STOCKMANN plc
Quarterly report
28.10.2008 at 12.30
STOCKMANN plc INTERIM REPORT January 1 - September 30, 2008
STOCKMANN'S OPERATING PROFIT IMPROVES, HIGHER FINANCIAL EXPENSES CUT INTO
PROFIT
Stockmann's third-quarter sales were up 45 per cent to EUR 531.5 million
(EUR 367.0 million in 2007). Operating profit also grew in the same
period, amounting to EUR 34.6 million (EUR 32.1 million). Sales in the
January-September period rose by 48 per cent to EUR 1 613.0 million (EUR
1 089.5 million). Consolidated operating profit also increased in January-
September, amounting to EUR 63.5 million (EUR 54.3 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 19.2 million.
Earnings per share were EUR 0.33 (EUR 0.72). As the general economic
trend in the Nordic and Baltic market areas will slow down consumer demand
in the last quarter of the year, it is likely that the profit for 2008
will not reach last year's level.
Key figures 7-9 7-9 1-9 1-9
2008 2007 2008 2007 2007
Sales EUR mill. 531.5 367.0 1613.0 1089.5 1 668.3
Revenue EUR mill. 440.7 308.6 1337.4 914.3 1 398.2
Operating profit EUR mill. 34.6 32.1 63.5 54.3 125.2
Profit (loss) EUR mill. 21.8 31.6 26.1 52.9 119.4
before taxes
Earnings per share EUR 0.27 0.43 0.33 0.72 1.59
Equity per share EUR 11.02 9.77 10.66
Cash flow from EUR mill. 38.1 21.8 119.9
operating
activities
Net gearing per cent 130.7 17.8 146.9
Equity ratio per cent 36.2 65.9 32.6
Weighted average thousands 57 693 55 566 55 606
number of shares
Return on capital per cent 12.2 17.2 12.1
employed, rolling
12 months
SALES AND RESULT
Stockmann's consolidated sales grew by 48 per cent to EUR 1 613.0 million
(EUR 1 089.5 million) in January-September. 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 7 per cent to EUR 852.3 million. The Group's
sales abroad amounted to EUR 760.7 million, an increase of 157 per cent.
Excluding Lindex, sales abroad grew by 8 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 due to the lessor's unlawful
actions. International operations accounted for an increased share of
consolidated sales, rising from 27 per cent to 47 per cent.
Other operating income amounted to EUR 4.0 million.
The Group's gross operating margin grew by EUR 260.4 million to EUR 639.2
million. The relative gross margin was 47.8 per cent (41.4 per cent). The
relative gross margin of Hobby Hall and Seppälä improved, and the
Department Store Division's relative gross margin was on a par with the
figure a year ago. 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 224.8 million and
depreciation by EUR 20.8 million.
Earnings in the report period were burdened by EUR 5.8 million of expenses
due to the closure of the Smolenskaya department store and an expense
provision of EUR 4.9 million. An expense provision of EUR 14.0 million was
charged to earnings in the third quarter due to the closure, but the costs
remained EUR 3.3 million smaller than estimated.
In the report period, the Group's operating profit grew by EUR 9.1 million
to EUR 63.5 million.
Net financial expenses rose by EUR 35.9 million and were EUR 37.4 million
(EUR 1.5 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 26.1 million, down EUR
26.8 million on the figure a year earlier. Direct taxes were EUR 6.9
million, decreasing by EUR 6.2 million on the figure a year earlier. Net
profit for the report period was EUR 19.2 million (EUR 39.8 million).
Third-quarter net profit decreased and was EUR 15.6 million (EUR 23.5
million).
Earnings per share in the report period were EUR 0.33 (EUR 0.72) and
diluted for options, earnings were EUR 0.33 (EUR 0.71). Equity per share
was EUR 11.02 (EUR 9.77).
SALES AND EARNINGS TREND BY BUSINESS SEGMENT
Department Store Division
The Department Store Division's sales grew by 4 per cent to EUR 847.1
million in the report period. Sales in Finland were up 2 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 an 8 per cent increase in sales, accounting for 30 per
cent of the division's sales (28 per cent).
