Kesko's management model
Kesko’s financial reporting and planning are based on Kesko Group’s management model. The Group units’ financial results are reported and analysed internally within the Group on a monthly basis and disclosed in quarterly interim reports, the half year financial report and the financial statements release. Financial forecasts are updated quarterly, in addition to which significant changes are taken into account in the monthly performance forecasts. The Group’s and its units’ strategies and related long-term financial plans are updated annually.
Roles and responsibilities
Kesko Group's financial reporting and its supervision are organised on three levels. Businesses analyse and report their figures to the divisions, which then report the division-specific figures to Group Level. Analyses and controls for ensuring the accuracy of reporting are used on each of the three reporting levels.
Planning and performance reporting
The Group's financial development and achievement of financial objectives are monitored by financial reporting covering the entire Group. Monthly performance reporting includes actual Group, division and business specific results, changes compared to the previous year, comparison with forecasts, and forecasts for the current financial year. The Group's short-term financial planning is based on annual budgeting and quarterly updated forecasts extending to the end of the current financial year. The key financial indicators are sales performance for growth, comparable operating profit, comparable operating margin, and comparable return on capital employed for profitability, and free cash flow for cash flow, monitored by monthly internal reporting. Information on the Group's financial situation is provided in interim reports, the half year financial report, and the financial statements release. The Group's sales figures are published monthly.
Performance reporting to the Group's top management
Performance reporting to the Group's top management comprises monthly reports on the Group's, divisions', businesses' and subsidiaries' sales, profits, capital employed and cash flow, as well as on the Group's financial items, cash flows and balance sheet position. Each business is primarily responsible for the financial reporting and the accuracy of the figures. The controlling function of each division analyses the whole division's figures for which the division's financial management is responsible. The Group is responsible for the whole Group's figures. Key income statement, capital employed and balance sheet items are analysed monthly at business, division and Group level, based on an agreed division of duties. This makes real-time information on the financial situation constantly available and enables real-time responses to possible issues.
Public performance reporting
Public performance reporting comprises interim reports, a half year financial report, the financial statements release, the annual financial statements and monthly sales reports. The same accounting principles and control methods are applied to public performance reporting as to monthly performance reporting. The Audit Committee reviews the interim report, the half year financial report and the financial statements and gives a recommendation on their reviewing to the Board of Directors. The Board approves the interim report, the half year financial report and the financial statements before they are published.
Key actions in 2022
Up-to-date forecasts to support management decision-making and the ability to quickly respond to changing situations were emphasized during the year. In 2022, we continued the harmonisation and automation of financial administration processes The integration of financial administration of acquisitions made in Norway and Sweden continued. The project related to identifying and documenting key controls related to financial processes and financial reporting continued as part of the effort to harmonise of financial administration processes. The finance organisation prepared for the application of new financial reporting requirements concerning EU sustainability reporting.
Key actions in 2023
In 2023, the harmonisation and automation of financial administration processes and the documentation of key controls will continue utilising modern technologies. Processes and reporting will be automated and developed based on business needs. Preparation for the application of the new EU sustainability reporting requirements, which will come into effect in 2024, will continue in 2023.
Accounting policies and financial administration IT systems
Kesko Group complies with the International Financial Reporting Standards (IFRS) approved for adoption by the European Union. The accounting policies applied by the Group have been compiled in an accounting manual, which is updated as the standards and interpretations are amended. The manual contains instructions for Group companies and for preparing the consolidated financial statements. Kesko Group's financial administration information is generated from division and company specific enterprise resource planning systems and basic finance systems into the Group's centralised consolidation system to produce the Group's key financial reports. The key systems used to generate financial information have been certified and secured by back-up systems, and they are controlled and checked regularly to ensure reliability and continuity.