METSÄ BOARD Annual review 2023
Insider administration For insider matters, Metsä Board and its group companies comply with Finnish laws, especially the Securities Markets Act, Regulation No 596/2014 of the European Parliament and of the Council on market abuse (MAR) and supporting orders and regulations, as well as the insider guidelines of NASDAQ Helsinki Ltd (Helsinki Stock Exchange) (https://www.nasdaq.com/ market-regulation/nordics/helsinki). Based on the above provisions, the Company has approved its own insider guidelines. Pursuant to MAR Article 14 and Chapter 51 of the Criminal Code, a person who possesses inside information shall not (i) engage or attempt to engage in insider trading by acquiring or transferring financial instruments on their own account or on behalf of a third party, (ii) recommend that another person engage in insider trading or induce another person to engage in insider dealing, and (iii) unlawfully disclose inside information to another person unless such disclosure is made as part of carry- ing out normal work duties. The goal of insider administration is to enable people considered the Company’s insiders to openly hold shares in the Company while maintaining public trust in the trading and price formation involving the Company’s securities. The Company recom- mends only long-term investments. Insiders are provided with instructions and training at regular intervals. The Company does not maintain a permanent company-specific insider register. If necessary, the Company will, by decision of the Chair of the Board of Directors, establish an insider project, which will include all persons involved in the preparation of a specific project containing insider information. The Company’s directors subject to the disclosure requirement include the members of the Board of Directors and the CEO. The ownership of these persons and of natural and legal persons related to them is public, as each of them has an independent duty of disclosure to the Company and the Supervisory Authority in respect of their transactions in Metsä Board shares and other financial instruments. Metsä Board publishes the notifications of transactions it receives in the form of stock exchange releases. Directors who are required to report are prohibited from trading in the Company’s shares and other financial instruments during the
recommendations, and the management action plans and their implementation. The Chair of the Audit Committee and the Audit Director also meet regularly without the presence of management. Risk management Risk management is an essential part of Metsä Board’s standard business planning and leadership. Risk management is part of daily decision making, operations follow-up and internal control, helping promote and ensure the achievement of the Company’s objectives. The effective coordination of business management and risk management is based on the operating principles approved by the Board of Directors, which are designed to keep the overall risk management system clear, understandable and sufficiently practical. Risks and their evolution are regularly reported to the Audit Committee of the Board of Directors. The key objective of risk management is to identify and evaluate the risks, threats and opportunities that may have an impact on the implementation of the strategy and the achieve- ment of short- and long-term objectives. The businesses regularly evaluate and monitor the risk environment and related changes as part of their normal operational planning. The risks identified and their management are reported to the Audit Committee and the Board at least twice a year. Business risks also involve opportu- nities, and they can be capitalised on within the boundaries of the agreed risk limits. Conscious risk-taking decisions must always be based on an adequate evaluation of the risk-bearing capacity and the profit/loss potential, among other matters. Such an evaluation must be conducted before any pre-engineering and execution phases of projects and investments. Responsibilities for risk management are shared between the different governing bodies. The Board of Directors is responsible for risk management and approves the risk management policy, while the Audit Committee assesses the Company’s risk management levels and practices and key risk areas and makes proposals to the Board of Directors in this regard. The CEO and the Corporate Management Team are responsible for defining and imple- menting risk management policies and are also responsible for ensuring that risks are taken into account in the Company’s planning processes,
and that they are adequately and appropriately reported. Reporting to Metsä Group’s Business Process Development Director, the Chief Risk Officer is responsible for the development, coordination and implementation of the Company’s risk management process. The Chief Insurance Officer, reporting to Metsä Group’s CFO, is responsible for key insurance solutions. The Risk Committee conducts a risk mapping twice a year, which is presented by the President and CEO to the Board after the Management Team meeting. The Risk Committee consists of the CFO, who leads the committee, with the Chief Production Officer, the Chief Development Officer, the Chief Risk Officer and the Chief Accounting Officer. The business and support functions identify and assess the material risks in their respective areas of responsibility in their planning processes, prepare for them, take the neces-sary preventive measures and report on the risks as agreed. The key elements of Metsä Board’s risk man- agement include implementing a comprehensive risk management process that supports the entire business, protecting assets and ensuring business continuity, corporate security and its continuous improvement, as well as crisis management and continuity and recovery plans. In line with the Risk Management Policy and Principles, adequate risk assessment is part of the pre-appraisal and implementation phases of projects that are financially or otherwise significant. Metsä Board’s risk management function is to: • ensure that all identified risks affecting personnel, customers, products, property, information assets, corporate image, corpo- rate responsibility or operational capacity are managed in accordance with the law and on the basis of the best available information;
