEK325 M (295) was distributed to Clas Ohlson’s shareholders.The average value of inventories during the financial yearwas SEK 1,024 M (940), up 9 per cent. The turnover rate forinventories at the distribution centre during the financial yearwas a multiple of 6.7 (6.8).At the end of the financial year, inventories amounted toSEK 1,117 M (953). Compared with the same month a yearearlier, 20 new stores were added. Inventories in new storesamounted to SEK 107 M. At the end of the year, inventorieswere affected by advance purchases of seasonal products inconjunction with the new spring catalogue. The value of purchasingcurrencies (USD and EUR) also affected the value ofinventories compared with the same date a year earlier.The company’s repurchase of own shares to secure LTI 2008(long-term incentive program 2008) amounted to SEK 58.0 M(0) during the first quarter of the financial year.Cash and cash equivalents totalled SEK 92 M (280). Interest-bearingliabilities pertaining to the utilisation of overdraftfacilities and bank loans amounted to SEK 274 M (0). Theincrease was primarily due to current investments in the distributioncentre at Insjön totalling SEK 615 M and investmentsin new stores. The high investment level implied an increase incapital requirements, which has been hedged for the comingyears through external financing. The equity/assets ratio was58.1 per cent (68.4).InvestmentsDuring the financial year, investments totalling SEK 434 M(252) were made. Of this sum, SEK 108 M (68) pertained toinvestments in new stores. A further SEK 279 M (143) relates toinvestment in the expansion of the distribution centre at Insjön.Other investments are mainly replacement investments.Shares and share capitalClas Ohlson B shares are listed on the OMX Nordic Exchange.The share capital totals SEK 82 million, broken down into5,760,000 series A shares and 59,840,000 series B shares, eachwith a quotient value of 1.25. Each series A share carries tenvotes, while each series B share carries one vote. All sharescarry equal rights to payment of dividend. Holders of A sharescan request that A shares be converted to B shares. The sharecapital is unchanged in comparison with the previous financialyear.On 30 April 2009, there were a total of 22,747 shareholdersaccording to the register of shareholders held by VPC (theSwedish central securities depository), compared with 22,744on 30 April 2008. The ten largest shareholders at the sametime accounted for 68 per cent of the capital and 82 per cent ofthe votes. For a list of shareholders, see page 31 of the printedannual report.Clas Ohlson 2008/09 Directors’ report 51

The Articles of Association do not contain any reservations forright of first refusal or other restrictions on the transferabilityof shares. Apart from authorisation pertaining to the repurchaseof shares stated on page 53, there are no other circumstancesof the kinds the company is obliged to disclose underthe provisions of Chapter 6 Section 2a (4-11) of the AnnualAccounts Act. To secure the company’s commitment regardingconditional matching shares and employee warrants in connectionwith LTI 2008, Clas Ohlson repurchased 645,000 sharesduring the first quarter of the financial year for a total of SEK58.0 M at an average price of approximately SEK 90 per share.As of 30 April 2009, the company had 645,000 shares (0),corresponding to 1 per cent of the total number of registeredshares. The number of shares outstanding, net after repurchase,amounted to 64,955,000 at the end of the year.EmployeesThe number of employees in the Group averaged 1,927 (1,801),of whom 790 (731) were women. The distribution by country is1,265 (1,264) in Sweden, 458 (385) in Norway, 174 (152) in Finlandand 30 (0) in the UK. Further information about employeesis contained in Notes 6, 31 and 32 to the annual accounts.The work of the BoardThe Board of Clas Ohlson consists of seven members electedby the Annual General Meeting and two members and twodeputy members appointed by the employees. The ChiefExecutive Officer sits on the Board. The Board has writtenrules of procedure and instructions for the distribution ofwork between the Board and the Chief Executive Officer. TheBoard’s meetings and work in connection with these meetingsconsequently follow an agenda with the aim of ensuring thatthe Board’s needs for information and checking of the operationand the organisation of the company are met.The Board met ten times during the year. An economicand financial report on operations is presented at each ordinarymeeting. The Board holds an annual meeting with thecompany’s auditors to review the audit report and the year’soperations. The work of the Board is described in more detailin the Corporate Governance Report on pages 74-77 of theprinted annual report.Risks and uncertaintiesClas Ohlson’s business operations are exposed to financial andoperational risks. Financial risks comprise primarily wageinflation, raw-material prices and exchange-rate exposure,while operational risks relate to establishment in the UK, purchasingin China, competition, logistics, key employees, socialresponsibility, product range and shrinkage. With regard to thedescription and quantification of the financial risks, these arestated in Note 2 of the annual report and on pages 24-26 in theprinted annual report.Environmental impactThe company has a duty of notification with respect to activityrelating to the temporary storage of electronic waste. This dutyof notification applies to any Swedish municipality in whichClas Ohlson has a store. The company does not otherwise haveany operations for which there is a duty of notification or forwhich it is mandatory to obtain a permit under the EnvironmentalCode. With regard to electrical and electronic waste, wecooperate with the Elkretsen organisation in Sweden, whichis the joint company owned by the electrical industry for wastedisposal. Clas Ohlson is affiliated to the recycling organisationRepa. In Norway, the company is affiliated to the recyclingorganisations AS Batteriretur, Renas AS, Elektronikkretur ASand Hvitvareretur AS. In Finland there is equivalent cooperationwith Serty and in the UK with Valpak.Environmental work is undertaken continuously in theGroup, and this is described in greater detail on pages 44-48 ofthe printed annual report and on the website, www.clasohlson.se.Guidelines for remuneration of senior managementThe 2008 Annual General Meeting decided that remunerationwould be paid according to the following principles, which willalso be proposed to the 2009 Annual General Meeting.The general principles of remuneration for senior managementwill be based on the position held, individualperformance, the Group’s financial results and the remunerationbeing competitive in the country of employment. Thecombined remuneration of senior management will consist offixed salary, variable salary in the form of short-term incentivebased on annual performance objectives, long-term incentivesbased on performance over several years, pension and otherbenefits. In addition to this, there are terms applicable on noticeof termination and severance pay.Fixed salaryFixed salary will constitute the basis for total remuneration.The salary level will be related to the relevant market andreflect the degree of responsibility the work entails. The fixedsalary will be reviewed annually to ensure that it is commensuratewith the market and competitive.Variable salary (Short-Term Incentive, “STI”)Senior management will receive, in addition to fixed salary,STI for results which surpass one or more predeterminedlevels of performance during a financial year. The remunerationfrom the STI programme may constitute no more than50 per cent of fixed salary, which means that the company cancalculate maximum levels of remuneration from the outset.Long-term incentives (“LTI”)On an annual basis, the Board of Directors will evaluatewhether a long-term incentive scheme (for example based onshares or share price) will be proposed to a general meetingor not. An extraordinary general meeting held in April 2008adopted the Board’s proposal to introduce a long-term sharerelatedincentive scheme, LTI 2008, for senior managementand other key individuals (a maximum of 40 people) judged tohave great potential to influence the long-term development ofClas Ohlson. The programme was implemented in May 2008and all the invited participants in the scheme have chosen to52 Directors’ reportClas Ohlson 2008/09

meet the requirements to make an initial investment of theirown in Clas Ohlson shares equivalent to a sum of between5 and 10 per cent of their gross salary. The 2008 AnnualGeneral Meeting adopted a corresponding programme for the2009/2010 financial year (LTI 2009).PensionPension agreements will, if possible, be defined-contributionand formulated in accordance with levels and practice applicablein the country in which the member of senior managementis employed.Other benefitsOther benefits may occur in accordance with the terms applicableto the country in which the member of senior managementis employed. However, such benefits may not constitute amajor proportion of the combined remuneration.Period of notice and severance paySenior management will be offered terms in accordance withthe legislation and practice applicable to the country in whichthe person concerned is employed. A member of senior managementwill be prevented from working in a competing businessduring the period of notice. In certain cases prohibitionof competition in return for continued remuneration may beapplied for a maximum period of 24 months following expiryof the period of notice.Authorisation for the Board to depart from the guidelinesThe Board will be able to depart from these guidelines if thereare special reasons for doing so. In the event of a major deviation,the shareholders will be informed of the reasons for this atthe next annual general meeting.For further information on remuneration, see Note 6 andpage 76 of the printed annual report.Parent CompanyParent Company sales amounted to SEK 4,002 M (4,063) andprofit after financial items totalled SEK 340 M (721). Profit hasbeen negatively affected by decreased dividend from subsidiaries.Investments for the year totalled SEK 333 M (197).Contingent liabilities for the Parent Company totalled SEK177 M (90).Events after the end of the yearThe Annual General Meeting of Clas Ohlson AB on 13September 2008 authorised the Board to acquire not morethan 930,000 shares during the period up to the next AnnualGeneral Meeting to ensure the company’s commitment inconnection with the introduction of the share-related incentiveprogramme, LTI 2009, which was adopted by the 2008 AnnualGeneral Meeting.Supported by this authorisation, the Board resolved toacquire 675,000 shares up to the time of the 2009 AnnualGeneral Meeting. The acquisition will occur on the NASDAQOMX Nordic Exchange Stockholm at a price within the shareprice range registered at any time. The company’s holding ofClas Ohlson shares amounted to 645,000 as per 30 April 2009,corresponding to 1 per cent of the total number of registeredshares.DividendClas Ohlson will be well-positioned financially for continuedgood growth in operations as well as being ready to exploitbusiness opportunities. It is essential that the expansion takesplace, as it has done to date, with retained high financialstrength and continued freedom of action.On this basis, the Board has considered that the level ofdividend should be equivalent to around half the net profit. Inaddition, the Board may propose that surplus liquidity also bedistributed.For the 2008/2009 financial year, the Board proposes thata dividend of SEK 3.00 per share be paid (previous year SEK5.00). The Board’s proposal is equivalent to around 54 per centof the Group’s net profit (78 per cent).Proposed allocation of earningsThe following earnings (SEK) are at the disposal of the AnnualGeneral Meeting:Profit brought forward 708,519,760Net profit for the year 183,108,548Total 891,628,308The Board and Chief Executive Officer propose:Dividend payable toshareholders SEK 3.00 per share 196,800,000Carried forward to new account 694,828,308Total 891,628,308The confirmed date for payment of dividend is proposed as16 September 2009. It is anticipated that the dividend decidedupon by the Annual General Meeting will be dispatched on 21September 2009.With reference to the information presented above andwhat has otherwise come to the knowledge of the Board, theview of the Board is as follows: A comprehensive assessmentof the financial position of the Parent Company and Groupindicates that the dividend is justifiable with reference to thedemands made by the nature, size and risks of the operationon the equity and liquidity of the Parent Company and Group.The Group’s equity/assets ratio is 58.1 per cent before paymentof dividend and 54.6 per cent after payment of dividend. Thisis judged to be an adequate equity/assets ratio, even when thefuture expansion in the Nordic countries and the United Kingdomis taken into account.Regarding the company’s earnings and position in otherrespects, reference should be made to the following incomestatements and balance sheets and the associated notes to theaccounts.Clas Ohlson 2008/09 Directors’ report 53

Five-year summarySEK M 2008/2009 2007/2008 2006/2007 2005/2006 2004/2005INCOME STATEMENTNet sales 4,930.2 4,661.6 4,101.2 3,567.6 2,954.8Operating profit 502.8 577.5 530.9 484.5 420.5Pre-tax earnings 503.8 587.8 537.8 491.0 425.9Income tax –138.3 –166.0 –152.0 –138.9 –120.6Net profit for the year 365.5 421.8 385.8 352.1 305.3BALANCE SHEETNon-current assets 1,197.5 852.0 683.5 642.6 563.7Inventories 1,117.2 952.6 826.7 749.0 542.9Current receivables 164.5 107.1 79.6 55.3 46.4Cash and cash equivalents, current investments 92.0 280.3 347.9 338.4 445.2Total assets 2,571.2 2,192.0 1,937.7 1,785.3 1,598.2Equity 1,493.1 1,499.5 1,367.3 1,256.9 1,058.6Non-current liabilities, non-interest-bearing 86.4 26.9 23.9 23.6 18.3Non-current liabilities, interest-bearing 65.0 - - - -Current liabilities, non-interest-bearing 718.1 665.6 546.5 504.8 521.3Current liabilities, interest-bearing 208.6 - - - -Total equity and liabilities 2,571.2 2,192.0 1,937.7 1,785.3 1,598.2CASH FLOWCash flow from operations 339.7 480.0 405.1 187.8 355.4Investments –433.1 –250.6 –125.1 –140.7 –198.6Cash flow after investments –93.4 229.4 280.0 47.1 156.8KEY RATIOSGrowth in sales, % 5.8 13.7 15.0 20.7 17.7Gross margin, % 40.8 40.2 39.7 39.9 40.4Operating margin, % 10.2 12.4 12.9 13.6 14.2Operating margin stores, % 10.2 12.5 13.2 13.8 14.5Operating margin mail order/internet, % 7.8 9.5 5.1 8.6 8.6Return on capital employed, % 32.6 41.8 40.9 42.4 43.9Return on equity, % 24.4 29.4 29.4 30.4 31.4Equity/assets ratio, % 58.1 68.4 70.6 70.4 66.2Sales per square metre in store, SEK 000 38 44 45 48 48Number of stores at year-end 106 86 71 59 48Number of full-time equivalent employees 1,927 1,801 1,647 1,439 1,229DATA PER SHARE 1Average number of shares before dilution 65,065,008 65,600,000 65,600,000 65,600,000 65,600,000Average number of shares after dilution 65,075,701 65,600,000 65,600,000 65,600,000 65,600,000Earnings per share before dilution, SEK 5.62 6.43 5.88 5.37 4.65Earnings per share after dilution, SEK 5.62 6.43 5.88 5.37 4.65Gross cash flow per share, SEK 7.04 7.71 7.02 6.32 5.40Equity per share, SEK 22.99 22.86 20.84 19.16 16.142 3Dividend, SEK 3.00 5.00 4.50 4.00 2.501Converted after split in October 2004.2Proposed dividend.3Including extra dividend of SEK 1.00.54 Five-year summaryClas Ohlson 2008/09

