2023
FINANCIAL
REVIEW
Report by the Board of Directors 3
Operating environment 4
Outlook and guidance for 2024 4
Financial performance 5
Segments 7
Changes in Group composition 9
Main objectives and results achieved in sustainability 10
EU Taxonomy 17
Key events during the financial year 25
Events after the financial year 26
Resolutions of the 2023 Annual General Meeting 26
Information contained in the notes to
the financial statements 26
Risk management 26
Significant risks and uncertainties 27
Proposal for profit distribution 28
Annual General Meeting 28
Shares and securities markets 28
Analysis of shareholding 28
Board authorisations 30
Group's key performance indicators 33
Calculation of performance indicators 34
Financial statements 38
Consolidated financial statements (IFRS) 39
Consolidated income statement 39
Consolidated statement of comprehensive income 39
Consolidated statement of financial position 40
Consolidated statement of cash flows 41
Consolidated statement of changes in equity 42
Notes to the consolidated financial statements 43
1. Accounting policies for the consolidated
financial statements 43
1.1 Basic information about the Company 43
1.2 Basis of preparation 43
1.3 Critical accounting estimates and assumptions 43
1.4 Critical judgements in applying
accounting policies 44
1.5 Consolidation principles 44
1.6 Discontinued operations and non-current assets
classified as held for sale and related liabilities 45
1.7 New IFRS standards and IFRIC interpretations
and the impact of new and updated standards 45
This report is a translation of the Finnish original.
1
FINANCIAL
REVIEW
2. Financial results 47
2.1 Revenue recognition 47
2.2 Segment information 47
2.3 Material and services 56
2.4 Other operating income 56
2.5 Operating expenses 56
2.6 Foreign exchange differences recognised in
operating profit 57
2.7 Income tax 57
2.8 Earnings per share 60
2.9 Additional details related to
the statement of cash flows 60
3. Capital employed 61
3.1. Acquisitions 61
3.2 Property, plant and equipment 63
3.3 Intangible assets 65
3.4 Leases 68
3.5 Inventories 70
3.6 Trade and other current receivables 70
3.7 Pension assets 72
3.8 Shares in associates and joint ventures 75
3.9 Provisions 77
4. Capital structure and financial risks 78
4.1 Capital management 78
4.2 Shareholders' equity 80
4.3 Financial risks 81
4.4 Finance income and costs 86
4.5 Financial assets and liabilities by category 87
4.6 Commitments and contingencies 91
5. Other 92
5.1 Subsidiaries, associates, joint ventures and
proportionately consolidated mutual real estate
companies 92
5.2 Related party transactions 94
5.3 Share-based compensation 96
5.4 Legal disputes and possible legal proceedings 98
5.5 Events after the balance sheet date 98
Parent company's financial statements (FAS) 99
Signatures 114
Auditor’s report 115
Auditor’s ESEF assurance report 119
2
REPORT BY
THE BOARD
OF DIRECTORS
THE REPORT BY THE BOARD OF DIRECTORS
2023
Kesko has operations in Finland, Sweden, Norway, Estonia,
Latvia, Lithuania and Poland, with some 1,800 stores
engaged in chain operations.
Kesko’s principal business model in the Finnish market is the
chain business model, in which independent K-retailers run
retail stores in Kesko's chains. Retailer operations accounted
for approximately 46% of Kesko’s net sales in 2023. At
the end of 2023, Kesko had nearly 1,100 independent
K-retailer entrepreneurs as partners. Kesko also engages
in its own retailing, which accounted for some 15% of net
sales. B2B trade is a significant and growing part of Kesko’s
business operations, and it accounted for approximately
39% of Kesko’s net sales.
Outside Finland, Kesko mainly engages in its own retailing
and B2B trade. Net sales for international operations
totalled €2,078 million, and accounted for 18% of Kesko’s
total net sales.
Together, Kesko and K-retailers form K Group, whose retail
sales (preliminary) totalled some €15.8 billion (0% VAT)
in 2023.
Operating environment
Identified megatrends impacting K Group’s operations
include globalisation and related supply chain security and
the growing importance of risk management, continued
population change and urbanisation, the growing importance
of data and possibilities enabled by digitalisation, and
the emphasised importance of sustainability. Themes
emphasised in customer and consumer trends include
individual customer behaviour, the need to constantly adjust
selections to customer needs, and multichannel shopping.
Key opportunities and risks in our operating environment
are related to developments in our economic operating
environment, digital services and data-driven management,
the geopolitical situation, sustainable purchasing and
human rights, and climate change. Emerging risks include
the loss of biodiversity and extreme weather phenomena.
Risks are described in more detail in the ‘Significant risks
and uncertainties’ section of this Report by the Board
of Directors.
Outlook and guidance for 2024
Kesko Group’s profit guidance is given for the year 2024,
in comparison with the year 2023. Kesko’s operating
environment is estimated to remain challenging in 2024.
Kesko’s net sales and operating profit are estimated to
remain at a good level in 2024 despite the challenges in the
company’s operating environment. Kesko estimates that its
comparable operating profit in 2024 will be in the range of
€620–720 million.
The profit guidance is based on an estimate of a relatively short
recession in Kesko’s operating countries. Key uncertainties
impacting Kesko’s outlook are developments in inflation and
interest rate levels, and geopolitical crises and tensions.
REPORT BY THE BOARD OF DIRECTORS
In grocery trade, B2C trade and the foodservice market
are expected to remain stable despite tightened price
competition, and inflation is expected to slow down in 2024.
Profitability in grocery trade is estimated to remain good
also in 2024.
In building and technical trade, the market is expected to
continue to decline in 2024. The economic cycle will have
the biggest impact on new residential building, while the
decline in other building construction, renovation building
and infrastructure construction is expected to be smaller.
The cycle is expected to turn in 2025. Profitability in
building and technical trade is estimated to fall short of the
2023 level, but to still remain at a reasonably good level in
2024.
In car trade, new car sales are expected to fall short of the
2023 level. Sales of used cars and services are expected to
grow. Profitability in car trade is estimated to still remain
good in 2024, but to fall short of the 2023 level.
4
Group net sales decreased by 0.2%. In comparable terms, net
sales decreased by 0.8%. Net sales increased in comparable
terms by 1.3% in Finland, and decreased by 9.8% in the other
Kesko operating countries. The comparable change % has
been calculated in local currencies and excluding the impact
of acquisitions and divestments completed.
Net sales for the grocery trade division grew by 3.7%. Sales
to K Group grocery store chains grew by 2.7%. Net sales
for Kespro’s foodservice business grew by 10.9%. Without
Covid-19 restrictions, consumption was relatively more geared
towards foodservice than retail than in the comparison period.
Net sales for the building and technical trade division
decreased by 8.7%, or by 10.5% in comparable terms.
Net sales for technical trade increased by 2.6%, but
decreased by 4.8% in comparable terms. Net sales for
building and home improvement trade decreased by 16.1%
in comparable terms. Net sales in building and home
improvement trade decreased in all operating countries,
impacted by a weaker construction market year-on-year.
In the car trade division, net sales increased by 12.2%, or by
13.9% in comparable terms. Net sales grew in all car trade
segments. Net sales for sports trade decreased.
The Group's comparable operating profit totalled €712.0
million, a decrease of €103.0 million. The comparable
operating profit for the grocery trade division decreased
by €15.6 million, weakened by campaigns and other
marketing efforts as well as increased real estate costs. The
division’s profitability was improved by the sales growth
and good profitability of Kespro’s foodservice business. The
comparable operating profit for the building and technical
trade division decreased by €111.4 million. The comparable
operating profit decreased in all operating countries
primarily as a result of the decrease in net sales. In addition
to the decrease in net sales, profitability for technical trade
was impacted by Elektroskandia, where profitability was
below that of the rest of the business, burdened by a €2.0
million expense recorded for the allocation of fair value of
inventories. In Finland, profitability for Onninen and building
and home improvement trade remained good. The share
of result from Kesko Senukai had a €1.9 million negative
impact on the division’s comparable operating profit
year-on-year. The comparable operating profit for the car
trade division increased by €18.2 million. The comparable
operating profit increased in the car trade segments by
€24.7 million thanks to net sales growth and transformation
and efficiency improvement measures. In sports trade,
comparable operating profit decreased.
Items affecting comparability,
€ million 1–12/2023 1–12/2022
Comparable operating profit 712.0 815.1
Items affecting comparability
+gains on disposal +0.4 +0,0
-losses on disposal -1.0 -0.1
+/-structural arrangements -16.1 +1.6
Total items affecting
comparability -16.7 +1.5
Operating profit 695.4 816.5
The most significant items affecting comparability
were related to the reorganisation of the K-Rauta chain
Financial performance
Net sales and profit 2023
1–12/2023 Net sales, € million Change % Change, comparable, %
Operating profit,
comparable € million Change, € million
Grocery trade 6,351.6 +3.7 +3.7 444.8 -15.6
Building and home improvement trade 1,912.1 -19.6 -16.1 65.0 -62.5
Technical trade 2,344.7 +2.6 -4.8 128.5 -45.2
Kesko Senukai - - - 19.0 -1.9
Building and technical trade total 4,193.2 -8.7 -10.5 212.5 -111.4
Car trade 1,262.3 +12.2 +13.9 82.6 +18.2
Common functions and eliminations -23.3 - - -27.8 +5.7
Total 11,783.8 -0.2 -0.8 712.0 -103.0
5
in Sweden, in which the Swedish building and home
improvement trade operations will be concentrated in the
K-Bygg chain, and to acquisitions.
K Group's (Kesko and the chain stores) retail and B2B
sales (0% VAT) totalled €15,850.0 million, representing a
decrease of 1.8%. During the 12-month period that ended
in December 2023, the number of Finnish households
belonging to the K-Plussa loyalty scheme and using
the Plussa network totalled 2.5 million, with 3.3 million
customers using their K-Plussa card.
Net finance costs, income tax
and earnings per share
Net finance costs, income tax
and earnings per share 1–12/2023 1–12/2022
Net finance costs, € million -83.9 -56.0
Interests on lease liabilities,
€ million -73.4 -68.4
Profit before tax, comparable,
€ million 630.4 763.2
Profit before tax, € million 613.5 761.1
Income tax, € million -118.0 -151.2
Earnings per share,
comparable, € 1.28 1.54
Earnings per share, € 1.25 1.53
Equity per share, € 6.93 6.90
The growth in Group net finance costs was impacted by
the increase in interest-bearing net debt and rise in interest
rate levels. In the comparison period, net finance costs were
reduced by a positive change in the fair value of interest
rate derivatives. The share of result of associates was €2.1
million (€0.6 million).
The Group’s effective tax rate was 19.2% (19.9%).
The Group’s earnings per share and comparable earnings
per share decreased compared to the year before.
Cash flow and financial position
Cash flow, € million 1–12/2023 1–12/2022
Cash flow from operating
activities 1,049.5 915.2
Cash flow from investing
activities -590.2 -344.3
Cash flow from financing
activities -492.2 -604.7
Financial position 31 Dec. 2023 31 Dec. 2022
Liquid assets, € million 227.3 314.1
Interest-bearing liabilities,
€ million 2,787.0 2,418.3
Lease liabilities, € million 1,997.9 1,920.1
Interest-bearing net debt excl.
lease liabilities, € million 561.9 184.1
Interest-bearing net debt/
EBITDA, excl. IFRS 16 impact 0.7 0.2
Gearing, % 92.8 76.7
Equity ratio, % 35.8 36.9
The Group’s cash flow from operating activities totalled
€1,049.5 million (€915.2 million).
The Group’s cash flow from investing activities totalled
€-590.2 million (€-344.3 million). Cash flow from investing
activities included a positive item of €54.3 million (€36.8
million) from the redemption of money market funds,
included in the Group’s liquid assets.
The Group’s net debt excluding lease liabilities increased due
to investments in store sites and logistics, and acquisitions.
Capital expenditure
Capital expenditure, € million 1–12/2023 1–12/2022
Store sites 286.5 268.1
Acquisitions 141.1 50.1
IT 25.0 41.8
Other investments 226.3 89.2
Total 678.9 449.2
Capital expenditure in store sites increased by €18.4
million on the comparison period. In the comparison period,
capital expenditure in store sites included the property
of K-Citymarket Turtola in Tampere, €40.3 million: the
ownership of the property was transferred to the Group
as a result of a return of surplus assets by Kesko Pension
Fund in March 2022. The investment did not have a cash
flow impact.
Other capital expenditure included an investment of €90.1
million in the construction of Onninen and K-Auto’s shared
logistics centre in Hyvinkää, Finland. The construction
project is expected to be completed in 2025.
Capital expenditure included the acquisition of
Elektroskandia Norge AS in Norway, completed on 1 March
2023, the acquisition of Zenitec Sweden AB in Sweden,
completed on 5 April 2023, and the acquisition of Geitanger
Bygg AS in Norway, completed on 2 October 2023.
Capital expenditure in the comparison period included the
acquisitions of the Swedish Kungälvs Trävaruaktiebolag,
Föllinge Såg AB, Djurbergs Järnhandel Aktiebolag and
XL-BYGG Bergslagen AB, and the Norwegian Seljord
Elektriske AS.
6
Segments
New segment structure
Kesko changed its division structure and segment reporting
as of 1 April 2023. Sports trade is now part of the car trade
division, while it previously was part of the building and
technical trade division. Data concerning the comparison
periods have been adjusted to correspond to the new
segment structure.
Grocery trade
1–12/2023 1–12/2022
Net sales, € million 6,351.6 6,124.7
Operating profit, comparable,
€ million 444.8 460.4
Operating margin, comparable, % 7.0 7.5
Return on capital employed,
comparable, % 17.4 19.6
Capital expenditure, € million 303.7 257.6
Personnel, average 6,257 6,288
Net sales for the grocery trade division totalled €6,351.6
million (€6,124.7 million), an increase of 3.7%. Sales
to K Group grocery store chains grew by 2.7%. Net
sales for Kespro’s foodservice business grew by 10.9%.
Without Covid-19 restrictions, consumption was relatively
more geared towards foodservice than retail than in the
comparison period.
The total retail grocery market in Finland (incl. VAT) is
estimated to have grown by approximately 6.0% (Finnish
Grocery Trade Association PTY), and retail prices are
estimated to have risen by some 9.0% (incl. VAT, Kesko’s
own estimate). K Group's grocery sales grew by 3.2% (incl.
VAT). New store openings by competitors are estimated to
have continued to impact market shares in 2023, but to a
lesser extent than in 2022. Online grocery sales grew by
5.7%, and accounted for approximately 3.2% of K Group’s
grocery sales (incl. VAT). Online grocery sales have risen
clearly above pre-pandemic levels. All K Group grocery
store chains offer online grocery sales services. The number
of K Group stores offering online grocery services was 729
at the end of the reporting period, up by 110 year-on-year.
The total market for the foodservice business is estimated
to have grown by 6.7% (Finnish Grocery Trade Association
PTY). Kespro’s market share is estimated to have continued
to grow in 2023. The popularity of eating out is expected to
be growing trend.
The comparable operating profit for the grocery trade
division totalled €444.8 million (€460.4 million), down by
€15.6 million, weakened by campaigns and other marketing
efforts as well as increased real estate costs. Profitability was
improved by sales growth and good profitability in Kespro’s
foodservice business. Kespro’s comparable operating profit
totalled €75.0 million (€59.2 million). Operating profit for
the grocery trade division totalled €443.6 million (€461.5
million). Items affecting comparability totalled €-1.3 million
(€1.1 million).
Capital expenditure for the grocery trade division totalled
€303.7 million (€257.6 million). Capital expenditure in store
sites totalled €251.2 million (€230.5 million).
Net sales, € million 1–12/2023 1–12/2022 Change, %
Change, %,
comparable
Sales to K-food stores 4,484.0 4,367.4 +2,7 +2,7
K-Citymarket, non-food 615.5 605.1 +1,7 +1,7
Kespro 1,154.9 1,041.3 +10,9 +10,9
Others 97.3 110.8 -12,1 -12,1
Total 6,351.6 6,124.7 +3,7 +3,7
7
Building and technical trade
1–12/2023 1–12/2022
Net sales, € million 4,193.2 4,591.1
Building and home improvement
trade 1,912.1 2,377.2
Technical trade 2,344.7 2,286.2
Operating profit, comparable,
€ million 212.5 323.8
Building and home improvement
trade 65.0 127.5
Technical trade 128.5 173.7
Kesko Senukai 19.0 20.9
Operating margin,
comparable, % 5.1 7.1
Building and home improvement
trade 3.4 5.4
Technical trade 5.5 7.6
Return on capital employed,
comparable, % 11.4 19.1
Capital expenditure, € million 273.0 108.2
Personnel, average 6,073 5,871
Net sales for the building and technical trade division
decreased by 8.7%, or by 10.5% in comparable terms. Net
sales for technical trade increased by 2.6%, but decreased
by 4.8% in comparable terms. Net sales for technical trade
grew in Norway, underpinned by the Elektroskandia AS
acquisition, but decreased in other operating countries. Net
sales for building and home improvement trade decreased
by 16.1% in comparable terms: net sales decreased in all
operating countries, impacted by a weaker construction
market year-on-year. Net sales development in euro terms
was increased by the strengthening of the Polish zloty
against the euro, and decreased by the weakening of the
Swedish krona and the Norwegian krone against the euro.
In Finland, net sales for the building and technical trade
division totalled €2,115.0 million (€2,382.3 million), down
by 11.2%. Net sales from international operations totalled
€2,078.2 million (€2,208.8 million), down by 5.9%, or by
9.8% in comparable terms.
The comparable operating profit for the building and technical
trade division totalled €212.5 million (€323.8 million),
down by €111.4 million. The comparable operating profit
decreased in all operating countries primarily as a result
of the decrease in net sales. In addition to the decrease in
net sales, profitability for technical trade was impacted by
Elektroskandia, where profitability was below that of the rest
of the business, burdened by a €2.0 million expense recorded
for the allocation of fair value of inventories. In Finland,
profitability for Onninen and building and home improvement
trade remained good. The share of result from Kesko
Senukai had a €1.9 million negative impact on the division’s
comparable operating profit year-on-year.
Operating profit for the building and technical trade
division totalled €201.9 million (€324.8 million). Items
affecting comparability totalled €-10.5 million (€0.9
million). The most significant items affecting comparability
were related to the reorganisation of the K-Rauta chain
in Sweden, in which the Swedish building and home
improvement trade operations will be concentrated in
the K-Bygg chain, and to acquisitions.
Capital expenditure for the building and technical trade
division totalled €273.0 million (€108.2 million). Capital
expenditure included an investment of €90.1 million in
the construction of Onninen and K-Auto’s shared logistics
centre in Hyvinkää, Finland. The construction project is
expected to be completed in 2025. Capital also expenditure
included the acquisition of Elektroskandia Norge AS in
Norway, completed on 1 March 2023, the acquisition
of Zenitec Sweden AB in Sweden, completed on 5 April
2023, and the acquisition of Geitanger Bygg AS in Norway,
completed on 2 October 2023. Capital expenditure in
comparison period included the acquisitions of the Swedish
Kungälvs Trävaruaktiebolag, Föllinge Såg AB, Djurbergs
Järnhandel Aktiebolag and XL-BYGG Bergslagen AB, and
the Norwegian Seljord Elektriske AS.
Net sales, € million 1–12/2023 1–12/2022 Change, %
Change, %,
comparable
Building and home improvement trade, Finland 937.6 1,126.7 -16.8 -16.8
K-Rauta, Sweden 149.8 189.1 -20.8 -14.5
K-Bygg, Sweden 280.0 352.8 -20.6 -19.7
Byggmakker, Norway 547.6 711.4 -23.0 -13.4
Building and home improvement trade, total 1,912.1 2,377.2 -19.6 -16.1
Technical trade, Finland 1,234.0 1,319.0 -6.4 -6.4
Technical trade, Sweden 132.8 147.0 -9.7 -10.7
Technical trade, Norway 517.5 346.5 +49.3 +4.3
Technical trade, Baltics 129.1 130.8 -1.3 -1.3
Technical trade, Poland 336.9 349.2 -3.5 -6.5
Technical trade, total 2,344.7 2,286.2 +2.6 -4.8
Total 4,193.2 4,591.1 -8.7 -10.5
8
Car trade
1–12/2023 1–12/2022
Net sales, € million 1,262.3 1,124.8
Car trade 1,078.6 910.9
Sports trade 183.9 214.0
Operating profit, comparable,
€ million 82.6 64.3
Car trade 73.1 48.4
Sports trade 9.5 16.0
Operating margin,
comparable, % 6.5 5.7
Car trade 6.8 5.3
Sports trade 5.1 7.5
Return on capital employed,
comparable, % 15.8 14.7
Capital expenditure, € million 80.3 45.1
Personnel, average 1,531 1,519
Net sales for the car trade division increased by 12.2%, or
by 13.9% in comparable terms. Net sales grew in all car
trade segments. Net sales for sports trade decreased by
14.1%.
The combined market performance of first registrations of
passenger cars and vans was +6.2%. The combined market
share of the Volkswagen, Audi, SEAT, CUPRA, Porsche and
Bentley passenger cars and Volkswagen vans imported by
the car trade division was 15.1% (14.1%).
The comparable operating profit for the car trade division
totalled €82.6 million (€64.3 million). The comparable
operating profit increased in the car trade segments by
€24.7 million thanks to net sales growth and transformation
and efficiency improvement measures. In sports trade,
comparable operating profit decreased due to the decline in
net sales.
Operating profit for the car trade division totalled €82.4
million (€63.9 million). Items affecting comparability totalled
€-0.1 million (€-0.4 million).
Capital expenditure for the car trade division totalled €80.3
million (€45.1 million).
Changes in Group composition
Kesko acquired Kungälvs Trävaruaktiebolag in Sweden on
1 March 2022, Seljord Elektriske AS in Norway on 1 June
2022, Föllinge Såg AB and Djurbergs Järnhandel Aktiebolag
in Sweden on 1 September 2022, and XL-BYGG Bergslagen
AB in Sweden on 1 October 2022. During the financial year,
subsidiary mergers were carried out in Finland, Sweden and
Norway in an effort to streamline Group structure.
Net sales, € million 1–12/2023 1–12/2022 Change, %
Change, %,
comparable
Car trade 1,078.6 910.9 +18,4 +20,7
Sports trade 183.9 214.0 -14,1 -14,1
Total 1,262.3 1,124.8 +12,2 +13,9
9
Operating principles, key commitments
and policies
Kesko’s operations are based on its value “The customer and
quality – in everything we do”, and its vision and mission.
Key Group-level policies that guide operations include the
governance policy, human resources policy, sustainability
policy, risk management policy, disclosure policy, data
protection policy, information security policy, and tax policy.
Kesko is committed to promoting the UN’s Sustainable
Development Goals (SDGs) in its operations. For Kesko
and its stakeholders, the main goals are Responsible
consumption, Climate action, Life on land, Gender equality,
and Decent work and economic growth.
Kesko first published a statement of commitment on human
rights and impact assessment in compliance with the UN's
Guiding Principles on Business and Human Rights in 2016.
Kesko reviews the commitment and impact assessment
every three years, most recently in the autumn of 2022.
Sustainability strategy 2022–2024
Sustainability is one of the key focus areas in Kesko’s
strategy. Sustainability work is guided by Kesko’s
sustainability policy, sustainability strategy, and the
K Code of Conduct. The Board of Directors of Kesko
Corporation approved a sustainability strategy for the
company in March 2022. The strategy is based on the
extensive materiality assessment updated in 2021, in which
stakeholders were asked to provide their views on key
sustainability themes for Kesko and its stakeholders.
The sustainability strategy sets sustainability targets for
Kesko and its business divisions. The four focus areas of the
sustainability strategy are climate and nature, value chain,
Main objectives and results achieved
in sustainability
Financial value creation
Kesko's operations create value and generate economic
benefits for various stakeholders in Kesko’s operating
countries and markets. Key stakeholders include
shareholders, customers, personnel, retailers, suppliers
and service providers, and the society. Kesko promotes
the growth of wellbeing throughout its supply chain, also in
developing countries.
The most important cash flows comprise revenue from
sales of goods and services to customers and retailers,
purchases from suppliers of goods and services, dividends
paid to shareholders, salaries and wages paid to personnel,
taxes, and capital expenditure. Kesko employs 17,702
people and in 2023 paid €629.8 million in wages. In 2023,
income taxes paid by Kesko in Finland totalled €104.3
million, and in other countries €10.0 million. Kesko also
pays real estate and property taxes, and collects, reports
and remits indirect taxes, such as value added tax and
excise duties. Kesko’s investments have a positive financial
impact on e.g. operators in the construction sector and
furniture, equipment and data system providers. Kesko’s
capital expenditure in 2023 totalled €678.9 million. At the
end of 2023, Kesko had 105,550 registered shareholders,
and dividends distributed for the year 2022 totalled €430
million.
Kesko’s business model is described at the beginning of this
Report by the Board of Directors. Risks related to climate
change, social and employee issues, human rights, and the
prevention of corruption and bribery are described in the
‘Significant risks and uncertainties’ section of the report.
people, and good governance. The sustainability vision is to
enable sustainable choices for customers and drive change
throughout the value chain.
Sustainability reporting and sustainability
indices
Since 2000, Kesko has reported on its actions in accordance
with the Global Reporting Initiative (GRI) guidelines for
reporting on sustainable development. The Sustainability
section of Kesko’s Annual Report is prepared in accordance
with the GRI Standards: Core option, and covers the key
areas of economic, social, and environmental responsibility.
Kesko’s sustainability principles, management, objectives,
processes and results are described in more detail in the
Sustainability section of the Annual Report.
Kesko is listed on several sustainability indices, the most
significant of which are the Dow Jones Sustainability Indices
the DJSI World and DJSI Europe, CDP, MSCI ESG Ratings,
and Sustainalytics.
In December 2023, Kesko was ranked the best European
company in its sector (Consumer Staples Distribution &
Retail) in the Dow Jones Sustainability Indices the DJSI
World and the DJSI Europe. In the global DJSI World, Kesko
ranked fourth in its sector.
In December 2023, Kesko received a rating of AAA (scale
AAA-CCC) in the MSCI ESG Ratings assessment. MSCI ESG
Research gives MSCI ESG sustainability ratings to listed
and certain private companies. The ratings are based on
industry-specific ESG risks and how well corporations are
managing them compared to their peers.
10
In January 2024, Kesko ranked 29th overall (74th in 2023)
on the Global 100 list of the Most Sustainable Corporations
in the World, and the highest among companies in its sector
(Consumer Staples). Kesko is the only company in the world
to have been included in the Global 100 list every year since
the list was first established in 2005.
Climate and nature
In accordance with its sustainability strategy, Kesko
concentrates on reducing carbon dioxide emissions from its
own operations and its whole value chain. Central to Kesko’s
climate and nature efforts are also the company’s impacts
on biodiversity and in terms of circular economy, especially
responsible packaging and reduction of food waste.
Emissions from Kesko’s own operations
Kesko aims for its own operations to be carbon neutral by
2025, and free of emissions by the end of 2030. In between
2025 and 2030, Kesko will offset its remaining emissions
and will continue to reduce emissions towards zero by the
end of 2030.
In Kesko’s own operations, emissions (Scope 1 and 2)
mostly come from fuel consumption in transport and
logistics operations, and the consumption of district heat.
In addition, emissions arise from Kesko’s own generation of
electricity and heat, refrigerant leaks, and the consumption
of purchased electricity. Emissions from Kesko’s own
operations are estimated to account for 1% of the total value
chain carbon dioxide emissions.
Kesko promotes the achievement of emissions targets
by, for example, increasing the purchase of emissions-
free electricity, reducing the use of natural gas and oil to
decrease emissions from self-generated energy, improving
energy efficiency, utilising waste heat, and increasing
electric transport vehicles in logistics.
The electricity consumed by Kesko in Finland is free of
carbon dioxide emissions, and for the most part generated
using nuclear and wind power. In Finland, Kesko’s electricity
consumption in Q4/2022–Q3/2023 totalled 278 GWh.
The consumption of heat and cooling energy totalled
214 GWh. In Kesko’s other operating countries, electricity
consumption totalled 33 GWh and heat consumption
12 GWh. Kesko’s consumption of electricity and heating and
cooling energy in all operating countries in total amounted
to 537 GWh in Q4/2022–Q3/2023.
Emissions from value chain
Kesko is committed to mitigating climate change by setting
science-based short-term emission reduction targets. The
short-term targets validated by the Science Based Targets
initiative (SBTi) are as follows:
• Kesko has committed to reducing absolute
scope 1 and 2 GHG emissions by 90% by the end of
2030 from a 2020 base year.
• Kesko has committed to 67% of its suppliers (by spend,
covering purchased goods and services) setting science-
based emission reduction targets by the end of 2026.
• Kesko has also committed to reducing absolute
scope 3 GHG emissions from the use of sold products by
17% by the end of 2026 from a 2020 base year.
In autumn 2023, Kesko committed to setting new long-
term emission reduction targets and to reducing emissions
throughout its value chain in accordance with the NetZero
Standard of the Science Based Targets initiative. Kesko is
seeking SBTi validation also for its new net-zero target.
In Kesko’s value chain, the most significant climate impacts
are generated during the lifecycle of products sold: in
primary production of raw materials, product manufacture,
packaging, transport, and product use. Kesko encourages
its suppliers of goods and services to reduce their emissions
and supports customers in making more sustainable
consumption choices.
Biodiversity
Kesko aims to prevent the loss of biodiversity in both its
own operations and its value chain. In autumn 2023, Kesko
initiated preparations for a biodiversity roadmap. As part
of the roadmap, Kesko is setting targets for the biodiversity
impacts of its own operations and value chain.
Circular economy
Kesko is strengthening circular economy operating models
with the objective that by the end of 2025, all packaging
used in Kesko’s private label products will be either
recyclable or reusable. Kesko also aims to halve the amount
of food waste by 2030.
11
Climate-related opportunities and risks
In 2022, Kesko examined climate change-related risks and
opportunities in accordance with the Task Force on Climate-
Related Financial Disclosures (TCFD) framework. The
impacts of climate change are twofold:
• The impacts of climate change on Kesko are related to
increasing regulation and extreme weather phenomena.
• The impacts of Kesko’s operations on the climate are
related to the lifecycle impact of products and services
sold, and Kesko’s energy solutions and emissions.
Opportunities
In addition to emissions from own operations, the biggest
climate impact in the trading sector comes from emissions
from the value chain of products. In addition to its own
operations, Kesko extends emission reduction targets to its
whole value chain.
All Kesko divisions can offer customers solutions that
help them reduce their climate impact, as living, food and
mobility are the biggest sources of greenhouse gases in
private consumption.
Risks
The most significant risk is that climate action on a global
scale stays at the current level, attempts to mitigate climate
change fail, and as a result, extreme weather phenomena,
such as powerful storms and extended periods of high
temperatures in the summer, will increase. The impact of
global warming on Finnish and global production areas and
consequently on product availability, quality and prices
could become critical factors for supply chain continuity and
product availability.
Key targets Indicators Results in 2023
Achieving carbon neutrality in 2025
and making Kesko’s own operations
emissions-free by the end of 2030.
Carbon dioxide emissions
(tCO
2
e)
Kesko’s own (scope 1 and 2) carbon dioxide
emissions in Q4/2022–Q3/2023 totalled
75,138 tCO
2
e.
Having 67% of Kesko’s suppliers (by
spend) set science-based emission
reduction targets by the end of 2026.
% of suppliers Kesko monitors progress mainly via CDP’s Climate
Change Questionnaire.
In 2023, 32.0% of Kesko’s suppliers (by spend) had
set science-based emission reduction targets.
12
Value chain
Kesko is developing sustainability and responsibility in
its value chain by, for example, supporting customers’
sustainable choices and increasing supply chain audits.
The sustainability and transparency of supply chains is one
of the focus areas for Kesko’s sustainability work.
Human rights and sustainable purchasing
In accordance with its human rights commitment, Kesko
respects all internationally recognised human rights.
Kesko’s purchasing is guided by Kesko’s ethical principles
for purchasing, which are based on the fundamental rights
at work accepted by the International Labour Organisation
(ILO), the UN Declaration of Human Rights, and the UN
Convention on the Rights of the Child.
