METSÄ BOARD Annual review 2023
Corporate governance statement
Comparable performance measures
Business operations and value creation 2 This is Metsä Board 4 CEO’s review 6
Reconciliation of items affecting comparability
European Securities and Markets Authority (ESMA) guidelines on Alterna- tive Performance Measures define alternative performance measures as a financial measure of historical or future financial performance, financial position or cash flows, other than a financial measure defined in the appli- cable financial reporting framework, in Metsä Board’s case International Financial Reporting Standards as adopted in the EU pursuant to Regulation (EC) No 1606/2002. With the exception of Earnings per share defined in IAS 33 Earnings Per Share, performance measures provided in the interim report all qualify as alternative performance measures under the ESMA guidelines. Metsä Board sees the presentation of alternative performance measures as providing users of financial statements with an improved view of the company’s financial performance and position, including among other things the efficiency of its capital utilisation, operational profitability and debt servicing capabilities. Exceptional and material items outside the ordinary course of business have been eliminated from the comparable operating result. Metsä Board has defined operating result as follows: Result for the period presented in IFRS income statement before income taxes, financial income and expense as well as share of result of associate companies and joint ventures. Reconciliation of operating result under IFRS and comparable operating result as well as EBITDA and comparable EBITDA is presented below. Comparable return on capital employed has been calculated using the same adjustments as the comparable operating result, and it has been further adjusted with items of financial income affecting comparability when applicable. Metsä Board considers that key figures derived in this manner improve comparability between reporting periods. None of these key figures with items affecting comparability eliminated are key figures used in IFRS reporting, and they cannot be compared with other companies’ key figures identified with the same names. Items affecting comparability include material gains and losses on disposals of assets, impairment and impairment reversals in accordance with IAS 36 “Impairment of Assets”, corporate divestments and acquisitions, adjust- ment measures and other restructuring measures and their adjustments, costs arising from extensive and unforeseeable interruptions in production and the compensation received for them as well as items arising from legal proceedings. In Metsä Board’s view, comparable performance measures better reflect the underlying operational performance of the company by eliminating the result effect arising from items and transactions outside ordinary course of business.
■ Introduction This Corporate Governance Statement of Metsä Board Corporation (“Metsä Board” or the “Company”) has been prepared in accordance with the Finnish Corporate Governance Code 2020 (the “Corporate Governance Code”), published by the Finnish Securities Market Association, and has been issued separately from the Report of the Board of Directors and published simultaneously with the Compa- ny’s financial statements and the Board of Directors’ Report. The Corporate Governance Code is available at https://cgfinland.fi/en/ corporate-governance-code/ . Metsä Board is a Finnish public limited com- pany whose A and B series shares are publicly traded on the official list of NASDAQ Helsinki Ltd (Helsinki Stock Exchange). The governance of Metsä Board is based on, in particular, the Finnish Limited Liability Companies Act (“Com- panies Act”), the Company’s Articles of Associ- ation and regulations issued under the Finnish laws, the rules and recommendations of Helsinki Stock Exchange applicable to listed companies, as well as the regulations and guidelines issued by the Finnish Financial Supervisory Authority. Metsä Board complies with the Corporate Governance Code and does not currently deviate from any specific recommendations of the Code.
the competence of General Meeting under the Companies Act and the Articles of Association, such as: • approval of the financial statements; • distribution of profits; • granting discharge to the members of the Board of Directors and the CEO; • election of the members of the Board of Directors and the remuneration of the members of the Board of Directors; • advisory approval of the remuneration policy and the remuneration report; • the appointment and remuneration of the auditor and the sustainability auditor; • other matters proposed to the General Meeting. A shareholder has the right to have a matter before the General Meeting of Shareholders if they request the Board of Directors in writing in sufficient time to allow the matter to be included in the notice of the meeting. In 2024, the deadline was 12 January 2024. The Annual General Meeting of the Company is held no later than June each year. The notice of the Annual General Meeting shall be given no earlier than three months and no later than three weeks before the meeting, but at least nine (9) days before the record date of the Annual General Meeting, by means of a stock exchange release and publication on the Company’s website and in full or in summary in at least one newspaper published in Finland. An Extraordinary General Meeting will convene if the Board of Directors considers it necessary, or if the auditor or shareholders representing at least 10% of all shares request it in writing to deal with a specific matter. Board of Directors The duties of Metsä Board’s Board of Directors are determined in accordance with the Finnish Limited Liability Companies Act, the Company’s Articles of Association and the written rules of procedure approved by the Board of Directors. Metsä Board’s Board of Directors is responsible for the management of the Company and the proper organisation of its operations. The Board of Directors is responsible for the proper organ- isation of the Company’s financial management and accounting control. The Board is also
This Statement has been reviewed by the Audit Committee of the Board of Directors. The Company’s auditor has verified that this State- ment has been issued, and that the description of the main features of the internal control and risk management systems relating to the finan- cial reporting process contained in the report is consistent with the financial statements.