Comments on the five-year trendSalesSales have increased over the past five years from SEK 2,955M to SEK 4,930 M, a rise of 67 per cent. The growth has beenentirely organic, i.e. without acquisitions. The price trend overthe period is neutral. Sale prices in the past two financial yearswere raised, but previously prices were reduced by an averageof 2 per cent per year. The exchange rates for the Norwegiankrone and the euro (Finland) are roughly the same as five yearsago. However, the rates have fluctuated during the period.Consequently, it can be concluded that more than the entireincrease in sales is due to greater sales volumes.The increase in sales in comparable stores has been -7 percent, 0 per cent, 2 per cent, 4 per cent and 5 per cent, respectively,in the past five years.Number of storesThe principal reason for the increase in sales is that the numberof new stores has gradually increased. Twenty new stores wereopened in 2008/09, fifteen in 2007/2008, twelve in 2006/07,eleven in 2005/06 and ten in 2004/05. There were 38 stores atthe start of the 2004/05 financial year, compared with 106 at theend of the 2008/09 financial year.Operating profitOperating profit has increased over the past five years fromSEK 420 M to SEK 503 M, a rise of 20 per cent. Profit hastherefore not increased at the same rate as sales. This is principallydue to four factors: firstly, sales decrease in comparablestores during 2008/2009; secondly, our establishment in Finlandand the UK where, to date, we have lower margins; thirdly, theincrease in the establishment rate of new stores; and fourthly,the fact that new smaller stores have lower profitability thanexisting ones. To this can be added, the recent years’ start-upcosts for the establishment of purchasing offices in China.Gross marginGross margin during the financial year was 40.8 per cent, anincrease of 0.4 percentage points compared with 2004/2005.The margin has been positively affected by currency effects,while a number of factors have had an adverse impact. Theseare principally increased freight costs due to higher worldmarket prices and longer freight distance, increased purchaseprices due to higher raw-material costs as well as higher environmentalcharges on products due to changes in legislation.Operating marginOperating margin has fallen in the past five years from 14.2 percent to 10.2 per cent. This is principally due to the four factorsdescribed in the section on operating profit.Cash flowCash flow from operations has decreased over the past fiveyears from SEK 355 M to SEK 340 M, down 4 per cent. Inventoriesat the end of the year were impacted by the advance purchaseof seasonal products in connection with the new springcatalogue. Furthermore, the value of purchase currencies(USD and EUR) affected the comparable stock value. Averageannual investments in the past five years total SEK 230 M.ReturnReturn on capital employed has fallen over the past five yearsfrom 43.9 per cent to 32.6 per cent, while return on equity hasfallen from 31.4 per cent to 24.4 per cent. The fall is primarilydue to the reduced operating margin.Sales, SEK MOperating profit, SEK MNumber of new stores5,0004,0002,9553,0002,0003,5684,1014,9304,6626005004003002004204845315785032520151010111215201,0001005004/05 05/06 06/07 07/08 08/09004/05 05/06 06/07 07/08 08/09004/05 05/06 06/07 07/08 08/09Clas Ohlson 2008/09 Comments on the five-year trend 55

GroupIncome statementSEK MNote1, 21 May 2008 1 May 2007– 30 April 2009 – 30 April 2008Net sales 4,930.2 4,661.6Cost of goods sold 4 –2,916.5 –2,788.7Gross profit 2,013.7 1,872.9Selling expenses 4, 5, 6 –1,388.7 –1,183.1Administrative expenses 4, 5, 6, 7 –119.4 –110.9Other operating income 3 1.6 1.0Other operating expenses 3 –4.4 –2.4Operating profit 502.8 577.5Financial itemsFinancial income 8 6.8 10.9Financial expense 8 –5.8 –0.6Profit before tax 503.8 587.8Income tax 9 –138.3 –166.0Net profit for the year 365.5 421.8Number of shares, million 65.1 65.6Earnings per share, SEK 10 5.62 6.43(before and after dilution forearnings attributable to theParent Company’s shareholdersduring the year)Proposed dividend pershare, SEK 11 3.00 5.00Cash flow statementSEK MOperating activities1 May 2008– 30 April 20091 May 2007– 30 April 2008Operating profit 502.8 577.5Adjustment for non-cash item– depreciation 92.4 83.7– profit from sale/disposal of fixed assets 0.2 1.6– other non-cash items 3.4 0.7Interest received 9.9 9.2Interest paid –3.9 –0.6Tax paid –206.1 –150.3Cash flow from operating activitiesbefore changes in operating capital 398.7 521.8Cash flow from changesin working capita– accounts receivables 1.0 3.9– inventories –149.3 –115.3– other receivables –52.2 –25.8– accounts payables 85.1 71.1– other current interest-freeoperating liabilities 56.4 24.3Cash flow from operating activities 339.7 480.0Investing activitiesInvestments in property,plant and equipment –434.3 –251.6Sale of equipment 0.5 1.0Changes in financial assets 0.7 0.0Cash flow from investing activities –433.1 –250.6Financing activitiesChanges in currentinterest-bearing liabilities 208.6 0.0Changes in non-currentinterest-bearing liabilities 65.0 0.0Repurchase of own shares –58.0 0.0Divided to shareholders –324.8 –295.2Cash flow from financing activities –109.2 –295.2Cash flow for the year –202.6 –65.8Cash and cash equivalents at start of year 280.3 347.9Exchange-rate difference in cashand cash equivalents 14.3 –1.8Cash and cash equivalentsat end of year 92.0 280.356 AccountsClas Ohlson 2008/09

GroupBalance sheetSEK M Note 30 April 2009 30 April 2008AssetsNon-current assets 12Property, plant and equipmentLand and buildings 263.3 273.0Equipment, tools, fixtures and fittings 509.2 431.9Construction in progress 423.2 143.8Total tangible assets 1,195.7 848.7Financial assetsShares and interests 0.1 0.1Deferred tax asset 9 1.6 2.5Non-current receivables 0.3 0.1Surplus in pension plan 19 0.0 0.6Total financial assets 2.0 3.3Total non-current assets 1,197.7 852.0Current assetsInventories 13 1,117.2 952.6Accounts receivables 14 12.5 13.3Other receivables 17 55.3 5.3Prepaid expenses and accruedincome 15 96.5 88.5Cash and cash equivalents 16 92.0 280.3Total current assets 1,373.5 1,340.0Total assets 2,571.2 2,192.0Change in Group equitySEK MSharecapitalBalance sheetSEK M Note 30 April 2009 30 April 2008Equity and liabilitiesEquity 18Capital and reserves attributable toParent Company shareholdersShare capital, 65,600,000 shareswith a quotient value of SEK 1.25 82.0 82.0Other contributed capital 90.4 90.4Translation differences 1.9 –8.2Hedge reserve –0.7 0.0Profit brought forward includingnet profit for the year 1,319.5 1,335.3Total equity 1,493.1 1,499.5Non-current liabilitiesDeferred tax liabilities 9 84.4 23.0Bank loans 20 65.0 0.0Pension obligations 19 0.1 0.0Other provisions 1.9 3.9Total non-current liabilities 151.4 26.9Current liabilitiesUtilised credit facilities 20 208.6 0.0Accounts payables 20 323.4 238.0Tax liability 36.8 149.3Other current liabilities 17, 20 76.8 30.8Accrued expenses anddeferred income 21 259.3 227.9Other provisions 22 21.8 19.6Total current liabilities 926.7 665.6Total equity and liabilities 2,571.2 2,192.0Attributable to Parent Company shareholdersOthercontributedcapitalTranslationdifferencesHedgereserveProfitbroughtforwardOpening balance at 1 May 2007 82.0 90.4 –13.8 0.0 1,208.7 1,367.3Exchange-rate differences 5.6 5.6Cash flow hedging recognised in equity, after tax 1 –26.8 –26.8Cash flow hedging recognised in income statement, after tax 2 21.2 21.2Cash flow hedging included in inventories, after tax 3 5.6 5.6Total transactions recognised directly in equity 0.0 0.0 5.6 0.0 0.0 5.6Net profit for the year 421.8 421.8Total recognised income and expenditure in equity 0.0 0.0 5.6 0.0 421.8 427.4Dividend –295.2 –295.2Closing balance at 30 April 2008 82.0 90.4 –8.2 0.0 1,335.3 1,499.5Opening balance at 1 May 2008 82.0 90.4 –8.2 0.0 1,335.3 1,499.5Exchange-rate differences 10.1 10.1Cash flow hedging recognised in equity, after tax 1 36.7 36.7Cash flow hedging recognised in income statement, after tax 2 –14.6 –14.6Cash flow hedging included in inventories, after tax 3 –22.8 –22.8Total transactions recognised directly in equity 0.0 0.0 10.1 –0.7 0.0 9.4Net profit for the year 365.5 365.5Total recognised income and expenditure in equity 0.0 0.0 10.1 –0.7 365.5 374.9Repurchase of own shares –58.0 –58.0Employee stock options plan: value of employees’ service 1.5 1.5Dividend –324.8 –324.8Closing balance at 30 April 2009 (see Note 18) 82.0 90.4 1.9 –0.7 1,319.5 1,493.11Tax has been taken into account at SEK –14.3 M (+10.4).2Tax has been taken into account at SEK 8.2 M (–8.2).3Tax has been taken into account at SEK 8.1 M (–2.2).Clas Ohlson 2008/09 Accounts 57Total

Parent CompanyIncome statementSEK MNote1, 21 May 200830 April 20091 May 200730 April 2008Net sales 23 4,001.8 4,062.8Cost of goods sold 4, 23 –2,857.6 –2,750.8Gross profit 1,144.2 1,312.0Selling expenses 4,5,6 –740.4 –665.4Administrative expenses 4,5,6,7 –98.2 –97.6Other operating income 3 1.3 0.8Other operating expenses 3 –3.8 –0.5Operating profit 303.1 549.3Financial itemsDividend from Group companies 24 39.4 165.8Interest income 8 2.4 6.5Interest expenses 8 –5.2 –0.6Profit after financial items 339.7 721.0Appropriations 25 –96.4 –16.0Profit before tax 243.3 705.0Income tax 9 –60.2 –152.4Net profit for the year 183.1 552.6Proposed divided per share, SEK 11 3.00 5.00(before and after dilution)Cash flow statementSEK MOperating activities1 May 200830 April 20091 May 200730 April 2008Operating profit 303.1 549.3Adjustment for items not includedin cash flow– depreciation 61.2 59.8– profit from sale/disposal of fixed assets 0.2 –0.1– other non-cash items 2.5 0.9Dividends received 39.4 165.8Interest received 5.5 4.2Interest paid –3.3 –0.6Tax paid –172.4 –82.5Cash flow from operating activitiesbefore change in operating capital 236.2 696.8Cash flow from changes inworking capital:– accounts receivables 1.2 4.2– inventories –96.9 –67.8– other receivables –204.8 –216.1– accounts payables 98.1 58.8– other current interest-freeoperating liabilities 15.5 14.3Cash flow from operating activities 49.3 490.2Investing activitiesInvestments in property,plant and equipment –332.6 –197.4Sale of equipment 0.5 0.8New formation of subsidiaries –6.5 –4.0Cash flow from investing activities –338.6 –200.6Financing activitiesRepurchase of shares –58.0 0.0Change in current interest-bearingliabilities 426.3 0.0Change in non-current interest-bearingliabilities 65.0 0.0Divided to shareholders –324.8 –295.2Cash flow from financing activities 108.5 –295.2Cash flow for the year –180.8 –5.6Cash and cash equivalents at start of year 194.8 200.4Cash and cash equivalents at end of year 14.0 194.858 AccountsClas Ohlson 2008/09

Parent CompanyBalance sheetSEK M Note 30 April 2009 30 April 2008AssetsNon-current assets 12Property, plant and equipmentLand and buildings 263.3 273.0Equipment, tools, fixtures and fittings 283.9 287.9Construction in progress 423.2 143.8Total property, plant and equipment 970.4 704.7Financial assetsParticipations in Group companies 24 41.0 34.4Shares and participations 0.1 0.1Total financial assets 41.1 34.5Total non-current assets 1,011.5 739.2Current assetsInventories 13Merchandise 800.8 703.9Total inventories 800.8 703.9Current receivablesAccounts receivables 14 7.0 8.2Receivables fromGroup companies 23 430.3 252.0Other receivables 18.9 0.7Prepaid expenses andaccrued income 15 64.8 56.5Total current receivables 521.0 317.4Cash and bank balances 26 14.0 194.8Total current assets 1,335.8 1,216.1Total assets 2,347.3 1,955.3Balance sheetSEK M Note 30 April 2009 30 April 2008Equity and liabilitiesEquity 18Restricted equityShare capital, 65,600,000 shareswith a quotient value of SEK 1.25 82.0 82.0Statutory reserves 106.8 106.8Total restricted equity 188.8 188.8Non-restricted equityProfit brought forward 708.6 537.1Net profit for the year 183.1 552.6Total unrestricted equity 891.7 1,089.7Total equity 1,080.5 1,278.5Untaxed reserves 27 249.0 152.6ProvisionsOther provisions 22 12.4 11.5Total provisions 12.4 11.5Non-current liabilitiesBank loans 20 65.0 0.0Total non-current liabilities 65.0 0.0Current liabilitiesUtilised credit facilities 20 426.3 0.0Accounts payables 20 293.9 195.9Tax liability 36.6 138.6Other current liabilities 20 10.6 11.0Accrued expenses and deferredincome 21 173.0 167.2Total current liabilities 940.4 512.7Total equity and liabilities 2,347.3 1,955.3Pledged assets 28 97.0 67.0Contingent liabilities 29 176.6 90.4Change in Parent Company equitySEK MShare capitalStatutoryreserveNonrestrictedequityOpening balance at 1 May 2007 82.0 106.8 832.3 1,021.1Dividend –295.2 –295.2Net profit for the year 552.6 552.6Closing balance at 30 April 2008 82.0 106.8 1,089.7 1,278.5TotalOpening balance at 1 May 2008 82.0 106.8 1,089.7 1,278.5Dividend –324.8 –324.8Repurchase of own shares –58.0 –58.0Employee stock options plan: value of employees’ service 1.7 1.7Net profit for the year 183.1 183.1Closing balance at 30 April 2009 (see Note 18) 82.0 106.8 891.7 1,080.5Clas Ohlson 2008/09 Accounts 59

