Annual report 2017

ANNUAL REPORT 2017

CONTENTS

Key figures for the Cooperative Society Elanto Group 4

CEO’s review 5

Report by the Board of Directors 6

Financial Statements 31 December 2017 13

Notes to the Financial Statements 17

Disposal of retained earnings 36

Auditor’s Report 37

Statement of the Supervisory Board 39

Governance 40

Governing bodies 41

3 KEY FIGURES FOR THE HELSINKI COOPERATIVE ELANTO GROUP 2013–2017

2013 2014 2015 2016 2017

Net sales, EUR million 1 916.4 1 893.9 1 871.4 1 953.8 2 004.4

Operating profit - EUR million 21.7 41.6 90.3 56.2 43.7 - % of net sales 1.1 2.2 4.8 2.9 2.2

Pre-tax profit - EUR million 22.0 35.4 84.9 58.2 50.5 - % of net sales 1.1 1.9 4.5 3.0 2.5

Return on shareholders’ equity % 3.7 5.0 12.2 7.9 6.3

Return on investment capital % 4.2 6.5 15.9 9.9 8.2

Equity ratio, % 61.6 72.6 78.9 76.0 74.6

Gross investments in fixed assets - EUR million 99.0 43.6 34.7 35.5 68.0 - % of net sales 5.2 2.3 1.9 1.8 3.4

Average number of personnel during financial year 6 300 6 058 5 805 5 554 5 537 *)

Wages, salaries and remunerations EUR mill. 159.6 159.1 155.5 157.8 161.0

CALCULATION OF KEY FIGURES

Return on shareholders’ equity- % = profit after financial items – taxes × 100 equity + minority shareholding, average

Return on investment capital- % = pre-tax profit + interest and other finance costs × 100 balance sheet total – loans excl. interest – obligatory provisions, average

Equity ratio, % = capital and reserves + minority interest × 100 balance sheet total – prepayments received

Gross investment in fixed assets = sum paid for fixed assets

The average personnel numbers during the financial period are calculated as the mean value.

*) The average personnel numbers exclude the staff of Herkku stores (478 persons). In an asset deal on 31 December 2017, HOK-Elanto acquired the business of the Stockmann Herkku stores, and the personnel were transferred to the employment of HOK-Elanto Liiketoiminta Oy as permanent employees.

4 CEO’S REVIEW

The cooperative business model continues to attract customers. HOK-Elanto already has more than 617,000 members, with 23,273 joining in 2017. A cooperative is a rewarding company model for its members. The Bonus and payment method benefit it pays bring plain cash direct into their account. In March 2018, we reviewed our Bonus structure in favour of the members: as an example, they are entitled to the full five per cent Bonus by spending EUR 900 a month instead of the former EUR 1,500.

HOK-Elanto continued on the growth track in 2017. The Group turnover exceeded two billion euros, growing by 2.6 per cent on the previous year. Obviously, this is based on the general economic growth, but our own actions also play a significant role.

We have made long-term investments in developing job satisfaction. The results of the work community survey have improved year by year, and the latest survey shows overall satisfaction at an excellent level. We strongly believe that this is evidenced in the customer experience.

Our food price cutting policy has provided our customers with the opportunity of buying high-quality Finnish products at affordable prices. This has brought more customers and sales. Our market share of the grocery business increased by 0.2 per cent to 42.3 per cent in comparable terms. The turnover of the two Sokos department stores and 10 Emotion cosmetics stores grew by 9.1 per cent. Fuels and car washes sold well, and the restaurant business improved its profits.

A total of 15 stores, S Markets and stores serve customers around the clock. In November and December, the 24/7 chain was bolstered by three more Prisma stores. Our network of stores and restaurants, opening hours, online grocery store and other electronic services are under constant development, paying close attention to customers' wishes. One example is the Korttelitoive chatbot launched in March 2018, where the customer chats in Messenger with the cartoon character Siponen, familiar from Alepa advertising.

The largest operation towards the year end and the turn of the year at HOK-Elanto was the acquisition of four Stockmann Herkku outlets and integration of their business as part of the Cooperative Society. We gained about 500 new professionals as colleagues, as well as residents as customers who are accustomed to excellent quality and service.

I would like to extend my warmest thanks to all HOK-Elanto employees and staff representatives for their excellent work, as well as the whole for good cooperation. We will continue our long-term efforts in developing our network, range, opening times, services and benefits to fulfil our members' changing needs.

Helsinki, 27 March 2018

Veli-Matti Liimatainen CEO

5 HELSINKI COOPERATIVE SOCIETY ELANTO ANNUAL REPORT 2017

Helsinki Cooperative Society Elanto, operating in the Greater standards. The acquisition required the approval of the Finnish Helsinki area, is the largest regional cooperative society in Competition and Consumer Authority, which was obtained in S Group. With its members numbering in excess of 600,000, mid-December 2017, and the transaction took place on 31 HOK-Elanto is the company with the largest owner base in December 2017. All the Herkku staff in transferred Finland. The main divisions of the Cooperative Society are the to the employment of HOK-Elanto and S Group as so-called supermarket business, department stores, restaurants, and fuel existing employees, and the Herkku stores continue to operate and car wash business. in all the Stockmann department stores.

HOK-Elanto's turnover broke the EUR 2 billion limit. The S Group has initiated collaboration with Nokas CMS Oy strongest growth was in the department store business. HOK- to implement automated cash dispensing (ATM) services in Elanto is the largest private employer in its area, its personnel Finland. The plan is based on the new Financial Supervisory exceeding 6,000 in 2018. Its influence as provider of indirect Authority guidelines issued to banks regarding cash withdrawal employment is also significant. transactions. The new guidelines have opened the automated cash dispenser markets to new operators from the start of OPERATING ENVIRONMENT 2017. They stipulate that the bank must set up a price structure The trend in private consumption plays a crucial role in covering the entire EU for customer cash withdrawals. The the development of S Group's sales. The strong consumer cost to the customer is independent of where or at which ATM confidence in the economy and the positive economic trend the customer withdraws the cash. ¬Cash continues to be an have sustained household consumption and brought about 2.3 important means of payment for the customers, as more than per cent in growth from the year before. As part of general one customer in three still pays in cash at the S Group grocery economic growth, sales also grew by 2.2 per cent on the stores. The 74 Nosto ATMs located in HOK-Elanto outlets were previous year. mostly installed in the early autumn.

According to the Finnish Grocery Trade Association PTY, the KEY TRENDS IN S GROUP 2017 grocery trade grew by 1.7 per cent (1.0%) whereas the net sales S Group consists of the Cooperative Societies and the SOK of the department stores fell by 0.5 per cent (+1.8%). Consumer Corporation with their subsidiaries. At the close of 2017 there prices increased by 0.5 per cent on the year before (+1.0%). Food were 20 regional Cooperative Societies. prices fell by 0.1 per cent (-1.3%). S Group's retail sales exclusive of tax amounted to EUR The sales value of the licensed restaurants grew in January- 11,273 million in 2017, growing by 2.3 per cent on the previous September by 1.7 per cent (3.9%). The growth arose from food year. At the end of December, S Group had 1,631 outlets (1,633). sales, while alcoholic drinks sales continued to contract. During 2017, 109,584 new members joined the Cooperative The consumption of motor gasoline fell in volume during Societies operating the Bonus system. The total number of the year by 1.9 per cent (-1.1%) while that of diesel oil rose by customer-owner members at the close of the year was 2,355,963. 2.0 per cent (3.5%). The members were paid a total of EUR 334 million in Bonuses. Household confidence in the improving economic situation S Group’s investments totalled EUR 492 million (EUR 510 has increased. The 2017 unemployment rate for the whole coun- mill.). try was 8.6 per cent (8.8%). In Southern Finland, the average unemployment rate rose to 7.7 per cent (7.4%). The total unconsolidated result of S Group before appropri- ations and taxes was a profit of EUR 296 million (EUR 292 mill.). ECONOMIC TRENDS IN GREATER HELSINKI The S Group personnel totalled 36,694 (37,758). The person- Population growth in the Greater Helsinki area continued to nel number of the Cooperative Societies was 30,599 (31,036) be brisk. Preliminary figures put the growth at 19,537 persons and that of the SOK Corporation 6,095 (6,722). (17,634) or 1.4 per cent (1.3%). At the turn of the year, the popu- lation of our trading area was 1,373,729 persons (1,354,192), EVENTS AT HOK-ELANTO IN 2017 or 24.9 per cent (24.6%) of the total population of Finland. HOK-Elanto’s turnover grew by 2.6 per cent (4.4%) last year. Stockmann and HOK-Elanto reached an agreement on the The main division, the supermarkets, underwent strong growth, of the four Stockmann Herkku Greater Helsinki outlets but the largest growth was in the department store business. to HOK-Elanto. The objective of the acquisition is to turn the During the year, new Alepa stores opened in Viertola, Herkku stores into flagship stores aspiring to European top Kellokoski, Jätkäsaari and Leinelä, and new S Markets in

6 Myyrmanni, Niittykumpu and Vehkoja in Hyvinkää. Respectively, delivers the shopping to the customer's door. Prisma Kauppakassi one S Market and six Alepa stores closed down due to e.g. expiry has collection points at the Kaari, Olari and Itäkeskus Prisma of lease agreements. Nine Alepas, five S Markets and one Prisma stores; Alepa Kauppakassi has them at Kartanonkoski and the are open around the clock on every day of the year. In addition, Helsinki- airport. 24/7 opening of three Prisma stores was tested in November- December, and customer feedback on the trial was good. NET SALES AND FINANCIAL PERFORMANCE

The price-cutting policy continued. In January the prices The turnover of the Helsinki Cooperative Society Elanto Group of vegetables were cut and in August the most popular basic in 2017 stood at EUR 2,004.4 million, showing growth on the weekday foodstuffs. By the end of 2017, the prices of about previous year of 2.6 per cent (prev. year EUR 1,953.8 mill.) 3,500 products had been cut. Buoyed by the price-cutting, the The Group’s pre-tax profit was EUR 50.5 million (EUR 58.2 sales of Finnish salads and vegetables grew in S Group by three mill.). The result includes one-off income of EUR 7.5 million (EUR million kilos. 14.7 mill.) and one-off costs of EUR 10.3 million (EUR 2.2 mill.). As planned, the restaurant network contracted by nine The one-off income consists mainly of profit from the sales of outlets. The sailor restaurant Salve celebrated its 120-year capital assets and the insurance payout received following the history in a number of ways, including a special book. The ABC Hyvinkää fire. The one-off costs are mostly write-downs of 150-year-old restaurant Kappeli was awarded the prestigious capital assets and increases in obligatory provisions. Paistinkääntäjät Chaine de Rotisseurs plaque in June. The Group’s adjusted trading profit was EUR 43.7 million The EUR 2.4 million refurbishment of Backas Manor in (EUR 56.2 mill.) or 2.2 per cent of turnover (2.9%). The return Vantaa was completed over the summer. The manor with on investment was 8.2 per cent (9.9%), and return on equity all its buildings is owned by HOK-Elanto, and the business is was 6.3 per cent (7.8%). operated by Kuninkaan Erä Oy. The 200-year-old main house The Group’s operating profit without the above one-off underwent thorough remodelling and was styled as a private items was EUR 53.3 million (EUR 45.7 mill.) or 2.7 per cent (2.3%) function restaurant venue in the spirit of the 1920s. of turnover. The deregulation of retail opening hours had an adverse effect on the sales of ABC Delis offering fast food, which is why HOK-Elanto Group net sales and adjusted trading profit per the HOK-Elanto ABC business will focus on fuel and car wash division sales in the future under its new strategy. The sales of fuels and Adjusted car washes saw strong growth. Trading Net sales Change Profit Change The ABC Hyvinkää property had a fire on the night of 22 2017 M€ % 2017 M€ M€ September 2017. The service station staff quickly evacuated Supermarkets 1 676.1 3.2 39.4 +1.5 the customers from the premises, and the fire resulted in no Department stores 70.7 9.1 4.8 +2.0 personal injury or loss. Following the fire, ABC Hyvinkää and Restaurants 121.0 - 4.4 2.6 +0.8 the adjoining Alepa store are closed for the time being. The Fuel and car wash sales 112.0 - 2.0 0.6 +0.3 premises are being rebuilt and are estimated to reopen in the Other operations and autumn 2018. The property and the businesses operating in it administration 24.5 2.2 -3.6 -17.1 had comprehensive insurance, the payments from which are HOK-Elanto Group total 2 004.4 2.6% 43.7 -12.5 mostly booked to 2017. The ABC forecourt was reopened after a brief break.

