The ICA Group’s AnnuAl reporT And susTAInAbIlITy reporT …...Sustainability Report o OveRview 2012 Comment from SvP CR 61 environment 62 Quality 83 ethical trade 101 Health 112

T h e I C A G r o u p ’ s A n n u A l r e p o r T A n d

s u s T A I n A b I l I T y r e p o r T 2 0 1 2

Sustainability Report

o OveRview 2012

Comment from SvP CR 61

environment 62

Quality 83

ethical trade 101

Health 112

Community engagement 119

Sustainability awards 130

o SuStainability aPPROaCH

excelling in responsible business 131

Dialogue with stakeholders 132

iCa’s materiality analysis 135

local variations 136

Risks and opportunities 137

o abOut tHe SuStainability RePORt

about the iCa Group’s Sustainability Report 139

Measurement and calculation methods 140

assurance Report 144

Reading our GRi Report 146

iCa’s operations

o OveRview 2012

CeO comment 1

iCa by the numbers 4

important events 2012 6

Goals and performance 7

o abOut iCa

we make every day a little easier 9

Markets and driving forces 10

Revenue sources 16

Strategies 17

employees 20

values 28

o OuR COMPanieS

Food, real estate, banking and non-food in one group 29

iCa Sweden 30

iCa norway 35

Rimi baltic 39

iCa bank 42

iCa Real estate 45

o HOw iCa iS GOveRneD 49

board of Directors and its work 50

board committees 51

board of Directors 52

Group Management 54

internal control over financial reporting 56

Policies and guidelines 57

How iCa’s sustainability work is governed 59

annual Report

o FinanCial Review 147

Operations 147

Financial year 2012 147

–Important events during the year 149

–Important events after the conclusion of the year 149

–Financial summary 150

–Income summary 151

–Net financial items and taxes 152

–Financial position 152

–Statement of cash flows 153

–Investments 153

–Five-year summary 154

Risks and risk management 155

Human resources 156

iCa’s corporate responsibility work 157

iCas stores and their sales 158

Parent Company 160

o aCCOuntS

The Group account

income statement 162

balance sheet 163

Changes in shareholders’ equity 165

Statement of cash flows 166

Supplementary information 167

The Parent Company account

income statement 199

balance sheet 200

Changes in shareholders’ equity 202

Statement of cash flows 203

Supplementary information 204

o SiGnatuReS 215

o auDitOR’S RePORt 216

CEO COMMENT

We are making ICA even strongerICA is a group that affects many people on a dailybasis. It was therefore both challenging and inspiring totake over as CEO in April 2012. It is also gratifying to beable to report, less than a year later, that 2012 wasanother successful year for ICA despite the economicconcerns in the market. The ICA Group’s consolidatednet sales amounted to SEK 96,863 million. Adjusted forthe divested ICA Maxi stores in Norway, net sales roseby 4.2 percent at constant exchange rates, andoperating income excluding non-recurring items wasSEK 3,466 million, an improvement of 11,9 percentcompared with 2011.

There were several highlights worth mentioning. ICA Sweden continued to outperform themarket as a whole. We saw fine performances by our private labels, Cura pharmacies and ICAnon-foods. Rimi Baltic developed well, as did ICA Bank, which launched an interesting newpackage of mutual funds. ICA Real Estate was stable and generated satisfactory operatingincome for the year. Another achievement is that our Swedish sourcing and logisticsprocesses are now certified according to quality and environmental standards.

But we still have a lot left to improve. When I took over this job, we began to formulate a newstrategy with the aim of ensuring that ICA as a group will continue to develop in the best waypossible. In September, the Board of Directors adopted the strategy, which is largely based onseveral of our existing strengths: a strong market position adapted to local needs, a closecooperation with individual ICA retailers, a broad customer base and strong customer focus,and two strong, well-known brands in ICA and Rimi.

The new Group strategy is based on six strategic themes that set the course for what we do.These themes are firmly established and help every company in the Group to pull in the samedirection. At the same time we can continue to create the room we need for localadjustments by each company.

Each theme comprises a number of areas and priorities that ICA will work with in the shortand medium term. In these areas, each company has then formulated concrete plans through anumber of strategic activities. For 2013 we have identified eight priority areas:

1. Grow the retail business Increasing growth is critical to our future profitability. We will continue to develop ourretail operations, especially in the Baltic countries and in Sweden's three majormetropolitan regions: Stockholm, Göteborg and Malmö. This includes both new storeopenings and higher sales and efficiencies in existing stores.

2. Increase profitable private label penetration We still have considerable untapped potential in our private labels. It is in many ways a win-win situation. Customers get good quality at competitive prices. ICA gets products withgood profitability, while helping the stores to stand out from the competition andstrengthening the brand. We have made the most progress so far in the Swedish market, butthe private labels will grow in Norway and the Baltic countries as well. Our goal is that theshare of private labels in our product range will grow by one percentage point per year.

ICA's OPERATIONS The ICA Group's Annual Report and Sustainability Report 2012

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3. Ensure competitive pricing and fair price perception Customers in all our markets see us as slightly more expensive than we really are. In analready tough market, it is critical that they have an accurate understanding of our prices. In2012, we took great pains to ensure competitive prices and better inform customers ofthem. This work will continue in 2013.

4. Build a leading digital sales position Online sales continue to grow in importance and at the same time are driving sales instores. Being a leader in digital sales is an important priority for us. In 2012, we made ICASpecial’s non-food selection available for online, and in 2013 we will focus our energies onimproving our digital offering ahead of a rollout in 2014.

5. Turnaround the ICA Norway business Reversing several years of losses at ICA Norway is a high priority for the Group. Severalimportant structural measures have already been taken, including the sale of the NorwegianICA Maxi stores, but larger measures have been necessary. In January 2013, we signed astrategic cooperation agreement with Norgesgruppen involving parts of sourcing anddistribution. It is a solution that gives us a better opportunity to ensure a good customeroffering and make ICA Norway profitable.

6. Collaborate to capture synergies within the Group Finding synergies between our various operations and companies is also a priority.Important areas include digital sales, CRM systems, private label development and, not least,sourcing.

7. Ensure efficient operations with focus on the supply chain We have to continuously improve our operations and increase cost efficiencies. Simplifiedprocesses for transports and warehousing, for example, can save money and help theenvironment. In addition to the measures in Norway in connection with the new agreementwith Norgesgruppen, we are also developing our Swedish warehouses and workingcontinuously to improve efficiencies in our logistics structure.

8. Create common ICA values The people in our organization will ultimately determine whether we can be the dynamicand successful company we want to be. We have therefore launched an extensive culturalproject to ensure that the same values are being embraced throughout the Group. It is aquestion of finding the principles to guide all our employees every day on the job, the gluethat holds us together as a Group. With a common culture, many things become easier,from how we lead to how we interact with our customers.

One of ICA’s fundamental principles is that good profitability goes hand in hand withresponsibility. By acting responsibly today, we improve our opportunities of good businesstomorrow. We already have a detailed set of values spelled out in “ICA’s Good Business,”where we lay out in seven position statements how we will work, from factory to store.Through these position statements, we also cover the ten principles in the United NationsGlobal Compact, which ICA has committed to. ICA has also signed the Global Compact’sCaring for Climate initiative. We have several collaborations with charitable organizationssuch as Childhood, the Red Cross and WWF.