The relative gross margin in the report period was on a par with the
previous year. The operating profit of the Department Store Division
declined to EUR 19.0 million (EUR 44.9 million). The operating profit for
the previous year includes EUR 9.7 million of non-recurring capital gains.
The closure of the Smolenskaya department store burdens the Department
Store Division's earnings by EUR 10.7 million.
Third-quarter operating profit amounted to EUR 13.5 million (EUR 25.7
million, including EUR 9.7 million in non-recurring capital gains).
Lindex
Lindex's sales in the report period amounted to EUR 496.9 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 remained on a par with the previous
year. Lindex's operating profit was EUR 38.4 million. It was burdened by
depreciation connected with the Lindex acquisition under IFRS and by a non-
recurring expense charge for inventories, to a total amount of EUR 5.9
million. The weakening of the Swedish krona against the euro reduces
operating profit for the report period by EUR 0.7 million in accounting
terms. Lindex's operating profit in the same period a year ago was EUR
43.0 million.
Third-quarter operating profit amounted to EUR 15.7 million, compared with
Lindex's operating profit of EUR 18.1 million in the previous year. The
weakening of the Swedish krona against the euro reduces third-quarter
operating profit by EUR 0.3 million in accounting terms.
Hobby Hall
Hobby Hall's sales decreased by 7 per cent to EUR 137.3 million (EUR 147.5
million) in the report period. A great deal of Hobby Hall's sales is
comprised of electronic products, whose prices have generally trended
downwards. Sales declined both in Finland and abroad, but Hobby Hall's
relative gross margin grew. Hobby Hall's operating result fell by EUR 3.8
million and was a loss of EUR 0.8 million (profit of EUR 3.0 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 third-quarter operating profit was EUR 0.7 million (EUR 2.5
million).
Seppälä
Seppälä's sales in the report period increased by 6 per cent on the same
period of last year and were EUR 131.1 million. Sales in Finland were down
one 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
24 per cent, and their share of Seppälä's total sales rose to 34 per cent
(29 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 profit to decrease by
EUR 1.7 million to EUR 10.4 million (EUR 12.1 million).
Seppälä's third-quarter sales grew by 10 per cent to EUR 50.1 million.
Sales growth was 5 per cent in Finland and 22 per cent abroad. Operating
profit grew to EUR 5.9 million as against EUR 5.5 million in the same
period of last year.
FINANCING AND CAPITAL EMPLOYED
Liquid assets totalled EUR 23.0 million at the end of September, as
against EUR 21.2 million a year earlier and EUR 33.2 million at the end of
2007.
Interest-bearing liabilities at the end of September were EUR 907.1
million (EUR 118.3 million), of which EUR 113.4 million consisted of long-
term borrowings. The loan Stockmann raised when it acquired Lindex stood
at EUR 683.0 million at the end of September. The loan is due on September
30, 2009, and will be refinanced before that. 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 126.0 million. Net working capital amounted to EUR
216.0 million at the end of September, as against EUR 238.0 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 36.2 per cent at the end of September (65.9 per
cent). The equity ratio at the end of 2007 was 32.6 per cent. Net gearing
was 130.7 per cent (17.8 per cent) at the end of September. 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 920.8 million from September of the previous year and stood at EUR
1 583.2 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 has appealed
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 EUR 22.7 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 repaid tax with interest
increased the Group's goodwill by EUR 22.7 million, and the amount has no
effect on the Group's earnings.
CAPITAL EXPENDITURES
Capital expenditures during the report period totalled EUR 126.0 million
(EUR 89.1 million).
Department Store Division
In December, Stockmann will open a new department store in leased premises
in the Metropolis shopping centre close to the centre of Moscow. The
department store has total floor space of about 8 000 square metres and
Stockmann's investment in the project amounts to approximately EUR 12
million, of which EUR 7.0 million was committed in the report period.
After the closure of the Smolenskaya department store due to the lessor's
unlawful actions and the opening of the new Metropolis department store,
Stockmann once again will have four department stores open for business in
Moscow.
