STOCKMANN plc INTERIM REPORT January 1 - June 30, 2006
STOCKMANN plc STOCK EXCHANGE RELEASE August 9, 2006, at 13.00
STOCKMANN plc INTERIM REPORT January 1 - June 30, 2006
The Stockmann Group's profit before taxes grew by 126 per cent or EUR 32.6 million to EUR 58.5 million (EUR 25.9 million in 2005). Profit from continuing operations before taxes was EUR 28.9 million (EUR 23.7 million). Other operating income amounted to EUR 34.0 million. As a consequence of disposals, aggregate sales decreased by 12 per cent to EUR 753.3 million (EUR 858.5 million in 2005). Sales from continuing operations increased by 9 per cent. The return on capital employed was 26.2 per cent (16.0 per cent) and earnings per share were EUR 0.95 (EUR 0.36). The earnings estimate for 2006 is unchanged.
Changes in the Group structure
Stockmann sold the entire shares outstanding in its subsidiary Stockmann Auto Oy Ab to Veho Group Oy Ab, the Ford businesses in Turku and Espoo to SOK and Stockmann Auto's VW-Audi business to Helsingin VV-Auto Oy, a Kesko Corporation company, for a total price of EUR 67.9 million. The capital gain on the transactions was a total of EUR 7.4 million. Concurrently, Stockmann and Veho launched wide-ranging loyal customer cooperation in the area of vehicle sales and services.
Stockmann sold its subsidiary that carries on the Zara business in Russia to the owner of the trademark, the Inditex Group of Spain, under an agreement signed on January 30, 2006. In 2002 Stockmann and Inditex concluded an agreement on the basis of which Stockmann received, up to 2010, franchising rights to trade under the Zara brand in Russia. By the end of 2005, Stockmann opened seven Zara stores in Russia, and operations got off to a good start. Sales generated by Stockmann's Zara stores in Russia amounted to just over EUR 46 million in 2005. In step with strong economic growth, the Russian market has become an increasingly interesting environment for retailers. Accordingly, Inditex and Stockmann decided by mutual agreement to cancel their previous contractual arrangements and concentrate henceforth on expanding their own business operations in Russia. Pursuant to the agreement that was made, operations in Russia have been carried out for Inditex's account as from January 1, 2006. The State Antimonopoly Committee of the Russian Federation approved the sale of shares in June, and the deal closed at the end of June. The purchase price was EUR 41.5 million. The capital gain of EUR 21.9 million has been booked to the second quarter. Stockmann will continue the Zara business in Finland.
Financial reporting
Stockmann adopted International Financial Reporting Standards (IFRS) on January 1, 2005. The accounting policies and calculation methods applied in the Interim Report are the same as those in the 2005 financial statements. In the interim reports for 2006, Stockmann Auto and the Zara business in Russia are treated as discontinued operations in accordance with IFRS 5. The figures are unaudited.
Sales and result
The Stockmann Group's sales from continuing operations grew by 9 per cent to EUR 678.4 million. Sales from continuing operations grew by 4 per cent in Finland and 28 per cent abroad. Sales generated by international operations accounted for 24 per cent of sales from continuing operations. As a consequence of disposals, the Group's aggregate sales decreased by 12 per cent to EUR 753.3 million (EUR 858.5 million). Similarly, consolidated revenue diminished by 12 per cent to EUR 630.0 million (EUR 715.0 million).
The gross margin on continuing operations improved by EUR 19.5 million to EUR 229.5 million. However, because the divested businesses were no longer included in the gross margin, the Group's aggregate gross margin decreased by EUR 1.6 million and was EUR 238.0 million. The relative gross margin was 37.8 per cent (33.5 per cent). The relative gross margin increased at Hobby Hall and the Department Store Division, but was down slightly at Seppälä. The change in the sales mix contributed to improving the Group's relative gross margin because low-margin vehicle sales were discontinued from the beginning of March. Operating costs were down EUR 0.4 million and depreciation decreased by EUR 0.2 million. Operating profit was up EUR 33.0 million to EUR 59.1 million (EUR 26.2 million). Operating profit from continuing operations grew by EUR 5.6 million to EUR 29.6 million.
Other operating income, EUR 34.0 million, came from the capital gains on the disposals of Stockmann Auto and the Zara business in Russia as well as from the capital gain on the unbuilt part of the department store plot in Tallinn. The capital gain on the portion of the plot in Tallinn, EUR 4.7 million, is included in continuing operations. In the comparison period there was no other operating income.
Net financial income and expenses decreased by EUR 0.3 million and were EUR 0.6 million negative (EUR 0.3 million negative).
Profit before taxes was EUR 58.5 million, up EUR 32.6 million on the figure a year earlier. Profit from continuing operations before taxes increased by EUR 5.2 million to EUR 28.9 million.
Direct taxes were EUR 7.0 million, an increase of EUR 0.2 million on the previous year. The capital gains on the sale of the shares in Stockmann Auto Oy Ab and in the company carrying on the Zara business in Russia, EUR 29.3 million, constitute tax-free income in their entirety.
Net profit for the report period was EUR 51.5 million, compared with EUR 19.1 million a year earlier. Net profit for the report period from continuing operations increased by EUR 4.2 million to EUR 22.0 million.
Earnings per share were EUR 0.95 (EUR 0.36) and diluted for options they were EUR 0.94 (EUR 0.35). Earnings per share from continuing operations were EUR 0.40 (EUR 0.34) and diluted for options they were EUR 0.40 (EUR 0.33). Equity per share was EUR 9.23 (EUR 8.14).
