XHEL:KOSKI ESEF Annual Report

Koskisen Oyj (XHEL:KOSKI)

ESEF Annual Report 2024-04-23 For: 2023-12-31

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Added on September 22, 2026


















	Koskisen Corporation



	REPORT OF THE BOARD OF DIRECTORS AND FINANCIAL STATEMENTS

	1 January - 31 December 2023

	(Unofficial translation of Finnish original)


























	Name or other identifier of the reporting entity	Koskisen Corporation
	Description of the change in the name or other identifier of the reporting entity after the end of the previous reporting period	no changes
	Domicile of the entity	Kärkölä
	Legal form of the entity	Public limited liability company
	Home state	Finland
	Registered address of the entity	Tehdastie 2, 16600 Järvelä
	Principal place of business	Kärkölä
	Description of the nature and main activities of the entity	Wood sawing, planing and impregnation
	Name of the parent company	Koskisen Corporation
	Name of the parent company of the entire Group	Koskisen Corporation



	Koskisen Corporation, Group

The Report of the Board of Directors and Financial Statements

Jan 1 - Dec 31, 2023
	Table of Contents

	The Report of the Board of Directors
	Calculation formulas for key figures
	Reconciliation of alternative performance measures
	Consolidated Financial Statements (IFRS)
		Consolidated statement of comprehensive income
		Consolidated balance sheet
		Consolidated statement of changes in equity
		Consolidated statement of cash flows
	Notes to the Consolidated Financial Statements
		1. General information and basis of preparation
		2. Segment information and revenue
		3. Financial risk and capital management
		4. Other operating income
		5. Materials and services
		6. Employee benefit expenses
		7. Share-based incentives
		8. Depreciation, amortisation and impairment
		9. Other operating expenses
		10. Finance income and expenses
		11. Income tax
		12. Property, plant and equipment
		13. Forest assets
		14. Leases
		15. Intangible assets
		16. Inventories
		17. Other receivables
		18. Equity
		19. Earnings per share
		20. Financial assets and liabilities
		21. Provisions
		22. Other payables
		23. Group structure
		24. Related party transactions
		25. Contingent liabilities and commitments
		26. New standards
		27. Events after the balance sheet date
	Parent company's Financial Statements (FAS)
		Income statement
		Balance sheet
		Statement of cash flows
		Notes to the financial statements of parent company

	Signatures
	List of records and materials
	Auditor´s report
	Independent Auditor’s Reasonable Assurance Report on Koskisen Oyj’s ESEF Financial Statements



Koskisen Corporation, Group

Calculation formulas for key figures

1.	Items affecting comparability are unusual material items outside the ordinary course of business that relate to (i) costs related to reorganisations, (ii) impairment charges, (iii) the gain or loss from the sale of businesses or significant fixed assets and (iv) costs related to the Listing. Items affecting comparability is presented to reflect the underlying business performance of Koskisen and to enhance comparability between periods. Koskisen believes that items affecting comparability provide meaningful supplemental information by excluding items outside the ordinary course of business that reduce comparability between periods.

2.	EBITDA	=	Operating profit (loss) + Depreciation, amortisation and impairments

			EBITDA is an indicator used to measure Koskisen’s performance.

3.	EBITDA margin, per cent	=	EBITDA
			--------------------------------------------------------------------------------------------------	x 100

			Revenue

			EBITDA margin is an indicator used to measure Koskisen’s performance.

4.	Adjusted EBITDA	=	EBITDA + Items affecting comparability

			Adjusted EBITDA is an indicator used to measure Koskisen’s performance. Adjusted EBITDA is presented in addition to EBITDA to reflect the underlying business performance and to enhance comparability between periods. Koskisen believes that adjusted EBITDA provides meaningful supplemental information by excluding items outside the ordinary course of business that reduce comparability between periods.

5.	Adjusted EBITDA margin, per cent	=	Adjusted EBITDA
			--------------------------------------------------------------------------------------------------	x 100
			Revenue

			Adjusted EBITDA margin is an indicator used to measure Koskisen’s performance. Adjusted EBITDA margin is presented in addition to EBITDA margin to reflect the underlying business performance and to enhance comparability between periods. Koskisen believes that adjusted EBITDA margin provides meaningful supplemental information by excluding items outside the ordinary course of business that reduce comparability between periods.

6.	EBIT margin, per cent	=	Operating profit (loss)
			--------------------------------------------------------------------------------------------------	x 100
			Revenue

			EBIT margin is an indicator used to measure Koskisen’s performance.

7.	Adjusted EBIT	=	Operating profit (loss) + Items affecting comparability

			Adjusted EBIT is an indicator used to measure Koskisen’s performance. Adjusted EBIT is presented in addition to operating profit (loss) to reflect the underlying business performance and to enhance comparability between periods. Koskisen believes that adjusted EBIT provides meaningful supplemental information by excluding items outside the ordinary course of business that reduce comparability between periods.

8.	Adjusted EBIT margin, per cent	=	Adjusted EBIT
			--------------------------------------------------------------------------------------------------	x 100
			Revenue

			Adjusted EBIT margin is an indicator used to measure Koskisen’s performance. Adjusted EBIT margin is presented in addition to EBIT margin to reflect the underlying business performance and to enhance comparability between periods. Koskisen believes that adjusted EBIT margin provides meaningful supplemental information by excluding items outside the ordinary course of business that reduce comparability between periods.

9.	Basic Earnings per Share, EUR	=	Profit (loss) for the period attributable to owners of the parent company
			-----------------------------------------------------------------------------------------------------------
			Weighted average number of ordinary Shares outstanding during the period

			Basic Earnings per Share reflects the distribution of Koskisen’s results to its shareholders.

10.	Diluted Earnings per Share, EUR	=	Profit (loss) for the period attributable to owners of the parent company
			-----------------------------------------------------------------------------------------------------------
			Weighted average number of ordinary Shares outstanding during the period + Weighted average number of all dilutive instruments potentially to be converted into Shares

			Diluted Earnings per Share reflects the distribution of Koskisen’s results to its shareholders.

