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Note 2. Segment information
The Group's reportable segments are composed of the Group's divisions, namely the grocery trade, the home improvement and speciality goods trade, and the car trade.
Segment information is reported in a manner consistent with the internal reporting provided to the chief operating decision-maker. The chief operating decision-maker, responsible for allocating resources to the operating segments, has been identified as the Group Management Board. The reportable operating segments derive their net sales from the food trade, the home improvement and speciality goods trade, and the car trade. Sales between segments are charged at prevailing market rates.
The Group Management Board assesses the segments' performances based on operating profit, operating profit adjusted for non-recurring items, and return on capital employed. Exceptional transactions outside the ordinary course of business are treated as non-recurring items and allocated to the segments. The Group identifies gains and losses on the disposal of real estate, shares and operating activities, impairments and costs of discontinuing significant operations and restructurings as non-recurring items. Gains on disposals are presented in the income statement within other operating income, and losses on disposals within other operating expenses. In other respects, the Management Board’s performance monitoring is in full compliance with IFRS reporting. Finance income and costs are not allocated to the segments, as the Group’s cash and cash equivalents are managed by the Group Treasury. Changes in the fair values of intra-Group foreign exchange forward contracts entered into are reported as part of other operating income and expenses to the extent that they hedge the segments’ foreign exchange risk.
The assets and liabilities of a segment’s capital employed consist of operating items that can be justifiably allocated to the segments. The assets of capital employed comprise property, plant and equipment and intangible assets, investments accounted for using the equity method and other investments, pension assets, inventories, trade receivables and other non-interest-bearing receivables, interest-bearing receivables and assets held for sale. The liabilities of capital employed consist of trade payables, other non-interest-bearing liabilities and provisions. The Group’s real estate assets and the revenue and costs generated from them have been allocated to the segments.
Capital employed does not include deferred tax assets and liabilities, financial assets at fair value through profit or loss, except for fair value measurements of foreign exchange forward contracts recognised in the balance sheet, available-for-sale financial assets, cash and cash equivalents, or interest-bearing liabilities.
Grocery trade
The grocery trade comprises the wholesale and B2B trade of groceries in Finland and the grocery trade in Russia. In Finland, Kesko Food's operating activities are based on the K-retailer business model and in Russia, Kesko Food itself acts as a retail operator. The retail trade in Finland comprises around 900 K-food stores operated using the K-retailer business model. These stores form the K-citymarket, K-supermarket and K-market grocery retail chains. Kesko Food manages the operations of the chains made up of the stores. Chain operations ensure higher competitiveness and a strong operational basis for K-retailers in terms of purchasing goods, building selections, marketing and price competition. Kesko Food’s subsidiary Kespro Ltd engages in grocery wholesaling in the Finnish hotel, restaurant and catering (HoReCa) business. K-citymarket, home and speciality goods, is a retailer of home and speciality goods in Finland.
Home improvement and speciality goods trade
The home improvement and speciality goods trade comprises the wholesale and B2B sales of the building and home improvement trade in Finland, Sweden, Norway, the Baltic countries, Russia and Belarus, the agricultural and machinery trade in Finland, the machinery trade in the Baltic countries and the leisure goods trade in Finland and Russia. In the building and home improvement trade, Kesko is responsible for the chains’ concepts, marketing, purchasing and logistics services and the store site network in all operating countries and for retailer resources in Finland. The Group itself is a retail operator in Sweden, Norway, the Baltic countries, Russia and Belarus. The retail store chains are K-rauta, Rautia, K-maatalous, Byggmakker (Norway), Senukai (Lithuania) and OMA (Belarus). The building and home improvement stores serve both consumer and professional customers. The furniture trade chains in Finland and the Baltic countries are Asko and Sotka. Intersport, Budget Sport and Kookenkä are the leisure goods chains. Intersport engages in the sports equipment trade in Finland and Russia. The agricultural and machinery trade comprise the operations of K-maatalous and Konekesko. Konekesko is a service company specialising in the import and trade of construction, environmental, agricultural and recreational machinery.
