The ICA Group’s Annual Report 2007 - CECODES · Rimi Baltic 13.0% ICA Banken 0.6% Other 0.7%! ! " Share of consolidated sales Ownership structure Organization ICA’s companies

The ICA Group’s Annual Report 2007

Contents1 This is ICA

2 ICA’s corporate responsibility work

3 2007 in brief

4 President’s statement

7 Goals and strategies

10 ICA Group

16 ICA Sverige

18 ICA Norge

20 Rimi Baltic

24 ICA Banken

25 Corporate Responsibility Report26 Statement of intent

28 Governance of the Group’s corporate responsibility work

32 Environment

40 Work environments and conditions

43 Human rights

45 Community affairs

47 Product quality

51 Health

54 Economic responsibility

55 GRI Index

58 Annual Report59 Directors’ report

62 Definitions of key financial ratios

65 Consolidated income statement

66 Consolidated balance sheet

68 Changes in consolidated shareholders’ equity

69 Consolidated statement of cash flows

70 Supplementary information, the Group

87 Parent Company income statement

87 Changes in Parent Company’s shareholders’ equity

89 Parent Company balance sheet

89 Parent Company statement of cash flows

90 Supplementary information, Parent Company

94 Audit report

96 Board of Directors

98 Group Management

100 Corporate governance

102 Glossary and abbreviations

103 Addresses

Vision We make every day a little easier.

Mission To be the leading retailer with a focus on food and meals.

This is ICA

The ICA Group is one of the Nordic region’s leading retail companies, with around 2,250 of its own and retailer-owned stores in Sweden, Norway and the Baltic countries. The Group includes ICA Sverige, ICA Norge and Rimi Baltic. ICA also offers financial services to Swedish cus-tomers through ICA Banken.

IAndel av ICA-koncernens omsättning

Ägare Organisation

ICA SverigePeder Larsson

ICA NorgeTrond Kongrød

Rimi BalticAntonio Soares

Assortment & Sourcing

Anders Nyberg

ICA Fastigheter Bo Liffner

ICA Banken Jörgen Wennberg

MarketingIngrid Jonasson Blank

FinanceSonat Burman-Olsson

President and CEOKenneth Bengtsson

ICA AB is 40 percent owned by Hakon Invest AB (publ) of Sweden and 60 percent by Royal Ahold N.V. of the Netherlands. Through a shareholder agreement, Royal Ahold and Hakon Invest jointly control ICA AB.

Royal Ahold is a Dutch retail group listed on the stock exchange in Amsterdam.

Hakon Invest, which is listed on the Nordic Exchange, is an investment company specializing in the Nordic retail sector. It is 67 percent owned by ICA-handlarnas Förbund, the member organization for Sweden’s ICA retailers. The remaining 33 percent is owned by individual shareholders.

ICA Sverige 62.5 %

ICA Norge 23.2 %

Rimi Baltic 13.0 %

ICA Banken 0.6 %

Other 0.7 %

Share of consolidated sales

Ownership structure Organization

ICA’s companies

In 2007 the ICA Group had sales of SEK 82,326 million and operating income of SEK 2,602 million. The Group had a total of 20,081 employees on average. In Group functions, the average number of employees was 2,209. ICA AB is the Parent Company of the ICA Group. The company includes functions for Marketing, Finance and Assortment & Sourcing.

ICA Sverige is one of Sweden’s leading food retailers. It is the principal supplier to ICA retailers, who own and manage their stores independ ently.

Sales: SEK 51,438 million

Average number of employees: 5,107

ICA Norge is a Norwegian retailer focused on food and meals. The stores are managed independently or as franchises.



Rimi Baltic operates several of the most modern food retail chains in the Baltic region. A wholly owned subsidiary of ICA AB from December 2006.



ICA Banken makes it easier for customers of ICA’s Swedish stores to manage their finances and in the process strengthens their ties to ICA.

Business volume: SEK 14,728 million

Average number of employees: 196

ICA Fastigheter’s (real estate) operations are included in ICA Sverige and ICA Norge.

ICA’s corporate responsibility

In seven position statements, the ICA Group has

summarized its stance on ethics and corporate

responsibility, a philosophy it calls “ICA’s Good

Business.” The aim is to be a sustainable company

driven by the following values:

ICA will:

be driven by profitability and high ethical standards.

listen to customers and always base its deci-sions on their needs.

nurture diversity and growth among employees.

maintain an open dialogue internally and with the community.

ensure product safety and quality.

promote a healthy lifestyle.

adopt sound environment practices to promote sustainable development.

Global Compact’s ten principles

ICA is a participant in the United Nations Global Compact and supports the following ten international principles.

Businesses should:

1. Support and respect the protection of internationally proclaimed human rights in areas they can impact.

2. Make sure that they are not complicit in human rights abuses.

3. Uphold the freedom of association and the effective recognition of the right to collective bargaining.

4. Eliminate all forms of forced and compulsory labor.

5. Effectively abolish child labor.

6. Eliminate discrimination in respect of employment and occupation.

7. Support a precautionary approach to environmental challenges.

8. Undertake initiatives to promote greater environmental responsibility.

9. Encourage the development and diffusion of environmentally friendly technologies.

10. Work against all forms of corruption, including extortion and bribery.

ICA’s corporate responsibility work

In 2007 ICA:

Adopted a climate strategy with the goal of reducing known greenhouse gas emissions by 30 percent by year 2020.

Adopted an HR policy for the entire Group.

Made preparations to open a purchasing office in Hong Kong with a department for quality, the environment and corporate responsibility.

Signed an agreement with WWF in Norway to promote sustainable fishing.

Developed an action program to strengthen food safety in stores.

Introduced sugar-free checkout areas in Norwegian ICA Supermarked stores as part of a health focus in Norway.

2007 in brief

The ICA Group’s net sales amounted to SEK 82,326 million (67,395), an increase of 22.2 percent compared with 2006.

Operating income amounted to SEK 2,602 million (2,297), an increase of 13.3 percent compared with 2006.

The operating margin was 3.2 percent, a decrease from 3.4 percent in 2006.

Omsättning, MSEK

* Restated according to IFRS.

Net sales, SEK million Omsättning, MSEK


Operating income, SEK million

Omsättning, MSEKContact

Madelene Gummesson Manager Financial Communication

Telephone: +46-8-561 505 83 E-mail: [email protected]

Financial information is also available at www.ica.se > About ICA.

Året i siffrorThe year in numbers

2007 2006

Net sales (SEK million) 82,326 67,395

Operating income (SEK million) 2,602 2,297

Operating margin (%) 3.2 3.4

Income after net financial items (SEK million) 2,282 2,046

Average number of employees 20,081 11,698

Ekonomiska rapporterFinancial reports in 2008

Interim report January–March May 7

Interim report January–June August 6

Interim report January–September November 5

4 ICA GROUP

In recent years we have tried to create an

organization and corporate structure that gives

us the best opportunity to focus on our core

business and attain leadership in our markets. We

have also devoted energy to finding the right level

to coordinate activities within the Group.

2007 began and ended with the same company

portfolio. It was also our first year with Rimi Baltic

as a wholly owned subsidiary of the ICA Group.

During the year we were therefore able to devote

all our energy to activities to improve the existing

operations of our companies. We have created a

stable platform moving forward.

Constant adjustments

To support our streamlined corporate structure in

an even better way, we introduced a new organ-

ization with three Group functions in early 2007.

The new organization strengthens coordination at

the Group level in the areas of product assortment

and sourcing, marketing and finance.

Focus on core business and strong sales

2007 was a very strong year for the ICA Group in terms of both sales and earnings. We had a year without major acquisitions or divest-ments and instead were able to focus on developing our existing operations. The level of activity maintained by the companies was high, as was the rate of new store openings.

We are always trying to find a balance between

coordination and local adjustments. While we

have much to gain by coordinating, we have to

listen to customers to remain successful, and

we do that best by being where they are. This is

why we have given our companies greater profit

responsibility and responsibility for local customer

offerings.

An array of activities

The Swedish ICA stores noted a strong sales

increase in total and for comparable stores.

There were several reasons for this, including

the large number of renovations and many new

stores. To continue to meet customer demand,

we have invested heavily to improve the product

assortment, primarily by adding a new organic

line and an expanded range of fresh, prepared and

semi-prepared foods. Our new distribution unit

in Helsingborg was gradually put into operation

during the year, which will improve logistics

efficiency in the future.

2007 01

ICA sells a portfolio of 24 properties in Norway.

2007 02

ICA sells the property Sjølyst Arken outside Oslo.

ICA introduces a new, simplified organization.

ICA and Dansk Supermarked finalize the change in Netto’s ownership structure.

2007 03

ICA becomes the first company in Norway to sell Fairtrade-labeled flowers.

2007 04

ICA is named the Swedish retail sector’s most popular employer by the recruit-ing company Retail Knowledge and the magazine Market.

ICA Nära Sergels torg opens in the heart of downtown Stockholm.

ICA adopts a climate strategy with the goal of reducing carbon dioxide emis-sions by 30 percent by 2020.

ICA sells the property Alta Storsenter in Norway.

President’s statement

ICA GROUP 5

ICA Norge was given a new management in

January 2007, and the changes we initiated in 2006

continued. We launched a program called Take

Off, which set priorities in a number of areas. We

managed to increase private label products from

8.6 to 10 percent of total sales, with potential for

further growth. We continued to invest in hyper-

markets and opened three new ICA Maxi stores

during the year. In addition to these activities,

we continued our long-term strategic efforts to

streamline the store network. We still have a long

way to go to produce a satisfactory result, but in

time I am convinced that the areas and activities

we are working on will have a further impact.

Rimi Baltic has been a wholly owned subsidiary

since December 2006. During the year its focus

was on store operations and an improved customer

offering. We noted sales and profitability increases

for comparable units and opened 14 new stores.

The positive trend is the result of years of hard

work to streamline the store structure. We look

forward to exchanging knowledge and creating

synergies throughout the Group and are planning

to launch joint projects, primarily in purchasing

and product selection.

ICA Banken has slowly but surely won over

more customers and developed into a profitable

bank with a diverse offering for consumers. Dur-

2007 05

ICA’s customers set a world record in blowing up balloons and are treated to cake when ICA celebrates its 90th anniversary.

ICA sells two Swedish properties in Gävle and Västerås.

2007 06

ICA sells 28 store properties throughout Sweden.

ICA is the first in the market to introduce frozen organic salmon.

2007 07 2007 08

ICA Norge is one of the main sponsors of Birkebeinerrittet, the world’s largest off-road bike race.

ing the year ICA Banken took a major step forward

through the launch of mutual funds, equities and

pension savings in cooperation with Nordnet

Bank AB. This effort has produced dividends,

and when the financial magazine Privata Affärer

announced its award for Bank of the Year for 2007,

ICA Banken took home the prize, in part thanks to

low fees and competitive terms.

Our real estate operations also had a good year.

The strategy is to maintain a consistent level in

our property portfolio, and as we acquire new

properties we will sell old ones. These opera-

tions also generate revenue from rental income

charged at market rates to retailers – income that

has increased in pace with the sales trend.

Our priorities remain intact

The direction we steered toward in early 2007 has

produced results, and when we look ahead we do

so within the framework of our new corporate

and organizational structure. This is a long journey

we have embarked upon. We will continue to

work with improvements in ICA Norge, as well

as with human resource development and store

improvements. And we will continue to improve

our offering through planned launches in new

fresh foods, non-foods and our organic line.

At the end of last year it became clear that a

number of ICA stores had incorrectly dated some

of their packaged meat. We took this very seriously

and are therefore devoting even greater energy to

quality work in stores in 2008. Store employees will

receive mandatory training in food handling, and

we have introduced an inspection program with

third-party audits and unannounced inspections of

all ICA stores and their self-inspection programs.

I am convinced that by taking these forceful

measures, we can show our customers that we

are serious and that ICA continues to stand for

quality in every respect.

As usual, I have ICA’s employees to thank for a

strong year. They are the key to everything we do

and it is why their development remains a priority.

We will continue to improve ICA as a workplace by

encouraging transfers between companies, offering

clearer career paths and through a program for

young leaders that I personally am involved in. All

to show that this is a business of the future and

that ICA is the best in class.

2007 09

ICA Sverige launches a climate campaign.

ICA Norge starts a pilot project called “Buddy with Your Body” in Vågå.

Launch of “Local Tastes”, ICA’s initiative for increased cooperation with local Swedish suppliers.

2007 10

ICA Banken launches new savings alter-natives.

ICA Sverige supports the Pink Ribbon campaign against breast cancer.

For the sixth consecutive year, ICA invites Swedish schoolchildren to visit its stores as part of the “5 a day” project in cooperation with the Swedish Cancer Society.

2007 11

ICA climbs to tenth place in Sweden in the Career Barometer survey by Universum.

Rimi Baltic establishes the Rimi Business School in cooperation with the School of Economics in Riga.

ICA sells two Swedish properties in Kungsbacka and Falun.

2007 12

The 60th Maxi ICA Hypermarket in Sweden opens in Vetlanda.

ICA Banken is named Bank of the Year by the magazine Privata Affärer.

All ICA Supermarked stores in Norway introduce sugar-free checkout areas.

Incorrectly dated packages of chopped meat are discovered at a number of Swedish ICA stores.

ICA Sverige supports the Swedish Red Cross’s “hug” campaign.

Kenneth Bengtsson, President and CEO

6 ICA GROUP

Goals and strategies

ICA’s vision is to make every day a little easier. Its mission is to be the leading retailer with a focus on food and meals.

Financial goals

ICA’s long-term goal is to increase sales faster than

the total market is growing in each sector.

The profitability goal is an operating margin

(EBIT) of 3.5–4.0 percent. The return on equity

over a business cycle should be at least 14–16

percent and the long-term equity/assets ratio

30–35 percent.

Strategies

ICA will be a far-sighted, dynamic company with

solid finances and a commitment to environmental

and social issues. The guiding principles for ICA’s

way of working are prioritization, coordination,

simpli fication and cost cutting. In concrete terms,

the Group has formulated the following strategies

for its operations:

Utilize economies of scales by coordinating cen-

tral functions and concepts

By coordinating central functions and concepts at

the Nordic level, ICA will take advantage of syner-

gies between companies. The efficiencies that are

gained will be largely reinvested to prevent price

increases.

Locally adapted concepts

While utilizing its scale to coordinate and take

advantage of synergies, ICA will continue to adapt

its local offerings to customer demand. These

local adjustments can be made by the individual

retailer or through concepts designed for various

geographical markets.

Price and assortment

ICA will focus on cutting prices while enhancing its

product range and improving efficiencies to give

customers what they want.

Format strategy

The ICA Group has adopted a strategy consisting

of four formats: hypermarkets, supermarkets,

convenience stores and discount stores.

New stores and renovations

ICA will open new stores and renovate the existing

store network. By improving the network and

its offerings, ICA will meet a variety of customer

needs.

Offer an attractive product range focused on pri-

vate labels, fresh foods and non-foods

ICA will continue to emphasize private label

products, fresh foods and non-food items. The

Group’s range of private label products gives

customers greater choice, high quality and lower

prices. These measures will increase sales and

profitability for retailers and the Group.

Corporate responsibility

ICA will maintain a strong local presence wherever it

operates. The Group will contribute to a sustainable

society by minimizing the impact of its operations

on the environment and taking responsibility for

the conditions under which its own products are

produced. Moreover, ICA promotes the health of

its customers and employees by offering safe and

nutritious products and continuously improving

its work environments.

Return on equity, %

Equity/assets ratio, %

Operating margin, %

ICA’s long-term objective is an operating margin of 3.5–4 percent. The operating margin decreased slightly in 2007 to 3.2 percent.

The Group’s objective is an average return on equity of at least 14–16 percent over a business cycle. The return on equity decreased in 2007 to 19.1 percent.

The long-term objective for the Group’s equity/assets ratio is 30–35 percent. The equity/assets ratio increased in 2007 to 32.4 percent.

ICA GROUP 7

Each year the ICA Kitchen produces hundreds of recipes to help customers vary what they eat on a day-to-day basis as well as on special occasions. Simplicity, taste and good ingredients are the three common denominators in all the recipes.

“We also try to adapt many of our recipes for allergy suf-ferers and give consideration to customers from different ethnic backgrounds,” says Helen Rundqvist, who heads the ICA Kitchen.

The recipes are available in several ways, including at www.ICA.se, on recipe cards in stores and on packages of ICA’s private label products.

Helen Rundqvist is joined in the kitchen by esteemed chef Leif Grönlund and Gudrun Borglund, who has more than 30 years of experience from the ICA Test Kitchen. Besides creat-ing recipes, the three offer cooking classes for employees, test kitchen utensils and reply to food questions from customers. The ICA Kitchen also serves as a sounding board for product developers.

Vision to inspireThe ICA Kitchen’s location, in the middle of ICA’s head office in Solna, reflects the central role it plays – a role that is likely to be even stronger in 2008.

The ICA Kitchen – in the thick of it

“2008 will be a big cooking year. ICA is launching many new, inspiring products, running more campaigns focused on food and putting more focus on suggestions and inspiration in stores,” says Helen Rundqvist.

Though sales of cookbooks are breaking new records, many people still find it hard to vary the food they eat on a daily basis. The ICA Kitchen’s vision and big challenge is to inspire without making cooking difficult.

“We want to get people excited and emphasize the enjoy-ment of a good meal, so that customers don’t see cooking as stressful,” says Helen Rundqvist, who concludes with a couple of her best tips. “Let loose, try new ingredients and choose what you buy in season.”

The new organization strengthens coordina-

tion at the Group level, at the same time that

Group companies have been given clearer profit

responsibility and greater responsibility for local

customer offerings. The companies now share

part of the responsibility for purchasing and

product selection, particularly with regard to fresh

foods, as well as certain aspects of marketing

communications. The companies have also taken

over responsibility for logistics in each country.

The Group’s Assortment & Sourcing function

is responsible for developing synergies and coordi-

nating purchasing and product assortment between

companies. The Nordic-Baltic purchasing coopera-

tion and the international purchasing cooperation

are priorities, as is the Group’s supply chain.

The Group’s Marketing function is responsible

for ICA’s strategic changes and comprises business

development, strategic marketing communications

and the Corporate Responsibility department.

The Group’s Finance function is responsible for

financial, legal and economic controls.

No major structural changes were made in

2007. ICA has focused on four areas of improve-

ment: ICA Norge, product development, human

resource development and store renovations.

Product focus

ICA tries to offer customers an attractive and

inspiring product range adapted to their needs

and wants. Category management, i.e., defining

the product range in the various countries and

various store formats, is therefore central to

operations.

Based on customer needs, wants and buying

habits, ICA develops an assortment that is both

The ICA Group: new organization improves coordination

During the year the ICA Group introduced a new, simplified organization with three Group functions: Assortment & Sourcing, Marketing and Finance. Coordination at the Group level and quick decision-making channels are the goals of the new structure.

broad and deep, i.e., a wide range of popular prod-

ucts in different price classes and quality levels.

Through its private labels, ICA offers quality

products at prices lower than those of the market

leaders, while at the same time building customer

loyalty. Its work with private label products has

given ICA insight into what it costs to develop and

produce various products, knowledge it can use

in negotiations with suppliers and to hold down

prices in stores.

Customer demand for products that simplify

their everyday lives is high. During the year ICA

launched an expanded range of prepared salads

and refrigerated meals, among other things.

Demand for organic products is also high, and

ICA has therefore given priority to the development

of a new organic line scheduled for launch in 2008.

Read more about “ICA I love eco” on pages 14–15.

Interest in locally produced foods has grown,

and ICA is looking to expand its range in this area.

Through an initiative called “Local Tastes”, ICA is

increasing its selection of local foods and making

it easier for small Swedish suppliers to reach more

customers through its stores.

Many customers want to be able to buy

everything in one place. ICA’s selection of

non-food items is important to make life easier

for customers while strengthening the position of

hypermarkets. ICA has created a new unit for all

employees who work with non-food items, from

product selection and purchasing to operations

and sales.

ICA has also begun supporting the Norwegian

operations in non-foods and started a cooperative

project with Rimi Baltic.

10 ICA GROUP

Purchasing cooperations

ICA’s Nordic purchasing organization is respon-

sible for coordinating the Group’s purchasing.

By being a stronger negotiating partner, ICA

can obtain better terms and continue to offer

customers good prices.

ICA has a comprehensive purchasing coopera-

tion with Ahold and its subsidiary Albert Heijn with

the aim of creating larger purchasing volumes,

as well as to exchange knowledge and ideas for

new products. The cooperation has advanced the

furthest in produce and private label products.

An important strategy is to enter into long-term

partnerships with selected suppliers. Together

with the supplier, ICA can analyze the value chain

and identify possible cost savings.

In 2008 ICA is opening an office in Hong Kong

to negotiate better prices, improve logistics

efficiency and, no less importantly, monitor work

with quality and human rights.

Global market prices of raw materials, especially

grains, milk and corn, rose substantially during

the year. ICA constantly discusses prices with

suppliers. Its aim is to minimize price increases

and ensure that future price cuts on raw materials

will benefit consumers in the form of lower prices

in stores.

Logistics

ICA is working to make the supply chain from sup-

plier to consumer as efficient as possible in order

to reduce costs and environmental impacts. ICA

is developing a new Nordic distribution network

to handle larger volumes and high-quality fresh

foods while extending their shelf lives. By taking

over responsibility for shipments from suppliers,

ICA can optimize deliveries to stores. The goal is

to reduce total exhaust emissions by 20 percent

compared with the previous logistics structure,

where suppliers accounted for a large share of

deliveries.

During the year ICA took over beverage deliveries

from bottling plants. This ensures stores of a wider

selection and more deliveries, at the same time

that the environmental impact is reduced, since

ICA can fill its shipments more effectively.

In 2006 ICA opened an ultramodern, 63,000

sq. m. warehouse in Helsingborg, which was

gradually ramped up during the year. It also

continues to evaluate the possibility of adding

a new warehouse in Mälardalen.

Business and format development

ICA is continuously improving its store formats in

Sweden and Norway. In the hypermarket format,

it is developing a “third-generation” store that

will compete with specialty chains by offering a

broader range in a number of categories such as

pet food, books, CDs and DVDs, and linens. The

new departments were rolled out in 2007. The

health and beauty department launched in 2006

can be found at 45 Maxi ICA Hypermarkets as of

year-end.

The “big supermarket” is a new concept in the

ICA Kvantum and ICA Supermarket formats. The

focus here is inspiration and appreciation of good

food. The stores offer an expanded range of fresh

foods. The concept will be tested in the first half

of 2008.

In the ICA Nära and ICA Nær formats, new

concepts are being tested in residential areas and

locations with high customer traffic, including

Sergels torg in central Stockholm. The emphasis is

on convenience, speed and availability, particularly

with regard to store hours and product selection.

The stores offer a wider range of fresh and prepared

foods than traditional convenience stores.

Branding and marketing communications

ICA’s brand has a very strong position in the

Swedish market. In Reputation Institute’s survey

of Sweden’s most widely recognized brands, ICA

placed third. Climate issues have been important

to marketing communications in Sweden, includ-

ing a successful campaign with energy-efficient

light bulbs and a climate website.

ICA’s Swedish website, www.ICA.se, is playing

a more prominent role in communication with

ICA GROUP 11

customers, and ICA is continuously developing

new services focused on food and inspiration.

Traffic to ICA.se has grown significantly. The web-

site had an average of 2,066,099 visits per month,

compared with 1,766,502 in the previous year.

ICA’s 90th anniversary was celebrated with a

number of activities for customers. Among other

things, stores celebrated by treating customers

to cake. The stores and customers together set a

world record in blowing up balloons. During the

year ICA also made the Guinness Book of World

Records for the longest serial commercial. Several

weeks after being dropped from the campaign, a

popular fictitious ICA Store owner named Stig was

brought back due to viewer protests.

In Norway, ICA markets the ICA and Rimi

brands. ICA stands for the same values in

Norway as in Sweden. Although its position is

not as strong in Norway, familiarity with what

ICA stands for increased during the year. In 2006

ICA launched the keyhole label in Norwegian

ICA stores, and the focus on health has greatly

impacted marketing communications. In 2007

Rimi celebrated its 30th anniversary. Brand

communications are aimed at strengthening

Rimi’s image as a trustworthy discount concept.

Knowledge about customers and their needs

and wishes is central to efforts to improve ICA’s

offerings and communication. ICA sees its stores

as the primary channel to reach customers. It is

also working to develop methods to better adapt

offerings based on previous purchases, which is

something customers want.

Corporate responsibility

ICA’s corporate responsibility concerns the environ-

ment, employees, product quality and health, as

well as work with socially responsible sourcing.

Climate issues have been a priority, and the work

involved in drafting a climate strategy was among

the highlights of the year. ICA signed the Business

Climate Call in Sweden and the Climate Promise

in Norway and formulated a goal to reduce the

Group’s known greenhouse gas emissions by 30

percent by 2020. As part of this work, ICA has

created a climate website with tips for customers at

ICA.se. It has also expanded and developed a new

platform for its organic line. In Norway, ICA has

continued to focus on health. It was the first in the

industry to launch sugar-free checkout areas in its

ICA Supermarked stores. Read more about these

projects on pages 14–15, 38–39 and 56–57 and in the

Corporate Responsibility Report on pages 25–55.

In human resources, the first half of the year was

distinguished by organizational changes. ICA has

tried to set clear objectives for every employee and

promotes HR development. Read more about ICA’s

human resources work under the heading, “Work

environments and conditions,” on pages 40–42.

Finance

ICA’s Group function for Finance underwent

major changes during the year. The work focused

on financial and internal controls and the Group

structure. The aim has been to adapt procedures

and structures to the requirements placed on an

internationally active company with two publicly

listed owners.

Financial control

The new organization implemented in early 2007

has given the companies clearer profit responsibil-

ity. Every company has therefore created its own

finance department and appointed a CFO who

reports directly to the Group CFO. To improve

access to decision guidance, the companies have

recruited more controllers.

Based on a new control model, ICA has also cre-

ated a meeting structure for the Group’s various

boards, management teams and committees. An

important outcome of this work is the internal

boards that have been established for each

company and which provide quarterly business

reviews. The new meeting structure also clarifies

decisions and mandates.

Internal control

ICA works with a structure to monitor and

safeguard internal control in financial reporting.

The Group’s audit committee receives reports

from the department for internal audit. Every

company also has an audit committee, where

the Group CFO serves as chair.

Group structure

As a result of the new group structure, Finance

has created a new structure for financial reporting

and monitoring. The Group functions have been

given clearer roles, and new competence has

been recruited to safeguard financial processes

and meet future demands. The Finance function is

working with further improvements and manag-

ing a number of major projects in reporting,

planning processes and administrative routines.

These projects are managed through the newly

established financial management group, which

12 ICA GROUP

their sales and expenses are reported in ICA’s

income statement.

Sale of products and services

ICA buys products and sells them, with a markup,

at stores in Sweden and Norway. Included in the

supply chain is development of and responsibility

for private label products. ICA also generates

revenue through the sale of services to the stores,

e.g., marketing communications, logistics, training

and store technology.

Real estate

In many cases, ICA owns the store properties or

holds leases on the properties. In the first case, it

generates revenue for ICA in the form of market-

rate rent from retailers. ICA often owns the land

and structure in connection with new store

openings. At the time of sale the property has

usually appreciated in value, which also generates

significant income for ICA.

Banking operations

Through ICA Banken, ICA sells financial services.

Net interest income and commissions from the

bank contribute to earnings.

Earnings sources

ICA Sverige ICA Norge Rimi Baltic ICA Banken

Stores Royalties and profit distributions from stores.

Sales in stores where ICA Sverige owns more than 50 percent of the shares.

Non-food sales in Maxi ICA Hypermarkets.

Franchise fees.

Sales in wholly owned stores.

Sales in wholly owned stores.

Supply chain Product sales to ICA stores.

Service sales to ICA stores.

Product sales to franchise stores.

Service sales to franchise stores.

Real estate Rental income and property sales.

Rental income and property sales.

Rental income and property sales.

Banking Sale of financial services

has a mandate to safeguard and improve the

Group’s legal and financial controls.

ICA’s business model

ICA AB’s earnings come from four main sources:

store operations, the sale of products and

services, real estate and banking services.

Store operations

ICA receives revenue through royalties and/or

profit distributions from the Swedish stores as

well as through franchise fees from Norwegian

franchisees.

Retail sales are an important source of earnings

in Norway, where ICA owns 48 percent of the

stores, and in Rimi Baltic in Estonia, Latvia and

Lithuania, where all the stores are wholly owned.

In Sweden, ICA receives revenue from

consumers through Maxi Special, a company that

sells non-food items to Maxi ICA Hypermarkets.

It also generates revenue from the 60-odd stores

where ICA Sverige owns more than 90 percent of

the shares. As part of the ICA idea, ICA provides

new retailers with startup capital through Group

contributions during a subsidiary stage. During

this period the subsidiaries are consolidated and

ICA GROUP 13

Work with its product assortment is one of the ICA Group’s most important strategies. Each year ICA launches between 200 and 300 products under its own brand name. In 2008 around 80 products in the new “ICA I love eco” line will hit the stores.

“Private label products are one of our most important brand bearers, since they follow the customer all the way home. It is especially important therefore that we commit to products that reflect the values we want to project,” says Ariella Rotstein, brand manager at ICA.

Trend spottingAll product assortments are the result of a careful analysis of current buying trends. ICA annually conducts a number of market and customer surveys.

“Among the trends we are looking at most closely are organic foods, health and convenience. We are also seeing that more and more people are shopping at discount stores during the week, but buying higher value-added products on the weekend. The latter require greater knowledge and special-ization within ICA. We try to meet all these needs through the selection offered at ICA stores,” says Ariella Rotstein.

New, inspiring organic line

Many benefitsICA already had an organic line called ICA Ekologiskt, which has now been rebranded as the “ICA I love eco” line. In this way, it hopes to reach a wider target audience than just those who are environmentally conscious or well-informed.

“We wanted a new organic alternative to highlight its benefits. Organic products are not only good for animals and nature. They taste good too,” says Ariella Rotstein.

In connection with the branding effort, ICA is broadening its organic line and launching around 60 new products this spring, with more to come. New organic products to look out for include pasta sauces, apricots, cocoa, jams, balsamic vinegar and instant coffee.

16 ICA’S COMPANIES

The food retailer ICA Sverige operates throughout

the country in cooperation with independent

retailers, who own and manage their stores. ICA

Sverige promotes sales to consumers and assists

stores to be more efficient. ICA Sverige identifies

and develops new locations and helps to enhance

current stores through renovation or expansion.

In addition, ICA Sverige is responsible for local

marketing communications and logistics.

ICA retailers in Sweden make an average of

70 percent of their total purchases through ICA

Sverige. The remaining 30 percent mainly consists

of fresh foods, exotic produce and bread, which

in many cases come directly from suppliers or

local producers. It is in the interests of individual

retailers to make their purchases from ICA Sverige

and help ICA AB to achieve high efficiency and

lower unit costs.

Highlights in 2007

Sales in Swedish ICA stores rose by 5.7 percent.

All formats reported positive sales trends,

contributing to the increase.

New store openings and renovations continued

at a fast pace in all store formats. In total, 16 stores

were opened during the year. In addition, major

changes were made in shelf space in 22 stores,

and 210 stores were renovated. A total of 52,000

square meters of new sales space was added.

ICA’s attention to stores in rural areas has helped

to slow closures; 31 stores (33) were closed

during the year, of which four were in rural

communities.

Product assortments have been a priority, with

an emphasis on fresh prepared foods and

organic products. A number of product

launches are scheduled for 2008.

ICA Sverige

ICA Sverige is one of Sweden’s leading food retail companies. It is the principal supplier to ICA retailers, who own and manage their stores as independent businesses. In 2007 ICA Sverige posted revenue of SEK 51,438 million. Sales in the 1,382 stores amounted to approximately SEK 80,737 million, excluding VAT.

A number of ICA stores were discovered to have

repackaged meat and changed the date. The

story was widely covered in the media, and led

ICA Sverige to take a series of measures.

To meet customer demand for local products, a

new project called “Local Tastes” was created.

The aim is to identify local producers and find

new ways for them to reach customers through

ICA stores in Sweden.

ICA Sverige always tries to keep prices in check,

but conditions during the year made that

difficult, mainly owing to higher global prices for

milk and grains.

Store formats

To meet customer needs, ICA Sverige has four

store formats in the convenience store, super-

market and hypermarket formats.

The ICA Nära and ICA Supermarket formats

performed well, posting sales increases of 4.7

and 3.6 percent, respectively. Nine new ICA Nära

stores and one new ICA Supermarket store were

opened during the year.

Sales for ICA Kvantum stores increased by 4.3

percent. Three stores (two of which were conver-

sions) were opened in the format during the year.

Hypermarkets developed strongly, and new

store openings continued at a fast pace. Five new

Maxi ICA Hypermarkets were opened during

the year. In addition, three former ICA Kvantum

stores were renovated and converted to Maxi ICA

Hypermarkets, whose total revenues increased by

11.2 percent.

Market

The Swedish population is approximately 9.2

million. The food retail market (excluding gas

stations) grew by 4.5 percent (5.1), according to

preliminary figures, to SEK 223 billion. Higher

About ICA Sverige

Market share

Mission: To be the leading retail company with a focus on food and meals.

Sales 2007: SEK 51,438 million (48,301)

Operating income 2007: SEK 2,372 million (2,557)

Average number of employees*: 5,107 (4,752)

Number of stores: 1,382 (1,397)

* Excluding employees hired by individual ICA stores

Sales, SEK million


The market share is based on food sales in Sweden according to the National Accounts, the industry standard.

ICA’S COMPANIES 17

global prices of raw materials affected food prices,

which rose by an average of 2.7 percent during the

year.

Three companies – ICA, Coop and Axfood –

together account for 64 percent of the Swedish

retail market. Coop is adapting to consumer

trends and has improved its range of organic

and local alternatives. Coop Extra is doing well,

while Coop Forum has reported weaker results.

Axfood’s discount chain, Willy:s, which has

generated much of the company’s success in

previous years, noted weaker development in

2007. BergendahlsGruppen is expanding north and

during the year opened City Gross stores in Falun

and Sundsvall.

Sales for Swedish ICA stores rose by 5.7 percent,

and their share of the Swedish food retail market

climbed to 36.8 percent (36.5). The average

purchase increased.

