Financial Review
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Business Overview
Strategy, value creation
and sustainability
Financial Review
Board of Directors’
Report, Financial
Statements and
investor information
Corporate Governance
Statement
Corporate Governance,
Internal Control and Risk
Management systems
GRI Supplement
Externally assured
sustainability information
compliant with the GRI
Standards
Remuneration Report
Remuneration of the
Board of Directors and
the CEO
Annual Report 2020
Metso Outotec’s Annual Report
2020 consists of fi ve sections:
Business Overview, Financial Review,
Corporate Governance Statement,
Remuneration Report and GRI
Supplement. All Annual Report
sections are available in English
and in Finnish. They are
downloadable on our Annual
Report website at mogroup.com/
corporate/investors/annual-
report-2020. In this Annual Report
we apply integrated reporting
elements.
3Financial review 2020
Financial review 2020
Table of contents
Board of Directors’ report .......................
Financial year 2020 ...............................
Corporate Governance Statement ..................
Non-financial information .........................
Shares and shareholders...........................
Key figures .......................................
Board of Directors’ proposal on the use of profit ....
Voluntary Unaudited Pro Forma
Financial Information ..............................
Illustrative segment information....................
Consolidated financial statements ...............
Consolidated statement of income .................
Consolidated statement of comprehensive income ..
Consolidated Balance Sheet........................
Consolidated statement of
changes in shareholders’ equity ....................
Consolidated statement of cash flows ..............
Notes to the Consolidated Financial Statements .....
1
Group performance...........................
Reporting segments .........................
Sales .....................................
Selling general and administrative expenses ....
Other operating income and expenses .........
Personnel expenses and number of personnel ...
Sharebased payments ......................
Finance income and expenses ................
Income taxes...............................
Earnings per share ..........................
2
Operational assets and liabilities ..............
Net working capital and capital employed .......
Trade receivables ...........................
Other receivables ...........................
Inventory ..................................
Trade and other payables ....................
Provisions .................................
Postemployment obligations .................
3
Intangible and tangible assets.................
Goodwill and other intangible assets ...........
Tangible assets .............................
Depreciation and amortization ................
Rightofuse assets .........................
4
Capital structure and financial instruments ....
Financial risk management....................
Financial assets and liabilities by category .......
Liquid funds ...............................
Equity ....................................
Borrowings and lease liabilities ................
Interestbearing net debt reconciliation .........
Contingent liabilities and other commitments ....
Derivative instruments .......................
5
Consolidation ................................
Principles of consolidation ....................
Subsidiaries ................................
Associated companies joint ventures and
related party transactions .....................
Acquisitions and business disposals ............
Discontinued operations .....................
New accounting standards....................
Exchange rates used ........................
6
Other notes..................................
Audit fees .................................
Lawsuits and claims .........................
Auditor’s Report ..................................
Investor information . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Notes to the Consolidated Financial Statements.....
Financial Statements of the Parent Company, FAS ..
Financial review 2020|Table of contents 4
Board of Directors’ report
Financial year 2020
Operating environment
After its outbreak during the first months of the year, the Covid-19 pandemic continued to
aect Metso Outotec’s end markets and customer operations throughout 2020. The most
severe impact was seen during the second quarter, after which the situation stabilized and
remained largely unchanged for the rest of the year. The most significant impacts resulted
from restrictions on workforce mobility and limited access to customer sites. Metso Outotec’s
own operations were also aected by restrictions during the spring but have been running
with additional health and safety measures and without major disruptions since early June.
The aggregates business, which faced the most rapid and negative impacts during the
spring, saw market activity normalizing towards the end of the year. In the minerals and
metals markets, decision-making as well as commissioning related to bigger investments was
hampered by mobility restrictions. However, positive news around Covid-19 vaccine devel-
opment and high metal prices activated decision-making in the fourth quarter and resulted
in a strong order intake for Metso Outotec. The services business continued to be aected
by limited access to planning, preparing, and carrying out maintenance and modernization
work at customer sites. The demand for spare parts and consumables continued to be good,
supported by healthy utilization rates at mines thanks to high metal prices.
Key figures, comparable
EUR million Change %
Orders received
Orders received by services business
% of orders received
Order backlog
Sales
Sales by services business
% of sales
Adjusted EBITA
% of sales
Operating profit
% of sales
Earnings per share, EUR (IFRS)
Earnings per share, total, EUR
Cash flow from operations (IFRS)
Gearing, % (IFRS)
Personnel at end of year
1)
based on average number of outstanding shares (737,413 thousand)
2)
based on the number of outstanding shares at the end of period (827,979 thousand)
Financial performance
Orders received in 2020 totaled EUR 4,150 million, compared to EUR 4,370 million in 2019. Sales
totaled EUR 3,897 million (EUR 4,030 million). Lower order and sales volumes resulted from the
negative impact of the Covid-19 pandemic on market activity.
Adjusted EBITA totaled EUR 448 million (EUR 509 million) and adjusted EBITA margin 11.5%
(12.6%). The weaker profitability year-on-year resulted from lower volumes, due to Covid-19 as
well as the Metals segment turning from a profit to a loss. Operating profit (EBIT) was aected
by negative adjustments of EUR 97 million (EUR 46 million negative), which were related to the
Metso Outotec transaction and integration costs. In addition, PPA amortization totaled EUR 71
million. EBIT totaled EUR 253 million (423 million) and EBIT margin 6.5% (10.5%).
Profit before taxes totaled EUR 201 million (IFRS), and profit for the period totaled EUR 138
million (IFRS). Earnings per share were EUR 0.17 based on the number of outstanding shares at
the end of the year of 827,979,202.
Financial review 2020|Board of Directors’ report 5
Impacts from currency and structural changes on orders received
EUR million Aggregates Minerals Metals
Metso
Outotec total
2019
Organic growth in constant currencies, % % % % %
Impact of changes in exchange rates, % % % % %
Structural changes, % % % % %
Total change, % % % % %
2020
Impacts from currency and structural changes on sales
EUR million Aggregates Minerals Metals
Metso
Outotec total
2019
Organic growth in constant currencies, % % % % %
Impact of changes in exchange rates, % % % % %
Structural changes, % % % % %
Total change, % % % % %
2020
Financial position
The Group’s net interest-bearing liabilities were EUR 799 million at the end of 2020, gearing
was 39.2%, and the debt-to-capital ratio 37.2%. The equity-to-assets ratio was 39.9%.
Metso Outotec’s liquidity position is solid. In addition to liquid funds amounting to EUR 537
million, the Group had committed and undrawn revolving credit facilities of EUR 790 million
at the end of the year. A syndicated EUR 600 million revolving credit facility has a maturity in
2025 with one one-year extension option. To be prepared for any Covid-19-related liquidity
needs, Metso Outotec arranged further liquidity buers during 2020, of which the EUR 100
million revolving credit facilities mature in 2021 and EUR 90 million in 2022. Metso Outotec also
has a EUR 600 million Finnish commercial paper program, under which EUR 60 million was
issued at the end of the year.
The Group has a Euro Medium Term Note Program (EMTN) of EUR 2 billion, under which
EUR 689 million at carrying value was outstanding at the end of 2020 (EUR 388 million in 2019).
EUR 589 million (EUR 288 million) of the outstanding amount was public bonds and EUR 100
million (EUR 100 million) private placements.
During the year, a EUR 100 million bank loan was drawn for general corporate purposes,
and a EUR 40 million loan was drawn for research, development, and innovation purposes
from the European Investment Bank. In July 2020, Metso Outotec repaid Outotec’s EUR 150
million hybrid bond, using a bank term loan of EUR 150 million with a maturity in 2022 with a
one-year extension option.
In addition, Metso Outotec repaid Outotec’s EUR 150 million bond in September 2020
with a bank term loan with a maturity in 2022. In November, Metso Outotec issued a public
bond amounting to EUR 300 million with a maturity of 7.5 years under its EMTN Program. The
proceeds were used to repay a EUR 300 million bank term loan.
The average interest rate of total loans and derivatives was 1.21% (1.37%) on December 31,
2020. The duration of medium and long-term interest-bearing debt was 2.1 years (1.8 years) and
the average maturity 3.7 years (2.9 years).
Moody’s Investor Service has assigned Metso Outotec a ‘Baa2’ long-term issuer rating with
stable outlook and S&P Global Ratings a ‘BBB’ long-term issuer credit rating with negative
outlook.
Metso Outotec integration and synergies
Metso Outotec integration, which started on July 1 after the transaction was completed on June
30, 2020, proceeded quickly during the second half of the year.
In early August, Metso Outotec announced an updated timetable and scope of the cost
synergies to be realized from the merger. The cost synergy target was raised to EUR 120 million
of annual pre-tax cost synergies, and the implementation will be accelerated so that the run
rate of the synergies is expected to be realized by the end of 2021. Procurement is estimated
to represent about 25% of the total cost synergies, and the rest will come from personnel,
functional and other cost synergies.
The realization of the cost synergies is proceeding according to plan: by the end of 2020,
an annual run rate of EUR 65 million had been reached, exceeding the earlier announced
plan to achieve about EUR 50 million by the end of the year. The main source of the realized
synergies has been the restructuring of the organization.
Also in August, the company maintained its original EUR 150 million annual revenue run-rate
synergy target by the end of 2022 but noted that the Covid-19 situation creates uncertainty
about the market development. The first revenue synergies were achieved and booked in
orders received during the second half of the year.
The realization of cost and revenue synergies is expected to result in one-o, pre-tax
costs of approximately EUR 75 million, which is below the original estimate of EUR 100 million.
Around EUR 33 million of this was booked in 2020, and the majority of the remaining is
expected to be incurred by the end of 2021.
The initial synergy targets, published in July 2019, were EUR 100 million of run rate pre-tax
cost synergies and EUR 150 million of additional revenue synergies. Both targets were initially
expected to materialize in three years after completion of the merger.
Financial review 2020|Board of Directors’ report 6
Reporting segments: Aggregates
Key figures
EUR million Change %
Orders received
Orders received by services business
% of orders received
Order backlog
Sales
Sales by services business
% of sales
Adjusted EBITA
% of sales
Operating profit
% of sales
Customer activity in the equipment business improved strongly during the final quarter of the
year from the earlier, Covid-19 impacted level of around 75–80% of normal. Improvement was
seen in all market areas and both in direct sales and in distribution. The demand continued to
be especially strong in China, supported by strong infrastructure investments in the country
initiated after the Covid-19 outbreak early in the year.
Orders increased 15% and sales grew 7%, thanks to the McCloskey acquisition, which was
included only in the fourth quarter in 2019. Covid-19 had a negative impact on organic orders
for the first nine months of the year and on sales throughout the year. The actions to protect
profitability were successful and enabled adjusted EBITA to total EUR 107 million and adjusted
EBITA margin 10.8% of sales (EUR 112 million and 12.0%).
Reporting segments: Minerals
Key figures
EUR million Change %
Orders received
Orders received by services business
% of orders received
Order backlog
Sales
Sales by services business
% of sales
Adjusted EBITA
% of sales
Operating profit
% of sales
The activity related to small and brownfield-driven equipment investments continued to
be healthy during the year, but Covid-19 uncertainties resulted in slow decision-making in
larger and more complex investments. Nevertheless, order intake in the equipment business
strengthened towards the end of the fourth quarter. High metal prices and utilization rates
at mines supported healthy demand for spare parts and consumables, while Covid-19 related
restrictions in access to customer sites limited opportunities for upgrades, modernizations, and
expert services.
Orders received totaled EUR 2,601 million (EUR 2,870 million). Sales were EUR 2,523 million
(EUR 2,627 million). Orders and sales both were aected by the weaker market environment
and the negative foreign exchange impact. Adjusted EBITA improved to EUR 365 million from
EUR 349 million and adjusted EBITA margin to 14.5% from 13.3%. The higher margin resulted
from improved operational eciency and integration synergies.
Financial review 2020|Board of Directors’ report 7
Reporting segments: Metals
Key figures
EUR million Change %
Orders received
Orders received by services business
% of orders received
Order backlog
Sales
Sales by services business
% of sales
Adjusted EBITA
% of sales
Operating profit
% of sales
Customer activity was low in 2020, aected by the Covid-19 related impact on decision-making
regarding large projects and modernization services. The fourth quarter, however, saw a pick
up in the market, resulting in an improved order intake.
Orders totaled EUR 443 million (EUR 534 million) and sales were EUR 382 million (EUR 475
million). The significant drop in volumes, combined with a high fixed-cost base pushed the
business into a loss. Adjusted EBITA was EUR -2 million (EUR 58 million) and adjusted EBITA
margin -0.6% (12.2%).
Capital expenditure and investments
Gross capital expenditure, excluding business acquisitions, was EUR 86 million in 2020. The
investments included the renewal of the footprint of the Consumables business, in which
manufacturing operations were closed in Ersmark, Sweden, and a new production plant
for high-quality rubber and poly-met wear parts for the mining industry was established in
Lithuania.
Research and development
R&D expenses in 2020 were EUR 92 million, or 2.4% of sales.
Inventions and patents
Pieces
Invention disclosures
Priority patent applications
Individual granted patents in force, as of December 31
Inventions protected by patents, as of December 31
Metso Outotec launched several products during the second half of 2020.
The next-generation Courier® 6G SL on-stream analyzer is designed for direct measurement
of gold, platinum, and other valuable metal concentrations from ore feed, concentrate, and
tailings streams. The new analyzer enables accurate, real-time elemental analysis measurement,
which is critical for establishing ecient process control to improve process stability and
maximize recovery.
The next evolution of the high-pressure grinding roll, the HRC™e brings energy eciency,
lower circulating loads, and increased throughput. It comes with a decreased installation capex,
compared to the existing HRC. Changes in design allow for maximum productivity with proven
technology that leads to superior grinding eciency.
The mechanical skew control HPGR (High Pressure Grinding Roll) retrofit kit was launched
for improved throughput and energy eciency on the heels of the new HRC™e HPGR release.
The new retrofit kit takes the key components responsible for minimizing skew from HRC™ and
makes the technology more accessible without the major investment or need to acquire a new
machine.
The mill discharge pump line was extended with new sizes for reliable and ecient slurry
handling in minerals processing. The Metso Outotec MD Series pumps oer outstanding
uptime and sustained eciencies. They have been designed for ecient operation and the
longest wear life to match the mill’s uptime.
The innovative Filter Optimizer further boosts the performance of Metso Outotec’s Larox®
PF filter in the mining and chemical industry processes. The Filter Optimizer enables more
precise control over the solid/liquid separation process. The new optimizer stabilizes the eect
Financial review 2020|Board of Directors’ report 8
of upstream process variations, provides tools for improved process control, and reduces the
need for manual intervention.
An extension was launched to Metso Outotec’s primary gyratory crusher range: the
SUPERIOR™ MKIII 6275UG. The new crusher, which can be used in dierent types of applica-
tions, both above and underground, provides large capacity with significant savings in capex
and operating costs.
Metso Outotec’s mill reline equipment oering was extended with a high-capacity Mill
Reline Machine (MRM). The new MRM enables easy and safe replacement of steel lining
systems inside even the largest grinding mills.
Metso Outotec’s line of mobile and modular stationary crushing solutions was comple-
mented with a sizer option specially designed for soft ore and aggregate applications. The new
additions to the mobile Lokotrack® product line are equipped with Komatsu’s sizer technology
and are available in five models ranging from 500 to 4,500 tons per hour.
Metso Outotec launched a full range of overland conveyor solutions that provide economic
and reliable material transportation for both open-pit and underground operations at the
lowest total cost of ownership. The conveyors come with the patented Energy Saving Idlers®
(ESI), which bring significant energy savings.
Compliance management
Regarding data privacy, Metso Outotec has developed practices and processes related to
personal data processing, specifically focusing on harmonizing the privacy related processes in
the company.
In the second half of 2020, Metso Outotec received ten reports of suspected financial
misconduct and ten reports of suspected non-financial misconduct via its Whistleblower
channel. In addition to the Whistleblower reports, seven reports were investigated after they
had been submitted directly to Compliance or Internal Audit. All cases were investigated, and
none had significant financial implications on Metso Outotec.
Metso Outotec has an audit framework in place to support risk management by ensuring
compliance and continuous business development. In total, 19 internal audits were performed
during the second half of the year after the merger was completed.
Corporate Governance and remuneration
Outotec Annual General Meeting 2020
Outotec Oyj’s Annual General Meeting (AGM) was held on March 11, 2020, in Helsinki, Finland.
The AGM adopted the parent company and consolidated Financial Statements and discharged
the members of the Board of Directors and the CEO from liability for the financial year 2019.
The AGM resolved that a dividend of EUR 0.10 per share, i.e. EUR 18,212,825.40 in total, be
paid for the financial year 2019. The dividend was paid on March 31, 2020.
The AGM resolved to adopt the Remuneration Policy for the governing bodies (including
the members of the Board of Directors and the President and CEO).
The AGM authorized the Board of Directors to decide on the repurchase of an aggregate
maximum of 18,312,149 of the company’s own shares. The number of shares corresponds to
approximately 10 percent of all shares prior to the merger. However, the company together
with its subsidiaries cannot at any moment own more than 10 percent of all the shares of the
company.
Authorized Public Accountants Ernst & Young Oy was chosen as the company’s Auditor
for a term commencing on the completion of the merger and ending at the end of the next
annual general meeting of Metso Outotec. The Auditor will be paid remuneration against the
Auditor’s reasonable invoice approved by the company.
Metso Outotec Board of Directors
Outotec Oyj’s Annual General Meeting resolved to increase the number of members of the
Board of Directors by two, i.e. to a total of ten Board members, upon competition of the
merger The AGM elected Matti Alahuhta, Ian W. Pearce, Klaus Cawén, and Hanne de Mora,
each previously members of the Outotec Board, to serve on the Board of Metso Outotec.
From the Board of Directors of Metso, the AGM elected Mikael Lilius, Christer Gardell, Antti
Mäkinen, Kari Stadigh, and Arja Talma as new members of the Board of Metso Outotec. In
addition, Emanuela Speranza was elected as a member of the Board of Metso Outotec,
conditional upon her election to Metso’s Board of Directors at Metso’s AGM 2020. Mikael Lilius
was elected as the Chair of the Board of Metso Outotec and Matti Alahuhta as the Vice Chair.
The Board’s term commenced on June 30, 2020 and will end at the end of the next Annual
General Meeting of Metso Outotec.
On July 1, 2020, after the registration of the demerger of Metso Corporation, Metso
Outotec’s Board of Directors established an Audit Committee and a Remuneration and HR
Committee.
Arja Talma was elected Chair and Klaus Cawén and Antti Mäkinen as members of the Audit
Committee. Antti Mäkinen was elected Chair and Christer Gardell and Hanne de Mora as
members of the Remuneration and HR Committee.
The following annual remunerations were decided to be paid to the members of the Board
as well as to the members of the Board committees:
• EUR 150,000 for Chair of the Board
• EUR 80,000 for Vice Chair of the Board
• EUR 65,000 for each member of the Board
• EUR 23,000 for Chair of the Audit Committee
• EUR 10,000 for each member of the Audit Committee
• EUR 12,000 for Chair of the Remuneration and HR Committee
• EUR 5,000 for each member of the Remuneration and HR Committee
Financial review 2020|Board of Directors’ report 9
The Board´s annual remuneration has been paid pro rata to the length of the term of oce
commencing on July 1, 2020, until the end of the company’s next Annual General Meeting.
In addition, the Annual General Meeting resolved that meeting fees for attendance at each
board and committee meeting be paid to members of the Board of Metso Outotec as follows:
EUR 900 for each member residing in the Nordic countries, EUR 1,800 for each member
residing in other European countries, and EUR 2,700 for each member residing outside Europe.
In addition, Board members shall be reimbursed for direct costs arising from Board work.
Metso Outotec Executive Team
Metso Outotec’s Executive Team consists of the following members:
Pekka Vauramo, President and CEO
Eeva Sipilä, CFO, Deputy CEO
Markku Simula, President, Aggregates
Stephan Kirsch, President, Minerals
Jari Ålgars, President, Metals
Ue Hansen, President, Recycling
Markku Teräsvasara, President, Services, Deputy CEO
Sami Takaluoma, President, Consumables
Nina Kiviranta, General Counsel
Piia Karhu, Senior Vice President, Business Development
Carita Himberg, Senior Vice President, Human Resources
New earning periods for senior management’s long-term incentive plans
The Board of Directors of Metso Outotec Corporation decided, on July 1, 2020, on the
establishment of new share-based long-term incentive programs for the Company’s manage-
ment and selected key employees. The programs include a Performance Share Plan (also “PSP”)
for the top management, a Deferred Share Plan (also “DSP”) for other senior management and
selected key employees, and a Restricted Share Plan (also “RSP”) as a complementary structure
for specific situations.
The objectives of the share-based long-term incentive programs are to align the interests
of Metso Outotec’s management and key employees with those of the Company’s share-
holders and, thus, to promote shareholder value creation in the long term, to motivate the
management and key employees to achieving Metso Outotec’s strategic targets, and to commit
key employees to the company.
Personnel
Metso Outotec had 15,466 employees at the end of December 2020.
Personnel by area December 31, 2020
Share %
Europe
North America and Central America
South America
Asia Pacific
Africa, Middle East and India
Total
Metso Outotec employees represent 95 nationalities, operating in over 58 countries and in 197
locations. The combination of dierent backgrounds and a wide range of service years and
ages ensures diverse capabilities.
Shares and share trading
Before the combination of Metso’s Minerals business and Outotec was completed, Outotec’s
share capital was EUR 17,186,442.52 and the total number of shares was 183,121,492. After the
transaction was completed on June 30, 2020, a total of 645,850,948 new Outotec shares were
issued as demerger consideration to Metso’s shareholders based on their shareholdings
in Metso on the same day. Trading in the new shares on the ocial list of Nasdaq Helsinki
commenced on July 1, 2020. After the transaction was completed, the total number of Metso
Outotec shares was 828,972,440 and its share capital was EUR 107,186,442.52. Treasury shares
totaled 993,238 on December 31, 2020.
Outotec share performance on Nasdaq Helsinki January 1 – June 30, 2020
EUR
Closing price
Highest share price
Lowest share price
Volume-weighted average trading price
Metso Outotec share performance on Nasdaq Helsinki July 1–December 31, 2020
EUR
Closing price
Highest share price
Lowest share price
Volume-weighted average trading price
Financial review 2020|Board of Directors’ report 10
Flagging notifications
On July 2, 2020, Cevian Capital Partners Ltd. flagged its 8.5% holding and Varma Mutual
Insurance Company flagged its less than 5% holding in Metso Outotec. Metso Outotec is not
aware of any shareholders’ agreements regarding the ownership of the company’s shares and
voting rights. Metso Outotec has 828,972,440 issued shares.
Strategy and financial targets
On October 28, 2020, Metso Outotec announced its new strategy and financial targets.
According to its strategy, the company will focus on growth and improving profitability. It aims
to become a top-tier supplier of products, technologies, and services in the aggregates and
minerals industries and a top financial performer.
The strategy will be implemented through four priorities: integration and financial perfor-
mance, customer centricity, sustainability, and performance culture
As a result of the strategy work, Metso Outotec decided to divest its Recycling business,
which sells products and services for metal and waste recycling. Its sales in 2020 were EUR
125 million, and it reported an adjusted EBITA margin of approximately 3%. The business has
around 300 employees and its main locations are Horsens, Denmark; Düsseldorf, Germany;
and San Antonio, Texas.
The Board of Directors approved the following financial targets for the company:
• Adjusted EBITA margin of >15% over the cycle
• Maintaining an ‘investment-grade’ credit rating
• Dividend pay-out of at least 50% of earnings per share
• Progress in sustainability in alignment with the 1.5 °C commitment
Metso Outotec aims to be a sustainability leader in its industry. The company strives for a
net positive impact on the planet and is committed to the 1.5 °C journey, with targets that are
validated by the Science Based Targets initiative. This will be implemented through a focus on
sustainable oerings and innovations and by being a responsible and trusted partner.
Metso Outotec has set targets to reduce the emissions of its own operations by 50% by
2030, compared to the 2019 baseline, and to reduce the emissions of logistics by 20% by 2025.
It is also targeting that 30% of the supplier spend by the end of 2025 is with partners who
have set a CO target.
Metso Outotec will continuously develop sustainable solutions for its customers, with a
focus on energy and emissions eciency, water eciency, circular solutions, and safety. Over
90% of the company’s R&D projects are targeted to have energy, emissions, or water targets.
Main events between July 1 and December 31, 2020
On July 1, 2020, the Board of Directors of Metso Outotec decided on the establishment of
new share-based, long-term incentive programs for the Company’s management and selected
key employees. The programs include a Performance Share Plan (also “PSP”) for the top
management, a Deferred Share Plan (also “DSP”) for other senior management and selected
key employees, and a Restricted Share Plan (also “RSP”) as a complementary structure for
specific situations.
On July 1, 2020, Metso Outotec announced that it will redeem Outotec’s EUR 150,000,000
Hybrid Bond issued on March 24, 2016. The redemption was made on July 31, 2020, for the
amount equal to 101 per cent of the principal amount, in whole, together with any accrued
interest.
On August 3, 2020, Metso Outotec closed the acquisition of the Australia-based fastener
and wear monitoring technology provider Davies Wear Plate Systems. The acquired company
will extend Metso Outotec’s wear lining portfolio and capabilities. Its sales in fiscal year 2020
were around AUD 17 million, or EUR 10 million, and it has approx. 30 employees.
On September 28, 2020, Metso Outotec started operations at its new manufacturing site in
the region of Šiauliai (Šiauliai län) in northern Lithuania. The new plant further strengthens the
company’s capability to produce high-quality rubber and poly-met wear parts for its mining
customers. The investment was announced in March 2020.
On October 28, 2020, it was announced that Pekka Vauramo will continue as the President
and CEO of Metso Outotec until the end of 2023.
On November 3, 2020, Metso Outotec announced the divestment of the fabrication,
machining, and assembly operations and the closure or rearrangement of the rest of opera-
tions at its site in Vereeniging, South Africa. The unit in Vereeniging has provided pumps, spare
parts, consumables, and repair services for the mining industry. The unit has had approximately
200 employees.
On November 11, 2020, Metso Outotec issued its first bond under its EMTN (Euro Medium
Term Note) program, which was established on November 13. The EUR 300 million bond
matures in May 2028 and pays a fixed coupon of 0.875%. The issue price was 99.167% and is
equal to EUR-swaps + 135 basis points. There are no financial covenants attached.
On December 9, 2020, Metso Outotec published a plan to reorganize its Metals business as
part of the turnaround program. The target is to create an operational model for Metals capital
and services that suits the scale and nature of the business today and meets the specific
demands of the Metals refining segment customer base. Approximately 1,100 employees
working with the Metals capital and services business around the world are within the scope of
the restructuring program. Restructuring is estimated to lead to a maximum 160 redundancies
in the Metals operations globally, corresponding to targeted savings of EUR 15 million.
On December 28, 2020, Metso Outotec announced that it will sell its aluminium business to
REEL International. The aluminium business has been reported under discontinued operations
since late 2019, when it was announced to be on sale. The business comprises green anode
plants, anode rodshops, and casthouses used in aluminium smelters, as well as related
equipment and services. Approximately 120 Metso Outotec employees will join REEL upon
closing, which is expected to take place during the first quarter of 2021. The value of the
transaction has not been disclosed. The sale will have no material impact on Metso Outotec’s
financial result.
Financial review 2020|Board of Directors’ report 11
Events after the reporting period
Shareholders’ Nomination Board’s proposals regarding the composition and remuneration of
the Board of Directors of Metso Outotec
The Shareholders’ Nomination Board published its proposals regarding the composition and
remuneration of the Board of Directors of Metso Outotec Corporation on January 22, 2021.
The Shareholders’ Nomination Board proposes to the Annual General Meeting scheduled
for April 23, 2021 that the Board of Directors should have seven members and that Klaus
Cawén, Christer Gardell, Antti Mäkinen, Ian W. Pearce, Kari Stadigh, Emanuela Speranza, and
Arja Talma should be re-elected as Board members.
Mikael Lilius, Matti Alahuhta, and Hanne de Mora were not available for re-election.
The Nomination Board proposes that Kari Stadigh should be elected Chair of the Board
and Klaus Cawén Vice Chair.
All the Board member candidates have given their consent to be elected and have been
assessed to be independent of the company and its significant shareholders, except for Antti
Mäkinen, who has been assessed to be independent of the company but not independent of
its significant shareholder.
The Nomination Board proposes the same fixed annual remuneration to the Board
members as in the previous term:
• Chair EUR 150,000
• Vice Chair EUR 80,000
• Other members EUR 65,000 each
The same additional remuneration as in the previous term is proposed for the Board
members that are elected as members of the Audit Committee and the Remuneration and HR
Committee:
• Chair of the Audit Committee EUR 23,000
• Members of the Audit Committee EUR 10,000
• Chair of the Remuneration and HR Committee EUR 12,000
• Member of the Remuneration and HR Committee EUR 5,000
The Nomination Board proposes that, as a condition for the annual remuneration, the
Board members should be obliged, directly based on the Annual General Meeting’s decision,
to use 20% or 40% of their fixed total annual remuneration for purchasing Metso Outotec
shares from the market at a price formed in public trading, and that the purchase will be
carried out within two weeks from the publication of the interim report for January 1 – March
31, 2021.
The Nomination Board proposes the same meeting fees as in the previous term as follows:
a fee of EUR 900 be paid to the members residing in the Nordic countries, a fee of EUR 1,800
be paid to the members residing in other European countries, and a fee of EUR 2,700 be paid
to the members residing outside Europe.
Composition of the Nomination Board
Metso Outotec’s Shareholders’ Nomination Board comprises Annareetta Lumme-Timonen
(Investment Director, Solidium Oy) as the Chair, and Niko Pakalén (Partner, Cevian Capital
Partners Ltd.), Risto Murto (President and CEO, Varma Mutual Pension Insurance Company),
Mikko Mursula (Deputy CEO, Ilmarinen Mutual Pension Insurance Company), and Mikael
Lilius (Chair of Metso’s Board of Directors). The Shareholders’ Nomination Board consists of
the representatives of the four largest registered shareholders of the company based on the
ownership situation as of August 15 annually.
Mikael Lilius did not participate in the decision-making concerning the remuneration of the
Board members.
Metso Outotec ranked 8th on the Global 100 list of the world’s most sustainable companies
On January 25, 2021, it was announced that Metso Outotec is ranked 8th on the Corporate
Knights 2021 Global 100 Index of the most sustainable companies in the world and places as a
top-ranking company among its peers.
Corporate Knights analyzed 8,080 companies on various indicators relative to industry peers.
Short-term business risks and market uncertainties
Covid-19 continues to pose significant short-term risks and uncertainties to Metso Outotec’s
market and operations. The development and longevity of the pandemic and its impact on
economic growth is dicult to predict. Further possible abrupt measures taken by various
national and local governments to restrict the spread may impact the demand for Metso
Outotec’s products and services, as well as Metso Outotec’s operations, which could restrict our
ability to provide services at customer sites and to run our manufacturing sites. The company
may also, to protect its personnel, need to take abrupt measures that are likely to aect the
eciency of its operations and customer deliveries.
The pandemic can continue to reduce the investment appetite and spending among our
customers, weaken the demand for Metso Outotec’s products and services, as well as aect
our business operations. Trade imbalances caused by the pandemic have, for example, caused
challenges in the availability of containers globally and could, when continued, impact supply
chain eciency.
There are also risks and uncertainties related to a more positive outcome in the pandemic,
as demand may quickly rise to catch up on pent-up demand, and thereby cause inflationary
pressures and challenge the supply chain to react quickly enough.
There are also other market- and customer-related risks that could cause on-going projects
to be postponed, delayed, or discontinued.
Uncertain market conditions could adversely aect our customers’ payment behavior and
increase the risk of lawsuits, claims, and disputes taken against Metso Outotec in various
countries related to, among other things, Metso Outotec’s products, projects, and other
operations.
Financial review 2020|Board of Directors’ report 12
Taris or other trade barriers could pose challenges to our supply chain and price
management, impacting our capability to secure customer deliveries and margins.
Exchange rate fluctuations and changes in commodity prices could aect our orders
received, sales, and financial position. Metso Outotec hedges currency exposure linked to firm
delivery and purchase agreements.
Information security and cyber threats could disturb or disrupt Metso Outotec’s businesses
and operations.
Metso Outotec has identified a significant risk related to its ilmenite smelter project in
Saudi Arabia in line with earlier disclosures. Provisions have been made against this risk. The
contractual position and other factual circumstances will ultimately determine the eventual
liability and financial impact.
Disputes related to project execution and resulting in extra costs and/or penalties are a
risk for Metso Outotec. In the contracts related to the delivery of major projects, the liquidated
damages attributable to, for instance, delayed delivery or non-performance may be significant.
Even though provisions are provided for, in accordance with accounting principles, there is no
certainty that additional liabilities would not materialize.
Metso Outotec is involved in a few disputes that may lead to arbitration and court
proceedings. Diering interpretations of international contracts and laws may cause uncer-
tainties in estimating the outcome of these disputes. The enforceability of contracts in certain
market areas may be challenging or dicult to foresee.
Market outlook
According to its disclosure policy, Metso Outotec’s market outlook describes the expected
sequential development of market activity during the following six-month period using three
categories: improve, remain at the current level, or decline.