A major enlargement and transformation project is ongoing at the
department store in the centre of Helsinki. New space will become
available stage by stage. 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 in addition to which significant
repairs and renovations on the old premises have been and will be carried
out in the course of the project. The works are estimated to be completed
phase by phase by the end of 2010. During the report period, the project
required an investment of about EUR 46.8 million. 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 over EUR 170 million. The final
construction permit was obtained at the beginning of March, and the
project is in the actual construction phase. The cornerstone was laid on
October 17, 2008. According to the current schedule, the building will be
completed in spring 2010. During the report period, the project required
an investment of about EUR 19.1 million.
Stockmann opened a new Nike store in Russia both in March and in August.
Stockmann now has a total of seven 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 are 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 March in
cooperation with Citibank. Stockmann has a total of about 1.6 million
Loyal Customers in Finland, Russia and the Baltic countries.
The Department Store Division's capital expenditures came to EUR 98.2
million.
Lindex
Lindex's capital expenditures totalled EUR 20.5 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.
In August, Lindex opened its first Russian store in St Petersburg. During
the report period, Lindex also opened three stores in Norway, two each in
Sweden and Estonia, and one each in Lithuania and the Czech Republic. One
store was closed in Sweden.
In September, the Lindex chain expanded to Saudi Arabia, when its
franchising partner Delta International Establishment opened its first
three stores there. The franchising partner carries out the store
investments, hires staff and is responsible for all retail operations.
Hobby Hall
In September, Hobby Hall's head office moved into new leased premises in
Käpylä, Helsinki. The division's new telephone system and upgraded store
cash register system contribute to improving Hobby Hall's customer
service. Hobby Hall's capital expenditures totalled EUR 1.9 million.
Seppälä
In the report period, Seppälä opened five stores in Russia, two each in
Finland and Estonia, and one in Lithuania. In addition, fourteen stores in
Finland were refurbished according to the new store concept. One store in
Finland was closed.
The Stockmann Group expanded into Ukraine at the end of October, when it
opened the first Ukrainian Seppälä store in Kharkov. In October, Seppälä
also opened one new store each in Russia and Estonia.
Seppälä's capital expenditures totalled EUR 4.8 million.
Other capital expenditures
The Group's other capital expenditures came to EUR 0.7 million.
NEW PROJECTS
Department Store Division
Stockmann has 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 at the turn of 2009-2010.
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 has made agreements to open two new stores in Finland towards the
end of the year as well as one store each in Sweden, Norway, Lithuania and
the Czech Republic.
Lindex's franchising partner will open three more Lindex stores in Saudi
Arabia by the end of the year. 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.
Hobby Hall
Testing of Hobby Hall's revamped online store will continue for the rest
of the year. The system will be up and running in 2009.
Seppälä
Seppälä will open eight new stores still within this year, three each in
Finland and Russia and two in Lithuania.
SHARES AND SHARE CAPITAL
The company's market capitalization at the end of September was EUR
1 063.2 million (EUR 1 894.5 million). At the end of 2007 the market
capitalization was EUR 1 659.8 million.
Stockmann's share prices underperformed the OMX Helsinki Cap index during
the report period. The price of the Series A share slightly outperformed
the OMX Helsinki index, while the trend in the Series B share price was
weaker. At the end of September the stock exchange price of the Series A
share was EUR 18.00, compared with EUR 29.50 at the end of 2007, and the
Series B share was selling at EUR 16.65, 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 by 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 Series A and Series B
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 September 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 September 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
15 613 employees, or 5 088 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 in Finland and
stores abroad. Stockmann's average number of employees, converted to full-
time staff, increased by 3 324 and was 11 843.
At the end of September 2008 the number of staff working abroad was 8 358
people. At the end of September of last year Stockmann had 4 004 people
working abroad. The proportion of the total personnel who were working
abroad was 54 per cent (38 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. The uncertainty prevailing in the
international financial markets might have an impact on changes in the
interest rate and consumer purchasing behaviour in Stockmann's main
territories. 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. 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 the
growth of consumer demand. By contrast, the growth of Russia's economy and
consumer demand has so far continued ahead. According to estimates, the
slowing down of consumer demand will continue in the Nordic countries and
the Baltic area. Growth in Russia will outpace the Group's other market
areas.