Sales and earnings trend by business segment
The Department Store Division's sales grew by 12 per cent to EUR 506.6 million (EUR 451.4 million). Sales in Finland were up 7 per cent. Sales were spurred by the new department store that was opened in the Jumbo Shopping Centre in Vantaa in October 2005. The extensive enlargement and renovation work that got started in the Helsinki department store, causing about 2 000-3 000 square metres of retail space to be continuously out of use, has not had a substantial effect on the main department store's sales. Although a significant number of new shopping centres have been opened in and around Helsinki during the past year, Stockmann's market share of retail trade in the Helsinki metropolitan area is estimated to have grown thanks to the department store in the Jumbo Shopping Centre. International operations' sales were lifted by the good like-for-like retail performance by the department stores in Russia and the Baltic countries as well as by the new Bestseller stores that were opened in Russia. Sales by international operations grew by 31 per cent and its share of the Group's sales rose to 25 per cent (22 per cent). The Department Store Division's operating profit increased by EUR 6.6 million to EUR 22.1 million (EUR 15.5 million). Earnings in the report period were burdened by the start-up costs for the department store that was opened in the Jumbo Shopping Centre in Vantaa. Earnings from international operations showed a very positive trend. In Riga and Moscow in particular, the results of the department stores that were opened in 2003 and 2004 improved markedly. The Department Store Division's result was also buoyed by the EUR 4.7 million capital gain on the sale of the unbuilt portion of the department store plot that was sold in Tallinn and booked to earnings in the second quarter. The division's operating profit in the second quarter was EUR 22.2 million, an increase of EUR 7.0 million on the figure a year earlier.
Because of a development programme aiming at improving profitability, Hobby Hall's sales were down 4 per cent to EUR 98.8 million (EUR 103.2 million). The decrease in sales came in the first quarter. Sales grew by 8 per cent in the second quarter. Online sales continued their robust growth, making up 45 per cent of Hobby Hall's distance sales in Finland (33 per cent) and 31 per cent of Hobby Hall's distance sales in Estonia (18 per cent). Thanks to effective cost management and the increase in the relative gross margin that was achieved through a revamped product assortment, Hobby Hall's operating profit improved by EUR 0.7 million to EUR 1.6 million (EUR 0.9 million). The division reported a second-quarter operating profit of EUR 0.6 million, up EUR 0.4 million on the figure a year earlier.
Seppälä's sales rose by 4 per cent on the same period a year earlier and were EUR 72.6 million (EUR 69.9 million). Sales grew strongly in the Baltic countries and Russia, where they were boosted by the new stores that were opened towards the end of 2005 and at the beginning of 2006 as well as by the good like-for-like sales trend. Seppälä's sales abroad grew by 64 per cent and its share of the division's aggregate sales rose to 21 per cent (13 per cent). Sales in Finland fell by 5 per cent. Seppälä's number of stores in Finland was unchanged during a period when competition hotted up, with new shopping centres and stores opening both in the Helsinki metropolitan area and in the smaller regional centres. Owing to the effect of larger price discounts than a year ago, Seppälä's relative gross margin decreased slightly on the comparison period but - at 55.9 per cent - was at a high level even on an international yardstick (57.6 per cent). Due to the energetic establishment of new stores in Russia and the Baltic countries, fixed costs rose more swiftly than sales. Seppälä's operating profit decreased by EUR 1.4 million to EUR 8.4 million (EUR 9.8 million). Seppälä's second-quarter operating profit was EUR 7.6 million, EUR 0.8 million less than a year ago.
Stockmann Auto's sales were EUR 74.8 million and it reported operating profit of EUR 7.7 million. The operating profit figure includes the EUR 7.4 million capital gain on the disposal of the Stockmann Auto businesses. Stockmann Auto was transferred to the new owners on March 1, 2006.
Financing and capital employed
The Group's financial position strengthened further during the report period. Interest-bearing liabilities at the end of June were EUR 25.5 million (EUR 99.0 million), of which EUR 23.4 million consisted of long- term borrowings (EUR 15.1 million). EUR 10.0 million of new long-term borrowings was drawn down. Liquid assets amounted to EUR 14.8 million at the end of the report period, as against EUR 14.4 million a year earlier and EUR 18.4 million at the end of 2005. Gross capital expenditures during the report period came to EUR 32.5 million. The proceeds from sales of businesses and properties generated a total of EUR 81.6 million in cash. Net working capital amounted to EUR 245.0 million at the end of June, as against EUR 233.6 million a year earlier and EUR 237.9 million at the end of 2005. Dividend payouts totalled EUR 59.5 million. Subscriptions made by exercising the 2000 share options added EUR 4.1 million to shareholders' equity. The equity ratio increased on the comparison period and was 77.3 per cent (61.3 per cent). The equity ratio at the end of 2005 was 66.4 per cent.
Over the past 12 months, ROCE rose to 26.2 per cent as a result of higher earnings and a decrease in the amount of capital employed (19.6 per cent at the end of 2005). The Group's capital employed diminished by EUR 6.5 million from June of the previous year and stood at EUR 527.3 million towards the end of the report period (EUR 552.5 million at the end of 2005).
Capital expenditures and current projects
Capital expenditures during the report period totalled EUR 32.5 million (EUR 22.1 million).
The construction works for the major enlargement and transformation project for the department store in the centre of Helsinki got under way in the early months of the year. 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, completely 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 total cost estimate for the project is approximately EUR 125 million. The works will be carried out stage by stage and are estimated to reach completion in 2010.
The twelfth Stockmann Beauty store was opened in Helsinki in March. During the first part of the year, four Bestseller stores were opened in Russia: two in St Petersburg and one each in Kazan and Moscow. So far, a total of eight Bestseller stores have been opened in Russia.
At the end of 2006, the Department Store Division will open a fourth department store in Moscow in the Mega Shopping Centre that is to be built on the southeast side. The cost estimate for the department store - to be built in leased premises - is about EUR 16 million for Stockmann's part of the investment. A further objective is to open another seven new Bestseller stores in Russia during 2006.
In 2005 Stockmann signed an agreement on the purchase of 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 underground station, in the immediate vicinity of Moscow Station. Stockmann will erect on the plot a shopping centre with about 50 000 square metres of gross floor space. According to plans, this will be the site of a full-scale Stockmann department store with about 20 000 square metres of retail space, other retail stores, office premises and an underground car-park. The department store and shopping centre investment will have a price tag of about EUR 120 million. Preparatory construction works have been started. Plans call for opening the department store and shopping centre in autumn 2008.
At the beginning of August, Stockmann signed a preliminary agreement on the opening of a fifth department store in leased premises in the Metropolis Shopping Centre that is to be built in the vicinity of Moscow's centre. 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. The objective is to open the department store in 2008.
The Department Store Division's investments came to a total of EUR 28.5 million, most of which went for the enlargement of the Helsinki department store and new investments in Russia.
Hobby Hall's capital expenditures amounted to EUR 1.6 million.