Discounters were quickly gaining ground in the

market a few years ago. Price cuts by traditional

players have since strengthened their position,

however. Price is no longer as decisive to which

stores consumers choose; many are more

interested in other considerations, such as a wide

selection, high quality and green alternatives.

During the year ICA acquired 23 stores or store

locations from the discount chain Netto and

converted six of them to ICA Nära stores and one

to an ICA Supermarket. The rest were sold to third

parties. Lidl is adapting to the Swedish market

by adding more brands that Swedish consumers

are familiar with, as well as products with higher

quality.

Focus in 2008

Growth in the food retail sector is expected to

continue, and market prospects are considered

good. Prices are clearly impacted by global factors

such as higher raw material prices, but there

are signs that prices may turn lower in 2008.

ICA Sverige tries to use negotiating models with

its suppliers that ensure that any decreases in

raw material prices will reduce prices in stores

correspondingly.

Product assortments remain a priority, and in

2008 a number of prepared meals, organic foods,

packaged fish and other private label products will

be launched.

ICA Sverige continues to improve logistics

efficiency by utilizing the new, highly automated

warehouse in Helsingborg. New store openings in

all formats continue at a fast pace.

ICA Sverige’s store formats as of December 31, 2007

Store formats DescriptionNo. of stores

Sales excl. VAT

No. of products

ICA Nära are small, convenient stores with good service, a narrow product range and quality fresh foods. Many serve as pick-up sites for Apoteket and Systembolaget, the state-run pharmacy and alcohol monopolies, and handle sales for ATG, the Swedish off-track betting service.

743 SEK 12,732 m 3,000–5,000

At ICA Supermarket, customers can find most of what they need on a daily basis or for special occasions. Per-sonal service is high, and the stores carry a wide range of fresh foods.

460 SEK 27,695 m 6,000–10,000

ICA Kvantum stores are designed to be the leading super-market in their communities, with food for everyday, weekends and special occasions. They offer a variety of fresh food items, anti-allergy foods, healthy, organic alter-natives and local products.

119 SEK 20,596 m 10,000–30,000

At Maxi ICA Hypermarkets, customers will find everything they need at good prices under one roof. In addition to a wide variety of foods, these stores carry books, clothes, housewares, sporting goods and everything for the gar-den. They have extended opening hours and are conven-iently located for customers who drive to the store.

60 SEK 19,714 m 30,000–45,000

ICA Sverige serves an overall support function for ICA stores, in accordance with the so-called ICA agreement. This is complemented by agreements for each format, through which the stores join forces under the ICA name to secure better purchasing terms and carve out a clearer image in the marketplace.

ICA agreementsA large number of the 1,382 Swedish ICA stores have an ICA agreement – a shareholder and financing agreement whereby ICA Sverige AB retains the rights to the store location while the retailer owns and runs the store, usually as a limited company.

New stores are usually opened by ICA Sverige, which then offers attractive financing terms to retailers to run them.

Depending on the store’s size and annual sales, the retailer then pays a royalty and in some cases a profit share to ICA Sverige. ICA Fastigheter Sverige AB owns most of the store properties or holds the leases on them.

Maxi SpecialMaxi ICA Hypermarkets have dedi-cated home and leisure departments, which are operated as branches by ICA Sverige’s subsidiary Maxi Special AB. Maxi Special is responsible for purchases and sales to these depart-ments in Maxi ICA Hypermarket. The properties are usually owned by ICA Fastigheter Sverige AB, which leases them to the retailer’s company or to Maxi Special.

ICA Sverige’s standard agreements


The food retailer ICA Norge operates through its

own stores and franchises, in addition to associ-

ated stores. ICA Norge promotes sales to custom-

ers and assists stores to improve efficiency. ICA

Norge identifies and develops new locations

and helps to enhance current stores through

modernization or expansion. It is also responsible

for portions of local marketing communications

and logistics.

Highlights of 2007

Sales for Norwegian ICA stores decreased by 0.9

percent. All formats reported higher sales for

comparable stores.

New stores were opened at a fast pace. The

nine stores that opened their doors during the

year added approximately 14,000 square

meters of sales space. Around thirty stores

were modernized as well.

Efforts to structure the store portfolio contin-

ued, as a result of which ICA Norge closed or

sold a total of 60 stores.

ICA Norge appointed a new management team.

The program “Take off” was started to create

Norway’s best stores while raising sales and

profitability. The focus is on five main areas: the

ICA Maxi hypermarket format, the Rimi discount

format, logistics efficiency, product assortments

and improvements to business control and

reporting.

A revision of the contractual terms between ICA

Norge and its stores was initiated and will

continue in 2008. The aim is to increase the

focus on store operations and sales.

ICA Norge

ICA Norge is a Norwegian food retailer, with 642 stores operated by the company or as franchises. In 2007 ICA Norge posted revenue of NOK 16,534 million, corresponding to SEK 19,095 million. Store sales amounted to approximately NOK 19,709 million, excluding VAT.

ICA Norge supported the establishment of an

association of franchisees that will give them a

greater role and insight into central decisions

and processes.

Efforts to help customers eat healthy continued.

All ICA Supermarked stores introduced

sugar-free checkout areas during the year.

ICA Norge took part in a project with the

football club Vålerenga to make it easier for

young people from foreign backgrounds to get

their first job.

ICA Norge launched a pilot project called “Buddy

with Your Body” in Vågå, with ICA Nær Vågå as a

base. Schools received shipments of fruit twice a

week, along with educational material on fruit

and vegetables.

Store formats

ICA Norge has four store formats in the conven-

ience store, supermarket, hypermarket and

discount formats. While Norwegian consumers

are price conscious, they also want larger stores

with a wider selection of prepared and fresh

foods. With its four store formats, ICA Norge tries

to meet these needs and cover every position

in the market. New stores were opened at a fast

pace, with three ICA Maxi, five ICA Supermarked

(including one conversion from Rimi) and two ICA

Nær stores added during the year. Aggregate sales

decreased by 0.9 percent. For comparable units,

sales rose by 3.0 percent.

The ICA Supermarked formats developed

strongly, with sales rising by 7.4 percent. ICA Maxi

posted an increase of 4.9 percent. ICA Naer and

Rimi decreased by 2.3 and 6.3 percent, respectively,

partly due to the large number of stores closed

About ICA Norge

Market share

Mission: To be the leading food retail chain in Norway with a focus on food and meals.

Sales 2007: NOK 16,534 million (15,966)

Operating income 2007: NOK 127 million (89)

Average number of employees*: 4,348 (4,043)

Number of stores: 642 (693)

*Excluding employees of franchise stores.

Sales, NOK million



and sold in both formats. For comparable units,

all formats reported increases: 3.0 percent for ICA

Nær, 2.3 percent for ICA Supermarked, 3.5 percent

for ICA Maxi and 3.2 percent for Rimi. Of ICA

Norge’s 642 stores, slightly over half are operated

as franchises, while the rest are wholly owned.

Market

The Norwegian population is approximately

4.7 million. The food retail market (excluding

convenience stores and gas stations) grew by 5.9

percent (5.1), according to preliminary estimates,

with sales of approximately NOK 116 billion,

excluding VAT. Food prices increased by slightly

over 2.5 percent during the year.

Coop Norge, NorgesGruppen and Rema

together account for a large share of sales in the

Norwegian market and are ICA Norge’s largest

competitors. Discount chains account for about

half of sales. ICA Norge’s market share decreased

during the year to 17.5 percent (19) due to the

restructuring of the store portfolio.

Many consumers are demanding a wider

product selection, and chains like ICA Norge are

developing hypermarket concepts. Many are

also expanding their selection of fresh foods and

produce. The German discount chain Lidl, which

entered Norway in 2004, has begun opening new

stores in urban areas and now offers a wider range

of Norwegian products.

Focus in 2007

Efforts to increase sales and develop Norway’s

best stores continue. ICA Norge will open new

stores and continue to modernize its existing

store network. Significantly fewer stores are

expected to be closed in 2007.

Product assortments remain a priority, with an

emphasis on the range of fresh foods, healthy and

organic products, and non-food items.

ICA Norge’s store formats as of December 31, 2007

Store formats DescriptionNo. of stores

Sales excl. VAT*

No. of products

ICA Nær convenience stores offer good service and a specially designed product selection from local suppliers.

275 NOK 4,407 million 3,000–6,000

ICA Supermarked stores are designed for customers who appreciate good food and a wide variety. Personal service is high and there is a wide selection of fresh foods, including a deli counter where customers can find the latest food trends.

79 NOK 4,558 million approx. 10,000

ICA Maxi stores carry everything in one location at good prices. In addition to a wide selection of foods, these stores sell books, clothes, housewares, music and DVDs. They are conveniently located for customers who travel by car.

25 NOK 2,833 million 15,000–24,000

Rimi discount stores make it easy and convenient for customers to do their daily shopping. With modern, airy stores, Rimi offers customers the everyday products they need at good prices.

263 NOK 7,910 million approx. 3,000

There are also 118 associated stores operating under the names Livi and Servicemat, which had a turnover of approxi-mately NOK 360 million (excl. VAT) in 2007.

*Sales refer to aggregate sales for both company-owned and franchised stores.

Ownership and operation of ICA Norge’s stores is divided into two main models: wholly owned branch stores and franchises. All stores are supported by an integrated system for purchasing, product selection, supply chain, administration and marketing.

Branch storesBranch stores are owned by ICA Norge. They represent more than half of the Rimi stores and nearly all ICA Supermarked and ICA Maxi stores.

Franchise agreementsRetailers operate their stores as independent franchises and pay a fee to ICA Norge based on a percentage of their sales. ICA Norge provides a number of central services, including marketing and administration. ICA Norge owns or holds leases on most of the franchise properties. ICA Nær is a franchise chain, and 48 percent of Rimi stores are operated as franchises.

Associated storesICA Norge primarily assists so-called associated chains such as Livi and Servicemat with purchasing and distribution.

ICA Norge’s standard agreements


Rimi Baltic was established as a joint venture

between ICA and Kesko Livs of Finland in 2005. By

integrating Rimi Baltic as a wholly owned entity,

ICA has created a stronger Nordic-Baltic alliance

with opportunities for synergies in administration,

IT and purchasing.

The company operates chains of wholly owned

stores in three formats. Centralized purchasing

of direct imports creates synergies between

the formats and countries. A central logistics

and distribution function manages a network of

distribution centers in the three Baltic countries.

Support functions for finance, IT and real estate

management are also centralized to ensure short

decision-making and reporting channels.

Highlights of 2007

Sales rose by 19.3 percent to EUR 1,161 million (972).

14 new stores were opened in the region.

Internal efficiency was a priority, with the goal of

improving profitability. A major project was

conducted to optimize management systems

and included reporting and meeting efficiency.

A project was launched to improve energy

efficiency at distribution centers and in stores.

A new central kitchen opened in Estonia early

in the year has taken over food production

previously handled by the stores.

Store formats

Rimi Baltic owns all its stores and coordinates

their supply chain. It operates three formats in

the Baltic countries to adapt to different locations

and customer categories. Rimi Hypermarket

and Rimi Supermarket focus on fresh foods and

good service, providing counters for hot and

cold foods, deli, fish and cheese. The product

Rimi Baltic

Rimi Baltic operates several of the Baltic region’s most modern gro-cery chains, comprising a total of 215 stores. In 2007 its sales in the region increased by 19.3 percent to EUR 1,161 million. As of December, 2006 Rimi Baltic is a wholly owned subsidiary of ICA AB.

range offered by Rimi Supermarkets includes

food-related non-foods, while the hypermarkets

also sell apparel, housewares, music and DVDs,

and seasonal non-food items. Rimi Baltic has also

developed a compact hypermarket format where

the emphasis is on atmosphere, comfort and

efficient use of space.

To serve small communities and lower income

consumers, Rimi Baltic offers two hard discount

chains with limited product lines and highly

competitive prices: Säästumarket, Estonia’s largest

discount chain, and SuperNetto, which operates in

Latvia and Lithuania.

Market

A total of around 7.5 million people live in

the three Baltic countries: Estonia, Latvia and

Lithuania. With a population of nearly 3.5 million,

Lithuania is the largest market, followed by Latvia

with 2.5 million and Estonia with 1.5 million.

The Baltic market for food products grew by 12

percent in 2007, to approximately EUR 6.7 billion.

In 2007 Maxima was the market leader in the

region, followed by Rimi Baltic with a share of 17.3

percent. The discount market, where Rimi Baltic

has a very strong position, has stagnated due to

rising real wages. Although it has tested softer ver-

sions of its discount concept, Rimi Baltic remains

confident in the discount market long-term.

In Estonia, competition was fierce in 2007,

mainly due to Maxima’s rapid expansion in

discount stores. Rimi Baltic’s sales rose by 5.3

percent, but its market share decreased slightly

to 22.4 percent (24). The company is the market

leader along with cooperatively owned ETK. The

Selver chain had a market share of 14.6 percent

and Maxima had a share of 9.8 percent.

In Latvia, Rimi Baltic’s sales increased by 26.9

percent and its market share was approximately

23 percent (22). The biggest competitor was

Maxima of Lithuania, with a market share of 20

About Rimi Baltic

Market share

Mission: Rimi Baltic’s stores will be its customers’ first choice in the fast-growing markets in Estonia, Latvia and Lithuania

Sales 2007: EUR 1,161 million (972)

Operating income 2007: EUR 11.6 million (2.2)

Average number of employees: 8,221 (9,132)

Number of stores: 215 (205)

Sales, EUR million


percent, followed by Elvi and Mego, with 5.5 and

3.1 percent, respectively. Selver is expected to

open stores in Latvia in 2008.

In Lithuania, Rimi Baltic increased its sales by

27.6 percent and is the fourth largest company,

with a market share of approximately 9.3 percent

(7). Maxima dominates the market, with a market

share of 46.9 percent, followed by the domestic

chain IKI with 17 percent and Norfa with a market

share of 13.9 percent.

Focus in 2008

Competition in the Baltic region is expected to

increase in 2008 when five European chains allied

under the name Coopernic enter the market after

acquiring an 80 percent interest in IKI in Lithuania

and Latvia. The five players are Leclerc (France),

Conad (Italy), Rewe (Germany), Colruyt (Belgium)

and Coop in Switzerland.

Rimi Baltic will focus on upgrading and modern-

izing its concept in the supermarket segment while

pursuing its hard discount profile. It will improve

quality levels in the hypermarket concept as well.

In Estonia, Rimi Baltic will continue its upgrades and

launch a new store project to regain market share.

The experience gained by opening a central

kitchen in Estonia will be used to start similar

kitchens in Lithuania and Latvia to produce meal

solutions for the Rimi brand. These kitchens will

replace existing production departments in the

stores and contribute to improved quality and

efficiency.

A new facility to centralize meat packaging

will be established in Lithuania for distribution to

stores in all three countries.

The company will intensify the purchasing

cooperation with other parts of ICA with an

emphasis on non-foods, fresh foods and private

label products.

Number of stores by country and format as of December 31, 2007

Hypermarket Supermarket Discount Total

Estonia 9 5 51 65

Latvia 13 30 51 94

Lithuania 10 22 24 56

Total 32 57 126 215

All Rimi Baltic stores are managed as wholly owned branches of the company.

Rimi Baltic’s standard agreements

Rimi Baltic has launched an extensive effort to upgrade and improve its stores in the supermarket format. In 2007 two Latvian stores with unique locations and different customer categories were given a major facelift.

“The first two stores we chose to renovate have the highest customer traffic in the country, and the key has been to care-fully analyze customer needs,” says Valdis Turlais, President of Rimi Latvia.

Focus on convenienceThe streets of Riga’s old town are filled with office workers, tourists and shoppers. The Rimi Galleria supermarket is located in one of its historic buildings. With its special location, it was the first Rimi store to open in the country, and celebrated its 10th anniversary in 2007.

With the help of the Paris-based agency Market Value, the store was totally renovated. Sales space was increased and a bakery was added, which otherwise are found only in Rimi Baltic’s hypermarkets.

Customer needs, new buying habits and location are critical in renovations

“Customers in this area are looking for a coffee, lunch or an afternoon snack, so we have concentrated on prepared foods, take away and a grilled selection. We also have a produce section no other store can match,” says Valdis Turlais. Convenient shopping and faster cashiersThe second store that was renovated, Rimi Stacia, is located inside the bustling Central Station. In October 2007 it was reopened after a total renovation and has since attracted a completely different clientele. With more than 60,000 customers per week, it is the busiest of Rimi Baltic’s super-markets in Latvia.

“Many customers have a train to catch or are hurrying to work, so they appreciate that they can get in and out quickly. We have emphasized self-service and food that is ready to grab. With eleven cash registers, we can certainly provide fast service,” concludes Valdis Turlais.


A fair interest rate on current accounts, simple-to-

understand terms and low fees are the philosophy

at ICA Banken, which was established in 2001. ICA

Banken offers its own branded products. When

ICA’s card is used, it also reduces processing fees

for ICA retailers.

Highlights of 2007

ICA Banken began offering equities, mutual

funds and individual pension savings (IPS) in

cooperation with Nordnet Bank AB.

ICA Banken was named Bank of the Year 2007 by

the magazine Privata Affärer.

ICA Banken noted substantial growth in its

customer base, adding 65,000 new customers.

ICA Banken was nominated as Sweden’s best

workplace in Alecta’s annual survey.

ICA Banken added 36 ATMs in cooperation with

and adjacent to ICA stores around Sweden.

ICA Banken processed the Swedish Migration

Board’s payments to asylum seekers.

Concept

ICA Banken offers the simplified services

customers want. This includes current accounts

and various forms of bank cards. ICA Banken also

offers unsecured loans with competitive terms.

Mortgage loans are offered in cooperation with

SBAB, and accident, life and disability insurance in

cooperation with Genworth Financial. ICA Banken

continues to install new ATMs in stores.

The number of banking customers who utilize

ICA Banken’s banking services increased to

350,000 (285,000) during the year. The number

ICA Banken

ICA Banken offers financial services that make life a little easier for customers and in the process strengthens their loyalty to ICA. During the year it launched new savings products and broadened its range of consumer services.

of ICA Banken cards in issue has increased to

260,000 (213,000). ICA Banken also administers

ICA’s customers card.

Market

The four major Swedish banks – SEB, Swedbank,

Nordea and Handelsbanken – continue to account

for about 80 percent of the market. Smaller banks

such as ICA Banken, Skandiabanken and Läns-

försäkringar Bank have well-established positions,

however.

In the Swedish Quality Index’s annual survey,

ICA Banken dropped from first place to fifth.

The Index’s analysis showed this may have been

because ICA Banken was unable to offer equity

and pension savings during a large part of the year.

Focus in 2008

ICA Banken has developed a broad-based offering

for consumers and will utilize various marketing

measures to cultivate new customers.

To improve customer service, ICA Banken has

started a training project where service staff at a

number of Maxi ICA Hypermarkets learns about

the bank’s services. During the year ICA Banken

will open payment terminals in Norwegian ICA

and Rimi stores, which will reduce transaction

costs for customers who use other credit cards.

A consolidation of processes and organiza-

tional structures, along with sales and customer

service, will be the priorities in the year ahead.

About ICA Banken

Mission: To make life a little easier for ICA’s customers through its financial services and increase their loyalty to ICA. It also reduces transaction costs for ICA stores and ICA AB from customers who use other bank and credit cards.

Business volume (deposits + lending incl. mortgages) 2007: SEK 14,728 million (13,480)

Deposits 2007: SEK 7,509 million (6,394)

Sales 2007: SEK 517 million (458)

Operating income 2007: SEK 83 million (11)

Average number of employees: 196 (174)

Number of ATMs: 105 (69)

Number of payment terminals: 6,000 (6,000)

Business volume, SEK million


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DExCorporate Responsibility Report

26 CORPORATE RESPONSIBILITY

We are strongly committed to our work with ethics

and social responsibility, which is an important

component to achieve ICA’s vision and mission,

and rests on a foundation of seven position state-

ments that describe what we do to contribute to

society’s development. We call them “ICA’s Good

Business,” and we want everyone who works at

ICA to know and follow these positions. Through

them, we also cover the ten principles of the UN’s

Global Compact, of which ICA is a signatory.

Coordinated response to climate concerns

Environmental issues, especially as relate to the

climate, are one of the areas we were the most

involved with during the year. We have received

more questions than ever from customers on our

work in the area and how they themselves can

reduce their environmental impact.

The Swedish and Norwegian governments

were a driving force during the year in the EU’s

decision to reduce greenhouse gas emissions.

ICA has worked for years with environmental

issues and has signed the Business Climate Call in

Sweden and the Climate Promise in Norway. In

April we adopted a climate strategy for the Group

with the long-term objective of reducing known

greenhouse gas emissions by 30 percent by 2020.

The analysis we have made of our operations

indicates that the goal is reasonable, and in 2008

we will formulate detailed targets for various

areas of operations. We have seen that in ICA’s

parts of the chain, store operations generate the

largest share of known greenhouse gas emissions,

which is why we are giving priority to reducing our

Work with ethics and social responsibility is a foundation of our business

One of the ICA Group’s overall strategies is to contribute to positive, sustainable development, which is a growing concern in the world and for ICA. We are one of the Nordic region’s most visible companies, and people expect us to take responsibility for how our operations impact the world around us. We are humbled by this and see it a source of both motivation and inspiration for future efforts.

impact in this area. But we have also taken several

other measures, including projects to increase rail

transports and climate offsets for business travel.

Read more about these measures on pages 32–39.

Health emphasis continues

Food and health are clearly linked, and as a leader

in the industry we take health concerns seriously.

We have continued to prioritize health issues and

pursued a campaign launched in Norway in 2006.

We have made it easier for Norwegian customers

to find nutritious products through the introduc-

tion of the keyhole label in our stores. Together

with Kostforum, a Norwegian alliance on nutri-

tional issues, we arranged a seminar during the

year to show how the food industry and voluntary

organizations can work together to implement

the Norwegian government’s action plan to

improve eating habits. We have also been a driving

force in the efforts to create a uniform health

labeling system for the Nordic countries, which

would benefit both customers and suppliers.

Diversity and social responsibility

Work with diversity and human resource develop-

ment is imperative to ICA’s long-term success.

During the year we established an HR policy for

the Group and strengthened our gender equality

plan. We also performed a salary analysis from a

gender perspective and corrected the differences

we realized were due to gender.

We take our responsibility for sourcing from

high-risk countries seriously and are proud to

have received positive evaluations in two reports

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CORPORATE RESPONSIBILITY 27

published by Fair Trade Center on canned tuna

and roses. Supplier inspections continue. To better

monitor their compliance with quality and human

rights standards, we took a major step during the

year by preparing to establish a department at the

Hong Kong office scheduled to open in 2008. By

being on site, we can maintain a closer dialogue

with suppliers in the region.

Food safety is a priority

Late in the year we at ICA were upset to learn

that a few isolated stores were incorrectly dating

packages of chopped meat, and we took strong

action. ICA retailers play an important role in

building the confidence of customers, and we

have stressed that we will not accept anything less

than full compliance with food safety laws and

the responsibility of every store to consistently

maintain an inspection program. Customers

should never question whether the food they

buy at ICA stores is safe to eat. We have therefore

presented a strong action program that includes

mandatory training, independent quality audits

and unannounced inspections of ICA stores’

internal controls.

Encouraging dialogue

We are continuously working to minimize the

environmental impact of our operations and

take responsibility for the conditions in which

our private label products are produced. Health

concerns remain a priority, as do efforts to ensure

the most fundamental thing we can: that the food

customers buy in our stores is of high quality and is

safe to eat, and tastes good.

The dialogue we maintain with customers,

employees, NGOs and other stakeholders is a key

to our work in these areas. In 2008 we will try to

expand upon this dialogue. We have also intro-

duced an IT tool to monitor non-financial data

in the Group, which will facilitate reporting and

monitoring and ensure consistently high quality in

the key performance indicators we use. It will also

make it easier for us to set goals internally.

We at ICA are driven by an ambition to make

continuous improvements in these areas. We

ask you to continue to inspire us and welcome

opinions about our work. It helps us in our efforts

to contribute to society’s development.

Kenneth Bengtsson President and CEO

Lisbeth Kohls Senior Vice President Corporate Responsibility

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Seven position statements called “ICA’s Good

Business” serve as a basis for ICA’s work with eth-

ics and social responsibility. ICA is also a signatory

of the UN’s Global Compact and supports its ten

international principles on human rights, labor,

environment and anti-corruption.

ICA’s Good Business and the Global Compact’s

principles are an integral part of operations and

imperative in order to live up to ICA’s core values

and achieve the Group’s vision and mission. To be

a sustainable company, ICA will:

be driven by profitability and high ethical standards.

listen to customers and always base its decisions on their needs.

nurture diversity and growth among employees.

Governance of the Group’s corporate responsibility work

With good profitability as a foundation, ICA wants to live up to the expectations of customers and society with regard to the environment, quality, work environment and conditions, human rights, commu-nity affairs, product quality, health and economic responsibility. Working with sustainable development is critical to the company’s long-term success.

maintain an open dialogue internally and with the community.

ensure product safety and quality.

promote a healthy lifestyle.

adopt sound environment practices to promote sustainable development.

Policies and guidelines are in place to convert

these points into practice in day-to-day activi-

ties. This is done through systematic work and

management systems in the companies, through

alliances with other organizations and through

regular contacts with key stakeholders. Concrete

goals and activities are included in each com-

pany’s business plan.

Every employee must be familiar with the

values that serve as the basis of their work. ICA

Points 1–6: ICA has a monitoring system for private label products. For other suppliers, it sets requirements in its policies. ICA systematically monitors suppliers in high-risk nations through BSCI audits. Visits have been made to suppliers to discuss potential improve-ments. ICA takes a structured approach to gender equality and diversity.

Points 7–9: In 2007 ICA increased its sales of organic products and began expanding the range, in addition to adopting a climate strategy with the goal of reducing greenhouse gas emissions.

Point 10: ICA monitors compliance in accordance with the guidelines in the business ethics policy, including an inspection program for competi-tive practices. Internal dialogues on business ethics are maintained by management teams and through interactive training for all employees.

The Global Compact’s ten principles for corporate responsibility

Businesses should: Read more on page:

1. Support and respect the protection of internationally proclaimed human rights in areas they can impact.

43–44

2. Make sure that they are not complicit in human rights abuses. 43–44

3. Uphold the freedom of association and the effective recognition of the right to collective bargaining.

43–44

4. Eliminate all forms of forced and compulsory labor. 43–44

5. Effectively abolish child labor. 43–44

6. Eliminate discrimination in respect of employment and occupation. 40–42

7. Support a precautionary approach to environmental challenges. 32–37

8. Undertake initiatives to promote greater environmental responsibility. 32–37

9. Encourage the development and diffusion of environmentally friendly technologies. 32–37

10. Work against corruption in all its forms, including extortion and bribery. 28–30

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Vision

Mission

ICA’s core values

ICA’s Good Business and Global Compact

has therefore developed a web-based training

program on ICA’s Good Business that will be a man-

datory part of the introductory program for new

employees in Sweden and Norway. All employees,

store managers and retailers will receive the

training. In 2007 it was completed by 7 percent of

ICA’s employees in Norway and Sweden.

Management and organization

Group Management has ultimate responsibility for

ICA’s corporate responsibility goals and strategies.

The Code of Professional Conduct and Ethics

team is responsible for ICA’s policies and their

implementation, as well as suggesting priorities

and monitoring ethical dilemmas, risks and ICA’s

reputation.

This cross-functional team is led by the head

of the Corporate Responsibility department and

includes managers from Legal Affairs, Assortment

& Sourcing (food products), Human Resources,

Corporate Communications, ICA Sverige and ICA

Norge. Beginning in 2008 Rimi Baltic will also be

participating. In 2007 the team held six meetings

and provided a summarized account which was

presented to Group Management. Day-to-day

work on many of the issues is handled by the

Corporate Responsibility department, which

organizationally falls under the Group marketing

function at ICA AB. Corporate Responsibility has

managers responsible for example health, product

quality, in-store quality, the environment and

recipe development.

In 2007 Group Management decided to adopt

a climate strategy and update the quality and

environmental policy in accordance with it. It also

decided to adopt an HR policy for the entire Group.

Stakeholder dialogue

ICA maintains an open dialogue with a number of

stakeholders on its sustainability work. The most

important are customers, employees, owners,

retailers, suppliers, government authorities and

NGOs.

ICA’s stakeholders have different expectations

and place different demands on ICA in terms of

sustainability. Through this dialogue, ICA gains

information and experience that can be used to

identify priority areas and potential improvements.

ICA works with a number of organizations

and participates in networks focused on social

responsibility, the environment, health and food

safety. Such forums give ICA the opportunity to

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30 corporate responsibility

compare and improve its ways of working. More

information can be found in each section of the

Corporate Responsibility Report.

Dialogue partners include:

Consumer organizations

Amnesty Business Forum

WWF in Sweden and Norway

Red Cross

World Childhood Foundation

Global Compact Nordic Network

Kostforum in Norway

National Food Administration in Sweden and Norwegian Food Safety Authority

Swedish Food Federation

Dagligvareleverandørenes Forening, the Norwegian grocers’ trade association

Svensk Dagligvaruhandel and Handels- og Servicenæringens Hovedorganisasjon, the retailers’ trade associations of Sweden and Norway

ICA is trying to expand the dialogue with

stakeholders as part of its sustainability work, with

the aim of developing a more formal, structured

process for this.

about the corporate responsibility report

The Corporate Responsibility Report covers the

Group’s work in the areas of the environment,

social responsibility and economic development.

ICA’s social responsibility includes work environ-

ments and conditions, human rights, community

affairs, product quality and health.

The Corporate Responsibility Report is pub-

lished annually together with ICA’s Annual Report.

The latest report was published in March 2007.

priority issues and results from dialogues with stakeholders and interest groups

stakeholders – approach current issues and expectations activities and results

owners Maintain a good return

Effective operational controls

Improvements in financial information

board of Directors Management of risks in invest-ments associated with quality, health, ethics and environment.

Thorough decision guidance

authorities – Continuous

dialogue

Legal compliance

Food safety

Product responsibility

Product labeling

Environmental aspects

Continuous training on new and cur-rent laws

Apply cautionary approach

Improve labeling of healthy foods

customers – ICA’s customer

contact – Customer surveys – www.ICA.se – Meetings in stores

Food safety and labeling

Growing demand for organic alternatives

Food additives

Accommodations for visually impaired

Customer satisfaction with stores

Extensive training in food safety and handling in the stores

Internal training in product labeling

Expand organic product range

Review additives in ICA’s private label products

Continuous improvements in stores

ica retailers and franchisees – Advisory structure– Meetings– Continuous

dialogue

Ensure high quality in stores

Offer a customized, competitive product assortment

Improve security for store employees

Provide training in, and ensure high standards of, food safety and handling

Expand the range of organic and healthy choices

Cut in half the number of robberies through training and preventive measures

employees – Surveys – Discussions– Intranet – Employee news-

letter, ICA Inside

Continuous competence and workplace development

Diversity and gender equality activities

Internal development opportu-nities

ICA Skolan has trained over 11,000 employees on 1,200 days

Improvements to performance reviews

Analyze and rectify gender-based salary discrepancies

suppliers – Continuous

dialogue– Visits

Increase the number of local sup-pliers and locally grown products

Place demands on working condi-tions and social responsibility for producers in high-risk countries

Representatives tour Sweden to meet local producers that want and have the potential to develop together with ICA

Introduce suppliers to BSCI and give advice prior to third-party audits according to this system for social responsibility

non-governmental organizations – Continuous

dialogue

Take responsibility for health, envi-ronmental and social issues

Manage climate issues

Transparent, open communication

Climate strategy and targets through 2020

Further inspections of suppliers in high-risk countries

Adapt corporate responsibility report to GRI guidelines 3.0

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Contact

Lisbeth Kohls Senior Vice President Corporate Responsibility

Telephone: +46-8-561 502 12 E-mail: [email protected]

Contents of the report

The Corporate Responsibility Report is designed

based on the latest version (3.0) of the Global

Reporting Initiative (GRI). The information and

key indicators presented in the report have been

selected using GRI’s core indicators and principles

for defining report content and the UN’s Global

Compact. The selection was based on the impact

of activities from a sustainability perspective

and on people and the environment, as well as

their strategic importance for the Group as a

whole. The report also mentions events that have

affected ICA during the year and activities that

employees are proud of.

The report is aimed at a broad target audience

of employees, customers, authorities, owners,

analysts, business partners, students and NGOs.

During the year ICA began using an IT tool to

help in compiling data for the report. The tool

supports reporting and monitoring and ensures

consistent quality in the indicators presented. No

adjustments or restatements have been made in

previous-year data.

Data is unavailable for certain ratios for one of

the regions Sweden, Norway or the Baltic countries.

Work is under way to ensure that all regions mea-

sure and report data in the same way, in order to

ensure the quality of reporting in future periods.

ICA plans to further improve the report and adapt

it to relevant GRI requirements. ICA’s Corporate

Responsibility Report meets the requirements for

GRI application level C.

The report for 2007 has not been reviewed by

ICA’s auditors.

Limitations

The Corporate Responsibility Report covers activi-

ties with a significant impact from a sustainability

perspective. This includes activities at offices, in

logistics and in some cases in stores operated by

ICA’s wholly owned companies and the Parent

Company. Through agreements in Sweden and

Norway, ICA works together with retailers and

franchisees. Information on stores is presented

where relevant to illustrate the reach of ICA’s

corporate responsibility work. Operations outside

ICA’s control, such as those of suppliers, are not

included.

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ICA’s climate strategy

In April 2007 ICA’s Group Management adopted

a new climate strategy with the goal of reducing

known greenhouse gas emissions by 30 percent

by 2020 compared with 2006. In developing the

strategy, an analysis was made of ICA’s operations

in Sweden and Norway from a climate perspective.

ICA’s climate impact, directly and indirectly,

has been assessed for the entire Swedish and

Norwegian operations, including the store net-

work. The climate impact in the form of carbon

dioxide equivalents, which is estimated wherever

possible, amounted to approximately 207,000

tons in 2006 after further calculations.

The largest source of greenhouse gases is store

operations, followed by transports, warehouses

and business travel. To achieve the objective,

management has decided on initial measures

affecting all climate-impacting activities. See the

list on page 36. An evaluation of ICA’s operations

now under way in the Baltic region is expected to

be completed in spring 2008. With regard to the

product assortment, international transports and

marketing, ICA has not yet been able to estimate

the climate impact, although an impact assess-

ment of its products is in progress.