Car trade
The car trade comprises the business operations of VV-Auto. VV-Auto imports and markets Volkswagen, Audi and Seat passenger cars and Volkswagen commercial vehicles in Finland. VV-Auto also engages in car retailing and provides after-sales services at its own retail outlets.
Common operations
Common operations comprise Group support functions.
Segment information for 2015
Profit
€ million Grocery trade Home im-
provement
and
speciality
goods trade
Car trade Common operations Elimi-
nations
Total
Segment net sales 4,672.9 3,249.8 747.9 129.4 8,799.9
of which inter-segment sales -15.4 -0.6 -0.4 -104.6 -121.0
Net sales from external customers 4,657.5 3,249.1 747.5 24.8 8,678.9
Other segment income 607.9 187.6 4.3 14.7 814.5
of which inter-segment sales -6.1 -10.0 0.0 2.0 -14.1
Other operating income from external customers 601.9 177.6 4.3 16.7 0.0 800.4
Depreciation and amortisation -69.1 -44.6 -8.0 -5.8 -0.1 -127.6
Impairment -0.0 -9.2 -9.2
Operating profit 249.4 -57.2 26.1 -23.7 0.0 194.6
Non-recurring items 71.9 -120.8 -0.9 -0.1 -49.9
Operating profit excluding non-recurring items 177.5 63.6 26.1 -22.8 0.1 244.5
Finance income and costs -7.1
Investments accounted for using the equity method 0.6
Profit before tax 188.0
Assets and liabilities
€ million Grocery trade Home im-
provement
and
speciality
goods trade
Car trade Common operations Elimi-
nations
Total
Tangible and intangible assets 788.3 523.7 75.7 60.0 2.9 1,450.5
Equity accounted investments and other investments 4.7 0.2 0.0 110.2 -0.6 114.5
Pension assets 40.6 16.3 119.5 176.4
Inventories 211.9 382.3 140.9 -0.0 735.0
Trade receivables 284.5 256.6 43.4 11.3 -14.1 581.7
Other non-interest-bearing receivables 50.5 60.7 4.1 24.2 -21.0 118.5
Interest-bearing receivables 3.8 3.8 0.3 63.1 71.0
Assets held for sale 0.5 0.5
Assets included in capital employed 1,384.3 1,243.5 264.4 388.8 -32.8 3,248.1
Unallocated items
Deferred tax assets 3.9
Financial assets at fair value through profit or loss 374.2
Available-for-sale financial assets 371.7
Cash and cash equivalents 141.2
Total assets 1,384.3 1,243.5 264.4 388.8 -32.8 4,139.3
Trade payables 424.4 355.3 17.4 7.7 -9.8 795.1
Other non-interest-bearing liabilities 233.5 131.3 69.2 88.8 -15.7 507.2
Provisions 4.0 16.6 31.9 0.9 53.4
Liabilities included in capital employed 661.9 503.3 118.6 97.5 -25.4 1,355.7
Unallocated items
Interest-bearing liabilities 439.1
Other non-interest-bearing liabilities 31.2
Deferred tax liabilities 71.4
Total liabilities 661.9 503.3 118.6 97.5 -25.4 1,897.3
Total capital employed as at 31 December 722.4 740.3 145.8 291.3 -7.4 1,892.4
Average capital employed 871.4 823.0 103.7 292.2 -7.1 2,083.2
Return on capital employed excl. non-recurring items,% 20.4 7.7 25.2 11.7
Capital expenditure 128.9 55.3 16.0 18.5 -0.2 218.5
Number of personnel as at 31 December 8,364 12,270 783 518 21,935
Average number of personnel 6,420 11,269 780 487 18,955
Segment information for 2014
Profit
€ million Grocery trade Home im-
provement
and
speciality
goods trade
Car trade Common operations Elimi-
nations
Total
Segment net sales 4,753.6 3,568.4 766.5 122.9 9,211.4
of which inter-segment sales -34.1 0.3 -0.4 -106.6 -140.8
Net sales from external customers 4,719.6 3,568.7 766.1 16.3 9,070.6
Other segment income 556.6 176.0 4.5 8.3 745.4