Seppälä's capital expenditures came to EUR 1.8 million. During the report period, Seppälä opened in Russia a store in both St Petersburg and Kazan. During 2006, Seppälä intends to open two stores in Finland and altogether ten or so stores in Latvia, Lithuania and Russia.
Other capital expenditures in the report period amounted to EUR 0.6 million.
Shares and shareholders
The company's market capitalization at the end of June was EUR 1 732.4 million (EUR 1 588.5 million). At the end of 2005 the market capitalization was EUR 1 761.3 million.
Stockmann's share prices underperformed 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 31.50, compared with EUR 32.11 at the end of 2005, and the Series B share was selling at EUR 31.74, as against EUR 32.53 at the end of 2005.
The 23 350 Stockmann shares subscribed for in December 2005 with the share options for 2000 were entered in the Trade Register on February 28, 2006, and they were admitted to public trading on the Helsinki Stock Exchange together with existing shares on March 1, 2006. In May, the Stockmann share options for the year 2000 were exercised to subscribe for 84 050 Stockmann plc shares with a par value of 2 euros and in June for 201 100 shares. The shares were entered in the Trade Register on May 17, 2006 and June 29, 2006. They were admitted to public trading on the Helsinki Stock Exchange on May 18, 2006, and June 30, 2006. As a consequence of the subscriptions the share capital was increased by EUR 570 300. Following the increase, the share capital is EUR 109 536 384. At June 30, 2006, Stockmann had 24 564 243 Series A shares and 30 203 949 Series B shares. The year 2000 share options can still be exercised to subscribe for a total of 1 325 620 Stockmann plc Series B shares.
The 2006 Annual General Meeting approved the Board of Directors' proposal on the granting of share options to Stockmann's Loyal Customers. The total maximum of 2 500 000 share options will be granted without consideration to Stockmann's Loyal Customers in disapplication of shareholders' pre- emptive subscription rights. The subscription rights are to be disapplied because by granting the share options, the company will offer Loyal Customers a benefit that rewards them for their continued patronage and at the same time improves Stockmann's competitive position. The share options will be granted to Loyal Customers whose purchases during January 1, 2006 - December 31, 2007, together with purchases made on parallel cards for the same account, are at least EUR 6 000 in total amount. 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 will entitle its holder to subscribe for one Stockmann plc Series B share. 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 28, 2006, which is EUR 33.35. On the record date for each dividend payout, the subscription price of a share subscribed for with the share options will be lowered by the amount of the dividends that may be declared after March 21, 2006, and prior to the share subscription. The subscription periods for the shares are May 2, 2008 - May 31, 2008, May 2, 2009 - May 31, 2009 and May 2, 2010 - May 31, 2010. As a consequence of the subscriptions, the company's share capital can be increased by a maximum of EUR 5 000 000.
The Annual General Meeting also passed the Board of Directors' proposal on the granting of share options to key employees of the Stockmann Group. A total of 1 500 000 share options will be granted to key employees belonging to the senior and middle management of Stockmann and its subsidiaries and to a wholly-owned subsidiary of Stockmann in disapplication of shareholders' pre-emptive subscription rights. The disapplication of the subscription right is made because the share options are part of the Group's incentive and commitment-building scheme for key employees and are an important element in maintaining the company's competitiveness in the international recruitment market. Of the share options, 375 000 will bear the marking 2006A, 375 000 the marking 2006B, 375 000 the marking 2006C, and 375 000 the marking 2006D. The subscription period for shares with share option 2006A is March 1, 2008 - March 31, 2010; with share option 2006B, March 1, 2009 - March 31, 2011; with share option 2006C, March 1, 2010 - March 31, 2012; and with share option 2006D, March 1, 2011 - March 31, 2013. The subscription period for shares will not, however, commence with the 2006B and 2006D share options unless the Group's financial targets criteria as determined separately by the Board of Directors have been met. Those share options 2006B and 2006D in respect of which the criteria determined separately by the Board of Directors have not been met shall lapse in the manner decided by the Board of Directors. Each share option will entitle its holder to subscribe for one Stockmann plc Series B share, whereby a total maximum of 1 500 000 shares can be subscribed for with the share options. The subscription price for each share through the exercise of the 2006A and 2006B share options is the volume-weighted average price of the company's Series B share on the Helsinki Stock Exchange during the period February 1 - February 28, 2006, plus 10 per cent, amounting to EUR 36.69 per share. The subscription price with the 2006C and 2006D share options is the volume-weighted average price of the company's Series B share on the Helsinki Stock Exchange during the period February 1 - February 29, 2008, plus 10 per cent. On the record date for each dividend payout, the subscription price of the shares to be subscribed for with share options will be lowered by the amount of dividends declared after the commencement of the period for determining the subscription price and prior to the share subscription. As a consequence of the subscriptions, the company's share capital can be increased by a maximum of EUR 3 000 000.
In accordance with the share option programme for key employees that was passed as a resolution of the Annual General Meeting, Stockmann's Board of Directors granted 2006A and 2006B share options to key employees and to Stockmann's wholly-owned subsidiary. Under the terms and conditions of the share options, Stockmann's Board of Directors will decide on the distribution of the C and D share options at a later date.
Stockmann held 382 903 of its own Series B shares (treasury shares) at the end of June 2006 and they represented 0.7 per cent of all the shares outstanding and 0.1 per cent of the total votes. The shares were bought back at a total price of EUR 5.8 million.
The Annual General Meeting in 2006 granted to the Board of Directors one- year authorizations to decide on the transfer of the company's treasury shares. The company's Board of Directors does not have valid authorizations to increase the share capital, to float issues of convertible bonds or bonds with warrants, or to buy back its own shares.
Personnel strength
During the report period the Stockmann Group had an average payroll of 9 994 employees, or 74 less than in the comparison period. The department store in the Jumbo Shopping Centre and the new stores in Moscow and St Petersburg brought an increase in the number of employees, but the personnel strength was reduced by the disposals of the Zara business in Russia at the beginning of 2006 and Stockmann Auto at the beginning of March. The personnel of Zara in Russia and Stockmann Auto transferred to the new owners' employ under the terms of their current employment contracts. Stockmann's average number of employees, converted to full-time staff, decreased by 146 and was 7 988.
