STOCKMANN'S ANNUAL GENERAL MEETING ON MARCH 18, 2008
Not for release, publication or distribution in Australia, Canada, Japan or the United States.
THE STOCKMANN GROUP'S SALES NETWORK EXPANDS TO THE MIDDLE EAST
The Annual General Meeting of Stockmann plc, held in Helsinki on March 18, 2008, adopted the financial statements for the financial year January 1 - December 31, 2007, granted release from liability to the responsible officers and resolved to pay a dividend of EUR 1.35 per share for last year. The Board of Directors' proposals to the Annual General Meeting were approved without changes. Under a franchising agreement, the Group's sales network will expand to the Middle East.
Managing Director's review
In his review to Stockmann's Annual General Meeting in Helsinki on March 18, 2008, CEO Hannu Penttil√§ observed that the transfer of the Swedish fashion chain Lindex to Stockmann's ownership through a public tender offer in December was a major acquisition, Finland's second largest last year.
Stockmann's most recent acquisitions were made back in the 1980s, when both Hobby Hall and Sepp√§l√§ became part of the Group. In the ensuing period organic growth has been achieved both by building out operations in the domestic market and by expanding via these concepts to new market areas. Non-core businesses, however, have been trimmed through measures such as divesting the wholesale business, the Sesto grocery chain and, most recently, the vehicle trade in 2006.
The Lindex transaction will strengthen the Stockman Group's position in many ways. Lindex accounts for a share of about 30 per cent on the Stockmann Group's sales, whereas department store operations make up a good 50 per cent and the aggregate share of Sepp√§l√§ and Hobby Hall is just under 20 per cent.
With the purchase of Lindex, the Stockmann Group has gained a significant position in the markets of Sweden and Norway, where it has not had operations previously. Lindex has a very large share of the Swedish and Norwegian market and operations there are very profitable. While the Lindex acquisition counterbalances the risk of the Group's eastward expansion, it also opens up new and immediate opportunities for expanding in the eastern market. The objective is to start up Lindex's operations in the fast-growing Russian market before the end of this year. This means that Stockmann of Finland will be the player who first brings a Swedish fashion chain to Russia.
The Czech Republic too, where Lindex started operations last autumn, is a new country for the Stockmann Group. Via Lindex's own purchasing offices, China, India, Bangladesh, Pakistan and Turkey also became countries where the Stockmann Group operates.
Likewise, the Middle East will soon be a new and interesting market area for Stockmann. According to a Letter of Intent, the Lindex fashion chain will expand to the Middle East, where operations will be carried on by a local company, Delta International Establishment, under a franchising agreement. This company 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, and six more stores will be opened there this year. According to plans, a total of 50 stores will be opened over a five-year period in Saudi Arabia, Kuwait, the United Arab Emirates and Egypt.
Finland's proportion of Stockmann's operations has now narrowed to about half, which was the strategic target for 2011 that was previously set by the Group. It is clear that Finland's share will show a further market fall over the next few years, because operations and markets are growing outside Finland.
In summary, the Lindex deal means that the Stockmann Group has grown to become a more than 16 000-strong company team, which soon will have operations in 14 countries. The Group's stores span six time zones from Norway to Novosibirsk.
A dividend of EUR 1.35 per share
The Annual General Meeting passed a resolution that a dividend of EUR 1.35 per share be paid for the 2007 financial year. The total dividend payout will amount to EUR 72.1 million. The dividend will be paid on April 2, 2008, to those shareholders who on the record date for the dividend payout, March 25, 2008, have been entered in the Shareholder Register kept by Finnish Central Securities Depository Ltd.
Election of the members of the Board of Directors
The Annual General Meeting resolved, in accordance with the proposal of the Board's Appointments and Compensation Committee, that seven members be elected to seats on the Board and re-elected, in accordance with the proposal of the committee, LL.M. Christoffer Taxell, Managing Director Erkki Etola, Managing Director Kaj-Gustaf Bergh, Professor Eva Liljeblom, Managing Director Kari Niemist√∂, Director of Sustainable Development Carola Teir-Lehtinen and Managing Director Henry Wiklund for a term of office until the end of the next Annual General Meeting.
