SUOMEN OSUUSKAUPPOJEN KESKUSKUNTA SOK CORPORATION

Transcription

1 SUOMEN OSUUSKAUPPOJEN KESKUSKUNTA SOK CORPORATION 2000 ANNUAL REPORT

2 CONTENTS Liber mundi (2000), by Timo Sarpaneva. Ässäkeskus head office building, 8th floor lobby. 3 Purpose of the S Group...4 CEO s Review...5 SOK Corporation in brief...6 Financial Statements for the year 2000 Report of the Executive Board...7 Consolidated Income Statement...10 Consolidated Balance Sheet...11 Consolidated Cash Flow Statement...12 SOK Income Statement...14 SOK Balance Sheet...15 SOK Cash Flow Statement...16 Accounting Principles...17 Notes to the Consolidated and SOK Income Statement and Balance Sheet...20 Key ratios and their method of calculation...34 Proposal of the Executive Board concerning the use of SOK s profit for the year...35 Auditors Report...36 Statement of the Supervisory Board...36 Field Division...38 Specialty Stores Division...41 Hotel and Restaurant Division...44 Administrative Division...46 Corporate Development and Planning...49 Human Resources and Communications...51 SOK Corporation s personnel in Associated Companies...54 The S Group...55 The S Group and the environment...56 SOK Supervisory Board...60 Executive Board...61 Supervisory system...62 SOK Organisation 1 Jan Description of the S Group...64 S Group Key Figures...65 Statistics...66

3 PURPOSE OF THE S GROUP 4 THE PURPOSE OF THE S GROUP IS TO PROVIDE SERVICES AND BENEFITS FOR COMMITTED CUSTOMER- OWNERS. The S Group consists of the cooperative societies and SOK with their subsidiaries. The SOK Corporation consists of SOK and its subsidiaries. As a central organisation for the S Group, it is the SOK Corporation s mission to promote and improve the operations of the cooperative societies and other member organisations of the S Group, to manage and supervise the Group to ensure efficient use of its overall resources, and to supervise the operations and protect the interests of the S Group and its different units. SUOMEN OSUUSKAUPPOJEN KESKUSKUNTA (SOK) Established 1904

4 CEO S REVIEW The basic conditions for the retail sector in 2000 were still good. The overall production in Finland continued to grow as estimated, on a strong level of 5.7 per cent. The export industry continued to grow forcibly, reaching a growth of 26 per cent. At the same time, Finland ran trade and current account deficits. The overall retail sales grew by 5.7 per cent but the development of commerce varied between business groups. The indicator that measures the consumer confidence in the future fell during the year, but rose to 12 points in November-December. A noteworthy fact is that consumers continued to believe in the good status of their personal finances, but were not convinced of favourable economic development. The indicator, measuring consumers intention to spend on durable goods at the time of the survey, fell considerably during the year. Although the stock market does not affect consumer behaviour in Finland to the same extent as in the USA, the fluctuating and falling share prices have had some effect on the behaviour of Finnish consumers. The retail sales of the S Group in 2000 amounted to FIM 36.2 billion. This means a growth of 6.5 per cent from the previous year, which is 0.8 per cent more than the growth rate of retail sales in the entire country. The S Group grocery sales reached 6.8 per cent growth. When the overall development in the country was approximately 3 per cent, our market share rose to 28.9 per cent. Net sales of the SOK Corporation were FIM 16.4 billion, showing an increase of 8 per cent. The combined result of the S Group before extraordinary items showed a profit of FIM 1,200 million, that is, FIM 100 million higher than the year before. The profit of the SOK Corporation was FIM 323 million. In competition between various bonus systems, the S Group succeeded well with the bonus system developed for customer-owners. The Bonus sales grew 19 per cent and the amount of the customer-owners accumulated bonus was FIM 489 million, showing an increase of FIM 97 million in comparison with the previous year. The year 2001 began well from the viewpoint of commerce. Despite the economic insecurities in the USA and Japan, and the dispirited stock markets, commerce was satisfactory, except for car and some other durable goods sales. Economic prospects are showing a more modest growth rate than last year, but the figures are still at a satisfactory level. The declining rate of inflation and interest combined with moderate income policies and tax reliefs are expected to ensure that the real spending power of households will rise to a level of 5.5 per cent. Unless consumer confidence is disturbed by the price of oil or other factors, commerce should face another year of growth. The S Group will continue to develop its operation by enriching the idea of partnership with the customer-owners, suppliers and other interest groups. I would like to express my warmest thanks to our customer-owners for their confidence in the S Group. I would also like to thank our administration for excellent cooperation. The personnel of cooperative societies and the SOK Corporation deserve a warm thank for their good performance and for their successful efforts to the benefit of our customer-owners. I also wish you all the best for work in Helsinki 14 March 2001 Jere Lahti 5

5 SOK CORPORATION IN BRIEF Net turnover, FIM million Operating profit, FIM million Profit before extraordinary items, FIM million Investments, FIM million Total assets, FIM million Return on investment % Equity ratio % Personnel

6 REPORT OF THE EXECUTIVE BOARD The trading environment Finland s economy continued to grow during the year According to the preliminary data of Statistics Finland, GDP growth reached approximately 5.5 per cent. During the past year, the sectors showing the strongest increase in production were the metal industry (22 per cent) and the electronics and electrical industry (38 per cent). These industries are largely behind the strong growth in exports. The annual total production growth will exceed 5 per cent. The growth rate of consumer spending remained at a high level. During the period from January to September, the statistics show a growth of volume of 4.5 per cent. The growth in durable goods was very strong at the beginning of the year but slowed down towards the end of the year; the growth during the period January - September reached about seven per cent. The number of cars registered decreased 1.1 per cent during the year Semidurable goods showed a growth of over 5.5 per cent, and spending on non-durable goods (groceries, fuel, and energy) grew by 2.6 per cent. According to the preliminary data, the increase in the consumption of services was 2.5 per cent. Consumer confidence strengthened during the latter half of the year after a slight fall in the autumn. The development of prices was very unstable during As the price of oil rose strongly, the rate of inflation increased but towards the year-end, the price of oil started to decrease. The average increase in consumer prices amounted to 3.4 per cent. Foodstuffs and non-alcoholic beverages increased slightly over one per cent. In the commodities group, the rate of inflation was mainly accelerated by the cost of living (+5.4 per cent) and traffic (+5.8 per cent). Retail sales rose by an annual 5.5 per cent. One per cent of the growth can be accounted for the rise in prices but 4.5 per cent of it is due to the increase in volume. Department store volume grew approximately 5.5 per cent by the end of November and the sales of groceries by 3.8 per cent. The sales of licensed bars and restaurants increased by approximately 6 per cent in Hotel accommodation sales increased by four per cent on the basis of the number of rooms booked. Owing to the growth in the supply of accommodation, the room occupancy rate remained at approximately 50 per cent. Changes in the structure of the Corporation The operation of the Sokos Hotel Kimmel was transferred to the Hotel Joensuun Kimmel Oy, which was co-founded by North Karelia Cooperative Society and Sokos Hotels. Sokos Hotels owns a 33 per cent share. Thus, the new company is an associated company of SOK. The real estate company Joensuun Kimmel sold the land and building of the Sokos Hotel Kimmel at the beginning of February. At the same time, a long lease was agreed with the buyer. At the beginning of April, the whole share capital of the real estate subsidiary in Kajaani was sold to the Cooperative Society Maakunta that carries on business on the premises. Respectively, at the beginning of February, the shares of the associated real estate company in Hämeenlinna were sold to the Cooperative Society Hämeenmaa that practices grocery trade in the building. In Tampere, the whole share capital of the real estate subsidiary was sold to the Cooperative Society Pirkanmaa that carries on business on the premises at the end of July. SOK sold the share capital of the Kiinteistö Oy Oulun Valtakulma to Cooperative Society Arina in October. At the beginning of June, SOK bought Foodbaltic Oy shares owned by co-op Schleswig-Holstein, which made Foodbaltic Oy a fully owned SOK subsidiary. The subsidiary of Foodbaltic Oy, Hansafood AS, opened a Prisma hypermarket in Tallinn in October. Foodbaltic Oy founded a chain management company Hansacoop Oü in co-operation with Eesti Tarbijateühistute Keskühistu (ETK, Estonian central firm for cooperative societies) for the benefit of the Prisma -markets. Sonera Plaza Oy became a shareholder in S-Kanava Oy with a 50 per cent share. S-Kanava Oy was a SOK subsidiary engaged in and developing consumer goods sales on the Internet. Royal Hotels Oy bought the business of the Rivoli Hotel Espoo at the beginning of October. In Raisio, the real estate company Kuloisten Kauppakeskus, equally owned by SOK and Turku Cooperative Society, was sold to the investment company Nordisk Renting Oy, from which both SOK and Turku Cooperative Society leased the space for their business. Two companies were founded with the Turku Cooperative Society in October, one for the managing and administration of the Shopping centre Mylly and the other for the possible future needs of the business. The share capital of the real estate company owning the former Anttila real estate in the city centre of Turku was bought for future development projects. At the end of the year, approximately twenty real estate subsidiaries were merged into the SOK or subsidiaries owned by SOK in order to simplify the structure of the real estate companies. At the end of the year, the Royal Hotels Oy was merged into the Sokos Hotels Oy in order to boost the hotel and restaurant business. At the same time, the name of the Sokos Hotels Oy was changed into Sokotel Oy. Jollas Opisto Oy was divided into two units; a training company and a company owning the real estate at the end of the year. During the year, there were some minor sales and purchases of shares and real estates. Changes after the period At the beginning of 2001, the business operations of Etelä- Suomen Huoltamot Oy were sold to Hämeenmaan Huoltamot Oy, a subsidiary of the Cooperative Society Hämeenmaa. According to the reorganisation programme of the Sokos business, the Sokos business operations were sold to the companies owned by SOK and the respective cooperative societies in Helsinki and Tapiola as well as in Tampere, Turku and Pori on 1 January The aforementioned companies are SOK owned by 90 per cent. Oy Sokos Ab will continue to operate in Kouvola and Oulu until its outlets are closed down in the spring In other towns, the businesses were sold to the respective cooperative societies on 1 January 2001 and in Seinäjoki and Lappeenranta in the autumn

7 8 Net turnover Net turnover of the SOK Corporation amounted to FIM 16,375 million, which showed an increase of 8.4 per cent in comparison with the previous year. Factors particularly contributing to the growth of net turnover were the invoicing of goods delivered to the chain units directly from industry (EDI) and the good sales development of the Hankkija Agriculture Ltd and Intrade Partners Oy, a supply company for consumer goods, and the car dealership. The favourable sales development was due to the car dealerships in Estonia and Latvia. SOK bought the majority holding in the dealerships at the end of The combined net turnover of agricultural and hardware stores increased by 7.1 per cent. The sales of Agrimarkets grew by eight per cent, whereas the overall market of agricultural equipment in Finland grew approximately 5 per cent. Therefore, Hankkija Agriculture Ltd reached better results than the general trend in the sector suggested. The sales of seed and working machinery decreased from the previous year, fertiliser sales were at the same level as last year, and the sales of heavy machinery, fodder, grain and hardware trade increased. The net turnover of the companies operating in the hotel and restaurant business were at the previous year s level. Comparatively however, the growth in net sales amounted to 5.4 per cent, when the growth of the overall market was approximately 4 per cent. Profitability remained high and the operating profit of the companies was clearly better than last year. The growth in the occupancy of hotel rooms reached the industry average and the level of the previous year. The growth in the utilisation rate of the SOK hotel companies exceeded the national average. The number of the hotels remained the same when the Sokos Hotel Kimmel was sold to the company co-owned by North Karelia Cooperative Society and Sokos Hotels Oy, and a new hotel unit was acquired in Espoo. It will be opened as a new unit of the Radisson SAS chain at the beginning of Net turnover in the corporation s car business grew by 21.9 per cent. The market share of Peugeot, imported by Oy Maan Auto Ab, remained at the level of the previous year, at 5.6 per cent and the market share of Peugeot commercial vehicles grew from 5.5 per cent to 6.2 per cent. The strong demand for Peugeot cars in the European market resulted in a limited supply, which in turn restricted sales. The factors contributing to the growth in net sales were the car dealerships in Estonia and Latvia. Their business started in the SOK Corporation at the end of the year 1999 and their turnover during 2000 amounted to FIM 181 million. Net turnover of the SOK Corporation s Sokos Department Stores and special shops for clothing were slightly reduced from the previous year. Net sales of Oy Sokos Ab diminished by 0.6 per cent, a lower figure than the national average in the industry. The development of clothing sales in Finland was weaker than expected. Net turnover of the SOK Corporation s consumer goods sourcing grew by 10.8 per cent. The strong growth was supported by the expansion of the Prisma chain and its success in commodity sales. Result The surplus of the SOK Corporation before extraordinary items was FIM 323 million. In the previous year, the corresponding result was FIM 292 million. The result includes other income from business operations, a proportion of the result of associated companies, value adjustments of fixed assets and investments, as well as their reversal and the change in obligatory provisions. Return on invested capital amounted to 9.2 per cent (8.9 per cent the year before). The largest item in income from other business operations was the sale of the Joensuun Kimmel Hotel and real estate, which generated a FIM 67 million profit. Other relatively significant sources of income were the sales of the Sokos real estate in Oulu to the Cooperative Society Arina and the Sarankulma real estate in Tampere to the Pirkanmaa Cooperative Society. Personnel costs remained at the level of the previous year, which resulted from the sale of the business operations of Hämeenlinnan Automarket Oy in October Value adjustments of fixed assets included machinery and equipment and other long term assets. The item includes the reversals of the depreciations of previous years. The decrease in rents is mostly due to the increase in obligatory provisions during the previous year and to their use during the accounting period. The difference between interest and other financing expenses and interest and other income was FIM 24.8 million smaller than in the previous year, which was the result of the reduction of net indebtedness and the control of the interest rate, as well as of the reversal of the value adjustment of the subordinated loan given to the Cooperative Society Hämeenmaa. In financing income and expenses, value adjustments of investments in fixed assets amounted to FIM 3.7 million, whereas the corresponding amount in the previous year was FIM 1.9 million. Due to the negative development of HOT Hometechnics Ltd, an obligatory reserve of FIM 14 million for extraordinary items has been made in preparation for the possible reorganisations in the future. The combined result of business groups was better than anticipated and also better than the year before. The result of agricultural and hardware sales achieved the anticipated level, but remained lower than the year before. The result in the hotel and restaurant business operations achieved the anticipated level and was better than the year before. The result in the car sales business achieved the anticipated level but remained at the last year s level. The result of the business operations of Sokos showed a loss but was better than the year before The result of the real estate operations was better than anticipated and also better than the year before. Operations of SOK SOK is the parent association of the SOK Corporation. According to its regulations as the central association of the S Group, its function is to promote and develop the activities of cooperative societies and other associations belonging to the S Group, to manage and supervise the efficient use of the Group s overall resources, and to monitor the activities and the interests of the S Group and its different units. The business operations of SOK consist of the provision of chain management, customer-owner and marketing services and other unit and Group services for the companies belonging to the S Group. Services with relevance to other S Group business operations include supply services, rental services, and the product category and invoicing services for goods delivered directly from industry to the chain units. Through its nation-wide subsidiaries, SOK diversifies the selection of services available for the customer-owners. In order to enhance the Sokos business operations, a restructing programme was launched in the spring The programme consisted of sharpening the business content, developing chain management and procurement services, and business sales to regional cooperative societies and to the companies co-owned by SOK and cooperative societies. The

8 programme was carried out according to plan and the sharpened chain management and procurement service operation was launched in co-operation with the Inex Partners Oy in autumn. The business sales were realised mainly on 1 January The operational requirements of the e-commerce company S-Kanava Oy were boosted by entering into co-operation with Sonera Corporation. At the same time, S-Kanava Oy became an equally owned associated company of SOK and Sonera Plaza Oy. Net turnover of SOK was FIM 7,273 million showing an increase of 10.7 per cent in comparison with the previous year. Surplus before extraordinary items was FIM 59 million, whereas the year before the corresponding figure was FIM 37 million. Income from other business operations fell considerably while other business expenses dropped. The reduction in other business expenses was largely due to the increase in obligatory provisions during the previous year. Rental costs included in other business expenses mainly consist of rent for facilities rented for the SOK Corporation or other companies of the S Group. The decrease in SOK s rental costs is caused by the aforementioned increase in the obligatory provisions during the previous year. Investments and divestments Acquisitions included in the SOK Corporation s fixed assets, i.e. investments in fixed assets amounted to FIM 361 million. The major investment was the purchase of the business operation of the Rivoli Hotel in Espoo. The improvement in the operational requirements of the units has been in focus in the hotel and restaurant business group, where the Sokos Hotel Pasila was the most significant object. Other central investments included the acquisition of the former Anttila real estate in Turku, the expansion and renovation of the logistics centre located in Kilo, Espoo, and the expansion of Intrade Partners Oy logistics centre in Hakkila, and the investments required by the building of the new information system project. Other investments consisted of purchases of furniture, interior design and IT systems in different sectors. The sale of the SOK Corporation s fixed assets amounted to FIM 190 million. Major items included therein were the sale of the business operation and real estate of the Sokos Hotel Joensuun Kimmel for the total of FIM 109 million. Other sale of fixed assets has been described in chapter Changes in the structure of the Corporation. Financing Short-term interests within the Euro area rose significantly during the year. The rise in long-term interests, started last year, levelled and the decreased towards the end of the year. The net financing expenses of the SOK Corporation before the value adjustments of the fixed asset investments were FIM 31 million, which showed a decrease of FIM 8 million from the previous year. The cash flow before extraordinary items, according to the SOK Corporation s sources and application of funds, showed a surplus of FIM 165 million. The indebtedness of the Corporation continued to reduce during the financial year, which is reflected by the change of gearing from 49 to 36. At the end of the financial year, interest-bearing net liabilities amounted to FIM 864 million, which shows a decrease of FIM 177 million from the previous year. Liquid assets at the end of the year amounted to FIM 2,004 million. In addition, the Corporation had a reserve of FIM 1,129 million in unused long-term credit limits. Personnel The average number of permanent personnel during the financial year was 4,500. The number of personnel in the SOK Corporation at the end of 2000 was 5,062, of which 401 (7.9 per cent) were SOK s personnel and 4,661 (92.1 per cent) subsidiary employees. The number of personnel grew by 15 (0.3 per cents) from the previous year. Foodbaltic Oy, that started the Prisma business in Tallinn and transferred into a subsidiary of SOK, its subsidiary Hansafood AS and the newly founded restaurant subsidiary Foodcourt AS in Tallinn have influenced the increase in personnel. On the other hand, the number of personnel was reduced by the closures of the Sokos Hotel Raumanlinna in Rauma and the Sokos Hotel Vaakuna in Kokkola and the business transfer of the Sokos Hotel Kimmel from the SOK Corporation. Preparations for the introduction of the euro As the Year 2000 project of the SOK Corporation and the entire S Group ended, the S Group could concentrate on the introduction of the euro. Consumers will have euro-denominated banknotes and coins from the beginning of 2002 and during the transition period of two months the euro and the Finnish markka will be used side by side. Until the end of 2001, the accounting currency of the SOK Corporation and the cooperative societies will be the Finnish markka. Financing however, has been carried out in euro since 1 January 1999 and the financial administration has been capable of handling euro-denominated invoices, the amount of which has been low for the time being. The customer interfaces will be kept in markka form until the end of 2001, i.e. until the end of the period when retail operations are conducted in markka. Euro-prices have been visible to customers along with the markka prices since the spring This concerns the price tags in shelves, price stickers on products and in advertising. In addition, receipts include the total price in euro. In the spring 2000, the Board of Directors appointed the organisation for the euro project. At the same time, the principles of the euro transition for the S Group were outlined. The focus is on customers perspective and reliability. Prospects for the current year The positive operating conditions of the retail sector are estimated to continue during the year The spending power of households will grow owing to increases in salaries, income tax decisions, improvement in employment grow and the slowing rate of inflation. In addition, consumer confidence is expected to strengthen. Consumer prices are estimated to rise approximately 2 per cent during the year, which is considerably less than last year. Growth in retail sales is expected to reach 4.5 per cent, which would be at the same level as in the previous year. The operating result of the SOK Corporation is estimated to decrease compared to The restructuring of the Sokos business operations will have a positive impact on the operating result of the corporation but the combined result of the founded companies will be negative. The result of the hotel and restaurant sector is expected to fall due to the investments but car sales are expected to show improvement when the supply increases, whereas the result of agricultural sales are estimated to remain at the same level as in