Metso Outotec expects the market activity to improve, subject to the development of the
Covid-19 pandemic.
Corporate Governance Statement
Metso Outotec published a separate Corporate Governance Statement for 2020 that complies
with the recommendations of the Finnish Corporate Governance Code for listed companies
and covers other central areas of corporate governance. The statement is available on our
website, separately from the Board of Directors’ Report.
Financial review 2020|Board of Directors’ report 13
The demerger of Metso Corporation and combination of Metso’s Minerals business and
Outotec was completed on June 30, 2020. Metso Outotec, headquartered in Finland, operates
globally and has subsidiaries and branch oces in 58 countries. The company is a forerunner
in sustainable products, end-to-end solutions, and aftermarket services for aggregates,
minerals processing, and metals refining industries globally. Metso Outotec was ranked 8th on
the Corporate Knights 2021 Global 100 Index of the most sustainable companies in the world.
Metso Outotec’s sustainability agenda comprises of two focus areas: Sustainable oering
and innovations and Responsible and trusted partner. In order to be a trusted partner, Metso
Outotec focuses on continuous development of Engaged and diverse experts, Responsible
procurement, Health and safety, and Environmental eciency in operations, which, in addition
to Sustainable oering and innovations, are identified as the most material sustainability topics.
Metso Outotec has established targets and key performance indicators for each of the material
topics in order to steer its sustainability activities.
Metso Outotec reports its economic, social and environmental performance annually in
accordance with the Global Reporting Initiative (GRI) Standards: Core option. The Annual
Report 2020, which includes a GRI Supplement 2020, will be published in March 2021.
This Statement of non-financial information contains a description of the business model
as well as risks, key performance indicators, and other details for Environmental responsibility,
Social responsibility and employees, Human rights, and Anti-corruption and bribery, as
required by the Finnish Accounting Act.
Metso Outotec’s business model and value creation
Metso Outotec’s extensive oering for aggregates, minerals and metals refining customers,
from equipment to a broad range of services and consumables, helps customers improve their
productivity and lower their operating costs and risks. Metso Outotec oers products and
spare and wear parts that consume less energy and water, when compared to conventional
solutions, by increasing process eciency, recycling, and reprocessing of tailings and waste.
The minerals industry oering is mainly electric, allowing customers to choose renewable
energy sources. Our aggregates industry oering includes dual power source products, which
we aim to further expand. Metso Outotec continuously develops its oering to meet customers’
growing needs for energy and emissions reduction, water resources management, resource
eciency, recovery, and safety.
The key resources for value creation are the deep know-how of Metso Outotec’s experts,
installed base and oering, 6,381 national technology patents, and research and development
centers. Long-term customer and supplier relationships are essential resources for the company
in creating value for stakeholders.
Metso Outotec generates employment and wealth in local communities as an employer
and buyer of goods and services. The company also contributes to local communities through
cooperation with universities and other research institutes.
In 2020, Metso paid EUR 221 million in dividends of which Metso Minerals’ share was EUR
177, million and Outotec paid EUR 18 million. Metso Outotec’s 2020 taxes paid were EUR 62
million.
Risks, risk management system and policies
Principal risks related to Metso Outotec’s sustainability are associated with health and safety,
quality, environment, compliance, brand and reputation, as well as human and labor rights,
especially in the supply chain.
Metso Outotec regularly analyses climate change related risks and opportunities and their
potential impact to business. As part of the sustainability content presented in the Business
Overview, Metso Outotec reports on risks and opportunities caused by climate change in
accordance with the recommendations of the Task Force on Climate-Related Financial Disclo-
sures (TCFD).
Operating throughout the value chain in a sustainable way is a high priority for Metso
Outotec, as environmental, social or governance misconduct can aect the company’s
reputation and have long-term financial and other consequences. Non-financial risks can also
lead to business interruption, lost working hours and other financial implications.
Metso Outotec takes a systematic approach to managing non-financial matters, including
appropriate policies, due diligence processes, governance and organization. Metso Outotec’s
Code of Conduct, approved by the Board of Directors, sets the company’s business conduct
for all employees. The Code of Conduct, Supplier Code of Conduct, HR policies, and Donation
& Sponsorship Policy, as well as Quality and Environment, Health and Safety (EHS) Policies,
all define the basic requirements for Metso Outotec’s environmental, social, and economic
sustainability.
The Board of Directors oversees the appropriate governance of overall enterprise risk
management. Internal control practices are aligned with Metso Outotec’s risk management
process approved by the Board of Directors. The non-financial risks in this statement have
been identified in accordance with the Finnish Accounting Act, separately to the financial
risks identified in the Corporate Governance Statement page 14. An audit frame is in place to
support risk management by ensuring compliance and continuous business development.
Metso Outotec complies with the requirements of international standards for management
systems. The majority of Metso Outotec’s major units are certified to ISO9001 (quality), and the
main operational units also have ISO14001 (environment), ISO45001, or OHSAS18001 (safety)
standards as a framework.
Environmental responsibility
Metso Outotec’s most significant environmental impact materializes through the use of its
products and processes delivered to customers. Key for Metso Outotec is to support customers’
long-term success through energy saving, electrification, and water eciency, as well as
circular and safety solutions. Metso Outotec has defined sustainability as a strategic priority
Non-financial information
Financial review 2020|Board of Directors’ report 14
and has set its commitment to limit the global average temperature increase to 1.5 °C as one
of its financial targets to measure value creation.
In Metso Outotec’s value chain, safety of the equipment, quality in the supply chain, and
the environmental impact of own operations are critical. Metso Outotec continuously develops
its oering and supply chain to address these matters. Furthermore, Metso Outotec oers
training and other services to customers, as well as trains and audits its suppliers regularly.
Sustainable oering and innovations
Metso Outotec’s product, process and service design is focused on helping customers to
operate safely with higher productivity while reducing their resource intensity. The mining and
aggregates industries face increasing energy reduction and water resource demands, as well as
more stringent environmental legislation. Innovating for solutions that are more energy ecient
is one of the key drivers in the mining industry, where the comminution process, including
crushing and grinding, is the most energy-intensive stage of minerals production especially
due to the decreasing grade of ore bodies. Improvements in comminution eciency result
in significant energy savings, have a large impact on the operating cost of a plant, as well as
conserve resources and reduce greenhouse gas emissions.
Metso Outotec reduces the global mining industry’s carbon dioxide (CO) and other
emissions by delivering technically more advanced products for its customers’ industrial
processes. The company measures the amount of CO emissions avoided from the use of
using Metso Outotec technologies compared to industry baselines or alternative technology.
Emissions of seventeen of Metso Outotec’s technologies are measured against the industry
baseline or alternative technologies annually. Metso Outotec has long-term targets related to
the environmental performance of its products and services with the aim of doubling the CO
handprint by 2035 compared to the 2019 baseline. In 2020, Metso Outotec’s CO handprint was
8.2 million tonnes less of CO equivalents in the seventeen technology areas. The company
also aims to set energy-eciency, emission or water-eciency targets for 90% of R&D projects
from 2021 onwards.
Environmental eciency in operations
Metso Outotec continuously aims to reduce the impacts of its operations and has set new
science-based CO emission targets aiming to halve the emissions of its own production by
2030, reduce emissions from logistics by 20% by 2025, increase the positive impact of the
product use phase by 20% by 2025 and work with suppliers to encourage them to set their
own science-based CO emission targets. The Science Based Targets Initiative has validated
Metso Outotec’s climate targets.
The combined CO emissions of Metso Outotec’s footprint, including own operations,
logistics, and suppliers, was 1,036,590 tonnes of CO in 2020.
Social responsibility and employees
Metso Outotec’s Code of Conduct defines the main principles of conducting business.
Metso Outotec values diversity at the workplace and follows the principle of equal oppor-
tunities. Fair and equal treatment is expected from all employees towards every person in the
company, and this extends to contractors, vendors, customers, and others with whom Metso
Outotec interacts with.
Metso Outotec has an Equal Opportunity and Diversity Policy that provides concrete
content to the general principles of Metso Outotec’s Code of Conduct. The underlying
principle of the policy is Metso Outotec’s commitment to promoting equal opportunities and
fair treatment for all employees, regardless of gender, age, race, religion, caste or religious
beliefs, ethnic or national origins, marital/civil partnership status, union membership, political
aliation, sexuality, or disability. Employees are selected based on merit and experience.
Engaged and diverse experts
In 2020, Metso Outotec’s focus was on integration and building the new organization. The
company purpose, vision, strategy, values, and four strategic priorities were published in
November 2020. Culture was defined as one of the four strategic priorities.
Retaining talented and competent employees is important, as people are key in maintaining
Metso Outotec’s position as the leading company. Driving company ambition towards tier-one
means building a strong culture defined by high performance and employee engagement,
values that guide behavior and ways of working, and by attracting, developing, and retaining
top talent.
As the first step in building the new company culture, new values were launched. After the
launch, in addition to virtual workshops, a digital platform was introduced to engage people
and to enable companywide discussion around the values. The results are used to further
develop the values descriptions.
A new employee engagement survey was introduced in November 2020. The first “Our
voice” survey gives information on employee sentiment and a baseline for future areas of
focus. Employee Net Promoter Score (eNPS) is one of the key indicators followed in employee
engagement, and the result in 2020 was 29.
Health and safety
Metso Outotec targets zero harm. There are occupational health and safety risks in the
aggregates, mining, and metals refining industries which Metso Outotec continuously and
actively mitigates. The most common risks in operations are related to lifting, working at
heights, machinery, hot work, and road travel. These risks are mitigated by a variety of means,
including continuous training, monitoring, and leadership involvement.
The merger of two companies, Metso and Outotec, enables ambitious targets also in the
area of health and safety. These challenge the whole organization to take action and strive
for true leadership in health and safety. In 2020, a new health and safety organization was
Financial review 2020|Board of Directors’ report 15
established, a new safe working behavior model called Modus Operandi was introduced,
and a safety training program focusing on safety roles and responsibilities throughout the
organization.
Year 2020 posed challenges, as the Covid-19 pandemic spread around the world with
unprecedented eects. Metso Outotec’s first priority has been on securing the health and
safety of its employees, customers, and partners by doing its best to control the virus from
spreading. The company had to adapt to changes quickly and support its employees in staying
safe by either working remotely or by introducing additional safety procedures at sites.
Employee safety, risk observations, safety conversations, and safety training hours are
continuously measured. Metso Outotec’s key indicators for safety are lost-time injuries per
million working hours (LTIF), which was 1.6 in 2020, and total recordable incident frequency
(TRIF), which was 4.1 in 2020. The LTIF and TRIF reporting covers Metso Outotec’s premises,
employees, and contractors working under Metso Outotec’s direct supervision, as well as
project sites. All serious accidents are reviewed by the top management to ensure proper
investigations and corrective actions. All employees and contractors not only have the right but
also an obligation to refuse and report any unsafe work.
Another important safety focus is on making sure that products and services are safe to
use and maintain; thus, the safety of service is considered in the early phase of product and
service development. Product safety is also one of the key drivers in Metso Outotec’s research
and development work.
The Product Compliance Management process ensures that products and services designed
and supplied by Metso Outotec worldwide meet all applicable safety requirements during the
product life cycle. The company follows incidents, hazards and development initiatives through
its QEHS management and product compliance management systems, as well as through
customer feedback collected after each major delivery and in customer surveys.
Human rights
Metso Outotec respects internationally proclaimed human rights and is committed to the
United Nations (UN) Guiding Principles on Business and Human Rights. Metso Outotec is also
committed to the UN Global Compact Initiative and its principles, as well as to the principles
of the Universal Declaration of Human Rights and the International Labour Organization’s
Declaration of Fundamental Principles and Rights at Work. These commitments are re-iterated
in Metso Outotec’s Code of Conduct and substantiated in the Supplier Code of Conduct, and
in HR, Quality and EHS policies.
Metso Outotec respects and supports human rights. All employees are entitled to be
treated with respect, with zero tolerance for discrimination, harassment, or illegal threats. Any
form of compulsory, forced, or child labor is unacceptable. Applicable national laws and
regulations regarding working hours and employee compensation are respected. Metso
Outotec requires that suppliers, business partners, and other stakeholders also follow similar
standards. A range of internal controls are in place, such as an anonymous whistleblower
channel that employees and externals can report to.
Potential risks and human rights impacts are related to the supply chain and to project site
work in high-risk countries. Human rights-related topics, including safety and labor rights, are
reviewed regularly in operations and within the operations of suppliers.
Responsible procurement
Due to the cyclical nature of Metso Outotec’s customer industries, a business model of
outsourcing manufacturing plays an important role. Metso Outotec expects its suppliers to
follow the Supplier Code of Conduct, which is based on Metso Outotec’s Code of Conduct,
and the international principles that Metso Outotec follows.
Based on supplier assessments for existing and new suppliers, the need for third-party or
internal supplier sustainability audits as well as other further actions are defined. Assessing
new suppliers is included in procurement’s ongoing processes, with a target to evaluate all new
direct suppliers in high-risk countries against Metso Outotec’s sustainability criteria.
Processes are in place to continuously develop a shared understanding with suppliers
in the areas of innovation, cost eciency, quality, and sustainability in order to manage the
risks related to outsourcing. Human and labor rights, environmental and safety practices,
compliance with laws and regulations, and anti-bribery are covered by third-party supplier
audits, supplier self-assessments, and Metso Outotec’s internal supplier sustainability audits.
Key supplier requirements are also incorporated into contract obligations, and a contract
breach can lead to consequences that include the termination of a supplier relationship.
Risk mapping within the existing supplier base enables a focus on the suppliers with the
highest potential risks in their operations. Supplier sustainability audits are conducted in higher
risk countries. After an audit has been performed, corrective action plans are agreed upon;
suppliers are asked to provide Metso Outotec with evidence that these actions have been
implemented and they are subject to possible re-audits. In 2020, 142 supplier sustainability
audits were conducted that included human rights topics. In addition, an e-learning course
about Metso Outotec’s Supplier Code of Conduct was launched; the course informs suppliers
about the expectations and requirements.
Anti-corruption and bribery
Metso Outotec endorses responsible business practices and complies with national and
international laws and regulations. The company has zero tolerance against corruption. Metso
Outotec works against corruption in all its forms and requires its suppliers and business
partners to follow the same principles and to fully comply with all applicable anti-corruption
laws. Metso Outotec’s Code of Conduct, Supplier Code of Conduct, and Anti-Corruption Policy
are the key policies that define the anti-corruption measures required from Metso Outotec’s
employees, customers, agents, suppliers, distributors, and other business partners.
Financial review 2020|Board of Directors’ report 16
To mitigate risks and to ensure compliance with the company’s new Code of Conduct,
training was implemented. Going forward, mandatory training will be part of the annual
process. 96.1% of Metso Outotec employees completed the training by the end of 2020. The
Code of Conduct training is also a part of the induction program for new employees. In
addition, all Metso Outotec’s senior managers are required to confirm their compliance with
Metso Outotec’s Code of Conduct requirements.
Metso Outotec conducts compliance checks on customers, suppliers, and other business
partners through third-party screening tools, portals that are linked to Metso Outotec’s
customer relationship management and supplier data management systems. All sales agents
are further required to confirm their compliance with the company’s Code of Conduct
requirements.
All Metso Outotec people have a responsibility for compliance. A range of internal controls
are in place, and people are strongly encouraged to report any suspected wrongdoing or
misconduct to their supervisors, to management, or to Compliance or Internal Audit, e.g.
using Metso Outotec’s internally and externally available whistleblower channel. All reports are
treated as confidential and anonymous, and Metso Outotec commits to no negative repercus-
sions for the reporting person.
The VP, Compliance and Risk Management regularly reports compliance cases and actions
taken to the Audit Committee of Metso Outotec’s Board of Directors.
Financial review 2020|Board of Directors’ report 17
Key non-financial performance indicators
1)
Non-financial topic Target for 2021 Key performance indicators 2020 2019
Environmental responsibility
CO handprint Increase carbon handprint to 7.9 M tonnes of CO by using
Metso Outotec’s technologies, compared to annual industry
baselines or alternative technology
Reduction in CO emissions by using Metso Outotec’s
technologies, compared to annual industry baselines or
alternative technology
2)
8.2 M tonnes of CO 7.2M tonnes of CO
CO emissions: Production (scope 1 &2
(market based))
Decrease CO emissions by 8%, compared to 2019 baseline CO emission of own production 51,097 tCO 127,792 tCO
CO emissions: Logistics Decrease CO emissions by 8%, compared to 2019 baseline CO emission of logistics 84,458 tCO 118,656 tCO
Suppliers’ CO targets 3% of suppliers by spend to have an SBT CO emission
target
% of suppliers with an SBT target 2.2% New target
Total footprint CO emissions See targets above for production, logistics, and suppliers CO emissions of production, logistics, and purchased
goods and services
1,036,590 tCO 1,171,763 tCO
Social responsibility and employees
Health and safety Continuous improvement in lost-time injuries frequency rate Lost time injuries per million work hours (LTIF)
3)
1.6 1.4
Continuous improvement in total recordable incident
frequency rate
Total recordable incident frequency per million hours
worked (TRIF)
3)
4.1 4.3
Engaged and diverse experts High response rate for annual employee engagement
survey and increase eNPS
eNPS
4)
29 49.1 (Metso)
7.5/10 (Outotec)
Human rights
Responsible procurement 100 supplier sustainability audits per year conducted in
higher-risk areas
Number of supplier sustainability audits conducted 142 160
Anti-corruption and bribery
Code of Conduct training All active employees, including blue-collar workers ,trained
on Code of Conduct, external workforce excluded
Code of Conduct training participation rate (%) 96.1% 99.2% (Metso)
n/a
5)
(Outotec)
1)
Both companies had targets for 2020 separately, but no combined targets were set for Metso Outotec for 2020,
due to the merger taking place on July 1, 2020. Sustainability data for the full-year 2020 for Metso and Outotec has
been combined to illustrate the new company Metso Outotec, which was formed on July 1, 2020. Unless otherwise
stated, our historical sustainability data is also presented as a combined basis for Metso Outotec.
2)
This positive impact to combat climate change, the handprint, is measured by the emissions avoided by the mining
industry using seventeen Metso Outotec technologies for 2020 and seven Metso Outotec technologies for 2019.
3)
Includes employees and contractors
4)
Metso Outotec implemented a new tool for measuring employee engagement in December 2020 and the scores
are not fully comparable with the previous employee engagement index.
5)
During 2019, Outotec’s updated Code of Conduct training material was distributed to all employees and contractors
with daily access to a computer for self-study with a new eLearning campaign targeted for 2020.
1. Organizational profile
Further information
In addition, as required by the Finnish Accounting Act and set forth in EU Directive 2014/95/
EU (rules on disclosure of non-financial and diversity information by large companies),
information related to non-financial matters is also available in:
• Business Overview: Strategy, value creation and sustainability
• Corporate Governance Statement: Corporate Governance, Internal Control and
RiskManagement systems
• Remuneration report: Remuneration of the Board of Directors and CEO
• GRI Supplement :Externally assured sustainability information compliant with GRI Standards
Financial review 2020|Board of Directors’ report 18
Metso Outotec has one share series, and each share entitles
its holder to one vote at a General Meeting and to an equal
amount of dividend. Metso Outotec’s shares are registered in
the Finnish book-entry system maintained by Euroclear.
Basic share information
Listed on Nasdaq Helsinki
Trading code MOCORP
ISIN code FI0009014575
Industry Industrials
Number of shares on December 31, 2020 828,972,440
Share capital on December 31, 2020 EUR 107,186,442.52
Market value on December 31, 2020 EUR 6,756.13 million
Listing date July 1, 2020
Metso shares are also traded on alternative marketplaces, like
BATS CXE and BATS BXE.
Shares and shareholders
Metso Outotec’s share and shareholders in 2020
On December 31, 2020, Metso Outotec’s share capital was EUR 107,186,442.52 and the total number of shares was 828,972,440.
More information on the past share capital changes is available at www.mogroup.com/corporate/investors/shares.
At the end of 2020, Metso had approximately 79,749 shareholders in the book-entry system. The largest shareholder was
Solidium, with 123,477,168 shares and 14.9 percent of the share capital. A total of 453,167,736 Metso Outotec shares were traded
on the Nasdaq Helsinki during 2020, equivalent to a turnover of EUR 2,666,695,603 million.
At year-end, the members of Metso Outotec’s Board of Directors and President and CEO Pekka Vauramo held a total of
595,338 Metso Outotec shares, corresponding to 0.07 percent of the total number of shares and votes. More information about
management holdings is available in note 1.5.
Number of shares
Outotec Oyj's number of outstanding shares at beginning of year
Shares granted from share ownership plans for Outotec management
New shares related to the reverse acquisition
Number of outstanding shares at end of year
Own shares held by the Parent Company
Total number of shares at end of year
Average number of outstanding shares
Average number of diluted shares
Earnings / share, basic, EUR
Earnings / share, diluted, EUR
Earnings / share, basic, based on outstanding shares, EUR
Net cash flow from operating activities / share, EUR
Dividend / share
1)
, EUR
Dividend
1)
, EUR
Dividend / earnings
1)
, %
Eective dividend yield
1)
, %
P/E ratio
2)
Equity / share
2)
, EUR
1)
Board proposal to the AGM
2)
Based on outstanding shares
Financial review 2020|Board of Directors’ report 19
Share performance and trading on Nasdaq Helsinki July 1 – December 31, 2020
Closing price, December 31, EUR
Market capitalization, December 31, EUR million
Trading volume, Nasdaq OMX Helsinki Ltd, pieces
% of shares
1)
%
Trading volume, Nasdaq OMX Helsinki Ltd, EUR million
Average daily trading volume, pieces
Relative turnover, % %
Share performance, % %
Highest share price, EUR
Lowest share price, EUR
Average share price, EUR
1)
Of the total amount of shares for public trading
Largest shareholders on December 31, 2020
Shares and votes
% of share capital and
voting rights
1 Solidium Oy
2 Varma Mutual Pension Insurance Company
3 Ilmarinen Mutual Pension Insurance Company
4 Elo Mutual Pension Insurance Company
5 The State Pension Fund
6 OP-Finland Funds
OP Life Assurance Company Ltd
OP-Finland Fund
OP-Finland Small Firms Fund
OP-Finland Index Fund
7 Aktia Funds
Sijoitusrahasto Aktia Capital
Sijoitusrahasto Aktia Nordic Small Cap
Aktia Secura Fund
Investment fund Aktia Nordic
Aktia Euro Fund
8 Nordea Funds
Nordea Fennia Fund
Nordea Finnish Index Fund
Nordea Life Assurance Finland Ltd.
Nordea Pro Finland Fund
Sijoitusrahasto Nordea Premium Varainhoito Tasapaino
Sijoitusrahasto Nordea Premium Varainhoito Maltti
Nordea Säästö 50
Sijoitusrahasto Nordea Säästö 25
9 Danske Invest Finnish Equity Fund
10 Svenska litteratursällskapet i Finland r.f.
11 Mandatum Life Insurance Company Limited
12 Veritas Pension Insurance Company Ltd.
13 Sigrid Jusélius Foundation
14 Evli Funds
Evli Finnish Small Cap Fund
Evli Finland Select Fund
15 Säästöpankki Kotimaa
16 Oy Etra Invest Ab
17 The Finnish Cultural Foundation
18 The Social Insurance Institution of Finland, KELA
19 Schweizer Nationalbank
20 Samfundet folkhälsan i Svenska Finland rf
20 largest owner groups in total
Nominee-registered holders
Other shareholders
In the joint book-entry account
Total
Financial review 2020|Board of Directors’ report 20
Breakdown of share ownership on December 31, 2020
Number of shares Shareholders
% of
shareholders
Total number
of shares and
votes
% of share
capital and
voting rights
1–100
101–1,000
1,001–10,000
10,001–100,000
100,001–1,000,000
1,000,001-
Total
Nominee-registered shares
In the joint book-entry account
Number of shares issued
Breakdown by shareholder category on December 31, 2020
Share %
Nominee-registered and non-Finnish holders %
Solidium Oy %
Private investors %
Finnish institutions, companies and foundations %
Total %
Flaggings
Under the provisions of the Finnish Securities Markets Act, shareholders of listed companies
have an obligation to notify both the Finnish Financial Supervision Authority and the company
of changes when their holdings reach, exceed, or fall below a certain threshold. Metso Outotec
is not aware of any shareholders’ agreements regarding Metso Outotec shares or voting rights.
All flagging notifications have been released as a stock exchange release are available at
www.mogroup.com/corporate/media/news
Incentive plans
Metso Outotec’s share ownership plans are part of the manage-
ment remuneration program. For further information, see at
www.mogroup.com/corporate/investors/governance/remuneration and notes 1.5 and 1.6. Any
shares to be potentially rewarded are acquired through public trading, and therefore the
incentive plans have no diluting eect on the share value.
Financial review 2020|Board of Directors’ report 21
EUR million
Sales
Operating profit (EBIT)
% of sales % % % % %
Profit before taxes
% of sales % % % % %
Profit for the period for continuing operations
% of sales % % % % %
Profit for the period for discontinued operations
Profit for the period
% of sales % % % % %
Profit attributable to shareholders of the company
Amortization of intangible assets
Depreciation of tangible assets
Depreciations of right-of-use assets
Depreciation and amortization, total
% of sales % % % % %
EBITA
% of sales % % % % %
EBITDA
% of sales % % % % %
Finance income and expenses, net
% of sales % % % % %
Interest expenses
% of sales % % % % %
Interest cover (EBITDA)
Gross capital expenditure
% of sales % %
Net capital expenditure
% of sales % %
Net cash flow from operating activities before
financial items and taxes
Cash conversion, % % %
Research and development
% of sales % %
Key figures
EUR million
Balance sheet total
Equity attributable to shareholders
Total equity
Interest bearing liabilities
Net working capital (NWC)
% of sales % % % % %
Capital emplyed
Return on equity (ROE), % % % % % %
Return on capital employed (ROCE) before taxes, % % % % % %
Return on capital employed (ROCE) after taxes, % % % % % %
Net debt
Gearing, % % % % % %
Equity to asset ratio, % % % % % %
Debt to capital, % % % % % %
Debt to equity, % % % % % %
Orders received
Order backlog, December 31
Personnel at the end of year
Key figures for 2020 are calculated based on IFRS data. All comparable key figures are based
on Metso Minerals carve-out data.
Financial review 2020|Board of Directors’ report 22
Earnings before financial expenses, net, taxes and amortization, adjusted (adjusted EBITA)
Operating profit + adjustment items + amortization
Earnings per share, basic
Profit attributable to shareholders
Average number of outstanding shares during the period
Earnings per share, diluted
Profit attributable to shareholders
Average number of diluted shares during the period
Interest cover (EBITDA)
EBITDA
Finance income and expenses, net
Cash conversion, %
Net cash flow from operating activities before financial
× 100
EBITDA
Return on equity (ROE), %
Profit for the period
× 100
Total equity (average for the period)
Return on capital employed (ROCE) before taxes, %
Profit before tax + financial expenses
× 100
Capital employed (average for the period)
Return on capital employed (ROCE) after taxes, %
Profit for the period + financial expenses
× 100
Capital employed (average for the period)
Gearing, %
Net interest-bearing liabilities
× 100
Total equity
Equity-to-assets ratio, %
Total equity
× 100
Balance sheet total – advances received
Debt to capital, %
Interest-bearing liabilities – lease liabilities
× 100
Total equity + interest-bearing liabilities – lease liabilities
Debt to equity, %
Interest-bearing liabilities – lease liabilities
× 100
Total equity
Interest-bearing liabilities
Interest-bearing liabilities, non-current and current + lease liabilities, non-current and current
Net interest-bearing liabilities
Interest-bearing liabilities – Non-current financial assets – loan and other interest-bearing
receivables (current and non-current) – liquid funds
Net working capital (NWC)
Inventories + trade receivables + other non-interest-bearing receivables + customer contract
assets and liabilities, net – trade payables – advances received – other non-interest-bearing
liabilities
Capital employed
Net working capital + intangible assets and tangible assets + right-of-use assets + non-current
investments + interest-bearing receivables + liquid funds + tax receivables, net + interest
payables, net
Net cash flow from operating activities / share, EUR
Net cash flow from operating activities
Outstanding shares at end of period
Eective dividend yield, %
Dividend per share
× 100
Trading price at the end of the year
Price / earnings ratio (P/E)
Trading price at the end of the year
Earnings per share
Equity/share
Equity attributable to shareholders
Number of outstanding shares at the end of the period
Formulas for the key figures
Financial review 2020|Board of Directors’ report 23
On December 31, 2020, the distributable equity of Metso Outotec Corporation was:
Invested non-restricted equity fund EUR
Own shares EUR
Retained earnings EUR
Net profit for the year EUR
Distributable equity, total EUR
The Board of Directors proposes that a dividend of EUR 0,20 per share be paid based on the
balance sheet to be adopted for the financial year, which ended December 31, 2020. Insofar
as the dividend to be paid exceeds the net profit for the year ended December 31, 2020, the
remaining amount will be paid from retained earnings from previous years.
Dividend payment EUR
Distributable equity after dividend payment EUR
These financial statements were authorized for issue by the Board of Directors on February 15,
2021, after which, in accordance with Finnish Companies Act, the financial statements are either
approved, amended or rejected in the Annual General Meeting.
Board of Directors’ proposal on the use of profit
Financial review 2020|Board of Directors’ report 24
Metso Outotec presents unaudited pro forma financial information for the twelve months
ended December 31, 2020, and for the year ended December 31, 2019 to illustrate the impacts
of the combination of Metso Minerals and Outotec on the business performance of Metso
Outotec. The pro forma financial information has been presented for illustrative purposes only
and addresses a hypothetical situation as if the combination took place on January 1, 2019,
therefore, it does not represent Metso Outotec’s actual historical results of operations and does
not purport to project the operating results of Metso Outotec.
For financial reporting purposes, the combination is accounted for as a reverse acquisition
using the IFRS acquisition method of accounting where Metso Minerals has been defined to
be the accounting acquirer and Outotec the acquiree. As the consolidated financial statements
of Metso Outotec are prepared as a continuation of the carve-out financial statements
of Metso Minerals following the completion of the combination, the pro forma financial
information has been prepared in accordance with the accounting principles of Metso Outotec
which are consistent with the accounting principles applied by Metso Minerals in its carve-out
financial statements.
Outotec’s net assets have been identified and recognized at their fair values as of the
acquisition date on June 30, 2020, and the pro forma statements of income for the periods
presented illustrate the P&L impact on these fair values. The pro forma financial information
also takes into account the eects of the demerger on the financial information, estimated
direct transaction costs related to the demerger and combination, certain accounting policy
alignments between Metso Minerals and Outotec, as well as certain refinancing transactions.
Certain reclassifications have also been made to Outotec’s historical financial information to
align to Metso Outotec’s financial statements presentation. The pro forma financial information
does not reflect any cost savings, synergy benefits, or future integration costs that are
expected to be generated or may be incurred as a result of the combination.
Pro forma adjustments
The pro forma financial information reflects the application of pro forma adjustments that are
based upon certain assumptions, described below, that management believes are reasonable
under the circumstances.
Fair valuation of Outotec’s net assets
Upon the completion of the combination, Metso Outotec prepared the detailed valuation of
all assets and liabilities of Outotec as of the acquisition date. As a result, aggregate fair value
adjustment of EUR 810 million of intangible assets related to customer relationships, marketing,
technology and order backlog were recognized in the acquisition balance sheet. Amortization
period for these intangible assets varies from 0.5 to 20 years. Respectively fair value adjustment
of EUR 5 million of property, plant and equipment were recognized to the acquisition balance
sheet. Depreciation period is 5.5 years. The depreciations and amortizations from the fair value
adjustments have been recognized to pro forma periods accordingly. In addition, historical
amortizations for certain intangible assets written o in the combination have been eliminated
from the pro forma periods.
Demerger impact and accounting alignment
The existing interest-bearing intra-group receivables and liabilities, including cash pool
receivables and liabilities between the Metso Minerals and Metso Group have been settled on
the date of the combination. The impact of arising intra-group finance income and expenses
has been eliminated from the pro forma statements of income as a demerger impact.
Transaction costs of EUR 71 million expensed in connection with the demerger and combi-
nation, primarily comprise financial, legal, and advisory costs (excluding financing transaction
costs and costs related to the issuance of Demerger Consideration Shares), as well as certain
employee benefits to be paid to the management and personnel in connection with the
completion of the demerger. These transactions costs have been recorded as Administrative
expenses in the pro forma statement of income as if they have been incurred at January 1, 2019.
For pro forma purposes, the costs already recorded as an expense of EUR 47 million for the
twelve months ended December 31, 2020, have been eliminated. In addition, a tax expense
of EUR 1 million recorded by Metso Minerals in connection with the demerger for the twelve
months ended December 31, 2020, has been eliminated and recorded as a tax expense in the
pro forma statement of income as if incurred at January 1, 2019.
In connection with the accounting policy alignment, sales related to certain Outotec’s
current receivables written o in the combination have been eliminated from the pro forma
periods.
