STOCKMANN’S COMPARATIVE IFRS INFORMATION

STOCKMANN plc STOCK EXCHANGE RELEASE February 15, 2005, at 11.45

STOCKMANN’S COMPARATIVE IFRS INFORMATION

As from the beginning of 2005, Finnish Accounting Standards (FAS) have
been replaced by International Financial Reporting Standards (IFRS) in
Stockmann’s consolidated financial statements. The following information
is presented in order to provide information on the effects of the
adoption of IFRS on the consolidated income statement, balance sheet and
key ratios. From Stockmann’s point of view, the most significant effects
of the transition to IFRS relate to the treatment of revaluation of
property, plant and equipment, treasury shares, some vehicle leasing and
hire-purchase agreements, the recognition of financial instruments and
segment reporting.

The table below shows the effect of the adoption of IFRS on some Group key
financial ratios:

Group key financial ratios 2004 FAS 2004 Effect of IFRS
transition to 2004
IFRS
Operating profit 71.4 (1.0) 70.4
Net profit for the period, EUR million 58.2 1.1 59.3
Earnings per share, undiluted EUR 1.11 0.02 1.13
Earnings per share, diluted EUR 1.09 0.02 1.11
Total assets EUR million 750.4 (1.4) 749.0
Return on capital employed, per cent 14.3 0.5 14.8
Return on shareholders’ equity, per cent 11.2 1.0 12.2
Equity ratio, per cent 65.5 (3.2) 62.3

The IFRS total assets at the end of 2004 were about the same as in the FAS
balance sheet. The IFRS Equity ratio was 62.3%, in other words 3.2% less
than in the FAS balance sheet. This is mainly due to charging to equity of
accumulated depreciation on revaluation of assets and the reversal of
deferred taxes relating to the IFRS adjustments. The increase in the IFRS
net profit for the period and the increase in earnings per share is mainly
due to a decrease in deferred tax liability. The adoption of IFRS has no
impact on the Group cash flow.

Additional information and comparative IFRS information for 2004

Contents:
General information
Balance sheet reconciliation and reconciliation of shareholders’ equity at
31 December 2004 and 31 December 2003
Reconciliation of net profit
Definitions of key financial ratios

General information

Stockmann converted from Finnish Accounting Standards (FAS) to
International Financial Reporting Standards (IFRS) on 1 January 2005 in
consolidated financial statements. The company has prepared an opening
balance sheet as at the date of transition, which is 1 January 2004. The
interim financial reports for 2005 will be presented in accordance with
IFRS.

The change in accounting standards impacts, amongst others, the following
accounting principles:

The measurement and revaluation of property, plant and equipment

Stockmann applies the cost model as defined in IAS 16 (Property, Plant and
Equipment) when measuring tangible assets. Contrary to the company’s prior
accounting practice, depreciation on the revaluation surplus of buildings
is recorded over their useful lives in the IFRS financial statements. An
adjustment equivalent to the accumulated depreciation has been done to
equity in the IFRS opening balance sheet. Deferred tax liabilities as
required by IFRS have been recorded on the revaluations.

Finance lease agreements

Motor vehicles under lease agreements, used by Stockmann Auto as courtesy
and showroom cars have been recognised in the IFRS financial statements in
accordance with IAS 17 (Leases) as assets and liabilities. According to
the previous practice, these agreements were disclosed in the notes.

Treasury shares

In accordance with IAS 39 (Financial Instruments: Recognition and
Measurement) the company’s own shares held by it have not been recognised
in the balance sheet. The elimination of these shares decreases non-
current investments and equity when compared to what was reported
previously.

Investments in equity instruments measured at fair value

In terms of IFRS, investments in listed companies are measured at fair
value at balance sheet date in accordance with IAS 39. The difference
between the market value and book value is recognised in equity.
Previously, investments in equity instruments were measured at no higher
than cost.