11.	Capital employed	=	Total assets - Current liabilities

			Capital employed reflects the capital tied to Koskisen’s operations and it is used to calculate return on capital employed.

12.	Liquid assets	=	Current financial assets at fair value through profit or loss + Deposits + Cash and cash equivalents

			Liquid assets reflects the amount of cash and other assets that are readily convertible to cash.

13.	Net debt	=	Borrowings + Lease liabilities - Liquid assets

			Net debt is an indicator used to assess Koskisen’s total external debt financing.

14.	Net debt/EBITDA, ratio	=	Net debt
			-------------------------------------------------------------------------------------	x 100
			EBITDA (last 12 months)

			Net debt/EBITDA is an indicator used to assess the level of Koskisen’s financial risk and the level of Koskisen’s indebtedness.

15.	Working capital	=	Inventories + Trade receivables + Other receivables - Advances received - Trade payables - Trade payables, payment system

			Working capital is an indicator used to monitor the level of direct net working capital tied to Koskisen’s operations.

16.	Equity ratio, per cent	=	Total equity
			----------------------------------------------------------------------------------------	x 100
			Total assets - Advances received

			Equity ratio measures Koskisen’s solvency and ability to meet its liabilities in the long term.

17.	Gearing, per cent	=	Net debt
			-------------------------------------------------------------------------------------------	x 100
			Total equity

			Gearing is a measure used to assess Koskisen’s financial leverage.

18.	Return on capital employed, per cent	=	Operating profit (loss) (last 12 months)
			-------------------------------------------------------------------------------------------	x 100
			Capital employed (average for the last 12 months)

			Return on capital employed reflects the return of capital tied to Koskisen’s operations.



Koskisen Corporation, Group

Reconciliation of alternative performance measures

The following table sets forth a reconciliation of the Alternative Performance Measures as at the dates and for the periods indicated:

EUR thousand	Jan 1 - Dec 31, 2023	Jan 1 - Dec 31, 2022
Items affecting comparability
Costs related to reorganisations	326	430
The gain (-) or loss (+) from sale of businesses or significant fixed assets	-190	-2,485
Costs related to the Listing	-	2,428
Items affecting comparability	137	373


EUR thousand	Jan 1 - Dec 31, 2023	Jan 1 - Dec 31, 2022
EBITDA
Operating profit (loss)	24,396	58,168
Depreciation, amortisation and impairments	8,607	8,083
EBITDA	33,003	66,251


EUR thousand	Jan 1 - Dec 31, 2023	Jan 1 - Dec 31, 2022
EBITDA margin, per cent
EBITDA	33,003	66,251
Revenue	271,275	317,651
EBITDA margin, per cent	12.2 %	20.9 %


EUR thousand	Jan 1 - Dec 31, 2023	Jan 1 - Dec 31, 2022
Adjusted EBITDA
Operating profit (loss)	24,396	58,168
Depreciation, amortisation and impairments	8,607	8,083
Items affecting comparability	137	373
Adjusted EBITDA	33,140	66,624


EUR thousand	Jan 1 - Dec 31, 2023	Jan 1 - Dec 31, 2022
Adjusted EBITDA margin, per cent
Adjusted EBITDA	33,140	66,624
Revenue	271,275	317,651
Adjusted EBITDA margin, per cent	12.2 %	21.0 %



Koskisen Corporation, Group

Consolidated statement of comprehensive income

EUR thousand	Note	Jan 1 - Dec 31, 2023	Jan 1 - Dec 31, 2022

Revenue	2	271,275	317,651

Other operating income	4	4,050	4,316
Change in inventories of finished goods and work in progress	16	922	-634
Change in fair value of forest assets	13	870	-19
Materials and services	5	-156,769	-161,770
Employee benefit expenses	6	-46,890	-46,269
Depreciation, amortisation and impairments	8	-8,607	-8,083
Other operating expenses	9	-40,455	-47,025
Operating profit (loss)		24,396	58,168

Finance income	10	4,573	5,998
Finance expense	10	-4,910	-6,408
Finance costs, net		-337	-410

Profit (loss) before income tax		24,059	57,757

Income tax expense	11	-3,829	-11,784
Profit (loss) for the period		20,230	45,973

Other comprehensive income:

Items that may be reclassified to profit or loss
Translation differences		335	186
Other comprehensive income for the period, net of tax		335	186
Total comprehensive income for the period		20,565	46,159

Profit (loss) for the period attributable to:
Owners of the parent company		20,230	39,746
Non-controlling interests		-	6,227
Profit (loss) for the period		20,230	45,973

Total comprehensive income for the period attributable to:
Owners of the parent company		20,565	39,929
Non-controlling interests		-	6,230
Total comprehensive income		20,565	46,159

Earnings per share for profit attributable to the ordinary equity holders of the parent company:

Basic earnings per share, EUR	19	0.88	2.48
Diluted earnings per share, EUR	19	0.87	2.47



The consolidated statement of comprehensive income should be read in conjunction with the accompanying notes.