Refinancing and taxation
On July 1, 2020, Metso Outotec redeemed Outotec’s EUR 150 million hybrid bond. To refinance
the hybrid bond, the Company has drawn up the EUR 150 million term loan. The impact of
refinancing is recorded in the pro forma statement of income as a finance expense. The pro
forma adjustment reflects the interest calculated using the eective interest rate method for
the EUR 150 million term loan assumed to be drawn for pro forma purposes as at January 1,
2019, including the estimated impact of transaction costs and fees.
The pro forma adjustment for income taxes has been calculated based on the tax deduct-
ibility of the pro forma adjustments in the jurisdiction, and accordingly, tax rates used for
pro forma purposes dier depending on the nature of the underlying pro forma adjustment.
The tax rate used for the fair value adjustments has been the Finnish statutory tax rate of 20
percent or the blended tax rate of 22.9 percent, as applicable.
Voluntary Unaudited Pro Forma Financial Information
Financial review 2020|Board of Directors’ report 25
Pro forma income statement
EUR million
Metso
Outotec IFRS
–
Outotec
historical
reclassified
–
Metso
Outotec
combined
–
Pro forma
adjustments
–
Metso
Outotec pro
forma
–
Sales
Cost of sales
Gross profit
Selling and marketing
expenses
Administrative expenses
Research and development
expenses
Other operating income and
expenses, net
Share of results of associated
companies
Operating profit
Finance income
Finance income, Metso
Group
Foreign exchange gains/
losses
Finance expenses
Profit before taxes
Income taxes
Profit for the year, continuing
operations
Earnings per share
Adjusted EBITA and operating profit
EUR million
Metso
Outotec IFRS
–
Outotec
historical
reclassified
–
Metso
Outotec
combined
–
Pro forma
adjustments
–
Metso
Outotec pro
forma
–
Adjusted EBITA
% of sales
Amortization of intangible
assets
Adjustment items
Operating profit
% of sales
Amortization of intangible
assets
Depreciation of tangible
assets
Depreciation of right-
of-use assets
Amortization and
depreciation total
Capacity adjustment costs
Acquisition costs
Gain / loss on disposal
Metso Outotec integration
costs
Metso Outotec transaction
costs
Adjustment items total
Pro forma Income Statement 1–12/2020, Continuing Operations
Financial review 2020|Board of Directors’ report 26
Pro forma adjustments
EUR million
Fair valuation
of Outotec’s net
assets
–
Demerger
impact and
accounting
alignment
–
Refinancing
–
Pro forma
adjustments
–
Sales
Cost of sales
Gross profit
Selling and marketing
expenses
Administrative expenses
Research and development
expenses
Other operating income and
expenses, net
Share of results of associated
companies
Operating profit
Finance income
Finance income, Metso
Group
Foreign exchange gains/
losses
Finance expenses
Profit before taxes
Income taxes
Profit for the year, continuing
operations
Pro forma income statement 1–12/2019 Continuing operations
Pro forma income statement
EUR million
Metso
Minerals
carveout
historical
–
Outotec
historical
reclassified
–
Metso
Outotec
combined
–
Pro forma
adjustments
–
Metso
Outotec pro
forma
–
Sales
Cost of sales
Gross profit
Selling and marketing
expenses
Administrative expenses
Research and development
expenses
Other operating income and
expenses, net
Share of results of associated
companies
Operating profit
Finance income
Finance income, Metso
Group
Foreign exchange gains/
losses
Finance expenses
Profit before taxes
Income taxes
Profit for the year, continuing
operations
Earnings per share
1)
Restated
Financial review 2020|Board of Directors’ report 27
Adjusted EBITA and operating profit
EUR million
Metso
Minerals
carveout
historical
–
Outotec
historical
reclassified
–
Metso
Outotec
combined
–
Pro forma
adjustments
–
Metso
Outotec pro
forma
–
Adjusted EBITA
% of sales
Amortization of intangible
assets
Adjustment items
Operating profit
% of sales
Amortization of intangible
assets
Depreciation of tangible
assets
Depreciation of right-
of-use assets
Amortization and
depreciation total
Capacity adjustment costs
Acquisition costs
Gain / loss on disposal
Metso Outotec integration
costs
Metso Outotec transaction
costs
Adjustment items total
1)
Restated
Pro forma adjustments
EUR million
Fair valuation
of Outotec’s net
assets
–
Demerger
impact and
accounting
alignment
–
Refinancing
–
Pro forma
adjustments
–
Sales
Cost of sales
Gross profit
Selling and marketing expenses
Administrative expenses
Research and development expenses
Other operating income and
expenses, net
Share of results of associated
companies
Operating profit
Finance income
Finance income, Metso Group
Foreign exchange gains/losses
Finance expenses
Profit before taxes
Income taxes
Profit for the year, continuing
operations
Financial review 2020|Board of Directors’ report 28
In order to improve comparability, Metso Outotec has prepared both illustrative and IFRS-
based historical quarterly segment information for 2019 and January -June 2020. The illustrative
historical segment information is presented as a combination of Metso Minerals carve-out
information and Outotec information, according to the Metso Outotec segment structure. The
Outotec information is based on Outotec’s historical accounting principles; Outotec’s Minerals
Processing segment is included in Metso Outotec’s Minerals segment and Outotec’s Metals
Refining segment is included in Metso Outotec’s Metals segment.
Illustrative segment information
Orders received and sales, 2020
EUR million – – – –
Orders received
Aggregates
Minerals
Metals
Metso Outotec total
Orders received by services business
Aggregates
% of orders received
Minerals
% of orders received
Metals
% of orders received
Metso Outotec total
% of orders received
Sales
Aggregates
Minerals
Metals
Metso Outotec total
Sales by services business
Aggregates
% of sales
Minerals
% of sales
Metals
% of sales
Metso Outotec total
% of sales
Adjusted EBITA and operating profit, 2020
EUR million – – – –
Aggregates
Adjusted EBITA
% of sales
Operating profit
% of sales
Minerals
Adjusted EBITA
% of sales
Operating profit
% of sales
Metals
Adjusted EBITA
% of sales
Operating profit
% of sales
Group head oce and other
Adjusted EBITA
Operating profit
Metso Outotec total
Adjusted EBITA
% of sales
Operating profit
% of sales
Financial review 2020|Board of Directors’ report 29
Orders received and sales, 2019
EUR million – – – –
Orders received
Aggregates
Minerals
Metals
Metso Outotec total
Orders received by services business
Aggregates
% of orders received
Minerals
% of orders received
Metals
% of orders received
Metso Outotec total
% of orders received
Sales
Aggregates
Minerals
Metals
Metso Outotec total
Sales by services business
Aggregates
% of sales
Minerals
% of sales
Metals
% of sales
Metso Outotec total
% of sales
Adjusted EBITA and operating profit, 2019
EUR million – – – –
Aggregates
Adjusted EBITA
% of sales
Operating profit
% of sales
Minerals
Adjusted EBITA
% of sales
Operating profit
% of sales
Metals
Adjusted EBITA
% of sales
Operating profit
% of sales
Group head oce and other
Adjusted EBITA
Operating profit
Metso Outotec total
Adjusted EBITA
% of sales
Operating profit
% of sales
Financial review 2020|Board of Directors’ report 30
Consolidated financial statements
Financial Statements
Consolidated statement of
income, IFRS
EUR million Note
Restated
Sales
Cost of sales
Gross profit
Selling and marketing expenses
Administrative expenses
Research and development expenses
Other operating income and expenses, net
Share of results of associated companies
Operating profit
Finance income
Foreign exchange gains/losses
Finance expenses
Finance income and expenses, net
Profit before taxes
Income taxes
Profit for the year for continuing operations
Profit from discontinued operations
Profit for the year
Profit from continuing operations attributable to
Shareholders of the parent company
Non-controlling interests
Earnings per share, EUR
1)
Earnings per share for continuing operations EUR
1)
1)
More information under Key figures
Consolidated statement of
comprehensive income, IFRS
EUR million Note
Restated
Continuing and discontinued operations
Profit for the year
Other comprehensive income
Cash flow hedges, net of tax
Currency translation on subsidiary net investment
Items that may be reclassified to profit or loss in
subsequent periods
Defined benefit plan actuarial gains and losses,
netoftax
Items that will not be reclassified to profit or loss
Other comprehensive income
Total comprehensive income
Attributable to
Shareholders of parent company
Non-controlling interests
Financial review 2020|Consolidated financial statements 31
Consolidated Balance Sheet
EUR million Note
Non-current assets
Intangible assets
Goodwill
Other intangible assets
Total intangible assets
Property, plant and equipment
Land and water areas
Buildings and structures
Machinery and equipment
Assets under construction
Total property, plant and equipment
Right-of-use assets
Other non-current assets
Investments in associated companies
Non-current financial assets
Loan receivables
Derivative financial instruments
Deferred tax assets
Other non-current receivables
Total other non-current assets
Total non-current assets
Current assets
Inventories
Trade receivables
Customer contract assets
Loan receivables
Derivative financial instruments
Income tax receivables
Other current receivables
Liquid funds
Total current assets
Assets held for sale
TOTAL ASSETS
EUR million Note
Equity
Share capital
Share premium fund
Cumulative translation adjustments
Fair value and other reserves
Retained earnings
Equity attributable to shareholders
Non-controlling interests
Total equity
Liabilities
Non-current liabilities
Borrowings
Lease liabilities
Post-employment benefit obligations
Provisions
Derivative financial instruments
Deferred tax liabilities
Other non-current liabilities
Total non-current liabilities
Current liabilities
Borrowings
Lease liabilities
Trade payables
Provisions
Advances received
Customer contract liabilities
Derivative financial instruments
Income tax liabilities
Other current liabilities
Total current liabilities
Total liabilities
Liabilities held for sale
TOTAL EQUITY AND LIABILITIES
Consolidated balance sheetAssets,IFRS Consolidated balance sheetEquity and Liabilities,IFRS
Financial review 2020|Consolidated financial statements 32
Consolidated statement of changes in shareholders’ equity, IFRS
EUR million Share capital
Share premium
fund
Cumulative transla
tion adjustments
Fair value and
other reserves Retained earnings
Equity attributable
to shareholders
Noncontrolling
interests Total equity
Jan 1, 2019
Profit for the year
Other comprehensive income
Cash flow hedges, net of tax
Currency translation on subsidiary net investments
Defined benefit plan actuarial gains (+) / losses (), net of tax
Total comprehensive income
Dividends
Dividends to related party
Share-based payments, net of tax
Changes in invested equity
Net change from winding up the consolidated tax groups
Other items
Changes in non-controlling interests
Dec 31, 2019
Jan 1, 2020
Profit for the year
Other comprehensive income
Cash flow hedges, net of tax
Currency translation on subsidiary net investments
Defined benefit plan actuarial gains (+) / losses (), net of tax
Total comprehensive income
Dividends
Dividends to related party
Share-based payments, net of tax
Changes in invested equity
Net change from winding up the consolidated tax groups
Demerger eect
Reverse acquisition
Other items
Changes in non-controlling interests
Dec 31, 2020
Financial review 2020|Consolidated financial statements 33
Consolidated statement of cash flows, IFRS
EUR million Note
Operating activities
Profit for the period
Adjustments
Depreciation and amortization
Finance expenses, net
Income taxes
Other items
Change in net working capital
Net cash flow from operating activities before financial
items and taxes
Interests paid
Interests received
Other financing items, net
Finance income and expenses paid, net
Income taxes paid
Net cash flow from operating activities
Investing activities
Capital expenditures on intangible and tangible assets
Proceeds from sale of intangible and tangible assets
Proceeds from sale of intangible and tangible assets,
Metso Group
Proceeds from and investments in financial assets, net
Business acquisitions, net of cash acquired
Business acquisitions, net of cash acquired, Metso Group
Proceeds from sale of businesses, net of cash sold
Proceeds from sale of businesses, net of cash sold,
MetsoGroup
Investments in associated companies
Net cash flow from investing activities
EUR million Note
Financing activities
Dividends paid
Dividends paid, Metso group
Increase in loan receivables
Transactions with non-controlling interests
Proceeds from increases in non-current debt
Repayment of non-current debt
Proceeds from and repayment of current debt, net
Proceeds from and repayment of debt, net, Metso Group
Repayment of lease liablities
Net cash flow from financing activities
Net change in liquid funds
Eect from changes in exchange rates
Cash classified as assets held for sale
Liquid funds equivalents at beginning of year
Liquid funds at end of year
Financial review 2020|Consolidated financial statements 34
Basic information
Helsinki under the trading symbol MOCORP . Metso Outotec Corporation is domiciled in
These consolidated financial statements were authorized for issue by Metso Outotec
Corporation’s Board of Directors on February 15, 2021, after which, in accordance with the
Finnish Companies Act, the financial statements are either approved, amended or rejected at
the next Annual General Meeting.
Basis of preparation
The consolidated financial statements have been prepared in accordance with International
Financial Reporting Standards (IFRS) and IFRIC Interpretations as adopted by the European
Union. The consolidated financial statements have been prepared on a historical cost basis,
except for financial assets and liabilities classified as at fair value through profit and loss
accounts.
The consolidated statement of income and statement of cash flows for January–June 2020
present Metso Minerals as a single economic entity and are based on historical financial
information of the relevant entities and business by using the same accounting principles and
carrying amounts as in Metso Group. Metso Minerals carve-out financial statements have been
prepared on a basis that combined the financial statements of the legal entities and operating
units attributable to the Minerals business to Outotec Group.
On October 28, 2020, Metso Outotec announced its decision to divest the Recycling
business. The Recycling business has been classified as discontinued operations in 2020.
Consequently, the figures for 2020 related to the consolidated statement of income are
presented for continuing operations, and the comparative figures for 2019 have been restated
accordingly. The assets and liabilities held for sale have been transferred to separate lines in
the consolidated balance sheet. The comparative figures for 2019 related to the consolidated
balance sheet have not been restated. The divestments are disclosed in note 5.5 “Discontinued
operations”.
The financial statements are presented in euros, which is the Parent Company’s functional
currency and Metso Outotec’s presentation currency. The figures presented have been
rounded; consequently, the sum of individual figures might dier from the presented total
figure.
Critical accounting estimates and judgments by management
The preparation of financial statements, in conformity with the IFRS, requires management to
make estimates and assumptions and to exercise its judgment in the process of applying the
Group’s accounting policies. These aect the reported amounts of balance sheet items, the
presentation of contingent assets and liabilities, and the income and expenses for the financial
year. Actual results may dier from the estimates made. The assets and liabilities involving a
higher degree of judgment or complexity, or areas where the assumptions and estimates are
significant to Metso Outotec ’s consolidated financial statements, are disclosed in the following
notes:
Note 1.2 Sales Note 2.6 Provisions
Note 1.6 Share-based payments Note 2.7 Post-employment obligations
Note 1.8 Income taxes Note 3.1 Goodwill and other intangible assets
Note 2.2 Trade receivables Note 3.2 Tangible assets
Note 2.3 Other receivables Note 3.4 Right-of-use assets
Note 2.4 Inventory Note 5.4 Acquisitions and business disposals
Due to the Covid-19 pandemic, Metso Outotec has reviewed the estimates and assumptions
used in the preparation of the consolidated financial statements. The possible impact of the
Covid-19 pandemic on the relevant factors in estimates and assumptions has been considered.
The estimates used and assumptions reflect management’s best judgement on the possible
impacts of the pandemic.
Notes to the Consolidated Financial Statements
Financial review 2020|Notes to the Consolidated Financial Statements 35
Abbreviations used in the Financial Statements
The following abbreviations are used in the financial statements.
AGM Annual General Meeting
EGM Extraordinary General Meeting
CGU Cash generating unit
EBIT Earnings before financial expenses, net and taxes
EBITA Earnings before financial expenses net, taxes and amortization
EBITDA Earnings before financial expenses net, taxes, amortization and depreciation
EMTN Euro Medium Term Note program
EPS Earnings per share
FAS Finnish accounting standards
HSE Health, safety, and environment
IFRIC Interpretations of International financial reporting standards
IFRS/IAS International financial reporting standards
KPI Key performance indicator
LTIF Lost-time incident frequency
NWC Net working capital
OCI Other comprehensive income
OTC Over the counter
P/E Price/earnings ratio
PSP Performance share incentive plan
R&D Research and development
ROCE Return on capital employed
ROE Return on equity
RSP Restricted share incentive plan
TSR Total shareholder return
WACC Weighted average cost of capital
Financial review 2020|Notes to the Consolidated Financial Statements 36
37
1
Group performance
37Financial review 2020|Notes to the Consolidated Financial Statements
Reporting segments ...........................................
Sales ...........................................................
Selling general and administrative expenses...............
Other operating income and expenses ......................
Personnel expenses and number of personnel..............
Sharebased payments........................................
Finance income and expenses................................
Income taxes ...................................................
Earnings per share.............................................
1.1.Reporting segments
ACCOUNTING POLICYReportable segments of Metso Outotec are based on end customer
groups, which are dierentiated by both oering and business model: Aggregates, Minerals
and Metals. The segments are reported in a manner consistent with the internal reporting
provided to the Board of Directors, Metso Outotec’s chief operating decision-maker respon-
sible for allocating resources and assessing the performance of the segments, deciding
on strategy, selecting key employees, as well as deciding on major development projects,
business acquisitions, investments, organizational structure and financing. The accounting
principles applied to segment reporting are the same as those used in preparing the
consolidated financial statements.
Segment performance is measured with operating profit/loss (EBIT). In addition, Metso
Outotec uses alternative performance measures to reflect the underlying business perfor-
mance and to improve comparability between financial periods: Earnings before interest,
tax and amortization (EBITA), adjusted and net working capital. Adjustment items comprise
capacity adjustment costs, acquisition costs, gains and losses on business transactions as
well as Metso Outotec transaction and integration costs. Their nature and net eect on cost
of goods sold, selling, general and administrative expenses, as well as other income and
expenses are presented in the segment information. Alternative performance measures,
however, should not be considered as a substitute for measures of performance in accor-
dance with the IFRS.
Corporate structure
Metso Outotec Group is a global supplier of sustainable technologies, end-to-end solutions,
and services for the minerals processing, aggregates, and metals refining industries. Metso
Outotec has a broad oering in terms of equipment, solutions, and aftermarket services.
Reportable segments of Metso Outotec are based on end customer groups, which are
dierentiated by both oering and business model: Aggregates, Minerals, and Metals.
Aggregates oers a wide range of equipment, aftermarket parts and services for quarries,
aggregates contractors and construction companies.
Minerals supplies a wide portfolio of process solutions, equipment and aftermarket services,
as well as plant delivery capability for mining operations.
Metals provides sustainable solutions for processing virtually all types of ores and concen-
trates to refined metals.
Group Head Oce and other segment is comprised of the parent company with
centralized group functions, such as treasury and tax, as well as shared service centers and
holding companies.
Financial income and expenses as well as income taxes are not allocated to segments but
included in the income statement of Group Head Oce and other. The treasury activities of
Metso Outotec are centralized into the Group Treasury to benefit from cost eciency obtained
from pooling arrangements, financial risk management, bargaining power, cash management,
and other measures. Metso Outotec has a centralized Group tax management function. The
objective of Group tax management is to ensure tax compliance and an optimized and
predictable overall tax cost for Metso Outotec.
Segment net working capital assets comprises inventories and non-interest bearing
operating assets and receivables. Segment net working capital liabilities comprises
non-interest- bearing operating liabilities.
Non-cash write-downs include write-os made to the value of receivables and inventories,
and impairment and other write-os recognized to reduce the value of intangible or tangible
assets and other assets.
Gross capital expenditure comprises investments in intangible and tangible assets,
associated companies, and joint ventures.
Intra-group transactions are made on an arm’s length basis.
Financial review 2020|Notes to the Consolidated Financial Statements 38
Segment information for the year 2020
2020
EUR million Aggregates Minerals Metals
Group Head
Oce and
Other Tota l
External sales
Intra-group sales
Sales
Earnings before interest, tax, and
amortization (EBITA)
% of sales
Adjusted EBITA
% of sales
Operating profit (-loss)
% of sales
Adjustment items and amortization
of intangible assets
Adjusted EBITA
Adjustment items, total
Amortization of other intangible
assets total
Operating profit (-loss)
Inventories
Trade receivables
Other non-interest-bearing
receivables
Customer contract assets and
liabilities, net
Trade payables
Advances received
Other non-interest-bearing liabilities
Net working capital
Segment information for the year 2019, restated
2019
EUR million Aggregates Minerals Metals
Group Head
Oce and
Other
Tota l
External sales
Intra-group sales
Sales
Earnings before interest, tax, and
amortization (EBITA)
% of sales
Adjusted EBITA
% of sales
Operating profit (-loss)
% of sales
Adjustment items and amortization
of intangible assets
Adjusted EBITA
Adjustment items, total
Amortization of other intangible
assets total
Operating profit (-loss)
Inventories
Trade receivables
Other non-interest-bearing
receivables
Customer contract assets and
liabilities, net
Trade payables
Advances received
Other non-interest-bearing liabilities
Net working capital
1)
Includes Metso- Group related items
Financial review 2020|Notes to the Consolidated Financial Statements 39
Geographical information
ACCOUNTING POLICYMetso Outotec presents the geographical distribution of the segments’
sales by location of customers. Non-current assets and gross capital expenditure are
presented by location of assets.
Metso Outotec’s businesses are present in more than 50 countries, providing strong diversi-
fication. The main market areas are Europe and North and Central America, accounting for
approximately 48 percent of sales. Metso Outotec has a global network of production units
located in key continents.
Sales to unaliated customers by destination
EUR million
Restated
Finland
Europe
North and Central America
South America
APAC
Africa, Middle East and India
Sales
Metso Outotec’s exports from Finland by destination, including intra-group sales
EUR million
Europe
North and Central America
South America
APAC
Africa, Middle East and India
Tota l
Non-current assets by location
EUR million
Finland
Europe
North and Central America
South America
APAC
Africa, Middle East and India
Non-allocated
Tota l
Non-current assets presented in the table above comprise intangible and tangible assets, right-
of-use assets, investments in associated companies, and joint ventures, equity investments and
other non-interest bearing non-current assets. Non-allocated assets include mainly goodwill
and other assets arising from business acquisitions that have not been pushed down to the
subsidiaries’ books.
Gross capital expenditure by location
EUR million
Finland
Europe
North and Central America
South America
APAC
Africa, Middle East and India
Tota l
Gross capital expenditure comprises investments in intangible and tangible assets, associated
companies and joint ventures. Right-of-use assets are not included in the gross capital
expenditure calculation.
1.2.Sales
ACCOUNTING POLICYMetso Outotec applies the IFRS 15 Revenue from Contracts with
Customers standard. The principle is that sales are recognized at an amount that reflects the
consideration, which Metso Outotec expects to receive in exchange for transferring goods
or services to a customer. Sales are recognized when the control of goods or services is
transferred to a customer. Control is transferred either at a point in time or over time.
When Metso Outotec provides standardized equipment and wear or spare parts to
customers, sales are recognized at a point in time when control of the goods is transferred,
typically at the delivery of the goods or after commissioning. Sales to distributors are
recognized at delivery when the distributor is not acting as an agent. If the distributor is
acting as an agent, sales are recognized only when delivered to the ultimate client.
When Metso Outotec provides customized engineered system deliveries or complete
plant deliveries, where the asset produced does not have alternative use and Metso Outotec
has enforceable right to payment for the performance completed, sales are recognized over
time. Sales recognition is based on estimated sales, costs, and profit. Metso Outotec measures
the progress using the cost-to-cost method, where sales and profits are recorded after
considering the ratio of accumulated costs to estimated total costs to complete each contract.
This method is considered to best reflect the satisfaction of the performance obligation. The
estimated sales, costs, and profit, together with the planned delivery schedule of the contract,
are subject to regular revisions as the contract progresses to completion. Revisions in profit
Continuing
operations
Discontinued
operations
Metso Outotec
total
Continuing
operations
Discontinued
operations
Metso Outotectotal
Financial review 2020|Notes to the Consolidated Financial Statements 40
estimates as well as any projected potential loss on contract are charged through the profit
and loss account in the period in which they become known.
Sales from providing services are recognized when the performance obligation is satisfied.
For long-term fixed price service contracts, sales are recognized over time, because the
customer receives the performance obligation simultaneously when the service is rendered.
The measure of the progress is based on costs of actual services provided as a proportion of
the costs of total services to be rendered. The estimated sales, costs and profit, together with
the planned delivery schedule of the contract are subject to regular revisions as the contract
progresses to completion. Revisions in contract estimates as well as any projected potential
loss on contract are charged through the profit and loss account in the period in which they
become known.
For short-term service contracts with an hourly fee based on a valid price list, sales are
recognized to the extent Metso Outotec has the right to invoice the customer, and for service
contracts with a fixed hourly fee agreed to in the contract, sales are recognized based on
invoicing.
Client contracts may include promises such as volume-based rebates, late delivery
penalties, or the right to return delivered parts. The impact of these promises on the final
consideration will be estimated when recognition is started and systematically during the
contract period. Sales will be recognized to the extent that Metso Outotec is entitled to the
consideration. Also, creditworthiness of the client and collectability of the consideration is
assessed throughout the contract period. Extended warranties are treated as a separate
performance obligation, and an appropriate transaction price is allocated to them and
recognized in sales when occurred.
Metso Outotec often requires advance payments from clients. Applying IFRS 15, advances
received do not include a financing component, because the payment schedule of them
follows closely the timing of performance obligations to be satisfied.
ESTIMATES AND ASSESSMENTS BY MANAGEMENTSales recognized at a point in time may require
judgment on facts and circumstances when the control is considered to have passed to the
client, aecting on timing of sales to be recognized. Transfer of control is assessed mainly
based on the terms of delivery in the contract and local legislation. Customer contracts
including clauses on rebates, late delivery penalties, right to return promises, or extended
warranties require management judgment on the probability of such clauses to have an eect
on contracts sales. Judgments are based on earlier experience and market practice when
available.
Sales recognized over time is based on the cost-to-cost method, which requires
management to be able to estimate total sales, costs, margin, and cash flow to complete the
project. The assessment of the progress and margin to be recognized as well as the total
costs estimated to complete the contracts requires judgments by management throughout
the contract period. The most critical judgments are needed in the case of a loss-making
contract when estimating the performance needed to be able to satisfy the contract.
Changes in general market conditions and the possible impact on the contracts need to be
predicted as well. The credit worthiness of the customer is verified and the collectability of
Continuing
operations
Discontinued
operations
Metso Outotec
total
Metso Outotec
total
the consideration assessed before entering into a contract. However, a risk of non-payment
might arise afterwards, and it requires management judgement on the impact on final sales
recognition.
Hedging of foreign currency denominated firm commitments
Metso Outotec’s hedging policy requires business units to hedge their foreign currency risk
when they become engaged in a firm commitment denominated in a currency other than
their functional currency. When a firm commitment qualifies for over time recognition, the
business unit applies hedge accounting and recognizes the eect of the hedging instruments
in other comprehensive income (OCI) until the commitment is recognized. Though Metso
Outotec has defined the characteristics triggering a firm commitment, the final realization of
the unrecognized commitment depends also on factors beyond management control, which
cannot be foreseen when initiating the hedging relationship. Such factors can be a change
in the market environment causing the other party to postpone or cancel the commitment.
To the extent possible, management strives to include clauses in its contracts that reduce the
impact of such adverse events on its results.
Disaggregation of sales
Sales by segments
EUR million
Restated
Aggregates
Minerals
Metals
Sales total
External sales by category
EUR million
Restated
Sales of services
Aggregates
Minerals
Metals
Sales of projects, equipment, and goods
Aggregates
Minerals
Metals
Sales total
Financial review 2020|Notes to the Consolidated Financial Statements 41
External sales by timing of sales recognition
EUR million
Restated
At a point in time
Over time
Sales total
External sales by destination
EUR million
Restated
Finland
Europe
North and Central America
South America
APAC
Africa, Middle East and India
Sales
Contract balances
EUR million
Trade receivables
Customer contract assets
Customer contract liabilities
Advances received
Customer contract liabilities and advances received are annually recognized as sales mainly
during the following year.
When providing standardized equipment, such as wear or spare parts, invoicing takes
place in general at the delivery or after commissioning. In engineered system deliveries,
plant deliveries, and long-term service contracts, invoicing is based on the client contracts.
Short-term service contracts are invoiced, when service is rendered.
Trade receivables are based on the invoicing to customers and are generally on terms of
30–90 days. The acquisitions in 2020 resulted in an increase in trade receivables of EUR 116
million (EUR 15 million in 2019), see note 5.4. Information about a provision for expected credit
losses on trade receivables is presented in note 2.2.
Engineered system and plant delivery contracts, and long-term service contracts are mainly
fixed-price contracts, where customers are invoiced with fixed amounts based on the contract
schedule. If the performance obligation satisfied exceeds the invoiced payment from the
customer, a contract asset is recognized. If the invoiced payment from the customer exceeds
the performance obligation satisfied, a contract liability is recognized.
Advances received is the amount paid in advance to Metso Outotec by customers. Typically,
Metso Outotec receives advance payments in customized large-scale engineered system and
equipment delivery projects as well as in plant delivery projects.
Changes in receivables from customers or in liabilities to customers and advances received
are typically the result of changes in business volume in the current year compared to the
previous year.
Unsatisfied performance obligations
The order backlog, amounting to EUR 2,366 million on December 31, 2020, corresponds to the
aggregate amount of the transaction price allocated to performance obligations that are fully
or partly unsatisfied at the end of the reporting period. These performance obligations are
expected to be materially satisfied in two years.
Performance obligations
Metso Outotec’s sales consist of the sale of standardized equipment deliveries and services
with wear or spare parts, customized large-scale engineered system and/or equipment
deliveries as well as plant deliveries. Metso Outotec’s performance obligations are as follows:
Equipment and wear or spare parts deliveries
When Metso Outotec provides standardized equipment and wear or spare parts to customers,
revenue will be recognized at a point in time, when control of the goods is transferred,
typically at the delivery of the goods or after commissioning. These contracts may include
promises, such as volume-based rebates, late delivery penalties, or the right to return delivered
parts. The impact of these promises on the final consideration will be estimated and sales will
be recognized to the extent that Metso Outotec is entitled. Extended warranties are treated as
a separate performance obligation, and an appropriate transaction price is allocated to them
and recognized in sales when occurred.
Metso Outotec cooperates with distributors especially in the aggregates business. Based on
the current distributor contracts, Metso Outotec recognizes sales at the delivery to a distributor.
Promises on volume-based rebates and the right to return goods are assessed and sales will
be recognized to the extent that Metso Outotec is entitled.
Engineered system and equipment deliveries
With customized large-scale engineered system and equipment deliveries and plant deliveries,
where assets produced do not have an alternative use for another client, and Metso Outotec
has the right to payment for the performance completed, revenue will be recognized over time.
Each large-scale engineered system and equipment delivery contract is assessed separately.
These contracts usually have a customer-specific, one total performance obligation agreed with
the client.
These contracts may include promises, such as late delivery penalties, performance
guarantees, and extended warranties. The impact of these promises on the final consideration
will be estimated and sales will be recognized to the extent that Metso Outotec is entitled.
Metso Outotec typically requires advance payments from clients, which in general, do not
include a financing component, because the payment schedule of advances follows closely the
timing of performance obligations to be satisfied.
Financial review 2020|Notes to the Consolidated Financial Statements 42
Service contracts
Sales from providing services are recognized when the services are rendered. For long-term-
fixed price contracts, sales are recognized over time. The measure of the progress is based
on the costs of actual services provided as a proportion of the costs of total services to
be rendered. For short-term service contracts with an hourly fee based on a valid price list,
revenue is recognized to the extent Metso Outotec has right to invoice the customer, and for
service contracts with a fixed hourly fee agreed in the contract, revenue is recognized based
on invoicing. Typical promises in service contacts are late delivery penalties, performance
guarantees, or right to return promises; the impact of these promises are assessed, and sales
recognized to the extent that Metso Outotec is entitled.
Major customers
In 2020 and 2019, Metso Outotec did not have any single customer whose sales would have
exceeded 10 percent of consolidated sales.
1.3.Selling, general, and administrative expenses
EUR million
Restated
Marketing and selling expenses
1)
Research and development expenses, net
Digitalization costs
1)
Administrative expenses
1)
Selling, general, and administrative expenses
1)
Digitalization expenses are included in marketing and selling expenses and in administrative expenses in the
consolidated statement of income.
ACCOUNTING POLICYResearch and development expenses comprise salaries, administration
costs, digital investments, and depreciation and amortization of tangible and intangible
assets, and are mainly recognized as incurred. When material development costs meet certain
capitalization criteria under IAS 38, they are capitalized and amortized over the expected
useful life of the underlying technology.
Research and development expenses
EUR million
Restated
Research and development expenses, total
Capital expenditure
Grants received
Depreciation and amortization
Research and development expenses, net
1.4.Other operating income and expenses
ACCOUNTING POLICYOther operating income and expenses comprise income and expenses
that do not directly relate to the operating activity of businesses within Metso Outotec or
which arise from unrealized and realized changes in the fair value of foreign currency denom-
inated financial instruments related to operations, including forward exchange contracts. Such
items include costs related to significant restructuring programs, gains and losses on disposal
of assets, and foreign exchange gains and losses, excluding those qualifying for hedge
accounting and those, reported under financial income and expenses, net. Additionally,
non-recoverable foreign taxes, which are not based on taxable profits, are reported in other
operating income and expenses, net. These include foreign taxes and tax-like payments that
are not based on double taxation treaties in force.
