FINANCIAL
REVIEW
2022 KESKO ANNUAL REPORT
129
KESKO ANNUAL REPORT 2022
Kesko's direction
Year 2022
Strategy and operating
environment
Business
Investors
Sustainability report
Sustainable Kesko
Climate and nature
Value chain
Our people
Good governance
Sustainability reporting
Financial review
Report by the Board of Directors
Consolidated financial
statements (IFRS)
Parent company's financial
statements (FAS)
Signatures
Corporate governance
Corporate Governance
Statement
Remuneration Report
Data balance sheet
Data strategy
Customers and data
FINANCIAL
REVIEW
Report by the Board of Directors 132
Operating environment 132
Outlook and guidance for 2022 132
Important events 132
Financial performance 133
Segments 135
Changes in Group composition 137
Main objectives and results achieved in sustainability 137
Key events during the financial year 151
Events after the financial year 151
Resolutions of the 2021 Annual General Meeting and
decisions of the Board's organisational meeting 151
Information contained in the notes
to the financial statements 152
Risk management 152
Significant risks and uncertainties 153
Proposal for profit distribution 154
Annual General Meeting 154
Shares and securities markets 154
Analysis of shareholding 156
Board authorisations 158
Group's key performance indicators 159
Calculation of performance indicators 160
Financial statements 164
Consolidated financial statements (IFRS) 165
Consolidated income statement 165
Consolidated statement of comprehensive income 165
Consolidated statement of financial position 166
Consolidated statement of cash flows 167
Consolidated statement of changes in equity 168
Notes to the consolidated financial statements 169
1. Accounting policies for the consolidated
financial statements 169
1.1 Basic information about the Company 169
1.2 Basis of preparation 169
1.3 Critical accounting estimates and assumptions 169
1.4 Critical judgements in applying
accounting policies 170
1.5 Consolidation principles 170
1.6 Discontinued operations and non-current assets
classified as held for sale and related liabilities 171
1.7 New IFRS standards and IFRIC interpretations
and the impact of new and updated standards 171
This report is a translation of the Finnish original.
130
KESKO ANNUAL REPORT 2022
Kesko's direction
Year 2022
Strategy and operating
environment
Business
Investors
Sustainability report
Sustainable Kesko
Climate and nature
Value chain
Our people
Good governance
Sustainability reporting
Financial review
Report by the Board of Directors
Consolidated financial
statements (IFRS)
Parent company's financial
statements (FAS)
Signatures
Corporate governance
Corporate Governance
Statement
Remuneration Report
Data balance sheet
Data strategy
Customers and data
2. Financial results 172
2.1 Revenue recognition 172
2.2 Segment information 172
2.3 Material and services 181
2.4 Other operating income 181
2.5 Operating expenses 181
2.6 Foreign exchange differences recognised in
operating profit 182
2.7 Income tax 182
2.8 Earnings per share 185
2.9 Additional details related to the statement of
cash flows 185
3. Capital employed 186
3.1. Acquisitions 186
3.2 Property, plant and equipment 187
3.3 Intangible assets 189
3.4 Leases 192
3.5 Inventories 194
3.6 Trade and other current receivables 194
3.7 Pension assets 196
3.8 Shares in associates and joint ventures 199
3.9 Provisions 201
4. Capital structure and financial risks 202
4.1 Capital management 202
4.2 Shareholders' equity 204
4.3 Financial risks 205
4.4 Finance income and costs 210
4.5 Financial assets and liabilities by category 211
4.6 Commitments and contingencies 215
5. Other 216
5.1 Subsidiaries, associates, joint ventures and
proportionately consolidated mutual real estate
companies 216
5.2 Related party transactions 218
5.3 Share-based compensation 220
5.4 Legal disputes and possible legal proceedings 222
5.5 Events after the balance sheet date 222
Parent company's financial statements (FAS) 223
Signatures 238
Auditor’s report 239
Auditor’s ESEF assurance report 243
THE REPORT
BY THE BOARD
OFDIRECTORS
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 2022. At
the end of 2022, Kesko had nearly 1,100 independent
K-retailer entrepreneurs as partners. Kesko also engages
in its own retailing, which accounted for some 14% of net
sales. B2B trade is a significant and growing part of Kesko’s
business operations, and it accounted for approximately
40% of Kesko’s net sales.
Outside Finland, Kesko mainly engages in its own retailing
and B2B trade. Net sales for international operations
totalled €2,209 million, and accounted for 19% 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 2022.
Operating environment
Identified megatrends impacting K Group’s operations
include accelerating change in the use of digital solutions
and new technologies, the importance of sustainability and
impacts on climate and nature, globalisation and related
supply chain security, the importance of risk management,
and continued population change. Themes emphasised
in customer and consumer trends include the need to
constantly adjust selections, multichannel shopping, growing
customer knowledge and power, and more individual
customer behaviour. 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 and loss
of biodiversity. 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 2022
Kesko Group’s guidance is given for the year 2023, in
comparison with the year 2022. Kesko’s net sales and
operating profit are estimated to remain at a good level in
2023 despite the challenges in the company’s operating
environment. Kesko estimates that its comparable operating
profit in 2023 will be in the range of €680–800 million. The
guidance is based on an estimated relatively short recession
in Kesko’s operating countries. Key uncertainties impacting
Kesko’s outlook are developments in inflation and interest
rate levels, and Russia’s ongoing offensive war in Ukraine.
In the grocery trade division, B2C trade as a whole is
estimated to remain stable, and the foodservice market is
predicted to continue to grow. Price inflation will support
sales development in euro terms, but will also increase costs.
Operating profit is expected to remain at a good level.
REPORT BY THE BOARD OF DIRECTORS
The construction market is expected to decrease somewhat
compared to 2022. New building construction is estimated
to decrease, but renovation building and construction
related to the green transition are estimated to continue to
grow. Operating profit is expected to remain at a good level
also in building and technical trade.
In the car trade division, car availability is estimated to
improve, but demand is estimated to remain below long-
term average. Profitability in the car trade division is
expected to remain at a good level.
Important events
Positive profit warning on 25 April 2022
Kesko raised its profit guidance for 2022 on 25 April 2022,
estimating that its comparable operating profit in 2022 will
be in the range of €730–840 million. Before, the company
estimated that the comparable operating profit would be in
the range of €680–800 million.
132
KESKO ANNUAL REPORT 2022
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Business
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Sustainable Kesko
Climate and nature
Value chain
Our people
Good governance
Sustainability reporting
Financial review
Report by the Board of Directors
Consolidated financial
statements (IFRS)
Parent company's financial
statements (FAS)
Signatures
Corporate governance
Corporate Governance
Statement
Remuneration Report
Data balance sheet
Data strategy
Customers and data
Financial performance
Net sales and profit 2022
1–12/2022 Net sales, € million Change % Change, comparable, %
Operating profit,
comparable € million Change, € million
Grocery trade 6,124.7 +3.6 +3.6 460.4 +17.5
Building and technical trade excl. speciality goods trade 4,591.1 +10.3 +9.7 302.8 +27.4
Speciality goods trade 214.0 -4.3 +1.8 16.1 -5.1
Kesko Senukai - - - 20.9 -0.5
Building and technical trade total 4,805.1 +9.5 +9.4 339.8 +21.8
Car trade 910.9 -11.4 -11.4 48.4 -3.9
Common functions and eliminations -31.8 - - -33.5 +4.2
Total 11,809.0 +4.5 +4.4 815.1 +39.6
Group net sales grew by 4.4% in comparable terms. Net
sales grew in comparable terms by 3.6% in Finland and by
8.4% in other operating countries. The comparable change
% has been calculated in local currencies and excluding
the impact of acquisitions and divestments completed. The
reported Group net sales grew by 4.5%.
Net sales for the grocery trade division grew by 3.6%.
Sales to K Group grocery store chains grew by 0.8%. Net
sales for Kespro’s foodservice business grew by 20.7%.
As Covid-19 restrictions were less severe than in the
comparison period, consumption was relatively more
geared towards foodservice than retail.
Net sales for the building and technical trade division
increased by 9.5%, or by 9.4% in comparable terms. Net
sales grew in comparable terms in all operating countries.
Net sales growth continued strong in Onninen’s technical
wholesale. The growth was underpinned by good volume
development and rising prices in some product categories.
In building and home improvement trade, sales increased in
B2B trade, but decreased in B2C trade.
Net sales for the car trade division decreased by 11.4% due
to the poor availability of cars.
The Group's comparable operating profit totalled €815.1
million, an increase of €39.6 million. In the grocery trade
division, profitability improved in particular thanks to strong
growth in Kespro’s foodservice business. In the building
and technical trade division, profit continued to strengthen
in Onninen’s technical wholesale. Onninen’s comparable
operating profit grew in all operating countries. In building
and home improvement trade, comparable operating profit
decreased in all operating countries. Share of result from
Kesko Senukai had a €0.5 million negative impact on the
building and technical trade division’s comparable operating
profit. In the car trade division, net sales and comparable
operating profit decreased due to the weakened availability
of cars in 2022.
Items affecting comparability,
€ million 1–12/2022 1–12/2021
Comparable operating profit 815.1 775.5
Items affecting comparability
+gains on disposal +0.0 +1.4
-losses on disposal -0.1 -0.0
-impairment charges - -5.4
+/-structural arrangements +1.6 +3.7
Total items affecting
comparability +1.5 -0.3
Operating profit 816.5 775.2
K Group's (Kesko and the chain stores) retail and B2B
sales (0% VAT) totalled €15,832.5 million, representing
a growth of 3.6% compared to the previous year. During
the 12-month period that ended in December 2022, the
number of Finnish households belonging to the K-Plussa
loyalty scheme and using the Plussa network totalled 2.4
million, with 3.3 million customers using their K-Plussa card.
133
KESKO ANNUAL REPORT 2022
Kesko's direction
Year 2022
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Business
Investors
Sustainability report
Sustainable Kesko
Climate and nature
Value chain
Our people
Good governance
Sustainability reporting
Financial review
Report by the Board of Directors
Consolidated financial
statements (IFRS)
Parent company's financial
statements (FAS)
Signatures
Corporate governance
Corporate Governance
Statement
Remuneration Report
Data balance sheet
Data strategy
Customers and data
Net finance costs, income tax and earnings
per share
Net finance costs, income tax
and earnings per share 1–12/2022 1–12/2021
Net finance costs, € million -56.0 -68.2
Interests on lease liabilities,
€ million -68.4 -71.3
Profit before tax, comparable,
€ million 763.2 710.4
Profit before tax, € million 761.1 712.9
Income tax, € million -151.2 -141.1
Earnings per share,
comparable, € 1.54 1.43
Earnings per share, € 1.53 1.44
Equity per share, € 6.90 6.37
The Group’s net finance costs were positively impacted
by the change in the fair value of interest rate derivatives,
€13.5 million, and a decrease in interest expenses for lease
liabilities. The share of result of associates amounted to €0.6
million (€5.9 million, or €2.0 million in comparable terms).
The Group’s comparable profit before tax grew thanks to
growth in comparable operating profit and a reduction in
net finance costs. The Group’s effective tax rate was 19.9%
(19.8%).
The Group’s earnings per share and comparable earnings
per share grew compared to the year before.
Cash flow and financial position
Cash flow, € million 1–12/2022 1–12/2021
Cash flow from operating
activities 915.2 1,152.0
Cash flow from investing
activities -344.3 -292.3
Cash flow from financing
activities -604.7 -834.4
Financial position 31.12.2022 31.12.2021
Liquid assets, € million 314.1 387.7
Interest-bearing liabilities,
€ million 2,418.3 2,295.1
Lease liabilities, € million 1,920.1 1,928.6
Interest-bearing net debt excl.
lease liabilities, € million 184.1 -21.3
Interest-bearing net debt/
EBITDA, excl. IFRS 16 impact 0.2 0.0
Gearing, % 76.7 75.4
Equity ratio, % 36.9 36.6
The Group’s cash flow from operating activities totalled
€915.2 million (€1,152.0 million). The cash flow was
weakened by growth in working capital. In addition, the cash
flow from operating activities for the comparison period
included a €38.6 million return of surplus assets paid by
Kesko Pension Fund.
The Group’s cash flow from investing activities totalled
€-344.3 million (€-292.3 million). In the comparison period,
the cash flow from investing activities included a negative
item of €55.9 million in investment of Group liquid assets in
money market funds.
Capital expenditure
Capital expenditure, € million 1–12/2022 1–12/2021
Group, total 449.2 276.6
Store sites 268.1 129.0
Acquisitions 50.1 13.8
IT 41.8 42.2
Other investments 89.2 91.6
Capital expenditure in store sites increased by €139.1
million on 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. The capital
expenditure did not have a cash flow impact.
Capital expenditure included the acquisitions of Kungälvs
Trävaruaktiebolag, Föllinge Såg AB, Djurbergs Järnhandel
Aktiebolag and XL-BYGG Bergslagen AB in Sweden and
Seljord Elektriske AS in Norway.
134
KESKO ANNUAL REPORT 2022
Kesko's direction
Year 2022
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Business
Investors
Sustainability report
Sustainable Kesko
Climate and nature
Value chain
Our people
Good governance
Sustainability reporting
Financial review
Report by the Board of Directors
Consolidated financial
statements (IFRS)
Parent company's financial
statements (FAS)
Signatures
Corporate governance
Corporate Governance
Statement
Remuneration Report
Data balance sheet
Data strategy
Customers and data
Segments
Grocery trade
1–12/2022 1–12/2021
Net sales, € million 6,124.7 5,909.0
Operating profit, comparable,
€ million 460.4 442.9
Operating margin, comparable,
% 7.5 7.5
Return on capital employed,
comparable, % 19.6 20.6
Capital expenditure, € million 257.6 122.8
Personnel, average 6,288 6,126
Net sales for the grocery trade division amounted to
€6,124.7 million (€5,909.0 million), an increase of 3.6%.
Sales to K Group grocery store chains grew by 0.8%. Net
sales for Kespro’s foodservice business grew by 20.7%.
As Covid-19 restrictions were less severe than in the
comparison period, consumption was relatively more geared
towards foodservice than retail.
The total retail grocery market in Finland (incl. VAT) is
estimated to have grown by approximately 3.3% (Finnish
Grocery Trade Association PTY) and retail prices are
estimated to have risen by some 8.9% (incl. VAT, Kesko’s
own estimate). K Group's grocery sales decreased by 0.2%
(incl. VAT). Online grocery sales decreased by 3.3%, and
accounted for approximately 3.1% 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 619 at the end
of the reporting period, up by 102 year-on-year. The total
market for the foodservice business is estimated to have
grown by 16.1% (Finnish Grocery Trade Association PTY).
The comparable operating profit for the grocery trade
division totalled €460.4 million (€442.9 million), up by
€17.5 million. Profitability improved in particular thanks
to strong growth in Kespro’s foodservice sales. Operating
profit for the grocery trade division totalled €461.5 million
(€443.9 million). Items affecting comparability totalled €1.1
million (€0.9 million).
Capital expenditure for the grocery trade division totalled
€257.6 million (€122.8 million). Capital expenditure
in store sites totalled €230.5 million (€101.2 million).
Capital expenditure in store sites included the property
for 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.
The capital expenditure did not have a cash flow impact.
Net sales, € million 1–12/2022 1–12/2021 Change, %
Change, %,
comparable
Sales to K-food stores 4,367.4 4,333.2 +0.8 +0.8
K-Citymarket, non-food 605.1 618.6 -2.2 -2.2
Kespro 1,041.3 862.7 +20.7 +20.7
Others 110.8 94.5 +17.1 +17.1
Total 6,124.7 5,909.0 +3.6 +3.6
135
KESKO ANNUAL REPORT 2022
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Good governance
Sustainability reporting
Financial review
Report by the Board of Directors
Consolidated financial
statements (IFRS)
Parent company's financial
statements (FAS)
Signatures
Corporate governance
Corporate Governance
Statement
Remuneration Report
Data balance sheet
Data strategy
Customers and data
Building and technical trade
1–12/2022 1–12/2021
Net sales, € million 4,805.1 4,387.7
Building and technical trade excl.
speciality goods trade 4,591.1 4,164.0
Building & home improvement
trade 2,377.2 2,292.3
Onninen 2,286.2 1,930.3
Speciality goods trade 214.0 223.7
Operating profit, comparable, €
million 339.8 318.0
Building and technical trade excl.
speciality goods trade 302.8 275.4
Building & home improvement
trade 127.5 154.2
Onninen 173.7 122.3
Speciality goods trade 16.1 21.2
Kesko Senukai 20.9 21.5
Operating margin, comparable, % 7.1 7.2
Building and technical trade excl.
speciality goods trade 6.6 6.6
Building & home improvement
trade 5.4 6.7
Onninen 7.6 6.3
Speciality goods trade 7.5 9.5
Return on capital employed,
comparable, % 19.4 19.0
Capital expenditure, € million 108.7 43.1
Personnel, average 6,155 5,977
Net sales for the building and technical trade division
increased by 9.5%, or by 9.4% in comparable terms. Net
sales grew in comparable terms in all operating countries.
Net sales growth continued strong especially in Onninen’s
technical wholesale. The growth was underpinned by good
volume development and rising prices in some product
categories. In building and home improvement trade,
sales grew in B2B trade but decreased in B2C trade. The
weakening of the Swedish krona and Polish zloty against the
euro diminished net sales development in euro terms, while
the strengthening of the Norwegian krone against the euro
positively impacted net sales in euro-terms.
In Finland, net sales for the building and technical trade division
totalled €2,596.3 million (€2,371.4 million), up by 9.5%. In
comparable terms, net sales in Finland increased by 10.2%.
Net sales from international operations amounted to €2,208.8
million (€2,016.4 million, an increase of 9.5%. In comparable
terms, net sales from international operations grew by 8.4%.
Net sales for building and home improvement trade increased
in Finland and Sweden and decreased in Norway. Net sales for
Onninen’s technical wholesale grew in all operating countries.
Sports trade net sales in speciality goods trade grew by 1.8%
in comparable terms. Reported net sales for speciality goods
trade decreased due to the discontinuation of the KooKenkä
and The Athlete’s Foot chains in 2021.
