Annual Report 2014 Table of Contents Year 2014 4 From the CEO...... 1 Strategy and vision...... 46 Key figures ...... 2 Materiality assessment...... 48 Board of Directors...... 6 Accomplishments in 2014...... 50 Personnel ...... 9 Responsible procurement...... 51 Report by the Board of Directors 2014...... 13 CSR aspects in the procurement process. . . . 51 Operations of the central procurement unit. . . . 13 Accounting for CSR in framework agreements...... 53 Financial status and key figures...... 14 Environmental label...... 55 Framework agreements as services...... 15 Market functionality and SMEs...... 59 Review of events in 2014 ...... 16 Digitisation of society having Risks and risk management...... 18 an impact on procurement ...... 62 Personnel and organisation ...... 19 Data-secure solutions...... 64 Forecast and targets for 2015...... 20 Working together Board of Directors’ proposal for successful procurement...... 65 for the disposal of profit...... 21 Case: Criminal Sanctions Agency Financial statements...... 22 put its inspection services up for tender. . . . . 67 Cash flow statement...... 22 Case: Tax Administration a frequent user of HR services...... 69 Profit and loss statement...... 23 Case: Keeping the police on the move. . . . . 71 Balance sheet...... 24 Stakeholders...... 73 Notes to the financial statements ...... 26 Closer co-operation in State governance. . . . 73 Signatures to the financial statements and auditor’s confirmation...... 32 Stakeholder analysis...... 74 Auditor’s Report ...... 33 External working groups...... 77 Memberships in organisations Sustainability report and disclosures...... 79 Transparency and stakeholder Hansel in brief...... 35 communications ...... 80 Our operations ...... 35 Customer and supplier satisfaction...... 81 Organisation...... 36 Work community...... 83 Structure of the Corporate Good employer...... 83 Responsibility Report ...... 37 Hansel Academy...... 85 Corporate responsibility programme...... 38 Benefit package ...... 87 CSR management...... 38 Green Office...... 88 Hansel’s values...... 39 Personnel statistics...... 90 Code of Ethics...... 40 GRI index ...... 94 Savings to the society...... 42 Key figure formulae...... 99 Trends affecting operations...... 45 Independent assurance report ...... 100
This pdf has been compiled from the contents of the online Annual Report. Read the online report at http://annualreport2014.hansel.fi From the CEO
We at Hansel operate as the state central procurement unit with the goal of producing savings. In 2014, the value of goods and services procured through our agreements rose to a record high of €715 million. The state centralised procurement system produced savings of nearly €250 million. In addition to centralised procurement we offer procurement consulting services for our customers. This service generates further value to our customers and the feedback we have received has been positive. Hansel participated in state procurement worth approximately one billion euros in 2014. I am proud of the responsibilities that we have carried out. We have been able to acknowledge the environmental and economic responsibility in our contracts. We still have a lot to do, especially in the area of social responsibility. We address our sustainability work closer in our corporate sustainability report. We welcome a wider use of electronic solutions in procurement. A new procurement act coming into force next year will require procurement to be subject to competitive electronic tendering. Currently we are introducing an electronic tendering service for the state. We predict that digitalisation of the procurement process will add efficiency to both customers and suppliers. Digitalisation will reduce the administrative burden and increase transparency in procurement. The basis of all our activities is cooperation – cooperation with customers, suppliers and other stakeholder groups. Cooperation is the key to our mutual success. I would like to warmly thank all our partners and Hansel's excellent staff for successful year 2014.
1 Key figures
Central procurements by sector
EUR thousand 2014 2013 2012 2011 2010 Change 13/14
Procurement sector Category
ICT procurement Data communications 32 296 32 299 30 491 25 413 23 017 0%
ICT equipment 84 692 79 585 83 705 81 480 84 171 6%
Software 29 810 27 834 27 410 22 452 23 870 7%
ICT services 46 957 31 935 26 321 29 379 34 899 47%
Total 193 756 171 653 167 927 158 724 165 956 13%
Procurement of administrative Financial management 50 725 51 356 40 141 31 463 35 702 –1% services
Organisational and HR 84 365 86 605 83 893 76 264 68 979 –3% development
Travel management 78 939 78 784 73 505 72 799 71 811 0%
Total 214 030 216 745 197 538 180 525 176 492 –1%
Procurement of materials and Vehicle and transport 51 201 50 080 49 394 42 367 44 001 2% technical services services
Material and facilities 70 432 56 786 52 596 57 083 48 977 24% services
Office supplies 63 927 64 828 66 183 63 286 52 249 –1%
Energy supply 121 238 134 898 153 338 173 572 65 669 –10%
Total 306 798 306 592 321 511 336 308 210 896 0%
Total 714 584 694 990 686 976 675 558 553 345 3%
2 Development of central procurement
EUR thousand
Framework agreements, top 15
EUR thousand 2014 2013 Share Growth
Electricity 81 415 90 879 11% –10%
Occupational health care services 61 138 65 923 9% –7%
Computers and peripherals 50 932 47 982 7% 6%
Technical ICT consultancy 40 416 31 682 6% 28%
Equipment leasing services 33 641 31 797 5% 6%
Scheluded flights 31 404 32 958 4% –5%
Fuel 30 497 36 292 4% –16%
Facility user services 28 798 23 960 4% 20%
Distribution channels for Microsoft access rights 28 517 25 723 4% 11%
Vehicles and economic driving training 26 326 28 814 4% –9%
Office furniture 25 062 22 825 4% 10%
Domestic accommodation and conference services 23 116 22 740 3% 2%
Voice solutions 18 611 17 662 3% 5%
Office and ICT-supplies 15 860 17 917 2% –11%
3 Security technology 13 613 7 573 2% 80%
Other total 205 238 190 262 29% 8%
Total 714 584 694 990 100% 3%
Central procurements by branch of administration
EUR thousand 2014 2013 Share Growth
Ministry of Defence 124 077 107 803 17 % 15 %
Ministry of Finance 103 360 89 356 14 % 16 %
Ministry of Education and Culture 101 746 98 160 14 % 4 %
Ministry of Employment and the Economy 81 965 84 609 11 % –3 %
Ministry of the Interior 68 406 69 324 10 % –1 %
Ministry of Transport and Communication 60 891 56 654 9 % 7 %
Ministry of Justice 38 525 45 014 5 % –14 %
Finnish Government 34 855 42 274 5 % –18 %
Ministry of Social Affairs and Health 34 629 39 874 5 % –13 %
Ministry of Agriculture and Forestry 30 456 27 915 4 % 9 %
Parliament of Finland 11 705 12 080 2 % –3 %
Ministry of Foreign Affairs 10 737 13 652 2 % –21 %
Ministry of the Environment 5 177 4 727 1 % 10 %
Agencies of the European Union 2 029 1 706 0 % 19 %
Office of the President of the Republic of Finland 1 103 1 404 0 % –21 %
Unallocated to any branch of the public administration 4 921 436 1 % 1 028 %
Total 714 584 694 990 100% 3 %
4 Cost development
EUR thousand
5 Board of Directors
Timo Laitinen, b. 1958 Master of Laws Director General State Treasury Member of the board since 2012
Selena Savo, b. 1973 Vice Chair Master of Arts Personnel Manager Ministry of Finance Member of the board since 2013
6 Tiina Lukkari, b. 1954 Master of Arts Executive Vice President Purchases Alko Inc. Member of the board since 2010
Rami Metsäpelto, b. 1968 Master of Laws Director General Finnish Transport Agency Member of the board since 2014
7 Panu Kilpinen, b. 1974 Vocational Qualification in Business and Administration Customer Manager Hansel Ltd Member of the board since 2013
8 Personnel
Customer Manager Kari Eronen, Category Category Manager Aino-Maija Lahtela, Legal Manager Pia Degerholm, Procurement Counsel Karolina Lehto, Category Manager Assistant Sanna Huhtala, Head of Unit Sami Tero Lehtisaari, Category Manager Sasu Seppälä, Customer Manager Marika Hilke Laitinen
Customer Manager Ritva Huusko, Statistic Category Manager Timo Malmberg, Legal administrator Merja Leppänen, Senior Counsel Katja Mikkonen, Legal Counsel Minna Specialist Anne Majalampi, Head of Unit Olli- Eskola, Customer Manager Taina Maukonen Pekka Leskinen
9 Chief Executive Officer Anssi Pihkala, Chief Accountant Petri Nousiainen, Sourcing Marketing Manager Arja Muuri, Senior Consultant Tommi Nurmi, Head of Unit Mervi Specialist Jani Mäkinen, Legal Counsel Outi Olkinuora, ICT Specialist Niko Myllynen Jousi, Sourcing Consultant Juha Ståhl
Communications Manager Thomas Sund, System Specialist Terhi Siitonen, Legal Counsel Sourcing Assistant Irmeli Kreander, Senior Ansa Nikander, Legal trainee Annukka Specialist Eero Korkeakoski, Assistant Käsnänen Controller Annika Hämäläinen
10 Head of Tendering Unit Ilkka Sihvola, Chief Senior Specialist Milja Virtanen, Sourcing Legal Counsel Eija Kontuniemi, Sourcing Consultant Tuomo Vuorinen, Category Consultant Mirke Turunen, Sourcing Manager Sari Ylipalo, Sourcing Consultant Consultant Olli Surakka Mirka Österberg
Bookkeeper Lea Helppi, Category Manager Controller Heli Jokela, HR Manager Minna Pontus Grönholm, Senior Specialist Maare Hälvä, Senior Specialist Minna Isoherranen Heinikoski, Sourcing Consultant Kristian Hartikainen
Senior Specialist Kari Mattsson, Chief IT Manager Mikko Saavalainen, Customer Category Officer Susanna Närvänen, Legal Advisor Mia Lindroos, Controller Anne Counsel Liisa Lehtomäki Saarnio, Legal Counsel Jukka-Pekka Salmela, Specialist in Marketing Communications Saana Salonen
11 Specialist Tero Dits, Customer Manager Panu Category Manager Mika Saarinen, Sourcing Kilpinen, Customer Advisor Anne Juslin, Legal Consultant Jussi Pyykkönen, Category Counsel Jukka Hämäläinen, Procurement Manager Jesse Ruotsalainen, Development Assistant Elina Somero, Chief Financial Officer Manager Timo Rantanen, Senior Specialist Kirsi Koivusaari Tuula Risikko
Sourcing Consultant Petteri Pohto, Customer Relations Director Petri Kalavainen, Assistant to Chief Executive Officer Tiina Pietiläinen, Head of Unit Kalle Hietaranta
12 Operations of the central procurement unit
Hansel Ltd is the central procurement unit of the Finnish Government. The objective of Hansel’s operations is to generate savings for the Finnish Government, by putting framework agreements for products and services out to tender. The tasks and roles of the central procurement unit are defined in the Act on Public Contracts, the Act on a Limited Liability Company Called Hansel Oy, and in the State Procurement Strategy. Hansel’s customers consist of ministries, their subordinate departments, and other government agencies.
Hansel’s customers have the opportunity to make acquisitions without separate tendering processes, by joining the framework agreements administered by Hansel. Central procurement implemented under the framework agreements generates considerable savings for the Finnish Government, through both procurement process costs and pricing. In addition to framework agreements, Hansel offers tendering services for its customers.
Through responsibly run operations, Hansel promotes high-quality procurement and the equal, non- discriminatory treatment of suppliers in the tendering process. Hansel's objective is to promote open competition and organise tendering processes in a manner that fosters efficient market operations. Hansel is a non-profit limited company fully owned by the State of Finland, and operates under the steering of the Ministry of Finance. The company’s operations are mainly funded by service fees collected from suppliers based on realised procurements. The maximum service fee that may be currently charged is 1.5 per cent of the contract value, while the average service fee in 2014 was 1.19 per cent (also 1.19 in 2013).
13 Financial status and key figures
Central procurements under Hansel’s framework agreements in 2014 totalled €715 million (in 2013, €695 million). Compared to the previous year, growth totalled €20 million, i.e. 2.8 per cent.
Measured in euros, growth was strongest in the categories related to procurements in ICT services as well as in Material and facilities services and ICT equipment. The categories that declined compared to the previous year were Energy supply, Organisational and HR development, as well as Office supplies.
Net sales in 2014 totalled €9.3 million (€8.7 million in 2013). Net sales consisted of the service fees for framework agreement sales totalling €8.5 million (€8.3 million in 2013), tendering expert services €671 thousand (€368 thousand in 2013) and other revenue €89 thousand (€58 thousand in 2013).
The financial position of the company is strong. Profit for the 2014 accounting period came to €235 thousand (€195 thousand in 2013). The balance sheet total on 31 December 2014 was €17.4 million (€17.1 million in 2013) and the total of liquid cash assets was €12.0 million (€12.3 million in 2013). Key financial figures
2014 2013 2012 2011 2010
Central purchasing, EUR thousand 714 584 694 990 686 976 675 558 553 345
Net sales, EUR thousand 9 268 8 679 8 468 8 263 8 059
Profit, EUR thousand 239 173 589 918 1 327 and its share of net sales, % 2,6 2,0 7,0 11,1 16,5
Profit for the financial period, EUR thousand 235 195 602 850 1 210
Balance sheet total, EUR thousand 17 402 17 073 16 677 17 494 15 182
Equity capital, EUR thousand 15 284 15 048 14 853 14 251 13 401
Equity ratio, % 87,8 88,1 89,1 87,5 88,3
Personnel at the end of the financial period (FTE) 77 73 71 66 57
14 Framework agreements as services
In 2014, Hansel organised the competitive tendering process for 19 framework agreements (20 in 2013). Subcategories included, the total number of competitive tendering processes organised was 47 (77 in 2013). At the year end, Hansel had a total of 76 framework agreements (74 on 31 Dec 2013), and a total of 185 competitive tenders including subcategories (164 in 2013). Also at the end of 2014, Hansel had 383 contract suppliers (378 in 2013).
Hansel’s largest framework agreement was for Electricity, which reached a procurement value of €81 million (€91 million in 2013). The second largest framework agreement, with a volume of €61 million (€66 million in 2013), was Occupational Health Care services, whilst the third largest was Computers and Peripherals with a volume of €51 million (€48 million in 2013).
Measured in euros, the main users of Hansel’s framework agreements were the administrative sectors of the Ministry of Defence, the Ministry of Finance, the Ministry of Education and Culture, the Ministry of Employment and the Economy, and the Ministry of the Interior. Utilisation of framework agreements is mainly promoted through marketing communications. In addition to face-to-face services, customers are offered diverse electronic services. Each year, Hansel organises customer and supplier events with the aim of promoting sales and exchanging experiences on framework agreements.
15 Review of events in 2014
Hansel’s task is to increase productivity in state procurement operations. The year 2014 was the second of the 2013–2017 strategy period. Hansel’s strategic objective is to assume a stronger role in developing government procurement and to collaborate actively with government entities. Additionally, Hansel wants to be a pioneer in responsible and innovative public procurement, increase its offering in tendering services for its customers, and implement electronic tendering tools. In this strategy period, Hansel will also focus on co-operation with customers and suppliers, contractual supervision and developing staff competencies.
