2008-08-06 11:45:00 CEST
2008-08-06 11:45:01 CEST
REGULATED INFORMATION
Stockmann - Interim report (Q1 and Q3)
STOCKMANN plc INTERIM REPORT January 1 - June 30, 2008
STOCKMANN plc
Quarterly report
6.8.2008 at 12.45
STOCKMANN plc INTERIM REPORT January 1 - June 30, 2008
STOCKMANN'S OPERATING PROFIT IMPROVES SUBSTANTIALLY; INCREASED FINANCIAL
EXPENSES AND THE PROVISION MADE TO COVER CLOSURE OF THE SMOLENSKAYA
DEPARTMENT STORE IN MOSCOW CUT INTO EARNINGS
Stockmann's second-quarter sales were up 66 per cent to EUR 583.9 million.
Compared with the same period a year ago, operating profit more than
doubled in spite of the EUR 14 million provision made to cover closure of
the Smolenskaya department store in Moscow and was EUR 31.4 million. In
January-June, the Stockmann Group's sales grew by 50 per cent to EUR
1 081.5 million (EUR 722.4 million in 2007). Consolidated operating profit
in January-June grew and was EUR 28.8 million (EUR 22.3 million). Net
financial expenses grew as a consequence of the Lindex transaction,
causing profit for the period to fall below the figure a year ago, to EUR
3.6 million. Earnings per share were EUR 0.06 (EUR 0.29). The Group's
earnings estimate for 2008 is unchanged despite the increased uncertainty
of the economic development in the Nordic and the Baltic countries. The
target is that earnings in 2008 will be higher than in the previous year.
Key figures 4-6 4-6 1-6 1-6
2008 2007 2008 2007 2007
Sales EUR mill. 583.9 350.7 1 081.5 722.4 1 668.3
Revenue EUR mill. 483.3 294.2 896.7 605.6 1 398.2
Operating profit EUR mill. 31.4 14.1 28.8 22.3 125.2
Profit (loss) EUR mill. 18.1 13.3 4.3 21.4 119.4
before taxes
Earnings per share EUR 0.27 0.18 0.06 0.29 1.59
Equity per share EUR - - 10.73 9.34 10.66
Cash flow from EUR mill. - - 26.9 2.2 119.9
operating
activities
Net gearing per cent - - 131.1 17.4 146.9
Equity ratio per cent - - 36.3 66.7 32.6
Weighted average thousands - - 55 850 55 486 55 606
number of shares
Return on capital per cent - - 12.2 16.3 12.1
employed, rolling
12 months
SALES AND RESULT
Stockmann's consolidated sales grew by 50 per cent to EUR 1 081.5 million
(EUR 722.4 million) in January-June. The bulk of the growth came from
consolidating Lindex's sales figures within the Stockmann Group's sales,
but the Department Store Division and Seppälä also reported higher sales.
Sales in Finland were up 9 per cent to EUR 578.5 million. The Group's
sales abroad amounted to EUR 503.0 million, an increase of 164 per cent.
Excluding Lindex, sales abroad grew by 14 per cent. Sales growth abroad
was retarded by the closure in May of the department store located in the
Smolensky Passage shopping centre in Moscow for the time being, due to the
lessor's unlawful actions. International operations accounted for an
increased share of consolidated sales, rising from 26 per cent to 47 per
cent.
The sale of an unbuilt plot generated EUR 3.7 million of other operating
income.
The Group's gross operating margin grew by EUR 173.1 million to EUR 423.1
million. The relative gross margin was 47.2 per cent (41.3 per cent). The
relative gross margin of Hobby Hall and Seppälä improved, and the Group's
relative gross margin was also boosted by the inclusion of Lindex's
figures within the Group's consolidated accounts. Operating expenses
increased by EUR 153.9 million and depreciation by EUR 16.5 million.
Earnings in the report period were burdened by EUR 1.3 million of expenses
due to closure of the Smolenskaya department store, in addition to which
an impairment loss on inventories of EUR 2.5 million, an EUR 5.7 million
expense provision and extra depreciation of EUR 4.5 million were charged
to second-quarter earnings.
In the report period, the Group's operating profit grew by EUR 6.5 million
to EUR 28.8 million.
Net financial expenses grew by EUR 23.7 million and were EUR 24.6 million
(EUR 0.9 million). Net financial expenses were increased for the most part
by the borrowed capital costs for the Lindex acquisition.
Profit before taxes in the report period was EUR 4.3 million, down EUR
17.1 million on the figure a year earlier. Direct taxes were EUR 0.7
million, decreasing by EUR 4.3 million on the figure a year earlier. Net
profit for the report period was EUR 3.6 million (EUR 16.3 million).
Second-quarter profit grew and was EUR 15.2 million (EUR 10.2 million).
Earnings per share in the report period were EUR 0.06 (EUR 0.29) and
diluted for options, earnings were EUR 0.06 (EUR 0.29). Equity per share
was EUR 10.73 (EUR 9.34).
SALES AND EARNINGS TREND BY BUSINESS SEGMENT
Department Store Division
The Department Store Division's sales grew by 7 per cent to EUR 582.3
million in the report period. Sales in Finland were up 4 per cent. Within
international operations, sales were lifted by the good like-for-like
sales growth at the department stores in Russia and the Baltic countries
as well as by the new Bestseller stores, but they were reduced by the
closure of the Smolenskaya department store in Moscow. International
operations posted a 16 per cent increase in sales, accounting for 30 per
cent of consolidated sales (28 per cent).
The relative gross margin diminished in the report period. The closure of
the Smolenskaya department store is responsible for a charge to the
Department Store Division's earnings of EUR 14 million. Accordingly, the
Department Store Division's operating profit fell and was EUR 5.6 million
(EUR 19.3 million).
Running the Crazy Days campaign at the department stores in Finland
entirely in April instead of in March, as was done last year, resulted in
a 17 per cent increase in second-quarter sales on the previous year. Owing
to the costs of closing the Smolenskaya department store and the provision
that was made for this, operating profit in the second quarter was EUR 4.1
million (EUR 11.5 million).