The comparable operating profit for the building and technical
trade division totalled €339.8 million (€318.0 million), an
increase of €21.8 million year-on-year. In the building and
technical trade division, profit continued to strengthen
in Onninen’s technical wholesale. Onninen’s comparable
operating profit grew in all operating countries. In building
and home improvement trade, comparable operating profit
decreased in all operating countries. Share of result from
Kesko Senukai had a €0.5 million negative impact on the
division’s comparable operating profit. The comparable
operating profit for speciality goods trade decreased.
Operating profit for the building and technical trade division
totalled €340.8 million (€323.1 million). Items affecting
comparability totalled €1.0 million (€5.1 million). The most
significant item affecting comparability in the comparison
period was the €6.5 million gain on disposal included in the
share of result of joint ventures.
Net sales, € million 1–12/2022 1–12/2021 Change, %
Change, %,
comparable
Building and home improvement trade, Finland 1,126.7 1,078.5 +4.5 +4.6
K-Rauta, Sweden 189.1 200.6 -5.7 -1.2
K-Bygg, Sweden 352.8 294.6 +19.8 +5.8
Byggmakker, Norway 711.4 721.0 -1.3 -2.3
Building and home improvement trade, total 2,377.2 2,292.3 +3.7 +2.0
Onninen, Finland 1,319.0 1,121.0 +17.7 +17.7
Onninen and MIAB, Sweden 147.0 118.7 +23.9 +29.8
Onninen, Norway 346.5 296.1 +17.0 +17.2
Onninen, Baltics 130.8 94.8 +38.0 +38.0
Onninen, Poland 349.2 303.3 +15.1 +18.2
Onninen, total 2,286.2 1,930.3 +18.4 +19.3
Building and technical trade excl. speciality goods trade
total 4,591.1 4,164.0 +10.3 +9.7
Sports trade, Finland 214.0 215.5 -0.7 +1.8
Speciality goods trade total 214.0 223.7 -4.3 +1.8
Total 4,805.1 4,387.7 +9.5 +9.4
136
KESKO ANNUAL REPORT 2022
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Business
Investors
Sustainability report
Sustainable Kesko
Climate and nature
Value chain
Our people
Good governance
Sustainability reporting
Financial review
Report by the Board of Directors
Consolidated financial
statements (IFRS)
Parent company's financial
statements (FAS)
Signatures
Corporate governance
Corporate Governance
Statement
Remuneration Report
Data balance sheet
Data strategy
Customers and data
Capital expenditure for the building and technical trade
division totalled €108.7 million (€43.1 million). Capital
expenditure included the acquisitions of Kungälvs
Trävaruaktiebolag, Föllinge Såg AB, Djurbergs Järnhandel
Aktiebolag and XL-BYGG Bergslagen AB in Sweden and
Seljord Elektriske AS in Norway.
Kesko Senukai financials, €
million 1–12/2022 1–12/2021
Net sales 1,224.3 1,091.4
Operating profit 70.2 80.2
Operating profit, comparable 64.8 66.3
Net profit for the period 47.1 56.0
Net profit for the period,
comparable 41.8 42.9
Kesko Group’s share of result of
joint ventures 23.5 28.0
Kesko Group’s share of result of
joint ventures, comparable 20.9 21.5
31.12.2022 31.12.2021
Assets 849.5 856.6
Liabilities 582.0 570.8
Equity 267.6 285.6
The table figures include Kesko Senukai’s business and real
estate companies.
Car trade
1–12/2022 1–12/2021
Net sales, € million 910.9 1,028.3
Operating profit, comparable,
€ million 48.4 52.2
Operating margin, comparable, % 5.3 5.1
Return on capital employed,
comparable, % 12.7 14.0
Capital expenditure, € million 44.7 71.2
Personnel, average 1,235 1,225
Net sales for the car trade division decreased by 11.4%,
impacted by the weakened availability of cars in 2022.
The combined market performance of first registrations of
passenger cars and vans was -15.9%. The combined market
share of the Volkswagen, Audi, SEAT, CUPRA, Porsche and
Bentley passenger cars and Volkswagen and MAN vans
imported by Kesko’s car trade division was 14.1% (17.3%).
The comparable operating profit for the car trade division
totalled €48.4 million (€52.2 million). The comparable
operating profit was weakened by the decrease in net sales
due to weaker availability of cars. Operating profit for the
car trade division totalled €47.8 million (€46.2 million).
Items affecting comparability totalled €-0.6 million (€-6.1
million), related to division restructuring.
Capital expenditure for the car trade division totalled €44.7
million (€71.2 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 1–12/2022 1–12/2021 Change, %
Change, %,
comparable
Car trade 910.9 1,028.3 -11.4 -11.4
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 service providers, dividends
paid to shareholders, salaries and wages paid to personnel,
taxes, and capital expenditure. Kesko employs 17,842
people and in 2022 paid €626.0 million in wages. In 2022,
income taxes paid by Kesko in Finland totalled €118.9
million, and in other countries €23.5 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 2022 totalled €449.2 million. At the
end of 2022, Kesko had 82,983 registered shareholders,
and dividends distributed for the year 2021 totalled €421
million.
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Sustainable Kesko
Climate and nature
Value chain
Our people
Good governance
Sustainability reporting
Financial review
Report by the Board of Directors
Consolidated financial
statements (IFRS)
Parent company's financial
statements (FAS)
Signatures
Corporate governance
Corporate Governance
Statement
Remuneration Report
Data balance sheet
Data strategy
Customers and data
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 updated sustainability strategy sets clear sustainability
targets for Kesko and its three divisions. The four focus areas
of the sustainability strategy are climate and nature, value
chain, people, and good governance. The sustainability vision
is to enable sustainable choices for customers and drive
change throughout the value chain.
In conjunction with the strategy update, Kesko also updated
its sustainability management model, specifying in particular
the role of the divisions in sustainability work. The Board of
Directors of Kesko Corporation decided to set sustainability-
related criteria for the company’s share-based commitment
and incentive schemes.
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, such as the Dow Jones Sustainability
Indices the DJSI World and DJSI Europe, CDP, MSCI ESG
Ratings, and Sustainalytics.
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.
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
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 new sustainability strategy for
In December 2022, Kesko was included in the Dow Jones
Sustainability Indices the DJSI World and the DJSI Europe.
In the global DJSI World, Kesko ranked third highest
in its industry and in the DJSI Europe the highest in its
industry. Kesko received the highest industry total score in
sections concerning climate targets, energy-efficiency, and
packaging policy, for example.
In CDP’s international 2022 Climate Change Questionnaire,
Kesko made the Leadership level A- list.
In the MSCI ESG Ratings, Kesko again received the highest
AAA grade (scale of AAA-CCC) in September 2022. 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.
The Sustainalytics ESG risk rating granted to Kesko in July
2022 was 14.3 (low). Sustainalytics assesses corporate risks
on a scale of 0 to 40+ (negligible 0–10, low 10–20, medium
20–30, high 30–40, severe 40+).
Kesko ranked 74th on the Global 100 list of the Most
Sustainable Corporations in the World in 2023 (69th in
2022). 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.
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Good governance
Sustainability reporting
Financial review
Report by the Board of Directors
Consolidated financial
statements (IFRS)
Parent company's financial
statements (FAS)
Signatures
Corporate governance
Corporate Governance
Statement
Remuneration Report
Data balance sheet
Data strategy
Customers and data
Climate and nature
In accordance with its sustainability strategy, Kesko
concentrates on reducing emissions from its own operations
and its whole value chain. The sustainability strategy
increases the importance of biodiversity. In terms of circular
economy, focus areas include packaging and reducing food
waste.
Reducing emissions from Kesko’s own
operations – towards carbon neutrality
K Group aims for its operations to be carbon neutral by 2025.
It will seek to systematically reduce emissions to reach zero
emissions from its own operations and transports in 2030.
In between 2025 and 2030, the remaining emissions will
be offset. The objective is to reach zero emissions from own
operations in 2030, with no need for offsets.
In Kesko’s own operations, emissions mostly come from the
consumption of district heat and transport fuels. In addition,
emissions from own operations come from the consumption
of purchased electricity, Kesko’s own generation of heat, and
refrigerant leaks. Emissions from Kesko’s own operations are
estimated to account for some 1% of the total value chain
emissions.
K Group is moving towards its carbon neutrality objective
by e.g. reducing emissions from heating by recycling waste
heat, giving up fossil fuels in heating, and improving energy-
efficiency. In autumn 2022, the focus was on preventing
acute general power shortages, with exceptional measures
taken to reduce electricity consumption.
Kesko participates in the Energy Efficiency Agreement
for 2017–2025 for the trading sector in Finland, and has
committed to reducing its energy consumption by at least
79 GWh, equalling 7.5% of the energy consumption in
2015. This target was already achieved in 2021. In 2022,
new energy efficiency measures amounting to at least 18.5
GWh were implemented.
Electricity purchased and consumed by K-stores and
other Kesko properties in Finland is fossil-free and free
of carbon dioxide emissions. In Q4/2021-Q3/2022,
electricity consumption totalled 564 GWh. The electricity
was generated using hydropower, nuclear power, wind
power and bio energy. Electricity and heat consumption in
Finland totalled 915 GWh. In the other operating countries,
electricity and heat consumption in Q4/2021-Q3/2022
totalled 51 GWh.
Emission reductions in the value chain
In Kesko’s value chain, the most significant climate impacts
are generated during the lifecycle of products and services
sold, e.g. in primary production of raw materials, product
manufacture, packaging, transport, and use of products.
Kesko encourages its suppliers of goods and services to
reduce their emissions and helps customers make more
sustainable choices.
Kesko aims for 67% of its direct suppliers of goods and
services to have science-based emission reduction targets
set by 2025. The biggest suppliers by spend are challenged
to reduce their emissions and to report their climate targets
and actions via CDP’s Climate Change Questionnaire.
In 2017, Kesko was the first company in Finland to set
targets approved by the Science Based Targets Initiative
(SBTi) for emissions from its own operations and supply
chain. In November 2021, SBTi approved Kesko’s new
tighter science-based emissions reduction targets with
which Kesko committed to the target of limiting global
warming to 1.5 degrees Celsius:
• Kesko has committed to reducing absolute scope 1 and 2
GHG emissions by 90% by 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 2026.
• Kesko has also committed to reducing absolute scope 3
GHG emissions from the use of sold products by 17% by
2026 from a 2020 base year.
Biodiversity
Kesko aims to prevent the loss of biodiversity in both its own
operations and its value chain.
In 2022, Kesko complemented its sustainable sourcing
policies with a new no-deforestation policy and also a coffee
and tea policy. Kesko also took part in a pilot testing the
Science Based Targets Network (SBTN) instructions for
setting science-based targets for nature.
Next steps include establishing a biodiversity roadmap for
Kesko, and setting division-specific targets concerning the
biodiversity impact of Kesko’s own operations and supply
chain.
Circular economy
Kesko is determinately promoting circular economy in its
operations. The objective is to have packaging that is either
recyclable, reusable or biodegradable for all of Kesko’s own
brand products by the end of 2025. Packaging plays an
important role in protecting products, providing information
to consumers, and preventing food waste. Kesko aims to
halve the amount of food waste by 2030.
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KESKO ANNUAL REPORT 2022
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Our people
Good governance
Sustainability reporting
Financial review
Report by the Board of Directors
Consolidated financial
statements (IFRS)
Parent company's financial
statements (FAS)
Signatures
Corporate governance
Corporate Governance
Statement
Remuneration Report
Data balance sheet
Data strategy
Customers and data
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. In 2023,
the risk assessment will be deepened with a more detailed
assessment of the financial impacts of the risks. The impacts
of climate change are twofold:
• Impacts on Kesko related to increasing regulation and
extreme weather phenomena.
• Impacts of Kesko’s operations on the climate 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. In grocery trade, the impact of climate
change on global production chains enables exporting
Finnish food to new markets in collaboration with the food
industry. In building and technical trade market, demand for
products related to saving energy and the green transition is
set to grow.
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 2022
Achieving carbon neutrality by 2025
and making Kesko’s own operations and
transports emissions-free by 2030
Carbon dioxide emissions
(tCO
2
e)
Scope 1 and 2 emissions in all operating countries in
Q4/2021–Q3/2022 totalled 89,900 tCO
2
e
1
Having 67% of Kesko’s biggest
suppliers (by spend) set science-based
emission reduction targets set by 2026
% of suppliers (CDP) 364 of Kesko’s suppliers invited to reduce their
emissions and report their climate targets and
actions via CDP’s Climate Change Questionnaire.
Of the invited suppliers by spend based on year
2021, 27.7% already have approved, science-based
emission reduction targets.
1
The Q4–2021-Q3/2022 figures include for the first time own transports by Onninen logistics in Finland and emissions from Kesko’s refrigerant leaks in Finland.
In addition, in calculating emissions from district heat consumption, region-specific market-based emission coefficients have been used for the first time.
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KESKO ANNUAL REPORT 2022
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Our people
Good governance
Sustainability reporting
Financial review
Report by the Board of Directors
Consolidated financial
statements (IFRS)
Parent company's financial
statements (FAS)
Signatures
Corporate governance
Corporate Governance
Statement
Remuneration Report
Data balance sheet
Data strategy
Customers and data
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 Kesko’s 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.
According to Group guidelines, K Code of Conduct contract
clauses must be added to all agreements under which Kesko
Group companies purchase products or services from
external parties.
Kesko employs sustainability policies to guide the sourcing
of products containing raw materials identified as critical
from a social and environmental responsibility perspective.
At the end of 2022, Kesko had 12 such policies.
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.
In 2022, Kesko published a Commitment to achieve a living
wage and income in the supply chain.
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.
Key targets Indicators Results in 2022
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, % 91.5%
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 Finnish and EU
legislation, are safe for users, and meet quality promises. All
food product operations have a self-control system in place
as required by law.
The Quality and Product Development unit in Kesko’s
grocery trade 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 the 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.
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KESKO ANNUAL REPORT 2022
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Our people
Good governance
Sustainability reporting
Financial review
Report by the Board of Directors
Consolidated financial
statements (IFRS)
Parent company's financial
statements (FAS)
Signatures
Corporate governance
Corporate Governance
Statement
Remuneration Report
Data balance sheet
Data strategy
Customers and data
People
Responsibility for people for Kesko means, in particular,
ensuring the safety and wellbeing of personnel, and
fostering diversity, inclusion and equal opportunities.
Professional and committed personnel forms the foundation
for Kesko’s operations. Kesko’s HR management is guided
by its human resources policy, the K Code of Conduct, and
common operating principles. Kesko respects internationally
recognised human rights and complies with the ILO
fundamental 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.
Personnel 1–12/2022 1–12/2021
Women 5,921 5,801
Men 8,711 8,431
Average number of personnel
converted into full-time
employees 14,633 14,232
31.12.2022 31.12.2021
Personnel at the end of the
reporting period
Women 7,483 7,509
Men 10,358 9,893
Finland 12,665 12,442
Other countries 5,176 4,960
Total 17,841 17,402
Diversity in the workplace
In the sustainability strategy, key themes in the People focus
area include diversity, inclusion and equal opportunities.
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
Personnel surveys are one of the key development tools
for operating practices and managerial work, and they also
provide an opportunity to hear personnel views. In 2022,
employee experience was measured with a Group-level
Our People survey, various pulse surveys, and separate
occupational health surveys. The Our People survey covered
the whole personnel and comprised wellbeing and diversity
and inclusion indices.
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. As
pandemic-related restrictions were lifted in 2022, a gradual
shift was made to manage the pandemic situation as part
of everyday management. Special focus was still paid to
ensuring the safe functioning of logistics and the stores.
To ensure the execution of Kesko’s strategy, the Group
employs performance and competence management
models. The performance management process comprises
target setting, continuous performance management,
and performance evaluation. Remuneration supports
strategy execution and performance (pay for performance).
Competence management comprises strategic
competencies and identifying competence development
and development measures at various organisational levels.
Personnel recruitments are based on strategy and need, an
approved resourcing plan, and identified change projects.
In recruitments, we are committed to equality, non-
discrimination and selection based on factors that predict
success at a position.
Key targets Indicators Results in 2022
Tangible actions to promote employee
health, wellbeing and capabilities by the
end of 2024
Wellbeing index
Diversity & inclusion index
81 (on a scale of 0 to 100, Our people 2022 survey)
86 (on a scale of 0 to 100, Our people 2022 survey)
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KESKO ANNUAL REPORT 2022
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Our people
Good governance
Sustainability reporting
Financial review
Report by the Board of Directors
Consolidated financial
statements (IFRS)
Parent company's financial
statements (FAS)
Signatures
Corporate governance
Corporate Governance
Statement
Remuneration Report
Data balance sheet
Data strategy
Customers and data
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 whole personnel.
Compliance
To ensure sustainability and compliance in Kesko Group’s
operations, Kesko implements the K Compliance operating
model confirmed by Kesko’s Board of Directors and the
K Code of Conduct. 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 Audit Committee of Kesko’s Board of Directors.
The practical implementation of the K Compliance operating
model is supported by the K Compliance programmes
confirmed by Kesko’s President and CEO. The systematic
implementation of the programmes ensures Kesko’s
compliance with operating principles, legislation, and
other requirements. In 2022, Kesko’s K Compliance
programmes covered data protection, competition law,
consumer protection, anti-corruption and anti-bribery,
and as a new addition, a programme concerning trading
sanctions and monitoring exports. Focus areas for action
included training personnel and conducting compliance
audits in accordance with the annual plan. Over 4,000
people participated in targeted training, and employees
completed over 17,000 online compliance training sessions.
Progress in the K Compliance programmes is reported to
the Audit Committee of the Board of Directors at least every
six months.
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 one
reason or another, the information cannot be passed directly
to managers or other persons in charge at Kesko. In total,
37 (34) reports were received through the channel in 2022.
Of these, 31 (25) required investigative actions. No misuse
of the channel was detected. Kesko’s SpeakUp channel was
updated during 2022. Kesko’s non-discrimination principles
were published as part of the update.
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 using maturity model assessment. In 2022, the
Audit Committee received three reports on K Compliance
operations: one of the reports focused solely on the K
Compliance programme concerning trading sanctions and
monitoring of exports.