To evaluate efforts to reduce greenhouse gas

emissions, ICA annually takes part in Folksam’s

climate index. In the 2007 index ICA Sverige

ranked as the top retailer and 20th overall out of

a total of 49 companies.

Product assortment and the environment

ICA is working to reduce the environmental

impact of the products sold in its stores and

expand the range of organic, locally produced and

ecolabeled products. Environmental demands are

placed on suppliers as well.

Environment

ICA has intensified efforts to reduce the environmental impact of its operations: from its product assortment, warehouses, offices, transports, business travel and stores. During the year a climate strategy was adopted with the goal of reducing known greenhouse gas emissions by 30 percent by 2020.

Organic products

Demand for organic products has grown

substantially, and in many product categories such

as dairy, eggs, meat and certain types of produce

is often higher than the supply. ICA is working

intensely to expand its offering by developing

its own organic line and adding to the range of

suppliers’ organic products in stores.

In an effort to improve its private label

assortment, the “ICA Ekologiskt” line has been

rebranded as “ICA I love eco.” The line is being

expanded, with around 80 new products

scheduled for launch in 2008. The rebranding is

designed to make them more inspirational and

underscore the benefits of organic alternatives.

ICA’s own organic products will be certified

according to organic standards. Vegetable

products are approved if they meet either the

EU’s regulations for organic production, KRAV in

Sweden or Debio in Norway. Animal products

must meet KRAV standards in Sweden or Debio in

Norway, which are more extensive than the EU’s

regulation on animal welfare.

Environmentally smart offerings

Last fall ICA Sverige ran a campaign to highlight cli-

mate issues from a consumer perspective. Among

other things, ICA offered regular customers the

opportunity to buy energy-efficient light bulbs at

a discounted price. The bulbs that were sold are

expected to reduce carbon dioxide emissions by

around 25,000 tons, or approximately 410 GWh,

based on Sweden’s current mix of electricity

sources. ICA also launched a climate website

with tips on how to reduce the amount of food

that is thrown out. See pages 38–39. ICA Norge

took part last fall in a major national campaign to

increase knowledge of and encourage people to

eat organic.

ICA’s greenhouse gas emissions in Sweden and Norway

Policies

Group’s quality and environmental policy covers operations in stores and warehouse units, transports, product assortments, information and competence. The policy is linked to practical guidelines for day-to-day activities in the Group and in stores. The policy was updated in 2007 to include guidelines linked to the climate strategy ICA adopted during the year. The policy in its entirety can be read at www.ICA.se.

ICA’s new store policy contains guide-lines on environmental considerations for new stores in Sweden and Norway. ICA Fastigheter AB’s guidelines require that new construction, maintenance and property management are environmentally safe and that environ-mental improvements are continuously made to the properties.

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Late in the year ICA introduced a new type of plastic

bag that contains around 30 percent renewable

raw material in form of starch, which reduces

greenhouse gas emissions when incinerated. It also

offered a designer shopping bag made of recyclable

polypropylene, the so-called bag-for-life, last fall.

Five kronor from each one sold is donated to WWF.

Integrated production

ICA supports so-called integrated production,

where artificial fertilizers and herbicides are

documented and used in a controlled setting.

Growers of fruit and vegetables that are not certi-

fied as organic and supply ICA Sverige must be

certified according to Global Gap or other system

of integrated production. In Norway, similar

requirements are made using the Norwegian

Quality System for Agriculture (KSL).

Eco- and climate-labeling

ICA tries to make ecolabeled alternatives available

in all product groups that meet the criteria for

Nordic Swan, Good Environmental Choice, the

EU Flower, KRAV, Debio or EU Organic. All laundry

detergents and dishwashing products in the main

product range are ecolabeled by Nordic Swan or

Good Environmental Choice. ICA also has its own

line of green cleaning products in Sweden and

Norway, Skona, most of which are also Swan or

Good Environmental Choice labeled.

ICA also follows and participates in the debate

on possible climate labeling, partly through the

retail trade association Svensk Dagligvaruhandel.

During the year ICA analyzed the climate impact

of more than 100 of its private label products from

a lifecycle perspective. The main purpose of these

analyses is to gather data to reduce the climate

impact of foods in keeping with ICA’s objective,

though it will also be used in further discussions

whether to introduce climate labeling in the future.

Dialogue with suppliers

ICA maintains a dialogue with the Federation of

Swedish Farmers (LRF) on trends and develop-

ments in Swedish agriculture. During the year

the focus was on how suppliers can help develop

organic and healthy products. To better meet

future consumer demand for

locally produced products,

another project called “Local

Tastes” was launched during

the year. ICA arranged meet-

ings with suppliers at five

locations in Sweden, with

another seven locations

scheduled for spring 2008.

New chemicals regulation

The EU’s new regulation

on chemicals and their safe use,

REACH, entered into force on June 1, 2007. As

an importer to the EU, ICA is required to inform

consumers about any hazardous substances in

its products and preparations.

An extensive analysis was conducted during the

year of the impact on ICA of the new require-

ments. The analysis served as the basis of new

procedures developed to ensure compliance

with the regulation. A number of ICA’s employees

have received training in the new legislation, and

implementation work is under way.

Biological diversity

ICA has been working with WWF since 1999 to

promote free range beef. In all, around 30,000

hectares of pastureland have been restored in

order to preserve biological diversity.

Criticism against products in the ICA assortment

During the year the Swedish Society for Nature

Conservation (SSNC) demanded a stop to sales

of toothpaste containing the antibacterial agent

triclosan, which is used to fight gum disease but

is classified as environmentally hazardous. ICA

decided to stop selling all toothpaste containing

triclosan. An investigation was conducted of other

chemical products, a few of which also contained

triclosan and are being phased out.

SSNC also showed that imported towels,

including some sold by ICA, contained nonyl phenol

ethoxylates, which break down into the environ-

mentally hazardous substance nonylphenols.

Nonylphenols are prohibited in European textile

manufacturing. ICA stopped all sales of these towels.

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ICA understands the seriousness of nonylphenol

ethoxylates and has improved its self-inspection

program. It requires suppliers to ensure that they

are not contained in imported products. ICA applies

the Swedish Textile Importers Association’s guide

on chemical contents for the textiles it buys and

participates in discussions with the industry and

government officials.

Logistics and transports

In the area of logistics, ICA works with the environ-

mental aspects of transports, waste management,

energy consumption and use of refrigerants. A

number of activities have been decided on and

launched in these areas to help ICA achieve its

climate goals. To increase competence, a web-

based environmental training program has been

developed that all Swedish logistics employees are

expected to receive in 2008.

Environmental management system

During the year ICA replaced the certification body

for the ISO 14001 environmental management

system in its Swedish logistics operations with Det

Norske Veritas and underwent a certification audit

with positive results. The reason for the switch was

to gain new perspective and increase the focus on

improvements. The goal is to introduce a similar

system for Norwegian logistics operations as well.

Transports

With ICA’s new logistics structure in Sweden,

which will be fully introduced by 2010, many

products are distributed through ICA’s ware-

houses instead of directly from suppliers to

stores. This makes transports more efficient by

increasing loads and reducing deliveries, meaning

fewer stops and starts for delivery vehicles. An

environmental analysis has been done that shows

that the new structure will reduce total emissions

from transports to ICA stores in Sweden. During

the year ICA took over deliveries from bottling

plants and is handling more transports by rail.

ICA has required for years that drivers used by

its haulers in Sweden receive training in eco-driving,

which can reduce fuel consumption by 10 to 15

percent. It was decided during the year that ICA’s

drivers in Norway will receive the same training.

Through audits, ICA monitors its haulers in

Sweden to ensure they meet environmental and

traffic safety requirements. This includes that

every contractor provides a drug- and alcohol-free

workplace, that speed limits are followed and that

emissions are reduced in relation to mileage driven.

If any violations are found, the company is given

a few weeks to remedy them, after which a new

inspection is conducted. During the year ICA signed

a framework agreement to install alcohol locks on

all vehicles contracted in Sweden as of 2009.

ICA has been trying for years to find ways to

increase rail transports. During the year work

began on a project called Flexiwagon, where

trucks are loaded on rail cars and transported

long-distance. For this method to work, it has to

be easy to drive the trucks on and off the train,

they have to be kept refrigerated and there has to

be enough shock absorption to prevent the trucks

and the goods from breaking. The method will be

tested and evaluated in 2008, with the hope of

implementing it in 2009.

Business travel

ICA monitors air travel from both a financial and

environmental perspective. As of 2008 all busi-

ness travel by air will be climate-offset.

The number of trips by train and air remained

at the same level in 2007 as the previous year. By

traveling by train instead of car, around 314 tons of

carbon dioxide has been eliminated.

ICA has guidelines that encourage employees,

whenever possible, to use telephone and video

conferencing rather than travel. In 2007 the num-

ber of video and teleconferences increased by 19

and 34 percent, respectively, surpassing the goal.

The share of environmental cars in ICA’s fleet

of company cars rose from 14 to 22 percent in

2007. In addition, restrictions were tightened

on, among other things, the amount of carbon

dioxide a company car may emit.

Environmental work in stores and warehouses

ICA works actively to reduce the environmental

impact of its stores and warehouses. Energy

consumption and waste management are two

priorities.

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In Sweden, ICA is in the process of certifying its

stores according to the Nordic Swan ecolabel. All

Maxi ICA Hypermarkets and ICA Kvantum stores in

Sweden are Nordic Swan certified. There are also

64 certified ICA Supermarkets and 26 ICA Nära

stores. ICA is investigating whether its Norwegian

ICA and Rimi stores are also eligible for certification.

The Swan ecolabel, requires that stores and the

products they sell are adapted to environmental

concerns, that employees receive training, and

that the staff and management work actively to

reduce the store’s environmental impact.

Waste management

The goal of ICA’s waste management work is

to reduce the amount of waste that ends up in

landfills. This is done by sorting and recycling

materials and reusing plastic crates. All of ICA’s

warehouses in Sweden sort compostable waste,

which is converted into soil or biogas.

ICA has audited the waste management

process at its Swedish warehouses to see how it

can be made more efficient. In connection with

this work, a new agreement was signed to recycle

corrugated board and soft plastics.

ICA is also reviewing waste management in

Norway in order to reduce volumes and more

efficiently manage wastes through better tech-

nology and fewer shipments.

Energy consumption

In-store energy consumption produced more than

half of ICA’s total known greenhouse gas emissions

in 2007. Despite conscientious efforts to reduce

consumption, ICA’s measurements show that in

total stores are using more rather than less energy.

One reason for the increase is the growing range

of refrigerated and frozen foods, which require

more energy and lighting. Many ICA Nära stores,

on the other hand, are reducing energy consump-

tion, mainly due to the installation of new, more

energy-efficient refrigeration equipment.

ICA will analyze energy use in stores to decide

on measures to initially slow and eventually

reduce consumption.

Norwegian ICA and Rimi stores use the CoolICA

system, which monitors energy consumption

and temperatures. It has been shown that merely

installing the system and monitoring consump-

tion will help stores reduce usage by around 10

percent. Since the start, 340 stores have installed

the system.

ICA uses Good Environmental Choice-labeled

electricity at all warehouses and offices in

Sweden. This reduces carbon dioxide emissions

from warehouses by around 5,426 tons compared

with conventional electricity, equivalent to the

consumption of about three normal-sized single-

family homes.

Environmental requirements in new construction

ICA places strict environmental requirements on

the construction of new stores and warehouses,

including in terms of energy conservation and

transport and travel planning. Green materials are

used in all construction, which is documented to

facilitate reuse and recycling when the structures

are eventually demolished. ICA carefully follows

developments in alternative refrigerants. In con-

nection with all new construction, renovations or

additions only climate-safe refrigerants such as

ammonia are used.

Alliances and networks in Sweden

Network Purpose

The Swedish government’s logistics forum

During the year the Swedish government created a logistics forum with 25 representatives from the business and educational sectors to gauge opinions on what the government can do to facilitate effi-cient logistics. ICA is one of the members. Among the issues being discussed are combi-transports, the railway network and road main-tenance.

Swedish Road Administration and five other companies from various industries

Roundtable discussion that resulted in a declaration of intent on traffic and environmental safety requirements for heavy transports.

Swedish Road Administration Project designed to improve emissions reporting from freight forward-ers. The project has resulted in a model for the grocery industry’s transports.

Future Retail Future Retail, a network of companies, municipalities, regions and government agencies, had as its mission to promote sustainable development in the retail sector. The network was disbanded by the Swedish government in 2007.

Swedish Association of Environmental Managers (NMC)

The mission of the association is to promote environmental management in the Swedish business sector by exchanging knowledge, contacts and experience.

WWF Sweden Forest & Trade Network (FTN)

Voluntary network that promotes sustainable forest management.

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ICA will:

1. Sign the Business Climate Call in Sweden.

2. Join the Climate Promise in Norway.

3. Introduce procedures to monitor progress toward the goal of reducing known greenhouse gas emissions

by at least 30 percent and annually report results.

4. Introduce clearer guidelines in the quality and environmental policy to emphasize climate concerns in

fruit and vegetable purchases, product development and use of refrigerants.

5. Lobby officials on issues important to our climate strategy.

6. Establish a cooperation with the Swedish biotech research institute SIK. Lifecycle analyses will be

conducted on at least 100 of our private label products to analyze their environmental impact.

7. Offer regular Swedish customers a discount on energy-efficient light bulbs in autumn 2007.

8. Launch an organic campaign in Norway in fall 2007.

9. Offer regular Swedish customers and employees the option to sign up for

Good Environmental Choice electricity.

10. Ship more goods by rail and sea to reduce truck transports.

11. Develop an solution together with the part-owned development company to transport trucks

onboard rail cars.

12. Promote alternative fuels by requiring the latest engine technology in all vehicles that drive for ICA.

13. Plan for ISO 14001 certification in Norwegian warehouses.

14. Introduce environmental certification in Norwegian stores.

15. Reduce energy consumption in existing stores.

16. Substantially lower energy consumption in new stores in relation to current stores.

17. Develop plastic bags with less climate impact.

18. Continue the launch in Norway of the CoolICA system to monitor and analyze electricity consumption

from refrigerators and freezers.

19. Provide all truck drivers that deliver for ICA in Norway training in eco-driving.

20. Create a model to cap carbon dioxide emissions from company cars by encouraging high-mileage

vehicles, diesel engines with particle filters or ethanol, hybrid or biogas cars.

21. Use more environmentally safe cars in the company fleet.

22. Provide everyone who drives on the job training in eco-driving.

23. Test car pool with environmentally safe cars.

24. Climate-offset business travel by air beginning in 2008.

25. Launch climate discussions with Rimi Baltic and map greenhouse gas emissions.

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25 climate-improving activities planned by ICA as step one.

Start April 2007.

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Number and sales of organic products

No. of organic products Sales trend, %

2007 2006 2005 2007 2006 2005

ICA Sverige 370 370 400 28 10 12

ICA Norge 350 n.a. * 157 20 30 n.a.

Rimi Baltic 190 52 7 n.a. n.a. n.a.

* Due to incomplete data, the number of organic products sold by ICA Norge cannot be provided for 2006.

Energy consumption in warehouses and stores (kWh/sq. m.)

Warehouses Stores

2007 2006 2005 2007 2006 2005

ICA Sverige 247 249 242 500 * 522 * n.a.

ICA Norge 234 249 n.a. 556 ** 568 580

Rimi Baltic 251 254 223 443 *** 412 394 * Estimate of the stores’ average energy usage.

** Monitoring with the help of CoolICA has had a positive effect on energy consumption in Norwegian stores.

*** Rimi Baltic rose mainly due to a higher share of refrigerated and frozen foods.

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DExDiesel consumption and carbon dioxide emissions from transports between ICA’s warehouses and stores

Diesel consumption, liters CO2, tons

2007 2006 2005 2007 2006 2005

ICA Sverige 20,743,897 * 19,051,283 17,996,700 53,692 * 49,231 46,530

ICA Norge 3,062,000 2,502,200 2,578,000 ** 7,961 6,506 6,703 **

Rimi Baltic 1,748,588 n.a. n.a. 4,522 n.a. n.a.

* During the year ICA took over shipping from transport providers, and the ongoing implementation of a new logistics structure has led to an increased number of transports.

** Includes ICA Meny Norge.

Amount of landfill waste, hazardous waste and total waste from warehouses (tons)

Landfill waste Hazardous waste* Total waste**

2007 2006 2005 2007 2006 2005 2007 2006 2005

ICA Sverige 327 304 523 34 25 31 10,819 10,675 9,285

ICA Norge 81 n.a. n.a. n.a. n.a. n.a. 12,529 n.a. n.a.

Rimi Baltic 29,923 n.a. n.a. 103 n.a. n.a. 49,885 n.a. n.a.

* Hazardous waste includes electrical and electronic equipment.

** Includes corrugated cardboard, soft plastics, other recycled waste, landfill waste and hazardous waste.

Amount of recycled waste and total recycling rate for warehouses (tons)

Corrugated board* Soft plastics* Other recycled waste** Total recycling rate, %

2007 2006 2005 2007 2006 2005 2007 2006 2005 2007 2006 2005

ICA Sverige 1,480 1,415 1,431 1,524 1,478 1,385 7,454 7,453 5,914 97 97 94

ICA Norge 9,511 10,396 9,635 697 465 612 2,240 n.a. n.a. n.a. n.a. n.a.

Rimi Baltic 7,576 5,768 3,363 1,417 586 190 10,866 n.a. n.a. 40 n.a. n.a.

* Also includes waste from stores.

** Metals, wood, glass, hard plastics, combustible waste, etc. managed using recycling or energy recovery.

Emissions of carbon dioxide and nitrogen oxides from ICA employees’ air travel

CO2, tons NOx, tons

2007 2006 2005 2007 2006 2005

ICA in Sweden and Norway 3,232 3,250 2,703 11.3 11.3 9.4

Source: Carlson Wagonlit Travel.

10 percent of all the food we take home from the store ends up in the trash. By better utilizing what we buy, we can save money and help the environment. The climate site launched in connection with ICA’s climate campaign in the fall of 2007 shows how.

“Estimates by the Swedish Environmental Protection Agency show that we throw away 10–15 percent of the food we take home. This is a great waste when you consider all the energy used to produce, transport and prepare the food,” says Kerstin Lindvall, Environmental Manager at ICA AB.

Climate-smart recipesThe site uses Sebastian, one of the characters from ICA’s television ads, to guide visitors around a kitchen. A handbook provides recipes for stews, soups and casseroles made from leftovers and products with long shelf lives usually kept around the house. A “wasted energy” calculator shows how much energy is lost by throwing food out. By tossing the food on a counter, the visitor can see how much is saved – and how long the conserved energy would light an energy-efficient light bulb. Try it and see!

Climate-smart food at www.ICA.se

OK, tell the truth. How much food did you throw out last week?

Stir-fry, risotto, pizza…the Leftover Cookbook has lots of ideas how to use leftovers.

Help eat up the impact of greenhouse gases. Visit www.ICA.se/klimat to find out how.

Sebastian leads us on a tour of his kitchen and shows us how to help the environment, and our wallets.

Tips about storageHow long will food keep in the freezer? Can you eat food that has passed its best-before date? Sebastian answers some frequently asked questions and provides tips on how food should be stored to stay fresh. For example, vegetables in season always stay fresher longer.

“In the Seasonal Calendar, visitors learn which fruit and vegetables are in season at various times of the year. Buying fruit and vegetables that are in season is good for the environ-ment and the food tastes better too”, says Kerstin Lindvall.

A Weekly Planner shows how to put together a menu based on how long foods stay fresh. The recipes are designed so that the ingredients will last the entire week and you will only have to shop once.

Climate-smart food at www.ICA.se

The energy consumed to produce, transport and prepare one serving of sausage is enough to light an energy-efficiency light bulb for 78 hours.

The Weekly Planner offers recipes to last the entire week. Fresh foods at the beginning of the week and frozen ones at the end.

Did you know that carrots, parsnips and potatoes lie dormant in the winter and therefore keep fresh longer than in the summer?

Fall is harvest season. That’s the time to enjoy fresh fruit and vegetables from our gardens.


Strategies and goals for HR work

The main strategy in the HR area is to strengthen

ICA’s brand and position as an employer. ICA has

tied goals and concrete activities to each of the

priority areas in the HR strategies.

Relationship between employer and employees

In Sweden and Norway, ICA has introduced

a system for performance reviews for office

staff called MAP, a Swedish acronym for goals,

responsibilities and personal development. The

idea is to underscore the connection between

each individual’s efforts and the ICA Group’s

results. The system is available to employees of

ICA AB, ICA Sverige, ICA Norge and ICA Banken,

and during the year all managers were trained to

use it. The goal is to have 85 percent of employees

receive reviews. This will be followed up in the

employee survey in 2008. A similar system for

logistics and stores is under development.

ICA’s employee survey measures the ability of

employees to perform their duties and serves as

a basis for the dialogue on working conditions

and for business development. Local results are

studied carefully, and managers and employees

together draw up an action plan how they want

to improve their workplaces. The goal for 2007

was that 78 percent of employees in Sweden and

Norway would participate in the survey, but due

to organizational changes at the beginning of the

year the results were difficult to measure. The

survey was conducted primarily in areas of opera-

tions that were not affected by the change.

Health and wellness

ICA’s goal is to maintain a positive work environ-

ment physically and mentally in order to promote

healthy habits short and long term and contribute

to the development of employees and the

business. A close cooperation with an occupa-

tional health service is an important ingredient

in these efforts. Taking a systematic approach

Work environments and conditions

ICA realizes that its success is dependent on its employees and their skills. Only through its employees can ICA create attractive work-places, a unique store experience and long-term profitability.

and continuously reviewing tools and methods

prevents ill health.

By working continuously on these issues, ICA

strives to keep absenteeism low. The goal for 2007

was total absenteeism of 6.3 percent. In work-

places where levels are high, special measures are

taken in the form of manager training, reorganiza-

tions and smaller teams.

ICA’s work with store security is described on

page 45.

Competence development

ICA tries to continuously improve the skills of

its employees in strategically important areas.

The goal is to encourage internal mobility, so

that 70 percent of available positions are filled

by in-house candidates. Results will be measured

beginning in 2008.

ICA’s Nordic training organization, ICA Skolan,

is the Group’s and the stores’ main partner in

this area. ICA Skolan operates in Sweden and in

Norway.

In 2007 a total of 5,000 employees attended 850

days of training by ICA Skolan in Sweden. In Norway,

the corresponding figures were 6,450 and 450. In

Sweden, over 2,400 web-based courses were held,

while the figure in Norway was 16,660.

During the year ICA worked hard to develop

and introduce a Nordic-wide leadership program

covering a number of aspects of leadership,

including understanding the company, building

and leading teams, helping employees improve

their skills, handling conflict and change, recruit-

ing, accounting and legal affairs. The target group

for the program is 900 managers in offices and

logistics and 400 store managers.

ICA has also developed an introductory

program for new office and logistics employees

in Sweden and Norway, which is scheduled for

launch in 2008. The aim is that all ICA employees

will share the same platform when it comes to

knowledge about the company, its values and

Policies

The ICA Group’s HR policy was adopted in November 2007 and covers leadership, competence development, health, gender equality and diversity.

An occupational health and safety policy that was already in place empha-sizes that work environments are an important competitive advantage and a strategic issue for ICA.

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ICA as an employer

Strategies for ICA’s HR work

Leadership strategy: Strong Nordic leadership to handle new chal-lenges in a fast-changing industry.

Gender equality and diversity strategy: Take a structured approach to gender equality and diversity issues.

Competence strategy: Ensure that the right competence is in place in strategic areas to facilitate ICA’s long-term planning.

Health and wellness strategy: Position ICA as an employer that promotes healthy habits.

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ways of working. ICA expects between 1,500 and

2,500 employees per year to receive the introduc-

tory training.

A one-year training program for store managers

developed by the Swedish ICA Skolan will also be

introduced for Norwegian store managers in 2008.

In Rimi Baltic, leadership training has been

provided for managers at various levels of the

company. Managers and other employees have

also received training in effective performance

reviews. A large number of managers have

attended store manager training as part of the

Rimi Management Academy.

All employees of Rimi Baltic who have been

with the company more than one year have the

opportunity to apply for a training grant. Grants

are awarded by Rimi Baltic’s management team

based on an assessment of each employee’s

performance and training needs.

Fairness and diversity

ICA’s success is dependent on employees with

different educations, ages, genders, and ethnic

and national backgrounds. Diversity issues are

part of ICA’s extensive management introduction.

The goal is to fill management positions equally

between men and women. There is also a goal to

eliminate discrimination at all workplaces.

During the year ICA conducted a salary review

in Sweden and found some discrepancies based

on gender. Adjustments were made to correct

them. ICA has also drafted an action plan and

directive for salaries in Sweden.

Average number of annual employees, employees and sick leave absences

No. of annual employees No. of employees Sick leave, %

2007 2006 2005 2007 2006 2005 2007 2006 2005

Group functions 2,209 2,041 1,417 2,242 2,083 1,445 3.1 3.2 3.2

ICA Sverige 5,107 4,752 4,917 6,477 6,025 5,769 6.7 7.3 7.1

ICA Norge 4,348 4,043 4,052 7,493 6,752 6,734 5.4 6.5 6.4

Rimi Baltic 8,221 9,132 8,375 10,871 10,165 9,313 8.8 6.0 n.a.

ICA Banken 196 174 154 223 179 158 5.5 6.9 7.0

Total 20,081 20,142 18,915 27,306 25,204 23,419 6.9 6.1 6.4*

* Excluding Rimi Baltic.

Employee turnover (%)

Group functions 10.0

ICA Sverige 7.6

ICA Norge 26.0

Rimi Baltic 80.7

ICA Banken 3.5

Total 44.9

Gender distribution (%)

Share of total employees

In management positions

Women Men Women Men

Group functions 53 47 44 56

ICA Sverige 25 75 21 79

ICA Norge 57 43 36 64

Rimi Baltic 87 13 80 20

ICA Banken 71 29 42 58

Total 65 35 47 53IN

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ICA Norge has established a cooperation with the football club Vålerenga to fight racism through a project called “Jobbsjansen.” Beginning in Octo-ber 2007 six young people from different ethnic backgrounds received an opportunity for work experience at Norwegian ICA and Rimi stores.

“The project provides a chance for young people from different ethnic minorities to get their first real job,” says Cecilie Skarphagen, HR director of ICA Norge. “The goal is that some of these participants will also get a job at one of our stores after the program is over.”

The target audience for the program is individuals between the ages of 17 and 23 who are currently unemployed and not studying. Eleven people are taking part: six young men and women with ICA and five with other companies. As part of the project, they work three days a week at ICA and two days for the club.

The program began on October 1 with a four-week introductory program, after which the participants joined ICA and Vålerenga until the summer of 2008.

“Through this project, we come into contact with young people who we otherwise wouldn’t reach. We hope they will consider a career in retail, which they might never have considered,” says Cecilie Skarphagen.

young people a chance at a job

ICA Norge gives

During the year one person who applied for a job

with ICA through a staffing agency suggested that

he was denied the position due to his ethnicity

and took the case to the Labor Court. A ruling is

expected in 2008.

In Norway, ICA has established a cooperation

against racism with the football club Vålerenga.

See article below.

In the Baltic region, managers at Rimi Baltic

underwent training that stressed the competitive

advantages of cultural diversity.

Employer branding

ICA is making a long-term effort to bolster its

reputation as an employer and ensure that it can

recruit the right competence in the short and

long term.

Among other things, ICA participates in a

number of job fairs at colleges and universities.

It awards a grant for the best retail-related thesis

at the Stockholm University School of Business,

while in Norway ICA continues to cooperate with

BI Norwegian School of Management’s retail stud-

ies program and Treider College’s store manager

training program.

In Universum’s Career Barometer survey, which

ranks companies in terms of their popularity

as employers, ICA climbed to tenth place (19) in

Sweden. In Norway, where the ICA brand is not

as well known, there was no change from the

previous year (52nd). ICA was also named the

Swedish retail sector’s favorite employer by the

recruiting company Retail Knowledge and the

magazine Market.

ICA’s trainee program was restarted in 2007.

The program is offered to eight participants from

Sweden and Norway and lasts fourteen months.

Photo: Christian Dietrichson

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Social requirements in sourcing

The requirements ICA places on its suppliers are

based on the UN’s declaration on human rights

and the International Labour Organization’s core

conventions. The requirements are stipulated in

agreements and monitored through self-audits by

suppliers, visits by ICA’s employees and recom-

mendations on third-party audits according to

the Business Social Compliance Initiative (BSCI) or

similar monitoring systems.

In 2008 ICA will be opening a sourcing office

in Hong Kong with a department for quality,

environmental safety and social responsibility.

This will facilitate monitoring of suppliers’ work

with quality and human rights in the region. ICA

AB has also strengthened the Corporate Responsi-

bility department through the addition of another

employee.

Monitoring suppliers

Through its part-owner Ahold, ICA is a member of

BSCI, a European initiative creating uniform criteria

and a systematic approach to social audits at the

production level.

ICA’s goal in 2008 is to audit two thirds of its

purchases of soft goods, such as clothes and linens,

from suppliers in countries defined as high risk by

Human rights

The products ICA sells in its stores must be produced under ethically acceptable conditions. ICA strives to build long-term relationships with its suppliers to ensure responsible production.

BSCI, according to BSCI or similar accreditation

systems. The number of suppliers that underwent

BSCI audits increased during the year.

Deficiencies were mainly found in the areas of

management systems, compensation/wages and

working hours.

To audit suppliers in primary production, ICA

uses the BSCI model introduced in 2007. During

the year a couple of ICA’s fruit suppliers in Africa

were audited.

Special attention was paid to social and

environmental conditions during sourcing trips

to India and China. The conditions at one Indian

supplier were found to have seriously worsened

to an extent that ICA immediately stopped all

its orders. The supplier must now demonstrate

marked improvements in conditions at the plant

before ICA begins working with it again.

Human rights training

ICA works continuously to train its employees on

human rights and corporate responsibility.

During the year employees from the sourcing

office in Shanghai and a number of ICA’s suppliers

participated in a workshop on BSCI and its

auditing system, and suppliers were encouraged

to undergo BSCI audits.

Social responsibility in sourcing

Continuous dialogue based on audit results

Requests for audits according to BSCI, SA 8000 or similar monitoring system

Follow-ups by ICA’s experts in quality, environment and social responsibility

Suppliers’ self-inspections serve as a basis for dialogue

Regularly scheduled visits by ICA’s buyers

ICA’s values and environmental and social requirements included in purchasing agreements

Policies

ICA’s business ethics policy contains guidelines on relationships with suppliers and partners with regard to bribery and gifts, fair competition and shareholdings.

ICA’s guidelines for ethical sourcing and social responsibility are included in the Group’s quality and environ-mental policy.

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Fairtrade products

Fairtrade is an independent labeling system that

promotes better working and living conditions

for growers and their employees in developing

countries. The 20-odd Fairtrade-labeled products

in ICA’s Swedish assortment include coffee, tea,

cocoa, sugar, juice, bananas and, on a season-

able basis, citrus fruits and grapes. In 2007 ICA

launched eight Fairtrade fruits and vegetables in its

private label line.

Reports on tuna and flowers

During the year ICA participated in two reports

by Fair Trade Center, a Swedish NGO, on working

conditions at flower growers and in the tuna

industry.

Since February 2007 ICA’s customers can buy

Fairtrade-certified roses, which were approved

in late 2006. ICA’s goal is that all the farms it buys

from will be Fairtrade-labeled or MPS-certified

(Dutch standard). Fair Trade Center’s report

stated that 95 percent of ICA’s fresh-cut flowers

comes from Kenya and that 70–80 percent of

that amount is fair-trade-labeled. ICA does not do

any of its own importing, instead buying flowers

through an agent in the Netherlands. However, it

does decide which farms the flowers will come

from and regularly visits suppliers.

ICA annually imports large amounts of

tuna primarily from Thailand and has long-

standing relationships with its suppliers.

Fair Trade Center considers ICA serious

in its efforts and has confirmed that

ICA has inspected all its tuna suppliers.

At the same time, there were some

issues with suppliers, and Fair Trade

Center has recommended that

ICA demand that they provide

training for their personnel and

investigate the suggestions of

discrimination uncovered in

the investigation.

Alliances and networks

Aim

Global Compact UN initiative to encourage international companies to support human rights, labor and the environment.

Swedish Partnership for Global Responsibility

Swedish government initiative to encourage companies to abide by fundamental principles of human rights, labor standards, environmen-tal safety and anticorruption as spelled out in the Global Compact.

Amnesty Business Forum Forum for companies that encourage human rights in their operations. Discussions are held several times a year on human rights and corpo-rate social responsibility from Amnesty’s perspective. The meetings are based on Amnesty’s recommendations on human rights and may, for example, involve country- or industry-specific risk analyses, human rights training and independent audits.

Business Social Compliance Initiative (BSCI)

European platform for retail, industrial and import companies that encourages audits and improvements to social conditions for suppliers in high-risk countries.

Ethical Trading Initiative (ETI-N)

A multi-stakeholder initiative involving Norwegian companies and organ-izations that encourages ethical trading (socially responsible sourcing). ETI-N identifies and develops best practices for its members. It also assists with training and advice how they can contribute to lasting improve-ments to safety and environmental conditions in their supply chains. ICA Norge is a member.

Global Social Compliance Programme (GSCP)

An international cooperation within CIES to create standards of corporate responsibility for suppliers.

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Contact with customers

ICA maintains an active dialogue with customers

and is always trying to be better at meeting their

wishes and needs. The dialogue is conducted

directly in stores, via surveys and through the

Customer Call Center for Sweden and Norway.

The call center receives customers’ complaints

and opinions about ICA as well as questions about

the content of private label products and recalls.

In 2007 the call center noted a major increase in

questions regarding the environment. Customers

want to know what ICA is doing and how they

themselves can weigh environmental concerns

when they shop for food.

ICA’s largest customer survey, the Customer

Satisfaction Index, asks 70–80 questions and is

conducted once a year. In 2007 a total of 6,400

customers in Sweden and 2,300 in Norway

participated. In Sweden, the survey confirmed that

all of ICA’s formats are leaders in their respective

segments. Customer satisfaction has gradually

increased in recent years. In Norway, the picture

is more mixed, although ICA Maxi remains one of

the most popular chains among its customers.