Koskisen Corporation, Group

Consolidated statement of changes in equity


		Attributable to owners of the parent company
EUR thousand	Note	Share-capital	Legal reserve	Reserve for invested unrestricted equity	Treasury shares	Cumulative translation differences	Retained earnings	Total equity attributable to owners of the parent company	Equity attributable to non-controlling interests	Total equity

Equity at Jan 1, 2023		1,512	16	73,843	-	-191	60,631	135,811	-	135,811

Profit (loss) for the period		-	-	-	-	-	20,230	20,230	-	20,230
Other comprehensive income
Cumulative translation differences		-	-	-	-	335	-	335	-	335
Total comprehensive income		-	-	-	-	335	20,230	20,565	-	20,565
Transactions with owners:
Dividend distribution		-	-	-	-	-	-9,895	-9,895	-	-9,895
Share-based payments	18	-	-	-	-	-	751	751	-	751
Acquisition of treasury shares	18	-	-	-	-3	-	-	-3	-	-3
Total transactions with owners		-	-	-	-3	-	-9,144	-9,148	-	-9,148
Equity at Dec 31, 2023		1,512	16	73,843	-3	144	71,717	147,229	-	147,229





		Attributable to owners of the parent company

EUR thousand	Note	Share-capital	Legal reserve	Reserve for invested unrestricted equity	Treasury shares	Cumulative translation differences	Retained earnings	Total equity attributable to owners of the parent company	Equity attributable to non-controlling interests	Total equity

Equity at Jan 1, 2022		1,512	16	-	-	-374	34,486	35,641	23,179	58,820

Profit (loss) for the period		-	-	-	-	-	39,746	39,746	6,227	45,973
Other comprehensive income
Cumulative translation differences		-	-	-	-	183	-	183	3	186
Total comprehensive income		-	-	-	-	183	39,746	39,929	6,230	46,159
Transactions with owners:
Share issue (merger)	18	-	-	43,252	-	-	-13,842	29,409	-29,409	-
Directed share issue, personnel offering	18	-	-	345	-	-	-	345	-	345
Share-based payments	18	-	-	-	-	-	242	242	-	242
Share issue	18	-	-	32,029	-	-	-	32,029	-	32,029
Transaction expenses, share issue	18	-	-	-1,783	-	-	-	-1,783	-	-1,783
Total transactions with owners		-	-	73,843	-	-	-13,601	60,242	-29,409	30,833
Equity at Dec 31, 2022		1,512	16	73,843	-	-191	60,631	135,811	-	135,811



The consolidated statement of changes in equity should be read in conjunction with the accompanying notes.



	1. General information and basis of preparation

	General information of the Group

	Koskisen Corporation (the company, the parent company) together with its consolidated subsidiaries (Koskisen, the Group) is a Finnish public company active in the sawn timber and panel industries where it manufactures a wide range of wooden products such as sawn goods, plywood and chipboard. Koskisen aims to be a sustainable partner with both the forest owners as well as its customers. Koskisen was founded in 1909. Its headquarters is in Järvelä, Finland and it has offices in Finland and Poland. Koskisen has approximately 900 employees.

	Koskisen Corporation is a Finnish public limited liability company, with a corporate identity number, 0148241-9, domiciled in Kärkölä, Finland. The registered address is Tehdastie 2, 16600 Järvelä, Finland. The parent company's / Koskisen Corporation's shares are listed on the main list of Nasdaq Helsinki Oy from 1 December 2022.



	The Board of Directors of Koskisen Corporation has approved these consolidated financial statements for issue on 12 April 2024. A copy of the consolidated financial statements is available at the Internet-address www.koskisen.com.


	Koskisen’s consolidated financial statements have been prepared in accordance with the International Financial Reporting Standards (IFRS) as adopted by the European Union, and the IAS and IFRS standards as well as interpretations issued by the SIC and the IFRIC as at 31 December 2023. The notes to the consolidated financial statements also comply with the requirements under the Finnish accounting and company legislation complementary to the IFRS.

	Certain new accounting standards and interpretations have been published that are not mandatory for 31 December 2023 reporting periods and have not been early adopted by the Group. These standards are not expected to have a material impact on the entity in the current or future reporting periods and on foreseeable future transactions.


	The consolidated financial statements have been prepared primarily under the historical cost convention unless otherwise indicated. Financial assets at fair value through profit or loss, derivative liabilities and forest assets, as well as assets and liabilities regarding benefit-based plans and share-based payments have been measured at fair value.


	The consolidated financial statements are presented in thousands of euros, which is the functional and presentation currency of the parent company.

	All amounts disclosed in the consolidated financial statements and notes have been rounded off to the nearest thousand unless otherwise stated, therefore the sum of individual figures may deviate from the presented total figure.


	Foreign currency translation

	Functional and presentation currency

	Items included in the financial statements of each of the Group’s entities are measured using the currency of the primary economic environment in which the entity operates (the functional currency). The consolidated financial statements are presented in euros, which is the company’s functional and presentation currency.

	Foreign currency transactions and balances

	Foreign currency transactions are translated into the functional currency using the exchange rates at the dates of the transactions. Foreign exchange gains and losses resulting from the settlement of such transactions and from the translation at year-end exchange rates of monetary assets and liabilities denominated in foreign currencies are recognised in the consolidated statement of comprehensive income.

	Foreign exchange gains and losses relating to the ordinary course of business, as well as, foreign exchange gains and losses relating to financial items are presented in finance costs, net in the statement of comprehensive income.

	Group companies

	The results and financial position of foreign operations that have a functional currency different from the presentation currency are translated into the presentation currency. Assets and liabilities for each balance sheet presented are translated at the closing rate at the date of that balance sheet. Income and expenses for each statement of comprehensive income are translated at average exchange rates. All resulting exchange differences are recognised in other comprehensive income.

	On consolidation, exchange differences arising from the translation of any net investment in foreign entities are recognised in other comprehensive income. When a foreign operation is sold or otherwise disposed of, the associated exchange differences are reclassified to the statement of comprehensive income, as part of the gain or loss on sale.

	Fair value adjustments arising on the acquisition of a foreign operation are treated as assets and liabilities of the foreign operation and translated at the closing rate.



	The effects of the Russian war of aggression

	Koskisen actively monitors the impact of Russia’s war of aggression against Ukraine on the estimates and assumptions used in the preparation of the consolidated financial statements. The war has kept the demand for birch plywood high relative to supply, supporting the high price level of birch plywood. The impact of the war on the estimates presented in financial reporting is based on the management’s best judgement.