In connection with the mid-term review of the strategy in October 2014, it was noted that no changes have occurred in the operational environment or owner's expectations that could be regarded as substantial enough to revise the strategy prior to its termination in 2017. The strategy period, which began in 2013, has proceeded according to plan. In some respects, its progress has been faster than planned; whereas with regard to the electrical tendering solution, for example, such progress has occurred more slowly, due to the Market Court deliberations.
The new procurement directives that came into effect at the beginning of 2014 imply renewal for the procurement units. The pivotal goals of the directives are to renew and modernise the regulations, intensify the effectiveness of the use of public funds, improve the participatory potential of SMEs, and promote taking social perspectives into account. The directives must be nationally enacted by 18 April 2016. Hansel’s CEO is involved in the steering group appointed by the Ministry of Employment and the Economy preparing the renewal of procurement legislation, and the Chief Legal Counsel is involved in the legislation-related preparation group and secretariat.
Renewal of procurement legislation will significantly affect Hansel’s activity. Of the changes affecting Hansel’s position and tasks, the most important are connected with the specifications of central procurement functions and procurement support functions, central procurements exceeding the limits, and renewal with respect to framework agreements. Pivotal changes affecting tendering include, among other things, policy-based amendments to procurement procedures, the changes connected with electrical data exchange procedures and the requirements linked to contractual revisions, as well as a large number of modifications associated with the advancement of the procurement process. Under the new legislation, horizontal policies such as compliance with the obligations of environmental, social and labour legislation, preventative measures against the grey economy and improvement in the position of SMEs are all being emphasised. Alongside renewal, international central procurements will become possible within the area of the European Union.
Social digitalisation is creating new opportunities for Hansel. The company’s IT infrastructure is currently being built in order to further reduce the need for manual work. By means of various service entities, an attempt will be made to ensure that information is maintained in only one location, from which it can be accessed by several individual channels. More use will be made of automation in customer and supplier cooperation, agreement supervision and reporting on procurements. The electrical tendering solution procurement decision has been made, and deployment of the system is under preparation. The system will first be introduced to Hansel and its use will subsequently be extended to customers.
16 Hansel will continue the significant addition of tendering services for its customers linked with procurements in accordance with its strategy. Tendering services as a share of net sales in 2014 totalled seven per cent, but growth compared to the previous year was 82 per cent, ending on €671 thousand (€368 thousand in 2013). In 2014, Hansel’s largest tendering services-based customers were the State Treasury, the Legal Register Centre, the Finnish Police and the Finnish Transport Agency. Significant projects included the information and case management system tendering for the State Treasury, tendering for the Legal Register Centre’s customer information system, and tendering for the Finnish Transport Agency in the maintenance of traffic routes. In 2014, Hansel was involved in 86 customer-based tenders, and for these procurements, the procurement value corresponded to €230 million. Some of the procurements are socially significant and, for this reason, are of particular interest to Hansel's employees.
The Ministry of Finance engaged a comprehensive assessment of state procurement activity performed in 2013, on the basis of which it launched the HANKO project in August 2014 (state procurement activity development project). The active period of the project will end on 29 January 2016. The project is divided into four development areas in which objectives include strengthening and clarifying the steering and organisation of state procurement procedures; increasing the systematic nature and monitoring of procurements; improving contract management, supplier cooperation and guidelines; and developing procurement-related expertise. Hansel’s involvement in this project comprises a major contribution to the work being done.
A representative of Hansel took part in the work of the State Procurement Advisory Board, which consists of representatives from all state administration sectors as well as from the university sector. The duties of the Advisory Board include overseeing the achievement of the savings targets set for government procurement operations, as well as promoting the practical implementation of Group- level targets and objectives and the dissemination of best practices. The Advisory Board has been appointed by the Ministry of Finance.
At the end of 2014, Hansel’s Board of Directors decided to reduce service fee percentages as applicable to several framework agreements. By reducing service fees, Hansel's average service fee approximates one per cent, which is the company's long-term objective. This reduction in the service fee percentage will not endanger the financial position of the company.
In December of 2013, Hansel's Board of Directors decided to set up an internal audit function, which reports directly to the Board. The role of Internal Audit is to support the Board of Directors and the CEO in their supervisory duties prescribed by law and the Board's rules of procedure, as well as to perform other internal audit and risk management related duties assigned by the CEO and the Board of Directors. This function was initiated in 2014 and was outsourced to the company’s external service provider. In 2014, internal inspections were performed with regard to the ethical guidelines and data security.
At the end of 2014, Hansel was involved in three tendering-related cases handled in the Market Court, and two in the Supreme Administrative Court. In 2014, the company received six Market Court decisions, in which two appeals were rejected, two were left without further action, and one expired. One trial ended in a procurement decision being revoked. The Supreme Administrative Court issued one expiry-related decision in 2014 with Hansel Ltd having revoked its appeal. Key events after the close of the accounting period
Business operations remained fundamentally the same after the close of the accounting period.
17 Risks and risk management
Hansel’s risks are particularly linked to framework agreement-based tendering and contractual management. Hansel reduces the risks connected with tendering by providing positive expertise in procurement legislation and by following the company's tendering process. The company has internal guidelines in use as well as a quality assurance system for competitive tendering. A special risk connected with the state's Electricity framework agreement applies to the state’s electrical derivatives, which are in liquidation in Hansel’s name on Nasdaq OMMX Stockholm Ab. The matter is described in more detail in the notes to the Financial Statements 5.1, Securities and Liabilities.
Each framework supplier’s financial, technical and professional ability to provide the procured products or services is assessed during the tendering phase. Contract suppliers are monitored throughout the contract period. In cooperation with a risk management expert, Hansel regularly conducts major risk identification projects, the results of which are presented in more detail in the Corporate Responsibility Report.
18 Personnel and organisation
On 31 December 2014, Hansel employed 77 people (73 on 31 December 2013 and 71 on 31 December 2012). The average number of personnel employed by Hansel in 2014 was 75 (71 in 2013 and 69 in 2012). Women accounted for 57 per cent of all personnel and 60 per cent of Executive Committee members. The average age of employees was 43. At the end of the accounting period, 96 per cent of all employees held permanent employment contracts (98 per cent in 2013 and 94 in 2012).
Education-wise, 57.5 per cent of employees hold a Master’s degree, and 13.8 per cent a Bachelor’s degree or a degree from a university of applied sciences. A total of 18.7 per cent of employees had completed a secondary education with no further qualifications, and 10 per cent did not have vocational qualifications. The company’s incentive system covers all permanent employees.
In 2014, 11 new employees were hired, six of them on fixed-term contracts. Ten employees left the company during the year. Of those who left, four resigned, the fixed-term contracts for five ended, and one retired.
The project for an expertise development strategy for Hansel’s personnel was continued in accordance with the plan in 2014. On the basis of the expertise survey, a training programme was assembled, referred to as Hansel Academy 2014–2016, which was launched in August. The goal is to enhance and diversify the company’s expertise-related resources. Lappeenranta University of Technology was selected as the partner.
A job satisfaction survey was conducted at Hansel during the latter half of 2014. Accordingly, well- being at work was found to be on a good level in the company, averaging 3.8 on a scale of 1–5 (3.7 in 2012). Managerial work is measured, for instance as part of the job satisfaction survey, and is being developed on the basis of its results. Training is regularly arranged for supervisors in connection with their work.
Hansel adheres to the guidelines on management and key employee rewards and incentives issued by the Cabinet Committee on Economic Policy. Sustainable development, environmental factors and the grey economy
Within public procurement, themes related to corporate responsibility and the struggle against the grey economy are playing an increasingly important role. In its activities, Hansel adheres to the principles of corporate responsibility, in line with Government policies. Corporate responsibility reporting is integrated with the company’s annual reporting practices and provides detailed coverage of all measures related to responsibility.
19 Forecast and targets for 2015
In 2015, Hansel will continue to execute its new strategy, according to which the company will take on more responsibility for developing the government’s procurement operations. The total number of central procurements is expected to grow in comparison to the previous year. Income from service fees is expected to fall due to a reduction in the average service fee level. This is due to a decision to cut the service fees for certain framework agreements. For customers, the lower service fee percentage translates into lower prices. Net sales from tendering services are expected to continue growing. It is anticipated that Hansel’s financial position will remain strong.
Hansel is initiating the deployment of an electrical tendering system in 2015. It is intended that the company’s customers will also be able to begin deploying the system during the year. Cooperation with the service centres of the state will continue actively in 2015. The goal is an improvement in state procurement activity cost effectiveness and quality, as well as the avoidance of overlapping work. Hansel regularly collaborates with organisations which include the State Treasury, Senate Properties, Valtori Government ICT Centre, the Finnish Government Shared Services Centre for Finance and HR (Palkeet) and HAUS.
Hansel follows the discussions on public procurement in the European Union and is a member of the cooperation group of key central procurement units of European states. In addition to Hansel, members include the following central procurement units: SKI from Denmark, Kammarkollegiet from Sweden, BBG from Austria, Consip from Italy and ANCP from Portugal.
20 Board of Directors' proposal for the disposal of profit
Profit for the financial period totalled €235,252.74. The Board of Directors proposes that no dividend be paid and that the profit for the financial period be recognised as equity capital and entered into the accounts as profit for previous financial periods. Board of Directors and auditors
At the Annual General Meeting of Hansel Ltd on 11 April 2014, the following members of the Board of Directors were elected:
Timo Laitinen, Director General, State Treasury (Chair) Selena Savo, Human Resources Manager, Ministry of Finance (Deputy Chair) Rami Metsäpelto, Director-General, Finnish Transport Agency, member Tiina Lukkari, M.A., member Panu Kilpinen, Customer Relationship Manager, Hansel Ltd (member, personnel representative)
The Board convened eight times during 2014.
Authorised Public Accounting Firm KPMG Oy Ab is the company auditor, with Jorma Nurkkala, Authorised Public Accountant, Chartered Public Finance Auditor, as Chief Auditor. Anssi Pihkala, LL.M., is Hansel’s CEO.
21 Cash flow statement
1 Jan–31 Dec 2014 1 Jan–31 Dec 2013
Cash flow from business operations:
Profit (loss) before extraordinary items (+/–) 295 108,26 259 553,23
Adjustments to operating profit (+/–):
Deprecation according to plan 48 155,45 51 697,76
Financial income and expenses –56 380,48 –86 881,48
Operating cash flow before change in working capital 286 883,23 224 369,51
Change in working capital:
Increase/decrease in interest-free short-term receivables –702 504,09 –2 744 546,72
Increase/decrease in interest-free short-term liabilities 98 462,64 296 951,91
Cash flow from operating activities before financial items and taxes –317 158,22 –2 223 225,30
Interest and other financial expenses paid for operating activities –1 060,10 –11 013,20
Interest received from operating activities 57 623,55 160 568,97
Direct taxes paid (–) –64 138,76 –160 488,46
Cash flow before extraordinary items –324 733,53 –2 234 157,99
Cash flow from business operations (A) –324 733,53 –2 234 157,99
Cash flow from investment:
Investments in tangible and intangible assets (–) –62 966,45 –31 098,84
Cash flow in investing activities (B) –62 966,45 –31 098,84
Cash flow from financing activities:
Cash flow from financing activities (C) 0,00 0,00
Change in cash and cash equivalents (A+B+C) increase (+) / decrease (–) –387 699,98 –2 265 256,83
Cash and cash equivalents at the beginning of period 12 348 960,64 14 614 217,47
Cash and cash equivalents at the end of period 11 961 260,66 12 348 960,64
–387 699,98 –2 265 256,83
Cash and cash equivalents at the end of period include time deposits 0,00 3 309 149,59
22 Profit and loss statement
1 Jan–31 Dec 2014 1 Jan–31 Dec 2013
Net sales 9 268 028,11 8 678 709,08
Other income from business operations 62 931,28 1 602,00
Personnel expenses –6 312 200,32 –5 948 775,63
Depreciation and value adjustment –48 155,45 –51 697,76
Other operating expenses –2 731 875,84 –2 507 165,94
Operating profit (loss) 238 727,78 172 671,75
Financial income and expenses 56 380,48 86 881,48
Profit (loss) before extraordinary items 295 108,26 259 553,23
Profit (loss) before appropriations and taxes 295 108,26 259 553,23
Income taxes –59 855,52 –64 138,76
Profit (loss) for the financial period 235 252,74 195 414,47
23 Balance sheet
ASSETS 31 Dec 2014 31 Dec 2013
Non-current assets
Intangible assets
Intangible rights 27 840,70 46 672,97
27 840,70 46 672,97
Tangible assets
Machinery and equipment 88 826,92 55 183,65
88 826,92 55 183,65
Non-current assets, total 116 667,62 101 856,62
Current assets
Long-term receivables
Other receivables 950 370,67 889 887,79
950 370,67 889 887,79
Short-term receivables
Accounts receivable 4 276 982,69 3 662 808,93
Other receivables 7 714,44 17 309,85
Prepayments and accrued income 89 371,66 52 111,77
4 374 068,79 3 732 230,55
Investments
Other shares and similar rights of ownership 1 969 090,75 1 977 245,20
1 969 090,75 1 977 245,20
Cash and cash equivalents 9 992 169,91 10 371 715,44
Current assets, total 17 285 700,12 16 971 078,98
ASSETS, TOTAL 17 402 367,74 17 072 935,60
EQUITY AND LIABILITIES 31 Dec 2014 31 Dec 2013
Equity
Share capital 12 500 000,00 12 500 000,00
Retained earnings 2 548 359,89 2 352 945,42
24 Profit (loss) for the financial period 235 252,74 195 414,47
Equity, total 15 283 612,63 15 048 359,89
Liabilities
Current liabilities
Accounts payable 160 521,94 217 094,56
Other liabilities 481 245,26 460 496,09
Accruals and deferred income 1 476 987,91 1 346 985,06
2 118 755,11 2 024 575,71
Liabilities, total 2 118 755,11 2 024 575,71
EQUITY AND LIABILITIES, TOTAL 17 402 367,74 17 072 935,60
25 Notes to the financial statements
1. Basis of preparation for the financial statements
1.1 Valuation principles Fixed assets are entered in the balance sheet at cost less planned depreciation. 25 per cent reducing balance depreciation is applied to machinery and equipment. Software licenses are amortised on a straight-line basis over five years. Other long-term expenses are amortised on a straight-line basis over five years.
Foreign currency items Foreign currency denominated assets and liabilities are recognised at the European Central Bank average exchange rate of the closing date of the financial period.