Accounting policies and notesAmounts are in SEK M unless stated otherwiseNote 1 Accounting and valuationprinciplesCompliance with standards and legislationThe consolidated financial statements for Clas Ohlson have been preparedin accordance with the Annual Accounts Act, RFR 1.1 SupplementaryAccounting Rules for Groups and International Financial Reporting Standards(IFRS) as approved by the EU. The financial statements were prepared inaccordance with the cost method, apart from financial assets and liabilitiesmeasured at fair value.The annual accounts of the Parent Company have been prepared in accordancewith the Swedish Companies Act and RFR 2.1 Accounting for LegalEntities. The same accounting policies are applied for the Group except incases indicated under “Parent Company accounting policies”. The differencesthat occur between the policies applied for the Parent Company andGroup derive from limitations on the possibilities to apply IFRS in the ParentCompany resulting from the Swedish Annual Accounts Act.Information on future standardsStandards, amendments and interpretations of current standards that havenot yet come into effect and will not be applied in advance by the Group.IAS 1 (Revised), “Presentation of Financial Statements” (pertains to financialyears beginning 1 January 2009 or later). According to the revised standard,recognised income and expense must be presented in a single statement(statement of comprehensive income) or two statements (an income statementand a statement of comprehensive income), separate from transactionswith shareholders. Components in other comprehensive income may not bepresented in the report of changes in shareholders’ equity since this mustonly include transactions with the company’s shareholders. The Group willapply IAS 1 (Revised) as of 1 May 2009.IAS 23 (Amendment), “Borrowing costs” (applies to financial years beginning1 January 2009 or later). According to the amendment, a company mustcapitalise as part of the acquisition cost of the asset borrowing costs that aredirectly attributable to acquisition, construction or production of an asset thattakes a considerable amount of time to complete for use or sale. The optionto immediately expense these borrowing costs will be removed. The Groupwill apply IAS 23 (Revised) as of 1 May 2009, but it is not anticipated to haveany significant impact on the consolidated financial statements.IFRS 2 (Amendment), “Share-based Payment” (applies to financial yearsbeginning 1 January 2009 or later). The amended standard addresses vestingconditions and cancellations. It clarifies that vesting conditions are serviceconditions and performance conditions only. Other features in share-basedpayment refer to non-vesting conditions. These features must be taken intoaccount when the fair value on the allocation day is adopted for transactionswith employees and others that provide similar services. However, they donot affect the number of options expected to be vested or the valuation ofthese after allocation day. All cancellations, regardless of whether they wereimplemented by the company or other parties, should be subject to the sameaccounting treatment. The Group will apply IFRS 2 (Revised) as of 1 May2009, but it is not expected to have any significant impact on the consolidatedfinancial statements.IFRS 8, Operating Segments (applies to financial years beginning 1 January2009 or later). IFRS 8 will replace IAS 14. The new standard requires thatsegment information be presented based on management’s perspective,which means that it must be presented in a manner that is used in internalreports. The Group will apply IFRS 8 as of 1 May 2009. Refer to Note 33.In addition, there are new standards, amendments and interpretations of currentstandards that have not yet come into effect and that are not relevant tothe Group.Basis of preparationThe items included in the financial statements for the various units in theGroup are valued in the currency used in the financial environment in whicheach company primarily operates (functional currency). The consolidatedfinancial statements use Swedish kronor (SEK), which is the Parent Company’sfunctional currency and the reporting currency for the Group. All sums,unless otherwise stated, are rounded to the nearest million Swedish kronorplus one decimal point.The accounting policies for the Group indicated below have been appliedconsistently to all periods presented in the consolidated financial statements,unless otherwise stated. The Group’s accounting policies have been appliedconsistently to the reporting and consolidation of the Parent Company andsubsidiaries.Estimates and assumptionsPreparing the financial statements in accordance with IFRS requires managementto make judgements, estimates and assumptions that impact upon theapplication of the accounting policies and the carrying amounts for assets,liabilities, income and expenses. These are based on historical experienceand a number of other factors that appear reasonable under the prevailingconditions. The estimates and assumptions are reviewed regularly and arenot judged to entail any significant risk of material adjustment of carryingamounts for assets and liabilities during the next financial year. Any changesto estimates are recognised in the period in which the change is made if thechange has only impacted upon this period, or in the period in which thechange is made and future periods if the change impacts upon both the currentperiod and future periods. Further information on estimates and assumptionsmade is presented in Notes 13 and 22.Consolidated financial statementsThe consolidated financial statements pertain to the Parent Company andall companies over which the Parent Company directly or indirectly has controllinginfluence. The consolidated financial statements include the whollyowned subsidiaries Clas Ohlson AS, Clas Ohlson OY, Clas Ohlson (UK)and Clas Ohlson Ltd (Shanghai). The purchase method has been appliedin preparing the consolidated financial statements. The annual accounts ofthe foreign subsidiaries have been translated using the current rate method,which means that assets, liabilities and equity have been translated from thefunctional currency to Swedish kronor at the exchange rate prevailing on thereporting date and income statements at the average exchange rate for theyear. The translation difference resulting from this, and resulting from the netinvestment having been translated at a different exchange rate at the end ofthe year than at the start of the year, is recognised in equity. Intra-Group salesand inter-company profits have been eliminated in full from the consolidatedfinancial statements.Translation of foreign currenciesTransactions in foreign currencies are translated to the functional currencyat the exchange rates applicable on the transaction date. Exchange-rategains and losses arising from the payment of such transactions and from thetranslation of monetary assets and liabilities in foreign currency at the rateprevailing on the reporting date are recognised in profit and loss. An exceptionis when transactions represent hedging that fulfils the conditions forhedge accounting of cash flows, in which case gains/losses are recognisedin equity. For derivatives, refer to the section on financial instruments.IncomeThe Group’s income is generated through the sale of products to consumersin accordance with the terms of sale. Sale income is reported net less VAT,returns, reservations for open purchase and discounts. Income is recognisedat the time of sale/delivery to the customer, when material risks and benefitsassociated with ownership of the goods have been transferred to the purchaser.Interest income pertains to interest on bank balances. The incomeis recognised in the period to which the interest pertains. Any interest-bearingsecurities are measured continuously at market value through profit andloss.Income taxesIncome taxes comprise current tax and deferred tax. Income taxes are recognisedin profit and loss except when an underlying transaction is recogniseddirectly in equity, whereby the associated tax effect is recognised in equity.Current tax is tax that is due for payment or receipt in the current year, withapplication of the tax rates decided upon or in practice decided upon at thebalance-sheet date, including adjustment of current tax attributable to priorperiods. Deferred tax according to the balance-sheet method is calculatedon all temporary differences arising between carrying amounts and values fortax purposes of assets and liabilities. Deferred tax is calculated with applicationof the tax rates and tax rules decided upon or in practice decided uponat the balance-sheet date. Deferred tax assets pertaining to deductible temporarydifferences and loss carryforwards are only recognised insofar as it islikely that it will be possible for these to be utilised. The value of deferred taxassets is reduced when it is no longer judged likely that it will be possible for60 AccountsClas Ohlson 2008/09

them to be utilised. These temporary differences have mainly arisen from thedepreciation of non-current assets, valuation of inventories and provisionsfor pensions.Property, plant and equipmentProperty, plant and equipment are recognised at cost less accumulateddepreciation and any accumulated impairment losses. Cost includes the purchaseprice and expenses directly attributable to the asset in order to bringit into the position and condition necessary for it to be utilised in accordancewith the purpose of the acquisition. Depreciation is based on the cost andestimated useful life of the assets. Straight-line depreciation is used for allproperty, plant and equipment. Land is not depreciated. The Group appliescomponent depreciation, which means that depreciation is based upon theestimated useful life of the components. The following depreciation periodsare applied:Equipment, tools, fixtures and fittingsBuildings Land improvements 3–15 years25–33 years20 yearsNew acquisitions and replacements are capitalised, while maintenance andrepair costs are expensed. As assets are sold or disposed of, the cost andappurtenant accumulated depreciation are written off. Any profit or lossis recognised. Interest expenses are not added to the cost of the assets,but are expensed as they arise. All of Clas Ohlson’s properties are owneroccupiedproperties.ImpairmentDepreciable assets are assessed to determine any decrease in value resultingfrom events or changes in circumstances indicating that the carryingamount might not be recoverable. An impairment loss is posted in theamount by which the carrying amount of the asset exceeds its recoverablevalue. The recoverable value is the higher of the fair value of the asset lessselling expenses and value in use. In assessing impairment loss, assets aregrouped at the lowest levels at which there are separate identifiable cashflows (cash-generating units).LeasesIn the Group and in the Parent Company, lease contracts only occur in theform of rental contracts for retail premises. All the stores, except the onein Insjön, are leased. These contracts have been classified as operationalleases as they do not signify that the economic benefits and risks associatedwith ownership have been transferred to the tenant.InventoriesInventories have been valued at the lower of cost and net selling price on thebalance-sheet date, applying the “first in, first out” principle. Net selling priceis the estimated selling price in operating activities less selling expenses.Inter-company profits arising from delivery between companies forming partof the Group are deducted. Necessary provision for obsolescence has beenmade. Inventory expenses include transfers from equity of any gains/lossesfrom cash flow hedging fulfilling the conditions for hedge accounting, attributableto purchases of goods.ReceivablesReceivables with a due date more than 12 months after the balance-sheetdate are recognised as non-current assets, while others as regarded as currentassets. Receivables are recognised at the amount expected to be paidafter individual testing.Accounts receivables are recognised initially at fair value and then ataccrued cost applying the effective interest rate method, less any provisionfor depreciation. A provision for depreciation is posted when there is objectiveevidence that the Group will not be able to receive all sums due accordingto the original terms of the receivables. The amount of the provision isrecognised in profit and loss.Financial instrumentsThe Group classifies its financial instruments in the following categories:financial assets measured at fair value through profit and loss, loan receivablesand accounts receivables, financial instruments held to maturity andavailable-for-sale financial assets. The classification depends on the purposefor which the instruments were acquired. The company’s managementestablishes the classification of the instruments at the time of the first reportingand reviews this decision on each reporting occasion.Purchases and sales of financial instruments are recognised on the tradedate – the date when the Group binds itself to purchase or sell the asset.Financial instruments are initially measured at fair value plus transactionexpenses, which applies to all financial assets not measured at fair valuethrough profit and loss. Fair value for listed securities is based on current bidprices. If the market for a financial asset is not active (and for unlisted securities),the Group will establish the fair value by applying such the use of informationconcerning recently completed transactions on an arms-length basis,reference to the fair value of another instrument that is essentially equivalent,analyses of discounted cash flow and options valuation methods. In this connection,market information is widely used while company-specific informationis used as little as possible. Financial instruments are derecognised fromthe balance sheet when the right to receive cash flows from the instrumenthas expired or been transferred and the Group has transferred virtually all therisks and benefits associated with right of ownership. Available-for-sale financialassets and financial assets measured at fair value through profit and lossare recognised after the time of acquisition at fair value. In cases when thetransactions constitute hedging that fulfils the conditions for hedge accountingof cash flows, gains/losses are recognised in equity (see under Translationof foreign currency). Loan receivables and accounts receivable arerecognised at accrued cost with application of the effective interest method.Realised and unrealised gains and losses due to changes in fair value pertainingto the category of financial assets measured at fair value through profitand loss are included in profit and loss in the period during which they arise.Only loan receivables and accounts receivable existed when the accountswere closed. Financial instruments in the form of interest-bearing securitiesmay occur on a current account basis during the financial year.With regard to any derivatives that are not categorised as an instrumentin currency hedging, changes in fair value are recognised in profit and loss.In hedging cash flow qualified for hedge accounting, the effective portionof changes in the fair value of the hedging instruments is recognised underequity in the hedge reserve until the underlying hedged item is recognised,whereby all appurtenant hedging items in equity are simultaneously transferredto profit and loss and recognised in cost of goods sold. Clas Ohlson applieshedge accounting for forward exchange contracts insofar as they qualifyfor hedge accounting according to the requirements. In all cases, the hedgingpertains to cash flow hedging. For information concerning the Group’sexchange hedging policy, see Note 2 under the section on Currency Risk.Cash and cash equivalentsCash and cash equivalents consist of cash and immediately available balancesat banks and equivalent institutions, as well as short-term investmentswith a term of less than three months from the time of acquisition.Employee benefitsThe overall principles for remuneration of senior management must be basedon the position, individual performance, Group profits and the fact that theremuneration must be competitive in the country of employment. The totalremuneration of senior management shall comprise basic salary, variableremuneration in the form of short-term incentives based on annual performancetargets, long-term incentives based on multi-year performance, pensionand other benefits. Additional items are terms and conditions for terminationand severance pay.Clas Ohlson will strive to offer a competitive total remuneration level withan emphasis on performance-based payments. This means that variableremuneration may comprise a significant portion of the total remuneration.The aim is that the fixed remuneration shall be comparable to the averagein the market while the total remuneration, when Clas Ohlson AB achievesor surpasses its targets, shall be in the upper quartile of the market. Referalso to Note 6. With regard to any severance pay, a provision is recognisedin cases where the company is demonstrably obliged to terminate a contractof employment before the normal time or as an offer to encourage voluntaryredundancy.With regard to pensions, both defined-benefit and defined-contributionpension plans occur. The Finnish subsidiary has only defined-contributionpensions. There are both defined-contribution and defined-benefit pensionplans in the Parent Company. However, in accordance with a statement fromFAR SRS, the defined-benefit supplementary pension for salaried employees(ITP) plan (Alecta) is treated as a defined-contribution pension policy.There are both defined-contribution and defined-benefit pension plans in theNorwegian subsidiary. Future obligations with regard to defined-benefit pen-Clas Ohlson 2008/09 Accounts 61

Note 1 cont.sion plans are calculated annually according to a method described in detailbelow.In defined-contribution plans, the company pays set contributions to aseparate legal entity and is not obligated to pay any further contributions.Expenses are charged against Group profits as the benefits are vested. Indefined-benefit plans, payments are made to employees and former employeesbased on final salary and the number of years of service. The Groupbears the risk associated with the pledged payments being made. The netsum of the estimated value of obligations and fair value of plan assets isrecognised on the balance sheet as either a provision or a non-current financialreceivable. In cases where a surplus in a plan cannot be fully utilised, onlythat part of the surplus that the company can recover through reduced futurecontributions or repayments is recognised.Regarding defined-benefit plans, the pension expense and pension obligationare calculated according to the Projected Unit Credit Method. Underthis method, the expense is distributed as the employees perform servicesfor the company that increase their entitlement to future remuneration. Thecalculation is performed annually by independent actuaries. The company’scommitments are measured at the current value of expected future paymentsusing a discount rate which is equivalent to the interest on municipal bonds(pertaining to Norway) with a term equivalent to the current commitments.The principal actuarial assumptions are stated in Note 19.Actuarial gains and losses may arise in establishing the present value ofthe obligation and the fair value of plan assets. These arise either throughthe fair value deviating from the assumption made previously, or through achange in assumptions. The part of the cumulative actuarial gains and losses,at the end of the preceding year, exceeding 10 per cent of the greaterof the present value of the obligations and the fair value of the plan assets isrecognised in profit or loss over the average remaining period of service ofemployees.ProvisionsProvisions are recognised in the balance sheet among current and non-currentliabilities when the Group has a legal or informal obligation resulting froman event that has occurred and it is likely that an outflow of resources will berequired to discharge the commitment and a reliable estimate can be madeof the amount. Provisions are made for open purchase, unredeemed giftcards and estimated future guarantee commitments.Accounts payableAccounts payable are initially recognised at fair value and thereafter ataccrued cost applying the effective interest method.BorrowingBorrowing is initially recognised at fair value, net after transaction expenses.Borrowing is thereafter recognised at accrued cost and any differencebetween the amount received (net after transaction costs) and the repaymentamount is recognised in profit and loss distributed over the borrowing period,applying the effective interest method.Charges paid for credit facilities are recognised as transaction costs forborrowing insofar as it is probable that the credit will be utilised in full orin part. In such cases, charges are recognised when the credit has beenutilised. When there is no evidence that the credit will be utilised in full or inpart, the charges will be recognised as advance payment for financial servicesand distributed over the term of current credit facilities.Borrowing is classified as current liabilities if the Group is not unconditionallyentitled to postpone payment of the debt for at least 12 months after thebalance-sheet date.Cash flow statementThe cash flow statement is prepared according to the indirect method. Therecognised cash flow comprises only transactions that entail receipts or disbursements.In addition to cash or bank balances, current financial investmentsthat are subject only to an insignificant risk of fluctuation in value andhave a remaining term of less than three months from the time of acquisitionare classified as cash and cash equivalents.Segment accountingA classification has been made of primary and secondary segments in thecompany’s operations. The decisive factors when making this choice arethe types of risks and opportunities that are dominant, how the companyis organised and how the internal reporting system is structured. Becausethe operation consists in full of the sale of products for house, home, technologyand hobbies, this is regarded as the primary segment. The divisioninto geographical customer markets is treated as a secondary segment.No sales between segments have occurred. A division could also be madebetween stores and mail orders/internet operations, but because the storesaccount for 97 per cent of sales, this division is not relevant in terms of segmentaccounting.Parent Company accounting policiesThe Parent Company has prepared its annual accounts in accordance withthe Swedish Annual Accounts Act and Recommendation RFR 2.1 Accountingfor Legal Entities, of the Swedish Financial Accounting Standards Council.This means that the Parent Company, in the annual accounts of the legalentity, has to apply all EU-approved IFRS standards and interpretations as faras possible under the terms of the Annual Accounts Act and in considerationof the connection between accounting and taxation. The recommendationspecifies the exceptions from and additions to IFRS that are to be made. AtClas Ohlson, the difference between the consolidated and Parent Companyaccounting policies is that IAS 1 is not applied with regard to preparation ofthe balance sheets and income statements for the Parent Company, whichinstead are prepared in accordance with the Annual Accounts Act.The accounting policies for the Parent Company have been consistentlyapplied to all periods presented in the Parent Company’s financial statements.Note 2 Financial risksThe Group is exposed to a variety of financial risks through its operations:market risk (including currency risk, interest-rate risk and price risk), creditrisk, liquidity risk and cash-flow risk. The Group’s overall risk managementpolicy focuses on the unpredictability of financial markets and endeavours tominimise potential unfavourable effects on the Group’s financial results. TheGroup uses derivatives to hedge certain risk exposure.Risk management is dealt with by a central financial department (GroupFinance) in accordance with policies adopted by the Board. Group Financeidentifies, evaluates and hedges financial risks in close cooperation with theGroup’s operational units. The Board draws up policies for overall risk managementand specific areas, such as currency risk, use of derivatives andinvestment of surplus liquidity.MARKET RISKCurrency riskA significant portion of accounts payable comprises liabilities in foreign currenciesand is therefore subject to currency risks. In the Group, the principalcurrencies used in purchases are hedged in order to reduce any currencyrisks, in accordance with the financial policy. Approximately 50 per cent ofthe anticipated flow six months ahead is hedged when prices in the maincatalogue are set.Approximately 42 per cent of the company’s purchases are made in currenciesother than Swedish kronor (SEK). The principal currencies for purchasingare the US dollar (USD), Hong Kong dollar (HKD) and euro (EUR). Inaddition, movements of SEK against the Norwegian krone (NOK) are verysignificant to the Group, because more than a third of sales take place inNorway. Net exposure to EUR is low, because the company has higher EURdenominatedsales due to its expansion in the Finnish market. The tablebelow shows how profit is affected by changes in the principal currencies.Impact onCurrency Change profit after tax, SEK MNOK +/– 5 per cent +/– 32USD +/– 5 per cent –/+ 21HKD +/– 5 per cent –/+ 9EUR +/– 5 per cent +/– 3Cash and cash equivalents are also exposed to currency risk since a certainproportion of the funds is invested in the subsidiaries. No currency hedging isused to hedge cash and cash equivalents or equity in the subsidiaries.Interest-rate riskThe interest-rate risk is very low as the company’s interest-bearing liabilitiesare lower in relation to profit and total assets.62 AccountsClas Ohlson 2008/09