9 CONSOLIDATED INCOME STATEMENT FIM million Ref Net turnover (1) Other operating income (2) Materials and services Raw materials and consumables (3) External services Staff costs Wages and salaries Social security costs (4) Depreciation and value adjustments (5) Other operating expenses Rents Other expenses (6) Share of associated companies profits (+/ ) Operating profit (1) Share of associated companies profits (+/-) Financial income and expenses (+/-) (8) Profit before extraordinary items Extraordinary items (+/-) (9) Profit before taxes Income taxes (+/-) (11) Minority interest (+/-) Profit for the financial year

10 CONSOLIDATED BALANCE SHEET ASSETS FIM million Ref FIXED ASSETS Intangible assets (12) Group goodwill (12) Tangible assets (12) Shares in associated companies (13) Other financial assets (13) CURRENT ASSETS Stocks (15) Long-term debtors (16) Deferred tax assets (17) Short-term debtors (18) Investments (19) Cash at bank and in hand LIABILITIES FIM million CAPITAL AND RESERVES (20) Cooperative capital Supplementary cooperative capital Revaluation reserve Legal reserve Supervisory Board s disposal fund Profit brought forward Profit for the financial year MINORITY INTEREST PROVISIONS (22) CREDITORS Capital loan (23) Long-term creditors (24) Deferred tax liability (25) Short-term creditors (26)

11 CONSOLIDATED CASH FLOW STATEMENT FIM million BUSINESS OPERATIONS Operating profit Adjustments to operating profit (1) Change in working capital (2) Cash flow from business operations before financing and taxes Interest paid and other financial expenses Interest received and other financial income Dividends received from business operations Direct taxes paid Cash flow from business operations INVESTMENTS Subsidiary shares purchased Acquisition of other fixed assets Subsidiary shares sold Sale of other fixed assets Change in other long-term investments Adjustment of items booked on accrual basis Liquid assets of subsidiaries sold and acquired Dividends received from investments Cash flow from investments FINANCING Increase in long-term creditors Decrease in long-term creditors Increase (+)/decrease (-) in short-term creditors Increase (-)/decrease (+) in short-term debtors Change in short-term investments Minority interest in group companies Increase in cooperative capital and supplementary cooperative capital Interest paid on the cooperative capital and supplementary cooperative capital Decrease in capital and reserves Cash flow from financing Increase (+)/decrease (-) in liquid funds Liquid funds at the beginning of the year Liquid funds at the end of the year Adjustments to operating profit (1) Gains (-) and losses (+) from the sale of fixed assets Depreciation and value adjustments Income and expenses which do not involve payment Change in working capital (2) Change in trade debtors Change in stocks Change in short-term interest-free creditors

12 SOK CORPORATION NET TURNOVER PROFIT BEFORE EXTRAORDINARY ITEMS RETURN ON INVESTMENT % PERSONNEL AT FIM million FIM million % OPERATING PROFIT NET INTEREST PAYABLE (% of net turnover) GROSS INVESTMENT IN FIXED ASSETS FIM million FIM million FIM million % 0.5 % 0.5 % % 0.2 % NET INTEREST-BEARING CREDITORS AT CAPITAL AND RESERVES* AT (Equity ratio, %) GEARING,% FIM million FIM million % % % % % * including minority interest and accumulated appropriations 1996

13 SOK INCOME STATEMENT FIM million Ref Net turnover (1) Other operating income (2) Materials and services Raw materials and consumables (3) External services Staff costs Wages and salaries Social security costs (4) Depreciation and value adjustments (5) Other operating expenses Rents Other expenses (6) Operating profit (loss) (1) Financial income and expenses (+/-) (8) Profit before extaordinary items Extraordinary items (+/-) (9) Profit before appropriations and taxes Appropriations (+/-) (10) Income taxes (+/-) (11) Profit for the financial year

14 SOK BALANCE SHEET ASSETS FIM million Ref FIXED ASSETS Intangible assets (12) Tangible assets (12) Financial assets (13) CURRENT ASSETS Stocks (15) Short-term debtors (18) Investments (19) Cash at bank and in hand LIABILITIES FIM million CAPITAL AND RESERVES (20) Cooperative capital Supplementary cooperative capital Legal reserve Supervisory Board s disposal fund Profit brought forward Profit for the financial year ACCUMULATED APPROPRIATIONS (21) PROVISIONS (22) CREDITORS Capital loan (23) Long-term creditors (24) Short-term creditors (26)

15 SOK CASH FLOW STATEMENT FIM million Ref BUSINESS OPERATIONS Operating profit Adjustments to operating profit (1) Change in working capital (2) Cash flow from business operations before financing and taxes Interest paid and other financial expenses Interest received and other financial income Dividends received from business operations Direct taxes paid Cash flow before extraordinary items Cash flow from the extraordinary items of business operations Cash flow from business operations INVESTMENTS Acquisition of fixed assets Sale of fixed assets Change in other long-term investments Adjustment of items booked on accrual basis Dividends received from investments Cash flow from investments FINANCING Increase in long-term creditors Decrease in long-term creditors Increase (+)/decrease (-) in short-term creditors Increase (-)/decrease (+) in short-term debtors Change in short-term investments Increase in cooperative capital and supplementary cooperative capital Interest paid on the cooperative capital and supplementary cooperative capital Decrease in capital and reserves Group contributions received Liquid funds from merger Cash flow from financing Increase (+)/decrease (-) in liquid funds Liquid funds at the beginning of the year Liquid funds at the end of the year Adjustments to operating surplus (1) Gains (-) and losses (+) from the sale of fixed assets Depreciation and value adjustments Income and expenses which do not involve payment Change in working capital (2) Change in trade debtors Change in stocks Change in short-term interest-free creditors

16 NOTES TO THE FINANCIAL STATEMENTS ACCOUNTING PRINCIPLES In accordance with SOK's rules and regulations, the name SOK Corporation is used for the SOK Group. The SOK Corporation consists of SOK (Suomen Osuuskauppojen Keskuskunta) and its subsidiaries. SOK's financial statements and consolidated financial statements have been prepared in accordance with the Finnish Accounting Act. The cash flow statement has been prepared in accordance with the general recommendation of the Finnish Accounting Standards Board, issued on 9 November 1999, applying the indirect form of cash flow statement. The cash flow statement data from the previous year have been rearranged into groups. Financial statements for the Parent Cooperative and all Finnish subsidiaries have been expressed in Finnish marks. Scope of the consolidated financial statements The consolidated financial statements cover the parent cooperative and all companies in which the parent cooperative held, either directly or through its subsidiaries, more than half of the voting rights at the end of the year. Four subsidiaries of the above-mentioned companies operate in Estonia and one in Latvia. The financial statements of associated companies (voting rights 20 50%) have been included in the consolidated financial statements. One of these associated companies operates in Estonia and one in Latvia. The consolidated financial statements do not include nine subsidiaries that were not engaged in business activities. Furthermore, eight housing companies, of which seven are governed by the State Housing Board regulations, have not been consolidated. The omission of these subsidiaries and associated companies has no relevant impact on the Group's result and shareholders' equity. Principles of consolidation The consolidated financial statements have been prepared by combining the Group companies' income statements and balance sheets and notes thereto. The financial statements of the Group companies cover the period from 1 January to 31 December Companies acquired or formed in the course of the financial year have been consolidated from the date of acquisition or formation. Subsidiaries or associated companies sold have been consolidated up to the date of sale. Intra-group holdings Intra-group holdings in subsidiaries have been eliminated using the acquisition cost method of accounting. Intra-group shareholding was eliminated by deducting the acquisition cost of shares as well as by deducting the amount equivalent to the holding of the Group from the subsidiaries' shareholders' equity. The shareholders' equity of the subsidiaries acquired after the beginning of the financial year 1998 also includes accelerated depreciation and voluntary provisions less deferred tax liability. Differences arising from eliminations, for the part that they have been caused by the differences between the current and book values of properties, have been allocated to the relevant fixed assets and the remaining part is shown as the Group goodwill in the balance sheet. The Group goodwill included in buildings has been depreciated in line with the depreciation plan for the building in question. Group goodwill is depreciated over a period of five years on a straight-line basis. Intra-group transactions and profit margins When preparing the consolidated financial statements, all intra-group income and expenses, distribution of profits, receivables and debts as well as non-realised profit margins from intra-group transactions have been eliminated. Minority interests Minority interest in the financial year's profit is shown as a separate item in the income statement. Minority interest in capital and reserves is also shown as a separate item in the consolidated balance sheet. Conversion differences Financial statements of foreign subsidiaries have been converted into Finnish marks at the average exchange rate of the Bank of Finland on the balance sheet date. Conversion differences arising from the elimination of shareholders' equity have been entered under profit brought forward in the consolidated balance sheet. Associated companies The equity method has been used to consolidate associated companies into the consolidated financial statements. The Group's share of the associated companies' profit for the financial year, which is proportional to the Group's holdings, adjusted with any depreciation of goodwill and dividends received, has been shown on the consolidated income statement after the operating profit. In turn, the result of associated companies serving the Group's actual business operations have been included in the operating profit. In the consolidated balance sheet, the Group's share of the net capital of an associated company accumulated after the acquisition, also inclusive of accumulated appropriations less deferred tax liability, has been added to the acquisition cost of associated companies and the Group's shareholders' equity. Intra-Group profit margins created in transactions between the Group companies and associated companies have been eliminated in proportion to each party's holdings. Margins were deducted from the Group's profit brought forward and the share acquisition cost of associated companies. Eliminated sales proceeds are recognised as income in keeping with depreciation. 17

17 18 Items denominated in foreign currencies and derivative contracts The business transactions denominated in foreign currencies have been entered at the exchange rate of the transaction date. Receivables and liabilities in foreign currencies outstanding on the balance sheet date have been converted into Finnish marks at the rate of the Bank of Finland on the date of the financial statements, and the translation differences have been entered as affecting income. Contracts signed for hedging purposes Currency forwards Interest gains and losses associated with currency forwards have been distributed over the contract period as interest income or expenses or adjustments thereto. Exchange rate differences of currency forwards signed for hedging purposes have been entered as affecting income or expense against the exchange rate difference arising from the hedged item in the course of the financial year during which the exchange rate difference of the hedged item was entered. The unrealised exchange rate gains or losses on future cash flows hedged with currency forwards after the balance sheet date have been entered in the balance sheet. Forward rate agreements and interest rate swaps The unrealised changes in the value of forward rate agreements have not been entered, and the realised changes of value have been distributed over the period of the agreement. The interests of interest rate swaps have been distributed over the contract period to adjust interest income or expense. Changes in the values of interest rate swaps used for hedging have not been entered. Share forwards The valuation profit for share forwards has been recognised as income in the amount of a loss charged as expense of the hedged item at most. Of negative changes of value, the share exceeding the non-registered valuation profit for the hedged item has been recorded. Interest rate, foreign currency, share and share index options Paid and received option premiums have been entered under advances received and paid. Premiums for interest rate options have been periodised over the contract period to adjust entered, hedged interests. Realised changes of value have been periodised over the contract period. Unrealised changes of value have not been entered. Exchange rate differences of foreign currency options have been entered as items affecting the result against the exchange rate difference caused by the hedged item in the course of the financial year during which the exchange rate difference of the hedged item was incurred. The maximum amount of valuation profit for share and share index options entered corresponds to the loss recorded for the hedged item. Of negative changes of value, the share exceeding the non-recorded valuation profit has been registered. Electricity derivatives The SOK Corporation evaluates the price risks of electricity for a two-year period. Electricity derivatives are mainly used for hedging from the price risks of electricity. The premiums of the electricity option contracts made for hedging purposes have been entered as advances paid and subsequently periodised over the contract period to adjust electricity purchases entered. Unrealised gains and losses from electricity options, forwards and futures have not been entered and the realised changes in value have been spread over the contract period. Derivative contracts for purposes other than hedging Derivative contracts are mainly made for hedging purposes. Derivative contracts other than those made for hedging purposes may only be made within the risk limits specified in the Corporation's risk management regulations approved by the Board of Directors of SOK. The negative changes in value of positions of derivative contracts made for purposes other than hedging outstanding on the date of the financial statements have been charged as expenses. Valuation profits for outstanding positions have only been recognised as income for an amount corresponding to the losses entered earlier for the contracts included in the position. Changes in the values of closed positions have been entered as affecting income on 31 December The current value of outstanding contracts made for purposes other than hedging on 31 December 2000 was FIM 0.3 million. Fixed assets and depreciation In the balance sheet, fixed assets have been valued at cost less accumulated planned depreciation. Furthermore, certain land areas and buildings include non-depreciated revaluations made in previous years. The revaluation reserve in the consolidated balance sheet is FIM 621 million. Planned depreciation was calculated in accordance with a depreciation plan drawn up in advance and on a straight-line basis from the original acquisition cost of fixed assets. Depreciation has been calculated from the beginning of the month after the asset was put into use. Depreciation periods, which are based on the expected useful life of the assets, are shown in Notes to the Income Statement under Depreciation. Stocks Stocks are entered in the balance sheet on the FIFO basis at the acquisition cost, or repurchase price, or probable selling price, whichever is the lowest. Investments Investments have been valued at the acquisition costs or at market price, whichever is the lowest.

18 Leasing Leasing payments are shown as rent expenses in the income statement. Future expenses and losses Future expenses and losses to which the company has committed to or that are likely to materialise are charged as expenses under the relevant expense item. In the balance sheet, these expenses and losses are included in provisions for liabilities and charges. Deferred taxes In the consolidated balance sheet, accumulated appropriations shown on individual financial statements have been divided into deferred tax liability, shareholders' equity, and minority interest. Any changes in these items are shown in the consolidated income statement. In the calculation of deferred tax liability, the depreciation not deducted in taxation has been taken into account as a reducing factor. Deferred tax assets arising from the Group companies' provisions for liabilities and charges and confirmed losses are shown only on the consolidated balance sheet, while the change in deferred tax assets is shown in the consolidated income statement. The deferred tax liabilities and assets arising from consolidation are included in the deferred tax liabilities and assets shown in the consolidated balance sheet, and any change therein is included in the change in deferred tax liabilities and assets shown in the consolidated income statement. In line with the prudence concept, the consolidated balance sheet shows the deferred tax liability in its entirety and deferred tax assets in the estimated and probable amount. The deferred tax liabilities and assets were calculated using the confirmed tax base for the next year, which is 29 per cent. Pension arrangements In addition to the statutory pension insurance scheme, the SOK Corporation and companies in the S Group have made voluntary pension arrangements with the Eläkekassa Elonvara pension fund. Additional pension insurance has been taken out for former members of the Elonvara pension fund who were employed by the SOK Corporation to secure their current and future retirement benefits compliant with the regulations of the pension fund. 19 MANAGEMENT OF FINANCIAL RISKS SOK's Finance unit is responsible for managing the SOK Corporation's financing and financial risks. The SOK Board of Directors has confirmed the SOK Corporation's regulations for financial policy, strategy, and the management of financial risks. These regulations define the principles for the management of financial risks and the maximum rates of financial risks. Furthermore, numerical targets have been set for the different sectors of financing in order to secure the adequacy, balance and affordability of financing under all circumstances. Liquidity risk The SOK Corporation aims at minimising liquidity and refinancing risks through a balance maturity distribution of loans and sufficient funding reserves. Sufficient liquidity is maintained with cash, credit accounts, liquid investments in the money market, and binding long-term credits. In accordance with its financial strategy, the SOK Corporation aims at maintaining the amount of its liquid funds and binding long-term credits not in use at the minimum level of 10 per cent of the balance sheet total of the SOK Corporation. The target set for the quick ratio is over 1, including long-term credits not in use. Liquid assets on 31 December 2000 amounted to FIM 2,003.7 million, and binding credits not in use were FIM 1,129.2, totalling 39.7 per cent of the balance sheet total. With attention to the above-mentioned credits, the quick ratio of 31 December 2000 was 1.1. Interest rate risk The SOK Corporation manages interest rate risks by distributing loans between fixed and variable instruments and by using interest rate derivatives. Of the SOK Corporation's anticipated net loans with variable interest rate, 100 per cent were hedged for the year 2001 on 31 December 2000, and the majority for the year 2002, using interest rate forwards, options and interest rate swaps. Foreign exchange risk The turnover of the SOK Corporation is generated almost exclusively in Finland. Commercial foreign exchange risks in the SOK Corporation are the responsibility of the unit closing the business deal. On 31 December 2000, the foreign exchange risks of the foreign exchange loans of the SOK Corporation and its Finnish subsidiaries were fully hedged with currency swaps. The extent of the foreign exchange risk related to the balance sheets of the Baltic subsidiaries is examined on the basis of the balance sheet source analysis. The foreign exchange risk is reduced primarily by financing the companies' operations in the same currency as they use and, second, by using derivatives. Credit risk The management of credit risks involved in commercial activity forms a part of the business units' ordinary activities. Investments and trade on derivatives may only be conducted with parties approved by the Board of Directors of SOK, within the limits approved by the Board of Directors.