Lindex is 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
approximately EUR 2.3 billion in 2008.
Earnings trend forecasts are complicated by the uncertainty prevailing in
the international financial markets. Fourth-quarter operating profit is
expected to be higher than in the previous year, but lower than earlier
expectations. The operating profit for 2008 will improve. Stockmann's
financial expenses following the Lindex acquisition will increase as
expected. As the general economic trend in the Nordic and Baltic market
areas will slowdown consumer demand in the last quarter of the year, it is
likely that the profit for 2008 will not reach last year's level.
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 30.9.08 30.9.07 31.12.07
ASSETS
Non-current assets
Intangible assets (Ref. 1.2) 838.4 10.7 844.5
Property, plant and equipment 550.4 409.7 476.8
(Ref.1.2)
Available-for-sale investments 6.6 6.6 6.5
Non-current receivables 1.7 1.7
Deferred tax assets 6.0 2.5 5.3
Non-current assets, total 1 403.1 429.5 1 334.8
Current assets
Inventories 281.4 202.7 244.4
Receivables, interest-bearing 51.2 97.2 98.8
Receivables, non interest-bearing 108.5 75.4 112.5
Cash and cash equivalents 23.0 21.2 33.2
Current assets, total 464.1 396.5 488.9
Assets, total 1 867.3 826.0 1 823.7
EQUITY AND LIABILITIES
Equity 676.2 544.2 593.8
Minority interest 0.0 0.0 0.0
Equity, total 676.2 544.2 593.8
Non-current liabilities, interest-bearing 113.4 30.2 855.4
Reserves 2.5 5.3
Non-current liabilities, total 115.9 30.2 860.7
Deferred taxes liabilities 56.5 26.2 57.3
Current liabilities
Current liabilities, interest-bearing 793.7 88.0 50.1
Current liabilities, non interest-bearing 225.1 137.3 261.7
Current liabilities, total 1 018.8 225.4 311.8
Equity and liabilities, total 1 867.3 826.0 1 823.7
Equity ratio, per cent 36.2 65.9 32.6
Net gearing, per cent 130.7 17.8 146.9
Cash flow from operations per share, EUR 0.66 0.39 2.16
Interest-bearing net debt, EUR mill. 832.9 -0.1 773.6
Number of shares at Sep. 30, thousands 61 703 56 094 56 094
Weighted average number of shares, 57 693 55 566 55 606
thousands
Weighted average number of shares, 57 693 55 790 55 815
diluted, thousands
Market capitalization, EUR mill. 1 063.2 1 894.5 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 1-9/2008 1-9/2007 1-12/2007
Cash flows from operating activities
Net profit for the financial year 19.2 39.8 88.4
Adjustments:
Deprecation 47.2 26.4 36.9
Profit (-) and loss (+) from sales -4.0
of non-current assets
Financial expenses 39.6 2.5 7.0
Financial income -2.2 -1.0 -1.3
Taxes paid 6.9 13.1 31.1
Other adjustments 3.3 1.8 1.2
Changes in working capital:
Change in trade and other 72.1 17.5 -11.0
receivables
Change in inventories -39.8 -47.7 -12.5
Change in trade payables and other -22.0 -11.9 8.8
liabilities
Interest paid -34.1 -1.7 -6.5
Interest received 0.6 0.8 1.3
Income taxes paid -48.6 -17.8 -23.5
Net cash from operating activities 38.1 21.8 119.9
Cash flows from investing activities