Kesko has 12 sustainability policies to guide the sourcing of
products containing raw materials identified as critical from
a social and environmental responsibility perspective.
In its purchasing chains, Kesko pays special attention to
human rights issues and working conditions in high-risk
countries. Kesko utilises international social responsibility
assessment systems for supplier audits in high-risk
countries, primarily amfori BSCI auditing. Kesko is a member
of amfori and participates in the amfori Business Social
Compliance Initiative (amfori BSCI). Kesko’s principle in
high-risk countries is to collaborate only with suppliers that
are already included in the scope of social responsibility
audits, or that start the process when the cooperation
begins. The audits focus on e.g. the observance of working
time regulations, management practices at factories, and
occupational health and safety of the workers.
Kesko takes part in the International Accord for Health
and Safety in the Textile and Garment Industry to promote
occupational health and safety in textile factories in
Bangladesh. Kesko is also a member of the Center for
Child Rights and Business, an organisation that promotes
children’s rights in China.
Product safety
Kesko and K Group stores together with suppliers are
responsible to the products' end-users for ensuring that the
products comply with all the requirements of EU legislation
and local legislation in Kesko’s operating countries, are
safe for users, and meet quality promises. All food product
operations have a self-control system in place as required
bylaw.
The Quality and Product Development unit in Kesko’s
grocery trade division requires the manufacturers of Kesko’s
own brand food products to have international certifications
that assure product safety. The laboratory of the Quality and
Product Development unit monitors the safety and quality of
own brand products and own imports in grocery trade. It is
a testing laboratory T251 which has been accredited by the
FINAS accreditation services and approved to comply with
the SFS-EN ISO/IEC 17025 standard.
Key targets Indicators Results in 2023
Ensuring the social responsibility of our own direct
imports from high-risk countries by having 100% of
the production facilities audited by 2024
Audited production facilities, % 97.0%
People
Responsibility for people for Kesko means, in particular,
ensuring the wellbeing and safety of personnel, and
fostering diversity, equity and inclusion.
Kesko’s HR management is guided by its human resources
policy, the K Code of Conduct, sustainability strategy, and
common operating principles. Kesko’s human resources
policy is based on the company’s mission, vision, strategy,
value and responsible operating and management principles.
The purpose of the human resources policy is to ensure that
skilled and committed employees who are familiar with both
their personal goals and Kesko’s direction form a foundation
for the achievement of good and sustainable financial
results. Kesko respects internationally recognised human
rights and complies with the ILO fundamental principles.
Personnel 1–12/2023 1–12/2022
Women 5,868 5,914
Men 8,877 8,699
Other/unknown 20 20
Average number of personnel
converted into full-time
employees 14,766 14,633
31 Dec. 2023 31 Dec. 2022
Personnel at the end of the
reporting period
Women 7,360 7,477
Men 10,319 10,349
Other/unknown 23 15
Finland 12,384 12,665
Other countries 5,318 5,176
Total 17,702 17,841
13
Diversity in the workplace
In the sustainability strategy, key themes in the ‘People’
focus area include diversity, equity and inclusion (DEI). In
2023, Kesko set DEI targets for increasing the share of
women in management positions, for equal pay, and for
measuring employee views on the realisation of equity. In
accordance with its non-discrimination plan, Kesko has
established a group comprising representatives of the
employer, personnel and the labour protection function, to
handle matters related to non-discrimination and equality
within the Group. Combatting discrimination is at the core
of the group’s activities. The group reviews matters related
to e.g. recruitment, career development and training,
remuneration, and the reconciliation of work and family life.
Employee wellbeing and success
Proactive management of employee wellbeing and working
capacity has been used in an effort to ensure the working
capacity and functioning of employees, to keep sickness
absences under control, and to prevent work-related
accidents and premature retirement due to disability. Focus
on mental wellbeing has continued to be particularly central.
Personnel surveys are used to obtain personnel insight to
develop operations and managerial work. The Group-wide
K Voices survey was conducted in late 2023 and early 2024.
To ensure the execution of Kesko’s strategy, the Group
employs performance and competence management
models. Performance management comprises target setting,
continuous performance management, and performance
evaluation. Competence management is used to ensure that
employees have the necessary competencies to achieve
targets and execute strategy. Competence development
takes place via training, development processes, and
extensive on-the-job learning. Recruitments are based
on strategy and need, an approved resourcing plan, and
identified change projects. In recruitments, Kesko is
committed to equality, non-discrimination and selection
based on factors that predict success at a position.
Key targets Indicators Results in 2023
Tangible actions to promote employee
health, wellbeing and capabilities by
the end of 2024
Wellbeing index
Diversity & inclusion index
81 (scale of 0 to 100, Our people 2022 survey)
86 (scale of 0 to 100, Our people 2022 survey)
Good governance
Key elements of good governance include compliance with
the K Code of Conduct, increasingly linking sustainability
to management remuneration, and strengthening the
sustainability competencies of the whole personnel.
Compliance
To ensure compliance in Kesko Group’s operations, Kesko
implements the K Compliance operating model confirmed
by its Board of Directors, based on the K Code of Conduct
that applies to the whole Group and all partners. Kesko’s
Compliance & Ethics function manages measures in
accordance with the K Compliance operating model, and
reports to Kesko’s President and CEO and the Board’s Audit
Committee.
The practical implementation of the K Compliance operating
model is supported by the K Compliance programmes
confirmed by Kesko’s President and CEO, which cover data
protection, competition law, anti-corruption and anti-
bribery, and trading sanctions and monitoring exports. The
systematic implementation of the programmes ensures
Kesko’s compliance with operating principles, legislation,
and other requirements. In 2023, the focus areas for Kesko’s
K Compliance operations included training personnel and
conducting compliance audits in accordance with the annual
plan. Over 1,400 people participated in targeted training,
and employees completed over 12,500 online compliance
training sessions.
Kesko’s SpeakUp is a confidential reporting channel open
to anyone. Maintaining the channel is a central part of
Kesko’s K Compliance operations. The channel is meant
for reporting crime and malpractice suspicions when, for
14
one reason or another, the information cannot be passed
directly to managers or other persons in charge at Kesko.
The channel may also be used to report suspected violations
of securities market regulations. In 2023, a total of 78
reports were received through the channel, of which 67
required investigative actions. No misuse of the channel
was detected. In December 2023, the channel was officially
updated to cover the whole K Group.
The Audit Committee of the Board of Directors monitors
the implementation of the K Compliance operating model as
well as Group-level compliance risks. The Audit Committee
also monitors the overall development of K Compliance
operations.
Emphasis in compliance operations is driven by the
identification of compliance risks related to Kesko’s strategy
and business operations. The Compliance & Ethics function
and the businesses regularly review and prioritise risks,
with the support of the risk management function. In the
assessment of compliance risks, there is an emphasis on
requirements the breach of which could have significant
negative consequences, for example, human rights violations
or serious legal, financial and reputational risks.
Prevention of corruption and bribery
The prevention of corruption and bribery is one of the focus
areas of Kesko’s compliance operations.
Kesko Group’s absolute zero tolerance towards bribery and
corruption is described in the K Code of Conduct, which
contains instructions on anti-bribery and anti-corruption.
Where necessary, these are complemented with more
detailed instructions. Each employee must complete two
online trainings on the K Code of Conduct, which include
instructions on the prevention of corruption and bribery.
Common instructions and training ensure that everyone at
Kesko has the same understanding of the anti-corruption
and anti-bribery principles and practices that guide their
daily work. The anti-corruption and anti-bribery instructions
have been published in the languages of all Kesko operating
countries, and the same instructions apply to all employees.
All Kesko partners are required to commit to compliance
with the K Code of Conduct partner version – and
consequently to zero tolerance towards bribery.
Reports received through Kesko’s SpeakUp channel in 2023
did not contain observations or suspicions of breaches
of instructions on anti-corruption and anti-bribery in
Kesko Group.
Key targets Indicators Results in 2023
Strong commitment to the K Code
of Conduct from all Kesko Group
personnel.
The ”Ethics index”, which comprises the rate of
employees completing the annual confirmation of
commitment to the K Code of Conduct, and two
questions in the regularly conducted personnel
survey concerning actions in compliance with
the K Code of Conduct in everyday work and the
reporting of violations
79.3% (K Voices 2021, K Code
of Conduct annual confirmation
in 2022)
All Kesko Group personnel members are asked annually
to confirm their commitment to compliance with the
K Code of Conduct.
An updated K Code of Conduct (both the personnel and the
partner versions) will be published in all operating country
languages in spring 2024.
Sustainability criteria for share-based
commitment and incentive plans for
Kesko management
As part of the sustainability strategy, Kesko’s Board of
Directors has set sustainability-related criteria for Kesko’s
share-based commitment and incentive plans (Performance
Share Plans, PSP), namely the PSP 2022–2025 and the PSP
2023–2026. In addition to financial indicators, the share
award plan includes targets linked to emission reductions
and international sustainability indices and assessments.
The sustainability targets concern years 2022 and 2023.
Financing linked to sustainability targets
Kesko has drawn down five bilateral loans, which combined
total €650 million. The interest margin of these loans
accounts for Kesko’s sustainability targets for its carbon
footprint and food waste, and in the value chain, emission
reduction targets set by Kesko’s direct suppliers of goods
and services.
15
New EU Corporate Sustainability Reporting
Directive (CSRD)
The Directive (EU) 2022/2464 of the European Parliament
and of the Council (issued on 14 December 2022) will
replace the Non-Financial Reporting Directive (NFRD).
Large listed companies are required to report under the new
sustainability reporting directive from the 2024 financial
year onwards. The first reports will be published in 2025 as
part of the Report by the Board of Directors to be published
for 2024. As a large listed company, Kesko will be among
the first corporations to report on sustainability based on the
requirements of the new Legislation.
Companies subject to the reporting requirement must
report on sustainability themes in accordance with the
European Sustainability Reporting Standards (ESRS). The
European Commission adopted the standards on 31 July
2023. The standards comprise a wide range of sustainability
themes related to the environment, social responsibility,
and governance. There are in total 12 standards, two of
which are mandatory for all companies and relate to general
information regarding reporting requirements and the
application of the standards, as well as general disclosure
on e.g. sustainability management, strategy, business model
and value chain. The remaining 10 standards concern
sustainability themes related to environment, social, and
governance. An essential part of the new requirements is
conducting a materiality assessment to determine the scope
of the company’s reporting based on the sustainability
matters that are material to the company and its business
model. In the materiality assessment, the company assesses
the impact its actions have on people and the environment,
as well as the risks and opportunities for the company arising
from social and environmental factors.
The objective of the new legislation is to provide a uniform
framework for companies to disclose information on
sustainability and to provide information of higher quality
and reliability for investors and other stakeholders. Going
forward, sustainability information will be reported as part
of the Report by the Board of Directors, which the Board
approves when approving the financial statements. The
assurance of the sustainability information reported will also
become mandatory.
In 2023, Kesko began preparations for the implementation
of the requirements posed by the new directive. Kesko will
be applying the requirements of the European Sustainability
Reporting Standards (ESRS) in its sustainability reporting
as of 2024. A central part of the preparation process
has been conducting the double materiality assessment
required by the ESRS to determine the reporting
requirements material for Kesko. A draft of Kesko’s double
materiality assessment and its impact on the content of
the upcoming CSRD-compliant sustainability report have
been analysed to identify further measures in preparing for
the implementation of the new reporting requirements. In
addition, preliminary drafts have been presented to business
and Group management and the Board’s Audit Committee.
16
EU Taxonomy
Kesko’s reporting on EU Taxonomy complies with
Regulation (EU) 2020/852 of the European Parliament
and of the Council (18 June 2020). The EU Taxonomy is a
classification system for sustainable financing, designed to
help companies and investors assess whether an economic
activity can be considered environmentally sustainable. The
Taxonomy defines a set of criteria for a business activity that
enables companies to assess to what extent the company’s
activities support the attainment of environmental and
climate objectives.
Companies that are required to publish non-financial
information under the Non-Financial Reporting Directive
(NFRD) shall disclose information on how and to what extent
their activities can be deemed environmentally sustainable
in the manner referred to in the EU Taxonomy based on six
climate and environmental objectives:
1. Climate change mitigation
2. Climate change adaptation
3. The sustainable use and protection of water and marine
resources
4. The transition to a circular economy
5. Pollution prevention and control
6. The protection and restoration of biodiversity and
ecosystems
Activities related to the first two objectives – climate change
mitigation and climate change adaptation – were reported in
stages in 2021 and 2022 based on the technical screening
criteria established for them. In 2021, the reporting
requirement covered Taxonomy-eligible activities. In 2022,
reporting expanded to cover the share of Taxonomy-eligible
activities that can be classified as Taxonomy-aligned
sustainable activities.
Economic activities and the technical screening criteria
related to the other four environmental objectives were
published in 2023. As with the first two environmental
objectives, for the first year, the reporting requirement
covers information on Taxonomy-eligible activities, and will
expand in 2024 to cover Taxonomy-aligned activities. Key
performance indicators are presented for Taxonomy-eligible
activities and Taxonomy-aligned activities. These indicators
are the proportion of the company’s net sales (turnover),
capital expenditure (CapEx), and operating expenditure
(OpEx) as defined in the Taxonomy.
Currently, the Taxonomy does not specifically mention
activities that are typical of the trading sector, meaning
that trading sector companies report on Taxonomy-
eligible activities if they engage in them. It is likely that the
Taxonomy will include an expanding number of activities,
and that assessment criteria will be established consequently
also for the trading sector and possibly for its different
product segments.
Taxonomy-eligible activities and assessing
Taxonomy alignment
Kesko has identified the car leasing operations and sales of
used cars in its car trade division and the owning, leasing
and construction of properties for own business needs as
Taxonomy-eligible activities in its operations. Of these,
the used car business in the car trade division is one of the
activities related to the circular economy (sale of second-
hand goods), which was included in Taxonomy-eligible
activities in 2023.
With each Taxonomy-eligible activity, Kesko has assessed
its Taxonomy alignment. Taxonomy alignment has been
determined by assessing whether an activity significantly
contributes to at least one of the climate and environmental
objectives. The assessment of Taxonomy alignment is made
based on the technical screening criteria applied for each
activity. In addition to meeting said criteria, Kesko has
confirmed that the activity does not cause significant harm
to the other climate and environmental objectives referred
to in the Taxonomy Regulation, using the separate DNSH
(‘Does Not Significantly Harm’) criteria, and that minimum
safeguards under the Taxonomy Regulation are met.
Kesko has examined the implementation of minimum
safeguards in relation to human rights, corruption and
bribery, fair competition, and taxation. The aforementioned
areas of minimum safeguards and related Kesko operating
instructions and measures are described in more detail in
this report in the sections ‘Human rights and sustainable
purchasing’, ‘Compliance’ and ‘Prevention of corruption and
bribery’. Based on its review, Kesko assesses that minimum
safeguards are in place in Kesko’s operations.
The following table presents the activities identified by
Kesko as Taxonomy-eligible, and Kesko’s assessments of
their Taxonomy alignment. Kesko does not have Taxonomy
activities related to gas or nuclear power.
17
Performance
indicators
Taxonomy activity Activity description Turnover CapEx Assessment of Taxonomy alignment
CCM 6.5 Transport by motorbikes,
passenger cars and light
commercial vehicles
Purchase, financing, renting, leasing and operation of vehicles designated
as category M1, N1 or L.
The activity includes leasing operations in the car trade division.
√ √ In 2022, Kesko presented some of the net sales and CapEx of the car leasing
business as Taxonomy-aligned. In 2023, Kesko continued to examine the
technical screening criteria for the activity. The activity includes as part
of the ‘does not significantly harm’ criteria the requirement that vehicle
tyres must comply with the best possible external rolling noise class. As
information on the external rolling noise class of the vehicle tyres is not
available, it is not possible to determine the Taxonomy alignment of the
vehicles. The data for 2022 has been adjusted accordingly, and Kesko does
not report the vehicles as Taxonomy-aligned.
CCM 7.1 Construction of new
buildings
The construction of buildings for residential and non-residential use.
The activity includes building projects developed by Kesko for its own
use. These are mainly new store and logistics properties.
√ An energy-efficiency value (E-value) is determined during the planning stage
of a new building construction project, which must be at least 10% lower
than the nationally set threshold. An assessment of a building’s Taxonomy
alignment is made during the planning stage. The realisation of the E-value is
confirmed when the building is completed.
CCM 7.2 Renovation of existing
buildings
Extensive repairs to existing buildings.
Extensive repairs in properties owned by Kesko and in leased properties
where Kesko is responsible for basic repairs.
√ Building renovations comply with the requirements applied to major
renovations. Projects have not been deemed Taxonomy-aligned, as the ‘do
no significant harm’ criteria for Taxonomy alignment related to activity 7.2
have not been met.
CCM 7.3 Installation, maintenance
and repair of energy
efficiency equipment
Individual renovation measures related to energy efficiency equipment,
such as adding insulation to parts of existing buildings, energy efficient
replacements for external doors and windows, installing energy efficient
light sources, and the installation, maintenance, repair and replacement
of ventilation equipment with efficient technologies.
The activity mainly includes the above-mentioned renovation measures in
Kesko store sites where Kesko is the lessee.
√ Capital expenditure in energy efficiency mainly includes capital expenditure
in LED lighting in properties where Kesko is a lessee. In order to meet the
substantial contribution criteria for activity 7.3, a light source must be in the
top two energy categories. The LED lighting used in Kesko’s projects does
not meet the Taxonomy alignment criteria.
CCM 7.4 Installation, maintenance
and repair of charging
stations for electric
vehicles in buildings
The installation, maintenance and repair of charging stations for electric
vehicles in buildings and parking spaces attached to buildings.
The activity covers Kesko’s K-Lataus stations in Finland and charging
stations installed at store sites in Kesko’s other operating countries.
√ The installation of charging stations for electric vehicles does not include
separate substantial contribution criteria. All capital expenditure related to
the activity is classified as Taxonomy-aligned.
CCM 7.5 Installation, maintenance
and repair of instruments
and devices for measuring,
regulation and controlling
energy performance of
buildings
The installation, maintenance and repair of instruments and devices for
measuring, regulation and controlling energy performance of buildings.
The activity covers the above-described capital expenditure in properties
where Kesko is a lessee.
√ The activity concerning the installation of instruments and devices for
measuring, regulation and controlling energy performance of buildings
does not include separate substantial contribution criteria when the activity
consists of individual measures listed in the Taxonomy regulation. All capital
expenditure related to the activity are classified as Taxonomy-aligned.
18
Kesko’s Taxonomy-eligible turnover comprises the car
leasing business and sales of used cars to customers in the
car trade division. In 2022, vehicles were identified in the
car leasing business that were presented as Taxonomy-
aligned based on the criteria for climate change mitigation.
To meet the criteria, vehicles must have zero or low (lower
than 50 g CO
2
/km) emissions. To qualify as Taxonomy-
aligned, the vehicles also must do no harm to the attainment
of the other climate and environmental objectives. In 2022,
turnover reported as Taxonomy-aligned accounted for 0.0%,
or €4.3 million, of total Group net sales. Vehicles reported
as Taxonomy-aligned accounted for 1.1%, or €8.3 million,
of the total Group CapEx. In 2023, Kesko continued to
examine the DNSH criteria for the car leasing business in
particular. The criteria for pollution prevention and control
includes the requirement that vehicle tyres must comply with
the best possible external rolling noise class. The technical
documentation for the vehicles available to Kesko does not
contain information on the external rolling noise class of
the vehicle tyres, and therefore all Taxonomy criteria for
taxonomy-alignment cannot be determined. In its 2023
reporting, Kesko has adjusted comparison data for 2022,
and does not present a portion of the turnover and CapEx
for the car leasing business as Taxonomy-aligned.
Kesko owns and leases properties in all operating countries
for business purposes. The Group uses some 1,500 owned
or leased retail, logistics and office properties. Capital
expenditure in real estate accounted for 59.5% (63.9%) of
the Group’s gross capital expenditure in 2023. Properties
are a source of emissions (Scope 1) from the Group’s
own operations, and improving the energy efficiency of
properties and transitioning to the use of emissions-free
and renewable energy reduce the climate impact from own
operations. The Taxonomy technical screening criteria
related to owning, constructing and renovating buildings
have been taken into account in Kesko’s internal instructions
used when planning and executing investment projects.
Real estate operations are not a primary business for Kesko,
and therefore there are alternative ways to apply Taxonomy
activities and technical screening criteria. In 2022, Kesko
presented also construction projects for new buildings as
part of the Taxonomy activity 7.7 Acquisition and ownership
of buildings. In the 2023 reporting, Kesko makes a change
and presents new construction projects in which Kesko acts
as a developer and makes decisions regarding construction
details, under the Taxonomy activity 7.1 Construction
of new buildings. With this change, Kesko follows the
construction sector practice for reporting new construction
projects. In addition, classification has been specified
with regard to other real estate operations compared to
2022, and comparison data for 2022 have been adjusted
accordingly.
Performance
indicators
Taxonomy activity Activity description Turnover CapEx Assessment of Taxonomy alignment
CCM 7.7 Acquisition and ownership
of buildings
Buying real estate and exercising ownership of that real estate.
The activity includes properties acquired during the reporting period, and
the amounts of right-of-use assets recognised in the balance sheet based
on lease agreements for properties.
Moreover, capital expenditure in properties owned by Kesko in line with
the above-mentioned activities 7.3 and 7.5 and activity 7.6 ‘Installation,
maintenance and repair of renewable energy technologies’ have been
included in activity 7.7 ‘Acquisition and ownership of buildings’.
√ For buildings built after 2020, the assessment of Taxonomy alignment has
been made based on the climate change mitigation substantial contribution
criteria of activity 7.1. ‘Construction of new buildings’.
A building built during or before 2020 must have at least a category A
energy certificate, or the building must be in the top 15% in the region in
terms of primary energy demand. The assessment method is mainly applied
to leased properties.
CE 5.4 Sale of second-hand
goods
The sale of second-hand goods that have been used for their intended
purpose before by a customer.
In Kesko, the sale of second-hand goods includes the used car business in
the car trade division.
√ The sale of second-hand goods is one of the circular economy activities.
Activities and related technical screening criteria were published for circular
economy in 2023. In the first year, the reporting requirement covers
Taxonomy-eligible activities, and Taxonomy alignment will be assessed in
upcoming years.
19
The Group’s Taxonomy-eligible capital expenditure includes
investments in new store sites and logistics properties,
investments in building improvement measures, and
investments in lighting, machinery and equipment to
improve the energy efficiency of buildings, and automation
for measuring and monitoring energy efficiency. In addition,
Taxonomy-eligible CapEx includes charging equipment for
electric vehicles and investments in vehicles for the leasing
operations of the car trade division. Land areas are not
classified as Taxonomy-eligible CapEx.
EU Taxonomy performance indicators
Kesko presents the performance indicators for turnover,
capital expenditure (CapEx) and operating expenditure
(OpEx) in accordance with the tables determined for non-
financial undertakings in the Taxonomy Regulation. The
tables for the performance indicators show the proportion
of turnover, capital expenditure and operating expenditure
derived from economic activities in line with the Taxonomy.
Performance indicator accounting policy
Turnover
When calculating the performance indicator for turnover,
Kesko applies the same IFRS accounting principles as it does
in the consolidated financial statements. The accounting
principles for revenue recognition are presented in Note 2.1
of the consolidated financial statements. The net sales figure
used in calculating the turnover performance indicator is the
Kesko Group net sales presented in the income statement.
The Taxonomy-eligible turnover is the share of total Group
net sales that comes from Taxonomy-eligible activities. In
Kesko’s business operations, car leasing operations and used
car sales in the car trade division have been identified as
Taxonomy-eligible activities that generate net sales. Kesko’s
primary operations which generate net sales are the sales of
products and services to customers and retailers. Product
sales are currently not a Taxonomy-eligible activity, with the
exception of used car sales.
Capital expenditure (CapEx)
Capital expenditure (CapEx) as defined in the Taxonomy
Regulation includes additions to tangible and intangible
assets during the financial year, before depreciation,
amortisation and any re-measurements. Capital expenditure
also includes additions to tangible and intangible assets
resulting from business combinations. In accordance with
the Taxonomy Regulation, Kesko includes in its CapEx
calculation investments in tangible and intangible assets and
the aggregate sum of additions to the right-of-use assets
recognised in the balance sheet based on lease agreements.
Goodwill recorded in acquisitions is not included in the
Taxonomy CapEx definition. Additions to property, plant
and equipment are presented in Note 3.2, additions to
intangible assets in Note 3.3, and additions to right-of-use
assets related to leases in Note 3.4 of the consolidated
financial statements.
The Taxonomy definition of CapEx differs from the definition
of the ‘capital expenditure’ performance indicator reported
by Kesko. In Kesko’s definition, the performance indicator
includes investments in tangible and intangible assets and
subsidiary shares. The indicator does not include additions
to right-of-use assets related to leases recognised in the
balance sheet. Group capital expenditure in 2023 totalled
€678.9 million (€449.2 million). The following table
details the capital expenditure items used to calculate the
Taxonomy CapEx indicator.
Capital expenditure under EU
Taxonomy (CapEx), € million 2023 2022
Property, plant and equipment
- Additions (Note 3.2) 511.2 370.0
Property, plant and equipment
- Acquisitions (Note 3.2) 3.7 1.6
Intangible assets
- Additions (Note 3.3) 21.9 28.6
Intangible assets
- Acquisitions excluding goodwill
(Note 3.3) 16.4 3.9
Right-of-use assets
- Additions (Note 3.4) 437.3 354.6
Right-of-use assets
- Acquisitions (Note 3.4) 15.7 15.6
EU Taxonomy CapEx, total 1,006.1 774.4
Operating expenditure (OpEx)
Operating expenditure (OpEx) as defined in the Taxonomy
Regulation includes direct non-capitalised costs that relate
to research and development, building renovation measures,
maintenance and repair, and any other direct expenditure
relating to the servicing of assets of property, plant and
equipment by the undertaking or a third party to whom
activities are outsourced that are necessary to ensure the
continued and effective functioning of such assets.
20
Proportion of turnover from products or services associated with Taxonomy-aligned economic activities 2023
Financial year 2023 2023 Substantial contribution criteria
DNSH criteria
('Does Not Significantly Harm')
Economic activites
Code
Turnover
Proportion of turnover,
year 2023
Climate change
mitigation
Climate change adaption
Water
Pollution
Circular economy
Biodiversity
Climate change
mitigation
Climate change adaption
Water
Pollution
Circular economy
Biodiversity
Minimum safeguards
Proportion of Taxonomy
aligned (A1) or eligible
(A2) turnover, year 2022
Category enabling
activity
Category
transitional activity
€ million %
Y; N;
N/EL
Y; N;
N/EL
Y; N;
N/EL
Y; N;
N/EL
Y; N;
N/EL
Y; N;
N/EL Y/N Y/N Y/N Y/N Y/N Y/N Y/N % E T
A. TAXONOMY-ELIGIBLE ACTIVITIES
A.1 Environmentally sustainable activities
(Taxonomy-aligned)
Turnover of environmentally sustainable activities
(Taxonomy-aligned) (A.1) 0.0 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% Y 0.0%
Of which Enabling 0.0 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% Y 0.0% E
Of which Transitional 0.0 0.0% 0.0% Y 0.0% T
A.2 Taxonomy-eligible but not environmentally
sustainable activities (not Taxonomy-aligned activities)
EL;
N/EL
EL;
N/EL
EL;
N/EL
EL;
N/EL
EL;
N/EL
EL;
N/EL
Transportation by motorbikes, passenger cars and light
commercial vehicles
CCM 6.5
CCA 6.5 24.9 0.2% EL EL N/EL N/EL N/EL N/EL 0.2%
Sale of second-hand goods CE 5.4 287.4 2.4% N/EL N/EL N/EL N/EL EL N/EL
Turnover of Taxonomy-eligible but not environmentally
sustainable activities (not Taxonomy-aligned activities) (A.2) 312.3 2.6% 0.2% 0.0% 0.0% 0.0% 2.4% 0.0% 0.2%
A. Turnover of Taxonomy eligible activities (A.1+A.2) 312.3 2.6% 0.2% 0.0% 0.0% 0.0% 2.4% 0.0% 0.2%
B. TAXONOMY-NON-ELIGIBLE ACTIVITIES
Turnover of Taxonomy-non-eligible activities 11,471.5 97.4%
Total 11,783.8 100%
Y – Yes, Taxonomy-eligible and Taxonomy-aligned activity with
the relevant environmental objective
N – No, Taxonomy-eligible but not Taxonomy-aligned activity
with the relevant environmental objective
EL – Taxonomy-eligible activity for the relevant objective
N/EL – Taxonomy-non-eligible activity for the relevant objective.
Codes
Climate change mitigation: CCM
Climate change adaptation: CCA
Circluar economy: CE
21
Proportion of CapEx from products or services associated with Taxonomy-aligned economic activities 2023
Financial year 2023 2023 Substantial contribution criteria
DNSH criteria
('Does Not Significantly Harm')
Economic activites
Code
CapEx
Proportion of CapEx,
year 2023
Climate change
mitigation
Climate change adaption
Water
Pollution
Circular economy
Biodiversity
Climate change
mitigation
Climate change adaption
Water
Pollution
Circular economy
Biodiversity
Minimum safeguards
Proportion of Taxonomy
aligned (A1) or eligible
(A2) CapEx, year 2022
Category enabling
activity
Category
transitional activity
€ million %
Y; N;
N/EL
Y; N;
N/EL
Y; N;
N/EL
Y; N;
N/EL
Y; N;
N/EL
Y; N;
N/EL Y/N Y/N Y/N Y/N Y/N Y/N Y/N % E T
A. TAXONOMY-ELIGIBLE ACTIVITIES
A.1 Environmentally sustainable activities
(Taxonomy-aligned)
Construction of new buildings CCM 7.1
CCA 7.1
CE 3.1 86.2 8.6% Y N N/EL N/EL N N/EL Y Y Y Y Y Y 1.9%
Installation, maintenance and repair of charging stations for
electric vehicles in buildings
CCM 7.4
CCA 7.4 5.2 0.5% Y N N/EL N/EL N/EL N/EL Y Y 0.8% E
Installation, maintenance and repair of instruments and
devices for measuring, regulation and controlling energy
performance of buildings
CCM 7.5
CCA 7.5 0.9 0.1% Y N N/EL N/EL N/EL N/EL Y Y 0.1% E
Acquisition and ownership of buildings CCM 7.7
CCA 7.7 18.8 1.9% Y N N/EL N/EL N/EL N/EL Y Y 12.7%
CapEx of environmentally sustainable activities
(Taxonomy-aligned) (A.1) 111.1 11.0% 11.0% 0.0% 0.0% 0.0% 0.0% 0.0% Y Y Y Y Y Y 15.6%
Of which Enabling 6.0 0.6% 0.6% 0.0% 0.0% 0.0% 0.0% 0.0% 1.0% E
Of which Transitional 0.0 0.0% 0.0% 0.0% T
Y – Yes, Taxonomy-eligible and Taxonomy-aligned activity with
the relevant environmental objective
N – No, Taxonomy-eligible but not Taxonomy-aligned activity
with the relevant environmental objective
EL – Taxonomy-eligible activity for the relevant objective
N/EL – Taxonomy-non-eligible activity for the relevant objective.