The digital services are spearheaded by the international The supermarket business continued to serve as the strong award-winning S Mobile that combines the clientships of the support pillar of the operation with its EUR 1.7 billion (EUR 1.6 stores and bank. The application has been downloaded by about bill.) turnover and 3.2 per cent growth. At the close of the year, 206,000 members in the HOK-Elanto business area. The app HOK-Elanto had 108 Alepa stores, 59 S Markets, 12 Prisma stores includes customer functionalities like mobile petrol fill-up and and one Kodin Terra. an electronic receipt archive. The adjusted trading profit of the supermarket trade was Online grocery sales grew by about a quarter compared EUR 39.4 million (EUR 37.9 mill.). The improved result arose to the year before. The HOK-Elanto online store operators are from sales growth and improved cost-effectiveness, as well as Alepa Kauppakassi and Prisma Kauppakassi. Alepa Kauppakassi the improvements in wastage management in grocery retailing.

7 The department store business continued to show vigorous mill.) in developing its outlet network. The largest investment growth. The net sales of the two Sokos department stores and was the acquisition of the four Stockmann Herkku stores in 10 Emotion cosmetics stores totalled EUR 70.7 million (EUR 64.8 the Greater Helsinki area, accomplished right at the end of mill.), growing by 9.1%. The adjusted trading profit of the HOK- the year. The other investments concerned store building and Elanto department store business was EUR 4.8 million (EUR 2.8 refurbishment, as well as the purchase of retail premises in mill.). The improved profits resulted particularly from growth Hyvinkää. Capital assets to the value of EUR 3.4 million were in cosmetics sales coupled with effective cost management. sold (EUR 20.2 mill.).

The net sales of the restaurant division totalled EUR 121.0 FINANCING AND INVESTMENTS million (EUR 126.6 mill.), showing a drop of 4.4 per cent. The adjusted trading profit for the restaurants reached EUR 2.6 mil- The net finance revenues were EUR 6.8 million (EUR 2.0 mill.). lion (EUR 1.8 mill.). The reduced turnover and improved profit The majority of the net finance revenues accrued from the resulted from planned cutting back of the network combined investment portfolio. with good cost management. At the close of the year, HOK- The Group's liquidity is good. At the close of the year, liquid Elanto owned 85 restaurants. investments and cash assets amounted to EUR 355.2 million The net sales of the fuel and car wash trade stood at EUR (EUR 325.7 mill.). The equity ratio was 74.6 per cent (76.0%). 112.0 million (EUR 114.4 mill.), showing a fall of 2.0 per cent. HOK-Elanto has a finance strategy and investment policy The chain comprises 34 fuel and car wash outlets in the Greater approved by the Board of Directors. The main criteria for Helsinki area. The adjusted trading profit was EUR 0.6 million investments are long duration and low risk. Thus, the goal (EUR 0.2 mill.). The improved profit was the result of a successful is both the preservation of the invested capital and capital fuel sales strategy and revised concepts. growth and obtaining a return without exposing the investment HOK-Elanto's other business consists of real estate capital to a higher risk than the level decided by the Board. In business along with funeral and legal services. Other business accordance with the investment policy, the Board has put asset produced a turnover of EUR 24.5 million (EUR 24.0 mill.). The managers to competitive tender. As from the start of 2016, HOK-Elanto Funeral and Legal Service have 12 offices. Other financial instruments are valued using the alternative method business produced an adjusted trading profit of EUR -3.6 million permitted by the Accounting Act, chapter 5, section 2a, as fair (EUR 13.5 mill.). It also includes the one-off incomes and costs values. The imputed return on investments in 2017 was 5.2 per mentioned above. cent (5.2%).

HOK-Elanto’s market share of the grocery trade in our area CO-OP MEMBER ADMINISTRATION stood at 42.3 per cent (42.1%). During the year, 23,273 (20,746) new co-op members signed up, and the number of member households totalled 617,373 GROUP STRUCTURE (610,632) at the end of the year. Of all households in our trading The HOK-Elanto Group is comprised of the parent company area, 79.2 per cent (80.2%) are co-op members. Of the Group’s Helsinki Cooperative Society Elanto, HOK-Elanto Liiketoiminta sales, 70.1 per cent (73.7%) was to co-op members. The HOK- Oy (supermarket, department store, service station store and Elanto customer-owners were paid Bonuses totalling EUR 60.3 fuel trades, and restaurants), HOK-Elanto Palvelu Oy and 25 million (EUR 63.5 mill.) and payment method benefit of EUR 1.8 property companies. During the year, two wholly owned sub- million (EUR 1.4 mill.). In addition, interest paid on cooperative sidiary property companies were merged. capital amounted to 10 per cent or EUR 5.8 million (10% and The Group contains 22 associated companies. The most EUR 5.8 mill.). important of the associated companies are Kiinteistö Oy HOK-Elanto has an extensive network of partners who offer Vantaanportin Liikekeskus, owner of the Jumbo Shopping benefits to customer-owners in the areas of culture, sport, and Centre in Vantaa, with HOK-Elanto holding 27.8 per cent of many leisure activities. the company, and SOK Fashion Retail Oy, of which HOK-Elanto owns 49 per cent and SOK 51 per cent. The company trades The various HOK-Elanto partners provide members with under the Marks & Spencer franchise in the Sokos department services the Cooperative Society does not itself provide, such as store in central Helsinki. health, insurance, optician, pharmacy, cruise, media and cultural services. Some of the partners offer benefits, including Bonus.

INVESTMENTS AND SALES OF CAPITAL ASSETS No significant changes in the partner network took place During 2017, HOK-Elanto invested EUR 68.0 million (EUR 35.5 during the year.

8 SHARES AND COOPERATIVE CAPITAL 2017 2016 Helsinki Cooperative Society Elanto has a single share type. No Supermarkets 3,577 3,517 special conditions are attached to the shares. Department stores 247 250 The Cooperative Society shares are divided by share type Restaurants 961 1,018 as follows: Fuel and car wash sales 73 116 2017 2016 Other operations and administration 279 214 Shares 617,373 610,632 Total 5,136 5,115 Cooperative capital EUR 59,560,281.07 EUR 59,281,693.35

The cooperative capital comprises the total sum of The average length of an employment relationship was 8 cooperative contributions paid by members and recorded as years and two months (8 yrs 3 mths). The average age of the share capital. staff was 35 years (35 years). Women accounted for 75 per cent During the financial period, any members who have (75%) of the total personnel. The share of full-time employees terminated their membership or had it terminated have out of the whole personnel fell to 47 per cent (49%), which had their cooperative contributions immediately refunded resulted mainly from the lack of available professional full-time in accordance with the cooperative Statutes. The number manpower. of returned shares was 16,532 or 2.7 per cent of all shares. HOK-Elanto’s staff job satisfaction survey was returned by The shareholdings relating to the refunded cooperative more than 92 per cent of the personnel. The HOK-Elanto job contributions were cancelled. The sum paid for the shareholding satisfaction index (TYT index) is at a very good level, now reach- is equivalent to the cooperative contribution accrued at the time ing 72.9 points (7.3 points higher than the standard norm in the membership was terminated, which was EUR 100 for paid-up Finland). The two-year 'Virettä duuniin' job satisfaction develop- members. The total sum of refunded cooperative contributions ment programme continues. Sickness absences fell by two per was EUR 1,590,598 (EUR 1,193,613). cent from the year before. S BANK The Cooperative Society employs staff with immigrant back- grounds from more than 40 countries. HOK-Elanto provided S Bank provides easy and useful solutions for managing daily summer jobs for about 2,000 young people. The longstanding finances, saving and funding larger purchases. The free current shortage of professional restaurant workforce was alleviated by account, international debit card and bank log-in IDs for online the recruitment of chefs from the Philippines. The chef recruit- banking are substantial benefits obtained by the customer- ment drive began in 2009. The group of 12 chefs now arrived owners from their own bank. in Finland is the seventh. At the end of 2017, more than 451,000 HOK-Elanto The Health Care Fund has proved to be one of the most customers (414,000) were using the S-Etukortti Visa debit card. valued staff benefits in job satisfaction surveys. The HOK-Elanto In excess of 470,000 HOK-Elanto customers (438,000) are in Health Care Fund members are all permanent employees, both possession of log-in IDs for S Bank. part- and full-time. The employer also provides financial support PERSONNEL for the operation of the Fund. At the end of the period, there were 5,529 personnel (5,557). HOK-Elanto again paid a profit-share bonus of EUR 1.5 mil- The Stockmann Herkku stores in central Helsinki, Tapiola, lion to its permanent employees from the 2016 profits. The Itäkeskus and Jumbo increased HOK-Elanto's permanent staff bonus amounted to 1.5 per cent (1.0) of the employee's annual numbers by 478 to 6,007. The personnel figures below exclude earnings. the Herkku staff details, as their contracts of employment came The income level at HOK-Elanto rose by 1.8 per cent. Retail into force on 1 January 2018. earnings rose by 2.1 per cent and those of restaurants by 0.55 Converted to full-time person years, the imputed number of per cent. The main reasons for the pay increases were the profit- personnel was 5,136 persons (5,115). The number was calculated share bonus paid and shift increments. as an average, and it is distributed across the divisions as follows: On 25 May 2017, a recreation day was organised for the HOK-Elanto staff and families at Linnanmäki Amusement Park. More than 7,000 people took part in the event.

9 HOK-Elanto also supports the staff’s leisure and recreational on refrigerated equipment and new lighting solutions, have activities by offering them company exercise vouchers. Events reduced the energy consumption and emissions of the stores, organised by individual units are also subsidised. at the same time improving customer comfort. In addition to environmental benefits, the investments in energy efficiency RISK MANAGEMENT have saved costs.

The HOK-Elanto Group aims to identify risk factors in advance The action plan of minimising the environmental risks of and assess their probability and significance in terms of business fuel sales is ongoing. The greenhouse gas emissions caused objectives. The HOK-Elanto Board of Directors has discussed by the refrigerants used in store equipment are monitored and approved a risk management policy identifying its aims, annually. The refrigerant used in all new refrigerated plant is principal methods and responsibilities. Risk management work carbon dioxide, which has a low climate warming potential. is continuous and it is carried out in all the elements of the Prevention of waste creation and the reuse and recycling management process. The risks are assessed comprehensively, of waste are the guiding principles of the stores’ waste taking into account the strategic, financial, operational and management. Wastage has been reduced by improving accident risks. the ordering system, better predictability of demand and The most important strategic risks at HOK-Elanto concern functioning in-house control. The double reduction of red- preserving the competitiveness of the grocery business and its label food products in the final opening hour of the store has continued development, and in the case of non-food goods helped to reduce wastage. Products removed from sale and at trade ensuring profitable business in the changing markets. In their best-before date are channelled to charity via more than addition, the development of digital services continues and its 80 partners providing food aid. success is vital. In the next few years, S Group will adopt new S Group is committed to reducing the consumption of operational models and processes, their smooth deployment plastic carriers and other bags. HOK-Elanto has discontinued being particularly important. Strategic risks are managed both free shopping bags, and biodegradable small bags are provided through measures by HOK-Elanto itself and at S Group level. alongside small plastic bags, as well as reusable bags available to HOK-Elanto pays particular attention to customer safety buy. All plastic shopping bags for sale contain recycled plastic. and the occupational health, safety and wellbeing of the The waste volumes have fallen despite the growth of the personnel. Every unit has its own instructions and plans based outlet network, and after 2012 no waste whatsoever has ended on identification of the risks in the work environment. The up in landfill. Of the waste created in 2017, 74 per cent was personnel undergo regular training, so that they are familiar directed to reuse or recycling, and the remaining 26 per cent with the safety instructions and able to ensure customer safety. for heat and electricity production.