1.2 Comparability of accounts The accounting principles that were applied in 2013 have also been applied in 2014. 2. Notes to the profit and loss statement
2.1 Personnel expenses and average number of personnel 2014 2013
Salaries –4 855 736,95 –4 542 946,91
Fees and remuneration of the Managing Director and the Board of Directors –280 681,54 –292 023,85
Pension expenses –928 991,48 –885 687,39
Other indirect personnel expenses –246 790,35 –228 117,48
Personnel expenses, total –6 312 200,32 –5 948 775,63
Total monetary value of fringe benefits 78 948,62 74 476,92
Number of employees
At the end of the financial period 77 73
Average during the financial period 75 71
2.2 Depreciation
Planned depreciation during the financial period
Intangible assets
Software licenses –18 832,27 –33 371,43
Tangible assets
Machinery and equipment –29 323,18 –18 326,33
Depreciation during the financial period, total –48 155,45 –51 697,76
26 2.3 Other operating expenses
Administrative expenses –1 344 207,55 –1 110 467,76
Facility expenses –576 646,48 –634 965,19
Telephone, IT and office expenses –461 393,62 –459 886,81
Marketing expenses –101 515,05 –90 916,31
Travel expenses –87 524,68 –63 246,97
Representation expenses –4 213,82 –4 475,23
Other operating expenses –156 374,64 –143 207,67
Other operating expenses, total –2 731 875,84 –2 507 165,94
2.4 Financial income and expenses
Financial income
Interest income 18 604,05 94 935,55
Exchange rate gains 18,84 38,75
Other income from securities 38 817,69 2 920,38
Financial income, total 57 440,58 97 894,68
Financial expenses
Interest expenses –679,86 –165,99
Exchange rate losses –15,46 –5,64
Guarantee premiums 0,00 –10 652,04
Other expenses from investments –364,78 –189,53
Financial expenses, total –1 060,10 –11 013,20
2.5 Auditors' fees
Audit fees –26 080,49 –29 831,62
Other fees –26 701,98 –15 738,00
Auditors' fees, total –52 782,47 –45 569,62
3. Notes to assets of the balance sheet 2014 2013
3.1 Changes in non-current assets
Intangible assets
27 Acquisition cost 1.1. 387 410,21 366 521,38
Procured during financial period 0,00 20 888,83
Sold during financial period 0,00 0,00
Acquisition cost 31.12. 387 410,21 387 410,21
Accumulated depreciation 1.1. –340 737,24 –307 365,81
Depreciation during the financial period –18 832,27 –33 371,43
Accumulated depreciation 31.12. –359 569,51 –340 737,24
Balance sheet value 31.12. 27 840,70 46 672,97
Tangible assets
Acquisition cost 1.1. 733 909,18 723 699,17
Procured during financial period 62 966,45 10 210,01
Sold during financial period 0,00 0,00
Acquisition cost 31.12. 796 875,63 733 909,18
Accumulated depreciation 1.1. –678 725,53 –660 399,20
Depreciation during the financial period –29 323,18 –18 326,33
Accumulated depreciation 31.12. –708 048,71 –678 725,53
Balance sheet value 31.12. 88 826,92 55 183,65
The company does not have a depreciation difference.
3.2 Long-term receivables
Other receivables
Guarantee deposits 950 370,67 889 887,79
Long-term receivables, total 950 370,67 889 887,79
3.3 Other receivables
Travel advances 7 714,44 17 309,85
Other receivables, total 7 714,44 17 309,85
3.4 Prepayments and accrued income
Accrued interest, Bank account for December 0,00 157,75
Deferred expense 83 330,66 51 954,02
28 Pension insurance payment receivables 6 041,00 0,00
Prepayments and accrued income, total 89 371,66 52 111,77
3.5 Investments Book-value Book-value
Other shares and similar rights of ownership
Fund units 1 969 090,75 1 977 245,20
Investments, total 1 969 090,75 1 977 245,20
Market value Market value
Fund units 2 145 967,15 2 024 770,42
4. Notes to equity and liabilities of the balance sheet 2014 2013
4.1 Equity
Restricted equity
Share capital 1.1. 12 500 000,00 12 500 000,00
Share capital 31.12. 12 500 000,00 12 500 000,00
Restricted equity, total 12 500 000,00 12 500 000,00
Non-restricted equity
Retained earnings 1.1. 2 548 359,89 2 352 945,42
Retained earnings 31.12. 2 548 359,89 2 352 945,42
Profit/loss for the financial period 235 252,74 195 414,47
Non-restricted equity, total 2 783 612,63 2 548 359,89
Equity, total 31.12. 15 283 612,63 15 048 359,89
4.2 Current liabilities
Accruals and deferred income
Annual leave salaries and related social security payments 714 457,50 682 628,73
Salary liabilities and related social security payments 680 000,00 570 355,94
Accrued pension expense 0,00 9 972,00
Mandatory employer insurance payments 12 017,26 5 718,13
Other accrued expense 70 513,15 78 310,26
Accruals and deferred income, total 1 476 987,91 1 346 985,06
29 5. Notes on collateral and contingent liabilities
5.1 Commitments
Other own commitments
Rental liabilities, less than one year 662 428,20 661 968,60
Rental liabilities, more than one year 2 108 924,00 2 852 512,59
On-demand bank guarantee to Nasdaq OMX Stockholm Ab 44 390 393,00 53 389 679,00
Guarantee deposits to Nasdaq OMX Stockholm Ab 950 370,67 889 887,79
Leasing liabilities, less than one year 160 379,71 67 220,81
Leasing liabilities, more than one year 246 891,21 64 734,02
Commitments, total 48 519 386,79 57 926 002,81
The structure of the government’s Electricity framework agreement was modified in 2013. The clearing account for energy derivatives trading is in Nasdaq OMX Stockholm Ab under Hansel’s name. To open the account, Hansel was required to make guarantee deposits to Nasdaq (totalling €950,370.67 on 31 December 2014). The deposits are verified every three months by Nasdaq.
Hansel Oy has a maximum on-demand bank guarantee of €75 million from Pohjola Bank Plc for use in hedging electricity purchase prices. On the balance sheet date, €50 million of this guarantee was still available for hedging purposes. On 31 December Hansel had used €44,390,393.00 of this guarantee, corresponding to the guarantees given to Nasdaq on the balance sheet date. The collateral provided by Hansel against the bank guarantee from Pohjola Bank is a directly enforceable government guarantee of a maximum of €150 million granted by the government to Hansel for use in electricity price hedging (decision VM/1805/02.04.06/2013).
For Hansel, electricity derivatives trading is a pass-through item that does not affect profits. The results of derivatives trading are charged or repaid to customers as such. The government's electricity procurement strategy is determined by the Ministry of Finance. The hedging policy, derived from the strategy, is set by the steering group for government electricity procurement appointed by the Ministry of Finance. Decisions regarding the hedging policy are made by the Ministry of Finance at the steering group's proposal. The term of office of the steering group for government electricity procurement ended on 31 December 2014. A portfolio manager chosen by Hansel through competitive tendering decides on the content and timing of individual hedges made in line with the hedging policy. The hedges made according to the policy reach up to 2019.
At the beginning of 2015, the steering group was renamed Monitoring group for government electricity procurement and its term of office was set for 1 January 2015–31 December 2016. The monitoring group is responsible for monitoring the government's electricity procurement and for making development proposals to the Ministry of Finance as required. Once a year, the monitoring group reports on the government electricity procurement to the State Procurement Advisory Board and, when necessary, to the senior management of the Ministry of Finance.
30 The European Securities and Markets Authority (ESMA), an EU authority, has issued a European Market Infrastructure Regulation (EMIR), which applies to derivatives. According to the regulation, bank guarantees will not be accepted as collateral for derivatives trading after March 2016. Various Nordic organisations, such as Nasdaq, are attempting to negotiate changes to the regulation. Various Nordic organisations, such as Nasdaq, are attempting to negotiate changes to the regulation. For the time being, the situation remains unresolved, but Hansel may have to adjust its collateral arrangements for derivatives in the future. 5.2 Pending legal proceedings
At the end of 2014, Hansel was involved in three tendering-related cases handled in the Market Court, and two in the Supreme Administrative Court. In 2014, Hansel received six Market Court decisions, in which two appeals were rejected, two were left without further action and one expired. One court hearing ended in the procurement decision being revoked. The Supreme Administrative Court dismissed one case in 2014, after Hansel Oy withdrew its appeal.
31 Signatures to the financial statements and auditor's confirmation
Helsinki March 12th 2015
Timo Laitinen, Chair Selena Savo, Vice Chair Tiina Lukkari Rami Metsäpelto Panu Kilpinen Anssi Pihkala, Managing Director Auditor's confirmation
A report on the audit has been issued today.
Helsinki March 12th 2015
KPMG Oy Ab Authorised Public Accountants Jorma Nurkkala APA, CPFA
32 Auditor's Report
To the Annual General Meeting of Hansel Oy
We have audited the accounting records, the financial statements, the report of the Board of Directors, and the administration of Hansel Oy for the year ended 31 December, 2014. The financial statements comprise the balance sheet, the income statement, the cash flow statement and notes to the financial statements. Responsibility of the Board of Directors and the Managing Director
The Board of Directors and the Managing Director are responsible for the preparation of financial statements and report of the Board of Directors that give a true and fair view in accordance with the laws and regulations governing the preparation of the financial statements and the report of the Board of Directors in Finland. The Board of Directors is responsible for the appropriate arrangement of the control of the company’s accounts and finances, and the Managing Director shall see to it that the accounts of the company are in compliance with the law and that its financial affairs have been arranged in a reliable manner. Auditor’s Responsibility
Our responsibility is to express an opinion on the financial statements and on the report of the Board of Directors based on our audit. The Auditing Act requires that we comply with the requirements of professional ethics. We conducted our audit in accordance with good auditing practice in Finland. Good auditing practice requires that we plan and perform the audit to obtain reasonable assurance about whether the financial statements and the report of the Board of Directors are free from material misstatement, and whether the members of the Board of Directors or the Managing Director are guilty of an act or negligence which may result in liability in damages towards the company or have violated the Limited Liability Companies Act or the articles of association of the company.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements and the report of the Board of Directors. The procedures selected depend on the auditor’s judgment, including the assessment of the risks of material misstatement, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity’s preparation of financial statements and report of the Board of Directors that give a true and fair view 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 company’s internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by management, as well as evaluating the overall presentation of the financial statements and the report of the Board of Directors.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion. Opinion
33 In our opinion, the financial statements and the report of the Board of Directors give a true and fair view of the financial performance and financial position of the company in accordance with the laws and regulations governing the preparation of the financial statements and the report of the Board of Directors in Finland. The information in the report of the Board of Directors is consistent with the information in the financial statements. Other opinions
We support that the financial statements should be adopted. The proposal by the Board of Directors regarding the use of the profit shown in the balance sheet is in compliance with the Limited Liability Companies Act. We support that the Members of the Board of Directors and the Managing Director should be discharged from liability for the financial period audited by us.
Helsinki, 12 March 2015
KPMG OY AB Jorma Nurkkala Authorized Public Accountant, CPFA
34 Our operations
Hansel is the central procurement unit of the Finnish government. It organises competitive tendering processes and maintains framework agreements for products and services for government procurement units. Besides framework agreements, Hansel provides tendering services for its customers.
Hansel’s objective is to be the engine of efficient procurement in the government sector. Hansel’s core duty is to increase productivity in central government procurement. By working in close and responsible co-operation with customers, Hansel is able to generate significant savings for society.
Besides creating savings, a centralised model allows more responsible procurement. Our goal is to lead the way in responsible procurement.
Hansel offers its customers security and ease. We turn complexity into simplicity. With years of experience in demanding tendering processes, Hansel’s experts have accumulated solid competences in responsible procurement.
Businesses are interested in the large volumes involved in government procurement, and this provides a good channel through which Hansel can influence the practices of companies that want to take part in government tenders. Contract suppliers are required to comply with sustainable practices in line with government guidelines. Responsibility as a foundation
Hansel's operations are guided by public procurement legislation, the central government procurement strategy and government resolutions.
The results of our work connected to corporate responsibility are presented in a Corporate Responsibility Report published annually in Finnish, Swedish and English. The previous report was published on 11 April 2014. The reporting is based on a materiality matrix, with due attention being paid to the G4 reporting principles.
In the report, responsibility aspects are arranged into a matrix based on stakeholder and Hansel's perspectives. This allows Hansel to focus on reporting the key themes within corporate responsibility.
35 Organisation
The members of the Hansel Board of Directors are elected by the annual general meeting. The Board is chaired by Timo Laitinen, Director General of the State Treasury. The Board of Directors consists of five members, including one personnel representative. Members of the Board of Directors are not members of the company’s operative management. The Board members include two women and three men. Decision-making is compliant with the Finnish Limited Liability Companies Act and Hansel’s articles of association.
Corporate responsibility management is monitored as part of the company's strategic management. The Board reviews a draft version of the corporate responsibility report and makes comments. The Board has not appointed any members specialising in corporate responsibility, nor are the Board’s fees tied to the results of CSR activities.
Hansel’s Executive Committee is nominated by the Board of Directors on the basis of a proposal by the CEO. The Executive Committee has five members, including the CEO: two male and three female members. The organisation of Hansel
The Framework Agreements Department, responsible for framework agreement management, is divided into three procurement divisions: ICT procurement, Procurement of administrative services, and Material and technical service procurement. Employees in this department include specialists in various areas and competitive tendering consultants.
The Account and Stakeholder Management Department is responsible for sales promotion, marketing communications, and customer service. The Legal and Competitive Tendering Department offers services related to the practical implementation of Hansel's and the central government's tendering processes, and legal consultation services.
Hansel also has a support team offering assistance to customers in completing simplified the tendering processes forming part of framework agreements.
The tasks of the Financial and Administrative Department consist of financial administration, communications, and HR. This department is responsible for the company’s management and external accounting and for corporate responsibility reporting. Communications is responsible for the company’s internal and external communications, while Human Resources is in charge of resourcing and competence development. The ICT team is responsible for the maintenance and development of IT systems.
The company is located in the post office building in Helsinki. Hansel has no international operations.
36 Structure of the Corporate Responsibility Report
The Corporate Responsibility Report presents the main results and achievements related to corporate social responsibility (CSR) in the review period 2014.
The overall concept of responsibility at Hansel is illustrated using CSR-related megatrends, the company’s strategy, co-operation with stakeholders and the responsibility materiality matrix.
The CSR aspects are approached through Hansel's corporate responsibility programme, responsible procurement, and co-operation with stakeholders. The report also explains what responsibility means in Hansel’s own activities.
The report also lists all the framework agreements that have been granted Hansel’s environmental label and explains the grounds for granting the label.
GRI guidelines compliant reporting
The structure of the report is based on the internationally approved Global Reporting Initiative GRI 4 guidelines (Core), which were updated in 2013. As required by the GRI guidelines, the report includes a table presenting the main content of the report, as well as guidance on where the information can be found.
If information is not available, this is mentioned in the table alongside an explanation for the omission. Some elements of the information are included in the financial statements.