Lindex
Lindex's sales in the report period amounted to EUR 322.1 million.
Compared with the pro forma statement for the corresponding period in
2007, sales were down one per cent, owing to changes in foreign exchange
rates. In local currency terms, sales grew slightly. Lindex's operating
profit was EUR 22.6 million. It was burdened by depreciation connected
with the Lindex acquisition and by a non-recurring expense charge for
inventories, to a total amount of EUR 5.2 million. Lindex's operating
profit in the same period a year ago was EUR 24.9 million.
Second-quarter operating profit grew and was EUR 23.8 million, compared
with Lindex's operating profit of EUR 22.8 million in the previous year.
Hobby Hall
Hobby Hall's sales decreased by 6 per cent to EUR 95.8 million (EUR 101.7
million) in the report period. Sales declined both in Finland and abroad,
but Hobby Hall's relative gross margin increased. Hobby Hall's operating
result fell by EUR 1.9 million and was a loss of EUR 1.4 million (profit
of EUR 0.5 million). The weakening in the operating result in the report
period was due to lower sales and to start-up costs for operations in
Russia.
Hobby Hall's sales grew by five per cent in the second quarter and were
EUR 48.3 million. The operating result was a profit of EUR 0.7 million,
whereas it was in the red in the same period of last year (an operating
loss of EUR 0.9 million).
Seppälä
Seppälä's sales in the report period increased by 4 per cent on the same
period of last year and were EUR 80.9 million. Sales in Finland were down
5 per cent, but showed strong growth in Russia, where they were buoyed by
new stores and the good like-for-like sales trend. Sales abroad were up 26
per cent, and their share of Seppälä's total sales rose to 33 per cent (26
per cent). The relative gross margin increased. Because new stores were
opened in rapid succession, fixed costs and depreciation grew faster than
the gross margin, causing Seppälä's operating result to decrease by EUR
2.1 million to EUR 4.5 million (profit of EUR 6.6 million).
Seppälä's second-quarter sales grew by 4 per cent to EUR 45.2 million.
Operating profit was EUR 5.1 million as against EUR 5.8 million in the
same period of last year.
FINANCING AND CAPITAL EMPLOYED
Liquid assets totalled EUR 23.8 million at the end of June, as against EUR
20.2 million a year earlier and EUR 33.2 million at the end of 2007.
Interest-bearing liabilities at the end of June were EUR 886.7 million
(110.6 million), of which EUR 759.8 million consisted of long-term
borrowings (30.2 million). At the end of 2007, interest-bearing
liabilities totalled EUR 905.6 million, of which EUR 855.4 million was
long-term debt. In June, Stockmann carried out an EUR 137.4 million share
issue targeted at institutional investors. The proceeds of the share issue
were used to repay part of the long-term loan which Stockmann raised when
it acquired AB Lindex (publ). Capital expenditures in the report period
amounted to EUR 76.5 million. Net working capital amounted to EUR 184.8
million at the end of June, as against EUR 224.8 million a year earlier
and EUR 193.9 million at the end of 2007. Dividend payouts totalled EUR
75.2 million.
Owing to the acquisition of Lindex, the equity ratio weakened against the
comparative period and was 36.3 per cent at the end of June (66.7 per
cent). The equity ratio at the end of 2007 was 32.6 per cent. Net gearing
was 131.1 per cent (17.4 per cent) at the end of June. At the end of 2007,
net gearing was 146.9 per cent.
The return on capital employed over the past 12 months was 12.2 per cent
(12.1 per cent at the end of 2007). The Group's capital employed increased
by EUR 913.9 million from June of the previous year and stood at EUR 1
544.8 million towards the end of the report period (EUR 1 499.4 million at
the end of 2007).
LINDEX ACQUISITION
In May, the Gothenburg Administrative Court of Appeal overturned the
affirmative decisions which Lindex had received in the County
Administrative Court concerning the deductibility in Sweden's taxation in
the years 2004/2005 and 2005/2006 of the approximately EUR 70 million of
losses made by the Lindex Group's company in Germany. Lindex will appeal
the ruling of the Administrative Court of Appeal to the Supreme
Administrative Court. In accordance with the decision of the
Administrative Court of Appeal, Lindex must return about EUR 22.3 million
of taxes and interest to the tax office. An adjustment has been made to
the preliminary calculation which was prepared in 2007 for the Lindex
acquisition. As a result of the adjustment, the tax with interest which is
to be repaid will increase the Group's goodwill by EUR 22.3 million, and
the amount will have no effect on the Group's earnings.
NEW LONG-TERM FINANCIAL TARGETS
At its strategy meeting held on June 18, 2008, Stockmann's Board of
Directors confirmed the Stockmann Group's strategic guidelines for the
next five years and the financial targets for the same period. During the
strategy period, the Group will continue to strengthen its profitable
growth both in Finland as well as in its present and new market areas
outside Finland. The purchase of Lindex towards the end of 2007 brought
the Group a strong new market area in Sweden and Norway, thereby enabling
the rapid expansion of Lindex's operations to new market areas, especially
in Russia. The integration of Lindex into the Stockmann Group has moved
ahead well. The Board of Directors estimates that the advantages of scale
resulting from the Lindex integration will rise to about 12-15 million
euros a year over the next two to three years. The bulk of this will come
from an improved gross margin Group-wide by leveraging Lindex's Far East
purchasing office network for the needs of the entire Group.
The Stockmann Group's long-term targets were last confirmed in 2006, prior
to the Lindex acquisition. The revised target for the Group is to achieve,
in all its market areas, annual growth that is faster than the market
average as well as to reach a 12 per cent operating profit margin and a 20
per cent return on capital employed by the end of the strategy period in
2013. Owing to the Group's large-scale capital expenditure programme, the
return on capital employed in the initial stage of the period will be
lower than in previous years.
The Lindex acquisition, which originally was made entirely with debt
financing, changed the Group's capital structure significantly. The
strategic target is an equity ratio of at least 40 per cent.