At its organisation meeting on March 18, 2008, the Board of Directors re- elected LL.M. Christoffer Taxell as its chairman and Managing Director Erkki Etola as its vice chairman. The Board of Directors re-elected LL.M. Christoffer Taxell chairman of the Appointments and Compensation Committee and re-elected as the other members of the committee Managing Director Erkki Etola, Professor Eva Liljeblom and Managing Director Henry Wiklund.
Re-elected as regular auditors were Jari H√§rm√§l√§, Authorized Public Accountant, and Henrik Holmbom, Authorized Public Accountant. KPMG Oy Ab, a firm of independent public accountants, will continue as the deputy auditor.
Authorization of the Board of Directors to pass a resolution on the issuance of shares and special rights entitling holders to shares
The Annual General Meeting passed a resolution to authorize 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 as follows.
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 is effective for a maximum of three years from the date of the Annual General Meeting. The authorization does not cancel the authorization given by the General Meeting on March 20, 2007, and entered in the Trade Register on May 14, 2007 regarding the right to pass a resolution on the transfer of own shares (treasury shares).
The purpose of the issuance of shares and/or the issuance of special rights entitling holders to shares is to reinforce the company's capital structure by amortizing the debt obtained for the acquisition of AB Lindex (publ).
Issuing share options to the Loyal Customers of Stockmann
The Annual General Meeting decided that, in disapplication of the shareholders' pre-emptive rights, a total maximum of 2 500 000 share options be granted to Stockmann's Loyal Customers without consideration. There is a weighty financial reason for the issuance of share options because they are intended to be issued in order to offer loyal customers a benefit that rewards the purchase loyalty of the loyal customers while simultaneously strengthening the competitive position of Stockmann. Share options will be issued to loyal customers, whose purchases in companies belonging to the Stockmann Group together with purchases originating from parallel cards directed to the same account during the time period January 1, 2008 - December 31, 2009 amounts to a total of at least EUR 6 000. For purchases of at least EUR 6 000, a Loyal Customer will receive 20 share options without consideration. In addition, for each full 500 euros by which the purchases exceed EUR 6,000, the Loyal Customer will receive an additional two share options. Each share option entitles its holder to subscribe for one of the company's Series B shares. The subscription price is the volume-weighted average price of the Series B share on the Helsinki Stock Exchange during the period February 1 - February 29, 2008. The subscription price of a share subscribed for with the share option will be lowered, by the amount of the dividends that may be declared prior to the share subscription, on the record date for each dividend payout. The subscription period for the shares is in May in the years 2011 and 2012.
STOCKMANN plc Hannu Penttil√§ CEO
ANNEXES Terms and conditions of the Loyal Customer Share Options
DISTRIBUTION OMX Nordic Exchange Helsinki Principal media
These materials are not an offer for sale of securities in the United States. Securities may not be sold in the United States absent registration with the United States Securities and Exchange Commission or an exemption from registration under the U.S. Securities Act of 1933, as amended. Stockmann plc has not registered, and does not intend to register any part of the offering in the United States or to conduct a public offering of securities in the United States.
This document is only being distributed to and is only directed at (i) persons who are outside the United Kingdom or (ii) to investment professionals falling within Article 19(5) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005 (the "Order") or (iii) high net worth com-panies, and other persons to whom it may lawfully be communicated, falling within Article 49(2)(a) to (d) of the Order (all such persons in (i), (ii) and (iii) above together being referred to as "relevant persons"). The securities offered are only available to, and any invitation, offer or agreement to subscribe, purchase or otherwise acquire such securities will be engaged in only with, relevant persons. Any person who is not a relevant person should not act or rely on this document or any of its contents.
TERMS OF SHARE OPTIONS TO THE LOYAL CUSTOMERS OF STOCKMANN plc 2006
Maximum number of share options
STOCKMANN plc (hereinafter also referred to as the "Company" or "Stockmann") issues without payment to its loyal customers a maximum of 2 500 000 share options.
Each share option entitles its holder to subscribe for one (1) Series B share in STOCKMANN plc, with the nominal value of two (2) euros, in accordance with the share subscription terms set forth below.
