Gresvig ASA

Annual report 1999 Gresvig ASA Annual report 1999

Contents This is Gresvig ASA 4 Highlights of 1999 5 Key figures 5 Directors’ report 6 Income statement 12 Balance sheet 13 Cash flow statement 14 Accounting principles 15 Notes to the accounts 16 Auditor’s report 27 Shareholder information 28 Chief executive’s statement 30 Gresvig Chain Service 32 Gresvig Chain Service – G-Sport 34 Gresvig Chain Service – INTERSPORT 35 Gresvig Goods Handling 36 Gresvig Retail 37 Definitions 38 Addresses/board 39 «Gresvig ASA will be the leading player for sports and leisure equipment, with the most attractive chain concepts and the most efficient flow of goods.»

Guttorm Bjerkeli Johansen President,Gresvig ASA

Financial calendar Report for the first quarter: 11 May 2000 Report for the first half-year: 17 August 2000 Report for the first nine months: 2 November 2000 Preliminary annual results: 28 February 2001

Financial calendar 3 GRESVIG ASA

CHAIN SERVICE GOODS HANDLING RETAIL

G-Sport and INTERSPORT make Gresvig ASA the leading company in the Norwegian market for sports and leisure equipment.The group’s core operations are This is chain service, goods handling and retailing. the Gresvig group

Gresvig ASA aims to be the leading player for sports and Gresvig Goods Handling leisure equipment, with the most attractive chain concepts This business area comprises the group’s Norwegian and the most efficient flow of goods.The company offers distribution centre and logistics function, operating under people experiences and active leisure in an environment- the SportDistribution name. SportDistribution is a pure friendly manner. Long-term relationships with consumers, logistics unit and contributes to secure, reliable and cost- chain members, suppliers, employees and partners will effective flow of goods from manufacturer to G-Sport contribute to profitability both for Gresvig’s shareholders or INTERSPORT dealer. SportDistribution has 113 and for dealers in G-Sport and INTERSPORT. employees. In Norway, the 230 dealers in the G-Sport chain have Logistics represent a critical success factor for Gresvig. about 30 per cent of the market, while the 136 dealers in The aim is to reduce logistical expenses to four per cent of the INTERSPORT chain hold roughly 18 per cent.The chain service centre revenues handled by the warehouse. INTERSPORT chain in Denmark has approximately 22 These revenues for the central warehouse at Askim came per cent of the national market. to NOK 1 265 million in 1999, while logistical expenses Gross sales revenues for the group amounted to NOK amounted to NOK 62.3 million (five per cent). 1 933 million in 1999.The group had about 900 employees (642 work/years) at 1 January 2000. Gresvig is listed on the Gresvig Retail Oslo Stock Exchange and has 746 shareholders.The group’s This business area consists primarily of the group’s own three business areas are Gresvig Chain Service, Gresvig shops in G-Sport Norway Retail, INTERSPORT Retail in Goods Handling and Gresvig Retail. Denmark and INTERSPORT in Poland. Sixteen of the group’s own G-Sport outlets are organised in G-Sport Gresvig Chain Service Norge Detalj AS.All are centrally located in the Oslo area. This business area is organised in the Gresvig Kjededrift AS INTERSPORT Retail in Denmark owns 18 shops, while company, which has been created by merging the group’s INTERSPORT Polska SP.zo.o embraced six shops and a former Norwegian chain service centres: G-Sport Norge AS chain service centre at 31 December 1999.The Gresvig and INTERSPORT AS.The central product and procurement Retail business area had gross sales revenues of NOK 665.2 function will ensure that chain members experience and million in 1999 and showed an operating loss of NOK 39.1 achieve an efficient flow of goods. In addition, the company million. It has 671 employees. embraces separate marketing departments for G-Sport and Profitability is satisfactory for all the shops in G-Sport INTERSPORT which develop and strengthen the identity Norway Retail.At 1 January 2000, Norwegian retailing of these two chains.The 1999 accounts show gross sales operations in INTERSPORT were limited to one shop in revenues of NOK 1 500 million and an operating profit of Oslo. INTERSPORT Retail in Denmark underwent a NOK 82.9 million. Gresvig Chain Service has 65 employees. substantial restructuring and cost-cutting process in 1999. In addition, Gresvig owns 59.23 per cent of the shares in the Danish chain service centre INTERSPORT Danmark AS, but votes for only 49 per cent of this stock. Gresvig’s share of the chain service centre’s 1999 profit of NOK 2.2 million is included under associated companies in the accounts.

4 This is Gresvig ASA Turnaround is yielding results

• Gresvig’s turnaround is starting to show results.The net loss for • The group’s structure has been adapted to future operations the year came to NOK 19.9 million as against NOK 179.3 million and core expertise. At 1 January 2000, it was organised in three the year before. Gross sales revenues totalled NOK 1 933 million, business areas: Gresvig Chain Service, Gresvig Goods Handling on a par with 1998 despite the sale of directly-owned shops and and Gresvig Retail.The group’s two spearheads into the consumer the fact that the INTERSPORT Danmark AS chain service centre market, G-Sport and INTERSPORT, will be further developed and is not consolidated in the 1999 accounts. their chain identities strengthened.

• Profits continued to improve for Gresvig’s two competing chains • Gresvig’s board and its largest shareholders negotiated during in Norway, G-Sport and INTERSPORT.The G-Sport Norge AS December 1999 with an international company on a voluntary and INTERSPORT AS chain service centres were merged to form cash bid to purchase all the shares in Gresvig for NOK 110 per Gresvig Kjededrift AS. Operating profit for the group’s chain share.The potential purchaser cancelled a negotiated agreement service centre came to NOK 82.9 million as against a pro forma when the Norwegian Competition Authority initiated an figure of NOK 63 million for 1998. investigation of Gresvig.

• Outside Norway, Gresvig is concentrating its operations on • The Competition Authority took steps to secure evidence at Denmark. Gresvig is the majority shareholder in the INTERSPORT Gresvig ASA and Gresvig Kjededrift AS in December 1999.This Danmark AS chain service centre.The INTERSPORT chain has 22 action was taken because the authority wished to discover whether per cent of the Danish market for sports and leisure equipment. or not any breaches had occurred with respect to earlier decisions INTERSPORT Retail in Denmark initiated a restructuring in 1999. in connection with Gresvig’s acquisition of Sport Holding AS in 1997. Gresvig is awaiting further consideration by the authority. • Shops and operations outside the core businesses have been sold or wound up. Cost-saving measures with an annual effect of • The Gresvig board believes that measures initiated and NOK 50 million were implemented in Norway, and freeing-up implemented during 1999 will restore the company to normal capital has reduced the group’s balance sheet by just over NOK and forward-looking operation. A concentration on efficient and 115 million. profitable chain operation, a commitment to selected markets and the cost savings made will be important for improved results in coming years.

Key figures for the Gresvig group (all figures in NOK) 1999 1998 1997 Average number of shares 7.7 mill. 7.6 mill. 7.5 mill. Earnings/(loss) per share (2.61) (23.46) 3.60 Cash flow per share after tax 5.83 (4.35) 10.04 Sales growth (0.7%) 20% 60% Development in results (79%) (596%) (46%) Net operating margin (0.3%) (7.8%) 3.3% Equity ratio 24.2% 24.7% 38.8% Return on equity (7.9%) (42.6%) 10.7% Return on total assets 3.9% (11.5%) 6.3% Current ratio 1.54 1.66 2.11

Highlights of 1999 5 DIRECTORS’ REPORT: Important moves for profitable operation

Prospects for profitable operation in the various business areas were analysed in early 1999, and a plan was established for implementing the changes required.The board expressed a clear ambition to restore profitable operation by disposing of areas without prospects for an adequate improvement in results. At the same time, the level of costs needed to be reduced within those parts of the group which will form the platform for the "new" Gresvig.

Photo: NPS These measures have been implemented substantially as The Gresvig group was characterised planned, but this has taken longer and cost more than expected. in 1999 by far-reaching changes in its At 31 December, the board could note that the changes in the business areas and structure. Norwegian part of the group’s business had been completed. However, further steps are still required in Denmark and Poland. In Norway, the restructuring involved the closure or sale of 18 shops in all. As a result, all but one of the outlets owned directly by INTERSPORT have been sold or closed. The whole operation in Drammen, where INTERSPORT was previously based, was wound up by integrating the warehouse function with the warehouse in Askim, while the administration joined G-Sport and the corporate management in the Oslo Havnelager building. In addition, the previously independent INTERSPORT and G-Sport chain service centres have been merged into Gresvig Kjededrift AS. Apart from reducing staff and costs, the merger and the relocation mean closer and better cooperation between the group’s different departments. Gresvig’s logistics function was also extensively rationalised through the implementation of new management systems and the closure of another outlying warehouse. Restructuring and rationalisation were paralleled by continuous work throughout the year on reducing capital tied up in stocks and accounts receivable.These items in the balance sheet have been reduced by a combined NOK 115 million.At the same time, Gresvig’s interest-bearing debt declined by NOK 10 million. Substantial changes were also made to Gresvig’s retail business in Denmark through a reorganisation of warehousing and

6 Directors’ report administrative functions.These will now be handled to a greater extent by contractors. Overall staffing has been cut from 30 to 14 people.Work on improving shop profitability will continue during 2000 with further measures. NOK 30 million in asset write-downs and provisions relating to the involvement in Poland has been charged to the group’s income statement.This reflects the board’s decision to wind up Gresvig’s Polish business. Operations in Latvia were wound up completely during 1999. A further NOK 6.8 million in costs relating to restructuring the Norwegian business has been charged to the accounts. The reorganisation has reduced the workforce by about 100 people. Overheads in the Norwegian part of the business have been cut by NOK 50 million. An overriding objective for the group’s board and administration during 1999 was to lay the basis for future profitable operation based on existing activities.This will restore freedom of action to develop the group, allowing Gresvig to play an aggressive role in the probable restructuring which faces the industry. Following the changes made, Gresvig is focusing its activities on operating the G-Sport and INTERSPORT chain service centre in Norway with associated goods handling and a reduced number of shops in the Oslo area.The retail business in Denmark will also be retained, including active ownership in INTERSPORT Danmark AS. It is particularly gratifying that the Norwegian chain service centre achieved growth and record results. At the same time, the board notes that outstanding work with the retail business has been clearly defined.