19 NOTES TO THE ACCOUNTS FIM million SOK CORPORATION SOK NOTES CONCERNING THE INCOME STATEMENTS 1a. Net turnover by sector Agricultural and hardware trade Hotel and restaurant business Car trade Sokos department stores and special clothing shops Service stations and petrol business Grocery trade Consumer goods sourcing EDI invoicing Real estate and property leasing and other services Operations sold Eliminations Total Domestic business operations contstitute 98.5% of the turnover b. Operating profit by business area Agricultural and hardware trade Hotel and restaurant business Car trade Sokos department stores and special clothing shops Service stations and petrol business Grocery trade Consumer goods sourcing EDI invoicing Real estate and property leasing and other services Operations sold Other operating income + inter-group transactions Total 2. Other operating income Profits on sale of fixed assets Goodwill income Other operating income Total 3. Raw materials and consumables Purchases during the financial year Change in stocks (+/-) Total 4. Staff costs Wages and salaries Pension costs Other social security costs Total Informaton concerning the staff and members of the boards is contained under item

20 FIM million 5. Depreciation and value adjustments Depreciation according to plan Value adjustments of group goodwill intangible and tangible fixed assets Reserved value adjustments Total SOK CORPORATION SOK The itemised specifications of the change in depreciation and accelerated depreciation are included under fixed assets and accumulated appropriations in the balance sheet notes. Planned depreciation is calculated on a straight-line basis so as to write off the cost of fixed assets over their expected useful lives. Value adjustments have not been depreciated. Planned depreciation is as follows: Years Buildings Light constructions and building equipment Office and warehouse fixtures 10 Warehouse, servicing and processing machinery 7 Restaurant and hotel furnishings 5-10 Shop furnishings 5-7 Motor vehicles and computer hardware (other than PCs) 5 Goodwill 5 Other tangible and intangible assets as permitted by taxation laws The write-off period for the goodwill of Royal Hotels Oy (merged into Sokos Hotels Oy on 31 December 2000) is ten years as an exception to the regular 5-year write-off period. These goodwill arise from the business operations transactions conducted in order to created the Radisson SAS hotel brand and network, whose yield expectations extend to a period of ten years at least. 6. Other operating expenses Other operating expenses Losses on sale of fixed assets Total Rents are presented as a separate item in the income statement. 7. Increase(-)/decrease(+) in provisions for liabilities and charges Increase in rent expenses against empty business premises Decrease in rent expenses against empty business premises Increase in other future expenses and losses Decrese in other future expenses and losses Total 8. Financial income and expenses Dividend income from group companies Dividend income from participating interest companies Dividend income from others Total dividend income on financial assets Interest income on other financial assets From group companies From others Other interest and financial income From group companies From others Total interest and other financial income Value adjustments of financial assets Reversed value adjustments of fixed assets Interest and other financial expenses To group companies To others Total interest and other financial expenses Total financial income and expenses

21 FIM million 9. Extraordinary items Extraordinary income Group contribution received Merger profit Other Total Extraordinary expenses Merger loss Preparing for company restructuring Total Total extraordinary items 10. Appropriations Increase(-)/decrease(+) in accelerated depreciation 11. Income taxes Income taxes on ordinary operations for the year Income taxes on ordinary operations for the previous year Income taxes on extraordinary items Effect of consolidation Change in deferred tax liability/assets Total SOK CORPORATION SOK NOTES CONCERNING ASSETS IN THE BALANCE SHEET 12. SOK Corporation's intangible and tangible assets Intangible assets Acquisition cost at Increase Decrease Transfers Acquisition cost at Accumulated depreciation at Accumulated depreciation on decreases and transfers Depreciation for the financial year Value adjustments Accumulated depreciation at Intangible Goodwill Other Advance Total Group Group rights capitalised payments intangible goodwill reserve expenditure assets Accumulated income entries at Accumulated income entries for the financial year Accumulated inceome entries at Book value at Book value at

22 Tangible assets Acquisition cost at Increase Decrease Transfers Acquisition cost at Accumulated depreciation and value adjustments at Companies acquired Accumulated depreciation on decreases and transfers Depreciation for the financial year Value adjustments Reserved value adjustments Accumulated depreciation at Revaluations at Decrease Revaluations at Book value at Book value at Land and Buildings Machinery Other Advance Total water and and tangible payments and tangible constructions equipment assets construction assets in progress Share of machinery in the book value of machinery and equipment FIM 1.6 million (1999 FIM 1.3 million) 13. SOK Corporation's financial assets Acquisition cost at Increase Decrease Transfers Acquisition cost at Shares in Other Total participating shares and shares interest membercompanies ships Accumulated value adjustments at Value adjustments Reversed value adjustments Accumulated value adjustments at Book value at Book value at Undepreciated part of group goodwill due to associated companies Unentered part of group reserves due to associated companies FIM 4.2 million (1999 FIM 6.6 million) FIM 2.1 million (1999 FIM 2.0 million) Capital loan Debtors Capital loan Other Total other debtors from from deptors debtors financial participating participating from others from assets interest interest others companies companies Amount at Increase Decrease Transfers Amount at Accumulated value adjustments at Accumulated value adjustments on decreases and transfers Reversed value adjustments Accumulated value adjustments at Book value at Book value at Total financial assets of SOK Corporation Total financial assets of SOK Corporation

23 12. SOK's intangible and tangible assets Intangible assets Acquisition cost at Increase Decrease Transfers Acquisition cost at Accumulated depreciation at Accumulated depreciation on decreases and transfers Depreciation for the financial year Value adjustments Accumulated depreciation at Book value at Book value at Intangible Other Advance Total rights capitalised payments intangible expenditure assets Tangible assets Acquisition cost at Merged companies Increase Decrease Transfers Acquisition cost at Accumulated depreciation and value adjustments at Merged companies Accumulated depreciation on decreases and transfers Depreciation for the financial year Accumulated depreciation at Land and Buildings Machinery Other Advance Total water and and tangible payments and tangible constructions equipment assets construction assets in progress Book value at Book value at

24 13. SOK's financial assets Acquisition cost at Increase Decrease Transfers Acquisition cost at Accumulated value adjustments at Value adjustments Reversed value adjustments Accumulated value adjustments at Book value at Book value at Shares Shares in Other Total in group participating shares and shares companies interest membercompanies ships Amount at Increase Decrease Transfers Amount at Capital loan Debtors Capital loan Debtors Capital Other Total debtors from debtors from from loan debtors other from group participating participating debtors from financial group companies interest interest from others assets companies companies companies others Accumulated value adjustments at Accumulated value adjustments on decreases and transfers Reversed value adjustments Accumulated value adjustments at Book value at Book value at Total financial assets of SOK Total financial assets of SOK Liabilities to secure group companies loans FIM million

25 Companies owned by SOK Corporation and SOK Group companies Commercial AS Kommest Auto Group Automaa Oy Etelä-Suomen Huoltamot Oy Foodbaltic Oy Group Foodcourt AS Hankkija Agriculture Ltd Helsingin Sokos Oy Intrade Partners Oy Jollas-Opisto Oy Kuusinen Oy Oy Maan Auto Ab Oy Sokos Ab Porin Sokos Oy Rainex Yrityspalvelu Oy S-Etuluotto Oy SOK-Business Oy SOK-Takaus Oy Sokos Hotels Oy Tampereen Sokos Oy Tenco Oy Group Turun Sokos Oy Real estate companies (28 pcs) Real estate companies under stocks (16 pcs) Total group companies 65 pcs Participating interest companies Associated companies Agribalt Oy Group Asunto Oy Kauniaisten Kirkkomäki Elielin Pysäköinti Oy Hansacoop Oü Hotelli Joensuun Kimmel Oy Hotellipankki Oy HOT Hometechnics Ltd Inex Partners Group Kauppakeskus Mylly Oy Keskuskorttelin Huolto Oy Kiinteistö Oy Haunistenmäki Kiinteistö Oy Pysäköintiveturi Kiinteistö Oy Rytilahden Maja Kiinteistö Oy Tullintorni Kiinteistö Oy Turun Toripaikoitus Kiinteistö Oy Valkeakosken Liikekeskus Malmintorin Kiinteistö Oy Oy Realinvest Ab Group S-Kanava Oy Tullin Parkki Oy Associated companies under stocks (1 pcs) Total Associated companies 21 pcs Corporation's SOK's Registered share- voting shareoffice holding % rights % holding % Estonia Helsinki Lahti Helsinki Estonia Helsinki Helsinki Helsinki Helsinki Helsinki Helsinki Helsinki Pori Helsinki Helsinki Helsinki Helsinki Helsinki Tampere Helsinki Turku Helsinki Kauniainen Helsinki Estonia Joensuu Helsinki Helsinki Helsinki Turku Vaasa Raisio Tampere Helsinki Tampere Turku Valkeakoski Helsinki Helsinki Helsinki Tampere Other participating interest companies Cervuctum Oy Polar Kiinteistöt Oyj Helsinki Helsinki Other shares owned by the Parent company Sato-Yhtymä Oyj Helsinki

26 SOK CORPORATION SOK Stocks Goods Other stocks Advance payments Total Long-term debtors Trade debtors Other deptors Prepayments and accrued income Total long-term debtors 17. Deferred tax assets Temporary differences From consolidation Total The deferred tax assets due to temporary differences have been combined and are shown in the consolidated balance sheet, but not in the group company balance sheet. 18. Short-term debtors Trade debtors Amounts owed by group companies Trade debtors Loan receivables Prepayments and accrued income Total Amounts owed by participating interest companies Trade debtors Loan receivables Prepayments and accrued income Total Loan receivables Other debtors Prepayments and accrued income Total short-term debtors Specification of prepayments and accrued income Financial items Other Total prepayments and accrued income 19. Investments Other shares and memberships Other investments from group companies Money market investments Total

27 NOTES CONCERNING LIABILITIES IN THE BALANCE SHEETS 20. Capital and reserves Cooperative capital at 1.1. Increase Cooperative capital at Cooperative capital due will accrue in Supplementary cooperative capital at 1.1. Increase Supplementary cooperative capital at Revaluation reserve at 1.1. Decrease in connection with sale of fixed assets Revaluation reserve at SOK CORPORATION SOK The hotel and department store buildings subject to revaluation are located in the centres of Helsinki, Tampere, Turku, and Jyväskylä, and also include the logistics centre in Espoo. All the above-mentioned buildings have been rented for use that serves the operations of the Group or the S Group directly or indirectly. The revaluations have been conducted in order to adjust the book values of the said buildings, registered in the consolidated balance sheet, closer to the estimated probable surrender prices. 28 Legal reserve at 1.1. Increase Legal reserve at Supervisory Board s disposal fund at 1.1. Increase Decrease Supervisory Board s disposal fund at Profit brought forward at 1.1. Transfer to legal reserve Transfer to Supervisory Board s disposal fund Interest on cooperative capital and supplementary cooperative capital Conversion difference Profit brought forward at Profit for the financial year Total capital and reserves Distributable funds at Profit brought forward Profit for the financial year Share transferred to shareholders equity from the accrued appropriations Total 21. Accumulated appropriations Accelerated depreciation Intangible rights Other capitalised expenditure Buildings and constructions Machinery and equipment Other tangible assets Total 22. Provisions Rent expenses against empty business premises Other future expenses Total

28 SOK CORPORATION SOK Capital loan 1996 Debenture Loan Main loan terms: Nominal value FIM 120 million. Loan period 10 years. The date for redemption may be May 22nd, 2006, provided there remains full coverage for the restricted equity. In the event that the redemption conditions are not fulfilled, the period can be extended for a year at a time. SOK has the unilateral right to repay the loan with interest at the nominal value already after 7 years on the interest payment day, and even earlier provided there remains full coverage for the restricted equity. The bearer of the debenture has not the right to withdraw or demand that the debenture capital be redeemed before due. The interest for the first 10 interest periods is fixed at 9.75 %, after which time it is 5 percentage points above the 12 month Helibor rate. Interest may only be paid to the extent that payment does not exceed the amount of SOK s distributable profit on the unrestricted equity. Any interest remaining unpaid shall remain a charge against SOK s assets on which interest shall be paid. This interest is to be paid before payment of interest on cooperative capital or the distribution of the profit. The loan is unsecured. In the event of the possible liquidation or bankruptcy of SOK, debenture bearer claims have a lower priority than other SOK s obligations and equal priority with any other possible SOK capital loans. No claims based on the loan may be set off against any counter-claims. 24. Long-term creditors Bonds Loans from financial institutions Advances received Trade creditors Other long-term creditors Accruals and deferred income Total long-term creditors Long-term creditors which fall due longer than five years Capital loan Loans from financial institutions Other long-term creditors Total 25. Deferred tax liability Appropriations Temporary differences Included in group companies own balance sheets Total 26. Short-term creditors Bonds Loans from financial institutions Advances received Trade creditors Amounts owed to group companies Trade creditors Other short-term creditors Accruals and deferred income Total Amounts owed to participating interest companies Trade creditors Other short-term creditors Accruals and deferred income Total Other short-term creditors Accruals and deferred income Total short-term creditors

29 Bonds SOK s foreign floating rate notes 1997 Main loan terms: Nominal value USD 25 million ( USD 20 million) Date of withdrawal Loan period four years, bullet Early redemption at option of issuer Interest rate three month LIBOR The loan is unsecured SOK CORPORATION SOK Specification of accruals and deferred income Staff costs Financial items Other Total accruals and deferred income NOTES CONCERNING INCOME TAXES See 11 above. 30 NOTES CONCERNING THE STAFF AND BOARD MEMBERS 27 a. Average staff numbers by group Agricultural and hardware trade Hotels and restaurant business Car trade Sokos department stores and special clothing shops Service stations and petrol business Grocery trade Consumer goods sourcing Real estate and property leasing and other services Operations sold Total SOK Subsidiaries Total The average staff numbers are calculated on the basis of month-end averages. 27 b. Salaries and remunerations: CEO and members of the Executive Board Members of the Supervisory Board Management loans: Interest on loans is determined by the base rate of the Bank of Finland per cent. Sum loan repayments in Management persion liabilities: For those members of the Executive Board in the employ of SOK and for certain of the subsidiaries managing directors, the age of retirement is years.

30 SECURED ASSETS AND CONTINGENT LIABILITIES SOK CORPORATION SOK Contingent liabilities Pledges and contingent liabilities Loans secured by mortgages Loans from financial institutions Mortgages Total mortgages given as security Loans secured by pledges Loans from financial institutions Pledged installment agreements Other creditors Book value of pledged shares Total pledges given as security General security for liabilities Mortgages Other securities given: Pledges Securities given on behalf of group companies Pledges Guarantees Total Securities given on behalf of others liabilities Guarantees given on behalf of associated company s liabilities Guarantees given on behalf of cooperative society s liabilities Guarantees given on behalf of others liabilities Total Other contingent liabilities Installment liabilities Leasing liabilities: -To be paid the following year -To be paid in a year s time Total Repurchasing liabilities Rental liabilities: Rented business facilities used by the S Group are regularly secured with long-term contracts, for which the SOK Corporation bears rental liabilities. Other financial liabilities: The Group companies have stated their potential responsibility to return the value added tax provided by the Value Added Tax Act, Section 33, in their individual financial statements. The said responsibility of the Parent Cooperative in 2000 amounted to FIM 4.8 million.

31 SOK CORPORATION 32 Liability under derivative contracts, value of underlying assets FIM million Interest derivatives Forward rate agreements Interest options Purchased Written Interest rate swaps Currency forwards Forward rate agreements Electric forwards Forward rate agreements Electric swaps Electric options Purchased Liability under derivative contracts, market value Interest derivatives Forward rate agreements Interest options Purchased Written Interest rate swaps Currency forwards Forward rate agreements Electric forwards Forward rate agreements Electric swaps Electric options Purchased SOK Liability under derivative contracts, value of underlying assets Interest derivatives Forward rate agreements Interest options Purchased Written Interest rate swaps Currency forwards Forward rate agreements Electric forwards Forward rate agreements Electric swaps Electric options Purchased Of which value Of which value Value of of underlying Value of of underlying underlying instruments of underlying instruments of assets open agreements assets open agreements Of which Of which market value market value Market of open Market of open value agreements value agreements Of which value Of which value Value of of underlying Value of of underlying underlying instruments of underlying instruments of assets open agreements assets open agreements

32 Liability under derivative contracts, market value FIM million Interest derivatives Forward rate agreements Interest options Purchased Written Interest rate swaps Currency forwards Forward rate agreements Electric forwards Forward rate agreements Electric swaps Electric options Purchased Of which Of which market value market value Market of open Market of open value agreements value agreements In examining the overall risk status, a factor to be taken into account, in addition to the derivatives, is the position of the balance sheet items that should be hedged. The derivative contracts open at the end of the financial year have mainly been used to control the Group's currency, interest rate and price risks. Open interest rate swaps have a duration from one to eight years. Open interest and electricity option contracts fall due in one to two years. Other open derivative contracts have durations of less than one year. Principles used in calculating the current value: the current value of interest rate swaps has been estimated on the basis of the current value of future cash flows in determining current values of other derivative contracts the market values of the date of the financial statements have been used. 33

33 SOK CORPORATION KEY RATIOS Net Turnover Operating profit FIM million % of net turnover Profit/loss before extraordinary items FIM million % of net turnover Profit/loss before appropriations and taxes FIM million % of net turnover Return on equity, % Return on investment, % Equity ratio, % 1) Gross investment in fixed assets FIM million % of net turnover Gearing, % Personnel average for the year CALCULATION OF KEY RATIOS Return on equity, % = Profit/loss after financial items + value adjustments on financial assets income taxes x 100 Capital and reserves + minority interest (+ accumulated appropriations 1996), average Return on investment, % = Profit/loss after financial items + interest and other financial expenses + value adjustments on financial assets x 100 Total assets interest-free creditors provisions for liabilities and charges, average Interest-free creditors FIM million Equity ratio % = Capital and reserves + minority interest (+ accumulated appropriations 1996) x 100 Total assets - advances received 1) If the capital loan entered under creditors in the balance sheet is considered as comparable to capital and reserves, the equity ratio for 2000 was 32.5 %. Gross investment in fixed assets = Acquisition costs of subsidiary shares and other fixed assets Gearing, % = Interest-bearing creditors liquid funds x 100 Capital and reserves + minority interest (+ accumulated appropriations 1996) The average personnel for the year Calculated on the basis of the monthly averages.