Codes
Climate change mitigation: CCM
Climate change adaptation: CCA
Circluar economy: CE
22
Financial year 2023 2023 Substantial contribution criteria
DNSH criteria
('Does Not Significantly Harm')
Economic activites
Code
CapEx
Proportion of CapEx,
year 2023
Climate change
mitigation
Climate change adaption
Water
Pollution
Circular economy
Biodiversity
Climate change
mitigation
Climate change adaption
Water
Pollution
Circular economy
Biodiversity
Minimum safeguards
Proportion of Taxonomy
aligned (A1) or eligible
(A2) CapEx, year 2022
Category enabling
activity
Category
transitional activity
€ million %
Y; N;
N/EL
Y; N;
N/EL
Y; N;
N/EL
Y; N;
N/EL
Y; N;
N/EL
Y; N;
N/EL Y/N Y/N Y/N Y/N Y/N Y/N Y/N % E T
A.2 Taxonomy-eligible but not environmentally
sustainable activities (not Taxonomy-aligned activities)
EL;
N/EL
EL;
N/EL
EL;
N/EL
EL;
N/EL
EL;
N/EL
EL;
N/EL
Transportation by motorbikes, passenger cars and light
commercial vehicles
CCM 6.5
CCA 6.5 45.8 4.5% EL EL N/EL N/EL N/EL N/EL 3.8%
Construction of new buildings CCM 7.1
CCA 7.1
CE 3.1 46.5 4.6% EL EL N/EL N/EL EL N/EL 5.9%
Renovation of existing buildings CCM 7.2
CCA 7.2
CE 3.2 103.1 10.2% EL EL N/EL N/EL EL N/EL 10.3%
Installation, maintenance and repair of energy efficiency
equipment
CCM 7.3
CCA 7.3 6.0 0.6% EL EL N/EL N/EL N/EL N/EL 0.6%
Acquisition and ownership of buildings CCM 7.7
CCA 7.7 484.9 48.2% EL EL N/EL N/EL N/EL N/EL 37.9%
CapEx of Taxonomy-eligible but not environmentally
sustainable activities (not Taxonomy-aligned activities) (A.2) 686.2 68.2% 68.2% 0.0% 0.0% 0.0% 0.0% 0.0% 58.5%
A. CapEx of Taxonomy eligible activities (A.1+A.2) 797.3 79.2% 79.2% 0.0% 0.0% 0.0% 0.0% 0.0% 74.1%
B. TAXONOMY-NON-ELIGIBLE ACTIVITIES
CapEx of Taxonomy-non-eligible activities 208.9 20.8%
Total 1,006.1 100%
Y – Yes, Taxonomy-eligible and Taxonomy-aligned activity with
the relevant environmental objective
N – No, Taxonomy-eligible but not Taxonomy-aligned activity
with the relevant environmental objective
EL – Taxonomy-eligible activity for the relevant objective
N/EL – Taxonomy-non-eligible activity for the relevant objective.
Codes
Climate change mitigation: CCM
Climate change adaptation: CCA
Circluar economy: CE
23
Proportion of OpEx from products or services associated with Taxonomy-aligned economic activities 2023
Financial year 2023 2023 Substantial contribution criteria
DNSH criteria
('Does Not Significantly Harm')
Economic activites
Code
OpEx
Proportion of OpEx,
year 2023
Climate change mitigation
Climate change adaption
Water
Pollution
Circular economy
Biodiversity
Climate change mitigation
Climate change adaption
Water
Pollution
Circular economy
Biodiversity
Minimum safeguards
Proportion of Taxonomy
aligned (A1) or eligible (A2)
OpEx, year 2022
Category enabling activity
Category
transitional activity
€ million %
Y; N;
N/EL
Y; N;
N/EL
Y; N;
N/EL
Y; N;
N/EL
Y; N;
N/EL
Y; N;
N/EL Y/N Y/N Y/N Y/N Y/N Y/N Y/N % E T
A. TAXONOMY-ELIGIBLE ACTIVITIES
A.1 Environmentally sustainable activities (Taxonomy-
aligned)
OpEx of environmentally sustainable activities (Taxonomy-
aligned) (A.1) 0.0 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% Y 0.0%
Of which Enabling 0.0 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% Y 0.0% E
Of which Transitional 0.0 0.0% 0.0% Y 0.0% T
A.2 Taxonomy-eligible but not environmentally
sustainable activities (not Taxonomy-aligned activities)
EL;
N/EL
EL;
N/EL
EL;
N/EL
EL;
N/EL
EL;
N/EL
EL;
N/EL
Transportation by motorbikes, passenger cars and light
commercial vehicles
CCM 6.5
CCA 6.5 1.8 3.2% EL EL N/EL N/EL N/EL N/EL 2.6%
Acquisition and ownership of buildings CCM 7.7
CCA 7.7 54.0 96.8% EL EL N/EL N/EL N/EL N/EL 97.4%
OpEx of Taxonomy-eligible but not environmentally
sustainable activities (not Taxonomy-aligned activities) (A.2) 55.8 100% 100% 0.0 % 0.0 % 0.0 % 0.0 % 0.0 % 100%
A. OpEx of Taxonomy eligible activities (A.1+A.2) 55.8 100% 100% 0.0 % 0.0 % 0.0 % 0.0 % 0.0 % 100%
B. TAXONOMY-NON-ELIGIBLE ACTIVITIES
OpEx of Taxonomy-non-eligible activities 0.0 0.0%
Total 55.8 100%
Y – Yes, Taxonomy-eligible and Taxonomy-aligned activity with
the relevant environmental objective
N – No, Taxonomy-eligible but not Taxonomy-aligned activity
with the relevant environmental objective
EL – Taxonomy-eligible activity for the relevant objective
N/EL – Taxonomy-non-eligible activity for the relevant objective.
Codes
Climate change mitigation: CCM
Climate change adaptation: CCA
Circluar economy: CE
24
In Kesko Group’s income statement, operating expenditure
as defined in the Taxonomy Regulation is included
under ’Other operating expenses’, which are presented
in Note 2.5 of the consolidated financial statements.
Operating expenditure under the Taxonomy Regulation in
Kesko Group is in particular related to expenses for the
use, maintenance and repair of properties – which in the
financial statements are included in ‘Property and store site
maintenance expenses’ – the total sum of which was €185.1
million (€181.5 million) in 2023. In addition to property
maintenance and repair costs, the figure includes expenses
related to e.g. heating, electricity and water consumption,
and waste management, which are not included in the
Taxonomy definition of operating expenditure. In addition,
Taxonomy-eligible expenses include expenses for servicing
of the leasing car fleet. In Kesko’s business model, operating
expenditure is not material in the transition to more
sustainable activities, but instead, building renovation
measures, such as those related to improving energy
efficiency, are capital expenditure by nature.
Key events during the financial year
Kesko announced on 30 January 2023 that it would acquire
the Norwegian technical trade company Elektroskandia Norge
AS from Rexel Group. The acquisition strengthens Onninen’s
position in technical trade in Norway. Elektroskandia Norge
AS had net sales of some €250 million in 2022 and it
employs some 270 people. The company has 13 stores and
sales offices and a highly automated distribution centre.
The transaction was completed on 1 March 2023. (Investor
news releases 30.1.2023 and 2.3.2023)
Kesko published its 2022 Annual Report, including a
strategy review, the Report by the Board of Directors and
financial statements for 2022, the Corporate Governance
Statement, the Remuneration Report for Governing Bodies,
and a sustainability report, on 6 March 2023 on its website
at www.kesko.fi. (Stock exchange release 6.3.2023)
Kesko announced it would be combining its customer
loyalty scheme and share ownership in a new way with
Shareholder’s K-Plussa, which offers Finnish loyalty
customers with shareholdings in Kesko an alternative way
to access K Group’s ‘Best Customer’ benefits. Shareholder’s
K-Plussa is available to Plussa loyalty customers in Finland
with registered annual personal purchases from K Group
stores of at least €3,000 for the past year and holdings
of at least 100 shares in Kesko. (Investor news release
30.3.2023)
Kesko Corporation’s Annual General Meeting was held on
30 March 2023 at Messukeskus in Helsinki. The Annual
General Meeting adopted the 2022 financial statements
and resolved to distribute a dividend of €1.08 per share.
The Annual General Meeting discharged the Board
members and the Managing Director from liability, approved
the Remuneration Report for Governing Bodies, made
resolutions concerning the Board members' remuneration,
elected the firm of authorised public accountants Deloitte
Oy as the company’s Auditor, resolved to change the term
of office of Board members from three years to one year,
and authorised the Board to decide on the repurchase of the
company’s own shares, on the issuance of shares, and on
donations for charitable purposes. Read more in the section:
Resolutions of the 2023 Annual General Meeting. (Stock
exchange releases 2.2.2023 and 30.3.2023)
Sami Kiiski, M. Sc. (Economics and Business), 47, was
appointed as the new President of Kesko’s car trade division
and a member of Group Management Board, as the previous
division President Matti Virtanen retired. Sami Kiiski had
acted as Senior Vice President in charge of Kesko’s leisure
trade since 2020. He is also a member of the Board of
Management of Intersport International Corporation. The
changes came to effect on 1 June 2023. Kesko also changed
its Group structure, and sports trade became part of the car
trade division. Prior to this, sports trade had been part of the
building and technical trade division. The segment structure
in Kesko’s financial reporting has depicted the changes
in Group structure as of 1 April 2023. Kesko published
comparison figures for the new segment structure for 2022
and for the first quarter of 2023 on 25 May 2023. (Stock
exchange releases 31.3.2023 and 25.5.2023)
Kesko agreed to acquire Davidsen Koncernen A/S, a
leading builders’ merchant in Denmark, thus expanding
Kesko’s operations to Denmark and strengthening its
market position in Northern Europe. The Davidsen family
will maintain a 10% minority holding in the company.
The completion of the acquisition is subject to EU
Commission’s merger approval and the fulfilment of
certain other conditions. The transaction is expected to be
completed in the first quarter of 2024 at the latest. (Investor
news release 23.8.2023)
Kesko announced that it will concentrate its building and
home improvement trade operations in Sweden under the
K-Bygg chain, and that it will increasingly focus on serving
building professionals alongside consumers. K-Rauta stores
in Sweden will either be converted into K-Bygg stores or
closed. Kesko’s building and home improvement trade
operations in Sweden will be concentrated under one brand
by the end of 2024. (Investor news release 29.8.2023)
25
Kesko’s Board of Directors appointed Jorma Rauhala as
the managing director of Kesko Corporation and President
and CEO of Kesko Group as of 1 February 2024, after
Mikko Helander announced his intentions to retire in 2024.
Rauhala currently acts as President of Kesko’s building and
technical trade division and Deputy CEO. (Stock exchange
releases on 8.12.2023 and 19.12.2023)
Events after the financial year
Kesko announced in August 2023 it would expand its
operations to Denmark by acquiring 90% of Davidsen
Koncernen A/S. In January 2024, the EU Commission
approved the acquisition, and it is expected to be completed
by the end of January 2024.
Kesko is set to withdraw from operating the Neste K service
stations. Kesko is currently responsible for the grocery
trade operations and additional services at Neste K stations.
Kesko plans to withdraw from operating 64 Neste K service
stations by the end of 2024. The stations will continue as
a service offered by Neste. Kesko’s motive is that role of
grocery trade at service stations has diminished. (Investor
news release 23.1.2024)
Resolutions of the 2023 Annual
General Meeting
The Annual General Meeting of Kesko Corporation held on
30 March 2023 adopted the company’s financial statements
for 2022. The Annual General Meeting resolved to distribute
a dividend of €1.08 per share on shares held outside the
company, paid in four instalments of €0.27 per share. The
record date of the first dividend instalment was 3 April 2023
and the pay date 12 April 2023. The record date of the
second dividend instalment was 21 June 2023 and the pay
date 28 June 2023. The record date of the third dividend
instalment was 12 September 2023 and the pay date 19
September 2023. The record date of the fourth dividend
instalment was 12 December 2023 and the pay date 19
December 2023. The Board was authorised to decide, if
necessary, on new dividend payment record dates and pay
dates for the second, third and/or fourth instalments, if the
rules and statutes of the Finnish book-entry system changed
or otherwise so required. The remaining distributable assets
remain in equity.
The resolutions of the Annual General Meeting were
communicated in more detail in a stock exchange release on
30 March 2023.
Information contained in the notes to
the financial statements
Information on the Group’s personnel is disclosed in Note 2.5.
Financial risks are presented in Note 4.3 and information on
financial instruments measured at fair value is disclosed in
Note 4.5.
Related party transactions are disclosed in Note 5.2.
Information on disputes and legal and authority proceedings
is disclosed in Note 5.4.
Risk management
Risk management at Kesko is proactive and an integral part
of day-to-day management to assess and manage business-
related opportunities and risks.
Kesko’s divisions and common operations are responsible
for identifying, assessing, handling and managing risks
related to their operations, and they report on risks, risk
management responses and the results of those responses
to the Group risk management function. Members of the
Group Management Board are responsible for the effective
and efficient implementation of internal control and risk
management in their respective areas of responsibility.
A risk management function independent of businesses
is responsible for providing a framework and guidance
for internal control and risk management and
supports, coordinates and supervises risk management
implementation in Kesko Group. The Chief Audit and
Risk Officer reports functionally to the Chair of the Audit
Committee and administratively to Kesko’s President
and CEO on matters related to internal audit, and to the
Group’s Chief Financial Officer on matters related to risk
management. The Risk Management Steering Group headed
by the Chief Financial Officer is responsible for establishing
the Group’s overview of the risk situation. The President and
CEO is responsible for the effectiveness and efficiency of the
Group’s risk management, and approves Group risk reports
before they are reviewed by the Board of Directors. Kesko’s
Board of Directors monitors and assesses the effectiveness
of risk management and supervises the assessment of risks
related to the company’s strategy and operations and their
management, aided by the Audit Committee.
The Group's most significant risks and uncertainties, as
well as material changes in and management responses to
them, including indicators, are reported to Kesko Board's
Audit Committee quarterly in connection with the review
of interim reports, the half-year financial report, and
the financial statements. The Audit Committee Chair reports
26
on risk management to the Board as part of Audit Committee
reporting. The most significant risks and uncertainties and
emerging risks are reported to the market by the Board in the
Report by the Board of Directors, and any material changes in
them in the interim reports and the half-year financial report.
Significant risks and uncertainties
Weakened demand due to inflation, rising
interest rates and economic downturn
Inflation, rising interest rates, weakened employment,
and economic uncertainty have an impact on consumer
purchasing power and companies’ willingness to invest.
In grocery trade, product price has an emphasised impact
on consumer purchase decisions, while customers in
car trade may postpone their purchases. In building and
technical trade, construction and renovation projects may
be postponed, which would impact sales and inventory
management.
Geopolitical risks
Growing tensions in security policy as a result of the war in
Ukraine and other military conflicts, as well as the potential
expansion of the conflicts and tightened military and
economic competition between superpowers could have a
significant impact on Kesko’s operating environment, supply
chain continuity, and product availability.
Cybercrime
Growing, professional cybercrime has resulted in higher
risk on business continuity and loss of critical information.
Targets of cyber-attacks may include, for example, data
systems critical for business continuity or personal data.
Cyber-attacks may result in business disruptions, loss of
customer trust, or fines imposed by authorities.
Compliance with laws and agreements
Changes in legislation and authority regulations could
necessitate significant changes and result in additional costs.
Compliance with laws and agreements is an important part
of Kesko's corporate responsibility. Non-compliance can
result in fines, claims for damages and other financial losses,
as well as loss of trust and reputation.
Climate change
Delays in actions aimed at mitigating climate change and an
increase in extreme weather phenomena can impact product
availability and cause disturbances in logistics and the store
site network. The impacts of Kesko’s operations on the
climate, in turn, are related to Kesko’s energy solutions and
emissions, and the lifecycle impact of products and services
sold in the whole supply chain.
Product safety
A failure in product safety control or in the quality assurance
of the supply chain could result in financial losses, the loss of
reputation and customer trust, or, in the worst case, a health
hazard to customers.
Store sites and properties
Good store sites are a key competitive factor for business
growth and profitability. The acquisition of store sites can
be delayed by town planning and permit procedures and
the availability and pricing of sites. Considerable amounts
of capital or lease liabilities are tied up in properties for
years. As a result of urbanisation, changes in the market
situation, growing significance of e-commerce, or a chain
concept proving inefficient, there is a risk that a store site
or a property becomes unprofitable, and operations are
discontinued while long-term liabilities remain.
Responsible operating practices and
reputation management
Various aspects of corporate responsibility, such as ensuring
responsibility in the purchasing chain of products, fair and
equal treatment of employees, the prevention of corruption,
and environmental protection, are increasingly important
to customers. Any failures in corporate responsibility and
sustainability could result in negative publicity for Kesko and
cause operational and financial damage.
Reporting to the market
In its investor communication and financial reporting, Kesko
follows the disclosure policy approved by Kesko’s Board
of Directors. Kesko's objective is to produce and publish
reliable and timely information. Disclosure follows the
principle of providing all market participants information in
a timely manner and non-selectively to form the basis for
the price formation of Kesko’s financial instruments such as
shares. Should the information published by Kesko prove
incorrect, or should communications fail to meet regulations
in other respects, it could result in losing investor and other
stakeholder trust and in possible sanctions. Significant
business arrangements, tight disclosure schedules and the
dependency on information systems create challenges for
the accuracy of financial information.
Risks of damage
Accidents, natural phenomena and epidemics can cause
significant damage to people, property or business. In
addition, risks of damage may cause business disruptions
that cannot be prevented.
27
Proposal for profit distribution
The Board of Directors of Kesko Corporation proposes to
the Annual General Meeting to be held on 26 March 2024
that a dividend of €1.02 per share be paid for the year
2023 based on the adopted balance sheet on shares held
outside the company at the date of dividend distribution.
The remaining distributable assets will remain in equity. The
Board proposes that the dividend be paid in four instalments.
The first instalment of €0.26 per share is to be paid to
shareholders registered in the company's register of
shareholders kept by Euroclear Finland Ltd on the instalment’s
record date 28 March 2024. The Board proposes that the
dividend instalment pay date be 9 April 2024.
The second instalment of €0.25 per share is to be paid
to shareholders registered in the company's register
of shareholders kept by Euroclear Finland Ltd on the
instalment’s record date 16 July 2024. The Board proposes
that the dividend instalment pay date be 23 July 2024.
The third instalment of €0.26 per share is to be paid
to shareholders registered in the company's register
of shareholders kept by Euroclear Finland Ltd on the
instalment’s record date 15 October 2024. The Board
proposes that the dividend instalment pay date be
22 October 2024.
The fourth instalment of €0.25 per share is to be paid
to shareholders registered in the company's register
of shareholders kept by Euroclear Finland Ltd on the
instalment’s record date 14 January 2025. The Board
proposes that the dividend instalment pay date be
21 January 2025.
The Board proposes it be authorised to decide, if necessary,
on new dividend payment record dates and pay dates for
the second, third and/or fourth instalments, if the rules
and statutes of the Finnish book-entry system change or
otherwise so require.
As at the date of the proposal for the distribution of profit,
29 January 2024, a total of 397,769,511 shares were held
outside the company, and the corresponding total amount of
dividends is €405,724,901.22.
The distributable assets of Kesko Corporation total
€1,584,703,413.17, of which profit for the financial year is
€509,617,838.22.
Annual General Meeting
The Board of Directors decided that Kesko’s Annual General
Meeting will be held on 26 March 2024 at 1.00 pm (EET).
Shares and securities markets
At the end of December 2023, the total number of shares in
Kesko Corporation was 400,079,008, of which 126,948,028
or 31.7%, were A shares, and 273,130,980 or 68.3%, were
B shares. On 31 December 2023, Kesko Corporation held
2,309,497 of its own B shares as treasury shares.
These treasury shares accounted for 0.85% of the total
number of B shares, 0.58% of the total number of shares,
and 0.15% of the votes attached to all shares in the
company. The total number of votes attached to all shares
was 1,542,611,260. Each A share carries ten (10) votes
and each B share one (1) vote. The company cannot
vote with own shares held by it as treasury shares and no
dividend is paid on such shares. At the end of 2023, Kesko
Corporation's share capital was €197,282,584.
The price of a Kesko A share quoted on Nasdaq Helsinki was
€20.35 at the end of 2022, and €18.02 at the end of 2023,
representing a decrease of 11.4%. Meanwhile, the price of a
Kesko B share was €20.62 at the end of 2022, and €17.93 at
the end of 2023, representing a decrease of 13.0%. In 2023, the
highest price for an A share was €21.95 and the lowest €15.26.,
while the highest price for a B share was €22.20 and the lowest
€15.02. The Nasdaq Helsinki All-Share index (OMX Helsinki)
was down by 6.6% and the weighted OMX Helsinki Cap index by
5.0% in 2023. The Retail Sector Index was up by 43.4%.
The market capitalisation of Kesko’s A shares was €2,288
million at the end of 2023, while the market capitalisation of
Kesko’s B shares was €4,856 million, excluding the shares
held by the parent company as treasury shares. The combined
market capitalisation of the A and B shares was €7,143
million, down by €1,018 million from the end of 2022.
In 2023, a total of 5.6 million A shares were traded on Nasdaq
Helsinki. The exchange value of the A shares was €102.9 million.
Meanwhile, 142.9 million B shares were traded, for an exchange
value of €2,642.3 million. Nasdaq Helsinki accounted for over
95% of the trading on Kesko’s A and B shares. Kesko shares were
also traded on multilateral trading facilities, the most significant
of which was Turquoise (source: Euroland).
At the end of December 2023, the number of registered
shareholders was 105,550, the highest figure in the
company’s history. At the end of the year, foreign ownership
of all shares was 33.9%, and foreign ownership of B shares
48.8%. Foreign ownership decreased by 4.6 percentage
points during the year.
28
Share performance and turnover
2021 2022 2023
Share price as at 31 Dec.
A share € 27.15 20.35 18.02
B share € 29.34 20.62 17.93
Average share price
A share € 26.73 21.89 18.47
B share € 27.73 23.11 18.49
Market capitalisation as at 31 Dec., A share € million 3,446.6 2,583.4 2,287.6
Market capitalisation as at 31 Dec., B share € million 7,926.6 5,577.9 4,855.8
Turnover
A share Million pcs 8* 7* 6*
B share Million pcs 165* 144* 143*
Relative turnover rate
A share % 6.8 5.8 4.4
B share % 58.6 52.2 52.3
Diluted average number of shares
Thousand
pcs 397,033 397,383 397,706
* Calculated with post-split number of shares
29
Analysis of shareholding
Analysis of shareholding by shareholder type as at 31 Dec. 2023
All shares Number of shares, pcs Percentage of all shares, %
Nominee-registered and non-Finnish
holders 135,649,101 33.91
Households 102,021,401 25.50
Non-financial corporations and housing
corporations 95,122,697 23.78
General government* 32,203,941 8.05
Non-profit institutions serving
households** 21,446,218 5.36
Financial and insurance corporations 13,635,650 3.41
Total 400,079,008 100.00
A shares
Number of
shares, pcs
Percentage of
A shares, %
Percentage of all
shares, %
Non-financial corporations and housing
corporations 74,746,304 58.88 18.68
Households 24,027,471 18.93 6.01
General government* 14,582,761 11.49 3.64
Non-profit institutions serving
households** 10,903,798 8.59 2.73
Nominee-registered and non-Finnish
holders 2,244,036 1.77 0.56
Financial and insurance corporations 443,658 0.35 0.11
Total 126,948,028 100.00 31.73
B shares
Number of
shares, pcs
Percentage of
B shares, %
Percentage of all
shares, %
Nominee-registered and non-Finnish holders 133,405,065 48.84 33.34
Households 77,993,930 28.56 19.49
Non-financial corporations and housing
corporations 20,376,393 7.46 5.09
General government* 17,621,180 6.45 4.40
Financial and insurance corporations 13,191,992 4.83 3.30
Non-profit institutions serving households** 10,542,420 3.86 2.64
Total 273,130,980 100.00 68.27
* General government, for example, municipalities, the provincial administration of Åland, authorised pension
providers and social security funds
** Non-profit institutions, for example, foundations awarding scholarships, organisations safeguarding certain interests
and various charitable associations
Analysis of shareholding by number of shares held as at 31 Dec. 2023
All shares
Number of shares
Number of
shareholders, pcs
Percentage of
shareholders, % Share total, pcs
Percentage of
shares, %
1−100 46,076 43.65 1,838,579 0.46
101−500 30,202 28.61 7,803,480 1.95
501−1,000 10,128 9.60 7,610,210 1.90
1,001−5,000 13,853 13.12 31,906,513 7.98
5,001−10,000 2,613 2.48 18,505,252 4.63
10,001−50,000 2,225 2.11 45,246,761 11.31
50,001−100,000 229 0.22 16,100,182 4.02
100,001−500,000 184 0.17 37,429,831 9.36
500,001− 40 0.04 233,638,200 58.40
Total 105,550 100.00 400,079,008 100.00
A shares
Number of shares
Number of
shareholders, pcs
Percentage of A
shareholders, % A share total, pcs
Percentage of
A shares, %
1−100 15,659 55.57 552,749 0.44
101−500 6,389 22.67 1,582,170 1.25
501−1,000 1,649 5.85 1,230,172 0.97
1,001−5,000 2,597 9.22 6,791,973 5.35
5,001−10,000 771 2.74 5,550,835 4.37
10,001−50,000 873 3.10 18,051,913 14.22
50,001−100,000 127 0.45 9,112,355 7.18
100,001−500,000 102 0.36 19,782,502 15.58
500,001− 12 0.04 64,293,359 50.65
Total 28,179 100.00 126,948,028 100.00
30
B shares
Number of shares
Number of
shareholders, pcs
Percentage of B
shareholders, % B share total, pcs
Percentage of
B shares, %
1−100 33,675 40.29 1,403,256 0.51
101−500 25,354 30.34 6,652,851 2.44
501−1,000 9,031 10.81 6,805,904 2.49
1,001−5,000 11,931 14.27 26,835,212 9.83
5,001−10,000 1,988 2.38 14,060,646 5.15
10,001−50,000 1,383 1.65 26,938,643 9.86
50,001−100,000 105 0.13 7,218,621 2.64
100,001−500,000 88 0.11 18,166,965 6.65
500,001− 25 0.03 165,048,882 60.43
Total 83,580 100.00 273,130,980 100.00
10 largest shareholders by number of shares held
as at 31 Dec. 2023
Number of
shares, pcs
Percentage of
shares, %
Number of
votes
Percentage of
votes, %
1. K-Retailers' Association 21,070,422 5.27 210,704,220 13.66
2. Ilmarinen Mutual Pension
Insurance Company 14,606,643 3.65 142,163,499 9.22
3. Vähittäiskaupan Takaus Oy 13,195,008 3.30 131,950,080 8.55
4. Elo Mutual Pension Insurance 6,101,725 1.53 9,753,250 0.63
5. Varma Mutual Pension
Insurance Company 5,978,944 1.49 5,978,944 0.39
6. Foundation for Vocational
Training in the Retail Trade 5,477,573 1.37 54,775,730 3.55
7. The State Pension Fund 3,400,000 0.85 3,400,000 0.22
8. K-Food Retailers' Club 2,486,307 0.62 24,863,070 1.61
9. Heimo Välinen Oy 2,280,000 0.57 22,800,000 1.48
10. Oy The English Tearoom Ab 2,000,000 0.50 2,000,000 0.13
Table above includes registered shareholders. The table does not contain shares held by
Kesko Corporation, amounting to 2,309,497 on 31 December 2023.
10 largest shareholders by number of votes as at 31 Dec. 2023
Number of
shares, pcs
Percentage of
shares, %
Number of
votes
Percentage of
votes, %
1. K-Retailers' Association 21,070,422 5.27 210,704,220 13.66
2. Ilmarinen Mutual Pension
Insurance Company 14,606,643 3.65 142,163,499 9.22
3. Vähittäiskaupan Takaus Oy 13,195,008 3.30 131,950,080 8.55
4. Foundation for Vocational
Training in the Retail Trade 5,477,573 1.37 54,775,730 3.55
5. K-Food Retailers' Club 2,486,307 0.62 24,863,070 1.61
6. Heimo Välinen Oy 2,280,000 0.57 22,800,000 1.48
7. Food Paradise Oy 1,564,164 0.39 15,641,640 1.01
8. Elo Mutual Pension Insurance 6,101,725 1.53 9,753,250 0.63
9. Pokela Oy Iso Omena 792,600 0.20 7,926,000 0.51
10. T.A.T. Invest Oy 792,080 0.20 7,726,400 0.50
31
Management's shareholdings
At the end of December 2023, Kesko Corporation's Board
members, the President and CEO and the corporations
controlled by them held 1,396,510 Kesko Corporation A
shares and 577,898 Kesko Corporation B shares, i.e. a total
of 1,970,619 shares, which represents 0.49% of the total
number of shares and 0.94% of votes carried by all shares of
the Company.
At 31 December 2023, the President and CEO held 5,000
Kesko Corporation A shares and 431,385 B shares, which
represented 0.11% of the total number of shares and
0.03% of votes carried by all shares of the Company. At 31
December 2023, the Group Management Board including
the President and CEO held 7,824 Kesko Corporation A
shares and 1,129,797 Kesko Corporation B shares, which
represented 0.28% of the total number of shares and 0.08%
of votes carried by all shares of the Company.
Board authorisations
Kesko has a share-based commitment and incentive scheme.
To implement the scheme, Kesko’s Board of Directors may
decide, within share issue authorisations granted by the
company’s General Meeting, to transfer Kesko B shares
held by the company as treasury shares. In 2023, Kesko
Corporation transferred 304,864 Kesko B shares held as
treasury shares to members of management and other
key persons in the company. Kesko issued related stock
exchange releases on 15 March 2023 and 2 May 2023.
Kesko issued a stock exchange release on 2 February 2023
regarding the most recent share-based commitment and
incentive plans. Kesko Corporation also transferred a total of
6,000 of its own B shares held by the company as treasury
shares to the members of Kesko’s Board of Directors as part
of the Board members’ annual remuneration, and issued a
related stock exchange release on 2 May 2023.
Kesko’s Annual General Meeting of 30 March 2023
authorised the Board to decide on the issuance of a
maximum of 33,000,000 new B series shares or B shares
held by the company as treasury shares, and on the
repurchase of a maximum of 16,000,000 of the company’s
own B shares. The authorisations are valid until 30 June
2024. The authorisations were communicated in a stock
exchange release on 30 March 2023.
32
Group's key performance indicators
2021 2022 2023
Income statement
Net sales € million 11,300.2 11,809.0 11,783.8
Change in net sales % 5.9 4.5 -0.2
Change in net sales, comparable % 8.2 4.4 -0.8
Operating profit, comparable € million 775.5 815.1 712.0
Operating margin, comparable % 6.9 6.9 6.0
Operating profit € million 775.2 816.5 695.4
Operating margin % 6.9 6.9 5.9
Profit for the year € million 571.8 609.9 495.6
Profit for the year as percentage of net sales % 5.1 5.2 4.2
Profitability
Return on equity, group % 24.2 23.1 18.0
Return on equity, comparable, group % 24.1 23.2 18.5
Return on capital employed % 17.2 17.0 13.1
Return on capital employed, comparable % 17.2 16.9 13.4
Funding and financial position
Interest-bearing net debt, group € million 1,907.3 2,104.2 2,559.8
Interest-bearing net debt excluding lease
liabilities € million -21.3 184.1 561.9
Gearing, group % 75.4 76.7 92.8
Equity ratio, group % 36.6 36.9 35.8
Interest-bearing net debt/EBITDA excluding
the impact of IFRS 16, group 0.0 0.2 0.7
2021 2022 2023
Other performance indicators
Capital expenditure € million 276.6 449.2 678.9
Capital expenditure as percentage of net
sales % 2.4 3.8 5.8
Cash flow from operating activities € million 1,152.0 915.2 1,049.5
Cash flow from investing activities € million -292.3 -344.3 -590.2
Average number of personnel converted into
full-time employees 14,232 14,633 14,766
Personnel at 31 Dec. 17,402 17,841 17,702
2021 2022 2023
Share performance indicators
Earnings/share, basic and diluted € 1.44 1.53 1.25
Earnings/share, comparable, basic 1.43 1.54 1.28
Equity/share € 6.37 6.90 6.93
Dividend/share* € 1.06 1.08 1.02
Payout ratio % 74.3 70.4 81.9
Payout ratio, comparable % 74.7 70.1 79.7
Cash flow from operating activities/share € 2.90 2.30 2.64
Price/earnings ratio (P/E), A share 19.04 13.26 14.46
Price/earnings ratio (P/E), B share 20.57 13.44 14.39
Effective dividend yield, A share % 3.9 5.3 5.7
Effective dividend yield, B share % 3.6 5.2 5.7
* Proposal to the General Meeting
33
Calculation of performance indicators
Kesko uses alternative performance measures to reflect business performance and
profitability. These indicators should be examined together with the IFRS-compliant
performance indicators.
Change in comparable net sales is used to reflect changes in the Group’s business volume
between periods. The indicator reflects the change in net sales excluding the impact of
acquisitions and divestments, in local currencies. The comparable net sales have been
calculated by including in the net sales the business operations that have been part of
Kesko Group in both the financial year as well as the comparison year. Other structural
arrangements related to acquisitions and divestments have been adjusted in the same manner
as acquisitions.