Key targets Indicators Results in 2022
Strong commitment to the K Code
of Conduct from all Kesko Group
personnel
”Ethics index” which comprises the rate of
employees completing the annual confirmation of
commitment to the K Code of Conduct, and two
personnel survey indicators* concerning actions
in compliance with the K Code of Conduct in
everyday work and the reporting of violations
82%
Compliance reporting was also expanded in division
management teams and country organisations.
The K Code of Conduct, which applies to all members
of personnel and partners, forms the basis for the
K Compliance operating model. Work to increase awareness
of the K Code of Conduct and its integration with Kesko’s
HR processes continued in 2022.
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 financial and reputational risks.
Ensuring data protection is a part of Kesko’s K Compliance
operating model. Kesko’s data protection policy determines
the principles, procedures and responsibilities to ensure the
lawful processing of personal data and high level of data
protection. Kesko Corporation’s Data Protection Officer
and the data protection group write a data protection
balance sheet every year, which is then reported to the Audit
Committee of the Board of Directors.
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Good governance
Sustainability reporting
Financial review
Report by the Board of Directors
Consolidated financial
statements (IFRS)
Parent company's financial
statements (FAS)
Signatures
Corporate governance
Corporate Governance
Statement
Remuneration Report
Data balance sheet
Data strategy
Customers and data
Prevention of corruption and bribery
The prevention of corruption and bribery is one of the focus
areas of Kesko’s compliance operations. Related actions are
implemented under the K Compliance programme. In 2022,
such actions included developing anti-corruption and anti-
bribery instructions and related training, and conducting
regular risk assessments. The focus in risk assessment was
on risks related to hospitality, with the objective of further
developing Group-level instructions.
Kesko’s K Code of Conduct contains instructions on
anti-bribery and anti-corruption. Where necessary, these
are complemented with more detailed instructions. New
employees receive training on the K Code of Conduct as part
of their onboarding. Each employee must also complete two
online trainings on the K Code of Conduct, which include
instructions on the prevention of corruption and bribery. In
2022, the number of completed online training courses was
4,798 (3,696).
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 – and consequently to zero
tolerance towards bribery.
Kesko Group’s absolute zero tolerance towards bribery
and corruption is described in the K Code of Conduct.
Kesko’s Compliance & Ethics function, Legal Affairs
unit, and K Code of Conduct ambassadors representing
various country organisations and units provide personnel
support in questions related to the application of the
K Code of Conduct.
Reports received through Kesko’s SpeakUp channel in 2022
did not contain observations or suspicions of breaches of
instructions on anti-corruption and anti-bribery in Kesko
Group.
All Kesko Group personnel members are asked annually to
confirm their commitment to compliance with the K Code
of Conduct. In 2022, the process was developed to also
include a discussion between manager and employee on the
application of the K Code of Conduct.
Sustainability criteria for share-based
commitment and incentive plan for Kesko
management
As part of the sustainability strategy, Kesko’s Board of
Directors decided to set sustainability-related criteria for
Kesko’s share-based commitment and incentive plans
(Performance Share Plans, PSP), i.e. the PSP 2021–2024
and the PSP 2022–2025. In addition to financial indicators,
the share award plan includes targets linked to emission
reductions and international sustainability indices and
assessments. The sustainability targets concerned year
2022. Kesko announced the plan in a stock exchange
release on 3 February 2022.
Financing linked to sustainability targets
Kesko has drawn down two bilateral loans, which combined
total €200 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.
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Good governance
Sustainability reporting
Financial review
Report by the Board of Directors
Consolidated financial
statements (IFRS)
Parent company's financial
statements (FAS)
Signatures
Corporate governance
Corporate Governance
Statement
Remuneration Report
Data balance sheet
Data strategy
Customers and data
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
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
Technical screening criteria have been confirmed for the first
two environmental objectives, ‘climate change mitigation’
and ‘climate change adaptation’, based on which companies
shall report on their activities. Criteria for the remaining
four environmental objectives is expected to be confirmed
in 2023.
In 2022, EU Taxonomy reporting requirements expanded
to include not only the identification of ‘Taxonomy eligible’
activities falling within the scope of the classification system,
but also disclosing information on what proportion of these
activities can be classified as environmentally sustainable
‘Taxonomy aligned’ activities. Key performance indicators
are presented for activities within the Taxonomy scope
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.
At this early stage, the EU Taxonomy regulation focuses
on activities which are material for reducing greenhouse
gas emissions and for building climate resilience and which
contribute the most to attaining the objectives of climate
change mitigation and climate change adaptation. Currently,
the Taxonomy does not specifically mention activities that
are typical of the trading sector, meaning that trading sector
companies report on the activities within Taxonomy scope if
they engage in them.
Taxonomy-eligible activities and assessing
taxonomy alignment
Kesko has identified the leasing operations in its car
trade division and the owning, leasing and construction
of properties for own business needs as activities falling
within the Taxonomy scope in Kesko’s operations. Kesko has
assessed the alignment of each activity within the Taxonomy
scope. Taxonomy alignment has been determined by
assessing whether an activity significantly contributes to at
least one of the environmental and climate objectives.
The assessment of Taxonomy alignment is made based on
the substantial contribution 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 environmental objectives referred to in the Taxonomy
Regulation, using the separate DNSH (‘Do No Significant
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 implementation
of minimum safeguards has been assessed using the
guidelines of the Report on Minimum Safeguards
published by the EU Platform on Sustainable Finance. 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.
Kesko’s Taxonomy-aligned activities promote the objectives
related to climate change mitigation. The following table
presents the activities identified by Kesko as falling within
Taxonomy scope, and Kesko’s assessments of how these
activities align with the Taxonomy’s technical screening
criteria.
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Performance
indicators
Taxonomy activity Activity description Turnover Capex Assessment of Taxonomy alignment
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.
√ √ Vehicles with CO
2
emissions of less than 50g CO
2
/km meet the substantial
contribution criteria set in the Taxonomy. In addition, the vehicles must meet the
DNSH criteria for circular economy and pollution prevention and control. The
cars in Kesko’s leasing fleet are type approved, meaning they meet the criteria for
circular economy and vehicle noise requirements. The fulfilment of the ‘Pollution
prevention and control’ criterion was also assessed by identifying the energy
efficiency category of the tyres installed in the vehicles.
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 abovementioned renovation measures in
Kesko’s store sites.
√
Capital expenditure in energy efficiency made in 2022 include capital expenditure in
LED lighting. When assessing the Taxonomy-alignment of LED lighting, Kesko has
applied the requirements of the eco-design and energy labelling regulation for light
sources that entered into force on 1 September 2021. In order to meet the substantial
contribution criteria for activity 7.3., a light source must be in the top two energy
categories. The selections of LED lighting that meet the criteria of the Taxonomy
Regulation and suit Kesko’s operating premises are still limited, which is why the LED
lighting installed in 2022 do not meet the EU Taxonomy substantial contribution
criteria.
7.4 Installation, maintenance and
repair of charging stations for
electric vehicles in buildings
Installation, maintenance and repair of charging stations for electric
vehicles in buildings and parking areas 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 electric car charging stations does not include separate
substantial contribution criteria. All capital expenditure related to the activity are
classified as Taxonomy-aligned.
7.5 Installation, maintenance
and repair of instruments
and devices for measuring,
regulation and controlling
energy performance of buildings
Installation, maintenance and repair of instruments and devices for
measuring, regulation and controlling energy performance of buildings.
√ The activity concerning the installation, maintenance and repair 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.
7.6 Installation, maintenance and
repair of renewable energy
technologies
Individual activities related to renewable energy technologies where the
technology is installed on site as building technical systems.
√ The activity concerning the installation of renewable energy technologies 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.
7.7 Acquisition and ownership of
buildings
Buying real estate and exercising ownership of that real estate. The
activity includes properties built, acquired and leased by Kesko.
Construction for own use may be classified either as Taxonomy activity
’7.1. Construction of new buildings’ or ‘7.7. Acquisition and ownership of
buildings’. Kesko orders the construction work of new buildings it owns
from construction companies, which is why the Taxonomy activity ‘7.7.
Acquisition and ownership of buildings’ more accurately depicts Kesko’s
operations than activity ‘7.1. Construction of new buildings’, which
depicts the operations of construction companies. Moreover, activity ‘7.7.
Acquisition and ownership of buildings’ covers renovation projects where
the total cost is 25% of the building’s fair value based on Taxonomy activity
‘7.2. Renovation of existing buildings’. The activity 7.2. is more suited to
depict the operations of companies engaged in renovation building, which is
why Kesko includes the building improvement measures described in activity
7.2., in the Taxonomy activity ‘7.7. Acquisition and ownership of buildings’.
The activity also includes the amounts of right-of-use assets recognised in
the balance sheet based on lease agreements for properties.
√ For buildings built after 2020, assessment of Taxonomy-alignment has been
made based on the climate change mitigation substantial contribution criteria
of Taxonomy activity ‘7.1. Construction of new buildings’. With new projects,
during the project planning stage, a calculated total energy consumption
figure is established for the project, and the figure must be at least ten percent
below the determined national limit. An assessment of a building’s Taxonomy-
alignment is made during the planning stage. The actualisation of the calculated
total energy consumption is verified during the building completion stage. A
climate risk assessment is made during the project planning stage. If significant
climate risks are identified in the assessment, attempts are made to remove the
risks during the construction stage.
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.
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According to Kesko’s assessment, the DNSH criteria related
to climate change adaptation concerning conducting a
climate risk assessment is not material to the Taxonomy
activity ‘6.5. Transport by motorbikes, passenger cars and
light commercial vehicles’ nor to activities 7.3 –7.6. with
regard to individual building renovation measures due to the
nature of the activities.
Kesko’s Taxonomy-eligible turnover comprises the leasing
operations in the car trade division, which is a Taxonomy
activity ‘6.5. Transport by motorbikes, passenger cars
and light commercial vehicles’. In the 2021 reporting, the
Taxonomy activity ‘6.6. Freight transport services by road’
was identified as an activity within Taxonomy scope and was
reported as part of the turnover indicator for the proportion
of selling transport capacity to third parties without a direct
connection to Kesko’s own sales of goods to customers.
Kesko no longer classifies this transport service as an activity
falling within Taxonomy scope due to the low volume.
During 2022, Kesko updated its interpretation of activities
that fall within Taxonomy scope, and now classifies property-
related activities as Taxonomy-eligible activities. In Kesko’s
financial reporting, activities related to owning, leasing,
constructing and using properties do not generate revenue
as independent activities. In 2021, real estate activities were
not included in the calculation of reported performance
indicators as Taxonomy-eligible activities, as the prevailing
interpretation at the time was that the inclusion of an
activity in the three indicators reported is mostly tied to the
recognition of revenue.
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 63.9% of the
Group’s gross capital expenditure in 2022. Properties are
a significant source of emissions (Scope 1) in the Group’s
own operations, and improving the energy efficiency of
properties and transitioning to the use of renewable energy
reduce the climate impact from own operations. The
Taxonomy regulation technical screening criteria related to
owning, constructing and renovating buildings have been
taken into account in Kesko’s internal instructions used when
planning and implementing investment projects.
The Group’s Taxonomy-eligible capital expenditure includes
investments in new store sites and logistics properties and
investments in efficient lighting, in machinery and equipment
to improve energy efficiency of buildings, and in automation
for measuring and monitoring energy efficiency. In addition,
Taxonomy-eligible CapEx includes charging stations for
electric vehicles and vehicles in the leasing operations of
the car trade division. Land areas are not classified as CapEx
within Taxonomy scope. Kesko has not identified in its
operations any CapEx plans as referred to in the Taxonomy
Regulation, aimed at upgrading Taxonomy-eligible activities
to render them Taxonomy-aligned.
EU Taxonomy performance indicators
Kesko presents the performance indicators for turnover and
capital expenditure (CapEx) in accordance with the tables
determined for non-financial undertakings in the Taxonomy
Regulation. Due to the nature of its operating expenditure,
Kesko does not present a table for the OpEx indicator, as its
operating expenditure is not material for the promotion of
the environmental objectives specified in the EU Taxonomy.
Kesko’s Taxonomy-eligible operating expenditure as
defined in the Taxonomy Regulation totalled €49.1 million
in 2022. The tables for the performance indicators show
the proportion of Group turnover and capital expenditure
derived from financial activities in line with the classification
system.
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Turnover
Substantial
contribution
criteria
DNSH criteria
(Do No Significant Harm)
Taxonomy-eligible economic activities Codes
Total
turnover
Proportion of turnover
Climate change
mitigation
Climate change
adaptation
Water and marine
resources
Circular economy
Pollution
Biodiversity
and ecosystems
Minimum
safeguards
Taxonomy-aligned
proportion of
turnover, 2022
Category
(enabling activity /
transitional activity)
€ million % % 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)
Transport by motorbikes, passenger cars and light commercial vehicles 6.5 4.3 0.0% 100% Y Y Y Y 0.0% E
Turnover from environmentally sustainable activities (A.1) 4.3 0.0% 0.0%
A.2. Taxonomy-eligible but not environmentally sustainable activities
Transport by motorbikes, passenger cars and light commercial vehicles 6.5 19.2 0.2%
Turnover from Taxonomy-eligible but not environmentally sustainable
activities (A.2) 19.2 0.2%
Total (A.1 + A.2) 23.5 0.2%
B. Taxonomy-non-eligible activities
Turnover from Taxonomy-non-eligible activities (B) 11,785.5 99.8%
Total (A + B) 11,809.0 100.0%
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Capital expenditure (CapEx)
Substantial
contribution
criteria
DNSH criteria
(Do No Significant Harm)
Taxonomy-eligible economic activities Codes
Total
CAPEX
Proportion of CAPEX
Climate change
mitigation
Climate change
adaptation
Water and marine
resources
Circular economy
Pollution
Biodiversity
and ecosystems
Minimum safeguards
Taxonomy-aligned
proportion of CAPEX,
2022
Category
(enabling activity /
transitional activity)
€ million % % 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)
Transport by motorbikes, passenger cars and light commercial vehicles 6.5 8.3 1.1% 100% Y Y Y Y 1.1% T
Installation, maintenance and repair of energy efficiency equipment 7.3 0.0 0.0% 0% Y 0.0% E
Installation, maintenance and repair of charging stations for electric vehicles
in buildings 7.4 6.5 0.8% 100% Y Y 0.8% E
Installation, maintenance and repair of instruments and devices for measuring,
regulation and controlling energy performance of buildings 7.5 2.0 0.3% 100% Y Y 0.3% E
Installation, maintenance and repair of renewable energy technologies 7.6 1.2 0.2% 100% Y Y 0.2% E
Acquisition and ownership of buildings 7.7 139.2 18.0% 100% Y Y 18.0%
CAPEX of environmentally sustainable activities (A.1) 157.2 20.3% 100% 20.3%
A.2. Taxonomy-eligible but not environmentally sustainable activities
Transport by motorbikes, passenger cars and light commercial vehicles 6.5 21.5 2.8%
Installation, maintenance and repair of energy efficiency equipment 7.3 9.4 1.2%
Installation, maintenance and repair of charging stations for electric vehicles
in buildings 7.4 0.0 0.0%
Installation, maintenance and repair of instruments and devices for measuring,
regulation and controlling energy performance of buildings 7.5 0.0 0.0%
Installation, maintenance and repair of renewable energy technologies 7.6 0.0 0.0%
Acquisition and ownership of buildings 7.7 342.6 44.2%
CAPEX of Taxonomy-eligible but not environmentally sustainable
activities (A.2) 373.5 48.2%
Total (A.1 + A.2) 530.7 68.5%
B. Taxonomy-non-eligible activities
CAPEX of Taxonomy-non-eligible activities (B) 243.7 31.5%
Total (A + B) 774.4 100%
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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 Group net
sales that comes from activities within Taxonomy scope. In
Kesko’s business operations, the leasing operations of the
car trade division have been identified as an activity falling
within Taxonomy scope and generating turnover. Kesko’s
primary operations which generate net sales are the sales of
goods and services to customers and retailers. The sales of
goods does not currently fall within Taxonomy scope.
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 Regulation CapEx definition 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 2022
totalled €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 2022
Property, plant and equipment - Additions
(Note 3.2) 370.0
Property, plant and equipment - Acquisitions
(Note 3.2) 1.6
Intangible assets - Additions (Note 3.3) 28.6
Intangible assets - Acquisitions (Note 3.3) 3.9
Right-of-use assets - Additions (Note 3.4) 354.6
Right-of-use assets - Acquisitions (Note 3.4) 15.6
EU Taxonomy CapEx, total 774.4
Operating expenditure (OpEx)
Operating expenditure (OpEx) as defined in the Taxonomy
Regulation include direct non-capitalised costs that relate to
research and development, building renovation measures,
maintenance and repair, and any other direct expenditures
relating to the day-to-day 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.
In Kesko Group’s income statement, operating expenditure
as defined in the Taxonomy Regulation are 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 are in particular related to expenses for the use,
maintenance and repair of properties, the total sum of
which was €181.5 million in 2022. 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.
The total amount of operating expenditure as defined in the
Taxonomy Regulation was €57.1 million in 2022, of which
Taxonomy-eligible operating expenditure accounted for
€49.1 million. Operating expenditure includes expenses
related to property maintenance and repair and expenses
for servicing of the leasing car fleet in the car trade division.
Of the Taxonomy-eligible operating expenditure, 97.0%
are expenses related to building maintenance and repair.
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. Due to the nature of the operating expenditure,
no table is presented for the Taxonomy OpEx indicator, as
the operating expenditure is not material to promoting the
environmental objects defined in the EU Taxonomy.
