BUSINESS OPERATIONS AND VALUE CREATION
SUSTAINABILITY REPORT
FINANCIAL DEVELOPMENT
GOVERNANCE
overdue between 90–180 days and 4.8 per cent (0.5) over 180 days. The specification of doubtful receivables is in the Notes. In the 2022 financial statements, credit losses have returned to the application of normal calculation principle. Expected credit losses on accounts receivables are calculated by using a provision matrix. Expected credit loss expense is rec- ognized by applying expected credit loss percentages based on five-year historic losses on accounts receivables from external debtors, net of credit insurance outstanding at period end. The expected credit loss percentage is 0.2 per cent of receivables. The geographical structure of the accounts receivable is diversified and is reflecting the external sales structure presented in the Segment information. The top ten largest sources of credit risk exist in Italy, USA, Turkey, Poland, United Kingdom, Sweden, Germany, Spain, Finland and South-Africa (around 67 per cent of total external receivables (65)). The share of largest individual customer (individual companies or groups of companies under common ownership) credit risk exposure of Metsä Board at the end of 2022 represented 7 per cent (7) of total external accounts receivable. 32 per cent (33) of accounts receivable was owed by ten largest customer groups (individual companies or groups of companies under common ownership). At the end of 2022, there was around 1.0 per cent (0.4) shortfall of credit insurance limits beyond usual policy deductibles and exclusions. Managing the capital Terms capital and capital structure are used to describe investments made in the company by its owners and retained earnings (together equity) and debt capital (liabilities) as well as the relation between them. In managing its capital structure, the Group aims at maintaining an efficient capital structure that ensures the Group’s operational conditions in financial and capital markets in all circumstances despite the fluctuations typical to the sector. The company has a credit rating for its long-term financing. Certain central target values, which correspond to standard requirements set by financing and capital markets, have been defined for the capital structure. No target level has been defined for the credit rating. The Group’s capital structure is regularly assessed by the Group’s Board of Directors and its Audit Committee. Metsä Board updated the company´s long-term financial targets and decided on a new dividend policy in 2017. Metsä Board´s target for the comparable return on capital employed is at least 12 per cent. According to the company´s target, the ratio of interest-bearing net liabilities to com- parable EBITDA is a maximum of 2.5. This target level gives the company
enough flexibility for potential growth in the future. In 2022 the long-term financial targets have been kept constant. The key ratios describing the capital structure and the capital amounts used for the calculation of the key ratio were on 31.12.2022 and 31.12.2021 the following:
EUR million
2022
2021
Interest-bearing net liabilities/comparable EBITDA
0.2
-0.2
Net gearing ratio, %
-4
-4
Interest-bearing borrowings
453.0 356.2
448.6 524.2
./. Liquid funds
./.Interest-bearing receivables Net interest bearing liabilities
2.3
2.7
-94.5
-78.4
Equity attributable to shareholders of parent company
2,082.0
1,699.4
+ Non-controlling interest
173.2
146.2
Total Equity
2,255.2
1,845.6
In Group`s certain financial contracts financial covenants have been set regarding financial performance and capital structure. Other covenants in the Group’s loan agreements are customary terms and conditions including for example a negative pledge, restrictions on major asset disposals, limitations on subsidiary indebtedness, restrictions on changes of business and mandatory prepayment obligations upon a change of control of the Group. According to the covenant conditions of Finnvera loan agreement guaranteed by a 95% share net gearing may not exceed 100 per cent in relation to the share capital. The Group has been in compliance with its covenants during the accounting periods 2022 and 2021. In case the company could not meet its obligations as defined in financial contracts and in order to avoid a breach of contract that could have an adverse effect on the company’s financial position, it would need to renegotiate its financial arrangements, payback its loans or get its debtors to give up their claims to meet these obligations. Metsä Group has launched a Green Finance Framework, which integrates sustainability and climate change mitigation to the Group´s investments and related financing activities. The framework is based on the Group´s strategy and the strategic sustainability objectives for 2030. The interest margin of Metsä Board´s EUR 200 million syndicated credit limit (revolving credit facility) has been linked to results of environmental objectives set by the company.
REPAYMENT OF NON-CURRENT LOANS EUR million
BREAKDOWN OF CURRENCY EXPOSURE %
300 250 200 150 100 50 0
USD�����������������������������������69% SEK����������������������������������� 37% GBP������������������������������������� 7% CAD������������������������������������� 2% Others����������������������������������1%
23 24 25 26 27 28-
124
Powered by FlippingBook