Report on 1999 Operations for the ICA Group

Report on 1999 Operations for the ICA Group Strong result and partnership with Ahold ¤ Store sales increased by 2.8% in Sweden and 5.0% in Norway ¤ Earnings before taxes increased 53% to 1,318 MSEK ¤ Earnings before interest and taxes improved 39% to 1,310 MSEK ¤ Net earnings after taxes up 62% to 917 MSEK ¤ 50/50 partnership for the ICA Group established with Ahold Summarized Financial Information 1999 Pro forma 1998 Net sales, MSEK 58,091 56,084 EBITDA, MSEK 2,316 2,007 EBIT, MSEK 1,310 942 EBIT margin, percent 2.3 1.7 Earnings before taxes, MSEK 1,318 862 Net earnings, MSEK 917 565 Earnings per share, SEK 27 17 Total assets, MSEK 23,150 23,341 Equity/assets ratio, percent 38.6 35.9 Return on capital employed, percent 13.0 9.6 Return on equity, percent 10.7 6.9 Comment by the President - 1999 has been a very important and successful year for the ICA Group. The merger between ICA and Hakon Gruppen develops very well and our financial results are strong, reflecting, among others our efficiency improvement programs. The partnership with Ahold opens entirely new doors. We become part of one of the leading global food retail networks. This will create fantastic opportunities for us in the future, says Svante Nilsson, President of ICA AB. The ICA Group 1999 ICA Handlarnas AB and Hakon Gruppen AS merged as of 1999-01-01 and together with ICA Menyföretagen and ICA Baltic form the ICA Group. The ICA Group also owns 50% of Statoil Detaljhandel. ICA is the largest retailing group in the Nordic countries with 4,600 stores in Scandinavia and the Baltics. Annual store sales amount to around 127 BSEK, incl VAT and excise taxes. The acquisition of the remaining 55% of the shares in Hakon Gruppen was completed in January 1999 through a share issue. The merger process between ICA and Hakon Gruppen has developed successfully during the year. A new group management has been appointed and common functions for, among others, sourcing and IT have been established. ICA and Statoil formed a 50/50 joint venture, Statoil Detaljhandel, operating almost 1,500 Statoil service stations in Sweden, Norway and Denmark. The transaction was completed in August 1999 and Statoil Detaljhandel is included in ICA's operations as an associated company as of 1999-01-01. During the year a new store concept for the Statoil service stations, ICA Express, has been developed and pilot stores opened. During 1999 Hakon Gruppen has acquired the hypermarket chain Maxi and reacquired the Hakon Eiendom real estate company from publicly listed Steen & Ström. These acquisitions are strategically important. Hakon Eiendom primarily owns retail space. In the Baltics several acquisitions have been made during the year, including 50% of the EKO-chain in Lithuania and one store in Estonia. In February 2000 the Interpegro-chain in Latvia was acquired. ICA Förlaget was divested during the year to ICA Förbundet for MSEK 200. In December 1999 ICA reached agreement on a partnership with the international food retailer Royal Ahold in a 50/50 joint venture. ICA was valued at 31.3 BSEK and will partner with a leading global retailer, which will strengthen the competitiveness of the ICA Group and its retailers. Future ownership of ICA will be divided as follows: ICA Förbundet 30 percent, Canica 20 percent and Ahold 50 percent. As a consequence of the transaction, ICA discontinued preparations for an Initial Public Offering in 2000. In November ICA launched a bonus program in Sweden for its ICA Customer card. The launch became an instant success and by March 2000 590.000 new cardholder applications had been received. As a result around 2.2 million households has ICA Customer cards. The Market Sweden The ICA retailers increased sales by 2.8 procent in 1999. This is somewhat lower than the increase for the sector in total which was 3.1 percent. The lower sales increase for the ICA retailers compared to the sector average primarily reflects ongoing changes in ICA's marketing and a limited number of new store openings. Discount stores and larges stores had the best sales development at ICA. Total store revenues amounted to 65.7 BSEK incl VAT. Norway Store sales for Hakon Gruppen increased by 5.0 percent, which is better than the increase for the sector in total which was approx. 2.8 %. Discount stores had the best development in the Norwegian market. Rimi had the strongest increase of Hakon Gruppen's chains. Total store revenues for Hakon Gruppen amounted to 28.8 BSEK incl VAT. Baltics ICA's stores in the Baltic countries showed strong development. The Rimi stores in Riga increased sales by 47 percent to 347 MSEK. Sales and Earnings Group sales amounted to 58,091 MSEK (56,084), an increase with 2,006 MSEK, or 3.6 procent, compared to pro forma 1998 sales. Earnings before depreciation and amortization (EBITDA) increased by 16% to 2,316 MSEK (2,007). Earnings before interest and taxes (EBIT) increased by 39% to 1,310 MSEK (942) and the EBIT margin to 2.3% (1.7%). Earnings before taxes and minority interests increased by 53 % to 1,318 MSEK (862). Excluding the capital gain on the divestiture of ICA Förlaget the result was 1,200 MSEK (862). Statoil Detaljhandel is included as of 1 January 1999 in ICA's accounts using the equity method. Net financial expenses incresaed by 59 MSEK to -145 MSEK, reflecting higher capital expenditure, the acquisition of Statoil Detaljhandel, and lower results in the treasury operation. Free cash flow from operations after capital expenditure and changes in working capital decreased to -1,215 MSEK (540). Return on capital employed improved to 13.0 % (9.6). Return on equity improved to 10.7 % (6.9). Financial Position Total assets decreased by 191 MSEK to 23,150 MSEK (23,341). The Group's cash and cash equivalents as of 31 December 1999 amounted to 1,150 MSEK (4,036). Net interest bearing debt increased to 5,710 MSEK (3,668). Shareholders' equity amounted to 8,798 MSEK (8,276). The equity to assets ratio was 38.6 % (35.9). Capital Expenditure Capital expenditure, compared to the pro forma accounts for 1998, amounted to 3,082 MSEK (1,734). The largest single capital expenditure was the investment in Statoil Detaljhandel. The Parent Company The parent company has not had any sales during the year. Earnings before interest and taxes were -58 MSEK (-40). Proposed Dividend and Annual General Meeting The Board of Directors has decided to propose the Annual General Meeting to establish the dividend for 1999 at 103:57 SEK (7:00) per share. The Annual General Meeting will be held at the China Theatre in Stockholm on 12 April 2000 at 10 AM. Stockholm 7 March 2000 ICA AB (publ) Svante Nilsson President This release has not been audited by the company's auditors. ------------------------------------------------------------ Please visit http://www.bit.se for further information The following files are available for download: http://www.bit.se/bitonline/2000/03/07/20000307BIT00990/bit0001.doc http://www.bit.se/bitonline/2000/03/07/20000307BIT00990/bit0002.pdf