GROUP SALES AND RESULTS The group achieved gross sales revenues of NOK 1 933 million in 1999, compared with NOK 1 947 million the year before.This reduction reflects the closure or sale of businesses with 1998 revenues of NOK 118 million, and the fact that INTERSPORT Danmark AS – with 1998 revenues of NOK 101.8 million – has not been consolidated in the 1999 accounts. For the comparable entities, the group achieved an increase of NOK 127 in gross sales revenues. An operating loss of NOK 5.7 million for 1999 compares with a loss of NOK 152.4 million the year before. NOK 36.8 million in costs related to the restructuring were charged to the operating result in 1999.That compares with NOK 162.5 million in write-downs on balance sheet items in 1998. The net loss came to NOK 19.9 million as against NOK 179.3 million in 1998. NOK 19 million has been charged to the income statement in respect of operations which were closed or sold during 1999.

Directors’ report 7 Photo: NPS GROUP BALANCE SHEET are not directly comparable. Shops which remain in group Measures initiated to free up capital improved Gresvig’s liquidity ownership are starting to show satisfactory gross margins. position in 1999. A continued focus on cost-efficiency improvements will enhance The book value of equity in Gresvig ASA totalled NOK 220.5 profitability in the time to come. million at 31 December, corresponding to an equity ratio of 24.2 The group has reaped good experience from its part owner- per cent as against 24.7 per cent at the end of 1998.The group’s ship of shops together with local sports equipment dealers, and net interest-bearing debt came to NOK 484 million at 31 would not exclude the possibility that such cooperation December, compared with NOK 494 million 12 months earlier. models might be considered. Equity in the group is below the level required in the loan agreement with Union Bank of Norway.The bank and Gresvig Denmark are working on various solutions. The group’s Danish operations comprise the wholly-owned subsidiaries INTERSPORT Detail AS Denmark and Kurt Larsen Sport Holding ApS as well as a 59.23 per cent holding in BUSINESS AREAS INTERSPORT Danmark AS. Gresvig Chain Service in Norway INTERSPORT Retail in Danmark operates 18 shops and This business area embraces operation of the competing has about five per cent of the Danish market.This business area INTERSPORT and G-Sport chains. During the year, the chain also underwent substantial changes in 1999, with a reduction in service centres were merged into a single unit but with separate the workforce from 30 to 14 people and cost savings estimated marketing functions for the respective chains.The merger, and the of roughly NOK 6 million on an annual basis.The changes have move from Drammen and Askim to Oslo, made it possible to primarily affected the company’s administration and its central downsize the workforce by 26 people. warehousing and logistic functions.Tied capital was reduced by As mentioned above, warehousing and logistics functions were NOK 20 million over the year. Nevertheless, the company failed also merged into a single unit during the year.Apart from cutting to achieve satisfactory results, and work on profitability staff and costs, this move – together with other measures – improvements at the individual shops will continue in 2000. reduced the number of products in our standard range by about Operating revenues came to NOK 180 million in 1999 as 40 per cent. against NOK 176.5 million the year before, and the operating loss Revenues of NOK 1 500 million in 1999 were achieved by the was NOK 10.7 million compared with NOK 6.9 million. chain service centre as against NOK 1 450 million the year before, INTERSPORT Danmark AS, which is the Danish chain service while its operating profit was NOK 82.9 million compared with centre, achieved operating revenues of NOK 103.1 million as NOK 63 million. against NOK 101.8 million in 1998.The company’s net profit was The increase in sales reflects the group’s conscious efforts to NOK 3.8 million, compared with NOK 2.1 million the year before. improve the product range and terms for its member shops.This Gresvig owns 59.23 per cent of the capital, but votes only for 49 enhanced purchasing loyalty among members by comparison with per cent.With effect from 1999, this company is therefore not earlier years. Both chains also expanded their market share. consolidated in the group accounts.

Retailing in Norway Poland The group wholly or partly owned a total of 39 shops under the Gresvig’s wholly-owned Polish subsidiary operates six INTER- INTERSPORT or G-Sport banners at 1 January 1999. Eighteen of SPORT shops and has established a central infrastructure with these outlets were sold or closed during the year, including all but capacity for a higher volume of business.The company had one of the INTERSPORT shops.The remaining wholly-owned operating revenues of NOK 46.9 million and an operating loss shops all lie in the Oslo area, while partial ownership has been of NOK 11.1 million in 1999. retained in some outlets in other parts of Norway. During 1999, the company achieved considerable Total revenues for this business area came to NOK 438.4 improvements in its operations.The aim of this work was to lay million, compared with NOK 457.6 million the year before.The the necessary basis which would also allow financial partners to operating loss for 1999 was NOK 17.4 million as against NOK be sought for the company in order to secure resources for further 1.1 million in 1998. NOK 6.9 million was charged to the accounts development. as a result of changes to the business area in 1999, compared with It has not proved possible so far to find such a partner, and NOK 20.6 million the year before.The sharp cutback in the Gresvig acknowledges that its own financial and other resources are number of shops means that sales and results for the two years not sufficient to sustain the commitment in Poland.The involvement

8 Directors’ report Photo: Sjøberg

in Poland will therefore be wound up in the best possible way forth in order to ensure that the group maintains the strongest during 2000. possible sales platform. In addition, Gresvig will participate in more In this connection, the board has chosen to make a provision general structural changes in the sector. of NOK 30 million in the 1999 accounts Following the extensive changes made in 1999, Gresvig is well placed to maintain its strong market position and profitability in Baltic states Norway. Gresvig liquidated its business operations in Latvia during the year. Gresvig is the majority shareholder in the INTERSPORT Danmark AS chain.The INTERSPORT chain has 22 per cent of the Danish market for sports and leisure equipment.This market MARKETS is characterised by very strong competition, and we expect no Norway accounts for roughly 85 per cent of Gresvig’s overall significant growth or other substantial changes in our market terms business, and will continue to be the most important market for in Denmark. the group. The Norwegian sports equipment market is worth some NOK 7 billion annually, measured by consumer prices, and almost ORGANISATION 90 per cent of this value is covered by various chains.While the Gresvig’s corporate management and chain service centre moved G-Sport chain has just over 30 per cent of the market, the into new premises in Oslo during 1999. Central staff functions INTERSPORT chain’s share is about 18 per cent.The overall and the central warehouse remain in Askim, while operations in market grew by roughly three per cent in 1999, and our two Drammen were wound up during the year. chains both increased their share slightly with a growth of 5.3 per At 31 December, the group had the equivalent of 642 full- cent for G-Sport and four per cent for INTERSPORT. time employees compared with 794 a year earlier.The board feels Despite the dominant share of chains in the overall market, it that collaboration with the workforce and their unions has been has still not experienced the changes in retail structure seen in a very good in a demanding year with major organisational and number of other segments during recent years.This business is still personnel-related changes. characterised by a large number of small players with relatively low Sickness absence amounted to 10.3 per cent compared average profitability. It is also affected by substantial stock-related with 13.5 per cent for 1998.Twelve days off work as a result of risk as a result of fashion trends and the great fluctuations in occupational injuries were registered in 1999.The board is seasonal weather conditions. concerned to create a safe and secure working environment. Gresvig expects changes to the retail structure in coming years The transition to 2000 was accomplished without problems and intends to play an active role in this development. Important worth mentioning. elements naturally include enhancing the strength of its chains through their product ranges, terms, shop management and so

Directors’ report 9 THE ENVIRONMENT Operations by the Gresvig group have little impact on the external environment. Great emphasis is placed on ensuring that the business causes the smallest possible environmental burden. The group is concerned to make a contribution through measures which can reduce the general environmental burden attributable to goods transport. Environmental considerations get priority wherever they are compatible with cost-effective operation. At 31 December 1999, no official orders for environmental action or investment had been issued against the group.

OTHER DEVELOPMENTS The Norwegian Competition Authority took steps to secure evidence at the group in December.This action was taken because the authority wished to discover whether or not any breaches had occurred with respect to earlier decisions in connection with Gresvig’s acquisition of Sport Holding AS in 1997.The company is unaware of any such breaches in the licence terms.The board is awaiting further consideration of this issue by the authority.

SHAREHOLDERS There were no significant changes in Gresvig’s shareholder structure during 1999.The largest shareholder is Steen & Strøm ASA, with 31.4 per cent. Details of the company’s shareholders and related information are provided on page 28.

COVERAGE OF NET LOSS The parent company, Gresvig ASA, incurred a net loss of NOK 34.7 million for 1999.The following allocations are proposed by the board to cover this loss:

(figures in NOK 1 000) Transferred to uncovered loss 34 732

PROSPECTS Measures required to create a better basis for profitable operation characterised 1999. Gresvig’s Norwegian operations are solidly placed for aggressive commitment and further progress in coming years. A good basis for further improvements in operating results has been created by disposing of unprofitable directly-owned shops, merging the two chain service centres, improving the efficiency of logistics and warehousing, organisational changes and concentrating functions which need to collaborate closely under the same roof. Gresvig’s two brands, INTERSPORT and G-Sport,

10 Directors’ report Photo: NPS come well ahead of their competitors in "top of mind" surveys among consumers.The board takes the view that this lays a good basis for further growth. In terms of the market, the board is aware of the challenge presented by new electronically-based distribution channels.The Gresvig group will commit resources in the time ahead to finding its place in this picture.With its good geographic coverage and the 366 member shops in its two chains, Gresvig should have a good basis for utilising new technology. Gresvig’s board also wants to strengthen the company’s competitiveness by building clearer brand identities for the two chains. Strategic work was initiated in 1999 to strengthen the identities of G-Sport and INTERSPORT.This will become visible to consumers in 2000. The Danish business remains unprofitable, which the board finds very unsatisfactory. However, Denmark will be an important element in a possible future Scandinavian commitment. Viewed overall, the Gresvig board regards the group as well equipped today for aggressive further development, since the bulk of the Norwegian turnaround has been implemented. No conditions have arisen since 1 January which the board believes might affect the company’s income statement or balance sheet. The board confirms that the going concern assumption is realistic.