Performance indicators reflecting comparable profit and profitability are used to improve the
comparability of operational performance between periods. Gains and losses on disposal of
real estate, shares and business operations, impairment charges and significant restructuring
costs are identified as items affecting comparability. Gains on disposal have been presented
within other operating income, and losses on disposal within other operating expenses in the
income statement.
Alternative performance measures that have been adjusted for the impact of IFRS 16 are used
to monitor the achievement of certain financial targets. The EBITDA excluding the impact of
IFRS 16 corresponds to EBITDA before the adoption of IFRS 16, and the interest-bearing net
debt excluding lease liabilities correspond to interestbearing net debt before the adoption of
the standard. These restated indicators are included as components in the Group’s financial
target “interest-bearing net debt excluding lease liabilities divided by EBITDA excluding the
impact of IFRS 16”.
In addition, the financial performance indicators required by the Decree of the Ministry
of Finance on obligation of securities issuers to disclose periodic information have been
presented as alternative performance measures. The management uses these indicators to
monitor and analyse business performance, profitability and financial position.
Profitability
Operating profit, comparable Operating profit +/– items affecting comparability
Items affecting comparability
– gains on disposal + losses on disposal + impairment charges +/–
structural arrangements
Return on equity, %
(Profit/loss before tax − Income tax) x 100
Shareholders' equity, average of the beginning and end of the financial
year
Return on equity,
comparable, %
(Profit/loss adjusted for items affecting comparability before
tax − Income tax adjusted for the tax effect of the items affecting
comparability) x 100
Shareholders' equity, average of the beginning and end of the financial
year
Return on capital employed, %
Operating profit x 100
(Non–current assets + Inventories + Receivables + Other current
assets – Non–interest–bearing liabilities) on average for 12 months
Return on capital employed,
comparable, %
Comparable operating profit x 100
(Non–current assets + Inventories + Receivables + Other current
assets – Non–interest–bearing liabilities) on average for 12 months
EBITDA
Operating profit + Depreciation and amortisation + Impairment
charges
EBITDA excluding the impact
of IFRS 16
EBITDA – rents from lease agreements
34
Funding, capital expenditure and financial position
Equity ratio, %
Shareholders' equity x 100
(Balance sheet total − Advances received)
Gearing, %
Interest-bearing net debt x 100
Shareholders' equity
Interest-bearing net debt
Interest-bearing liabilities + Lease liabilities – Other current financial
assets – Cash and cash equivalents
Interest-bearing net debt
excluding lease liabilities
Interest-bearing net debt – Lease Liabilities
Capital expenditure
Performance indicator includes investments in tangible and intangible
assets, subsidiary shares, shares in associates and joint ventures
and other shares. Additions of right-of-use assets for leases in
the consolidated statement of financial position are not capital
expenditure. Redemption of a leased property (right-of-use asset) is
reported as capital expenditure.
Interest-bearing net debt
excluding lease liabilities /
EBITDA excluding the impact
of IFRS 16
Interest-bearing net debt excluding lease liabilities / EBITDA excluding
the impact of IFRS 16
Share performance indicators
Earnings/share, diluted
Net profit/loss – Share of non-controlling interests of net profit/loss
Average number of shares adjusted for the dilutive effect
Earnings/share, basic
Net profit/loss − Share of non-controlling interests of net profit/loss
Average number of shares
Earnings/share, basic,
comparable
Net profit/loss adjusted for items affecting comparability − Share of
non-controlling interests of net profit/loss adjusted for items affecting
comparability
Average number of shares
Equity/share
Equity attributable to equity holders of the parent
Basic number of shares at the balance sheet date
Payout ratio, %
(Dividend/share) x 100
(Earnings/share)
Price/earnings ratio (P/E)
Share price at balance sheet date
(Earnings/share)
Effective dividend yield, %
(Dividend/share) x 100
Share price at balance sheet date
Market capitalisation Share price at balance sheet date x Number of shares
Cash flow from operating
activities/share
Cash flow from operating activities
Average number of shares
Yield of A share and B share Change in share price + Annual dividend yield
35
Reconciliation of alternative performance measures to IFRS
financial statements
€ million 1–12/2023 1–12/2022
Items affecting comparability
Gains on disposal 0.4 0.0
Losses on disposal -1.0 -0.1
Structural arrangements -16.1 1.6
Items in operating profit affecting comparability -16.7 1.5
Items in financial items affecting comparability -0.2 -3.6
Items in income taxes affecting comparability 3.1 -0.0
Total items affecting comparability -13.7 -2.2
Items in EBITDA affecting comparability -12.8 -0.1
Operating profit, comparable
Operating profit 695.4 816.5
Net of
Items in operating profit affecting comparability -16.7 1.5
Operating profit, comparable 712.0 815.1
EBITDA
Operating profit 695.4 816.5
Plus
Depreciation and impairment charges 184.0 169.0
Depreciation and impairment charges for right-of-use assets 353.2 322.1
EBITDA 1,232.5 1,307.7
EBITDA, comparable
EBITDA 1,232.5 1,307.7
Net of
Items in EBITDA affecting comparability -12.8 -0.1
EBITDA, comparable 1,245.3 1,307.8
€ million 1–12/2023 1–12/2022
Profit before tax, comparable
Profit before tax 613.5 761.1
Net of
Items in operating profit affecting comparability -16.7 1.5
Items in financial items affecting comparability -0.2 -3.6
Profit before tax, comparable 630.4 763.2
Net profit, comparable
Comparable profit before tax 630.4 763.2
Net of
Income tax 118.0 151.2
Items in income taxes affecting comparability 3.1 -0.0
Net profit, comparable 509.3 612.0
Net profit attributable to owners of the parent, comparable
Net profit, comparable 509.3 612.0
Net profit attributable to owners of the parent, comparable 509.3 612.0
Earnings/share, comparable, €
Net profit attributable to owners of the parent, comparable 509.3 612.0
Average number of shares, basic, 1,000 pcs 397,706 397,383
Earnings/share, comparable, € 1.28 1.54
Return on capital employed, %
Operating profit 695.4 816.5
Capital employed, average 5,313.3 4,811.9
Return on capital employed, % 13.1 17.0
Return on capital employed, comparable, %
Operating profit, comparable 712.0 815.1
Capital employed, average 5,313.3 4,811.9
Return on capital employed, comparable, % 13.4 16.9
36
€ million 1–12/2023 1–12/2022
Group
Return on equity, %
Net profit 495.6 609.9
Equity, average 2,750.3 2,635.8
Return on equity, % 18.0 23.1
Return on equity, comparable, %
Net profit, comparable 509.3 612.0
Equity, average 2,750.3 2,635.8
Return on equity, comparable, % 18.5 23.2
Equity ratio, %
Shareholders’ equity 2,758.4 2,742.2
Total assets 7,754.3 7,474.0
Advances received 56.7 46.9
Equity ratio, % 35.8 36.9
37
FINANCIAL
STATEMENTS
FINANCIAL STATEMENTS
2023
Consolidated income statement
| 1 Jan.–31 Dec. | 1 Jan.–31 Dec. | ||
€ million | Note | 2023 | 2022 |
Net sales | 2.1 | ||
Material and services | 2.3 | - | - |
Change in inventory | - | ||
Other operating income | 2.4 | ||
Employee benefit expenses | 2.5 | - | - |
Depreciation, amortisation and impairment charges | 3.2 3.3 | - | - |
Depreciation and impairment charges for right-of-use assets | 3.4 | - | - |
Other operating expenses | 2.5 | - | - |
Share of result of joint ventures | |||
Operating profit | |||
Interest income and other finance income | 4.4 | ||
Interest expense and other finance costs | 4.4 | - | |
Interest expense for lease liabilities | 4.4 | - | - |
Foreign exchange differences | 4.4 | - | - |
Total finance income and costs | 4.4 | - | - |
Share of result of associates | |||
Profit before tax | |||
Income tax | 2.7 | - | - |
Net profit for the year | |||
Net profit for the year attributable to Owners of the parent | |||
Earnings per share for net profit attributable to owners of the parent | |||
Basic and diluted, Group total, € | 2.8 |
CONSOLIDATED FINANCIAL STATEMENTS (IFRS)
Consolidated statement of comprehensive income
| 1 Jan.–31 Dec. | 1 Jan.–31 Dec. | ||
€ million | Note | 2023 | 2022 |
Net profit for the year | |||
Items that will not be reclassified subsequently to profit or loss | |||
Actuarial gains and losses | 2.7 3.7 | - | |
Items that may be reclassified subsequently to profit or loss | |||
Currency translation differences related to a foreign operation | 2.7 | - | - |
| Share of other comprehensive income of associates | |||
and joint ventures | 2.7 | - | - |
Cash flow hedge revaluation | 2.7 | - | |
Total comprehensive income for the year, net of tax | - | ||
Total comprehensive income for the year | |||
Comprehensive income for the year attributable to Owners of the parent |
39
Consolidated statement of financial position
€ million | Note | 31 Dec. 2023 | 31 Dec. 2022 |
| ASSETS | |||
| Non-current assets | |||
Property, plant and equipment | 3.2 | ||
Goodwill | 3.3 | ||
Intangible assets | 3.3 | ||
Right-of-use assets | 3.4 | ||
Shares in associates and joint ventures | 3.8 5.1 | ||
Other investments | 4.3 4.5 | ||
Non-current receivables | 4.3 4.5 | ||
Deferred tax assets | 2.7 | ||
Pension assets | 3.7 | ||
Total non-current assets | |||
| Current assets | |||
Inventories | 3.5 | ||
Interest-bearing receivables | 3.6 4.5 | ||
Trade receivables | 3.6 4.3 4.5 | ||
Income tax assets | 3.6 | ||
Other non-interest-bearing receivables | 3.6 4.5 | ||
Other financial assets | 4.3 4.5 | ||
Cash and cash equivalents | 4.5 | ||
Total current assets | |||
Non-current assets classified as held for sale | |||
Total assets |
€ million | Note | 31 Dec. 2023 | 31 Dec. 2022 |
| EQUITY AND LIABILITIES | |||
Share capital | 4.2 | ||
Share premium | 4.2 | ||
Other reserves | 4.2 | ||
Currency translation differences | 4.2 | - | - |
Revaluation reserve | 4.2 | ||
Retained earnings | |||
Total equity | |||
| Non-current liabilities | |||
Interest-bearing non-current liabilities | 4.3 4.5 4.6 | ||
Lease liabilities | 4.5 4.6 | ||
Non-interest-bearing non-current liabilities | 4.3 4.5 | ||
Deferred tax liabilities | 2.7 | ||
Provisions | 3.9 | ||
Total non-current liabilities | |||
| Current liabilities | |||
Current interest-bearing liabilities | 4.3 4.5 4.6 | ||
Lease liabilities | 4.5 4.6 | ||
Trade payables | 4.3 4.5 | ||
Other non-interest-bearing liabilities | 4.3 4.5 | ||
Income tax liabilities | 4.5 | ||
Accrued liabilities | 4.3 4.5 | ||
Provisions | 3.9 | ||
Total current liabilities | |||
Total liabilities | |||
Total equity and liabilities |
40
Consolidated statement of cash flows
| 1 Jan.–31 Dec. | 1 Jan.–31 Dec. | ||
€ million | Note | 2023 | 2022 |
| Cash flows from operating activities | |||
Profit before tax | |||
| Adjustments | |||
Depreciation according to plan | |||
Depreciation and impairment for right-of-use assets | |||
Finance income and costs | - | ||
Interest expense for lease liabilities | |||
Other adjustments | 2.9 | - | - |
| Change in working capital | |||
Current non-interest-bearing receivables, increase (-)/decrease (+) | - | ||
Inventories, increase (-)/decrease (+) | - | ||
Current non-interest-bearing liabilities, increase (+)/decrease (-) | - | ||
- | - | ||
Interest paid and other finance costs | - | - | |
Interest paid on lease liabilities | - | - | |
Interest received | |||
Dividends received | |||
Dividends and capital repayments received from associated companies and joint ventures | |||
Income taxes paid | - | - | |
Net cash flows from operating activities, total |
| 1 Jan.–31 Dec. | 1 Jan.–31 Dec. | ||
€ million | Note | 2023 | 2022 |
| Cash flows from investing activities | |||
Payments for acquisition of subsidiary shares, net of cash acquired | 3.1 | - | - |
| Payments for property, plant, equipment | |||
and intangible assets | 2.9 | - | - |
Proceeds from sale of subsidiaries and businesses, net cash deducted | |||
| Proceeds from sale of property, plant, equipment | |||
and intangible assets | |||
Proceeds from sale of other investments | |||
| Loan receivables and other financial assets, increase | |||
(-)/decrease (+) | |||
Net cash flows from investing activities, total | - | - | |
| Cash flows from financing activities | |||
Interest-bearing liabilities, increase (+)/decrease (-) | 4.1 | ||
Repayments for lease liabilities | 3.4 4.1 | - | - |
Interest-bearing receivables, increase (-)/decrease (+) | 4.1 | ||
Dividends paid | - | - | |
Other items | |||
Net cash flows from financing activities, total | - | - | |
Change in cash and cash equivalents | - | - | |
Cash and cash equivalents as at 1 January | 4.5 | ||
| Currency translation difference adjustment | |||
and change in value | - | - | |
| Cash and cash equivalents assets | |||
as at 31 December | 4.5 |
41
Consolidated statement of changes in equity
| Currency | |||||||
| Share | translation | Revaluation | Treasury | Retained | |||
| € million | capital | Reserves | differences | reserve | shares | earnings | Total equity |
Balance as at 1 January 2023 | - | - | |||||
Share-based payments | |||||||
Dividends | - | - | |||||
Other changes | - | - | |||||
Transactions with owners, total | - | - | - | - | |||
| Comprehensive income | |||||||
Net profit for the year | |||||||
Actuarial gains/losses | - | - | |||||
Currency translation differences related to a foreign operation | - | - | |||||
Share of other comprehensive income of associates and joint ventures | - | - | |||||
Cash flow hedge revaluation | - | - | |||||
Total comprehensive income for the year, net of tax | - | - | - | - | |||
Total comprehensive income for the period | - | - | |||||
Balance as at 31 December 2023 | - | - | |||||
Balance as at 1 January 2022 | - | - | |||||
Share-based payments | |||||||
Dividends | - | - | |||||
Other changes | - | ||||||
Transactions with owners, total | - | - | - | ||||
| Comprehensive income | |||||||
Net profit for the year | |||||||
Actuarial gains/losses | |||||||
Currency translation differences related to a foreign operation | - | - | |||||
Share of other comprehensive income of associates and joint ventures | - | - | |||||
Cash flow hedge revaluation | |||||||
Total comprehensive income for the year, net of tax | - | ||||||
Total comprehensive income for the period | - | ||||||
Balance as at 31 December 2022 | - | - |
Further information on share capital and reserves is disclosed in Note 4.2 and on share-award plans in Note 5.3. Deferred tax related to components of other comprehensive income is presented
in Note 2.7.
42
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
1. ACCOUNTING POLICIES FOR THE CONSOLIDATED
FINANCIAL STATEMENTS
The notes to the consolidated financial statements have
been grouped into sections based on their subject. The basis
of preparation is described as part of this note, while the
accounting policies directly related to a specific note are
presented as part of the note in question. The notes contain
the relevant financial information as well as a description of
the accounting policies and key estimates and judgements
applied for the topics of the individual note.
Kesko has issued an XHTML financial review complying
with the ESEF requirements on Kesko’s website. The Audit
firm Deloitte Oy has provided to company an independent
auditor’s reasonable assurance report in accordance with
ISAE 3000 (Revised) on Kesko’s ESEF Financial Statements.
1.2 Basis of preparation
1.3 Critical accounting estimates
and assumptions
The preparation of consolidated financial statements in
conformity with international accounting standards requires
the use of certain estimates and assumptions about the future
that affect the reported amounts of assets and liabilities,
contingent liabilities, and income and expense. The actual
results may differ from these estimates and assumptions.
The impact of climate risks has been assessed on the
Group’s business operations and the consolidated financial
statements. Climate change related risks on Kesko are
assessed based on selected climate scenarios. Kesko
Group has not identified any business operations subject
to material climate risks in terms of business continuity
or valuation of asset items. Kesko owns and manages via
leases a substantial number of properties in all its operating
countries. Individual asset items may be subject to risks of
damage or investment needs due to, for example, extreme
weather phenomena.
The estimates and judgements made are continuously
evaluated, and they are based on historical experience and
43
other factors, including expectations of future events that
are believed to be reasonable under the circumstances.
The critical accounting estimates and assumptions used in
the preparation of consolidated financial statements are
further described in the corresponding notes.
• Income tax (Note 2.7)
• Acquisitions (Note 3.1)
• Intangible assets (Note 3.3)
• Leases (Note 3.4)
• Inventories (Note 3.5)
• Trade and other current receivables (Note 3.6)
• Pension assets (Note 3.7)
• Provisions (Note 3.9)
1.4 Critical judgements in applying
accounting policies
The Group's management uses its judgement in the
adoption and application of accounting policies in the
financial statements. The management has exercised its
judgement in the application of accounting policies in the
income statement with regard to the presentation of income
(Note 2.1), the existence of control over subsidiaries (Note
1.5), measuring receivables, determining provisions for
restructuring, and measuring assets and liabilities recognised
in the balance sheet based on lease agreements (Note 3.4).
1.5 Consolidation principles
44
45
46
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
2. FINANCIAL RESULTS
47
48
Common functions
Common functions comprise Group support functions.
Segment information 2023
| Profit | |||||
| Building and | |||||
€ million | Grocery trade | technical trade | Car trade | Common functions | Total |
Division net sales | 6,351.6 | 4,193.2 | 1,262.3 | -0.0 | 11,807.1 |
of which intersegment sales | -16.5 | 0.9 | -7.4 | -0.3 | -23.3 |
Net sales from external customers | 6,335.1 | 4,194.1 | 1,254.9 | -0.3 | 11,783.8 |
Change in net sales in local currency excluding acquisitions and disposals, % | 3.7 | -10.5 | 13.9 | - | -0.8 |
Change in net sales, % | 3.7 | -8.7 | 12.2 | - | -0.2 |
Other division income | 803.6 | 135.8 | 29.3 | 10.6 | 979.3 |
of which intersegment income | -0.4 | -1.8 | 0.1 | -2.0 | -4.1 |
Other operating income from external customers | 803.2 | 133.9 | 29.4 | 8.7 | 975.2 |
Depreciation and amortisation | -93.6 | -30.8 | -28.6 | -31.0 | -184.0 |
Depreciation and impairment charges for right-of-use assets | -232.0 | -91.9 | -22.8 | -6.4 | -353.2 |
Share of result of joint ventures | 19.0 | 19.0 | |||
Operating profit | 443.6 | 201.9 | 82.4 | -32.6 | 695.4 |
Items affecting comparability | -1.3 | -10.5 | -0.1 | -4.8 | -16.7 |
Comparable operating profit | 444.8 | 212.5 | 82.6 | -27.8 | 712.0 |
Finance income and costs | -83.9 | ||||
Share of result of associates | 2.1 | ||||
Profit before tax | 613.5 | ||||
49
| Assets and liabilities | ||||||
| Building | ||||||
| and | ||||||
| Grocery | technical | Common | Elimina- | |||
| € million | trade | trade | Car trade | functions | tions | Total |
| Property, plant, equipment | ||||||
and intangible assets | 1,534.9 | 1,035.5 | 265.7 | 96.4 | -1.8 | 2,930.7 |
Right-of-use assets | 1,233.1 | 441.4 | 81.1 | 61.2 | 1,816.9 | |
| Interests in associates | ||||||
| and joint ventures | ||||||
and other investments | 5.5 | 155.7 | 0.1 | 86.2 | -0.6 | 246.8 |
Pension assets | 18.6 | 4.9 | 56.0 | 79.6 | ||
Inventories | 271.9 | 578.2 | 233.8 | 1,083.9 | ||
Trade receivables | 389.8 | 509.9 | 71.2 | 2.1 | -2.5 | 970.5 |
| Other non-interest-bearing | ||||||
receivables | 80.3 | 189.2 | 28.1 | 35.9 | -15.6 | 318.0 |
Interest-bearing receivables | 1.7 | 0.0 | 65.3 | 66.9 | ||
Assets included in capital employed | 3,535.9 | 2,914.9 | 680.0 | 403.1 | -20.6 | 7,513.3 |
| Unallocated items | ||||||
Deferred tax assets | 13.7 | |||||
Other financial assets | 15.4 | |||||
Cash and cash equivalents | 211.9 | |||||
Total assets | 3,535.9 | 2,914.9 | 680.0 | 403.1 | -20.6 | 7,754.3 |
| Building | ||||||
| and | ||||||
| Grocery | technical | Common | Elimina- | |||
| € million | trade | trade | Car trade | functions | tions | Total |
Trade payables | 620.4 | 717.7 | 55.4 | 26.5 | -1.7 | 1,418.3 |
| Other non-interest-bearing | ||||||
liabilities | 295.0 | 242.2 | 96.6 | 47.3 | -16.6 | 664.5 |
Provisions | 0.2 | 5.2 | 13.2 | 0.4 | 18.9 | |
Liabilities included in capital employed | 915.5 | 965.0 | 165.2 | 74.2 | -18.3 | 2,101.7 |
| Unallocated items | ||||||
Interest-bearing liabilities | 789.2 | |||||
Lease liabilities | 1,997.9 | |||||
| Other non-interest-bearing | ||||||
liabilities | 36.3 | |||||
Deferred tax liabilities | 70.9 | |||||
Total liabilities | 915.5 | 965.0 | 165.2 | 74.2 | -18.3 | 4,995.9 |
| Total capital employed | ||||||
as at 31 December | 2,620.4 | 1,949.8 | 514.7 | 329.0 | -2.3 | 5,411.6 |
Average capital employed | 2,555.4 | 1,865.1 | 523.6 | 371.5 | -2.3 | 5,313.3 |
| Return on capital | ||||||
employed, %, comparable | 17.4 | 11.4 | 15.8 | 13.4 | ||
| Number of personnel | ||||||
as at 31 December | 8,184 | 6,934 | 1,641 | 943 | 17,702 | |
Average number of personnel converted into full-time employees | 6,257 | 6,073 | 1,531 | 905 | 14,766 | |
50
Segment information 2022
| Profit | |||||
| Building and | |||||
€ million | Grocery trade | technical trade | Car trade | Common functions | Total |
Division net sales | 6,124.7 | 4,591.1 | 1,124.8 | -0.0 | 11,840.6 |
of which intersegment sales | -23.3 | -0.6 | -7.5 | -0.3 | -31.6 |
Net sales from external customers | 6,101.4 | 4,590.6 | 1,117.3 | -0.3 | 11,809.0 |
Change in net sales in local currency excluding acquisitions and disposals, % | 3.6 | 9.7 | -9.2 | - | 4.4 |
Change in net sales, % | 3.6 | 10.0 | -9.6 | - | 4.5 |
Other division income | 789.0 | 153.0 | 35.9 | 28.8 | 1,006.6 |
of which intersegment income | -0.1 | -2.9 | -0.2 | -4.6 | -7.9 |
Other operating income from external customers | 788.9 | 150.1 | 35.6 | 24.1 | 998.7 |
Depreciation and amortisation | -84.4 | -27.8 | -27.2 | -29.7 | -169.0 |
Depreciation and impairment charges for right-of-use assets | -213.7 | -80.7 | -21.8 | -5.9 | -322.1 |
Share of result of joint ventures | 23.5 | 23.5 | |||
Operating profit | 461.5 | 324.8 | 63.9 | -33.6 | 816.5 |
Items affecting comparability | 1.1 | 0.9 | -0.4 | -0.1 | 1.5 |
Comparable operating profit | 460.4 | 323.8 | 64.3 | -33.5 | 815.1 |
Finance income and costs | -56.0 | ||||
Share of result of associates | 0.6 | ||||
Profit before tax | 761.1 | ||||
51
| Assets and liabilities | ||||||
| Building | ||||||
| and | ||||||
| Grocery | technical | Common | Elimina- | |||
| € million | trade | trade | Car trade | functions | tions | Total |
| Property, plant, equipment | ||||||
and intangible assets | 1,333.6 | 842.2 | 245.3 | 105.1 | -1.6 | 2,524.6 |
Right-of-use assets | 1,189.3 | 402.9 | 83.2 | 62.1 | 1,737.6 | |
| Interests in associates | ||||||
| and joint ventures | ||||||
and other investments | 4.3 | 160.4 | 0.1 | 81.0 | -0.6 | 245.2 |
Pension assets | 19.6 | 4.5 | 62.8 | 86.9 | ||
Inventories | 270.3 | 611.7 | 233.4 | 1,115.4 | ||
Trade receivables | 369.2 | 517.7 | 84.5 | 2.9 | -5.1 | 969.3 |
| Other non-interest-bearing | ||||||
receivables | 121.6 | 223.9 | 22.8 | 73.7 | -33.0 | 409.0 |
Interest-bearing receivables | 0.8 | 68.6 | 69.4 | |||
| Non-current assets | ||||||
classified as held for sale | 0.5 | 0.5 | ||||
Assets included in capital employed | 3,308.7 | 2,763.3 | 669.4 | 456.7 | -40.3 | 7,157.7 |
| Unallocated items | ||||||
Deferred tax assets | 2.2 | |||||
Other financial assets | 68.6 | |||||
Cash and cash equivalents | 245.5 | |||||
Total assets | 3,308.7 | 2,763.3 | 669.4 | 456.7 | -40.3 | 7,474.0 |
| Building | ||||||
| and | ||||||
| Grocery | technical | Common | Elimina- | |||
| € million | trade | trade | Car trade | functions | tions | Total |
Trade payables | 596.7 | 794.1 | 79.0 | 32.3 | -2.6 | 1,499.4 |
| Other non-interest-bearing | ||||||
liabilities | 294.7 | 278.3 | 97.7 | 55.8 | -35.4 | 691.1 |
Provisions | 0.8 | 2.2 | 19.1 | 0.2 | 22.2 | |
Liabilities included in capital employed | 892.2 | 1,074.5 | 195.8 | 88.3 | -38.1 | 2,212.7 |
| Unallocated items | ||||||
Interest-bearing liabilities | 498.2 | |||||
Lease liabilities | 1,920.1 | |||||
| Other non-interest-bearing | ||||||
liabilities | 37.6 | |||||
Deferred tax liabilities | 63.2 | |||||
Total liabilities | 892.2 | 1,074.5 | 195.8 | 88.3 | -38.1 | 4,731.8 |
| Total capital employed | ||||||
as at 31 December | 2,416.5 | 1,688.8 | 473.6 | 368.4 | -2.2 | 4,945.0 |
Average capital employed | 2,353.6 | 1,693.5 | 438.2 | 328.9 | -2.2 | 4,811.9 |
| Return on capital | ||||||
employed, %, comparable | 19.6 | 19.1 | 14.7 | 16.9 | ||
| Number of personnel | ||||||
as at 31 December | 8,316 | 6,863 | 1,661 | 1,001 | 17,841 | |
Average number of personnel converted into full-time employees | 6,288 | 5,871 | 1,519 | 955 | 14,633 | |
52
Alternative performance measures in segment reporting
Kesko uses alternative performance measures in internal reporting of business performance
and profitability to the highest operational decision-making body, i.e. the Group Management
Board. The alternative performance measures should be examined together with the IFRS
performance indicators.
Change in comparable net sales is used to reflect changes in the Group’s business volume
between periods. The indicator reflects the change in net sales excluding the impact of
acquisitions and divestments, in local currencies. The comparable net sales have been
calculated by including in the net sales the business operations that have been part of Kesko
Group in both the reporting period as well as the comparison period. Other structural
arrangements related to acquisitions and divestments have been adjusted in the same manner
as acquisitions.
Exceptional transactions outside the ordinary course of business are treated as items
affecting comparability. Performance indicators reflecting comparable profit and profitability
are used to improve the comparability of operational performance between periods. Gains
and losses on the disposal of real estate, shares and business operations, impairments and
significant restructurings are identified as items affecting comparability. Gains on disposals
are presented in the income statement within other operating income, and losses on disposals
within other operating expenses. Impairment charges and significant profit and loss items
related to changes in lease agreements are presented in the income statement under
depreciation, amortisation and impairment charges.
Alternative performance measures that have been adjusted for the impact of IFRS 16 are used
to illustrate continuity in business profitability and financial position and the achievement
of certain financial targets. The EBITDA excluding the impact of IFRS 16 corresponds to
EBITDA before the adoption of IFRS 16, and the interest bearing net debt excluding lease
liabilities correspond to interest-bearing net debt before the adoption of the standard. These
restated indicators are included as components in the Group’s financial targets’ performance
indicators. The indicator is presented in Note 4.1 Capital management.
| Items affecting comparability € million | ||
€ million | 2023 | 2022 |
Gains on disposal | +0,4 | +0,0 |
Losses on disposal | -1.0 | -0.1 |
Structural arrangements | -16.1 | +1,6 |
Items in operating profit affecting comparability, total | -16.7 | +1,5 |
Items related to structural arrangements are presented on the following lines in the
consolidated income statement: other operating income (€+0.8 million), change in inventory
(€-1.0 million), employee benefit expenses (€-7.5 million), depreciation, amortisation and
impairment charges (€-0.5 million), depreciation and impairment charges for right-of-use
assets (€-3.4 million) and other operating expenses (€-5.1 million).
In 2022 items related to structural arrangements are presented on the following lines in the
consolidated income statement: employee benefit expenses (€-1.1 million), depreciation and
impairment charges for right-of-use assets (€+1.6 million), other operating expenses (€-1.6
million) and share of result of joint ventures (€+2.6 million).
53
| Reconciliation of alternative performance measures to IFRS financial statements | ||
€ million | 2023 | 2022 |
| Operating profit, comparable | ||
Operating profit | 695.4 | 816.5 |
Net of Items in operating profit affecting comparability | -16.7 | 1.5 |
Operating profit, comparable | 712.0 | 815.1 |
| Return on capital employed, comparable, % | ||
Operating profit, comparable | 712.0 | 815.1 |
Capital employed, average | 5,313.3 | 4,811.9 |
Return on capital employed, comparable, % | 13.4 | 16.9 |
| Comparable change in net sales | ||
Net sales, building and technical trade | 4,193.2 | 4,591.1 |
Foreign exchange effects | 172.4 | |
Effect of acquisitions and divestments | -258.5 | |
Change in net sales, comparable, % | -10.5 | 9.7 |
Net sales, Group | 11,783.8 | 11,809.0 |
Foreign exchange effects | 172.4 | |
Effect of acquisitions and divestments | -258.5 | -5.3 |
Change in net sales, comparable, % | -0.8 | 4.4 |
Calculation of performance indicators
Operating profit, comparable
Operating profit +/– items affecting comparability
Return on capital employed, comparable, %
Comparable operating profit x 100
(Property, plant and equipment + Goodwill + Intangible assets + Right-of-use assets + Shares in
associates and joint ventures + Financial assets at fair value through profit or loss + Non-current
receivables + Pension assets + Inventories + Trade receivables + Income tax assets + Other non-
interest-bearing receivables + Non-current assets classified as held for sale - Non-interest-bearing
non-current liabilities - Pension obligations - Provisions - Trade payables - Other non-interest bearing
liabilities - Income tax liabilities - Accrued liabilities - Liabilities related to available-for-sale non-current
assets) on average for the reporting period
54
Geographical information
The Group operates in Finland, Sweden, Norway, Estonia, Latvia, Lithuania and Poland.
The grocery trade operates in Finland. The building and technical trade operates in Finland,
Sweden, Norway, the Baltic countries and Poland, and the car trade operates in Finland. Net
sales, assets, capital expenditure and personnel are presented by location.
Net sales are mostly derived from sales of goods. The amount derived from sales of services
is minor.