In accordance with our new strategy, we will also excel in responsible business. It is animportant position for us, and we are proud that ICA became the first retailer to publishindependently audited quarterly reports on sustainability work in 2012. In these quarterlyreports, we discuss the progress of our work on issues concerning the environment, quality,health, fair trade and social engagement. By increasing transparency in our CR work, we, as amajor player, can spur and challenge ourselves and our industry colleagues to continue towork long-term for a better environment and social development.


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An exciting time now awaits us. In 2012, one of our principal owners, Royal Ahold, decided tore-evaluate its holding in ICA, and in February 2013 our other owner, Hakon Invest, announced itwill acquire Royal Ahold’s shares in ICA. Following completion of the acquisition, ICA andHakon Invest will become one group – ICA Gruppen. When the transaction has been approvedby the relevant authorities, ICA Gruppen will be one of the leading listed Nordic retailcompanies. At the same time, Industrivärden is acquiring a 10 percent interest in ICA Gruppen.Together we will have new opportunities to develop ICA from a long-term perspective, withfood retail as our natural core business. As envisioned CEO, I very much look forward toguiding ICA Gruppen into the future together with our many dedicated employees.

Per Strömberg CEO


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Sales, SEK million Operating income, SEK million

Income after net financial items, SEK million Operating income excluding capital gain andimpairments, SEK million

Operating margin, % Operating margin excl capital gains andimpairment losses, %

ICA BY THE NUMBERS

Increased sales in 2012Net sales for the year amounted to SEK 96,863 million (95,179), up 1.8 percent. Adjusted forthe divested ICA Maxi stores in Norway, net sales increased by 4.0 percent, or 4.2 percent atconstant exchange rates.

Operating income amounted to SEK 3,466 million (3,097) excluding non-recurring items ofSEK 192 million (592), up 11.9 percent.

Income after net financial items amounted to SEK 2,937 million (2,156).

Net income for the year amounted to SEK 919 million (1,395). Net income for the yearincludes a tax expense of SEK 1,274 million related to a tax dispute for the years 2004–2008as well as a one-time tax reduction of SEK 139 million after the Swedish corporate tax ratewas cut to 22 percent as of 2013.

08 09 10 11 120

50,000

100,000

150,000

08 09 10 11 120

2,500

5,000

08 09 10 11 120

2,000

4,000

08 09 10 11 120

2,500

5,000

08 09 10 11 122

3

4

08 09 10 11 122

3

4


4

Summary of key financial ratios for the ICA Group 2008 2009 2010 2011 2012

Operating margin, % 2.3 2.9 3.1 2.6 3.4Return on capital employed, % 11.4 13.5 15.5 12.5 17.6Return on equity, % 13.5 11.3 3.9 11.2 7.6Equity/assets ratio, % 32.0 34.8 30.0 27.7 25.0• Return on equity = Income after tax as a percentage of average equity. Theoperations of ICA Bank are excluded from both the income statement and balancesheet in the calculation. • Return on capital employed = Income after financial income as a percentage ofaverage capital employed. The operations of ICA Bank are excluded from both theincome statement and balance sheet in the calculation.


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IMPORTANT EVENTS 2012

ICA´s efforts during the year2012 results in brief: 2012 was a successful year for the ICA Group. Operating income excludingnon-recurring items amounted to SEK 3,466 million, up 11.9 percent, mainly driven by strongsales development in ICA Sweden. Rimi Baltic, ICA Bank and ICA Real Estate also posted goodresults.

New CEO of the ICA Group: On April 1, 2012, Per Strömberg took over as the CEO of the ICAGroup.

New Group strategies: The work during the year was characterized by the introduction of theICA Group’s new strategy and the strategic priorities that will guide us going forward. The goalof the strategy is that every function and company will pull more effectively together towardsthe same goals. This will make ICA a more competitive and cost-effective group in the longterm. The strategy is based on six long-term strategic themes that set the direction for ICA.Based on the themes the company has identified eight strategic priorities for 2013.

Continued expansion of ICA’s offering: Simplicity and convenience havebecome increasingly important for customers, and one way to address this isto continue to broaden ICA’s offering. During the year, the expansion of Curapharmacies continued. At year-end 2012, ICA had 48 Cura pharmacies inSweden. They reported good sales increases, with more openings in the

future. Another example was the launch of ICA Bank’s mutual funds, which address the desireof its customers to consolidate their savings. ICA Bank offers fund solutions for different risklevels: conservative, moderate and aggressive.

Healthy private label choices: ICA’s aim is to offer something for every tasteand budget. An important tool in this work is our private labels. By developingour own unique products we can be sure to meet customer demand in termsof price and quality. The popularity of these products is evident in the salesnumbers. In 2012, private label sales in Sweden grew significantly faster than

other brands.

Several steps to turn around ICA Norway: Efforts to return Norway to profitability have beenunder way for several years. Several measures have already been taken, but they have notbeen enough. The work continued in 2012, including through the sale of the Norwegian ICAMaxi stores to Lagopus Eiendomsutvikling. In addition, the conversion of the Rimi storescontinued and seven ICA Supermarked stores were modernized. Administrative measures weretaken as well to reduce costs for personnel, among other things.

After the end of the year, ICA Norway signed a cooperation agreement with Norgesgruppen toensure competitive purchasing prices and efficient logistics.

Quarterly report on sustainability work: As of the second quarter of 2012, ICA reports on aquarterly basis recent developments in the sustainability work in the priority areasenvironment, quality, ethical trade, health and community engagement. The reports areindependently reviewed. This is a way for ICA to be more transparent, improve thesustainability work and at the same time encourage positive change in the industry.

Tax ruling against ICA: In October, the Administrative Court of Appeal affirmed the CountyAdministrative Court’s ruling to deny ICA interest deductions of about SEK 3.4 billion for theperiod 2004-2008 and imposed in addition a tax surcharge for the tax year 2007. The total taxclaim amounts to about SEK 1.3 billion, of which ICA already paid about SEK 1.2 billion inJanuary 2011. The tax expense is reported in the third quarter and affected net income for theyear.


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FinancialICA's most important goalsIncrease sales faster than the total market in each sector.

Reach an operating margin of 3.5–4 percent.

Reach a return on equity of at least 14–16 percent over a business cycle.

Maintain an equity/assets ratio at 30–35 percent in the long term.

Outcome 2012Operating margin excluding non-recurring items increased to 3.6 percent (3.3) due to higheroperating income. Excluding net capital gains and impairments, the operating margin wasunchanged 3.3 percent.

Return on equity decreased to 7.6 percent (11,2), mainly due to that net income for the yearwas affected by a tax expense referring to a tax dispute between the years 2004-2008.

Equity/asset ratio decreased to 25 percent (27.7). This was because shareholders’ equitydecreased mainly because the dividend to the shareholders was higher than net income forthe period.

EnvironmentICA’s most important goalsReduce the Group’s direct greenhouse gas emissions by 20 percent by 2012 compared to2006.

Reduce the Group’s direct greenhouse gas emissions by 30 percent by 2020 compared to2006.

Outcome 2012Since 2006, the ICA Group's direct greenhouse gas emissions have been reduced by about8 percent (5 percent), mainly due to a number of long-term measures involving energy,refrigerants and business travel. Among other things, renewable electricity usage in stores hasrisen and energy improvements have been implemented. Compared with 2011, emissions ofgreenhouse gases decreased by about 3 percent in 2012. The sale of the ICA Maxi stores inNorway during the year has resulted in lower energy consumption and less distribution. Thishas a positive effect on greenhouse gas emissions. Due to strict savings requirementsNorwegian stores and warehouses went back to using conventional electricity in 2011, whichhave affected the outcome negatively. The recent long, cold winters and very hot summershave also been a challenge.