Oslo, 25 February 2000 The board of directors of Gresvig ASA

Svein Eskedal (Chairman)

Bjørn Sigurd Johansen Christian A Beck

Peter Ruzicka Dag Fossheim

Anne-Gro Omholt Guttorm B Johansen (President)

Directors’ report 11 Income statement 1.1 – 31.12

GRESVIG ASA (parent co) GRESVIG GROUP (Amounts in NOK 1 000) Note 1999 1998 1997 1999 1998 1997

OPERATING REVENUES Gross sales revenues 11, 23 - 2 344 1 134 699 1 932 600 1 947 076 1 626 432 Sales revenue reductions - - (126 490) (142 967) (121 795) (122 257) Net sales revenues - 2 344 1 008 209 1 789 633 1 825 281 1 504 175 Other operating revenues 18 118 687 151 574 103 525 118 003 114 374 138 449 Net operating revenues 118 687 153 918 1 111 734 1 907 636 1 939 656 1 642 624

OPERATING EXPENSES Cost of goods sold 1 413 2 096 810 255 1 336 984 1 379 908 1 175 555 Payroll and related expenses 12 59 390 63 363 89 436 208 238 221 871 156 528 Depreciation 2 11 333 11 839 24 218 46 217 52 107 42 207 Write-down shares/goodwill - 128 000 - - 113 000 - Restructuring expenses 17 30 000 - - 36 790 20 621 - Other operating expenses 5, 16, 19 73 259 66 348 134 763 285 118 304 551 214 442 Total operating expenses 175 395 271 646 1 058 672 1 913 347 2 092 058 1 588 733

Operating result (56 708) (117 728) 53 062 (5 711) (152 403) 53 891

FINANCIAL INCOME/EXPENSES Group contribution received 17 922 3 300---- Income from investment in associates 4 - - - 1 542 (3 092) 611 Interest received from group companies 1 550 1 322 1 531--- Other financial income 4 051 31 8 368 19 798 15 184 11 693 Financial income 16 (3 355) (16 340) (19 990) (57 823) (57 591) (26 305) Net financial items 20 168 (11 687) (10 091) (36 483) (45 499) (14 001)

Ordinary profit/(loss) before tax (36 540) (129 415) 42 971 (42 195) 197 902 39 890

Tax on ordinary result 1, 22 1 808 43 538 (7 808) 22 200 19 744 (12 865)

Profit/(loss) before minority interests (34 732) (85 877) 35 163 (19 995) (178 158) 27 025

Minority interests - - - 122 (1 126) (1 246)

Net profit/(loss) for the year (34 732) (85 877) 35 163 (19 873) (179 284) 25 779

12 Income statement Balance sheet at 31 December

GRESVIG ASA (parent co) GRESVIG GROUP (Amounts in NOK 1 000) Note 1999 1998 1997 1999 1998 1997

Trademarks - - 7 501 5 635 7 075 7 501 Deferred tax benefit 1, 22 32 010 30 132 1 740 48 066 25 183 1 740 Goodwill 2 45 390 50 525 90 107 195 753 215 547 305 027 Land, buildings and other property 2 4 560 4 702 6 904 10 726 20 141 15 166 Machinery and plant 2 6 272 7 812 40 279 31 276 42 026 73 999 Fixtures and fittings, tools, office machinery, etc 2 6 973 8 222 - 28 006 43 739 - Investments in subsidiaries 3 522 845 364 845 350 222--- Loans to group companies 6 755 7 142---- Investments in associates 4 15 000 - - 22 261 318 8 722 Loans to associate companies - - - 6 650 - - Investments in shares 4 26 26 1 202 1 769 2 995 2 490 Other receivables - 2 125 14 856 31 857 17 494 21 409 Total fixed assets 369 831 475 531 512 811 382 000 374 519 436 054

Stocks 9 - - 197 302 319 477 415 918 364 501 Accounts receivable 5, 6, 7, 9 - - 128 819 157 626 180 809 179 897 Other receivables 6, 7, 12 464 124 157 348 32 738 32 797 19 484 22 572 Shares 4 - - - 160 5 24115 901 Cash and bank deposits 137 56 30 367 17 669 29 235 56 429 Total current assets 464 261 157 404 389 226 527 729 650 688 639 299 TOTAL ASSETS 1 104 092 632 935 902 037 909 729 1 025 207 1 075 353

PAID-IN EQUITY Share capital 21 38 256 38 256 37 540 38 256 38 256 37 540 Share premium reserve 242 081 242 081 231 160 242 081 242 081 231 160 Total paid-in equity 280 337 280 337 268 700 280 337 280 337 268 700

RETAINED EARNINGS Other equity/uncovered loss 12 077 46 809 137 444 (60 751) (41 391) 137 004 Minority interests - - - 874 14 102 12 053 Total retained earnings 12 077 46 809 137 444 (59 877) (27 289) 149 057 TOTAL EQUITY 292 414 327 146 406 144 220 460 253 048 417 757

Pension liabilities 20 8 240 7 392 6 213 10 994 7 957 6 213 Deferred tax 22 - - 10 386 - - 5 465 Other provisions for liabilities 8 - - 700 700 700 700 Other long-term liabilities 7, 15 467 730 39 467 254 519 335 360 371 862 342 196 Long-term liabilities 475 970 46 859 271 818 347 054 380 519 354 574

Liabilities to financial institutions 14 285 348 87 821 77 079 166 337 193 251 105 134 Accounts payable 13 - - 29 738 36 694 67 739 80 217 Tax payable 22 156 4 633 6 250 1 904 14 764 9 073 Public duties payable 2 661 2 460 29 833 35 316 51 411 48 875 Dividend - - 11 262 - 434 11 262 Other current liabilities 10 47 543 164 016 69 913 101 963 64 041 48 459 Total current liabilities 335 708 258 930 224 075 342 215 391 639 303 021 TOTAL EQUITY AND LIABILITIES 1 104 092 632 935 902 037 909 729 1 025 207 1 075 353

Oslo, 25 February 2000 Peter Ruzicka Bjørn Sigurd Johansen Christian A Beck

Svein Eskedal Dag Fossheim Anne-Gro Omholt Guttorm B Johansen (Chairman) (President and CEO)

Balance sheet 13 Cash flow statement

GRESVIG ASA (parent co) GRESVIG GROUP (Amounts in NOK 1 000) 1999 1998 1999 1998

CASH FLOW FROM OPERATIONS Profit/(loss) before tax (36 540) (129 415) (42 195) (197 902) Taxes paid (70) (6 250) 230 (9 073) Gain/(loss) on sale of fixed assets - - 7 107 - Ordinary deprecation 11 334 11 839 46 217 52 904 Write-down of fixed assets - 128 000 - 121 000 Changes in inventories - 197 302 96 441 (51 417) Changes in accounts receivable - (19 072) 23 183 5 595 Changes in accounts payable - (29 738) (31 045) (7 151) Changes in other accrual accounting items, etc 10 226 35 268 (11 423) (4 839) Net cash flow from operations (15 050) 187 934 88 515 (90 883)

CASH FLOW FROM INVESTMENTS Cash provided by sales of fixed assets 260 100 981 13 493 11 271 Cash applied to investment in fixed assets (3 528) (6 235) (9 685) (101 904) Cash provided by sales of shares and interests in other companies - (199 927) 1 226 21 872 Cash applied to investments in shares, etc (158 000) - - (3 444) Change in investment in associate companies (15 000) - (28 593) - Change in minority share - - (13 106) - Net cash flow from investments (176 268) (105 181) (36 665) (72 205)

CASH FLOW FROM FINANCING Reduction of long-term debt - (201 255) (41 348) - Reduction of current debt - (29 833) (26 914) - Addition to long-term debt 173 477 - 4 846 117 515 Addition to current debt - 114 348 - 18 003 Group contribution paid/received 17 922 3 300 - - Cash provided by increase in equity - 11 638 - 11 638 Dividend paid - (11 262) - (11 262) Net cash flow from financing 191 399 (113 064) (63 416) 135 894

Net change in cash and cash equivalents 81 (30 311) (11 566) (27 194) Cash and cash equivalents at 1 Jan 99 56 30 367 29 235 56 429 Cash and cash equivalents at 31 Dec 99 137 56 17 669 29 235

14 Cash flow statement General accounting principles

GENERAL The Gresvig Invest AS subsidiary owns shares in G-Sport Rune AS The annual accounts have been prepared in accordance with at Strømmen.These shares are not consolidated in the group the Norwegian Accounting Act of 1998 and generally-accepted accounts since the aim is to sell them to new operators in the Norwegian accounting principles.The company has revised its relatively near future.The shares are included at cost price. accounting principles to accord with the Accounting Act of 1998. The changes made are described in a separate note. CRITERIA FOR REVENUE RECOGNITION Revenues are recognised when they are earned. CONSOLIDATION PRINCIPLES The group accounts embrace Gresvig ASA and all subsidiaries in CASH DISCOUNTS which Gresvig ASA owns more than 50 per cent of the voting Cash discounts on sales are recorded as a reduction in sales shares and/or companies in which it has a dominant influence, revenues, while cash discounts on purchases are recorded as and include the following wholly-owned subsidiaries: a reduction in the cost price of the goods.

• Gresvig Kjededrift AS CLASSIFICATION • INTERSPORT Detalj AS Assets which are to be held or used on a long-term basis as well • INTERSPORT Detail AS, Denmark as receivables falling due longer than 12 months from the end of • Kurt Larsen Sport Holding ApS, Denmark the accounting year are classified as fixed assets. Other assets are • INTERSPORT Polska SP.zo.o classified as current, recorded at the lower of cost price and actual • Sport Holding AS value.The total outstanding balance on the group’s loans is • Gresvig Service AS recorded under long-term liabilities – in other words, the first • Gresvig Invest AS 12 month’s instalment on long-term loans is not separated out as • Gresvig Distribusjon AS a current liability.The 1998 figures have been revised accordingly. Other liabilities are classified as current. Shares in some group companies have been transferred from subsidiaries to Gresvig ASA.These companies have accordingly ASSETS AND LIABILITIES IN FOREIGN CURRENCY become directly-owned subsidiaries. Monetary items denominated in foreign currencies are translated Internal revenues and inter-company balances have been at the exchange rate on the balance sheet date. eliminated in the group accounts. Similarly, internal gains in stocks have been eliminated. Shares in subsidiaries have been eliminated STOCKS in accordance with the purchase method. Differences between the Stocks are recorded at the lower of cost price or expected net purchase price for shares in the subsidiaries and the book value realised value. of net assets at the time of purchase have been analysed and allocated to the relevant assets.The portion of the excess purchase TANGIBLE FIXED ASSETS price which cannot be allocated to purchased assets is classified Tangible fixed assets are recorded in the balance sheet at historical as goodwill and depreciated over its expected economic lifetime. cost less accumulated straight-line depreciation.Write-downs to Holdings in associated companies in which the group has a actual value are made when the fall in values is expected to be significant interest (20-50 per cent) are treated/recorded in lasting.Tangible fixed assets are depreciated by the straight-line accordance with the equity method. method over the expected economic lifetime of the asset at the INTERSPORT Danmark AS, the Danish chain service centre, following rates: has been included in 1999 as an associate company. It was consolidated into the accounts in the two preceding years. Gresvig • Vehicles 15-25% ASA owns 59.23 per cent of the shares, but votes for only 49 • Machinery, furniture and fixtures 20-25% per cent.The group had strategic plans to change this ownership • Goodwill 7-20% structure, but a reassessment of these has resulted in classification as an associate. Historical figures have not been revised, but the Gains on sales of fixed assets are recorded as other operating company made the following contribution to results in the group revenues, and losses as operating expenses. accounts for 1998 and 1997:

(Amounts in NOK 1 000) Gr sales rev Pre-tax profit 1998 101.8 3.7 1997 59.3 3.9

Accounting principles 15 PENSION LIABILITIES in the new Accounting Act, net deferred tax benefit is recorded in Gresvig ASA has a collective pension plan with a life insurance the balance sheet. company for its employees. In addition come pension plans for some employees which are financed from operations.These CASH FLOW STATEMENT pension plans are accounted for in accordance with the Norwegian The cash flow statement has been prepared in accordance with Accounting Standard for Pension Costs.This standard requires the the indirect method. Liquid assets include cash and bank deposits. company’s pension plans to be treated as defined benefit plans. Pension liabilities are estimated at the present value of future MAJOR EVENTS OF THE YEAR pension benefits earned at 31 December. Future pension benefits A decision was taken at the beginning of 1999 to merge the are calculated on the basis of estimated salary at the time of group’s two Norwegian chain service centres, INTERSPORT AS retirement. Pension funds are assessed at expected market value and G-Sport Norge AS. Shares in INTERSPORT AS were at 31 December. Net pension liabilities, adjusted for unamortised transferred from Sport Holding AS to Gresvig ASA at their actual estimated differences, are recorded as long-term debt. Net pension value before the merger took place.At the merger date, the shares expenses for the period are recorded in the income statement as in both companies were consequently owned by Gresvig ASA.As a payroll and related expenses.The impact of changes to the pension result, this operation was a direct merger of two wholly-owned plans is allocated over the remaining earnings period.The following subsidiaries with a pooling of interests for accounting purposes. assumptions were used in the calculation: After all creditor deadlines had expired, the merger was implemented towards the end of the year but with accounting Discount rate 7.0% effect from 1 January 1999. Sport Holding AS will be liquidated Pay adjustments 3.3% in 2000. Pension regulation 2.5% During the year, it was decided to sell/close the operational Voluntary termination 1.5% units owned by INTERSPORT Detalj AS in Norway.At 31 Expected yield 7.0% December 1999, one operational unit was left in INTERSPORT Detalj AS, namely INTERSPORT at Byporten in Oslo. DEFERRED TAX/DEFERRED TAX BENEFIT In the second half of 1999, stocks held by the chain service Deferred tax liability is calculated on the basis of temporary centres were concentrated under a single roof at Askim.This differences between book and tax values at 31 December.A achieved the effect planned when the acquisition was made in nominal tax rate of 28 per cent is applied in Norway, and national 1997. Bicycles are still stored outside the central warehouse, with tax rates in other countries.Tax expenses in the income statement the whole logistical function for this product category assigned to include taxes payable as well as change in deferred tax. As specified a third party.

Notes to the accounts

NOTE 1 – Changes in accounting principles,etc

With effect from 1 January 1999, the group adopted new accounting principles as specified in the Norwegian Accounting Act of 1998.The effects of the new principles on equity and results for 1998 are:

(Amounts in NOK 1 000) Equity 1.1.99 Result-98 Deferred tax benefit (on uncovered loss) 25 183 25 183

Comparative figures in the balance sheet have been revised in accordance with the new principles.

16 Notes to the accounts NOTE 2 – Tangible fixed assets Vehicles/ Buildings/ (Amounts in NOK 1 000) machinery/furniture fixtures and fittings Total Goodwill PARENT COMPANY Cost price 1 Jan 99 33 982 5 609 39 591 85 416 Additions 3 019 509 3.528 - Disposals at cost - 261 261 - Cost price 31 Dec 99 37 001 5 857 42 858 85 416 Accumulated depreciation 23 756 1 298 25 054 40 026 Accumulated write-downs ---- Book value 31 Dec 99 13 245 4 559 17 804 45 390 Depreciation for the year 5 807 391 6 198 5 135 Write-downs for the year ----

GROUP Cost price 1 Jan 99 163 554 23 558 187 112 401 033 Additions 6 081 1 968 8 049 1 636 Disposals at cost 6 436 8 136 14 572 6 487 Cost price 31 Dec 99 163 199 17 390 180 589 396 182 Accumulated depreciation 98 281 6 663 104 944 79 430 Accumulated write-downs - - - 121 000 Book value 31 Dec 99 64 919 10 726 75 645 195 753 Depreciation for the year 26 000 1 790 27 790 18 427 Write-downs for the year ----

NOK 6 million of the NOK 8 million in additions for the year through investment (excluding goodwill) represents IT investments at Gresvig ASA and Gresvig Kjededrift AS. In addition, roughly NOK 1.5 million was invested in buildings fixtures and fittings in Poland. NOK 11.2 million of the NOK 14.5 million in disposals for the year relate to the fact that INTERSPORT Danmark AS is not consolidated in 1999.The group’s passenger cars/goods vehicles are primarily leased on three-year contracts. NOK 2.1 million in rental was charged to the accounts in 1999. Goodwill added in 1998 refers to small changes in directly-owned shops, while disposals represent the sale of retail units. Capitalised goodwill has arisen historically through the acquisition of operational units, primarily retail outlets. Goodwill arising in this way is considered to be strategic in that it gives the group a dominant and substantial position in specific market segments and will be significant for a long time. Goodwill established through the acquisition of retail units has been allocated partly to operation of the chain service centre, since the acquisition also gives this part of the business market power.The depreciation period was assessed in 1996 at 15 years, and the remaining lifetime is about 11 years.

Goodwill in the group is allocated to the following business areas: (Amounts in NOK 1 000) Balance 1999 Chain Service 113 792 Retail 81 961 Total 195 753

NOTE 3 – Shares/interests in subsidiaries Ownership/ Book (Amounts in NOK 1 000) voting share Number Par value value Gresvig Kjededrift AS 100% 11.9 m 100 308 455 Sport Holding AS 100% 11.4 m 7.50 184 636 Kurt Larsen Sport Holding ApS 100% 125 1 000 29 550 INTERSPORT Detalj AS 100% 13 000 1000 0 INTERSPORT Detail AS Denmark 100% 16 000 1000 0 INTERSPORT Polska SP.zo.o 100% - - 0 Gresvig Service AS 100% 100 1 000 104 Gresvig Invest AS 100% 50 1 000 50 Gresvig Distribusjon AS 100% 50 1 000 50 Total - - - 522 845

Gresvig ASA has provided guarantees for certain of its subsidiaries.The most significant in this context is a guarantee of USD 4 million for INTERSPORT Poland’s working capital facility with a Polish bank. In addition come certain rent guarantees for retail premises.

Notes to the accounts 17 NOTE 4 – Shares/interests in other companies

The company held the following shares at 31 December 1999:

(Amounts in NOK 1 000) Ownership Share Number Par value Book value G-Sport Rune AS 40% 40% 160 1 000 160 Total current holdings ----160

INTERSPORT International Corp. ----315 *) INTERSPORT Danmark AS 59.2% 49% - - 18 942 *) INTERSPORT Morenen AS 34% 34% 350 1 000 640 *) G-Sport Amanda AS 33% 33% 263 1 000 98 *) IS Sjølyst AS 50% 50% 750 1 000 236 *) G-Sport Bergen AS 49% 49% 1470 1 000 2 017 *) G-Sport Kristiansand AS 34% 34% 13630 10 1 568 *) IS Sentrum II ANS 34/92 34/92 34 - (1 239) Other shares/bonds ----1 454 Total long-term ----24 031 Total shares/securities ----24 191

*) Of which shares in associated companies: Group’s valuation 31 Dec 98 5 630 Added 1999 13 544 Restructuring effect 1999 1 546 Share of 1999 results 1 542 Group's valuation 31 Dec 99 22 262

The addition in 1999 is due almost entirely to the change in status from consolidated to associated company for INTERSPORT Danmark AS at 1 January 1999. Shares are recorded in the balance sheet at the lower of historical cost and actual value.

NOTE 5 – Accounts receivable

Accounts receivable for the group are recorded at nominal value less a provision for bad debts of NOK 17.2 million, as against NOK 22.6 million in 1998.

Specification of bad debts – group: (Amounts in NOK 1 000) 1999 1998 Actual losses 15 522 9 621 Change in provision (7 411) 11 703 Loss recorded in the accounts 8 111 21 324

NOTE 6 – Receivables falling due in more than 12 months 1999 1998 Accounts receivable 7 585 2 533 Other receivables 8 172 3 419

18 Notes to the accounts NOTE 7 – Intragroup accounts

Gresvig ASA had the following accounts with its subsidiaries at 31 December 1999: Current Long-term (Amounts in NOK 1 000) Receivables liabilities liabilities Gresvig Kjededrift AS 336 754 3 438 - G-Sport Norge Detalj AS 69 269 - - INTERSPORT Detalj AS 24 160 - - INTERSPORT Detail AS, Denmark 17 801 - - Kurt Larsen Sport ApS 894 - - INTERSPORT Polska SP.zo.o 19 439 - - Gresvig Service AS 1 670 - - Gresvig Distribusjon AS 13 289 - - Sport Holding AS - - 162 861 Total 483 276 3 438 162 861

The group had the following accounts with its associated companies at 31 December 1999: Current Long-term (Amounts in NOK 1 000) Receivables liabilities liabilities INTERSPORT Danmark AS 626 3 268 - INTERSPORT Morenen AS 81 - - INTERSPORT Sjølyst AS 328 - - G-Sport Amanda AS 1 654 - - G-Sport Bergen AS 6 061 - - G-Sport Kristiansand AS 1 911 - - Total 10 661 3 268 -

NOTE 8 – Guarantee liabilities

The group has provided security for bank overdraft facilities and certificate loans as well as for leases with chain members. A provision of NOK 700 000 – unchanged from 1998 – has been made for possible losses related to these commitments.

NOTE 9 – Mortgages

Mortgage bonds have been issued to the company’s banks as security for its overdraft facilities and debts secured by mortgage. The total nominal value of these bonds is NOK 2 201 million, including NOK 2 000 million in bonds held by Union Bank of Norway, the group’s principal banker.