Hansel publishes its Corporate Responsibility Report in Finnish, Swedish and English at www.hansel.fi. The report was verified by KPMG and is now, for the second time, published only in online format.
37 CSR management
In recent years it has become increasingly important to account for CSR within central procurement. Hansel’s CSR efforts are managed as part of the company’s ordinary management system.
CSR is an integral part of Hansel's operations. In accordance with government policies, we pay special attention to the ways in which environmental, social and financial responsibility issues are factored into our agreements.
Hansel regularly monitors its contract suppliers for their ability to fulfil their obligations as central government procurement partners. We are also committed to combating grey economy. Corporate responsibility team in a key role
A central role is played by the Corporate Responsibility team, which meets regularly and consists of experts from various functions within the organisation. The team consists of eight members.
The team develops, deploys and provides information on CSR-related matters. Team members participate in CSR related events and training sessions organised by various stakeholders.
Members of the CSR team have been working in co-operation with their peers in other Nordic procurement units. The objective of this co-operation is to share information and best practices, particularly those related to social responsibility.
Other activities of the Corporate Responsibility team include presentations on Hansel’s CSR efforts at client events. A CSR-related training day co-organised with HAUS Finnish Institute of Public Management Ltd has also been planned. Internal audit
At the end of 2013, Hansel's Board of Directors decided to set up an internal audit function. The role of internal audit is to support the Board of Directors and the CEO in supervisory duties prescribed by law and the Board's rules of procedure, and to perform other internal audit and risk management related duties assigned by the CEO and the Board of Directors. Internal audit reports to the Board of Directors.
In 2014, a decision was made to outsource internal audit to PricewaterhouseCoopers Oy (PwC). The Board of Directors decided that the areas to be audited in 2014 were Hansel's Code of Ethics and data security. The audit of the Code of Ethics was consultative. In connection with the audit, the content and scope of the Code was extended. The audit of data security focused on risk management.
38 Hansel's values
Hansel's corporate culture is founded on values that affect everything that happens in the workplace. The common value base is used as a management tool in our organisation. Values that have been formulated together and therefore effectively internalised provide a firm foundation for corporate culture and workplace development.
During 2014, an extensive discussion was held on values in Hansel, with the objective of questioning the current values and making changes where necessary. All Hansel employees were invited to join the discussion, which took place in several forums for around six months. Active discussion
Several methods were used to collect feedback on values. A lively discussion began in a microblog service, after which employee feedback was collected through a value survey.
The results showed that the existing values – co-operation, expertise and corporate responsibility – had been internalised and were considered suitable for Hansel. Some improvements were hoped for that would make the values more consistent with the company's operations.
All personnel took part in the value discussions at Hansel's summer day. Employees were divided into small groups to discuss and suggest new values and a new service commitment. Descriptive values for Hansel
After extensive discussions, a decision was made to revise the values. The new values are “Responsible Expert” and “Efficient Partner”. These values are an integral part of co-operation with customers and supplier, and within the organisation.
39 Code of Ethics
Hansel's Code of Ethics was updated in 2014. The Code provides the foundation for Hansel's practices and policies. Operations are built on a value base common to central government organisations: productivity, expertise, openness and impartiality. Equality and responsibility are also taken into account in Hansel's operations.
Hansel works with its customers, business life and other stakeholders in a variety of ways and through numerous channels. By working in close co-operation with our stakeholders, we intend to ensure that we can offer our customers good contracts and work efficiently with our contract suppliers.
Because Hansel's operations have far-reaching impacts, our practices and policies must be flawless. By adhering to an extensive and well-internalised Code of Ethics, Hansel strives to guarantee the equal treatment of all stakeholders and suppliers.
Corporate hospitality and gifts to individuals comply with codes of conduct for civil servants and other principles generally accepted within central government. Corruption and bribery are strictly forbidden.
Hansel does not offer financial support to political parties or groups. Instead of Christmas gifts, an annual donation of €1,000 is made to the Hospital for Children and Adolescents. No other donations are made. Disqualification provisions observed
The disqualification provisions of the Administrative Procedure Act do not directly apply to Hansel's operations. Since the majority of our customers comply with the Administrative Procedure Act, we are also expected to abide by its principles.
We also follow the recommendations made in the Public Service Code of Ethics Committee Report, as applicable, and the government guidelines regarding disqualification and conflicts of interest. Disqualified persons do not take part in competitive tendering processes, nor do they exercise any decision-making powers in contract management. Situations involving disqualification are considered on a case-by-case basis and according to Hansel's internal guidelines.
At Hansel, employees should not, in principle, be tasked with any assignments related to their previous employer, its partner or competitor, immediately after assuming their new position.
For any outside employment, employees require a permit, which is issued by the CEO. Hansel keeps a register of employees' outside employment permits. Employees are not permitted to engage in any activities that compete with Hansel's operations.
Hansel's experts give lectures at functions organised by the company's stakeholders. Providing stakeholders with an opportunity to benefit from their specialists' competences is considered a positive issue at Hansel. Giving lectures and arranging training days at stakeholder events requires a permit from the employee's supervisor, and information on such permits is recorded in statistical form.
40 The company's experts may witness situations that constitute a breach of competition laws. These include price fixing, market sharing or abuse of a dominant market position. If our experts suspect that competition laws have been breached, they inform Hansel’s Chief Legal Counsel.
41 Savings to the society
Responsibility is reflected in the purpose of Hansel’s operations – generating savings for the government. The conclusion of a study conducted at the Helsinki School of Economics (Karjalainen et al. 2008)1 indicated that, compared to distributed procurement operations, use of a centralised operational model in procurement generates significant savings of approximately 20–25 per cent.
Based on the model presented in the study and the potential calculations of Hansel’s framework agreements, the savings achieved through central procurement were €247 million in 2014.
Through more efficient operations, Hansel has been able to lower the service fees charged from contract suppliers. Currently, the maximum service fee that can be charged is 1.5 per cent of the contract value while the average service fee in 2014 was 1.19 per cent. Hansel's operating model
42 Hansel's tax footprint
Hansel is now reporting its tax footprint in its CSR report for the first time. Tax footprint reporting is based on guidelines issued by the Prime Minister’s Office, the Ownership Steering Department, on 1 October 2014, providing instructions for the State's majority-owned companies on how to report country-specific taxes.
Because Hansel has no operations abroad, all taxes are paid in Finland in accordance with current legislation. Operating under the CEO, the financial department is responsible for tax affairs at Hansel. Hansel has no specific tax strategy or tax planning.
The amount of value added tax to be paid from 2014 amounted to €1,626,449.41. The amount of corporate income tax amounted to €59,885.52. Tax withholding in 2014 amounted to €1,607,314.51.
No public grants were paid to Hansel in 2014. 1 43 1This research was conducted using Hansel’s central procurement figures for 2006. The research concluded that the savings achieved in 2006 already amounted to approximately €95 million. This study suggested that if all potential central procurement were conducted in a fully centralised manner, the savings could amount to 25.7%. As it was assumed that a 100% utilisation rate could not, realistically, be achieved, this figure was viewed as a theoretical maximum value for savings through central procurement. The study estimated a utilisation rate of 80% to be realistic.
44 Trends affecting operations
During 2013, the Corporate Responsibility team defined the trends that affect Hansel’s operations. This involved consideration of global megatrends and identifying those which apply to Hansel in particular.
The main megatrends affecting Hansel concern the development of the global economy, sustainable consumption and changes in consumer status. The latter refers particularly to the strengthening role of the consumer, which means that companies must offer their customers solutions which are easy to use and function properly. Additionally, various technology-driven trends, such as the powerful digitisation of society, have a strong impact on operations.
Once these megatrends had been identified, the focus moved to those which affect Hansel’s operations on a practical level. Megatrends
45 Strategy and vision
Hansel’s vision is to be the engine of efficient procurement in the government sector. The company’s strategic objective is to assume a stronger role in developing government procurement and to collaborate actively with government entities.
We want to lead the way in responsible and innovative public procurement, to increase our offering in tendering-related consultancy services, and to introduce electronic tendering tools. In this strategy period, we will also focus on co-operation with customers and suppliers, on contractual supervision and on developing staff competence.
The five-year strategy was adopted at the beginning of 2013. In an interim assessment completed in October 2014, Hansel's Board of Directors concluded that the strategy implementation has progressed according to plan.
It was also concluded that, since the beginning of the strategy period, no material changes have occurred in Hansel's business environment that would require strategy revision. Vision for 2017: Engine of efficient procurement in the government sector
CSR aspects are extensively accounted for in Hansel’s strategy. Responsibility is promoted through the framework agreements in particular, which set certain CSR-related requirements on tenders.
Regarding Hansel’s own operations, corporate social responsibility primarily involves reducing environmental impacts, engaging in proper financial administration, making efficient use of resources, ensuring the occupational well-being of personnel, and improving customer and supplier satisfaction. Risks and risk management
The risks related to Hansel’s operations are analysed in connection with annual strategy updates. Every few years, in addition to normal risk assessment, Hansel conducts a more comprehensive risk analysis, in co-operation with risk management experts. 46 In general, the key risks faced by Hansel are related to contracting activities – the tendering process in particular.
The most recent risk assessment was completed in February 2013. As a result, 27 risks were identified and assessed, with respect to the probability and magnitude of their consequences, should the risks be realised. On the basis of this information, risks were placed in a so-called risk matrix.
For each risk the causes and consequences were discussed, as well as actions to reduce the risks. Risks include changes in legislation and legal practices, major damages or refunds, and risks associated with the availability of workforce or coping at work.
A special risk connected with the state's Electricity framework agreement applies to the state’s electrical derivatives, which are in liquidation in Hansel’s name on Nasdaq OMMX Stockholm Ab. The matter is described in more detail in the notes to the Financial Statements 5.1, Securities and Liabilities.
47 Materiality assessment
Corporate responsibility efforts at Hansel are based on a materiality assessment. The main CSR aspects of Hansel’s operations are presented in the matrix below, which was updated by the Corporate Responsibility team in 2013.
There are several elements affecting the content of the matrix. The assessment took into account the company’s values, trends in the operating environment, and the company’s strategic objectives and related actions. Similarly, government guidelines and decisions-in-principle related to Hansel affect the content of the matrix.
Other issues considered in the assessment included the outcomes of customer and supplier satisfaction surveys, reports of the Corporate Responsibility team, feedback from customers and suppliers, and the results of job satisfaction surveys.
The aspects of responsibility presented in the matrix are linked to the identified trends through colour-coding. Besides megatrends affecting Hansel’s operations, the diagram includes issues related to Hansel as a responsible employer. The materiality matrix and the trends affecting Hansel’s operations define the issues dealt with in the corporate responsibility report. Hansel materiality matrix
48 49 Accomplishments in 2014
50 CSR aspects in the procurement process
Hansel aims to lead the way in responsible procurement. The importance of corporate responsibility and responsible procurement is emphasised, among other instances, in the decisions-in-principle and procurement strategy of the government.
Framework agreements offer an effective way of deploying government decisions through procurement. The volume of central procurement procedures is significant: during 2014, the Finnish state acquired products and services with a total value of around €715 million through framework agreements.
Thanks to this large volume, Hansel is able to influence the generation of new services and the development of more environmentally aware products. Hansel can have an impact on what is available on the market by incorporating CSR aspects in framework agreements and setting criteria related to the environment, for example.
Tendering processes organised by Hansel are carried out openly and fairly, in line with procurement legislation. CSR elements are taken into account at the planning and implementation stages of the tendering process, as well as during the contract period.
All suppliers of goods and services who fulfil the minimum requirements set in the call for tenders are allowed to take part in the tendering processes organised by Hansel, in line with the open procedure. CSR aspects in the procurement process
Needs assessment
– Procurement, lease or repair – Paying attention to the needs of special needs groups, accessibility, reachability ("Design for all")
Tenderer's eligibility
– An account of the tenderer's financial status, subcontractors, and of the environmental care actions pertaining to the service – Documentation required by the Act on the Contractor’s Obligations
Technical specifications (product or service features)
– Requirement specifications using tools such as the EU GPP toolkit, criteria for an environmental or energy label etc. – Paying attention to the needs of special needs groups ("Design for all")
51 Comparison criteria (the awarding of points)
– Additional features of a product or service that indicate responsibility when tools such as the EU GPP toolkit are applied
Contractual terms and conditions and supervision of compliance
– Ecological product packaging, reduced carbon dioxide emissions during transport, warranty terms, pick-up and recycling of discarded materials etc. – Compliance with the standards of ILO conventions, promoting employment opportunities, awareness of ethical trade issues, voluntary responsibility report
52 Accounting for CSR in framework agreements
We offer customers easy-to-use services and framework agreements featuring CSR as a built-in element. Although we make every effort to take extensive account CSR, the fact remains that it is much easier to factor environmental and financial considerations into products and services than to account for social responsibility.
Hansel’s contracts comply with government guidelines and policies, such as the government resolution, published in June 2013, on the promotion of sustainable energy and environmental solutions in public procurement. This resolution provides guidelines on emissions for vehicles used by the government, and principles concerning energy procurement, among other issues. Environmental issues
Hansel has included environmental aspects in its framework agreements for several years. For assistance, Hansel has drawn on other criteria, such as Motiva's eco-friendliness and the European Commission's Green Public Procurement criteria.
Environmental criteria have been established for computers, for example; these include a requirement to fulfil Energy Star level energy efficiency standards. Attention is paid to recycling and decommissioning, and each supplier is required to pick up old equipment from customers for recycling, regardless of what make is involved, at the prices given in the contract.
Framework agreements allow Hansel's customers to acquire low-emission vehicles with carbon dioxide emissions below 100 g/km. All-electric vehicles and plug-in hybrids are also available, with extremely low consumption and carbon dioxide emissions. The vehicle selection offered in the contract is automatically updated, allowing us to offer our customers the latest and most ecological solutions on every occasion.
Environmental factors are highlighted in the Office Furniture framework agreement. All wood and wood-based materials must derive from legally harvested timber, and at least 70% of the materials must come from forests with a documented system of sustainable management. There are separate environmental criteria for the plastic, glues, textiles and metal parts in furniture. The suppliers are required to offer a furniture recycling service.
It is an objective of framework agreements to account for the recycling of discontinued products or packaging materials whenever possible. Appropriate recycling prevents the discharge of harmful substances into nature and reduces the environmental burden caused by the use of raw materials and non-renewable natural resources. Financial aspects
Combating grey economy is one of the Finnish government's spearhead projects addressing financial responsibility. The government’s actions in this respect focus on the grey market in labour-intensive areas and on a reform of the Act on the Contractor’s Obligations.
The main labour-intensive areas from Hansel’s point of view include the hospitality industry, the transport industry, and the cleaning and security services industries.
53 Hansel strives to account for financial responsibility aspects as comprehensively as possible in its framework agreements. In this regard, suppliers taking part in the tendering process are required to have fulfilled their social obligations properly: in other words, they must have paid their taxes and social security contributions, and comply with statutory demands related to the environment, health and safety, working conditions and terms of employment.