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Key events during the financial year
On 4 March 2022, Kesko published its 2021 financial
statements, Report by the Board of Directors, Corporate
Governance Statement, Remuneration Report for Governing
Bodies, and the ‘Kesko’s direction’ section of its Annual
Report. The 2021 Sustainability Report and Data Balance
Sheet were published on 11 March 2022. (Stock exchange
release 4.3.2022, investor news 11.3.2022)
Kesko’s Board of Directors approved a new sustainability
strategy for the company, setting clear sustainability targets
for the operations of Kesko and its three divisions. The
focus areas of the strategy are climate and nature, value
chain sustainability, responsibility for people, and good
governance. (Investor news 21.3.2022)
Kesko Corporation’s Annual General Meeting was held
on Thursday, 7 April 2022, at Kesko Corporation’s
headquarters K-Kampus, with special arrangements in
place and without any shareholders or their representatives
present. To prevent the spread of the Covid-19 pandemic,
Kesko’s Board of Directors decided to have exceptional
meeting procedures based on the temporary legislative act
375/2021 in place. Read more in the section: Resolutions of
the 2022 Annual General Meeting (Stock exchange releases
11.2.2022 and 7.4.2022)
Kesko issued a positive profit warning and raised its profit
guidance for 2022 on 25 April 2022, estimating that its
comparable operating profit in 2022 would be in the range
of €730–840 million. Before, the company estimated that
the comparable operating profit would be in the range of
€680–800 million. (Stock exchange release 25.4.2022)
The acquisitions of the Swedish building and home
improvement trade companies Föllinge Såg AB and Djurbergs
Järnhandel Aktiebolag were completed in September, and the
acquisition of the Swedish XL-BYGG Bergslagen in October.
These acquisitions complement Kesko’s growing K-Bygg
chain, which serves professional builders.
A change in Kesko’s Group Management Board: Chief Digital
Officer (CDO) Anni Ronkainen announced she would be
leaving her duties in Kesko Corporation. Ronkainen had been
the CDO and member of Group Management Board since
April 2015. Ronkainen’s last day was 30 September 2022.
(Stock exchange release 4.8.2022)
Kesko announced it would invest over €300 million to build
an 82,000 square metre logistics centre for Onninen and
K-Auto in Hyvinkää, Finland. The project will be completed in
stages between 2025 and 2030. (Investor news 23.9.2022)
Events after the financial year
Kesko announced on 30 January 2023 that it would acquire
Elektroskandia Norge AS, a company operating in technical
wholesale in Norway, from Rexel Group. The acquisition will
strengthen Onninen’s position in technical trade in Norway.
Elektroskandia Norge AS’s net sales in 2022 totalled some
€250 million and the company has 270 employees, 13 sales
points, and a highly automated distribution centre. The
completion of the acquisition is subject to the approval of the
local competition authority.
Resolutions of the 2021 Annual
General Meeting and decisions of the
Board's organisational meeting
The Annual General Meeting of Kesko Corporation on 7
April 2022 adopted the company’s financial statements for
2021. The Annual General Meeting resolved to distribute
a dividend of €1.06 per share on shares held outside the
company. The dividend was paid in four instalments. The
record date of the first dividend instalment of €0.27/
share was 11 April 2022 and the pay date 20 April 2022.
The record date of the second dividend instalment of
€0.26/share was 22 June 2022 and the pay date 29 June
2022. The record date of the third dividend instalment of
€0.27/share was 13 September 2022 and the pay date 20
September 2022. The record date of the fourth dividend
instalment of €0.26/share was 13 December 2022 and the
pay date 20 December 2022. 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 change or otherwise so require. The remaining
distributable assets will remain in equity.
The Annual General Meeting discharged the Board members
and the Managing Director from liability for the financial
year 2021, and approved the Remuneration Report for
Governing Bodies for 2021. The resolution concerning the
Remuneration Report is advisory in nature.
As proposed by the Shareholders’ Nomination Committee,
the General Meeting resolved to leave the Board members'
fees and the basis for reimbursement of their expenses
unchanged. Board members' remuneration and the basis for
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reimbursement of their expenses for the 2022–2023 period
are as follows:
• Board Chair, an annual fee of €102,000
• Board Deputy Chair, an annual fee of €63,000
• Board member, an annual fee of €47,500
• Board member who is the Chair of the Audit Committee,
an annual fee of €63,000
• A meeting fee of €600/meeting for a Board meeting and
its Committee's meeting. A meeting fee of €1,200/Board
meeting for the Board Chair. However, a meeting fee of
€1,200/Committee meeting is to be paid to a Committee
Chair who is not the Chair or Deputy Chair of the Board.
The meeting fees are to be paid in cash.
• Daily allowances and reimbursements of travel expenses
are paid to the Board members in accordance with the
general travel rules of Kesko.
The aforementioned annual fees will be made in Kesko
Corporation’s B shares and in cash, with approximately 30%
of the fees paid in shares. After the transfer of shares, the
remaining amount will be paid in cash. The company will
acquire the shares or transfer shares held by the company
as treasury shares in the name and on behalf of the Board
members. The company is responsible for the costs arising
from the acquisition of the shares. The shares will be
acquired or transferred to the Board members on the first
working day to follow the publication of the interim report
for the first quarter of 2022. A Board member cannot
transfer shares obtained in this manner until either three
years have passed from the day the member has received
the shares or their membership on the Board has ended,
whichever comes first.
As proposed by the Board, the Annual General Meeting
re-elected the firm of authorised public accountants Deloitte
Oy as the company’s Auditor, with APA Jukka Vattulainen
continuing as the auditor with principal responsibility. The
Annual General Meeting resolved that the Auditor's fee and
the reimbursement of the Auditor's expenses are to be paid
according to an invoice approved by the company.
As proposed by the Board, the Annual General Meeting
resolved to authorise the Board to decide on the repurchase
of the company’s B series shares. Under the authorisation,
the Board will be entitled to decide on the acquisition of a
maximum of 16,000,000 of the company’s own B shares.
The authorisation is valid until 30 June 2023.
As proposed by the Board, the Annual General Meeting
resolved to authorise the Board to decide on the issuance
of new B series shares as well as of own B shares held by
the company as treasury shares. The number of B shares
thereby issued would total at maximum 33,000,000. The
authorisation is valid until 30 June 2023.
The Annual General meeting resolved to authorise the Board
to decide on donations in a total maximum of €300,000
for charitable or corresponding purposes until the Annual
General Meeting to be held in 2023, and to decide on the
donation recipients, purposes of use, and other terms and
conditions of the donations.
The resolutions of the Annual General Meeting were
communicated in more detail in a stock exchange release on
7 April 2022.
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
their management and 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.
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 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
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Sustainability reporting
Financial review
Report by the Board of Directors
Consolidated financial
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Parent company's financial
statements (FAS)
Signatures
Corporate governance
Corporate Governance
Statement
Remuneration Report
Data balance sheet
Data strategy
Customers and data
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, supported 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 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, high energy prices 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 the potential expansion of the conflict, as well
as 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.
Business continuity
Serious disturbances affecting resources and operations
that are critical for business continuity, such as personnel,
logistics, and information systems, could cause business
disruptions. For example, a personnel strike related to the
labour market situation, an extensive fire at the central
warehouse, or a telecommunications issue caused by a
power outage could result in a significant problem for
business continuity.
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. The EU General Data
Protection Regulation has placed more importance on the
need to protect personal data.
Availability and retention of personnel
The implementation of strategies and the achievement of
objectives require competent and motivated personnel. The
Covid-19 pandemic made the workforce more mobile and
lowered the threshold of changing jobs. Issues related to the
availability of skilled personnel in logistics and retail have also
become more prominent.
Climate change
The impact of risks related to climate change for Kesko
are assessed using selected climate scenarios. 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.
153
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Signatures
Corporate governance
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Customers and data
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 could
result in negative publicity for Kesko and cause operational
and financial damage. Challenges in Kesko’s corporate
responsibility work include communicating responsibility
principles to customers and ensuring responsibility in the
purchasing chain of products.
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.
Proposal for profit distribution
The Board of Directors of Kesko Corporation proposes to
the Annual General Meeting to be held on 30 March 2023
that a dividend of €1.08 per share be paid for the year
2022 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 €0,27 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 3 April 2023. The Board proposes
that the dividend instalment pay date be 12 April 2023.
The second instalment of €0,27 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 21 June 2023. The Board proposes
that the dividend instalment pay date be 28 June 2023.
The third instalment of €0,27 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 12 September 2023. The Board
proposes that the dividend instalment pay date be 19
September 2023.
The fourth instalment of €0,27 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 12 December 2023. The Board
proposes that the dividend instalment pay date be 19
December 2023.
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,
1 February 2023, a total of 397,458,647 shares were held
outside the company, and the corresponding total amount of
dividends is €429,255,338.76.
The distributable assets of Kesko Corporation total
€1,498,545,852.49, of which profit for the financial year is
€408,925,619.88.
Annual General Meeting
The Board of Directors decided that the Annual General
Meeting will be held on 30 March 2023 at 1.00 pm (EET).
Shares and securities markets
At the end of December 2022, 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 2022, Kesko Corporation held
2,620,361 of its own B shares as treasury shares.
These treasury shares accounted for 0.96% of the total
number of B shares, 0.65% of the total number of shares,
and 0.17% 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
154
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dividend is paid on the shares. At the end of December 2022,
Kesko Corporation's share capital totalled €197,282,584.
The price of a Kesko A share quoted on Nasdaq Helsinki
was €27.15 at the end of 2021, and €20.35 at the end
of December 2022, representing a decrease of 25.05%.
Correspondingly, the price of a B share was €29.34 at the
end of 2021, and €20.62 at the end of December 2022,
representing a decrease of 29.72%. In 2022, the highest
price for an A share was €27.30 and the lowest €17.24.
The highest price for a B share was €29.65 and the lowest
€17.81. The Nasdaq Helsinki All-Share index (OMX Helsinki)
was down by 16.0% and the weighted OMX Helsinki Cap
index by 16.4% in 2022. The Retail Sector Index was down
by 44.3%.
At the end of 2022, the market capitalisation of the A shares
was €2,583 million. The market capitalisation of the B shares
was €5,578 million, excluding the shares held by the parent
company. The combined market capitalisation of the A and B
shares was €8,161 million, down by €3,212 million from the
end of 2021.
In 2022, a total of 7.3 million A shares were traded on Nasdaq
Helsinki. The exchange value of the A shares was €160.5
million. Meanwhile, 143.9 million B shares were traded, with an
exchange value of €3,325 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 2022, the number of registered Kesko
shareholders was 82,983, the highest figure in the company’s
history. At the end of 2022, foreign ownership of all shares
was 38.46%, and foreign ownership of B shares 55.47%.
Share performance and turnover
2020 2021 2022
Share price as at 31 Dec.
A share* € 20.00 27.15 20.35
B share* € 21.04 29.34 20.62
Average share price
A share* € 16.62 26.73 21.89
B share* € 17.72 27.73 23.11
Market capitalisation as at 31 Dec., A share € million 2,539.0 3,446.6 2,583.4
Market capitalisation as at 31 Dec., B share € million 5,676.4 7,926.6 5,577.9
Turnover
A share Million pcs 11** 8** 7**
B share Million pcs 249** 165** 144**
Relative turnover rate
A share % 8.2 6.8 5.8
B share % 91.2 58.6 52.2
Diluted average number of shares* Thousand pcs 396,661 397,033 397,383
* Kesko Corporations ‘s Annual General Meeting on 28 April 2020 decided on a share issue without payment (share split) in which three (3) new A shares were
issued for each existing A share, and three (3) new B shares for each existing B share. The share-specific indicators have been calculated using the post-share split
number of shares. Share-specific indicators for the comparison periods have been adjusted to correspond to the post-share split number of shares.
** Calculated with post-split number of shares
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Financial review
Report by the Board of Directors
Consolidated financial
statements (IFRS)
Parent company's financial
statements (FAS)
Signatures
Corporate governance
Corporate Governance
Statement
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Data balance sheet
Data strategy
Customers and data
Analysis of shareholding
Analysis of shareholding by shareholder type as at 31 Dec. 2022
All shares Number of shares, pcs Percentage of all shares, %
Nominee-registered and non-Finnish
holders 153,873,070 38.46
Households 94,783,242 23.69
Non-financial corporations and housing
corporations 91,883,579 22.97
General government* 28,367,242 7.09
Non-profit institutions serving households** 20,193,712 5.05
Financial and insurance corporations 10,978,163 2.74
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 73,976,460 58.27 18.49
Households 23,549,520 18.55 5.89
General government* 15,058,525 11.86 3.76
Non-profit institutions serving households** 10,657,043 8.40 2.66
Nominee-registered and non-Finnish holders 2,360,677 1.86 0.59
Financial and insurance corporations 1,345,803 1.06 0.34
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 151,512,393 55.47 37.87
Households 71,233,722 26.08 17.81
Non-financial corporations and housing
corporations 17,907,119 6.56 4.48
General government* 13,308,717 4.87 3.33
Financial and insurance corporations 9,632,360 3.53 2.41
Non-profit institutions serving households** 9,536,669 3.49 2.38
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. 2022
All shares
Number of shares
Number of
shareholders, pcs
Percentage
of share-
holders, % Share total, pcs
Percentage of
shares, %
1−100 35,451 42.72 1,348,466 0.34
101−500 22,150 26.69 5,855,040 1.46
501−1,000 8,068 9.72 6,086,734 1.52
1,001−5,000 12,284 14.80 28,897,640 7.22
5,001−10,000 2,448 2.95 17,405,203 4.35
10,001−50,000 2,136 2.57 43,494,569 10.87
50,001−100,000 239 0.29 16,809,244 4.20
100,001−500,000 169 0.20 34,741,344 8.68
500,001− 38 0.05 245,440,768 61.35
Total 82,983 100.00 400,079,008 100.00
A shares
Number of shares
Number of
shareholders, pcs
Percentage
of A share-
holders, % A share total, pcs
Percentage of A
shares, %
1−100 13,246 54.60 458,587 0.36
101−500 5,265 21.70 1,334,111 1.05
501−1,000 1,422 5.86 1,076,456 0.85
1,001−5,000 2,486 10.25 6,683,638 5.27
5,001−10,000 715 2.95 5,154,976 4.06
10,001−50,000 884 3.64 18,308,419 14.42
50,001−100,000 127 0.52 9,039,860 7.12
100,001−500,000 102 0.42 19,566,346 15.41
500,001− 14 0.06 65,325,635 51.46
Total 24,261 100.00 126,948,028 100.00
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Good governance
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Financial review
Report by the Board of Directors
Consolidated financial
statements (IFRS)
Parent company's financial
statements (FAS)
Signatures
Corporate governance
Corporate Governance
Statement
Remuneration Report
Data balance sheet
Data strategy
Customers and data
B shares
Number of shares
Number of
shareholders, pcs
Percentage
of B share-
holders, % B share total, pcs
Percentage of B
shares, %
1−100 24,470 38.48 965,355 0.35
101−500 18,151 28.54 4,883,408 1.79
501−1,000 7,149 11.24 5,405,983 1.98
1,001−5,000 10,466 16.46 23,883,547 8.74
5,001−10,000 1,856 2.92 13,148,495 4.81
10,001−50,000 1,299 2.04 25,318,124 9.27
50,001−100,000 113 0.18 7,860,549 2.88
100,001−500,000 75 0.12 16,172,611 5.92
500,001− 21 0.03 175,492,908 64.25
Total 63,600 100.00 273,130,980 100.00
10 largest shareholders by number of shares held as at 31 Dec. 2022
Number of
shares, pcs
Percentage of
shares, %
Number of
votes
Percentage of
votes, %
1. K-Retailers' Association 20,529,553 5.13 205,295,530 13.31
2. Ilmarinen Mutual Pension
Insurance Company 14,635,984 3.66 146,359,840 9.49
3. Vähittäiskaupan Takaus Oy 13,195,008 3.30 131,950,080 8.55
4. Foundation for Vocational
Training in the Retail Trade 5,290,612 1.32 52,906,120 3.43
5. Elo Mutual Pension Insurance 5,224,489 1.31 8,990,890 0.58
6. Varma Mutual Pension
Insurance Company 4,303,944 1.08 4,303,944 0.28
7. The State Pension Fund 2,700,000 0.68 2,700,000 0.18
8. K-Food Retailers' Club 2,374,951 0.59 23,749,510 1.54
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
Does not contain shares held by Kesko Corporation, amounting to 2,620,361 on
31 Dec. 2022.
10 largest shareholders by number of votes as at 31 Dec. 2022
Number of
shares, pcs
Percentage of
shares, %
Number of
votes
Percentage of
votes, %
1. K-Retailers' Association 20,529,553 5.13 205,295,530 13.31
2. Ilmarinen Mutual Pension
Insurance Company 14,635,984 3.66 146,359,840 9.49
3. Vähittäiskaupan Takaus Oy 13,195,008 3.30 131,950,080 8.55
4. Foundation for Vocational
Training in the Retail Trade 5,290,612 1.32 52,906,120 3.43
5. K-Food Retailers' Club 2,374,951 0.59 23,749,510 1.54
6. Heimo Välinen Oy 2,280,000 0.57 22,800,000 1.48
7. Food Paradise Oy 1,640,164 0.41 16,401,640 1.06
8. Elo Mutual Pension Insurance 5,224,489 1.31 8,990,890 0.58
9. OP-Finland mutual fund 1,454,861 0.36 7,783,319 0.51
10. T.A.T. Invest Oy 792,080 0.20 7,726,400 0.50
157
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Parent company's financial
statements (FAS)
Signatures
Corporate governance
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Statement
Remuneration Report
Data balance sheet
Data strategy
Customers and data
Management's shareholdings
At the end of December 2022, Kesko Corporation's Board
members, the President and CEO and the corporations
controlled by them held 1,360,800 Kesko Corporation A
shares and 526,022 Kesko Corporation B shares, i.e. a total
of 1,886,822 shares, which represents 0.47% of the total
number of shares and 0.92 % of votes carried by all shares
of the Company.
At 31 December 2022, the President and CEO held 5,000
Kesko Corporation A shares and 385,786 B shares, which
represented 0.10% of the total number of shares and
0.03% of votes carried by all shares of the Company. At 31
December 2022, the Group Management Board including
the President and CEO held 7,824 Kesko Corporation A
shares and 993,933 Kesko Corporation B shares, which
represented 0.25% of the total number of shares and 0.07%
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 2022, Kesko
Corporation transferred 345,104 Kesko B shares held as
treasury shares to members of management and other
selected key persons in accordance with the terms and
conditions of share award plans, while 1,719 B shares were
returned to the company without consideration based on
the same terms and conditions. Kesko issued related stock
exchange releases on 7 December 2022, 8 July 2022,
20 May 2022, 18 March 2022, 15 March 2022 and 17
February 2022. Kesko issued a stock exchange release on
3 February 2022 regarding the most recent share-based
commitment and incentive plans. Kesko Corporation also
transferred a total of 4,918 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 2022.