Customer privacy

Personal information on Swedish customers is

obtained through the ICA customer card. With this

information, ICA can customize offerings while

managing the commitments that the card’s banking

Community affairs

ICA has stores in Sweden, Norway and the Baltic region. Many people come into daily contact with, and are impacted by, ICA’s operations. Through long-term work with sponsorships, store security and ser-vice issues, ICA contributes to its communities. It also maintains an active dialogue with customers and is responsive to their needs.

services entail. Safeguarding customer privacy

is a high priority, and in addition to current laws

ICA has drafted its own guidelines on personal

information.

In 2006 the Swedish Data Inspection Board

stated that scanning customer IDs in connec-

tion with purchases of beer and tobacco is not

permissible. ICA has taken measures to correct

this, including by improving information in stores.

In early 2007 the Data Inspection Board approved

ICA’s measures and closed the case.

ICA has a privacy ombudsman to whom cus-

tomers can turn if they feel ICA has not protected

their information satisfactorily. No complaints

were submitted during the year.

Store security

The overall objective of ICA’s security work is

to protect employees, customers, property and

the businesses against all types of threats. ICA’s

systematic security work comprises security

standards, routines, monitoring and training.

In Sweden, ICA is investing heavily to train

employees in robbery prevention. It also provides

advice and guidelines to stores on security issues.

The number of robberies in Swedish ICA stores

continued to decrease.

The overall objective of security work in

Norway is to make ICA the safest store on the

market for customers, employees and suppliers.

E-mail and telephone calls received by the Customer Call Center

2007 2006 2005

E-mail 44,670 39,189 26,121

Telephone calls 66,900 70,407 69,137

Number of robberies

2007 2006 2005

ICA stores in Sweden 25 34 51

ICA Norge 1 8 5

Rimi Baltic 1 0 0

Policies

ICA’s business ethics policy contains guidelines on relationships with suppliers and partners with regard to bribery and gifts, fair competition and shareholdings.

ICA’s sponsorship policy states that ICA will follow the guidelines on sponsorships and events in the ICC International Code on Sponsorship and the guidelines of the Swedish sponsorship and event association.

ICA’s customer policy contains internal guidelines on interacting with customers, marketing, customer privacy and how certain products are sold.

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Service issues in rural and more densely

populated communities

ICA’s investments in small stores in Sweden’s rural

communities have produced results. Expanded

services, including on behalf of Systembolaget

and Apoteket, the state-run alcohol and pharmacy

monopolies, as well as postal and banking

services, have made many of these stores popular

locally. The positive trend with fewer store

closures continued, and of the 31 stores closed in

2007 only four were in rural communities.

Together with the Association for Promotion

of Village Stores (FLF), ICA uses various measures

such as skills training and mentoring to assist

rural food retailers. Financing is provided through

contributions from county boards.

There are also examples of cooperative efforts

to maintain services in more densely populated

residential areas. In Gothenburg, a project to main-

tain local food retail services has also become a

successful social project. Together with the local

municipality, housing companies, the govern-

ment’s employment office and social agencies,

young people who have been unemployed for

long periods receive training and are recruited by

ICA stores. Initial training provided by ICA Skolan

is supplemented with on-the-job training by the

local ICA retailer and partner.

Sponsorships and cooperations

Sponsorships are designed to support ICA’s long-

term business plan. The emphasis is on health,

social responsibility, environment and sustainable

development. ICA’s management has decided to

actively support the World Childhood Foundation,

the Red Cross and WWF.

In Sweden, ICA has cooperated with WWF since

the late 1980’s and during the year signed an agree-

ment with WWF in Norway. The aim is to work

together on a number of projects that promote

sustainable fishing.

Rimi Baltic supports a number of charities in

Estonia, Latvia and Lithuania, with a focus on

helping children and young adults.

In its athletic sponsorships, ICA works with

clubs that offer extensive children’s and youth

activities and have clearly defined values.

Sponsorships

Company Aim/partner Activity

ICA Group Red Cross A holiday campaign called “Hugs for the lonely” collected over SEK 29 million. ICA and its customers contributed nearly SEK 4 million.

Pink ribbon campaign against breast cancer/Swedish Cancer Society

ICA took part in the Pink Ribbon campaign for the fifth consecutive year. The company, its employees, stores and customers donated SEK 6.3 million.

WWF ICA signed an agreement with WWF in Norway.

ICA’s climate campaign collected a total of SEK 1.5 million for WWF in Sweden.

World Childhood Foundation

ICA donated 5 öre from every paper bag it sold to Child-hood, for a total of SEK 1.1 million. Together with other companies, ICA arranged “Childhood Day” at the amuse-ment park Gröna Lund.

Sports clubs in football, bandy, handball and cross-country skiing

Sponsorship agreements to help clubs from the elite to the recreational level.

ICA Sverige “Blodomloppet” Series of road races around Sweden to recruit blood donors and encourage exercise. A total of 46,200 run-ners took part, a gain of 20 percent. This year’s campaign resulted in 2,000 new blood donors.

ICA Norge Ethical Trade Initiative Resource center and promoter of ethical trade.

Rimi Baltic Youth sponsorships Rimi Baltic in Estonia, Latvia and Lithuania sponsored a number of charities with an emphasis on children and young people. For example, it has contributed to schools and orphanages as well as low-income families.

Ziedot.lv Rimi Baltic works with the charity organization Ziedot.lv, which operates a portal where individuals and companies can donate money to specific charitable projects.

Work with social responsibility in 2007

Company Initiative

ICA Sverige ICA is dialoguing with an interest group representing the visually impaired to update guidelines in the customer policy to make stores more accessible.

Training for more security coordinators in large store formats provided by ICA Academy.

ICA Norge Implementation of an automatic cash handling system at all ICA Maxi stores.

The program to reduce loss, including thefts, continued. New routines and tools have been developed, and employees from all stores attended a course.

Major training investments in security, fire prevention and first aid.

Rimi Baltic Rimi Latvia participated in a government campaign to promote the use of Latvian in stores. Four Rimi Supermarkets were awarded for their work.

ICA Norge has launched a

long-term effort to develop and

implement uniform security standards for

its stores. The number of robberies in Norwegian

ICA and Rimi stores decreased during the year.

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The focus of ICA’s quality work is to ensure

product safety throughout the supply chain, from

primary producer to consumer. This includes

inspections and monitoring of production,

product quality, warehousing, transports and

handling in stores.

During the winter it was found that a number

of ICA stores had mishandled meat products. ICA

took this very seriously and has initiated a number

of forceful measures to rectify the problem. Read

more about the incident in the article on page 48.

Quality work is not considered a competitive

advantage but rather a responsibility for the entire

industry in order to maintain the confidence of

consumers. Work with food safety is often done

along with other food retailers and industry

associations.

Quality audits of ICA’s head office

ICA’s supervisory authority, the city of Solna,

together with the National Food Administration,

conducted an audit of ICA’s head office during the

year, which confirmed that ICA’s overall quality

work is handled satisfactorily and found no serious

discrepancies. Mention was made, however, of

concerns with brand labels.

ICA’s agreements require all suppliers to abide

by current laws and ICA’s policies. ICA has previously

conducted a risk assessment and chosen not to

devote its focus to monitoring brand suppliers,

since it feels that they bear responsibility for

managing their own brands. ICA has studied the

opinions in the audit and will review its risk assess-

ment to determine whether it needs revision.

ICA’s quality organization, which is responsible

for training the purchasing department on current

rules for product labeling, intensified its work in

this area.

Product quality

The confidence of customers in the products sold in its stores is fundamental and vital to ICA’s success. ICA works continuously to ensure product quality and to abide by current laws and regulations on food safety.

Quality requirements on food suppliers

ICA participates in the Global Food Safety

Initiative (GFSI), an international collaboration

that sets standards for evaluating food safety.

ICA’s suppliers of private label products must

be certified according to standards approved by

GFSI, which requires monitoring systems, inspec-

tion programs for critical points, Hazard Analysis

and Critical Control Points (HACCP), and good

manufacturing practices (GMP). A similar system

called Global Gap is used for fruit and vegetables.

During the year ICA also decided to accept ISO

22000, a new standard for food safety systems, in

the requirements it places on suppliers.

ICA requires all brand suppliers to follow cur-

rent laws and have HACCP-based self-inspection

programs. This is confirmed through audits and

questionnaires.

For local suppliers to specific ICA stores whose

products are not purchased cooperatively, ICA

ensures that their operations are conducted in

approved facilities, that self-inspections are based

on HACCP and that they have systems in place for

recalls and product traceability. During the year 60

local suppliers were audited. In cooperation with

other food retailers and the organization “Swedish

Seal,” ICA has begun to develop an industry stand-

ard for quality requirements on local suppliers.

Rimi Baltic has harmonized the quality require-

ments in its sourcing agreements in all three

Baltic countries. The requirements are based on

national and EU laws. Accordingly, suppliers must

guarantee product safety, traceability, appropriate

labeling and information, and strong measures in

the event of recalls.

Rimi Baltic has a sophisticated quality assurance

system to ensure the quality of fresh produce.

In addition, quality managers are employed at

warehouses in each country to monitor fresh foods.

Policy

The Group’s quality and environmental policy covers store operations, product assortments, information and competence issues. The policy is complemented by practical guidelines for day-to-day work within the Group and in stores. Also included are guide-lines for suppliers’ self-inspections and management systems. In 2007 the policy was updated with new guidelines on certification require-ments for suppliers of private label cosmetics and hygiene products. The policy in its entirety can be found at www.ICA.se.

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Quality requirements on near-food

and non-food products

As of January 2008 ICA requires its suppliers of

private label cosmetics and hygiene products to

be certified by BRC Global Standard Consumer

Products or other equivalent standard. Other

private label suppliers of near-food and non-food

products must be certified according to ISO 9001

or other relevant industry standard.

Quality assurance and monitoring

of private label products

Quality work in the development of private

label products is done in several stages. ICA’s

quality laboratory tests appearance, smell, taste,

consistency and nutritional content. Detailed

specifications describe each approved product’s

ingredients, microbiological limits, nutritional

value, the supplier’s traceability system and

Late in the year a number of ICA stores in Sweden were found to have incorrectly changed the date on pack-aged chopped meat. ICA took the incident seriously and quickly approved a number of measures to restore customer confidence.

The disclosure drew strong reactions from customers and within ICA. Not a week later ICA gathered over 1,000 retailers from Sweden’s nearly 1,400 ICA stores at a meeting in Stockholm.

“We wanted to show how serious we felt this was and to clearly demonstrate that we will not tolerate any misbehavior. We also clearly explained to retailers the responsibility they have,” says Ingrid Jonasson Blank, Executive Vice President at ICA AB.

At the meeting ICA’s management and retailers also agreed on an action program to prevent similar recur-rences in the future.

Restoring confidence“Our brand has obviously been hurt by what happened, and we hope these measures will help to restore cus-tomer confidence,” says Ingrid Jonasson Blank. The event has contributed to an intense discussion on food handling throughout the grocery industry and within ICA.

“What has happened has brought us together even more as an organization. We have placed enormous focus on this issue and it has given a tremendous lift to our work with food safety and quality,” concludes Ingrid Jonasson Blank.

In 2008 ICA will work with ICA-handlarnas Förbund* to review which rules must be met to be an ICA retailer.

* ICA-handlarnas Förbund is the membership organization of ICA retailers in Sweden.

food safety Focus on

in stores

ICA’s enhanced action program

Mandatory food hygiene training for all ICA stores by January 31, 2008.

New training in food safety, employer responsibility, leadership, ethics and values.

Anticimex will conduct audits in all stores to help them meet food safety requirements.

3,000 unannounced in-store quality audits will be conducted in 2008.

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Quality work in 2007

Company Activity

ICA Group ICA joined the Swedish chapter of the Animal Welfare Platform, which is drafting uniform guidelines to evaluate animal health.

Partner: Animal Welfare Platform and other Swedish grocers.

An alliance was established with SMAK and Arena – KRAV’s control organization. The aim is to begin following Swedish Seal’s animal welfare checklist.

ICA prepared for the opening of a new office in Hong Kong during the year.

ICA decided to accept ISO 22000 as a standard for food safety management systems.

ICA Sverige A new quality laboratory for fruit and vegetables was opened in Helsingborg.

A decision was made that store employees will receive web training on food hygiene.

A cooperation was established to develop quality standards for local suppliers.

Partner: Swedish Seal and other grocers.

A decision was made to introduce industry-wide temperature guidelines for refrigerated and frozen foods.

Partner: Swedish Frozen Food Institute and other Swedish food retailers.

ICA signed a new agreement with Anticimex on self-inspections in Swedish stores.

An audit of ICA’s head office was conducted by the National Food Administration and municipal officials from Solna.

ICA Norge Evaluation of KSL, a quality assurance standard for Norwegian growers comprising products, farming and cultivation.

Introduction of the same web-based self-inspection program in Norwegian stores as is being implemented in Sweden.

The Norwegian Food Safety Authority conducted an audit of ICA Norge’s in-store food safety.

Rimi Baltic Rimi Baltic complemented its purchasing agreements with guidelines indicating that all products sold in the Baltic region must be labeled in the local language. Periodic controls are conducted to monitor compliance.

The quality team received more resources and two specialists per country to conduct daily in-store audits to verify how well self-inspections are being done. The audits also provide an opportunity to teach store employees about HACCP guidelines.

A new program for cleaning stores was introduced by Rimi Baltic in the three Baltic countries.

Rimi Lithuania conducted more than 3,000 product tests in accredited laboratories. Just over 60 percent focused on salmonella.

Rimi Latvia updated technical documentation for handling agricultural products in stores.

packaging information. New and existing products

are tested based on these specifications. In 2007,

some 1,840 sensory tests were conducted and

some 750 quality tests in ICA’s labs in Sweden and

Norway. As part of the work involved in monitor-

ing ICA’s private label products in Sweden and

Norway, some 1,850 microbiological and chemical

analyses have been conducted by independent,

accredited laboratories.

Rimi Baltic’s private label products tripled in

number during the year, and it has a special organi-

zation responsible for their quality assurance. This

work includes quality audits of suppliers, sensory

tests by customer panels, monitoring of product

labels and coordination of recalls. In 2007 Rimi

Baltic audited 50 suppliers and arranged consumer

panels for 195 new products in its private line. As

part of its inspections of private label products,

Rimi Baltic had around 3,240 microbiological and

chemical analyses conducted by independent

laboratories.

Animal welfare

ICA’s rules on animal welfare are based on Swedish

and Norwegian laws and cover private label

products, eggs and fresh and frozen meat. For

the Euroshopper private label and other products

containing meat, ICA requires its suppliers to

follow EU rules.

Quality assurance for warehouses and transports

Quality work, regarding food and safety, in the

logistics area is largely devoted to ensuring that

the refrigerated chain remains unbroken and that

goods are stored and transported at the right

temperature to ensure quality. All of ICA’s ware-

houses and distribution units use HACCP-based

self-inspections with defined critical control points.

Based on these inspections, action plans and

routines are prepared to ensure product quality.

ICA is trying to build a more efficient supply

chain, so that products remain fresh as long as

possible in stores and after being purchased by

consumers. Quality work also includes monitor-

ing compliance with hygiene and animal safety

programs.

Guidelines and routines are described in ICA’s

quality handbook, which is available on the

intranet. Continuous training is provided for all

employees concerned.

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The effectiveness of ICA’s quality work in logistics

was confirmed during the year by internal audits

through the self-inspection program and third-

party reviews.

ICA continuously analyzes its procedures and

routines to encourage knowledge transfers and

coordinate guidelines and routines between

countries.

Traceability and recalls

An important part of the work with product

quality is the ability to trace a product backward

and forward in the food chain. According to EU

regulations, every level that handles a product

must be able to trace it one step backward and

forward in the chain. Traceability routines are

coordinated between Sweden and Norway.

Rimi Baltic has coordinated guidelines in the

three Baltic countries to guarantee prompt,

simultaneous recalls.

In cases where ICA suspects a product may

pose a health risk if it reaches consumers, it is dis-

cussed with the appropriate supervisory authority

and a press release is distributed. In 2007 this was

done for two types of prepared salads and ground

beef due to possible salmonella contamination.

In both cases the salmonella was detected in the

manufacturers’ self-inspections. Last fall there was

also a public recall of muesli when ICA detected

glass fragments after receiving complaints.

ICA is continuously improving its routines by

communicating and building support for them

within the organization. Thanks to refinements to

its systems, it is now possible to recall even small

product shipments.

In-store quality assurance

ICA aspires to live up to customer demands that its

stores maintain high hygienic standards and that

its food products, especially fresh foods, are safely

handled. According to current EU laws, every store

must have its own inspection program for hygiene

and food safety. Similar laws apply in Norway.

The program covers routines, staff training,

labeling, food handling, equipment and property

maintenance, and inspections of temperatures in

refrigerated display cases and freezers.

ICA has introduced a web-based self-inspection

program to monitor quality work. Store employees

record temperatures and other inspection points

with the help of a handheld terminal. Nearly

1,100 Swedish stores have begun introducing the

program. Others use a conventional system with

pen and paper. To facilitate knowledge transfers

and coordination, work began during the year

to introduce the self-inspection program in

Norwegian stores as well.

During the year the Norwegian Food Safety

Authority conducted an audit of ICA’s in-store

food safety work. Violations were found in the

areas of temperature control, deviation handling

and training.

All food handling in Rimi Baltic is based on

HACCP principles. Training in food handling and

safety is a key element of Rimi Baltic’s HACCP and

is offered to all store employees. During the year

training was done in-house in Latvia, while in Esto-

nia and Lithuania outside partners were used. As of

2008 all training in food handling and safety will be

handled in-house in all three Baltic countries.

Product recalls

Total no. of recalls Of which private label products

2007 2006 2005 2007 2006 2005

ICA Sverige 101 99 92 42 43 44

ICA Norge 68 59 51 22 12 13

Rimi Baltic 646 406 472 68* 19 13

The number of recalls is increasing as the assortment grows to include more products that place higher demands on handling.

* The number of private label products within Rimi Baltic has tripled in 2007.

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Overall objective

The overall objective of ICA’s health work is to

be regarded as a leader and inspire people to eat

healthy. It also wants to be regarded as a leader in

its range of products for food allergy sufferers. Its

success in achieving this is measured in Sweden

through the Customer Satisfaction Index (CSI).

According to the latest CSI survey, ICA is seen as a

leader in inspiring healthy eating and in terms of

its product range for allergy sufferers. In Norway,

ICA has worked intensely with health issues in

recent years and, along with Meny, is regarded

as the chain that has done the most in this area,

according to the latest CSI survey.

ICA has sales targets for keyhole-labeled

products and produce, and carefully monitors

sales figures for healthy products. See table.

Nordic label for healthy foods

ICA maintains a dialogue with politicians, govern-

ment authorities and representatives of the food

industry on what retailers can do to reduce health

problems.

The question of uniform labeling of healthy

foods has been brought up by the Nordic Council

of Ministers and was the subject of extensive

debate during the year. ICA believes uniform

labeling would be an important step forward to

improving the health of the Nordic population, at

the same time that it would benefit suppliers that

are active in more than one market.

The question of uniform labeling was brought

up at a seminar in Oslo arranged by ICA and

Norway’s Kostforum, an alliance of five central

organizations that promote healthy eating: the

Norwegian Diabetes Association, Norwegian

Society for Nutrition and Health, the Norwegian

Cancer Society, Nasjonalforeningen for folkhelsen

(Ministry of Public Health) and the Norwegian

Heart and Lung Patient Organization.

Health

Interest in what we eat and how we feel is steadily growing. Health is one of the ICA Group’s highest priorities. ICA wants to inspire cus-tomers and employees to eat healthy and makes it easier for them to shop, prepare and eat nutritious food.

Representatives of the food and grocery indus-

tries, NGOs, government agencies and politicians

attended the seminar.

ICA launched the keyhole symbol in Norwegian

stores in 2006 and is promoting a labeling system

adapted to Nordic conditions that is easy to com-

municate to customers and the industry.

Health focus in Norway

ICA Norge continues to gain a place among lead-

ing retailers in the area of health. As an element

in this effort, it actively monitors the Norwegian

government’s action plan for nutritional eating.

In addition to launching the keyhole label, ICA

Norge has three priorities for health-related work.

It is working extensively to encourage consump-

tion of fish by improving the product range, as

well as packaging and quality assurance. Produce

is another area where efforts are being made to

broaden the product range, expand departments

in stores and intensify marketing. In addition, all

ICA Supermarked stores in Norway introduced

sugar-free checkout areas during the year where

they replaced candy with fruit and vegetables. See

pages 56–57.

Health claims on products

A new EU regulation on nutritional and health

claims on products entered into force on July 1,

2007. The basic principle in the regulation, which

covers all types of foods, is that claims may not be

vague, confusing or misleading. Moreover, they

must be based on generally accepted scientific

documentation and be understandable to the

average consumer. ICA is working with the food

and health council of Svensk Dagligvaruhandel,

the Swedish national food retail trade organiza-

tion, to interpret the rules and adapt its labeling of

private label products.

Policy

ICA’s health policy describes how to promote healthy eating habits. ICA encourages customers and employees to eat a balanced diet of tasty and nutritious foods. Health concerns should be reflected in the product assortment, marketing and communi-cation. The policy is supported by the nutritional recommendations of the Nordic Council of Ministers. ICA is also working to reduce the harm caused by tobacco and alcohol.

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In November the council arranged a day of

training on the new rules. ICA will provide internal

training to ensure that all buyers and category

supervisors apply the new regulation in their

day-to-day work.

Additives and trans fats

Discussions on the necessity of additives and their

potential risks has intensified. ICA believes that

additives should be used restrictively and only

if they add value for customers, for example, by

improving food safety.

ICA has developed guidelines for additives in

the quality and environmental policy and begun

reviewing the additives in its private labels to

determine to what extent they can be reduced or

replaced. As part of this work, internal training will

be provided to ICA’s product developers.

The debate on trans fats in foods remains

topical. ICA has been working intensely for several

years to remove industrial trans fats from its own

products with good results. It has also driven

the issue of uniform labeling in the industry. On

average, the trans fat content in products sold in

Sweden falls below the maximum level of two

grams a day recommended by the WHO.

Healthy product assortment

Interest in eating a healthy diet remains strong,

and ICA is investing heavily to develop and market

its healthy range, including keyhole-labeled

products, fruit, vegetables and whole grains. By

setting sales targets for this type of product, ICA

motivates its stores to market and display them

clearly. During the year significant sales increases

were noted for keyhole-labeled products, whole

grains, beans, peas and lentils in Sweden.

Improvements continue, and ICA has created

several products that make it easier to eat a

healthy diet, such as packaged salads and grated

carrots. The ICA Gott liv line includes a number

of new products that have been launched and

several that reached Norwegian ICA stores during

the year.

The focus on healthy products will continue in

2008, with an emphasis on fruit and vegetables.

Work with health issues in 2007

Company Initiative

ICA Group Developed an action plan to review additives in private label products.

ICA Sverige Published a brochure, “Being allergic,” containing information, advice and recipes for allergy sufferers and their families.

Intensive information campaign and training program on tobacco, alcohol and lottery sales for stores.

ICA Norge Launched a project called “Buddy With Your Body” to encourage Norwegian children in the municipality of Vågå to eat more fruit and vegetables.

All ICA Supermarked stores introduced sugar-free checkout areas and replaced candy with fruit and nuts.

Launched a health campaign site with information, recipes and games at www.ICA.no.

Participated in developing guidelines for marketing fatty, sweet and salty products to children.

Participated in the Norwegian Food Safety Authority’s reference groups for food labeling and the Department of Health and Social Affairs’ monitoring of Norwegian action plans to encourage nutritional diets.

Overview of the ICA Group’s healthy products 2007

No. of products Change in sales compared with 20062007 2006 2005

Keyhole-labeled products (excluding fruit and vegetables)

Sweden 1,050 1,174 Approx. 800* 6.3%

Norway 700 Approx. 750 Approx. 700* –1.2%

ICA Gott liv Sweden 86 72 49 20%

Norway 15 6 2 n.a.

Products for food allergy sufferers

Sweden 420 365 320 10.5%

Norway 133 98 97 n.a.

Fruit and vegetables (private label)

Sweden 591 450 n.a. 0.8%

Norway 118 310 290 1.4%

* The figures for 2005 are not comparable with 2006 and 2007 since the keyhole criteria changed in 2006.

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Products and services for allergy sufferers

ICA wants all customers to find products that suit

them and is therefore refining and modernizing

its selection designed for allergy sufferers. ICA is

stressing the issue with stores and encouraging

them to make it easier for customers to find

information and suitable products on the shelves.

In Norway, many ICA Supermarked and ICA

Maxi stores have a concept called “Fri for,” where

products free of gluten, lactose, egg and soy are

displayed in the same section, together with help-

ful information on the shelves where it is easily

accessible for consumers.

The range of products for special nutritional

needs (Särnär and Fri for) – and their sales –

increased during the year.

ICA always labels all the ingredients in its private

label products so that customers with food aller-

gies can be certain of what they are eating. It also

works continuously to improve the industry-wide

standard on the use of the phrase, “May contain

breadsFocus on gluten-free The number of people with food allergies is growing in the Nordic region, and ICA is working continuously to improve its product range to meet their needs. During the year a new range of gluten-free breads were introduced in ICA’s stores.

Gluten-free bread differs from regular bread mainly in its consistency and taste. It generally lacks the chewiness that gluten provides, and is often tasteless.

“Many small suppliers have developed good products, and we knew it was time for us to modernize our line,” says Christian Andersson, category supervisor for bread at ICA.

To get professional help selecting bread, ICA invited 25 people from the Swedish Society for Coeliacs* in Stockholm to taste the offerings from ICA’s suppliers.

“We wanted to ask those directly affected what they wanted and give them a say when we reviewed our prod-uct range. By considering their opinions and suppliers’ offers, we now have an updated line of around 30 tasty and economical breads,” says Christian Andersson.

traces of...”. Rimi Baltic requires all its suppliers to

label product contents, nutritional information

and allergy-causing ingredients on their packaging.

Tobacco and alcohol

ICA is responsible for ensuring that tobacco,

alcohol and lottery tickets are not sold to under-

age customers. To verify ID checks, ICA conducts

“undercover” purchases in Swedish and Norwe-

gian stores. These purchases are made by the

company Remarkable, which performs a similar

service for Systembolaget, the state-owned alco-

hol retail monopoly. The previous year’s results

from undercover purchases were unsatisfactory.

But through an intense focus on information and

training for store employees, coupled with a large

number of undercover purchases, the results have

significantly improved. In 2007 ID checks were

handled satisfactorily in 75 to 90 percent of cases,

compared with 55 to 70 percent in 2006. ICA’s

goal is to maintain an average of 85 percent.

* The Swedish Society for Coeliacs is an organization of 21,000 members and associations in every province in Sweden dedicated to the interests of those sensitive to gluten, lactose, milk protein and soy protein.

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Objectives and outcome

ICA’s economic development is described in

the Directors’ Report and financial reports. The

Annual Report also describes ICA’s financial

objectives and the results achieved.

Distribution of value-added

ICA’s economic sustainability is defined using the

term value-added, which is the economic value

the Group’s creates. Value-added has increased in

recent years, facilitating higher distributions to the

Group’s stakeholders.

The table below illustrates how the value ICA

creates is distributed.

Economic responsibility

ICA seeks profitable long-term growth based on high ethical standards and sustainable development, while delivering value to its owners. Continuous growth helps to create value for ICA’s stakeholders inside and outside the company.


Amounts in SEK million 2007 2006 2005

Value-added generated

Revenue 82,326 67,395 66,096


Cost of goods and services sold –73,012 –59,677 –59,031

Value-added (income – cost of goods and services sold) 9,314 7,718 7,065

Salaries and other cash compensation –5,374 –4,329 –4,054

Tax and social security expenses –1,453 –1,104 –1,218

Net interest expenses –321 –251 –273

Dividend –958 –610 –607

Retained in operations 1,208 1,424* 913

* Including the gain on the sale of ICA Meny.

Costs, investment and savings

ICA’s sustainability work gives rise to costs in various

areas, e.g., to improve work environments and the

product range, manage wastes and provide training.

ICA has made investments designed to reduce

energy consumption and the impact on the

environment, which will contribute to savings

over time. During the year it invested in a rail

project, Flexiwagon, where trucks can be shipped

on rail cars over long distances.

Investments in store operations include for

example energy-efficient refrigeration and freezer

equipment as well as new refrigerants. To improve

monitoring of quality and human rights in its

sourcing operations in Asia, ICA has opened a new

purchasing office in Hong Kong.

Policies

ICA’s economic responsibility is reflected in several of the Group’s poli-cies. According to the business ethics policy, ICA will be managed with a goal of being profitable while maintaining high ethical standards. The new store policy mentions the importance of a local presence in ICA’s markets.

ICA also has a finance and tax policy that places limits on the Group’s financial risk-taking.

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GRI content index– Global Reporting Initiative

Profile Pages

Strategy and analysis

1.1 Statement from most senior decision maker 4–6, 7, 26–27

Organizational profile

2.1 Name of the organization 1

2.2 Primary brands, products and/or services 13

2.3 Operational structure of the organization 1, 17, 19, 21

2.4 Location of organization’s headquarters 103

2.5 Number of countries where the organization operates

16, 18, 20

2.6 Nature of ownership and legal form 1

2.7 Markets served 17, 19, 21

2.8 Scale of the reporting organization 41, 54

2.9 Significant changes 20

2.10 Awards received 4, 42

Report profile

3.1 Reporting period 30

3.2 Date of most recent previous report 30

3.3 Reporting cycle 30

3.4 Contact point for questions 31

Report scope and boundary

3.5 Process for defining report content 31

3.6 Boundary of the report 31

3.7 Specific limitations 31

3.8 Basis for reporting 31

3.10 Restatements of information 31

3.11 Significant changes 31

3.12 GRI content index 55

Governance

4.1 Governance structure of the organization 29, 100–101

4.2 Chair 96

4.3 Independent members 96–97

4.4 Mechanisms for shareholders and employees 97, 100–101

4.14 List of stakeholder groups 29–30

4.15 Selection of stakeholders 29–30

Performance indicators Pages

Economic performance

EC1 Economic value generated and distributed 54

EC8 Development and impact of infrastructure investments and services

46

Environmental performance

EN3 Direct energy consumption 37

EN4 Indirect energy consumption 35, 37

EN5 Energy saved due to conservation and effi-ciency improvements

35

EN6 Energy-efficient products 32

EN16 Total direct and indirect greenhouse gas emissions

32, 37

EN17 Other relevant indirect greenhouse gas emissions

34, 37

EN18 Initiatives to reduce greenhouse gas emis-sions and reductions achieved

32–39

EN20 NOx, SOx and other significant air emissions 37

EN22 Total weight of waste 35, 37

Social performance

SO3 Percentage of employees trained in organization’s anti-corruption policies and procedures.

29

Labor practices and decent work

LA1 Total workforce 41

LA2 Employee turnover 41

Non-discrimination

HR4 Total number of incidents of discrimination and actions taken.

41–42

Product responsibility

PR2 Incidents of non-compliance concerning health and safety impacts of products and services

50

PR5 Customer satisfaction, including results of surveys

30, 45

= The indicator is reported or an explanation has been provided why it is not reported.

= The indicator is partly reported.

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CASEWho hasn’t impulsively grabbed a candy bar at a supermarket checkout? Now you can choose fruit and nuts instead, at least if you shop at any of ICA Norge’s Supermarked stores.

ICA Supermarked is creating a healthy image, and starting in December 2007 its stores in Norway were the first to offer sugar-free checkout areas.

“This commitment shows our customers that we take health issues seriously. We are not only saying that we care about health; we are doing something about it,” says Rino Segerblad, Supermarked manager at ICA Norge.

The decision was made after testing sugar-free checkouts in a store in downtown Oslo with positive results. When the Minister of Health presented a plan last year to improve the health of the Norwegian people, the press conference was held in the store, which Rino Segerblad sees as recognition of the efforts ICA is making.

Fruit and nuts insteadBy replacing candy, chocolate and soft drinks with pre- packaged fruit and vegetables, nuts and water, ICA rein-forces that the checkouts are sugar-free zones. Stores have many different ways to design these areas, and it is up to each retailer to do what is the best way in their store.

Healthy checkout areas in Norway

“We haven’t stopped selling candy; we have just made it a little less accessible,” says Rino Segerblad. “The reactions from customers have been very positive. Families with small children in particular have found it a little easier to visit the store,” adds Rino Segerblad.

The next step in the Norwegian health efforts will be to further improve the line of packaged fruit and vegetables together with ICA’s suppliers, to make it easier for consumers to eat a little healthier every day.

Annual ReportICA ABCorporate identity number 556582-1559

ANNUAL REPORT 59

Financial review

The Board of Directors and the President of ICA AB hereby present

the annual report for the financial year January 1, 2007 – December 31,

2007. All amounts are in millions of Swedish kronor (SEK million) unless

indicated otherwise.

Operations

ICA AB is the parent company of the ICA Group, which operates

around 2,250 of its own and retailer-owned stores in Sweden, Norway

and the Baltic countries. ICA AB maintains its registered office in

Stockholm at Svetsarvägen 16, SE-171 93 Solna. The subsidiaries ICA

Sverige AB, ICA Norge AS and Rimi Baltic AB are sales companies

within various geographical areas. ICA Banken offers financial services

to Swedish customers. ICA AB includes three Group-wide functions for

Finance, Marketing and Assortment & Sourcing.

Financial summary

Key financial ratios

January – December

SEK million 2007 2006

Net sales 82,326 67,395

Operating income 2,602 2,297

Operating income excluding capital 1) 2,006 1,709

Net income for the period from continued operations 2,166 2,034

Total assets 37,319 35,506

Cash flow from operating activities 4,169 3,044

Operating margin, % 3.2 3.4

Operating margin excluding capital 1) 2.4 2.5

Equity/assets ratio, % 32.4 28.8

Return on equity excluding ICA Banken, % 2) 19.1 25.7

Return on capital employed excluding ICA Banken, % 3) 13.8 12.9

1) Excluding capital gains from real estate sales and impairment losses on fixed assets.

2) Return on equity = Income after tax as a percentage of average equity. The opera-tions of ICA Banken are excluded from both the income statement and balance sheet in the calculation of return on equity.

3) Return on capital employed = Income after financial income as a percentage of average capital employed. The operations of ICA Banken are excluded from both the income statement and balance sheet in the calculation of return on capital employed.