At the end of June 2006 the number of staff working abroad was 3 175 people. At the end of June of last year Stockmann had 3 217 people working abroad. The proportion of the total personnel who were working abroad was 32 per cent (31 per cent).
Full-year outlook
Retail sales excluding the motor trade are estimated to increase by about 3 per cent in Finland in 2006. The markets in Russia and the Baltic countries are set to continue growing faster than the Finnish market. Because of the divestment of the vehicle business and the Zara business in Russia, Stockmann's sales in 2006 will be lower and are estimated to come in at just over EUR 1.6 billion. Sales from continuing operations are estimated to grow.
In the third quarter, earnings from continuing operations are expected to be at the previous year's level. For the full year in 2006, Stockmann's target is for the Group to post markedly higher profit before taxes in 2006 than it did in 2005.
Balance sheet, Group EUR millions 30.6.06 30.6.05 31.12.05 ASSETS Non-current assets
| Intangible assets | 5.9 | 8.5 | 7.6 | |
| Property, plant and equipment | 278.9 | 289.9 | 303.1 | |
| Available-for-sale investments | 6.0 | 7.1 | 6.0 | |
| Non-current receivables, | 0.2 | 6.4 | 4.3 | |
| interest-bearing | ||||
| Deferred tax assets | 3.4 | 2.9 | 3.5 | |
| Non-current assets, total | 294.5 | 314.8 | 324.5 | |
| Current assets | ||||
| Inventories | 145.7 | 187.8 | 212.0 | |
| Receivables, interest-bearing | 105.0 | 103.7 | 107.5 | |
| Receivables, non interest-bearing | 89.0 | 88.2 | 99.2 | |
| Available-for-sale investments | 0.0 | |||
| Cash and cash equivalents | 14.8 | 14.4 | 18.4 | |
| Current assets, total | 354.5 | 394.1 | 437.0 | |
| Assets, total | 649.0 | 708.9 | 761.5 | |
| EQUITY AND LIABILITIES | ||||
| Equity | 501.8 | 434.9 | 505.3 | |
| Minority interest | 0.0 | 0.0 | 0.0 | |
| Equity, total | 501.8 | 434.9 | 505.3 | |
| Non-current liabilities, interest-bearing | 23.4 | 15.1 | 13.7 | |
| Deferred taxes | liabilities | 26.9 | 29.0 | 28.2 |
| Current liabilities | ||||
| Current liabilities, interest-bearing | 2.1 | 83.9 | 33.6 | |
| Current liabilities, non interest-bearing | 94.8 | 146.1 | 180.7 | |
| Current liabilities, total | 96.8 | 230.0 | 214.3 | |
| Equity and liabilities, total | 649.0 | 708.9 | 761.5 | |
| Equity ratio, per cent | 77.3 | 61.3 | 66.4 | |
| Gearing, per cent | 2.1 | 19.5 | 5.7 | |
| Cash flow from operations per share, EUR | 0.43 | 0.26 | 1.53 | |
| Interest-bearing net debt, EUR mill. | -94.6 | -25.5 | -83.3 | |
| Number of shares at June 30, thousands | 54 768 | 53 848 | 54 460 | |
| Weighted average number of shares, | 54 111 | 53 039 | 53 350 |
| Net profit for the financial year | 51.5 | 19.1 | 76.9 | |
| Adjustments | -9.9 | 15.9 | 57.8 | |
| Changes in working capital | -1.6 | -5.1 | -18.8 | |
| Financial items | -0.9 | 1.1 | -2.6 | |
| Taxes paid | -15.9 | -17.0 | -31.3 | |
| Net cash from operating activities | 23.3 | 14.0 | 81.9 | |
| Cash flows from investing activities | ||||
| Group companies divested | 81.6 | 11.7 | ||
| Cash from other investments | 0.1 | 0.2 | 1.7 | |
| Investments in tangible and intangible | -32.2 | -23.3 | -58.1 |
| Net cash used in investing activities | 49.5 | -23.1 | -44.7 |
| Net cash used in financing activities | -76.5 | -17.9 | -60.2 |
| Change in cash and cash equivalents | -3.6 | -27.0 | -23.0 |
| Cash and cash equivalents at start of the | 18.4 | 41.4 | 41.4 |
| Income statement, | 1-6/2006 | ||
| Group, EUR millions | Continuing Discontinued | Total | |
| operations | operations | ||
| Revenue | 568.9 | 61.1 | 630.0 |
| Other operating income | 4.7 | 29.3 | 34.0 |
| Materials and consumables | -339.5 | -52.5 | -392.0 |
| Wages, salaries and employee benefits | -97.1 | -5.4 | -102.5 |
| Depreciation | -16.1 | -0.3 | -16.4 |
| Other operating expenses | -91.4 | -2.6 | -94.0 |
| Operating profit | 29.6 | 29.6 | 59.1 |
| Finance income and expenses | -0.6 | 0.0 | -0.6 |
| Profit before tax | 28.9 | 29.6 | 58.5 |
| Income taxes | -6.9 | -0.1 | -7.0 |
| Profit for the period | 22.0 | 29.5 | 51.5 |
| Earnings per share, EUR | 0.40 | 0.55 | 0.95 |
| Earnings per share, diluted, EUR | 0.40 | 0.54 | 0.94 |
| Operating profit, per cent | 5.2 | 48.4 | 9.4 |
| Equity per share, EUR | 9.23 | ||
| Return on equity, per cent, moving 12 | 23.3 |
