Kesko's Annual Report 2009

132 Kesko financial statements 2009
unavailability of a major part of the personnel or the key people
because of an epidemic or some other reason must be prepared
for. Up-to-date continuity plans and their testing maintain the
abilities to control exceptional situations. Substitute arrangements
are made to ensure that the resources for functions will be
maintained. Ensuring efficient internal and external communications
plays an important part in continuity planning.
Legislation, agreements and ethical principles
Compliance with legislation, agreements and Kesko's ethical
principles is an important basic value in all of Kesko's operations.
Non-compliance may result in fines, compensation for damages
and other financial losses, and a loss of confidence or reputation.
The Group has specific training programmes, especially in
competition legislation, to avoid this. Self-assessments are made
in matters concerning competition legislation.
Contractual risks are managed by harmonising agreements
and the processes of entering into agreements, and by electronic
archiving of contracts. An essential issue in the chain agreements
between Kesko and the retailers is finding solutions for the highquality
delivery of customer promises and commitment to the
chain business operation.
In international operations, problems also arise from different
interpretations and procedures concerning, among other things,
taxation and official regulations.
Reporting to the markets
The objective of Kesko's corporate communications is to produce
and publish reliable information at the right time. If some information
published by Kesko proved to be incorrect or a release
failed to meet regulations, it might result in investors and other
stakeholder groups losing confidence, and possible sanctions.
The accuracy of financial information is challenged by tight
schedules and dependence on information systems. This risk is
managed through careful scheduling and ensuring the right
resources and sufficient competencies.
Damage risks
Damages, accidents and crimes are prevented through uniform
practices and cost-efficient safety precautions. The financial consequences
of damage are covered with insurance, in accordance
with the policy defined by the Kesko Board of Directors. The
Kesko Group uses international insurance programmes to cover,
among others, property, business interruption and liability risks.
The Group's risk management function steers the implementation
of insurance programmes in a centralised manner.
NOTE 43
Related-party transactions
The Group's related parties include its key management personnel
(the Board of Directors, the Managing Director and the Corporate
Management Board), subsidiaries, associates and the Kesko
Pension Fund. The subsidiaries and associates are listed in a separate
note (note 45).
The following transactions were carried out with related parties:
Sales of goods and services
€ million
Sales of goods
2009 2008
Board of Directors and management 37.2 24.3
Kesko Pension Fund 0.2 1.3
Total 37.4 25.5
Sales of services
Associates 0.9 1.0
Board of Directors and management 4.8 1.9
Kesko Pension Fund 1.5 1.3
Total 7.1 4.2
The related party transactions disclosed include those transactions
with related parties that are not eliminated in the consolidated
financial statements.
Among associates consolidated using the equity method, a
property owned by Valluga-Sijoitus Oy has been leased for the
Group's use. Vähittäiskaupan Takaus Oy and Vähittäiskaupan Tilipalvelu
Oy sell their services to Kesko's and K-retailers' retail
companies. The other associates mainly include business property
companies which have leased their premises and real estate
to the Kesko Group. Associates that operate as mutual real estate
companies have been consolidated in the financial statements in
proportion to their ownership interest.
Some members of Kesko's Board of Directors act as K-retailers.
The Group companies sell goods and services to enterprises controlled
by them.
The Kesko Pension Fund is a separate legal entity which manages
and holds in trust part of the pension assets of the Group's
employees in Finland. Pension assets include Kesko Corporation
shares in the amount of €104.3 million. Real estate and
premises owned by the Pension Fund have been leased to the
Kesko Group, which has subleased most of them to retailers. In
2009, the Kesko Group paid a total amount of €52.5 million
(€62.7 million) in contributions to the Pension Fund.
Goods and services are sold to related parties on normal market
terms and conditions and at market prices.
In March 2009, the Kesko Group sold four store properties to
the Kesko Pension Fund. The debt-free selling price was about
€50 million. The Group's €19.7 million gain on the disposal is
included in the non-recurring items within the operating profit.
Purchases of goods and services
€ million
Purchases of goods
2009 2008
Associates 0.0 0.0
Board of Directors and management 1.4 2.2
Total 1.4 2.2
Purchases of services
Associates 2.6 2.5
Board of Directors and management 0.1 0.1
Pension Fund 0.0 0.2
Total 2.7 2.8