Investments in tangible and intangible -127.7 -88.5 -113.2
assets
Acquisition of subsidiary net cash -18.9 -852.5
acquired
Capital expenditures on other 0.1
investments
Cash from tangible assets 5.0
Dividends received 0.1 0.1 0.1
Net cash used in investing activities -141.3 -88.4 -965.6
Cash flows from financing activities
Proceeds from issue of share capital 135.4 5.8 5.8
Change in short-term loans, increase 111.1 74.9 35.5
(+), decrease (-)
Long-term loans, increase (+), -80.2 20.0 835.6
decrease (-)
Dividends paid -75.2 -72.1 -72.1
Net cash used in financing activities 91.1 28.6 804.8
Change in cash and cash equivalents -12.1 -37.9 -40.9
Cash and cash equivalents at start of 33.2 59.2 59.2
the period
Translation differences in cash and cash 0.2 0.4
equivalents
Cheque account on credit at start of the -14.6
period
Cash and cash equivalents 23.0 59.2 33.2
Cheque account on credit at the end of -16.2 -14.6
the period
Cash and cash equivalents at end of the 6.8 21.2 18.6
period
Income statement, Change
Group, EUR millions 1-9/2008 1-9/2007 per cent 1-12/2007
Revenue 1 337.4 914.3 46 1 398.2
Other operating income 4.0 9.7 9.7
Materials and consumables -698.2 -535.4 30 -791.2
Wages, salaries and employee -257.6 -150.9 71 -224.1
benefits expenses
Depreciation -47.2 -26.4 79 -36.9
Other operating expenses -275.0 -156.9 75 -230.6
Operating profit (loss) 63.5 54.3 17 125.2
Finance income and expenses -37.4 -1.5 -5.7
Profit (loss) before tax 26.1 52.9 -51 119.4
Income taxes -6.9 -13.1 -31.1
Profit (loss) for the period 19.2 39.8 -52 88.4
Earnings per share, EUR 0.33 0.72 1.59
Earnings per share, diluted, 0.33 0.71 1.58
EUR
Operating profit, per cent 4.7 5.9 9.0
Equity per share, EUR 11.02 9.77 13 10.66
Return on equity, per cent, 11.1 14.6 -24 15.2
moving 12 months
Return on capital employed, 12.2 17.2 -29 12.1
per cent, moving 12 months
Average number of employees, 11 843 8 519 39 8 979
converted to full-time staff
Investments 126.0 89.1 41 977.4
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 1-9/2008 1-9/2007 Change 1-12/2007
per cent
Department Store Division 847.1 817.7 4 1 218.1
Lindex 496.9 68.1
Hobby Hall 137.3 147.5 -7 206.5
Seppälä 131.1 123.6 6 174.7
Shared 0.6 0.6 -10 0.8
Group 1 613.0 1 089.5 48 1 668.3
Revenue, EUR millions 1-9/2008 1-9/2007 Change 1-12/2007
per cent
Department Store Division 713.0 688.1 4 1.025.0
Lindex 399.2 54.7
Hobby Hall 114.7 122.5 -6 171.7
Seppälä 109.1 102.6 6 145.1
Shared 1.4 1.0 1.7
Group 1 337.4 914.3 46 1 398.2
Operating profit (loss), EUR 1-9/2008 1-9/2007 Change 1-12/2007
millions per cent
Department Store Division 19.0 44.9 -58 91.8
Lindex 38.4 15.0
Hobby Hall -0.8 3.0 -125 5.7
Seppälä 10.4 12.1 -14 20.7
Shared -2.8 -5.1 -45 -7.5
Eliminations -0.8 -0.6 -0.7
Group 63.5 54.3 17 125.2
Investments,
gross, EUR millions 30.9.2008 30.9.2007 Change 31.12.2007
per cent
Department Store Division 98.2 78.4 25 111.5
Lindex 20.5 853.1
Hobby Hall 1.9 2.0 -5 3.5
Seppälä 4.8 7.6 -37 9.3
Shared 0.7 1.1 -40
Group 126.0 89.1 41 977.4