Receivables

Hire-purchase agreements transferred to finance companies when financing
customer motor vehicle purchases have been recognised in accordance with
IAS 39 (Financial Instruments: Recognition and Measurement). Agreements
where all risks, rewards and control have not transferred to the
transferee, are recognised in the IFRS balance sheet in receivables and
debts. Under the previous reporting, these agreements were disclosed only
in the notes to the financial statements. The interest income on these
agreements is recognised over the duration of the agreement, whereas
previously it was recognised in total at the inception of the agreement.
As from 1 January 2004, hire-purchase agreements have been recognised in
accordance with IAS 39, in conjunction with the transitional provisions of
IFRS 1.

Derivatives and hedge accounting

Derivatives are measured at fair value in accordance with IAS 39.
Stockmann uses in its IFRS reporting IAS 39 compliant hedge accounting
when recognizing derivatives hedging forecasted foreign currency purchases
and sales.

Deferred tax liabilities and assets

A deferred tax liability or asset is recognised for all temporary
differences between the carrying amount of an asset or liability and its
tax base in accordance with IAS 12 (Income Taxes). The most significant
liabilities arise from the property, plant and equipment of foreign
subsidiaries and revaluations included in the carrying amounts of
buildings and property. In terms of the previous accounting practice, no
deferred tax assets and liabilities were calculated on these differences

Translation differences

Cumulative translation differences have been combined with retained
earnings at the date of transition to IFRS (1 January 2004), as permitted
by IFRS 1.

The Finnish pension scheme (TEL)

The Finnish pension scheme (TEL) has been accounted for as a defined
contribution plan under FAS. Under IFRS, the disability element of TEL is
also accounted for as a defined contribution plan. At the date of
transition to IFRS, the total TEL disability obligation is estimated at
17.5 million Euros.

Segment reporting

The introduction of IFRS will result in a change in the current segment
reporting structure. A property unit whose income consists mainly of
intragroup rentals, will fall away. In the IFRS reporting, property held
by the group has been allocated to segments with business operations by
including it in the assets of each segment. In the segment income
statements, depreciation and other costs relating to the buildings will be
reported instead of the previous internal rentals. Under IFRS, other
operating income has been allocated to the segments, whereas under FAS
they were reported at group level.
The identification of segments is based on the group structure and
internal reporting. The primary or business segments are the Department
Store Division, Stockmann Auto, Hobby Hall and Seppälä. The secondary or
geographical segments are Finland, the Baltic states and Russia.

Reconciliation of assets, liabilities and equity at 1 January 2004 and 31
December 2004
Note Million euros FAS 31 Effect IFRS 1 FAS 31 Effect of IFRS
December of January Decembe transition 31
2003 transiti 2004 r 2004 to IFRS Decemb
on to er
IFRS 2004
1 Property, 230.0 6.3 236.3 262.7 5.7 268.4
plant and
equipment
Intangible 30.5 30.5 24.4 24.4
assets
2 Non-current 28.7 (21.6) 7.0 28.0 (21.0) 7.1
financial
assets
3 Non-current 0.2 0.2 0.1 7.4 7.4
accounts
receivables
Total non- 289.4 (15.3) 274.1 315.3 (8.0) 307.3
current assets
3 Accounts 177.8 177.8 169.6 5.5 175.1
receivable
Stocks 191.3 191.3 195.0 195.0
4 Other 21.0 0.3 21.3 29.3 1.1 30.3
receivables
5 Cash and cash 121.3 1.0 122.3 41.4 41.4
equivalents
Total current 511.4 1.3 512.7 435.1 6.6 441.7
assets
Total assets 800.8 (14.0) 786.8 750.4 (1.4) 749.0
6 Interest- 64.6 2.3 66.9 65.8 2.2 68.0
bearing
liabilities
7 Accounts 153.3 0.9 154.2 162.3 13.7 176.0
payable and
other
liabilities
Current tax 9.7 9.7 8.0 8.0
liability
8 Deferred tax 26.0 7.8 33.9 22.6 6.6 29.2
liabilities
Total 253.7 11.0 264.6 258.7 22.4 281.1
liabilities
Net assets 547.1 (25.0) 522.2 491.7 (23.8) 467.9
Shareholder`s 105.3 105.3 106.8 106.8
equity
Share premium 147.1 147.1 155.0 155.0
9 Revaluation 50.2 (5.9) 44.2 50.1 (5.8) 44.4
and other
reserves
9 Retained 244.6 (19.1) 225.5 179.7 (18.0) 161.7
earnings
Total equity 547.1 (25.0) 522.0 491.6 (23.8) 467.9