In procurement that falls within the scope of the Act on the Contractor’s Obligations, it is additionally required that selected contract suppliers provide regular reports on their tax payments and the collective labour agreements under which they work, as well as proof of registration in the trade register, prepayment register, VAT register and employer register.
Supervision of contract suppliers’ financial and legal status is performed by an external organisation. Hansel is immediately informed if a supplier’s financial position weakens or its legal structure changes. Social responsibility
The basic principles of public procurement are applied to the inclusion of social responsibility aspects. All criteria must be fair and non-discriminatory, mindful of the principle of proportionality and openly communicated. The social elements must be related to the object of procurement, and be significant in terms of procurement implementation.
In practice, social elements may be incorporated in the terms and conditions of the contract – e.g., by requiring that the supplier commit to the key labour and human right conventions of the International Labour Organization (ILO).
On a few occasions, such as in the competitive tendering process for the Computers and Servers framework agreements, Hansel has required tenderers to present a voluntary statement on their adherence to the ILO conventions.
Hansel has conducted a risk analysis on the social responsibility of its framework agreements. This involved placing the agreements in a risk matrix, with the value of the contract in euros and the size of the social risk involved expressed as variables. The objective was to identify the areas and framework agreements involving a high risk from a social responsibility point of view.
The analysis showed that the highest social risk lies in the framework agreements made with specific international goods suppliers and Finnish service providers. With regard to the international suppliers of goods, the high risk was linked to labour-intensive production practices, a large number of subcontractors and long supply chains.
Social risks tend to grow when goods are manufactured in countries where little attention is paid to workers’ rights, and when raw materials are mostly sourced from outside Europe. With regard to Finnish service providers, the risk factors were related to labour-intensive services, a large number of subcontractors and low-income areas.
Hansel has around ten framework agreements whose placement in the matrix indicated high or very high social risk. Development efforts based on the risk analysis are under way at Hansel, with the aim of creating suitable models for reducing the risks involved in the identified areas.
54 Environmental label
Revised in 2013, the government resolution on the promotion of sustainable energy and environmental solutions in public procurement requires that environmental issues are taken into account in all public procurement.
When planning a tendering process, a project team investigates the opportunities for including environmental aspects in the criteria. If including such aspects is not possible or only one environmental element is identified, this is documented in accordance with Hansel's internal guidelines.
If a framework agreement has included environmental aspects in relation to two or more criteria set by Hansel, it is awarded Hansel’s own environmental label. By the end of 2014, 55 of the 76 framework agreements that were in force (72 per cent) took account of environmental aspects.
On some occasions, due to the nature of the procurement, environmental aspects cannot be taken into consideration; in some categories, such as organisational and HR development services and other similar framework agreements involving specialist services, environmental considerations are difficult to account for.
In Hansel's framework agreements, environmental aspects are accounted for:
1 in the definition of the procurement need, or 2 in the procurement requirement specifications, or 3 in the applicability requirements, or 4 as a criterion for comparison, or 5 in the agreement terms.
ICT Procurement
Data communications
Video conferencing services 2010 1 2 3 5
Mobile phones 2012–2014 3 5
Telecommunications service 2014–2018 1 2 4 ICT equipment
End-to-end printing environment services 1 2 3 4 5
Network equipment 2010 2 5
Data storage solutions 2011 2 4 5
Network printers and services 2012–2016 2 3 4 5
Multifunction machines and services 2012–2016 2 3 4 5
Servers and related services 2013–2015 2 3 4 5
Electronics and audio-visual equipment 2013–2015 2 3 5
Computers (PC/Windows) 2014–2016 2 3 5
55 2 3 5 Computers (iOS/OS X) 2014–2016
Rugged computers 2014–2016 2 3 5 Software
Distribution channels for Microsoft access rights 2012–2016 1 3
ICT services
Machine halls and capacity services 2013–2019 1 3 4 5
Procurement of administrative services
Financial management
Leasing services 2013–2017 2 3
Payment solution 2013–2017 1 3
Leasing services for cars 2013–2017 2 3 Organisational and HR development
Occupational health care services 2013–2018 3 4 5
Consultancy services for management 2013–2017 3 5
Data technology training 2014–2018 1 2 3 5 Travel management
Accommodation services in Brussels 2011 4 5
Train travel services 2011 1 5
Domestic accommodation and conference services 2012 4 5
Passenger shipping services 2012 2 3
Travel agency services 2012 3 5
Scheduled flights 2013–2014 3 4
Procurement of materials and technical services
Vehicle and transport services
Furniture removal 2012 2 3 5
Car rental and minileasing services 2013–2017 2 3 5
Vehicles and trailers 2013–2017 2 3 5
Vehicles and economic driving training 2013–2017 1 2 3 4 5
Chartered bus services 2014–2018 2 3 5
56 2 3 5
Work machines 2014–2018 Material and facilities services
Restaurant services (Facility user services) 2014–2017 2 3 5
Electricity and HVAC supplies 2011 2 3 5
Consumable logistics services for institutional kitchens 2011 2 3 5
Facility user services 2012 2 3 5
Food products 2012–2016 1 2 3 5
Gases 2013–2017 3 5
Security technology 2012–2016; systems and equipment 2 3 5
Cleaning services (Facility user services) 2014–2017 2 3 5
Security services (Facility user services) 2014–2017 3 5
Overall services (Facility user services) 2014–2017 2 3 5 Office supplies
Office and ICT supplies 2012–2016 2 3 4 5
Office furniture 2013–2018 2 3 5
Printing services 2014–2018 1 2 3
Distribution services for domestic literature 2014–2018 2 3 4 5
Distribution services for foreign literature 2014–2018 2 3 4 5 Energy supply
Electricity 2013–2017 2 3
Lubricants 2011 2 3
Fuels 2013–2017 2 3 5
Fuel purchases from service stations (professional drivers) 2014–2018 2 5
Fuel purchases from service stations 2014–2018 2 5
57 Central procurement with environmental aspects taken into account
Procurement sector Category Central Environment Environment Environment Environment procurement considered in considered in considered in considered in in 2014, M€ 2014, M€ 2014, % 2013, % 2012, % ICT procurement Data 32 9 28 32 29 communications ICT equipment 85 83 98 92 91 Software 30 29 96 92 27 ICT services 47 7 14 1 0 Total 194 128 66 64 55
Procurement of Financial 51 43 85 87 93 administrative management services Organisational 84 27 32 3 0 and HR development Travel 79 74 93 94 96 management
Total 214 144 67 56 54 Procurement of Vehicle and 51 51 100 97 94 materials and transport technical services services Material and 70 60 85 85 71 facilities services Office supplies 64 55 87 86 86 Energy supply 121 121 100 100 100 Total 307 288 94 94 92
Total 715 559 78 75 72
58 Market functionality and SMEs
Ensuring a healthy market and promoting competition are important features of financial responsibility. Hansel makes every effort to take the operational prerequisites of small and medium- sized companies into consideration in tendering processes. In this field, Hansel collaborates with the Federation of Finnish Enterprises.
Hansel has 383 contract suppliers in total, 20 of whom are from outside Finland. In addition, there are three groupings that each contain at least one foreign company. We keep track of the proportion of SMEs of all contract suppliers and of the distribution of framework agreement sales between SMEs and major corporations. The European Commission’s definition of SMEs is used here.2
In 2014, 43 per cent of Hansel’s suppliers were SMEs. This figure includes all suppliers who have a direct contractual relationship with Hansel; subcontractors are not accounted for. In practice this means that procurement from SMEs under Hansel’s agreements exceeded €91 million during the year. SMEs as contract suppliers*
2014 2013 2012 2011 2010
Number of SME contract suppliers 164 173 161 263 342
Percentage of SMEs of all contract suppliers, % 43 46 46 64 71
Central procurement from SMEs, M€ 91,5 70,8 115,0 176,2 203,3
Share of central procurement from SMEs, % 12,8 10,2 16,7 26,1 36,7 *In 2012, the classification criteria for associations and for municipality and city-owned companies were revised; these are now included in "Other". Classification has similarly been revised for some companies that are part of international groups, if these companies were previously classified as SMEs due to the small scale of operations in Finland. Because Hansel’s customers often have large procurement volumes, it can sometimes be difficult for small companies to meet the order volume. Use of subcontractors to accommodate part of procurement is permitted in Hansel's tendering processes. This gives SMEs a better opportunity to take part in central procurement.
Hansel also permits participation by groupings formed by companies. Consortia find it easier to meet large order volumes, which improves SMEs' chances of becoming government contract suppliers.
Procurement through SMEs based on framework agreements has decreased in recent years. One of the contributing factors to this decrease is the Electricity framework agreement, which became the company’s largest agreement (calculated in euros) in 2011, when the government decided to centralise its electricity procurement through Hansel. The electricity contract supplier is not an SME.
It should be noted that there are some areas, such as scheduled flights and leasing services, where there are no SMEs. Furthermore, there are some agreements that require nation-wide coverage, such as the framework agreements for data and voice communications. Split procurement
59 Framework agreements are based on the Act on Public Contracts. Suppliers for framework agreements are selected in a competitive tendering process, which may be arranged regionally. Generally, tendering processes are organised in accordance with an EU-wide open procedure.
Customers often use a simplified tendering process for procurements within the framework agreement. These simplified processes are only open to suppliers selected for the framework agreement. A simplified tendering process for occupational health services or printing services, for instance, is therefore only open to selected suppliers from the geographic area in question, or for a specific product group.
The method employed in the tendering process is always considered on a case-by-case basis, in order to meet market functionality requirements and customer needs. When possible, procurement is split into smaller units to facilitate SME participation. SMEs are allowed to team up to improve their chances in tendering processes.
However, tendering processes may not exclusively target SMEs; instead, the winner is always the tenderer or tenderers offering the most economically advantageous tender, regardless of the size of the company they represent. A regional tendering process is arranged for approximately 10 per cent of Hansel's framework agreements.
To take regional aspects into account, the framework agreement for Occupational Health Care services is divided into more than 60 geographical areas, with the objective of supporting the availability of local health care services. 25 contract suppliers were selected to provide occupational health care services under the framework agreement.
Regional aspects were also incorporated in the Domestic Accommodation and Conference Services framework agreement, which was divided into approximately 70 regions in order to respond to the customers’ accommodation needs in the best possible way. Approximately 90 contract suppliers were selected to provide accommodation and conference services.
The framework agreement for computers assigns nationwide responsibility for computer servicing and maintenance to contract suppliers. In practice, services are provided through an extensive subcontractor network, offering customers access to nearly 140 service points. Revision to public procurement law
The new Public Procurement Directives prepared by the European Union were approved in February 2014. Hansel's experts have been actively involved in the preparatory work for a national legislation reform carried out after the Procurement Directives were approved.
They took part in the work carried out by project steering and preparation groups, and in that performed by the secretariat. The Finnish Government plans to submit a Government proposal on the matter to the Parliament in 2015, and the new Act on Public Contracts is scheduled to enter into force in April 2016.
This reform involves an overall revision of the procurement legislation. For Hansel, the most significant changes include reforms of the procurement procedures and the tendering process in practice, electronic procurement procedures and the status of central procurement units, and more detailed provisions regarding framework agreements.
Following the legislative reform, more attention will be paid to environmental and social considerations, innovation, and the position of SMEs.
2 60 2Number of personnel under 250, with maximum net sales of €50 million or maximum balance sheet total of €43 million. Companies must also fulfil the ‘independence criterion’, which means that no large companies own more than 25% of the SME in question.
61 Digitisation of society having an impact on procurement
The digitisation of society is affecting Hansel's operations in a number of ways. Several digitisation projects are under way in the government administration, such as the State Treasury's "From procurement to payment" project.
This project aims to simplify financial administration processes, harmonise operating models, clarify roles and responsibilities, and improve capacity utilisation in the Finnish Government Shared Services Centre for Finance and HR.
Changes taking place in Hansel's operating environment are taken into account in the company strategy, which includes several actions aimed at building electronic procurement services. For our customers and contract suppliers, the digitisation of Hansel's services translates into a wider range of electronic services. We want to offer fast and flexible service to our customers and suppliers, and to this end have made a growing number of services available online.
The new online service introduced in late 2014 will improve the efficiency of our customers' procurement by offering them more information and by simplifying the framework agreement registration notice procedure. Development work to provide better online services for customers will continue with the objective of improving the service level and customer and supplier satisfaction. In the future, customers will receive personal service through customer services and customer relationship managers. Towards more efficient procurement
Procurement is often a laborious and time-consuming process. Electronic procurement solutions will reduce the administrative burden, simplify the tendering process and framework agreements, and increase the transparency of the procurement process.
The tendering process for an electronic tendering system designed to enhance government procurement, and the introduction of such a system, represents an important strategy-driven project for Hansel. Electronic auction has been used as a tool in the tendering process, and experiences have been positive.
Studies show that SMEs in particular benefit from electronic procurement. Generally speaking, the participation of SMEs in public procurement tendering has increased with the adoption of electronic processes3. Procurement of an electronic tendering solution
A new Public Procurement Directive was approved by the European Parliament in January 2014, requiring all public procurements to be opened to tenders electronically after a transition period of around two years.
The procurement process for an electronic tendering solution is currently under way in Hansel. A procurement decision made in 2014 was brought before the Market Court, resulting in a new tendering process and delaying the project from its original schedule. The complaint submitted to the Market Court had to do with tenderers' compliance with the call for tenders and the scoring system.
62 After receiving the Market Court's decision, we re-launched the tendering process for an electronic tendering system, and a procurement decision was made in February 2015. The first introduction of the tendering solution is scheduled for summer 2015.
One of the key objectives of the electronic procurement solution is to make the procurement process more efficient. To this end, procurement units are provided with the opportunity to submit calls for tenders online, making it easier and quicker for tenderers to reply and submit their tenders.
3Communication from the Commission to the European Parliament, the Council, the European Economic and Social Committee and the Committee of the Regions: End-to-end e-procurement to modernise public administration, 26 June 2013.
63 Data-secure solutions
According to police estimates, the number of cyber-crimes in Finland is growing, and cyber-attacks on companies are expected to continue. In fact, the government administration and globally operating companies may face a growing variety of data security breaches.
In line with the decision-in-principle on the development of data security in the state administration, data security issues form an integral part of management, expertise, risk management, and administrative development. In principle, every organisation is responsible for data security within its own operations.
At government administration level, responsibility for data security steering and development lies with the Ministry of Finance. Hansel’s framework agreements take into consideration the government’s data security guidelines and requirements.
Hansel also participates in government data security improvement projects and builds models that incorporate data security into the tendering process for framework agreements. Framework agreements offer customers an opportunity to specify their own, unique data security requirements.
