Annual Report 2012 - S-kanava

1

Annual Report 2012

3

ANNUAL REPORT 2012

CONTENTS

Key fi gures for the Helsinki CooperativeSociety Elanto Group 4

Managing Director’s Review 5

Report by the Board of Directors 6

Financial Statements 31 December 2011 14

Notes to the Financial Statements 18

Disposal of retained earnings andinterest on cooperative capital 34

Auditors’ Report 5

Statement of the Supervisory Board 36

Administration 37

Administrative bodies 38

4

CALCULATION OF KEY FIGURES Return on shareholders’ equity- % = profi t before extraordinary items - direct taxes × 100 equity + minority shareholding, average Return on investment capital- % = profi t before extraordinary items + interest and other fi nance costs × 100 balance sheet total - loans excl. interest – obligatory provisions, average Equity ratio, % = capital and reserves + minority interest × 100 balance sheet total - prepayments received Gross investment in fi xed assets = sum paid for fi xed asset investments Return on investment capital % is calculated without including capital costs in interest and other fi nance costs. The average personnel numbers during the fi nancial period are calculated as the mean value.

KEY FIGURES FOR THE HELSINKI COOPERATIVE ELANTO GROUP

2008–2012

Net sales, EUR million 1,484,4 1,569,0 1,668,2 1,779,5 1,876,6 Operating profi t - EUR million 23,7 31,6 59,1 28,6 29,5 -% of net sales 1,6 2,0 3,5 1,6 1,6 Profi t before extraordinary items - EUR million 24,1 29,0 55,2 26,1 29,4 -% of net sales 1,6 1,8 3,3 1,5 1,6 Oman pääoman tuotto-% 5,0 5,7 9,3 4,3 4,7 Return on investment capital % 6,6 7,1 11,8 5,5 5,8 Equity ratio, % 60,7 60,1 63,0 63,7 65,3 Gross investment in fi xed assets - EUR million 106,5 86,8 51,0 76,1 88,0 -% of net sales 7,2 5,5 3,1 4,3 4,7 Average number of personnel during fi nancial year 5,517 5,899 6,087 6,175 6,201

Wages, salaries and remunerations MEUR 120,4 134,8 140,8 146,4 153,7

2012 2011201020092008

5

CUSTOMER-OWNER’S WELLBEING – OUR FIRST PRIORITY

The function of a cooperative society is to promote the wellbeing of its customer-owners or members by providing services and benefi ts. To fulfi l this task successfully, it must keep its outlet network in good order and develop its services to cater for the members’ changing needs. HOK-Elanto has almost 580,000 member households in Greater Helsinki, represent-ing more than 83 per cent of all households in the area. HOK-Elanto is the company with the largest owner base in Finland.

The Greater Helsinki area has the most buying power in the country, and its popula-tion continues to grow. HOK-Elanto’s main businesses are the food and drink trade and transport fuels. Their demand remains steady also in weaker economic situations. Due to strong demand, HOK-Elanto has continued to implement its long-term growth strategy, bucking the trend. Our fi nances are on a very solid foundation. We are continuously de-veloping new forms of service for the future, with particularly the role of online business and the multi-channel business model increasing their foothold.

Through the effi ciency of its concerted operation and customer-led approach, S Group has achieved the Group’s current success and growth. However, the planned government bill for legislation concerning exploitation of a dominant position in the retail trade may adversely affect our future operations and long-term development. In my view, the pro-posed form of the law would in no way fulfi l the set objectives of reducing the grocery bill for the Finnish consumer, increasing the fairness of income distribution in the food chain, and promoting fair competition. But it would certainly make the lives of Finnish operators in the sector more diffi cult, neither would the country’s small producers benefi t from the increased infl uence of international industry.

Through its actions, a large company that is conscious of its responsibility can also show an example to other businesses in the sector. HOK-Elanto’s refurbishment pro-gramme places great importance on energy effi ciency. Similarly, HOK-Elanto has made signifi cant progress in waste sorting, and in 2012 only 1 per cent of all waste created by the stores and restaurants ended up in landfi ll sites. In this, too, the goal for the future is even more ambitious: not a single gram to landfi ll.

Provision of good service requires competent, highly motivated staff. HOK-Elanto’s job satisfaction survey was returned by 91 per cent of the personnel. The results show that overall satisfaction is extremely high and exceeds very signifi cantly the average satisfac-tion level of Finnish companies in all main aspects.

I want to extend my warmest thanks to all HOK-Elanto employees for their excellent work. I also want to thank our able administration and S Group, as well as other stake-holder groups, for the good cooperation over the past year.

MANAGING DIRECTOR´S REVIEW

Helsinki, 11 March 2013

Matti NiemiManaging Director

6

Helsinki Cooperative Society Elanto, operating in the Greater Helsinki area, is the largest regional cooperative society in S Group and the company with the largest owner base in Fin-land. The main divisions of the Cooperative Society are the supermarket business, department stores, restaurants, and service station store and fuel business.

Helsinki Cooperative Society Elanto has continued to im-plement its focused growth strategy. The extension of Hy-vinkää Prisma Centre, Prisma Jumbo’s concept update and renovation of the S Market chain were the most visible events in HOK-Elanto’s operation last year. The turnover for the whole group grew by 5.5 per cent. Several new units were opened during the year, but some former sites were also closed down. It was possible to relocate their staff in our own outlets.

OPERATING ENVIRONMENTLast year, the operating environment of the retail trade was clearly divided in two. The early part of the year was domi-nated by a hopeful belief in a slow economic recovery. The em-ployment rate rose well and the pay deals supported private consumption. Consumer confi dence in economic growth was buoyed up. However, re-emergence of the euro crisis as criti-cal in the summer and the fact that export demand remained modest served to weaken the perceived trend in the operat-ing environment. Towards the end of the year the situation improved somewhat and over the year 2012 as a whole, the volume of gross national product fell by 0.2 per cent.

The confi dence of households in improvements in the eco-nomic situation were clearly weakened in the second half of the year, when negative news on the future development of employment rates increased. Nevertheless, the 2012 unem-ployment rate for the whole country was 7.7 per cent (7.8%). In Uusimaa, unemployment rose to 5.8 per cent (5.4%). The impacts of the worsening economic situation on private con-sumption remained slight last year, and consumption by house-holds held up as the signifi cant force maintaining economic stability and employment.

The value of the whole retail trade grew during the year by 4.3 per cent. Growth in the grocery trade was 5.0 per cent (6.8%) and that of the department stores 3.5 per cent (2.4%). The standard consumer price index grew 3.5 per cent from the previous year. Food prices went up by 5.7 per cent.

The customer volumes of online stores are growing rap-idly. The growth of internet trade has been particularly fast

in the food product group, which grew by almost 80 per cent compared to the year before. The growth of internet sales over the year is estimated at about 10 per cent (14%). The most common items bought online are travel services, travel tickets and tickets for events. The most often bought goods are clothing and shoes.

The fuel trade experienced a tough price war in the spring particularly in diesel fuel sales, which affected the profi t de-velopment of all operators. In terms of volume, petrol and diesel sales fell from the previous year by 2.0 per cent (-0.2%).

The turnover of accommodation and restaurant services grew in the whole country during the year (11 mths) by 6.7 per cent. The sales value of licensed restaurants was up by 3.2 per cent on the previous year (5.2%). Food sales have continued to grow, but the share of alcohol sales fell by 3.3 per cent.

ECONOMIC TRENDS IN GREATER HELSINKI Population growth in the Greater Helsinki area continues to be brisk, exceeding the average for the country. This is par-tially explained by the immigrant population, which accounts for almost 42 per cent of the growth, as before. Preliminary fi gures put the growth at 16,586 persons (15,507) or 1.3 per cent (1.3%). At the turn of the year, the population of our business area was 1,284,599 persons (1,267,658), or 23.7 per cent (23.5%) of the total population of Finland.

The number of retail stores remained at the previous level. Last year, HOK-Elanto was clearly the most active operator in new store openings and extensions.

As for petrol sales, a special feature in development in the Greater Helsinki area is that grades 95 E10 and 98 E5 are sold in equal volumes, while the ratio in other parts of the country is about 45/55.

In the restaurant sector, the number of covers grew in the Greater Helsinki area. The early part of the year began with promise, but by the summer the general economic situation was evident as clearly reduced demand. The recession also tends to increase the black economy in the sector.

KEY TRENDS IN S GROUP 2012 S Group consists of the cooperative societies and the SOK Corporation with its subsidiaries. The pre-tax retail sales of S Group amounted to EUR 12,037.1 million in 2012, growing by 5.0 per cent on the previous year.

HELSINKI COOPERATIVE SOCIETY ELANTO ANNUAL REPORT OF THE BOARD OF DIRECTORS

2012

7

Retail sales by the Cooperatives totalled EUR 10,373.3 mil-lion and accounted for 86.2 per cent of S Group sales. Retail sales by the Cooperatives increased by 5.3 per cent on the previous year.

At the end of the year, S Group had 1,697 outlets, com-pared with 1,669 at the same time in the previous year.

The number of regional Cooperative Societies at the close of 2012 was 21 and that of local Cooperatives 8.

S Group Bonus is paid on the basis of sales inclusive of VAT. The bonus sales of S Group companies were EUR 9,444 million, amounting to growth of 4 per cent from the previous year. Co-op members were paid bonuses of EUR 378.5 million, representing an increase of 5 per cent on the previous year. During the year, 61,448 new members joined the Cooperative Societies operating the bonus system, and their total member-ship at the close of the year stood at 2,055,227.

S Group’s personnel numbered 43,417, showing growth on the previous year of 1,275 persons. The personnel number of the Cooperative Societies was 32,787 and that of the SOK Corporation 10,630.

Investments by S Group totalled EUR 573 million, having stood at EUR 559 million a year before. The gross investments of the Cooperative Societies were EUR 448 million and those of the SOK Corporation EUR 125 million.

EVENTS AT HOK-ELANTO IN 2012 HOK-Elanto continued the extensive refurbishment pro-gramme of the S Market chain, begun in 2011. During the year, 17 existing S Markets underwent modernisation and refurbishment, and in addition, two completely new units for the chain were opened. This completed the two-year renovation drive, which made the S Markets more tempting than ever.

The number of Prisma stores remained static during the year, but Hyvinkää Prisma doubled its sales area, and Jumbo Prisma was renovated according to the latest chain concept.

The Alepa chain opened four new units, and the online gro-cery store underwent intensive development during the year.

Alepa Kauppakassi delivers the groceries to your front door or workplace, at best within a few hours from ordering.

At the moment, Kauppakassi offers the opportunity of online food shopping to more than a million Finns in Greater Hel-sinki. The Alepa Kauppakassi service was the fi rst in Finland to introduce bar code -based mobile phone walls to central Helsinki in June.

In the nature of a campaign, the mobile walls carried a sample selection of Alepa products that can be purchased by scanning the product bar codes with a mobile phone. The Alepa Kauppakassi mobile phone wall won the Retail Awards 2013 Prize in the Online Store of the Year series.

In November, the Prisma Kauppakassi pilot project was launched with Kannelmäki Prisma, where orders for daily food shopping could be placed from its ranges of more than 20,000 products and left conveniently at a separate collection point or delivered home in the Kannelmäki area.

In the service station store and fuel division, an un-manned ABC service station was opened at Juvankartano S Market. Hyvinkää and Vuosaari Port service station stores and Tuomarinkylä Deli opened Alepa grocery stores, of which Hy-vinkää and Tuomarinkylä serve 24 hours a day. An Alepa Mini store was opened at the Mechelininkatu Deli. It is a new store concept designed and implemented by the Alepa chain for retail premises under 100 square metres. Jumbo Prisma opened the fi rst Deli coffee bar that is not connected to fuel sales.