Price riskThe price risk is regarded as low as the company buys from more than 600suppliers. In accordance with its purchasing policy, the company also avoidsentering into long-term supply contracts, to retain flexibility with regard tosuppliers and products.Credit riskAccounts receivables are characterised by a very low risk, as each sub-itemis small and the Group’s credit policy is restrictive. Provisions for doubtfulreceivables are made following individual examination, but this has not beennecessary in the past two financial years for either the Group or the ParentCompany.Short-term investments normally pertain to investments in commercialpapers in the Swedish interest-rate market. The loss risk is low because thepolicy is to choose commercial papers with a very high credit rating. At theend of the year there were no short-term investments, but they may occur ona current-account basis during the year.Cash and cash equivalents are invested in various bank accounts, mainlyat Svenska Handelsbanken and its international branches in Norway, Finlandand the UK. The credit risk is considered insignificant.Capital riskThe capital risk is regarded as low because the Group had a low portion ofliabilities at the end of the financial year and an equity/assets ratio of 58.1per cent.Note 3 Other operating income andoperating expensesOther operating incomeGroupParent Company2008/09 2007/08 2008/09 2007/08Exchange-rate differences 1.6 0.8 1.3 0.6Gain/loss on sale or disposalof property, plant andequipment 0.0 0.2 0.0 0.2Total 1.6 1.0 1.3 0.8Other operating expensesExchange-rate differences –3.0 –0.7 –2.4 –0.4Gain/loss on sale or disposalof property, plant andequipment –1.4 –1.7 –1.4 –0.1Total –4.4 –2.4 –3.8 –0.5Note 4 DepreciationGroup 2008/09 2007/08Depreciation broken down by type of assetLand and buildings 14.5 14.4Equipment, tools, fixtures and fittings 77.9 69.3Total 92.4 83.7Depreciation broken down by functionCost of goods sold 17.8 16.8Selling expenses 71.9 64.4Administrative expenses 2.7 2.5Total 92.4 83.7Parent Company 2008/09 2007/08Depreciation broken down by type of assetLand and buildings 14.5 14.1Equipment, tools, fixtures and fittings 46.7 45.7Total 61.2 59.8Depreciation broken down by functionCost of goods sold 14.7 14.4Selling expenses 43.8 42.9Administrative expenses 2.7 2.5Total 61.2 59.8Note 5 Expenses distributed bytype of costPayroll expenses including social security expenses during the financial yeartotalled SEK 1,040.6 M (919.7) in the Group and SEK 690.0 M (647.9) in theParent Company. Depreciation during the financial year totalled SEK 92.4 M(83.7) in the Group and SEK 61.2 M (59.8) in the Parent Company.Note 6 Expenses for employee benefitsSalaries and otherremuneration2008/09 2007/08Parent Company 487.7 465.0Subsidiaries 297.4 232.0Group total 785.1 697.0Social security expensesSocialsecurityexpenses2008/09 2007/08of which,pensionexpensesSocialsecurityexpensesof which,pensionexpensesParent Company 202.3 50.4 182.9 34.0Subsidiaries 53.2 16.8 39.8 9.9Group total 255.5 67.2 222.7 43.9Of the Parent Company’s pension expenses, SEK 2.7 M (4.7) pertained tothe group consisting of the Board, CEO and Deputy CEO. Of the subsidiaries’pension expenses, SEK 0.9 M (0.6) pertained to managing directors of subsidiaries.In the Group, expenses for defined-contribution pensions amountedto SEK 57.0 M (37.9) and defined-benefit pensions to SEK 1.0 M (0.2).The Parent Company’s pension expenses include negotiated pensionstotalling SEK 11.8 M (0) resulting from restructuring of the distribution centre.The Parent Company only has defined-contribution pensions (includingAlecta), for which the year’s expenses amounted to SEK 29.4 M (28.2). Inthe Parent Company, the year’s expenses for special employer’s contributionon pension premiums totalled SEK 9.2 M (5.8). For further information on thedefined-benefit pension plans in the Group, see Note 19.Clas Ohlson 2008/09 Accounts 63

Note 6 cont.Remuneration of Board members, managing directors andother senior managementParent Company2008/09 2007/08Salaries and other remuneration 18.9 23.4– of which variable remuneration 0.0 4.5Pension expenses 5.8 7.0Number of individuals in group 15 16Group2008/09 2007/08Salaries and other remuneration 26.7 28.2– of which variable remuneration 0.0 5.2Pension expenses 6.7 7.6Number of individuals in group 19 18Board remunerationFees are paid to the members of the Board according to a resolution by theAnnual General Meeting. Board members who are employed in the companydo not receive director fees. No pensions or other remuneration under incentiveschemes are paid to the company’s Board.In subsidiaries, director fees to external members were paid in the amountof SEK 0.1 M (0.2). No other director fees were paid in the subsidiaries.The Board2008/09 2007/08DirectorfeesOtherremunerationDirectorfeesOtherremunerationAnders Moberg. Chairman 0.50 0.12 0.40 0.10Björn Haid. member 0.25 0.06 0.20 0.05Cecilia Marlow. member 0.25 0.06 0.20 0.10Elisabet S Bjöklund. member 0.25 0.18 0.20 0.15Klas Balkow. member and CEO 0.00 0.00 0.00 0.00Lottie Svedenstedt. member 0.25 0.06 0.20 0.05Urban Jansson. member 0.25 0.12 0.20 0.05Board total 1.75 0.62 1.40 0.50Board member Klas Balkow received remuneration as President and CEO ofthe company.During the financial year, the gender distribution among Board memberselected by the AGM was four men and three women. In percentage terms, thedistribution was thus 57 per cent male and 43 per cent female. The equivalentdistribution in the preceding financial year was the same.Remuneration of senior managementRemuneration paid to the Chief Executive Officer and other members ofsenior management is made up of basic salary, variable remuneration andpension contributions. Other members of senior management are the eightindividuals who together with the Chief Executive Officer made up the Groupmanagement team during the financial year.For the composition of the senior management at 30 April 2009, see page79 of the printed annual report.Salaries paid to seniormanagementBasicsalary2008/09 2007/08 3Variableremuneration2 BenefitsBasicsalaryVariableremunerationBenefitsKlas Balkow. CEO 3.6 0.6 0.2 3.3 1.4 0.2Deputy CEO 3.4 0.4 0.1 3.3 0.5 0.1Other seniormanagement (7) 7.8 1.3 0.3 8.3 1.2 0.4Total management 14.8 2.3 0.6 14.9 3.1 0.71Remuneration paid to CEO Klas Balkow in the preceding year pertained to 11 months.2Of the variable remuneration, recognised expenses and unpaid remuneration pertaining toLTI 2008 were as follows: CEO SEK 0.2 M, Deputy CEO SEK 0.2 M, other senior managementSEK 0.3 M.3The preceding year’s remuneration included remuneration of former CEO Gert Karnbergertotalling SEK 6.1 M in basic salary, SEK 2.2 M in variable remuneration, SEK 0.3 M in benefitsand SEK 2.1 in pension.Pension expenses forsenior management2008/09 2007/08 3DefinedcontributionDefinedbenefitDefinedcontributionDefinedbenefitKlas Balkow. CEO 1.3 0.0 1.3 0.0Deputy CEO 1.3 0.0 1.3 0.0Other seniormanagement (7) 3.2 0.0 2.9 0.0Total management 5.8 0.0 5.5 0.0Under the contract of employment with the Chief Executive Officer, the mutualperiod of notice is six months. Twelve months’ salary is payable in the eventof termination by the company. Applicable salary and benefits are payableduring the period of notice. The retirement age is 65, and the current pensioncontribution is equivalent to SEK 1.3 M.Salary and other remuneration payable to the CEO are decided by theBoard and discussed by a Remuneration Committee appointed within theBoard. Salary is reviewed at the end of each calendar year. Salaries and otherremuneration of managing directors of subsidiaries are decided by the Boardof each subsidiary according to guidelines issued by the Board’s RemunerationCommittee.Salaries and other remuneration for other senior management are decidedby the Chief Executive Officer, supported by the Remuneration Committee.Terms of employment comply with applicable collective agreements. Theperiod of notice is three to six months. Applicable salary and benefits arepayable during the period of notice. Up to six months’ severance pay is payablein the event of termination by the company.The principles for variable remuneration are decided by the Annual GeneralMeeting and processed by the Remuneration Committee. During theyear, two different types, STI and LTI, were payable. Refer to the descriptionbelow.Provisions for STI and LTI are posted continuously. All members of seniormanagement are entitled to annual pension contributions, primarily in accordancewith the ITP plan. Retirement age varies between 65 and 67 years.The gender distribution among the senior management of the ParentCompany, and of the Group, is seven men and two women. In percentageterms, the distribution is thus 78 per cent male and 22 per cent female. Thedistribution in the preceding year was unchanged.Further information on decision-making processes in the Group is presentedon pages 74-76 of the printed annual report.164 AccountsClas Ohlson 2008/09

Remuneration principlesThe overall principles for remuneration of senior management are to bebased on position, individual performance, Group profits and the fact thatremuneration must be competitive in the country of employment. The totalremuneration of senior management must comprise basic salary, variableremuneration in the form of short-term incentives based on annual performancetargets, long-term incentives based on multi-year performance, pensionand other benefits. Additional principles comprise terms and conditionsfor termination and severance pay.Clas Ohlson shall strive to offer a competitive remuneration level with anemphasis on performance-based payment. This means that variable remunerationmay comprise a significant portion of total remuneration. The aim isthat the fixed remuneration shall be comparable to the average in the marketwhile the total remuneration, when Clas Ohlson AB achieves or surpasses itstargets, shall be in the upper quartile of the market.Basic salaryThe basic salary shall comprise the basis for total remuneration. The salaryshall be related to the relevant market and reflect the extent of the responsibilitiesincluded in the position. The basic salary’s trend shall depend onhow well work is performed and how well the employee develops his/hercompetencies to assume future work assignments with greater responsibility.The basic salary shall be reviewed annually to ensure that it is market-basedand competitive.Short-term Incentive “STI”In addition to basic salary, senior management shall be able to receive STI forprofits that exceed one or several predetermined performance levels duringa financial year. Clearly defined performance targets are decided annually bythe Board or by individuals elected by the Board. The performance targetsmay be connected to operational, financial or personal results.Remuneration from the STI plan is subject to a ceiling, which means thatClas Ohlson can calculate maximum remuneration levels from the beginning.Insofar as performance does not match the lowest performance level, no STIwill be paid. STI will depend on the position and may not exceed 50 percent of salary if the ceiling is achieved, which also represents the maximumoutcome of STI.Long-term Incentive “LTI”The aim of long-term incentive plans is to create the prerequisites for recruitingcompetent employees and retaining them in the Group, provide competitiveremuneration and unite the interests of shareholders and senior management.Long-term incentive plans that entitle employees to acquire shares aresubject to approval by the Annual General Meeting. LTI 2008 is currently ineffect. In addition, LTI 2009 was launched after the close of the financial year.LTI 2008 and LTI 2009 are share matching and profit-based employee stockoption plans.Long-term incentive plan LTI 2008An Extraordinary General Meeting held in April 2008 resolved to adopt a performance-basedincentive plan (LTI 2008). The LTI 2008 included a maximumof 40 individuals, comprising certain members of senior management andother individuals regarded as having a long-term impact on Clas Ohlson’sdevelopment.To participate in the plan, employees must acquire series B shares in ClasOhlson corresponding to a value of not less than 5 per cent and not morethan 10 per cent of their annual basic salary. Participants acquired seriesB Clas Ohlson shares, at market price, which the company will later match(1:1 in LTI 2008) free of charge through allotment of shares. If the employeeholds the acquired shares and is still employed by the Group three yearsafter the date of acquisition, the company will issue matching shares to theemployee.The employee may also be allotted profit-based employee stock options.Employee stock options are allocated free of charge and each stock optionentitles the holder to acquire one series B Clas Ohlson share. When theoption is exercised, the price per share will amount to SEK 107.60 per share,corresponding to 110 per cent of the volume-weighted average of the mostrecent price paid for series B Clas Ohlson shares on the Nasdaq OMX NordicExchange during a period of 10 trading days prior to the day the optionswere allocated. The options may be exercised not earlier than three yearsand not later than seven years from the day they were allotted. For an optionto be exercised, the holder must still be employed by the Clas Ohlson Groupand have retained his/her personal investment for three years from the dateof allotment. The option holdings do not provide entitlement to receive dividendson the underlying shares.The number of employee stock options that may be exercised depends onthe number of series B shares that the employee has acquired within theframework of the LTI 2008 plan, and whether the company’s growth and profitgrowth per share for 2008/2009 and the subsequent two financial yearsincrease to the levels set by the Board. These established levels are: Entry,Target and Stretch, with a straight-line increase between each profit level.Entry is a minimum level that must be exceeded in order for a employee stockoption to be exercised. The three levels correspond to the following numberof employee stock options:• Entry: five options per acquired series B share• Target: ten options per acquired series B share• Stretch: 15 options per acquired series B shareAccordingly, the total number of employee stock options that may be exercisedby each participant is limited to 15 per acquired series B share.Changes in the number of stock options outstanding were as follows:Number of employee stock optionsAs of 1 May 2008 0Allocated 520,875Forfeited 34,070As of 30 April 2009 486,805It was not possible to exercise any of the above options at 30 April 2009. Thenumber of allotted options is based on the maximum outcome in the plan.However, the number that may be exercised after three years is based onachievement of growth and profit targets. The sum that is expensed is basedon the level of five options per share.In accordance with the above, LTI 2008 will include the following number ofseries B shares and employee stock options for the various participant categoriesif the Target level is achieved:ParticipantMatching shares No. of employeeNo. of B shares 1 stock options 1Target valueSEK M 2CEO 3,650 36,500 0.8Other members ofGroup management 11,080 110,800 2.6Other participants 19,995 199,950 4.6Total 34,725 347,250 8.01The number of shares and employee stock options may be recalculateddue to decisions concerning a new share issue2The target value of the plan is calculated based on the fair value on thedate of allotment. The share value on the date of allotment was SEK 82.83and the fair value of the option was SEK 14.97. To calculate the fair value ofthe options, the binominal model for option valuation was used. The valuationwas conducted with an anticipated dividend of SEK 5.00 per share, ananticipated term of five years, an interest rate of 3.95 per cent and volatilityof 26.99 per cent. The volatility was measured as standard deviation for theanticipated return on the share price based on a statistical analysis of dailyshare prices for the past three years. The values were adjusted for the discountedvalue of future dividends.Accounting policiesThe LTI 2008 was reported in accordance with IFRS 2 Share-based Payment.The Group posts a provision for anticipated social security contributionsthat will be paid when the shares are allotted and when the options areexercised. The provision for social security contributions is reassessed everybalance-sheet date based on the fair value. The cost recognised in profit andloss for 2008/2009 totalled SEK 2.0 M, of which social security contributionsaccounted for SEK 0.4 M.Share repurchased for the LTI planDuring 2008, Clas Ohlson repurchased series B Clas Ohlson shares to fulfilthe company’s long-term obligations under the incentive plan. The shareswill be allotted or sold to participants in the plan. Clas Ohlson intends to selladditional shares in the market in conjunction with options being exercised orshares being allotted to cover payment of social security contributions.Clas Ohlson 2008/09 Accounts 65