ENVIRONMENTAL RESPONSIBILITY Product safety is a matter of everyday responsibility, Responsibility is one of HOK-Elanto's key values. Systematic and and an important tool is the in-house control of foods. The long-term measures have resulted in reducing the environmental municipal food safety officers monitor the implementation of loading of its operation. A variety of our activities are intended food safety measures. The inspections of all HOK-Elanto stores to counter climate change and further the circular economy. and restaurants produced an excellent or good grade. The Our responsibility programme aims to provide solutions for achievement is considerably better than the average in the reducing emissions and sustainable consumption. We are HOK-Elanto trading area, which grades 48 per cent of stores also seeking the best solutions for reducing the climate and and 39 per cent of restaurants as ‘excellent’. The results are environmental impacts of our operation, as well as ways of displayed as emoticons at the outlet entrances. developing sustainable production and raw materials. HOK-Elanto has been unprejudiced in furthering the Over the last decade, HOK-Elanto has invested in improving charging network for electric vehicles. You can recharge an its energy efficiency. In retailing, the highest energy consumption electric vehicle at all our Prisma stores, two S Markets and four is related to refrigeration, ventilation and lighting. The HOK- ABC stations. There is a service point of a shared-access electric Elanto stores employ real-time hourly monitoring of energy car scheme at Viikki Prisma. Since 2016, the Alepa chain has been consumption, which provides an opportunity of improving and a principal partner of city bikes in Helsinki, thus contributing to evaluating the effectiveness of the energy-saving measures the residents’ wellbeing and responsibility for the environment. implemented. New energy solutions, such as installing doors

10 RESPONSIBLE COOPERATION In 2017, Managing Director Jorma Bergholm continued as The objective of HOK-Elanto’s activities is the responsible Chairman of the Supervisory Board, Member of Parliament Ben development of service provision for customer-owners and Zyskowicz as First Vice Chairman, and Member of Parliament consumers in the Greater Helsinki area. The brochure on Kari Uotila as Second Vice Chairman. Continuing as Supervisory corporate responsibility, distributed in all HOK-Elanto outlets Board members were Sini Alén, Kindergarten Teacher, Arto as well as our website, contains details of how consumers can Bryggare, B.Sc. (Econ. and Bus. Admin.), Juha Hakola, Chief make responsible choices in their purchases, and how the Inspector, Seppo Huhta, Journalist, Pia Kauma, M.Sc. (Econ. and Cooperative Society contributes to a better daily life in its area Bus. Admin.), Merja Kuusisto, Specialist Nurse, Björn Månsson, in a variety of ways. Journalist, Heli Puura, LL.M., and Lea Saukkonen, Development Manager. New members of the Supervisory Board were Timo Every year, HOK-Elanto spends about EUR 500,000 on various Harakka, Member of Parliament, Kimmo Kiljunen, D.Soc.Sc., community cooperation projects. In 2017, HOK-Elanto supported Sirkka-Liisa Kähärä, Nurse, and Irina Krohn, M.A. (Theatre and the work of a number of partners, including the Finnish Red Drama). The staff representatives were Piia Kuusniemi, Chief Cross, Helsinki Festival, Mannerheim League for Child Welfare, Shop Steward, and Reija Laitinen, Supermarket Manager. Youth Services, City Of Helsinki Youth Department and the association continuing the work of Veikko and Lahja Hursti. In 2018, Managing Director Jorma Bergholm continues as Chairman of the Supervisory Board, Member of Parliament Ben To mark Finland's centenary, HOK-Elanto donated EUR Zyskowicz as First Vice Chairman, and Member of Parliament 100,000 to Helsinki Deaconess Institute's Vamos project. The Kari Uotila as Second Vice Chairman. Continuing as Supervisory donation was used to employ two career coaches to provide Board members are Sini Alén, Kindergarten Teacher, Arto guidance in finding their own path in life to about a hundred Bryggare, B.Sc. (Econ. and Bus. Admin.), Juha Hakola, Chief young people at risk of marginalisation. On Independence Day, Inspector, Timo Harakka, Member of Parliament, Seppo Huhta, we served coffee and cake to customers in all the Prisma stores Journalist, Kimmo Kiljunen, D.Soc.Sc., Irina Krohn, M.A. (Theatre in the area and glasses of sparkling wine in the restaurants. and Drama), Merja Kuusisto, Specialist Nurse, Sirkka-Liisa More than 80,000 customers joined us in celebrating 100-year- Kähärä, Nurse, Björn Månsson, Journalist, Heli Puura, LL.M., old Finland. and Lea Saukkonen, Development Manager. A new member Multiculturalism is part of daily life at HOK-Elanto. For many of the Supervisory Board is Marika Niemi, Lecturer in Business years, the company has trained and employed immigrants and Studies. The staff representatives are Piia Kuusniemi, Chief Shop thus fostered their integration in Finnish society and the world Steward and Reija Laitinen, Supermarket Manager. of employment. The Board of Directors in 2017 was comprised of Matti Niemi, HOK-Elanto also facilitates the integration of a number of CEO, Commercial Counsellor (Chairman), Tuula Entelä, LL.M., special groups and increased tolerance by employing e.g. peo- B.Sc. (Econ. & Bus. Admin.) (Vice Chairman), Professor Jaakko ple with learning difficulties and mental health rehabilitants. Aspara, Professor Markku Kuisma, Pekka Laaksonen, M.Sc. The national collaboration between S Group and the (Econ. and Bus. Admin.), Sallamaari Muhonen, Communications Football Association of Finland was launched in 2011, the Consultant, and Markku Uitto, Managing Director. objective being to build multi-use playing fields. The goal is In 2018, the Board is comprised of CEO Veli-Matti to create a hundred multi-use playing fields in the grounds of Liimatainen, M.Sc. (Econ. and Bus. Admin.) (Chairman, new Finnish primary schools. By the end of 2017, the collaboration member) and Tuula Entelä, LL.M., B.Sc. (Econ. & Bus. Admin.) has already produced 80 Ässä fields in various parts of Finland. (Vice Chairman), Professor Jaakko Aspara, Taru Keronen, A record 20 fields will be constructed in 2018. Managing Director (new member), Pekka Laaksonen, M.Sc. The field in the grounds of Vindängen skola in Tapiola is (Econ. and Bus. Admin.), Sallamaari Muhonen, Communications the fifth in the HOK-Elanto area. Consultant, and Markku Uitto, Managing Director. The auditors for the financial year 2017 were the public accounting company PricewaterhouseCoopers Oy, with Janne GOVERNANCE Rajalahti, Authorised Public Accountant, acting as principal With its owners numbering in excess of 617,000, HOK-Elanto auditor. In 2018, the public accounting company Pricewater- is the company with the largest owner base in Finland. The houseCoopers Oy continues as the auditor. principal governing bodies of HOK-Elanto are the Council of Representatives, Supervisory Board and Board of Directors.

11 Matti Niemi, Commercial Counsellor, the long-time CEO of Helsinki Cooperative Society Elanto, retired at the end of the year, and as from 1 January 2018, the CEO has been Veli-Matti Liimatainen, M.Sc. (Econ. and Bus. Admin.)

As from 1 January 2018, the management team of the HOK-Elanto Group comprises Veli-Matti Liimatainen, CEO, Kimmo Nikula, Chief Operating Officer (S Market, Alepa, Herkku, Sokos, Emotion and Funeral and Legal Services), Lassi Juntunen, Chief Operating Officer (Prisma, Kodin Terra, ABC, online stores), Jouko Heinonen, Chief Operating Officer (restaurants) up to 8/2018, Henriikka Puolanne, Chief Operating Officer (restaurants) starting from 8/2018, Juha Ilvonen, Chief Planning Officer, Antero Levänen, Chief Human Resources Officer, Laura Oja, Chief Financial Officer, Jyrki Karjalainen, Chief Real Estate Officer, and Tuomas Ahola, Chief Communications and Marketing Officer.

OUTLOOK FOR THE FUTURE Economic trends in Finland and its neighbouring areas are an important factor in the success of the S Group's operations. S Bank forecasts continued growth for the Finnish economy at 2.8 per cent in 2018 and 2.4 per cent in 2019. Industrial investments and exports are expected to continue to drive the growth, albeit at a slightly slower rate from the year 2017. Conversely, there are no signs of weakening in the growth of private consumption. Higher rates of employment and pay rises bolster the buying power and consumption of households, while inflation remains relatively subdued. Household purchases are also supported by persistently low interest rates.

In 2018, HOK-Elanto’s turnover is forecast to grow. The four Stockmann Herkku stores in the Greater Helsinki area bring a premium level grocery store chain into the HOK-Elanto service range. The Herkku stores will be developed in cooperation with customers and staff towards even higher quality through means like joint discussion groups.

The investments for the year 2018 are estimated to total EUR 32 million. The Group's operating profit will be weaker than last year, resulting from the continued price-cutting policy, changes in the outlet configuration and takeover of the Herkku business. The personnel numbers are expected to rise.

The Bonus paid to HOK-Elanto members will increase with changes in the Bonus table. As from 1 March, the full 5 per cent Bonus is paid on monthly purchases of EUR 900, reduced from the previous limit of EUR 1,500. Member communications will also undergo changes during spring 2018.

12 INCOME STATEMENT 1.1.–31.12.2017

Group Cooperative Society HOK-ELANTO INCOME STATEMENT (EUR 1,000) (EUR 1,000) 2017 2016 2017 2016

Appendix NET SALES 1 2 004 393 1 953 841 67 584 68 056 Other income from business operations 2 8 480 15 716 3 113 9 951

MATERIALS AND SERVICES Materials, equipment and goods 3 1 456 224 1 407 051 5 051 5 241 External services 34 273 35 349 315 354 1 490 497 1 442 401 5 366 5 595

PERSONNEL COSTS 4 Wages, salaries and bonuses 160 982 157 845 8 866 8 757 Ancillary personnel costs 38 173 39 632 2 468 2 772 199 155 197 477 11 334 11 529

DEPRECIATION AND WRITE-DOWNS 5 35 827 32 987 6 182 4 508

OTHER OPERATING COSTS Property rents 93 664 88 925 19 460 20 199 Other costs 6 150 021 151 596 20 340 22 295 243 685 240 521 39 800 42 494

OPERATING PROFIT 43 708 56 171 8 013 13 881

Share of assoc. co. profits (+/-) -1 218 -1 213 Financial income and costs (+/-) 9 8 055 3 221 7 169 2 571 PROFIT BEFORE APPROPRIATIONS AND TAXES 50 545 58 179 15 182 16 451

Appropriations (+/-) 11 29 570 41 400 Income taxes (+/-) 12 -9 936 -11 015 -9 103 -10 719 Minority shareholdings (+/-) 74 62

RETAINED EARNINGS FOR THE FINANCIAL YEAR 40 683 47 226 35 648 47 132

13 BALANCE SHEET 31.12.2017

Group Cooperative Society ASSETS (EUR 1,000) (EUR 1,000) 2017 2016 2017 2016

Appendix FIXED ASSETS

Intangible assets 13 33 448 11 194 1 907 2 195 Tangible assets 13 242 114 244 899 72 360 67 365 Shares in associated companies 14 20 636 19 157 23 672 21 801 Other investments 14 109 675 101 104 258 943 255 401 405 873 376 354 356 882 346 762

CURRENT ASSETS

Inventories 15 79 075 77 844 137 141 Long-term receivables 16 653 988 653 Deferred tax assets 17 3 727 3 275 Short-term receivables 18 46 595 37 991 33 505 44 323 Securities 20 265 567 240 862 265 567 240 862 Cash and bank receivables 88 986 84 812 72 005 68 959 483 950 445 437 372 202 354 938

889 824 821 791 729 084 701 700

Group Cooperative Society LIABILITIES (EUR 1,000) (EUR 1,000) 2017 2016 2017 2016

CAPITAL AND RESERVES Appendix Cooperative capital 21 59 117 59 117 59 117 59 117 Reserve fund 67 000 67 000 67 000 67 000 Cooperative contribution fund 5 143 4 865 5 143 4 865 Fair value reserve 11 385 6 425 14 231 8 026 Profit from previous financial years 478 950 438 022 432 434 391 130 Profit for the financial period 40 683 47 226 35 648 47 132 662 278 622 654 613 573 577 270

ACCUMULATED APPROPRIATIONS 22 MINORITY INTERESTS 1 495 1 514 OBLIGATORY PROVISIONS 23 15 874 12 655 2 328 2 628

LIABILITIES Long-term liabilities 24 1 766 1 598 30 918 70 330 Deferred tax liability 25 3 453 1 829 Short-term liabilities 26 204 959 181 542 82 265 51 472 210 178 184 968 113 183 121 802

889 824 821 791 729 084 701 700

14 CASH FLOW STATEMENT 1.1.–31.12.2017

Group Cooperative Society (EUR 1,000) (EUR 1,000) 2017 2016 2017 2016

CASH FLOW FROM BUSINESS OPERATIONS Operating profit 43 708 56 171 8 013 13 881 Adjustments to operating profit (1) 35 922 17 273 2 770 -4 946 Change in working capital (2) 15 158 14 777 463 -1 800 Cash flow from business operations before financial 94 788 88 221 11 246 7 135 items and taxes -108 013 -103 201 -108 013 -103 201 Increase in short-term investments 89 487 64 418 89 487 64 418 Decrease in short-term investments -817 -1 819 -1 183 -2 035 Interest paid and other finance costs 8 181 3 151 8 486 3 488 Interest received and other financial income -9 969 -25 196 -9 972 -23 552 Income tax paid 73 657 25 574 -9 949 -53 747 Cash flow from business operations

CASH FLOW FROM INVESTMENTS -56 677 -28 574 -11 248 -4 031 Investments in tangible and intangible assets -4 099 -8 431 -4 099 -8 431 Investments in other interests -7 290 -7 290 -500 Loans granted 2 293 19 368 2 229 61 233 Capital gains 4 061 5 295 Repayments of loan receivables 2 081 1 159 2 080 1 158 Dividends received from investments -63 692 -16 478 -14 267 54 724 Cash flow from investments