The restaurant business was also the target of investments during the audit period. The extended Hyvinkää Prisma Cen-tre opened a Rosso and Coffee House. Tikkurila Rosso was refurbished, at Iso Omena a signifi cant reformulation of the Chico’s concept was implemented, and at the same time other units of the restaurant division were also renovated, i.e. Coffee House, Wok-Up and Hesburger.

The funeral services division opened one new outlet during the year, in Espoonlahti.

NET SALES AND FINANCIAL PERFORMANCEHOK- Elanto’s sales in 2012 were EUR 2,244 million (prev. year EUR 2,130 mill.). Thus, the turnover of the whole HOK-Elanto Group totalled EUR 1,877 million (EUR 1,779 mill.), showing growth of 5.5 per cent (6.7%). Over the year, relatively the highest contribution to the turnover came from the Alepa, Emotion and Kodin Terra stores.

8

The Group’s profi t before extraordinary items and taxes was EUR 29.4 million (EUR 26.1 mill.). The result includes one-off income, more than half from the sale of fi xed assets, of EUR 2.0 million (EUR 1.9 mill.) and one-off costs of EUR 0.2 million (EUR 0.4 mill.). The Group’s operating profi t, excluding the above items, was EUR 27.6 million (EUR 24.7 mill.). The result was also better than forecast.

The Group’s trading profi t was EUR 29.5 million (EUR 28.6 mill.) or 1.6 per cent of turnover (1.6%). The return on invest-ment capital was 5.8 per cent (5.5%), and return on sharehold-ers’ equity was 4.7 per cent (4.3%).

HOK-Elanto Group’s net sales and operating profi t per division

Liikevaihto2012 M€

Kehitys%

Liiketulos2012 M€

Liiketulos2011 M€

Supermarket trade 1 492,8 7,2 % 20,1 17,9Department store trade 79,0 - 15,8 % - 0,6 - 1,7Service station storeand fuel trade 155,9 3,2 % - 5,2 - 4,2Restaurants 125,6 4,0 % 4,8 4,1Other operations and administration 23,3 10,0 % 10,3 12,5

HOK-Elanto Group consolidated 1 876,6 5,5 % 29,5 28,6

The net sales of the HOK-Elanto supermarkets totalled EUR 1,492.8 million (EUR 1,392.6 mill.), showing growth of 7.2 per cent (7.0%). The net sales accumulated from the business of 12 Prisma stores, 53 S Markets, 87 Alepa stores, and one Kodin Terra. The operating profi t of the supermarket trade was EUR 20.1 million (EUR 17.9 mill.). The improved result was due to increased growth in turnover following systematic develop-ment work and controlled costs.

HOK-Elanto’s market share of the grocery trade in our area grew a little, standing at 42,1 per cent (41.9%).

Tuusula Kodin Terra succeeded in increasing its sales over the year both to co-op members and trade customers. Its turn-over grew by a huge 36 per cent. The development of Kodin Terra has focused particularly on improving job and customer satisfaction and building up trade sales.

The department store turnover totalled EUR 79.0 million (EUR 94 mill.), showing a drop of 15.8 per cent (+1.5%). The net sales comprised the business of two Sokos department stores and eight Emotion stores. The drop in department store sales is due to Sokos Tapiola, which closed down to make way for the Tapiola metro station development at the end of 2011.

The operating profi t of the department store business was EUR -0.6 million (EUR -1.7 mill.).

Measures are ongoing to develop the department store business and nurse it back to ealth.

The net sales of the service station store and fuel trade stood at EUR 155.9 million (EUR 151.1 mill.), amounting to 3.2 per cent growth (6.8%). The HOK-Elanto ABC chain has 34 (33) outlets in the Greater Helsinki area. The operating profi t for the division was EUR -5.2 million (EUR -4.2 mill.). The contrib-uting factors to the weakened result were the tough price competition in the fuel trade and the development invest-ments targeted at the service station store and Deli concepts. The S Business Card was launched in the ABC chain in April.

Co-op member visits to Deli stores increased over the year by 19 per cent, and development of the Deli concept continues.

The net sales of the HOK-Elanto restaurant division to-talled EUR 125.6 million (EUR 120.7 mill.), showing growth of 4.0 per cent (6.1%). At the turn of the year, HOK-Elanto owned 100 restaurants. The operating profi t for the restaurants was EUR 4.8 million (EUR 4.1 mill.). Despite weakened consumer confi dence in their own fi nances, the restaurants’ turnover has increased and profi t development continued at the previous good level. The number of restaurants fell by four during the year, mostly due to expired lease agreements.

The turnover of other business, EUR 23.3 million, grew by 10.0% (11.8%) from the year before. HOK-Elanto’s other business consists of real estate business and funeral services. The funeral services opened one new outlet during the year, making the total number of offi ces 12 in various parts of our area. Other business produced an operating profi t of EUR 10.3 million (EUR 12.5 mill.). It also includes the above-mentioned one-off profi ts from the sale of capital assets.

GROUP STRUCTUREThe HOK-Elanto Group comprises the parent company Helsinki Cooperative Society Elanto, HOK-Elanto Liiketoiminta Oy (su-permarket, department store, service station store and fuel trades, and restaurants), HOK-Elanto Palvelu Oy and 29 real estate companies. In order to simplify the Group structure, 9 property subsidiaries merged with Helsinki Cooperative Soci-ety Elanto during the year. In addition, one property subsidiary was set up and the whole share stock of one company was acquired.

9

The Group includes 27 (28 in the previous year) associated companies. The most important of the associated companies are Kiinteistö Oy Vantaanportin Liikekeskus, owner of the Jumbo Shopping Centre in Vantaa, with HOK-Elanto holding 27.9 per cent of the company, and S-ryhmän logistiikkakeskuk-set Oy, of which HOK-Elanto owns 20.0 per cent.

INVESTMENTS AND SALES OF CAPITAL ASSETS During 2012, HOK-Elanto invested EUR 88.0 million (EUR 76.1 mill.) in developing its outlet network. The largest projects were construction of phase three of the Kannelmäki Shopping Centre, extension of Hyvinkää Prisma, and implementation of the S Market chain refurbishment programme.

The income from realisation of capital assets was EUR 1.4 million (EUR 2.7 mill.).

FINANCE The Group’s liquidity is good. At the close of the year, liquid investments and cash assets amounted to EUR 62.7 million (EUR 85.9 mill.). The equity ratio was 65.3 per cent (63.7%). The loans accruing interest were EUR 65.0 million (EUR 70.0 mill.).

The net fi nance costs amounted to EUR 0.4 million (EUR 2.4 mill.). The drop in net interest was due to the ending of fi nance cost charge payments by HOK-Elanto to its associated companies and the reduction in loan hedging costs. Unused committed credits and limits at the end of the review period stood at EUR 75 million.

CO-OP MEMBERSHIP AND S BANKDuring the year, 22,476 (23,920) new members joined the Cooperative Society, as well as 3,083 (3,279) transferring from other Cooperatives. The number of co-op member households at the end of the year was 577,638 (563,532). Of all households in our trading area, 83.3 per cent (82.6%) are co-op members.

78 per cent (79%) of the turnover came from co-op mem-bers’ purchases. The members received total Bonus payments of EUR 71.0 million (EUR 68.0 mill.), more than EUR 1.4 million every week on average. In addition, they received EUR 1.2 million (EUR 0.9 mill.) benefi t for using the S Card as payment method and EUR 1.9 million (10% and EUR 1.8 mill.) in inter-est on cooperative capital. Thus, co-op members using the services were rewarded to the tune of EUR 143 / household on average (EUR 137).

During the year, our network of Bonus partners remained almost unchanged. The number of Bonus veterinary surgeons was reduced by two, when the contracts with three clinics ended and a new one was signed with one clinic. There are now three Bonus vets.

HOK-Elanto has a considerable network of partners who offer benefi ts to customer-owners. During 2012, new Bonus partners were the football clubs HJK and FC Honka, Espoo City Theatre, Music Theatre Kapsäkki, the water and winter sports centre Serena and the ice hockey clubs HIFK and Espoo Blues.

The only in-store bank in Finland, S Bank, offers economical basic bank services, an easy-to-use internet bank, and a Visa card with no annual or monthly charges. For a co-op member household, these benefi ts mean average annual added value worth EUR 100. There are full-service S Bank branches in Prisma and Sokos stores. The funds of private persons deposited in S Bank across the country totalled EUR 2,333 million, and the number of customers at the end of the year approached 2.6 million. The number of S-Etukortti Visa cards issued by S Bank exceeded 1.1 million. HOK-Elanto owns 10 per cent of S Bank.

ELECTION FOR COUNCIL OF REPRESENTATIVESHOK-Elanto is the company with the largest owner base in Fin-land. Every four years, the co-op members are able to partici-pate in democratic decision-making by voting in the election for the Council of Representatives. Last year, the election took place 2–14 May, and the total number of members with the right to vote was 554,892. HOK-Elanto is the only organisation in Finland to offer such a large group of voters also the option of casting their votes online. A total of 116,768 customer-owners voted in the election for the HOK-Elanto Council of Representatives. The voter turnout fell from 26.8 per cent to 21.0 per cent. The option of voting online was taken up by a total of 40,204 members or 34.6 per cent of the voters (30,612 and 22% at the previous election).

PERSONNEL HOK-Elanto is one of the biggest employers in its area. The number of permanent staff grew by 56 persons on the previous year. At the end of the period, there were 6,241 personnel (6,185). In accordance with the targets set by the HR strategy, full-time staff numbers grew by 91 persons and part-time staff reduced by 35 persons. Converted to full-time person years, the imputed number of personnel was 5,104 persons (4,997). All the staff of Sokos Tapiola, which closed

10

down at the turn of the year, were placed in HOK-Elanto’s own businesses.

HOK-Elanto again paid a profi t-share bonus to its perma-nent employees from the previous year’s profi ts. The profi t-share bonus for 2011 was paid to 5,332 employees (5,276) and amounted to 1.0 per cent (1.5%) of the employee’s annual earnings.

HOK-Elanto offers young people a good way of entering the world of work. More than one-third of our permanent staff are under 25, in addition to which about two thousand young summer workers and students on work experience were given the opportunity of getting the feel of service sector work at HOK-Elanto last summer.

HOK-Elanto’s job satisfaction survey was returned by 91 per cent of the staff. The results show that overall satisfaction is extremely high and exceeds statistically very signifi cantly the average satisfaction level of Finnish companies in all main aspects. We have invested a lot of determined effort in the occupational wellbeing of our staff, which is evident in the reductions in sickness absences and early retirements. HOK-Elanto’s wages during sick leave fell on the previous year by 12.7 per cent.

Nominal personnel numbers converted to full-time jobs per division:

Supermarket trade 3347 3168

Department store trade 296 338

Restaurants 953 983

Service station store and fuel trade 232 244

Other operations and administration 276 265

Total 5104 4997

31.12.2012 31.12.2011

HOK-Elanto has played its part for a long time in employ-ing and training immigrants. At the end of the year, there were people from 43 different countries among the personnel.

The availability and permanence of a trained workforce present a challenge to management and developing the op-eration. At HOK-Elanto, the turnover of particularly part-time staff is rapid. The commitment of personnel is fostered e.g. by offering training opportunities and long-term career planning, as well as a variety of staff benefi ts. The quality of personnel

work is monitored using a number of indicators. They include job satisfaction, quality of supervisory work, satisfaction on leaving, ratio of personnel costs to turnover, and staff turno-ver rates.

During 2012, in excess of a thousand new employees were given induction training for new jobs, some of them with the help of online training. Store opening coaching was organised for the personnel of all new outlets. Basic vocational skills are ensured by measures such as induction and work instruc-tion, product knowledge and customer service skills, co-op membership, checkout work and health and safety at work. In addition, constant attention is paid to various skills and knowledge required by the authorities, such as food hygiene, initial fi re fi ghting, or licensing regulations.