EUR million
Restated
Other operating income
Gain on sale of intangible and tangible assets
Rental income
Foreign exchange gains
1)
Other income
Other operating income total
Other operating expenses
Loss on disposed businesses
Loss on sale of intangible and tangible assets
Impairment of intangible and tangible assets
Foreign exchange losses
1)
Other expenses
Other operating expenses total
Other operating income and expenses, net
1)
Includes foreign exchange gains and losses resulting from trade receivables and payables and related derivatives.
Financial review 2020|Notes to the Consolidated Financial Statements 43
1.5.Personnel expenses and number of personnel
Personnel expenses
EUR million
Salaries and wages
Pension costs, defined contribution plans
Pension costs, defined benefit plans
1)
Other post-employment benefits
1)
Share-based payments
2)
Other indirect employee costs
Tota l
1)
For more information on pension costs, see note 2.7.
2)
For more information on share-based payments, see note 1.6.
Number of personnel at end of year and average number of personnel during the year
Personnel at end of the year
Average number of personnel during the year na
Board remuneration
EUR thousand
Serving Board members December 31, 2020:
Mikael Lilius
Matti Alahuhta
1)
Christer Gardell
Antti Mäkinen
Kari Stadigh
Arja Talma
Emanuela Speranza
1)
Ian W. Pearce
1)
Klaus Cawén
1)
Hanne de Mora
1)
Raimo Brand
2)
Former Board members
Ozey K. Horton, Jr.
3)
Nina Kopola
4)
Peter Carlsson
5)
Lars Josefsson
6)
Tota l
1)
Metso Outotec Board member from July 1, 2020
2)
Attended meetings as a personnel representative, without voting rights until June 30, 2020
3)
Metso Board member until April 25, 2019
4)
Resigned from Metso’s Board as of August 1, 2019
5)
Metso Board member until June 16, 2020
6)
Metso Board member until June 30, 2020
According to the decision of the 2020 Annual General Meeting, the annual fees paid to the
Board members were: Chairman of the Board EUR 150,000, Vice Chairman of the Board EUR
80,000 and other Board members EUR 65,000. An additional annual remuneration is paid to
the member of the Board elected in the position of Chairman of the Audit Committee EUR
23,000, members of the Audit Committee EUR 10,000, Chairman of the Remuneration and HR
Committee EUR 12,000, and members of the Remuneration and HR Committee EUR 5,000. The
annual fixed fees shall be paid to the Board members of Metso Outotec in proportion to the
actual length of their term of oce.
In addition, the Annual General Meeting resolved that meeting fees for attendance at
each Board and Committee meeting be paid to members of the Board of Metso Outotec as
follows: EUR 900 to each member of the Board residing in the Nordic countries, EUR 1,800 for
members of the Board residing in other European countries, and EUR 2,700 to each member
of the Board residing outside Europe. In addition, Board members shall be reimbursed for
direct costs arising from Board work.
Remuneration paid to Chief Executive Ocer and other Executive Team members
EUR Salary Fringe benefits
Performance
bonus paid
Sharebased
payment Total
2020
President and CEO
Pekka Vauramo
Other Executive
Team members
Tota l
EUR Salary Fringe benefits
Performance
bonus paid
Sharebased
payment Total
2019
President and CEO
Pekka Vauramo
Other Executive
Team members
Tota l
Remuneration paid to President and CEO Pekka Vauramo in 2020 is presented in the table
above. Mr. Vauramo participates in the remuneration programs according to the respective
terms and conditions decided by the Board. For more information on share-based payments,
see note 1.6.
It has been agreed that Mr. Pekka Vauramo will continue as the President and CEO of
Metso Outotec until the end of 2023. The President and CEO is entitled to participate in a
supplementary defined contribution pension plan. The supplementary pension contribution is
equivalent to 25% of the annual salary. For years ended December 31, 2020 and December 31,
2019 these pension premium payments for the supplementary defined contribution pension
plan totaled approximately EUR 206 thousand and EUR 188 thousand. The notice period for
Financial review 2020|Notes to the Consolidated Financial Statements 44
both parties is six months. Severance pay is full monthly salary multiplied by twelve (12) if the
agreement is terminated by the company.
Metso Outotec has a subscribed supplementary pension plan for other Metso Outotec
Executive Team members in Finland. For the years ended December 31, 2020, and December
31, 2019, these pension premium payments totaled approximately EUR 369 thousand and EUR
278 thousand, respectively.
Board share ownership in Metso Outotec
Mikael Lilius
Matti Alahuhta
Christer Gardell
Antti Mäkinen
Kari Stadigh
Arja Talma
Emanuela Speranza
Ian W. Pearce
Klaus Cawén
Hanne de Mora
Tota l
Executive Team share ownership in Metso Outotec
Pekka Vauramo
Markku Simula
Stephan Kirsch
Jari Ålgars
Ue Hansen
Markku Teräsvasara
Sami Takaluoma
Eeva Sipilä
Nina Kiviranta
Piia Karhu
Carita Himberg
Tota l
1.6.Share-based payments
ACCOUNTING POLICYMetso Outotec has share-based incentive plans for its key personnel.
The equity-settled share awards are valued based on the market price of the Metso
Outotec share on the grant date and recognized as an employee benefit expense over the
vesting period with a corresponding entry in other reserves of the equity. The historical
development of the Metso Outotec share and the expected dividends have been taken into
account when calculating the fair value. The entire share incentive, including the cash-for-
taxes portion, is recognized in equity. Also the value of the cash portion is based on the grant
date value. As a market condition, total shareholder return of the Performance Share Plans will
be taken into account when determining the fair value at grant, and it will not be changed
during the plan. The fair value of the cost estimate of the Performance Share Plans will only
be changed when service or non-market conditions are concerned.
At each balance sheet date, Metso Outotec revises its estimates on the amount of share-
based payments that are expected to vest. The impact of a revision to a previous estimate is
accrued as an employee benefit expense with a corresponding entry to equity. The historical
development of Metso Outotec share and the expected dividends have been taken into
account when calculating the fair value.
ESTIMATES AND ASSESSMENTS BY MANAGEMENTAt each balance sheet date, management
reviews its estimates for the number of shares that are expected to vest. As part of this
evaluation, Metso Outotec takes into account changes in the forecasted performance of the
Group and its reporting segments, expected turnover of the personnel benefiting from the
incentive plan, and other pertinent information impacting the number of shares to be vested.
Metso Outotec Performance and Restricted Share Plans 2020
In June 2020, Metso Outotec’s Board decided on long-term share-based incentive plans: the
Performance Share Plan (PSP) and Restricted Share Plan (RSP). The commencement of each
new PSP and RSP and the earnings criteria for each new PSP plan will be subject to a separate
decision by the Board. The PSP consists of an annually commencing plan, each with a three-
year earning period, and the complementary RSP consists of an annually commencing plan,
each with a three-year vesting period. The possible rewards are paid partly in Metso Outotec’s
shares and partly in cash.
If the participant’s employment or service ends for reasons relating to the participant
before the reward payment, no reward will be paid from the long-term incentive plans.
Performance Share Plan 2020–2022
The earning criteria for the PSP 2020–2022 is based on the total shareholder return of Metso
Outotec’s share and the achievement of the synergy targets set in connection with the
combination of the businesses. At the end of 2020, there were 10 participants in the plan, and
the potential reward corresponds to a maximum of 963,600 Metso Outotec shares, out of
which the Metso Outotec Executive Team can receive a maximum reward of 963,600 shares.
The potential reward will be paid in 2023.
Financial review 2020|Notes to the Consolidated Financial Statements 45
Metso Outotec Deferred Share Plan 2020
In July 2020, Metso Outotec’s Board of Directors decided to establish a new long-term incentive
plan for senior managers and key employees. The Deferred Share Plan (DSP) is a long-term
incentive plan that aligns and rewards the employee’s performance and Metso Outotec share
value development during a performance period. Metso Outotec Executive Team members
aren’t eligible to participate in the DSP.
If the participant’s employment or service ends for reasons relating to the participant before
the reward payment, no reward will be paid from the long-term incentive plans.
Deferred Share Plan 2020–2022
At the end of 2020, there were 163 participants in the DSP 2020–2022 plan, and the potential
reward corresponds to a maximum of 2,190,300 Metso Outotec shares. The potential reward will
be paid in 2023.
Metso Performance and Restricted Share Plans 2015–2019
In December 2014, Metso’s Board decided on long-term share-based incentive plans: the Perfor-
mance Share Plan (PSP) and Restricted Share Plan (RSP). The commencement of each new PSP
and RSP and the earnings criteria for each new PSP plan will be subject to a separate decision
by the Board. The PSP consists of an annually commencing plan, each with a three-year earning
period, and the complementary RSP consists of an annually commencing plan, each with a
three-year vesting period. The possible outstanding rewards are paid partly in Metso Outotec’s
shares and partly in cash.
If the participant’s employment or service ends for reasons relating to the participant before
the reward payment, no reward will be paid from the long-term incentive plans.
Performance Share Plan 2016–2018
The earning criteria for the PSP 2016–2018 and the potential reward are based on the total
shareholder return (TSR) of Metso’s share during 2016–2018. A total of 79,040 Metso treasury
shares were used to pay rewards to 80 participants in March 2019.
Performance Share Plan 2017–2019
The earning criteria for the PSP 2017–2019 and the potential reward are based on the total
shareholder return (TSR) of Metso’s share during 2017–2019. A total of 120,551 Metso treasury
shares were used to pay rewards to 80 participants in February 2020.
Restricted Share Plan 2017–2019
A total of 1,176 Metso treasury shares were used to pay rewards to 2 participants in February
2020.
Performance Share Plan 2018–2020
The earning criteria for the PSP 2018–2020 and the potential reward are based on the total
shareholder return (TSR) of Metso’s share during 2018–2020. The plan was evaluated in June
2020 and the earning criteria were not met; there will be no payout from PSP 2018–2020 plan.
Restricted Share Plan 2018–2020
At the end of 2020, there was 1 participant in the RSP plan; the potential reward corresponds
to 93,660 Metso Outotec shares, out of which the Metso Outotec Executive Team members can
receive a reward of 93,660 shares. The potential reward will be paid in 2021.
Performance Share Plan 2019–2021
The earning criteria for the PSP 2019–2021 was based on the total shareholder return of Metso’s
share during 2019–2021. The plan performance was evaluated in June 2020. A total of 631,710
Metso Outotec shares will be used to pay rewards to 8 participants in 2022.
Restricted Share Plan 2019–2021
At the end of 2020, there were 2 participants in the RSP plan; and the potential reward
corresponds to 124,880 Metso Outotec shares, out of which Metso Outotec Executive Team
members can receive a reward of 124,880 shares. The potential reward will be paid in 2022.
Deferred Share Unit Plan
In December 2017, Metso’s Board of Directors decided to establish a new long-term incentive
plan for senior managers and key employees. The Deferred Share Unit Plan (DSUP) is a long-
term share value-based incentive plan that aligns and rewards the employee’s performance
and Metso share value development during a performance period. Metso Outotec Executive
Team members aren’t eligible to participate in the DSUP.
Deferred Share Unit Plan 2018–2020
At the end of 2020, there were 83 participants in the DSUP plan. The potential reward will be
paid in 2021.
Deferred Share Unit plan 2019–2021
At the end of 2020, there were 95 participants in the DSUP plan. The potential reward will be
paid in 2022.
Outotec Performance Share Plan 2019–2021
Outotec’s Board of Directors decided on December 11, 2018, to adopt a Share-based Incentive
Program 2019–2021 for the company’s key personnel.
The earning criteria for the Outotec Performance Share Plan 2019–2021 were based on
operating result (EBIT) and free cash flow. A total of 321,779 Metso Outotec shares are to be
paid to 64 participants, out of which 3 Metso Outotec Executive Team members can receive a
reward of 57,335 shares. The potential reward will be paid in 2022.
Matching Share Plan 2018–2022
Metso Outotec has one active Matching Share Plan for President and CEO Pekka Vauramo.
The plan requires personal investment in Metso shares. The potential reward corresponds to
a maximum 117,075 Metso Outotec shares and will be delivered in three installments which are
subject to fulfilling the performance criterion of adjusted EBITA for each installment.
Financial review 2020|Notes to the Consolidated Financial Statements 46
Beneficiaries of and granted shares under the share ownership plan as at December 31, 2020
Beneficiaries
total Shares total
Plan 2017–2019
Granted 2020
Plan 2016–2018
Granted 2019
Expenses of share-based payments
EUR thousand
Plan PSP 2016–2018
Plan PSP 2017–2019
Plan PSP and DSUP 2018–2020
Plan PSP and DSUP 2019–2021
Plan PSP and DSUP 2020–2022
Outotec LTIP 2019
Tota l
1.7.Finance income and expenses
EUR million
Restated
Finance income
Dividends received
Interest income on cash and cash equivalents
Income on financial investments
Other finance income
Finance income total
Foreign exchange gains/losses
Finance expenses
Interest expenses from financial liabilities at amortized cost
Interest expenses on lease liabilities
Other finance expenses
Finance expenses total
Finance income and expenses, net
1.8.Income taxes
ACCOUNTING POLICYIncome taxes in the consolidated income statement includes taxes of
subsidiaries based on taxable income for the current period, tax adjustments for previous
periods, and the changes in deferred taxes. The other comprehensive income statement
(OCI) includes taxes on items presented in the OCI. Deferred taxes are determined for
temporary dierences arising between the tax base of assets and liabilities and their financial
statement carrying amounts, measured using substantially enacted tax rates.
ESTIMATES AND ASSESSMENTS BY MANAGEMENTMetso Outotec is subject to income tax in its
operating countries. Metso Outotec’s management is required to make certain assumptions
and estimates in preparing the annual tax calculations for which the ultimate tax consequence
is uncertain. Annually, Metso Outotec has tax audits ongoing in several subsidiaries and
recognizes tax liabilities for anticipated tax audit issues based on a estimate of whether
additional taxes will be due. Where the final outcome of these issues is dierent from the
estimated amounts, the dierence will impact the income tax in the period in which such
determination is made.
Components of income taxes
EUR million
Restated
Income taxes for current year
Income taxes for prior years
Change in deferred tax asset and liability
Income taxes
Dierences between income tax expense computed at the Finnish statutory rate and
income tax expense provided on earnings
EUR million
Restated
Profit before taxes
Income tax at Finnish statutory tax rate of 20.0%
Eect of dierent tax rates in foreign subsidiaries
Non-deductible expenses
Tax-exempt income or tax incentives
Foreign non-creditable withholding taxes
Deferred tax assets not booked on current year loss
Deferred tax liability on undistributed earnings
Eect of enacted change in tax rates
Income tax for prior years
Other
Income taxes
Financial review 2020|Notes to the Consolidated Financial Statements 47
Tax eects of components in other comprehensive income
EUR million
Before
taxes Tax
After
taxes
Before
taxes Tax
After
taxes
Cash flow hedges
Defined benefit plan actuarial gains (+) / losses ()
Currency translation on subsidiary net investments
Total comprehensive income (+) / expense ()
Current year tax
Deferred tax
Total
ACCOUNTING POLICYThe deferred tax asset or liability is determined for temporary dierences
arising between the tax bases of assets and liabilities and their financial statement carrying
amounts using the substantially enacted tax rates expected to apply in future years. Typical
temporary dierences arise from provisions, depreciation and amortization expense, inter-
company inventory margins, defined benefit plans, and tax loss carry-forwards. Deferred tax
liabilities are recognized in the balance sheet in full, and the deferred tax assets are only
recognized if it is probable there will be taxable income in the future against which deferred
tax can be used. Deferred tax assets are oset against deferred tax liabilities if they relate to
taxes levied by the same taxation authority.
ESTIMATES AND ASSESSMENTS BY MANAGEMENTIn determining deferred tax assets and liabilities,
Metso Outotec is required to make certain assumptions and estimates on, in particular,
future operating performance and the taxable income of subsidiaries, recoverability of tax
loss carry-forwards and potential changes in tax laws in jurisdictions where Metso Outotec
operates. A deferred tax liability based on foreign subsidiaries’ undistributed earnings has
been provided only where Metso Outotec’s management has elected to distribute such
earnings in the coming years and the distribution is subject to taxation. Because tax conse-
quences are dicult to predict, deferred tax assets and liabilities may need to be adjusted
in future coming financial years, which may have an impact in the period in which such
determination is made.
Reconciliation of deferred tax balances
2020
EUR million Jan
Charged
to income
statement
Charged
to share
holders’
equity
Acquisi
tions and
disposals
Translation
dierences
and Group
items Dec
Deferred tax assets
Tax losses carried forward
Intangible assets and property, plant
and equipment
Inventory
Provisions
Accruals
Pension related items
Other
Total deferred tax assets
Oset against deferred tax liabilities
Net deferred tax assets
Deferred tax liabilities
Purchase price allocations
Intangible assets and property, plant,
and equipment
Other
Total deferred tax liabilities
Oset against deferred tax assets
Net deferred tax liabilities
Deferred tax assets (+) / liabilities (),
net
Financial review 2020|Notes to the Consolidated Financial Statements 48
Reconciliation of deferred tax balances, comparison period
2019
EUR million Jan
Charged
to income
statement
Charged
to share
holders’
equity
Acquisi
tions and
disposals
Translation
dierences
and Group
items Dec
Deferred tax assets
Tax losses carried forward
Intangible assets and property, plant
and equipment
Inventory
Provisions
Accruals
Pension related items
Other
Total deferred tax assets
Oset against deferred tax liabilities
Net deferred tax assets
Deferred tax liabilities
Purchase price allocations
Intangible assets and property, plant
and equipment
Other
Total deferred tax liabilities
Oset against deferred tax assets
Net deferred tax liabilities
Deferred tax assets (+) / liabilities (),
net
Deferred tax liability on undistributed retained earnings in subsidiaries will be recognized when
the dividend distribution is probable in the near future and it will cause a tax impact. At the
end of year 2020 there were no substantial undistributed earnings in subsidiaries from which a
deferred tax liability is not booked.
1.9.Earnings per share
Basic
When Metso Minerals and Outotec were combined, a total of 645,851 thousand new shares
were issued as demerger consideration to Metso’s shareholders. After the share issue, the
number of Metso Outotec shares totals 828,972 thousand.
Basic earnings per share is calculated by dividing the profit attributable to shareholders of
the company by the weighted average number of shares issued and outstanding for the year,
excluding own shares held by the Parent company. The average number of shares consists
of 645,851 thousand shares addressed to Metso’s shareholders for January–June and the total
number of shares for July–December.
Earnings per share
Profit attributable to shareholders of the company, EUR million
Weighted average number of shares issued and outstanding
(inthousands)
Earnings per share, basic, EUR
1)
Based on new shares issued to Metso’s shareholders (645,851)
Earnings per share, continuing operations
Profit attributable to shareholders of the company, EUR million
Weighted average number of shares issued and outstanding
(inthousands)
Earnings per share, basic, EUR
1)
Based on new shares issued to Metso’s shareholders (645,851)
Basic, calculated with outstanding shares on December 31, 2020
Basic earnings per share is calculated by dividing the profit attributable to shareholders of the
company by the number of outstanding shares at the end of the period, excluding own shares
held by the Parent company.
Earnings per share
Profit attributable to shareholders of the company, EUR million
The number of outstanding shares at end of year (in thousands)
Earnings per share, basic, EUR
Financial review 2020|Notes to the Consolidated Financial Statements 49
Diluted
The shares to be potentially issued in the future are treated as outstanding shares when
calculating the diluted earnings per share, if they have a dilutive eect. The own shares
held by Metso Outotec are reissued within the terms of the share ownership plan to the key
personnel, if the targets defined in the plan are met. Diluted earnings per share are calculated
by increasing the weighted average number of outstanding shares by the number of shares,
would be distributed to the beneficiaries based on the results achieved, if the conditional
earnings period ended at the end of the financial period in question. As at December 31,
2020, Metso Outotec held 993,238 own shares to be used as consideration under the share
ownership plans.
Earnings per share
Profit attributable to shareholders of the company, EUR million
Weighted average number of shares issued and outstanding (in
thousands)
Adjustment for potential shares distributed (in thousands)
Weighted average number of diluted shares issued and outstanding
(in thousands)
Earnings per share, diluted, EUR
Financial review 2020|Notes to the Consolidated Financial Statements 50
2
Operational assets and liabilities
51Financial review 2020|Notes to the Consolidated Financial Statements
Net working capital and capital employed ..................
Trade receivables...............................................
Other receivables . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Inventory........................................................
Trade and other payables.....................................
Provisions.......................................................
Postemployment obligations.................................
2.1.Net working capital and capital employed
Net working capital, balance sheet value
EUR million
Inventories
Trade receivables
Other non-interest-bearing receivables
Customer contract assets and liabilities., net
Trade payables
Advances received
Other non-interest bearing liabilities
Net working capital
Capital employed
EUR million
Net working capital
Intangible assets
Property, plant and equipment
Right-of-use assets
Non-current investments
Interest-bearing receivables
Liquid funds
Tax payables and receivables, net
Interest payables, net
Capital employed
2.2.Trade receivables
ACCOUNTING POLICYTrade receivables are invoiced receivables from customers related to
Metso Outotec’s ordinary business transactions. General payment terms are typically from 30
days to 90 days and they are non-interest-bearing receivables. Trade receivables are initially
recognized at recoverable value and subsequently valued at amortized cost. If, exceptionally
an over 360- day payment term was oered to a client, the invoiced amount is discounted to
its fair value.
Metso Outotec may enter into an agreement to sell trade receivables. Trade receivables
will be derecognized when payment has been received and there is certainty that the credit
risk and other risks and rewards have been transferred to a third party.
In measuring expected credit losses, Metso Outotec applies the IFRS 9 simplified
approach, which uses a lifetime expected loss allowance to be assessed and recognized
regularly. Credit loss risk related to customer contract assets is covered mainly by the advance
payments received from the clients.
Based on an analysis of the previous year’s credit losses by ageing category and nature, as
well as a macroeconomic outlook in the near future, Metso Outotec recognizes a credit loss
allowance from 0.2% to 5% on trade receivables undue or less than 180 days overdue. For
trade receivables more than 180 days overdue, the impairment is assessed individually, but
without any credit guarantee, collateral, or similar assurance on the recoverability, a minimum
credit loss provision of 25% (over 180 days overdue) and 100% (over 360 days overdue) will
be recognized. Trade receivables are written o when there is no reasonable expectation
of recovery. Probability of bankruptcy, other financial reorganization, or a similar situation
indicating insolvency of the client triggers a final write o.
ESTIMATES AND ASSESSMENTS BY MANAGEMENTEstimates on expected credit losses and credit
loss provisions to be recognized are based on management’s best judgment. The judgment
is based on experience with past years’ credit losses, current economic outlook and client
segment, and location information. Trade receivables are collected actively, and possible
impairment analyzed regularly by the businesses and Metso Outotec legal units, and the
necessary actions to secure receivables are made by management. When a credit loss
provision of a trade receivable is assessed individually, collateral, credit guarantees, financial
position of the client, and earlier payment behavior are taken into consideration.
EUR million
Trade receivables
Trade receivables for sale
Trade receivables total
Trade receivables classified as held for sale
Tota l
Provision on trade receivables by ageing category
EUR million
Trade
receivables
gross
of which
provided
Trade
receivables
gross
of which
provided
Undue
overdue 1–30 days
overdue 31–180 days
overdue 181–360 days
overdue 360– days
Total, gross
Total, net
Realized write-os amounted to EUR 3 million in 2020 (EUR 4 million in 2019).
Financial review 2020|Notes to the Consolidated Financial Statements 52
Provision for impairment of trade receivables
EUR million
Accumulated provision at beginning of year
Impact of exchange rates
Acquisitions
Impact in income statement
Other change
Accumulated provision at end of year
2.3.Other receivables
ACCOUNTING POLICYOther non-interest-bearing receivables are recognized in the balance
sheet at fair value which can be subsequently written down due to impairment. The
impairment is expensed under selling, general and administrative expenses.
ESTIMATES AND ASSESSMENTS BY MANAGEMENTThe Group policy is to calculate an impairment
loss based on the best estimate of the amounts that are potentially uncollectable at the
balance sheet date. Metso Outotec management actively monitors the amount of receivables
past due globally and initiates action as necessary.
EUR million
Non
current Current Tota l
Non
current Current Tota l
Loan receivables
Prepaid expenses and accrued
income
VAT, payroll tax, and social charge
receivables
Pension assets
Other receivables
Non-interest-bearing receivables
total
Other non-interest-bearing receivables included EUR 11 million in 2020 and EUR 15 million
in 2019 of Brazilian tax credits arising from delivery of goods and transfer of services (ICMS)
recognized by local subsidiaries. Of that amount, EUR 2 million in 2020 and 3 million in 2019
was classified as long term.
2.4.Inventory
ACCOUNTING POLICYInventories are valued at the lower of historical cost calculated or net
realizable value. Costs are measured on a weighted average cost basis and include purchase
costs as well as transportation and processing costs. The costs of finished goods include
direct materials, wages, and salaries plus employer social contributions, subcontracting, and
other direct costs, as well as a portion of production and project administration overheads.
Net realizable value is the estimated amount that can be realized from the sale of the asset in
the normal course of business, less the cost to sell.
Inventories are shown net of a provision for obsolete and slow-moving inventories. Metso
Outotec’s policy is to maintain a provision for slow-moving and obsolete inventory based
on the best estimate of such amounts at the balance sheet date. An obsolescence provision
is charged to the income statement in the period in which the obsolescence is determined.
Estimates are based on a systematic, on-going review and evaluation of inventory balance
Trade-in equipment received is recorded as inventory at the lower of cost or net realizable
value.
ESTIMATES AND ASSESSMENTS BY MANAGEMENTInventory valuation requires management to
make estimates and judgments particularly relating to obsolescence and expected selling
prices in dierent market conditions. It also entails management’s assessment of the general
market trends in global markets.
EUR million
Materials and supplies
Work in progress
Finished products
Inventories
For continuing operations, the cost of inventories recognized as expense amounted EUR 2,331
million in 2020 and EUR 1,958 million in 2019.
Changes in provision for inventory obsolescence
EUR million
Balance at beginning of year
Impact of exchange rates
Additions charged to expense
Acquisitions
Used reserve
Deductions / other additions
Classification as held for sale
Balance at end of year
Financial review 2020|Notes to the Consolidated Financial Statements 53
2.5.Trade and other payables
ACCOUNTING POLICYThe fair values and carrying amounts of trade and other payables are
considered to be the same, due to the short-term maturities. The maturities of the current
non-interest-bearing liabilities rarely exceed six months. The maturities of trade payables are
largely determined by trade practices and individual agreements between Metso Outotec and
its suppliers.
Accrued personnel costs, including holiday pay, are settled in accordance with local laws
and regulations.
EUR million
Non
current Current Tota l
Non
current Current Tota l
Trade payables
Derivative instruments
Other payables
Accrued interests
Accrued personnel costs
Accrued project costs
VAT, payroll tax, and social
charge payables
Other payables
Other payables
2.6.Provisions
ACCOUNTING POLICYProvisions are recognized when the Group has a legal or constructive
obligation as a result of a past event, and it is probable that financial benefits will be required
to settle the obligation and a reliable estimate the amount of the obligation can be made.
Provisions, for which settlement is expected to occur more than one year after the initial
recognition, are discounted to their present value and adjusted in subsequent closings for the
time eect.
Warranty and guarantee provisions
Metso Outotec issues various types of contractual product warranties under which it generally
guarantees the performance levels agreed in the sales contract, the performance of products
delivered during an agreed warranty period and services rendered for a certain period or
term. The provision for estimated warranty costs is based on historical realized warranty costs
for deliveries of standard products and services in the past. The typical warranty period is 12
months from the accepted delivery. The adequacy of provisions is assessed periodically on a
case by case basis.
Restructuring and capacity adjustment costs
A provision for restructuring and capacity adjustment costs is recognized only after
management has approved, committed to and started to implement a formal plan.
Employee termination benefits are recognized after the representatives of employees or
individual employees have been informed of the intended measures in detail and the
related compensation packages can be reliably measured. The costs included in a provision
for capacity adjustment are those costs that are either incremental or incurred as a direct
result of the plan or as the result of a continuing contractual obligation with no continuing
economic benefit to Metso Outotec or a penalty incurred to cancel the contractual obligation.
Restructuring and capacity adjustment expenses are recognized in either cost of goods
sold or in selling, general and administrative expenses depending on the nature of the
restructuring expenses. Restructuring costs, which are recorded under other operating income
and expenses, net, can also include other costs incurred as a result of the plan, such as asset
write-downs.
Environmental remediation costs
Metso Outotec recognizes provisions associated with environmental remediation obligations
when there is a present obligation as a result of past events, an outflow of resources is
considered probable and the obligation can be estimated reliably. Such provisions are
adjusted as further information develops or circumstances change. Recoveries of environ-
mental remediation costs from other parties are recorded as assets when their receipt is
deemed virtually certain.
Provision for loss making projects
A provision for loss making projects is booked when the costs needed to settle the perfor-
mance obligations of the contract exceed the consideration to be received. Such a provision
for the unrecognized portion of the loss is recognized immediately when these conditions
have been met and is revised according to the progress of the project.
ESTIMATES AND ASSESSMENTS BY MANAGEMENTProvisions booked require management to
estimate the future costs needed to settle the obligations and to estimate the possible
outcomes of claims or lawsuits. The outcome depends on future development and events,
so the final costs needed and the timing to settle the obligation may dier from the initial
provision estimated.
For larger and long-term delivery projects and sales involving new technology, additional
warranty provisions can be established on a case by case basis to take into account the
potentially increased risk.
Financial review 2020|Notes to the Consolidated Financial Statements 54
Provisions
EUR million
Non
current Current Tota l
Non
current Current Tota l
Warranty and guarantee provisions
Project loss provisions
Restructuring provisions
Environmental remedial provisions
Other provisions
1)
Tota l
1)
Include provisions related to lawsuits and personnel liabilities.
Changes in provisions
Warranty
and
guarantee
provisions
Project loss
provisions
Restruc
turing
provisions
Environ
mental
remediation
provisions
EUR million Tota l
Carrying value at beginning of year
Impact of exchange rates
Acquisitions
Addition charged to expense
Used reserve
Reversal of reserve / other changes
Classification as held for sale
Carrying value at end of year
2.7.Post-employment obligations
ACCOUNTING POLICYMetso Outotec has several dierent pension schemes in accordance with
local regulations and practices in countries where it operates. In certain countries, the pension
schemes are defined benefit plans with retirement, disability, death, and other post-retirement
benefits, such as health services, and termination income benefits. The retirement benefits are
usually based on the number of service years and the salary levels of the final service years.
Metso Outotec has both defined contribution and defined benefit schemes. The schemes are
generally funded through payments to insurance companies or to trustee-administered funds.
Other arrangements are unfunded with benefits being paid directly by Metso Outotec as
they fall due. All arrangements are subject to local tax and legal restrictions in their respective
jurisdictions.
In the case of defined benefit plans, the liability recognized from the plan is the present
value of the defined benefit obligation as of the balance sheet date less the fair value of the
plan assets. Independent actuaries calculate the defined benefit obligation by applying the
projected unit credit method. The present value of the defined benefit obligation is deter-
mined by discounting the estimated future cash flows using the interest rates of high-quality
corporate bonds that are denominated in the currency in which the benefits will be paid, and
having maturity approximating to the terms of the related pension obligation. The cost of
providing retirement and other post-retirement benefits to personnel is charged to profit and
loss concurrently with the service rendered by personnel. Net interest is recorded through
financial income and expenses in the income statement. Actuarial gains and losses arising
from experience adjustments and changes in actuarial assumptions are recognized through
OCI in shareholders’ equity in the period in which they arise. Past service costs, gains and
losses on curtailments, or settlements are recognized immediately in the income statement.
The contributions to defined contribution plans and multi-employer and insured plans are
charged to profit and loss concurrently with the payment obligations.
ESTIMATES AND ASSESSMENTS BY MANAGEMENTThe present value of the pension obligations is
based on annual actuarial calculations, which use several assumptions, such as the discount
rate and expected return on assets, salary and pension increases, and other actuarial factors.
As a result, the liability recorded on Metso Outotec’s balance sheet and cash contributions to
funded arrangements are sensitive to changes. Where the actuarial experience diers from
those assumptions, gains and losses result, which are recognized in OCI. Sensitivity analyses
on the present value of the defined benefit obligation have been presented in the tables.
Assets of Metso Outotec’s funded arrangements are managed by external fund managers.
The allocation of assets is reviewed regularly by those responsible for managing Metso
Outotec’s arrangements based on local legislation, professional advice, and consultation with
Metso Outotec, based on acceptable risk tolerances.
Financial review 2020|Notes to the Consolidated Financial Statements 55
Metso Outotec’s pension and other post-employment plans
The pension arrangements in Germany, the US, the UK and Canada together represent 87% of
Metso Outotec’s defined benefit obligation and 81% of its pension assets. These arrangements
provide retirement income, which is substantially based on salary and service at or near
retirement.
The German plans are unfunded with benefits paid directly by the company as they fall due.