Kesko’s Annual General Meeting of 7 April 2022 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 2023. The
authorisations were communicated in a stock exchange
release on 7 April 2022.
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Report by the Board of Directors
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Parent company's financial
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Corporate governance
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Statement
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Data balance sheet
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Customers and data
Group's key performance indicators
2020 2021 2022
Income statement
Net sales € million 10,669.2 11,300.2 11,809.0
Change in net sales % -0.5 5.9 4.5
Change in net sales, comparable % 3.6 8.2 4.4
Operating profit, comparable € million 567.8 775.5 815.1
Operating profit as percentage of net
sales, comparable % 5.3 6.9 6.9
Operating profit € million 600.2 775.2 816.5
Operating profit as percentage of net sales % 5.6 6.9 6.9
Profit for the year (incl. non-controlling
interests) € million 435.3 571.8 609.9
Profit for the year as percentage of net
sales % 4.1 5.1 5.2
Profitability
Return on equity, group % 20.1 24.2 23.1
Return on equity, comparable, group % 17.8 24.1 23.2
Return on capital employed % 12.7 17.2 17.0
Return on capital employed, comparable % 12.0 17.2 16.9
Funding and financial position
Interest-bearing net debt, group € million 2,310.3 1,907.3 2,104.2
Interest-bearing net debt excluding lease
liabilities € million 285.3 -21.3 184.1
Gearing, group % 105.5 75.4 76.7
Equity ratio, group % 33.1 36.6 36.9
Interest-bearing net debt/EBITDA
excluding the impact of IFRS 16, group 0.4 0.0 0.2
2020 2021 2022
Other performance indicators
Capital expenditure € million 398.4 276.6 449.2
Capital expenditure as percentage of net
sales % 3.7 2.4 3.8
Cash flow from operating activities € million 1,152.4 1,152.0 915.2
Cash flow from investing activities € million -421.3 -292.3 -344.3
Personnel, average for the period, group
total 17,629 14,232 14,633
Personnel, as at 31 Dec., group total 17,650 17,402 17,841
2020 2021 2022
Share performance indicators
Earnings/share, basic and diluted** € 1.09 1.44 1.53
Earnings/share, comparable, basic** 0.97 1.43 1.54
Equity/share** € 5.52 6.37 6.90
Dividend/share* € 0.75 1.06 1.08
Payout ratio % 69.8 74.3 70.4
Payout ratio, comparable % 77.4 74.7 70.1
Cash flow from operating activities/
share** € 2.91 2.90 2.30
Price/earnings ratio (P/E), A share 18.62 19.04 13.26
Price/earnings ratio (P/E), B share 19.59 20.57 13.44
Effective dividend yield, A share % 3.8 3.9 5.3
Effective dividend yield, B share % 3.6 3.6 5.2
* Proposal to the General Meeting
**Kesko Corporations ‘s Annual General Meeting on 28 April 2020 decided on a share issue without payment (share
split) in which three (3) new A shares were issued for each existing A share, and three (3) new B shares for each
existing B share. The share-specific indicators have been calculated using the post-share split number of shares.
Share-specific indicators for the comparison periods have been adjusted to correspond to the post-share split number
of shares.
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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 interest-bearing 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
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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
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Reconciliation of alternative performance measures to IFRS
financial statements
€ million 1–12/2022 1–12/2021
Continuing operations
Items affecting comparability
Gains on disposal 0.0 1.4
Losses on disposal -0.1 -0.0
Impairment charges - -5.4
Structural arrangements 1.6 3.7
Items in operating profit affecting comparability 1.5 -0.3
Items in financial items affecting comparability -3.6 2.9
Items in income taxes affecting comparability -0.0 1.0
Total items affecting comparability -2.2 3.5
Items in EBITDA affecting comparability -0.1 4.7
Operating profit, comparable
Operating profit 816.5 775.2
Net of
Items in operating profit affecting comparability 1.5 -0.3
Operating profit, comparable 815.1 775.5
EBITDA
Operating profit 816.5 775.2
Plus
Depreciation and impairment charges 169.0 176.8
Depreciation and impairment charges for right-of-use assets 322.1 310.3
EBITDA 1,307.7 1,262.2
EBITDA, comparable
EBITDA 1,307.7 1,262.2
Net of
Items in EBITDA affecting comparability -0.1 4.7
EBITDA, comparable 1,307.8 1,257.6
€ million 1–12/2022 1–12/2021
Profit before tax, comparable
Profit before tax 761.1 712.9
Net of
Items in operating profit affecting comparability 1.5 -0.3
Items in financial items affecting comparability -3.6 2.9
Profit before tax, comparable 763.2 710.4
Net profit, comparable
Comparable profit before tax 763.2 710.4
Net of
Income tax 151.2 141.1
Items in income taxes affecting comparability -0.0 1.0
Net profit, comparable 612.0 568.2
Net profit attributable to owners of the parent, comparable
Net profit, comparable 612.0 568.2
Net profit attributable to owners of the parent, comparable 612.0 568.2
Earnings/share, comparable, €
Net profit attributable to owners of the parent, comparable 612.0 568.2
Average number of shares, basic, 1,000 pcs 397,383 397,033
Earnings/share, comparable, € 1.54 1.43
Return on capital employed, %
Operating profit 816.5 775.2
Capital employed, average 4,811.9 4,508.9
Return on capital employed, % 17.0 17.2
Return on capital employed, comparable, %
Operating profit, comparable 815.1 775.5
Capital employed, average 4,811.9 4,508.9
Return on capital employed, comparable, % 16.9 17.2
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€ million 1–12/2022 1–12/2021
Group
Return on equity, %
Net profit 609.9 571.8
Equity, average 2,635.8 2,359.4
Return on equity, % 23.1 24.2
Return on equity, comparable, %
Net profit, comparable 612.0 568.2
Equity, average 2,635.8 2,359.4
Return on equity, comparable, % 23.2 24.1
Equity ratio, %
Shareholders’ equity 2,742.2 2,529.5
Total assets 7,474.0 6,966.0
Advances received 46.9 46.2
Equity ratio, % 36.9 36.6
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FINANCIAL STATEMENTS
FINANCIAL
STATEMENTS
Consolidated income statement
| 1 Jan.–31 Dec. | 1 Jan.–31 Dec. | ||||
€ million | Note | 2022 | % | 2021 | % |
Net sales | 2.1 | 100.0 | 100.0 | ||
Material and services | 2.3 | - | -87.3 | - | -85.8 |
Change in inventory | 2.0 | 0.4 | |||
Other operating income | 2.4 | 8.5 | 8.5 | ||
Employee benefit expenses | 2.5 | - | -6.7 | - | -6.8 |
| Depreciation, amortisation | |||||
and impairment charges | 3.2 3.3 | - | -1.4 | - | -1.6 |
| Depreciation and impairment charges | |||||
for right-of-use assets | 3.4 | - | -2.7 | - | -2.7 |
Other operating expenses | 2.5 | - | -5.7 | - | -5.4 |
Share of result of joint ventures | 0.2 | 0.2 | |||
Operating profit | 6.9 | 6.9 | |||
Interest income and other finance income | 4.4 | 0.1 | 0.1 | ||
Interest expense and other finance costs | 4.4 | 0.0 | - | -0.1 | |
Interest expense for lease liabilities | 4.4 | - | -0.6 | - | -0.6 |
Foreign exchange differences | 4.4 | - | -0.0 | - | -0.0 |
Total finance income and costs | 4.4 | - | -0.5 | - | -0.6 |
Share of result of associates | 0.0 | 0.1 | |||
Profit before tax | 6.4 | 6.3 | |||
Income tax | 2.7 | - | -1.3 | - | -1.2 |
Net profit for the year | 5.2 | 5.1 | |||
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. | ||
on | Note | 2022 | 2021 |
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 |
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Consolidated statement of financial position
€ million | Note | 31 Dec. 2022 | % | 31 Dec. 2021 | % |
| 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 | 62.7 | 64.2 | |||
| 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 | 37.3 | 35.8 | |||
Non-current assets classified as held for sale | 0.0 | 0.0 | |||
Total assets | 100.0 | 100.0 |
€ million | Note | 31 Dec. 2022 | % | 31 Dec. 2021 | % |
| 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 | 36.7 | 36.3 | |||
| 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 | 25.9 | 27.2 | |||
| 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 | 37.4 | 36.5 | |||
Total liabilities | 63.3 | 63.7 | |||
Total equity and liabilities | 100.0 | 100.0 |
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Consolidated statement of cash flows
| 1 Jan.–31 Dec. | 1 Jan.–31 Dec. | ||
€ million | Note | 2022 | 2021 |
| 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 received from associated companies | |||
and joint ventures | |||
Income taxes paid | - | - | |
Net cash flows from operating activities, total |
€ million Note
1 Jan.–31 Dec.
2022
1 Jan.–31 Dec.
2021
| Cash flows from investing activities | |||
| Payments for acquisition of subsidiary shares, | |||
net of cash acquired | 3.1 | - | - |
| Payments for investments consolidated | |||
using the equity method | 2.9 | - | |
| 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 |
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| Consolidated statement of changes in equity | ||||||||
| Currency | ||||||||
| Share | translation | Revaluation | Treasury | Retained | Total | |||
| € million | capital | Reserves | differences | reserve | shares | earnings | equity | |
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 | - | - | ||||||
Balance as at 1 January 2021 | - | - | - | |||||
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 | ||||||||
Cash flow hedge revaluation | - | - | ||||||
Other items | ||||||||
Total comprehensive income for the year, net of tax | ||||||||
Total comprehensive income for the period | ||||||||
Balance as at 31 December 2021 | - | - | ||||||
Further information on share capital and reserves is disclosed in Note 4.2 and on share-based compensation plans in Note 5.3. Deferred tax related to components of other comprehensive income is presented in Note 2.7. | 168 |
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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.
address Työpajankatu 12, Helsinki, Finland and from the
internet at www.kesko.fi.
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.
1.1 Basic information about the Company
divisions, namely the grocery trade, the building and
technical trade, and the car trade.
The Group's parent company, Kesko Corporation , is a
Finnish public limited company constituted in accordance
with the laws of Finland. The Company's business ID is
0109862-8, it is domiciled in Helsinki, Finland , and it's
registered address is PO Box 1, FI-00016 KESKO , Finland .
Copies of Kesko Corporation's financial statements and the
consolidated financial statements are available from Kesko
Corporation, PO Box 1, Helsinki, FI-00016 KESKO, visiting
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 estimates and judgements made are continuously
evaluated, and they are based on historical experience and
other factors, including expectations of future events that
are believed to be reasonable under the circumstances.
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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
The critical accounting estimates and assumptions used in
the preparation of consolidated financial statements are
further described in the corresponding notes.
• Acquisitions (3.1)
• Intangible assets (3.3)
• Leases (3.4)
• Inventories (3.5)
• Trade and other current receivables (3.6)
• Pension assets (3.7)
• Provisions (3.9)
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retail chains. Kespro is a foodservice provider and wholesaler in Finland. K-Citymarket's home
and speciality goods trade operates in home and speciality goods retailing in Finland.
Building and technical trade
The building and technical trade operates in the wholesale, retail and B2B trade in Finland,
Sweden, Norway, the Baltic countries and Poland. In the building and home improvement
trade, Kesko is responsible for the chains’ concepts, marketing, purchasing and logistics
services and the store site network in all operating countries and for retailer resources in
Finland where the retailer business model is employed. Kesko acts as a retail operator in
Sweden and Norway. The retail store chains are K-Rauta (Finland and Sweden), K-Bygg
(Sweden) and Byggmakker (Norway). The building and home improvement stores serve both
consumers and business customers. Onninen provides HEPAC and electrical products and
services to business customers in the Baltic Sea Region and Scandinavia. Onninen has around
130 places of business in Finland, Sweden, Norway, Poland and the Baltic countries.
Speciality goods trade is included in the building and technical trade division, and comprises
leisure trade in Finland, with the Intersport and Budget Sport chains. The operations of the
Kookenkä and The Athlete’s Foot shoe store chains were discontinued in 2021 as part of the
strategy for leisure trade.
Car trade
Car trade comprises the business operations of new cars, used cars, services and leasing.
The new cars business includes the operations for importing, marketing and retailing of
Volkswagen, Audi, SEAT, CUPRA, Porsche and Bentley passenger cars and of Volkswagen and
MAN commercial vehicles in Finland, and of SEAT and CUPRA passenger cars in the Baltics.
The used car business includes the purchasing of used cars from Finland and abroad and the
retailing of the cars in Finland. Services operations include repair and maintenance services,
spare parts sales and accessories services in Finland. The leasing business provides car leasing
services for both private and corporate customers. Services provided by the car trade division
also include the K-Charge charging network for electric vehicles.
Common functions
Common functions comprise Group support functions.
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Segment information 2022
Profit
€ million Grocery trade
Building and
technical trade Car trade Common functions Total
Division net sales 6,124.7 4,805.1 910.9 -0.0 11,840.7
of which intersegment sales -23.3 0.0 -8.2 -0.3 -31.7
Net sales from external customers 6,101.4 4,805.2 902.7 -0.3 11,809.0
Change in net sales in local currency excluding acquisitions and disposals, % 3.6 9.4 -11.4 - 4.4
Change in net sales, % 3.6 9.5 -11.4 - 4.5
Other division income 789.0 177.2 10.6 28.8 1,005.6
of which intersegment income -0.1 -2.1 -0.1 -4.6 -6.9
Other operating income from external customers 788.9 175.1 10.6 24.1 998.7
Depreciation and amortisation -84.4 -28.4 -26.6 -29.7 -169.0
Depreciation and impairment charges for right-of-use assets -213.7 -92.4 -10.1 -5.9 -322.1
Share of result of joint ventures 23.5 23.5
Operating profit 461.5 340.8 47.8 -33.6 816.5
Items affecting comparability 1.1 1.0 -0.6 -0.1 1.5
Comparable operating profit 460.4 339.8 48.4 -33.5 815.1
Finance income and costs -56.0
Share of result of associates 0.6
Profit before tax 761.1
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Assets and liabilities
€ million
Grocery
trade
Building
and
technical
trade Car trade
Common
opera-
tions
Elimina-
tions Total
Property, plant, equipment
and intangible assets 1,333.6 844.6 243.0 105.1 -1.6 2,524.6
Right-of-use assets 1,189.3 434.3 51.8 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 270.3 647.9 197.2 1,115.4
Trade receivables 369.2 561.1 41.1 2.9 -5.1 969.3
Other non-interest-bearing
receivables 121.6 231.5 15.2 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 2,884.4 548.3 456.7 -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 2,884.4 548.3 456.7 -40.3 7,474.0
€ million
Grocery
trade
Building
and
technical
trade Car trade
Common
opera-
tions
Elimina-
tions Total
Trade payables 596.7 837.7 35.3 32.3 -2.6 1,499.4
Other non-interest-bearing
liabilities 294.7 293.1 82.9 55.8 -35.4 691.1
Provisions 0.8 2.2 19.0 0.2 22.2
Liabilities included in
capital employed 892.2 1,133.0 137.3 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 1,133.0 137.3 88.3 -38.1 4,731.8
Total capital employed as
at 31 December 2,416.5 1,751.3 411.0 368.4 -2.2 4,945.0
Average capital employed 2,353.6 1,752.1 379.5 328.9 -2.2 4,811.9
Return on capital
employed, %, comparable 19.6 19.4 12.7 16.9
Number of personnel as at
31 December 8,316 7,226 1,298 1,001 17,841
Average number of
personnel 6,288 6,155 1,235 955 14,633
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Segment information 2021
Profit
€ million Grocery trade
Building and
technical trade Car trade Common functions Total
Division net sales 5,909.0 4,387.7 1,028.3 0.0 11,325.1
of which intersegment sales -17.8 0.2 -6.7 -0.5 -24.8
Net sales from external customers 5,891.2 4,388.0 1,021.6 -0.5 11,300.2
Change in net sales in local currency excluding acquisitions and disposals, % 3.1 14.7 15.2 - 8.2
Change in net sales, % 3.1 20.6 15.2 - 5.9
Other division income 762.9 171.3 9.7 17.6 961.5
of which intersegment income -0.1 -1.1 -0.1 -2.8 -4.2
Other operating income from external customers 762.7 170.2 9.6 14.8 957.3
Depreciation and amortisation -79.8 -32.7 -31.5 -32.7 -176.8
Depreciation and impairment charges for right-of-use asses -205.5 -89.2 -9.8 -5.9 -310.3
Share of result of joint ventures 28.0 28.0
Operating profit 443.9 323.1 46.2 -38.0 775.2
Items affecting comparability 0.9 5.0 -6.1 -0.3 -0.3
Comparable operating profit 442.9 318.0 52.2 -37.7 775.5
Finance income and costs -68.2
Share of result of associates 5.9
Profit before tax 712.9
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Assets and liabilities
€ million
Grocery
trade
Building
and
technical
trade Car trade
Common
functions
Elimina-
tions Total
Property, plant, equipment
and intangible assets 1,161.7 817.3 242.5 96.7 -1.6 2,316.5
Right-of-use assets 1,170.3 440.3 58.4 66.0 1,735.0
Interests in associates and
joint ventures and other
investments 7.7 168.7 0.0 74.4 -0.6 250.1
Pension assets 19.8 4.5 70.4 94.7
Inventories 225.4 525.5 143.4 894.3
Trade receivables 349.7 524.2 35.2 2.8 -2.6 909.2
Other non-interest-bearing
receivables 78.4 187.7 23.3 30.6 -15.8 304.2
Interest-bearing receivables 0.6 71.9 72.5
Non-current assets
classified as held for sale 0.5 0.5
Assets included in capital
employed 3,013.7 2,668.2 502.6 413.2 -20.6 6,577.1
Unallocated items
Deferred tax assets 1.1
Other financial assets 107.9
Cash and cash equivalents 279.8
Total assets 3,013.7 2,668.2 502.6 413.2 -20.6 6,966.0
€ million
Grocery
trade
Building
and
technical
trade Car trade
Common
functions
Elimina-
tions Total
Trade payables 569.1 716.6 25.0 23.3 -1.4 1,332.6
Other non-interest-bearing
liabilities 283.7 306.4 95.6 49.0 -17.0 717.7
Provisions 0.9 1.0 27.9 0.0 29.8
Liabilities included in
capital employed 853.7 1,024.0 148.5 72.3 -18.4 2,080.0
Unallocated items
Interest-bearing liabilities 366.5
Lease liabilities 1,928.6
Other non-interest-bearing
liabilities 23.5
Deferred tax liabilities 37.9
Total liabilities 853.7 1,024.0 148.5 72.3 -18.4 4,436.5
Total capital employed as
at 31 December 2,160.0 1,644.2 354.2 340.9 -2.2 4,497.1
Average capital employed 2,145.6 1,673.5 374.4 317.5 -2.1 4,508.9
Return on capital
employed, %, comparable 20.6 19.0 14.0 17.2
Number of personnel as at
31 December 8,303 6,940 1,164 995 17,402
Average number of
personnel 6,126 5,977 1,225 905 14,232
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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 2022 2021
Gains on disposal +0,0 +1,4
Losses on disposal -0,1 -0.0
Impairment - -5.4
Structural arrangements +1,6 +3,7
Items in operating profit affecting comparability, total +1,5 -0.3
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).
