KESKO CORPORATION STOCK EXCHANGE RELEASE ... - Euroland

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.