Assets, EUR millions 30.9.2008 30.9.2007 Change 31.12.2007
per cent
Department Store Division 682.1 641.2 6 652.4
Lindex 987.4 992.9
Hobby Hall 96.5 108.1 -11 102.7
Seppälä 49.0 40.0 23 44.7
Shared 52.4 36.8 42 30.9
Group 1 867.3 826.0 126 1 823.7
Non-interest-bearing 30.9.2008 30.9.2007 Change 31.12.2007
liabilities, EUR millions per cent
Department Store Division 101.5 105.2 -4 125.9
Lindex 86.9 100.8
Hobby Hall 20.8 21.8 -5 14.5
Seppälä 7.6 7.3 5 11.5
Shared 67.2 29.3 71.7
Group 284.1 163.6 74 324.3
Market areas
Change
Sales, EUR millions 1-9/2008 1-9/2007 per cent 1-12/2007
Finland 1) 852.3 793.8 7 1 171.5
Sweden and Norway 2) 426.1 59.5
Baltic states and Czech 152.2 133.5 14 194.1
Republic 1)
Russia 3) 182.3 162.2 12 243.2
Group 1 613.0 1 089.5 48 1 668.3
Finland, per cent 52.8 72.9 70.2
International operations, 47.2 27.1 29.8
per cent
Change
Revenue, EUR millions 1-9/2008 1-9/2007 per cent 1-12/2007
Finland 1) 711.4 662.0 7 977.6
Sweden and Norway 2) 340.9 47.5
Baltic states and Czech 129.4 113.5 14 165.0
Republic 1)
Russia 3) 155.8 138.7 12 208.0
Group 1 337.4 914.3 46 1 398.2
Finland, per cent 53.2 72.4 69.9
International operations, 46.8 27.6 30.1
per cent
Change
Operating profit (loss), EUR 1-9/2008 1-9/2007 per cent 1-12/2007
millions
Finland 1) 40.3 53.8 -25 96.3
Sweden and Norway 2) 37.4 14.4
Baltic states and Czech 6.7 11.8 -43 21.1
Republic 1)
Russia 3) -21.0 -11.3 86 -6.6
Group 63.5 54.3 17 125.2
Finland, per cent 63.5 99.0 76.9
International operations, 36.5 1.0 23.1
per cent
Investments, Change
gross, EUR millions 30.9.2008 30.9.2007 per cent 31.12.2007
Finland 1) 73.4 53.3 38 80.2
Sweden and Norway 2) 16.5 847.0
Baltic states and Czech 4.7 1.5 210 5.1
Republic 1)
Russia 3) 31.5 34.3 -8 45.0
Group 126.0 89.1 41 977.4
Finland, per cent 58.2 59.8 8.2
International operations, 41.8 40.2 91.8
per cent
Change
Assets, EUR millions 30.9.2008 30.9.2007 per cent 31.12.2007
Finland 1) 624.2 568.4 10 585.2
Sweden and Norway 2) 967.8 975.7
Baltic states and Czech 75.6 74.3 2 75.8
Republic 1)
Russia 3) 199.7 183.3 9 187.0
Group 1 867.3 826.0 126 1 823.7
Finland, per cent 33.4 68.8 32.1
International operations, 66.6 31.2 67.9
per cent
1) Department Store
Division, Lindex, Hobby Hall
and Seppälä
2) Lindex
3) Department Store
Division, Lindex, 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 September 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
Cost of share issue
Cash flow hedges
Cost of share issue
Dividends
Translation differences
Profit for the period
Equity September 30, 2008 123.4 186.0 44.1
* including share issue
Statement of changes Fair Reserve for
invested
in equity value unrestricted Translation
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 September 30, 2007 0.0 0.0 0.0
Equity December 31, 2007 0.5 0.0 0.0
Options exercised
Rights issue 126.2
Share bonus
Cost of share issue -2.0
Cash flow hedges 1.3
Cost of share issue
Dividends
Translation differences 0.0 0.1
Profit for the period
Equity September 30, 2008 1.8 124.2 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 1.4 1.4 1.4