The company's dividend policy remains unchanged in spite of strong growth
and the energetic capital expenditure programme. The dividend policy is to
pay out a dividend that is more than half of the profit derived from
mainline operations.
CAPITAL EXPENDITURES
Capital expenditures during the report period totalled EUR 76.5 million
(EUR 63.9 million).
Department Store Division
The major enlargement and transformation project at the department store
in the centre of Helsinki saw the first approximately 500 square metres of
completely new space go into use at the beginning of May. The project
involves expanding the department store's commercial premises by about 10
000 square metres by converting existing premises to commercial use and by
building new retail space. In addition, new goods handling, servicing and
customer parking areas will be built. After the enlargement, the Helsinki
department store will have a total of about 50 000 square metres of retail
space. The cost estimate for the enlargement is about EUR 190 million. The
works are estimated to be completed phase by phase by autumn 2010. During
the report period, the project required an investment of about EUR 28.9
million. The department store's present retail space already clearly
exceeds the level prior to the enlargement project, and in the months
ahead, new space will become available stage by stage. Stockmann has
succeeded in carrying out the extensive project without disrupting the
department store's profitability.
In 2006, Stockmann purchased a 10 000-odd square metre commercial plot on
Nevsky Prospect, St Petersburg's high street. The plot is located next to
the Vosstaniya Square metro station, in the immediate vicinity of the
Moscow railway station. On this plot, Stockmann will erect the Nevsky
Centre shopping centre that will have about 100 000 square metres of gross
floor space, of which about 50 000 square metres will be store and office
space. A full-scale Stockmann department store with about 20 000 square
metres of retail space has been planned for the shopping centre, along
with other retail stores, office premises and an underground car park. The
total investment is estimated at about EUR 170 million. The final
construction permit was obtained at the beginning of March, and the
project is in the actual construction phase. According to the target
schedule, the building will be completed by the end of 2009. During the
report period, the project required an investment of about EUR 10.2
million.
Stockmann opened a new Nike store in Russia in March. Stockmann now has a
total of six Nike stores in Russia.
Stockmann's credit line Loyal Customer Card was relaunched in Finland as
an international MasterCard as from April. In Latvia, where Stockmann has
not previously had any Loyal Customer credit card, the new cards will be
introduced towards the end of 2008, and they will go into use in Estonia
in early 2009. The new card offerings will be based on an agreement
between Stockmann and Nordea concerning transfer of the financing of Loyal
Customer accounts to Nordea. This transfer of accounts will lighten
Stockmann's balance sheet by about EUR 65 million. In Russia, a Stockmann
Loyal Customer MasterCard credit card was brought out in the market in
March in cooperation with Citibank. Stockmann has a total of about 1.5
million Loyal Customers in Finland, Russia and the Baltic countries. All
in all, there are more than 600 000 accounts with a credit facility in
Finland and Estonia.
The Department Store Division's capital expenditures came to EUR 57.2
million.
Lindex
Lindex's expenditures amounted to EUR 14.9 million and went for new store
openings and refurbishments as well as for the new distribution centre in
Gothenburg, which was placed in use at the turn of the year and has
operated at full capacity since the spring.
During the report period, Lindex opened two stores in Sweden and Norway as
well as one each in Estonia, Lithuania and the Czech Republic. One store
was closed in Sweden.
Hobby Hall
Hobby Hall's capital expenditures totalled EUR 1.0 million.
Seppälä
In the report period, Seppälä opened two stores in Russia, two in Finland
and one each in Lithuania and Estonia. In addition, five stores in Finland
were refurbished according to the new store concept and moved to better
commercial locations and the flagship store in Helsinki's Forum shopping
centre was reopened with a new look. One store in Finland was closed.
Seppälä's capital expenditures totalled EUR 2.8 million.
Other capital expenditures
The Group's other capital expenditures came to EUR 0.5 million.
NEW PROJECTS
Department Store Division
Stockmann will open its fifth department store in Moscow in leased
premises in the Metropolis shopping centre that is being built right near
the city's centre. The department store will have a total of about 8 000
square metres of floor space, and Stockmann's investment in the project
will be about EUR 12 million. Stockmann's objective is to open the
department store in October 2008.
Stockmann has also made an agreement on opening a full-scale department
store in leased premises located in a shopping centre that is currently
being built in Ekaterinburg, Russia. The department store will have a
total of more than 8 000 square metres of retail space, and Stockmann's
investment in the project will be about EUR 12 million. According to
plans, the department store will be opened in autumn 2009.
At the beginning of 2008, Stockmann signed a preliminary agreement on
opening a sixth Stockmann department store in Moscow in leased premises.
The department store, which will be located in the Rostokino shopping
centre that is under construction on the north side of Moscow, will have
about 10 000 square metres of retail space, and Stockmann's investment in
it will be about EUR 16 million. According to preliminary plans, the
shopping centre will be completed at the end of 2009.
In March, Stockmann signed a preliminary lease agreement for a department
store in a shopping centre that will be located in a new multifunctional
centre near the centre of Vilnius, Lithuania's capital city. The shopping
centre will be completed towards the end of 2010. The Stockmann department
store, with a total floor area of about 13 000 square metres, will be one
of the shopping centre's anchor tenants.
The Department Store Division is continuing to establish new Stockmann
Beauty stores in Finland and to build out the chain of Nike and Bestseller
stores in Russia.
Lindex
Lindex will open its first store in Russia in St Petersburg in August
2008. The objective is to open more stores in Russia in the latter part of
the year. In addition, agreements have been made on opening three stores
in Norway towards the end of the year as well as two stores in Finland and
one store in Sweden. The aim is to open more stores in the Baltic
countries too this year.
Lindex has signed a franchising agreement with Delta International
Establishment on expanding its chain of stores to the Middle East under a
franchising arrangement. The franchising partner will carry out the store
investments, hire the staff and be responsible for the entire retail sales
operations. The first store is to be opened in Saudi Arabia in September
2008, and by the end of the year, six more stores will be opened there.