of which inter-segment sales -8.1 -9.3 1.3 -16.0
Other operating income from external customers 548.5 166.7 4.5 9.6 0.0 729.3
Depreciation and amortisation -74.9 -61.3 -8.5 -5.9 -0.0 -150.7
Impairment -4.3 -19.1 -21.0 -44.4
Operating profit 216.2 -52.0 28.9 -41.7 -0.0 151.4
Non-recurring items -7.1 -52.4 -21.8 -81.3
Operating profit excluding non-recurring items 223.2 0.4 28.9 -19.9 -0.0 232.6
Finance income and costs -6.1
Investments accounted for using the equity method -0.2
Profit before tax 145.0
Assets and liabilities
€ million Grocery trade Home im-
provement
and
speciality
goods trade
Car trade Common operations Elimi-
nations
Total
Tangible and intangible assets 1,018.1 645.8 75.5 59.9 2.8 1,802.1
Equity accounted investments and other investments 4.7 0.1 0.0 101.1 -0.6 105.3
Pension assets 40.6 16.2 90.4 147.2
Inventories 213.4 452.7 110.6 -0.2 776.4
Trade receivables 286.5 261.6 39.1 13.5 -16.4 584.2
Other non-interest-bearing receivables 51.2 64.7 3.3 57.8 -14.4 162.6
Interest-bearing receivables 8.6 3.6 4.9 17.0
Assets held for sale 0.5 0.5
Assets included in capital employed 1,623.0 1,444.6 228.5 328.1 -28.8 3,595.4
Unallocated items
Deferred tax assets 4.2
Financial assets at fair value through profit or loss 219.3
Available-for-sale financial assets 271.7
Cash and cash equivalents 107.0
Total assets 1,623.0 1,444.6 228.5 328.1 -28.8 4,197.7
Trade payables 436.4 343.2 21.7 4.7 -11.3 794.6
Other non-interest-bearing liabilities 214.4 172.7 71.6 56.6 -12.8 502.5
Provisions 9.7 29.1 29.8 0.2 68.8
Liabilities included in capital employed 660.5 544.9 123.1 61.5 -24.1 1,365.9
Unallocated items
Interest-bearing liabilities 498.9
Deferred tax liabilities 67.4
Total liabilities 660.5 544.9 123.1 61.5 -24.1 1,932.2
Total capital employed as at 31 December 962.6 899.7 105.4 266.6 -4.7 2,229.5
Average capital employed 1,006.6 940.9 96.3 313.9 -3.4 2,354.2
Return on capital employed excl. non-recurring items,% 22.2 0.0 30.1 9.9
Capital expenditure 98.0 71.9 13.2 12.2 -1.2 194.0
Number of personnel as at 31 December 8,157 14,286 823 528 23,794
Average number of personnel 6,176 12,524 825 451 19,976
Group-wide information
The Group operates in Finland, Sweden, Norway, Estonia, Latvia, Lithuania, Russia and Belarus. The grocery trade takes place in Finland and Russia, the car trade in Finland, and the home improvement and speciality goods trade in Finland, Sweden, Norway, the Baltic countries, Russia and Belarus.
Net sales, assets, capital expenditure and personnel are disclosed by location.
2015
€ million
Finland Other
Nordic countries
Baltic countries Russia and Belarus Eliminations Total
Net sales 7,056.8 627.2 584.1 426.8 -16.0 8,678.9
Assets 2,357.1 182.3 216.3 492.5 3,248.1
Capital expenditure 130.6 4.2 4.1 79.6 218.5
Average number of personnel 8,300 988 4,508 5,160 18,955
2014
€ million
Finland Other
Nordic countries
Baltic countries Russia and Belarus Eliminations Total
Net sales 7,416.8 625.1 552.8 493.4 -17.5 9,070.6
Assets 2,711.4 212.4 219.8 451.8 3,595.4
Capital expenditure 115.5 6.4 6.2 65.9 194.0
Average number of personnel 9,580 1,124 4,468 4,804 19,976
Net sales are nearly completely derived from sales of goods. The amount derived from sales of services is minor.
Kesko Group had no income derived from a single customer amounting to more than 10% of Kesko Group’s total income.