Itella 2012

 

Financial responsibility

Itella wants to grow profitably because only a financially sound company can implement its responsibility in terms of society, the staff, the environment, and all stakeholder groups. We plan our finances from a long-term perspective, anticipating changes in the market, customer demands, and risk scenarios both in Finland and abroad.

We implement our financial responsibility by renewing our business operations and improving our profitability in accordance with our strategy, and by supporting the competitiveness of our customer companies and the public sector. The economic impact of our operations is comparable to those of the banking and telecommunications sectors since, in addition to consumers, our services are employed by hundreds of thousands of private and public sector operators every day.

Services and goods provided to business customers generate approximately 96 percent of our net sales. Key customer industries include the media, trade, and services. International business accounts for a third of all net sales.

We are a state-owned company that operates on market terms, and everything we do is based on the earnings we receive from our customers. Approximately 50 percent of our operations relate to postal services. The rest consist of logistics and financial management services provided to business customers.

The general economic uncertainty prevailed throughout the past year – a fact also reflected on our business. After a promising first quarter, the Finnish economy slipped onto a downward trend during late spring and early summer. The economic uncertainty looks set to continue in 2013, meaning that we need to commit to continuous activity to maintain the positive momentum.

Our financial goal is to increase our net sales with an average annual rate in excess of five percent and to achieve a operating profit in excess of 5.5 percent.

Financial impact in accordance with the income statement

Active R&D operations related to services

Our research and development costs totaled EUR 15.2 million, or 0.8 percent of the Group's operating costs, in 2012.

In Itella Mail Communications, research focused on the increasing popularity of social media and the effect that this has on the demand for postal services, as well as on the significance of communality in terms of the development of print and electronic media and from the perspective of readers, journalists, and advertisers alike. In addition, we studied the advancement of the electronification of consumer invoices and the factors that have a bearing on such development, the structure and electronification of letter traffic, the importance of online shops as a channel for buying Christmas gifts, and the trends in subscriber activity regarding newspapers and magazines in the next few years. We continued the development of online services offered to small and medium-sized companies as well as consumers, and introduced new features to web-based marketing services. We renewed our post box services and simultaneously adopted an entirely new system to produce and manage such services.

We also want to develop our services by asking consumers to provide us with tips and ideas about the kinds of services they wish Posti would offer or on how they would develop the services of Posti. For such purposes, we set up Ideaposti, which is an online service designed for consumer customers. The service works in two directions: on the one hand, consumers may post their own ideas there and comment on or offer further development ideas on the ideas posted by their fellow consumers; on the other hand, the service provides Posti with an avenue through which to test its own development ideas. The users of the service therefore have a chance to evaluate improvements planned by Posti before they are even put into practice.

Itella Logistics invested in a new warehouse management system and freight operating system with the objective of increasing the efficiency of its operations. After VR Transpoint's groupage logistics and PT Logistiikka became a part of Itella Logistics, we also continued to develop the optimization and transport management systems of the domestic transport business.

Itella Information studied the global spread of electronic invoicing among both consumers and businesses. We also invested in assessing the rate of automation within financial processes across different European countries. We continued the development of the OpusCapita products —designed for the automation of cash flows — by introducing new mobile and cloud service solutions to the market and by further investment in the user friendliness of the products.

We also engaged in continuous development work in Itella Bank, the subsidiary which began its operations during the past year. Itella Bank specializes in the transmission of payments and invoice data, particularly in relation to online commerce, parcel services, and other postal business.

We improved the quality of our risk management process

We have a comprehensive approach to risk management. In 2012, we focused particularly on the continuing improvement of the quality and extent of our risk management process. The Group's key strategic risks involve the markets, the business environment, the ability of business operations to develop, and regulation. The principal operational risks, on the other hand, involve first and foremost the profitability of business operations, as well as business interruptions and other disruptive risks. A more detailed description of the aforementioned risks is available in the Board of Directors' Report.

We comply with the International Financial Reporting Standards

Our financial reporting complies with the International Financial Reporting Standards. As an issuer of two publicly listed bonds, we are obligated to disclose periodic information to a limited extent. Our disclosure obligation is based on the Finnish Securities Market Act and the rules and regulations of NASDAQ OMX Helsinki Oy. A more detailed description of our financial reporting policies is available on our webpages at www.itella.com/financials.

In connection with our financial statements, we also publish our Corporate Governance Statement, referred to in Recommendation 54 of the Finnish Corporate Governance Code of the Securities Market Association.

Financial and emotional support for selected organizations and individuals through sponsorship

In addition to taking care of our own duties and goals, we want to do our bit in securing the well-being of our customers and employers. Our way of going about this is to provide financial and emotional support to select organizations and individuals who influence the lives of many people.

Our targets for sponsorship reflect our value system. They represent team spirit, empathy to people's everyday lives, and an uncompromising attitude towards one's own work and duties. We are involved in enabling recreational sports and cultural activities, and we support top athletes and performers on their way to international success. Our partnership support is based on interactive collaboration, in which our role is not merely that of a financial sponsor, but a proactive operator. Donations are decided annually by Itella's Board of Directors.

During the past few years, we have focused our sponsorship efforts on soccer, through SPL, the Football Association of Finland. In February, we renewed our contract whereby we will continue to be one of SPL's main partners.