	The liquidation process of OOO Koskiles, Koskisen’s logistics and wood supply company operating in Russia, was completed in November 2023, after which the group has no operations in Russia. The costs related to the liquidation of the company were not significant.


	Key estimates and management judgement

	The preparation of financial statements in conformity with IFRS requires management to use certain critical estimates and exercise judgement, which have an impact on the amount of assets and liabilities as well as the amount of income and expenses recognised for the financial year presented in these consolidated financial statements. In addition, the management is required to use judgement in the application of the accounting policies.

	The estimates and judgement are continually evaluated and are based on the management’s best knowledge, historical experience and expectations of future events that are believed to be reasonable under the circumstances. The resulting accounting estimates will, by definition, seldom equal the related actual results.

	The estimates and assumptions that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities are presented in the following notes to the consolidated financial statements:

	Note	Key estimates and judgements
	13. Forest assets	Valuation of forest assets
	14. Leases	Embedded leases
	14. Leases	Lease term determination
	14. Leases	Determination of incremental borrowing rate
	21. Provisions	Estimation of the amount and timing of the provision




Revenue by segments
	Jan 1 - Dec 31, 2023			Jan 1 - Dec 31, 2022
EUR thousand	External	Internal	Total	External	Internal	Total
Panel Industry	148,786	9	148,795	152,111	1,873	153,984
Sawn Timber Industry	122,400	24,823	147,223	165,426	23,637	189,063
Segments total	271,186	24,832	296,018	317,537	25,510	343,048
Other	89	577	666	114	581	695
Elimination of internal sales		-25,410	-25,410		-26,092	-26,092
Total	271,275	-	271,275	317,651	-	317,651

Koskisen generates revenue mainly from the sale of goods, i.e. sawn timber and panel. Majority of the Koskisen’s revenue is recognised at a point in time when customer obtains control of the goods based on the applicable delivery terms. The payment terms in Koskisen’s customer contracts typically vary between 30 and 60 days, and the contracts do not include significant financing components. The contracts may include variable payments such as cash discounts or other discounts.

In 2023 and 2022 Koskisen had no external customers from which revenue recognised would have been over 10% of the Group’s total revenue.

Revenue by countries

EUR thousand			Jan 1 - Dec 31, 2023		Jan 1 - Dec 31, 2022
Finland			111,206		124,553
Japan			21,116		39,950
Germany			20,320		20,822
Poland			11,556		11,742
Other EU countries			75,419		81,718
Other countries			31,658		38,866
Yhteensä			271,275		317,651

EBITDA by segments

EUR thousand			Jan 1 - Dec 31, 2023		Jan 1 - Dec 31, 2022
Panel Industry			29,282		29,279
Sawn Timber Industry			3,274		41,557
Segments total			32,556		70,835
Other			3,204		-4,747
Eliminations			-2,757		162
Total			33,003		66,251

Reconciliation of EBITDA to operating profit (loss)

EUR thousand			Jan 1 - Dec 31, 2023		Jan 1 - Dec 31, 2022
EBITDA			33,003		66,251
Depreciation, amortisation and impairments			-8,607		-8,083
Operating profit (loss)			24,396		58,168



	Basis of preparation



Non-current assets by geographical area

EUR thousand	Jan 1 - Dec 31, 2023	Jan 1 - Dec 31, 2022
Finland	126,498	101,898
EU countries	3,032	2,493
Other countries	16	42
Total	129,546	104,434


Credit risk

Credit risk arises from cash and cash equivalents, deposits, investments measured at fair value through profit or loss (FVPL), favourable derivative financial instruments as well as trade receivables. The Group’s credit risks or counterparty risks are realised when the customer or other counterparty is unable to fulfil its commitments to the Group.

Regarding trade receivables Koskisen applies the expected credit loss model to assess impairment loss for the doubtful trade receivables since the trade receivables do not contain a significant financing component. To measure the lifetime expected credit losses, trade receivables have been grouped based on aging category and measured based on historical loss rates adjusted by forward looking estimates and individual assessment. Trade receivables is written off as impaired when receivership or bankruptcy is confirmed or when it is otherwise obvious that the customer will be unable to meet its payment obligations. Changes in impairment loss for doubtful trade receivables are recognised under other operating costs in the statement of comprehensive income. According to the principles of credit management, the quality of receivables is assessed on the basis of customer-specific analysis. Credit risks related to customers are managed by credit insurance, advance payment terms and/or by expecting bank guarantees or confirmed letters of credit for customer payments.

Koskisen is also exposed to counterparty risks related to financial institutions, through the significant amounts of liquid funds deposited with financial institutions, in the form of financial investments and in derivatives. Financial investments are made only with counterparties with high creditworthiness. While cash and cash equivalents and deposits are also subject to the impairment requirements of IFRS 9, the identified impairment loss was immaterial.

Loss allowance

		Under 30	30-60	61-90	Over 90
EUR thousand	Not due	days	days	days	days	Total
Dec 31, 2023
Expected loss rate	0.1 %	0.1 %	0.2 %	1.6 %	100.0 %
Trade receivables, gross	18,750	4,464	160	5	85	23,464
Loss allowance	-11	-3	-0	-0	-85	-99
Trade receivables, net	18,739	4,462	159	5	-	23,365

		Under 30	30-60	61-90	Over 90
EUR thousand	Not due	days	days	days	days	Total
Dec 31, 2022
Expected loss rate	0.1 %	0.1 %	0.2 %	1.6 %	100.0 %
Trade receivables, gross	22,043	3,369	125	31	15	25,584
Loss allowance	-12	-2	-0	-0	-15	-30
Trade receivables, net	22,031	3,367	125	31	-	25,554

Loss allowance reconciliation

EUR thousand				2023		2022
Opening loss allowance at Jan 1				30		41
Increase in loss allowance recognised in the statement of comprehensive income during the financial year				99		30
Receivables written off during the financial year as uncollectible				-20		-4
Unused amount reversed				-10		-37
Closing loss allowance at Dec 31				99		30