Mortgages: Accounts (Amounts in NOK mill) Inventory receivable Leases Total Nominal value mortgage bonds 1 201 1 000 - 2 201 Book value pledged assets 232.3 247.0 - 479.3 Book value mortgage debt - - - 390.3 Bank overdraft facilities - - - 379.0

Notes to the accounts 19 NOTE 10 – Significant lease agreements

(Amounts in NOK 1 000) Number Term Annual rent Own operational sites: Norway: Central facility Askim 1 12 yrs 13 500 Central facility Lier 1 1 yrs 8 500 Offices Oslo Havnelager 1 5 yrs 3 230 Own stores G-Sport 23 1-5 yrs 26 370 Own stores INTERSPORT 1 5 yrs 3.150 Sub-lettings 6 1-7 yrs 5.800 Denmark: Own stores INTERSPORT 17 1-7 yrs 13 400 Poland: Own stores INTERSPORT 8 1-9 yrs 8 720

NOTE 11 – Sales revenues

(Amounts in NOK 1 000) 1999 1998 By business area: Chain service centres 1 535 1 554 Shops 662 659 Elimination (264) (266) Group 1 933 1 947

By country: Norway 1 938 1 908 Denmark 180 278 Poland 79 27 Elimination (264) (266) Group 1 933 1 947

NOTE 12 – Remuneration

(Amounts in NOK 1 000) 1999 1998 Pay 166 605 178 699 National Insurance contributions 20 035 22 743 Pensions expenses 7 579 4 902 Other remuneration 14 019 15 527 Total 208 238 221 871

Average number of work-years 642 794

Remuneration to leading personnel: President Directors Pay 1 659 380 Loans/interest rate 1 399/0% Security

Bonus schemes which depend on the financial results achieved are operated for a substantial number of employees in the group. Subject to specified conditions, the president is entitled to a severance payment equivalent to 2.5 times his annual salary.

20 Notes to the accounts The group has provided loans to its employees, which totalled NOK 5 674 000 at 31 December 1999. Of this sum, NOK 5 580 000 has been loaned to three senior employees; NOK 1 399 000 to president and CEO, NOK 2 401 000 to executive vice president and NOK 1 780 000 to the general manager, Gresvig Kjededrift AS.The loans were provided under contracts of employment. It had subsequently been established that the purpose of these loans conflicts with some of the provisions of the Joint Stock Companies Act.These loan arrangements have now been discontinued. An option programme for a number of senior employees of the group was initiated in September 1999.The annual general meeting in April 1999 authorised a capital expansion by issuing up to 500 000 shares for employees.The programme is intended to run over three years, with a new agreement concluded each year. When the programme began in the autumn of 1999, option agreements were concluded with 39 people embracing a total of 188 000 shares at an issue price of NOK 75.The market price at that time was NOK 77, and had reached NOK 87 at 31 December 1999. Under these agreements, the options can be exercised over a three-year period, with the earliest opportunity being October 2000 for one-third of the shares involved. The chief executive owns 13 900 shares in the company, and director Peter Ruzicka owns 2 700.The chief executive and the chairman have purchased options in the market for NOK 100 000 each.

Fees for the group auditor, Deloitte & Touche: (Amounts in 1 000 NOK) Gresvig ASA Group Audit fees 264 1 027 Consultancy fees 330 330

NOTE 13 – Financial instruments – off balance sheet

The company held purchase agreements/forward contracts at 31 December 1999 for hedging future commodity purchases in equivalent currencies and at fixed payment dates.The income/expense is accrued and classified in the same manner as the corresponding balance sheet items.

Contracts all fall due during the first half of 2000 and total: (Amounts in whole NOK 1 000) USD 5 000 equalling NOK 39 765 EUR 5 100 equalling NOK 42 478

NOTE 14 – Bank deposits/overdraft facilities

The group has no restricted funds related to employee payroll tax withholding. Bank guarantees have been given to the respective local authorities for the correct payment of these taxes.

Credit facilities at 31 December 1999: Gresvig ASA NOK 310 million INTERSPORT Retail Denmark DKK 30 million INTERSPORT Poland USD 4 million

NOTE 15 – Long-term liabilities

Liabilities falling due more than five years after 31 December: Total (Amounts in NOK 1 000) 1999 1998 Financial institutions 304.6 335.8 Other long-term liabilities 8.6 7.7

Gresvig ASA has long-term loans totalling NOK 268.8 million with Union Bank of Norway, with NOK 30 million in annual instalments and an average interest rate which is currently seven per cent per annum. The company also has a long-term loan with the Uni bank in Denmark, taken out in 1998 with a nominal value of DKK 33 million for 10 years without instalments and an average interest rate which is currently 4.7 per cent per annum. Certain requirements for the group’s results and balance sheet are set by the loan agreement with Union Bank of Norway. This year’s results breach some of these conditions. The shop computer system for G-Sport stores has been financed through a long-term leasing/credit agreement over five years. Both investment and liability are included in the company’s balance sheet and the costs will be reflected as depreciation and financial expenses. This computer system is sub-leased to chain members on normal commercial terms, and will be sold to members when the lease expires.

Notes to the accounts 21 NOTE 16 – Composite items

(Amounts in NOK 1 000) 1999 1998 Other operating expenses group: Housing expenses 110.4 99.8 Advertising expenses 74.1 77.2 Administration expenses 92.5 106.2 Bad debts 8.1 21.3 Total 285.1 304.5

Financial expenses group: Unrealised foreign exchange losses 5 222 4 111 Realised foreign exchange losses 1 404 4 071 Interest payments to financial institutions 36 652 25 919 Other interest expenses 13 426 21 569 Other financial expenses 1 119 1 922 Total 57 823 57 591

Other operating expenses parent: Housing expenses 20.7 19.3 Advertising expenses 1.1 1.0 Administration expenses 52.0 54.5 Bad debts 12.9 8.5 Other central expenses (13.5) (17.0) Total 73.2 66.3

Financial expenses parent: Unrealised foreign exchange losses 1 211 3 207 Realised foreign exchange losses 250 Interest payments to financial institutions 407 3 872 Other interest expenses 1 629 8 244 Other financial expenses 109 767 Total 3 356 16 340

NOTE 17 – Restructuring/sales/closures

Extensive closures/sales of retail units were implemented in the INTERSPORT Detalj AS and G-Sport Norge Detalj AS operating companies during 1999. Provisions for restructuring were made in other units.These transactions have incurred net expenses of NOK 36.8 million in the fiscal year, which derive from:

(Amounts in NOK 1 000) INTERSPORT Retail 4 956 G-Sport Norge Retail 1 834 INTERSPORT Poland 30 000

NOTE 18 – Major individual transactions

Internal transfers of shares in subsidiaries and associated companies were made within the group during 1999.This relates to shares in INTERSPORT Danmark AS, in addition to shares in the wholly-owned companies INTERSPORT AS, INTERSPORT Detalj AS, INTERSPORT Detail AS in Denmark and INTERSPORT Polska SP.zo.o. All these transfers have occurred from Sport Holding AS to Gresvig ASA. The transfers were made at actual value, totalling NOK 173 million.

22 Notes to the accounts NOTE 19 – Related parties

The group leases premises from its largest shareholder, Steen & Strøm ASA.These leases embrace offices in the Oslo Havnelager building and shops in three shopping centres.They are based on normal commercial terms, and annual rent payments total about NOK 6.7 million.

NOTE 20 – Pensions

The group's insurance plan financed from operations covers six people.The funded pension plan includes 214 employees and 18 pensioners.

(Amounts in NOK 1 000) 1999 1998 Net pension expenses for the period: Current year’s pension earnings 3 350 2 970 Interest expenses 1 198 618 Expected return on pension assets (637) (384) Net amortisation 966 (285) Net pension expenses 4 877 2 919

Reconciliation of pension liabilities and pension funds against the amount recorded in the balance sheet: Projected benefit obligations (at net present value) 25 093 21 357 Pension fund at expected market value (10 669) (9 191) Net pension liability before actuarial loss 14 424 12 166 Unrecognised net actuarial loss (3 430) (4 209) Accrued pension liability 10 994 7 957

NOTE 21 – Equity

The group's share capital consists of 7 651 181 shares at NOK 5.00 each, all in the same share class. All shares carry the same voting rights.The company’s 20 largest shareholders and its Risk regulation are listed under shareholder information.

Share Other (Amounts in NOK 1 000) capital equity Total PARENT COMPANY: Equity 1 Jan 99 38 256 258 758 297 014 Revision 1 Jan - 30 132 30 132 Share issues --- Net profit/(loss) for the year - (52 654) (52 654) Group contribution received - 17 922 17 922 Dividend --- Equity 31 Dec 99 38 256 254 158 292 414

GROUP: Equity 1 Jan 99 38 256 176 417 214 673 Revision 1 Jan - 38 375 38 375 Share issues --- Net profit/(loss) for the year - (19 873) (19 873) Dividend --- Change in minority/currency - (12 715) (12 715) Equity 31 Dec 99 38 256 182 204 220 460

Notes to the accounts 23 NOTE 22 – Taxes

GRESVIG ASA: (Positive figures represent tax income. Figures in brackets represent a tax expense.)

Tax expenses for the year are calculated as follows: (Amounts in NOK 1 000) 1999 Tax payable (70) Change in deferred tax 1 878 Effect of changes in tax rules 0 Tax on ordinary result. 1 808

Reconciliation from nominal to actual tax rates: 1999 Profit/(loss) before taxes (36 540) Expected income tax at nominal rate (28%) 10 231

Tax effect of the following items: Non-deductible expenses 0 Tax-free revenues 0 Dividend effect 0 Loss for the year without deferred tax benefit (8 400) Change in downgrading of deferred tax 0 Other items (23) Tax expense 1 808 Effective tax rate 4.9 %

1999 1998 Specification of tax effect of temporary differences in uncovered loss: Benefit Liability Benefit Liability Tangible fixed assets 544 - - 1 092 Intangible fixed assets - 32 970 - 32 783 Financial fixed assets 128 000 - 128 000 - Stocks ---- Receivables 21 439 - 8 500 - Investments ---- Current liabilities ---- Long-term liabilities ---- Commitments 8 240 - 7 392 - Loss carried forward 6 067 - 14 596 - Total 164 290 32 970 158 488 33 875

Deferred tax 36 770 - 34 892 - Unrecorded deferred tax 4 760 - 4 760 - Net deferred tax, balance sheet 32 010 - 30 132 -

At 31 December 1999, the group had a loss of NOK 6 067.