Since the goal for 2012 was not reached, a decision was made in September to set a new goal:to reduce the Group’s direct greenhouse gas emissions by 20 percent by 2015 compared with2006.

Focus 2013In 2013, the emphasis will be on measures to improve energy efficiency in stores andwarehouses and increase the number of stores that use renewable energy. As of the firstquarter of 2013, the goal will be reported as direct climate impact per square meter of areainstores.

GOALS AND PERFORMANCE

Three perspectives on ICA´s operationsICA measures its operations from three perspectives: financial, environmentaland social. Following is a summary of the Group’s goals in each area and theperformance results for 2012.


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SocialICA’s most important goals100 percent of ICA’s corporate brand suppliers in high-risk countries 1 will be socially auditedby 2012.

Outcome 2012At the end of 2012, 74 percent (67 percent) of the production units, factories, farms andprocessing plants in high-risk countries that produce ICA's corporate brands had been sociallyaudited. The work has largely been done by ICA’s sourcing offices in Hong Kong, Shanghai andHo Chi Minh City, which employ around 70 experts in sourcing, quality and social responsibilitywho inspect suppliers, visit factories, offer advice and training, and monitor results. During theyear, the work was concentrated on supplier audits conducted by either in-house staff or thirdparties.

Our aim was to reach 100 percent by 2012, but we did not achieve it despite an improvementduring the year. The main reason is that the process of auditing suppliers is very time-consuming. We have made the most progress with suppliers of non-food products andprocessed foods, but more needs to be done to ensure that all suppliers of fruit, vegetables andflowers are socially audited.

In 2012, around 150 audits were conducted using our own tool, ICA Social Audit, for thepurpose of controlling and monitoring work in the factories, farms and processing plants thatproduce our products. In addition, a number of third-party audits of production units thatproduce our private labels were conducted according to internationally recognized standardssuch as BSCI, ETI and SA8000.

Focus 2013The goal that 100 percent of ICA’s corporate brand suppliers in high-risk countries will besocially audited remains unchanged. In coming years, the focus will be on making our supplierseven more informed and aware of these issues and working together on training activities, forexample.

1 Corporate brands essentially mean private label goods. High-risk countries as defined by the UN Human

Development Index and Economic Security Index (UNDP).


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ABOUT ICA

We make every day a little easierICA’s operations focus on food and meals. The vision is to make every day a littleeasier for customers.

VisionWe make every day a little easier.

MissionWe want to be the leading retailer focused on food andmeals.

ICA in briefThe ICA Group (ICA AB) is one of the Nordic region’sleading retail companies, with around 2,100 of its ownand retailer-owned stores in Sweden, Norway and thethree Baltic countries. The Group includes the retailcompanies ICA Sweden, ICA Norway and Rimi Baltic;ICA Real Estate, which owns and manages properties;and ICA Bank, which offers financial services to Swedish customers. Around 50,000 peoplework at ICA in offices, within logistics or in one of our own or retailer owned stores. Over21,000 of them are employed by the ICA Group. ICA AB is a joint venture 40% owned by HakonInvest AB and 60% by Royal Ahold N.V. of the Netherlands. According to a shareholderagreement, Royal Ahold and Hakon Invest jointly share control over ICA AB. Through RoyalAhold, ICA AB is part of an international retail network.


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ICA's markets 2012, GDP development vs 2011

Source: Eurostat prognosis Feb 2013

MARKETS AND DRIVING FORCES

ICA's marketsICA meets customers every day in five countries and four different industries:groceries, real estate, banking and non-food.

Capturing trends and staying informed of what ishappening in the market are critical in order to meetcustomers’ needs in the right way at the right time.Food and meals are ICA’s core business, but the bankingand real estate operations are growing in importanceas ICA Bank’s customers increase in number and nowthat ICA Real Estate is Sweden’s largest retail realestate company. The driving forces in the variousindustries are not exactly the same, but twooverarching global drivers that are shaping our marketare shared by the entire Group:

EconomyEconomic conditions and global financial concernsaffect everyone, but not always in the same way. While the real estate industry slows duringdownturns and banking customers generally become more cautious, groceries tend to becontracyclical: in bad times many people prefer to spend their money on preparing good foodat home rather than going out. At the same time economic conditions affect customers’ pricesensitivity and competition for customers and capital intensifies.

ClimateAwareness of climate issues continue to grow, even though it has been at a slower pace inrecent years. There is a need for long-term engagement and concrete measures. Eatingclimate-smart and choosing products that have been responsibly produced are easy ways forconsumers to make a difference on a daily basis. Climate change could also eventually lead todroughts, floods and other natural disasters that affect access to food, and thus to commodityprices.

ICA’s core business is groceries, so it is important we adapt to food and eating trends. At thispoint, ICA is seeing the following trends in the food retail industry.

0.8

3.2

2.5

4.3

2.9

Sweden

Norway

Estonia

Latvia

Lithuania


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Food trends: How customers shopValue for the money and smart shoppingFewer companies are talking about discount vs. premium customers. They all target both. The economicslowdown has given discounters a boost in recent years, however. ICA’s private labels are a response tocustomer demand for good quality at a fair price. They also help to build the ICA brand.

Simple and convenientThe common denominator for ICA’s customers is that their time is in short supply. As a result, many arewilling to pay for convenience in the form of prepared foods and smart solutions such as our popularpreselected grocery bags. ICA is also seen growing interest in online grocery shopping. This doesn't meanthat customers will stop going to stores, but that they want both alternatives.

Healthy and naturalObesity and diseases of affluence are a growing problem. This makes health an important future issue.Consumers care, and will continue to care, about their weight and well-being when they choose what toeat. This interest in health is especially prominent in Sweden and Norway. Food ingredients such as sugarand additives also interest customers.

Sustainable and localMore and more people are realizing that we can help the environment through small measures such asusing leftovers to reduce waste, shopping less but more often, and choosing organic and local foods.Trust remains an important issue, and many people want to know how the food industry is takingresponsibility for sustainable development.


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Market shares Sweden 2011

Source: SCB/HUI and Magazine Markets: "Who is who 2012"


Sweden – Stable developmentIn the Swedish market, ICA is the market leader in the food retail sector and animportant player in the real estate and banking markets. The Swedish economyreported stable development in 2012 with a GDP growth for 2012 of 0,8 percent.

Grocery marketGrocery market’s size 2012 : SEK 287 584 million

incl.VAT1

Grocery market’s growth 2012 : 3.3 percent in current

prices1

Against the backdrop of the European debt crisis andrising Swedish unemployment, the economy hasbecome an important issue for households. Thirtypercent of Swedes look for discounted prices whenthey shop. Twenty percent buy the highest quality foodregardless of price. Although many people are cautiousabout their money, there are good opportunities forgrowth, though at a modest pace. Food retailers usuallybenefit when consumers hold tightly onto their wallets.

The Swedish grocery market is also affected by urbanization and new migratory patterns.Sweden is urbanizing faster than any other country in Europe. Half of all Swedes already live inthe three major metropolitan regions.

There are around ten food retailers in Sweden, but the market is fairly consolidated. The threelargest companies – ICA, Coop and Axfood – account for the majority of sales, about 64percent of the Swedish retail market.

The average Swedish customer spends about 12 percent of their disposable income on food.Customers are still greatly interested in health, the environment and convenient solutions thatsave time. The fact that a growing percentage of Swedes are constantly connected tocomputers and smartphones, making it easy to compare prices, is also affecting competition.