CASH FLOW FROM FINANCING 51 700 Long-term loans drawn down -127 -6 244 -40 000 -31 154 Long-term loan repayments -669 -21 30 857 -33 114 Increase (+)/decrease (-) in short-term loans 529 438 529 438 Change in cooperative capital -5 524 -5 444 -5 524 -5 444 Interest paid on cooperative capital 41 400 14 000 Group contributions -5 791 -11 271 27 262 -3 574 Cash flow from financing 4 174 -2 177 3 046 -2 599 Change in cash assets, increase (+) /decrease (-) 84 812 86 989 68 959 72 017 Cash assets at beginning of financial year 88 986 84 812 72 005 68 959 Cash assets at end of financial year

Adjustments to operating profit (1) -2 546 -13 985 -2 534 -9 303 Capital gains (-) and losses (+) from fixed assets 35 827 32 987 6 182 4 508 Depreciation and write-downs 2 641 -1 729 -878 -610 Other income and expenses not involving payments 35 922 17 273 2 770 -5 405

Change in working capital (2) -7 484 -3 323 -135 10 218 Change in short-term receivables -1 231 1 969 4 -4 Change in inventories 23 873 16 130 594 -12 014 Change in short-term non-interest-bearing creditors 15 158 14 776 463 -1 800

15 Net sales MEUR Operating profitMEUR

2000 9060 80 1500 7045 60 50 1000 30 40 1954 2004 30 58 51 500 2015 10 0 0 0 2016 2017 2016 2017

Gross investments MEUR Co-op member households

100 700 000 600 000 80 500 000 610 632 617 373 60 400 000

40 300 000 200 000 20 36 68 100 000 0 0 2016 2017 2016 2017

Net sales per chain 2017

Fuels and car wash 6% Other business 1% Restaurants 6% Alepa stores 18% Department stores 3% Kodin Terra 1%

Prisma stores 34% S-markets 31%

Group balance sheet assets MEUR Group balance sheet liabilities MEUR

900 900

800 890 890 821 800 821 700 700

600 600

500 500

400 400

300 300

200 200

100 100

0 0 2016 2017 2016 2017 Fixed assets Inventories Equity capital Minority interests and reserves Receivables Cash assets Long-term Short-term loan capital loan capital

16 NOTES ON THE PREPARATION OF THE FINANCIAL STATEMENTS

Helsinki Cooperative Society Elanto (HOK-Elanto) is responsible Machinery and equipment years for the Group’s financing, accounting, real estate, marketing, Restaurant equipment 5 personnel and member administration. HOK-Elanto regularly Grocery store and specialised equipment 5 sells administrative services and leases business premises to its Computer hardware and office equipment 5 subsidiary companies as well as, to some extent, outside the Transport equipment 5 Group. The sales income from these administrative services and Car wash equipment and fuel distribution meters 6 lease or rental revenues are included in HOK-Elanto’s net sales. Building services; machinery and equipment 5 Stores: cash register systems 5 COMPARABILITY WITH THE PREVIOUS FINANCIAL Digital signage 3 YEAR The result includes one-off income of EUR 7.5 million (EUR Paving 10 14.7 mill.) and one-off costs of EUR 10.3 million (EUR 2.2 mill.). Other tangible assets 10 The one-off income consists mainly of profit from the sales of capital assets and the insurance payout received following the PROPERTY RENTS ABC Hyvinkää fire. The one-off costs are mostly write-downs of Costs incurred from leasing property are entered under capital assets and increases in obligatory provisions. leasing of business premises. The lease liabilities arising from the associated long-term lease agreements are presented in FIXED ASSETS the Notes to the financial statements. The largest leasehold Intangible and tangible assets are included in the balance sheet properties are the Prisma stores in Kannelmäki, Itäkeskus, Iso under direct purchase costs, less the planned depreciations Omena, Sello and Viikki. deducted annually in the accounts. The difference of planned depreciations and booked depreciations is presented in the INVENTORIES income statements of the Group companies as appropriations, Current assets are booked in the balance sheet at their purchase and the accumulated difference of the depreciations entered cost or the lower repurchase cost or likely sale price. in their balance sheets is presented as a single item in the accumulated appropriations. Permanent write-downs on the FINANCIAL ASSETS AND LIABILITIES undepreciated acquisition cost of fixed assets are booked as a As from the start of 2016, financial instruments have been valued cost in the write-downs. The fixed asset balance sheet values using the alternative method permitted by the Accounting do not include revaluations. Act, section 5, subsection 2a, as fair values. Application of fair The planned depreciations are based on the original values concerns financial assets classed as being held for sale. acquisition cost of the intangible and tangible assets and their Other receivables from financial instruments and other financial estimated economic lifecycles. Depreciation has been calculated liabilities are valued at amortized acquisition costs. from the beginning of the month following the deployment Financial assets held for sale include shares, fund holdings month of each item. and bonds, which are included under financial securities booked mostly under short-term assets. Transaction costs are not The planned depreciation periods are: years included in the acquisition cost. Held-for-sale financial assets INTANGIBLE ASSETS are assessed at fair value using the price quoted on the active Software and licences 3–5 markets on the day of the financial statement. Unquoted share Goodwill, Group goodwill 5 investments were valued at the acquisition cost, as it was not Modernisation costs of premises 5 possible to apply the fair value under the current valuation Franchise joining fees 5 methods. The change in the fair values of held-for-sale financial Road arrangement costs 10 assets is booked in the fair value reserve under capital and Paving of leased areas 10 reserves. Other long-term costs 5 Loans and receivables consist of cash assets, loans granted TANGIBLE ASSETS years and sales and other receivables. Buildings 25 Other financial liabilities include debts subject to interest, Air raid shelters 25 purchase and other debts. The booking of financial assets and Tanks, shelters and other structures 5–10 liabilities follows the practice on the date of the investigation.

17 Business transactions in foreign currencies are booked HOK-Elanto holds either directly or indirectly more than half at the exchange rate on the transaction date. Receivables in of the voting rights conferred by the shares, as well as all the foreign currencies included in held-for-sale financial assets were associated companies in which HOK-Elanto has a significant converted to euros at the exchange rate on the date of the holding of at least 20% with voting rights. The companies financial statement. For these, the exchange rate difference is included in the consolidated financial statements, together booked in the fair value reserve. There were no other foreign with the Group’s holdings in them, are shown in the Notes to currency receivables or debts. the Balance Sheet asset items.

In 2017, the merger was carried out of Kiinteistö Oy THE IMPAIRMENT PRINCIPLE CONCERNING Turunväylän Kauppakeskus and Kiinteistö Oy Nihtisilta 4, both RECEIVABLES CLASSIFIED AS FINANCIAL ASSETS of them wholly owned subsidiaries of Helsinki Cooperative At the end of the reporting period, an assessment is made Society Elanto. on whether or not there is objective evidence of impairment of the value of any item other than those classed as financial Accounting policies applied in the consolidated assets assessed at fair values and recognised in profit or loss. financial statement No impairment losses were recorded for the financial period. Intra-Group shareholdings have been eliminated in the financial When objective evidence is obtained of the impaired value statements using the acquisition cost method, whereby the of a debt instrument or share classed as held-for-sale financial acquisition cost of shares in subsidiaries is eliminated against assets, any loss accrued to capital and reserves is booked in capital and reserves at the time of acquisition. The difference the income statement as an impairment loss. If the fair value between the acquisition cost of subsidiaries and the capital and of the debt instrument classed as held-for-sale later rises, and reserves corresponding to the acquired new assets is allocated the rise may objectively be deemed to result from an event principally to buildings and parcels of land. Group assets and after the entry of the impairment loss, the impairment loss is liabilities allocated to buildings are depreciated/entered as cancelled and an entry recognised in profit or loss is made. If income according to the depreciation plan of the asset item. the fair value of a share later rises, the rise in value is booked The associated companies have been consolidated using under capital and reserves. the equity method. The Group’s share, commensurate to its PENSION ARRANGEMENTS shareholding, of the associated companies’ profit for the financial period and change in capital and reserves is presented Both the statutory pension security and supplementary volun- as a separate item. Of the Group’s 22 associated property tary pension security for the employees of the Group companies companies, the most important is Kiinteistö Oy Vantaanportin are covered through external pension insurance companies. Liikekeskus. The only associated company trading is SOK Pension costs are booked as costs in the year they are accrued. Fashion Retail Oy, of which HOK-Elanto owns 49 per cent and Directors’ discretionary pension benefits the SOK Corporation 51 per cent. The company is engaged in department store retailing under the Marks & Spencer franchise The CEO and Management Team members were included in the Sokos premises in central Helsinki. During the financial in a defined-benefit group pension insurance scheme up to year, the shareholding of Kanniston Liikekeskus Oy was divested 31 December 2017. As from the start of 2018, the CEO and and shares of Kannelmäen Liikekeskus Oy were acquired. Management Team members were moved to a money purchase extra pension scheme. The annual extra pension premium is the Minority interests have been separated out from the sum equivalent to their fixed salary package for 2.6 months, and Group’s capital and reserves and result, and they are presented the lowest possible pension age for the accrued extra pension separately in the financial statements. fund is 60 years. When preparing the consolidated financial statements, all intra-Group income and costs, distribution of profits and profits ACCOUNTING POLICIES APPLIED IN THE CON- from the sale of fixed assets, as well as inter-company receiva- SOLIDATED FINANCIAL STATEMENT bles and liabilities have been eliminated. The current assets in the consolidated financial statements exclude internal margins. Scope of the consolidated financial statements and changes in Group structure Deferred taxes The consolidated financial statement includes the parent Deferred taxes relating to the HOK-Elanto Group are booked in cooperative and all the subsidiaries, i.e. companies in which accordance with the principles detailed below and the general

18 recommendations of the Finnish Accounting Standards Board. No deferred tax has been entered for attributable Group Deferred tax liabilities and assets arising from consolidation are assets and liabilities (total EUR 3.5 million net) because the included in deferred tax liabilities and assets in the consolidated generated Group assets and liabilities are wholly attributable balance sheet, and any change in them is booked as a change to key buildings and land areas in terms of business operations, in deferred tax liabilities and assets in the consolidated income and there is no intention to transfer them outside the Group. statement. As from the start of 2016, financial instruments have In line with conservative accounting practices, the been valued using the alternative method permitted by consolidated balance sheet shows the deferred tax liability in its the Accounting Act, section 5, subsection 2a, as fair values. entirety and deferred tax assets as the estimated and probable Application of fair values concerns financial assets classed as amount. The tax rate of 20.0 per cent has been applied to the being held for sale. The 2017 financial statement contains a calculations. deferred tax liability of EUR 2.8 million on the fair value reserve of EUR 14.2 million. In the consolidated balance sheet, the accumulated appropriations shown in individual financial statements have The held-for-sale financial assets will be classified at the been divided into deferred tax liability and capital and reserves, start of 2018 into categories under IFRS 9. From the start of and changes in them are presented in the consolidated income 2018, the investment portfolio assets will be recognised in profit statement. Depreciation to be reversed on taxable income or loss at fair values. (depreciation not deducted in taxation) has been taken into account as a reducing factor in calculating the above-mentioned deferred tax liability.

The deferred tax assets resulting from obligatory provisions and confirmed losses of Group companies are presented in the consolidated balance sheet, and any change is presented in the consolidated income statement. In property subsidiaries where there is a minority holding, depreciation on the buildings has mostly been calculated in accordance with the company’s result. However, at Group level, planned depreciations have been entered for the companies, and the deferred tax assets attributable to the included accrued additional depreciations of EUR 2.0 million have not been taken into consideration.

The intra-Group gains on the sale of capital assets were primarily generated before 1989 when such items were not subject to taxation. Therefore, no deferred tax assets have been created by the elimination of their internal margins. The Group also has intra-Group capital gains attributable to shares of EUR 6.4 million, for which deferred tax assets have not been entered because it is unlikely that they will be realised. Oy Center-Inn Ab sold its entire business to HOK-Elanto Liiketoiminta Oy on 31 May 2015. Deferred tax assets were booked on the goodwill paid for in this deal and eliminated in the consolidated financial statement. Further deferred tax assets were booked on the intra-Group assignment of claim rights in 2013.

No deferred tax assets have been entered for Group company impairments or write-downs on shares, land areas and buildings, totalling EUR 17.0 million (EUR 12.3 mill.) and not deducted in taxation, as their realisation is not deemed to be likely. Moreover, no deferred tax assets have been entered for Group level write-downs of EUR 0.5 million (EUR 0.5 mill.).