In 2012, there was a slight drop in the proportion from the total number of employees of employment relationships lasting less than a year. The average length of an employment relationship was 7.3 years (7.0). The average age of person-nel rose from the year before to 36 years (35 yrs.), and the proportion of women out of the whole personnel was 74 per cent (74%).

The operation of the HOK-Elanto Health Care Fund covers all HOK-Elanto permanent employees, both part- and full-time. The Health Care Fund has proved to be one of the most valued staff benefi ts in job satisfaction surveys. The employer also provides fi nancial support for the operation of the Fund.

On 17 May 2012, a recreation day was organised for the whole HOK-Elanto staff and families at Linnanmäki Amuse-ment Park. Almost 8,000 people took part in the event.

HOK-Elanto also supports the staff’s leisure and recreation opportunities by offering them company exercise vouchers. Events organised by individual units are also subsidised.

RISK MANAGEMENT The HOK-Elanto Group practises comprehensive risk man-agement, with the aim of identifying risk factors, assessing their probability and signifi cance in terms of safety and busi-ness. Annual risk analyses are carried out both for the Group management and individual divisions. Risk and hazard as-sessments are carried out at each unit.

HOK-Elanto pays particular attention to customer safety and occupational health, safety and wellbeing of the personnel.

11

Every unit has its own instructions and plans based on identi-fi cation of the risks in the work environment. The instructions are adapted to the activity and conditions in each unit.

Risk management is a part of the daily activities. The goal is to ensure the staff has suffi cient health and safety skills to be able to take care of our customers. Compliance with instruc-tions is ensured through training so that everyone working for HOK-Elanto recognises their risk management responsibilities.

HOK-Elanto has a Crisis Management Team, which is pre-pared for unexpected, signifi cant situations threatening the continuity of business by developing the resources of manag-ing crisis situations and by taking care of business continuity planning.

According to the 2012 risk analysis, the most signifi cant risks of HOK-Elanto are typical for our business sectors and concern management of the competition situation, develop-ing new operational models, and the operating conditions in the Greater Helsinki area.

Regular safety inspections of the units were continued in partnership with LähiTapiola General Mutual Insurance Com-pany. Based on the safety inspections, we have been able to develop comprehensive risk management procedures togeth-er. The purpose of the inspections is to increase preventative measures, in order that accidents may be avoided altogether or their costs minimised.

ENVIRONMENTAL RESPONSIBILITY As part of its daily operation, HOK-Elanto takes into account the environmental impacts of its activities in accordance with the principles of sustainable development. This is manifested in the construction, management and maintenance of build-ings. It is also evident in the use of energy and water and in the organisation of waste management. Environmental impacts are also considered in the development of purchas-ing and logistics. The environmental risks of the fuel trade are also assessed.

In its environmental projects, HOK-Elanto has paid particu-lar attention to energy effi ciency, which is one of the most im-portant means available to the retail sector of averting climate change. In the retail sector, the highest energy consumption is related to refrigeration, ventilation and lighting. Several pilot projects in these areas are underway, and the best sav-

ings measures found will be spread throughout the network. HOK-Elanto stores use real-time hourly monitoring of energy consumption, which allows analysis of consumption both in the long and short term. Monitoring also allows evaluation of the effectiveness of implemented energy-saving measures.

New stores are built more energy-effi cient than ever be-fore, at the same time piloting new techniques, such as carbon dioxide refrigeration, underfl oor heating, geothermal heat and air-source heat pumps. The most signifi cant savings have been achieved through improvements in refrigeration equip-ment and property management systems and the optimal use of their control systems.

The key points of waste management are prevention of waste formation and its reuse or recycling. Waste control is the most important means of reducing waste volumes right at the point of creation. The EU Decree on by-products that came into force in March 2011 introduced new standards for dealing with animal-derived waste in the retail sector. With this change, sorting of waste in stores became more effi cient.

The activities aimed at reducing environmental impacts are coordinated by the environment and quality manager. Indicators and procedures are developed across the whole Group. At Group level, there is a separate energy expert who is supported by an energy steering group.

Ensuring product safety is an aspect of responsibility that is a part of the daily life of our outlets. An important instru-ment in product safety is the in-house control of foodstuffs. The stores make the necessary in-house control entries directly into an electronic database.

GOOD TASTE BY DESIGNHOK-Elanto was one of the most visible principal partners of the WDC 2012 project. The Cooperative Society has raised the profi le of everyday design in its own operation and also more extensively in the Greater Helsinki streetscape. The theme has also been illustrated through products. For example, Kaurak-akku and Eloleipä, representing the design elite of daily bread, brought out the company’s long history and the importance of its products and services in the daily life of the Helsinki area. The restaurants gave prominence to the dedicated champagne and Design Menus of the theme year. Kolmen Sepän Terassi was also refurbished as part of the WDC Helsinki 2012 project.

12

RESPONSIBLE COOPERATION The operation of HOK-Elanto strives for responsible develop-ment of the service provision for customer-owners and con-sumers in the Greater Helsinki area. The brochure on corporate responsibility, distributed in all HOK-Elanto outlets, contains details of how the consumer can make responsible choices in his purchases, and how the Cooperative Society contributes to a better daily life in its area in a variety of ways.

Every year, HOK-Elanto spends about EUR 360,000 on various community cooperation projects. One of them is the activities of a society continuing the work of Veikko and Lahja Hursti, distributing food aid to the homeless and other needy people in the capital area.

For some years, we have run a joint Duunisauma Project with the City of Helsinki Youth Department, furthering the resources of young people to enter the world of work. From the start of 2013, the scheme was extended to Espoo’s youth services.

Youngsters have been able to produce content for social media at Nuorisotalo Happi Hattuakatemia. HOK-Elanto also has a joint World Design Capital Helsinki 2012 project with the City of Helsinki Youth Department, organising cookery courses for youngsters at Nuorisotalo.

LäksyHelppi, a project launched together with the Finnish Red Cross in autumn 2009, helps particularly schoolchildren with immigrant backgrounds do their homework. LäksyHelppi clubs are now operating in a total of 12 schools, clubrooms and libraries in Helsinki and Espoo.

Multiculturalism is part of daily life at HOK-Elanto. For many years, HOK-Elanto has trained and employed immigrants and thus fostered their integration in Finnish society and world of employment. In 2012, a voluntary activity entitled Ystäväksi maahanmuuttajaäidille [Befriend an immigrant mom] was launched in partnership with the Mannerheim League for Child Welfare, and it has aroused a great deal of interest.

HOK-Elanto also facilitates the integration of a number of special groups and increased tolerance by employing e.g. people with special needs and mental health rehabilitants.

In the autumn of 2011, S Group and the Football Asso-ciation of Finland launched a joint project with the goal of constructing 100 multi-use sports fi elds in different parts of Finland, with the help of regional Cooperative Societies. Ässä-kenttä no. 16, and the second fi eld in the HOK-Elanto area, was completed in Tuusula, at Ruukki School.

ADMINISTRATION With its owners numbering almost 580,000, HOK-Elanto is the company with the largest owner base in Finland. The principal governing bodies of HOK-Elanto are the Council of Repre-sentatives, Supervisory Board and Board of Directors.

The Committee of Chairpersons of the Supervisory Board consists of Managing Director Jorma Bergholm (Chairman), Member of Parliament Ben Zyskowicz (First Vice Chairman) and Adviser Sallamaari Muhonen (Second Vice Chairman). They also form the Supervisory Board’s Committee of Chair-persons in 2013.

The other Supervisory Board members on 1 January 2013 are Arto Bryggare, B.Sc. (Econ. and Bus. Admin.), Pastor Mika Ebeling, Chief Inspector Juha Hakola, Seppo Huhta, Parlia-mentary Journalist, Juha Häkkinen, Executive Director, Pia Kauma, Member of Parliament, Merja Kuusisto, Member of Parliament, Pentti Puoskari, Ph.D.(Soc. Sc.), Piia Rantala-Ko-rhonen, Deputy Mayor, Tatu Rauhamäki, Lobbyist Manager, Lea Saukkonen, Meteorologist, Tarja Tenkula, Ward Sister and Kari Uotila, Member of Parliament. The staff representatives are Piia Kuusniemi, Chief Shop Steward and Raili Parkkinen, Supermarket Manager.

The Board of Directors consists of Matti Niemi, Managing Director (Chairman); Tuula Entelä, Director of Business Opera-tions (Vice Chairman); Antti Pankakoski, Managing Director; Professor Matti Pohjola: Harry Salonaho, Managing Director; Ulla-Maija Tolonen, Commercial Counsellor, and Markku Uitto, Managing Director. There were no changes to the members of the Board of Directors in 2013.

During the year, the Board of Directors initiated the re-formulation of HOK-Elanto’s strategy, which included scrutiny of present business activities and services, as well as develop-ment needs both from the business point of view and taking members’ needs into account.

In 2012, the auditor has been Matti Hartikainen, Author-ised Public Accountant with Peter Forsell, Authorised Public Accountant, as deputy auditor, and the Authorised Public Ac-countants Ernst & Young with Jan Rönnberg, Authorised Public Accountant, as principal auditor, as the second audit company. No deputy auditor was selected for Ernst & Young Oy. They will act as the auditors also in 2013.

The Managing Director of Helsinki Cooperative Society Elanto is Matti Niemi, M.Sc.(Econ.) and the Deputy Manag-

13

ing Director is Veli-Matti Liimatainen, who is also Head of the Retail Division.

The HOK-Elanto Group Management Group comprises Matti Niemi, Managing Director; Veli-Matti Liimatainen, Deputy Man-aging Director; Jouko Heinonen, Division Director, Restaurant Division; Markku Kuusinen, Division Director, Service Station Stores and Fuel Trade; Juha Ilvonen, Planning Director; Laura Oja, CFO; Antero Levänen, HR Director, and Jyrki Karjalainen, who was appointed Real Estate Director on 1 September 2012.

OUTLOOK FOR THE FUTUREThe economic situation of 2013 is uncertain in many respects. The economic activity of the Greater Helsinki area and migration create the conditions for stability in HOK-Elanto’s main business.

Finland’s economic outlook refl ects the general develop-ment of the eurozone. The growth of consumer buying power is stalling. Wage development is moderate as the result of low pay deals and shrinking pay drifts. The falling employment rate also cuts the growth of the payroll. Thus, the growth of real incomes will remain subdued, as both income and value added taxes rise. On the other hand, the interest rates remain-ing low and the drop in saving ratios increase the possibilities of household consumption. Despite the weak outlook, private consumption is expected to grow slightly this year.

HOK-Elanto’s turnover will grow to almost EUR 2 billion. Investments in 2013 are estimated to total approx. EUR 115 million, as the result of which the Group operating profi t will be below the 2012 level.

HOK-Elanto acquired the share stock of Oy Center-Inn Ab on 8 January 2013. With the deal, HOK-Elanto acquired 10 restaurants in Helsinki city centre and the Flamingo Shopping Centre in Vantaa. Oy Center Inn Ab continues as a subsidiary of Helsinki Cooperative Society Elanto. The company has a

permanent staff of 130 restaurant sector professionals, whose employment will continue.

Phase three of the Kannelmäki Shopping Centre Kaari will be completed in the late autumn, when the Centre will see the opening of a new Sokos store designed for a shopping centre environment, 10 different restaurant concepts, and business premises of more than 40 other service providers in addition to the current businesses.

The basic refurbishment of the Alepa chain will be com-pleted over the next two years. About 40 stores in all will be renovated in 2013. A pilot project was launched in Alepa Vi-herlaakso in January, combining the Kauppakassi service with collection from a Posti automatic parcel point. In January, the pilot project of the express checkout service was extended to S Market Ympyrätalo.