Learn more in ICA Sweden’s future focus about how ICA is capturing market trends.

Real estate market in SwedenInstability in the eurozone has led to austerity by banks. There aren't many banks that areactive in the real estate-market, and it is becoming harder to borrow money. Those who arelending are making tough demands on the borrower and the property being financed. This hascontributed to a sluggish real estate-market with few deals. During the year, alternativefinancing opportunities were discussed by market players. It appears that the bond financingwill be the biggest beneficiary at the expense of traditional bank financing. This trend is alreadyin full swing on the Continent, mainly in the UK. The property transactions market recoveredduring the fourth quarter, however, and total volume for 2012 was about SEK 110 billion, slightlybetter than previous years.

Foreign real estate investors have been less active in the Nordic market due to tough financingconditions and less aggressive investment strategies. Many have instead chosen to focus ontheir home markets.

An important trend in Sweden is the strong population growth in urban areas, which is alsowhere the most interesting locations are. There is still high demand for attractive propertieswith low yield requirements. Yields have increased significantly for less than the bestproperties, however.

ICA 36%

Coop 15%

Axfood 13%

Bergendahls 5%

Lidl/Netto 4%

Övriga dagligvarubutiker 9%

Övriga säljkanaler 18%


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Another trend in the Swedish real estate market is that several Swedish funds as well asinternational investors have announced they want to increase their exposure to commercialreal estate, especially food retail. Several transactions involving ICA as a tenant have beenfinalized in Sweden and Norway.

The current economic climate gives tenants a better bargaining position than in previousyears. Property owners and banks value long-term leases more than before due to the risk ofbankruptcies. Many large players have put their expansion plans on hold due to overbuildingand online competition, which has especially affected sales of appliances and sporting goods.Large shopping centers are growing less than the rest of the market, and many experts believethey have now reached a ceiling in terms of development and growth. Medium-sized shoppingcenters are still seeing good growth in metropolitan areas.

Learn more in ICA Real Estate’s future focus about how ICA is capturing market trends.

Banking market in SwedenThe economic concerns in 2012 led to greater cautiousness in the banking market and anupswing in savings. These concerns made Swedish consumers, who were already resistant tochange, even more reluctant to switch banks. The Riksbank has forecast that interest rates willremain low, which means that mortgage costs will be held in check, giving households morecapital for savings and consumption. Mortgage growth has slowed, although consumer loansparadoxically increased in Sweden in 2012.

Being close to customers offers competitive advantages. This applies to the banking market aswell. With the stores serving as an agent for ICA Bank, customers never have to go far forservice. ICA stores offer customers cash deposits and withdrawals, a service other Swedishbanks are eliminating at their branches. At the same time today's customers are constantlyonline and are happy to do their banking anywhere at any time. Digitalization is leading tolower fees and giving new low-price alternatives a market alongside the major Swedish banks.

In general, Swedish consumers are reluctant to switch banks. In pace with technologicaladvances, however, there have been signs of increased mobility and flexibility. Solutions suchas a digital banking ID have made it easier for customers to switch banks and to use differentbanks for different purposes. Having a bank in your mobile phone makes this possible.

New rules from the EU and the Swedish Financial Supervisory Authority will change therequirements on banks’ capital adequacy, risk organizations, the board of directors’ work,reporting, etc.

Learn more in ICA Bank’s future focus about how ICA is capturing market trends.

1 - Preliminary figure February 2012


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Market shares Norway 2011

Source: AC Nielsen


Norway – strong development continuesDespite global turbulence, the Norwegian economy has performed well in recentyears, with help from low interest rates and high oil prices. GDP growth for 2012was 3.2 percent. Grocery sales have also developed strongly.

Grocery marketGrocery market’s size 2011: NOK 143.717 million1

Grocery market’s growth 2011: 3.8 percent (3.2)1

Thanks in part to high oil prices, Norway has managedwell during the European debt crisis, and the trend in thegrocery market has been positive. Import costs arehigher because Norway is not a member of the EU,which affects everyone in the market.

Norway is a long, narrow country where many peoplelive long distances from each other. For the groceryindustry this makes it important to coordinatetransports and maximize efficiencies. Learn more aboutICA’s cooperation with Norgesgruppen. Because of their proximity to Sweden, manyNorwegians travel across the border to shop less expensively. Border trade accounted for only7.9 percent of grocery sales in 2011, but is growing quickly. In 2012 border trade grewby approximately 10 percent.

Norwegian customers spend an average of 11 percent of their income on food. The country hasthe highest number of food stores per capita in Europe. The average Norwegian has 4–5 foodretailers nearby, and visits 3–4 of them on a regular basis. While they place high demands onquality, price awareness is also prevalent. This is one reason why the discount segment isdriving the market’s growth.

Real estate market in NorwayJust like in the Swedish market, financing opportunities in Norway have been impacted by theeuro crisis. Few deals are being made, and few international investors are attracted to themarket. Banks have shown little interest in new customers, and most small and medium-sizedreal estate companies are fighting to find financing for new properties. The base is low, but amargin premium between 200 and 300 bp makes financing expensive, and equity requirementsare high. Even with 30–40 percent equity, banks are reluctant to take on new customers.

Norway is also being affected by the urbanization trend and migration to cities, especiallyOslo, where the population is expected to grow by 30 percent in the next decade. Rural areasin turn are shrinking, leaving them with an older population. Urban housing demand isincreasing, leading to higher prices and making it harder for young people to enter the market.Despite a slight increase, rents are relatively stable.

An important sign is that several Swedish funds and international investors have said they arewilling to increase their exposure to the commercial real estate, particularly food retail. In thissegment, several deals where ICA has been a tenant have been finalized in Sweden andNorway.

1 - AC Nielsen 2011 (2010)

Norgesgruppen 37.4%

Coop Norge 23.4%

Rema 1000 21.3%

ICA Norge 14.1%

Bunnpris 3.8%


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Baltic countries – strong economic growthThe Baltic countries had strong economic growth in 2012. At the same time, allthree countries struggled with relatively high inflation and unemployment,although they were reduced to varying degrees. GDP growth for 2012 was 2.5

percent in Estonia, 4.3 percent in Latvia and 2.9 percent in Lithuania1.

EstoniaGrocery market’s size 2012: EUR 1 942,8 million2

Grocery market’s growth 2012: 10.1 percent2

Rimi Baltic's Marketshare in Estonia 2012: 18.5 percent

Estonia managed the best of the three Baltic countries during the crisis years and recoveredthe fastest. In 2013 household spending is expected to rise due to the deregulation of theelectricity market. Combined with continued stiff competition in the grocery market, price willremain a focus going forward.

Estonian customers spend an average of 20-25 percent of their income on food. At the sametime, there are other aspects beside price. Interest in eating healthy is growing, as is interest inlocally produced foods.

LatviaGrocery market’s size 2012: EUR 2 300.8 million2


Rimi Baltic's Marketshare in Latvia 2012: 25 percent

Latvia initially trailed its neighbors in economic development, but in the last two years growthhas accelerated. Unemployment is still high, however, which makes price an important factor.The grocery market is influenced by the fact that 45 percent of the population is of Russianheritage. This creates strong demand for specialty products such as carp. On average, Latviansspend 25-30 percent of their income on food. Interest in local foods is high.