• ensure the achievement of the objectives set for the Company; • meet the expectations of stakeholders; • protect assets and ensure business continuity; • optimise the profit/loss potential ratio; and • ensure the management of the Company’s overall risk exposure and the minimisation of overall risks. The most significant risks and uncertainties known to the Company are described in the Report of the Board of Directors. Auditing According to Metsä Board’s Articles of Asso- ciation, the Company has one auditor, which must be an auditing firm approved by the Finnish Patent and Registration Office, with the principal auditor being a Chartered Accountant. The auditor is elected annually by the General Meeting of Shareholders at the Annual General Meeting. The Company’s audit services have been tendered for the financial years 2011 and 2021 under the guidance of the Audit Committees of the Company and the parent company Metsäliitto Cooperative. Based on the 2011 tender, PricewaterhouseCoopers Oy, the Company’s long-term auditor, was replaced by KPMG Oy Ab at the Annual General Meeting in the spring of 2012. The audit was put out to ten- der in 2021, and in accordance with the decision of the Annual General Meeting in the spring of 2023, the Company’s auditor will be KPMG Oy Ab, which appointed Kirsi Jantunen, KHT, as its principal auditor. The Audit Committee oversees the auditor selection procedure and makes recommendations to the Board of Directors on the proposal to the Annual General Meeting regarding the selection of the auditor and the auditor’s remuneration.
period between the end of the reporting period and the end of the publication date of the interim report (but always for at least 30 calendar days – the “closed window”). Metsä Board maintains a list of persons who, in the course of their duties, are involved in the preparation and communication of interim reports, the financial statements release and the annual financial statements and thus may receive inside information. These persons are covered by the Company’s closed window and are therefore subject to the trading restriction mentioned above. Related party transactions The Board of Directors has defined the princi- ples for monitoring and evaluating related party transactions. The Company has contractual relationships with the parent company Metsäli- itto Osuuskunta and its sister companies Metsä Fibre Oy and Metsä Tissue Oyj in the normal course of business. The most significant of these are related to the procurement of raw materials such as wood and pulp and the operation of joint integrated mill sites. The Board of Directors decides on contractual relations with related parties unless the matter is related to the normal business of the Company and is of minor importance. In situations in which the Board of Directors deals with a busi- ness or other contractual relationship or a rela- tionship with Metsäliitto Cooperative or a related company, the Board of Directors acts in principle without its members who are dependent on Metsäliitto Cooperative or the related company in question. The Audit Committee of the Board of Directors regularly monitors and evaluates the transactions and contractual relationships of the Company and its related parties. To assess the independence and integrity of directors, directors must disclose to the Company any matters that may affect their ability to act free of conflicts of interest. As of 31 December 2023, the members of the Board of Directors, the CEO and the other members of the Corporate Management Team had no financial loans from the Company or its subsidiaries, and no collateral arrangements existed between them. There were no significant business relationships between these persons or their related parties (as defined in IAS 24) and the Company during 2023.
Business operations and value creation 2 This is Metsä Board 4 CEO’s review 6
Strategy and financial targets
8
Value creation
Financial development 10 Key figures 12
Report of the Board of Directors
20 72
• Sustainability statement • Sustainability statement assurance report
74
Consolidated financial statements
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
In 2023, audit fees were paid as follows:
170 Remuneration report 174 Investor relations and investor information
Audit fees
2022
2023
Audit fees to KPMG Oy Ab
EUR 260,000 EUR 251,000
EUR 232,000 EUR 223,000
International fees
For services unrelated to the audit proper, incl. certificati- on of the sustainability report
EUR 32,000
EUR 0
Total
EUR 543,000 EUR 12,000 EUR 555,000
EUR 455,000 EUR 11,000 EUR 466,000
To other audit firms than KPMG Oy Ab
Total
162
163
Corporate governance statement | METSÄ BOARD ANNUAL REVIEW 2023
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