Maturities of financial liabilities

							Total
							contractual	Carrying
EUR thousand	2024	2025	2026	2027	2028	2029-	cash flows	amount
Dec 31, 2023
Loans from financial institutions	7,877	9,237	13,993	3,246	3,180	5,086	42,619	37,711
Lease liabilities	4,979	3,523	2,848	2,565	2,458	23,472	39,846	25,989
Trade payables	25,411	-	-	-	-	-	25,411	25,411
Trade payables, payment system 1)	7,437	-	-	-	-	-	7,437	7,396
Total	45,704	12,759	16,841	5,811	5,639	28,559	115,312	96,507


							Total
							contractual	Carrying
EUR thousand	2023	2024	2025	2026	2027	2028-	cash flows	amount
Dec 31, 2022
Loans from financial institutions	5,650	6,265	6,357	11,309	657	2,227	32,465	28,650
Lease liabilities	4,090	3,759	3,355	2,766	2,584	27,311	43,865	27,309
Trade payables	32,263	-	-	-	-	-	32,263	32,263
Trade payables, payment system 1)	7,316	-	-	-	-	-	7,316	7,316
Total	49,319	10,024	9,712	14,075	3,241	29,538	115,909	95,538
1) Trade payables under the payment system are payable on demand, so the company reports them as short-term debt. Accumulated interest and interest for the 45 days notice period have been added to the contractual cash flows of these.


Foreign exchange risk

Koskisen’s headquarters is in Finland and Koskisen also has a foreign subsidiary in Poland. The Group is exposed to both transaction and translation foreign exchange risks. The Group’s business and results from operations are exposed to changes in exchange rates between the euro, the presentation currency, and other currencies, such as the U.S. dollar (USD) and British pound (GBP). The largest export currency after the euro is the USD, which is used for example as the currency for exports to Japan. The magnitude of foreign exchange exposures changes over time as a function of revenue and costs in different markets, as well as the prevalent currencies used for transactions in those markets. Significant changes in exchange rates may also impact Koskisen’s competitive position and related price pressures through their impact on our competitors.

The majority of Koskisen’s revenue and results are in the group companies’ functional currencies, hence Koskisen’s exposure to risks, other than risks arising from USD, is limited. Additionally, Koskisen is exposed to risks related to liquidity and payment discipline of its customers, which may impact cash flow or lead to credit losses

As shown in the table below, Koskisen is primarily exposed to changes in EUR/USD exchange rate. The sensitivity of profit or loss to changes in the exchange rates arises mainly from revenue, outstanding trade receivables in USD, and a bank account in USD. Koskisen’s exposure to other foreign exchange movements is not material.

To mitigate the impact of changes in exchange rates on Koskisen’s results, Koskisen hedges the foreign exchange exposure by entering into foreign exchange forward contracts. The Koskisen policy is to fix 100% of the USD denominated sales within the current quarter, 50% in the next quarter and 25% of the third quarter. The nominal amount of the outstanding USD foreign exchange forward contracts was EUR 2,416 thousand on 31 Dec 2023 (31 December 2022: EUR 2,404 thousand). The group’s open USD position as well as the derivatives and the sensitivity analysis of the position are presented in the tables below. At the balance sheet date, the open USD position is higher than the average during the financial period.


		USD exposure
EUR thousand	31.12.2023		31.12.2022

Trade receivables		752		523
Cash and cash equivalents		3,550		4,688
Trade payables		40		46
Foreign currency forwards (nominal value)		2,416		2,404
Foreign currency forwards (fair value)		55		82


		Impact on post-tax profit
EUR thousand		2023		2022

EUR strengthens against US dollar 10%		-1,589		-2,740
EUR weakens against US dollar 10%		1,589		2,740




As Koskisen has entities where the functional currency is other than the euro, the shareholders’ equity is exposed to fluctuations in foreign exchange rates. Changes in shareholders’ equity caused by movements in foreign exchange rates are shown as currency translation differences in the consolidated financial statements. The Group does not hedge this risk.



Interest rate risk

Koskisen borrows money from financial institutions and the interest rates of these loans are based on floating markets rates which exposes Koskisen to an increase in its financing costs (cash flow interest rate risk).

Koskisen hedges its exposure to changes in interest rates with interest rate swaps. These hedges cover 80% (2022: 100%) of the open balance of variable rate loans from the change of the market rates. Their nominal amount is EUR 30.0 million during the periods presented. The interest rate swap agreements are valid until 2025, and accordingly effectively fix interest rates partly to predetermined level.

The following sensitivity analysis covers both variable rate loans and the interest rate swap contracts.

	Impact on post-tax profit
EUR thousand	2023	2022

Interest rates – increase by one percentage points 1)	-77	-
Interest rates – decrease by one percentage points 1)	77	-

1) Holding all other variables constant


5. Materials and services

Materials and services comprise purchases of materials and supplies such as logs, coatings, glues, energy for production and other production materials. External services comprise log harvesting, transportation and machinery repair services.

EUR thousand	Jan 1 - Dec 31, 2023	Jan 1 - Dec 31, 2022
Purchases of materials and supplies	122,969	122,506
Change in inventories	-2,363	2,979
External services	36,163	36,285
Total	156,769	161,770


6. Employee benefit expenses

Koskisen employed an average of 904 employees in 2023, of which 810 employees were located in Finland and 76 in Poland. In addition, there were some 20 employees working in sales in different countries around the world. Koskisen’s employee benefit expenses are presented in the table below. The remuneration of the members of the Executive Board team, CEO and the members of the Board of Directors is presented in the note 24. Related party transactions.