34 PROPOSAL OF THE EXECUTIVE BOARD CONCERNING THE USE OF SOK S PROFIT FOR THE YEAR Surplus indicated in the income statement FIM 91,874, Surplus from the previous financial years FIM 1,667,346, Total FIM 1,759,221, The Executive Board proposes that the profit for the financial year of FIM 91,874, be used as follows: paid as interest on the supplementary cooperative capital FIM 3,349, distributed as 9 % interest on the cooperative participation share paid by the cooperative societies by the beginning of the financial year FIM 25,612, transferred to the supervisory board's disposal fund FIM 1,000, left in the profit account FIM 61,912, Should the cooperative meeting approve the above proposal, the SOK shareholders' equities will be as follows: Cooperative capital FIM 320,241, Supplementary cooperative capital FIM 55,000, Legal reserve FIM 70,000, Supervisory board's disposal fund FIM 1,787, Profit account FIM 1,729,259, Total FIM 2,176,287, Helsinki, 14 February 2001 Jere Lahti Jukka Salminen Arto Hiltunen Leo Laukkanen Kalle Lähdesmäki Reijo Lähteenmäki Jorma Niiniaho Jouko Vehmas

35 AUDIT REPORT To the members of Suomen Osuuskauppojen Keskuskunta SOK We have audited the accounting records, the financial statements, and the administration of Suomen Osuuskauppojen Keskuskunta SOK for the period of 1 January - 31 December The financial statement drafted by the Executive Board includes the income statement, balance sheet, cash flow statement, and notes to the financial statements both for the Corporation and the Cooperative. Based on our audit we submit a statement on the financial statement and administration. The audit has been conducted in accordance with sound auditing procedure. The accounting records as well as the accounting principles and the content and presentation of the financial statement have been examined to an extent sufficient to determine that there are no relevant errors or defects. In auditing the administration, we have examined the lawfulness of the activities of the Supervisory Board and the Members of the Executive board in accordance with the regulations provided by the Cooperative Societies Act. We express as our opinion that the financial statements have been prepared in accordance with the Finnish Accounting Act and other rules and regulations concerning the drafting of financial statements. The financial statements provide correct and sufficient information, as intended in the Accounting Act, on the results of the Corporation's and the Cooperative's activities and their financial standing. The financial statements and the consolidated financial statements may be approved and the Members of the Supervisory Board and the Executive Board can be discharged from liability for the period audited by us. The proposal made by the Executive Board on accumulated profit is in compliance with the Cooperative Societies Act and the Cooperative's Rules. Helsinki, 21 March Tapani Rotola-Pukkila Authorised Public Accountant Jorma Jäske Authorised Public Accountant Juhani Heiskanen Authorised Public Accountant STATEMENT BY THE SUPERVISORY BOARD In accordance with Item 2, Paragraph 1 in Section 18 of the Rules of Suomen Osuuskauppojen Keskuskunta SOK, the Supervisory Board has today examined the report of the Executive Board, the attached financial statement and consolidated financial statements as well as the proposal on the use of profit, and reviewed the auditors' report for the year in question and the Audit Committee's report for the Annual General Meeting of SOK. As it presents the Executive Board's report and the auditors' report, the Supervisory Board suggests that the financial statements and the consolidated financial statements be confirmed, and that the proposal on the profit for the financial year and shareholders' equity be approved. Eino Laaksonen s, Eino Tenhunen s, Simo Kutinlahti s, Matti Vanto s, Pentti Sevón s and Håkan Smeds s membership of the Supervisory Board will expire. The Supervisory Board members Kalle Lähdesmäki and Jouko Vehmas, whose membership will also expire, were elected members of SOK s Board of Directors as of 1 January A corresponding number of new members to be elected by the Annual General Meeting for a period of three years has been proposed to replace the members subject to membership expiration. In addition, Tauno Riekki has submitted his resignation from the Supervisory Board. Helsinki, 28 March 2001 SUOMEN OSUUSKAUPPOJEN KESKUSKUNTA on behalf of the Supervisory Board Kari Neilimo Chairman Markku Viljanen Secretary

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37 FIELD DIVISION Reijo Lähteenmäki 38 The Field Division is made up of four SOK subsidiaries: Hankkija Agriculture Ltd, Oy Maan Auto Ab, Automaa Oy and AS Kommest Auto. Other Field Division units include market chain management, ABC service-station chain management and automotive chain management. The Field Division is headed by Reijo Lähteenmäki (M. Soc. Sc.). The average national value of groceries trade has grown by 2.6 per cent. The S Group s grocery trade outperformed this development in 2000 with a sales increase of 6.8 per cent. Consequently, the Group increased its market share for the tenth consecutive year. The S Group s groceries trade is estimated to represent 28.9 per cent of the market; a slight increase from 27.8 per cent in the previous year. The total market for agricultural goods and products grew 3 per cent to approximately FIM 9.5 million. The S Group sales exceeded the growth and the Group maintained its position as the market leader in this field. The percentage of new passenger cars registered in Finland fell by roughly one per cent. There were 134,768 new passenger cars registered. The S Group s car business developed according to the market and the Group maintained its 10 per cent market share. Total consumption of petrol in Finland dropped by 3.5 per cent. Regardless of the decrease, the S Group s fuel business performed well. The Group s market share grew and is now 12.5 per cent. Hankkija Agriculture Ltd Hankkija Agriculture Ltd recorded a net turnover of FIM 3,568 million in 2000, which indicates a growth of 7.7 per cent. The growth was clearly better than the total market of agricultural goods. After several declining years, the total market for fertilisers grew slightly. The Hankkija Agriculture share of the total market was 52.1 per cent. The position in the market also strengthened in the pesticides business. The volumes in the feed market grew slightly. Despite the good grain crops, demand for feed, especially cattle feed, remained high. The market share in the Feed sales improved from the previous year. The good quality of the crop resulted in the lesser use of certified seed. In the declining seed market, Hankkija Agriculture s share of the total market remained at over 50 per cent. Hankkija Agriculture grain trade received a quality and environment certificate as the first in the field of seed and the only one in Finland. The company fortified its cooperation with Boreal Suomen Kasvinjalostus Oy by buying part of its share capital. The volume of the grain trade grew 42 per cent from the previous year. Although the price of grain fell because of the Agenda solution, the sales of the chain grew by 15 per cent. The national industry has long-standing agreements on grain delivery. The Agrimarket chain imports grain to nine countries, primarily in Europe and USA. The total tractor market grew by roughly 10 per cent and the number of new tractors registered was 5,125. The market share of the Agrimarket chain was 17.1 per cent. The share of John Deere increased and Massey Ferguson degreased slightly. The total annual sales of combine harvesters fell 20 per cent from the previous year, being 415 pieces. The chain s share of the total market of combine harvesters amounted to 63 per cent. Sale of agricultural machinery fell slightly, which corresponds to the development in the field. The sales of oil also fell but the high rise in crude oil prices increased sales by over 50 per cent. Spare parts sales remained at the previous years level. The Agrimis system, an ordering and maintenance information system intended for the use of contract mechanics in field conditions, was implemented in production at the end of the year. Sales of hardware supplies increased by 9 per cent over the previous year, whereas the growth of retail sales was 4.4 per cent. The hardware selections were diversified and the chain operation was tightened. The garden sales grew by 21 per cent, whereas the average growth in the sector was below 10 per cent. The sale of living growth materials and culture mediums succeeded especially well. The regular customer scheme was improved by renewing the accumulating principles of the Agribonus. The production and machinery acquisitions and the crop sales are combined and the Agribonus limit is FIM 30,000. In addition, spare parts and cattle equipment sales that previously accumulated the store bonus have been transferred into the Agribonus system. The company s Agribonus sales for regular customers amounted to FIM 1.6 billion, which represents 57.8 per cent of total sales. At the year-end, Hankkija Agriculture Ltd had 19,997 regular customers, 1,976 more than previous year. The total amount of Agribonus and store-purchase bonuses paid to customers was FIM 16.3 million.

38 The development project of the online Agrimarket chain resulted in an operational model of the online shop for the customers. Preparations for launching online shopping were started at the same time. The Agrimarkets of Oulainen, Sievi, Huittinen and Lammi were moved to new sites. Five outlets were refurbished to improve the chain image, functionality, and hardware selection and presentation. As the business operations of Oy Agrimarket Virkkala-Virkby Ab were taken over by Hankkija Agriculture Ltd., seven Agrimarkets and one grain establishment were added to the service network. The hardware and garden outlet of the Cooperative Society Koskiseutu was acquired by Hankkija Agriculture Ltd. in Muhos. The Agrimarket in Järvelä and Kuhmo were discontinued and the sales areas were added to the neighbouring units. The logistics of seed sales were improved by building new seed warehouses to the seed centres in Alastaro and Hyvinkää. The opening of the Agrimarket machine centre was held in Turku in November. The machine centre was built according to the chain s new guidelines on heavy machinery. The experience was positive in Turku, so the centralised sale of tractors, combine harvesters and special farming machinery was organised into eight machine centres starting in early The building of a new machine centre is beginning in Seinäjoki. In Oulu, space for the new machine centre was leased from the Agrimarket real estate. Other space measures were transferred for The Latvian subsidiary of Agribalt Oy, a company jointly owned by Hankkija Agriculture Ltd and Avena Oy, completed its first fiscal year in The company has one outlet in Jelgava. It reached its sales and turnover targets. According to the agreement made with Combitrans, the company responsible for managing the deliveries in Eastern and Northern Finland, it will concentrate on managing the deliveries from the March of At the end of the year, the South Ostrobothnia Cooperative Society transferred its delivery management operations into the Agrimarket logistics centre. After these measures, all the Agrimarket logistics operations are located in the logistics centre in Turku. The harmonisation of the communications and working technology and systems was strongly emphasised. Internet and facilities were upgraded to include all workstations in the field. The Intranet system Agritori was implemented to improve internal data communication and recording. When the South Ostrobothnia Cooperative Society was included in the Agrimarket chain IT systems, the chain reached full operational coverage of the information system. The extensive training and development programme aimed at the entire personnel continued and everyone received a personal training programme. Extensive product training was carried out among sales personnel. At the end of the year, Hankkija Agriculture Ltd employed 758 people, 43 more than a year earlier. In addition to the business outlets of Hankkija Agriculture Ltd, the Agrimarket chain included the South Ostrobothnia Cooperative Society, the Salo District Cooperative Society, the OSLA Cooperative Society and Kymenlaakso Agrimarket Oy. The chain maintained the market share of over 40 per cent of the total market. The chain has 143 Agrimarkets in total FIM million ± prev. year Net turnover Operating profit Oy Maan Auto Ab Oy Maan Auto Ab is a subsidiary of SOK engaged in the import and marketing of Peugeot cars, spare parts and accessories through its dealership network. At the year-end, there were 37 dealerships, five of which were owned by Automaa Oy, 16 by regional cooperative societies and 16 privately. A total of 7,601 new Peugeot passenger cars were registered, showing a decrease of one per cent. However, the market share of Peugeot passenger cars remained however at 5.6 per cent. Growth was curbed by the shortage of diesel-powered vehicles that continued the entire year. The sales of diesel powered cars increased by 20 per cent in the total market. The sales of Peugeot vans continued to develop favourably by four per cent when the total sales dropped by eight per cent. The number of new registrations was 808. The market share of vans grew from 5.5 per cent into 6.2 per cent. SOK entered into partnership with private Peugeot dealers at the end of the year. That secured the nation-wide supply of benefits for the customer-owners buying Peugeot cars and services FIM million ± prev. year Net turnover Operating profit Automaa Oy Automaa Oy is a SOK subsidiary involved in car retail trading and car servicing. The company has outlets in Helsinki, Espoo, Vantaa, Tampere and Turku. During the operational year, the company withdrew from Jyväskylä and Hämeenlinna operations. Refurbishment of the company s outlet in Espoo was completed in summer. The new premises in Vantaa were inaugurated on 1 November With the new premises, the operating possibilities of the used car sale and maintenance work 39

39 40 improved considerably. The number of used cars was decreased by 400 during the year. The bonus for customer-owners was in use in all company outlets. Customer-owners represented 75 percent of the private clientele who purchased new cars. The total market grew by 1.2 per cent in the Automaa operational area. The Automaa sales, however, grew 2.5 per cent. A total of 3,833 new Peugeot cars were sold and 5,611 used cars FIM million ± prev. year Net turnover Operating loss AS Kommest Auto AS Kommest Auto imports and sells Peugeot cars in Estonia. SOK has a holding of 90 per cent of the company. It has four dealerships in Estonia; two in Tallinn, one in Tartu and one in Pärnu. A new dealership was opened in Tallinn during the year. Net turnover in 2000 amounted to FIM 146 million, largely due to export sales. The company sold 2,111 Peugeots, 878 of which were exported, and held a 9 per cent market share. AS Lauva Auto AS Lauva Auto is a wholly-owned subsidiary of AS Kommest Auto in Latvia, which imports and sells Peugeot through a dealership in Riga. Net turnover in 2000 totalled FIM 37 million. The company sold 463 Peugeots in 2000 and its market share was 5.3 per cent. Foodbaltic Oy Foodbaltic Oy is a development company, fully-owned by SOK after it bought the 50 per cent holding of the co-op Schleswig-Holstein. The company s mission is to develop and practice market retail in the Baltic countries and in St. Petersburg. During the operational year, Foodbaltic Oy opened two Prisma hypermarkets in Tallinn. One of them is owned by the Foodbaltic Oy subsidiary Hansafood AS and the other by the ETK subsidiary Ramare AS. The Hansafood Prisma was opened in the shopping centre Sikupilli on 11 October 2000 and the Foodbaltic associated company Ramare s Prisma on 8 November In addition, Foodbaltic Oy has conducted studies of opportunities in the Baltic area. ABC chain management ABC chain management is the development unit of the S Group minimarket business and petrol sales. Its principal responsibilities include assisting the regional cooperative societies and managing business development operations. At the year-end, the cooperatives owned 230 service stations, seven more than in the previous year. There were 94 full service stations with minimarkets operating in conjunction with petrol stations and 136 other outlets, including unmanned service stations. ABC-minimarket and ABC-automated service stations are new brands of the S Group. The ABC network has expanded to cover 16 regional cooperative societies. The cooperative societies opened nine ABC minimarkets and 31 unmanned service stations during the year. This sector generated total sales of FIM 3,185 million, showing an increase of 20.3 per cent. The chain management operation concentrated on planning the ABC minimarkets and ABC automatic service stations according to the concept and operation guidance, expansion of the systems base in every unit, and site acquisition. The S Group fuel sales developed well. The market share in petrol sales grew to 12.5 per cent. The growth was especially due to the expansion of the ABC network and the concentration of the customer-owners petrol purchases on the S Group service stations. Automotive chain management The key task of this management unit is to control and co-ordinate the development programmes designed for the S Group s car trading business, and to participate in the implementation of these programmes together with the dealerships. The development focus points were the turnover and parameter figures of the industry, training of key persons, and the development of the systems and network services of the car dealership. Surveys about the systems concepts of the car dealerships and the realisation model of the network services as well as car financing were conducted in collaboration with the car dealerships during the year. In the latter part of the year, the mission of the car-dealer business management was to prepare the competition strategy of the S Group car dealership. In addition, the development of the customer processes was worked on, with the aim of creating a basis for importing customer thinking as a part of the S Group car dealership. At the end of the year, the S Group had 41 car dealerships, four less than in the previous year. The total car retail sales amounted to FIM 3,541 million, which shows a 3.4 per cent growth from the previous year. The number of new cars sold was 13,971 and used cars 22,740. The S Group market share was 10 per cent. The SOK Corporation and 14 regional cooperative societies, either directly or through their subsidiaries, are engaged in car dealing. Car dealerships represented 18 different makes at the year-end.

40 SPECIALITY STORES DIVISION Risto Mäkeläinen The Speciality Stores Division consists of SOK subsidiaries Oy Sokos Ab, Kuusinen Oy, Tenco Oy, Rainex Yrityspalvelu Oy and Intrade Partners Oy, as well as a market consumer goods management unit. The Division was headed by Mr Risto Mäkeläinen (M. Sc. Econ.). Consumer goods trading in Finland is estimated to have grown by 3 to 4 percent in The S Group s consumer goods sales increased by 7 per cent, and therefore the S Group s market share expanded significantly. Oy Sokos Ab Oy Sokos Ab is a department store company that had nine large-selection Sokos outlets and eight outlets with a narrower selection in The redirection of the Sokos business, started in previous year, was completed during Floating and fixed assets were transferred to the regional cooperative societies in Jyväskylä, Lahti, Kuopio, Joensuu, Hämeenlinna, Kajaani, Rauma and Salo through sales realised at the beginning of At the same time, the businesses of the department stores in Helsinki and Tapiola, as well as Turku, Tampere and Pori were transferred to the local companies founded by SOK and the local cooperative societies. The objective of these changes is to integrate the department stores closely with the local supply of convenience goods and marketing of the regional cooperative societies. During the year, the Sokos business was discontinued in Seinäjoki and Lappeenranta. In Seinäjoki, the regional cooperative society continues the speciality store operation and in Lappeenranta, an Emotion store started its operation. The first Emotion unit was launched as a joint venture of Sokos and the local cooperative society in Hamina at the beginning of the summer. The chain will expand during the next few years. The Sokos stores in Kouvola and Oulu will be terminated in the spring of The remaining Sokos units have entered into a chain agreement concerning the Sokos business. During the year, the Sokos operation has shifted its focus from product groups to product concepts. The objective of the product concept vision is to offer customers larger and more stimulating product entities. The common operating models of Oy Sokos Ab and its sourcing company Intrade Partners Oy were actively developed. The objective was to reach a cost-effective and integrated operational model, in which the buyers of the Intrade Partner Oy and the personnel in the selection management of Oy Sokos Ab were organised into teams that specialise in specific product concepts. The chain management unit was downsized significantly. Chain management and selection planning were transferred to SOK s Sokos chain management unit at the beginning of Oy Sokos Ab is responsible for some of the operations during the transfer period. At the end of the year, Oy Sokos Ab employed 1,205 personnel, while in 1999 it was 1,261. Net turnover was FIM 1,117 million, which showed a 0.7 per cent decrease from the previous year. The fall was mainly due to write-offs. Sales in the clothing sector grew but sales in living and leisure sectors decreased from the previous year. The redirection and reorganisation of Sokos Business is a notable operation that creates new visions for the development of the speciality businesses in the city centres. Due to the local grasp of marketing and the more effective cost structure, the Sokos chain has a better chance to succeed. The realisation of the structural changes incurred exceptional con-recurrent costs. In addition, the mild weather at the year-end did not favour clothes sales FIM million ± prev. year Net turnover Operating loss Intrade Partners Oy Intrade Partners Oy s business activities comprise the sourcing of home products, clothing and leisure goods for the S Group s chains. The largest clients were the Prisma and S Market chains, Sokos department stores and fashion stores, and the Agrimarket chain. Other client chains included the Sale and Alepa grocery store chains and the minimarkets at service stations and as a new client, HOT-Kodintekniikka. In addition, the company supplied store furnishings to the S Group s business units and hardware and garden products to Tradeka and Elanto. The internal operational models and processes, as well as those shared with the chains, were boosted during the year, and resources were reallocated to meet the needs of the client chains. The organisational structure was changed to respond to the business ideas of the chains and the organisation of 41

41 42 the selection management. The objective was to enhance the competitiveness of the client chains. Net turnover increased largely because of the expansion of home appliance sales in client chains and the good development of the Prisma hypermarket and Agrimarket chains and the investments in the Prisma chain. Thanks to increased volumes, Intrade Partners Oy was able to improve its cost-efficiency, which in turn enabled it to provide its clients with better terms of acquisition. The company performed as expected. At the year-end, it employed 252 people FIM million ± prev. year Net turnover Operating profit Kuusinen Oy Kuusinen Oy specialises in selling international brands of women s and men s fashions and footwear. The company had two outlets in Helsinki in 2000: a store selling men s fashions and footwear and a fashion store for women. The most significant events in 2000 were the refurbishment of the women s store in the spring and the refurbishment of the men s store in the summer. Other important operations were the downsizing of the floating assets, the decrease in the number of brands for sale and the launch of the private label line. Company s net turnover was FIM 47.2 million, which shows a decrease of 8 per cent due to the aforementioned investments. The number of employees was 48 at year-end. Tenco Oy Tenco Oy is a development company, wholly-owned by SOK, responsible for developing and carrying on department store business in the Baltic countries and in St. Petersburg, Russia. Tenco Oy s wholly-owned subsidiary, Tenco Eesti AS, practices department store business in the city centre of Tallinn. Its turnover was FIM 27.8 million. The new shopping centres erected in Tallinn changed the competitive situation and resulted in a 14 per cent decrease in the company s net turnover. Rainex Yrityspalvelu Oy Rainex Yrityspalvelu Oy is engaged in the wholesale of hardware and building supplies, and it is also a bulk-supplier of civil defence products, occupational health and safety goods, workwear and institutional catering products and textiles. The company has six sales offices across Finland, in Helsinki, Jyväskylä, Kuopio, Oulu, Tampere and Turku, and warehouses in Vantaa, Oulu and Turku. The hardware and building supplies business changed practically every month in The growth in sales during the first quarter reached 14.1 per cent but slackened significantly and was eventually 4.4 per cent. The prices of the building supplies rose approximately 3.2 per cent. The autumn and the beginning of the winter were favourable for building. Rainex Yrityspalvelu Oy invested in electronic commerce. At the year-end, we converted to the so-called E-invoicing that also includes the EDI -standby. The Internet homepages were founded and the invoicing of large volumes will be converted to the electronic format during A utility goods department was founded in the company on 15 December Its aim is to serve the existing customer groups with a larger selection and expand the customer structure. Rainex Yrityspalvelu Oy booked a net turnover of FIM million, an increase of 4 per cent, which was in line with the growth of the market. The number of personnel at year-end was 38. Market consumer goods management The task of the Market consumer goods management unit is the development and management of consumer goods sales in the Prisma, S Market and Sale outlets. The development of the Prisma chain continued; a new Prisma was opened in Nummela and two Prisma units in Tallinn. Moreover, new, larger Prisma outlets were opened in Halikko and Pori as substituting units. The consumer goods sales of the Market chains reached FIM 2,650 million, which shows a growth of 10 per cent. The consumer goods sales of the Prisma outlets was FIM 2,076 million, with the growth of 12.6 per cent. Measured by the sales in 2000, the Prisma chain grew into the largest consumer goods chain in Finland.

