METSÄ BOARD Annual review 2024
Notes to the consolidated financial statements 1. Accounting principles Metsä Board Group
Business operations and value creation 2 This is Metsä Board 4 CEO’s review 6
Strategy and financial targets
8
Value creation
0.5 million. Further information can be found in the notes: 2.4. Operating expenses, 4.2. Property, plant and equipment, 5.1. Equity, translation differences, and 5.2. Exchange rate differences, financial income and expenses. Mitigating climate change and reducing emissions Transitioning to fully fossil-free energy in production, abandoning fossil-based raw materials, using energy and water more efficiently, and adopting measures in line with regenerative forestry principles to safeguard forests’ strong growth and carbon storage are at the core of Metsä Group’s sustainability targets. The Group aims for fully fossil-free mills and raw materials by the end of 2030. The achievement of ambitious targets requires investment, the development of operations and the prod- uct range, and the use of the best available technology. Climate-related targets have the greatest impact on the useful lives of property, plant and equipment (Note 4.2) and the preparation of future cash flow estimates in connection with goodwill impairment testing (Note 4.1). At the end of the reporting period, climate-related matters had no material impact on the estimated useful lives or impairment of property, plant and equipment.
the timing or amount of contractual cash flows, for example, those with environmental, social and governance (ESG)-linked features, financial assets with non-recourse features and financial assets that are contractu- ally linked instruments. IFRS 18 Presentation and Disclosure in Financial Statements*(effective for financial years beginning on or after 1 January 2027, early application is permitted) IFRS 18 will replace IAS 1 Presentation of Financial Statements. The key new requirements are as follows: Income and expenses in the income statement to be classified into three new defined categories—operating, investing and financing—and two new subtotals—“Operating profit or loss” and “Profit or loss before financing and income tax”. Disclosures about management-defined performance measures (MPMs) in the financial statements. MPMs are subtotals of income and expenses used in public communications to communicate management’s view of the company’s financial performance. Disclosure of information based on enhanced general requirements on aggregation and disaggregation. In addition, specific requirements to disaggregate certain expenses, in the notes, will be required for companies that present operating expenses by function in the income statement. * = Amendment has not been approved to be applied by the EU by 31.12.2024. Other standard changes do not have a significant impact on the group’s financial statements. Translations in foreign currency The items included in the financial statements of Subsidiaries, joint operations, joint ventures and associated companies are presented in the currency that is used in each company’s primary operating environment. The consolidated financial statements are presented in euros, which is the parent company’s functional and presentation currency. Business transactions denominated in foreign currencies are recognised in the operating currency using the exchange rate on the transaction date. At the end of the financial period, open receivables and liabilities denom- inated in foreign currencies are translated into the functional currency using the exchange rate on the balance sheet date. Since March 2024, the rate used for the Russian ruble is the closing rate for EUR/RUB published by Refinitiv, which management considers to best represent the market rate for the time. Any gains or losses resulting from transactions in foreign
currencies and from the translation of monetary items are recognised in exchange rate differences in financial items. Information about interest and currency hedging is provided in Note 5.6 Management of financial risks. The income statements of companies whose functional currency is not the euro are translated into euros using the average exchange rates of the financial period, and their balance sheets are translated using the exchange rates on the balance sheet date. Changes in translation differences arising from the translation of companies’ income statements and balance sheets and from the translation of net investments in foreign entities are recog- nised in other comprehensive income. In conjunction with divestments of Group companies, either by selling or by dissolving , translation differences accumulated by the time of the divestment are recognised in the income statement as part of the gain or loss from the divestment. Earnings per share Undiluted earnings per share are calculated using the weighted average number of shares during the reporting period, where the own shares held by the group have been deducted. In calculating earnings per share adjusted for the effect of dilution, the average number of shares is adjusted for the dilution effect of any equity instruments that have been issued. In calculating earnings per share, earnings are taken to be the reported earnings attributable to the parent company’s shareholders.