Losses carried forward lapse in the following years: Year 2000 - Year 2001 - Year 2002 - Year 2003 - Year 2004 - After 2004 6 067 Total 6 067

24 Notes to the accounts GROUP: Tax expenses for the year are calculated as follows: (Amounts in NOK 1 000) 1999 Tax payable 230 Change in deferred tax 21 970 Effect of changes in tax rules 0 Tax on ordinary result. 22 200

Allocation of tax expense between Norway and abroad: Norway Abroad Tax on ordinary result 21 877 323

Reconciliation from nominal to actual tax rates: 1999 Profit/(loss) before taxes (42 195) Expected income tax at nominal rate (28%) 11 815

Tax effect of the following items: Non-deductible expenses (11) Goodwill depreciation (1 970) Share of profit associated companies 460 Loss for the year without deferred tax benefit (17 592) Change in downgrading of deferred tax 31 483 Other items (1 985) Tax expense 22 200 Effective tax rate 52.6 %

1999 1998 Specification of tax effect of temporary differences in uncovered loss: Benefit Liability Benefit Liability Tangible fixed assets 18 784 - 11 324 - Intangible fixed assets - 52 359 - 46 615 Financial fixed assets 112 442 - 0 - Stocks 21 534 - 29 648 - Receivables 10 756 - 13 894 - Investments ---- Current liabilities 3 914 - 9 040 - Long-term liabilities ---- Commitments 10 994 - 7 727 - Loss carried forward 108 466 - 101 138 - Total 286 890 52 359 172 771 46 615

Deferred tax 65 669 - 35 324 - Unrecorded deferred tax 17 603 - 10 140 - Net deferred tax, balance sheet 48 066 - 25 184 -

Deferred tax benefits on losses in foreign units have not been stated in the balance sheet. At 31 December 1999, the group had a loss of NOK 45 599.

Losses carried forward lapse in the following years: Year 2000 - Year 2001 - Year 2002 - Year 2003 - Year 2004 - After 2004 45 599 Total 45 599

Notes to the accounts 25 NOTE 23 – Business areas Net operating Operating (Amounts in NOK 1 000) revenue result 1999 G-Sport Chain Centre 943 592 65 065 INTERSPORT Chain Centre 415 277 17 795 G-Sport Retail 365 102 1 797 INTERSPORT Retail 74 726 (19 152) INTERSPORT Retail Denmark 181 017 (10 681) INTERSPORT Poland 46 387 (11 102) Group items, eliminations (118 465) (49 433) Gresvig group 1 907 636 (5 711)

1998 G-Sport Chain Centre 911 948 12 976 INTERSPORT Chain Centre 417 459 (23 701) G-Sport Retail 409 061 22 021 INTERSPORT Retail 73 703 (17 971) INTERSPORT Retail Denmark 176 702 (9 171) INTERSPORT Poland 25 991 (11 212) Group items, eliminations (75 208) (125 345) Gresvig group 1 939 656 (152 403)

Specified operating results are based on the official accounts of the respective companies – in other words, after administrative expenses from parent company Gresvig ASA have been debited.

26 Notes to the accounts Auditor’s report 1999

Auditor’s report 27 Share price will reflect asset value

Gresvig ASA is concerned to maintain a good dialogue with its shareholders, potential investors, analysts, stockbrokers and financial markets in Norway and abroad.

The aim is to ensure that the share price reflects the association place no restriction on the number of shares which underlying value of the group by making all price-relevant may be owned or voted by a single shareholder. information available to the market. In December 1999, an international company Dividend policy negotiated with Gresvig’s largest shareholders and the Dividend policy has a high priority in Gresvig's overall and financial board over making a voluntary cash bid for all the shares strategies. in Gresvig at a price of NOK 110 per share.The potential The Gresvig board's long-term objective is to pay a dividend buyer cancelled the agreement on 15 December after which corresponds to 30-50 per cent of net profit for the year. the Norwegian Competition Authority initiated an However, the board is unable to propose a dividend for 1999 investigation of Gresvig with reference to the competitive on the basis of the results achieved by the group. position in the domestic market for sports and leisure equipment.The share price on the final day of trading on Risk regulation the Oslo Stock Exchange in 1999 was NOK 87. Risk regulation per share at 1 January 2000 is put at NOK 0.The historical risk amounts since the company secured its listing on the Share capital Oslo Stock Exchange have been: Gresvig ASA had a share capital of NOK 38 255 905 at 1 January 1995: (NOK 2.51) 31 December 1999, divided into 7 651 181 shares with a 1 January 1996: NOK 4.83 nominal value of NOK 5 each.The company was quoted 1 January 1997: NOK 5.70 on the Oslo Stock Exchange for the first time on 2 May 1 January 1998: NOK 3.27 1994. 1 January 1999: NOK 2.07

Option schemes Share price The Gresvig board wishes to ensure that management’s The Gresvig share performed better than the Oslo Stock primary focus is on achieving the company’s goals. Against Exchange’s all-share index during 1999. At 1 January 1999, this background, the annual general meeting in 1999 the share price was NOK 47. It had risen to NOK 87 at authorised the board to issue up to 500 000 new shares 31 December – an increase of 85 per cent over the year. for employees. A total of 188 000 options – in other The Oslo Stock Exchange’s all-share index rose by 45.54 words, the right to purchase a corresponding number of per cent over the same period. shares – were issued in 1999 at a price of NOK 75 per The highest price of NOK 92.50 for the Gresvig share was share.The first opportunity to exercise these options will attained on 7 December 1999, while the low point for the year be 1 October 2000.This long-term incentive scheme was NOK 40 on 9 and 18 February.The company had a stock embraces 39 senior and middle managers in the group. market value of NOK 665 million at 31 December 1999. Experience from this allocation and progress with results will be taken into account by the board when determining Investor relations conditions for the remaining share options – up to Information on the company is published through interim and 312 000 – available for allocation in 2000 and 2001. annual reports, and through presentations to investors, analysts and financial communities. Annual or quarterly accounts are Voting rights/restrictions on ownership normally published about six-seven weeks after the end of the Gresvig has only one category of share. Each share carries relevant period, and in accordance with the regulations governing one vote at the general meeting.The company's articles of listed companies.

28 Shareholder information Foto: NPS

Registry of securities and registered Shareholders enterprise numbers Gresvig had 746 shareholders at 31 December 1999, as against 571 The Gresvig share is registered in the Norwegian Registry of at 1 January.The 20 largest shareholders owned 5 810 976 shares, Securities (VPS) under the number ISIN NO 000 3046401, with corresponding to 75.94 per cent of the share capital. Foreigners held Union Bank of Norway as the account manager. Gresvig's registered 16.21 per cent of the shares. enterprise number is 937 905 645. Its ticker code on the Oslo Stock Exchange is GRE.

Shareholder information Shareholder structure Owners by size at 31 December 1999: Shareholders Number of shares Shareholders Percentage 1-50 30 0.01 The largest shareholders in Gresvig at 31 December 1999: 51-100 68 0.08 Shareholder No of shares Percentage 101-1000 395 2.20 Steen & Strøm Invest 2.403.867 31.41 1001-10 000 191 8.97 Storebrand Livsforsikring 898.700 11.74 10 001 – 100 000 53 22.34 Over 100 000 9 66.38 Bank of New York 540.744 7.06 Norgesinvestor Verdi 300.000 3.92 Key share-related figures 1999 1998 1997 1996 1995 Varner Finans AS 295.400 3.86 Earnings (loss) per share (NOK) (2.61) (23.46) 3.60 8.61 10.70 Storebrand AMS 242.800 3.17 Dividend per share (NOK) 0 0 1.50 2.00 5.00 Morgan Guaranty Trust 143.125 1.87 Pay-out ratio (%) - - 43.5 23.2 46.7 Share price at 31 Dec (NOK) 87 47 88 103 96 Bank of New York 135.086 1.76 Verdipapirfondet AVA 119.200 1.55 Royal Trust Corp of Can 82.120 1.07 Development of the share price Terra Vekst 80.000 1.04 4 Jan 1999 – 25 Feb 2000 Opplysningsvesenets Fond 67.668 0.88 Storebrand Skadeforsikring 65.400 0.85 Gresvig share – – Oslo Stock Exchange all-share index 100 1500 Storebrand Aksje Innl 65.250 0.85 90 1400 Skandinaviska Enskilda 64.000 0.83 80 1300 Verdipapirfondet AVA 64.000 0.83 70 1200 Thomas Fearnley 63.400 0.82 60 1100 Chase Manhattan Bank 62.316 0.81 50 1000 Storebrand ASA 59.900 0.78 40 900 Bank of New York 58.000 0.75 04.1.99 25.2.00

Shareholder information 29 Profitable operation – more important than higher market share

• Strategic steps have been taken to focus been eliminated. Shops and operations outside the core the Gresvig group. business have been sold or closed. Overall, measures • The group’s structure has been tailored implemented to focus the Gresvig group’s operations to future operations and the core business. have reduced costs in Norway by NOK 50 million on an • The turnaround in 1999 is beginning to annual basis. show positive results. The group’s core expertise is reflected in its new structure with three business areas: Gresvig Chain Service, A year of hard work in 1999 followed on from the Gresvig Goods Handling (SportDistribution) and Gresvig acquisitions and international expansion of 1997 and Retail. the first half of 1998.And 2000 will be a year of further improvement through enhanced results for both the A single chain service centre: Gresvig Kjededrift AS Gresvig group and the chain members in G-Sport and has been created by merging the chain service centres INTERSPORT.Operations will be driven by tougher demands for G-Sport and INTERSPORT in Norway into a single for earnings on a daily basis, rather than by an endless company, and concentrating this under one roof.A common struggle over increased market share.We are working product and procurement organisation increases economies consciously to optimise shareholder assets in the long term. of scale and reduces costs for both Gresvig and the chain members. Separate marketing departments for G-Sport and Gresvig has three overriding goals for its future operations: INTERSPORT take care of the chain-specific cooperation • A long-term competitive return over time to shareholders. required with dealers, as well as the need to maintain each • Profitable chain operation to ensure efficient flow chain’s identity and aggressive concept development. of goods to the dealers in G-Sport and INTERSPORT. • Leading positions in the Norwegian and Danish markets A unified retail strategy: Gresvig Retail will cultivate for sports and leisure equipment. good directly-owned shops.This business area currently embraces 49 wholly- and partly-owned outlets in Norway, These objectives underlie the important strategic steps we Denmark and Poland.This compares with 61 wholly- or have taken to concentrate our resources and commitment on partly-owned Gresvig stores at 1 January 1999. Costs have the areas where Gresvig has special competitive advantages. been reduced and a good foundation laid for improved Unprofitable shops and duplicated functions in the group have results. Gresvig will commit resources to developing