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43 HOTEL AND RESTAURANT DIVISION Juhani Järvenpää 44 The hotel and restaurant division consisted of the SOK subsidiaries Sokos Hotels Oy and Royal Hotels Oy and the SOK s restaurant chain management company Sokotel. Just after the New Year Sokos Hotels Oy and Royal Hotels Oy merged and the newly formed company was named Sokotel Oy. Sokotel Oy is a SOK s subsidiary, wholly-owned by SOK, and its business consists of the operation of 16 Sokos hotels and 6 Radisson SAS hotels. Despite the merger, the business chains remained separate and will operate with their successful profile in the future. The name of the SOK s restaurant chain guidance unit was renamed Ässäravintolat at the turn of the year. Mr Juhani Järvenpää (M. Sc. Econ.) was in charge of the hotel and restaurant business. The development of the sales in the hotel and restaurant field continued positive but the growth slackened however compared to the previous year. The sales of the S Group hotel and restaurant line grew 3.1 per cent from the previous year, which was near the average of the entire business. The occupancy rate of the S Group hotels, compared to the previous year, remained nearly the same, which was somewhat above 62 per cent. The hotel occupancy rate s national average remained the same as in the previous year, approximately 49 per cent. The Sokos Hotels chain Sokos Hotels chain is the largest and most recognised hotel chain in Finland and it offers professional service for business and conference clients and a wide variety of recreational opportunities for guests. The 36 modern hotels in the Sokos Hotels chain are located in 24 towns in central surroundings. Sokotel Oy, SOK s hotel and restaurant subsidiary own 16 of the hotels. The rest of the hotels in the Sokos Hotels chain are owned by the regional cooperatives. Hotels owned by SOK accounted for approximately 53 percent of the Sokos Hotels chain s total sales and approximately 47 percent of the total room capacity. Before the merger at the turn of the year, SOK s Sokos Hotels operated under a company named Sokos Hotels Oy. Various changes happened in the structure and units of the company during the accounting period. The company sold the business of the Sokos Hotel Kimmel to the Hotelli Joensuun Kimmel Oy, 67 per cent of whose shares are owned by North Karelia Cooperative Society and 33 per cent by Sokos Hotels Oy. Kiinteistö Oy Joensuun Kimmel, a real estate subsidiary owned by Sokos Hotels Oy, was merged into its parent company at the end of August The real estate company had sold its hotel estate to an outside investor at the beginning of the year. The company s 16 units that belong to the Sokos Hotels chain are located in Helsinki, Vantaa, Espoo, Lahti, Hämeenlinna, Tampere, Joensuu, Pori, Vaasa, and Rovaniemi. Sokos Hotels Oy exceeded their business objectives. The majority of the units succeeded markedly better than in last year but there were great differences in the development of the units and regions. The largest investment targets were the refurbishment of the rooms and conference and restaurant facilities in Sokos Hotel Pasila, rooms and restaurant renovations in Sokos Hotel Porin Vaakuna and smaller repairs in various units. One of the largest investments was also the subscription for shares in Hotelli Joensuun Kimmel Oy after the business of Sokos Hotel Kimmel was sold. The number of personnel of Sokos Hotels Oy was approximately 899 persons during the accounting period In the previous year the corresponding number was 1,168 persons. This decrease in the number of personnel could be mainly attributed to the structural arrangements carried out over the course of the year. Company s net turnover decreased 2.2 per cent during the accounting period and it was FIM 674 million. The changes in net turnover were mostly due to the changes made in 2000 and the structural changes made in They were the transfer of the Vaasa and Oulu units into the Radisson SAS chain in March - June 1999 and the termination of the Kokkola unit and the sale of the Sokos Hotel Raumanlinna at the end of the year. Sokos Hotels Oy 2000 FIM million ± prev. year Net turnover Operating profit 1) ) Operating profit includes FIM 43.5 million of internal profit from the sales of businesses. In 1999, the corresponding profits were FIM 88.5 million.

44 Radisson SAS chain Radisson SAS is a world-wide chain of first-class hotels that cater to business travellers and conference activities. At the moment, SOK has the exclusive right to conduct business activities under the Radisson SAS name in Finland. The Radisson SAS chain will run the operations for the time being under a management agreement, but SOK will then assume management of operations in accordance with a franchise agreement at the turn of the year Before the merger just after the New Year, Radisson SAS business in Finland was run by Royal Hotels Oy, a subsidiary wholly-owned by SOK. In 2000, the business of the company consisted of five Radisson SAS hotels, Radisson SAS Royal Hotel, Radisson SAS Hesperia Hotel and Radisson SAS Plaza Hotel in Helsinki, and Radisson SAS Royal Hotel Vaasa in Vaasa, and Radisson SAS Hotel Oulu in Oulu. The company bought the business of Hotel Rivoli in Espoo in the autumn. The Espoo unit was united with the Radisson SAS chain at the beginning of February Royal Hotels Oy did not meet all of its objectives but a positive development was significant compared to the previous year. The operation was concentrated on the continuing development of the services and operational efficiency in the units during the accounting period. In addition to the business sale in Espoo, the most significant investments were the renovations of the rooms in the Radisson SAS Royal Hotel Helsinki, the renovations of the night club in the Vaasa unit and the renovations of the restaurant in the Oulu unit. Royal Hotels Oy personnel consisted of approx. 544 persons in the accounting period The number was 419 in the previous year. Mostly the business divestments have influenced the average number of personnel. The net turnover of the Royal Hotels Oy grew 26.9 per cent during the accounting period and amounted to FIM 358 million. The growth in the net turnover was primarily due to the influence of the units purchased and opened in The unit in Espoo also increased net turnover at the end of the year. Royal Hotels Oy 2000 FIM million ± prev. year Net turnover Operating profit Restaurant chain management Ässäravintolat is a company in charge of the restaurant chain management in SOK s hotel and restaurant business. Its purpose is to develop business ideas for restaurants in the S Group chain, to prepare strategies for the chains, to devise development and networking plans together with a development team, to monitor the performance of the restaurant chains to ensure their profitability and competitiveness, and to maintain and improve the attraction of the brands. Ässäravintolat is also responsible for co-ordinating the training sessions and quality studies associated with the key elements of the brand, and for producing marketing material and guidelines as well as the content for Web services. Moreover, Ässäravintolat participates actively in the development of food and beverage products. Ässäravintolat participates in working groups that develop logistics solutions and information systems for the whole sector, contributes to the maintenance of the ROJ system and suggests ideas for bonuses offered to the restaurants customer-owners. At the end of the year, there were 116 restaurants in the S Group s restaurant chains. Rosso is the largest of the chains, and it has 41 restaurants in 34 towns. Other chains, recognised nationwide, are Fransmanni and Night-restaurant that operate in conjunction with the hotels, Amarillo, Sevilla and Memphis chains that are designed for food and social life, Corner pub - restaurants and Coffee House cafeterias. In addition to several renovations in restaurants, twelve new chain restaurants were opened during the year: Rosso in Kirkkonummi and Imatra, Corner in Helsinki, Kajaani and Mikkeli, Coffee House in Helsinki and Jyväskylä, Memphis in Jyväskylä and a Rosso Express in Seinäjoki. Rosso, Rosso Express and Coffee House were opened also in Tallinn, in the shopping centre Sikupilli. The sales of the chain restaurants were FIM 870 million. The profitability remained at a good level. The development unit of the hotel and restaurant group is responsible for the development of the business idea, food product and food production and for the strategic operations of the field. During the year, the emphasis was on the joint operations of the retail sales and restaurant business. The first Presso café was opened in Prisma in Joensuu in November. The convenience food concept was developed in cooperation with the shop field. The pilot unit will be opened at the beginning of The operational model of the food court was refined and the planning for the units to be launched in 2001was launched. The close cooperation with Hesburger remained active in addition to the concepts of the S Group. 45

45 ADMINISTRATIVE DIVISION Jukka Salminen 46 The SOK Corporation s Administrative Division was in charge of accounting, financing, field consulting, real estate management, logistics and information systems, legal affairs and administrative services. The head of division was Jukka Salminen, M. Sc. Econ. Accounting The Administrative Division was responsible for the financial control of the SOK Corporation as well as for the common principles and guidelines on financial control within the S Group in the fields of accounting, bookkeeping, financial statements and taxation, and for providing the necessary financial services to the Group. After the changes implemented in IT applications to ensure Y2K compliance in the information systems, the focus was shifted to the introduction of the Euro in Due to the great level of integration in the basic systems in financial administration and in the payment traffic systems, the overall planning for the change was started long before the euro s introduction. The financial guidance mapped the direction of the future development of the planning and monitoring systems, focusing on improving the common database of the systems. The Group accounting guided the implementation of the latest changes in accounting methods uniformly in the SOK Corporation and in the regional cooperative groups. In addition, the cooperation in guidance of tax issues increased from the previous year. The development of the financial operation processes was supported with a pilot project with one cooperative society. This project helped to identify the development missions of the process and to receive suggestions for procedures in systems development. The accounting and ledgers for the new companies (S- Kanava Oy, HOT-Kodintekniikka Oy) were launched as an addition to the service sector. The exploitation of the application entities provided for the regional cooperative societies was boosted and expanded. Finance The finance unit was centrally responsible for the financing of the SOK Corporation. Finance unit s corporate bank was responsible for the management of the liquidity of the SOK corporation as well as for the management of the interest-rate and currency risks according to the guidelines and limits set by the SOK Board of Directors. In connection with the risk management business, the corporate bank acted as a profit unit, exploiting the changes in the financial market. The company continued its operation in the electricity wholesale market during the year. It has purchased most of the electricity needed on the premises of the SOK Corporation and acted according to the guidelines on the risks management of electricity prices. SOK-Takaus Oy granted guarantees for cooperative societies and subsidiaries of SOK. The value of guarantees at the end of the year amounted to FIM 380 million. Guarantee liabilities remained at the previous year s level. Counter-security and funds at the end of the year amounted to FIM 488 million. S-Etuluotto Oy is a company specialised in management of the S Group s consumer loans. During the second year of its operation, the systems were stabilised and the services developed, taking into account the needs of the customer-owners, customers and the business chains of the S Group. The amount of outstanding credit at the end of the year was FIM 104 million, while at the end of 1999 it was FIM 95 million. Field consulting The main function of the field consulting unit is to control the financial position and operations of cooperative societies, providing guidance in taking necessary measures, to steer the development of cooperative societies regional and operational structures and to prepare investments in cooperation with the management of regional cooperative societies. In accordance with the accounting guidelines approved by the SOK Board of Directors, field consulting conducted continuous follow-up on the profitability and economic status of the cooperative societies. The financial position of the cooperative societies was defined in accordance with confirmed criteria. Field consulting supported the cooperative societies annual planning by providing an analysis of the operating environment and general planning consultation and budgetary guidelines. The reorganisation of business groups was completed in the business area of Cooperative Society Hämeenmaa. The business operations of the Etelä-Suomen Huoltamot Oy and the Sokos department stores were transferred to Cooperative Society Hämeenmaa through an acquisition carried out on 1 January 2001.

46 The number of local cooperative societies fell by one into 20, when the Cooperative Society Koskelonseutu merged into the Cooperative Society PeeÄssä. A regional structure report guiding the development of regional structures was prepared for the SOK Supervisory Board and the revision of the financial guidance principles and criteria began. Renewal of the model regulations for cooperative societies was started on the basis of the changes in the Cooperatives Act. Field consulting unit participated in the monitoring of the cooperative societies savings-fund activity, which was compliant with the guarantee circle agreements. The Board of Directors of a cooperative society is responsible for its savingsfund activities, and these activities are controlled by a savings-fund inspector. Member investments constitute the cooperative societies debt to its member investors. The primary responsibility for repayment of member investments lies with the cooperative society in question and all its assets. Furthermore, the cooperative societies have two separate guarantee circle agreements: one comprises 22 regional cooperative societies and the other 10 local cooperative societies involved in savings-fund activity. Savings-fund investments made in cooperative societies increased by FIM 387 million during the year, amounting to FIM 2,229 million at the end of the year. Real estate management The real estate management unit managed the Corporation s real estate, produced maintenance services, and was in charge of property development. Real estate investments amounted to FIM 104 million. Major investments included the ongoing construction of the Shopping centre Mylly. The largest refurbishment targets were the Vaakuna hotel in Vaasa, Päiväranta in Kuopio and the S Market in Kauniainen. The development of the Sokos block in Tampere continued and the first phase was completed during the financial year. The Hakkila logistics centre was expanded by m 2 to serve the consumer goods sales. The investment in the Kilo logistics centre was carried out in accordance with the three-year development programme. Construction of the parking facility owned by the associated company Eliel Pysäköinti Oy, located between the Sokos department store and the Helsinki railway station, was completed and the parking facility was opened. There is direct, underground access from the parking facility to the Sokos department store. Basic maintenance programmes for properties continued according to plan. The sales of real estate amounted to FIM 316 million. The largest pieces of property sold were the unfinished Shopping centre Mylly in Raisio and the Kimmel building in Joensuu, which was sold to Nordisk Renting Oy. The aforementioned buildings were rented for business use with long-term leases. The Sarankulma property (the former regional warehouse in Tampere), where an S Market operates, was sold to Pirkanmaa Cooperative society. The surface area of unoccupied premises amounted to 3,236 m 2 at the end of the year, showing a net decrease of 8,138 m 2 over the year. The utilisation rate of premises at the end of the year was 99 per cent. Net turnover from real estate operations amounted to FIM 627 million, of which FIM 497 million from the S Group. The operating profit was FIM 16 million higher than in the previous year. The Business Sites unit focused on the acquisition of new business locations, the development of existing locations, and the related consultation and construction services within the S Group. The main focus of services in 2000 was on the preparation, planning and implementation of projects in regional cooperative societies and in the large units of the SOK Corporation. In line with the strategy, the production of the user services and marketing for the regional cooperatives was started. The major demand was for the maintenance records and realtime energy monitoring of the properties. The real estate management unit also participated in several national development programmes and training for the real estate field. For finance and management services, the introduction of the Realisti-real estate software continued with the objective of standardising the real estate databases and software in the S Group. The real estate management continued to participate in the environmental building and real estate programme ProGresS, alongside with the pioneers of the field. The objective of the programme is to make the environmental issues a profitable part of the business by offering the abilities as competitive products and service concepts. The programme consists of the energy saving programme KRESS, and an annual environmental benchmarking that maps out the competence areas and secures the preparedness in comparison to the primary competitors. At the end of the year, a real estate environmental classification project was launched, and it will continue until the end of All these procedures support the objective of sustained development and continuous improvement that are in accordance with the S Group environmental policy. Logistics and information systems Priorities in information management development included the renewal of operations management systems and the utilisation of specific data. Other issues were the addition of EDI connections, ex- 47

47 48 pansion of electronic communication, preparations for Euro, improvements in data security, service capabilities and cost effectiveness of information management. The preparation for the Euro progressed according to the principles determined earlier. Practical working methods and target schedules were specified to secure that the preparations progress cost-effectively and on schedule. The new Intranet system that will be implemented early in 2001 was developed in the area of electronic communication and information management. The needs for improvement in the S Group information management service abilities were outlined with an extensive user satisfaction survey. It clearly revealed the users expectations and their visions of the strengths and development needs of the information management. The overall satisfaction was clearly above the average of the control group. The development actions will begin in The information security, operational reliability and economy of the S-Net information network were improved with several development programmes. The objective of these actions is to secure the continuous operation of the network in the face of longer service times of the retail field and the challenges in the network business. The challenges to information management from information technology and its applications as well as the changing operating environment of the retail field have been studied systematically. Planning work to create a logistics strategy for the S Group s convenience and consumer goods business continued with part projects. Legal affairs This unit is in charge of all of the SOK Corporation s legal affairs. Its activity focuses on various agreements related to business operations and their structure. The major assignments during the year were linked to the business arrangements of Sokos department stores and the agreements concerning the Prisma hypermarkets in Tallinn. Office of Free Competition received an application concerning price fixing and the regional structure of the S Group. The renewal of the Cooperatives Act continues. The model regulations for cooperative societies were prepared on the basis of the changes in legislation Administrative services The administrative services unit is in charge of producing centralised services for units operating in the Ässä centre. The activity covers the following service areas: office and leisure-facility rentals, safety, office furniture and equipment, switchboard, reception, the payroll department, mailing, copying services, working-hours control, access control, archives, cleaning services, personnel restaurants and business travel. After the completion of the office renovations in the Fleminginkatu 36 at the beginning of the year, the planning of the second phase of office renovations for the old office facilities was started. The building began in June and the facilities will be completed at the end of the year. The renovation covered approximately 5,300 m 2 and it was targeted at the facilities in Satamaradankatu 1, vacated by the Theatre Academy. SOK Corporation received approximately 3,500 m 2 of that space. All the furniture and facilities were renovated. Furthermore, the functionality of the Ässä centre was improved by constructing new meeting rooms. The developer was Polar Kiinteistöt Oyj, and the design of the activities and the interior was done by the administrative services unit. Security was addressed in particular. The security principles and security organisation were confirmed in June. Risk analyses were carried out in the units by using the risk analysis method and the security programmes were created. The programmes were launched.