Note 7 Remuneration of auditorsGroupParent Company2008/09 2007/08 2008/09 2007/08ÖhrlingsPricewaterhouseCoopersRemuneration for auditengagements 1.9 1.6 1.0 1.0Remuneration for otherconsultations 0.6 0.4 0.4 0.3Total 2.5 2.0 1.4 1.3Note 8 Financial income and expensesFinancial income and expenses are broken down as follows:Group 2008/09 2007/08Financial assets measured at fair value throughprofit and loss:– capital gains on securities held to maturity 1.0 1.2Interest income 5.8 9.7Group total 6.8 10.9Parent Company 2008/09 2007/08Financial assets measured at fair value throughprofit and loss:– capital gains on securities held to maturity 1.0 1.2Interest income 1.4 5.3Total Parent Company 2.4 6.5Financial expenses are broken down as follows:GroupInterest expenses –5.8 –0.6Parent CompanyInterest expenses –5.2 –0.6Note 9 Income taxTax on net profit for the yearGroupParent Company2008/09 2007/08 2008/09 2007/08Income tax on net profit for theyear 76.0 163.9 60.2 152.4Deferred tax76.0 163.9 60.2 152.4Deferred tax pertaining to temporarydifferences 62.8 0.0 0.0 0.0Effect of change in theSwedish tax rate –3.0 0.0 0.0 0.0Deferred tax pertaining to capitalisedloss carry-forwards 2.5 2.1 0.0 0.062.3 2.1 0.0 0.0Total reported tax expense 138.3 166.0 60.2 152.4Reconciliation of applicable taxrate and effective tax rateGroupParent Company2008/09 2007/08 2008/09 2007/08Reported profit before tax 503.8 587.8 243.3 704.9Income tax calculated accordingto national tax rates pertaining toprofit in each country –141.1 –164.6 –68.1 –197.4Effect of other tax rates for internationalsubsidiaries 0.0 0.0 0.0 0.0Tax effect of:Non-deductible expenses –3.5 –1.4 –3.1 –1.4Non-taxable income 0.0 0.0 0.0 0.0Dividends from subsidiaries 0.0 0.0 11.0 46.4Temporary differences 2.1 0.0 0.0 0.0Revaluation of deferred tax –change in the Swedish tax rates 4.2 0.0 0.0 0.0Recognised tax expense –138.3 –166.0 –60.2 –152.4Applicable tax rate for incometax, % 28.0 28.0 28.0 28.0Effective tax rate, % 27.4 28.2 24.8 21.6Deferred tax items recogniseddirectly in equity 0.2 0.0 0.0 0.0Group 2008/09 2007/08Recognised deferred tax assets and tax liabilitiesEquipment, tools, fixtures and fittings –2.7 –2.8Inventories 0.6 0.6Inter-company profit in inventories –18.9 20.1Provisions 3.6 2.0Pensions 0.0 –0.2Accelerated depreciation –46.6 –42.7Tax allocation reserve –18.8 0.0Deficits in subsidiaries 0.0 2.5Total deferred tax asset (+)deferred tax liability (–), net –82.8 –20.5Deferred tax asset 1.6 2.5Deferred tax liability –84.4 –23.0The Group does not have any unrecognised deferred tax assets or tax liabilitieson temporary differences.GroupChange in deferred tax in temporarydifferences during the yearAmount atstart ofyearRecognisedin profit andlossAmount atthe end ofyearEquipment, tools, fixtures and fittings –2.8 0.1 –2.7Inventories 0.6 0.0 0.6Inter-company profit in inventories 20.1 –39.0 –18.9Provisions 2.0 1.6 3.6Pensions –0.2 0.2 0.0Accelerated depreciation –42.7 –3.9 –46.6Tax allocation reserve 0.0 –18.8 –18.8Deficits in subsidiaries 2.5 –2.5 0.0Total –20.5 –62.3 –82.866 AccountsClas Ohlson 2008/09

Note 10 Earnings per shareEarnings per share before dilution2008/09 2007/08Net profit for the year 365.5 421.8Average number of shares outstanding 65.1 65.6Earnings per share before dilution 5.62 6.43Earnings per share after dilutionNet profit for the year 365.5 421.8Average number of shares outstanding 65.1 65.6Earnings per share after dilution 5.62 6.43Earnings per share before and after dilutionThe calculation of earnings per share has been based on net profit for theyear attributable to the Parent Company’s shareholders, totalling SEK 365.5M (421.8), and on a weighted average number of shares outstanding beforeand after dilution during both 2007/08 and 2008/09.Note 11 Dividend per shareThe dividends paid in 2008/09 and 2007/08 totalled SEK 328.0 M (SEK 5.00per share) and SEK 295.2 M (SEK 4.50 per share) respectively. A dividendpertaining to 2008/09 of SEK 3.00 per share, totalling SEK 196.8 M, will beproposed at the Annual General Meeting to be held on 12 September 2009.The proposed dividend has not been recognised as a liability in these financialstatements.Note 12 Non-current assetsProperty, plant andequipmentLand and buildingsGroupParent Company2008/09 2007/08 2008/09 2007/08Opening cost 372.1 364.6 371.6 364.1Acquisitions for the year 4.8 7.5 4.8 7.5Closing accumulated cost 376.9 372.1 376.4 371.6Opening depreciation 99.1 84.8 98.6 84.5Depreciation for the year 14.5 14.4 14.5 14.1Translation differences 0.0 –0.1 0.0 0.0Closing accumulateddepreciation 113.6 99.1 113.1 98.6Closing residual valueaccording to plan 263.3 273.0 263.3 273.0Assessed value, buildings 123.8 98.2 123.8 98.2Assessed value, land 13.8 13.6 13.8 13.6Carrying amount, land 5.8 5.6 5.8 5.6Equipment, tools, fixturesand fittingsGroupParent Company2008/09 2007/08 2008/09 2007/08Opening cost 688.8 612.4 462.2 432.3Acquisitions for the year 150.1 100.8 48.4 46.6Reclassifications 0.0 0.0 0.0 0.0Sales and disposals –41.4 –32.2 –24.3 –16.7Translation differences 16.6 7.8 0.0 0.0Closing accumulated cost 814.1 688.8 486.3 462.2Opening depreciation 256.9 214.0 174.3 144.6Depreciation for the year 77.9 69.3 46.7 45.7Sales and disposals –35.6 –29.7 –18.6 –16.0Translation differences 5.7 3.3 0.0 0.0Closing accumulateddepreciation 304.9 256.9 202.4 174.3Closing residual valueaccording to plan 509.2 431.9 283.9 287.9Construction in progressOpening cost 143.8 0.5 143.8 0.5Acquisitions for the year 279.4 143.3 279.4 143.3Reclassifications 0.0 0.0 0.0 0.0Closing accumulated cost 423.2 143.8 423.2 143.8Financial assetsOpening cost 3.3 4.8 34.5 30.5Decrease/increase innoncurrent receivables –1.3 –1.5 0.0 0.0Increase in participations inGroup companies 0.0 0.0 6.6 4.0Closing accumulated cost 2.0 3.3 41.1 34.5Fair value 2.0 3.3 41.1 34.5Investment commitmentsContracted investments on the balance-sheet date not yet recognised inthe financial statements total the following amounts:Land and buildings 77.0 228.2 77.0 228.2Equipment, tools, fixturesand fittings 115.0 104.0 115.0 104.0Note 13 InventoriesGroupParent Company2008/09 2007/08 2008/09 2007/08Merchandise 1,117.2 952.6 800.8 703.9Total 1,117.2 952.6 800.0 703.9Cost of goods sold 2,916.5 2,788.7 2,857.6 2,750.8Of which, obsolescence 12.6 21.4 9.4 14.2Obsolescence is calculated according to individual assessment on the basisof age analysis in stores and the distribution centre.Clas Ohlson 2008/09 Accounts 67

Note 14 Accounts receivablesGroupParent Company2008/09 2007/08 2008/09 2007/08Accounts receivables 12.5 13.3 7.0 8.2Total 12.5 13.3 7.0 8.2Fair value 12.5 13.3 7.0 8.2Note 15 Prepaid expenses andaccrued incomeGroupParent Company2008/09 2007/08 2008/09 2007/08Prepaid rent 45.5 32.5 23.3 20.5Prepaid costs of materials 18.6 18.7 14.6 12.7Other prepaid expenses 32.2 37.3 26.9 23.3Total 96.5 88.5 64.8 56.5Note 16 Cash and cash equivalentsGroup 2008/09 2007/08Cash and bank balances 92.0 280.3Group total 92.0 280.3At the end of the year, utilised overdraft facilities, which are not included incash and cash equivalents, totalled SEK 208.6 M in the Group; refer to Note20.Unutilised overdraft facilities in the Group, which are not included in cashand cash equivalents, amounted to SEK 11.4 M at year-end.Note 17 Forward contractsAs per the balance-sheet date, outstanding cash-flow hedging existedaccording to the following table.CurrencypairCarrying amountand fair valueNominal amountAverage remainingterm in monthsSell/buy 2008/09 2007/08 2008/09 2007/08 2008/09 2007/08NOK/SEK –2.5 – 266.9 – 2 –EUR/SEK 1.6 – 44.3 – 2 –Total –0.9 – 311.2 – –In both currency pairs, there are positive and negative market values. Forwardcontracts with positive market values totalled SEK 2.5 M (0), which wasrecognised in the item Other current receivables. Forward contracts withnegative market values totalled SEK 3.4 M (0), which was recognised in theitem Other current liabilities.Deferred tax of SEK 0.2 M was taken into account and the remaining fairvalue of SEK 0.7 M (0) was recognised in the hedging reserve within equity.Note 19 Pension obligationsThe pension obligation pertains to employees in subsidiaries in Norway. It is adefined-benefit pension plan, which means that payments to employees andformer employees are based on final salary and number of years of service.The obligation is secured in the insurance company Storebrand AS.Group 2008/09 2007/08Surpluses (–)/obligations (+) in the balance sheet for:Pension benefits 0.1 –0.6Group total 0.1 –0.6Group 2008/09 2007/08Recognition in profit and loss pertaining to:Pension benefits 1.0 0.2Group total 1.0 0.2Pension benefitsThe amounts recognised in the balance sheet have been calculated as follows:2008/09 2007/08 2006/07Present value of funded obligations 9.7 9.4 17.9Fair value of plan assets –8.0 –6.6 –10.1Unrecognised actuarial gains/losses –1.6 –3.4 –6.9Asset/liability in balance sheet 0.1 –0.6 0.9The amounts recognised in the balance sheet are as follows:2008/09 2007/08 2006/07Expenses for service during currentyear 0.7 2.8 2.6Interest expense 0.4 0.2 0.7Expected return on plan assets –0.3 –0.3 –0.5Actuarial gains/losses reported duringthe year 0.2 0.1 0.2Gains on reduction 0.0 –2.6 0.0Total, included in personnel expenses 1.0 0.2 3.0Of the total expense, SEK 0.2 M (0.0) was included in the item Cost of goodssold, SEK 0.4 M (0.1) in Selling expenses and SEK 0.4 M (0.1) in Administrativeexpenses.The actual return on plan assets was SEK 0.3 M (0.3).Note 18 EquityThe total number of ordinary shares is 65,600,000 (2007/08: 65,600,000)with a quotient value of 1.25. The number of series A shares is 5,760,000,while the number of series B shares is 59,840,000. Each series A seriesshare carries ten votes, while each series B series share carries one vote.All issued shares are fully paid up. The company has one outstanding stockoption plan, LTI 2008, whose outcome was hedged through the repurchaseof 645,000 B shares. The number of shares outstanding at the end of theyear was 64,955,000. The average number of shares before and after dilutionis reported in Note 10.The Group’s provisions consist of translation differences that have arisenon the translation of foreign subsidiaries’ financial accounts, as well as thehedging reserve.68 AccountsClas Ohlson 2008/09