LithuaniaGrocery market’s size 2012: EUR 3 392.5 million2


Rimi Baltic's Marketshare in Lithuania 2012: 6.3 percent

Lithuanian unemployment remained high at around 14 percent in 2012. Competition in thegrocery market is very tight, with a growing number of new stores. In the years since thefinancial crisis, Lithuania saw its population shrink. Before the crisis in 2008, there were 3.3million Lithuanians; today there are only 3 million. Emigration has increased and fewer childrenare being born.

An important trend is the growth in smartphones. In the short term this will impact the foodmarket, e.g., through new marketing opportunities. Purchasing power remains low; on averagethe population spends 25-30 percent of their income on food. This makes price a higherpriority than customer loyalty: more than 78 percent of all customers are prepared to switchstores depending on weekly sales. There is a growing interest in fresh foods and preparedmeals, but the average customer still buys mostly staples such as potatoes, pork and fish.

1 - Eurostat estimates February 20132 - Statistical Central bureau in Estonia, Latvia and Lithuania


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REVENUE SOURCES

ICA's revenuesThere are four cornerstones that generate the ICA Group’s revenues: the stores,the supply chain, real estate development and financial services. Thecornerstones are combined differently for each market based on local needs.Day-to-day operations are organized in five major subsidiaries.

1. ICA and the supply chain: 53.9 percent of revenueThe ICA Group buys products and sells them at a mark-up to retailer-owned stores in Swedenand franchised stores in Norway. ICA also sells services to these stores, e.g., marketingcommunications, logistics, training and retail technology.

2. ICA and its stores: 42.5 percent of revenueICA generates retail revenue in several ways. In Sweden, it comes from royalties and/or profitdistributions from the stores. It also comes from end customers through Maxi Special, thewholly owned company that sells housewares and leisure products at Maxi ICA Hypermarkets.In Norway, revenue comes from wholly owned stores and franchise fees. In the Balticcountries, it comes from wholly owned stores.

3. ICA and its properties: 2.8 percent of revenueFor ICA it is strategically important to obtain and develop the right retail locations andshopping centers. It therefore owns many of its retail properties. Tenants can include otherretailers as well. The operations generate consistent revenue in the form of rents. When sold,the properties have often appreciated in value, which generates a gain for ICA.

4. ICA and financial services: 0.8 percent of revenueOffering financial services is one of many ways ICA builds customer loyalty. In Sweden, ICABank’s customers can save, borrow and obtain insurance. Net interest income andcommissions contribute to earnings, at the same time that use of ICA Bank’s cards reducesfees paid to other card issuers. The bank also offers its services such as payment terminals andATMs to other companies for a fee.


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STRATEGIES

How ICA will develop in the futureIn 2012, ICA formulated a new Group strategy. The aim is to ensure the continueddevelopment of all ICA companies. This will be achieved by identifying betterways to make every day a little easier and at the same time gather our marketsand companies within a coherent framework, with a continued focus on a localpresence.

1. Strengthen ICA’s customer loyalty and brand positionICA will strengthen its brands and customer loyalty in every market through effective, well-targeted marketing activities and decisions. The most important brands are ICA and Rimi. In2013, our priority is to further define and strengthen the brand promises. ICA will establishloyalty programs that provide greater value for both customers and the Group. To date,successful loyalty programs have been used in Sweden, where customers receive uniqueofferings based on individual buying habits. In 2012, loyalty card terminals were installed in thelargest Rimi stores in the Baltic countries . Customers swipe their card to activate uniqueofferings.

2. Strengthen and expand ICA’s customer offeringICA will grow its retail business and ensure it has a well-adapted retail network. In particular, itwill accelerate new store openings in Sweden’s urban areas, as well as in Lithuania. ICA RealEstate plays an important role in the development of properties with ICA stores to ensure thatthey suit the individual ICA retailer and the customer. Furthermore, we will continue to expandCura pharmacies, which in 2012 had a successful year. The Group’s goal is also to increasesales through a strong range of new products and services. Among other things, ICA will givegreater attention to fresh foods and in general ensure competitive prices in every country,including through its private labels.

One of the strategic priorities in 2013 is in fact ICA’s private labels . In a unique way they canbuild customer loyalty through competitive prices, while helping to distinguish ICA from thecompetition and contributing to profitability. The goal is to grow the share of private labelproducts by one percentage point a year over time. This will be achieved in part by bettersharing experiences between companies and in close cooperation with ICA retailers.

3. Optimize and broaden ICA’s sales channelsOne of ICA’s biggest strengths is its retail structure, which differs between countries andoriginated with the successful cooperation with individual ICA retailers in Sweden. Togetherwith the retailers, the store formats will be upgraded based on customer demand. In addition,ICA will try to build sales by developing and integrating more sales channels.

Being a leader in digital sales is a critical success factor for the Group, since demand for onlineshopping continues to grow. Ahead of the Christmas holiday, digital sales of ICA Special’sproduct line were launched in Sweden. In 2013, a coordinated Group initiative will be launchedto pave the way for online food shopping by ICA’s customers. This work will be done inconsultation with the ICA retailers’ association.


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4. Simplify ICA’s businessICA will be better at defining and capturing synergies within the Group, while working toincrease efficiencies and adopting a continuous improvement mindset. One area wheresignificant synergies can be found is in Assortment & Sourcing, where ICA is trying to takeadvantage of the opportunities for collaboration that already exist between its companies,including in the development of private label products, as well as better utilize the sourcingorganization in Asia. The current purchasing collaboration with Ahold will be a priority as well.

The single most important strategic priority, however, is to turn around ICA Norway. ICA madeseveral important decisions in 2012, one of which was the sale of the Norwegian ICA Maxistores. In January 2013, a strategically important collaboration was announced between ICAand Norgesgruppen in the areas of sourcing and logistics. The agreement creates important,new opportunities for better purchasing prices and more efficient logistics. In coming years,ICA will continue to drive activities that contribute to increased profitability and efficiency.

5. Engage and develop ICA’s employeesICA will develop a common set of values and strive to be an attractive employer for currentand future employees through proactive talent management across the entire Group.

One of the strategic priorities in 2013 is the work with ICA’s values, which was initiated in late2012. Strong values empower the company, strengthen its potential and make ICA the dynamic,successful company it should be.

6. Excel in corporate responsibilityICA will excel in corporate responsibility, which will be reflected in everything the Group doesand will be noticeable. The Group is constantly trying to raise the bar through projects such as“I Care” and “ We Can Do More ,” healthy products, CO2 reductions and investments in theenvironment and quality. This strengthens ICA as a player in the grocery market, and the hopeis to inspire others and create value for society as a whole and for customers. Among otherthings, the ICA Group published its first quarterly reports on the sustainability work in 2012. Onan operating level, ICA has come a long way in toward delivering on its CR promise. In additionto the success in securing quality and environmental certifications for the Swedish sourcingand logistics processes, over 300 ICA stores are now certified according to the Swedishstandard for food safety in stores.

In 2013, a project called “ICA Retailers for the Environment” will be launched. The aim is tosupport stores in their efforts to reduce environmental impacts. ICA will continue to work forquality and environmental certifications in Norway, the Baltic countries and Asia.

The Group strategy is based on six long-term strategic themes that set the course foreverything we do. They comprise a number of areas and priorities that ICA will work with inthe short and medium term. Based on these areas, each company has formulated concreteplans in strategic activities. With a single strategy for ICA as a whole it is easier for companiesand employees to set priorities from a holistic perspective.