19 NOTES TO THE FINANCIAL STATEMENT Group Cooperative Society (EUR 1,000) (EUR 1,000) AND ANNUAL REPORT 2017 2016 2017 2016

NOTES TO THE INCOME STATEMENT

1. Net sales per division Supermarkets 1 676 132 1 624 172 Department stores 70 672 64 763 Restaurants 120 962 126 568 Fuel and car wash sales 112 105 114 351 Other operations and administration 24 521 23 988 67 584 68 056 Total 2 004 392 1 953 842 67 584 68 056

2. Other income from business operations Profit from sale of fixed assets 2 552 14 029 2 534 9 304 Other income from business operations 5 928 1 688 578 648 Total 8 480 15 717 3 112 9 952

3. Materials, equipment and goods Purchases during financial year 1 457 456 1 405 082 5 047 5 246 Change in stock, increase (-) or decrease (+) -1 231 1 969 4 -4 Total 1 456 225 1 407 051 5 051 5 242

4. Personnel costs Wages, salaries and bonuses 160 982 157 845 8 866 8 757 Pension costs 29 854 29 696 2 097 2 359 Other social security costs 8 319 9 936 371 413 Total 199 155 197 477 11 334 11 529

Notes on personnel and members of governing bodies in section 29.

5. Depreciation and write-downs Planned depreciations 32 237 32 308 4 041 3 764 Write-downs from fixed assets 3 590 680 2 141 743 Total 35 827 32 988 6 182 4 507

Details of depreciation and changes in depreciation differences are included under the specification of fixed assets and accumulated appropriations in the notes to the balance sheet.

6. Other operating costs Voluntary social security costs 7 064 7 347 674 723 Property, equipment and disposables costs 84 865 83 946 6 399 5 916 Marketing, administrative and other costs 58 091 60 302 13 267 15 656 Total 150 020 151 595 20 340 22 295

Property rentals are presented as a separate item in the Incom e Statement.

7. Auditor’s fees Audit fees 100 149 86 110 Certificates and statements 1 1 Other fees 1 1 Total 101 150 87 111

8. Increase (-) or decrease (+) of obligatory provisions Increased rental costs of partly vacant premises -4 733 -537 Decreased rental costs of partly vacant premises 1 316 1 656 Increases in land decontamination costs -103 Decreases in land decontamination costs 300 300 Total -3 219 1 119 300 0

*) included under other operating costs

20 NOTES TO THE FINANCIAL STATEMENT Group Cooperative Society (EUR 1,000) (EUR 1,000) AND ANNUAL REPORT 2017 2016 2017 2016

9. Financial income and costs Dividends from investment assets From associated companies 2 059 1 140 2 059 1 140 From others 22 19 21 19 Dividends from investment assets total 2 081 1 159 2 080 1 159

Interest income from other investments of fixed assets From Group companies 697 748 From others 192 147 192 147 Total 192 147 889 895

Other interest and financial income From Group companies 1 From others 7 904 3 272 7 514 2 859 Total 7 904 3 272 7 514 2 860

Interest and other financial income, total 8 096 3 419 8 404 3 754

Write-downs from fixed asset investments 1 305 173 2 132 941

Interest and other finance costs To Group companies 397 232 To others 817 1 184 786 1 170 Interest and other finance costs, total 817 1 184 1 183 1 402

Financial income and costs, total 8 055 3 221 7 169 2 571

Breakdown of financial income Net income from loans and receivables, extra-Group 266 222 232 183 Net income from loans and receivables, intra-Group 698 749 Net income from held-for-sale financial assets 6 685 1 704 6 680 1 701 Other financial income 2 441 1 528 2 089 1 157 9 392 3 454 9 699 3 789 Breakdown of finance costs Net costs of financial liabilities booked as current acquisition costs, extra-Group 8 51 1 43 Net costs of financial liabilities booked as current acquisition costs, intra-Group 397 232 Other finance costs 1 329 181 2 133 943 1 337 232 2 530 1 218

Financial income and costs, total 8 055 3 221 7 169 2 571

10. Appropriations Group assistance 29 570 41 400 Total 29 570 41 400

11. Income taxes Income taxes for fin. period (+/-) 10 003 10 719 9 103 10 703 Income taxes for prev. fin. periods (+/-) 16 16 Taxes on taxable income 10 003 10 735 9 103 10 719 Change in deferred tax liability / assets -67 279 Total 9 936 11 014

Deferred tax assets and liabilities not booked in balance sheet Deferred tax assets 2 353 2 727 Deferred tax liability 2 846 1 605

21 NOTES TO THE FINANCIAL STATEMENT Group Cooperative Society (EUR 1,000) (EUR 1,000) AND ANNUAL REPORT 2017 2016 2017 2016

NOTES TO BALANCE SHEET ASSET ITEMS

12. Intangible and tangible assets

Intangible assets

Intangible rights Acquisition cost 1 January 868 791 980 980 Increases 27 83 Decreases -36 -7 Acquisition cost 31 December 859 868 980 980

Accumulated depreciation 1 January 737 635 392 294 Accumulated depreciation of decreases and transfers -36 -7 Depreciation for the financial period 78 108 98 98 Accumulated depreciation 31 December 779 737 490 392

Book value 31 December 80 131 490 588

Goodwill Acquisition cost 1 January 56 117 56 117 Increases 21 717 Acquisition cost 31 December 77 834 56 117

Accumulated depreciation 1 January 56 117 56 117 Depreciation for the financial period 17 Accumulated depreciation 31 December 56 134 56 117

Book value 31 December 21 700 0

Other intangible assets Acquisition cost 1 January 53 185 52 537 2 973 2 810 Increases 3 017 3 252 21 163 Decreases -5 223 -4 581 Inter-item transfers 2 379 1 977 Acquisition cost 31 December 53 358 53 185 2 994 2 973

Accumulated depreciation 1 January 42 149 42 695 1 366 1 092 Accumulated depreciation of decreases and transfers -5 223 -4 585 Depreciation for the financial period 4 827 4 039 211 274 Accumulated depreciation 31 December 41 753 42 149 1 577 1 366

Book value 31 December 11 605 11 036 1 417 1 607

Intangible assets, prepayments Acquisition cost 1 January 26 88 Increases 365 1 409 Inter-item transfers -328 -1 471 Acquisition cost 31 December 63 26 0 0

22 Group Cooperative Society NOTES TO THE FINANCIAL STATEMENT (EUR 1,000) (EUR 1,000) AND ANNUAL REPORT 2017 2016 2017 2016

Group goodwill Acquisition cost 1 January 17 657 17 657 Acquisition cost 31 December 17 657 17 657

Accumulated depreciation 1 January 17 657 17 657 Accumulated depreciation 31 December 17 657 17 657

Book value 31 December 0 0

Group goodwill in the balance sheet 31 December 0 0

Intangible assets, total 33 448 11 194 1 907 2 195

Tangible assets

Land and water areas Owned Acquisition cost 1 January 80 449 84 832 26 838 26 833 Inter-item transfers 304 373 Increases 4 945 6 4 766 6 Accumulated depreciation of decreases and transfers 12 Decreases -205 -4 389 -209 Acquisition cost 31 December 85 493 80 449 31 780 26 838

Accumulated write-downs 1 January 3 471 3 321 3 261 3 111 Write-downs 490 150 150 Write-downs for Group -20 Accumulated write-downs 31 December 3 941 3 471 3 261 3 261

Book value 31 December 81 551 76 977 28 518 23 577

Property rental rights Acquisition cost 1 January 515 477 296 257 Increases 13 13 Decreases -83 Depreciation for the financial period -3 Inter-item transfers 69 25 25 Acquisition cost 31 December 498 515 296 296 Write-downs 44 3 44 Accumulated write-downs 31 December 44 44 48 44

Book value 31 December 454 471 248 251

Land and water areas, total 82 005 77 448 28 767 23 828

Buildings and structures Owned Acquisition cost 1 January 234 877 236 298 77 644 79 751 Increases 4 762 1 145 4 090 257 Decreases -5 818 -7 449 -2 246 -6 902 Inter-item transfers 2 215 4 883 1 900 4 538 Acquisition cost 31 December 236 036 234 877 81 387 77 644

Accumulated depreciation 1 January 107 774 102 370 35 855 36 645 Accumulated depreciation of decreases and transfers -5 818 -5 229 -2 246 -4 365 Depreciation for the financial period 10 261 10 148 3 419 3 575 Write-downs 3 451 485 2 064 Accumulated depreciation 31 December 115 668 107 774 39 092 35 855

Book value 31 December 120 369 127 103 42 295 41 789

Buildings and structures, total 120 369 127 103 42 295 41 789

23 Group Cooperative Society NOTES TO THE FINANCIAL STATEMENT (EUR 1,000) (EUR 1,000) AND ANNUAL REPORT 2017 2016 2017 2016

Machinery and equipment Acquisition cost 1 January 97 329 92 793 2 760 2 985 Increases 12 208 12 904 268 294 Decreases -2 239 -13 294 -380 -519 Inter-item transfers 4 988 4 926 Acquisition cost 31 December 112 286 97 329 2 648 2 760

Accumulated depreciation 1 January 58 384 53 621 2 001 2 124 Accumulated depreciation of decreases and transfers -2 136 -13 158 -292 -459 Depreciation for the financial period 17 011 17 922 282 336 Write-downs 54 Accumulated depreciation 31 December 73 313 58 385 1 991 2 001

Book value 31 December 38 971 38 944 657 759

Other tangible assets Acquisition cost 1 January 1 744 1 699 690 645 Increases 5 Decreases -166 Inter-item transfers 45 45 Acquisition cost 31 December 1 583 1 744 690 690

Accumulated depreciation 1 January 1 434 1 343 476 446 Accumulated depreciation of decreases and transfers -166 Depreciation for the financial period 43 91 32 31 Write-downs 62 62 Accumulated depreciation 31 December 1 373 1 434 570 476

Book value 31 December 211 310 120 214

Prepayments and assets in the course of construction Acquisition cost 1 January 1 094 3 216 775 2 457 Increases 9 091 8 263 2 019 2 927 Inter-item transfers -9 627 -10 385 -2 272 -4 608 Book value 31 December 558 1 094 521 775

Tangible assets, total 242 114 244 899 72 360 67 365

14. Investments Holdings in Group companies Acquisition cost 1 January 62 349 70 822 Decreases -8 473 Acquisition cost 31 December 62 349 62 349

Accumulated write-downs 1 January 2 914 3 214 Write-down reversals -300 Accumulated write-downs 31 December 2 914 2 914

Book value 31 December 59 435 59 435

Receivables from Group companies Sum 1 January 69 158 74 053 Increases 2 200 Decreases -6 261 -4 895 Sum 31 December 65 097 69 158

Book value 31 December 65 097 69 158

24 Group Cooperative Society NOTES TO THE FINANCIAL STATEMENT (EUR 1,000) (EUR 1,000) AND ANNUAL REPORT 2017 2016 2017 2016

Capital loan receivables from Group companies Sum 1 January 27 263 27 163 Increases 500 Decreases -400 Sum 31 December 27 263 27 263

Accumulated write-downs 1 January 1 500 1 500 Accumulated write-downs 31 December 1 500 1 500

Book value 31 December 25 763 25 763

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

Receivables from Group companies, total 90 860 94 921

Shares and holdings in associated companies

Shares in associated companies Acquisition cost 1 January 23 224 23 956 31 165 31 417 Increases 2 640 208 3 859 1 421 Decreases -242 -940 -205 -1 674 Acquisition cost 31 December 25 622 23 224 34 819 31 165

Accumulated write-downs 1 January 4 067 3 908 9 363 8 162 Write-downs 1 902 1 421 2 002 1 421 Write-down reversals -984 -1 262 -220 -220 Accumulated write-downs 31 December 4 985 4 067 11 145 9 363

Book value 31 December 20 636 19 157 23 672 21 801

SOK Corporation holdings Acquisition cost 1 January 34 310 34 310 34 310 34 310 Increases 589 589 Acquisition cost 31 December 34 899 34 310 34 899 34 310

Book value 31 December 34 899 34 310 34 899 34 310

Shares in other associated companies Acquisition cost 1 January 49 500 43 092 49 500 43 092 Increases 6 408 6 408 Decreases -3 138 -3 138 Acquisition cost 31 December 46 362 49 500 46 362 49 500

Accumulated write-downs 1 Jan. from capital loan conversion 3 138 3 138 3 138 3 138 Write-down reversals -3 138 -3 138 Accumulated write-downs 31 December 0 3 138 0 3 138

Book value 31 December 46 362 46 362 46 362 46 362

25 Group Cooperative Society NOTES TO THE FINANCIAL STATEMENT (EUR 1,000) (EUR 1,000) AND ANNUAL REPORT 2017 2016 2017 2016

Shares and holdings in associated companies, total Acquisition cost 1 January 107 033 101 357 114 974 108 819 Increases 3 229 6 616 4 448 7 829 Decreases -3 380 -940 -3 343 -1 674 Acquisition cost 31 December 106 882 107 033 116 079 114 974

Accumulated write-downs 1 January 4 067 3 908 9 363 8 162 Accumulated write-downs 1 Jan. from capital loan conversion 3 138 3 138 3 138 3 138 Write-downs 1 902 1 421 2 002 1 421 Write-down reversals -4 121 -1 262 -3 358 -220 Accumulated write-downs 31 December 4 986 7 205 11 145 12 501