In the US and Canada, annual valuations are carried out to determine whether cash funding
contributions are required in accordance with local legislation. In the UK, Metso Outotec’s
defined benefit pension arrangement is closed to future accrual. Plan assets are held by a
separate pension fund and are administered by a board of trustees. Cash contributions are
determined on a triennial basis in accordance with local funding legislation, with the level of
cash payments being agreed between the trustees and Metso Outotec.
Assets of Metso Outotec’s funded arrangements are managed by external fund managers.
The allocation of assets is reviewed regularly by those responsible for managing Metso’s
arrangements based on local legislation, professional advice, and consultation with Metso
Outotec, based on acceptable risk tolerances.
The expected contributions to plans in 2021 are EUR 4 million. Metso Outotec paid contri-
butions of EUR 7 million to defined benefit plans in 2020.
Amounts recognized in the balance sheet as of December 31
Pension benefits
Other post
employment benefits Tota l
EUR million
Present value of funded
obligations
Fair value of plan assets
Present value of unfunded
obligations
Unrecognized assets
Amounts in the balance sheet
liabilities
assets
liabilities classified as held for
sale
Net liability
Movements in net liability recognized in the balance sheet (total)
Tota l Total
EUR million
Net liability at beginning of year
Adjustments due to business combinations
Net expense recognized in the income statement
Employer contributions
Gain () / loss (+) recognized through OCI
Translation dierences
Net liability at end of year
Financial review 2020|Notes to the Consolidated Financial Statements 56
Amounts recognized in the income statement
Pension benefits
Other post
employment benefits Tota l
EUR million
Employer’s current service cost
Net interest on net surplus (+) /
deficit ()
Settlements
Gain () / loss (+) recognized in
the income statement
Recognition of past service cost
(+) / credit ()
Administration costs paid by the
scheme
Expense (+) / income ()
recognized in the income
statement
Amounts recognized through OCI
Pension benefits
Other post
employment benefits Tota l
EUR million
Return on plan assets, excluding
amounts included in interest
expense (+) / income ()
Actuarial gain () / loss (+)
on liabilities due to change in
financial assumptions
Actuarial gain () / loss (+)
on liabilities due to change in
demographic assumptions
Actuarial gain () / loss (+) on
liabilities due to experience
Gain () / loss (+) as result of
asset ceiling
Total gain () / loss (+)
recognized through OCI
Changes in the value of the defined benefit obligation
Pension benefits
Other post
employment benefits Tota l
EUR million
Defined benefit obligation at
beginning of year
Other adjustment to present value
Employer’s current service cost
Interest cost
Business combinations
Plan participant contributions
Past service cost (+) / credit ()
Actuarial gain () / loss (+) due to
change in financial assumptions
Actuarial gain () / loss (+)
on liabilities due to change in
demographic assumptions
Actuarial gain () / loss (+) due to
experience
Settlements
Benefits paid from the
arrangement
Benefits paid direct by employer
Translation dierences
Defined benefit obligation at end
of year
Changes in the fair value of the plan assets during the year
Pension and other
postemployment
benefits total
EUR million
Fair value of assets at beginning of year
Interest income on assets
Return on plan assets, excluding interest income
Assets distributed on settlements
Business combinations
Employer contributions
Plan participant contributions
Benefits paid from the arrangements
Benefits paid direct by employer
Administration expenses paid from the scheme
Translation dierences
Fair value of assets at end of year
Financial review 2020|Notes to the Consolidated Financial Statements 57
Major categories of plan assets as a percentage of total plan assets as at December 31
Quoted Unquoted Tota l
Equity securities % % % % % %
Bonds % % % % % %
Property % % % % % %
Cash % % % % % %
Insurance contracts % % % % % %
Other % % % % % %
Tota l
%
%
%
%
%
%
As at December 31, 2020 there were no plan assets invested in aliated or property occupied
by aliated companies.
Principal actuarial assumptions at December 31 expressed as weighted averages
%
Benefit obligation:
Discount rate % %
Rate of salary increase % %
Rate of pension increase % %
Expense in income statement:
Discount rate % %
Rate of salary increase % %
Rate of pension increase % %
The calculated life expectancy of persons covered by defined benefit plans is based on
regularly updated local mortality tables. These are shown in the table below.
Weighted average life expectancy used for the major defined benefit plans
Life expectancy at
age of for a male
member currently
aged
Life expectancy at
age of for a male
member currently
aged
In years
Germany
United States
United Kingdom
Canada
Life expectancy is allowed for in the assessment of the Defined Benefit Obligation using
mortality tables that are generally based on experience within the country in which the
arrangement is located with (in many cases) an allowance made for anticipated future changes
in longevity.
Sensitivity analyses on the present value of the Defined Benefit Obligation in the below
table presents the present value of the Defined Benefit Obligation when major assumptions
are changed while others held constant.
Sensitivity analyses
% Pension Other Total Pension Other Total
Discount rate
Increase of 0.25%
Decrease of 0.25%
Salary increase rate
Increase of 0.25%
Decrease of 0.25%
Pension increase rate
Increase of 0.25%
Decrease of 0.25%
Medical cost trend
Increase of 0.25%
Decrease of 0.25%
Life expectancy
Increase of one year
Decrease of one year
Weighted average duration of Defined Benefit Obligation, expressed in years
In years Pension Other Total Pension Other Total
At December 31
Financial review 2020|Notes to the Consolidated Financial Statements 58
3
Intangible and tangible assets
59Financial review 2020|Notes to the Consolidated Financial Statements
Goodwill and other intangible assets ........................
Tangible assets .................................................
Depreciation and amortization................................
Rightofuse assets ...........................................
3.1.Goodwill and other intangible assets
ACCOUNTING POLICY
Goodwill and other intangible assets with an indefinite useful life
Goodwill represents the excess of acquisition costs over the fair value of net identified
assets acquired and liabilities assumed and the fair values of previously owned interests and
non-controlling interests. Goodwill is allocated to cash generating units (CGUs), which are
the reportable segments Aggregates, Minerals, and Metals. If Metso Outotec reorganizes
its reporting structure, goodwill is reallocated to the cash generating units aected based
on their relative fair values at the time of the reorganization. The carrying value of goodwill
is tested with the CGU’s value in use or the CGU’s fair value less costs of disposal, when
appropriate. Previously recognized impairment losses on goodwill are not reversed.
Other intangible assets with an indefinite useful life, such as brand values, are not
amortized. Currently, such assets are tested for impairment annually as part of the appro-
priate CGU tested for impairment. Previous losses on impairment are only reversed to the
extent that the new carrying amount of the assets does not exceed the carrying amount the
asset would have had, if the asset had not been impaired.
Other intangible assets
Other intangible assets with a definite useful life, mainly trademarks, patents, licenses, IT
software, or acquired order backlog are measured at costs less accumulated amortizations
and impairment losses.
Amortization of intangible assets
Amortization of intangible assets with a definite useful life is calculated on a straight-line basis
over the useful life of the assets as follows:
Patents and licenses 5–10 years
Computer software 3–5 years
Technology 3–20 years
Customer relationships 3–20 years
Other intangible assets < 1–20 years
The probable useful lives of assets are reviewed annually. If material deviations from
previous estimates arise, the useful lives are reassessed. The carrying value of intangible assets
subject to amortization is reviewed for impairment whenever events or circumstances indicate
that the carrying amount of an asset may not be recoverable. A previously recognized
impairment loss may be reversed if there is a significant improvement of the circumstances
having initially caused the impairment, but not to a higher value than the carrying amount,
that would have been recorded had there been no impairment in prior years.
Research and development expenses comprise salaries, administration costs, depreciation
and amortization of tangible and intangible assets, and they are mainly recognized as incurred.
When material development costs meet certain capitalization criteria under IAS 38, they are
capitalized and amortized during the expected useful life of the underlying technology.
Goodwill and other intangible assets
EUR million Goodwill
Patents and
licenses
Capitalized
software
Other
intangible
assets
Intangible
assets total
2020
Acquisition cost at beginning of
year
Translation dierences
Business acquisitions
Business disposals
Capital expenditure
Reclassifications
Other changes
Acquisition cost at end of year
Accumulated depreciation at
beginning of year
Translation dierences
Business acquisitions
Business disposals
Other changes
Impairment losses
Amortization charges for the year,
continuing operations
Amortization charges for the year,
discontinued operations
Accumulated depreciation at end of
year
Reclassified to held for sale
Net book value at end of year
Financial review 2020|Notes to the Consolidated Financial Statements 60
EUR million Goodwill
Patents and
licences
Capitalized
software
Other
intangible
assets
Intangible
assets total
2019
Acquisition cost at beginning of
year
Translation dierences
Business acquisitions
Business disposals
Capital expenditure
Reclassifications
Other changes
Acquisition cost at end of year
Accumulated depreciation at
beginning of year
Translation dierences
Business acquisitions
Business disposals
Other changes
Impairment losses
Amortization charges for the year
Accumulated depreciation at end of
year
Net book value at end of year
Impairment testing
ACCOUNTING POLICYGoodwill and other intangible assets with an indefinite useful life are
tested for impairment annually. The testing of goodwill and other intangible assets with an
indefinite useful life is performed at the cash generating unit level. If the carrying value of
goodwill exceeds the recoverable value, an impairment is recognized in the income statement
under depreciations and amortizations. Impairment losses on goodwill are not reversed.
Currently, Metso Outotec’s management has defined three separate CGU’s, Aggregates,
Minerals, and Metals, to which goodwill has been allocated.
The recoverable amounts of CGUs are based on value in use calculations, where the
estimated future cash flows of CGUs are discounted to their present value. The cash flows
are derived from the current year’s last-quarter estimate, the following year’s budget, and the
approved strategy for the next four years, beyond which cash flows are calculated using the
terminal value method. The terminal growth rate used is based on management’s judgment
regarding the average long-term growth. Cash flows include only normal maintenance
investments and exclude any potential investments that enhance the CGU’s performance and
acquisitions.
ESTIMATES AND ASSESSMENTS BY MANAGEMENTValue in use calculations are inherently
judgmental and highly susceptible to change from period to period because they require
management to make assumptions about future supply and demand related to its individual
business units, future sales prices, profit margins, and achievable eciency savings over time.
The value of benefits and savings expected from the eciency improvement programs are
inherently subjective. Metso Outotec management estimates sales growth rate and EBITDA
development for the testing period as well as the discount factor used. The present value
of the cash generating units is discounted using the CGU’s weighted average cost of capital
(WACC) calculated by Metso Outotec. WACC calculations include judgments regarding,
among other things, relevant beta factors, peer companies, and capital structure to use.
Metso Outotec performs impairment testing annually, or whenever there is an indication
of impairment. Typical triggering events are material and permanent deterioration in the
global economy or political environment, observed significant under-performance relative
to projected future performance, and significant changes in Metso Outotec’s strategic
orientations.
Expected useful lives and remaining amortization periods for other intangible assets are
reviewed annually by management. Acquisitions, disposals, and restructuring actions typically
generate a need for the reassessment of the recoverable amounts and remaining useful
lives of the assets. When the other intangible assets are measured at fair value, less costs
of disposal, the selling price, incremental costs, and selling costs need to be estimated by
management.
Upon initial acquisition, Metso Outotec uses readily available market values to determine
the fair values of acquired net assets to be allocated. However, when this is not possible,
the valuation is based on past performance of such an asset and expected future cash
generating capacity, which requires management to make estimates and assumptions of the
future performance and use of these assets. Any change in Metso Outotec’s future business
priorities may aect the recoverable amounts.
Goodwill allocation to cash generating units
EUR million
Balance at the beginning of year
Translation dierences
Allocation to discontinued operations
Acquisitions and disposals
Balance at end of year
EUR million Minerals Aggregates Metals Total
Balance at end of year
During 2020, goodwill increased by EUR 520 million, due to the reverse acquisition of Outotec
Group and the acquisition of Brian Investment Pty Ltd. In addition, EUR 18 million was allocated
to the Recycling business, which has been classified as a discontinued operation. For more
details, see notes 5.4 and 5.5.
Financial review 2020|Notes to the Consolidated Financial Statements 61
The goodwill from the reverse acquisition of Outotec Group has been allocated to the
Minerals and Metals segments. According to the value in use calculation, EUR 437 million of
goodwill is allocated to the Minerals segment and EUR 79 million to the Metals segment.
The value of other intangible assets with indefinite useful life totaled EUR 8 million in 2020
(EUR 16 million in 2019), which comprises the brand values in the Minerals segment. The
discontinued operations portion of the brand values totaled EUR 8 million.
Annual impairment test in 2020
As at December 31, 2020, goodwill totaled EUR 1,052 million. In accordance with the Metso
Outotec reporting structure, goodwill is allocated to cash generating units, Aggregates,
Minerals, and Metals. The goodwill related to the reverse acquisition of Outotec Group
was allocated to the Minerals and Metals segments. The cost of centralized Group services
were allocated to CGUs based on their proportional share of sales volume. Metso Minerals
carve-out financial statement 2019 goodwill was allocated entirely to Metso’s Minerals segment.
Given that the recoverable amounts of each CGU significantly exceeded the carrying
value of goodwill and other tested assets, no indication of impairment was found in 2020. The
value in CGUs were derived from estimates, budgets, and strategy figures reviewed by Metso
Outotec’s management and approved by the Board of Directors.
The key assumptions used in assessing the recoverable amount are the profitability and
growth rate in the estimate period, long-term average growth in the terminal period and
discount rate. The key values used were the following:
% Minerals Aggregates Metals
Sales growth in four-year estimate period % % %
EBITDA % range in four-year estimate period %% %% %%
Growth rate in the terminal period % % %
WACC after tax % % %
WACC before tax % % %
Values assigned to key assumptions reflect past experience and the management’s expecta-
tions on the future sales and production volumes, which are based on the current structure
and production capacity of each CGU. The seasonality and current market situation of each
cash generating unit have been considered separately. In addition, data on growth, demand,
and price development, provided by various research institutions, have been utilized. The
growth rate of 1.7% for the terminal period is based on the long-term expectations on the
growth in the Metso Outotec’s market environments, considering the current low interest rate
environment and overall financial market situation.
WACC before tax is used as a discount factor in the calculations. It takes into account
the expected return on both debt and equity and has been derived from the WACC on
comparable peer industry betas, capital structure, and tax rates. CGU WACCs are evaluated
annually for testing, and CGU-specific risk is incorporated through individual beta factors from
the market data of the segment’s peer companies.
Sensitivity analysis
The sensitivity to impairment of the calculations of each cash generating unit was tested in the
following scenarios:
• Scenario 1: increasing WACC by 2.0 percentage points
• Scenario 2: reducing the terminal growth rate from 1.7% to 1.2%
Impact on the value in use of the CGUs in the sensitivity analysis
% WACC increase by pp Terminal growth from % to %
Minerals % %
Aggregates % %
Metals % %
The sensitivity analysis also includes several cash projections on break-even levels of EBITDA%,
WACC, and sales growth, based on a reasonable change in the future performance of the
CGU. However, the impact on the present value obtained is limited, as long as there is no
permanent weakening expected for the business, which would aect the terminal value.
Based on these sensitivity analyses, the management believes that no reasonably possible
change of the key assumptions used would cause the carrying value of any CGU to exceed its
recoverable amount. A decrease in the terminal growth rate from 1.7% to 1.2% did not cause
an impairment risk. A 2 percent increase in WACC would cause an impairment risk of EUR 23
million in the Metals segment.
Financial review 2020|Notes to the Consolidated Financial Statements 62
3.2.Tangible assets
ACCOUNTING POLICYTangible assets are stated at historical cost, less accumulated depreciation
and impairment loss, if any. The tangible assets of acquired subsidiaries are measured at their
fair value at the acquisition date.
Depreciation is calculated on a straight-line basis over the expected useful lives of the
assets as follows:
Buildings and structures 15–40 years
Machinery and equipment 3–20 years
Land and water areas are not depreciated.
Expected useful lives are reviewed at each balance sheet date and, if they dier signifi-
cantly from previous estimates, the remaining depreciation periods are adjusted accordingly.
Subsequent improvement costs related to an asset are included in the carrying value of
such asset or recognized as a separate asset, as appropriate, only when the future economic
benefits associated with the costs are probable and the related costs can be separated from
normal maintenance costs.
Metso Outotec reviews tangible assets to be held and used by the company for
impairment whenever events and changes in circumstances indicate that the carrying amount
of an asset may not be recoverable. Gains and losses on the disposal of tangible assets
and possible impairments are recognized in operating income and expenses. A previously
recognized impairment loss may be reversed if there is a significant improvement in the
circumstances having initially caused the impairment, however not to a higher value than
the carrying amount that, would have been recorded had there been no impairment in prior
years.
Capitalized interests
The interest expenses of self-constructed tangible assets are capitalized in Metso Outotec’s
financial statements. The capitalized interest expense is amortized over the estimated useful
life of the underlying asset.
Government grants
Government grants relating to additions to tangible assets are deducted from the acquisition
cost of the asset and they reduce the depreciation charge of the related asset. Other
government grants are deferred and recognized as profit concurrently with the costs they
compensate.
ESTIMATES AND ASSESSMENTS BY MANAGEMENTAcquisitions, disposals and restructuring actions
typically generate a need for reassessment of the recoverable values and remaining useful
lives of assets. When tangible assets are valued at fair value less costs of disposal, the selling
price, incremental costs and selling costs need to be estimated by management.
Tangible assets
EUR million
Land and
water areas
Buildings
and
structures
Machinery
and
equipment
Assets
under
constrution
Tangible
assets total
2020
Acquisition cost at beginning of year
Translation dierences
Business acquisitions
Capital expenditure
Reclassifications
Other changes
Acquisition cost at end of year
Accumulated depreciation at
beginning of year
Translation dierences
Business acquisitions
Other changes
Impairment losses
Depreciation charges for the year,
continuing operations
Depreciation charges for the year,
discontinued operations
Accumulated depreciation at end of
year
Classification as held for sale
Net book value at end of year
Financial review 2020|Notes to the Consolidated Financial Statements 63
EUR million
Land and
water areas
Buildings
and
structures
Machinery
and
equipment
Assets
under
construc
tion
Tangible
assets total
2019
Acquisition cost at beginning of
year
Translation dierences
Business acquisitions
Business disposals
Capital expenditure
Reclassifications
Other changes
Acquisition cost at end of year
Accumulated depreciation at
beginning of year
Translation dierences
Business acquisitions
Business disposals
Other changes
Impairment losses
Depreciation charges for the year,
continuing operations
Depreciation charges for the year,
discontinued operations
Accumulated depreciation at end of
year
Net book value at end of year
3.3.Depreciation and amortization
Depreciation and amortization
EUR million
Intangible assets from acquisitions
Other intangible assets
Tangible assets
Buildings and structures
Machinery and equipment
Right-of-use assets
Land areas
Buildings and structures
Machinery and equipment
Tota l
Depreciation and amortization by function
EUR million
Cost of goods sold
Selling, general, and administrative expenses
Tota l
The depreciation and amortizations of discontinued operations totaled EUR 2 million in year
2020.
3.4.Right-of-use assets
ACCOUNTING POLICYMetso Outotec recognizes a right-of-use asset in the balance sheet for
lease agreements which give the right to use the asset during the lease period and the lease
liability based on the lease payment obligation. The right-of-use assets and corresponding
lease liabilities are recognized at present value. Lease liabilities include the following payments:
• fixed payments, less any lease incentives provided by the lessor;
• variable payments that depend on an index or a rate;
• expected payments under residual value guarantees;
• the exercise price of purchase options when exercise is estimated to be reasonably certain;
and
• penalties for terminating the lease if the lease term reflects the exercise of a termination
option.
Lease payments are discounted by using the implicit interest rate in the lease to the extent
it can be readily determined. Otherwise the currency specific incremental borrowing rate
is used as the discount rate. Interest expenses are recognized in the income statement as
finance expense.
Right-of-use assets are measured at cost. The cost comprises of the following:
• lease liability;
• lease payments made at or before the commencement of the lease, less lease incentives
received;
• initial direct costs; and
• estimated dismantling and restoration costs.
Subsequently, right-of-use assets are measured at cost and depreciated over the shorter of
estimated useful life and the lease term. Metso Outotec’s right-of-use assets consist primarily
of operative and oce premises in the category of Buildings, and cars, operative machinery,
and equipment in the category of Machinery and equipment. The depreciations of right-
of-use assets are recognized in the in the income statement in cost of sales and selling and
administrative expenses.
Metso Outotec uses practical expedients provided for leases. Lease payments for leases
of low value assets and short-term leases (shorter than twelve months) are expensed in the
income statement on a straight-line basis. Low value assets comprise IT equipment and other
small oce items.
Financial review 2020|Notes to the Consolidated Financial Statements 64
The lease payments are presented in the cash flow from financing activities, and the
interest related to leases are presented in the cash flow from operating activities. Lease
payments related to short-term leases and low-value assets are presented in the cash flow
from operating activities.
Modifications to lease agreements may result in adjustments to existing right-of-use assets
and lease liabilities. A gain or loss arising from a modification or a termination of a lease
agreement is recognized as other operating income or other operating expenses in the
income statement.
A number of lease contracts include extension and termination options. Such options have
been taken into account when determining the lease term. A period covered by Metso Outo-
tec’s option to extend the lease is included in the lease term if such option is suciently likely
to be exercised. Further, a period covered by Metso Outotec’s option to terminate the lease is
included in the lease term if it is reasonably certain that such option will not be exercised.
ESTIMATES AND ASSESSMENTS BY MANAGEMENTThe most significant management judgment
relates to lease agreements that include extension or early termination options for Metso
Outotec. For these contracts, management needs to assess the probability of exercising
such option, which may significantly aect the estimated length of the lease term and,
consequently, the amounts of right-of-use asset and lease liability, as well as the related
depreciation and interest expense. Management judgment is also applied in defining the
incremental borrowing rate used to calculate the present value of the future lease payments.
Amounts recognized in balance sheet
2020
EUR million
Land and
water areas Buildings
Machinery and
equipment
Rightofuse
assets total
Acquisition cost at beginning of year
Translation dierences
Acquisitions
Additions
Derecognition
Acquisition cost at end of year
Accumulated depreciation at beginning of year
Translation dierences
Accumulated depreciations for derecognized
contracts
Depreciation charges for the year, continuing
operations
Depreciation charges for the year,
discontinued operations
Accumulated depreciation at end of year
Classification as held for sale
Net book value at end of year
2019
EUR million
Land and
water areas Buildings
Machinery
and
equipment
Right
ofuse
assets total
Acquisition cost at beginning of year
Translation dierences
Acquisitions
Additions
Derecognition
Acquisition cost at end of year
Accumulated depreciation at beginning of year
Translation dierences
Accumulated depreciations for derecognized
contracts
Depreciation charges for the year, continuing
operations
Depreciation charges for the year, discontinued
operations
Accumulated depreciation at end of year
Net book value at end of year
Amounts recognized in profit and loss
EUR million
Operating profit
Depreciation expense on right-of-use assets
Rental expense relating to leases of low-value assets
Rental expense relating to leases of short-term assets
Finance expenses
Interest expense on lease liabilities
Total amount recognized in profit and loss
The total cash outflow for leases including short-term leases and leases of low-value assets, in
2020 was EUR 42 million (EUR 30 million in 2019).
A maturity analysis of lease liabilities is presented in note 4.5.
Financial review 2020|Notes to the Consolidated Financial Statements 65
4
Capital structure and financial instruments
Financial review 2020|Notes to the Consolidated Financial Statements 6666Financial review 2020|Notes to the Consolidated Financial Statements
Financial risk management....................................
Financial assets and liabilities by category...................
Liquid funds ....................................................
Equity ...........................................................
Borrowings and lease liabilities ...............................
Interestbearing net debt reconciliation .....................
Contingent liabilities and other commitments ...............
Derivative instruments .........................................
4.1.Financial risk management
As a global company, Metso Outotec is exposed to a variety of business and financial risks.
Financial risks are managed centrally by the Group Treasury under annually reviewed written
policies approved by the Board of Directors. Treasury operations are monitored by the Treasury
Management Team chaired by the CFO. Group Treasury identifies, evaluates and hedges
financial risks in close cooperation with the operating units. Group Treasury functions as
counterparty to the operating units, manages centrally external funding, and is responsible
for the management of financial assets and appropriate hedging measures. The objective of
financial risk management is to minimize potential adverse eects on Metso Outotec’s financial
performance.
Sensitivity analysis
Sensitivity analysis figures presented in connection with dierent financial risks are based on
the risk exposures at the balance sheet date. The sensitivity is calculated by assuming a change
in one of the risk factors of a financial instrument, such as interest or currency. It is not likely
that the future volatility of a risk factor will develop in accordance with the test assumptions
and that only one factor would be impacted.
When calculating the sensitivity, Metso Outotec has chosen to use market conventions in
assuming a one percentage point (100 basis points) variation in interest rates, and a 10 percent
change in foreign exchange rates because this provides better comparability from one period
to another and information on the volatility to users of financial statements. Metso Outotec is
aware that such assumptions may not be realistic when compared to past volatility and they
are not intended to reflect the future. Metso Outotec has chosen not to use past volatility as
this could mislead the users of financial statements to assume the analysis reflects manage-
ment’s view on future volatility of the financial instruments.
Liquidity and refinancing risk and capital structure management
Liquidity or refinancing risk arises when a company is not able to arrange funding at terms
and conditions corresponding to its creditworthiness. Sucient cash, short-term investments,
and committed and uncommitted credit facilities are maintained to protect short-term liquidity.
Diversification of funding among dierent markets and an adequate number of financial
institutions is used to safeguard the availability of liquidity at all times. Group Treasury monitors
bank account structures, cash balances and forecasts of the operating units, and manages the
utilization of the consolidated cash resources.
The liquidity position of Metso Outotec remained good supported by the operative cash
flow, maturity structure of the funding, and available back up credit facilities. Liquid funds,
consisting of cash and cash equivalents, amounted to EUR 537 million (EUR 156 million in
2019), and there were no deposits or securities with a maturity more than three months (EUR 0
million in 2019).
In addition, the company had committed and undrawn revolving credit facilities of EUR
790 million at the end of the year. A syndicated EUR 600 million revolving credit facility has a
maturity in 2025 with one one-year extension option. In order to be prepared for any Covid-19
related liquidity needs, Metso Outotec arranged further liquidity buers during the reporting
period. EUR 100 million revolving credit facilities mature in 2021 and EUR 90 million in 2022.
Metso Outotec also has a EUR 600 million Finnish commercial paper program, under which
EUR 60 million was issued at the end of the period.
During the year a EUR 100 million bank loan was drawn for general corporate purposes,
and a EUR 40 million loan for research, development and innovation costs was drawn from
European Investment Bank. Metso Outotec issued a public bond amounting to EUR 300 million
with a maturity of 7.5 years under the Euro Medium Term Note Program (EMTN Program) in
November 2020. The proceeds were used to repay a EUR 300 million bank term loan.
Metso Outotec repaid Outotec’s EUR 150 million hybrid bond in July 2020. The refinancing
of the hybrid bond was done with a bank term loan of EUR 150 million with a maturity in 2022
with a one-year extension option.
Metso Outotec repaid Outotec’s EUR 150 million bond in September 2020 with a bank term
loan with a maturity in 2022.
Metso Outotec’s refinancing risk is managed by balancing the proportion of short-term and
long-term debt as well as the average remaining maturity of long-term debt. The tables below
analyze the repayments and interests on Metso Outotec’s liabilities by the remaining maturities
from the balance sheet date to the contractual maturity date. The net interest payments of
interest-rate swaps hedging long-term loans are included in the long-term debt repayment
figures.
Maturities of debts
Dec Dec
EUR million < year – years > years < year – years > years
Long-term debt
Repayments
Interests
Other liabilities
Short-term debt
Repayments
Interests
Trade payables
Other liabilities
Total
Detailed information on balance sheet items is presented in other notes to the consolidated
financial statements. Capital structure is assessed regularly by the Board of Directors and
managed operationally by Group Treasury.
Capital structure management in Metso Outotec comprises both equity and interest-bearing
debt. As of December 31, 2020, the equity attributable to shareholders was EUR 2,037 million
(EUR 1,252 million in 2019), and the amount of interest-bearing debt was EUR 1,206 million (EUR
1,001 million in 2019). Metso Outotec has a target to maintain an investment-grade credit rating.
Financial review 2020|Notes to the Consolidated Financial Statements 67
Moody’s Investor Service has assigned a ‘Baa2’ long-term issuer rating with stable outlook
and S&P Global Ratings a ‘BBB’ long-term issuer credit rating with negative outlook to Metso
Outotec.
There are no prepayment covenants in Metso Outotec’s financial contracts that would be
triggered by changes in the credit rating. Covenants included in some financing agreements
refer to a combination of a certain credit rating level and Metso Outotec’s capital structure.
Metso Outotec is in compliance with all covenants and other terms of its debt instruments.
Interest rate risk
Interest rate risk arises when changes in market interest rates and interest margins influence
finance costs, returns on financial investments and valuation of interest-bearing balance sheet
items. Interest rate risks are managed by balancing the ratio between fixed and floating
interest rates and by managing the duration of debt and investment portfolios. Additionally,
Metso Outotec may use derivative instruments, such as forward rate agreements, swaps,
options, and futures contracts, to mitigate the risks arising from interest-bearing assets
and liabilities. The interest rate risk is managed and controlled by the Group Treasury and
measured using sensitivity analysis and duration of long-term debt. The duration of long-term
debt was 2.1 years as at December 31, 2020 (1.8 years in 2019).
At the end of 2020, the balance sheet items exposed to interest rate risk were inter-
est-bearing assets of EUR 544 million (EUR 229 million in 2019), and interest-bearing debt
amounted to EUR 1,206 million (EUR 1,001 million in 2019).
The basis for the interest rate sensitivity analysis is an aggregate group-level interest
exposure, composed of interest-bearing assets, interest-bearing debt, and financial derivatives,
such as interest rate swaps and options, which are used to hedge the underlying exposures.
For all interest-bearing current debt and assets to be fixed during the next 12 months, a one
percentage point move upwards or downwards in interest rates with all other variables held
constant would have an eect on Metso Outotec’s net interest expenses, net of taxes, of EUR
-/+ 1.0 million (EUR -/+ 2.0 million in 2019).
For financial assets valued at fair value, a one percentage point change upwards or
downwards in all interest rates with all other variables held constant would have the following
eects, net of taxes, in the income statement and equity:
EUR million
Eects in
Income statement + +
Equity + +
The eect in the income statement comprises the changes in the fair value on the financial
instruments, which are measured at fair value through profit and loss. The eect in equity is
comprised of the changes in the fair value on the financial instruments, which are measured at
fair value through other comprehensive income, such as derivatives under hedge accounting.
Foreign exchange risk
Metso Outotec operates globally and is exposed to foreign exchange risk in several currencies,
although the geographical diversity of operations decreases the significance of any individual
currency. About 80 percent of Metso Outotec’s sales originate from outside the euro zone; the
main currencies being Euro, US dollar, Australian dollar, Chilean peso, Canadian dollar, and
Swedish krona.
Transaction exposure
Foreign exchange transaction exposure arises when an operating unit has commercial or
financial transactions and payments in other than its own functional currency and when related
cash inflow and outflow amounts are not equal or concurrent.
In accordance with the Metso Outotec Treasury Policy, operating units are required to
hedge in full the foreign currency exposures on balance sheet and other firm commitments.
Future cash flows denominated in a currency other than the functional currency of the unit
are hedged with internal foreign exchange contracts with the Group Treasury for periods, that
usually do not exceed two years. Operating units also do some hedging directly with banks
in countries where regulation does not allow group internal cross-border foreign exchange
hedging contracts.
Group Treasury monitors the net position of each currency and decides to what extent a
currency position is to be closed. Group Treasury is, however, responsible for entering into
an external forward transaction whenever an operating unit applies hedge accounting. Metso
Outotec Treasury Policy defines upper limits on the open currency exposures managed by the
Group Treasury; limits have been calculated on the basis of their potential profit impact. To
manage the foreign currency exposure, Group Treasury may use forward exchange contracts
and foreign exchange options.
Total amount of foreign currency exposures on December 31
EUR million
Operational items
Financial items
Hedges
Total exposure
This aggregate group-level currency exposure is the basis for the sensitivity analysis of foreign
exchange risk. This exposure, net of respective hedges, is composed of all assets and liabilities
denominated in foreign currencies, projected cash flows for unrecognized firm commitments,
both short- and long-term sales and purchase contracts, and anticipated operational cash
flows to the extent their realization has been deemed highly probable and therefore hedged.
This analysis excludes net foreign currency investments in subsidiaries together with instruments
hedging these investments.
If the euro were to appreciate or depreciate ten percent against all other currencies, the
impact on cash flows, net of taxes, derived from the year-end net exposure as defined above,
Financial review 2020|Notes to the Consolidated Financial Statements 68
would be EUR +/ 2.3 million (EUR -/+ 1.3 million in 2019). Transaction exposure is spread to
about 50 currencies and as of December 31, 2020, the biggest open exposure was in the US
dollar, 30 percent.
A sensitivity analysis of financial instruments as required by IFRS 7, excludes the following
items: projected cash flows for unrecognized firm commitments, advance payments, both short-
and long-term purchase contracts, and anticipated operational cash flows. The next table
presents the eects, net of taxes, of a +/ 10 percent change in EUR foreign exchange rates:
EUR million USD SEK Other Tota l Total
Eects in
Income statement + + + + +
Equity + + + + +
The eect in equity is the fair value change in derivatives contracts qualifying as cash flow
hedges for unrecognized firm commitments. The eect in income statement is the fair
value change for all other financial instruments exposed to foreign exchange risk including
derivatives, which qualify as cash flow hedges, to the extent the underlying sales transaction,
recognized over time, has been recognized as revenue.