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STRATEGIES

Strategic prioritiesThe new Group strategy is based on six strategic themes that set the course forwhat we do. Each theme comprises a number of areas and priorities that ICA willwork with in the short and medium term. For 2013 ICA have identified eightstrategic priorites:

1. Grow the retail businessIncreasing growth is critical to our future profitability. We will continue to develop our retailoperations, especially in the Baltic countries and in Sweden's three major metropolitan regions:Stockholm, Göteborg and Malmö. This includes both new store openings and higher sales andefficiencies in existing stores.

2. Increase profitable private label penetrationWe still have considerable untapped potential in our private labels. It is in many ways a win-winsituation. Customers get good quality at competitive prices. ICA gets products with goodprofitability, while helping the stores to stand out from the competition and strengthening thebrand. We have made the most progress so far in the Swedish market, but the private labels willgrow in Norway and the Baltic countries as well. Our goal is that the share of private labels in ourproduct range will grow by one percentage point per year.

3. Ensure competitive pricing and fair price perceptionCustomers in all our markets see us as slightly more expensive than we really are. In an alreadytough market, it is critical that they have an accurate understanding of our prices. In 2012, wetook great pains to ensure competitive prices and better inform customers of them. This workwill continue in 2013.

4. Build a leading digital sales positionOnline sales continue to grow in importance and at the same time are driving sales in stores.Being a leader in digital sales is an important priority for us. In 2012, we made ICA Special’s non-food selection available for online, and in 2013 we will focus our energies on improving ourdigital offering ahead of a rollout in 2014.

5. Turnaround the ICA Norway businessReversing several years of losses at ICA Norway is a high priority for the Group. Severalimportant structural measures have already been taken, including the sale of the Norwegian ICAMaxi stores, but larger measures have been necessary. In January 2013, we signed a strategiccooperation agreement with Norgesgruppen involving parts of sourcing and distribution. It is asolution that gives us a better opportunity to ensure a good customer offering and make ICANorway profitable.

6. Collaborate to capture synergies within the Group Finding synergies between our various operations and companies is also a priority. Importantareas include digital sales, CRM systems, private label development and, not least, sourcing.

7. Ensure efficient operations with focus on the supply chain We have to continuously improve our operations and increase cost efficiencies. Simplifiedprocesses for transports and warehousing, for example, can save money and help theenvironment. In addition to the measures in Norway in connection with the new agreement withNorgesgruppen, we are also developing our Swedish warehouses and working continuously toimprove efficiencies in our logistics structure.

8. Create common ICA valuesThe people in our organization will ultimately determine whether we can be the dynamic andsuccessful company we want to be. We have therefore launched an extensive cultural project toensure that the same values are being embraced throughout the Group. It is a question of findingthe principles to guide all our employees every day on the job, the glue that holds us together as aGroup. With a common culture, many things become easier, from how we lead to how weinteract with our customers.


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EMPLOYEES

Culture begins with leadersIn the ICA Group’s new strategy, dedicated employees are a central, long-termtheme. ICA's view of strong leadership is therefore shaped by common Groupmethods.

Sales staff, pharmacists, systems developers andeconomists. At ICA there are currently over 150different professions and 500 different positions inseveral different countries. For such a large group toreach its business objectives, every employee has to becommitted to their work. HR development is thereforean important long-term theme in ICA’s overarchingstrategy.

ICA has four cornerstones in its efforts to build aconsistent corporate culture: The first cornerstone is leadership. A successful ICAleader has to manage three areas to create an atmosphere where individuals and groups canrun themselves: a strategic area, which focuses on the business’s long-term purpose anddirection; an operational area, which focuses on implementing the mission and deliveringresults; and lastly an interpersonal area, which focuses on people and relationships and in thatway creates harmony between individuals and groups, so that ICA’s employees can developand succeed.

The second cornerstone is competence. ICA works in industries that require corecompetencies as well as new knowledge. With its partner, ICA School, ICA can customizetraining programs to the needs of every market.

The third cornerstone is diversity. Everyone should have the same opportunity to be recruitedand develop professionally regardless of gender, ethnic background, religion or other beliefs,functional disability, sexual orientation and age. ICA takes a long-term view of diversity andwants to capitalize on differences – and in this way create complementary teams.

The fourth cornerstone concerns ICA as a workplace and an employer brand. We workactively to attract new talent, but also to encourage internal rotation. Switching jobs internallygives employees the opportunity to find new challenges and continue to develop within ICA.The aim is that 70 percent of all senior-level recruitments within the Group will be doneinternally. Internal recruitment is also important because current employees already embodyour values, which is exactly what is needed as we build a strong Group culture.


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Employee factsNo. of full-time annual employees 2012Sweden: 8,199 (7,507) Norway: 4,667 (5,450) Baltic countries: 8,078 (7,776) Hong Kong: 76 (73) Total: 21,020 (20,806)

Gender representation in the ICA Group2010: Women 64 percent, men 36 percent 2011: Women 64 percent, men 36 percent 2012: Women 65 percent, men 35 percent

PolicyThe ICA Group’s personnel policy steers ICA’s stance on employees.Learn more about ICA’s policies here.

Group goalThe goal is that ICA’s Good Business values will be reflected in every part of the Group. Learn more aboutGood Business here.


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EMPLOYEES

Important events 2012Continued focus on leadership: Started in 2009, ICA’s leadership program was designedexclusively for the Group in partnership with the University of Oxford. Today the program isconducted by ICA School. Its purpose is to strengthen the ICA culture, where leadership is thecommon platform we work from to achieve profitability and sustainable growth, improve thecapacity of each management team, and give each leader the time to reflect over theirpersonal strengths and individual management style.

Employee survey: An annual survey of the Group’s employees called SpICAp (pronounced“Speak up”) was launched in 2012. It mainly focuses on three areas: engagement, well-being andleadership. Its purpose is to identify potential areas of improvement. The results showed thatICA’s employees were engaged in their work, felt healthy and thought they had goodmanagers.

Physical disabilities are no obstacle: The goal of the “We can do more”project, a collaboration with Samhall and Glada Hudik Theater, was to create500 to 1,000 jobs for people with functional disabilities by 2012. At year-end,around 1,200 people had been employed in a total of 670 Swedish ICA stores;87 percent of the stores planned to extend these employees.

First volunteer program: Social engagement is of central importance to ICA.The Group is now giving employees the opportunity to volunteer duringworking hours. The idea is to make it easier for them to contribute personallyand positively to society. The various charities involved, including the RedCross, focus on children, young people and women.

Resolution of conflict: In November 2012 the Swedish Labour Court passed a judgmentregarding shift work at ICA’s warehouse in Västerås. The principal question in the case waswhether ICA in Västerås had been entitled to schedule shift work at public holidays. The courtconcluded that this was in accordance with the collective bargaining agreement. The secondquestion in the case regarded damages for breach against the prohibition in the collectivebargaining agreement to schedule other forms of shift work at public holidays. In July 2010 thecourt had ruled that the collective bargaining agreement contained such a prohibition.Consequently, approximately 30 employees was granted damages between 10 000 –25 000 SEKeach.


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MEDARBETARE

GRI indicatorsLA1 Total workforce by employment type, employment contract and region.

LA2 Total number and rate of employee turnover by age group, gender and region.

LA7 Rates of injury, occupational diseases, lost days, and absenteeism, and totalnumber of work-related fatalities by region.

LA12 Percentage of employees receiving regular performance and careerdevelopment reviews.

LA13 Composition of governance bodies and breakdown of employees per categoryaccording to gender, age group, minority group membership and otherindicators of diversity.


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LA1

LA2 Global Compact 6

About ICA’s employees

Total workforce by employment type, employment contract and region.