Changes to the asset/liability recognised in the balance sheet are:2008/09 2007/08At the start of the year –0.6 0.9Exchange-rate differences –0.3 0.1Total expenses recognised in profit and loss 1.0 0.2Contributions paid 0.0 –1.8At end of year 0.1 –0.6The principal actuarial assumptions used were as follows:2008/09 2007/08Discount rate, % 3.8 4.5Expected return on plan assets, % 5.8 5.5Future pay increases, % 4.0 4.5Future pension increases, % 1.5 1.8Estimated average remaining period of service, years 9 13Defined-contribution plansDefined-contribution plans exist in Sweden, Norway and Finland. Paymentto these plans takes place regularly according to the rules for the plan concerned.2008/09 2007/08Group 57.0 37.9Parent Company 41.6 28.2The Parent Company’s pension expense includes negotiated pensions totallingSEK 11.8 M (0) resulting from restructuring of the distribution centre.Of the Group’s total expense for defined-contribution plans, SEK 8.6 M(8.6) pertained to the ITP plan financed in Alecta. Alecta’s surplus may be distributedto the policyholders and/or the insured. At the end of 2008, Alecta’ssurplus in the form of the collective funding ratio was 112 per cent (2007: 152per cent). The collective funding ratio comprises the market value of Alecta’sassets as a percentage of the insurance commitments calculated accordingto Alecta’s actuarial assumptions, which do not comply with IAS 19.Note 20 Financial liabilitiesGroupParent Company2008/09 2007/08 2008/09 2007/08Accounts payables 323.4 238.0 293.9 195.9Other current liabilities 76.8 30.8 10.6 11.0Total 400.2 268.8 304.5 206.9Fair value 400.2 268.8 304.5 206.9The average period of credit is 20 days (17 days) for accounts payable and23 days (13 days) for other current liabilities.All bank loans and overdraft facilities are denominated in SEK. The bank loanis renewed on a monthly basis and is estimated to extend until 2011. Thecurrent average interest rate is 2.5 per cent per year. The overdraft facilitycarries floating interest rates. During the year, the average interest rate was4.4 per cent.The total borrowing includes secured bank loans and overdraft facilitiestotalling SEK 97.0 M (67.0). Collateral for bank loans consists of chattel andproperty mortgages. The credit limit on the overdraft facilities totalled SEK220 M (100). The Parent Company’s credit is included in a cash pool for theGroup in which utilised credit totalled SEK 208.6 M.The fair value on borrowing corresponds to its carrying amount, since thediscounting effect is not significant.Note 21 Accrued expenses anddeferred incomeGroupParent Company2008/09 2007/08 2008/09 2007/08Accrued salary expenses 76.1 72.5 52.9 51.6Accrued holiday payexpenses 106.6 93.0 64.4 61.3Accrued social securitycontributions 56.2 53.4 47.4 46.0Other items 20.4 9.0 8.3 8.3Total 259.3 227.9 173.0 167.2Note 22 Other provisionsPertains to provisions for guarantee commitments, unredeemed gift cardsand open purchase, which are all expected to be utilised during the subsequentfinancial year. The provision for estimated future guarantee commitmentsis equivalent to the guarantee expenses for the year with respect tothe length of the warranty period. Thirty days open purchase is applicable inthe terms of purchase. The provision for open purchase is calculated accordingto these terms with respect to the estimated return rate.GroupParent Company2008/09 2007/08 2008/09 2007/08Opening provisions 19.6 16.8 11.5 10.6Utilised during the year –19.6 –16.8 –11.5 –10.6Allocated during the year 21.8 19.6 12.4 11.5Total other provisions 21.8 19.6 12.4 11.5Break-down of items:Guarantee commitments 11.0 6.6 8.2 4.1Open purchase andunredeemed gift cards 10.8 13.0 4.2 7.4Total other provisions 21.8 19.6 12.4 11.5Group Parent Company2008/09 2007/08 2008/09 2007/08Non-current portionBank loans 65.0 0.0 65.0 0.0Current portionOverdraft facilities 208.6 0.0 426.3 0.0Total borrowing 273.6 0.0 491.3 0.0Clas Ohlson 2008/09 Accounts 69

Note 23 Intra-Group transactionsOf the Parent Company’s invoiced sales, intra-Group sales accounted forSEK 1,444.1 M (1,476.9). Of this sum, SEK 1,235.7 M (1,271.6) related tosales to Clas Ohlson AS in Norway, SEK 199.5 M (205.3) to sales to ClasOhlson OY in Finland and SEK 8.9 M (0) to sales to Clas Ohlson Ltd in theUK. No purchases were made from subsidiaries.Note 24 Participations in GroupcompaniesThe subsidiary Clas Ohlson AS in Norway, with corporate registration numberNO 937402198 and registered office in Oslo; 10,000 shares with a par valueof NOK 100. Shareholding 100 per cent. Carrying amount NOK 50,475. Adividend has been paid from the Norwegian subsidiary to the Parent Companyamounting to SEK 39.4 M (165.8).The subsidiary Clas Ohlson OY in Finland, with corporate registrationnumber FI 1765891-7 and registered office in Helsinki; 500,000 shares witha par value of EUR 1. Shareholding 100 per cent. Carrying amount SEK 30.4M, of which value of shareholders’ contribution SEK 25.8 M.The subsidiary Clas Ohlson Ltd in the UK, with corporate registrationnumber 6298382, 300,000 shares with a par value of GBP 1. Shareholding100 per cent. Carrying amount SEK 4.0 M.The subsidiary Clas Ohlson Ltd in Shanghai, with corporate registrationnumber 3110000400574190, 900,000 shares with a par value of USD 1.Shareholding 100 per cent. Carrying amount SEK 6.5 M.Note 25 AppropriationsParent Company 2008/09 2007/08The difference between book depreciation anddepreciation according to plan on:– equipment, tools, fixtures and fittings –25.8 –17.0– land and buildings 1.0 1.0Provision for tax allocation reserveTax 2010 –71.6 0.0Total Parent Company –96.4 –16.0Note 26 Cash and bank balancesParent Company 2008/09 2007/08Cash and bank balances 14.0 194.8Total Parent Company 14.0 194.8At the end of the year, utilised overdraft facilities, which are not included incash and bank balances, totalled SEK 426.3 M. The credit is included in acash pool for the Group in which utilised credit totalled SEK 208.6 M; referto Note 20.Unutilised overdraft facilities, which are not included in cash and bankbalances, totalled SEK 11.4 M at the end of the year.Note 28 Pledged assetsGroupParent Company2008/09 2007/08 2008/09 2007/08Cash and cash equivalents 11.1 8.8 - -Property mortgages 23.0 23.0 23.0 23.0Floating mortgages 74.0 44.0 74.0 44.0Total pledged assets 108.1 75.8 97.0 67.0Assets indicated above, for own obligations, are pledged to credit institutionsas general security for currency forward contracts and utilised overdraftfacilities, which at the end of the year totalled SEK 208.6 M in the Group andSEK 426.3 M in the Parent Company (refer also to Note 26). In the precedingyear, unutilised overdraft facilities totalled SEK 100 M in the Group and ParentCompany.Note 29 Contingent liabilities andcommitmentsParent Company 2008/09 2007/08Contingent liabilitiesGuarantee in favour of Group companies pertainingto future rental commitments 176.6 90.4CommitmentsAll store premises, with the exception of Insjön, are leased and treated asoperating leases. The company’s policy is that rent should be fixed and notbased on store turnover. The average contract period at 30 April 2008 wasfive years.Agreed leases have been calculated according to rent levels for 2009.2008/09 2007/08Rents and lease payments in financial year 134.4 101.72009/10 2010/11 2011/12 2012/13 2013–Contracted futurerents 132.4 126.6 123.5 118.7 431.3Note 30 Related-party transactionsThe number of shareholders in the company at the end of the financial yearwas 22,747. The largest shareholders are Clas Ohlson’s descendents MaryHaid and Johan and Helena Tidstrand, with 45 per cent of the capital and 67per cent of the votes. No transactions with related parties took place duringthe financial year. Remuneration of the Board and senior management is presentedin Note 6 to the annual report.Note 27 Untaxed reservesParent Company 2008/09 2007/08Accumulated difference between book depreciationand depreciation according to plan on:– equipment, tools, fixtures and fittings 168.6 142.8– land and buildings 8.8 9.8Provision for tax allocation reserveTax 2010 71.6 0.0Total Parent Company 249.0 152.670 AccountsClas Ohlson 2008/09

Note 31 Average number of employeesGroupParent Company2008/09 2007/08 2008/09 2007/08Sweden 1,265 1,264 1,265 1,264– of whom women (525) (518) (525) (518)Total Norway 458 385– of whom women (174) (143)Total Finland 174 152– of whom women (78) (70)Total UK 30– of whom women (13)Total 1,927 1,801 1,265 1,264– of whom women 790 731 525 518The average number of employees is based on the total number of hoursworked in relation to total annual working time. For further information on ouremployees, see pages 36-38 of the printed annual report.Note 32 Sickness absenceAverage sickness absence, %GroupParent Company2008/09 2007/08 2008/09 2007/08Total sickness absence 3.6 3.9 3.5 3.9– of whom long-term sick leave 27 31 28 31– of whom men 2.8 3.0 2.7 3.0– of whom women 4.8 5.4 4.7 5.3– of whom employees aged upto 29 2.9 3.2 2.7 3.0– of whom employees aged30-49 4.1 4.4 4.0 4.4– of whom employees agedover 50 4.5 4.9 4.4 4.9Note 33 Segment reportingGroup 2008/09 2007/08Primary segment: sale of products for house andhome, technology and hobbies constitutes the primarysegmentSales 4,930.2 4,661.6Operating profit 502.8 577.5Total assets 2,571.2 2,192.0Total liabilities 1,078.1 692.5Investments in property, plant and equipmentfor the year (see Note 12) 434.3 251.6Depreciation for the year 92.4 83.7Group 2008/09 2007/08Secondary segments: sales by geographicalcustomer marketSweden, the UK, ChinaSales, external customers 2,572.9 2,585.9Total assets 1,789.1 1,602.8Investments in property, plant and equipmentfor the year 368.6 197.4NorwaySales, external customers 1,923.5 1,716.8Total assets 618.5 436.8Investments in property, plant and equipmentfor the year 48.9 39.2FinlandSales, external customers 433.8 358.9Total assets 163.6 152.4Investments in property, plant and equipmentfor the year 16.8 15.0From the next financial year, Clas Ohlson will be applying IFRS 8 pertainingto segment reporting. In this connection, the distribution into primary andsecondary segments will cease. The segment will instead be geographiccustomer markets according to the following: Sweden, Norway and othersegments. At present, other segments include Finland, the UK and China.Note 34 Events after the end ofthe periodSales during May rose 13 per cent to SEK 372 M. In local currency, salesincreased by 10 per cent. Compared with the same month in the precedingyear, 20 stores have been added and the total number of stores at the end ofMay 2009 totalled 107. Mail orders/internet sales totalled SEK 7 M comparedwith SEK 8 M in the corresponding year-earlier period.Sales channels (SEK M) 2009 2008 Percentage Percentagechange change.local currencyCountriesSweden 191 186 + 2 + 2Norway 143 118 + 22 + 21Finland and UK 38 26 + 42 + 32372 330 + 13 + 10On 13 September 2008, the Board decided to utilise the authorisation grantedby the Annual General Meeting of Clas Ohlson AB to buy back not morethan 930,000 shares to secure the company’s commitment in connectionwith the introduction of a share-related incentive plan, LTI 2009. Supportedby the authorisation, the Board decided to acquire 675,000 shares up to the2009 Annual General Meeting. The shares will be acquired on Nasdaq OMXNordic Exchange Stockholm at a price within the share price range registeredat the particular time. The company’s holding of Clas Ohlson treasury sharesat 30 April 2009 totalled 645,000 shares, corresponding to 1 per cent of thetotal number of registered shares.Note 35 Contingent liabilities andcommitmentsThe Group does not have any contingent liabilitiesCommitmentsAll store premises, with the exception of Insjön, are leased and treated asoperating leases. The company’s policy is that rent should be fixed and notbased on store turnover. The average contract period at 30 April 2008 wassix years.Agreed leases have been calculated according to rent levels for 2009.Group 2008/09 2007/08Rents and lease payments in the financial year 320.4 231.02009/10 2010/11 2011/12 2012/13 2013–Contracted futurerents 339.5 344.4 330.2 316.1 1,220.7Clas Ohlson 2008/09 Accounts 71

Certification of the annual reportThe consolidated financial statements have been prepared in accordance with IFRS as adopted by the EU and give a true and fair viewof the Group’s financial position and results of operations. The financial statements of the Parent Company have been prepared inaccordance with generally accepted accounting principles and give a true and fair view of the Parent Company’s financial positions andresults of operations. The Directors’ Report for the Group and the Parent Company provides a fair review of the development of theGroup’s and the Parent Company’s operations, financial position and results of operations and describes material risks and uncertaintiesfacing the Parent Company and the companies included in the Group.Insjön, 30 June 2009anders moberg Björn hAID ELISABET salander björklundChairman of the BoardLottie SVEDENSTEDT URBAN jansson CECILIA MARLOWMikael Öberg Caroline Persson KLAS BALKOWEmployee representative (Handels) Employee representative (Unionen) Chief Executive OfficerDeputyOur audit report was issued on 2 July 2009Öhrlings PricewaterhouseCoopers ABannika wedinAuthorised Public AccountantAuditor-in-chargePETER BLADHAuthorised Public AccountantThe balance sheets and income statements are to be adopted at the Annual General Meeting to be held on 12 September 2009.72 AccountsClas Ohlson 2008/09

Audit reportTo the Annual General Meeting ofClas Ohlson Aktiebolag (publ)Corporate Identity Number 556035-8672We have examined the annual accounts, the consolidated accounts, the accounting records and the administration of the Board ofDirectors and the CEO of Clas Ohlson Aktiebolag (publ) for the financial year from 1 May 2008 to 30 April 2009. The company’sannual accounts and the consolidated accounts are included in the printed version of this document on pages 50-72. The Board ofDirectors and the CEO are responsible for these accounts and the administration of the company as well as for the application ofthe Annual Accounts Act when preparing the annual accounts and the application of international financial reporting standards(IFRS) as adopted by the EU and the Annual Accounts Act when preparing the consolidated accounts. Our responsibility is toexpress an opinion on the annual accounts, the consolidated accounts and the administration based on our audit.We conducted our audit in accordance with generally accepted auditing standards in Sweden. Those standards require that weplan and perform the audit to obtain high but not absolute assurance that the annual accounts and the consolidated accounts arefree of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures inthe accounts. An audit also includes assessing the accounting policies used and their application by the Board of Directors andCEO and significant estimates made by the Board of Directors and the CEO when preparing the annual accounts and consolidatedaccounts as well as evaluating the overall presentation of information in the annual accounts and the consolidated accounts.As a basis for our opinion concerning discharge from liability, we examined significant decisions, actions taken and circumstancesof the company to be able to determine the liability, if any, to the company of any Board member or the CEO. We also examinedwhether any Board member or the CEO has, in any other way, acted in contravention of the Companies Act, the AnnualAccounts Act or the Articles of Association. We believe that our audit provides a reasonable basis for our opinion set out below.The annual accounts and the consolidated accounts have been prepared in accordance with the Annual Accounts Act, and give atrue and fair view of the company’s financial position and results of operations in accordance with generally accepted accountingprinciples in Sweden. The consolidated accounts have been prepared in accordance with international financial reporting standards(IFRS) as adopted by the EU and the Annual Accounts Act, and give a true and fair view of the Group’s financial positionand results of operations. The statutory directors’ report is consistent with the other parts of the annual accounts and the consolidatedaccounts.We recommend to the Annual General Meeting that the income statements and balance sheets of the Parent Company and theGroup be adopted, that the profit of the Parent Company be dealt with in accordance with the proposal in the directors’ reportand that the members of the Board of Directors and the CEO be discharged from liability for the financial year.Insjön, 2 July 2008Öhrlings PricewaterhouseCoopers ABAnnika WEDINAuthorised Public AccountantAuditor-In-ChargePETER BLADhAuthorised Public AccountantClas Ohlson 2008/09 Audit report 73