| Income statement, | 1-6/2005 | ||
| Group, EUR millions | Continuing Discontinued | Total | |
| operations | operations | ||
| Revenue | 523.5 | 191.5 | 715.0 |
| Other operating income | 0.0 | 0.0 | 0.0 |
| Materials and consumables | -313.5 | -161.8 | -475.4 |
| Wages, salaries and employee | -89.2 | -15.4 | -104.6 |
| Depreciation | -14.5 | -2.1 | -16.6 |
| Other operating expenses | -82.2 | -10.1 | -92.3 |
| Operating profit | 24.0 | 2.2 | 26.2 |
| Finance income and expenses | -0.3 | -0.1 | -0.3 |
| Profit before tax | 23.7 | 2.1 | 25.9 |
| Income taxes | -6.0 | -0.9 | -6.8 |
| Profit for the period | 17.8 | 1.3 | 19.1 |
| Earnings per share, EUR | 0.34 | 0.02 | 0.36 |
| Earnings per share, diluted, EUR | 0.33 | 0.02 | 0.35 |
| Operating profit, per cent | 4.6 | 1.1 | 3.7 |
| Equity per share, EUR | 8.14 | ||
| Return on equity, per cent, moving | 12.9 |
| Income statement, | 1-12/2005 | ||
| Group, EUR millions | Continuing Discontinued | Total | |
| operations | operations | ||
| Revenue | 1 164.9 | 377.7 | 1 542.6 |
| Other operating income | 7.0 | 0.0 | 7.0 |
| Materials and consumables | -683.6 | -311.9 | -995.5 |
| Wages, salaries and employee | -187.6 | -30.4 | -218.0 |
| Depreciation | -29.9 | -5.8 | -35.8 |
| Other operating expenses | -175.2 | -21.5 | -196.7 |
| Operating profit | 95.6 | 8.1 | 103.7 |
| Finance income and expenses | -1.7 | 0.8 | -0.9 |
| Profit before tax | 93.9 | 8.9 | 102.8 |
| Income taxes | -24.0 | -2.0 | -26.0 |
| Profit for the period | 69.9 | 6.9 | 76.9 |
| Earnings per share, EUR | 1.31 | 0.13 | 1.44 |
| Earnings per share, diluted, EUR | 1.29 | 0.13 | 1.42 |
| Operating profit, per cent | 8.2 | 2.2 | 6.7 |
| Equity per share, EUR | 9.34 | ||
| Return on equity, per cent, moving | 15.8 |
SEGMENT INFORMATION Segments Sales, EUR millions 1-6/2006 1-6/2005 Change 1-12/2005 per cent
| Department Store Division | 506.6 | 451.4 | 12 | 1 024.1 |
| Hobby Hall | 98.8 | 103.2 | -4 | 210.5 |
| Seppälä | 72.6 | 69.9 | 4 | 155.2 |
| Shared | 0.5 | 0.4 | 7 | 0.9 |
| Continuing operations, total | 678.4 | 625.0 | 9 | 1 390.7 |
| Discontinued operations | 74.8 | 233.6 | -68 | 460.6 |
| Group | 753.3 | 858.5 | -12 | 1 851.3 |
| Revenue, EUR millions | 1-6/2006 | 1-6/2005 | Change | 1-12/2005 |
| per cent | ||||
| Department Store Division | 425.9 | 379.1 | 12 | 860.0 |
| Hobby Hall | 82.0 | 85.7 | -4 | 174.7 |
| Seppälä | 60.1 | 57.7 | 4 | 128.1 |
| Shared | 0.9 | 1.1 | -14 | 2.1 |
| Continuing operations, total | 568.9 | 523.5 | 9 | 1 164.9 |
| Discontinued operations | 61.1 | 191.5 | -68 | 377.7 |
| Group | 630.0 | 715.0 | -12 | 1 542.6 |
| Operating profit, EUR | 1-6/2006 | 1-6/2005 | Change | 1-12/2005 |
| millions | per cent | |||
| Department Store Division | 22.1 | 15.5 | 43 | 65.4 |
| Hobby Hall | 1.6 | 0.9 | 74 | 6.1 |
| Seppälä | 8.4 | 9.8 | -14 | 31.1 |
| Shared | -3.3 | -2.6 | -7.3 | |
| Eliminations | 0.8 | 0.6 | 39 | 0.3 |
| Continuing operations, total | 29.6 | 24.1 | 22 | 95.6 |
| Discontinued operations | 29.6 | 2.1 | 8.1 | |
| Group | 59.1 | 26.2 | 126 | 103.7 |
| Investments, | ||||
| gross, EUR millions | 30.6.06 | 30.6.05 | Change | 31.12.05 |
| per cent | ||||
| Department Store Division | 28.5 | 12.4 | 129 | 42.1 |
| Hobby Hall | 1.6 | 0.6 | 160 | 1.3 |
| Seppälä | 1.8 | 0.5 | 241 | 3.4 |
| Shared | 0.6 | 1.2 | -50 | 2.3 |
| Continuing operations, total | 32.5 | 14.7 | 120 | 49.1 |
| Discontinued operations | 7.4 | -100 | 7.9 | |
| Group | 32.5 | 22.1 | 47 | 57.0 |
| Assets, EUR millions | 30.6.06 | 30.6.05 | Change | 31.12.05 |
| per cent | ||||
| Department Store Division | 442.7 | 415.4 | 7 | 463.7 |
| Hobby Hall | 102.1 | 97.4 | 5 | 106.3 |
| Seppälä | 29.3 | 27.2 | 8 | 31.2 |
| Shared | 74.8 | 45.3 | 65 | 39.3 |
| Continuing operations, total | 649.0 | 585.3 | 11 | 640.5 |
| Discontinued operations | 123.7 | -100 | 121.1 | |
| Group | 649.0 | 708.9 | -8 | 761.5 |
| Non-interest-bearing | 30.6.06 | 30.6.05 | Change | 31.12.05 |
| liabilities, EUR millions | per cent | |||
| Department Store Division | 80.2 | 76.8 | 4 | 110.4 |
| Hobby Hall | 10.7 | 10.4 | 3 | 15.3 |
| Seppälä | 6.4 | 7.2 | -11 | 10.9 |
| Shared | 24.4 | 37.4 | -35 | 32.9 |
| Continuing operations, total | 121.7 | 131.9 | -8 | 169.4 |
| Discontinued operations | 43.2 | -100 | 39.6 | |
| Group | 121.7 | 175.1 | -30 | 209.0 |