1. According to the former accounting practice, no depreciation has been
provided on the revaluation of buildings. At the date of transition to
IFRS, accumulated depreciation of 10.8 million Euros was deducted from the
value of property, plant and equipment in the financial statements
prepared under the previous accounting standards. The Company’s share of
property, plant and equipment in mutual property companies relative to the
company’s share of equity in these companies was added to property, plant
and equipment in accordance with IFRS-standards. The increase was 15.1
million Euros at the date of transition. The shares in mutual property
companies were included in long-term investments under the former
accounting standards. At the date of transition, lease agreements for
courtesy and showroom cars for Stockmann Auto of 2.0 million Euros have
been classified as finance leases and added to property, plant and
equipment. The corresponding adjustments to the 2004 FAS balance sheet are
11.3 million Euros for revaluation, 15.1 million Euros for mutual property
companies and 1.9 million Euros for cars acquired on finance lease
contracts.

2. At the date of transition, treasury shares of 6.2 million Euros and
shares in mutual property companies of 14.8 million Euros were removed
from financial assets. Listed shares held by the company have been
classified according to IAS 39 as assets available for sale and
transferred from non-current assets to current assets. The carrying amount
of these shares amounted to 0.5 million Euros at the date of transition.
The corresponding reclassifications to the 2004 FAS balance sheet 2004 are
6.1 million Euros for own shares and 14.8 million Euros for mutual
property companies.

3. In accordance with IAS 39, receivables of 12.9 million Euros
originating from hire-purchase contracts that have been transferred to
financing companies, have been added to accounts receivables in the 2004
FAS financial statements. Of these receivables, 7.4 million Euros are non-
current.

4. At the date of transition, a deferred tax receivable of 0.3 million
Euros arising from the measurement of derivatives was added to other
receivables. In 2004 accrued income of 0.8 million Euros relating to the
measurement of financial instruments and a deferred tax asset of 0.2
million Euros relating to derivatives were added to other receivables

5. The listed shares, with a book value of 0.5 million Euros, are included
in cash and cash equivalents in the IFRS balance sheet. In the FAS balance
sheet these shares were disclosed in non-current assets. The difference
between the quoted price of the shares and their carrying amount at the
balance sheet date, which was 0.5 million Euros at the date of transition,
was added to cash and cash equivalents in the IFRS balance sheet. Most of
these shares were sold in 2004.

6. A liability, representing finance lease agreements for courtesy and
showroom cars was added to interest-bearing liabilities. At the date of
transition, the liability was 2.0 million Euros and it was 1.9 million
Euros at the end of 2004. A share of the liabilities of mutual property
companies, corresponding to the company’s share of equity in these
companies, was added to interest-bearing liabilities. This share of
liabilities amounted to 0.3 million Euros both at the date of transition
and at the end of the year 2004.

7. In accordance with IFRS, other liabilities include an accrual relating
to the measurement of financial instruments. This accrual was 0.9 million
Euros at the date of transition and 0.5 million Euros at the end of the
year 2004. Of the 12.9 million Euro liability, relating to car hire
purchase agreements transferred, 5.5 million Euros are presented in
current liabilities and 7.4 million Euros in non-current liabilities.