48 CORPORATE DEVELOPMENT AND PLANNING Taavi Heikkilä 53 per cent of which were equipped with a direct charge facility and 30,000 of them with credit facility. The marketing unit is the S Group s in-house advertising agency. It designs and produces marketing material for the regional cooperative societies, the chains, the subsidiaries and the entire S Group, and makes extensive use of information technology and partnership networks to provide these services. More marketing services were provided than in the previous year. Major clients included the Prisma chain, the Sokos department store and fashion store chains, Sokos Hotels chain, Oy Maan Auto Ab and Automaa car dealership chains, ABC minimarket chain and the customer-owner services unit. Corporate development and planning operations cover services to customer-owners, marketing, strategic corporate planning, and business activities in the Baltic region and St. Petersburg. It also includes a unit in charge of cooperatives. The head of Corporate Development and Planning is Mr Taavi Heikkilä (M. Sc. Econ.). Services to customer-owners and marketing In cooperation with the regional cooperative societies and the chains, the customer-owner services unit aims to create a customer-owner service system that reflects the S Group s mission statement. This system covers membership administration, S-Benefit Card administration, savings-fund and bonus accounting and the relevant support services for cooperative societies, the production of marketing and other corporate material directed at customer-owners, teleservices for customer-owners, and marketing research services for the S Group. Every month, customer-owners receive a letter from the regional cooperative society s management along with a statement of their accumulated bonuses, an S-Account statement and the Yhteishyvä magazine. The package also contains information on the special product and service benefits currently offered to customer-owners. The supply of services and benefits for the customer-owners was expanded by launching a nation-wide Bonus-cooperation system with the interior decoration chain ASKO on 1 March At the year-end, the regional cooperative societies had 837,023 members, of which 103,382 were new customer-owners. Customer-owners continued to concentrate their purchases in the S Group s outlets and, consequently, sales that bring bonuses to customers picked up by 19 per cent from the previous year, totalling FIM 19.3 billion. The bonus repaid to customers as a reward for concentrating their purchases reached FIM 489 million. The number of S-Benefit Cards in circulation was roughly 1.9 million, approximately Strategic planning The renewal of the S Group s strategic process was launched during the year. The focus was on picturing the external operating environment and rather extensive scenario work. Changing trends in the European retail trade and their influence on competition were in focus in monitoring overall competition and operating environment. The Baltic Region project surveyed the suitability of various business ideas for complementing the customer needs in a competitive and profitable manner. Securing the profitable operation of the small units in cooperation with other companies was studied in particular. The first SOK s environmental policy statement containing significant data on the environmental acts made in 1999 was published in The environmental report supplies information to various interest groups. The report is also an important tool for communicating the environmental issues. Environmental reporting is a significant part of the open communication described in the S Group s environmental policy. Network Business SOK Network Business is a new unit, founded on 1 November Its mission is to develop and co-ordinate the network business operation of the S Group. The primary responsibilities of the unit are: the strategy of the S Group network business, the guidelines, development, content provision and maintenance of the S Group portal ( and co-ordination and concealment of the S Group network business. The unit shall also study the possibilities of exploiting the technologies that enable network use (i.e. digital television) as part of the multi-channel business of the S Group. The most important missions at the end of 2000 were the renewal of the S Group portal and the modernisation of the S Group network business strategy. The new improved S Channel was launched on March

49 50 The Baltic region and Russia This unit is in charge of the S Group s business activities and its associated companies and partnerships in the Baltic countries and Russia. The investment planning and business expansion directed in the Baltic region continued in SOK entered into a cooperation agreement and launched acquisitions, marketing and investments based on the Prisma business idea with ETK, an Estonian cooperative society. The Finnish Cooperative Union SOK s cooperation unit was responsible for the operation of the Finnish Cooperative Union. The Union has no clerical staff. The purpose of this Union is to promote the principles of cooperation in the everyday activities of the S Group, support the cooperative societies in their efforts to improve the efficiency of cooperative administration, and to boost in-house collaboration throughout the S Group. Both SOK and all S Group cooperative societies are members of the Union. The FCU Board of Directors was made up of the following members: Matti Vanto (Master of Laws), Chairman, (until 26 April), Marja Lehtiranta (Master of Laws), Vice Chairman and Pekka Havukainen (until 26 April), Jukka Huiskonen (Master of Laws), Chairman as of 26 April, Tytti Isohookana-Asunmaa (Member of Parliament), Pekka Kangasmäki (Managing Director), Pekka Kivimäki (Principal) (until 26 April), Ulla Kurvinen (Teacher), Kauko Mikkonen (Professor) as of 26 April, Otto Mikkonen (Managing Director) as of 26 April, Håkan Smeds (Managing Director) Heikki Taimi (Municipal Secretary), Juha Vuorenhela (Master of Laws) as of 26 April, as the representatives of the cooperative societies, and Jere Lahti and Tapio Peltola as representatives of SOK. The Board closely followed and participated in the amendment of the Cooperative Societies Act. In its meetings, the FCU Board of Directors discussed ways in which the S Group could benefit from the amendment. The revision of the cooperative societies regulations was prepared in the group appointed by the FCU Board of Directors. The FCU Board of Directors also participated in this project by giving statements and guiding the work. Training sessions directed at the entire administrative personnel of the S Group were arranged in cooperation with the Jollas Institute. Over the year, two national training sessions for the administrative personnel were held in Helsinki. In addition, several other training events and seminars were organised for individual cooperative societies and members of the Supervisory Board, Board of Directors and Council of Representatives. A total of 1,543 customer-owners took part in the administration of the regional cooperative societies, 80 of whom were members of the Board, 444 were members of the Supervisory Board and 1,019 were delegates in the Council of Representatives. There were nine council elections held during the year, in Cooperative Society KPO, Cooperative Society Maakunta, Cooperative Society PeeÄssä, Cooperative Society Suur-Savo, Cooperative Society Ympäristö, Pirkanmaa Cooperative Society, North Karelia Cooperative Society, Salo District Cooperative Society and Turku Cooperative Society. The cooperative department offered assistance to the cooperative societies in the execution of the elections and in the counting of the ballots. The average turnout was 33 per cent. Due to the activating operations, the turnover percentage rose significantly in many cooperative societies compared to the previous election. The highest percentage was in the election held in the North Karelia Cooperative Society, 52 per cent. All cooperative societies that held the election offered training to new members either during a meeting or as a separate event. As in previous years, the cooperative department offered assistance to cooperatives in matters associated with the amendment of rules and trade register entries. The department also attended a number of functions organised by the societies for administration and interest groups. The eighth S Group supervisors convention was held on 17 June 2000 in Helsinki, at the Finlandia House and in the Jollas Institute. Approximately 900 representatives of the societies as well as senior management of the SOK Corporation took part in the various events organised during the convention. International relations are managed through the Finnish Consumer Cooperative Union. The FCCU is a member of the International Cooperative Alliance (ICA) and of EURO COOP, a Brussels-based lobby organisation for consumer cooperatives. ICA has 236 member societies in 93 countries; the total number of ICA members is more than 730 million. EURO COOP members include the consumer cooperatives of 11 EU member states, and its associate members include the consumer cooperatives of four eastern Central European countries. EURO COOP acts as the representative for more than 3,200 cooperative societies and their 21 million members. EURO COOP is gaining increasing importance in Brussels, and therefore the Finnish Consumer Cooperative Union has decided to give EURO COOP activities a priority status. The number of elected officials in the regional cooperative societies of the S Group year 2000 (no committees) M F ALL Board of Directors Supervisory Board 1) Representatives 1) Total ) Incl. The clerical members (of the cooperative societies)

50 HUMAN RESOURCES AND COMMUNICATIONS Aino Toikka Human resources and communications include the personnel, training, occupational health services, S Publications and public relations units. Human resources and communications were led by Aino Toikka, MA. Personnel The Personnel unit was responsible for the centralised services and guidance concerning personnel resources and employment issues. Nine persons were recruited for the commercial field training group, which began in February, and 17 persons for the polytechnic group, which began in June, in co-operation with regional cooperative societies. Sokos Hotels restonome field training was launched in November, for which nine people were elected. The field training programs secure the successors of key personnel in the different business areas of the S Group. Salary increases were implemented on the basis of collective agreements in the retail, hotel and restaurant sectors. At the same time, a new pay schedule concerning all professions in the retail field was utilised. The basic pay was supplemented by applying and expanding the pay-by-results system and incentives separately in each unit. The objective of practising pay-by-result and incentive systems is to motivate the personnel to better performance and to reward them for results and for development of personal skills. Jollas Institute The Jollas Institute is the training and learning centre of the S Group. It is a special vocational institute for training the personnel of the cooperative societies within the S Group and the SOK Corporation. The focus of the operation is on training that supports the S group strategies. It is planned in cooperation with the field and chain guidance. The number of training days was over 32,000 in Jollas Institute offers training and coaching services to all chains and personnel groups. The operation focused on the frontline and managerial training based on the S Group strategies and the realisation of the fit-for-work 2000 programme. Over 16,000 S Group people took part in the fit-for-work 2000 during the year. The fit-for-work programme maintained and developed the physical, mental, social and professional working abilities. During the operational year, the training of the highest management of the S Group continued. New projects were the leadership development for the hotel and restaurant managers and the follow-up of the Leader training. Modern marketing and customer thinking stabilised as a part of the long training operations. Training programmes aimed at vocational qualifications have established their status in the Jollas Institute. Diplomaoriented training was provided for salespersons and car sales assistants and for supervisors in hotels, restaurants and central kitchens. In addition, tests were held for salespersons, food supervisors and sales supervisors. There are more than 400 apprenticeship students The international quality of activities was realised through practical training periods and study excursions abroad, she student connections were made closer and visiting lecturers were invited from foreign universities. Several excursions outside of Finland were arranged in co-operation with foreign universities and higher education institutions. Training in information technology has increased and the IT based distance learning has continued. The Jollas Institute started to develop the personnel training program based on network studying. The Jollas Institute operates in close contact with the S Group s regional cooperative societies and the SOK Corporation s units. The training programmes are mainly designed according to the needs of the customers, in co-operation with the commercial chains of the S Group The trainers come from the field for the duration of approximately five years, after which the trainers take other positions within the S Group. The trainers are experienced in their own field as well as in working as a superior. The pedagogic training is received in Jollas Institute. The training of the trainer, focusing on the training to keep up to date, as well as developing the training, are primary principles in the Jollas Institute. Occupational health services Occupational health services are aimed at promoting the personnel s well-being by means of e.g. regular meetings where health issues are discussed. These meetings help personnel to find personal resources in life, support the control of work and life, and map out the risks related to lifestyles and untreated illnesses with the aim of reducing them. Preventive rehabilitation programmes have been provided for different occupation groups. The Fit-for-work 2000 programme has been the focus of the operation. The occupational health care personnel has 51

51 52 participated in the training of the superiors and team leaders as well as in the realisation of the programmes in the units. Occupational health services unit also participates in developing health issues in the working environment and working communities. The activity also includes health care services provided by a general practitioner and focused on occupational health care. S Publications For 96 years, the Yhteishyvä magazine has been a link to the customers of the S Group. The circulation of the magazine has become the fourth largest in Finland and the third most read magazine. In 2000, twelve issues were published and the number of its pages, including supplements, was increased to an average 174 pages (19.2 per cent growth). The magazine s circulation, revised in the summer, was 805,351 annual sets (growth compared 1999 was 79,363 annual sets). By the end of the year, over 849,000 magazines had been published. A separate supplement on cooking was published in every issue. Six other supplements were published during the year, subjects were: living, garden, beauty and fashion and domestic appliances. The magazine was targeted regionally with changeable pages, additional covers and supplements. Samarbete, Yhteishyvä s Swedish-language sister magazine, has been published continuously for 91 years, and Matbladet, the Swedish version of the cooking supplement, is now published with the magazine. Samarbete s revised circulation in 2000 was 28,768 annual sets (27,238 in 1999). Both magazines were published in co-operation with Helsinki Media Special Magazines. Ässä, the professional magazine for the personnel of the S Group, entered its 86th year. The magazine was published in 11 issues and its articles dealt with issues such as changes in the operating environment of the S Group. S-viesti, the personnel magazine of the SOK Corporation, was published in 11 issues. Its special focus in 2000 was personnel policy in the SOK Corporation. S Publications was in charge of the content production of the S channel Internet service, which began in 1998, and participated in further developing the concept. Public relations The public relations unit was responsible for disseminating information on the activities of the SOK Corporation and the S Group to various interest groups. The company participated in the public discussion on events in the sector of commerce by providing information to the media. The annual report and the interim report of the SOK Corporation were published in Finnish, Swedish and English. Number of personnel The number of personnel in the SOK Corporation at the end of 2000 was 5,062 persons, of which SOK personnel constituted 401 (7.9 %) and employees in the subsidiaries 4,661 (92.1%) people. The number of employees increased by 15 people (0.3 %) from the previous year. The increase in the number of personnel resulted from new subsidiaries acquired during the year: Foodbaltic Oy, its subsidiary Hansafood AS and newly founded subsidiary Foodcourt AS. On the other hand, the number of personnel was reduced by the close-down of Sokos Hotel Raumanlinna in Rauma and Sokos Hotel Vaakuna in Kokkola and the transfer of the Sokos Hotel Kimmel to the North Karelia Cooperative Society. Number Percentage Change SOK CORPORATION Field Division Hotel and Restaurant Division Specialty Stores Division Administrative Division Units of the CEO Corporate Development and Planning Human resources and Communications SOK CORPORATION TOTAL SUBSIDIARIES SOK Employment relationships The majority (92.6 per cent) of the SOK Corporation s personnel was employed on a permanent basis per cent had a full-time job and 29.8 per cent were working part-time. In comparison with the previous year, the share of the permanent employment relationships grew approximately 2 per cent and full-time relationships increased about 3 per cent. Part-time employment relationships were most common in retail, hotel and restaurant operations, and service station stores and fuel sales. Gender distribution At the end of 2000, 38.7 per cent of the SOK Corporation s personnel were men and 61.3 per cent women. Proportionally, the largest number of women were working in retail; the largest number of men in car and farm machinery sales. Personnel by operation sectors The largest operation sector within the SOK Corporation consisted of employees. The majority of personnel in this sector, and in the group of clerical personnel, were women. Age structure The average age of the SOK Corporation s personnel in 2000 was 39 years. There were no significant gender-related differences in the age structure at the corporation level. Instead,

52 REVIEW OF THE SOK CORPORATION S PERSONNEL IN 2000 there were company-specific differences: the number of young people was largest in hotel and restaurant operations and in retail. Continuous development of expertise and wellbeing at work Fit-for-work 2000 programme is the largest and widest training programme in the S Group, whose objective is a more satisfied, motivated and abled personnel in the working community, where work is a pleasure. The important areas of the training programme are social, professional, physical and mental wellbeing at work. The training programme started with over 16,000 participants of the whole personnel of 22,000. In practice, all S Group personnel participated in the programme. Part of the SOK Corporation companies will launch the fit-for-work process in 2001 after the completion of other extensive training programmes. The fit-for-work process was launched in different regions of Finland with trainers training programmes led by Jollas Institute. 250 persons participated in these events. After the trainers training events, the teams chose the most important fitfor-work goals and set the development objectives. Although the focus has been on team programmes, large common meetings have enhanced the wellbeing at work in the S Group. The two-day fit-for-work competition gathered approximately 600 S group people from all parts of the country in Jyväskylä in October HENRY, the national personnel management group, awarded the S Group for the fit-for-work 2000 training as the personnel act of the year. The award was given for the first time and, naturally, the received sum will be invested into the development of the fit-for-work process. The jury and the judges explained their award by stating that the personnel s wellbeing at work has been approached from the viewpoint of the needs and basis of S Group s various working communities. The working communities have been supported with a wellmade programme that has created facilities for improvement in the wellbeing at work. During the operational year 2000, a personnel study was conducted in SOK, from which the will determine their development areas and set their levels of objective. Development of a lighter and more flexible benchmarking model of a good job on the S Group level begun alongside with the personnel study. A discussion about basic values started in the S Group in the operational year The objective of the thorough discussion about values is to obtain strategic support from the common values in the S Group. The realised applications made on the basis of these values will become strategic pillars of support that strengthen the competitiveness of the various organisations. The basic values will be widely used in the leadership processes and communication and training programmes. In addition to the fit-for-work 2000 programme, there were other focus areas in the internal training of the SOK Corporation in 2000: the development programme of the hotel and restaurant leadership, the training for operational processes and changes in the convenience goods sector. The car sales management training continued and the farm machinery sales accomplished training in various personnel groups. The diploma-oriented training was offered in convenience goods, car and farm machinery sales sectors. In 2000, Jollas Institute led 6,500 training days in the SOK Corporation. Training based on S Group strategies, continuance of the leadership training, the further development of the fit-forwork process and the expansion of the possibilities in network studying will be in focus in the operational year EMPLOYMENT RELATIONS IN SOK CORPORATION, JOB CLASSIFICATION GROUPS WITHIN THE SOK CORPORATION, AGE STRUCTURE OF SOK CORPORATION S PERSONNEL, (luvut eivät sisällä AS Kommest Auton ja AS Lauva Auton henkilöstöä) Temporary employees 7.4 % Permanent employees 92.6 % Part-time employees 29.8 % Senior salary earners 15.3 % Salary earners 16.2 % Directors and managers 4.8 % Store managers 3.7% Wage earners 60.0 % Full-time employees % -29 Age %

53 ASSOCIATED COMPANIES 54 Inex Group In 1999, the Inex Group consisted of the parent company Inex Partners Oy, owned equally by SOK and Tradeka, and its subsidiaries Meira Nova Oy, Meira Oy, and A-Muna Oy. Logistics related to frozen goods are conducted in co-operation with the associated company Finnfrost Oy. Inex Group has undertaken an extensive development programme during the past years. Projects are related to selections, acquisitions, logistics services, operating processes, information systems, and personnel. The development has boosted the capacity of the operation and thus provided added value and competition benefits to the client chains. The success of the client chains, the boost in Inex operations, and the positive economic tendency in Finland have enhanced the profitability of the operation. The Group s net sales amounted to FIM 9,063 million, showing an increase of 5 per cent over the previous year. The operational turnover was at the planned level and the financial position was better than planned. The Group s parent company, Inex Partners Oy, which produces services related to the selection, supply and logistics of special and convenience-goods stores, continued its favourable development. The company s net sales amounted to FIM 8,117 million, which constituted a growth of 6 per cent over the previous year. The Christmas sales were especially good. The increase in sales is still larger than the average. The competitive benefits and the position in the market strengthened with the growth. Inex Partners Oy s financial turnover reached the objectives. The net sales of Meira Nova Oy, a company providing services related to selection, supply and logistics in the HoReCa sector, decreased 4 per cent over the previous year and amounted to FIM 980 million. This was mainly due to the sales transfer into the year 1999, which was due to the Millennium-phenomenon, and to the structural changes in the sales and clientele. Meira Nova s share of the delivery wholesale trade in the HoReCa sector is approximately 30 per cent. The net sales of Meira Oy, operating in the coffee and spice industries, amounted to FIM 361 million, with a decrease by 3 per cent. This was mainly due to the sales transfer into the year 1999, which was due to the Millennium-phenomenon. The market share of the Meira coffee rose into nearly 27 per cent. The leading position of Meira spices among retail spice brands remained at 31 per cent. The net sales of Finnfrost Oy, an associated company producing acquisition and logistics services related to frozen goods, amounted to growth of 4 per cent, i.e. FIM 751 million. The number of personnel employed by the Inex Group was 1,980 at the year-end. HOT Hometechnics Ltd HOT Hometechnics Ltd was founded in It is co-owned equally by SOK and Ernst Brinkmann KG from Germany. The company commenced its operation by opening an outlet in Jyväskylä in June, in Espoo in September and in Vantaa in November. The launches have succeeded despite the problems in the operational guidance systems. The sales consist largely of purchases of the customer-owners. The owners considered the expansion and funding of the operation during the end of the year. In January 2001, it became evident that the Brinkmann KG has financial difficulties and they will apply for reorganisation. Therefore the plans for the new founding of the HOT Hometechnics Ltd have been stopped and the new situation will be estimated later. Net turnover of the company was FIM 59.9 million in 2000 and the number of personnel amounted to 106 at the end of the year. S-Kanava Oy S-Kanava Oy is a company that operates in retail sales on the Internet and develops the sales of the convenience goods on the Internet in co-operation with SOK. During the year, the company s ownership basis was expanded by directing an issue of shares to Sonera Plaza Oy, through which the ownership is equally divided between SOK and Sonera Plaza Oy. As the ownership basis changed, the development and maintenance work of the s-kanava.net portal, which previously were a part of the company s business, were transferred to SOK s network business unit. The Network shop, S-Kanavan Verkkokauppa, was opened with a narrow selection as a part of the s-kanava.net portal in September after the pilot phase. The selection was expanded with new product groups for Christmas, but the actual launch of the network shop, with a new name, outlook and wider selection will take place in spring Net turnover of the S-Kanava Oy amounted to FIM 0.6 million, and the operating profit was negative due to the costs of the launching and developing of a new business. The number of employees was 13 at the year-end.