Important events during the year

In February 2007 ICA decided to simplify the Group’s organizational

structure. Four Group functions were consolidated into three. The

subsidiaries now have clearer responsibility for local customer

offerings while coordination in certain areas was strengthened at the

Group level. The composition of ICA’s Group Management was

changed as well.

In January ICA Eiendom AS sold a real estate portfolio mainly

comprised of retail properties to ERIV. The sales price amounted to

NOK 516 million with a capital gain of approximately NOK 100 million,

which affected ICA’s operating income in the first quarter of 2007.

Trond Kongrød was appointed the new President and COO of ICA

Norge in January.

ICA Eiendom AS sold a property in Norway to Klaveness Eiendom AS

in February. The purchase price was NOK 330 million with a capital

gain of approximately NOK 90 million, which affected ICA’s operating

income in the third quarter 2007.

ICA’s ownership changes in Netto were approved by the Swedish

Competition Authority on February 5, 2007. The deal was finalized on

February 15, after which ICA owns 5 percent of Netto. Structural costs

in connection to the deal were reported in the fourth quarter 2006.

In April ICA Eiendom Norge AS sold Alta Storsenter (Komsa Eiendom

AS) to Amfi Eiendom AS. The buyer closed on the property on May 2,

2007. The underlying property value amounted to NOK 273 million,

and the sale positively impacted operating income by approximately

NOK 65 million during the second quarter 2007.

In May ICA Fastigheter Sverige AB sold two properties to Standard

Life Investments European Property Fund (EPGF) for SEK 237 million.

The buyer closed on the properties on May 31. The agreement

positively affected ICA’s operating income by SEK 140 million during

the second quarter 2007.

On June 15 the Swedish Tax Agency denied interest deductions of

approximately SEK 1.8 billion made by ICA Finans AB for the period of

2001-2003. The Swedish Tax Agency’s claim of SEK 716 million

includes penalties and interest. ICA believed that the deductions

were made in compliance with tax rules and appealed the decision to

the County Administrative Court. The Swedish Tax Agency also

issued a statement to the County Administrative Court asserting that

ICA should be denied interest deductions of SEK 1.7 billion made in

2004-2005. ICA always believed that the deductions were in

compliance with the tax rules and contested the Swedish Tax

Agency’s claim. In November the Swedish Tax Agency withdrew its

statement to the County Administrative Court claiming that ICA

should be denied interest deductions in 2004-2005.

In June ICA Fastigheter Sverige AB reached an agreement to sell a

portfolio of 28 store properties in Sweden for SEK 601 million. The

buyer closed on the properties on October 1, 2007. The sale affected

ICA’s operating income by approximately SEK 90 million during the

fourth quarter 2007.

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60 ANNUAL REPORT

ICA Banken launched new savings products in cooperation with

Nordnet Bank in October.

ICA Fastigheter Sverige AB agreed in November to sell two properties

to Standard Life Investments European Property Growth Fund (EPGF)

for SEK 199 million. The sale will positively affect ICA’s operating income

by approximately SEK 60 million by the third quarter of 2008 at the latest.

At the end of the year incorrectly labeled meat was found at a

number of ICA stores. ICA immediately launched an action program

that includes mandatory training in food handling practices in stores,

an inspection program with independent quality audits at all ICA

stores and unannounced inspections of the ICA stores’ internal

controls.

Important events after year-end

No important events after year-end.

Financial year 2007

The ICA Group reported a strong sales increase and strong income for

2007. Sales rose by approximately 22 percent – partly attributable to

the fact that ICA is consolidating the Baltic operations as of January 1,

2007. Excluding Rimi Baltic’s sales, the increase was 6.2 percent. The

increase is mainly due to the strong sales trend for stores in Sweden

and the Baltics. The Group’s operating income also rose during the

year, gaining slightly more than 13 percent. 2007 was a year without

major acquisitions or divestments, when ICA focused on improving its

existing operations. The level of activity in its companies and the pace

of new store openings were both high.

The annual sales trend for Swedish ICA stores was very positive in

total and for comparable stores. The positive trend was helped by a

large number of modernized stores as well as new ones. Moreover,

ICA devoted great effort to product selection. The launch of a new line

of eco-friendly foods and an expanded range of fresh foods, prepared

foods and locally produced items are examples. The new distribution

unit in Helsingborg was gradually placed in operation during the year,

which will improve logistics efficiency in the future.

ICA Norge launched its “Take off” program with high-priority actions

in a number of areas to increase sales and improve profitability. ICA

has seen some positive effects of this work and will continue these

activities. In addition, ICA has continued its long-term strategic work to

streamline the store network.

For Rimi Baltic, the year was highlighted by store operations and an

improved customer offering. Baltic sales were very good, and several

new stores were opened. ICA will continue to exchange knowledge

and create synergies with the Baltic operations.

At the end of the year incorrectly labeled meat was found at a

number of ICA stores. ICA immediately launched an action program

that includes mandatory training in food handling practices in stores,

an inspection program with independent quality audits at all ICA stores

and unannounced inspections of the ICA stores’ internal controls.

ICA Sverige is one of the country’s leading retail companies, with a

focus on food and consumables. It is the main supplier to ICA retailers,

who own and manage their stores independently. In 2007 ICA Sverige

had net sales of SEK 51,438 million. Sales in the 1,382 stores amounted

to approximately SEK 80,737 million including VAT. Sales in Swedish ICA

stores rose by 5.7 percent. All formats reported positive sales trends

and contributed to the increase. New store openings and renovations

continued at a high rate in all store formats. In total, 16 stores were

opened in 2007. In addition, major space changes were implemented at

22 stores, and 210 stores were renovated. In all, 52,000 square meters

of retail space were added. To meet customer demand for locally

produced products, the “Local Tastes” project was started. The aim is

to identify local producers and find new ways of cooperating to help

them reach out to customers through ICA stores in Sweden.

ICA Norge is a Norwegian retail company with a focus on food and

consumables. ICA Norge has 642 stores operated by the company

or as franchises. In 2007 ICA Norge reported net sales of NOK 16,534

million. Store sales amounted to approximately NOK 19,709 million

excluding VAT. Sales for Norwegian ICA stores decreased by 0.9

percent. All store formats reported higher sales for comparable stores.

New openings continued at a rapid rate, with nine new stores opening

during the year. In all, 14,000 square meters of retail space were

added. In addition, about 30 existing stores modernized. The efforts

to structure the store portfolio continued, as a result of which ICA

Norge closed or sold 60 stores. The “Take off” program was started

to create Norway’s best stores with higher sales and profitability. The

work is focused on five main areas: the ICA Maxi Hypermarket format,

the Rimi discount profile, logistical efficiencies, product selection, and

efficiencies in business control and accounting.

Rimi Baltic is one of the leading, most modern food retail chains

in the Baltic countries. In 2007 the company’s sales in the region

increased by 19.4 percent to EUR 1,161 million. Since December 2006

Rimi Baltic is a wholly owned subsidiary of ICA AB. 14 stores were

opened in the region, raising the total number to 215.

ICA Banken offers services that make it easier for ICA’s customers to

manage their finances and in the process strengthens their ties to ICA.

During the year the bank launched new savings products, broadening

its offering of consumer banking services. During the year the bank

continued to add new customers and increased its business volume

by 9.3 percent. ICA Banken was named Bank of the Year 2007 by the

magazine Privata Affärer.

As part of the agreement with Dansk Supermarked, ICA took over 23

stores and store locations from Netto Marknad AB. Six of them were

converted to ICA Nära stores and one to an ICA Supermarket. Four

stores and one property were sold to Lidl. The other stores were closed.

Income summary

Group

Consolidated net sales during the year amounted to SEK 82,326 million

(67,395), an increase of 22.2 percent. Rimi Baltic’s net sales of SEK

10,736 million were consolidated during the year. Excluding Rimi Baltic,

consolidated sales were SEK 71,590 million, an increase of 6.2 percent.

Operating income for the year increased to SEK 2,602 million (2,297)

and includes capital gains on real estate sales and impairment losses

on fixed assets of SEK 596 million (588). Operating income excluding

these items increased to SEK 2,006 million (1,709).

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ANNUAL REPORT 61

ICA Sverige

ICA Sverige’s sales rose by 6.5 percent. Excluding sales by the new Netto

stores in Mälardalen of SEK 181 million, the increase was 6.1 percent.

Operating income amounted to SEK 2,372 million (2,557) and

includes capital gains on real estate sales and impairment losses on

fixed assets of SEK 290 million (465). Operating income before capital

gains is in line with the previous year. Operating income has been

positively affected by higher sales volumes and an improved gross

margin. However, income was charged with higher logistics expenses

owing to the opening of the new distribution unit in Helsingborg. Part

of the operating expenses for logistics is covered by an adjustment to

the fee paid by ICA retailers.

ICA Norge

ICA Norge’s net sales increased by 4.0 percent. In local currency the

increase was 3.6 percent.

Operating income amounted to SEK 144 million (114) and includes

capital gains on real estate sales and impairment losses on fixed assets

of SEK 308 million (124). Operating income has improved due to higher

capital gains. Excluding capital gains, however, income declined due

to higher shrinkage and the fact that newly opened stores are not yet

profitable. Furthermore, income declined due to the fact that ICA has

taken over unprofitable franchised stores, which is part of the long-term

work with restructuring the Norwegian store network. Income was also

charged with higher expenses for product selection and marketing.

Rimi Baltic

Rimi Baltic’s net sales increased by 19.4 percent in local currency.

Sales volume and revenue have increased substantially because of

the higher number of stores than previous year and an increase in

comparable-store sales.

Operating income amounted to SEK 92 million, compared with SEK

20 million in 2006. Operating income includes capital gains on real

estate sales, including impairment losses on fixed assets, of SEK –3

million (71). The higher operating income is due to an improvement in

comparable-store sales.

ICA Banken

ICA Banken’s revenues rose by 12.7 percent.

Operating income improved to SEK 83 million (11). Business volume

increased by 9.3 percent. The income improvement is due to lower

depreciation, better net interest income and higher commission income.

ICA Group Functions

The operating deficit for ICA Group Functions was SEK –89 (–373). The

lower deficit is due to a reduction in shared Group expenses, which

previously included joint ventures, and to adjustments in the distribu-

tion of shared expenses.

Income for the period from continuing operations increased by

6.5 percent to SEK 2,166 million (2,034). The tax expense for the year

amounted to SEK 116 million (12). Income for the period including

results from discontinued operations decreased by 9.8 percent to SEK

2,166 million (2,401).

Financial position

The Group’s total assets increased by SEK 1,813 million to SEK 37,319

million. The increase is due to investments in tangible fixed assets as

well as increased current liabilities and inventories. Capital employed

increased by SEK 768 million to SEK 26,548 million. The equity/assets

ratio was 32.4 percent (28.8). The Group’s net debt excluding ICA

Banken was SEK 2,344 million (4,539).

Statement of cash flows

Cash flow from operating activities amounted to SEK 4,169 million (3,044)

during the period. The difference is mainly due to higher operating

income and increased deposits in ICA Banken. Cash flow from investing

activities amounted to SEK –149 million (–389). Cash flow from financing

activities amounted to SEK –3,372 million (–1,872). The positive cash flow

has been used to repay loans and pay the dividend. The Group’s liquid

assets totaled SEK 4,360 million (3,749) on December 31.

Investments

Investments in 2007 amounted to SEK 2,805 million (2,423).

Changes in accounting principles

IFRS 7 Financial Instruments: Disclosures has been applied since 2007.

IFRS 7 does not entail any changes in the reporting and valuation of finan-

cial instruments, although disclosure requirements are changed compared

with IAS 32 and IAS 30. IFRS 7 has also led to new disclosure requirements

according to IAS 1 pertaining to capital and its management.

Financial risk management

The financial strategy of the ICA Group is conservative and focuses on

defining and managing financial risks. ICA Banken accounts for part

of the Group’s total assets, which means that the financial risk taking

account of the bank’s operations is higher than normal for a retail

company.

The Board of Directors is responsible for establishing the financial

policy, which governs the Group’s financial risk management. Within

the ICA Group, financial risks are managed centrally through the

Group’s finance function.

For more information on ICA’s risk management, see the notes to

the consolidated accounts – Note 22 for Principles of financial risk

management and Note 23 for Financial instruments.

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62 ANNUAL REPORT

Five-year summary

Information on 2003 is based on previously released information from

annual reports prepared in accordance with the provisions of the

Annual Accounts Act and the general advice of the Swedish Accounting

Standards Board. As of 2004 information is provided according to IFRS.

Definitions of key financial ratios:

Capital employed = Total assets less non-interest-bearing liabilities and

provisions.

Operating margin = Operating income as a percentage of net sales.

Return on capital employed = Income after financial income as a

percentage of average capital employed. The operations of ICA Banken

are excluded from both the income statement and balance sheet in the

calculation of return on capital employed.

Five-year summary for the ICA Group

SEK million 2003 2004 IFRS 2005 IFRS1 2006 IFRS 2007 IFRS

Condensed income statement

Net sales 71,980 73,334 71,663 67,395 82,326

Operating income before depreciation/amortization 4,437 3,514 3,248 3,545 4,080

Depreciation/amortization –1,695 –1,280 –1,275 –1,248 –1,478

Operating income before goodwill amortization and impairment 2,742 2,234 1,973 2,297 2,602

Goodwill amortization and impairment –622 –257 –15 – –

Operating income 2,120 1,977 1,958 2,297 2,602

Net financial items –312 –236 –287 –251 –320

Income after net financial items 1,808 1,741 1,671 2,046 2,282

Tax –32 –226 –148 –12 –116

Minority share 1

Result from discontinued operations 367

Net income for the year 1,777 1,515 1,523 2,401 2,166

Condensed balance sheet

Intangible fixed assets 2,288 2,064 1,914 3,447 3,599

Tangible fixed assets 11,639 12,675 12,441 13,232 14,959

Financial fixed assets 3,936 3,185 4,914 3,959 3,368

Other fixed assets – 186 49 181 276

Other current assets 9,245 9,780 10,493 10,938 10,757

Liquid assets 4,446 3,198 2,920 3,749 4,360

Total assets 31,554 31,088 32,731 35,506 37,319

Shareholders’ equity 12,169 7,094 8,386 10,216 12,073

Minority interests 34

Interest-bearing liabilities and provisions 9,527 15,150 15,774 15,563 14,475

Non-interest-bearing liabilities and provisions 9,824 8,844 8,571 9,727 10,771

Total shareholders’ equity and liabilities 31,554 31,088 32,731 35,506 37,319

Key financial ratios

Operating margin, % 2.9 2.7 2.7 3.4 3.2

Return on capital employed, % 13.1 12.9 12.2 12.9 13.8

Return on equity, % 15.7 16.9 20.4 25.7 19.1

Equity/assets ratio, % 38.7 22.8 25.6 28.8 32.4

1) In accordance with the annual report for 2005.

Return on equity = Income after tax as a percentage of average equity.

The operations of ICA Banken are excluded from both the income

statement and balance sheet in the calculation of return on equity.

Equity/assets ratio = Shareholders’ equity as a percentage of total

assets.

Human resources

The Group had an average of 20,081 employees (11,698) during the

year. Rimi Baltic, which is consolidated as of January 1, 2007, had 8,221

employees.

The principal HR strategy is to strengthen ICA’s brand and position as an

employer. The four priority areas are equality and diversity, competence,

health and wellness, and leadership. Goals and concrete activities are

linked to each area. In Sweden and Norway, ICA has introduced a com-

mon system for employee performance reviews called MAP, a Swedish

acronym for goals, responsibility and personal development, for office

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ANNUAL REPORT 63

staff. The aim is to clarify the link between the efforts of individuals and

the ICA Group’s results. ICA strives to maintain positive physical and men-

tal work environments to promote employee health short- and long-term

as well as contribute to the development of its staff and the business as

a whole. The same high quality demands apply to occupational health

and safety as to other operations. ICA strives to continuously build the

skills of its employees in the strategically important areas. The goal is to

promote internal mobility within the company, where 70 percent of the

Group’s available positions are filled by internal candidates. ICA’s success

is dependent on employees with different educations, ages, ethnicities

and national backgrounds. The diversity issue is part of ICA’s extensive

management introduction program. ICA’s goal is to maintain an equal

distribution between men and women in the appointment of new

managers. It also has as its goal to eliminate workplace discrimination.

ICA’s corporate responsibility

ICA’s corporate responsibility comprises the Group’s efforts involving

the environment, employees, product quality and health, and socially

responsible sourcing.

Climate impact has been a priority, and the creation of a climate

strategy for ICA took precedence during the year. ICA has signed the

Business Climate Call in Sweden and the Climate Promise in Norway

and formulated a goal to reduce the Group’s carbon dioxide emissions

by 30 percent by 2020. As part of this work, ICA has analyzed the

climate impact of over a hundred of its private-label products from a

lifecycle perspective.

ICA has also expanded and developed a new platform for its line

of organic products. In Norway, it has continued to focus on health

issues. Among other things, ICA was the first in the industry to launch

candy-free checkout areas in Norwegian ICA Supermarkets.

ICA’s demands on its suppliers are based on the UN’s declaration

of human rights and the International Labour Organization’s (ILO)

core conventions. The requirements are included in all agreements

and monitored through self-declarations by suppliers, visits by ICA’s

employees and recommendations on third-party audits to according to

the Business Social Compliance Initiative (BSCI) or similar certification.

The ICA Group is also a signatory to the UN Global Compact. This

commits ICA to ten international principles covering human rights,

working conditions, the environment and countering corruption.

In seven position statements, the ICA Group has summarized its

stance on ethics and corporate social responsibility, a philosophy it

calls “ICA’s Good Business.” The aim is to be a sustainable company

driven by the following values:

ICA will be driven by profitability and high ethical standards.

ICA will listen to the customers and always base decisions on their

needs.

ICA will nurture diversity and personal growth among its employees.

ICA will maintain an open dialogue internally and with the community.

ICA will ensure product safety and quality.

ICA will promote a healthy lifestyle.

ICA will adopt sound environment practices to promote sustainable

development.

Policies and guidelines are in place to convert these points into practice

in day-to-day activities. This is done through a systematic management

system in the subsidiaries, cooperation with other organizations and

regular contact with key stakeholders.

ICA store sales during the year

The following tables refer to store sales. In Sweden, this includes

Swedish retailer-owned ICA store sales. In Norway, franchise store

sales are included. Sales for retailer-owned and franchised stores are

not consolidated in the Group. As of this year all sales are reported

excluding VAT.

ICA store sales in Sweden

January – December 2007

Store sales excl. VATSEK

millionChange,

all stores

Change, comparable

stores

Maxi ICA Stormarknad 19,714 11.2% 3.3%

ICA Kvantum 20,596 4.3% 4.7%

ICA Supermarket 27,695 3.6% 4.9%

ICA Nära 12,732 4.7% 4.6%

Total 80,737 5.7% 4.5%

In 2007 the share of private label sales in Sweden rose from 16.9 percent

to 17.4 percent.

ICA and Rimi store sales in Norway


Store sales excl. VATNOK

millionChange,

all stores

Change, comparable

stores

ICA Maxi 2,833 4.9% 3.5%

ICA Supermarked 4,558 7.4% 2.3%

ICA Nær 4,407 –2.3% 3.0%

Rimi 7,910 –6.3% 3.2%

Total 19,709 –0.9% 3.0%

In 2007 private label sales in Norway rose from 8.6 percent to 10.0 percent.

Rimi Baltic’s sales in the Baltic countries


Store sales excl. VATEUR

millionChange,

all stores

Change, comparable

stores

Estonia 364 5.3% 4.2%

Latvia 544 26.9% 19.0%

Lithuania 248 27.6% 17.9%

Total 1,156 19.3% 13.5%

In 2007 private label sales in the Baltics rose from 3.0 percent to 5.2

percent.

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Number of stores

ICA stores in Sweden, including retailer-owned stores

Store formatDec. 2006 New

Con-verted Closed

Dec. 2007

Maxi ICA Stormarknad 52 5 3 60

ICA Kvantum 122 1 –2 –2 119

ICA Supermarket 477 1 –7 –11 460

ICA Nära 746 9 6 –18 743

Total 1,397 16 0 –31 1,382

ICA and Rimi stores in Norway, including franchised stores

Store formatDec. 2006 New

Con-verted Closed

Dec. 2007

ICA Maxi 23 3 –1 25

ICA Supermarked 76 4 –1 79

ICA Nær 306 2 7 –40 275

Rimi 288 –7 –18 263

Total 693 9 0 –60 642

Number of stores in Baltic countries

CountryDec. 2006 New

Con-verted Closed

Dec. 2007

Estonia 64 3 –2 67

Latvia 90 4 94

Lithuania 51 7 –2 56

Total 205 14 –4 215

ICA AB

The Parent Company has three overall functions for Finance, Market-

ing and Assortment & Sourcing. The Parent Company’s net sales

amounted to SEK 888 million (783), with income after net financial

items of SEK 725 million (400).

Board of Directors and Management/Board’s rules of procedure

During the year the Board of Directors of ICA AB consisted of eight

members elected by the Annual General Meeting with four deputies,

as well as two members with two deputies appointed by the unions.

All members appointed by the Annual General Meeting are connected

with the owners of ICA AB. The CEO, CFO and Chief Counsel (Board

Secretary) participate in the Board’s work, which follows special rules

of procedure that ensure that the Board receives the information

it needs to monitor and develop business operations. The Board

convened on eight occasions in the financial year 2007.

Board committees

The Board is able to establish committees to complement its work.

The committees are subordinate to the Board and report to it on an

ongoing basis.

Audit Committee

The Board of Directors has appointed an Audit Committee to oversee

accounting and reporting of financial information. The Audit Commit-

tee is also responsible for evaluating the Group’s systems for internal

oversight and control. Among the Committee’s other duties are to

handle auditing issues from the external and internal audit. The Audit

Committee’s work is governed in its rules of procedure, which are laid

down by the Board of Directors.

The Audit Committee consists of two members: John Rishton (Chair-

man) and Claes-Göran Sylvén. In addition, assistants to the members,

the external auditors, internal auditors and ICA AB’s President and

CFO attend all or part of the committee’s meetings. In 2007 the Audit

Committee held six meetings.

Executive Committee

The Board has appointed the Chairman, Deputy Chairman and President

to an Executive Committee responsible to continuously monitor the

Group’s operations. The committee also prepares issues that will be

discussed by the Board and supports the presidents and other senior

executives of the subsidiaries in the implementation and execution of

the decisions taken by the Board. The committee also has a mandate to

decide on investments that do not require treatment by the Board.

Compensation Committee

The Board has given the Executive Committee a mandate to act as a

Compensation Committee for the purpose of deciding on compensa-

tion principles for senior executives in Group Management. The

President’s salary is determined by the Board, however.

Internal control over financial reporting

ICA works since 2006 with a structure to monitor and safeguard

internal control over financial reporting. Financial flows are docu-

mented and key controls are tested annually. The results of the tests

are reported to the company’s management.

Approval of financial reports

The financial reports included in this annual report were approved by

the Audit Committee on February 12 and by the Board of Directors on

February 15, 2008.

Proposed appropriation of earnings

The following funds are at the disposal of the Annual General Meeting (SEK):

Retained earnings 7,554,415,078

Net income for the year 947,004,964

Total 8,502,226,549

The Board of Directors and the President propose that the earnings be distributed as follows:

To the shareholders, a dividend of 1,084,000,000

Carried forward 7,418,226,549

Total 8,502,226,549

The proposed dividend conforms to the agreement between the

shareholders, which states that the annual dividend will amount to at

least 40 percent of net income for the year. The Group’s equity/assets

ratio following the dividend is 29.4 percent.

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(SEK million) Note 2007 2006

Net sales 2, 3 82,326 67,395

Cost of sales 4 –70,685 –57,640

Gross profit 11,641 9,755

Selling expenses 4 –6,276 –4,521

Administrative expenses 4, 6 –3,536 –3,658

Other operating revenue 7 753 805

Share of net income of associated companies and joint ventures 14 20 –84

Operating income 2, 5, 8, 9 2,602 2,297

Financial income 115 107

Financial expenses –435 –358

Net financial items 10 –320 –251

Income after net financial items 2,282 2,046

Tax 11 –116 –12

Income after tax before result from discontinued operations 2,166 2 034

Result from discontinued operations 17 – 367

NET INCOME FOR THE YEAR 2,166 2,401

Attributable to:

Parent Company’s shareholders 2,167 2,393

Minority interest –1 8

Consolidated Income Statement

Consolidated Income Statement 2007, SEK million Consolidated Income Statement 2006, SEK million

Graphics: Bonanza

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(SEK million) Note Dec. 31, 2007 Dec. 31, 2006

ASSETS

Fixed assets

Intangible fixed assets 12 3,599 3,447

Tangible fixed assets 13

Buildings and land 9,321 8,148

Investment properties 1,188 997

Leasehold improvements 679 564

Equipment 3,191 2,833

Construction in progress 580 690

14,959 13,232

Financial fixed assets 23

Shares in associated companies and joint ventures 14 29 63

Receivables from related parties 21 11 320

Other financial fixed assets 359 108

ICA Banken’s receivables 16 2,689 2,810

Other receivables 280 658

3,368 3,959

Deferred tax assets 11 276 181

Total fixed assets 22,202 20,819

Current assets 23

Inventory 15 3,934 3,550

Current receivables

Accounts receivable 2,916 2,554

Tax assets 34 132

ICA Banken’s receivables 16 1,762 1,679

Receivables from related parties 21 20 10


Prepaid expenses and accrued income 1,980 1,849

Liquid assets 24 4,360 3,749

Assets held for sale 17 103 1,146

Total current assets 15,117 14,687

TOTAL ASSETS 37,319 35,506

Consolidated Balance Sheet

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SHAREHOLDERS’ EQUITY, PROVISIONS AND LIABILITIES

Shareholders’ equity 18

Share capital 500 500

Other paid-in capital 12,557 12,557

Reserves 1,160 354

Retained earnings –2,157 –3,208

Shareholders’ equity related to Parent Company’s shareholders 12,060 10,203

Minority interest 13 13

Total shareholders’ equity 12,073 10,216

Long-term liabilities 23

Provisions for pensions 19 845 760

Deferred tax liability 11 626 648

Liabilities to credit institutions 1,352 3,366

Other provisions 64 104

Other liabilities 2,650 2,764

Total long-term liabilities 5,537 7,642

Current liabilities 23

Liabilities to credit institutions 570 941

Accounts payable 6,480 5,690

Deposits, ICA Banken 16 7,509 6,394

Liabilities to related parties 21 14 20

Tax liabilities 7 6

Other liabilities 2,669 2,452

Provisions 30 72

Accrued expenses and deferred income 2,430 2,073

Total current liabilities 19,709 17,648

TOTAL SHAREHOLDERS’ EQUITY AND LIABILITIES 37,319 35,506

Consolidated Balance Sheet Dec. 31, 2007, SEK million Consolidated Balance Sheet Dec. 31, 2006, SEK million

Graphics: Bonanza

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Shareholders’ equity related to Parent Company’s shareholders

(SEK million) Share capitalOther paid-in

capital ReservesRetained earnings Total

Minorityinterest

Total share-holders’ equity

Opening balance, January 1, 2006 500 12,557 273 –4,978 8,352 19 8,371

Change in accounting principle –13 –13 –13

Opening balance, shareholders’ equity, after change in principle 500 12,557 273 –4,991 8,339 19 8,358

Change in translation reserve for the year –455 –455 –455

Change in hedging reserve for the year 38 38 38

Change in revaluation reserve for the year 498 498 498

Acquisition of minority –14 –14

Net income for the year 2,393 2,393 8 2,401

Total change in net worth excluding transactions with company’s owners 500 12,557 354 –2,598 10,813 13 10,826

Dividend –610 –610 –610

Closing balance, December 31, 2006 500 12,557 354 –3,208 10,203 13 10,216

Opening balance, January 1, 2007 500 12,557 354 –3,208 10,203 13 10,216

Change in translation reserve for the year 768 –158 610 610

Change in hedging reserve for the year 38 38 38

Change in revaluation reserve for the year – – –

Acquisition of minority 0 1 1

Net income for the year 2,167 2,167 –1 2,166

Total change in net worth excluding transactions with company’s owners 500 12,557 1,160 –1,199 13,018 13 13,031

Dividend –958 –958 –958

Closing balance, December 31, 2007 500 12,557 1,160 –2,157 12,060 13 12,073

Changes in Consolidated Shareholders’ Equity

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(SEK million) Note 24 2007 2006

Operating activities

Operating income 2,602 2,297

Adjustments for non-cash items 584 428

Income tax paid –114 –220

Cash flow from operating activities before change in working capital 3,072 2,505

Changes in working capital

Inventory (increase - / decrease +) –274 –165

Deposits ICA Banken (increase + / decrease -) 1,115 –378

Current receivables (increase - / decrease +) –618 –146

Current liabilities (increase + / decrease -) 874 1,228


Investing activities

Purchase of tangible and intangible fixed assets –2,858 –2,423

Proceeds from sale of tangible and intangible fixed assets 1,868 2,297

Proceeds from borrowings –1,183 –131

Repayment of borrowings 1,939 375

Interest received 80 90

Purchase of operations Note 25 2 –1,420

Proceeds from sale of operations 0 924

Investment in associated companies –2 –125

Proceeds from sale of associated companies 5 24

Cash flow from investing activities –149 –389

Financing activities

Change in minority share in equity –1 –13

Repayment of borrowings –3,065 –2,046

Proceeds from borrowings 859 1,002

Interest paid –207 –205

Dividend paid –958 –610

Cash flow from financing activities –3,372 –1,872

Cash flow of the year 648 783

Liquid assets at beginning of year 3,749 2,920

Exchange rate differences in liquid assets –37 46

Liquid assets at end of year 4,360 3,749

Consolidated Statement of Cash Flows

2007 2006

2007 2006

– + – +From the income statement +3,072 +2,505

Inventory –274 –165

Short-term receivables, incl. deposits ICA Banken +497 –524

Short-term liabilities +874 +1,228

Cash flow from operating activities +4,169 +3,044

Sales of fixed assets +3,892 +3,710

Investment in fixed assets –4,041 –4,099

Long-term liabilities –2,414 –1,262


Cash flow of the year +648 +783

Consolidated Statement of Cash Flows, SEK million

Graphics: Bonanza

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Note 1 Accounting principles

These consolidated accounts are prepared in accordance with the Interna-tional Financial Reporting Standards (IFRS) as adopted by the EU Commission and the interpretations of the International Financial Reporting Interpretation Committee (IFRIC). The company also follows the Swedish Accounting Standards Board’s recommendation RR 30:06 Supplementary accounting rules for groups, which specifies additional disclosure requirements in accordance with the Annual Accounts Act.

The following standards and interpretations had been published but not yet entered into force at the time this annual report was approved:

IFRS 8 Operating Segments

IAS 1 (Revised), Presentation of Financial Statements

IFRIC 11 IFRS 2 – Group and Treasury Share Transactions

IFRIC 12 Service Concession Arrangements

IFRIC 13 Customer Loyalty Programmes

IFRIC 14 IAS 19- The Limit on a Defined Benefit Asset, Minimum Funding Requirements and Their Interaction

IFRS 8 replaces IAS 14 Segment Reporting. IFRS 8 will be applied as of 2009. The standard is currently expected to affect the definition of reportable segments. The revised IAS 1 will be applied in 2009. The changes relate to disclosure require-ments and the presentation of equity and earnings, among other things.

Of the pronouncements, only IFRIC 13 affects ICA. IFRIC 13 is expected to have little effect on the financial reports when applied.

Accounting principles applied Changes in accounting principlesIFRS 7 Financial Instruments: Disclosures have been applied since 2007. IFRS 7 does not entail any changes in the reporting and valuation of financial instruments, although disclosure requirements are changed compared with IAS 32 and IAS 30.

IFRS 7 has also led to new disclosure requirements according to IAS 1 pertaining to capital and its management.

Basis of accountingThe consolidated accounts are based on historical accrued acquisition costs, with the exception of financial derivatives and certain financial assets, which are recognized at fair value. The Parent Company’s functional currency is Swedish kronor, which is also the reporting currency for the Parent Company and the Group. All amounts in the financial statements are in millions of Swedish kronor (SEK) unless indicated otherwise.

Non-current assets and disposal groups held for sale are recognized at the lower of their previous carrying amount and fair value after deducting selling expenses.

The preparation of the financial statements in conformity with IFRS requires that management make use of judgments, estimates and assumptions that affect the application of the accounting principles and the carrying amounts in the income statement and the balance sheet. Estimates and assumptions are based on historical experience and various other factors that are believed to be reasonable under the circumstances, the results of which form the basis of making the judgments about carrying amounts of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates and judgments.

Consolidated accountsThe consolidated accounts comprise the Parent Company, ICA AB, and its subsidiaries. A subsidiary is included in the consolidated accounts as of the date the Parent Company secures a controlling influence over the company and is no longer included as of the date the Parent Company’s controlling influence over the company ceases.

The minority interest initially consists of the minority share of the fair value of the net assets and is recognized in shareholders’ equity separately from the Parent Company’s equity. The income or loss from the minority interest is recognized in the income statement separately from the Parent Company’s results as a portion of results for the period.

Supplementary information, the Group

The purchase accounting method is applied to the acquisition of subsidiaries. The cost of an acquisition consists of the fair value on the acquisition date of the assets offered as consideration as well as new and assumed liabilities and direct purchase costs. Acquired identifiable assets, liabilities and contingent liabilities are valued at fair value. The difference between acquisition cost and fair value is recognized as goodwill. If the acquisition cost is less than the fair value of acquired identifiable assets, liabilities and contingent liabilities, the difference is recognized directly through profit or loss.

In incremental acquisitions, each transaction is treated individually. Goodwill is determined for each acquisition based on fair value on the transac-tion date and the consideration paid for the acquisition. Changes in the fair value of shares that had already been owned are recognized as a revaluation in shareholders’ equity.

For all units included in the consolidated accounts, uniform accounting principles are applied. This also applies to companies reported according to the equity method. All intra-Group transactions are eliminated.

Investments in associated companiesHoldings in associated companies are reported according to the equity method. An associated company is a unit in which the Group has a significant but not controlling influence. Application of the equity method means that investments in associated companies are recognized in the balance sheet at cost plus any changes in the Group’s share of the associated company’s net assets less any impairments and dividends. The income statement reflects the Group’s share of associated companies’ income after tax.