EUR thousand	Jan 1 - Dec 31, 2023	Jan 1 - Dec 31, 2022
Wages and salaries	38,876	38,070
Pension costs - defined contribution plans	6,157	6,943
Social security costs	1,863	1,935
Other long-term benefits - service allowance	-6	-678
Total	46,890	46,269

Other long-term benefits consist of an annual service allowance plan. The cost of the plan is determined based on the advice of qualified actuary who carries out a full valuation of the plan on a regular basis using the projected unit credit method. Under this method, the costs of the plan are charged to the statement of comprehensive income to spread the regular costs over the working lives of the employees. Koskisen presents the service cost relating to defined benefit obligations in employee benefit expenses while the net interest is presented in finance costs.


Average number of employees
	Jan 1 - Dec 31, 2023	Jan 1 - Dec 31, 2022
Salaried employees	243	236
Workers	661	689
Average number of employees during the period	904	925


	Other operating expenses comprise, for example costs related to sales freight, forwarding and chipping, expenses for property maintenance and IT expenses.


Fees paid to the auditor of the Group performing the statutory audit for the years presented in the consolidated financial statements appointed by the annual general meeting are presented in the table below.

Auditor remuneration

EUR thousand	Jan 1 - Dec 31, 2023	Jan 1 - Dec 31, 2022
Audit	100	347
Tax and legal advisory services	5	74
Other services	28	1,178
Total	133	1,599

Auditor remuneration include the fees paid to the auditors of each Group company.


11. Income tax

Income tax expense comprises current income tax based on the taxable income for the period and deferred tax expense.

Income tax expense

EUR thousand	Jan 1 - Dec 31, 2023		Jan 1 - Dec 31, 2022

Current tax on result for the period		-1,612		-9,844
Adjustments for current tax of prior periods		-208		-5
Total current income tax expense		-1,819		-9,849

Change in deferred tax assets		137		-817
Change in deferred tax liabilities		-2,147		-1,119
Total deferred tax expense		-2,009		-1,935

Income tax expense		-3,829		-11,784

The difference between income taxes at the statutory tax rate in Finland (20%) and income taxes recognised in the statement of comprehensive income is reconciled as follows:

Reconciliation of the effective tax rate

EUR thousand	Jan 1 - Dec 31, 2023		Jan 1 - Dec 31, 2022


Profit (loss) before taxes		24,059		57,757
Tax calculated at Finnish tax rate 20 %		-4,812		-11,551
Effect of other tax rates for foreign subsidiaries		1		10
Effect of expenses not deductible for tax purposes		-223		-606
Utilisation of non-deductible net interest expenses from previous reporting periods		1,398		-
Effect of non-taxable income		15		377
Effect of unrecognised deferred tax assets from tax losses		-		-9
Adjustment in respect to prior years		-208		-5


Income tax expense		-3,829		-11,784


Deferred tax assets and liabilities
		Recognised in profit or loss	Reclassifi-cations	Translation differences
EUR thousand	At Jan 1	Recognised in profit or loss	Reclassifi-cations	Translation differences	At Dec 31

2023
Deferred tax assets
Leases	1,093	153		0	1,247
Other long-term employee benefits	604	21			625
Intangible assets	-	-31	97		66
Provisions	20	17			37
Credit loss provision	6	13		0	20
Other items	219	-36	-97	4	90
Total	1,942	137	-	5	2,084
Netting of deferred taxes	-1,814				-1,996
Total	129				88

Deferred tax liabilities
Accumulated depreciation differences	4,280	1,547			5,827
Tangible assets	-	174	164		338
Intangible assets	164		-164		-
Derivatives	306	9			314
Borrowings	626	207			833
Rental contracts	172	196			367
Other items	-	14			14
Total	5,547	2,147	-	-	7,694
Netting of deferred taxes	-1,814				-1,996
Total	3,734				5,697

Deferred tax liabilities, net	3,605				5,610

		Recognised in profit or loss	Reclassifi-cations	Translation differences
EUR thousand	At Jan 1	Recognised in profit or loss	Reclassifi-cations	Translation differences	At Dec 31

2022
Deferred tax assets
Borrowings	1,030	-1,030			-
Other long-term employee benefits	734	-130			604
Derivatives	408	-353	-55		-
Tax losses	0	-0			-
Leases	384	710		-0	1,093
Provisions	24	-4		-0	20
Credit loss provision	8	-2		-0	6
Other items	173	-8	55	-2	219
Total	2,761	-817	-	-2	1,942
Netting of deferred taxes	-2,700				-1,814
Total	61				129

Deferred tax liabilities
Accumulated depreciation differences	4,052	227			4,280
Intangible assets	168	-4			164
Derivatives	-	306			306
Borrowings	95	531			626
Rental contracts	-	172			172
Other items	113	-113			-
Total	4,429	1,119	-	-	5,547
Netting of deferred taxes	-2,700				-1,814
Total	1,728				3,734

Deferred tax liabilities, net	1,667				3,605


12. Property, plant and equipment

Property, plant and equipment

EUR thousand	Land	Buildings and structures	Machinery and equipment	Other tangible assets	Advance payments and construction in progress	Total
Cost at Jan 1, 2023	2,734	61,241	95,078	6,061	26,741	191,854
Additions	33	7,648	8,604	120	15,303	31,708
Disposals	-61	-1,613	-3,738	-825	-4	-6,241
Reclassifications	-	14,738	2,688	2,085	-24,044	-4,533
Translation differences	8	144	16	5	8	182
Cost at Dec 31, 2023	2,714	82,158	102,648	7,446	18,004	212,970

Accumulated depreciation and impairment at Jan 1, 2023	-	-39,870	-71,297	-4,412	-	-115,579
Depreciation	-	-1,503	-3,523	-358	-	-5,385
Accumulated depreciation of disposals and reclassifications	-	1,272	3,738	538	-	5,548
Impairment	-	-	-35	-	-	-35
Translation differences	-	-28	21	-3	-	-10
Accumulated depreciation and impairment at Dec 31, 2023	-	-40,130	-71,096	-4,235	-	-115,462

