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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
thousands
Weighted average number of shares, 54 867 53 927 54 129
diluted, thousands
Cash flow statement, Group EUR millions 1-6/2006 1-6/2005 1-12/2005
Cash flows from operating activities
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
assets
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
period
Cash and cash equivalents at end of the 14.8 14.4 18.4
period
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
expenses
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
months
Return on capital employed, per cent, 26.2
moving 12 months
Average number of employees, converted 7 760 228 7 988
to full-time staff
Investments 32.5 32.5
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
benefits expenses
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
12 months
Return on capital employed, per 16.0
cent, moving 12 months
Average number of employees, 7 108 1 027 8 135
converted to full-time staff
Investments 14.7 7.4 22.1
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
benefits expenses
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
12 months
Return on capital employed, per 19.6
cent, moving 12 months
Average number of employees, 7 503 1 034 8 537
converted to full-time staff
Investments 54.3 2.7 57.0
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,
Stockmann Auto, Hobby Hall and Seppälä
2) Department Store Divisions,
Stockmann Auto, Hobby Hall and Seppälä
3) Department Store Divisions and
Seppälä
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,
Stockmann Auto, Hobby Hall and Seppälä
2) Department Store Divisions,
Stockmann Auto, Hobby Hall and Seppälä
3) Department Store Divisions and
Seppälä
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,
Stockmann Auto, Hobby Hall and Seppälä
2) Department Store Divisions,
Stockmann Auto, Hobby Hall and Seppälä
3) Department Store Divisions and
Seppälä
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
liability
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
premises, EUR millions
Minimum rents payable on the
basis of binding lease
agreements on business
premises
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
employee benefits expenses
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
continuing operations
Discontinued operations
Profit for the period, 21.9 7.6 4.8 0.9
discontinued operations
Profit for the period 43.1 8.4 42.4 15.4
Earnings per share,
continuing operations, EUR
Basic 0.39 0.01 0.70 0.27
Diluted 0.39 0.01 0.69 0.27
Earnings per share,
discontinued operations,
EUR
Basic 0.41 0.14 0.09 0.02
Diluted 0.40 0.14 0.09 0.02
Earnings per share, total,
EUR
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
total
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
total
Discontinued operations 0.0 61.1 96.4 89.9
Group 299.5 330.5 475.7 351.9
Operating profit, EUR
millions
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
total
Discontinued operations 21.9 7.7 4.1 1.9
Group 50.6 8.5 58.0 19.5
This Interim Report is
unaudited.
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
employee benefits expenses
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
continuing operations
Discontinued operations
Profit for the period, 1.0 0.3 1.0 1.3
discontinued operations
Profit for the period 17.9 1.2 29.7 10.0
Earnings per share,
continuing operations, EUR
Basic 0.32 0.02 0.56 0.16
Diluted 0.31 0.02 0.54 0.16
Earnings per share,
discontinued operations,
EUR
Basic 0.02 0.00 0.02 0.02
Diluted 0.02 0.00 0.02 0.02
Earnings per share, total,
EUR
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
total
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
total
Discontinued operations 106.8 84.6 85.5 83.5
Group 380.9 334.1 429.7 330.6
Operating profit, EUR
millions
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
total
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.