8. Tax liabilities arising from revaluations, from differences between the
carrying amounts and tax bases of property, plant and equipment in foreign
subsidiaries and from the measurement of financial instruments were added
to deferred tax liabilities. These deferred tax liabilities were 7.8
million Euros at the date of transition and 6.6 million Euros at the end
of the year 2004.

9. Equity

Consolidated statement of changes in equity
Million Share Share Treasu Legal Other Minori Transl Retained Total
Euros capit premium ry reser reser ty . earnings
al shares ve ves * intere Diff.
st
Equity at 105.3 147.1 6.2 0.2 43.7 0.0 0.0 244.6 547.1
31 December
2003
Transition
to IFRS:
Deferred (7.5) (7.5)
taxes
Depreciatio (10.8) (10.8
n )
Treasury (6.2) (6.2)
shares
Financial 0.3 (0.9) (0.6)
instruments
Adjusted 105.3 147.1 0.0 0.2 44.1 0.0 0.0 225.4 522.0
equity at 1
January
2004
Options 1.6 7.7 9.3
exercised
Share 0.1 0.1
option
benefits
Cash flow 0.6 0.6
hedges
Investments (0.3) (0.3)
sold
Dividends (123.3) (123.
3)
Translation 0.2 0.2
differences
Profit for 58.2 58.2
the period
IFRS 1.1 1.1
adjustments
to P/L
Equity at 106.8 154.8 0.0 0.2 44.3 0.0 0.2 160.4 467.9
31 December
2004
*excluding deferred tax liability

Reconciliation of profit for 2004
Note Million Euros FAS Effect of IFRS
transition to
IFRS
Revenue 1445.0 0.0 1445.0
10 Other income 3.1 (0.7) 2.4
Raw materials and consumables 951.5 0.0 951.5
11 Depreciation 30.2 0.5 30.7
12 Other expenses from operations 395.1 (0.2) 394.9
13 Finance income 12.2 0.8 13.0
Finance cost 4.4 0.0 4.4
Profit before taxes 79.1 (0.3) 78.9
14 Taxes 21.0 (1.4) 19.6
Profit for the period 58.2 1.1 59.3

10. Other operating income
A profit of 0.7 million Euros was calculated on the sale of shares now to
be valued at fair value, in accordance with the previous accounting
standards. This profit has been transferred from other operating income
to finance income in the IFRS financial statements.

11. Depreciation
Depreciation on the revaluations of 0.5 million Euros was added to the
depreciation calculated according to former accounting standards.

12. Other operating expenses
Share issue costs of 0.2 million Euros, formerly included in other
operating expenses, were deducted from the share premium under IFRS.

13. Finance income
Profit from sale of shares of 0.7 million Euros, formerly included in
other operating income, was transferred to finance income. The change in
the fair values of financial instruments, 0.4 million Euros, was added to
finance income. Interest income from transferred Stockmann Auto leasing
contracts that will be recognized during the remaining contract period in
the IFRS financial statements, totalling 0.3 million Euros, was deducted
from finance income.

14. Taxes
Deferred tax liabilities arising from the IFRS adjustments decreased by
1.4 million Euros, mainly due to a change in the tax rate in Finland, and
deferred tax assets reduced by 0.1 million Euros.

Calculation of key financial ratios

Earnings per share: Profit for the period divided by the average number of
shares during the period adjusted for share issues

Return on capital employed, per cent: Profit before taxes plus interest
and other financial expenses, divided by capital employed, multiplied with
100

Capital employed: Total assets less deferred tax liability and other non-
interest-bearing liabilities (average over the year)

Return on equity, per cent: Profit for the period, divided by capital and
reserves plus minority interest (average over the year), multiplied with
100

Equity ratio, per cent: Capital and reserves plus minority interest,
divided by total assets less advance payments received, multiplied with
100

STOCKMANN plc

Hannu Penttilä
CEO

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