Book value 31 December 101 897 99 829 104 934 102 473

Undepreciated proportion of Group assets derived from associated companies 3 917 4 061

Group reserves derived from associated companies not entered as income -391 -415

Receivables from associated companies Sum 1 January 1 470 1 470 Conversion to holdings in associated companies -1 470 -1 470 Sum 31 December 0 0 0 0

Accumulated write-downs 1 January -1 470 -1 470 Conversion to holdings in associated companies 1 470 1 470 Accumulated write-downs 31 December 0 0 0 0

Book value 31 December 0 0 0 0

Receivables from associated companies, total 0 0 0 0

Other shares and holdings Acquisition cost 1 January 18 982 19 215 19 150 19 382 Increases 251 602 251 602 Decreases -324 -835 -324 -834 Acquisition cost 31 December 18 909 18 982 19 077 19 150

Accumulated write-downs 1 January 2 440 2 763 2 625 2 922 Accumulated depreciation of decreases and transfers -336 -336 Write-downs 266 40 330 40 Write-down reversals -26 -100 Accumulated write-downs 31 December 2 706 2 440 2 855 2 625

Fair value reserve 1 January 352 392 348 387 Change in fair value 22 -40 26 -39 Fair value reserve 31 December 374 352 374 348

Book value 31 December 16 576 16 894 16 596 16 872

26 Group Cooperative Society NOTES TO THE FINANCIAL STATEMENT (EUR 1,000) (EUR 1,000) AND ANNUAL REPORT 2017 2016 2017 2016

Other receivables from others Sum 1 January 3 539 3 539 3 500 3 500 Increases 8 301 7 290 Decreases -2 Sum 31 December 11 839 3 539 10 790 3 500

Book value 31 December 11 839 3 539 10 790 3 500

Other investments, total 109 675 101 104 258 943 255 401

Shares/ 15. Companies owned by Group and parent company 31 December 2017 holdings Associated companies owned by parent company ownership %

HOK-Elanto Liiketoiminta Oy Helsinki 100 HOK-Elanto Palvelu Oy Helsinki 100 Kiinteistö Oy Nihtisilta 4 Espoo 100 Kiinteistö Oy Syystie 19 Helsinki 100 Lahdenväylän Kauppakeskus Oy Vantaa 100 Kiinteistö Oy Hyvinkään Kauppa-Matti Helsinki 100 Hokki-Kiinteistöt Oy Helsinki 100 Kiinteistö Oy Korson Kauppakeskus Vantaa 100 Kiinteistö Oy Keravan Kauppakaari 2 100 Gesterbyn Liikekiinteistö Oy Kirkkonummi 100 Kiinteistö Oy Espoon Siltakatu Espoo 100 Kiinteistö Oy Lommilan Kauppakeskus Espoo 100 Kiinteistö Oy Espoon Kutojantie 1 Espoo 100 Kiinteistö Oy Keravan Kauppakaari 17 Kerava 100 Kiinteistö Oy Hyrylän Portti 100 Kiinteistö Oy Vantaan Porttipuisto Helsinki 100 Kiinteistö Oy Saunalahden Portti Helsinki 100 Kiinteistö Oy Peltokuumolantie 2 Hyvinkää 100 Vuosaaren Liikekeskus Oy Helsinki 57 Korson Liiketalo Oy Vantaa 76 Jakomäen Kauppakeskus Oy Helsinki 82 Hakunilan Kiinteistötalo Oy Vantaa 61 Pihlajamäen Ostoskeskus Oy Helsinki 74 Kiinteistö Oy Espoon Joosepinkuja 2 Espoo 53 Kiinteistö Oy Kalevankatu 31 Kerava 76 Kiinteistö Oy Soukan Liiketalo Espoo 62 Rajatorpan Ostoskeskus Oy Vantaa 77

On 31 December 2017, the HOK-Elanto Group comprised 27 subsidiaries in addition to Helsinki Cooperative Society Elanto, 25 of them property companies.

27 NOTES TO THE FINANCIAL STATEMENT AND ANNUAL REPORT

Associated company partially owned by the parent company

Suomen Osuuskauppojen Keskuskunta (SOK Corporation), Helsinki Holding 19.78%, share of vote 5.65%, and book value of holding EUR 34.90 million. SOK Corporation’s capital and reserves on 31 December 2017 were EUR 781.24 million and SOK Corporation’s losses for 2017 were -EUR 10.90 million.

Shares/ holdings Associated companies owned by parent company ownership %

SOK Fashion Retail Oy Helsinki 49 Kiinteistö Oy Helsinginkatu 1 Helsinki 41 Kannelmäen Liikekeskus Oy Helsinki 41 Kaivospuhos Oy Vantaa 39 Eestinmäen Palvelukeskus Oy Porvoo 38 Karakallion Ostoskeskus Oy Espoo 33 Asunto Oy Ylhäinen Helsinki 25 Asunto-Osakeyhtiö Siilitie 6 Helsinki 30 Matinkylän Liikekiinteistö Oy Espoo 29 Puotinharjun Puhos Oy Helsinki 29 As. Oy Puistotalo Helsinki 28 Kiinteistö Oy Vantaanportin Liikekeskus Vantaa 28 Kiinteistö Oy Säterintie 2 Helsinki 28 Kiinteistö Oy Tapulikaupungin palvelutalo Helsinki 28 Haaga III Liikekeskus Oy Helsinki 28 Gammelbackan Palvelukeskus Oy Porvoo 28 Mikkolan Liikekiinteistö Oy Vantaa 26 As. Oy Porvoonkulma Helsinki 25 Asunto-Osakeyhtiö Vihdintie 7 Helsinki 25 Kiinteistö Oy Laajalahden Liikekeskus Espoo 25 Kiinteistö Oy Erätori Helsinki 24 Munkkivuoren Ostoskeskus Oy Helsinki 21

The total number of associated companies is 22.

28 Group Cooperative Society NOTES TO THE FINANCIAL STATEMENT (EUR 1,000) (EUR 1,000) AND ANNUAL REPORT 2017 2016 2017 2016

16. Inventories Materials and disposables 2 559 2 688 Goods 76 519 75 155 137 141 Total 79 078 77 844 137 141

17. Long-term receivables Sales receivables Non-interest-bearing other long-term receivables 988 988 Other interest-bearing long-term receivables 653 653 Total 988 653 988 653

18. Deferred tax assets From periodisation differences and temporary differences 3 727 3 275 Total 3 727 3 275

19. Short-term receivables Sales receivables 22 318 17 442 1 523 1 268

Receivables from Group companies Sales receivables Other receivables 29 934 41 444 Accrued income 101 143 Total 30 035 41 587

Receivables from associated companies Sales receivables 7 974 6 338 136 170 Accrued income 5 285 6 932 378 612 Total 13 259 13 270 514 782

Other receivables 7 085 137 688 Accrued income 3 932 7 142 744 687 Short-term receivables, total 46 595 37 991 33 505 44 323

20. Key items included in accrued income Personnel costs 2 890 6 361 375 292 Financing items 216 299 227 309 Accrued income from SOK Corporation 1 589 1 875 378 612 Income taxes 19 105 18 32 Annual contribution receivables and marketing contributions 3 696 5 056 Other accrued income 807 377 225 196 Accrued income, total 9 217 14 073 1 223 1 441

21. Securities Other shares and holdings 256 557 231 473 256 557 231 473 Other securities from others 9 010 9 389 9 010 9 389 Total 265 567 240 862 265 567 240 862

The shares and holdings consist of share and interest-bearing funds and Finnish listed and unlisted shares held for investment. Other securities from others are direct bond investments.

29 Group Cooperative Society NOTES TO THE FINANCIAL STATEMENT (EUR 1,000) (EUR 1,000) AND ANNUAL REPORT 2017 2016 2017 2016

NOTES TO BALANCE SHEET LIABILITIES

22. Capital and reserves Cooperative capital 1 January 59 117 59 117 59 117 59 117 Cooperative capital 31 December 59 117 59 117 59 117 59 117

Fair value reserve 1 January 6 425 -1 098 8 026 -1 103 Held-for-sale fixed assets: changes in value during financial period 11 399 9 499 11 404 9 499 sum transferred from equity to income statement -5 199 -370 -5 199 -370 Change in deferred tax liability -1 240 -1 606 Fair value reserve 31 December 11 385 6 425 14 231 8 026

The held-for-sale financial assets include EUR 54,713.35 in unlisted shares (in financial period 2016 EUR 55,520.65), the fair value of which cannot be reliably assessed.

Reserve fund 1 January 67 000 61 000 67 000 61 000 Addition 6 000 6 000 Reserve fund 31 December 67 000 67 000 67 000 67 000

Tied-up capital and reserves, total 137 502 132 542 140 348 134 143

Cooperative contribution fund 1 January 4 865 4 424 4 865 4 424 Addition 279 441 279 441 Cooperative contribution fund 31 December 5 144 4 865 5 144 4 865

Retained earnings from prev. periods 1 January before changes in accounting policies 485 248 448 006 438 262 401 114 Changes in accounting policies applied to Financial Statement *) 1 837 1 837 Reserve fund transfer in accordance with Section 27 of the Statutes -6 000 -6 000 Interest paid on cooperative capital -5 828 -5 821 -5 828 -5 821 Adjustment to retained earnings **) -470 Retained earnings from preceding financial periods 31 December 478 950 438 022 432 434 391 130

*) Accounting Act 5.2a applied from 1 January 2016, retrospective adjustment. **) Write-down of land area owned by property subsidiary not included in Group accounts in 2016

Retained earnings for the financial year 40 683 47 226 35 648 47 132

Unrestricted capital and reserves, total 524 776 490 113 473 226 443 127

Capital and reserves, total 662 278 622 654 613 574 577 270

Portion of accumulated depreciation difference recorded in Group capital and reserves EUR 12,760,366.02 (EUR 12,490,344.88).

Calculation on distributable surplus 31 December Retained earnings from preceding financial periods 31 December 432 434 391 130 Retained earnings for the financial year 35 648 47 132 Minimum transfer to reserve fund under Statutes (Section 27) -4 713 Total 468 082 433 549

30 Group Cooperative Society NOTES TO THE FINANCIAL STATEMENT (EUR 1,000) (EUR 1,000) AND ANNUAL REPORT 2017 2016 2017 2016

23. Accumulated appropriations Depreciation difference Other intangible assets 13 22 Buildings and structures -160 1 570 Machinery and equipment -1 202 -3 114 Shares 1 336 1 437 Other tangible assets 13 85 Total 0 0

24. Obligatory provisions Partly vacant premises 7 530 4 114 Contractual liability 2 228 2 228 2 228 2 228 Land decontamination costs 6 116 6 313 100 400 Total 15 874 12 655 2 328 2 628

25. Long-term liabilities Loans from financial institutions 136 263 Accounts payable 51 30 Other long-term liabilities to Group 30 330 70 330 Other long-term liabilities 301 51 300 Deferred liabilities 1 277 1 253 288 Long-term liabilities, total 1 766 1 597 30 918 70 330

Liabilities maturing later than in five years Loans to financial institutions Other long-term liabilities to Group 30 330 70 330 Deferred liabilities 198 Total 0 198 30 330 70 330

26. Deferred tax liability From appropriations 222 From fair value reserve 3 453 1 606 Total 3 453 1 828

27. Short-term liabilities Loans from financial institutions 77 87 Advance payments received 86 125 7 4 Accounts payable 22 921 20 629 1 729 1 343

Liabilities to Group companies Accounts payable 606 798 Other short-term liabilities 66 750 35 572 Deferred liabilities 5 259 5 013 Total 72 615 41 383

Liabilities to associated companies Accounts payable 113 646 96 404 490 107 Deferred liabilities 426 308 Total 114 072 96 712 490 107

Other short-term liabilities 13 127 14 773 2 666 2 475 Deferred liabilities 54 676 49 216 4 758 6 159 Short-term liabilities, total 204 959 181 542 82 265 51 471

31 NOTES TO THE FINANCIAL STATEMENT Group Cooperative Society (EUR 1,000) (EUR 1,000) AND ANNUAL REPORT 2017 2016 2017 2016

28. Key items included in deferred liabilities Personnel costs 44 029 38 121 3 046 2 890 Income taxes 2 017 2 069 1 180 2 062 Bonus liabilities 6 754 6 610 312 474 Financing items 2 2 Other deferred liabilities 2 302 2 724 5 477 5 743 Deferred liabilities, total 55 102 49 524 10 017 11 171

NOTES ON PERSONNEL AND MEMBERS OF GOVERNING BODIES 29a Average number of personnel *) 5 537 5 554 145 141

29b Average number of personnel per division *) Supermarkets 4 063 4 052 Department stores 244 241 Marks & Spencer 30 34 Fuel and car wash sales 78 116 Restaurants 833 885 Other operations and administration 289 226 145 141 Total 5 537 5 554 145 141

*) the average personnel numbers exclude the staff of Stockmann Herkku stores (478 persons). In an asset deal on 31 December 2017, HOK-Elanto acquired the business of the Stockmann Herkku stores, and the personnel were transferred to the employment of HOK-Elanto Liiketoiminta Oy as permanent employees.