Carrying value at Jan 1, 2023	2,734	21,370	23,781	1,650	26,741	76,275
Carrying value at Dec 31, 2023	2,714	42,028	31,551	3,211	18,004	97,508

EUR thousand	Land	Buildings and structures	Machinery and equipment	Other tangible assets	Advance payments and construction in progress	Total
Cost at Jan 1, 2022	2,730	65,881	93,572	6,661	6,797	175,642
Additions	81	435	4,803	34	21,267	26,621
Disposals	-84	-5,542	-3,996	-706	12	-10,316
Reclassifications	-	490	685	73	-1,329	-80
Translation differences	7	-24	15	-1	-8	-11
Cost at Dec 31, 2022	2,734	61,241	95,078	6,061	26,741	191,854

Accumulated depreciation and impairment at Jan 1, 2022	-	-44,186	-71,252	-5,063	-	-120,500
Depreciation	-	-1,063	-3,523	-215	-	-4,801
Accumulated depreciation of disposals and reclassifications	-	5,397	3,542	866	-	9,806
Impairment	-	-23	-54	-	-	-77
Translation differences	-	4	-11	0	-	-6
Accumulated depreciation and impairment at Dec 31, 2022	-	-39,870	-71,297	-4,412	-	-115,579

Carrying value at Jan 1, 2022	2,730	21,696	22,321	1,598	6,797	55,142
Carrying value at Dec 31, 2022	2,734	21,370	23,781	1,650	26,741	76,275


Other tangible assets comprise the Mäntsäläntie industrial area's stormwater system (EUR 1.3 million), and district heating network (EUR 0.5 million) which were taken into use during the reporting period, and in addition amongst others, constructions of roads, parking and warehouse areas and an art collection.

The increases during the financial period amounted to EUR 31.7 (26.6) million and were mainly related to the construction of the new sawmill in Järvelä. At the end of the financial period, advance payments and work in progress included EUR 11.3 million related to the new sawmill, and investments of EUR 27.9 million related to this were completed during the financial year. Other significant investments during the financial period are a spindleless lathe (EUR 2.0 million), as well as a solar power plant in Järvelä (EUR 1.3 million).

The additions during 2022 were mainly related to the new sawmill in Järvelä. Advance payments and construction in progress included EUR 21.6 million related to the construction of the new sawmill, of which the additions in 2022 amount to EUR 15.8 million. The additions to machinery and equipment consisted mainly of a stick stacker to the new sawmill (EUR 3.3 million).


13. Forest assets

Koskisen owns 781 hectares of forests land in Southern Finland at the end of the reporting period. The value of the forest assets, i.e. standing trees, is EUR 3.6 million as at 31 December 2023 (31 December 2022: EUR 2.7 million).

Forest assets

EUR thousand	2023	2022
Carrying value, at Jan 1	2,731	2,750
Gain (loss) arising from changes in fair value	870	-19
Decreases due to sales	-2	-
Carrying value, at Dec 31	3,599	2,731

Koskisen uses forest certification and all of its own forests are certified by the Programme for the Endorsement of Forest Certification (PEFC). PEFC sets requirements for the monitoring of certified wood raw materials and wood products in supply chains. In addition, the certification requires safeguarding the diversity of forests, maintaining the health and growth of forests and the use of the forests for recreational use.


14. Leases

Koskisen’s lease contracts comprise leases of real estates, including offices, apartments, warehouses and land areas, production machinery and equipment, cars and leases of other machinery and equipment, such as IT equipment. The lease terms are fixed or valid until further notice and may include extension or termination options. The lease contracts may include index clauses, which are typically based on the consumer price index. These are not included in the measurement of lease liability until they realise.

In addition, Koskisen has entered into an agreement for heat energy supply which includes a lease contract for power plants. Koskisen has right to receive substantially all the economic benefits from the use of the power plants. The agreement includes an option based on which at the end of the 15 years agreement period, or in case of a breaching event, Koskisen has the right and obligation, if the other party requires, to redeem the power plants for itself or for a third party. Due to restructuring the lease agreement during 2022 Koskisen received a payment of EUR 3.0 million which was recognised as decrease to the right-of-use assets.

Koskisen also has an agreement for sawn timber manufacturing. All payments for the agreement are variable, and therefore not included in the measurement of the lease liability but are recognised as cost in the statement of comprehensive income as incurred.

The balance sheet shows the following amounts relating to leases:

EUR thousand	Dec 31, 2023	Dec 31, 2022
Right-of-use assets
Power plants	18,751	19,822
Machinery and equipment	6,891	2,274
Land and water areas	229	278
Buildings	289	328
Total	26,159	22,702

Lease liabilities
Non-current	23,857	25,294
Current	2,132	2,015
Total	25,989	27,309

	Jan 1 - Dec 31, 2023	Jan 1 - Dec 31, 2022
Additions to the right-of-use assets during the financial year	1,636	1,022

The statement of comprehensive income shows the following amounts relating to leases:

EUR thousand	Jan 1 - Dec 31, 2023	Jan 1 - Dec 31, 2022
Depreciation charge of right-of-use assets
Power plants	1,589	1,658
Machinery and equipment	1,191	1,265
Land and water areas	49	49
Buildings	138	81
Total	2,967	3,053

Interest expense	2,079	2,254

Expense relating to short-term leases 1)	8	14
Expense relating to leases of low value assets
that are not short-term leases1)	361	345
Expenses relating to variable lease payments
not included in lease liabilities1)	0	1,466
1) Included in other operating expenses

	Jan 1 - Dec 31, 2023	Jan 1 - Dec 31, 2022
The total cash flow for leases in the financial year	5,607	7,326

The maturity of the lease liabilities is presented in note 3: Financial risk and capital management.