Corporate governanceThe governance of Clas Ohlson is based upon Swedish legislation,principally the Companies Act, the listing agreement withthe OMX Nordic Exchange Stockholm and the Swedish Codeof Corporate Governance. In addition, governance follows theArticles of Association, internal instructions and policies, andrecommendations issued by relevant organisations. The corporategovernance report has been prepared in accordance withthe Code. It does not form part of the formal annual report andhas not been reviewed by the company’s auditors.Swedish Code of Corporate GovernanceThe Swedish Code of Corporate Governance is applicableto all major companies listed on the OMX Nordic ExchangeStockholm. The aim is to improve corporate governance inlisted companies and foster trust in companies both among thegeneral public and in the capital market. The Code is based onthe “comply or explain” principle, which means that it is possibleto deviate from the Code if an explanation is provided asto why the deviation has been made. Clas Ohlson followed theSwedish Code of Corporate Governance during the financialyear, with the exception of the following item.Chairman of the Nomination CommitteeThe Chairman of the Nomination Committee according to theCode is not to be a Board member. The AGM appointed ElisabetSalander Björklund as Chairman since this was judged toprovide continuity in the work of the Nomination Committee.Annual General MeetingThe ultimate decision-making body within the Group is theAnnual General Meeting of Shareholders, which since the initialpublic offering in 1999, has always been held in Insjön on aSaturday in early September. Each year, the AGM appoints theBoard and Chairman of the Board for Clas Ohlson AB. It alsoappoints auditors for the company at four-year intervals. TheAGM also decides how profits are to be appropriated. Otherissues that arise are issues that are mandatory items under theCompanies Act and Clas Ohlson’s Articles of Association (thefull text in Swedish can be found at www.clasohlson.se underFinancial Information). The AGM has always been very wellattended, and the latest one attracted nearly 1,800 participants,making it one of the largest in Sweden.Nominating procedureThe Annual General Meeting decides on the membershipof the company’s Nomination Committee. The NominationCommittee’s task is to submit proposals for Board members orauditors and their fees as well as the Board committees to thenext Annual General Meeting, at which the Board or auditorsare due to be elected. The Nomination Committee alsoproposes the Chairman of the AGM.A Nomination Committee consisting of Elisabet SalanderBjörklund, Chairman, Per Karlsson and Lars Öhrstedt waselected at the Annual General Meeting held on 13 September2008. Elisabet Salander Björklund is a member of the Board,while the other two are independent of both the Board andcompany. The Nomination Committee represents broadexperience of work in boards of directors and nominatingprocedures.The group has worked on the nominating procedure forthe Annual General Meeting of Clas Ohlson on 12 September2009 and held six meetings, at which the composition of theBoard was considered and discussed. The focus has been oncandidates having to bring the right expertise to Clas Ohlson.The evaluation made of the Board’s work has also formed thebasis for the assessments. The Nomination Committee has alsoworked to ensure that the directors’ fees and committee feesare set at an appropriate level.The proposals of the Nomination Committee will bepresented in the second week of August at the time when thenotice of the Annual General Meeting is published.AuditorsThe Annual General Meeting appoints auditors for theParent Company at four-year intervals. The current auditorsare Öhrlings PricewaterhouseCoopers (ÖPwC), whoare represented by Annika Wedin (Auditor-in-Charge) andPeter Bladh. Both are authorised public accountants at ÖPwC.ÖPwC was elected in 2008 to serve up to the time of the 2012Annual General Meeting. Payment for audit engagements inthe Group in the past three years has totalled SEK 1.9 M, SEK1.6 M and SEK 1.6 M, respectively. Remuneration for otherconsultations in the past three years has totalled SEK 0.6 M,SEK 0.4 M and SEK 0.4 M, respectively. Work in addition toauditing relates to the adaptation of the Clas Ohlson Group tothe new IFRS accounting rules and consultation on tax issues.The independent position of the auditors is ensured firstly bythe internal policies of the auditing firm and secondly by theBoard’s guidelines indicating what engagements the auditingfirm may undertake in addition to auditing.Board of DirectorsThe Board of Clas Ohlson comprises seven members, includingthe CEO, who are elected by the AGM. As well as thesemembers, the Board includes two representatives of the tradeunionorganisations in the company. These individuals areelected annually by their own organisations. The present Boardof Directors is described on page 78 of the annual report.Board meetingsThe first meeting of the new Board, at which the rules ofprocedure for the Board are established, is held immediatelyfollowing the AGM. The members of the Board’s Audit andRemuneration Committees and authorised signatories forthe company are also appointed at this meeting. In additionto this meeting, the Board holds at least six further meetingsduring the year: once a quarter at the time of publication ofthe company’s financial reports, once in June at the time ofconcluding the annual report and once during the winter halfof the year for strategic discussions. The strategy meeting usuallytakes place over two days, while other meetings are held onone day. The strategy meeting principally discusses issues of astrategic nature, such as the Group’s goals and strategies, productrange, store-opening strategy, major investments and so on.Other meetings primarily deal with the usual Board issues, thecompany’s reports and reporting by the Board committees. Thecompany’s auditors attend two of the Board meetings to reporton what has emerged during the audit. The Board held nine74 Corporate governanceClas Ohlson 2008/09

Board meetings and one strategy meeting during the financialyear.How the Board operatesThe rules of procedure for the Board of Directors stipulatewhich items on the agenda are to be fixed and which may vary.Each Board meeting is normally to be devoted to a specifictopic so that the Board can gain more in-depth knowledge andunderstanding of the various parts of the company’s operations.There are also presentations on these topics by employees of thecompany.The work of the Board’s committees is an important elementof the Board’s work. The Board has prepared instructionsfor the committees’ work. The Remuneration Committee andAudit Committee discuss issues that fall within the committees’remit. Issues that have been dealt with in the committeemeetings are minuted and notified to the other Board membersat the Board meetings.The rules of procedure also state that the Board must meetwith the company’s auditors at least twice per year as well asaddressing certain formal matters, such as rules for the callingof meetings and secrecy.Distribution of work between Board and CEOThe Board appoints the Chief Executive Officer (CEO) of thecompany. The distribution of work between the Board andCEO is indicated in the Board’s rules of procedure. These statethat the Board is responsible for the governance, supervision,organisation, strategies, internal control, budget and policies ofthe company. In addition, the Board decides on major investmentsand matters of principle relating to the governance ofsubsidiaries, as well as the election of Board members and theCEO. The Board also establishes the quality of the financialreporting. The CEO in turn is responsible for ensuring that thecompany is administered in accordance with Board’s guidelinesand instructions. In addition, the CEO is responsible for budgetingand planning the company’s operations so that specifiedgoals are attained. The CEO ensures that the control environmentis favourable and that the Group’s risk-taking at any timeis compatible with the Board’s guidelines. Any deviations haveto be reported to the Board. The Board also receives regularinformation from the CEO every month through a monthlyreport.Audit CommitteeAt its first meeting following the AGM, the Board establishedan Audit Committee comprising Urban Jansson, Chairman,Cecilia Marlow and Lottie Svedenstedt. The Audit Committeefulfils the guidelines regarding independence in the SwedishCode of Corporate Governance. The Audit Committeeis responsible for preparing the work of the Board on qualityassurance of financial reporting and work on issues relatingto the company’s internal control. The members of the AuditCommittee met the auditors on two occasions during thefinancial year to learn about the focus of the audit and discussviews on the risks faced by the company. In addition, the auditorsattended the committee’s other meetings. Important tasksfor the Audit Committee are to serve as a communication linkbetween the Board and the company’s auditors and to establishwhat services over and beyond auditing can be procuredfrom the company’s auditors. The auditing effort is evaluatedannually, after which information is passed to the NominationCommittee on the outcome.The Audit Committee held eight meetings during thefinancial year. The attendance is shown in the table below. Themeetings are minuted and reported at the next Board meeting.Representatives of the company’s management and thecompany’s internal controller attended the committee’s meetingsas co-opted members. Work on the company’s internalcontrol and risk management was reported. Issues concerningsuch topics as accounting and liquidity were also addressed bythe Committee.Remuneration CommitteeThe fees paid to the Board, Nomination Committee and auditorsare decided each year at the Annual General Meeting.Proposals for fees are discussed beforehand by the NominationCommittee. On the other hand, the Board decides on theremuneration of the CEO. A special Remuneration Committee,appointed by the Board and consisting of Chairman ofthe Board Anders Moberg and two other members, ElisabetSalander Björklund and Urban Jansson, worked towardsComposition of the Board and attendance during the financial year 71 2Member Elected Independent Independent Board meetings Audit CommitteeRemunerationCommitteeAnders Moberg 2003 Yes Yes 10/10 3/333Klas Balkow 2007 No Yes 10/104 58Björn Haid 1990 No No 9/10 3/4 3/38Cecilia Marlow 2007 Yes Yes 9/10 8/8Lottie Svedenstedt 2004 Yes Yes 10/10 8/8Elisabet Salander Björklund 2000 Yes Yes 9/10 3/3Urban Jansson 2005 Yes Yes 10/10 4/4 1/11Independent in relation to the company and company management according to the Swedish Code of Corporate Governance.2Independent in relation to major shareholders of the company according to the Swedish Code of Corporate Governance.3President and CEO.4Employed from 1965 to 2006.5Grandson of Clas Ohlson, represents the single largest shareholder Mary Haid. See page 31.6Chairman.7The trade-union organisations have had two representatives on the Board.For further information on Board members, see page 78. The work of the Board and its committees is described on pages 74-76.8The composition of the committees was changed at the first Board meeting following the 2008 AGM.66 8 86Clas Ohlson 2008/09 Corporate governance 75

creating a basis for decisions on this during the financial year.The Remuneration Committee fulfils the guidelines regardingindependence in the Swedish Code of Corporate Governance.The Remuneration Committee also submits proposals forguidelines relating to fixed salary and variable remunerationfor other senior management, including the presidentsof the subsidiaries concerned. The process regarding variableremuneration for all staff works in a similar way. The Committeemet three times during the financial year. Attendanceis shown in the table on page 75. The meetings were minutedand reported at the next Board meeting. Work during the yearfocused primarily on issues concerning variable remunerationand pensions.Governance of subsidiariesThe four wholly owned subsidiaries Clas Ohlson AS in Norway,Clas Ohlson OY in Finland, Clas Ohlson Ltd in the UKand Clas Ohlson Ltd (Shanghai) in China are governed by theirown boards in the country concerned, principally consisting ofrepresentatives of Clas Ohlson AB in Sweden. The Board inSweden receives continuous information about the subsidiariesthrough the monthly reports presented by the presidents of thesubsidiaries. These reports also include the results of operationsand financial position of the company concerned.RemunerationFees paid to be Board during the financial year totalled SEK2.3 M, in accordance with a decision of the AGM. Of the feespaid, SEK 0.6 M pertained to remuneration for work on theBoard’s Remuneration and Audit Committees. Of the Board’stotal fee, SEK 0.6 M was paid to the Chairman of the Board.No fee is paid to Board members who are employees of thecompany.The fee paid to the Nomination Committee during thefinancial year totalled SEK 0.2 M. Of this sum, SEK 0.1 waspaid to the Chairman of the Nomination Committee. Committeemember Lars Öhrstedt declined to receive a fee.The company’s CEO received pay totalling SEK 4.2 Mduring the equivalent period, of which SEK 0.6 M was in theform of variable remuneration. Pay received by the other eightmembers of senior management totalled SEK 12.9 M, of whichSEK 1.7 M was in the form variable remuneration. Four ofthese members of senior management, as well as the CEO,receive the additional benefit of a free car. The 2008 AnnualGeneral Meeting decided on guidelines for senior managementpertaining to the 2008/09 financial year.Severance payUnder the contract of employment with the CEO, the mutualperiod of notice is six months. Twelve months’ salary is payablein the event of termination by the company. Applicable fixedsalary, variable remuneration and benefits are payable duringthe period of notice.PensionsThe members of the Board do not receive any pension benefitsfor their Board engagements.The retirement age for the CEO is 65 and for other seniormanagement varies between 65 and 67. The CEO has adefined-contribution pension into which SEK 1.3 M was paidduring the year. Other members of senior management receivepension entitlements principally under the applicable supplementarypension for salaried employees (ITP) plan, which alsocovers other salaried staff. In addition to this, supplementarypension contributions have been made for four other membersof senior management.Remuneration principlesThe general principles of remuneration for senior managementare to be based on the position held, individual performance,the Group’s financial results and the remunerationbeing competitive in the country of employment. Thecombined remuneration of senior management shall consist offixed salary, variable salary in the form of short-term incentivebased on annual performance objectives, long-term incentivesbased on performance over several years, pension and otherbenefits. In addition to this, there are terms applicable on noticeof termination and severance pay.Clas Ohlson shall strive to offer a competitive total level ofremuneration, focusing on payments based on performance.This means that variable remuneration may comprise asignificant portion of total remuneration. The aim is for fixedremuneration to be in line with the median of the comparablemarket, while total remuneration, when Clas Ohlson meetsor exceeds its objectives, shall be in the upper quartile of themarket. For further information about remuneration, see Note6 on pages 63-65.INTERNAL CONTROLThe Board’s report on internal control pertaining to thefinancial reporting for the 2008/09 financial yearThis report has been prepared in accordance with the SwedishCode of Corporate Governance and the guidance drawn up byFAR SRS and the Confederation of Swedish Enterprise andwith application of the transitional rules issued by the SwedishCorporate Governance Board. This briefly means that:- the report is limited to internal control pertainingto financial reporting- the report does not form part of the formal annual accounts- the report is limited to a description of how internal controlis organised (and does not contain any statement on howwell the control has worked), and- the report has not been reviewed by the company’s auditorsThe work on internal control follows the framework developedby the Committee of Sponsoring Organisations of theTreadway Commission (COSO). The framework consists offive individual areas: control environment, risk assessment,control activities, information and communication, and follow-up.Control environmentThe control environment comprises the organisational structureand the values, guidelines, policies, instructions and so onaccording to which the organisation works. Effective Board76 Corporate governanceClas Ohlson 2008/09

work forms the basis of good internal control, and the Boardof Clas Ohlson has established rules of procedure and clearinstructions for its work. This also includes the Board’s Remunerationand Audit Committees.Part of the Board’s work involves drawing up and approvingthe policies that govern the Group’s work on internal control.Another part involves creating the necessary conditions for anorganisational structure with clear roles and responsibilities,leading to effective management of the risks in the operation.The executive management is responsible for implementingguidelines for the maintenance of good internal control. Workis continuously in progress to evaluate the company’s routinesaccording to the COSO model. The executive managementand the committees report continuously to the Board accordingto established routines. All activity is undertaken in accordancewith the ethical guidelines drawn up in the Group’s Code ofConduct.Risk assessment and control activitiesA model has been devised in the company to assess the riskof errors in financial reporting, which identifies a number ofitems in the income statement and balance sheet and processesfor drawing up financial information where the risk of materialerrors is judged to be elevated.The Group’s income consists to 98 per cent of sales in storeswhere payment is principally made in cash or by credit card.This income is documented in its entirety in bank accountswhich are reconciled daily. The risk of errors in the reportingof income is limited. During the financial year, the checkoutsystem was inspected by an external party. The controls wereperformed through an IT-based review. Group expenses primarilycomprise goods-related expenses, carriage, salaries andsocial security contributions, rental expenses and marketing.Budgets pertaining to income and expenses have been distributedto each store and department. The outcome is checkedmonthly against both the budget and the previous year. Deviationsare documented in writing through non-conformancereports, which are reviewed by the immediate superior.Clas Ohlson’s assets consist to 90 per cent of non-currentassets and inventories. Accordingly, particular emphasis hasbeen placed on preventing and detecting deficiencies in theseareas when designing internal controls.The processes and the control structure are documentedin a separate financial manual, which is updated regularly.Work is continuously in progress to evaluate the most essentialprocesses in the Group. The greatest risks in each process areanalysed. An assessment is then made of whether the controlsthat take place are adequate. If there is a need, furthercompensatory controls are introduced to reduce the risk to anacceptable level.During the year, work was performed on the company’soverall risk management to ensure that an up-to-date survey ofthe company’s risk situation was maintained, thereby determiningthe measures to be taken in prioritised areas. This surveywas conducted at Group level and represents a tool for theBoard’s and company management’s strategic and operationalcontrol. The survey enables a focus on reducing the company’sexposure to risk and the consequences of any risks that haveoccurred.Information and communicationMajor policies, guidelines, instructions and manuals that are ofsignificance to internal control are regularly updated and communicatedto employees concerned. General guidelines andinstructions are also posted on the company’s intranet, to whichall staff in the Group have access. There are both formal andinformal information channels to the company managementand the Board for information from staff. The Board receivesregular feedback from the operations on questions that relateto internal control through the Audit Committee. For externalcommunication, there are guidelines that support the requirementto provide the equities market with correct information.Follow-upCompany management and the Audit Committee regularlyreport to the Board on the basis of established routines. TheBoard also receives regular information from the CEO everymonth through a monthly report for the Group. This monthlyreport contains information on the results and financial positionsof the subsidiaries.Each interim report is analysed by the Audit Committeewith regard to the correctness of the financial information.The Audit Committee also plays a key role in monitoring toensure that there are sufficient control activities for the mostmaterial areas of risk pertaining to the financial reporting andcommunicating material issues to the company’s management,Board and auditors. An important aspect is to ensure that anydeficiencies identified in the external audit are rectified.Twice a year, the entire Board meets the company’s auditorsto be informed of the external audit and discuss relevant issues.On the basis of the auditors’ reporting, the Board forms a pictureof the internal control and the correctness of the financialinformation. The CEO does not take part in any issues thatrelate to company management.Following evaluations in 2008/09 and previous years, the Boardhas not found it necessary to date to establish an internal auditfunction. The company’s Group-wide controller functionhas instead been adapted so that it also deals with work onthe company’s internal control. The question of whether toestablish a separate internal audit function will be re-examinedannually.This report does not form part of the formal annualaccounts and has not been reviewed by the company’s auditors.Insjön, 30 June 2009The Board of DirectorsClas Ohlson 2008/09 Corporate governance 77