If the Group’s share of recognized losses in the associated company exceeds the carrying amount of the shares in the Group, the value of the shares is reduced to zero. Additional losses are not recognized, provided the Group has not issued any guarantees to cover losses in the associated company.

The difference between the acquisition cost of the acquired shares and the fair value of the Group’s share of the identifiable assets and liabilities in the associate is accounted as goodwill (surplus) or in case of a negative difference (deficit) is recognized directly through profit or loss. The Group’s investments in associated companies comprise goodwill, which is dealt with in accordance with the accounting principles for goodwill described below. Impairment testing is conducted on reported shares in associated companies when there are indications of diminished value.

In transactions between Group companies and associated companies, the portion of unrealized gains corresponding to the Group’s share of the associ-ated company is eliminated. Unrealized losses are eliminated correspondingly as long as there is no indication of impairment.

Investments in joint venturesA joint venture is a contractual arrangement whereby two or more parties undertake an economic activity subject to joint control. ICA reports joint ventures according to the equity method.

In transactions between Group companies and joint ventures, the portion of unrealized gains corresponding to the Group’s share of the jointly controlled company is eliminated. Unrealized losses are eliminated correspondingly as long as there is no indication of impairment.

Transactions in foreign currencyTransactions in foreign currency are translated to the functional currency at the exchange rate on the transaction date. Monetary assets and liabilities expressed in foreign currency are translated to the functional currency at the exchange rate on the balance sheet date. Exchange rate differences are recognized through profit or loss. Non-monetary assets and liabilities are recognized at historical acquisition costs translated at the exchange rate on the transaction date. All Group companies with a functional currency other than the reporting currency are restated as follows:

Assets and liabilities including goodwill and consolidated surpluses and deficits are translated from the foreign operations’ functional currency to the Group’s reporting currency, Swedish kronor, at the balance sheet date exchange rate.

Revenue and expenses in foreign operations are translated to Swedish kronor at the average exchange rate for the period.

All exchange rate differences that arise through translation are recognized directly in shareholders’ equity as a translation reserve.

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When foreign operations are divested, the cumulative exchange rate differ-ences are recognized through profit or loss together with the gain or loss on the sale.

RevenueRevenue is recognized when the significant risks and benefits associated with ownership of the goods have been transferred to the buyer and it is likely that the economic benefits will be accrued by the Group. Moreover, the revenue must be reliably estimated. Wholesale sales meet these requirements upon delivery of the goods and retail sales when the customer pays at the store. Sales of alcoholic beverages are recognized exclusive of selective purchase taxes. Revenue from franchise sales is recognized upon delivery for goods and other franchise revenue. Rental revenue is recognized in the period to which it relates.

Revenue from the sale of services includes royalties, franchise fees and revenue from various forms of consulting services. The revenue is recognized through profit or loss as it is earned.

Revenue from property sales is recognized when the significant risks and benefits associated with the property are transferred to the buyer. Depending on the terms of the sales contract and the requirements on its fulfillment, the risks and benefits can be transferred to the buyer when the contract is signed, on the closing date or at any point in between. Normally these risks and benefits are transferred to the buyer on the closing date and the result of the sale is recognized at that point. The determination whether the risks and benefits were transferred to the buyer takes into consideration the further management of the property. If there is still an obligation on the Group’s part, no result from the sale is recognized until the obligation has ceased.

Dividends are recognized through profit or loss when the right to receive payment has been determined.

Sale and leasebackIn cases where a property has been sold and then leased back, an overall assessment is made of who controls the significant risks and benefits associated with the property and whether the Group has retained a controlling interest in the property. A controlling interest exists, for example, if a leaseback property is leased to an independent ICA retailer. If the assessment shows that the significant risks and benefits as a whole remain in the Group, revenue from the sale is not recognized on the transaction date, but rather when these risks and benefits are later transferred to the buyer. If the Group has retained a controlling interest, no revenue is recognized until this interest ceases.

If the risks and benefits are retained by the Group, or it retains an interest in the property, the Group continues to recognize the property in the balance sheet as if no sale had taken place and it is still depreciated based on its estimated useful life. The proceeds received from the sale are treated as a loan and recognized as a liability. Leasing fees are split between interest expenses and amortization of the liability.

Goodwill and trademarksGoodwill represents the portion of the acquisition cost exceeding the fair value of the acquired share of the subsidiary’s net assets on the acquisition date. Net assets refer to the difference between identifiable assets, liabilities and any contingent liabilities in an acquired subsidiary, associated company or joint ven-ture. In accordance with IFRS 3, it is assumed that the goodwill has an indefinite useful life. Intangible assets with an indefinite economic life are not amortized. Goodwill is recognized at acquisition cost less any accumulated impairment.

The goodwill arising from business acquisitions is attributed at the time of the acquisition to the cash-generating units that benefit from the acquisition.

Trademarks have an indefinite useful life. Impairment testing is conducted annually or when there is an indication of diminished value.

Other intangible assetsOther intangible assets are recognized in the balance sheet at acquisition cost less accumulated amortization and impairment losses. Amortization is booked on a straight-line basis over the estimated economic life of the assets.

Tangible fixed assetsTangible fixed assets are recognized at acquisition cost less accumulated depreciation and any impairment. Acquisition cost includes the acquisition price and direct expenses. The cost of tangible fixed assets is depreciated to estimated residual value. Depreciation is booked on a straight-line basis over the estimated economic life of the assets.

Investment propertiesProperties used by the Group or leased to ICA retailers are reported as operat-ing properties. Other properties, which are leased to third parties, are reported as investment properties. Investment properties are recognized at acquisition cost less accumulated depreciation and any impairment. Depreciation is booked on a straight-line basis over the estimated economic life of the assets to estimated residual value. Residual value and economic lives are reassessed at the close of each year and adjusted when necessary.

Non-current assets held for saleAssets are classified as non-current assets held for sale if they are available for immediate sale, a decision has been made to sell them and it is likely that a sale will be made within 12 months. Non-current assets held for sale are valued when the reclassification is made, in accordance with IFRS 5, at the lower of book value and estimated sales value less selling expenses.

Discontinued operations are part of a company that has either been disposed of or is classified as held for sale and:

Represents a separate line of business or geographical area of operations;

Is part of a coordinated plan to dispose of separate line of business or geographical area of operations;

Is a subsidiary acquired exclusively with a view to resale.

The classification as discontinued operations is made upon a sale or an earlier date when the operations meet the criteria to be classified as held for sale.

As long as a non-current asset is classified as held for sale, there is no depreciation.

Depreciation and amortizationDepreciation and amortization are calculated on the acquisition cost of the assets. Depreciation and amortization schedules are based on estimated economic lives. An asset’s residual value and economic life are estimated annually.

Buildings 20 – 40 years

Investment properties 20 – 40 years

Leasehold improvements 6 – 20 years

Store equipment and trucks 7 – 10 years

IT systems 3 – 5 years

Other equipment 3 – 10 years

ImpairmentThe carrying amount of fixed assets is tested for impairment when events or other circumstances indicate that the carrying amount may not be recovered. In the test, the carrying amount is compared with the higher of the asset’s fair value less selling expenses and its value in use. Value in use consists of the pres-ent value of the future net cash flow the asset generates. If a single asset does not generate a cash flow independent of other assets, cash flow is calculated for the group of assets, i.e., a cash-generating unit. The value in use calculation of future net cash flows uses a discounting factor before tax that reflects the market’s current estimate of the time value of money and the risks associated with the asset. If the carrying amount exceeds the higher of the asset’s net realizable value and value in use, the asset is written down to the higher of its net realizable value and value in use.

Goodwill, assets with an indefinite economic life and intangible assets that are not yet taken in use are tested annually for impairment. Testing for impair-ment can take place more often when events or other circumstances indicate a decrease in value during the year.

Impairment losses are recognized through profit or loss if the recoverable amount is lower than the asset’s book value. Impairment losses can be reversed if the assumptions used in the calculation that led to the original impairment have changed. Impairment reversal is limited to the depreciated amount that would have been recognized had the original impairment not occurred. Reversal of impairment is recognized through profit or loss. Impair-ment of goodwill is not reversed.

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InventoryInventory is valued at the lower of acquisition cost and net realizable value. Acquisition cost is determined using the first-in, first-out (FIFO) method. Acqui-sition cost consists of all purchase costs after deducting supplier allowances related to products in stock.

Net realizable value corresponds to the estimated sales price under normal conditions less estimated costs to finish the product and the costs required to make the sale.

ICA receives supplier allowances in form of discounts and other types of payments that effectively reduce the company’s purchase cost from suppliers or costs for sales-promotion activities performed by ICA to the benefit of the supplier.

Financial instrumentsFinancial instruments are initially recognized at cost. This corresponds to fair value including transaction costs for all financial instruments, except in the case of the category financial assets at fair value through profit or loss, which are recognized excluding transaction costs. The subsequent recognition depends on the categorization according to IAS 39.

A financial asset or financial liability is recognized in the balance sheet when the company becomes a party to the instrument’s contractual conditions. A financial asset is removed from the balance sheet when the rights in the agreement are realized, expire or the company loses control over them. A financial liability is removed from the balance sheet when the obligation in the agreement is fulfilled or otherwise relieved.

Purchases and sales of financial assets are recognized on the trade date, i.e., the date on which ICA commits to buy or sell the asset. However, in cases where ICA purchases or sells listed securities, settlement date accounting is applied.

Official market quotes on the balance sheet date are used to determine the fair value of listed financial assets. Unlisted financial assets are valued using generally accepted methods such as the discounting of future cash flows to the listed market interest rate for each maturity. Listed exchange rates on the balance sheet date are used in the translation to Swedish kronor.

On each balance sheet date ICA assesses whether there are objective indica-tions that a financial asset is impaired. Accounts receivable are recognized at the amount that is expected to be received after deducting impaired loans, which are evaluated individually.

Financial assets at fair value through profit or lossThis category has two sub-categories: financial assets held for trading and other financial assets the company has designated to this category. A financial asset is classified as held for trading if the purpose is to sell the asset in the short term. Derivatives fall into this category, unless used for hedge account-ing. Assets in this category are carried at fair value with changes in value recognized through profit or loss.

Held-to-maturity investmentsThis category comprises financial assets with fixed or determinable payments and fixed maturities which ICA intends and is able to hold to maturity. They are valued at amortized cost based on the effective interest rate calculated on the acquisition date. Premiums and discounts as well as transaction costs are accrued over the maturity of the instrument.

Loans and receivablesThis category comprises assets with fixed or determinable payments that are not quoted on an active market and are not derivatives. Assets in this category are valued at amortized cost, which is determined based on the effective inter-est rate calculated on the acquisition date. Receivables with short maturities, such as accounts receivable, are valued at nominal amounts.

Available-for-sale financial assetsThis category comprises assets that not classified in any of the other categories or those that ICA has designated to this category. Assets are carried at fair value with changes in value recognized through equity. When the asset is removed from the balance sheet, the previously recognized result is transferred from equity to profit or loss.

Financial liabilities at fair value through profit or lossThis category includes two sub-categories: financial liabilities held for trading and other financial liabilities the company has designated to this category. Derivatives fall into this category, unless used for hedge accounting. Assets in this category are carried at fair value with changes in value recognized through profit or loss.

Other financial liabilitiesThis category comprises all other financial liabilities. They are valued at amortized cost based on the effective interest rate calculated when the liability was recognized. Liabilities with short maturities, such as accounts payable, are valued at nominal amounts. Premiums and discounts as well as direct issue costs are accrued over the maturity of the liability.

DerivativesAll derivatives are recognized at fair value in the balance sheet. For derivatives not reported as hedges and those included in a fair value hedge, changes in value are recognized through profit or loss. For derivatives that meet the requirements for cash flow hedges, the effective share of changes in value is recognized in equity until the hedged item is recognized through profit or loss or as an initial cost in the balance sheet. For derivatives that do not meet the requirements for cash flow hedges and for the ineffective share of derivatives that meets the requirements for cash flow hedges, changes in value are recognized through profit or loss as a financial result. The amount in the hedging reserve related to interest risk is recognized through profit or loss as the derivative’s value declines toward zero.

ICA Banken’s receivables and liabilitiesICA Banken’s lending in the form of unsecured and card credits to consumers is included in the category loans and receivables. It is recognized at amortized cost on the settlement date and subsequently after taking into account established and anticipated credit losses.

ICA Banken’s deposits are included in the category other financial liabilities. Investments of ICA Banken’s surplus liquidity are included in the category available-for-sale financial assets.

Netting of financial assets and liabilitiesFinancial assets and liabilities are offset and recognized net in the balance sheet when there is a legal right of set-off and when the intent is to settle the items with a net amount or to realize the asset and settle the liability at the same time.

Sale of loan portfolio related to store financingAccording to IAS 39, an asset will continue to be recognized in the balance sheet if the majority of the risks associated with the asset are retained by the seller. In November 2005 ICA signed a cooperation agreement with Nordea on store financing. At the same time Nordea took over the Swedish portfolio of operating loans to ICA retailers. In accordance with the agreement, ICA will compensate Nordea for future credit losses. As ICA essentially retains the risk of future credit losses after the sale, the loans continue to be recognized in the balance sheet. The nominal value of the loan portfolio is included in other long-term loans and the selling proceeds received in other financing.

InterestInterest income is recognized as it is earned. Interest income is calculated on the basis of the underlying asset’s yield according to the effective interest rate. Loan expenses and interest are recognized in profit or loss in the period to which they are attributable. Interest expenses associated with new construc-tion or major renovations or additions are capitalized as part of the production cost of the fixed asset.

Liquid assetsLiquid assets comprise cash, bank balances and other short-term investments, including ICA Banken’s short-term investments. Short-term investments have a maturity of no longer than three months. In the balance sheet, overdraft facilities are recognized as borrowings among current liabilities.

ClassificationNon-current assets and long-term liabilities are expected to be realized or paid more than twelve months after the balance sheet date. Current assets and current liabilities are expected to be realized or paid within twelve months of the balance sheet date.

ProvisionsProvisions are recognized in the balance sheet when the Group has a legal or informal obligation resulting from an event that has occurred and it is likely that an outflow of resources associated with the economic benefits will be required to fulfill the obligation and the amount can be reliably estimated. If the effect of the time value of the future payment is considered significant,

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the value of the provision is determined by estimating the present value of the expected future cash flow with a discounting factor (before tax) that reflects the market’s current valuation of the time value. The gradual increase in the allocated amount necessitated by the present value calculation is recognized as an interest expense through profit or loss. Provisions are tested at the close of each year.

Provisions for restructuring are recognized when the Group has established a detailed, formal restructuring plan and the restructuring has either begun or been publicly announced.

A provision for contract losses is recognized when the benefits the Group expects to receive from a contract are lower than the unavoidable costs to fulfill the contract’s obligations.

Contingent liabilitiesA contingent liability is recognized when there is a possible obligation attribut-able to past events and whose existence is confirmed only by one or more uncertain future events, or when there is an obligation but it is not probable that payment will be required.

Pensions and other post-employment benefitsThe Group has both defined-contribution and defined-benefit pension plans. In the latter, the company bears the risk for the benefits as agreed to. In a defined-contribution plan, the company does not have any obligation beyond paying the contractual fees to the plan.

Fees for defined-contribution plans are recognized as a cost through profit or loss as the right is vested.

The Group’s obligation with respect to defined-benefit pension plans is calculated separately for each plan annually. The calculation is an estimate of the present value of future entitlements that employees have earned through service to the company. The fair value of plan assets is deducted from the present value of the pension obligation. The calculation is based on a number of assumptions. The discount rate is the interest rate on the balance sheet date for government bonds with a maturity corresponding to that of the obligation. The calculation is performed by a qualified actuary using the so-called projected unit credit method.

Actuarial gains and losses arise either as a result of a difference between an assumption and the actual outcome or because an assumption has changed. For actuarial gains and losses arising after the transition date for IFRS, January 1, 2004, the so-called corridor rule is applied. This means that when the cumulative actuarial gain or loss exceeds a limit corresponding to 10 percent of the greater of the present value of the commitment and the fair value of plan assets, the net gain or loss is recognized over the employees’ expected remaining working lives.

When there is a difference between how the pension cost is determined in a legal entity and the Group, a provision or receivable is recognized for the special employer’s contribution based on this difference. No present value calculation is made for the provision or receivable.

LeasingLeases are classified in the Group as either operating or finance. In a finance lease, essentially all economic risks and benefits associated with ownership are transferred from the lessor to the lessee. All other leases are operating.

ICA as lesseeLeasing fees for operating leases are recognized through profit or loss and divided on a straight-line basis over the life of the lease.

Significant finance leases are recognized as fixed assets and liabilities in the balance sheet, while in the income statement the cost is recognized among operating expenses and interest. Leasing fees are split between interest and amortization. Assets are depreciated over their lease term or estimated useful life, whichever is shorter.

ICA as lessorAssets subject to a finance lease are recognized in the balance sheet as a receivable at an amount equal to the net investment as per the lease. Lease payments received are recognized as amortization of the receivable or finan-cial income. This income is allocated based on a pattern reflecting a constant periodic return over the lease term.

Assets subject to an operating lease are presented according to the nature of the asset. Lease revenue from operating leases is recognized in income on a straight-line basis over the lease term. Direct costs incurred at the start of the lease are expensed on a straight-line basis over the lease term.

Income taxIncome taxes consist of current and deferred tax. Income taxes are recognized through profit or loss except when the underlying transaction is recognized directly against shareholders’ equity, while the associated tax is recognized in shareholders’ equity.

Current tax is tax that will be paid or received in the current year. This includes adjustments in current tax attributable to previous periods.

Deferred tax is recognized in accordance with the balance sheet method, which is based on temporary differences between the recognized and taxable values of assets and liabilities. The following temporary differences are not taken into account: temporary differences that arise in the first-time reporting of goodwill, the first-time reporting of assets and liabilities from a transaction other than a business acquisition and which, at the time of the transaction, affects neither the recognized nor taxable gain or loss, and temporary differ-ences attributable to shares in subsidiaries, associated companies and joint ventures not expected to be reversed in the foreseeable future. The valuation of deferred tax is based on how the carrying amounts of assets and liabilities are expected to be realized or settled. Deferred tax is calculated applying the tax laws and tax rates in effect or essentially in effect on the balance sheet date.

Deferred tax assets are recognized for all deductible temporary differences and unutilized tax loss carryforwards to the extent it is likely that future taxable gains will be available. The carrying amounts for deferred tax assets are tested on each balance sheet date and reduced to the extent it is no longer likely that they can be utilized.

Segment reportingA segment is a distinguishable component of the Group that provides goods and services (operating area) within a particular economic environment (geographical area) and that is subject to the risks and returns that differ from other segments.

For ICA, business areas are considered its primary segments and countries its secondary segments.

Important assumptions and estimatesThe consolidated accounts are based on various assumptions and estimates made by the Board of Directors. These assumptions affect the carrying amounts of assets and liabilities, of income and expenses, and of pledged assets and contingent liabilities. Estimates may deviate from future results. The assumptions and estimates that the Board of Directors feels are most important and where there is the greatest risk of future changes in the values of assets and liabilities are as follows.

Sale and leasebacksThe Group sells store properties, which in some cases are leased back and sublet to the ICA retailer on identical terms. ICA has determined that the signifi-cant risks and benefits in such sale and leaseback arrangements are retained by the Group. The combined transaction is therefore treated as financing and as such, the properties continue to be recognized in the consolidated balance sheet and depreciation continues over their estimated useful life. Proceeds received are accounted as a long-term liability, while the lease fee is split between interest expenses and amortization of the liability.

Consolidation of store companiesIn accordance with IAS 27, ICA AB consolidates companies in which it exercises a controlling influence. All store companies in which ICA has more than 50 percent of the votes have been consolidated. ICA has analyzed other store companies to determine whether it exercises a controlling influence even if it owns less than 50 percent of the votes. In accordance with IAS 27 and SIC 12, one indication that ICA could be considered to exercise a controlling influence over a store company is if ICA has retained a majority of the risks and economic benefits. Based on a review of agreements and financial informa-tion, it has been determined that the CA retailers and franchisees exercise a controlling influence over each store company. Consequently, ICA does not consolidate these store companies.

Impairment of fixed assetsThe determination whether a fixed asset has been impaired or not requires an assessment of its recoverable value. Recoverable value is the higher of the asset’s value in use and fair value less selling expenses. The calculation of value in use requires an assessment of future cash flows and discount rates. A change in assumptions regarding, among other things, future cash flows and discount rates could change the carrying amount of fixed assets.

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PensionsThe calculation of defined-benefit pensions requires assumptions with regard to future payroll and interest rates. Because of the long maturity of the pensions in these plans, the uncertainty of these assumptions is high and may necessitate corrections in the future that affect future liabilities and expenses.

Damages and provisionsICA AB and its subsidiaries are involved in a number of disputes related to the Group’s operations. These disputes have a built-in uncertainty. The Board of Directors’ assessments of the outcome of these disputes are based on assessments by external and internal attorneys. If there is thought to be more than a 50 percent likelihood that ICA will lose a case, a provision is allocated accordingly.

Supplier allowancesThere are a number of different types of contracts governing supplier allow-ances. To calculate allowances, certain types of contracts require assumptions about future sales and purchasing volumes. If these assumptions change, it could lead to a different calculation of the allowances.

Credit losses ICA BankenICA Banken’s credit losses consist of allocations for anticipated and established credit losses. If the financial situation faced by ICA Banken’s customers changes, it could affect the level of credit losses.

The Group’s operations are divided into the following business areas: ICA Sverige, ICA Norge, Rimi Baltic and ICA Banken. ICA Sverige, ICA Norge and Rimi Baltic relate to retail and wholesale operations in each respective geographical region. ICA Banken conducts banking operations. ICA Meny is reported as a discontinued

Note 2 Segment reporting

operation. See also Note 17. Rimi Baltic operated as joint venture in 2006, but is reported as of December 31, 2006 as a wholly owned subsidiary. See also Note 25.

All internal transactions are based on market prices. Shared Group expenses are distributed based on store sales in the various segments.

ICA Sverige ICA Norge Rimi Baltic ICA Banken

2007 2006 2007 2006 2007 2006 2007 2006

External net sales 51,243 47,927 19,095 18,359 10,736 0 517 458

Internal net sales 195 374 – 2 – – – –

Share of associated companies’ net profit 0 8 20 5 – –12 – –

Operating income 2,372 2,557 144 114 92 –12 83 11

Assets 15,516 14,187 9,148 9,252 6,158 5,182 8,408 7,365

Liabilities incl. provisions 12,912 12,094 4,763 5,346 5,339 4,538 7,777 6,733

Investments in fixed assets 1,010 1,260 929 1,003 774 – 31 7

Depreciation/amortization 418 379 608 614 276 – 32 71

Impairment losses 1 1 14 68 8 – – –

Other non-cash items –387 –536 –343 –175 –5 12 – –

Average number of employees 5,107 4,752 4,348 4,043 8,221 – 196 174

Corporate Intersegment items

Total continuing operations, ICA Group

Discontinued operations

(ICA Meny) Total

2007 2006 2007 2006 2007 2006 2007 2006 2007 2006

External net sales 735 651 82,326 67,395 – 4,383 82,326 71,778

Internal net sales 451 463 –646 –839 0 0 –

Share of associated companies’ net profit 0 –85 20 –84 – 20 –84

Operating income –89 –373 2,602 2,297 – 38 2,602 2,335

Assets 20,083 19,180 –21,994 –19,660 37,319 35,506 – – 37,319 35,506

Liabilities incl. provisions 8,542 10,194 –14,087 –13,615 25,246 25,290 – – 25,246 25,290

Investments in fixed assets 114 101 2,858 2,371 – 52 2,858 2,423

Depreciation/amortization 121 115 1,455 1,179 – 17 1,455 1,196

Impairment losses – – 23 69 – – 23 69

Other non-cash items –5 –2 –740 –701 – – –740 –701

Average number of employees 2,209 2,041 20,081 11,010 – 688 20,081 11,698

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Note 2 Cont.

Continuing operations Discontinued operations Total

Net sales Operating income Net sales Operating income Net sales Operating income

Country 2007 2006 2007 2006 2007 2006 2007 2006 2007 2006 2007 2006

Sweden 52,495 49,036 2,353 2,206 – 3,044 – 26 52,495 52,080 2,353 2,232

Norway 19,095 18,359 157 91 – 1,339 – 12 19,095 19,698 157 103

Baltic countries 10,736 – 92 – – – – – 10,736 – 92 –

Total 82,326 67,395 2,602 2,297 – 4,383 – 38 82,326 71,778 2,602 2,335

According to balance sheet:

AssetsInvestments

in fixed assets

Country 2007 2006 2007 2006

Sweden 21,666 20,529 1,145 1,357

Norway 9,495 9,771 939 1,014

Baltic countries 6,158 5,182 774 –

Denmark – 24 – –

Total 37,319 35,506 2,858 2,371

Note 3 Net sales by revenue source

2007 2006

Wholesale sales 43,775 43,427

Retail sales 32,891 18,803

Rental revenue 1,758 1,648

Net interest income and commissions, ICA Banken 517 459

Other services for ICA retailers and franchisees 3,385 3 058

Net sales 82,326 67,395

Note 4 Expenses by type of expense

2007 2006

Cost of sales 62,772 51,275

Personnel expenses 7,236 5,877

Administration charges 2,008 1,703

Cost of premises 2,885 2,164

Depreciation/amortization 1,478 1,248

Other expenses 4,118 3,552

Total expenses 80,497 65,819

Note 5 Personnel expenses, pensions, etc.

Average number of employeesThe number of employees is calculated on the basis of the Group’s measure of normal working hours (1,800 hours).

2007 20061

Women Men Total Women Men Total

Sweden 2,823 4,194 7,017 2,659 4,401 7,060

Norway 2,551 2,292 4,843 2,344 2,294 4,638

Baltic countries 7,167 1,054 8,221 – – –

Total 12,541 7,540 20,081 5,003 6,695 11,698

1) Figures include the discontinued operations of ICA Meny.

Salaries and other remuneration to Board, President and EVP 2007 2006

Salaries and similar remuneration 42 52

Cost of pensions and similar remuneration 12 18

Of the salaries and other remuneration, 9 (12) relates to bonuses. The group is comprised of 17 (18) persons who make up the Group’s management and Board.

Gender distribution of Board of Directors and Management 2007 2006

Board of Directors

Men 28 39

Women 13 8

Total 41 47

Management

Men 70 68

Women 29 29

Total 99 97

Benefits to Senior ExecutivesNo fees were paid to the Board members appointed by the Annual General Meeting. Employee representatives received a fee of SEK 4,000 per meeting, to which Board members received background material, with decision points on the agenda, prior to the meetings.

The salary paid to the company’s President amounted to SEK 11 million (11) during the year, including a bonus of SEK 5 million (5). The employment contract of the President of the Parent Company stipulates a 12-month term and severance pay for two years if terminated by the company. If the President resigns, the term of notice is six months. The President is entitled to receive pension benefits from age 60. The company covers the obligation by annually paying pension premiums to insurance companies corresponding to 35 percent of the President’s salary. The Group does not have other post-employment obligations to the President.

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Note 6 Audit expenses

2007 2006

Audit fees:

Deloitte 19 12

Other audit firms 4 2

Total 23 14

Consulting fees:

Deloitte 0 5

Other audit firms 3 –

Note 7 Other operating revenue

2007 2006

Profit shares and share dividends 150 148

Capital gains 603 657

Total 753 805

Note 8 Leases

Finance leasesICA as lessor

Receivables related to finance leases with ICA as lessor

Minimum leasing fees

Present value of mini-mum leasing fees

2007 2006 2007 2006

Maturity date within 1 year 100 97 95 92

Maturity date later than 1 year but within 5 years 152 204 129 169

Maturity date later than 5 years 1 7 1 5

Total 253 308 225 266

Less: Unearned interest –28 –42

Present value of minimum leasing fees 225 266

Receivables are recognized in the following items:

Long-term receivables 130 174

Other current receivables 95 92

ICA enters into finance leases on store equipment. No new leases are signed as of 2007. The average lease period is 2.5 years. Interest is variable with an average rate of 5.8 percent (3.95). Variable fees included in income for the period amount to SEK 0 million (6).

The non-guaranteed carrying amount of assets under finance leases as of December 31, 2007 is estimated at SEK 0 million (0).

The fair value of receivables with respect to finance leases as of December 31, 2007 is estimated at SEK 225 million (266), based on the estimated present value of anticipated cash flows.

Operating leasesICA as lesseeThe Group leases buildings and equipment. Lease fees are agreed to over an average period of 10 years. Rents change in accordance with index clauses. Options are available to extend the leases beyond the current term.

Contractual leasing expenses under existing agreements fall due for payment as follows:

2007 2006

The year’s leasing expense 2,703 2,200

Of which minimum leasing fees 2,545 2,088

Of which variable fees 158 112

The year’s leasing revenue from sublet assets –991 –1,146

Future contractual minimum leasing fees:

Maturity date within 1 year 2,557 2,317

Between 1-5 years 7,920 7,143

Later than 5 years 6,195 6,127

Total 16,672 15,587

Future minimum leasing fees for contracts on sublet assets

5,038 4,502

ICA as lessorThe Group leases out buildings and equipment. Rents are fixed, although variable rents based on revenues do occur. Leasing fees are contracted over an average lease period of 10 years. Rents change in accordance with index clauses.

Contractual leasing expenses under existing agreements fall due for payment as follows:

Future contractual minimum leasing fees: 2007 2006

Maturity date within 1 year 466 420

Between 1-5 years 1,477 1,488

Later than 5 years 728 988

Total 2,671 2,896

Variable fees included in results 470 495

Note 9 Exchange rate differences in operating income

Purchases of goods and services in foreign currency have produced exchange rate differences on the following levels of operating income.

2007 2006

Net sales 1 0

Cost of sales –13 –22

Administrative expenses 2 –

Total –10 –22

Note 10 Net financial items

2007 2006

Financial income

Interest income 107 107

Market valuation of financial derivatives 4 –

Exchange rate differences 4 –

Financial income 115 107

Financial expenses

Interest expenses –435 –338

Market valuation of financial derivatives – –6

Exchange rate differences – –14

Financial expenses –435 –358

In the ICA Group, interest income and interest expenses in ICA Banken are recognized in operating income.

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Note 11 Taxes

Current tax 2007 2006

Current tax on net income for the year –257 –266

Deferred tax on temporary differences 141 254

Reported tax expense –116 –12

Reconciliation between current tax rate and effective tax

Current tax rate, % 28,0 28,0

Tax-exempt income –17,0 –29,4

Result from associated companies’ net income –0,2 1,1

Other non-deductible expenses and tax-exempt income –5,7 0,9

Effective tax rate % 5,1 0,6

Reported deferred tax assets and tax liabilities 2007 2006

Fixed assets –97 –79

Inventory 7 6

Provisions –2 –66

Tax loss carryforwards 161 96

Untaxed reserves –411 –413

Financial derivatives –8 –11

Total deferred tax assets (+) deferred tax liabilities (–), net –350 –467

As reported in balance sheet:

Deferred tax assets 276 181

Deferred tax liabilities –626 –648

The Group has no unreported deferred tax liabilities or tax assets on tempo-rary differences. Capitalized tax assets from tax loss carryforwards are likely to be offset against future profits, since taxable surpluses have been generated historically and taxable surpluses are very likely to arise in the future.

Change in deferred tax in temporary differences and tax loss carryforwards

Balance, Jan. 1, 2006

Recognized through profit or loss

Recognized through equity

Business acquisition/divestment

Balance, Dec. 31, 2006

Fixed assets 61 110 –250 –79

Inventory 3 3 6

Provisions 79 –145 –66

Tax loss carryforwards 41 55 96

Untaxed reserves –644 231 –413

Financial derivatives –10 0 –1 –11

Total –470 254 –1 –250 –467


Recognized through profit or loss

Recognized through equity

Business acquisition/divestment


Fixed assets –79 –18 –97

Inventory 6 1 7

Provisions –66 64 –2

Tax loss carryforwards 96 65 161

Untaxed reserves –413 2 –411

Financial derivatives –11 3 –8

Total –467 114 3 – –350

Tax assets are denoted by (+) and tax liabilities by (-) in the table above.

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Note 12 Intangible fixed assets

Accumulated acquisition cost GoodwillTrade- marks

IT systems Other

Opening balance, Jan. 1, 2006 1,605 – 475 201

Purchases 998 673 75 99

Sales/disposals –37 – –25 –29

Exchange rate difference –52 –1 –2 –2

Closing balance, accumulated acquisition cost, Dec. 31, 2006 2 514 672 523 269

Opening balance, Jan. 1, 2007 2,514 672 523 269

Purchases 0 0 50 23

Sales/disposals 0 0 0 –29

Exchange rate difference 174 30 2 5

Closing balance, accumulated acquisition cost, Dec. 31, 2007 2,688 702 575 268

Accumulated amortization GoodwillTrade- marks

IT systems Other

Opening balance, Jan. 1, 2006 –271 –81

Amortization for the year –109 –55

Closing balance, accumulated amortization, Dec. 31, 2006 –380 –136

Opening balance, Jan. 1, 2007 –380 –136


Sales/disposals – 31

Closing balance, accumulated amortization, Dec. 31, 2007 –460 –157

Accumulated impairment losses Goodwill

Trade- marks

IT systems Other

Opening balance, Jan. 1, 2006 –15 – – –

Impairment losses for the year – – – –

Closing balance, accumulated impairment losses, Dec. 31, 2006 –15 – – –

Opening balance, Jan. 1, 2007 –15 – – –

Impairment losses for the year – – –1 –1

Closing balance, accumulated impairment losses, Dec. 31, 2007 –15 – –1 –1

Net carrying amount

As of Dec. 31, 2006 2,499 672 143 133

As of Dec. 31, 2007 2,673 702 114 110

Amortization of intangible fixed assets is included in the following income statement items.

2007 2006

Selling expenses –52 –55

Administrative expenses –80 –109

Total –132 –164

Impairment losses for intangible fixed assets are included in line item selling expenses in the income statement.

Useful life of intangible assetsTrademarks were acquired in connection with the acquisition of Rimi Baltic AB. Since there is no predictable period during which these trademarks are expected to benefit the Group, their useful life is considered indefinite.