Directing of share options
The share options will be issued in deviation from the shareholders' pre- emption right to subscription to a part of Stockmann's loyal customers and to the Company's subsidiary, Suomen P√§√§omarahoitus Oy - Finlands Kapitalfinansiering Ab, in order to be further issued to Stockmann's loyal customers in accordance with these terms. It is proposed to deviate from the shareholders' pre-emption right to subscription because the issuing of the share options is intended to offer loyal customers, who frequently do their shopping in the Company's stores, a significant benefit, which may reward the loyal customers for their purchase loyalty whilst at the same time strengthens the competitive position of Stockmann.
Issuance of share options
Share options are issued to such private persons who wish to receive options and who are Stockmann's loyal customers and whose registered purchases, together with registered purchases originating from parallel cards directed to the same account, from companies belonging to Stockmann Group during the time period of 1 January 2008 - 31 December 2009 exceed a total of EUR 6 000 (six thousand). For purchases of at least EUR 6 000 (six thousand), the loyal customers shall without payment receive 20 (twenty) options. In addition, for every full EUR 500 (five hundred), with which the purchases, calculated as mentioned above, exceed EUR 6 000, the loyal customer shall receive additionally two (2) options.
The Company shall at the latest in February 2010 send each loyal customer entitled to share options a letter, in which the maximum number of share options granted to the loyal customer is stated. In addition to the details of the loyal customer card holder, the letter will include information on the holders of parallel cards directed to the same account as on 31 December 2009 and the amount of their purchases affecting the issuance of share options. The share options will be issued when the Company has received from the loyal customer a written consent to the offer for the number of share options to be issued.
The intention is that the subsidiary of the Company mentioned above, will subscribe for options only if this is called for due to any practical considerations relating to the registering of the options or any other factors relating to the implementation of the program. If the subsidiary has subscribed for options, such options shall be divided between the loyal customers as set forth above.
Should the total amount of options to be issued based on the purchases exceed 2 500 000 (two million five hundred thousand), the Board of Directors of the Company shall have the right to reduce the amount of options to be issued to the loyal customers in such a way that the total amount of options to be issued will not exceed 2 500 000 (two million five hundred thousand). In such a case the amount of options issued to the loyal customer shall be reduced in proportion to the purchases affecting the amount of options to be issued, however, so that each person entitled to options will get at least 20 (twenty) options. If this minimum amount cannot be issued to each loyal customer entitled to options, the Board of Directors of the Company has the right to change these option subscription terms and to decide upon any other conditions relating to the issuance of options in such a case.
To the extent that all options are not issued according to the above, they will expire on 31 December 2010 unless the Board of Directors of the Company decides to continue such time period.
The options held by the Company's subsidiary do not entitle to subscription for shares.
Transfer of options
The options are personal and can be transferred only based on matrimonial right to property, inheritance or a will. The right to options cannot be transferred before the options have been issued to the loyal customer. The loyal customer may, however, transfer his/her right to options, either wholly or partially, to a holder of a parallel card on 31 December 2009 directed to the same account. The right to options can only be transferred so that each recipient will receive a minimum of 20 (twenty) options, except when the amount of options issued to the loyal customer is smaller than this.
When the Company issues the options, it will establish a register (hereinafter referred to as the "Option Register"), which includes the following details of the person entitled to the options: name, personal identification number, address and amount of options. The right to subscribe for shares is determined based on the Option Register. A person entitled to options has upon request a right to receive from the Company a certificate indicating the right to participate in the subscription issue and its conditions.
Terms of subscription of shares
Subscription of shares based on the share options
The number of shares subscribed for based on the share options may amount to a maximum of 2 500 000 new Series B shares in Stockmann plc of a nominal value of two (2) euros. The share capital of the Company may increase by a maximum of EUR 5 000 000 (five million) and the number of Series B shares with a maximum of 2 500 000 (two million five hundred thousand) as a result of the subscriptions.
Share subscription right and the minimum and maximum amount of the subscription
The right to subscribe for shares is granted to a loyal customer or a holder of a parallel card, to whom options have been transferred as described above or to whom the right to options has been transferred based on matrimonial right to property, inheritance or a will. The Company will before the commencement of the subscription period send more detailed instructions relating to the subscription of shares to the persons entitled to subscription at the address noted in the Option Register.