HOK-Elanto is preparing to develop its retail premises on the corner of Hakaniemi Market as part of the overall develop-ment project for the area. The development and modernisation measures lasting several years will affect the business of Sokos Hakaniemi during 2014. In order that changes in the business activities and future projects may be catered for as far as possible through internal recruitment, joint consultations were initiated with the staffs of both Sokos Hakaniemi and Sokos Helsinki, as a result of which the staff’s contracts of employment will continue, but there may be changes to their job descriptions.

New Prisma stores are planned for Lommila, Hakunila, Myyrmäki, Tuusula, Mäntsälä, Klaukkala and Marja-Vantaa. New S Market and Alepa units are also planned. Extension of the Kodin Terra network in the Helsinki area is planned into Konala, Helsinki, Nihtisilta, Espoo and Porttipuisto, Vantaa.

Development of the S Group online business continues. The aim is a multi-channel concept combining an online store and a small, local ‘basement’ store.

kauppakassiSinun kauppasi netissä

14

CONSOLIDATED INCOME STATEMENT1.1.–31.12.2012

HELSINKI COOPERATIVE SOCIETY ELANTO CONSOLIDATED INCOME STATEMENT

NET SALES 1 1 876 644 1 779,474 108 158 97 768Other income from business operations 2 1 899 1 886 1 777 1 507 MATERIALS AND SERVICES Materials, equipment and goods 3 1 364 282 1,289,163 4,090 3 890External services 28 240 27,278 362 351 1 392 523 1 316 441 4 452 4 242 PERSONNEL COSTS 4 Wages, salaries and bonuses 153 702 146,401 8,096 7 079Ancillary personnel costs 37 137 35,345 2,730 1 965 190 839 181 746 10 826 9 044 DEPRECIATION AND WRITE-DOWNS 5 37 372 36 613 21 927 20 534 OTHER OPERATING COSTS Property rents 69 098 65 205 34 731 29 674Other costs 6 159 253 152 732 28 626 25 369 228 351 217 937 63 357 55 042 OPERATING PROFIT 29 460 28 623 9 373 10 413 Share in the profits of associated companies (+/-) 340 -79 Financial income and costs (+/-) 9 -360 -2 448 2 933 1 529

PROFIT BEFORE EXTRAORDINARY ITEMS 29 439 26 097 12 306 11 942 Extraordinary items (+/-) 10 10 000PRE-TAX PROFIT 29 439 26 097 22 306 11 942 Appropriations (+/-) 11 -808 -1 609Income taxes (+/-) 12 -7 392 -6 778 -5 602 -2 742Minority shareholdings (+/-) -260 -87 PROFIT FOR THE ACCOUNTING PERIOD 22 308 19 406 15 895 7 591

Group (EUR 1,000) Cooperative (EUR 1,000)

2012 2011 2012 2011

Appendix

15

CONSOLIDATED BALANCE SHEET31.12.2012

ASSETS

FIXED ASSETS

Appendix

Intangible assets 13 10 941 11 314 961 657Tangible assets 13 406 090 362 428 143 029 126 180Shares in associated companies 14 57 949 53 656 61 999 58 029Other investments 14 67 947 64 767 334 085 311 388 542 927 492 165 540 074 496 254 CURRENT ASSETS Inventories 16 90 741 96 804 138 124Long-term receivables 17 Deferred tax assets 18 753 785 Short-term receivables 19 32 435 39 780 33 928 7 704Securities 21 1 915 36 720 1 915 36 720Cash and bank receivables 60 738 49 133 36 212 29 442 186 583 223 222 72 193 73 990 729 509 715 388 612 267 570 244

CAPITAL AND RESERVES Appendix Cooperative capital 22 19 475 18 956 19 475 18 956Reserve fund 46 000 43 000 46 000 43 000Other funds 11 292 11 292Profit for previous financial years 384 312 358 539 305 383 291 397Profit for the accounting period 22 308 19 406 15 895 7 590 472 094 451 192 386 753 372 235 ACCUMULATED APPROPRIATIONS 23 3 145 1 794MINORITY INTERESTS 3 988 4 223 OBLIGATORY PROVISIONS 24 3 070 3 196 600 400 LIABILITIES Long-term liabilities 25 36 729 70 760 122 370 170 155Deferred tax liability 4 449 3 758 Short-term liabilities 27 209 179 182 259 99 398 25 660 250 357 256 777 221 768 195 815 729 509 715 388 612 267 570 244

LIABILITIES


2012 2011 2012 2011


2012 2011 2012 2011

16

BUSINESS OPERATIONSOperating profit 29 460 28 623 9 373 10 413Adjustments to operating profit (1) 35 502 33 453 21 494 18 798Change in working capital (2) 9 169 -3 809 1 168 -183Cash flow from business operations before financial items and taxes 74 130 58 267 32 035 29 028Increase (-)/decrease (+) in short-term receivables -17 763 20 423Change in short-term investments -90 -34 -90 -34Interest paid and other finance costs -1 750 -3 642 -1 931 -5 878Interest received and other financial income 1 004 1 692 7 374 7 563Income tax paid -2 259 -17 989 186 -13 870Cash flow before extraordinary items 71 035 38 295 19 811 37 233 INVESTMENTS Investments in tangible and intangible assets -81 640 -67 413 -34 479 -28 934Acquisition of shares in subsidiaries -1 257 -1 257 Investments in other shares -7 112 -6 630 -7 112 -6 630Loans granted -97 590 -34 070Capital gains on tangible and intangible assets 288 526 4 965 289Capital gains on shares 1 079 1 190 1 079 1 190Repayments of loan receivables 964 68 270 4 659Dividends received from investments 9 9 9 9Cash flow from investments -88 633 -71 354 -66 115 -63 487 FINANCE Long-term loans drawn down 15 381 15 000 58 500Long-term loan repayments -20 000 -32 000 -7 000Increase (+)/decrease (-) in short-term loans 56 1 36 308 -59 903Increase in cooperative capital 545 552 545 552Interest paid on cooperative capital -1 754 -1 655 -1 754 -1 655Cash flow from financing -5 772 -1 103 18 099 -9 506 Change in cash assets, increase (+)/decrease (-) -23 369 -34 162 -28 205 -35 761 Cash assets at beginning of financial year 84 107 118 269 64 417 100 178Cash assets at end of financial year 60 738 84 107 36 212 64 417

Adjustments to operating profit (1) Capital gains (-) and losses (+) in fixed assets -1 138 -1 047 -1 148 -813Depreciation and write-downs 37 372 36 613 21 927 20 534Other income and expenses not involving payments -732 -2 113 715 -923 35 502 33 453 21 494 18 798Change in working capital (2) Change in short-term receivables 5 236 -7 026 -1 340 1 216Change in inventories 6 063 -8 672 -14 -29Change in short-term non-interest-bearing creditors -2 130 11 889 2 523 -1 369 9 169 -3 809 1 168 -183

GROUP CASH FLOW STATEMENT1.1.-31.12.2012


2012 2011 2012 2011

17

Consolidated Balance Sheet assets,milj. €

0

100

200

300

400

500

600

700

800

715 730

Fixed assets

Fixed assets Current assets

Receivables

Consolidated Balance Sheet liabilities, milj. €

0

100

200

300

400

500

600

700

800

Short-termliabilities

Capital andreserves

Minority interestand reserves

Long-termliabilities(incl. tax liability)

2011 20122011 2012

715 730

Operating profi t, milj. €Net sales, milj. €

0

500

1000

1500

2000

1779 1877

Co-op member households

400000

450000

500000

550000

600000

563 532 577 638

Gross investments, milj. €

0

20

40

60

80

100

8876

Net sales per chain 2012

Alepa 18%

S-market 30%Prisma 31%

Kodin Terra 1%

Sokos and Emotion 6%

Restaurant trade 7%

ABC 9%

2011 20122011 2012

2011 20120

15

30

45

60

2011 2012

2926

18

Helsinki Cooperative Society Elanto (HOK-Elanto) is responsible for the Group’s fi nancing, accounting, real estate, marketing, personnel and member administration. The parent company also has central responsibility for acquiring, fi nancing and owning the Group’s real estate, machinery and equipment. HOK-Elanto regularly sells administrative services and leases equipment and business premises to its subsidiary companies as well as, to some extent, outside the Group. The income from the sales of these administrative services and revenues from rentals are included in HOK-Elanto’s net sales.

COMPARABILITY WITH THE PREVIOUS FINANCIAL YEARThe result includes one-off income, more than half from the sale of fi xed assets, of EUR 2.0 million (EUR 1.9 mill.) and one-off costs of EUR 0.2 million (EUR 0.4 mill.).

FIXED ASSETSIntangible and tangible assets are included in the balance sheet under purchase costs classed as variable, less the planned depreciations deducted annually in the accounts. The differ-ence of planned depreciations and booked depreciations is presented in the income statements of the Group companies as appropriations, and the accumulated difference of the depreciations entered in their balance sheets is presented as one item in the accumulated appropriations. Permanent write-downs on the undepreciated acquisition cost of fi xed assets are booked as a cost in the write-downs. The fi xed asset balance sheet values do not include revaluations.

The planned depreciations are based on the original acqui-sition cost of the intangible and tangible assets and their esti-mated economic lifecycles. Depreciation has been calculated from the beginning of the month following the deployment month of each item.

The planned depreciation periods are: yearsComputer software and other licenses 4Goodwill, Group goodwill 5Computer software 5Other long-term costs 5Buildings 25Tanks and other structures 10Machinery and equipment restaurant equipment 5 grocery store and other specialised equipment 5 computer hardware and offi ce equipment 5 transport equipment 5 building machinery and equipment 5 outlet cash register systems 3Other tangible assets 10Paving 10

PROPERTY RENTSRental costs incurred from leasing property are entered under leasing of business premises. The lease liabilities arising from the associated long-term lease agreements are presented in the Notes to the fi nancial statements. The largest leasehold properties are the Prisma stores in Itäkeskus, Sello and Viikki.

EQUIPMENT RENTALS AND LEASINGHelsinki Cooperative Society Elanto is responsible for procur-ing and fi nancing machinery and equipment for the entire Group. The parent company owns the assets and leases them to its subsidiaries. The Group companies’ leasing payments are treated as furnishing, fi tting and equipment costs and included under other operating costs.

INVENTORIES Inventories are booked at the direct acquisition cost or re-placement cost according to variable costs or probable market price, whichever is the lowest.

RECEIVABLES, FINANCING RESERVES AND LIABILITIESReceivables are taken at their nominal value or at no more than their probable value, liabilities at their nominal value, and securities as well as other such fi nancial assets at their acquisition cost or probable market price, whichever is the lowest.

There were no receivables or liabilities in foreign curren-cies on the balance sheet date.

PENSION ARRANGEMENTSBoth the statutory pension security and supplementary voluntary pension security for the employees of the Group companies are covered through external pension insurance companies. Pension costs are booked as costs in the year they are incurred.

CASH FLOW STATEMENTThe cash fl ow statements have been drawn up in accordance with the general recommendations of the Finnish Account-ing Standards Board, applying the indirect form of cash fl ow statement. The cash assets include short-term SOK Corpora-tion commercial papers, as well as cash and bank receivables.

A member’s entitlement to distributed surplus (return of surplus and interest on cooperative capital) expires after fi ve years from the due date given in the decision of the An-nual General Meeting of the Cooperative Society. The entry of expired interest debt on cooperative capital as income is included in the cash fl ow statement in the adjustments to operating profi ts.

NOTES ON THE PREPARATION OF THE FINANCIAL STATEMENTS

19

DERIVATIVE INTEREST RATE CONTRACTSDerivative interest rate contracts have been used for hedging purposes. Interest incomes and costs accrued from interest rate derivatives acquired for hedging purposes and interest option premiums acquired for hedging purposes are periodicised over the agreement term to adjust the interest cost or income of the instrument being hedged.