Over a five-year period, the aim is to open a total of 50 stores in Saudi
Arabia, Kuwait, the United Arab Emirates and Egypt.
Lindex is seeking to open 20-25 new stores a year during 2008-2009, half
of them in the Nordic countries and half in new market areas.
Hobby Hall
An upgraded cash register system and telephone system, which will
contribute to improving Hobby Hall's customer service, will go into use in
the autumn. Hobby Hall's revamped online store will be tested during the
summer and it will be up and running after the tests have been completed.
In the early autumn, Hobby Hall's head office will move into leased
premises in a new office building in Helsinki's Käpylä district.
Seppälä
According to plans, Seppälä and the Stockmann Group will again expand
their operations to a new country with the opening in September of
Seppälä's first store in Ukraine. Seppälä will still open 11 new stores
within this year; five new stores in Russia, three in Finland, two in
Estonia and one in Latvia.
SHARES AND SHARE CAPITAL
The company's market capitalization at the end of June was EUR 1 511.4
million (EUR 1 776.8 million). At the end of 2007 the market
capitalization was EUR 1 659.8 million.
Stockmann's share prices outperformed both the OMX Helsinki index and the
OMX Helsinki Cap index during the report period. At the end of June the
stock exchange price of the Series A share was EUR 24.42, compared with
EUR 29.50 at the end of 2007, and the Series B share was selling at EUR
24.55, as against EUR 29.66 at the end of 2007.
A total of 364 Stockmann plc Series B shares were subscribed for with
Stockmann Loyal Customer share options in May. The shares were entered in
the Trade Register on June 26, 2008, and they became available for public
trading, together with the existing shares, on OMX Nordic Exchange
Helsinki on June 27, 2008. As a consequence of the subscriptions, the
share capital was increased EUR 728.
The 2008 Annual General Meeting authorized the Board of Directors of the
company to decide on the issuance of shares and special rights entitling
holders to shares, as referred to in Chapter 10, Section 1, of the Limited
Liability Companies Act, in one or more instalments. The Board of
Directors was authorized to decide on the amount of A Series and B Series
shares to be issued. However, the aggregate number of shares issued on the
basis of the authorization may not exceed 15 000 000 shares. Issuance of
shares and special rights entitling holders to shares can be carried out
in accordance with or in disapplication of the shareholders' pre-emptive
rights (directed issue). The Board of Directors is authorized to decide on
all the terms and conditions concerning the issue of shares and special
rights referred to in Chapter 10, Section 1, of the Limited Liability
Companies Act. The authorization will be valid for up to three years.
In accordance with the authorization granted by the Annual General
Meeting, the Board of Directors decided on a directed share issue of 5 609
360 new shares, which was carried out on June 23, 2008. In the share
issue, subscriptions were made for 2 456 424 Stockmann plc Series A shares
and 3 152 936 Stockmann plc Series B shares. Of the Series A shares
subscribed for, 438 618 were converted to Series B shares. As a
consequence of the share subscriptions and conversions, 2 017 806 Series A
shares and 3 591 554 Series B shares were entered in the Trade Register on
June 27, 2008, and they were made available for public trading on the OMX
Nordic Exchange in Helsinki, together with old shares, on June 27, 2008.
Following the above-mentioned registrations, Stockmann's share capital
increased to EUR 123 406 672. At June 30, 2008, Stockmann had 26 582 049
Series A shares and 35 121 287 Series B shares.
Stockmann held 364 321 of its own Series B shares (treasury shares) at the
end of June 2008. They comprised 0.6 per cent of all the shares
outstanding and 0.1 per cent of all the votes. The shares were bought back
at a total price of EUR 5.5 million.
The Annual General Meeting in 2007 authorized the Board of Directors to
decide on the transfer of the company's own Series B shares in one or more
instalments. The authorization will be in force for five years. The
company's Board of Directors does not have valid authorizations to buy
back treasury shares.
NUMBER OF EMPLOYEES
During the report period, the Stockmann Group had an average payroll of 15
637 employees, or 5 202 more than in the comparison period. The increase
in the number of employees was attributable in large part to the
acquisition of Lindex in December. In addition, there was steady growth in
the number of staff employed at the department stores and other stores in
Finland and abroad. Stockmann's average number of employees, converted to
full-time staff, increased by 3 444 and was 11 811.
At the end of June 2008 the number of staff working abroad was 8 313
people. At the end of June of last year Stockmann had 3 976 people working
abroad. The proportion of the total personnel who were working abroad was
53 per cent (37 per cent).
RISK FACTORS
The quarterly report released on April 24, 2008, outlined the risks
relating to the dispute regarding the validity of the leasehold on the
Smolenskaya department store and the appeals that have been lodged
concerning the tax deductibility of the loss made by the Lindex Group's
company in Germany, and the present stage of these issues has been
discussed in this interim report. A new risk factor that has emerged is
the rise in construction costs, coupled with rapidly accelerating
inflation. In other respects, there has been no change in risk factors
after the publication on February 7, 2008, of the discussion presented in
the Board Report on Operations.
Lindex has pending legal proceedings in Germany concerning taxation there
in 2004-2006. The value of the rectification claim made by Lindex
concerning the assessment on the basis of estimated net income is about
EUR 32 million. The tax effect of this claim has not been recorded in
earnings.
Stockmann has initiated legal proceedings against the landlords of the
Smolenskaya department store in the International Commercial Arbitration
Court (ICAC) in Moscow, whereby it is claiming damages of about USD 75
million due to the unlawful closure of the department store.
FULL-YEAR OUTLOOK
Of late, uncertainty has increased greatly in the world economy as well as
in the financial and equity markets. Inflation has gathered pace, mainly
in step with the rising prices of energy and food. Of the Stockmann
Group's market areas, the weakening in consumer confidence in the Nordic
countries and the Baltic area has been reflected to some degree as a
slowdown in consumption demand. By contrast, the growth of Russia's
economy and consumption demand has continued ahead. According to
estimates, consumption demand will grow further, but at a slower pace than
in the first part of the year, in the Nordic countries and the Baltic
area. In Russia, growth will be faster than in these markets.