In 2021 the most significant items affecting comparability were the €0.9 million sales gains
from grocery trade properties, the €6.5 million sales gain on real estate in the building and
technical trade division, included in the share of result of joint ventures, and the €6.1 million
costs related to the restructuring of the car trade division and impairment charges.
In 2021 items related to structural arrangements are presented on the following lines in the
consolidated income statement: material and services (€0.0 million), change in inventory
(€0.6 million), employee benefit expenses (€-4.8 million), depreciation, amortisation and
impairment charges (€-0.9 million), depreciation and impairment charges for right-of-use
assets (€1.2 million), other operating expenses (€0.9 million) and share of result of joint
ventures (€6.5 million).
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Reconciliation of alternative performance measures to IFRS financial statements
€ million 2022 2021
Operating profit, comparable
Operating profit 816.5 775.2
Net of
Items in operating profit affecting comparability 1.5 -0.3
Operating profit, comparable 815.1 775.5
Return on capital employed, comparable, %
Operating profit, comparable 815.1 775.5
Capital employed, average 4,811.9 4,508.9
Return on capital employed, comparable, % 16.9 17.2
Comparable change in net sales
Net sales, building and technical trade 4,805.1 4,387.7
Foreign exchange effects 35.3
Effect of acquisitions and divestments -61.0 -17.3
Change in net sales, comparable, % 9.4
Net sales, Group 11,809.0 11,300.2
Foreign exchange effects 35.3
Effect of acquisitions and divestments -61.0 -17.3
Change in net sales, comparable, % 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
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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.
2022
€ million Finland
Other 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 10,372 3,036 337 888 14,633
2021
€ million Finland
Other Nordic
countries Baltic countries Others Eliminations Total
Net sales 9,290.7 1,618.6 94.8 303.3 -7.1 11,300.2
Assets included in capital employed 4,989.8 1,226.6 220.9 139.8 6,577.1
Average number of personnel 10,114 2,980 316 822 14,232
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2.4 Other operating income
Revenue recognition, including the definition of income reported under other operating
income, is presented in Note 2.1.
€ million 2022 2021
Income from services 773.7 753.7
Lease income 44.0 40.9
Gains on disposal of property, plant, equipment and intangible
assets 0.7 1.7
Gains on disposal of businesses 0.0 0.6
Realised gains on derivative contracts and changes in fair value 16.1 7.2
Others 164.3 153.3
Total 998.7 957.4
Income from services mainly comprises chain and store site fees paid by retailers' chain
companies.
More information on lease income is provided in Note 3.4.
2.5 Operating expenses
Average number of the Group personnel
2022 2021
Grocery trade 6,288 6,126
Building and technical trade 6,155 5,977
Car trade 1,235 1,225
Common functions 955 905
Total, Group 14,633 14,232
2.3 Material and services
€ million 2022 2021
Material and services -10,088.5 -9,488.6
External services -216.0 -206.7
Total -10,304.5 -9,695.3
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2.6 Foreign exchange differences recognised in operating profit
€ million 2022 2021
Net sales -0.0 -0.1
Other operating income 16.1 7.2
Material and services 1.2 -0.4
Other operating expenses -11.1 -4.0
Total 6.1 2.8
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2.9 Additional details related to the statement of cash flows
Adjustments to cash flows from operating activities
€ million 2022 2021
Adjustment of non-cash transactions in the income statement
and items presented elsewhere in the statement of cash flows:
Change in provisions -7.5 -8.2
Share of results of associates and joint ventures -24.1 -34.1
Impairments - 5.4
Credit losses 4.0 2.2
Gains on disposal of property, plant, equipment and intangible
assets and business operations 3.5 -1.0
Losses on disposal of property, plant, equipment and intangible
assets and business operations 0.4 4.5
Share-based compensation -9.2 -10.6
Defined benefit pensions 5.5 44.6
Others 7.3 6.2
Total -20.2 9.0
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 2022 2021
Total acquisitions of property, plant, equipment and intangible
assets 399.1 262.6
Total acquisitions of subsidiaries and investments in associates
and other investments 50.1 14.0
Total capital expenditure 449.2 276.6
of which cash payments 386.4 247.4
Loans relating to acquired companies and cash and cash
equivalents 19.9 5.3
Payments arising from prior period investing activities -21.9 -10.4
Capital expenditure financed with liabilities 24.4 34.2
Pension Fund return of surplus assets 40.3 -
Total 449.2 276.6
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Acquisitions in Norway
Kesko's Norwegian subsidiary Byggmakker CF AS acquired the entire capital stock of 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. The goodwill arising from the acquisition is not
tax deductible. The consolidated income statement includes minor acquisition-related costs
under “Other operating expenses”, presented as items affecting comparability. The impact of
the acquired business to the Group’s net sales and operating profit was minor.
Acquisitions in 2021
Byggarnas Partner i Sverige AB
Kesko’s subsidiary Fresks Försäljning AB acquired the entire capital stock of Byggarnas Partner
i Sverige AB, a Swedish building and home improvement trade business for professional
builders, on 1 September 2021. The consideration paid was €9.7 million. The acquisition
strengthens Kesko’s position in the building and home improvement market especially in the
Stockholm region, where Byggarnas Partner has a network of five stores.
The fair value of the assets acquired for Kesko Group amounted to €7.9 million and the
liabilities assumed to €4.5 million. The fair value of the intangible assets acquired at the
date of acquisitions totalled €0.6 million. The goodwill arising from the acquisition is not tax
deductible. The consolidated income statement includes minor acquisition-related costs under
“Other operating expenses”, presented as items affecting comparability. The impact of the
acquired business to the Group’s net sales and operating profit was minor.
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.
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2022 2021
€ million
Acquisitions
in Sweden
Acquisitions
in Norway
Byggarnas
Partner i
Sverige AB
Debt-free acquisition price 38.3 12.5 9.7
Fair values of assets acquired and liabilities
assumed at the date of acquisition
Intangible assets 4.0 1.1 0.6
Property, plant, equipment, right-of-use assets
and investments 14.5 2.5 1.5
Inventories 10.2 2.8 3.1
Receivables 8.5 1.4 2.8
Deferred tax asset 0.0 0.1
Cash and cash equivalents 5.9 1.3
Total assets 43.1 9.2 7.9
Trade payables, other payables, provisions,
lease liabilities 22.2 3.7 4.3
Deferred tax liability 1.6 0.3 0.3
Total liabilities 23.8 4.0 4.5
Net assets acquired, total 19.3 5.2 3.4
Goodwill 19.0 7.3 6.3
Cash flow impact of acquisition
Consideration paid -38.3 -12.5 -9.7
Cash and cash equivalents acquired 5.9 1.3 0.0
Cash flow impact of acquisition -32.4 -11.2 -9.7
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194
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195
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The Group operates several pension plans in different operating countries. In Finland, the
statutory pension provision of personnel is provided through pension insurance companies
and the voluntary supplementary pension provision is mainly provided through Kesko Pension
Fund. The statutory pension provision provided through pension insurance companies is a
defined contribution plan. Defined benefit plans comprise mainly supplementary pension
provision provided through Kesko Pension Fund.
Pension plans in foreign subsidiaries are managed in accordance with local regulations and
practices, and they are defined contribution plans.
Kesko Pension Fund
Kesko Pension Fund is a pension provider of its members providing supplementary retirement
benefits to employees who are beneficiaries of the Pension Fund. New members have not been
included in the Pension Fund after 9 May 1998. As the conditions set out in the Fund's rules
are met, beneficiaries between 60 and 65 years of age are granted an old-age pension. The
amount of retirement benefit granted by the Fund is the difference between the employee's
retirement benefit based on his/her pensionable salary calculated in accordance with the
Fund's rules and the statutory pension. In addition to the individually calculated pensionable
salary, the retirement benefit amount of each beneficiary is impacted by the duration of his/her
membership of the Pension Fund. The Pension Fund had 2,148 beneficiaries, of whom 286 were
active employees and 1,862 were retired employees. Kesko Group's contribution to the Pension
Fund's obligation is 96.4% (96.4%). The notes present Kesko Group's interest in the Pension
Fund except for the analysis of assets by category and the maturity analysis of the obligation.
In addition to its rules, the Pension Fund's operations are regulated by the Employee Benefit
Funds Act, the decrees under the Act and official instructions, and the Fund's operations are
supervised by the Financial Supervisory Authority. The regulations include stipulations on
the calculation of pension obligation and its coverage, for example. The pension obligation
shall be fully covered by the plan assets, any temporary deficit is only allowed exceptionally.
In addition, the regulations include detailed stipulations on the acceptability of the covering
assets and the diversification of investment risks.
Kesko Pension Fund did not charge contributions from its members during this or the previous
financial year. In 2022 Kesko Pension Fund paid €42.9 million in total in return of surplus
assets to Finnish Group companies. The return of surplus assets included the property of
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K-Citymarket in Turtola in Tampere, €40.3 million. Kesko Group does not expect to pay
contributions to the Pension Fund in 2023.
The defined benefit asset recognised in the balance sheet is determined
as follows:
€ million 2022 2021
Present value of defined benefit obligation -225.2 -282.1
Fair value of plan assets 312.1 376.9
Net assets recognised in the balance sheet 86.9 94.7
Movement in the net assets recognised in the balance sheet:
As at 1 January 94.7 89.6
Income/cost recognised in the income statement -4.1 -7.2
Remeasurement 38.3 49.9
Return of surplus assets -42.9 -38.6
Contributions to plan and plan costs 1.0 1.0
As at 31 December 86.9 94.7
€ million
Present value of
defined benefit
obligation
Fair value of
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 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
€ million
Present value of
defined benefit
obligation
Fair value of
plan assets Total
As at 1 January 2021 -294.5 384.0 89.5
Current service cost -4.2 -4.2
Gains or losses on settlement -2.8 -2.8
Interest cost/income -1.3 1.6 0.3
Plan costs -0.5 -0.5
-8.3 1.1 -7.2
Remeasurement
Return on plan assets 42.7 42.7
Gain/loss from changes in demographic
assumptions 0.4 0.4
Gain/loss from changes in financial
assumptions 12.1 12.1
Experience gains/losses -5.2 -5.2
7.3 42.7 49.9
Contributions to plan and plan costs 1.0 1.0
Return of surplus assets -38.6 -38.6
Benefit payments 13.3 -13.3 0.0
As at 31 December 2021 -282.2 376.9 94.7
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
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Plan assets were comprised as follows in 2021
€ million Quoted Unquoted Total
Europe
Equity instruments 34.5 34.5
Debt instruments 42.8 14.4 57.1
Investment funds 64.9 10.2 75.1
Properties 120.0 120.0
United States
Investment funds 78.1 78.1
Other countries
Investment funds 29.1 29.1
Total 214.9 179.1 394.0
€ million 2022 2021
Kesko Corporation shares included in fair value - -
Properties leased by Kesko Group included in fair value 86.9 120.0
Principal actuarial assumptions:
2022 2021
Discount rate 3.56% 0.89%
Salary growth rate 2.97% 2.00%
Inflation 2.49% 1.50%
Pension growth rate 2.68% 1.80%
Average service expectancy, years 5 7
Weighted average duration of pension obligations and expected maturity
analysis of undiscounted pension obligations
2022 2021
Weighted average duration of pension obligations, years 12 15
Expected maturity analysis of undiscounted pension obligations,
€ million
Less than 1 year 15.4 14.1
Between 1−10 years 120.5 111.7
Between 10−20 years 110.2 94.6
Between 20−30 years 76.9 61.3
Over 30 years 59.4 45.2
Total 382.3 327.0
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 2022, the realised return on
investing activity was -3.73%.
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
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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 €89.2 million as at 31 December 2022. 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 rises, the present value of the defined benefit obligation decreases. 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.
Actuarial assumption
Change in
assumption
Impact on
defined benefit
obligation,
increase
Impact on
defined benefit
obligation,
decrease
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%
2021
Discount rate 0.50% -6.89% 7.77%
Salary growth rate 0.50% 0.99% -0.95%
Pension growth rate 0.50% 6.40% 5.80%
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.
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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 2022 2021
Interest-bearing liabilities and lease liabilities in the consolidated
statement of financial position 2,418.3 2,295.1
- Lease liabilities 1,920.1 1,928.6
- Other current financial assets 68.6 107.9
- Cash and cash equivalents 245.5 279.8
Interest-bearing net debt excluding lease liabilities 184.1 -21.3
€ million 2022 2021
Operating profit 816.5 775.2
+ depreciation, amortisation and impairment 169.0 176.8
+ depreciation and impairment charges for right-of-use-assets 322.1 310.3
- lease payments for right-of-use-assets 399.1 388.3
EBITDA excluding the impact of IFRS 16 908.5 873.9
Interest bearing net debt/EBITDA excluding the impact of IFRS 16 0.2 0.0
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 €314.1 million (€387.7 million) on 31 December 2022.
Interest-bearing liabilities on 31 December 2022 totalled €2,418.3 million (€2,295.1
million), of which lease liabilities accounted for €1,920.1 million (€1,928.6 million). Interest-
bearing net debt totalled €2,104.2 million (€1,907.3 million), and interest-bearing net debt
excluding lease liabilities totalled €184.1 million (€-21.3 million).