ACCOUNTING POLICIES APPLIED IN THE CONSOLIDATED FINANCIAL STATEMENT

Scope of the consolidated fi nancial statements and changes in Group structureThe consolidated fi nancial statement includes the parent co-operative and all the subsidiaries, i.e. the companies in which HOK-Elanto holds either directly or indirectly more than half of the voting rights conferred by the shares, as well as all the associated companies in which HOK-Elanto has a signifi cant holding and voting right of at least 20%. The companies in-cluded in the consolidated fi nancial statements, together with the Group’s holdings in them, are shown in the Notes to the Balance Sheet asset items.

During 2012, Helsinki Cooperative Society Elanto acquired the entire shareholding of Kiinteistö Oy Espoon Kutojantie 1, set up the company Kiinteistö Oy Keravan Kauppakaari 17, and sold the shares of its associated company Tenniskujan Liike Oy. In addition, in order to simplify the Group structure, 9 property subsidiaries merged with their parent Helsinki Co-operative Society Elanto.

Accounting policies applied in the consolidated fi nancial statement Intra-Group shareholdings have been eliminated in the fi nan-cial statements using the acquisition cost method, whereby the acquisition cost of shares in subsidiaries is eliminated against capital and reserves at the time of acquisition. The difference between the acquisition cost of subsidiaries and the capital and reserves corresponding to the acquired new assets is allocated principally to buildings and parcels of land. Group assets and liabilities allocated to buildings are depreciated/entered as income according to the depreciation plan of the asset item.

The associated companies have been consolidated using the equity method. The Group’s share of the associated com-panies’ profi t for the fi nancial period and change in capital and reserves are presented as individual items. Of the Group’s 27 as-sociated companies, the most important are Kiinteistö Oy Van-taanportin Liikekeskus and S-ryhmän logistiikkakeskukset Oy.

Minority interests have been separated out from the Group’s capital and reserves and result, and they are presented separately in the fi nancial statements.

When preparing the consolidated fi nancial statements, all intra-Group income and costs, distribution of profi ts, gains on the sale of fi xed assets and inter-company receivables and lia-bilities have been eliminated. Internal margins are not included in the inventories in the consolidated fi nancial statements.

DEFERRED TAXES Deferred taxes relating to the HOK-Elanto Group are booked in accordance with the principles explained below and the general recommendations of the Finnish Accounting Stand-ards Board. Deferred tax liabilities and assets arising from consolidation are included in deferred tax liabilities and assets in the consolidated balance sheet, and any change in them is booked as a change in deferred tax liabilities and assets in the consolidated income statement.

In line with conservative accounting practices, the con-solidated balance sheet shows the deferred tax liability in its entirety and deferred tax assets as the estimated and probable amount. The tax rate of 24.5 per cent approved by Parliament on 13 December 2011 and confi rmed on 29 December 2011 has been applied to the calculations.

In the consolidated balance sheet, the accumulated appro-priations shown in individual fi nancial statements have been divided into a deferred tax liability and capital and reserves, and changes in them are presented in the consolidated income statement. Depreciation to be reversed on taxable income (depreciation not deducted in taxation) has been taken into account as a reducing factor in calculating the above-men-tioned deferred tax liability.

The deferred tax assets resulting from obligatory pro-visions and confi rmed losses of Group companies are pre-sented in the consolidated balance sheet, and any change is presented in the consolidated income statement. In real estate subsidiaries where there is a minority holding, depre-ciation in accordance with the result has been calculated for buildings at Group level. However, at Group level, planned depreciations have been entered for the companies, and the deferred tax assets attributable to the included accrued ad-ditional depreciations of EUR 4.6 million have not been taken into consideration.

The intra-Group gains on the sale of fi xed assets were primarily generated before 1989 when such items were not subject to taxation. Therefore, no deferred tax assets have been created by the elimination of their internal margins. Furthermore, the Group has intra-Group capital gains of EUR 6.4 million attributable to shares, for which deferred tax as-sets have not been entered because it is unlikely that they will be realised.

No deferred tax assets have been entered for write-downs totalling EUR 5.4 million (EUR 5.5 mill.), which are not de-ducted in taxation, on shares, land areas and buildings, as their realisation is not deemed to be likely.

No deferred tax has been entered for attributable Group assets and liabilities (total EUR 4.5 million net) because the generated Group assets and liabilities are wholly attributable to key buildings and land areas in terms of business opera-tions, and there is no intention to transfer them outside the Group.

20

HOK-ELANTONOTES TO THE FINANCIAL STATEMENTS


2012 2011 2012 2011

NOTES TO THE INCOME STATEMENT 1. Net sales per division Supermarket trade 1 492 803 1 392 638 Department store trade 79 020 93 811 Restaurants 125 621 120 737 Fuel and service station store trade 155 888 151 101 Other operations and administration 23 311 21 187 108 158 97 768Total 1 876 644 1 779 474 108 158 97 768 2. Other income from business operations Profit from sale of fixed assets 1 151 1 174 1 161 943Other income from business operations 748 712 616 564Total 1 899 1 886 1 777 1 507 3. Materials, equipment and goods Purchases during financial year 1 358 220 1 297 835 4 105 3 919Change in stock, increase (-) or decrease (+) 6 063 -8 672 -14 -29Total 1 364 282 1 289 163 4 090 3 890 4. Personnel costs Wages, salaries and bonuses 153 702 146 401 8 096 7 079Pension costs 28 095 26 057 2 345 1 601Other social security costs 9 042 9 288 385 364Total 190 839 181 746 10 826 9 044

Notes on personnel and members of governing bodies in section 29. 5. Depreciation and write-downs Planned depreciations 37 372 36 595 21 927 20 520Write-downs from fixed assets 18 14Total 37 372 36 613 21 927 20 534

Details of depreciation and changes in depreciation differences are included under the specification of fixed assets and accumulated appropriations

6. Other operating costs Voluntary social security costs 8 586 7 434 743 623Property, equipment and disposables costs 88 029 84 468 7 501 6 748Marketing, administrative and other costs 62 639 60 831 20 382 17 998Total 159 253 152 732 28 626 25 369 Rentals are presented as a separate item in the Income Statement 7. Auditor’s feesAudit fees 155 155 58 64Certificates and statements 1 Other fees 58 Auditor’s fees total 156 213 58 64

8. Increase (-) or decrease (+) of obligatory provisions Decreased rental costs of partly vacant premises 326 709 Increases in property demolition costs -200 -200 Decreases in land decontamination costs 630 450Decreases in other obligatory provisions 300 Total 126 1 639 -200 450

21

Group (EUR 1,000) Group (EUR 1,000)

2012 2011 2012 2011


9. Financial income and costs Dividends from investment assets Dividends from others 9 9 9 9Total 9 9 9 9 Interest income from other investments of fixed assets From Group companies 4 035 2 987From others 2 50 1 50Total 2 50 4 036 3 037 Other interest and financial income From Group companies 2 268 3 614From others 997 1 466 501 778Total 997 1 466 2 769 4 393 Interest and other financial income, total 999 1 516 6 805 7 430 Write-downs from fixed asset investments -68 385 -68 385Write-downs from securities in current assets -80 80 -80 80

Interest and other finance costs To Group companies 2 532 1 949To others 1 515 3 508 1 497 3 496Interest and other finance costs, total 1 515 3 508 4 029 5 446 Financial income and costs, total -360 -2 448 2 933 1 529 10. Extraordinary items Group contributions received 10 000 Extraordinary items, total 10 000 11. Appropriations Depreciation differences, increase (-) or decrease (+) -809 -1 609 12. Income taxes Income taxes from actual operations in financial period 6 670 5 926 3 152 2 741Income taxes from actual operations from prev. financial periods 16 1Income tax on extraordinary items 2 450 Taxes on taxable income 6 670 5 942 5 602 2 742Change in deferred tax liability/assets 722 836 Total 7 392 6 778

Deferred tax assets 147 98Deferred tax liability 633 282

22


2012 2011 2012 2011

NOTES TO BALANCE SHEET ASSET ITEMS 13. Intangible and tangible assets Intangible assets

Intangible rights Acquisition cost 1 January 498 448Increases 122 54Decreases -4Acquisition cost 31 December 621 498 Accumulated depreciation 1 January 414 374Accumulated depreciation of decreases and transfers -4Depreciation for the financial period 51 44Accumulated depreciation 31 December 464 414 Book value 31 December 156 84 Goodwill Acquisition cost 1 January 56 117 56 117Acquisition cost 31 December 56 117 56 117 Accumulated depreciation 1 January 55 683 53 379Depreciation for the financial period 366 2 304Accumulated depreciation 31 December 56 049 55 683 Book value 31 December 68 434 Other long-term costs Acquisition cost 1 January 47 071 43 231 2 178 2 088Transfer from merged subsidiaries 4 Increases 2 608 1 126 46 10Decreases -524 -1 448 -198Inter-item transfers 1 475 4 161 116 278Acquisition cost 31 December 50 630 47 071 2 344 2 178 Accumulated depreciation 1 January 36 279 32 783 1 521 1 556Transfer from merged subsidiaries 4 Accumulated depreciation of decreases and transfers -524 -1 448 -198Depreciation for the financial period 4 616 4 944 205 162Accumulated depreciation 31 December 40 372 36 279 1 730 1 521 Book value 31 December 10 258 10 791 613 657 Intangible assets, prepayments Acquisition cost 1 January 5 369 Increases 1 920 3 800 454 280Inter-item transfers -1 466 -4 164 -106 -281Acquisition cost 31 December 459 5 347 0 Intangible assets, total 10 941 11 314 961 657


23


2012 2011 2012 2011

Group goodwill Acquisition cost 1 January 7 508 7 508Acquisition cost 31 December 7 508 7 508

Accumulated depreciation 1 January 7 508 7 508Accumulated depreciation 31 December 7 508 7 508

Book value 31 December 0 0

Group goodwill in the balance sheet 31 December 0 0

Tangible assets

Land and water areas Real estate ownership Acquisition cost 1 January 93 416 93 248 37 511 37 413Cost of subsidiaries acquired during financial year 184 Transfers from merged subsidiaries 3 619 Increases 13 008 402 7 758 330Decreases -3 432 -233 -3 432 -233Acquisition cost 31 December 103 177 93 416 45 456 37 511 Accumulated write-downs 1 January 1 859 1 859 3 111 3 111Accumulated write-downs of deductions and transfers -14 -14Write-downs 14 14Accumulated write-downs 31 December 1 859 1 859 3 111 3 111

Book value 31 December 101 318 91 558 42 344 34 399 Property rental rights Acquisition cost 1 January 828 502 246 207Transfers from merged subsidiaries 3 Increases 22 329 39Decreases -4 Acquisition cost 31 December 850 828 249 246 Accumulated write-downs 1 January 0Accumulated write-downs of decreases and transfers -4Write-downs 4Accumulated write-downs 31 December 0

Book value 31 December 850 828 249 246

Land and water areas, total 102 168 92 385 42 593 34 645 Buildings and structuresOwned buildings and structures Acquisition cost 1 January 275 575 237 759 69 463 63 608Transfer from merged subsidiaries 13 868 Increases 7 953 3 817 1 431 463Decreases -1 730 -870 -1 354 -351Inter-item transfers 31 977 34 870 281 5 742Acquisition cost 31 December 313 775 275 575 83 689 69 463 Accumulated depreciation 1 January 86 158 74 801 25 583 22 477Transfers from merged subsidiaries 6 506 Accumulated depreciation of decreases and transfers -482 -907 -106 -351Depreciation for the financial period 14 148 12 263 3 655 3 457Accumulated depreciation 31 December 99 824 86 158 35 639 25 583