Kesko Group does not have net sales derived from a single customer, which exceeds 10% of
Kesko Group’s total net sales.
| 2023 | Other | |||||
€ million | Finland | Nordic countries | Baltic countries | Others | Eliminations | Total |
Net sales | 9,714.0 | 1,612.5 | 129.1 | 336.9 | -8.7 | 11,783.8 |
Assets included in capital employed | 5,733.1 | 1,417.5 | 211.3 | 151.4 | 7,513.3 | |
Average number of personnel converted into full-time employees | 10,314 | 3,167 | 357 | 927 | 14,766 |
| 2022 | Other | |||||
€ million | Finland | Nordic countries | Baltic countries | Others | Eliminations | Total |
Net sales | 9,610.7 | 1,729.3 | 130.8 | 349.2 | -10.9 | 11,809.0 |
Assets included in capital employed | 5,492.6 | 1,294.5 | 216.0 | 154.6 | 7,157.7 | |
Average number of personnel converted into full-time employees | 10,372 | 3,036 | 337 | 888 | 14,633 |
55
2.3 Material and services
€ million | 2023 | 2022 |
Material and services | -9,814.8 | -10,088.5 |
External services | -220.2 | -216.0 |
Total | -10,035.0 | -10,304.5 |
€ million | 2023 | 2022 |
Income from services | 780.3 | 773.7 |
Lease income | 46.1 | 44.0 |
| Gains on disposal of property, plant, equipment | ||
and intangible assets | 1.6 | 0.7 |
Gains on disposal of businesses | - | 0.0 |
Realised gains on derivative contracts and changes in fair value | 1.4 | 16.1 |
Others | 145.9 | 164.3 |
Total | 975.2 | 998.7 |
2.5 Operating expenses
€ million | 2023 | 2022 |
Salaries and fees | -629.8 | -626.0 |
Social security costs | -58.4 | -58.8 |
| Pension costs | ||
Defined benefit plans | -1.2 | -4.1 |
Defined contribution plans | -89.2 | -86.2 |
Share-based payment | -8.1 | -10.6 |
Total | -786.6 | -785.8 |
Average number of the Group personnel
2023 | 2022 | |
Grocery trade | 6,257 | 6,288 |
Building and technical trade | 6,073 | 5,871 |
Car trade | 1,531 | 1,519 |
Common functions | 905 | 955 |
Total, Group | 14,766 | 14,633 |
Average number of the Group personnel by segment is calculated as full-time equivalent
employees.
56
€ million | 2023 | 2022 |
Marketing costs | -208.5 | -210.2 |
Property and store site maintenance expenses | -185.1 | -181.5 |
ICT expenses | -111.9 | -117.6 |
Lease payments in the income statement | -7.7 | -7.4 |
| Losses on disposal of property, plant, equipment | ||
and intangible assets | -1.1 | -0.4 |
Realised losses on derivative contracts and changes in fair value | -1.7 | -11.1 |
Other operating expenses | -135.8 | -142.0 |
Total | -651.8 | -670.2 |
€ million | 2023 | 2022 |
Audit | -1.2 | -1.2 |
Tax consultation | -0.0 | -0.0 |
Other services | -0.2 | -0.1 |
Total | -1.4 | -1.3 |
2.6 Foreign exchange differences recognised in operating profit
€ million | 2023 | 2022 |
Net sales | -0.2 | -0.0 |
Other operating income | 1.4 | 16.1 |
Material and services | -1.0 | 1.2 |
Other operating expenses | -1.7 | -11.1 |
Total | -1.4 | 6.1 |
57
€ million | 2023 | 2022 |
Current tax | -113.9 | -141.5 |
Tax for prior years | -0.5 | -0.9 |
Change in deferred taxes | -3.6 | -8.8 |
Total | -118.0 | -151.2 |
€ million | 2023 | 2022 |
Profit before tax | 613.5 | 761.1 |
Tax at parent's rate 20.0% | -122.7 | -152.2 |
Effect of foreign subsidiaries' different tax rates | -3.5 | -2.8 |
Effect of tax-free income | 0.4 | 0.3 |
Effect of expenses not deductible for tax purposes | -2.0 | -1.2 |
Effect of unrecognised deferred tax assets | -0.6 | 0.1 |
| Effect of consolidation of share of result of associates and joint | ||
ventures | 4.2 | 4.8 |
Tax for prior years | -0.5 | -0.9 |
Adjustment and revaluation of deferred tax for previous years | 7.0 | 0.6 |
Others | -0.3 | 0.1 |
Tax charge | -118.0 | -151.2 |
Effective tax rate | 19.2% | 19.9% |
€ million | 2023 | 2022 |
Deferred tax assets | 13.7 | 2.2 |
Deferred tax liabilities | 70.9 | 63.2 |
Total | -57.2 | -61.0 |
| Income | Tax | |||||
| state- | charged/ | Exchange | ||||
| 1 Jan. | ment | credited | differ- | Other | 31 Dec. | |
| € million | 2023 | charge | to equity | ences | changes | 2023 |
| Deferred tax assets | ||||||
Leases | 37.1 | -0.1 | - | -0.1 | - | 36.8 |
Provisions | 8.9 | -1.6 | - | -0.1 | -0.1 | 7.1 |
| Defined benefit pension | ||||||
plans | 0.0 | 0.4 | - | - | - | 0.5 |
Tax loss carry-forwards | 0.1 | 9.9 | - | 0.3 | 0.1 | 10.5 |
| Other temporary | ||||||
differences | 12.9 | 1.7 | 0.3 | 0.0 | 0.4 | 15.3 |
Total | 59.0 | 10.3 | 0.3 | 0.2 | 0.4 | 70.2 |
| Deferred tax liabilities | ||||||
Difference between accounting depreciation | ||||||
and tax depreciation | 62.0 | 8.0 | - | - | 0.0 | 70.0 |
Fair value allocation | 28.1 | 1.5 | - | -0.7 | 2.8 | 31.7 |
| Defined benefit pension | ||||||
plans | 17.2 | -0.0 | -1.4 | - | - | 15.8 |
| Other temporary | ||||||
differences | 12.8 | 4.5 | -7.5 | -0.0 | 0.1 | 9.9 |
Total | 120.0 | 13.9 | -8.8 | -0.7 | 2.9 | 127.3 |
| Net deferred tax asset (+)/ | ||||||
liability (-) | -61.0 | -57.2 | ||||
58
| Income | Tax | |||||
| state- | charged/ | Exchange | ||||
| 1 Jan. | ment | credited | differ- | Other | 31 Dec. | |
| € million | 2022 | charge | to equity | ences | changes | 2022 |
| Deferred tax assets | ||||||
Leases | 39.2 | -1.9 | - | -0.2 | - | 37.1 |
Provisions | 10.4 | -1.3 | - | -0.2 | -0.1 | 8.9 |
| Defined benefit pension | ||||||
plans | 0.1 | -0.0 | - | - | - | 0.0 |
Tax loss carry-forwards | 0.5 | -0.4 | - | - | - | 0.1 |
| Other temporary | ||||||
differences | 13.5 | -0.7 | 0.1 | -0.1 | 0.1 | 12.9 |
Total | 63.7 | -4.3 | 0.1 | -0.5 | 0.0 | 59.0 |
| Deferred tax liabilities | ||||||
Difference between accounting depreciation | ||||||
and tax depreciation | 49.4 | 12.3 | - | - | 0.3 | 62.0 |
Fair value allocation | 28.4 | -0.9 | - | -0.6 | 1.1 | 28.1 |
| Defined benefit pension | ||||||
plans | 18.9 | -9.4 | 7.6 | - | - | 17.2 |
| Other temporary | ||||||
differences | 3.7 | 2.5 | 6.7 | -0.0 | -0.0 | 12.8 |
Total | 100.5 | 4.5 | 14.3 | -0.6 | 1.4 | 120.0 |
Net deferred tax asset | -36.8 | -61.0 | ||||
| 2023 | Tax | 2022 | Tax | |||
| Before | charge/ | After | Before | charge/ | After | |
| € million | tax | credit | tax | tax | credit | tax |
| Items that will not be reclassified | ||||||
| subsequently to profit or loss | ||||||
Actuarial gains and losses | -6.9 | 1.4 | -5.5 | 38.2 | -7.6 | 30.6 |
| Items that may be reclassified | ||||||
| subsequently to profit or loss | ||||||
| Currency translation differences | ||||||
relating to a foreign operation | -19.5 | -19.5 | -41.9 | -41.9 | ||
| Share of other comprehensive income | ||||||
of associates and joint ventures | -1.8 | -1.8 | -0.5 | -0.5 | ||
Cash flow hedge revaluation | -38.8 | 7.8 | -31.0 | 32.8 | -6.6 | 26.2 |
Total | -67.0 | 9.1 | -57.9 | 28.6 | -14.2 | 14.3 |
€ million | 2024 | 2025 | 2026 | 2027 | 2028 | 2029– | Total |
- | - | - | - | - | 149.2 | 149.2 |
59
2023 | 2022 | |
| Net profit for the period attributable to equity holders of | ||
the parent, € million | 495.6 | 609.9 |
| Number of shares | ||
Weighted average number of shares outstanding | 397,705,620 | 397,383,187 |
Diluted weighted average number of shares outstanding | 397,705,620 | 397,383,187 |
Earnings per share from net profit attributable to equity holders of the parent | ||
Basic and diluted, Group total, € | 1.25 | 1.53 |
2.9 Additional details related to the statement of cash flows
Adjustments to cash flows from operating activities
€ million | 2023 | 2022 |
| Adjustment of non-cash transactions in the income statement | ||
| and items presented elsewhere in the statement of cash flows: | ||
Change in provisions | -2.4 | -7.5 |
Share of results of associates and joint ventures | -21.0 | -24.1 |
Credit losses | 5.1 | 4.0 |
| Gains on disposal of property, plant, equipment | ||
and intangible assets and business operations | -1.6 | 3.5 |
| Losses on disposal of property, plant, equipment | ||
and intangible assets and business operations | 5.5 | 0.4 |
Share-based compensation | -2.3 | -9.2 |
Defined benefit pensions | 0.5 | 5.5 |
Others | 5.5 | 7.3 |
Total | -10.8 | -20.2 |
The group ‘Others’ within the adjustments to cash flows from operating activities includes the
adjustment of unrealised foreign exchange gains and losses on purchases and sales, and the
adjustment of other transactions of a non-cash nature.
Capital expenditure and non-cash financing activities
€ million | 2023 | 2022 |
| Total acquisitions of property, plant, equipment | ||
and intangible assets | 550.0 | 399.1 |
| Total acquisitions of subsidiaries and investments in associates | ||
and other investments | 129.0 | 50.1 |
Total capital expenditure | 678.9 | 449.2 |
of which cash payments | 643.5 | 386.4 |
| Loans relating to acquired companies and cash | ||
and cash equivalents | 40.3 | 19.9 |
Payments arising from prior period investing activities | -39.0 | -21.9 |
Capital expenditure financed with liabilities | 34.2 | 24.4 |
Pension Fund return of surplus assets | - | 40.3 |
Total | 678.9 | 449.2 |
60
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
3. CAPITAL EMPLOYED
61
The following table provides a summary of the consideration paid, the values of assets
acquired and liabilities assumed by Kesko Group at the date of acquisition, and the cash flow
impact of the acquisitions.
| 2023 | |||
| Zenitec | Elektroskandia | Geitanger | |
| € million | Sweden AB | Norge AS | Bygg AS |
Acquisition price | 4.9 | 120.8 | 8.0 |
| Fair values of assets acquired and liabilities | |||
| assumed at the date of acquisition | |||
Intangible assets | 0.6 | 15.6 | 0.6 |
Property, plant, equipment, right-of-use assets and investments | 0.3 | 15.1 | 1.8 |
Inventories | 2.8 | 38.6 | 3.0 |
Receivables | 2.3 | 45.8 | 1.9 |
Deferred tax asset | - | 1.3 | - |
Cash and cash equivalents | -0.0 | 5.3 | 2.4 |
Total assets | 6.0 | 121.6 | 9.6 |
| Trade payables, other payables, provisions, lease | |||
liabilities | 4.5 | 81.6 | 2.9 |
Deferred tax liability | 0.1 | 3.8 | 0.2 |
Total liabilities | 4.6 | 85.4 | 3.1 |
Net assets acquired, total | 1.4 | 36.2 | 6.5 |
Goodwill | 3.5 | 84.7 | 1.5 |
| Cash flow impact of acquisition | |||
Consideration paid | -4.9 | -120.8 | -8.0 |
Cash and cash equivalents acquired | -0.0 | 5.3 | 2.4 |
Cash flow impact of acquisition | -5.0 | -115.5 | -5.6 |
Acquisitions in 2022
Acquisitions in Sweden
Kesko's Swedish subsidiary Fresks Försäljning AB acquired Kungälvs Trävaruaktiebolag,
a company that serves professional builders, on 1 March 2022, Djurbergs Järnhandel
Aktiebolag and Föllinge Såg AB on 1 September 2022, and XL-BYGG Bergslagen AB on
1 October 2022. The consideration paid for the acquisitions totalled €38.3 million. The
acquisitions complete Kesko's growing K-Bygg chain for professional builders.
The fair value of the assets acquired for Kesko Group amounted to €43.1 million and the
fair value of the liabilities assumed to €23.8 million. The fair value of the intangible assets
acquired at the date of acquisitions totalled €4.0 million.
Acquisitions in Norway
Kesko's Norwegian subsidiary Byggmakker CF AS acquired the Norwegian Seljord Elektriske
AS on 1 June 2022. The consideration paid was €12.5 million.
The fair value of the assets acquired for Kesko Group amounted to €9.2 million and the fair
value of the liabilities assumed to €4.0 million. The fair value of the intangible assets acquired
at the date of acquisition totalled €1.1 million.
62
| 2022 | ||
| Acquisitions | Acquisitions | |
| € million | in Sweden | in Norway |
Acquisition price | 38.3 | 12.5 |
| Fair values of assets acquired and liabilities assumed | ||
| at the date of acquisition" | ||
Intangible assets | 4.0 | 1.1 |
Property, plant, equipment, right-of-use assets and investments | 14.5 | 2.5 |
Inventories | 10.2 | 2.8 |
Receivables | 8.5 | 1.4 |
Deferred tax asset | 0.0 | 0.1 |
Cash and cash equivalents | 5.9 | 1.3 |
Total assets | 43.1 | 9.2 |
Trade payables, other payables, provisions, lease liabilities | 22.2 | 3.7 |
Deferred tax liability | 1.6 | 0.3 |
Total liabilities | 23.8 | 4.0 |
Net assets acquired, total | 19.3 | 5.2 |
Goodwill | 19.0 | 7.3 |
| Cash flow impact of acquisition | ||
Consideration paid | -38.3 | -12.5 |
Cash and cash equivalents acquired | 5.9 | 1.3 |
Cash flow impact of acquisition | -32.4 | -11.2 |
| Prepay- | ||||||
| Machinery | Other | ments and | ||||
| 2023 | Land and | and | tangible | construction | Total | |
| € million | waters | Buildings | equipment | assets | in progress | 2023 |
| Cost | ||||||
Cost as at 1 January | 352.5 | 1,647.8 | 665.8 | 33.4 | 113.8 | 2,813.3 |
Exchange differences | -0.7 | 0.0 | -1.3 | 0.3 | 0.2 | -1.5 |
Additions | 38.8 | 173.7 | 100.1 | 2.0 | 196.6 | 511.2 |
Acquisitions | - | 1.5 | 1.9 | - | 0.3 | 3.7 |
Deductions | -1.0 | -1.5 | -74.9 | -0.9 | -2.0 | -80.3 |
Transfers between items | 1.6 | 44.8 | 9.0 | 2.6 | -76.6 | -18.7 |
Cost as at 31 December | 391.2 | 1,866.2 | 700.6 | 37.4 | 232.3 | 3,227.7 |
| Accumulated depreciation | ||||||
| and impairment charges | ||||||
| Accumulated depreciation | ||||||
and impairment charges as at 1 January | -7.3 | -658.5 | -380.5 | -21.6 | -1,067.8 | |
Exchange differences | 0.1 | 0.2 | 0.9 | -0.1 | 1.1 | |
| Accumulated depreciation | ||||||
on deductions | 0.3 | -3.1 | 43.1 | 0.9 | 41.2 | |
| Accumulated depreciation | ||||||
on transfers | - | 1.5 | -0.6 | -1.0 | 0.0 | |
| Depreciation and impairment | ||||||
charges for the year | -0.3 | -80.8 | -63.3 | -2.1 | -146.5 | |
| Accumulated depreciation | ||||||
and impairment charges as at 31 December | -7.2 | -740.7 | -400.3 | -23.9 | -1,172.0 | |
Carrying amount as at 1 January | 345.3 | 989.3 | 285.3 | 11.8 | 113.8 | 1,745.5 |
Carrying amount as at 31 December | 384.1 | 1,125.5 | 300.3 | 13.5 | 232.3 | 2,055.6 |
| Prepay- | ||||||
| Machinery | Other | ments and | ||||
| 2022 | Land and | and | tangible | construction | Total | |
| € million | waters | Buildings | equipment | assets | in progress | 2022 |
| Cost | ||||||
Cost as at 1 January | 317.6 | 1,474.0 | 642.5 | 37.6 | 51.8 | 2,523.5 |
Exchange differences | -1.7 | -4.3 | -5.1 | -0.6 | -0.1 | -11.7 |
Additions | 35.5 | 148.5 | 79.6 | 1.7 | 104.8 | 370.0 |
Acquisitions | - | 0.6 | 1.0 | - | 0.0 | 1.6 |
Deductions | -0.1 | -3.0 | -63.1 | -0.8 | -1.7 | -68.8 |
Transfers between items | 1.2 | 31.9 | 11.0 | -4.5 | -41.1 | -1.4 |
Cost as at 31 December | 352.5 | 1,647.8 | 665.8 | 33.4 | 113.8 | 2,813.3 |
| Accumulated depreciation | ||||||
| and impairment charges | ||||||
| Accumulated depreciation | ||||||
and impairment charges as at 1 January | -7.3 | -588.9 | -367.5 | -22.3 | -985.9 | |
Exchange differences | 0.1 | 2.1 | 3.5 | 0.4 | 6.2 | |
| Accumulated depreciation | ||||||
on deductions | - | 2.2 | 46.0 | 1.0 | 49.2 | |
| Accumulated depreciation | ||||||
on transfers | - | 0.2 | -1.0 | 1.0 | 0.2 | |
| Depreciation and impairment | ||||||
charges for the year | -0.0 | -74.2 | -61.5 | -1.7 | -137.5 | |
| Accumulated depreciation | ||||||
and impairment charges as at 31 December | -7.3 | -658.5 | -380.5 | -21.6 | -1,067.8 | |
Carrying amount as at 1 January | 310.3 | 885.1 | 275.0 | 15.3 | 51.8 | 1,537.6 |
Carrying amount as at 31 December | 345.3 | 989.3 | 285.3 | 11.8 | 113.8 | 1,745.5 |
64
65
| Other | |||||
| 2023 | intangible | Prepay- | Total | ||
€ million | Goodwill | Trademarks | assets | ments | 2023 |
| Cost | |||||
Cost as at 1 January | 635.1 | 96.1 | 249.4 | 9.1 | 989.7 |
Exchange differences | -15.0 | -2.0 | -3.1 | - | -20.1 |
Additions | - | 0.0 | 19.7 | 2.2 | 21.9 |
Acquisitions | 90.0 | 2.0 | 14.3 | - | 106.4 |
Deductions | - | - | -10.0 | -0.0 | -10.0 |
Transfers between items | - | -0.1 | 28.0 | -7.2 | 20.7 |
Cost as at 31 December | 710.1 | 96.0 | 298.2 | 4.2 | 1,108.5 |
| Accumulated amortisation | |||||
| and impairment charges | |||||
| Accumulated amortisation | |||||
and impairment charges as at 1 January | -46.2 | -9.3 | -155.1 | -210.6 | |
Exchange differences | -0.2 | 0.5 | 2.2 | 2.5 | |
| Accumulated amortisation | |||||
and impairment charges on disposals | - | 14.5 | 14.5 | ||
| Accumulated amortisation | |||||
and impairment on transfers | 0.0 | -2.1 | -2.1 | ||
Amortisation and impairment charges for the year | - | -1.3 | -36.6 | -37.8 | |
| Accumulated amortisation | |||||
and impairment charges as at 31 December | -46.4 | -10.0 | -177.0 | -233.5 | |
Carrying amount as at 1 January | 588.9 | 86.8 | 94.2 | 9.1 | 779.1 |
Carrying amount as at 31 December | 663.7 | 86.0 | 121.2 | 4.2 | 875.1 |
| Other | |||||
| 2022 | intangible | Prepay- | Total | ||
€ million | Goodwill | Trademarks | assets | ments | 2022 |
| Cost | |||||
Cost as at 1 January | 634.9 | 97.0 | 258.8 | 12.6 | 1,003.2 |
Exchange differences | -25.9 | -1.7 | -3.6 | - | -31.2 |
Additions | 0.0 | 0.1 | 21.1 | 7.3 | 28.6 |
Acquisitions | 26.1 | 0.7 | 3.2 | - | 30.0 |
Deductions | 0.0 | - | -42.4 | -0.1 | -42.5 |
Transfers between items | - | - | 12.2 | -10.7 | 1.5 |
Cost as at 31 December | 635.1 | 96.1 | 249.4 | 9.1 | 989.7 |
| Accumulated amortisation | |||||
| and impairment charges | |||||
| Accumulated amortisation | |||||
and impairment charges as at 1 January | -46.1 | -8.8 | -169.4 | -224.3 | |
Exchange differences | -0.1 | 0.5 | 2.6 | 2.9 | |
| Accumulated amortisation | |||||
and impairment charges on disposals | - | 42.5 | 42.5 | ||
| Accumulated amortisation | |||||
on transfers | - | - | -0.2 | -0.2 | |
Amortisation and impairment charges for the year | - | -1.0 | -30.6 | -31.6 | |
| Accumulated amortisation | |||||
and impairment charges as at 31 December | -9.3 | -155.1 | -210.6 | ||
Carrying amount as at 1 January | 588.8 | 88.2 | 89.3 | 12.6 | 779.0 |
Carrying amount as at 31 December | 588.9 | 86.8 | 94.2 | 9.1 | 779.1 |
Other intangible assets include software and licences amounting to €55.0 million
(€52.9 million).
66
| Trademarks | Goodwill | Trademarks | Goodwill | |
| € million | 2023 | 2023 | 2022 | 2022 |
| Grocery trade | ||||
Grocery trade, chain operations | - | 76.1 | - | 76.1 |
Grocery trade, Kespro | 5.3 | 2.0 | 5.3 | 2.0 |
| Building and technical trade | ||||
Technical trade | 58.3 | 152.2 | 58.3 | 66.0 |
Byggmakker, Norway | 20.8 | 199.3 | 22.3 | 211.5 |
K-Bygg, Sweden | - | 191.0 | - | 190.3 |
Car trade | - | 43.1 | - | 43.1 |
Total | 84.4 | 663.7 | 85.9 | 588.9 |
| Pre-tax | Terminal | Pre-tax | Terminal | |
| discount rate | growth rate | discount rate | growth rate | |
| € million | 2023 | 2023 | 2022 | 2022 |
| Grocery trade | ||||
Grocery trade, chain operations | 6.8% | 0.5% | 6.8% | 0.5% |
Grocery trade, Kespro | 6.5% | 1.5% | 6.5% | 1.5% |
| Building and technical trade | ||||
Technical trade | 7.6% | 2.0% | 7.8% | 2.0% |
Byggmakker, Norway | 7.2% | 2.0% | 7.2% | 2.0% |
K-Bygg, Sweden | 7.1% | 2.0% | 7.1% | 2.0% |
Car trade | 7.2% | 1.5% | 7.2% | 1.5% |
67
68
| 2023 | Land and | Machinery and | |
| € million | buildings | equipment | Total |
Carrying amount as at 1 January | 1,718.9 | 18.6 | 1,737.6 |
Additions | 431.0 | 6.2 | 437.3 |
Acquisitions | 14.8 | 0.9 | 15.7 |
Depreciation | -339.3 | -8.0 | -347.3 |
Impairment charges | -5.9 | - | -5.9 |
Deductions | -10.2 | -0.4 | -10.6 |
Exchange differences | -9.5 | -0.3 | -9.8 |
Carrying amount as at 31 December | 1,799.9 | 17.0 | 1,816.9 |
| 2022 | Land and | Machinery and | |
| € million | buildings | equipment | Total |
Carrying amount as at 1 January | 1,717.2 | 17.9 | 1,735.0 |
Additions | 346.6 | 8.0 | 354.6 |
Acquisitions | 14.7 | 0.9 | 15.6 |
Depreciation | -313.8 | -7.5 | -321.3 |
Impairment charges | -2.4 | - | -2.4 |
Deductions | -30.0 | -0.0 | -30.1 |
Exchange differences | -13.3 | -0.6 | -13.9 |
Carrying amount as at 31 December | 1,718.9 | 18.6 | 1,737.6 |
€ million | 2023 | 2022 |
| Operating profit | ||
Depreciation and impairment charges on right-of-use assets | -353.2 | -322.1 |
Lease payments for short-term leases | -3.2 | -3.0 |
Lease payments for low-value assets | -3.6 | -3.4 |
Variable lease payments | -1.0 | -1.0 |
| Financial expenses | ||
Interest expense for lease liabilities | -73.4 | -68.4 |
Total | -434.3 | -397.9 |
€ million | 2023 | 2022 |
Interest expense for lease liabilities | -73.4 | -68.4 |
Repayments of lease liabilities | -354.3 | -332.7 |
Lease payments in the income statement | -7.7 | -7.4 |
Total | -435.4 | -408.5 |
69
€ million | 2023 | 2022 |
Lease income for operating leases | 68.5 | 63.6 |
€ million | 2023 | 2022 |
Goods | 1,078.4 | 1,113.0 |
Prepayments | 5.5 | 2.3 |
Total | 1,083.9 | 1,115.4 |
Write-down of inventories to net realisable value | 72.3 | 56.7 |
70
€ million | 2023 | 2022 |
| Interest-bearing receivables | ||
Interest-bearing loans and receivables | 4.3 | 4.4 |
Total interest-bearing receivables | 4.3 | 4.4 |
Trade receivables | 970.5 | 969.3 |
Income tax assets | 6.6 | 21.9 |
| Other non-interest-bearing receivables | ||
Non-interest-bearing loans and receivables | 44.6 | 80.2 |
Prepaid expenses and deferred income | 258.0 | 281.0 |
Total other non-interest-bearing receivables | 302.6 | 361.2 |
Total | 1,284.0 | 1,356.9 |
€ million | 2023 | 2022 |
Trade receivables not due | 875.8 | 886.7 |
1−7 days past due trade receivables | 58.0 | 38.1 |
8−30 days past due trade receivables | 14.7 | 23.6 |
31−60 days past due trade receivables | 4.7 | 4.1 |
Over 60 days past due trade receivables | 17.1 | 16.8 |
Total | 970.5 | 969.3 |
71
72
assets to Finnish Group companies. The return of surplus assets included the property of
K-Citymarket in Turtola in Tampere, €40.3 million.
The defined benefit asset recognised in the balance sheet is determined as
follows
€ million | 2023 | 2022 |
Present value of defined benefit obligation | -241.0 | -225.2 |
Fair value of plan assets | 320.3 | 312.1 |
Net assets recognised in the balance sheet | 79.6 | 86.9 |
| Movement in the net assets recognised in the balance sheet | ||
As at 1 January | 86.9 | 94.7 |
Income/cost recognised in the income statement | -1.2 | -4.1 |
Remeasurement | -6.8 | 38.3 |
Return of surplus assets | 0.0 | -42.9 |
Contributions to plan and plan costs | 0.3 | 1.0 |
As at 31 December | 79.6 | 86.9 |
| Present value of | |||
| defined benefit | Fair value of | ||
| € million | obligation | plan assets | Total |
As at 1 January 2023 | -225.2 | 312.1 | 86.9 |
Current service cost | -2.3 | -2.3 | |
Gains or losses on settlement | -1.5 | -1.5 | |
Interest cost/income | -7.7 | 10.9 | 3.2 |
Plan costs | -0.5 | -0.5 | |
-11.6 | 10.4 | -1.2 | |
| Remeasurement | |||
Return on plan assets | 11.4 | 11.4 | |
| Gain/loss from changes in financial | |||
assumptions | -15.1 | -15.1 | |
Experience gains/losses | -3.2 | -3.2 | |
-18.3 | 11.4 | -6.8 | |
Contributions to plan | 0.3 | 0.3 | |
Benefit payments | 14.0 | -14.0 | - |
As at 31 December 2023 | -241.0 | 320.3 | 79.6 |
| Present value of | |||
| defined benefit | Fair value of | ||
| € million | obligation | plan assets | Total |
As at 1 January 2022 | -282.2 | 376.9 | 94.7 |
Current service cost | -4.0 | -4.0 | |
Gains or losses on settlement | -0.3 | -0.3 | |
Interest cost/income | -2.5 | 3.1 | 0.6 |
Plan costs | -0.5 | -0.5 | |
-6.8 | 2.6 | -4.1 | |
| Remeasurement | |||
Return on plan assets | -12.1 | -12.1 | |
| Gain/loss from changes in financial | |||
assumptions | 58.5 | 58.5 | |
Experience gains/losses | -8.0 | -8.0 | |
50.5 | -12.1 | 38.3 | |
Contributions to plan and plan costs | 1.0 | 1.0 | |
Return of surplus assets | -42.9 | -42.9 | |
Benefit payments | 13.3 | -13.3 | 0.0 |
As at 31 December 2022 | -225.2 | 312.1 | 86.9 |
Plan assets were comprised as follows in 2023
€ million | Quoted | Unquoted | Total |
| Europe | |||
Equity instruments | 28.5 | 28.5 | |
Debt instruments | 57.4 | 3.2 | 60.6 |
Investment funds | 72.9 | 15.9 | 88.8 |
Properties | 85.5 | 85.5 | |
| United States | |||
Investment funds | 51.2 | 51.2 | |
| Other countries | |||
Investment funds | 16.9 | 16.9 | |
Total | 198.5 | 133.1 | 331.6 |
73
Plan assets were comprised as follows in 2022
€ million | Quoted | Unquoted | Total |
| Europe | |||
Equity instruments | 29.2 | 29.2 | |
Debt instruments | 49.8 | 20.4 | 70.2 |
Investment funds | 56.1 | 15.1 | 71.2 |
Properties | 86.9 | 86.9 | |
| United States | |||
Investment funds | 47.2 | 47.2 | |
| Other countries | |||
Investment funds | 18.5 | 18.5 | |
Total | 171.6 | 151.6 | 323.2 |
€ million | 2023 | 2022 |
Kesko Corporation shares included in fair value | - | - |
Properties leased by Kesko Group included in fair value | 85.5 | 86.9 |
Principal actuarial assumptions
2023 | 2022 | |
Discount rate | 3.02% | 3.56% |
Salary growth rate | 2.96% | 2.97% |
Inflation | 2.48% | 2.49% |
Pension growth rate | 2.67% | 2.68% |
Average service expectancy, years | 5 | 5 |
Weighted average duration of pension obligations and expected maturity
analysis of undiscounted pension obligations
2023 | 2022 | |
Weighted average duration of pension obligations, years | 12 | 12 |
Expected maturity analysis of undiscounted pension obligations, € million | ||
Less than 1 year | 15.4 | 15.4 |
Between 1−10 years | 121.4 | 120.5 |
Between 10−20 years | 109.2 | 110.2 |
Between 20−30 years | 75.6 | 76.9 |
Over 30 years | 55.5 | 59.4 |
Total | 377.0 | 382.3 |
Risks related to pension plan
Asset related risks
The Pension Fund's investments comprise properties, equity index funds, private equity funds,
unlisted shares and both long-term and short-term money market investments. The Pension
Fund's investment policy defines the investment restrictions pertaining to classes of assets
and the allowed investees. The investment plan, annually approved by the Pension Fund
board, sets the investment allocation and return targets for the year ahead. The objective
of investing activity is to secure a return on the investments and their convertibility into
cash, as well as ensuring appropriate diversity and diversification of investments. On an
annual basis, the objective is to exceed the Pension Fund's obligation expenses and costs,
so that contributions need not be charged to the members. The long-term target return
on investment activity is 5.0%. The risks involved in investment activity are managed by
continuously monitoring market developments and analysing the adequacy of the return and
risk potential of the investments. The returns compared to chosen reference indices and the
breakdown of investments are reported on a monthly basis. In 2023, the realised return on
investing activity was 7.9%.