Lindex will be part of the Stockmann Group for all of 2008. This means a
strong increase in the Group's sales. Consolidated sales are estimated to
be almost EUR 2.4 billion in 2008 if Stockmann does not succeed in
reopening the Smolenskaya department store in Moscow, which was closed in
May owing to the above-discussed rental dispute.
Third-quarter operating profit is estimated to improve on the figure a
year ago. Full-year sales and earnings will be affected substantially by
the trend in consumption demand in the latter part of the year. The
operating profit for 2008 is expected to improve. Although Stockmann's
financial expenses following the Lindex acquisition will increase
markedly, the Group reiterates its target of posting higher profit in 2008
than in the previous year.
ACCOUNTING POLICIES
The quarterly report has been prepared in compliance with IAS 34. The
accounting policies and calculation methods applied are the same as those
in the 2007 financial statements. The figures are unaudited.
Balance sheet, Group EUR millions 30.6.08 30.6.07 31.12.07
ASSETS
Non-current assets
Intangible assets (Ref. 1.2) 865.5 11.2 844.5
Property, plant and equipment 516.1 392.0 476.8
(Ref.1.2)
Available-for-sale investments 6.6 6.5 6.5
Non-current receivables 1.7 1.7
Deferred tax assets 5.3 2.5 5.3
Non-current assets, total 1 395.3 412.1 1 334.8
Current assets
Inventories 231.6 156.2 244.4
Receivables, interest-bearing 63.4 98.5 98.8
Receivables, non interest-bearing 100.6 93.5 112.5
Cash and cash equivalents 23.8 20.2 33.2
Current assets, total 419.4 368.5 488.9
Assets, total 1 814.6 780.6 1 823.7
EQUITY AND LIABILITIES
Equity 658.1 520.3 593.8
Minority interest 0.0 0.0 0.0
Equity, total 658.1 520.3 593.8
Non-current liabilities, interest-bearing 759.8 30.2 855.4
Reserves 2.5 5.3
Non-current liabilities, total 762.3 30.2 860.7
Deferred taxes liabilities 56.6 26.2 57.3
Current liabilities
Current liabilities, interest-bearing 126.9 80.4 50.1
Current liabilities, non interest-bearing 210.8 123.5 261.7
Current liabilities, total 337.7 203.8 311.8
Equity and liabilities, total 1 814.6 780.6 1 823.7
Equity ratio, per cent 36.3 66.7 32.6
Net gearing, per cent 131.1 17.4 146.9
Cash flow from operations per share, EUR 0.48 0.04 2.16
Interest-bearing net debt, EUR mill. 799.5 -8.1 773.6
Number of shares at June 30, thousands 61 703 56 094 56 094
Weighted average number of shares, 55 850 55 486 55 606
thousands
Weighted average number of shares, 55 850 55 752 55 815
diluted, thousands
Market capitalization, EUR mill. 1 511.4 1 776.8 1 659.8
Equity ratio, per cent = 100 x (Equity + minority interest) / Total assets
less advance payments received
Net gearing, per cent = 100 x Interest-bearing net financial liabilities /
Equity total
Interest-bearing net debt = Interest-bearing liabilities less cash and
cash equivalents less interest-bearing liabilities
Market capitalization = Number of shares multiplied by the quotation for
the respective share series on the balance sheet date
Cash flow statement, Group EUR millions 1-6/2008 1-6/2007 1-12/2007
Cash flows from operating activities
Net profit for the financial year 3.6 16.3 88.4
Adjustments:
Deprecation 34.0 17.5 36.9
Profit (-) and loss (+) from sales -3.7
of non-current assets
Financial expenses 25.1 1.5 7.0 Financial income -0.5 -0.6 -1.3
Taxes paid 0.7 5.0 31.1
Other adjustments 3.6 1.3 1.2
Changes in working capital:
Change in trade and other 64.2 0.4 -11.0
receivables
Change in inventories 6.1 -1.2 -12.5
Change in trade payables and other -46.2 -26.3 8.8
liabilities
Interest paid -27.3 -0.8 -6.5
Interest received 0.2 0.5 1.3
Income taxes paid -32.9 -11.6 -23.5
Net cash from operating activities 26.9 2.2 119.9
Cash flows from investing activities
Investments in tangible and intangible -80.7 -62.2 -113.2
assets
Acquisition of subsidiary net cash -8.3 -852.5
acquired
Capital expenditures on other -0.2
investments
Cash from tangible assets 5.5
Dividends received 0.1 0.1 0.1
Net cash used in investing activities -83.6 -62.1 -965.6
Cash flows from financing activities
Proceeds from issue of share capital 135.5 5.8 5.8
Change in short-term loans, increase 70.5 67.3 35.5
(+), decrease (-)
Long-term loans, increase (+), -93.0 20.0 835.6
decrease (-)
Dividends paid -75.2 -72.1 -72.1
Net cash used in financing activities 37.8 21.0 804.8
Change in cash and cash equivalents -18.8 -38.9 -40.9
Cash and cash equivalents at start of 33.2 59.2 59.2
the period