€ million 2022 2021
Financial assets at fair value through profit or loss - 50.0
Financial assets at amortised cost (maturing in less than 3 months) 17.0 32.0
Cash and cash equivalents 228.5 197.9
Other current financial assets 68.6 107.9
Borrowings - repayable within one year (including overdraft) -252.6 -160.1
Lease liabilities - repayable within one year -328.1 -317.9
Borrowings - repayable after one year -245.5 -206.4
Lease liabilities - repayable after one year -1,592.0 -1,610.7
Cash and debt, net -2,104.2 -1,907.3
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€ million
Carrying amount
as at 1 Jan. 2022 Cash flows
Business acquisitions
and divestments
Net changes
of lease liabilities
Foreign exchange
adjustments
Carrying amount
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
€ million
Carrying amount
as at 1 Jan. 2021 Cash flows
Business acquisitions
and divestments
Net changes
of lease liabilities
Foreign exchange
adjustments
Carrying amount
as at 31 Dec. 2021
Lease liabilities due within 1 year -312.7 323.2 -0.6 -326.9 -0.8 -317.9
Lease liabilities due after 1 year -1,712.3 -0.5 107.3 -5.3 -1,610.7
Borrowings due within 1 year -182.6 22.5 0.0 -160.1
Borrowings due after 1 year -408.7 202.4 0.0 -206.4
Other current financial assets 51.7 56.2 0.0 107.9
Cash and overdraft 150.0 47.6 0.0 0.3 197.9
Financial assets at amortised cost 4.5 27.5 32.0
Financial assets at fair value through profit or loss 99.9 -49.9 50.0
Net debt -2,310.3 629.4 -1.0 -219.6 -5.8 -1,907.3
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Parent company's financial
statements (FAS)
Signatures
Corporate governance
Corporate Governance
Statement
Remuneration Report
Data balance sheet
Data strategy
Customers and data
213
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Year 2022
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Business
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Sustainability report
Sustainable Kesko
Climate and nature
Value chain
Our people
Good governance
Sustainability reporting
Financial review
Report by the Board of Directors
Consolidated financial
statements (IFRS)
Parent company's financial
statements (FAS)
Signatures
Corporate governance
Corporate Governance
Statement
Remuneration Report
Data balance sheet
Data strategy
Customers and data
214
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Year 2022
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Business
Investors
Sustainability report
Sustainable Kesko
Climate and nature
Value chain
Our people
Good governance
Sustainability reporting
Financial review
Report by the Board of Directors
Consolidated financial
statements (IFRS)
Parent company's financial
statements (FAS)
Signatures
Corporate governance
Corporate Governance
Statement
Remuneration Report
Data balance sheet
Data strategy
Customers and data
215
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Kesko's direction
Year 2022
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environment
Business
Investors
Sustainability report
Sustainable Kesko
Climate and nature
Value chain
Our people
Good governance
Sustainability reporting
Financial review
Report by the Board of Directors
Consolidated financial
statements (IFRS)
Parent company's financial
statements (FAS)
Signatures
Corporate governance
Corporate Governance
Statement
Remuneration Report
Data balance sheet
Data strategy
Customers and data
5.1 Subsidiaries, associates, joint ventures and proportionately
consolidated mutual real estate companies
Subsidiaries
Owned by the parent Domicile
Group's
ownership
interest, %
Parent's
ownership
interest, %
Ankkuri-Energia Oy Helsinki, Finland 100.00 100.00
Asunto Oy Kirkkonummen Västeruddintie 33 Kirkkonummi, Finland 100.00 100.00
Barker-Littoinen Oy Espoo, 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
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
Kesko Real Estate Latvia SIA Riga, Latvia 100.00 100.00
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
Kiinteistö Oy Kittilän Säästökulma Helsinki, Finland 100.00 100.00
Kiinteistö Oy Kittilän Valtatie 31–33 Helsinki, Finland 100.00 100.00
Kiinteistö Oy Lappeenrannan Oksasenkatu 4 Helsinki, Finland 100.00 100.00
Kiinteistö Oy Mustasaaren Mustikka Helsinki, Finland 100.00 100.00
Kiinteistö Oy Nokian Kauppapaikka 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
Owned by the parent Domicile
Group's
ownership
interest, %
Parent's
ownership
interest, %
Kiinteistö Oy Savonlinnan Länsikeskus Joensuu, Finland 100.00 100.00
Kiinteistö Oy Sarviniitynkatu 4 Kerava, Finland 100.00 100.00
Kiinteistö Oy Sunan Hallitalo Helsinki, Finland 100 100
Kiinteistö Oy Tarkkaiikka Oulu, Finland 100.00 100.00
Kiinteistö Oy Vasarakatu 22 Jyväskylä, Finland 100.00 100.00
Kiinteistö Oy Voisalmen Liiketalo Helsinki, Finland 100.00 100.00
Klintcenter Ab Mariehamn, Åland 100.00 100.00
K-Market Oy Helsinki, Finland 100.00 100.00
Konekesko Oy Helsinki, Finland 100.00 100.00
Koskelan Ostokeskus Oy Oulu, Finland 58.64 29.32
Onninen Oy Helsinki, Finland 100.00 100.00
Rake Eiendom AS Oppegård, Norway 100.00 100.00
Rantasalmen Kauppakeskus Oy Helsinki, Finland 100.00 100.00
Reinin Liha Oy Helsinki, Finland 100.00 100.00
Tampereen Länsikeskus Oy Tampere, Finland 100.00 100.00
216
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Financial review
Report by the Board of Directors
Consolidated financial
statements (IFRS)
Parent company's financial
statements (FAS)
Signatures
Corporate governance
Corporate Governance
Statement
Remuneration Report
Data balance sheet
Data strategy
Customers and data
Owned by other Group companies Domicile
Group's
ownership
interest, %
Parent's
ownership
interest, %
Arn Eiendom AS Vefsn, Norway 100.00
Byggarnas Partner Sverige AB Segeltorp, Sweden 100.00
Bygg & Interiör i Katrineholm AB Katrineholm, Sweden 100.00
Bygg & Interiör i Flen AB Flen, Sweden 100.00
Bygg & Interiör i Vingåker AB Vingåker, Sweden 100.00
Byggmakker CF AS Sandefjord, Norway 100.00
Djurbergs Järnhandel Aktiebolag Söderköping, Sweden 100.00
Fresks Försäljning AB Östersund, Sweden 100.00
Hasti-Ari AS Oppegård, Norway 100.00
Högsbo Trä Aktiebolag Västra Frölunda, 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 Hyvinkään Onnela 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
Kiinteistö Oy Visuveden Liiketalo Ruovesi, 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-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 LLP Aktau, Kazakhstan 100.00
Onninen SIA Riga, Latvia 100.00
Onninen Sp. z o.o. Warsaw, Poland 100.00
Owned by other Group companies Domicile
Group's
ownership
interest, %
Parent's
ownership
interest, %
Onninen UAB Vilnius, Lithuania 100.00
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
Sørbø AS Skedsmokorset, 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
XL-Bygg Bergslagen AB Frövi, Sweden 100.00
Övik Låsteknik AB Örnsköldsvik, Sweden 100.00
Associates and joint ventures
Associates and joint ventures are consolidated using the equity method.
Owned by the parent Domicile
Group's
ownership
interest, %
Parent's
ownership
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
Owned by other Group companies Domicile
Group's
ownership
interest, %
Parent's
ownership
interest, %
EDISON Data AS Oslo, Norway 20.00
Proffsenteret AS Ringerike, Norway 34.11
KS Holding UAB Vilnius, Lithuania 50.01
217
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Financial review
Report by the Board of Directors
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Signatures
Corporate governance
Corporate Governance
Statement
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Data balance sheet
Data strategy
Customers and data
Proportionately consolidated mutual real estate companies
Owned by the parent and others Domicile
Group's
ownership
interest, %
Parent's
ownership
interest, %
Asunto Oy Harjutie Espoo, Finland 46.22 46.22
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 Lahden Lyhytkatu 1 Lahti, Finland 50.00 50.00
Kiinteistö Oy Lukonmäen Palvelukeskus Tampere, Finland 34.54
Kiinteistö Oy Taidetehtaanparkki Porvoo, Finland 21.00 21.00
Kiinteistö Oy Ulvilan Hansa Ulvila, Finland 42.41 42.41
Kiinteistö Oy Vantaanportin Liikekeskus Vantaa, Finland 27.81 27.81
Lapin Tehdastalo Oy Tampere, Finland 21.24 21.24
Munkkivuoren Ostoskeskus Oy Helsinki, Finland 30.65 30.65
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
5.2 Related party transactions
The Group's related parties include its 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, Kesko’s subsidiaries, associates
and joint ventures, and Kesko Pension Fund. The subsidiaries, associates and joint ventures
are listed in Note 5.1.
The related party transactions disclosed consist of such transactions carried out with related
parties that are not eliminated in the consolidated financial statements.
Some members of the Kesko Board are K-retailers. The Group companies sell goods and
services to companies controlled by them. Goods and services have been sold to and
purchased from related parties on normal market terms and conditions and at market prices.
Kesko reports Kesko Senukai Group and KS Holding Group, which are part of Kesko’s building
and technical trade segment, as joint ventures using the equity method.
The associated company consolidated using the equity method, Mercada Oy, owns properties
which have been leased for use by the Group. Vähittäiskaupan Takaus Oy and Vähittäiskaupan
Tilipalvelu Oy sell their services to Kesko’s and K-retailers’ retail companies. The other
associates mainly comprise business property companies. Mutual real estate companies have
been consolidated in the financial statements in proportion to their ownership interests.
Kesko Pension Fund is a stand-alone legal entity which manages the majority of the pension
assets related to the voluntary pensions of the Group’s employees in Finland. At the end
of 2022 or 2021, the pension assets did not include Kesko Corporation shares. Properties
owned by Pension Fund have been leased to Kesko Group.
During the financial years 2022 and 2021, Kesko Group did not pay contributions to
Pension Fund.
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Report by the Board of Directors
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Corporate governance
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Data balance sheet
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Customers and data
The following transactions were carried out with related parties:
Income statement
Associates
and joint ventures
Board and
management Pension Fund
€ million 2022 2021 2022 2021 2022 2021
Sales of goods 9.9 9.6 88.2 92.0
Sales of services 5.2 5.1 1.0 1.0 0.2 0.3
Purchases of goods -0.6 -1.9 -13.1 -11.5
Purchases of services -0.1 -0.1 0.0 0.0
Other operating income 0.8 0.3 19.1 17.9 0.3
Other operating costs -3.9 -3.6 -0.0 -0.3 -0.2 0.0
Finance income 6.0 6.3
Finance expenses -0.3 -0.0 -0.0
Balance sheet
Associates
and joint ventures
Board and
management Pension Fund
€ million 2022 2021 2022 2021 2022 2021
Current receivables 25.8 4.9 7.2 8.2 0.0 3.8
Non-current receivables 64.7 68.1
Current liabilities 10.1 4.7 2.3 2.5 4.8 13.8
Items related
to leases
Associates
and joint ventures
Board and
management Pension Fund
€ million 2022 2021 2022 2021 2022 2021
Cash flow from leases -35.9 -35.1 -1.8 -6.2 -8.3
Lease liabilities 231.9 243.0 41.7 48.5
At the balance sheet date, receivables arisen from Kesko's sales to companies controlled
by the Board members were €7.2 million (€8.2 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 €12.0 million (€16.0 million).
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Report by the Board of Directors
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Signatures
Corporate governance
Corporate Governance
Statement
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Data balance sheet
Data strategy
Customers and data
220
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Climate and nature
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Good governance
Sustainability reporting
Financial review
Report by the Board of Directors
Consolidated financial
statements (IFRS)
Parent company's financial
statements (FAS)
Signatures
Corporate governance
Corporate Governance
Statement
Remuneration Report
Data balance sheet
Data strategy
Customers and data
Assumptions for share award calculations
PSP
2022–2023
PSP
2021–2022
PSP
2020–2021
PSP
2019–2020
Grant dates 2.2.2022 2.2.2021 4.2.2020 20.3.2019
Grant date fair value of share award, € 27.71 21.01 14.85 13.11
Share price at grant date, € 28.77 21.76 15.48 13.70
Shares transferred in 2024 2023 2022 2021
Number of share awards granted,
maximum, pcs* 500,285 646,970 842,850 1,220,600
Changes in the number of shares granted, pcs -20,550 -87,500 -116,200 -129,600
Actual amount of share award, pcs* 655,729 726,168
Number of plan participants
at end of financial year 59 52 46 103
Share price at balance sheet date, € 20.62 29.34 21.04 15.77
Assumed fulfilment of performance criteria, % 69.0 84.5 90.0 71.6
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
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.
221
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Report by the Board of Directors
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Signatures
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Data balance sheet
Data strategy
Customers and data
Assumptions for share award calculations
KPSP and
RSP 2022
KPSP and
RSP 2021
KPSP and
RSP 2020
RSP
2019–2020
Grant dates 2.2.2022 2.2.2021 4.2.2020 20.3.2019
Grant date fair value of share award, € 27.71 21.01 14.85 13.11
Share price at grant date, € 28.77 21.76 15.48 13.70
Shares transferred in 2025 2024 2023 2022
Number of share awards granted,
maximum, pcs* 215,155 256,769 291,700 34,800
Changes in the number of shares granted, pcs -13,365 -14,936 -50,966 -6,000
Actual amount of share award, pcs* 192,950 209,320 28,800
Number of plan participants
at end of financial year 150 135 85 13
Share price at balance sheet date, € 20.62 29.34 21.04 15.77
Assumed fulfilment of performance criteria, % 55.0 89.3 82.0 71.6
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.
Legal proceedings concerning UAB Kesko Senukai Lithuania – Kesko has disclosed, for
example in its financial statements for 2021, that it was party to two legal proceedings
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. Both legal proceedings have ended,
and final judgements have been given. The minority shareholders have brought a claim to
the District Court of Helsinki to annul and reverse the arbitral award given in one of the legal
proceedings. Minority shareholders have also initiated a new arbitration proceeding against
Kesko regarding the company’s shareholder agreement.
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.
222
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Report by the Board of Directors
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Parent company's financial
statements (FAS)
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Data balance sheet
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PARENT COMPANY'S FINANCIAL STATEMENTS (FAS)
Parent company's income statement
€ 1 Jan.–31 Dec. 2022 1 Jan.–31 Dec. 2021
Net sales 6,620,483,911.52 6,365,811,744.96
Other operating income 896,343,273.82 834,772,868.35
Materials and services -5,922,332,251.39 -5,662,809,364.87
Change in inventory 57,389,050.87 11,416,497.67
Employee benefit expenses -348,288,605.22 -338,417,338.48
Depreciation, amortisation and impairment -102,891,749.91 -101,597,266.27
Other operating expenses -741,397,846.78 -730,244,803.36
Operating profit 459,305,782.91 378,932,338.00
Finance income and costs 63,839,871.87 47,870,421.15
Profit before appropriations and taxes 523,145,654.78 426,802,759.15
Appropriations
Change in depreciation reserve -28,327,302.66 -13,693,328.90
Group contribution -3,441,910.30 30,475,864.55
Profit before taxes 491,376,441.82 443,585,294.80
Income taxes -82,450,821.94 -88,935,242.55
Profit for the financial year 408,925,619.88 354,650,052.25
223
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Report by the Board of Directors
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Parent company's financial
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Corporate governance
Corporate Governance
Statement
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Data balance sheet
Data strategy
Customers and data
Parent company's balance sheet
€ 31 Dec. 2022 31 Dec. 2021
ASSETS
NON-CURRENT ASSETS
INTANGIBLE ASSETS
Intangible rights 5,467,058.98 4,062,642.96
Other intangible assets 196,023,659.20 172,161,408.51
Prepayments 8,843,638.88 12,583,008.77
210,334,357.06 188,807,060.24
PROPERTY, PLANT AND EQUIPMENT
Land and waters
Owned 247,306,198.38 224,327,993.92
Leasehold interests and connection fees 6,656,847.26 1,201,988.31
Buildings
Owned 556,902,410.32 468,798,386.05
Machinery and equipment 97,574,724.25 88,970,519.00
Other tangible assets 6,489,657.89 5,612,838.97
Prepayments and construction in progress 87,473,806.60 45,681,450.60
1,002,403,644.70 834,593,176.85
INVESTMENTS
Investments in subsidiaries 1,080,275,454.12 1,052,815,045.52
Investments in associates 113,989,719.85 111,704,919.85
Other investments 23,741,379.16 15,219,812.62
1,218,006,553.13 1,179,739,777.99
CURRENT ASSETS
INVENTORIES
Finished products/goods 325,389,112.08 268,000,061.21
325,389,112.08 268,000,061.21
€ 31 Dec. 2022 31 Dec. 2021
RECEIVABLES
Long-term
Receivables from subsidiaries 80,431,580.19 93,855,424.19
Receivables from associates 64,758,166.16 68,130,199.58
Loan receivables 198,289.59 195,005.00
Other receivables 10,120,166.55 9,142,666.59
155,508,202.49 171,323,295.36
Short-term
Trade receivables 408,603,965.96 401,881,076.54
Receivables from subsidiaries 458,263,141.09 410,990,047.58
Receivables from associates 25,277,501.01 4,485,666.41
Loan receivables 415,425.56 160,166.01
Other receivables 7,034,007.06 15,276,301.13
Prepayments and accrued income 122,462,451.29 87,950,046.12
1,022,056,491.97 920,743,303.79
OTHER FINANCIAL ASSETS 35,826,114.02 74,791,120.38
CASH AND CASH EQUIVALENTS 229,888,894.55 269,250,914.39
TOTAL ASSETS 4,199,413,370.00 3,907,248,710.21
224
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Financial review
Report by the Board of Directors
Consolidated financial
statements (IFRS)
Parent company's financial
statements (FAS)
Signatures
Corporate governance
Corporate Governance
Statement
Remuneration Report
Data balance sheet
Data strategy
Customers and data
€ 31 Dec. 2022 31 Dec. 2021
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 823,451,129.66 881,380,981.71
Profit for the financial year 408,925,619.88 354,650,052.25
1,893,326,447.39 1,896,980,731.81
APPROPRIATIONS
Depreciation reserve 183,109,980.14 154,204,262.19
PROVISIONS
Provisions 2,238,581.83 1,993,887.54
LIABILITIES
Non-current
Loans from financial institutes 200,000,000.00 150,000,000.00
Pension loans 44,343,000.00 56,337,000.00
Other creditors 10,372,880.37 8,995,992.00
254,715,880.37 215,332,992.00
Current
Pension loans 11,994,000.00 11,994,000.00
Advances received 26,638,337.94 20,241,848.68
Trade payables 745,126,341.50 706,659,113.18
Payables to subsidiaries 516,685,528.79 436,405,049.89
Payables to associates 5,621,438.75 4,656,873.54
Other payables 328,588,060.01 219,821,267.87
Accruals and deferred income 231,368,773.28 238,958,683.51
1,866,022,480.27 1,638,736,836.67
TOTAL LIABILITIES 4,199,413,370.00 3,907,248,710.21
225
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Report by the Board of Directors
Consolidated financial
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Parent company's financial
statements (FAS)
Signatures
Corporate governance
Corporate Governance
Statement
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Data balance sheet
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Customers and data
Parent company's cash flow statement
€ 1 Jan.–31 Dec. 2022 1 Jan.–31 Dec. 2021
Cash flows from operating activities
Profit before appropriations 523,145,654.78 426,802,759.15
Adjustments
Depreciation according to plan 102,891,749.91 101,597,266.27
Finance income and costs -63,839,871.87 -47,870,421.15
Other adjustments -51,392,533.62 20,225,978.26
510,804,999.20 500,755,582.53
Change in working capital
Current non-interest-bearing receivables, increase
(-)/decrease (+) -38,448,516.52 -32,048,396.12
Inventories increase (-)/decrease (+) -57,389,050.87 -11,416,497.67
Current non-interest-bearing liabilities, increase
(+)/decrease (-) 56,750,795.21 60,407,058.59
-39,086,772.18 16,942,164.80
Interests paid and other finance costs -14,410,293.32 -17,037,141.16
Interests received 16,608,267.52 14,340,978.85
Dividends received 66,587,990.30 48,186,249.20
Income tax paid -110,101,405.44 -86,764,319.78
-41,315,440.94 -41,274,232.89
Net cash generated from operating activities 430,402,786.08 476,423,514.44
Cash flows from investing activities
Purchases of property, plant, equipment and
intangible assets -268,739,614.55 -154,426,379.56
Acquisitions of subsidiaries -27,133,141.86 -
Sales of subsidiaries, net of cash 5,987,807.94 2,568,130.88
Acquisitions of associates - -462,592.00
Investments in other investments -1,000.00 -
Proceeds from other investments 363,780.00 147,500.00
Proceeds from disposal of property, plant,
equipment and intangible assets 135,466.99 1,475,461.41
Long-term receivables, increase (-)/decrease (+) 11,569,386.96 30,219,565.19
Other financial assets, increase (-)/decrease (+) 38,945,717.30 -64,996,112.70
Net cash used in investing activities -238,871,597.22 -185,474,426.78
€ 1 Jan.–31 Dec. 2022 1 Jan.–31 Dec. 2021
Cash flows from financing activities
Interest-bearing liabilities, increase (+)/decrease (-) 226,769,185.97 -48,344,652.02
Short-term interest-bearing receivables, increase
(-)/decrease (+) -44,199,882.78 53,691,870.93
Dividends paid -406,670,233.05 -297,833,916.52
Group contributions received and paid -3,441,910.30 30,475,864.55
Other items -3,394,705.32 -619,380.19
Net cash used in financing activities -230,937,545.48 -262,630,213.25
Change in cash and cash equivalents -39,406,356.62 28,318,874.41
Cash and cash equivalents as at 1 Jan. 269,250,914.39 240,976,376.76
Impairment of financial assets at fair value through
profit or loss 44,336.78 -44,336.78
Cash and cash equivalents as at 31 Dec. 229,888,894.55 269,250,914.39
226
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Data balance sheet
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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
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
three years and it is allowed to vary between one and a half and four 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
227
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Customers and data
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 2022 2021
Grocery trade 5,493.9 5,288.4
Building and home improvement trade 1,126.6 1,077.4
Others 0.0 0.0
Total 6,620.5 6,365.8
Note 3. Material and services
€ million 2022 2021
Material and services -5,811.6 -5,559.5
Change in inventory 57.4 11.4
External services -110.7 -103.3
Total -5,864.9 -5,651.4
Note 4. Other operating income
€ million 2022 2021
Gains on sales of real estate and shares 0.0 0.4
Rent income 90.9 90.1
Fees for services 576.7 561.3
Profits from mergers 28.4 0.1
Others 200.3 182.8
Total 896.3 834.8
228
KESKO ANNUAL REPORT 2022
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Report by the Board of Directors
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Parent company's financial
statements (FAS)
Signatures
Corporate governance
Corporate Governance
Statement
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Data balance sheet
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Customers and data
Note 5. Employee benefit expenses
€ million 2022 2021
Salaries and fees -322.4 -312.6
Social security costs
Pension costs -13.8 -14.8
Other social security costs -12.1 -11.1
Total -348.3 -338.4
The 2022 pension costs include a €40.3 million (€36.5 million) return of surplus assets by
Kesko Pension Fund.