Dividends -72.1 -72.1 -72.1
Translation differences 0.0 0.0 0.0
Profit for the period 39.8 39.8 0.0 39.8
Equity September 30, 2007 201.6 544.2 0.0 544.2
Equity December 31, 2007 250.9 593.8 0.0 593.8
Options exercised 0.0 0.0
Rights issue 137.4 137.4
Share bonus 0.1 0.1 0.1
Cost of share issue -2.0 -2.0
Cash flow hedges 1.3 1.3
Cost of share issue 1.4 1.4 1.4
Dividends -75.2 -75.2 -75.2
Translation differences 0.0 0.1 0.1
Profit for the period 19.2 19.2 0.0 19.2
Equity September 30, 2008 196.5 676.2 0.0 676.2
Contingent liabilities, 30.9.2008 30.9.2007 31.12.2007
Group EUR millions
Mortgages on land and 1.7 1.7 1.7
buildings
Guarantees 0.1
Pledges 0.2 0.1
Total 1.9 1.8 1.8
Lease agreements on 30.9.2008 30.9.2007 31.12.2007
business premises, EUR
millions
Minimum rents payable on
the basis of binding lease
agreements on business
premises
Within one year 85.5 67.7 124.6
After one year 455.7 323.4 449.3
Total 541.2 391.1 573.8
Lease payments 30.9.2008 30.9.2007 31.12.2007
Within one year 1.3 1.0 1.4
After one year 1.1 1.0 1.3
Total 2.4 2.1 2.8
Derivative contracts 30.9.2008 30.9.2007 31.12.2007
Nominal value
Currency derivatives 224.4 67.8
Electricity derivatives 3 1.5
Total 227.4 69.3
Exchange rates
Country Currency 30.9.2008 30.9.2007 31.12.2007
Russia RUB 36.4095 35.3490 35.9860
Estonia EEK 15.6466 15.6466 15.6466
Latvia LVL 0.7086 0.7038 0.6964
Lithuania LTL 3.4528 3.4528 3.4528
Sweden SEK 9.7943 9.2147 9.4415
Income statement
quarterly, Q3 Q2 Q1 Q4
Group, EUR millions 2008 2008 2008 2007
Continuing operations
Revenue 440.8 483.3 413.4 483.9
Other operating income 0.3 -0.1 3.8 0.0
Materials and consumables -224.7 -242.6 -231.0 -255.8
Wages, salaries and -82.3 -90.2 -85.1 -73.2
employee benefits expenses
Depreciation -13.2 -18.7 -15.2 -10.5
Other operating expenses -86.2 -100.3 -88.5 -73.7
Operating profit (loss) 34.6 31.4 -2.5 70.8
Finance income and expenses -12.8 -13.3 -11.3 -4.3
Profit (loss) before tax 21.8 18.1 -13.8 66.5
Income taxes -6.2 -2.9 2.2 -17.9
Profit (loss) for the 15.6 15.2 -11.6 48.6
period
Earnings per share,
continuing operations, EUR
Basic 0.27 0.27 -0.21 0.87
Diluted 0.27 0.27 -0.21 0.87
Earnings per share,
discontinued operations,
EUR
Basic
Diluted
Earnings per share, total,
EUR
Basic 0.27 0.27 -0.21 0.87
Diluted 0.27 0.27 -0.21 0.87
Q3 Q2 Q1 Q4
Sales, EUR millions 2008 2008 2008 2007
Department Store Division 264.8 306.4 275.9 400.4
Lindex 174.9 183.8 138.3 68.1
Hobby Hall 41.6 48.3 47.4 58.9
Seppälä 50.1 45.2 35.7 51.2
Shared 0.2 0.2 0.2 0.2
Group 531.5 583.9 497.5 578.8
Revenue, EUR millions
Department Store Division 223.1 257.3 232.7 336.9
Lindex 140.6 147.6 111.0 54.7
Hobby Hall 34.7 40.4 39.7 49.2
Seppälä 41.7 37.6 29.7 42.5
Shared 0.6 0.4 0.4 0.7
Group 440.7 483.3 413.4 483.9
Operating profit, EUR
millions
Department Store Division 13.5 4.1 1.5 46.9
Lindex 15.7 23.8 -1.2 15.0
Hobby Hall 0.7 0.7 -2.1 2.7
Seppälä 5.9 5.1 -0.6 8.6
Shared -0.7 -2.2 0.2 -2.4
Eliminations -0.5 0.0 -0.3 0.0
Group 34.6 31.4 -2.5 70.8