Data security aspects are taken into account in all of Hansel's operations and procurement solutions. Security is a key consideration for systems, tools, practices and procedures. It is a reflection of sound business practices and part of Hansel’s risk management. Basis for data security policy
Key business-critical data security principles and requirements are set out in Hansel’s data security policy. Data security obligations apply to all Hansel employees. Hansel’s data security manager is responsible for providing data security related training and instructions, and for in-house communications.
At Hansel, data security means ensuring the confidentiality, integrity and accessibility of data. Data security is a reflection of sound business practices and part of Hansel’s risk management.
Maintaining a level of data security that is appropriate and sufficient for Hansel’s business allows the use of modern and efficient business processes and methods.
Hansel is committed to upholding the basic data security level specified for government administration. The audit conducted in 2012 showed that Hansel meets all of the basic requirements for data security within the state administration.
Tendering processes are required to meet the basic, increased or high level specified in the instructions issued by the Government Information Security Management Board (VAHTI). Furthermore, customers may contribute to the data security level of the services provided.
64 Working together for successful procurement
Hansel's service commitment to all its stakeholders is “Working together for successful procurement”. Hansel works in close co-operation with its customers and suppliers to ensure an optimal outcome.
Customers' and suppliers' views are taken into account in the tendering process. Furthermore, steps are taken to ensure good co-operation and smooth operation during the contract period.
To maintain smooth co-operation during the contract period, Hansel organises events and functions for its customers, contract suppliers and other stakeholders. Specialist Day
The HanselForum Specialist Day held in January 2014 attracted nearly 200 Hansel customers to the Messukeskus fair and convention centre in Helsinki. During the day, they had the opportunity to visit a contract supplier exhibition and to learn about current issues in management consultation, occupational health care and human resources services.
An opportunity was also provided to meet Hansel's specialists to talk about services and service procurement. Customers also had lively conversations with contract suppliers.
Topics included practical matters such as the effectiveness of framework agreements and the simplified tendering processes, and ways of preparing for them. The procurement of specialist services, in particular, is an area that highlights the importance of interaction between customers and contract suppliers. Vehicle Day
The HanselForum Vehicle Day held in the spring attracted more than 100 customers and 30 contract suppliers to Premier Park in Porvoo. At this event, visitors were able to learn more about the vehicle and transport framework agreements between Hansel and its contract suppliers, which allow customers to procure almost anything related to vehicles and transport.
The agreements offer Hansel's customer access to electric vehicles and low-emission vehicles, among other things. Customers can also procure services, such as training in economic driving. Cleantech procurement and environmental issues play an increasingly strong role in central government procurement, which reflects on suppliers' products and services across the board, and on their own operations.
The Vehicle Day provided an excellent meeting place for customers and suppliers. This informal and casual occasion inspired several discussions and exchanges of information. During the event, Hansel received plenty of feedback which can be applied in the development of new solutions. Government Procurement Day
At the end of September, Hansel and the Ministry of Finance organised the Government Procurement Day, which attracted hundreds of procurement professionals to Finlandia Hall in Helsinki. The event offered a concise review of the current status of central government procurement and of development efforts being made. 65 Co-operation and responsibility were recurring themes at the event. The reform of the Act on Public Contracts, development work on central government procurement, and co-operation related to central procurement were areas of considerable interest, and inspired many discussions.
In her opening speech, the State Secretary of the Ministry of Employment and the Economy underlined the importance of using the taxpayers' money responsibly and efficiently. The State must be a skilled and responsible buyer that assesses the impact of its procurement on society.
The State Secretary urged procurement professionals not to forget that they were instrumental in the development of procurement legislation. Considering the growing complexity and diversity of procurement, she also stressed the importance of clearly defined, but flexible rules, and of co- operation with suppliers.
66 Case: Criminal Sanctions Agency put its inspection services up for tender
Hansel and the Criminal Sanctions Agency have been collaborating for many years. Hansel has organised a number of tendering processes for the Agency, the most recent one being for property inspection services. All the Agency had to do was to specify the properties to be inspected and to sign an agreement with the selected supplier – Hansel's tendering services took care of everything else.
The Criminal Sanctions Agency has had positive experiences of Hansel's tendering services. The successful tendering process was preceded by careful specification of requirements. Safety Engineer Ari Pakarinen was responsible for launching the tendering process and for internal communication and project co-ordination.
“We have facilities all over the country, all of which require a large number of statutory inspections and reporting: fire detectors, lifts, gates, and much more,” Pakarinen says, explaining the scope of the project.
He continues: “We received a lot of useful information from the field during the preparatory stage. Property Managers told us about what they needed and about the key considerations for the supplier – safety being one of these.” Aiming for centralised service
The Criminal Sanctions Agency wanted a centralised service solution.
“It is important to obtain the analysis from a single source to gain a better overall picture. Much more effort would be required in order to co-ordinate decentralised operations. What's more, it is always simpler to deal with just one supplier,” Pakarinen explains.
After the specification stage, Hansel handled the tendering process and negotiations with tenderers.
“Our groundwork was so thorough that our participation in dealings with the suppliers was not required,” Pakarinen says.
The contract for inspection services covers a period of 2 + 4 years. After the first two years, feedback is requested from the field, and based on the results the contract is renewed for one year at a time. Finland's leading procurement competence
Hansel's tendering services offers undeniable benefits: With no need to allocate its own resources to the tendering processes, the Criminal Sanctions Agency can focus on its core duties.
“Hansel has leading competences in public tendering processes in Finland. Furthermore, working with them generates overall cost savings for us,” Pakarinen comments.
“We have been extremely satisfied with Hansel's service,” he says. He would like to see Hansel assume even more responsibility for supplier liaisons in the tendering processes, eliminating the need for the procuring organisation to take part in the negotiations.
67 “Since we are such a big organisation, with nearly 3,000 employees, it is clear that fault can always be found with the selected supplier. But we can learn and then do things differently in the next tendering process,” Pakarinen points out, emphasising the customer's role in the specification process.
“I hope Hansel can further expand its resources. Over the years, the availability of services has improved, but there are areas in need of improvement, such as contract supplier supervision. Supervision should be extended beyond the current spot checks,” Pakarinen says, rolling the ball in Hansel's court.
68 Case: Tax Administration a frequent user of HR services
The framework agreement for HR services offers an extensive range of solutions for government administration units. Experiences gained in Tax Administration have been encouraging.
The majority of tax returns are returned online, but a large number are still submitted in paper copies. The Tax Administration employs around a hundred seasonal employees in February–May, whose task is to accurately and reliably record the data submitted in tax returns.
“At a certain time of each year, we need a large number of employees,” says Merja Kortesuo, a procurement lawyer working at the administration unit's financial services.
“Hiring temporary agency workers has been a good solution for us. We need extra workforce in several locations, and data recording is the type of work that can easily be separated from the other duties of civil servants,” Kortesuo explains. Framework agreement in active use
The Tax Administration's centralised nationwide model has been in use since late 2011. Similar arrangements have been used before; the current model will remain in effect until the termination of the framework agreement in autumn 2015.
These temporary employees are provided by a single contract supplier, which has been the cause of slight concern.
“We had no previous experience of this supplier, but once co-operation began it proved to be highly competent, professional and reliable,” Kortesuo says approvingly.
She gives further praise to the supplier for excellent co-operation and flexibility in cases of unexpected, urgent needs for workforce. Reliable and skilled workforce
Kortesuo feels that one of the major benefits of the framework agreement lies in Hansel being able to offer a good and reliable supplier.
“Much more work would have been involved in organising the tendering process ourselves. Hansel is up to date with the latest procurement-related legislation and we can fully rely on their ability to account for every last detail of the supplier contracts.” Service solutions for different needs
“From our perspective, the framework agreement for hiring temporary agency workers works exactly as it should. The essential thing for the customer is to specify the product or service being procured in as much detail as possible, either before the procurement process begins, or with the supplier at the latest,” Kortesuo points out.
Most work at the Tax Administration is carried out by civil servants, which limits the opportunities for using temporary agency workers. 69 “Diminishing human resources are a fact we have to live with, and hiring temporary workers is a worthwhile alternative in cases where the procurement unit is able to clearly define sets of assignments in which public power need not be exercised,” Kortesuo concludes.
In addition to temporary workforce, other services offered through the framework agreement include recruitment and direct search services, and support services for career planning and re- employment.
70 Case: Keeping the police on the move
The Finnish Police has a fleet of 1,700 vehicles, approximately half of which are marked patrol vehicles: police vans and passenger cars. The fleet also includes motorcycles, snowmobiles and boats. The Police uses Hansel's framework agreements for its vehicle procurement.
The Police acquires ownership of most of its vehicles, but in recent years leasing contracts have been used in the case of some unmarked vehicles.
“The number of vehicles procured annually varies between 160–170. In addition, we buy five to ten motorcycles a year,” says Jouni Jantunen, head of materials management at the National Police Board. Police vehicles need special equipment
A brand-new vehicle provided by a contract supplier must be properly equipped for police use.
“The supplier delivers a frame, and each vehicle is then equipped for a specific use. Fitting police vans with all the necessary equipment is a demanding task carried out by our own subcontractor,” Jantunen explains.
Regular patrol cars, motorcycles and snowmobiles require less equipment, which is provided by another subcontractor.
Police duties such as public order maintenance, traffic control and criminal investigation, place different requirements on vehicles. Driving in urban environments means more idling than usual, and off-the-road driving is sometimes required, making durability a key criterion. Geographic location poses its own challenges: the further up north you go, the more important it is to have four-wheel drive. Framework agreements offer numerous benefits
“Having someone else carry out the tendering process for us is a major advantage, as the process is very demanding and time-consuming,” Jantunen notes.
High-volume, nationwide procurement operations also deliver significant cost benefits. Such an arrangement is attractive to suppliers due to the opportunity to cater for the entire government administration's product and service needs.
Jouni Jantunen was a member of the customer team involved in the preparation of the framework agreement. In his opinion, it is a good arrangement.
“We get to say which properties we require in vehicles and, as a result, the vehicles are perfectly suited for their purpose,” Jantunen comments approvingly.
The customer team discusses the types of vehicles needed and the properties required for the specific purposes of different vehicles. The team works in close and continuous co-operation with other safety and security authorities.
“In a small country, it makes sense to pool resources,” Jantunen summarises.
71 Expert assistance in tendering processes
Besides Hansel's framework agreements, the Finnish Police also relies on Hansel's expert assistance in areas such as training and consultation.
“Hansel has been a great help with the tendering processes we have carried out ourselves,” Jantunen says, and goes on to say that his experiences have been highly positive.
Overall, co-operation with Hansel has been smooth.
“They listen to us and take our views and requests into account. In my opinion, everything works really well. We are highly satisfied with the current framework agreements and co-operation,” Jantunen concludes.
72 Closer co-operation in State governance
Government organisations work systematically to improve their mutual co-operation. As part of this development work, a service centre co-operation network has been established, with regular meetings held between management representatives from the State Treasury, HAUS Finnish Institute of Public Management, Finnish Government Shared Services Centre for Finance and HR (Palkeet), Hansel, Senate Properties, and the Government ICT Centre Valtori.
The primary objective of this co-operation is to improve the Government's performance. Closer co- operation helps to eliminate unnecessary overlaps in Government organisations and to identify new forms of co-operation. The Government's best overall interest is the key issue in this. By working together, Government organisations strive for simplicity and clarity in service provision, hoping to offer a one-stop-shop experience to customers.
It is also hoped that co-operation will contribute to the operational development of new organisations, such as the Government ICT Centre Valtori, which began operating in March 2014. Valtori provides sector-independent ICT services for central government administration. To do this, it uses Hansel's framework agreements and draws on Hansel's procurement competence. Meanwhile, its membership of customer teams during the preparatory stage of framework agreements allows Hansel to benefit from the specific competences of service centres.
In addition to the co-operation network consisting of senior management from service centres, a network of communications specialists was set up in December 2014. Held at Hansel premises, the first meeting of this network attracted nearly twenty communications officers from various government organisations. The objective of this network is to enhance communications-related co- operation between various government entities and to offer a forum for joint discussions.
73 Stakeholder analysis
Hansel’s key stakeholders include customers, suppliers, the owner, and employees. The company also has various other stakeholders, such as the legislative bodies responsible for procurement legislation, non-profit organisations, industry organisations, and the media.
In early 2013, Hansel updated its stakeholder analysis, identifying and classifying all relevant stakeholders and assessing their interactive relationships with Hansel, as well as their expectations for the company. Analysis of the major stakeholders with whom Hansel regularly works
Stakeholder Expectations and requirements Impact on stakeholders Management and co-operation practices
Customer relationships
Procurement Procurement procedures that, Reducing the Operations are based on a customer units in addition to taking the procurement expenses of relationship plan, drawn up annually, customers’ needs into account, state administration wherein areas of focus and major customer offer good terms, reasonable procurement relationship development activities are pricing, high-quality service, organisations and the identified. Responsibility: Director, ease of use, and proven effort related to Customer Relations and Customer compliance with legislation. procurement; centralised Managers Support for the tendering accountability for processes of in-house sustainable choices in procurement. state administration procurement.
Group service Hansel is expected to support Reducing the Group service providers are perceived to providers the operations of service procurement expenses of be steering the procurement of state centres through its framework state administration administration in the service and product agreement services and procurement categories for which they are responsible. expertise in procurement organisations and the Hansel Ltd aims to develop its solution legislation and tendering. effort related to offering to be able to support centres’ procurement. Centralised operations more efficiently. Responsibility: accountability for Director, Customer Relations and sustainable choices in Procurement Sector Heads state administration procurement.
Supplier relationships
74 Framework Profitable commercial activities Significant sales volumes Supplier co-operation is conducted in line suppliers with state administration for the suppliers with with an action plan prepared annually. organisations; professional successful tenders; non- Responsibility: Chief Category Officer, tendering processes coupled discriminatory and fair Category Managers with non-discriminatory and treatment of suppliers; fair treatment. requirements that promote sustainable choices.
Internal relationships
Owner A well-run, responsible Generation of savings in Hansel Ltd aims to be active in expressing company that generates the state's operational the views of the central procurement unit savings for state procurement. costs via improved on state procurement development and procurement profitability savings opportunities. Responsibility: CEO and savings on procurement expenses; state procurement operations that are fully compliant with legislation.
Hansel Secure and rewarding An employer with long- This involves HR programmes. personnel employment; opportunities to term, responsible Responsibility: Head of Finance, HR develop both individual skills operations, offering, Manager and the company. alongside financial compensation, an attractive work environment and the opportunity to influence projects that are significant at national level.
Relationships with other stakeholders
Legislative Presenting the viewpoint of the A skilled and professional Hansel actively makes development bodies procurement unit in support of unit that can share proposals, participates in working groups, legislative development. practical experiences of and organises information sessions. public procurement and Responsibility: Head of Legal Affairs the related legislation.
Other state Presenting the perspective of Varies, depending on the Active participation in dialogue is administration the procurement unit and stakeholder. encouraged, and regular meetings are held central procurement units. with partner management and key personnel.