EUR million
2023 120.8
2022 531.5
Operating result
Depreciation, amortisation and impairment charges
93.8
83.1
Strategy and financial targets
EBITDA
214.6
614.6
8
Value creation
Items affecting comparability Other operating income
-2.7
-28.6
Financial development 10 Key figures 12
Employee costs
4.6 11.6 0.6 -11.7
Share of results of associated companies
4.1
Other operating expense
■ Corporate governance in Metsä Board
Report of the Board of Directors
Total
1.4
EBITDA, comparable
216.0
602.8
20 72
• Sustainability statement • Sustainability statement assurance report
Depreciation, amortisation and impairment charges
-93.8
-83.1
The Company’s statutory bodies are the General Meeting, the Board of Directors and the CEO, whose duties and responsibilities are deter- mined in accordance with the Companies Act. The coordination of the Company’s operations and operational management is also ensured by a Management Team assisting the CEO, whose members (including the CEO) are not members of the Board of Directors. General Meeting The General Meeting is the highest decision- making body, at which shareholders exercise their decision-making power. Each shareholder has the right to participate in the General Meeting by following the procedure described in the notice of the General Meeting. The General Meeting decides on the matters that fall within
Items affecting comparability Impairment charges and reversals of impairments
0.9
74
Consolidated financial statements
Operating result, comparable
122.2
520.7
Share of results of associated companies and joint ventures Net financial items
78 Notes to the consolidated financial statements 126 Parent company financial statements 129 Notes to the parent company financial statements 142 The Board’s proposal to the Annual General Meeting for the distribution of funds 143 Auditor’s Report 147 Shares and shareholders 151 Ten years in figures 152 Taxes 153 Production capacities 155 Calculation of key ratios and comparable performance measures Corporate governance 157 Corporate governance statement 165 • Board of Directors of Metsä Board 168 • Corporate Management Team of Metsä Board
0.1
-6.6
Items affecting comparability Financial items
0.3
0.5
Result before income tax, comparable
122.6
514.6 -63.5
Income taxes
-19.3
Income taxes related to items affecting comparability
0.5
0.3
Result for the period, comparable
103.8
451.4
"+" sign items = expense affecting comparability "-" sign items = income affecting comparability
Items affecting operating result comparability in 2023 totalled EUR -1.4 mil- lion. They comprised Metsä Board’s capital gains of EUR 2.7 million from the sale of a land area unrelated to business operations, and items related to the business of the associated company Metsä Fibre: A write-down related to the closure of the old Kemi pulp mill; translation differences from discontinued operations in Russia; the loss on sale of fixed asset items, and other items, totalling EUR -4.1 million. Items affecting operating result comparability in 2022 totalled EUR 10.8 million. They comprised EUR 19.2 million from the sale of the share capital in Hangö Stevedoring Ab; a EUR 6.5 million capital gain from the sale of a land area unrelated to business operations; a EUR -5.5 million restructuring of customer service and supply chain management; a EUR 2.8 million valuation gain related to the divestment of shares; a EUR -1.0 million impairment recognised for the Russian operations; a EUR -10.5 million impairment recognised for the Russian operations of the associated company Metsä Fibre; a EUR -1.2 million impairment recognised in the assets of Metsä Fibre’s Kyrö sawmill; and other items EUR 0.3 million.
METSÄ BOARD’S GOVERNANCE MODEL
SHAREHOLDERS’ MEETING
BOARD OF DIRECTORS
170 Remuneration report 174 Investor relations and investor information
BOARD COMMITTEES
Audit Committee
Nomination and HR Committee
CEO
Corporate Management Team
156
157
Corporate governance statement | METSÄ BOARD ANNUAL REVIEW 2023
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