Translation or equity exposure
Foreign exchange translation exposure arises when the equity of a subsidiary is denominated
in currency other than the functional currency of the Parent Company. The major translation
exposures are in US dollar, Swedish krona, Chinese yuan, Australian dollar, and Pound sterling,
which altogether comprise approximately 69 percent of the total equity exposure. Metso
Outotec is currently not hedging any equity exposure.
Credit and counterparty risk
Credit or counterparty risk is defined as the possibility of a customer or a financial coun-
terparty not fulfilling its commitments towards Metso Outotec. The operating units of Metso
Outotec are primarily responsible for credit risks pertaining to sales and procurement activities.
The units assess the credit quality of their customers, by taking into account their financial
position, past experience, and other relevant factors. When appropriate, advance payments,
letters of credit, and third party guarantees or credit insurance are used to mitigate credit risks.
Group Treasury provides centralized services related to customer financing and seeks to ensure
that the principles of the Treasury Policy are adhered to with respect to terms of payment and
required collateral. Metso Outotec has no significant concentrations of credit risks.
The maximum credit risk equals the carrying value of trade and loan receivables. The credit
quality is evaluated both on the basis of aging of the trade receivables and on the basis of
customer-specific analysis. The aging structure of trade receivables is presented in note 2.2.
Counterparty risk arises also from financial transactions agreed upon with banks, financial
institutions, and corporates. The risk is managed by careful selection of banks and other
counterparties, by counterparty-specific limits determined in the Treasury Policy, and netting
agreements, such as ISDA (Master agreement of International Swaps and Derivatives Associ-
ation). The compliance with counterparty limits is regularly monitored.
Credit risk exposure relates to the carrying value of financial assets valued at amortized cost,
such as trade receivables, interest bearing receivables, other receivables, deposits and security
investments and cash and cash equivalents, and customer contract assets.
Impairment on cash on hand, bank accounts, deposits, and interest- bearing investments
is assessed regularly, but deemed minor because of their high investment grade and short
duration. Group Treasury makes a financial analysis of corporate counterparties regularly. In
addition, the investments are constantly monitored by Group Treasury, and Metso Outotec
does not expect any future credit losses from these investments.
For trade receivables and customer contract assets, Metso Outotec applies the IFRS 9
simplified approach to measuring expected credit losses, which uses a lifetime expected loss
allowance to be assessed and recognized regularly, see note 2.2.
Fair value estimation
For those financial assets and liabilities that have been recognized at fair value in the balance
sheet, the following measurement hierarchy and valuation methods have been applied:
Level 1 Unadjusted quoted prices in active markets at the balance sheet date. The market
prices are readily and regularly available from an exchange, dealer, broker, market
information service system, pricing service, or regulatory agency. The quoted market
price used for financial assets is the current bid price. Level 1 financial instruments
include fund investments classified as fair value through profit and loss.
Level 2 The fair value of financial instruments in Level 2 is determined using valuation
techniques. These techniques utilize observable market data readily and regularly
available from an exchange, dealer, broker, market information service system, pricing
service, or regulatory agency. Level 2 financial instruments include:
• Over-the-counter derivatives classified as financial assets/liabilities at fair value
through profit and loss or qualified for hedge accounting
• Debt securities classified as financial instruments at fair value through profit and loss
• Fixed-rate debt under fair value hedge accounting
Level 3 A financial instrument is categorized into Level 3 if the calculation of the fair value
cannot be based on observable market data. Metso Outotec had no such instruments
in 2020 or in 2019.
Financial review 2020|Notes to the Consolidated Financial Statements 69
Metso Outotec’s financial assets and liabilities measured at fair value
Dec
EUR million Level Level Level
Assets
Financial assets at fair value through profit and loss
Derivatives not under hedge accounting
Financial assets at fair value through other
comprehensive income
Derivatives under hedge accounting
Tota l
Liabilities
Financial liabilities at fair value through profit and loss
Derivatives not under hedge accounting
Financial liabilities at fair value through other
comprehensive income
Derivatives under hedge accounting
Tota l
Metso Outotec’s financial assets and liabilities measured at fair value, comparison period
Dec
EUR million Level Level Level
Assets
Financial assets at fair value through profit and loss
Derivatives not under hedge accounting
Financial assets at fair value through other
comprehensive income
Derivatives under hedge accounting
Tota l
Liabilities
Financial liabilities at fair value through profit and loss
Derivatives not under hedge accounting
Financial liabilities at fair value through other
comprehensive income
Derivatives under hedge accounting
Tota l
4.2.Financial assets and liabilities by category
ACCOUNTING POLICYUnder IFRS 9, Metso Outotec classifies financial assets and liabilities
in measurement categories according to contractual terms of the cash flows and Metso
Outotec’s business model to manage the investment at the inception. Reclassification of
the categories will be made only if the business model for managing those assets changes.
Financial assets and liabilities are classified as non-current items when the remaining maturity
exceeds 12 months and as current items when the remaining maturity is 12 months or less.
Financial assets and liabilities are classified as follows:
At amortized cost
Financial assets
Financial assets valued at amortized cost are investments in debt instruments or receivables,
that are held to maturity and for the collection of contractual cash flows, where those cash
flows are solely payments of principal and/or interest. These are recognized at fair value, less
transaction costs, and subsequently measured at amortized cost using the eective interest
method. Interest income is recognized in financial income in the income statement. Financial
assets at amortized cost include deposits, commercial papers, interest-bearing loans and
receivables, trade receivables, and non-interest-bearing receivables. Impairment is assessed
regularly, and when the carrying value exceed the recoverable value of discounted cash flows,
the appropriate impairment is recognized in the income statement.
For trade receivables, Metso Outotec applies the IFRS 9 simplified method, which requires
expected lifetime losses to be recognized from the initial recognition of the receivables. See
more in Note 2.2 Trade receivables.
Financial liabilities
Issued bonds and withdrawn loan facilities from financial institutions as well as trade and
other liabilities are valued at fair value, net transaction costs, and subsequently measured at
amortized cost using the eective interest method. Trade and other receivables are non-inter-
est-bearing short-term unpaid debts.
The dierence between the debt amount, net transaction costs, of bonds and loans from
financial institutions and the redemption amount is recognized in the income statement as an
interest expense over the period of the borrowings using the eective interest method. Fees
paid on the establishment of loan facilities are recognized in the income statement as other
finance expenses over the period of the facility, or, if withdrawal of the loan is probable, as
part of the transaction cost.
At fair value through other comprehensive income (FVOCI)
Financial assets
Financial assets valued at fair value through other comprehensive income are debt instru-
ments or receivables, which are held for collection of contractual cash flows or held for selling
the assets, and where contractual cash flows are solely payments of principal and/or interest.
Financial review 2020|Notes to the Consolidated Financial Statements 70
Interest income is recognized in the income statement using the eective interest method.
Change in fair value is recognized in other comprehensive income (OCI). At derecognition,
the cumulative previously booked gains and losses in OCI are released from equity to the
income statement. Metso Outotec includes in this measurement category derivatives under
hedge accounting, trade receivables for sale, and security investments with a maturity of less
than three months. Impairment is assessed regularly, and when the carrying value exceeds
the recoverable value of discounted cash flows, the appropriate impairment is recognized in
the income statement.
At fair value through profit and loss (FVPL)
Financial assets
Financial assets valued at fair value through profit and loss are equity investments, invest-
ments in funds, and derivatives not under hedge accounting. Change in fair value and gain
or loss at derecognition are recognized in the income statement. The change in fair value
includes the valuation of impairment risk as well.
The fair value of listed equity shares or investments in funds is the quoted market price on
the balance sheet date. Unlisted shares are valued at cost, less impairment, if any.
Financial liabilities
Fixed-rate debts covered by fair value hedge accounting and derivatives not under hedge
accounting are included in this measurement category. Change in fair value and gains or
losses at derecognition are recognized in the income statement.
Financial assets and liabilities by category as of December 31, 2020
2020
EUR million
At fair value
through
profit and
loss
At fair value
through
other
compre
hensive
income
At
amortized
cost
Carrying
value Fair value
Non-current financial assets
Equity investments
Loan receivables
Derivatives
Other receivables
Tota l
Current financial assets
Trade receivables
Trade receivables, for sale
Loan receivables
Derivatives
Deposits and securities, maturity
three months or less
Cash on hand and in bank accounts
Tota l
Non-current liabilities
Bonds
1)
Lease liabilities
Other non-current debt
Derivatives
Other liabilities
Tota l
Current liabilities
Current portion of non-current debt
Lease liabilities
Loans from financial institutions
Commercial papers
Trade payables
Derivatives
Tota l
1)
The bonds have been measured at amortized cost, adjusted by the fair value to the extent of the hedged risk.
Financial review 2020|Notes to the Consolidated Financial Statements 71
Financial assets and liabilities by category as of December 31, 2019
2019
EUR million
At fair value
through
profit and
loss
At fair value
through
other
comprehen
sive income
At
amortized
cost
Carrying
value Fair value
Non-current financial assets
Equity investments
Loan receivables
Derivatives financial instruments
Other receivables
Tota l
Current financial assets
Trade receivables
Trade receivables, for sale
Loan receivables
Derivatives financial instruments
Deposits and securities, maturity
three months or less
Cash on hand and in bank accounts
Tota l
Non-current liabilities
Bonds
Lease liabilities
Other non-current debt
Derivatives
Other liabilities
Tota l
Current liabilities
Current portion of non-current debt
Lease liabilities
Loans from financial institutions
Commercial papers
Other current loans
Trade payables
Derivatives
Tota l
For more information on derivative financial instruments, see note 4.8.
4.3.Liquid funds
ACCOUNTING POLICYDeposits and securities with a maturity of more than 3 months consist
of highly liquid investments, which are part of Metso Outotec’s cash management. These
commercial papers, deposits and debt investments have a maturity of less than twelve
months, and they are measured at amortized cost.
Cash and cash equivalents consist of cash on hand and bank accounts, deposits, and
interest-bearing investments that can be easily converted into a known amount of cash within
a period of three months or less, as well as bond fund investments, with the same risk profile.
Cash on hand, bank accounts, deposits, and interest-bearing investments are measured at
amortized cost. The bond fund investments are measured at fair value through profit and loss
accounts.
Impairment on cash on hand, bank accounts, deposits, and interest-bearing investments
is assessed regularly, but deemed minor because of their high investment grade and short
duration. Impairment risk of bond fund investments is included in the change in fair value of
them.
EUR million
Deposits and securities, maturity more than three months
Cash and cash equivalents
Deposits and securities, maturity three months or less
Cash on hand and in bank accounts
Cash and cash equivalents total
Liquid funds total
Average returns for deposits and securities
%
With maturity more than three months
With maturity three months or less % %
Financial review 2020|Notes to the Consolidated Financial Statements 72
4.4.Equity
ACCOUNTING POLICY
Issue of new shares and own shares
Transaction costs directly attributable to the issue of new shares or options are shown net of
their tax eect in equity as a deduction from the proceeds.
Own shares held by the Parent Company valued at the historical acquisition price are
deducted from equity. Should such shares be subsequently sold or reissued, the consider-
ation received, net of any directly attributable transaction costs and related income tax, is
recorded in equity.
Translation dierences
The translation dierences arising from subsidiary net investments and non-current subsidiary
loans without agreed settlement dates are recognized through Other Comprehensive
Income (OCI) to cumulative translation adjustments under equity. When Metso Outotec
hedges the net investment of its foreign subsidiaries with foreign currency loans and with
financial derivatives, the translation dierence is adjusted by the currency eect of the
hedging instruments which has been recorded, net of taxes, through OCI in equity. When
a foreign entity is disposed of, the respective accumulated translation dierence, including
the eect from qualifying hedging instruments, is reversed through OCI and recognized in
the consolidated statements of income as part of the gain or loss on the sale. If the equity
of a subsidiary denominated in a foreign currency is reduced by a return of capital, the
translation dierence relating to the reduction is reversed through OCI and recognized in the
consolidated statements of income.
Dividends
Dividends proposed by the Board of Directors are not recognized in the financial statements
until they have been approved by the shareholders in the Annual General Meeting.
Share capital and number of shares
The partial demerger of Metso Corporation and the combination of Metso’s Minerals business
and Outotec was completed on June 30, 2020. Metso shareholders received 4.3 newly
issued shares in Outotec for each share owned in Metso on the record date. Thus, a total of
645,850,948 new Outotec shares were issued as demerger consideration to Metso’s share-
holders based on their shareholdings in Metso on June 30, 2020. After the transaction was
completed, the total number of Metso Outotec shares was 828,972,440 and its share capital
was EUR 107,186,442.52.
Metso Outotec Corporation’s registered share capital, which is fully paid, was EUR
107,186,442.52 as of December 31, 2020 and Outotec Corporation’s share capital was EUR
17,186,442.52 as of December 31, 2019.
Number of outstanding shares at beginning of year
Shares related to Outotec PSP program, in escrow account
Redemption of own shares by the Parent Company
Shares granted from share ownership plans
New shares related the reverse acquisition
Number of outstanding shares at end of year
Own shares held by the Parent Company
Total number of shares at end of year
As of December 31, 2020, the acquisition price of 993,238 own shares held by the Parent
Company was EUR 9,493,030.00 and was recognized in treasury stock.
Dividends
The Board of Directors proposes that a dividend of EUR 0.20 per share be paid based on the
balance sheet to be adopted for the financial year, which ended December 31, 2020. Insofar
as the dividend to be paid exceeds the net profit for the year ended December 31, 2020, the
remaining amount will be paid from retained earnings from previous years. These financial
statements do not reflect this dividend payable of EUR 166 million.
Fair value and other reserves
The hedge reserve includes the fair value movements of derivative financial instruments which
qualify as cash flow hedges.
The fair value reserve includes the change in fair values of trade receivables for sale. Share-
based payments are presented within the fair value reserve.
The legal reserve consists of restricted equity, which has been transferred from distributable
funds under the Articles of Association, local company act or by a decision of the shareholders.
The other reserves consist of the distributable fund and the invested non-restricted equity
fund held by the Parent Company.
Financial review 2020|Notes to the Consolidated Financial Statements 73
Changes in fair value and other reserves
EUR million
Treasury
stock
Hedge
reserve
Fair value
reserve
Legal
reserve
Other
reserves Tota l
January 1, 2019
Cash flow hedges
Fair value gains (+) / losses (), net of tax
Transferred to profit and loss, net of tax
Sales
Cost of goods sold / Administrative
expenses
Interest income / expenses
Share-based payments, net of tax
Other
December 31, 2019
Cash flow hedges
Fair value gains (+) / losses (), net of tax
Transferred to profit and loss, net of tax
Sales
Cost of goods sold / Administrative
expenses
Interest income / expenses
Share-based payments, net of tax
Demerger
Reverse acquisition
Other
December 31, 2020
Information on changes in fair value and other reserves for 2019 is based on Metso Minerals
carve-out data, and 2020 information is based on Metso Outotec data.
Cumulative translation adjustments included in shareholders’ equity
EUR million
Cumulative translation adjustment at beginning of year
Currency translation, change
Cumulative translation adjustment at end of year
4.5.Borrowings and lease liabilities
ACCOUNTING POLICYLong-term debt is initially recognized at fair value, net of transaction
costs incurred and subsequently measured at amortized cost using the eective interest
method. The dierence, between the debt amount recognized and the redemption amount,
is recognized in income statement as interest expense over the period of the borrowings. The
fair value changes in borrowings covered by fair value hedge are, in respect of hedged risk,
recognized through profit and loss. A portion of long-term debt is classified as short-term
debt, when the settlement of the liability is due within 12 months from the balance sheet date.
Borrowings are derecognized only, if the contractual obligation is discharged, cancelled or
expired.
Fees paid on the establishment of loan facilities are recognized in income statement as
other finance expenses over the period of the facility, or, if withdrawal of the loan is probable,
as part of the transaction cost. Transaction costs arising from modification to debt instruments
are included in the carrying value of the debt and amortized using the eective interest
method over the remaining period of the modified liability, provided that the new conditions
obtained through the modification do not substantially dier from those of the original
debt. Modification gains or losses are recognized in the income statement at the time of
non-substantial modification.
EUR million
Carrying
values Fair values
Carrying
values Fair values
Bonds
Loans from financial institutions
Other long-term debt
Total borrowings
Lease liabilities
Total long-term interest-bearing debt
Loans from financial institutions
Commercial papers
Cash pool liabilities, Metso Group
Total short-term borrowings
Lease liabilities
Total short-term interest-bearing debt
Total interest-bearing debt
Financial review 2020|Notes to the Consolidated Financial Statements 74
Bonds
2020
EUR million
Nominal
interest rate
Eective
interest rate
Outstanding
original loan
amount
Outstanding
carrying
value
Public bond 2017–2024 % %
Public bond 2020–2028 % %
Private placements 2022 % %
Bonds total
Bonds, comparison period
2019
EUR million
Nominal
interest rate
Eective
interest rate
Outstanding
original loan
amount
Outstanding
carrying value
Public bond 2017–2024 % %
Private placements 2022 %
Bonds total
Metso Outotec has a Euro Medium Term Note Program (EMTN) of EUR 2 billion, under which
EUR 689 million at carrying value was outstanding at the end of 2020 (EUR 388 million in 2019).
EUR 589 million (EUR 288 million) of the outstanding amount was public bonds and EUR 100
million (EUR 100 million) private placements.
During the year, a EUR 100 million bank loan was withdrawn for general corporate purposes,
and a EUR 40 million loan for research, development, and innovation costs was withdrawn
from European Investment Bank.
In July 2020, Metso Outotec repaid Outotec’s EUR 150 million hybrid bond. The refinancing
of the hybrid bond was done with a bank term loan of EUR 150 million with a maturity in 2022
with a one-year extension option.
Metso Outotec repaid Outotec’s EUR 150 million bond in September 2020 with a bank term
loan with a maturity until 2022.
Metso Outotec issued a public bond amounting to EUR 300 million with a maturity of 7.5
years under the EMTN Program in November 2020. The proceeds were used to repay a EUR
300 million bank term loan.
The average interest rate of total loans and derivatives was 1.21% (1.37%) on December 31,
2020. The duration of medium and long-term debt interest-bearing debt was 2.1 years (1.8
years) and the average maturity 3.7 years (2.9 years) on December 31, 2020.
Short-term loans from financial institutions consist of bank loans withdrawn by Metso
Outotec subsidiaries to fund local operations. The subsidiary loans are Indian rupee denomi-
nated. In addition, the nominal value of commercial papers was EUR 60 million at the end of
2020. The weighted average interest rate applicable to the short-term borrowing at December
31, 2020, was 0.8% (4.8% in 2019). In 2021, interest amounting to EUR 0.3 million is expected to
be paid concurrently with respective principals on the short-term debt presented above.
Metso Outotec had committed and undrawn revolving credit facilities of EUR 790 million
at the end of the year. A syndicated EUR 600 million revolving credit facility has a maturity
in 2025 with one one-year extension option. In order to be prepared for any Covid-19 related
liquidity needs, Metso Outotec arranged further liquidity buers during 2020. EUR 100 million
revolving credit facilities mature in 2021 and EUR 90 million in 2022. Metso Outotec also has a
EUR 600 million Finnish commercial paper program, under which EUR 60 million was issued at
the end of the period.
Contractual maturities of interest-bearing debt
2020
EUR million Borrowings Repayments Interest
Lease
liabilities
2021
2022
2023
2024
2025
Later
Tota l
1)
Future lease payments at nominal value.
Contractual maturities of interest-bearing debt, comparison year
2019
EUR million Borrowings Repayments Interest
Lease
liabilities
2020
2021
2022
2023
2024
Later
Tota l
1)
Future lease payments at nominal value.
The maturities of derivative financial instruments are presented in note 4.8.
Financial review 2020|Notes to the Consolidated Financial Statements 75
4.6.Interest-bearing net debt reconciliation
Net interest-bearing liabilities
EUR million
Borrowings, non-current
Lease liabilities
Borrowings, current
1)
Loan receivables
2)
Liquid funds
Net interest-bearing liabilities
1)
Figure for 2019 includes EUR 86 million Metso Group cash pool liabilities.
2)
Figure for year 2019 includes EUR 17 million cash pool receivables and EUR 50 million loan receivables within Metso
Group.
Changes in net interest-bearing liabilities
2020
EUR million
Balance at
beginning
of year
Cash
flows
Acquisi
tions
Trans
lation
dier
ences
Other
noncash
move
ments
Classifi
cation as
held for
sale
Balance
at end of
year
Borrowings,
non-current
Lease liabilities
Borrowings, current
Loan receivables
Liquid funds
Net interest bearing
liabilities
2019
EUR million
Balance at
beginning
of year
Cash
flows
Acquisi
tions Dispos als
Trans
lation
dier
ences
Other
noncash
move
ments
Balance
at end of
year
Borrowings,
non-current
Lease liabilities
Borrowings, current
Loan receivables
Liquid funds
Net interest bearing
liabilities
4.7.Contingent liabilities and other commitments
ACCOUNTING POLICYGuarantees have been given for obligations arising in the ordinary
course of business of Metso Outotec Group companies. Guarantees have been given by
financial institutions or by Metso Outotec Corporation on behalf of group companies. These
guarantees have typically been given to secure a customer’s advance payments or to secure
commercial contractual obligations, or given as counter guarantees to banks, that have given
commercial guarantees to a Group company.
The repurchase commitments represent engagements whereby Metso Outotec agrees
to a purchase back equipment sold to customer. The conditions triggering the buy-back
obligation are specific to each sales contract.
EUR million
Guarantees
External guarantees given by Parent and Group companies
Other commitments
Repurchase commitments
Other contingencies
Tota l
4.8.Derivative instruments
ACCOUNTING POLICYDerivatives are initially recognized in the balance sheet at fair value and
subsequently measured at their fair value at each balance sheet date. Derivatives are desig-
nated at inception either as hedges of firm commitments or forecasted transactions (cash flow
hedge) or as hedges of fixed-rate debt (fair value hedge), or as hedges of net investment in
a foreign operation (net investment hedge), or as derivatives at fair value through profit and
loss that do not meet the hedge accounting criteria.
In hedge accounting, Metso Outotec documents at inception the relationship between the
hedging instruments and the hedged items in accordance with its risk management strategy
and objectives. Metso Outotec also tests the eectiveness of the hedge relationships at
hedge inception, and quarterly both prospectively and retrospectively.
Derivatives are classified as non-current assets or liabilities when the remaining maturities
exceed 12 months and as current assets or liabilities when the remaining maturities are less
than 12 months.
Cash flow hedge
Metso Outotec applies cash flow hedge accounting to certain interest rate swaps, foreign
currency forward contracts and to electricity forwards.
Metso Outotec designates only the currency component of the foreign currency
forward contracts as the hedging instrument to hedge foreign currency-denominated firm
Financial review 2020|Notes to the Consolidated Financial Statements 76
commitments. The interest component is recognized under other operating income and
expenses, net. The gain or loss relating to the eective portion of the currency forward
contracts is recognized in the income statement concurrently with the underlying in the same
line item. The eective portion of foreign currency forwards hedging sales and purchases
is recognized in the sales and the cost of goods sold, respectively. The gain or loss relating
to the eective portion of interest rate swaps hedging variable rate borrowings is reversed
from the hedge reserve through other comprehensive income (OCI) to the income statement
within financial items concurrently with the recognition of the underlying liability. Both at
hedge inception and at each balance sheet date, an assessment is performed to ensure the
continued eectiveness of the designated component of the derivatives in osetting changes
in the fair values of the cash flows of hedged items.
Metso Outotec regularly assesses the eectiveness of fair value changes of electricity
forwards in osetting fair value changes of the underlying forecasted electricity purchases in
dierent countries. The gain or loss relating to the eective portion of the electricity forward
contracts is recognized in the cost of goods sold. The eective portion of the derivatives is
recognized through OCI in the hedge reserve under equity and reversed through OCI to be
recorded through profit and loss concurrently with the underlying transaction being hedged.
The gain or loss relating to the ineective portion of the derivatives is reported under
other operating income or expenses, net or under financial items when contracted to hedge
variable rate borrowings. Should a hedged transaction no longer be expected to occur, any
cumulative gain or loss previously recognized under equity is reversed through OCI to profit
and loss.
Fair value hedge
Metso Outotec applies fair value hedge accounting to certain fixed-rate loans. The change
in fair value of the interest rate swap hedging the loan is recognized through profit and loss
concurrently with the change in value of the underlying. Both at inception and quarterly, the
eectiveness of the derivatives is tested by comparing their change in fair value against those
of the underlying instruments.
Derivatives at fair value through profit and loss
Certain derivative instruments do not qualify for hedge accounting. These instruments,
which have been contracted to mitigate risks arising from operating and financing activities,
comprise foreign exchange forward contracts, currency and interest rate options, interest rate
swaps, and swap agreements for nickel.
Changes in the fair value of interest rate swaps are recognized in interest expenses.
Changes in the fair value of foreign exchange forward contracts are mainly recognized in
other operating income and expenses. However, when the foreign exchange forwards have
been contracted to mitigate the exchange rate risks arising from foreign currency-denom-
inated cash and from financial instruments used for cash management, the changes in fair
value of the derivatives are recognized in financial income and expenses. Changes in the fair
value of other derivative instruments, such as commodity instruments, are recognized in other
operating income and expenses.
Fair value estimation of derivative instruments
The fair value of the foreign currency forward contracts is determined using forward exchange
market rates at the balance sheet date. The fair value of the interest rate swaps is calculated
as the present value of the estimated future cash flows based on observable yield curves. The
fair value of the commodity forwards and swaps are based on quoted market prices at the
balance sheet date. The fair value of options is determined using the Black-Scholes valuation
model.
Notional amounts and fair values of derivative financial instruments at December 31:
EUR million
Notional
amount
Fair value
assets
Fair value
liabilities
Fair value
net
2020
Forward exchange contracts
1)
Interest rate swaps
Tota l
2019
Forward exchange contracts
1)
Interest rate swaps
Tota l
1)
Some 32 percent and 23 percent of the notional amount at the end of 2020 and 2019, respectively, qualified for
cash flow hedge accounting.
The notional amounts indicate the volumes in the use of derivatives, but do not indicate the
exposure to risk.
Financial review 2020|Notes to the Consolidated Financial Statements 77
Derivative financial instruments recognized in the balance sheet at December 31
EUR million Assets Liabilities Assets Liabilities
Interest rate swaps – cash flow hedges
Interest rate swaps – fair value hedges
Interest rate swaps – non-qualifying hedges
Forward exchange contracts – cash flow
hedges
Forward exchange contracts –
non-qualifying hedges
Derivatives total
In 2020 and 2019, there was no ineectiveness related to the cash flow hedges. As at
December 31, 2020 the fixed interest rates of swaps varied from 0.51 percent to 2.6 percent.
Maturities of financial derivatives as at December 31, 2020 (expressed as notional amounts)
EUR million
and
later
Forward exchange contracts
Interest rate swaps
Notional and carrying amounts of financial derivatives applying hedge accounting at end
of year
EUR million
Notional
amount
Fair value
assets
Fair value
liabilities
Fair value
net
2020
Forward exchange contracts
Interest rate swaps
Tota l
2019
Forward exchange contracts
Interest rate swaps
Tota l
Forward exchange contracts hedge commercial cash flows of projects applying hedge
accounting. The hedge ratio is 1:1. 89% of hedged cash flows mature in year 2021, 11% in year
2022.
Impact of cash flow hedge in the statement of financial position in 2020
EUR million Notional amount
Hedging gain loss
recognized in OCI
net of tax
Amount reclassified
from OCI to PL
Cost of hedging
recognized in OCI
Metso Outotec applies fair value hedge accounting to the bonds maturing in 2024 and 2028.
The hedge accounted total notional value is EUR 250 million (EUR 100 million in 2019). The
terms of the interest rate swap match the terms of the fixed rate bonds (maturity date, interest
fixing and payments dates). Fair values of cash flows of interest rate swap and bond are
compared when measuring hedge accounting eectiveness. Credit margin is added to the
discount curve of the bond.
Bonds applying fair value hedge accounting as at December 31, 2020
Notional
amount of
loan EUR
million Hedge ratio
Maturity date
of loan
Fair value of
loan EUR
million
Notional
amount of
interest rate
swap
Maturity date
of interest rate
swap
Fair value of
interest rate
swap EUR
million
% June June
% May May
Financial review 2020|Notes to the Consolidated Financial Statements 78
5
Consolidation
Financial review 2020|Notes to the Consolidated Financial Statements 7979Financial review 2020|Notes to the Consolidated Financial Statements
Principles of consolidation ....................................
Subsidiaries .....................................................
Associated companies joint ventures and
related party transactions ............................. . . . . . . . .
Acquisitions and business disposals..........................
Discontinued operations.......................................
New accounting standards ....................................
Exchange rates used...........................................
5.1.Principles of consolidation
Subsidiaries
The consolidated financial statements include the financial statements of the Parent Company
and each of those companies over which Metso Outotec exercises control. Control is achieved
when Metso Outotec is exposed, or has rights, to variable returns from the investee and has
the ability to aect those returns through its power over the investee. The companies acquired
during the financial period have been consolidated from the date Metso Outotec acquired
control. Subsidiaries sold or distributed to the owners have been included up to their date of
disposal.
All intercompany transactions, balances, and gains or losses on transactions between
subsidiaries are eliminated as part of the consolidation process. Non-controlling interests are
presented in the consolidated balance sheet within equity, separate from equity attributable to
shareholders. Non-controlling interests are separately disclosed in the consolidated statement
of income.
Acquisitions of businesses are accounted for using the acquisition method. The purchase
consideration of an acquisition is measured at fair value over the assets given up, shares
issued, or liabilities incurred or assumed at the date of acquisition. For each acquisition, the
non-controlling interest in the acquiree, if any, can be recognized either at fair value or at
the non-controlling interest’s proportionate share of the acquiree’s net assets. The excess
acquisition price over the fair value of net assets acquired is recognized as goodwill (see also
intangible assets). If the purchase consideration is less than the fair value of the Group’s share
of the net assets acquired, the dierence is recognized directly through profit and loss.
When Metso Outotec ceases to have control, any retained interest in equity is re-measured
to its fair value at the date when control is lost, with the change in carrying amount recognized
in profit or loss. The fair value is the initial carrying amount for the purposes of subsequently
accounting for the retained interest as an associate, joint venture, or financial asset. In addition,
any amounts previously recognized in other comprehensive income in respect of that entity is
accounted for as if the Group had directly disposed of the related assets or liabilities.
Non-controlling interest
Transactions with non-controlling interests are regarded as transactions with equity owners. In
the case of purchases from non-controlling interests, the dierence between any consideration
paid and the relevant share of the carrying value of net assets acquired in the subsidiary is
recorded in shareholders’ equity. Gains or losses on disposal to non-controlling interests are
also recorded directly in shareholders’ equity.
Non-current assets or disposal group held-for-sale
Metso Outotec classifies a non-current asset or disposal group as held for sale if its carrying
amount will be recovered principally through a sale transaction rather than through continuing
use. These assets are valued at the lower of its carrying value and fair value, less costs to sell,
and assets subject to depreciation or amortization are no longer amortized. Assets related to
non-current assets or a disposal group classified as held-for-sale are disclosed separately from
other assets, but financial statements for prior periods are not reclassified.
Foreign currency translation
The financial statements are presented in euros, which is the Parent Company’s functional
currency and Metso Outotec’s presentation currency.
Transactions in foreign currencies are recorded at the rates of exchange prevailing at
the date of the transaction. At the end of the reporting period, unsettled foreign currency
transaction balances are valued at the rates of exchange prevailing at the balance sheet date.
Trade-related foreign currency exchange gains and losses are recorded in other operating
income and expenses, unless the foreign currency-denominated transactions are subject to
hedge accounting, in which case the related exchange gains and losses are recorded in the
same line item as the hedged transaction. Foreign exchange gains and losses associated with
financing are entered as a net amount under financial income and expenses.
The statement of income of a subsidiary with a functional currency dierent from the
presentation currency is translated into euros at the average month end exchange rate for the
financial year, and the balance sheet is translated at the exchange rate in eect on the balance
sheet date. This exchange rate dierence is recorded through other comprehensive income
(OCI) within cumulative translation adjustments under equity.
The translation dierences arising from subsidiary net investments and long-term subsidiary
loans without agreed settlement dates are recognized through OCI within cumulative
translation adjustments under equity. When Metso Outotec hedges the net investment of
its foreign subsidiaries with foreign currency loans and financial derivatives, the translation
dierence is adjusted by the currency eect of hedging instruments that has been recorded,
net of taxes, through OCI under equity. When a foreign entity is disposed of, the respective
accumulated translation dierence, including the eect from qualifying hedging instruments, is
reversed through OCI and recognized in the consolidated statement of income as part of the
gain or loss on the sale. If the equity of a foreign currency-denominated subsidiary is reduced
by reimbursement of invested funds, the translation dierence relating to the reduction is
reversed through OCI and recognized in the consolidated statement of income.