If the return on investment assets underperforms the discount rate applied to the calculation
of the present value of defined pension obligation, a deficit in the plan may arise. The
diversification of assets is aimed to reduce this risk in varying financial conditions. If a deficit
74
is created in the pension plan, such that the pension obligation is not fully covered, Pension
Fund members are obligated to pay contributions to the Fund in order to cover the obligation.
Calculated in compliance with the IAS 19 standard, the amount of plan assets exceeded the
plan obligation by €82.1 million as at 31 December 2023. Local rules concerning the Pension
Fund may also create a contribution obligation in situations in which the IAS 19 obligation is
fully covered. In such a case, the amount of contributions charged increases the amount of
pension assets according to IAS 19.
Obligation related risks
In addition to the general level of interest rates, the defined benefit obligation may be
impacted by changes in the statutory pension provision, future salary increases, index-based
pension increases and changes in life expectancy. The pension promise made to the Fund's
beneficiaries is tied to the amount of pensionable salary and it is a lifelong benefit. The total
pension amount consists of the statutory pension and the supplementary pension provided
by the Fund. Salary increases will increase the future pension amount. If changes in statutory
pension provision, such as an increase in the retirement age or reduction of pension provision,
were compensated to pensioners by the supplementary pension, the changes would increase
the defined benefit obligation. The amount of future pensions is adjusted annually with an
index-based increase in accordance with the terms and conditions of the plan. The extension
of life expectancy will result in an increase in plan obligation.
Changes in the general level of interest rates and the market yield of high-quality bonds have
an impact on the present value of the defined benefit obligation. When the level of interest
rates falls, the present value of the defined benefit obligation rises. Because the Pension
Fund's investment assets are invested and their return targets are set for long terms, changes
in the annual return on investments do not necessarily correlate in the short term with
changes in the discount rate applied to the defined benefit obligation.
Sensitivity analysis
The sensitivity of the defined benefit obligation to changes in the principal assumptions is
presented in the following table.
| Impact on | Impact on | ||
| defined benefit | defined benefit | ||
| Change in | obligation, | obligation, | |
| Actuarial assumption | assumption | increase | decrease |
| 2023 | |||
Discount rate | 0.50% | -5.87% | 6.52% |
Salary growth rate | 0.50% | 0.74% | -0.56% |
Pension growth rate | 0.50% | 5.60% | -5.10% |
| 2022 | |||
Discount rate | 0.50% | -5.70% | 6.33% |
Salary growth rate | 0.50% | 0.72% | -0.70% |
Pension growth rate | 0.50% | 5.30% | -4.90% |
The impacts of sensitivity analysis have been calculated so that the impact of a change in
the assumption is calculated while assuming that all other assumptions are constant. In
practice, this is unlikely to occur, and changes in some of the assumptions may correlate with
each other. The sensitivity of the defined benefit obligation has been calculated using the
same method as when calculating the pension obligation recognised within the statement of
financial position.
75
Summary of financials of significant joint ventures, € million | 31 Dec. 2023 | 31 Dec. 2022 |
Current assets | 413.9 | 427.4 |
Non-current assets | 426.8 | 422.1 |
Current liabilities | 301.0 | 285.8 |
Non-current liabilities | 292.9 | 296.2 |
| The above-mentioned balance sheet items contain the following | ||
| items: | ||
Cash and cash equivalents | 69.7 | 72.8 |
Current interest-bearing liabilities | 47.1 | 39.8 |
Non-current interest-bearing liabilities | 292.8 | 296.1 |
| 1 Jan.–31 Dec. | 1 Jan.–31 Dec. | |
| 2023 | 2022 | |
Net sales | 1,174.9 | 1,224.3 |
Net profit attributable to owners of the parent | 37.9 | 47.1 |
Comprehensive income for the year attributable to owners of the parent | 34.3 | 48.2 |
Group share of profit for the year | 19.0 | 23.5 |
Share of result of the joint venture consolidated in the consolidated financial statements | 19.0 | 23.5 |
| Share of other comprehensive income of the joint venture | ||
consolidated in the consolidated financial statements | 17.1 | 24.1 |
The above-mentioned income statement items contain the following items: | ||
Depreciation, amortisation and impairment | -53.9 | -49.3 |
Interest income | 1.1 | 0.6 |
Interest expense | -11.9 | -12.3 |
Income tax | -4.7 | -7.9 |
Dividends and repayment of capital received from joint ventures | -21.7 | -33.0 |
| Reconciliation for balance sheet value of joint ventures, | ||
€ million | 2023 | 2022 |
Net assets of joint ventures | 246.7 | 267.6 |
Minority interest in net assets | 22.0 | 34.0 |
Group interest in net assets | 112.6 | 117.2 |
Goodwill | 19.2 | 19.2 |
Fair value allocations | 15.0 | 15.0 |
Balance sheet value of joint ventures | 146.8 | 151.3 |
Summary of financials of a significant associate, € million | 2023 | 2022 |
Current assets | 22.1 | 27.7 |
Non-current assets | 506.7 | 516.3 |
Current liabilities | 11.1 | 11.4 |
Non-current liabilities | 477.6 | 488.5 |
Equity attributable to equity holders of the parent | 40.1 | 44.1 |
Net sales | 51.8 | 48.7 |
Net profit for the year | -4.1 | 10.5 |
Comprehensive income for the year, total | -4.2 | 9.6 |
| Reconciliation for balance sheet value of an associate, | ||
€ million | 2023 | 2022 |
Net assets of the associate | 40.1 | 44.1 |
Group interest in net assets | 13.4 | 14.7 |
Balance sheet value of the associate | 13.4 | 14.7 |
76
Summary of financials of other associates, € million | 2023 | 2022 |
Group share of profit for the year | 2.8 | -3.5 |
Group share of comprehensive income for the year | 2.8 | -3.5 |
| Balance sheet value of associates in the consolidated statement | ||
of financial position | 72.7 | 65.9 |
| Warranty | |||
| € million | provisions | Other provisions | Total |
Provisions as at 1 Jan. 2023 | 7.9 | 14.3 | 22.2 |
Foreign exchange effects | -0.0 | 0.1 | 0.1 |
Additional provisions | 4.3 | 6.8 | 11.0 |
Unused amounts reversed | -3.4 | -1.5 | -4.9 |
Amounts charged against provision | -2.1 | -7.3 | -9.4 |
Provisions as at 31 Dec. 2023 | 6.6 | 12.3 | 18.9 |
| Analysis of total provisions | |||
Non-current | 2.7 | 4.3 | 6.9 |
Current | 3.9 | 8.1 | 12.0 |
The biggest items in other provisions are costs related to care plans of vehicles and machines
sold by Group companies, real estate costs for empty store sites, and restructuring costs. The
average duration for care plans is 3–4 years.
77
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
4. CAPITAL STRUCTURE AND FINANCIAL RISKS
4.1 Capital management
Kesko Group’s objectives in capital management include target rates set for the Group’s
solvency and liquidity. The Group’s capital structure (equity-to-debt ratio) is managed at
Group level. The targets for the Group’s solvency and liquidity are set with the purpose of
securing the Group’s liquidity in all market situations, enabling the implementation of Group
strategy, and increasing shareholder value. The targets have been set for the performance
indicator ‘interest-bearing net debt/EBITDA’. Some of the Group’s interest-bearing liabilities
include covenants, whose terms and conditions have been taken into account in the above
target rate. The Group does not have a credit rating from any external credit rating institution.
Target levels for Kesko Group’s performance indicators are approved by the Board of
Directors of Kesko Corporation. The Board confirmed an updated version of the company’s
strategy and new medium-term financial targets for the company on 27 May 2021. The
new medium-term financial targets for profitability are a comparable operating margin of
over 6.0% (previously 5.5%) and a comparable return on capital employed of over 14.5%
(previously 12.5%). As for financial position, the Group continues to target a maximum
interest-bearing net debt/EBITDA of 2.5, excluding the impact of IFRS 16.
€ million | 2023 | 2022 |
| Interest-bearing liabilities and lease liabilities in the consolidated | ||
statement of financial position | 2,787.0 | 2,418.3 |
- Lease liabilities | 1,997.9 | 1,920.1 |
- Other current financial assets | 15.4 | 68.6 |
- Cash and cash equivalents | 211.9 | 245.5 |
Interest-bearing net debt excluding lease liabilities | 561.9 | 184.1 |
Operating profit | 695.4 | 816.5 |
+ depreciation, amortisation and impairment | 184.0 | 169.0 |
+ depreciation and impairment charges for right-of-use-assets | 353.2 | 322.1 |
- lease payments for right-of-use-assets | 430.7 | 399.1 |
EBITDA excluding the impact of IFRS 16 | 801.8 | 908.5 |
| Interest bearing net debt/EBITDA excluding the impact of IFRS 16 | 0.7 | 0.2 |
Reconciliation of net debt
The Group determines net debt by deducting the Group's liquid assets, which comprise cash
and cash equivalents and other current financial assets, from interest-bearing short-term and
long term-liabilities.
The Group had liquid assets of €227.3 million (€314.1 million) on 31 December 2023.
Interest-bearing liabilities on 31 December 2023 totalled €2,787.0 million (€2,418.3
million), of which lease liabilities accounted for €1,997.9 million (€1,920.1 million). Interest-
bearing net debt totalled €2,559.8 million (€2,104.2 million), and interest-bearing net debt
excluding lease liabilities totalled €561.9 million (€184.1 million).
€ million | 2023 | 2022 |
| Financial assets at amortised cost | ||
(maturing in less than 3 months) | 3.3 | 17.0 |
Cash and cash equivalents | 208.6 | 228.5 |
Other current financial assets | 15.4 | 68.6 |
Borrowings - repayable within one year (including overdraft) | -98.5 | -252.6 |
Lease liabilities - repayable within one year | -350.6 | -328.1 |
Borrowings - repayable after one year | -690.7 | -245.5 |
Lease liabilities - repayable after one year | -1,647.2 | -1,592.0 |
Cash and debt, net | -2,559.8 | -2,104.2 |
78
| Carrying amount | Business acquisitions | Net changes of | Foreign exchange | Carrying amount | ||
| € million | as at 1 Jan. 2023 | Cash flows | and divestments | lease liabilities | adjustments | as at 31 Dec. 2023 |
Lease liabilities due within 1 year | -328.1 | 354.3 | -3.4 | -374.8 | 1.4 | -350.6 |
Lease liabilities due after 1 year | -1,592.0 | -12.1 | -51.6 | 8.4 | -1,647.2 | |
Borrowings due within 1 year | -252.6 | 154.2 | - | 0.0 | -98.5 | |
Borrowings due after 1 year | -245.5 | -445.2 | - | - | -690.7 | |
Other current financial assets | 68.6 | -53.2 | - | - | 15.4 | |
Cash and overdraft | 228.5 | -28.1 | 8.2 | -0.1 | 208.6 | |
Financial assets at amortised cost | 17.0 | -13.7 | - | - | 3.3 | |
Net debt | -2,104.2 | -31.7 | -7.3 | -426.4 | 9.8 | -2,559.8 |
| Carrying amount | Business acquisitions | Net changes of | Foreign exchange | Carrying amount | ||
| € million | as at 1 Jan. 2022 | Cash flows | and divestments | lease liabilities | adjustments | as at 31 Dec. 2022 |
Lease liabilities due within 1 year | -317.9 | 332.7 | -1.6 | -343.8 | 2.5 | -328.1 |
Lease liabilities due after 1 year | -1,610.7 | -12.3 | 19.0 | 11.9 | -1,592.0 | |
Borrowings due within 1 year | -160.1 | -92.5 | - | 0.0 | -252.6 | |
Borrowings due after 1 year | -206.4 | -39.1 | -0.0 | -0.0 | -245.5 | |
Other current financial assets | 107.9 | -39.3 | - | - | 68.6 | |
Cash and overdraft | 197.9 | 23.5 | 7.4 | -0.3 | 228.5 | |
Financial assets at amortised cost | 32.0 | -15.0 | - | - | 17.0 | |
Financial assets at fair value through profit or loss | 50.0 | -50.0 | - | - | - | |
Net debt | -1,907.3 | 120.2 | -6.4 | -324.8 | 14.1 | -2,104.2 |
79
| Number of shares | |||||||
| Reserve of invested | |||||||
| Share capital | non-restricted equity | Share premium | Total | ||||
Share capital | A | B | Total | € million | € million | € million | € million |
1 January 2022 | 126,948,028 | 270,162,316* | 397,110,344* | 197.3 | 197.8 | 266.9 | 662.0 |
Transfer of treasury shares | 348,303 | 348,303 | |||||
31 December 2022 | 126,948,028 | 270,510,619* | 397,458,647* | 197.3 | 197.8 | 266.9 | 662.0 |
Transfer of treasury shares | 310,864 | 310,864 | |||||
31 December 2023 | 126,948,028 | 270,821,483* | 397,769,511* | 197.3 | 197.8 | 266.9 | 662.0 |
Number of votes | 1,269,480,280 | 270,821,483 | 1,540,301,763 | ||||
B shares held by the Company as at 31 Dec. 2022 | 2,620,361 |
Transfer, share-based compensation plan | -310,864 |
Returned during the period | - |
B shares held by the Company as at 31 Dec. 2023 | 2,309,497 |
80
| Group's translation exposure as at 31 Dec. 2023 | |||
€ million | NOK | SEK | PLN |
Net investment | 487.2 | 297.5 | 85.2 |
81
| Group's translation exposure as at 31 Dec. 2022 | |||
€ million | NOK | SEK | PLN |
Net investment | 381.6 | 263.4 | 71.0 |
| Sensitivity analysis, impact on equity as at 31 Dec. 2023 | |||
€ million | NOK | SEK | PLN |
Weakening 10% | -44.3 | -27.0 | -7.7 |
Strengthening 10% | 54.1 | 33.1 | 9.5 |
| Sensitivity analysis, impact on equity as at 31 Dec. 2022 | |||
€ million | NOK | SEK | PLN |
Weakening 10% | -34.7 | -23.9 | -6.5 |
Strengthening 10% | 42.4 | 29.3 | 7.9 |
| Group's transaction exposure | ||||
| as at 31 Dec. 2023 | ||||
€ million | USD | SEK | NOK | PLN |
Group's transaction risk | -2.9 | 57.5 | 51.7 | -11.6 |
Hedging derivatives | 17.2 | -47.3 | -42.3 | 5.1 |
Open exposure | 14.3 | 10.2 | 9.5 | -6.6 |
| Group's transaction exposure as at | ||||
| 31 Dec. 2022 | ||||
€ million | USD | SEK | NOK | PLN |
Group's transaction risk | -1.2 | 74.9 | 23.7 | 11.9 |
Hedging derivatives | 23.4 | -56.2 | -20.9 | -10.7 |
Open exposure | 22.3 | 18.7 | 2.8 | 1.2 |
| Sensitivity analysis, impact on pre-tax profit | ||||
| as at 31 Dec. 2023 | ||||
€ million | USD | SEK | NOK | PLN |
Change +10% | -1.3 | -0.9 | -0.9 | 0.6 |
Change -10% | 1.6 | 1.1 | 1.1 | -0.7 |
| Sensitivity analysis, impact on pre-tax profit | ||||
| as at 31 Dec. 2022 | ||||
€ million | USD | SEK | NOK | PLN |
Change +10% | -2.0 | -1.7 | -0.3 | -0.1 |
Change -10% | 2.5 | 2.1 | 0.3 | 0.1 |
82
31 Dec. 2023 | 31 Dec. 2022 | |||||||
€ million | <1 year | 1–5 years | >5 years | Total | <1 year | 1–5 years | >5 years | Total |
| Maturities of financial liabilities and related finance costs | ||||||||
Borrowings from financial institutions | 0.2 | 650.6 | 0.8 | 651.6 | 0.2 | 200.6 | 0.9 | 201.7 |
finance costs | 29.6 | 17.3 | 0.1 | 47.0 | 4.5 | 9.2 | 0.1 | 13.9 |
Pension loans | 12.0 | 32.3 | - | 44.3 | 12.0 | 38.6 | 5.7 | 56.3 |
finance costs | 0.6 | 0.9 | - | 1.5 | 0.8 | 1.4 | 0.1 | 2.2 |
Lease liabilities | 350.6 | 1,064.2 | 583.0 | 1,997.9 | 328.1 | 1,012.4 | 579.7 | 1,920.1 |
finance costs | 69.6 | 164.5 | 68.4 | 302.5 | 61.6 | 144.2 | 52.1 | 257.9 |
Payables to K-retailers | 64.5 | - | - | 64.5 | 82.1 | - | - | 82.1 |
finance costs | - | - | - | - | 0.2 | - | - | 0.2 |
Other interest-bearing liabilities | 21.7 | 7.9 | 0.0 | 29.6 | 158.3 | - | 0.0 | 158.3 |
finance costs | 0.1 | 0.4 | - | 0.5 | 1.3 | - | - | 1.3 |
Non-current non-interest-bearing liabilities | 0.6 | 3.9 | 19.7 | 24.1 | 1.0 | 2.6 | 20.5 | 24.1 |
| Current non-interest-bearing liabilities | ||||||||
Trade payables | 1,418.3 | 1,418.3 | 1,499.4 | 1,499.4 | ||||
Accrued expenses | 415.1 | 415.1 | 442.6 | 442.6 | ||||
Other non-interest-bearing liabilities | 193.4 | 193.4 | 195.5 | 195.5 | ||||
31 Dec. 2023 | 31 Dec. 2022 | |||||||
| € million | <1 year | 1–5 years | >5 years | Total | <1 year | 1–5 years | >5 years | Total |
| Cash flows of derivatives | ||||||||
| Payables | ||||||||
Foreign currency derivatives | 125.1 | - | - | 125.1 | 140.9 | - | - | 140.9 |
Interest rate derivatives | 3.9 | 4.8 | - | 8.7 | 1.0 | 3.0 | - | 4.0 |
of which derivatives under hedge accounting | 3.0 | 2.9 | - | 5.9 | ||||
Electricity derivatives | 0.5 | 1.3 | - | 1.9 | 0.6 | 0.1 | - | 0.7 |
| Receivables | ||||||||
Foreign currency derivatives | 123.5 | - | - | 123.5 | 142.8 | - | - | 142.8 |
Interest rate derivatives | 9.4 | 7.0 | - | 16.3 | 3.3 | 8.2 | - | 11.5 |
of which derivatives under hedge accounting | 3.6 | 2.1 | - | 5.6 | ||||
Electricity derivatives | 5.3 | 2.2 | 0.0 | 7.5 | 29.3 | 15.5 | - | 44.8 |
84
| Financial assets at amortised cost | ||
€ million | 2023 | 2022 |
Carrying amount as at 1 January | 38.7 | 52.7 |
Changes | -23.3 | -14.1 |
Carrying amount as at 31 December | 15.4 | 38.7 |
| Maturity analysis of non-current | ||||||
| receivables as at 31 Dec. 2023 | ||||||
€ million | 2025 | 2026 | 2027 | 2028 | 2029– | Total |
| Non-interest-bearing non-current | ||||||
receivables | 1.9 | 2.5 | 3.5 | 0.2 | 0.6 | 8.8 |
| Loans and receivables from associates | ||||||
and joint ventures | 3.4 | 0.5 | 1.5 | - | 56.0 | 61.4 |
Other non-current receivables | 1.1 | 0.0 | 0.0 | 0.0 | 0.0 | 1.3 |
Total | 6.4 | 3.0 | 5.1 | 0.2 | 56.6 | 71.4 |
| Maturity analysis of non-current | ||||||
| receivables as at 31 Dec. 2022 | ||||||
€ million | 2024 | 2025 | 2026 | 2027 | 2028– | Total |
| Non-interest-bearing non-current | ||||||
receivables | 9.8 | 5.2 | 4.2 | 5.9 | 0.7 | 25.9 |
| Loans and receivables from associates | ||||||
and joint ventures | 3.4 | 3.4 | 0.5 | 1.5 | 56.0 | 64.7 |
Other non-current receivables | 0.2 | - | - | - | - | 0.2 |
Total | 13.4 | 8.6 | 4.7 | 7.4 | 56.7 | 90.8 |
85
| 31 Dec. 2023 | 31 Dec. 2023 | 31 Dec. 2022 | 31 Dec. 2022 | |
| Positive | Negative | Positive | Negative | |
| fair value | fair value | fair value | fair value | |
| Fair values of derivative contracts | (balance | (balance | (balance | (balance |
| € million | sheet value) | sheet value) | sheet value) | sheet value) |
Interest rate derivatives | 14.8 | -8.5 | 12.2 | -0.1 |
Foreign currency derivatives | 0.2 | -1.8 | 2.4 | -0.6 |
Electricity derivatives | 7.5 | -1.9 | 44.8 | -0.7 |
| Notional principal amounts of | ||
| derivative contracts | ||
€ million | 31 Dec. 2023 | 31 Dec. 2022 |
Interest rate derivatives | 530.0 | 330.0 |
Foreign currency derivatives | 125.3 | 141.7 |
Electricity derivatives | 39.4 | 69.7 |
4.4 Finance income and costs
€ million | 2023 | 2022 |
| Interest income and other finance income | ||
Income on investments at amortised cost | 0.6 | 1.0 |
Interest income on loans and receivables | 13.4 | 9.7 |
Income on investments at fair value through profit or loss | 0.6 | 1.0 |
Other finance income | 2.4 | 1.3 |
Total interest income and other finance income | 16.9 | 13.0 |
| Interest expense and other finance costs | ||
Interest expense on financial liabilities at amortised cost | -24.9 | -4.0 |
Losses on investments at amortised cost | 1.2 | -2.2 |
Losses on investments at fair value through profit or loss | -0.3 | -3.5 |
Other finance costs | -2.2 | 12.7 |
Total interest expense and other finance costs | -26.3 | 2.9 |
Interest expense for lease liabilities | -73.4 | -68.4 |
| Exchange differences | ||
Exchange differences and changes in fair values of derivatives, borrowings denominated in foreign currencies not qualifying for hedge accounting, and cash at bank | -1.1 | -3.5 |
Total exchange differences | -1.1 | -3.5 |
Total finance income and costs | -83.9 | -56.0 |
86
87
88
| Fair value through | ||||||||
| Fair value through | other comprehensive | |||||||
| Balance, € million | profit or loss | Amortised cost | income | Carrying amount | Fair value | Level 1 | Level 2 | Level 3 |
| Non-current financial assets | ||||||||
Other investments | 14.0 | - | 14.0 | 14.0 | 14.0 | |||
Non-current receivables | 64.1 | 64.1 | 64.1 | |||||
Non-current receivables, derivatives | 5.6 | 1.7 | 7.3 | 7.3 | 7.3 | |||
| Current financial assets | ||||||||
Trade receivables | 970.5 | 970.5 | 970.5 | |||||
Other receivables | 299.9 | 299.9 | 299.9 | |||||
Other receivables, derivatives | 1.2 | 5.8 | 7.0 | 7.0 | 7.0 | |||
Other financial assets | - | 15.4 | - | 15.4 | 15.5 | - | ||
Cash and cash equivalents | - | 211.9 | - | 211.9 | 211.9 | - | ||
Total financial assets | 20.8 | 1,561.7 | 7.5 | 1,590.1 | 1,590.2 | 14.3 | 14.0 |
| Fair value through | ||||||||
| Fair value through | other comprehensive | |||||||
| Balance, € million | profit or loss | Amortised cost | income | Carrying amount | Fair value | Level 1 | Level 2 | Level 3 |
| Non-current financial liabilities | ||||||||
Non-current interest-bearing liabilities | 690.7 | 690.7 | 691.0 | |||||
Non-current lease liabilities | 1,647.2 | 1,647.2 | 1,647.2 | |||||
| Non-current non-interest-bearing | ||||||||
liabilities | 22.6 | 22.6 | 22.6 | |||||
| Non-current non-interest-bearing | ||||||||
liabilities, derivatives | - | 1.6 | 1.6 | 1.6 | 1.6 | |||
| Current financial liabilities | ||||||||
Current interest-bearing liabilities | 98.5 | 98.5 | 98.1 | |||||
Current lease liabilities | 350.6 | 350.6 | 350.6 | |||||
Trade payables | 1,418.3 | 1,418.3 | 1,418.3 | |||||
Other non-interest-bearing liabilities | 606.1 | 606.1 | 606.1 | |||||
Other non-interest-bearing liabilities, derivatives | 1.8 | 0.6 | 2.3 | 2.3 | 2.3 | |||
Total financial liabilities | 1.8 | 4,834.0 | 2.1 | 4,837.8 | 4,837.8 | 3.9 |
89
| Fair value through | ||||||||
| Fair value through | other comprehensive | |||||||
| Balance, € million | profit or loss | Amortised cost | income | Carrying amount | Fair value | Level 1 | Level 2 | Level 3 |
| Non-current financial assets | ||||||||
Other investments | 13.2 | - | 13.2 | 13.2 | 13.2 | |||
Non-current receivables | 66.0 | 66.0 | 66.0 | |||||
Non-current receivables, derivatives | 12.1 | 12.8 | 24.9 | 24.9 | 24.9 | |||
| Current financial assets | ||||||||
Trade receivables | 969.3 | 969.3 | 969.3 | |||||
Other receivables | 331.2 | 331.2 | 331.2 | |||||
Other receivables, derivatives | 2.4 | 32.1 | 34.4 | 34.4 | 34.4 | |||
Other financial assets | 29.9 | 38.7 | - | 68.6 | 68.6 | 29.9 | ||
Cash and cash equivalents | - | 245.5 | - | 245.5 | 245.5 | - | ||
Total financial assets | 57.6 | 1,650.6 | 44.8 | 1,753.1 | 1,753.1 | 89.2 | 13.2 |
| Fair value through | ||||||||
| Fair value through | other comprehensive | |||||||
| Balance, € million | profit or loss | Amortised cost | income | Carrying amount | Fair value | Level 1 | Level 2 | Level 3 |
| Non-current financial liabilities | ||||||||
Non-current interest-bearing liabilities | 245.5 | 245.5 | 243.4 | |||||
Non-current lease liabilities | 1,592.0 | 1,592.0 | 1,592.0 | |||||
| Non-current non-interest-bearing | ||||||||
liabilities | 24.1 | 24.1 | 24.1 | |||||
| Non-current non-interest-bearing | ||||||||
liabilities, derivatives | - | - | - | - | - | |||
| Current financial liabilities | ||||||||
Current interest-bearing liabilities | 252.6 | 252.6 | 252.2 | |||||
Current lease liabilities | 328.1 | 328.1 | 328.1 | |||||
Trade payables | 1,499.4 | 1,499.4 | 1,499.4 | |||||
Other non-interest-bearing liabilities | 636.9 | 636.9 | 636.9 | |||||
Other non-interest-bearing liabilities, derivatives | 0.6 | 0.7 | 1.2 | 1.2 | 1.2 | |||
Total financial liabilities | 0.6 | 4,578.7 | 0.7 | 4,579.9 | 4,577.3 | 1.2 |
90
| Changes in level 3 instruments | ||
€ million | 2023 | 2022 |
Private equity funds and other shares and interests as at 1 January | 13.2 | 15.5 |
Purchases | 1.3 | 0.3 |
Gains and losses through profit or loss | -0.5 | -0.4 |
Changes in fair value | 0.0 | -2.2 |
Private equity funds and other shares and interests as at 31 December | 14.0 | 13.2 |
€ million | 2023 | 2022 |
| Collateral given for own commitments | ||
Pledges | 9.0 | 9.0 |
Mortgages | 181.2 | 179.6 |
Guarantees | 60.0 | 61.6 |
Other commitments and contingent liabilities | 64.0 | 58.4 |
| Collateral given for others | ||
Guarantees | - | - |
Other commitments and contingent liabilities | - | - |
91
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
5. OTHER
| Group's | Parent's | ||
| ownership | ownership | ||
Owned by the parent | Domicile | interest, % | interest, % |
Ankkuri-Energia Oy | Helsinki, Finland | 100.00 | 100.00 |
Asunto Oy Kirkkonummen Västeruddintie 33 | Kirkkonummi, Finland | 100.00 | 100.00 |
Asunto Oy Porvoon Taiteilija | Porvoo, Finland | 100.00 | 100.00 |
Byggmakker Handel AS | Oppegård, Norway | 100.00 | 100.00 |
Fiesta Real Estate AS | Tallinn, Estonia | 100.00 | 100.00 |
Intersport Finland Oy | Helsinki, Finland | 100.00 | 100.00 |
Jyväscool Oy | Jyväskylä, Finland | 100.00 | 100.00 |
JK-Kiinteistöt Oy | Hyvinkää, Finland | 100.00 | 100.00 |
Kalatukku E. Eriksson Oy | Helsinki, Finland | 100.00 | 100.00 |
K Auto Oy | Helsinki, Finland | 100.00 | 100.00 |
Keskinäinen Kiinteistö Oy Malmin Kankirauta | Helsinki, Finland | 100.00 | 100.00 |
| Keskinäinen Kiinteistö Oy Voisalmentie 9 | |||
Lappeenranta | Helsinki, Finland | 100.00 | 100.00 |
Kesko AB | Stockholm, Sweden | 100.00 | 100.00 |
Kesko Export Oy | Helsinki, Finland | 100.00 | 100.00 |
Kiinteistöosakeyhtiö Varkauden Kauppakatu 29 | Varkaus, Finland | 52.29 | 52.29 |
Kiinteistö Oy Espoontori | Espoo, Finland | 66.60 | 66.60 |
Kiinteistö Oy Espoon Asemakuja 2 | Espoo, Finland | 100.00 | 100.00 |
Kiinteistö Oy Espoon Asematori | Espoo, Finland | 54.10 | 54.10 |
Kiinteistö Oy Eteläkoivulan Kauppakeskus | Pori, Finland | 78.45 | 78.45 |
Kiinteistö Oy Helsingin Itäkeskus | Helsinki, Finland | 100.00 | 100.00 |
Kiinteistö Oy Hiukkavaaran Kauppa | Oulu, Finland | 100.00 | 100.00 |
| Group's | Parent's | ||
| ownership | ownership | ||
Owned by the parent | Domicile | interest, % | interest, % |
Kiinteistö Oy Hyvinkään Onnela | Helsinki, Finland | 100.00 | 100.00 |
Kiinteistö Oy Kittilän Säästökulma | Helsinki, Finland | 100.00 | 100.00 |
Kiinteistö Oy Kuopion Tulliportinkatu 33 | Kuopio, Finland | 100.00 | 100.00 |
Kiinteistö Oy Lappeenrannan Oksasenkatu 4 | Helsinki, Finland | 100.00 | 100.00 |
Kiinteistö Oy Mariannen Liiketila | Helsinki, Finland | 100.00 | 100.00 |
Kiinteistö Oy Pontsonkulma | Helsinki, Finland | 94.60 | 94.60 |
Kiinteistö Oy Riistaveden Keskustie 15 | Helsinki, Finland | 79.50 | 79.50 |
Kiinteistö Oy Sarviniitynkatu 4 | Kerava, Finland | 100.00 | 100.00 |
Kiinteistö Oy Sunan Hallitalo | Helsinki, Finland | 100.00 | 100.00 |
Kiinteistö Oy Tarkkaiikka | Oulu, Finland | 100.00 | 100.00 |
Kiinteistö Oy Voisalmen Liiketalo | Helsinki, Finland | 100.00 | 100.00 |
Klintcenter Ab | Mariehamn, Åland | 100.00 | 100.00 |
Kompass Invest Oy | Kemiönsaari, Finland | 100.00 | 100.00 |
K-Market Oy | Helsinki, Finland | 100.00 | 100.00 |
Koskelan Ostokeskus Oy | Oulu, Finland | 58.64 | 29.32 |
ML 84 Dormant Oy | Helsinki, Finland | 100.00 | 100.00 |
Onninen Oy | Helsinki, Finland | 100.00 | 100.00 |
Rake Eiendom AS | Oppegård, Norway | 100.00 | 100.00 |
Reinin Liha Oy | Helsinki, Finland | 100.00 | 100.00 |
Tampereen Länsikeskus Oy | Tampere, Finland | 100.00 | 100.00 |
92
| Group's | Parent's | ||
| ownership | ownership | ||
Owned by other Group companies | Domicile | interest, % | interest, % |
Arn Eiendom AS | Vefsn, Norway | 100.00 | |
Djurbergs Järnhandel Aktiebolag | Östersund, Sweden | 100.00 | |
Elektroskandia Norge AS | Langhus, Norway | 100.00 | |
Espoontorin Pysäköintitalo Oy | Espoo, Finland | 68.80 | |
Geitanger Bygg AS | Bergen, Norway | 100.00 | |
Hasti-Ari AS | Oppegård, Norway | 100.00 | |
| Västra Frölunda, | |||
| Högsbo Trä Aktiebolag | Sweden | 100.00 | |
K Auto AC Oy | Helsinki, Finland | 100.00 | |
K Auto PC Oy | Helsinki, Finland | 100.00 | |
K Auto Leasing Oy | Helsinki, Finland | 100.00 | |
K Auto Retail Oy | Helsinki, Finland | 100.00 | |
Kesko Onninen International Trading Co., Ltd | Shanghai, China | 100.00 | |
K rauta SIA | Riga, Latvia | 100.00 | |
Kestra Kiinteistöpalvelut Oy | Helsinki, Finland | 100.00 | |
Kiinteistö Oy Kokkolan Kaanaanmaantie 2–4 | Kokkola, Finland | 64.78 | |
Kiinteistö Oy Lappeenrannan Rakuunaparkki | Lappeenranta, Finland | 57.12 | |
Kiinteistö Oy Vantaan Simonsampo | Vantaa, Finland | 100.00 | |
KR Fastigheter i Järfälla AB | Sollentuna, Sweden | 100.00 | |
KR Fastigheter i Linköping AB | Sollentuna, Sweden | 100.00 | |
KR Fastigheter i Täby AB | Sollentuna, Sweden | 100.00 | |
K-Bygg Bergslagen AB | Sollentuna, Sweden | 100.00 | |
K-Bygg Försäljning AB | Segeltorp, Sweden | 100.00 | |
K-Bygg Sverige AB | Östersund, Sweden | 100.00 | |
K-rauta Fastigheter i Malmö AB | Sollentuna, Sweden | 100.00 | |
K-Rauta Holding Finland Oy | Helsinki, Finland | 100.00 | |
Kungälvs Trävaruaktiebolag | Kungälv, Sweden | 100.00 | |
Mark & Infra i Sverige AB | Täby, Sweden | 100.00 | |
Olarin Autokiinteistö Oy | Espoo, Finland | 100.00 | |
Onninen AS | Skedsmo, Norway | 100.00 | |
Onninen AS | Tallinn, Estonia | 100.00 | |
Onninen SIA | Riga, Latvia | 100.00 | |
Onninen Sp. z o.o. | Warsaw, Poland | 100.00 | |
Onninen UAB | Vilnius, Lithuania | 100.00 |
| Group's | Parent's | ||
| ownership | ownership | ||
Owned by other Group companies | Domicile | interest, % | interest, % |
Peltosaaren Liikekeskus Oy | Riihimäki, Finland | 59.67 | |
Profelco Oy | Vantaa, Finland | 100.00 | |
Rake Bergen AS | Oppegård, Norway | 100.00 | |
Sport1 Flokkmann Mosjøen AS | Mosjøen, Norway | 100.00 | |
| Skedsmokorset, | |||
| Sørbø AS | Norway | 100.00 | |
Sörred’s Byggvaruhus AB | Göteborg, Sweden | 100.00 | |
Tau & Jørpeland Eiendom | Jørpeland, Norway | 100.00 | |
Trøgstadveien 13 AS | Oppegård, Norway | 100.00 | |
Zenitec Sweden AB | Hästvdeda, Sweden | 100.00 | |
Övik Låsteknik AB | Örnsköldsvik, Sweden | 100.00 |
| Group's | Parent's | ||
| ownership | ownership | ||
Owned by the parent | Domicile | interest, % | interest, % |
Graanin Liikekeskus Oy | Mikkeli, Finland | 50.00 | 50.00 |
Kesko Senukai Lithuania UAB | Vilnius, Lithuania | 50.00 | 50.00 |
Kiinteistö Oy Itäaukio | Lahti, Finland | 26.20 | 26.20 |
Kiinteistö Oy Janakkalan Linnatuuli | Janakkala, Finland | 29.86 | 29.86 |
Kiinteistö Oy Joensuun Kaupunginportti | Joensuu, Finland | 22.77 | 22.77 |
Mercada Oy | Helsinki, Finland | 33.33 | 33.33 |
Vähittäiskaupan Takaus Oy | Helsinki, Finland | 42.84 | 42.84 |
Vähittäiskaupan Tilipalvelu VTP Oy | Helsinki, Finland | 30.00 | 30.00 |
| Group's | Parent's | ||
| ownership | ownership | ||
Owned by other Group companies | Domicile | interest, % | interest, % |
EDISON Data AS | Oslo, Norway | 40.00 | |
Proffsenteret AS | Ringerike, Norway | 34.11 | |
KS Holding UAB | Vilnius, Lithuania | 50.01 |
93
Proportionately consolidated mutual real estate companies
| Group's | Parent's | ||
| ownership | ownership | ||
Owned by the parent and others | Domicile | interest, % | interest, % |
Asunto Oy Harjutie | Espoo, Finland | 46.22 | 46.22 |
Asunto Oy Helsingin Strorken | Helsinki, Finland | 25.42 | 25.42 |
Asunto Oy Kajaanin Louhikatu 2 | Kajaani, Finland | 42.96 | 42.96 |
Asunto Oy Naantalin Tullinkulma | Naantali, Finland | 24.45 | |
Asunto Oy Soukan Itäinentorni | Espoo, Finland | 46.60 | 46.60 |
Asunto-Oy Punkalaitumen Pankkitalo | Punkalaidun, Finland | 33.82 | |
Itäkeskuksen Pysäköintitalo Oy | Helsinki, Finland | 36.16 | 36.16 |
Kiinteistö Oy Iso Roobertinkatu 20–22 | Helsinki, Finland | 25.64 | 25.64 |
Kiinteistö Oy Lahden Lyhytkatu 1 | Lahti, Finland | 50.00 | 50.00 |
Kiinteistö Oy Lukonmäen Palvelukeskus | Tampere, Finland | 34.54 | |
Kiinteistö Oy Taidetehtaanparkki | Porvoo, Finland | 24.06 | 24.06 |
Kiinteistö Oy Ulvilan Hansa | Ulvila, Finland | 43.47 | 43.47 |
Kiinteistö Oy Vantaanportin Liikekeskus | Vantaa, Finland | 27.81 | 27.81 |
Lapin Tehdastalo Oy | Tampere, Finland | 21.24 | 21.24 |
Munkkivuoren Ostoskeskus Oy | Helsinki, Finland | 39.20 | 39.20 |
Raksilan Paikoitus Oy | Oulu, Finland | 33.33 | 33.33 |
Talo Oy Kalevanpuisto | Kuopio, Finland | 47.60 | 47.60 |
Voisalmen Ostoskeskus Oy | Lappeenranta, Finland | 50.00 |
94
The following transactions were carried out with related parties:
| Associates | Board | |||||
| Income statement | and joint ventures | and management | Pension Fund | |||
€ million | 2023 | 2022 | 2023 | 2022 | 2023 | 2022 |
Sales of goods | 7.2 | 9.9 | 87.8 | 88.2 | ||
Sales of services | 4.7 | 5.2 | 0.9 | 1.0 | 0.0 | 0.2 |
Purchases of goods | 0.0 | -0.6 | -10.7 | -13.1 | ||
Purchases of services | 0.0 | -0.1 | 0.0 | 0.0 | ||
Other operating income | 0.8 | 0.8 | 19.1 | 19.1 | - | - |
Other operating costs | -4.4 | -3.9 | -0.0 | -0.0 | -0.1 | -0.2 |
Finance income | 6.1 | 6.0 | - | - | ||
Finance expenses | -0.2 | -0.3 | - | - | -0.2 | |
| Associates | Board | |||||
| Balance sheet | and joint ventures | and management | Pension Fund | |||
€ million | 2023 | 2022 | 2023 | 2022 | 2023 | 2022 |
Current receivables | 9.9 | 25.8 | 7.6 | 7.2 | - | 0.0 |
Non-current receivables | 61.4 | 64.7 | - | - | ||
Current liabilities | 5.8 | 10.1 | 3.8 | 2.3 | 2.8 | 4.8 |
| Items related | Associates | Board | ||||
| to leases | and joint ventures | and management | Pension Fund | |||
€ million | 2023 | 2022 | 2023 | 2022 | 2023 | 2022 |
Cash flow from leases | 38.7 | 35.9 | - | - | 6.0 | 6.2 |
Lease liabilities | 222.7 | 231.9 | - | - | 40.5 | 41.7 |
At the balance sheet date, receivables arisen from Kesko's sales to companies controlled
by the Board members were €7.6 million (€7.2 million). The receivables are collateralised
by a commercial credit granted by Vähittäiskaupan Takaus Oy, a Kesko associate, with the
maximum amount always limited to the maximum realisable value of the counter security
from the K-retailer company and entrepreneur to Vähittäiskaupan Takaus. At the end of the
financial year, the counter security was valued at €10.6 million (€12.0 million).