IT systems relate to capitalized development expenditures for IT systems. The useful life is calculated for each system and amounts to between three and five years. Amortization is booked on a straight-line basis over the useful life of the assets. The remaining amortization schedule for IT systems is approximately 2 years.

Other intangible assets consist of tenancy rights and other intangible surplus values in connection with the acquisition of store operations. Amortization is booked over the estimated useful life of the assets.

Impairment testing of goodwillGoodwill is distributed among the Group’s following segments:

2007 2006

ICA Norge 1,628 1,501

Rimi Baltic 1,045 998

Total 2,673 2,499

Goodwill is distributed among the cash-generating units that are expected to benefit from the acquisition. The lowest level it is distributed to is the one monitored in internal controls in the Group, and the highest level is segments. Goodwill impairment tests are conducted annually and when there is an indi-cation of impairment loss. The recoverable amount for a cash-generating unit is determined based on calculations of value in use. The calculations are based on estimated cash flows in budgets and forecasts for the upcoming 2-3 years. Cash flows beyond this period are extrapolated based on anticipated inflation. In no case is real growth higher than 2 percent. The need for working capital is expected to remain at the same relative level as in year 3. The discount rate is 7.5 percent before tax for ICA Norge and 8.6 percent before tax for Rimi Baltic.

Impairment testing of trademarksTrademarks attributable to the acquisition of Rimi Baltic are distributed by country and store format. Impairment testing of trademarks is conducted annually and when there is an indication of impairment loss. The recoverable amount for each trademark is determined based on calculations of value in use. The calculations are based on the estimated cash flows in budgets and forecasts for the upcoming three years. Cash flows beyond this period are extrapolated based on anticipated inflation. In no case is real growth higher than 2 percent. The need for working capital is expected to remain at the same relative level as in year 3. The discount rate is 8.4-10.1 percent before tax depending on the country the trademark is attributable to.

Impairment testing of other intangible assetsFor intangible assets other than goodwill and trademarks, a recoverable amount is determined when there is an indication that the asset has decreased in value. During the year no circumstances occurred that would motivate impairment testing.

Note 13 Tangible fixed assets

2007 2006

Buildings and land

Acquisition cost, opening balance 10,351 8,741

Purchases 1,334 1,642

Sales/disposals –225 –30

Reclassifications –44 138

Exchange rate difference 176 –140

Accumulated acquisition cost, closing balance 11,592 10,351

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2007 2006

Depreciation and impairment losses, opening balance –2,203 –1,797

Sales/disposals/reclassifications 194 –173

Impairment losses for the year –4 –9

Depreciation for the year –311 –224

Exchange rate difference 53 0

Accumulated depreciation and impairment losses, closing balance –2,271 –2,203

Residual value according to plan, closing balance 9,321 8,148

Tax assessment value of Swedish properties

Land 682 480

Buildings 3,128 2,590

Total 3,810 3,070

Investment properties


Purchases 142 156


Reclassifications 265 –547



Depreciation and impairment losses, opening balance –167 –446

Sales/disposals/reclassifications –196 312

Impairment losses for the year 0 –8


Exchange rate difference 4 15

Accumulated depreciation and impairment losses, closing balance –396 –167

Residual value according to plan, closing balance 1,188 997

Tax assessment value of Swedish properties

Land 10 12

Buildings 6 23

Total 16 35

An internal appraisal has been made of the fair value of all investment proper-ties based on current rents and the yields in each market. It shows that the fair value exceeds book value by SEK 429 million (286).

The following amounts have been recognized through profit or loss for investment properties:

2007 2006

Rental income 121 140

Direct costs for properties that generated rental income 24 21

Direct costs for properties that did not generate rental income 0 0

Leasehold improvements 2007 2006

Acquisition cost, opening balance 956 861

Purchases 163 222


Reclassifications 126 –32


Accumulated acquisition cost, closing balance 1,275 956

Note 13 Cont. 2007 2006

Depreciation and impairment losses, opening balance –392 –309

Sales/disposals/reclassifications –80 19

Impairment losses for the year –1 –



Accumulated depreciation and impairment losses, closing balance –596 –392

Residual value according to plan, closing balance 679 564

Equipment


Purchases 1,185 1,239


Reclassifications – 98



Depreciation and impairment losses, opening balance –4,809 –4,266

Sales/disposals/reclassifications 486 128

Impairment losses for the year –15 –6


Exchange rate difference –4 4

Accumulated depreciation and impairment losses, closing balance –5,193 –4,809


Construction in progress

Opening balance 690 1,068

Expenses capitalized during the year 1,229 1,130

Reallocations during the year –1,359 –1,472

Impairment loss for the year –1 –


Closing balance 580 690

Expenses capitalized during the year include SEK 14 million (32) in capitalized interest based on an interest rate of 4.3 percent (2.9).

Impairment losses for tangible fixed assets of 21 (23) are included in the line item cost of sales in the income statement.

Note 14 Shares in joint ventures, associated companies and subsidiaries

Joint ventures

Carrying amount, joint ventures 2007 2006

Carrying amount, opening balance 46 657

New share issues and shareholders’ contribution – 125

Group change – –613

Share of profit – –98

Exchange rate difference – –25

Reclassification –46 –

Carrying amount, closing balance 0 46

Goodwill and other consolidated surplus values – 0

Share of shareholders’ equity – 46

Total 0 46

Interest in joint ventures, % Dec. 31, 2007 Dec. 31, 2006

Netto Marknad, ICA & DSG AB – 50

Rimi Baltic AB – 100

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80 ANNUAL REPORT

In 2005 ICA AB and Kesko Livs Ab formed a jointly owned food retail business in the Baltic countries. On December 18, 2006 ICA AB acquired the remaining 50 percent of Rimi Baltic AB from Kesko Livs Ab, and Rimi Baltic has since been a wholly owned subsidiary of the ICA Group. In the income statement Rimi Baltic AB is recognized as a joint venture for the full-year 2006. In the balance sheet Rimi Baltic AB is consolidated as of December 31, 2006.

Until December 2006 ICA AB and Dansk Supermarket each owned 50 percent of Netto Marknad AB, which operates the Netto discount concept in Sweden. In December 2006 an agreement was reached by the owners whereby ICA reduced its interest to 5 percent. According to the agreement, the change in ownership would take effect on January 1, 2007. One of the conditions was the approval of competition authorities, which was received on February 5, 2007. The deal closed on February 15, 2007 with an effective date of January 1, 2007. As part of the agreement, ICA took over 21 stores and two projects in the Mälardal area. ICA has converted seven stores to ICA Nära. Four stores and one property have been sold to Lidl. The other stores have been closed. ICA has not now, nor did it in 2006, provide any guarantees for Netto Marknad AB. Until the sale, Netto Marknad AB was financed by both owners with capital contributions and loans.

The following table summarizes ICA’s share of the revenue, expenses, assets and liabilities of its joint ventures. The table includes income statement and balance sheet information for Rimi Baltic and Netto for 2006. Since Rimi Baltic was recognized as a joint venture until December 31, 2006, this provides a fair picture of the connection between the income statement and balance sheet.

2007 2006

Revenue – 5,622

Expenses – –5,719

Income – –98

Fixed assets – 1,355

Current assets – 821

Total assets – 2,176

Shareholders’ equity – 661

Long-term liabilities – 713

Current liabilities – 802

Shareholders’ equity and liabilities – 2,176

Associated companies

Carrying amount, associated companies 2007 2006


Purchases 2 0

Undistributed share of associated companies’ net income 18 13

Disposals –9 –44


Accumulated acquisition cost, closing balance 29 17

Impairment losses, opening balance 0 –19

Impairment losses, disposed companies – 19

Impairment losses for the year – –

Accumulated impairment losses, closing balance 0 0


Shares in associated companies The following table summarizes the most significant holdings of shares in associated companies:

Ownership % Profit share

Dec. 31, 2007

Dec. 31, 2006

Dec. 31, 2007

Dec. 31, 2006

HB Näringshuset – – – 7

Borgenveien 50 AS 50 50 19 0

Landbu Eiendom AS 41 41 1 0

Other associated companies 0 7

Total 20 14

The ownership percentages above refer to votes, which in every case is the identical to the share of capital.

Shares in subsidiariesHoldings in subsidiaries directly and indirectly owned by ICA AB. The list is limited to operating companies.

Ownership %

Direct holdings Corp. ID no Reg. office Dec. 31, 2007 Dec. 31, 2006

ICA AS 988 351 032 Oslo, Norway 100 100

ICA Ahold Trading AB 556615-4620 Stockholm 100 100

ICA Baltic AB 556042-7410 Stockholm 100 100

ICA Banken AB 516401-0190 Stockholm 100 100

ICA Detalj AB 556604-5448 Stockholm 100 100

ICA Fastigheter AB 556604-5471 Stockholm 100 100

ICA International Services BV 34177382 Netherlands 100 100

ICA Reinsurance S.A 915/93 Luxembourg 99 99

Indirect holdings

ICA Eiendom Norge AS 968 930 451 Oslo, Norway 100 100

ICA Fastigheter Sverige AB 556033-8518 Västerås 100 100

ICA Global Sourcing Ltd 1 150 322 Hong Kong 100 –

ICA Norge AS 931 186 744 Oslo, Norway 100 100

ICA Sourcing and Services BV 35 025 260 Netherlands 100 100

ICA Sverige AB 556021-0261 Stockholm 100 100

Rimi Baltic AB 556609-6268 Stockholm 100 100

In addition to the companies listed above, the ICA Group comprises 196 operating and dormant companies. A complete list of all Group companies can be obtained from ICA’s corporate communications department.

Note 14 Cont.

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ANNUAL REPORT 81

Note 15 Inventory

2007 2006

Inventory of goods for resale 4,033 3,598

Deduction for obsolescence in inventory –99 –48

Inventory 3,934 3,550

Note 16 ICA Banken

ICA Banken conducts banking operations, including card operations as well as savings and lending. Lending consists of checking accounts, credit cards, unsecured loans and second mortgages. In addition, the bank offers mortgages through SBAB. All deposits are demand deposits. Savings products are provided in cooperation with Nordnet.

Since ICA Banken’s lending is almost exclusively to a large number of private persons, there is no concentration of credit risks. Savings and lending both carry variable interest rates with the exception of a small portion of lending with a fixed 3-month rate. This means that the total interest rate risk is marginal. The surplus liquidity generated by ICA Banken because deposits exceed lending is invested in short-term government securities and other low-risk investments. The bank carries very small amounts in foreign currency, due to which its currency risk is also marginal. The fair value of financial assets and liabilities corresponds to their carrying amount.

ICA Banken’s lending to private persons matures as follows:

2007 2006

No longer than 3 months 1,323 1,237

Longer than 3 months but not more than 1 year 439 442

Longer than 1 year but not more than 5 years 1,786 2,131

Longer than 5 years 903 679

Total lending 4,451 4,489

Bad debts:

2007 2006

Bad debts 158 142

Less: Reserve for credit losses –100 –89

Bad debts net 58 53

ICA Banken has as a principle to classify a receivable as bad debt when payments of interest or principal are overdue by more than 60 days. Bad debts, net, amounted to 1.3 percent (1.2) of lending. The provision ratio is a reserve for credit losses in relation to total bad debts. The provision ratio for bad debts amounted to 63.3 percent (62.7). Credit losses amounted to 1.3 percent (1.5) of average lending to the public.

Loans overdue, not classified as bad debt

2007 2006

Overdue between 5-30 days 40 43

Overdue between 31-60 days 30 30

Overdue for longer than 61 days 4 4

Total 74 77

The majority of loans are unsecured.

Note 17 Non-current assets held for sale and discontinued operations

Result from discontinued operations 2007 2006

Net sales – 4,383

Cost of sales – –4,063

Selling expenses – –204

Administrative expenses – –78

Financial items – –11

Income before tax – 27

Tax – –9

Result after tax but before result from disposal – 18

Result from disposal of discontinued operations before tax – 349

Tax attributable to result from disposal of discontinued operations – 0

Result from disposal of discontinued operations after tax – 349

Result from discontinued operations, net after tax – 367

In September 2006 the holding in ICA Meny was sold. ICA Meny is a supplier to restaurants, the foodservice sector and convenience stores. ICA Meny constituted a separate line of business and is recognized as a discontinued operation as of June 2006. At the time Meny was reclassified as a discontinued operation, no gain or loss arose in connection with its valuation at fair value less selling expenses.

In 2006 ICA Meny reported cash flow from operating activities of SEK 14 million, with cash flow from investing activities of SEK -15 million and cash flow from investing activities of SEK 0 million.

The effect on individual assets and liabilities in the Group attributable to the disposal is as follows:

2006


Inventory 335

Accounts receivable 819

Other receivables 57

Liquid assets 0

Provisions –102

Accounts payable –399

Other liabilities –797

Disposed assets and liabilities, net 57

Assets held for sale: 2007 2006

Tangible fixed assets 103 1,146

A process is under way in the Group to ensure an efficient capital structure. As an element in this process, the Group is selling buildings and land that in certain cases are leased back. Fixed assets held for sale relate to buildings and land in Norway and Sweden that in certain cases are sold and in other cases are sold and leased back through operating leases.

Impairment losses of SEK 0 million (46) were reported during the year when these assets were classified as held for sale.

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Note 18 Shareholders’ equity

For a summary of shareholders’ equity, refer to the report, Changes in shareholders’ equity.

Specification of the equity item reserves 2007 2006

Translation reserve

Translation reserve, opening balance –121 334

Translation differences for the year 768 –455

Translation reserve, closing balance 647 –121

Hedging reserve

Hedging reserve, opening balance –23 –61

Increase 15 20

Recognized through profit or loss 23 18

Hedging reserve, closing balance 15 –23

Revaluation reserve

Revaluation reserve, opening balance 498 –

Change in revaluation reserve – 498

Revaluation reserve, closing balance 498 498

Total reserves 2007 2006

Reserves, opening balance 354 273

Changes in reserves for the year:

Translation reserve 768 –455

Hedging reserve 38 38

Revaluation reserve – 498

Reserves, closing balance 1,160 354

As of December 31, 2007 the share capital consists of 5,000,000 shares (5,000,000) with a nominal value of SEK 100.

Other paid-in capitalRelates to shareholders’ equity contributed by the owners. The principal contri-bution from the owners took place in connection with the implementation of ICA’s new structure in 2000.

ReservesTranslation reserve The translation reserve comprises all exchange rate differences that arise through the translation of financial reports from foreign operations that have prepared their reports in a currency other than one in which the Group’s financial reports are presented. The Parent Company’s and Group’s reports are presented in Swedish kronor.

Hedging reserve The hedging reserve comprises the effective share of the cumulative net change in the fair value of a cash flow hedging instrument attributable to hedging transactions that have not yet occurred.

Revaluation reserve The revaluation reserve comprises changes in value attributable to tangible and intangible fixed assets. In incremental acquisitions, the revaluation of the previously owned interest in the assets is recognized in the revaluation reserve.

Retained earnings including net income for the yearRetained earnings including net income for the year include earnings in the Par-ent Company and its subsidiaries and associated companies. Earlier provisions to the statutory reserve, excluding transferred share premium reserves, are included in this shareholders’ equity item.

DividendShareholders received a total dividend of SEK 958 million (610), or SEK 191.60 (122) per share.

The Board of Directors has proposed a total dividend of SEK 1,084 million, or SEK 216.80 per share. The dividend proposal will be presented to the Annual General Meeting in May 2008 for resolution.

Asset managementCapital refers to shareholders’ equity and debt. The asset management objec-tive is to safeguard the Group’s survival and freedom of action and guarantee that the owners continue to receive a return on their investment. The ratio of debt to equity should ensure a balance between risk and return. The capital structure is modified, if necessary, to changes in economic conditions and other market factors. To maintain or adjust the capital structure, the Group can distribute funds, increase shareholders’ equity through the issuance of new shares or capital contributions, or increase or decrease borrowings. The bal-ance sheet shows the Group’s liabilities and equity, the statement of changes in shareholders’ equity shows the various components of equity, and this note provides a specification of the various components included in reserves.

The Group’s long-term equity/assets objective is 30–35 percent. The objective for return on equity is at least 14–16 percent on average over a business cycle.

ICA Banken, part of the ICA Group, faces the same capital adequacy requirements as other banks. Capital adequacy requirements are a guarantee that ICA Banken is able to meet its obligations to customers. The requirements stipulate that ICA Banken must maintain a specific amount of equity in relation to its lending and revenue. Compliance with capital adequacy requirements is monitored by the Swedish Financial Supervisory Authority. These require-ments were fully met during the year.

Note 19 Pensions

Practically all employees in Sweden receive pension benefits in accordance with collective agreements. Salaried employees receive defined-benefit pensions according to the ITP plan. Pension obligations are secured through provisions in the balance sheet and insurance premiums. Unionized employees receive defined contribution pensions according to the STP plan through AMF pension.

All employees in Norway are covered by occupational pension agreements. Although defined-benefit pensions are used, the majority of employees in Norway receive defined-contribution pensions. The defined benefit plans are secured through both the payment of fees to insurance companies and provisions in the balance sheet. In addition to occupational pensions, unionized employees have the opportunity to retire at age 62. This is secured in part through the payment of fees and in part through provisions in the balance sheet.

In the Baltic countries contractual pensions are very limited. Where they do exist, they are defined-contribution.

There are no healthcare costs in the Group’s plans that significantly affect the reported obligation for defined benefit plans.

Obligations for retirement pensions and family pensions for white-collar employees in Sweden are secured by insurance through Alecta. In accordance with a pronouncement from the Swedish Financial Reporting Board, RFR 3, this is a defined benefit plan covering multiple employers. For the fiscal year the company did not have access to information that would make it possible to recognize it as a defined-benefit plan. The ITP pension plan secured through insurance from Alecta is therefore recognized as a defined contribution plan. Annual pension premiums covered by Alecta amount to SEK 23 million (31). Alecta’s surplus can be divided between policy-holders and/or insureds. As of September 30, 2007 Alecta’s surplus in the form of its consolidation level was 164 percent (141 percent as of September 30, 2006 and 143 percent as of December 31, 2006). The consolidation level is based on the market value of Alecta’s assets as a percentage of insurance obligations calculated using Alecta’s actuarial assumptions, which does not agree with IFRS 19. In December 2007 Alecta decided to decrease the fee for year 2008 with 40 percent for existing customers.

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Note 19 Cont.

Cost of defined benefit pensions 2007 2006

Cost of vested benefits during the period 70 57

Interest expense 44 38

Assumed rate of return on plan assets –4 –3

Reported actuarial gains (-) losses (+) 16 10

Pension cost for defined benefit pensions 126 102

Pension cost for defined contribution pensions 277 241

Total pension costs 403 343

Of the total pension cost, SEK 285 million (240) is included in the cost of sales and SEK 118 million (103) in administrative expenses.

Disclosures below relate to defined benefit plans.

Carrying amount in balance sheet 2007 2006

Present value of funded obligations 156 134

Fair value of plan assets –84 –68

72 66

Present value of unfunded obligations 1,069 955

Unrecognized actuarial losses (-) gains (+) –296 –261

Carrying amount 845 760

The amount is recognized in its entirety on the provisions for pensions line in the balance sheet.

Change in pension obligations 2007 2006

Opening balance, present value pension obligations 1,089 1,108

Cost of vested benefits during the period 70 57


Actuarial gains (–) losses (+) 52 63

Pension disbursements –33 –28

Changes in exchange rates 11 –6

Effects of disposals and business combinations –8 –143

Closing balance, present value pension obligations 1,225 1,089

Change in plan assets 2007 2006

Opening balance, plan assets 68 72

Assumed return on plan assets 4 3

Actuarial gains (+) losses (–) 4 13

Pension disbursements from plan assets –33 –28

Contributions 43 31

Changes in exchange rates 6 –4

Effects of disposals and business combinations –8 –19

Closing balance, plan assets 84 68

Actual return on plan assets 8 16

Plan assets distributed by asset class 2007 2006

Bonds and other interest-bearing securities 48 40

Equities 23 18

Real estate 10 8

Other assets 3 2

Total plan assets 84 68

The assumed return on plan assets is based on long-term expectations regarding the return for each asset class. This return is based on an inflation assumption and historical data on returns for various asset classes. The assumed return for each asset class, together with the mix of assets expected to be held long-term, produces a total assumed return on plan assets.

Important actuarial assumptions (%) 2007 2006

Discount rate 4.6 4.0

Inflation 1.9 1.5

Rate of salary increase 3.6 3.0

Assumed return on plan assets 6.0 5.5

Amounts for current year and comparative years 2007 2006 2005 2004

Present value defined-benefit obligations –1,225 –1,089 –1,108 –966

Plan assets 84 68 72 76

Deficit (–) surplus (+) –1,141 –1,021 –1,036 –890

Experience adjustments for obligations –8 –68

Experience adjustments for plan assets 4 13

Fees expected to be paid to defined benefit plans for 2008 amount to SEK 31 million.

Note 20 Pledged assets and contingent liabilities

Pledged assets 2007 2006

Property mortgages 222 585

Restricted cash 233 5

Total 455 590

Contingent liabilities

Liability associated with partnerships – 1

Guarantees and contingent liabilities 270 173

Tax disputes 716 –

Total 986 174

The Swedish Tax Agency has denied interest deductions made by ICA Finans AB, a company in the ICA Group, for interest on borrowings from the Irish subsidiary ICA Ahold Export Unltd of nearly SEK 1.8 billion for the period 2001-2003. The Swedish Tax Agency’s claim amounts to SEK 716 million, including penalties and interest. The Irish subsidiary’s operations were wound up in 2003. ICA believes that the deductions were in compliance with tax rules. ICA is contesting the tax claim and penalties and has appealed the decision to the County Administrative Court.

The Swedish Tax Agency also conducted an audit of the restructuring of the ICA Group’s finance operations in July 2004. The Swedish Tax Agency issued a statement to the County Administrative Court in June asserting that ICA should be denied interest deductions of SEK 1.7 billion made in 2004–2005. ICA always believed that the deductions were in compliance with the tax rules and contested the Swedish Tax Agency’s claim. In November The Swedish Tax Agency withdrew its statement.

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Note 21 Related-party transactions

Transactions between ICA AB and subsidiaries affiliated with the company have been eliminated in the consolidated accounts and are not indicated in this note. Transactions between the Group and other related parties are indicated below.

ICA has signed a number of commercial agreements with its owners, joint venture partners and associated companies. The agreements were signed on market terms with regard to price and payment terms. The scope of these transactions is indicated in the tables below:

2007

Sales to related parties

Purchases from

related parties

Receiv-ables from

related parties

Liabilities to related

parties

Owners:

Royal Ahold 48 0 12 4

Hakon Invest AB (publ) 3 75 2 0

Associated com-panies

0 4 17 10

Total 51 79 31 14

2006

Sales to related parties

Purchases from

related parties

Receiv-ables from

related parties

Liabilities to related

parties

Owners:

Royal Ahold 52 25 8 7

Hakon Invest AB (publ) 20 87 3 9

Joint ventures:

RIMI Baltic AB – – – –

Netto Market AB 1 – 293 3

Associated companies 1 8 26 1

Total 74 120 330 20

The ICA Group has had daily transactions with the board members who are ICA retailers. This is a natural part of their role as ICA retailers. All transactions were made on market terms and refer to the sale of goods, consulting services and rent for premises.

The management of the ICA Group and the Board of Directors of ICA AB have received the following compensation:

2007 2006

Salaries and similar remuneration 42 52

Cost of pensions and similar remuneration 12 18

Total 54 70

In total, this group has been granted loans and credits from ICA Banken of SEK 1 million (1).

Note 22 Principles of financial risk management

The Group has a central function for financial management whose primary purpose is to ensure that the Group has secured financing through loans and lines of credit, to handle cash management and to actively manage and control financial exposure in line with the Group’s financial policy.

The financial instruments managed by the finance department consist of bank credits, short- and long-term loans, short-term investments and derivatives. The Group also has other financial instruments such as accounts receivable and payable, which are directly tied to the ICA Group’s operations.

ICA’s principal risk exposure relates to interest rates, liquidity, foreign currencies and credits.

Interest rate riskInterest rate risk is defined as the risk that changes in market interest rates will affect cash flow or the fair value of financial assets and liabilities. The financial policy states that the Group will tie up its interest rates for 18 months with a mandate to deviate from this norm by +/- 6 months. Interest rate swaps are used to adjust interest rate exposure.

Liquidity riskLiquidity risk is defined as the risk that the Group cannot meet its short-term payment obligations. ICA’s financial policy states that the liquidity reserve must amount to a level where the reserve can handle the fluctuations that can be expected in day-to-day liquidity in a 12-month period. To ensure this, the Group has bank overdraft facilities and unutilized credit facilities. The Group’s strong cash flow and unutilized loan facilities enabled the Group to meet its liquidity needs without difficulty in 2007. At year-end 2007 borrowings amounted to SEK 3,036 million (5,715) and the liquidity reserve to SEK 9,042 million (7,353). The surplus liquidity in ICA Banken is not available to the group according to banking laws.

Foreign currency riskForeign currency risk is defined as the risk that changes in exchange rates will affect cash flow. The primary foreign currency risk in the ICA Group is the transaction exposure that arises due to the import of goods paid in foreign currency. The risk norm in the financial policy is that 100 percent of the out-standing transaction exposure is hedged. This exposure is hedged for the next 3–6 months. Currency hedges are arranged on the order date. For non-foods, the currency hedge is based on projected volumes. According to the financial policy, borrowings in foreign currency are hedged. The foreign currency risk that arises because the Group has invested in foreign subsidiaries is not actively hedged in the financial market.

Credit riskCredit risk is defined as the risk that a counterparty in a financial transaction can-not fulfill its obligations according to the contract and that any security does not cover the company’s claim. The banks and financial institutions the Group works with must have a creditworthiness corresponding to at least “A” from Standard & Poor’s or “A2” from Moody’s Investor Service. For commercial counterparties with which the company has a large exposure, individual assessments are made. The maximum credit exposure corresponds to the book value of financial assets. The credit risk that arises through ICA Banken’s lending to the public is managed by performing credit checks on all loan applicants.

Note 23 Financial instruments

Interest rate risk If interest rates increase or decrease by 1 percentage point, the income statement is affected by SEK 54 million (36) and shareholders’ equity by SEK 39 million (26). The change is calculated based on an assumption of a parallel shift in the yield curve of 1 percentage point and the debt position on the balance sheet date.

Liquidity riskDue dates for payment of financial liabilities (calculated from the balance sheet date).

2007 2006

Due < 1 year 11,908 11,138

Due longer than 1 year up to 3 years 807 70

Due longer than 3 years up to 5 years 3 2 953

Due longer than 5 years 573 784

Total 13,291 14,945

The table above excludes ICA Banken’s deposits. It also excludes the liabilities that arise when ICA sells properties which are then leased back fully or in part and subsequently sublet to ICA retailers. For these properties, ICA has received sales proceeds, which are recognized as a liability until the lease with the ICA retailer expires. There is no effect on liquidity when the obligation ceases.

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Foreign currency riskThe Group hedges all major currency exposures from operations-related transactions using forward exchange contracts. The currency exposures that are not hedged represent less than 2 percent of total currency exposures. As a result, there are no significant exposures in foreign currencies as of December 31, 2007 outside the Group’s functional currencies. A change in the exchange rate for any of the transaction currencies therefore has a marginal effect on ICA’s income and shareholders’ equity.

Credit riskAnalysis of overdue receivables that have not been written down. (For ICA Banken’s nonperforming loans, see note 16 ICA Banken.)

2007 2006

Due < 40 days 191 221

Due > 41 days 90 87

Total 281 308

Overdue receivables refer to account overdrafts by independent ICA retailers. An individual assessment is made of each receivable based on the likelihood that it will be paid. If it is believed that the receivable will not be paid wholly or in part, it is written down to the amount that is expected to be paid. During the year receivables were written down by SEK 26 million (40). Collateral for the credits primarily consists of chattel mortgages.

ICA’s maximum credit risk corresponds to the book value of the financial instruments plus any financial guarantees that have been issued. The maxi-mum credit risk for financial guarantees amounts to SEK 219 million (124).

Classification of financial assets and liabilities 2007 2006

Valued at fair value through profit or loss for trading 8 18

Derivatives used as hedges 32 27

Loans and accounts receivable 10,702 11,049

Available-for-sale financial assets 3,643 2,661

Non-financial assets 22,934 21,751


Derivatives used as hedges 10 –

Liabilities valued at amortized cost 23,664 23,700

Non-financial liabilities 1,572 1,590

Total liabilities 25,246 25,290

Net result by category 2007 2006

Net profit/loss:

Financial assets and liabilities at fair value through profit or loss 1) 4 –6

Available-for-sale financial assets:

Recognized through equity –1 0

Transferred from equity to profit or loss 0 0

Interest from financial liabilities and assets not valued at fair value through profit or loss

Interest income from financial assets 509 453

Interest expenses from financial liabilities –604 –433

Loans and accounts receivable have been written down by SEK 86 million (108).

1) Refers to holdings held for sale.

Hedge accountingICA applies hedge accounting for the currency risk that arises through the import of goods. This is a cash flow hedge. The financial instruments used as hedges are forward exchange contracts. Their fair value is indicated in a separate table.

ICA also applies hedge accounting for the risk of changes in interest rates. This is a cash flow hedge. The financial instruments used as hedges are interest rate swaps. Their fair value is indicated in a separate table.

Cash flow from cash flow hedges arises over the course of the year.The inefficiency in cash flow hedges is immaterial.

Fair value of financial assets and liabilitiesThe Group’s interest-bearing assets and liabilities, excluding derivatives, carry a fixed interest rate of up to 3 months, which means that their carrying amount essentially corresponds to their fair value.

Fair value of financial derivatives

2007 2006

Asset Liability Asset Liability

Included in hedge accounting:

Interest rate swaps 2) 32 1 28 –

Forward exchange contracts 2) 7 17 – –

Not included in hedge accounting

Interest rate swaps – – – –

Forward exchange contracts 9 1 8 4

2) The entire item refers to cash flow hedges which, in their entirety, will affect the acquisition cost of the hedged investment in the following year.

ICA Banken’s investments have a short maturity, which means that their carrying amount essentially corresponds to their fair value.

Sale of loan portfolio related to store financingIn November 2005 Nordea took over ICA’s Swedish portfolio of operating loans to ICA retailers. According to the agreement, ICA will compensate Nordea for future credit losses. As of December 31, 2007 the outstanding credit for operating loans amounts to SEK 128 million (230) and the maximum compensation from ICA for credit losses is SEK 12 million (22). The outstanding credit is reported in other long-term receivables with a corresponding amount reported as other liabilities.

Note 24 Statement of cash flows


Depreciation/amortization 1,455 1,196

Impairment losses 23 69

Undistributed earnings from associated companies –18 85

Capital gains/losses –603 –613

Provisions –6 5

Sale and leaseback transactions –267 –314

Total non-cash items 584 428

Values in the statement of cash flows for 2006 include discontinued opera-tions. For a disclosure of cash flows for discontinued operations, see Note 17 Non-current assets held for sale and discontinued operations.

Composition of liquid assets 2007 2006

Cash and bank balances 1) 1,006 1,126

Short-term investments 1) 3,354 2,623

Total liquid assets 4,360 3,749

1) Of which ICA Banken

Cash and bank balances 290 157

Short-term investments 3,349 2,619

Total liquid assets ICA Banken 3,639 2,776

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86 ANNUAL REPORT

Note 25 Business combinations

Acquisitions 2007In 2007 the Group acquired 3 store operations in Sweden and 15 in Norway. The operations in Sweden were acquired from ICA retailers, who managed them under the ICA agreement, which stipulates how valuations are made in connection with such sales. The acquired stores will be sold to ICA retailers. The Group will own and run the stores for only a short period. The store opera-tions in Norway were acquired from franchisees. These have been acquired at the market value of the assets and liabilities. The total purchase price for the store operations was SEK 22 million. The contribution to consolidated income after tax for 2007 was SEK –7 million.

If all store acquisitions had taken place as of January 1, 2007, consolidated net sales would have increased by SEK 671 million and income after tax would have changed by SEK –10 million.

The net assets of the acquired companies on their acquisition dates were as follows:

Store operationsValue according to

acquisition analysis


Inventory 6

Accounts receivable and other receivables 41

Liquid assets 24


Accounts payable and other current liabilities –78

Net identifiable assets and liabilities 22

Purchase price paid 1) –22

Cash (acquired) 24

Net cash 2

1) The amount includes fees for legal services of SEK 0 million.

The value according to the acquisition analysis is the book value, which essentially corresponds to the fair value.

Acquisitions 2006On December 18 the remaining 50 percent of Rimi Baltic AB was acquired from Kesko Livs AB. In the income statement Rimi Baltic AB is recognized as a joint venture for the full-year 2006, but in the balance sheet it is consolidated as of December 31, 2006. Rimi Baltic is engaged in food retail operations in Estonia, Latvia and Lithuania. The purchase price was SEK 1,756 million. The contribu-tion to consolidated income after tax for 2006 for the acquired 50 percent was SEK –12 million.

In 2006 the Group acquired two store operations in Sweden. The opera-tions were acquired from ICA retailers, who managed them under the ICA agreement, which stipulates how valuations are made in connection with such sales. The acquired stores will be sold to ICA retailers. The Group will own and run the stores for only a short period. The total purchase price for the store operations was SEK 12 million. The contribution to consolidated income after tax for 2006 was SEK 2 million.

If all store acquisitions had taken place as of January 1, 2006, consolidated net sales would have increased by SEK 9,073 million and income after tax would have decreased by SEK 8 million.

The net assets of the acquired companies on their acquisition dates were as follows:

Rimi Baltic

Carrying amount before

acquisition

Value according to acquisition

analysis for acquired 50%

Tangible fixed assets 1,470 1,026

Intangible fixed assets 629 194

Inventory 576 288

Accounts receivable and other receivables 483 243

Liquid assets 346 173

Long-term liabilities –849 –468

Accounts payable and other current liabilities –1,403 –698

Net identifiable assets and liabilities 1,252 758

Group goodwill 998

Purchase price paid 1) –1,756

Cash (acquired) 346

Net cash outlay –1,410

Store operationsValue according to

acquisition analysis


Inventory 5

Accounts receivable and other receivables 11

Liquid assets 2


Accounts payable and other current liabilities –13

Net identifiable assets and liabilities 12

Purchase price paid 1) –12

Cash (acquired) 2

Net cash outlay –10

1) The amount includes fees for legal services of SEK 1 million related to Rimi Baltic and 0 related to store operations.

