Rapala Interim Report Q3 2005: Sales, Profitability, and Strategy Update

1. Interim Report - July to Sept 2005 November 9, 2005

2. Group Overview Q3 In Brief Sales and Profitability Cashflow & Working Capital Strategy Implementation North American Perspective Outlook for 2005 AGENDA

3. REST OF EUROPE REST OF WORLD MALAYSIA CZECH REPUBLIC PORTUGAL LOCAL IMPORTERS SHIMANO OWN DISTRIBUTION OWN GROUP BRANDS SOFTBAITS STORM OTHER LURES BLUE FOX HARDBAITS RAPALA Supply SPINNERS BLUE FOX WILLTECH HONG KONG CHINA THIRD PARTY SUPPLIERS OWN R&D AND MANUFACTURING OR SOURCING SOURCE PRODUCT Group Overview FINLAND ESTONIA USA SWEDEN POLAND CANADA ITALY DENMARK RUSSIA JAPAN GERMANY NORWAY UKRAINE BRAZIL NETHERLANDS FRANCE LITHUANIA Distribution BELGIUM SPAIN LATVIA AUSTRALIA SWITZERLAND CHINA HUNGARY THAILAND Group Brands SOURCING R&D MANUFACTURING AND R&D HOOKS TERMINAL TACKLE KNIVES KNIVES ACCESSORIES LINE RODS&REELS SHIMANO OTHER FISHING HUNTING OUTDOOR STORM VMC FRANCE WILLTECH CHINA MARTTIINI FINLAND, ESTONIA & CHINA PELTONEN FINLAND FINLAND RAPALA FINLAND IRELAND ESTONIA USA CHINA Slide 3

4. Q3 IN BRIEF • Q3 2005 a satisfactory but seasonally slow quarter driven by distribution business • Group’s strategy implementationprogressed with acquisitions & organic growth • Outlook: 2005 sales is forecast to be close to 190 MEUR and operating profit is expected to be at last year levels or slightly better

5. NET SALES BY QUARTER • Q3 2005 sales increased 18% from last year (YTD +9%). Rapala Freetime, acquired in July, contributed to Q3 sales with more than 1 MEUR. • 9-month sales increased in all geographical segments • New products for 2006 received well with increased product listings by major customers in key markets.

6. OPERATING PROFIT & EBITDA BY QUARTER • Q3 2005 operating profit was seasonally low at -0.2 MEUR but improved from the corresponding quarter last year (-0.8 MEUR). Q3 operating profit margin was -0.5% and return on capital employed -0.5%. • All geographical segments made a positive YTD result, NA even improved its result. • Fixed costs have temporarily increased as a result of increased activity in business development, start-up of new operations, weakening of USD (YTD 0.3 MEUR) and IFRS option costs (YTD 0.5 MEUR). • Equity-to-assets ratio increased to 34.0% (Dec 04: 32.0%), gearing decreased to 109.6% (Dec 04: 136.5%) & net interest-bearing debt decrease to 79.4 (Dec 04: 81.7)

7. CASHFLOW AND WORKING CAPITAL • Cash flow from operating activities clearly positive at 10.2 MEUR in Q3 • Working capital decreased 10.3 MEUR from June 2005, but is still 7.5 MEUR above December 2004 levels mainly due to new businesses and increased sales • Group’s management continues to drive working capital down, target to get below last year level, excluding new or acquired operations (Q3 net stock down 1.4 MEUR)

8. STRATEGY IMPLEMENTATION IN Q3 • Rapala’s strategic objective is profitable growth, founded on 3 established strenghts: • a unique manufacturing and sourcing platform (China and Europe) • a leading global distribution network in fishing tackle industry • a strong brand portfolio with several leading brands • New Markets • The acquisition of Freetime, an Australian distributor with annual sales of 5 MEUR in July was followed by purchase of the remaining 33% minority stake in Rapala’s Danish distribution company in August • Rapala Eurohold Ltd was established together with the former management of Eurohold Trade Ltd, Mr Karoly Agh Senior and Junior and it acquired the fishing tackle distribution and retail business of Eurohold in the beginning of October. • Rapala owns 70% of Rapala Eurohold and Mr Agh Senior and Junior together own 30 %. • In 2004, the net sales of Eurohold were some 2 MEUR. • A worldwide exclusive distribution agreement was sign with Kiotech Ltd, effective from the beginning of October, for sport fishing for the pheromone biotechnology branded as Ultrabite. • Ultrabite is a pheromone based fish attractant developed by CEFAS governmental laboratories in the UK, which generates natural and irresistible feeding behavior in fish. • In the future, Rapala will launch a wide range of lures and baits containing these pheromones. On a larger scale, the impact on sales will be seen only in 2007 and onwards.