| Market areas | 1-6/2006 | ||
| Continuing | Discontinued | Total | |
| Sales, EUR millions | operations | operations | |
| Finland 1) | 518.4 | 74.8 | 593.2 |
| Baltic states 2) | 75.4 | 75.4 | |
| Russia 3) | 84.6 | 84.6 | |
| Group | 678.4 | 74.8 | 753.3 |
| Finland, per cent | 76.4 | 78.8 | |
| International operations, per cent | 23.6 | 21.2 | |
| Continuing | Discontinued | Total | |
| Revenue, EUR millions | operations | operations | |
| Finland 1) | 432.3 | 61.1 | 493.4 |
| Baltic states 2) | 64.2 | 64.2 | |
| Russia 3) | 72.5 | 72.5 | |
| Group | 568.9 | 61.1 | 630.0 |
| Finland, per cent | 76.0 | 78.3 | |
| International operations, per cent | 24.0 | 21.7 | |
| Continuing | Discontinued | Total | |
| Operating profit, EUR millions | operations | operations | |
| Finland 1) | 20.1 | 7.7 | 27.8 |
| Baltic states 2) | 9.9 | 9.9 | |
| Russia 3) | -0.4 | 21.9 | 21.5 |
| Group | 29.6 | 29.6 | 59.1 |
| Finland, per cent | 68.0 | 47.0 | |
| International operations, per cent | 32.0 | 53.0 | |
| Investments, | 30.6.2006 | ||
| gross, EUR millions | Continuing | Discontinued | Total |
| operations | operations | ||
| Finland 1) | 24.2 | 24.2 | |
| Baltic states 2) | 0.5 | 0.5 | |
| Russia 3) | 7.8 | 7.8 | |
| Group | 32.5 | 32.5 | |
| Finland, per cent | 74.5 | 74.5 | |
| International operations, per cent | 25.5 | 25.5 | |
| Continuing | Discontinued | Total | |
| Assets, EUR millions | operations | operations | |
| Finland 1) | 493.4 | 493.4 | |
| Baltic states 2) | 74.1 | 74.1 | |
| Russia 3) | 81.5 | 81.5 | |
| Group | 649.0 | 649.0 | |
| Finland, per cent | 76.0 | 76.0 | |
| International operations, per cent | 24.0 | 24.0 | |
| 1) Department Store Divisions, |
| Market areas | 1-6/2005 | ||
| Continuing | Discontinued | Total | |
| Sales, EUR millions | operations | operations | |
| Finland 1) | 499.7 | 218.0 | 717.7 |
| Baltic states 2) | 63.4 | 63.4 | |
| Russia 3) | 61.9 | 15.5 | 77.4 |
| Group | 625.0 | 233.6 | 858.5 |
| Finland, per cent | 79.9 | 93.4 | 83.6 |
| International operations, per cent | 20.1 | 6.6 | 16.4 |
| Continuing | Discontinued | Total | |
| Revenue, EUR millions | operations | operations | |
| Finland 1) | 416.7 | 178.3 | 595.0 |
| Baltic states 2) | 53.9 | 53.9 | |
| Russia 3) | 52.9 | 13.2 | 66.1 |
| Group | 523.5 | 191.5 | 715.0 |
| Finland, per cent | 79.6 | 93.1 | 83.2 |
| International operations, per cent | 20.4 | 6.9 | 16.8 |
| Continuing | Discontinued | Total | |
| Operating profit, EUR millions | operations | operations | |
| Finland 1) | 27.5 | 1.7 | 29.3 |
| Baltic states 2) | 0.9 | 0.9 | |
| Russia 3) | -4.3 | 0.4 | -3.9 |
| Group | 24.1 | 2.1 | 26.2 |
| Finland, per cent | 114.0 | 83.0 | 111.5 |
| International operations, per cent | -14.0 | 17.0 | -11.5 |
| Investments, | 30.6.2005 | ||
| gross, EUR millions | Continuing | Discontinued | Total |
| operations | operations | ||
| Finland 1) | 11.2 | 2.5 | 13.7 |
| Baltic states 2) | 0.6 | 0.6 | |
| Russia 3) | 2.9 | 4.9 | 7.8 |
| Group | 14.7 | 7.4 | 22.1 |
| Finland, per cent | 76.2 | 33.8 | 62.0 |
| International operations, per cent | 23.8 | 66.2 | 38.0 |
| Continuing | Discontinued | Total | |
| Assets, EUR millions | operations | operations | |
| Finland 1) | 448.7 | 109.1 | 557.8 |
| Baltic states 2) | 69.0 | 69.0 | |
| Russia 3) | 67.6 | 14.5 | 82.1 |
| Group | 585.3 | 123.7 | 708.9 |
| Finland, per cent | 76.7 | 88.3 | 78.7 |
| International operations, per cent | 23.3 | 11.7 | 21.3 |
| 1) Department Store Divisions, |
| Market areas | 1-12/2005 | ||
| Continuing | Discontinued | Total | |
| Sales, EUR millions | operations | operations | |
| Finland 1) | 1 106.8 | 414.1 | 1 520.9 |
| Baltic states 2) | 140.8 | 140.8 | |
| Russia 3) | 143.1 | 46.5 | 189.6 |
| Group | 1 390.7 | 460.6 | 1 851.3 |
| Finland, per cent | 79.6 | 89.9 | 82.2 |
| International operations, per cent | 20.4 | 10.1 | 17.8 |
| Continuing | Discontinued | Total | |
| Revenue, EUR millions | operations | operations | |
| Finland 1) | 923.2 | 338.3 | 1 261.5 |
| Baltic states 2) | 119.7 | 119.7 | |
| Russia 3) | 122.0 | 39.4 | 161.4 |
| Group | 1 164.9 | 377.7 | 1 542.6 |
| Finland, per cent | 79.3 | 89.6 | 81.8 |
| International operations, per cent | 20.7 | 10.4 | 18.2 |
| Continuing | Discontinued | Total | |
| Operating profit, EUR millions | operations | operations | |