Translation differences in cash and cash 0.1 0.4
equivalents
Cheque account on credit at start of the -14.6
period
Cash and cash equivalents 23.8 59.2 33.2
Cheque account on credit at the end of -23.7 -14.6
the period
Cash and cash equivalents at end of the 0.1 20.2 18.6
period
Income statement, Change
Group, EUR millions 1-6/2008 1-6/2007 per cent 1-12/2007
Revenue 896.7 605.6 48 1 398.2
Other operating income 3.7 9.7
Materials and consumables -473.6 -355.6 33 -791.2
Wages, salaries and employee -175.3 -103.3 70 -224.1
benefits expenses
Depreciation -34.0 -17.5 94 -36.9
Other operating expenses -188.8 -106.9 77 -230.6
Operating profit (loss) 28.8 22.3 29 125.2
Finance income and expenses -24.6 -0.9 -5.7
Profit (loss) before tax 4.3 21.4 -80 119.4
Income taxes -0.7 -5.0 -31.1
Profit (loss) for the period 3.6 16.3 -78 88.4
Earnings per share, EUR 0.06 0.29 1.59
Earnings per share, diluted, 0.06 0.29 1.58
EUR
Operating profit, per cent 3.2 3.7 9.0
Equity per share, EUR 10.73 9.34 15 10.66
Return on equity, per cent, 12.9 13.6 -5 15.2
moving 12 months
Return on capital employed, 12.2 16.3 -25 12.1
per cent, moving 12 months
Average number of employees, 11 811 8 367 41 8 979
converted to full-time staff
Investments 76.5 63.9 20 977.4
Earnings per share = (Profit before taxes - minority interest - income
taxes) / Average number of shares, adjusted for share issues
Return on equity, per cent, moving 12 months = 100 x Profit for the period
(12 months) / (Equity + minority interest) (average over 12 months)
Return on capital employed, per cent, moving 12 months = 100 x (Profit
before taxes + interest and other financial expenses) (12 months) /
Capital employed (average over 12 months)
SEGMENT INFORMATION
Segments
Sales, EUR millions 1-6/2008 1-6/2007 Change 1-12/2007
per cent
Department Store Division 582.3 542.2 7 1 218.1
Lindex 322.1 68.1
Hobby Hall 95.8 101.7 -6 206.5
Seppälä 80.9 78.1 4 174.7
Shared 0.4 0.4 -6 0.8
Group 1 081.5 722.4 50 1 668.3
Revenue, EUR millions 1-6/2008 1-6/2007 Change 1-12/2007
per cent
Department Store Division 490.0 455.9 7 1 025.0
Lindex 258.6 54.7
Hobby Hall 80.0 84.4 -5 171.7
Seppälä 67.3 64.8 4 145.1
Shared 0.8 0.5 1.7
Group 896.7 605.6 48 1 398.2
Operating profit (loss), EUR 1-6/2008 1-6/2007 Change 1-12/2007
millions per cent
Department Store Division 5.6 19.3 -71 91.8
Lindex 22.6 15.0
Hobby Hall -1.4 0.5 -372 5.7
Seppälä 4.5 6.6 -32 20.7
Shared -2.0 -4.0 -49 -7.5
Eliminations -0.4 -0.2 -0.7
Group 28.8 22.3 29 125.2
Investments,
gross, EUR millions 30.6.2008 30.6.2007 Change 31.12.2007
per cent
Department Store Division 57.2 56.6 1 111.5
Lindex 14.9 853.1
Hobby Hall 1.0 1.4 -27 3.5
Seppälä 2.8 5.6 -49 9.3
Shared 0.5 0.3 87
Group 76.5 63.9 20 977.4
Assets, EUR millions 30.6.2008 30.6.2007 Change 31.12.2007
per cent
Department Store Division 623.9 594.6 5 652.4
Lindex 1 012.6 992.9
Hobby Hall 94.3 107.7 -12 102.7
Seppälä 44.0 40.3 9 44.7
Shared 39.8 38.1 5 30.9
Group 1 814.6 780.6 132 1 823.7
Non-interest-bearing 30.6.2008 30.6.2007 Change 31.12.2007
liabilities, EUR millions per cent
Department Store Division 78.1 89.9 -13 125.9
Lindex 100.0 100.8
Hobby Hall 15.0 21.2 -29 14.5
Seppälä 6.9 9.3 -25 11.5
Shared 69.8 29.3 71.7
Group 269.9 149.7 80 324.3
Market areas
Change
Sales, EUR millions 1-6/2008 1-6/2007 per cent 1-12/2007
Finland 1) 578.5 531.8 9 1 171.5
Sweden and Norway 2) 277.3 59.5
Baltic states and Czech 102.1 88.5 15 194.1
Republic 1)
Russia 3) 123.6 102.1 21 243.2
Group 1 081.5 722.4 50 1 668.3
Finland, per cent 53.5 73.6 70.2
International operations, 46.5 26.4 29.8
per cent
Change
Revenue, EUR millions 1-6/2008 1-6/2007 per cent 1-12/2007
Finland 1) 482.6 443.1 9 977.6
Sweden and Norway 2) 221.8 47.5
Baltic states and Czech 86.8 75.2 15 165.0
Republic 1)
Russia 3) 105.6 87.3 21 208.0
Group 896.7 605.6 48 1 398.2
Finland, per cent 53.8 73.2 69.9
International operations, 46.2 26.8 30.1
per cent
Change
Operating profit (loss), EUR 1-6/2008 1-6/2007 per cent 1-12/2007
millions
Finland 1) 24.6 24.3 1 96.3
Sweden and Norway 2) 22.9 14.4
Baltic states and Czech 3.9 7.0 -44 21.1
Republic 1)
Russia 3) -22.6 -9.0 150 -6.6
Group 28.8 22.3 29 125.2
Finland, per cent 85.4 109.1 76.9
International operations, 14.6 -9.1 23.1
per cent
Investments, Change
gross, EUR millions 30.6.2008 30.6.2007 per cent 31.12.2007
Finland 1) 45.5 33.5 36 80.2
Sweden and Norway 2) 12.2 847.0
Baltic states and Czech 3.1 1.2 153 5.1
Republic 1)
Russia 3) 15.7 29.2 -46 45.0
Group 76.5 63.9 20 977.4