Total number and rate of employee turnover by age group, gender and region.

ICA is a major employer whose mission is to be the leading retailer with a focus on food andmeals in Sweden, Norway and the Baltic countries. The ability to attract and retain engagedand competent employees is an essential part of being a competitive company and asuccessful group. Having the right people in the right place helps to reach goals and achievegood profitability. It is therefore important for us to be the clear choice of employer for theemployees that are needed to secure our goals.

A successful company is created through people and our operations are a result of theinterplay between people and their competence. It is only employees who can create a reallyattractive workplace and a unique store experience, which in turn creates profitability.

In total, the ICA Group employs about 28,000 employees, which includes part-time employees.Converted to full-time staff this is equivalent to 21,020 annual employees.

The turnover rate for employees is generally higher in Norway and the Baltic countries, sincethese operations include store employees. In Norway, the high turnover rate in 2012 is due to,among other things, the sale of ICA Maxi stores and a cut back on office employees, affectedby the economic situation in ICA Norway. Rimi Baltic generally has a high turnover of staff inthe stores, which affects the entire industry in the Baltic States. About 75% of employees in thestores stay shorter than one year. One reason for this is that working in stores is seen as a lowstatus occupation with low wages which also is affected by a lack of leadership. Plans for RimiBaltic in 2013 include work to improve the situation.

Number of annual employees

2012 2011 2010Sweden 8,199 7,507 7,322Norway 4,667 5,450 5,367Baltic countries 8,078 7,776 7,623Hong Kong 76 73 61Totalt 21,020 20,806 20,373

Employee turnover, % 2012 2011 2010Parent Company 7 10 6ICA Bank 4 7 4ICA Real Estate 7 17 13ICA Sweden 10 12 5ICA Norway 25 18 22Rimi Baltic 52 46 29ICA Group 31 27 21


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LA7 Global Compact 1

Wellness contributes to a good workenvironment

Rates of injury, occupational diseases, lost days, and absenteeism, and total number of work-related fatalities by region.

A good work environment is created when leaders join with their staff to make the workplacesafe and secure. To position the ICA Group as a healthy company, we stress earlyrehabilitation and prevention of disease and accidents. This improves the health of ouremployees and reduces rehabilitation costs.

The sick-leave within the ICA Group is quite stable. ICA Norway has the highest absenteeism,where we for several years have made intense efforts to create a turnaround of a negativefinancial result, which affects the work environment.

Preventive wellness gives the ICA Group’s leaders a tool to effectively work with their teams.It also creates a dialogue with each employee on what they can do to improve their ownhealth and well-being. Wellness options include massage, naprapathy and on-site occupationalhealthcare.

Sick-leave, % 2012 2011 2010Parent Company 2 2 2ICA Bank 3 3 3ICA Real Estate 1 2 4ICA Sweden 5 5 5ICA Norway 7 6 7Rimi Baltic 5 4 5ICA Group 5 4 5

Safe stores are essentialGrocery stores are a gathering place for large numbers of people, from customers andsuppliers to the store staff. Preventing accidents and creating safe environments is obviouslycritical. In Sweden, Norway and the Baltic countries, employees receive training in fire safety,first aid and how to prevent robberies and avoid threatening situations. Preventive measures,such as neighborhood watches together with other retailers, authorities, municipalities andschools are also important.

In Sweden and Norway, the ICA Group are implementing common safety standards for storesand periodically conducts safety audits. The aim is to prevent injuries and external criminalityand to create a safe and secure environment.

ICA Sweden is working in several ways to support ICA retailers. All employees have theopportunity to enroll in an interactive online course on Store Safety free of charge. In addition,it is recommended that all stores implement a 13-point program to prevent threats, violenceand robberies. ICA Sweden has also conducted safety audits to prevent damages and offers viapartner follow up after robbery, fire and break-ins. A coordination center in Sweden, ICASecurity Center, provides resources and crisis support round-the-clock if an ICA store isvictimized by crime.


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LA12

In 2012, there were a total of 23 robberies in Swedish ICA stores, a decrease of 28 percent fromthe previous year. This is in line with the overall trend for decrease of store robberies inSweden.

Number of store robberies 2012 2011 2010ICA Sweden 23 32 47ICA Norway 4 3 3Rimi Baltic 0 0 0

Performance and development reviews

Percentage of employees receiving regular performance and career development reviews.

The ICA Group is trying to increase the number of performance and development reviews itconducts, and also improve their quality. The goal is that all our employees will receive areview once a year. According to the results of the SpICAp survey (earlier called theTemperature Survey) in 2012, 79 (71) percent have had a review in the last twelve months.


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LA13 Global Compact 1, 6

Share of employees by age group, the ICAGroup, %

Gender distribution, all employees, the ICAGroup, %

Gender distribution, management level, theICA Group, %

Diversity and gender equality initiatives

Composition of governance bodies and breakdown of employees per category according togender, age group, minority group membership and other indicators of diversity.

An active approach to diversity increases our attractiveness as an employer. Everyone,regardless of gender, ethnic background, religion or other beliefs, functional disability, sexualorientation or age, should have the same chance of being hired and developing on the job. Wecondemn sexual harassment and discrimination in any form. One indication of the importancewe attach to this issue is that the ICA Group has a diversity manager since 2010.

One example of our diversity work is the “We can do more” project in Sweden, where the goalwas to give 500 to 1,000 people with functional disabilities employment within ICA by year-end2012. The project was a co-operation between ICA, the ICA retailer’s association, SwedishNational Association for Persons with Intellectual Disability (FUB), Samhall, Sweden’smunicipalities and county councils and Glada Hudik Theater. At the end of 2012, around 1,200people with functional disabilities were working in 670 Swedish ICA’s stores. 87 percent ofthese stores were planning to retain them as employees even after the current period ofemployment expired.

Rimi Baltic has been working to integrate employees with functional disabilities for severalyears. Today, Rimi Baltic Estonia has 52 employees with functional disabilities in its stores.Rimi Latvia currently employs 103 people with functional disabilities, which is two percent ofthe total headcount in the company. Rimi Lithuania is actively engaged in integratingpeople with functional disabilities into the working environment in close cooperation with theassociation of people with functional disabilities. 94 employees with functional disabilities areemployed in the company, which makes more than four percent of the total employees.

Employees (up to 19) 7%

Employees (20-29) 30%



Employees (over 50) 17%

Women 65%

Men 35%

Women 60%

Men 40%


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The employee magazine ICAs Goda Affärer ("ICA'sGood Business") covers our view of quality, theenvironment, responsibility and health. It is publishedby ICA Sweden and distributed to all stores andemployees in Sweden.

VALUES

ICA takes responsibilityAt ICA, a commitment to social responsibility andstrong community engagement go hand in hand withlong-term profitability. ICA’s customers and otherstakeholders should feel secure and confident in ICAand its businesses. To describe its ethical standards andcorporate responsibility, ICA has coined the term “ICA’sGood Business,” which means that ICA will:

be driven by profitability and high ethical standards

listen to customers and always base decisions ontheir needs

nurture diversity and growth among its employees

maintain an open dialogue internally and with thecommunity

ensure quality and safe products

promote a healthy lifestyle

adopt sound environment practices to promote sustainable development


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Sales distribution

The ICA IdeaThe ICA Idea is based on individual retailers working in cooperation. Each retailer owns andoperates their own store and in that way can tailor concepts and offers to local needs. The ICAGroup originated from this idea, where individual retailers also cooperate in areas such assourcing and logistics to achieve the same economies of scale as wholly owned chains.Essentially it is a way to combine collaboration with local adjustments as close to customersas possible.