Board of DirectorsAnders MobergBorn in 1950Chairman of the Board since 2004, Boardmember since 2003. Professional experience:CEO of the retail company Majid Al FuttaimGroup in Dubai 2007-2008. CEO of Royal Ahold2003-2007. Division President at Home Depot1999-2002. Previously employed for a number ofyears by IKEA, where he was President and CEO1986-1999.Other directorships: Sweden: Husqvarna,Byggmax AB, ZetaDisplay AB. Denmark: DFDS.Finland: Ahlstrom OY and Sofia Bank OY. Netherlands:HemA B.V.Number of shares in Clas Ohlson AB: 1,380,000Independent*Cecilia MarlowBorn in 1960. Member of the Board since 2007.Professional experience: Managing Director ofKronans Droghandel since 2008. PreviouslyPresident of JC/JStore 2006-2007, Presidentof Polarn&Pyret 2004-2006, President ofOrdning&Reda 2001-2003, President of PublicisWelinder 1997-2001.Other directorships: Member of the Board ofCatella Capital.Number of shares in Clas Ohlson AB: 0Independent*Urban JanssonBorn in 1945Member of the Board since 2005Professional experience: CEO of Ratos 1992-1998. Executive Vice President of Incentive1990-1992. CEO of HNJ Intressenter 1984-1990. Various senior positions in SEB 1972-1984.Other directorships: Chairman of Bergendahls,Global Health Partner, HMS Networks,Rezidor Hotel Group and others. Member ofthe Boards of Addtech, Höganäs, SEB andothers.Number of shares in Clas Ohlson AB: 15,000Independent*Klas BalkowBorn in 1965President and CEO from 8 September 2007.Professional experience: Formerly ManagingDirector of a subsidiary of the AxelJohnson Group, where he was responsible forAxImage, a business area that comprises severalstore chains and the agency for Fujifilm in bothSweden and Norway. Previously worked at Bredbandsbolagetand held a number of senior positionsin Procter & Gamble over a period of tenyears in both the Nordic countries and the US.Other directorships: Member of the Board of FujifilmSverige AB.Number of shares in Clas Ohlson AB: 13,252Björn HaidBorn in 1945Member of the Board since 1990.Grandson of Clas Ohlson.Professional experience: Product range developmentat Clas Ohlson 1965-2006.Number of shares in Clas Ohlson AB: 266,400* Independent in relation to the company andcompany management and major shareholders inthe companyLottie SvedenstedtBorn in 1957. Member of the Board since 2004.Professional experience: CEO of KID Interiör2006-2007. Own consultancy business inorganisational and leadership development2000-2006. Head of business area IKEA ofSweden 1998-2000. President of Inter IKEA SystemsAS 1993-1996. Regional Manager at H&M1989-1992.Other directorships: Chairman of the Board ofMiL Institute. Member of the Boards of BjörnBorg AB, Stadium AB, Stampen AB, PromediaAB, mkt media ab, Global Health Partner Plc.Number of shares in Clas Ohlson AB: 3,300Independent*Elisabet Salander BjörklundBorn in 1958. Member of the Board since 2000.Professional experience: Executive Vice Presidentat Stora Enso since 1995. AssiDomän1981–1995.Other directorships: Member of the Boards ofSJ AB, the Swedish Forest Industries Federation,Arbio, the Marcus Wallenberg Foundation,a number of associated companies and subsidiariesof the Stora Enso Group. Member ofthe Royal Swedish Academy of Agriculture andForestry and the Royal Swedish Academy ofEngineering Sciences.Number of shares in Clas Ohlson AB: 8,000Independent*Deputy memberMikael ÖbergBorn in 1963Employee representative (Handels)Number of shares in Clas Ohlson AB: 2Caroline PerssonBorn in 1978Employee representative (Unionen)Member of the Board since 2007Number of shares in Clas Ohlson AB: 0Deputy memberEmma LindqvistBorn in 1976Employee representative (Handels)Number of shares in Clas Ohlson AB: 078 Board of DirectorsClas Ohlson 2008/09

Senior managementKlas BalkowBorn in 1965President and CEOCEO since 2007Number of shares in Clas Ohlson AB:13,252Susanne Löfås-HällmanBorn in 1964Head of HREmployee since 2001Number of shares in Clas Ohlson AB:1,348Bo HeymanBorn in 1952Director of New Store OpeningsEmployee since 1983Number of shares in Clas Ohlson AB:2,519Göran AtterlingBorn in 1958Chief Financial OfficerEmployee since 2009Number of shares in Clas Ohlson AB:1,921Ulrika GöranssonBorn in 1970Group Market DirectorEmployee since 2008Number of shares in Clas Ohlson AB:2,416Rolf AnderssonBorn in 1946Director of Distribution CentreEmployee since 1989Number of shares in Clas Ohlson AB:1,697John WomackBorn in 1966Director of Information and IREmployee since 2008Number of shares in Clas Ohlson AB:6,034Mats BortasBorn in 1948Director of PurchasingEmployee since 1976Number of shares in Clas Ohlson AB:4,640Peter JelkebyBorn in 1963Director of OperationsEmployee since 2008Number of shares in Clas Ohlson AB:3,868Lars Wallén, Deputy CEO and Chief Financial Officer, retired in April 2009.Clas Ohlson 2008/09 Senior management 79

Quarterly resultsSEK M 2008/09 2007/08Q 11 May 2008-31 July 2008Q 21 Aug. 2008-31 Oct. 2008Q 31 Nov. 2008-31 Jan. 2009Q 41 Feb. 2009-30 Apr. 2009Q 11 May 2007-31 July 2007Q 21 Aug. 2007-31 Oct. 2007Q 31 Nov. 2007-31 Jan. 2008Q 41 Feb. 2008-30 Apr. 2008Sales 1,114.3 1,223.9 1,538.6 1,053.4 1,031,9 1,146.1 1,496.2 987,4Cost of goods sold –669.6 –724.6 –888.9 –633.4 –624.9 –676.8 –875.7 –611,3Gross profit 444.7 499.3 649.7 420.0 407.0 469.3 620.5 376,1Selling expenses –312.4 –351.9 –376.5 –347.9 –242.5 –308.0 –333.8 –298,81Administrative expenses –24.7 –30.8 –31.4 –32.5 –22.8 –36.2 –25.9 –26,0Other operating income/expense –0.1 –1.4 –0.1 –1.2 0.1 –0.1 0.1 –1,5Operating profit 107.5 115.2 241.7 38.4 141.8 125.0 260.9 49,8Net financial items 1.8 1.5 –1.5 –0.8 2.5 1.9 2.1 3,8Pre-tax earnings 109.3 116.7 240.2 37.6 144.3 126.9 263.0 53,6Income tax –30.6 –33.2 –65.9 –8.6 –40.4 –35.6 –73.5 –16,5Profit for the period 78.7 83.5 174.3 29.0 103.9 91.3 189.5 37,1KEY RATIOS FOR THE PERIODGross margin, % 39.9 40.8 42.2 39.9 39.4 40.9 41.5 38,1Operating margin, % 9.6 9.4 15.7 3.6 13.7 10.9 17.4 5,02Earnings per share, SEK 1.20 1.29 2.68 0.45 1.58 1.39 2.89 0,571Includes a non-recurring expense of SEK 10.9 M pertaining to severance pay for the former CEO Gert Karnberger.2Refers to before and after dilution.DefinitionsCash flow from operationsInternally generated funds includingchanges in working capital.Working capitalTotal of current assets excluding cashand cash equivalents, less current liabilities.Capital employedBalance-sheet total less non-interest-bearingliabilities and provisions.Average capital employed is calculatedas the average of opening and closingcapital employed during the year.Gross marginGross profit in the income statement aspercentage of net sales for the financialyear.Operating marginOperating profit as a percentage of netsales for the financial year.Return on equityNet profit for the year as stated in theincome statement and expressed as apercentage of average equity.Equity/assets ratioEquity at the end of the year as a percentageof the balance-sheet total.Sales per square metre in storeStore sales in relation to effective retailspace. For new stores, a conversionhas been made in relation to how longthe store has been open.Earnings per shareProfit after tax in relation to averagenumber of shares.Gross cash flow per shareProfit after tax plus depreciation in relationto average number of shares.80 Quarterly results and DefinitionsClas Ohlson 2008/09

AddressesHEAD OFFICEClas Ohlson ABSE-793 85 InsjönTel +46 247 444 00Fax +46 247 444 25www.clasohlson.seHEAD OFFICENorWAYClas Ohlson ASTorggata 2-6N-0105 OsloTel +47 23 21 40 05Fax +47 23 21 40 80www.clasohlson.noHEAD OFFICEfinlandClas Ohlson OYGeorgsgatan 23 AFIN-00100 HelsinkiTel +358 20 111 2222Fax +358 20 111 2234www.clasohlson.fiMAIL ORDER/INTERNET SALESSWEDENClas Ohlson ABSE-793 85 InsjönTel +46 247-444 44Fax +46 247-445 55www.clasohlson.seMAIL ORDER/INTERNET SALESnorWAYClas Ohlson ASPostboks 485N-0105 OsloTel +47 23 21 40 00Fax +47 23 21 40 80www.clasohlson.noSWEDENBorås – KnallelandEskilstuna – CityhusetFalun – Falan GallerianGävle – Affärshuset NianGothenburg – BäckebolGothenburg – NordstanGothenburg – PartilleHalmstad – CombihusetHelsingborg – Väla centrumHelsingborg – KullagatanHudiksvall – Gallerian FyrenInsjön – DalarnaJönköping – A6Kalmar – BaronenKarlstad – Mitt i CityKristianstad – Domus-husetKungsbacka – KungsmässanLinköping – CentreLuleå – SmedjanMalmö – TriangelnMotala – CentreNorrköping – DominoNyköping – NyckelnPiteå – Gallerian PiteåSkellefteå – CitykompanietSkövde – CentreStockholm – FarstaStockholm – GallerianStockholm – HaningeStockholm – HäggvikStockholm – Kista GalleriaStockholm – NackaStockholm – SicklaStockholm – SkärholmenStockholm – SolnaStockholm – TäbyStockholm – VällingbyStockholm – VäsbyStrömstad – NorbySundsvall – BirstaSundsvall – Nya hamnenTrelleborg – ValenUddevalla – CentreUmeå – MVGUppsala – S:t Per GallerianVisby – CentreVästerås – ArosianVäxjö – Affärshuset TegnérÖrebro – MariebergÖrebro – KrämarenÖrnsköldsvik – MagasinetÖstersund – MittpunktenNORWAYArendal – Amfi ArenaAsker – Trekanten KjøpesenterBergen – Bergen StorsenterBergen – LaguneparkenBergen – SartorBergen – ÅsaneDrammen – Gulskogen KjøpesenterFredrikstad – Torvbyen KjøpesenterGjøvik – CC Mart’nHamar – Maxi KjøpesenterHaugesund – Oasen StorsenterHønefoss – CentreJessheim – Jessheim StorsenterKristiansand – CentreKristiansand – SørlandssenteretLarvik – CentreLørenskog – Lørenskog StorsenterMoss – Amfi SenterNarvik – Narvik StorsenterOslo – Alna SenterOslo – Oslo CityOslo – Storo StorsenterOslo – TorggataPorsgrunn – Down TownSandnes – KvadratSandvika – Sandvika StorsenterSarpsborg – StorbyenSki – Ski StorsenterSkien – HerkulesStavanger – KildenStavanger – MadlaStrømmen – Strømmen StorsenterTromsø – Jekta StorsenterTrondheim – City SydTrondheim – LadeTrondheim – SolsidenTønsberg – FarmandstredetÅlesund – Stormoa KjøpesenterFINLANDEspoo – Entresse Shopping CentreEspoo – SelloHelsinki – KamppiHelsinki – MannerheimvägenHelsinki – ItäkeskusJoensuu – CentreKokkola – Chydenia Shopping CentreKuopio – CentreLappeenranta – Gallerian ShoppingCentreLempäälä – IdeaparkRovaniemi – CentreSeinäjoki – CentreTampere – CentreVantaa – Jumbo Shopping CentreVaasa – Rewell CenterTurku – Forum Shopping CentreUKCroydon – The Whitgift CentreManchester – Arndale CentreFor information on the addresses and telephone numbers of stores, see www.clasohlson.se.Investor Relations contactsJohn WomackDirector of Information and IRTel: +46 247 444 00Klas BalkowPresident and CEOTel: +46 247 444 00Göran AtterlingChief Financial OfficerTel: +46 247 444 00Michael EhrlingIR productionTel: +46 247 444 00Content, structure and texts: Clas Ohlson AB in cooperation with Sund KommunikationProduction: Clas Ohlson ABPrinted by: Strokirk-Landströms AB, LidköpingPhotography: Lars Dahlström, Johan Olsson, Ulf Palm, Trons LasseTranslation: The Bugli Company ABThis annual report has been prepared in Swedishand translated into English. In the event of anydiscrepancies between the Swedish and thetranslation, the former shall have precedence.Clas clas Ohlson ohlson 2008/09 2008/09Addresses 81

Clas Ohlson AB (publ.)SE-793 85 InsjönTel: +46 247 444 00Fax: +46 247 444 25www.clasohlson.seCorporate Identity Number: 556035-8672