Book value 31 December 213 951 189 417 48 050 43 880

Buildings and structures, total 213 951 189 417 48 050 43 880


24

Machinery and equipment Acquisition cost 1 January 174 428 156 020 173 260 155 814Transfer from merged subsidiaries 56 Increases 17 145 17 006 17 096 16 925Decreases -8 661 -7 678 -8 661 -8 559Inter-item transfers 6 160 9 080 6 160 9 080Acquisition cost 31 December 189 072 174 428 187 912 173 260 Accumulated depreciation 1 January 127 385 118 068 126 296 117 866Transfers from merged subsidiaries 56 Accumulated depreciation of decreases and transfers -8 474 -7 547 -8 474 -8 428Depreciation for the financial period 18 034 16 864 18 024 16 858Accumulated depreciation 31 December 136 945 127 385 135 902 126 296


Other tangible assets Acquisition cost 1 January 1 750 1 801 495 495Transfer from merged subsidiaries 143 Decreases -51 Acquisition cost 31 December 1 750 1 750 638 495 Accumulated depreciation 1 January 914 790 230 187Transfers from merged subsidiaries 115 Accumulated depreciation of decreases and transfers -51 Depreciation for the financial period 156 175 43 43Accumulated depreciation 31 December 1 070 914 388 230

Book value 31 December 680 836 249 265 Advance payments and assets in the course of construction Acquisition cost 1 January 32 746 33 741 426 2 931Increases 42 565 42 952 6 152 12 314Inter-item transfers -38 147 -43 947 -6 451 -14 819Book value 31 December 37 163 32 746 127 426

Tangible assets, total 406 090 362 428 143 029 126 180

14. Investments Holdings in Group companies Acquisition cost 1 January 72 297 72 297Increases 1 257 Decreases -2 549 Acquisition cost 31 December 71 005 72 297 Accumulated write-downs 1 January 814 814Accumulated write-downs 31 December 814 814


Receivables from Group companies Amount 1 January 147 985 117 610Merged companies (30.11.2012) -8 330 Increases 94 030 34 070Decreases -68 270 -3 695Amount 31 December 165 415 147 985




2012 2011 2012 2011

25

Capital loan receivables from Group companies Amount 1 January 28 584 28 584Merged subsidiaries (30.11.2012) -181 Increases 3 560 Amount 31 December 31 963 28 584 Accumulated write-downs 1 January 1 500 1 500Accumulated write-downs 31 December 1 500 1 500


Key terms and conditions for capital loans:

There are no predetermined due dates for the loans. The loan capital may be repaid and interest paid only in the part that the company’s unrestricted shareholders’ equity and the sum of all capital loans at the time of repayment exceed the total losses confirmed for the company’s last completed financial period or balance sheet included in a more recent financial statement.

Receivables from Group companies, total 195 878 175 069

Shares and holdings in associated companies

Shares in associated companies Acquisition cost 1 January 54 604 50 360 59 426 55 107Increases 4 327 4 365 4 000 4 365Decreases -34 -101 -30 -26Inter-item transfers -20 -20Acquisition cost 31 December 58 897 54 604 63 396 59 426 Accumulated write-downs 1 January 947 627 1 397 1 077Write-downs 320 320Accumulated write-downs 31 December 947 947 1 397 1 397

Book value 31 December 57 949 53 656 61 999 58 029 SOK Corporation holdings Acquisition cost 1 January 29 936 29 038 29 936 29 038Increases 2 079 899 2 079 899Acquisition cost 31 December 32 015 29 936 32 015 29 936

Book value 31 December 32 015 29 936 32 015 29 936 Shares in other associated companies Acquisition cost 1 January 16 906 16 187 16 906 16 187Increases 1 034 720 1 034 720Acquisition cost 31 December 17 940 16 906 17 940 16 906

Book value 31 December 17 940 16 906 17 940 16 906 Shares and holdings in associated companies, total Acquisition cost 1 January 101 446 95 585 106 269 100 331Increases 7 439 5 983 7 112 5 983Decreases -34 -101 -30 -26Inter-item transfers -20 -20Acquisition cost 31 December 108 851 101 446 113 351 106 269 Accumulated write-downs 1 January 947 627 1 397 1 077Write-downs 320 320Accumulated write-downs 31 December 947 947 1 397 1 397




2012 2011 2012 2011

26

Undepreciated proportion of Group assets derived from associated companies 7 562 7 724 Group reserves derived from associated companies not entered as income 508 538

Receivables from associated companies Amount 1 January 964 964Decreases -964 -964Amount 31 December 0 0 Book value 31 December 0 0 Receivables from associated companies, total 0 0 0 0 Other shares and holdings Acquisition cost 1 January 20 560 20 265 20 726 20 432Increases 647 647Decreases -372 -372Inter-item transfers 20 20Acquisition cost 31 December 20 560 20 560 20 726 20 726 Accumulated write-downs 1 January 2 674 2 692 2 733 2 750Accumulated write-downs of decreases and transfers -82 -82Write-downs 234 234Write-down reversals -68 -169 -68 -169Accumulated write-downs 31 December 2 606 2 674 2 665 2 733 Book value 31 December 17 954 17 886 18 061 17 994 Other receivables from others Amount 1 January 38 38Increases 1Amount 31 December 38 38 Book value 31 December 39 38 0 0 Investments, total 125 896 118 423 396 084 369 417 Stock exchange shares included in other shares Total market value 31 December 178 140 178 140Corresponding book value 12 12 12 12Difference 166 129 166 129



2012 2011 2012 2011

27

Shares/holdings %

15. Companies owned by Group and parent company 31 December 2012

Group companies owned by parent company HOK-Elanto Liiketoiminta Oy Helsinki 100HOK-Elanto Palvelu Oy Helsinki 100Gesterbyn Liikekiinteistö Oy Kirkkonummi 100Hokki-kiinteistöt Oy Helsinki 100Kiinteistö Oy Espoon Kutojantie 1 Espoo 100Kiinteistö Oy Espoon Siltakatu Espoo 100Kiinteistö Oy Hyvinkään Kauppakuja 2 Helsinki 100Kiinteistö Oy Kannelmäen Kauppakeskus Helsinki 100Kiinteistö Oy Keravan kauppakaari 2 Kerava 100Kiinteistö Oy Keravan kauppakaari 17 Kerava 100Kiinteistö Oy Korson kauppakeskus Vantaa 100Kiinteistö Oy Majavantie 5 Helsinki 100Kiinteistö Oy Nihtisilta 4 Espoo 100Kiinteistö Oy Olarin Komeetanranta 3 Espoo 100Kiinteistö Oy Peltokuumolantie 2 Hyvinkää 100Kiinteistö Oy Syystie 19 Helsinki 100Kiinteistö Oy Turunväylän Kauppakeskus Espoo 100Lahdenväylän Kauppakeskus Oy Vantaa 100Kiinteistö Oy Lommilan Kauppakeskus Espoo 100Jakomäen Kauppakeskus Oy Helsinki 78Rajatorpan Ostoskeskus Oy Vantaa 77Kiinteistö Oy Kalevankatu 31 Kerava 76Korson Liiketalo Oy Vantaa 76Pihlajamäen Ostoskeskus Oy Helsinki 74Kiinteistö Oy Siltasaarenkatu 6 Helsinki 65Kiinteistö Oy Soukan Liiketalo Espoo 62Hakunilan Kiinteistötalo Oy Vantaa 61Kuulapolun Liikekiinteistö Oy Vantaa 60Vuosaaren Liikekeskus Oy Helsinki 57Kiinteistö Oy Siltasaarenkatu 8-10 Helsinki 55Kiinteistö Oy Espoon Joosepinkuja 2 Espoo 53

On 31 December 2012, the HOK-Elanto Group of companies comprised31 subsidiaries in addition to the parent company Helsinki Cooperative Society Elanto,29 of them real estate companies.


28

Shares/holdings %

Associated company partially owned by parent company Suomen Osuuskauppojen Keskuskunta (SOK Corporation), Helsinki Holding 20,52 %, share of vote 5,76 %, book value of holding EUR 32,01 million. SOK Corporation’s capital and reserves on 31 December 2012 were EUR 660,0 million and SOK Corporation’s profit for 2012 was EUR 7,76 million.

Associated companies partially owned by parent company Kanniston Liikekiinteistö Oy Kerava 50Malmintorin Kiinteistöosakeyhtiö Helsinki 48Kiinteistö Oy Asematie 8 Vantaa 42Otaniemen Pankkitalo Oy Espoo 42Kiinteistö Oy Helsinginkatu 1 Helsinki 41Kaivospuhos Oy Vantaa 39Eestinmäen Palvelukeskus Oy Porvoo 38Laajasalon Ostostori Oy Helsinki 37Karakallion Ostoskeskus Oy Espoo 33Asunto Oy Ylhäinen Helsinki 25Martinlaakson Liikekeskus Oy Vantaa 30Asunto-Osakeyhtiö Siilitie 6 Helsinki 30Matinkylän Liikekiinteistö Oy Espoo 29Puotinharjun Puhos Oy Helsinki 29Kiinteistö Oy Vantaanportin Liikekeskus Vantaa 28Kiinteistö Oy Säterintie 2 Helsinki 28Kiinteistö Oy Tapulikaupungin palvelutalo Helsinki 28Haaga III Liikekeskus Oy Helsinki 28Gammelbackan Palvelukeskus Oy Porvoo 28Mikkolan Liikekiinteistö Oy Vantaa 26As. Oy Porvoonkulma Helsinki 25Asunto-Osakeyhtiö Vihdintie 7 Helsinki 25Kiinteistö Oy Laajalahden Liikekeskus Espoo 25Kiinteistö Oy Erätori Helsinki 24Munkkivuoren Ostoskeskus Oy Helsinki 21Asunto Oy Meilahdenkatu 2 Helsinki 20S-ryhmän logistiikkakeskukset Oy Helsinki 20 The total number of associated companies is 27.


29

16. Inventories Goods 90 741 96 804 138 124Total 90 741 96 804 138 124 17. Long-term receivables Sales receivables 0 0 0 0 18. Deferred tax assets From periodisation differences and temporary differences 753 785 Total 753 785 19. Short-term receivables Sales receivables 15 672 20 701 1 272 1 013 Receivables from Group companies Sales receivables 2 174 1 679Other receivables, Group contribution 27 045 6Accrued income 2 997 968Total 32 215 2 654 Receivables from associated companies Sales receivables 6 380 7 515 8 7Accrued income 2 116 1 890 16 121Total 8 497 9 404 24 128 Other receivables 1 802 1 348 83 4Accrued income 6 465 8 328 334 3 905Short-term receivables, total 32 435 39 780 33 928 7 704 20. Key items included in accrued income Personnel costs 3 287 2 447 64 122Financing items 129 134 2 166 392Accrued income from SOK Corporation 261 16 121Income taxes 2 684 4 788 3 481Annual contribution receivables and marketing contributions 1 412 1 629 Other accrued income 1 070 959 1 102 880Accrued income, total 8 582 10 217 3 347 4 995 21. Securities Other shares and holdings 1 915 1 745 1 915 1 745Other securities from others 34 975 34 975Total 1 915 36 720 1 915 36 720



2012 2011 2012 2011

30

NOTES TO BALANCE SHEET LIABILITIES

22. Capital and reserves Cooperative capital 1 January 18 956 18 463 18 956 18 463Addition 519 493 519 493Cooperative capital 31 December 19 475 18 956 19 475 18 956 Reserve fund 1 January 43 000 40 000 43 000 40 000Addition 3 000 3 000 3 000 3 000Reserve fund 31 December 46 000 43 000 46 000 43 000 Contingency fund 11 282 11 282Other funds 10 10Other funds, total 11 292 11 292 Profit/loss from preceding financial periods 1 January 377 944 363 312 298 987 296 196Reserve fund transfer in accordance with Section 27 of the Statutes -3 000 -3 000 -3 000 -3 000Interest paid on cooperative capital -1 896 -1 799 -1 896 -1 799Correction of error in previous financial period -4 26 Transfers from other funds 11 292 11 292 Other change -25 Profit from preceding financial periods 31 December 384 312 358 539 305 383 291 397 Profit/loss for financial period 22 308 19 406 15 895 7 591 406 619 377 944 321 278 298 987 Capital and reserves, total 472 094 451 192 386 753 372 235