	Accounting policy

	At the contract inception, Koskisen assesses whether the arrangement is, or contains, a lease. A contract is, or contains, a lease if the contract conveys the right to control the use of an identified asset for a period of time in exchange for consideration. Koskisen recognises a right-of-use asset and a corresponding lease liability at contract commencement for leases where it is a lessor. The contract commencement date is the date on which the asset is available for use by the lessee.

	Koskisen measures the lease liability at the commencement by discounting the future lease payments to their present value. The lease payments include fixed payments, variable lease payments based on an index or a rate, residual value guarantees, which are expected to be payable by Koskisen and the exercise price of a purchase option, if Koskisen is reasonably certain to exercise the option. Penalties for terminating the lease are included in the lease liability measurement if the lease term reflects that Koskisen will use the termination option.

	Koskisen discounts lease payments using the interest rate implicit in the lease. If that rate cannot be readily determined, Koskisen uses the incremental borrowing rate, i.e. the rate that Koskisen would have to pay to borrow over a similar term, and with a similar security to obtain an asset of a similar value to the right-of-use asset in a similar economic environment. Interest expense on lease liabilities is presented in the cash flow from operating activities.

	After the lease commencement, lease liability is measured at amortised cost using the effective interest method. Lease liability is remeasured, when the lease payments change due to, for example, index change, exercising of option included in the lease are reassessed or to reflect other lease modifications.

	Right-of-use assets are measured at cost comprising the initial amount of the lease liability, any lease payments made at or before the contract commencement, any initial direct costs and restoration costs. Right-of-use assets are depreciated using the straight-line method over the shorter of the asset’s useful life and lease term. If Koskisen is reasonably certain to exercise a purchase option, the right-of-use asset is depreciated over the asset’s useful life.

	Koskisen applies the short-term and low value asset exemptions provided by the standard. Short-term leases are leases with a lease term of 12 months or less. Low value assets include, among others, bicycles and ICT equipment. Lease payments associated with those leases are recognised as an expense on a straight-line basis. Koskisen does not separate non-lease components from lease components in the sawmill lease.

	Koskisen has minor activities as a lessor by leasing its land areas and apartments. Koskisen classifies all of its leases as operating leases as the leases do not transfer substantially all of the risks and rewards incidental to ownership of an underlying assets.


	Key estimates and judgements

	Embedded leases

	Koskisen has agreements for heat energy supply and sawn timber manufacturing for which management has assessed whether the agreements include a lease. When the agreements include an identified asset and Koskisen utilises substantially all of the capacity of the assets and therefore obtains substantially all of the economic benefits from the use of the assets, and if Koskisen also has right to direct the use of the asset for a period of time, Koskisen accounts the arrangement as a lease. In some arrangements all the payments for a lease are variable, not dependent on index or a rate, and not in-substance fixed. Accordingly, for such arrangements no lease liability nor right-of-use asset has been recognised in the balance sheet.

	Lease term determination

	Koskisen assesses the lease term on a lease-by-lease basis based on the contractual obligations, economic incentives, and nature of the asset. Koskisen’s lease contracts include contracts with fixed lease terms, extension and termination options and contracts that are valid until further notice.

	If the contract contains a fixed lease term without option to extend or to terminate the lease, the lease term is set based on the fixed lease term. Extension options (or periods after termination options) are only included in the lease term if the lease is reasonably certain to be extended (or not terminated).

	If the lease term is not stated clearly in the contract, or will continue in perpetuity until further notice, management assesses the enforceable period of the lease based on the contractual terms and reasonable certainty. In case there are no significant penalties involved in contracts where the lease term in not stated clearly or continues until further notice, the Group determines the lease term on a lease-by-lease basis reflecting the Group’s need for the underlying asset and its strategic planning period of five years.

	The lease term is reassessed if a significant event or change in circumstances occurs.

	Incremental borrowing rate determination

	The incremental borrowing rate is determined based on recent third-party financing agreements as a starting point, adjusted to reflect the lease term, credit risk for leases, the leased asset and changes in financing conditions and operating environment since third-party financing was received.


15. Intangible assets

EUR thousand	Softwares	Advance payments and work in progress	Total
Cost at Jan 1, 2023	3,415	290	3,705
Translation differences	6	-	6
Additions	389	30	419
Disposals	-662	-	-662
Reclassifications	473	-290	183
Cost at Dec 31, 2023	3,622	30	3,652

Accumulated amortisation and impairment at Jan 1, 2023	-2,782	-	-2,782
Translation differences	-4		-4
Accumulated amortisation of disposals and reclassifications	662	-	662
Amortisation	-220	-	-220
Accumulated amortisation and impairment at Dec 31, 2023	-2,344	-	-2,344


Carrying value at Jan 1, 2023	633	290	923
Carrying value at Dec 31, 2023	1,278	30	1,308


EUR thousand	Softwares	Advance payments and work in progress	Total
Cost at Jan 1, 2022	3,185	160	3,345
Additions	100	275	374
Disposals	-94	-	-94
Reclassifications	225	-144	80
Cost at Dec 31, 2022	3,415	290	3,705

Accumulated amortisation and impairment at Jan 1, 2022	-2,726	-	-2,726
Cumulative amortisation on disposals and reclassifications	95		95
Amortisation	-152	-	-152
Accumulated amortisation and impairment at Dec 31, 2022	-2,782	-	-2,782


Carrying value at Jan 1, 2022	459	160	619
Carrying value at Dec 31, 2022	633	290	923


	Accounting policy

	Software-related costs

	Software costs are recognised as an asset if Koskisen has control over the underlying asset, at historical cost less accumulated amortisation and impairment losses. Amortisations are calculated on a straight-line method over the useful economic lives of the assets which is five years.

	The assets’ useful lives and amortisation methods are reviewed at minimum at the end of each reporting period and adjusted, if appropriate, to reflect changes in the expected economic benefits. The amortisation of intangible assets is commenced when the asset is ready for its intended use.


	Impairments are presented in note 12: Property, plant and equipment.