Business overview
JOINT VENTURES AND ASSOCIATES
JMR
In addition to our consolidated subsidiaries, we also have
interests in food retail and foodservice operations through
our investments in joint ventures and associates. Our share
in income of joint ventures and associates is included in
our consolidated statements of operations. As of January 1,
2006, we had interests in two significant entities that we
accounted for as unconsolidated joint ventures and
associates: ICA AB and Jerónimo Martins Retail.
ICA AB
In April 2000, we acquired a 50% partnership interest in
ICA AB ("ICA"), which in turn owns the ICA group. In
November 2004, we increased our interest in ICA to 60%.
The other 40% interest in ICA is held by Hakon Invest AB,
a Swedish company listed on the Stockholm Stock
Exchange. Under our shareholders agreement with Hakon
Invest AB, our 60% shareholding interest in ICA does not
entitle us to unilateral decision making authority over ICA,
because the agreement provides that strategic, financial and
operational decisions will be made only on the basis of
mutual consent.
ICA is an integrated food retail and wholesale group,
headquartered in Stockholm, Sweden. As of December 31,
2005, ICA served over 2,500 retailer-owned and company-
operated supermarkets, neighborhood stores, hypermarkets
and discount stores in Sweden, Norway and, through a joint
venture, in the Baltic states. ICA also provides consumer
financial services in Sweden through its bank.
ICA is comprised primarily of the following entities:
ICA Sverige AB ("ICA Sverige"), which is a wholesaler
supplying retailer-owned stores and a limited number of
company-operated stores under the "ICA" brand name
in Sweden.
ICA Norge AS ("ICA Norge"), which operates company-
owned stores and supplies both franchise and associated
stores under the "ICA" and "RIMI" brand names in
Norway.
ICA Meny AB ("ICA Meny"), which is a food supplier to
restaurants, the catering sector and convenience stores
in Sweden and in Norway. On February 22, 2006, ICA
announced its intention to sell ICA Meny.
ICA Banken AB ("ICA Banken"), which is a bank that
provides limited consumer financial services in Sweden.
Etos AB ("Etos"), which operates stores that sell health
and beauty care products in Sweden, mainly in the
Stockholm area.
ICA has two 50/50 joint ventures:
Rimi Baltic AB ("Rimi Baltic"), which is a joint venture
with Kesko Livs Ab that operates discount stores,
supermarkets and hypermarkets in Latvia, Estonia and
Lithuania under various brand names.
Netto Marknad AB ("Netto"), which is a joint venture with
Dansk Supermarked that operates discount stores
in Sweden under the brand name "Netto."
ICA operated the following retail locations as of
December 31, 2005:
Square meters 1 I Stores
ICA Sverige 2, 3 500 - 7,000 70
ICA Norge 4 350 - 4,000 258
Total 5, 6 328
1 The property data is presented in square meters, which may be converted
to square feet by multiplying the number of square meters by 10.75.
2 This does not include 1,355 associated stores supplied by ICA Sverige.
3 This does include eight Etos stores.
4 This does not include 147 associated stores and 489 franchise stores supplied
by ICA Norge.
5 The relationship between the independent retailers and ICA is governed by various
types of agreements, under which the retailer pays a specific fee and/or a fixed
premium to the purchase price. In exchange, ICA provides the retailers with
services, including, among others, marketing, format development and supply of
goods. In addition, in some cases, the ICA group owns or has rights to the store
locations, which it leases to the retailer.
6 This does not include the stores from ICA's two joint ventures. Rimi Baltic
operates over 170 stores and Netto over 70 stores.
In 1992, we became a 49% partner in Jerónimo Martins
Retail ("JMR") with Gestao de Empresas de Retalho, SGPS,
S.A. JMR, headquartered in Lisbon, Portugal, owns Pingo
Doce, a major supermarket chain, and the Feira Nova
hypermarket chain, both in Portugal. Under the terms of our
shareholders' agreement, we share equal voting power in
JMR with Gestao de Empresas de Retalho, SGPS, S.A.
50