9. STRATEGY IMPLEMENTATION IN Q3 • New Markets (continue) • Opening of new sales companiesinChina and Thailand progressed and sales offices in Bangkok and Beijing were opened in October. • New Products • The acquisition of lure and other fishing tackle business of Luhr Jensen & Sons, Inc (USA) was closed in mid-October. • Luhr Jensen manufactures a wide range of lures for freshwater and saltwater species. • It is one of the five largest lure companies in the USA and the market leader in the Pacific Northwest and Alaska (USA) and in British Columbia (Canada). • The net sales of its lure and fishing tackle business were somewhat below EUR 7 million in the financial year ended in June 30, 2005. • With Rapala and Luhr Jensen combined, the Group is now the world’s largest manufacturer of metal fishing lures. • This deal contributes to the Group’s brand strategy and portfolio while it leverages Rapala’s unique manufacturing and distribution platforms. • The production of Luhr Jensen products will be transferred to the Rapala factories, primarily Rapala’s factory located in China, during a 12-month transition period. • The consideration of the deal comprises of cash and newly issued shares of Rapala. The part of payment that will be made in shares will take place after one year.

10. STRATEGY IMPLEMENTATION IN Q3 • New Products (continue) • The acquisition of Finnish knife manufacturer Marttiini Oy from Lauri Marttiini, his son Ilkka Marttiini and Ilkka Marttiini’s family members was closed in early November. • The deal includes the Finnish knife factory in Rovaniemi, the knife sheaths factory in Estonia and the 49% share in the Chinese knife joint-venture with Rapala. • The net sales for the acquired business was some 6 MEUR in 2004 of which Rapala has bought more than 40%. • This acquisition further strengthens the filleting knife business of the Group and Rapala is now the market leader worldwide. • Rapala will add Marttiini brand to its portfolio of global brands, and Rapala´s own distribution companies in 25 countries will strengthen the distribution of Marttiini-branded knives. • The consideration of the deal comprises of cash and newly issued shares of Rapala. • Ramp-up of the Chinese knife manufacturing join venture (Rapala ownership 100% after the Marttiini deal) proceeds on plan. • The launch of Rapala’s new product line for fishing clothing (Rapala ProWear) proceeds on plan and products are available for 2006 season.

11. STRATEGY IMPLEMENTATION IN Q3 • New Products (continue) • The conditional acquisition of 61% of Peltonen Ski Oy • was done to ensure increasing volumes of skis to be distributed through the Group distribution companies in Finland and increasingly also in Norway.. • The net sales of Peltonen were some 2 MEUR in 2004 of which some 50% was bought by Rapala, who owns the Peltonen brand since 2002. • Winter-sports, together with hunting, have an important role in the Group distribution business in Nordic countries were the fishing tackle business is very slow in autumn and winter time. This deal has not yet been closed. • These acquisitions and new operations had next to none effect on Q3. They, including Freetime, will have a modest but positive impact on fourth quarter operating profit and they are estimated to increase the Group net sales with some 4 MEUR. • They are expected to increase 2006 net sales in excess of 15 MEUR compared to 2005 and be earnings enhancing. • The total purchase price for all acquisitions announced in 2005 is close to 12 MEUR of which some 7 MEUR will be allocated to fixed assets and some 5 MEUR to inventories. This purchase price represents on an average a EBITDA multiple of 4-5. • Group’s management continues to plan and negotiate new initiatives to implement the Group strategy.

12. NORTH AMERICAN PERSPECTIVE • Third Quarter Performance and Development Initiatives • 9-month sales are slightly up from last year level and profitability has improved • Focus to reduce working capital and especially inventories progressed • Plans to improve efficiency and productivity finalized • New Products for 2006 Seasons • All new products in inventory or on the way to be received • Shipments to customers have started • New products well received • Business Development for 2006 • Major increase in listings with some key customers • Potentially more listings to come • New Concept Shop with Cabelas • Price increases implemented succesfully for 2006 • Efficiency and productivity programs to be kicked off before year-end 2005

13. Financial position stable with gearing at 109.6% (136.5% at Dec 2004) and equity-to-assets ratio at 34.0% (32.0% at Dec 2004). Working capital on ongoing operations to be reduced below last year level Sales for 2005 expected to increase from last year and be close to 190 MEUR including the impact of newly acquired businesses. The gap in operating profit compared to 2004 was 2.7 MEUR in Q1. This gap reduced in Q2 to 1.6 MEUR and in Q3 to 1.0 MEUR. This gap is expected to disappear in Q4. Operating profit for the financial year 2005 is expected to be at last year levels or slightly better. The impact of newly acquired businesses on operating profit is slightly positive. Strategy implementation continues to ensure profitable growth. New products for 2006 well received with increased product listings by major customers in key markets. Deliveries of products for 2006 season have started in Q4. OUTLOOK FOR 2005