Net investment hedge
Metso Outotec may hedge its net foreign investments in certain currencies to reduce the eect
of exchange rate fluctuations. The hedging instruments are mainly foreign currency loans and
foreign currency forward contracts. Both realized and unrealized exchange gains and losses
measured on these instruments are recorded, net of taxes, through OCI in a separate compo-
nent of equity against the translation dierences arising from consolidation to the extent these
hedges are eective. The interest portion of derivatives qualifying as hedges of net investment
is recognized under financial income and expenses.
Financial review 2020|Notes to the Consolidated Financial Statements 80
Ownership
Company name Dec
Algeria
Metso Algerie EURL %
Argentina
Metso Outotec Argentina SA %
Australia
Brian Investments Pty Ltd %
Metso Australia Ltd %
Outotec Ausmelt Pty Ltd %
Outotec Pty Ltd %
Scanalyse Holding Pty Ltd %
Austria
Metso Austria GmbH %
Brazil
Metso Brazil Indústria e Comércio Ltda %
Outotec Tecnologia Brasil Ltda %
Bulgaria
Metso Bulgaria EOOD %
Petrobau Ingenieur EOOD Bulgaria %
Canada
Metso Shared Services Ltd %
Outotec (Canada) Ltd %
Metso Canada Holdings Inc %
McCloskey International Limited %
Metso Minerals Canada Inc. %
Chile
Industrial Support Company SpA %
Metso Chile SpA %
Outotec (Chile) S.A. %
Outotec Servicios Industriales Ltda. %
China
Outotec Shanghai Co Ltd. %
Metso Minerals (Quzhou) Co. Ltd %
Metso Minerals (Tianjin) Co. Ltd %
Metso Minerals (Tianjin) International
Trade Co. Ltd %
Outotec Suzhou Co. Ltd %
Shaoguan City Shaorui Heavy
Industries Co. Ltd %
SISUPER Machinery Heavy Industry
(Suzhou) Co. Ltd %
Ownership
Company name Dec
Czech Republic
Metso Czech Republic s.r.o. %
Denmark %
Metso Denmark A/S %
Metso Denmark Properties Aps %
Ecuador
Outotec-Technology (Ecuador) S.A. %
Egypt
Outotec Egypt Company LLC %
Finland
Metso Minerals Oy %
International Project Services Ltd. Oy %
Outotec (Ceramics) Oy %
Outotec (Filters) Oy %
Outotec (Finland) Oy %
Outotec International Holdings Oy %
Outotec Turula Oy %
Rauma Oy %
France
Metso France SAS %
Germany
Metso Germany GmbH %
Outotec Deutschland GmbH %
Outotec GmbH & Co KG %
Outotec Holding GmbH %
Ghana
Metso Ghana Ltd %
Outotec (Ghana) Limited %
India
Larox India Private Ltd %
Metso India Private Ltd %
Outotec India Private Ltd %
Indonesia
PT Metso Minerals Indonesia
1)
%
PT Outotec Technology Solutions %
Iran
Outotec Iranian Minerals and Metals
Processing %
Ownership
Company name Dec
Italy
Metsotec Italy Srl %
Japan
Metso Japan Co. Ltd %
Kazakhstan
Metso (Kazakhstan) LLP %
Outotec (Kazakhstan) LLP %
Lithuania
Metso Outotec Global Business
Services UAB %
Metso Outotec Lithuania UAB %
Macedonia
Metso Minerals Dooel Skopje %
Malaysia
Metso Outotectec Malaysia Sdn Bhd %
Mexico
Metso Outotec Mexico SA de CV %
Metso Outotec SA de CV %
Outotec Mexico SA de CV %
Outotec Servicios Corporativos SA
DE CV %
Mongolia
Outotec Mongolia LLC %
Morocco
Outotec Morocco LLC %
Namibia
Outotec Namibia (Pty) Ltd %
New Caledonia
Outotec (New Caledonia) SAS %
Netherlands
Metsotec NL BV %
Outotec (Netherlands) BV %
Outotec B.V. %
Norway
Metso Norway A/S %
Outotec (Norway) A/S %
Panama
Metso Central America SA %
Outotec (Panama) SA %
Ownership
Company name Dec
Papua New Guinea
Metso PNG Limited %
Peru
Metso Perú SA %
Outotec (Peru) S.A.C. %
Poland
Outotec (Polska) Sp. z o.o. %
Portugal
Metso Portugal Lda %
Qatar
Outotec Trading & Contracting WLL
2)
%
Russia
AO Outotec St. Petersburg %
OOO Metso %
Romania
Metso Minerals Romania S.R.L. %
Saudi Arabia
Outotec Saudi Arabia LLC %
Outotec Technology Saudi LLC %
Serbia
Metso d.o.o. Beograd %
Singapore
Metso Asia Pacific Pte Ltd %
South Africa
Metso South Africa Pty Ltd %
Metso South Africa Sales Pty Ltd %
Outotec (RSA) (Pty) Ltd. %
Outotec Africa Holdings (Pty) Ltd %
Outotec Biomin (Pty) Ltd %
Outotec Services (RSA) Proprietary
Limited %
Spain
Metso Espana SA %
Outotec (Spain) S.L. %
Sweden
AB P. J. Jonsson och Söner %
Larox AB %
Metso Sweden AB %
Outotec (Sweden) AB %
5.2.Subsidiaries
Financial review 2020|Notes to the Consolidated Financial Statements 81
Ownership
Company name Dec
Thailand
Metso Outotec (Thailand) Limited %
Turkey
Metso Minerals Anonim Sirketi %
Outotec Turkey Metal Enerji ve su
Teknolojileri Anonim Sirketi %
United Arab Emirates
Metsotec FZE %
Outotec Engineering DMCC %
Outotec Engineering RAK LLC
1)
%
Outotec Middle East Industrial Projects
Consultancy LLC
3)
%
United Kingdom
Kiln Flame Systems Enterprises Limited %
Kiln Flame Systems Ltd %
McCloskey International Ltd %
Metso Outotec Captive Insurance
Limited %
Metso UK Ltd %
Outotec (UK) Limited %
United States
Metso McCloskey USA LLC %
Metso Minerals Industries Inc. %
Metso Outotec USA Inc. %
Outotec (USA) Inc. %
Vietnam
Metso Vietnam Co. Ltd %
Zambia
Metso Zambia Ltd %
Outotec (Zambia) Limited %
1)
Has been 100% consolidated
2)
Has been 70% consolidated
3)
Has been 90% consolidated
5.3.Associated companies, joint ventures
and related party transactions
ACCOUNTING POLICYThe equity method of accounting is used for investments in associated
companies in which the investment provides Metso Outotec the ability to exercise significant
influence over the operating and financial policies of the investee company. Such influence
is presumed to exist for investments in companies in which Metso Outotec’s direct or indirect
shareholding is between 20 and 50 percent of the voting rights or if Metso Outotec is able to
exercise significant influence. Investments in associated companies are initially recognized at
cost after which Metso Outotec’s share of their post-acquisition retained profits and losses is
included as part of investments in associated companies in the consolidated balance sheets.
Under the equity method, the share of profits and losses of associated companies and
joint ventures is presented separately in the consolidated statements of income.
A joint arrangement is an arrangement in which two or more parties have joint control.
Within Metso Outotec, all the joint arrangements are joint ventures. Investments in joint
ventures in which Metso Outotec has the power to jointly govern the financial and operating
activities of the investee company are accounted for using the equity method. Investments in
joint ventures in which Metso Outotec has control over the financial and operating activities
of the investee company are fully consolidated and a non-controlling interest is recognized.
Associated companies and joint ventures
EUR million Ownership
Carrying
value Ownership
Carrying
value
Liugong Metso Construction Equipment (Shanghai)
Co. Ltd % %
Sefate Capital (Pty) Limited % %
Enefit Outotec Technology Oü %
GreenExergy AB %
Sidvin Outotec Engineering Private Ltd %
Tota l
Financial review 2020|Notes to the Consolidated Financial Statements 82
The movements in the carrying value of investments in associated companies and
jointventures
EUR million
Investments in associated companies and joint ventures
Acquisition cost at beginning of year
New subsidiaries
Investments
Acquisition cost at end of year
Equity adjustments in investments in associated companies and joint
ventures
Equity adjustments at beginning of year
New subsidiaries
Share of results
Translation dierences
Equity adjustments at end of year
Carrying value at end of year
Metso Outotec’s share of the assets and liabilities, sales and results of the associated
companies and joint ventures, which have been accounted for using the equity method
EUR million
Assets
Liabilities
Sales
Profit
Related party transactions
Transactions carried out and related balances with associated companies and joint ventures
EUR million
Sales
Purchases
Receivables
Payables
Related party information in comparison period 2019
In the comparison period, Metso Minerals’ related parties included Metso Oyj (now Neles Oyj)
and Metso companies other than Metso Minerals business related.
The related party relationship between Metso Minerals and Metso ceased to exist at the
eective date of the demerger. The balance sheet items between Metso Minerals and the
other Metso companies for the comparison period have been disclosed as related party
transactions for information purposes. The balance sheet items between Metso Minerals and
Metso were settled in connection with the demerger.
Metso Minerals’ sales and purchases to and from the other Metso’s businesses have been
insignificant during the comparison period.
In addition, Metso Group has equity and financing transactions with the Metso Minerals
business that have led to the recognition of receivables and liabilities with Metso Group.
Current receivables include trade receivables arising from intragroup services as well as
loan receivables and positive cash pool balances as a result of the centralized cash pool
arrangements.
Non-current and current liabilities represent loan balances owed by Metso Minerals entities
to Metso Group that have been arranged for Metso Minerals business to meet its financing
needs. Trade payables comprise items arising from intragroup services. Cash pooling liabilities
represent cash owed to Metso as part of the centralized cash pool arrangements.
EUR million
Receivables
Non-current
Loan receivables
Other non-current receivables
Current
Loan receivables
Trade receivables
Cash pool receivables
Liabilities
Non-current
Other non-current liabilities
Current
Cash pool liabilities
Trade payables
Other current liabilities
Financial review 2020|Notes to the Consolidated Financial Statements 83
5.4.Acquisitions and business disposals
Acquisitions in 2020
It was announced on July 4, 2019, that Metso’s Minerals business and Outotec will be combined
through a partial demerger of Metso Corporation. The Extraordinary General Meetings
of Metso and Outotec approved the demerger and combination on October 29, 2019. All
regulatory approvals for the combination were received by June 18, 2020. The completion of
Metso’s partial demerger was registered with the Finnish Trade Register on June 30, 2020, and
the name of the combined company was changed to Metso Outotec Corporation. Metso
shareholders received 4.3 newly issued shares in Outotec for each share owned in Metso on
the record date. Thus, a total of 645,850,948 new Outotec shares were issued as demerger
consideration to Metso’s shareholders based on their shareholdings in Metso on June 30,
2020. After the transaction was completed, the total number of Metso Outotec shares was
828,972,440 and its share capital was EUR 107,186,442.52.
The purpose of the combination is to create a leading company in process technology,
equipment, and services serving the minerals, metals, and aggregates industries. The
combination is expected to deliver a range of strategic, commercial, operational, and financial
benefits.
The combination of Metso Minerals and Outotec is highly complementary and creates a
unique company in the industry. Metso Outotec leverages the strengths of both companies,
including technology and R&D, product and process excellence, scale, and global service
oering footprint. The combination will deliver significant benefits to all stakeholders.
Metso Outotec expects to achieve material cost and revenue synergies. The cost synergies
are expected to be realized from operations, with the balance from optimization of supply
chain and procurement savings. The highly complementary product and service portfolio and
the combined global footprint are expected to generate multiple cross-selling opportunities,
leading to revenue synergies.
The partial demerger of Metso Corporation and combination of Metso’s Minerals business
and Outotec was completed on June 30, 2020. In the consolidated financial statements
according to IFRS this transaction is treated as a reverse acquisition, where Metso Minerals
is the accounting acquirer and Outotec the accounting acquiree. The acquisition of Outotec
has been accounted for in the consolidated financial statements as a business combination
using the acquisition method. Outotec has been consolidated from the acquisition date June
30, 2020 onwards to Metso Minerals. Further information of the combined assets and liabilities
of the reverse acquisition can be found in the demerger plan published on July 1, 2019 in the
Metso Outotec Group’s website.
Consideration transferred
The consideration transferred amounted to EUR 899 million and was measured using the
market price of the Outotec share (EUR 4.91) as of June 30, 2020 and the number of Outotec
shares outstanding (183.1 million) before the completion of the transaction.
Recognized amounts of identifiable assets acquired and liabilities assumed
Outotec’s net assets were identified and recognized at fair value as of the acquisition date
on June 30, 2020. Based on new information about facts and circumstances at the acquisition
date measurement period adjustments have been made on deferred tax assets of prior year
losses EUR 7 million and increases in provisions related to discontinued operations EUR 11
million compared to the original fair value calculation. The following table summarizes the fair
values of assets and liabilities assumed. The accounting of the acquisition is still provisional
pending the finalization of the valuation of the assets and liabilities assumed. The provisional
amounts recognized may be adjusted within 12 months after the date of acquisition, to reflect
new information obtained about the facts and circumstances that existed at the date of the
acquisition.
Preliminary assets and liabilities recognized as a result of the acquisition
EUR million Outotec Fair value
Intangible assets
Property, plant and equipment
Right-of-use assets
Deferred tax assets
Other non-current assets
Inventory
Trade receivables
Customer contract assets
Income tax receivables
Other receivables
Liquid funds
Assets
Non-current interest-bearing liabilities
Deferred tax liability
Other non-current liabilities
Current interest-bearing liabilities
Trade payables
Customer contract liabilities
Accrued income taxes
Other liabilities
Liabilities
Net liabilities, held for sale
Net identifiable assets acquired at fair value
Goodwill
Purchase consideration
Financial review 2020|Notes to the Consolidated Financial Statements 84
The acquired Outotec business was consolidated into the Minerals and Metals segments and
contributed sales of EUR 534 million to Metso Outotec for the period from July 1, 2020 to
December 31, 2020. The company’s sales in the fiscal year that ended on December 31, 2019,
were EUR 1,210 million. The company employs 3,877 people.
The identified intangible assets relate to technology, customer relationships, Outotec’s
trademark, and order backlog. Fair values for the intangible assets have been determined
using appropriate valuation methods including multi-period excess earnings method (MEEM)
for customer relationships and order backlog, and Relief from royalty method (Rfr) for
technology and Outotec’s trademark. The amortization period for these assets varies from 0.5
years to 20 years. Goodwill is attributable to market share, future products and technologies,
geographical presence synergies, and workforce. Goodwill will not be deductible for tax
purposes. The fair value adjustments of acquired Outotec assets and liabilities as well the
goodwill have been allocated to the Minerals and Metals segments.
Fair value adjustments of the identifiable assets of Outotec
Fair value
adjustments
Amortization depreciation
EUR million Periods –
Customer-related intangible assets years
Marketing-related intangible assets years
Technology-related intangible assets years
Order backlog year
Total intangible assets
Property, plant, and equipment years
Fair value adjustments total
Outotec fair value adjustments and goodwill are allocated to the Minerals and Metals segment.
The amount of the non-controlling interest in Outotec recognized at the acquisition date
was EUR 1 million and was measured based on a proportionate share of the value of net
identifiable assets acquired.
IFRS-based acquisition costs of EUR 26 million recognized by Metso Outotec and Metso
Minerals during 2020 (EUR 12 million during the financial year of 2019) are expensed and
included in administrative expenses in the income statement and in operating cash flow in the
statement of cash flows. Outotec recognized EUR 33 million of transaction costs before the
date of business combination June 30, 2020. For further detailed specification of transaction
costs, please see the section “Voluntary Unaudited Pro Forma Financial Information”.
According to pro forma financial information on the combination Group sales would have
been EUR 3,896 million and operating profit EUR 253 million, if the combination had taken
place at the beginning of the year. For a more detailed description on pro forma financial
information, please see the section “Voluntary Unaudited Pro Forma Financial Information”.
Other acquisitions in 2020
On August 3, 2020, Metso Outotec acquired a 100% share of the Australian company Brian
Investments Pty Ltd, a fastener and wear monitoring technology provider. The acquisition
extends Metso Outotec’s wear lining portfolio and capabilities. The acquired business was
consolidated into the Minerals segment and contributed sales of EUR 5 million to Metso
Outotec for the period from August 3, 2020, to December 31, 2020. The company’s fiscal year
sales are about EUR 10 million. The company employs about 30 people.
Assets and liabilities recognized as a result of the acquisitions
EUR million Brian Investments Pty Ltd
Fixed assets
Inventory
Receivables
Liquid funds
Liabilities
Net identifiable assets acquired at fair value
Goodwill
Purchase consideration
Goodwill is attributable to personnel knowhow and synergies. Goodwill is not deductible for
tax purposes. The initial calculation of goodwill generated is based on the result of acquired
companies, adjusted by changes in accounting principles and eects from the fair value
adjustment of acquired assets and related tax adjustments.
Net cash flow impact of the acquisitions
EUR million
Brian Investments
Pty Ltd
McCloskey
International Ltd Total
Cash consideration paid
Cash and cash equivalents acquired
Net cash flow for the year
Contingent consideration
Cash considerations, total
Acquisition costs of EUR 0.2 million are expensed and included in administrative expenses in
the income statement and in operating cash flow in the statement of cash flows.
As the contingent consideration of the McCloskey acquisition was reassessed, an amount of
EUR 4 million was recognized as other income in the income statement.
Acquisitions in 2019
On May 3, 2019, Metso Minerals acquired 100% share of the company Industrial Support
Company SpA in Chile, which used to form the service division of the Chilean mining engi-
neering, construction and technology company HighService Corp. The acquired business was
consolidated into Metso Minerals and contributed sales of EUR 35 million for the period from
Financial review 2020|Notes to the Consolidated Financial Statements 85
May 3, 2019 to December 31, 2019. The company’s sales in 12 months fiscal year that ended on
December 31, 2018, were EUR 57 million. The company employs 869 persons.
On October 1, 2019, Metso Minerals acquired a 100% share of the Chilean company
McCloskey International Limited, a mobile crushing and screening equipment manufacturer,
with operations in Canada, the United States, and the United Kingdom. With the McCloskey
acquisition, Metso Minerals expanded its oering in the aggregates industry globally and
strengthened its customer reach to the general contractor segment. With this acquisition,
Metso Minerals is able to better take part in the attractive, long-term growth of the mobile
equipment market within the aggregates industry. The acquired business was consolidated into
the Metso Minerals and contributed sales of EUR 55 million for the period from October 1, 2019,
to December 31, 2019. The company’s sales in 12 months fiscal year that ended on September
30, 2019, were EUR 322 million. The company has about 900 employees.
Assets and liabilities recognized as a result of the acquisitions
2019
EUR million
McCloskey
International Ltd
Industrial Support
Company Tota l
Intangible assets
Tangible assets
Right-of-use assets
Deferred tax assets
Inventory
Trade receivables
Other receivables
Liquid funds
Interest bearing liabilities
Trade payables
Other liabilities
Accrued income taxes
Deferred tax liability
Net identifiable assets acquired at fair value
Goodwill
Purchase consideration
Goodwill is attributable to personnel knowhow and synergies. Goodwill on the McCloskey
acquisition is partly tax deductible.
The initial calculation on goodwill generated is based on the result of acquired companies,
adjusted by changes in accounting principles and eects from the fair value adjustment of
acquired assets and related tax adjustments.
Net cash flow impact of the acquisitions
2019
EUR million
McCloskey
International Ltd
Industrial Support
Company Tota l
Cash consideration paid
Cash and cash equivalents acquired
Net cash flow for the year
Contingent consideration
Cash considerations, total
Contingent consideration of the McCloskey acquisition will be paid if the profitability require-
ments are met for a two-year period.
Acquisition costs of 5 million are expensed and included in administrative expenses in the
income statement and in operating cash flow in the statement of cash flows.
Disposals in 2019
On January 4, 2019, Metso Minerals had successfully completed the divestment of its grinding
media business to Moly-Cop, a portfolio company of American Industrial Partners. The
transaction included the sale of Metso Spain Holding, S.L.U, including operations in Bilbao and
Seville, Spain. As part of the transaction, approximately 80 employees transferred from Metso
Minerals to Moly-Cop. The turnover of the divested business in 2018 was approximately EUR
60 million. The grinding media business was part of the Minerals segment.
The cash consideration was EUR 11 million. The net assets of the disposed entity were EUR
13 million, whereby Metso Minerals booked a small loss on the transaction.
EUR million
Intangible assets
Tangible assets
Inventories
Trade receivables
Other receivables
Cash and cash equivalents
Interest-bearing liabilities
Trade payables
Other liabilities
Deferred tax liabilities
Net assets of disposed business
Consideration received in cash
Net assets of disposed business
Loss on disposal
Consideration received in cash
Cash and cash equivalents disposed of
Debt repayments of disposal
Net cash inflow on disposal
Financial review 2020|Notes to the Consolidated Financial Statements 86
5.5.Discontinued operations
ACCOUNTING POLICYDiscontinued operations is a component of an entity that either has been
disposed of or is classified as held for sale, and represents a separate major line of business
or geographical area of operations, is part of a single coordinated plan to dispose of a
separate major line of business or geographical area of operations, or is a subsidiary acquired
exclusively with a view to resale. The result from discontinued operations is shown separately
in the consolidated statement of income and the comparative figures are restated accordingly.
Non-current assets and assets and liabilities related to discontinued operations are
classified as held for sale if their carrying amounts are expected to be recovered primarily
through sale rather than through continuing use. Classification as held for sale requires that
the following criteria are met: the sale is highly probable, the asset is available for immediate
sale in its present condition – subject to usual and customary terms, the management is
committed to the sale, and the sale is expected to be completed within one year from the
date of classification.
Prior to classification as held for sale, the assets or assets and liabilities related to a
disposal group in question are measured according to the respective IFRS standards. From
the date of classification, non-current assets held for sale are measured at the lower of the
carrying amount and the fair value, less costs to sell, and the recognition of depreciation and
amortization is discontinued. Non-current assets held for sale are presented in the statement
of financial position separately from other items. The comparative figures for statement of
financial position are not restated.
Discontinued operations: Recycling business
On October 28, 2020, Metso Outotec announced its decision to divest its Recycling business.
The Recycling business sells products and services for metal and waste recycling. The
business has around 300 employees and its main locations are Horsens, Denmark; Düsseldorf,
Germany; and San Antonio, Texas.
The business to be divested has been classified as discontinued operations, including the
transfer of assets held for sale and liabilities directly attributable to them on separate lines
in the balance sheet. The figures in the income statement have been adjusted to show the
discontinued operations separately from continuing operations. The comparative figures for
2019 have been restated correspondingly.
The Recycling business has limited synergies with the core of the new Metso Outotec, which
is why preparations to divest the business have started. The sale is expected to be executed
during 2021.
Result of the discontinued operations
EUR million
Sales
Cost of sales
Sales, general and administrative expenses
Other income and expenses, net
Operating result
Finance income and expenses, net
Income taxes
Result for the period
Balance sheet of the discontinued operations
EUR million
Non-current assets
Inventories
Trade and other receivables
Cash and cash equivalents
Total assets
Non-current liabilities
Current liabilities
Total liabilities
Financial review 2020|Notes to the Consolidated Financial Statements 87
Discontinued operations: Aluminium and Waste-to-energy businesses
At the date of the Outotec acquisition, June 30, 2020, the Aluminium and Waste-to-energy
businesses were disclosed as discontinued operations, as they are also in the balance sheet of
Metso Outotec on December 31, 2020. The figures in the income statement have been adjusted
to show the discontinued operations separately from continuing operations.
The Aluminium business to be divested includes green anode plants, rod shops and certain
casthouse technologies as well as related service operations. On December 28, 2020, Metso
Outotec announced the sale of this business to REEL International, headquartered in France.
The closing of the sale is expected to take place during the first quarter of 2021. The sale will
have no material impact on Metso Outotec’s financial result.
The Waste-to-energy business to be divested comprises of biomass, wood waste and
various other fuel plants, including the related service operations. This divestment is expected
to be implemented during 2021.
Result of the discontinued operations 7–12/2020
EUR million
Sales
Operating result
Result for the period
Balance sheet of the discontinued operations
EUR million
Non-current assets
Inventories
Trade and other receivables
Total assets
Non-current liabilities
Current liabilities
Total liabilities
5.6.New accounting standards
New and amended standards effective in 2020
The following new or revised IFRS standards have been adopted from January 1, 2020, in these
consolidated financial statements. Their adoption has not had any material impact on the
disclosures or on the amounts reported in these financial statements.
Interest Rate Benchmark Reform amendments to IFRS 9 and IFRS 7
In September 2019, the IASB issued Interest Rate Benchmark Reform (Amendments to IFRS9,
IAS 39 and IFRS 7). These amendments modify specific hedge accounting requirements to
allow hedge accounting to continue for aected hedges during the period of uncertainty
before the hedged items or hedging instruments aected by the current interest rate bench-
marks are amended as a result of the on-going interest rate benchmark reforms.
Amendments to References to the Conceptual Framework in IFRS Standards
The amendments included in Amendments to References to the Conceptual Framework in
IFRS Standards include consequential amendments to aected Standards so that they refer
to the new Framework. Some pronouncements are only updated to indicate which version of
the Framework they are referencing to or to indicate that definitions in the Standard have not
been updated with the new definitions developed in the revised Conceptual Framework.
The amended standards are IFRS 2, IFRS 3, IFRS 6, IFRS 14, IAS 1, IAS 8, IAS 34, IAS 37, IAS
38, IFRIC 12, IFRIC 19, IFRIC 20, IFRIC 22, and SIC-32.
Amendments to IFRS 3 Definition of a business
The amendments clarify that while businesses usually have outputs, outputs are not required for
an integrated set of activities and assets to qualify as a business. To be considered a business
an acquired set of activities and assets must include, at a minimum, an input and a substantive
process that together significantly contribute to the ability to create outputs.
The amendments are applied prospectively to all business combinations and asset acquisi-
tions for which the acquisition date is on or after January 1, 2020.
Amendments to IAS 1 and IAS 8 Definition of material
The amendments make the definition of material in IAS 1 easier to understand and are not
intended to alter the underlying concept of materiality in IFRS Standards. The prohibition of
‘obscuring’ material information with immaterial information has been included as part of the
new definition. The definition of material in IAS 8 has been replaced by a reference to the
definition of material in IAS 1.
Financial review 2020|Notes to the Consolidated Financial Statements 88
New and amended standards to be applied
At the date of authorization of these financial statements, Metso Outotec has not applied the
following new and revised IFRS Standards that have been issued but are not yet eective [and
(in some cases) had not yet been adopted by the EU (marked with *)]:
• IFRS 17 Insurance Contracts *
• Amendments to IFRS 4 – deferral of IFRS 9
• IFRS 10 and IAS 28 (amendments): Sale or Contribution of Assets between an Investor and its
Associate or Joint Venture
• Amendments to IAS 1 Classification of liabilities as current or non-current *
• Amendments to IFRS 3 Reference to the conceptual framework *
• Amendments to IAS 16 Property, plant and equipment – proceeds before intended use *
• Amendments to IAS 37 Onerous contracts – cost of fulfilling a contract *
• Annual Improvements to IFRS Standards 2018–2020 Cycle Amendments to IFRS 1, IFRS 9,
IFRS 16 and IAS 41 *
• Amendments to IFRS 9, IAS 39, IFRS 7, IFRS 4 and IFRS 16 Interest Rate Benchmark Reform –
Phase 2
The directors do not expect that the adoption of the Standards listed above will have a
material impact on the financial statements of Metso Outotec in future periods.
5.7.Exchange rates used
Average rates Yearend rates
USD (US dollar)
SEK (Swedish krona)
GBP (Pound sterling)
CAD (Canadian dollar)
BRL (Brazilian real)
CNY (Chinese yuan)
AUD (Australian dollar)
Financial review 2020|Notes to the Consolidated Financial Statements 89
6.1.Audit fees
EUR million
Audit services
Tax services
Other services
Tota l
The above table discloses fees to Metso Outotec’s auditor EY. The disclosed fees include also
the fees for Metso Minerals audits in the period before EY was appointed as the auditor of
Metso Outotec. In addition, fees paid to Outotec’s auditor PwC during January 1 – June 30,
2020, totaled EUR 1.0 million and were allocated as follows: audit services EUR 0.4 million, tax
services EUR 0.3 million, and other services EUR 0.3 million.
6.2.Lawsuits and claims
Several lawsuits, legal claims and disputes based on various grounds are pending against
Metso Outotec in various countries related, among other things, to Metso Outotec’s products,
projects, other operations, and customer receivables. Metso Outotec’s management assesses,
however, to the best of its present understanding that the outcome of these lawsuits, claims,
and legal disputes would not have a material adverse eect on Metso Outotec in view of the
grounds presented for them, provisions made, insurance coverage in force, and the extent
of Metso Outotec’s total business activities. It should be noted, however, that outcomes of
pending lawsuits, legal claims, and disputes are beyond the direct influence of Metso Outotec’s
management and may, therefore, materially deviate from management’s current assessment.
6
Other notes
Financial review 2020|Notes to the Consolidated Financial Statements 90
Financial review 2020|Financial Statements of the Parent Company, FAS 91
Financial Statements of the Parent Company, FAS
Statement of income of the Parent Company
EUR Note
Sales
Other operating income
Personnel expenses
Depreciation and amortization
Other operating expenses
Operating profit (loss)
Finance income and expenses, net
Profit before appropriations and taxes
Appropriations
Profit before taxes
Income taxes
Current tax expense
Profit
Balance sheet of the Parent Company
Assets
EUR Note
Non-current assets
Intangible assets
Tangible assets
Investments
Shares in Group companies
Other investments
Total non-current assets
Current assets
Inventories
Long-term receivables
Short-term receivables
Bank and cash
Total current assets
Total assets
Shareholders’ equity and liabilities
EUR Note
Shareholders’ equity
Share capital
Share premium fund
Treasury shares
Invested non-restricted equity fund
Reserve for cash hedges
Retained earnings
Profit for the year
Total shareholders’ equity
Liabilities
Long-term liabilities
Current liabilities
Total liabilities
Total shareholders’ equity and liabilities
Financial review 2020|Financial Statements of the Parent Company, FAS 92
EUR thousand
Cash flows from operating activities
Profit for the year
Adjustments to operating profit (loss)
Depreciation and amortization
Impairment
Unrealized exchange gains / losses
Finance income and expenses, net
Group contributions
Taxes
Other non-cash items
Total adjustments to operating profit (loss)
Increase / decrease in short-term non-interest-bearing trade
receivables
Increase / decrease in short-term non-interest-bearing debt
Change in working capital
Interest paid
Other financial expenses paid
Dividends received
Interest received
Income taxes paid
Net cash provided by operating activities
EUR thousand
Cash flows from investing activities
Investments in tangible and intangible assets
Investments in subsidiary shares
Long-term loans granted
Repayments of long-term loans
Short-term loans granted
Repayments of short-term loans
Interest received from investments
Business acquisitions – transferred assets and liabilities from
MetsoMinerals carve-out
Net cash used in investing activities
Cash flows from financing activities
Sales from treasury shares to subsidiaries
Changes of short-term loans, (+withdrawals, installments)
Withdrawal of long-term loans
Repayments of long-term loans
Dividends paid
Change in Group pool accounts
Group contributions
Net cash provided by / used in financing activities
Net increase / decrease in bank and cash
Bank and cash at beginning of year
Bank and cash at end of year
Cash flow statement of the Parent Company
Financial review 2020|Financial Statements of the Parent Company, FAS 93
1Accounting principles
The Parent Company Financial Statements have been prepared in accordance with the
Finnish Generally Accepted Accounting Principles throughout the year 2020 from January 1 to
December 31 of 2020. The financial statements are presented in euros.
Acquisitions
The partial demerger of Metso Corporation and combination of Metso’s Minerals business
and Outotec was completed on June 30, 2020. Outotec Oyj continues as the Parent Company
changing its name to Metso Outotec Oyj. In this combination Metso Outotec Oyj received
assets and liabilities from the former Metso Minerals on June 30, 2020. The received assets and
liabilities were recorded in book values. The published demerger plan agreed on July 4, 2019
lists details of the transferred assets and liabilities.
Foreign currency translations
Transactions in foreign currencies are recorded at the rates of exchange prevailing at the date
of the transaction. At the end of the accounting period, monetary items are valued at the rate
of exchange prevailing at the end of period.
Tangible and intangible assets
Tangible and intangible assets are valued at historical cost, less accumulated depreciation
according to plan. Land and water areas are not depreciated.
Depreciation and amortization is calculated on a straight-line basis over the expected useful
lives of the assets as follows:
Computer software 3–5 years
Other intangibles 10 years
Buildings and structures 20–25 years
Machinery and equipment 3–5 years
Other tangible assets 20 years
Financial Instruments
Metso Outotec’s financial risk management is carried out by a central treasury department
(Group Treasury) under the policies approved by the Board of Directors. Group Treasury
functions in cooperation with the operating units to minimize financial risks in both the Parent
Company and the Group. Long-term debt is initially recognized at fair value, net of transaction
costs incurred. In subsequent periods, they are valued at amortized cost using the eective
interest rate method. Debts, which are hedged with a fair value hedge are recognized at fair
value through profit and loss, and unrealized adjustment is presented in the hedge reserve.