54 THE S GROUP The S Group consists of the SOK Corporation and the cooperative societies with their subsidiaries. The S Group s retail sales amounted to FIM 36,167 million in 2000, showing an increase of 6.5 per cent over the previous year. Growth could be largely attributed to the favourable development of the Prisma retail chain and the minimarkets. The S Group booked a total profit before extraordinary items of FIM 1,200 million. Profit rose by FIM 100 million over the previous year and represents an all-time high for the Group. The S Group s gross investments totalled FIM 1,343 million. At the year-end, the S Group had 1,177 retail outlets; a decrease of 32 outlets over The most significant investments in the outlet network included the completion of Prisma hypermarkets in Halikko, Pori, Nummela and Tallinn. Significant Prisma expansions were made in Kajaani, Seinäjoki, Rauma, Varkaus, Imatra, Pietarsaari and Kuopio. New, large S Markets were opened in Lempäälä, Kokkola, Kouvola, Kristiinankaupunki and Ruoholahti in Helsinki. In addition, servicestation minimarkets were opened in Kuortti and Keljo. An Agrimarket Konekeskus was opened in Turku and in Espoo, the hotel Rivoli was acquired and added to the Radisson SAS chain. At the year-end, the S Group employed 21,879 personnel, showing an increase of 604. The cooperative societies The number of cooperative societies was 43. There were 23 regional societies operating in line with the S Group s strategy and 20 local societies. The latter decreased by one when the Cooperative Society Koskelonseutu merged with the Cooperative Society PeeÄssä. The cooperative societies and their subsidiaries generated total sales worth FIM 28,481 million, an increase of 7.1 per cent. The regional societies accounted for 97.8 per cent of the total sales. The cooperative societies reported a profit before extraordinary items of FIM 876 million, up by FIM 70 million over the previous year. All regional cooperative societies booked a profit. The total investments of the cooperative societies were FIM 1,109 million, approximately the same as last year. Deposits made by customer-owners in the savings funds of the cooperative societies amounted to FIM 2,229 million at the end of the year. Deposits grew by FIM 387 million. The number of customer-owners in the regional cooperative societies rose by 90,840 and totalled 837,023 at the yearend. Local societies included, the cooperative societies had a total of 854,043 members. Bonus purchases by the customer-owners amounted to FIM 19.3 billion; an increase of 19 per cent. Bonuses repaid to customers by the cooperative societies and the SOK Corporation increased by FIM 97 million (25 per cent) and amounted to FIM 489 million. The number of personnel employed by the cooperative societies and their subsidiaries was 16,817 at the year-end, showing an increase of 589 over the previous year. Regional Cooperative Societies of the S Group Cooperative Society Varuboden, Kirkkonummi South Karelia Cooperative Society, Lappeenranta South Ostrobothnia Cooperative Society, Seinäjoki Helsinki Cooperative Society HOK, Helsinki Cooperative Society Jukola, Nurmes Koillismaa Cooperative Society, Kuusamo Cooperative Society Arina, Oulu Cooperative Society Hämeenmaa, Lahti Cooperative Society Keskimaa, Jyväskylä Cooperative Society Keula, Rauma Cooperative Society KPO, Kokkola Cooperative Society Maakunta, Kajaani Cooperative Society Osla, Porvoo Cooperative Society PeeÄssä, Kuopio Cooperative Society Seutu, Lohja Cooperative Society Suur-Savo, Mikkeli Cooperative Society Ympyrä, Hamina Cooperative Society Ympäristö, Kouvola Pirkanmaa Cooperative Society, Tampere North Karelia Cooperative Society, Joensuu Salo District Cooperative Society, Salo Satakunta Cooperative Society, Pori Turku Cooperative Society, Turku 55 S GROUP RETAIL TRADE BY BRANCH 2000, Total FIM 36.2 Billion S GROUP RETAIL SALES BY CHAIN 2000 FIM million Service stations 8.4 % Car dealerships 9.8 % Hardware/ Agri 12.7 % Hotels/ Restaurants 9.1 % Homewares 2.3 % Leisure-time 3.1 % Grain trade 1.7 % Clothing 5.8 % Food and grocery 47.1 % S Markets Prisma hypermarkets Sale stores Alepa stores Sokos and Sokos fashion stores Hotels and restaurants Service stations Agrimarkets Car dealerships 41

55 S GROUP AND THE ENVIRONMENT 56 Environmental management Within the S Group, environmental issues and the implementation of environmental policies is the responsibility of both the units of the SOK Corporation and the cooperative societies. SOK s task is to co-ordinate environmental activities and to provide related expert services to all members of the S Group. In the SOK business planning centre, experts in this field include the environmental manager and the environmental planning engineer. In addition, a person in charge of environmental issues has been appointed at every business unit of the SOK Corporation. At some units, there is a separate environmental team, or environmental issues are addressed within the management. The environmental co-ordination team has a central role in the development of environmental issues. The persons in charge of environmental issues and the environmental experts form this team. The team met six times during In 1999, the environmental organisation concentrated on the implementation of the S Group environmental policy, updated in The central principles of the renewed environmental policy are continuous improvement, and the development and maintenance of environmental awareness among personnel. The objective is to develop the S Group s operations according to the principles of sustainable development. Systematic environmental work is based on uniform policies. This helps us to create a common and understandable environmental language. Discussions were held with several SOK units to determine the guidelines that will direct future environmental development. Environmental aspects have been derived from the environmental policy and they are basically the same for all units. Each unit has determined their goals and objectives based on the environmental aspects, schedules, and the responsible persons, as well as the action plan, which is a list of issues that have to be addressed using existing resources. The described operating model has made it easier to connect environmental issues with day-to-day decision-making. Environmental indicators are needed to produce unambiguous and comparable information on practical environmental actions. The SOK Corporation has started the production of environmental indicators related to waste amounts, and the consumption of electricity, heat and water. SOK Real estate continued to participate in the environmental building and real estate programme ProGresS, which determined individual environmental parameters for each line of business and each company. ProGresS is co-ordinated by RAKL, the Finnish real estate and building union, and supported by TEKES. This helps to include environmental issues as part of the management and accounting system. As a result of the aforementioned development, we are moving towards environmental accounting. It is a system for producing environmental information for the measurement of the effects a company has on the environment. It is different from the traditional accounting system in a way that the company s performance is evaluated over a long period of time, with the objective of finding what effect an environmental act or operation has on net turnover, and if both the company and the environment can benefit simultaneously. The environmental programme applied in SOK s real-estate operations and the various environmental projects based on it have created a solid foundation for the systematic management of environmental issues related to building and property maintenance. Proper groundwork enables the construction of an environmental system compliant with the ISO standard. Despite the fact that the ISO standard is complied with in the systematic environmental policy, the certification of the environmental system is not the main objective. The certification is acceptable if it clearly brings added value to the operation. Hankkija Agriculture Ltd has the only certified systems in the S Group. The grain trade was certified in 1999, based on the ISO-9002 standard and the quality and environmental system for seed production was issued in Employee environmental competence Increase and maintenance of environmental information of personnel have both been greatly in focus during the year Information has been given through training, workshops, communication, reporting, pilot projects, and co-operation with the authorities. Training in environmental issues has been provided in co-operation with the Jollas Institute, the Adult Education Centre in Hyvinkää-Riihimäki, and with regional cooperative societies. In the Jollas Institute, environmental issues have been included in start-up training, management training, commercial field training and executive workshops. Other training has been connected to the environmental training directed at the regional cooperatives, as well as training given to persons responsible for environmental issues in Oy Sokos Ab and the Sokos Hotels chain. In addition, the units have had their own internal training, i.e. in cooperation with suppliers and other interest groups. Some of the S Group outlets participated in the organic shop 2000 competition, in which the winner among hypermarkets series was the Prisma in Mikkeli. Employee environmental competence has been improved, in connection with the pilot project in collecting electronic scrap, for example. Environmental issues have been marketed to personnel through the Ässä magazine, Internet pages and the first environmental report of the SOK Corporation. In addition, various trade magazines, guides, brochures, concepts and fairs have been important sources of information. Real estate Taking the environmental issues into consideration has been a visible factor in the building, use, and maintenance of the S Group real estates. Environmental issues have been part of the Shopping centre Mylly project, the joint operation of the SOK and the Turku Cooperative Society, in the planning stage. Appropriate design ensures flexible use of the building, as well as cost-effective and environmentally sound maintenance in the long run. The advanced technology used in the construction enables energy-efficient use and the conservation of natural resources. A special environmental team has addressed the environmental issues of the Shopping centre Mylly that will be opened in October The team met eight times during 2000.

56 Over 60 companies participated in the environmental programme ProGresS (Profitable Green Development in Real Estate Business) of the real-estate and building sectors, and the pilot for the S Group was the ABC service-station store in Kuortti, opened in spring The developer was Cooperative Society Suur-Savo, and the builder SOK Real estate operations. In the Kuortti service-station store, environmental consideration shows in the natural landscaping, the recycling point, the draining point for septic tanks, the packaging of products, and the organic bakery. The most important measures taken are the application of technical solutions in fuel distribution risk management surpassing existing regulations, the energy-efficiency of cafeteria and shops. The operating and maintenance costs and effects on the environment can be reduced by taking the environmental issues into consideration also in refurbishment operations. For example, the planning of the Jollas Institute refurbishment project can be guided according to the environmental objectives. SOK Real estate takes part in the environmental classification project of the buildings co-ordinated by MOTIVA. The purpose of the project is to give clear numerical classification indicators for different types of buildings. The project started in The furnishing and supplies used in the daily maintenance and care of real estate are essential. Intrade Partners Oy Shop Services analysed the harmful substances in shop furnishings. Oy Sokos Ab has chosen energy saving lamps for its shops and an environmentally certified paper towel system for all its sanitary facilities. Energy and water consumption According to the MOTIVA s summary based on the energy reviews of the years , the shops energy saving potential is on average 9 per cent and the time to repay the investments 2.2 years. The most cost-efficient propositions were: 1. Decreasing the temperature of service water 2. Monitoring the operating times of ventilation systems 3. Monitoring the power of district heating 4. Levelling consumption peaks and timing consumption 5. Changing heating, plumbing and ventilation equipment 6. Restricting water flow SOK Real estate operations have joined the voluntary energy saving agreement of the real estate and building industry (KRESS). Joining this agreement requires that the company make analysis of its energy consumption, make plans for more efficient energy consumption, take according to plan actions and report to RAKLI annually. The energy planning solutions for the retail sector are connected to the ventilation, lighting and cold storing. Energy costs and the burden on the environment have been significantly reduced by intensifying energy use. Acquisitions and logistics Development relating to activities in acquisition and logistics should also be considered an act with environmental value. As Finland is a sparsely populated country, where the distances between towns and cities are long, it is both economically and environmentally viable to deliver goods to all customers in as rational a manner as possible, avoiding unnecessary transport, packaging, and unloading. The Efficient Consumer Response co-operation between trade and industry enhances information management and provides improved opportunities to design logistic operations. In addition, the expansion of electronic trade could be seen as an act with environmental value: it enables central deliveries of goods ordered via the Internet. More than half of groceries sold in the S Group chains are transported to the stores through procurement, storage and distribution services provided by Inex Partners Oy. The cooperation between the S Group and Inex in environmental 57 Removal of plastic binding straps Wooden crates are replaced by recyclable plastic ones Plastic nets fall into disuse Decreasing number of gussets containing aluminium The net on the crate falls into disuse Lower product wastage How does the environmental system affect an orange pallet? Decreasing number of single-use pallets

57 58 issues is an essential part of the chain of logistics. A good example of successful cooperation is Transbox, a recyclable plastic box for perishable goods. Goods are delivered in the box from the supplier through the transportation chain to the store, where the box can be used on counters without any further handling. The introduction of Transbox has resulted in a reduction of packaging waste, easier handling and timesaving. It has also helped to reduce deterioration in the quality of perishables. Intrade Partners Oy acts as the procurement and logistics company for the S Group. Its main task is to offer products of good quality and competitive price and good-quality service for its customer chains. In practice, the monitoring and guidance of the environmental issues are the responsibility of the quality control unit. Packaging requirements emphasise avoidance of excessive packaging and recommend avoiding PVC as a packaging material. Packaging material and its recyclable qualities must be marked in accordance with EU practices. Products that impose a lesser burden on the environment shall be marked with a nationally or internationally approved environmental label. Regulations include environmental and ethical requirements that bind the suppliers of goods (e.g. prohibition of child labour), and that must be taken into account when evaluating a new supplier. Intrade Partners Oy is responsible for ensuring that purchased goods and the information about them are compliant with environmental legislation and requirements. Product range The number of environment-labelled products in the range of products is growing continuously. Organic products have established their position in foodstuffs. The S Group received considerable publicity when the first Organic Store of the Year was selected in Organic products gained higher visibility in 1999, when the Helsinki Cooperative Society HOK received the ProAnimalia award. The representatives of ProAnimalia regarded HOK s S Market chain as a pioneer in the sale of organic products. The range is wide and the store network is dense, so organic products, including meat, are easily available to customers. In 2000, the Prisma in Mikkeli, managed by Cooperative Society Suur-Savo, was chosen as the organic shop of the year in the hypermarket category. All these awards prove that the S Group has been the unprejudiced pioneer in the field of organic products. The environment-labelled products in the consumer goods sector consist of products labelled with the Nordic Swan or the EU Flower. Environmental specification in building materials have become popular. There have been some Fair Trade products on the market since the autumn The best-known criterion of the Fair Trade is the prohibition of child labour. The products labelled with an elephant face also meet high environmental criteria; the use of pesticides is reduced to a minimum and the water systems and the soil are protected according to strict regulations. Some of the Fair Trade products meet the criteria for organic products, which mean increased farmer income. In 2000, there was a selection of coffee, tea, honey and chocolate labelled with the elephant in the market product range. The Premium Trading unit of Intrade Partners Oy and Rainex Yrityspalvelu Oy has participated in the development project of the textile and clothes competitiveness. The purpose of the project is to determine environmental indices to selected textile products according to the life-cycle principle. Premium Trading has participated in teams working on industrial bedsheets and terry-cloth items. The traditional plastic and paper bags have been paired with biodegradable shopping and fruit bags made of corn starch. In home electronics, environmental labelling has become compulsory for lamps, in addition to refrigeration equipment and washing machines. Packaging and waste management The Government s decree on packages and packaging waste entered into force on 1 December It provides an obligation to maintain statistics on, and to utilise, both imported packages and packages manufactured by stores in Finland. The objective of the statistics is to create information on packaging materials and the amount of packaging waste. The statistics can also be used in preventing the production of packaging material, reducing disposable packages, and increasing recyclable packages. Waste generated by stores mainly consists of packaging waste. The amount of packaging waste has been reduced by developing and utilising recyclable delivery equipment. The generated packaging materials are sent for recycling or given other uses. A well-functioning waste management can reduce the amount of waste destined for landfills to under 10 per cent of the total amount of waste normally produced. At best, it is possible to reduce the amount of waste destined for landfills to 5 per cent with motivated personnel, appropriate instructions, efficient societal co-operation, and potential reuse solutions for the waste produced. One of the reasons for a higher rate of utilisation is the use of plastic and wooden packages for energy in the local energy plant. A corresponding tendency is expanding to other parts of Finland as well, which has led to the division of four main groups of waste: biowaste, cardboard, the energy fraction, and landfill waste. This enables a utilisation rate exceeding 90 per cent. SOK participates in the VTT research that investigates the impact of the division in the place of origin on the quality of the recycled fuel. The pilot in this project is the Seppälä Prisma in Jyväskylä of the Cooperative Society Keskimaa. The sorting of waste generated by the operations of the S Group has been developed in accordance with local legislation on waste management. The highest utilisation rate has been reached in the handling of corrugated board, which constitutes a 50 per cent of the total waste amount of Prisma supermarkets. The sector that showed the strongest growth in 1999 was biowaste recovery.

