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Year <strong>2007</strong><br />
Note 35<br />
Contingent liabilities<br />
Divisions The Group<br />
Financial<br />
statements<br />
Further information<br />
Commitments<br />
€ million<br />
Collateral given for own commitments<br />
<strong>2007</strong> 2006<br />
Pledges 38 57<br />
Mortgages 26 26<br />
Guarantees<br />
Other commitments and contingent<br />
101 118<br />
liabilities 50 62<br />
Collateral given for shareholders<br />
Guarantees 1 1<br />
Collateral given for others<br />
Other commitments and contingent<br />
liabilities 6 9<br />
Guarantees 3 4<br />
Note 36<br />
Operating leases<br />
Group as the lessee<br />
Minimum lease payments under non-cancellable operating lease<br />
agreements:<br />
€ million <strong>2007</strong> 2006<br />
Not later than 1 <strong>year</strong> 285.3 191.9<br />
Later than 1 <strong>year</strong> and<br />
not later than 5 <strong>year</strong>s 830.5 767.3<br />
Later than 5 <strong>year</strong>s 675.8 570.9<br />
Total 1,791.5 1,530.1<br />
Expected future minimum lease<br />
payments under non-cancellable<br />
sublease agreements 46.4 40.3<br />
Lease and sublease payments recognised<br />
for the period:<br />
Minimum lease expenses 262.6 246.5<br />
Contingent lease expenses 0.3 2.0<br />
Sublease payments (-income/+expense) -16.4 -17.6<br />
The <strong>2007</strong> income statement includes operating lease payments in a total<br />
amount of €317.7 million (€290.1 million).<br />
Kesko leases retail and logistics premises for its operating activities.<br />
Most of the leases are index-linked and in conformity with local market<br />
practice. Future minimum lease payments for the comparison <strong>year</strong><br />
(2006) have been adjusted to correspond to their actual amounts.<br />
Group as the lessor<br />
Minimum lease payments based on non-cancellable operating leases:<br />
115<br />
€ million <strong>2007</strong> 2006<br />
Not later than 1 <strong>year</strong> 8.9 11.2<br />
Later than 1 <strong>year</strong> and<br />
not later than 5 <strong>year</strong>s 15.1 18.3<br />
Later than 5 <strong>year</strong>s 20.0 22.5<br />
Total 44.1 52.0<br />
Aggregate contingent rents charged to<br />
the income statement 0.2 0.7<br />
Kesko leases premises to entrepreneurs other than K-retailers in order<br />
that the total service offer of a store site support its profit generation<br />
potential. Such premises typically include so-called store entrance stores<br />
at large retail outlets.<br />
Note 37<br />
Share-based payments<br />
The Group operates option plans as part of the management's incentive<br />
and commitment arrangements. Each option gives its holder the right to<br />
subscribe for one Kesko Corporation B share at a price and during the<br />
period specified in the terms of the option scheme. The options are forfeit<br />
if the employee leaves the company before the end of the vesting<br />
period.<br />
Year 2003 option plan<br />
On 31 March 2003, the Annual General Meeting resolved to grant a total<br />
of 1,800,000 options with no consideration to the management of the<br />
Kesko Group as well as to a wholly-owned subsidiary of Kesko Corporation.<br />
A deviation was made from the shareholders' pre-emptive subscription<br />
rights, since the stock options form a part of the incentive and commitment<br />
programme for the management. Each option entitles its holder<br />
to subscribe for one new Kesko Corporation B share. The options are<br />
marked with the symbols 2003D (KESBVEW103), 2003E (KESBVEW203)<br />
and 2003F (KESBVEW303) in units of 600,000 options each. The share<br />
subscription periods of options are:<br />
• 2003D 1 April 2005–30 April 2008<br />
• 2003E 1 April 2006–30 April 2009 and<br />
• 2003F 1 April <strong>2007</strong>–30 April 2010.<br />
The original exercise price per share of option 2003D was equal to the<br />
volume weighted average price of a Kesko Corporation B share on the<br />
Helsinki Stock Exchange between 1 April-30 April 2003 (€9.63), that of<br />
option 2003E between 1 April-30 April 2004 (€15.19) and that of option<br />
2003F between 1 April-30 April 2005 (€19.08). The exercise prices were<br />
reduced by the amounts of dividends per share distributed after the end<br />
of the above period for the determination of the exercise price, but before<br />
the exercise date. At the end of <strong>2007</strong>, the price of a B share subscribed for<br />
with option 2003D was €3.03 and with option 2003E it was €10.59, and<br />
the exercise period started on 1 April 2006. At the end of <strong>2007</strong>, the price