Finland, per cent 59.5 52.4 8.2
International operations, 40.5 47.6 91.8
per cent Change
Assets, EUR millions 30.6.2008 30.6.2007 per cent 31.12.2007
Finland 1) 571.4 535.6 7 585.2
Sweden and Norway 2) 994.0 975.7
Baltic states and Czech 72.3 72.9 -1 75.8
Republic 1)
Russia 3) 176.9 172.1 3 187.0
Group 1 814.6 780.6 132 1 823.7
Finland, per cent 31.5 68.6 32.1
International operations, 68.5 31.4 67.9
per cent
1) Department Store
Division, Lindex, Hobby Hall
and Seppälä
2) Lindex
3) Department Store
Division, Hobby Hall and
Seppälä
Statement of changes Share
in equity premium Legal
Group, EUR millions Equity* fund reserve
Equity December 31, 2006 111,7 183,4 44,1
Options exercised 0,5 2,6
Share bonus 0,2
Transfer to other funds 0,0
Cost of share issue
Dividends
Translation differences
Profit for the period
Equity June 30, 2007 112.2 186.2 44.1
Equity December 31, 2007 112.2 186.0 44.1
Options exercised 0.0
Rights issue 11.2
Share bonus
Cash flow hedges
Cost of share issue
Dividends
Translation differences -0.2
Profit for the period
Equity June 30, 2008 123.4 186.0 43.9
* including share issue
Statement of changes Fair Reserve for
invested
in equity value unrestricted Translatioo
n
Group, EUR millions reserve** equity reserve
Equity December 31, 2006 0,0 0,0 0,0
Options exercised
Share bonus
Transfer to other funds
Cost of share issue
Dividends
Translation differences 0,0
Profit for the period
Equity June 30, 2007 0.0 0.0 0.1
Equity December 31, 2007 0.5 0.0 0.0
Options exercised
Rights issue 124.3
Share bonus
Cash flow hedges -0.2
Cost of share issue
Dividends
Translation differences -0.1 -0.1
Profit for the period
Equity June 30, 2008 0.2 124.3 -0.1
** excluding deferred tax
liability
Statement of changes
in equity Retained Minority
Group, EUR millions earnings Total interest Total
Equity December 31, 2006 232,3 571,6 0,0 571,6
Options exercised 3,1 3,1
Share bonus 0,2 0,4 0,4
Transfer to other funds 0,0 0,0
Cost of share issue 0,9 0,9 0,9
Dividends -72,1 -72,1 -72,1
Translation differences 0,0 0,0 0,0
Profit for the period 16,3 16,3 0,0 16,3
Equity June 30, 2007 177.7 520.3 0.0 520.3
Equity December 31, 2007 250.9 593.8 0.0 593.8
Options exercised 0.0 0.0
Rights issue 135.5 135.5
Share bonus 0.1 0.1 0.1
Cash flow hedges -0.2 -0.2
Cost of share issue 0.8 0.8 0.8
Dividends -75.2 -75.2 -75.2
Translation differences -0.4 -0.4
Profit for the period 3.6 3.6 0.0 3.6
Equity June 30, 2008 180.3 658.1 0.0 658.1
Contingent liabilities, 30.6.2008 30.6.2007 31.12.2007
Group EUR millions
Mortgages on land and 1.7 1.7 1.7
buildings
Guarantees 1.5
Pledges 0.1
Total 1.7 3.2 1.8
Lease agreements on 30.6.2008 30.6.2007 31.12.2007
business premises, EUR
millions
Minimum rents payable on
the basis of binding lease
agreements on business
premises
Within one year 96.7 68.3 124.6
After one year 466.8 337.8 449.3
Total 563.5 406.1 573.8
Lease payments 30.6.2008 30.6.2007 31.12.2007
Within one year 1.3 1.0 1.4
After one year 1.1 1.0 1.3
Total 2.4 2.0 2.8
Derivative contracts 30.6.2008 30.6.2007 31.12.2007
Nominal value
Currency derivatives 325.5 67.8
Electricity derivatives 3.2 1.5
Total 328.7 69.3
Exchange rates
Country Currency 30.6.2008 30.6.2007 31.12.2007
Russia RUB 36.9477 34.8070 35.9860
Estonia EEK 15.6466 15.6466 15.6466
Latvia LVL 0.7047 0.6963 0.6964
Lithuania LTL 3.4528 3.4528 3.4528
Sweden SEK 9.4703 9.4415
Income statement
quarterly, Q2 Q1 Q4 Q3
Group, EUR millions 2008 2008 2007 2007
Continuing operations
Revenue 483.3 413.4 483.9 308.6
Other operating income -0.1 3.8 0.0 9.7
Materials and consumables -242.6 -231.0 -255.8 -179.8
Wages, salaries and -90.2 -85.1 -73.2 -47.6
employee benefits expenses
Depreciation -18.7 -15.2 -10.5 -8.9
Other operating expenses -100.3 -88.5 -73.7 -50.0
Operating profit (loss) 31.4 -2.5 70.8 32.1
Finance income and expenses -13.3 -11.3 -4.3 -0.5
Profit (loss) before tax 18.1 -13.8 66.5 31.6
Income taxes -2.9 2.2 -17.9 -8.1
Profit (loss) for the 15.2 -11.6 48.6 23.5
period, continuing
operations
Discontinued operations
Profit (loss) for the
period, discontinued
operations
Profit (loss) for the 15.2 -11.6 48.6 23.5
period
Earnings per share,
continuing operations, EUR
Basic 0.27 -0.21 0.87 0.43
Diluted 0.27 -0.21 0.87 0.42
Earnings per share,
discontinued operations,
EUR
Basic
Diluted
Earnings per share, total,
EUR
Basic 0.27 -0.21 0.87 0.43
Diluted 0.27 -0.21 0.87 0.42
Q2 Q1 Q4 Q3
Sales, EUR millions 2008 2008 2007 2007
Department Store Division 306.4 275.9 400.4 275.5
Lindex 183.8 138.3 68.1