AIM: AIM: RATIONAL OPERATION EFFECTIVE FLOW OF GOODS GRESVIG GRESVIG CHAIN SERVICE GOODS HANDLING

PURE CHAIN CONCEPTS GROUP’S CENTRAL WAREHOUSE PRODUCT AND PROCUREMENT CENTRE DISTRIBUTION AND LOGISTICS

30 Chief executive’s statement electronic sales channels. Given the group’s good geographic efforts to win market share. An 0.1 percentage point coverage and 366 member shops, it has a good foundation improvement in profit margin for Gresvig and its chain for exploiting new technology. members is more important than defending or expanding market share by one percentage point. Gresvig will operate as a single company with one voice in I take an optimistic view of the future. Both G-Sport procuring product categories which involve considerable and INTERSPORT in Norway improved their profits in volume and handling.The group’s two spearheads in the 1999.The turnaround is beginning to show results.After a Norwegian consumer market – G-Sport and INTERSPORT period when costs were rising faster than earnings, we have – will be further developed with differentiated product got the expenditure side under control.We have staked out ranges and chain identities.Through its INTERSPORT a course which will make Gresvig a profitable, leading and commitment, Gresvig has secured a strategic position in long-term player in priority markets with the most attractive Denmark which will be extended on its own account or in chain concepts and the most efficient flow of goods. cooperation with partners. The critical factors for Gresvig’s success are and will The group enters its improvement year in 2000 with remain goods handling and close cooperation with chain about 50 per cent of the Norwegian market for sports members in G-Sport and INTERSPORT.The year of and leisure equipment.The INTERSPORT chain has 22 improvement in 2000 will document that both the per cent of the Danish market for sports and leisure Gresvig group and the dealers in the two chains are on equipment. Profitability NOW is the key consideration route to succeed. for Gresvig.This means that day-to-day operating Guttorm B Johansen improvements are being given priority over aggressive Chief executive, Gresvig ASA

AIM: PROFITABLE OWN SHOPS GRESVIG RETAIL

17 G-SPORT SHOPS 25 INTERSPORT SHOPS

Chief executive’s statement 31 An effective chain

CHAIN SERVICE service centre

The job of Gresvig Chain Service is to ensure efficient operation of the group’s two competing chains, G-Sport and INTERSPORT.

The business area is organised in the Gresvig Kjededrift AS • Winter sports company, which was created in 1999 by merging the • Bicycles G-Sport Norge AS and INTERSPORT AS chain service • Outdoor activities centres.This secures more rational operation and a lower • Angling level of costs. • Shooting/hunting Gresvig Kjededrift AS serves the group’s 366 chain • Clothes and textiles – external brands members in Norway – 230 dealers in the G-Sport chain • Clothes and textiles – own brands and 136 in the INTERSPORT chain.The chain service • Footwear centre’s job is to ensure that the members of these • Team sports competing chains experience and achieve a more efficient • Camping and water sports flow of goods. Product and procurement functions for the group have been concentrated in a single organisation. Gresvig Chain Service concludes agreements which build on The chain service centre also has separate marketing long-term relations with a variety of suppliers and which departments for G-Sport and INTERSPORT. These secure competitive terms for chain members in G-Sport and departments provide close and personal follow-up to INTERSPORT.The two chains will continue to have a common meet the needs and interests of their respective dealers, basic range of products.Their distinctive identities will be further while continuing to develop the chain concept and identity, developed through separate concepts as well as differentiated strengthen relations with dealers and pursue a marketing chain and campaign ranges. programme for the respective chains. The new organisation means fewer duplicated Sports and leisure market in growth functions, reduced costs and better opportunities to The Norwegian market for sports and leisure equipment has cultivate the distinctive identity of the two competing enjoyed stable extpansion over the past three years. Growth in chains. Both G-Sport and INTERSPORT will maintain 1999 was just over three per cent from the 1997-98 level. Shop and strengthen their own chain identities in the Norwegian sales in the sports and leisure market were worth slightly more volume market for sports and leisure equipment. than NOK 7 billion in 1999, corresponding to roughly NOK 1 625 Gresvig Chain Service has 65 employees in Oslo. per capita.This represents a high level of consumption for sports The accounts for 1999 show gross sales revenues of NOK equipment in an international context. Developments in recent 1 500 million and an operating profit of NOK 82.9 million. years indicate that demand is relatively insensitive to business cycle The corresponding pro forma figures for 1998 are NOK fluctuations. On the other hand, the market is strongly influenced 1 450 million and NOK 63 million respectively. by local climatic conditions. The trend in this sector is that specialist chains are taking market share from independent sports equipment shops. At 31 Long-term relationships December 1999, chains controlled just under 90 per cent of From 2000, the group’s product and procurement functions Norway’s sports and leisure market. Despite this strong tendency will be integrated with the focus on the following 10 towards chain formation, the general level of profitability in the principal categories: sports equipment business is below the retailing average.

32 Gresvig Chain Service This reflects sharp competition, which has helped to keep price rises lower than increased payroll and other operating expenses for Norway’s roughly 1 100 sports equipment shops.These have an average turnover of just under NOK 7 million. Economics of scale have yet to be demonstrated by the current restructuring of this business from independent to chain-based shops.

Prospects G-Sport and INTERSPORT hold strong positions in the Norwegian market, and results for these competing chains show positive progress. Merging the G-Sport and INTERSPORT chain service centres is expected to have a full effect on profits from 2000. Concentrating these two centres in Gresvig Kjededrift AS achieves more rational operation and a lower level of costs.This is necessary if Gresvig is to achieve an acceptable level of profitability which allows it to pursue an aggressive commitment to further development of both G-Sport and INTERSPORT. Revenues in the Norwegian market for sports and leisure equipment are expected to grow by two-five per cent annually over the next five years. Priority is being given in 2000 to measures which improve profitability rather than to expanding market share for the chains in Norway. Gresvig Kjededrift A/S achieved an operating margin of 5.5 per cent in 1999.

Key figures Gresvig Kjededrift AS* (NOK mill) 1999 1998 1997 Gross sales revenues 1 500 1 450 1430 Gross margin 26.0% 23.5% 21.5%

Operating profit 82.9 63 80.1 Operating margin 5.5% 4.4% 5.6%

* pro forma 1997 and 1998. See definitions on page 38.

Gresvig Chain Service 33 G-Sport leader in Norway

G-Sport is the leading Norwegian sports and leisure chain, actively developing and extending the market through new and profitable concepts.

The G-Sport chain has 230 members with an overall Standardised packages of goods with competitive campaign market share of roughly 30 per cent.The chain is products will be designed to be attractive to customers nationwide with shops offering active sport and leisure and shops. G-Sport aims to provide the best combination for all. of price and quality. With effect from fiscal 1999, the G-Sport Norge AS Priority will continue to be given to training managers and INTERSPORT AS chain service centres merged. and shop sales staff. A purposeful commitment to expertise and further development of the chain concept Operations in 1999 will lay the basis for long-term profitable growth for G-Sport achieved gross sales revenues of NOK 1 037 G-Sport dealers and Gresvig Chain Service. million in 1999, compared with NOK 1 000 million in The shops will present a uniform identity to the 1998. Operating profit rose by 14 per cent from NOK market. G-Sport will be the leading chain in the sports and 57.1 million to NOK 65.1 million.This improvement reflects leisure market – characterised by a product range which is increased sales revenues and reduced costs. tailored to the market, offering well-known brands and its Purchasing loyalty, which expresses how large a own brands in all commodity categories as well as the proportion of purchases by chain members are made via market’s best prices for competitive products. Gresvig, remained at a high and stable level of just over 80 per cent. Sales of bicycles by G-Sport in Norway rose by 10 per cent in 1999, with the biggest increase recorded for its own Diamant brand. In addition, product categories such as winter sports, shooting/hunting and own-brand leisure wear all witnessed sales growth of 10 per cent or more during 1999.

The G-Sport chain identity Further development of G-Sport as the leading nationwide sports and leisure chain with expertise in specialist retailing will be aggressively pursued. Measures have been initiated to reinforce the competitive position. Dealers in the G-Sport chain are expanding their collaboration with Gresvig Chain Service. The new cooperation model Key figures G-Sport* involves increased commitment to own brands, aggressive (NOK mill) 1999 1998 1997 market drives and close personal follow-up between Gross sales revenues 1 036.8 1 000.0 1 033.9 Gresvig’s product and procurement organisation and Gross margin 26.3% 24.9% 24.7% G-Sport dealers. Operating profit 65.1 57.1 71.8 G-Sport’s own brands – Brooks, Diamant, Greenwood, Operating margin 6.3% 5.7% 6.9% Haglöfs, Frank Shorter, Fjellsport,Walton, Head, K2 and Madshus – are important components in its product range. * pro forma 1997 and 1998. See definitions on page 38.

34 Gresvig Chain Service – G-Sport INTERSPORT largest in the world

INTERSPORT is the world’s largest sports equipment chain, with some 4 000 stores. Gresvig holds the INTERSPORT licence for Norway.

The INTERSPORT chain in Norway has 136 members with competitive position.A dealers’ advisory committee with an overall market share of roughly 18 per cent. Its presence is six dealers among its members was established for particularly strong in northern and mid-Norway, and in some INTERSPORT in 1999, both to strengthen the chain of the southern counties. operationally and actively to enhance its chain concept. With effect from fiscal 1999, the INTERSPORT AS and INTERSPORT dealers have access to an international G-Sport Norge AS chain service centres merged. procurement programme for branded goods. Own brands, In addition, Gresvig owns 59.23 per cent of the shares in such as Crazy Creek, Etirel, McKinley, Firefly, Pro Touch and the Danish INTERSPORT Danmark AS chain service centre, Nakamura, account for a growing proportion of sales. but votes for only 49 per cent of this stock. Gresvig’s share of INTERSPORT will promote itself as a strong and profitable the chain service centre’s 1999 profit is included under chain of specialist shops with a training programme for associated companies in the accounts. members. Emphasis is put on a central build-up of The year before, INTERSPORT Danmark AS was expertise in marketing and concept development, while consolidated in the Gresvig income statement and balance allowing for local tailoring of activities and promotion. sheet. Gresvig is the largest shareholder in Intersport A focus on knowledge and branded goods is central. International Corp, with 14 per cent of the shares. Gresvig The trend in the Norwegian sports equipment market also holds the INTERSPORT licences for Poland and Latvia. is for the average consumer to display less interest in competitive sport than before. Relaxation, fitness, experiences Operations in 1999 and health are important motivations which determine Gross sales revenues for INTERSPORT in 1999 came to demand for products and commodity categories. NOK 462.8 million as against NOK 450.4 million the year INTERSPORT will be a leading chain for everyone pursuing before. Operating profit rose from NOK 5.9 million to NOK a sport or activity – a sporting image with a distinctive array 17.8 million. Growth in sales, reduced costs and increased of goods and campaign ranges. purchasing loyalty among chain members all made important contributions to the improvement in results. Purchasing loyalty, which expresses how large a proportion of purchases by chain members are made via Gresvig, was roughly 62 per cent at 31 December 1999. With shop sales by chain members rising by some four per cent in 1999, INTERSPORT strengthened its market position. Key figures INTERSPORT* Growth during the year was strongest for product groups (NOK mill) 1999 1998 1997 such as winter sports, team sports and textiles. Gross sales revenues 462.8 450.4 395.8 Gross margin 25.7% 20.4% 17.5% The INTERSPORT chain identity Operating profit 17.8 5.9 8.3 Further progress will be aggressively sought for INTERSPORT Operating margin 3.8% 1.3% 2.1% as part of the world’s largest and best-known chain for sports equipment. Measures have been initiated to reinforce the * pro forma 1997 and 1998. See definitions on page 38.