29c Salaries and remuneration (for the tasks) of the CEO and his deputy, members and deputy members of the Board of Directors and the Supervisory Board 1 402 1 339 1 402 1 339

The management’s discretionary pension benefits are detailed in the accounting policy.

30. Related parties: transactions

Key transactions between Group companies

Sale of services 17 913 17 811 Rental incomes 30 146 30 992 Total 48 059 48 803

Property rents 13 862 13 447 Purchase of services 2 026 2 288 Total 15 888 15 735

32 NOTES TO THE FINANCIAL STATEMENT Group Cooperative Society (EUR 1,000) (EUR 1,000) AND ANNUAL REPORT 2017 2016 2017 2016

31. NOTES ON SECURITIES AND CONTINGENT LIABILITIES

Pledges given and contingent liabilities

Liabilities mortgaged as security: – loans from financial institutions 217 349 – mortgages 1 471 1 438

Other pledges given: – mortgages 450 414 350 314 – mortgages as security for land use charges 16 000 16 000 – collaterals 191 226

Mortgages total – charges provided as security 17 922 17 852 – charges in own possession 52 153 50 170

Security given on behalf of Group companies: Guarantees – directly enforceable guarantees as security for 7 970 8 187 7 970 8 187 rental payments – other guarantees 750 750 750 750

Guarantees given on behalf of others: Helsinki Cooperative Society Elanto also has a collateral security liability on loans drawn down by S-ryhmän logistiikkakeskukset Oy, the primary collateral being the company’s assets. The company’s shareholders (excl. SOK) have given a guarantee as a collateral security liability on the company’s current and new loans for the maximum sum of EUR 650 million. The shareholders’ (excl. SOK) share of the total sum of the collateral security liability is determined proportionate to the shareholders’ (excl. SOK) holdings in the SOK Corporation at the time the company was formed. Helsinki Cooperative Society Elanto’s maximum collateral security liability of the above sum is EUR 130 million. The value of the primary collateral is assumed to cover the amount of the loan drawn down. The total sum remaining of the main loan drawn down included in the above-mentioned collateral security liability on 31 December 2017 was EUR 444.5 million, of which Helsinki Cooperative Society Elanto’s collateral security liability is EUR 88.9 million.

Other contingent liabilities Leasing liabilities – payable next year 67 86 18 2 – payable in more than a year 106 91 45 0 Total 173 177 63 2

Liability for returning value added tax concerning property investments: The Group and Helsinki Cooperative Society Elanto are obliged to refund value added tax deductions made on pro- perty investments, if there is a change in use liable to tax during the adjustment period.

Liability for returning value added tax concerning property investments: 12 534 14 579 5 437 6 199 The HOK-Elanto Group and Helsinki Cooperative Society Elanto are obliged to refund for property investments completed in 2009–2017 any deductions in value added tax, if there is a reduction in use of the property liable to tax during the adjustment period. The last adjustment year is 2026.

33 Group Cooperative Society NOTES TO THE FINANCIAL STATEMENT (EUR 1,000) (EUR 1,000) AND ANNUAL REPORT 2017 2016 2017 2016

Lease obligations Property lease obligations – payable next year 82 523 80 300 2 011 1 985 – payable in more than a year 471 870 490 111 10 163 11 398 554 393 570 411 12 174 13 383 Lease obligations are given exclusive of value added tax.

Obligation under shareholder agreement to provide guarantees for the obligations of S-Voima Oy and to fund its operations. The shareholders are responsible for the obligations of S-Voima Oy in accordance with the so-called Mankala principle. According to this principle, the liability for the company’s variable costs is determined according to the energy consumed by the shareholder. Liability for the company’s fixed costs, also including e.g. loan instalments and interest as well as depreciation, are divided proportionally to the series of shares held by the shareholder. The company’s A series shares are linked to the purchase of market electricity, B and B1 series shares to the purchase of electric energy produced with wind power, and C series shares to the purchase of electricity produced with nuclear power, in which S Group, including HOK-Elanto, has decided not to participate.

32. FAIR VALUES OF HELD-FOR-SALE FINANCIAL ASSETS AND THE FAIR VALUE HIERARCHY Fair value Level 1 Level 2 Level 3

Share investments, listed 17 247 17 247 Share investments, unlisted 55 55 Share funds 67 382 67 382 Interest-bearing investments 10 128 10 128 Interest-bearing funds 171 218 171 218 Total 266 030 265 975 0 55

On level 1 of the hierarchy, fair values are based on the listed prices of directly comparable asset items in an active market. The Group has used fund managers’ reports as price sources in determining the fair values of these instruments.

In determining fair values for level 2 instruments, the Group applies commonly accepted valuation models, however, the input data are largely based on observable market information.

The fair values of level 3 instruments are based on input values for the asset item not based on observable market information, but largely on the estimates of the management and their application in generally approved valuation models. Level 3 includes unlisted shares, the fair value of which cannot be reliably determined.

34 NOTES TO THE FINANCIAL STATEMENT AND ANNUAL REPORT

33. MANAGEMENT OF FINANCIAL RISKS

Helsinki Cooperative Society Elanto has a financial strategy and an investment policy approved by the Board, defining the principles and responsibilities of finance and investment activity at Helsinki Cooperative Society Elanto and its subsidiaries.

The objective of the financial strategy is to ensure financial adequacy, balance and economy and to minimise the financial risks. The financial strategy also sets the numerical targets for financial risks. Most of HOK-Elanto's financial risks concern investment activity. The Group has no external interest-bearing debt (31.12.2016 EUR 0.3 mill.).

HOK-Elanto is taking steps to prepare for future changes through long-term and low-risk investment activity. Thus, the goal is both the preservation of the invested capital and capital growth and obtaining a return without exposing the investment capital to a higher risk than the level decided by the Board. HOK-Elanto’s consolidated balance sheet and the estimated risk attached to its items are taken into account when determining the risk level acceptable in investments. The investment risk level is regulated primarily by setting so-called base allocations for the different investment categories and their fluctuation margins (minimum / maximum). There must be no conflict between the sector or practices of the object of the investment and the operational principles of HOK-Elanto. The object of the investment must adhere to the principles of ethics and sustainable development.

The liquidity portfolio consists of short-term cash liquidity, held entirely in short-term interest-bearing investments. On 31 December 2017, the liquidity portfolio funds were held in bank accounts. Any cash assets in excess of the liquidity portfolio are categorised under the investment portfolio. The investment portfolio funds are held in both interest rate instruments (short and long-term) and shares. The base allocation (weights and fluctuation margins of the various asset classes) of the investment portfolio is updated at least once a year. Any changes made to the base allocation must be submitted for approval by the Board.

Capital Effect of 1 %- Effect of 1 %- Effect of 1 %- Effect of 1 %- Group interest rate risk exposed unit interest unit interest unit interest unit interest to risk rate rise on rate fall on rate rise on rate fall on capital and capital and profits profits reserves reserves

Held-for-sale financial assets 181 345 -5 440 5 440 Loans and receivables 80 786 798 -798 Total 262 131 0 0 -4 642 4 642

The effect of interest at 1 percentage unit on profits reflects the effect over the next 12 months.

The held-for-sale financial assets will be classified at the start of 2018 into categories under IFRS 9. From the start of 2018, the investment portfolio assets will be recognised in profit or loss at fair values, therefore their risk is presented here as recognised in profit or loss.

Price risk attached to Group Capital Effect of 10% Effect of 10% Effect of a 10% Effect of a 10% share investments exposed exchange rate exchange exchange exchange to risk rise on capital rate fall on rate rise rate fall on and reserves capital on profits profits and reserves

Held-for-sale financial assets 84 684 0 0 8 468 -8 468

The held-for-sale financial assets will be classified at the start of 2018 into categories under IFRS 9. From the start of 2018, the investment portfolio assets will be recognised in profit or loss at fair values, therefore their risk is presented here as recognised in profit or loss.

Group currency risk

As at 31 December 2017, 100% of the held-for-sale financial assets were euro-denominated.

35 PROPOSAL OF THE BOARD OF DIRECTORS ON DISPOSAL OF RETAINED EARNINGS

The distributable funds of Helsinki Cooperative Society Elanto at 31 December 2017 are EUR 468,082,269.28.

No substantial change has taken place in the Cooperative Society’s financial position after the close of the financial year. The liquidity of the Cooperative Society is good, and the Board of Directors takes the view that the profit distribution proposed below will not jeopardise the Cooperative Society’s liquidity.

The Board of Directors proposes that Helsinki Cooperative Society Elanto’s retained earnings for the financial year 1 January – 31 December 2017 of EUR 35,648,166.75 be transferred into the retained earnings account from previous financial years.

Helsinki, 15 March 2018

Veli-Matti Liimatainen Jaakko Aspara Tuula Entelä Chairman, Board of Directors

Taru Keronen Pekka Laaksonen Sallamaari Muhonen

Markku Uitto

36 AUDITOR’S REPORT

FOR MEMBERS OF HELSINKI COOPERATIVE SOCIETY ELANTO

FINANCIAL STATEMENT AUDIT have been prepared on the basis of the going concern assumption. The financial statement is prepared based on the Audit opinion going concern assumption, unless there are plans to dissolve It is our opinion that the financial statement provides a true the parent Cooperative Society of Group or to discontinue the and fair view of the result and financial position of the Group business, or there is no other realistic alternative to such action. and the parent Cooperative Society in accordance with the provisions concerning the preparation of financial statements Auditor’s obligations in financial statements currently in force in Finland and in compliance with statutory audit requirements. We aim to obtain reasonable assurance on whether the overall Subject of the audit financial statement contains material misstatements resulting We have audited the financial statement of Helsinki Cooperative from fraud or error, and to provide an auditor's report including Society Elanto (Reg. No. 1837954-9) for the financial period our opinion. Reasonable assurance is a high level of assurance, 1 January–31 December 2017. The financial statement includes but it is no guarantee that material misstatements are always the balance sheet, income statement, cash flow statement and detected in an audit performed according to good auditing notes to the financial statements for both the Group and the practice. Misstatements may result from fraud or error, and parent Cooperative Society. they are deemed to be material is they can, alone or collectively, reasonably be expected to influence financial decisions made Grounds for opinion by users on the basis of the financial statement. We have conducted the audit in accordance with the good Good auditing practice includes the application of professional auditing practice observed in Finland. Our obligations under scepticism, which we maintain throughout the audit. In addi- good auditing practice are described in more detail under tion: ‘Auditor’s obligations in financial statements audit’. • we identify and assess any risk of material misstatement in We believe that we have obtained the necessary amount of the financial statement resulting from fraud or error, plan appropriate auditing evidence upon which to base our opinion. and perform audit procedures corresponding to such risks, Independence and obtain the necessary amount of auditing evidence to We are independent of the parent Cooperative Society and the justify our opinion. The risk of failure to detect material Group companies in accordance with Finnish ethical standards misstatement resulting from fraud is greater than the risk concerning the audit performed by us, and we have complied of failure to detect material misstatement resulting from with the other ethical obligations contained in the standards. error, as fraud may include collaboration, forgery, deliberate omission of information or presentation of misstated Obligations of the Board of Directors and CEO information, or evading internal control. regarding financial statements • we form an opinion on the internal control relevant to the The Board of Directors and CEO are responsible for preparing audit in order to plan the appropriate audit procedures in the financial statement in such a way as to provide a true and the circumstances, but not for the purpose of being able to fair view in accordance with the provisions currently in force pass opinion on the effectiveness of internal control in the in Finland concerning the preparation of financial statements parent Cooperative Society or Group. and in compliance with statutory requirements. The Board of Directors and CEO are also responsible for any internal control • we evaluate the appropriateness of the accounting policies they deem necessary in order to prepare financial statements used in preparing the financial statement, as well as the without misstatements resulting from fraud or error. reasonableness of the management’s accounting estimates and their presentation. When preparing the financial statement, the Board of Directors and CEO are obliged to assess the ability of the parent • we form an opinion on whether it has been appropriate Cooperative Society and Group to continue its operation and for the Board of Directors and CEO to prepare the financial in relevant circumstances to disclose any matters affecting the statement on the basis of a going concern assumption, as well continuity of the business, and that the financial statements as making a decision based on the auditing evidence obtained

37 as to whether there is any material uncertainty related to OTHER REPORTING OBLIGATIONS events or circumstances that may give significant cause to Other information question the ability of the parent Cooperative Society or Group to continue its operations. If we conclude that there is The Board of Directors and CEO are responsible for all other material uncertainty, we are obliged in our Auditor's Report information. Other information includes the Annual Report. to draw the reader’s attention to the information presented Our opinion concerning the financial statement does not cover in the financial statements concerning uncertainty or, if any other information. the information concerning uncertainty is insufficient, to We are obliged to study the other information detailed above in modify our opinion. Our conclusions are based on auditing conjunction with the financial statement audit and concurrently evidence obtained up to the issue date of the auditor's report. make an assessment on whether the other information However, subsequent events of circumstances may result in materially contradicts the knowledge we have obtained from the parent Cooperative Society or Group being unable to the financial statement and while performing the audit, or continue its operations. whether it appears to be otherwise materially misstated. With • we evaluate the general presentation, structure and content regard to the management report, we are further obliged to of the financial statement, including all the information it assess whether it has been prepared in accordance with the contains, and whether the financial statement describes the relevant regulations. business activities and events on which it is based in such a It is our opinion that the information in the management report way as to provide a true and fair view. and financial statement are consistent and that the manage- • we obtain the necessary amount of appropriate auditing ment report has been prepared in compliance with the relevant evidence from the financial information on Group entities regulations. or business activities to be able to provide an opinion of the In the event that the work we have carried out leads us to consolidated financial statement. We are responsible for the conclude that the information contained in the management management, oversight and performance of the audit. We report contains a material misstatement, we are obliged to issue are solely responsible for the audit opinion. a report on the matter. We have nothing to report in this respect. We communicate with the governing bodies on matters such as the planned extent and timing of the audit, as well as significant Other statements audit observations, including possible significant deficiencies We recommend that the financial statement and consolidated in internal control identified during the audit. financial statement be approved. We recommend that the members of the Supervisory Board, Board of Directors and CEO of the parent Cooperative Society be discharged from liability for the financial period audited by us.