Hobby Hall 48.3 47.4 58.9 45.9
Seppälä 45.2 35.7 51.2 45.4
Shared 0.2 0.2 0.2 0.2
Group 583.9 497.5 578.8 367.0
Revenue, EUR millions
Department Store Division 257.3 232.7 336.9 232.2
Lindex 147.6 111.0 54.7
Hobby Hall 40.4 39.7 49.2 38.2
Seppälä 37.6 29.7 42.5 37.8
Shared 0.4 0.4 0.7 0.5
Group 483.3 413.4 483.9 308.6
Operating profit, EUR
millions
Department Store Division 4.1 1.5 46.9 25.7
Lindex 23.8 -1.2 15.0
Hobby Hall 0.7 -2.1 2.7 2.5
Seppälä 5.1 -0.6 8.6 5.5
Shared -2.2 0.2 -2.4 -1.1
Eliminations 0.0 -0.3 0.0 -0.5
Group 31.4 -2.5 70.8 32.1
Income statement
quarterly, Q2 Q1 Q4 Q3
Group, EUR millions 2007 2007 2006 2006
Continuing operations
Revenue 294.2 311.4 389.6 281.1
Other operating income 0.4 0.0
Materials and consumables -164.0 -191.6 -215.6 -166.1
Wages, salaries and -52.6 -50.8 -57.9 -44.2
employee benefits expenses
Depreciation -8.4 -9.1 -7.9 -7.9
Other operating expenses -55.1 -51.7 -58.1 -43.0
Operating profit (loss) 14.1 8.2 50.5 19.8
Finance income and expenses -0.8 -0.2 -0.5 0.5
Profit (loss) before tax 13.3 8.0 50.1 20.4
Income taxes -3.2 -1.9 -12.3 -5.0
Profit (loss) for the 10.2 6.1 37.8 15.4
period, continuing
operations
Discontinued operations
Profit (loss) for the
period, discontinued
operations
Profit (loss) for the 10.2 6.1 37.8 15.4
period
Earnings per share,
continuing operations, EUR
Basic 0.18 0.11 0.70 0.29
Diluted 0.18 0.11 0.69 0.28
Earnings per share,
discontinued operations,
EUR
Basic -0.01
Diluted -0.01
Earnings per share, total,
EUR
Basic 0.18 0.11 0.70 0.28
Diluted 0.18 0.11 0.68 0.28
Q2 Q1 Q4 Q3
Sales, EUR millions 2007 2007 2006 2006
Department Store Division 261.0 281.2 363.4 249.0
Lindex
Hobby Hall 46.0 55.6 55.5 45.5
Seppälä 43.5 34.6 45.3 40.2
Shared 0.2 0.2 0.2 0.2
Group 350.7 371.7 464.4 334.9
Revenue, EUR millions
Lindex 219.6 236.3 305.5 209.8
Department Store Division
Hobby Hall 38.1 46.2 46.1 37.8
Seppälä 36.1 28.7 37.5 33.2
Shared 0.4 0.1 0.5 0.2
Group 294.2 311.4 389.6 281.1
Operating profit, EUR
millions
Department Store Division 11.5 7.8 44.3 13.1
Lindex
Hobby Hall -0.9 1.5 3.4 2.1
Seppälä 5.8 0.8 7.3 5.4
Shared -2.1 -1.8 -3.8 -0.9
Eliminations -0.1 0.0 -0.6 0.1
Group 14.1 8.2 50.6 19.8
1. ASSETS
EUR mill. 30.6.2008 30.6.2007 31.12.2007
Acquisition cost Jan. 1 813.8 551.7 551.7
Translation difference +/- -0.8 -0.7 0.0
Aquisitions through business 0.0 154.7
combinations (investment) (+)
Translation difference +/- -0.2
Increases Jan. 1-June 30 76.2 63.9 125.9
Decreases Jan. 1-June 30 -2.3 -1.1 -18.4
Acquisition cost June 30/Dec. 31 886.9 613.9 813.8
Accumulated depreciation Jan. 1 212.5 193.2 193.2
Translation difference +/- -0.2 0.3 0.0
Depreciation on reductions -0.6 -0.3 -17.6
Depreciation for the financial year 34.0 17.5 36.9
Accumulated depreciation 245.6 210.8 212.5
June 30/Dec. 31
Book value Jan. 1 601.3 358.5 358.5
Book value June 30/Dec. 31 641.3 403.1 601.3
Goodwill
EUR mill. 30.6.2008 30.6.2007 31.12.2007
Acquisition cost Jan. 1 720.0
Aquisitions through business 721.7
combinations (investment) (+)
Translation difference +/- -2.2 -1.7
Increases Jan.1-June 30 22.5
Acquisition cost June 30/Dec. 31 740.3 720.0
Book value Jan 1. 720.0
Book value June 30/Dec. 31 740.3 720.0
Total 1 381.6 403.1 1 321.3
2. ACQIORED OPERATIONS, 2007
Lindex acquisition, precision of
preliminary acquisition cost in
30.6.2008
Acquired companies
Milj. euroa Carrying Carrying
amounts Fair values amounts
before recognized after business in business business
combination combination combination
Intangible assets
Trademarks 18.4 78.2 96.6
Rights over leased premises 0.0 0.0
Customer relationships 2.4 2.4
Supplier relationships 4.3 4.3
EDP software 10.3 10.3
Goodwill 7.6 -7.6 0.0
Property, plant and equipment 41.1 41.1
Other fiancial assets 2.6 2.6
Deferred tax assets 3.0 3.0
Inventories 72.6 4.2 76.8
Trade and other receivables 14.6 14.6
Cash and cash equivalents 9.0 9.0
Assets, total 179.2 81.5 260.8
Deferred taxes liabilities 1.7 25.0 26.7
Pension liabilities 3.4 3.4
Other provisions 2.5 2.5
Current account with overdraft 29.0 29.0
facility
Other liabilities 69.9 22.3 92.2
Liabilities, total 106.5 47.3 153.8
Net assets 72.7 34.2 107.0
Acquisition cost 851.1
Goodwill 744.2 744.2
STOCKMANN plc
Hannu Penttilä
CEO
DISTRIBUTION
OMX Nordic Exchange Helsinki
Principal media
A press and analyst conference will be held today, August 6, 2008, at
14.00 at the World Trade Center, Aleksanterinkatu 17, Helsinki.
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