75 Industry Dialogue supporting the Greater efficiency and Co-operation is maintained through organisations development of contract terms. impact of operations: a regular meetings and representatives’ centralised and efficient inclusion in tendering processes. channel through which Responsibility: Category Managers the interests of the parties Hansel represents can be voiced in state procurement.
Not-for-profit Promotion of responsibility and Greater efficiency and Establishing co-operation and sharing organisations sustainable development. impact of operations: a information. Utilising the expertise of the centralised and efficient organisations in framework agreement channel for promoting tendering processes. Responsibility: sustainable choices in Corporate Responsibility team state administration procurement.
Media Information and news items on Greater efficiency of Media needs are responded to through state administration operations: a professional active services. Responsibility: procurement and procurement entity providing reliable, Communications Manager operations. centralised information on state administration procurement and procurement operations.
76 External working groups
Hansel’s expert representatives regularly take part in working groups whose objectives include developing national procurement activities, promoting responsibility, and improving data security in procurement. Key working groups in which Hansel was involved in 2014
Working group Established by Objective
From procurement to State Treasury Driving forward the project for an electronic and automated From payment (Hama) procurement to payment process project
Central government Ministry of Finance Developing central government procurement procurement development project (Hanko)
Steering and co- Ministry of Finance To develop co-operation between Hansel and Senate Properties operation teams of Senate Properties and Hansel
Working group for Working group To support the planning and implementation of shared service and secure ICT established by Hansel solution procurement within the framework of corporate government procurement steering. Focus areas include ICT procurement and the special needs of the defence and security cluster. Convenes 2–3 times a year.
Procurement forum LOGY To influence the development of Finnish procurement expertise and promote the competitiveness of forum members.
Monitoring group for Ministry of Finance To monitor government electricity procurement government electricity procurement
State Procurement Ministry of Finance To promote interaction between government procurement units and Advisory Board oversee the fulfilment of the Government Procurement Strategy.
Ecolabelling Board Ministry of To promote the use of the Nordic and European ecolabels – the Nordic Employment and the Swan and the EU Flower – in Finland. Hansel's participation in the Economy and Motiva Board ended in 2014. Services Ltd
Steering group of the Ministry of To steer policy work through a team of experts Finnish National Public Employment and the Procurement Policy for Economy Wood-based Products
Working group for Ministry of Finance To coordinate Finnish projects for electronic procurement. electronic procurement
Smart Procurement Finnish Funding To improve market access for products and services developed by Agency for Technology SMEs in particular, and to improve the productivity and effectiveness and Innovation (Tekes) of public services
77 Working group for Advisory Committee To update the General Terms of Public Procurement. The group's updating the Terms for on Information activities ended in 2014. Public IT Procurement Management in Public Administration (JUHTA) / JHS unit
JYSE development Ministry of Finance To update the General Terms of Public Procurement. The group's team activities ended in 2014.
Steering group for Motiva To promote sustainable procurement in society sustainable procurement advice
VISO project Aalto University To create visualisations of procurement contracts. The project ended in November 2014.
Innovative Public VTT Technical To promote innovative public procurement in society Procurement Research Centre of Development Club Finland
Steering group for Finnish Environment The objective of the project is to promote innovative cleantech innovative public Institute procurement in Finland. The steering group convenes a few times a cleantech procurement year.
Steering group for the Ministry of To prepare a comprehensive reform of public procurement legislation Act on Public Contracts Employment and the reform Economy
Working group for the Ministry of To prepare a comprehensive reform of public procurement legislation Act on Public Contracts Employment and the reform Economy
Steering group for Working group To promote co-operation between Valtori and Hansel. Convenes Valtori and Hansel established by Hansel approximately five times a year. and Valtori
Steering group for the Working group Development and follow-up of co-operation between Palkeet and Finnish Government established by Hansel Hansel. Convenes a few times a year. Shared Services Centre and Palkeet for Finance and HR (Palkeet)
VAHTI: Technology unit Ministry of Finance To come up with the main aspects of information security, particularly with regard to public procurement. In addition to its involvement in the working groups, Hansel makes expert statements on government procurement and its development.
78 Memberships in organisations and disclosures
Hansel was a member of the following organisations in 2014:
FIDE Finland Helsinki Chamber of Commerce HENRY The Finnish IT Law Association Meeting Professionals International Nooan Arkki (Green Office) Service Sector Employers PALTA The Finnish Association of Communications Professionals (ProCom) The Institute of Internal Auditors Finland The Finnish Business Travel Association Finnish Association of Purchasing and Logistics (LOGY) The Finnish Information Processing Association (FIPA) The Information Society Development Centre (TIEKE) Corporate Responsibility Network FIBS
Anssi Pihkala, Hansel's CEO, is a member of the Board of Directors of the Mint of Finland and a member of the advisory board of the Finnish Government Shared Services Centre for Finance and HR.
The CEO does not hold significant numbers of shares in companies.
79 Transparency and stakeholder communications
The principles of communication at Hansel are transparency, consistency and timeliness. The CSR principles listed in the company strategy will be taken into account in the communications strategy.
Through consistent communications, Hansel seeks to maintain a corporate image that emphasises expertise from different angles. Hansel also strives to maintain and develop an interesting and attractive employer image.
Besides its traditional communication channels, Hansel is increasing its use of social media. Through Facebook, Twitter and LinkedIn, we can disseminate information on our operations and receive real- time feedback from customers, suppliers, and other partners.
Our presence in the social media offers interactive channels to our stakeholders, which we hope will improve our customer service and communications. Social media is an effective channel: by answering a question or posting information in the social media, we can serve hundreds of customers and stakeholders. As applicable, these channels are also used for crisis communication. Communication, disclosure and non-disclosure
Hansel has a transparent approach and communicates openly about its operations. However, to ensure the commercial success of our tendering processes and non-discrimination between tenderers, issues related to the process are not disclosed while the process is under way. Information is provided to tenderers only, in accordance with established practices and procedures.
In any handover of documents, we follow instructions that ensure the protection of Hansel's, its customers' and its suppliers' confidential information.
80 Customer and supplier satisfaction
Hansel regularly monitors trends in customer and supplier satisfaction. Feedback is collected from customers and suppliers through extensive surveys conducted approximately once a year.
The latest supplier satisfaction survey was carried out in June 2014 and the latest customer satisfaction survey in January 2015. The results are examined by the Executive Committee and then used in the planning of improvements together with personnel. Customers satisfied with Hansel's services
According to the customer satisfaction survey, Hansel has succeeded in developing its operations in a favourable direction. The overall satisfaction rate of Hansel’s customers was 3.87 on a scale of 1–5 (3.84 in 2014).
The highest points were given for expertise in procurement legislation and tendering process competence. High scores were also given for Hansel’s service mind set, contact persons and corporate communications.
Meanwhile, knowledge of the object of procurement and of customer needs were identified as areas in need of development, which are not beyond Hansel's control.
A total of 327 customers replied to the customer survey, and responses were received from all branches of public administration. The largest numbers of responses were received from the administrative branches of the Ministry of Defence, Ministry of Employment and the Economy, and the Ministry of the Interior. Contract suppliers appreciate equal opportunities
A contract supplier survey was carried out in June 2014. Respondents included 421 contact people in supplier organisations. The overall supplier satisfaction rate was 3.88 on a scale of 1–5.
The highest points were given for expertise in procurement legislation and tendering procedures, for Hansel's contact people, and for its communication. Similarly, non-discrimination and equal opportunities were awarded high scores.
Meanwhile, knowledge of the object of procurement and the simplicity of the tendering process were given the lowest points.
Of all respondents, 60 per cent represented major corporations and 40 per cent SMEs. The results showed no significant differences between overall satisfaction in major corporations and SMEs.
Systematic feedback collection
In addition to conducting extensive surveys, we introduced a new operating model in 2014, which involves collecting feedback from customers and suppliers after each tendering and consultation project.
81 Requests for feedback are, as a rule, sent to everyone involved in tendering projects. The purpose of our systematic feedback collection is to improve co-operation with stakeholders.
We also collect feedback on customer satisfaction with the framework agreement before the end of the contract period, in order to be able to take any development needs into account in the next framework agreement.
82 Good employer
Hansel aims to be a respected and responsible employer that offers its personnel an encouraging work community, challenging work, and opportunities for continuous professional growth.
It is the duty of our supervisors and managers to make sure all employees are treated fairly and that job duties are assigned equally. Inappropriate conduct is not tolerated in the workplace, and problems are addressed immediately.
We make sure the ground rules of the work community are adhered to, and that no conflicts of interests arise regarding work duties. Collective agreement and co-operation with employee associations
Hansel’s collective labour agreement was negotiated with Service Sector Employers PALTA and the Federation of Professional and Managerial Staff (YTN). It is valid until further notice.
The labour agreement applies to all Hansel personnel, except for the CEO. As specified in the labour agreement, personnel are represented by a workplace steward and his or her deputy, selected from amongst the staff.
The interests of the personnel are also promoted by the personnel association, which is a member of the Federation of Professional and Managerial Staff (YTN). Roughly half of Hansel’s personnel are trade union members. The collective agreement and guidelines for personnel are available on Hansel’s intranet. Job satisfaction and leadership development
A good and well-led working community contributes to employee job satisfaction, commitment and inspiration. Fostering a great atmosphere at work is important.
Hansel conducts a job satisfaction survey every 18 months in order to assess the well-being of the work community. The most recent survey was conducted in August 2014.
The results of the survey showed that job satisfaction at Hansel has remained at a good level in recent years. The average score of Hansel’s occupational well-being was 3.8 on a scale of 1–5 (3.7 in 2012).
Efforts to improve managerial work include regular manager training and assessment of the quality of managerial work as part of the employee well-being survey. A 360-degree evaluation of leadership practices was conducted at Hansel in 2013, in which each manager carried out a self-evaluation and was assessed by his/her direct subordinates, line manager and closest colleagues.
The results were analysed in individual training sessions, on the basis of which personal development plans were drawn up for managers. Company-level management training will be organised to address general leadership issues. Spending time together
83 One way to encourage everyone to pull together is to organise shared activities and events for employees. Hansel encourages all of its personnel to participate in the events organised by the company’s employee club.
In 2014, the employee club organised various sports and cultural events, a summer day and the traditional Christmas party. Among other activities, Hansel has its own floorball and football teams taking part in amateur leagues.
Events organised by the personnel club have been very popular, and the club programme is planned and developed in tune with employee wishes. The costs of these events are partially borne by the employer. Total spending for recreational activities in 2014 was €34,439 (€35,656 in 2013).
84 Hansel Academy
Hansel's strategy places strong emphasis on competence development. Hansel Academy, a competence development programme running for multiple years, is designed to increase employee understanding of the present situation and future challenges of procurement.
Hansel Academy focuses on procurement management. The training programme is a major investment that allows us to maintain and grow our knowledge capital.
Organised in autumn 2014, the first two training days were intended for the entire personnel. The training provided an overview of the current procurement trends, general operating policies and practices of the government administration, and government finances.
Future training will offer a deeper insight into supplier management, procurement-related risks and service management. This training will be attended by employees engaged in these roles. Educated personnel
In addition to Hansel Academy, other internal training is offered in areas such as responsibility and procurement law. External training providers are used to arrange training for specific roles. This type of training includes the ICT law and agile methods training course organised for lawyers and tendering consultants in autumn 2014.
Hansel is an expert organisation, with 70.5 per cent of employees having completed a master’s or bachelor’s degree, or a degree from a university of applied sciences. University degrees were most commonly held in economics and law. Education*
2014 2013 2012 2011 2010
Master's level degree, % 57,6 54,6 53,4 47,2 39,7
Bachelor's level degree, %** 2,6 1,3 2,8 5,7
Degree from a university of applied sciences, % 10,3 10,7 12,3 14,3 24,1
Secondary education degree + other degrees, % 19,2 22,7 21,9 21,4 25,9
No vocational qualification, % 10,3 10,7 9,6 11,4 10,3
Training days, per person per year 5 4 5 5 5
Training services purchased from third parties, € per person per year 1 298 789 1 064 952 1 304
*Presented based on existing employment relationships.
**Previously included in degrees from universities of applied science. In 2014, persons in managerial positions had 8.3 training days (5.6 days in 2013) while others had 4.6 training days (3.2 days in 2013). Women had 4.7 training days and men 5.6 (in 2013, women had 3.6 and men 3.4 training days).
85 On a case-by-case basis, Hansel supports participation in long-term education programmes outside the company, with financial support and flexitime solutions that facilitate the combination of work and study.
Personnel surveys show that in the last few years, personnel satisfaction with the opportunities the company provides for competence development through training and learning at work has remained high.
New employees undergo a job orientation programme lasting around two weeks, during which they learn about all of the company’s main functions. The programme also goes through the Code of Ethics and other CSR-related elements. Feedback from new employees is collected via a feedback discussion, held a few months after the beginning of employment.
86 Benefit package
Employment benefits, available to all Hansel employees, include a company mobile phone, recreational vouchers, employer-subsidised commuter vouchers, luncheon vouchers, and leisure accident insurance. A new fringe benefit offered from 2013 onwards is a temporary carer to look after a sick child.
Hansel personnel also benefit from a wide range of occupational health services, including health care at general practitioner level, on-call health care, and specialist consultations. Occupational health care operations focus on preventive health care.
Hansel adheres to the guidelines on management and key employee rewards and incentives issued by the Cabinet Committee on Economic Policy. Hansel’s Board of Directors sets annual incentive targets. Performance-related pay and other benefits
From the beginning of 2013, the incentive system has complied with the statement of the Cabinet Committee on Economic Policy issued on 13 August 2012, which sets the maximum performance- related bonus at 15 per cent of the annual salary.
Members of the Executive Committee may receive a bonus equal to 30 per cent of the salary as compensation for exceptional performance. In accordance with the Board of Directors' decision, performance-related pay in 2014 was based on customer satisfaction and personal performance.
The financial statements for 2014 include a provision for incentives of €554,915, excluding social insurance payments. Incentives will be paid out in April 2015. Temporary personnel are not covered by the incentive scheme, although in other respects their benefits are identical to those of permanent employees. Paid incentives (excluding social insurance payments)
2014 2013 2012 2011 2010
Thousands of euros 492 319 307 266 455 Employees with permanent employment contracts and who need a car for carrying out their duties are entitled to a company car. Company-car tax is deducted from the total salary of the recipients of this benefit. Eight Hansel employees had a company car at the end of 2014.
In 2007, a supplementary pension from an insurance company was taken out for the CEO. The annual fees for this pension insurance come to €9,714 (including life insurance). The CEO’s retirement age is 63 years.
87 Green Office
Since 2009, Hansel has been a WWF Green Office and is a member of Finland's Green Office network that consists of approximately 180 organisations. Green Office is an environmental programme developed by WWF Finland. Its objectives include reducing the environmental burden caused by offices.