Portion of accumulated depreciation difference recorded in Group capital and reserves EUR 17,640 thousand (EUR 15,302 thousand). Calculation on the distributable surplus 31 December Profit/loss from preceding financial periods 31 December 305 383 291 397Profit/loss for financial period 15 895 7 591Other funds 11 292Reserve fund transfer in accordance with Section 27 of the Statutes -5 000 -3 000Total amount of accelerated cooperative contribution repayments -316 -317Total 315 962 306 962 23. Accumulated appropriationsDepreciation difference Other long-term costs 90 100Buildings 6 208 5 836Machinery and equipment -5 140 -6 264Shares 1 921 2 065Other tangible assets 67 57Total 3 145 1 794



2012 2011 2012 2011

31

24. Obligatory provisions Partly vacant premises 807 1 133 Property demolition costs 200 200 Land decontamination costs 2 063 2 063 400 400 Total 3 070 3 196 600 400 25. Long-term liabilities Loans from financial institutions 34 597 70 000 34 231 70 000Accounts payable 15 60 9 25Other long-term liabilities to the Group 87 430 99 430Other long-term liabilities 2 117 700 700 700Long-term liabilities, total 36 729 70 760 122 370 170 155 26. Deferred tax liability From appropriations 4 449 3 758Total 4 449 3 758

27. Short-term liabilities Loans from financial institutions 30 828 3 30 769 Advance payments received 269 186 7 8Accounts payable 22 816 24 593 2 654 4 759 Liabilities to Group companies Accounts payable 833 1 243Other short-term liabilities 44 844 9 235Deferred liabilities 9 904 2 401Total 55 581 12 880 Liabilities to associated companies Accounts payable 89 203 98 436 1 017 998Total 89 203 98 436 1 017 998 Other short-term liabilities 15 091 13 481 3 092 2 928Deferred liabilities 50 972 45 560 6 278 4 087Short-term liabilities, total 209 179 182 259 99 398 25 660 28. Key items included in deferred liabilities Personnel costs 38 234 35 082 2 465 2 307Income taxes 2 307 1 2 307 Bonus liabilities 7 744 7 813 1 132 1 076Financing items 278 514 5 118 678Other deferred liabilities 2 408 2 151 5 159 2 427Deferred liabilities, total 50 972 45 560 16 182 6 488



2012 2011 2012 2011

32

NOTES ON PERSONNEL AND BOARD MEMBER SALARIES 29a Average number of personnel 6 201 6 175 150 133 29b Average number of personnel per division Supermarket trade 4 367 4 296 Department store trade 390 428 Fuel and service station store trade 233 232 Restaurants 933 961 Other operations and administration 278 258 150 133Total 6 201 6 175 150 133 29c Salaries and remuneration (for the tasks) of the Managing Director and his deputy, members and deputy members of the Board of Directors and the Supervisory Board 1 087 1 115 1 087 1 115 30. NOTES ON SECURITIES AND CONTINGENT LIABILITIES

Pledges given and contingent liabilitiesLiabilities mortgaged as security -loans from financial institutions 425-mortgages 762 Other pledges given: Pledges for lease liabilities -deposits pledged 39 38 -Finnish government bonds -mortgages pledged 164 72 57 29Other pledges -mortgages pledged for credit security 92 126

Mortgages total-mortgages pledged as security 1 018-mortgages in own possession 49 513 Security given on behalf of Group companies: Guarantees -directly enforceable guarantees as security for rental payments 6 287 6 242- other guarantees 697 697 Guarantees given on behalf of others: Helsinki Cooperative Society Elanto has a collateral security liability commensurate with its holding (20.0%) on loans drawn down by S-ryhmän logistiikkakeskukset Oy, the primary collateral being the company’s assets. The total sum of the principal borrow-ing on 31 December 2012, against which the collateral security is provided, is EUR 208.9 million. The maximum share of Helsinki Cooperative Society Elanto of the collateral security is approx. EUR 41.8 million. EUR 185.8 million of the principal borrowing had been drawn down at the close of the year, of which the collateral security liability of Helsinki Cooperative Society Elanto is EUR 37.2 million.

In connection with the financing of S Group’s new grocery logistics centre, the company’s present loan agreement will come up for renewal in 2013. The maximum sum of the shareholders’ total collateral security liability related to S-ryhmän logistiikkakeskukset Oy after the above financing arrangement is EUR 650.0 million, which includes refinancing of the company’s previous liabilities. Helsinki Cooperative Society Elanto’s collateral security liability is determined by this proportional to its shareholding, amounting to a maximum of EUR 130.0 million. The value of the primary collateral is assumed to cover the amount of the loan drawn down. Other contingent liabilities

Leasing liabilities -payable next year 214 248-payable in more than a year 331 529Total 545 777 Liability for returning value added tax concerning property investments: The Group and Helsinki Cooperative Society Elanto are obliged to refund value added tax deductions made on property invest-ments, if there is a change in use liable to tax during the adjustment period. Liability for returning value added tax 31 December 2012 22 572 3 329 Liability for returning value added tax 31 December 2011 17 059 17 059 3 279 3 279Liability for returning value added tax 31 December 2010 10 638 2 289Change 5 513 6 421 50 990



2012 2011 2012 2011

33

Lease obligations Property lease obligations -payable next year 62 936 58 104 1 376 1 070-payable in more than a year 364 559 368 783 9 899 3 008 427 496 426 888 11 274 4 078

Obligation under shareholder agreement to finance S-ryhmän logistiikkakeskukset Oy from 2010 on and to provide it with guarantees. Under the agreement, the shareholders of S-ryhmän logistiikkakeskukset Oy have a mutual obligation to provide the company with both equity finance and possible loan finance, as well as to provide guarantees for the company’s credit facilities. It is esti-mated that loan finance from the company shareholders will not be required. The mutual liability of the shareholders is divided proportional to their shareholding. Helsinki Cooperative Society Elanto’s shareholding is 20.0 per cent and the liability for the remaining proportion of equity finance EUR 16.7 million. The collateral security liability under the shareholders’ agreement is entered above under ‘Guarantees given on behalf of others’.

Obligation under shareholder agreement to provide guarantees for the obligations of S-Voima Oy and to fund its operations.

The shareholders are responsible for the obligations of S-Voima Oy in accordance with the so-called Mankala principle. Ac-cording to this principle, the liability for the company’s variable costs is determined according to the energy consumed by the shareholder. Liability for the company’s fixed costs, including loan instalments and interest as well as depreciation, are divided proportionally to the series of shares held by the shareholder. The company’s A series shares are linked to the purchase of mar-ket electricity, B series shares to the purchase of electric energy produced with wind power, and C series shares to the purchase of electricity produced with nuclear power, in which the S Group later decided not to participate. The HOK-Elanto Board of Directors has decided not to purchase S-Voima Oy C series shares, which means that HOK-Elanto is not involved in the nuclear power project.

Moreover, the shareholders of S-Voima Oy have agreed in the shareholder agreement on a mutual obligation to fund the company’s investments in production companies on equity terms, whereupon the liability is by definition divided on the basis of share series proportional to shareholding. Based on decisions made by the time of the financial statements of Helsinki Co-operative Society Elanto, the liability for the remaining proportion of equity funding is estimated at a total of EUR 4.7 million. It is estimated that loan finance from the company shareholders will not be required. Liability under derivative contracts, value of underlying assets Value of underlying assets Derivative interest rate contracts Option contracts Purchased 20 000 110 000 20 000 110 000 Written 10 000 40 000 10 000 40 000 Interest rate exchange agreements 60 000 40 000 60 000 40 000Of which value of underlying instruments of open agreements Derivative interest rate contracts Option contracts Purchased 20 000 110 000 20 000 110 000 Written 10 000 40 000 10 000 40 000 Interest rate exchange agreements 60 000 40 000 60 000 40 000 Liability under derivative contracts, fair value Fair values Derivative interest rate contracts Option contracts Purchased 143 768 143 768 Written -143 -848 -143 -848 Interest rate exchange agreements -1 156 21 -1 156 21Of which fair values of open agreements Derivative interest rate contracts Option contracts Purchased 143 768 143 768 Written -143 -848 -143 -848 Interest rate exchange agreements -1 156 21 -1 156 21 In assessing the overall risk position, the position of the balance sheet items to be hedged must be taken into account in ad-dition to derivatives. The derivative contracts that were open at the end of the financial year have been used to manage the Group’s interest rate risks. The open interest rate options mature within a year, the interest rate swaps within three years. The fair values of derivatives are based on market values or the present values of future cash flows.



2012 2011 2012 2011

34


BOARD OF DIRECTORS’ PROPOSAL ON DISPOSAL OF RETAINED EARNINGS

AND INTEREST ON COOPERATIVE CAPITAL

The distributable funds of Helsinki Cooperative Society Elanto at 31 December 2012 are EUR 315,962,214.00.

No substantial change has taken place in the Cooperative Society’s fi nancial position after the close of the fi nancial year.

The liquidity of the Cooperative Society is good, and the Board of Directors takes the view that the profi t distribution

proposed below will not jeopardise the Cooperative Society’s liquidity.

The Board of Directors proposes that Helsinki Cooperative Society Elanto’s

profi t for the fi nancial period 1 January - 31 December 2012 of EUR 15,894,797.05 be used as follows:

• A transfer shall be made to the reserve fund, in accordance with Section 27 of the Statutes, EUR 5,000,000.00.

• As interest on cooperative contributions, interest at 10% shall be paid on ordinary shares.

The interest shall be paid for the whole year to members who have paid their cooperative contribution

in full on the last day of the fi nancial period, and whose concomitant membership continues at the

time of the interest payment in one of the S Group Cooperative Societies. EUR 1,907,517.50

• Set aside in the retained earnings account of previous fi nancial years EUR 8,987,279.55

Matti Niemi Tuula Entelä Antti Pankakoski

Matti Pohjola Harry Salonaho Ulla-Maija Tolonen

Markku Uitto

35


TO THE COUNCIL OF REPRESENTATIVES OF HELSINKI COOPERATIVE SOCIETY ELANTOWe have audited the accounting records, fi nancial state-ments, annual report and corporate governance of Helsin-ki Cooperative Society Elanto for the fi nancial year 1 January – 31 December 2012. The fi nancial statements in-clude the balance sheet, income statement, cash fl ow statement and notes to the fi nancial statements for both the Group and the parent Cooperative Society. RESPONSIBILITY OF THE BOARD OF DIRECTORS AND MANAGING DIRECTORThe Board of Directors and Managing Director are responsi-ble for the preparation of the fi nancial statements and re-port of the Board and for ensuring that they provide true and fair information, in accordance with the legal provi-sions and regulations on the preparation of fi nancial state-ments and the report by the Board currently in force in Fin-land. The Board of Directors is responsible for the appropriate organisation of controls for the accounts and fi -nancial man-agement, and the Managing Director is responsible for en-suring that the accounts comply with the legislation and that the fi nancial management is organised in a reliable manner.

RESPONSIBILITY OF THE AUDITORWe are obliged to issue a statement on the fi nancial state-ments, consolidated fi nancial statement and annual re-port, based on the audit we have carried out. The Auditing Act stipulates that we adhere to the principles of pro-fessional ethics. We have conducted the audit in accordance with the good auditing practice observed in Finland. Good auditing practice requires that we plan and perform the audit in or-der to reach reasonable certainty on whether or not the fi -nancial statements or annual report contain substantial er-rors and whether or not the mem-bers of the parent Cooperative Society Supervisory Board or Board of Directors or the Managing Director have committed an act or negli-gence which may result in liability for damages towards the Cooperative Society, or breached the Cooperatives Act or the Statutes of the Cooperative Society.

