ANNUAL REPORT 2003 INEX PARTNERS OY

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KEY FIGURES INEX GROUP 1999 – 2003 EUR million 1999 2000 2001 2002 2003 Net turnover 1,424 1,490 1,606 1,696 1,784 Increase in net turnover, % 6 5 8 6 5 Profi t before extraordinary items 5 4 8 5 5 Profi t for the fi nancial year 3 3 5 22 3 Return on investment, % 13.1 11.8 18.1 11.8 9.7 Equity ratio, % (1) 17.1 17.5 16.2 21.9 20.5 Gearing, % –104.7 –103.5 –183.0 –155.4 –185.5 Gross investments 12 7 5 7 3 Personnel, average 1,920 2,026 2,100 2,216 2,242 INEX PARTNERS OY 1999–2003 EUR million 1999 2000 2001 2002 2003 Net turnover 1,259 1,333 1,448 1,531 1,597 Increase in net turnover, % 6 6 9 6 4 Profi t before extraordinary items 4 4 9 13 4 Profi t for the fi nancial year 4 3 0 24 4 Return on investment, % 9.6 9.8 19.4 25.6 8.5 Equity ratio, % (1) 19.6 19.7 16.0 22.6 21.4 Gearing, % –86.5 –93.4 –194.1 –124.3 –187.0 Gross investments 9 6 2 6 3 Personnel, average 1,528 1,630 1,730 1,869 2,015 (1) This ratio includes the equity portion of appropriations. 2
MANAGING DIRECTOR’S REPORT A SUCCESFUL PLAYER IMPLEMENTS REFORMS – PROACTIVELY Inex Group’s business operations saw positive developments in 2003 and operating results remained solid. However, overall growth in the Finnish grocery trade slackened, primarily due to increased competition and a fall in prices caused by a battle for market share. Quantifi ed in kilos, sales volumes have increased; however, when measured in euros sales are not increasing at the same rate; in fact, sales are falling. This trend is expected to continue over the next few years. Viewed against this background, the Inex Group companies performed well in 2003, their sales growth outperforming the general market trend. Effi ciency, reliability and quality improved, and results were profi table and better than planned. Inex continued the strong development of its operations in line with its competitive strategy. The added value we create directly strengthens the competitiveness of our customer chains in the retail sector. The network formed by the S Group, Tradeka and ourselves has indisputably been the most successful player and a forerunner in the Finnish grocery trade since Finland joined the European Union in 1995. As for Inex, our success has been, and will be, based on customer orientation, skilled personnel, effi ciency, networking, continuous reform and a fruitful co-operation with our partners. We have implemented new operational models more rapidly than our competitors and continuously provided our customers with competitive benefi ts via our active development functions. The ongoing internationalisation of trade and industry and related struc- tural changes, EU enlargement and changes in the competitive situation of the Finnish grocery trade require a continuous and fundamental reform of operations. In order to create competitive advantages for the future, strategic redirectioning projects must be implemented briskly throughout the whole partner network. The most successive players will be those who implement the necessary reforms proactively. First, we must respond to the most topical challenge, price competition, by further increasing our effi ciency. We will achieve this by renewing our operational models, intensifying co-operation, attending to cost factors in all of our processes and throughout the value chain, and focusing on retailer brands. Second, we will continue to develop our logistics services on a retailer-driven basis, and expand into new fi elds with the aim of enhancing competitiveness. The third fi eld of reform is retailers’ product ranges and international purchasing co-operation. In particular, the number of retailer brands is increasing at a rapid pace in all product areas. This trend is orchestrated by international chains as well as the price competition between, and the profi ling needs, of Finnish retail chains. In response, we must accelerate our development work in this fi eld in co-operation with our suppliers and international partners. It is important that we achieve a suitable mix of retailer brands and other brands in our product ranges in line with customer needs. The fourth factor affecting our reform needs is EU enlargement on 1 May 3 2004. The level of costs is markedly lower in the new EU countries than in the current member countries, and we must take full advantage of this to further develop our purchasing channels and logistics. The fi fth fi eld of reform comprises networking, value chains and processes. This means the unbiased development of the entire value chain involving ourselves, our customer chains and other partners. Correspondingly, we must transfer from unit-based activities to network-based activities guided by customer-based consumer information. The purpose of all this is to utilise joint buying power and purchasing and logistics opportunities. We must also continue to develop and implement new operating models more rapidly than our competitors. In this work, information management and management by knowledge will be the central competitive tools and development targets. 2003 was a successful year for Inex. I wish to express my warm thanks to our loyal customers, skilled personnel and supportive partners and shareholders for these excellent achievements. Our skill-oriented foundation provides a fi rm footing for future growth. On the threshold of my retirement, I also wish to thank everybody for nearly 40 years of fruitful co-operation and wish you all the best of success in the future. March 2004 Martti Haaman
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ANNUAL REPORT 2003 INEX PARTNERS OY

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