The average number of personnel at Kesko Corporation was 7,308 (7,262) people.
Salaries and fees to the management
€ million 2022 2021
Managing Director 4.9 4.4
Members of the Board of Directors 0.5 0.5
Total 5.4 4.9
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 2022 2021
Depreciation according to plan -102.2 -100.3
Impairment, non-current assets -0.7 -1.3
Total -102.9 -101.6
Note 7. Other operating expenses
€ million 2022 2021
Rent expenses -327.9 -323.5
Marketing expenses -152.0 -154.3
Maintenance of real estate and store sites -105.6 -92.0
Losses on disposals of non-current assets 0.0 -0.1
ICT expenses -87.7 -72.4
Losses from mergers -6.8 -32.9
Other operating expenses -61.5 -55.0
Total -741.4 -730.2
Auditors' fees
€ million 2022 2021
Audit 0.4 0.4
Tax consultation 0.0 0.0
Other services 0.1 0.2
Total 0.5 0.6
229
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Note 8. Finance income and costs
€ million 2022 2021
Income from long-term investments
Dividend income from subsidiaries 39.5 47.0
Dividend income from associates 26.9 -
Dividend income from others 0.1 1.2
Gains on disposal of shares 0.0 -
Gains on sales of investments 0.0 1.5
Income from long-term investments, total 66.6 49.7
Other interest and finance income
From subsidiaries 8.9 6.6
From others 22.9 11.3
Interest and finance income, total 31.8 17.9
Impairment of investments held as non-current assets
Impairment of shares 0.3 0.1
Changes in fair value 0.0 0.0
Impairment and changes in fair value of investments held as
non-current assets, total 0.3 0.1
Interest and other finance costs
To subsidiaries -11.4 -10.0
To others -23.5 -9.8
Interest and finance costs, total -34.9 -19.8
Total 63.8 47.9
Note 9. Appropriations
€ million 2022 2021
Difference between depreciation according to plan and
depreciation in taxation -28.3 -13.7
Group contributions received 36.9 43.7
Group contributions paid -40.4 -13.2
Total -31.8 16.8
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 2022 2021
Other changes 0.2 -0.4
Total 0.2 -0.4
Note 11. Income taxes
€ million 2022 2021
Income taxes on group contributions 0.7 -6.1
Income taxes on ordinary activities -82.5 -82.0
Taxes for prior years -0.6 -0.8
Total -82.5 -88.9
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 €36.6 million. The amount of other deferred tax
liabilities or assets is not material.
230
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Note 14. Property, plant and equipment
€ million 2022 2021
Land and waters, owned
Acquisition cost as at 1 Jan. 224.3 208.8
Increases 20.1 11.0
Transferred in mergers 2.4 3.9
Decreases - -0.1
Transfers between items 0.5 0.8
Acquisition cost as at 31 Dec. 247.3 224.3
Book value as at 31 Dec. 247.3 224.3
Land and waters, leasehold interests
Acquisition cost as at 1 Jan. 1.6 2.3
Increases 5.5 -
Decreases - -0.0
Transfers between items 0.0 -0.6
Acquisition cost as at 31 Dec. 7.1 1.6
Accumulated depreciation as at 1 Jan. -0.4 -0.1
Depreciation for the financial year 0.0 -0.3
Accumulated depreciation as at 31 Dec. -0.5 -0.4
Book value as at 31 Dec. 6.7 1.2
Buildings
Acquisition cost as at 1 Jan. 821.1 757.6
Increases 88.2 30.2
Transferred in mergers 13.9 35.0
Decreases -0.4 -2.5
Transfers between items 19.7 0.7
Acquisition cost as at 31 Dec. 942.5 821.1
Accumulated depreciation as at 1 Jan. -352.3 -318.5
Transferred in mergers -3.3 -10.2
Accumulated depreciation on decreases and transfers 0.0 1.7
Depreciation for the financial year -30.1 -25.3
Accumulated depreciation as at 31 Dec. -385.6 -352.3
Book value as at 31 Dec. 556.9 468.8
Notes to the balance sheet
Note 13. Intangible assets
€ million 2022 2021
Intangible rights
Acquisition cost as at 1 Jan. 16.3 15.4
Increases 1.1 2.4
Decreases -2.8 -1.5
Transfers between items 1.9 -
Acquisition cost as at 31 Dec. 16.5 16.3
Accumulated depreciation as at 1 Jan. -12.3 -10.8
Accumulated depreciation on decreases and transfers 2.8 1.4
Depreciation and amortisations for the financial year -1.6 -2.9
Accumulated depreciation as at 31 Dec. -11.1 -12.3
Book value as at 31 Dec. 5.5 4.1
Other intangible assets
Acquisition cost as at 1 Jan. 369.9 342.8
Increases 48.9 30.0
Decreases -31.1 -18.8
Transfers between items 17.5 15.9
Acquisition cost as at 31 Dec. 405.2 369.9
Accumulated depreciation as at 1 Jan. -197.7 -171.9
Accumulated depreciation on decreases and transfers 31.1 18.2
Depreciation and amortisations for the financial year -42.6 -44.1
Accumulated depreciation as at 31 Dec. -209.2 -197.7
Book value as at 31 Dec. 196.0 172.2
Prepayments
Acquisition cost as at 1 Jan. 12.6 11.9
Increases 7.0 12.1
Decreases -0.1 -0.3
Transfers between items -10.7 -11.1
Acquisition cost as at 31 Dec. 8.8 12.6
Book value as at 31 Dec. 8.8 12.6
231
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€ million 2022 2021
Machinery and equipment
Acquisition cost as at 1 Jan. 295.1 299.8
Increases 32.0 25.6
Transferred in mergers 0.0 0.2
Decreases -19.6 -32.5
Transfers between items 3.6 2.0
Acquisition cost as at 31 Dec. 311.1 295.1
Accumulated depreciation as at 1 Jan. -206.1 -211.3
Transferred in mergers 0.0 -0.2
Accumulated depreciation on decreases and transfers 19.2 31.8
Depreciation for the financial year -26.6 -26.4
Accumulated depreciation as at 31 Dec. -213.5 -206.1
Book value as at 31 Dec. 97.6 89.0
Other tangible assets
Acquisition cost as at 1 Jan. 21.2 20.5
Increases 1.2 0.6
Transferred in mergers - 0.1
Decreases - -0,0
Transfers between items 1.0 0.0
Acquisition cost as at 31 Dec. 23.3 21.2
Accumulated depreciation as at 1 Jan. -15.6 -14.3
Transferred in mergers - -0.1
Accumulated depreciation on decreases and transfers - 0.1
Depreciation for the financial year -1.2 -1.3
Accumulated depreciation as at 31 Dec. -16.8 -15.6
Book value as at 31 Dec. 6.5 5.6
Prepayments and construction in progress
Acquisition cost as at 1 Jan. 45.7 10.5
Increases 76.4 41.3
Transferred in mergers - 2.0
Decreases -1.0 -0.5
Transfers between items -33.6 -7.6
Acquisition cost as at 31 Dec. 87.5 45.7
Book value as at 31 Dec. 87.5 45.7
Note 15. Investments
€ million 2022 2021
Investments in subsidiaries
Acquisition cost as at 1 Jan. 1,080.5 1,177.9
Increases 42.5 7.5
Decreases -29.1 -104.9
Acquisition cost as at 31 Dec. 1,093.9 1,080.5
Impairment as at 1 Jan. -27.7 -90.7
Accumulated impairments on decreases 14.1 63.1
Impairment as at 31 Dec. -13.6 -27.7
Book value as at 31 Dec. 1,080.3 1,052.8
Investments in associates
Acquisition cost as at 1 Jan. 111.7 111.0
Increases 2.3 0.5
Transfers between items - 0.2
Book value as at 31 Dec. 114.0 111.7
Other investments
Acquisition cost as at 1 Jan. 15.2 18.6
Increases 8.5 0.1
Transferred in mergers - 0.1
Decreases -0,0 -3.3
Transfers between items 0.0 -0.2
Acquisition cost as at 31 Dec. 23.7 15.2
Book value as at 31 Dec. 23.7 15.2
An analysis of Kesko Corporation's ownership interests in other companies as at 31 December
2022 is presented in the notes to the consolidated financial statements.
232
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Note 16. Receivables
Receivables from subsidiaries
€ million 2022 2021
Long-term receivables
Loan receivables 80.4 93.9
Long-term receivables, total 80.4 93.9
Short-term receivables
Trade receivables 9.9 9.0
Loan receivables 418.9 377.3
Prepayments and accrued income 29.5 24.7
Short-term receivables, total 458.3 411.0
Total 538.7 504.8
Receivables from associates and joint ventures
€ million 2022 2021
Long-term receivables
Loan receivables 64.7 68.1
Other receivables 0.0 0.0
Long-term receivables, total 64.8 68.1
Short-term receivables
Accrued income 21.7 1.0
Other receivables 3.6 3.5
Short-term receivables, total 25.3 4.5
Total 90.0 72.6
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
€7.2 million.
Prepayments and accrued income
€ million 2022 2021
Taxes 20.9 0.0
Fees for services 6.0 9.6
Employee benefit expenses 7.6 7.6
Purchases 34.1 33.8
Others 53.8 37.0
Total 122.5 88.0
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 2021 197.3 197.5 243.4 22.8 1,170.1 1,831.1
Dividends -297.8 -297.8
Treasury shares 9.1 9.1
Transfer to donations 0.0 0.0
Profit for the year 354.7 354.7
Balance as at
31 December 2021 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
In accordance with a new accounting policy, donations are recorded in the income statement
as expenses as of 2021.
233
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Restricted equity 2022 2021
Share capital 197.3 197.3
Share premium 197.5 197.5
Total 394.8 394.8
Non-restricted equity 2022 2021
Contingency fund 243.4 243.4
Reserve of invested non-restricted equity 22.8 22.8
Retained earnings 1,232.4 1,236.0
Total 1,498.5 1,502.2
Calculation of distributable profits 2022 2021
Other reserves 266.2 266.2
Retained earnings 823.5 881.4
Profit for the year 408.9 354.7
Total 1,498.5 1,502.2
On 31 December 2022, Kesko’s distributable assets totalled €1,498,545,852.49.
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 7 April
2022 and valid until 30 June 2023, to issue a maximum of 33,000,000 B shares and acquire
16,000,000 B shares.
Treasury shares
On 2 May 2022, Kesko Corporation transferred a total of 4,918 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
7 April 2022 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. 2021 2,968,664
Transferred, share-based compensation scheme -345,104
Transferred, Board of Directors -4,918
Returned during the financial year 1,719
Own B shares held by the Company as at 31 Dec. 2022 2,620,361
Note 18. Provisions
€ million 2022 2021
Provisions for leases 1.7 1.5
Other provisions 0.5 0.5
Total 2.2 2.0
Note 19. Non-current liabilities
Kesko has drawn down two bilateral loans, which combined total €200 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.
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Note 20. Current liabilities
€ million 2022 2021
Liabilities to subsidiaries
Trade payables 6.8 1.7
Other payables 25.1 6.8
Accruals and deferred income 484.9 427.9
Total 516.7 436.4
Liabilities to associates
Trade payables 0.1 0.0
Accruals and deferred income 0.0 0.0
Other payables 5.5 4.6
Total 5.6 4.7
Accruals and deferred income
Employee benefit expenses 111.7 110.8
Accruals and deferred income from purchases 25.2 29.2
Taxes 0.8 7.5
Transaction prices 0.0 0.4
Fees for services 17.8 25.4
Others 75.9 65.7
Total 231.4 239.0
Note 21. Non-interest-bearing liabilities
€ million 2022 2021
Current liabilities 1,157.4 1,085.0
Total 1,157.4 1,085.0
Note 22. Guarantees, commitments and contingencies
€ million 2022 2021
Real estate mortgages
For own debt 159.8 159.8
For subsidiaries 0.7 0.8
Pledged shares 9.5 9.5
Guarantees
For own debt 0.5 0.5
For subsidiaries 70.9 67.9
Other liabilities and liability engagements
For own debt 40.5 34.8
Rent liabilities on machinery and fixtures
Due within a year 6.5 6.9
Due later 6.3 7.1
Rent liabilities on real estate
Due within a year 256.2 277.7
Due later 1,254.5 1,490.5
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.
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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
Company's transaction exposure
as at 31 Dec. 2021
€ million USD SEK NOK PLN
Transaction risk -15.2 44.0 62.6 26.5
Hedging derivatives 46.8 -41.0 -56.6 -26.1
Exposure 31.6 3.0 6.0 0.4
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. 2022
€ million USD SEK NOK PLN
Change +10% -1.6 -1.7 -0.5 0.0
Change -10% 2.0 2.1 0.6 0.0
Sensitivity analysis, impact on pre-tax profit
as at 31 Dec. 2021
€ million USD SEK NOK PLN
Change +10% -2.9 -0.3 -0.5 0.0
Change -10% 3.5 0.3 0.7 0.0
Derivatives
Fair values of derivative
contracts
€ million
31 Dec. 2022
Positive
fair value
(balance
sheet value)
31 Dec. 2022
Negative
fair value
(balance
sheet value)
31 Dec. 2021
Positive
fair value
(balance
sheet value)
31 Dec. 2021
Negative
fair value
(balance
sheet value)
Currency derivatives 2.6 -0.7 1.8 -1.6
Interest rate derivatives 12.2 -0.1 0.1 -2.2
Notional amounts of
derivative contracts
€ million 31 Dec. 2022 Notional amount 31 Dec. 2021 Notional amount
Currency derivatives 153.3 227.6
Interest rate derivatives 330.0 420.0
All currency derivatives mature in 2023. Interest rate derivatives mature in 2024, 2026 and
2027.
€ million 2022 Fair value 2021 Fair value
Liabilities arising from
derivative instruments
Values of underlying
instruments as at 31 Dec.
Interest rate derivatives
Interest rate swaps 330 12.1 420 -2.1
Foreign currency derivatives
Forward and future contracts 153 1.9 228 0.1
Outside the Group 142 1.8 205 0.6
Inside the Group 12 0.1 23 -0.5
Commodity derivatives
Electricity derivatives 139 0.0 70 0.0
Outside the Group 70 44.2 35 11.3
Inside the Group 70 -44.2 35 -11.3
Note 23. Cash and cash equivalents within the statement of
cashflows
€ million 2022 2021
Financial assets at fair value through profit or loss 0.0 50.0
Available-for-sale financial assets 17.0 32.0
Cash and cash equivalents 212.9 187.3
Total 229.9 269.3
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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 5.1).
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.
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SIGNATURES
Signatures for financial statements and report by
the Board of Directors
Helsinki, 1 February 2023
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, 1 February 2023
Deloitte Oy
Authorised public accountants
Jukka Vattulainen
APA
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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, 2022. 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 a summary of significant
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)
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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 588.9 million (EUR
588.8 million). In addition, consolidated statement
of financial position includes EUR 86.8 million
(EUR 88.2 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 11,809.0 million (EUR 11,300.2 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 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.
We have identified the risk of revenue recognition
and fraud, especially in exceptional manual
revenue recognition.
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 the
risk assessment for fraud, we have focused our
substantive audit procedures for the transactions
identified to ensure the appropriateness and
accuracy. We have assessed the basis and
appropriateness for significant credit entries
and the appropriateness of exceptional entries,
and assessed the appropriateness of applied
management judgment.
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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
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
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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 28
th
of April
2020, and our appointment represents a total period of uninterrupted engagement of 3 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, 1 February 2023
Deloitte Oy
Audit Firm
Jukka Vattulainen
Authorised Public Accountant (KHT)
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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
(743700OX6HSVMCAHPB95-2022-12-31_FI.zip) of Kesko Oyj (0109862-8) for the
financial year 1.1.-31.12.2022 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 and 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.
AUDITOR’S ESEF
ASSURANCE REPORT
(Translation of the Finnish original)
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Opinion
In our opinion, the tagging of the consolidated financial statements in the ESEF financial
statements (743700OX6HSVMCAHPB95-2022-12-31_FI.zip) of Kesko Oyj for the financial
year 1.1.-31.12.2022 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.-31.12.2022 has been expressed in our auditor’s report dated 1.2.2023. In this report,
we do not express an audit opinion or any other assur-ance conclusion on the consolidated
financial statements.
Helsinki, 1 February, 2023
Deloitte Oy
Audit Firm
Jukka Vattulainen
APA