KESKO CORPORATION STOCK EXCHANGE RELEASE ... - Euroland

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10 was 9.6 percent more than during the corresponding period in the previous year. The Group´s operating profit was EUR 1.5 million (EUR 0.4 million). Investments totalled EUR 0.7 million. The increase in net sales were mostly attributable to Telko, a company acquired in the autumn of 2000. Other units that increased their net sales were Leipurien Tukku and the optical sector. The Tähti Optikko chain continued to strengthen its market share, as the Group´s optical sales grew by 10.1 percent. The global sales of telecommunication products slowed down, which was reflected in the Kauko East-West Division´s net sales. The decreased net sales of Kauko Electronics resulted from an over 20 percent decrease in TV sales in Finland. Consumers have postponed their TV purchases due to the expectation of digital TV programmes starting in the autumn. There have also been problems with the trade in data equipment and communicators. Sales of these product groups are expected to pick up towards the end of the year. East-West Trade, Telko and Adidas Suomi increased their operating profit the most. The Kaukomarkkinat Group´s operating profit for the whole year is expected to exceed the level of the previous year. Share and equities markets Kesko Corporation’s share capital is EUR 180,426,800, with 35.2 percent of the share capital consisting of A shares and 64.8 percent of B shares. The price of the company´s A share was EUR 16.95 at the end of 2000 and EUR 18.50 on 31 March 2001, an increase of 9.1 percent. The price of the B share was EUR 10.75 at the end of 2000 and EUR 11.48 on 31 March 2001, an increase of 6.7 percent. The HEX general index dropped during the period by 36.0 percent and the HEX portfolio index by 23.0 percent. The trading sector price index rose by 8.6 percent. The market value of A shares was EUR 587 million and that of B shares EUR 671 million, i.e. the total market value of all shares amounted to EUR 1,258 million. During the period under review, 0.5 million of Kesko’s A shares with a total value of EUR 9.2 million and 4.6 million B shares with a total value of EUR 51.2 million were traded on the Helsinki Exchanges. Kesko and the euro
11 According to its transition plan, Kesko will prepare its financial statements for 2001 in markkas and they will then be converted into euros by using a conversion rate. When the decisions on Kesko’s euro schedule were made, they were based largely on the premise that the majority of Kesko’s customers operate in Finland. During the transition period, the majority of Kesko’s purchases and sales will be made in markkas. The prices of stock items will remain in markkas until 31 December 2001. Based on the agreements made with customers, some invoicing has been carried out in euros right from the beginning of the transition period. During the transition period, the transfer to the euro has been managed by a special euro committee. The necessary information system changes have been scheduled. The Group is expected to be ready well before the changes are implemented in the early autumn of 2001. Events during the period under review A chain operation reform affecting Kesko and about 1,450 K- retailers was introduced at the beginning of 2001. Over 98 percent of the retailers approved the new chain agreement or a customer agreement. Joint operation will be intensified throughout the entire chain - in the development of chain concepts, in category management, marketing, purchasing operations and logistics. The new chain operation will significantly strengthen Kesko´s competitiveness and the K- stores´ ability to meet customer requirements in rapidly changing markets. A total of 34 retailers operating in various chains remained outside the chain operation. On 21 February 2001, Kesko sent a notice of termination to the 11 Citymarket retailers who did not sign the new chain agreement. After adopting the new system, Kesko cannot apply parallel systems. On 10 April 2001, after the period under review, Kesko Corporation was served a summons by nine Citymarket retailers to whom Kesko had given notice. The Citymarket retailers primarily demanded that Kesko pay damages amounting to approx. FIM 91 million (approx. EUR 15.3 million) for serving notice, which they claim to be contrary to contract. Kesko contests all the claims presented against it on the grounds that they are unjustified and considers that it has sufficient legal grounds to serve notice to terminate the agreements. Kesko demands that the Citymarket retailers who have taken legal actions against it shall pay full compensation for court costs and other damages arising from this operation.
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KESKO CORPORATION STOCK EXCHANGE RELEASE ... - Euroland

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