Non-current receivables from associates and joint ventures contain the shareholder loan
granted to Mercada Oy and the financing loans granted to UAB Kesko Senukai Lithuania.
Current receivables contain €3.4 million of the current portion of these loans. Other current
liabilities include, for example, chain rebate payables to companies controlled by the Kesko
Board members. Chain rebates are paid retrospectively based on criteria related to the
amount of actual annual purchases and the quality of operations.
During the financial year 2022, Kesko Pension Fund paid in total €42.9 million in return of
surplus assets to Finnish Group companies. The return of surplus assets included the property
of K-Citymarket Turtola in Tampere, €40.3 million. The ownership of the property was
transferred to Kesko Corporation.
The Group joint ventures UAB Kesko Senukai Lithuania and UAB KS Holding distributed in
total €21.7 million as dividends and equity repayments to Kesko Group companies in the
2023 financial year. The Group associate Vähittäiskaupan Takaus Oy distributed €2.6 million
as dividend to Kesko Corporation in the 2023 financial year.
| Monetary salaries, fees, fringe benefits | |||
| and share-based compensation | |||
€1,000 | 2023 | 2022 | |
Mikko Helander | President and CEO | 3,370.1 | 4,866.4 |
| Group Management | |||
Board | other members | 8,232.9 | 9,801.4 |
Esa Kiiskinen | Board Chairman | 114.6 | 117.0 |
Peter Fagernäs | Board Deputy Chairman | 70.2 | 71.4 |
Jannica Fagerholm | Board member | 74.4 | 75.6 |
Piia Karhu | Board member | 55.9 | 57.1 |
Jussi Perälä | Board member | 52.9 | 54.1 |
Toni Pokela | Board member | 52.9 | 54.1 |
Timo Ritakallio | Board member | 57.7 | 58.9 |
Total | 12,081.6 | 15,156.0 |
95
5.3 Share-based compensation
96
As of 1.1.2018 cash-settled share-based payments for which the employer shall deduct,
on behalf of the employee, from the share award such number of shares which covers taxes
and tax-like charges paid in cash, shall be classified in their entirety as equity-settled share-
based payments.
Share-based commitment and incentive scheme
The purpose of the share-based compensation schemes is to promote Kesko's business
and increase the Company's value by aligning the objectives of the shareholders and
executives. The schemes also aim to commit the grantees to Kesko Group and give them the
opportunity to receive Company shares upon fulfilling the objectives set in the share-based
compensation plan.
The impact of the share-based compensation plans on the Group's profit for 2023 was
€-8.1 million (€-10.6 million).
As at 31 December 2023, the amount to be recognised as expense for the financial years
2024−2026 is estimated at a total of €8.6 million. The actual amount may differ from
the estimate.
The performance Share Plan (PSP)
PSP plan is a share-award plan that consists of individual annually commencing share plans,
each with a two-year performance period and a two-year commitment period following the
payment of the potential share award. Kesko's Board decides annually whether to initiate a
new plan. During the commitment period, the shares cannot be pledged or transferred, but
the other rights attached to the shares remain in force. If a person's employment or service
relationship terminates prior to the expiry of a commitment period, the person must, as a rule,
return the shares under transfer restriction to Kesko or its designate for no consideration.
The number of shares granted based on the share-based compensation plan represents
gross earnings, from which the applicable withholding tax is deducted and the remaining net
amount is paid to the participants in shares. Kesko Group's tax free sales (%), Kesko Group's
comparable return on capital employed (ROCE, %) and the absolute total shareholder return
(TSR, %) of a Kesko B share are the performance criteria for the PSPs initiated during 2020–
2021. In addition, the target measuring Kesko's sustainability, is included as the performance
criteria for the PSP plan initiated from 2022 onwards.
| PSP | PSP | PSP | PSP | |
| Assumptions for share award calculations | 2023–2026 | 2022–2025 | 2021–2024 | 2020–2023 |
Grant dates | 1.2.2023 | 2.2.2022 | 2.2.2021 | 4.2.2020 |
Grant date fair value of share award, € | 20.56 | 27.71 | 21.01 | 14.85 |
Share price at grant date, € | 21.64 | 28.77 | 21.76 | 15.48 |
Shares transferred in Number of share awards granted, | 2025 | 2024 | 2023 | 2022 |
maximum, pcs* | 651,430 | 517,350 | 646,970 | 842,850 |
Changes in the number of shares granted, pcs | -121,890 | -31,725 | -100,950 | -116,200 |
Actual amount of share award, pcs* | - | - | 409,515 | 655,729 |
Number of plan participants at end of financial year | 59 | 60 | 49 | 46 |
Share price at balance sheet date, € | 17.93 | 20.62 | 29.34 | 21.04 |
Fulfilment of performance criteria, % | - | - | 75.0 | 90.0 |
| Estimated number of share awards returned | ||||
prior to the end of commitment period, % | 2.5 | 2.5 | 2.5 | 2.5 |
*Gross number of shares from which the applicable withholding tax is deducted and the remaining net amount is paid
in shares.
The performance-based share award plan Key Personnel Share Plan (KPSP)
and Restricted Share Pool (RSP)
KPSP plan consists of individual annually commencing share plans, each with a one-year
performance period and a two-year commitment period. Kesko's Board decides annually
whether to initiate a new plan. The number of shares granted based on the share-based
compensation plan represents gross earnings, from which the applicable withholding tax is
deducted and the remaining net amount is paid to the participants in shares. The performance
criteria for the KPSP comprise indicators related to Kesko's profitability and the profitability,
growth and capital efficiency of the participant's area of responsibility, and Kesko's
share performance.
RSP is a secondary share plan for special situations, to be decided upon separately. The
plan consists of annually commencing individual share plans that each have a three-year
commitment period, after which the potentially promised share awards for an individual plan
will be paid to the participants, provided that their employment or service relationship with
Kesko Group continues until the payment of the awards. The number of shares granted based
97
| KPSP and | KPSP and | KPSP and | KPSP and | |
| Assumptions for share award calculations | RSP 2023 | RSP 2022 | RSP 2021 | RSP 2020 |
Grant dates | 1.2.2023 | 2.2.2022 | 2.2.2021 | 4.2.2020 |
Grant date fair value of share award, € | 20.56 | 27.71 | 21.01 | 14.85 |
Share price at grant date, € | 21.64 | 28.77 | 21.76 | 15.48 |
Shares transferred in Number of share awards granted, | 2026 | 2025 | 2024 | 2023 |
maximum, pcs* | 293,850 | 214,980 | 256,769 | 291,700 |
Changes in the number of shares granted, pcs | -8,500 | -14,610 | -23,612 | -54,370 |
Actual amount of share award, pcs* | - | 88,246 | 191,450 | 209,320 |
Number of plan participants at end of financial year | 161 | 139 | 126 | 83 |
Share price at balance sheet date, € | 17.93 | 20.62 | 29.34 | 21.04 |
Fulfilment of performance criteria, % | - | 21.9 | 89.3 | 82.0 |
| Estimated number of share awards returned | ||||
prior to the end of commitment period, % | 2.5 | 2.5 | 2.5 | 2.5 |
5.4 Legal disputes and possible legal proceedings
Group companies act as plaintiffs, defendants or parties to certain legal proceedings, disputes
or investigations related to the Group’s business operations. Although according to Kesko’s
management's estimate, the outcome of pending disputes and legal and authority proceedings
is unlikely to have any material impact on the Group's financial position, the outcome of
disputes and legal and authority proceedings is difficult to predict.
Investigation by the Finnish Competition and Consumer Authority regarding Onninen Oy
– The Finnish Competition and Consumer Authority has been investigating Kesko Group
company Onninen’s suspected violation of competition law for almost 10 years, and finally
decided on 8 September 2022 to take the matter to the Market Court. The investigation has
concerned a wide range of companies operating in the HPAC infra plastic pipe product market
in Finland. The FCCA proposes a penalty payment of €16 million for Onninen for the alleged
infringement. The suspected violation concerns almost in its entirety a period of time before
Kesko acquired the capital stock of Onninen from Onvest Oy on 1 June 2016. Consequences
resulting to Onninen from the investigation were addressed in the acquisition terms and
conditions. Onninen denies the FCCA claims of suspected violation of competition law as
unfounded. Kesko is not suspected of participation in the alleged infringement.
Legal proceedings concerning UAB Kesko Senukai Lithuania – Kesko has disclosed, for
example in its financial statements 2022, that it was party to an arbitration and a legal
proceeding concerning the shareholder agreement of Kesko’s joint venture UAB Kesko
Senukai Lithuania and the disagreements concerning the management and development of
the company and its subsidiary. The other parties to these legal proceedings have included,
for example, the minority shareholders of UAB Kesko Senukai Lithuania. The arbitration
process ended during 2023 and the judgement given is final. In the legal proceeding
concerning the annulation and reversal of the arbitral award issued in 2022, the District Court
of Helsinki gave its decision in 2023. The opposing parties have appealed the District Court
decision to the Helsinki Court of Appeal, where the matter is pending.
5.5 Events after the balance sheet date
Kesko announced in August 2023 it would expand its operations to Denmark by acquiring
90% of Davidsen Koncernen A/S. In January 2024, the EU Commission approved the
acquisition, and it is expected to be completed by the end of January 2024.
Kesko is set to withdraw from operating the Neste K service stations. Kesko is currently
responsible for the grocery trade operations and additional services at Neste K stations.
Kesko plans to withdraw from operating 64 Neste K service stations by the end of 2024.
The stations will continue as a service offered by Neste. Kesko’s motive is that role of grocery
trade at service stations has diminished.
98
PARENT COMPANY'S FINANCIAL STATEMENTS (FAS)
Parent company's income statement
€ 1 Jan.–31 Dec. 2023 1 Jan.–31 Dec. 2022
Net sales 6,662,223,788.54 6,620,483,911.52
Other operating income 898,211,500.06 896,343,273.82
Materials and services -5,893,409,138.14 -5,922,332,251.39
Change in inventory -23,008,211.48 57,389,050.87
Employee benefit expenses -384,770,788.96 -348,288,605.22
Depreciation, amortisation and impairment -113,486,865.95 -102,891,749.91
Other operating expenses -754,854,973.67 -741,397,846.78
Operating profit 390,905,310.40 459,305,782.91
Finance income and costs 160,251,693.28 63,839,871.87
Profit before appropriations and taxes 551,157,003.68 523,145,654.78
Appropriations
Change in depreciation reserve -23,549,009.97 -28,327,302.66
Group contribution 64,919,581.06 -3,441,910.30
Profit before taxes 592,527,574.77 491,376,441.82
Income taxes -82,909,736.55 -82,450,821.94
Profit for the financial year 509,617,838.22 408,925,619.88
99
Parent company's balance sheet
€ 31 Dec. 2023 31 Dec. 2022
ASSETS
NON-CURRENT ASSETS
INTANGIBLE ASSETS
Intangible rights 5,125,872.64 5,467,058.98
Other intangible assets 219,153,791.56 196,023,659.20
Prepayments 4,150,302.51 8,843,638.88
228,429,966.71 210,334,357.06
PROPERTY, PLANT AND EQUIPMENT
Land and waters
Owned 277,174,152.62 247,306,198.38
Leasehold interests and connection fees 7,289,059.93 6,656,847.26
Buildings
Owned 658,740,908.91 556,902,410.32
Machinery and equipment 88,443,233.36 97,574,724.25
Other tangible assets 6,341,067.34 6,489,657.89
Prepayments and construction in progress 113,022,536.55 87,473,806.60
1,151,010,958.71 1,002,403,644.70
INVESTMENTS
Investments in subsidiaries 1,281,768,095.60 1,080,275,454.12
Investments in associates 121,462,239.85 113,989,719.85
Other investments 24,693,492.49 23,741,379.16
1,427,923,827.94 1,218,006,553.13
CURRENT ASSETS
INVENTORIES
Finished products/goods 302,380,900.60 325,389,112.08
302,380,900.60 325,389,112.08
€ 31 Dec. 2023 31 Dec. 2022
RECEIVABLES
Long-term
Receivables from subsidiaries 34,933,925.92 80,431,580.19
Receivables from associates 61,386,166.16 64,758,166.16
Loan receivables 1,071,723.22 198,289.59
Other receivables 10,320,055.51 10,120,166.55
107,711,870.81 155,508,202.49
Short-term
Trade receivables 401,544,346.37 408,603,965.96
Receivables from subsidiaries 419,460,312.16 458,263,141.09
Receivables from associates 9,491,959.99 25,277,501.01
Loan receivables 276,310.07 415,425.56
Other receivables 12,647,229.78 7,034,007.06
Prepayments and accrued income 89,145,137.15 122,462,451.29
932,565,295.52 1,022,056,491.97
OTHER FINANCIAL ASSETS - 35,826,114.02
CASH AND CASH EQUIVALENTS 200,012,586.12 229,888,894.55
TOTAL ASSETS 4,350,035,406.41 4,199,413,370.00
100
€ 31 Dec. 2023 31 Dec. 2022
EQUITY AND LIABILITIES
CAPITAL AND RESERVES
Share capital 197,282,584.00 197,282,584.00
Share premium 197,498,010.90 197,498,010.90
Reserve of invested non-restricted equity 22,753,307.40 22,753,307.40
Other reserves 243,415,795.55 243,415,795.55
Retained earnings 808,916,472.00 823,451,129.66
Profit for the financial year 509,617,838.22 408,925,619.88
1,979,484,008.07 1,893,326,447.39
APPROPRIATIONS
Depreciation reserve 206,658,990.11 183,109,980.14
PROVISIONS
Provisions 2,017,574.84 2,238,581.83
LIABILITIES
Non-current
Loans from financial institutes 650,000,000.00 200,000,000.00
Pension loans 32,349,000.00 44,343,000.00
Other creditors 19,001,617.22 10,372,880.37
701,350,617.22 254,715,880.37
Current
Pension loans 11,994,000.00 11,994,000.00
Advances received 31,541,172.75 26,638,337.94
Trade payables 739,185,366.57 745,126,341.50
Payables to subsidiaries 262,814,413.54 516,685,528.79
Payables to associates 5,728,650.62 5,621,438.75
Other payables 183,827,426.62 328,588,060.01
Accruals and deferred income 225,433,186.07 231,368,773.28
1,460,524,216.17 1,866,022,480.27
TOTAL LIABILITIES 4,350,035,406.41 4,199,413,370.00
101
Parent company's cash flow statement
€ 1 Jan.–31 Dec. 2023 1 Jan.–31 Dec. 2022
Cash flows from operating activities
Profit before appropriations 551,153,503.68 523,145,654.78
Adjustments
Depreciation according to plan 113,486,865.95 102,891,749.91
Finance income and costs -160,251,693.28 -63,839,871.87
Other adjustments -7,413,552.15 -51,392,533.62
496,975,124.20 510,804,999.20
Change in working capital
Current non-interest-bearing receivables,
increase (-)/decrease (+) 27,535,297.96 -38,448,516.52
Inventories increase (-)/decrease (+) 23,008,211.48 -57,389,050.87
Current non-interest-bearing liabilities,
increase (+)/decrease (-) -19,265,630.51 56,750,795.21
31,277,878.93 -39,086,772.18
Interests paid and other finance costs -44,423,936.93 -14,410,293.32
Interests received 34,714,965.24 16,608,267.52
Dividends received 168,684,828.28 66,587,990.30
Income tax paid -58,598,511.77 -110,101,405.44
100,377,344.82 -41,315,440.94
Net cash generated from operating activities 628,630,347.95 430,402,786.08
Cash flows from investing activities
Purchases of property, plant, equipment
and intangible assets -416,858,310.90 -268,739,614.55
Acquisitions of subsidiaries -96,464,969.71 -27,133,141.86
Sales of subsidiaries, net of cash - 5,987,807.94
Investments in other investments - -1,000.00
Proceeds from other investments 71,393.23 363,780.00
Proceeds from disposal of property, plant,
equipment and intangible assets 364,804.87 135,466.99
Long-term receivables, increase (-)/decrease (+) 48,113,571.58 11,569,386.96
Other financial assets, increase (-)/decrease (+) 35,826,114.02 38,945,717.30
Net cash used in investing activities -428,947,396.91 -238,871,597.22
€ 1 Jan.–31 Dec. 2023 1 Jan.–31 Dec. 2022
Cash flows from financing activities
Interest-bearing liabilities,
increase (+)/decrease (-) 86,878,735.01 226,769,185.97
Dividends paid 34,350,288.54 -44,199,882.78
Group contributions received and paid -430,315,181.18 -406,670,233.05
Other items 64,919,581.06 -3,441,910.30
Net cash used in financing activities 14,600,317.10 -3,394,705.32
Net cash used in financing activities -229,566,259.47 -230,937,545.48
Change in cash and cash equivalents -29,876,308.43 -39,406,356.62
Cash and cash equivalents as at 1 Jan. 229,888,894.55 269,250,914.39
Impairment of financial assets at fair value
through profit or loss - 44,336.78
Cash and cash equivalents as at 31 Dec. 200,012,586.12 229,888,894.55
102
Notes to the parent company's financial statements
Note 1. Principles used for preparing the financial statements
Kesko Corporation's financial statements have been prepared in compliance with the Finnish
Accounting Standards (FAS).
Non-current assets
Intangible assets
Intangible assets are stated in the balance sheet at cost less depreciation according to plan
and possible amortisations.
Depreciation plan
Other capitalised expenditure 5−10 years
IT software and licences 3−5 years
Property, plant and equipment
Property, plant and equipment are stated in the balance sheet at cost less depreciation
according to plan and possible amortisations.
Depreciation plan
Depreciation according to plan is calculated on a straight line basis so as to write off the cost
of property, plant and equipment over their estimated useful lives.
The most common estimated useful lives are:
Buildings 10–33 years
Fixtures and fittings 8 years
Machinery and equipment 25% reducing balance method,
from 1st January 2023 8 years
Warehouse automation equipment 10 years
Transportation fleet 5 years
IT equipment 3–8 years
Other tangible assets 5−14 years
Leasehold interests are depreciated during their likely lease period. Land and connection
fees have not been depreciated. The total of depreciation according to plan and the change
in depreciation reserve comply with the Finnish Business Tax Act. The change in depreciation
reserve has been treated as appropriations.
Valuation of inventories
Inventories are stated, using the moving-average cost method, at lower of direct purchase
cost, replacement cost and probable selling price.
Valuation of financial assets
Marketable securities have been valued at the lower of cost and net realisable value.
Foreign currency items
Foreign currency transactions have been recorded in euros using the rate of exchange at the
date of transaction. Foreign currency receivables and payables have been translated into
euros using the rate of exchange at the balance sheet date. If a receivable or a payable is tied
to a fixed rate of exchange, it has been used for translation. Exchange rate differences have
been recognised in profit or loss.
Derivative contracts
Interest rate derivatives
Interest rate derivatives are used to modify the durations of borrowings. The target duration
is between 1 and 4 years. Cash flows arising from interest rate derivatives are recognised
during the financial year as interest income or expenses, according to the maturity date. In
the financial statements, outstanding interest rate forward contracts, interest rate future
contracts, interest rate option contracts and interest rate swap contracts are stated at fair
value, but unrealised revaluation is not stated as income. Any valuation losses are included in
interest expenses.
Foreign currency derivatives
Foreign currency derivatives are used for hedging against translation and transaction risks.
Foreign currency derivatives are used for hedging against commercial foreign exchange
risk. Foreign exchange forward contracts are valued using the forward exchange rate of the
balance sheet date. The exchange differences arising from outstanding derivative contracts
103
are reported in financial items and adjustment items of sales and purchases. If a derivative has
been used for hedging a foreign-currency-denominated asset, the change in value has been
recognised against that of the asset item. The premiums of option contracts are included in
the balance sheet accruals until they expire, or if a value change at the balance sheet date so
requires, recognition in profit or loss.
Commodity derivatives
Ankkuri-Energia Oy, a Kesko Corporation subsidiary, uses electricity derivatives to balance
the energy costs of the Group and its retailers. Kesko Corporation is an external counterparty
in electricity derivatives with a bank, and enters into corresponding internal hedge with
Ankkuri-Energia Oy. At no stage does Kesko Corporation have derivative positions, and thus
there are no effects on profit or loss. The electricity price risk is reviewed on a 5-year time
span. With respect to derivatives hedging the price of electricity supplied during the financial
year, change in fair value is recognised at Kesko under finance income and cost. Unrealised
gains and losses on contracts hedging future purchases are not recognised in profit or loss.
Pension plans
Personnel's statutory pension provision is organised through pension insurance companies
and the voluntary supplementary pension provision is mainly organised through Kesko
Pension Fund. Pension costs are recognised as expense in the income statement.
Provisions
Provisions stated in the balance sheet include items committed to under agreements or
otherwise but not yet realised. Changes in provisions are included in the income statement.
Rent liabilities for vacant rented premises no longer used for the Group's business operations,
as well as losses resulting from renting the premises to third parties, are included in provisions.
Income tax
Income tax includes the income tax payments for the period calculated based on the profit for
the period, and taxes payable for prior periods, or tax refunds. Deferred taxes are not included
in the parent company's income statement and balance sheet.
Notes to the income statement
Note 2. Net sales by division
€ million 2023 2022
Grocery trade 5,724.6 5,493.9
Building and home improvement trade 937.7 1,126.6
Others 0.0 0.0
Total 6,662.2 6,620.5
Note 3. Material and services
€ million 2023 2022
Material and services -5,782.8 -5,811.6
Change in inventory -23.0 57.4
External services -110.6 -110.7
Total -5,916.4 -5,864.9
Note 4. Other operating income
€ million 2023 2022
Gains on sales of real estate and shares 0.2 0.0
Rent income 99.4 90.9
Fees for services 580.6 576.7
Profits from mergers 26.1 28.4
Others 192.0 200.3
Total 898.2 896.3
104
Note 5. Employee benefit expenses
€ million 2023 2022
Salaries and fees -316.5 -322.4
Social security costs
Pension costs -56.7 -13.8
Other social security costs -11.5 -12.1
Total -384.8 -348.3
The 2022 pension costs include a €40.3 million return of surplus assets by Kesko Pension Fund.
The average number of personnel at Kesko Corporation was 7,402 (7,308) people.
Salaries and fees to the management
€ million 2023 2022
Managing Director 3.4 4.9
Members of the Board of Directors 0.5 0.5
Total 3.8 5.4
An analysis of the management's salaries and fees is included in the notes to the consolidated
financial statements.