AUDITORS’ REPORT

Tilintarkastusotava OyAuthorised Public Accountants

Matti Hartikainen, Authorised Public Accountants

Uimarannantie 23 B, 00780 Helsinki

Ernst & Young OyAuthorised Public Accountants

Jan Rönnberg, Authorised Public AccountantsElielinaukio 5 B, 00100 Helsinki


An audit involves measures to obtain auditing evidence on the fi gures and other information presented therein in-cluded in the fi nancial statements and annual report. The choice of such measures is based on the judgment of the auditor, also including assessment of the risk of material misstatement resulted from malpractice or error. In his assessment of such risks, the auditor takes into account the internal control, which in a Cooperative Society is important in preparing fi nancial statements and annual reports containing true and fair information. The auditor asses-ses the internal controls in order to design audit procedures that are appropriate for the circumstances, but not for the purpose of making a statement on the effectiveness of the internal controls in the Cooperative Society. An audit also includes an assessment of the propriety of the principles applied in preparing the fi nan-cial state-ments, the reasonable accuracy of the accounting esti-mates made by executive management, and the general manner of presentation of the fi nancial statements and annual report. It is our opinion that we have amassed the necessary amount of appropriate auditing evidence upon which to base our report.

REPORT ON THE FINANCIAL STATEMENTS AND ANNUAL REPORT As our report, we submit that the fi nancial statements and an-nual report provide a true and fair view on the result and fi -nancial situation of the Group and parent Cooperative Society, in accordance with the legal provisions and regulations gov-erning the preparation of fi nancial statements and annual re-ports currently in force in Finland. There are no discrepancies between the information of the annual report and fi nancial statements.

OTHER STATEMENTSWe recommend that the fi nancial statements and consolidated fi nancial statements be approved. The proposal made by the Board of Directors regarding the disposal of retained earnings shown in the balance sheet is in compliance with the Coopera-tives Act and the Statutes of the Cooperative. We recommend that the members of the Supervisory Board and Board of Direc-tors and Managing Director of the parent Cooperative Society be discharged from liability for the period audited by us.

36

STATEMENT OF THE SUPERVISORY BOARD

Saimi LehtimäkiSecretary, Supervisory Board

Jorma BergholmChairman, Supervisory Board

Having examined the annual report of Helsinki Cooperative Society Elanto for 2012 and the fi nancial statements, auditor’s reports for the Group and parent Cooperative Society, and proposal of the Board of Directors on the disposal of retained earnings, the Supervisory Board issues the following statement to the Spring General Meeting of the Council of Representatives in accordance with Paragraph 11, Section 18 of the Statutes of the Cooperative:

The Supervisory Board recommends that the fi nancial statements and balance sheet, as well as the consolidated fi nancial statements and balance sheet, be approved.

The Supervisory Board recommends the proposal of the Board of Directors concerning the disposal of retained earnings.

Helsinki, 4 April 2013

37

COUNCIL OF REPRESENTATIVES

Helsinki Cooperative Society Elanto’s highest decision-making body is the Council of Representatives, which decides on ap-proving the income statement and balance sheet as well as the consolidated income statement and consolidated balance sheet, on the measures it sees fi t concerning the profi t or loss of the approved fi nancial statements or consolidated fi nancial statements, as well as election of the members of the Super-visory Board and the auditors. The Council of Representatives met twice during 2012. At its Spring General Meeting held on 8 May 2012, the Council of Representatives approved the Cooperative Society and Group income statements and ba-lance sheets for the fi nancial year 2011 and decided on the disposal of the retained earnings for 2011, as well as electing a new Supervisory Board member to replace one who had resigned. At its Autumn General Meeting held on 27 Novem-ber 2012, the Council of Representatives elected members for the Supervisory Board for the period 2013–2015 in place of the six members who were retiring, as well as electing a new Supervisory Board member to replace one who had resigned, and selecting the auditors for 2013.

SUPERVISORY BOARD

The task of the Supervisory Board is to supervise the admi-nistration and operations of the Cooperative Society, which is managed by the Board of Directors and the Managing Di-rector. The Supervisory Board approves the core strategies and overall fi nancial objectives of the Cooperative, as well as appointing the Managing Director and electing the members of the Board of Directors of the Cooperative and the repre-sentatives for the meetings of the SOK Corporation and The Finnish Cooperative Union (SOKL) (The operation of SOKL ended in 2012). In accordance with Helsinki Cooperative So-ciety Elanto’s Statutes, the Supervisory Board comprised 18 members in 2012. The Supervisory Board met six times in 2012.

The Committee of Chairpersons of the Supervisory Board consisted of Managing Director Jorma Bergholm (Chairman), Member of Parliament Ben Zyskowicz (First Vice Chairman) and Adviser Sallamaari Muhonen (Second Vice Chairman).

They also form the Supervisory Board’s Committee of Chairpersons in 2013.

ADMINISTRATION

BOARD OF DIRECTORS, MANAGING DIRECTOR AND AUDITORS

The Board of Directors is responsible for the governance of the Cooperative and the appropriate organisation of ope-rations in accordance with the legislation and the Statutes of the Cooperative. The Board of Directors decides on the strategies and overall objectives of the Cooperative as well as annual fi nancial objectives and operational plans, prepares the fi nancial statements and consolidated fi nancial statement and puts forward a proposal on the measures to be taken as required by the result for the fi nancial year.

In 2012, the Board of Directors of Helsinki Cooperative Society Elanto met 11 times. The members of the Board of Directors were Matti Niemi, Managing Director (Chairman); Tuula Entelä, Director of Business Operations (Vice Chairman); Antti Pankakoski, Managing Director; Professor Matti Pohjo-la: Harry Salonaho, Managing Director; Ulla-Maija Tolonen, Commercial Counsellor, and Markku Uitto, Managing Direc-tor. There were no changes to the members of the Board of Directors in 2013.

Matti Niemi, M.Sc.(Econ.), continues as Managing Director of Helsinki Cooperative Society Elanto.

In 2012, the auditor was Matti Hartikainen, Authori-sed Public Accountant with Peter Forsell, Authorised Public Accountant, as deputy auditor, and the Authorised Public Accountants Ernst & Young with Jan Rönnberg, Authorised Public Accountant, as principal auditor, as the second Audit Company. No deputy auditor was selected for Ernst & Young Oy. They will act as the auditors also in 2013.

38

COUNCIL OF REPRESENT ATIVES 2012–2016

Aatela Elli, Chief Shop Steward, NurmijärviAlén Sini, Nursery School Teacher, VantaaArajärvi Pentti, Professor, HelsinkiArhinmäki Paavo, Minister of Culture and Sport, HelsinkiAsara-Laaksonen Teija, Division Director, VantaaAsko-Seljavaara Sirpa, Professor, HelsinkiAspara Jaakko, Professor of Marketing, HelsinkiBergholm Jorma, Managing Director, HelsinkiBogomoloff Harry, Managing Director, HelsinkiBryggare Arto, B.Sc.(Econ.and Bus. Admin.). HelsinkiEbeling Mika, Pastor, HelsinkiEklund Tarja, Bakery Worker, VantaaFinne-Elonen Laura, Specialist Physician, HelsinkiFinskas Matti, Journalist, EspooHaatainen Tuula, M.Soc.Sc., HelsinkiHakanen Yrjö, Chairman, HelsinkiHakola Juha, Chief Inspector, HelsinkiHuhta Seppo, Parliamentary Journalist, EspooIngervo Sirkku, Special Needs Teacher, HelsinkiJurva Johanna, Member of Parliament, VantaaJärvinen Jukka, Addictions Counsellor, HelsinkiKaikkonen Antti, Member of Parliament, TuusulaKanerva Seppo, Commodore, General Staff, HelsinkiKiljunen Kimmo, Ph.D.(Soc. Sc.), VantaaKinnunen Marjo, Team Leader, HelsinkiKiviniemi Mari, Member of Parliament, HelsinkiKokkonen Paula, LL.M., HelsinkiKuisma Risto, LL.M., PornainenKuusisto Merja, Member of Parliament, TuusulaKähärä Sirkka-Liisa, Nurse, Vantaa

Könkkölä Kalle, Executive Director, HelsinkiLaukkanen Antero , Counsellor of Social Welfare, EspooLekman Sirkka, Silhouette Artist, HelsinkiLuhtanen Leena, Counsellor of Educations, EspooLuukkainen Hannele, Lic.Soc.Sc., HelsinkiMoilanen Eeva-Liisa, LL.M., HelsinkiMuhonen Sallamaari, Adviser, HelsinkiNurminen Jukka, Head of Service, HelsinkiNäre Sari, Docent, D.Soc.Sc., HelsinkiPaavolainen Sara, Actress, HelsinkiPasterstein Dennis, Inspector, HelsinkiPelkonen Jaana, Member of Parliament, HelsinkiPeltokorpi Terhi, Midwife, HelsinkiPrusti Riitta, Pensioner, HelsinkiPuhakka Sirpa, Party Secretary, HelsinkiPursiainen Terho, Pastor, JärvenpääRihtniemi Suvi, Executive Director, HelsinkiRäty Laura, Deputy Mayor, HelsinkiSaarnio Pekka, Journalist, HelsinkiSaukkonen Lea, Meteorologist, HelsinkiSuonperä Kaarina, Trainer, VantaaSärkijärvi Jouni, Architect, EspooTenkula Tarja, Ward Sister, HelsinkiTorvalds Nils, Journalist, HelsinkiTuomioja Erkki, Minister for Foreign Affairs, HelsinkiUotila Kari, Member of Parliament, EspooVahasalo Raija, Member of Parliament, KirkkonummiVennamo Meri, M.A., HelsinkiVikstedt Tea, Painter, HelsinkiVärmälä Johanna, Nurse, Espoo

ADMINISTRATIVE BODIES OF HOK-ELANTO

39

HOK-ELANTO SUPERVISORY BOARD 2013

Bergholm Jorma, Managing Director, Helsinki, Chairman

Bryggare Arto, B.Sc.(Econ.and Bus. Admin.), Helsinki

Ebeling Mika, Pastor, Helsinki

Hakola Juha, Chief Inspector, Helsinki

Huhta Seppo, Parliamentary Journalist, Espoo

Häkkinen Juha, Executive Director, Vantaa

Kauma Pia, Member of Parliament, Espoo

Kuusisto Merja, Member of Parliament, Tuusula

Kuusniemi Piia, Chief Shop Steward, Helsinki,

staff representative

Muhonen Sallamaari, Adviser, Helsinki, 2. Vice Chairman

Parkkinen Raili, Supermarket Manager, Vantaa,

staff representative

Puoskari Pentti, Ph.D.(Soc. Sc.), Vantaa

Rantala-Korhonen Piia, Deputy Mayor, Oulu

Rauhamäki Tatu, Lobbyist Manager, Helsinki

Saukkonen Lea, Meteorologist, Helsinki

Tenkula Tarja, Ward Sister, Helsinki

Uotila Kari, Member of Parliament, Espoo

Zyskowicz Ben, Member of Parliament, Helsinki,

1. Vice Chairman

HOK-ELANTO BOARD OF DIRECTORS 2013

Niemi Matti, Managing Director, Hyvinkää, Chairman

Entelä Tuula, Director, Business Operations, Espoo,

Vice Chairman

Pankakoski Antti, Managing Director, Helsinki

Pohjola Matti, Professor, Helsinki

Salonaho Harry, Managing Director, Helsinki

Tolonen Ulla-Maija, Commercial Counsellor, Halikko

Uitto Markku, Managing Director, Espoo

40

Editing and graphic design: HOK Elanto, Communications and Marketing ServicesPrinted at: Libris Oy, 2013

Helsinki Cooperative Society ElantoKaupintie 14, FI-00440 Helsinki, Finland

Tel. +358 10 76 600hok-elanto.fi

Business ID 1837954-9

Annual Report 2012 - S-kanava

Documents

Transcript of Annual Report 2012 - S-kanava