Each option entitles its holder to subscribe for one (1) Series B share in STOCKMANN plc of the nominal value of two (2) euros. The minimum amount of share subscription is 20 (twenty) Series B shares, or a smaller amount of shares based on the amount of options issued, and the maximum amount the total amount of options that has been noted in the Option Register of the subscriber. The part of the share subscription price that exceeds the nominal value of the share shall be entered into the reserve for invested unrestricted equity.
The share subscription period
The loyal customer has the right to subscribe for shares during the subscription period alternatively either 2 May 2011 - 31 May 2011, or 2 May 2012 - 31 May 2012. The person entitled to subscription shall subscribe for all his/her shares at the same time.
The share subscription price and the subscription of shares
The subscription price for the shares shall be the trading-volume weighted average price for the Stockmann plc's Series B shares on the Helsinki Exchange during the period of 1 February - 29 February 2008. The share subscription price of the share options shall be deducted by the amount of the dividend decided after the beginning of the period for determination of the share subscription price but before the share subscription, as per the dividend record date.
The Board of Directors of the Company shall before the commencement of the subscription period inform of the subscription price, the place for subscription and the procedure for subscribing shares. If no other procedure has been announced, the subscription of shares based on the share options shall take place at the Head Office of STOCKMANN plc.
The shares shall be paid for when subscribed for.
Approval of subscriptions
The Board of Directors of the Company will approve of all subscriptions that are made in accordance with the subscription terms and the Option Register.
The registering of the shares in the book-entry accounts and the commencement of trade
It is the intention of the Company that the shares shall be registered in the book-entry account notified by the subscriber by 30 June 2011 and 30 June 2012.
The shares shall be subject to public trade as of the date of the registration of the increase of share capital in the Trade Register.
The shares subscribed for based on the share options shall entitle to dividend and other shareholder rights as of the date of the registration of the increase of share capital in the Trade Register.
Issues of shares and of options and other special rights entitling holders to shares before the share subscription
Should STOCKMANN plc before the end of the share subscription period increase its share capital or issue share options or other special rights entitling holders to shares, the share option holders shall have the same right as, or an equal right to, that of the shareholders. Equality is reached in the manner determined by the Board of Directors by adjusting the number of shares available for subscription, the share subscription price or both of these.
Option holders' rights in certain cases
If STOCKMANN plc decreases its share capital before the share subscription, the subscription right based on the terms of the share options shall be adjusted accordingly as specified in the resolution to decrease the share capital.
If STOCKMANN plc is placed into liquidation before the share subscription, the share option holders shall be reserved an opportunity to exercise their share subscription rights within a period of time before the placing into liquidation set forth by the Board of Directors. After this, the right to subscription ceases to exist. If STOCKMANN plc is deleted from the register before the share subscription, the share option holders shall have the same right as, or an equal right to, that of the shareholders.
If STOCKMANN plc resolves to merge into another company as merging company or merge with a company to be formed in a combination merger, or if the Company resolves to be demerged entirely, the share option holders shall, prior to the merger or demerger, be given the right to subscribe for shares with their share options within a period of time determined by the Board of Directors. After this, the right to subscription ceases to exist.
If STOCKMANN plc resolves to acquire its own shares after the commencement of the share subscription period by an offer to all shareholders, the share option holders shall be given an equal offer. In any other case, the acquiring of own shares does not require any actions by the Company as regards the options.
If a redemption right and obligation to all shares of STOCKMANN plc, as referred to in Chapter 18 Section 1 of the Finnish Companies Act, arises to any of the shareholders before the end of the share subscription period on the basis that a shareholder possesses over 90 per cent of the shares and the voting power of the shares of STOCKMANN plc, or if a redemption obligation as set forth in the Articles of Association of STOCKMANN plc arises, the share option holders shall be given a possibility to use their right to share subscription by virtue of the share options within a period of time determined by the Board of Directors. After this, the right to subscription ceases to exist.
If the nominal value of the shares is changed while the share capital remains unchanged, the share subscription terms of the share options shall be amended so that the total nominal value of the shares available for subscription and the total subscription price remain unchanged.
The Board of Directors of STOCKMANN plc shall decide on all other matters relating to the issuance of share options and the subscription of shares, and shall give more detailed instructions on the procedure for carrying out the subscriptions. The documents relating to the share options can be seen at the Company's Head Office in Helsinki.