Note 6. Depreciation, amortisation and impairment
€ million 2023 2022
Depreciation according to plan -113.0 -102.2
Impairment, non-current assets -0.5 -0.7
Total -113.5 -102.9
Note 7. Other operating expenses
€ million 2023 2022
Rent expenses -350.6 -327.9
Marketing expenses -152.7 -152.0
Maintenance of real estate and store sites -102.8 -105.6
Losses on disposals of non-current assets -0.0 0.0
ICT expenses -78.0 -87.7
Losses from mergers -11.8 -6.8
Other operating expenses -58.9 -61.5
Total -754.9 -741.4
Auditors' fees
€ million 2023 2022
Audit firm Deloitte
Audit 0.4 0.4
Tax consultation - 0.0
Other services 0.2 0.1
Total 0.5 0.5
105
Note 8. Finance income and costs
€ million 2023 2022
Income from long-term investments
Dividend income from subsidiaries 146.7 39.5
Dividend income from associates 19.6 26.9
Dividend income from others 2.3 0.1
Gains on disposal of shares - 0.0
Gains on sales of investments 0.4 0.0
Income from long-term investments, total 169.0 66.6
Other interest and finance income
From subsidiaries 24.0 8.9
From others 21.9 22.9
Interest and finance income, total 45.9 31.8
Impairment of investments held as non-current assets
Impairment of shares - 0.3
Changes in fair value 0.1 0.0
Impairment and changes in fair value of investments held as
non-current assets, total 0.1 0.3
Interest and other finance costs
To subsidiaries -20.5 -11.4
To others -34.2 -23.5
Interest and finance costs, total -54.7 -34.9
Total 160.2 63.8
Note 9. Appropriations
€ million 2023 2022
Difference between depreciation according to plan and
depreciation in taxation -23.5 -28.3
Group contributions received 88.9 36.9
Group contributions paid -24.0 -40.4
Total 41.4 -31.8
As of the 2020 financial year, an increased 50% depreciation on machinery and equipment and
similar fixed assets acquired has been made in compliance with the Finnish Business Tax Act.
Note 10. Changes in provisions
€ million 2023 2022
Other changes -0.2 0.2
Total -0.2 0.2
Note 11. Income taxes
€ million 2023 2022
Income taxes on group contributions -13.0 0.7
Income taxes on ordinary activities -69.8 -82.5
Taxes for prior years -0.1 -0.6
Total -82.9 -82.5
Note 12. Deferred taxes
Deferred tax assets and liabilities have not been recorded on the balance sheet. The deferred
tax liability on accumulated appropriations is €41.3 million. The amount of other deferred tax
liabilities or assets is not material.
106
Note 14. Property, plant and equipment
€ million 2023 2022
Land and waters, owned
Acquisition cost as at 1 Jan. 247.3 224.3
Increases 27.3 20.1
Transferred in mergers 1.9 2.4
Decreases -0.1 -
Transfers between items 0.8 0.5
Acquisition cost as at 31 Dec. 277.2 247.3
Book value as at 31 Dec. 277.2 247.3
Land and waters, leasehold interests
Acquisition cost as at 1 Jan. 7.1 1.6
Increases 0.4 5.5
Transferred in mergers 0.1 -
Transfers between items 0.2 0.0
Acquisition cost as at 31 Dec. 7.8 7.1
Accumulated depreciation as at 1 Jan. -0.5 -0.4
Depreciation for the financial year -0.0 0.0
Accumulated depreciation as at 31 Dec. -0.5 -0.5
Book value as at 31 Dec. 7.3 6.7
Buildings
Acquisition cost as at 1 Jan. 942.5 821.1
Increases 84.8 88.2
Transferred in mergers 8.7 13.9
Decreases - -0.4
Transfers between items 48.2 19.7
Acquisition cost as at 31 Dec. 1,084.3 942.5
Accumulated depreciation as at 1 Jan. -385.6 -352.3
Transferred in mergers -2.0 -3.3
Accumulated depreciation on decreases and transfers 0.0 0.0
Depreciation for the financial year -37.9 -30.1
Accumulated depreciation as at 31 Dec. -425.5 -385.6
Book value as at 31 Dec. 658.7 556.9
Notes to the balance sheet
Note 13. Intangible assets
€ million 2023 2022
Intangible rights
Acquisition cost as at 1 Jan. 16.5 16.3
Increases 1.3 1.1
Decreases -1.0 -2.8
Transfers between items 0.0 1.9
Acquisition cost as at 31 Dec. 16.9 16.5
Accumulated depreciation as at 1 Jan. -11.1 -12.3
Accumulated depreciation on decreases and transfers 1.0 2.8
Depreciation and amortisations for the financial year -1.7 -1.6
Accumulated depreciation as at 31 Dec. -11.8 -11.1
Book value as at 31 Dec. 5.1 5.5
Other intangible assets
Acquisition cost as at 1 Jan. 405.2 369.9
Increases 49.9 48.9
Decreases -5.8 -31.1
Transfers between items 19.1 17.5
Acquisition cost as at 31 Dec. 468.4 405.2
Accumulated depreciation as at 1 Jan. -209.2 -197.7
Accumulated depreciation on decreases and transfers 5.8 31.1
Depreciation and amortisations for the financial year -45.9 -42.6
Accumulated depreciation as at 31 Dec. -249.2 -209.2
Book value as at 31 Dec. 219.2 196.0
Prepayments
Acquisition cost as at 1 Jan. 8.8 12.6
Increases 2.5 7.0
Decreases -0.0 -0.1
Transfers between items -7.2 -10.7
Acquisition cost as at 31 Dec. 4.2 8.8
Book value as at 31 Dec. 4.2 8.8
107
€ million 2023 2022
Machinery and equipment
Acquisition cost as at 1 Jan. 311.1 295.1
Increases 14.8 32.0
Transferred in mergers 0.1 0.0
Decreases -17.8 -19.6
Transfers between items 3.0 3.6
Acquisition cost as at 31 Dec. 311.2 311.1
Accumulated depreciation as at 1 Jan. -213.5 -206.1
Transferred in mergers -0.1 0.0
Accumulated depreciation on decreases and transfers 17.1 19.2
Depreciation for the financial year -26.3 -26.6
Accumulated depreciation as at 31 Dec. -222.7 -213.5
Book value as at 31 Dec. 88.4 97.6
Other tangible assets
Acquisition cost as at 1 Jan. 23.3 21.2
Increases 0.4 1.2
Transferred in mergers 0.1 -
Transfers between items 0.7 1.0
Acquisition cost as at 31 Dec. 24.4 23.3
Accumulated depreciation as at 1 Jan. -16.8 -15.6
Transferred in mergers -0.1 -
Depreciation for the financial year -1.2 -1.2
Accumulated depreciation as at 31 Dec. -18.1 -16.8
Book value as at 31 Dec. 6.3 6.5
Prepayments and construction in progress
Acquisition cost as at 1 Jan. 87.5 45.7
Increases 92.1 76.4
Decreases -1.6 -1.0
Transfers between items -64.9 -33.6
Acquisition cost as at 31 Dec. 113.0 87.5
Book value as at 31 Dec. 113.0 87.5
Note 15. Investments
€ million 2023 2022
Investments in subsidiaries
Acquisition cost as at 1 Jan. 1,093.9 1,080.5
Increases 229.2 42.5
Decreases -27.7 -29.1
Acquisition cost as at 31 Dec. 1,295.4 1,093.9
Impairment as at 1 Jan. -13.6 -27.7
Accumulated impairments on decreases - 14.1
Impairment as at 31 Dec. -13.6 -13.6
Book value as at 31 Dec. 1,281.8 1,080.3
Investments in associates
Acquisition cost as at 1 Jan. 114.0 111.7
Increases 7.5 2.3
Book value as at 31 Dec. 121.5 114.0
Other investments
Acquisition cost as at 1 Jan. 23.7 15.2
Increases 1.0 8.5
Transferred in mergers 0.0 -
Decreases -0.1 -0.0
Transfers between items 0.1 0.0
Acquisition cost as at 31 Dec. 24.7 23.7
Book value as at 31 Dec. 24.7 23.7
An analysis of Kesko Corporation's ownership interests in other companies as at 31 December
2023 is presented in the notes to the consolidated financial statements.
108
Note 16. Receivables
Receivables from subsidiaries
€ million 2023 2022
Long-term receivables
Loan receivables 34.9 80.4
Long-term receivables, total 34.9 80.4
Short-term receivables
Trade receivables 10.3 9.9
Loan receivables 380.0 418.9
Prepayments and accrued income 29.2 29.5
Short-term receivables, total 419.5 458.3
Total 454.4 538.7
Receivables from associates and joint ventures
€ million 2023 2022
Long-term receivables
Loan receivables 61.4 64.7
Other receivables 0.0 0.0
Long-term receivables, total 61.4 64.8
Short-term receivables
Accrued income 1.0 21.7
Other receivables 8.5 3.6
Short-term receivables, total 9.5 25.3
Total 70.9 90.0
Kesko Corporation has advanced a long-term loan to its associated company, Mercada Oy,
in the amount of €56.0 million and to its joint venture, UAB Kesko Senukai, in the amount of
€3.8 million.
Prepayments and accrued income
€ million 2023 2022
Taxes - 20.9
Fees for services 5.5 6.0
Employee benefit expenses 6.6 7.6
Purchases 31.1 34.1
Others 45.9 53.8
Total 89.1 122.5
Note 17. Shareholders' equity
€ million
Share
capital
Share
premium
Contin-
gency
fund
Reserve of
invested
non-
restricted
equity
Retained
earnings
Total
equity
Balance as at
1 January 2022 197.3 197.5 243.4 22.8 1,236.0 1,897.0
Dividends -421.3 -421.3
Treasury shares 8.7 8.7
Profit for the year 408.9 408.9
Balance as at
31 December 2022 197.3 197.5 243.4 22.8 1,232.4 1,893.3
Dividends -429.6 -429.6
Treasury shares 6.1 6.1
Profit for the year 509.6 509.6
Balance as at
31 December 2023 197.3 197.5 243.4 22.8 1,318.5 1,979.5
Restricted equity 2023 2022
Share capital 197.3 197.3
Share premium 197.5 197.5
Total 394.8 394.8
109
Non-restricted equity 2023 2022
Contingency fund 243.4 243.4
Reserve of invested non-restricted equity 22.8 22.8
Retained earnings 1,318.5 1,232.4
Total 1,584.7 1,498.5
Calculation of distributable profits 2023 2022
Other reserves 266.2 266.2
Retained earnings 808.9 823.5
Profit for the year 509.6 408.9
Total 1,584.7 1,498.5
On 31 December 2023, Kesko’s distributable assets totalled €1,584,703,413.17.
Breakdown of parent company shares Pcs
A shares 126,948,028
B shares 273,130,980
Total 400,079,008
Votes attached to shares Number of votes
A share 10
B share 1
Board's authorisations to acquire and issue own shares
Authorised by the General Meeting, the Board acquired a total of 500,000 of the Company’s
own B shares during the 2018 financial year. The Board also acquired a total of 1,200,000 of
the Company’s own B shares during the financial years 2011 and 2014. The shares are held
by the Company as treasury shares and the Board is entitled to transfer them. The acquisition
cost of the B shares held by the Company and acquired during the 2018 financial year was
€24.4 million, and the acquisition cost of shares acquired during the 2011 and 2014 financial
years was €23.5 million. These costs have been deducted from retained earnings in equity.
The Board has an authorisation, granted by the Annual General Meeting of 30 March 2023
and valid until 30 June 2024, to issue a maximum of 33,000,000 B shares and acquire a
maximum of 16,000,000 B shares.
Treasury shares
On 2 May 2023, Kesko Corporation transferred a total of 6,000 of its own B shares
(KESKOB) held by the Company as treasury shares to the members of Kesko’s Board of
Directors. The transfer was based on the resolution made by the Annual General Meeting on
30 March 2023 to pay a portion of the Board members’ annual fees in Kesko B shares.
Shares
Own B shares held by the Company as at 31 Dec. 2022 2,620,361
Transferred, share-based compensation scheme -304,864
Transferred, Board of Directors -6,000
Returned during the financial year -
Own B shares held by the Company as at 31 Dec. 2023 2,309,497
Note 18. Provisions
€ million 2023 2022
Provisions for leases 1.4 1.7
Other provisions 0.6 0.5
Total 2.0 2.2
Note 19. Non-current liabilities
Kesko has drawn down five bilateral loans, which combined total €650 million. The interest
margin of these loans accounts for Kesko’s sustainability targets for its carbon footprint and
food waste, and in the value chain, emission reduction targets set by Kesko’s direct suppliers
of goods and services.
110
Note 20. Current liabilities
€ million 2023 2022
Liabilities to subsidiaries
Trade payables 7.6 6.8
Other payables 11.4 25.1
Accruals and deferred income 243.7 484.9
Total 262.8 516.7
Liabilities to associates
Trade payables 0.0 0.1
Accruals and deferred income 0.0 0.0
Other payables 5.6 5.5
Total 5.7 5.6
Accruals and deferred income
Employee benefit expenses 108.5 111.7
Accruals and deferred income from purchases 20.0 25.2
Taxes 4.2 0.8
Transaction prices 0.4 0.0
Fees for services 16.9 17.8
Others 75.5 75.9
Total 225.4 231.4
Note 21. Non-interest-bearing liabilities
€ million 2023 2022
Current liabilities 1,141.4 1,157.4
Total 1,141.4 1,157.4
Note 22. Guarantees, commitments and contingencies
€ million 2023 2022
Real estate mortgages
For own debt 162.1 159.8
For subsidiaries 0.7 0.7
Pledged shares 9.0 9.5
Guarantees
For own debt 0.5 0.5
For subsidiaries 70.9 70.9
Other liabilities and liability engagements
For own debt 49.4 40.5
Rent liabilities on machinery and fixtures
Due within a year 7.1 6.5
Due later 7.0 6.3
Rent liabilities on real estate
Due within a year 306.6 256.2
Due later 1,597.9 1,254.5
Foreign currency risks
The result of the Company's operating activities is affected by the amount of working capital
financing granted by the Company to its foreign subsidiaries and in part also, in its capacity as
the Group's parent company, the subsidiaries' hedgings against their parent.
The foreign currency exposure is hedged using foreign currency derivatives in accordance
with the confirmed foreign currency risk policy. The fair value of foreign currency derivatives
is calculated by measuring them based on quoted market prices at the balance sheet date.
The measurement of derivatives is based on direct market data, in other words, they are
classified at level 2. The maximum credit risk of these derivatives corresponds to their fair
value at the balance sheet date.
The results of derivatives are recognised in financial items.
111
Company's transaction exposure
as at 31 Dec. 2023
€ million USD SEK NOK PLN
Transaction risk -4.8 58.4 54.4 -11.2
Hedging derivatives 17.2 -47.3 -42.3 5.1
Exposure 12.4 11.1 12.1 -6.1
Company's transaction exposure
as at 31 Dec. 2022
€ million USD SEK NOK PLN
Transaction risk -5.5 75.2 26.6 10.8
Hedging derivatives 23.4 -56.2 -20.9 -10.7
Exposure 17.9 19.0 5.6 0.1
The sensitivity analysis of transaction exposure shows the profit impact of a +/-10% exchange
rate change on the Company's foreign currency denominated acquisitions and hedging
foreign currency derivatives.
Sensitivity analysis, impact on pre-tax profit
as at 31 Dec. 2023
€ million USD SEK NOK PLN
Change +10% -1.1 -1.0 -1.1 0.6
Change -10% 1.4 1.2 1.3 -0.7
Sensitivity analysis, impact on pre-tax profit
as at 31 Dec. 2022
€ million USD SEK NOK PLN
Change +10% -1.6 -1.7 -0.5 0
Change -10% 2.0 2.1 0.6 0
Derivatives
Fair values of derivative
contracts
€ million
31 Dec. 2023
Positive fair
value (balance
sheet value)
31 Dec. 2023
Negative fair
value (balance
sheet value)
31 Dec. 2022
Positive fair
value (balance
sheet value)
31 Dec. 2022
Negative fair
value (balance
sheet value)
Currency derivatives 0.4 -1.8 2.6 -0.7
Interest rate derivatives 14.8 -8.5 12.2 -0.1
Notional amounts of
derivative contracts
€ million 31 Dec. 2023 Notional amount 31 Dec. 2022 Notional amount
Currency derivatives 133.0 153.3
Interest rate derivatives 530.0 330.0
All currency derivatives mature in 2024. Interest rate derivatives mature in 2024, 2025,
2026 and 2027.
€ million 2023 Fair value 2022 Fair value
Liabilities arising from
derivative instruments
Values of underlying
instruments as at 31 Dec.
Interest rate derivatives
Interest rate swaps 530 6.3 330 12.1
Foreign currency derivatives
Forward and future contracts 133 -1.3 153 1.9
Outside the Group 125 -1.6 142 1.8
Inside the Group 8 0.2 12 0.1
Commodity derivatives
Electricity derivatives 79 - 139 -
Outside the Group 39 5.7 70 44.2
Inside the Group 39 -5.7 70 -44.2
Note 23. Cash and cash equivalents within
the statement of cash flows
€ million 2023 2022
Financial assets at fair value through profit or loss - 0.0
Available-for-sale financial assets 3.3 17.0
Cash and cash equivalents 196.7 212.9
Total 200.0 229.9
112
In the statement of cash flows, cash and cash equivalents include those recognised in the
balance sheet and portions of available-for-sale financial assets with maturities of less than
three months from acquisition and also financial assets at fair value through profit and loss.
Note 24. Related parties
Kesko Corporation’s related parties include the company’s management (the Board of
Directors, President and CEO and the Group Management Board) and the companies
controlled by them, their family members and companies controlled by the family members,
the Group’s subsidiaries, associates and joint ventures, and Kesko Pension Fund. The
subsidiaries, associates and joint ventures are listed in a separate note (note 5.2).
Some members of the Kesko Board are K-retailers. Kesko Corporation sells goods and
services to companies controlled by them. Goods and services have been sold to related
parties on normal market terms and conditions and at market prices.
113
SIGNATURES
Signatures for financial statements
and report by the Board of Directors
Helsinki, 29. January 2024
Esa Kiiskinen Peter Fagernäs
Jannica Fagerholm Piia Karhu Jussi Perälä
Toni Pokela Timo Ritakallio Mikko Helander
President and CEO
The Auditor's note
Our auditor's report has been issued today.
Helsinki, 29 January 2024
Deloitte Oy
Jukka Vattulainen
APA
114
115
To the Annual General Meeting of Kesko Oyj
Report on the Audit of Financial Statements
Opinion
We have audited the financial statements of Kesko Oyj (business identity code 0109862-8)
for the year ended 31 December, 2023 The financial statements comprise the consolidated
income statement, statement of comprehensive income, financial position, statement of
cash flows, statement of changes in equity and notes, including material information in
the accounting policies, as well as the parent company’s income statement, balance sheet,
statement of cash flows and notes.
In our opinion
• the consolidated financial statements give a true and fair view of the group’s financial
position, financial performance and cash flows in accordance with International Financial
Reporting Standards (IFRS) as adopted by the EU,
• the financial statements give a true and fair view of the parent company’s financial
performance and financial position in accordance with the laws and regulations governing
the preparation of financial statements in Finland and comply with statutory requirements.
Our opinion is consistent with the additional report submitted to the Audit Committee.
Basis for opinion
We conducted our audit in accordance with good auditing practice in Finland. Our
responsibilities under good auditing practice are further described in the Auditor’s
Responsibilities for the Audit of Financial Statements section of our report.
We are independent of the parent company and of the group companies in accordance with
the ethical requirements that are applicable in Finland and are relevant to our audit, and we
have fulfilled our other ethical responsibilities in accordance with these requirements.
In our best knowledge and understanding, the non-audit services that we have provided to the
parent company and group companies are in compliance with laws and regulations applicable
in Finland regarding these services, and we have not provided any prohibited non-audit
services referred to in Article 5(1) of regulation (EU) 537/2014.
The non-audit services that we have provided have been disclosed in note 2.5 to the
consolidated financial statements.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a
basis for our opinion.
Key audit matters
Key audit matters are those matters that, in our professional judgment, were of most
significance in our audit of the financial statements of the current period. These matters were
addressed in the context of our audit of the financial statements as a whole, and in forming
our opinion thereon, and we do not provide a separate opinion on these matters.
We have also addressed the risk of management override of internal controls. This includes
consideration of whether there was evidence of management bias that represented a risk of
material misstatement due to fraud.
AUDITOR’S REPORT (Translation of the Finnish original)
116
Key audit matter How our audit addressed the key audit matter
Impairment testing of Goodwill and trademarks
Refer to Note 3.3 in the consolidated financial
statements of Kesko Oyj.
Consolidated statement of financial position
includes goodwill of EUR 663.7 million (EUR
588.9 million). In addition, consolidated statement
of financial position includes EUR 86.0 million
(EUR 86.8 million) Trademarks.
Goodwill is subject to management’s annual
impairment test. As a result of management’s
goodwill impairment test, no impairment was
identified.
Goodwill impairment testing requires substantial
management judgment over the projected future
business performance, cash flows and applied
discount rate.
Note 3.3 in the Consolidated financial statements
describes key assumptions used by management
and sensitivity analysis for the impairment tests
approved by the Board.
As part of our audit procedures we have assessed
the impairment testing calculations prepared by
management and approved by the board, and
assessed key controls over impairment testing for
each cash generating unit.
The recoverable amounts of the cash-generating
units are determined based on value-in-use
calculations. Estimated cash flows used in these
calculations are based on three-year financial plans
approved by management. The key assumptions
used for the plans are total market growth and
profitability trends, changes in store network,
product and service selection, pricing and
movements in operating costs.
We have assessed the key assumptions used by
management in the Goodwill impairment tests:
• comparing the growth and profitability estimates
to historical performance.
• comparing the estimates with the latest approved
budgets and strategic plans.
• comparing applied discount rates to external
sources.
• testing the mathematical accuracy of the
impairment calculations
We have also assessed the related disclosure
information.
We have no key audit matters to report with respect to our audit of the parent company financial
statements. There are no significant risks of material misstatement referred to in Article 10(2c) of
Regulation (EU) No 537/2014 with respect to the parent company financial statements.
Key audit matter How our audit addressed the key audit matter
Revenue recognition
Refer to accounting policies for the consolidated
financial statements and note 2.1.
Consolidated Net Sales of Kesko Oyj amounted
to EUR 11,783.8 million (EUR 11,809.0 million).
Kesko operates in grocery trade, building and
technical trade, and car trade through wide sales-
and retail network.
Consolidated net sales comprise the sale of
goods, services and energy from contracts with
customers. The share of the of service and energy
sales in total net sales is not significant. The Group
sells products to retailers and other retail dealers
and engages in own retailing.
Net sales is a key business and economic
indicator and consists of a significant volume of
transactions. For this reason, the functionality
of information system controls is emphasised
in revenue recognition. A significant part of
the Kesko Group's net sales is automatically
recognised in accounting through IT systems
based on the fulfilment of the sales performance
obligation.
Revenue recognition due to its significance require
specific attention both from the accounting and
the auditing perspective.
We have evaluated the IT systems related to
revenue recognition by testing access and change
management controls. We also evaluated process
level controls by performing walkthroughs of each
significant class of revenue transactions, assessed
the design of key controls and tested the operating
effectiveness of those controls.
We have analyzed the revenue transactions
recorded to net sales to identify entries
originating from automated processes and entries
from manual journals, and to focus our audit
procedures to transactions estimated as higher risk
transactions.
Our audit procedures to ensure appropriateness
of revenue recognition for sales transaction
population recorded to net sales have consisted
among others, performing comprehensive data
analytics based substantive audit procedures
together with sample based test of details.
We have made a focused risk assessment
for addressing fraud risk relating to revenue
recognition, and identified manual journal entries
by applying data analytics. Based on our revenue
related risk assessment, we have focused our
substantive audit procedures for the transactions
identified to ensure the appropriateness and
accuracy.
117
Responsibilities of the Board of Directors and
the President and CEO for the financial statements
The Board of Directors and the President and CEO are responsible for the preparation
of consolidated financial statements that give a true and fair view in accordance with
International Financial Reporting Standards (IFRS) as adopted by the EU, and of financial
statements that give a true and fair view in accordance with the laws and regulations
governing the preparation of financial statements in Finland and comply with statutory
requirements. The Board of Directors and CEO are also responsible for such internal control
as they determine is necessary to enable the preparation of financial statements that are free
from material misstatement, whether due to fraud or error.
In preparing the financial statements, the Board of Directors and the President and CEO are
responsible for assessing the parent company’s and the group’s ability to continue as going
concern, disclosing, as applicable, matters relating to going concern and using the going
concern basis of accounting. The financial statements are prepared using the going concern
basis of accounting unless there is an intention to liquidate the parent company or the group
or cease operations, or there is no realistic alternative but to do so.
Auditor’s responsibilities in the audit of financial statements
Our objectives are to obtain reasonable assurance on whether the financial statements as
a whole are free from material misstatement, whether due to fraud or error, and to issue an
auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance,
but is not a guarantee that an audit conducted in accordance with good auditing practice will
always detect a material misstatement when it exists. Misstatements can arise from fraud
or error and are considered material if, individually or in aggregate, they could reasonably
be expected to influence the economic decisions of users taken on the basis of the financial
statements.
As part of an audit in accordance with good auditing practice, we exercise professional
judgment and maintain professional skepticism throughout the audit. We also:
• Identify and assess the risks of material misstatement of the financial statements, whether
due to fraud or error, design and perform audit procedures responsive to those risks, and
obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion.
The risk of not detecting a material misstatement resulting from fraud is higher than for
one resulting from error, as fraud may involve collusion, forgery, intentional omissions,
misrepresentations, or the override of internal control.
• Obtain an understanding of internal control relevant to the audit in order to design audit
procedures that are appropriate in the circumstances, but not for the purpose of expressing
an opinion on the effectiveness of the parent company’s or the group’s internal control.
• Evaluate the appropriateness of accounting policies used and the reasonableness of
accounting estimates and related disclosures made by management.
• Conclude on the appropriateness of the Board of Directors’ and the President and
CEO’s use of the going concern basis of accounting and based on the audit evidence
obtained, whether a material uncertainty exists related to events or conditions that may
cast significant doubt on the parent company’s or the group’s ability to continue as a
going concern. If we conclude that a material uncertainty exists, we are required to draw
attention in our auditor’s report to the related disclosures in the financial statements or, if
such disclosures are inadequate, to modify our opinion. Our conclusions are based on the
audit evidence obtained up to the date of our auditor’s report. However, future events or
conditions may cause the company to cease to continue as a going concern.
• Evaluate the overall presentation, structure and content of the financial statements,
including the disclosures, and whether the financial statements represent the underlying
transactions and events so that the financial statements give a true and fair view.
• Obtain sufficient appropriate audit evidence regarding the financial information of the
entities or business activities within the group to express an opinion on the consolidated
financial statements. We are responsible for the direction, supervision and performance of
the group audit. We remain solely responsible for our audit opinion.
We communicate with those charged with governance regarding, among other matters, the
planned scope and timing of the audit and significant audit findings, including any significant
deficiencies in internal control that we identify during our audit.
We also provide those charged with governance with a statement that we have complied
with relevant ethical requirements regarding independence, and communicate with them all
relationships and other matters that may reasonably be thought to bear on our independence,
and where applicable, related safeguards.
From the matters communicated with those charged with governance, we determine those
matters that were of most significance in the audit of the financial statements of the current
118
period and are therefore the key audit matters. We describe these matters in our auditor’s
report unless law or regulation precludes public disclosure about the matter or when, in
extremely rare circumstances, we determine that a matter should not be communicated in
our report because the adverse consequences of doing so would reasonably be expected to
outweigh the public interest benefits of such communication.
Other Reporting Requirements
Information on our audit engagement
We were first appointed as auditors by the Kesko’s Annual General Meeting on 28th of April
2020, and our appointment represents a total period of uninterrupted engagement of 4 years.
Other information
The Board of Directors and the President and CEO are responsible for the other information.
The other information comprises the report of the Board of Directors and the information
included in the Annual Report, but does not include the financial statements and our auditor’s
report thereon. We have obtained the report of the Board of Directors prior to the date of this
auditor’s report, and the Annual Report is expected to be made available to us after that date.
Our opinion on the financial statements does not cover the other information.
In connection with our audit of the financial statements, our responsibility is to read the
other information identified above and, in doing so, consider whether the other information
is materially inconsistent with the financial statements or our knowledge obtained in the
audit, or otherwise appears to be materially misstated. With respect to report of the Board
of Directors, our responsibility also includes considering whether the report of the Board of
Directors has been prepared in accordance with the applicable laws and regulations.
In our opinion, the information in the report of the Board of Directors is consistent with the
information in the financial statements and the report of the Board of Directors has been
prepared in accordance with the applicable laws and regulations.
If, based on the work we have performed on the other information that we obtained prior to
the date of this auditor’s report, we conclude that there is a material misstatement of this other
information, we are required to report that fact. We have nothing to report in this regard.
Other Statements
We support that the financial statements and consolidated financial statements should be
adopted. The proposal by the Board of Directors regarding the use of profit shown on the
balance sheet is in compliance with the Limited Liability Companies Act. We support that the
Members of the Board of Directors and the President and CEO of the parent company should
be discharged from liability from the financial period audited by us.
Helsinki, 29 January, 2024
Deloitte Oy
Audit Firm
Jukka Vattulainen
Authorised Public Accountant (KHT)
119
AUDITOR’S ESEF ASSURANCE REPORT
To the Board of Directors of Kesko Oyj
We have performed a reasonable assurance engagement on whether the iXBRL tagging of the
consolidated financial statements in the ESEF consolidated financial statements (743700OX6
HSVMCAHPB95-2023-12-31_FI.zip) of Kesko Oyj (0109862-8) for the financial year
1.1.-31.12.2023 has been prepared in accordance with the requirements of Article 4 of
Commission Delegated Regulation (EU) 2018/815 (ESEF RTS).
Responsibilities of the Board of Directors a
nd the Managing Director
The Board of Directors and Managing Director are responsible for the preparation of the
report of the Board of Directors and financial statements (ESEF financial statements) that
comply with the requirements of ESEF RTS. This responsibility includes:
• preparation of ESEF financial statements in XHTML format in accordance with Article 3 of
ESEF RTS
• tagging the consolidated financial statements’ primary statements, disclosures and
identifying information in the ESEF financial statements with iXBRL tags in accordance with
Article 4 of ESEF RTS, and
• ensuring consistency between ESEF financial statements and audited financial statements.
The Board of Directors and the Managing Director are also responsible for such internal
control as they determine is necessary to enable the preparation of ESEF financial statements
in accordance with the requirements of ESEF RTS.
Auditor’s Independence and Quality Control
We are independent of the company in accordance with the ethical requirements that are
applicable in Finland and are relevant to the engagement we have performed, and we have
fulfilled our other ethical responsibilities in accordance with these requirements.
INDEPENDENT AUDITOR’S REPORT ON THE ESEF CONSOLIDATED
FINANCIAL STATEMENTS OF KESKO OYJ
The auditor applies International Standard on Quality Management 1 and, accordingly, an
audit firm shall design, implement and maintain a system of quality control including policies
and procedures regarding compliance with ethical requirements, professional standards, and
applicable legal and regulatory requirements.
Auditor’s Responsibilities
In accordance with the engagement letter, we express an opinion on whether the tagging of
the consolidated financial statements in the ESEF financial statements has been prepared
in all material respects in accordance with the requirements of Article 4 of ESEF RTS. We
conducted a reasonable assurance engagement in accordance with International Standard on
Assurance Engagements ISAE 3000.
The engagement includes procedures to obtain evidence on:
• whether the tagging of the consolidated financial statement’s primary statements in the
ESEF financial statements has been prepared in all material respects in accordance with the
requirements of Article 4 of ESEF RTS
• whether the tagging of the consolidated financial statements’ disclosures and identifying
information in the ESEF financial statements has been prepared in all material respects in
accordance with the requirements of Article 4 of ESEF RTS, and
• whether the ESEF financial statements are consistent with the audited financial statements.
The nature, timing and extent of the procedures selected depend on the auditor’s judgment.
This includes the assessment of risk of material departures from the requirements set out in
ESEF RTS, whether due to fraud or error.
We believe that the evidence we have obtained is sufficient and appropriate to provide a basis
for our opinion.
(Translation of the Finnish original)
120
Opinion
In our opinion, the tagging of the consolidated financial statements in the ESEF financial
statements (743700OX6HSVMCAHPB95-2023-12-31_FI.zip) of Kesko Oyj for the financial
year 1.1.-31.12.2023 has been prepared in all material respects in accordance with the
requirements of Article 4 of ESEF RTS.
Our audit opinion on the consolidated financial statements of Kesko Oyj for the financial year
1.1.-31.12.2023 has been expressed in our auditor’s report dated 29.1.2024. In this report,
we do not express an audit opinion or any other assurance conclusion on the consolidated
financial statements.
Helsinki, 29 January, 2024
Deloitte Oy
Audit Firm
Jukka Vattulainen
APA