Silmäasema Oyj - Inside information

Silmäasema Oyj: No changes in Finnish Tax Administration's view regarding value added tax in the tax audit of Silmäasema

Stock Exchange Release 20 June 2017, at 10 p.m.

The Finnish Tax Administration has concluded the tax audit of Silmäasema
Optiikka Oy, a fully owned subsidiary of Silmäasema Oyj. The tax audit covered
corporate income taxation, value added tax and withholding tax. The main focus
of the audit was on the value added tax, which was reviewed for the years
2014-2016. The audit of the corporate income tax and withholding tax covered the
year 2015. Other companies in the Silmäasema Group have not been subject to the
tax audit.

Silmäasema and the Finnish Tax Administration have a difference of view related
to the allocation of the business between taxable retail sales and tax-free
healthcare and medical services. The most significant differences of view are
related to both eye examinations carried out by opticians in connection with the
sales of eyeglasses as well as of private entrepreneur ophthalmologists
practicing in Silmäasema premises. Tax audit and differences in the Finnish Tax
Administration's view in comparison with Silmäasema's practice in value added
tax was described in the Offering Circular published on 26 May 2017 in relation
with Silmäasema's IPO.

The Finnish Tax Administration has today issued its taxation decision regarding
the tax audit of value added tax. According to the decision of the Finnish Tax
Administration, approximately EUR 1.4 million (net impact) of value added tax
from the years 2014-2016 and a punitive tax increase of EUR 150,000 is payable
by Silmäasema Optiikka Oy. This decision is in accordance with the detailed
description in the Offering Circular of Silmäasema. In addition, the Finnish Tax
Administration has issued a penal interest of approximately EUR 135,000. These
are payable in July 2017.

"The interpretation and the practice related to value added tax deductibility
expressed by the Finnish Tax Administration restricts, according to our view,
for no reason, the deductibility of value added tax in a manner that differs
from the calculation principles that comply with the real tax-free business of
Silmäasema's optical retail stores. We consider the Finnish Tax Administration's
decision to be incorrect, and we intend to appeal the taxation decision to the
Board of Adjustment of taxation and, when needed, to the Court. In addition, we
have registered the value added tax according to the same principles for more
than 20 years, and the Finnish Tax Administration has also neglected the
doctrine of legitimate expectations for the benefit of the tax payer.," says
Pasi Kohmo, CEO of Silmäasema Oyj.

Despite the differences of view, Silmäasema Group will change its practices
related to value added tax deductibility as a result of the decision of the
Finnish Tax Administration, which in practice means decreasing the deductible
portion of value added tax relating to overhead costs and capital expenditure.
Silmäasema estimates that the negative effect of the change in value added tax
deductibility in the year 2016 would have been approximately EUR 590,000,
consisting of EUR 420,000 for the purchase price of the investments and directly
impacting the profit and loss of overhead costs by EUR 170,000.

Silmäasema believes the change in the treatment of value added tax to be
temporary and is going to seek appeal to the decision. Due to this Silmäasema
will in the future eliminate the change in value added tax deductibility when
reporting adjusted EBITDA and adjusted EBIT.

No decisions have yet been received related to corporate income tax and the
current decision related to value added tax is estimated to deduct the corporate
income tax payable by approximately EUR 150,000 for the years 2014-2016.


Additional information:

Pasi Kohmo, CEO, Silmäasema, +358 50 331 7015, pasi.kohmo@silmaasema.fi

Anu Kankkunen, CFO, Silmäasema, +358 50 66969, anu.kankkunen@silmaasema.fi

Silmäasema in brief

Silmäasema is a Finnish company, which offers all products and services for
optical retail and eye healthcare nationwide. Silmäasema is the largest private
eye clinic provider offering eye surgeries and the second largest optical retail
chain with 25.3 per cent market share. The Silmäasema chain has 148 stores and
13 eye clinics as well as eight stores in Estonia. The Silmäasema chain employs
close to 1,000 eye healthcare professionals. In 2016, the Silmäasema chain
conducted around 210,000 optician's eye examinations, 190,000 ophthalmologist's
appointments and over 15,000 cataract and refractive surgeries. Silmäasema's
Group net sales were 101.3 million euros in 2016 and adjusted EBITDA was 12.0
million euros.


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