Metsä Board Corporation and its subsidiaries comprise a forest industry group (”Metsä Board” or ”the Group”). Metsä Board’s business operations consist solely of folding boxboard, fresh fibre linerboard and market pulp businesses. Metsä Board reports on its financial performance in one reporting segment. Metsä Board Corporation is Group’s parent company, which is domiciled in Helsinki. The registered address of the company is Revontulenpuisto 2, 02100 Espoo Finland. The parent company is listed on Nasdaq Helsinki Ltd. At the end of 2024 Metsäliitto Cooperative owned 52.0 per cent of the shares, and the voting rights conferred by these shares were 68.9 per cent. A copy of the annual report can be obtained from Metsä Board’s website www.metsagroup.com/metsaboard/ or parent company’s head office at Revontulenpuisto 2, 02100 Espoo Finland. The Group consolidated financial statements were authorised for issue by the Board of Directors on 5 February 2025. According to Finnish Companies Act shareholders can accept or reject the financial statements in General Meeting of shareholders after date of publication. General Meeting of shareholders also have possibility to decide to change financial statements. Accounting principles Metsä Board Corporation’s consolidated financial statements have been prepared in accordance with the International Financial Reporting Stand- ards (IFRS) effective and approved by the EU at the date of the financial statements 31 December 2024. The notes to the consolidated financial statements also comply with the requirements of Finnish accounting and company legislation supplementing the IFRS regulations. The consolidated financial statements are presented in millions of euros, unless otherwise noted. The consolidated financial statements have been prepared based on original acquisition costs, excluding financial assets recognised at fair value, hedged items in fair value hedging, assets and obligations related to defined benefit plans and share-based payments measured at fair value. The impact of Russia’s military aggression Due to the discontinuation of Russian business operations, the Group rec- ognised an impairment of EUR 0.3 million for owned and leased property. The Group also recognised a loss of EUR 0.7 million in other operating expenses mostly related to accumulated Russian ruble-denominated translation differences. On 13 May 2024, Metsä Board completed a corporate restructuring in which control of the Russian subsidiary Metsä Board Rus LLC was transferred to the VLP Group. After the transaction, the Group has no holdings in Russia. The restructuring resulted in a loss of EUR
Financial development 10 Key figures 12
Report of the Board of Directors
20 20 37 70 89 96
• Sustainability statement
General information
E – Environment
S – Social responsibility
G – Governance
Annexes to the Sustainability statement
98 Consolidated financial statements 102 Notes to the consolidated financial statements 150 Parent company financial statements 153 Notes to the parent company financial statements 166 The Board’s proposal to the Annual General Meeting for the distribution of funds 167 Auditor’s Report 171 Sustainability statement assurance report 173 Shares and shareholders 177 Ten years in figures 178 Taxes 179 Production capacities 181 Calculation of key ratios and comparable performance measures Corporate governance 183 Corporate governance statement 190 • Board of Directors of Metsä Board 194 • Corporate Management Team of Metsä Board
Amendments to standards applied during the 2024 financial period
Supplier Finance Arrangements – Amendments to IAS 7 Statement of Cash Flows and IFRS 7 Financial Instruments: Disclosures. The amend- ments enhance the transparency of supplier finance arrangements and their effects on a company’s liabilities, cash flows and exposure to liquidity risk. Amendments require to disclose quantitative and qualitative informa- tion about supplier finance programs. Other standard changes do not have a significant impact on the group’s financial statements. New and amended standards to be applied during future financial periods Classification and Measurement of Financial Instruments – Amendments to IFRS 9 Financial Instruments and IFRS 7 Financial Instruments: Disclo- sures* (effective for financial years beginning on or after 1 January 2026, early application is permitted) The amendments clarify that an entity is required to apply settlement date accounting when derecognising a financial asset or a financial liability; and to permit an entity to deem a financial liability that is settled using an electronic payment system to be discharged before the settlement date if specified criteria are met. The amendments clarify the application guid- ance for assessing the contractual cash flow characteristics of financial assets, including financial assets with contractual terms that could change
Other accounting principles Other accounting principles are presented as part of the relevant Notes.
Key estimates and judgements The preparation of financial statements requires the use of the manage- ment’s estimates, assumptions and judgement-based decisions that affect the amount of assets and liabilities, the presentation of contingent assets and liabilities in the financial statements, and the amount of income and expenses. Even though such estimates and assumptions are based on the management’s best knowledge at the time they were made, it is possible that the actual values differ from those used in the financial statements. In terms of the financial statements, the key areas that involve the man- agement’s estimates and judgement-based decisions are presented in the following notes:
196 Remuneration report 201 Investor relations and investor information
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Consolidated financial statements | METSÄ BOARD ANNUAL REVIEW 2024
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