58 Changes in environmental legislation mean stricter regulations of local authorities, which pose new challenges to the S Group. It has therefore been essential to initiate a dialogue between the retail sector and municipal authorities. Active cooperation in reasonable, and economical management of environmental issues has received positive feedback from both the S Group and the municipalities. Recycling services for customers The best known recycling service for customers is the bottle and can recycling system. Other recycling services are connected to bio centres and tyre recycling. The electronic scrap collection project is the newest service offered. The drinks container collection is one of the basic services in the market trade. The collection is mostly dealt with by bottle and can equipment. The recycling rate of returnable glass and plastic bottles lies in over 95 per cent and that for aluminium cans is over 90. Tyre manufacturers responsibility for recycling was applied in Finland for the first time in The obligation to recycle 90 per cent of tyres, issued by the Government, was met well in advance, in 1.5 years. The major reason for the good result is that the entire sector made a commitment to the matter from the very beginning. Of the SOK Corporation s companies, Hankkija Agriculture Ltd and Oy Maan Auto Ab have signed a contract with Finnish Tyre Recycling Ltd. The recycling activity of used tyres is funded through a recycling fee included in the purchase price of new tyres. Helsinki Cooperative Society HOK, Cooperative Society Suur-Savo and Cooperative Society Keskimaa have taken part in electronic scrap collection project co-ordinated by Suomen Ympäristökeskus. The Prisma chain outlets have been the pilot outlets of the project. Communication Information on environmental issues has been disseminated to interest groups through the SOK environmental report, the environmental pages in the annual report, and the Internet pages of the S Group. The Yhteishyvä magazine has provided information on environmental issues to households. Regional cooperatives have distributed information using brochures, experts in ecological issues, bulletin boards and various events. The Ässä magazine and the S-Intranet have been useful tools for internal communication. Interest groups The S Group has continued an active dialogue in international environmental co-operation, and in EuroCoop s environmental working group as well as in the EuroCommerce environmental committee. Central themes have included issues related to the recycling of electronic scrap, the use of packaging and environment labels. SOK has actively led the work of the environmental committee of the Federation of Finnish Commerce and Trade (FFCT). The joint environmental working group of FFCT and the Confederation of Finnish Industry and Employers (TT) have examined such issues as questions relating to generating environmental information during the product life-cycle. SOK has also had representatives in the following working groups: the Ministry of the Environment s EMAS2 working group, the Ministry of the Environment s waste-management committee, the Ministry of the Environment s sustainable development group -division, The Ministry of Agriculture s foodstuffs quality strategy -group s environment system team, and TEKES communities waste flows into business - project management group. Cooperative Society Seutu is the only retail-sector representative in the Lohja environmental cluster project. The objective of the project is to expand, deepen and stabilise the network cooperation both at company and regional level. Network cooperation improves environmental management in the region, which in turn adds to the companies and the region s competitiveness and employment and reduces their environmental burden. The project is co-ordinated by the Helsinki University Adult Education Centre and the West Nylands Further education Centre. 59 No nets on crates Gusset Recyclable pallet Binding straps replace the net and the shrink film The environmental systems encourages the further development of packaging

59 SOK SUPERVISORY BOARD 2000 The supervisory board in a cooperative society may be given wider duties than in a limited company. The tasks of the Supervisory Board are specified in the Rules of SOK. The main duty of the Supervisory Board is to supervise that the Society and the SOK Corporation are administered in accordance with the law, the SOK Rules, the decisions of the general meetings of the Society and the Supervisory Board, and in the interests of the Society. In addition, the Supervisory Board decides on the principles of collaboration and the long-term plans of the S Group. These decisions of the Supervisory Board form the basis for the operations of the S Group. The Executive Board shall provide the Supervisory Board with all the information it requires in order to carry out its duties. In accordance with the Rules, the Supervisory Board shall consist of members, as decided upon by the general meeting of the Society, one-third of whom are annually due to resign. The number of members of the present Supervisory Board is 23. In addition, the Supervisory Board has two representatives of the staff. The SOK Rules specify the duties of the chairman of the Supervisory Board. The Supervisory Board and chairman are assisted by a committee of presiding officers established by the Board and consisting of the chairman and vice chairmen of the Supervisory Board. Total remuneration paid to members of the Supervisory Board in 2000 is shown in the Notes to the Accounts on page Kari Neilimo (born 1944) Kangasala Chairman Ph. D. (Econ.) Professor of Business Administration, Tampere University Chairman, Supervisory Board, Pirkanmaa Cooperative Society Retiring in 2002 Eino Tenhunen (born 1941) Pyhäselkä First Vice Chairman Managing Director, North Karelia Cooperative Society Retiring in 2001 Eino Laaksonen (born 1936) Oulu Second Vice Chairman Principal, Pohjankartano Upper Secondary School Chairman, Supervisory Board, Cooperative Society Arina Retiring in 2001 Arto Arvonen (born 1944) Salo Managing Director, Salo District Cooperative Society Retiring in 2002 Tuula Entelä (born 1955) Espoo LL. M, B. Sc (Econ.) Director of Investment Sato-Yhtymä Oyj from Retiring in 2002 Esko Hakala (born 1952) Kajaani Managing Director, Cooperative Society Maakunta Retiring in 2003 Tuomo Herrala (born 1941) Lappeenranta Managing Director, South Karelia Cooperative Society Until Arto Hiltunen (born 1958) Porvoo B. Sc. (Econ.) Managing Director, Helsinki Cooperative Society HOK Until Jukka Huiskonen (born 1945) Mikkeli LL. M. J.Huiskonen, Attorneys-at-Law Chairman, Supervisory Board, Cooperative Society Suur-Savo Retiring in 2003 Heikki Ikonen (born 1943) Nurmes Farmer Chairman, Supervisory Board, Cooperative Society Jukola Retiring in 2002 Pekka Kangasmäki (born 1945) Porvoo B. Sc. (Econ.) Managing Director, Cooperative Society Osla Retiring in 2003 Simo Kutinlahti (born 1957) Keuruu Farmer Chairman, Supervisory Board, Cooperative Society Keskimaa Retiring in 2001 Maija-Liisa Lindqvist (born 1951) Lahti Training planner Chairman, Supervisory Board, Cooperative Society Hämeenmaa Retiring in 2002 Kalle Lähdesmäki (born 1952) Seinäjoki M. Sc. (Econ.) Managing Director, South Ostrobothnia Cooperative Society Retiring in 2001* Ahti Manninen (born 1950) Lappeenranta Managing Director, South Karelia Cooperative Society From Retiring in 2003 Matti Ojanperä (born 1941) Pori Managing Director, Cooperative Society Satakunta Retiring in 2003 Tauno Riekki (born 1941) Kuusamo M.A. Managing Director, Cooperative Society Koillismaa Retiring in 2003 Pentti Sevón (born 1945) Lohja Managing Director, Cooperative Society Seutu Retiring in 2001 Jorma Sieviläinen (born 1954) Rauma Managing Director, Cooperative Society Keula Retiring in 2002 Håkan Smeds (born 1948) Espoo Managing Director, Cooperative Society Varuboden Retiring in 2001 Timo Sonninen (born 1948) Iisalmi Farmer Chairman, Supervisory Board, Cooperative Society PeeÄssä Retiring in 2002 Matti Suokas (born 1946) Kotka B. Sc. (Econ.) Director of Finance, Sunila Oy Chairman, Supervisory Board, Cooperative Society Ympyrä Retiring in 2003 Antero Taanila (born 1941) Kokkola Administrative Director, Outokumpu Zinc Oy Chairman, Supervisory Board, Cooperative Society KPO Retiring in 2002 Matti Vanto (born 1945) Raisio LL. M. Lawyer, Naantali Town Chairman, Supervisory Board, Turku Cooperative Society Retiring in 2001 Jouko Vehmas (born 1956) Kouvola B. Sc. (Econ.) Managing Director, Cooperative Society Ympäristö Retiring in 2001* PERSONNEL REPRESENTATIVES Kirsi Ervola (born 1950) Helsinki M. Sc. (Agri. For.) Editor, S Publications Retiring in 2001 Annikki Heikkinen (born 1942) Helsinki Secretary, Real Estate Maintenance Retiring in 2001 * Member of SOK`s Executive Board from

60 SOK EXECUTIVE BOARD 2000 The Executive Board shall represent the Society and manage its administration and the appropriate organisation of its operations within the SOK Corporation in accordance with the law and the Rules. The specific duties of the Executive Board are given in the Rules, in addition to which the Supervisory Board has confirmed the agendas of the bodies. All important decisions pertaining to the operations of the Corporation are decided by the Executive Board. The members of the Executive Board are appointed by the Supervisory Board. In accordance with the Rules, the Executive Board consists of a chairman, who is the Chief Executive Officer of the Society, and a minimum of three and a maximum of eight other members appointed by the Supervisory Board for a term of one calendar year at a time. The members of the Executive Board in 2000 are Jere Lahti, CEO of the Society, Reijo Lähteenmäki, Field Division Director and Jukka Salminen, Administrative Director. Their fields of responsibility are explained in the relevant section of the annual report. These fields of responsibility are confirmed by the Supervisory Board. The other five members of the Executive Board are managing directors of regional cooperative societies. The duty of the CEO is to direct the activities of the Executive Board and the operations of the Society. The main conditions of employment of the CEO are contained in a written contract. The benefits of those members of the Executive Board in the employ of SOK are based on their conditions of employment. No separate fee is paid for their membership of the Executive Board. The other members of the Executive Board are paid a meeting fee on a monthly basis. The fees paid to members of the Executive Board not in the employ of the Society are decided by the Supervisory Board. The emoluments of those members in the employ of the Society are decided by the chairman of the Supervisory Board in collaboration with the vice chairmen and in accordance with the instructions given by the Supervisory Board if requested. Jere Lahti (born 1943) Chairman and Chief Executive Officer Dhc (Comm.), B. Sc. (Econ.) Various positions in SOK since Manager of Audit Department, Managing Director of the Turku Cooperative Society and Chairman of the Executive Board Director, SOK s Grocery and Specialty Goods Division and member of the Executive Board. Since 1988 SOK s CEO and Chairman of the Executive Board Jukka Salminen (born 1947) Executive Vice President M. Sc. (Econ.) Various positions in SOK since Director of SOK s Administrative Division, member of the Executive Board since Veikko Autio (born 1945) B. Sc. (Econ.) Managing Director, Turku Cooperative Society Member of SOK s Executive Board since 1998 Martti Eurola (born 1945) M. Sc. (Econ.) Managing Director, Cooperative Society KPO Member of SOK s Executive Board since 1998 Arto Hiltunen B. Sc. (Econ.) Managing Director, Helsinki Cooperative Society HOK Member of SOK`s Executive Board since 2000 Leo Laukkanen (born 1947) Managing Director, Cooperative Society Suur-Savo Member of SOK s Executive Board since 1998 Reijo Lähteenmäki (born 1941) M.Sc (Soc.Sc.) Various positions in SOK since 1985 Director of SOK s Field Division Member of the Executive Board since 1999 Jorma Niiniaho (born 1945) M. Sc. (Econ.) Managing Director, Cooperative Society Ympyrä Member of SOK s Executive Board since The Executive Board of SOK in In the front row, from the left Jukka Salminen, Jere Lahti, Reijo Lähteenmäki, in the back row, from the left Veikko Autio, Jorma Niiniaho, Arto Hiltunen, Leo Laukkanen and Martti Eurola.

61 SUPERVISORY SYSTEM 62 A supervisory system was established in order to supervise accounting and asset management, to ensure that strategic objectives are met, and that activities are conducted correctly and serve their purpose. The highest supervisory authorities in charge of internal supervision are the Executive Boards of the SOK Corporation and its subsidiaries. The key objective of the statutory audit of accounts is to ensure that the financial statements and the information provided by the Corporation s management provide a true and fair view of the Corporation s financial performance and its financial position, and that the supervisory systems are effective. Auditors report regularly to SOK s Executive Board regarding their observations on administration and activities. In addition to the auditors, SOK has an audit committee appointed by the general meeting of the co-operative society. The committee s guidelines have been approved at the general meeting. Its responsibilities include supervising the implementation of decisions taken by the SOK Corporation s institutions across the S Group, and ensuring that the Group s overall resources are used efficiently. The audit committee has two administrative inspectors and SOK auditors, who are elected at the general meeting of the co-operative society. The SOK Corporation has a Controller unit, which acts as an independent and business-driven management, and as a monitoring and supervisory unit for senior management. The unit focuses on identifying and preventing risks by conducting business analyses and giving statements about decisions concerning major investments or realisations to the Executive Board. Furthermore, it controls and supervises the implementation and development of internal supervision across the SOK Corporation. In line with the agreed division of responsibilities, the Controller unit also provides the auditors with assistance for auditing operations and financial statements, and helps the audit committee carry out the audit of corporate governance. The SOK Corporation also has a comprehensive financial reporting system as well as corporate principles set forth by the Executive Board, which determine the order of priority when it comes to investment decision making. The auditors of SOK 2000 SOK has a minimum of two and a maximum of three auditors, selected by the Cooperative Meeting, and two deputies. REGULAR AUDITORS Jorma Jäske M. Sc. Econ. Authorised Public Accountant Tapani Rotola-Pukkila Master of Economics Authorised Public Accountant Juhani Heiskanen Doctor Sc. Econ Authorised Public Accountant DEPUTIES Jorma Anttila M. Sc. Econ Authorised Public Accountant Eero Huusko M. Sc. Econ Authorised Public Accountant SOK audit committee 2000 MANAGEMENT AUDITORS Pekka Ripatti Colonel Member of the North Karelia Cooperative Society Supervisory Board Kristina Dufholm Master of Laws The chairman of the Cooperative Society Varuboden Supervisory Board DEPUTIES Kalevi Karjalainen District prosecutor Member of the Cooperative Society Suur-Savo Supervisory Board Tapani Kortejärvi Farmer, engineer The chairman of the Cooperative Society Osla Supervisory Board SOK auditors are also members of the audit committee.

62 SOK CORPORATION ORGANISATION 1 JAN Chairman and CEO Jere Lahti Business Control Pekka Kantonen Secretariat Markku Viljanen Field Division Reijo Lähteenmäki Specialty Stores Division Juhani Järvenpää Automotive Division Risto Mäkeläinen Administrative Division Jukka Salminen Corporate Development & Planning Taavi Heikkilä Human Resources and Communications Aino Toikka Market Chain Management Antti Sippola ABC Chain Management Heikki Strandén Hankkija Agriculture Ltd Ensio Hytönen Intrade Partners Oy Jouko Nieminen Foodcourt AS Liisi Jauho Hansafood AS Liisi Jauho Ässäravintolat Chain Management Liisa Niemi Sokos Chain Management Reijo Kaltea Sokotel Oy Tapio Satta Sokos Hotels Markku Oksanen Radisson SAS Hotels Frank Fiskers Tenco Eesti AS Arttu Laine Kuusinen Oy Rami Antila from Sokos Companies Automotive Chain Management Risto Malin Oy Maan Auto Ab Jorma Lehmuskallio Automaa Oy Reino Ylä-Autio AS Kommest Auto Toomas Rüütman Rainex Yrityspalvelu Oy Stig Lindh Accounting Jarno Jahnukainen Finance Jari Annala Field Consulting Jorma Koistinen Real Estate Management Christian Lybeck Legal Affairs Markku Viljanen from Administrative Services Jarmo Vehokari Strategic Planning Harri Miettinen Customer-Owner Services and Marketing Risto Niemelä Information Systems Arvo Valkama e-business Visa Palonen Projects in the Baltic area Hannu Uski Cooperative Department Tapio Peltola Personnel Aino Toikka Training 63Matti Pulkki until Occupational Health Services Juha Teirilä S Publications Public Relations Tarmo Tuominen Inex Partners Oy HOT Hometechnics Ltd Finnish Cooperative Union Netista Oy Member of the Executive Board Member of the Management Team 63

63 DESCRIPTION OF THE S GROUP The S Group operates through regional structures, the basic units of which are the regional cooperatives and the SOK Corporation. The regional cooperatives are owned by their members, the customer-owners. The purpose of a regional society is to produce the services that meet the basic needs of customerowners through locally managed chains in its area of operations. These are primarily the Prisma, S Market, Sale and Alepa chains, Sokos department stores, service stations and restaurants. The SOK Corporation consists of the secondary cooperative SOK, owned by the cooperatives, and its subsidiaries. Its purpose is to produce the support functions and services required by the regional societies. Through its own business operations, the Corporation further strengthens the competitiveness of the S Group. It provides the services that meet the special needs of the societies customer-owners through nationally managed chains. These are primarily specialty stores, Sokos and Radisson SAS hotels and Agrimarkets. Regional Co-ops (23) Local co-ops (20) Regionally managed chains 64 Prisma Hypermarkets S Market Supermarkets Alepa/Sale Discount Stores Sokos Department Stores Restaurants Supervisory Board (25) Customer-Owners Customers Specialty Stores Service Stations Auto Dealerships Others Sokos Hotels Agri Business SOK Corporation Hotels Sokos Hotels Radisson SAS Hotels Auto Dealerships Automaa Oy Agri Business Hankkija Agriculture Ltd Projects in the Baltic area Executive Board (8) Nationally managed chains Sourcing services Inex Partners Oy Intrade Partners Oy Oy Maan Auto Ab Rainex Yrityspalvelu Oy Support services Commercial services Chain boards Chain management

64 S GROUP KEY FIGURES FIM million SOK CORPORATION Net turnover Depreciation Operating profit Financial income and expenses Profit/loss before extraordinary items, appropriations and taxes Profit/loss for the financial year Total assets Fixed assets Stocks Current assets (without stocks) Capital and reserves Minority interest Accelerated depreciation *) Voluntary provisions *) Provisions for liabilities and charges Creditors Interest-bearing creditors Liquid funds Net interest-bearing creditors Personnel at ±% FIM million FIM million *) Accelerated depreciation and voluntary provisions have been divided between capital and reserves and deferred tax liability for SOK Sales (excl. VAT) Sales to cooperative societies Operating profit before extraordinary items, appropriations and taxes Profit/loss for the financial year Personnel at COOPERATIVE SOCIETIES + SUBSIDIARIES Sales (FIM million) Number of societies Membership Personnel at S GROUP Retail sales (FIM million) Outlets Personnel at FIM million FIM million CALCULATION OF KEY RATIONS Liquid funds Net interest-bearing creditors = Cash at bank and in hand + investments = Interest-bearing creditors liquid funds

65 STATISTICS S GROUP RETAIL OUTLETS, DECEMBER 31, Outlets Retail Sale, Number Change FIM million Sokos Department Stores Sokos Fashion Stores Sokos Stores owned by regional cooperative societies Total Prisma Hypermarkets Total Department Stores S Markets Alepa Stores Sale Stores Other Market Outlets Total Market Outlets Neighbourhood Stores Specialty Stores Hotels Restaurants Cafés Total Hotels and Restaurants Agrimarkets and Agrimarket Stores Auto Dealerships Service Stations 122 * Other Services TOTAL * Also 108 unmanned petrol stations attached to stores SELECTED S GROUP DATA S Group Business Outlets Year Cooperatives Members Retail Service Production Total Outlets Operations 1 Plants Since 1980 only accommondation and catering. 2 Classification changed in Comparable decrease 136.

66 SUOMEN OSUUSKAUPPOJEN KESKUSKUNTA (SOK) Fleminginkatu 34 P.O.Box 171, FIN Helsinki, Finland Tel , telefax