To ensure sustainable development in Hansel's internal operations, we regularly monitor key figures for the consumption of electricity and paper, for travel and equipment, and for furniture procurement. WWF’s Climate Calculator, which is a Green Office tool, has been utilised in the calculations. Emission figures have not been adjusted in proportion to growth in business or personnel.
Environmental impacts are primarily generated by travel, energy consumption in facilities, and office equipment. Office equipment and some office furniture were modernised in 2014. Since, due to the nature of our business, the emissions from our operations are very small, our emissions in 2014 increased as a result of equipment and furniture replacement. The environmental impact of Hansel's own operations
2014 2013 2012 2011 2010
Direct impact, Hansel's own CO2 thousands CO2 thousands CO2 thousands CO2 thousands CO2 thousands operations of kilograms of kilograms of kilograms of kilograms of kilograms
Paper consumption 0,74 0,75 0,78 0,97 1,03
Road traffic according to fuel 46,75 42,43 46,93 35,04 45,60 consumption*
Emissions corresponding to the 0,23 0,32 0,52 0,36 0,56 mileage allowances paid out by the company
Other traffic (taxis) 1,15 0,98 1,21 1,08 3,18
Air traffic 38,84 24,12 42,41 33,12 35,05
Marine traffic 1,27 3,41 0,00 1,03 0,46
Rail traffic 0,08 0,10 0,11 0,23 0,00
Electricity consumption** 15,04 12,97 11,19 9,88
Direct impact, total 104,10 85,08 103,15 81,71 85,88
Emissions caused by office equipment and furniture procurement***
Mobile phones 1,87 0,70 0,56 0,72 0,46
Laptop computers 13,07 0,17 0,86 1,54 9,75
88 Desktop computers 0,00 0,00 0,00 0,00 4,70
LCD displays 28,83 0,23 1,14 1,59 14,53
Multifunction equipment 0,00 0,00 0,00 1,89 0,41
Furniture 13,37 0,42 0,89 4,78 0,00
Emissions caused by office 57,14 1,52 3,45 10,52 29,85 equipment and furniture procurement, total
Total 161,24 86,60 106,60 92,23 115,73
*Calculation is based on the company-car fuel purchases.
**Since the beginning of 2011, at least 30% of the electricity produced is of renewable energy sources, as required in line with the Government's decision-in-principle.
***Emissions related to office equipment procurement have been monitored since 2010. Emissions are calculated on the basis of consumption over the full life cycle of the equipment. Practical information and actions
Hansel’s employees have received environmental training, and the company's website and intranet regularly publish environmental tips on various topics. Video conferencing is used to reduce the need for travel.
Hansel issues its employees with HSL commuter vouchers, to encourage them to use public transport. The CO2 emissions limit for company cars is 140 g/km.
Whenever possible and applicable, Hansel also uses the framework agreements concluded after tendering processes in its own procurement. Hansel’s own marketing materials are mainly in electronic format.
Following participation in the Green Office project, solutions generating a smaller environmental load were introduced in minor office purchases. For example, waste sorting at Hansel's offices has been established in accordance with the Green Office guidelines.
In 2014, Hansel exceeded the objectives for renewable energy sources specified in the government's decision-in-principle in its energy consumption.
89 Personnel statistics
During 2014 Hansel signed 11 new employment contracts: four with male and seven with female employees. 81.8 per cent of the new employees were aged under 30 and 18.2 per cent were over 30.
Six people were recruited on a fixed-term basis and five on a permanent basis. The main reason for fixed-term contracts is family leave by permanent employees. In addition, Hansel employs a few hourly paid students during the summer and peak seasons. Number of personnel
2014 2013 2012 2011 2010
Number of personnel at the end of the financial period (FTE) 77 73 71 66 57
Average number of personnel during the financial period (FTE) 75 71 69 63 58
Valid employment contracts on 31 December 80 79 78 77 69
Valid permanent contracts on 31 December 77 77 73 69 64
Valid fixed-term contracts on 31 December 3 2 5 8 5
Full-time fixed-term contracts on 31 December 2 1 2 4 2
Part-time fixed-term contracts on 31 December 1 1 3 4 3
Full-time employment contracts (fixed-term and permanent) on 31 December 79 78 75 73 66
Parental leave, on average 2 4 5 7 8
Permanent employment contracts on 31 December, % 96,2 97,5 93,6 89,6 92,8
Fixed-term employment contracts on 31 December, % 3,8 2,5 6,4 10,4 7,2 As required by law, Hansel has an equality plan, presenting measures for ensuring equality and preventing discrimination. The company monitors trends and differences in salaries and the representation of men and women in the various types of jobs. Employers by gender
90 Average duration of employment relationships
Years of service 2014 2013 2012 2011 2010
40 or more 5 5 3 3 2
30–39 3 4 6 6 5
20–29 0 0 0 0 2
10–19 9 6 1 1 1
4–9 33 33 33 34 23
1–3 23 24 23 18 25
Less than a year 6 6 9 11 8
Total 79 78 75 73 66 Employees by age
30 or under 31-39 40-49 50 or over
91 Employee turnover
2014 2013 2012 2011 2010
New employment relationships 11 12 12 14 9 of which fixed-term contracts 6 7 3 5 2
Terminated contracts 10 11 10 6 5
Retirements 1 0 0 0 1
Termination of fixed-term contracts 5 8 3 2 1
Resignations 4 3 7 4 3
92 Average turnover rate, % 13,1 14,6 14,1 13,0 10,1
Exit rate, % 12,5 13,9 12,8 7,8 7,2
Exit rate, resigned personnel, % 5,0 3,8 9,0 5,2 4,3 An exit interview is conducted with all departing employees, with the objective of gaining feedback on the operations of the work community and development ideas, for their further improvement. Feedback is handled by the Executive Committee. No employment contracts were terminated at Hansel between 2008 and 2014. Sick leave and accidents
2014 2013 2012 2011 2010
Number of accidents leading to sick leave annually 2 5 7 1 2
Number of accidents during working hours annually 1 2 1 - -
Deaths - - - - -
Sick leave, including care for sick child (days/FTE) 9,0 6,6 9,3 8,1 7,8
Sick leave. excluding care for sick child (days/FTE) 7,6 5,4 8,3 7,4 7,1
Short sick leave periods (1–3 days), excluding care for sick child (days/FTE) 2,5 2,3 2,6 2,6 2,1
Total sick leave, excluding care for sick child (FTE) 2,4 1,6 2,4 2,0 1,8
Sick leave rate, including care for sick child (%) 3,8 2,8 3,9 3,4 3,3
Sick leave rate, excluding care for sick child (%) 3,4 2,3 3,5 3,1 3,0
Healthcare expenses (€ per person per year) 721 596 669 486 433
Personnel recreation expenses (€ per person per year) 456 514 579 674 504
93 GRI index
Hansel reports in accordance with the internationally approved Global Reporting Initiative GRI 4 guidelines (Core). These guidelines were updated in 2013. As required by the GRI guidelines, the table below presents the main content of the report, as well as links to the material in question. If information is not available, this is mentioned in the table alongside an explanation for the omission. Some elements of the information are included in the financial statements.
General standard disclosures Additional External assurance information
Strategy and analysis G4-1 CEO's review • Organisational profile G4-3 Name of the organisation • G4-4 Primary brands, products and services • G4-5 Location of the organisation's headquarters • G4-6 Number of countries where the organisation operates, and names of countries • where either the organisation has significant operations or that are specifically relevant to the sustainability topics covered in the report G4-7 Nature of ownership and legal form • G4-8 Market areas • G4-9 Scale of the organisation • G4-10 Total number of employees by employment contract, employment type, region • and gender G4-11 Percentage of total employees covered by collective bargaining agreements • G4-12 Organisation's supply chain • G4-13 Significant changes during the reporting period regarding the organisation’s size, No changes • structure, ownership, or its supply chain G4-14 Whether and how the precautionary approach or principle is addressed by the • organisation G4-15 Externally developed economic, environmental and social charters, principles, or • other initiatives to which the organisation subscribes or which it endorses G4-16 Memberships of associations and national or international advocacy • organisations Identified material aspects and boundaries G4-17 Entities included in the organisation’s consolidated financial statements Hansel is not • a group G4-18 Process for defining the report content • G4-19 Material aspects • G4-20 List of entities or groups of entities within the organisation for which the aspects Concerns • are material Hansel G4-21 List of entities or groups of entities outside of the organisation for which the • aspects are material G4-22 Effect of any restatements of information provided in previous reports, and the No changes • reasons for such restatements 94 G4-23 Significant changes from previous reporting periods in the scope and aspect No changes • boundaries Stakeholder engagement G4-24 List of stakeholder groups engaged by the organisation • G4-25 Basis for identification and selection of stakeholders with whom to engage • G4-26 Organisation’s approach to stakeholder engagement • G4-27 Key topics and concerns that have been raised through stakeholder engagement • Report profile G4-28 Reporting period • G4-29 Date of most recent previous report • G4-30 Reporting cycle • G4-31 Contact point for questions regarding the report or its contents • G4-32 GRI content index • G4-33 Policy and current practice with regard to seeking external assurance • Governance G4-34 Governance structure, including committees • G4-36 Positions with responsibility • Business ethics G4-56 Ethics and integrity •
external impacts internal impacts management indicator
Material aspects DMA and indicators Omissions External Aspect assurance boundary limitations outside Hansel G4-21
Economic responsibility
Indirect economic Hansel's aim is to create • Central impacts savings for the state government
CSR management
Estimate of savings
Hansel's operating model
95 Procurement Trends affecting Indicator has been reported regarding • Aspect has practices procument practices framework agreements. Of indicator G4-EC9 been reported the percentage of procurement budget has concerning not been reported, instead the percentage of framework CSR in procurement framework agreement in which regional agreements aspects have been considered, since Hansel and its impacts process does not monitor its customers' procument on central budgets. government and contract Equal treatment of suppliers. suppliers
Framework agreements in which regional aspects are considered, G4-EC9
Share of SMEs in framework agreements
Environmental responsibility
Products and Responsibility is a part of G4-EN27 indicator has been replaced with • Contract services the company's strategy another, since Hansel does not produce suppliers products and services procured through framework agreements. Trends affecting operatios
Environmental responsibility in services and products
An indicator that is suitable to Hansel's operations is the amount of central procurement through framework agreements where environment is considered
Social responsibility
96 Employment Hansel's equality plan • Job satisfaction survey and leadership evaluation
Employee turnover, G4-LA1
Education Competence Indicator G4-LA10b has not been reported, • development is since such career endings that the indicator emphasised in Hansel's refers to are very rare and not material in strategy Hansel.
Average hours of training, G4-LA9
Programs for skills management, G4- LA10
Anticorruption Code of ethics approved • Contract by the Board of Directors suppliers
No corruption cases Central government Training on code of ethics, G4-SO4
Product and Hansel's strategic • Central service labelling objective is to assume a government strong role in developing government procurement
Customer satisfaction
Results of customer satisfaction surveys, G4-PR5
97 Supplier Considering Detailed percentage can not be presented, • The screening assessment: environmental aspects since clarification has been voluntary. of the supply- chain covers contract – Screening of new suppliers, not sub- Environmental suppliers using contractors. assessments environmental criteria, G4-EN32 – Assessment for impacts on Risk analysis on the society social responsibility
Financial responsibility in framework agreements
Screening of new suppliers using criteria for impacts on society, G4-SO9
98 Key figure formulae
Equity ratio, % = Shareholders' equity x 100 Balance sheet total − Advances received
(Number of employees who entered employment 1 Jan–31 Dec + Average turnover, % = Number of employees who ended their employment 1 Jan–31 Dec) /2 x 100 Number of personnel on 31 Dec
Exit rate, % = Number of employees who ended their employment 1 Jan–31 Dec x 100
Number of personnel on 31 Dec
Exit rate, resigned personnel, % = Number of employees who resigned 1 Jan–31 Dec x 100 Number of personnel on 31 Dec
Sick leave percentage = Number of sickness absence days 1 Jan–31 Dec x 100 Theoretical working days 1 Jan–31 Dec
99 Independent assurance report
To the Management of Hansel Oy
We have been engaged by the Management of Hansel Oy (hereafter Hansel) to provide limited assurance on Hansel’s Sustainability Information (hereafter Sustainability Information) in the Hansel Annual Report 2014 from the reporting period 1.1.–31.12.2014. The sections and documents subject to the engagement are listed in the Global Reporting Initiative (GRI) Index.
The Management of Hansel is responsible for the preparation and presentation of the Sustainability Information in accordance with the Global Reporting Initiative (GRI) Sustainability Reporting Guidelines G4 core level.
Our responsibility is to carry out a limited assurance engagement and to express an independent conclusion on the information subject to the assurance. We have conducted the engagement in accordance with the IAASB international assurance standard ISAE 3000 Assurance Engagements other than Audits or Review of Historical Financial Information. We do not accept or assume responsibility to anyone other than Hansel for our work, for this assurance report, or for the conclusions we have reached. Limitations of the engagement
Data and information related to sustainability are subject to inherent limitations applying to data accuracy and completeness, which are to be taken into account when reading our assurance report. The presented Sustainability Information is to be considered in connection with the explanatory information on data collection, consolidation and assessments provided by Hansel. Our assurance report is not intended for use in evaluating Hansel’s performance in executing the sustainability principles Hansel has defined. To assess the financial state and performance of Hansel, Hansel’s audited Financial Statement for the year ended 31 December 2014 is to be consulted. The work performed in the engagement
Our assurance procedures are designed to obtain limited assurance on whether the Sustainability Information is presented in accordance with the Global Reporting Initiative (GRI) Sustainability Reporting Guidelines G4 core level in all material respects. A limited assurance engagement consists of making inquiries, primarily of persons responsible for the preparation of the Sustainability Information, and applying analytical and other evidence gathering procedures, as appropriate. The evidence gathering procedures mentioned above are more limited than for a reasonable assurance engagement, and therefore less assurance is obtained than in a reasonable assurance engagement.
In our engagement we have performed the following procedures:
Interviews with two members of the management to reassert our understanding of the connection between Hansel’s sustainability procedures and Hansel’s business strategy and operations as well as sustainability objectives; An assessment of the Sustainability Information’s conformity with the principles of the G4 guidelines for defining content and reporting quality; A review of the performance data and assertions presented in the Sustainability Information, 100 and testing of data accuracy and completeness through samples from Hansel’s information systems; An assessment of data management processes, information systems and working methods used to gather and consolidate the presented Sustainability Information; Comparison of the presented Sustainability Information to underlying rules of procedure, management and reporting systems as well as documentation.
Based on the assurance procedures performed, nothing has come to our attention that causes us to believe that the information subject to the assurance engagement is not presented in accordance with the Global Reporting Initiative (GRI) Sustainability Reporting Guidelines G4 core level in all material respects.
Helsinki, April 14, 2015
KPMG OY AB Jorma Nurkkala KHT, JHTT
Nathalie Clément Senior Manager, Advisory
101