OUR COMPANIES

Food, real estate, banking and non-food inone groupICA’s operations comprise food retail, real estate, banking and non-food. Day-to-day operations are organized in five subsidiaries.

The retail operations are managed by ICA Sweden, ICANorway and Rimi Baltic. The real estate operations inSweden and Norway are managed by ICA Real Estateand the financial services by ICA Bank. The companiesare adapted to their markets and industries, but at thesame time support the Group’s shared strategy.

How the stores are managedIndependent retailers working incooperationThe retailers own and manage their stores, but havecentral agreements with ICA covering a number ofareas. The original “ICA idea". Used only in Sweden. No.of stores: 1.330

Wholly owned storesICA owns and manages the stores as a chain. The only store format in the Baltic countries andthe dominant in Norway for years. No. of stores: 577

FranchisingThe stores are managed by franchisees. Used only in Norway. No. of stores: 155

CombinationThe models can be combined depending on the situation. Maxi ICA Hypermarket in Sweden isa combination solution where independent retailers manage the food departments, while ICAmanages non-foods. To the customer it appears to be one store. No. of stores: 75

ICA Sweden 67%

ICA Norway 20%

Rimi Baltic 10%

ICA Bank 1%

ICA Real Estate 2%


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ICA Sweden in briefMission: To be the leading retailer focused on foodand meals. Sales 2012: SEK 65,750 million (62,500) Operating income 2012: SEK 2,849 million (2,617) Total number of stores: 1,330 (1,334) Average number of employees (excluding storeemployees): 7,229 (6,557)

The food retailer ICA Sweden operates in cooperationwith independent retailers. The retailers own andmanage their own stores, but have agreements withICA Sweden in areas such as coordinated purchasing,logistics, marketing communications and retaildevelopment. ICA operates the Cura pharmacies aswell. ICA Sweden also includes ICA Special AB, whichoperates the non-food departments at Maxi ICAHypermarkets.

The Swedish grocery market is mature and growingslowly. In 2012, it grew by 3.3 percent (1.3).

ICA SWEDEN

Retail work produces good results11.5 million visits per week to over 1,300 stores around the country. Swedishcustomers value ICA, and it shows in our results.

The most important priorities in 2012 were to maintaincompetitive prices, continue to offer a carefullyselected assortment of private label products and freshfoods, and build customer loyalty through targetedmarketing. Good sales and improved income for ICASweden in 2012 prove that customers are respondingwell to our efforts. During the year, three new ICAKvantum stores, five new ICA Nära stores and two ICATo Go stores were opened. Cura pharmacies haveexpanded and the additional customer traffic showsthat Cura is now established in the market. Learn moreabout 2012 and ICA Sweden’s market.

In 2013, ICA Sweden will continue to integrate the newGroup strategies and strategic priorities in its businessplans and day-to-day work. Fresh foods and privatelabels will remain important in order to offer uniqueproducts for every taste and budget. Moreover, ICA willbuild its digital sales position and continue to excel inresponsible business. One example is to encouragehealthy eating habits, e.g., by giving more attention tofresh foods such as fruit and vegetables. Learn more about ICA Sweden’s future focus.


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Maxi ICA HypermarketEverything under one roof at fair prices. Wide assortment of foods and non-foods such ashousewares, entertainment and garden supplies. Number of stores: 75 (75) Retail sales, SEK million: 28,735 (27,333) Number of items: around 35,000 (foods and non-foods)

ICA KvantumDesigned to be the leading local supermarket, with foods for everyday and specialoccasions. Offer a variety of fresh foods, alternatives for allergy sufferers, healthy andorganic choices, and local products. Number of stores: 121 (117) Retail sales, SEK million: 23,577 (22,487) Number of items: 10,000-30,000

ICA SupermarketWide assortment for everyday meals or special occasions. Emphasis on personal serviceand a wide range of fresh foods. Number of stores: 430 (435) Retail sales, SEK million: 30,919 (29,911) Number of items: 7,000-11,000

ICA NäraSmall convenience stores offering good service, a narrow product range and quality freshfoods. Many serve as an agent for the state-run pharmacy and alcohol retailers, andhandle sales for ATG, the Swedish off-track betting service. Number of stores: 700 (704) Retail sales, SEK million: 15,041 (14,564) Number of items: around 5,000

ICA To GoAn urban concept focused on tasty, nutritious meals that are easy to grab on the go. ICATo Go is managed as a pilot project within ICA Sweden. Number of stores: 4 (3) Number of items: 1,200

CuraICA's own pharmacy chain, conveniently located in large ICA stores. Cura pharmaciesoffer both prescription and nonprescription drugs and have generous opening hours. Number of pharmacies: 48 (42)

ICA Special ABICA Special AB specializes on the sourcing and sale of non-foods such as housewares,apparel and cleaning products for all store formats in Sweden. ICA Special drives sales ofnon-foods at Maxi ICA Hypermarkets as a fully integrated operation and serves as awholesaler for Kvantum, Supermarket and Nära. They also provides services to ICA’soperations in Norway and the Baltic countries.

Store formats in ICA Sweden


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ICA SWEDEN

Important events 2012Results in brief: Successful sales work in stores, a very good product assortment, the rightprices for customers and a slightly stronger market were the most important reasons why ICASweden’s net sales rose med 5.2 percent and operating income by 8.9 percent in 2012. ICASweden also succeeded in maintaining cost controls internally. In terms of new store openings,2012 was somewhat of a slow year. During the year, with 10 new ICA stores wereopened: three ICA Kvantum stores, five ICA Nära stores and two ICA To Go stores. No newhypermarkets were opened. On the other hand, considerable energy was devoted to upgradingand renovating a large number of existing stores.

Gains for ICA’s private labels: Sales of ICA’s private labels increased more than other products.ICA continued to expand its discount offering ICA Basic, but at the same time strengthened itspremium line by among other things launching quality meats from Nebraska under the nameUS Beef. Many new items were added to ICA’s selection of fruit and vegetables as well.

Exciting new stores: Two pilot stores were opened in 2012. They willcontribute new ideas and challenge other stores’ offerings. ICA NäraJärvastaden, which emphasizes price, was opened in February. In Sundbyberg,a new supermarket that opened November offers an expanded range of freshfoods and prepared meals priced no more expensively than standard

products.

More Cura pharmacies: Cura’s sales growth shows that customers like the concept ofpharmacies conveniently located inside large ICA stores. Eight new pharmacies were openedin Sweden during the year, and the business is contributing positively to the company’s sales.The rate of store openings was slightly slower than expected, however, mainly because themarket is still facing a shortage of trained pharmacists.

ICA To Go in new locations: The ICA To Go pilot project continued duringthe year. ICA To Go is an urban concept providing meal alternatives forpeople on the go. The pilot stores are in Stockholm, where the concept iscontinuously being refined and evaluated. In 2012, two new stores wereopened adjacent to major subway stations, including Central Station, at the

same time that it was decided after a trial period that the Kungsgatan store wasn’t in the rightlocation and was closed. The stores on Drottninggatan and in Kista remain open.

Digital ICA: ICA laid the foundation during the year for its future onlineoffering. The customer website ica.se, which had already been Sweden’slargest recipe site, was rela

Documents

The ICA Group’s AnnuAl reporT And susTAInAbIlITy reporT …...Sustainability Report o OveRview 2012 Comment from SvP CR 61 environment 62 Quality 83 ethical trade 101 Health 112