Gresvig Chain Service – INTERSPORT 35 rd Eek rd å

Rational Photo: B

GOODS HANDLING flow of goods

The job of Gresvig Goods Handling is to ensure an efficient flow of goods to the 366 G-Sport and INTERSPORT shops in Norway.

This business is a unit within Gresvig ASA and embraces the the whole value chain from ordering to delivery will group’s Norwegian distribution centre and logistics function. make the use of SportDistribution’s systems easy and The SportDistribution logistics unit contributes to a secure, comprehensible. reliable and cost-effective flow of goods from manufacturer to chain member and dealer. Prospects On 1 July 1999, stocks of goods for G-Sport and SportDistribution is pursuing an action plan which aims at a INTERSPORT were concentrated under a single roof at further reduction in logistical costs to roughly four per cent Askim. In addition, bicycles are stored with a third party in of revenues handled by the warehouse.These costs currently Moss.With 113 employees, SportDistribution’s will be an lie at about five per cent. efficient logistics organisation for the Gresvig group. Gresvig’s value-chain thinking involves a focus on Gresvig’s strong market position builds on attractive simplicity for dealers and chain members.The simplest chain concepts, leading local dealers, the best range of approach is that all goods are purchased via shop computer products for consumers and efficient supply of goods.The systems – in other words, through a single channel – and key to success in a fashion-conscious sports sector is to that the goods are delivered on time, in one consignment offer the right products at the right time to the right and with a single invoice. Shop computer systems, which are consumers.About 80 per cent of the items carried have integrated in chain service centre management systems, a shelf life of just one season. represent a substantial saving for members in terms of Orders secured at trade fairs five months or more inventory management, purchasing routines and checking before products are delivered to chain members account of goods received. for about 60 per cent of the group’s sales revenues. More efficient flow of goods will mean both lower costs The delivery cycle for sports equipment is long and for Gresvig and reduced distribution expenses for chain complicated.That makes logistics a critical success factor members in G-Sport and INTERSPORT. for Gresvig.

Operations in 1999 Actual handling of the goods is carried out by the Sport- Distribution logistics unit. Earnings from goods handling and transport to customers as well as operating revenues from external users were on a par with 1998. Sales of goods handled by the warehouse came to NOK 1 265 million as against NOK 1 222 million the year before. Lower area expenses and higher productivity has yielded an annual cost saving of approx. NOK 5 million. Operations in Gresvig Goods Handling aim to contribute to profitability for members and shareholders through an efficient supply chain with low costs.A focus on

36 Gresvig Goods Handling rd Eek rd å

Directly- Photos: B

RETAIL owned shops

Gresvig Retail embraces the group’s directly- owned retail outlets – G-Sport shops in Norway and INTERSPORT shops in Denmark and Poland.

G-Sport Norway Retail embraced 17 shops of its own at 6.9 million in 1998. Measures implemented will reduce 1 January 2000, when INTERSPORT Retail in Denmark costs in 2000 and improve follow-up of the company’s had 18 shops of its own. own shops. During 1999, INTERSPORT’s Norwegian retailing business was wound up. Nine wholly- and five partly-owned INTERSPORT Polska SP.zo.o shops were sold or closed during the year.At 1 January Gresvig’s INTERSPORT shops in Poland achieved gross 2000, this business was confined to one store in Oslo. sales revenues of NOK 46.9 million in 1999 as against NOK 27 million the year before.The operating loss came G-Sport Retail to NOK 11.1 million, on a par with 1998. Over the year, G-Sport Norge Detalj AS has been developed as a pure retail company with its own shops in Prospects the Oslo area. Gresvig reduced the number of outlets by Gresvig Retail expects improved results in 2000, as a four in 1999. One was closed, while three were transferred consequence both of a lower level of costs and of the to the G-Sport Bergen AS company owned 49 per cent divestment of unprofitable retail outlets in 1999. G-Sport by Gresvig. A 75 per cent interest is also held in Retail consists throughout of shops in central locations. Strandtorget AS, which owns seven shops in the Mjøsa The level of costs in Denmark’s INTERSPORT Retail region of eastern Norway. has been substantially reduced, which will have an effect on Gross sales revenues came to NOK 364.1 million results in 2000. In addition, work will continue on structural in 1999 as against NOK 384.7 million the year before. measures in order to achieve economies of scale from a Operating profit amounted to NOK 1.8 million, compared strong market position in Denmark. with NOK 7.7 million for 1998. Reduced sales revenues reflect a purposeful geographic concentration on fewer shops.

INTERSPORT Retail Restructuring characterised operations at INTERSPORT Retail in Denmark during 1999.The retailing company was Key figures Gresvig Retail* given a new management, and its staff was reduced from Gresvig G-Sport Retail INTERSPORT 30 to 14 people.This process was both expensive and Retail Norway Retail Danmark time-consuming. INTERSPORT Retail’s shops have roughly (NOK mill) 99 98 97 99 98 97 99 98 97 five per cent of the Danish sports equipment market, Gross sales revenues 665.2 661.7 551.3 364.1 384.7 359.7 180.0 176.5 139.6 which generated revenues of about NOK 3.5 billion in Gross margin 33.8% 37.4% 39.0% 39.1% 40.1% 40.1% 35.1% 36.0% 38.5% 1999. Operating profit (39.1) (18.1) 7.6 1.8 7.7 16.7 (10.7) (6.9) 1.2 Gross sales revenues amounted to NOK 180 million in Operating margin (5.9%) (2.8%) 1.4% 0.5% 2.0% 4.7% (5.9%) (3.9%) 0.9% 1999, compared with NOK 176.5 million the year before. The operating loss was NOK 10.7 million as against NOK * pro forma 1997 and 1998. See definitions on page 38.

Gresvig Retail 37 Definitions:

Gross sales revenues Cash flow per share Sales revenues excluding VAT before income reductions. Profit/loss before extraordinary items less taxes payable plus depreciation divided by the average number of shares. Gross margin Gross sales revenues less cost of goods sold divided by Percentage sales growth gross sales revenues. The percentage change in gross sales revenues.

Operating profit/loss Development in results Net operating revenues less total operating costs *) Percentage change in profit/loss before tax. *) Before allocation of the parent company’s administration fee in 1998 and 1997 Equity ratio Equity divided by total assets. Operating margin Operating profit in per cent of gross sale revenues. Return on equity Profit/loss before extraordinary items and after tax divided Average number of shares by equity in the balance sheet at the start of the period. Number of shares at the end of each quarter, divided by the number of quarters. Return on total assets Profit/loss before extraordinary items and after tax, Net earnings/(loss) per share (EPS) plus financial expenses, divided by average total assets. Profit/loss before extraordinary items and after tax divided by the average number of shares. Current ratio Current assets divided by current liabilities. Price/earnings ratio (p/e) The share price at 31 December divided by earnings/loss per share.

38 Definitions Gresvig ASA Annual report 1999 Gresvig ASA Head office and storehouse Sagveien 25 N-1814 ASKIM Tel +47 69 81 65 00 Fax +47 69 88 60 51

Group administration Havnelageret,Langkaia P O Box 384 Sentrum N-0102 OSLO Tel +47 23 35 85 00 Fax +47 23 35 85 10

SportDistribution Sagveien 25 N-1814 ASKIM Tel +47 69 81 65 00 Fax +47 69 88 60 51

Chain Service Gresvig Kjededrift AS Administration Havnelageret, Langkaia P O Box 384 Sentrum N-0102 OSLO Tel +47 23 35 85 00 Fax +47 23 35 85 10

Storehouse Sagveien 25 N-1814 ASKIM Tel +47 69 81 65 00 Fax +47 69 88 60 51

INTERSPORT Danmark AS Tarupvej 57 DK-5210 ODENSE NV Tel +45 66 16 44 13 Fax +45 66 16 44 45 Retail INTERSPORT Detalj AS Havnelageret, Langkaia P O Box 384 Sentrum N-0102 OSLO Tel +47 23 35 85 00 Fax +47 23 35 85 10

G-Sport Norge Detalj AS Havnelageret, Langkaia P O Box 384 Sentrum N-0102 OSLO Tel +47 23 35 85 00 Fax +47 23 35 85 10

INTERSPORT Detail AS Kurt Larsen Sport Holding ApS Thule vei 14-18 P O Box 759 DK-5210 ODENSE NV Tel +45 66 16 32 32 Fax +45 66 16 32 23 Board of directors Svein Eskedal, chairman INTERSPORT Polska SP.zo.o Bjørn Sigurd Johansen Executive management committee Ul Merliniego 2 Christian A Beck Guttorm B Johansen, president and CEO PL-02 511 WARSAW Peter Ruzicka Bjørn Hildan, executive vice president Tel +48 22 646 90 90 Dag Fossheim Morten Vinje, president and general manager, Fax +48 22 844 19 32 Anne-Gro Omholt Gresvig Kjededrift AS rjc aaeetaddsg:GIMne s Fotaeht:NPS/Scanpix GCI Monsen as Frontpagephoto: Project management and design:

Gresvig ASA

Enterprise no. NO 937 905 645

Head office and storehouse: Sagveien 25 N-1814 ASKIM NORWAY Tel +47 69 81 65 00 Fax +47 69 88 60 51

Group administration: Havnelageret, Langkaia Postboks 384 Sentrum N-0102 OSLO NORWAY Tel +47 23 35 85 00 Fax +47 23 35 85 10