| Finland 1) | 92.2 | 3.1 | 95.4 |
| Baltic states 2) | 7.3 | 7.3 | |
| Russia 3) | -4.0 | 5.0 | 1.0 |
| Group | 95.6 | 8.1 | 103.7 |
| Finland, per cent | 96.5 | 38.6 | 92.0 |
| International operations, per cent | 3.5 | 61.4 | 8.0 |
| Investments, | 31.12.2005 | ||
| gross, EUR millions | Continuing | Discontinued | Total |
| operations | operations | ||
| Finland 1) | 31.8 | 2.7 | 34.6 |
| Baltic states 2) | 1.7 | 1.7 | |
| Russia 3) | 15.6 | 5.1 | 20.7 |
| Group | 49.1 | 7.9 | 57.0 |
| Finland, per cent | 64.8 | 34.9 | 60.7 |
| International operations, per cent | 35.2 | 65.1 | 39.3 |
| Continuing | Discontinued | Total | |
| Assets, EUR millions | operations | operations | |
| Finland 1) | 489.3 | 98.2 | 587.4 |
| Baltic states 2) | 72.2 | 72.2 | |
| Russia 3) | 79.0 | 22.9 | 101.9 |
| Group | 640.5 | 121.1 | 761.5 |
| Finland, per cent | 76.4 | 81.1 | 77.1 |
| International operations, per cent | 23.6 | 18.9 | 22.9 |
| 1) Department Store Divisions, |
| Statement of changes | Share | Treasury | |
| in equity | premium | share | |
| Group, EUR millions | Equity | fund | fund |
| Equity December 31, 2004 | 106.8 | 154.8 | 0.0 |
| Options exercised | 0.8 | 3.4 | |
| Transfer to other funds | 0.0 | ||
| Cash flow hedges | |||
| Dividends | |||
| Translation differences | |||
| Profit for the period | |||
| Equity June 30, 2005 | 107.7 | 158.1 | 0.0 |
| Equity Dec. 31, 2005 | 109.0 | 166.5 | 0.0 |
| Options exercised | 0.6 | 3.5 | |
| Share bonus | 0.2 | ||
| Cost of share issue | |||
| Dividends | |||
| Translation differences | |||
| Profit for the period | |||
| Equity June 30, 2006 | 109.5 | 170.2 | 0.0 |
| * excluding deferred tax liability |
| Statement of changes | Trans- | ||
| in equity | Legal | Other | lation |
| Group, EUR millions | reserve | funds* | reserve |
| Equity December 31, 2004 | 0.2 | 44.4 | -0.1 |
| Options exercised | |||
| Transfer to other funds | 0.0 | ||
| Cash flow hedges | -3.5 | ||
| Dividends | |||
| Translation differences | 0.0 | ||
| Profit for the period | |||
| Equity June 30, 2005 | 0.2 | 40.9 | -0.1 |
| Equity Dec. 31, 2005 | 0.2 | 43.9 | 0.0 |
| Options exercised | |||
| Share bonus | |||
| Cost of share issue | 0.0 | ||
| Dividends | |||
| Translation differences | 0.0 | ||
| Profit for the period | |||
| Equity June 30, 2006 | 0.2 | 43.9 | 0.0 |
| * excluding deferred tax liability |
Statement of changes
| in equity | Retained | Minority | ||
| Group, EUR millions | earnings | Total | interest | Total |
| Equity December 31, 2004 | 161.9 | 467.9 | 0.0 | 467.9 |
| Options exercised | 4.2 | 4.2 | ||
| Transfer to other funds | 0.1 | 0.1 | 0.1 | |
| Cash flow hedges | -3.5 | -3.5 | ||
| Dividends | -53.0 | -53.0 | -53.0 | |
| Translation differences | 0.0 | 0.0 | ||
| Profit for the period | 19.1 | 19.1 | 0.0 | 19.1 |
| Equity June 30, 2005 | 128.1 | 434.9 | 0.0 | 434.9 |
| Equity Dec. 31, 2005 | 185.7 | 505.3 | 0.0 | 505.3 |
| Options exercised | 4.1 | 4.1 | ||
| Share bonus | 0.2 | 0.4 | 0.4 | |
| Cost of share issue | 0.0 | 0.0 | ||
| Dividends | -59.5 | -59.5 | -59.5 | |
| Translation differences | 0.0 | 0.0 | 0.0 | |
| Profit for the period | 51.5 | 51.5 | 0.0 | 51.5 |
| Equity June 30, 2006 | 178.0 | 501.8 | 0.0 | 501.8 |
| * excluding deferred tax |
Contingent liabilities, 30.6.06 30.6.05 31.12.05 Group EUR millions Mortgages on land and 1.7 1.7 1.7 buildings
| Pledges | 0.1 | 0.1 | 0.1 |
| Other commitments | 1.7 | 27.2 | 15.5 |
| Total | 3.5 | 28.9 | 17.3 |
| Lease agreements on business |
| Within one year | 65.3 | 59.5 | 66.0 | |
| After one year | 341.0 | 346.9 | 383.4 | |
| Total | 406.3 | 406.3 | 449.5 | |
| Derivative instruments | ||||
| Nominal value | ||||
| Foreign exchange derivatives | 5.2 | 127.3 | 10.4 | |
| Interest rate derivatives | 35.0 | |||
| Exchange rates | ||||
| Country | Valuutta | 30.6.06 | 30.6.05 | 31.12.05 |
| Russia | RUB | 34.2400 | 34.6370 | 33.9200 |
| Estonia | EEK | 15.6466 | 15.6466 | 15.6466 |
| Latvia | LVL | 0.6961 | 0.6961 | 0.6962 |
| Lithuania | LTL | 3.4528 | 3.4528 | 3.4528 |
Income statement
| quarterly, | Q2 | Q1 | Q4 | Q3 |
| Group, EUR millions | 2006 | 2006 | 2005 | 2005 |
| Continuing operations | ||||
| Revenue | 299.5 | 269.4 | 379.3 | 262.0 |
| Other operating income | 4.7 | 0.0 | 7.0 | 0.0 |
| Materials and consumables | -170.8 | -168.7 | -214.3 | -155.7 |