Income statement
quarterly, Q3 Q2 Q1 Q4
Group, EUR millions 2007 2007 2007 2006
Continuing operations
Revenue 308.6 294.2 311.4 389.6
Other operating income 9.7 0.4
Materials and consumables -179.8 -164.0 -191.6 -215.6
Wages, salaries and -47.6 -52.6 -50.8 -57.9
employee benefits expenses
Depreciation -8.9 -8.4 -9.1 -7.9
Other operating expenses -50.0 -55.1 -51.7 -58.1
Operating profit (loss) 32.1 14.1 8.2 50.5
Finance income and expenses -0.5 -0.8 -0.2 -0.5
Profit (loss) before tax 31.6 13.3 8.0 50.1
Income taxes -8.1 -3.2 -1.9 -12.3
Profit (loss) for the 23.5 10.2 6.1 37.8
period
Earnings per share,
continuing operations, EUR
Basic 0.43 0.18 0.11 0.70
Diluted 0.42 0.18 0.11 0.69
Earnings per share,
discontinued operations,
EUR
Basic
Diluted -0.01
Earnings per share, total,
EUR
Basic 0.43 0.18 0.11 0.70
Diluted 0.42 0.18 0.11 0.68
Q3 Q2 Q1 Q4
Sales, EUR millions 2007 2007 2007 2006
Department Store Division 275.5 261.0 281.2 363.4
Lindex
Hobby Hall 45.9 46.0 55.6 55.5
Seppälä 45.4 43.5 34.6 45.3
Shared 0.2 0.2 0.2 0.2
Group 367.0 350.7 371.7 464.4
Revenue, EUR millions
Department Store Division 232.2 219.6 236.3 305.5
Lindex
Hobby Hall 38.2 38.1 46.2 46.1
Seppälä 37.8 36.1 28.7 37.5
Shared 0.5 0.4 0.1 0.5
Group 308.6 294.2 311.4 389.6
Operating profit, EUR
millions
Department Store Division 25.7 11.5 7.8 44.3
Lindex
Hobby Hall 2.5 -0.9 1.5 3.4
Seppälä 5.5 5.8 0.8 7.3
Shared -1.1 -2.1 -1.8 -3.8
Eliminations -0.5 -0.1 0.0 -0.6
Group 32.1 14.1 8.2 50.6
1. ASSETS
EUR mill. 30.9.2008 30.9.2007 31.12.2007
Acquisition cost Jan. 1 813.8 551.7 551.7
Translation difference +/- -6.1 -0.2 0.0
Aquisitions through business 0.0 154.7
combinations (investment) (+)
Translation difference +/- -0.2
Increases Jan. 1-Sep. 30 124.9 88.5 125.9
Decreases Jan. 1-Sep. 30 -6.8 -18.4
Acquisition cost Sep. 30/Dec. 31 925.7 640.0 813.8
Accumulated depreciation Jan. 1 212.5 193.2 193.2
Translation difference +/- -0.8 -0.1 0.0
Depreciation on reductions -4.5 -17.6
Depreciation for the financial year 47.2 26.4 36.9
Accumulated depreciation 254.3 219.6 212.5
September 30/Dec. 31
Book value Jan. 1 601.3 358.5 358.5
Book value Sep. 30/Dec. 31 671.4 420.4 601.3
Goodwill
EUR mill. 30.9.2008 30.9.2007 31.12.2007
Acquisition cost Jan. 1 720.0
Aquisitions through business 721.7
combinations (investment) (+)
Translation difference +/- -25.9 -1.7
Increases Jan.1-Sep. 30 23.3
Acquisition cost Sep. 30/Dec. 31 717.4 720.0
Book value Jan 1. 720.0
Book value Sep. 30/Dec. 31 717.4 720.0
Total 1 388.8 420.4 1 321.3
2. ACQIORED OPERATIONS, 2007
Lindex acquisition, precision of
preliminary acquisition cost in
30.9.2008
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 23.3 93.2
Liabilities, total 106.5 48.3 154.8
Net assets 72.7 33.2 106.0
Acquisition cost 850.9
Goodwill 745.0 745.0
STOCKMANN plc
Hannu Penttilä
CEO
DISTRIBUTION
OMX Nordic Exchange Helsinki
Principal media
A press and analyst conference will be held today, October 28, 2008, at
14.00 at the World Trade Center, Aleksanterinkatu 17, Helsinki.