Helsinki, 19 March 2018 PricewaterhouseCoopers Oy Authorised Public Accountants

Janne Rajalahti Authorised Public Accountant

38 STATEMENT OF THE SUPERVISORY BOARD

Having examined the Annual Report of Helsinki Cooperative Society Elanto for 2017 and the financial statements for the Group and parent Cooperative Society, auditor’s reports and the proposal of the Board of Directors on the disposal of retained earnings, the Supervisory Board issues the following statement to the Spring General Meeting of the Council of Representatives in accordance with Section 17 of the Statutes of the Cooperative:

The Supervisory Board proposes that the Financial Statement and Consolidated Financial Statement are endorsed.

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

Helsinki, 5 April 2018

Jorma Bergholm Saimi Lehtimäki Chairman, Supervisory Board Secretary, Supervisory Board

39 GOVERNANCE

COUNCIL OF REPRESENTATIVES The Committee of Chairpersons of the Supervisory Board The Helsinki Cooperative Society Elanto Council of comprised Managing Director Jorma Bergholm (Chairman), Representatives applies the powers of decision resting with Member of Parliament Ben Zyskowicz (First Vice Chairman) the owners in matters assigned to it under the legislation and and Member of Parliament Kari Uotila (Second Vice Chairman). Statutes. The Council of Representatives holds two statutory meetings a year. BOARD OF DIRECTORS, CEO AND AUDITORS The Board of Directors is responsible for the governance of the At the Spring meeting on 25 April 2017, the Council of Cooperative Society and the appropriate organisation of its Representatives endorsed the 2016 Financial Statement and operations. The Board of Directors conducts the Cooperative the Consolidated Financial Statement, as well as deciding Society affairs in accordance with the legislation, regulations, on distributing the retained earnings shown on the balance and the decisions of the Council of Representatives and sheet and the granting of discharges for the members of the Supervisory Board. The Board of Directors decides on the Board of Directors, Supervisory Board and CEO. The Council of Cooperative Society’s strategies and financial targets, prepares Representatives also selected the members of the appointments the Financial Statement and Consolidated Financial Statement, committee and discussed the responses of the Board of Directors and makes a proposal on the measures necessitated by the to proposals. retained earnings according to the balance sheet.

At the Autumn Meeting on 28 November 2017, the Council of In 2017, the Board of Directors of Helsinki Cooperative Society Representatives selected the members of the Supervisory Board Elanto met 12 times. The Board of Directors was comprised 2018–2020 to replace the five members who had completed of Matti Niemi, CEO, Kauppaneuvos (Chairman); Tuula Entelä, their terms of service, decided on the remuneration of the LL.M., B.Sc. (Econ. & Bus. Admin.), (Vice Chairman); Professor Council of Representatives and Supervisory Board, as well as Jaakko Aspara; Professor Markku Kuisma, Pekka Laaksonen, M.Sc. the Auditor's fee structure 2018, in addition to discussing the (Econ. and Bus. Admin.), Sallamaari Muhonen, Communications responses of the Board of Directors to proposals. Consultant, and Markku Uitto, Managing Director.

SUPERVISORY BOARD The CEO of Helsinki Cooperative Society Elanto up to 31 The task of the Supervisory Board is to oversee the governance December 2017 was Matti Niemi, Kauppaneuvos, M.Sc. (Econ. of the Cooperative Society, the execution of which is the and Bus. Admin.) From the beginning of 2018, the post of CEO responsibility of the Board of Directors and CEO. The is held by Veli-Matti Liimatainen, M.Sc. (Econ. and Bus. Admin.) Supervisory Board approves the key strategies and financial objectives of the Cooperative Society, as well as appointing the The auditors for the financial year 2017 were the public CEO and electing the members of the Board of Directors of the accounting company PricewaterhouseCoopers Oy, with Janne Cooperative Society and the representatives for the meetings Rajalahti, Authorised Public Accountant, acting as audit leader. In of the SOK Corporation. Helsinki Cooperative Society Elanto’s 2018, the public accounting company PricewaterhouseCoopers Supervisory Board comprises 18 members. The Supervisory Oy continues as the auditor. Board met seven times in 2017.

40 HOK-ELANTO’S GOVERNING BODIES

COUNCIL OF REPRESENTATIVES 2016–2020

Abdulla Zahra, Midwife, Helsinki Laaninen Timo, Journalist, Helsinki Alanko-Kahiluoto Outi, Member of Parliament, Helsinki Larmo Jussi, Service Manager, Kerava Alén Sini, Nursery School Teacher, Vantaa Laukkanen Antero, Member of Parliament, Espoo Anttila Maija, Nursing Instructor, Helsinki Laurikainen Samuli, Organic Farmer, Helsinki Arajärvi Pentti, Professor, Helsinki Luhtanen Leena, M.Soc.Sc., Espoo Asko-Seljavaara Sirpa, Professor, Helsinki Månsson Björn, Journalist, Helsinki Bogomoloff Harry, M.Soc.Sc., Helsinki Niemi Marika, Lecturer in Business Studies, Espoo Bryggare Arto, B.Sc. (Econ. and Bus. Admin.), Helsinki Niikko Mika, Member of Parliament, Vantaa Ebeling Mika, Pastor, Helsinki Norrena Vaula, Small Entrepreneur, Vantaa Eklund Tarja, Bakery worker, Vantaa Nurminen Jukka, B.Sc.HCM, Helsinki Finne-Elonen Laura, Specialist Physician, Helsinki Paavolainen Sara, Actress, Helsinki Haatainen Tuula, Member of Parliament, Helsinki Pelkonen Jaana, Member of Parliament, Helsinki Hakanen Yrjö, Freelancer, Helsinki Peltokorpi Terhi, Secretary, Culture and Social Policy, Helsinki Hakola Juha, Chief Inspector, Helsinki Prusti Riitta, Pensioner, Helsinki Harakka Timo, Member of Parliament, Helsinki Puhakka Sirpa, Editor, Helsinki Hiltunen Rakel, Kaupunkineuvos, Helsinki Rantanen Mari, Emergency Nurse, Helsinki Juvonen Arja, Member of Parliament, Espoo Reinikainen Pekka, Doctor, Helsinki Järvinen Jukka, Addiction Counsellor, Helsinki Rihtniemi Suvi, Managing Director, Helsinki Kaikkonen Antti, Member of Parliament, Tuusula Rinne Merike, Pensioner, Vantaa Kanerva Seppo, Commodore, General Staff, Helsinki Rydman Wille, Member of Parliament, Helsinki Karttunen Pasi, Chief Shop Steward, Hyvinkää Saksala Harri, LL.M., Helsinki Kauma Pia, M.Sc. (Econ. and Bus. Admin.), Espoo Sarkomaa Sari, Member of Parliament, Helsinki Kiljunen Kimmo, D.Soc.Sc., Vantaa Suonperä Kaarina, Kamarineuvos, Vantaa Kinnunen Marjo, Team Leader, Helsinki Särkijärvi Jouni, Architect, Espoo Koivulaakso Dan, M.Soc.Sc., Helsinki Söderman Jacob, Licentiate in Laws, Helsinki Kokkonen Paula, LL.M., Helsinki Tuomioja Erkki, Member of Parliament, Helsinki Krohn Irina, M.A. (Theatre and Drama), Helsinki Uotila Kari, Member of Parliament, Espoo Kuusisto Merja, Specialist Nurse, Tuusula Vahasalo Raija, School Principal, Kirkkonummi Kähärä Sirkka-Liisa, Nurse, Vantaa Vepsä Sinikka, Community Nurse, Helsinki Könkkölä Kalle, Executive Director, Helsinki Värmälä Johanna, Registered Nurse, Espoo

41 SUPERVISORY BOARD 2017 Kuusniemi Piia, Chief Shop Steward, Riihimäki, Bergholm Jorma, Managing Director, Helsinki, Chairman Staff Representative Alén Sini, Nursery School Teacher, Vantaa Kähärä Sirkka-Liisa, Nurse, Vantaa Bryggare Arto, B.Sc. (Econ. and Bus. Admin.), Helsinki Laitinen Reija, Supermarket Manager, Helsinki, Hakola Juha, Chief Inspector, Helsinki Staff Representative Harakka Timo, Member of Parliament, Helsinki Månsson Björn, Journalist, Helsinki Huhta Seppo, Journalist, Espoo Niemi Marika, Lecturer in Business Studies, Espoo Kauma Pia, M.Sc. (Econ. and Bus. Admin.), Espoo Puura Heli, LL.M., Helsinki Kiljunen Kimmo, D.Soc.Sc., Vantaa Saukkonen Lea, Development Manager, Helsinki Krohn Irina, M.A. (Theatre and Drama), Helsinki Uotila Kari, Member of Parliament, Espoo, 2. Vice Chairman Kuusisto Merja, Specialist Nurse, Tuusula Zyskowicz Ben, Member of Parliament, Helsinki, 1. Kuusniemi Piia, Chief Shop Steward, Riihimäki, Staff Vice Chairman Representative Kähärä Sirkka-Liisa, Nurse, Vantaa BOARD OF DIRECTORS 2017 Laitinen Reija, Supermarket Manager, Helsinki, Staff Niemi Matti, Commercial Counsellor, CEO, Hyvinkää, Chairman Representative Entelä Tuula, LL.M., B.Sc. (Econ. & Bus. Admin.), Espoo, Månsson Björn, Journalist, Helsinki Vice Chairman Puura Heli, LL.M., Helsinki Aspara Jaakko, Professor, Helsinki Saukkonen Lea, Development Manager, Helsinki Kuisma Markku, Professor, Helsinki Uotila Kari, Member of Parliament, Espoo, 2. Vice Chairman Laaksonen Pekka, M.Sc. (Econ. and Bus. Admin.), Helsinki Zyskowicz Ben, Member of Parliament, Helsinki, Muhonen Sallamaari, Communications Consultant, Helsinki 1. Vice Chairman Uitto Markku, Managing Director, Espoo

SUPERVISORY BOARD 2018 BOARD OF DIRECTORS 2018 Bergholm Jorma, Managing Director, Helsinki, Chairman Veli-Matti Liimatainen, M.Sc. (Econ. and Bus. Admin.), Espoo, Alén Sini, Nursery School Teacher, Vantaa Chairman Bryggare Arto, B.Sc. (Econ. and Bus. Admin.), Helsinki Entelä Tuula, LL.M., B.Sc. (Econ. & Bus. Admin.), Espoo, Vice Hakola Juha, Chief Inspector, Helsinki Chairman Harakka Timo, Member of Parliament, Helsinki Aspara Jaakko, Professor, Helsinki Huhta Seppo, Journalist, Espoo Keronen Taru, CEO, Järvenpää Kiljunen Kimmo, D.Soc.Sc., Vantaa Laaksonen Pekka, M.Sc. (Econ. and Bus. Admin.), Helsinki Krohn Irina, M.A. (Theatre and Drama), Helsinki Muhonen Sallamaari, Communications Consultant, Helsinki Kuusisto Merja, Specialist Nurse, Tuusula Uitto Markku, Managing Director, Espoo

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Editing and graphic design: HOK Elanto, Communications and Zeeland Family Printed at Next Print, 2018

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