| Wages, salaries and | -48.9 | -48.3 | -56.5 | -41.8 |
| Depreciation | -8.1 | -8.0 | -8.7 | -6.7 |
| Other operating expenses | -47.7 | -43.7 | -52.8 | -40.2 |
| Operating profit | 28.7 | 0.8 | 54.0 | 17.5 |
| Finance income and expenses | -0.9 | 0.2 | -2.0 | 0.6 |
| Profit before tax | 27.9 | 1.1 | 52.0 | 18.2 |
| Income taxes | -6.6 | -0.3 | -14.4 | -3.6 |
| Profit for the period, | 21.2 | 0.8 | 37.6 | 14.5 |
| Basic | 0.39 | 0.01 | 0.70 | 0.27 |
| Diluted | 0.39 | 0.01 | 0.69 | 0.27 |
| Earnings per share, |
| Basic | 0.41 | 0.14 | 0.09 | 0.02 |
| Diluted | 0.40 | 0.14 | 0.09 | 0.02 |
| Earnings per share, total, |
| Basic | 0.80 | 0.15 | 0.79 | 0.29 |
| Diluted | 0.79 | 0.15 | 0.78 | 0.29 |
| Q2 | Q1 | Q4 | Q3 | |
| Sales, EUR millions | 2006 | 2006 | 2005 | 2005 |
| Department Store Division | 270.8 | 235.8 | 344.3 | 228.4 |
| Hobby Hall | 46.2 | 52.6 | 63.4 | 43.9 |
| Seppälä | 40.2 | 32.4 | 45.1 | 40.1 |
| Shared | 0.3 | 0.2 | 0.2 | 0.2 |
| Continuing operations, | 357.6 | 320.9 | 453.1 | 312.6 |
| Discontinued operations | 0.0 | 74.8 | 117.4 | 109.6 |
| Group | 357.6 | 395.7 | 570.5 | 422.3 |
| Revenue, EUR millions | ||||
| Department Store Division | 227.4 | 198.5 | 289.0 | 191.9 |
| Hobby Hall | 38.4 | 43.6 | 52.6 | 36.4 |
| Seppälä | 33.3 | 26.8 | 37.3 | 33.1 |
| Shared | 0.4 | 0.5 | 0.5 | 0.6 |
| Continuing operations, | 299.5 | 269.4 | 379.3 | 262.0 |
| Discontinued operations | 0.0 | 61.1 | 96.4 | 89.9 |
| Group | 299.5 | 330.5 | 475.7 | 351.9 |
| Operating profit, EUR |
| Department Store Division | 22.2 | -0.1 | 37.8 | 12.1 |
| Hobby Hall | 0.6 | 1.0 | 4.3 | 0.9 |
| Seppälä | 7.6 | 0.8 | 14.5 | 6.9 |
| Shared | -1.9 | -1.4 | -3.3 | -1.4 |
| Eliminations | 0.2 | 0.6 | 0.6 | -0.9 |
| Continuing operations, | 28.7 | 0.8 | 53.9 | 17.5 |
| Discontinued operations | 21.9 | 7.7 | 4.1 | 1.9 |
| Group | 50.6 | 8.5 | 58.0 | 19.5 |
| This Interim Report is |
Income statement
| quarterly, | Q2 | Q1 | Q4 | Q3 |
| Group, EUR millions | 2005 | 2005 | 2004 | 2004 |
| Continuing operations | ||||
| Revenue | 274.0 | 249.5 | 344.2 | 247.1 |
| Other operating income | 0.0 | 0.0 | 0.1 | 0.0 |
| Materials and consumables | -156.6 | -157.0 | -192.5 | -148.8 |
| Wages, salaries and | -45.6 | -43.6 | -53.9 | -40.2 |
| Depreciation | -7.3 | -7.3 | -7.8 | -7.2 |
| Other operating expenses | -41.7 | -40.6 | -48.7 | -37.7 |
| Operating profit | 23.0 | 1.0 | 41.3 | 13.1 |
| Finance income and expenses | -0.5 | 0.2 | -0.2 | -0.9 |
| Profit before tax | 22.5 | 1.3 | 41.1 | 12.3 |
| Income taxes | -5.6 | -0.4 | -12.4 | -3.5 |
| Profit for the period, | 16.9 | 0.9 | 28.8 | 8.7 |
| Basic | 0.32 | 0.02 | 0.56 | 0.16 |
| Diluted | 0.31 | 0.02 | 0.54 | 0.16 |
| Earnings per share, |
| Basic | 0.02 | 0.00 | 0.02 | 0.02 |
| Diluted | 0.02 | 0.00 | 0.02 | 0.02 |
| Earnings per share, total, |
| Basic | 0.34 | 0.02 | 0.58 | 0.18 |
| Diluted | 0.33 | 0.02 | 0.56 | 0.18 |
| Q2 | Q1 | Q4 | Q3 | |
| Sales, EUR millions | 2005 | 2005 | 2004 | 2004 |
| Department Store Division | 244.4 | 207.0 | 303.1 | 210.3 |
| Hobby Hall | 42.7 | 60.5 | 64.6 | 46.2 |
| Seppälä | 39.9 | 30.0 | 43.5 | 38.1 |
| Shared | 0.2 | 0.2 | 0.2 | 0.2 |
| Continuing operations, | 327.3 | 297.7 | 411.4 | 294.9 |
| Discontinued operations | 130.6 | 102.9 | 104.3 | 101.8 |
| Group | 457.9 | 400.6 | 515.8 | 396.7 |
| Revenue, EUR millions | ||||
| Department Store Division | 204.8 | 174.3 | 254.8 | 177.0 |
| Hobby Hall | 35.5 | 50.2 | 53.4 | 38.3 |
| Seppälä | 32.9 | 24.8 | 35.8 | 31.4 |
| Shared | 0.8 | 0.2 | 0.2 | 0.4 |
| Continuing operations, | 274.0 | 249.5 | 344.2 | 247.1 |
| Discontinued operations | 106.8 | 84.6 | 85.5 | 83.5 |
| Group | 380.9 | 334.1 | 429.7 | 330.6 |
| Operating profit, EUR |
| Department Store Division | 15.2 | 0.2 | 36.5 | 10.9 |
| Hobby Hall | 0.2 | 0.7 | 1.5 | -2.7 |
| Seppälä | 8.4 | 1.3 | 8.0 | 5.3 |
| Shared | -1.5 | -1.1 | -1.2 | -1.1 |
| Eliminations | 0.7 | -0.1 | -3.5 | 0.7 |
| Continuing operations, | 23.1 | 1.0 | 41.3 | 13.1 |
| Discontinued operations | 1.5 | 0.6 | 1.1 | 1.6 |
| Group | 24.6 | 1.6 | 42.4 | 14.8 |
STOCKMANN plc
Hannu Penttilä CEO
DISTRIBUTION Helsinki Stock Exchange Principal media
A press and analyst conference will be held today, August 9, 2006, at 14.15 at the World Trade Center, Aleksanterinkatu 7, Helsinki.
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