Goodwill from the acquisition of Rimi Baltic relates to the value of being represented in a geographical market with strong economic growth and for an established, efficient logistics organization.

Note 26 Investment commitments

In 2007 the Group entered into agreements to acquire tangible fixed assets for SEK 1,479 million (2,004).

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ANNUAL REPORT 87


Net sales 2 888 783

Cost of sales –458 –411

Gross profit 430 372

Administrative expenses 3, 4, 5, 6 –519 –602

Operating income –89 –230

Result from financial investments: 7

Result from shares in Group companies 1,156 1,146

Interest income and similar profit/loss items 35 12

Impairment on joint ventures – –150

Interest expenses and similar profit/loss items –377 –378

814 630

Income after net financial items 725 400

Appropriations 18 174 153

Income before tax 899 553

Income taxes 8 48 104

NET INCOME FOR THE YEAR 947 657


ASSETS

Fixed assets 21

Intangible fixed assets 9 21 42

Tangible fixed assets 10 187 173

Financial fixed assets

Shares in subsidiaries 11, 12 33,832 33,842

Shares in associated companies and joint ventures 11, 13 2 46

Other financial fixed assets 14 52 4

Deferred tax assets 8 6 6

Total fixed assets 34,100 34,113

Current assets 21

Current receivables

Accounts receivable 47 63

Receivables from Group companies 3,119 2,545

Receivables from associated companies 14 81

Tax assets – 75


Prepaid expenses and accrued income 16 178 178

Cash and bank balances 10 0

Total current assets 3,446 2,966

TOTAL ASSETS 37,546 37,079

Parent Company Income Statement

Parent Company Balance Sheet

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88 ANNUAL REPORT


SHAREHOLDERS’ EQUITY, PROVISIONS AND LIABILITIES

Shareholders’ equity 17

Restricted equity

Share capital (5,000,000 shares) 500 500

Statutory reserve 8,788 8,788

Revaluation reserve 8,532 8,532

Non-restricted equity

Retained earnings 7,555 7,194

Net income for the year 947 657

Total shareholders’ equity 26,322 25,671

Untaxed reserves 18 1,292 1,466

Provisions 21

Provisions for pensions 19 323 286

Provisions for structural costs 11 10

Total provisions 334 296


Liabilities to Group companies 15 8,000 8,000

Total long-term liabilities 8,000 8,000

Current liabilities 21

Accounts payable 243 265

Liabilities to Group companies 1,112 1,094

Liabilities to associated companies 14 42

Tax liabilities 1 –

Other liabilities 21 20

Accrued expenses and deferred income 16 207 225

Total current liabilities 1,598 1,646

TOTAL SHAREHOLDERS’ EQUITY, PROVISIONS AND LIABILITIES 37,546 37,079

Pledged assets 20 5 5

Contingent liabilities 20 9,239 9,945

Parent Company Balance Sheet

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ANNUAL REPORT 89


Operating activities

Operating income –89 –230

Dividends received 1,156 1,146

Adjustments for non-cash items 22 142 133

Income tax paid –129 –99

Cash flow from operating activities before change in working capital 1,080 950

Change in working capital

Current receivables (increase – / decrease +) 1,165 1,008

Current liabilities (increase + / decrease –) –842 –794


Investing activities

Purchase of tangible and intangible fixed assets –97 –64

Proceeds from sale of tangible fixed assets 10 –

Investment in financial fixed assets –4 –

Proceeds from sale of financial fixed assets 0 1

Investment in associated companies –2 –125

Interest received 35 12

Cash flow from investing activities –58 –176

Financing activities


Interest paid –377 –378

Cash flow from financing activities –1,335 –988

Cash flow for the year 10 0

Liquid assets at beginning of year 0 0

Exchange rate differences in liquid assets 0 0

Liquid assets at end of year 10 0

Parent Company Statement of Cash Flows

Restricted equity Non-restricted equity

(SEK million) Share capitalStatutory

reserveRevaluation

reserveRetained earnings

Net income for the year

Total share-holders’ equity

Opening balance, January 1, 2006 500 8,788 8,532 6,604 591 25,015

Group contributions received 846 846

Tax on Group contributions –237 –237

Dividend –19 –591 –610


Closing balance, December 31, 2006 500 8,788 8,532 7,194 657 25,671

Opening balance, January 1, 2007 500 8,788 8,532 7,194 657 25,671

Group contributions received 919 919

Tax on Group contributions –257 , –257

Dividend –301 –657 –958


Closing balance, December 31, 2007 500 8,788 8,532 7,555 947 26,322

Changes in Parent Company’s Shareholders’ Equity

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90 ANNUAL REPORT

Supplementary Information, Parent Company

Note 1 Accounting principles

The Parent Company has prepared its annual report according to the Annual Accounts Act (1995:1554) and the Swedish Accounting Standards Board’s recommendation RR 32:06 Reporting by a legal entity. RR 32:06 means that the Parent Company, in the annual report for the legal entity, will apply all IFRS and pronouncements approved by the EU as far as possible within the framework of the Annual Accounts Act and with consideration to the connection between reporting and taxation. RR 32:06 specifies the exemptions from and supplements to IFRS. As a whole, this results in the following differences between the Group’s and the Parent Company’s accounting principles.

All amounts are in millions of Swedish kronor (SEK) unless indicated otherwise.

Subsidiaries, associated companies and joint venturesShares in subsidiaries, associated companies and joint ventures are reported in the Parent Company according to the purchase method. Reported revenue is limited to dividends received, provided that they are attributable to profits earned after acquisition.

TaxesIn the Parent Company, untaxed reserves include deferred tax liabilities. In the consolidated accounts, on the other hand, untaxed reserves are divided between deferred tax liabilities and shareholders’ equity.

LeasesIn the Parent Company, all leases are reported according to the rules for operating leases.

Defined-benefit pension plansThe Parent Company uses a different basis to calculate defined-benefit pension plans than in IAS 19. The calculations by the Parent Company comply with the Act on Safeguarding Pension Benefits and the Financial Supervisory Authority’s regulations, which are a prerequisite for tax deductibility. The biggest differ-ences compared with IAS 19 are how the discount rate is determined, that the calculation is based on current salary levels and does not take into account future salary increases, and that all actuarial gains and losses are recognized as soon as they arise.

Group contributions and shareholders’ contributions for legal entitiesThe Parent Company reports Group contributions and shareholders’ contribu-tions in accordance with the pronouncements of the Swedish Accounting Standards Board’s Emerging Issues Task Force. Shareholders’ contributions are recognized directly against the shareholders’ equity of the recipient and are capitalized in the shares and participations of the contributor, to the extent impairment is not required. Group contributions are reported according to their financial impact. This means that Group contributions paid to minimize the Group’s tax are recognized directly against retained earnings after deducting their tax effect.

Note 2 Intra-Group purchases and sales

Of the year’s total net sales, 17 percent (17) relates to sales to subsidiaries.

Note 3 Personnel expenses, pensions, etc.

Average number of employeesThe number of employees has been calculated on the basis of the Group’s measure of normal working hours (1,800 hours).

2007 2006

Women 890 811

Men 811 725

Total 1,701 1,536

Salaries and other remuneration 2007 2006

Board and President 22 36

Other employees 684 603

Total 706 639

Social security expenses 2007 2006

Social security expenses 373 357

Of which pensions 1) 119 121

1) Of the pension costs, 9 (17) relates to the Board, President and EVP. The group comprising the Board, President and EVPs, whose salaries and remuneration are paid by ICA AB, is made up of 14 (17) persons.

AbsenteeismAs percent of normal working hours

2007 2006

Sick leave absences

Of which long- term sick leave

Sick leave absences

Of which long- term sick leave

Younger than 29 years 2.1 0.3 1.9 0.3

30 – 49 years 2.7 1.2 2.5 1.1

50 years and older 3.9 2.5 4.3 3.1

Total 2.8 1.3 2.8 1.4

Men 1.7 0.5 1.6 0.7

Women 3.8 2.0 3.7 2.0

Gender distribution of Board of Directors and Management 2007 2006

Board of Directors

Men 10 10

Women – –

Total 10 10

Management

Men 5 6

Women 2 2

Total 7 8

Note 4 Audit expenses

Audit fees 2007 2006

Deloitte 3 4

Note 5 Depreciation and amortization

Depreciation and amortization of tangible and intangible fixed assets are included in line item administrative expenses in the income statement.

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ANNUAL REPORT 91

Note 6 Operating leases

The Group leases buildings and equipment. There are no significant leasing agreements in the Parent Company. Contractual lease expenses under existing leases fall due for payment as follows:

2007 2006

The year’s leasing fees 79 103

Future contractual minimum lease fees:

Maturity date year 1 32 32




Maturity date year 5 or later 91 103

Total 202 219

Note 7 Result from financial investments

Results from shares in Group companies 2007 2006

Dividends 1,156 1,146

Other interest income and similar profit/loss items

Interest income, Group companies 33 10

Other interest income and similar profit/loss items 2 2

Total 35 12

Write-down of joint ventures – –150

Other interest expenses and similar profit/loss items

Interest expenses, subsidiaries –361 –365

Other interest expenses and similar profit/loss items –16 –13

Total –377 –378

Total result from financial investments 814 630

Note 8 Taxes

Current income tax 2007 2006

Current tax on net income for the year 48 108

Deferred tax on temporary differences 0 –4

Reported tax expense 48 104

Reconciliation between current tax rate and effective tax (%)

Current tax rate 28.0 28.0

Tax-exempt income –36.0 –58.0

Other non-deductible expenses 2.7 11.2

Effective tax rate –5.3 –18.8

Reported in balance sheet:

Deferred tax assets 6 6

No deferred tax is recognized directly against shareholders’ equity. The Company has no unrecognized deferred tax liabilities or tax assets on temporary differences.

Change in deferred tax in temporary differences and tax loss carryforwards


Reported through profit or loss


Fixed assets 5 –2 3

Provisions 5 –2 3

Total 10 –4 6


Reported through profit or loss


Fixed assets 3 0 3

Provisions 3 0 3

Total 6 0 6

(Tax assets are denoted by (+) and tax liabilities by (–) in the table above.)

Note 9 Intangible fixed assets

Dec. 31, 2007

Dec. 31, 2006


Purchases 4 24


Amortization, opening balance –67 –37


Accumulated amortization, closing balance –92 –67


Note 10 Tangible fixed assets

EquipmentDec. 31,

2007Dec. 31,

2006


Purchases 93 64



Depreciation, opening balance –420 –362

Sales/disposals 36 11


Accumulated depreciation, closing balance –463 –420


Accelerated depreciation, opening balance 0 –6

Change for the year 10 6

Accelerated depreciation, closing balance 10 0

Tax value, closing balance 197 173

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92 ANNUAL REPORT

Dec. 31, 2007

Dec. 31, 2006

Shares in subsidiaries


Group change –10 –

Sales – –2


Impairment losses, opening balance –515 –515

Accumulated impairment losses, closing balance –515 –515


Note 12 Shares in subsidiaries

Specification of ICA AB’s direct holdings of shares in subsidiaries.

Corp. ID no. Reg. office NumberCapital and

votes,%Nominal

value

Book value

Dec. 31, 2007

Dec. 31, 2006

ICA AS 988 351 032 Norway 1,000 100 NOK 1,000 1 1

ICA Ahold Trading AB 556615-4620 Stockholm 1,000 100 SEK 100 1 1

ICA Baltic AB 556042-7410 Stockholm 30,000 100 SEK 500 184 184

ICA Banken AB 516401-0190 Stockholm 1,000,000 100 SEK 100 628 628

ICA Danmark A/S 25610024 Denmark 51,000 100 DKK 1 0 10

ICA Detalj AB 556604-5448 Stockholm 1,000 100 SEK 100 16,717 16,717

ICA Fastigheter AB 556604-5471 Stockholm 1,000 100 SEK 100 2,425 2,425

ICA International Services BV 34177382 Netherlands 1,000 100 EUR 10 13,864 13,864

ICA Reinsurance SA 915/93 Luxembourg 119 99 SEK 100,000 12 12

Total 33,832 33,842

A complete list of first- and second-tier subsidiaries can be obtained free of charge from the company’s corporate communications department.

Dec. 31, 2007

Dec. 31, 2006

Shares in associated companies and joint ventures


Purchases 2 –

Shareholders’ contributions – 126

Reclassifications –361 –


Impairment losses, opening balance –315 –165

Reclassifications 315 –

Impairment loss – –150

Accumulated impairment losses, closing balance 0 –315


Note 11 Financial fixed assets

Note 13 Shares in associated companies and joint ventures

Specification of ICA AB’s direct holdings in associated companies and joint ventures.

Associated companies Corp. ID no. Number

Inter-est %

Book value

Dec. 31, 2007

Dec. 31, 2006

HB Luntmakaren, Stockholm 969658-3419 – 50 0 0

F-train AB, Östersund 556677-2231 30,000 30 2 –

Joint ventures

Netto Marknad, ICA & DSG AB, Halmstad 1) 556615-2269 50,000 5 – 46

Total 2 46

The share of votes and share of capital are identical.

1) Netto Marknad, ICA & DSG AB was a joint venture at year-end 2006 with a 50 percent interest. Ownership decreased in 2007, and the holding is recognized as other financial fixed assets.

Note 14 Other financial fixed assets

Dec. 31, 2007 Dec. 31, 2006

Shares in tenant-owner associations 2 2

Other long-term securities holdings 49 1

Other long-term receivables 1 1

Total 52 4

Note 15 Long-term liabilities to Group companies

Dec. 31, 2007 Dec. 31, 2006

ICA Finans AB 1) 8,000 8,000

1) Of which 0 (0) falls due for payment more than five years after the balance sheet date.

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ANNUAL REPORT 93

Note 16 Accruals

Dec. 31, 2007

Dec. 31, 2006

Prepaid expenses and accrued income

Other prepaid expenses 40 56

Supplier bonuses 102 94

Other accrued revenue 36 28

Total 178 178

Accrued expenses and deferred income

Accrued salaries, vacation pay and social security expenses 174 165

Accrued interest expenses 6 6

Other accrued expenses 27 54

Total 207 225

Note 17 Shareholders’ equity

For a list of shareholders’ equity, see the report, Changes in shareholders’ equity.

Restricted equityRestricted equity may not be reduced through profit distributions.

Share capitalAs of December 31, 2007 the share capital consists of 5,000,000 shares (5,000,000) with a nominal value of SEK 100.

Statutory reserveShare premium reserves that arose before January 1, 2006 have been transferred to the statutory reserve in accordance with the transitional rules in the Annual Accounts Act.

Revaluation reserveWhen a tangible or financial fixed asset is revaluated, the revalued amount is allocated to a revaluation reserve.

Non-restricted equityRetained earningsConsists of previous year’s earnings less paid dividends. Together with net income for the year, retained earnings comprise the capital available for distribution to the shareholders.

A dividend of SEK 958 million has been paid to shareholders (610).

Note 18 Appropriations and untaxed reserves

Dec. 31, 2007 Dec. 31, 2006

Appropriations

Change in tax allocation reserve 164 147

Change in accelerated depreciation 10 6

Total 174 153

Untaxed reserves

Accelerated depreciation –10 0

Tax allocation reserve, financial year 2002 – 407

Tax allocation reserve, financial year 2003 275 275





Tax allocation reserve, financial year 2008 243 –

Total 1,292 1,466

Note 19 Provisions for pensions

All employees receive pension benefits according to collective agreements. Salaried employees receive defined-benefit pensions according to the ITP plan. Pension obligations are secured through provisions in the balance sheet and through insurance premiums.

Reconciliation of carrying amount for self-managed pensions 2007 2006

Opening balance, principal on pension obligations 286 243

Cost charged against this result 25 25


Pension disbursements –6 –5

Transferred pensions, Group 5 12

Closing balance, principal on pension obligations 323 286

Of the total pension obligation, FPG/PRI pensions account for SEK 287 million (252). The entire amount is covered by the Act on Safeguarding Pension Benefits.

Specification of recognized pension costs 2007 2006

Self-managed pensions:

Cost excluding interest expense 25 25


Total cost of self-managed pensions 38 36

Insured pensions:

Insurance premiums 93 95

Tax on pension returns 1 1

Special employer’s contribution on pension returns 23 23

Cost of credit insurance 2 1

Recognized pension cost 119 120

Important actuarial assumptions 2007 2006

Discount rate 3.60% 3.60%

Pension calculations are based on salary levels on the balance sheet date.

Note 20 Pledged assets and contingent liabilities

Dec. 31, 2007 Dec. 31, 2006

Pledged assets

Restricted cash 5 5

Total 5 5

Contingent liabilities

Guarantees for subsidiaries 9,239 9,945

Guarantees and contingent liabilities – 0

Total 9,239 9,945

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94 ANNUAL REPORT

Note 21 Financial instruments

Classification of financial assets and liabilities 2007 2006

Held-to-maturity investments 2 2

Loans and accounts receivable 3,447 2,893

Available-for-sale financial assets 49 –

Non-financial assets 34,048 34,184


Liabilities valued at amortized cost 9,598 9,646

Non-financial liabilities 334 296

Total liabilities 9,932 9,942

Note 22 Statement of cash flows


Depreciation/amortization 104 99

Provisions for pensions 37 43

Other provisions 1 –9

Total 142 133

Stockholm, February 15, 2008

Claes-Göran Sylvén John Rishton

Chairman Vice Chairman

Dirk Anbeek Peter Berlin Dick Boer

Fredrik Hägglund Per Jansson Per-Anders Olofsson

Magnus Rehn Peter Wakkie Kenneth Bengtsson

President

Our audit report was submitted on February 15, 2008

Deloitte AB

Jan Berntsson

Authorized Public Accountant

To the annual meeting of the shareholders of ICA ABCorporate identity number 556582-1559

We have audited the annual accounts, the consolidated accounts, the account-ing records and the administration of the board of directors and the managing director of ICA AB for the financial year 2007. The board of directors and the managing director are responsible for these accounts and the administration of the company as well as for the application of the Annual Accounts Act when preparing the annual accounts and the application of international financial reporting standards IFRSs as adopted by the EU and the Annual Accounts Act when preparing the consolidated accounts. Our responsibility is to express an opinion on the annual accounts, the consolidated accounts and the administration based on our audit.

We conducted our audit in accordance with generally accepted auditing standards in Sweden. Those standards require that we plan and perform the audit to obtain reasonable assurance that the annual accounts and the consolidated accounts are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the accounts. An audit also includes assessing the accounting principles used and their application by the board of directors and the managing director and significant estimates made by the board of directors and the managing director when preparing the annual accounts and consolidated accounts as well as evaluating the overall presentation of information in the annual accounts and the consolidated accounts. As a basis for our opinion concerning discharge from liability, we examined significant decisions, actions taken and circumstances of the company in order to be able to determine the liability, if any, to the company of any board member or the managing director . We also examined whether any board member or the managing director has, in any other way, acted in contravention of the Companies Act, the Annual Accounts Act or the Articles of Association. We believe that our audit provides a reason-able basis for our opinion set out below.

The annual accounts have been prepared in accordance with the Annual Accounts Act and give a true and fair view of the company’s financial position and results of operations in accordance with generally accepted accounting principles in Sweden. The consolidated accounts have been prepared in accordance with international financial reporting standards IFRSs as adopted by the EU and the Annual Accounts Act and give a true and fair view of the group’s financial position and results of operations. The statutory administra-tion report is consistent with the other parts of the annual accounts and the consolidated accounts.

We recommend to the annual meeting of shareholders that the income statements and balance sheets of the parent company and the group be adopted, that the profit of the parent company be dealt with in accordance with the proposal in the administration report and that the members of the board of directors and the managing director be discharged from liability for the financial year.

Stockholm, 15 February 2008

Deloitte AB

Jan BerntssonAuthorized Public Accountant

Audit Report

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ANNUAL REPORT 95

Graphics and color codes have been added to the annual report

to make the financial information easier to understand. A few basic

financial terms and how they are connected are explained below.

Graphics used in the annual report

Balance sheet

The balance sheet explains the company’s financial position. On one

side are its assets – what it has spent its money on. The other side

shows its liabilities and shareholders’ equity – in other words, how

the assets have been financed or where the money on the asset side

comes from.

The balance sheet provides a snapshot. As soon as something

occurs to affect the company’s finances, the balance sheet will

change as well.

Connection

The balance sheet shows the value of the company’s assets and how

they are financed as of a specific date. The income statement shows

the company’s revenue and expenses for the period.

The income statement shows how shareholders’ equity in the

balance sheet changed during the year.

Income statement

The income statement shows the revenue generated by the business

and the expenses incurred over a specific period. Revenue is an indi-

cation of how the company performed, based on what customers

were prepared to pay for its products or services. Expenses represent

what the company consumed during the period. The difference

between revenue and expenses is the company’s profit.

The graphics and color codes are designed by Bonanza.

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Board of Directors

John Rishton

Vice Chairman

President and CEO, Royal Ahold

Born 1958

Elected 2006

Other assignments: Board member of Rolls Royce Group Plc.

Dirk Anbeek

Board member

EVP Franchise & Real Estate, Albert Heijn, Etos, Gall & Gall

Born 1963

Elected 2003

Other assignments: Board member of JMR.

Claes-Göran Sylvén

Chairman

President and CEO, Hakon Invest AB

Born 1959

Elected 1999

Other assignments: Chairman of Forma Publishing Group and Svensk Handels Försäkringar. Board member of the Swedish Federation of Trade and UGAL.

Per-Anders Olofsson

Board member

ICA retailer

Born 1949

Elected 1997

Other assignments: Chairman of the ICA Sverige Advisory Board. Vice Chairman of ICA-handlarnas Förbund.

Fredrik Hägglund

Board member

General Counsel, Hakon Invest AB

Born 1967

Elected 2004

Other assignments: Board member of EuroCom-merce and Anti Corruption Institute.

Per Jansson

Board member

Employee representative, Swedish Commercial Employees’ Union.

Logistics worker, ICA Sverige AB

Born 1950

Elected 2002

96 ICA GROUP

Deputies

Elected by the Annual General Meeting Göran HessebornStig-Åke LundströmGuy Thomson

Employee representatives Pontus BergmanHåkan Jönsson

Peter Berlin

Board member

ICA retailer

Born 1960

Elected 2005

Other assignments: Vice Chairman of ICA-handlarnas Förbund and ICA’s district board in Malmö.

Peter Wakkie

Board member

Executive Vice President and Chief Corporate Governance Counsel, Royal Ahold

Born 1948

Elected 2007 (previously as a deputy)

Other assignments: Board member of Albert Heijn Vaste Klanten Fonds, Schuitema N.V. and Wolters Kluwer N.V.

Dick Boer

Board member

EVP and COO Europe, Royal Ahold President and CEO, Albert Heijn

Born 1957

Elected 2006

Other assignments: Co-Chairman of ECR Europe. Deputy Chairman of CBL. Member of the Executive Board of VNO-NCW, the Supervisory Board of the Red Cross Hospital Beverwijk and the European Retail Round Table.

Magnus Rehn

Board member

Employee representative, Unionen labor federation

Head of Data Quality, Non-food, ICA AB

Born 1966

Elected 2007 (previously as a deputy)

Other assignments: Board member of Unionen local in Kallebäck.

ICA GROUP 97

Group Management

Ingrid Jonasson Blank

EVP, Marketing, ICA AB

Born 1962

Employed 1986

Other assignments: Board member of Forma Publishing Group, the Association of Swedish Advertisers, the Swedish Cancer Society, Bilia and the CIES Marketing Council.

Anders Nyberg

EVP, Assortment & Sourcing, Deputy President ICA AB

Born 1956

Employed 2006

Other assignments: Director of GS 1 AB.

Kenneth Bengtsson

President and CEO, ICA AB

Born 1961

Employed 1999

Other assignments: Chairman of the Swedish Federation of Trade. Board member of the Confederation of Swedish Enterprise, CIES and the World Childhood Foundation.

Sonat Burman-Olsson

EVP, Finance, CFO, ICA AB

Born 1958

Employed 2007

98 ICA GROUP

Antonio Soares

COO, Rimi Baltic AB

Born 1949

Employed 2002

Peder Larsson

COO, ICA Sverige AB

Born 1957

Employed 1999

Other assignments: Board member of the Swedish Grocers’ Federation.

Trond Kongrød

COO, ICA Norge AS

Born 1961

Employed 2004

Other assignments: Board member of Netidentitet AS, the Federation of Norwegian Commercial and Service Enterprises (HSH) and the Norwegian-Swedish Chamber of Commerce. Advisor to ECR Norway.

ICA GROUP 99

Corporate governance

The Management and the Board of Directors are entrusted to ensure that the demands of ICA’s owners and other stakeholders for efficient operational control are met.

Ownership structure

ICA AB is a joint venture 40 percent owned by

Hakon Invest AB and 60 percent by Royal Ahold

N.V. Through a shareholder agreement, Royal

Ahold and Hakon Invest jointly control ICA AB.

Annual General Meeting

The rules on the Annual General Meeting can

be found in the Companies Act and the articles

of association. The meeting elects the Board of

Directors and auditors and adopts the income

statement, balance sheet and proposed appro-

priation of earnings.

Besides the Annual General Meeting, two

Extraordinary General Meetings were held in 2007.

The Annual General Meeting on May 2, 2007

resolved, among other things, to adopt the income

statement and balance sheet for 2006 and to pay a

total dividend of SEK 958 million to the shareholders.

Extraordinary General Meetings treated

changes on the Board during the year.

Board of Directors and its work

The Board’s work follows special rules of

procedure adopted at the statutory Board

meeting following the election on May 2, 2007. In

addition to the items treated in accordance with

the Companies Act, the rules of procedure include

committee directives and rules on quorums.

In 2007 the Board of ICA AB consisted of eight

members and four deputies elected by the Annual

General Meeting as well as two members with

two deputies appointed by the unions. Joost

Sliepenbeek stepped down as a deputy at the

Extraordinary General Meeting in March and

was replaced by Guy Thomson. Also, Kenneth

Ljungberg stepped down as a Board member

and Magnus Rehn was elected as a new member.

Håkan Jönsson replaced Magnus Rehn as a deputy.

Anders Moberg stepped down from his position

at Ahold and his membership on ICA’s Board in

August. The Extraordinary General Meeting in

October elected Peter Wakkie, Executive Vice

President and Chief Corporate Governance

Counsel of Royal Ahold, as a Board member.

All members appointed by the Annual General

Meeting are affiliated with the owners of ICA AB.

The Chief Executive Officer, Chief Financial Officer

and Chief Counsel (Secretary of the Board) are not

members of the Board but participate in its work.

No fees have been paid to the Board members

elected by the Annual General Meeting. The

employee representatives have received a fee

of SEK 4,000 per meeting.

During fiscal year 2007 the Board held eight

meetings. Among other things, it treated issues

regarding financial reporting, business conditions,

the reorganization of operations to underscore

profit responsibility in each country, legal issues

and the usual investment concerns involving the

store network. Special attention was given to

the Norwegian operations. Moreover, the Board

decided during the year to sell certain store

properties in Sweden and Norway.

Nomination Committee

ICA does not have a Nomination Committee

since the shareholder agreement between its

owners gives each the right to nominate their own

representatives to the Board.

Board committees

The Board is able to establish committees to

complement its work. The committees are

subordinate to the Board and report to it on an

ongoing basis.

Audit Committee

The Board of Directors has appointed an Audit

Committee to monitor accounting and reporting

of financial information. The Audit Committee

is also responsible for evaluating the Group’s

systems for internal oversight and control. Among

the Committee’s other duties are to handle

auditing questions from the external and internal

audit. The Audit Committee’s work is governed in

its rules of procedure, which are laid down by the

Board of Directors.

100 ICA GROUP

The Audit Committee consists of two members:

John Rishton (Chairman) and Claes-Göran Sylvén.

In addition, assistants to the members, the

external auditors, internal auditors and ICA AB’s

President and CFO normally attend all or part

of the Committee’s meetings. In 2007 the Audit

Committee held six meetings.

Executive Committee

The Board has appointed the Chairman, Deputy

Chairman and CEO to an Executive Committee

responsible for continuous monitoring of the

Group’s development. The Committee also

prepares issues that will be discussed by the Board

and supports the presidents and other senior

executives of the subsidiaries in the implementa-

tion and execution of the decisions taken by the

Board. The Committee has a mandate to decide

on investments that do not require discussion by

the Board.

Compensation Committee

The Board has given the Executive Committee a

mandate to act as a Compensation Committee

to decide on compensation principles for senior

executives in Group Management. The President’s

salary is determined by the Board, however.

Internal control over financial reporting

ICA works with a structure to monitor and

safeguard internal control of financial reporting.

Financial flows are documented and control

points are tested annually. The results of the tests

are reported to the company’s management.

Approval of financial reports

The financial reports in this annual report were

approved by the Audit Committee on February 12

and by the Board of Directors on February 15, 2008.

Auditors

The accounting firm of Deloitte has been ICA’s

auditor since September 2000 and was reelected

most recently at the Annual General Meeting on

May 25, 2004 for a mandate period of four years.

The company’s chief auditor, Jan Berntsson, partici-

pated in two Board meetings during the year.

President and other senior executives

The Board of Directors appoints the President and

CEO. According to the Swedish Companies Act,

the Board’s rules of procedure and the President’s

instruction, the President is responsible for day-to-

day management of the company. The President

keeps the Board continuously informed on the

operations and development of the company and

the Group. Together with the company’s three

Executive Vice Presidents and the country COOs,

the President is a member of Group Management,

which meets regularly to discuss the company’s

development and make decisions affecting

operations. Group Management is presented on

pages 98–99.

ICA’s policies

ICA’s Group Management has adopted a number

of policies that govern operations.

They are summarized in a document called

“ICA’s Good Business,” which contains seven posi-

tions on ethics and corporate responsibility. Each

policy includes guidelines that support day-to-day

operations.

Business ethics policy (including the Competi-tion Law Compliance program)

Occupational health and safety policy (for each subsidiary)

New store policy

Finance and tax policy

HR policy

Health policy

Information policy (including guidelines for financial information)

Customer policy

Quality and environmental policy

Sponsorship policy

The cross-functional management team for

business ethics has responsibility under Group

Management for continuously monitoring compli-

ance with these policies.

ICA GROUP 101

Average number of employees – Based on the Group’s measure of normal working hours, 1,800.

BRC – British Retail Consortium.

BSCI – Business Social Compliance Initiative. European platform for social compliance in supplier countries.

Carbon dioxide equivalents – Measure of greenhouse gases that allows comparisons of different sources of emissions.

CFO – Chief Financial Officer.

CIES – Acronym in French for Comité Interna-tional d’Entreprises à succursales, a member organization for food retail chains.

Climate neutralization – Process to compensate for greenhouse gas emissions through offsetting reductions.

Debio – Certification body for organic produc-tion. Norwegian equivalent to Sweden’s KRAV.

EU Flower – The official symbol in the EU Commission’s ecolabeling scheme.

Euroshopper – The ICA Group’s discount product range.

Fairtrade – Independent labeling system focused on the working and living conditions of produc-ers and workers in developing countries.

Global Compact – UN initiative to encourage companies to support human rights, labor and the environment.

GlobalGap – International quality assurance system for horticultural products.

GMP – Good Manufacturing Practice.

GRI – Global Reporting Initiative.

Good Environmental Choice – The ecolabel of the Swedish Society for Nature Conservation.

Greenhouse gas – Gas that contributes to the greenhouse effect, e.g., carbon dioxide, nitrous oxide, methane and the fluorinated gases HFC, FC and SF6.

HACCP – Hazard Analysis and Critical Control Point. Risk analysis and management program.

Hard discount – Discount stores with limited product range.

ICA I love eco – The ICA Group’s line of organic products, formerly ICA Ekologiskt.

IFRS – International Financial Reporting Standards.

ISO 9000/ISO 14001/ISO 22000 – International standards for quality and environmental and food safety.

Joint venture – Partnership jointly managed by two or more companies that share the risks and profits.

Keyhole – Swedish National Food Administra-tion’s symbol for lean foods containing less sugar and salt, but more fiber than similar products.

KRAV – Swedish labeling system for organic food.

LCA – Life Cycle Analysis. Method used to evalu-ate the environmental impact of a product from cradle to grave.

MPS – Milieu Project Sierteelt. Dutch standard for sustainable cultivation methods.

Near-food – Toiletries, cleaning products and hygiene products.

NGO – Non-Governmental Organization

Non-food – Products excluding food, e.g. clothes and housewares.

Organic – Grown and produced according to KRAV’s or the EU’s rules, i.e., essentially without pesticides or fertilizer.

Primary production – Farming and fishing, for example.

REACH – Registration Evaluation Authorisation and restriction of Chemicals.

Swan – Official Nordic ecolabel of the Nordic Council of Ministers.

Sweden’s electricity mix – Electricity provided through the Swedish distribution network, most of which is derived from nuclear, solar, wind and hydroelectric power.

WHO – World Health Organization.

For definitions of key financial ratios, see page 62.

Glossary and abbreviations

102 ICA GROUP

Addresses

CITIGATESTOCKHOLM.COM PHOTO: JANN LIPKA PRINT: ALFA PRINT ITEM NUMBER: 850143

ICA AB

President and CEO Kenneth Bengtsson

SE-171 93 Solna, Sweden

Visiting address: Svetsarvägen 16

Tel: +46 8 561 500 00

www.ica.se

ICA Sverige AB

COO Peder Larsson



Tel: +46 8 561 500 00

www.ica.se

ICA Norge AS

COO Trond Kongrød

Postboks 6500 Rodeløkka

N-0501 Oslo, Norway

Visiting address: Sinsenveien 45

Tel: +47 23 05 50 00

www.ica.no

ICA Banken AB

COO Jörgen Wennberg



Tel: +46 8 561 590 00

www.ica.se

Rimi Baltic AB

COO Antonio Soares

A. Deglava Str 161

Lv 1021 Riga, Latvia

Tel: +371 704 55 50

www.rimibaltic.com

ICA Fastigheter AB

COO Bo Liffner

SE-721 84 Västerås, Sweden

Visiting address: Ingenjör Bååths gata 11, T2

Tel. +46 21 19 30 00

www.ica.se/fastigheter

ICA GROUP 103

Documents

The ICA Group’s Annual Report 2007 - CECODES · Rimi Baltic 13.0% ICA Banken 0.6% Other 0.7%! ! " Share of consolidated sales Ownership structure Organization ICA’s companies