Transaction costs arising from issuance of bonds are recognized over the life of the bond
using the eective yield method. The unrecognized portion as of the balance sheet date is
presented as a decrease in liabilities. Derivatives outside hedge accounting are valued at fair
value through profit and loss. Forward exchange contracts are measured at fair value. The
change in fair value is recognized as income or expense in the income statement. The fair
value of forward exchange contracts is determined using forward exchange market rates at the
balance sheet date. Bank and cash – as well as securities – consist of cash in bank accounts
and investments of liquid funds in interest bearing instruments. Financial assets are measured
at historical cost, less possible impairment loss.
Provisions
Provisions are unrealized costs, for which the company is committed, and which will not
provide any income in the future and which are likely to occur. Provision changes are included
in profit and loss.
Leases
Leases of assets, where the lessor retains all the risks and benefits of ownership, are classified
as operating leases. Payments made under operating lease agreements are expensed on a
straight-line basis over the lease periods. Leases of property, plant and equipment, where the
lessee has substantially all the rewards and risks of ownership of an asset, are classified as
finance leases.
Income taxes
Income tax expense includes taxes calculated for the financial year, adjustments to prior year
taxes, and changes in the deferred taxes. Deferred tax assets and liabilities have not been
recognized in the financial statements.
Notes to the Financial Statements of the Parent Company
Financial review 2020|Financial Statements of the Parent Company, FAS 94
2Other operating income
EUR thousand
Foreign exchange gains
Other
Total
3Personnel expenses
EUR thousand
Salaries and wages
Pension costs
Other indirect employee costs
Total
Remuneration paid to Executive Team
EUR thousand Total
Metso
Outotec Oyj Outotec Oyj
Chief Executive Ocer
Board members
1)
Total
1)
Board remuneration is presented in note 1.5 of the Consolidated Financial Statements.
The first half-year includes the remuneration figures of the Outotec Oyj Executive team until
June 2020, whereas the second half-year figures correspond to Metso Outotec Oyj since July
2020.
Number of personnel
Personnel at end of year
Average number of personnel during the year
4Depreciation and amortization
EUR thousand
Patents and licenses
Capitalized software
Other intangible assets
Machinery and equipment
Total
5Other operating expenses
EUR thousand
Impairment of intangible assets
Foreign exchange losses
Other
Total
6Audit fees
EUR thousand Total EY PWC PWC
Audit
Tax consulting –
Other services
Total
Outotec’s auditor for the first half of 2020 was PwC in Outotec while EY was chosen as the
auditor for Metso Outotec in the second half of the year. The above table discloses the fees
to Metso Outotec Oyj’s auditor EY for the full-year 2020, as well as the fees to Outotec Oyj’s
auditor PwC for the period January 1 – June 30, 2020.
Financial review 2020|Financial Statements of the Parent Company, FAS 95
7Finance income and expenses
EUR thousand
Dividends received from
Group companies
Total
Interest income from investments from
Group companies
Others
Total
Other interest and financial income from
Group companies
Others
Fair value change in derivatives
Exchange rate dierences
Interest and finance income, total
Interest expenses to
Group companies
Others
Other finance expenses
Exchange rate dierences
Impairment loss on non-current assets
Others
Interest and other finance expenses, total
Finance income and expenses, net
8Appropriations
EUR thousand
Group contributions received
9Income taxes
EUR thousand
Income taxes on operating activities
Income taxes for prior years
Total
Financial review 2020|Financial Statements of the Parent Company, FAS 96
10Fixed assets
EUR thousand
Patents and
licenses
Capitalized
software
Other
intangible
assets
Intangible
assets total Land areas
Buildings and
structures
Machinery and
equipment
Tangible assets
total Total
2020
Acquisition cost at beginning of year
Additions
Additions coming from the combination
Decreases
Acquisition cost at end of year
Accumulated depreciation at beginning of year
Accumulated depreciation of decreases
Accumulated depreciation of the combination
Depreciation for the year
Accumulated depreciation at end of year
Net carrying value at end of year
EUR thousand
Patents and
licenses
Capitalized
software
Other
intangible
assets
Intangible
assets total Land areas
Buildings and
structures
Machinery and
equipment
Tangible assets
total Total
2019
Acquisition cost at beginning of year
Additions
Decreases
Acquisition cost at end of year
Accumulated depreciation at beginning of year
Accumulated depreciation of decreases
Depreciation for the year
Accumulated depreciation at end of year
Net carrying value at end of year
Financial review 2020|Financial Statements of the Parent Company, FAS 97
11Investments
EUR thousand
Shares in Group
companies Other shares
Receivables
from Group
companies
Receivables
from other
companies
Other
investments
total
2020
Acquisition cost at beginning of year
Additions
Additions coming from the combination
Decreases
Acquisition cost at end of year
2019
Acquisition cost at beginning of year
Additions
Decreases
Acquisition cost at end of year
12Shareholdings
Subsidiaries December 31, 2020
Subsidiary Domicile Ownership %
International Project Services Ltd. Oy Finland
Metso Canada Holdings Inc Canada
Metso Minerals Canada Inc. Canada
Metso Minerals Oy Finland
Metso Outotec Captive Insurance Limited Great Britain
Metso Outotec France SAS France
Metso USA Inc. United States
Outotec (Brazil) Ltda Brazil
Outotec (Canada) Ltd. Canada
Outotec (Chile) SA Chile
Outotec (Filters) Oy Finland
Outotec (Finland) Oy Finland
Outotec (Mexico), S.A. de C.V. Mexico
Outotec (Peru) S.A.C Peru
Outotec (Polska) Sp.z o.o. Poland
Subsidiary Domicile Ownership %
Outotec (RSA) Pty Ltd South-Africa
Outotec (Shanghai) Co. Ltd China
Outotec (Spain) S.L. Spain
Outotec (Sweden) AB Sweden
Outotec (USA) Inc. United States
Outotec Africa Holdings South Africa
Outotec Holding GmbH Germany
Outotec International Holding Oy Finland
Outotec Morocco LLC Morocco
Outotec Pty Ltd Australia
Outotec Servicios Corporativos SA DE CV Mexico
Outotec Turkey Metal Enerji ve su Teknolojileri Anonim Sirketi Turkey
Outotec Turula Finland
Outotec-Technology (Ecuador) S.A. Ecuador
Rauma Oy Finland
Financial review 2020|Financial Statements of the Parent Company, FAS 98
13Specification of receivables
Long-term receivables
EUR thousand
Deferred tax asset
Derivatives
Long-term receivables total
Transferred assets related to Metso Minerals business on June 30, 2020, have a Deferred tax
asset impact of 50 thousand euros (not recognized in the Financial Statements) and a deriva-
tives impact of 3,054 thousand euros.
Short-term receivables
EUR thousand
Trade receivables from
1)
Group companies
Others
Total
Loan receivables from
2)
Group companies
Others
Total
Prepaid expenses and accrued income from
3)
Group companies
Others
Total
Other receivables
4)
Short-term receivables total
Impact of transferred assets related to Metso Minerals business on June 30, 2020, on:
1)
Trade receivables from group companies 6,559 thousand euros and from others 61 thousand euros
2)
Loan receivables from group companies 354,544 thousand euros
3)
Prepaid expenses and accrued income from group companies 6,173 thousand euros and from others 15,508
thousand euros
4)
Other receivables 27,088 thousand euros
Specification of prepaid expenses and accrued income
EUR thousand
Prepaid expenses and accrued income from Group companies
1)
Group contribution receivables
Accrued interest income
Other accrued items
Total
Prepaid expenses and accrued income from others
2)
Accrued interest income
Other accrued items
Total
Impact of transferred assets related to Metso Minerals business on June 30, 2020 on:
1)
Accrued interest income from group companies 6,111 thousand euros and other accrued items from group
companies 62 thousand euros
2)
Other accrued items from others 15,508 thousand euros
Financial review 2020|Financial Statements of the Parent Company, FAS 99
14Statement of changes in shareholders’ equity
EUR thousand
Share capital at beginning of year
Change from the combination
Share capital at end of year
Share premium fund at beginning of year
Share premium fund at end of year
Treasury shares at beginning of year
Change
Treasury shares at end of year
Invested non-restricted equity fund at beginning of year
Change
Change from the combination
Invested non-restricted equity fund at end of year
Reserve for cash hedges at beginning of year
Change
Reserve for cash hedges at end of year
Retained earnings at beginning of year
Dividend distribution
Other change
Change from the combination
Retained earnings at end of year
Profit for the year
Total shareholders’ equity at end of year
Statement of distributable funds at December 31
EUR
Invested non-restricted equity fund
Treasury shares
Retained earnings
Profit for the year
Total distributable funds
At the end of the year 2020, Metso Outotec Oyj held 993,238 own shares, whereas at the end
of the year 2019 the number of Outotec Oyj own shares was 1,271,628.
15Long-term liabilities
EUR thousand
Bonds from
1)
2)
Others
Hybrid loan
Loans from financial institutions
Derivatives
Total
1)
Specification of bonds and fair values in note 4.5 to the Consolidated Financial Statements.
2)
Impact of transferred liabilities related to Metso Minerals business on June 30, 2020, on Bonds from others 402,308
thousand euros, Loans from financial institutions 439,393 thousand euros, and deferred tax liability 2,525 thousand
euros
Debt maturing after more than five years
EUR thousand
Bonds
Presented at nominal value
Financial review 2020|Financial Statements of the Parent Company, FAS 100
16Short-term liabilities
EUR thousand
Current portion of long-term liabilities
Bonds
Total
Short-term interest-bearing debt
1)
Loans from financial institutions
Group pool accounts
Total
Trade payables to
2)
Group companies
Others
Total
Accrued expenses and deferred income to
3)
Group companies
Others
Total
Provisions
4)
Provision for restructuring
Total
Other short-term non-interest-bearing debt to
5)
Group companies
Others
Total
Short-term liabilities total
Short-term liabilities to Group companies total
Impact of transferred liabilities related to Metso Minerals business on June 30, 2020 on:
1)
Group pool accounts 39,859 thousand euros
2)
Trade payables to others 1,956 thousand euros
3)
Accrued expenses and deferred income to group companies 42 thousand euros and to others 12,852 thousand
euros
4)
Provisions for restructuring 200 thousand euros
5)
Other short-term non-interest-bearing debt to group companies 50,916 thousand euros and to others 269
thousand euros
Specification of accrued expenses and deferred income
EUR thousand
Accrued expenses and deferred income to Group companies
1)
Accrued interest expenses
Other accrued items
Total
Accrued expenses and deferred income to others
2)
Accrued interest expenses
Accrued derivatives
Accrued salaries, wages and social costs
Other accrued items
Total
Imact of transferred liabilities related to Metso Minerals business on June 30, 2020 on:
1)
Accrued interest expenses to group companies 42 thousand euros.
2)
Accrued interest expenses to others 953 thousand euros, accrued salaries, wages, and social costs 2,270 thousand
euros and other accrued items 9,630 thousand euros.
Financial review 2020|Financial Statements of the Parent Company, FAS 101
17Other contingencies
Guarantees and mortgages
EUR thousand
Guarantees on behalf of group companies
Own commercial commitments
Total
The portion related to Metso Minerals business on June 30th, 2020 was 179,299 thousand euros.
Lease commitments
EUR thousand
Payments in the following year
Payments later
Total
18Derivative instruments
EUR thousand
Net fair values
Contracts made with financial institutions
Foreign exchange forward contracts
Interest rate swaps
Contracts made with subsidiaries
Foreign exchange forward contracts
Total
Nominal values
Contracts made with financial institutions
Foreign exchange forward contracts
Interest rate swaps
Contracts made with subsidiaries
Foreign exchange forward contracts
Total
The portion related Metso Minerals business related to derivative instruments on June 30, 2020,
9,743 thousand euros for net fair values and 2,503,875 thousand euros for nominal values.
Financial review 2020|Signatures of the Board of Directors’ Report and Financial Statements 102
Signatures of the Board of Directors’ Report and
Financial Statements 2020
Mikael Lilius Matti Alahuhta
Chair of the Board Vice Chair of the Board
Christer Gardell Antti Mäkinen Kari Stadigh
Member of the Board Member of the Board Member of the Board
Arja Talma Emanuela Speranza Ian W. Pearce
Member of the Board Member of the Board Member of the Board
Klaus Cawén Hanne de Mora
Member of the Board Member of the Board
Pekka Vauramo
President and CEO
Auditor’s note
Our auditor’s report has been issued today.
Helsinki, February 15, 2021
Ernst & Young Oy
Authorized Public Accountant Firm
Mikko Järventausta
APA
Financial review 2020|Auditor’s Report 103
Auditor’s Report
(Translation of the Finnish original)
To the Annual General Meeting of Metso Outotec Corporation
Report on the Audit of Financial Statements
Opinion
We have audited the financial statements of Metso Outotec Corporation (business identity
code 0828105-4) for the year ended 31 December, 2020. The financial statements comprise the
consolidated balance sheet, income statement, statement of comprehensive income, statement
of changes in equity, statement of cash flows and notes, including summaries of significant
accounting policies, as well as the parent company’s balance sheet, income statement, state-
ment of cash flows and notes.
In our opinion
• the consolidated financial statements give a true and fair view of the group’s financial
position as well as its financial performance and its cash flows in accordance with Interna-
tional Financial Reporting Standards (IFRS) as adopted by the EU.
• the financial statements give a true and fair view of the parent company’s financial perfor-
mance and financial position in accordance with the laws and regulations governing the
preparation of financial statements in Finland and comply with statutory requirements.
Our opinion is consistent with the additional report submitted to the Audit Committee.
Basis for Opinion
We conducted our audit in accordance with good auditing practice in Finland. Our responsibil-
ities under good auditing practice are further described in the Auditor’s Responsibilities for the
Audit of Financial Statements section of our report.
We are independent of the parent company and of the group companies in accordance
with the ethical requirements that are applicable in Finland and are relevant to our audit, and
we have fulfilled our other ethical responsibilities in accordance with these requirements.
In our best knowledge and understanding, the non-audit services that we have provided
to the parent company and group companies are in compliance with laws and regulations
applicable in Finland regarding these services, and we have not provided any prohibited
non-audit services referred to in Article 5(1) of regulation (EU) 537/2014. The non-audit services
that we have provided have been disclosed in note 6.1 to the consolidated financial statements.
We believe that the audit evidence we have obtained is sucient and appropriate to
provide a basis for our opinion.
Key Audit Matters
Key audit matters are those matters that, in our professional judgment, were of most
significance in our audit of the financial statements of the current period. These matters were
addressed in the context of our audit of the financial statements as a whole, and in forming
our opinion thereon, and we do not provide a separate opinion on these matters.
We have fulfilled the responsibilities described in the Auditor’s responsibilities for the
audit of the financial statements section of our report, including in relation to these matters.
Accordingly, our audit included the performance of procedures designed to respond to our
assessment of the risks of material misstatement of the financial statements. The results of our
audit procedures, including the procedures performed to address the matters below, provide
the basis for our audit opinion on the accompanying financial statements.
We have also addressed the risk of management override of internal controls. This includes
consideration of whether there was evidence of management bias that represented a risk of
material misstatement due to fraud.
Financial review 2020|Auditor’s Report 104
Key Audit Matter How our audit addressed the Key Audit Matter
Revenue recognition over time, including valuation of project receivables and
projectlossprovisions
The accounting principles and disclosures about revenue, project receivables and project loss
provisions are included in Note 1.2, Note 2.2 and Note 2.6.
Metso Outotec delivers customized engineered systems and complete plants to its
customers, where the moment of signing a delivery contract and the final acceptance of a
delivery by the customer may take place in dierent financial periods. In accordance with
Metso Outotec’s accounting principles, revenue from such projects is recognized over time.
The recognition of revenue and the estimation of the outcome of a project require
significant management judgment, in particular with respect to estimating the stage of
completion and cost to complete. Significant judgment is also required to assess the
recoverability of project receivables and particularly to determine the project loss provision
when it is expected that the total costs will exceed the total revenues from the delivery contract.
Based on above, revenue recognition over time, including valuation of project receivables and
project loss provisions, was a key audit matter.
This matter was also a significant risk of material misstatement referred to in EU Regulation
No 537/2014, point (c) of Article 10(2).
Our audit procedures to address the risk of material misstatement in respect of the revenue
recognition over time, including valuation of project receivables and project loss provisions,
included, among others:
• Assessment of the Group’s accounting policies over revenue recognition over time and
valuation of project receivables and project loss provisions.
• Inspection of the project documentation such as contracts, legal opinions and other written
communication.
• Evaluation of financial development and current status of projects by
– analyzing the changes in assumptions relating to estimated revenues and costs, receipts of
project payments and loss provisions, and
– discussions with the dierent levels of organization including project management and
group management.
• Evaluation of the appropriateness of the Group’s disclosures in respect of revenue recogni-
tion over time and valuation of projects receivables and project loss provisions.
Valuation of goodwill
The accounting principles and disclosures about goodwill are included in Note 3.1.
As of balance sheet date December 31, 2020, the value of goodwill in continuing operations
amounted to 1 052 million euros representing 19% of the total assets and 52% of the total
equity. In 2020, the goodwill increased by 496 million euros (net), of which 517 million euros
was recognized from the acquisition of Outotec.
The annual impairment testing of goodwill was based on the management’s estimate about
the values-in-use of the cash generating units. There are a number of assumptions used to
determine the values-in-use of cash generating units, including revenue growth, margins and
the discount rate applied on net cash-flows. Estimated values-in-use may vary significantly
when the underlying assumptions are changed and the changes in above-mentioned
individual assumptions may result in an impairment of goodwill.
The valuation of goodwill was a key audit matter because the annual impairment testing
included management judgment with respect to the key assumptions used and because of the
significance of the goodwill to the financial statements.
Our audit procedures in respect of valuation of goodwill included, among others:
• Evaluation of the determination of cash generating units and the goodwill allocated to those
units.
• Involvement of our valuation specialists to assist us in evaluating the key assumptions used in
impairment testing by comparing the management’s assumptions to externally derived data
and to our independently calculated industry averages, in particular those relating to
– the forecasted revenue growth,
– the forecasted margin and
– the weighted average cost of capital used to discount the net cash-flows.
• Testing of the accuracy of the impairment calculations prepared by the management
and comparison of the sum of discounted cash flows against Metso Outotec’s market
capitalization.
• Evaluation of the adequacy of the disclosures of the impairment testing results.
Financial review 2020|Auditor’s Report 105
Key Audit Matter How our audit addressed the Key Audit Matter
Outotec business combination
The accounting principles and disclosures about the business combination are included in
Note 5.4.
Outotec business combination was completed on June 30, 2020.
Under IFRS, the transaction was accounted for as a reverse acquisition, where Metso
Minerals was the accounting acquirer and Outotec the acquiree. The consideration transferred
as well as the assets acquired and the liabilities assumed in a business combination were
measured at acquisition date fair values. The management judgement related specifically to
the identification of the acquired intangible assets and determination of the related fair values.
Outotec business combination was a key audit matter because the fair valuation included
judgment and because of the significance of the acquisition to the financial statements.
Our audit procedures in respect of Outotec business combination included, among others:
• Evaluation of the criteria for reverse acquisition accounting applied in the business
combination.
• Involvement of our valuation team to assist us in evaluation of
– the valuation processes and methodologies used
– the fair valuation of the consideration transferred
– the identification and fair valuation of acquired assets and assumed liabilities.
• Evaluation of the adequacy of the disclosures of the business combination.
Accounting for the transferred assets and liabilities of Metso Corporation in the
receiving parent company
The accounting principles and disclosures about the transferred assets and liabilities of Metso
Corporation are included in the parent company’s notes.
In the partial demerger of Metso Corporation, the assets and liabilities of Metso Minerals
business were transferred into the receiving Metso Outotec Corporation by using carrying
values as of 30 June 2020.
The total book value of net assets transferred amounted to 793 million euros. The
accounting for the transfer in the receiving parent company was a key audit matter because
the transferred assets and liabilities had significant impact on the equity and balance sheet of
Metso Outotec Corporation.
Our audit procedures in respect of the accounting for the transferred assets and liabilities
included, among others:
• Assessment of the compliance of the partial demerger against the Limited Liability Act and
the demerger plan.
• Evaluation of the appropriateness of the transferred assets and liabilities by comparing them
to the demerger plan.
• Testing of the carrying amounts of transferred assets and liabilities by comparing the
balances in the receiving entity to the balances in the demerging entity.
• Evaluation of the adequacy of the disclosures of the transferred assets and liabilities.
Responsibilities of the Board of Directors and the Managing Director for the Financial
Statements
The Board of Directors and the Managing Director are responsible for the preparation of
consolidated financial statements that give a true and fair view in accordance with International
Financial Reporting Standards (IFRS) as adopted by the EU, and of financial statements that
give a true and fair view in accordance with the laws and regulations governing the prepa-
ration of financial statements in Finland and comply with statutory requirements. The Board
of Directors and the Managing Director are also responsible for such internal control as they
determine is necessary to enable the preparation of financial statements that are free from
material misstatement, whether due to fraud or error.
In preparing the financial statements, the Board of Directors and the Managing Director are
responsible for assessing the parent company’s and the group’s ability to continue as going
concern, disclosing, as applicable, matters relating to going concern and using the going
concern basis of accounting. The financial statements are prepared using the going concern
basis of accounting unless there is an intention to liquidate the parent company or the group
or cease operations, or there is no realistic alternative but to do so.
Auditor’s Responsibilities for the Audit of the Financial Statements
Our objectives are to obtain reasonable assurance on whether the financial statements as a
whole are free from material misstatement, whether due to fraud or error, and to issue an
auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance,
but is not a guarantee that an audit conducted in accordance with good auditing practice
will always detect a material misstatement when it exists. Misstatements can arise from fraud
or error and are considered material if, individually or in aggregate, they could reasonably
be expected to influence the economic decisions of users taken on the basis of the financial
statements.
Financial review 2020|Auditor’s Report 106
As part of an audit in accordance with good auditing practice, we exercise professional
judgment and maintain professional skepticism throughout the audit. We also:
• Identify and assess the risks of material misstatement of the financial statements, whether
due to fraud or error, design and perform audit procedures responsive to those risks, and
obtain audit evidence that is sucient and appropriate to provide a basis for our opinion.
The risk of not detecting a material misstatement resulting from fraud is higher than for one
resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepre-
sentations, or the override of internal control.
• Obtain an understanding of internal control relevant to the audit in order to design audit
procedures that are appropriate in the circumstances, but not for the purpose of expressing
an opinion on the eectiveness of the parent company’s or the group’s internal control.
• Evaluate the appropriateness of accounting policies used and the reasonableness of
accounting estimates and related disclosures made by management.
• Conclude on the appropriateness of the Board of Directors’ and the Managing Director’s
use of the going concern basis of accounting and based on the audit evidence obtained,
whether a material uncertainty exists related to events or conditions that may cast significant
doubt on the parent company’s or the group’s ability to continue as a going concern. If
we conclude that a material uncertainty exists, we are required to draw attention in our
auditor’s report to the related disclosures in the financial statements or, if such disclosures
are inadequate, to modify our opinion. Our conclusions are based on the audit evidence
obtained up to the date of our auditor’s report. However, future events or conditions may
cause the parent company or the group to cease to continue as a going concern.
• Evaluate the overall presentation, structure and content of the financial statements, including
the disclosures, and whether the financial statements represent the underlying transactions
and events so that the financial statements give a true and fair view.
• Obtain sucient appropriate audit evidence regarding the financial information of the
entities or business activities within the group to express an opinion on the consolidated
financial statements. We are responsible for the direction, supervision and performance of
the group audit. We remain solely responsible for our audit opinion.
We communicate with those charged with governance regarding, among other matters, the
planned scope and timing of the audit and significant audit findings, including any significant
deficiencies in internal control that we identify during our audit.
We also provide those charged with governance with a statement that we have complied
with relevant ethical requirements regarding independence, and communicate with them all
relationships and other matters that may reasonably be thought to bear on our independence,
and where applicable, related safeguards.
From the matters communicated with those charged with governance, we determine those
matters that were of most significance in the audit of the financial statements of the current
period and are therefore the key audit matters. We describe these matters in our auditor’s
report unless law or regulation precludes public disclosure about the matter or when, in
extremely rare circumstances, we determine that a matter should not be communicated in
our report because the adverse consequences of doing so would reasonably be expected to
outweigh the public interest benefits of such communication.
Other Reporting Requirements
Information on our audit engagement
We were appointed as auditors by the Annual General Meeting with eect from 30 June 2020.
Other information
The Board of Directors and the Managing Director are responsible for the other information.
The other information comprises the report of the Board of Directors and the information
included in the Annual Report, but does not include the financial statements and our auditor’s
report thereon. We have obtained the report of the Board of Directors prior to the date of this
auditor’s report, and the Annual Report is expected to be made available to us after that date.
Our opinion on the financial statements does not cover the other information.
In connection with our audit of the financial statements, our responsibility is to read the
other information identified above and, in doing so, consider whether the other information is
materially inconsistent with the financial statements or our knowledge obtained in the audit, or
otherwise appears to be materially misstated. With respect to report of the Board of Directors,
our responsibility also includes considering whether the report of the Board of Directors has
been prepared in accordance with the applicable laws and regulations.
In our opinion, the information in the report of the Board of Directors is consistent with
the information in the financial statements and the report of the Board of Directors has been
prepared in accordance with the applicable laws and regulations.
If, based on the work we have performed on the other information that we obtained prior
to the date of this auditor’s report, we conclude that there is a material misstatement of this
other information, we are required to report that fact. We have nothing to report in this regard.
Helsinki, February 15, 2021
Ernst & Young Oy
Authorized Public Accountant Firm
Mikko Järventausta
Authorized Public Accountant
Financial review 2020|Investor information 107
Investor Relations function and policies
The main task of Investor Relations is to support the correct valuation of Metso Outotec’s share
by providing up-to-date information on matters concerning our operations, operating environ-
ment, strategy, objectives, financial performance and market outlook. Our goal is to provide
correct, adequate and current information regularly and impartially to all market participants. In
our work, we aim for promptness, transparency, agility and excellent service.
Investor Relations is responsible for all investor communications, including contacts
with representatives of the capital markets. All investor meeting requests are processed by
Investor Relations. In addition to financial reports, actively updated webpages and a quarterly
newsletter, our investor communications include investor meetings and seminars in which
corporate executives actively participate. We also arrange Capital Markets Day events. In
addition, we regularly gather and analyze market information and investor feedback for use by
top management and the Board of Directors.
During the 21-day period prior to publication of the annual, half-year or interim financial
results, we are not in contact with capital market representatives. At other times, we are happy
to answer inquiries of analysts and investors by phone, email or at arranged investor meetings.
Contact details are available on the following page.
Market estimates and analyst reports
We actively monitor market expectations and will review, if requested so by an analyst, their
model against publicly available information. However, we do not comment on or take any
responsibility for estimates or forecasts published by capital market representatives and we do
not comment on the company’s valuation or share price development, give preference to one
particular analyst, or distribute analyst reports to the investment community.
We maintain a list of the analysts following Metso Outotec on a regular basis on our
website at www.mogroup.com/corporate/investors/shares/analysts/.
Market outlook
Metso Outotec’s market outlook describes the expected sequential development of market
activity during the following six-month period using three categories: improve, remain at the
current level, or decline.
Current market outlook, published on February 16, 2021
Metso Outotec expects the market activity to improve, subject to the development of the
Covid-19 pandemic.
Guidance on our financial communications
The principle of equality in our investor communications means giving all market participants
simultaneous and timely access to the information they need to be able to determine the value
of the Metso Outotec share in an informed manner. We follow the rules and recommendations
of:
• Finnish Corporate Governance Code 2020
• Finnish Companies Act
• Accounting Act
• Finnish Securities Markets Act
• Market Abuse Regulation ((EU) N:o 596/2014 (“MAR”))
• Rules, regulations and guidelines of Nasdaq Helsinki and the Finnish Financial Supervisory
Authority
Our disclosure policy has been approved by the Board of Directors and it describes
the main principles and practices of our stock exchange communications as well as other
important disclosure practices we follow. The purpose of the policy is to promote reliable and
consistent disclosure of information and to describe the decision-making procedures relevant
to disclosing market-relevant information. More information and our Disclosure Policy are
available at www.mogroup.com/corporate/investors/financials/.
Our releases are divided into three categories: stock exchange releases, corporate press
releases and trade press releases. The category of a release is based on MAR demands, on
the materiality and relevance of the information as well as on internal guidelines.
Stock exchange releases are used for releasing inside information according to the MAR
and other matters required by the rules of the stock exchange. Corporate press releases are
used for communicating about business events that do not include inside information but are
estimated to be newsworthy or of general interest to stakeholders. Trade press releases are
used for discussing our products and technology and other topics that are of interest to our
customer industries and the trade media.
Our financial reviews and our releases, as well as their email subscription, are available in
Finnish and English on our website at www.mogroup.com/corporate/media/news/. We disclose
information about our financial performance according to a schedule announced in advance.
Financial information and key figures are disclosed on the Metso Outotec and segment level.
Financial reporting schedule 2021
Annual Report 2020 Week commencing March 15, 2021
Interim report for January–March 2021 April 23, 2021
Half-year financial report 2021 August 4, 2021
Interim report for January–September 2021 November 2, 2021
Investor information
Financial review 2020|Investor information 108
Shareholder’s change of address
Shareholders are kindly asked to notify of changes in their address to the bank, brokerage firm
or other account operator with which they have a book-entry account.
Annual General Meeting 2020
Metso Outotec’s Annual General Meeting 2021 will be held at 2:00 p.m. on Friday, April 23,
2021 at 2.00 p.m. (EET) at Sanomatalo at the address Töölönlahdenkatu 2, FI-00100 Helsinki,
Finland. In order to ensure the health and safety of the shareholders, employees and other
stakeholders of the Company, the General Meeting will be organized without shareholders’
and their proxy representatives’ presence at the General Meeting venue.
Shareholders can participate in the General Meeting and use their shareholder rights in
connection with the General Meeting by voting in advance (either personally or through a
proxy representative), by submitting counterproposals in advance and by asking questions in
advance in the manner described below. Proxy representatives must also vote in advance in
the manner described below.
Notice of the meeting including all meeting proposals has been published
as a stock exchange release on February 16, 2021 and is also available at
www.mogroup.com/corporate/investors/governance/agm/2021.
Important dates related to AGM 2021
Deadline for presenting questions in advances April 9, 2021 at 4:00 pm (EEST)
Record date of AGM April 13, 2021
Registration period ends April 16, 2021 at 4:00 pm (EEST)
Annual General Meeting April 23, 2021
Dividend ex-date, 1st installment April 26, 2021
Record date of dividend payment, 1st installment April 27, 2021
Date of dividend payment, 1st installment May 4, 2021
Minutes of the meeting available May 7, 2021, at the latest
Dividend payment 2nd installment Board of Directors to resolve in November
2021
Registration and pies
A shareholder whose shares are registered on the shareholder’s Finnish book-entry account
can register and vote in advance on certain matters on the agenda of the General Meeting
from February 24, 2021 at 4.00 p.m. (EET) until April 16, 2021 at 4.00 p.m. (EEST) by the
following means:
a) through Metso Outotec’s website at
https://www.mogroup.com/corporate/investors/governance/agm/2021/. The Finnish personal
identity code or business ID as well as strong identification with Finnish banking codes or
mobile ID is needed for electronic registration and advance voting;
b) by sending the advance voting form available on the Company’s website or corresponding
information to Innovatics Ltd to the address Innovatics Oy, AGM/Metso Outotec Corpora-
tion, Ratamestarinkatu 13 A, 00520 Helsinki by letter or by email at agm@innovatics.fi.
Proxy and voting instruction templates will be available on the Company’s website at
https://www.mogroup.com/corporate/investors/governance/agm/2021/ no later than as
from February 24, 2021 onwards. Possible proxy documents shall be delivered primarily as an
attachment in connection with the electronic registration and advance voting or alternatively by
email to agm@innovatics.fi or as originals by regular mail to the address Innovatics Oy, AGM/
Metso Outotec Corporation, Ratamestarinkatu 13 A, 00520 Helsinki before the end of the
registration and advance voting period, i.e. before April 16, 2021 at 4.00 p.m. (EEST), by which
time the proxy documents must have been received.
Nominee registered shares
A holder of nominee-registered shares has the right to participate in the General Meeting
by virtue of such shares, based on which the shareholder on the record date of the General
Meeting, on April 13, 2021, would be entitled to be registered in the Company’s shareholders’
register held by Euroclear Finland Ltd.
Further information will be available on the Company’s website at
www.mogroup.com/corporate/investors/governance/agm/2021.
Resolutions of the AGM
Resolutions of the AGM will be published as a stock exchange release without delay after the
meeting has finished.
More information about the Annual General Meeting and the meeting proposals are
available on our website at www.mogroup.com/corporate/investors/governance/agm/2021.
IR contacts
Juha Rouhiainen
Vice President, Investor Relations
Tel. +358 20 484 3253
juha.rouhiainen@mogroup.com
Metso Outotec Corporation
Postal address
Metso Outotec Corporation, PO Box 1220, 00101 Helsinki, Finland.
Visiting addres
Metso Outotec Corporation, Töölönlahdenkatu 2, 00100 Helsinki, Finland.
Telephone
+35820484100